Ramada Plaza Suites & Conference Center
One Bigelow Square
Pittsburgh, Pennsylvania

COMMITTEE MEMBERS:

Douglas L. Wood, M.D., Chairman
Mayo Clinic
Rochester, Minnesota

Jeff Bloom
Washington, D.C.

G. Kristin Crosby, M.D.
Vice President and Chief Medical Officer
Olympic Health Management Systems, Inc.
Bellingham, Washington

Bruce Devereux Cummings
President and CEO
Olean General Hospital
Olean, New York

Gary C. Dennis, M.D.
Howard University Hospital
Washington, D.C.

Michele M. Evink
Director of Pharmacy
Clarke County Hospital
Osceola, Iowa

Eugene Anthony Fay
Vice President of Reimbursement and
Government Affairs
Province Healthcare Company
Brentwood, Tennessee

John Finan, Jr.
President and CEO
Franciscan Missionaries of
Our Lady Health System, Inc.
Baton Rouge, Louisiana

Lisa Gigliotti, J.D.
Human Services Policy Coordinator
Office of Governor
Lansing, Michigan

Heidi Margulis
Senior Vice President, Government Relations
Humana, Inc.
Louisville, Kentucky

Mary M. Martin
The Senior Coalition
Crofton, Maryland

Nancy H. Nielsen, M.D.
Internist
Buffalo, New York

Dr. Erik Olsen
Member, Board of Directors, AARP
Glenbrook, Nevada

Suzanne R. Pattee, J.D.
Vice President
Public Policy and Patient Affairs
Cystic Fibrosis Foundation
Bethesda, Maryland

Jack A. Rovner
Michael, Best & Friedrich, LLC
Chicago, Illinois

Judith A. Ryan
President and CEO
The Evangelical Lutheran Good Samaritan Society
Sioux Falls, South Dakota

Patricia Osborne-Shafer, R.N., M.N.
Beth Israel Deaconness Medical Center
Boston, Massachusetts
Christy Schmidt, Executive Coordinator
Regulatory Reform Initiative
Washington, D.C.

William Toby, Jr.
Rockville Centre, New York

Patricia M. Walden
Southington Care Center
Southington, Connecticut

INDEX OF SPEAKERS AND PRESENTATIONS

Marcia K. Brand, Ph.D.
Director, Office of Rural Health Policy
HRSA, DHHS

Tom Hoyer, CMS

Rural Health
Open Door Forum
Timothy Trysla, Facilitator
Center for Medicare and Medicaid Services
Washington, D.C.

Panel: Provider and Beneficiary Perspectives

Robert L. Harman, CEO, Grant Memorial Hospital
Petersburg, West Virginia

Tim Size, Executive Director
Rural Wisconsin Cooperative
Sauk City, Wisconsin

Wayne Myers, M.D.
Maine

Mona Counts, Ph.D., CRNP, FNAP, FAANP
Clinical Director, Primary Care Center of
Mt. Morris
Mt. Morris, Pennsylvania

Raymond J. Bahl, Apprise Counselor
Pennsylvania

Public Comments:

Paul W. Smith
Raleigh, North Carolina

Phyllis Fredland
Executive Director
Home Health Agency
McKees Rocks, Pennsylvania

Robert Urban, M.D., President
Association of American Physicians and Surgeons
Belle Vernon, Pennsylvania

INDEX OF SPEAKERS AND PRESENTATIONS:

James Pendleton, M.D.
Retired Psychiatrist
Pennsylvania

Kay Bishirjian
American Dietetic Association

Dean Cross, M.D.
Cardiologist

Multiple Reviews
Panel 1

Anthony J. Tirone, Director, Federal Relations
Joint Commission on Accreditation of
Health Care Organizations
Washington, D.C.

Andrew Webber, Vice President for External Relations
National Committee for Quality Assurance
Washington, D.C.

Ken Segel, Director
Pittsburgh Regional Health Care Initiative
Pittsburgh, Pennsylvania

Panel 2

Dean Eckenrode, Senior vice President
UPMC Insurance Division
Pennsylvania

Elizabeth B. Concordia, President and CEO
University of Pittsburgh Medical Center
Presbyterian and Shadyside
Pittsburgh, Pennsylvania

Daniel Martich, M.D., Executive Director
Electronic Medical Record, UPMC
Associate Professor, Critical Care Medicine, UPMC
Pittsburgh, Pennsylvania

 DR. WOOD: We are on a rather tight agenda this morning since we need to make the beginning of an open forum at 9:30, but on behalf of the members of the committee I want to particularly welcome members of the public who are attending today's hearing. This is the third hearing of the Secretary's Advisory Committee on Regulatory Reform, and so as not to delay our first two presenters, let me simply preface this by saying that our major interest as a committee is in identifying solutions to a regulatory burden, and so for those of you who will be presenting as part of our panel later this morning or who might be making public comments later today we are very interested in solutions. So if you have some good ones for us, please lay them out, and if you're thinking now about talking to us mostly about problems, we're interested in those, but we're really interested in some solutions. So if you can think of those before the time comes for your presentation, that would be great.

The format that we have used quite successfully in our regional hearings have been to identify some major issue areas and then to have leaders from CMS talk with us about the original intent of the legislation or a program design and then to hear from people who live this every day and deal with these regulations and then use those as a basis for committee discussion in formulating recommendations, and in our previous hearings in Miami and in Phoenix this format has worked exceedingly well.

Today we'd like to begin with the discussion of rural health issues, and I'm particularly pleased that we welcome folks from CMS who have had tremendous experience in this area, and then, as I mentioned earlier, at 9:30 we will do a rural health open door forum, and that will incorporate telephone calls in to this room from outside the region. That's why we need to be pretty tight about the schedule.

I am pleased to introduce to my left Marcia Brand who will begin. Her expertise here is particularly evident to members of the committee from the briefing books, and I am personally quite anxious to hear what she has to say, and then Mr. tom Hoyer to her left will follow a little bit later. So, Marcia, without getting too behind, I think I've got you back to schedule.

DR. BRAND: My name is Marcia Brand. I direct the federal office of Rural Health Policy, and as I look at your agenda this morning, I am the first of roughly eight folks who are going to speak passionately and quickly about issues related to rural health. I think that any time you hear someone speak about access to rural health care services, you will find that there's considerable passion in their voice.

My responsibility is to give you an overview of rural health, talk about HHS's rural programs, give you the highlights of some current issues and do this in less than 12 minutes, which I cannot possibly do. So under tab A you will find my handouts, and if you'd like to contact us later, I'd be happy to talk with you.

The first challenge I have is to define for you what is rural, and historically what we have done is define rural about what it is not. It is not a metropolitan statistical area, which is the definition that the Office of Management and Budget uses. The Census Bureau has a definition. USDA has a definition, and there are a number of program specific definitions. So there is no consensus around what one considers rural, and then to further stratify that, there's no consensus around what one considers frontier. However, there are enough folks who will recognize that their situations and their distances from population centers make their needs unique, and so we historically have used OMB's definition which is roughly less than 50,000 people in an area.

Some quick facts about rural America. About one in five persons lives there. There are about 65 million Americans who are in rural areas. That's about 20 percent of the nation's population. The other thing I want to make perfectly clear to you is rural is not synonymous with farming. I know that most people, you know, you think rural and you think the idyllic cattle in the field standing in front of the red barn, and that is not necessarily rural. It is driven now by multiple employment sectors including manufacturing and service sector industries.

I think the other thing that's important for this particular committee is that elderly people make up a larger portion of the rural population, about 18 percent versus 15 percent in urban areas. About 23 percent of Medicare beneficiaries are rural, or that's about 8.9 million folks.

A couple other quick facts about health care in rural America. There are fewer providers. Rural hospitals tend to be smaller and less stable, but certainly health care plays a very important critical role in the economic development of that particular community.

One important point to keep in mind is although one in five Americans live in rural America, only one in ten physicians practice there, and there are about 2,226 rural hospitals. About 1,200 of those have less than 50 beds, so they tend to be smaller institutions. Access to oral and mental health care is an even greater challenge in rural areas, as many of you probably are aware, and rural rates of uninsurance tend to be higher, as well.

The Department of Health and Human Services has a number of programs that address rural issues, either specifically or through its larger Medicare/Medicaid and S-CHIP programs. The interesting thing to keep in mind from our perspective is that we are an agency of more than 6,000 employees with a budget of more than $300 billion, and trying to figure out how to best use those resources to serve rural America is quite a challenge.

The Office of Rural Health Policy which is the part of the federal enterprise that I direct is responsible for serving as a rural voice in advising the Secretary on rural issues. We have been there since 1987. As Dr. Myers who will speak later often characterized us -- he was my predecessor in this role -- we are the office of unintended consequences because essentially what happened was in 19 -- in the late '80s when we moved to prospective payment, roughly 300 hospitals, small rural hospitals promptly closed, and the Department recognized a need for someone to serve as an advocate for rural communities within HHS. The National Advisory Committee also provides counsel to the Secretary, and we work with them. We have roughly eight programs that are specifically rural focused in our office, and then there are a number of other smaller programs scattered throughout Health and Human Services. Certainly as Mr. hoyer will talk about, and we're mighty glad to see you, by the way, there are a number of Medicare provisions that provide some incremental adjustments to how rural providers are paid, and he'll talk about those, and there are some specific designations for medical underservice in rural communities such as rural health clinics, critical access hospitals. So the Department has a pretty broad agenda and pretty broad effort to serve rural America.

 This is part of -- this is what I want to focus on since we're short on time and there is some other specific information I can share with you later. This administration is very committed to doing a better job of serving rural America.

Secretary Thompson was the secretary of Wisconsin, a large rural state. I don't have to tell you how Texas might be most easily characterized, and certainly the President is from a large rural state, and so there's a great interest in doing a better job in how we serve rural America, and those of us who have been in the administration for a while certainly can feel and it's a palpable difference in how rural issues are played out within the Department. Last summer the Secretary created a department-wide initiative on rural America, both the health and the human services side of the house, and rolled out this initiative in July, and specifically what we are supposed to do and what we have done is look at how our programs serve rural communities, where we have got investments, how much money is going to rural communities and what barriers exist, similar to what you're doing, that are either regulatory, legislative or administrative to doing a better job of serving rural America, and then we are to look at ways to strengthen those programs.

Just sort of as an update, we as a department have completed this activity and have a set of recommendations that are shortly going to the Secretary. There will also be a public report that describes what we found, but if I could characterize it in a nutshell, essentially what we found is that if there are 65,000 employees and over $300 billion in the Department's portfolio, it is almost impossible for the mayor of a small rural community to figure out how to access those resources because it is so complicated. There are more than 225 programs that serve rural America that are HHS programs. How do you figure out which ones would help you satisfy long-term unmet health care needs in your community? So there's recommendations that we make to the Secretary, and subsequently what he will share with rural America will be ways to make it easier to access those resources. We're very excited about that. We've got this report in the can. It should be out shortly.

We also solicited comments from the community at large, and we got over -- we got about 500 comments, and it was interesting, they ranged from, given the fact that Mr. thompson is from Wisconsin, there was one from Wisconsin that said, you go, Tommy, you know, to another comment from Wisconsin that was 26 pages of very discrete recommendations for how to revise Medicare/Medicaid and other policies within the agencies, so they were very helpful and instructive to us. There were 72 of them that specifically looked at the programs that you will be looking at, and we have shared the information with CMS and they're working on those issues.

Just really quickly I want to talk about some of the regulatory issues that are on our plate and things that we are working on, so we're sort of skipping forward to current regulatory issues under HRSA.

 Health Resources and Services Administration is the agency within which my office is located. We manage a grant program called the Rural Hospital Flexibility Grant Program. We call that Flex for obvious reasons. It's a jointly administered program between CMS and our office. CMS works with the small rural hospitals to determine which should be designated as critical access hospitals, which is a payment designation for the smallest of hospitals, and our office provides grants to states to support efforts to determine which hospitals should be critical access hospitals and also to strengthen EMS quality and networking.

A number of other issues facing rural providers are access to capital. It's very difficult to find resources to restore a physical plant that was a Hillburton hospital built back when many of us were born, and so how can you get access to capital, and also, you know, it's important to be able to demonstrate that your bottom line is in the black because no one's going to lend you money if you're a failing institution, so that's certainly a challenge. Our office manages two grant programs: The Outreach and Network Grants. A reauthorization of them is pending in the safety net bill.

It's important that you know that there are two key areas within this administration's budget proposal for FY 2002 and fiscal year 2003, and they are the expansion of the Community Health Centers Program. Many of you have community health centers in your area, in your community. They provide resources and health care for low income folks on a sliding scale. It's a grant program to help that community health center get up and going. The administration's proposal is to significantly increase the number of community health centers and also as a companion piece to increase the number of national health service corps providers who serve in those facilities and other places that have difficulty getting providers.

Telehealth/distance learning is important to this Department, and we're trying to work on ways to increase the diffusion of technology. I have heard the Secretary on a couple of occasions speak in an impassioned way about the fact that if he goes to a rural community, the technology in the Winn-Dixie is better than the technology in the rural hospital. You know, how can we change that? So certainly that's important.

A couple of other quick points before I yield the balance of my time, even though this isn't Washington, D.C., to the fine representative from CMS, about some regulatory issues that we're looking at. We have a work group, and it's just been a great asset to our office. We work with Tom Hoyer and others from CMS, and this has been critically important because it's opened communication between our grantees, the provider groups that we hear from and allowed us to get good, quick, thoughtful feedback from CMS, so that's worked out very well for us.

We also have a Technical Assistance Center that principally focuses on our critical access hospitals but gives us a good way to triage that information, and we find out from our Flex grants what the problems are, where the issues are. This Technical Assistance Center triages that and sends it to Tom, and we work with him to figure out if this is something that's happening to one provider in one community or this is something that's nationwide that we need to address.

The last two areas are new areas of work for us. One is the Mississippi Delta Small Hospital Performance Improvement Initiative which needs an acronym, if anybody wants to come up with one. This is a pilot, and Christy Krozier has a web site outside for you. What we're trying to do is develop essentially what is a public utility for small rural hospitals that anyone who wanted to could go there and get the resources that might help him or her as an administrator of that facility look at improving the bottom line, ways to strengthen work force, and we're piloting it first in the Delta because some of the most vulnerable facilities are there, and hopefully we can take it nationwide.

 The last area that we've got going this year is the SHIP program, Small Hospital Improvement Grant Program, which may help many small rural hospitals address some of the issues that you may hear about today. It provides grants to small hospitals to help with prospective payment system transition, HIPAA and HIPAA compliance and looking at quality. It's $15 million. It's a new program, and if you have to consider 15 million divided by about 1,800 hospitals that might be eligible, it's a small amount of money, but in many rural communities that goes a long way.

So I thank you for the opportunity to address you this morning. I know that you've got lots of interesting speakers following because I've had the pleasure of meeting them, and I'll turn it over to Tom. Thank you.

DR. WOOD: Well done. We'll be anxious to hear the recommendations. We may ask you some specific questions later actually. So Tom, all yours.

MR. HOYER: Thank you, Marcia. I appreciate your attempt to make me even briefer than my usual brief self. One thing I wanted to start out with quickly is to make the point as a starting point that Medicare was enacted as a national program, and it was intended initially to be exactly the same everywhere, and as a result, it was designed with cost reimbursement to pay every cost that occurred every place it occurred and under Part B with reasonable charge reimbursement and literally hundreds of localities in each of which we paid for local medical practice at local prices. There wasn't even a rural accommodation of any kind until 1970 when the law was changed to put in a waiver for nurse staffing for rural hospitals and rural health clinics enacted in 1977.

So we went along that way for quite a while until the big revolution in 1983 when Congress introduced hospital prospective payment, a system intended to be, again, truly national, based on averages, adjusted by geography, only to adjust for wages, so that the same payment would be worth in effect the same amount everywhere it was made.

 Congress discovered fairly quickly that hospital prospective payment wasn't the one size that fit all and began to make legislative changes in it immediately. Among them for rural communities was rural referral centers, sole community hospitals, small rural Medicare dependent hospitals, geographic reclassification, swing beds, essential access community hospitals, which some of you will remember, but I think the major change after that that came in Medicare came with the Balanced Budget Act of '97 containing provisions for prospective payment or fee schedules for virtually every other one of Medicare services, thus, in effect, placing all of our services under administered price systems; again, all broadly designed national programs.

But BBA '97 did something else, and I think it's significant. It was the first statute in my watch, and it's been a 31 year watch, that contained a number of rural provisions. For example, it replaced essential access community hospitals with critical access hospitals, to my mind a much better deal for rural America. There were provisions on rural health clinic payment, authorization of tele- medicine and some other things. Following in BBRA '99 additional rural specific provisions, including a required study by MedPac which came out last year and which I think provided a fairly sound basis for further study of rural issues and further development, further research for the answer of the questions, and finally the Beneficiary Improvement and Protection Act of 2000 which contained more than 20 additional rural specific provisions.

The combination of these three laws signalled a new interest by the Congress in looking at and dealing with rural issues in the context of Medicare. Although these were undeniably provisions relating to payment for services, they were prompted by concerns about the unique nature of rural service delivery and the desire to assure that services could be available in rural areas.

CMS under a previous name took heed of this new congressional intent. The administrator established what was called a rural initiative intended to assure that the service issues of rural America were known to CMS, were considered when the agency made policy or planned operations. This effort was placed in the charge of two senior executives in the Central Office, I was one of them, who were supposed to establish and maintain relationships with the Office of Rural Health Policy, the National World Health Association and other organizations representing rural interests.

For example, I convened a biweekly meeting with the Office of Rural Health Policy with Marcia and Tom Morris, of course, that's a great pleasure, so its staff can present issues to us and we can assemble appropriate CMS staff to brief them and to discuss issues of interest to the rural community; also attend meetings of the National Rural Health Association; actually have an arrangement with Terry Hill of the National Rural Health Resource Center so that he can forward to me questions and issues from the field and receive answers which can then be disseminated through the Resource Center's channels.

The second senior officer was Linda Ruiz, regional administrator in our Seattle office and the leader of a regional consortium. She was charged with establishing relationships in the field, making sure the application of our policies and its impact is also monitored and that feedback from providers is heard at Central Office. She's made countless visits to providers, given valuable technical assistance to them and advice to us.

An example I think of Linda's leadership in this area is the study she inaugurated of the patterns physicians have shown in claiming payment bonuses for practicing in certain shortage areas. I just saw a recent set of results from that study. It indicates a significant number of physicians for one reason or another have failed to claim that additional payment. Some followup action items will be to look for ways to let them know how to do that, that they're entitled to do it and do it.

 In addition to the work that Linda and I do, each of CMS's ten regional offices has a rural health coordinator whose duty it is to stay in touch with these issues and provide an entree into the regional office for rural issues and problems. The coordinators have regular conference calls among themselves and with me to exchange information and best practices so they can provide a uniform comprehensive level of services to their constituents. They are, in fact, just now putting the finishing touches on a rural resource book that they have designed to provide ready access to the law, the regulations and our instructions on programs of interest to rural providers, along with information on who to talk to in Central Office and how to get your questions answered. I know from my own travels and discussions that many of these individuals are quite well known in rural circles in their regions.

Finally, in addition to this effort which I have just described, Tom Scully, our current administrator, has established what he calls an open door process under which there are monthly open telephone calls open to anyone who has a telephone and knows the number. He also holds face-to-face meetings on these issues. There is a specific open door group for rural issues. These meetings are frequently chaired by Tom and also by Tim Trysla who is with us here today.

These efforts have decent results. January 1st we published, CMS put in place a payment system for rehabilitation hospitals which contains a specific and significant adjustment in payment for rural hospitals I believe in part because our own consciousness of the need to look at rural issues caused us to identify that payment differential in our research and to build it into our payment methodology. I think that's a very positive result of this activity. Other examples relate to our open door meetings. I'd like to go through just a few of them. They may come up later anyhow.

Burden is a major issue. MDS was discussed last time, and critical access hospitals had raised with us the issue of collecting the minimum data set when it turned out we were not collecting it from them or using it. They made this request at an open door call, and as a result, we have very recently issued an instruction lifting enforcement of the requirement. So, in fact, these hospitals don't need to collect that data anymore.

Another issue raised at an open door had to do with physicians' assistants. The law requires that they be employees. Our instructions required as well that they not be the owners of the entity that employed them. This created some difficulties in rural areas where there was a shortage of other folks to be the owners, and we have issued an instruction here very recently changing that rule and allowing physician assistants to own the practices for which they work.

Again, there was a comment that the number of CRNA services eligible for pass- through payments in small hospitals was limited unnecessarily, and I understand we will have a counterproposal in the hospital regulation we are hoping to publish at the end of this month. There was an issue with respect to the storage of medical records in rural health clinics where it appeared we had a federal requirement more stringent than the prevailing practice, and again, Tom Scully instructed us with no nonsense to get that changed in a hurry, and I believe we're working on a rule to change it now.

We were asked to modify the critical access hospital rules to allow these hospitals to use more than 15 beds in extraordinary circumstances, for example, in times of an epidemic, and while the law doesn't allow us explicitly to do that, I did want to point out that we do and will continue to rely on states to authorize hospitals to follow these practices in those kind of situations so there is a safety valve of the kind that was requested.

Another suggestion was that we develop a single set of conditions of participation for a critical access hospital that would include the other types of providers, skilled nursing facilities, home health agencies, that they operate so that they could have but one single survey. This is an issue a lot more complex than it would seem because the statutory requirements governing these different providers are sufficiently different to make it almost impossible to combine them. For example, two of those three providers require unannounced surveys. It would be kind of tough to coordinate two unannounced surveys with an announced one at the same time. Nonetheless, while I'm chuckling over it, we're also working on it because we do see the need to see if we can develop some greater efficiency there, and I would at least note that there has been introduced this year in Congress a bill which would authorize a new type of provider in rural areas that would operate a hospital, a home health agency and a SNF, if it wished, all under one banner and all on cost reimbursement. I assume if such legislation is passed, it may well contain provisions that would allow a single set of conditions of participation.

