[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]
THE NEED FOR BETTER FOCUS IN THE RURAL HEALTH CLINIC PROGRAM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
FEBRUARY 13, 1997
__________
Serial No. 105-5
__________
Printed for the use of the Committee on Government Reform and Oversight
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_____________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN H. SCHIFF, New Mexico EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California
JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York
STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,
THOMAS M. DAVIS, Virginia DC
DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana TIM HOLDEN, Pennsylvania
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
JOHN SHADEGG, Arizona DENNIS KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio ROD R. BLAGOJEVICH, Illinois
MARSHALL ``MARK'' SANFORD, South DANNY K. DAVIS, Illinois
Carolina JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire JIM TURNER, Texas
PETE SESSIONS, Texas THOMAS H. ALLEN, Maine
MIKE PAPPAS, New Jersey ------
VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont
BOB BARR, Georgia (Independent)
------ ------
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
Judith McCoy, Chief Clerk
Phil Schiliro, Minority Staff Director
------
Subcommittee on Human Resources
CHRISTOPHER SHAYS, Connecticut, Chairman
VINCE SNOWBARGER, Kansas EDOLPHUS TOWNS, New York
BENJAMIN A. GILMAN, New York DENNIS KUCINICH, Ohio
DAVID M. McINTOSH, Indiana THOMAS H. ALLEN, Maine
MARK E. SOUDER, Indiana TOM LANTOS, California
MIKE PAPPAS, New Jersey BERNARD SANDERS, Vermont (Ind.)
STEVEN SCHIFF, New Mexico THOMAS M. BARRETT, Wisconsin
Ex Officio
DAN BURTON, Indiana, HENRY A. WAXMAN, California
Lawrence J. Halloran, Staff Director and Counsel
Doris F. Jacobs, Associate Counsel
Robert Newman, Professional Staff Member
Marcia Sayer, Professional Staff Member
R. Jared Carpenter, Clerk
Ron Stroman, Minority Professional Staff
C O N T E N T S
----------
Page
Hearing held on February 13, 1997................................ 1
Statement of:
Buto, Kathleen, Associate Administrator for Policy, Health
Care Financing Administration, Department of Health and
Human Services; Marilyn H. Gaston, M.D., Director, Bureau
of Primary Health Care, Health Resources and Services
Administration, Department of Health and Human Services,
accompanied by Dena Puskin, Acting Director, Office of
Rural Health Policy, Health Resources and Services
Administration............................................. 45
Finerfrock, Bill, executive director, National Association of
Rural Health Clinics; Tom Harward, physician assistant and
executive director, Belington Clinic, Belington, WV; and
Robert J. Tessen, M.S., co-founder and first president,
Texas Association of Rural Health Clinics, National Rural
Health Association......................................... 89
Steinhardt, Bernice, Director, Health Service Quality and
Public Health, General Accounting Office, accompanied by
Frank Pasquier, Assistant Director, Health Issues, Seattle
office; Lacinda Baumgartner, evaluator, Health Issues,
Seattle office; and George Grob, Deputy Inspector General
for Evaluation and Inspections, General Accounting Office.. 4
Letters, statements, etc., submitted for the record by:
Buto, Kathleen, Associate Administrator for Policy, Health
Care Financing Administration, Department of Health and
Human Services, prepared statement of...................... 50
Finerfrock, Bill, executive director, National Association of
Rural Health Clinics, prepared statement of................ 93
Gaston, Marilyn H., M.D., Director, Bureau of Primary Health
Care, Health Resources and Services Administration,
Department of Health and Human Services, prepared statement
of......................................................... 60
Grob, George Deputy Inspector General for Evaluation and
Inspections, General Accounting Office, prepared statement
of......................................................... 20
Harward, Tom, physician assistant and executive director,
Belington Clinic, Belington, WV, prepared statement of..... 112
Steinhardt, Bernice, Director, Health Service Quality and
Public Health, General Accounting Office, prepared
statement of............................................... 8
Tessen, Robert J., M.S., co-founder and first president,
Texas Association of Rural Health Clinics, National Rural
Health Association, prepared statement of.................. 118
THE NEED FOR BETTER FOCUS IN THE RURAL HEALTH CLINIC PROGRAM
----------
THURSDAY, FEBRUARY 13, 1997
U.S. House of Representatives,
Subcommittee on Human Resources,
Committee on Government Reform and Oversight,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:15 p.m., in
room 2203, Rayburn House Office Building, Hon. Christopher
Shays (chairman of the subcommittee) presiding.
Present: Representatives Shays, Snowbarger, Souder, Pappas,
Towns, and Kucinich.
Staff present: Lawrence J. Halloran, staff director and
counsel; Doris F. Jacobs, associate counsel; Robert Newman, and
Marcia Sayer, professional staff members; R. Jared Carpenter,
clerk; Ron Stroman, minority professional staff; and Jean Gosa,
minority staff assistant.
Mr. Shays. I will call this hearing to order.
The Rural Health Clinic Program is adrift. Drawn off course
by financial cross-currents and a weak hand at the helm, the
program lost sight of its core mission: improved access to
primary health care by Medicare and Medicaid beneficiaries in
rural areas. Today, the subcommittee asks how the Rural Health
Clinic Program lost its focus and grew dramatically away from
truly underserved areas into less rural and suburban locations.
The rapid growth in the number of rural health clinics
since 1990 caught the attention of both the General Accounting
Office, GAO, and the Health and Human Services Department, HHS,
Inspector General, the IG. Through separate investigations, the
two reached strikingly similar conclusions: rural health
clinics are growing for the wrong reasons, in the wrong places,
and at substantial cost to Medicare and Medicaid programs.
Their testimony today will describe a program distorted by a
focus on money rather than medicine.
In launching the program in 1977, Congress permitted cost-
based reimbursement of primary care doctors as well as mid-
level practitioners, physician assistants, nurse practitioners,
and nurse midwives, to induce the expansion of health care
delivery into rural areas. The higher reimbursement rates made
rural Medicare practices financially viable.
In later years, as Medicare and Medicaid moved away from
cost-based reimbursement to lower, fixed fee schedules in other
areas, rural health clinics became one of the last
opportunities for doctors and hospitals to get the higher
payments.
It appears this financial incentive, more than any other
factor, drove the growth of rural health clinics after 1990 and
tilted that growth away from independent clinics toward those
owned and operated as part of a hospital or nursing home. In
1990, less than 10 percent of the 600 rural health clinics
nationwide were provider or facility based. Today, they
represent almost half the Nation's 3,000 rural health care
clinics, and their growth continues.
The GAO also found many rural health clinics were formed
through the purchase or conversion of existing medical
practices, rather than through the extension of care to those
without adequate access. In many instances, the rural health
clinics designation became little more than an accounting
gimmick. The result was not better rural health care, just a
healthier bottom line for some suburban doctors and hospitals.
Different program management and broad eligibility criteria
also facilitated, perhaps even accelerated, this costly form of
growth.
The Health Care Financing Administration, HCFA, decided it
would be easier to reimburse facility-based rural health
clinics the same way Medicare pays for other outpatient
departments. That decision proved very costly. Unlike payments
to independent rural health clinics, reimbursement to provider-
based clinics are not capped, not reviewed for reasonableness,
and may include institutional overhead costs shifted from a
facility's other operations. We asked the agency to address
this policy and their plans to control Rural Health Clinic
Program costs in testimony today.
At the same time, the Health Resources and Services
Administration, charged with the designation of medically
underserved areas and health professional shortage areas, where
rural health clinics may locate, failed to update those key
indicators to reflect current areas of need. Certification of
one, or two, or any number of clinics in an area has little or
no impact on its designation status. The availability of mid-
level practitioners, the very heart of the Rural Health Clinic
Program, has never been factored into the designation formula.
As a result, we have no way of knowing where the Rural
Health Clinic Program is succeeding or where it needs to go
next to meet real needs. Testimony from the agency today will
address how rural health care access can be measured more
accurately and more often.
Finally, we will hear from rural health clinic association
representatives and testimony from an independent clinic
operator on how to extend the reach of Medicare and Medicaid
into isolated rural areas more efficiently and effectively.
For me, this type of hearing epitomizes good, constructive
oversight. A 20-year-old program, targeted to meet rural health
care needs, is found to be missing its mark. Through the
process of thorough investigation, open public discussion, and
the cooperation of the executive and legislative branches, we
can recalibrate the program's trajectory and put it back on
course.
It may take additional hearings to clarify the
administrative and legislative actions needed to focus the
Rural Health Clinic Program on the rural elderly, the poor, and
the children who truly need better access to Medicare and
Medicaid. We are committed to the task, and I am grateful to
all our witnesses today for their help in this effort.
I welcome all of you.
At this time, I would turn to the gentleman from Cleveland,
if he has a statement he would like to make, and then I will
turn to my colleague, the vice chairman.
Mr. Kucinich. I just want to say, Mr. Chairman and members
of the committee, what a pleasure it is to be on this
subcommittee with the Chair. I look forward to a productive
relationship, and I certainly appreciate the chance to be here.
Thank you.
Mr. Shays. I thank the gentleman.
Mr. Snowbarger. I will forego any opening remarks.
Mr. Shays. Well, we are eager to begin. We have a great
committee, some wonderful new Members. This subcommittee, in
the last session, had 52 hearings, and I felt that we not only
had hearings, but we acted on what we learned. So we're going
to learn a lot today, and we look forward to what we learn.
Hopefully, we can all, collectively, make a contribution.
Before actually calling on you, Mr. Towns is the ranking
member of this committee and, frankly, an equal partner in this
process. So, at this time, if he can catch his breath, we are
going to call on you, if you'd like to make a statement.
Mr. Towns. Thank you very much, Mr. Chairman.
Access to adequate primary health care is a critical need
in rural America. While I represent an urban district in
Brooklyn, NY, I was born in a rural community in North
Carolina, so I know personally the importance of this issue. I
also know that the lack of primary health care in rural
communities is also faced every day in inner city areas like
Brooklyn. In both cases, there is a dangerous shortage of
trained primary health care professionals, and we should never
lose sight of that. That is why I support the goals of the
Rural Health Clinic Program.
This program was designed to attract and retain primary
care providers and assistants to rural communities around the
country. Unfortunately, as GAO has discovered, there appears to
be widespread waste and abuse within this program. Even more
disturbing to me is the fact that Medicare and Medicaid
payments to rural health clinics are increasingly benefiting
well-staffed, financially well off clinics in suburban areas
that already have extensive health care delivery systems in
place. That is a real concern.
As the GAO points out, there are numerous rural underserved
communities which desperately need the rural health clinics,
but there are virtually no efforts being made to locate rural
health clinics in these areas. Instead, more populated suburban
areas are taking advantage of the large financial incentives in
the program. This abuse must be stopped, and it must be stopped
now.
I am pleased to note, Mr. Chairman, that the Department of
Health and Human Services appears to be moving in the right
direction to correct some of these abuses. For example, it is
my understanding that HHS will soon hold facility-based rural
health clinics to the same payment limits and cost reporting
requirements as independent rural health clinics. This would be
a good first step, but more needs to be done, and that's what
we have to talk about even further.
As the GAO report makes clear, this problem will only be
fixed if both the Congress and the administration work together
to solve these problems. As a member of both this subcommittee
and the Health and Environment Subcommittee of the Commerce
Committee, I look forward to working with you, Mr. Chairman,
and the administration to correct the problems that we know
exist.
I would like to yield back. Thank you for holding this
hearing. I look forward to working with you in bringing about
some solutions. Thank you very, very much. I yield back.
Mr. Shays. I thank the gentleman.
Before I swear in our panel, I would ask unanimous consent
that all members of the subcommittee be permitted to place any
opening statement in the record and that the record remain open
for 3 days for that purpose. Without objection, so ordered.
I also ask unanimous consent that our witnesses be
permitted to include their written statements in the record.
Without objection, so ordered.
We have today Bernice Steinhardt, Director, Health Service
Quality and Public Health, General Accounting Office;
accompanied by Frank Pasquier, Assistant Director, Health
Issues, Seattle Office; and Lacinda Baumgartner, Evaluator,
Health Issues, Seattle Office; then George Grob, who is the
Deputy, Office of Inspector General, Department of Health and
Human Services. It is wonderful to have all of you here.
At this time, if you would rise, we will swear you in. We
swear in all our witnesses, including Members of Congress.
[Witnesses sworn.]
Mr. Shays. For the record, all four of our witnesses have
responded in the affirmative.
We basically have two statements, but all can participate
in responding to questions.
So we will start with you, Ms. Steinhardt.
STATEMENTS OF BERNICE STEINHARDT, DIRECTOR, HEALTH SERVICE
QUALITY AND PUBLIC HEALTH, GENERAL ACCOUNTING OFFICE,
ACCOMPANIED BY FRANK PASQUIER, ASSISTANT DIRECTOR, HEALTH
ISSUES, SEATTLE OFFICE; LACINDA BAUMGARTNER, EVALUATOR, HEALTH
ISSUES, SEATTLE OFFICE; AND GEORGE GROB, DEPUTY INSPECTOR
GENERAL FOR EVALUATION AND INSPECTIONS, GENERAL ACCOUNTING
OFFICE
Ms. Steinhardt. Thanks very much for having us at this
hearing today to talk about our report on rural health clinics.
As you pointed out, Mr. Chairman, this is a program that
has grown very rapidly. We brought a couple of charts along
with us, and, as you can see from the bar chart, the program
started out relatively modestly, from about 100 or so clinics
in its early days, to about 500 clinics a decade later. But in
the early 1990's, for reasons that I know the Inspector
General's Office will talk about in testimony, the number of
clinics began to grow dramatically, and today, as the chairman
pointed out, there are about 3,000 rural health clinics across
the country.
I wanted to add, though, that the growth in rural health
clinic costs has also been dramatic, with Medicare and Medicaid
expenditures growing at two to three times the rate of the
Medicare and Medicaid programs overall. Currently, annual
expenditures for rural health clinics total about $760 million,
but by the year 2000, they could exceed $1 billion a year.
When we started our study of the program for the
subcommittee, we asked two broad questions. We asked first
whether the program is serving a population that would
otherwise have difficulty obtaining primary care. In other
words, is this program improving access to care? And second,
are there adequate controls in place to ensure that Medicare
and Medicaid payments to the clinics are reasonable and
necessary? The answer to both questions, simply put, is ``no.''
Let me take a few minutes to elaborate. Returning to the
first question of improving access, I think it's fair to say
that some rural health clinics do, in fact, benefit their rural
communities. These clinics are generally in sparsely populated
areas with fewer than 5,000 people, that couldn't support a
primary care practice otherwise, and which, by their presence,
have made it possible to reduce by many miles the distance they
have to travel for care.
But while these types of rural health clinics can be found,
as the pie chart shows there on the left, many of the areas in
which clinics are being certified, and that's 19 percent of the
pie there, are in well populated areas, sometimes with
extensive primary health care systems. This has increasingly
become the case among the clinics that have been certified in
the last couple of years.
What is more, in many of the locations that we looked at in
depth, primary care was already available to the Medicare and
Medicaid populations. We looked at care patterns for a sample
of over 42,000 Medicare and Medicaid beneficiaries, and we
found that before they became rural health clinic patients,
about three out of four of these people had been seeing a
primary care provider in the same city in which they lived or
in which the clinic was located.
Overall, in fact, we found that the availability of care
didn't change very much for about 90 percent of these 42,000
people after their rural health clinics were certified. As you
pointed out, Mr. Chairman, this really isn't surprising, given
that 68 percent of the clinics were simply conversions of
existing physician practices, practices that, in many cases,
had been in existence for 12 to 18 years before they became
rural health clinics.
Apart from the Medicare and Medicaid populations, the
certification of rural health clinics seems to have little or
no effect on the availability of care for any other underserved
segments of the population. Even though many of these clinics
qualify for the program because the overall population is
designated as underserved, less than half of a group of clinics
we surveyed said that they used the program to expand their
staff or to increase the number of patients that they actually
see. In fact, some of them told us they were seeing fewer
patients after they became rural health clinics.
Turning to the question of cost controls, we found that the
Rural Health Clinic Program does not have adequate controls in
place to ensure reasonable costs. These clinics, you will
recall, are generally reimbursed by Medicare and Medicaid for
the costs that they claim in providing services, rather than
according to the lower set fees for these services that would
otherwise apply.
So, under this system, we estimate that, in 1993, rural
health clinics were paid at least 43 percent more by Medicare
and at least 86 percent more by Medicaid than they would have
been paid under a fee schedule system. In 1996, we estimate
this amounted to an additional $100 million for Medicare and
close to an additional $200 million in Medicaid reimbursement.
This differential we found is particularly great among those
rural health clinics that are operated by a hospital or other
facility.
As you can see--once again, I will turn your attention to
the bar chart--about half of all rural health clinics are made
up of facility operated clinics, which are the white portion of
the bar. And their portion, as you can also see from the chart,
has increased dramatically over the last few years. You can
only see a white bar there beginning in 1990.
Unlike the independently operated clinics, the facility
operated clinics are not subject to any limits on payments for
visits. In one case we came across, a clinic received over $200
for a visit, or about four times the maximum $55 or $56 paid
for a visit to an independent clinic. While independent clinics
have a maximum reimbursement per visit, neither they nor the
facility based clinics have any apparent limits on the amount
or types of costs that they can claim.
In a sample of independent clinics, we found that a quarter
were paying physician salaries of up to 50 percent or more than
the national mean of $127,000. These are rural health clinics,
mind you. In looking at facility based clinics we found
hospitals sometimes claiming overhead costs that were more than
100 percent of the direct costs of operating the clinic.
Finally, under current law, rural health clinics receive
this extra Medicare or Medicaid reimbursement indefinitely,
even if the area in which they are located is no longer rural
or underserved, and even if the clinics don't depend on it for
financial viability.
