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79–640 2002

CAN IMPROVED COMPLIANCE WITH THE REGULATORY FLEXIBILITY ACT RESUSCITATE SMALL

HEALTH CARE PROVIDERS?

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

WASHINGTON, DC, APRIL 10, 2002

Serial No. 107–53

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 

STEVE CHABOT, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

JOHN R. THUNE, South Dakota 

MICHAEL 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 

BILL PASCRELL, JR., New Jersey 

DONNA M. 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 April 10, 2002 .............................................................................. 1

WITNESSES

Sullivan, Hon. Thomas, Chief Counsel for Advocacy, U.S. Small Business 

Administration ..................................................................................................... 7

Nielsen, David, M.D., Representing American Academy of Otolaryngology ....... 8

Jones, Warren, M.D., Representing American Academy of Family Physicians . 12

Evans, Zachary, President, National Association of Portable X-Ray Providers . 14

Harroun, Mary, President, Merry Walker Corporation ........................................ 16

APPENDIX

Opening statements: 

Manzullo, Hon. Donald .................................................................................... 32

Christensen, Hon. Donna Christian ................................................................ 35

Ross, Hon. Mike ................................................................................................ 39

Prepared statements: 

Sullivan, Hon. Thomas ..................................................................................... 40

Nielsen, David ................................................................................................... 47

Jones, Warren ................................................................................................... 52

Evans, Zachary ................................................................................................. 60

Harroun, Mary .................................................................................................. 215

Additional Information: 

Submission from Congresswoman Christian-Christensen ............................ 267

(1)

CAN IMPROVED COMPLIANCE WITH THE 

REGULATORY FLEXIBILITY ACT RESUSCITATE SMALL HEALTHCARE PROVIDERS? 

WEDNESDAY, APRIL 10, 2002 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:06 a.m. in room 

2360, Rayburn House Office Building, Hon. Donald Manzullo presiding. 

Chairman MANZULLO. The Committee will come to order. First of 

all, I want to thank the witnesses for showing up. I want the 

record to indicate that two weeks ago our office received a letter 

that Administrator Scully would be appearing at this hearing. And 

I want that letter to be made part of the record. 

Subsequent to that time, Mr. Scully has expressed a desire that 

he wanted to be on the panel by himself. And the Chairman of 

Small Business Committee sets the rules, not the witnesses. And 

one of the reasons that we like to put people from the Administration on panels with the people that are affected by Administration 

directives is the fact that the purpose of this Committee is to solve 

problems. We are problem-solvers. 

Mrs. Vela ́zquez and I have had over 40 hearings. And in all of 

those hearings we have been in total agreement on every issue that 

was brought up at the hearings at the full Committee level. And 

the reason for that is the fact that we are here to represent small 

businesses, how they are affected by rules and regulations. 

We unfortunately had to issue an subpoena last night to Mr. 

Scully. The subpoena was duly served. Mr. Scully appeared in this 

Committee room approximately 15 minutes ago he advised our 

staff that notwithstanding the Congressional subpoena, that he 

was not going to appear today at this hearing. 

We, of course, will take every precaution necessary and every 

measure necessary, because we represent small businesspeople. 

And he did not like the fact that he had to appear at a table with 

lobbyists, end of quote. And we said it is important that you appear 

at the table with people who are affected by regulation. Tom Sullivan is part of the Administration; it does not bother him to be 

here. 

So it is very disheartening that the person who is in charge of 

making all the rules and regulations for the delivery of health care 

services, for Medicare and Medicaid, purposefully, willfully, intenVerDate May 23 2002 21:46 Jun 17, 2002 Jkt 079640 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A640.XXX pfrm17 PsN: A640
2

tionally is ignoring a subpoena of the Chairman of the Small Business Committee of the United States House of Representatives. 

This is extremely, extremely serious. But notwithstanding that, 

we are going to have the hearing. And I am going to encourage the 

members of the Committee to address their questions to the empty 

chair. 

Mr. Scully put his testimony on the table. His testimony will not 

be admitted into the record. The testimony of all the other witnesses will be admitted into the record, the full and complete written testimony. In addition to that, I am going to leave the record 

open for a couple of weeks. Anybody who wants to submit testimony to be part of this record can do so. Keep your comments to 

under two typewritten pages, and get those to Mr. Pineles, who is 

seated next to me. 

The purpose of this hearing is to complement what President 

Bush said on March 19, 2002. He is a Member of the Administration. He should be; he is a great President. 

But he stated that ‘every agency is required to analyze the impact of new regulations on small businesses before issuing them. 

This is important law. 

The problem is that it has often been ignored. The law is on the 

books. The regulators do not care that the law is on the books. 

From this day forward they will care that the law is on the books. 

We want to enforce the law.’ End of quote. That is what President 

Bush said on March 19 of 2002. 

I concur with the President, the law must be enforced. This Committee will play its part in ensuring that the regulators comply 

with the law because it is important to small businesses. 

This is the first hearing to ensure that the regulators will care 

that the law is on the books. The Health Care Financing Administration, or HCFA as I will continue to refer to it, not by the new 

name—you know, you do not change the nature of a substance by 

giving it a new name. It is still the old name. Unfortunately, the 

old habits continue. I am not going to refer to it as the CMS, because they have not deserved the dignity of being given a new 

name unless they come up with a new product. 

Today’s hearing focuses on HCFA’s compliance with the Regulatory Flexibility Act, or RFA. In particular, the Committee will be 

examining HCFA’s analysis, or more to the point the lack of analysis, in implementing the physician fee schedule. 

HCFA’s failure to comply with RFA in developing the physician 

fee schedule is emblematic of an endemic problem at HCFA. The 

regulators do not care that RFA is on the books. From this day forward, HCFA will care that the RFA is on the books. And I may 

issue a subpoena every day to Mr. Scully to have him come here, 

and just for the purpose of showing up and asking questions, so he 

will learn that he is an unelected official. 

The purpose of this Committee, one of the purposes is oversight. 

We oversee, they show up; they do not determine the rules. The 

Committee is not interested in excuses or crabbed interpretation by 

lawyers at HCFA to avoid compliance with RFA. 

The Committee expects that HCFA, if it wants to demonstrate 

that it is a new agency, will comply with the RFA. HCFA should 

evaluate the cost of the regulations on small health care providers, 

3

and examine alternatives that are less burdensome to our health 

care providers. 

I would now yield to our ranking Minority Member for an opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. Today’s hearing is 

the fourth in a series of hearings we have convened to examine the 

Center for Medicare and Medicaid Services, and its heavy impact 

on small businesses. 

We are here to hold accountable this very aloof federal agency for 

ignoring the law that requires it to reach out and involve small 

businesses in drafting the regulations that affect them the most. 

The Regulatory Flexibility Act has been in effect for more than 

20 years. Yet federal agencies still feel free to ignore its mandate. 

Well, I want to ask the chief representative of CMS what he does 

not understand about following the law. 

Doctors and dentists in private practice are the quintessential 

small businesses. In fact, two-thirds of all doctors’ offices employ 

fewer than 25 workers. Most dentists are solo practitioners with no 

more than four employees. This means that the great bulk of our 

medical service providers lack the resources they need to absorb 

administrative burdens and costs put upon them by federal paperwork and regulation requirements. 

With Medicare the burdens are extreme. The senior health insurance compensation system has more than 10,000 pages of rules, 

policies, and regulations. The effect of this complexity should be obvious. 

A recent survey indicated one-third of doctors spend one hour on 

Medicare paperwork for every one to four hours of patient care. For 

dentists, this burden can be outright debilitating. 

And the end result is what should really concern us. These 

health care providers get fed up with the hassle and decreasing 

compensation, so they stop taking new Medicare patients. 

Making matters worse is the operation of the Centers for Medicare and Medicaid Services. This agency has been particularly delinquent in reaching out to small business during the development 

of regulations. This is one of the requirements of Reg Flex that the 

agency has chosen to ignore. 

Regulations can be fair, balanced, and provide the necessary protection to our health, welfare, and environment. CMS must work 

to determine the impact its regulations have on small businesses, 

explore the regulatory options for reducing that impact, and allow 

itself to be held accountable for the final choice on a regulatory approach. 

Mr. Chairman, I just would like to add that the action and behavior of Mr. Scully today are just incredible.a And the lack of respect to this Committee, and to you, and to all the members of this 

Committee. I do not understand why he cannot come and answer 

questions. Why is it that they are so hostile to small businesses? 

So I am ready, I am willing, I am prepared to work with you. 

And if we need to hold him in contempt, we will do so. 

Thank you, Mr. Chairman. 

Chairman MANZULLO. We are going to change the rules a little 

bit. I am going to allow two more opening statements. I have invited Dr. Weldon to come and be on the panel today. I am going 

4

to have him give an opening statement. And then Dr. ChristianChristensen will also give an opening statement. 

Mr. PASCRELL. I have a question. 

Chairman MANZULLO. Yes, go ahead, Bill. 

Mr. PASCRELL. Mr. Chairman, not as an opening statement, but 

a statement. We have an emergency situation in this country. In 

the last two months a disproportionate number of physicians have 

ceased being Medicare providers. This is a dangerous situation. 

And for this Administrator not to be here at the bequest, at the request of this Committee is an absolute travesty. And I want you 

to know personally that I look at it as a travesty. And I want you, 

as our Chairman, to do something about it. 

Chairman MANZULLO. We will do that. Thank you. Dr. Weldon. 

Dr. WELDON. Thank you, Mr. Chairman. And I am honored to be 

able to join with one of my other physician colleagues in the House 

to speak on this issue. And I would imagine she may say the same 

thing that I am going to say. 

I practiced medicine for 15 years prior to being elected to the 

House of Representatives, and I still see patients about once a 

month at the VA clinic. And I made significant use of portable xray services in five nursing homes where I took care of my own patients in those nursing homes. 

In the typical scenario where I would use it, I would be seeing 

patients in my office, and I would get a phone call from one of the 

nursing homes. And I would get on the phone with a nurse, and 

the nurse would tell me that my patient had a fever and a cough, 

or had fallen and hurt their wrist or their arm or their knee. And 

I was really faced with a simple dilemma in that situation. 