 There are also a number of questions and suggestions related to Medicare cost reports. I know Mr. Fay was recently at a meeting where we discussed that for I believe an entire day, and I must say it was much more exciting at my end of the phone than it was wherever you were, but this is it turns out to be a very complicated issue because of the users of the data and because there are so many different providers that we regulate, but I can assure you that it is a top priority of the administrator and something that my staff is working on busily with MedPac and other stakeholders.

These are I think some recent examples of what CMS has been doing in rural areas with the rural initiative and the open door. I think they demonstrate a real and a significant commitment to rural health policies, and one minute late, I thank you.

DR. WOOD: We need to move fairly quickly to the open door forum since that's on our nationally advertised starting time, and I'm going to let Mr. tim Trysla tell you about what the open door forum is and then run the forum and we'll listen.

MR. TRYSLA: Thank you very much. Chairman Wood and other distinguished members of the task force, on behalf of Tom Scully I want to thank you for this opportunity to talk about a regulatory burden of rural health care providers as well as an open door policy.

CMS understands that rural health care providers have many issues relating to regulatory burden, many of them that Tom Hoyer has raised about, that had been raised on our open door sessions.

If I can just list a few, and then we'll move directly to our open door call which Tom Scully will be -- it's always important not to get in front of your boss -- Tom Scully actually will be chairing. One of the things that Tom raises, the Critical Access Hospital Program has been one of the more successful programs that Congress has put in place, but there has been a tremendous amount of red tape and regulatory concerns about that, and Tom mentioned that the 15 bed limit is something that we want to look at, and I encourage your analysis as well as the CRNA issues of whether you are going to have better flexibility for nurse anesthetists in rural areas.

A couple other things that we're hearing a lot about is obviously the EMTALA issue. When you're dealing with -- if you're in a rural area, obviously you're in the transfer business if you're dealing with critical cases, and one of the other particular problems we have is whether you're going to have a small -- rural hospitals obviously have, traditionally have small medical staffs, and if you only have one surgeon, it's very difficult to keep them on call, and the regulatory burdens that EMTALA does place on rural hospitals is something that we'd encourage you to continue to look at.

Also when you're having specialists travel to only one community for one or two days, it's difficult to, even though you're going to offer those services, to require those as a portion of EMTALA.

Obviously Tom spoke to our continued commitment to lessen the burden on medical cost reports, and another issue that's come to our attention and we'd be interested in your analysis is the dealing with sole community provider hospitals, and many times these are by definition the only providers in a rural area, and one concern that we've had in our like provider status is the fact that you lose your sole community status if you have a like provider in a 35 mile radius. What we're experiencing or hearing about in the field is that specialists, specialty hospitals, commonly three or four bed hospitals that do particular procedures, because they're being paid as an acute bed hospitals are basically threatening that sole community status for many communities. These are by definition large rural hospitals in a very rural area that where they are often the only providers that have a full complex set of services available to rural areas.

Another issue that we want to look at and encourage your analysis of is the ability for rural hospitals to get provider numbers. Many times they will bring in physicians, contract physicians over the weekends and to fill the particular gaps in a rural hospital, and many times those services that they're providing aren't being billed because of the inability to get a provider number. There is a concern whether these physicians are acting as independent contractors or actually employees of a particular staffing company, but we encourage you to look at our 855B process that often takes quite a bit of time for rural hospitals and a lack of reimbursement to be included.

Before we go to the rural hospital I want to highlight the fact that through the leadership of Tom Scully and Secretary Thompson we have taken steps to making CMS more open and accessible to small rural providers. The rural open door sessions is a direct response to the concern of rural hospitals that have neither the time nor the resources to hire a full time lobbyist to help decipher or interpret complicated and inflexible regulations.

With one out of every four Medicare beneficiaries residing in a rural area, CMS is especially sensitive to reducing the regulatory burden of rural providers and increasing the flexibility of and understandability of our programs largely also due through the commitment of Tom Hoyer who obviously brings a tremendous amount of institutional knowledge and helps us as well as a majority of our career staff that participate on these open calls. The rural open door session allows the administrators and senior staff to operate both as advocates for flexibility for providers and beneficiaries but also as a clearinghouse of information. We pride ourselves on hopefully giving straight talk answers to these providers that often are the sole providers in many rural areas.

One of the first issues raised, as Tom noted, was the collection of MDS information in critical access hospitals, and this is one of we believe is a success story of our open doors. To give you a sense of how our open door forum works and to let you know the types of issues that are raised, we have basically allowed you to participate today as I hope active participants of our open door policy. We hope -- we have arranged about a 30 minute call that demonstrates how rural open doors process, and we hope that this will be instructive. I want to thank you for this opportunity to speak with today. It is our hope that our open door session will be the means to continue the work that this Commission has garnished in the same spirit and the commitment that you have shown today. And, Dr. Wood, I thought I'd be quick. Why don't we move to the open door.

DR. WOOD: Please go ahead.

MR. TRYSLA: Okay.

SPEAKER ON TELECONFERENCE: That is rural health clinic operating hours. The concern there was that some surveyors were taking the position that if there was not a clinician in a clinic, the clinic could not let a patient come inside even to wait for an appointment, and that was a concern, say, if there were a snowstorm or something, and it seemed as we looked into this that that was a little bit of an overly restrictive interpretation, and I'm going to ask Steve again if he has anything else to say about that.

SPEAKER ON TELECONFERENCE: There were two issues raised around operating hours on the last couple calls. The one that you're referring to, Tom, the fact that folks were being forced to stand outside instead of being allowed to sit in a waiting room should not be happening. There is nothing that would prohibit giving patients access to a waiting room prior to the actual opening for services by the clinic.

The second issue was one where folks were asking why certain services couldn't be provided before clinic hours and, therefore, before there was the necessary medical professional coverage. That one remains one where our position is that if you're providing a service, the staff coverage policy has to apply. So there's not a way to during these preopening hours to be drawing blood or those sorts of things, but as far as allowing folks in to sit in a waiting room, whether it's very cold, or as it is here today, very hot, there is nothing wrong with allowing folks to sit in a waiting room in advance of the clinic actually opening, and we will try to make sure that the survey agencies all know the sort of separation of those two issues, and if there are folks who have particular problems in particular states around allowing waiting rooms to be open, if they will give me an e-mail or a call, we will try to talk to that survey agency directly.

SPEAKER ON TELECONFERENCE: Great. Thank you very much, Steve. And the last issue that came up with regard to rural health clinics, and this was also faced by a visitor at the last rural health open door forum, and that is that apparently some surveyors were taking the position that the rule that says that a rural health clinic must employ a PA and NP or certified nurse midwife at least 50 percent of the time actually meant, the surveyors were taking the position that employment actually meant employment and that contract employees, i.e., to a 1099 type process, were not permitted, and, Steve, I think what we found on this is that our regs do, in fact, permit contracting with these allied health professionals. Is that a fair way of saying it?

SPEAKER ON TELECONFERENCE: No. I think the regs actually do not permit contracting for those. It is something that we are looking at as we talk about other necessary revisions to the conditions of participation regs. It is something that we are keeping on the table and looking at. There are some small number of providers which where contracting is allowed, if I'm not mistaken, maybe at QHC, and we are looking at whether that same provision should be, but that would have to be a regulatory change.

SPEAKER ON TELECONFERENCE: Okay. Thanks for clarifying that. I misunderstood. I misunderstood that. So that does require a reg change. All right. That was all I had  --.

MR. TRYSLA: Tom Barker.

SPEAKER ON TELECONFERENCE: And I'm now going to turn it over to Tim Trysla.

MR. TRYSLA: I guess am I -- Tom?

SPEAKER ON TELECONFERENCE: Yes.

MR. TRYSLA: Oh, good. We have had the Secretary's Regulatory Task Force that joined us. We encourage your participation. We just ask that you announce your name to the other participants on the call. I know Administrator Scully will be joining us shortly.

For those folks who are on the call this is an opportunity for the Secretary's Regulatory Task Force to observe an open door policy and to observe how we are trying to open the agency up and address some of the regulatory burdens of rural providers, and we would encourage your participation to give you an opportunity to educate us about some of the regulatory burdens that are facing rural providers.

What we usually do on these calls, just as a way of background, is if an issue is raised and we can't answer the question, we actually at the beginning of each call give an overview of what the process is and where we are in that particular, either getting an answer, announcing that answer or setting up, letting people know that we're having meetings. We'll often have subsequent subgroups to break into to work on a particular problem as an outgrowth of issues that are raised on a rural call.

Tom, I wanted to raise the issue of we had heard in the past, and I apologize for joining you late, that you had raised the question on critical access hospitals and whether we're going to move or give critical access hospitals the option of going to an all- inclusive rate, and I'm wondering if you can give me an update on that.

SPEAKER ON TELECONFERENCE: Yeah. The update on that is that we are continuing to hear from a lot of hospitals that their fiscal intermediaries are unable to implement the all- inclusive payment rate option and, as a result, although we've heard that in other states it appears to be working, so we're going to put together a meeting of Central Office staff, the regional offices that are dealing with this, and the fiscal intermediaries in the next couple of weeks. It's scheduled for April 29th to walk through all of those issues, find out what the problems are, find out why some FIs are unable to implement the option and work through; I've got a list of about seven or eight problems, and try to get a handle on those and work through them.

MR. TRYSLA: Also another thing I raised in my testimony is that the inability for rural providers to get a provider number. And, Tony, do you want to comment about some of the difficulties you are facing and see if we can get some response in Baltimore?

MR. FAY: I'll be glad to. One of the issues rural hospitals face, at least the ones -- oh, by the way, my name is Tony Fay, a member of the committee, and I believe I might have brought this issue up about six months or so ago on one of these calls about how physicians in the rural area, you have a lot of temporary physicians that come and go, locum tenens in some cases; in other cases they're just temporary physicians because there is a distinction between locums and temporary physicians and especially in the ED where you may have folks come and go, and they don't always have provider numbers with your carrier. They may be with another carrier, licensed in several states, et cetera, et cetera.

So what happens is you've got to enroll them because typically with the low volumes in a rural area they want the hospital to pay them an hourly rate. They will cover whatever patient load there is there, but the hospital has to bill, but if the physician doesn't have a provider number with that carrier, then they have got to enroll that physician, and the enrollment process can take months. So by then the physician is gone, and if there are followup questions or forms to be signed, it's difficult to find that person.

So that's an issue that at least with the rural hospitals I've worked with has been a real problem, and some of the solutions we've tried that have worked with a moderate degree of success are, let's say, getting Part B numbers for all of the hospitals, setting up a group number. There are limits to doing that. You have got to have at least two physicians in the group, and if you can't get your own medical staff to be a part of that group, you can't have a group number, but if the hospital did have a Part B group number, then that makes the step of at least enrolling that physician into your group a little bit easier.

And then one of the other solutions, because we have seen different speed factors with the different carriers and how fast they are turning around 855s, is to have some expedited form of enrollment, especially for physicians that are already credentialed in the Medicare program. It may not be with your carrier, but it shouldn't take another three or six months to get enrolled with another carrier if they're in good standing with the former carrier.

MR. TRYSLA: This might be something for the Program Integrity or Terry Kabe.

SPEAKER ON TELECONFERENCE: OFM I think. Is Bob Loyal in Baltimore or someone from OFM?

SPEAKER ON TELECONFERENCE: No, Tom.

SPEAKER ON TELECONFERENCE: Well, this is something that our Office of Financial Management has looked at before, and if we either absolutely write this is an issue that has come up in past open door forums, then we are trying to figure out a way to address some concerns that rural providers are having in getting provider numbers, but absolutely we've heard it before.

MR. HOYER: Yeah, Tom. This is Tom Hoyer. I don't know whether we've looked at this before, but since hospitals can bill on behalf of physicians, it may be that's an avenue, as Tony suggests, that we could pursue and see if we could make this work a little faster.

SPEAKER ON TELECONFERENCE: Thanks, Tom.

MR. CUMMINGS: Hi. This is Bruce Cummings, formerly of Maine, now western New York, and I just wanted to put an exclamation point after Tony's suggestion. In my former life we found, particularly when we were setting up a network of rural health clinics, that between getting provider numbers for them, which took four to six months, and then the individual providers who also needed individual provider numbers, that there were tremendous cash flow problems that ensued over a six to 12 month period. My specific suggestion with respect to the 855s is to try to do this on line. Is that something that has been under consideration?

SPEAKER ON TELECONFERENCE: That's a good -- Bruce, did you say?

MR. CUMMINGS: Yes.

SPEAKER ON TELECONFERENCE: Yes. That's a good suggestion. That's something that we'll take a look at. I need -- I wish someone from the Office of Financial Management which assigns provider numbers was on the call in Baltimore, but I will talk to them about it off line, and we'll try to have something for you at the next open door, on the next open door call. Thank you. Tim, are there other issues there, or do you want me to open this up to  --.

MR. TRYSLA: You need to bring the microphone a little bit closer to you.

MS. RYAN: Judith Ryan, member of the Committee. I want to applaud the progress that you have made with the critical access hospitals and the integration and relief of regulatory burden for those services that are a part of the hospital system, but a number of the materials that you have put before the committee this morning speak to the rural continuum of care and to the need for long-term care, and in many cases as you are relieving the regulatory burden from the critical access hospital and its related services, the regulatory burden, both in terms of the documentation, the prospective payment, the inflexibility with regard to swinging beds between categories of patients, remains on the free-standing long-term care provider, and that provider is a critical component of the continuum of services in rural America and in many very small rural cities is the only provider of health care and essentially becomes that care center for the community. So I would just urge that the Task Force look in all of your documents, and as you are describing the critical nature of the community health center and the critical access hospital, that you also look very carefully at the long-term care provider in those rural areas and consider them a part of that same continuum as you are looking at streamlining of regulatory burden.

MR. TRYSLA: I appreciate the comment. I think that is a legislative issue that the Congress may be taking up. I know it's been considered in the past. Unfortunately, we have limited amount of ability to do that administratively, but we certainly will look at it.

MS. RYAN: One of the real dilemmas we see, even in terms of telehealth, is that the various pieces of legislation will include schools, hospitals, physician clinics, and because the long-term care provider is not specifically named but lumped under the descriptive that talks about and other not-for- profit entities, is specifically excluded from those same benefits and consultative assistants, and I just think it could be addressed sweepingly if you'd simply describe the continuum each time.

MR. TRYSLA: Right. I appreciate that. Tom, why don't we -- with Dr. Wood -- oh, we have another one.

DR. WOOD: Miss Gigliotti.

MS. GIGLIOTTI: Lisa Gigliotti from the State of Michigan, and I just want to also comment on some of the same issues that have been mentioned but really to thank all of you in the State of Michigan. We're more than 50 percent rural, and we have a unique situation with islands and people living on islands having inclement weather, and some of the telemedicine and telehealth grants have made a tremendous difference, and I just want to give you an example to maybe carry with you.

When I first visited one of the islands that has a quite large population, we went to their medical clinic, and one of the arms of their x-ray machine was held together with duct tape, and you know, you have those joke books "101 Things to do With Duct Tape." I never thought I would see one on an x -ray. They have received a grant, telemedicine grant, and now are able to contact a hospital emergency room on the mainland for somebody, let's say, who is having a heart attack and there's a snowstorm so they can't fly or snowmobile or get people to the mainland in any other way, so a tremendous difference, and thank you, and something I haven't heard people mention is the cost of accreditation for some of these folks from some of the critical access hospitals that have such a small budget it's really becoming difficult for them. Thank you.

SPEAKER ON TELECONFERENCE: Thank you very much.

MR. TRYSLA: One thing I did, I don't know if it's a problem in Michigan, but one thing we have been brought to our attention is getting certifications and having a single certification process for a rural hospital, and it's something that we've been looking at an approach. For instance, in Montana a distinguished interest -- we don't have a lot of authority to -- we don't have a lot of authority in our demonstration authority to actually do that in the certification process, but we actually want to work with a particular part of the country in a regional office to actually develop that type of procedure, and we'd certainly want to do that in places.

MS. GIGLIOTTI: Yeah, that would be helpful. Thank you.

DR. WOOD: This is an issue for later today actually on our discussions, the multiple review issue, the multiple accreditation/multiple review issue, but that's good. Mr. cummings?

MR. CUMMINGS: Yeah, Bruce Cummings again. Coming formerly from a critical access hospital and one who echoed some of the comments my colleagues have made about what an important development this is for the rural landscape and also appreciate some of the improvements that have been made since the  --.

 SPEAKER ON TELECONFERENCE: Tim, is it possible to get closer to the mic?

MR. CUMMINGS: -- Also appreciate some of the improvements that have been made to the program, and in the last two Congressional sessions one of the big problems still facing critical access hospitals, however, are contractor induced cash flow problems. As you know, fiscally you have up to three years to close and settle reports. So for these small fragile entities that are ostensibly cost based, that can result and does result, at least in my former hospital, with tremendous cash flow problems. This is a matter that this committee has been documented and will be advanced on to the Secretary, but I wonder if this has already come up in your bailiwick as already being addressed through other channels.

MR. TRYSLA: You know, if I can speak to that, and Tom Barker, I know you've got -- we've heard about this quite a bit. I mean to some extent we are only as good as our worst contractor, and I think that's something that was a cold reality when I first took this job. The cash flow problems that are facing the critical access hospital are real, and what we're trying to do through these processes is actually get to sit down between the head office, the Baltimore office and the contractors to simply see if there is something we can do to expedite it to get more clarification and to move the process along, and also we feel that contractor reform that builds some competition and moves these contracts away from cost basis and puts incentives for these type of performance standards will be a drastic improvement to how we can perform our jobs, and we are working with Congress to make sure that that is a reality. The bill actually has passed the House and is being considered in the Senate, but we feel that contractor reform is one way of putting, bringing a little competition to some of our contractors we think would help and improve some of the performance.

Tom, I would suggest that we take a call from the field.

SPEAKER ON TELECONFERENCE: Yes. Operator, could you go ahead and open up the call to the people on line, please.

THE OPERATOR: Your first question comes from Mary Peterson.

MS. PETERSON: Hello. I appreciate the updates that you gave on the privacy and the operating hours and the contract employees. In concern with the rural health clinic operating hours, I really appreciate that. They don't have to any longer stand outside in the elements, but somebody, I don't know what it takes, they need to get real with how medicine is delivered today. It doesn't start when a provider walks in the door. There needs to be things done. Patients need to be taken to a room. They need to have some vitals updated, you know, and all that could be done before that provider arrives. He's there for a limited amount of time, and yet nothing can start until he puts, he or she puts her foot in the door. That's not the way medicine is delivered today, and it's kind of unrealistic to put rural health clinics to the task to try to only operate when the provider walks in the door.

SPEAKER ON TELECONFERENCE: Steve, do you want to say anything about that?

SPEAKER ON TELECONFERENCE: The only thing I can sort of repeat on that one, that is one of the regulatory requirements. We are keeping track of all of the suggestions of ways we might amend those regulations, but there is not a, if you would, quick fix, and that we are moving forward to get consideration, you know, from internally policy makers on which of these we will consider and which of them we have heard the issue.

MS. PETERSON: Okay. And we appreciate that because we have to always look at these regulations. They can't be set in stone as things evolve in the delivery of health care. You know, delivery modes and methods have changed, and our regulations have to be proactive in meeting that or we won't survive. The same thing with the contract employee issue. Thank you.

SPEAKER ON TELECONFERENCE: Thanks, Mary. Appreciate it. Operator, another question on the line.

THE OPERATOR: Yes, sir. Your next question comes from Mark Lynn.

MR. LYNN: Yes, hi. My name's Mark Lynn from Healthcare Business Specialists in Chattanooga, Tennessee. I've got two questions. The first one is on the Medicare payer, the Medicare secondary payer form. Is -- I think we recently got some relief, that in the past we had to do this eight page form every time a patient came to a hospital, but I don't know if that relief applies to rural health clinics, which right now we're being told that every time a patient comes we have to fill out that eight page form every visit. I think now the hospitals can do it once every 90 days. So that's my first question is does that relief apply to rural health clinics? And my second question is what are the requirements for an off-campus provider-based rural health clinic to provide advanced beneficiary notices to patients? The way the questionnaire reads that you send in to apply to be provider based it looks like you almost have to give an ABM for every single Medicare patient that comes to your clinic.

SPEAKER ON TELECONFERENCE: On the first issue, David, is there someone in Baltimore who can talk about the MSP form?

SPEAKER ON TELECONFERENCE: This is David Wargo. Mark, let me bring this issue up to my manager, and I'll get right back to you.

MR. LYNN: Okay. Thanks.

MR. WARGO: Okay?

MR. LYNN: No problem.

MR. BARKER: Mark, what's your e-mail? Did you say your name is Mark Lantham?

MR. LYNN: Mark Lynn, L-Y-N-N.

MR. BARKER: L-Y-M -- .

MR. LYNN: N, as in Nancy.

MR. BARKER: Oh, N-N, okay. What's your e-mail?

MR. LYNN: MRLHBS@aol.com. 

MR. BARKER: And let me give you my e-mail; tbarker@cms.hhs.gov. We'll be in touch by e-mail on the 1st. What about the question on ABNs, David?

 MR. WARGO: I'm not the expert in this area, but my manager and some of my colleagues are, and as it relates to all provider types, and I'm going to have to research this and talk to my colleagues and managers to find out what we can do as it relates to REPs.

MR. BARKER: Okay. So, Mark, it sounds like we'll follow up with you, and on the next call we will get an answer for everybody. We'll let everyone know what the answer is, because those questions obviously concern all rural health providers, not just yours.

MR. LYNN: Thank you.

MR. BARKER: Thanks, Mark. Tim, I know  --.

MR. TRYSLA: I think he's fading out. If I could, just 30 seconds to close. As you can tell, the issues that are raised are very diverse. We're only as good as the Baltimore staff, and to be quite frank, you know, as an appointee for the agency, we hope that these open doors will continue beyond our leadership and really becomes an institutional part of this agency.

