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74–521PS 2001

THE REGULATORY MORASS AT THE CENTERS FOR

MEDICARE AND MEDICAID SERVICES; A PRESCRIPTION FOR BAD MEDICINE

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JULY 11, 2001

Serial No. 107–17

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

DONALD MANZULLO, Illinois, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

JOHN THUNE, South Dakota

MIKE PENCE, Indiana

MIKE FERGUSON, New Jersey

DARRELL E. ISSA, California

SAM GRAVES, Missouri

EDWARD L. SCHROCK, Virginia

FELIX J. GRUCCI, JR., New York

TODD W. AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

BILL SHUSTER, Pennsylvania

NYDIA M. VELAZQUEZ, New York

JUANITA MILLENDER-McDONALD,

California

DANNY K. DAVIS, Illinois

WILLIAM PASCRELL, New Jersey

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

JAMES R. LANGEVIN, Rhode Island

MIKE ROSS, Arkansas

BRAD CARSON, Oklahoma

ANIBAL ACEVEDO-VILA, Puerto Rico

DOUG THOMAS, Staff Director

PHIL ESKELAND, Deputy Staff Director

MICHAEL DAY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on July 11, 2001 ............................................................................... 1

WITNESSES

Berkley, Shelley, Member, U.S. House of Representatives .................................. 3

Toomey, Patrick J., Member, U.S. House of Representatives .............................. 5

Hulsebus, Michael, D.C., Hulsebus Chiropractic .................................................. 12

Whitson, David, M.D., P.C., Medical Offices of David Whitson ........................... 14

Seeley, Brian, Seeley Medical, Inc., for the Power Mobility Coalition ................ 17

Chase, Phillip, The Chase Group, for the American HealthCare Association .... 19

Goldhecht, Norman, Diagnostic Health Systems, for the National Association

of Portable X-Ray Providers ................................................................................ 23

APPENDIX

Opening statements:

Manzullo, Hon. Donald .................................................................................... 37

Velazquez, Hon. Nydia ..................................................................................... 40

Prepared statements:

Toomey, Patrick J. ............................................................................................ 43

Berkley, Shelley ................................................................................................ 47

Hulsebus, Michael ............................................................................................ 49

Whitson, David, M.D. ....................................................................................... 56

Seeley, Brian ..................................................................................................... 60

Chase, Phillip .................................................................................................... 70

Goldhecht, Norman .......................................................................................... 78

Additional Information:

Statement of Steven M. Mirin, M.D., Medical Director, American Psychiatric Association ....................................................................................... 83

(1)

THE REGULATORY MORASS AT THE CENTERS

FOR MEDICARE AND MEDICAID SERVICES:

A PRESCRIPTION FOR BAD MEDICINE

WEDNESDAY, JULY 11, 2001

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Committee met, pursuant to call, at 10:05 a.m. in Room

2360, Rayburn House Office Building, Hon. Donald Manzullo

[chairman of the committee] presiding.

Chairman MANZULLO. The Small Business Committee will come

to order. Good morning.

This is the Committee’s second hearing to examine the regulatory problems at the centers for Medicare and Medicaid services,

CMS, formerly known as HCFA. I will not recognize the new name

until I am convinced that HCFA is the a new organization with a

new operating philosophy. So I will not use the new name anymore. At that point when I no longer use HCFA, then the reforms

we are seeking will have been implemented.

In the previous hearing the Committee heard about the deluge

of paperwork that health care providers towered under in the effort

to provide service to the injured and the informed. Today’s hearing

will address the regulatory morass swamp in health care providers

and potential solutions to the draining of that swamp. [Laughter.]

It is like Pogo in that swamp down there? [Laughter.]

Are you doing okay? We are having some fun today, are we not?

You bet, you bet. The Committee’s next hearing at the end of this

month we expect to hear from Thomas Scully of the head of HCFA,

and Sean O’Keith from the Office of Management and Budget,

about administrative actions that they can take to resolve the problems identified by the Committee.

The health care provider renders service to an eligible Medicare

beneficiary and should be reimbursed at a rate that enables the

health care provider to stay in business. That seems like a simple

proposition. However, sometimes simple tasks are rendered unduly

complex by excessive federal government procedure. In the case of

Medicare, the simple proposition of reimbursing providers for services rendered now covers more than 130,000 pages of federal laws,

regulations and informal guidance. The U.S. Court of Appeals,

Judge Leon Higginbothim, once noted about Federal Milk Marketing Orders, ‘‘It is difficult to imagine a case intertwined with

greater confusion and delay and a problem which but for the administrative process was not extremely complex.’’ Well, what does

2

that mean? It means you cannot understand it. Today’s hearing

will demonstrate that Judge Higginbothim’s statement can be applied with equal, if not greater, force to the operation of the Medicare program.

The regulatory morass of HCFA has spawned a hydro-headed

monster feared by all and accountable to no one. This morass cannot last because the diversity affects the ability of small businesses

to provide adequate health care to beneficiaries. I am interested in

navigating through this, and I would like to thank Mr. Toomey and

Ms. Berkley for their leadership on this issue. The ultimate beneficiaries will be patients and taxpayers because higher quality care

will be offered at a lower overall cost to the economy. And I will

recognize the Ranking Member of the Full Committee, the distinguished gentle lady from New York, for her opening statement.

[Mr. Manzullo’s statement may be found in the appendix.]

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Today we continue our examination of the Health Care Financing Administration system, known today as the Center for Medicare and Medicaid Services. During our last hearing, this Committee examined the main burdens CMS imposes on health care

providers. Foremost among these are onerous and often contradictory paperwork requirements that doctors must go through simply

to receive payment for services. Even more disconcerting, doctors

can face unannounced audits for unintended errors. In addition,

doctors are forced to pay the difference in disputed agency billings

up front, before the dispute is resolved—effectively, they are considered guilty until proven innocent. Tragically, these impositions

discourage doctors from caring for the most needing among us—the

aged, and the poor.

Today, Mr. Chairman, we focus on solutions to these problems.

The Medicare Education and Regulatory Fairness Act, proposed by

my colleagues Congresswoman Berkley and Congressman Toomey,

goes far to overcome these challenges. First, this bill will reduce

the administrative burden on doctors by easing complex billing requirements and creating an expedited system for dispute claims

resolution. Second, doctors will get advance notice for any audit, so

they are not caught by surprise when CMS comes knocking. Lastly,

this bill bars up-front repayments in fee disputes, requiring the

agency to prove the doctor has committed an error, rather than the

other way around. This legislation addresses many of the inequities

created by the most recent reforms, enforcing the fair play we expect from our government.

Nevertheless, I hope we will be careful as we move forward. Unintended or unexpected consequences of our reform proposals could

divert energy and funds away from the primary mission of CMS,

which is to compensate fairly the doctors who provide services to

the poor and elderly. For example, our attempt to level the playing

field between doctors and CMS should not limit enforcement efforts

against fraud or abuse. As a recent news report has suggested,

there are still some people out there trying to bilk CMS for their

own profit.

In loosening the grip CMS has on providers, we need to avoid a

return to our earlier system, which was rife with chronic

mispayments or improper payments. CMS has reduced payment

3

error rates from 14 percent in 1996 to 6.8 percent in 2000—and we

can encourage them toward their goal of a five percent error rate

set for next year.

Finally, the driving force for our reform remains the continued

viability of Medicaid and Medicare. Thankfully, through strong fiscal discipline and good success in reducing fraud and errors, the

Medicare Trust Fund will remain solvent through 2025. We can

continue and improve on that success.

To conclude, Mr. Chairman, CMS provides a vital service to

those who most need medical are; our poor and our elderly. We will

work together to build a system where doctors do not fear caring

for their patients while we fight waste, fraud and abuse.

Thank you.

[Ms. Velazquez’s statement may be found in appendix]

Chairman MANZULLO. Thank you very much.

We have two panels. Our first panel consists of two members,

Congresswoman Shelley Berkley from Nevada, and Congressman

Pat Toomey from Pennsylvania.

Congresswoman Berkley, please.

Ms. BERKLEY. Thanks.

Chairman MANZULLO. And I am going to put on the five-minute

clock. Normally members ignore red lights and green light, but let’s

take a stab at it anyway. Thank you.

STATEMENT OF THE HONORABLE SHELLY BERKLEY, A

CONGRESSWOMAN FROM THE STATE OF NEVADA

Ms. BERKLEY. Thank you, Chairman Manzullo, Ranking Member

Velazquez, and Members of the Committee for this opportunity to

speak before you today.

Let me begin by telling you how pleased I am that the Small

Business Committee is studying this problem of the regulatory burden in the Medicare system. I do not have to tell you that many

health care providers are in fact small business people. Many of

them have small practices with only a few staff members.

They are finding it increasingly difficult, sometimes impossible,

to keep up with the constantly changing regulatory obligations of

the Medicare system. And to give you some idea of what they are

contending with, I have with me the books that most doctors will

tell you represents the core of their medical education when they

are in medical school, and I have in front of you five cases of Medicare regulations that the doctors after they graduate medical school

after having mastered what is in these books, then they have to

master what is in those crates. It is not very balanced, I would say.

Asking a small practice, or any practice for that matter, to deal

with that massive amount of paperwork is unfair, unnecessary, and

counterproductive. Finding a way to reduce this burden can mean

the difference between helping small practices stay open, particularly in rural areas, or watching them shut down one by one.

In order to help this important segment of the small business

population, the Medicare regulatory burden must be addressed.

And I want to share with you how I became involved in this.

I received a telephone call from a friend of mine telling me about

a problem that a fellow doctor was having. Apparently he had attended a HCFA seminar in Las Vegas and got into a debate with

4

a HCFA representative who was talking about the different regulations. And in the exchange, from what I understand, it got very

heated. Then, of course, the seminar ended. The doctor went home.

Two weeks later he received a letter from HCFA advising him of

an impending audit. He is absolutely certain that the reason that

he got this letter was for retribution for having spoken out about

some of the regulations that were being proposed, or initiated I

should say.

What happened to this doctor should not happen in America to

anybody. HCFA came in. They totally disrupted his practice for

months after months after months. His practice ground to a standstill while the auditors took over his office, went through hundreds

of thousands of dollars of billings.

A year later he received a letter, after almost the destruction of his practice, saying that he owed $900. There was never any question of fraud, never any question of abuse. What there was was a

difference in the coding, and after hundreds and hundreds of thousands of billings being gone through by HCFA, totally disrupting

the man’s practice, they told him he owed $900, and it was terribly,

terribly unfair.

As I helped my constituent, I found myself wading deeper and

deeper into the amazing amount of paperwork, regulation and explanation that health care providers must deal with on a daily

basis. As time went on, I began to hear one story after another

from hardworking providers who have had increasing problems

working within Medicare.

One letter I received from a constituent is particularly compelling. It was sent to me by a doctor who has fought his way, unsuccessfully, through the regulatory process. He writes, ‘‘Although I

have spent my entire 30-year career dedicated to the care of my patients, I will be forced to retire. There is no way for me to express

the pain and anguish that I feel at the prospect of this happening.

At this point I can think of nothing else to do except to ask for your

help. How can this be happening in our country?’’ It is time to do

something to protect our nation’s community of law-abiding physicians from overly burdensome federal acts so that they can remain

in the Medicare program, treating and caring for our nation’s older

Americans.

