[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]





                        QUALITY CARE FOR SENIORS

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON CRIMINAL JUSTICE,
                    DRUG POLICY, AND HUMAN RESOURCES

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 10, 2000

                               __________

                           Serial No. 106-188

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                   U.S. GOVERNMENT PRINTING OFFICE
70-277                     WASHINGTON : 2001


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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                    Lisa Smith Arafune, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

   Subcommittee on Criminal Justice, Drug Policy, and Human Resources

                    JOHN L. MICA, Florida, Chairman
BOB BARR, Georgia                    PATSY T. MINK, Hawaii
BENJAMIN A. GILMAN, New York         EDOLPHUS TOWNS, New York
CHRISTOPHER SHAYS, Connecticut       ELIJAH E. CUMMINGS, Maryland
ILEANA ROS-LEHTINEN, Florida         DENNIS J. KUCINICH, Ohio
MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
STEVEN C. LaTOURETTE, Ohio           JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
DOUG OSE, California                 JANICE D. SCHAKOWSKY, Illinois
DAVID VITTER, Louisiana

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
           Sharon Pinkerton, Staff Director and Chief Counsel
                          Lisa Wandler, Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 10, 2000...................................     1
Statement of:
    Altenhof, Lorraine, medicare recipient.......................     6
    Altenhof, Patricia, daughter.................................     5
    Borror, Kelly L., administrator, Lutheran Homes, Inc., Fort 
      Wayne, IN..................................................    33
    Collins, Dorothy Burk, Regional Administrator, Health Care 
      Financing Administration, Department of Health and Human 
      Services, Region V, Chicago, IL............................    65
    Knapp, Dennis L., president and executive officer, Cameron 
      Memorial Community Hospital, Angola, IN....................    26
    Miller, Thomas D., president and executive officer, Lutheran 
      Hospital of Indiana, Fort Wayne, IN........................    15
    Schroeder, Dr. Barbara M., president, Fort Wayne Medical 
      Society, Fort Wayne, IN....................................    54
    Tobalski, Jim, senior vice president community relations, 
      Parkview Health System and Parkview Hospital, Fort Wayne, 
      IN.........................................................    58
Letters, statements, etc., submitted for the record by:
    Altenhof, Lorraine, medicare recipient, prepared statement of     8
    Borror, Kelly L., administrator, Lutheran Homes, Inc., Fort 
      Wayne, IN, prepared statement of...........................    35
    Collins, Dorothy Burk, Regional Administrator, Health Care 
      Financing Administration, Department of Health and Human 
      Services, Region V, Chicago, IL:
        Information concerning write-offs........................    81
        Prepared statement of....................................    67
    Knapp, Dennis L., president and executive officer, Cameron 
      Memorial Community Hospital, Angola, IN, prepared statement 
      of.........................................................    28
    Miller, Thomas D., president and executive officer, Lutheran 
      Hospital of Indiana, Fort Wayne, IN, prepared statement of.    19
    Schroeder, Dr. Barbara M., president, Fort Wayne Medical 
      Society, Fort Wayne, IN, prepared statement of.............    56
    Tobalski, Jim, senior vice president community relations, 
      Parkview Health System and Parkview Hospital, Fort Wayne, 
      IN, prepared statement of..................................    61

 
                        QUALITY CARE FOR SENIORS

                              ----------                              


                         MONDAY, APRIL 10, 2000

                  House of Representatives,
Subcommittee on Criminal Justice, Drug Policy, and 
                                   Human Resources,
                            Committee on Government Reform,
                                                    Fort Wayne, IN.
    The subcommittee met, pursuant to notice, at 9 a.m., at the 
John F. Young Center, 2109 East State Street, Fort Wayne, IN, 
Hon. John L. Mica (chairman of the subcommittee) presiding.
    Present: Representatives Mica and Souder.
    Staff present: Sharon Pinkerton, chief counsel; and Lisa 
Wandler, clerk.
    Mr. Mica. Good morning. I'd like to call this meeting of 
the Subcommittee on Criminal Justice, Drug Policy, and Human 
Resources to order. Today's hearing is a congressional field 
hearing entitled, ``Quality Care for Seniors. Are HCFA and its 
contractors managing health care efficiently and fairly?''
    By way of introduction, I'm the chairman of the 
subcommittee, John Mica, and I'm pleased to be here this 
morning at the invitation of Congressman Souder, who has 
probably been one of the most active and effective members of 
the Government Reform Committee in the House of 
Representatives. I have enjoyed working with him, and we are 
conducting this investigation as an oversight hearing in Fort 
Wayne at his request this morning.
    I'll open the hearing with an opening statement, and then 
yield to Mr. Souder. Without objection, the record will be left 
open for 2 weeks. That's so ordered. Anyone who would like to 
submit testimony for this hearing is welcome to do so 
contacting Mr. Souder for this subcommittee, and we will make 
your statement part of the official congressional record.
    We'll then proceed today with two panels. We have witnesses 
in two panels. And there being no other business at this time, 
I will proceed with my opening statement.
    Today, I'm pleased to convene this hearing to examine the 
impact of Health Care Financing Administration, which is also 
referred to as HCFA's regulations which they're having on 
health care providers and ultimately who needs good health 
care, and that is our senior citizens not only in Fort Wayne, 
IN, but throughout this country.
    Medicare has become one of the most complicated programs 
run by the Federal Government. In fact, the Mayo Clinic, a 
well-respected medical group, has counted more than 130,000 
pages of laws, rules, manuals, instructions, alert notices that 
govern the delivery and the payment for health care services. 
It's no wonder that senior citizens, health care professionals, 
vendors and others who care for our senior citizens and those 
in need of health care are tormented by the restrictions under 
which they are forced to function. Their hands are tied by what 
appear to them as sometimes meaningless and arbitrary red tape.
    In 1997, Congress enacted landmark changes to the Medicare 
program, which were contained in the Balanced Budget Act. Many 
of these changes were designed to provide more beneficiary 
choices and to help guarantee the solvency of the Medicare 
program well into the 21st century. The good news is that many 
of the objectives of that legislation have been accomplished. 
Wasteful spending is down, the Medicare program itself is more 
secure, and many of our Nation's elderly have expanded 
preventative benefits and increased choices for accessing 
quality health care.
    Also, the Department of Health and Human Services' 
Inspector General has reduced the amount of money lost to fraud 
as a result of having new tools available to tackle that 
problem. However, as we've learned during the past few years, 
the Balanced Budget Act has also had some unintended but 
nevertheless troubling consequences. In some cases, providers 
and hospitals were pressured for more savings than were 
originally anticipated under the law. In other cases, HCFA--
again, our Health Care Financing Agency--has failed to act in 
the interest of seniors or in accordance with congressional 
intent and sometimes sent out confusing messages or response. 
Congress has learned about these problems from many 
communities, and I applaud Congressman Souder for bringing our 
subcommittee here to help evaluate the impact of Federal 
regulations on his community. I think he's also doing a service 
to the country, because what we see here in Fort Wayne, IN is 
no different than what we face in Florida or across our Nation.
    As a result of some of the feedback that Congress has 
received, Congress passed legislation 4 months ago which we 
hope will address some of these problems. Our goal today is to 
gather more information and help ensure that your concerns here 
in Fort Wayne are considered both by HCFA, the Federal 
administering agency, and also by the U.S. Congress. We hope to 
do that as Congress decides how best to ensure that our 
Nation's citizens have access to quality, affordable health 
care.
    Today, we'll hear from the entire range of those 
individuals and agencies involved in providing health care from 
our Federal Government, again HCFA, to the hospitals and other 
providers, right down to the patient who is really the major 
concern of our health care service system. I'm hopeful that 
HCFA will be sensitive to the concerns and issues put forward 
today by the providers and also by the patients. If these 
concerns can be resolved administratively, HCFA should take 
action now. If further refinements are needed to be made by 
law, then Congress should act to make them.
    With health care of seniors at stake, we need to ensure 
that the Medicare Program is working as we intended it to work. 
This is certainly an issue which requires the attention and the 
oversight of the U.S. Congress and the House of Representatives 
and particularly our committee, which is an investigation and 
oversight subcommittee of the U.S. House of Representatives.
    I wish to again personally thank Congressman Souder for his 
request, for his perseverance in getting to the bottom of this 
matter and also making one of the most important things we do 
in our Federal Government work, and that's make certain that 
our seniors and others who rely on health care can get that 
service and have access to that service, and those who are 
providing that service know that the rules are set up in a 
fashion to make certain that all that is done cost effectively 
and efficiently and for the benefit of the patients.
    We'll yield at this time for the purpose of an opening 
statement from the gentleman from Indiana. Mr. Souder, you're 
recognized.
    Mr. Souder. I thank Chairman Mica. It's a great sacrifice. 
He comes here from Daytona Beach and Orlando----
    Mr. Mica. Yes.
    Mr. Souder [continuing]. Where the combined----
    Mr. Mica. Great sacrifice. It was almost 80 degrees this 
weekend and the sun shining.
    Mr. Souder. It isn't----
    Mr. Mica. Thank you again for the invitation.
    Mr. Souder. It isn't always 30 degrees on April 10th, but 
it's enough that many of us this time of year visit Florida. 
This hearing today really arose out of a series of town 
meetings and could prove to be a series of hearings examining 
issues and problems related to the Health Care Financing 
Administration's Medicare guidance and reimbursement practices 
and the impact of those policies on the health care industry 
and health care beneficiaries, because I hear from many of my 
colleagues similar concerns around the country.
    HCFA's responsibility for administering the Medicare 
Program is undoubtedly a large and complicated one. With 39.5 
million beneficiaries and 870 million claims processed and paid 
annually, it is reasonably expected that errors will occur in 
processing payment. Additionally, the Balanced Budget Act of 
1997 restructured the program immensely to ensure the program's 
solvency. As such, the program has certainly experienced 
numerous changes. While it is true that the Balanced Budget Act 
included provisions to ensure the solvency of the Medicare 
program into the 21st century, it is also true that the core 
mission of HCFA to assure health care security for 
beneficiaries was intended to remain intact. Congress is aware 
of the unintended consequences that resulted in the Balanced 
Budget Act and the effect it has had on the health care 
industry. Those issues are currently being addressed in 
Congress, and we passed several measures last year, and several 
bills have been introduced to further alleviate the pressures 
felt by the health care industry and its recipients as a result 
of those consequences because, in fact, when reimbursement or 
these questions arise, the hospitals and health care providers 
usually do one of two things: They either reduce benefits to 
the beneficiaries or shift costs to other families. And that's 
been one of the primary ways health costs have been rising in 
this country; it is because of the cost shifting that occurs 
when the Federal Government doesn't adequately reimburse for 
other costs.
    We're not here today to contemplate the far-reaching 
effects spurred by the Balanced Budget Act; we are here to 
discuss the perceived changes of the Medicare policies, 
including those that involve diagnostic screening, pre-surgical 
testing and reimbursement issues. In February 2000, I held 27 
town meetings throughout northeast Indiana. During the course 
of those meetings, numerous Medicare patients expressed 
concerns about information they had received indicating 
Medicare would not cover certain pre-surgical tests. When asked 
what a patient should do when his or her doctor ordered a test 
for which Medicare ultimately denied payment, I could not 
answer. For example, one person said they had started the 
testing process. It was now being denied. They didn't have 
enough money to finish out the tests. ``What am I supposed to 
do?'' She said, ``Mark, what am I supposed to do now?''
    Both my mom and mother-in-law are on Medicare, and I feel 
the pressures in my own family, as well. When asked why 
Medicare would refuse payment for tests a doctor deemed a 
necessity, I simply didn't have an answer. I mean, I could 
guess, but I wanted to find out what at core was the problem. 
Appearances suggested that what a medical professional 
perceives as medically necessary does not always coincide with 
what HCFA, the Health Care Financing Administration, and its 
carriers define as medically necessary. It is my hope that such 
appearances will prove to be false.
    We are here today to listen to information from a wide 
range of health care affiliates from one end of the spectrum to 
the other. Our goal is to begin to untangle the confusion 
surrounding the Medicare program in northeast Indiana and 
define for Medicare recipients the policy issues at hand. 
Nobody's assuming any malicious behavior on anybody's part. 
HCFA is trying to make very difficult budget decisions as are 
health care providers, and we want to make sure there is a fair 
process so that everybody is covered in as cost-effective way 
as possible.
    I'd like to thank the subcommittee chairman, Mr. Mica, for 
his efforts in investigating this issue, and I'd also like to 
thank those who came and testified today for their valuable 
time. Also want to say a last word about my friend, Mr. Mica. 
He, like I, was a Senate staffer prior to getting elected to 
Congress. He was elected to the House before me, had a number 
of years in service there and has been leader in a number of 
issues, including health care. But, as our No. 1 leader on our 
drug task force in this country on anti-drug abuse, we have 
travelled to Columbia and Mexico together many times. We've 
been at hearings around this country, and we've worked with 
many other issues facing families and children, as well, and I 
very much appreciate his national leadership on that. And as we 
tackle these difficult health issues in addition to the drug 
abuse problems, I hope we can have a similar impact.
    I yield back.
    Mr. Mica. Thank you.
    Now to proceed with our first panel. Our first panel 
consists of Ms. Lorraine Altenhof, and she is a Medicare 
recipient. She's accompanied by her daughter, Patty Altenhof. 
We also have Thomas D. Miller, who's president and chief 
executive officer of Lutheran Hospital of Indiana, Fort Wayne, 
IN, and Dennis L. Knapp, another witness. He is president and 
chief executive officer of Cameron Memorial Community Hospital 
from Angola, IN; and Kelly L. Borror, administrator of Lutheran 
Homes in Fort Wayne, IN.
    I don't believe you've testified before our subcommittee or 
before our Government Reform Committee before, this is an 
investigations and oversight subcommittee of the House of 
Representatives. In that capacity, we do swear in our witnesses 
and in just a moment, I'll ask you to stand and be sworn.
    Additionally, we try to limit your oral presentation before 
the subcommittee to, approximately, 5 minutes. We'll wind the 
clock on you here and ask you to try to summarize around 5 
minutes. You can, upon request, submit an entire statement, 
which will be printed and part of the official record of this 
congressional hearing. At a simple request, we will grant that.
    And, as I said, we're leaving the record open of this 
hearing for 2 weeks. We cannot possibly hear everyone who would 
like to speak in this hearing, but we do allow submission of 
testimony upon a request to the committee or Mr. Souder at this 
point to be made part of the record.
    So those are some of the ground rules for our hearing 
today. We'll proceed first by having you stand and be sworn.
    [Witnesses sworn.]
    Mr. Mica. Since the answer is in the affirmative, we'll let 
the record reflect. I'm pleased this morning to welcome both 
Lorraine Altenhof and her daughter, Patty Altenhof. I 
understand we're going to have one of you provide testimony and 
the other available for questioning. You're recognized.
    Ms. Lorraine Altenhof. How should I----
    Mr. Mica. However you'd like to proceed. Just recognize 
yourself for the record.