We try to bring as many of the senior staff and managers in place at these or responses and we ask for an agenda so that we will have people in the room in order to do it. We can get hit by any question that will be raised, and sometimes we just don't have the expertise in the room, but what we do do is give a commitment to getting a straight answer to some of these providers, and as you can tell, those were three providers operating throughout the country that weren't the Washington folks. We strongly encourage associations to bring their membership to ask their day-to-day operations in order to open up our agency, and we hope again that this is a continuation of your commitment today. Thank you.

DR. WOOD: Tim, I appreciate your help in facilitating this. I've already heard a couple specific things that need to be fixed right away, and I must tell you my own personal thoughts about the operating hours. Coming from Minnesota where it's either extremely hot or it's extremely cold. There are only two seasons in Minnesota: July and winter. And so, and as a person who travels to do outreach, I'm pretty sure that we're probably in violation of the rule all the time because by the time I get there I know that the patients are not being asked to stand or wait outside until I show up. So I'm actually quite surprised to find out about this rule today myself. I'm hoping that by the end of this meeting anyway there will be really one strong recommendation that it be fixed, and since it's regulatory then we trust that it can be fixed pretty quickly.

MR. TRYSLA: We also want to, we want to make sure there is plenty of flexibility because we want to make sure that certain tests, blood tests and others, can be, so that when the doctor does show up, you actually have the procedures, diagnostics done, and that's the real talents that we have whether we can actually do services prior to someone being on site, and we are working to make sure, actually documenting all the recommendations we have, and they're quite diverse on this particular issue, and we are working --.

DR. WOOD: Well, I guess my only concern about that, I mean, to be quite frank, is why should CMS specify the way that somebody runs their clinic or their hours of operation? I mean, what in Heaven's name is there anything about what CMS should be doing about that sort of thing? There's no other regulatory agency or payer that tells me how I run my clinic, that is whether I, what hours I open it, when I open it, who has to be in the clinic when the patients are there.

MR. HOYER: Dr. Wood, let me just add a piece of information there. I think the issue for us is not so much that we care when the doors are open but the services that are provided by the person who isn't the physician are covered by Medicare as services incident to a physician service where traditionally there's no payment if there isn't a physician there. So I think the regulations were built on that premise, and I think that what Tim is telling you is that we're doing some quick legal analysis to see what we might be able to do in this situation, but it's not -- I mean, the main issue is things like the laboratory services performed by the nurses are in the Medicare statute only covered when a physician is present. So there's a real statutory difficulty to get through there.

DR. WOOD: Well, that's a good clarification, Tom. I appreciate actually sharing that because it's one thing that we can consider, but it still is quite a striking factor in terms of whether that patient's actually in the building or not for billing. Does that mean that for billing purposes I have to specify that the provider was in the building when the patient was and the test was done, or do I need to define that the provider actually had something to do with simply ordering the procedure and interpreting the results, which to me should be plenty sufficient? We need to --.

I have actually overstepped my bounds as chairman. I apologize. I apologize to the committee for monopolizing the conversation here, but it is quite striking again from the perspective if somebody actually does this in a rural setting.

MR. HOYER: I promise to bore you at the break.

DR. WOOD: What we should do actually, what I'd like to do is to change the schedule slightly and take a ten minute break so we can get ready for the next panel, and then we'll come back to the panel actually. So we will do a ten minute break and come back at 10:15. There is one thing to announce.

MS. SCHMIDT: There's a demonstration outside of one of the things that Marcia described to you by Kristi Crosser. It's the Rural Hospital Performance Improvement Project which was what she described as a way of getting technical assistance out to rural areas. The web site's outside, and there will be people out there to describe it to you if you want to look at that during the break. Thanks.

 (Recess taken.)

DR. WOOD: We have with us today several members of groups that have to deal with these regulations on a daily basis, and I mentioned earlier that our objective is to hear from the field the impact of some of these regulations and some specific suggestions for solutions.

So for our panel this morning on provider and beneficiary perspectives we have several individuals, and I'm not sure that they know which order they're going to go in, but it looks like they're all prepared, so if I mix up the order, it won't be a big surprise to any of them.

At any rate, I am very happy to welcome Mr. robert Harman who is the CEO of Grant Memorial Hospital in Petersburg, West Virginia; Tom Size, Executive Director, Rural Wisconsin Cooperative, who is from Sauk City, Wisconsin; Dr. Wayne Myers here from Maine; and Dr. Mona Counts who is the clinical director of the Primary Care Center of Mt. Morris in Mt. Morris, Pennsylvania; and Mr. raymond Bahl who is Apprise Counselor also from Pennsylvania.

Actually Mr. harman is listed first, and so you win the lottery today. Each of you, by the way, if you look toward the end of the table, there is a light system that will remind you, and I will use that to try to gently guide you to conclude when the time is finished. So you get seven minutes on a green light, one on a yellow.

MR. HARMAN: Mr. chairman, I appreciate the opportunity to meet with you this morning. I have never taken an Evelyn Wood speed reading course, but today I wish I had, and when you look through all this material, you probably wish you had, too.

As Dr. Wood indicated, I'm with Grant Memorial Hospital in Petersburg, West Virginia. We're a county owned facility licensed for 61 beds and staffing 56 beds. We have an average daily census of about 35 patients of which 10 or 12 are skilled nursing patients.

I'd like to talk a little bit about the issues that you have put in front of us, but I'd also like to speak briefly to the issues of access to care in rural areas and some legislative support issues that rural hospitals are needing.

It's my belief that regulatory issues go in lock step with financial issues, and each influences the other, and I'd be remiss if I didn't give you some background on the financial status of hospitals in West Virginia.

Since 1997 the operating margins of 19 small rural hospitals in West Virginia have gone from a minus .3 percent to a minus 6.8 percent, and for critical access hospitals in our state, which there are 11, those margins have gone from a minus 8.7 percent to a minus 10.1 percent, and our rural hospitals have had some decline in the last four years, and since 1997 we have lost $5.2 million in the delivery of patient care, and while everything else is going up in price, including your supplies and labor and most assuredly malpractice insurance, the regulatory issues continue to confront us.

We offer obstetrical services to a five county area. We're the only facility in that five county area that provides those services. We deliver about 300 babies a year, and it's a service that's a loss leader because there's no money in that service. We have a home health service that serves three counties and it's currently providing us a small margin of profit.

Now, it's my understanding that CMS believes that there's enough profit in the home health care program nationally that a 15 percent cut is needed in October. For us that's very problematic. With that 15 percent cut it's very doubtful that we can continue our service in a profitable way, and we've already eliminated a homemaker program in order to sustain that service.

Access to care in West Virginia is a critical issue. West Virginia ranks highest in the nation in the percentage of population enrolled in Medicare, sixth in percentage receiving Medicaid, and fourteenth in population not covered by health insurance. Over half of our population is dependent upon federal aid or publicly funded programs or charity care, and West Virginia ranks first in the nation for death rate for cancer and COPD and second for deaths due to heart disease and diabetes. Rural hospitals are a lynch pin and safety net, not only in our state, but across the country.

With respect to the regulatory issues over the last five years, health care regulations have gone through, as you are well aware, numerous changes affecting a multitude of providers and requiring vast amounts of expenditures in order to comply. All these requirements are being implemented against a backdrop of rising costs, an emerging malpractice crisis and diminishing margins.

I really can't adequately express to you the magnitude of the pressure that these issues are putting on rural hospitals across the country, but most of you are aware of this. The development and implementation of regulations affecting operations in reimbursement generally are made with good intent, and the solution to a regulatory overload is sometimes very difficult to identify. Now, it's been suggested that there are some general and program specific solutions that include the following:

An impact analysis of regulatory policy changes for rural providers should be required prior to their adoption or implementation.

Regulations should be released by governmental agencies in an incremental and coordinated fashion so as not to overpower hospital personnel or other rural health providers.

The cost of implementing specific regulations should be factored into the Medicare payment updates.

OASIS and MDS requirements should be limited to the data that is necessary to determine the payment level for patient care.

With respect to HIPAA, the support is needed for the replacement of redundant written consent with written acknowledgment in the privacy rule.

Also supporting the permitting of hospitals to share nonfacially identifiable information for quality and other important purposes.

 Again, support the exemption of incidental disclosures of patient information under HIPAA and support the elimination of additional business associate requirements.

In the printed testimony you will see some additional discussion and some additional comments as to some of those factors that are involved with business associate agreements.

With respect to access to care, there are a number of issues that are government policy issues and rules issues that I think impact access to rural care. First of these is the J-1 visa. Now, in West Virginia 44 of 55 counties are designated as medically underserved, and many hospitals and rural health clinics and other providers depend on the J-1 program for physician services. USDA's recent decision to cease granting J-1 waivers as an interested governmental agency undermines the public's health in underserved areas across the country, not just in West Virginia.

I urge you to assist in perhaps getting reinstated the USDA's policy of granting J-1 visas or to find some alternative that can look at the I think 82 existing applications for processing and to find some way of processing future applications.

Ambulance services are also an important part of access to care in rural areas. We provide a first responder ambulance service out of our emergency department, and with the advent of prospective or fee-based reimbursement and ambulance program we're facing with an increasing deficit. We currently lose $100,000 in this program and are projecting $190,000 loss with a full implementation of the fee-based program.

Even with the rural rate adjustment it's problematic that we can keep this program going and maintain access to service. In order to continue the provision of EMS services in rural areas, I'd suggest that we retain the current cost-based methodology for rural ambulance providers until we can see if there's another alternative out there. Medical malpractice insurance coverage is very problematic and is affecting access in West Virginia. We've had 45 physicians who have left the state based on the malpractice issue, and I know there's physicians in my community who 18 months ago would not even consider discussing this issue, but with the upcoming round of renewals, if premiums go up as dramatic as ours have at the hospital, they may vote with their feet, and even though this issue is not necessarily in the arena of regulations, I would encourage your support for national solutions in the area of tort reform that can bring some semblance of balance for hospitals, providers and the public.

In your printed testimony you will also see some discussion on legislation to support rural health care. This includes relief for low volume hospitals which Mr. Size will speak to and has been instrumental in developing a Rural Community Hospital Assistance Act. There's discussion on the PPS wage index issue, market basket update and Medicare DSH cap.

It's important I think for rural providers that rural health policy initiatives promoted by HHS are supported by the payment system and by regulations that stand under CMS and other agencies. Continued access to care in rural areas is threatened, and we need to protect and ensure that that access is there.

On behalf of the other rural hospitals in West Virginia, I express our sincere appreciation for your work and for your support to rural health care providers. Thank you.

DR. WOOD: Thank you, Mr. harman. Mr. Size.

MR. SIZE: Great. They haven't done the light yet, so I've got extra time. Thanks. I appreciate the opportunity to be here today. I have had the opportunity to know Secretary Thompson since shortly after we started the co-op in 1979. We're about 28 rural hospitals. All are under 50 except two which are under 100. They are very diversified. In other words, they do a lot more than just traditional inpatient care.

The Secretary's actually home area district before he was Governor was Elroy which is kind of in the heart of our cooperative service area. So he's long shown us a true appreciation of rural health. So there's no doubt in my mind that as Secretary that he's made this a priority. So we're really excited to be here today, really excited to see and hear a lot of the good work that's already started in the department.

I have got written testimony. I'm just going to try to hit some of the highlights of six kind of theme areas of recommendation. Before I do that though there's a number of what I heard as very favorable comments on the single certification process, and I guess I wanted to bring to everyone's attention that actually that then Governor Thompson signed a law, the Rural Medical Center bill back in around '94 or early '95 that was very much a state counterpart to exactly that issue. Obviously at that time it was put in the hopes of developing some sort of demonstration pilot process on the federal side, but we tried to get the state ready in terms of recognition that rural hospitals do a lot more than just hospital, and they don't have a bunch of separate corporations. We tend to be one corporation, one campus, and having more than just actually survey process, it gets to the regs of how wide a hallway is for a nursing home versus a hospital versus a clinic, and it's all one building. That would be -- I know Wisconsin. I can't speak for anybody in Wisconsin other than myself, but I know that's something we'd certainly like to work with the feds, and we have a lot of the facilitating state statutes already passed under Governor Thompson's leadership.

Into my main remarks, the first thing is probably the most important thing, and that's to really support what I heard Tom and Tim say is there is really a new federal rural collaboration, and it's easy for them to say it. They have to say it, but I'm from the field; I can say whatever I want, and it's real. They really are making a difference. I guess I would really challenge them, as I heard Tim say, institutionalize the process because this issue of regulatory reform, these are like dragon's teeth. You guys can be the most brilliant people, work for three years, and yet would be right for about one month and there will be a whole new crop of this stuff coming up.

So the reality is you really have to institutionalize the process that you've so well begun with the open door policy, with the rural reps at the region. We work with Craig Chesmar, and he's terrific; we call, we get answers, and that's new. I've been in this business a long time, and I know it's new.

Office of Rural Health is a terrific resource, and my guess is I have seen a real substantive increase in the department-wide access of the expertise in that office. I would commend you to keep doing that. So really my first and biggest point is keep up the good work, extend it and institutionalize it because it's the process as much as anything.

The second point I want to make is continue your work of developing a better understanding of rural realities in context. What's particularly frustrating to be here for such a short period of time, when you're talking rural, we really have a desire to comment and need to comment on every piece of the American healthcare system because every component has a rural piece to it that's a little bit different. We obviously can't do that, but we hope you do take the time to read our collective written testimony.

One very good example comes from Dr. Ira Moscovice who's a friend at the University of Minnesota, and the paper is not out yet, but I have talked a lot with him about it, and he's looking at patient safety quality issues which are kind of one of the hot issues today, and he's not going to come out and say that rural has more or less but that we're different, and what he's really able to show I think rather convincingly that high volume, large bureaucracies tend to create one kind of management and regulatory challenge while low volume, more personal settings create another set of management regulatory processes. It's not that one should be regulated more or less or one has more problems or less problems. It's the fact that we're different kinds of settings, and we tend to make different kinds of mistakes. So I think it's a really wonderful kind of template for the fact that rural is different, and we're not asking for special treatment; just understand how we're different.

In that light some of the specific recommendations I'd quickly highlight would be make sure you always disaggregate the data. The Department's doing a better job now than they have historically done, but there is still I think more opportunities. As Bob mentioned, I had on my list, too, and we didn't talk, do a rural impact analysis on sensitive, vulnerable providers before you proceed with new regulations. Another one is invest in rural best practices. The Department has a lot of investment in AHQR, quality and research and stuff like that that too often the research happens in settings that are more convenient to the researchers and that have less problem with the low volume statistical issues that rural settings bring. Nonetheless, we have a need for best practices equivalent to any of the larger settings.

 Third one is just a plug. Bob set the stage for it. At least think through, understand why we're working hard to get the Rural Community Hospital Assistance Act passed. Fundamentally what it means is PPS doesn't work, hasn't worked for the smaller rural hospitals, and basically we've run out of time to do the band-aid solutions. I had the opportunity back in 1985, not '95, '85, to testify in Washington when PPS designed. At that time we were saying it did not make sense to cross the Wisconsin River from Dane County into Sauk County and see the wage index drop 20 percent. Labor markets don't work that way, but the response I got from the then less politically sensitive HCFA rep was all models have their boundary problems, get used to it, live with it.

We then a couple weeks later Carolyne Davis, then administrator, said we'll get back to you in a couple of months on what's better wage policy, and we're kind of still waiting, and I think -- so what we're saying now is for the smaller hospitals I don't think you'll ever tweak PPS well enough to make it work. The implication of that and part of the current system, and Tom Hefty is a friend from Wisconsin and I wish he was here because I think he'd support this, the reason the system works is we cost shift like hell. In rural we cost shift about 33 percent compared to urban cost shifting 13 percent, and I think in the good old days of single digit health insurance premium indicate increases we can get away with that. It's clear to me with the demographic trends we're facing business has about had it. They're no longer going to subsidize the rural shortfall due to federal underpaying.

Longstanding rural biases, three of my favorites are please do not water down the occupational mix adjustment. That's already in law. It's now within the Department to do it. I know there's folks actively trying to dissuade the Department that it's just too cumbersome to get the data, but if we don't get the data, we're not going to make the adjustment, and it's a long overdue technical adjustment. There's a lot of understanding, not consensus, that the percent of the DRG that receives the wage index adjustment is too high. That needs to be lower. That can be done by the Department.

We need to look at the hospital wage index use and reclassification system. I have outlined some problems with it in my testimony, but I see the yellow light, so I'm going to move on.

Rural work force, Bob mentioned that, as well. J-1 visa, big problem here. I mean, the reality is it would be a real shame for all the good stuff the Department's doing on rural to be wiped out by a failure to address this issue. Recognize it. Right now USDA is kind of in the spotlight, but I also believe there's some proposals floating around to get them reinstating the program and then move it over as soon as you can to the Department, and we would fully support that.

My last comment would just be on HIPAA, to stand firm I think on the wise improvements that were recently proposed in the final rule. I'm convinced from the field that our communities, our families, our patients, would go crazy if they actually had to experience what the original regs and the original amount of paperwork that they would be involved in. They care about privacy, but it's not a fettish with them. It's not an extreme thing which I think some of the advocates who have dominated the debate at the national level have made it, so I really affirm the Department's I think more common sense practical approach.

I would also say there's some other remarks, that famous 25-page document, I think it was only ten pages, is on our web site and I've done a link to that, if it's not already in your packet. Thank you.

DR. WOOD: Thank you. Dr. Myers.

DR. MYERS: Thank you very much, Chairman Wood. At various times in my checkered career I've been a rural pediatrician, ran outreach programs for academic medical centers, preceded Dr. Brand in the Federal Office of Rural Health Policy. I've always had trouble holding jobs. Right now I raise vegetables in rural Maine, and I mention that simply because I don't have a particular vested sector in the things we're talking about today. Consequently, I'll also be sort of jumping around, and I apologize for that.

I assumed one reason I was asked to come is as a physician that was once a practitioner talking to colleagues and saying what can be fixed through regulation that makes you crazy, and one of the things that kept bubbling up was a very small item that ought to be fixable. You have to have consistency between a diagnosis and the lab work that gets ordered, and that makes excellent sense, and there were abuses that this resolved, but there are some situations where it really gets in the way that could be fixed. Just by waiving the requirement or exempting some very basic things like a blood count.

When I was talking to Dr. Tom Dean in Wessington Springs, South Dakota, he was there with a fellow with a swollen, red big toe that happened to be diabetic and he probably had gout, and he thought so, but you can't get a blood count, so he had to say, well, I think he's got cellulitis of the foot so he could get a white count so that he didn't risk mismanaging his infection and costing him his forefoot in an amputation, and I wouldn't really weaken that whole mechanism. I'd simply say there are a few tests that are so fundamental that you ought to waive the item of consistency between diagnosis and labwork.

Another, as my good friend Mr. hoyer says, everybody loves to beat up on the fiscal intermediaries, but anything that can be done to promote consistency within their behavior. You would think that a given provider only works with one fiscal intermediary, and that doesn't work that well. Continuing with Dr. Westington, he runs -- he's medical director in a federally qualified health center. His FQHC bills go to one fiscal intermediary. The lab bills go to another fiscal intermediary in a different state, and the bills from the hospital where he sends patients and which owns his FQHC go to a third FI. They have different requirements as to what diagnoses they will tolerate. So he says he kind of feels like the, you know, the rat that keeps punching buttons. He keeps punching in diagnoses, and eventually it spits out a pellet and everything gets paid for, but it makes the system look silly, and it chews up an awful lot of staff time. So the two points there are waiving some requirements on basic lab work and doing all that could possibly be done to promote consistency among the fiscal intermediaries.

I want to jump now to the idea of rural health work force and the J-1s, and I would certainly accede to the fact that we can reorganize our health work force and put much more responsibility into, say, nurse practitioners in the ambulatory area and put docs in the rural hospitals, and that might work fine, but it's not the system we're dealing with at the moment. Some things you might be aware of.

Rural Policy Research Institute is coming out with a very good seven or eight page resource document on the J-1 visa issue, not so much opinion, just how many people flow through different mechanisms, and I'd commend that to you. That should be on the web by the end of the week. It's a piece of work that the Federal Office of Rural Health Policy promoted, and Dr. Keith Mueller is the lead author.

You should be aware that there are 50 percent more J-1 visa waiver docs in shortage areas than there are National Health Service Corps docs. You should be aware that we place about 370 National Health Service Corps physicians compared to 600 J-1s. You might be aware that the Bureau of Primary Health Care which is becoming our flagship for safety net stuff says they're going to have an annual vacancy rate of 1,100. They described this in terms of primary care physicians. I don't know if they really thought carefully about how else they might meet that requirement, but at this point we're only graduating about 5,000 primary care physicians in this country a year. You're going to need 1,100 of them in the community health centers.

I just want you to understand that the flip answer of, well, we'll just expand the National Health Service Corps ain't necessarily going to work. I'm not sure that there's that many people standing in line to work in the health centers. A corollary is that the community health center demand on National Health Service Corps work force has pretty much closed down the flow from that mechanism into, let's say, the private practice option, and that's why you have the Conrad State 20 Program.

In terms of community health centers, there's a relatively empty wedge that starts in Montana and the Dakotas and tapers down to Oklahoma, and these are their sparsely populated states. The community health center model has worked remarkably well in areas of relatively high population density and where minority populations are sizeable. It's been hard to make that model work in areas where sheer distance, large proportions of elderly, transportation difficulties are the limiting factors in the performance of the system.

Within the community health center legislation is a provision that says that sparsely populated areas can get a special waiver from the Secretary of issues regarding the governing board and regarding the provision of the full required scope of service by a community health center. I don't know how long that provision has been extant, but those regs haven't really been overhauled since 1987, so they've probably been there a long time, yet the Bureau says that nobody has ever asked for one of those waivers. Funny that we at least realize that there's now over a billion dollars on that stump every year, and that is becoming the way we seem to say we're going to deal with care of the uninsured, so I want to come back to that at the very end.