So what does the program need to do to address these
findings. Our report made several recommendations. First, we
recommended that HCFA revise its Medicare payment policy to
hold all rural health clinics to payment limits and to
reimburse them for only the reasonable costs incurred in
providing care. HHS has actually agreed with our
recommendations and has said that it would begin to take
actions to implement them.
We also believe that the Congress needs to develop a more
precise definition for the types of areas that are eligible for
these higher Medicare and Medicaid payments, so that the
program is more clearly targeted to increasing access to care.
This wouldn't necessarily require redoing the existing
criteria, only adding another screen that would be targeted to
communities where access is a problem.
We therefore recommended that the Congress restrict this
higher Medicare and Medicaid reimbursement to rural health
clinics in areas that have no other Medicare or Medicaid
providers, or to clinics that can demonstrate that the existing
providers, the existing capacity, if you will, is not great
enough to accept new Medicare or Medicaid patients, and that
that funding will be used to expand access to them.
We also recommended that the Congress require periodic
recertification to make sure that the financial assistance
given to clinics is still appropriate.
This concludes my remarks, and we would certainly be happy
to answer any questions.
[The prepared statement of Ms. Steinhardt follows:]
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Mr. Shays. Thank you.
We will hear from Mr. Grob and then we will start our
question- ing. I like this era of charts. They one-upped you;
they've got color.
Mr. Grob. Mr. Chairman, it's 1997, and it's the 20th
anniversary of this program. Like a birthday that ends in zero,
it's probably a good time to take stock and see where we've
been and where we're going.
When we began this evaluation, we found that the General
Accounting Office was also beginning work on this subject, so
we began to collaborate with them early on in the project to
divide the work up. We took somewhat different approaches to
the study. Our approach was based very much on onsite reviews.
We sent inspectors out into the countryside to locate the rural
health clinics that were there, to see what they were like, to
talk to the people who were there, and things of this nature.
We did some other larger analysis of national data.
What is good about the fact that we took these two
different approaches is two things. One is, I think if you put
the two reports together, you get a pretty full picture of
what's happening. The second is a remark you made in
introducing this, which is, the results were identical. For all
practical purposes, the findings and the recommendations were
the same. So it seems that no matter what direction you look at
this thing from, you get the same answers, which gives you even
more confidence about the results.
Briefly, we found that the rural health clinics are
important to people who live in rural areas and who need access
to primary care. But the program is vulnerable to waste because
of the placement of the centers and because of weak cost
controls or unsatisfactory reimbursement systems.
Rather than repeat all of the details of those findings,
which you have just heard from the representative from GAO, let
me concentrate instead on talking about the growth and the
nature of the growth. I've got a growth chart here that is
similar to GAO's, and, frankly, I did it so that the line would
appear to be a bit steeper, because I wanted very much to
illustrate the rapid rate of growth of this program.
From 1990 to the end of 1996, the number of centers has
increased tenfold. In the last year alone, the increase in the
number of centers was 30 percent. When we calculated it, there
were more than 250 applications still pending at the end of
that year. In some of the States that we went to and asked them
questions, they expected growth rates of 50 percent in 1 year,
not a small number of States.
As far as the dollars are concerned, as was mentioned, we
are now at about three quarters of a billion dollars. The
growth began to accelerate in recent years. It wasn't so heavy
in the beginning years. The remark that by the year 2000 we
would be at $1 billion actually may come true sooner than that.
In the last year alone, the growth rate was 48 percent in the
dollars. So if we have the same growth rate next year, we will
be at $1 billion just next year.
Now, why is this growth occurring? And a good question that
might be asked, is anything different today than was the case
20 years ago when the program was first started? Well, some
things are still the same. One thing pushing the growth is the
need. About a quarter of the population of the country still
lives in rural areas, and they are going to continue to need
access to primary care. Hopefully, that will become the driving
force for any growth in this program.
Another big part of it, though, is the incentive funding.
And to make it simple, I have just included a chart here that
shows what the funding levels are in just a few States, and
these are typical of what you will see. Basically speaking, the
reimbursement rates for the rural health clinics are about
twice what they would be for clinics that don't receive this
incentive. And if they are provider based, because that cap is
not on them, they can even be considerably more than that,
perhaps two or three times that amount. So that chart there
just illustrates that fact.
Now, where health care is missing, where people have
trouble with the financial base, that might be just what the
doctor ordered, financially. But in places where there are lots
of services--for example, in one area we visited, we found 10
pages in the Yellow Pages, 10 Yellow Pages full of health care
providers in a location where a health clinic was located.
Mr. Shays. Just to clarify that, you mean like the big ad?
Mr. Grob. Well, I was just saying, we sent our inspectors
out to actually see these things.
Mr. Shays. I just want to understand 10 pages.
Mr. Grob. Ten pages in the Yellow Pages.
Mr. Shays. Was it lines?
Mr. Grob. Well, it was the usual mixture of ads and lines,
typical Yellow Pages full of health care providers, as an
example, just to give you a sense of how rural it was or how
needy it was.
So the incentive funding no doubt is a big cause for the
growth. Now, in fairness to the Health Care Financing
Administration, the last time this Congress took a look at this
program, there was a concern that there wasn't enough growth in
the program, and HCFA was instructed to notify various
providers of the availability of this program, and they did so.
That might have had a hand in spurring the growth of some of
the provider-based rural health clinics.
We found a reason that we didn't expect, and that was
managed care. What's happening here is that there are
unspecified fears of the coming of managed care in rural areas,
and the large providers are basically trying to get a foothold
in the area before other managed care organizers come into the
area. They are trying to establish a foothold, a very common
thing that we heard over and over again.
A lot of those provider-based rural health centers are very
small, one practitioner. They may even be claiming to lose
money, but what they are saying is, they want to be there so
that they have a stake in it before someone else comes in and
organizes the area.
Another thing is the business organization. Initially, a
lot of these clinics were just small operations, one or two
doctors, and things like this. Now, with the providers becoming
heavily involved in it, we have the basis of a large
organization behind them, some chains are cropping up here and
there, as well. So that accounts for it.
Finally, as far as the dollars are concerned, there is the
problem of tenure that was alluded to earlier. Once you have
the incentive funding, you have it; it never goes away. There
is no recertification of these programs periodically.
The reason that I mention these areas of growth is that all
of them are still there. In fact, the forces behind some of
them are growing, and the forces for some are such that they
will spur the growth even faster. For example, where we had the
centers opening up, initially their costs were not high because
they were new businesses. Now they are maturing, so their cost
is going to be even greater. They are going to be doing more
and more business as time goes on.
The tenure never goes away, so it keeps accumulating. We
keep getting more and more growth that way. And certainly the
concerns for managed care will be increasing and not decreasing
in the near future.
For all these reasons, we feel that what is important to
consider now is the rate of growth that is occurring and also
the notion that someone iterated earlier, that if we do want to
do something about this program, we need to do it now, because
there are large dollar amounts looming right behind that curve.
Even without the reasons, I think any analyst would put a ruler
in that curve and guess where that curve is going to end up
next year.
Our recommendations are similar to GAO's, and I won't
repeat them. We think a control can be placed on the location
and the cost. There are numerous ways to do this that are
spelled out in both of our reports and in our written
testimony.
Thank you very much.
[The prepared statement of Mr. Grob follows:]
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Mr. Shays. Mr. Towns, you have the floor.
Mr. Towns. Thank you very much, Mr. Chairman.
Mr. Shays. Let me just say, Mr. Grob and Ms. Steinhardt,
both reports were very well-written, well-organized, and I
think fairly clear, not oversensationalized. I thought they
were both excellent reports. In some sense, I almost feel we
don't have to issue a report; we just submit yours to the
Congress.
We hope, very shortly, to respond to what you all have
written. Before I do give the floor to Mr. Towns, I want to be
clear on one thing. When we're asking HCFA to make a change in
the process--I guess what I really want to know is, I feel a
number of people have gained the system and are making a
gigantic windfall. Do we have the ability quickly, through
regulation, to change, or is it going to be a long, laborious
process?
Mr. Grob. I could give an opinion on that. I think that
some of the change that needs to be made can indeed be made
through the regulatory process, but the regulatory process is
never quick. The rules for public rulemaking generally take a
year or more because of the requirement for the opportunity for
the public to comment, and dealing with those comments, and
things of this nature.
Mr. Shays. And there is no shortcut, Ms. Steinhardt?
Ms. Steinhardt. Well, there is no shortcut to the
rulemaking process. But I think the point here is, if we have
the will to take action here, there are things we can do to
make sure that this program is back on track. It had a purpose.
It has lost focus and lost track of that purpose. I think both
the Congress and HCFA need to take action.
Mr. Shays. By the time it comes to my questioning, because
I will go to Mr. Snowbarger after Mr. Towns, I would love you
to just articulate what changes are really rulemaking changes
and what can be done more quickly. That will be something I
will ask.
Ms. Steinhardt. Sure.
Mr. Shays. Mr. Towns.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me begin with you, Ms. Steinhardt. You mentioned
recertification more than once. In order to do that, how much
money are we talking about? Have you thought about it in
dollars and cents?
Ms. Steinhardt. What it takes to actually recertify?
Mr. Towns. Yes, the costs. Yes, the costs involved, that
process.
Ms. Steinhardt. We didn't calculate the cost, but this is
not something that needs to involve onsite field visits or
anything. This is something that HCFA can do, or HRSA could do,
with a data base, just knowing who these clinics are and where
they are located. This is a data base search.
Mr. Towns. Right. And I guess it would not take too much to
put that equipment in place.
Ms. Steinhardt. They ought to know where all these clinics
are.
Mr. Towns. As you know, Congress established the Rural
Health Clinic Program because many rural communities were
having difficulties attracting and retaining primary care
providers. In your review, did you come across sparsely
populated rural areas that lacked primary care providers?
Ms. Steinhardt. Yes. We found that there were some areas
that met the general criteria that would qualify them for rural
health clinics that were still without a rural health clinic.
Maybe Mr. Pasquier wants to add some details to that.
Mr. Towns. Sure.
Mr. Pasquier. Yes. I think the real contrast that we say
was, when we took our sample of beneficiaries, the ones where
access has improved, we noticed in the smaller communities
where there were these clinics that the program really did make
a big difference. In the larger communities, there really
wasn't much of a change in access. The patients were going to
the same providers or providers in that same community.
So I think the benefits of the program are much more
pronounced and easier to see when they are restricted to the
smaller community. That's what we found.
Mr. Towns. In your judgment, why aren't those communities
using the Rural Health Clinic Program? Do you have any reason
as to why they were not using it?
Ms. Steinhardt. They may not be aware of it, that they
qualify for it. I know, just anecdotally, some of the rural
health clinics that we spoke with became aware that they were
eligible for certification because financial consultants
contacted them and told them that they had an opportunity to
increase their reimbursements if they applied for designation
as a rural health clinic. So not every community is aware of
the benefit available to them.
Mr. Towns. Do you have any suggestions as to how HHS might
be able to target these communities to be able to get this
information?
Ms. Steinhardt. Well, I think the recommendations we make
would certainly help the program be focused on those places
where there are no Medicare or Medicaid providers or where the
providers can't accommodate any more Medicare or Medicaid
patients. That's where we think this program was intended--
those are the communities we think were the intended
beneficiaries of this program, and we think that's how the
criteria ought to be targeted.
Mr. Towns. Let me ask a question I think the chairman sort
of alluded to, but I want to turn it around, maybe, to a
degree. Once a rural health clinic is designated, that
designation cannot be removed, even if the area has developed
into a well financed and viable health care delivery system, if
it has it in place. Once that designation is there, it is
there. How would you recommend fixing it?
Ms. Steinhardt. We would revisit that. It's not that it
can't be dedesignated. In fact, there were some clinics that,
during the 1980's, I guess, the sort of earlier years of the
program, that were dedesignated.
Mr. Towns. How did that come about, do you know?
Ms. Steinhardt. I think they asked for it, or the
definitions changed.
Mr. Shays. Excuse me. Could you be clear as to whom
``they'' are? Did the rural health clinic ask, or did HCFA ask
for it? Where is it coming from?
Mr. Towns. The ``who,'' yes.
Mr. Shays. If you don't know, I would just as soon not
speculate. I want us to be very clear on this.
Ms. Baumgartner. They are dedesignated--if there is a
change of ownership, they have to reapply for certification, or
if they lose their status as a Medicare provider, they would be
dedesignated. There was some movement to dedesignate some of
the shortage areas, I think, in the 1980's.
Ms. Steinhardt. Right. My point is simply that it is
possible to dedesignate; it's just that, by and large, no one
has ever gone back to take another look at the clinics to see
whether they still met the original criteria that qualified
them. And that's our recommendation--that such a review take
place to see whether they still meet the original criteria, and
we would add our additional screening criteria.
Mr. Grob. That would require a statutory change, that
review.
Ms. Steinhardt. Right. The recertification requirement
would require Congress to act.
Mr. Towns. You know, I agree with you that there should be
a review, but I think the point I want to make is, how often
should this review take place?
Ms. Steinhardt. Good question. We didn't specify the
frequency of the review. One thought that came to our minds was
every 3 years, which is the frequency with which the health
professional shortage areas are reviewed to see whether they
still qualify as health professional shortage areas, but we
have no set feelings about it.
Mr. Towns. Any other comments?
[No response.]
Mr. Towns. Your report suggests restricting the cost-based
reimbursement benefit of the program. What impact will this
have on the financial viability of rural health clinics in
truly underserved areas?
Ms. Steinhardt. Good question. From our review, we found
that most of the clinics don't depend on their rural health
clinic status or cost reimbursement status for financial
viability. It's just not the case. And these clinics, unlike,
say, federally qualified health centers, are not required to
serve underserved populations. They don't have to see uninsured
populations, for example, as a condition of their being a rural
health clinic.
So this is not as though they need their rural health
clinic status in order to make sure that they are able to care
for the uninsured, because they don't have to see them if they
can't afford to.
Mr. Towns. I know you made some recommendations. Is there
anything else, now that you've had an opportunity to look
further, that you would like to recommend that we might be able
to do on this side?
Ms. Steinhardt. Well, as far as the Rural Health Clinic
Program, I think the recommendations we've made in this report
would take care of the two big areas that we are concerned
with, which is improving access for the intended beneficiaries
of this program, and establishing better cost controls.
There are things, I think--and this is something we intend
to do some more work on--we think that there are issues related
to the whole area of how we deal with increasing access to
communities that are regarded as underserved. There are a whole
variety of programs that are intended to help these
communities. They are not well coordinated; they are not really
well related to one another. We think there are opportunities
to improve, overall, how we, as the Federal Government, support
access to these communities by doing a better job with those
programs.
We have done some work in this area in the past. We have
recommendations on the whole medically underserved health
professional shortage area system. We have looked at the J-1
visa waiver program that allows foreign physicians to serve in
underserved areas. We have looked at the National Health
Service Corps. There are common themes that run across all
these programs, and I think there is certainly room for
improvement in how we put all these programs together to deal
with improving access.
Mr. Towns. Thank you very much. I yield back, Mr. Chairman.
Mr. Shays. Thank you.
Mr. Snowbarger.
Mr. Snowbarger. Thank you, Mr. Chairman.
I apologize for the simplicity of these questions. You all
are out there sitting there as experts, and the chairman is
probably an expert on this, and the audience is probably expert
on this. I want to go back just to some very basic things.
Mr. Grob, if you can help with your chart, your South
Carolina line. If you can just explain to me the differences
there in the reimbursement, it would be helpful.
Mr. Grob. OK. First of all, let me tell you that there is
no central data bank of Federal data for what happens in every
State. Whenever we look at the Medicaid program, we really have
to hustle after the data and get it State by State, and we
don't always get uniformly comparable data when we do so.
But just to give you an example, there is a rate that each
State sets for reimbursement of primary care. Health care
providers, they have the option to set whatever rate they want.
So for each of those three States, I have shown what rate those
States have set on their own.
For a freestanding rural health clinic, they are allowed to
receive reimbursement based on the costs that they incur, but
it is subjected to a limit, and the limit is imposed by HCFA,
by the Health Care Financing Administration, which basically
certifies the centers. That's what you see there for the
independent rural health centers. You notice they are all about
the same. The rate now is about $56.65, something like that,
but, again, it's a cost limit, so there might be a few that are
below that.
Mr. Shays. If I could just interrupt you, I would just
point out to the gentleman that the questions can be simple,
but the answers are never.
Mr. Snowbarger. I suspected that.
Mr. Shays. I thought I understand this, and I'm getting a
little confused. I want you to speak a little more slowly and
define the difference between Medicaid and Medicare. I just
think it would be helpful. And I just want to say to you that
we learn more from the simple questions, so that's the way we
proceed.
Mr. Snowbarger. Prepare to learn.
Mr. Shays. Yes. So I'm going to ask you, if you don't mind,
to answer the vice chairman's question by just starting over
again, giving a different framework. You've got independents,
you've got the provider-based, you've got the independent
doctors, and you've got Medicare and Medicaid. If you could
kind of sort all this out, because this is going to be the base
from which we ask other questions.
Mr. Grob. OK. Let me start out, first of all, there are
both Medicare and Medicaid program. The Medicare program is
administered by HCFA. The Medicaid programs, of course, are
administered by each State. Each of those programs sets their
own rates. There are rates that HCFA sets for the Medicare
program, and each State sets its own rate for the Medicaid
programs.
If a center, physicians' office, or any group would like to
become a rural health clinic under the Medicare and Medicaid
Rural Health Clinic Program, they apply to the Health Care
Financing Administration for a certification to that effect. If
they pass certain criteria, which includes providing certain
primary care services, having the assistance of mid-level
providers, and things of this nature, and if they live in an
underserved rural area, then the Health Care Financing
Administration will certify them as being one of these centers.