            STATEMENT OF PATRICIA ALTENHOF, DAUGHTER

    Ms. Patricia Altenhof. My name is Patricia Altenhof, and 
this is a letter my mother received from Parkview Hospital 
right before she was scheduled for surgery. The letter reads:

    Dear Medicare Recipient: Changes to Medicare occur 
frequently and they can be confusing. This letter describes one 
of these changes. We hope this explanation helps.
    Medicare has always had a regulation that it will only pay 
for what is medically necessary. Its definition of this term is 
``a service that is ordered by a physician for the diagnosis or 
treatment of an illness or disease.'' Medicare recently changed 
this interpretation on what tests they will cover, now 
disallowing any service that is considered a screening that is 
not specifically identified by Medicare as a screening for 
which it will pay. Among screenings that Medicare does allow 
are the mammogram and Pap test for women and PSA prostatic test 
for men.
    Screenings considered not covered by Medicare include pre-
surgical testing (the tests that hospitals or ambulatory 
surgery center does before your surgery). The anesthesiologist 
must have the pre-surgical test results to know how you will 
tolerate general anesthesia; many potential problems are 
identified as a result of this testing; however, Medicare does 
not define this testing as a covered service.
    Medicare's decision is very narrow and does not take into 
account such issues as family history for a disease or exposure 
to certain elements that cause a disease. Therefore, even 
though Medicare deems that a test is not covered, that test may 
still be very necessary from your physician's point of view. 
Nonetheless, if the test is not covered under Medicare's 
definition, they will not pay, despite the fact that your 
doctor ordered the test.
    When your physician orders a test for which Medicare will 
not pay, he or she has a sound medical reasoning for 
investigating a possible health hazard that could cause 
problems for you. If this is the case, you are still 
responsible for any charges resulting from such tests. At the 
time of service, you will be asked to sign a document which 
notes that this information has been explained to you and that 
you take financial responsibility for the service being 
provided for which Medicare does not pay. In addition, Medicare 
will not allow hospital or health care facilities to provide 
these services free of charge.
    Hospitals and laboratories work closely with your doctor to 
ensure that Medicare covers every test possible. However, there 
will be times when you will be required to pay for these 
services since Medicare does not cover them.

       STATEMENT OF LORRAINE ALTENHOF, MEDICARE RECIPIENT

    Ms. Lorraine Altenhof. As soon as I received that letter--
--
    Mr. Mica. Could you identify yourself again----
    Ms. Lorraine Altenhof. Alright, I'm Lorraine Altenhof.
    Mr. Mica. Thank you.
    Ms. Lorraine Altenhof. And this letter came to me about 2 
or 3 weeks before my surgery was scheduled. I was operated on 
March 1st, and I had subclavian bypass and carotid artery. And 
when I called Medicare, the girl there told me that the doctors 
and hospitals should not use the word ``pre-op.'' She said if 
they would just use the word ``diagnosis,'' Medicare will pay 
it. So I said OK.
    So I called the Parkview Hospital, and I talked to a gal 
there. And she said, ``We can't.'' I told her what the girl at 
Medicare told me, and she said, ``Well, we can't do that. 
They'll get us on fraud.'' I told it to my doctor, Dr. Sanford, 
and he said the same thing. He said, ``We can't do that'' and 
``They would get us on fraud.''
    So at the Parkview, when I talked to this gal, she told me 
that, in the past, if Medicare didn't pay for something, the 
hospital would write it off and take the loss. But now she's 
telling me that Medicare's saying that the patient must pay it. 
And I said, ``Well, how much money are we talking about?'' And 
she said, ``From $200 to $250 for those tests.'' And I said, 
``Well, what if you don't have the money to pay for it?'' She 
said, ``Well, I don't know what to tell you.''
    And I don't understand why Medicare has the right to tell a 
hospital whether or not they want to write something off for a 
Medicare patient. What right does Medicare tell them they can't 
do that? I don't understand that. And I was really very upset. 
And, so far, all I've received from my--I have supplement 
insurance with Medicare, and all I've received so far is one 
statement, and on it was an $11.07 charge that Medicare did not 
pay. So I called my supplement insurance company and asked them 
what that charge was for, and she said it was for a chest x-
ray, which I had to have a chest x-ray, a blood test and an 
EKG.
    Now, I don't want anybody operating on me without that 
test. And I don't understand why, if they're calling it a 
screening, why it should--why can't they change the word? Why 
use it as a screening? Those are necessary. You don't want a 
doctor operating on you without that. So, anyway, I just wanted 
to come here and say those things, because I don't understand. 
And then the girl at Medicare also told me that ``Congress 
makes the rules,'' she told me, and ``We have to do what 
Congress says.'' That's what I was told. And those are her 
exact words.
    Mr. Mica. But----
    Ms. Lorraine Altenhof. And----
    Mr. Mica. If you had something else to add, go right ahead.
    Ms. Lorraine Altenhof. No.
    Mr. Mica. Well, we appreciate your testimony. We appreciate 
your also coming forward to our congressional subcommittee to 
provide us with your personal experience. What we're going to 
do is hear from these other individuals, and then we'll come 
back and we'll ask questions.
    [The prepared statement of Ms. Lorraine Altenhof follows:]

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    Mr. Mica. At this time, I'm going to Thomas D. Miller, 
president and chief executive officer of Lutheran Hospital of 
Indiana. You're recognized, Mr. Miller.

STATEMENT OF THOMAS D. MILLER, PRESIDENT AND EXECUTIVE OFFICER, 
          LUTHERAN HOSPITAL OF INDIANA, FORT WAYNE, IN

    Mr. Miller. Thank you, Chairman Mica and Congressman 
Souder, for taking time out. Chairman Mica, if it's 80 degrees 
in Florida, I would suggest that it's minus 10 degrees in 
health care today in hospitals. And let me tell you that I 
appreciate you folks doing quality care for seniors, but let me 
give you an overview of what hospitals see from Medicare.
    Medicare spending for the last 3 years has been flat while 
Medicare senior population has grown by 3\1/2\ percent a year 
and inflation has grown by 2.6 percent. Part A, which is the 
Hospital Trust Fund, spending fell by 4.4 percent last year and 
4.5 percent in the first quarter of fiscal year 2000. Congress 
intended on saving $103 billion for 1998 through 2000 through 
the Balanced Budget Act, but, due to dramatic cuts and 
regulation changes, has determined that they now saved $227 
billion, twice as much as what was intended.
    Since November 22nd, the day Congress recessed, Medicare 
spending projections have dropped by another $62 billion for 
fiscal year 2000 to 2004. The additional cuts in the program 
have been done without a single vote. Hospitals are faced today 
with an unprecedented struggle to stay viable.
    For background purposes, Medicare represents the single 
largest payer for hospitals throughout the country. In Indiana, 
46 percent of the patients discharged are Medicare patients, 
and when you look at the illnesses of those Medicare patients, 
roughly 60 percent of the revenues that go through hospitals. 
This is according to the Indiana Hospital Association. Also, 
according to that, Medicare only reimburses hospitals in 
Indiana 82.1 percent of our costs. Not of our charges; of our 
costs. When combined with the additional cuts that were not 
included into these numbers, you can understand that a crisis 
has developed. Medicare is our largest payer, but has become 
our most unreliable. Policy and regulation changes are ongoing 
without concern for a hospital's ability to implement changes 
or without regard to the quality of care for our seniors. The 
concern only appears to be money. The current regulations have 
shown a unique ability to be successful in this practice.
    Two recent changes that occurred involving Outpatient 
Perspective Payment System, which I'll refer to as APC, and the 
encouraged use of Advanced Beneficiary Notification that Mrs. 
Altenhof has mentioned. APCs are a new and unique way to 
reimburse hospitals for outpatient services. HCFA's indicated 
for years that these changes were coming and that they would be 
in effect July of this year. Unfortunately, until this past 
week, they didn't publish the guidelines that they've been 
working on for over 10 years. It appears that HCFA is 
interested in meeting a deadline here of July 1st more than 
whether hospitals can adjust to the new payment methodology. It 
is interesting that HCFA is implementing these changes when the 
intermediaries have indicated that they cannot pay the hospital 
under this system due to lack of time. If the interest is to 
further place hospitals in a position where incorrect bills are 
sent so that the term ``fraud'' can be used, the current 
practice with APC will be successful. I would suggest a focus 
should be placed upon making the infrastructure changes that 
need to take place before regulations are changed.
    One hears regularly that there is rampant fraud in health 
care and it's costing the government billions of dollars. Using 
the APCs as an example, the problem is not as much a problem of 
hospitals billing accurately, as it is a problem of changing 
regulations and processes that the hospital can't adjust to. It 
is merely impossible to accurately implement a total outpatient 
reimbursement methodology within 90 days of last week when the 
total information systems have to be installed at our hospital 
that haven't even been written yet because the guidelines were 
just established.
    In regard to the Advanced Beneficiary Notifications, this 
change has taken place over the last few months, and it 
involves outpatient tests that HCFA determines to be not 
medically necessary or screening and as such are not covered 
under Medicare. Just so that you understand the regulations, 
Medicare holds the provider liable for non-coverage of services 
if it is determined that the provider either, one, had the 
actual knowledge of the non-covered services of a particular 
case or, two, could reasonably have expected to have such 
knowledge. In general, providers should have known a policy or 
rule if the policy or rule is in a Federal Regulation, Medicare 
manual or in other publications.
    This statement is being used to hold providers accountable 
for all regulations and a reasonable interpretation of the 
regulations by HCFA before they bill. One can already see how 
easy it is for HCFA to make a policy for which compliance is so 
difficult, specifically APCs where 1,000 pages in the initial 
regulations of which hospitals have to communicate to 
physicians and all of our billing staff the accuracy of all 
aspects of 1,000 pages.
    Regarding ABNs, the local Medical Review Policy provided 
guidance on whether or not it is covered and under what 
clinical circumstances considered reasonable, necessary and 
appropriate for the diagnosis and treatment of illness or 
injury. Providers who knowingly bill services as covered that 
are--I'm using the word that is in the manual--clearly not 
covered are, according to the local Medical Review Policy, 
considered to be knowingly submitting a false claim. They may 
be subject to civil monetary penalties of $10,000 per claim.
    The word that is more disturbing in the regulations is the 
use of the word ``clearly.'' I personally find very little in 
regulations that are clear. With this as a basis, the following 
was issued in December 1999, Part A news,

    Providers are encouraged to provide their patients with an 
Advanced Beneficiary Notification or Hospital-Issued Notice of 
Non-Coverage when the services rendered may be reduced or 
denied as part of a reasonable--or, as denied as not reasonable 
or necessary. Providing an ABN or Hospital-Issued Notice of 
Non-Coverage protects you from liability.

