But what you are saying is, if the situation told me more money would be made for home dialysis in my State, I would have to look the administrator in the eye and say: Well, you know, for the past 10 years we have pushed toward home dialysis, and we may have a few additonal patients for whom this is appropriate, but not many, and this is not going to be an area where money will be made.

Now, if you go to another place in which this potential has not been realized, I can conceive where that might be a successful venture. But I cannot predict this. To assume that all of our motivations are related to the economic aspects is not true.

As I said before, doctors have been trained how to diagnose illnesses and save lives. We have not been trained to be economists. That is a recent issue.

Chairman RANGEL. I am not talking about doctors. I did not make my question clear. I am assuming the doctor is an employee of a nondoctor.

Dr. RICHARD M. FREEMAN. All right, the doctor is an employee of the nondoctor.

Chairman RANGEL. The doctor's employer is a corporation with stockholders.

Dr. RICHARD M. FREEMAN. I see. I do not know how to answer that question.

Mr. NEWMANN. I might comment from a patient's point of view. One of the dangers of overstressing economic incentives in this whole area is the destruction of the doctor-patient relationship. One would hope that the mode of treatment and the location of treatment would be determined primarily by medical and appropriate psychological, personal and environmental grounds.

If patients are to be able to maintain a trust in their doctors to assist them in deciding where the best place for treatment is, the economic incentives for a corporation owning a facility must not override this important doctor-patient relationship.

Chairman RANGEL. Mr. Newmann, I could not agree with you more. But you are here trying to improve access, quality of care, and to make certain that arbitrary reimbursement rates are not set, right? That would damage the quality and access. There is nothing I would like better than to perfect the doctor-patient relationship. But I did not create these chains of dialysis centers throughout the country, and you as a patient cannot see the chairman of the board at the center where you are being dialysed.

It is not my fault. I am just asking. If the rate change comes in and your doctor is not able to make decisions-and I know the doctor has a code of ethics and everything else, but he has a job.

Mr. NEWMANN. Well, as came up in the national conference in the beginning of March, there were some who speculated that if the rates are not appropriate and people were being forced home inappropriately, unfortunately the answer may end up in some lawsuits as a result of patient deaths.

Chairman RANGEL. Let me inerrupt. First of all, I want all of the help I can get from patients and doctors that they are not forced to take home dialysis under conditions which for health reasons are not practical, health including physical as well as psychological. I do not want to interfere with what any doctor decides. If they make mistakes they have enough problems without having legislative oversight, all right.

I am concerned about creating incentives where it is practical perhaps to have home care, to have hospital care, to have site care. But nondoctors are making that decision, or it appears that the reimbursement would concern nonmedical people.

Mr. NEWMANN. If you are looking for incentives for patients, I do not know whether Margaret

Chairman RANGEL. Not patients, I guess. It is for patients to not be concerned about the costs, for patients to be confident that their doctor is giving them the best advice and treatment that is available, and that the doctor is not coerced, in order to make certain that the company, to be able to pay an adequate return for their investment to stockholders is not telling the doctor, you did not send enough people home.

You mentioned something about 40 to 50 percent of patients going home under CAPD.

Dr. RICHARD M. FREEMAN. What I mentioned is, it appears that of the new patients who entered dialysis somewhere between 40 and 50 percent are now going home for home dialysis, including home hemo as well as peritoneal dialysis.

Chairman RANGEL. What percentage is peritoneal dialysis?

Dr. RICHARD M. FREEMAN. I do not know what the breakdown is. I just know the total numerator and denominator. I just know there is a move toward home dialysis, which was not present 3 or 4 years ago, based upon HCFA's recent figures.

Chairman RANGEL. OK. Well, we are going to have a long day, and I hope for the record that, Mr. Newmann, you will be able to tell me, which has nothing to do with the present hearing, how patients would like to have the services available evaluated and how you can assist me in asking the administration to evaluate the costs of those services without getting involved in the doctor-patient relationship.

And you, doctor, I hope will be able to send some information to the committee as to when an administrator decides he is going to use the reimbursement rate to influence medical decisions, where the American Medical Association stands on that, without doing violence to the private sector and a free marketplace.

Dr. RICHARD M. FREEMAN. Gotcha.

Chairman RANGEL. And we will work with the kids later.
Thank you very much.