Now, if they are certified, they get more money, under both
the Medicare program and the Medicaid program. The money that
they get is based on the cost that they incur. So instead of
getting money for a certain fee, they are basically allowed to
charge what it costs them to do business.
However, that cost reimbursement is limited by a cap which
the Health Care Financing Administration has set. That cap is
updated every year, and it applies to the freestanding clinics.
Whether they be under the Medicare program or the Medicaid
program, they are subject to that cap. Right now it's about $56
or $57. OK?
Other clinics, of course, get paid by a fee, are on a basis
other than that. However, if they are not freestanding, if they
are basically owned by a hospital, then the Health Care
Financing Administration has construed that they are part of
the hospital, and they are reimbursed the way that, say, the
outpatient department of a hospital or another ancillary unit
of a hospital would be reimbursed.
That reimbursement system under Medicare does not have a
cap placed on it. It is based on reasonable costs. The result
of that is that if you are a clinic that is owned by a
hospital, the cap doesn't apply to you.
So this chart that I have prepared here illustrates how
this would work under the Medicaid program. It shows the fact
that those rates would vary from State to State, because the
underlying Medicaid rates would vary from State to State. A
similar thing would happen, however, under the Medicare
program.
Basically speaking, in these rural areas, the independent
clinical labs are receiving about twice as much money as a
clinic would receive under the Medicaid program. For those that
are owned by providers, it could be a lot more.
Mr. Snowbarger. Could I follow through with a few
definitional things here?
Mr. Shays. Yes.
Mr. Snowbarger. I understand that Medicare and Medicaid are
different programs, and you have indicated that both of those
programs have some kind of rural health clinic designation.
Mr. Grob. Yes.
Mr. Snowbarger. Are they definitionally the same?
Mr. Grob. They are.
Mr. Snowbarger. Wow, we finally coordinated something.
Mr. Grob. Yes, we did. However, I will tell you--and you
didn't ask me this, but I think it's worth laying on the table.
Mr. Snowbarger. Well, I'll ask it.
Mr. Grob. OK. Another issue is, different people would
represent the interest of the States. You each represent the
interest of the States that you come from, to some extent. So
would the people running the Medicaid program or the Governors.
It is the Health Care Financing Administration that
certifies these clinics. So if they certify them, then the
Medicaid program must pay the higher rates. Not all the people
who run the Medicaid programs are happy about the fact that
they have to pay higher rates because the Health Care Financing
Administration certifies the clinics.
So there is a single certification, which is unusual, and
it applies, for this program, to both Medicare and Medicaid.
The State officials don't have any control, or very little
control, over that certification process. Some wish they did
have more control. To change that, by the way, I believe that
would be a statutory matter.
Mr. Snowbarger. Again, coming out of HCFA, Medicare makes
the designation?
Mr. Grob. In essence, yes. The Health Care Financing
Administration speaks on behalf of both.
Ms. Steinhardt. One thing that I think might be important
to keep in mind, just in sort of a historical context about
this program, when the Rural Health Clinic Program was
established, Congress' concern was that there were parts of the
country, rural areas in the country, which depended for primary
care on people other than physicians--nurse practitioners,
physician assistants--and they were not being reimbursed under
Medicare.
So the initial thrust of this program was to provide
reimbursement to nonphysician providers of primary care, to
make sure that those areas of the country were not penalized,
you might say, for depending on nonphysicians for their care.
Everybody was under a cost reimbursement system then. So it
wasn't cost reimbursement that was the sort of benefit, by
itself, to these rural health clinics; it was coverage of
nonphysician providers that was the benefit then.
As we moved to a prospective payment system, where we moved
to a fee schedule, and under this sort of managed care--the
whole restructuring of the health care system, in which
suddenly there were concerns about managed care and
establishing market share, and so on. The whole flavor of the
program really changed dramatically, so that it's now operating
really in a very different environment and with different kinds
of concerns than it did back in 1977 when it was established.
And that's important to remember.
Mr. Snowbarger. One other question, and I want to just make
sure that the reference over here to provider base is the same
as reference to facility base here?
Mr. Grob. Yes, it is. Yes, thank you.
Mr. Snowbarger. A phenomenon I've seen occur in our area is
for, say, a metropolitan hospital--it comes from a large area--
would not qualify, I presume, as a rural health provider. As is
common with a lot of hospitals, both buying and creating family
practice clinics, and some of those clinics end up in areas
that now qualify for the higher reimbursement.
Is that the kind of thing we're talking about?
Mr. Grob. Yes.
Mr. Snowbarger. What is the rationale used by these
agencies that this perhaps even transplanted clinic from an
urban area to a rural area, frankly, operated under a separate
structure even, now qualifies?
Mr. Grob. I think I can address that, if you wish, sir. It
gets to say that I still live in a rural area and have been
following these developments very carefully in the area that I
live.
What you see happening there is that there is quite a
concern among various organizers of health care. They may be
the large hospitals, they may be HMOs that are associated with
hospitals or freestanding, they may be groups of physicians who
want to band together to have their own health maintenance
organizations, or whatever, but they are all quite concerned
about organizing the medical care in the areas where it is
unorganized right now. Those areas may be rural areas.
So exactly what you are saying is happening. Hospitals and
others are, as I said earlier, trying to gain a foothold so
they have a stake in everything that happens and that they are
basically in the game. We were surprised about this. When our
inspectors went out and talked to the people as to what was
happening, they started coming back with these reasons, which
are somewhat nebulous, but very commonly given.
I know I, myself, have seen it firsthand where I live. It
is a consideration, and it's exactly what you are describing.
That's starting to fuel this instead of the original purpose of
the program.
Mr. Snowbarger. Again, Mr. Chairman, what is the rationale
for the higher reimbursement for the provider-based and
facility-based, in the circumstances that I was saying.
Mr. Grob. OK. What happened here was that, when the Health
Care Financing Administration had to establish what the limits
on cost-based reimbursement were, it had a harder time,
administratively, dealing with how we pay hospitals. Since they
were controlled by the hospitals, they had to be paid for as
part of the system for paying hospitals, which is a different
system entirely.
Mr. Snowbarger. Thank you, Mr. Chairman.
Mr. Shays. You're welcome. I would love to just get a much
clearer sense of what is rural. Define for me ``rural.''
Ms. Steinhardt. Under 50,000. The definition now is non-
urbanized areas, and for the purposes of this program it's non-
urbanized areas of less than 50,000 population.
Mr. Shays. In a 15-mile square?
Ms. Steinhardt. No, that's it. That is the definition with
no other qualifications around it. It could be only a few miles
away from a larger area.
Mr. Shays. That's just too absurd to contemplate. If you
had a 10-mile-square area, and you said there were less than
50,000, and right next to it you had even a larger area, you
are saying that would be defined as rural?
Ms. Steinhardt. Yes.
Mr. Shays. OK. That doesn't take a rocket scientist to know
that's the first thing we change. Except, politically.
Ms. Steinhardt. Yes. Go ahead.
Mr. Shays. No, I'm happy to have both of you participate in
this dialog. Do you have something to add to it?
Mr. Pasquier. No, the definition in this program uses the
Bureau of the Census definition, which is ``non-urbanized,''
and it depends on the city. If the city has an under-50,000
population, then it is considered rural.
Now, looking at solutions to the program, we think, if you
establish additional criteria rather than try to redefine what
is rural, if you establish additional criteria that is trying
to target funds to those beneficiaries that are experiencing
problems with access, you can avoid having to redefine
``rural'' in the statute, which is a problem.
Mr. Shays. I hear what you are saying. There must be
another reason why I can't do it. Are you saying that a
Ridgefield, CT, that maybe has a population of 10,000 people,
or 12,000, or 15,000 people, could be designated as rural under
our system? There must be other factors.
Mr. Grob. These would be areas that are outside the large
metropolitan statistical areas.
Mr. Shays. It's not logical to me, so there is something
I'm not getting.
Ms. Steinhardt. There are lots of problems with trying to
define ``rural,'' just as there are lots of problems with
trying to define ``medically underserved'' and ``shortage
areas.''
Mr. Shays. Let me just say that what this committee, I am
almost certain, is going to do: we're going to recommend that
we do a better job serving people in rural areas. And what I'm
getting a sense of is, I'm not sure that your reports are going
to really help us get to that, if I'm not able to see a little
more definition to this issue.
Ms. Steinhardt. I think, though, the way we tried to get at
it was to focus on the problem of access. If the people in the
community are not well served, if they have no Medicare or
Medicaid providers, or the ones they have can't see any more
patients, that, to us, gets at the problem of access most
directly.
So, while I think it may be very important to take on the
issues of defining ``rural,'' and defining ``medically
underserved,'' these are very thorny problems.
Mr. Shays. Is that a thorny problem politically, or
statistically is it a problem?
Ms. Steinhardt. Maybe both.
Mr. Shays. The other two who are going to follow afterwards
maybe can answer some of these questions. Where I get concerned
is when you basically tell me that the new people who have
gained access, basically about 90 percent of them didn't need
it, and that tells me that we're building this gigantically
expensive system that is going to have a constituency. When you
get into the billions of dollars, you are going to have a hard
time changing it. So I feel there is a tremendous sense of
urgency to get at that problem.
So you, basically, in your chart over there against the
wall, when you say 27 percent are in areas that are 25,000 to
50,000, that is even a misstatement, in some ways, because they
could be right next door to a community with a lot more.
I mean, I have a friend who lives in Montana, who thinks
nothing of going shopping 5 hours away, or going, literally, to
a movie that is 3 hours away. But to my suburban mind, if it's
10 miles away, that's a distance. There's a mind-set here that
we just have a big disconnect.
Ms. Steinhardt. Well, every 3 years, HCFA does a survey of
Medicare beneficiaries. When they ask Medicare beneficiaries
how they feel about their access to care, 97 percent of
Medicare beneficiaries feel they have adequate access to care.
It's an important reminder.
Mr. Shays. OK. Let me just say, from my standpoint, I'm
going to investigate this with the panels that will follow. You
have kind of thrown the ball into play and have provided a
tremendously useful effort for us.
Mr. Souder, do you have some questions you would like to
ask?
Mr. Souder. Just a couple of clarifications. I apologize; I
missed the original testimony. I tried to look through some
last night and some here while we were talking through. I'm a
bit confused on a couple of terms in Mr. Grob's testimony.
You have a statement that rural health clinics converted to
rural health clinic status--in other words, they were already
rural health clinics--when you say independent rural health
clinics, do you mean those are the ones that haven't converted
to status yet.
Mr. Grob. No. You may be running a clinic in a rural area,
but you may not be receiving the benefit of any special funding
from either the Medicare or the Medicaid program.
Mr. Souder. So you would be the blue on your chart?
Mr. Grob. Yes, the regular rate. So, if you wanted to
receive that funding, then you would have to apply for
certification to get into the Medicare and Medicaid Rural
Health Clinic Program. Then, if certified, you could receive
the higher rates of pay.
Mr. Souder. So, then, if you are independent, you move to
the red; and if you work with a facility, you are in the green.
Mr. Grob. Yes, that's right.
Mr. Souder. And your chart over there is, the gray is, in
effect, the red; and the white is the green?
Mr. Grob. That's correct.
Ms. Steinhardt. Yes.
Mr. Souder. The increase in the amount of independents, you
are arguing, was due to the financial incentives; both of those
groups, the white and the gray?
Mr. Grob. That's correct.
Mr. Souder. There is some implication in the testimony that
some of these places might have closed if they weren't able to
convert. How do we sort that out?
Mr. Grob. I really don't think anybody knows that, to be
honest with you. I certainly don't think we would have any way
of telling. I can tell you that our inspectors, in reviewing
the facilities, didn't see very many that they felt were really
in jeopardy. In fact, the opposite may be the case. Because of
the special rates that these facilities receive, they may
actually be making it more difficult for nonsubsidized
enterprises to come into existence, because they have an
advantage in these heavily populated areas.
It is possible, though, I think in the rural areas, that
are truly rural and truly underserved, I do think the financial
thing could make a difference. And I don't think that any of us
are advocating that we eliminate that financial benefit for
those in the rural areas where you need the money for financial
stability or because you might want to attract providers in the
area that aren't there now. I think it does turn more on what
is truly rural, what it truly underserved.
Ms. Steinhardt. In our survey--if I might just add--in our
survey we found that, while some may depend on this
designation, many don't depend on it for financial viability.
Even if they were not to have that designation, they would
remain financially viable.
Mr. Souder. The other question I have is that--anybody here
can answer the questions; I was picking on Mr. Grob--obviously,
the group of the facility-based has exploded, proportionally,
yet there has been a steady growth of the other as well.
My understanding is, you were having independents also
convert to facility-based, so it means there has been a fairly
substantial percentage converting from nothing into the
independent. Then there also is probably some resistance--I
certainly hear this in Indiana--the resentment of doctors and
independent clinics having to go with facilities. There is
somewhat of a rivalry.
So on what grounds--is this being facility-driven, trying
to come in, is that part of your argument, as opposed to--are
the independents that associate with a facility actually
struggling financially?
Mr. Grob. No, I think you stated it exactly right. Again,
now, this is not hard; this is what people were telling us.
What I think we are seeing is that, on the provider side, on
the facility-based, it's the facility that is bankrolling the
center, to get it established, to kind of extend themselves
out. Whereas, for the independent practitioner, they are the
ones who want to convert over because the funding is more
favorable.
I don't think that the facilities are necessarily
establishing these centers because they expect to make a lot of
money in them, initially. I think they are simply trying to
position themselves. In fact, a lot of them told us that they
weren't making money. Of the facility-based centers that we
saw, a lot of them were very small: one doctor, a few visits.
The independent ones were the large ones, because they were
behaving much more as the program was intended to behave.
Again, we can't prove this, and I'm sure that
representatives of the industry might deny that it's the case,
and perhaps on good basis. I am simply trying to tell you what
our inspectors saw and what people told them when they were
there.
Mr. Souder. How much of this may be caused by the fact that
the hospitals in towns 5,000 to 10,000 are in relatively deep
trouble?
For example, in my district, which is centered by Fort
Wayne and has nine rural counties around it, what has happened
is with the access of the interstates and the commuting, and so
on, the Fort Wayne hospitals are in heavy competition to get
the feeder system that, on almost anything major, they are
drawing in the patients from the rural areas, leaving
substantial empty beds in the rural hospitals, then starting to
set up this outreach to feed in and through system.
Are they using this heavily to do that? Is that partly what
is going on?
Mr. Grob. I believe that, in a general manner, they are
using the ability to sponsor these centers as a way to reach
out and fill those areas with things less than hospitals.
Mr. Souder. Thank you for helping clarify.
Mr. Towns [presiding]. Thank you very much.
Any other questions from any Members?
[No response.]
Mr. Towns. Let me thank the members of the panel for
enlightening testimony. Also, you have pointed out that we
still have a lot of work to do in order to make certain that we
are not wasting resources. I think that is a real concern. I
think that when we get involved in the checking and the
rechecking, we don't want to spend all of our money checking
and rechecking either. We also want to be able to have some
resources to spend in terms of getting rid of the problems in
terms of the patients.
So thank you very, very much.
The second panel: Kathy Buto; Dr. Gaston; Dr. Puskin.
We swear in all of our witnesses. If you would just please
stand.
[Witnesses sworn.]
Mr. Towns. Let the record reflect that all of them answered
in the affirmative.
Why don't we start with you, Ms. Buto.
STATEMENTS OF KATHLEEN BUTO, ASSOCIATE ADMINISTRATOR FOR
POLICY, HEALTH CARE FINANCING ADMINISTRATION, DEPARTMENT OF
HEALTH AND HUMAN SERVICES; MARILYN H. GASTON, M.D., DIRECTOR,
BUREAU OF PRIMARY HEALTH CARE, HEALTH RESOURCES AND SERVICES
ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES,
ACCOMPANIED BY DENA PUSKIN, ACTING DIRECTOR, OFFICE OF RURAL
HEALTH POLICY, HEALTH RESOURCES AND SERVICES ADMINISTRATION
Ms. Buto. Mr. Chairman, members of the subcommittee, I am
very pleased to be here. I am Kathleen Buto, the associate
administrator for policy at the Health Care Financing
Administration, HCFA.
I am pleased to have the opportunity to address rural
health clinics and to respond to the concerns raised by the
Inspector General's report and the GAO about the program not
improving access to primary care services in underserved areas.
The GAO and IG reports indicate that while the number of
rural health clinics has grown rapidly in recent years, their
proliferation has not necessarily been in areas where Medicare
and Medicaid beneficiaries face access problems. Rather, many
clinics are being certified in areas where other clinics, RHCs,
already exist or where beneficiaries have other sources of
medical care. The process does not adequately identify
underserved areas, and Medicare's current cost base payment
methodology encourages providers to seek RHC status.
HCFA generally agrees with the findings of the reports and
is working with the Public Health Service to correct these
problems. Before discussing how we are addressing these issues,
I would like briefly to touch on some background of the Rural
Health Clinic Program.
The Rural Health Clinics Act was enacted in 1977 by
Congress and implemented by us in 1978, to increase access to
primary health care services for Medicare and Medicaid
beneficiaries living in rural areas. To be classified as an RHC
by HCFA, clinics must be located in a rural area and a shortage
area. I would emphasize that, because there was a lot of focus
on the rural designation in the last panel. The shortage area
designation is equally if not more important in this program,
as designated by the Public Health Service or by a Governor,
and approved by the Public Health Service.
In addition, an entity applying for RHC designation under
Medicare must meet specific conditions of participation set out
in the Medicare statute, including staffing requirements, lab
requirements, and other criteria appropriate to a setting for
primary health care.
Under the Medicare statute, HCFA must continue to designate
existing clinics as RHCs, even if the area in which they are
located is no longer considered a shortage or rural area. This
is a statutory provision. Certification by Medicare as an RHC
leads to corresponding RHC status under Medicaid, if the clinic
elects to serve Medicaid beneficiaries.