    To understand the ramifications of the above, one must 
understand how tests are ordered. First, the problems are 
generally outpatient tests. HCFA and intermediaries are holding 
hospitals responsible for determining the medical necessity of 
tests. However, 100 percent of the time, hospital is only 
completing a test ordered by a physician. In the case of most 
hospital outpatient tests, we receive blood samples, urine or 
other specimens with an order for the test to be performed and 
a stated diagnosis or symptom from the physician's office. We 
do not see the patient or generally interpret or enter the 
physician--or, excuse me--interrupt the physician at his office 
to question his written order. We perform over 600,000 lab 
tests a year.
    Based on the information above, if the test ordered does 
not meet the medical necessity as defined by HCFA for the 
specific tests and the hospital bills, this is considered a 
fraudulent claim. Because of the magnitude of the volume and 
the reality that hospitals are not in a position to question 
doctors' orders for tests that they believe are important, we 
perform the tests and send the results to the patient. It is 
this practice that is coming under specific focus by the 
intermediary under the umbrella of medical necessity. Recent 
software changes at Lutheran now match the symptom and 
diagnosis for the tests ordered; however, the ability to do 
errant claims is prevalent throughout the system.
    The hospitals are in a no-win situation. The physician 
writes an order but doesn't have the knowledge or time to know 
what tests were ordered or approved for a specific diagnosis. 
The hospital has no computer systems to determine medical 
necessity before the tests are performed, and not doing a test 
that a physician orders could be harmful to the patient. Local 
hospitals are working hard to overcome these issues, but HCFA 
is holding them accountable today for a system that is not 
manageable. If we don't do the tests and we send the results to 
the physician before billing determines that it may not be 
medically necessary, so we don't bill them to avoid a fraud 
charge, then we are found guilty of an anti-kickback statute. A 
New Jersey hospital which offers free care to patients is 
coming under significant pressure because they provide free 
care to patients because they might be inducing referrals from 
physicians. This is truly a catch 22.
    To understand the scope of the situation we're dealing 
with, we believe that 30 to 40 percent of our lab tests may 
fall into this category that don't meet the medical necessity, 
and that's 30 to 40 percent of 600,000 tests. The problems 
don't relate just to laboratory tests but to pre-admission 
testing and diagnoses. The only safeguards that a hospital has 
according to the guidelines were published in the Part A news 
providing ``An ABN protects you from liability.''
    Today, Medicare is viewed by many as nothing but bad 
insurance. It is every hospitals most unreliable payer. 
Hospitals face threats of civil penalties and anti-kickback 
statues. The HCFA appears accountable to no one and are only 
interested in cutting cost. I learned today that 70 percent of 
the budget surplus is due to reductions in Medicare and 
Medicaid spending. Also, 1999 was the first time that the 
actual dollars paid for health care went down as compared to 
the prior year even though the population has increased by 3.4 
percent for the elderly.
    HCFA's approach has not been to improve the system or to 
help hospitals, seniors or doctors comply. They say nothing has 
changed. Perhaps that's the problem. Health care is changing 
dramatically, and if we're living under regulations that have 
not been updated, simplified or computerized, then we're bound 
for failure. I believe HCFA has made compliance difficult. 
Based on current regulations, providing ABNs to Medicare 
patients is our only remedy available to us. Many procedures 
that have been paid for by Medicare in the past will now be 
paid for by those who don't have the resources--our seniors.
    HCFA may use the term that these procedures are not 
medically necessary, but, in reality, hospitals are not in a 
position to know because they don't see the patient and they 
don't practice medicine. We have, in the past, relied on the 
knowledge of physicians to determine the best course of patient 
care. It appears that in the future, we must be only concerned 
about meeting a regulation that has not changed for decades. 
There is no doubt that the system is broken.
    I hope that you will be able to fix this problem. I hate 
implying that everything is related to antiquated rules and 
money, but in the case where 80 percent of the hospitals in the 
country can't even cover the cost on a Medicare patient and 
rules are written in a way that they cannot be administered, 
then it is the only conclusion that can be reached.
    I appreciate the opportunity to testify and your interest 
in solving----
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Mr. Miller follows:]

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    Mr. Mica. We'll now hear from Dennis L. Knapp, who's 
president and chief executive officer of Cameron Memorial 
Community Hospital in Angola, IN. You're recognized, sir.

STATEMENT OF DENNIS L. KNAPP, PRESIDENT AND EXECUTIVE OFFICER, 
        CAMERON MEMORIAL COMMUNITY HOSPITAL, ANGOLA, IN

    Mr. Knapp. Thank you, Chairman Mica. I'll try not to cover 
some of the same ground that Mr. Miller covered, although we 
all deal with the same problems. As a preface to my statement, 
we are a small, 61-bed hospital located about an hour overland 
trip to any large tertiary facility. So ours is an issue of 
providing services to about 40,000 people in a rural county.
    We deal a lot with allocation of resources and the most 
efficient use of those resources, and Medicare has made this 
very complex for us to do. Since we do sit in the northeast 
corner of Indiana, we also get patients from Ohio and Michigan, 
and the local Medical Review Policies vary from fiscal 
intermediary to fiscal intermediary. So we deal with not only 
fiscal intermediaries from Indiana but fiscal intermediaries 
from Ohio and from Michigan. And if you would think that it 
would be very easy to come up with a software program that 
could look at a patient's requested examination and determine 
whether it was appropriate for payment under the Medicare 
system, however, these policies are made at the local level 
through the local fiscal intermediaries. Thus, something that 
may be covered in Michigan may not be covered in Indiana and 
vice versa, making it very complex for us.
    Included in my testimony is 13 pages of codes for a chest 
x-ray. Each one of those codes is for a different condition, 
and, of course, to code any x-ray that was coming through our 
institution erroneously through those 13 pages of code would be 
considered a fraudulent charge. And with the stepped-up 
enforcement of the fraudulent-going system, I think we're all 
concerned about that.
    We also deal a lot with program conflicts. Right now, our 
small institution has 794 laboratory tests, 781 radiology tests 
that we have to determine whether an Advanced Beneficiary 
Notice is needed each time that patient comes through for one 
of those tests prior to us doing the test. And, again, remember 
this has to be done on a manual basis since no software exists 
at this time due to lack of standardization of the policies to 
perform this. That totals 1,575 procedures, which then have to 
be looked through and compared with about 74,000 diagnoses to 
determine whether the billing is appropriate for that 
particular patient.
    Other areas we deal with in program conflicts is that, 
again, we are encouraged to secure an ABN up front if that's 
necessary. When a patient comes through our emergency services, 
we always opt on the safe side and perform the emergency care 
first, as required by the Emergency Medical Treatment And Labor 
Act [EMTALA]. And, so, the emergency service is always 
performed first at the risk possibly of not getting any 
reimbursement for the procedures that you're performing on the 
patient or lacking the protection of an ABN. So, in that area, 
the program is actually conflictual with itself.
    Mr. Miller discussed patient concern over pre-operative 
screenings. That, too, has come to us. Quite recently in the 
face of this, I reviewed a chart where a lady was in for a 
surgical procedure, and had she not had the pre-surgical 
screenings, most notably the chest x-ray, we would not have 
seen that she had a partially collapsed lung, an enlarged heart 
and a broken rib, and she would have went to surgery, anyway, 
or chose not to have the procedure.
    The many Medicare recipients come to us to ask, ``What do I 
do?'' And, right now, we have no good answer for them. We have 
to say that, ``Yes, you should, for your patient--for your 
safety and your good health, have these screening procedures 
performed prior to your procedures; however, we also have to 
notify you that they'll be at your cost.'' And patients are 
very confused by this. The HCFA has not communicated this well 
to patients, and a lot of the seniors just plain don't have the 
resources to cover these pre-testing procedures.
    And, also, as Mr. Miller said, with the new APCs that are 
coming across----
    Mr. Miller. APC.
    Mr. Knapp. APCs that are coming into implementation July 
1st, we are going to lack the ability to efficiently bill those 
procedures. The implementation time is just not enough. In the 
last year, we've purchased almost $1 million worth of computer 
equipment to upgrade our computer systems only to be faced with 
purchasing more software when and if it becomes available to 
provide these services. We realize that being in a rural 
hospital setting, we are allowed up to 2 years leniency, I 
guess, from being impacted by APCs, but, at the same time, we 
have to go ahead and bill as if they were in effect.
    We are hoping for clarification from HCFA in the future 
regarding these areas, and we are most certainly asking for 
clarification as far as to do pre-operative screening for 
patients. Thank you.
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Mr. Knapp follows:]

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    Mr. Mica. Our last witness on this panel is Kelly L. 
Borror, and she is the administrator of Lutheran Homes in Fort 
Wayne, IN. Welcome, and you're recognized.

 STATEMENT OF KELLY L. BORROR, ADMINISTRATOR, LUTHERAN HOMES, 
                      INC., FORT WAYNE, IN

    Ms. Borror. Thank you, Mr. Chairman and Congressman Souder, 
for inviting me to participate in this panel. I am honored to 
be selected to give testimony today.
    In the current system of Federal oversight for nursing 
facilities, the State survey agency has been given the 
authority by HCFA to evaluate facility adherence to the law, 
cite deficiencies and even impose sanctions. The State agency 
is responsible for informal dispute resolution and also the 
appeals process. In short, under the current system, the State 
survey agency acts as the judge, the jury and the enforcer. We 
are concerned about the deficiencies that are considered actual 
harm. Minor isolated incidents are resulting in severe 
enforcement penalties. If facilities are cited for actual harm 
on consecutive surveys, they are subject to immediate fines up 
to $10,000. There is survey team subjectivity regarding 
interpretation of the regulations. Some teams evaluate 
compliance based on outcome, others base it on potential 
outcome, and still others focus almost entirely on the process 
itself. Survey inconsistency is viewed as the largest problem 
for providers in long-term care in northeast Indiana.
    HCFA conducted an extensive training campaign for nursing 
home inspectors to help States enforce Federal requirements 
more effectively and consistently; however, by not conducting 
training sessions that included both the inspector and the 
provider, discrepancies in interpretation continue. An annual 
survey cycle may extend as long as 6 months before a facility 
is found to be in full compliance. New deficiencies or followup 
surveys extend the survey and create the possibility for 
additional sanctions.
    It is our desire to have HCFA require States to contract 
with outside entities to review the cited deficiencies, scope 
and severity, recommended sanctions and to independently 
conduct informal dispute resolution. It is, furthermore, our 
desire for HCFA to train inspectors and providers at the same 
time; to utilize sanctions to assist providers; to encourage a 
team approach during survey; and to expedite a survey process.
    Providers are currently struggling with the Prospective 
Payment System known as PPS to survive; there are many, many 
hidden costs. We are accountable for all expenses which are 
incurred within the resident's plan of care. Cost constraints 
and containment are affecting quality services, such as 
transportation and mobile x-ray to name two. The decreases in 
available ancillary service results in increased outpatient 
admissions to hospitals, increased transportation costs and 
increased expenses to providers. It is greatly appreciated that 
the Balanced Budget Refinement Act of 1999 was passed; however, 
it is felt the revision did not go far enough, specifically 
with the non-therapy ancillary costs that are involved.
    In a Prospective Payment System based strictly on average 
payments, some residents will have costs that far exceed the 
average. These are known as outliners. HCFA has created other 
outliner provisions for hospital, home health and hospital 
outpatient services for expensive cases. It is time that long-
term care providers have an outliner provision. It is our 
desire to meet individual care needs, whether known or unknown 
at the time of an admission to a nursing facility; for HCFA to 
provide PPS billing training to ancillary vendors; for HCFA to 
re-evaluate ancillary reimbursement; and, finally, to require 
HCFA to develop an outliner provision for skilled nursing 
facilities.
    Staffing issues in nursing facilities remain the priority 
from everyone's viewpoint. Currently, with the reimbursement 
restrictions, facilities are tied to low-end salaries due to 
the PPS system. This is especially true in reference to 
reimbursement for our cognitively impaired residents, such as 
Alzheimers. Facilities across the country are experiencing a 
nursing staff crisis. In view of the shortage, it becomes 
imperative that facilities have the option of training 
individuals who are not certified or not licensed. Permitting 
individuals to be trained to perform certain tasks can offer 
partial relief to the shortage and additional individual 
attention to residents.
    Currently, the area where training non-nursing assistance 
is most needed is assistance with eating. It is our desire for 
HCFA to revise cognitively impaired payment classifications 
specifically related to Alzheimer/dementia population. It is 
further a desire to request the additional language submitted 
in my prepared statement to be added to the Medicare and 
Medicaid statutes to give the facilities flexibility to use 
non-nursing staff to assist residents with eating.
    Mr. Chairman, please note, due to the time restraint, I did 
not cover Full Federal Rate Reimbursement Option or 
Consolidated Part B Implementation this is currently posing, 
although there are many complex issues associated with long-
term care, as well as acute care, and I request you admit my 
full written statement and encourage the committee to review 
that.
    Mr. Mica. Without objection, your entire statement will be 
made part of the record.
    Ms. Borror. Again, thank you for the opportunity to provide 
information. Facilities are struggling with survey process, 
reimbursement issues and a lack of available staff, and it is 
time for HCFA, State regulators and providers to work together 
toward quality care for seniors. Thank you.
    [The prepared statement of Ms. Borror follows:]

