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speech language pathology therapies and services amount to 1.5% of the average individual monthly insurance premium or $3.70. In light of the above, we have reviewed H.R. 3626 and the other two measures and wish to offer some specific comments. Our comments follow:


H.R. 3626


Coverage, Section 2113, Standard Benefits Package

We support the approach taken in the standard benefits package as defined in Section 2113 (b). It adopts the Medicare benefit package and adds services for children and pregnant women. This parallels current practice not only in Medicare, but also Medicaid and many commercial insurance plans.

The Medicare definition of a hospital references rehabilitation hospitals and the therapeutic services they provide. Medicare has traditionally covered inpatient and outpatient rehabilitation hospital services since its inception in 1965. See Sections 1861(b), definition of inpatient hospital services, and (e) definition of hospital, (s) definition of medical and other health services, (p) outpatient physical therapy services, (g) outpatient occupational therapy services, and (cc) definition of comprehensive outpatient rehabilitation facility.


Many Medicaid programs also cover inpatient and

outpatient rehabilitation hospital services. At least 75 percent of the states cover outpatient physical therapy and each state offers at least one outpatient rehabilitation service. See Sections 1902 (a) (10) and 1905 (a) (13).

Commercial insurers also recognize these services. The Health Insurance Association of America has issued two bulletins regarding the coverage of inpatient hospital services by insurance carriers. Finally, many Blue Cross and Blue Shield plans cover at least inpatient rehabilitation hospitals and units and the services they provide.

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Section 2103(c) (2) defines small employer

with 1-51 employees. We recommend that this number not be increased, and would prefer that it be decreased to 25 employees.

C. Community Rating

Section 2112 (b) allows insurers to make certain adjustments for premiums across small employers and requires community rating based on an area no smaller than a county. We support community rating over group rating to spread the risk and, ideally, to enhance the access for persons with disabilities.

D. Coinsurance and Deductibles Sections 2113(c) outlines the allowable deductible and coinsurance payments. We simply caution that these amounts may prove too high for some persons with disabilities.

E. Preexisting Conditions/Health Status In Section 2131 we support the provision on non-discrimination based on health status. We support the intent to limit exclusions for preexisting conditions to 6 months in Section 2132. However, we recommend that all preexisting conditions clauses be deleted to eliminate the possibility of lack of receipt of health care for


persons with disabilities and therefore the almost total bar to coverage these provisions create.

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Title IV, Section 402 (h) appears to require payment on the basis of Medicare rates. We have major concerns with the use of the current Medicare payment methodology Currently most rehabilitation hospitals and units are exempt from the Medicare diagnosis related group (DRG) based prospective payment system (PPS) under which most acute care hospitals are paid. They were excluded because the DRGS did not include data from rehabilitation hospitals and units and do not recognize diagnoses with long lengths of stay.



We have several concerns with the

of the current Medicare payment methodology. First, the current system, known as TEFRA, pays excluded facilities on the basis of cost subject to a ceiling limitation. Hospitals are designated a base year based on the date of exclusion from the PPS.

the end of the base year the Medicare costs are divided by the number of Medicare discharges to create a cost per discharge. This amount is updated annually, theoretically to recognize the cost of inflation. The maximum amount a hospital receives in subsequent years is the number of discharges times the cost per discharge. If the hospital's costs exceed this cost per discharge it loses money. If its Medicare costs are less it receives a small incentive payment. TEFRA is based on the presumption that all operations remain stable. It presumes that case mix, severity, utilization, and patient acuity remain stable; that the updates will be adequate to account for inflation and any changes; and that management can keep costs within the targets if there is any change. However, in reality, this is not true. The same assumptions on which TEFRA was based are now proving to be

its weaknesses. Case mix, severity. utilization, and acuity do change and cause facilities' costs to increase. The net result is that for a facility to stay below the limits it must cut length of stay. One way to achieve this is to take less complicated cases. Hence, there is inherent bias against admitting more complicated cases that could benefit from rehabilitation.



Therefore, recommend that TEFRA be changed to address the defects in the system for payment beyond Medicare at this time. Any such change must also recognize all the real costs of delivering health care that Medicare and the TEFPA system do not do. NARF is investigating possible patient classification systems that may lead to a way to estimate resource utilization and recognition of the full costs of treatment of Medicare patients. Second, Medicare currently covers the elderly and disabled. If expanded to all populations, any payment methodology would have to be amended considerably recognize

the medical needs and, therefore, costs of these new populations. These include pediatric cases, those who experience spinal cord and traumatic brain injury, and numerous other rehabilitation cases in the younger age groups.


Third, Medicare does not pay full costs under its current reimbursement principles which results in underpayments shifting to other entitities.

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commend your inclusion in the benefits package of several recognized screens and procedures which, when utilized, help detect disease early and thereby prevent death and serious illness. Rehabilitation plays a major role in


certain complications such

bed sores and deep vein thrombosis as examples.


We also support projects to determine the feasibility of expanding coverage for additional services such as cholesterol screening,


osteoporosis, and comprehensive assessment of persons between 65 and 75.

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We are concerned that the basic benefits plan in Section 103 does not state clearly that rehabilitation inpatient and outpatient hospital and other rehabilitation services are included. We support attempts to limit exclusion based on preexisting conditions as stated above and make the same recommendation here. We are concerned that allowing large employers to adopt the Med Access benefits plans may end up eliminating some of the excellent benefit plans offered by employers, which do cover rehabilitation services and persons with disabilities.

