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11. De certification is an authority which state agencies must clearly have in order to be effective ($219(b)). However, future development of both substantive and procedural criteria must carefully prevent discrimination against public and inner city facilities which serve the poor.

them:

The following provisions should be modified to strengthen

1. The problem with the non-metropolitan residents language changed in $209(b)(2) is not the percentage but rather the definition of "non-metropolitan." Residents of remote rural underserved areas must be represented. We recommend that "medically underserved" areas as defined by HEW have mandatory representation (which would also include inner city areas).

2. Section 209(d)(2) concerning which family members are indirect providers should include every relative in the provider's household whether or not they are spouses.

3. As noted in our testimony, HSA support for consumers must go far beyond the requirements of $213. Consumer board and committee members must have special access to their own full-time staff independent of providers and the HSA technical staff. This consumer staff must prepare analyses in lay terms of the pros and cons of particular projects under review. Also, the consumer staff must have the resources and be required to conduct public information and consumer organizing activities for those not already involved in the HSA to compete with provider trade associations.

4. While we have no objection to the "batching," priority-setting approach to review contemplated by $218(b)(4), the language must require HSAs to actually use this approach to qualify for the one-year time period. Otherwise, they should be limited to 90 days.

5. Section 219(a) should allow HEW to require HSAs to conduct appropriateness review for major medical equipment, such as CAT scanners, in non-institutional settings, including physician offices.

There are several provisions we oppose. We urge that they be eliminated.

1. HSAs should not be allowed to accept funds from health insurers and use them as matching for Federal funds ($208). Where insurers are controlled by, or clearly allied with, providers, the HSA cannot be truly independent. This section allows providers to indirectly do what they are prohibited from doing directly.

2.

Former indirect providers must not be allowed to become consumers as soon as their indirect provider status ends ($209(d)(1)). This would allow the Executive Director of a county medical society to leave that position and immediately become a consumer on the HSA board. To the contrary, the waiting period should be extended to five years.

3. Ownership transfers or lease arrangements, even those which involve no change in services or capacity, should not be excluded from mandatory certificate of need coverage (section 218(b) (3) (A)). Who owns or operates a facility can have a major effect on the quality and appropriateness of services rendered, especially for nursing homes. Planning agencies must have the authority to look at the owner's record in other facilities.

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4. Section 225 provides that the health planning amendments will not be effective until a year from enactment-mid-1979 at the earliest. Most of the changes made by the bill are years overdue, and there is no reason to allow the problems to persist. The amendments should be effective within three months, with exceptions only for those requirements which actually require time to implement. Most of the amendments would not in any way disrupt the ongoing activities of the HSA. Even those which cannot be done immediately, such as training for board members, should be started without delay.

5. Loans and loan guarantees under Title XVI should not continue to be available for construction of new inpatient facilities ($301(b)), even where there is rapid population growth or where some beds have been closed. All regions now have some excess capacity to absorb population growth. There is virtually no possibility of closing too many hospital beds in any area.

The following provisions in the law are seriously in need of amendment but are completely absent from the bill:

1. As noted in our testimony, HEW has failed to publish promised regulations defining "broadly representative" of the population as it applies to the consumer component of HSA governing bodies ($1512(b)(3)(C)(1)). No mention is made of these regulations in HEW testimony before this Subcommittee or in the list of regulations under development. The failure of this Subcommittee either to compel HEW to issue regulations or to amend this provision in the statute is an effective endorsement of the current composition of HSA boards. The extreme and pervasive under-representation of women, the poor, the medically underserved, and those with special health problems completely undermines the effectiveness of and support for most HSAs. It is imperative that Congress act now to correct this problem by adopting amendments similar to those proposed by this group, the Consumer Coaltion for Health, and legal services groups.

2. Section 210 concerning selection of HSA board members should prohibit providers from being eligible to vote for consumer candidates in a general membership election. Providers, especially hospitals, have "packed" HSA elections in some areas, such as Los Angeles and Arkansas, by giving their employees time off and transportation to polling places to vote for "consumer" slates handpicked to be sympathetic to providers. Consumers should not represent provider interests.

3. Section 212(b) should be expanded to require that all HSA committees and SACS have consumer majorities. (Section 1512(b)(3)(C)(iv) now requires HSA committees to comply with all composition requirements "to the extent practicable.") In some HSAs, "technical" task forces dominated by providers have developed important sets of review criteria.

4. The law now provides no way for consumers to appeal HSA decisions which are followed by the State Agency. We recommend that any person who has given oral or written testimony or voted as an HSA member on an application under review have standing to appeal the decision to the State reviewing body. Otherwise, there is no way for anyone to challenge an arbitrary approval of an unnecessary project where the HSA and the SHPDA agree.

5. State agencies, which make final certificate of need and appropriateness review decisions, are not required to have consumer majorities. The individual or group which makes the decision is often dominated by providers. We recommend that the SHPDA decision-makers have a majority

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consumers or nominated by consumers and that they be appointed for fixed terms rather than serve at the pleasure of the Governor.

6. We have proposed that HSAs and State agencies pay the costs of intervention for consumer groups which are technically qualified, have no vested interest, and are otherwise unable to afford to prepare analyses of projects under review.

7. As noted in our testimony, there ought to be a moratorium on non-emergency capital expenditures until States are in full compliance with certificate of need requirements and have completed their State Health Plan and State Medical Facilities Plan. After that, there should be a dollar ceiling. This is similar to the approach taken in the Hospital Cost Containment bill which was approved by the Senate Human Resources Committee last year.