In fact, I guess I am at the very end. It's not infrequent for Congress to say, well, we can't deal with this, the variation in the rural stuff; we're going to opt out, give that and just say the Secretary may make special exceptions in the case of areas of low population density. That was true in some of the Balanced Budget Act stuff on health professions education. It's true in the 330 clinic, and nobody ever exercises that, and the reason is that there's multiple layers between somebody that wants to give services out in the sticks and the person that has the authority to deal with it in D.C. in the Primary Care Association's primary care office, in the state, the regional office, and they're all busy, and then within the agency there's people busy writing regs. The last thing that they're interested in is publicizing the idea that you don't really have to do this.

So I would encourage you to consider a recommendation that alerts the assistant secretary for legislation to be on the lookout for such provisos and gives the Federal Office of Rural Health Policy standing to be the liaison in working out the parameters for such waivers and using their mechanisms across the country to let the constituents know that there is the possibility of special consideration. As it is, when you walk into an agency to talk to them about how they're writing their regs for rural, it's pretty clear that with the exception of CMS under Mr. hoyer's leadership, you're often viewed as, you know, that's all very nice, but you're minding our business, so get out of the way. I would give the federal office standing to intervene on behalf of the rural constituents, and I'll close with that. Thank you very much.

DR. WOOD: Thank you. Dr. Counts.

DR. COUNTS: Can you all hear me? Can everybody hear me? I guess you can now. No, I didn't prompt him. I want you all to know that. I am a nurse practitioner, and the doctor is piled high and deep, so that we're real clear on everything, and I do run a clinical practice in rural Pennsylvania. I also teach for Penn State University, and I work with their family nurse practitioner program, and I was very pleased with Dr. Brand's statements because what we have done is that based on the premise that if you educate people in their homes or in their home towns or in their local areas, you not only have culturally specific care, but they tend to stay there, and, in fact, all of our graduates have. And what we do is we have an outreach program to 15 different campuses. We use interactive television, and that's how we've been developing these practitioners.

It's very interesting to teach a class and have a bank of TVs in front of you. They still can't sleep, see, because you could see them all, but at any rate, it's not enough just to educate these practitioners, and you all can look at the written comments that I have distributed. We really have to look at how are they utilized. And there are four or five major points that I'd like to make.

One is recognition of nurse practitioners as primary care providers. We have such inconsistencies that it becomes very difficult. We started the practice in Mt. Morris in 1994. We were a break-even practice, weren't making a lot of money, but you could pay the bills, and then HMOs came in, and when the HMOs started, some recognized nurse practitioners; others do not, and it is a strong request that we have that -- I'll actually read the recommendation; that it's recommended that attention needs to be given to the structure of Medicaid managed care programs, both in regulation and in legislation, at the state and national levels so that they do not prohibit the provision of primary care services by nurse practitioner and the recognition of nurse practitioners as primary care providers.

We are the only providers in our area. We have approximately 5,000 patients. If they are in an HMO that does not recognize us, patients will still come, they'll bring us zucchini and canned goods. We can't pay the electric bills with it though.

The second point that I'd like to make is Medicare Part A and Part B. Nurse practitioners in the Balanced Budget Act of 1997 they did recognize nurse practitioners as provider of Part B services. We need to expand that to include the appropriate things from Part A, specifically as hospice and home health care. As it currently stands, we have to go find our collaborating physician which is approximately 40 miles away, he's available by telephone but not by signature, in order to put somebody on home health care or to get them started with hospice.

The recommendation is that NPs be authorized for Part A. Some people have suggested that this could be just rules, not necessarily legislation, but I'm not sure regarding that.

The fourth one is credentialing, and I would like to support all your statements. We have been credentialed as Medicare providers since 1994, have my own U pin number, and where I have admitting privileges happens to be in another state. Unbeknownst to me because prior to that they had just changed the medical staff laws so that I could bill under my name and not incident to and that type of thing, now I have to reapply for another Medicare fiscal intermediary, and by the time it gets processed through there I probably will not be able to do timely billing kind of things. So the recommendation is that we really look at how can we have a universal kind of application. Is there some way that we can get them all together? We almost have to hire somebody just to keep up with the application process for the multiple insurance companies.

And the last point that I'd really like to bring out to all of you is the community confidence. When you see small rural communities that want to mobilize and start taking care of their own, so to speak, they don't have the skills, the resources, the efforts to reach out and get those programs that are available. When we first started in this community, they organized as a 501(C)(3). There are no grant writers. There's no other resources. They have providers that are nurse practitioners that are doing provision of care. So reaching out to these communities of how do you get started with some of these efforts, you know, how do you help them, and the recommendation is that we not only look at the outreach and the networking grants, but how do we get some technical assistance to these smaller communities to help them even to begin to access the resources that are available.

The people we serve at the primary care center, we have almost, I think it's about 40 percent of our patients are uninsured, period. They're small rural communities. They're economically disadvantaged. We are probably the northernmost county that is distressed Appalachian community. They don't show up on the work force rolls as being unemployed because they've been unemployed so long that they're no longer on the rolls. So even though it may say that our unemployment rate's about 7.9, it's probably closer to 25 percent. It's coal mining area.

What has happened with the new programs that have been put through is that we have these safety nets. This clinic is serving as a safety net for these people in this rural community. However, with the impact of the HMOs and how Medicare and Medicaid have awarded these monies they then go to HMOs and we still will not be able to treat them unless we're recognized as PCPs, and with that I will share my written comments, and any questions I'll be glad to take, since I'm early.

DR. WOOD: Very good.

MR. BAHL: I'm here today as a representative of the Commonwealth of Pennsylvania Apprise program. The Pennsylvania Department of Aging to help older Pennsylvanians created the Apprise program, and this program assists persons approaching age 65 or seniors confused about their coverage, and we help them make informed decisions to understand their health options and what decisions they can make that is best for them.

Apprise counselors are especially trained volunteers. We do not represent any insurance company, nor are we paid any commissions. As I have stated, we are all volunteers. We answer questions regarding Medicare, Medicaid, MediGap, long-term health care and the Medical Plus Choices including the Medicare HMOs. We help seniors understand their Medicare benefits and what services are covered under the Parts A and B. Apprise counselors also can work with the Medicare appeal process and the appeal paperwork. We inform regarding the eligibility of prescription drug programs and in Pennsylvania in applying for the Pennsylvania PACE program. Counselors advise on programs that can pay the Part B premiums for those who qualify for this program.

I have been a counselor for eight years, about the time this program started in Pennsylvania, and I work under the Allegheny County Department of Aging from whom I take direction and training, along with direction and training from the Commonwealth of Pennsylvania. I'm also most fortunate to have the facilities and the support of the Jefferson Regional Hospital here in Western Pennsylvania who provide me with office space, appointment scheduling, some limited clerical and other kinds of support.

In the years that I have been privileged to be an Apprise counselor I estimated I have interviewed hundreds of seniors. I have heard and listened to their urgent concerns regarding medical coverage and in some cases the lack of medical coverage. I have heard of coverage being denied, coverage being dropped, premiums being increased and bills being sent to them and not understood. However, the many persons I have counseled are not aware of the problems that you providers have and for the cutting of the red tape that impedes them from providing the proper care to Medicare recipients. Many have no idea of regulatory provisions, nor are they concerned with them.

I have mentioned the common everyday complaints, and most of these are rather easily settled and I hope to the satisfaction of the client, but the main complaint, concern and most understood points are three, and they are prescriptions, prescriptions and prescriptions.

The normal question regarding prescriptions are, why doesn't Medicare cover prescriptions? Why doesn't the federal government, Republican or Democratic, pass meaningful prescription coverage? Why do persons with Medicaid receive full prescription coverage at no cost to them but those of us who may be one dollar over the income limits receive no prescription benefits? Why can we go to Canada to obtain prescriptions at 40, 50, 60 percent less? Why can't our government control these costs as Canada does? And why do pharmaceutical companies offer discounts to some? Why don't they offer discounts to all people on Medicare?

The common complaint is people on lower income for whatever reason or for whatever program get every benefit and every break possible. Those who are able or fortunate enough to have an income over set guidelines are forgotten, but any money over these guidelines is quickly exhausted by prescription cost.

There are other concerns other than prescriptions. I have found that some MediGap providers or their representatives are not fully explaining the difference between issue age and attained age contracts. As you know, in attained age contracts they produce larger than normal or expected rate increases, and then we have the Medicare summary notice. You know this is not a bill? But you may be responsible for. I feel a concentrated effort must be made to educate the Medicare recipients on this form, and also why do the Part B premiums happen to go up each year just about what my social security increases? And we also need additional vision and dental care under Medicare. And why must I even purchase a supplemental policy? Shouldn't Medicare take care of all my medical costs even if it requires an additional premium on my part?

I hope my eight years of helping seniors with their Medicare concerns and presenting these concerns to you is helpful, and I certainly thank you for this opportunity.

DR. WOOD: Thank you very much. We have some time for committee questions and comments. Anybody? Dr. Crosby.

DR. CROSBY: I was wondering if -- well, first I want to thank you for an excellent presentation, and I was wondering if Dr. Counts and Mr. harman might comment on telemedicine and the referral line, MDTV and the Mars line which West Virginia University offers as an aid to rural physicians who don't have access in their communities to specialists.

 DR. COUNTS: We have used -- we don't have the equipment for telemedicine. However, we have used the consult line both from the University of Pittsburgh because I rely on my physician colleagues for when we have questions which we call, but we don't have the equipment to have the interactive telemedicine, but we have used the Mars line from West Virginia and the lines from specifically Children's and Allegheny.

MR. HARMAN: We do have the MDTV equipment in our hospital, and we have had it from the initiation of the program at the university. It's proven I think to be very helpful in the area of education, particularly for staff, and to some degree for physicians. It does carry the grand rounds programs that are available at the university for the med students, although those generally occur at 9 a.m. in the morning or at 10 a.m. when most physicians are in their offices seeing patients, so from that perspective it's not very helpful. We have used it for some patient consultations with the university physicians, although I must say that, quite frankly, it's not used to the extent that I think it could be used, and it could be beneficial to some of our physicians and patients. I don't know the reason for that.

I know the physicians at the university have done extensive education with physicians on my staff and I'm sure at other facilities also, but whether it's a product of not having enough time to come present patients to the consultant that's on the other end of the line or not I'm just not sure, but it has not been used to an extent that it could be used.

DR. WOOD: Dr. Dennis, a question?

DR. DENNIS: Yes. Can you hear me? Just to comment further on the physicians that aren't using the telemedicine services. Do you think that there are issues related to either turf or loss of patients to other physicians outside your community, or do you think that it is a lack of time and participation? In other words, is there some other issue that seems to be unrelated to access that could be involved? And then the other is in the case of emergencies is there availability of telemedicine services, not just for elective consultation?

MR. HARMAN: In response to your first statement, I don't think it has any relationship to the potential of losing patients either to the university or any other physician. I really truly think it's a matter of time and location and being able to work out the process of presenting your patient to the consult physician.

We've done rheumatology, I mean they have done rheumatology clinics through that mechanism, and we have had several patients who have done that. They have gone from the process early on where the physician had to be there to present the patient to the position where you can have a nurse there to present the patient as long as you have got the physician statements, the documentation necessary to present the patient adequately. So I don't think that there's a process there that physicians are reluctant to use it because of loss of patients, at least not in my facility. What was the  other --.

DR. DENNIS: Emergencies, access to telemedicine for emergency consultations.

MR. HARMAN: Oh, yes. We have been able to use that on a couple of occasions. We initially had the equipment set up in our emergency room, and I know there were a couple of instances where they had particularly fracture cases that they were evaluating, and they did call the university and ask for the radiologist on call to look at the films, and they did transmit the films over the MDTV program to get an evaluation from the radiologist there because currently we have radiology coverage at our hospital 8 to 4, and we have teleradiography available now which we didn't have then, but it is available for emergency cases.

DR. WOOD: Jack.

MR. ROVNER: Thank you. Actually I have three very hopefully brief questions. One on the telemedicine that we have heard about. Do you find the interstate issues is a barrier for you in terms of you can cross state lines in doing any of your telemedicine access?

MR. HARMAN: I can't really speak to that very well because currently, you know, we're only hooked in to the university setup. We had initially -- there is a telemedicine site in Martinsburg, West Virginia, which is in the far end of the eastern panhandle, and it is set up actually I believe at the VA Hospital, but it doesn't cross state lines as far as I know. Winchester, Virginia is a very large system that's about 70, 80 miles from us. We had talked at one time about the possibility of being table to tie those physicians in because it's a major referral base for us, but that never did occur, and I think perhaps there may be a barrier, you know, crossing state lines, but I really honestly can't speak to that.

MR. ROVNER: Let me change focus a little. I'd like to get comment. The fraud and abuse laws have some issues, some safe harbors to allow or ease recruiting in rural areas, underserved areas and so forth, and I'd like to know if you can comment on how well those safe harbors are serving your needs in recruiting physicians to underserved areas.

MR. SIZE: You know, with my testimony both earlier, Matrix and this, I did a lot of talking with our members in general with other colleagues, and it didn't surface as an issue. Maybe I missed it, but it wasn't something that came up.

MR. ROVNER: That would suggest that perhaps the safe harbors are working.

MR. SIZE: That's what I would take from it, but I'm not an expert.

MR. ROVNER: The third question I have actually is for Mr. harman. I looked at your testimony and there's something -- I was kind of jumping the gun for HIPAA for tomorrow, but you're here today. In your testimony on the business associates you have a comment that of suggesting that HHS should consider development of a certification program for suppliers, essentially business associates that would eliminate the need for the agreements. I'm wondering if you could explain what you have in mind.

 MR. HARMAN: I can't to any great degree, and I haven't done a lot of work in looking at the business associate agreements. I just know that in the context of looking at those agreements you get overwhelmed with the prospect of having to have a business associate agreement with anyone and everyone with which you do business, and it's a very complicated thing, and I just think it really needs to be evaluated and looked at so that some of those requirements for business associate agreements need to be changed, and Tim.

MR. SIZE: Yeah. I actually would totally support I think the implication behind the question. We have two task forces running the co-op to try to help our hospitals get up to speed, and I sat in on a meeting a couple weeks ago, and that issue came up very strongly supported that if there were some governmental role in certifying, it could save a lot of us a lot of work.

MR. ROVNER: Do you have any idea what you mean by certifying? I'm trying to understand what your vision is of what the certification of a supplier by the government would be.

MR. SIZE: I think it would be an attestation similar to what we would have to separately contract for. Why should all of us be having these various contracts with the same party? Couldn't the government just look once and then say, okay, the principles are in place that otherwise we have to show are in place through contracts.

DR. WOOD: Multiple review in reverse.

MR. ROVNER: Yeah. That's what I'm trying to grasp. You're sort of suggesting that -- let me see if I got it right, that suppliers of the health care industry who would be business associates, there would be a program where they could go to the HHS and get certified as though they were voluntarily submitting to the privacy rules which would eliminate with the current process which is essentially because of limitation in their authority that they require you, the covered entity, to flow that through.

 MR. SIZE: Right.

MR. ROVNER: Very interesting. Thank you.

DR. WOOD: Mr. Bloom.

MR. BLOOM: Thank you. I wanted to thank Mr. bahl for his testimony. I really appreciate -- first of all, thank you for volunteering for the program that you're doing. I think it's vitally important and also for highlighting the issue of people that do fall through the cracks where they are not poor enough to qualify for Medicaid but not rich enough to afford their health care services. I'm one of those people. I have been on social security disability and will be for the rest of my life since 1994, and you would think it's a fortunate thing that I have a nice size social security check, but it's actually a burden, and given the fact that my MediGap premiums are going up at the rate they are, I will probably be eligible for Medicaid in the not-too- distant future, but I really appreciate you highlighting that issue because it really is -- I can imagine the frustration people have when they're ten dollars over the limit and then they can't afford prescription drugs; they're one dollar over the limit and they can't afford, you know, $100 prescriptions or, you know, usually most seniors I think take six prescriptions in Medicare is the average number, and I really appreciate bringing that up. I think it's a very important issue, and I appreciate the work you do. So I hear you.

MR. BAHL: Thank you.

DR. WOOD: Mr. Fay.

MR. FAY: Thank you, Mr. chairman. Jack already asked my two questions, but I would like to respond to them.

DR. WOOD: Just what you wanted.

MR. FAY: We operate rural hospitals in multiple states, and we do have a big issue with telemedicine across state lines. We invested significant amounts of money a couple years ago in company-wide digital radiography and bought the digital imaging equipment and all of that, and that's been great and wonderful. It saves a lot of money on film, and you've got digital images and so forth, but the problem we had is if the radiologist is in Nashville and the patient is in Arizona, you've got a problem, and we never came to a conclusion. We got conflicting advice from the carriers. We realized there were state law issues, and to make a long story short we never resolved the problem. We still use the digital radiography equipment, and we do teleradiology within state lines, but we have been unable to successfully do that across state lines, and then your second question dealt with the physician recruiting safe harbor. We do recruit a lot of physicians. That's one of the reasons we're invited in the communities typically to partner with or require the hospitals as we are able to recruit a lot of physicians, and that's been very helpful because obviously we do have to guarantee incomes and do certain other things to allow a physician to ramp up his or her practice over a period of two to three years. Thank you.

DR. WOOD: I will go to Bill and then Judith Ryan. Bill Toby.

 MR. TOBY: Mr. chairman, I have just one question and one response to Mr. Size, but one question to Mr. harman and Dr. Counts. I'd just like to get your response to a question as to whether or not you think that Medicare's telemedicine services policy is reasonable or how is it working in respect to your ability to do telemedicine? I've looked at some of the claims, and there are not that many. So I'm just wondering how is it working?

MR. SIZE: Yeah. I'm rarely humble enough to say I don't have an opinion, but this might be one of those situations. In Wisconsin I think because we are blessed with a relatively good competitive environment between some of our tertiary coordinated systems that we have a tradition of probably an unusually large number of outreach clinics, the visiting specialist, and I think that's probably reduced the demand for the development of more sophisticated telemedicine systems.

So, again, it's one of those issues I just haven't heard people talk about, and to the best of my knowledge at least in the co-op I don't think it's a major tool. It's not to say maybe there aren't opportunities there, but I think for the aforementioned reason it's just something that doesn't happen a lot in my area. So I'm really not qualified to respond.

DR. COUNTS: And from my standpoint we have no equipment, so it's a moot point. We don't have telemedicine. We do on the campuses, the Penn State campuses, do have interactive television, but that's not patient care. The thing that we also have is we have convinced specialists to come down and hold clinics one day a week within access which has addressed many of the needs. We needed dental care desperately and couldn't get a dentist, so we got the chorus teacher to marry one, and so now the practice is -- so I mean there are other creative ways to address it.

MR. TOBY: Well, as a former acting administrator of HCFA, I'd like to also offer a response to Mr. Size's assertion that PPS does not work in rural areas. That was one of your four points I think you made, and you said it didn't work in rural areas, PPS, and I thought notwithstanding Dr. Marcia Brand's reminding us that there's no single definition of rural, that at the exception of PPS in 1983 there was understanding that PPS didn't fit all sizes, and as a result, there was an exclusion. All the US territories were excluded, all the hospitals in the US territories were excluded. For example, in the Virgin Islands even today they're on cost payment. So consequently there was an understanding of the uniqueness of areas, and if one had looked from a policy point of view at rural hospitals, they could have been excluded at the beginning.

MR. SIZE: Yeah. I guess if I may just respond quickly. I have myself and many colleagues to blame. I really at that point in time there was a very small development of a rural advocacy concept. I mean when we started the co-op, the concept that rural hospitals had that different reality was actually new, and we were almost criticized; well, what do you mean, what rural, I don't understand what you're talking about. I mean we were asleep at the switch when the system got developed, so we share ownership for the problem, and we've been playing catch-up ever since.

DR. WOOD: Mr. myers, did you want to make a comment?

DR. MYERS: This is kind of gratuitous, but I am always a little concerned when a conversation about rural health finds itself focusing on telehealth, and I got sensitized in the early '90s when you'd make the rounds on the Hill and you'd say what are you going to be doing about rural health this here, and say, well, we're putting a lot of energy into telemedicine. Well, it just doesn't matter that much for a variety of reasons.

Practitioners, be they physician or nurse practitioner, are acculturated from the word go to be able to describe situations over the phone, and our real telemedicine system consists of telephones. There were studies in the '70s on the Navajo reservation that indicated with the exception of a few conditions like what's my rash, the ability to see the patient as opposed to talk to the patient or talk about the patient, did not add a great deal of substance to the accuracy of the conclusions reached, although the person wanting the consult felt more confident that their situation had been seen.

So the part I guess I'm rising to is please don't think that you're going to get around the work force problems by putting a television unit scattered around the country.

DR. COUNTS: I'd just like to support his answer because one of the things about doing culturally specific care is the eyeball to eyeball, although one of the things that I find happening in our practices because we all now are internet connected, I have patients e-mailing me with their symptoms, and so if you truly know your patient base population, that may be enough information to reach the right outcome, but, you know, it may have all kinds of implications, but the need for the face-to-face interaction will never go away.

DR. WOOD: I want to give Ms. Ryan the last question, and then we need to move on to public comment.

MS. RYAN: I'm so struck by how much of our conversation would suggest that both the statutes and regulations and payment systems are driving the institutional delivery of the care, around the medical episode of care and how much of our discussion has focused on that, and yet about 85 percent of the long-term care is now provided by the community and through informal systems and focused on function and ability to manage your own self care and chronic disease.

If you use, for example, this discussion about telehealth, where we're using it best in long-term care is with our nursing staff working with residents who are about to be admitted into nursing facilities or trying to avoid that and working with them through very low tech ways in which we can work with the resident and family to manage their own health, and I just think that somehow we need to be sure that we don't devise regulatory systems such that we drive an institutional model of care because we're not going to be able to afford it.

DR. WOOD: We need to move to public comment. I'd like to invite Dr. Paul Smith to begin the comment, and while he is coming to the microphone, again, we will give each of you five minutes to make your comments, and we're really interested in your suggestions for solutions.

MR. SMITH: Thank you, Dr. Wood. I appreciate the honorary degree, but I'm not a physician.

Ladies and gentlemen, I'm Paul Smith. I'm a former durable medical equipment provider forced into retirement by the Region C durable medical equipment regional carrier. The fact that I'm making an 18-hour round trip to appear for five minutes hopefully conveys the depth of the passion from which I speak.

