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Michigan Non-Profit Homes Association Conference, East Lansing, MI, September 13, 1972 (2)
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Michigan Non-Profit Homes Association Conference, East Lansing, MI, September 13, 1972 (2)
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The original documents are located in Box D33, folder "Michigan Non-Profit Homes
Association Conference, East Lansing, MI, September 13, 1972 (2)" of the Ford
Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential
Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D33 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
NINETY-SECOND CONGRESS
WILBUR D. MILLS, ARK., CHAIRMAN
AL ULLMAN, OREG.
JOHN W. BYRNES, WIS.
JAMES A. BURKE, MASS.
JACKSON E. BETTS, OHIO
MARTHA W. GRIFFITHS, MICH.
HERMAN T. SCHNEEBELI, PA.
DAN ROSTENKOWSKI, ILL.
HAROLD R. COLLIER, ILL.
COMMITTEE ON WAYS AND MEANS
PHIL M. LANDRUM, GA.
JOEL T. BROYHILL, VA.
CHARLES A. VANIK, OHIO
BARBER B. CONABLE, JR., N.Y.
RICHARD H. FULTON, TENN.
CHARLES E. CHAMBERLAIN, MICH.
OMAR BURLESON, TEX.
JERRY L. PETTIS, CALIF.
U.S. HOUSE OF REPRESENTATIVES
JAMES C. CORMAN, CALIF.
JOHN J. DUNCAN, TENN.
WILLIAM J. GREEN, PA.
DONALD G. BROTZMAN, COLO.
SAM M. GIBBONS, FLA.
WASHINGTON, D.C. 20515
HUGH L. CAREY, N.Y.
JOE D. WAGGONNER, JR., LA.
JOSEPH E. KARTH, MINN.
September 7, 1972
JOHN M. MARTIN, JR., CHIEF COUNSEL
J. P. BAKER, ASSISTANT CHIEF COUNSEL
RICHARD C. WILBUR, MINORITY COUNSEL
MEMORANDUM
To:
Mr. Paul Miltich
Office of Honorable Gerald R. Ford
From:
Office of Minority Counsel
Re:
Telephone request
In response to your telephone request earlier today,
we are sending material relating to proposals affecting
nursing homes and similar institutions under H.R. 1 as
passed by the House. In addition to a Committee Print
summarizing the House-passed bill, there is a Xerox copy
of more elaborate explanations of pertinent provisions
from the House Report on H.R. 1. Also enclosed is a sum-
mary of tentative modifications in these proposals made by
the Senate Finance Committee.
This a large amount of material, but we have attempted
to highlight the particular provisions which are likely to
be of greater interest to you, and a further condensation
of these provisions may be found in a marked section of re-
marks (copy also enclosed) by Mr. Byrnes on the House floor
during debate on H.R. 1.
As noted earlier in our telephone conversation, the
Chairman of our committee has indicated that further con-
sideration of various national health insurance proposals
will not be possible this year. The Committee held 4 1/2
weeks of public hearings on these measures late in 1971.
When the Committee does resume deliberations on national
health insurance, it undoubtedly will again review the
medicare and medicaid programs.
If you have any questions about the enclosed material,
or if we may be of further service in any additional way,
please let us know.
92d Congress
}
COMMITTEE PRINT
1st Session
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
SUMMARY OF PROVISIONS OF
H.R. 1
THE "SOCIAL SECURITY AMENDMENTS
OF 1971"
As REPORTED TO THE
HOUSE OF REPRESENTATIVES
ON
MAY 26, 1971
(House Report No. 92-231)
U.S. GOVERNMENT PRINTING OFFICE
62-854 O
WASHINGTON : 1971
CONTENTS
Page
I. Provisions relating to the social security cash benefits program:
Five-percent increase in social security benefits
1
Automatic increase in benefits, the contribution and benefit base, and
in the earnings test
1
Special minimum primary insurance amounts
2
Increased widow's and widower's insurance benefits
2
Increased benefits for those who delay retirement beyond age 65
2
Age-62 computation point for men
2
Additional dropout years
3
COMMITTEE ON WAYS AND MEANS
Election to receive actuarially reduced benefits in one category not to
be applicable to certain benefits in other categories
3
WILBUR D. MILLS, Arkansas, Chairman
Computation of benefits based on combined earnings
4
JOHN C. WATTS, Kentucky
JOHN W. BYRNES, Wisconsin
Liberalization of the retirement test
4
AL ULLMAN, Oregon
JACKSON E. BETTS, Ohio
Reduced benefits for widowers at age 60
4
JAMES A. BURKE, Massachusetts
HERMAN T. SCHNEEBELI, Pennsylvania
Childhood disability benefits
4
MARTHA W. GRIFFITHS, Michigan
HAROLD R. COLLIER, Illinois
Continuation of student's benefits through end of semester
4
DAN ROSTENKOWSKI, Illinois
JOEL T. BROYHILL, Virginia
Benefit-eligibility requirements for a child adopted by an old-age or
PHIL M. LANDRUM, Georgia
BARBER B. CONABLE, JR., New York
disability insurance beneficiary
5
CHARLES A. VANIK, Ohio
CHARLES E. CHAMBERLAIN, Michigan
Nontermination of child's benefits by reason of adoption
5
RICHARD H. FULTON, Tennessee
JERRY L. PETTIS, California
Elimination of the support requirements for divorced women
5
OMAR BURLESON, Texas
JOHN J. DUNCAN, Tennessee
Waiver of duration-of-marriage requirements in case of remarriage
5
JAMES C. CORMAN, California
DONALD G. BROTZMAN, Colorado
Disability insured status for individuals who are blind
6
WILLIAM J. GREEN, Pennsylvania
Wage credits for members of the uniformed services
6
SAM M. GIBBONS, Florida
Reduction in waiting period for disability benefits
6
HUGH L. CAREY, New York
Disability insurance benefits applications filed after death
6
JOE D. WAGGONNER, JR., Louisiana
Disability benefits affected by the receipt of workmen's compensation
6
JOHN M. MARTIN, JR., Chief Counsel
Optional determination of self-employment earnings
7
J. P. BAKER, Assistant Chief Counsel
Payments by an employer to the survivor or estate of a former em-
RICHARD C. WILBUR, Minority Counsel
ployee
7
Coverage of members of religious orders who are under a vow of
(II)
poverty
7
Self-employment income of certain individuals living temporarily
outside the United States
7
Penalty for furnishing false information to obtain a social security
number
7
Trust fund expenditures for rehabilitation services
8
Other OASDI amendments
8
II. Provisions relating to medicare, medicaid, and maternal and child
health:
A. Eligibility and payment for benefits:
Extending health insurance protection to disabled beneficiaries
8
Hospital insurance for the uninsured
8
Amount of supplementary medical insurance premiums
9
Change in supplementary medical insurance deductible
9
Coinsurance under hospital insurance and the lifetime reserve
9
Automatic enrollment for supplementary medical insurance
9
Incentives for comprehensive care under medicaid
9
Cost sharing under medicaid
10
Determination of payments under medicaid
10
Relationship between medicare and Federal employees benefits
10
Medicare benefits for people living near United States border
10
B. Improvements in operating effectiveness:
Límitation on Federal participation for capital expenditures.
11
Experiments and demonstration projects in prospective reimburse-
ment and incentives for economy
11
Limits on costs recognized as reasonable
11
Limits on prevailing charge levels
11
Limits on skilled nursing home and intermediate care facility
costs
12
(III)
IV
V
II. Provisions relating to medicare, medicaid, and maternal and child
IV. Provisions relating to family programs:
health-Continued
A. Opportunities for families program:
Page
B. Improvements in operating effectiveness-Continued
Page
Registration for employment and training
22
Payments to health maintenance organizations
12
Child care and other supportive services
23
Payments for services of teaching physicians
12
Operation of manpower services, training and employment
Advance approval of extended care and home health services
programs
23
under medicare
12
Allowances of individuals participating in training
24
Termination of payments to suppliers of services who abuse the
Utilization of other programs
24
medicare or medicaid programs
12
Rehabilitation services for incapacitated family members
24
Elimination of requirement that States have comprehensive
Evaluation and research; reports
24
medicaid programs
13
B. Family assistance plan:
Reductions in care and services under medicaid
13
Payment of benefits
24
State determinations of reasonable hospital costs under medicaid
13
Rehabilitation services and child care for incapacitated family
Government payment no higher than charges
13
members
24
Institutional planning under medicare
13
Evaluation and research; reports
25
Federal matching for automated medicaid systems
13
C. Determination of benefits:
Prohibition of reassignments
13
Uniform determinations
25
Institutional utilization review under medicaid
13
Eligibility for and amount of benefits
25
Stopping payment where hospital admission not necessary under
Definition of income
25
medicare
14
Exclusions from resources
26
Use of health agencies in medicaid
14
Meaning of family and child
26
Medicaid and comprehensive health care programs
14
Optional State supplementation
27
Program for determining qualifications for certain health care
D. Procedural and general provisions:
personnel
14
Payments and procedures
27
Penalty for fraudulent acts under medicare and medicaid
14
Penalties for fraud
28
C. Miscellaneous and technical provisions:
Administration
28
Physical therapy and other services under medicare
15
Child care
28
Coverage of supplies related to colostomies
15
Obligations of parents
28
Ptosis bars
15
Local committees to evaluate program
28
Intermediate care facilities under medicaid
15
V. Other related assistance provisions:
Coverage prior to application under medicaid
15
Adoption and foster care services under child welfare
29
Certification of hospitalization for dental care
15
Provisions related to new assistance programs:
Grace period for paying medicare premium
15
Effective date for adult assistance and family programs
29
Extension of time for filing medicare claims
16
Prohibition against participation in food stamp program by
Waiver of enrollment period requirements where administrative
recipients of payments under family and adult assistance
error is involved
16
programs
29
Three-year limitation on medicare enrollment dropped
16
Special provisions for Puerto Rico, the Virgin Islands, and
Waiver of medicare overpayment
16
Guam
29
Medicare fair hearings
16
Determination of medicaid eligibility
29
Collection of medicare premium by the railroad retirement board
16
Transitional administration of public assistance
29
Prosthetic lenses furnished by optometrists
16
Limitations on increases in State welfare expenditures
30
Social services requirement in extended care facilities
16
Limitation on Federal expenditures for social services
30
Refund of excess premiums
17
Waiving of requirement for skilled nursing homes in rural areas
Public assistance amendments effective immediately:
17
Exemptions of Christian Scientist sanatoriums from certain re-
Additional remedies for State noncompliance with provisions of as-
sistance titles
30
quirements under medicaid
17
Statewideness not required for services
30
Requirements for nursing home administrators
17
Optional modification in disregarding income under AFDC
30
Termination of Nursing Home Administration Advisory Council
17
Individual programs for family services not required
30
Increase in limit on payments to Puerto Rico for medicaid
17
Enforcement of support orders
30
Provides reimbursement review board under medicare
17
Chiropractors' services
Separation of social services and cash assistance payments
31
17
Extension of title V to American Samoa and the Trust Territory
Increase in Federal matching to States for costs of establishing
of the Pacific
paternity and collecting child-support payments
31
17
Financing OASDHI
18
Vendor payments for special needs
31
III. Provisions relating to assistance for the aged, blind, and disabled:
Increase in Federal matching-WIN program
31
Eligibility for and amount of benefits
VI. Provisions for tax changes (other than payroll taxes)
31
19
Definition of income
Child care deduction
31
19
Exclusions from resources
20
Retirement income credit
31
Meaning of terms
20
Tables:
Rehabilitation services
20
Potential fiscal year 1973 costs of assistance provisions under H.R. 1
33
Optional State supplementation
21
Projected recipients under current law and persons eligible for assis-
Payments and procedures
21
tance under H.R. 1, fiscal years 1973-1977
34
Penalties for fraud
21
Potential State savings under assistance provisions of H.R. 1
35
Administration
21
Evaluation and research
22
SUMMARY OF PROVISIONS OF H. R. 1
THE "SOCIAL SECURITY AMENDMENTS OF 1971"
As REPORTED TO THE HOUSE OF REPRESENTATIVES ON MAY 26, 1971
(HOUSE REPORT No. 92-231)
I. PROVISIONS RELATING TO THE SOCIAL SECURITY
CASH BENEFITS PROGRAM
Five-percent increase in social security benefits.-Social security
benefits would be increased by 5 percent. The minimum benefit
would be increased from $70.40 to $74.00 a month. The average
old-age insurance benefit payable for the effective month would
rise from an estimated $133 to $141 a month and the average
benefit for aged couples would increase from an estimated $222 to
$234 a month. Special benefits for persons age 72 and over who
are not insured for regular benefits would be increased from $48.30
to $50.80 for individuals and from $72.50 to $76.20 for couples.
Effective date.-Benefits payable for June 1972.
Number of people affected and dollar payments.-27.4 million
beneficiaries would become entitled to higher payments and
16,000 people would be made newly eligible. About $2.1 billion in
additional benefits would be paid in the first full year. *
Automatic increase in benefits, the contribution and benefit base, and in
the earnings test
(a) Increases in benefits:
Social security benefits would be automatically increased ac-
cording to the rise in the cost of living. Increases could occur only
once a year, provided that the Consumer Price Index increased
by at least 3 percent and that legislation increasing benefits had
neither been enacted nor become effective in the previous year.
(b) Increases in contribution and benefit base:
In any year in which an automatic benefit increase becomes
effective, the social security contribution and benefit base would
be automatically increased according to the rise in average wages
covered under the social security program (if wage levels had gone
up sufficiently).
* Hereinafter the first full year, when referring to the effects of changes in the social security cash benefits
or medicare programs, refers to the 12 months beginning July 1972.
(1)
2
3
(c) Change in earnings test:
In any year in which an automatic benefit increase becomes
in determining average earnings for men, while for women only years
effective, the exempt amount under the retirement test would be
up to age 62 must be taken into account. Also, benefit eligibility is
automatically increased in the same manner as the contribution
figured up to age 65 for men and up to age 62 for women. Under the
and benefit base is increased-according to the rise in average
bill, these differences, which provide special advantages for women,
wages covered by the program.
would be eliminated by applying the same rules to men as now apply
Effective date.First possible increase effective for January 1974.
to women.
Special minimum primary insurance amounts
The new provision would become effective over a 3-year transition
period. The number of years used in computing benefits for men would
A special minimum benefit would be provided for people who
be reduced in three steps. Men who reach age 62 in 1972 would have
worked for 15 or more years under social security. The benefit would
only years up to age 64 taken into account; men who reach age 62
be equal to $5 multiplied by the number of years of coverage the per-
in 1973 would have only years up to age 63 taken into account; men
son has under the social security program, up to a maximum of 30
reaching age 62 in 1974 or later would have only years up to age 62
years. The highest minimum benefit under this provision would be
taken into account in determining average earnings. The number of
$150 for a person who had 30 or more years of coverage. The special
quarters of coverage needed for insured status for men would also be
minimum would not be raised under the automatic benefit increase
reduced in three steps, with the first step in the reduction effective
provisions.
for January 1972 and subsequent reductions in 1973 and 1974.
Effective date.-January 1972.
Effective date.-Prospective only, in 3 annual steps, becoming fully
Number of people affected and dollar payments.-300,000 people
effective for men reaching 62 in 1974 and after.
would get increased benefits on the effective date and $30 million in
Dollar payments.-$6 million in additional benefits would be paid
additional benefits would be paid in the first full year.
in the first full year.
Increased widow's and widower's insurance benefits
Additional dropout years
A widow (or widower), including those already on the rolls, would
One additional year of low earnings-in addition to the 5 years
be entitled to a benefit equal to 100 percent of the amount her deceased
provided under present law-for each 15 years of covered work could
husband would be receiving if he were still living. Benefits applied
be dropped in computing the average monthly wage on which benefit
for before age 65 would be reduced according to the widow's age at
amounts are based.
the time of application.
Effective date.-Benefits payable on the basis of the earnings of
Effective date.-January 1972.
people who reach age 62 or die after 1971 or whose first month of
Number of people affected and dollar payments.-3.4 million people
entitlement to disability insurance benefits is after December 1971.
would receive increased benefits on the effective date, and $764 mil-
Dollar payments.-$17 million in additional benefits would be
lion in additional benefits would be paid in the first full year.
paid in the first full year.
Increased benefits for those who delay retirement beyond age 65
Election to receive actuarially reduced benefits in one category not to be
A worker's old-age benefit would be increased by 1 percent for each
applicable to certain benefits in other categories
year (1/12 of 1 percent for each month) in which the worker between
Under present law, when a person receives a benefit in one benefit
ages 65 and 72 does not receive benefits because he is working after
category that is reduced because it is taken before age 65, and also
age 65. No increased benefit would be paid under the provision to the
receives another benefit in a different benefit category beginning with
worker's dependents or survivors.
the same month or a later month, the second benefit is generally re-
Effective date.Prospective only for computations and recomputa-
duced to reflect the reduction in the first benefit. For example, when a
tions after 1971 based on earnings after 1970.
woman applies for a retirement benefit prior to age 65, it is reduced
Number of people affected and dollar payments.400,000 people
under the actuarial reduction formula; if she applies for a spouse's
would receive increased benefits, and $11 million in additional benefits
benefit at age 65 or later, it is reduced to take account of the fact
would be paid, in the first full year.
that she took her retirement benefit early. The bill would eliminate
Age-62 computation point for men.
the actuarial reduction of the spouse's benefit in such cases. The same
Under present law, the method of computing benefits for men and
rule would apply to men entitled to dependent husbands' benefits.
women differs in that years up to age 65 must be taken into account
Effective date.-The sixth month following the month of enactment.
Number of people affected and dollar payments.-100,000 people would
receive increased benefits on the effective date, and $20 million in addi-
tional benefits would be paid in the first full year.
62-854 71 2
4
5
Computation of benefits based on combined earnings
(including a student in a vocational school) attains age 22 (rather
A working married couple each of whom had at least 20 years of
than the month before he attains age 22) if he has not received, or
covered earnings under the program after marriage could have their
completed the requirements for, a bachelor's degree from a college or
earnings for each year combined up to the maximum amount of
university.
taxable earnings for that year. If they elected to have their earnings
Effective date.-January 1972.
combined, each member would receive a benefit equal to 75 percent
Number of people affected and dollar payments.-55,000 students
of the benefit based on their combined earnings. Payments to the
would have their benefits continued beyond age 22, and $16 million
surviving spouse based on the combined earnings would continue
in additional benefits would be paid, in the first full year.
at the 75-percent rate. Dependents' and other survivors' benefits
would not be affected. The provision would be an alternative to
Benefit-eligibility requirements for a child adopted by an old-age or dis-
present law and would apply only if higher payments would result.
ability insurance beneficiary
Effective date.Prospective only for people who attain age 62 in or
The provisions of present law relating to eligibility requirements
after January 1972.
for child's benefits in the case of adoption by old-age and disability
Dollar payments.-$11 million in additional benefits would be paid
insurance beneficiaries would be modified to make the requirements
in the first full year.
uniform in both cases. A child adopted after a retired or disabled
Liberalization of the retirement test
worker becomes entitled to benefits would be eligible for child's bene-
fits based on the worker's earnings if the child is the natural child or
The amount that a beneficiary under age 72 may earn in a year and
stepchild of the worker or if (1) the adoption was decreed by a court
still be paid full social security benefits for the year would be increased
of competent jurisdiction within the United States, (2) the child
from the present $1,680 to $2,000. Under present law, benefits are
lived with the worker in the United States for the year before the
reduced by $1 for each $2 of earnings between $1680 and $2880 and
worker became disabled or entitled to an old-age or disability insur-
for each $1 of earnings above $2880. The bill would provide for a
ance benefit, (3) the child received at least one-half of his support
$1 reduction for each $2 of all earnings above $2000; there would
from the worker for that year, and (4) the child was under age 18 at
be no $1-for-$1 reduction as under present law. Also, in the year in
the time he began living with the worker.
which a person attains age 72 his earnings in and after the month in
Effective date.January 1968.
which he attains age 72 would not be included, as under present law, in
determining his total earnings for the year.
Nontermination of child's benefits by reason of adoption
Effective date.-Taxable years ending after 1971.
A child's benefit would no longer stop when the child is adopted.
Number of people affected and dollar payments.-In the first full year,
Effective date.Month of enactment.
700,000 people would receive increased payments and 390,000 people
Elimination of the support requirements for divorced women
who get no payments under present law could get some payments.
Under present law, benefits are payable to a divorced wife age 62 or
Additional benefits amounting to $484 million would be paid in the
older and a divorced widow age 60 or older if her marriage lasted 20.
first full year.
years before the divorce, and to a surviving divorced mother. In order
Reduced benefits for widowers at age 60
to qualify for any of these benefits a divorced woman is required to
Widowers under age 62 could be paid reduced benefits (on the same
show that: (1) she was receiving at least one-half of her support from
basis as. widows under present law) starting as early as age 60.
her former husband, (2) she was receiving substantial contributions
Effective date.-January 1972.
from her former husband pursuant to a written agreement, or (3)
Childhood disability benefits
there was a court order in effect providing for substantial contribu-
tions to her support by her former husband. The would eliminate
Childhood disability benefits would be paid to the disabled child
these support requirements for divorced wives, divorced widows, and
of an insured retired, deceased, or disabled worker, if the disability
surviving divorced mothers.
began before age 22, rather than before 18 as under present law. In
Effective date.-January 1972.
addition, a person who was entitled to childhood disability benefits
Number of people affected and dollar payments.-10,000 additional
could become re-entitled if he again becomes disabled within 7 years
women would become immediately eligible for benefits on the effec-
after his prior entitlement to such benefits was terminated.
tive date, and $18 million in additional benefits would be paid in the
Effective date.January 1972.
first full year.
Number of people affected and dollar payments.-13,000 additional
people would become immediately eligible for benefits on the effective
Waiver of duration-of-marriage requirement in case of remarriage
date, and $14 million in additional benefits would be paid in the first
The duration-of-marriage requirement in present law for entitlement
full year.
to benefits as a worker's widow, widower, or stepchild-that is, the
period of not less than nine months immediately prior to the day on
Continuation of student's benefits through end of semester
which the worker died that is now required (except where death was
Payment of benefits to a child attending school would continue
accidental or in the line of duty in the uniformed service, in which case
through the end of the semester or quarter in which the student
the period is three months)-would be waived in casés where the
6
7
worker and his spouse were previously married, divorced, and remar-
earnings before disablement. Average current earnings for this purpose
ried, if they were married at the time of the worker's death and if the
can be computed on two different bases and the larger amount will
duration-of-marriage requirement would have been met at the time of
be used. The bill adds a third alternative base, under which a worker's
the divorce had the worker died then.
average current earnings can be based on the one year of his highest
Effective date.January 1972.
earnings in a period consisting of the year of disablement and the five
Disability insured status for individuals who are blind
preceding years.
Under present law, to be insured for disability insurance benefits a
Effective date.January 1972.
worker must be fully insured and meet a test of substantial recent
Number of people affected and dollar payments.-65,000 people
covered work (generally 20 quarters of coverage in the period of 40
would receive increased benefits on the effective date, and $4 million in
calendar quarters preceding disablement). The bill would eliminate
additional benefits would be paid in the first full year.
the test of recent attachment to covered work for blind people; thus a
Optional determination of self-employment earnings
blind person would be insured for disability benefits if he is fully
Self-employed persons could elect to report for social security
insured-that is, he has as many quarters of coverage as the number of
purposes two-thirds of their gross income from nonfarm self-employ-
calendar years that elapsed after 1950 (or the year he reached age 21,
ment, but not more than $1,600. (This optional method of reporting
if later) and up to the year in which he became disabled.
is similar to the option available under present law for farm self-
Effective date.January 1972.
employment.) A regularity of coverage requirement would have to be
Number of people affected and dollar payments.30,000 additional
met and the option could be used only five times by any individual.
people would become immediately eligible for benefits on the effective
Effective date.-Taxable years beginning after 1971.
date, and $29 million in additional benefits would be paid in the first
full year.
Payments by an employer to the survivor or estate of a former employee
Amounts earned by an employee which are paid after the year of
Wage credits for members of the uniformed services
his death to his survivors or his estate would be excluded from coverage.
Present law provides for a social security noncontributory wage
Under present law, such wages are covered and social security taxes
credit of up to $300, in addition to contributory credit for basic pay,
must be paid on these wages but the wages cannot be used to determine
for each calendar quarter of military service after 1967. Under the
eligibility for or the amount of social security benefits.
bill, the additional noncontributory wage credits would also be pro-
Effective date.January 1972.
vided for service during the period January 1957 (when military service
Coverage of members of religious orders who are under a vow of poverty
came under contributory social security coverage) through December
1967.
Social security coverage would be made available to members of
Effective date.January 1, 1972.
religious orders who have taken a vow of poverty, if the order makes an
Number of people affected and dollar payments.-130,000 additional
irrevocable election to cover these members as employees of the
people would receive larger benefits on the effective date, and $39
order.
million in additional benefits would be paid in the first full year.
Effective date.-Upon enactment.
Reduction in waiting period for disability benefits
Self-employment income of certain individuals living temporarily outside
the United States
The present 6-month period throughout which a person must be
disabled before he can be paid disability benefits would be reduced by
Under present law, a U.S. citizen who retains his residence in the
one month (to 5 months).
United States but who is present in a foreign country or countries for
Effective date.-January 1972.
approximately 17 months out of 18 consecutive months, must exclude
Number of people affected and dollar payments.-950,000 people
the first $20,000 of his earned income in computing his taxable income
would receive increased benefits, and $105 million in additional bene-
for social security and income tax purposes. The bill would provide
fits would be paid, in the first full year.
that U.S. citizens who are self-employed outside the U.S. and who
retain their residence in the United States would not exclude the first
Disability insurance benefits applications filed after death
$20,000 of earned income for social security purposes and would com-
Disability insurance benefits (and dependents' benefits based on a
pute their earnings from self-employment for social security purposes
worker's entitlement to disability benefits) would be paid to the
in the same way as those who are self-employed in the U.S.
disabled worker's survivors if an application for benefits is filed within
Effective date.-Taxable years beginning after 1971.
3 months after the worker's death, 01 within 3 months after enactment
Penalty for furnishing false information to obtain a social security
of this provision.
number
Effective date.For deaths occurring after 1969.
Provides criminal penalties when an individual furnishes false in-
Disability benefits affected by the receipt of workmen's compensation
formation in applying for a social security number with intent to
Under present law, social security disability benefits must be
deceive the Secretary as to his true identity.
reduced when workmen's compensation is also payable if the com-
bined payments exceed 80 percent of the worker's average current
8
9
Trust fund expenditures for rehabilitation services
Amount of supplementary medical insurance premium
Provides an increase in the amount of social security trust fund
The supplementary medical insurance premium will be determined
monies that may be used to pay for the costs of rehabilitating social
as under present law for months through June 1972 ($5.30 through
security disability beneficiaries. The amount would be increased from
June 1971 and $5.60 from July 1971 through June 1972.) Thereafter,
1 percent of the previous year's disability benefits (as under present
the Secretary of Health, Education, and Welfare would, as under
law) to 1½ percent for fiscal year 1972 and to 1½ percent for fiscal
present law, determine and promulgate for each year a monthly
year 1973 and subsequent years.
enrollee premium for both aged and disabled. However, the enrollee
Dollar payments.-Additional payments for the cost of vocational
premiums would be increased only in the event of the enactment of
rehabilitation services would amount to $17 million in the first full
legislation providing for a general benefit increase or in the event of
year.
an automatic general benefit increase. In any given year, the premium
Other OASDI amendments
would rise by no more than the percentage by which cash benefits
had been increased across the board in the interval since the premium
Other changes relate to social security coverage of policemen and
firemen in Idaho, public hospital employees in New Mexico, Federal
was last increased. The premium amount paid by the beneficiary
Home Loan Bank employees, employees of the Government of Guam,
would never exceed one-half of total program costs.
Effective date.-July 1972.
and students employed by certain nonprofit organizations; retroactive
payments for certain disabled people; social security benefits for a
Change in supplementary medical insurance deductible
child entitled on the earnings record of more than one worker; benefits
The Medicare part B deductible, currently $50 per year, would be
for certain dependent grandchildren; recomputation of benefits to
increased to $60.
survivors of a deceased worker who was entitled to both social security
Effective date.-January 1972.
and railroad retirement benefits; authorization for the Managing
Trustee of the social security trust funds to accept money gifts or
Coinsurance under hospital insurance and the lifetime reserve
bequests; and preserving the amount of a family's benefit when the
Coinsurance equal to one-eighth of the inpatient hospital deductible
worker's benefit is increased.
would be imposed for each day of inpatient hospital coverage during a
benefit period beginning with the 31st day and continuing through
II. PROVISIONS RELATING TO MEDICARE, MEDICAID,
the 60th day. This amount is now $7.50, but would increase as the
AND MATERNAL AND CHILD HEALTH
inpatient hospital deductible increases (as hospital costs rise). (Coin-
surance for the 61st through the 90th day would remain equal to one-
fourth of the inpatient hospital deductible.) The lifetime reserve,
A. ELIGIBILITY AND PAYMENT FOR BENEFITS
under which the beneficiary pays one-half of the hospital deductible,
Extending health insurance protection to disabled beneficiaries
would be increased from 60 days to 120 days.
Health insurance protection under title XVIII would be extended
Effective date.-Hospital stays beginning after 1971.
to persons entitled to monthly cash benefits under the social security
Automatic enrollment for supplementary medical insurance
and railroad retirement programs because they are disabled, after
People entitled to hospital insurance benefits would be automatically
they have been entitled to disability benefits for at least two years.
enrolled and covered for supplementary medical insurance benefits
Effective date.July 1972.
unless they indicate they do not want to be enrolled for such coverage.
Number of people affected and dollar payments.-About 1.5 million
Effective date.January 1972.
disabled social security and railroad beneficiaries would be eligible for
Incentives for comprehensive care under medicaid
both hospital benefits and physician coverage under medicare. About
Incentives would be created for States to contract with health
$1.85 billion in benefits would be paid on behalf of disabled bene-
ficiaries in the first full year of the program.
maintenance organizations or similar facilities. At the same time,
disincentives would be provided to discourage prolonged stays in insti-
Hospital insurance for the uninsured
tutions. Specifically, there would be-
People reaching age 65 who are ineligible for hospital insurance
(1) an increase of 25 percent (up to maximum of 95 percent)
benefits under medicare would be able to enroll, on a voluntary basis,
in the Federal Medicaid matching percentage to States under
for hospital insurance coverage under the same conditions under
contract with HMO's or other comprehensive health care facilities;
which people can enroll under the supplementary medical insurance
(2) a decrease in the Federal medical assistance percentage by
part of medicare. Those who enroll would pay the full cost of the
one-third after the first 60 days of care in a general or TB
protection-$31 a month at the beginning of the program-rising as
hospital;
hospital costs rise. States and other organizations, through agréements
(3) a reduction in the Foderal percentage by one-third after
with the Secretary, would be permitted to purchase such protection
the first 60 days of care in a skilled nursing home unless the State
on agroup basis for their retired (or active) employees age 65 or over.
establishes that it has an effective utilization review program;
Effective date.-January 1972.
10
11
(4) a decrease in Federal matching by one-third after 90 days
B. IMPROVEMENTS IN OPERATING EFFECTIVENESS
of care in a mental hospital and provision for no Federal matching
after 275 additional days of such care during an individual's
Limitation on Federal participation for capital expenditures
Jifetime except that the 90-day period may be extended for an
Reimbursement amounts to providers of health services and health
additional 30 days if a doctor certifies that the patient will benefit
maintenance organizations under the medicare, medicaid, and ma-
therapeutically from such an additional period of hospitalization;
ternal and child health programs for capital costs, such as depreciation
and
and interest, would not be made with respect to large capital expendi-
(5) authority for the Secretary to compute a reasonable cost
tures which are inconsistent with State or local health facility plans.
differential for reimbursement between skilled nursing homes and
States would be required to establish procedures by which a facility
intermediate care facilities.
or organization proposing a capital expenditure may appeal a decision
Effective date.-July 1, 1971, except that the reasonable cost differ-
by a planning agency.
ential provision would be effective January 1, 1972.
Effective date.July 1972 (or earlier if requested by a State).
Cost sharing under medicaid
Experiments and demonstration projects in prospective reimbursement and
The Secretary of Health, Education, and Welfare would be able to
incentives for economy
require the payment of a premium, related to income, for those
The Secretary of Health, Education, and Welfare would be required
eligible as medically indigent (non-cash recipients) under a State
to develop experiments and demonstration projects designed to test
medicaid program. In addition, states would be permitted to impose
various methods of making payment to providers of services on a
a nominal cost sharing with respect to cash recipients, but applying
prospective basis under the medicare, medicaid, and maternal and
only to services not required to be provided under the State program.
child health programs. In addition, the Secretary would be authorized
States could apply copayment provisions to the medically indigent
to conduct experiments with methods of payment or reimbursement
which are not related to income.
designed to increase efficiency and economy (including payment for
Effective date.July 1, 1972.
services furnished by organizations providing comprehensive, mental,
Determination of payments under medicaid
or ambulatory health care services); with areawide or communitywide
Families eligible for cash assistance would have a deductible under
peer review, utilization review, and medical review mechanisms; and
medicaid equal to one-third of the family's earnings above $720
with performance incentives for intermediaries and carriers.