We have grave reservations about Section 131 and essentially requiring that all plans be in a cost controlled plan or a managed care plan.

Under current managed care plans for the non-elderly, our members find that many HMOs are not providing full and adequate coverage for inpatient and outpatient rehabilitation hospital and other outpatient rehabilitation services. In some quarters this is due to a fear of additional costs. Even the federally qualified HMOS that by federal regulation are to deliver 60 days of rehabilitation services often do not. The result is that the patient is not restored to an independent life when this may be possible. For many patients, this means transferring to Medicaid and then finding themselves dependent on services based on the lottery of which state they live in. Also, we have heard from our members in over 9 states that Medicare risk contracting HMOS will not inform enrollees about their rehabilitation benefits and send them to a less appropriate level of care, denying them a needed benefit that in many cases,


with the younger age groups, is medically necessary and required because of illness, injury, or their condition.


In Section 133, also oppose prohibiting laws that require specialists to review the work of specialists under a utilization review program. With respect to utilization review programs, we recommend that reviewers have experience and training for the area they are reviewing. This means that physical therapists must review the work of other physical therapists and physiatrists or other physicians with training and experience in rehabilitation must review the work of similarly qualified physicians. All too frequently this is not the case with disastrous results, i.e., a surgeon is not knowledgeable about the needs of rehabilitation patient.



III. H.R. 2121

In Section 5000B, we support the core benefits package which is the Medicare benefits package and refer you to the comments above with respect to H.R. 3626.

Our other comments on preexisting conditions, additional benefits are the same as above with respect to H.R. 3626.


We support the concept of reinsurance as a way to protect other plans and to assure that plans will address the services needed by individuals if they have injury


illness which incurs catastrophic costs. These include burns, congenital deformities in newborns, spinal cord injuries and traumatic brain injuries as examples only. Reinsurance is employed frequently by commercial insurers for these purposes now.

We would be pleased to discuss any

of these concerns and recommendations with you or your staff as we, as an association, the nation and the Congress face these major health care issues.

P.O. Box 17675. Washington. D.C. 2004) (703) 18.9300 • Fax: (703) 018-0,346

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James S Liljestrand. M.D.

Roben E Brabham. Ph.D.

Eric Director



The following are several principles for a reforned health care system as reviewed by the NARF Board of Directors. They are excerpted from an upcoming publication "Access Rehabilitation: A focus for the Health Care Debate."

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NO existing payment mechanisms Reet rehabilitation's needs exactly. There are number of principles against which to evaluate health care reform proposals. These principles all take into account that rehabilitation is, and should continue to be, an integral part of the health care system. They are:

A. Responsive
The needs of persons with disabilities must be taken into
consideration. Providers of care for persons with
disabilities and prevention of disability are an integral
part of any heath care system and must be considered in a
system and must be involved in all discussions about system

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Access to health care should be available for all people without regard to

age, income, disability or employment status.

C. - Coverage

Any benefit package Rust include the

appropriate rehabilitation components throughout the continuum of care. Rehabilitation is a vital part of the health care system and must continue to be so.

D. Quality Care
High quality care should be provided. Mechanisms that assure
the services meet appropriate standards of quality must be
included. These mechanisms might include measures of quality
of life, functional status, and social integration.
E. Compensation

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Any system should contain the rapidly rising costs of health
care delivery, insure more appropriate use of health care
services, and promote greater efficiency in the health care
delivery system.
G. Other

A health care system must include the following in a manner that isolates them from payment related to actual service delivery:


primary and secondary disability prevention;

2. health promotion;
3. public education and awareness; and
4. education and training of rehabilitation personnel.


The current system creates discomfort among all publics. Sporadic access to health care, limited resources, inconsistent coverage, and payment help highlight the need for reformed payment system. The principles outlined above suggest a set of characteristics which shouid be coordinated into any payment system. They need to be used in analyzing all proposals. The major characteristics specific to.a payment system for medical rehabilitation are:

A. Quality Promotion Any new system must promote high quality care. Outcomes would be

measure of effective quality. These measures could be developed over the next decade and include specific components of quality of life, functional independence, and social integration. Incentives would be balanced by quality component for the benefit of


receiving services. There would be no incentive to take easy cases disproportionately. B. Outcomes Focus

Outcomes would be a measure of a provider's services and continued ability to participate in

the payment system. Outcomes would be on an aggregate versus individual basis in o:der to avoid not taking difficult cases that have potential for important gains. Payment would not be withheld in individual cases that did not meet outcome targets.

For example, there is an outcome measure now under Medicare requiring that every two weeks the provider show the patient's improvement in order to continue coverage. Measures of outcome would be reproducible for patients and providers and be able

be reviewed for appropriate utilization.


c. Classification System

To effectively use outcomes in a payment system, patients need to be classified by those that have similar outcomes and resource use.

TWO of the variables to use in a classification system are severity of the medical condition and status of the functional compromise. It would include incentives to take more severely involved patients. D. Incentives

Any reform system would include incentives for efficiency. If facilities have incentives they can develop resources to relate to their mission. These would include incentives to take severe cases.

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Payments should be based on medical necessity of the event as apposed to being arbitrarily restricted amount, by setting, or period of time because of inadequate resources.


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