8. There are still several gaps in mandatory coverage under State certificate of need programs. Federal facilities are entirely excluded.

It is discriminatory to cover other facilities which serve out-of-area residents and provide specialized services (e.g., children's hospitals) and exclude those operated by the Federal government. At a minimum, the Federal agency should have to provide public, detailed, written justification for not following an HSA or SHPDA planning decision.

Closure of services, either voluntarily through incentive payments or by decertification, should be reviewed by HSAs and State agencies according to strict criteria which assure that public and inner city hospitals are not discriminated against and low-income patients are not denied access to necessary services.

Finally, HEW should be given authority to require review of equipment which doesn't meet the capital expenditure threshold but nevertheless has a major impact on operating costs. (Such a provision was considered during markup of the Hospital Cost Containment bill in this Subcommittee last year.) Examples are the CAT scanners now being marketed for less than $150,000 and fetal monitors.

RENAL PHYSICIANS ASSOCIATION

ONE IBM PLAZA SUITE 3100

CHICAGO, ILLINOIS 60611

February 20, 1978

Senator Edward M. Kennedy
Chairman, Health Subcommittee
United States Senate

431 Russell Senate Office Building
Washington, D.C. 20510

Dear Senator Kennedy:

The Renal Physicians Association seeks the opportunity to present the following statement as a matter of record concerning the hearings and deliberations of The National Health Planning and Resources Development Act (PL-93-641).

It is our desire to comment first on the program in a general way, relative to certain basic concepts concerning the law, its goals and their impact, and then in a specific way as it relates to the Medicare ESRD Program enacted under PL-92-603.

General Considerations

The basic concept of this law was to establish local Health Systems Agencies, whose function was to contain the spiraling costs of health care through a system of coordinated planning for health care. To this end, the HSA would plan for needed services, permit orderly and progressive development of services, set standards which would either upgrade services or lead to their deletion, and prevent duplication of unnecessary services and facilities. The very essence of the law, i.e., to halt costly duplication and unneeded services is, in itself, and example of what the Medicare ESRD Program set about to prevent - duplication of already existent planning services. Much in the way of health planning was either developed, or in the process of being developed at the State level when the law was enacted. Thus, the Federal Government not only duplicated a program already in place in many areas, but did it at great cost to the taxpayer.

Should all the HSAs ultimately receive designation, the cost to the health care system will be additional billions. We believe Congress should study the cost-benefit ratio of this multi-billion dollar program the same way they are demanding such analyses of health care providers for new services, equipment, and programs - until now that has not happened.

Secondly, the HSAs are faced with tasks that simply are not achievable through a body of volunteer and unskilled individuals who now operate them, and who have little or no knowledge about health care, health planning, cost analysis, cost-benefit ratios, and the other myriad of complex factors which are the components of the health care system.

Further, in many areas of the country, it has become evident that the HSAs

Senator Edward M. Kennedy

February 20, 1978

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have not drawn upon knowledgeable experts in specific fields before embarking upon program activities within their HSPs, resulting in unreasonable and imprudent goals.

Thirdly, the composition of HSA Boards have become a crazyquilt. The manner of selection to the boards is variable from HSA to HSA, and in some instances, reflect local political controls and influences. A standardized system of board selection should be adopted in which all major providers of care, institutional and physician, are given a balanced voice on the board.

The exclusion of major institutional providers of care from a voice on the board and policy making decisions is hardly a fair way to implement a health care program at the local, regional, as well as national level.

There is a major fallacy in the entire concept of "consumer" representation, as a majority body on HSA Boards. Not only is health care planning placed in the hands of unskilled individuals, but, as Medicare Director Thomas Tierney recently stated at the Blue Cross-Blue Shield Health Economics Conference in January, the "...true consumer (of health care) is the prescribing physician." Yet, physician representation on the HSA Boards and various planning functions represent less than 10% of the board composition as a national survey shows.

Consequently, the majority of board members of HSAs, as presently designed, should be changed so as to reflect a proper balance for that which is necessary for effectiveness in the health care field. Simply, all major institutional providers should be given a seat on the HSA Board by mandate, along with representatives of the physician community so as to constitute a majority of board members, not a minority as exists presently.

The proposed amendment to extend certificate of need legislation to physicians' offices is not only an intrusion into the ability of an individual physician to practice his specialty and provide necessary care to his patients, but it remains unlikely as a way to achieve cost savings. Historically, treatments and diagnostic procedures are far less costly in an individual practitioner's office than in an institutional setting.

Further, the proposed CON amendment is pegged at $150,000. It would not be long before that figure would be reduced to include equipment less costly than that amount. The individual physician who wishes to practice, for example, sophisticated ophthalmology, could easily exceed these arbitrary figures and he would easily be excluded from practicing his specialty in an office setting.

The concept is wrong and the desired effect would, in the end, drive up costs because it would eliminate a now competitive side of the health care market by concentrating certain equipment and procedures in high cost settings. In addition, the expenditure for equipment purchase does not involve public funds, and should not be subject to controls directed at such funds.

The relationship of HSAs to State Health Departments will continue to be one of increasing identity struggle. The HSAs, with federal funding and the force of federal regulations, have already exerted authority in areas not properly within their realm.