(after deducting the earnings of school children and any costs of re-
Effective date.-Enactment.
quired child care) less the difference between the medicaid standard
Limits on costs recognized as reasonable
and the payment standard, if any, in that State. All States would be
The Secretary of Health, Education, and Welfare would be given
required to impose such a deductible. Any family with income below
authority to establish and promulgate limits on provider costs to be
the State medicaid standard would be eligible for medicaid assistance.
recognized as reasonable under medicare based on comparisons of the
Effective date.-July 1, 1972.
cost of covered services by various classes of providers in the same
Relationship between medicare and Federal employees benefits
geographical area. Hospitals and extended care facilities could charge
Effective with January 1, 1975, no payment would be made under
beneficiaries for the costs of services in excess of those that are found
medicare for the same services covered under a Federal employees
necessary to the efficient delivery of needed health services (except
health benefits plan, unless in the meantime the Secretary of Health,
in the case of an admission by a physician who has a financial interest
Education, and Welfare certifies that such plan or the Federal em-
in the facility).
ployees health benefits piogram has been modified to make available
Effective date.-July 1972.
coverage supplementary to medicare benefits and that Federal em-
Limits on prevailing charge levels
ployees and retirees age 65 and over will continue to have the benefit
Physicians' charges determined to be reasonable under the present
of a contribution toward their health insurance premiums from either
criteria in the medicare, medicaid, and maternal and child health law
the Government or the individual plan.
would be limited by providing: (a) that after December 31, 1970,
Effective date.-January 1975.
medical charge levels recognized as prevailing may not be increased
Medicare benefits for people living near United States border
beyond the 75th percentile of actual charges in a locality during the
Medicare beneficiaries living in border areas of the United States
calendar year elapsing prior to the start of the fiscal year; (b) that for
would be entitled to covered inpatient hospital care outside the United
fiscal year 1973 and thereafter the prevailing charge levels recognized
States if the hospital they use is closer to their residence than a com-
for a locality may be increased, in the aggregate, only to the extent
parable United States hospital and if it has been accredited by à
justified by indexes reflecting changes in costs of practice of physicians
hospital approval program with standards comparable to medicare
and in earnings levels; and (c) that for medical supplies, equipment,
standards. Coverage would also be extended in these cases to physi-
and services that, in the judgment of the Secretary, generally do not
cians' and ambulance services furnished in conjunction with covered
vary significantly in quality from one supplier to another, charges
foreign hospital care.
Ef ective date.-January 1972.
62-854 71 3
12
13
allowed as reasonable may not exceed the lowest levels at which such
Program review teams would be established to furnish the Secretary
supplies, equipment, and services are widely available in a locality.
professional advice in carrying out this authority.
The existing Health Insurance Benefits Advisory Council is to
Effective date.-Enactment.
conduct a study of the methods of reimbursement of physicians' fees
Elimination of requirement that States have comprehensive medicaid
under medicare and report to the Congress no later than July 1, 1972.
programs
Effective date.-(See provision.)
The existing requirement that States have comprehensive medicaid
Limits on skilled nursing home and intermediate care facility costs
programs by 1977 would be repealed.
The average per diem costs for skilled nursing homes and inter-
Effective date.-Enactment.
mediate care facilities countable for Federal financial participation
Reductions in care and services under medicaid
under medicaid would be limited to 105 percent of such costs for the
The states would be permitted to eliminate or reduce the scope and
same quarter of the preceding year. Increases resulting from higher
extent of health services which are optional under the Federal medicaid
labor costs due to minimum wage legislation would not count in
statute, e.g., outpatient drugs, eyeglasses and dental care. States
computing the cost figure.
would have to provide the same dollar amounts for their required
Effective date.-January 1, 1972.
health services.
Payments to health maintenance organizations
Effective date.-Enactment.
Medicare beneficiaries could choose to have all covered care, except
State determinations of reasonable hospital costs under medicaid
emergency services, provided by a health maintenance organization
States would be allowed to develop methods and standards for
(a prepaid group health or other capitation plan). The Department
reimbursing the reasonable cost of inpatient hospital services. Such
of Health, Education, and Welfare would contract with such organi-
costs could not exceed medicare rates.
zations, and would reimburse them on a monthly per capita basis at a
Effective date.-July 1, 1972, or earlier if a State plan so provides
rate equivalent to 95 percent of the estimated per capita costs of medi-
care beneficiaries in the area who are not enrolled in such organiza-
Government payment no higher than charges
tions. Profits accruing to the organization, beyond its retention rate
Payments for institutional services under the medicare, medicaid,
for nonmedicare members, would be passed on to the medicare en-
and maternal and child health programs could not be higher than the
rollees in the form of expanded benefits.
charges regularly made for these services.
Effective date.-January 1972.
Effective date.July 1971.
Payments for services of teaching physicians
Institutional planning under medicare
Medicare would pay for the services of teaching physicians on the
Health institutions under the medicare program would be required
basis of reasonable costs, rather than fee-for-service charges, unless a
to have a written plan reflecting an operating budget and a capital
bona fide private patient relationship had been established or the
expenditure budget.
hospital had, in the 2-year period ending in 1967, and subsequently,
Effective date.Sixth month following month of enactment.
customarily charged all patients and collected from at least 50 percent
Federal matching for automated medicaid systems
of patients on a fee-for-service basis. Medicare payments would also be
Federal matching for the cost of designing, developing, and installing
authorized on a cost basis for services provided to hospitals by the staff
mechanized claims processing and information retrieval systems would
of certain medical schools.
be set at 90 percent and 75 percent for operation of such systems.
Effective date.-Accounting periods beginning after June 30, 1971.
Effective date.-July 1, 1971.
Advance approval of extended care and home health services under medicare
Prohibition of reassignments
The Secretary of Health, Education, and Welfare would be author-
Medicare (part B) and medicaid payments to anyone other than a
ized to establish minimum periods of time (by medical condition) after
patient, his physician, or other person providing the service, would be
hospitalization during which a patient would be presumed, for payment
prohibited, unless the physician (or, in the case of medicaid, another
purposes, to require extended care level of services in an extended care
type of practitioner) is required as a condition of his employment to
facility. The attending physician would certify to the condition and re-
turn over his fees to his employer or unless there is a contractual
lated need for the services. A similar provision would apply 10 post-
arrangement between the physician and the facility in which the serv-
hospital home health services.
ices were provided under which the facility bills for all such services.
Effective date.-January 1972.
Effective date.-Enactment date for medicare; July 1, 1972 (or
Termination of payments to suppliers of services who abuse the medicare
earlier at the option of the State) for medicaid.
or medicaid programs
Institutional utilization review under medicaid
The Secretary of Health, Education, and Welfare would be given
The same utilization review committees now reviewing medicare
authority to terminate payment for services rendered by a supplier of
cases in hospitals and nursing homes would be required to review
health and medical services found to be guilty of program abuses.
medicaid cases in institutions utilized by medicare.
15
14
C. MISCELLANEOUS AND TECHNICAL PROVISIONS
Stopping payment where hospital admission not necessary under medicare
If the utilization review committee of a hospital or extended care
Physical therapy and other therapy services under medicare
facility, in its sample review of admissions, finds a case where institu-
Under medicare's supplementary medical insurance program, up to
tionalization is no longer necessary, payment would be cut off after 3
$100 per calendar year of physical therapy services furnished by a
days. This provision parallels the provision in present law under which
licensed physical therapist in his office or the patient's home under.
long-stay cases are cut off after 3 days when the utilization review
a physician's plan would be included in covered charges. Hospitals
committee determines that institutionalization is no longer required.
and extended care facilities could provide physical therapy services
Effective date.-Third month following the month of enactment.
under part B to inpatients who have exhausted their days of hospital
Use of health agencies in medicaid
insurance coverage. Where physical therapy and other ancillary serv-
State medicaid programs would be required—
ices are furnished by a provider of services, or by others under arrange-
(1) To establish and implement plans, prepared by the State
ments with the provider, medicare reimbursemer to the provider
health agency, or other appropriate State medical agency, for the
would in all cases be based on a reasonable salary payment for the
professional review of care provided to medicaid recipients, and
services.
(2) Provide that the State medical agency which licenses
Effective date.-January, 1972.
health institutions shall perform that function for medicaid.
Coverage of supplies related to colostomies
Effective date.-July 1, 1972.
Medicare coverage would be provided for colostomy bags and sup-
Medicaid and comprehensive health care programs
plies directly related to colostomy care.
A state medicaid plan would not be out of compliance if it arranged
Effective date.-Enactment.
for medicaid care through a comprehensive health plan in one or more
Ptosis bars
areas which provided more services than are generally provided under
Coverage would be provided under part B of medicare for ptosis
the State's medicaid plan.
bar devices required for the care of individuals suffering from paralysis
Effective date.-Enactment.
or atrophy of the eyelid muscle.
Program for determining qualifications for certain health care personnel
Effective date.-Enactment.
The Secretary of Health, Education, and Welfare would be required
Intermediate care facilities under medicaid
to develop and employ proficiency examinations to determine whether
The provisions for optional coverage of intermediate care facilities
health care personnel, not otherwise meeting specific formal criteria
would be moved from title XI of the Act (here it applies, by reference
now included in medicare regulations, have sufficient training, experi-
to the cash assistance titles) to title XIX as an optional service.
ence, and professional competence to be considered qualified personnel
Services in a public institution for the mentally retarded could qualify
for purposes of the medicare and medicaid program.
if the primary purpose is to provide health or rehabilitation services
Effective date.-Enactment.
and if the patient is receiving active treatment.
Penalty for fraudulent acts under medicare and medicaid
Effective date.-January 1, 1972.
Present penalty provisions relating to the making of a false state-
Coverage prior to application under medicaid
ment or representation of a material fact in any application for medi-
States would be required to provide medicaid coverage for care
care payments would be broadened to include the soliciting, offering,
and services furnished in or after the third month prior to the applica-
or acceptance of kickbacks or bribes, including the rebating of a por-
tion of an eligible person.
tion of a fee or a charge for a patient referral, by providers of health
Effective date.-July 1, 1972.
care services. The penalty for such acts would be imprisonment up to
one year, a fine of $10,000, or both. Similar penalty provisions would
Certification of hospitalization for dental care
apply under medicaid.
A dentist would be authorized to certify the necessity for hospitaliza-
Anyone who knowingly and willfully makes, or induces the making
tion to protect the health of a medicare patient who is hospitalized
of, a false statement of material fact with respect to the conditions
for a noncovered dental procedure.
and operation of a health care facility or home health agency in order
Effective date.-Third month after month of enactment.
to secure medicare or medicaid certification of the facility or agency,
Grace period for paying medicare premium
would be guilty of a misdemeanor punishable by up to 6 months' im-
Where there is good cause for a medicare beneficiary's failure to
prisonment, a fine of not more than $2,000, or both.
pay supplementary medical insurance premiums, an extended grace
Effective date.-Enactment.
period of 90 days would be provided.
Effective date.-Enactment,
16
17
Waiving of requirement for skillea nursing homes in rural areas
Extension of time for filing medicare claims
The requirement that skilled nursing homes under medicaid have
The time limit for filing supplementary medical insurance claims
at least one full-time registered nurse on the staff would be waived
would be extended where the medicare beneficiary's delay is due to
for up to one year at a time over a five-year period where the skilled
administrative error.
nursing home is in a rural area and certain other conditions are met.
Effective date.-Enactment.
Effective date.-Enactment.
Waiver of enrollment period requirements where administrative error is
involved
Exemption of Christian Scientist sanatoriums from certain requirements
under medicaid
Relief would be provided where administrative error has prejudiced
Christian Scientist sanatoriums under medicaid would be exempted
an individual's right to enroll in medicare's supplementary medical
from provisions in the bill which require certain health-related func-
insurance program.
tions or conditions.
Effective date.-July 1966.
Effective date.-Enactment.
Three-year limitation on medicare enrollment dropped
Requirements for nursing home administrators
Eligible beneficiaries would be permitted to enroll under medicare's
supplementary medical insurance program during any prescribed en-
States would be permitted to provide under medicaid for a perma-
rollment period. Beneficiaries would no longer be required to enroll
nent waiver of a nursing home administrator who had been such an
within 3 years following first eligibility or a previous withdrawal from
administrator for more than 3 years before the time the basic pro-
vision became effective (July 1970).
the program.
Effective date.-Enactment.
Effective date.-Enactment.
Waiver of medicare overpayment
Termination of Nursing Home Administration Advisory Council
Where incorrect medicare payments were made to a deceased
The National Advisory Council on Nursing Home Administra-
tions under medicaid would be terminated.
beneficiary, the liability of survivors for repayment could be waived
if the survivors were without fault in incurring the overpayment.
Effective date.-Thirty days after enactment.
Effective date.-Enactment.
Increase in limit on payments to Puerto Rico for medicaid
Medicare fair hearings
The present limit of $20 million on the annual Federal payment for
Fair hearings, held by medicare carriers in response to disagreements
medicaid would be raised to $30 million. The present matching rate
over amounts paid under supplementary medical insurance, would be
of 50 percent would be retained.
conducted only where the amount in controversy is $100 or more.
Effective date.Fiscal year 1972.
Effective date.-Enactment.
Provider reimbursement review board under medicare
Collection of medicare premium by the railroad retirement board
Providers of services, under certain circumstances, would be per-
Where a person is entitled to both railroad retirement and social
mitted to appeal to a review board (established by the Secretary
security monthly benefits, his premium payment for supplementary
specifically to conduct such reviews) from a decision of the fiscal
medical insurance benefits would be deducted from his railroad
intermediary concerning the amount of program reimbursement, if
retirement benefit in all cases. The Railroad Retirement Board is
the amount in controversy is at least $10,000.
given authority to choose the carrier for part B benefits for its
Chiropractors' services
beneficiaries.
The Secretary of Health, Education, and Welfare would conduct a
Effective date.-Applicable to premiums becoming due after the
study of the desirability of covering chiropractors' services under
fourth month following the month of enactment.
medicare, utilizing the experiments and experience under the medic-
Prosthetic lenses furnished by optometrists
aid program. A report on the study, including the experience of other
The definition of physician, for purposes of the medicare program,
programs paying for chiropractors' services, would be submitted to the
would be amended to include a licensed doctor of optometry, but
Congress within 2 years after enactment of the bill.
only with respect to establishing the medical necessity of prosthetic
Effective date.-Enactment.
lenses (which are already covered under the program).
Extension of title V to American Samoa and the Trust Territory of the
Effective date.-Enactment.
Pacific
Social services requirement in extended care facilities
The crippled children and maternal and child health provisions of
title V of the Act would be extended to American Samoa and the Trust
The present requirement for social services in extended care facili-
ties under medicare would be removed.
Territory of the Pacific.
Effective date.-Enactment.
Effective date.-Fiscal years beginning after June 30, 1971.
Refund of excess premiums
FINANCING OASDHI
In the event of the death of a medicare beneficiary, any hospital
In order to finance the changes in the OASDHI program as amended
or medical insurance premiums paid for any month after the month of
by the bill, the limit on taxable earnings would be increased to $10,200
his death will be refunded to his estate or to a survivor.
effective January 1972 and the following schedule of OASDI and HI
Effective date.-Enactment.
tax rates would be provided:
18
19
SOCIAL SECURITY TAX RATES AND MAXIMUM ANNUAL SOCIAL SECURITY TAXES FOR EMPLOYEES, EMPLOYERS,
III. PROVISIONS RELATING TO ASSISTANCE FOR THE
AND SELF-EMPLOYED
AGED, BLIND, AND DISABLED
Employees and employers, each
Self-employed
OASDI,
HI,
Total,
Maximum
OASDI,
HI,
Total,
Maximum
The existing Federal-State programs of aid to the aged, blind, and
percent
percent
percent
tax
percent
percent
percent
tax
permanently and totally disabled would be repealed, effective July 1,
1972, and a new, totally Federal program would be effective on that
Present law:
1971 1
4.6
0.6
5.2
$405.60
6.9
0.6
7.5
$585.00
date. The new national program is designed to provide financial
1972 *
4.6
.6
5.2
468.00
6.9
.6
7.5
675.00
1973-75 ²
5.0
.65
5.65
508.50
7.0
.65
7.65
688.50
assistance to needy people who have reached age 65 or are blind or
1976-79 :
5.15
.7
5.85
526.50
7.0
.7
7.7
693.00
535.50
7.0
.8
7.8
702.00
disabled and would be established by a new Title XX of the Social
1980-86
5.15
.8
5.95
1987 and after
5.15
is
6.05
544.50
7.0
is
7.9
711.00
Security Act. The program would be administered by the Social Secu-
H.R. 1 (excluding effect of
the automatic adjustment
rity Administration through its present administrative framework and
provisions):
1971 1
4.6
.6
5.2
405.60
6.9
.6
7.5
585.00
facilities.
1972-74
4.2
1.2
5.4
550.80
6.3
1.2
7.5
765.00
The eligibility requirements and other legislative elements of the
1975-76
5.0
1.2
6.2
632.40
7.0
1.2
8.2
836.40
1977 and after
6.1
1.3
7.4
754.80
7.0
1.3
8.3
846.60
new program are as follows:
1 Tax rates apply to annual earnings up to $7,800.
Eligibility for and amount of benefits
3 Tax rates apply to annual earnings up to $9,000.
3 Tax rates apply to annual earnings up to $10,200.
Individuals or couples could be eligible for assistance when their
monthly income is less than the amount of the full monthly payment.
Full monthly benefits for a single individual would be $130 for
IST-YEAR BENEFIT COSTS AND NUMBER OF PERSONS AFFECTED BY OLD-AGE, SURVIVORS, DISABILITY, AND
MEDICARE PROVISIONS OF H.R. 1
fiscal year 1973; $140 for fiscal year 1974, and $150 thereafter. Full
[Amounts in millions; numbers of persons in thousands]
monthly benefits for an individual with an eligible spouse would
be $195 for fiscal year 1973, and $200 for fiscal year 1974 and there-
Present-law
after. Benefits would not be paid for any full month the individual is
1st-year
beneficiaries
Newly
benefit
immediately
eligible
outside the U.S.
Provision
costs
affected
persons 8
The Secretary would establish the circumstances under which gross
income from a trade or business, including farming, is large enough
Total
$5,438
to preclude eligibility (net income notwithstanding). In addition,
Cash benefit changes applicable to both present and future beneficiaries:
5 percent benefit increase-effective June 1972
2,073
27,400
16
people who are in certain public institutions, or in hospitals or nursing
Other cash benefit changes-generally effective January 1972:
homes getting medicaid funds, would be eligible for benefits of up to
Retirement test changes:
$2,000 exempt amount; 1 for 2 above $2,000
473
680
390
$25 a month. People who fail to apply for annuities, pensions, work-
Earnings in year of attainment of age 72
11
20
Increased benefits for widows and widowers to 100 percent of
men's compensation, and other such payments to which they may be
PIA (limited to OAIB)
764
3,400
Children disabled at ages 18-21
14
13
entitled would not be eligible.
Noncontributory credits for military service after 1956
39
130
Election to receive larger future benefits by certain beneficiaries
Definition of income
eligible for more than 1 actuarially reduced benefit
20
100
Eliminate support requirement for divorced wives and surviving
In determining an individual's eligibility and the amount of his
divorced wives
18
10
Student child's benefits continued after age 22 to end of semes-
benefits, both his earned and unearned income would have to be
ter
16
55
Special minimum PIA up to $150
300
taken into consideration. The definition of earned income would follow
30
Liberalized workmen's compensation offset (80 percent of high 1
year)
4
65
generally the definition of earnings used in applying the earnings limi-
Liberalized disability insured status provision for the blind (drop
tation of the social security program. Unearned income would mean all
20/40 requirement)
29
30
Increased allowance for vocational rehabilitation expenditures
17
other forms of income, among which are benefits from other public
Subtotal
3,508
(4)
459
and private programs, prizes and awards, proceeds of life insurance
not needed for expenses of last illness and burial (with a maximum of
Cash benefit changes applicable only to future beneficiaries-effective
January 1972:
$1,500), gifts, support, inheritances, rents, dividends, interest, and so
Age 62 computation point for men.
6
Benefits based on combined earnings of husband and wife
11
forth. For people who live as members of another person's household,
Credit for delayed retirement
11
400
17
the value of their room and board would be deemed to be 33½ percent
Additional drop-out year for every 15 years of coverage
Reduce disability waiting period to 5 months
105
950
of the full monthly payment.
Subtotal
150
(4)
The following items would be excluded from income:
Total, cash benefit changes
3,658
(4)
459
1. Earnings of a student regularly attending school, with reasonable
limits.
Medicare benefit changes:
Hospital insurance for disabled beneficiaries
1,500
1,500
2. Irregular earned income of an individual of $30 or less in a quarter
Supplementary medical insurance for disabled beneficiaries
350
1,500
Change in supplementary medical insurance deductible-effective
and irregular unearned income of $60 or less in a quarter.
January 1, 1972
-70
19,800
3. The first $85 of earnings per month and one-half above that for
Total, Medicare changes
1,780
19,800
1,500
the blind and disabled (plus work expenses for the blind). The first $60
of earnings per month and one-third above that for the aged.
1 Represents additional benefit payments in the 12-month period beginning July 1, 1972.
2 For cash benefits, present-law beneficiaries whose benefit for the effective month would be increased under the pro-
4. The tuition part of scholarships and fellowships.
vision; for Medicare, persons with insurance protection.
3 For cash benefits, persons who cannot receive a benefit under present law for the effective month, but who would
5. Home produce.
receive a benefit for such month under the provision; for Medicare, persons who gain insurance protection.
6. One-third of child-support payments from an absent parent.
4 Figures not additive because a person may be affected by more than one provision.
8 Effective July 1, 1972.
20
21
7. Foster care payments for a child placed in the household by Я.
Optional State supplementation
child-placement agency.
A State which provides for a State supplement to the Federal
8. Assistance based on need received from certain public or private
payment could agree to have the Federal Government make the
agencies.
supplemental payments on behalf of the State. If a State agrees to
9. Vocational rehabilitation allowances.
have the Federal Government make its supplemental payments, the
Exclusions from resources
Federal Government would pay the full administrative costs of making
Individuals or couples cannot be eligible for payments if they have
such payments, but if it makes its own payments, the State would pay
all of such costs.
resources in excess of $1,500. The following items would be excluded
from resources:
States could but would not be required to cover under medicaid
1. The home to the extent that its value does not exceed a reasonable
persons who are made newly eligible for cash benefits under the bill.
amount.
The Federal government, in administering supplemental benefits
2. Household goods and personal effects not in excess of a reasonable
on behalf of a State, would be required to recognize a residency re-
amount.
quirement if the State decided to impose such a requirement.
3. Other property which is essential to the individual's support
Payments and procedures
(within reasonable value limitations).
4. Life insurance policies (if their total face value is $1,500 or less).
Benefits could be paid monthly, or otherwise, as determined by the
Other insurance policies would be counted only to the extent of
Secretary of Health, Education, and Welfare. Benefits could be paid
their cash surrender value.
to an individual, an eligible spouse, partly to each, or to another
The Secretary would prescribe periods of time and manners in
interested party on behalf of the individual. The Secretary could
which excess property must be disposed of in order that it not be
determine applied. ranges of incomes to which a single benefit amount may be
included as resources.
Cash advances of up to $100 could be paid if an applicant appears
Meaning of terms
to meet all the eligibility requirements and is faced with a financial
An eligible individual must be a resident of the United States,
emergency. Applicants apparently eligible for benefits on the basis of
Puerto Rico, the Virgin Islands, or Guam and a citizen or an alien
disability could be paid benefits for up to three months while their
admitted for permanent residence, and be aged, blind, or disabled.
disability claim was in process.
Aged individual: One 65 years of age or older.
The Secretary may arrange for adjustment and recovery in the
Blind individual: An individual who has central visual acuity of
event of overpayments or underpayments, and could waive overpay-
20/200 or less in the better eye with the use of a correcting lens, or
equivalent impairment in the fields of vision.
fault. ments to achieve equity and avoid penalizing people who were without
Disabled individual: An individual who is unable to engage in any
People who are, or claim to be, eligible for benefits and who dis-
substantial gainful activity by reason of a medically determinable
agree with determinations of the Secretary, could obtain hearings if
physical or mental impairment which is expected to last, or has lasted,
they request them within 30 days. Final determinations would be
for 12 months or can be expected to end in death. (This definition is
subject to judicial review in Federal district courts, but the Secretary's
now used for social security disability benefits.)
decisions as to any fact would be conclusive and not subject to review
Eligible spouse: An aged, blind, or disabled individual who is the
by the courts.
husband or wife of an individual who is aged, blind, or disabled.
The right of any person to any future benefit would not be transfer-
Child: An unmarried person who is not the head of a household and
able or assignable, and no money payable under the program would
who is either under the age of 18, or under the age of 22 and attending
be subject to execution, levy, attachment, garnishment, or other legal
school regularly.
process.
Determination of marital relationship: Appropriate State law will
If an individual fails to report events and changes relevant to his
apply except that, if two people were determined to be married for
eligibility without good cause, benefits which may be payable to the
purposes of receiving social security cash benefits, they will be con-
individual would be terminated or reduced.
sidered to be married, and two persons holding themselves out as
The heads of other Federal agencies would be required to provide
married in the community in which they live would be considered
such information as the Secretary of HEW needs to determine eligi-
married for purposes of this program.
bility for benefits.
Income and resources of a spouse living with an eligible individual
Penalties for fraud
will be taken into account in determining the benefit amount of the
individual, whether or not the income and resources are available to
A penalty of up to $1,000 or up to one year imprisonment, or both,
him. Income and resources of a parent may count as income of a
would be provided in case of fraud under the program.
disabled or blind child.
Administration
Rehabilitation services
The Secretary of HEW may make administrative and other arrange-
Disabled-and blind beneficiaries would be referred to State agencies
ments as necessary to carry out the purposes of the program and the
States could enter into agreements to administer the Federal benefits
for vocational rehabilitation services. A beneficiary who refused
during a transitional period.
without good cause any vocational rehabilitation services offered would
not be eligible for benefits.
22
23
Evaluation and research
(2) If the wages and other employment conditions are contrary
The Secretary of HEW would continually evaluate the program,
to those prescribed by applicable Federal, State, or local law, or
including its effectiveness in achieving its goals and its impact on
less favorable than those prevailing for similar work in the locality,
related programs. He could conduct research and contract for inde-
or the wages are less than an hourly rate of 3/4 of the highest
pendent evaluations of the program. Up to $5 million a year would be
Federal minimum wage ($1.20 per hour under present law);
appropriated to carry out the evaluation and research. Annual reports
(3) If membership in a company union or non-membership in
to the President and the Congress on the operation and administration
a bona fide union is required;
of the program would be required.
(4) If he has demonstrated the capacity to obtain work that
would better enable him to achieve self-sufficiency, and such work
is available.
IV. PROVISIONS RELATING TO FAMILY PROGRAMS
Child care and other supportive services
The present program of aid to families with dependent children
The Secretary of Labor directly or by using child care projects
(AFDC) would be repealed effective July 1, 1972, and two new totally
under the jurisdiction of the Department of Health, Education, and
Federal programs would take effect on that day. The new programs
Welfare, would provide for child care services for registrants who
would be adopted for a period of five years (through fiscal year 1977)
require them in order to accept or continue to participate in man-
in order to give Congress an opportunity to review their operation
power services, training, employment, or vocational rehabilitation.
before continuing them in subsequent years. The new programs would
The Secretary of Labor would be authorized funds to provide child
be established by a new Title XXI in the Social Security Act. A descrip-
care by grant or contract. Families receiving such services might also
tion of the two new programs follows:
be required to pay all or part of the costs involved.
Families in which at least one person is employable would be
Health, vocational rehabilitation, family planning, counseling, so-
enrolled in the Opportunities for Families Program, administered by
cial, and other supportive services (including physical examinations
the Department of Labor. Families with no employable person would
and minor medical services) would also be made available by the
be enrolled in the Family Assistance Plan administered by the Depart-
Secretary of Labor to registrants as needed.
ment of Health, Education, and Welfare.
Operation of manpower services, training and employment programs
The Secretary of Labor would develop an employability plan de-
A-OPPORTUNITIES FOR FAMILIES PROGRAM
signed to prepare recipients to be self-supporting. The Secretary would
Registration for employment and training
then provide the necessary services, training, counseling, testing coach-
ing, program orientation, job training, and followup services to assist
Every member of a family who is found to be available for work by
the registrant in securing employment, retaining employment, and
the Secretary of Health, Education, and Welfare would be required to
obtaining opportunities for advancement.
register for manpower services, training and employment.
Provision would also be made for voluntary relocation assistance
An individual would be considered available for work unless such
to enable a registrant and his family to be self-supporting.
person-
Public service employment programs would also be used to provide
(1) Is unable to work or be trained because of illness, inca-
needed jobs. Public service projects would be related to the fields of
pacity, or age;
health, social service, environmental protection, education, urban and
(2) Is a mother or other relative caring for a child under age 6
rural development and redevelopment, welfare, recreation, public fa-
(age 3 beginning July 1974);
cility and similar activities. The Secretary of Labor would establish
(3) Is the mother or other female caretaker of a child, if the
these programs through grants or by contract with public or nonprofit
father or another adult male relative is in the home and is
agencies or organizations. The law would provide safeguards for
registered.
workers on such jobs and wages could not be less than the higher of
(4) Is a child under the age of 16 (or a student up to age 22)
the prevailing or applicable minimum wage or the Federal minimum
(5) Is needed in the home on a continuous basis because of
wage.
illness or incapacity of another family member.
Federal participation in the costs of an individual's participation
Nevertheless, any person (except one who is ill, incapacitated, or
in a public service employment program would be 100 percent for the
aged) who would be exempted from registering by the above provisions
first year of his employment, 75 percent for the second year, and 50
could voluntarily register.
percent for the third year.
Every person who registered (other than a volunteer) would be
required to participate in manpower services or training and to accept
available employment. An individual could not be required to accept
employment however-
(1) If the position offered is vacant due to a strike, lockout, or
other labor dispute;
24
25
States and their subdivisions that receive Federal grants would be
required to provide the Secretary of Labor with up-to-date listings of
Evaluation and research; reports
job vacancies. The Secretary would also agree with certain Federal
The Secretary of Health, Education, and Welfare would be author-
agencies to establish annual or other goals for employment of members
ized to conduct research and demonstrations of the family assistance
of families receiving assistance.
plan and directed to make annual evaluation reports to the President
and the Congress. An appropriation of $10,000,000 would be author-
Allowances of individuals participating in training
ized for this purpose.
An incentive allowance of $30 per month would be paid to each
registrant who participates in manpower training (States would have
C-DETERMINATION OF BENEFITS
the option of providing an additional allowance of up to $30). Neces-
sary costs for transportation and similar expenses would also be paid.
Uniform determinations
Utilization of other programs
Both Secretaries would be required to apply the same interpreta-
tions and applications of fact to arrive at uniform determinations of
The Secretary of Labor would be required to integrate this program
eligibility and assistance payment amounts under the two family
as needed with all other manpower training programs involving all
programs.
sectors of the economy and all levels of government.
Eligibility for and amount of benefits
Rehabilitation services for incapacitated family members
Family benefits would be computed at the rate of $800 per year for
Family members who are incapacitated would be referred to the
the first two members, $400 for the next three members, $300 for the
state vocational rehabilitation service. A quarterly review of their
next two members and $200 for the next member. This would provide
incapacities would usually be made.
$2,400 for a family of four, and the maximum amount which any fam-
Each such incapacitated individual would be required to accept
ily could receive would be $3,600. A family would not be eligible
rehabilitation services that are made available to him, and an allow-
if it had countable resources in excess of $1,500.
ance of $30 would be paid him while he receives such services. (States
If any member of the family fails to register, take required employ-
would have the option of providing an additional allowance of up to
ment or training, or accept vocational rehabilitation services, the
$30.) Necessary costs for transportation and similar expenses would
family benefits would be reduced by $800 per year.
also be paid.
Benefits would be determined on the basis of the family's income for
Evaluation and research; reports
the current quarter and the three preceding quarters.
The Secretary of Labor would be authorized to conduct research
After a family has been paid benefits for 24 consecutive months,
and demonstrations of the program and directed to make annual
a new application would be required which would be processed as
evaluation reports to the President and the Congress. An appropria-
if it were a new application.
tion of $10,000,000 would be authorized for these purposes.
The Secretary could determine that a family iş not eligible if it has
very large gross income from a trade or business.
B-FAMILY ASSISTANCE PLAN
Families would have to apply for all other benefits available to them
in order to be eligible.
Payment of benefits
Definition of income
All eligible families with no member available for employment
Earned income would follow generally the definition of earnings used
would be enrolled and paid benefits by the Secretary of Health, Edu-
in applying the earnings limitation of the social security program. Un-
cation, and Welfare.
earned income means all other forms of income among which are
Rehabilitation services and child care for incapacitated family members
benefits from other public and private programs, prizes and awards,
Family members who are unemployable because of incapacity
proceeds of life insurance not needed for last illness and burial (with a
would be referred to State vocational rehabilitation agencies for
maximum of $1,500), gifts, support, inheritances, grants, dividends,
services. A quarterly review of their incapacities would usually be
interests and so forth.
made. Such persons would be required to accept services made avail-
The following items would be excluded from the income of a family:
able, and would be paid a $30 per month incentive allowance plus
1. Earnings of a student regularly attending school, with limits
transportation and other related costs. (States would have the option
set by the Secretary.
of providing an additional allowance of up to $30.)
2. Irregular earned income of an individual of $30 or less in a
Child care services would also be provided if needed to enable
quarter and irregular unearned income of $60 or less in a quarter.
individuals to take vocational rehabilitation services.
3. Earned income used to pay the cost of child care under a schedule
prescribed by the Secretary.
26
27
4. The first $720 per year of other earned income plus one-third
of the remainder.
Optional State supplementation
5. Assistance based on need received from public or private agen-
If a State decides to supplement the basic Federal payment, it would
cies, except veterans' pensions.
be required to provide benefit amounts that do not undermine the
6. Training allowances.
earnings disregard provision. A State could agree to have the Federal
7. The tuition part of scholarships and fellowships.
Government make the supplementary payments on behalf of the State.
8. Home produce.
If a State agrees to have the Federal Government make its supplemen-
9. One-third of child support and alimony.
tal payments, the Federal Government would pay the full administra-
10. Foster care payments for a child placed in the family by a child
tive costs of making such payments, but if it makes its own payments
placement agency.
the State would pay all of such costs.
The total of the exclusions under (1), (2), and (3) above could not
States could but would not be required to cover under medicaid
exceed $2,000 for a family of four rising by $200 for each additional
persons who are made newly eligible for cash benefits under the bill.
member to an overall maximum of $3,000.
The Federal Government, in administering supplemental benefits
Exclusions from resources
on behalf of a State, would be required to recognize a residency re-
A family cannot be eligible for payments if it has resources in ex-
quirement if the State decided to impose such a requirement.
cess of $1,500. In determining what is included in the $1,500 amount,
the following items are excluded:
D-PROCEDURAL AND GENERAL PROVISIONS
1. The home to the extent that its value does not exceed a reason-
Payments and procedures
able amount.