And the simple dilemma was, do I put this patient in an ambulance and transfer them to my office, and try to evaluate them in 

my office? And then put them back in an ambulance and send them 

back to the nursing home, at a substantial cost? Or do I send them 

by ambulance to the emergency room, at substantially higher costs? 

Or do I call one of the portable x-ray providers if I needed a film? 

And I found the portable x-ray service to be extremely helpful. 

They would typically be there in less than an hour, which was 

often quicker than they could get the x-ray in the emergency room, 

amazingly. And they would have it developed, and then they would 

have a radiologist calling me with the results of the x-ray, mind 

you at no additional charge, which is something that I could only 

get with extreme difficulty out of the hospital. 

Often the information was extremely valuable. It was no fracture, and we could begin a course of anti-inflammatory agents, 

splinting, Ace bandages. The results on the chest x-ray would be 

no evidence of pneumonia. Even if there was evidence of a pneumonia, if the patient was not in any distress I could begin an antibiotic regimen at the nursing home. 

The long and the short of it is I felt like these portable nursing 

services, or portable x-ray services were saving Medicare, in my 

particular experience, thousands and thousands of dollars a year 

on unnecessary transportation costs, unnecessary visits to the 

emergency room. They were extremely helpful to the patient. I 

mean, it is incredibly traumatic. 

5

My colleague from the U.S. Virgin Islands knows this. Take one 

of these elderly people and load them into an ambulance, transport 

them, it is extremely traumatic to them. And I found it to be nothing short of a cost-saver, hands down. 

And frankly, for those people here from CMS, I understand Mr. 

Scully refused—— Chairman MANZULLO. Excuse me, is anybody here from CMS? 

Dr. WELDON. Nobody is here from CMS, not a single person. 

Chairman MANZULLO. Anybody here? Not one person here from 

CMS. 

Dr. WELDON. Well, this is disgraceful. Mr. Chairman—— Chairman MANZULLO. Just a second. Let the record, let the 

record show that we have approximately 70 people in the hearing 

room today, and that not one person here in this hearing room is 

from CMS, HCFA. [Laughter.] 

Could you conclude so we could—— Dr. WELDON. Yes, I am sorry. I could go on and on about this, 

but you know, to me this is just—— Chairman MANZULLO. Well, let me make it easier for you. You 

can ask questions later on. 

Dr. WELDON. I will ask questions later on. 

Chairman MANZULLO. Thank you. 

Dr. WELDON. Thank you, Mr. Chairman. 

Chairman MANZULLO. All right. Dr. Christian-Christensen, Congresswoman Christian-Christensen? 

Ms. CHRISTIAN-CHRISTENSEN. Thank you. Mr. Chairman, I would 

like to submit my statement for the record. 

Chairman MANZULLO. All the statements will be received for the 

record, with the exception of Mr. Scully’s statement. 

Ms. CHRISTIAN-CHRISTENSEN. Thank you. At the outset I just 

want to express my extreme disappointment in what is happening 

here this morning. To me it says a lot about the willingness of 

HCFA to really reform and to be responsive to the needs of our providers. 

As we were walking down the hall today and talking about the 

hearing that we were about to have, which I want to take this opportunity to also thank you and your ranking Member for holding, 

for attempting to hold a hearing and hold CMS, or HCFA, more accountable. Because certainly we have had a lot of complaints and 

needs that have to be addressed on behalf of our small business. 

But as we were walking down here this morning, we were talking about the hearing and what we hoped to accomplish from this 

meeting. And it was not to be a confrontational meeting, it was to 

be a problem-solving meeting, with everyone at the table, as we 

have sought to do with other agencies. And so this is extremely, extremely disappointing. And it makes me wonder about how well the 

listening sessions are going. Because if the Administrator is not 

willing to be here and listen and dialogue with us, then I am not 

sure what is happening out here. 

But as my other colleague said, you know, this is a real crisis in 

health care that we are facing. Many of us are committed to increasing access for all Americans to quality health care. And what 

is happening in this case is exactly the opposite. Our seniors, our 

disabled, our poor, those who are most in need are not being able 

6

to access health care. And the providers are going out of business. 

They are opting out now. But this is a serious crisis that has to 

be addressed. 

I have another shot at this on Friday. I think I am going to make 

sure that the press is there. The Congressional Black Caucus Brain 

Trust is having a hearing, along with the other minority caucuses, 

on how well the Department is addressing the disparities in health 

care. CMS is our last panel. The Chief Operating Officer is supposed to be there. I am going to make sure the press is there, because at that hearing we will also be having community-based organizations who will be joining us on the panel. I want to see what 

is going to happen. 

I would also like to suggest that, as we do in every other instance, when we are having difficulty with someone on one level we 

go to the boss. And I would like to suggest that we call the Secretary in and have him come in, along with Mr. Scully, and begin 

to address some of these issues for us. 

So with that, I am going to not say any more. 

[Ms. Christian-Christensen’s statement may be found in appendix.] 

Chairman MANZULLO. Appreciate that very much. 

Ms. CHRISTIAN-CHRISTENSEN. And I look forward, I welcome our 

witnesses. I want to especially welcome my President, the President of the American Academy of Family Physicians, Dr. Jones, 

who was willing to join us, and all of our panelists here this morning. 

Thank you. 

Chairman MANZULLO. Thank you. Congresswoman Napolitano, 

did you have a couple words in the opening statement? 

Ms. NAPOLITANO. Let’s go on with it. 

Chairman MANZULLO. Okay. Thank you very much. The first witness will be Mr. Tom Scully. Do you have his bio here? Could you 

start the clock, please? Okay. 

Could you please state your name for the record? 

[No response.] 

Chairman MANZULLO. Let the record indicate that the seat reserved for Mr. Scully that has the Honorable Thomas Scully in 

front of it is vacant. 

Let the record further indicate that this witness is under subpoena by the United States Congress. If anybody in here is from 

HCFA and you do not want to raise your hand, we will give you 

the opportunity to get on the phone and get Mr. Scully from down 

the hall or outside, where he may have secreted himself. And he 

is welcome to join this panel at any time within the next half-hour. 

Could you stop the clock, then? Thank you for your comments, 

Mr. Scully. 

The first real witness is a man who has done a tremendous job 

as the Head of the Office of Advocacy. He is also a member of the 

Administration that enjoys appearing on panels with the people 

that are affected by administrative rules and regulations. 

The purpose of this Committee is to solve problems, not to divide 

Administration and people affected by the Administration into separate camps or separate panels. That is why we like to have one 

panel, so we can have a good cross-discussion going on. 

7

And Mr. Sullivan, I look forward to your testimony. Thank you 

for your tremendous leadership that you have provided as the Head 

of the Office of Advocacy. Please. 

STATEMENT OF THOMAS SULLIVAN, CHIEF COUNSEL FOR ADVOCACY, UNITED STATES SMALL BUSINESS ADMINISTRATION 

Mr. SULLIVAN. Good morning, and thank you for the opportunity 

to appear before the Committee this morning to address the adequacy of CMS’s compliance with the Regulatory Flexibility Act. 

Before proceeding, let me state that consistent with the Office of 

Advocacy’s statutory independence, this statement was not circulated through the Executive Branch for comment. Because of 

this, these views do not necessarily reflect the position of SBA or 

the Administration. 

I thank the Chairman for accepting my complete written statement into the record. And I will now summarize just the key points 

to keep within the five-minute time limit. 

It is our goal at the Office of Advocacy that CMS more fully consider the consequences of their regulatory actions on small employers prior to finalizing their rules. That is, after all, the primary 

tenet of the Reg Flex Act. 

Recently the President singled out the Reg Flex Act in his small 

business plan. In a speech three weeks ago yesterday here in 

Washington, President Bush said, ‘I want to make sure people understand that we are going to do everything we can to clean up the 

regulatory burdens on small businesses.’

The President then talked specifically about the Reg Flex Act, 

saying, ‘Already it is under current law. Every agency is required 

to analyze the impact of new regulations on small businesses before 

issuing them.’

The President did not stop there. The Chairman read this part 

of the President’s speech in his opening statement. The President 

said, ‘From this day forward, they, the regulators, will care that 

the law is on the books.’ I was right there when the President said 

that, and no one in the Reagan Center clapped louder. 

Generally speaking, Advocacy believes that CMS should do a better job of following that law. Two recent rulemakings served to 

highlight Advocacy’s ongoing concern with CMS’s lack of compliance with the Reg Flex Act. 

In July, 1999, CMS’s predecessor, HCFA, issued an interim final 

rule entitled ‘Medicare and Medicaid Programs, Conditions of Patients’ Rights.’ The rule contained standards for the use of patient 

restraints in hospitals. After reviewing the rule, Advocacy concluded that the one-hour restriction on the use of restraints was 

particularly burdensome on rural hospitals, primarily because it 

called for the treating physician to make a face-to-face assessment 

of the patient within one hour of initiating restraint or seclusion. 

Interestingly, the rule became the subject of a lawsuit filed in the 

United States District Court of D.C. In September, 2000, the Court 

upheld the rule. But because HCFA failed to comply with the Reg 

Flex Act, the Court remanded the rule back to the agency for the 

completion of a regulatory flexibility analysis. 

8

The Court’s decision reads, ‘The Secretary’ the named Defendant 

was Donna Shalala, ‘did not obtain data or analyze available data 

on the impact of the final rule on small entities. Nor did she properly assess the impact the final rule would have on small entities.’

The Office of Advocacy continues to insist that CMS complete the 

regulatory analysis, as ordered by the Court. This analysis still has 

not been done. 

Why do the analysis after the fact? Because if CMS can produce 

regulatory analyses of the rule’s impacts on small health care entities for the one-hour rule, they can, and hopefully will, do it for 

others. 

The second rule making is the portable x-ray rule. On three occasions since 1998, the Office of Advocacy has filed comments with 

CMS concerning the agency’s determination of payment policies as 

they apply to the portable x-ray and EKG industry. 