This need is precisely the reason why Congressman Toomey and

I introduced the Medicare Education and Regulatory Fairness Act,

MERFA, last March. This important legislation seeks to provide

regulatory relief to health care providers in the Medicare system.

The bill achieves this goal by reforming some of the practices of

CMS, clarifying current regulations and providing education about

Medicare regulations to providers.

MERFA responds to the problems health care providers face by

reforming the audit practice to limit random audits, make the practice of returning overpayments to CMS more fair, and limit the use

of extrapolation. MERFA provides basic rights concerning appeals

and delays recovery of overpayments until the entire appeals process has been completed.

MERFA also creates several effective education functions to ensure that billing and documentation errors are minimized. Finally,

MERFA requires CMS to make sure that new documentation

5

guidelines for physician services are pilot tested before implementation.

Physicians and other health care providers do not want to spend

valuable time on paperwork. They know there is some that must

be done, but they more importantly want to save lives, ease sickness and serve their patients. MERFA will help them do that.

Medicare needs to be user friendly, a user friendly system for both

patients and providers. This bill is a step in that direction.

Once again, I want to thank you for testifying and thank you for

an opportunity appear in front of you. Thank you very much.

[Ms. Berkley’s statement may be found in appendix]

Chairman MANZULLO. Well, thank you. I presume you do not

want those documents made part of the record.

Ms. BERKLEY. In the interest of not overburdening with regulation, no.

Chairman MANZULLO. Thank you.

By the way, statements of all witnesses and members of Congress will be made part of the official record without objection.

Congressman Toomey.

STATEMENT OF THE HONORABLE PATRICK J. TOOMEY, A

CONGRESSMAN FROM THE STATE OF PENNSYLVANIA

Mr. TOOMEY. Thank you, Chairman Manzullo. It is a pleasure to

be here to testify today before the Committee. I want to thank you,

Mr. Chairman, also Ranking Member Velazquez, and my fellow

Committee members. Perhaps in light of the fact that I am member

of this Committee, you will go easy on me during questioning.

Mr. Chairman, first, I would like to thank you for one other

thing, and that is your longstanding leadership on the need to reform Medicare for health care providers and the patients that they

serve. I would also like to thank my fellow Committee members,

many of whom are co-sponsors of this legislation. Representative

Berkley and I introduced MERFA just four months ago, and today

we will be announcing that we have over 220 bipartisan co-sponsors. Medicare reform for providers is indeed an issue whose time

has come.

As we heard in this Committee’s hearing on May 9, health care

providers of all kinds are suffering under excessive paperwork and

regulations. In my view, Medicare’s burdensome regulations are a

symptom of the fundamental structural flaw in the program. As

long as the federal bureaucracy attempts to dictate the circumstances under which it will allow, and the price it will pay for

thousands of different individual medical procedures, Medicare will

always be a maze of regulations and will not provide the effective,

efficient medical insurance that our senior citizens deserve. Ultimately, we need to transform Medicare into a market-based system

in which patients are also consumers. Patients should be in control

of the money that is being spent on their behalf.

Now, H.R. 868, the Medicare Education and Regulatory Fairness

Act, is not nearly that ambitious. Fundamental, comprehensive reform of Medicare will take more of a consensus and more time.

But, in the meantime, health care providers need relief now, and

that is what our bill does. Congress needs to step in and restore

some balance between HCFA and the health care providers. And

6

if we do not step in, HCFA’s practices will have serious detrimental

effects on the quality of our seniors’ medical care.

I would like to outline what I believe are several unintended consequences of some of HCFA’s current practices. First, a number of

HCFA’s practices are counterproductive. In an effort to try to lower

the cost of health care, HCFA attempts to reduce fraud by imposing enormous paperwork burdens on all health care providers, including the overwhelming majority of whom are honest and would

never commit fraud. Paradoxically, this burden actually increases

the cost of providing health care for senior citizens. Second,

HCFA’s practices can be counterproductive when they reduce the

amount of time health care providers have to spend with their patients. Third, seniors’ medical records have become more of a way

for physicians to communicate with Medicare bureaucrats than as

a way to communicate with their colleagues. As Dr. David Whitson

will testify in the next panel, sometimes these documents are no

longer even clinically useful medical records. Rather than being

medical records, they have become billing records. Fourth, and perhaps most disturbing, is the perverse incentive for health care providers to deliver ordinary care—the service that will not raise eyebrows at HCFA—not necessarily the best care. For health care providers, the risks and costs of defending against HCFA are so great

that it produces an incentive for them to bill Medicare for common

services, which means providing patients with common services,

even when the best care might call for more intensive or just different services. Finally, the shear complexity and associated costs

of compliance are so great that solo and small group practices often

simply cannot afford to comply.

So what does MERFA do to correct these unintended consequences? MERFA reforms how HCFA issues new regulations and

policies, for one. It ensures health care providers have a modicum

of due-process rights when there is a dispute with HCFA, and it

allocates administrative funding for the specific purpose of educating providers about proper billing and documentation. Our goal

is to ease some of the regulatory burdens that health care providers face so they can spend more time with their patients and

less time dealing with HCFA bureaucrats.

Here are a few examples of some of the specific reforms in

MERFA:

MERFA will clarify that health care providers only need to comply with the regulation issued by HCFA when it is finalized, and

that a regulation cannot be applied retroactively;

it allows providers the option of entering into a repayment plan

for overpayments rather than HCFA automatically offsetting future

payments;

it prevents HCFA from unilaterally recouping an alleged overpayment while an appeal is still pending;

it would allow providers up to one year to return overpayments

without penalty or audit if they discover the mistake before HCFA

does;

it requires funds to be used to educate providers about property

documentation and billing. It creates a safe harbor so providers can

voluntarily submit claims for education purposes without fear that

that would trigger an investigation; and

7

it would require HCFA to pilot test new Evaluation and Management Guidelines before mandating them for all physicians nationwide.

I would like to point out that there are some new sheriffs in

town—George W. Bush as President and our own Don Manzullo as

Chairman of the Small Business Committee—provide the leadership that has made regulatory reform popular in Washington, and

we need to make sure that health care providers do not miss out

on that spirit and that momentum.

A majority of House members now recognize the need to rein in

some of HCFA’s excesses. In the administration, Secretary Tommy

Thompson and Administrator Tom Scully have made encouraging

remarks. There are over 60 health care provider groups in support

of our bill, and with the Small Business Committee’s help, we can

make HCFA reform a reality for our health care providers and the

patients they serve.

Thank you very much.

[Mr. Toomey’s statement may be found in the appendix.]

Chairman MANZULLO. Thank you for that excellent testimony.

Congresswoman Berkley, if you want, you can give me the name

of these people at HCFA that harassed your constituent, and we

will write the story. We will put it up on web site, on the Small

Business Committee web site.

Ms. BERKLEY. I will check with the doctor. The one doctor in particular was so intimidated by what transpired that he has kept an

amazingly low profile, and I have invited him to participate with

me, and quite frankly, he is fearful of going public with his story

for fear of additional retribution. But I will share this with him

and see if he would not be more willing to go more public.

Chairman MANZULLO. In the next panel, you will listen to a fearless one, who is my chiropractor, who took in the entire system

and——

Ms. BERKLEY. He would have to be fearless to be your chiropractor. [Laughter.]

Chairman MANZULLO. That was pretty good.

I do not have any questions. I am a co-sponsor on your bill. I

wish you God speed on it, and I trust that we can do something

with this organization. I had an incident yesterday. I was on the

phone for 15 minutes with a HCFA carrier. The difference between

Social Security where the people are in direct contact with people

who work for the agency, and we have a relatively—in fact, a very

good relationship.

And the problem with HCFA is that it is one-step removed from

these contracting organizations. But there is a lady who is dying

of liver cancer who wanted to get—her husband wanted to get a lift

chair, and for 30 days he had been arguing with a woman at one

of these carriers who insisted that she was not going to violate the

privacy and wanted an incompetent woman to sign a privacy release.

And I got on the phone and I argued with her for 15 minutes,

and I finally said, ‘‘Who is your supervisor?’’ ‘‘Well, they are not

available.’’

I said, ‘‘Would you like to come before my Committee on a subpoena?’’ I said, ‘‘I am not kidding.’’

8

I have had it with these incompetent bureaucrats that waste all

of our money instead of helping people.

And, finally, it go to, she gave me the name of the executive of

the organization, and he called and he was extremely apologetic because I finally got to a person who understood that a person who

is incompetent cannot even sign an X, because if you move their

hand for them, then you are guilty of a felony. And all that because

they had no idea what they were doing, and fortunately it was an

isolated incident with this one particular organization, but it is stories like that that build up and build up.

Mr. Toomey, I would add another name to the new sheriffs in

town besides George W. Bush and myself, and that is my distinguished ranking minority member, Mrs. Velazquez. At times she

may appear to be very tame.

Ms. BERKLEY. I wonder who her chiropractor is. [Laughter.]

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

I have been historically—well, first of all, thank you for being

here and we will work together with you in easing the burden of

paperwork regulations and regulations.

But, Ms. Berkley, all those books that you have, those are regulations?

Ms. BERKLEY. No, no, these are the—these are the textbooks—— Ms. VELAZQUEZ. Oh.

Ms. BERKLEY [continuing]. Of medical school.

Ms. VELAZQUEZ. Oh, okay.

Ms. BERKLEY. Those are the regulations.

Ms. VELAZQUEZ. And those are the regulations.

So how do you—can you tell me how do you think those regulations got there in the first place?

Ms. BERKLEY. I think the—the only thing I could think of is that

through the years, through additional regulation upon regulation

upon regulation, they just grow and grow.

I suspect that much of what is in that cart—the container—probably contradicts what is in that container. And if I could share an

anecdote.

When I was first running for Congress, I started—my husband

started courting me, and we were dating during my campaign. He

is a doctor. He is a nephrologist. He used to bring—now this may

not sound very romantic, but he used to bring HCFA regulations

on our dates for me to read.

And I am an attorney by profession, he is a practicing physician

for many years, and he would show me these regulations that I

could not make any sense out of. And you know, they keep getting

promulgated and promulgated and expecting physicians and health

care providers to not only digest the information, which is often

contradictory, but to master it and to follow it until the next regulation comes, which may contradict the one that they are operating

under, with no education, no opportunity to learn the new regulation before it is implemented. So I think a lot of the—many parts

of MERFA addressed that particular problem as well.

Ms. VELAZQUEZ. Yes, but the point that I just would like to

make, if you allow me, is that, look, all those regulations that have

been promulgated and that are reflected in those regulations are

a result of the Health Insurance Portability and Accountability Act

9

of 1996, the Balanced Budget Act of 1997, the Balanced Budget Act

of 1999, the Medicare/Medicaid Benefits Improvement and Protection Act of 2000.

Passed by who? By us, Congress.

Ms. BERKLEY. Yes.

Ms. VELAZQUEZ. So we have to go to the root of the problem here,

and it is not just HCFA, but also we need to recognize that this

is a result of congressional mandates that we passed here in Congress.

Ms. BERKLEY. I do not disagree with you, and I think what Congressmen Toomey pointed out is quite accurate, the unintended

consequences often of what is done in Congress, this is the unintended consequence.

Ms. VELAZQUEZ. Thank you.