Are there other questions from staff?

Mr. MARTIN. Mr. Chairman, may I ask a question of Mr. Newmann?

Chairman RANGEL. I am terribly sorry. I apologize.

Mr. MARTIN. I have a question of Mr. Newmann. I arrived late. Mr. Newmann, you have asserted that there has been a high degree of cost in the end-stage renal disease program, and, there have been studies showing the cost per patient has declined in real dollars, if not in current dollars. There seems to be an apparent contradiction to that in your first recommendation where you recommend a specific adjustment for inflation in the calculations.

I wonder if you could expand on that a little bit? Why you would need to make an adjustment for inflation? If you have good data showing the real cost has declined, or has not risen as fast as inflation, then why would you want to raise the guidelines as fast as inflation? Apparently there is no need to if the first statement is correct.

Mr. NEWMANN. Currently the independent facilities have a reimbursement rate of $138, 80 percent of which medicare pays for. The proposed regulations are suggesting an average rate of $128. If you do the arithmetic, that is even incorrect. It gets down to about $124 on the average when you apply the methodology HCFA has proposed.

Our suggestion is, given the success of the program, given the fact that the increase in costs is due to increased numbers, not increased real costs per patient, the inflationary element involved in current costs in 1982 we suspect is not reflected in the methodology and rates proposed based upon 1977, 1978, and 1979 data.

At the very least, it seems reasonable to include that, so that if your estimates are accurate with what is going on in the economy this would not involve an increased per patient per year cost.

Mr. MARTIN. I understand your point about the number of patients increasing, and certainly that should be a factor. But you address the inflation rate. Presumably, you are wanting a Consumer Price Index adjustment.

Ms. DIENER. Congressman Martin, there have been a number of technological changes in the past 10 years. When our organization started in 1969, patients were normally dialyzed 12 to 15 hours a day. It is now down to about 4 hours per session.

The concern is, assuming there will be that kind of technological advance in the future, it may or may not occur, but to make that kind of assumption and simply say that inflation is not a factorMr. MARTIN. Has anything happened since 1977?

Ms. DIENER. I would let other technical people address that.

Mr. MARTIN. Are we doing everything today as we did in 1977? Because their claim is that the data base from 1977 to 1979 should be adjusted for inflation. If we have had some improvements in that time, then perhaps not?

Dr. RICHARD M. FREEMAN. I think the intimation is, why use old data to determine reimbursement in 1982?

Mr. MARTIN. Do you have current data?

Dr. RICHARD M. FREEMAN. No. That is the point. Why use the data from 1979 if it is available from 1980 to 1982.

Mr. MARTIN. Is it available?

Dr. RICHARD M. FREEMAN. It certainly should be. We send a lot of it in.

Mr. MARTIN. If it is available, then why make a point about adjusting for inflation? Why not just make a point about using up to date data.

Dr. RICHARD M. FREEMAN. That would be fine.

Mr. NEWMANN. The reason the point was made about adjusting for inflation was, we are often told by the data for current years is not processed. I think all of the centers are sending it in, but there have been problems with their management information system. Whatever data is used, we all agree should be relevant to costs in 1982.

Mr. MARTIN: The reasons that caught my eye, I am sure you are aware there are some other discussions going on up here on the Hill regarding the extent to which we have adjusted so many things to the Consumer Price Index that the adjustment has meant that those programs have risen in cost faster than other indicators, faster than the devaluation of the currency, faster than the in

crease in wages of those who have to pay taxes to support all of

these programs.

And some attempt is being made to tighten down on the use of easy cost-of-living adjustments.

Mr. NEWMANN. In this case, the proposed rule suggests a decrease of close to 10 percent, if you work out the methodology.

Mr. MARTIN. I would feel a lot better about going on the basis of the more recent data you have.

Mr. NEWMANN. So would we.

Mr. MARTIN. And still trying to encourage the optimum use of home dialysis and whatever mode would encourage that development, because that has been a contributing factor, is that not so, in the decreasing cost per patient?

Dr. RICHARD M. FREEMAN. There are many factors. That is one of many.

Mr. MARTIN. Has it been a major one?

Dr. RICHARD M. FREEMAN. I think it has been a major one. But there are other efficiencies which have helped, too. Many factors are involved.