2. Household goods and personal effects not in excess of a reason-
The Secretary would be permitted to pay the benefits at such times
able amount.
as best carry out the purposes of the title and could make payments to
3. Other property which is essential to the family's self-support.
a person other than a member of the family or to an agency where he
An insurance policy would be counted only to the extent of its cash
finds inability to manage funds. The Secretary's decision would be
surrender value except that if the total face value of all such policies
subject to hearing and review.
with respect to an individual is $1,500 or less, no cash surrender
The family benefits could not be paid to an individual who failed
value will be counted.
to register, or take work, training or vocational rehabilitation.
The Secretary would prescribe periods of time, and manners in
Cash advances of $100 or less could be paid if an applicant appears
which, property must be disposed of in order that it would not be
to meet all the eligibility requirements and is faced with a financial
included as resources.
emergency.
The Secretary may arrange for adjustment and recovery in the
Meaning of family and child
event of overpayments or underpayments, with a view toward equity
A family would be defined as two or more related people living
and avoiding penalizing people who were without fault.
together in the United States where at least one of the members is a
People who are, or claim to be, eligible for assistance payments, and
citizen or a lawfully admitted alien and where at least one of them is a
who disagree with determinations of the Secretary, could obtain hear-
child dependent on someone else in the family.
ings if they request them within 30 days. Final determinations would
No family will be eligible if the head of the household is'an under-
be subject to judicial review in Federal district courts, but the Secre-
graduate or graduate student regularly attending a college or uni-
tary's decisions as to any fact. would be conclusive and not subject to
versity. Benefits would not be payable to an individual for any month
review by the courts. The Secretary would also be given authority
in which he is outside the United States.
to appoint qualified people to serve. as hearing examiners without
The term "child" means an unmarried person who is not the head of
their having to meet the specific standards prescribed under the Ad-
the household, and who is either under the age of 18 or under the age of
ministrative Procedure Act for hearing examiners.
22 if attending school regularly.
The right of any person to any future benefit would not be trans-
Appropriate State law would be used in determining relationships.
ferable or assignable, and no money payable under this title would be
The income and resources of an adult (other than a parent or the
subject to execution, levy, attachment, garnishment, or other legal
spouse of a parent) living with the family but not contributing to the
process.
family would be disregarded.
In addition, the Secretary would establish necessary rules and regu-
If an individual takes benefits under adult assistance, he could not
lations dealing with proofs and evidence, and the method of taking
be eligible for family benefits.
and furnishing the same, in order to establish the right to benefits.
Each family would be required to submit a report of income within
30 days after the end of a quarter and benefits would be cut off if the
report was not filed. If a family failed, without good cause, to report
income or changes in circumstances as required by the Secretary, it
28
29
would be subject to a penalty of $25 the first time, $50 the second time
on the effectiveness of the elements of the program designed to help
and $100 for later times.
people become self-supporting. Each committee would be composed of
The head of any Federal agency would be required to provide such
representatives from labor, business, and the public, as well as public
information as the Secretary of HEW needs to determine eligibility
officials not directly involved in the administration of the programs.
for benefits under this title.
V. OTHER RELATED ASSISTANCE PROVISIONS
Penalties for fraud
A penalty of $1,000 or 1 year imprisonment, or both, would be
ADOPTION AND FOSTER CARE SERVICES UNDER CHILD WELFARE
provided in the case of fraud under the program.
Authorizations of $150 million for fiscal year 1972 and higher
Administration
amounts for subsequent years would be provided for payments to the
Both the Secretary of Health, Education, and Welfare and the
States to support foster care and related services.
Secretary of Labor could perform their functions directly, through
other Federal agencies, or by contract. An additional Assistant Sec-
PROVISIONS RELATED TO NEW ASSISTANCE PROGRAMS
retary is authorized in the Department of Labor to head up the new
program in that Department.
Effective date for adult assistance and family programs
Child care
Major changes made in the assistance programs would be effective
The Secretaries of Labor and Health, Education, and Welfare are
July 1, 1972. The child care provisions would become effective upon
each given the authority and responsibility for arranging day care
enactment of the bill. The amendments which provide benefits to
for their respective recipients under the Opportunities for Families
families where the father and mother are both present, neither is
Program and the Family Assistance Plan who need such day care in
incapacitated, and the father is not unemployed (the "working poor")
order to participate in training, employment, or vocational rehabilita-
would become effective January 1, 1973.
tion. Where such care can be obtained in facilities developed by the
Prohibition against participation in food stamp program by recipients
Secretary of Health, Education, and Welfare, these would be utilized.
of payments under family and adult assistance programs
Insofar as possible, arrangements would be made for after school
The bill would amend the Food Stamp Act of 1964 by providing that
care with local educational agencies. All day care would be subject to
families and adults eligible for benefits under the assistance programs
standards developed by the Secretary of Health, Education, and
in this bill would be excluded from participation in the food stamp
Welfare, with the concurrence of the Secretary of Labor. Both Secre-
program.
taries would have authority to make grants and contracts for payment
of up to 100 percent of the cost of care. The Secretary of Health,
Special provisions for Puerto Rico, the Virgin Islands, and Guam
Education, and Welfare would have total responsibility for construc-
There would be special provisions for Puerto Rico, the Virgin
tion of facilities. $700 million would be authorized for the provision of
Islands, and Guam. The amounts used in the family assistance plan
child care services in the first fiscal year, and such sums as Congress
and the aid to the aged, blind, and disabled (other than the $720
may appropriate in subsequent years. In addition, $50 million would
amount of annual earnings to be disregarded and the $30 per month
be authorized for construction and renovation of child care facilities
incentive allowances) would be adjusted by the ratio of the per capita
for each fiscal year.
income of each of these jurisdictions to the per capita income of the
lowest of the 50 States.
Obligations of parents
A deserting parent would be obligated to the United States for the
Determination of medicaid eligibility
amount of any Federal payments made to his family less any amount
The Secretary would be able to enter into agreements with States
that he actually contributes by court order or otherwise to the family.
under which the Secretary would determine eligibility for medicaid
Any parent of a child receiving benefits who travels in interstate
both for those eligible for Federal payments and the medically needy
commerce to avoid supporting his child would be guilty of a mis-
in cases where the State covered the medically needy. The State would
demeanor and subject to a fine of $1,000, imprisonment for 1 year,
pay half of the Secretary's additional administrative costs arising from
or both.
carrying out the agreement.
The Secretary would report to appropriate officials cases of child
Effective date.July 1, 1972.
neglect or abuse which came to his attention while administering the
Transitional administration of public assistance
program.
The Secretary of Health, Education, and Welfare could enter into
Local committees to evaluate program
agreements with States under which a State would administer the
Local advisory committees would be set up throughout the country,
Federal assistance program for a period of up to one year from the
with a minimum of one in each State, which would evaluate and report
beginning of the program.
30
31
Limitations on increases in State welfare expenditures
Enforcement of support orders
States would be guaranteed that, if they make payments supple-
States would be required to secure support for a spouse of a parent
mentary to the Federal adult or family programs, it would cost them
from the other parent (of children receiving assistance payments)
no more to do SO than the amount of their total expenditures for cash
where he has descrted or abandoned his spouse, utilizing reciprocal
public assistance payments during calendar year 1971, to the extent
arrangements with other States to obtain or enforce court orders for
that the Federal payments and the State supplementary payments to
support.
recipients do not exceed the payment levels in effect under the public
Effective date.July 1, 1972, or earlier, if the State plan so provides.
assistance programs in the State for January 1971. The value of food
Separation of social services and cash assistance payments
stamps would be taken into account in computing whether the guaran-
Each State would be required to submit a proposal to. the Secre-
tee would go into effect if the State pays in cash the value of food
tary by January 1, 1972 providing for the administrative separation
stamps. Most States would save money under the provisions of the
of handling eligibility for cash payments and the provision of social
bill; this provision would guarantee that no State would lose money.
services by July 1, 1972.
Limitation on Federal expenditures for social services
Increase in Federal matching to States for costs of establishing paternity
The Federal Government would continue to provide 75 percent
and collecting child support payments
matching funds to the States for child care and family planning services
Federal matching would be increased from 50 percent to 75 percent
on an open-end appropriation basis. Federal matching for other
for State costs incurred in establishing the paternity of AFDC children
specified social services would be limited to the amounts appropriated
and locating and collecting support from their absent parents.
by the Congress.
Effective date.-Enactment.
PUBLIC ASSISTANCE AMENDMENTS EFFECTIVE IMMEDIATELY
Vendor payments for special needs
Additional remedies for State noncompliance with provisions of assistance
States would be permitted to provide for non-recurring items of
titles
special need by means of vendor payments.
The Secretary would be able to require States to make payments to
Increase in Federal matching-WIN program
people who did not receive all money due them because the State
Effective immediately, the Federal matching under the WIN pro-
failed to comply with a Federal requirement.
gram would be increased from 80 to 90 percent. This provision expires
The Secretary could require a State which is in noncompliance with
June 30, 1972.
a Federal requirement to set up a timetable and method for assuring
compliance, or could request the Attorney General to bring suit to
enforce the Federal requirements.
VI. PROVISIONS FOR TAX CHANGES (OTHER THAN
Effective date.-Enactment.
PAYROLL TAXES)
Statewideness not required for services
Child Care Deduction
A State would be permitted to furnish social services in one area
Under present law, a child care deduction of $600 per child, but
of a State without being required to furnish such services in all geo-
not more than $900, is available for child care expenses in certain
graphic areas of the State.
cases. Generally, this amount is available in the case of such expenses
Effective date.-Enactment.
incurred by a widow or widower or certain other married couples
Optional modification in disregarding income under AFDC
with an incapacitated spouse and also in the case of married couples
States would be permitted, between enactment and July 1, 1972, to
with incomes of not over $6,000.
modify their present AFDC programs so as to substitute the earnings
The new provision retains the basic child care provision of present
disregard provisions in the family assistance provisions (cost of child
law but increases from $6,000 to $12,000 the income a married couple
care, plus $720, plus one-third of the remainder) for provisions of
may have and still be eligible for this deduction, In addition, the
present law (the first $30 and one-third of the remainder after which
amount of child care expenses which may be deducted is increased
actual work expenses are deducted).
from $600 for the first child to $750, and to $1,125 for two children,
A State could also apply the maximum dollar limits in the family
and to $1,500 for three or more children. These changes are effective
programs on child care and student earnings ($2,000 for a family of
with respect to taxable years beginning on or after January 1, 1972.
four rising to $3,000 for a family of nine or more) to its present AFDC
Retirement Income Credit
program.
Under present law, a retirement income credit of up to $1,524
Effective date.-Enactment.
multiplied by 15 percent ($229) is allowed for single persons age 65
Individual programs for family services not required
or over having "retirement income"-that is, income from pensions,
States would no longer be required to prepare a separate plan of
dividends, interest, rents or other passive income sources. However,
services for each individual who is eligible for AFDC.
this credit is available only if the individual had ten prior years of
Effective.date.-July 1, 1972, or earlier if the State so chooses.
32
33
earned income above $600. The income eligible for this credit is re-
5
1
3
1
duced, however, by social security, railroad retirement or other
Net cost
to all gov-
ernments
$1. 7
3 i
1. 4
2. 0
3 :
8 .8
3.
2. 0 2.0
4. 0
3. 9
3 2.
tax-exempt pension income. It is also reduced by 50 percent of earnings
over $1,200 and 100 percent of earnings over $1,700. (This earnings
limitation, however, does not apply to those age 72 and over.) For
married couples_a credit equal to one and one-half times the credit
2
1
1
1
4
4
6
referred to above is generally available under present law. However,
Net cost
$0. 2
- 1. 2
1. 6
in some cases where both can qualify for the credit a credit of up to
twice that referred to above is available.
In addition, under present law, the retirement income credit deter-
mined substantially as indicated above is available for retirement
State and local 1
H.R. 1
$3. 1
3. 1
1. 5
4. 6
1
3. 5
3. 5
3. 5
income received from governmental units where the individual is
under age 65, except that the credit is reduced on a dollar-for-dollar
basis for earnings above $900 (between age 62 and 65 the earnings
$3. 3
3. 3
1. 1.4 4
4. 7
4
4
test described above applies).
which is both more liberal and also will be easier to compute on the
Current law
4. 7
5. 1
5. 1
The committee has adopted a substitute retirement income credit
return form. This credit for a single person will be based upon $2,500
instead of $1,524. It will not be necessary for the individual involved
Potential fiscal year 1973 costs of Assistance provisions under H.R. 1
3
5
7
Net cost
$1. 9
1. 6
1. 9
to have "retirement income" as he is required to have under present
3. 5
1
3. 2
.3
3
8 .
1
2. 4
5. 6
1
5. 5
law or 10 years of prior earnings of $600 or more. However, as under
neither is incapacitated, and the father is employed. The effective date for this provision
present law, the $2,500 will be reduced for social security, railroad
retirement and other tax-exempt pension income. Also, as under
[In billions of dollars; negative amounts indicate decreases]
3
present law, it will be reduced for earned income above a specified
Federal
2 $5. 8
5. 5
1 4.
9. 6
8
5
8
1
1
H.R. 1
1. 1
1. 0
11. 7
.5
1. 1
3. 3
15. 0
14. 9
3 Net benefit increases to recipients.
level (if the individual is under age 72). However, the amount will
only be reduced for 50 percent of earnings above $2,000 instead of
is Jan. 1, 1973.
50 percent of earnings above $1,200 plus 100 percent of earnings
above $1,700.
2
6
Current law
$3. 9
3. 9
2. 2
6. 1
2. 4
8. 5
3
4
9. 4
9. 4 9.4
As under present law, the amount derived in this manner is multi-
plied by 15 percent in order to obtain the credit (the new figure gives
a maximum credit of $375).
For a married couple, both over age 65, the retirement income
credit is to be based upon $3,750 instead of the $2,500 applicable to a
single person. Otherwise the credit is to be computed in the same
manner indicated above except on the basis of the combined experience
of the husband and wife.
For those below age 65 receiving Government pension income the
$2,500 also becomes applicable but, as under present law, only with
respect to Government pension income. The earnings test for these
persons is raised from $900 to $1,000 if under age 62 but for those
above that age, the $2,000 earnings test applies.
Payments to families
Less savings from public service jobs
Subtotal
Payments to adult categories
Cost of cash assistance
Federal cost of "hold harmless" provision
Cost of maintenance payments
Food programs
Child care
Training
Supportive services
Cost of related and support activities
Public service jobs
Administration
Total cost of program
Impact of other programs
Grand total
1 Assumes that the States, through supplemental programs, maintain benefit levels
including the value of food stamp bonuses.
2 Includes only 6 months of payments to families in which both parents are present,
34
35
Projected recipients under current law and persons eligible for
Potential State savings under assistance provisions of H.R. 1 1
assistance under H.R. 1, fiscal years 1973-1977
[In millions of dollars]
(In millions)
1973
1974
1975
1976
1977
1973
1974
1975
1976
1977
Alabama
$32. 4
$38. 4
$45. 4
$47. 2
$49. 1
Persons eligible for benefits under H.R. 1:
Alaska
2.5
3.1
3.7
4.4
Persons in families:
5.1
Arizona
21. 5
22. 6
23. 8
25. 2
26. 5
Not now covered under present programs_
9.1
8.1
7.2
6.4
5.7
Arkansas
19. 7
20. 4
21. 3
22. 1
22. 9
Covered under present programs
10. 3
10. 6
10. 9
11. 2
11. 5
California
234. 9
294. 9
356. 5
402. 5
447. 7
Aged, blind and disabled
6.2
6.6
7.1
7.2
7.2
Colorado
13. 3
16. 6
19. 8
21. 5
23. 1
Connecticut
21. 3
25. 7
30. 2
34. 8
39. 1
Total eligibles under H.R. 1
25. 6
25. 3
25. 2
24. 8
24. 4
Delaware
1.8
2.1
2.5
3.0
3.6
District of Columbia
12. 6
17. 0
21. 5
23. 4
25. 1
Recipients under current law:
Florida
170. 3
177.8
185. 3
192. 9
200. 2
Persons in families with dependent children
11. 6
12. 6
13. 6
14. 7
15. 8
Georgia
57. 8
53.4
55. 0
56. 7
58. 3
Aged, blind and disabled
3.4
3.4
3.5
3.5
3.6
Hawaii
7.0
7.8
8.6
9.6
10. 7
Idaho
1.5
1.9
2.2
2.8
3.4
Total recipients under current law
15. 0
16. 0
17. 1
18. 2
19. 4
Illinois
62. 1
78.9
95. 6
112. 4
129. 2
Indiana
8.6
10. 5
12. 6
14. 7
16. 9
Iowa
26. 7
28. 6
30. 5
32. 6
34. 6
Kansas
14. 2
15. 6
17. 0
18. 7
20. 3
Kentucky
12. 6
13. 6
14. 5
15. 5
16. 3
Louisiana
65. 4
68. 5
71. 7
74. 9
78. 1
Maine
3.6
4.4
5.4
6.4
7.5
Maryland
41. 9
44. 7
47.5
50. 4
53. 2
Massachusetts
44. 3
57. 3
70. 4
83. 7
96. 9
Michigan
45. 4
58. 2
71. 2
84. 2
97. 2
Minnesota
15. 2
19. 4
23. 8
28. 1
32. 6
Mississippi
23. 3
24. 2
25. 2
26. 4
27. 5
Missouri
12. 1
14. 9
20. 5
22. 6
24. 7
Montana
2.5
2.7
2.9
3.2
3.5
Nebraska
3.1
3.9
4.7
5.6
6.6
Nevada
1.1
1.2
1.2
1.8
2.1
New Hampshire
2.3
2.9
3.6
4.4
5.2
New Jersey
50. 1
64. 4
78.6
93. 1
107. 6
New Mexico
7.3
7.8
8.2'
8.7
9.1
New York
188. 4
238. 7
289. 2
339. 6
390. 1
North Carolina
31. 9
33. 0
34. 1
35. 2
36. 4
North Dakota
1.2
1.2
1.4
1.8
2.2
Ohio
64. 0
69. 3
74. 6
79. 9
85. 3
Oklahoma
38. 3
40. 2
42. 0
43. 9
45. 6
Oregon
15. 9
17. 4
18. 9
20. 5
22. 0
Pennsylvania
51. 3
69. 9
88. 5
107. 2
125. 9
Rhode Island
6.3
7.7
9.3
11. 0
12. 7
South Carolina
13. 8
14. 5
15. 2
16. 0
16. 7
South Dakota
2.5
2.8
3.3
3.7
4.3
Tennessee
34. 2
35. 1
36. 1
37. 0
38. 0
Texas
57. 1
59. 7
61. 4
65. 1
67. 7
Utah
3.4
3.6
3.9
4.3
4.7
Vermont
1.1
1.3
1.7
2.1
2.5
Virginia
10. 4
12.9
15.5
18. 2
20. 9
Washington
11. 4
15. 9
20.6
25. 2
30. 0
West Virginia
18. 3
18. 7
19. 2
19. 7
20. 3
Wisconsin
33. 3
35. 5
37. 6
39. 9
42. 1
Wyoming
1.2
1.3
1.5
1.9
2.2
Guam
22
22
32
33
33
Puerto Rico
26. 1
27. 6
29. 1
30. 7
32. 2
Virgin Islands
1.1
1.2
1.2
1.4
1.4
Total
1, 643. 8 1, 911. 1 2, 185. 5 2, 438. 1 2, 687. 4
1 Assumes that the States, through supplemental payments, maintain January 1971 payment levels in-
cluding the value of food stamps and agree to Federal administration of supplemental payments.
See 8p.13-45
92d Congress
2d Session
}
COMMITTEE PRINT
Social Security and Welfare Reform
Summary of the Principal Provisions
of H.R. 1 as Determined by the
Committee on Finance
COMMITTEE ON FINANCE
UNITED STATES SENATE
RUSSELL B. LONG, Chairman
JUNE 13, 1972
Prepared by the staff and printed for the use of the
Committee on Finance
U.S. GOVERNMENT PRINTING OFFICE
79-184 O
WASHINGTON : 1972
CONTENTS
Page
COMMITTEE ON FINANCE
Introduction
1
RUSSELL B. LONG, Louisiana, Chairman
CLINTON P. ANDERSON, New Mexico
WALLACE F. BENNETT, Utah
THE SOCIAL SECURITY, MEDICARE, AND
CARL T. CURTIS, Nebraska
MEDICAID PROGRAMS
HERMAN E. TALMADGE, Georgia
VANCE HARTKE, Indiana
JACK MILLER, Iowa
J. W. FULBRIGHT, Arkansas
LEN B. JORDAN, Idaho
Social Security Cash Benefits
ABRAHAM RIBICOFF, Connecticut
PAUL J. FANNIN, Arizona
FRED R. HARRIS, Oklahoma
CLIFFORD P. HANSEN, Wyoming
1. PROVISIONS OF THE HOUSE BILL CHANGED AND
HARRY F. BYRD, JR., Virginia
ROBERT P. GRIFFIN, Michigan
NEW PROVISIONS ADDED BY THE COMMITTEE
GAYLORD NELSON, Wisconsin
TOM VAIL, Chief Counsel
Increase in social security benefits.
3
MICHAEL STERN, Assistant Chief Clerk
Special minimum benefits.
4
(II)
Automatic increases in benefits, the tax base, and the earnings
test
5
Increased benefits for those who delay retirement beyond age
65
5
Reduction in waiting period for disability benefits
5
Benefits for a child based on the earnings record of a grand-
parent
6
Refund of social security tax to members of certain religious
faiths opposed to insurance
6
Sister's and brother's benefits
6
Disability benefits for individuals who are blind
6
Issuance of social security numbers and penalty for furnishing
false information to obtain a number
7
Treatment of income from sale of certain literary or artistic
items
7
Underpayments
8
Payments by an employer to disability beneficiaries or to the
survivor or estate of a former employee
8
Death benefits where body is unavailable
8
2. PROVISIONS OF THE HOUSE BILL THAT WERE NOT
CHANGED BY THE COMMITTEE
Increase in widow's and widower's insurance benefits
8
Age 62 computation point for men
9
Liberalization of the retirement test
9
Childhood disability benefits.
9
Continuation of child's benefits through the end of a semester
9
Eligibility of a child adopted by an old-age or disability in-
surance beneficiary
10
Nontermination of child's benefits by reason of adoption
10
Disability benefits affected by the receipt of workmen's com-
pensation
10
(III)
IV
V
Page
Page
Dependent widower's benefits at age 60
10
Medicare benefits for border residents (sec. 211)
23
Waiver of duration-of-marriage requirement in case of remar-
Payments to health maintenance organizations (sec. 226)
24
riage
11
Reductions in care and services under medicaid program (sec.
Wage credits for members of the uniformed services
11
231)
26
Disability insurance benefits applications filed after death
11
Payments to States under medicaid for installation and opera-
Coverage of members of religious orders who are under a vow
tion of claims processing and information retrieval systems
of poverty
11
(sec. 235)
27
Self-employment income of certain individuals living tempo-
Provider Reimbursement Review Board (sec. 243)
27
rarily outside the United States
11
Physical therapy services and other services under medicare
Trust fund expenditures for rehabilitation services
12
(sec. 251)
28
Waiver of registered nurse in rural skilled nursing facility (sec.
3. OTHER CASH BENEFIT AMENDMENTS
267)
29
Coverage of chiropractic services
Principal Medicare-Medicaid Provisions
29
1. PROVISIONS OF HOUSE BILL NOT SUBSTAN-
3. NEW PROVISIONS ADDED BY THE
TIALLY MODIFIED BY COMMITTEE
FINANCE COMMITTEE
Medicare coverage for disabled beneficiaries (sec. 201)
13
Establishment of Professional Standards Review Organiz-
Hospital insurance for the uninsured (sec. 202)
13
Coverage of drugs under medicare
30
Part B premium charges (sec. 203)
14
Inspector General for Medicare and Medicaid
30
Automatic enrollment for part B (sec. 206)
14
Medicaid coverage of mentally ill children
33
Relationship between medicare and Federal employees' benefits
Public disclosure of information regarding deficiencies
33
(sec. 210)
14
Extended care facilities-Skilled nursing facilities
34
Limitation on Federal payments for disapproved capital ex-
Authority for demonstration projects concerning the most suit-
penditure (sec. 221)
15
able types of care for beneficiaries ready for discharge from a
Experiments in prospective reimbursement and peer review
hospital or skilled facility
35
(sec. 222)
15
Physicians' assistants
36
Limitations on coverage of costs (sec. 223)
16
The role of the Joint Commission on the Accreditation of Hos-
Limitation on prevailing charge levels (sec. 224)
16
pitals in Medicare
37
Payment for physicians' services in the teaching setting (sec.
Maternal and child health
38
227)
16
Coverage of speech therapists and clinical psychologists under
medicare
Advance approval of ECF and home health coverage (sec.
38
228)
17
Provide Secretary greater discretion in selection of intermedi-
Termination of payment to suppliers of service (sec. 229)
17
aries and assignment of providers to them
39
Elimination of requirement that States move toward comprehen-
Disclosure of information concerning medicare agents and pro-
viders
sive medicaid program (sec. 230)
18
40
Access to subcontractors' records
Relationship between medicaid and comprehensive health pro-
41
Duration of subcontracts
41
grams (sec. 240)
18
Waiver of beneficiary liability in certain situations where medi-
Program for determining qualifications for certain health care
care claims are disallowed
41
personnel (sec. 241)
18
Family planning
42
Penalties for fraudulent acts and false reporting under medicare
Penalty for failure to provide required health care screening
43
and medicaid (sec. 242)
19
Outpatient rehabilitation coverage
43
Prosthetic lenses furnished by optometrists under part B (sec.
Medicare coverage for spouses and social security beneficiaries
264)
19
under age 65
44
Alcoholism and addiction
45
2. PROVISIONS OF HOUSE BILL SUBSTANTIALLY
MODIFIED BY COMMITTEE
Financing Social Security Benefits
Failure by States to undertake required institutional care re-
Social Security cash benefits.
view activities (sec. 207)
20
49
Hospital insurance
Cost sharing under medicaid (sec. 208)
21
51
Mandatory medicaid deductible for families with earnings (sec.
209)
22
VI
VII
THE WELFARE PROGRAMS
Furnishing manuals and other policy issuances
Page
80
Requirement of statewideness for social services
Aid to the Aged, Blind, and Disabled
80
Use of social security numbers and other means of identifica-
Page
tion
Present law
53
80
Committee amendments
54
Duration of residency
80
National minimum welfare standards and disregard of social
Welfare payments for rent
81
security or other income
54
Alcoholics and addicts
81
Earned income disregard
54
Sharing the cost of prosecuting welfare fraud
81
Other income disregards
55
Recent disposal of assets
81
Eligibility for other benefits
55
Recouping overpayments
82
Definitions of blindness and disability
55
Ineligibility for food stamps
82
Age limit for aid to the disabled
55
Appeals process
82
Medicaid coverage
56
Safeguarding information
83
Social services
56
Separation of services and eligibility determination
83
Prohibition of liens in aid to the blind
56
Quality of work performed by welfare personnel
83
Other eligibility requirements
56
Offenses by welfare employees
84
Administrative costs
56
Limiting HEW regulatory authority in welfare programs
85
Statistical material
58
Demonstration projects to reduce dependency on welfare
85
Guaranteed Job Opportunity for Families
2. CHILD WELFARE SERVICES
Description of program
66
Grants to States for child welfare services (including foster
care and adoptions)
Work incentives under the program
67
85
Work disincentives under present law and administration pro-
National Adoption Information Exchange System
86
posal
69
3. SOCIAL SERVICES
Eligibility to participate
71
Participation in work program
71
Federal matching for social services
86
Kinds of employment
72
Family planning services
88
Placement in regular employment
72
Eliminate statutory requirement of individual program of
Subsidized public or private employment
72
services for each family
88
Federally funded jobs
73
Supportive services for participants in the WIN program
88
Work bonus for low-income workers
74
Transportation assistance
75
4. OTHER PROVISIONS
Training
75
Services
75
Evaluation of programs under the Social Security Act
88
State supplementation
76
Use of Federal funds to undermine Federal programs
89
Food stamps
76
Appointment and confirmation of Administrator of Social and
Children of mothers refusing to participate in the employment
Rehabilitation Services
89
program
76
Administration of the employment program
Child Care
77
Employment program in Puerto Rico
77
Bureau of Child Care
91
Tax credit to develop jobs in the private sector
77
Authorization
92
Effective dates
78
Grants to States for establishment of model day care
92
General Welfare Provisions, Child Welfare Services, Social
Aid to Families With Dependent Children
Services, and Other Provisions
Persons eligible for Aid to Families With Dependent Children
93
1. GENERAL WELFARE PROVISIONS
Definition of "incapacity" under Aid to Families With De-
Welfare as a statutory right
79
pendent Children
93
Declaration method of determining eligibility
79
Ineligibility of unborn children
94
Denial of welfare for refusal to allow caseworker in home
79
Children living in a relative's home
94
IX
VIII
TABLES
Page
Cooperation of mother in identifying the father and seeking
Page
support payments
94
1. Comparison of monthly benefits under present law, House
Families where there is a continuing parent-child relationship
94
bill and Committee bill
4
Income disregard
95
2. Social security taxes under present law, House bill, and
Assistance levels
96
Committee bill
47
Right to apply for aid to receive it with reasonable prompt-
3. Social security cash benefit progress of trust funds under
ness
96
present law and under the system as modified by the Com-
Community work and training programs
97
mittee bill, calendar years 1972-77
50
Protective payments for children
97
4. Progress of hospital insurance trust fund
51
Emergency assistance-Migrant workers
97
Making establishment of Advisory Committee optional
5. Recipients of aid to the aged, blind, and disabled
57
98
Administrative costs
6. Old-age assistance: Monthly amount for basic needs under
98
Federal financial participation in welfare payments
full standard and largest amount paid for basic needs,
98
by State
58
Statistical material
100
7. Aid to the blind and aid to the permanently and totally dis-
Child Support
abled Monthly amount for basic needs under full stand-
ard and largest amount paid for basic needs, by State
60
103
8. Work incentives under the Committee bill
69
Assignment of right to collection of support payments
Locating a deserting parent; access to information
104
9. Work disincentives under the House bill Income for fam-
ily of four
70
Incentives for States and localities to collect support payments
104
10. Recipients of Aid to Families With Dependent Children
99
Voluntary approach stressed
105
Civil action to obtain support payments-Residual monetary
11. Aid to Families With Dependent Children Income eligi-
obligation
105
bility level for payments and largest amount paid to fam-
Criminal action
ily of four by State
100
105
Determining paternity
106
12. AFDC families by parentage of children
108
Leadership role of Justice Department
107
13. AFDC families with specified number of illegitimate re-
Attachment of Federal wages
107
cipient children
108
Child support under workfare
14. AFDC families by status of father
109
107
Effective dates
15. AFDC families by whereabouts of father
110
107
Statistical material
16. State savings in welfare payment costs, 1974
112
108
17. State savings in AFDC costs under Committee bill
116
Fiscal Relief for States
Federal funding of Aid to the Aged, Blind, and Disabled
115
Federal funding of Aid to Families With Dependent Children
115
Federal funding costs of Public Assistance Administration
116
INTERNAL REVENUE AMENDMENTS
Retirement income credit
117
Social security and unemployment tax of affiliated corpo-
rations
117
ANALYSIS OF COST OF COMMITTEE BILL
Charts:
Cost increases in H.R. 1 and Committee bill
121
Social security cash benefits
123
Medicare and medicaid
125
Aid to the aged, blind, and disabled
127
Cost of programs for families: H.R. 1 and the Committee
bill
129
INTRODUCTION
This summary describes briefly, in general terms, the significant
features of the provisions of H.R. 1, the Social Security Amendments
of 1971 as ordered reported to the Senate by the Committee on Fi-
nance. The description of minor and technical amendments included in
the bill may not be contained here but will be reflected in the text of
the Committee bill and will be explained in the Committee report
accompanying the bill.
As ordered reported by the Committee, H.R. 1 represents the most
massive revision of the Social Security laws Congress has ever under-
taken. The bill would increase benefits by $17.6 billion over the esti-
mated costs if present law were continued. The social security cash
benefits alone will increase by $7 billion in 1973 ($7.4 billion in
1974) largely because of the 10-percent increase in benefits approved
by the Committee. Medicare benefits will rise by $3 billion by 1974 as
the new program for coverage of the disabled and for the provision of
drugs become effective.
But perhaps the most significant features of the bill are those seek-
ing to reform the welfare laws. In addition to upgrading the level of
benefits for needy old age, blind, and disabled Americans (at an added
cost of $2.2 billion in 1974) the Committee bill offers a bold, new ap-
proach to the problem of increasing dependency under the program of
Aid to Families With Dependent Children. Specifically, where the
youngest child in an AFDC family has reached school age (or where the
family is headed by a male) the family would no longer be eligible
for welfare as it is today, but instead the head of the family would be
offered a guaranteed job opportunity. He, or she, would be given an
opportunity to become independent through employment and suf-
ficient financial incentives are provided by the bill to encourage him
or her to prefer employment in the private economy to work in the
guaranteed job. Moreover, unlike today, the Federal Government's
incentive to help these families locate suitable jobs would be enhanced
because under the Committee plan the entire cost of the employment
program would be borne by the Federal Government whereas AFDC
costs are shared with the States. The cost of this new system of em-
ployment opportunity is estimated at $4.5 billion in 1974, with vir-
tually all the expense incurred to increase the income of the poor who
work.
(1)
The Social Security, Medicare, and Medicaid Programs
SOCIAL SECURITY CASH BENEFITS
As passed by the House, H.R. 1 would increase social security cash
benefits by $3.9 billion in 1973 and $4.3 billion in 1974. A little over
half of this increase is related to the 5-percent across-the-board
benefit increase in the House bill.
The Committee bill would increase social security cash benefit pay-
ments by $7.4 billion in 1974. The major item of cost relates to the
10 percent benefit increase in the Committee bill, twice the amount of
the increase in the House bill.
Another major feature of the Committee bill would provide a special
minimum benefit to low-wage workers with long-time attachment to
employment covered under social security. A retired worker with at
least 30 years of covered employment would be guaranteed a benefit of
at least $200 (if the worker is married, the couple would receive a
benefit of at least $300).
The individual provisions of the Committee bill are described below.