The spring of 1999 brought our company's fourth carrier audit in less than two years, and shortly thereafter they illegally suspended our payments. Despite borrowing the equity in my home and emptying my retirement account, we had to close the business a year later. They took my livelihood and my 12 employees' jobs and my retirement, left me heavily in debt and almost ruined my health. Unknown to us they finished the audit in September of '99 and turned the case over to the FBI. Eight months later the FBI finally called me, interviewed me under false pretenses for two hours, then informed me the carrier was alleging Medicare fraud.

After another year and a half we were finally told in November of last year the US Attorney is declining prosecution. During this same time frame I personally know three other DME providers with almost identical situations all now out of business.

In recent weeks we have discovered our situation was apparently predicated on eight of 29 audit questionnaires returned from prescribing physicians stating they had not ordered the equipment we had delivered. The nurse or records clerk apparently failed to find the order in the patient records, and the carrier, despite having the originals, never copied the physician but only sent the questionnaire.

Last month upon receiving these questionnaires identifying the specifics for the first time, in less than three weeks I was able to confirm in writing from each of the eight physicians that they did, indeed, write the order. If the auditors had had minimal competency and interest in hearing the truth, surely they could have discovered in six months what I did in three weeks. The individual documentation is in your packets. It looks like this (indicating).

In the meantime and ironically being out of business has afforded me an opportunity to realize a lifetime dream of running for the US Congress in North Carolina's new 13th District. Of course, health care is a critical issue in the campaign, and if successful, I look forward to working with my friend Deputy Secretary Allen and others in the Department to help implement this Committee's recommendations and bring some sanity, honesty and reasonableness to the intermediary carrier system.

Recommendations for change: Medicare needs to clearly define and determine who makes medical necessity decisions. The provider should not be penalized for relying on the physician's certification. Individual providers I know have literally been assessed millions of dollars in recoupment based on small audit samples on claims up to five years old. Medical necessity is poorly defined, and there is frequently room for honest disagreement. The various DMERCs each have their own standards. This is the area most frequently used by the DMERCs going after providers who did not and should not, according to the OIG, have any role in the medical necessity decision. The provider should not be expected to countermand the physician's determination. Most of the problems with medical necessity here would go away if Medicare had a prior approval procedure for power wheelchairs. Problems and disagreements arising in audits years later, frequently after the patient is deceased, could be resolved before the provider has to risk some clerk making an arbitrary and questionable decision that could ruin him financially.

Medicaid currently requires a prior approval process. Medicare offers one for motorized scooters but not power wheelchairs. Unnecessary and illogical differences between the way motorized scooters and motorized wheelchairs are handled create many problems and cost the system millions of dollars per year in unnecessary expense. Physical qualifying requirements are very similar, and most people qualifying for one would qualify for the other. The power chairs are much more expensive, but many people would even prefer the scooters, yet Medicare pushes these people toward the more expensive equipment and then accuses the providers of code chasing. To be specific, the allowable on a scooter is kept to about 500 to $1,000 under the actual cost, but the allowable for the more expensive power wheelchair generally covers the whole thing. In other words, with a scooter the patient will typically have a sizeable out- of-pocket but none with a wheelchair.

A certificate of medical necessity for the scooter must be filled out by a specialist while the patient's personal physician can do the certification on the motorized wheelchair. Can anybody here guess why most patients go for the motorized wheelchair?

And finally, of all the matters I'm presenting the one that troubles me the most is and has been the attitude of the carrier toward me and others that they have brutalized. From management down they are frequently arrogant, condescending and confrontational toward providers. They see themselves as the ultimate authority on matters of policy and interpretation and, indeed, are unless the provider has the time and resources to battle them through the appeals process. It is far too easy for them to ignore accused providers, delay the process, deny justice and put honest providers out of business simply by making unfounded secret allegations that the provider cannot defend until and unless he is able to discover what the problem is. Thank you.

 DR. WOOD: Thank you. Ms. Phyllis Fredland.

MS. FREDLAND: Hello. My name is Phyllis Fredland. I am an executive director of a small home health agency in McKees Rocks, Pennsylvania, which is a suburb of Pittsburgh. We are licensed and have been in existence for approximately 17 and a half years.

Since October of 2000 when OASIS went into effect we have seen the cost of visits skyrocket due to the requirements of OASIS. Our expenses have increased by more than 25 percent due to OASIS, and we believe the cost of running a home health agency will further increase with the implementation of HIPAA.

OASIS is an incomplete patient assessment program that so far has no clinical value for home health agencies. All the information in this assessment was information we were required to obtain already but in a format that does not allow the expression of the uniqueness of the patient.

To complete one OASIS form takes approximately 40 minutes and it's duplicate work. For my nursing staff it has added approximately five hours of useless paperwork per 60-day period per patient. So if a nurse sees ten patients in a week, it would be 25 hours of extra work per month. This means each nurse can make 25 fewer visits per month, and today we have a nursing shortage.

In addition, many nurses have left the field because of the extra paperwork. They don't want to do it. Of all the questions on OASIS, only 27 out of approximately 100 are used to determine a home health agency's payment for the patient under the prospective payment system, PPS. The other 75 questions CMS uses for their adverse event, case mix, OBQI and OPQM reports. At our agency we have found that these reports are valueless. Thus far they have told us nothing that we don't already know. All they have done is confirm that we see an older and sicker patient than the average patient home health agencies see.

The following solutions are being offered. We have agencies do only the 27 questions on OASIS that are needed for payment under PPS. Pay home health agencies for doing OASIS. CMS is proposing a 15 percent cut to home health agencies' payments in October. Instead we feel that the payment to home health agencies should be increased.

Another problem for home health agencies is the way your payments under PPS are structured. The system does not adequately pay for patients who require large amounts of care like your insulin dependent diabetics or on daily dressings. These patients are called outlyers. We have found that PPS pays only half the cost of caring for these patients. Because of this substantial loss, home health agencies find that they cannot care for those patients, and the patient is admitted to other facilities: Hospitals, skilled nursing facilities, at higher cost. Most of the time this cost is picked up by us, taxpayers.

We suggest the following solution: CMS eliminate the $2,300 threshold for an outlyer. This means that you cannot get payment, additional payment until you have gone $2,300 beyond what the HHRG is. We also believe that there needs to be an added question on OASIS called daily visits which like the therapy question would raise your payment. Under Medicare the intermediaries send additional documentation requests, these are called ADRs commonly, to check on the necessity of care that agencies give. Since the advent of OASIS the intermediaries have requested that we send them printouts of OASIS. This costs the home health agency more than $50 per ADR. This includes staff time, printing cost and mailing cost. The following is suggested as a solution: OASIS is sent to the state via the internet and then via the internet on to the intermediaries. Therefore, we feel that the added $50 cost could be avoided by having the intermediaries get the OASIS information via the internet. In addition, we believe that if the intermediaries were required to examine OASIS prior to sending an ADR, over 50 percent of the ADRs would not need to be sent.

DR. WOOD: Could I ask you to wrap up, please.

MS. FREDLAND: This would help avoid the delay on ADRs. We also believe that ADR payments should be made differently than they are. I have given you a copy of what I'm reading from now and talking about. I hope you will take the time because there are a number of other things that should go on. Thank you.

DR. WOOD: Thank you. Next to Dr. Robert Urban.

DR. URBAN: Thank you for having me. I'm Dr. Robert Urban. I'm a physician who has been in a largely rural family practice for 46 years. I'm currently the President of the Association of American Physicians and Surgeons. It's an organization of physicians, a national organization, that's dedicated to the preservation of private practice. It's an advocacy group for patients' rights.

During that nearly half century I have experienced a vast spectrum of change in health care; for instance, from having and needing no malpractice insurance during the early '50s to an almost unmanageable situation today regarding the law. I have practiced essentially without specialists and high tech during the first half of my career. I've delivered over 1,500 babies, performed numerous surgeries, provided orthopedic care with only a fluoroscope in the early days, and I've made tens of thousands of house calls, but during this same time period I have seen patient and physician autonomy disappear as government and managed care rules and regulations have eroded and decimated the private practice of medicine. Unfortunately, the patients of America are the ones who have suffered most from these changes.

Today I would like to address one aspect of health care which I think could benefit from real regulatory reform. Of all the current regulatory reform issues which we have to deal with today, in my opinion none of them is as egregious as the regulations involving the medical savings account process and concept. The overly restrictive regulations which limit the use and efficacy of the medical savings account imposed by the HIPAA statute of 1996 are destroying a concept which is the embodiment of our American heritage of individual freedom, in this case the freedom to purchase health care as one sees fit and not as someone else chooses for you.

A recent Zogby poll on the public's opinion for medical savings account found that 89 percent agree that all Americans should have the option of choosing to purchase a medical savings account. 81 percent agree that all employers should have the option of offering their employees a medical savings account. This includes 84 percent of blacks, 80 percent of Hispanics, 80 percent of Democrats and 84 percent of Republicans. Further, the latest figures from the United States Treasury Department showed that in the year 2000 42 percent of those who purchased medical savings accounts were previously uninsured for six months or more, and these are the ones that we are supposed to be so concerned about.

For 35 years we have been trying to control health care costs. We have been unsuccessful because our efforts have not addressed the main reason for escalating health spending, and that is Americans are spending other people's money when they purchase health care. Milton Friedman, Nobel laureate economist, recently again expressed two observations which I think are paramount in explaining both the high level of health care spending and the extreme dissatisfaction with that spending. First, he said almost all payments to date to physicians and other health care providers are made by a third party, not the patient. That is an insurance company, government agency or employer. Second, he said that nobody spends somebody else's money as wisely or frugally as he spends his own. Dr. Friedman estimated the third party payment caused real per capita health spending to be double what it would have been otherwise in 1997. He then went on to say that the majority of this increase, 57 percent, is due to third party payment that resulted when federal wage controls and tax policy converged to create our current employer-based health insurance system. Having created the problem with third party payment, how can the government correct it? Dr. Friedman recommended medical savings accounts. However, the current medical savings account pilot program which is currently legal today thanks to HIPAA of '96 is neither widely available nor flexible. With its mass of restrictive regulations, it is designed to fail.

HIPAA imposed unnecessary complexity, restricted the scope of the medical savings account project and created medical savings account design problems. The federal MSA law took a simple health insurance idea and turned it into a marketer's nightmare. HIPAA provisions that allowed medical savings accounts for a limited number of participants within a narrowly defined population for a relatively short period of time made many potential providers reluctant to develop medical savings account programs and market the product to the general public. Design flaws in the federal regulations hampered the ability of medical savings account marketers, we're primarily talking here about insurance companies, to customize features of their products to the needs of individual employers.

DR. WOOD: Could you wrap up, please.

DR. URBAN: Yes. What is needed to make medical savings accounts work to control costs is a sincere effort to fix the obvious flaws of the HIPAA program, HIPAA and medical savings account program.

Necessary regulatory reforms should include the following points. Number one, permanent authorization of tax qualified medical savings account insurance options. The December Sunset provision should be eliminated. Availability should be permanent.

Number two, there should be no limitations on the number of medical savings accounts that could be established. As you know, there are only 750,000 allowed at this time.

Number three, eligibility should be extended to all businesses and workers. Every American who desires a medical savings account should be eligible.

Number four, there should be more flexible deductible ranges. The amount of the deduction allowed for contributions to MSAs should be increased to 100 percent of the deductible.

Number five, the permitted deductibles under high deductible plans should be reduced from $1,500 in the case of individuals to $1,000 and from $3,000 in the case of couples or families to $2,000.

Six, both employees and employers should be permitted to contribute to medical savings accounts; and seven, state regulatory barriers to MSAs should be removed.

To summarize, by removing the largely arbitrary and unfair regulatory restrictions, MSAs would become a marketable product for insurance and financial institutions and would thus become available to all Americans. Spending our own money would encourage our citizens to spend their health care dollars more wisely and frugally. Furthermore, the amount of paperwork required by our current system would be largely eliminated thus saving enormous amounts of money, reducing the overall cost of health care. I thank you very much for having the opportunity to present.

DR. WOOD: Thank you. Dr. James Pendleton.

DR. PENDLETON: My name is Jim Pendleton. I'm a retired psychiatrist. I practiced solo psychiatry for 31 years in the Philadelphia area and drove out here last night to give some thoughts, and I appreciate very much this opportunity.

My purpose is to show the importance of increasing market function in Medicare. I will describe what I see as problems in the Medicare system that would be corrected by offering Medicare recipients a medical savings account type choice.

In 1965 doctors in hospitals took care of the American people for 5.6 percent of the Gross National Product. It's now about 14 percent. The Medicare law passed that year stated that the government had no jurisdiction over the conduct, administration or reimbursement of physicians, hospitals or other medical entities. Since that time we have been saddled with price controls, increasing regulation, paperwork and punishments. Referring to the punishment, HIPAA prescribes up to one year in prison plus $5,000 fine for a doctor who is convicted of embezzling less than $100.

Increasing regulation, paperwork and punishments are inevitable. They are the only means that the government has to protect taxpayer money because the system replaces patient's money where the patient would watch how it was being spent for allocation to the doctor for his services.

Introducing the patient's money through MSAs causes patients and doctors to cooperate in balancing value and cost. In contrast, the bounty system that Medicare has instituted requires a patient to go through the difficulties, the personal difficulties of informing on his doctor for an unsure distant reward. Patients with MSAs inspect the doctor's spending and become prudent shoppers and gatekeepers. The patient's money induces the control and would allow significantly decreased need for regulation, paperwork and punishment.

MSAs were to be instituted in the Medicare Plus Choice program, but because of so many regulations published so close to the deadline no insurance company proposed a plan. Medicare should provide a plan in which patients benefit from economizing at the highest levels of expenditure. Companies have developed such plans for their own use. I worked on a concept in which the patient will get a rebate if the hospitalization costs less than the average for an area. If the cost is higher than that average, the patient would pay a decreasing percentage copayment as the more the cost overran the regional average. A simple method allows the patient to know prices ahead of time.

If patients could pass on money to their heirs from a medical savings account, many would likely continue to consider cost during the last illness. The idea of old people conjures up people who are feeble, incompetent and defenseless. I'm 71 years old, and my friends who are older than I am know full well the value of money. The sharpest people will likely choose the MSA option. Five or six of them a day coming through a doctor's office will do a far better job of policing that doctor's practice than government or insurance inspectors can. I saw two psychiatrists close their practices because they failed to provide what patients felt was of value. One went to work for a hospital, and the other went to work for an HMO, but the patients had made a decision refuting the idea that patients can't make the decisions that are involved in medical care.

I want to correct some false statements in articles written by people planning for health care that make it sound as though the market is either vicious or can't work in medical care. The market including in medicine can't be run on greed. To stay in practice a doctor had better base his practice on service to patients as good or better than the competitors, and there is competition in medicine; every similar doctor within reach of the patient or nursing function, whatever. The patient, not the doctor, is the consumer and has marked influence on the doctor's decision.

DR. WOOD: Can you wrap up, please.

DR. PENDLETON: Yes, I will. I have three lines for my recommendation. They're short. Hospitals don't run doctors' practices more efficiently than doctors do. The market is far more democratic than our political system because people vote on every transaction with their money. Managed care is not a true market operation and doesn't prove that the market failed.

My recommendations: That CMS form a task force to develop a medical savings account plan that would reward the patient financially for economizing in health care at all levels of expenditure. The committee should include significant representation of clinicians who know the setting of private practice because they practice it. Those clinicians should favor MSAs and understand how the market can work to balance quality and cost in health care. Thank you.

DR. WOOD: Miss Kay Bishirjian.

MS. BISHIRJIAN: Good morning. My name is Kay Bishirjian, and I am presenting on behalf of the American Dietetic Association. Today I want to discuss nutrition and its importance for citizens in rural America.

As a member of the American Dietetic Association, I am speaking on behalf of our nation's largest organization of food and nutrition professionals. We are dedicated to serving the public through the promotion of optimal nutritional health and well being. Our work is based on information drawn from peer- reviewed nutrition research and resources representing significant scientific consensus.

All Americans require adequate nutrition to maintain health, prevent chronic disease related to diet and treat existing disease. However, rural America offers some unique challenges due to distance, geography and limited availability of the wide array of health care options. Isolated individuals frequently are more susceptible to poor control of chronic diet related disease states due to the difficulty at accessing available medical and/or nutritional care.

Nutrition screening can identify people at increased risk for poor nutritional status and facilitate intervention to improve health. A good example of the importance of nutrition screening comes from the Nevada Division of Aging Services. They started a pilot program in January 2001. The program provides 120 at- risk seniors with nutrition screening and intervention that includes medical nutrition therapy, additional meals and dietary supplements. In one instance a homebound older gentleman was screened after spending two weeks in the hospital to treat a sore on his foot. The healing process was impaired by poorly controlled diabetes. Medical nutrition therapy provided by a registered dietician along with home delivered meals through the Meals on Wheels program helped this man to control his diabetes, resulting in the rapid healing of his foot wound. He also was able to lose ten pounds. This was accomplished with medical nutrition therapy that included nutrition counseling related to meal planning, food preparation and diet therapy, and the total cost of this nutrition intervention was $350, far less than the cost of even one day in a hospital, not to mention the additional cost to health care and support services had the man's foot been amputated.

Although this hearing is not directly about the Older Americans Act, this example is appropriate since a large percentage of our elderly population live in rural areas, and the meals programs and other nutrition-related services offered through the Administration on Aging are vital in maintaining their nutritional health and well being. These programs do play a significant role. Between 80 and 90 percent of the participants have incomes below 200 percent of the DHHS poverty level which is twice the rate for the overall elderly population in the United States.

Approximately two-thirds of the participants are either overweight or underweight placing them at increased risk for nutrition and health problems. Those receiving home delivered meals have more than twice as many physical impairment compared to the generally elderly population.

Rural people must be able to access dietician/physician teams who can determine what best meets their needs and who can teach them how to apply that knowledge to their daily lives. Unfortunately, citizens in the rural areas often have limited access to qualified health professionals capable of providing information and guidance needed to make proper nutrition a priority. Programs like the National Health Service Corps which encourages health professionals to practice in underserved rural areas could help bridge the gap between need and access. Unfortunately, this program no longer includes dietetic professionals in its list of eligible participants.

The American Dietetic Association believes that dietetic professionals should again be included in this program. The American Dietetic Association also is interested in community health systems and urges that people qualified to promote health and nutrition be placed to address some of the nation's most significant health concerns which often link to diet and nutrition. Recognition of telemedicine technology as a vehicle for nutrition services delivery could also facilitate access to dieticians when none are available in the immediate area.

DR. WOOD: Could you wrap up, please.

MS. BISHIRJIAN: Yes. Finally, rural America has a significant challenge in addressing poverty and alleviating the pain it causes for individuals. More than one-fifth of rural America has persistently high poverty rates. Rural development is an appropriate long-term strategy, but in the interim many rural residents need access to nutrition assistance programs. People living in rural areas often face unique and difficult challenges, not the least of which is accessing nutritious meals each day and developing the knowledge and skills to adopt and maintain healthful long-term eating and exercise patterns. Thank you for the opportunity to discuss some of the nutrition programs and services available.

DR. WOOD: Dr. Dean Cross.

DR. CROSS: Thank you. I'm Dean Cross. I am a solo cardiologist. I was born and raised on a farm in New York state. I was trained at Johns Hopkins Hospital and Yale Medical School. I would like to make a few comments.

American health care is failing. There is a crisis which is only going to worsen. Patients need time to heal from disease. They do not get better any faster because of extensive use of costly computers to monitor length of stay as well as other parameters irrelevant to care. They need time to recover, and Medicare payment schedules do not allow for this. The difficulties facing a small office in rural Pennsylvania or in the city are numerous.

Medicare fee schedules are ludicrously low resulting in near abandonment of the use of certain important testing procedures because they take too long to do for what is being paid to the physician to do it. Many offices are cash strapped because of increasing malpractice premiums and decreasing payments for Medicare, and now you are apparently demanding electronic claim submission which is going to further cash strap small offices.

Complex medical cases cannot get good care because doctors do not get paid enough to look through volumes of charts, analyze stacks of data and records and spend time with the patient. I find it very difficult to get consultants to provide the care I know they're capable of giving because they can't afford more than about 15 to 20 minutes based on the current fee schedules.

Patients on Medicare cannot get good mental health care which often requires time with a psychiatrist but because of paltry payments most psychiatrists will not spend the time. The patient gets a few minutes and then a pill prescription which they often cannot afford.

The incentives to physicians are wrong and misdirected. They do not reward appropriate medical care. They incent unnecessary and inappropriate care, and the less you pay, the more unnecessary tests and procedures and surgeries are being done. For instance, a cardiac catheterization pays about $350 for about two hours of doctor time plus very special skills, but for another 15 to 30 minutes by putting a special balloon catheter through a lesion which may or may not need to be dilated there's $1,000 payment, so 20 to 30 percent of the time the patient gets what they do not need and the doctor makes up for the shortfall of the 50 to 70 percent cuts in payment over the past ten years.

Likewise, the Medicare HMO incent no care for the paltry few bucks a month that the doctor gets. These patients will not be put in a hospital by a physician because they need to be seen every day, and for the whatever 30 bucks or so, 50 bucks a month that a doctor gets they're not going to do that kind of work, so these patients suffer.

When we in our office have a question regarding billing, they call Medicare help people. We get different answers for the same questions from different people. When we finally find someone who is competent, within weeks they are often gone and replaced by inexperienced people with little knowledge to answer questions correctly.

Recommendations: You need to pay more to all doctors and reward appropriateness. Sometimes I think you, Medicare would be better off paying each doctor a fixed fee of $500,000 or so a year with the admonition go out there and practice good evidence-based cost effective and appropriate medicine, take good care of your patients. This will likely save Medicare millions of dollars. You need to stop threatening doctors and punishing them with whimsical charges. You should not force small offices to spend huge dollars on ridiculous computer systems to submit claims electronically if the doctor's offices cannot afford it. If you do persist in that, many small offices will have to close.