Ms. BERKLEY. Thank you.

Chairman MANZULLO. Congresswoman and Physician ChristianChristensen.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman, and I

want to welcome my colleagues also this morning, and I want to

thank you for the second in a series of hearings on HCFA. I think

this Committee has a unique and very important perspective to

bring to the issue of HCFA and the reform as it affects our small

business health care providers.

Like you, Mr. Chairman, I feel that a new name is not a new

agency make, and I am awaiting real reform before I really adopt

the name of Center for Medicare and Medicaid Services as well.

Having been victimized myself by this agency, I am really proud

to be a co-sponsor of your bill. We welcome the bill. I think it

makes a real effort in addressing some of the issues and frustrations that physicians have been facing, and some of which we will

hear about on the next panel.

I think, among those reforms are the pilot testing. So many

times our carrier would inform us of some new reg, and by the time

we got used to it, it is changing, or it just wasn’t working. So I

think that pilot testing is very, very important.

The repayment plan, it should not have taken legislation to

have—to make that happen. It just makes good sense in the spirit

of cooperation because, as even HCFA will tell you, most of the

areas where they find discrepancies are not really deliberate fraud

and abuse. They are mistakes. So it should not have had to take

us, but we are glad that you are doing it.

And I hope that—your bill is drafted, but the copy you showed

me earlier this morning about the one particular. I took care of a

lot of patients who were coming from low-income levels, and even

the co-payment was difficult for them to meet. And I will admit

here that—even though it is on the record—that many times I just

forewent the co-payment. Of course, I lived in absolute fear that I

would be called up for the $2 or $5 or whatever it was, and be

sanctioned and maybe be denied the ability to take care of Medicare patients. So I hope, Shelly, it is retroactive, and it covers any

allowances that I have made.

I just wanted to ask one question. [Laughter.]

One of the purposes of MERFA is to make Medicare carriers and

the intermediary audit process more equitable and increase MediVerDate 31-AUG-2001 22:21 Sep 17, 2001 Jkt 074521 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A521.XXX pfrm02 PsN: A521
10

care education efforts. What is HCFA’s and OIG’s official position

on this bill? Have they offered one? And has the private insurance

agents industry offered an official position?

Mr. TOOMEY. Not surprisingly, the OIG is not terribly supportive

of this bill. They have made a series of observations, some of which

we believe are valid considerations that ought to be taken into account. Others, we think are not. And, frankly, as we move forward

in this process, both Ways and Means and Commerce have jurisdiction and what we ought to do, and I believe what they are doing,

both of those committees, is taking input from those folks and balancing their concerns with the legitimate concerns of the providers.

I will say in informal discussions with the new administrator of

HCFA, he was very, very sympathetic to the intent. He observed

that there might be some technical things that need to be adjusted

as a practical matter, but that he was very open to this effort to

end. I think that is going to be very helpful.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you. I have no further

questions. Again, thanks for being here and thanks for the bill.

Chairman MANZULLO. Congresswoman Kelly.

Ms. KELLY. Thank you, Mr. Chairman.

Inasmuch as I just got here and have not heard the testimony,

I am not going to ask any questions. I know where to find these

two individuals at a later moment when I do have questions.

Thank you.

Chairman MANZULLO. Thank you.

Congressman Baird.

Mr. BAIRD. Thank you, Mr. Chair. Thank you for convening this

hearing and to the sponsors. I am also proud to be a co-sponsor.

I went to a little hospital called Morton General, way up in the

hills, and they had been audited that very year. Activity had been

found that they had 12 instances of overbilling, double billing, not

overbilling. And I thought they should receive a award for their efficiency, 12 out of an entire year, and instead they got menacing

and threatening letters. So I applaud this bill and that is part of

why I co-sponsored it.

One quick question, and then—a specific detail question. In some

of the summaries, it talks about providers covered in the bill, including physicians. It is my understanding that many other providers, including my own profession of psychology, face similar

challenges, and I trust that they would also be protected under the

provision of MERFA. Is that the intent?

Ms. BERKLEY. It is our intent to be as inclusive as possible. And

if there were any omissions of a health care provider, part of the

profession, we are urging them to please to contact either one of

our offices, and we will incorporate them.

Mr. TOOMEY. And if I could just add, I completely agree with

Representative Berkley, and we have manifested that with letters

to the relevant committee chairs, that this should include all health

providers.

Mr. BAIRD. Terrific. I would like to follow up and make sure we

get some others included.

One sort of philosophical question, but it is important. I think

the Chair raised an interesting point, the difference with dealing

with formerly HCFA folks versus Social Security.

11

In this intermediary, the so-called hired guns, there is somewhat

of a paradox in that that is the very model of privatizing government services, which is—I am not trying to be partisan here, but

that has been sort of the mantra of the majority party now, and

yet it is that very privatization that in some cases has made it

more difficult for us to deal with them.

And I just wonder if there are comments from the sponsors of the

bill about that.

Mr. TOOMEY. We could probably have a discussion that would go

on for a very long time on this topic.

I think that the word ‘‘privatization’’ can, of course, mean many,

many different things to different people. Having a private corporation to perform the functions within a very highly bureaucratic government structure may not necessarily provide great relief.

However, I think if we move in the direction of empowering patients to make the decisions about the kind of insurance product

they would have, the kind of coverage they have, and diminish the

control that the government has, that, I think, would be extremely

helpful.

Mr. BAIRD. I appreciate that point. I think my concern is in the

nature of trying to root out waste, fraud or abuse, we have basically created consultative gun slingers—these bounty hunters— that go out, and they effectively act like that towards practitioners,

and the practitioners who have been on the receiving end have said

essentially you have created a virtually unaccountable organization

to investigate well-intended practitioners with virtually no consequences.

If we have a problem with Social Security, I think they are pretty receptive to us calling us and pulling their chain a little bit. Or

frankly, what I do with Social Security, if I call them up, oftentimes I say good work when they do a good job—— Chairman MANZULLO. That is right.

Mr. BAIRD [continuing]. Because so oftentimes they do excellent

work and we need to commend it. But I am greatly concerned

about this whole issue. I hope your bill addresses that in part. But

I think separately this Committee or this body might want to

evaluate whether it has been such a successful experiment to have

these consulting bodies.

I yield back my time. Thank you, Mr. Chairman.

Chairman MANZULLO. I appreciate that very much. We are in the

process of obtaining some of these contracts between HCFA and

the providers, and I am interested to see the so-called performance

contracts, where they work on a cut of the money that they get

from the providers.

If any do not want to send those to me voluntarily, we will just

issue a subpoena duces tecum. They can bring them to Washington

and put them on my desk.

Mr. TOOMEY. I applaud you, Mr. Chairman.

Chairman MANZULLO. So that is the role that we are going to

take on this.

I appreciate it very much.

Ms. BERKLEY. Thank you.

Chairman MANZULLO. And let us know what more we can do on

your bill.

12

Ms. BERKLEY. Thank you.

Chairman MANZULLO. Thank you. Let us have the second panel,

please.

Okay, we have our second panel in place. You are going to share

a microphone. We are going to start from the left and go all the

way down this side here.

Our first witness is Dr. Michael Hulsebus. Dr. Hulsebus is from

Byron, Illinois, which is not too far from Egin, Illinois, and his father, Bob Hulsebus, pioneered chiropractic in the State of Illinois.

He was one of the early pioneers, and Mike is here with his brother, Roger Hulsebus. The boys come in pairs to watch each other.

And I am very proud to be their congressman. I would just state

that they set the example of whenever a provider has a medical

problem, a problem with HCFA, to immediately contact a member

of Congress because we can do a lot of things here in Washington

to help them out.

So our first witness will be Dr. Hulsebus. The light in front of

you will be green is go, yellow, you have got a minute to go, and

then red. We will try to keep everybody’s testimony to about five

minutes so we have plenty of time for questions.

Michael.

STATEMENT OF MICHAEL HULSEBUS, HULSEBUS

CHIROPRACTIC

Dr. HULSEBUS. Thank you, Mr. Chairman and members of the

Committee. As you stated, my name is Michael Hulsebus.

Chairman MANZULLO. Hang on a second. Are you having a problem with those—Michael, why do you not start over with your

statement.

Dr. HULSEBUS. Okay. Well, thank you, Mr. Chairman and members of the Committee. My name is, like he said, Michael Hulsebus.

I am a doctor of chiropractic from Rockford, Illinois.

I appreciate the opportunity to address this Committee as it reviews the actions of the Health Care Finance Administration and

it’s dealing with the chiropractic profession. I am also speaking

here on behalf of the American small business operators who must

deal with a growing mountain of red tape and procedure wrangling

to survive. It would seem in the best interest of the free enterprise

system to simplify the processes dealing with small businesses,

whose operators need an assist.

I am glad to tell my story, but dismayed to think it is not unique.

While there was an end to my situation, I know there are other

chiropractic and health care professionals who have been forced out

of the system because they could not assemble the forces necessary

to fight this battle.

After the Health Care Financing Administration removed Blue

Cross and Blue Shield from administering Medicare in 1999, it

then retained several contractors across the United States, including Wisconsin Physicians Service for services, who administers the

program in my home state of Illinois. Since then there has been a

clear pattern of targeting the chiropractic profession from elimination from the program.

This happened even though the Office of Inspector General

issued a report in September 1998 saying the chiropractic profesVerDate 31-AUG-2001 22:21 Sep 17, 2001 Jkt 074521 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\A521.XXX pfrm02 PsN: A521
13

sion is not an area of major concern, and the limited resources of

this program would be best served by focusing on other and more

costly benefits.

In post-payment reviews, like the one I went through in 1999,the

carriers issue a demand for records, along with threat of expulsion

from the program. Then they contact an analysis of the records to

determine whether the treatments are ‘‘medically’’, not

chiropractically, necessary or whether treatments constitutes maintenance care. If determined to be not medically necessary or to be

maintenance care, the claims are rejected.

Throughout this review process, the chiropractor is subjected to

potential claims of criminal fraud, of a quasi-criminal nature. The

physician is provided minimal options from the outset, none of

which recognize the fundamental principle with the Constitution

that every citizen is innocent until proven guilty.

In the usual course of the post-payment review process, the physician is provided with three options:

Number one, admit guilt, and pay or agree to pay; number two,

admit guilt, but seek the reexamination of the charts; or deny guilt,

and be required to produce the records of every Medicare patient

cared for by the clinic, subject them to review by the consultant

and face the ultimate consequences.

The ultimate consequence could be expulsion from Medicare program or possible criminal sanctions.

Under the regulation, it is the physician, in conjunction with the

patient, who is primarily responsible for the determination of the

necessity and duration of care, including the existence of a subluxation, which the chiropractor is uniquely qualified to determine.

However, Health Care Financing Administration and the provider

have arbitrarily limited the number visits that will be compensated.

Chiropractic methodology and patient input had been largely ignored. Making this even more complicated the previous admitted

failure to properly communicate with the profession as to what is

required under the guidelines, and what documentation is necessary.

Since March 1999, when I first received a demand for documentation, I have been forced to engage in unjustified and substantial amount of work, efforts and expense, all to defend myself

against alleged overpayments which were ultimately allowed after

a costly two-year review process.