1. PROVISIONS OF THE HOUSE BILL CHANGED AND NEW PROVISIONS
ADDED BY THE COMMITTEE
Increase in Social Security Benefits
The Committee bill provides for a general 10-percent increase in
social security benefits in place of the 5-percent increase in the House-
passed bill. The increase would be effective with the benefit checks that
will be delivered July 3.
However, it seems unlikely that Congress could take final action on
the bill in time for the higher amounts to show up in the July checks.
The increase, therefore, will be paid retroactively after the bill is
enacted.
Under the Committee bill about 27.8 million social security bene-
ficiaries will receive higher benefits and about $4.3 billion in additional
benefits will be paid in 1974 as a result of the 10 percent benefit in-
crease. The average retirement benefit would rise from an estimated
$133 to $147 a month, rather than to $141 as under the House bill. The
average benefits for aged couples would increase from an estimated
$223 to $247 a month, rather than to $234 a month under the House-
passed bill. A worker with maximum earnings creditable under social
security who retired at age 65 this year would get a monthly benefit of
$237.80 rather than $216.10 as under present law. If he and his wife
both become entitled to benefits at age 65, they would get $356.70
rather than $324.20 under present law.
The minimum benefit would be increased by 5 percent from $70.40
to $74.00, as in the House-passed bill.
(3)
4
5
Special benefits for people age 72 and over who are not insured
Effective date.-January 1973.
for regular benefits would be increased by 5 percent, as in the House-
Number of people affected and dollar payments.-1.3 million people
passed bill, from $48.30 to $50.80 for individuals and from $72.50 to
would get increased benefits on the effective date and $300 million in
$76.20 for couples.
additional benefits would be paid in 1974.
Special Minimum Benefits
Automatic Increases in Benefits, the Tax Base, and the
The House-passed bill would provide a special minimum benefit of
Earnings Test
$5 multiplied by the number of years in covered employment up to
thirty years, producing a benefit of at least $150 a month for a worker
The Committee bill retains the provisions in the House bill provid-
who has been employed for 30 years under social security coverage. The
ing for automatic annual increases in social security benefits as the cost
Committee bill replaces this with a provision for a special min-
of living rises. These increases would go into effect each January when-
imum benefit under the social security program which would pro-
ever the Consumer Price Index goes up by at least 3 percent. However,
vide a payment of $200 per month ($300 for a couple) for persons who
the Committee did change the method of financing the additional bene-
have been employed in covered employment for thirty years.
fits paid under the automatic mechanism. Under the Committee
This benefit would be paid as an alternative to the regular benefits in
bill, the financing would be directly related to the amount of the
cases where a higher benefit would result.
additional benefits and one-half would be provided from an increase in
Specifically, the Committee bill would provide a special minimum
the tax rate and one-half from an increase in earnings (presently
of $10 per year for each year in covered employment in excess of ten
$9,000 and increasing to $10,200 beginning January 1973 under the
years (for purposes of this special minimum, there would be no credit
Committee bill) subject to the social security tax. Under the House-
for the first ten years of employment). Under this provision, the new
passed bill, the financing mechanism would not be related to the cost
higher minimum benefit would become payable to people with 18 or
of the automatic benefit increase, but rather to changes in wage rates.
more years of employment; at that point, the special minimum bene-
Under the House bill, the increased benefits would be financed entirely
fit-$80-would be more than the regular minimum. A worker with
through an increase in the taxable wage base.
twenty years of employment under social security would thus be guar-
Effective date.-The first cost-of-living increase would be possible
anteed a benefit of at least $100; one with twenty-five years would be
for January 1975.
guaranteed at least $150, while one with thirty years would receive at
least $200 a month. Minimum payments to a couple would be one and
Increased Benefits for Those Who Delay Retirement Beyond
one-half times these amounts.
Age 65
The level of payments under the present law, the House bill, and
The Committee bill includes the provisions in the House bill which
the Committee bill are shown in the following table:
would provide for an increase in social security benefits of one percent
TABLE 1.-COMPARISON OF MONTHLY BENEFITS UNDER PRESENT
for each year after age 65 that the individual delays his retirement.
However, the committee modified the provision SO that the additional
LAW, HOUSE BILL, AND COMMITTEE BILL
benefit would apply to persons already retired, rather than only to
those coming on the social security rolls after the bill's enactment.
Retirement benefit for an
Effective date.-January 1973.
individual under-
Number of people affected and dollar payment.-5 million people
Average monthly
Years of employment
Present
House
Committee
would get increased benefits on the effective date and $180 million in
earnings
under social security
law
Bill
Bill
additional benefits would be paid in 1974.
$200
20
$128.60
$135.10
$141.50
Reduction in Waiting Period for Disability Benefits
$200
25
128.60
135.10
150.00
$200
30 or more
128.60
150.00
200.00
Under the House bill, the present 6-month period throughout which
a person must be disabled before he can be paid disability benefits
$250
20
145.60
152.90
160.20
would be reduced by one month (to 5 months). Under the committee
$250
25
145.60
152.90
160.20
bill, the waiting period would be reduced 2 months to a 4-month
$250
30 or more
145.60
152.90
200.00
period.
ffective date.-January 1973.
$300
20
160.90
169.00
177.00
Number of people affected and dollar payments.-950,000 benefici-
$300
25
160.90
169.00
177.00
aries would become entitled to higher benefit payments on the effective
$300
30 or more
160.90
169.00
200.00
date and 8,000 additional people would become entitled to benefits.
About $250 million in additional benefits would be paid in 1974.
6
7
Benefits for a Child Based on the Earnings Record of a
who have six quarters of coverage earned at any time; (b) changing
Grandparent
the definition of disability for the blind to permit them to qualify for
benefits regardless of their capacity to work and whether they work;
Under the House bill, coverage would be extended to grandchildren
not adopted by their grandparents if their parents have died and if the
(c) permitting the blind to receive disability benefits beyond age 65
without regard to the retirement test; and (d) excluding the blind
grandchildren were living with a grandparent at the time the grand-
from the requirement that disability benefits be suspended when a
parent qualified for benefits. The Committee approved the House pro-
beneficiary refuses without good cause to accept vocational rehabili-
vision but extended it to instances where the grandchild's parents
tation.
either are totally disabled or have died, and the grandchild is living
Effective date.-January 1973.
with a grandparent.
Number of people affected and dollar payments.-250,000 additional
Effective date.-January 1973.
people would become eligible for benefits on the effective date and
$200 million in additional benefits would be paid in 1974.
Refund of Social Security Tax to Members of Certain Religious
Faiths Opposed to Insurance
Issuance of Social Security Numbers and Penalty for Furnishing
False Information to Obtain a Number
Under present law, members of certain religious sects who have
conscientious objections to social security by reason of their adherence
The Committee bill includes a number of provisions (not contained
to the established teachings of the sect may be exempt from the social
in the House bill) dealing with the method of issuing social security
security self-employment tax provided they also waive their eligibility
account numbers. Under present law, numbers are issued upon appli-
for social security benefits. This exemption was written largely to re-
cation, often by mail, upon the individual's motion.
lieve the Old Order Amish from having to pay the social security tax
Under a Committee amendment, numbers in the future generally
when, because of their religious beliefs, they would never draw social
would be issued at the time an individual enters the school system;
security benefits.
for most persons, this would be the first grade. In the case of non-
The Committee bill would extend the exemption (by a refund or
citizens entering the country under conditions which would permit
credit against income taxes at year end) from social security taxes to
them to work, numbers would be issued at the time they enter the
members of the sect who are "employees" covered by the Social Se-
country or in the case of a person who may not legally work at the
curity Act as well as the "self-employed" members of the sect. The
time he is admitted to the United States, the number would be issued
employee would have to file an application for exemption from the
at the time his status changes. In addition to these general rules, num-
tax and waive his eligibility for social security and medicare benefits
bers would be issued to persons who do not have them at the time they
just as the self-employed members must presently do. Although a
qualified individual would be exempt from the tax, his employer would
apply for benefits under any federally financed program.
As a corollary to this more orderly system of issuing social security
continue to deduct the tax from his pay and to pay the employer tax.
account numbers, the Committee bill would provide criminal pen-
Later the employee could claim a refund or a tax credit. However, the
alties for (1) knowingly and willfully using a social security num-
provision specifically provides that there would be no forgiveness of
ber that was obtained with false information for any purpose or (2)
the employer portion of the social security tax as the Committee be-
lieves this would create an undesirable situation in which an employer
using someone else's social security number or other use of a social
would have a tax incentive to hire people of one religious belief in
security number to conceal one's true identity (such as by counterfeit-
preference to those of other religious beliefs.
ing a social security number) for such purposes. The penalties pro-
Effective date.-January 1973.
vided would be a fine of up to $1,000 or imprisonment for up to one
year or both. These criminal penalties perfect and improve upon
Sister's and Brother's Benefits
features of the House bill relating to false information with respect
to social security numbers.
The Committee bill includes a provision (not contained in the House
bill) to extend social security coverage to dependent sisters and to
Treatment of Income From Sale of Certain Literary or
dependent disabled brothers.
Artistic Items
Effective date.-January 1973.
Number of people affected and dollar payments.-50,000 additional
The Committee bill includes a provision (not contained in the House
people would become eligible for benefits on the effective date and $70
bill) to exclude income from sale of certain literary or artistic items
million in additional benefits would be paid in 1974.
created before age 65 from income for purposes of determining the
amount of benefits to be withheld under the social security earnings
Disability Benefits for Individuals Who Are Blind
test. Under existing law, such income is not counted if the literary
work was copyrighted before age 65. Under the amendment, the time
The Committee bill includes provisions (not contained in the House-
of copyright is immaterial SO long as the work which produced the
passed bill) (a) making disability benefits payable to blind persons
literary or artistic item was performed before age 65.
79-184 O 72 2
8
9
Underpayments
Number of people affected and dollar payments.-3.8 million people
The Committee bill includes a provision (not contained in the House
would get increased benefits on the effective date and $1 billion in
bill) under which additional relatives (by blood, marriage, or adop-
additional benefits would be paid in 1974.
tion) would be added to the present categories of persons listed in the
law who may receive social security cash payments due but unpaid
Age 62 Computation Point for Men
to a deceased beneficiary.
Under present law, the method of computing benefits for men and
Payments by an Employer to Disability Beneficiaries or to the
women differs in that years up to age 65 must be taken into account
Survivor or Estate of a Former Employee
in determining average earnings for men, while for women only years
up to age 62 must be taken into account. Also, benefit eligibility is fig-
Under the House bill amounts earned by an employee which are paid
ured up to age 65 for men but only up to age 62 for women. Under both
after the year of his death to his survivors or his estate would be ex-
the House bill and the Committee bill, these differences, which provide
cluded from coverage. The Committee bill would extend the provision
special advantages for women, would be eliminated by applying the
to payments made to disability insurance beneficiaries. Under present
same rules to men as now apply to women.
law, such wages are covered and social security taxes must be paid on
Effective date.-The new provision would become effective, starting
these wages but the wages cannot be used to determine eligibility for
January 1973, over a 3-year transition period.
or the amount of social security benefits.
Liberalization of the Retirement Test
Death Benefits Where Body Is Unavailable
The amount that a beneficiary under age 72 may earn in a year and
Under Public Law 92-223, expenses of memorial services can be
still be paid full social security benefits for the year would be increased
counted as funeral expenses for the purpose of the social security lump
from the present $1,680 to $2,000. Under present law, benefits are re-
sum death payment, even though the body is unavailable for burial
duced by $1 for each $2 of earnings between $1,680 and $2,800 and for
or cremation. The provision applies only with respect to deaths after
each $1 of earnings above $2,880. The bill would provide for a $1 re-
December 29, 1971. The Committee bill would cover deaths occurring
duction for each $2 of all earnings above $2,000; there would be no
after 1960, thus spanning the entire period of the Vietnam action.
$1-for-$1 reduction as under present law. Also, in the year in which a
person attains age 72 his earnings in and after the month in which he
2. PROVISIONS OF THE HOUSE BILL THAT WERE NOT CHANGED BY
attains age 72 would not be included, as under present law, in de-
THE COMMITTEE
termining his total earnings for the year.
Effective date.-January 1973.
Increase in Widow's and Widower's Insurance Benefits
Number of people affected and dollar payments.-1.1 million benefi-
ciaries would become entitled to higher benefit payments on the effec-
Under present law, when benefits begin at or after age 62 the benefit
tive date and 400,000 additional people would become entitled to
for a widow (or dependent widower) is equal to 821/2 percent of the
benefits. About $650 million in additional benefits would be paid
amount the deceased worker would have received if his benefit had
in 1974.
started when he was age 65. A widow can get a benefit at age 60 re-
Childhood Disability Benefits
duced to take account of the additional 2 years in which she would
be getting benefits.
Childhood disability benefits would be paid to the disabled child of
Both the House bill and the Committee bill would provide benefits
an insured retired, deceased, or disabled worker, if the disability began
for a widow equal to the benefit her deceased husband would have
before age 22, rather than before 18 as under present law. In addition,
received if he were still living. Under the bill, a widow whose benefits
a person who was entitled to childhood disability benefits could be-
start at age 65, or after, would receive either 100 percent of her de-
come re-entitled to childhood disability benefits if he again becomes
ceased husband's primary insurance amount (the amount he would
disabled within 7 years after his prior entitlement to such benefits was
have been entitled to receive if he began his retirement at age 65) or,
terminated.
if his benefits began before age 65, an amount equal to the reduced
Effective date.-January 1973.
benefit he would have been receiving if he were alive.
Number of people affected and dollar payments.-13,000 additional
Under the bill, the benefit for a widow (or widower) who comes on
people would become eligible for benefits on the effective date and
the rolls between 60 and 65 would be reduced (in a way similar to the
$16 million in additional benefits would be paid in 1974.
way in which widows' benefits are reduced under present law when
they begin drawing benefits between ages 60 and 62) to take account of
Continuation of Child's Benefits Through the End of a Semester
the longer period over which the benefit would be paid.
Effective date.-January 1973.
Payment of benefits to a child attending school would continue
through the end of the semester or quarter in which the student
(including a student in a vocational school) attains age 22 (rather
10
11
than the month before he attains age 22) if he has not received, or
Waiver of Duration-of-Marriage Requirement in Case of
completed the requirements for, a bachelor's degree from a college
Remarriage
or university.
Effective date.-January 1973.
The duration-of-marriage requirement in present law for entitle-
Number of people affected and dollar payments.-55,000 present
ment to benefits as a worker's widow, widower, or stepchild-that is,
beneficiaries would have their benefits continued and 6,000 additional
the period of not less than nine months immediately prior to the day
people would become eligible for benefits on the effective date and
on which the worker died that is now required (except where death
$18 million in additional benefits would be paid in 1974.
was accidental or in the line of duty in the uniformed service, in
which case the period is three months)-would be waived in cases
Eligibility of a Child Adopted by an Old-Age or Disability
where the worker and his spouse were previously married, divorced,
Insurance Beneficiary
and remarried, if they were married at the time of the worker's death
and if the duration-of-marriage requirement would have been met at
The provisions of present law relating to eligibility requirements
the time of the divorce had the worker died then.
for child's benefits in the case of adoption by an old-age insurance
Effective date.-January 1973.
beneficiary or by disability insurance beneficiaries would be modified
to make the requirements uniform in both cases. A child adopted after
Wage Credits for Members of the Uniformed Services
a retired or disabled worker becomes entitled to benefits would be
eligible for child's benefits based on the worker's earnings if the child
Present law provides for a social security noncontributory wage
is the natural child or stepchild of the worker or if (1) the adoption
credit of up to $300, in addition to contributory credit for basic pay,
was decreed by a court of competent jurisdiction within the United
for each calendar quarter of military service after 1967. Under the
States, (2) the child lived with the worker in the United States for
bill, the additional noncontributory wage credits would also be pro-
the year before the worker became disabled or entitled to an old-age or
vided for service during the period January 1957 (when military
disability insurance benefit, (3) the child received at least one-half of
service came under contributory social security coverage) through
his support from the worker for that year, and (4) the child was under
December 1967.
age 18 at the time he began living with the worker.
Effective date.-January 1973.
Disability Insurance Benefits Applications Filed After Death
Nontermination of Child's Benefits by Reason of Adoption
Disability insurance benefits (and dependents' benefits based on a
worker's entitlement to disability benefits) would be paid to the dis-
A child's benefit would no longer stop when the child is adopted.
abled worker's survivors if an application for benefits is filed within
Effective date.-January 1973.
3 months after the worker's death, or within 3 months after. enact-
ment of this provision for deaths occurring after 1969.
Disability Benefits Affected by the Receipt of Workmen's
Compensation
Coverage of Members of Religious Orders Who Are Under a Vow
of Poverty
Under present law, social security disability benefits must be re-
duced when workmen's compensation is also payable if the combined
Social security coverage would be made available to members of
payments exceed 80 percent of the worker's average current earnings
before disablement. Average current earnings for this purpose can be
religious orders who have taken a vow of poverty, if the order makes
computed on two different bases and the larger amount will be used.
an irrevocable election to cover these members as employees of the
order.
The bills add a third alternative base, under which a worker's average
current earnings can be based on the one year of his highest earnings
Self-Employment Income of Certain Individuals Living
in a period consisting of the year of disablement and the five pre-
ceding years.
Temporarily Outside the United States
Effective date.-January 1973.
Under present law, a U.S. citizen who retains his residence in the
United States but who is present in a foreign country or countries for
Dependent Widower's Benefits at Age 60
approximately 17 months out of 18 consecutive months, must exclude
Widowers under age 62 could be paid reduced benefits (on the same
the first $20,000 of his earned income in computing his taxable income
basis as widows under present law) starting as early as age 60.
for social security and income tax purposes. The bill would provide
Effective date.-January 1973.
the U.S. citizens who are self-employed outside the United States and
who retain their residence in the United States would not exclude the
first $20,000 of earned income for social security purposes and would
compute their earnings from self-employment for social security pur-
12
poses States. in the same way as those who are self-employed in the United
Trust Fund Expenditures for Rehabilitation Services
Provides an increase in the amount of social security trust fund
monevs that may be used to pay for the costs of rehabilitating social
PRINCIPAL MEDICARE-MEDICAID PROVISIONS
security disability beneficiaries. The amount would be increased from
1 percent of the previous year's disability benefits (as under present
1. PROVISIONS OF HOUSE BILL NOT SUBSTANTIALLY MODIFIED BY
law) to 11/4 percent for fiscal year 1972 and to 11/2 percent for fiscal
COMMITTEE
year 1973 and subsequent years.
Medicare Coverage for Disabled Beneficiaries
3. OTHER CASH BENEFIT AMENDMENTS
(Section 201)
Other amendments included in the Committee's bill relate to the
Problem
executive pay level of the Commissioner of Social Security; the cov-
The disabled, as a group, are similar to the elderly in those charac-
erage of U.S. missionaries working outside the U.S.; retroactive bene-
teristics-low incomes and high medical expenses-which led Congress
fits for certain disabled persons; social security benefits for a child
to provide health insurance for older people. They use about seven
entitled on the earnings of more than one person; filing of disability
times as much hospital care, and about three times as much physi-
applications; social security coverage for students employed at State
cians' services as does the nondisabled population. In addition, dis-
operated schools; and social security coverage of Registrars of Voters
abled persons are often unable to obtain private health insurance
in Louisiana; coverage of certain policemen and firemen in West
coverage.
Virginia; and wage credits for Americans of Japanese ancestry who
Finance Committee Amendment
were interned by the U.S. Government during World War II.
In addition, in order to pay for a portion of the long-range costs
Effective July 1, 1973, a social security disability beneficiary would
associated with the 10-percent across-the-board benefit increase, the
be covered under Medicare after he had been entitled to disability
Committee deleted the House-passed amendments relating to actuari-
benefits for not less than 24 consecutive months. Those covered would
ally reduced benefits in one category not being made applicable to cer-
include disabled workers at any age; disabled widows and disabled
tain benefits in other categories; the computation of benefits based on
dependent widowers between the ages of 50 and 65; beneficiaries age
combined earnings of a married couple; and to the dropping of addi-
18 or older who receive benefits because of disability prior to reaching
tional years of low earnings from the computation of average earnings.
age 22; and disabled qualified railroad retirement annuitants. An esti-
mated 1.5 million disabled beneficiaries would be eligible initially.
Estimated first full-year cost is $1.5 billion for hospital insurance and
$350 million for supplementary medical coverage.
Hospital Insurance for the Uninsured
(Section 202)
Problem
A substantial number of people reaching or presently over age 65
are ineligible for Social Security and thus cannot secure Part A
(hospital insurance) coverage under Medicare. These people have
difficulty in securing private health insurance coverage with benefits
as extensive as those of Medicare.
Finance Committee Amendment
The Committee bill will permit persons age 65 or over who are
ineligible for Part A of Medicare to voluntarily enroll for hospital
insurance coverage by paying the full cost of coverage (initially esti-
mated at $31 monthly and to be recalculated annually). Where the
Secretary of HEW finds it administratively feasible, those State and
other public employee groups which have, in the past, voluntarily
elected not to participate in the Social Security program could opt
(13)
14
15
for and pay the Part A premium costs for their retired or active em-
has earned entitlement to Medicare, is paying a portion of his premium
ployees age 65 or over.
to F.E.P. for coverage for which no benefits will be paid him. This is
The Finance Committee amendment requires enrollment in Part B
particularly true in the case of hospitalization. The F.E.P. does not
of Medicare as a condition of buying into Part A.
presently offer such employees or retirees with dual eligibility the
option of electing a lower-cost policy or one which supplements rather
Part B Premium Charges
than duplicates Medicare benefits.
(Section 203)
Finance Committee Amendment
Problem
Effective January 1, 1975, Medicare would not pay a beneficiary,
During the first 5 years of the program it has been necessary to
who is also a Federal retiree or employee, for services covered under
increase the Part B premium almost 100 percent-from $3.00 monthly
his Federal Employee's health insurance policy which are also covered
per person in July 1966 to a scheduled $5.80 rate in July 1972. The
under Medicare unless he has had an option of selecting a policy
government pays an equal amount from general revenues. This in-
supplementing Medicare benefits. If a suplemental policy is not made
crease and projected future increases represent an increasingly sig-
available, the F.E.P. would then have to pay first on any items of
nificant financial burden to the aged living on incomes which are not
care which were covered under both the F.E.P. program and Medicare.
increasing at a similar rate.
Finance Committee Amendment
Limitation on Federal Payments for Disapproved Capital
Expenditure
The Committee bill will limit Part B premium increase to not more
than the percentage by which the Social Security cash benefits had
(Section 221)
been generally increased since the last Part B premium adjustment.
Problem
Costs above those met by such premium payments would be paid
out of general revenues in addition to the regular general revenue
A hospital or nursing home can, under present law, make large capi-
matching.
tal expenditures which may have been disapproved by the State or
local health care facilities planning council and still be reimbursed by
Automatic Enrollment for Part B
Medicare and Medicaid for capital costs (depreciation, interest on
debt, return on net equity) associated with that expenditure.
(Section 206)
Finance Committee Amendment
Problem
The Committee bill will prohibit reimbursement to providers under
Under present law, eligible individuals must initiate action to
the Medicare and Medicaid programs for capital costs associated with
enroll in Part B of Medicare. Nearly 96 percent of eligible older
expenditures of $100,000 or more which are specifically determined to
people SO enroll. Some eligibles, however, due to inattention or in-
be inconsistent with State or local health facility plans.
ability to manage their affairs, fail to enroll in timely fashion and
lose several months or even years of necessary medical insurance
Experiments in Prospective Reimbursement and Peer Review
coverage.
Finance Committee Amendment
(Section 222)
Problem
Effective July 1, 1973, the change provides for automatic enroll-
Reimbursement on the present reasonable costs basis contains little
ment under Part B for the elderly and the disabled as they become
incentive to decrease costs or to improve efficiency, and retrospective
eligible for Part A hospital insurance coverage. Persons eligible for
automatic enrollment must also be fully informed as to the procedure
cost-finding and auditing have caused lengthy delays and confusion.
Payment determined on a prospective basis might provide an incentive
and given an opportunity to decline the coverage.
to cut costs. However, under prospective payment providers might
Relationship Between Medicare and Federal Employees'
press for a rate less favorable to the Government than the present cost
Benefits
method, and they might cut back on the quality, range and frequency
of necessary services SO as to reduce costs and maximize return.
(Section 210)
Finance Committee Amendment
Problem
The Committee bill instructs the Secretary to experiment with vari-
Federal retirees and older employees have been required to take full
ous methods of prospective reimbursement, and to report to the Con-
coverage and pay full premiums for Federal employee coverage despite
gress with an evaluation of such experiments. In view of its adoption
the fact that the Federal Employees' Programs will not pay any
of the Professional Standards Review amendment, the Committee
benefits for services covered under Medicare. Thus the retiree, who also
deleted the portion of this section authorizing peer review
experimentation.
16
17
Limitations on Coverage of Costs
rendered by interns and residents under the direction (sometimes
(Section 223)
nominal) of an attending physician who is assigned to (but not se-
Problem
lected by) the Medicare patient.
Certain institutions may incur excessive costs, relative to comparable
The issue relates to the compensation of the attending physician
facilities in the same area, as a result of inefficiency or "the provision
often termed the supervisory or teaching physician. The salaries of
of amenities in plush surroundings." Such excessive costs are now re-
interns and residents are now covered in full as a Part A hospital cost.
imbursed under Medicare.
In general, patients were not billed for the services of teaching physi-
Finance Committee Amendment
cians prior to Medicare and, since Medicare, billings have been essen-
tially limited to Medicare and Medicaid patients. The proceeds are
The Committee bill authorizes the Secretary to establish limits on
most frequently used to finance and subsidize medical education rather
overall direct or indirect costs which will be recognized as reasonable
than being paid directly to the teaching doctor. While charges have
for comparable services in comparable facilities in an area. He may
often been billed on a basis comparable to those charged by a private
also establish maximum acceptable costs in such facilities with respect
physician to his private patients the services provided are often less.
to items or groups of services (for example, food costs, or standby
costs). The beneficiary is liable for any amounts determined as exces-
Finance Committee Amendment
sive (except that he may not be charged for excessive amounts in a
The Committee bill provides that services of teaching physicians
facility in which his admitting physician has a direct or indirect own-
would be reimbursed on a costs basis unless:
ership interest). The Secretary is required to give public notice as to
(A) The patient is bona fide private or;
those facilities where beneficiaries may be liable for payment of costs
(B) The hospital has charged all patients and collected from
determined as not "necessary" to efficient patient care.
a majority on a fee-for-service basis.
In cases where emergency care is involved, however, patients would
For donated services of teaching physicians, a salary cost would be
not be liable for any differential in costs related to the emergency care.
imputed equal to the prorated usual costs of full-time salaried physi-
cians. Any such payment would be made to a special fund designated
Limitation on Prevailing Charge Levels
by the medical staff to be used for charitable or educational purposes.
(Section 224)
Advance Approval of ECF and Home Health Coverage
Problem
Under the present reasonable charge policy, Medicare pays in full
(Section 228)
any physician's charge that falls within the 75th percentile of cus-
Problem
tomary charges in an area. However, there is no limit on how much
Uncertainty about determinations of eligibility for care in an
to year and thereby increase Medicare payments and costs.
physicians, in general, can increase their customary charges from year
extended care facility or home health program following hospitaliza-
tion have created major difficulties for intermediaries, institutions
Finance Committee Amendment
and beneficiaries. The essential problem is in determining whether the
patient is in need of skilled nursing and medical services or in fact,
The Committee bill recognizes as reasonable, for Medicare reim-
needs a lesser level of care. Retroactive claims denials resulting from
bursement purposes only, those charges which fall within the 75th
determinations that skilled care was not required, while often justified,
percentile. Starting in 1973, increases in physicians' fees allowable for
have created substantial friction and ill will.
Medicare purposes, would be limited by a factor which takes into ac-
Finance Committee Amendment
in an area.
count increased costs of practice and the increase in earnings levels
The Committee bill authorizes the Secretary to establish, by diag-
With respect to reasonable charges for medical supplies and equip-
nosis, minimum periods during which the post-hospital patient would
ment, the amendment would provide for recognizing only the lower
be presumed to be eligible for benefits.
charges at which supplies of similar quality are widely available.
Termination of Payment to Suppliers of Service
Payment for Physicians' Services in the Teaching Setting
(Section 229)
(Section 227)
Problem
Problem
Present law does not provide authority for the Secretary to withhold
Physicians in private practice are generally reimbursed on a fee-
future payments for services rendered by an institution or physician
for-service basis for care provided to their bona fide private patients.
who abuse the program, although payments for past claims may be
should be made in teaching hospitals where the actual care is often
Difficulties have arisen in determining how and whether payments
withheld on an individual basis where the services were not reasonable
or necessary.
18
19
Finance Committee Amendment
At the same time there are persons available who do not meet full
The Secretary would be authorized to suspend or terminate Medi-
licensing or Medicare educational requirements, but who have had
care payments to a provider found to have abused the program.
years of experience and have been granted "waivered" status (for
Further, there would be no Federal participation in Medicaid pay-
example, waivered licensed practical nurses).
ments which might be made subsequently to this provider. Program
Finance Committee Amendment
review teams would be established in each State to furnish the Secre-
The Committee bill would require the Secretary to develop and
tary with professional advice in discharging this authority.
sonnel who are disqualified or restricted in responsibility under pres-
apply appropriate means of determining the proficiency of health per-
Elimination of Requirement That States Move Toward
Comprehensive Medicaid Program
ent regulations because of lack of formal training or educational
(Section 230)
requirements. In order to encourage young people to complete required training,
Problem
all health personnel initially licensed after Dec. 31, 1975 would be
The Medicaid program has been a significant burden on State
expected to meet otherwise required formal educational and training
finances. Section 1903 (e) of Title 19 requires each State to show that
criteria.
it is making efforts in the direction of broadening the scope of services
Penalties for Fraudulent Acts and False Reporting Under
in its Medicaid program and liberalizing eligibility requirements for
Medicare and Medicaid
medical assistance. These required expansions of Medicaid programs
have been forcing States to either cut back on other programs or to
(Section 242)
consider dropping Medicaid. The original date for attainment of those
objectives was 1975. The Finance Committee, the Senate and the House
approved an amendment in 1969 postponing the date to 1977.
Problem Present penalty provisions applicable to Medicare do not specifically
include as fraud such practices as kickbacks and bribes. There is no
Finance Committee Amendment
criminal penalty provision applicable to Medicaid. Additionally, there
The Committee bill would repeal section 1903 (e).
are no penalties at present for false reporting with respect to health
and safety conditions in participating institutions.
Relationship Between Medicaid and Comprehensive Health
Finance Committee Amendment
Programs
The Committee bill would establish penalties for soliciting, offering
(Section 240)
or accepting bribes or kickbacks, or for concealing events affecting a
Problem
benefit payments to improper use, of up to one year's imprisonment
person's rights to benefits with intent to defraud, or for converting
State agencies often cannot make pre-payment arrangement which
might result in more efficient and economical delivery of health
and a $10,000 fine or both. Concealing knowledge of events affecting
services to Medicaid recipients because such arrangements might
a person's right to benefits with intent to defraud, and converting the
violate present Title 19 requirements that the same range and level of
benefits to improper use would also be a Federal crime subject to
services be available to all recipients throughout the State.
same penalty. Additionally, the bill establishes false reporting of a
material fact as to conditions or operations of a health care facility as
Finance Committee Amendment
a misdemeanor subject to up to 6 months' imprisonment, a fine of
The Committee bill would permit States to waive Federal state-
$2,000, or both.
wideness and comparability requirements with approval of the Secre-
tary if a State contracts with an organization which has agreed to
Prosthetic Lenses Furnished by Optometrists Under Part B
provide health services in excess of the State plan to eligible recipients
who reside in the area served by the organization and who elect to
(Section 264)
receive services from such organization. Payment to such organiza-
tions could not be higher on a per-capita basis than the per-capita
Problem Medicare will pay for prosthetic lenses furnished by an optometrist,
medicaid expenditures in the same general area.
provided that the medical necessity for such lenses has been deter-
mined by a physician.
Program for Determining Qualifications for Certain Health
Care Personnel
cian's order for prosthetic lenses is unfair to both the patient and the
Optometrists contend that to require their patients to obtain a physi-
optometrist. Moreover, because the physician who furnishes the order
(Section 241)
is generally an opthalmologist, the requirement may serve to encour-
Problem
age patients to use an ophthalmologist in preference to an optometrist.
There is a shortage of qualified manpower in the health care field
and many facilities have difficulty hiring sufficient qualified personnel.
20
21
Finance Committee Amendment
by present law which are intended to assure that the patient is getting
The Committee bill provides that, for the purposes of the medicare
the right care in the right place.
program, an optometrist be recognized as a "physician" under sec-
2. Where a State makes a satisfactory showing to the Secretary
tion 1861 (r) of the Act, but only with respect to establishing the
that it has an effective program of control over the utilization of hos-
medical necessity of prosthetic lenses for medicare beneficiaries. An
pital and mental hospital care: (a) the 60-day limitation in general
optometrist would not be recognized as a "physician" for any other
and TB hospitals, and (b) the 90-day or 120-day annual limitation
purposes under medicare and no additional services performed by
and the 365-day lifetime limitation on care in mental hospitals, would
optometrists would be covered by the proposal.
not apply. If proper procedures assure that the patient needs the care
and is benefiting from it, it seemed inappropriate to cut off Federal
2. PROVISIONS OF HOUSE BILL SUBSTANTIALLY MODIFIED BY
matching utilizing arbitrary limitations.
COMMITTEE
3. The Committee deleted the House provision calling for a 25%
increase in matching for amounts paid to HMO's, since if HMO's
Failure by States To Undertake Required Institutional Care
deliver services more efficiently, and economically, it would be in the
Review Activities
States' interest to deal with HMO's without an increase in matching.
4. Intermediate care services would also be subject to a reduction in
(Section 207)
Federal matching after 60 days, unless the State provides satisfactory
Problem
assurance that required review is being undertaken. This appeared
Both the General Accounting Office and the HEW Audit Agency
appropriate in view of the shift of intermediate care to Medicaid in
have found substantial unnecessary and overutilization of costly insti-
legislation enacted subsequent to House consideration of H.R. 1.
tutional care under Medicaid, accompanied by insufficient usage of
5. Finally, the Secretary's validation of State utilization controls
less costly alternative out-of-institution health care. There is no pro-
would be made on site in the States and such findings would be a mat-
vision in present law which places affirmative responsibility upon
ter of public record. The purpose here is to assure actual-rather than
States to assure proper patient placement. As a practical matter, the
paper-compliance with the proposed statutory requirements.