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    Mr. Mica. Thank you for your testimony. I thank all of our 
witnesses. I'd like to proceed with a few questions. First of 
all, Mrs. Altenhof, did you get your medical procedure?
    Ms. Lorraine Altenhof. [Nods head.]
    Mr. Mica. You did.
    Ms. Lorraine Altenhof. Yeah. You mean the testing?
    Mr. Mica. Well, the whole works.
    Ms. Lorraine Altenhof. Oh, yeah. They operated on me on 
March 1st.
    Mr. Mica. OK.
    Ms. Lorraine Altenhof. And I have----
    Mr. Mica. What about payment?
    Ms. Lorraine Altenhof. So far, I've just received one 
statement, and it came from my supplement insurance, stating 
that Medicare did not pay a charge of $11.07. So I called the 
insurance company, and they told me it was for a chest x-ray, 
which amazed me, because I'm sure a chest x-ray costs more than 
that. So is it possible that the hospital could be writing it 
off?
    Mr. Mica. Well, we can ask that question, but that's the 
only charge that you've----
    Ms. Lorraine Altenhof. So far.
    Mr. Mica [continuing]. Incurred? And that would be covered 
by your supplemental?
    Ms. Lorraine Altenhof. Only if Medicare pays my 
supplemental insurance pays.
    Mr. Mica. All right. OK.
    Ms. Lorraine Altenhof. If Medicare----
    Mr. Mica. It would not----
    Ms. Lorraine Altenhof [continuing]. Doesn't pay, neither 
will my insurance.
    Mr. Mica. All right. Obviously, you had a difficult 
experience, and I'm sure it caused you additional pain and 
suffering in addition to your medical procedure.
    Ms. Lorraine Altenhof. Yeah. They were two major surgeries.
    Mr. Mica. Yes, ma'am.
    Ms. Lorraine Altenhof. But again, I was only in 2 days, and 
they asked me if I wanted to go home.
    Mr. Miller. Yeah.
    Mr. Mica. Thank you. Mr. Miller, it's almost getting to the 
point where this is so frustrating dealing with trying to 
straighten out a program that produces 140,000 pages of 
regulations and compliances. It becomes almost impossible, and 
one of the things Congress has tried to do since we've 
attempted to reform the Medicare Payment System is to cut down 
on some of the fraudulent billing, some of the extra 
procedures, sometimes medically unnecessary procedures, that 
were not done often by legitimate operators, but trying to sort 
through this and create a system. Congress really sets the 
general parameters, and then we let the agencies set the rules.
    Is there any way you can see us ever correcting this, other 
than just coming back time and again and trying to do this 
patchwork approach to fixing?
    Mr. Miller. Well, just to note, first of all, that Medicare 
is one of the unique insurers that doesn't actually communicate 
to the beneficiaries what services are covered or not covered. 
All other insurers that hospitals deal with, it's the insurance 
company's responsibility to determine whether a test is 
medically necessary or not, and, if not, they then allow for 
the hospital to bill the individual for that care.
    Medicare requires the hospitals to determine in advance 
without communicating to the seniors what is medically 
necessary or not. Medicare has not taken the responsibility to 
educate physicians; they hold the hospitals responsible for 
educating physicians. The hospitals are caught in a catch 22. 
Perhaps, the first suggestion would have to be to take the same 
approach as every other insurer in the country and begin 
communicating to physicians and patients what is or what is not 
covered and allow for those items that are not covered to be 
billed by the providers as opposed to sending Advanced 
Beneficiary Notifications, making patients then choose maybe 
not to have a procedure that is medically necessary. And in 
Mrs. Altenhof's standpoint, she might have chose not to have 
that procedure because of the $300 or $500. That is a very 
difficult situation.
    The other thing is that Medicare and HCFA would indicate 
that the standards, the guidelines, the rules have not changed 
since 1960. My suggestion, it's time for a total overhaul. Wish 
I could give you what the right answer is, and I don't profess 
to be the best policymaker in health care, but I know 1,000 
pages of additional regulations last week on outpatient payment 
is not the way to go, and a 90-day implementation process. 
Interpretations of new policies like the Advanced Beneficiary 
Notification, where the only intent is to reduce the payment to 
providers at a time when providers are already receiving less 
than their cost just causes conflicts between hospitals and the 
patients.
    I think it's a very difficult situation. I wish I had an 
easy answer.
    Mr. Mica. Mr. Knapp, you described 13 pages of coding for a 
chest x-ray, and how can a hospital comply with those kinds of 
regulations? Is it becoming impossible or difficult to make 
certain that you're in compliance?
    Mr. Knapp. It's very difficult. Over the last----
    Mr. Mica. If you'd like to pull that up----
    Mr. Knapp. Oh. I'm sorry.
    Mr. Mica. We can catch you.
    Mr. Knapp. Over the last 2 years, most hospitals have had 
to develop a complete corporate compliance program to avoid 
HCFA implementing much of the--they come in and find a 
deficiency. In a full corporate compliance program, their 
responsibility is to develop policies and procedures to make 
sure that things are appropriate.
    In our institution, we've had to bring in our audit team 
and do a complete review of our charge master to make sure all 
codes, all edits--all the procedures that, through their audit, 
we would lessen the probability of any kind of fraudulent 
billing occurring. And, of course, that all costs a lot of 
money and pushes up our health care cost overall.
    Mr. Mica. So you're sort of caught in a difficult position 
between being charged with fraud or not covering yourself as 
far as liability, if something happens with a patient.
    Mr. Knapp. That's very true.
    Mr. Mica. In surgery and if a test is not done or some 
procedure is not done; then you face, I think, liability 
problems.
    Mr. Knapp. Yes.
    Mr. Mica. And I think that the pressure has been, from 
Congress, to try to eliminate fraud and eliminate unnecessary 
tests or diagnoses, but by the same token, you must cover 
yourself as far as liability, and that becomes a big cost and 
also a big factor in health care today; is that correct?
    Mr. Knapp. That's true.
    Mr. Mica. Ms. Borror, you talked about a system of possible 
independent evaluations and trying to get someone to 
independently make a determination, I guess, where there's a 
conflict either in payment or services. Is that correct?
    Ms. Borror. I think you're referring to the survey 
process----
    Mr. Mica. Right.
    Ms. Borror. With independent review. Basically, what we go 
through right now is the survey--the survey agency is empowered 
by HCFA, comes out and surveys the facility. They determine 
what citations need to be or found as far as deficiencies, and 
then they also determine what sanction is going to be implied 
or imposed.
    Mr. Mica. But you were recommending a system that changed 
that?
    Ms. Borror. Correct.
    Mr. Mica. Can you elaborate a little bit?
    Ms. Borror. Right now, they are doing the appeals process, 
as well. If we could have an outside entity that would oversee 
what the survey results were and----
    Mr. Mica. Who would appoint that--also HCFA, or----
    Ms. Borror. I do not know who would end up appointing that. 
And it would be nice for HCFA to state that that is required by 
the State survey agencies to have outside review rather than to 
be appointed by HCFA or not, but----
    Mr. Mica. All right. But, again, you're calling for some 
type of a change in the evaluation system?
    Ms. Borror. Correct.
    Mr. Mica. All right. You're also having problems complying 
with HCFA regulations, and if they impose some of these 
additional APC, I guess, rules----
    Ms. Borror. Uh-huh.
    Mr. Mica [continuing]. By July, that gives you 90 days to 
comply. Would you have difficulties?
    Ms. Borror. The way APC affects us is with outpatient 
services that we need to use for ancillary services under the 
Prospective Payment System. And when we try to utilize services 
in-house--we've attempted to work out something with an acute 
care facility here in town, trying to bring services in-house 
which they would need to bill out patient wise. And, at this 
point in time, their reimbursement fees are not such they can 
even offer the service to us, which then results in us sending 
the patient into the hospital for maybe a service that could 
have been done at the nursing facility.
    And under the Prospective Payment System, we are 
accountable for our--all charges. We are given one set lump sum 
of money and whatever that individual needs, rather it was a 
part of their plan of care at the hospital or rather it was 
something that developed beforehand or afterward becomes a part 
of that person's plan of care under Medicare, then the nursing 
facility has no other alternative but to provide that to meet 
the resident's needs, and that is at our expense. So the 
Payment System itself does not cover generally an individual's 
needs at that point in time.
    Mr. Mica. Thank you. I yield at this time to the gentleman 
from Indiana, Mr. Souder.
    Mr. Souder. One thing, just in general, which is true for 
the second panel, as well, but we may have additional written 
questions in this 2-week period, and if any of you have 
additional things you'd like to get into the record that we can 
ask HCFA either in Chicago or Washington to respond to, or 
answer in future hearings. This is just scratching the surface, 
as you well know, particularly because we've combined so many 
different things in this hearing.
    Before we restructured the committee system after 
Congressman Hastert became Speaker, he was the chair of the 
committee that had the drug policy. We restructured, moved 
Human Services from a different subcommittee into the one that 
Mr. Mica now chairs. We had seven hearings that I attended on 
Medicare and Medicaid fraud before we passed the Balanced 
Budget Act, and in each one, we'd go through just a little 
subsection of this. So I know it's a massive subject.
    There are a couple of things I wanted to get on the record 
and see where we might follow through: one, with Mr. Knapp. You 
referred to the difference in Michigan and with patients from 
different areas. Is it because of State clearances that there 
are differences? Is it because they go through a different HCFA 
regional office?
    Mr. Knapp. The payment usually comes from a fiscal 
intermediary, which is--in Michigan, it can be Travellers, it 
can be Blue Cross. There's a couple fiscal intermediaries up 
there. But the local Medical Review Policies for payment are 
made at the fiscal intermediary level; therefore, there's no 
Federal standardization of those. Standardization across the 
United States would certainly help.
    Mr. Souder. One of the things we found earlier on is that 
even in trying to track ``fraud,'' the regional system 
computers couldn't even talk to each other in the Federal 
Government.
    Mr. Knapp. That's true.
    Mr. Souder. And I was trying to see whether we had much of 
that in the Midwest or where exactly the lines were. What 
percentage of the patients that come through are from Indiana 
in your case?
    Mr. Knapp. Of the Medicare patients, probably 60 percent.
    Mr. Souder. So 40 percent.
    Mr. Knapp. Yeah. We're located in the very northeastern 
corner of the State, so we get people from both Ohio and 
Michigan.
    Mr. Souder. Now, in the Lutheran system, with your other 
hospitals outside of Allen County, as well, do you know what 
your percentage runs?
    Mr. Miller. Just to quote a number, I would guess for 
Medicare patients, probably 80 to 85 percent are local and 15 
percent may be outside.
    Mr. Souder. What other unique questions would apply to your 
situation? I saw in your written testimony, Mr. Knapp, you 
referred to even what kind of medications you'd have in supply 
in a rural hospital an hour away from any major city--South 
Bend or Fort Wayne or Lansing. You would have to supply 
questions on urgent needs. Does that mean you would have 
different types or have to do substitutions that wouldn't 
necessarily be under the guidelines?
    Mr. Knapp. Yes. In my testimony, I used the example of a 
drug that dissolves blood clots, and I use it because it's a 
very expensive drug, first of all.
    Mr. Souder. Uh-huh.
    Mr. Knapp. I think hospitals are put in the position many 
times of having to have these resources on hand and a quantity 
of these resources and have a lot of capital, so to speak, 
sitting on the shelf and not knowing if they're ever going to 
get at least their cost back out of them.
    Again, because of our position in the county being an hour 
away from a major tertiary facility, we're forced sometimes to 
keep many things available that normally we wouldn't use on a 
frequent basis. And so, we have to tie up a lot of our money 
that way. Overall, I think right now we're getting about 41 
cents on the $1 reimbursement for Medicare. So, again, we have 
to tie up resources for use on Medicare patients, and----
    Mr. Souder. Could you----
    Mr. Knapp [continuing]. And we're glad to do that.
    Mr. Souder. Forty-one cents on the dollar; could you 
explain that?
    Mr. Knapp. On the $1 of charge. And, again, it's an overall 
number for Medicare.
    Mr. Souder. And how do you make up the gap difference?
    Mr. Knapp. You mentioned earlier the process of cost 
shifting, and that, of course, has led to a--I think one of our 
major problems in health care expenses in that hospitals are 
forced to keep their rates at what the market will bear. There 
may be other insurance companies out there willing, obviously, 