We believed that pursuant to the Reg Flex Act, CMS should have 

analyzed the impact on this industry separately. Only then would 

the agency have been in a position to decide whether to certify no 

impact under the Reg Flex Act, or whether to perform further analysis. 

I know that the portable x-ray rule will be discussed more by 

other witnesses on this panel. So I will conclude my statement by 

saying that Advocacy is working to implement the President’s commitment towards a full agency compliance with the Reg Flex Act. 

We applaud the President’s renewed emphasis toward Government accountability to the small employer community. My office 

has found that early consultation with small business works. And 

we are willing to work with CMS to ensure legitimate small business input. 

It is my hope and my desire that the Office of Advocacy and CMS 

will develop a working relationship that will result in better communication and better compliance with the Regulatory Flexibility 

Act. 

Chairman MANZULLO. Thank you very much. Before we go to the 

next witness, do you know when the last communique ́ was to, from 

your office to CMS was, on the portable x-rays? 

Mr. SULLIVAN. I am told by my counsel that the last letter to 

CMS was on December 28, Mr. Chairman. 

Chairman MANZULLO. Okay, thank you. 

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

Chairman MANZULLO. Our next witness is, is Dr. David R. 

Nielsen, M.D., who is a member of the American Academy of 

Otolaryngologists, ENTs. And he has written in their journal, I am 

not going to try to mention the name of that again——

[Laughter.] 

Chairman MANZULLO [continuing]. A very well-esteemed and 

well-respected surgeon. We look forward to your testimony, Dr. 

Nielsen. 

STATEMENT OF DAVID R. NIELSEN, M.D., THE AMERICAN 

ACADEMY OF OTOLARYNGOLOGY—HEAD AND NECK SURGERY 

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

Committee. I want to thank each of you for the opportunity to tesVerDate jun 06 2002 04:13 Jun 15, 2002 Jkt 079640 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HR\OC\A640.XXX pfrm15 PsN: A640
9

tify today. And I concur with the spirit which you expressed, Mr. 

Chairman, about the purpose of this meeting. 

I am not a lobbyist. I am not an administrator. I am a privatepracticing physician, and we felt that would be more useful to the 

Committee, and more useful to CMS, to have that kind of input, 

rather than simply lobbying activities. 

My name is David Nielsen. I am a practicing otolaryngologist. I 

have no Federal Government contracts. I currently work at the 

Mayo Clinic in Scottsdale, Arizona, but prior to that I was a solo 

private practitioner for 13 years. So I can assure the members of 

the Committee that I can speak personally about the concerns that 

we have about the burdens that are placed on small businesses and 

private practitioners in medicine. 

We have a common frustration with the barrage of burdensome 

Medicare regulations and guidelines, and the constant struggle 

that we face to remain compliant. Rather than talk about all of the 

issues that I have in my written testimony, let me get right to the 

meat of what it is that we want to share with you today. 

The RFA requires that each federal agency perform and make 

available to the public an initial and a final regulatory flexibility 

analysis of any rule that will have a significant economic impact 

on small businesses, including physician practices. It also states 

that in this analysis, the Agency must describe any significant alternative proposals that could achieve the rule’s objectives at a 

lower cost to small entities, and explain why each alternative was 

rejected in favor of the final rule. This has not been done. 

Against a backdrop of dramatically increasing practice costs and 

falling reimbursement rates, federal regulations often have a particularly dramatic and significant effect on physicians. We are subject to a wide array of federal regulations, which includes, but is 

not limited to, the Health Insurance Portability and Accountability 

Act regulations on medical privacy and electronic transactions; 

Medicare and Medicaid fraud and abuse regulations, including the 

Starek Physician Self-Referral Laws, the Federal Anti-Kickback 

Statute, and the False Claims Act; the limited English proficiency 

guidance, and the associated need to provide interpreter services 

for the deaf, which is required under the Americans with Disabilities Act; and evaluation and management documentation guidelines. 

These are simply a few of the regulations that we struggle with. 

Let me give you some specific examples. As otolaryngologists who 

deal with speech and hearing and communication problems on a 

daily basis, I can assure the Committee members that there is no 

one more interested in good communications with our patients. 

However, the limited English proficiency guidance issued by the 

Department of Health and Human Services requires physicians 

who receive payment from Medicaid to provide, at their own expense, trained and competent interpretation and translation services for all of their limited-English-proficient patients. 

As an example, an otolaryngologist who practices in the state of 

Kansas would pay $70 per hour, often with a two-hour minimum, 

including transportation costs, for an interpreter. But Medicaid 

would only reimburse the otolaryngologist between $12 and $28 for 

that visit. That reimbursement not only does not cover practice 

10

costs, but can create hundreds of dollars of out-of-pocket expenses 

for a physician who wishes to treat Medicaid patients. And hence, 

people are dropping out of coverage, because it would not be unusual for someone who lived in an area where there was a large 

multi-lingual population to have more expenses for interpretive 

services than revenue in the course of the practice day. 

We acknowledge that the goals of this departmental issuance are 

laudable, but forcing small businesses to bear the burden of paying 

for an ever-growing crop of unfunded regulatory mandates threatens the financial liability of physician practices, and may ultimately threaten patient access to care. 

This is not about physician costs, and it is not about physician 

income. It is about access to care, which is being severely curtailed. 

In the context of the Medicare physician fee schedule, CMS could 

potentially take into account the high costs of compliance through 

the Medicare economic index, which is a component of the physician fee schedule update formula. Although CMS references this 

and has included the physician practice expense in the MEI, federal health care regulatory compliance costs are not explicitly 

taken into account, because the measures are based on price data 

which come from across the country, from the economy as a whole. 

Despite the RFA’s requirements and CMS’s own admission that 

physicians are small businesses and qualify for coverage, CMS did 

not engage in a full regulatory flexibility analysis in the final rulemaking and publishing of the 2002 Medicare Physician Fee Schedule. They do reference the rule. 

Moreover, CMS has an obligation to respond to all the comments 

which were submitted to the proposed rule, pursuant to the Administrative Procedure Act. CMS’s failure to perform an analysis of the 

costs of regulatory compliance under the RFA, or to acknowledge 

the comments which were submitted, undermines the integrity of 

the regulatory process. 

In summary—I am going to run out of time here, but let me just 

summarize—we intended to do what you suggested, Mr. Chairman, 

which is to provide solutions. We really want to find a way to solve 

these problems. And we recommend the following. 

Number one. We urge that all House Members encourage their 

Senate colleagues to pass the Medicare Regulatory and Contracting 

Reform Act, H.R. 3391. And we want to specifically thank Representatives Toomey and Berkley, who are responsible for proposing the initial H.R. 868, from which I believe this came. And we 

are grateful for their interest and support of the legislation. 

Second, we recommend that Congress direct CMS and all other 

agencies to comply fully with the RFA in order to better protect 

small business entities, like physician practices, from the onerous 

and costly regulations which we now face. 

Third, we recommend that Congress expand the RFA to cover 

subregulatory issuances to help ensure that small businesses are 

not unnecessarily burdened. Right now we suffer from such 

issuances as program memoranda, contractor letters, guidance documents and coverage decisions, which are not technically regulations, and therefore they fall beneath the radar screen of the RFA. 

These create a significant regulatory burden to small businesses. 

11

And finally, we hope to remove the requirement that small business physicians be forced to arrange for, provide, and pay out of 

pocket for services for which they cannot be reimbursed. 

I would be happy to take any questions later on. And thank you, 

Mr. Chairman. 

[Dr. Nielsen’s statement may be found in appendix.] 

Chairman MANZULLO. Thank you very much. Congresswoman 

Christian-Christensen, would you like to introduce the next witness? 

Ms. CHRISTIAN-CHRISTENSEN. Thank you. As a family physician, 

it is my pleasure to introduce Dr. Warren A. Jones, a family physician and retired Navy Captain who is President of the American 

Academy of Family Physicians. He was elected in 2000. 

He previously served on the Board. And the American Academy 

of Family Physicians represents more than 93,500 family physicians and family practice residents and medical students nationwide. He is a Fellow of the Academy. 

He is also Professor of Family Medicine at the University of Mississippi Medical Center, and Assistant Professor of Family Medicine at Howard University School of Medicine, and Deputy Director 

of the Mississippi Area Health Education Centers. 

He recently retired from his position as Medical Director of TriCare Military Health Program, the military’s health insurance program. So he brings practice experience, as well as management of 

a health insurance program, to his testimony today. 

He previously served as Director of Medical and Clinical Services 

for the Pacific Region of Tri-Care. He has received numerous military honors, including the Defense Superior Service Medal and the 

Navy Commendation Medal for Superior Performance. And he has 

received the Meritorious Service Medal three times. 

It is a pleasure for me to welcome you, Dr. Jones, to our Committee. 

Chairman MANZULLO. I think we need a man like him to be in 

charge of HCFA, don’t you, Congresswoman? Would you second 

that nomination? 

Before we get into your testimony, Dr. Jones, Dr. Nielsen, where 

did you come from to be here today? 

Dr. NIELSEN. I work at the Mayo Clinic in Scottsdale, Arizona, 

and I will be the new incoming Executive Vice President of the 

American Academy of Otolaryngology Head and Neck Surgery. 

Chairman MANZULLO. And so you traveled all the way from 

Scottsdale to be here today? 

Dr. NIELSEN. Yes, sir. 

Chairman MANZULLO. And then, Dr. Jones, same question? 

Dr. JONES. I traveled from the Jackson, Mississippi area, sir. 

Chairman MANZULLO. To be here today. And Mr. Evans, same 

question? 

Mr. EVANS. Mr. Chairman, I traveled from Kansas City, Missouri. 

Chairman MANZULLO. Okay. And Mary. 

Ms. HARROUN. I traveled from Richmond, Illinois. 

Chairman MANZULLO. Okay. And let the record indicate that 

these witnesses have traveled here at their expense. They had been 

advised in advance that Mr. Scully would be here. Perhaps we 

12

should get all your expenses and send him a bill, and have him pay 

it personally. But I do not know how that would go over. He just 

had to come from across the street. 