Department of HEW has seldom if ever, recovered from a State
amounts improperly spent for non-covered care or services.
Cost Sharing Under Medicaid
House Bill
(Section 208)
1. Unless a State can make a showing satisfactory to the Secretary
Problem
that the State has an effective program of control over the utilization
of nursing home care, effective January 1, 1973, the House bill provides
Under present law, States may require payment by the medically
for a one-third reduction in the Federal Medicaid matching share
indigent of premiums, deductibles and co-payment amounts with
for stays in a fiscal year which exceed 60 days in a skilled nursing
respect to Medicaid services provided them but such amounts must be
home.
"reasonably related to the recipient's income." However, States can-
2. Federal matching would be available, in any year, for only: (a)
not require cash assistance recipients to pay any deductibles or co-
60 days of care in a general or TB hospital, and (b) 90 days in a
payments.
mental hospital (except that an additional 30 days would be allowed
House Bill
in a mental hospital if the State shows that the patient will benefit).
This section contains 3 provisions:
There would be no Federal matching for care in a mental hospital
1. It requires States which cover the medically indigent to impose
beyond 120 days in any year. In addition, there would be no Federal
monthly premium charges. The premium would be graduated by
matching for care in a mental hospital after 365 days of such care
income in accordance with standards prescribed by the Secretary and
during a patient's lifetime.
details regarding the operation of the premium would be left to the
3. The House bill would also provide for an increase of 25% (up to
Secretary's discretion. The House Committee report indicates that
a maximum of 95%) in the Federal Medicaid matching formula for
it would be expected that premiums would be fixed on a state-by-state
amounts paid by States under contracts with Health Maintenance
basis at whatever level would be required to result in a savings under
Organizations or other comprehensive health care facilities.
the medically indigent program of approximately 6 percent.
4. The bill would provide authority for the Secretary to assure that
2. States could, at their option, require payment by the medically-
average Statewide reimbursement for intermediate care in a State is
indigent of deductibles and co-payment amounts which would not
reasonably lower than average payments for higher level skilled nurs-
have to vary by level of income.
ing home care in that State.
3. With respect to cash assistance recipients, nominal deductible and
Finance Committee Changes
co-payment requirements, while prohibited for the six mandatory
services required under Federal law (inpatient hospital services; out-
1. In addition to the utilization review requirement, States must
patient hospital services; other X-ray and laboratory services; skilled
also conduct the independent professional audits of patients as required
nursing home services; physicians' services; and home health services),
22
23
would be permitted with respect to optional Medicaid services such
untarily elect to participate by paying a premium of 20 percent of
as prescribed drugs, hearing aids, etc.
income (excluding work bonus) above $2,400. Costs of coverage for
those families on a premium basis would be subsidized by the Federal
Finance Committee changes
Government to the extent premium income did not cover the costs of
The provision would be modified by the Committee bill as follows:
benefits for those families.
1. The House bill permits States to impose co-payments and de-
The Committee retained that portion of Section 209 of the House bill
ductibles on the medically-indigent. The change limits such amounts
which gives States the option of covering under Medicaid aged, blind
to co-payments on patient-initiated elective services only, such as the
and disabled persons made newly eligible as a result of the increases in
initial office visits to physicians and dentists.
payment levels to these persons proposed by the Committee.
2. The House bill also allows States to impose co-payments and
deductibles on the indigent for optional Medicaid services. The com-
Medicare Benefits for Border Residents
mittee deleted this provision, as the savings ($5 million) would most
probably be exceeded by the administrative costs.
(Section 211)
Problem
Mandatory Medicaid Deductible for Families With Earnings
At present," coverage for care in a foreign hospital near the U.S.
(Section 209)
border is available only where an emergency occurs within the United
Problem
States and where the foreign institution is the closest adequate facility.
This limitation creates difficulty in securing necessary non-emergency
Under present law, AFDC families with earnings can, at a certain
care by border residents who ordinarily do and would use the nearest
earnings point lose eligibility for Medicaid. This has been called the
hospital suited to their medical needs, which may be a foreign hospital.
"Medicaid Notch". This notch is believed to act as a potential work
disincentive, since at a certain income level a family may precipi-
House Bill
tously lose Medicaid eligibility if it has additional earnings.
Authorizes use of a foreign hospital by a U.S. resident where such
House Bill
hospital was closer to his residence or more accessible than the nearest
suitable United States hospital. Such hospitals must be approved
Section 209 would remove this "notch" by requiring AFDC families
under an appropriate hospital approval program.
with earnings to pay a Medicaid deductible. In States without a med-
In addition, the provision authorizes Part B payments for neces-
ically indigent program this deductible would be equal to one-third
sary physicians' services furnished in conjunction with such hospitali-
of all earnings over $720. The deductible amount is identical to the
zation.
amount of earnings which AFDC families would be allowed to retain
as an incentive to work. This approach eliminates any sudden loss
Finance Committee Changes
of Medicaid eligibility. However, although eligible for Medicaid,
The Committee approved the House provisions; it also authorized
every dollar of a recipient's retained earnings raises his Medicaid de-
Medicare payments for emergency hospital and physician services
ductible by one dollar.
needed by beneficiaries in transit between Alaska and the other con-
In those States with programs for the medically indigent, an AFDC
tinental States.
recipient would not have to pay the deductible until his retained earn-
ings exceeded the difference between a State's cash assistance level and
Payments to Health Maintenance Organizations
its medically indigent level. At this point, however, his Medicaid
deductible would increase dollar for dollar with his retained earnings.
(Section 226)
Finance Committee Changes
Problem
Although the House provision eliminates any sudden loss of eligibil-
Certain large medical care organizations seem to make the delivery
of medical care more efficient and economical than the medical care
ity for Medicaid, the provision acts as a substantial work disincentive,
since the Medicaid deductible increases dollar for dollar with retained
community at large.
Medicare does not currently pay these comprehensive programs on
earnings.
In order to avoid establishing a substantial work disincentive the
an incentive capitation basis, and consequently any financial incentives
Committee amended Section 209 to deal with the "Medicaid Notch"
to economical operation in such programs have not been incorporated
by allowing Work Program families otherwise eligible for Medicaid,
in Medicare.
who would ordinarily lose eligibility as a result of earnings from
Two areas of potential concern arise in dealing with HMO's. The
first area of concern involves the quality of care which the HMOs
employment, to remain eligible for Medicaid for one year. At
the expiration of that year, such families could elect to continue in
will deliver. Most existing large HMOs provide care which is gen-
Medicaid by paying a premium of 20 percent of income in excess of
erally accepted as being as of professional quality. However, if the
$2,400 annually (excluding work bonus amounts). Additionally, other
Government begins on a widespread basis, to pay a set sum in advance
families participating in the Work Program (see Title IV) which
to an organization in return for the delivery of all necessary care to
are otherwise ineligible for Medicaid in a State could also vol-
79-184 72 3
24
25
a group of people, there must be effective means of assuring that such
GENERAL REQUIREMENTS
organizations will not be tempted to cut corners on the quality of their
care (e.g., by using marginal facilities or by not providing necessary
Such reimbursement would be authorized for HMOs which: (1)
care and services) in order to maximize their return or "profit." Under
have been in operation for at least two years, and (2) have a minimum
present reimbursement arrangements, although there may be no in-
of 25,000 enrollees, not more than one-half of whom are age 65 or over.
centive for efficiency, neither is there an incentive to profit through
Exception
underservicing and other corner-cutting.
The Secretary would be authorized to make exceptions to the mini-
The second problem area involves the reimbursement of HMO's.
If an HMO were to enroll relatively good risks (i.e., the younger and
mum enrollment requirement in the case of HMOs in smaller com-
healthier Medicare beneficiaries), payment to that organization in
munities or sparsely populated areas which had demonstrated through
at least 3 years of successful operation, capacity to provide health'
relation to average per capita non-HMO costs-without accurate actu-
arial adjustments-could result in large "windfalls" for the HMO, as
care services of proper quality on a prepaid basis and which have at
the current costs of caring for these beneficiaries might turn out to be
least 5,000 members.
REIMBURSEMENT
much less than Medicare's average per capita costs. Additionally, ceil-
ings on windfalls might be evaded because an HMO conceivably could
The combined Part A-Part B per capita payment would be deter-
inflate charges to it by related organizations thereby maximizing profits
mined and administered as follows:
through exaggerated benefit costs.
1. An eligible HMO approved by the Secretary for per capita re-
It may not always be possible to detect and eliminate such windfalls
imbursement would submit, at least 90 days prior to the beginning of
through actuarial adjustment. Further, once a valid base reimburse-
a prospective Medicare contract year, an operating costs and enroll-
ment rate is determined, an issue remains as to the extent to which the
ment forecast. On the basis of the estimate and available information
HMO, and the Government should share in any savings achieved by
regarding Medicare costs in the HMO's area, the HMO and the Secre-
an HMO.
tary would arrive at an interim per capita reimbursement rate. The
House Bill
rate would reflect estimated costs of the HMO for its enrolled popula-
The House bill authorizes Medicare to make a single combined Part
tion but might not exceed 100 percent of the estimated "adjusted aver-
A and B payment, prospectively on a capitation basis, to a "Health
age per capita cost" (as defined below).
Maintenance Organization," which would agree to provide care to a
2. At the beginning of the contract period, the HMO would be
group not more than one-half of whom are Medicare beneficiaries
paid monthly, in advance, the interim per capita prepayment for
who freely choose this arrangement. Such payments may not exceed
the Medicare beneficiaries actually enrolled. The HMO would submit
95 percent of present Parts A and B per capita costs in a given geo-
interim cost estimates on a quarterly basis and the interim payment
graphic area.
could be adjusted as indicated in such estimates, subject however to
The Secretary could make these arrangements with existing pre-
the limitations set forth below.
paid groups and foundations, and with any new organization which
3. The HMO would submit, annually, independently certified finan-
meets the broadly defined term "Health Maintenance Organization."
cial statements, including certified costs statements allocating HMO
operating costs to the Medicare population in proportion to utilization
Finance Committee Changes
of HMO resources. Allocations may use statistical, demographic and
Agreeing with the desirability of authorizing reasonable per capita
utilization data collection and analysis methods acceptable to the Sec-
payments to organizations which have demonstrated a capacity to pro-
retary in lieu of fee-for-service or cost-per-service methods in the case
vide quality health care, and recognizing the above problems, the Com-
of an HMO which does not operate on a fee-for-service basis. Such
mittee authorized the following approach as a modification of the
statements would be developed in accordance with Medicare account-
HMO provision in the house bill:
ing principles but not necessarily on the basis of actual case-by-case
patient services. All HMO's would be subject to audit in accordance
ELIGIBILITY FOR INCENTIVE REIMBURSEMENT
with the selective audit procedures of the Bureau of Health Insurance
The Secretary would be authorized to contract on an incentive
and would also be subject to audit and review by the Comptroller
capitation basis for Medicare services with substantial, established
General (and the Inspector General for Health Care administration).
HMO's: (1) with reasonable standards for quality of care at least
4. The Secretary would retroactively determine on an actuarial
equivalent to standards prevailing in the HMO's area, and which can
basis what the per capita costs for Part A and Part B services for the
be adequately monitored, and (2) which have sufficient operating his-
HMOs' Medicare population would have been if the population had
tory and sufficient enrollment to provide an adequate basis for evaluat-
been served through other health care arrangements in the same gen-
ing their ability to provide appropriate health care services and for
eral area and not enrolled in the HMO. That is to say there would be a
establishing a combined Part A-Part B capitation rate.
calculation, on the basis of experience in the same or similar geo-
graphical areas, of the cost for the non-HMO group of similar size, age
distribution, sex, race, institutional status, disability status, cost experi-
26
27
ence for the Medicare contract year in question, and other factors
House Bill
deemed by the actuaries to be relevant and material such as unusual
usage of low-cost hospitals and non-usage of specialists. This figure
The House bill provides for a continuance of the maintenance of
defined as "adjusted average per capita cost" would be determined
effort clause with respect to the six mandatory health care services.
as promptly as practical after the end of a contract period. Many of
The provision would, however, amend section 1902(d) by restricting
the difficulties and uncertainties of previously suggested methods of
the maintenance of effort requirement to those six basic services. The
rate determination are minimized or eliminated by making this deter-
State would be able to modify the scope, extent and expenditures for
mination after the fact. For example, the makeup of the enrolled
optional services provided, such as drugs, dental care and eyeglasses.
population and Medicare cost experiences-within and outside of the
Finance Committee Changes
HMO-would be known, rather than merely estimated.
The Committee substituted for the House provision an amendment
5. If the HMO's costs for the types of expenses reimbursable under
repealing Section 1902(d)-entirely. This action is consistent with
medicare are less than the adjusted average per capita cost the differ-
Committee and Senate action on H.R. 17550 in 1970.
ence, called "net savings" would be divided and allocated as follows:
Savings between 90 percent and 100 percent would be divided
Payments to States Under Medicaid for Installation and Opera-
equally between the Government and the HMO. Savings between
tion of Claims Processing and Information Retrieval Systems
80 percent and 90 percent would be divided 75 percent to the
Government and 25 percent to the HMO. Savings below the 80
(Section 235)
percent level would be allocated entirely to the Government.
Problem
Thus, assuming an HMO operated at 80 percent of adjusted average
Many States do not have effective claims administration or properly
per capita costs, it would receive a share equal to 71/2 percent of the
designed information storage and retrieval systems for their Medicaid
adjusted average per capita costs and the Government would retain
programs and do not possess the financial and technical resources to
121/2 percent of those costs.
develop them. Their recourse today is to contract with private com-
6. At the option of the HMO, it could apply any amount of its
panies for their data processing.
share of the saving toward improved benefits, reduced supplemental
premium rates, or other advantages for beneficiaries or retain the
House Bill
money. It could not, however, make cash refunds to beneficiaries.
1. Authorizes 90 percent Federal matching payments toward the cost
7. If, on the other hand, HMO costs exceed adjusted average per
of designing, developing and installing mechanized claims processing
capita costs, the "excess costs" would be allocated between the gov-
and information retrieval systems deemed necessary by the Secretary.
ernment and the HMO in the following manner:
The Federal government would assist States with technical advice
Any amount of excess between 100 percent and 110 percent
and development of model systems. Federal matching at 75 percent
would be divided equally between the Government and the HMO.
would be provided toward the costs of operating such systems.
Excess costs between 110 percent and 120 percent would be borne
2. Authorizes 90% matching for 2 years (up to a total of $150,000
25 percent by the HMO and 75 percent by the Government. Costs
annually) for the development of cost determination systems for State-
in excess of 120 percent would be borne entirely by the Govern-
owned general hospitals.
ment. Any losses incurred would carry forward and be recovered,
Finance Committee Changes
proportionally, by the HMO and the Government in the future.
The Committee deleted the first part of the House provision retain-
Any losses by the Government would have to be recovered in full
ing, however, the part authorizing funds for cost-determination
before any "savings" could be paid to an HMO in future years.
systems.
Provider Reimbursement Review Board
Reductions in Care and Services Under Medicaid Program
(Section 243)
(Section 231)
Problem
Problem
Under present law, there is no specific provision for an appeal by a
The Medicaid program has been a significant burden on State
provider of services of a fiscal intermediary's final reasonable cost
finances. In an effort to reduce financial pressure upon States, Section
determination, although administrative procedures exist to assist pro-
1902 (d) of Title 19 provides that a State may reduce the range, dura-
viders and intermediaries to reach reasonable settlement on disputed
tion or frequency of the services it provides under its Medicaid
items.
program, but it cannot reduce its aggregate expenditures for Medicaid
from one year to the next. This maintenance of effort requirement has
House Bill
forced a few States to either cut back on other programs or to con-
The House bill establishes a Provider Reimbursement Review Board
sider dropping Medicaid.
to consider disputes between a provider and intermediary where the
amount at issue is $10,000 or more and where the provider has filed
a timely cost report. Decisions of the Review Board would be final
29
28
unless the Secretary reversed the Board's decision within 60 days. If
Finance Committee Changes
such a reversal occurs the provider would have the right to obtain
The Committee modified the House provision by adopting language
judicial review.
assure that factors, such as travel time, be included in the calcula-
The House provision is similar to a Senate amendment to H.R.
tion to of salary-related reimbursement and deleting the provision that
17550 in 1970. The House did not include those portions of the earlier
would have established a new and separate benefit of up to $100 an-
Senate amendment which would allow providers, as a group, to appeal
nually for services provided by an independent physical therapist in
aggregate amounts of $10,000 on a common issue; and which would
his office or in a patient's home.
allow appeals to the Board by a provider where the intermediary
Additionally, the Committee will include in its Report instructions
fails to make timely final costs determinations.
to the Secretary designed to assure that reasonable arrangements may
Finance Committee Changes
be undertaken in rural and smaller population centers to enhance
availability of physical therapy in those areas.
The Committee substituted the 1970 Senate language and added
language requiring the Secretary to report to the legislative committees
Waiver of Registered Nurse in Rural Skilled Nursing Facility
at the end of the first year of operation of the provision concerning its
capacity to function effectively and equitably as well as any suggestions
(Section 267)
he might have for improvement of the process.
Problem There are some rural nursing homes which can obtain a registered
Physical Therapy Services and Other Services Under Medicare
nurse to work one shift 5 days a week, but which are unable to obtain
(Section 251)
the services of an additional registered nurse to work on the other
Problem
2 days, generally the weekend.
Physical therapy is presently covered as an inpatient service, and as
House Bill
an outpatient service when furnished through a participating facility
The House bill would allow a complete waiver of the requirement
or home health agency. Services cannot be provided in a therapist's
for a registered nurse in a rural nursing home, if there is no other
office.
skilled nursing home in the area to meet patient needs. Under the
An additional problem relating to physical therapy is that a patient
bill a skilled nursing home could function without any skilled nurse
can exhaust his inpatient benefits and continue to receive payment for
at all.
treatment only if the facility can arrange with another facility to
furnish the therapy as an outpatient service. For example, a hospital-
Finance Committee Changes
ized patient would receive necessary physical therapy as a Part A
The Committee modified the provision granting waivers for
benefit during his 90 days of coverage. But, if his hospital stay exceeded
certain rural skilled nursing facilities which are unable to assure the
90 days, he would be required to secure such services under Part B from
presence of a full-time registered nurse in such facilities 7 days a week.
a Home Health Agency-even though the hospital, itself, was capable
The Committee modification would allow a rural skilled nursing home,
of providing the needed therapy conveniently.
which has one full-time registered nurse and is making good faith ef-
Another problem is the rapidly increasing cost of physical therapy
forts to obtain another, a special waiver of the nursing requirement
services and findings of abuse of the benefit.
with respect to not more than two shifts, such as over a weekend.
This special waiver would be authorized if the facility had only pa-
House Bill
tients whose physicians indicated that each such patient could be
The House bill would include as covered services under Part B,
without a registered nurse's services for a 48-hour period. If the facil-
physical therapy provided in the therapisťs office under such licensing
ity had any patients for whom physicians had indicated a need for daily
as the Secretary may require and pursuant to a physician's written
skilled nursing services, the facility would have to make arrangements
plan of treatment.
for a registered nurse or a physician to spend such time as was neces-
It would also authorize a hospital or extended care facility to pro-
sary at the facility on the uncovered day to provide the skilled serv-
vide outpatient physical therapy services to its inpatients, so that an
ices needed.
inpatient could conveniently receive his Part B benefits after his inpa-
Coverage of Chiropractic Services
tient benefits have expired.
Problem
Finally, it would control physical therapy costs by limiting total
Chiropractors are not currently eligible to participate as physicians
payments in one year for services by an independent practitioner in his
in the Medicare program.
office or the patient's home to $100, and by limiting reimbursement for
services provided by physical and other therapists in an institutional
House Bill
setting to a reasonable salary-related basis rather than fee-for-service
The House Bill calls for a study regarding the coverage of
basis.
chiropractors.
31
30
Finance Committee Changes
disease, chronic kidney disease, chronic respiratory disease, diabetes,
tuberculosis. The amendment would limit reimbursement to certain
gout, glaucoma, high blood pressure, rheumatism, thyroid disease and
The Committee on Finance deleted the study of chiropractic serv-
ices called for in the House bill and substituted a provision providing
drug used in the treatment of these conditions. For example, people
for the coverage under Medicare of services involving treatment by
with chronic heart disease often use digitalis drugs to strengthen their
means of manual manipulation of the spine by a licensed chiropractor
heartbeat, anticoagulant drugs to reduce the danger of blood clots and
who meets certain minimum standards established by the Secretary of
drugs to lower their blood pressure. These types of drugs would be
Health, Education, and Welfare. The same limitations on chiro-
covered under the amendment as they are necessary in the treatment
practic services applicable to Medicare would also pertain to States
of the heart condition and they are not types of drugs which would be
providing such care under Medicaid.
used by people without heart conditions.
Other drugs which might be used by those with chronic heart con-
3. NEW PROVISIONS ADDED BY THE FINANCE COMMITTEE
ditions (such as sedatives, tranquilizers and vitamins) would not be
Establishment of Professional Standards Review Organizations
covered as they are drugs which are generally less expensive, less
critical in treatment and much more difficult to handle administra-
Problem
tively, as many patients without chronic heart disease may also utilize
There are substantial indications that a significant amount of health
these types of medications.
services paid for by Medicare and Medicaid are in excess of those
The major provisions of the amendment are:
which would be found to be medically necessary under appropriate
Eligibility.-Medicare beneficiaries with one or more of the follow-
professional standards. Furthermore, in some instances services pro-
ing conditions:
vided are of unsatisfactory professional quality.
Diabetes.
High blood pressure.
Finance Committee Amendment
Chronic cardiovascular disease.
The Committee provided for the establishment of Professional
Chronic respiratory disease.
Standards Review Organizations sponsored by organizations repre-
Chronic kidney disease.
senting substantial numbers of practicing physicians (usually 300 or
Arthritis, gout and rheumatism.
more) in local areas to assume responsibility for comprehensive and
Tuberculosis.
ongoing review of services covered under the Medicare and Medicaid
Glaucoma.
programs. The purpose of the amendment would be to assure proper
Thyroid disease.
utilization of care and services provided in Medicare and Medicaid
Cancer.
utilizing a formal professional mechanism representing the broadest
Benefits.-Would include those drugs:
possible cross-section of practicing physicians in an area. Appropriate
Necessary over a prolonged period of time for treatment of the
safeguards are included so as to adequately provide for protection
above conditions;
of the public interest and to prevent pro forma assumption in
Generally subject to use only by those with the above condi-
carrying out of the important review activities in the two highly ex-
tions.
pensive programs. The amendment provides discretion for recogni-
This recommendation would exclude drugs not requiring a phy-
tion of and use by the PSRO of effective utilization review committees
sician's prescription (except for insulin), drugs such as antibiotics
in hospitals and medical organizations.
which are generally used only for a short period of time, and drugs
such as tranquilizers and sedatives which may be used by eligible
Coverage of Drugs Under Medicare
beneficiaries but also by many other persons.
Problem
A list of the covered drug categories and illustrative drug entities
The costs of outpatient prescription drugs represent a major item
follows:
of medical expense for many older people, especially for those suffer-
THERAPEUTIC CATEGORY AND DRUG ENTITY
ing from chronic and serious illness conditions. The costs of such drugs
are not presently covered under the Medicare program.
Adrenocorticoids (e.g., Cortisone, Dexamethasone, Hydrocortisone,
Finance Committee Amendment
Prednisone)
The Committee amended Part A of Medicare to cover the
Anti-arrhythmics (e.g., Quinidine)
costs of certain specified drugs, purchased on an outpatient basis, which
Anti-coagulants (e.g., Dicumarol)
are necessary in the treatment of the most common, crippling or life-
Anti-hypertensives (e.g., Reserpine)
Anti-neoplastics (e.g., Cyclophosphamide, Flourouracil, Mercapto-
threatening chronic disease conditions of the aged. Beneficiaries would
pay $1 toward the cost of each prescribed drug included in the reason-
purine, Methotrexate, Vincristine)
Anti-rheumatics (e.g., Phenylbutazone)
able cost range for the drug involved.
Bronchial dialators (e.g., Isoproterenol)
The amendment would cover specific drugs used in the treatment
Cardiotonics (e.g., Digitoxin, Digoxin)
of the following conditions: arthritis, cancer, chronic cardiovascular
32
33
Coronary vasodilators (e.g., Nitroglycerin)
ing, such suspension would become effective not less than 30 days after
Diuretics (e.g., Hydrochlorothiazide)
issuance unless specifically countermanded by the Secretary of HEW.
Gout suppressants (e.g., Colchicine)
Upon issuance of an order of suspension the Inspector General would
Hypoglycemics (e.g., Insulin)
be required to immediately advise the committees on Finance and
Miotics (e.g., Philocarpine)
Ways and Means as to the findings and basis for the order. If the
Thyroid hormones (e.g., Thyroid)
Secretary countermands, he too would be required to immediately
Tuberculostatics (e.g., Aminosalicylate, Isoniazid)
advise the legislative committees as to the reasons for his action.
Reimbursement and Cost Controls.-The amendment would utilize a
Thus, a serious issue involving a question concerning Congressional
reasonable charge reimbursement method, and would incorporate a
intent would be placed before the committees having jurisdiction in
formulary approach. The formulary established could include only
orderly and delineated fashion.
drug entities in categories specified above. Participating pharmacies
would file either their usual and customary markups or professional
Medicaid Coverage of Mentally Ill Children
fee schedules as of June 1, 1972, which would then be applied to the
estimated acquisition cost of the drug product. The usual and cus-
Problem
tomary charge, including mark-up or professional fee, for purposes
Present law limits reimbursement under Medicaid for care of the
of program payments and allowances, could not exceed the 75th per-
mentally ill to those otherwise eligible individuals who are 65 years of
centile of charges by comparable vendors in an area for similar quan-
age or older.
tities of the dosage form of the drug. Outpatient drugs dispensed by a
participating hospital or extended care facility would be reimbursed
Finance Committee Amendment
on the regular Part A Medicare costs basis. Increases in prevailing
The Committee bill would authorize coverage of inpatient care in
mark-ups or fees would be limited in a fashion essentially parallel to
mental institutions for Medicaid eligibles under age 21, provided that
that applicable to physicians' fees.
the care consists of a program of active treatment, that it is provided
Financing.-Part A Medicare payroll tax.
in an accredited medical institution, and that the State maintains its
Cost.-$700 million with a $1 co-payment per prescription. There
own level of fiscal expenditures for care of the mentally ill under 21.
would be an offsetting reduction in Federal-State Medicaid costs of
The amendment also provided for demonstration projects of the
$100 million as a result of this Medicare drug coverage.
potential benefits of extending Medicaid mental hospital coverage to
mentally ill persons between the ages of 21 and 65.
Inspector General for Medicare and Medicaid
Public Disclosure of Information Regarding Deficiencies
Problem
There is, at present, no independent reviewing mechanism charged
Problem
with specific responsibility for ongoing and continuing review of
Physicians and the public are currently unaware as to which hos-
Medicare and Medicaid in terms of the efficiency and effectiveness of
pitals, extended care facilities, skilled nursing home and intermediate
program operations and compliance with Congressional intent. While
care facilities have deficiencies and which facilities fully meet the
HEW's Audit Agency and the General Accounting Office have done
statutory and regulatory requirements. This operates to discourage
helpful work, there is a need for day-to-day monitoring conducted
the direction of physician, patient, and public concern toward deficient
at a level which can promptly call the attention of the Secretary and
facilities, which might encourage them to upgrade the quality of care
the Congress to important problems and which has authority to
they provide to proper levels.
remedy some of those problems in timely, effective and responsible
Finance Committee Amendment
fashion.
The Committee added to the House bill a provision under which the
Finance Committee Amendment
Secretary of Health, Education and Welfare would be required to
Under the amendment, an Office of Inspector General for Health
make reports of an institution's significant deficiencies or the absence
Administration would be established within the Department of Health
thereof (such as deficiencies in the areas of staffing, fire safety, and
Education, and Welfare. The Inspector General would be appointed
sanitation) a matter of public record readily and generally available
by the President, would report to the Secretary, and would be re-
at social security district offices. Following completion of a survey of
sponsible for reviewing and auditing the Social Security health pro-
a health care facility or organization, those portions of the survey re-
grams on a continuing and comprehensive basis to determine their
lating to statutory requirements as well as those additional significant
efficiency, economy, and consonance with the Statute and Congressional
survey aspects required by regulation relating to the capacity of the
intent.
facility to provide proper care in a safe setting would be matters of
The Inspector General would be authorized to issue an order of
public record. In the case of Medicare, such information would be
suspension of a formal regulation, practice, or procedure which he
available for inspection within 90 days of completion of the survey
found inconsistent with the law or legislative intent. Generally speak-
upon request in Social Security District Offices, and, in the case of
Medicaid, the information would be available in local Welfare offices.
34
35
Extended Care Facilities-Skilled Nursing Facilities
Problem
c. 14-Day Transfer Requirement for Extended Care Benefits.-
Under existing law, Medicare beneficiaries are entitled to extended
medicare. home under medicaid and the extended care benefit nursing under
Serious benefit problems have arisen with respect to the skilled
care benefits only if they are transferred to an extended care facility
within 14 days following discharge from a hospital. The Committee
modified this with respect to certain patients. An interval of more
In the case of medicare, the definition of eligibility has
than 14 days would be authorized for patients whose conditions did
and resulting in many facilities' refusal to participate in medicare practi-
tioners, dissatisfaction on the part of patients, providers and led to
tremely great difficult to apply objectively and, consequently, has been ex-
not permit immediate provision of skilled services within the 14-day
limitation (e.g., patients with fractured hips whose fractures have not
mended to the point where physical therapy and restorative nursing
widespread retroactive denial of benefits.
can be utilized). An extension not to exceed 2 weeks beyond the 14
Medicaid has its own set of problems with respect to skilled
days would also be authorized in those instances where an admission
and home the care. These include, according to the General Accounting nursing
to an ECF is prevented because of the non-availability of appro-
of HEW Audit Agency, widespread inappropriate Office
priate bed space in facilities ordinarily utilized by patients in a
other patients institutional in skilled nursing homes who more properly placement
geographic area.
ards that a skilled nursing facility meet all appears diffi-
cult widespread to insist noncompliance with required standards. It
settings-such as intermediate care facilities-and belong in
d. Reimbursement Rates for Care in Skilled Nursing Facilities.-
The Committee added a provision amending Title 19 to require
States, by July 1, 1974, to reimburse skilled nursing and inter-
table without, for at the same time, assuring that reimbursement necessary is stand-
mediate care facilities on a reasonable cost-related basis, using accept-
on the case often today. The Comptroller General and others have is not
the necessary care in the proper setting. In general, that equi-
able cost-finding techniques and methods approved and validated by
the Secretary of HEW. Cost reimbursement methods which the Sec-
gate many basis, States it in reimbursing for nursing home care. On an utilized
by irrational payment mechanisms developed and reported
retary found to be acceptable for a State's Medicaid program would be
adapted, with appropriate adjustments, for purposes of Medicare
because of appears that nursing homes are not underpaid. aggre-
skilled nursing facility reimbursement in that State.
probability, the arbitrary payment structures in many States, However, in
e. Skilled Nursing Facility Certification Procedures.-The Com-
vide while others many are facilities being underpaid. are being overpaid for the care they pro- all
mittee also added a provision under which the Secretary of HEW
would decide whether a facility qualifies to participate as a "skilled
Finance Committee Amendments
nursing facility" in both the Medicare and Medicaid programs. The
tion Home and Committee bill would establish Nursing
a. Conforming Facilities.-The Standards for Extended Care and Skilled
Secretary would make that determination, based principally upon the
appropriate State health agency evaluation of the facilities. A State
and skilled set of standards for extended care facilities under a single defini-
could, for good cause, decline to accept as a participant in the Medic-
to category of "skilled nursing facilities" which would be creates a
single nursing homes under Medicaid. The provision Medicare
aid program a facility certified by the Secretary but could not over-
rule the Secretary and receive Federal Medicaid matching funds for
facility" participate in both health care programs. A "skilled eligible
any institution not approved by the Secretary. The Committee also
incorporated into the amendment proposals of the President regard-
other an extended care facility and which also present defi-
nition of would be defined as an institution meeting the nursing
ing full Federal financing of skilled nursing facility and intermediate
These Medicaid requirements set forth in the Social satisfies certain
care facility survey and inspection costs attributable to the Medicare
b. "Level changes are intended to reduce duplicative activity Security and Act.
and Medicaid program and the training of additional Federal and
Medicare of Care" Requirements for Extended red-tape.
State nursing facility inspection personnel.
post-hospital the extended-care benefit more equitable and Care.-To suitable make
Authority for Demonstration Projects Concerning the Most Suit-
of retroactive needs of older citizens, as well as to avoid the to the
able Types of Care for Beneficiaries Ready for Discharge From
requirements facilities, the Committee bill would change the Medicare pa-
tients and denials of coverage which have plagued problem
a Hospital or Skilled Facility
under with respect to entitlement for extended level of care
Problem
skilled care for individuals in need of "skilled nursing authorize skilled
benefits Medicare. Present law would be amended to care benefits
It is not unusual for a previously hospitalized medicare beneficiary
to need services other than those covered under the program. A bene-
facility rehabilitation which services on a daily basis in a skilled care and/or
ficiary who is discharged from a hospital may need further institu-
when or two) when no skilled services were actually periods (e.g.
a day coverage would also continue during short-term basis.
Medicare it is practical to provide only on an inpatient nursing
tional care for a condition for which he was hospitalized, but the care
required is not skilled care.
Finance Committee Amendment
desirable discharge from a skilled facility for such brief period provided was neither but
nor practical.