to pay more than Medicare is willing to pay. And, so, you have 
to keep raising your charges and consider the Medicare 
shortfall as a contractual deficit for the hospital in order to 
make up for that shortfall through other insurers.
    Mr. Souder. Mrs. Altenhof referred to another thing that's 
a byproduct. That is that you can squeeze services to some 
degree, for example, the length of time somebody's in the 
hospital, because if you're losing money on that individual, 
there's no incentive to keep them there any longer than is the 
absolute minimum. You are certainly not going to put somebody 
out who's at health risk----
    Mr. Knapp. Oh, no.
    Mr. Souder [continuing]. But that's the kind of things that 
are occurring.
    Mr. Knapp. In the early 1980's, we made the conscious 
effort to induct the outpatient technology to take care of as 
much outpatient work as we could in the inpatient setting. And 
we've reduced our average length of stay to about 2 days. 
Again, that was a small general hospital. And then, last year, 
we saw 77,000 outpatients through a 60-bed hospital.
    Mr. Souder. Ms. Borror, I wanted to put a couple of things 
in the record as to the home health care area and then the 
long-term care nursing home area. And, again, we're just 
scratching the surface a little bit today. I wanted to clarify 
a couple of things.
    My understanding--and Mr. Mica asked a variation of this 
question--is that, based on what you chose to stress here, you 
felt that the clearance process was a bigger problem than a lot 
of other things currently, taking 6 months and then constantly 
re-evaluating, that you're taking so much time filling out 
forms that you weren't able to provide care.
    Ms. Borror. Correct.
    Mr. Souder. Is that----
    Ms. Borror. This is correct. It wasn't that way until about 
1\1/2\ years or so ago with a lot of the changes in regulation 
and the imposition of fines and sanctions. In 1997, Indiana 
imposed $77,000. In the third quarter, by 1999, there was over 
$400,000 in fines imposed. So there's a drastic difference, and 
this money goes to the Indiana General Fund. And that comes as 
a result of the survey process. And the longer a survey takes 
in a building, the greater the possibility for sanctions to be 
enforced and applied on a facility.
    Mr. Souder. In the small church I grew up in out in the 
Grabill area, once a month, we would go up and have a church 
service at the nursing homes up in Butler. Much of my life, I 
went to Butler on Sunday. In addition, we have large homes in 
Warren, Avilla and Swiss Village, in Berne--all over this 
district. I've also been in the Golden Years Homestead, where 
my grandma was and at Cedars, where my father-in-law was before 
they both passed away over the last few years. Clearly, 
everybody here is concerned about the quality of nursing care. 
Nobody's arguing that there aren't problems. I've also heard 
from the nursing home providers that one of the big 
difficulties is staffing questions and how to adequately meet 
the staffing needs.
    Do you have anything you'd like to put into the record 
today related to that and how we might look at addressing that 
and what pressures you're facing?
    Ms. Borror. I think right now, the staffing issue, there's 
a tremendous shortage, not only for long-term care, but also 
with acute care, and I'm sure these gentlemen can attest to 
that.
    When we look at staffing, unfortunately, we cannot pay the 
same salary rates as a hospital or an acute care system. Our 
rates that we receive from Medicare are quite a bit lower than 
even a hospital transitional care unit, specifically with the 
full Federal transition into reimbursement right now. The 
certain task-performed training would be a great assistance to 
individuals, specifically when we're looking at nutrition and 
we can only have a certified or a licensed person do any 
feeding or assistance with feeding at mealtime. To be able to 
train other individuals who are not licensed or certified would 
assist us in meeting some additional staffing needs and quality 
care needs for residents and having availability of 
individuals.
    Mr. Souder. Thank you. Mr. Miller, I wanted to thank you 
personally, as well as Dr. Schroeder and others and Jim 
Tobalski and the many from Parkview that have come in and tried 
to overall clarify. I'd like to put this into the record, 
because it's a frustration with the administration on the 
unfairness of the fraud question.
    Clearly, we have to track the fraud, and we've made some 
attempts to say in Congress you're innocent until proven 
guilty. There's an assumption that there is a maliciousness 
which the word ``fraud'' implies as opposed to the lack of 
clarity. And, with all due respect, we'll get into this in the 
second panel. It's difficult with the cost pressures for HCFA 
to make lots of different changes and to do all those. But, 
that said, we ought to acknowledge that difficulty, and this 
whole question of fraud has been disturbing.
    Here in Fort Wayne, we've seen newspaper headlines where, 
in fact, hospitals here have been accused of fraud where, in 
the end, most of even the things that were in question were 
resolved in the hospital's favor. And, at the same time, the 
only things that weren't were marginal decisions, but because 
of the headlining in the Fort Wayne newspapers, the implication 
was that there was fraud practiced, or at least alleged, by the 
Federal Government inside our district when, in the end, there 
was none. There wasn't a single case. There were a couple of 
cases that were these questionable judgments. And I appreciate 
you're bringing those kind of things out, because too many 
times, people say, ``Oh, the Federal Government is having all 
this fraud'' or ``Hospitals are practicing fraud'' when, in 
fact, we can see these are very difficult decisions by you all 
and by the doctors, and the number of classifications are just 
amazing. So I thank you for that.
    I wanted to ask a technical followup on Ms. Altenhof's 
situation. How long in her case where she comes in, how long 
until you get a clear definitive decision from Medicare as to 
whether it's covered or not covered?
    Mr. Miller. I don't know her individual situation, but----
    Mr. Souder. Right.
    Mr. Miller [continuing]. Generally for Medicare--and the 
reason why she probably hasn't received a bill is just because 
of the timing. For someone who had surgery in March, which is 
less than 30 days, she looks great, so the health care system 
is working. But I would guess that 60 days is a reasonable 
timeframe. Generally between 60 and 90 days, we should know 
exactly what was paid or what wasn't. But Medicare's unique. 
Medicare's the only insurer who pays first and then questions 
later. Sometimes----
    Ms. Lorraine Altenhof. Yes.
    Mr. Miller [continuing]. A year later, sometimes 3 years 
later. Most insurers make the determination and then you 
appeal. They pay and then, if they determine 2 years later they 
shouldn't have, they charge you with fraud and ask for, you 
know, $10,000 per incident over and over and over again 
multiple denominators of that number. So it's a unique 
situation that, in her case, I'm sure they're going to pay 
first and then--they don't even have the systems in place--you 
mentioned the differences between different intermediaries to 
look through it, and they'll be doing that over the next few 
years, and we'll come back, I suspect, in this case maybe to 
indicate that that was a fraudulent billing.
    Mr. Souder. One of the things that, after you hear the full 
testimony today--and if you have additional questions you'd 
like us to submit or additional comments--I appreciate you 
clarifying that, because one of the undoubted difficulties is 
that I can see how unintended consequences occur. For example, 
one of the things we heard in our oversight hearing 5 years ago 
was that Medicare was the slowest payer. So most likely what we 
did or I assume we'll hear, was that we forced them to pay 
first and question later, because we were hearing from 
providers that they weren't getting paid fast enough.
    The problem here, to me, appears that at the crux of what 
you said is the lack of clarity at the beginning that every 
other provider does. Now, I'm sure--and I do want to 
acknowledge this for the record--that part of this is that 
Congress makes some of these rules and the biggest thing we've 
done here is we haven't actually made the rules; for the most 
part, what we've done is restricted the budget. And then 
there's an interpretation, as Mr. Miller said and others, and 
this is our dilemma that we're working through. I remember 
traveling throughout northeast Indiana saying we were going to 
reduce the Medicare growth from 10 to 7 percent. And, in fact, 
it has only grown by about 2.5 percent. Now, I and other 
Members of Congress are going all around the country talking 
about surpluses. Well, as we heard, a big chunk of that surplus 
is because we've saved costs in Medicare because HCFA has made 
difficult rulings, not Congress making the rulings, and that 
way, all the politicians can talk about a surplus, but we're 
the bad guys that made the rulings. So what we've done last 
year, we came in with about 8 or 10 billion at the tail end to 
try to relieve some of the pressure.
    And, clearly, some of these things are cost-driven, but 
even if they're cost-driven and what we're--what we need to 
sort through is how much of this is cost pressure, how much of 
this is just not good business practices? If other insurance 
companies can do it and give the guidelines in advance, can the 
government do that? How do we have to put into that kind of 
infrastructure? How much of these were arbitrary decisions that 
need to be relooked at? How much of this is, in fact, cost? And 
we're all going to have to share in part of that, whether it's 
hospitals, whether it's in patient preplanning, whether it's in 
the Federal Government trying to put more dollars in if, in 
fact, we don't have enough knowledge.
    Any other comments any of you want to make? You can make 
written requests, too.
    Ms. Lorraine Altenhof. I just wanted to tell you that my 
daughter, Patty, is a nurse at Marcell Nursing Home, and they 
have the same problem the lady down here was talking about with 
the shortage of nurses there, right?
    Ms. Patricia Altenhof. Uh-huh.
    Ms. Lorraine Altenhof. Terrible.
    Mr. Souder. And we have a strong nursing training program 
in this market, yet I still hear it everywhere----
    Ms. Patricia Altenhof. Yes.
    Mr. Souder [continuing]. That there is this tremendous 
shortage, and we're going to have to look for creative ways to 
address it.
    Mr. Miller. Just one other thing. You mentioned what can be 
done. Let me offer one suggestion. The determination of medical 
necessity shouldn't be different for seniors as it is for non-
seniors, and the billing process shouldn't require within 
hospitals 10 or 11 or 12 different processes to bill. Perhaps, 
within 5 years, the determination of what's medically necessary 
can be consistent among outpayers and perhaps one billing 
system could be put in place that would allow us to bill 
consistently between all providers.
    Mr. Mica. Thank you. Well, I think we're going to recess 
here for about 7 minutes. We'll reconvene at 10:20, and then, 
at that time, I'll call forward our second panel. This hearing 
is in recess.
    [Recess.]
    Mr. Mica. I would like to stay on schedule today, and I 
just checked. There will be votes scheduled on time today, but 
let me call the subcommittee back to order in this hearing on 
the quality care question for seniors.
    I'm pleased at this time to welcome our second panel. Our 
second panel consists of Dr. Barbara Schroeder. She is the 
president of the Fort Wayne Medical Society here in Fort Wayne, 
IN. We also have Dorothy Burk Collins, and she is the Regional 
Administrator for the Health Care Financing Administration, 
Department of Health and Human Services from Region Five 
located in Chicago. We also have Jim Tobalski, and he is the 
senior vice president of Community Relations for Parkview 
Health Systems and Parkview Health Hospital here in Fort Wayne, 
IN.
    Again, let me inform our witnesses this is an 
investigations and oversight subcommittee of the U.S. House of 
Representatives. In that regard, we do swear in our witnesses, 
which I'll do in just a moment. Also, if you have a lengthy 
statement or documentation you'd like to be made part of the 
record, upon request, that will be submitted and part of the 
complete record of this hearing.
    At this time, if you'd please stand and be sworn. Raise 
your right hand.
    [Witnesses sworn.]
    Mr. Mica. Witnesses have answered in the affirmative.
    Mr. Souder. Mr. Chairman.
    Mr. Mica. Yes.
    Mr. Souder. I think I should have said this in the first 
panel, too. You now join all the--everybody from Craig 
Livingstone, Nussbaum, and John Podesta, and all of this is the 
same committee that's done all the investigations on all the 
White House investigations and so on. And, actually, some 
people who got sworn in later found out that they should have 
stuck with what they said.
    Mr. Mica. Yes. We have one of the more difficult tasks in 
Congress, particularly in the House. We're the investigative 
panel, and it is an important responsibility, and it does 
provide an opportunity to help us make our system of government 
work and be responsive. It's an important task.
    Mr. Souder. That is unless you lost your e-mails. We're 
having Charles Ruff this week.
    Mr. Mica. We do have a vast array of witnesses, but we're 
pleased to welcome these three witnesses from this local 
community and Chicago to testify before us today. In that 
regard, I'll recognize Dr. Barbara M. Schroeder, president of 
the Fort Wayne Medical Society. Welcome, Dr. Schroeder, and 
you're recognized.

