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 si