The Committee authorized the Secretary of HEW to exneri-
LIBRARY
ment with methods for determining suitable levels of care for Medi-
care patients who are ready for discharge from hospitals and skilled
nursing facilities and no longer require skilled care, including some
36
37
terminally-ill patients but who are unable to maintain themselves at
home without some sort of additional assistance. The experiments and
provided by these new physicians' assistants, SO long as they are serv-
demonstration projects could include (1) making Medicare payment
ices commonly provided by para-professional personnel in a physi-
for each day of care provided in an intermediate care facility, count
cian's office. They go on to argue that, until the training and licensure
as one covered day of skilled nursing facility care, if the care was for
of physicians' assistants becomes more uniform, it would be inappro-
the condition for which the person was hospitalized, (2) covering the
priate for Medicare to take the lead in encouraging doctors-by gener-
services of homemakers, where institutional services are not needed.
ous reimbursement to use physicians' assistants to work independently
Such experiments would be aimed at determining whether such cover-
or to expand their responsibilities.
age could effectively lower long-range costs by postponing or preclud-
Finance Committee Amendment
ing the need for higher cost institutional care or by shortening the pe-
The committee authorized demonstration projects to determine the
riod of such care, and ascertaining what eligibility rules may be ap-
most appropriate and equitable methods of compensating for the serv-
propriate and the resultant costs of application of various eligibility
ices of physicians' assistants (including nurse practitioners). The ob-
generally, would be desirable.
requirements, if the project suggests that extension of such coverage
jectives are development of non-inflationary and less-costly alterna-
tives which do not impede the continuing efforts to expand the supply
of qualified physicians' assistants.
Physicians' Assistants
Problem
The Role of the Joint Commission on the Accreditation of
Over the past few years, a number of programs have been developed
Hospitals in Medicare
to train physicians' assistants. These assistants are seen as a way to
Problem
extend the physician's productivity and to bring care to many who
would otherwise not receive it. HEW is currently supporting the
Several problems have arisen with respect to the JCAH role in
training of these physicians' assistants. There are some 100 experi-
the Medicare certification process. Present law specifies that an insti-
mental training programs for physician assistants and nurse practi-
tution may be deemed to meet the certification requirements of Medi-
lack of agreement among professionals on the experience and educa-
tioners. Each of these, however, is structured differently, reflecting the
care if it is accredited as a hospital by the Joint Commission on Ac-
creditation of Hospitals.
tion that should be required of training program applicants, the con-
In addition, under the definition of a hospital, the section states
tent of the programs, or the responsibilities and supervision that are
that an institution must meet such requirements as the Secretary finds
appropriate for their graduates. These unresolved issues have
necessary in the interests of health and safety, except that such other
Association, the American Public Health Association, as well as the
prompted the American Medical Association, the American Hospital
requirements may not be higher than the comparable requirements
prescribed for the accreditation of hospitals by the Joint Commission
Department (in its "Report on Licensure and Related Health
on the Accreditation of Hospitals. Another section of the law does allow
Personnel Credentialing") and other organizations to ask for a
an individual State to set higher standards.
personnel. moratorium on State licensure of the new categories of health
The JCAH survey process is not subject to Federal review,
and all JCAH survey reports are confidential, available only
Some feel that it is inconsistent for HEW to support the training of
to the Commission and the facility concerned. Consequently,
these personnel, while Medicare does not, in some instances, recognize
the Federal agencies responsible to the Congress for the ad-
all their services as reimbursable items.
ministration of Medicare, are not in a position to audit the
Under present law, part B of Medicare pays for physicians' services.
validity of the overall JCAH survey process and are thus unable to
for services commonly rendered in a physician's office by para-medical pays
Within the scope of paying for physicians' services, the program
determine the extent to which specific deficiencies may exist in the vast
majority of participating hospitals, since JCAH survey reports are
service. Medicare will recognize a small charge by the physician for that
personnel. For example, if a nurse administers an injection in the office,
not available to the Social Security Administration. A further prob-
lem arises because, under present law, Medicare is barred from setting
any standards which are higher than comparable JCAH require-
Medicare will not pay where a physician submits a charge for
ments. This has been interpreted by Social Security to also bar estab-
professional service, performed by a para-medical person, in cases a
lishment of any standards in an area where JCAH has remained si-
where the service is traditionally performed by a physician. For
lent. Since the law does not refer to any specific JCAH standard, but
cal ample, the program would not recognize a charge for a complete physi- ex-
rather to any standards prescribed by the JCAH, the law serves as an
exam conducted by a nurse.
almost total and blanket delegation of authority over hospital stand-
Additionally, Medicare will not recognize a physician's charge for
ards to a private agency. Thus, if the Joint Commission chooses to
cian's a service performed by a para-medical person outside of the physi-
lower a standard, Medicare is obliged to also accept that reduced
Others jection administered by a para-medical employee in a nursing an home.
office. In other words, he would not be reimbursed for in-
standard. Though the Federal Government is tied to JCAH standards,
a State may promulgate higher standards for facilities within the
argue that Medicare does reimburse physicians for services
State.
39
38
tively inaccessible to the aged due to the small eligible percentage to participate of speech in
Finance Committee Amendment
The Committee approved a provision under which the State certifi-
pathologists Medicare who program. are employed Part of by the providers problem is the fact that the pro-
cation agencies, as directed by the Secretary, would survey on a ran-
the vider clinic or agency must be physician-directed.
dom sample basis (or where substantial allegations of noncompliance
have been made) hospitals accredited by the Joint Commission on
Accreditation of Hospitals. This would serve as a mechanism to vali-
date the JCAH survey process. If deficiencies from the JCAH stand-
ards were found to exist in an institution, the Medicare standards and
compliance procedures would be applied in that facility. To implement
Finance pists the clinic removing Coverage services on or Committee an outpatient the outpatient of of requirement the such services Amendment department. personnel basis that of is clinical presently such are The rendered care psychologists available in a under physician-directed and speech Medicare thera- under serv- in if a
this authority, JCAH hospitals would, as a condition of participating
in Medicare, agree, if included in a survey, to furnish the State agency
or the Secretary on request with copies of the JCAH survey report on a
physician-directed elinic physician-directed.clinic physician-directed clinic would
confidential basis. The Joint Commission on Accreditation of Hos-
pitals has indicated that it would cooperate fully with such validation
a retain plan overall of care responsibility and for the patient's costs care. would be included with in
surveys and the Secretary would be expected to consult with and co-
operate with JCAH in these activities.
and respect limited to psychological by the overall treatment, $250 annual such limitation on reimbursement
Under the provision the Secretary would be authorized to promul-
for outpatient treatment of mental illnesses.
gate standards as necessary for health and safety after consultation
Greater Discretion in Selection Them of
with JCAH and with adequate lead-time without being bound to
JCAH standards.
Provide Intermediaries Secretary and Assignment of Providers to
Maternal and Child Health
Problem
Problem or association of providers of services-hospitals, the option extended of nomi-
The intent of the 1967 Amendments was to divide available funds
care A group facilities, and home health agencies-have the Federal Government) to act
between formula grants to the States, and special project grants for
a few years, so that the Federal Government could fund innovative
nating as the "fiscal an organization intermediary" nomination (including is between available the with providers respect to and carriers the Govern- in part
special project grants which the States might not be able to support
out of their formula funds. The 1967 Amendments terminated special
ment. The of Medicare.) (No Secretary such is authorized to enter that into to an do agreement SO would with be con- an
B
project grants as of fiscal year 1973 and converted all the project money
to formula grants on the rationale that after a few years' time the
organization effective or agency and only efficient if he finds of the program. if The he
States would recognize the value of and continue to support worth-
while project grants as part of an overall State program. Two prob-
sistent Secretary with may terminate
lems have occurred in the interim. First the special project grant has
been utilized primarily in urban ghetto areas, while the formula funds
finds of the that agreement it has failed is
are weighted in favor of rural States. Therefore, a shift of funds from
program.
urban States with project grants to rural States without project grants
would occur if the project grants were terminated. Additionally,
many project grant directors feel that with the pressure on State fi-
nances, State health departments would be reluctant to use new for-
mula funds to continue support for project grants however worthy
they might be.
Problem assignment of when ity It existing to would they determine be providers. wish of to to <<<<<<<<<<<<<<<<<<<<<<<<< change which The intermediary in a That is. the
Finance Committee Amendment
The Committee added to H.R. 1 a provision which extends for two
additional fiscal years (through June 30, 1974) the present special
ability ineffective, Secretary of should a or particular otherwise of consider action not in the the in wish interest the of best the of program provider, effective interest. but program be able operation. to take a
project grant authorization contained in Title V of the Social Security
different
course
Act to support maternal and child health programs.
Finance
Committee Amendment amended section 1816 SO as to intermediaries. authorize the
Coverage of Speech Pathologists and Clinical Psychologists
Under Medicare
Secretary The Finance to take assign Committee into and available the provid-
Problem
While speech pathology and clinical psychology services are at times
He ers, for would but his assignment would not be action would be the adminis-
useful to aged persons with certain disorders, such services are rela-
tration of the Medicare program.
79-184 O 72 4
41
40
Access to Subcontractors' Records
Disclosure of Information Concerning Medicare Agents and
Providers
Problem Committee's attention that subcontractors and related under
Problem
As part of its responsibility for administration of the Medicare
program, the Social Security Administration regularly prepares for-
mal evaluations of the performance of contractors-carriers and inter-
the organizations calling It Medicare has records for come production of program to and the the thereby subcontractor of apparently pertinent avoid involving requirements can financial create transactions books, does subsidiary in not Medicare documents, require related contracts produc- papers to the
mediaries--and State agencies, which assist SSA in program adminis-
tration. In addition, SSA also prepares program validation review
reports, which are intended to be used as management devices for
and subcontract. tion by a subcontractor Although obtained the of his Medicare cost access and statute other under financial the terms records, of his the prime Sec-
informing intermediaries of findings and recommendations concerning
retary
generally
has
selected providers of services and some of the aspects of their own
contracts.
Medicare operations.
Finance Committee Amendment
These evaluations and reports are of significant help in reviewing
the Committee bill, a requirement would be must included include under in
either the overall administrative performance of an individual con-
titles XVIII provision that prime contractors subcontrac-
Under and XIX providing that the Secretary which in the
tractor or a particular aspect of its operation. Additionally, the sum-
mary evaluations comparing the performance of one contractor with
any future prime arrange contract for performance a of part of their on services a consolidated by basis,
that of another are very useful. However, these evaluations and re-
ports are not available to the public in general.
tors, would financial make available data for subcontractors to the government, and of organizations the services where related the to
The Finance Committee recognized the dichotomy which exists in
cost the subcontractor and which perform any part
this situation. On the one hand is the need for public awareness of the
deficiencies of contractor performance with the accompanying pres-
aggregate subcontract cost be required is $25,000 that or more. subcontracts specify that which the
sures for improvement in administration that only such awareness
can bring. On the other hand, there is the need to avoid premature
subcontractor, and of the subcontract would produce pertinent the Secretary,
Similarly, it would organizations related to the subcontractor, financial
public disclosure of this type of information and to provide contrac-
tors with sufficient opportunity to respond to the information in the
perform books, documents, any part General, papers the and Inspector records upon General, request and, by in the case, of the
reports before their publication to avoid release of erroneous findings,
without rebuttal, which may prove damaging to their reputations.
the Medicaid Comptroller program, appropriate with these State requirements officials. would be grounds contractor) for
Finance Committee Amendment
terminating Failure to an comply intermediary's or carrier's (the prime
To meet this problem, the Committee amendment provides that the
participation in the Medicare program.
SSA regularly make public the following types of evaluations and
Duration of Subcontracts
reports: (1) individual contractor performance reviews and other for-
mal evaluations of the performance of carriers, intermediaries, and
carriers
(the
prime
State agencies, including the reports of follow-up reviews; (2) com-
parative evaluations of the performance of contractors-including
Problem Under present are law, generally Medicare contracted intermediaries for under end and terms of each which year. permit If he
comparisons of either overall performance or of any particular con-
contractors) the contract at the is auto-
tractor operation; (3) program validation survey reports-with the
the fails Secretary to give the to necessary cancel notice of cancellation, the contract
names of individuals deleted.
The proposal would require public disclosure of future reports.
matically renewed for another light year. where some of these prime contractors which
Such reports would include only those which are official in nature and
Instances have into come subcontracts to which extend beyond This the time seems at incon-
not include internal working documents such as informal memoranda,
have entered could terminate the prime contract. renewal procedure.
etc. Under the proposal, public disclosure of evaluations and reports
the sistent Secretary with the concept of the annual contract
would not be made until the contractor, State agency, or facility was
given suitable opportunity for comments as to the accuracy of the find-
Proposal situation, the Committee bill would specify periods in the
ings and conclusions of the evaluation or report with such comments
To deal with future this subcontracts may not be entered unless into such for subcon-
being made part of the report where the portions originally objected
statute that remaining term of a prime contract applicable
to have not been modified in line with the comment.
Disclosure of such evaluations and reports should not lessen the
longer tracts are than subject the to the same contract renewal limitations
effort of SSA in its present information-gathering activities nor is the
to the prime contract.
provision in any way to be interpreted as otherwise limiting disclosure
Waiver of Beneficiary Liability in Certain Situations Where
of information required under the Freedom of Information Act.
Medicare Claims Are Disallowed
Problem whenever a Medicare claim is disallowed, beneficiary. the
ultimate Under liability present law, for the services rendered falls upon the
42
43
quently This is true it is even when the program has paid the claim
allowed. The determined that the claim should be and subse-
ment of Health, Education, and Welfare covering family planning
payment result is that in many cases a beneficiary reopened is and dis-
services includes information which makes clear that the mandate of
the services even though he acted in good faith and did not liable for
the Congress that all appropriate AFDC recipients be provided family
pital, physician he received were not covered, and though know the that hos-
Finance Committee Amendment
or other provider of services was even at fault.
planning services has not been fulfilled.
Finance Committee Amendment
Under the Committee bill, a beneficiary could be "held
The Committee amended the House bill to authorize 100 percent
was certain without situations fault. where claims were disallowed but the harmless" in
Federal funding for the costs of family planning services. The Com-
mittee amendment would also require States to make available on a
example, the or to would shift either to
the Government In such situations the liability beneficiary
voluntary and confidential basis such counseling, services, and sup-
Government. with the beneficiary reasonably) in
applying Medicare a the upon whether, for
plies, directly and/or on a contract basis with family planning orga-
nizations throughout the State, to present, former or likely recipients
who are of child-bearing age desiring such services. The amendment
tions would be In the future, Professional Standards Review and the
would also reduce the Federal share of AFDC funds by 2 percent,
active denials. concurrent, designed to minimize the problem of either retro- in
advance or expected to give priority to determinations, Organiza-
beginning in fiscal year 1974, if a State in the prior year fails to
inform the adults in AFDC families and on workfare of the avail-
Where that the the beneficiary was aware, or should have been
ability of family planning services and/or if the State fails to actually
beneficiary fact services were not covered, liability would aware, of the
provide or arrange for such services for persons desiring to receive
them.
State law to and collect the provider could either exercise his remain with the
tion through the Medicare for the appeals services furnished or appeal the rights determina- under
Penalty for Failure To Provide Required Health Care Screening
for covered payment as were involved, the Government would assume that non-
Where services neither the beneficiary process. nor the provider knew
Problem
Many States have failed to implement the statutory requirement-
situation would though a covered service had been furnished. liability
or have implemented it only partially-because of their contention
ments.) However, medically necessary or did not meet the level of care services
were not arise in many cases disallowed because the (This
that the screening of all children under age 21 is not possible given
available financial and health care resources. Under HEW regulations
involving similar covered with the result that in type of service
rendered was that not the provider is put on notice that a payment, the it would
make certain when Medicare made such require-
States must now provide health care screening to children under age 6.
Finance Committee Amendment
given he situations and further stays treatments subsequent cases
Under the Committee amendment, States will be required to provide
Government's Where case, liability could not would contend be somewhat that he exercised limited. or due care. Thus, in the the
screening services to all eligible children between the ages of 7 and 21
by no later than July 1, 1973. The amendment also includes a provision
faith liability reasonably would the could provider shift be expected to did the not provider, to exercise know that assuming due such care care that (that was is, not he covered), knew or
that would reduce the Federal share of AFDC matching funds by 2
percent, beginning is fiscal year 1975, if a State (a) fails to inform
the adults in AFDC families and on workfare of the availability of
services and due intermediary's decision, both to told that he
could on appeal the beneficiary's the part. The provider would be there was good
child health screening services; (b) fails to actually provide or arrange
for such services; or (c) fails to arrange for or refer to appropriate
under State law and care. If, on the other hand, he as exercised coverage his of the
corrective treatment children disclosed by such screening as suffering
Medicare received reimbursement from the rights
illness or impairment.
amounts coinsurance) and would be required to (subject seek to to recover deduc-
tibles and program would indemnify the beneficiary beneficiary, the
Outpatient Rehabilitation Coverage
so paid from the provider.
Problem
Medicare presently provides a home health benefit under both Part
Problem
Family Planning
A and Part B. Under Part A, a beneficiary may receive up to 100
Though services Federal to law and policy permit and
home health visits in the year following discharge from a hospital or
ients extend well low income families likely to become encourage States to
ECF. Part B covers up to 100 home health visits in a calendar year
without a prior hospitalization requirement. To receive home health
taken as advantage as of families this opportunity. already on welfare, most States welfare have recip- not
benefits under Part A or Part B, a patient must be homebound and
The met progress the which has been made under the 1967
require skilled nursing care on an intermittent basis or physical or
speech therapy. Home health services must ordinarily be provided in
not committee's expectations. The annual report Amendments by the Depart- has
the home; however, if use of equipment which cannot be taken to the
home is involved, the services may be provided at an outpatient
facility. Medicare also provides, under Part B, coverage of outpatient
45
44
hospital services, and of outpatient physical therapy services provided
age 60-64. mothers, dependents, parents for example-have related been worker
Frequently, these older beneficiaries-retired workers, de-
by certain organized rehabilitation agencies.
There is a relatively small but effective group of free-standing
widows, their own group coverage or that of It a is a difficult task
rehabilitation facilities which provide a range of rehabilitation serv-
pendent is now upon deceased for health insurance protection. when they no
ices on an outpatient basis, including some services which would be
who for such older persons to find comparable protection
covered under Medicare if they were provided by participating home
longer are connected to the labor force.
health agencies or by hospital outpatient departments. Under present
Finance Committee Amendment
law, Medicare payment cannot be made when such services are pro-
vided by free-standing rehabilitation facilities.
spouses 60-64 (such aged as a beneficiary who elects early retirement age
The 60-64 of Medicare beneficiaries and to other persons at 62)
provision makes Medicare protection available at cost age to
Finance Committee Amendment
The amendment would consolidate the present Part B home health
entitled to benefits under the Social Security Act.
and outpatient physical therapy benefits. Coverage under the new
benefit would be on two levels: homebound beneficiaries would be en-
Alcoholism and Addiction
titled to the full range of benefits, while beneficiaries who were not
homebound would be entitled to rehabilitation benefits only. In order
Problem the House bill, alcoholics and addicts would be defined as dis- for
to qualify for rehabilitation services under the combined benefit, a
abled Under (applying the general social security definition of disability) addicts would
beneficiary would have to have a need for physical or speech therapy.
(That is, an individual who was not homebound could receive in the
not purposes receive cash assistance if treatment were available
of welfare eligibility. However, alcoholics and which they
rehabilitation center covered clinical psychologists' services, medical
social services or occupational therapy only if he also required phys-
refused. Committee was concerned that this provision might result, without in
ical or speech therapy.)
The in alcoholics and addicts receiving cash payments
The new consolidated benefit would be subject to a coverage limit
many being cases, involved-or only nominally involved-in treatment programs.
of 100 visits in a calendar year, as is the present Part B home health
benefit. (There would be no change in the provisions of present law
Finance Committee Amendment
relating to Part A home health benefits or Part B outpatient hospital
signed The to encourage appropriate care and treatment of alcoholics
Committee approved an amendment establishing a program and de-
services.)
Home health agencies could provide the full range of benefits pro-
addicts. Below is a brief outline of the program:
vided under the combined benefit. Qualified organizations (including
OUTLINE
providers of outpatient physical therapy services under present law
and free-standing rehabilitation facilities) would be able to provide
Persons medically determined (as described below) to be alcoholics the
such rehabilitation services included in the combined benefit as the
and addicts would not be eligible for welfare benefits under aid to
Secretary found they were qualified to provide. A rehabilitation cen-
ter would not necessarily have to provide services to homebound pa-
disabled. Alcoholics and addicts who meet the income and resources test social for
tients in order to qualify.
welfare and who meet a definition of disability parallel to substantial the
Medicare Coverage for Spouses and Social Security Beneficiaries
security definition-that is who are unable to engage in any de-
Under Age 65
gainful activity by reason of a medically determinable addictive to
pendence on alcohol or drugs which has lasted or can be expected in
Present Law
last for period of 12 months-would be eligible to receive help estab-
Under present law, persons aged 65 and over who are insured or are
alcoholism a or addiction treatment program which would be
deemed to be insured for cash benefits under the social security or
an lished under Title XV if the State wishes to institute such a program.
railroad retirement programs are entitled to hospital insurance (part
be referred to a local treatment organization or agency certified by
Once enrolled in the treatment program, the alcoholic or addict would
A). Essentially all persons aged 65 and over are eligible to enroll for
medical insurance (part B) without regard to insured status. The
the appropriate State agency designated under the Comprehensive and
House bill includes a provision that would permit persons aged 65 and
Alcohol Abuse and Treatment Act of 1970 or the Drug Abuse
over who are not insured or deemed insured for cash benefits to enroll
Treatment Act of 1972.
in part A, at a premium rate equal to the full cost of their hospital in-
In a State which provides welfare payments under categories other to
surance protection ($31 a month through June 1973).
than aid to the disabled to persons medically determined
Problem
be alcoholics or addicts (for example, an alcoholic mother or and an
addicted child on AFDC) the person must be referred for care
Many additional social security cash beneficiaries find it difficult to
treatment to the appropriate agency as a condition of continued eligi-
obtain adequate private health insurance at a rate which they can
afford. This is particularly true if they are of an advanced age, say,
bility for Federal matching. Refusal of care and treatment by an
46
individual. addict or alcoholic would result in termination of payments for that
programs To assure directed maintenance of expenditure levels in the
to Title XV, and the Committee to avoid any required shifting that: of the bulk of those expenditures of alcoholics
and addicts toward treatment and rehabilitation primary Federal
actually social available not exceed amounts appropriated, (including
(a) services) Title XV expenditures for care and treatment
FINANCING SOCIAL SECURITY BENEFITS
and addicts. in States for care and treatment allocated, of alcoholics and
In considering how to finance the Committee bill, the actuarial
assumptions on which the cost estimates are based were reviewed.
(3) If reduction a reduction in other Federal expenditures
Up to this time, the costs of the social security cash benefits pro-
through ing impounding of in appropriations or expenditure is levels made, either
grams have been based on the assumption that over the long-run
ing funds appropriated funds), then the (includ-
neither benefit nor wage levels will change. While this has not been
tionate to such available decreases. under Title XV would be reduced Federal propor- match-
considered to be a forecast of what will happen, it has been considered
a valid measure of the relative long-range costs of various changes in
treatment To be eligible for reimbursement under Title
the program, and it has long been used to determine what levels of
oped plan program of must be carried out under a XV, the individual
social security taxes are needed to pay for the program. Because the
month intervals. or drugs and which dysfunctional de-
pendency on alcohol rehabilitation designed to terminate professionally devel-
nature of the assumptions runs counter to the rising wage trends that
have actually occurred, most reevaluations of the actuarial cost esti-
extent feasible a program Additionally, of work the plan must must include be renewed to the maximum at three-
mates have shown that the tax schedules in the law at the time of the
reevaluation were higher than needed to pay for the benefits in the law.
bill. tion in the new employment program rehabilitation established under including the Committee participa-
In view of this, an Advisory Council on Social Security in April
1971 submitted a report which recommended a revision in the long-
lack If of proper maintenance treatment funds or for rehabilitation the would be thwarted by the
range actuarial assumptions that have been used in determining the
cost of the social security program and which are, therefore, the basis
made tenance with payments Title XV to funds. the patient enrolled or protective alcoholic payments or addict, could main- be
for the schedule of tax rates that is in the law. In essence, the Council's
recommendation is that the actuarial projections should properly as-
protective comparable welfare payments Maintenance and the question payments may not exceed
sume an increase in both wages and prices in future years.
months. Matching payments under must be specifically reviewed of maintenance at least every versus three
In the past decade, the balance in the social security trust funds has
generally equalled one year's worth of benefits. The Advisory Council
ment for the would types be of matched payments Title XV at made. Medicaid would For be example, at the rates medical otherwise care and provided treat-
has suggested that the trust fund balance remain equal to one year's
benefit payments, but the Council felt the balance could safely be 75
percent of one year's benefit payments. The Committee bill incorpo-
person be matched would at otherwise the rates be applicable aided. to rates the category and cash under payments which would the
rates a tax schedule calculated to maintain a trust fund balance at
least equal to three-quarters of one year's worth of benefits.
The tax schedule based on this assumption is compared with the
schedule in present law and in the House-passed bill in the following
table.
TABLE 2.-SOCIAL SECURITY TAXES UNDER PRESENT LAW,
HOUSE BILL, AND COMMITTEE BILL
Maximum
wages
OASDI,
HI,
Total,
taxable
percent
percent
percent
Employers and Employees
Present law:
1971
$7,800
4.6
0.6
5.2
1972
9,000
4.6
.6
5.2
1973-75
9,000
5.0
.65
5.65
1976-79
9,000
5.15
.7
5.85
1980-86
9,000
5.15
.8
5.95
1987 and after
9,000
5.15
.9
6.05
(47)
49
48
TABLE 2- SOCIAL SECURITY TAXES UNDER PRESENT LAW,
should be noted that the tax base not and reflect the any tax wage rates base shown or tax in be
HOUSE BILL, AND COMMITTEE BILL-Continued
this It schedule increases, for provided years after for 1974 in do bill, increases which may in the
Maximum
rate needed to finance these the provisions, automatic the cost-of living bereases base as necessary will be each met time by
wages
OASDI,
HI,
Total,
bill. Under rates and benefits. the tax
taxable percent percent percent
thereising thereising increase in
Social Security Cash Benefits
House bill (excluding effect of
the automatic adjustment
provisions):
The income and outgo of the social security cash benefit trust
1971
7,800
4.6
.6
5.2
are shown on the following table.
1972-74
10,200
4.2
1.2
5.4
1975-76
10,200
5.0
1.2
6.12
1977 and after
10,200
6.1
1.3
7.4
Committee bill (excluding effect
of the automatic adjustment
provisions):
1972
9,000
4.6
0.6
5.2
1973-77
10,200
4.55
1.15
5.7
1978-80
10,200
4.65
1.35
6.00
1981-84
10,200
4.65
1.5
6.15
1985-93
10,200
4.65
1.6
6.25
1994-2010
10,200
4.65
1.7
6.35
2011 and after
10,200
5.7
1.7
7.4
Self-employed persons
Present law:
1971
7,800
6.9
.6
7.5
1972
9,000
6.9
.6
7.5
1973-75
9,000
7.0
.65
7.65
1976-79
9,000
7.0
.7
7.7
1980-86
9,000
7.0
.8
7.8
1987 and after
9,000
7.0
.9
7.9
House bill (excluding effect of
the automatic adjustment
provisions):
1971
7,800
6.9
.6
7.5
1972-74
10,200
6.3
1.2
7.5
1975-76
10,200
7.0
1.2
8.2
1977 and after
10,200
7.0
1.3
8.3
VND ПИДЕВ THE V2 CV3H WODILIED BA ВЕЙЕЕШ THE OF COWWILLEE BIRT funds
Committee bill (excluding
effect of the automatic ad-
justment provisions):
1972
9,000
6.9
0.6
7.5
1973-77
10,200
6.8
1.15
7.95
1978-80
10,200
7.0
1.4
8.4
1981-84
10,200
7.0
1.5
8.5
1001
1985-93
10,200
7.0
1.6
8.6
1994 and after
10,200
7.0
1.7
8.7
EASE
51
50
Hospital Insurance
Finance
Committee
bill
$43.5
45.0
47.7
50.3
53.4
55.7
schedule of taxes adopted for for the hospital present insurance program is (including designed
Assets, end of year
to The provide sufficient under income current to pay financing) provide for the a reasonable costs of the reserve. pro-
Committee, will cause $14.8 and the billion trust to fund at the to increase end of 1977. from 1973- $6.4 The
Present
law
$45.6
56.3
69.3
83.9
101.5
120.7
Annual exempt
amount under
retirement test
$2,280
2.520
The billion at outgo, the end and of year-end 1973 to balance table. of the fund for the period
income, are shown in the following
1977 TABLE 4.-PROGRESS OF HOSPITAL 1973-77¹ INSURANCE TRUST FUND,
TABLE 3.-SOCIAL SECURITY CASH BENEFIT PROGRESS OF TRUST FUNDS UNDER PRESENT LAW
AND UNDER THE SYSTEM AS MODIFIED BY THE COMMITTEE BILL, CALENDAR YEARS 1972-77
Finance
Committee
bill
$3.1
1.5
2.6
2.6
3.2
2.3
[Dollars in billions]
Net increase in funds
Fund at end
of year
10.7
13.0
17.6
Contribution and
benefit base
$11,400
12.600
Income
Outgo
Calendar year
Present
law
41.6
19.2
$12.6
$8.8
$6.4
$5.2
11.3
9.2
1973
14.1
15.4
12.9
11.7
1974
5.8
5.5
16.4
14.6
13.5
1975
17.7
16.4
14.8
Finance
bill
$43.1
49.5
52.3
57.4
60.3
Benefit (percent)
increase
1976
(Dollars in billions)
Committee
66.2
1977 1 Assumes that the tax base will increase to $11,400 in 1975 and to $12,600 in
Outgo
1977.
Present
law
$41.0
43.0
44.9
46.9
49.8
51.1
Finance
Committee
bill
$46.2
51.0
55.0
60.0
63.5
68.5
Income
Present
law
$46.2
53.7
57.9
61.5
66.5
70.3
1 These estimates assume that the following changes will become effective on Jan. 1, of:
Year
1975
1977
Calendar year
GERALD
1972
1973
1974
1975
1976
1977
The Welfare Programs
The original Social Security Act of 1935 established our Federal-
State grant programs which today provide assistance to the aged,
blind, and disabled, and to needy families with children. Unlike the
federally administered social security program, the welfare titles of
the Social Security Act do not set benefit levels nor describe in detail
methods of administering the welfare programs; States establish their
own assistance programs within the broad guidelines of the Federal
law.
Within the past 5 years, however, the Federal-State relationships
have undergone substantial change. Three factors have played an im-
portant role in the changing relationships.
1. The tremendous growth in the Aid to Families with Depend-
ent Children rolls has created both a fiscal and administrative
burden which many States find difficulty coping with.
2. A number of court decisions have had far reaching impact on
all aspects of the welfare programs under the Social Security
Act, sometimes using the very broadness of the Federal statute
(intended to allow States more latitude) against the States by
saying that what the Congress did not expressly permit it must
not have intended to permit. This position was explicitly stated
by the Supreme Court in Townsend v. Swank (opinion dated De-
cember 20, 1971), where it was said that "at least in the absence
of congressional authorization for the exclusion clearly evidenced
from the Social Security Act or its legislative history, a State
eligibility standard that excludes persons eligible for assistance
under federal AFDC standards violates the Social Security Act
and is therefore invalid under the Sunremacy Clause."
3. The Department of Health, Education, and Welfare has is-
sued a séries of regulations beginning in January 1969, whose ef-
fect has been to make it easier to get on welfare and harder to get
off welfare. regulations which many States have vigorously, but
unsuccessfully, opposed.
Under present law each State plays the central role in determining
the nature of its welfare program, within the broad outline of Federal
law. The Committee bill largely reiterates this aspect.
AID TO THE AGED, BLIND, AND DISABLED
Present Law
Three categories of adults are eligible for Federally supported as-
sistance: persons 65 and over, the blind (without regard to age), and
permanently and totally disabled persons 18 years of age and older.
Each State establishes a minimum standard of living (needs stand-
ard) upon which assistance payments are based; any aged, blind or
disabled person whose income is below the State needs standard will
(53)
54
difference be eligible for some assistance, although the State need not
55
disabled speaking. all income and resources of needs standard.
Generally between the individual's income and the pay the full
Other Income Disregards
as work payment (though a portion of earnings be amount of the
assistance person must be considered in determining the an aged, blind or
The Committee provided that in determining an individual's income
for purposes of adult assistance, any rebate of State or local taxes
sonal a incentive). States also place limitations on may the real disregarded
(such as real property or food taxes) received by an aged, blind or
out being property disqualified an aged, for blind assistance. or disabled individual may retain and with- per-
disabled recipient would not be counted as income or assets.
Monthly other State payments to an aged, blind or disabled
This disregard would apply to the first $130 of income guaranteed
an adult recipient (the Federal share) ; States would be free to deter-
couple with no between income $97 and range $350. between $70 and $250 and for individual an aged
mine how they wish to treat such tax rebates with respect to the State's
share of welfare payments (if any) to such recipients.
Committee Amendments
Eligibility for Other Benefits
The Committee of aid bill would continue State administration of
Adopting a provision of the House bill, the Committee bill requires
federalized grams to the aged, blind, and disabled (in the pro-
applicants for and recipients of aid to the age, blind, and disabled, as a
set Federal administration called for by the House contrast to the
condition of welfare eligibility, to apply for any other benefits they are
disabled a individuals guanteed as discussed minimum below. income level for aged, bill) blind, but would and
eligible for (such as social security, unemployment insurance, work-
men's compensation, etc.).
National Minimum Welfare Standards and Disregard of Social
Definitions of Blindness and Disability
Security or Other Income
Under individuals the Committee's bill, State public assistance
Under present law each State is free to prescribe its own definition
assure needy those who are aged, blind, and disabled would programs for
of blindness and disability for purposes of eligibility for aid to the
blind and aid to the permanently and totally disabled.
mittee bill for an individual or $195 for a couple. In addition payment of at
least $130 with no other income a monthly assistance have to
The Committee approved amendments setting a Federal definition
for blindness and disability.
payments. not cause any reduction in these minimum security assistance or other
income would would provide that the first $50 of social the Com-
The term "disability" would be defined as "inability to engage
in any substantial gainful activity by reason of any medically
As a result, aged, blind, and disabled welfare recipients
determinable physical or mental impairment which can be expected
be assured need-related) of at least $50 would. under the Committee (which are
not have monthly income from social security or other sources who also
to result in death or has lasted or can be expected to last for a con-
tinuous period of not less than 12 months." Under the disability insur-
ance program, this definition is now found in section 223 (d) (1) of the
or for a couple.