Dr. Jones, we look forward to your testimony. And could you pull 

the mike closer? 

STATEMENT OF WARREN A. JONES, M.D., THE AMERICAN 

ACADEMY OF FAMILY PHYSICIANS 

Dr. JONES. Yes, sir, Mr. Chairman. And I would just like to say 

before my time begins that if you submitted him a bill for our expenses, we would only get paid 40 cents on the dollar. 

Mr. Chairman, Ranking Member Vela ́zquez, Representative 

Christian-Christensen, my good friend and respected colleague, 

members of the Committee. We thank you for this wonderful opportunity to be here today to comment on the small medical practices 

and the impact on these practices across the country, especially 

those of family physicians and other primary care docs who work 

in our communities to take care of our patients, and to meet their 

needs. 

We particularly appreciate your interest in the CMS implementation of the Medicare physician fee update as it relates to the Regulatory Flexibility Act. We would suggest that the best solution to 

the problems created by the flawed formula that determines this 

update is enactment of the recommendations of the Medicare Payment Advisory Commission.

You have already heard about the Academy and who we are. And 

I would just like to share with you that, in case you may not know, 

there are three Members of Congress who are members of our organization, including a member of this Committee. And we thank you 

for all of the leadership you provide in helping to make sure we 

meet the needs of our patients across America. 

I guess some of you may wonder why I am here. But it is important to point out that most of the members of the American Academy of Family Physicians can be characterized in their practices as 

small businesses. Moreover, recent studies show that the presence 

of a family physician in a rural community is a substantial economic stimulus. 

The study by the Santa Fe Health Policy Research for the Oklahoma State University Health Sciences Center found that, on average, each family physician will generate, both direct by and secondarily, an estimated 50 full-time jobs. And these jobs will generate 

over $1.1 million income annually for each of these communities. 

It is definitely a small business worth protecting. 

Mr. Chairman and members of the Committee, physicians and 

other health care practitioners have experienced a sharp 5.4 percent across-the-board reduction in Medicare payments as of January 1. Although it is called a physician fee update, these cuts apply 

to all services in the more than one million health professionals, including therapists, advanced health professionals, nurse practitioners, chiropractors, and optometrists. And many of these provide 

services in their own individual offices and serve as small businesses. 

The Medicare Payment Advisory Commission has called for the 

elimination of the current update formula, and warned that cuts of 

13

the magnitude expected under this formula could raise concerns 

about the adequacy of payments and beneficiary access across our 

nation. And that is one of the things I wanted to talk to you about. 

I wanted to tell you a couple of stories, if I might. I want to tell 

you a story about a young family physician, Dr. Casey, who 

dreamed of being a family physician and entered medical school 

late in life. And her goal was to go back to her town in Kentucky, 

a small town, Pikeville, and take care of her neighbors. 

Well, while in medical school she had her second child, and then 

her third child, and came out with about $145,000 in debt. But she 

still went back to the small town, and she delivered care. 

But what she is finding now, after three years in practice, she 

found that she could barely meet her bills. But then she found that 

the income from Medicare patients decreased so dramatically that, 

at six years in practice, she is having to go into her savings to keep 

her practice afloat. With her own savings, she is subsidizing her 

practice. 

She now says that unless the Medicare fee schedule is fixed, she 

can only stay in practice two more years. She has limited taking 

any new Medicare patients. This is emblematic of what has occurred. 

And as you heard from the introduction, I now live in Mississippi. And one of my tasks will be to help to increase the number 

of health care providers in the Mississippi Delta and other areas 

in our state. But I can tell you that the current reimbursement 

schedule is a major disincentive to young people to choose health 

care, and to deliver care to the population that is most in need. It 

is going to be difficult for me to accomplish that task, and difficult 

for you to see that your communities are served. 

I will show you this. And I apologize for not having a copy for 

each of you right now. But this is a map that shows the United 

States and what is recognized as health service shortage areas. To 

give you an idea of the magnitude of family physicians as small 

businesses, this currently shows in red the areas that are considered small business, excuse me, underserved areas. 

But if these family physicians in practice now are unable to remain in practice, and they end up leaving their communities, the 

areas in red will now become health shortage areas. 

Chairman MANZULLO. Doctor, could you show both of those pictures to the people that are in the back? Matthew, would you hold 

that up so the people who are visiting today can take a look at each 

of those? 

And again, the first map is? 

Dr. JONES. The first map is the state of primary health care underserved areas in the United States. And this is including family 

physicians and all other primary care provides. And if these small 

practices of family doctors would go out of business, these red areas 

would represent the underserved areas. 

In reality, these small practices deliver care where Americans 

live. 

What we ask you to do today, sir, is to continue what you are 

doing. Hold these hearings, hold CMS accountable, and be as responsive as possible to the need to make sure that we get the kind 

14

of appropriate reimbursement, not to make money, but to make 

sure we keep our offices open. 

When we have to lay off nurses and we have to lay off staff in 

order to be able to take care of our patients, we limit access. Seventeen percent of family physicians responded on the survey last year 

that they have limited Medicare access; they are not accepting any 

new Medicare patients. If we were to do that survey today, following the 5.4-percent decrease, I am sure it would be up to 25 percent. 

And with the continued negative growth rate that is projected 

under the current formula, we will get to a point where we will 

have a 17-percent decrease in reimbursement. And no small business can remain in effect and in practice with a negative growth 

rate like that. 

Thank you for the opportunity to be here, and I look forward to 

entertaining any questions. 

[Dr. Jones’s statement may be found in appendix.] 

Chairman MANZULLO. Thank you, Doctor. The exhibits will be 

made part of the record. I would like to work with you, and perhaps your association, afterwards to get enough color pictures of 

that to send to every Member of Congress with a dear colleague. 

I am sure Mrs. Vela ́zquez would join with me in showing the critical area we are in with so many doctors that will be fleeing the 

practice. 

Thank you for your testimony. 

Our next witness is Zach Evans, who is with the National Association of Portable X-Ray Providers. He currently serves as the 

Chairman of the Board for the National Association of Portable XRay Providers; is a provider himself. We look forward to your testimony, Mr. Evans. 

STATEMENT OF MR. ZACHARY EVANS, PRESIDENT, NATIONAL 

ASSOCIATION OF PORTABLE X-RAY PROVIDERS 

Mr. EVANS. Thank you, Chairman, Ranking Member Vela ́zquez, 

and distinguished Committee members. I also want to recognize 

Congressman Weldon. I believe that the proceedings here today 

will be of great interest to him. 

Mr. Chairman, I appear before you today under a cloud of fear: 

fear of reprisal from CMS for speaking to this Committee, fear of 

being punished by a federal agency that has targeted my industry 

for daring to tell the truth. 

Just five weeks ago our association testified before this Committee regarding CMS’ illegal rulemaking against our industry. 

The day before the hearing, while John Cavalier, the President of 

our association, was here in Washington to meet with this Committee, his small business was subjected to an unannounced audit 

by CMS. 

In light of the clear intent of CMS to intimidate volunteers who 

serve on the Board of Directors of the NAPXP, I wish to thank the 

Committee for offering to protect my identity in this hearing. In 

spite of risks entailed in speaking out, I feel strongly as a citizen 

and small business owner that the only way to combat this abuse 

is to bring full light to this matter. And that cannot be done from 

behind a screen, even if the screen is there to protect me. 

15

That an honest small businessman would need, might need such 

protection from his own government is unconscionable. When Members of Congress contact CMS regarding the data necessary to 

reach informed decisions regarding our industry, they are told, as 

you were told, Mr. Chairman, that it cannot be produced. In fact, 

it can and has. 

This data demonstrates a policy failure that has been devastating to the health care delivery in rural America. After Congressman Phil Crane received this stunning information, CMS realized what it had produced, and attempted to retract it. 

Now, in response to your request, Mr. Chairman, CMS claims 

that the same data produced last year is impossible to compile. 

How can CMS steadfastly hold that their policies are correct, when 

they also claim that they are unable to compile basic usage data? 

As we raise awareness of our situation, CMS targets us with a 

fraud alert. The February 7 fraud alert was followed by a March 

20 CMS request for comments on improving the health and safety 

standards survey process, specifically for portable x-ray services. 

Obviously, looking for irregularities within our industry has become a very high priority for CMS in the wake of our discussions 

with this Committee and others. 

While CMS aggressively seeks to uncover supposed fraud within 

the industry, they refuse to assist us in educating small business 

providers of our services, so that they might better serve the public 

and avoid improper activities. We have repeatedly requested either 

CMS speakers or responses to technical questions to assist us in 

complying with CMS regulations. Routinely, we are unable to get 

a speaker or answers to our questions. 

Obviously, preventing improper billing or fraud by interacting 

with us is not a priority, while catching someone at it is. 

Mr. Chairman, our role in health care delivery is relatively simple. We provide x-rays, EKGs, and other diagnostic services at the 

patient’s bedside. We do so at a substantial savings to Medicare, 

over the alternative of transporting the patient to the hospital. 

CMS would have you believe that doctors carry EKG devices 

with them to nursing homes, family members of patients transport 

their loved ones to other facilities, or nursing homes purchase the 

equipment and provide the trained staff to provide these services 

themselves. 

We are fortunate to have two Members of Congress here who are 

also physicians today with us, Dr. Weldon and Dr. Christiansen. I 

ask these professionals, are the claims of CMS credible? Do they 

stand up to your personal experiences in the medical profession? 

CMS offers no data to support these assumptions. In spite of the 

clear statutory requirements contained in the RFA, SBREFA, the 

APA, and the Social Security Act, CMS refuses to consider the impact upon our industry of their rulemaking, consult with us during 

the rulemaking process, or in any way evaluate industry costs prior 

to setting our reimbursement rates. 

In his letter to you, Mr. Chairman, Mr. Scully states that the 

PEAC Committee is the appropriate body to review our industry 

costs, and the process is more efficient. We applied for a seat on 

that Committee and were denied. 