The scope of services furnished by these clinics is
comparable to services provided in a physician's office. These
services may be provided by physicians and mid-level
practitioners, including physician assistants, nurse
practitioners, and certified nurse midwives. Services provided
by RHCs also include outpatient mental health services
furnished by clinical psychologists and clinical social
workers.
Medicare regulations for this program distinguish between
two types of rural health clinics: independent and provider-
based. Independent clinics are freestanding practices that are
not part of the hospital, skilled nursing facility, or home
health agency. Provider-based clinics are integral and
subordinate parts of hospitals, skilled nursing facilities, or
home health agencies, under common licensure, governance, and
professional supervision.
The rural health clinic benefit has allowed many
communities in rural America to establish and maintain rural
health clinics. Communities located primarily in the western
United States rely heavily on Medicare and Medicaid support to
provide primary and emergency care to beneficiaries living in
remote and mountainous areas.
While some rural clinics serve primarily Medicaid
beneficiaries, most rural health clinics are an essential
source of care for the entire community, including patients
with Medicare, Medicaid, private insurance, as well as the
uninsured, even though they are not required to cover the
uninsured. Rural health clinics often provide care free of
charge to patients who are unable to pay.
When the act was passed in 1977, projections of
participation were optimistic. By October 1990, only 581
clinics around the country participated in the Rural Health
Clinic Program. Recognizing the importance of rural health
clinics in improving access to vital health services, Congress
enacted several amendments to the original law to encourage
participation of providers.
For example, in OBRA 1987, there was a mandated increase in
the payment caps applied to this program and annual updates to
the caps based on the Medicare economic index. Prior to that,
we didn't have any indexing or increases in the cap. OBRA 1989
provided Governors the option of designating health care
shortage areas within the States, thereby increasing the number
of areas where RHCs could potentially locate.
This law also required that HCFA disseminate rural health
clinic application materials--I think as alluded to by the
previous panel--to all Medicare providers, including hospitals,
skilled nursing facilities, and home health agencies, as a way
of promoting participation in the program. The legislation also
required us to expedite the approval time for rural health
clinic certification.
In part due to these changes instituted by Congress, the
number of rural health clinics has grown significantly, as
pointed out. Much of the growth in rural health clinics has
occurred in States where there are large rural areas that for
many years had few or no clinics. The GAO and IG are concerned,
however, that while increases in the number of rural health
clinics may approve access in certain geographic areas, these
clinics are also locating in areas where Medicare and Medicaid
beneficiaries have adequate access to other primary care.
Let me now address some of the initiatives HCFA and the
Department are pursuing to address the concerns raised in the
two reports. First, a HCFA work group charged with monitoring
the growth in rural health clinics; second, the Public Health
Service's plans to reevaluate the shortage area designation
process, which I will pretty much defer to the other panelists
here; a proposed regulation that would consider a new payment
methodology for rural health clinics; a study underway to
evaluate access to clinic services; and legislative proposals
that would give States flexibility in establishing new Medicaid
rural health clinic rates that are in the President's 1998
budget.
We are concerned about the inappropriate proliferation of
rural health clinics in recent years. The agency first received
reports from State Medicaid agencies about the number of rural
health clinics growing rapidly in 1994, and we moved to convene
a working group in October 1994 to analyze and propose
solutions related to this proliferation and other issues
impacting the Rural Health Clinic Program.
Although we certainly agree with the GAO and IG reports, I
would point out that we began to work on payment limits and
payment reforms 2 or 3 years ago, and think that, basically, we
are ready to go forward with rules.
Representatives from the Health Resources and Services
Administration have also participated with us as partners, and
our work group meets periodically with representatives from the
rural health care clinic community to solicit input and gauge
industry reaction to some of our proposals.
One of the first issues addressed by the group, also
identified by GAO as an area of concern, is the method by which
the Department designates clinics. HCFA is concerned about the
current method to establish areas and the fact that it only
measures the number of primary care physicians to the
population base.
In fairness to HRSA, HRSA is also concerned and is looking
at the issue of whether mid-level practitioners, who typically
provide the majority of services in rural health clinics,
should be included in that calculation. So they are beginning
to look at that, as well.
HCFA is concerned that all shortage area designations are
not periodically updated, and, as such, a rural health clinic
may be established in an area that was designated years ago but
would no longer meet the criteria for shortage area. We are
also sensitive to the fact, however, that the shortage area
designations are used for a wide variety of governmental
purposes. So any changes that need to be made to it need to
take those broader purposes into account.
Given that scenario, we in HCFA believe we need to take a
look at additional tests of need beyond the two that are set
out in the statute already, the rural provision and also the
medically underserved. So we are looking at a variety of other
factors that could be put into place to add criteria in
selecting rural health clinics, in addition to the two that
exist.
We would consider the fact that rural health clinics
currently, a number of them, are already located in areas, but
that we ought to maybe take a look at nonphysician personnel,
such as physician assistants and nurse practitioners, in
considering future designations. We believe that additional
tests and better measures of need will limit RHC growth to
areas that are truly underserved, and we are working with a
work group to develop specific proposals in this area.
The GAO and IG reports identified the currently statutorily
mandated cost-based payment system as another factor
contributing to the rapid growth of these clinics, particularly
of the provider-based variety. We believe that a significant
reason for this growth is the differential between independent
and provider-based. We are preparing regulations to eliminate
the difference in payment levels and apply a payment cap to the
provider-based rural health clinics, or at least to seek
comment on the application of a payment cap through
regulations.
We are looking to get additional information about the
relationship between RHCs and the access to care through an
evaluation that our Office of Research and Demonstrations is
sponsoring. Some of the questions that came up in the last
panel about access to care issues in relation to costs that are
rising are among the things that we will be looking at there.
Let me mention a budget proposal in the 1998 budget that
deals with the Medicaid provision, that would phaseout cost-
based reimbursement. Right now, as you heard, Medicaid is
required to pay the Medicare rates. This would phaseout that
cost-based reimbursement. In place of that, our proposal would
provide some supplemental payments during a transition period,
both for rural health clinics and FQHCs, as States move away
from that to a more competitive basis.
Just in conclusion, as you know, we agree with many of the
conclusions of the IG and GAO reports. We recognize that
changes need to be made. We are working on some regulations to
make those changes and to look at other criteria that ought to
be applied.
I will end my statement there.
[The prepared statement of Ms. Buto follows:]
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Mr. Towns. Thank you very much.
Dr. Gaston.
Dr. Gaston. Thank you very much, Mr. Chairman, members of
the committee. I am Dr. Marilyn Gaston, director of the Bureau
of Primary Health Care within the Health Resources and Services
Administration. I am pleased to be accompanied by Ms. Dena
Puskin, acting director of HRSA's Office of Rural Health
Policy.
We implement safety net programs which provide primary
health care services to underserved populations. In the Bureau,
these include the National Health Service Corps and the
federally qualified health centers, FQHCs, including community
health centers, migrant health centers, health care for the
homeless programs, and health care for public housing
residents, and the FQHC look-alikes. In connection with these
programs, we also manage the underserved area designation
processes.
Safety net programs are a critical part of the health care
delivery system in the Nation today. As you know, that system
is being challenged rapidly and dramatically, with profound
effects upon these programs and, most of all, upon the people
that they are trying to serve.
In the last 5 years, the numbers of uninsured persons
increased nationally by 15 percent, but the number of uninsured
increased by 34 percent within our safety net programs, clearly
double. These programs are also affected by decreasing
revenues, as managed care is implemented, and by loss of
capacity caused by closures of other safety net providers. Yet
these programs are more essential than ever to assure access to
health services for uninsured and other underserved
populations.
RHC's and FQHCs are both intended to enhance access in
underserved areas. However, FQHCs serve as safety net
providers, as they must provide care to all patients in their
target populations who seek their services regardless of their
ability to pay. This is an essential feature of safety net
providers. As GAO points out, some RHCs are serving as safety
net providers and providing care to the underserved populations
on which their certification is based, including not only
Medicaid and Medicare patients but also the uninsured and
underinsured.
HRSA agrees with the GAO finding that many RHCs are located
in areas of highest need. This is occurring, in part, because
their location is a designated underserved area alone is not
sufficient to ensure that Federal resources are targeted to
areas of highest need.
In HRSA Bureau of Primary Health Care, we use the
designations as only one aspect of determining need for Federal
resources and funding of FQHCs. For example, the National
Health Service Corps uses a HPSA designation as a first screen
in determining where a provider should be placed. Other scoring
mechanisms are then used to determine priorities among HPSAs
and among primary care delivery sites in HPSAs, before
available providers are allocated to those HPSAs of greatest
need.
Similarly, the MUAMUP designation is the first screen in
determining potential need for a health center grant. Then a
grant application for a health center is also required to
confirm that unmet need in the designated community and how
they intend to increase access. Throughout all of these
determinations, we routinely gain invaluable input from States
regarding the need and required intervention.
Like health center grantees and National Health Service
Corps placements, applicants for FQHC look-alike status must
also provide information on additional aspects of need. So we
use designations as a first screen and other measures of need
as additional considerations. Most of all, we continuously
monitor our programs for need, access, quality, and community
impact.
To assure adherence to the mission, we require annual grant
or recertification applications from grantees and FQHC look-
alikes, respectively. In addition, for grantees we conduct
monitoring activities beyond the annual applications, which
include regularly scheduled onsite reviews.
Finally, we agree with the GAO that MUAs be updated
regularly. HRSA has developed a new approach to improve the
existing designation process for HPSAs and MUAs. The new
approach will consolidate the two existing procedures, thereby
eliminating two overlapping lists of designations and
additional data burdens for States and communities.
As a result, in the future, both MUAs, MUPs, and HPSAs will
be updated simultaneously, on a regular schedule, the one we
are using for HPSAs at this point. We would ask States to
review their designations annually and require States to submit
new data for those designations every 3 years. With the new
designation process, we also plan to begin counting nurse
practitioners, physician assistants, and certified nurse
midwives.
We also agree with the GAO that the current RHC eligibility
criterion of location in an underserved area does not go far
enough to ensure that the program is directed and maintained in
needed communities with critical shortages of primary care
providers. As has been stated, additional assessments of need
are required.
Before an entity is certified as an FQHC or RHC, it is
important that it documents the lack of sufficient health care
resources in the service area and how it intends to increase
access to health care for a substantial number of underserved
persons. We in HRSA support HCFA's efforts to explore
additional tests of need for RHCs, and have been working with
them in their efforts.
I would also like to note that just last week the
Secretary's Advisory Committee on Rural Health adopted a
position which supports certification of new RHC sites based on
additional program-specific needs assessment. Clearly, HRSA
considers State involvement in the certification process as
critical. We have also been collaborating with HCFA in
determining how to increase State involvement. HRSA also agrees
with the GAO recommendation to require periodic recertification
of RHCs to ensure that clinics continue to meet eligibility and
need requirements.
In conclusion, we believe all of these changes will greatly
improve decisions around the location of RHCs and will help
ensure that they are strategically placed. A recertification
process will ensure whether they should be maintained in
underserved communities.
Provider types that are reimbursed by higher Medicaid and
Medicare rates than others, because of their safety net nature,
which includes FQHCs and RHCs, should be held accountable for
receiving the special subsidy. It is imperative that FQHC or
RHC provide increased access to health care for a substantial
number of underserved persons.
Given the changing health care environment and budgetary
pressures at both the Federal and State levels, it is critical
that Federal grant programs and financing mechanisms for health
care services maximize their contribution to the safety net and
increase access for the many underserved citizens in our
country.
Thank you very much for the opportunity to testify. We will
be glad to answer any questions.
[The prepared statement of Dr. Gaston follows:]
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Mr. Towns. Thank you very much, Dr. Gaston. I understand
that Dr. Puskin will not be testifying, so we will move
forward.
Let me just move to you, Mr. Snowbarger, and let you open
up.
Mr. Snowbarger. Thank you, Mr. Chairman.
I have just a couple of questions. I guess I didn't realize
until your testimony, Dr. Gaston, that we've got two different
kinds of certifications: one is medically underserved; the
other one is, what, health professional shortage?
Dr. Gaston. Shortage area.
Mr. Snowbarger. OK. I looked on the map for my State, and
where I see these RHCs going in, there may be some areas where
they are medically underserved or there would be a shortage; I
see other areas of the State where there definitely is, but
there aren't any RHCs out there. So if we are trying to target
this relief--or maybe incentive, I ought to say--if we are
trying to target this incentive to places where there really is
a medically underserved or health shortage area, how do we
change the definitions to get them focused in the right way?
Dr. Gaston. As I mentioned, one of the things that is
important to remember is that the HPSA--let me talk about them
in a little more detail. The HPSA, the health professional
shortage area, is to really look at those areas that need
providers. The medically underserved areas are looking at
services. Now, you can't separate providers from services, but
that is the main intent.
The HPSAs are published annually, and they are updated
every 3 years. OK. The first screen for the HPSA relates to--
it's focused on providers--it relates to the physician to
population ratio in that area, in a rational service area.
Mr. Snowbarger. So ``provider'' refers specifically to a
physician?
Dr. Gaston. It does. Right. We are going to begin counting
other providers, the mid-levels; we have not done that in the
past. So it's talking about mainly the physician to population
ratio, starting at a 1 to 3,500 ratio. After that, though,
before we put any core providers in an area, we look at the
poverty of that area, we look at the infant mortality rate, we
look at the access barriers as it relates to distance, we look
at low birth weight.
So there are many other criteria that go into the
determination, and then we take those HPSAs and score them and
prioritize them. Then we also score the sites in those
prioritized HPSAs. So it's a three-stage process. I think that
is the point that we want to make.
And we do this in conjunction with the States. So if we
want to target certain areas, first of all, those communities
have to ask for those designations. We don't designate them
from the Federal Government. This is a ground-up process. So
the communities and the States decide what areas they want to
be designated, and then they send them to us for that. I think
that's an important distinction, too.
So the targeting of those areas first starts with the local
concern, and then to get resources, to have Federal
interventions put into those areas, we really have to look at a
major series of steps that determine need further than just the
HPSA or the MUA.
Mr. Snowbarger. The statute that talks about HPSAs
indicates that they are to be reviewed annually and, if
necessary, revised. Have we been revising those?
Dr. Gaston. Yes, they are reviewed.
Mr. Snowbarger. Well, what are we revising? What do you
interpret that statute to mean? The reason I ask is,
apparently, it looks to me like we need to be revising the
designation or the definition of where there is a shortage.
Dr. Gaston. What gets revised are the resources in areas.
OK. And this is happening very rapidly now, as you might
expect. But what changes could be the level of poverty, it
could be, certainly, the physician to population ratio. So all
those criteria are subject to changes based on the environment.
Mr. Snowbarger. But they are measured against some kind of
standard? Let me try to do it a different way. I see a problem
happening here. When I measure these bar graphs with, again,
the map of my State, where these RHCs are located. I see a
mismatch. And with the pie chart over here, I see a mismatch.
Has there been any attempt to try to change that mismatch,
to try to get RHCs into areas that are medically underserved
and the health professional shortage?
Dr. Gaston. Let me mention something very important. We in
HRSA do not administer the RHCs. We don't know when they get
certified. We don't know where some of them are. This is
administered by HCFA.
Mr. Snowbarger. OK. I'm asking the wrong person.
Ms. Buto, same question.
Ms. Buto. Any attempt to try to target the areas that are--
that's the issue of further additional criteria for targeting.
We have set up this group of folks to look at those criteria.
Some of the issues would be, can you come up with a way to
target frontier areas, for instance, areas which are really
underserved, that really aren't able to get professionals in
there? That's one of the things we're looking at.
Another thing we're looking at is, there might be different
purchasing strategies that you need to take. For instance, in
the budget this year, we are asking for authority so that
Medicare can go in.
Where we have a need and we're not able to use a major
statutory framework to get at the need, maybe we ought to go in
and say, we need to purchase special services in a really
underserved area; let's see what kind of bidding we can set up
to get interested parties into this area. That might be a more
effective way to get at those really hard to get at areas, by
figuring out what you need in that area to get people into it.
So I think we've got to use more than one strategy to get
at this issue.
Mr. Snowbarger. Mr. Chairman, just two more short
questions. The question may not be short, but the answer is
expected to be. Let's put it that way.
Have we decertified any of these areas since 1977?
Ms. Buto. The law does not allow us to--there is an actual
provision that grandfathers in existing rural health clinics.
So one of the issues that I think the GAO and IG both raised
is, if we really want to put teeth in decertification, if you
will, there probably has to be a change in the law. That's one
of the things we've looked at, as well.
One issue that has to be dealt with in any provision in
that grandfather clause would be, you know, you want to be sure
you are not just decertifying in an area and then it becomes
medically underserved again and you recertify. You want to be
sure that you have criteria that get at the problem rather than
create a churning in the system that actually disadvantages the
people being served.
Mr. Snowbarger. It looks like we've given an awful lot of
incentive for some areas that may have been medically
underserved in the past to be fully served, maybe excessively
served at this point in time.
Dr. Gaston. May I make one point?
Mr. Snowbarger. Sure.
Dr. Gaston. Just to clarify the decertification versus
dedesignation.
Mr. Snowbarger. OK.
Dr. Gaston. The designation process relates to what we do
in HRSA, MUAs, OK. There has not been a decertification, as far
as I know, or very few, in terms of the RHCs, the clinics
themselves. There's a constant process where we are
dedesignating areas all the time. They lose their HPSAs, and
then new HPSAs are designed. So that process is very fluid.
Ms. Buto. The problem--just to get back to the connection
to the grandfather issue--is that even after that has occurred,
if there is one designated in that area right now, the law says
they continue.
And the reason, I think, originally, for that was, there
was a lot of concern, especially as the program was getting
started, that by the time you invested the capital and actually
set up a clinic, that if the designation was lost, you would
have really deterred people from getting into the program. That
was, obviously, a long time ago.