Finally, the aging of America is a very costly burden, something which our government may not really want to face, and the hidden agenda and hidden incentives may be to restrict care to the elderly, promote early death and thus safe millions of dollars for the entire system. Thank you for the opportunity.

DR. WOOD: Thank you. For members of the committee we have some site visits scheduled for this afternoon, and when you arrived this morning, you were asked to choose. If you have not selected, I ask that you go do that now so that we can see what the balance is and where people will go. Lisa?

MS. GIGLIOTTI: There was a question about the site visit and the smart card, whether the smart card portion would be available. Could anyone clarify that?

MS. SCHMIDT: Yes. Whether we'll be able to see the smart card? Yes. My understanding is that the University of Pittsburgh Medical Center site visit will include the experimental smart card that they have, and that the other site visit, as you know, is in the primary care center of Mt. Morris where one of our panelists will be, Mona Counts, will be taking us through that and talking more about rural health care.

DR. WOOD: Now, in order to get through the day then, since our public comment period went a little longer than we had anticipated, what I will ask the committee members, take a break. There is a lunch next door that you can bring back to the room, and while we are doing the first panel, then we'll allow you to do your nutritional support for the day and make sure that that's complete. So at this point let's stop and take care of those needs.

(A recess was taken from 12:07 p.m. to 12:33 p.m.).

DR. WOOD: This afternoon we have several topics to cover, and one is to begin to look at the issue of multiple review. We need to try to preserve a little bit of time for questions and comments, and then we have to make some site visits. I apologize for being a little bit behind, but we do want to have time for our panels to share their thoughts with us.

We're going to begin with the discussion on multiple reviews from the perspective of two of the major accrediting bodies in the country and then also from the perspective of the regional purchasing consortium that is the Regional Health Care Initiative.

So I'm particularly pleased to welcome Mr. Anthony Tirone from the Joint Commission and the Washington office and Andrew Webber who is the Vice president of External Affairs for the NCQA, and then to Mr. webber's left, well, actually he's -- yeah, he's over there, Mr. Segel. Ken and I were talking about sort of the similarities between what they're doing and what we have done in the Twin Cities, so I am anxious to hear his comments, as well, and we're going to let Mr. tirone start off.

MR. TIRONE: Thank you very much for the opportunity to address you here, and I will try not to interfere too much with lunch as we go here.

The concept of multiple reviews and what it does to health care I think is something we're all familiar with, or maybe not, but let me first start off by giving you all a little background about who we are and what it is that we do for those of you who just may not know that the Joint Commission is a private not-for-profit corporation. We're the oldest, largest accreditor. We were formed in 1951. In fact, last year we celebrated our 50th anniversary.

The mission of the Joint Commission is to continuously improve the safety and quality of care provided to the public through the provisions of health care accreditation and related services that support the performance improvement in health care organizations.

We currently accredit approximately 18,000 health care organizations and eight program areas: Hospitals, networks, home care, nursing homes, behavioral health, ambulatory care, assisted living and clinical laboratories.

The public/private partnership for overseeing care in the Medicare program really started with Congress in 1965 when as part of the basic Medicare legislation they determined that hospitals accredited by the Joint Commission would be "deemed to meet the Medicare requirements for health and safety." In the same law they also added that the Secretary could approve other organizations who have had standards that met, equal or exceeded the Secretary's standards.

Under this form of deem status that's existed since 1966 essentially the accreditor, the Joint Commission for hospitals and in other areas we'll talk about, is charged with determining the compliance of the provider with health and safety requirements. CMS through its state agency then validates the performance of the Joint Commission by doing a sampling of surveys of their own, and when they do their survey, they do a sample of some five percent of hospitals, and they are soon to expand that validation process into other areas into ambulatory care and home care. When they do their sample, they use the conditions of participation and see if the provider meets the conditions; whereas, in our review we have used our own standards.

Under this deem status arrangement the Joint Commission currently has federal recognition for hospitals, home care, hospice, ambulatory surgery centers, clinical labs. Medicare Plus Choice recently awarded this, and we now have an application pending for critical access hospital accreditation.

Just as a way of background, several states also recognize Joint Commission under their licensure programs, and you can see it's 45 states for hospitals, 18 for ambulatory networks and so on. The goal of the public/ private partnership really should be to utilize the strengths of each of the best, of each the public and of the private sectors to come together to handle the oversight in a way that would reduce the redundancy, reduce cost and also lead to enhanced patient safety and the quality of health care. The way we would view this is that under the accreditation process we focus -- the accreditation is really focused on quality improvement, on addressing the systems of health care to see that those changes that are made are lasting changes and that there is improvements in quality of care.

 Regulations and the role of the government would seem to do things that one thing the accreditors cannot do which is to focus on the access to protection of the public and the achievement of minimally acceptable standards. An accreditor cannot close a hospital, accreditor cannot close a home care agency. The federal government and the state government has the ability to withdrawal of payment or licensure to do that. So we think that together they need to work so that in those organizations and that those providers that are either unable or unwilling to provide adequate and quality of care, there has to be a regulatory response.

We have a lot of issues in common. We all do our processes through survey activity which is part of the problem with multiple reviews. We are faced with the fact that data extraction and collection is extremely expensive, and for the most part we assess the provider's performance against standards that measure either what they allege they do or what the actual outcome of care.

 The process of changing the Medicare requirements, I mentioned we both use standards. The process for Medicare to change its requirements is extremely slow and difficult. While the process requires the publications of NPRMs, public comments and final regulations, it is not these steps in themselves that creates complexity. The fact is that the government should tell people what they intend to do, give them a chance to comment and then react to those comments.

The Joint Commission when it changes its standards goes through a very similar process of involving the industry, involving consumers. We even field test our standards before we ever go out and make a change. We change our standards though as circumstances dictate and usually on a two-year cycle.

Under the Medicare process the regulatory, and something, an area I will suggest that you address, is painfully slow. As a result, providers today must still meet, hospitals must still meet the 1985 version of the Life Safety Code. Other providers have to also use other versions of the code from the 1980s. The states and the Joint Commission have all virtually used the 1997 code today.

Recently in October CMS was able to publish another NPRM to change the Life Safety Code to bring it up to a current version of the 2000 code, one that we will all be using very shortly. The final rule is expected in the end of this year, and we could only hope that it actually occurs. I would suggest as part of your recommendations that you encourage that that actually take place.

Other regulations that have been around for a while, and we heard some of that talking about the rural health rules this morning, the home care requirements were published in 1989. An NPRM to change those requirements was published in 1997, has not been heard from since. The Medicare conditions were published in 1986, again a proposal to change them in 1997 and no final rule on that; ICFMR in 1988, ESRD in 1976, hospice 1983, and so on. It's a process that -- to think that health care has not changed since 1976 is not to recognize what's going on. It's a process that I think needs to be reviewed.

So I know that CMS does conduct its validations of hospitals using the 1986 conditions. This has constrained the Joint Commission in its ability to change our standards because we must be always cognizant of the fact that the providers will have to meet not only what we tell them to meet to meet our standards to be accredited, not only to move in this quality improvement mode that we've been on since 1987, but we must also be aware that if challenged by the state they must still meet the hospital conditions.

Now, CMS recognized the significant changes in the conditions between the conditions of participation and the Joint Commission standards in the 1997 NPRM, but they do not recognize that change when they do their validation surveys.

I want to talk about opportunities to improve this public/private partnership. We think that the current forms of deem status should be reviewed and should be talked about, but the current model I think works well for hospitals. It may not work for other providers. Here the managed care, managed care plus choice deem status has just been awarded in that area. That's an area where there will still be joint responsibility; interesting to see how it works there. In long-term care we don't think the current deem status model would work, but there should be opportunities to utilize the quality improvement aspects that can come from accreditation and to recognize that in a long-term care oversight process.

We think that improved data sharing is essential. As I noted, the collection of data and collection of information is extremely expensive. We have some very preliminary efforts going on with CMS now. They have agreed to share the OASIS data for some of the deemed agencies with us. We're talking about giving them our OREGs which is our performance improvement data set for hospitals to CMS, but there's much more data that should be exchanged, full ranges of OASIS data or an MDS, complaint information that should be made more available to us all to help better oversee and improve the quality of care.

We have been working with CMS to the development of performance measures. We think that that can be strengthened to the benefit of all to allow that there be one set of measures, that they be understandable, that we not conflict, we not cause problems. The validation process that is now practiced is really very burdensome on providers. A provider that elects to be accredited can find themselves having a lot more surveys than they could if they weren't accredited. They are going to start doing validation surveys of ambulatory care facilities. An ambulatory care facility that's accredited by the Joint Commission is surveyed every three years. Those that are not based on the IG report recently issued may never be surveyed. They will now receive potentially two surveys: One from us, one from the state. We think there's room to come up with a validation process that is more, for not a better term, more better, to make this thing really, to make it something that is valuable to both us, to the government and to the provider.

DR. WOOD: Can you wrap up, please.

MR. TIRONE: As far as recommendations for regulatory reform, please, suggest that a Life Safety Code regulation be published in final. The conditions of participation that we went through they should be addressed. They should be brought up to date. The process by which DHHS does its regs I would suggest you look at very carefully. The regulations as now written are very detailed, make it very difficult to adopt to changing circumstances. If the process for publishing and updating them cannot be improved, then perhaps they should look at their regs and write them in ways that are broader and less specific so that the regulation can accept changes without changing the reg. Thank you very much.

DR. WOOD: Mr. webber.

MR. WEBBER: Thank you. I'm going to speak from here, if that's okay. Is this on?

DR. WOOD: It is.

MR. WEBBER: It's great to be here in Pittsburgh. It sort of brings to mind that just a couple of weeks ago I saw a documentary on Pittsburgh where they talked about how Pittsburgh was covered in a cloud of smoke for years and years, and to come through the tunnel this morning and to see a brilliant, bright, sunny city, clean as can be, beautiful riverside, sort of reminds me that progress can be made. So I hope in that spirit we can talk about issues of regulatory reform.

Chairman Wood, and other members of the Advisory Committee on Regulatory Reform, I am pleased on behalf of the National Committee for Quality Assurance to present testimony on the issue of regulatory reform. NCQA applauds this effort, and we really support the goal of making regulations more efficient and effective.

Just by way of background, NCQA is a public interest not-for-profit organization dedicated to improving the quality of care for people everywhere, an ambitious goal. We are the leading private accreditation organization of health plans, and after ten short years of operation we have successfully accredited about half of the HMOs in the country representing 75 percent of the enrolled lives in HMOs. Recently we introduced our PPO plan accreditation program and our utilization management and credentialing certification program for PPO and provider networks. We also accredit managed care, behavioral health, physician group and disease management organizations.

Apropos to today's discussion NCQA accreditation is currently recognized by 24 state regulators as meeting or exceeding certain state requirements for licensed health plans. In addition, as Tony mentioned, NCQA was recently granted deeming authority for the Medicare Plus Choice program which very importantly permits NCQA accredited plans to forgo a duplicative review by CMS regional offices for certain Medicare requirements that overlap with NCQA accreditation standards. Using deeming authority as a means to partner with innovative private sector programs and eliminate redundant reviews by the public sector is one of the themes of my testimony today.

Mr. chairman, at present plans and providers are faced with a dizzying array of regulatory approaches and requirements in oversight programs. For example, and I'm sure Mrs. Margulis can relate to this, a health plan that participates in Medicare and Medicaid, sells commercial health insurance in several states and contracts with large self-funded employers faces conflicting requirements and multiple oversight activities. An important goal of regulatory reform should be to reduce the burden and complexity of the current oversight maze and to introduce a more uniform and streamlined approach. With this policy goal in mind and based on NCQA's decade-long experience as an independent evaluator of health care organizations, we recommend the following for your consideration.

Recommendation 1: As a general philosophy, regulatory programs should evolve from an initial stage of demanding compliance with minimum administrative, structural or capacity requirements to the advanced stage of having regulatory entities demonstrate real improvement through performance measures and outcomes. This philosophy represents NCQA's approach to accreditation; moving from an initial focus on largely structural accreditation standards or system capacity, as we like to call it, to the integration of performance and outcome measures through HEDIS and CAHPS. I think an important point in this regard is that as we move to more performance- based requirements or a regulatory model, we should be vigilant about reducing and even eliminating minimum structural requirements. I really think at the end of the day the consumer is more interested in the performance of a plan or a provider and improving performance over time than whether or not there is evidence of minimum requirements being met.

Recommendation 2: Regulated entities that demonstrate sustained compliance with regulatory requirements should be rewarded with reduced oversight and be publicly recognized. NCQA accredited entities that perform well are rewarded with a less frequent survey cycle and are prominently displayed in NCQA's public report card. Our regulatory system I think must find ways, creative ways to incent good performance, not just punish the bad actors, through reducing levels of regulatory oversight or highlighting the best performers in a very public way. Of course, public purchasers like the Medicare and Medicaid program could even go further and begin to pay extra based on performance.

Recommendation 3: New regulatory requirements, particularly performance measures, should be evidence based. NCQA is committed to a rigorous development process for all new accreditation standards and HEDIS performance measures to ensure that the changes are grounded in good science or, at the very least, consistent with current professional knowledge. The institute of medicine and crossing the quality chasm called a challenge to the health care system that is both evidence-based, patient centered and system minded, and I think some of that same criteria needs to be applied to the standards we set and how we build our regulatory requirements.

Regulation 4: Regulated entities should be given sufficient lead time to comply with new requirements. NCQA publishes new accreditation standards and HEDIS performance measures a full year before implementation. I told myself this morning, too, I wasn't going to mention HIPAA because you folks are talking about that tomorrow, but it is now within a year when all HIPAA providers need to be in compliance, and just this month, as everyone's aware, there are new revisions to the HIPAA privacy requirements, again, less than a year before all providers, covered entities and business associates need to come into compliance with the final rule.

Recommendation 5: CMS should strive for the greatest degree of standardization of uniformity of substantive regulatory requirements with other public and private programs. Specifically we urge the Medicare and Medicaid programs to rely on private accreditation standards as the basis for its own requirements. CMS should consider whether its own requirements offer enough extra value to be worth making plans and providers comply with multiple sets of requirements and standards.

I was thinking about this coming here today, and what we really need I think is a secretary to call a summit meeting where we could get all the regulators, state regulators, insurance commissioners, public health people, get the NAIC, the National Association of Managed Care regulators, get the Department of Labor, and I'm talking about the context now of just oversight of health care plans, Department of Labor that oversees the ERISA program together in a room to really commit to getting the multiple requirements more in alignment.

Recommendation 6: CMS should eliminate regulatory requirements that become obsolete. Again, are we, as Tony said, are we regulating 21st century health care industry with 20th century requirements?

DR. WOOD: Can you pick a few of the last ones you have that you want to highlight and wrap up.

MR. WEBBER: Sure. Recommendation 8. Let me skip. CMS should rely on deeming authority to the greatest extent possible. Deeming, as Tony mentioned, eliminates redundant review and permits the government to focus its limited resources on identified deficiencies, and again, they have done a very good job in the Medicare program as pursuing deeming authority, and I think CMS should push Medicaid agencies to do the same.

Let me just end the testimony by acknowledging and thanking CMS for the recent decision to grant deeming authority to NCQA, and in that context I would like to recommend the following. CMS should also include the functional areas of utilization management, grievance and appeals as deemable categories. To eliminate any possibility of redundant review, the Department should take full advantage of all of the elements of NCQA's accreditation program that correspond with M plus C requirements. Unfortunately, utilization management, grievance and appeals are not presently deemable categories, and this would reduce the level of redundant oversight.

And recommendation 10: CMS should move its regional office on-site survey schedule from a two to three year cycle. This change is consistent with NCQA's three-year accreditation survey cycle and moves us towards the goal of conducting both private accreditation NCQA and CMS on-site surveys in the same calendar year. It might even provide opportunities for further coordination through concurrent or joint surveys.

Thanks again. It's a pleasure to be here, and I'd be glad to entertain any questions.

DR. WOOD: Mr. segel.

MR. SEGEL: Thank you very much, Dr. Wood, and members of the committee. It was a pleasure for us through the Regional Health Care Initiative to host Secretary Thompson, Secretary O'Neill and several other federal officials almost a year ago here in Pittsburgh and since that time witness this hearing and the effort it represents. The Department and the federal health policymaking apparatus have certainly been attentive to our issues and interests here in Pittsburgh as we work to deliver the best health care possible, and we appreciate that.

To have you understand the perspective I'll offer on the issues before the Committee, you need to know a little bit about what is the Regional Health Care Initiative and where did it come from, and so I will spend just a few minutes doing that, and I will begin where Andrew took you through the tunnel coming into what many people still perceive as, expect to be a smoke-filled city. In fact, the work to make sure that it wasn't began soon after World War II and driven by a public/private consortium of leaders here in town called the Allegheny Conference that has continued at different times in the City of Pittsburgh to really assert itself to take on very complex and daunting challenges and pulling different stakeholders together, and it was at the end of 1997, the very end, and into '98 when what became the genesis of the Health Care Initiative came together when prodded on warily by the same group, the Allegheny Conference, leaders from the health care industry and all of the stakeholder groups that touch it: Business, small business person groups, corporations, physicians, hospital administrators, health plans, the Attorney General of Pennsylvania, came together and said, you know what, there's something fundamentally wrong with health care in this town even though it's the most important industry, the largest industry, and that is from whatever perspective we come to it from we're not happy. No one's happy. The people delivering care are not happy. The people paying for care are not happy. The people receiving care are not happy, and no one in their own way was satisfied with the course we were on, and so the question became wasn't there something we could do as a community, as a community of health care, people involved in health care, that would leave the fate of health care in this region somewhat in our own hands and not leave it to the course of fate. And the question became what. And so let me tell you a little bit about what our framework for change has become in the previous years.

We are now a coalition of 40 hospitals now, four major health plans, over a dozen corporations, small business person groups, literally hundreds of clinicians, including Dr. Lauren Roth who is walking in right now, and many others in this room, all working together to achieve perfect patient outcomes through superior health systems performance by identifying and solving problems at the points where care is actually delivered to people. That is our orientation. Sometimes we even say it differently. We work to identify and solve problems where care is delivered to patients, and by doing that we believe that's how we'll have the performance of the health care system in terms of its quality and cost that we want, and that's how we'll achieve the perfect patient outcomes we're striving for.

 Imbedded in this way of thinking is the fact that everybody has to be involved and that excellence can't be forced on anyone as absolutely core to what we're talking about. Our focus on patients, and I'm trying to provide a little context for how we think about these issues, is that there's only one object of the system, and it's people and getting people the right health care, and it's only when people get focused on that objective in a common way that progress is possible, and so we work very hard to stay there.

And our third principle, by identifying and solving problems at the point of care, is our really conviction, and it bears stating again and again because it's amazing how easily we stray from it, is that this is the level at which health care change has to happen, that all of us running health care organizations in more policymaking roles, regulators have to realize and have to be focused here and recognize that the next regulation is unlikely to produce dramatic gains and outcomes. In fact, it may just introduce more rigidity into the system, and so our effort, and I will tell you about the specific activities for just a couple minutes, is really rooted in some of the thinking that -- I'll also quote the Institute of Medicine and crossing the quality chasm. They are pointing to the science of complex adaptive systems which health care certainly is, and what does it take to improve a complex system? Well, the first rule is a fuel goals and a few prohibitions guiding the system, not 130,000 pages of regulation, right? The second is good enough vision that the parts of the system can learn from each other effectively but not be disrupted for each other, and then third, that the whole system is geared toward robust support for localized learning at the point where service is delivered, and that's a framework for thinking about. If you haven't reviewed it, I think that's really valuable.

So what are we doing? Besides all the rhetoric, what are we doing? Well, we have six clinical areas of medicine where all of the clinicians and hospitals in the consortium I have named are working together first to take an existing database that everybody was already using and measure our outcomes of care on a risk-adjusted basis and then try and develop based on the recognition that we have more variation in care that we want, sophisticated means of measuring the processes of care that are relevant to clinicians, that clinicians find relevant and useful, and in building region-wide platforms that we certainly hope are compatible with national approaches. What we're trying to do there is make sure that the roll-up of data systems and multiple reviews is based on information that clinicians in particular find useful in the collection and the feedback of that data to them in providing care, and that's an underlying principle that I think has to guide all of our work. That clinical work, though, ambitious and making me tired and many of my colleagues is we decided is not enough to really cause the kind of transformation I have been alluding to.

So we actually picked two areas of patient safety where we are working to actually eliminate patient safety problems: Medication errors and health care acquired infections. I won't bother to list the toll that these take within our health system, but to us they represent both symbols of system failure and opportunities to get very good at identifying and solving problems in the course of what is a very complex enterprise of delivering care, and we have worked to first identify what is the best national standard compatible with the principle I have already articulated of usefulness at the point of actually doing work to get everybody counting these things the same way and reporting them. And so working with the Centers for Disease Control we have adapted their infection tracking system which is really very clearly most relevant to clinicians, most powerful.

Encouragingly, the Centers for Disease Control wants to work with us because they don't want to just be about surveillance. They don't want to just measure the problems. They want to be about actually solving the problems, and so we're trying to tie those things together, again, where real patients are cared for, and we are working with US Pharmacopoeia on the patient safety side.

We also have experiments in four different hospitals in actually applying a total systems management approach focused on where patients are cared for to improving outcomes based on scientific problem solving principles derived from Toyota, believe it or not, and Alcoa, the home of our founding Chair, and those are very exciting.

Just to allude briefly to a couple things related to regulations we are seeing, two brief examples, and then one or two suggestions about how to get out of this box. One real example where regulation has gotten in the way and one perceived example. One real example is derived from one of the hospitals I just alluded to where Toyota principles based on close observation of what's really happening are derived is that within the same hospital when a patient is discharged from regular care into a rehabilitation setting we have work going on with the pharmacy, and we observed that the medications for that patient, the patient has to be discharged, fully discharged, have to be brought back to the pharmacy, entered in the computer, restocked on the shelves, the orders rewritten and brought back out, all at the same time for that same patient and the same care, threatening to interrupt their care and creating an extra 60 to 90 minutes of work that I would suggest the government is paying for one way or another. Surely there can be a more flexible approach to that.