16

Mr. Chairman, counsels for both the Legislative and Executive 

Branches are of the opinion that CMS is engaged in illegal rulemaking pertaining to this industry. While CMS has no effort or expense in seeking to uncover fraud within our industry, they refuse 

to obey federal rulemaking statute. 

We know that small business providers will be prosecuted if they 

get caught in expanding, in the expanding CMS fraud net. I ask 

you, who will prosecute CMS? How can we be subject to penalties 

for improper billing, when the rulemaking that establishes the billing is illegal? When a federal agency refuses to obey the law, and 

then uses its might to punish the small businesses that dare to 

complain, where do they go for justice? 

In closing, Mr. Chairman, I want to thank this Committee again. 

I would also like to especially thank the two physicians. Congresswoman Christiansen and your staff have been most helpful. I appreciate the time that Dr. Weldon has given. As I know, he does 

not sit on this Committee. And I would formally request that this 

matter be investigated by the Committee on Government Reform, 

and specifically the Subcommittee which Congressman Weldon 

chairs, Civil Service and Agency Organization, as he deems appropriate. 

Thank you for your time. And I will be available for questions. 

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

Chairman MANZULLO. Thank you very much. Could you, if you 

would not mind, take the seat here on the end next to your props? 

And Matthew, could you put Mr. Scully’s sign down there at the 

end, and replace the signs? It will be a little bit easier for you to 

testify with your props there. 

Mr. EVANS. Do I have to sit beside him? [Laughter.] 

Chairman MANZULLO. Okay. The next witness is a constituent of 

mine from Richmond, Illinois. Mary is the President and CEO, and 

probably chief manufacturer, of Merry Walker Corporation. And we 

look forward to your testimony, Mary. 

STATEMENT OF MARY HARROUN, PRESIDENT, MERRY 

WALKER CORPORATION 

Ms. HARROUN. Thank you very much, Mr. Chairman. 

Chairman MANZULLO. Could you pull the mike a little bit closer 

to you? 

Ms. HARROUN. And members of this distinguished Committee. 

Back in 1990, I invented the Merry Walker after having spent 

20 years in the nursing home industry watching my residents melt 

away under the guise of restraints and sitting in wheelchairs. 

Twelve years ago I invented a product known as the Merry Walker, 

which is a registered trademark, and is honored by being protected 

with two U.S. patents. 

When I was in the nursing home business, industry, as a geriatric psychologist and licensed nursing home administrator, I 

looked around at my residents and I said, you all walked once, why 

aren’t you walking any more? And they were sitting in wheelchairs 

at that time, with Posey belts. And now today, because of CMS, 

they are now still in wheelchairs, under the guise of chair alarms, 

which forbids them from standing because this horrible, screeching, 

17

loud, buzzing noise occurs behind them every time they go to stand 

up. 

Physical therapists have said it takes three weeks for an elderly 

person sitting in a wheelchair to never, ever walk again. That is 

intolerable. 

My issue with CMS is the minimum data set, which is done on 

all 1.8 million residents in nursing homes, hospitals, and VA facilities. That is done upon entrance; it is maintained every three 

months. There are 500 questions that are posed to fill out this assessment, of which then CMS somewhere here in this area has a 

large database. 

There are 500 questions. There are 17,000 nursing homes. And 

there are 1.8 million people suffering because of the MDS. 

My issue started last summer. Actually, Merry Walker, we had 

some discussion back in 1994 as to whether it was a restraint. I 

discussed it with Lois Steinford, who was Chief of the Nursing 

Home Survey Process for HCFA. She has since retired. But she 

stated that Merry Walker is an enabler, and a piece of adaptive 

equipment very worthy of praise, and it does the job of getting elderly ambulatory, and keeping them ambulatory. 

I did not pursue it any further. When the MDS was brought out 

in 1995, I got a copy of it on my desk, I read through the format 

of the assessment and saw no problems. It was not interfering with 

my product. I did not agree with it, but never mind. 

Last summer I was at the Alzheimer Educational Conference in 

Chicago, and Mary Lucero, a geriatric psychologist, as I am also, 

of geriatric resources, gave a full-hour seminar on the benefits of 

the Merry Walker ambulation device. Many of her attendees of that 

seminar ended up coming up to my booth afterwards saying, ‘We 

can’t use the Merry Walker.’ I am going, ‘What? Why can’t you use 

it?’

Ended up calling the North Carolina Public Health Department. 

And in my fax machine I received page 3158 of the MDS Users’ Guide. I did not even know this was available, because I am not 

in that aspect of the field any more. 

I read from this lovely publication, under ‘Devices and Restraints. Intent to record the frequency over the last seven days 

which a resident was restrained by any of the devices listed below 

at any time during the day or night.’ And we have a definition of 

a restraint, which is a mechanical device, equipment attached to or 

adjacent to the resident’s body that the resident cannot easily remove, and that restricts freedom of movement or normal access to 

one’s body. 

We have full bedrails. We have other types of bedrails. We have 

trunk restraint and we have limb restraint. Then we get down to 

the fated clause of chair prevents rising. And I will read. 

‘Any type of chair with a locked lapboard or a chair that places 

a resident in a recumbent position that restricts rising, or a chair 

that is soft and low to the floor (that is, bean bag chair); includes 

lap cushions (that is, lap buddy, Merry Walkers).’

I obviously contested that immediately with CMS, and have had 

no result. We have received statements that I feel are untrue, citing regulations that do not exist. So I am here to appeal to you to 

intercede on behalf of the 1.8 million people, to allow them the posVerDate jun 06 2002 04:13 Jun 15, 2002 Jkt 079640 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HR\OC\A640.XXX pfrm15 PsN: A640
18

sibility of getting out of wheelchairs, and saving Medicare billions 

of dollars against decubitus ulcers and unnecessary fractures. 

Thank you. 

Chairman MANZULLO. As part of your testimony, could you demonstrate how that latch works, and how it has been denominated 

as a restraint? 

Ms. HARROUN. Anybody who normally walks with the assistance 

of one person is the candidate to use Merry Walker. Most of the 

people in wheelchairs are able to get up and walk in the Merry 

Walker. 

This cross-bar, which seems to have CMS in a problem, I have 

to have this closed securely, because I have to hold onto it. And 

they are able to walk, walk, walk. When they get tired, they simply 

sit down. 

Chairman MANZULLO. Explain the significance of the legal definition of restraint on the nursing homes, and why those machines 

are not in nursing homes. You can resume your chair and speak 

into the mike. 

Ms. HARROUN. The objection that CMS has to the Merry Walker 

is the front latch mechanism. And they are claiming that cognitively-impaired people are unable to open that front gate. 

Anybody with an Alzheimer-type dementia is totally impaired 

from doing anything in the abstract. They cannot open a doorknob, 

they cannot use the commode by themselves, they can hardly feed 

themselves, because those things are in the abstract. 

Because the latch mechanism on the Merry Walker happens to 

be in the abstract is basically there for their safety. Merry Walker 

needs to be deemed an adaptive device, and that is what they are 

not doing. 

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

Chairman MANZULLO. Thank you. Dr. Christian-Christensen? 

Ms. CHRISTIAN-CHRISTENSEN. Thank you. I would like to first, 

submit some documents for the record. One of them is a letter that 

Congresswoman Nydia Vela ́zquez and I wrote to Administrator 

Scully on the issue of the x-ray audit that took place on the day 

that they were testifying here. It was, this came out of the blue. 

It was something that they thought had been resolved, or at least 

was put on hold. And while the testifying was taking place, they 

were being audited. 

In addition to that, they were meeting here that week, and they 

asked for some, for CMS to send some, a representative to explain 

some of the regulations to their membership. And they refused to 

go. So I wanted to submit that for the record. 

And also some documentation from some of my own constituents 

on the problems that they have been having, and on which we 

want to meet with CMS. 

Chairman MANZULLO. The documents will be received and be 

made part of the record without objection. 

Ms. CHRISTIAN-CHRISTENSEN. I want to commend Ms. Harroun, 

is it? 

Ms. HARROUN. Yes. 

Ms. CHRISTIAN-CHRISTENSEN. On the wheelchair. In fact, if I 

could just tell a quick story about a person that, I had a constituent who was in the VA hospital who was in a wheelchair. And 

19

we were able, with working with the American Legion, to get that 

person home, into an area where he could have assisted living. The 

wheelchair failed to come. 

We were called and worked to get this wheelchair to come, get 

to the Virgin Islands from the VA in Puerto Rico. I thought it had 

been resolved. I was in a little restaurant one day, and this old 

man came in to me, walking. And he introduced himself. It was the 

same person. The wheelchair never came. 

Ms. HARROUN. Good. Good. 

Ms. CHRISTIAN-CHRISTENSEN. He was walking with a cane. So 

this is a really great invention, I guess I would call it. I hope we 

can work to get it approved. 

I wanted to ask Mr. Sullivan a couple of questions. Your last 

statement said it is your hope and desire that the Office of Advocacy and CMS will develop a working relationship that will result 

in better communication and action on the issues that are of concern to the Committee. 

I mean, how do we make that happen? This is not the first time 

that you have been here. We have gone through this over, you 

know, several times. How do we make that happen? 

Mr. SULLIVAN. Congresswoman, we keep trying. We keep trying 

over and over again, to the extent that we need to write more letters that clarify their reluctance to comply with the Regulatory 

Flexibility Act. We will do that. To the extent that we work with 

OMB in a signed memorandum of understanding that clarifies exactly how agencies are supposed to comply with the Reg Flex Act, 

we will do that. 

Ms. CHRISTIAN-CHRISTENSEN. Did you and OMB make any headway after your last meeting here? 

Mr. SULLIVAN. Yes, we have, Congresswoman. We have actually 

signed a memorandum of understanding to share information that 

leads to a decision-making by OMB when it comes to rules. 

So to the extent that we document non-compliance with the Regulatory Flexibility Act, we then make available that analysis, and 

a response or lack of response to that analysis to Dr. John Graham, 

when they make a decision on whether or not a regulation should 

move forward. 

