HEALTH PLANNING AMENDMENTS OF 1978 THURSDAY, FEBRUARY 2, 1978 U. S. SENATE, SUBCOMMITTEE ON HEALTH AND SCIENTIFIC RESEARCH, Washington, D.C. The subcommittee met, pursuant to notice, at 9:55 a.m., in room 5302, Dirksen Senate Office Building, Senator Edward M. Kennedy (chairman of the subcommittee), presiding. Present: Senators Kennedy, Pell, and Schweiker. Also present: Stuart Shapiro, M.D., professional staff member; Robert Wenger, J.D. counsel; Peter Harris, professional staff member: David Winston, professional staff member; and Polly Gault. professional staff member. Senator PELL. The Human Resources Committee will come to order. The chairman of our subcommittee, Senator Kennedy, has asked that I open the hearing in his behalf since he is presently testifying on the full employment bill. He will be here shortly, but as a matter of courtesy to the witnesses and for the sake of expedition, he asked me to get the ball rolling. We will now insert Senator Kennedy's opening statement in the record. [The statement referred to follows:] OPENING STATEMENT OF SENATOR EDWARD M. KENNEDY Senator KENNEDY. I am pleased to open a series of hearings on S. 2410, "The Health Planning Amendments of 1978" which I introduced last week along with Senators Schweiker, Javits, Randolph, Pell, and Chafee. These amendments build and strengthen the "National Health Planning and Resources Development Act of 1974," and should help us achieve a rational system of health planning so that every American will be able to receive quality health care at a reasonable cost. When the Congress enacted that historic legislation in 1974, it made the finding that "The achievement of equal access to quality health care at a reasonable cost is a priority of the Federal Government. Tragically, with the rapidly escalating cost of health care, we are perhaps further from that goal today than we were 3 years ago. National health expenditures tripled between 1965 and 1975. In fiscal year 1977 over $160 billion was spent on health care. Health expenditures now account for 8.7 percent of the GNP. The rate of increase was approximately twice the CPI for the same period. The costs of medicare and medicaid went up billions last year and the total Federal share of these health expenditures has now reached almost $50 billion. (1) Unfortunately, these increased costs, which come out of the pocket of every American, have not produced an adequate supply or distribution of health resources, and consequently have not made possible equal access for all to such resources. During the last session of Congress, the Human Resources Committee ordered reported S. 1391, "The Hospital Cost Containment Act of 1977, which included a short-term revenue limitation that would. in part, accomplish the deescalation of hospital costs. Unfortunately, movement on this important bill has slowed, but I am hopeful that early this year the revenue limitation portion of that bill will pass the Senate and then become law. At the time the health planning law passed in 1974, I don't believe that anyone claimed that it was perfect. Some charged that it hadn't gone far enough-for instance by not extending the certificate of need. requirements of expensive equipment to all sites. Others feared that it. went too far-by allowing, for example, ISA's to exercise control over the use of Federal funds in their respective areas. Now, after 3 years of experience with the law, we are in a position to say what has gone wrong and needs to be corrected and what has proven right and needs to be encouraged even more. The hearing today and the subsequent hearings will be important. Throughout the drafting of S. 2410, compromises were made, and I expect that the bill will be modified as we hear from a variety of thoughtful witnesses. In drafting the bill. I adhered to a basic belief that the planning process can work and thus have attempted to strengthen this processnot disrupt it. The past 3 years have been full of turmoil for those involved in planning for health care. It has taken more time than we anticipated for the health systems agencies, the State health planning and development agencies, and the State health coordinating councils to get themselves fully organized and functioning. The Department of Health, Education, and Welfare has been negligently slow in promulgating the required regulations and some of the working relationships between local and State agencies are still unclear. The bill that was introduced has purposely not mandated changes in board composition of the HSA's or the SICC's for fear of slowing down the process further. Unless there are very compelling reasons to tamper with those boards, I am not inclined to disrupt what have become, in most instances, stable relationships. The bill contains a number of provisions that will strengthen the role of consumers and the Governors alike. The requirements of the State health plan have been significantly modified and the Governor of each State and the consumer dominated SHCC must now both approve this plan. Once approved, this plan will be the foundation on which certificate of need decisions are based. This will foster closer coordination in the planning and review process and should help reduce the past arbitrariness of many certificate of need decisions. In like manner, the due process requirements have been strengthened to reduce potential discrimination against particular providers. Nationwide it has been estimated that we have as many as 100,000 unneeded hospital beds costing well over $2 billion a year. In order to equitably address this concern, the bill establishes a program that encourages hospitals to close, merge, or convert unnecessary facilities and services. This would be an entirely voluntary program and includes incentive payments to encourage planning, development and delivery of long-term care services, and other alternatives to hospital care. At these hearings, I also hope to hear other suggestions on ways to modify title XVI of the planning law in order to provide funds to insure that there are adequate private care centers, outpatient departments, and inpatient services in urban and rural poverty areas. There is no question in my mind that if planning is to work it must be generously funded. Without an adequate financial base, the local and State agencies will not be able to carry out their already extensive responsibilities. The bill provides this financial base and makes it easy for the HSA's and SHPDA's to get these funds. The HEW regional offices are already short staffed, and to change the funding formula from a per capita base to a discretionary project grant, seems to me to be giving more authority to the regional offices than they have the capacity to handle. I am hopeful that the witnesses today, and at subsequent hearings, will discuss constructive improvements in the planning process. The time for nay-saying rhetoric is past. Let us move forward in strengthening the planning process so that all Americans can have access to quality medical care at a reasonable cost. [The bill S. 2410 referred to follows:] 95TH CONGRESS 2D SESSION S. 2410 IN THE SENATE OF THE UNITED STATES JANUARY 23, 1978 Mr. KENNEDY (for himself, Mr. SCHWEIKER, Mr. WILLIAMS, Mr. Javits, Mr. RANDOLPH, Mr. PELL, and Mr. CHAFEE) introduced the following bill; which was read twice and referred to the Committee on Human Resources A BILL To amend titles XV and XVI of the Public Health Service Act to revise and extend the authorities and requirements under those titles for health planning and health resources development. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 4 SHORT TITLE: REFERENCE TO ACT SECTION 1. (a) This Act may be cited as the "Health 5 Planning Amendments of 1978". 6 (b) Whenever in this Act an amendment or repeal is 7 expressed in terms of an amendment to, or repeal of, a sec8 tion or other provision, the reference shall be considered to be 2 1 made to a section or other provision of the Public Health 2 Service Act. 3 TITLE I-REVISION AND EXTENSION OF NA 4 5 TIONAL HEALTH PLANNING AND DEVELOP- 6 SEC. 101. The last sentence of section 1511 (a) is 7 amended by (1) striking "if the Governor of each State" 8 and inserting in lieu thereof "if the Governor of any State" 9 and (2) striking "in order to meet the other requirements 10 of this subsection". 11 SEC. 102. Section 1511 (b) (4) is amended to read as 12 follows: 13 "(4) (A) The Secretary shall review on his own ini14 tiative or at the request of any Governor or designated health 15 systems agency the appropriateness of the boundaries of the 16 health service areas established under paragraph (3) and, 17 if he determines that the boundaries for a health service area 18 no longer meet the requirements of subsection (a), or if the 19 boundaries for a proposed revised health service area more 20 appropriately meet the requirements of subsection (a), he 21 shall revise the boundaries in accordance with the proce22 dures prescribed by paragraph (3) (B) (ii). If the Secretary 23 acts on his own initiative to revise the boundaries of any 24 health service area, he shall consult with the Governor of the 25 appropriate State or States, the chief executive officer or |