Mr. Snowbarger. Since the answers don't appear to be short,
the next question will be a rhetorical one. There's a statement
in the report that concerns me greatly. Let me just read it
quickly.
``HCFA officials said that they did not establish cost
limits for facility-based RHCs as they did for independent
RHCs, because few facility-based RHCs were certified when the
program began.'' Here's what bothers me: ``And it was easier to
reimburse these RHCs the same way as Medicare paid the
facility's other outpatient departments, on the basis of lower
costs or charges for services.''
That may be easy, but the time has come to put a little
hard work into it and figure out why we're paying at different
rates for the same service.
Ms. Buto. Yes. And I think I mentioned that we're going to
that. I should just say that, at the beginning, there were only
10 hospitals. There was a real danger in double paying, because
in a hospital accounting system, you would pay them for some of
the overhead here, and then you would also pay in the clinic
over here.
So the feeling at the time was, one accountant looking at
all the books was better than paying them out of different
pockets. Now, we feel that, you know, that's obviously out of
control and we need to put limits on.
Mr. Snowbarger. Thank you, Mr. Chairman.
Mr. Towns. Thank you.
We have a vote on, so what I would like to do is to finish
with this panel and then bring the next panel up.
Let me begin by saying that GAO recommended four changes to
the Rural Health Clinic Program. Which of those recommendations
do you agree with, and which ones do you disagree with? Or if
you want to add some more, fine.
Ms. Buto. We basically agree with all of them. Two of them,
I think, were legislative changes, and two were administrative
changes. One of those, as I say, we're already planning to
propose a cap on the provider-based. And the other was to apply
some screens in terms of reasonable costs, if I recall. I may
be getting IG and GAO mixed up. We are also doing the
development of screens. So we're doing both of those
administratively, and the legislative proposals we also agree
needed to be addressed.
Dr. Gaston. We also agree that there need to be further
determinants of need. There needs to be a recertification
process and some monitoring.
Mr. Towns. In your testimony, Dr. Gaston, you used the term
``periodic'' recertification. What do you really mean by that,
every 3 years, every 5 years, every 6 months? What do you
really mean?
Dr. Gaston. OK. Again, we don't certify or recertify the
RHCs. We are involved in that process as it relates to the FQHC
look-alikes, which we also do conjointly with HCFA and really
could serve as a model of how we could do the RHC program. But
we designate areas of underservice. They are looked at annually
by the States. We do this in conjunction with the States. Then
their designation is either given to them, or they are
dedesignated on a 3-year basis.
Mr. Towns. Right. That's the test for need.
Dr. Gaston. Yes.
Mr. Towns. OK. Can HHS meet the statutory 1-year
requirement for updating the health professional shortage area
list? If not, how long would it take you to do it?
Dr. Gaston. Well, we are assessing them annually. The
States do that. We rely on the States to do that. And we do it
every 3 years; we do a complete one. It's very labor intensive,
in terms of finding the data. So to do it annually, when we are
not convinced that the criteria need to be looked at that
often, we have not considered moving to a complete assessment
annually. We do that every 3 years, and that seems to work
fine.
Mr. Towns. Let me ask a question, Ms. Buto. How much time
and money is needed to conduct the type of periodic
recertification recommended by GAO? How much money would be
involved in doing that; do you have any idea?
Ms. Buto. I don't. We have a general survey budget in
Medicare. Unlike someone else's statement in the earlier panel,
Medicare certifies hospitals and nursing homes, home health
agencies, and many other providers, for Medicaid. So this is
not the only instance in which we have the same standards. So
we have to budget that. When the budget for the agency comes
up, we usually line item how much we can allocate to each of
the different categories.
I can't tell you specifically, if we were to go to
recertification, how much it would cost. We would need to
reshuffle some of our money, because that hasn't been growing.
We have had to reallocate and target that funding.
Mr. Towns. Thank you very much, Mr. Chairman.
Mr. Shays [presiding]. I thank the gentleman.
Unfortunately, because I wasn't here during the previous
questions and some of the statements, what I may do is cover a
little bit of old ground, but I want to just establish a sense
of what the obstacles are in this situation. Basically, the GAO
is saying that 90 percent of the people who are being served
would have been served anyway. So first I need to be clear with
both of you whom you have your disputes with: the GAO or the
Inspector General.
Ms. Buto. I think we said earlier we really don't have
disputes with the GAO and Inspector General around the
recommendations. There are a number of areas where I would
dispute or at least raise the question that I don't think that
they had the time or the focus of their review was in the same
direction.
The 90 percent is a good example. Ninety percent may have
been served. I don't think we know many of those would actually
have received the same range of services. They may have had a
provider; it may have been an emergency room. Again, it depends
how the question was asked and how extensive the services were
that were available. It may be some smaller percentage, but the
fact is, we all know that there are many of these rural health
clinics that are in areas where there are plenty of other
providers.
The issue of overpaying them is really, again, related very
much to the managed care penetration, both in Medicaid and
Medicare. Particularly where physicians are seeing themselves
moving into managed care in Medicaid, the rural health clinic
option has become more and more attractive, even more
attractive because the fee schedules themselves are going away
in Medicaid and being replaced by negotiated managed care
arrangements.
In Medicare, it's more complicated. We actually have an
abuse in the program where some physicians have actually picked
and chosen between sometimes billing us as a physician and
sometimes billing us as a rural health clinic. Our regulations
are intending to address that issue, as well, because there are
fees in the Medicare physician fee schedule that are higher
than what you could get as an RHC.
We find that some billings are occurring for those fees.
And then when the clinic rate is higher, billing is occurring
there. This is not a widespread problem, but it is enough of an
issue that we're going to draw some very clear lines about what
an RHC is, and if it's an RHC service, you cannot bill the fee
schedule.
So those are the kinds of things we're finding that I'm not
sure GAO or IG went into, because that wasn't the line of
inquiry. So the nature of service, if you will, and the reasons
people are doing RHC billing may vary, and there actually may
be worse abuses in some other areas related to lack of clarity
here.
Generally, we agree with the recommendations.
Mr. Shays. Well, I think your key point is that, if it was
even 70 percent of the problem, it would be bad. Now you are
going to decide at what level people are being served. I have a
sense that you might have a disagreement as to what level. So,
in essence, you basically buy into the fact that this system is
broken.
Ms. Buto. That's right, that we need to fix--we either need
to narrow those criteria to really get at the areas of need and
change the payment limits to really discourage that
proliferation on the provider-based side.
Mr. Shays. Usually, if there is 10 percent type of abuse in
the other way, you would say we're starting to see a problem.
So 10 percent may be working the way we want, and 90 percent
not working the way we want raises some questions, obviously,
that really make us wonder: are we approaching this in a quick
enough manner? And I'm not getting a sense that that's
happening.
Dr. Gaston, where do you agree or disagree with the general
thrust of the Inspector General's or GAO's report?
Dr. Gaston. We agree that the determination around need and
where they are placed really needs to be refined and looked at.
The way we do it in the Bureau is the way we would recommend
doing it, that the designations, as they are published, are
only screens, first-level screens, and then, after that, you go
through a whole list of other need determinants, along with
access, other health services, the community impact.
So these entities really have to show that they are
performing the mission, they are increasing access, and having
an impact. That's the first thing. They certainly need to be
recertified so that, over time, you do have to make decisions
as to whether that is continuing. So the monitoring and the
recertification is another key aspect.
We certainly agree that this has to be done in conjunction
with the States. We cannot do that in isolation. So all these
decisions, the States have to have input in terms of data,
input in terms of their priorities, input into interventions
they think should happen, et cetera.
Mr. Shays. One of the things that we determined in looking
at other areas where we wanted to change rules, the rules are
basically stacked against the people who have to pay the bills,
because it takes us so long, in our regulations and rules, to
change them.
So if the system favors the seller--and I consider the
government the buyer; in other words, we are paying for it--if
it favors the person who is providing the service, they are
going to readily want to take advantage of it. If it doesn't
favor them, they simply aren't players. So we only lose. In
other words, we're just going to continue to pay out.
I need to get a sense of how we can move more quickly. I
need some specific recommendations of what you suggest that we
do, so that this committee staff can write a report soon, and I
can go to the leadership on both sides of the aisle and say, we
need to take action. So tell me some very real, specific things
we can do right away.
Ms. Buto. We're about to issue the rule on putting the
payment limit on the provider-based side. Clearly, as you say,
regulations take a while.
Mr. Shays. How long will it take? Just run me through that.
Ms. Buto. The regulations take--a good estimate is a year
from the time that they go out in proposed to the time they are
actually finalized and implemented, because we give our
intermediaries a chance to put them into place. If there were
legislation, for instance--and I think it's fair to say we
would support legislation of this sort--that were to make the
same change, we would still have to give our contractors time
to make the change, but it would be quicker.
Rulemaking is important for another reason. I just have to
say this. We often create unintended consequences, and we're
concerned about that, and that's why we seek public comment. So
there's a balance. But in terms of quickness, you know,
legislation is quicker than regulations.
Mr. Shays. Do you both agree? I'm sorry. Dr. Gaston.
Dr. Gaston. Yes.
Mr. Shays. What could be done relatively quickly?
Dr. Gaston. Well, from our side, we already have revised
regulations as it relates to the designation process that I
described in my testimony, that would improve what we are doing
in terms of MUA and HPSA designations. Hopefully, that will
proceed. Again, we have to go through the same process that
HCFA is having to do, in terms of rulemaking, et cetera. But
certainly that will be on board very soon.
Mr. Shays. The GAO report came out in November 1996. Why do
we not yet have suggested rule changes?
Ms. Buto. The rule changes--and I mentioned a little of
this before you came in--involve more than just the payment
limit. They are going to address some commingling of funds
between physicians who are billing us sometimes on the fee
schedule, sometimes as RHCs. They are going to incorporate a
number of other changes the law has made over time.
So it is a process that--by the way we do rulemaking, we
try to involve interested parties, beneficiaries, then we clear
them with our lawyers and issue them. That usually does take a
few months. The IG's office has also been involved in looking
at our rules in the Department. It just takes that long, quite
frankly, to do.
Mr. Shays. Let me back up a second. Why did it take the
GAO's report to get us to take some action? Why didn't we do
this 5 years ago?
Ms. Buto. And I disagree with that, because we started the
rulemaking effort way before the GAO issued its report. We
began working on the commingling issue a couple of years ago,
just gathering the data on what was happening, because you
can't assume it's happening everywhere until you look at what
records are being billed, as well as the cap issue. We have
been working sort of in tandem with the Inspector General and
others on this, and gathering the information.
Part of it is, their information has helped us refine some
of the policies in the regulation, but we did not start after
they completed their report.
Mr. Shays. Either way, it's not a good commentary, frankly,
on HCFA. If you started sooner, you should have been done
sooner. And if you started later, you should have started
sooner. So from my simple mind, you basically want people to go
into rural areas, doctors; you want to provide health care in
rural areas.
So my simple mind says, there are reasons why people don't
do it. The reason they don't do it is, there is not a large
population; therefore, they don't get enough traffic. And maybe
they don't even want the lifestyle of a rural area. So there
has to be some inducement. So it seems logical that we should,
in fact, pay more to serve a rural area.
My simple mind says, though, that if someone can go 10 or
15 or 20 miles away and get that same service, that maybe then
you don't need to have a higher reimbursement rate. And it
seems to me that that's a no-brainer. Tell me where I'm wrong.
Ms. Buto. You're not.
Dr. Gaston. We agree with you.
Ms. Buto. We agree with you. What we are doing is--because
certification is still in our court, when new ones come in, we
really are focusing on the areas where there aren't any, where
we really, genuinely don't have providers, and we're giving
those the highest priority. But right now, the way the law is
structured, there is no ability, once you're certified, even if
the designation changes, for you to be out of the program,
nondesignated.
So we feel that, No. 1, we've got to move on that issue of
adding more criteria.
Mr. Shays. You're talking about being designated as a rural
health clinic.
Ms. Buto. That's correct.
Mr. Shays. Let me ask you this: Why can't you have two
levels of rural health clinics, those that are clearly isolated
from other health care facilities, and those that aren't?
Ms. Buto. You can. I mentioned also earlier that we're
looking at the issue of frontier areas where there really is a
dire need, where we can really focus this effort. And that's
one of the things that we are likely to be having a proposal to
address.
Mr. Shays. I guess the thing that concerns me is that there
is a political problem. The political problem is that once you
have allowed people to invest in these facilities and develop a
political constituency, we're not going to change it. Yet if
the number was 20 percent who really couldn't have gotten
health care without this, but if we're looking at anything to
more than 75 percent, it tells me that the system had to have
been sick for a long time.
I don't mean to throw stones at HCFA or anyone else,
because I know that politicians, of which I am one, sometimes
come in and say, why didn't you do this or protect this person.
I understand, but it strikes me that there is a tremendous
imbalance at HCFA, where you are so sensitive to the criticism,
to what doctors might say, and to what the politicians might
say about you cutting off services or making it more difficult
that we now end up with an abuse like this.
For me, recertification should be something that shouldn't
take a long time. That's just a no-brainer that we would
require recertification. Why do we have to compile all these
different rules? I don't like to be in a large group sometimes,
because you're only as quick as the slowest person in the
group. I got that same image when you were talking about where
you've got all these different rules you want to change.
So things that we know we can do now, we're waiting until
we get some other things that we might want to do, and you want
to package them all in one. Tell me why we have to package them
all in one.
Ms. Buto. They are done. They are very close to being
issued, so I think, at this point, we ought to just proceed
with those. They are related. The issue of a cap on provider-
based entities and the commingling of funds, they are all
related, because there are different ways to push the balloon,
if you will.
Mr. Shays. And recertification?
Ms. Buto. Recertification is in the statute. We cannot do
it under the law. That's the problem.
Mr. Shays. OK. Have you asked anyone in Congress to
recertify? Prior to this effort, have you made an effort, or
anyone?
Ms. Buto. We have not asked for legislative authority to
repeal that or to change that, but it is one of the three or
four things we are working on.
Mr. Shays. How long will it take you to do that?
Ms. Buto. I think the next couple of months developing the
proposal.
Mr. Shays. No, that takes us too long. We're not going to
wait a couple of months. I mean, why would we have to wait a
couple of months to have you write a letter to ask us to
recertify?
Ms. Buto. Oh, to ask for the authority?
Mr. Shays. Yes. In other words, why can't you all tell us?
Put some of the burden on us. Why can't you tell us these are
the things you want us to do, and we will work on them? I'll
give you an example. In this very committee, we had the issue
of people ripping off Medicare and Medicaid. It was not a
Federal offense to commit fraud, except by wire or mail, and
health care fraud was not a Federal offense.
We had a hearing like this, and it became evident to us,
and the administration was asking us to change it. We went to
our leadership, and we put it in the health care reform bill.
But, I don't see why we would wait a day.
Ms. Buto. We'll take it back and get back to you quicker.
Mr. Shays. OK. I would like to say that by the end of this
month, if you could make some preliminary suggestions of things
that you would like us to do statutorily. We need to get it in
to start that process, and then, if you want to finalize it, or
even if you want it to be oral in the next 2 weeks and then
tell us in a month, but in the next 30 days. It seems to me
that you have studied this long enough and you can ask us to do
certain things.
Ms. Gaston, is there anything, statutorily, that you would
like us to do?
Dr. Gaston. No. I would like to make a point, though, that
you made, that was very important. We want people to go into
underserved areas. What kind of incentives can we give them? As
we look at cost-based reimbursement, that certainly has been an
important one. We fully support those programs that are meeting
the mission of seeing everybody, increasing access, everybody,
regardless of ability to pay, do need cost-based reimbursement.
Also, the ones that are increasing access through enabling
services, that are dealing with language barriers, et cetera,
those kinds of incentives and those kinds of payments will keep
them alive. So I want to make that as a point as that is being
considered.
Mr. Shays. You are suggesting, then, you have a two-tiered
billing.
Dr. Gaston. Yes.
Mr. Shays. Some rural health care clinics won't get that
kind of reimbursement; some will.
Dr. Gaston. It has to be the ones that are meeting the
mission of serving the underserved, increasing access,
improving health outcomes, those are the ones that then get it.
Mr. Shays. Is there anything that you all wish we had asked
or statements or comments you want to make?
Doctor, do you have any comment?
Ms. Puskin. The only clarification is, it's very important
to understand what was said earlier about the very critical
role of Medicare and Medicaid in assuring that services are
available in rural areas. These are communities that often the
providers have 60, 70 percent of their patient load is Medicare
and Medicaid.
So the role of Medicare and Medicaid in stabilizing access
to health services in those areas is very critical. Therefore,
this program and its role in stabilizing the availability of
services needs to be considered very, very carefully. So as we
look at certification and recertification, we certainly feel
that we need standards that are better than the current ones
that we have.
As we look at it, it's very critical, as we look at
underserved, the potential for communities to become
underserved in the future is very critical to look at,
particularly, I think, as we look at the history in the past.
When we didn't have supportive services, special provisions for
hospitals, for example, under Medicare, we saw that hospitals
went under very quickly when we removed those underpinnings.
Mr. Shays. You are triggering a question that I do want to
put on the record. In some of our urban areas we have
community-based health care clinics that basically get
reimbursement from Medicare and Medicaid, but also, frankly,
provide health care services and aren't properly reimbursed.
Will the rural health clinics come to me and say, you are
seeing one part of the story; the other part of the story is
that the extra money we get from the Federal Government has
enabled us to serve other people who are the working poor? Will
that be one of the claims that will be made?
What I'm trying to understand is, it seems so illogical
that we could have allowed it to get to this point, there must
be something I'm just not getting. For me, it should have been
dealt with years ago, and I should have known about it years
ago, and we should have dealt with it years ago, if it has
gotten so bad. What am I missing here?