Among my concerns at this points are the following: The methods—utilized for the identification of chiropractics for post-payment

review, and the apparent efforts to target the chiropractic profession, in post-payment reviews and the adoption of guidelines that

further restrict the scope of acceptable services, and the varied interpretation of policy from state to state and—consultant—and to

consultants.

The admitted failure to properly communicate and educate the

profession——

Chairman MANZULLO. Michael, why do you have a sip of water

there.

Dr. HULSEBUS. Sure. The admit failure to——

14

Chairman MANZULLO. Settle down a little bit. We will give you

a little bit more time.

Dr. HULSEBUS. Sure. No problem.

The admitted failure to properly communicate and educate the

profession as to the guidelines and requirements imposed. My experience with the review process has been contravention of the Congressional intent and the directives that created the Medicare program. The processing and punishment rather than the creation

ways to meet the goals of the program.

With the new guidelines now in place, it would be expected that

the situation will not improve without your intervention.

And I want to thank you very much for everything you have

done, and I appreciate that, and I will entertain any questions.

[Mr. Hulsebus’s statement may be found in the appendix.]

Chairman MANZULLO. Thank you for your testimony.

Congressman Toomey, do you want to introduce your constituent,

the next witness?

Mr. TOOMEY. Mr. Chairman, thank you very much. I would like

to do that.

I am very grateful that Dr. David Whitson has taken time out

of his practice and his busy schedule to be with us today. I would

like to introduce him to the Committee.

Dr. Whitson is a constituent of mine from Allentown, Pennsylvania in the Lehigh Valley where he was born and raised, educated, and has practiced as a solo family practitioner since 1975,

and I can assure my colleagues from personal experience, as well

as the words of many friends back home, that Dr. Whitson is well

known, not only for his medical expertise, but the compassion and

genuine personal concern that he has always shown for his patients.

Dr. Whitson is also kind enough to serve on a Health Care Advisory Council that I formed, and he has given me very valuable

input on health care issues, in particular. It was any suggestions

that he had made and the input that he had given with regard to

Evaluation and Management guidelines that helped us to draft

MERFA in the form that it has.

So I am very grateful for all of his help, grateful that he is with

us today, and I would like to introduce Dr. David Whitson.

STATEMENT OF DAVID W. WHITSON, M.D., P.C., MEDICAL

OFFICES OF DAVID WHITSON, ALLENTOWN, PA

Dr. WHITSON. Thank you, Congressman Toomey.

Chairman MANZULLO. We look forward to your testimony.

Dr. WHITSON. Thank you. I would like to thank you, Chairman

Manzullo, Ranking Member Velazquez——

Chairman MANZULLO. Excuse me, Doctor. Could you pull the

microphone a little bit closer, the other microphone. Thank you.

Dr. WHITSON. I would like to thank you, Chairman Manzullo,

Ranking Member Velazquez and the other Committee members for

the opportunity to testify.

Most cancers start slowly and stay quietly hidden until they insidiously infiltrate an organ, a system, and then the entire person.

Eventually when they have grown to sufficient power and size,

15

they start their terrible destructive, destructive, crippling and often

fatal course.

Ladies and gentleman, there is a cancer growing in the health

care system in the United States, and in my opinion, it has the

power to cripple and destroy the best medical care available in the

world.

The cancer began at the seemingly innocent attempt to control

costs for senior citizens when Medicare recruited physicians to participate in its program. Well-intentioned, it has mushroomed into

a bureaucratic nightmare of paperwork, rules, regulations and reviewers whose job seems to be one of forcing physicians into decreased payments for their services cloaked under the evaluation

and management guidelines. It is imperative that this cancer be

controlled before our once proud medical system is crippled beyond

repair.

Mine is the story of living the American dream. From modest beginnings with considerable hard work and support derived from our

government and other generous people I was able to achieve my

dream, a solo family doctor, and have done so for 26 years.

But my dream is in grave trouble. For the last five years, the

business aspect of medical practice has become a nightmare. Medicare has mandated, and almost all other insurance companies have

happily followed suit, that I must document ridiculous and excessive information regarding each and every patient encountered to

the brink of absurdity.

The feeling, if it is not written down, you did not do it, has ruined medical recordkeeping, turned medical records into fodder for

malicious attorneys chasing lawsuits, Medicare and insurance companies whose folks are seeking refunds, and changed the focus of

the physician from the patient to the record. It has to stop.

It really doesn’t matter economically what I do when I see a patient. It matters to the patient. But Medicare cares only about

what I write down. If I examine a patient’s eye, it is now inadequate to record the eye is normal. If I want proper reimbursement

for the proper time and complexity of the exam and decisions I

make, I must record almost every aspect of my exam and thinking

process about why I think the eye is normal.

So my record must say, ‘‘Eyelid, normal cover; moves normally;

surface of the eye has normal color, normal tearing and no evidence

of injury; pupil reacts normally to changes in light and reactions

normally when patient changes from looking near or farther away;

front part of the eye appears quiet, suggesting no inflammation;

lens is normal, suggesting no cataract or foreign body; back part of

the eye is fine, showing no infallation; retina looks normal, including a normal nerve, artery, vein, and no evidence of detachment,’’

et cetera.

I am stopping out of consideration for your time and the clock.

My point is if I know I ask the right questions of my patient and

did a thorough eye exam on my patient, and I decide the eye is normal, my note in my chart that the eye is normal should suffice. I

or another physician who might need to review my patient’s chart

should know it’s normal. If on a second exam an abnormality is

noted, we can safely assume it occurred in the interim.

16

Under current E&M guidelines, I must include all the details I

elucidated into the chart. This confuses the chart. It makes mountain of reading for myself or another physician should we need to

review it, and really adds no useful information. It simply adds

words.

However, if one assumes the adage, ‘‘If it isn’t written, it wasn’t

done,’’ any malpractice attorney or Medicare or insurance reviewer

wishing to down code the visit starts to drool if he looks and my

record and see it is concisely saying ‘‘eye is normal.’’

Ladies and gentlemen, I am tired. I am being beaten down. I am

a very good family doctor who wants passionately to practice medicine and I would greatly appreciate your help. The private insurers

follow Medicate. The absurdity of the E&M coding nightmare has

to stop. Physicians like me who love family practice need your help

before we become extinct like all the mom and pop businesses in

this country.

Huge corporations, who lack the tremendously valuable personal

touch I feel is such an inherent assets to good medical care, will

deliver medicine, rather than individuals who know and truly care

about each person they see.

Physicians and patients are not interchangeable as insurance

companies would have you believe. It takes a long time to build

trust with patients. Once established, it makes a physician much

more efficient and effective in helping that patient, but there is no

code for the time that it takes to build that trust.

Congressman Toomey and his co-sponsors have attempted to initiate some positive reform. It is not enough, but it does represent

hope for dedicated family physicians like me.

In reference to my opening remarks, I truly hope someday medicine can cure all cancers. It is also up to you to help the possibility

of that cure. Medical practice in this country is in trouble. Before

medicine can cure anything, we must use the necessary time, effort

and legislation to cure medicine of the cancers that threaten its

quality, its providers and its longevity.

Thank you for the kind attention.

[Mr. Whitson’s statement may be found in the appendix.]

Chairman MANZULLO. Thank you very much, Dr. Whitson.

We are going to—there is a vote, we have to go vote and we will

stand in recess until we return, probably about 10 or 15 minutes.

[Whereupon, a recess was taken.]

Chairman MANZULLO. Okay, we will reconvene our hearing.

Our next witness is Brian Seeley, who has grown up in the home

medical equipment industry; works at a family business located in

Cleveland. In 1988, Mr. Seeley purchased a small company in Ormond Beach, Florida. It has grown into two location, selling appliance in north-central Florida, and it is considered a full-time home

medical equipment and service company.

Seeley Medical has 13 employees. He is a member of the board

of directors for the Power Mobility Coalition where he works closely

with industry leaders concerning reimbursement criteria access

and product document.

We look forward to your testimony, Mr. Seeley.

17

STATEMENT OF BRIAN SEELEY, SEELEY MEDICAL, INC., ORMOND BEACH, FLORIDA, FOR THE POWER MOBILITY COALITION

Mr. SEELEY. Thank you, and good morning, Mr. Chairman, distinguished members of the Committee.

As was stated earlier, I represent the Power Mobility Coalition,

which is a coalition of supplier and manufacturers who provide

power mobility equipment and services, such as motorized wheelchairs and scooters for beneficiaries nationwide. The PMC members represent well over half of the nation’s power mobility market

in all regions of the country.

According to HCFA’s own Medicare data, more than 95 percent

of all suppliers of durable medical equipment generate billings of

less than $350,000 a year annually, and 99 percent generate less

than five million annually.

While HCFA has overall responsibility for the Medicare program,

many of its responsibilities related to reimbursement and medical

policy have been delegated by the agency to the carriers. These are

the four regional DMERCs around the country.

Unfortunately, the carriers have used this authority to create

new policies, often in direct contrast to existing policy published by

HCFA, developed by Congress. A deeper concern is that HCFA is

aware that policies are not being adhered to by the carriers, and

by omission are allowing these policies to stand. These actions and

HCFA’s lack of oversight of the carriers has lead to an erosion of

the due process accorded to small businesses who choose to provide

items and services to Medicare program beneficiaries.

Three examples of these violations of our due process I would

like to cover today are the audits, extrapolation and appeals.

Medicare audits should be conducted base on good cause and adhere to established standards and guidelines. In fact, HCFA has

told carriers, ‘‘subject providers only to the amount of medical review necessary to address the nature and extent of the identified

problem.’’ But one of HCFA’s carriers that oversees 17 states uses the number of power wheelchairs sold by suppliers in that region as the

reason for an audit. If you sell more than seven chairs per month

in that reason as a provider, you will be audited by that carrier.

This creates a chilling effect on the ability of small businesses to

provide equipment and services to the patients who qualify for

them.

Mr. Chairman, the development of new technology in the power

mobility industry has made this equipment available to a larger

number of disabled persons. It is now possible for beneficiaries to

obtain smaller, more light-weight and maneuverable motorized

wheelchairs for use inside a patient’s home. This is not an instance

of over utilization. This is an instance of technology.

The criterion used by HCFA’s carriers is inconsistent with the

policies set forth by Congress. Congress has established the Certificate of Medical Necessity, CMN, as a document which determines

all medical necessity requirements for claims submitted to the

Medicare system. When creating CMN forms, HCFA explicitly declared in writing, I quote, ‘‘These forms contain medical information necessary to make an appropriate claims determination.’’ Yet

18

HCFA’s carriers recently told suppliers in writing, and I quote, ‘‘CMN represents nothing more than a Medicare pre-payment tool,

and CMN itself does not provide sufficient documentation of medical necessity.’’ The suppliers complied with the rules established by Medicare

program, but they are punished by the carriers which applies new

and arbitrary criteria after the equipment has been delivered to the

patient and after the claim has already been paid.

An example of the lack of due process is the use of the extrapolation by HCFA’s carriers in their calculation of so-called overpayments. Let me explain extrapolation.

A carrier may draw a sample of claims, sometimes it is as few

as 10. All those claims are paid to the supplier. It is determined

that 50 percent of them should not have been paid even though the

patients’ physicians certified the need for the equipment and the

patient qualified for the equipment. We are talking about five

claims.