$245 total monthly income of at least $180 for an individual bill,
Social Security Act. The provisions of the disability insurance pro-
vidual which guarantee a monthly income of at least $180 programs
At present, will only seven States have old age assistance
gram further specify that this definition is met only if the disability
is SO severe that an individual "is not only unable to do his previous
work but cannot, considering his age, education, and work experience,
sachusetts, receiving social security benefits (Alaska, Idaho, for an indi-
would, of Nebraska, South Dakota, and Washington). Illinois, These Mas-
engage in any other kind of substantial gainful work which exists in
the national economy, regardless of whether such work exists in the
higher than course, be free to continue providing assistance States
immediate area in which he lives, or whether a specific job vacancy
The cost the minimum standards required by the Committee at levels
exists for him, or whether he would be hired if he applied for work."
H.R. less State the Committee bill than under the House-passed would be
under to the States of providing additional assistance action.
(Sec. 223 (d) (2) (A)).
The term "blindness" would be defined as central visual acuity of
for States." 1; savings are discussed under the heading "Fiscal version Relief of
20/200 or less in the better eye with the use of correcting lens. (Sec.
216 (i) (1) (B).) Also included in this definition is the particular sight
limitation which is referred to as "tunnel vision."
Earned Income Disregard
However, States will be permitted to continue assistance to disabled
In addition or to providing for a monthly disregard of $50
or blind individuals who were already on the rolls under the existing
regard security for other income, the Committee approved of social
State definition, but who would not meet the Federal definition of
ients who able any earnings above $50. This will enable earned those income
plus one-half aged, of blind or disabled recipients of $50 an of additional dis-
blindness or disability.
Age Limit for Aid to the Disabled
offsetting reduction are to in do their some assistance work to do grants. SO without suffering a totally recip-
Present law requires that an individual be 18 years or older in order
to be eligible for aid to the disabled; the House bill would have deleted
79-184 o 72 5
57
56
Statistical Material
this age requirement. The Committee bill retains the provision of exist-
ing law.
TABLE 5.-RECIPIENTS OF AID TO THE AGED, YEARS BLIND, AND
DISABLED, DECEMBER OF SELECTED
Medicaid Coverage
Number of
Percent increase
Under present law, the States are required to cover all cash assistance
recipients
since 1960
recipients under the Medicaid program. The Committee bill, like
Year
the House version, would exempt from this requirement newly eligible
recipients who qualify because of the previously agreed provision of
2,143,000
a $130 minimum benefit with a disregard of $50 of social security and
1940
2,128,000
other income.
1945
2,952,000
Social Services
1950
2,883,000
1955
2,781,000
The Committee also approved an amendment, similar to a
1960
2,721,000
-2
provision in the House bill, clarifying the types of social services for
1961
2,710,000
-3
which Federal funding may be provided and setting a limitation on
1962
2,713,000
-3
authorizations for appropriations for social services. This amendment
1963
2,725,000
-2
is described in the section dealing with general welfare provisions,
2,729,000
-2
1964
child welfare services, social services, and other provisions.
2,745,000
-1
1965
1966
2,802,000
+1
Prohibition of Liens in Aid to the Blind
1967
2,810,000
+1
1968
2,959,000
+6
The Committee bill prohibits the imposition of liens against the
1969
3,098,000
+8
property of blind individuals as a condition of eligibility for aid to
1970
3,172,000
+14
the blind.
1971
3,341,000
+20
Other Eligibility Requirements
1972
1973:
+26
The Committee decided that there would be no uniform Federal eli-
Current law
(not 3,500,000 available)¹
gibility rules as in the House bill. The determination will be left to the
Committee bill
States on such questions as assets, resources, relative responsibility
1974:
3,600,000
+29
and other eligibility factors except those specified above or in the sec-
Current law
(not available)¹
tion of this summary entitled "General Welfare Provisions, child wel-
Committee bill
fare services, social services, and other provisions."
estimate of recipients of Aid to the Aged, Blind, and Disabled under the
Administrative Costs
1 The bill will be included in the Committee Welfare. report.
Committee Source: Department of Health, Education, and
The Committee bill requiring minimum pavment levels will
make many individuals newly eligible for aid to the aged, blind, and
disabled who are not now eligible, with a corresponding impact on
State administrative costs. Under present law the Federal Govern-
ment pays 50 percent of the cost of all administrative expenses.
The Committee decided that the Federal Government pay the States
an amount equal to 100 percent of their calendar year 1972 administra-
tive costs related to the aged, blind, and disabled, plus 50 percent of
additional costs. The 1973 budget, relating to the period from July
ore
1972 to June 1973, estimates an expenditure of $408 million for admin-
istration of aid to the aged, blind, and disabled; the State share of this
amount is $204 million.
58
59
Statistical Material
TABLE BASIC 6.-OLD-AGE NEEDS ASSISTANCE: MONTHLY
TABLE 6.-OLD-AGE ASSISTANCE: MONTHLY AMOUNT FOR
AMOUNT UNDER FULL STANDARD AMOUNT FOR
BASIC NEEDS UNDER FULL STANDARD AND LARGEST
1971 PAID FOR BASIC NEEDS, BY STATE, AND NOVEMBER LARGEST
AMOUNT PAID FOR BASIC NEEDS, BY STATE, NOVEMBER
1971-Continued
Aged individual
Aged couple
Aged individual
Aged couple
Largest
Largest
Monthly
amount
Largest
Monthly
amount
Monthly
amount
paid for
amount
paid for
amount
amount
Monthly
Largest
for basic
basic
for basic
basic
for basic
paid for
amount
needs
needs
needs
basic
amount
needs
needs
for basic
paid for
needs
Alabama
needs
basie
needs
Alaska
New Hampshire
$173
$173
$238
$238
$146
Arizona
$103
250
New Jersey
162
162
222
222
$242
Arkansas
250
$206
New Mexico
116
116
155
155
118
350
California
118
159
219
164
350
New York
159
219
149
178
105
164
North Carolina
115
115
150
150
249
Colorado
178
320
210
Connecticut
320
North Dakota
125
125
190
190
Delaware
140
140
Ohio
126
126
208
208
176
280
Florida District of Columbia
280
212
140
176
224
Oklahoma
130
130
212
150
140
224
Oregon
141
113
200
160
197
113
206
197
Pennsylvania
138
138
208
208
Georgia
114
114
210
155
Guam
210
Puerto Rico
54
22
88
34
Hawaii
100
91
163
211
140
165
Rhode Island
163
211
Idaho
132
140
201
165
South Carolina
87
80
121
121
Illinois
132
205
201
South Dakota
180
180
220
220
182
183
182
219
205
Tennessee
102
97
142
142
Indiana
183
224
219
lowa
224
Texas
119
119
192
192
185
Kansas
80
247
Utah
106
106
142
142
122
Kentucky
117
186
160
Vermont
177
177
233
233
141
Louisiana
110
190
178
Virgin Islands
52
52
103
103
96
96
147
152
199
147
160
Virginia
152
199
Maine
100
235
160
Maryland
188
Washington
192
192
247
247
115
Massachusetts
115
130
198
West Virginia
146
76
186
97
Michigan
96
187
198
Wisconsin
108
108
164
164
189
Minnesota
165
189
280
131
Wyoming
139
108
195
186
165
158
218
280
Mississippi
158
210
218
Missouri
210
150
Montana
181
75
218
Nebraska
120
85
257
150
Nevada
111
192
170
182
182
169
235
175
169
271
235
271
60
61
TABLE AND 7.-AID TOTALLY TO THE BLIND AND AID TO THE
NEEDS DISABLED: MONTHLY AMOUNT PERMANENTLY
TABLE 7.-AID TO THE BLIND AND AID TO THE PERMANENTLY
PAID FOR UNDER FULL STANDARD AND LARGEST FOR AMOUNT BASIC
AND TOTALLY DISABLED: MONTHLY AMOUNT FOR BASIC
BASIC NEEDS, BY STATE, NOVEMBER 1971
NEEDS UNDER FULL STANDARD AND LARGEST AMOUNT
PAID FOR BASIC NEEDS, BY STATE, NOVEMBER 1971-Con.
Blind individual
Disabled individual
Blind individual
Disabled individual
Monthly
Largest
amount for
amount
Monthly
Largest
Largest
Largest
basic
paid for
amount
Monthly
amount
Monthly
amount
basic
amount for
paid for
amount for
paid for
amount for
needs
basic
paid for
needs
basic.
basic
basic
basic
basic
needs
Alabama
needs
needs
needs
needs.
needs
Alaska
$105
Arizona
$75
250
$122
250
$71
Arkansas
118
250
Mississippi
$150
$75
$150
$75
118
250
118
Missouri
255
100
170
80
California
149
105
118
149
Montana
132
123
120
111
192
192
105
172
Nebraska
182
182
182
182
Colorado
172
Nevada
155
155
Connecticut
(1)
(1)
103
Delaware
103
176
123
176
123
176
New Hampshire
173
173
173
173
Florida District of Columbia
189
150
176
117
New Jersey
162
162
162
162
150
113
117
150
New Mexico
116
116
116
116
114
114
113
Georgia
114
New York
159
159
159
159
114.
North Carolina
126
126
115
115
Guam
100
Hawaii
91
140
100
91
125
125
125
Idaho
140
132
140
North Dakota
125
132
140
132
Ohio
126
126
126
Illinois
116
182
182
132
183
182
Oklahoma
130
130
130
130
Indiana
183
182
183
Oregon
151
151
141
113
183.
Pennsylvania
150
150
lowa
138
138
185
Kansas
125
161
185
156
80
122
Puerto Rico
54
22
54
Kentucky
22
141
110
117
Louisiana
96
141
Rhode Island
163
163
163
163
96
110
96
South Carolina
104
95
87
80
106
101
96
Maine
84
South Dakota
180
180
180
180
66
Maryland
Tennessee
102
97
102
97
115
115
Massachusetts
130
115
96
115
Michigan
223
130
Texas
116
110
116
105
223
96
178
Utah
116
116
106
Minnesota
106
165
165
178
165
Vermont
177
177
177
177
158
158
165
158
Virgin Islands
51
52
52
52
158
Virginia
153
153
152
152
Washington
192
192
190
190
West Virginia
146
76
146
76
Wisconsin
108
108
108
108
Wyoming
139
108
127
108
1 No program.
GUARANTEED JOB OPPORTUNITY FOR FAMILIES
The whole Nation has become increasingly concerned at the rapid
growth of the welfare rolls in recent years, and with good reason.
By far the major factor in this growth has been the increase in the
number of persons receiving Aid to Families with Dependent Chil-
dren. From 5.3 million recipients at the end of 1967, the number of
AFDC recipients doubled during the next four years. The soaring
costs of this program have forced States to shift funds into welfare
that would otherwise go for education, health, housing and other
pressing social needs. There is universal agreement that something
must be done, but there remains much confusion about the nature of
the problem that must be solved. The Committee feels that a more
expensive and expansive welfare program is not the answer.
The soaring welfare rolls reflect three developments.
First, they show that there are a large number of children in this
country who are needy and whose parents in most cases are not
working.
Second, they show an alarming increase in dependency on the tax-
payer. The proportion of children in this country who are receiving
AFDC has climbed sharply, from three percent in the mid-fifties to
nine percent today. This means that an increasing number of families
are becoming dependent on welfare and staying dependent on welfare.
Third, the growth in the AFDC rolls reflects increasing family
breakup and increasing failure to form families in the first place.
Births out of wedlock, particularly to teenage mothers, have increased
sharply in the past decade. Two striking statistics highlight the prob-
lem: the number of families headed by women increased by 15 percent
between 1970 and 1971, while the number of families with both father
and mother present declined in absolute numbers during the same one-
year period. Today, almost 8 million women and children receive wel-
fare because of the "absence of the father from the home"-principally
due to family breakup or failure of the father to marry the mother of
his child.
Many persons who strongly advocate increasing welfare benefits
have simply glossed over the problems of family breakup and the in-
crease of births out of wedlock. Even more importantly, they have
avoided discussing the problem of increasing dependency.
In an article that appeared in the New York M agazine in November,
1971, Nathan Glazer raises the fundamental question of what increas-
ing dependency on welfare has done for recipients in New York City
Has it reduced starvation and given them more food? Has it
improved their housing? Has it improved their environment? Has
it improved their clothing? Has it heightened their self-respect
and sense of power? Has it better and more effectively incorpo-
(63)
64
65
ter for Bernstein, director of research at the New School's city ?
Blanche rated them into the economic and political life of the
dentally but inexorably. We simply cannot believe that the uni-
the increase New York City Affairs, has estimated that 50 Cen-
verse is so constituted. We much prefer, if a choice has to be made,
1960's in welfare recipients in New York City percent the of
to have a good opinion of mankind and a poor opinion of our
births. was due to desertion and 25 percent was due to during
socio-economic system.
She reports that in 1961 there were 12,000 deserted illegitimate
Somehow, the fact that more poor people are on welfare, receiv-
on welfare in New York City. By 1968 there were 80,000. families
ing more generous payments, does not seem to have made this
fare happened in New York City was not an explosion in What
country a nicer place to live-not even for the poor on welfare,
illegitimacy. alone. The city witnessed an explosion in desertion and wel- in
whose condition seems not noticeably better than when they were
poor and off welfare. Something appears to have gone wrong a
the poor of New York of what was for them-as for the who
Welfare, along with those who pressed its expansion, deprived
liberal and compassionate social policy has bred all sorts of un-
anticipated and perverse consequences.
the condition, the way that involved commitment to work
of preceded their them-the best and indeed only way to the improvement poor
To raise such questions is to point to the fundamental problems
of our welfare system, a vicious circle in which the best of inten-
of strengthening of family ties. In place of this, the advocates and
tions merge into the worse of results.
revolution through welfare explosion propagated a false
As Congress examines fundamental questions concerning the effect
demeaning sense of the "rights" of the poor, one which had dis- and
of dependency on welfare, it must also take note of developments in
astrous consequences
American society, such as the changing role of women in America and
Relief is necessary to the poor. In any civilized society it
the increasing public demand for action to improve the quality of life
the be given generously, and if needed, extensively. But it should must be
in this country.
the aim of every society to find and encourage other
When the AFDC program was first established under the Social Se-
bution maintenance of a decent standard of living than the means distri- to
curity Act of 1935, American society generally viewed a mother's role
an of welfare rights, welfare can never, if given regularly
cates of charity. For whatever the position of modern advo-
as requiring her to stay at home to take care of her children; she would
be considered derelict in her duties if she failed to do so. But values
the extensive scale, be other than alms, and whatever alms did on
have changed, and today, one-third of all mothers with children under
the souls of those who gave them, they could not be for for
age six are members of the labor force, and more than half of the moth-
souls of those who received them. Every society-capitalist, good
ers with school-age children only are members of the labor force.
relief socialist, or "welfare state"-tries to find ways to replace
Furthermore, in families where the father is not present, two-thirds
and to make it unnecessary. To advocate its expansion money
of the mothers with children under age six are in the labor force. This
a means of dealing with distress is one thing; to advocate its as
number has been growing steadily in the past 20 years, and it may be
pansion as a means of breaking the commitment to work with ex- its
expected to continue to grow.
sible. attendant effects on self-respect and on family life is irrespon-
At the same time, it is widely recognized today that many important
tasks in our society remain undone, such as jobs necessary to improve
The fundamental problem is raised somewhat differently in
our environment, improve the quality of life in our cities, improve the
sults" article entitled "Welfare: the Best of Intentions, the Worst of Re- an
quality of education in our schools, improve the delivery of health serv-
The that appeared in the August, 1971, issue of Atlantic Magazine.
ices, and increase public safety in urban areas. The heads of welfare
social author, Irving Kristol, begins by quoting from the 19th century
families are qualified to perform many of these tasks. Yet welfare
commentator Alexis de Tocqueville:
pays persons not to work and penalizes them if they do work. Does it
to improve the conditions of life. Experience has proven that the
There are two incentives to work: the need to live and the desire
make sense to pay millions of persons not to work at a time when SO
many vital jobs go undone? Can this Nation continue to consider un-
first majority of men can be sufficiently motivated to work only by the
employable mothers of school-age children on welfare and pay them
to remain unemployed when more than half of mothers with school-
minority. of these incentives. The second is only effective with a small
age children in the general population are already working?
stimulant and leaves only the second intact.
whatever the origin of their poverty, weakens or destroys the first aid,
A law which gives all the poor a right to public
It is the Committee's conclusion that paying an employable person
a benefit based on need, the essence of the welfare approach, has not
At this point, we are bound to draw up short and take leave
worked. It has not decreased dependency-it has increased it. It has
of Tocqueville. Such gloomy conclusions, derived from a our less than
not encouraged work-it has discouraged it. It has not added to the
to benign view of human nature, do not recommend themselves either
dignity in the lives of recipients, and it has aroused the indignation
political temperament. We do not like to think that our instincts
the twentieth-century political imagination or to the 'American
of the taxpayers who must pay for it.
As President Nixon has stated
of-social compassion might have dismal consequences-not acci-
In the final analysis, we cannot talk our way out of poverty we
cannot legislate our way out of poverty; but this Nation can work
66
67
its way out of poverty. What America needs now is not more
Not Eligible To Receive Basic In-
welfare, but more "workfare".
This would be the effect of
Eligible for Welfare-Continued
come from Welfare 1-Continued
the transformation of welfare into "workfare," a new work-
4. Family headed by mother too
rewarding program.
remote from an employment
The Committee agrees that the only way to meet the economic needs
program to be able to par-
of poor persons while at the same time decreasing rather than increas-
ticipate
ing their dependency is to reward work directly by increasing its
5. Family headed by mother at-
value. The Committee bill seeks to put the President's words into
tending school full time even
practice by:
if there is no child under 6
(1) Guaranteeing employable family heads a job opportunity
6. Child living with neither par-
rather than a welfare income; and by
ent, together with his care-
(2) Increasing the value of work by relating benefits directly
taker relative(s (though
to work effort.
State may deny welfare if his
In meeting these objectives the Committee bill will substantially
mother is also receiving wel-
increase Federal expenditures to low-income working persons, but the
fare)
increased funds that go to them-about $2.4 billion-will be paid in
1 These families would be eligible for State supplementation if the State payment level
the form of wages and wage supplements, not in the form of welfare,
is over $2,400 a year for the family and if otherwise eligible under the State requirements.
since the payments will be related to work effort rather than to need.
Under the welfare system, an employed person who cuts his or her
An estimated 40 percent or 1.2 million of the 3 million families cur-
working hours in half receives a much higher welfare payment; under
rently receiving Aid to Families with Dependent Children would
the Committee bill, a person reducing his or her work effort by half
have to obtain their basic source of income from employment once the
would find the Federal benefits also reduced by half.
Committee bill becomes effective.
All heads of families, whether eligible for welfare or not, as well as
Description of Program
heads of families no longer eligible for welfare, could volunteer to
participate in the new employment program.
Under the guaranteed employment program recommended in
The Committee bill provides three basic types of benefit to heads
the Committee bill, persons considered employable would not be
of families:
eligible to receive their basic income from Aid to Families with De-
1. A guaranteed job opportunity with a newly established Work
pendent Children but would be eligible on a voluntary basis to parti-
Administration paying $1.50 per hour for 32 hours and with maxi-
cipiate in a wholly federally financed employment program. Thus,
mum weekly earnings of $48.
employable family heads would not be eligible for a guaranteed wel-
2. A wage supplement for persons employed at less than $2.00 per
fare income, but would be guaranteed an opportunity to work.
hour (but at least at $1.50 per hour) equal to three quarters of the
In the description of the guaranteed job program that follows, it is
difference between the actual wage paid and $2.00 per hour.
assumed that the Federal minimum wage will rise to at least $2.00
3. A work bonus equal to 10 percent of wages covered under social
per hour.
security up to a maximum bonus of $400 with reductions in the bonus
The following table shows which families would continue to be
as the husband's and wife's covered wages rise above $4,000.
eligible for welfare and those which would no longer be eligible to re-
ceive their basic income from welfare under the Committee bill:
Work Incentives Under the Program
Eligible for Welfare
Not Eligible To Receive Basic In-
The program would guarantee each family head an opportunity to
come from Welfare 1
earn $2,400 a year, the same amount as the basic guarantee under the
1. Family headed by mother with
1. Family headed by able-bodied
House bill for a family of four. It also strengthens work incentives
child under age 6
father
rather than undermine them, as shown in the table below.
2. Family headed by incapacitated
2. Family headed by mother with
In table 8, the three types of employment are compared under the
father where mother is not in
no child under 6 (unless the
guaranteed employment program.
the home or is caring for
father
mother is attending school
The table also shows what happens to total family income under
full time)
the proposal if the father works 40 hours a week (32 hours in the case
3. Family headed by mother who
of Government employment), 20 hours a week, or no hours a week.
is ill, incapacitated, or of
The sources of income shown are: (a) wages paid by the employer,
advanced age
(b) wages paid by the Government, either as employer or in the form
of a wage supplement to the employee (for those in jobs paying less
68
69
than $2.00 per hour), and (c) the work bonus equal to 10 percent of
TABLE 8.-WORK INCENTIVES UNDER THE
wages covered under social security.
COMMITTEE BILL
The table shows these major points about the Committee plan:
(1) Since the participant is paid for working, his wages do not
vary with family size. Thus a family with one child would have
Employed by-
no economic incentive to have another child. This feature also
Govern-
Private
Private
preserves the principle of equal pay for equal work.
ment at
employer
employer
increases. (2) As the employee's rate of pay increases, his total income
$1.50 per
at $1.50
at $2.00
hour
per hour
per hour
(3) As the employee's income rises due to higher pay in a
regular job, the cost to the Government decreases. $1.50-per-hour
employment by the Government costs the taxpayer $48 for a
40 hours worked (32 hours if Govern-
32-hour week; working 40 hours for a private employer at the
ment employment):
same $1.50 hourly rate gives the employee a $33 boost in income
Wages paid by-
while cutting the cost to the Government by $27. Moving to an
Employer
$60.00
$80.00
Government
$48.00
15.00
unsubsidized job at $2.00 per hour increases the employee's income
Special 10-percent payment
6.00
8.00
another $7 while saving the Government about $13 more.
(4) The less the employee works, the less he gets. No matter
Total Government payment
48.00
21.00
8.00
what the type of employment, the employee who works half-time
gets half of what he would get if he works full time; he gets
Total income
48.00
81.00
88.00
no Federal benefit if he fails to work at all.
(5) The value of working is increased rather than decreased.
20 hours worked: (16 hours if Govern-
Working 32 hours for the Government is worth $1.50 per hour;
ment employment):
when a private employer pays $1.50, the value of working to the
Wages paid by-
employee is $2.02 per hour; and working at $2.00 per hour is
Employer
30.00
40.00
participant in private employment will receive more than $2.00
worth $2.20 per hour to the employee. This will assure that any
Government
24.00
7.50
an hour. Under the House bill, by way of contrast, the value of
Special 10-percent payment
3.00
4.00
be working is decreased rather than increased, since the family would
Total Government payment
24.00
10.50
4.00
eligible for welfare benefits if the family head does nothing.
Total income
24.00
40.50
44.00
Actual value of 40 hours
No hours worked
0
0
0
of employment under-
Wage paid by employer
House Bill
Committee
Hourly value of working
1.50
2.02
2.20
(cents)
bill
$1.50
$2.00
73
$2.02
90
2.20
Work Disincentives Under Present Law and Administration
$1.23 for a family of 2; $1.04 for a family of 3.
Proposal
(6) Earnings from other employment do not decrease the
By way of contrast, under present law a mother who is eligible
received for hours worked. Thus an individual able to work wages in
for welfare is guaranteed a certain monthly income (at a level set by
private employment part of the time increases his income and
the State) if she has no other source of income; if she begins to work,
saves is the Government money. Virtually no policing mechanism
her welfare payment is reduced. Specifically, in addition to an allow-
necessary to check up on his income from work.
ance for work expenses, her welfare payment is reduced $2 for each
$3 earned in excess of $30 a month. Generally, then, for each dollar
earned and reported to the welfare agency, the family's income is
increased by 33 cents.
The House bill uses the same basic approach as present law but
substitutes a flat $60 exemption plus one-third of additional earnings
for the present $30 plus work expenses plus one-third of additional
earnings. The disincentive effects of this are clearly illustrated in
70
71
of the a following family of examples 4 as shown of in the table effect 9: of the House bill on the head
(1) For The less the individual works, the more the
Eligibility to Participate
20 pays. hours receives example, $26.60 an individual more in welfare working at $2.00 per Government hour for
Except as noted below, eligibility to participate in the employment
program would be open to all family heads who are U.S. citizens or
government ing 40 hours benefit a week goes at up that by wage; $44.10. if he than does an not individual work at all, work- his
aliens lawfully admitted for permanent residence with a child under
age 18 (or under age 22 and attending school full time). Participation
(2) An by individual cutting back on his work effort
would be purely voluntary. Mothers with children under age 6 who
ing under at the a Committee bill. The Lower Committee bill.The Thetal of the House bill than
value income of a relatively smaller or, said another decreases way, the his
were eligible for welfare would also be eligible to participate in the
employment program if they SO chose.
about $13 less than his for total 20 income hours under if the an House individual bill is work- only
Participation in Work Program
than wage. the An $82 individual who works not at he all works receives full time at that
Only one member of a family would be eligible to participate in
an hour. received by an individual working 40 hours only at $36 $2.00 less
the work program, the head of the household. This would be deemed
to be the father unless he was dead, absent, or incapacitated, in which
(3) the The family value of working is decreased rather
case it would be deemed to be the mother.
the Since $29.20 in additional is eligible family for $46.20 income in welfare for than doing increased. nothing,
A head of a household would not be permitted to participate in the
employment program as a $1.50-per-hour Government employee if he
Working $1.50 per hour 40 hours amounts a to a value of only for 73¢ 40 an hours hour for of work at
or she:
per hour to the employee. week at $2.00 per hour is worth only working 90¢
(1) is a substantially full time student;
(2) is a a striker, but this disqualification would not apply to
(4) Earnings if from any employment (as well
any employee who is (1) not participating or directly interested in
payments), reported, reduce the benefits received as by child the support family.
the labor dispute and (2) does not belong to a group of workers
any of whom are participating in or financing or directly inter-
TABLE 9.-WORK DISINCENTIVES UNDER THE HOUSE BILL:
ested in the dispute. The disqualification also would not apply
INCOME FOR FAMILY OF 4
to employees of suppliers or other related businesses which are
forced to shut down or lay-off work because of a labor dispute in
which they are not directly involved. This disqualification,
Employed by-
adapted from the unemployment insurance laws, is designed to
prevent the government financing one side of a labor-manage-
ment dispute.
Private
Private
(3) is receiving unemployment compensation;
employer
at $1.50
employer
(4) is a single person or is a member of a couple with no child
per hour
at $2.00
under 18 (or under age 22 and attending school full time) or
40 hours worked:
per boy
(5) has left employment without good cause or been discharged
r
Wages
for cause or malicious misconduct during the prior 60 days. The
Welfare
$60.00
Work Administration would be authorized to extend the dis-
15.40
$80.00
qualification to as much as six months for individuals who are
Total income
2.10
discharged because of malicious misconduct or for the commission
75.40
of a crime against their employer.
20 hours worked:
82.10
In addition:
Wages
(6) a family would be ineligible if it has unearned income in
Welfare
30.00
excess of $300 monthly or if total family income exceeds $5,600 an-
35.40
40.00
nually; and
Total income
28.70
(7) if an individual is able to find regular employment on a
65.40
part-time basis, he or she will be assured an opportunity for suffi-
No hours worked:
68.70
cient additional employment as a Government employee to re-
Wages
sult in a combined total of 40 hours work per week. If an individ-
Welfare
0
ual working substantially full time in private employment wishes
46.20
0
to work up to 20 hours in addition for the Government, the local
Total income
46.20
office of the Work Administration (if it has work available) may
46.20
provide him or her such an employment opportunity. Similarly,
Hourly value of working 40 hours
46.20
an individual working full time for the Government under the
.73
.90
79-184 o 72 6
72
or reduction employment she is provided. in the program number could of hours work of an Government additional 20 hours with no
73
employment
he
For these jobs, the Federal Government would make a payment
to any employee who is the head of a household equal to three quarters
Three 1.
Kinds of Employment
of the difference between what the employer pays him and $2.00 per
lic 2. or kinds of employment private sector or in jobs in
hour, for up to 40 hours a week. Thus if an employer paid $1.50 an
hour the Federal subsidy would amount to 38 cents an hour (three-
quarters of the 50-cent difference between $1.50 and $2.00). This wage
supplement would be administered by the local office of the Work
ing 3. the full cost of the salary. with or the no subsidy; bear- pub-
Administration.
Federally Funded Jobs
For persons who could not be placed in either regular or subsidized
Some participants Some participants Some participants The with employment little or no
Placement in Regular Employment
public or private employment, jobs would be created which would pay
at the rate of $1.50 per hour. An individual could work up to 32 hours
a week (an annual rate of about $2,400), and would be paid on the
all pay at least per
basis of hours worked just as in any other job. There would be no pay
for hours not worked.
mum In at this wage least category law, in which would the be jobs not covered by the
Subsidized Public or Private Employment
However, a woman with school-age children would not be required
to be away from home during hours that the children are not in school
(unless child care is provided), although she may be asked, in order to
earn her wage, to provide after-school care to children other than her
but $1.50 per hour. No employer supplement paid less than $2.00 Federal mini- hour
own during these hours.
for minimum the job because of the supplement. would be paid if per the em-
If an individual is able to find regular employment on a part-time
basis, he or she will be assured an opportunity for sufficient additional
under the the relates minimum wage wage would itself be downgraded would not Thus be under affected. no jobs the
employment as a Government employee to result in a combined total
of 40 hours work per week. If an individual working substantially
Small minimum wage law. Some solely of to these those include: jobs
not
covered
full time in private employment wishes to work up to 20 hours in
retail stores:
today
addition for the Government, the local office of the Work Admin-
Sales clerk
Outside salesmen in any industry.
istration (if it has work available) may provide him or her such
Cashier
an employment opportunity. Similarly, an individual working
Cleanup man
Public sector:
full time for the Government under the employment program could
Recreation aide
work an additional 20 hours in private employment with no reduction
in the number of hours of Government employment he or she is
Park service Porkerternal
provided.
Participants would not be considered Federal employees, nor would
Waitress
aide
they be covered by social security, unemployment compensation or
Busboy
Sanitation aide
workmen's compensation. The 10 percent special work-bonus would
Cashier
Cook
Library assistant
not apply to their salary.
Porter
Police aide
For these individuals who cannot be placed immediately in regular
Chambermaid
Counterman
Fire department assistant
employment at a rate of pay at least equal to the minimum wage, or
in subsidized private employment, the major emphasis would be on
having them perform useful work which can contribute to the better-
Domestic Gardener service:
Child care assistant
aide
ment of the community. A large number of such activities are currently
Caretaker Consumer protection aide
going undone because of the lack of individuals or funds to do them.
Handyman
With a large body of participants for whom useful work will have to
Cook
Home for the aged employee
be arranged, many of these community improvement activities could
now be done. At the same time, safeguards are provided SO that the
Household aide
Child attendant
Agricultural labor:
program meets the goal of opening up new job opportunities and does
Attendant for aged or dis-
Jobs picking, grading, sort-
not simply replace existing employees, whether in the public or private
ing, and
sector.
abled person
other spraying,
Any job in the regular economy paying $1.50 per hour or more, even
preparatory work;
a part-time job, would yield a greater income than $1.50 per-hour
livestock milking cows; caring for
Government employment and it is anticipated that this will serve as
an incentive for participants to seek regular employment. In addition,
74
vidual the cost in to regular the Government employment. would be substantially less for an indi-
75
Transportation Assistance
Work Bonus for Low-Income Workers
In recognition of the fact that a major reason for low-skilled jobs
would Low-income under be eligible the workers for a work in regular bonus employment who head
going unfilled in metropolitan areas is the difficulty an individual
faces getting to the potential job, the Work Administration would
ilies the taxed wage where income the husband's social of the security husband (or and equal railroad wife to is 10 retirement) percent of program, their families wages if
be authorized to arrange for transportation assistance where this is
necessary to place its employees in regular jobs. For example, the
Work Administration might determine the upper limit of transporta-
by work which bonus this would income be equal exceeds and to wife's $4,000 or less. $4,000, For fam- the
tion time to get to a job-say, 45 minutes or one hour, depending on
examples: one-quarter bonus The size once of of income the $1,600 work reached is bonus $400, which is a shown subtracted Thus The Thus the quarter of on the table from $400 $4,000 equals be the by no $1,600; amount zero). work
the average commuting time in the area. If the individual can get to
the job within that amount of time through ordinary public transpor-
tation or other arrangements, then he would be expected to do so. If
this could not be done, however, then the Work Administration would
be authorized to provide transportation directly to employees who
4,000 3,000 $2,000 Annual earnings of family taxed under social security below Work for selected bonus
could be placed in regular jobs in order to cut the transportation time
down to the standard. The Work Administration could only do this
where it was necessary in order to increase employment opportunities.
5,000
$200
In any case, the cost would ordinarily not be borne by the Govern-
ment-the employee would pay the Work Administration, and per-
5,600
300
haps be reimbursed by the employer if this is customary in the area for
400
the type of job involved. The Work Administration would have the
billion create THE a work disincentive. The as income having rises no above a economic gradual $4,000 incentive phaseout for of
The plan of (1) not varying benefits 150 by 0
flexibility to absorb some of the costs involved in unusual circum-
stances.
Training
Participants in the employment program would be eligible to volun-
families. There and would provide work plan bonus would payments cost an to estimated SO as not $1.2 to
teer for training to improve their skills under the training program
administered by the Work Administration. The individual would be
curity but are only certain when types the amount of work which are covered under 51/2 million
accepted for enrollment to the extent funds are available and only if
they are satisfied that the individual is:
Such ment ployer of exceeds domestics, $50 yardmen in a quarter. and This other of limitation wages earned applies from to a the single social em- se-
1. Capable of completing training; and
2. Able to become independent through employment at the end
ify social bonus for employees, security with respect because if to they all of are of the their the heads wages of similar including a family, non-business those would get employees. the employ- work
of the training and as a result of the training.