Ms. Buto. I think what you are missing, what we all were
missing for a while, is that a big part of this problem is in
Medicaid, and it took us a while to understand the dimensions
of what was going on in Medicaid. That is more than half of the
growth issue. The other big part of this issue is provider-
based clinics growing out of control, and that very much is
related to the cap.
Were those two things really addressed--and, as I say, we
have a legislative proposal on the Medicaid side and the cap on
the Medicare side--then I think Dena is right. What we have to
look at, and the tough thing about writing back to you in a
month, is trying to develop the right criteria so that you're
not putting everybody at risk where you really need those
critical clinics. That's the part we're really going to have to
address.
Mr. Shays. Let me ask you this. Really what I would like is
there to be some oral communication between this committee and
your staff in the next 2 weeks, telling us where you think we
could logically move and where the trouble points are, and that
timeframe could obviously be adjusted then. It's just that I do
think that we have to bring some kind of timeframe, some kind
of deadline.
Given that I know the regulation process and the statutory
process, I'm only here for, basically, 18 more months. That's
the way I'm thinking. So I don't think I have that kind of
timeframe to just go on indefinitely.
May I just clarify? Because HCFA focuses more on Medicare
than Medicaid, obviously, you're saying that the Medicaid part
you lost.
Ms. Buto. The data we get from the States varies
tremendously by State. So we have heard episodically about it,
but until we had some of this very state-specific study that
both GAO and IG have done, we haven't had that kind of detail
in some of the State experience.
Mr. Shays. Doctor, do you have anything you want to add?
Ms. Puskin. One of the things is, you asked a question, if
these clinics use the money to serve the uninsured, and I think
that's a very important role. These clinics were designed,
however, to ensure that there was access for the Medicare and
Medicaid population. We did do a survey in 1994, when we had
about 1,300 clinics, and we did find that about 16 percent of
them had more than 25 percent of their volume in the uninsured.
We don't know exactly where that stands now. It is
important to State, the mission for these clinics is to
ensure--and we need to make sure that they do this--serve the
Medicare and Medicaid population and ensure access for them. It
is a much more complicated question when we get to the
uninsured, because that is not necessarily part of their
mission by statute.
Mr. Shays. It's not part of their mission, but they may
have taken it on.
Ms. Puskin. In our survey, a significant percentage had a
very high percentage of uninsured that they provided care to.
Mr. Shays. That is a good lead to the next panel. Let me
just ask each of you, though, tell me the most difficult
political obstacle. Clearly we have to define exactly what we
want, but on merit, we need to make major changes and as
quickly as possible. Define for me the political challenge that
HCFA might have, HHS, in general, might have on this side. What
are the political challenges?
Ms. Buto. It's a very general one, and that is that we
continue to see real problems in rural areas in terms of
access, both in physician access and practitioner access. You
will see we are proposing some greater access to nonphysician
practitioner services. So there is this bigger problem. The
problem in dealing with this one is not overdoing it in a way
that we have done harm.
Mr. Shays. Let me put it in my words. Since it has the name
``rural health clinic,'' just the name alone, if we make any
changes in rural areas, people will say, what are doing
changing a system that is helping us? Even if they are only
getting 10 percent of the benefit, they are fearful that some
change could be harmful. Whereas, we've got to sell them on the
fact that we really want to do a lot more in rural areas to
meet their needs. But that would be one.
Ms. Buto. I see that as the biggest one.
Mr. Shays. Any others?
Dr. Gaston. I would agree.
Mr. Shays. Is another obstacle that we have people
entrenched in the system that are making a windfall; they have
a collective mass that means that they will be able to prevent
change?
Ms. Buto. I may be naive on this, but I think there's
enough concern from good rural health clinics and the
legitimate providers that everyone wants to clean up that part
of the problem where there are entrenched and undeserving, if
you will, entities involved in the program.
Ms. Puskin. Can I just say, one thing that you need to
recognize is, some people see rural health clinics and the
toehold that some of the urban may have in it as actually a
good thing, because what they are seeing is the need, using it
as a tool to organize care in rural areas, and that what you're
doing is creating the linkages that help to prepare those rural
areas to become part of networks of care that are more
effective.
Now, in fact, there is a lot of abuse, but I think, as you
are looking at the system, rural health clinics have a
reputation for both good and bad, for the good that they do in
helping to maintain services out there. So the political
problem you face is a concern of throwing the baby out with the
bathwater.
Mr. Shays. One last question: The two-tier approach, will
that encounter a lot of opposition?
Dr. Gaston. Yes, it will.
Mr. Shays. But that enables us to get around the whole
issue of what is truly designated as a rural area. I mean,
that's the way we can deal with that problem; correct?
Dr. Gaston. No. No, that's not going to deal with that
problem.
Mr. Shays. Let me put it this way: An area that I might not
consider rural, the census will call it rural--we're not going
to change that. You are recommending that we not change that.
Dr. Gaston. No, the first thing we have to do is really
define where they are, in terms of underserved areas.
Mr. Shays. Right.
Dr. Gaston. That has to be fixed right away, and I think
that can be fixed right away.
Mr. Shays. OK. Thank you very much.
We will call our last panel. Bill Finerfrock, executive
director, National Association of Rural Health Clinics; Tom
Harward, physician assistant and executive director, in West
Virginia; and Robert J. Tessen, co-founder and first president
of the Texas Association of Rural Health Clinics.
If you would all remain standing.
[Witnesses sworn.]
Mr. Shays. Let me just say that you are free to read your
statements, but sometimes, as the third panel, you can almost
be more effective just responding to what you have heard. So I
would encourage you to do that, but do whatever you are
comfortable with. I want to address what you're hearing before
we even start our questions.
We will just go down the line.
STATEMENTS OF BILL FINERFROCK, EXECUTIVE DIRECTOR, NATIONAL
ASSOCIATION OF RURAL HEALTH CLINICS; TOM HARWARD, PHYSICIAN
ASSISTANT AND EXECUTIVE DIRECTOR, BELINGTON CLINIC, BELINGTON,
WV; AND ROBERT J. TESSEN, M.S., CO-FOUNDER AND FIRST PRESIDENT,
TEXAS ASSOCIATION OF RURAL HEALTH CLINICS, NATIONAL RURAL
HEALTH ASSOCIATION
Mr. Finerfrock. Thank you, Mr. Chairman.
I think I would prefer to perhaps respond rather than
recite what is in the testimony, because I think there are some
important things that have been brought out here today and some
things that perhaps need some clarification and explanation.
First, as was mentioned, this is the 20th anniversary of
the Rural Health Clinic Program, 1997, and I think it's
important that Congress take a look at the program at this
time. What we're finding is that, while the Rural Health Clinic
Program has not changed substantially over the last 20 years,
the world in which rural health clinics operate has changed.
So while we didn't see tremendous growth in the early
years, changes in Medicare, Medicaid, and other areas, managed
care, as has been mentioned, has created perhaps an opportunity
for folks to take a look at the Rural Health Clinic Program
that didn't exist in the past.
I think it's important. We had the pie chart over there,
and you focused somewhat on ``rural'' as part of what is the
problem. The statute all along has defined ``rural'' as a non-
urbanized area. So for the GAO report to say at the outset that
the premise of the program was to put practitioners in
underserved, low-density, low-populated areas is really an
inaccurate reflection of the record.
In fact, at the time the Rural Health Clinic Program was
created, there was very little discussion about the size of the
community in which the clinic was located. In fact, the Carter
administration had proposed that there be no restriction on the
size of the community, that really what the focus was on was an
underserved area, that what we were trying to do was provide
access to underserved populations.
Congressman, in Brooklyn, you've got underserved
populations even though you've got a million people who live in
Brooklyn. So population is not your determiner of whether or
not a community is underserved. So no one ever sat down and
said, ``Well, are you a population of 8,000 that is adjacent to
another population,'' to a great degree; they said, ``Are you
underserved?'' And therein lies the problem.
We have a situation that has evolved over the last almost
18 years where our definitions and what we define as
``underserved'' have really become outdated and inefficient. If
you look, as has been mentioned, rural health clinics are
supposed to be in underserved areas, defined as underserved
areas or health professional shortage areas.
The MUA lists haven't been updated since 1981, which means
that they were probably using data from the late 1970's to make
those designations, if you look at the way we do data
collection. So we're sitting here in 1997 certifying clinics in
areas that were defined as underserved based on information
from 1979. That doesn't make any sense. We have to update those
medically underserved area lists, as has been mentioned by
others.
In that regard, we would support an initiative to change
the statute to put the words ``currently certified'' into the
statute, with ``currently'' being defined as the area having
been reviewed within the last 3 years. In other words,
tomorrow, if that were to be in law, if someone were to seek
certification as a rural health clinic and use the MUA list, we
went to the MUA list and said, ``Sorry, this designation was
done in 1981. You can't have it until you come back to use with
more accurate, up-to-date information.''
We think that is absolutely critical, and we think the law
needs to be changed to incorporate that into the statute, to
give us that ability to have some degree of reliance that the
information is at least timely and current.
We also believe that there is a problem with the cap that
does not exist on provider-based, as you have heard, relative
to the independent clinics. I would just say--and you started
to get to this toward the end of your conversation with the
previous panel--we've known about this problem for a long time.
The Health Care Financing Administration embarked--over 2
years ago, they announced in the Federal Register that they
were going to develop regulations to address this particular
problem. The rural health clinics community has been waiting
for over 2 years for HCFA to publish regulations so that we
could move ahead to begin to close what we see as a very
serious gap in this process.
So we would encourage, as a community, the rural health
clinics that I speak on behalf of, that we move ahead
expeditiously in this area. That having been said, though, I
think it's important, you had another chart up there, and I'm
sorry it's no longer there, but it looked at the three
different types of reimbursement. There was blue bar, a green
bar, and a red bar.
The blue bar looked at what clinics get through traditional
Medicaid. The green bar was what clinics get that are hospital-
based. And the red bar was independent clinics. That's really
not an accurate comparison or a fair comparison to make. In
many respects, you are comparing apples to oranges.
Let me give you an example. Under the Medicaid program, as
they mentioned, you had what was an office visit that might be
charged at $25, and that was compared to a rural health clinic
visit where the practice might get $56 or a provider-based
clinic where they were going to get some higher amount. What
that's not accurately reflecting is that the independent rural
health clinic and the provider-based clinic are based on
aggregate costs; it's an all-inclusive rate.
So if a Medicaid beneficiary under traditional Medicaid
comes into a physician's office and has an ear infection, which
is a fairly simply diagnosis to undertake and fairly simple
prescription, it's a short visit, Medicaid pays that practice
$25. That same patient goes into a rural health clinic, they
are going to get $56. Seems like a pretty good deal.
But 2 days later, that same patient, that same mother
brings that child back, and she has fallen off her bike, she's
got a wound that perhaps needs suturing, needs debridement,
needs bandaging, may have a suspected broken bone. That clinic
has to do an x-ray, has to suture the wound, has to bandage it,
has to cast and set the fracture.
The clinic is only going to get $56 for that visit, even
though, under traditional Medicaid, they might get $120,
because an office visit is not just an office visit. Under fee-
for-service, you have to add in all of the ancillary,
additional costs that a practice can bill for. Rural health
clinics don't do that. They look at the entire cost of
operating that clinic on an annual basis and then aggregate
that and bring it out to an average.
So some patients, as would be shown there, you're going to
win on. But what that fails to show is that there are a lot of
patients on which you're going to lose money on that particular
encounter. So we need to really understand what cost-based
reimbursement is.
Mr. Shays. Is that independent and provider both?
Mr. Finerfrock. In provider-based clinics, it's a little
bit different. In my testimony, I give you another example of
where that somehow can be very misleading the way that is
characterized.
A provider-based clinic is paid based on what is referred
to as the lesser of cost or charges, and it's a step-down
process in their accounting that is done through the hospital.
So there is never a per-encounter rate that is done for a
hospital-based rural health clinic.
The figure that you saw there is that GAO went in after the
fact and looked at the aggregate that that hospital was
reimbursed for its clinic, then looked at the number of
patients they saw, and did a calculation. But that clinic was
never reimbursed on a per-encounter basis.
Why that can be very misleading, in my testimony I give you
an example. You have three clinics that all cost the same
amount to operate, $250,000, let's say. They are identical in
every way: overhead, services, the health professionals that
they employ, the salaries that they pay each of those health
professionals. The only difference is one is located in a
community with 1,000 people; one with 3,000 people; and one
with 5,000 people.
If, on average, every patient visits that clinic two times
a year, you're going to have 10,000 visits, 6,000 visits, and
2,000 visits. What GAO has done is taken the $250,000, in the
one case divided it by 10,000; in another case divided it by
6,000; in the other case divided it by 2,000, and come out and
said, ``Well, geez, in the community of 1,000, we're
reimbursing these people $125 per encounter, and in the other
community we're reimbursing them $25 per encounter.''
The point is that in the low-density population, by virtue
of the way they are doing their calculation, it's going to come
out with a very high per-encounter rate. Now, we can argue
whether or not that is fair or unfair, and so forth, but the
point being that there is a volume factor here that comes into
play. When you are talking about low-density areas, as they
are, by definition you are going to have a high per-encounter
cost, because you have a low patient volume.
Mr. Shays. But they are not really talking about low
density. In some areas, they aren't low-density at all.
Mr. Finerfrock. They may not be. In some areas, they are
not. I'm just saying that looking at a provider-based clinic
and doing the calculations the way they do it can present a
very misleading picture of what may or may not be occurring.
I will let it go on, and then we can answer questions.
[The prepared statement of Mr. Finerfrock follows:]
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Mr. Shays. Mr. Harward.
Mr. Harward. Thank you for the opportunity to be here. In
this setting, I'm about as nervous as some of these people
would be feeding my horses. So I'm going to stick with my
statement, but I think that it addresses what's going on here.
Mr. Shays. Let me just say something to you. We all get
nervous sometimes before this committee, for different reasons.
So we're happy to have you read your statement.
Mr. Harward. Thank you.
Mr. Shays. And don't rush when you read it.
Mr. Harward. OK. Thank you very much.
Thank you for the opportunity to comment on the Rural
Health Clinic Program. My name is Tom Harward. I'm a physician
assistant, and I practice in a small community clinic in
Belington, WV. I've been the only resident health care provider
in our town of 1,800 for the past 19 years.
There are other health care services in towns 14 to 16
miles away. Although not every single person in Belington uses
the clinic, I believe that most take a certain amount of
security in having the clinic there. I'm equally sure that the
RHC Program has been valuable to many other rural areas in West
Virginia.
In 1985, I talked a friend of mine into relocating to a
small town called Riverton. Riverton has about 500 residents,
and its' clinic had closed. The town is on a fair-sized creek
in the mountains, about 50 miles east of where I practice.
About 2 weeks after he arrived, he found himself, along
with his wife, mother-in-law, and 4-year-old, sitting in a barn
loft. He was watching his home and about half of that town
float down the creek. I had a little trouble looking him in the
eye for a while after that flood, but he rebuilt his home, and
he rebuilt his clinic. He is still practicing there today.
My friend is a PA. I think he represents the hearts and
guts about what non-physician providers are supposed to be
about, and that is cost-effective care, particularly to
underserved populations. That's what the Rural Health Clinic
Program is supposed to be about, a lean, cost-effective program
providing care to rural and underserved populations.
Perhaps the respective agencies and professions need to be
reminded of this focus on occasion. Perhaps we need our
collective professional feet held to the fire a bit. So be it.
But like the lady said earlier, don't throw the baby out with
the bathwater.
The GAO report does not make good reading for those who are
advocates of the Rural Health Clinic Program, particularly when
it States that it was adrift, without focus. I cannot speak for
the areas mentioned in the report. I found it well written, but
I know it doesn't reflect anything about my clinic, and I know
it does not generally reflect what has transpired in West
Virginia.
Our clinics are in rural areas. They do serve rural
populations. They are also in areas where the weather can be
treacherous, the terrain rough, and there is often no public
transportation. The GAO report cited a failure to increase the
number of patients served. When I joined our clinic in 1978, we
saw less than 3,000 patients a year. This year we will see
nearly 14,000.
The report cited a failure to increase the number of health
care providers. When I began, there was a physician a half day
a week and myself. Today, we've got another full-time PA and a
half-time OBGYN nurse practitioner. Two family docs give us two
half-days a week each; a pediatrician, the same; and a surgeon
also comes in. In the western end of the county, a new
provider-based RHC has brought in another family physician and
a PA.
Mention was made in this report of the failure to provide
care to the underserved and a lack of a sliding fee schedule
for this group. We do offer a sliding fee schedule. We provide
care for every single person who walks through the door and
asks for it. We have programs for indigent children, adults,
and seniors.
The report was critical of the cost-based system whereby
high overhead and administrative costs resulted in counter
rates which, in some cases, were cited as $200. The two
provider-based clinics in the western end of our county have
rates of $52 and $56, respectively. I represent the
administrative overhead of our clinic, and I see 4,000 to 6,000
patients a year. Our rate is $38, and I believe it is good
value.
For this $38, we are able to provide our community with a
clinic that is open 5\1/2\ days a week, a call system where
help is available 24 hours a day, 7 days a week, a
comprehensive family practice situation where we can provide
both inpatient and outpatient care, including obstetrics. We
have a house call service that reaches hundreds of the elderly
and disabled a year. And we have health programs such as
cervical cancer screening and the pediatric health service.
We also have two innovative projects--and I want to make
this clear--that are not financed by the Rural Health Clinic
Program, but because of the stability we have by it, we've been
able to move forward on these. We have one of the finest
school-based clinics in the State. We provide screening
services there, acute care to kids who can't get services
elsewhere, and health education programs.