So the simple answer to your question is, we keep trying. And 

we try with the help of this Committee, and any other help that 

we can, to convince CMS that it is to their benefit to adequately 

consider the impact on small business. 

Ms. CHRISTIAN-CHRISTENSEN. Are there any suits pending right 

now? I cannot remember from the last hearing. Are there any suits 

against CMS to which you have filed an amicus? 

Mr. SULLIVAN. As to whether or not we have filed an amicus 

brief on pending suits, the answer is no. But there is still outstanding the court decision that orders CMS to do the regulatory 

analysis that is in my written statement. We will continue to try 

and work with this Committee to make sure that CMS does that 

regulatory analysis and complies with the court decision. 

Ms. CHRISTIAN-CHRISTENSEN. Does anyone else want to add anything to how do we make them comply? Because it is getting very 

frustrating, Mr. Chairman. 

20

Dr. NIELSEN. Mr. Chairman and Congresswoman ChristianChristensen, it was our intent, as we came here today, to be here 

testifying in the spirit which you mentioned at the beginning, Mr. 

Chairman. Our intent was that our testimony not be an attempt 

to accuse, or to malign, or to embarrass anyone; but rather, an opportunity for us to sit around the table, express the reality of what 

we face, and work toward some common conclusions and results. 

In fairness to Mr. Scully and to his administration, much of what 

we are complaining about, or much of what we see as a problem, 

was inherited by him and by his administration. And we have had 

assurances from Secretary Thompson and from Mr. Scully that 

they intend to sit down with us and work with us on this. 

And so my contribution would be that we continue to try to do 

that. If this is not the right venue, let’s find another one. But we 

stand ready to meet whenever and wherever to openly discuss the 

reality of these situations, and find solutions for them. We did not 

intend in any way for this to be a confrontational situation. 

Mr. EVANS. Thank you for letting us have this moment. I agree 

with the gentleman that spoke before me, that HCFA did inherit 

some of these problems. But I will tell you that the new CMS has 

effectively closed their ears. They do not, they do not want any conversation. 

Before, they at least talked to us. They listened to us. And they 

may say yes occasionally, once in a blue moon; but they at least 

said no, and we knew where we stood. 

It is out of control. It is completely out of control. 

Ms. CHRISTIAN-CHRISTENSEN. Mr. Chairman, I know my time is 

up right now, but I get the sense that perhaps Mr. Scully, Secretary Thompson did not understand the complexity of the nature 

of HCFA and what they were going to have to deal with. You know, 

I really think it is out of control. 

Chairman MANZULLO. Dr. Weldon. 

Dr. WELDON. Thank you, Mr. Chairman. And I want to again 

thank you for providing me with the opportunity to join with your 

Committee and your colleagues on this very important hearing. 

Mr. Evans, if you could just answer a few questions for me. I understand there have been several audits of your industry throughout the country. Representing your industry today, can you comment on the outcome of those audits in terms of the numbers or 

percentages of portable x-ray companies that have been found to be 

over billing, or double-billing, or engaging in any kind of fraud in 

the Medicare program? 

Mr. EVANS. Sure. To give you statistics of the whole industry is 

a pretty tough thing to do, because obviously not all portable x-ray 

providers belong to our association. I can tell you that within our 

industry, we have done anything and everything to try to make 

sure that we are compliant. We have had conversations with CMS 

on how to be more compliant, how to avoid fraud. 

I think that what is happening is that we do not order the xrays, Doctor. We do not know who to bill, unless the skilled nursing 

facility, or SNF as they are called, tells us who to bill. The rules 

are so confusing that a lot of the time the finger gets pointed back 

at us. 

21

I will tell you that I was personally audited recently, within the 

last few years. I came through, you know, clean as a whistle. In 

fact, they said there was a $29 problem, so to speak, and we came 

back and showed them that there, in fact, was not a $29 problem. 

There was not an issue there. But as far as statistics, I cannot tell 

you exactly. 

Dr. WELDON. So you do not keep track of the number of audits 

for your members, and—— Mr. EVANS. No. We have—— Dr. WELDON. The reason I ask you the question is, Medicare, 

CMS has really not provided us any data to support the claim that 

would justify a fraud alert for your business. And so I was wondering if you had any information as to how much fraud is out 

there. 

Mr. EVANS. I think that every, I think that every industry, be it, 

and I do not care what industry it is, I think that every industry 

has some dirt. 

I can tell you that the President of our association was just recently audited, as I said in my testimony. His came back clean. 

And his was a federal audit, not a state audit. 

Dr. WELDON. Now, I wanted to get into that a little bit with you. 

You implied in the opening comments that his audit was some kind 

of a reprisal from CMS? 

Mr. EVANS. It sure appears that way to me. I have got to tell 

you, in my testimony my fear is, as far as I am concerned, wellfounded. I have instructed my staff that if CMS walks in, or the 

state walks in, that I am out of town and they will have to come 

back. That they do not have all the records there to be able to go 

through it. 

I am very fearful that they are going to come in and audit me. 

I am very fearful, not only for myself, but for the members who we 

represent. 

Dr. WELDON. How are you typically reimbursed? If you get a call 

from a nursing home to go do an x-ray or EKG, do you bill through 

Part A or Part B? Either one? 

Mr. EVANS. The skilled nursing facility has to instruct us. There 

is no way for us to go in and know whether this is a Part A patient, 

in other words a patient that has spent three days or more in the 

hospital and has been released back into that facility, and is still 

under the Part A care; or if it is a Part B patient, and the Part 

B patient is there under, has not been in the hospital and is there 

for just normal care. 

We have no control over that. And I think that that is one of the 

reasons why this is so hard to track. That is one of the reasons why 

we have looked for exclusion from PPS.

It is my understanding that CMS has said we want to treat everybody the same within a group. We are not treated the same. We 

are in the physician’s fee schedule, and we are the only people 

within the physician’s fee schedule that are not excluded from PPS. 

Dr. WELDON. Dr. Jones, as I understand it, CMS is scheduled to 

put through another 5-percent reduction for reimbursement, and 

then possibly another reduction after that. 

Is that what you were alluding to when you showed those two 

maps? If these things progress onward, more and more providers 

22

in your association would have to just start refusing to see Medicare patients? It just would not be profitable at all for them to see 

these people? Is that the concern you are raising? 

Dr. JONES. Thank you very much for the opportunity to answer 

that question, Congressman Weldon. 

The formula is so flawed that Mr. Scully was quoted himself, on 

the 2nd of February of ’02 in The Milwaukee Journal, as saying 

that the formula is, quote-unquote, screwed up and exceedingly 

harsh. And if he is saying that as the head of the Agency, it shows 

that it really needs to be addressed. 

The problem is that it is scheduled for 5.4 percent this year, 5.7 

percent next year. And it is the formula that is tied to the GDP, 

and not tied to the expense of the office for seeing patients, as you 

know. 

So the problem is, what we see occurring is that this negative 

rate of reimbursement, this negative growth will make it such a 

disincentive for our best and brightest to look at coming into health 

care and for those who are currently practicing, to continue to see 

the Medicare population, which is our most needy population, those 

that are elderly and those that are infirm. 

And we just cannot afford to have that happen. We need to have 

this formula fixed. The regulators are saying it is beyond regulatory control. And if it is, then we need to now look at getting 

some help from Congress. 

Dr. WELDON. It is in the statute in the ’97 budget agreement, 

Congress has to fix it. Thank you, Mr. Chairman. 

Mr. EVANS. Congressman Weldon, Mr. Chairman, may I make 

another statement? 

I would just like to say that the 5.7-percent decrease that Dr. 

Jones spoke about translated to our industry as a roughly 12-percent decrease in revenue. If this other 5.4 percent goes into effect, 

we are gone. In fact, we have, we have providers in California that 

are already going by the wayside. 

Added on this with the situation with the prospective payment 

system, and us being under that system, in October the skilled 

nursing facilities are taking a 17-percent cut in their revenues. 

They are paying us for Part A patients; they will no longer be able 

to afford to pay us. 

While the situation with physicians is a critical situation, and I 

agree with it, we are about gone. 

Chairman MANZULLO. Thank you. Go ahead, Dr. Nielsen. 

Dr. NIELSEN. Mr. Chairman and Congressman Weldon, the extent of this goes far beyond that. It has not been too many weeks 

since the announcement of the expected decreases over the next 

five years were announced. And I do not remember the exact numbers, but it was approximately 5.5 percent two or three years in a 

row, and 2.8 at the end. And when you add those up, you are talking about a 20-point-something-percent reduction. And in a small 

business private practice, where overhead may be 50 percent, that 

is a 40-percent cut in pay. 

It is not about physician pay, but physicians who have to pay out 

of pocket to treat patients will stop treating them. And although 

this is a map of primary care, we have regions of the country where 

specialists such as our head and neck surgeons, who have to proVerDate jun 06 2002 04:13 Jun 15, 2002 Jkt 079640 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HR\OC\A640.XXX pfrm15 PsN: A640
23

vide very comprehensive care for head/neck surgery cases with long 

global periods and extensive follow-up, are unable to afford to do 

it. They simply stop providing the care. 

And as a lot of insurance companies adopt Medicare fee schedules and global periods, it extends way beyond Medicare. Then it 

becomes your entire insured population. That cost shifts all of the 

specialty and tertiary care to regional medical centers and academic institutions, who can no longer bear the burden. And pretty 

soon we are going to start losing teaching institutions. 

So the ramifications of this go far beyond primary care, and far 

beyond the kind of mapping that you see here that Dr. Jones presented. 

Chairman MANZULLO. Thank you. Ms. Napolitano. 

Ms. NAPOLITANO. Thank you, Mr. Chairman. I think we can 

probably spend weeks really getting complaints, if you will, on 

HCFA. And I come back from the state level, where we went 

through this ad nauseam. 

The issue then, Mr. Chairman, is, will you set up a meeting with 

Secretary Thompson, and maybe get to the bottom of how can we 

work together? Not being punitive, not being aggressively charging 

anybody with dereliction of duty or whatever. But get to the point 

now. We are facing a critical state. 