 STATEMENT OF DR. BARBARA M. SCHROEDER, PRESIDENT, FORT WAYNE 
                MEDICAL SOCIETY, FORT WAYNE, IN

    Dr. Schroeder. Thank you. I'd like to begin just by saying 
thanks for giving us the opportunity to speak. I'm very much a 
neophyte in terms of the government. And seeing this process 
gives me a little bit more faith that legislators really do 
want to hear all sides of the issue.
    The core issue that I'm going to address is pre-operative 
tests as being screening tests. And it's my view that pre-
operative tests are not in the same category as general 
screening tests. In my mind, a screening test is one that's 
done on a large segment of the population, looking randomly for 
a disease whereas pre-operative testing is done specifically to 
see if there's a reason that the person shouldn't have surgery 
or if they should be somehow investigated further to see when 
an abnormal test has come forward.
    As you know, Congress has excluded from coverage 
examinations that are performed for a purpose other than the 
treatment or diagnosis of a specific illness, symptom, 
complaint or injury, except for certain approved screening 
tests, and these are published in the code of Federal 
Regulations. In the February and March 1999 issue of our 
Regional Medicare Update, a clarification regarding pre-
operative testing was published, and it stated that screening 
services other than those named by law as exceptions are not 
covered and will be denied in accordance with Section 1826 of 
the Social Security Act. And this clarification superseded all 
prior policy publications regarding screening procedures, such 
as pre-operative tests, chest x-rays, etc.
    A further word on this was published in January 2000, and 
this stated that pre-operative tests ordered routinely are 
considered screening services and are not reimbursable by the 
Medicare program. And, again, I would argue that certain 
routine tests are necessary for the treatment of an illness, 
and I'm certain that many physicians, anesthesiologists in 
particular, might have varying opinions on what is actually 
necessary for the surgery and what is not. And that, I think, 
is partly the problem; it's not totally clear all the time 
what's necessary to safely do a surgery.
    I've attached with my testimony some guidelines that were 
circulated to Parkview staff physicians as a guideline for all 
certifications as to what pre-operative tests would be 
necessary for anyone undergoing surgery independent of whether 
or not they have a sign or a symptom related to that particular 
test. For example, an electrocardiogram within a year is 
recommended by the Parkview anesthesiologists for anyone over 
65 who's undergoing any kind of a surgery, even a local, and 
this is recommended even if the person doesn't have chest pain, 
doesn't have a heart history, no high blood pressure. Why is 
that? Because the stress of surgery on a 65-year-old heart is 
significant, and the likelihood of heart problems even in the 
absence of symptom is high enough that the most basic of good 
medical care would warrant that an EKG be done. And this allows 
the physician to check for any heart disease and also for 
knowing a baseline when you do put the person through surgery 
in case they have any chest pain or problems during the 
surgery.
    Another example is the ordering of a hemoglobin within 30 
days of a surgery if significant blood loss is anticipated. The 
person doesn't have any signs or symptoms that would otherwise 
qualify the ordering of a hemoglobin under the Medicare testing 
guideline, and, yet, to do a surgery where you anticipate major 
blood loss without a hemoglobin is something that no prudent 
surgeon would do, and that's kind of the basis of my argument 
that it's not a screening test; it's a test to prepare the 
person for surgery.
    The challenge, of course, is to determine which tests are 
necessary to surgically treat a disease and which are not. And, 
as I stated earlier, physicians will differ on what they feel 
is medically necessary to get a person ready for surgery. Few 
people would argue, for example, that you need a cholesterol 
for a cataract surgery. I mean, there are some things which are 
clear. So I believe that simple guidelines could be developed, 
such as those included in this testimony that I've submitted, 
which would allow for the coverage of necessary pre-operative 
testing.
    In summary, then, I think that the HCFA and Congress have 
three options: One is to continue to designate all tests done 
prior to surgery that do not have associated signs and symptoms 
as screening, and to deny coverage as thus. And the fact that 
seniors have and will continue to object to this is the source 
of this hearing. The result of continuing this practice is that 
some seniors will refuse to have the testing based on their 
lack of ability to pay for it and morbidity and perhaps 
mortality will result.
    The second option would be to leave the pre-operative 
testing up to physicians and let us decide what's medically 
necessary. This might require some further legislative 
clarification that specifically excludes pre-operative testing 
from screening testing. The third option would be to develop 
some specific guidelines such as those that I've attached which 
would protect Medicare from indiscriminate pre-operative 
testing and help guide physicians as to what is truly medically 
necessary to perform the surgery. Another option within this 
category would be to state legislatively that certain tests 
ordered pre-operatively do not require signs and symptoms to be 
covered, such as EKGs, hemoglobins, electrolytes or a serum 
glucose.
    Thank you again for the opportunity to speak.
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Dr. Schroeder follows:]
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    Mr. Mica. I'm going to call on Jim Tobalski next. He is a 
senior vice president of community relations for Parkview 
Health System and Parkview Hospital. You are recognized, sir.

  STATEMENT OF JIM TOBALSKI, SENIOR VICE PRESIDENT COMMUNITY 
 RELATIONS, PARKVIEW HEALTH SYSTEM AND PARKVIEW HOSPITAL, FORT 
                           WAYNE, IN

    Mr. Tobalski. Thank you, and thanks to Chairman Mica and 
Congressman Souder for this opportunity. A lot has been said 
today about the Balanced Budget Act and its impact on hospitals 
across the Nation and a lot of the unintentional impact. I did 
want at least to try to provide something much more personal 
and specific about the Balanced Budget Act. For the Parkview 
Health System, which is Parkview Hospital, Whitley Hospital and 
Huntington Hospital, the Balanced Budget Act will reduce our 
reimbursement over a 5-year period by $47.7 million. That at 
least provides, I think, an example at a much more local level. 
Even with the Balanced Budget Refinement Act, that reduction 
will still be about $40 million over 5 years. So at least you 
have some context as to the change.
    While we're concerned about the reimbursement cuts, we're 
equally concerned about how increasingly complicated it is to 
be a health care provider in the Medicare Program. Each one of 
our health care staff is proud to provide health care to our 
community seniors. It is becoming increasingly more difficult, 
though, and we believe that our mission to care for seniors in 
the future will be jeopardized unless we can truly reform 
Medicare and improve and simplify the program, and we've got 
several suggestions.
    Quite simply, Medicare is just too complex, and there 
doesn't seem to be any relief in sight, even with the passing 
of the Health Insurance Portability and Accountability Act, 
which Congress had intended to reduce the administrative costs 
and burdens associated with health care. I'd like to go over 
one example, because I think it's at the heart of 
administrative simplification.
    There are, approximately, 300 different medical procedures 
that Medicare might require health care providers to obtain an 
Advanced Beneficiary Notice [ABN] which was mentioned earlier, 
where we must notify a Medicare recipient in advance that the 
service is not covered by Medicare and they may be responsible 
for payment. However, before a hospital or health care provider 
can determine whether or not an ABN is required, we need to 
match those 300 different procedures with, approximately, 
14,000 different diagnoses. Certain procedures, with certain 
diagnoses, require an ABN. The same procedures with different 
diagnoses will not require an ABN.
    To compound that, there are Federal regulations often that 
conflict with one another. The ABN requirement also applies to 
services received through the emergency room, yet the Emergency 
Medical Treatment and Active Labor Act [EMTALA] states that 
health care providers cannot delay treatment to get financial 
information from patients. The dilemma for Parkview and other 
hospitals is not how to proceed with treatment. We're going to 
do what's best for the patient; we're going to treat first and 
worry about finances later. We're still left with a conflict, 
though, where one law requires us to obtain an ABN before 
providing treatment while another law requires us to provide 
treatment before obtaining an ABN. Now, as a community 
hospital, we will always choose to provide emergency care 
first, yet we will be faced with the situation of not complying 
with the ABN requirement and then risk the loss of 
reimbursement for the care provided.
    Earlier, there was discussion also about education for 
senior citizens, and I think it's important, so I'd like to 
repeat this in my testimony. Senior citizens just do not 
receive enough information from Medicare to help guide them 
through the system. It's a very complex process for health care 
providers and I think equally, if not more, complex for older 
adults. Many seniors turn to health care providers for answers 
and clarifications, but that's a very frustrating process for 
both seniors and health care providers, because there are often 
far too many gray areas in interpretation which only Medicare 
can truly clarify, not health care providers and not seniors.
    We recently attempted to proactively inform senior citizens 
about a change in pre-surgical testing covered by Medicare. I 
won't go over that in detail. We sent out 30,000 letters to 
current and past Medicare patients. I have made a mental note, 
if we're going to do that again, to hand-deliver a copy of one 
of those letters to Congressman Souder, especially if he plans 
on holding town hall meetings in his district before we do 
that.
    While this topic is very, very complex, we still wanted to 
attempt to provide education to recipients, like Mrs. Altenhof, 
who you've heard from earlier. We feel it's better for Medicare 
recipients to learn about changes in advance of them arriving 
at the hospital, where it's a more frustrating a time to learn 
about changes or new interpretations of rules and regulations. 
Everybody would benefit from more education--seniors, hospitals 
and the Medicare program itself.
    Another key area is just having an adequate enough time to 
implement changes from new laws and new legislations and new 
regulations. Mr. Miller covered earlier the whole Ambulatory 
Payment Classification. I know it's probably not possible to 
enter a prop into my testimony, but these are the new 
regulations, explanations and addendums. I think it comes out 
to, with the addendums, approximately, 1,300 pages just for the 
new Ambulatory Payment Classification, and we have until July 
1st to have this system in place if we are going to comply with 
all the new rules and regulations.
    One other key area is written verification. We often ask 
Medicare to verify if we're interpreting the rules correctly; 
it seems like a very reasonable thing to do. Medicare is 
typically hesitant to provide answers in writing when we try to 
clarify them. A written response to providers would help with 
consistency, it would help with compliance and it would, to me, 
even more importantly help with overall trust and relationship-
building, which really needs to take place within the entire 
system.
    Last, while Parkview and I are not experts in the funding 
of government agencies, we believe that the Health Care 
Financing Administration is underfunded. We are sure that it 
would probably take additional resources for HCFA to play a 
role in improving and simplifying the administration of the 
program, and Ms. Collins has not asked me to present this 
testimony today.
    A recent report indicated that in the past 20 years, the 
number of Medicare beneficiaries has gone up 50 percent. Of 
course, the complexity of new policy directives and rules are 
even more mind-boggling, yet HCFA's work force--in this study, 
it was indicated it is now smaller than it was two decades ago. 
If Congress wants this program to be effective, they should at 
least consider the resources that HCFA may need to meet the 
tremendous challenges of simplifying the program.
    I don't think it's too naive to suggest that health care 
providers and the Medicare program can become better partners, 
which we really are not right now with all the skepticism 
that's involved. We could accomplish a lot on administrative 
simplification and making billing practice smoother if there 
was more of a partnership relationship. Right now, the current 
environment is one of skepticism and mistrust really on both 
sides. That's really the only way senior citizens will best be 
served is when Medicare and health care providers work together 
to provide benefits to our Nation's older adults.
    Again, thanks for this opportunity to provide you with this 
feedback today.
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Mr. Tobalski follows:]

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    Mr. Mica. We'll now hear from Dorothy Burk Collins. She's 
the Regional Administrator for HCFA, the Health Care Financing 
Administration, with HHS for Region 5 located in Chicago.
    Welcome, and you're recognized.

  STATEMENT OF DOROTHY BURK COLLINS, REGIONAL ADMINISTRATOR, 
HEALTH CARE FINANCING ADMINISTRATION, DEPARTMENT OF HEALTH AND 
             HUMAN SERVICES, REGION V, CHICAGO, IL

    Ms. Collins. Chairman Mica, Congressman Souder, thank you 
for inviting me to be here today with you and your constituents 
to discuss our efforts to improve Medicare guidance to 
hospitals and other providers. I appreciate this opportunity to 
hear firsthand from you and from others here about your needs 
and concerns.
    Assuring and enhancing access to quality care is a high 
priority for us. We want to help hospitals and physicians 
provide all the care their patients need that we, by law, can 
cover, and we are taking a number of steps to help providers 
understand Medicare policy and procedures. We're also working 
to increase our oversight of the private insurance companies 
that, by law, process Medicare claims. We want our guidance to 
be clear so providers and contractors understand and can follow 
the rules. This isn't always easy since the laws governing 
Medicare are complex and extensive. We have, therefore, 
initiated a wide range of educational activities targeted 
specifically to hospitals and other providers.
    For example, we are airing satellite broadcasts to hundreds 
of sites across the country on topics of interest to providers, 
such as resident training, as well as other health initiatives. 
We are developing computer-based training modules for providers 
on topics such as proper claim submission and Medicare 
Secondary Payer rules. And we maintain the Health Care 
Financing Administration Web site, www.hcfa.gov to provide up-
to-date, easily accessible material for hospitals on a wide 
variety of issues, including interactive courses on proper 
filing and documentation of claims. And we are enhancing our 
toll-free customer service lines at all Medicare intermediaries 
to provide answers to questions hospitals and other providers 
may have. Also, for our contractors, we are developing report 
cards that will rate and rank their performance. We are 
requiring them to report regularly to us on payment and coding 
policy changes. We are evaluating local coverage policies that 
contractors, by law, can establish in areas where there is no 
national policy so that we can better determine where national 
policy is needed and where there are issues or concerns about 
contractors' local policies.
    We want to work together with all parties, including 
beneficiaries, providers and contractors. Only by working 
together can we develop effective solutions so patients can get 
the care they need and providers can get the fair treatment 
they deserve to the greatest extent the law will allow. 
Medicare is a complex program; we've heard a lot about that 
here today. As you know, medicine itself is complex, and on any 
given day, someone will disagree with a decision or feel we 
were not responsive enough. We have been working hard to 
improve our service to beneficiaries and providers. We want to 
continue working to improve. We will continue to closely 
monitor how laws and regulations governing our programs affect 
beneficiaries and providers. We want to hear from you about 
problems that Medicare providers and beneficiaries may be 
having. We will continue to examine our own regulations and 
policies to make adjustments where we can under law to ensure 
that beneficiaries continue to have access to the quality care 
that they deserve.
    I thank you again for inviting me. I look forward to 
hearing from you, working with you, and I am happy to answer 
any questions.
    [The prepared statement of Ms. Collins follows:]