We also have built, from donations in the community,
because of the support that our clinic has, a preventive health
center that is opened from 7 a.m. until 8 p.m. We offer
nutrition counseling here, exercise instruction, aerobics,
water aerobics, hydrotherapy services, stretching exercises for
seniors, et cetera. We feel like that people need to take
responsibility for their own care, and this is our attempt.
I would like to close with these final thoughts. I grew up
here in the Washington area. I left Connecticut Avenue and
Chesapeake Street here about 20 years ago. And I know that we
are not completely unique, or my area is not completely unique
in its weather and terrain, but people do come to care late and
they are sicker.
We deal with an extraordinary number of people that have
diabetes, obesity, chronic obstructive pulmonary disease, and
other illnesses. We provide care to families who really do
exist on $6 and $8 an hour, in areas where the unemployment
rate is likely to run 12 to 22 percent.
I just ask you to remember, as you take a look at this
program, that it has been important to us. We have adhered to
its original concept. Obviously, it needs fixing. Reasonable
caps would be a good start, and also redesignation.
I want to throw one issue out here in the comments made
today. We talk about decertification. I've been there 19 years.
I'm 56 years old. If you decertify my clinic, I can't practice.
I put my whole life in this place, because I would not be
eligible to be reimbursed under Medicare. So if you fix this,
it needs to be fixed right.
Another issue, in terms of decertification, at our rate,
$38, I challenge you to go to a doctor in Washington for $38,
in most cases. It has given us a floor, and it has allowed us
to develop these other programs.
I have watched dozens--and I mean dozens--of physicians and
other providers come into this area. There are cultural
reasons; there are social reasons; there are economic reasons.
They fear the school system. You know, if you want your kid to
be a physician or a lawyer, you might not want him in our high
school. And they are there a year or two, and their kids start
to grow up, and they pull out--not everybody--but they pull
out.
I've been there when we got $7.50 from Medicaid for a
patient encounter, and I've also been there when Medicaid took
6 months to pay us. So I want to make those points. If you fix
this thing, it's got to be fixed right, and I think it should
be done in an expedient manner.
[The prepared statement of Mr. Harward follows:]
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Mr. Shays. Tell me again how many years you've had your
clinic or you've been involved in the clinic.
Mr. Harward. Nineteen.
Mr. Shays. I don't think you need to fear, for a variety of
reasons, that we will be acting too quickly. You don't need to
go to sleep at night fearful that the next morning HCFA or
Congress will have taken decisive action. But I'm going to be a
little more sympathetic and sensitive to the areas you
describe. So I look forward to having a dialog with you.
Mr. Tessen.
Mr. Tessen. Mr. Chairman, members of the committee, I do
want to follow my script to some degree.
Mr. Shays. Where are your cowboy boots?
Mr. Tessen. Well, I wanted to act urban today. I figure
this is Washington, you can't act Texan up here.
Mr. Shays. I don't know one Texan up here who wears normal
shoes, as a Member of Congress.
Mr. Tessen. I would challenge you to see what's in their
closet, then.
Mr. Shays. OK.
Mr. Tessen. I figure a good pair of Niconas these days cost
$600, so we can't afford too many.
Mr. Shays. OK.
Mr. Tessen. I appreciate the opportunity to share some
information with you. I just want to follow the script and
bring out some points particularly reflective of some of the
comments that had been made earlier.
I am representing the National Rural Health Association,
which is a national member organization comprised not just of
rural health clinics but physicians, Federal qualified health
clinics, community-operated practices, research and education,
everyone. I am the founder and the chair of the division which
we call constituency groups within the NRHA, to represent rural
health clinics.
I would suggest that there are some other reasons that the
number of RHCs has exploded in the last 6 or 7 years, other
than those that have been brought out so far during testimony
today. No. 1--and I will use Texas as an example--the reason
there were no functioning RHCs in Texas up through 1989--there
were 12 originally, and they all went under after the 1977
legislation.
So by 1989 there were none, because in Texas the State
regulations did not allow independent practice by a physician
assistant. So we could not have a rural health clinic without
over the shoulder supervision of a physician assistant until
1989. After 1989, the numbers took off like crazy, but it was
because of the change in State regulations that allowed PAs to
practice.
I would also suggest another reason for some of the
numbers, something we have experienced in some of the western
States, a lot of the physicians in rural areas are aging. I
guess we're all aging, at least some of us, faster than others,
it seems. But in rural areas, a lot of the physicians are or
are at retirement age. One of the things that the Rural Health
Clinic Program has allowed communities to do is, instead of
that practice closing and the community losing its access to
care, allow a rural health clinic to come in. That's going to
show up as a conversion, No. 1.
Mr. Shays. Fair enough.
Mr. Tessen. But what it's going to do, it's going to allow
a mid-level practitioner, nonphysician provider to be brought
into that community to continue that practice. Whereas, without
the Rural Health Clinic Program, there may not have been the
ability to convert that practice and convert that primary care.
I think that's another aspect of rural conversions we have to
look at, in terms of rural health clinics.
I would emphasize that one of the biggest problems with
this program is the lack of data. OIG did a report. GAO did a
report. Bill's association did a report a couple years ago.
There have been a couple studies. But I would challenge anybody
to be able to tell you what is going with rural health clinics
in the United States, across the board, with objective data.
There isn't any. There simply is no data. Instead of being
proactive, we end up reacting to a study or something that was
done that wants to change something.
I guess what I would recommend is that there really be an
effort made to find out what is really going on. I think
clinics like Tom's don't get the recognition they need. They
don't show up in the data.
I would also point out that I think there are some other
discrepancies or faults with the design of the GAO study. One
of the things that I would suggest is that there is an
assumption made, it seems, in their report, that all those RHCs
they found are full-time clinics. That's not necessarily true.
We had one county in Texas that received notorious play in
the media because there were 10 RHCs in the county. I went down
there. Four of those are owned by the same physician assistant
who has opened each of those clinics 1 day a week.
Mr. Shays. Interesting.
Mr. Tessen. That's not brought out in the GAO report.
It also assumes, I think, in the GAO report, that all
clinics serve all patients, and that's not true. There are some
rural health clinics that serve just pediatric patients. In
that case, that clinic does not provide access to Medicare
patients. That was not brought out in the GAO report.
I also think using population assumes that all patients in
all locales are the same, and that's not true. I think that
every area has a different patient mix. Number of Medicare and
Medicaid patients, unemployed, indigent care, levels of
poverty, those are different. You may have some areas 15 miles
away--which, by the way, I think 15 miles in Texas is a little
bit different than 15 miles in Connecticut. If I've got to
drive 15 miles in Texas, I'm in another town half a county
away. And I think we, in the western States, look at it a
little bit differently.
Mr. Shays. But that would imply you would look at 15 miles
as being pretty close, not a big deal.
Mr. Tessen. Except that, in terms of access to care, the
orientation of the folks in that town 15 miles away is going to
be to that community rather than to a town 15, 20, or 30 miles
away.
Mr. Shays. But isn't the issue whether someone can get a
health care?
Mr. Tessen. It is, yes.
Mr. Shays. That's really the issue. And I'm seeing the
abuse. Let me let you finish your statement. I'm really happy
you all are here, because I think we will learn a lot.
Mr. Tessen. I would also assume that 15 miles assumes the
presence of transportation. I would contend that, for a lot of
the elderly, particularly in a lot of rural areas,
transportation is not available, as a matter of just a way of
life.
I would also suggest the current system is broken in
another way. I think left unspoken here today has been the idea
that the current system is working as it is supposed to have
been working in a number of ways. And I'm going to tell you
it's not. I have clinics in Texas that have not been surveyed,
even though the regulations require an annual survey, have not
been surveyed in 6 or 7 years. There has been no one coming in
to check on those clinics to see if they are in compliance with
the existing law, much less any abuses that may be going on.
I would also suggest that the feedback system is poor. We
have clinics in the western part and some of the fiscal
intermediaries out west that are not giving feedback to the
individual RHCs on their cost reports, their allowable costs,
if their data is in line with what it should be, for 18 months
after the data has been submitted.
I would suggest, if we were running a private business and
had to wait on our accountant's report for 18 months before we
could determine if we were in line or not, or if we tried to
convince that when we appear before the IRS tax board, it
wouldn't fly, but that's what rural health clinics face as a
matter of routine.
I think the National Rural Health Association is in full
agreement that the program needs to be fine-tuned. We agree
that access to care should be the primary determinant for
placement and certification of a rural health clinic. But what
we would also contend is that the objective definitions be
that, objective and consistent across the board. I mean, when
we talk about developing policies, we can't even agree on the
definition of ``rural.'' I think we're going to have to have
objective data.
I just want to make a couple other quick points.
Mr. Shays. OK. And then we would like to get to
questioning. Just make one or two more points, and then we will
get to the questioning.
Mr. Tessen. I would say that there has been a thing in the
GAO report that said that conversions in even the rural health
clinics in the suburban areas did so without adding staff. I
would contend that's not possible, because, by requirement, by
definition, a rural health clinic has to have at least a mid-
level practitioner 50 percent of the time. So by simply going
to a rural health clinic certification, they have to add a mid-
level practitioner at least 50 percent of the time. They can't
avoid that and still be in compliance with the law. So I would
contest that.
[The prepared statement of Mr. Tessen follows:]
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Mr. Shays. Let me just have a sense of where your
perspective is, in terms of background. There are approximately
3,000 rural health clinics today.
Mr. Tessen. Yes; 3,273.
Mr. Shays. How many belong to the National Association of
Rural Health Clinics?
Mr. Finerfrock. Well, we have about 450 that pay dues, but
they represent, in many instances, because you have multiple
clinics, we have about 900 clinics.
Mr. Shays. You are part of the National Rural Health
Association.
Mr. Tessen. Right.
Mr. Shays. How many members do you have?
Mr. Tessen. Just over 200 now.
Mr. Shays. Now, do these two different--your association,
do you have the same basic type clinics part of it, or do you
kind of go after a certain group?
Mr. Finerfrock. Our membership is both independent and
provider-based. I don't want to speak for Sam.
Mr. Shays. Is it geographically based?
Mr. Finerfrock. I think the way I would describe the
difference in our organizations is--and I mean this
positively--NRHA is a department store, and we are a boutique.
NRHA has a variety of rural entities that are members, all
under the broad, so there are rural hospitals, independent
providers.
Mr. Shays. So you have other organizations besides.
Mr. Tessen. Using that analogy, we would be like Saks.
Mr. Finerfrock. And we're the boutique on the corner. We
just work on rural health clinics.
Mr. Shays. So, Mr. Harward, did you join a ``Saks,'' or
which one are you in?
Mr. Harward. Rural Health Care Association.
Mr. Shays. Now, Mr. Tessen, do you have clinic of your own?
You have your own clinic besides being part of an association?
Mr. Tessen. I manage a clinic at this point.
Mr. Shays. You manage a clinic.
Mr. Tessen. But that's not my full-time job. I also work at
a medical school in Texas, in Galveston.
Mr. Shays. And you're basically in charge of this
association.
Mr. Finerfrock. I'm kind of a policy wonk.
Mr. Shays. OK. Listen, we're policy wonks. We can't be
totally against you guys.
Mr. Harward, you're in the trenches.
Mr. Harward. Yes, sir.
Mr. Shays. OK. Describe to me your community.
Mr. Harward. My community has one stop light, one bridge, a
Quick Stop, a couple small grocery stores. As I said, the
population is about 1,800. It's primarily marginal farming,
timber industry, a declining coal industry. The town itself is
about 1,800. The county is 16,000, probably 350, 450 square
miles.
Mr. Shays. So the closest community of more than 50,000
would be how far away?
Mr. Harward. 150 miles.
Mr. Shays. See, in my own mind, that's the kind of
community that I would visualize we're trying to focus in on.
Now, I do understand your point, Mr. Finerfrock. Your point is
that you could even make an argument that a rural health clinic
could be in the Bronx, in terms of need.
Mr. Finerfrock. Yes. You have heard reference here to the
FQHC program, federally qualified health centers program. Some
of the previous witnesses made reference to that program. That,
in essence, is very similar in its financing to the RHC
program. Those facilities get cost-based reimbursement under a
cap, and their costs look at the same things that the RHC costs
do. So there is, in essence, an urban component or model of
this.
Mr. Shays. Yes, there is a model, but my sense is that when
Congress started this--and we will look at the record--in
``rural,'' certainly the implication was that we were talking
more like areas that Mr. Harward is part of.
Mr. Tessen. Under the initial legislation, there was also
the certifiability in medically underserved populations, MUPs.
HCFA has gotten rid of that.
Mr. Shays. HCFA has gotten rid of?
Mr. Tessen. The RHC eligibility under the MUP certification
process. But when that was in effect, we have ``rural health
clinics'' in downtown Dallas because of the population being
poor, impoverished, no work, and no medical services
whatsoever.
Mr. Shays. I'm not saying we don't have to deal with that
problem, but my sense was, this program was not designed for
that.
Mr. Tessen. Right.
Mr. Shays. That's all I'm saying. I can make a strong
argument that you need to be in Bridgeport, CT, in one sense.
But what I don't like is, where people were, in fact, serving
the community, they decided to be under a new system that gave
them a greater reimbursement. I do think you're making the
point of older physicians selling.
Mr. Tessen. Retiring.
Mr. Shays. Retiring, and then a clinic coming in. You have
answered one question. All three of you answered one question.
To me, it appeared to be a no-brainer, and you're saying, you
just need to get into this a little deeper to understand.
Mr. Harward, I'm just going to say to you that I will use
you as the test. If we're doing anything or if HCFA is doing
anything that would negatively impact your circumstance, then I
think we're headed in the wrong direction. So I will use you as
the benchmark, in a way, and others like you, because I do want
you to go to sleep at night.
Mr. Harward. I want to go.
Mr. Finerfrock. I'm really glad to hear that, because, I
mean, for me, personally, Tom is kind of the benchmark. This is
where this grandfather clause, I think--if we could spend a
little bit of time perhaps on that.
Mr. Shays. I don't want to spend too much time. I don't
want to grandfather people who shouldn't be grandfathered.
Mr. Finerfrock. That's right. I don't think we do. But my
point is that there are reasons why that grandfather clause was
put in there, and Tom mentioned one of them at the end of his
presentation, which is that you have PAs and NPs who are
staffing these clinics. If you take away the certification from
them, there is no mechanism for Medicare, in many instances, to
pay for their services.
Mr. Shays. I want to let Mr. Towns ask questions. The one
thing that I'm going to qualify my own response, I could see
where you were truly in what I would call a rural area, serving
people that aren't going to get care elsewhere. And I can see
how that community can change. And then I can see how you've
devoted 20 years of your life. I would be very sensitive to not
saying, ``Oh, my gosh, no longer should you be there,'' if you
have shown that kind of commitment to the community.
So I think there should be some way to give credit to, and
allow for, that individual to continue to practice. The
question would be, not that you would decertify, but would you
put them on a different reimbursement rate that would be
competitive with the area and be fair?
Mr. Finerfrock. I would agree. There has got to be some
kind of a glide path or some mechanism for transition. I just
saw it earlier. I mean, HCFA mentioned they are working on
legislative proposals. I saw it just as we were coming in here.
Their proposal is, you would immediately be kicked out of the
RHC program. If your area was decertified as an underserved
area, you would be immediately shut down as a rural health
clinic, which means he's out of business. My view is, that's
too simplistic.
Mr. Shays. Would you be put out of business? I'm sorry. I
want to get to Mr. Towns.
Mr. Harward. If we cannot be reimbursed.
Mr. Shays. No, no. It seems to me that you would meet the
test of reimbursement.
Mr. Harward. I can't be reimbursed unless I'm in a rural
health clinic.
Mr. Shays. Right. I don't see how your health clinic would
be one that would be targeted for decertification, is what I'm
saying.
Mr. Harward. Not likely, except we have two other rural
health clinics in the other end of the community, provider-
based clinics. You factor us in as providers--currently we're
not factored in, in figuring a medically underserved area--
that's going to change the ratio a little bit. It might be a
little plus or minus.
I'm not afraid for our clinic to compete, what I'm saying,
on the ``private'' market, but I want an even playing field.
Mr. Shays. But you're an independent, correct, or are you
provider-based?
Mr. Harward. We're an independent.
Mr. Shays. So you're not even getting reimbursed at the
rate that some of your competition is.
Mr. Harward. We don't need it.
Mr. Shays. No, let me back up a second. You're not even
getting reimbursed at the rate that some of your competition is
getting reimbursed.
Mr. Harward. No, we're not.
Mr. Shays. OK. So I'm just saying it's interesting that
you're not upset that others are making more money than you are
in this system, that you may tend to compete.
Mr. Harward. I might be a little more upset than I show.
Mr. Shays. OK. At least your human. I wanted to know.
Mr. Towns.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me thank all of you for your testimony. I know you have
heard the comments that were made earlier by GAO and also the
Deputy Inspector General. I guess I could start with you, Mr.
Harward. I would like to ask each member to tell us how you
would correct the problems that GAO and the Deputy Inspector
General described earlier.
Mr. Harward. The cap is absolutely essential. I mean, the
cap is going to take care of a hugh amount of the problem. I
think that's important. The designation issue is tremendously
important, to be updated regularly. And it's tremendously
important to include, on some formula, nonphysician health care
providers in this designation. Those are two most important
things. Those two things alone, I believe, would give you the
kind of cost control that you need and stop the proliferation.
Mr. Shays. May I just ask?
Mr. Towns. Sure.
Mr. Shays. Do you mean new designation, or do you mean
decertification?
Mr. Harward. The first thing you need to do, I guess, is
level it off, OK. And then, in terms of the decertification, I
think it has to be on the table. Yes, I agree.
Mr. Towns. I want to move to also ask Mr. Finerfrock, and
you, too, Mr. Tessen. Before I do that, if a clinic is closed
in the State of West Virginia, just assume that it happens, the
worst, what happens to the medical records?
Mr. Harward. There is no central repository that I'm aware
of.