Chairman MANZULLO. We have remedies to take care of people 

who obstruct truth from coming forth, and that is the purpose of 

this Congressional hearing. We will pursue those avenues vigorously. 

I think it would be a good idea for us to send a letter to Secretary Thompson, who is a marvelous man, and explain to him that 

somebody under his watch is not doing his job. 

Ms. NAPOLITANO. Or explain why he is not doing his job to the 

satisfaction of this Committee. 

But I think it goes beyond. I can tell you that some of my providers have been, especially home health care providers, nursing 

home providers, and some of my dentists are complaining to me 

about their not being able to treat patients. They are cutting down 

repeatedly because of, the statement has been because of the lack 

of reimbursement, and they have to keep their door open. 

So you cannot blame them. And we are not really helping the 

people who need it the most, that will not have the access to this 

assistance. And whatever can be done, we are with you, Mr. Chairman. And I think the rest of the Committee understands the severity of the issue. It is not going to get better, and we need to act 

expediently as possible. 

Thank you. 

Chairman MANZULLO. Thank you. Let me put this into the 

record. The number of times that I can think of off the top of my 

head where we have had members of the Administration along 

with small businesspeople. 

We had somebody from the VA along with a constituent of mine 

complaining about when the VA went into the laundry business. 

And that particular match, the VA came in, the shortest statement 

I have ever heard. They said as soon as we got your letter, take 

our word, as of June 30 last, the VA is out of the laundry business. 

We saved about 200 jobs in my district alone. 

24

We have a match with somebody from the National Parks Service, and a camp owner from Denali in Alaska. And as a result of 

that, Denali National Park decided not to go into the hotel business. We saved about eight small businesses that had campgrounds 

outside. 

We had a match with Mr. Barreto, who has been nothing but 

fabulous with the SBA, is doing a great job, and Dr. Graham from 

OMB. It was a pretty tense meeting. But it brought the parties together, along with the owner of Albany Travel, over the size standards. As a result of that hearing bringing the people together, new 

size standards were promulgated almost immediately. Albany got 

their $600,000 loan and were able to stay in business. 

Again, Hector Barreto came in with people from the industry 

with regard to the subsidy rate. And our policy here is whenever 

anybody testifies from the Administration, if there is somebody 

with the witness that knows the answer better than they do, that 

individual just scoots up to the table, identify them self for the 

record, and answers the question. 

Dr. Blanchard testified, it was about three weeks ago, extremely 

productive hearing, all going to the resolution of that issue. 

We had a match with somebody from the Federal Prison Industries, with the lady from Ohio, dealing with electronic harnesses. 

And as a result of that, Federal Prison Industries went out of the 

business of making electronic harnesses and she got her contract. 

We had a match with the Defense Logistic Agency when two 

Major Generals were here, and a lady from Phoenix, Arizona. As 

a result of that hearing, the importation of most of those black berets stopped. We got a $50 million set-aside for small businesses 

and helped save her business in Phoenix, Arizona. 

We had a match with the National Park Service and the folks 

at West Yellowstone, Yellowstone, Montana. As a result of that valuable testimony, it went into the record on the impact on small 

businesses. 

We had a match when I held a field hearing in Santa Fe, New 

Mexico, with the people who run the Los Alamos Lab, along with 

members of the six Pueblos, the Indian tribes, and others who were 

seeking contracts. As a result of that, one person who was complaining was put in charge of overseeing all contracts at Los Alamos, with an initial start of $50 million being set aside for small 

business involved in construction. 

That is how we do business in this Committee. And I think for 

Mr. Scully to wield his arrogance, to think that he cannot sit down 

with these nice people. I mean, to me it just defies logic that a person can remain a part of the Administration and come here, and 

stiff a Congressional Committee, ignore a Congressional subpoena, 

when our only purpose here is to save the jobs of small 

businesspeople. 

And it has always been within this spirit that we have worked 

on this issue. And I would say if Mr. Scully is somehow—he is 

missing an opportunity, I think, to redeem himself and the organization. Now what you have here is an antagonistic group of people. 

I really think that Mr. Scully should resign. He should resign his 

office immediately. Anybody who does not take the time to meet 

with people, to take the input from the people most affected, is 

25

doing a disservice to the seniors of this country, and to the poor 

who rely upon Medicare services. And the sooner he does that, the 

better. I mean, we need to get on with the tremendous problems 

that are affecting this Government. 

It was in the last Administration where the Doctor Hulsebus, it 

was three brothers, from Rockford, Illinois were savagely and brutally attacked by HCFA that said they owed $250,000 in chiropractic overpayments as a result of extrapolation. We took on 

HCFA at that time, and brought them out to Rockford, had a meeting and found out that they did not even know what an x-ray was. 

They had no idea. How can you say that an adjustment by a chiropractor was not medically necessary when you did not look at the 

x-rays? As a result of that, that entire fine was lifted. It got down 

to eventually $1500. HCFA insisted on appealing the remaining 

$1500 on that, and they were persuaded not to do that, and to drop 

the appeal. 

This is an agency that has, my understanding, 4,500 employees. 

I do not know what they do. They contract with 81 different companies, including Wisconsin Physician Service that does my area. 

They are some of the worst people, who know absolutely nothing 

about medical care. They have 81 different sets of regulations, 81 

different sets of standards. Totally confusing the medical industry. 

Demoralizing people who spent years in college for the purpose of 

healing. And many of those are here in this room today. 

I just think when I look upon the tremendous amount of sacrifice, and the witnesses here, and the time that you have put in 

for the practice of healing. You came here today to heal some of the 

wounds that have arisen because of the intransigence of the Health 

Care Financing Administration. 

They are not here today. Perhaps at the next hearing we will 

have a new Administrator. 

Mr. Davis, did you have any questions? 

Mr. DAVIS. Yes, sir. 

Thank you very much, Mr. Chairman. Let me apologize for not 

hearing the testimony, but I think I got a good drift of what has 

been taking place. Plus I think the fact that I have been associated 

with health care now for about 30 years, and have spent about 15 

of those as a health planner, and represent a district that has 24 

hospitals in it, four medical schools, and the biggest medical center 

complex in the country, as well as about 35 or 40 nursing homes 

and about 25 or 30 community health centers, I spend a great deal 

of my time listening to the woes of people who have interacted with 

HCFA. And also having some understanding of why HCFA was created in the first place, to try and handle, or get a handle on, what 

was called the spiraling runaway health care costs. 

I kind of understand a little bit of what has taken place. And I 

agree with you, it is one of the most complex of all agencies probably within the Federal Government. And I guess the one question—and I have heard these arguments and discussions many, 

many times, as I am sure most of us have, and all of us probably 

have—what would your recommendations be to us in terms of what 

it is that you think we really can do, and need to do, to try to get 

a, a balance on this problem? That would be my question to the 

panel. 

26

Ms. HARROUN. I am Mary Harroun, Congressman Davis. I live 

in your general area. I am a Chicago person. 

I have before me a very ragged-tagged book of nursing home regulations. They are there. They were passed in 1990. If HCFA, 

CMS, would just mandate that their surveyors follow these regulations, providing the highest quality of care possible to our residents 

in long-term care. They are written. They do not follow them. 

Mr. DAVIS. Follow the rules. 

Dr. NIELSEN. Congressman Davis, one of the things that I recommended was passage of the Medicare Regulatory and Contracting Reform Act. And one of the most important provisions of 

that Act is a provision that engages us in compliance education. 

Physicians want to be in compliance. Nobody wants to be audited, nobody wants to have their reputation ruined, or their office 

sacked, or their records reviewed. And we want education. 

So to the degree that we have to deal with this extremely complex issue, as you mentioned, and we are going to have difficult 

regulations whose executive summaries run into the hundreds of 

pages, help us to educate ourselves so that we can comply. And 

let’s reduce those burdens that are unnecessary. 

We are being asked to bear the burdens financially for, for a provision of services that we think are good, but we do not have the 

resources to cover. If we are going to make those services necessary, then we have to provide the resources to cover them. 

I come from a family of 10 children. And if one of us misbehaved, 

it was not my father’s pattern to spank all of us just so that he 

made sure he got the right one in there somewhere. And that is 

the way physicians feel. If there is a problem, don’t spank all of us. 

Let’s find the problem, and let’s weed it out. 

Dr. JONES. And with all due respect, I am number nine of 12, 

and we all got spanked whether we needed it or not. [Laughter.] 

But Mr. Davis, I appreciate the opportunity to offer you two suggestions, as a Committee. 

I would like to ask your support for the legislation that was introduced by Representative Nancy Johnson, preserving patient access Preserving Patient Access to Physicians Act, H.R. 3882. 

The good thing about that is it would affect the MedPAC recommendations and remove reimbursements for expenditures away 

from the GDP. To me, that is the reasonable way to do it. 

Some people say it costs too much. My question is, can we afford 

not to do it? It is the right thing to do. 

And it is interesting to me that CMS found a way to increase the 

reimbursement for Medicare Plus Choice. It seems as though they 

wanted to ensure that there was money there to make sure that 

everyone had an HMO, but not put money into physician reimbursement to make sure that everyone had a physician. There is 

a disconnect here for me. Your support in helping to make sure this 

happens, and getting Medicare to do all they can, getting CMS to 

do all they can from the regulatory component would help us tremendously. 

Mr. EVANS. Congressman Davis, thank you for asking the question. My name is Zach Evans, and I am with the portable x-ray 

providers. 

27

Our industry is 85 percent, 85 to 90 percent dependent on Medicare. We cannot turn Medicare patients away and look for other 

sources of payment. 

Like I said before, we are, if we do not get a bill passed, and it 

is a bill which Congressman Phil Crane and Chairman Manzullo 

have sponsored. It is H.R. 3094, which will help fix our industry. 

Is it a total fix? No, sir, it is not. Do I think that, that the things 

that we have mentioned here, all of us have mentioned here today, 

will help? I think they will. But I think it is going to take more 

than that in the long run. I think it is going to take an honest effort by Mr. Scully and his organization to respect this Committee 

and respect the small businesses that are out there. Because I do 

not see any respect today. 