That amount is then extrapolated to the universe of claims. If

there 100 claims in that universe, a small business will owe repayment of 50 electric wheelchairs rather than just five. That can represent up to $350,000 to a small proprietor. To a company like

mine, that would put me out of business.

The overpayment amount is due within 30 days of the carrier’s

determination, and even though the supplier wins, most, if not all,

of the overpayment back on appeal the business is severely damaged. This process is creating hardships for dealers and has forced

many businesses to face bankruptcy. This is unfortunate because,

according to HCFA’s own figures, 80 percent of the denials are reversed on appeal.

When a Medicare carrier audits the power mobility supplier, a

carrier/reviewer will make a determination as to whether he believes the equipment is medically necessary. If the determination

is negative, the reviewer who has never examined the patient reverses the determination previously made by the treating physician. The suppliers must then go through a lengthy appeal process.

I would like to thank you, Mr. Chairman, for providing the

Power Mobility Coalition with the opportunity to bring these important issues to your attention, to the attention of the Committee.

An audit process that targets class of suppliers rather than targeting abuse, extrapolations which can easily put a small supplier

out of business, and a lengthy appeals process that withholds proper payments to supplier with an ultimate reversal rate of 80 percent.

We look forward to working with you to achieve reasonable solutions to these issues. Our entire industry and tens and thousands

of disabled beneficiaries are counting on you.

Thank you.

[Mr. Seeley’s statement may be found in the appendix.]

Chairman MANZULLO. Mr. Seeley, I would suggest that if you are

having continuing problem with this—what the acronym used for

the carrier?

Mr. SEELEY. The regional carriers, the DMERCs?

Chairman MANZULLO. The DMERCs, if you feel that they are

acting in violation of the law, you send us a letter. I will ask that

19

the HCFA inspector general do an investigation. And if I believe

that what they are doing is illegal, I am going to ask them to cancel the contract.

Mr. SEELEY. Thank you, Mr. Chairman. We will do that.

Chairman MANZULLO. That is what we have to do, every time

there is a violation you bring it to our attention. We have within

the Small Business Administration the Office of Advocacy that has

a legal staff. We work with them. We have about a half a dozen

lawyers on staff that are experts in the regulatory analysis. He

does read regulations on Saturday night. [Laughter.]

Not so much a social life, but use our Committee. We work on

a bipartisan basis. We were effective in canceling a contract when

the Air force had decided they have 106,000 baseball caps made,

and instead of giving—using it for procurement, they subcontracted

with the Government Printing Office because they thought that

hats were printed and not manufactured. And we called one individual and we stopped that contract. So we are not adverse to

using any of our tools possible to raise as much hell possible, because you cannot afford to go to court with it, and that is why we

are here to be your advocate. Okay?

Mr. SEELEY. I appreciate that, Mr. Chairman.

Chairman MANZULLO. Our next witness is Phillip Chase. Mr.

Chase has been in the health care delivery business for over 30

years, including both owner/operator as well as senior manager

level position in one of the largest health care delivery systems in

the country. He has a keen interest in health policy development

and implementation, which has been a constant focus for him

throughout his career.

We look forward to your testimony, Mr. Chase.

STATEMENT OF PHILLIP CHASE, THE CHASE GROUP, THOUSAND OAKS, CALIFORNIA, FOR THE AMERICAN HEALTH

CARE ASSOCIATION

Mr. CHASE. Thank you, Mr. Chairman.

Chairman Manzullo, Ranking Member Velazquez, and members

of the Committee, thank you for having the opportunity to appear

before you this morning and share some insights in regards to effective reforms to the Health Care Financing Administration, now

known as CMS.

As the Chairman spoke, I am Phillip Chase. I am here today on

behalf of the American Health Care Association. The American

Health Care Association is a nonprofit association representing

12,000 not-for-profit and for-profit health facilities for skilled nursing, assisted living, and subacute care, and facilities for the disabled.

Let me briefly speak of myself. I have 30 years of experience as

the owner and operator of skilled nursing facilities in California.

Currently, I am the administrator of the Center at Park West, a

99-bed skilled nursing facility. I know firsthand the financial problems of the nursing home profession as an owner, as well as the

day-to-day problems as an administrator trying to negotiate around

complex CMS regulations to provide high quality care to my client

residents.

20

Before I begin my testimony, I want to say that from what my

AHCA’s representatives tell me in Washington, it is a new day at

CMS, and with a new willingness to develop solutions to problems

that face us. We are greatly encouraged by the statements of Secretary Thompson and by Administrator Scully.

What I am going to do today is identify some systems that we

believe deserve your oversight and attention.

There is a dangerous storm now brewing over the long-term care

horizon, Mr. Chairman. We have a demographic crisis that, if not

addressed, will severely threaten the quality and availability of

care for the wave of baby boomers who are about to enter in the

long-term care system.

Financially, skilled nursing facilities are, at best, treading water.

We are facing a staffing crisis of epidemic proportions in every part

of the U.S. Our turnover rates exceed 80 percent annually and recruitment is nearly impossible. The staffing crisis is compounded

exponentially by the regulatory system that forces caregivers to

focus on extraordinary amounts of time on cumbersome paperwork

at the expense of direct patient care.

This is a burdensome system and it leaves a highly negative impact on patient care by driving good providers and caregivers to

leave their profession.

I am here today not to ask for less government—I am here today

to ask for smarter government—government that works in the best

interest of promoting and maintaining quality care for beneficiaries

and work to create a positive and healthy environment for our

caregivers.

Since the Institute of Medicine study in 1983 and the Nursing

Home Reform Act of 1987, facilities have been forced to work closely with HCFA’s regulation to try to understand how to negotiate

through that process. The system of oversight that exists today— although well intended—grew uncontrollably, as you heard earlier,

and has evolved into an ineffective bureaucracy that needs major

reform.

Today, providers face a system of oversight that is entirely subjective and process-oriented, and focuses more on punishment, not

on quality of care.

The system bears little resemblance to the OBRA ’87 that was

envisioned. The current environment is a type of ‘‘Catch–22’’ scenario in which the low number of citations is interpreted as poor

oversight, while a high number of citations is determined to be

poor care.

The Institute of Medicine study, December of 2000, reinforces

this conclusion. Therefore, the question before us: What reforms or

changes can CMS make that would be more significant to improve

its environment?

They are of two types, Mr. Chairman. The first is the much-needed administrative changes in how CMS carries out it regulatory

process; the second, to address the issue of financing in terms of

Medicaid and Medicare.

With regard to the regulatory improvement, let me share with

you a few insights.

The first I would ask you to consider is to allow a consultative

environment. Currently the language within HCFA’s orders to

21

state agencies is—there is a no collaboration policy. They are not

permitted to collaborate with providers in terms of how to solve

issues. We believe this is unfortunate. Their expertise and the nature of their job is seeing other providers and how they work gives

them some opportunities to share with us successful programs and

stories. So we believe that a change to the state operations manual

where they could be consulted would be very useful in that regard.

The second is to allow providers to follow physicians’ orders. We

recently had a survey in my facility wherein a state surveyor actually told me not to follow physicians’ orders. This obviously is not

appropriate, and we are caught in the middle because the surveyor

is telling us to act a certain way, yet our regulations and our ethics

require us to follow physicians’ plan of care.

The solution is to modify the CMS—I’m sorry—the State Operations Manual in a way that the surveyors clearly understand that

physicians’ orders should stand as the marking process in the care

of our clients.

The third issue is to stop CMS from holding nurse aide training

programs. If you have a survey citation in which you have patients

deficient care, your training program for CNAs may be suspended.

And because of the length of time it takes for you to get adjudication to a proper hearing as to the fairness of that particular deficiency, in the meantime you have lost your ability to provide the

training program for much needed staff as I mentioned earlier.

Next, implement a fair and timely appeal process. Currently, providers who want to dispute citations they believe have been issued

in error have first to appeal to the agency. That agency acts as the

enforcer, the judge and jury, and often fails to render an objective

ruling on a dispute. Only after the full administrative process has

been pursued, the informal resolution process, the administrative

law judge process, and finally the department appeals board, and

then to the secretary can either the provider then go to the court

system to seek a remedy. This is not very timely. It can be anywhere from a year to a year and a half before that process is completed, and very costly to me as a small business provider.

On the penalties that continue—one of the penalties that continue while I appeal this determination is this nurse aide training

program, which is very vital to our sustaining our staff and maintain our level of care.

A further ramification of this is that, although I have no claims,

my liability record in terms of provider of care to my clients, my

premiums for liability has skyrocketed from two years ago where

I paid $60 a day in 1999, to this year paying $550 a day. That is

almost a ten times increase.

Chairman MANZULLO. How are you doing in time? You are a

minute 30 over.

Mr. CHASE. Thank you, sir.

Chairman MANZULLO. Can you finish in 30 seconds?

Mr. CHASE. Yes, sir.

As a small provider, small business provider, the lengthy appeal

process needs to be addressed and looked into.

The next issue that I want to bring to your attention is the removal of disincentives to provide. I was able to take over from an

existing provider who was about to be closed down, and part of the

22

‘‘cost’’ that I incurred was that I got stuck with his penalties and

fines that he had experienced in his cooperation, and I as a successor in interest ended having to pay his fines and ended up having to pay for his cost settlement because I inherited his provider

number.

Today the Medicaid system pays for about 70 percent of the seniors in our nursing homes across the country, about 1.4 million clients. CMS does have the ability to work with states in addressing

that payment system in a way that we can bring that to a conclusion, bring that to a more positive resolution.

In conclusion, Mr. Chairman, I think we have the opportunity at

this point to work with members of the Committee and the new administration to seek ways in which the patients’ needs and their

care can be properly addressed in order to provide small business

opportunity to provide a quality environment to these clients.

Thank you.

[Mr. Chase’s statement may be found in the appendix.]

Chairman MANZULLO. So it is the superfund law that applies to

succeeding owners of long-term health care facilities?

Mr. CHASE. I have not gone to HCFA directly to ask for some reconciliation to these issues, and they have not——

Chairman MANZULLO. Do they have authority to do that, the

tacking of the fines of——

Mr. CHASE. Yes, they do.

Chairman MANZULLO [continuing]. That they screwed up in the

first place?

Mr. CHASE. It is a part of the provider agreement contract.

Chairman MANZULLO. What I would like you to do is to send me

a letter; put in there that provider agreement, and then ask in your

letter what statutory or regulatory authority HCFA has in order to

slap you with the penalties that were incurred by your predecessor.

Mr. CHASE. Yes, sir.

Chairman MANZULLO. We will take that letter and we will send

it to HCFA, and we will get an answer from them.

Mr. CHASE. All right, thank you for your help.

Chairman MANZULLO. Okay?

Mr. CHASE. Thank you.

Chairman MANZULLO. You bet. This is amazing. My mother was

in a nursing home for a period of time, and I could commensurate

with what she had to go through on it.

Our next guest is Norman, is it Goldhecht?

Mr. GOLDHECHT. Correct.

Chairman MANZULLO. Mr. Goldhecht is currently the Executive

Vice President of Diagnostic Health Systems, DHS, located in

Lakewood, New Jersey, where he oversees operations, billing and

cardiac services. I guess the cardiac services are related to the operations of billing?

Mr. GOLDHECHT. That’s true.