There are also many perceived challenges, and I won't cite the example. I see my red light flashing. People are so wary of regulation now that they believe regulations constrain their behavior in real world problem solving when, in fact, they don't, and we see that very frequently as well. How we can get out of this box, I think efforts like this are fabulous. I think it's not -- it's to go beyond the role of reducing the burden of regulation, however, and to figure out a way to make the mechanism, to come up with much more flexible means to experiment and be able to waive regulations based on a direct connection of national leaders and regulators and others with systems experiments that are happening on the ground in different places. I think it can't be done unless there's a regular engagement by folks like you with real world care happening in a systematic way, shared experiments to try and identify problems and barriers and solve them. That's our model here in Pittsburgh. We are pleased with the progress we've had to date, and we'd love to work with you going forward.

DR. WOOD: I'd like to give the committee about seven or eight minutes to ask questions of this group before we bring our second panel up. Let me start with Tony and we'll go to Ive.

MR. FAY: Thank, you, Mr. Chairman. My question for Mr. concordia is to follow up on your last point. You alluded to the disruption in the continuum of care when the patient goes to the post acute setting or perhaps into the home care setting and so forth and going back some years doing cost reports way back when we were still cost based, I do remember the days when nobody knew what a sub provider was or nobody knew what a hospital based SNF was; you just did it all in the hospital, and it was all reimbursed under the cost formula, and then as we started inventing PPS systems first with the DRG system, it became necessary to carve out these different continuum of care because it had different payment systems that relate to it, and that, at least in my mind, is one of the things that's driven different criteria and different certifications for hospital based psychiatric units, rehabilitation units, long-term hospital based LTACs, so on and so forth. Do you envision a solution where we can put those silos back together so that we have sort of a single oversight survey, et cetera, that would apply to the continuum of care in a site of service?

MR. SEGEL: A couple things I want to clarify. You will shortly be hearing from Liz Concordia, the executive of two of our major hospitals. I am Ken Segel, and she is much more substantive and knowledgeable than I am, so, but I appreciate your question, and we certainly do. We do envision and we are determined to work toward a system that is driven by patient need and how well we deliver against that need and that the measurement again rolls up out of the tools that are useful to people actually providing the care, and so that the monitoring that needs to be done flows out of stuff that's actually useful to doing work, and that, you know, the barriers that are primarily oriented toward keeping somebody from playing games can be brought down through sort of a more modern approach to quality assessment and in improvement. So it's not easy given where we are, but I think if we can get the focus back on how well are people delivering against the needs of people, patients, and generate again sort of experimental sites where good will begins to take over in terms of what we're seeing and what we're doing, and again, the oversight rolls up out of useful tools, we'll be moving in the right direction.

DR. WOOD: Go ahead.

MR. WEBBER: Well, I just wanted to comment. It's a very interesting question, and looking at again NCQA's experience. Our original model was the integrated health care delivery system where accountability would rest with a health care plan that was truly responsible for not only the insurance financing mechanism but putting together an integrated delivery system that would truly be accountable to patient care outcomes.

Now, what's interesting is that the pendulum swung in the direction of sort of the managed care integrated delivery system and then it swung back with the managed care backlash, and we're back to a very fragmented system, and actually at NCQA we're sort of frustrated with that, and our accreditation is now moving to the need to evaluate the different segments of care with no accountability in any one place, and how we again build the notion which was back in the Institute of Medicine's report of integration as a concept where we can have accountability, build team networks and have a unit of analysis and accountability one place rather than in this group arenas is I think something that we should still be working towards.

DR. WOOD: Go ahead, Heidi.

MS. MARGULIS: Thank you, Mr. Chairman. I have a couple of observations and then a question for Mr. Tirone, and the observations are with regard to Mr. webber's comment about holding a summit or I would call it a, it would be the equivalent of a Middle East summit of the health care system participants. I would proffer that we probably need a vision for health in this country before we put us all in a room and that that probably is also what's missing, Tony, from having one survey, one oversight, one everything is that, as I mentioned previously in another hearing, that we operate in our provider plan silos, and it's very difficult then to talk about the continuum of care. I would also agree with Mr. webber that representing a company who I think over the years was portrayed as one or an industry as one that did, indeed, manage care we, indeed, today do not manage care and probably have realized we never really did, and so I think we need to take a look at the system from the outside in which is from the eyes of the consumer and then begin to put the system back together again, but that's for another day.

I would also make an observation, Mr. segel, from what you said in terms of I thought it was interesting that you used a manufacturing set of principles to guide the work that you just spoke about in terms of Toyota, and I'm wondering as a number of us in my field have if the principles that apply to manufacturing can, indeed, be applied to the health care industry, and I speak of in terms of ISO 9000 not being a perfect system itself, but are we talking a look at the system as a whole and really improving the system and not just fixing parts, so to speak.

Enough of my rhetoric and on to the question for Mr. tirone. You spoke on, and it's on my page 4, and I'm not a lawyer, in terms of your recommendations and the ones that I'm most interested in are those that apply to changing the regulatory process or improving it, and so I would ask you very specifically about your recommendation, the process by which DHHS revises regulations should be reviewed, specifically how should they revise the regulatory process?

MR. TIRONE: The process that's used today, as a disclaimer, I guess, as I used to work there, and I was there for a long time, and was as frustrated with the regulatory process when I was there as I am now. It's a process that just takes endless amounts of time because you have a huge department -- I guess since I don't work there anymore I can say things like -- where everybody thinks where there's only one group with responsibility but a whole lot of different groups with authority, and it just impedes the flow of regs so that you have things like the hospital conditions which it's been five years, and they're not published, the home care conditions, since they did the NPRM.

I think that perhaps this body can require that or suggest that the Secretary take a look at why it takes that long to move from step to step. You can't eliminate the public process and you shouldn't, and, in fact, on occasion HHS has, for whatever reason, gone immediately and done things like put out interim final regs without securing comment or realizing the impact of those regs, and they create quite a bit of havoc, quite frankly. So I think I'd just suggest that I don't have the cure except maybe to say take seven smart people and tell everybody else to go home and let's get the reg done, but I think it just has to be looked at, and I will tell you every time the HHS staff looks at it, they always come back and say, well, gee, it's a tough process but it's the best we can do. Well, I don't think that's true.

DR. WOOD: I need to exercise a little bit of discretion here as the Chair. First, if we have enough time tomorrow, I am encouraged by this little discussion. I have an example that might come back to your concept of vision and how you make this work for the future, and it's actually work that we have done in the context of what has been talked about here aimed at improving cardiac care. So I'll think about how we might show that tomorrow.

Next, because we have some others who are here, I'd like to invite to the table our group from UPMC, and then for those of you who are waiting we do have some initial time at the end, and so I've got your names. We will come back to that a little bit later.

And so if we could invite our UPMC team, I will introduce them to you. We have Ms. Elizabeth Concordia. She is actually the president and CEO of the Presbyterian Shadyside operations; Mr. dean Eckenrode who is the Senior Vice President for insurance or the Insurance Division, and Dr. Daniel Martich who is the Executive Director of the Electronic Medical Record effort and who also happens to be an intensivist, and I think, at least by the way I have it, Miss Concordia, would you please lead.

MS. CONCORDIA: Actually do you need me to come up to the podium?

DR. WOOD: You can cede that if you want to. I'll let you delegate authority.

MR. ECKENRODE: She has ceded it to me, and first let me thank you for the opportunity to offer comments on the regulatory reform process. I think what we need to do is give you a little bit of background on what UPMC Health System is and kind of an overview of how we view regulation, and then we'll talk specifically about how Dr. Martich and Elizabeth Concordia see the impact of regulation and oversight in their daily lives.

May we have the first slide, please. The mission of UPMC is to provide outstanding patient care and to shape tomorrow's health system through clinical innovation, biomedical and health services research and education. We make this lofty statement for one reason. It's to assure you that our primary focus is on patient care and health care delivery no matter how diverse the operation seems to be.

In terms of an overview of UPMC, it's an organization that has $4.6 billion in assets and $3.2 billion in revenues. It is probably the leading employer in Western Pennsylvania with 28,000 full time equivalents including 1,700 physicians. About 1,100 of those physicians are in university practice plans and the balance practicing in community medicine. We have over 4,200 aligned physicians who either have admitting privileges at a UPMC facility or who are in some form clinically linked with their physician colleagues at UPMC.

There are 19 hospital facilities with 164,000 admissions and 3,300 beds. We also have a 370,000 member health plan, the UPMC Health Plan, that offers both commercial, Medicare and Medical Assistance products.

We are engaged in a number of diversified services which encompass home care, rehabilitation services, senior living, technology development and international programs. That includes a transplant hospital in Palermo, Sicily. We are the largest integrated delivery and financing system in Pennsylvania, and we are one of the biggest in the country.

This next slide is not unabashed advertising. It's merely an opportunity to express to you that while we are large and diverse, we have also managed to do a few things right and are recognized by our colleagues across the country as one of the best hospitals in their estimation.

Because of the size, the complexity and the diversity of the organization and the fact that we are focused on health care delivery, we correctly invite scrutiny by a variety of governmental and nongovernmental entities, and there they are. Now, I'm sure many of you recognize similar entities in your own operations. We may be a little more extensive here in Pennsylvania, but each and every one of those organizations has a legitimate right and interest to be focused on what emanates from the UPMC Health System. However, the number of agencies seeking to monitor influence and/or reports on the UPMC Health System's performance is in itself daunting. The complexity and the repetitiveness of the demands, however, is the most frustrating and inefficient aspect of this oversight.

 Multiple agencies seeking access to the same or similar information in accordance with their own needs and timelines, and let's underscore their own needs and timelines, impose incredible burdens on provider cost and personnel, both clinical and administrative. Even well intentioned efforts to streamline the administration of a Medicare program often failed to consider that much of the disbursed program management initiative circles back to one primary data source, and that's the provider.

Now, this next slide just gives you an idea of the agents that act on behalf of CMS in Medicare and Medicaid program administration. Each one of those entities has a unique role and performs a distinct service for CMS. However, when you look at their primary focus, while each may have a distinct interaction with a beneficiary or an eligible individual for an entitlement program, much of their interaction is focused on the data that emanates from that beneficiary or medical assistant recipient's interaction with the provider. The question we have is: Who knows how much overlap exists within these organizations? Secondarily, what's the degree of coordination prescribed between these organizations in fulfilling their purpose? And if anybody has the answer, please give it now, because we don't.

There's a significant overlap in the data sought by each CMS agent but employed uniquely for their own purpose. Much of the data is derived from multiple requests of a single source: The provider. This is little evidence of coordination that we see among the various oversight and regulatory agencies, and the result is an incredible economic and administrative burden on the care delivery process that consumes resources that might be otherwise directed to patient care, and in an era when budget neutrality pervades the very essence of what we do in deciding how much of our generic national resources will be consumed by the entitlement programs, it is an unusually heavy burden on providers to have to devote part of those resources to the pursuit of regulatory requests.

 Now, to give you some perspective about how this affects individuals in their everyday life and operation, I'll turn it over to Elizabeth Concordia who is the CEO and President of UPMC Presbyterian and UPMC Shadyside.

MS. CONCORDIA: Thank you, Dean. I'm actually going to come up here and stand. It's that triple A personality. I wanted to today just outline a few of the areas of opportunity and then come down to a really specific level of examples and some recommendations about how the regulatory burdens and regulatory requirements affect us. Again, if you look at myself as an administrator and my colleagues that are here today, Dr. Martich, we all went into health care because we care about patients, and so everything that I'm going to talk about today is again how is this affecting the patient, and we are so focused on the patient we believe that some of these regulatory challenges really do take away from our ability to care for patients. It takes nurses off the floor. It takes people away from delivering the care, and I would venture to guess I believe one of you talked about let's get out to the consumer and ask them. The patients would like that individual contact and not be asked the same information ten times when they enter a hospital and also would rather have the nurses there as opposed to being surveyed and be around with many different individuals.

So on that note one of the first areas where I believe there's opportunity is in the insurance and payer area. We have about 500 contracts at UPMC hospitals, and each payer then offers multiple insurance products within each line, and then each product has different rules. So if you look at the burden, it is truly phenomenal if you actually sit next to a register in the emergency department that they can get this information correct because you have to have a Ph.D. to understand for this carrier they want this information, for this carrier they want different information, and again, we treat these patients exactly the same whether they have Medicare, Champis, Highmark or whatever.

So one of the things that I did when I came here in October is I went around the hospital and I actually spent some time seeing how we delivered patient care, and it really became apparent, at the registration area, for example, if you are a Medicare patient, we ask you all the registration questions that everyone gets asked, and then we have to ask you to fill out this form (indicating). If you're a Champis patient, you fill out this form (indicating). What do you do if you're both? Highmark, whatever it is. So, again, all these forms get filled out for us to care for the patient, and I think some of the innovative solutions that are out there we actually are piloting at UPMC what we're calling a smart card. I know when we all go to any other industry, we are not asked different questions depending on whether we are paying with Mastercard, Visa or American Express. However, again, in our everyday lives we do ask different questions. The smart card will allow us to get the patient's information. One of our practices the physician's patients have these smart cards so that if any of those patients happen to come to the hospital for service, we will know all of the information from the patient, and from the patient's perspective they are relieved that we don't have to ask them the same information that they were just asked yesterday or three weeks before, and the opportunity just from an insurance perspective and data integrity perspective and data collection is really wonderful with this smart card concept, and so that is one of the areas that we are looking, but again, that only works when your patients are a captive audience within your system. So I would say from a regulatory perspective credit cards work, but we haven't seemed to be able to bring that into the health care arena, and in the health care arena the patients are a lot less patient because they want care; they don't want to go through all of these questions. So I think that there's some real opportunity there with regard to the regulation.

 And then if we do finally get you registered and we get you in and you are successfully processed through the system, it's never as quick as we would like, and then you're ready to go home, let's take a look at the regulations that are required to get you out of the hospital.

If you need to get skilled nursing care, you fill out 30 plus pages of documentation to get care at home, home care. Nursing home, 30 pages of documentation. Every single data item in these sheets is already currently in the medical record, but who fills out this data? Mostly in almost every hospital it is a nurse, a nurse who is incredibly short supply who we want holding the hand, giving care and assessing the patients. So I would venture again to bet that if you ask the patients, they would unanimously say this system needs to be improved.

One of the things that we are doing is we are looking forward to the implementation of an electronic patient record, and what we will do is we will have all this data electronically, but because we are at the regulatory, obviously we need to adhere to all the regulatory requests, we will then format that data and have it print as it is required. However, that's easier to do than having a nurse have to fill out the same information again and again and again. That's what we can do specifically. However, I believe that that is a band-aid to the true problem which is most patients these days don't just hit an acute care hospital. Let's share the data. Someone mentioned that before, and let's not have the data have to go to multiple places again and again.

And then once we finally get the patient out, we still haven't been paid for that patient. So the other component that's a real challenge that eats a lot of physicians' and nurses' and administrators' time is the appeals and denial process. We've got hundreds of examples of denials where we have gotten the authorization up front, we now have to make a copy of the medical record to go through an appeals process. We have situations we've got patients, we're a transplant center and we are committed obviously to our academic mission, so we will again, we do nothing different for whoever the patient is, but we have examples where patient comes to us, gone through the entire process for transplantation workup, has a letter from the Medicare PRO in their hand that tells us that they're covered for this, and then the intermediary says, no, they're not covered. We then have to go through multiple, multiple appeals processes, and that administrative burden lies on the hospital and I would also venture to guess is not the best use of time.

Moving along quickly to the next area of opportunity on the back end is the financial reporting. Hospitals are required to complete annual cost reports for both Medicare and Medicaid. One Medicare report, and I just think this is an unbelievable, this is like a Dilbert cartoon, for Presbyterian Hospital one year cost report for us 500 pages and the required HCFA 339 required documentation that you have to submit with it is this for one year (indicating), less than five percent of the true reimbursement for our Medicare patients comes from this. So the hours of people that we have filling out and completing these applications multiplied by the number of hospitals in our health system is taking dollars that I would rather put into direct patient care.

We also have examples where we have filled out these cost reports for one of our SNFs. This is truly happening as we stand here today. We have zero dollars associated with that cost report, and we are currently being audited on that cost report. It doesn't make any sense. It makes no sense again opportunity here is to simplify the report or extend the time frames so that we don't have to file these annually, do them every other year or whatever the recommendation is, and then also create reasonable time frames for new regulations. We are now going to submit two cost reports within a three-month period because the APC regulation change that the reporting information and utilization couldn't get back to us from the government so that we could put in timely cost reporting. So again I think that's an area of opportunity.

We're always looking for innovative solutions at UPMC. However, in this area I have to tell you, quite honestly, with the regulations as it is we have not been able to come up with some innovative solutions there.

And lastly, I think there's real opportunity in surveys. We again welcome the opportunity to show how wonderful we provide care to our patients, but we would like to show that once to whoever wants to see it. We have had the opportunity in Pittsburgh of having the PHRI as an example of a consortium and having an outside organization come together, look at data elements and really look then at all of the institutions and then come to the institutions with one set of rules, one set of requests, one set of recommendations. At Shadyside Hospital alone just in this calendar year, in January we underwent a full Department of Health licensing survey, three days, two surveyors. We did very well. Next month, full Joint Commission survey, four days, five surveyors, and when I say these surveys, I'm sure many of you appreciate what goes into this. This is just the application, 58 pages to fill out for the Department of Health survey.

Department of Health then comes in and asks for this. The medical records that we pull alone for this, getting the documentation together is phenomenal, and who's doing it? Clinicians. Joint Commission, 80 plus pages, and then the Joint Commission, which we appreciate very much, has given us a 30 page document of guidelines for the document review session of what to have ready for when they get here. That's a room full of documents that we prepare, and then, they are very organized with this, which I appreciate, when they come they give us 18 pages of information that they want when they come on site, and all of this we've done now twice in two months because both the Department of Health and the Joint Commission have deem status, and many of the regulations overlap.

 So again we have had both these surveys, and then to top it all off, last week we were fortunate enough to be chosen for a focused Medicare audit that the Department of Health performed on Medicare's behalf to validate the Joint Commission survey that we had that was a month after the Department of Health survey that surveyed exactly the same information. So that one of the requests that we did have when they came in is can't you look at the data that's exactly the same data that you looked at in January when you gave us rave reviews so we don't have to pull all of the data all over again. But at lease in all of these, and I am saying this from an organization who received no citations in these surveys, so this is not an organization that didn't do well and then had focused surveys with that.

But my point here is from a survey perspective we welcome the opportunity, you know, we welcome the surveyors to come in. However, if you all could agree on the information that you want, let alone the regulations, in Pennsylvania the Department of Health allows 24 hours for verbal orders to be signed; the Joint Commission allows 30. Quagmire: What do you do? Obviously we go to the most stringent, but again, it really does have an impact.

These examples are examples that truly, truly take precious hours away from clinicians that we would rather have seeing patients. It makes us put dollars into administrative functions that in this day and age we would much, much prefer, you know, designating and directing to our patients, and that is, you know, one of I think the challenges that we have in health care today is as an organization how do we balance our desire to perform patient care with the regulatory burdens, and again, all of these go under, go forth while we still have patients that are showing up in our emergency departments every single day that we treat no matter what insurance, no matter what is going on with regard to those.

And lastly, I did just want to make one statement in that we think that here in Pittsburgh in UPMC we, you know, again have a wonderful delivery of care. We do very innovative and creative things, and we think that it's time to put some of these innovations into practice, and we would welcome, be it with PHRI or anyone else to be a pilot. We are so desperate to try something new that we would love and welcome the opportunity to do that here in Pittsburgh because we think that the people that will benefit at the end of the day are our patients, and that's what we're here for. And on that note I'd like to pass it over to Dan Martich, Dr. Martich, who actually is caring for these patients and can tell us a little bit from a physician perspective some of the challenges.

DR. MARTICH: Thanks, Liz. It's not my triple A personality; it's my ethnicity that precludes my being able to sit down and talk to you all without using my hands, so I'm going to go that route.

You have heard very eloquently from Dean and Liz how the excessive regulations have really negatively impacted our patients, our health system, our hospitals. Let me bring it back to a little bit more of a personal level, and that's the level that you hear and I hear people chatting across fences of yards and in the grocery store, and nowadays it's Starbucks talking about it, and that's the patient/ physician relationship, and specifically I'd like to dial down into one area that's near and dear to my heart as a practicing intensivist, and that is how the documentation requirements have negatively impacted that relationship.

So I teach a lot of medical students and residents and fellows, and I always go through the history of medicine because I think it's fascinating, first of all, and we're destined to relive that history if we don't understand it, and maybe we should actually in this case. So if you look at the progress note, the physician note, it started out, the solo practitioner, as a note to myself. It was a communication tool so that six months from now I can see what Mrs. Schwartz's glycemic control was or I can look at Mr. jones's hypertension three months hence, but to myself. It evolved into a doctor to doctor or doctor to clinician, clinician to clinician communication in the hospital and in the setting where specialists were involved so that we can care for the patient. Both of those were all about the care of the patient. Lawrence Wheaton came up with the SOAP note which was both a teaching tool but was still about the care of the patient in a structured format: Subjective, objective, assessment, plan.

The next bullet I will affectionately term CYA, and it was all about malpractice, medicolegal requirements, what did we have to document so that -- I'm sure there's still some attorneys in the room, although I think the physicians outnumber you once -- would not be sued, and ultimately right now this is where we are. We document to justify our bill.

So if you can go to the next slide, what about the current documentation requirements? First of all, they change regularly. My colleagues and I are constantly reviewing what exactly it is that we need to do to justify a 99232 versus a 231 versus a 99291. Do I have to say the patient was critically ill and get the ten negative review of systems in there as long as the family history is not included? It creates anxiety. The jewel of our health system I view because I'm a teaching physician in an academic center are our academic centers, and just about the time that all these regulation requirements for documentation went in place HHS's Office of the Inspector General said, I think the PATH initiative would be a good start right now. That's physicians at teaching hospitals. It targeted us, and it fined many teaching hospitals across the country. So our anxiety level already here heightened to a certain level was sent up to here, and what happened? We all started documenting far greater than we probably needed to, but we still have that anxiety as teaching physicians. We double document, triple document, and what's that burden? That burden is if you ask some of my colleagues, myself as an intensivist, I see 20 to 30 patients a day, ten minutes of documentation that's in excess of what the medical student does, what the intern does, what the resident does, what the fellow does, is about average. That's a dictated note to justify that kind of bill. For 20 patients a day that's three hours and 20 minutes; 30 patients, five hours; 40 patients a day, six hours and 40 minutes. That's in excess to all those other individuals documenting.