Mr. MARTIN. Thank you, Mr. Chairman.

Chairman RANGEL. Thank you.

This has been a good panel. I hope your schedules will allow you to wait until the administration finishes their testimony.

The next panel is: Dr. John Capelli, chief of staff of Our Lady of Lourdes Hospital, Camden, N.J., on behalf of Catholic Hospital Association; and my friend and colleague, Congressman Norman Minetta is with us and will be introducing the next panelist; and Dr. Ann Thompson, director of division of renal disease, George Washington University Hospital; and Dr. Alan Gruskin, St. Christopher's Hospital for Children.

And the Chair recognizes Congressman Mineta.

Mr. MINETA. Mr. Chairman and members of the committee, I really do appreciate your indulgence-

Chairman RANGEL. I am terribly sorry. Robert Fortner, did I call Dr. Fortner, director of El Camino, on behalf of North California Hospital Dialysis Procedures? Very well.

STATEMENT OF HON. NORMAN Y. MINETA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. MINETA. Prior to my service here, I was a member of a hospital board of trustees for a number of years, and so I would like to at this time take the opportunity to introduce to you a friend, a person who has been the medical director of the El Camino Dialysis Services of Mountain View, North California, Dr. Robert W. Fortner.

Dr. Fortner is accompanied here today at the committee hearings by Mr. Donald Simmons, the manager of the El Camino facility. He is also here in his capacity as immediate past president of the National Renal Administrators Association.

The El Camino center is operated by the El Camino Hospital District. The center has a multifaceted program, including services to 64 patients at the facility and to 70 home patients. This mix of alternatives allows the physicians and the patients to jointly develop

a program of treatment that best meets the patient's needs at the lowest possible cost.

The center is one of the home dialysis training programs in our State. In fact, the first patient was trained by the center for home treatment in 1967, a patient whom I am happy to say is still alive 15 years later. In that period, the center has trained more than 300 home patients.

Now, I have been a great admirer of the El Camino program for a number of years. Dr. Fortner and Mr. Simmons have done an excellent job in developing a flexible program able to respond to each patient's unique needs. We all share, I believe, a support for the general principle of providing medical care at the lowest reasonable cost. We also share a sense that home dialysis is an important option that should be made available to renal patients.

How best to structure a set of Federal rules and reimbursement practices to encourage such treatment is of course a complex and difficult question. I am sure as the committee continues its consideration of these difficult matters, Dr. Fortner's and Mr. Simmons' background and experience will be of great help to all of you.

Again, Mr. Chairman, I appreciate this opportunity to introduce Dr. Fortner and Mr. Simmons. And I am quite sure their background and experience will be helpful to all of you, as it has been to me in the past.

Chairman RANGEL. The Chair and the committee would like to thank you for your introduction and your interest in this matter, and we will feel free to go to the Budget Committee on this. [Laughter.]

Mr. MINETA. That is right.

Chairman RANGEL. Dr. Capelli.

STATEMENT OF JOHN P. CAPELLI, M.D., CHIEF OF STAFF, OUR LADY OF LOURDES HOSPITAL, CAMDEN, N.J., ON BEHALF OF THE CATHOLIC HEALTH ASSOCIATION

Dr. CAPELLI. Thank you, Mr. Chairman, Mr. Pickle.

I am Dr. John Capelli, chief of staff and director of nephrology and transplantations at Our Lady of Lourdes Hospital, Camden, N.J. Today I speak for the Catholic Health Association with regard to the medicare end-stage renal disease program.

We support the concept of the dual composite rate as an incentive reimbursement system and as a stimulus to improve less costly levels of home dialysis care. However, the CHA is deeply disturbed over the basic thrust of these rules as proposed by HCFA and their effects upon patients, facilities, and physicians in the ESRD pro

gram.

In establishing a dual composite rate for ESRD services, Congress intended to promote a recognizable distinction in costs for hospitals and freestanding facilities. The CHA commends Congress for its appreciation of the legitimate cost differential between hospital-based and independent ESRD facilities.

Unfortunately, there was an equally clear intention by HCFA not to create a dual reimbursement rate for each type of provider, and further, there was to be an ultimate intent to phase out whatever separation in rates, as was expressed in the decision memorandum to Secretary Schweiker. This expressed goal by HCFA has very serious consequences.