Chairman MANZULLO. Prior to joining DHS in 1985, Mr.

Goldhecht worked for the Lovebright Diamond Company where his

primary functions including invoice clients and tracking accounts

receivables.

We look forward to your testimony, Mr. Goldhecht.

23

STATEMENT OF NORMAN GOLDHECHT, DIAGNOSTIC HEALTH

SYSTEMS, LAKEWOOD, NEW JERSEY, FOR THE NATIONAL

ASS’N OF PORTABLE X-RAY PROVIDERS

Mr. GOLDHECHT. Thank you, Mr. Chairman, and members of the

Committee. I appreciate the opportunity to appear before you

today. My name, as you mentioned, is Norman Goldhecht, and I

serve as the Regulatory Chairman of the National Association of

Portable X-Ray Providers, and I also operate a mobile radiology

company in New Jersey. I am particular pleased to have the opportunity to once again testify before this Committee as my company

serves many patients in the New Jersey and New York area who

are constituents of the members of this Committee.

Mr. CHAIRMAN, I represent an industry predominated by small

and micro businesses. Our companies provide services to our nation’s elderly in a particularly safe, convenient fashion, as we, literally, provide care at the patient’s bedside. Because the vast majority of our patients rely on Medicare, our industry is highly dependent upon HCFA and its regulatory processes and pricing.

The regulatory process and specific policies of HCFA are critical

to our ability to provide our much needed services. It is for this

reason that we are so grateful to this Committee for, again, seeking

to ensure that the small businesses of America are appropriately

considered when HCFA policies and procedures are reviewed.

I would additionally like to thank Chairman Talent, the immediate past Chair of this Committee for sponsoring legislation last

year to assist our industry in providing quality care for the elderly

and infirm. Although Chairman Talent, and fellow original sponsor,

Chairman Crane, were unable to prevail in the much needed legislation, the NAPXP and all of its members greatly appreciate their

efforts and the efforts of all the members and staff who assisted

them.

The negative effects of HCFA policy are first felt and most keenly

in our rural and less prosperous communities. American small

business provides the most cost-effective and thus available service

in far-flung communities and other less profitable areas. While our

federal agencies are most likely to hear and understand the wellfinanced perspectives of big business interests, the needs of our

citizens living in regions offering lower profits to the small businesses who provide the only service available are frequently ignored.

As I present our situation to the Committee, I must stress that

our situation is grave. If we are unable to effect change upon the

current HCFA policies, our industry will continue to shrink until

only those patients fortunate enough to live in high density, high

profit areas will find our services available. To the elderly patients

in a facility in rural Illinois, or Colorado, or Texas, the need for an

X-Ray or an EKG in February will require an ambulance ride to

a hospital. There, the patient will be subject to all the of the waiting and discomfort we all associate with a trip to the hospital followed by another ambulance ride home. Contrast this with quality

care offered in the comfort of the patients’ rooms, surrounded by

reassuring sights and sounds without concern of adverse weather

conditions or road hazards.

24

Fortunately, this Committee has already provided an appropriate

mechanism for improving for most of our policy problems. Passage

of the Regulatory Flexibility Act should have dramatically decreased the number and scope and type of problems our industry

has experienced at the hands of HCFA. Unfortunately, while RFA

presents a clear mandate for small business impact analysis in the

regulatory process, it is all too often ignored. HCFA’s failings in

this area are cited directly by SBA Chief Counsel Glover in his annual report on RFA Fiscal 2000.

If the NAPXP were to request one result from this Committee’s

actions, it would be that the RFA be vigorously employed and enforced.

I would like to list three areas where HCFA’s policies have failed

to serve our industry or the Medicare system.

Rural access: Portable x-ray providers service many skilled nursing facilities and homebound patients that reside in rural areas.

The providers must travel considerable distances to and from these

sites. Increasingly, our member companies are opting not to service

these areas, and thus patients. We are, frankly, amazed that a policy which has the effect of creating a regional ‘‘wrong side of the

tracks’’ disadvantage to millions of our nation’s elderly is tolerated.

By refusing to additionally compensate providers of rural services

in response to their clearly higher costs and lower profits, HCFA

is actively engaged in a policy which simultaneously denied equal

patient care, and drives rural small business service providers out

of existence.

E.K.G. transportation: Currently, portable x-ray providers do not

receive any additional reimbursement to travel to and from a

skilled nursing facility while performing an EKG. The 1995 GAO

study of this situation showed an already disproportionate relationship between portable EKG services in rural versus urban settings.

Which member of this Committee would wish to explain to their

constituents that are receiving fewer diagnostic procedures simply

because they reside in the wrong area of the country?

Consolidated Billing: The Prospective Payment System for SNFs

mandated by the Balanced Budget Act has been very damaging to

our industry. While our industry initially offered cautious support

of this policy in the interest of improving fiscal health to the system as a whole, enactment has caused many of our worst fears to

be realized.

Mr. Chairman, I recognize the challenges faced by the this hard

working Committee in dealing with these often complex issues.

Again, I, and all of the members of the NAPXP, pledge our support

for the efforts and thank you for the opportunity voice our concerns.

I would be happy to answer any questions of the Committee.

[Mr. Goldhecht’s statement may be found in the appendix.]

Chairman MANZULLO. I appreciate all of your testimony. There

is a nursing home back in our district that got audited by HCFA,

and they were cited and threatened with a fine because they did

not serve parsley garnish on a plate even though it was on the

menu, and also they served porkettes instead of pork chops for dinner.

25

Now, I was discussing with my colleague here that, you know, we

pass the laws, but there must be a bunch of people out there that

have nothing to do but to walk around and harass people. I do not

even know what a porkette is. I guess that is what happens when

you raise beef cattle. I don’t know.

Dr. Hulsebus, the question I want to ask of you, you practice

with your brothers; is that correct?

Dr. HULSEBUS. That is correct.

Chairman MANZULLO. And one of them is here.

Dr. HULSEBUS. Yes. Dr. Robert Hulsebus began practicing in

1949, and my father is a chiropractor, as we stated earlier, and we

have a large practice in Illinois.

And when Medicare came in and—carrier, rather, and audited

us, they said they randomly picked, they picked our chiropractic

and some other chiropractic clinic down in Baulton, Illinois, by the

name of Dr. Frank Beamus. We were all second generation chiropractors and we had large chiropractic facilities.

And when we were audited, we have always cooperated and always tried to communicate with the carrier to try to comply with

everything they have asked us to do. We have asked for guidelines

and tried to cooperate, and our chiropractors, myself included, are

on boards and past presidents of state organizations, and we are

very, very active.

And basically we are told by the carriers we couldn’t talk to

them. And we received letters from them and mandated payment.

Chairman MANZULLO. They would not sit down with you and explain to you what, if anything, you did wrong?

Dr. HULSEBUS. Not at all.

Chairman MANZULLO. And then they went after you and your

brothers, and what is the total amount of fine that they wanted

from—— Dr. HULSEBUS. Well, it is a quarter of a million dollars, and you

have to understand that chiropractic care, the only paid benefit is

that of chiropractic adjustments of the spine, which averages $35

a visit.

Chairman MANZULLO. So there is really one Medicare coding that

that you could use; is that correct?

Dr. HULSEBUS. Correct.

Chairman MANZULLO. And that is to manipulate the spine?

Dr. HULSEBUS. Correct. Based on 80 percent of our care, roughly,

not necessary. And it is the same care we have been doing to the

patients for—ever since Medicare started.

Chairman MANZULLO. Now, we had these people come in our office in Rockford.

Dr. HULSEBUS. The program integrated people.

Chairman MANZULLO. That did not answer my letter for 90 days.

Dr. HULSEBUS. Right.

Chairman MANZULLO. And they came in the office in Rockford,

and tell us what happened there.

Dr. HULSEBUS. Well, basically, we sat down with them and told

them we would like to dialogue and have open communication, and

they said they reviewed our claims and they had a non-qualified

person, a non-chiropractor that is, review the claims. And they just

said we just find the claim is not necessary.

26

And yet we had been audited by Blue Cross/Blue Shield before

that, that said all the claims were payable. And we asked them

how they came about their audit and how they came about their

decision on whether it was necessary or not, and they said, well,

they had a nurse, registered nurse review them and they also had

the medical director.

Well, we asked them, ‘‘Well, did you review each claim? Did you

look at the x-ray of each patient?’’ because in chiropractic it is mandated that each patient must have an x-ray to demonstrate the

need of the care for supplementation.

And they said ‘‘No. We didn’t look at the x-rays.’’ And I said, ‘‘Well, how can you determine whether care is necessary or not if you don’t use the criterion material in order to determine whether it is necessary or?’’ Chairman MANZULLO. And that is when we came to the conclusion they do not know the difference between x-rays and the Xfiles.

Dr. HULSEBUS. Exactly. It was just so ridiculous, the whole thing

was. They never looked at anything. They made their claims in

January and they did not—— Chairman MANZULLO. They went from $250,000 down to zero.

Dr. HULSEBUS. Down to—basically, we went from $250,000 to about $40,000 down to nothing. In the end, we prevailed on the

whole thing, and all the care was necessary and everything was

great.

Chairman MANZULLO. Right at the end you got them down to $1,500, and then you took that to the administrative law judge,

and then won, and then HCFA wanted to appeal that.

Dr. HULSEBUS. Correct. We went in front of a judge and he

looked at the whole thing, and said there is nothing in here that

should not be paid. The carrier makes no sense in the way they did

this, and there is no reason for this at all. He recommended total

payment. And then they wanted to appeal it again.

And then your office stepped in, and asked what was going on

and——

Chairman MANZULLO. Well, I think we did more than that.

Dr. HULSEBUS. Oh, yeah, I know you did a lot more than that.

Chairman MANZULLO. But the—if you had not had a relationship

with a member of Congress—— Dr. HULSEBUS. Mr. Manzullo, we went to four different law

firms. We spent a tremendous amount of money and we tried everything we could. You know what our research were, we do not

even know what a post-hearing review is. There was no law firm

that we could contact that could help us. And finally we went to

yourself and asked for help and immediately—you know, you

looked into it, and said there is something wrong here.

You tried to contact them, I can vouch for that, and they would

not even cooperate with you. And the carriers totally would not cooperate with us, tell us what we were doing wrong. All we want

to do was correct the problem, if there was a problem. We could

not find out what the problem was, even through your office.

Chairman MANZULLO. And to this date, there still are no guidelines—— Dr. HULSEBUS. There are no guidelines.

27

Chairman MANZULLO [continuing]. From HCFA as to what is expected of the chiropractors.

Dr. HULSEBUS. And there are no guidelines, and we still do not

know if what we do is right or wrong, and we just continue to try

to provide the services that is best for our patients and try to go

along with it. We do not know what to do.

Dr. HULSEBUS. I appreciate your coming. I guess the lesson

learned here is that we have to educate members of Congress on

how to go about to deal with HCFA, and educate the medical profession that they should contact members of Congress in order to— in order to have us represent you before HCFA.

What a story, huh? It is amazing.

Ms. Velazquez.

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Mr. Goldhecht, oftentimes regulations that are required by a regulated community were not only required by statute, but required

within a certain time frame. In other words, the statute passed by

Congress was the problem.

Do you believe that growing amount of CMS paperwork requirements are the result of congressional mandate?