So what are the opportunity costs associated with that time spent? Well, it's time spent not providing direct patient care. It's time spent not listening to and educating the patient. It's time spent not communicating with the patient's family. In my area, let me tell you, my patients are intubated. They're not talking. They've got a tube in their mouth. I'm talking to their families or trying to talk to their families about prognosis, end of life decisions, real world things, and again, at the jewel of our health care system in the US it's time not spent teaching tomorrow's doctors.

What can we do about it? Last slide. We need to absolutely maintain doctor to doctor, clinician to clinician communication while meeting the necessary medicolegal requirements for those attorneys and without encouraging fraud. How do we do that? There are some methods that you can all assist with, and these are not mutually exclusive. You can pick and choose maybe all three. Standardize the notes. Since the requirements have gone into place it's been a moving target. Why not have the government pick the list. You check off here. You have a drop-down list. The electronic health record will help build this, but frankly, I think the government can actually help in this area because my experience in building electronic health record or trying to for 1,700 owned physicians or employed physicians and 4,200 others associated with our system is that it's very tough to get consensus. There's an adage that I live by in my work in the electronic health record. It's two physicians, three opinions, and so if CMS can help us out in that regard, that would be wonderful.

Adopt the "chart it once" rule. If an intern writes it, a resident writes it, a post- doctoral fellow writes it, why do I not need to have to repeat that in its entirety as the attending physician? I shouldn't.

And document by exception. This is something actually nurses have caught on to and grasped tightly to, but it's hard to generate a bill by that exception. How about the laboratory evaluation and physical examination were negative except for the following. Again, not mutually exclusive, perhaps a combination of the three. I will turn back to Dean.

MR. ECKENRODE: Thank you, Dan, and if you will indulge us with a couple of moments to recap our perspective here. I believe Mr. webber had mentioned something about promoting integrated delivery systems and the desire to have a seamless opportunity to deliver care and get information. Well, for the past seven or eight years that's exactly what UPMC Health System has been trying to do. Integrate and streamline operations, develop an electronic health record and leverage our technology investments both in information technology and clinical applications, and the reason you do that is to achieve a seamless, efficient, high quality continuum of care, but if you are overregulated and if you are imposed upon at every turn, you can largely be prevented from achieving that continuum.

We recognize the importance of regulation oversight. We welcome it. It's a vehicle for assuring patient safety. It's a vehicle for assuring the appropriate utilization resources, and it advances major public agendas. Today's system though is cumbersome, it's duplicative, it's inconsistent, and it's trying to govern 20th century health care with mid 20th century regulations, and it's just unacceptable.

If you want to look at what we recommend, if I can briefly summarize these things, eliminate or simplify the Medicare cost report, improve uniformity across regions on provider payment and medical necessity criteria, give providers an easy way to obtain guidance in the application of regulations, look at cost benefit analysis before implementing regulations, streamline physician documentation requirements, establish a system to facilitate participation by interested parties, but do it once. Coordinate regulators outside of the provider community. Give them the opportunity to act as a consortia and look at how many overlapping requests and duplicative requests are made from those entities, and under the guise of do something, anything, set up an opportunity for a handful of providers or health systems to pilot the new way of regulation. Thank you very much.

DR. WOOD: I want to thank all of the group from UPMC, and to go back to our committee members that I so rudely put on hold, I apologize, but let me start with Bruce, then we'll go to Mr. Bloom and Ms. Ryan, and then we'll go from there and so on.

MR. CUMMINGS: Thank you, Mr. chairman. Thank you for really a scintillating presentation. You sounded all the right notes, and I want to see if we can play let's make a deal here. Ms. Concordia, you offered in the course of your remarks to make UPMC a laboratory for some of these new ways of gathering and processing data, and within this committee one of the task forces is charged with data and information or looking at ways of doing it. So I want to ask the Chair and the staff if it's possible since one of the recommendations of our subcommittee is to try to set up one or more pilots where the data that is now being collected to go on to myrative forms, ABN, MSP, OASIS, swing bed, MDS, there are other culprits, go into a central repository, and the question is can we make UPMC, it sounds like they're on record, offering to be such a laboratory to be a pilot to do precisely that.

DR. WOOD: Yeah. I think the answer to that actually is we certainly can recommend that as a possibility. There is some concern, I'm not a lawyer and my counsel Leslie will be listening to this -- she's already waving at me. Of course, Leslie has her counsel, but some of the discussion over the years about how much latitude the Secretary has, there is more latitude on the Medicaid side than there is on the Medicare side, but it is possible actually to make some suggestions that could end up in an authorizing piece of legislation. The real challenge for that then is how much is it going to cost when you look at one versus the other, and there have been a couple of those actually that have been done in legislation, and one has been recently proposed by Senator Jeffords, and if I remember correctly, in that law or that proposal wasn't UPMC one of the sites, there were six, that was proposed?

MR. ECKENRODE: Good question.

MS. CONCORDIA: Do you know, George, sitting in the back?

DR. WOOD: There were potentially six sites that were in that Jeffords legislation. It happens that Mayo was one of them, and Dartmouth was another, and I thought yours was in it, but the answer so your question is absolutely yes, and it's simply a matter of how you put it together.

Now, Leslie, I should give you a chance to make sure I have not misspoken.

THE AUDIENCE: I think generally you are correct. Typically the Medicare demonstration authority relates only to payment as opposed to participation of payment and survey and cert. So I think we need to take a look at what ability we have to do things in a combined variety. I mean, there may be some things that we can't do, for example, the statute requires an out-and-out site visit a certain period of years. Well, we would need to continue to do that, but in as much there is data collection, et cetera, that would support some of those things, there may be a way to do better coordination and so that you didn't have the data collection burdens that you are currently facing.

I think it's just a matter of actually taking a close look at what's required in each individual component that either you are regulated by or what's being regulated in the rule setting. We're talking about different types of entities with UPMC. I think we're looking at really more the different individuals or the differently organizations that do the survey itself. So you have got two different issues there.

DR. WOOD: Okay. Mr. Bloom.

MR. BLOOM: Thank you. First of all, let me thank the people from UPMC. Your presentation was terrific. I think this smart card has enormous potential not only for cutting down on filling out the forms but expanding the thinking behind it obviously, and I'm sure you've thought of it, in terms of putting people's medical history on it, the medications that they're taking, just as importantly the medications that might kill them if they take them and other information, and I think it would be an extraordinarily fabulous thing to happen. It's a really wonderful thing. I really commend you. And my question really is for Mr. webber, and unless I'm misinformed, you will have to help me with this, and I'm just going to play devil's advocate a little bit. This is not my personal viewpoint, but NCQA, and my own personal experience has been quite good because you actually disaccredited an HMO that I was involved with at one point. They lost their accreditation, although it really didn't seem to have that much impact on their actual business, although they did work very hard to get the accreditation back, but if I recall correctly, the HMOs that you accredit actually pay you to do the accreditation, and I guess what kind of firewall or protection do you have built in to make sure that there isn't any sort of bias or incentive for you to give them accreditation? Because basically the regulated is paying the regulator in this case.

MR. WEBBER: Well, that is, let me just say that that is a private accreditation model, and when NCQA got started, we actually went to the employer business community that was asking for independent evaluations of managed care organizations that they were moving their employed population into and said, would you be willing to pay for this evaluation? And their answer was no, but they said to us, we would be willing, we would be willing as a contract provision to say to the HMOs that we contract with that you must go through this independent NCQA evaluation, and that was the model, and I think it's very important to understand that NCQA did not get off the ground because HMOs voluntarily came forward and asked to be accredited and asked for their information to go public. They came because there was leverage particularly from the employer community that demanded it.

We are very open to other business models, and, you know, would love to consider other ways that we could get paid, but it was simply the only business model that we had to create our independent evaluation system.

I might also say it's the same thing the Joint Commission does and every other private accreditation entity, but the value of our accreditation is based on how the consumers and government sees us and employers that pay for managed health care see us has been the basis for our being in the system overall. It has not been because we are again part and parcel of the health care delivery system, and you mention that health care plan that we did not give accreditation status to. I can remind you that every time that we deny accreditation we have a lawyer from that health care plan on our doorstep the next day because unlike other private accreditation organizations that information goes public immediately and is on our web site and is published because we as an organization have been committed to public accountability and making the information on our evaluation open and transparent to the public at large.

MR. TIRONE: Just a comment with that. First of all, our decisions also go immediately on the web site, but the fact is that if we didn't have an objective evaluation, then there really wouldn't be much value in it, and that's what the industry sees, and yes, we have to be -- their fees support the organization, but they have to get something for it, and it is that independent evaluation.

MR. WEBBER: The Enron problem has not helped private accreditation, I might add.

MS. RYAN: I would just like to comment that the last panel just gave me a royal headache this afternoon because it was so much like what it feels like day to day on the home front, so you just did a marvelous job of describing the reality of it.

While it was alluded to in some of the testimony this morning, it seems that we not only have the repetitive requests that aren't timely because the cycles are not uniform, and we not only have the fragmented number of agencies engaged in in either the deem status or the governmental status, but it's all of the validation processes that are beginning to emerge, and I think they just make the whole thing then exponentially complex.

For example, HCFA is trying to validate the Joint Commission and the deem status process to the other accrediting bodies but also doing the lookback surveys of the state survey and certification process in long-term care. Then we have the additional audit processes that have been introduced for purposes of validation of the accuracy of the data, some of it coming from the state survey and certification process for the clinical data under MDS and now a duplicative process coming from CMS about the validation of the data for payment purposes emerging, and then we have all of the new compliance regulations that are coming out of OIG that talk about compliance with the regulations and the audit requirements that are in place there, and then we have the audit requirements that are coming as CMS contracts with new intermediaries, and every intermediary goes back and does a backward look-see as to what the findings of the prior intermediary have been. So that that's almost like a whole overlay of validation, and at least continuous quality improvement theory that came from Demming said unless those observations are independent they don't add any value anyway.

DR. WOOD: Does somebody want to comment, other than the fact that the other, one of the other tenets of continuous improvement is that if you have to inspect the inspector, the system is so irreparably broken you start over with quality design. Jack, did you want to comment?

MR. ROVNER: No. I have a question for the panel.

DR. WOOD: Oh, well, go ahead.

MR. ROVNER: I would like to try to drill down to see if we can come up with some recommendations for solutions based on your comments, and I'm particularly interested to get you to comment on (A) if there's a statutory barrier to what I'm about to ask, and then (B) if there's a regulatory fix, because what I hear basically is there are by deeming we can pick accrediting organizations to basically give CMS what it needs for, you know, conditions of participation, et cetera, so it seems to me there's two questions:

One, the regulatory burden that you point out which is that the government has to approve the process; the regulatory process is so slow that we're always going to be five to ten years behind. So is there a mechanism or is there a statutory barrier, and if not, is there a mechanism that you see could be implemented where HHS or CMS can essentially incorporate or adopt as kind of their operating regulations the processes that you have in place that you obviously are much more nimble in updating, so rather than having them follow behind you on regulations, they essentially adopt what you do which then brings me to my second level of question then is, as Dr. Wood just mentioned, for the verification process is there a better way to effectively have the, if you will, the government as the accreditor of the accreditors watch out to make sure that you are doing the job independently because whether you're above reproach, that always is a question that's there and needs oversight.

So I'm asking for comments from any of the panel. Is there a way, (A) is there a statutory barrier that would prevent streamlining the system so that the deemers can do the job; (B) are there ways then if there isn't a statutory barrier for HHS or CMS to basically be able to work with you to adopt your regulations or your approach as the regulations without having to go through this long process of five years or whatever, and then how can they best do the verification process as least intrusive so you don't have three surveys in six months but basically satisfying I think the public and political demand that we are making sure you are doing your job that the government is ceding to you.

MR. TIRONE: I will take a shot. First of all, it would be different for different providers because the statute has different directions, and I used to know it all, but I'm not quite sure I remember it all now, but long-term care, there's a lot of very specific requirements in their regulations. For hospitals it's more. Once you get by what a hospital is, it's more as the Secretary shall decide. So that in some areas and one of the suggestions I made is that if the Medicare conditions were more general, then they could fit more easily within the Joint Commission standards or other standards. So I think there's ways to work that so that you don't have conflicting standards or confusing standards for most providers.

The validation process, as you mentioned, there's a lot of audiences for the validation. There is an absolute requirement that the Joint Commission, that the accreditor be publicly responsible for what we do when we do a public function, and in deeming we're doing a public function as well as private accreditation.

I think that there is. There's better ways to use data. There's not -- it seems to me that there's an overreliance on walking in our steps before us in as many places as you can afford to get into in making, as I said, redundant demands, somewhat redundant and conflicting demands. There are ways that perhaps we can work together, and, in fact, some ideas were suggested in the past where the Joint Commission and the state or CMS could do a validation process together that works cooperatively. They have been piloting one where we work very uncooperatively, and I'm certainly not suggesting that, but I mean I think there are ways to make it more tolerable and less of a burden on the provider. As I pointed out, the bottom line here, the one that we're all trying to help is the one that gets all of the burden here, the provider who's supposed to be doing this has to respond to that. So I think there are regulatory fixes that can be done here in both areas, both by bringing the standards together and a recognition, HHS has to recognize that they are not, that perhaps a public process is not as nimble, a government process is not as nimble as the private sector can be, and make your rules recognizing that instead of make your rules till, oh, we can change them, it only takes six months and we can do it; we'll recognize that it can't be done.

DR. WOOD: Liz? Andrew?

MS. CONCORDIA: Even if we did nothing with regard to changing the regulations, if we could get everyone to agree to simultaneously survey us, that would have a huge impact on our staff because it would be one staff group that we would be taking out of the field to deal with all the surveyors, and then we would have our validation survey simultaneously with the others. So I think we all recognize the challenge of the regulatory burdens here and how difficult it is to change things, but I also think that there are some small steps that we can make and take that can be done immediately, and so if we can look at some short-term solutions going towards a long- term solution as someone that's challenged every day to make sure we care for our patients in these budgetary constraints, I'm very concerned that if we don't do something now, the system is broken, and we do not have enough dollars, and to have a physician and many physicians tell you again and again that they can spend less time with a patient because they're documenting and because they're with various, you know, abiding by various regulatory issues, I really think we're not serving our patients appropriately, so I think that there are some things that we can do immediately, and I would welcome this group to at least embrace that component of what we need to do.

MR. WEBBER: Let me comment, too, from the program that I know the most about, the Medicare Plus Choice deeming program. I think it would need a statutory change. BBA was pretty explicit that we as accrediting entities had to meet or exceed the Secretary's requirements. So I mean that became the platform that we had to meet.

It's interesting, there are some states, and again, this is not what we prefer because we like voluntary deeming, but there are some states that require private accreditation where in order to get licensed in the state, Pennsylvania is one, Florida is another, you have to go through private accreditation. The thing that you have to worry about there is in if there are a number of private accreditation organizations that are sort of eligible to meet that test, then you've really got to worry about the variation in the different accreditation standards among those organizations, and you don't have an awful race to the bottom where the accrediting entity that has the lowest standard is the one that everyone wants to go through as a process. So again, we would have to worry about that.

In terms of your second issue, oversight, there are lots of mechanisms, and again, based on NCQA experience where we're deemed in states quite often we'll go on a survey and representatives from the state regulatory body will be there with us as observers watching what we do every step of the way, and there will also be good coordination because we're never going to have a process where every one of our requirements exactly meets what the state requirements are. They're always going to have to do some level of additional review, but through that process they can more clearly identify that additional review and maybe the week later or again as we talked about have a coordinated survey where we all can get the work done, the accrediting body and the state work done at the same time. So, you know, I think there are some interesting models out there particularly at the state level that might inform how you might want to recommend that Medicaid and Medicare programs move.

DR. WOOD: Mr. finan, and then we'll come back to Ms. Walden.

MR. FINAN: The presentations this afternoon were really excellent, and I think that they point out, if we think about the Institute of Medicine study, the crossing the quality chasm work that was done by the Institute of Medicine, it really does portray a picture of a system that's broken, and as we I think are doing good work in this effort to improve regulations and reduce the regulatory burden, I go back to what Tony said earlier, and I have had this sense for a long time, that the licensing and regulatory systems are more of a franchising system to protect or create silos rather than to focus on the care of the patient or the care of an individual, and it just might be an interesting thing at some point, Mr. chairman, to pick a point of contact and a provider, and I would use a physician as a good example and ask the question of CMS perhaps of why does that physician have certain freedoms in the care of a patient in the ICU, and yet when we move that patient to a different setting, all the rules change? What is it that is of such great concern when we put the patient in the home or we put the patient in an ambulatory setting that causes that physician or nurse now to have to be subject to a whole different set of rules and regulations? It could be very instructive to us in trying to get to, if not additional targets, not that we don't have a lot already, this is a target-rich environment, as we say, but it may, in fact, lead us to at least some priorities that could make meaningful change and get us more traction going forward.

DR. WOOD: Well, actually I like that thought. I have been struggling in my own mind with what it is we will recommend for the long term, and we need to start thinking about that because we're going to have to make those recommendations, and the more I listen to this and I've tried to think about how we would go forward, we could continue to tinker around the edges a little bit which is a lot about what we have been doing, but we probably wouldn't make very much progress.

What the Institute of Medicine has described in its two reports so far is what we have heard. Now, the second report actually begins to give some principles on which you would design a delivery system for the future, but there really isn't much in the way of mechanisms of payment or measurement that would go along with that, although a report that is currently being prepared might have some of that, but I think there are some things that we might then need to consider in that regard. Today we don't have enough time to go through that discussion, but I've been talking with Christy and the members of the Executive Committee about beginning to outline some time that we can have to really talk about how we're going to do that. Are we going to talk about evolutionary or what you might consider to be revolutionary or disruptive change here? None of those terms are actually very good. I prefer a different approach, and that is a quality design approach that will take some time but will yield the results that we want in the long term.

So I want every one of you to start thinking about that because that becomes the question. When we start thinking about the writing, we're either going to write a really short report that's going to offer very little tinkering, not much else, or we're going to write something else that might be much more provocative, might leave more work for us to do, might get us dismissed in a hurry, I don't know which, but I'm personally willing to take the risk.

MR. FINAN: Let's try to blow their socks off.

DR. MARTICH: I'm with you, Jack.

DR. WOOD: Ms. Walden.

MS. WALDEN: Yes. Thank you, Mr. Chairman. I, too, have really appreciated this commentary this afternoon, particularly hearing that as a long-term care provider I'm not the only one who is dealing with a lot of these issues, and I think I mentioned at a previous hearing that long-term care environments are the second most regulated industry in existence, and so we're dealing with these burdens all the time, particularly ongoing surveys, and I can empathize with the experience that Ms. Concordia mentioned having gone through four surveys in a three-month period of time and dealing with my staff's posttraumatic stress syndrome after that experience, and I was just wondering if Mr. tirone could comment on why it is that the current deem status process for long-term care will not work and what alternatives might be available, and I also appreciate your comment to CMS that perhaps some of the quality initiatives or, rather, the quality improvement processes could be adopted for long-term care, but to be able to replace the current system with some sort of deemed process I think would make sense.

MR. TIRONE: I think the current atmosphere around long-term care amongst consumer groups on the Hill would dictate that any, that a classic deem status where in effect the oversight of the organization is turned over to someone other than a government agency would just not be acceptable, and it's not -- I think Tom Scully was alleged to have suggested even a slackening of the oversight, and the story was he got a trip to the Vice President's woodshed or something, but in any case, so I mean it's not -- so I don't think it's a practical approach. I think that the straight regulatory approach though has not been shown to be effective and that just giving people more hammers may not be the answer.

MS. WALDEN: Well, to respond to Dr. Wood's request that we look at solutions, is there a possibility of doing some sort of pilot program or has that been looked at?

MR. TIRONE: Well, under the, as was mentioned, the HCFA Medicare has always taken the position that the statute does not allow demonstration authorities of health and safety requirements. They can demonstrate anything under the payment mode, but for health and safety they cannot. They do have the ability to change their process but not on a demonstration method.

We think that demonstration authority would be very helpful. We think that there is a lot of the quality improvement the systematic change approach that the Joint Commission would bring to a nursing home setting and does bring could be very helpful, but we recognize that unless there's some incentive, that you already have four surveys every three months, I'm not sure how encouraged you are to add a couple more, even though I'm sure the 80 page application that Miss Concordia showed was an exaggeration, but, well, that's all right, that's all right. I mean there has to be some incentive in the system to bring that about, and I think that can be done.

MS. WALDEN: Honestly, if it would bring about change, we would definitely volunteer to do it. I think somebody has to step forward and, frankly, I don't believe that the current process measures quality, and there was a tremendous difference in the outcomes between our state survey and our Joint Commission survey, and so there's something seriously broken, and we would volunteer to participate, and I think there are others that would as well.

MR. TIRONE: I mean we have done some work that we'll be publishing that shows that the Joint Commission accredited homes have less, have fewer serious violations under the state survey, but I think there's room to work here.

DR. WOOD: We need to conclude now so that we can make our site visits. The buses are now outside. They will leave at 2:30, so if you have things to take upstairs to your rooms, you have 15 minutes to do that or you miss the bus, and the bus for dinner this evening leaves at 6:45 from the lobby. Thanks to our panelists. Good job.

(At 2:19 p.m. the meeting was adjourned.)

C E R T I F I C A T E

I hereby certify that the proceedings and evidence are contained fully and accurately in the stenographic notes  taken by me on the hearing of the within cause and that this is a correct transcript of the same.

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Registered Diplomate Reporter