Mr. Towns. You are educating us here, too, you know. I want
you to know that.
Mr. Harward. Yes. They would be locked up somewhere. We
would advertise in the paper, you know, when that's going to
happen. Once my clinic was provider-based, many, many years
ago, and it was one of the very few, one of two or three. And
the hospital that I worked for in the early 1980's, before this
happened, went bankrupt and closed down. A lot of those records
are just sitting in a basement somewhere, and people can't get
to them.
So, I mean, you know, they advertised for a while. We've
been an independent, private clinic now, or community clinic,
since that bankruptcy, for I guess 12 years.
Mr. Towns. In other words, they just left the records.
Mr. Harward. Yes, sir. Yes, sir. Now, people, when you
advertise, would ask that they be transferred to another health
care provider, you know, in an adjacent area or the same town.
We just don't happen to have any in our town. It would be one
of those providers in a nearby town.
Mr. Towns. Mr. Finerfrock.
Mr. Finerfrock. I would agree with Tom that a cap is really
important on the provider-based side. One of the other issues
that has not been addressed, concurrent with that, is a
productivity standard. On the independent clinics, in addition
to the cap, clinics are required to maintain a productivity
standard in order to get their reimbursement rate.
That standard is 4,200 visits per year on a full-time
equivalency for a physician; 2,000 visits per year for a PA or
a nurse practitioner. If they don't achieve that level, then
there's a downward adjustment in their payments to reflect that
they were not operating at what was considered to be maximum
productivity.
In addition to there not being a cap on the provider-based
clinics, there is not a productivity standard, the issue I was
addressing earlier. So simply imposing a cap on provider-based
is not sufficient. There also needs to be a productivity
standard, in order to make sure that they are operating
efficiently, as well.
In terms of the shortage area issue, I would agree those
need to be updated and updated immediately. Short of that, we
need to institute into the law, ``currently certified,'' which
would be the area has been reviewed in the last 3 years, in
order to prevent people from doing a designation based on
information that is outdated. It also needs to include the
availability of PAs and NPs at some appropriate FTE
substitution rate for physicians.
There should be a tie-in notice. Once a clinic is
certified, the Health Care Financing Administration should
notify the Office of Shortage Designation that that clinic has
been certified. Otherwise, what you run the risk of is that,
during that 3-year intervening period, you know, people come in
and set up multiple rural health clinics when it perhaps was no
longer warranted.
So we need to have a mechanism for alerting the Office of
Shortage Designation that there may have been a change in the
provider availability in that community, so that designation
may no longer be appropriate.
We need to create a glide path in order to transition folks
off of rural health clinics, if, for some reason, the area is
no longer rural or no longer underserved. What I would
recommend there is that we look at a situation where they would
actually be excess capacity. In other words, you heard earlier
that it requires 1 physician to 3,500 population in order for a
designation to occur. So if the community exceeds that, if
there were 1 physician for 3,000, it would lose its
designation.
What I would suggest is that dedesignation wouldn't kick in
until you had an infrastructure perhaps that was 1 to 1,500 or
1 to 1,000. In other words, so that you were sure that there
was adequate capacity within the community such that losing
that designation would not result in them being back as an
underserved area, what I refer to as the yo-yo effect. I think
Kathy Buto talked about that, where you create an incentive to
get someone to an area, then by virtue of being successful at
recruiting to the area, the area is no longer underserved, and
so we pull away that incentive.
I think those would be my recommendations.
Mr. Towns. Just before I leave you, Mr. Finerfrock, how
many provider-based clinics do you represent?
Mr. Finerfrock. You know, I'm not sure. I mean, I don't
make that distinction in our membership. We have provider-based
on our board, and we have provider-based on our policy
committee. But I can find that out for you.
Mr. Towns. Mr. Tessen.
Mr. Tessen. I think there are a couple of things. I think
the cap on provider-based is in the right direction, but I
would make a case that there should be some sort of exception
or level or some differentiation for those rural hospitals that
have rural health clinics that are really rural hospitals, out
in the middle of no place, that are just struggling to survive
with patient loads of one or two patients per day. I mean,
we've got to do something to protect the people in the frontier
areas and the really rural areas from just pulling out
infrastructure across the board.
Mr. Shays. May I?
Mr. Towns. Yes.
Mr. Shays. In a sense that raises the two-tiered approach.
Are all three of you comfortable with that approach?
Mr. Harward. I would like to respond. You asked do I resent
that $20 difference between the people in the other end of the
county. One is a rural hospital that's now one of these each
piece hospitals. Their bed capacity went from 90 to 12, and
they are associated with a distant hospital. They are sort of
the junior partner in this program. That clinic is real
important to the survival of that hospital, and they do
maintain emergency room there, and it's part of their financial
base. I think we have to avoid doing things to these small
hospitals that could hurt that.
On the same subject, on the question of decertification,
it's real important. One of the things that you could do in
decertification is just knock the rate to 75 percent of the
maximum, if you reach a point. Because these people that are
abusing it are way, way above. If you've got the cap and even
you limited my community-based clinic to 75 percent of the
maximum rate because we hit that magic number where we were no
longer served, we could continue to do what we do best, which
is community health.
Mr. Tessen. I think another thing that really concerns me
is, we're talking about all kinds of changes in the system
without addressing the fact that we aren't following the
current system. I mean by that the lack of surveys, the lack of
audits, the lack of timely feedback and cost reports, the
waivers for the mid-level practitioners are not being enforced.
If we change the system and don't address that part of it,
we're going to have the same problem. I mean, people are going
to go into it, and there's no real way to find out if people
are in compliance or not.
I guess my point is, why have a system if we're not going
to follow the basics of it, even it's required by regulation
and law at this point.
The other thing that I would say is that the NRHA, the
National Rural Health Association, has put together a white
paper on a whole list of proposals for rural health clinic
refinement. I guess that has been submitted as part of the
testimony. It is intriguing, in NRHA, the process of devising
policies, because I have to sit and argue with the rural
hospital folks, and I have to sit and argue with the FQHC
people, and I have to argue with the research and education
people when we develop policies.
So the policies that are in this NRHA paper are really a
real strong reflection of kind of the microcosm that is going
on in the whole argument about rural health clinics on a
national basis. So these are fairly good, I think.
Mr. Towns. Thank you very much.
Thank you, Mr. Chairman.
Mr. Finerfrock. Mr. Chairman.
Mr. Shays. Yes.
Mr. Finerfrock. You asked about the two-tiered approach. On
that, we've had some discussions with the Health Care Financing
Administration on that concept of having a different cap and
different standards for clinics that are located in what are
defined as frontier areas. I think that's a reasonable thing to
take a look at.
The only difference I would make, perhaps, on this point,
with Sam, is that I don't think that we should make that
exclusive to hospital-owned clinics. To me, the payment should
be based on the services that you are delivering and the care
that you are delivering. The ownership of the clinic shouldn't
make that distinction.
So if we're going to create this level playing field--I
just got a call the other day, a physician in the Upper
Peninsula of Michigan is 40 miles from the nearest town of any
size, he's by himself, could really use to be a rural health
clinic, but can't be for a variety of reasons. If you were to
do the two-tiered approach, I suspect that he would be able to
do that and make it attractive. He's on the verge of leaving
that community, and I think that kind of an approach would
really help.
Mr. Shays. I just wonder, in that case, if knowing that we
might change the rules to benefit him would keep him there.
Mr. Finerfrock. We might.
Mr. Shays. The process is still going to take so long.
Mr. Finerfrock. It will, but it may keep him there.
I think another point needs to be made. There was a
reference to managed care, I think, by one of the earlier
witnesses, that perhaps the growth was a result of managed care
and the concern about that. I think we also have to consider
the Health Care Reform plan that the Clinton administration
proposed back in the first Clinton administration.
The reason I say that is, in that plan there was a proposal
to create facilities that are called, ``essential community
providers,'' and that those ``essential community providers''
would have special status when it came to negotiating with
managed care or any plan that the Clinton proposal was going to
put into that community. And rural health clinics were
automatically defines as an essential community provider.
I think, for the same reason that you were suggesting that
the prospect that we might be able to do something for that
physician, might encourage him to stay in, I think the prospect
that the government was going to create this ``essential
community provider'' category and give you special status for
purposes of negotiating with managed care also was an incentive
to become a rural health clinic, even though they didn't intend
to expand their services to Medicare and Medicaid. They were
looking down the road, trying to provide some kind of a special
status for themselves when the world, as they new it, was going
to change.
Mr. Shays. Very interesting.
We have been joined by Mike Pappas, from New Jersey, a new
Member, and a wonderful new Member. I don't know if you would
like to just enter into this dialog or just say hello.
Mr. Pappas. Yes, if I could, Mr. Chairman.
Mr. Shays. Sure.
Mr. Pappas. Thank you. I'm sorry for getting here late.
You may have covered this, but if you would bear with me, I
understand there is a program called Partnership for Rural
Opportunities. I'm wondering if you folks, in various
capacities, are familiar with it and, if so, if there has been
any work with them?
Mr. Shays. This may be a viable program none of you have
heard about, but we are continually learning of government
programs that we voted for, right?
Mr. Pappas. As I understand it, it's a division within the
Department of Health and Human Services.
Mr. Tessen. Never heard of it.
Mr. Finerfrock. I'm not familiar with it.
Mr. Shays. Is there anyone in our audience who might know?
Ms. Rapp. I know.
Mr. Shays. If you don't mind just coming up. We won't even
swear you in. I'm just curious.
Ms. Rapp. I won't go to the front.
Mr. Shays. No, no. We need you to be in the mike here. Just
identify who you are.
Ms. Rapp. I'm Jennifer Rapp. I'm the government affairs
director for the National Rural Health Association here in
Washington. We work closely with the National Rural Development
Partnership, which is affiliated with the PRO. The PRO was
formed within the Department of Health and Human Services by a
number of divisions within HHS. The Federal Office of Rural
Health Policy belongs, so do several of the other divisions
within HHS. They formed this group to kind of cut across
division barriers, but to look at rural issues department-wide.
So I know what the group is, and we have had communication
with them. They are a relatively new group. I think they just
started holding meetings within HHS about 6 months ago.
Mr. Shays. Do you want to pursue that a minute?
Mr. Pappas. Yes. I just would be curious, these folks who
are very involved, on the witness stand--what effort is going
to be made to--if folks such as these should be made aware of
this. I'm assuming this new conglomeration has been established
to try to, say, improve the situation. Their input may be
helpful. Do you know?
Ms. Rapp. So far they have involved outside groups through
the larger, National Rural Development Partnership, which there
is a Washington component called the National Rural Development
Council, which I sit on. They, in the past year, have invited
outside organizations such as other associations to sit on the
council, indirectly interacting with this department group
called the PRO.
So I don't attend PRO meetings, because it's only intra-
HHS. But I do participate, and I'm sure other outside
organizations could participate through serving on the National
Rural Development Council.
Mr. Shays. And the purpose of the organization is what?
Ms. Rapp. I think to really have a rural filter. I know the
woman who heads it up, in the Office of the Secretary, actually
spoke at our meeting on Monday about the group, and she likes
to call it a rural filter for all issues that pass through the
Department of Health and Human Services.
I would also like to mention that I think Jake Culp, from
the Federal Office of Rural Health Policy, is here, and he
participates.
Mr. Shays. Would you like to just comment on this?
Mr. Culp. I could just say one more thing.
Mr. Shays. Let me just say this to you. You're going to
come up here, but just would you say your name again so our
recorder has it. Do you have a card?
Ms. Rapp. Yes, I do. It's Jennifer Rapp, R-a-p-p.
Mr. Shays. And you represent?
Ms. Rapp. I'm the government affairs director for the
National Rural Health Association.
Mr. Shays. And you, sir, are?
Mr. Culp. I'm Jake Culp. I'm with the Office of Rural
Health Policy. I work with Dr. Puskin, who was here testifying
earlier.
Mr. Shays. Now, did you want to make a response?
Mr. Culp. Yes. I would just like to elaborate. Jennifer got
at that. This is a group that was formed, I think it's about 9
or 10 months ago, and it's serving two purposes in our
Department, in my view.
The first purpose is to get all of the various components
of the Department together on a regular basis, who have
something to do with rural health care, and that's a lot of us.
That's the Health Care Financing Administration, that's our
office--we're in another part of the Department, the Health
Resources and Services Administration--the Administration on
Aging, another part of the Department that also has some rural
interest. So it's an opportunity for us to come together, and
the leadership for that is provided out of the Office of the
Secretary.
One of the goals of the group that's a little different is,
we've been working hard over the years, our office and the
Department, as well, to get a close tie-in between economic
development issues in rural issues and health. The Department
of Agriculture, for example, has agents out there in small
rural communities all over the country, and we're trying to
work with them to make health a part of their agenda as they
work on local economic development issues in small communities.
So this group also has that role, to work closely with the
Department of Agriculture and other parts of the executive
branch on rural health care kinds of issues.
It's a very important activity.
Mr. Pappas. Thank you. One of the things, I think, that
could be done to maybe even improve what I think is a very
worthwhile effort is to provide some sort of a mechanism where
people out in the community could then be given a forum to
maybe express what their views are as to what the various
Federal programs do or don't do.
Ms. Rapp. May I make one comment about that? State rural
development councils do sit on the larger body. So within each
State there is a State rural development council, and that's
kind of the ground-up approach.
Mr. Pappas. OK. Thank you, Mr. Chairman.
Mr. Shays. You're welcome. I will say, I've broken my rule,
not swearing in two witnesses here, but circumstances dictated
that. Thank you both very much.
I want to ask if there is anything you wish we had asked
you, that you wanted to make a point on before we close up
here. You have given a nice definition to the hearing, and I
thank you all for being here. Is there any closing statement
you want to say?
Mr. Tessen. I would just invite members of the committee or
their staffs to come out and visit some real rural health
clinics, like Tom's or some others. Some are closer.
Mr. Pappas. Easy for you to say.
Mr. Shays. Be careful. He's from Texas.
Mr. Tessen. I think that rural health clinics, in reality,
are really interesting animals, and I think that seeing them in
operation is an experience to behold.
Mr. Shays. As you were testifying, particularly Mr.
Harward, I was thinking that it would be important for us to
find a way to visit a few. I have, obviously, seen community-
based health care clinics who do some of the same stuff.
Any other comments?
Mr. Finerfrock. If I could. In the testimony that Dr.
Gaston presented, she made reference to the fact that the
Department was going to now incorporate PAs, NPs, and CNNs into
the designation process. If you could get clarification, in the
written testimony, there was a caveat that was not addressed in
her oral presentation, which was, once we feel that there is
sufficient data.
I don't think that that should be taken lightly. I think
there is data. They have suggested that there is not sufficient
data. We've done some checking around. Tom was on the medical
board in West Virginia and can provide accurate information
there.
I would be remiss to Congressman Towns if I didn't
acknowledge your efforts on the part of correcting the problem
for Medicare reimbursement for PAs and nurse practitioners
outside of the rural health clinic. You have been a real leader
on that issue. I know last year, as part of the budget act,
that provision was adopted by Congress, through no small effort
of yours, and I know the PA and NP communities are very
appreciative of everything that you have done in that regard.
Mr. Shays. He's a good guy.
Mr. Finerfrock. The last thing I just wanted to say is that
Tom's calm demeanor, he has earned that honestly. Tom is the
father of 15 kids.
Mr. Towns. No wonder he's so calm.
Mr. Finerfrock. Anybody who can survive that experience--
ranging in age from 9 to 33--anybody who can survive that
experience, I think coming before Congress is probably a piece
of cake.
Mr. Harward. Actually, when they left home, we would be
dedesignated. [Laughter.]
Mr. Towns. Mr. Chairman, if I could just ask one quick
question.
Mr. Shays. Sure.
Mr. Towns. I'm concerned that there seems to be no
continuity in terms of records, when facilities close and
facilities consolide. What happens to records in your area?
Because I think it's something we're going to have to look at,
at some point in time, as to what happens to records when
facilities happen to close.
Mr. Tessen. As I understand it, legally, medical records
are the property of the owner of the clinic. I guess there's
legal precedent for that someplace. If whoever owns that
clinic, whatever clinic it is, rural health clinic or anything
else, if that clinic closes or anything else, those medical
records remain the property of that owner.
Mr. Harward. They should go to the patient. I mean, you can
mandate that they go to the patient if the facility closes. If
they have not assigned them to another provider, it's pretty
simple. You know, if they choose to abuse them or throw them
away, that's their problem. It's simple enough.
Mr. Towns. What I'm thinking about, see, most clinics or
most hospitals do not close down with everyone elated over the
fact that it's closing. It generally closes, and people are
upset, the union is involved, and everybody is mad. I can sort
of picture them throwing the records out the window. I think
that somewhere along the line we have to have a uniform way of
doing this as we move along. I don't know exactly what we need
to do, but I think it's something we need to investigate.
Mr. Finerfrock. I know you have a background in hospital
administration and medical records. I've heard you raise this
issue at other hearings, and I think you're right. This is not
the first time. I mean, a couple years ago I heard you raise
this issue.
The whole area of medical records is getting a lot of
attention now, in terms of privacy, and security, et cetera,
and computerization of medical records. I think you talk to the
health professionals and see. It's not something we've looked
at, but I think it's a serious issue. My understanding is that
each State handles it differently. It's an area that is
governed, at the current time, by State law.
Mr. Shays. Let me ask, before we close up, is there anyone
from the GAO's office here? Anyone from the Inspector General's
Office here?
I'm not going to ask you to come up. Thank you for staying.
Is there anyone from HCFA or the Health Resources and
Services Administration?
I just want to thank you for staying. I appreciate your
doing that, because the third panel deserves to be heard by the
people that ultimately impact your lives. So thank you for
staying.
Thank you all. We will call this hearing to a close.
[Whereupon, at 4:20 p.m., the subcommittee adjourned.]
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