Mr. GOLDHECHT. That is part of the problem that our industry

faces. A lot of the requirements and audits that we received are related to paperwork that is somewhat out of our control.

For example, a lot of the procedures, when we performing, using

Mr. Chase’s example, Mr. Chase’s facility, a nurse calls a facility— calls our facility or provider to order an x-ray to be performed.

They get a physician order, and we go out and perform, and they

will provide us with a slip.

Yet we are obligated to document all of that to make sure that

is done properly. If the audit comes, they will come and audit us

to make sure that their doctor or the doctor that is on their staff

performed what he needed to do, which we have no affiliation with,

no control with, yet we are going to be liable, and we are going to

get audited and have to document all that.

But more so, some of the regulations that has recently been mandated are more troublesome. For example, in my testimony, the

EKGs, the removal of EKG transportation, we basically are paid

the same amount a physician is paid to perform an EKG. He performs it in his office. We perform it by traveling. We are not paid

for that travel time. That expense is incurred, and the reimbursement that we get paid, what my company gets paid is a little bit

less than $16.15. It is a major problem.

Ms. VELAZQUEZ. Thank you.

Mr. Chase, in the time that we have gone through the transitions

of the BBA, BBIA, HCFA and BIPA, have you used the rule-making processing, and are you using the process to give you comments

as to where you think there are problems?

Mr. CHASE. Yes, ma’am, we do. Our association is very active in

dialoguing with the agency and providing our input brought on by

providers in the field who are experiencing the real live issues and

those these changes will impact us, and we do try to provide our

perspective on those regulations.

Ms. VELAZQUEZ. And do you think the agency listens to your

comments?

28

Mr. CHASE. Not as successfully as we would like. It has to be told

a number of times over and over again before it appears to finally

click with them. It is frustrating.

Ms. VELAZQUEZ. Mr. Goldhecht, in your experience, could you say

that there is any major program, Medicare, Medicaid, private insurance, that stands out as being outstandingly better or worse

than another in terms of providers?

Mr. GOLDHECHT. Unfortunately, no one is better than the other.

Medicaid for our industry is probably the one. Medicare and the

private—the private insurance companies usually suit to what

Medicare deems reasonable. The problem is what is reasonable and

what is not, especially when you talk about a micro industry like

ours. It is just overlooked in general, and that is the biggest obstacle that we have.

Ms. VELAZQUEZ. Mr. Michael Hulsebus?

Dr. HULSEBUS. Yes.

Ms. VELAZQUEZ. Regarding the legislation that was sponsored by

Mr. Toomey and Mrs. Berkley, what is the difference between the

operations that apply to the appeals and coverage process and the

provisions contained in MERFA?

Dr. HULSEBUS. I am not sure if I understand your question correctly.

Mr. CHASE. Like, for example, should we be giving the agency

time to promulgate the BIPA regs before we start reforming the

system again?

Dr. HULSEBUS. Again, I am not real clear on your question.

Ms. VELAZQUEZ. If anyone will comment on that.

Dr. WHITSON. I think part of what they are trying to do, what

Congressman Toomey’s bill is trying to do is basically stop—if an

agency like Medicare finds me in violation and finds under an

audit that I have done some things that they want to down code,

they can then extrapolate that to a large amount of money, and demand that money from me within 30 days or it starts bearing interest, and then fine me even more.

Part of the new regulations, I think that is in the new bill, would

be that they would not be able to do that until I have had a chance

to appeal it and I could indeed, if I were found negligent in my recordkeeping, I could take up to a year to repay that rather than basically have the ability to put me out of business, which they have

at this point, even before I appeal it.

Ms. VELAZQUEZ. Okay, Mr. Chairman, I do not have anymore

questions.

Chairman MANZULLO. Thank you.

Mr. Toomey.

Mr. TOOMEY. Thank you, Mr. Chairman, and if I can follow-up

on the last question. I agree with the way that Dr. Whitson has

characterized the legislation, but I would point out that our legislation is broad in its scope in that it only applies to the first audit,

and the subsequent audit would not limit HCFA the way the first

one would be audited, which is part of why I find it very hard to

imagine why people would disagree with us.

I was hoping Dr. Whitson could just comment a little bit more

about something that he touched upon during his testimony, and

that is, is there any way that you could quantify for us, whether

29

it is in dollars or in personnel time or your own time or the number

of staff you have, the entire burden that you face in dealing with

the regulatory environment, and especially if you could sort of

characterize that in terms of the effect that you see that having on

solo family practitioners.

Do you see it having an effect on the number of solo practitioners

in the Lehigh Valley where you practice medicine? And do you see

it having an impact on the future of these small practices that so

many patients so very much want to have?

Dr. WHITSON. I see it having—I see it having a huge impact. I

am becoming a dinosaur. I cannot think of very much other solo

family practitioners in the Allentown area, and there used to be a

lot of us.

I now get things in the mail like this all the time. I got two yesterday. I used to enjoy going to medical conferences. I enjoy going,

but I used to enjoy it more because now a lot of the medical conferences are about coding. They are about documentation and coding guidelines.

Yesterday, coincidentally, which is not an usual day, I got two.

This one says, ‘‘Certified professional coder Boot Camp.’’ Okay, I

can go for three days, and this is dedicated to the business of medicine.

Ladies and gentlemen, Congressmen and Congresswomen, I continually want to be a better physician, but I do not want to be a

better coder. Unfortunately, I am in a situation that if I do not do

that I am the target. I have not done what my colleague here has

done, and ask for help from Congressman Toomey, and perhaps I

should have because I have been rather outspoken in my dislike of

managed care.

I have viewed health maintenance organizations as wealth maintenance organizations basically for insurance companies, and I

think insurance companies have now been placed squarely between

patients and doctors. Because they are placed between doctors and

patients, it really does not enhance the care I can give them. It

simply enhances what I have to give the insurance companies, and

that is more and more reports.

I can remember the good old days, I hate to sound that old, when

the regulations were not that bad, and to take it to an extreme example, if we think about the three by five cards that the old family

doctors used to use that are so often made fun of, I am not so sure

we have not gone to the complete opposite extreme.

The good old family doctor who knew each and every patient, he

had that history, but he had it right up here in his memory, and

he knew that patient personally. So when he saw something and

put down a couple of words about what that office visit was about,

the next time he saw the person he knew why he came in the last

time, and he knew what he should be concerned about this time.

Now, if I want to dictate into my record, I cannot write it, I have

got to dictate it because I have got to put much too much down.

I still want to dictate pertinent things. I want to know what was

wrong with the person, what I might be concerned about, but also

in my notes I want to put down if the person’s husband is sick, or

if something is really important in that person’s life because it will

impact on their medical care.

30

The insurance companies could care less. For them I must dictate, as in my initial testimony, all the line by line, item by item

things that really I know are normal and the patient knows are

normal, but I have got to document for the insurance company or

the insurance company will say I never should have gotten paid 40

or 50 dollars for that visit. I should have gotten paid $15 for that

visit, and that would not pay my office overhead.

Some doctors are starting to use templates. It is scary. They can

have them in their palm computers or they can have a big computer system if it happens to be a big corporation with a lot of doctors, and a lot of them have even set their computers to default to

normal findings.

So when they see a person, they can just flip the mouse and it

checks everything in all the review systems or medical things that

should have been examined, and that does not prove they were examined, but it will certainly stand up very well if they are subject

to an audit.

I think this is a tremendous problem for the little guy, for the

independent practitioner. In the past five years I have had my first

malpractice claim that was over my head for two and a half years,

dismissed by a jury in 10 minutes, because of an attorney who used

the coding or inadequate documentation that they thought was inadequate because of this silly rule that if you did not write it down,

you did not do it, which is just incorrect.

And my concern is that Medicare—where Medicare goes everyone

else goes. Malpractice attorneys, private insurers, Blue Cross and

Blue Shield, I think it is having a tremendous deleterious effect.

I doubt that there will be many solo practitioners or small practices

left unless this is changed.

Thank you.

Mr. TOOMEY. Let me just say and then I will yield the balance

of my time, Mr. Chairman, but I want to thank the witnesses all

for their testimony. This has been extremely helpful. The Ranking

Member made the point that many of the problems have grown out

of legislation that Congress is guilty of. Others have grown out of

regulations, I think, that is dreamed of its own. But together we

have got to deal with this problem.

It is an absolute tragedy that we have allowed health care in the

United States to get to the point where wonderful family practitioners like Dr. Whitson are basically being forced out of business

or becoming employees of large groups or hospitals, or losing a

very, very important and valuable choice for patients. We have got

to bring this to an end.

I want to thank you all for your support for this legislation, and

I yield the balance of my time.

Chairman MANZULLO. Thank you.

Dr. Christian-Christensen?

Mrs. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman.

I too want to thank our panelists for being here and for not only

being here yourself but for giving voice to all of the hundreds of

thousands of health care providers and all of the years of the frustration that we have faced with HCFA.

You have also not only been able to help us understand better

what you face in dealing with HCFA, but you are preparing us for

31

our next hearing, which we will be questioning the HCFA officials,

so we thank you for the preparation that you have been able to lay

down for us for that hearing. I probably have maybe about two

questions.

We recognize that Congress has created some of the problem, but

how much of it can be addressed by more uniformity within the

contractors and more monitoring of the contractors because it

seems as though from one city, or one region to another what we

have done has been interpreted differently and is administered differently?

How much do you think we can fix the problem by addressing

the contractors, the contractees?

Mr. CHASE. I will start. Certainly in the survey certification process where the state agencies are out to review our compliance, if

you look at the 50 states and how they operate directly under the

guise of HCFA, there are regional interpretations that are so significantly different than what happens in one area versus the

other. And our ability to use or to bring our point to bear is limited

because we are dealing with only our particular licensing agency,

and they answer only to HCFA, and we have to deal with them on

an ongoing basis.

So the differences that occur and exist from region to region are

very significant and they are frustrating for us. We worked very

hard with Congress, firstly, and then with the agencies to develop

reasonable and new regulations that is meaningful to the quality

of care you will find in a facility and yet to have third party interpretations that are not consistent around the country is very, very

frustrating and unfair.

Mrs. CHRISTIAN-CHRISTENSEN. Okay. Do you think the MERFA

begins to address the collaboration issue?

I think that was also your issue, Mr. Chase, the collaboration

issue?

Chairman MANZULLO. Donna, you are not on?

Mrs. CHRISTIAN-CHRISTENSEN. Oh, sorry. The collaboration issue,

do you think that MERFA begins to address that issue?

Mr. CHASE. I think it is a first step. It allows us to at least recognize that there is an issue that we need to work with together on

behalf of the clients that we both are concerned with. We do not

want to be in this environment that currently exists. We want to

be able to work together for the benefit of the client. They are the

ones that both Congress, HCFA, and ourselves should be concerned

and focused on, and that is not yet the case. Hopefully, this will

give us the first step in that process.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you. I really appreciate

again all of you again for coming. I am revisiting all of my worst

nightmares from practice, especially listening to you, Dr. Whitson,

is it?

Dr. WHITSON. Yes.

Mrs. CHRISTIAN-CHRISTENSEN. As a family physician myself, but

we really appreciate your being here.

Thank you. Thank you, Chairman.

Chairman MANZULLO. So you left the uncomplicated world of

medicine to come to this easy place. [Laughter.]