If that had been me, and I ignored a subpoena, I would be in the 

pokey right now. 

Ms. HARROUN. That is right. 

Mr. EVANS. Thank you. 

Mr. DAVIS. Well, I thank you all very much. And Mr. Chairman, 

it seems to me—yes? 

Mr. SULLIVAN. Mr. Congressman, I actually would like to answer 

how Congress can help come to a solution, in addition to having 

these hearings which are intended to be productive. 

As far as the Office of Advocacy is concerned, we do need your 

help to help convince CMS that compliance with the Reg Flex Act 

is more than simply running a bunch of numbers. When CMS complies with the Reg Flex Act, and they consider their consequence 

on small business, they will learn what Dr. Weldon has already 

learned, and what he brought before this Committee. That is that 

if you consider the impact on transportation costs, and you consider 

what portable x-ray providers do, you actually save the Medicare 

system money. 

Mr. DAVIS. Well, I thank all of you for your answers. And Mr. 

Chairman, it seems to me that you do a pretty good job of spanking. [Laughter.] 

Chairman MANZULLO. Dr. Christensen. 

Ms. CHRISTIAN-CHRISTENSEN. I am sorry that I did not get to this 

before, but this was something that was shared with us at one of 

our roundtables. And it shows you what happened to Medicare payments, which is down all the way at the bottom of this. And this 

is what, where practice costs are. 

In actuality, what happens is that there is at least a $20 billion 

shortfall in the payments over just the last, since 1997. A shortfall 

of $20 billion over the last five years. The costs are going up, and 

the discrepancy is just really large. 

And one of the problems with this is, and correct me if I am 

wrong, but whatever Medicare does, all of the other insurance companies follow. 

Mr. EVANS. Very correct. 

Ms. CHRISTIAN-CHRISTENSEN. So what we are seeing here is the 

beginning of a process of getting rid of small business health care 

providers. Because the other insurance companies are going to follow. There is just going to be no way for them to stay in business. 

28

I know it sounds bad to hear that providers are not going to 

serve Medicare patients, but they just cannot. And it is going to get 

worse, because this is just the beginning. 

Mr. Chairman, I feel like there is a war going on against small 

health care practitioners. I felt it before I came here, I feel it even 

more now. The references made by Dr. Jones about the HMOs 

versus the practitioner, but I feel like they are trying to get rid of 

all of us and let the big corporations, you know, continue to make 

the money. You know we cannot let that happen. 

Chairman MANZULLO. I have a final question that is technical, 

Mary, so I am going to read it, if you do not mind. ‘It seems clear that in a wheelchair muscles degenerate. But with 

the assistance of the Merry Walker, those same muscles are used 

and preserved. ‘In the Sunday Washington Post, Mr. Scully announced that 

HCFA would begin rating nursing homes. The data to be used to 

rate nursing homes will come from the MDS, that is the minimum 

data set.’ This was originally a question for Mr. Scully, but since he is not 

here, I will ask you. I guess you are in his chair. Here is the question. 

Since the Merry Walker is deemed to be a restraint and nursing 

homes are discouraged from using restraints, and are sometimes 

penalized for doing so, do you believe a nursing home would receive 

a poorer rating for using the Merry Walker than a nursing home 

that places residents in wheelchairs? 

Ms. HARROUN. Yes, Mr. Chairman. In my research of this MDS 

wrongful tort suit describing the Merry Walker as a chair that prevents rising, I—— Chairman MANZULLO. They actually took your trademark 

name—— Ms. HARROUN. That is correct. 

Chairman MANZULLO [continuing]. And took out the capitalization——

Ms. HARROUN. That is correct. 

Chairman MANZULLO [continuing]. And used it as a generic 

name in their manual. 

Ms. HARROUN. That is correct. 

Chairman MANZULLO. Anybody else would have been sued for 

doing that. 

Ms. HARROUN. Yes. And there is no way I can sue them. We have 

already pursued that. Because they made no money. You can only 

do a trademark lawsuit when there is money to be made.

Chairman MANZULLO. I just hope, I just hope people realize the 

significance of what they did to you. It is the same as if somebody 

took the name Xerox——

Ms. HARROUN. And put it with small letters, and ‘do not use it,’

basically. 

Chairman MANZULLO. And they used your device, with Merry 

Walker spelled the same way, they did not put the trademark on 

it, or service mark, in small letters, and used it as an example of 

what they do not like. 

Ms. HARROUN. Right. 

Chairman MANZULLO. Okay. 

29

Ms. NAPOLITANO. Mr. Chairman, isn’t that defamation of a product? 

Chairman MANZULLO. I do not know what it is. I think it is defamation of Congress that these guys do not show up. 

Ms. HARROUN. Yes, exactly. The thing is, they have now come 

across, in their latest writings, which they—when I wrote to them 

the 1st of August, we have got two answers here coming forth. I 

will answer your question in a second. 

Chairman MANZULLO. Go ahead. 

Ms. HARROUN. I did write Tom Scully, Jeane Nitsch, Fred Gladden, and Steve Pelovitz. I copied them all on the same letter, showing them Merry Walker was a registered trademark, it was a patented product. And it is certainly not a chair that prevents rising. 

I mean, I went into that in detail. 

They wrote back on the internet, on a question/answer on the 

internet stating that Merry Walker is not—they used the trademark. Do you want me to read that? 

Chairman MANZULLO. That is all right, you can just—— Ms. HARROUN. All right, I will just say it. They said that Merry 

Walker, although it is not a chair that prevents standing, it is still 

a chair that restricts freedom of movement. That is, residents’ access to steps—this is nursing home regulations—to the commode, 

to transferring to another chair, or into their bed. There are no 

regs on steps in nursing homes. 

Chairman MANZULLO. Because there are no steps. 

Ms. HARROUN. We have things called elevators in nursing homes. 

Yes, what a unique idea. And there is no such thing as transferring 

to a chair regulations, or to a commode, or to bed. That is why they 

are in the nursing home. 

Chairman MANZULLO. So they made a reference to regulations 

that do not exist. 

Ms. HARROUN. That do not exist, that is correct. And it was not 

my say-so. I did have a witness of an expert on these rules. And 

there are none. 

Now, in answer to your question, I did contact all the MDS minimum data set coordinators of all the large nursing home chains. 

Marriott, Manor Care, all of them. There are like 20 of them. Got 

hold of all the MDS coordinators and asked them how they are able 

or not able to use the Merry Walker because of what the MDS has 

written. 

None of them can use the Merry Walker. None of the large corporations handling the majority of our nursing home residents are 

allowed to use the Merry Walker because of the MDS. 

Chairman MANZULLO. So because HCFA will not correct the 

miscategorization, a nursing home that allows seniors to deteriorate will fare better under Mr. Scully’s rating than a nursing home 

that attempts to keep seniors active and healthy. 

Ms. HARROUN. That is right. So Merry Walker will never be used 

in nursing homes under this new policy, because they will be cited 

and they will get negative ratings. 

Chairman MANZULLO. Mary, a final question. How many of these 

have you manufactured and put into the market? 

Ms. HARROUN. There is about 100 a month over the last 12 

years. 

30

Chairman MANZULLO. So that is, what, about 15,000? Would that 

be correct? 

Ms. HARROUN. About. And there is 1.8 million people that could 

use them. 

Chairman MANZULLO. Have you ever had a liability suit against 

you for this machine? 

Ms. HARROUN. I have never. And I never even had a viable FDA 

med watch, in 12 years. 

Chairman MANZULLO. Okay. This has been a very interesting 

hearing. 

Let me say this. Mr. Scully’s not showing up here, in my opinion, 

my wholehearted opinion, this is not indicative of the President’s 

office. We have worked with numerous agencies. In fact, I was in 

China the first week of January as the Chairman of the American/

Chinese Parliamentary Exchange. 

And we sat down with Undersecretaries of Commerce, and state 

and national security councils, USTR’s office. I mean, there was 

more than a briefing. It was, it was for the purpose of making sure 

that when I went there, we would present the same message. And 

I met with the President of China, an extraordinary hour-and-25-

minute meeting. 

But everything that we did, and the reason I bring that up, it 

was totally in concert with everything that we want to do with the 

Department of State, the National Security Council, the Department of Commerce and the USTR’s office. It was done purposely, 

to make sure that they were not only notified of what they were 

doing, but they helped us set the agenda. Because I believe that 

the branches should work together. 

And that is why I am very disappointed that we have this, this 

total disconnect that is going on. This Committee does not have the 

reputation for doing anything other than trying to solve, solve 

problems. 

We will deal with Mr. Scully appropriately, swiftly, according to 

the rules. And I just want to thank you for coming long distances, 

paying your own way. Very impressive witnesses. I thank God that 

there are people like you that are out there, that are carrying the 

torch, especially to the two M.D.s that studied long and hard and 

continue to stay in the profession, even though it becomes more 

and more discouraging. 

This Committee is adjourned—I am sorry, Mr. Davis? 

Mr. DAVIS. Yes. Before you adjourn, I just want to commend you. 

I mean, very seriously. I mean, of course this Committee does not 

necessarily have jurisdiction over HCFA, and this is a serious—I 

mean, this is a gut-wrenching complex. I mean, it really is. 

I mean, I see people come in my office and virtually cry. I have 

had nursing home operators and home health agencies; people who 

I am wondering if I am going to be able to keep them from cracking 

up before they leave. 

I just want to commend you for this hearing, and for the depth 

of analysis of a problem and of an issue that we have been able 

to explore today. And, and pledge, also, support for your continuing 

effort as you attempt to deal with HCFA and the Administration, 

to try and help us move towards some resolution of a big problem 

facing an awful lot of people throughout the country. 

31

So I commend you for that. 

Chairman MANZULLO. Thank you, Congressman Davis. This 

Committee is adjourned. 

[Whereupon, at 11:49 a.m., the Committee was adjourned.]

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