[Congressional Record Volume 143, Number 18 (Wednesday, February 12, 1997)]
[Extensions of Remarks]
[Pages E237-E238]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   THE PATIENT FREEDOM OF CHOICE ACT

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Wednesday, February 12, 1997

  Mr. STARK. Mr. Speaker, I am pleased to introduce the Patient Freedom 
of Choice Act of 1997.
  Previously, I have sponsored legislation that restricts physicians 
from self-referral because this practice leads to overutilization and 
increased health care expenses. This legislation is designed to rectify 
a similar problem.
  Today, nonprofit hospitals, forprofit hospitals, and large health 
care conglomerates have acquired their own posthospital entities such 
as home health care agencies, durable medical equipment businesses and 
skilled nursing facilities so as to refer discharged patients 
exclusively to their own services. As a result, many nonhospital based 
entities have seen inflows of new patients completely halted once a 
hospital acquires an agency in their service area.
  The effects of this self-referral trend are harmful. Hospitals that 
refer patients exclusively to their own entities eliminate competition 
in the market and thereby remove incentives to improve quality and 
decrease costs. Further, hospitals are able to selectively refer 
patients that require more profitable services to their own entity 
while sending the less profitable cases to the nonhospital based 
entities. The nonhospital entity is forced to either raise prices or 
leave the market. Worst of all, patients have no voice in deciding 
which entity provides the services.
  This legislation remedies the problem by leveling the playing field. 
First, hospitals will be required to provide those patients being 
discharged for post-hospital services with a list of all participating 
providers in the service area so that the patient may choose their 
provider.
  Second, hospitals must disclose all financial interest in post 
hospital service entities to the Secretary of Health and Human 
Services. In addition, they must report to the Secretary the percentage 
of post hospital referrals that are

[[Page E238]]

made to their self-owned entities as well as to other eligible 
entities. A hospital that fails to comply with the bill's requirements 
would be subject to a civil money penalty of $10,000 for each 
violation.
  This legislation does not hinder a hospital's ability to offer its 
own services. It merely guarantees that all providers will have an 
opportunity to compete in the market. Most importantly, it guarantees 
that patients will have choice when selecting their provider.
  I am drafting a similar bill for introduction later this year which 
would require that all providers--not just hospitals--give freedom of 
choice to Medicare and Medicaid beneficiaries. I see no reason why a 
patient should be held captive to a provider's preference for 
referral--it should be the patient's choice. For example, home health 
agencies who refer clients to nursing homes should provide the 
beneficiary with a complete list of all Medicare-Medicaid certified 
nursing homes in the area in which the patient resides. This 
requirement would ensure that all Medicare and Medicaid beneficiaries 
are given a choice of provider regardless of referral source.
  Additionally, I will add to the next bill a third party cause of 
action which would allow these providers to bring suit against 
hospitals for failing to adhere to the proper discharge planning 
process.
  Attached is a letter that typifies the current problem in the home 
health services market.
                                        Visiting Nurse Association


                                      of Greater Philadelphia,

                                                 December 1, 1995.
       Re United States v. Heartland Health Systems Inc. Civil 
     Action No. 95-6171-CV-SJ-6.

     Ms. Gail Kursh,
     Chief, Professions & Intellectual Property Section/Health 
         Care Task Force Antitrust Division, U.S. Department of 
         Justice, Washington, DC.
       Dear Ms. Kursh: I am writing to urge that the Justice 
     Department not consent to the proposed final judgment in the 
     above-referenced case, because the ``Referral Policy'' 
     regarding provision of home health care does not adequately 
     protect patient choice and fair competition.
       The VNA of Greater Philadelphia is the largest home health 
     agency in Pennsylvania. We are a non-profit, community-based 
     agency which has served communities in southeastern 
     Pennsylvania, including the City of Philadelphia, for 110 
     years. We provide home health services to approximately 2,000 
     patients a day, many of whom are Medicare and/or Medicaid 
     patients referred for care directly following an episode of 
     hospitalization.
       Patient choice and fair competition are protected by both 
     Medicare and Medicaid law and by antitrust provisions. The 
     proposed Heartland referral policy undermines these 
     protections. Heartland would have no obligation to provide 
     reasonable information about other home health providers in 
     the community for patients who have expressed no provider 
     preference. Telling a hospitalized patient that there are 
     other providers listed in the telephone book and then giving 
     the patient ``time to investigate'', all in the context of 
     the Heartland representative extolling the virtues of its 
     home health service, clearly encourages steering patients to 
     the hospital-owned agency. Further, a policy of stonewalling 
     patient's requests for information about other providers, 
     places the discharge planning staff in the position of 
     denying knowledge that they actually have about alternate 
     providers. This clearly undermines continuity of care for 
     patients.
       Although the Heartland consent decree may have no formal 
     precedential impact, in practice this decree could have far-
     reaching, negative impact on patients and on independent 
     providers, including visiting nurse associations, because it 
     would send a clear signal that anti-trust and patient choice 
     protections are no longer to be taken seriously.
       We urge that you require a more aggressive policy to assure 
     that vulnerable, hospitalized patients truly have access to 
     the information they need to make an informed choice of their 
     home health provider.
           Sincerely,
     Stephen W. Holt.

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