Appreciate your questions.

32

Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman. And I apologize for missing

a little bit of the testimony.

Chairman MANZULLO. Excuse me, Mr. Issa. You told me that

several times.

Mr. ISSA. That’s alright. You know, my grandfather’s name was

Dafanse Swanza Be Issa, so he decided to be big Dave Issa, and

I have been living with this pronunciation for my whole life. I take

almost any pronunciation, Mr. Chairman, especially from you.

[Laughter.]

Getting to a lighter note, your testimonies. I think I heard a consistent pattern in the time that I have been here and reading

through your testimonies, and it seems to encompass two things:

One, you are not terribly keen about any HMO.—unless I misunderstood that. But there is a particular concern that the worst

offender is the federal government when it tries to play HMO and/

or health care provider.

Is there anyone that is not going to nod yes on that?

Okay, so assuming that is the case, we are looking at reform and

helping you in this case, and, of course, Mr. Toomey’s bill. It seems

like in the case of HMOs, for the most part, patients that come to

you, they and/or their employer have chosen that plan. In a sense

the employee has decided to stick somebody between you and them

to get a cheaper price. And we may not fully agree whether it is

the employer or the employee, but between the two of them one of

them has made that decision because in most cases they offer an

HMO and a PPO and a POS, all of which you probably do not like,

but you know, different flavors.

I guess my question would be, is there any real potential for the

government ever to be the best of the health care reimburses or is

it an inevitability that they are always going to be the worst? Perhaps what we should be looking at is not reforming, but to a great

extent trying to privatize, trying to move the dollars to the patient

and then let the patient make the choice.

And I put that out to you today in the hopes that you will come

back and tell me is this viable? Is this a direction Congress should

be looking, to put the dollars of the Medicare and Medicaid recipient back into their hands with the understanding that they are

going to put it into some other plan, but a plan that would not be

the federal government making the decisions. I would welcome any

of your comments.

Dr. WHITSON. That is exactly the only way to answer this problem. I can remember years ago when the government first recruited

physicians to join Medicare, and many of my older patients who

then were going to be on Medicare would come and try to pay for

their office visit, and I would say, ‘‘No, no, now this is going to be

paid for by the government.’’

They would say, ‘‘No, we don’t want that.’’

They were smarter than I was. Basically, what has happened is

the patient has been taken out of the equation. Let the patients be

the consumers. Let them have some financial stake and some financial risk in what care they decide to have.

A lot of my patients were forced into HMOs. They did not have

a choice. Unfortunately, health care became a benefit of employVerDate 31-AUG-2001 22:21 Sep 17, 2001 Jkt 074521 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HR\OC\A521.XXX pfrm02 PsN: A521
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ment. As technology increased, some people think doctors charge

too much. I think it was mostly technology. But as it increased, it

became a very burdensome thing for the employers, and they wanted a cheaper way out. But they were not giving apples for apples.

They were giving apples for oranges and patients were forced into

that situation.

But I think the only way out is the federal government giving

the choice back to people and giving them some financial incentive

to make choices. Do not go where it is really expensive. Do consider

what treatment options are best for you, and do consider what they

cost, and then that will trickle down to the private insured’s.

Mr. CHASE. Let me add from my perspective dealing with the

senior community. My concern has always been that that would be

the long-term goal, but in the short term, we have the existing

world as we know it, and the Medicare program, as managed by

HCFA, set up by Congress in terms of the benefits to the beneficiaries, in my view is more fair to the client beneficiary than is

the managed care system.

Managed care system by definition is pay at a reduced rate by

the government to the third party administrator, and then he has

got to pay for his salaries and staff and advertising, promotions, et

cetera, to the net cents available to—as you provide care, it is probably 65 cents on the dollar, where Medicare at least keeps the dollar whole and promulgates that service down to the continuum.

So in dealing with seniors, I always encourage them to maintain

their Medicare status because I believe they have a better shot at

receiving a quality outcome than they do associate with managed

care as their attempts to be more efficient in the process.

Mr. GOLDHECHT. To further back up that point, the Medicare

process as it is today as far as the skilled nursing facility, which

my industry deals with, it is a much better system for that patient

as it exists right now. The HMO that has tried to manage those

patients has failed terribly, and specifically with our industry, they

have not reimbursed certain codes because they just felt like they

didn’t need to, and this puts us in precarious situation because we

are contracted with the nursing home to perform services to their

residents regardless of their insurance.

If that patient has an insurance that does not recognize some of

our codes, we have to perform the service anyway. If a private insurance company all of a sudden decides, well, you know, we are

not going to pay for this code, and we say, well, if you do not pay

for it, you will have to put that patient on ambulance, they know

we are going to go anyway because we have a contract with the facility. So therefore we are in a situation between the patient, the

facility and the service.

So unless there are these intrinsic things that, and this is just

one example as our industry adhere to this, there is going to be

massive fallout.

Mr. ISSA. I want to thank you. With respect to the Chairman’s

time, can I allow another answer?

Chairman MANZULLO. Sure.

Mr. ISSA. Please.

Mr. SEELEY. I was simply going to make the point, Congressman,

that is a difficult question from my industry’s perspective to anVerDate 31-AUG-2001 22:21 Sep 17, 2001 Jkt 074521 PO 00000 Frm 00037 Fmt 6633 Sfmt 6602 E:\HR\OC\A521.XXX pfrm02 PsN: A521
34

swer. When I deal with the agency in my community as well, and

when comparing HMOs, for most of the HMO plans, I have been

contracted with HMOs to Medicare, I would say in concept—— Chairman MANZULLO. Would you excuse me just a second.

Dr. Hulsebus has to catch a 1:30 in Baltimore. And Mike, it is

nice seeing you, but you should leave now.

Dr. HULSEBUS. Okay. [Laughter.]

Thank you.

Mr. ISSA. Thank you, Doctor.

Chairman MANZULLO. We know Rockford is not a straight shot.

We will see you later. Thank you.

Mr. ISSA. Yes, Brian.

Mr. SEELEY. The only problem exists that if the Medicare system

we are given the opportunity that is on paper to work the way it

should be, the way we are told it should be. If HCFA would oversee

its intermediaries the way Congress has instructed them to oversee, it might be a pretty darn good system. The problem is that on

the intermediary level for our industry they act autonomously.

HCFA knows they act autonomously. There is no consistency so we

do not know how the system actually is working or should work.

Mr. ISSA. Well, I appreciate your comment. One odd thing when

you notice that many were working at reforming the existing system, as a freshman who is going to be here for awhile, I am looking

and saying, you know, I do not have the power to reform the system. I will go with my leadership and help them. But over the next

several years I hope we will see you all again in the effort to find

bigger, final solutions, if they exist, even if they are outside the

box. And judging from the ascendancy of my Chairman, with a lot

of hard work, I could end up chairing—what is it, eight years, six

years?

Chairman MANZULLO. I do not know if you want that. [Laughter.]

You know, there is something else to this place besides legislation. What the Hulsebuses did because of their tenacity is they took

on the entire system, and HCFA said that there were no longer torture chiropractors nationwide. You saw his demeanor. He can barely talk about it, and I can barely talk about it myself. But these

are people that are trained to heal. And those boys were tortured

so much, that that became a cause celebre for me. The reason I’m

asking you is to get letters to us. Get them to Barry Pineles. He’s

an expert on regulatory reform. He’ll work with the Democrat minority staff. And if we go after these abuses one by one, that could

set a standard for different areas.

So, sometime I think that the law is the last thing you want to

do. You pass laws to add more regulations. If we could find the

abuse and uncover them one by one, we’ll do that. That’s why we’re

here. Ms. Velazquez.

Ms. VELAZQUEZ. Yes, Mr. Goldhecht, I have one more question.

What has been the effect on your industry of implementation of the

prospective payment system?

Mr. GOLDHECHT. How much time do we have today? [Laughter.]

There are two major flaws that happened to our industry that

has directly related. One is that in lieu of getting paid directly from

part B, we are now paid from the SNF. The SNF have there own

35

problems with their payments, but as it flows down to our level,

they have negotiated prices with us that are below the HCFA fee

schedule and in some cases, below what our costs are.

In doing so, it has put a pressure on us. We have gone to HCFA

many times and told them, ‘‘you are putting us in a precarious situation’’, here we are as a part A patient, we are doing this service

for below cost and next door, the bed next door, there is a part B

patient, and we are performing a service at the Medicare fee schedule. That is clearly a violation of kickback laws.

They turned this to OIG and OIG says it is HCFA problem and

we go around the revolving door.

The second problem that is probably just as big, if not bigger, is

that there is no prompt payment from SNF to any kind of vendor.

They get paid from HCFA. They don’t have any obligation to pay

the provider timely. And in those several contracts that exist,

HCFA’s response to us is, well, that is a private relationship between you and the SNF, and I tend to disagree that we perform

the service. They have collected the funds. Surely it is our funds.

We have just—they are the vehicle for us to get it, and that is

probably the biggest obstacle.

Ms. VELAZQUEZ. Mr. Chase, as a nursing home owner, how current are you paying—are you paying these providers and how

quickly do you get these payments out?

Mr. CHASE. We try to stay within about 90—between 90 and 120

days. The issue is Congress showed some wisdom here, as you

know, in April the PPS system was adjusted and that was some relief. And as that cash flows begins to become a reality in our bank

accounts, I think we can make a concerted effort to be more appropriate and more timely in that payment. But the PPS system was

a tremendous hit to the profession. About 20 percent of my colleagues across the country are in Chapter, and a certain number

of others certainly are near being in Chapter because of the public

program and what PPS did.

And, finally, your wisdom in April, and hopefully you will have

an opportunity here this year or next to continue that payment because there is a cliff on that fix that you put in place last year. It

expires at the end of September of 2002, and we need Congress’s

support to continue that cash flow so that we can be a fair partner

to our ancillary key members so we can provide that quality care

and product to our clients.

Ms. VELAZQUEZ. Thank you. No more questions, Mr. Chairman.

Chairman MANZULLO. Thank you. For the record, could somebody—was it you, Mr. Goldhecht, that used the word ‘‘SNF’’

Mr. GOLDHECHT. Yes.

Chairman MANZULLO. Could you——

Mr. GOLDHECHT. Skilled nursing facilities.

Chairman MANZULLO. All right. Okay.

We are having this hearing involving the HCFA people in about

two weeks. I would ask any of the groups that you would like us

to ask a question of them—oh, I see a lot of pens going down—to

get those in writing, get those to both staffs. We will take a look

at them. It gives us ideas as to questions to ask, and it will be very

interesting to hear. We have great expectations for Mr. Scully—I

do not know why he would take that job. [Laughter.]

36

But I admire him because he has gone into, I think, the worst

managed agency in Washington, with an attempt to clean it up. We

have talked to some of the people at HCFA. There are some marvelous physicians over there that are working very, very hard to

try to do something, really dedicated public servants that have got

into it because they were tortured by the system, and a lot of my

colleagues have been tortured by that system. So we are looking

forward to a great hearing.

And again, I want to thank you for the tremendous testimony,

traveling a good distance to come down here. I do not know who

is taking care of your practice, David, as a sole practitioner. But

again, thank you very much.

This hearing is adjourned.

[Whereupon, at 12:25 p.m., the committee was adjourned.]

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