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    Mr. Mica. Well, thank you. You've heard, Ms. Collins, some 
of the problems that have surrounded trying to comply with HCFA 
regulations. Part of the problem is that Congress, of course, 
has altered some of the laws relating to operation of HCFA, and 
I think with good intent. But the agency is responsible for 
trying to put into place the regulations that make the system 
work.
    We heard concerns about new guidelines coming out, I guess 
in July, in 90 days and then the problems of compliance. We 
heard a previous witness testify they had to spend $1 million, 
I think, on software and computer equipment for compliance 
reasons. And it appears that we have some problems in trying to 
define what's eligible for payment.
    How do we best resolve that?
    Ms. Collins. I think we share a goal that all hospitals and 
providers under Medicare be fully informed about Medicare rules 
and regulations. Meeting that goal is a challenge because of 
the breadth and scope of the program. We are taking steps to 
improve our efforts here. Increasing our educational outreach 
efforts to providers and beneficiaries is definitely a focus of 
our organization. I think communication and providing good 
information goes a long way to meeting that objective.
    Mr. Mica. Well, one of the complaints we heard, too, we had 
someone who has been through the system, so to speak--a 
Medicare recipient--and then we had others testify that 
Medicare does not provide seniors even basic information about 
their benefits and what's covered. Is that correct?
    Ms. Collins. I think we can always improve the information 
that we provide to the Medicare beneficiaries. As you may be 
aware, most recently, the Medicare handbook used to be given 
when beneficiaries first joined Medicare and then they were 
lucky if they got an update every so often. Now, the Medicare 
handbook is provided to beneficiaries on an annual basis as a 
basic step in making sure that beneficiaries understand their 
Medicare program.
    Also, there are a variety of options available to Medicare 
beneficiaries now and there are choices for how they receive 
their Medicare benefits through managed care organizations, or 
other choices. So, there is an increased effort on the part of 
HCFA to provide information to Medicare beneficiaries at the 
local level, and, again, we are working very hard to increase 
that effort--use of our toll-free telephone lines and other 
services to try to inform Medicare beneficiaries.
    Mr. Mica. What about on-line computer access?
    Ms. Collins. Medicare maintains a Website www.Medicare.gov. 
The Website is specifically focused on providing Medicare 
information to Medicare beneficiaries and their 
representatives. The site is kept up-to-date with a full range 
of information about coverage and benefits to Medicare 
beneficiaries. Although use of the Internet by seniors and 
everyone else is increasing, there is nothing like that 
personal contact. So there is a 1-800 number for beneficiaries 
and also increased effort with local organizations to provide 
information on a personal level.
    Mr. Mica. One of the questions and topics of conversation 
in this hearing has been the question of coverage for pre-
surgical testing. Has HCFA changed or reinterpreted its 
policies regarding coverage of these services? And, if so, why 
and where are we in this matter?
    Ms. Collins. Health Care Financing Administration has not 
issued anything specific regarding a national policy on this 
particular issue. Pre-operative testing is paid for, is part of 
the diagnosis-related group for an inpatient surgery, and pre-
operative testing for outpatient surgery is covered when it is 
medically necessary, meaning that there are signs and symptoms 
that justify the tests.
    I think there's been some confusion about this, and I've 
heard a great deal about this here today and will seek to 
followup on this to make sure there is a clear understanding of 
this, because I think that there has been some confusion 
regarding outpatient billing. The rules require outpatient 
billing to be based on the final diagnosis. Sometimes the 
initial screening may not actually match up with that final 
diagnosis and it may appear that there isn't a reason for that 
initial test. Providers can put on the claim codes for symptoms 
that could justify that initial test.
    Again, we would be happy to facilitate discussions here in 
Fort Wayne and throughout the State to try to make sure that 
there is a good understanding of the requirements and to clear 
up this issue.
    Mr. Mica. Well, one of the questions that's arisen, too, is 
is HCFA redefining what's medically necessary, and if they're 
doing so on an overall basis or as it may refer to individual 
health problems. What's the status of the definition of 
``medically necessary'' and how do health care providers and 
patients and others find out what ``medically necessary,'' is 
defined as today by HCFA? And then is there a process--is this 
something that is changing, and then how do we get that word 
out so that both the providers and the beneficiaries know 
what's acceptable under the term ``medically necessary?''
    Ms. Collins. Health Care Financing has not recently issued 
any changes to the definition of ``medical necessity,'' but 
that does not mean that there isn't active discussion going on 
about that and that there are differences of opinion about that 
across the country. In fact, I became aware that the American 
Medical Association, at one of their meetings just last week 
that the definition of ``medical necessity'' and ``screening'' 
was a topic of great discussion, and they issued proposals 
related to that.
    I think that this is something that is under discussion, 
but no changes have been made nationally. Where there is no 
national policy, local medical review policy can be developed 
by the local intermediary, and after it is discussed with 
groups in the State, medical societies and others, to make 
decisions on medical necessity for certain procedures.
    Mr. Mica. There's also concern today about the absence of a 
formal appeals process for coverage decisions. What can we do 
to improve that process? And maybe you've heard some of the 
suggestions that were put forward.
    Ms. Collins. Are you referring to Ms. Borror's testimony?
    Mr. Mica. Right.
    Ms. Collins. I think her concern was the appeal of survey 
findings from a State survey while an enforcement action is 
still being determined and still under the control of the 
agency that did that survey in the first place. There's a 
process called an ``Informal Dispute Resolution Process,'' and 
how that is conducted by each State survey agency is at the 
option of the State under our requirements.
    Some States do use independent entities to conduct that 
review. I believe here in Indiana the State agency itself 
conducts that review. There also is an independent body, 
through an administrative law judge process, through hearings 
and appeals, that would provide a fully independent process for 
review of any survey citations that led to enforcement actions 
that the nursing home would want to appeal.
    Mr. Mica. Thank you. Mr. Souder.
    Mr. Souder. The light that keeps going on and off above 
your head is a new thing that the Department of Justice has put 
in for our hearings. It's kind of to test your heart rate to 
see if you're answering----
    Let me start with Ms. Collins, and I want to come back to 
Dr. Schroeder and Mr. Tobalski.
    Parkview Hospital received two newsletters via your 
carrier, Administar, one dated March 1999 and another January 
2000 that refers to ``Coverage Policy Clarification Screening 
and Pre-operative Services and Pre-operative Testing, a 
Reminder.''
    Can you clarify or are you familiar with those two 
newsletters? And that certainly gives the impression that there 
were changes.
    Ms. Collins. I would like to discuss those. I became aware 
of them late last week and I would like to discuss this in more 
detail with Parkview Hospital, with the intermediary and others 
to clear this up. I'm not a technical expert in this area, but 
I think there is confusion about routine screening--say like a 
cholesterol screening pre-operatively versus pre-op testing 
that may be entirely appropriate for a particular surgery I 
believe that that was the intent of the clarification that our 
intermediary issued. And I want to be sure that there's a good 
understanding about pre-operative testing that it's appropriate 
to assure safe and effective treatment for the beneficiary. 
That is, indeed, covered. But, as you know, routine screenings 
are specifically excluded by law from Medicare coverage, except 
certain preventive tests have recently been added for coverage.
    Mr. Souder. Well, first let me say that I appreciate your 
commitment to work with Parkview directly in clarifying, and 
I'm looking forward to that and hearing the resolution. I do 
want to pursue this a little bit further, because just a few 
minutes ago in response to Mr. Mica, you said that certain 
tests could be justified if they were directly related. And I 
have a followup that related to something Dr. Schroeder said 
earlier.
    But one of the concerns that was also expressed this 
morning and that I've had to deal with as a Congressman is a 
fact that ``could justify'' means if, in fact, they submitted 
them under what we heard earlier was a ``Oh. Well, this should 
go as part of the operation and not as a diagnostic test'' and 
could justify means that if it's put in under diagnostic but 
found to be inappropriate, then they get cited for fraud.
    And Parkview and other hospitals in this region have had 
that very thing happen, because, in fact, in your testimony--
and this is something we've tried to address--you talk about 
your anti-fraud efforts, and we certainly have put a lot of 
pressure on it to try to address fraud, and we realize our 
efforts to reduce fraud, wastes and abuse have brought some of 
this on. But I think it would be fair to say that while you 
have discovered fraud, much of what usually gets mulched down--
what we found is fraud, waste, abuse and lots of confusion. And 
that, in fact, the danger here is that it could be justified. 
If you were a hospital administrator, wouldn't you be erring on 
the side of not submitting rather than being cited for fraud 
and having a whole legal process develop with that? And have we 
not put the burden of proof, in fact, where it leads to denial 
of services as opposed to being responsive to the patient?
    Ms. Collins. Let me respond to that by saying that I think 
that if I were a hospital administrator and coming from my 
perspective as an administrator of the program benefit, that 
the needs and the concerns of the beneficiary are always first, 
and, certainly, you want to operate within the parameters of 
the law. But providing good quality care to that patient is the 
priority.
    Mr. Souder. It's the priority, but you go broke. And we've 
had a number of hospitals in this region financially not be 
able to make it, look at consolidations, and, in fact, Parkview 
and Lutheran have absorbed the administration of those 
hospitals, because a lot of the smaller hospitals have, in 
fact, tried to meet the medical needs of their people and 
can't. And, now, what we have are our remaining large hospital 
systems in this district coming to me and saying, ``We can't, 
long-term, meet this unless we can figure this out--there's 
only so much cost shifting we can do.''
    Now, Dr. Schroeder raised another point, and that was is 
that she said, as I understood it--and correct me if I'm 
wrong--that some tests may not be necessary? As I understood 
Ms. Collins' testimony, that if there was a direct reason 
related to this test to have the pre-screening diagnostic 
tests, it would or could be justified. Doesn't necessarily mean 
it would, but it possibly could be justified. And, most likely, 
if it were directly related, it would be a medical necessity.
    But, as I understood you to say in your testimony, there 
are some things with the heart that people at a certain age, 
particularly if they've had any pattern of heart problems, that 
you would do that test even if you normally wouldn't do it as a 
diagnostic test or have any indication; is that correct?
    Dr. Schroeder. That's exactly it. That, pre-operatively, 
there may be situations where you want the results of a test 
even though they have no signs or symptoms. For an outpatient 
surgery, you want to know that that's OK before you do the 
surgery. That's the prudent thing to do.
    Mr. Souder. And, Ms. Collins, are you saying that, either 
because of something that Congress has done or that HCFA has 
interpreted or a carrier has interpreted, that a test on 
somebody of an age who is at risk of a heart problem wouldn't 
be allowed testing?
    Ms. Collins. There is no national policy saying that EKGs 
are or are not required pre-operatively across the board for 
any patient 65 years or older. The local fiscal intermediary 
here in Indiana, Administar Federal, has issued local Medical 
Review Policies related to the coverage of EKGs pre-
operatively, and that policy was developed after a full review 
and comment here in the State, but, obviously, there is still 
concern regarding that.
    And I would like to followup on that and see if we can have 
further discussions to try to reach a better consensus about 
what is appropriate pre-operatively.
    Mr. Souder. So what I understand is that--I'm not sure I 
fully understood this before is that when we heard several 
times today that other insurers have to clearly say what is 
covered, and Medicare does not as much, although certainly 
there's a large attempt, but are you telling me that a decision 
like a question I just asked will depend by State?
    Ms. Collins. Where there is no national policy regarding 
certain medical review decisions on determination of medical 
necessity, yes, the local intermediary, based on a local 
practice by physicians and providers in that State can make 
local policy.
    Mr. Souder. So in Cameron Hospital in Angola where 40 
percent of the people coming in are from other States and 
they're in the corner of northeast Indiana, or Parkview which 
gets a lot of Ohio traffic in through here, or even Lutheran 
and their system that gets, Mr. Miller estimated, 15 percent--
how do they function?
    Ms. Collins. The local Medical Review Policy applies within 
the State where the service is provided. If the intermediary in 
Ohio has a different policy in this area, it would not apply 
here in Indiana.
    Mr. Souder. Mr. Tobalski, could you explain a little bit--I 
alluded to a few things there. Could you explain a little bit 
how what you've heard now from Ms. Collins and some 
clarification and willingness to work through it and how you 
came to your decision and what might have precipitated some of 
that?
    Mr. Tobalski. Sure. We received the bulletins that you 
referred to earlier from Medicare, from HCFA and their fiscal 
intermediary that indicated that pre-operative testing would be 
considered a routine screening unless appropriate signs and 
symptoms were documented in the medical record. We asked for a 
clarification of that, and the clarification we were given is 
that a patient, for instance, with heart disease and/or 
diabetes would be a patient that a surgeon typically would have 
a concern over before operating, before putting them under 
general anesthesia.
    And, of course, I'm reciting this from conversations that 
I've had with clinical people, and I, myself, am not a care 
provider. But that those people would have to have symptoms 
present for us to be able to do pre-surgical testing for that 
to be covered. Minus symptoms, the tests would not be covered. 
Yet I think most surgeons would tell you that pre-surgical 
screening is very important for patients with chronic 
conditions and/or other diseases whether or not symptoms are 
present at a given time in a person's medical history.
    We felt there really was only one thing to do with that new 
interpretation. That was to change the way we were 
communicating policies and to proactively educate Medicare 
recipients on a very complicated topic. These are difficult 
enough topics for health care providers to sift through let 
alone Medicare recipients and/or seniors. And, so, we 
proactively sent out information to a large group of seniors in 
advance to try to get them more familiar with the new 
interpretation, because we felt they had a right to know.
    Mr. Souder. Dr. Schroeder, do you want to add anything at 
this point?
    Dr. Schroeder. Well, again, I think that the issue is best 
clarified, perhaps, by an example, and since I'm an 
ophthalmologist, most of my surgeries don't involve a huge 
amount of blood loss, but let's say a dacryocystorhinotomy, 
which is a surgery to open up a canal into the nose when the 
tears don't drain. And, usually, there's not a lot of blood 
loss, but there certainly can be. It's an outpatient procedure, 
and especially if you were going to do it on someone who's 70, 
you'd want to know in advance if they were anemic. They may not 
be dizzy; they may not be pale; they may not have any symptoms 
or signs of anemia. And if you'd link the diagnosis of a nasal 
lacrimal duct obstruction, or tears that don't drain, with 
obtaining a CBC, then it would be kicked out as being not 
medically necessary.
    But my point is that no prudent surgeon would do some 
surgeries without--now, you people might argue about what is or 
isn't medically necessary. Maybe someone would say, ``I'm so 
good, I never have blood loss. I don't need to check the CBC.'' 
But you see the point is that it's not linked as medically 
necessary by the diagnosis, and, yet, it's certainly not a 
screening test in the sense of screening massively for anemia, 
and that, I think, is the problem.
    Mr. Souder. I would appreciate it, Ms. Collins, if you can 
look at the list that Dr. Schroeder gave, and if we can--I 
mean, this type of stuff isn't going to go away. We're likely 
to continue to have these kinds of discussions as long as 
there's a Medicare program, but to the degree that we can 
refine.
    I also had a few other questions. One of the things also 
that came up is that hospitals can no longer write off as a 
loss outstanding bills. Could you explain that?
    Ms. Collins. I took that as a note, and I just don't feel 
prepared to answer that question. I'd be happy to followup with 
a written response to that.
    [The information referred to follows:]

    As an incentive to hospitals to collect cost sharing and 
not cost-shift onto private pay patients, Medicare shares bad 
debts with hospitals. The Balanced Budget Act phased in a 
reduction in the amount of bad debt shared by Medicare. 
Currently, Medicare pays 55 percent of hospitals' bad debts 
attributable to unpaid Medicare beneficiary deductibles and 
coinsurance.

    Mr. Souder. OK. We'll keep the record open, because we 
heard it several times. Do you have an additional comment with 
that, Mr. Tobalski?
    Mr. Tobalski. No. The interpretation for us is very clear. 
We cannot write off charges to Medicare patients, because it is 
viewed as an inducement to get Medicare patients to come to our 
institution or to our providers, and that is clearly illegal to 
do.
    Mr. Souder. Is that a relatively new regulation?
    Mr. Tobalski. No. I think that's been in place. I think 
that regulation's been in place for a while. I'm not an expert 
on this as far as how long that has been in place, but it does 
exist.
    Mr. Souder. Could you explain a little bit, Ms. Collins, 
why hospitals would be held responsible for determining the 
medical necessity, and is it possible to clarify this more? If 
other insurance companies can clarify their guidelines, why is 
it, then, so difficult for Medicare to do this?
    Ms. Collins. I don't know that it's more difficult for us 
than other insurance companies, but I think we have an 
obligation to try to make our rules and instructions more 
clear, so providers can better understand what is and is not 
covered. I don't have a new answer for that, other than our 
efforts to provide better information, to have discussions 
about this, to be sure that there's an understanding so that 
there is consensus about these issues and to keep the conflicts 
or legitimate differences of opinion to a minimum.
    Mr. Souder. Mr. Tobalski, this stack of--well, first of 
all, let me ask Ms. Collins. We heard several times about the 
new regulations that just came out last week. Is HCFA going to 
ask Congress to delay the implementation? I don't think it 
seems reasonable that they're going to be able to get their 
systems.
    Ms. Collins. The information I have is that we will meet 
the July 1st date for implementation of outpatient Prospective 
Payment System. The initial implementation of this had been 
delayed. There was a previous implementation date, but our 
efforts to ensure our Y2K compliance delayed implementation. 
The information I have is we are standing firm on this July 1st 
date.
    Mr. Souder. The July 1st implementation date--is that when 
you're going to be ready or when you expect the hospitals to be 
ready?
    Ms. Collins. That is when billing will begin under the new 
system.
    Mr. Souder. Mr. Tobalski, how are you--how is Parkview and 
your system going to try to prepare and figure out how not to, 
A; get caught in fraud? B; make sure that patients know what 
they're going to have to cover and what you're going to cover 
by July 1st?
    Mr. Tobalski. Well, we're going to work very, very hard. 
Our two biggest concerns are that almost all health care 
providers are going to have to find a software solution for 
this and find vendors who can provide the software solution. We 
have to implement that software solution, train staff, and, 
basically, our biggest concern is we will not have a software 
system in place that will produce a bill that the intermediary 
will accept and then pay.
    That's not going to change the health care that we provide 
the patients, of course, but the amount of time that we have to 
adapt is extremely short and we are extremely skeptical of how 
ready we will be. If our only alternative is to be as ready as 
we can be, then that's obviously what we're proceeding on.
    We had staff reviewing these documents this weekend, since 
they are now available. And that will be the very large task of 
some of our finance and patient accounting staff over the next 
2 months.
    Mr. Souder. Ms. Collins, given the fact that Mr. Tobalski 
raised for you the concern about HCFA's staff and the ability 
to respond and to work with these things--and, undoubtedly, we 
are under tremendous cost pressures, because we were told by 
the Medicare Commission multiple times that it's going broke 
initially by 2002, which is why everybody has been pushing so 
hard on this to try to preserve and save Medicare, but one of 
the things that's hard for me to understand with my business 
background is why, when something like this was going, it 
wouldn't be built into the lead time in a plan that there would 
be software to help providers reach the ability to cope with 
something like this, particularly if you're facing lawsuits 
afterwards?
    A natural business reaction would be to put up a protective 
shield that in effect, tells people, ``We're not going to cover 
you. We'll cover you if we can.'' Then if, indeed, they can't 
write off the bad errors as a loss, we kind of caught them 
every which direction.
    Was there any discussion inside HCFA about making sure 
there was software before you had a lead time?
    Ms. Collins. I'm unaware of anything related to software 
development related to this, so I can't answer your question 
specifically.
    Mr. Souder. OK. Well, we'll pursue these things at the 
Washington level, too, I'm sure. Are there any other comments 
or questions that anyone on the panel has?
    Mr. Tobalski. I'd like to make one short comment.
    Mr. Souder. Uh-huh.
    Mr. Tobalski. Earlier, on the other panel, there was 
mention of hospitals and corporate compliance programs. I 
wanted to make sure that each of you understood that hospitals 
and health care providers developing comprehensive corporate 
compliance programs are a good thing. We should be doing that. 
You should expect us to do that. The difference is, I've worked 
in hospitals now for about 25 years--four different hospitals--
and I don't think I've ever really looked across the desk or 
across the nurses' station at a nurse, at a physician, at an 
accountant, at an administrator who had fraud in their eyes. 
And corporate compliance programs really should be built on the 
assumption that we're doing things proactively, we're doing 
them right, we want to comply and with some level of 
cooperation between Medicare, the government and providers in 
developing these programs.
    I think the current environment is not like that, like I 
mentioned earlier. Providers are really viewed as people who 
are abusing the system, and there just are way too many health 
care providers and physicians and hospitals that are trying to 
comply to the best of their ability, and the implication that 
somehow we're trying to get something out of the system that 
we're not entitled to is really insulting, to people who have 
worked in the profession for a long time or for just a short 
period of time.
    So I do just want to again reinforce the commitment that 
health care providers and that Parkview Hospital have toward 
corporate compliance. It is important.
    Mr. Souder. I do want to say, for the record, and in 
defense of the administration that we've had some whoppers in 
front of our committee. We had a firm out West with $1 billion 
in long-term health care, and, yet, they were still in the 
system because nobody else would provide some of that health 
care, and they had taken advantage of that. I saw on 20/20 or 
60 Minutes where they had this lab in Los Angeles.
    But, to me, as a business person, part of what I don't 
understand is why they had millions of dollars going through a 
little office where they didn't see any patients and just one 
walk-through and why there would be an assumption that a long-
serving hospital or a doctor who had been doing this for a 
career would be in the category of the exceptional. Is what 
you're trying to address there, that when you look for fraud, 
you assume past precedents might lead to the word ``fraud'' 
here? Most of what we've been dealing with is confusion, and 
that's really what's upsetting.
    Also, I would like to thank Mr. Mica again. I know we're 
running really tight on time, but I thank him for coming in, 
for Sharon and Lisa for their work, for Elizabeth Rogers on my 
staff and Mary Honegger with working on the hearing. State 
Representative Gloria Goeglein has been here the whole time. 
She's been a crusader for seniors' rights in the legislature 
and making sure that all health care, including mental health, 
is well-covered in our district, and I appreciate her very 
much.
    I'd also ask, for the record, that the charge that Mr. 
Miller presented and the other statements that weren't in the 
record in full be put into the record.
    Mr. Mica. Without objection, so ordered. Also, Mr. 
Tobalski, you had presented 1,300 pages. Would you identify 
that again? What is it?
    Mr. Tobalski. These are the regulations, explanations and 
addendums for the Ambulatory Patient Classification.
    Mr. Mica. And you're----
    Mr. Tobalski. Payment Classification.
    Mr. Mica. And you're providing them to the subcommittee?
    Mr. Tobalski. Well, I bought them as a prop. If you would 
like them.
    Mr. Mica. Well, they're----
    Mr. Tobalski. I had not brought them with the intent you 
would take them back. And one of your staffers, I think, is 
encouraging me to keep them.
    Mr. Mica. OK.
    Mr. Tobalski. And to not submit these into the record.
    Mr. Mica. All right. Well, that is a request, but we will 
refer to those in the record, and they are available, I'm sure, 
as public record.
    Mr. Souder. I'd also like to thank Ms. Collins for doing a 
schedule shift to be here with us today. Because of the 
tightness of the congressional schedule, we don't have the 
option of the other days during the week. And I appreciate very 
much your accompanying.
    Mr. Mica. Thank you. As I announced at the beginning of the 
hearing and with the consent of Mr. Souder and the minority, we 
will leave the record open for a period of 2 weeks. Additional 
questions may be submitted to all of the witnesses who appeared 
before us today. We'd ask their compliance with providing that 
information, material and responses in a prompt fashion to the 
subcommittee.
    Mr. Souder, anything further at this point? Again, I'd like 
to thank Mr. Souder for requesting this hearing. We try, at 
least under the period in which Mr. Souder and I've been in the 
majority, to not conduct all of the congressional business in 
Washington but to take it out into the country and hear from 
the people who are directly affected by our Federal programs. 
We do have a responsibility to make certain that taxpayer 
dollars are properly expended and also programs that are 
authorized and funded by Congress operate efficiently and with 
the full intent of Congress. So this hearing will go a long way 
toward trying to make a very important program work and 
function as intended by Congress.
    There being no further business come before the Criminal 
Justice, Drug Policy, and Human Resources Subcommittee of the 
House of Representatives, this meeting is adjourned. Thank you.
    [Whereupon, at 11:20 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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