Employees under the employment program who wished to partici-
pate in training would be strongly motivated, for they would be paid
ministratron which ministoration which have to ation which have to arrange to pert have to arren which the perform on these the $50 work wages, quarterly however, limitation. the individual In not order covered to qual- by
only $1.30 rather than $1.50 for each hour of training. Following the
successful completion of training (which could not exceed 1 year in
duration), the trainee would receive a lump-sum bonus for having
narily with making be his employer services would pay available. for him the the wages as prevailing an and employee other wage of costs for the the associated Work job would Ad- and
completed training.
Services
tion. this basis by the Work covered Administra- under ordi-
social If a security, on If then the it employment will be would
Since the purpose of the proposal is to improve the quality of life
for children and their families, any member of a family whose head
have Administration have will to have pay a social covered security by social taxes. security, However, then the em-
participates in the work program could be provided services to
strengthen family life or reduce dependency, to the extent funds are
at least been subject to social security record of all such wages which the would Work
available to pay for the services. Open-ended funding would be pro-
The 10 $50 percent be paid work by a private employer taxes but during for the a requirement
vided for family planning and child care services. The agency admin-
Revenue Service. bonus would be administered quarter. by the Internal that
istering the employment program would refer family members to other
agencies in arranging for the provision of social and other services
which they do not provide directly. For example, a disabled family
member might be referred to the vocational rehabilitation agency, or
a 16-year-old out-of-school youth might be referred to an appropriate
work or training program, even though the cost of the services them-
selves would not be borne by the employment program.
76
77
Former participants in the work program would have access to
her to participate in the employment program. Following this, the
free family planning services and to child care on a wholly or partly
mother would either have to be found to be incapacitated under the
subsidized basis, depending on family income. Other services needed to
Federal definition (that is, unable to engage in substantial gainful
continue in employment, including minor medical needs, could be
employment), with mandatory referral to vocational rehabilitation
provided by the agency administering the program.
agency; or, if she is not found to be incapacitated, the State could
arrange for protective payments to a third party to ensure that the
State Supplementation
needs of the children are provided for.
In order to prevent the State welfare program from undermining
Administration of the Employment Program
the objectives of the Federal employment program the State would
have to assume that individuals eligible for the State supplement who
The employment program would be administered by a newly created
are also eligible to participate in the employment program are actually
Work Administration headed by a 3-man board appointed by the Pres-
participating full time and thus receiving $200 per month. A similar
ident with the advice and consent of the Senate. The actual operations
rule would apply to mothers with children under age 6 who volunteer.
of the program would be carried out by local offices of the Work
Furthermore, the State would be required to disregard any earnings
between $200 a month and $375 a month (the amount an employee
Administration. The local office would hire individuals applying to participate,
would earn working 40 hours a week at $2.00 per hour) to ensure
develop employability plans for participants, attempt to expand job
that the incentive system of the alternative plan is preserved. These
earnings disregards would be a flat requirement; States would not be
needed for persons to participate (utilizing the Work Administration's
opportunities in the community, arrange for supportive services
required to take into account work expenses. The effect of this
Bureau of Child Care to arrange for child care services), and operate
requirement would be to give a participant in the work program a
programs utilizing participants which are designed to improve the
strong incentive to work full time (since earnings of $200 will be
quality of life for the children of participants in the employment
attributed to him in any case), and it would not interfere with the
program.
strong incentives he would have to seek regular employment rather
Employment Program in Puerto Rico
than working for the Government at $1.50 per hour.
Certain provisions relating to the employment program in Puerto
Food Stamps
Rico were made. These modifications are necessary because of the fact
that Puerto Rico has a different minimum wage structure than the rest
Individuals participating in the employment program would not be
of the United States, has substantially lower per capita income, and
eligible to participate in the food stamp program. However, States
has a high rate of unemployment. Under the Committee bill the wages
would be reimbursed the full cost of adjusting any supplementary
paid to Government employees would be equal to three-quarters of the
benefits they might decide to give to participants so as to make up for
lowest minimum wage applicable to a significant percentage of the
the loss of food stamp eligibility. In order to avoid having States pro-
population. This would result in a lower wage for Government em-
vide assistance to an entirely new category of recipient not now eli-
ployees than in the rest of the United States, but it would be signifi-
gible for federally-shared Aid to Families with Dependent Children,
cantly higher than current welfare payments in Puerto Rico. The wage
the Committee provided that the Work Administration would pay
supplement program for persons in regular employment at less than
families headed by an able-bodied father the amount equal to the value
the minimum wage would not be applicable to Puerto Rico, but the 10
of food stamps (but only to the extent that the State provides cash
percent work bonus for low-income earners in jobs covered by social
instead of food stamps for families which are now in the Aid to Fam-
security would apply.
ilies with Dependent Children category).
Tax Credit to Develop Jobs in the Private Sector
Children of Mothers Refusing to Participate in the Employment
Program
The provision of the present tax law under which an employer
hiring a participant in the Work Incentive Program is eligible for
Under the employment program, mothers in families with no chil-
a tax credit equal to 20 percent of the employee's wages during the
dren under age six would generally be ineligible to receive their basic
first 12 months of employment, with a recapture of the credit if the
income from the Aid to Families with Dependent Children program.
employer does not retain the employee for at least one additional year
If it comes to the attention of a welfare agency, however, that chil-
(unless the employee voluntarily leaves or is terminated for good
dren are suffering neglect because a mother who is ineligible for basic
cause), will be continued under the new guaranteed employment
income under AFDC also refuses to participate in or is disqualified
program.
from the employment program, the Work Administration would be
authorized to make payment to the family for up to one month if the
mother is provided counseling and other services aimed at persuading
78
children, would be open to the the Work
Incentive Because Program, the guaranteed job opportunity program, unlike
visions of the the tax following credit to ensure limitations would head be of added any to family the with
mittee's of expanding work program: employment opportunities that the for credit participants meets the primary in the Com- pro- aim
one have month; participating in the guaranteed respect job program to individuals for at least who
1. The been credit would apply only with
GENERAL WELFARE PROVISIONS, CHILD WELFARE
SERVICES, SOCIAL SERVICES, AND OTHER PROVISIONS
2. percent The credit of would not be applicable with
1. GENERAL WELFARE PROVISIONS
least the 15 employer one employee) all would employes always of be the permitted employer to in take any respect one the year to credit more (though for than at
The following amendments approved by the Committee apply to
both the adult categories (Aged, Blind and Disabled) and to the Aid
is worked 3. discharged The for credit the and Work would replaced Administration not be by available another in employee cases where who an employee formerly
to Families with Dependent Children category. Other provisions for
each category are specified in separate sections of this release relating
to each program.
earnings ployee at percent $2 an hour). of $4,000, approximately the case amount of any of one annual em-
4. The (20 credit could not exceed $800 and in the
Welfare as a Statutory Right
the pants credit to private job program, the Committee bill partici-
In order in the to guaranteed create additional employment opportunities for
A number of court cases in recent years have been based on the view
that welfare is a property right rather than a gratuity provided for
under a statute. The Committee agreed to make clear in the statute
businesses. A private employer employers hiring participants in would addition extend to
that welfare is a statutory right granted under law which can be ex-
deduction. at the same time for the income taking tax child the credit care or would household not be expense eligible
tended, restricted, altered, amended or repealed by law. It is distinct
from a property right or any right considered inviolate under the
Constitution.
Effective Dates
1974. The As effective of that date date, for families the basic job opportunity program is
Declaration Method of Determining Eligibility
gible (including for a mother with no child which under include an employable January adult
Generally speaking, the usual method of determining eligibility for
however, welfare the family as their head basic will be income. If age unable 6) will to find no a longer regular be job, eli-
public assistance has involved the verification of information provided
by the applicant for assistance through a visit to the applicant's home
annually, paying $1.50 the an same hour amount for 32 hours assured weekly, of producing Government employment
and from other sources. For persons found eligible for assistance, re-
determination of eligibility is required at least annually, and similar
of The 4 under 10 percent the House-passed work which family would assistance have been plan. payable $2,400 to of a income family
procedures are followed.
The Department of Health, Education, and Welfare has required
States to use a simplified or "declaration method" for aid to aged, blind,
mechanism service be under To low-income workerber:1 is become operative.Specificalvillb a effective wage the offices payable minimum supplement is July functioning. to even make 1973, wage before the utilizing for bonus law payments family the and and the the paying heads bonus effective services guaranteed until wage in which less supplement the starting regular of than Work the will employment $2.00 local be jobs in Administration payment paid January per employment not hour quarterly program covered would 1973. will
and disabled, and has strongly urged that this method be used in the
program of Aid to Families with Dependent Children. The simplified
or "declaration method" provides for eligibility determinations to be
based to the maximum extent possible on the information furnished by
the applicant, without routine interviewing of the applicant and with-
out routine verification and investigation by the caseworker. The Com-
mittee bill precludes the use of the declaration method by law. It also
explicitly authorizes the States in the statute to examine the applica-
tion or current circumstances and promptly make any verification from
independent or collateral sources necessary to insure that eligibility
exists. The Secretary could not, by regulation, limit the State's author-
ity to verify income or other eligibility factors.
Denial of Welfare for Refusal to Allow Caseworker in Home
In 1969 a Federal District Court ruled on constitutional grounds
that a State could not terminate welfare payments to a recipient who
(79)
81
80
refused to allow a caseworker in her home. In 1971, the Suprems
States for at least 30 consecutive before days, he he may must again remain become in
Court reversed the lower court's decision. The Committee agreed to
the the United United States for 30 consecutive days
codify the Supreme Court's decision in the statute by amending the
eligible
Act to permit a State to require as a condition of eligibility for wel-
fare that a recipient allow a caseworker to visit the home at a reason-
In addition, United States and either a resident under
for welfare. to become eligible for welfare, citizen an individual or alien lawfully must be
able time and with reasonable advance notice.
a admitted resident for of the permanent residence or a person who is a
color of law.
Furnishing Manuals and Other Policy Issuances
Welfare Payments for Rent
Regulations issued by the Department of Health, Education, and
Under existing Some States have indicated make single
law welfare payments are that ordinarily they could made effect directly sub-
Welfare in October, 1970, require States to make available current
copies of program manuals and other policy issuances without charge
to stantial the recipients. administrative savings if they authorities were permitted of the to rent portion a of
to public or university libraries, the local or district offices of the Bu-
reau of Indian Affairs, and welfare or legal services offices or orga-
payment directly to for public recipients housing in public housing. also permit The Committee State welfare bill
nizations. The material may also be made available, with or without
welfare payments States to do this. It would rent directly to a landlord
charge, to other groups and to individuals. The Committee approved
would permit vendor payment for payments pro-
an amendment under which States would be permitted to be reim-
agencies that to make the a welfare recipient has for failed two consecutive to make rent months, and
bursed for the cost (but no more than the cost) of making this infor-
vided or (a) not to the same landlord) amount actually allowed by the
(whether to accept the The
mation available.
(b) the to landlord the recipient agrees for shelter as total payment amendment for in the Public rent. Law
Requirement of Statewideness for Social Services
State agreed to repeal a welfare circumstances to
Committee also would require welfare agencies in some of rent.
The Social Security Act requires that social services (including
92-213 pay as which a rental allowance more than the actual cost
child care and family planning services) under the welfare programs
be in effect in all political subdivisions of a State in order for the
Alcoholics and Addicts
State to obtain Federal matching funds. This requirement of state-
wideness has sometimes delayed the provision of these services. The
The Committee was concerned been over the determined fact that to many be alcoholics thousands and of
Committee agreed to permit the Secretary to waive the requirement of
statewideness for services.
recipients on not welfare being who provided have necessary amendments rehabilitative related care to and
addicts treatment. are For of explanation these persons, of committee see the end of the section on Medicare care
Use of Social Security Numbers and Other Means of Identification
and and treatment Medicaid provisions.
The Committee bill would require the use of social security numbers
in the administration of assistance programs. States would use social
Sharing the Cost of Prosecuting Welfare Fraud
security numbers for case file identification, for cross-checking pur-
poses and as an aid in the compilation of statistical data with respect
to the welfare programs. In addition, States would be authorized to
the or THE TOTAL administration of the agency. Federal The Committee matching also bill for extends the cost an
welfare Government programs, pays as these 50 percent costs are of the in-
use photographs and such other means of identification as they desire
in administering the welfare programs, as well as setting penalties for
amendment of State and local prosecuting attorney efforts to prosecute welfare
misuse of these means of identification.
fraud.
Recent Disposal of Assets
Duration of Residency
individual with assets whose value those exceeds assets
The Committee agreed to require States to establish a three-month
the welfare qualify for assistance. assistance even
Under present eligibility law, an level in the State, For example, may dispose an elderly of widow
duration of residence requirement in order to be eligible for welfare.
If a welfare recipient in one State moves to another State, the State
of origin would continue making the welfare payments for three
in may though order give the to her children assets continue to her children to with make this to the situation qualify assets available for by providing to her. that
months; however, no State would be required to make welfare pay-
ments more than 90 days after an individual has left the State.
The Committee also agreed with the provision in the House-passed
anyone The Committee who has voluntarily bill deals prior assigned to applying or transfered for public property assistance will to and be a
version of H.R. 1 that would make an individual ineligible for wel-
fare payments during any month in which the person is outside the
relative who ineligible has within received for public one less year assistance than fair market for one value year period for the commencing property, with
United States the entire month; once an individual has been outside
the date of transfer.
82
83
Recouping Overpayments
determined that the recipient was not entitled to them. Any amounts
The Committee agreed to provide statutorily that overpayments
not repaid would be considered an obligation of the recipient and
constitute an obligation of an individual to be withheld from any
would be recouped in the same manner as other overpayments. In
future assistance payments or any amounts (other than Social Secur-
addition, the Committee bill would stipulate that the recipient has a
ity death benefits) owed by the Federal Government to the individ-
right to appeal at a higher administrative level but that payments
ual; in addition, overpayments could be collected through ordinary
need not be continued once an initial adverse determination has been
collection procedures.
made on the local level at a hearing at which evidence can be presented.
The Committee provision was designed to assure that the appeals
Ineligibility for Food Stamps
procedures would be handled expeditiously by the State and also to
Under the Committee bill (as under the House version), individuals
assure that appeals would not be made frivolously.
in the welfare programs will not be eligible for food stamps or surplus
commodities. States would be assured that there would be no addi-
Safeguarding Information
tional expenses to them if they adjust their welfare payment levels to
The statutes in all of the welfare programs under the Social Security
take into account loss of entitlement for food stamps, so that recipients
Act provide safeguards which restrict the use or disclosure of infor-
would suffer no loss of income as a result of losing entitlement to
mation concerning applicants and recipients to purposes directly con-
food stamps.
nected with the administration of each welfare program. Regulations
Appeals Process
issued by the Department of Health, Education, and Welfare state
Present law requires that a State plan must provide for granting
that the same policies apply to requests for information from a gov-
ernmental authority, the courts or law enforcement officials as from
an opportunity for a fair hearing before the State agency to any in-
dividual whose claims for aid is denied or not acted upon with reason-
any other outside source.
able promptness.
The Committee bill re-enacts these statutory provisions but includes
features making it clear that this requirement may not be used to pre-
On March 23, 1970, the Supreme Court ruled in two cases (Gold-
berg v. Kelly (397 U.S. 254) and Wheeler v. Montgomery (397 U.S.
vent a court, prosecuting attorney, tax authority, law enforcement
280)) that assistance payments could not be terminated before a re-
official, legislative body or other public official from obtaining infor-
mation in connection with his official duties including the collection of
cipient is afforded an evidentiary hearing. The decision was made on
support payments or prosecuting fraud or other criminal or civil
the constitutional grounds that termination of payments before such
violations.
a hearing would violate the due process clause. The Court argued
that welfare payments are a matter of statutory entitlement for per-
Separation of Services and Eligibility Determination
sons qualified to receive them, and that "it may be realistic today
to regard welfare entitlements as more like 'property' than a 'gratu-
A further example of legislation through regulation involves the
ity.' * * The constitutional challenge cannot be answered by an
separation of social services from the welfare payment process. On
argument that public assistance benefits are 'a "privilege" and not a
March 1, 1972, the Department of HEW issued a regulation requiring
"right."
States to have completely separate administrative units handling the
The HEW regulations based on the court's decision (45 CFR 205.10)
provision of social services and handling the determination of eligi-
go much further than the court in spelling out the requirements for
bility for welfare. The issuing of this regulation was justified on the
fair hearings. The tone and emphasis of the regulations is shown in
grounds that the Family Assistance Plan in the House-passed bill
these excerpts: "Agency emphasis must be on helping the claimant to
would soon be enacted and it would require a separation of the State-
submit and process his request, and in preparing his case, if needed.
administered services program from the Federal welfare payment pro-
The welfare agency must not only notify the recipient of his right to
grams. Under the Committee bill States would not be required to
appeal, it must also notify him that his assistance will be continued
separate the provision of social services from the determination of
during the appeal period if he decides to appeal." The regulation con-
eligibility for welfare.
tinues: "prompt, definitive, and final administrative action will be
taken within 60 days from the date of the request for a fair hearing,
Quality of Work Performed by Welfare Personnel
except added). where the claimant requests a delay in the hearing" (emphasis
In an effort to try to upgrade the quality of work performed by
The Committee bill deals with this situation by requiring State
welfare personnel, the Committee bill directs the Secretary of the
Welfare agencies to reach a final decision on the appeal of a welfare
Department of Health, Education, and Welfare to study and report to
recipient within 30 days following the day the recipient was notified
the Congress by January 1, 1974, on ways of enhancing the quality of
of the agency's intention to reduce or terminate assistance. The
welfare work, whether by fixing standards of performance or other-
bill would also require the repayment to the agency of amounts
wise. In making this study, the Secretary could draw on the knowl-
which a recipient received during the period of the appeal if it was
edge and expertise of persons talented in the field of welfare adminis-
84
85
tration, including those having direct contact with recipients. He
should also benefit from suggestions made by recipients themselves as
(9) demanding, or accepting, or attempting to collect, directly
to how the level of performance in the administration of the welfare
or indirectly as payment or gift, or otherwise, any sum of money
system might be improved, with a view toward ending the wide varia-
or other thing of value for the compromise, adjustment, or settle-
tions in employee conduct which characterize today's system, and
ment of any charge or complaint for any violation or alleged
moderating the extremes to which some social workers go in perform-
violation of law, except as expressly authorized by law.
ing their duties.
In addition to these penalties the employee involved shall be dis-
missed from office or discharged from employment.
Offenses by Welfare Employees
Limiting HEW Regulatory Authority in Welfare Programs
Under present Federal law there is no provision particularly di-
rected to the question of employee conduct in the administration of the
The Social Security Act permits the Secretary of Health, Education,
welfare program. On the other hand, the Internal Revenue Code
and Welfare to "Make and publish such rules and regulations, not
(Sec. 7214) contains a list of offenses the commission of any of which,
inconsistent with this Act, as may be necessary to the efficient adminis-
by a tax employee, would bring into effect discharge from employment
tration of the functions" with which he is charged under the Act.
and penalties of (a) fines not to exceed $10,000, or (b) imprisonment
Similar authority is provided under each of the welfare programs.
for not more than five years, or both. The provision in the Internal
Particularly since January, 1969, regulations have been issued under
Revenue Code also authorizes a court to award out of any fines im-
this general authority with little basis in law and which sometimes
posed an amount up to one-half of the fine to be paid to the informer
have run directly counter to legislative history. Many States have at-
whose information resulted in the detection of the criminal offense.
tributed at least a part of the growth of the welfare caseload in recent
This law has contributed to the high quality of performance of Inter-
years to these regulations of the Department of HEW.
nal Revenue employees and has been a factor in assuring relatively
A number of Committee decisions deal with problems raised by
uniform standards of conduct.
specific HEW regulations. In addition, the Committee agreed to
Under the Committee bill similar rules would apply under the wel-
modify the statutory language quoted above by limiting the Secre-
fare laws that could relate to an upgrading of the quality of perform-
tary's regulatory authority under the welfare programs SO that he
ance by welfare workers in general and serve as the basis for standards
may issue regulations only, with respect to specific provisions of the
of conduct which hopefully might narrow the wide variations in em-
Act and even in these cases the regulations may not be inconsistent
ployee conduct which exist today.
with these provisions.
Specifically, under the Committee bill it would be a crime punish-
able by a fine of up to $10,000 or imprisonment of up to 5 years, or
Demonstration Projects to Reduce Dependency on Welfare
both, in the case of a welfare employee who is found guilty of
(1) extortion or willful oppression under color of law; or
The Social Security Act currently authorizes appropriations for
(2) knowingly allowing the disbursement of greater sums than
research and demonstration projects in the area of public assistance
are authorized by law, or receiving any fee, compensation, or
and social services. The authority has been used to fund several guar-
reward, except as prescribed, for the performance of any duty; or
anteed minimum income experiments and also a large number of
(3) failing to perform any of the duties of his office or employ-
projects related to providing social services to welfare recipients. The
ment with intent to defeat the application of any provision of the
Committete agreed to place emphasis on those programs helping per-
welfare statute; or
sons to become economically independent by requiring that one-half
(4) conspiring or colluding with any other person to defraud
of the funds spent under these two sections be spent on projects relat..
the United States or any local, county or State government; or
ing to the prevention and reduction of dependency on welfare, rather
(5) knowingly making opportunity for any person to defraud
than welfare expansion.
the United States; or
2. CHILD WELFARE SERVICES
(6) doing or omitting to do any act with intent to enable any
other person to defraud the United States or any local, county
or State government; or
Grants to States for Child Welfare Services (Including Foster
(7) making or signing any fraudulent entry in any book, or
Care and Adoptions)
making or signing any application, form or statement, knowing
it to be fraudulent; or
The Committee adopted an amendment increasing the annual au-
(8) having knowledge or information of the violation of any
thorization for Federal grants to the States for child welfare services
provision of the welfare statute which constitutes fraud against
to $200 million in fiscal year 1973, rising to $270 million in 1977 and
the welfarersystem, and failing to report such knowledge or infor-
thereafter. For fiscal year 1973, this is $154 million more than the $46
mation to the appropriate official or
million which has been appropriated every year since 1967. The Com-
mittee anticipates that a substantial part of any increased appropria-
tion under this higher authorization will go towards meeting the costs
86
87
of providing foster care which now represents the largest single item
in the family, and services to educate appropriate family members
of child welfare expenditure on the county level. The Committee, how-
about household and related financial management and matters
ever, avoided earmarking amounts specifically for foster care SO that
pertaining to consumer protection;
wherever possible the State and counties could use the additional funds
(d) nutrition services;
to expand preventive child welfare services with the aim of helping
(e) services to assist the needy families with children in dealing
families stay together and thus avoiding the need for foster care. The
with problems of locating suitable housing arrangements and
additional funds can also be used for adoption services, including
other problems of inadequate housing, and to educate them in
action to increase adoptions of hard-to-place children.
practices of home management and maintenance;
(f) emergency services made available in connection with a
National Adoption Information Exchange System
crisis or urgent need of the family. Fires, floods, accidents, deser-
tions and illnesses can all be disasters to people which may lead
The Committee bill would authorize $1 million for the first fiscal
to institutionalization and dependency unless immediate response
year and such sums as may be necessary for succeeding fiscal years for
can be brought to bear on the problem;
a Federal program to help find adoptive homes for hard-to-place chil-
(g) services to assist appropriate family members to engage
dren. The amendment would authorize the Secretary of Health, Edu-
in training or secure or retain employment; and
cation, and Welfare to "provide information, utilizing computers and
(h) informational and referral services for individuals in need
modern data processing methods, through a national adoption infor-
of services from other agencies (such as the health, education, or
mation exchange system, to assist in the placement of children await-
vocational rehabilitation agency, or private social agencies) and
ing adoption and in the location of children for persons who wish to
follow-up activities to assure that individuals referred to and
adopt children, including cooperative efforts with any similar pro-
eligible for available services from such other agencies received
grams operated by or within foreign countries, and such other related
such services.
activities as would further or facilitate adoption."
For the aged, blind, and disabled, the services would include:
3. SOCIAL SERVICES
(a) protective services for individuals who are (or are in danger of
being abused, neglected, or exploited, such as institutional services for
Federal Matching for Social Services
those aged or physically or mentally disabled who are unable to main-
tain their own place of residence;
The Committee also approved an amendment clarifying the types of
(b) homemaker services, including education in household and re-
social services for which Federal funding may be provided and bring-
lated financial management and matters of consumer protection, and
ing such funding within the limitations of the appropriations process.
services to assist aged, blind, or disabled adults to remain in or return
Under current law, each State determines what kinds and amounts of
to their own homes or other residential situations and to avoid institu-
social services it will provide to welfare recipients (and other low-
tionalization or to assist in making appropriate living arrangements
income persons who are classified as potential recipients). Whatever
at the lowest cost in light of the care needed;
services the State provides are matched on a 75 percent Federal, 25
(c) nutrition services, including the provision, in appropriate case,
percent non-Federal basis.
of adequate meals, and education in matters of nutrition and the prep-
Because this matching is completely open-ended and not subject
aration of foods;
to the ordinary limitations of the appropriation process, Federal costs
(d) services to assist individuals to deal with problems of locating
for social services have soared in the past few years from $354 million
suitable housing arrangements and other problems of inadequate hous-
in 1969 to $692 million in 1971, and to an estimated $1,363 million in
ing, and to educate them in practices of home maintenance and man-
1972.
agement;
The Committee amendment would specifically list the services for
(e) emergency services made available in connection with a crisis or
which Federal matching may be provided. For families, the services
urgent need of an individual;
would be:
(f) services to assist individuals to engage in training or securing or
(a) services to unmarried women who are pregnant or already
retaining employment; and
have children, for the purpose of arranging for prenatal and post-
(g) informational and referral services for individuals in need of
services from other agencies (such as the health, education, or voca-
natal care of the mother and child, developing appropriate living
tional rehabilitation agency, or private social agencies) and follow-up
arrangements for the child, and assisting the mother to complete
school through the secondary level or secure training SO that she
activities to assure that individuals referred to and eligible for avail-
may become self-sufficient:
able services from such other agencies received such services.
Under the Committee amendment, Federal matching for social
(b) protective services for children who are (or are in danger
services beginning January 1973 would be the same as Federal match-
of being abused. neglected, or exploited;
(c) homemaker services when the usual homemaker becomes
ing for Medicaid (which ranges from 50 percent to 83 percent, depend-
ill or incapacitated or is otherwise unable to care for the children
ing on State per capita income), with two differences: (1) Federal
matching would not exceed 75 percent, and (2) for the 12 months of
79-184 O - 72 - 7
89
88
Use of Federal Funds to Undermine Federal Programs
calendar year 1973, the Federal matching percent would not be below
65 percent even if the Medicaid matching rate is below 65 percent.
Another amendment approved by the Committee would prohibit
Child care and family planning services would continue to be matched
the use of Federal funds to pay, directly or indirectly, the compensa-
on an open-ended basis, and child welfare services would continue to
tion or expenses of any individual who in any way participates in
be a separate Federal grant program; with these exceptions, Federal
action relating to litigation which is designed to nullify Congressional
funds for all other social services in both the adult and AFDC cate-
statutes or policy under the Social Security Act. This prohibition may,
gories (excluding child care, family planning, and child welfare
however, be waived by the Attorney General 60 days after he has
services) would be limited to not more than $1 billion annually be-
provided the Committee on Finance and the Committee on Ways and
ginning in fiscal year 1973. The Federal funds appropriated for social
Means with notice of his intent to waive the prohibition. This will allow
services would be allocated among the States on the basis of the total
the Committees time to take legislative action if appropriate. This
State population. Any funds which are allotted but not used by one
amendment is similar to one approved by the Committee in 1970 as
State may be reallotted among the other States.
part of the Social Security-Welfare bill of that year-a bill which was
not finally enacted.
Family Planning Services
Appointment and Confirmation of Administrator of Social and
The Committee approved payment by the Federal Government of
Rehabilitation Services
100 percent of the cost of Family Planning Services as compared with
75 percent under present law.
The Social and Rehabilitation Service was established in 1967 by a
reorganization within the Department of Health, Education, and Wel-
Eliminate Statutory Requirement of Individual Program of
fare. Its responsibilities at present are broad, encompassing the fed-
Services for Each Family
erally aided welfare programs, medicaid, and programs in the areas
of vocational rehabilitation, aging, and juvenile delinquency. The sums
Present law requires States to develop an individual program of
involved are huge; the bulk of the $14-billion 1972 budget for the
services for each family receiving AFDC. This has proven to be an
agency is spent on the public assistance and medicaid programs. The
unnecessary administrative burden. The Committee agreed to delete
Committee agreed to upgrade the stature of the Administrator of the
this statutory requirement.
Social and Rehabilitation Service by having the President select him
and by having him confirmed by the Senate as his colleagues with
Supportive Services for Participants in the WIN Program
equivalent positions in the Department (the Commissioner of Social
Security, the Commissioner of Education, and the Surgeon General)
Until the Government Employment Program begins on January 1,
now enjoy.
1974, the Committee bill would continue 90 percent Federal matching
for supportive services other than family planning services to enable
AFDC recipients to participate in the Work Incentive Program.
4. OTHER PROVISIONS
Evaluation of Programs Under the Social Security Act
The Committee bill assigns to the General Accounting Office the
basic role of evaluating programs under the Social Security Act. In
addition, the amendment would not permit any Federal agency to
enter into a contract to evaluate any program under the Social Se-
curity Act (if an expenditure of more than $25,000 is involved) unless
the Comptroller General approves the study in advance. His approval
would be conditioned on his determination that:
(a) The conduct of such study or evaluation of such program
is justified;
(b) The department or agency cannot effectively conduct the
study or evaluation through utilization of regular full-time em-
ployees; and
(c) The study or evaluation will not be duplicative of any study
or evaluation which is being conducted, or will be conducted with-
in the next twelve months, by the General Accounting Office.
CHILD CARE
At the present time, the lack of availability of adequate child care
today represents perhaps the greatest single obstacle in the efforts of
poor families, especially those headed by a mother, to work their way
out of poverty. It also represents a hindrance to those mothers in
families above the poverty line who wish to seek employment for their
own self-fulfillment or for the improvement of their family's economic
status.
The Committee on Finance has long been involved in issues relating
to child care. The committee has been dealing with child care as a seg-
ment of the child welfare program under the Social Security Act since
the original enactment of the legislation in 1935. Over the years, au-
thorizations for child welfare funds were increased in legislation acted
on by the committee.
As part of its continuing concern for the welfare of families with
children who are in need, and in order to provide for the expansion
of child care required to enable the new employment program to meet
its goal of making present AFDC recipients independent, the Commit-
tee is proposing a new approach to the problem of expanding the
supply of child care services and improving the quality of these serv-
ices. The Committee bill thus establishes within the new Work Admini-
stration a Bureau of Child Care with the eventual goal of making child
care services available throughout the Nation to the extent they are
needed, but are not supplied under other programs.
Bureau of Child Care
The Bureau of Child Care would have as its first priority mak-
ing available child care services to participants in the employment
program. Next in order of priority would be the provisions of child
care to low-income working mothers and to other mothers desiring
child care services.
Where child development services are available under any other
legislation approved by the Congress, the Bureau would attempt to
place children in those services.
To the maximum extent possible, the Bureau would attempt to uti-
lize mothers participating in the employment program in providing
child care services.
Initially, the Bureau would train persons to provide family day care
and would contract with existing public, private non-profit, and pro-
prietary facilities to serve as child care providers. To expand services,
the Bureau would also give technical assistance and advice to organiza-
tions interested in establishing facilities under contract with the Bu-
reau. In addition, the Bureau could provide child care services in its
own facilities.
Federal child care standards are specified in the amendment to as-
sure that adequate space, staff and health requirements are met. In
(91)
92
addition, facilities used by the Bureau will have to meet the Life
Safety Code of the National Fire Protection Association. Any facility
in which child care is provided by the Bureau, either directly or by
contract, will have to meet the Federal standards, but will not be
subject to any licensing or other requirements imposed by States or
localities. This provision will make it possible for many groups and
AID TO FAMILIES WITH DEPENDENT CHILDREN
organizations to establish child care facilities under contract with the
Bureau where they cannot now do SO because of overly rigid State
Persons Eligible for Aid to Families With Dependent Children
and local requirements.
Subsidization of child care for low-income working mothers will
The Committee bill, when the Guaranteed Employment program
depend on the availability of appropriations. Mothers able to pay will
goes into effect on January 1, 1974, will require that States:
be charged the full cost of services.
1. Make eligible for AFDC only the following classes of
In addition to appropriations to subsidize child care costs for low-
families:
income working mothers, fees would be charged for services provided
a. Family headed by mother with child under age 6;
or arranged for by the Bureau. They would be set at a level which
b. Family headed by incapacitated father where mother is
would cover the unsubsidized costs of arranging for child care. The
not in the home or is caring for father;
fees would go into the revolving fund to provide capital for further
c. Family headed by mother who is ill, incapacitated, or of
expansion of services.
advanced age;
The child care amendment also includes provision to authorize the
d. Families headed by mother too remote from an employ-
Bureau to issue bonds for construction if, after the first two years of
ment program to be able to participate;
operation, the Bureau feels that additional funds for capital con-
e. Family headed by mother attending school fulltime
struction of child care facilities are needed. Up to $50 million in bonds
even if there is no child under 6; and
could be issued each year, with an overall limit of $250 million on
f. Child living with neither parent, together with his care-
bonds outstanding.
taker relative providing his mother is not also receiving
Authorization
welfare; and
2. Do not reduce payment levels to AFDC recipients below
The Committee agreed to authorize $800 million in fiscal year 1973
$1,600 for a two-member family, $2,000 for a three-member family
(and such sums as the Congress might appropriate thereafter) to ar-
and $2,400 for a family of four or more; or, if payment levels are
range for and to pay for part or all of the cost of child care for the
already below these amounts, they could not be reduced at all.
children of participants in the employment program and to other low
This requirement is not intended to act as a limitation on the right
income working mothers. (The House bill would provide $750 million
of a State to make other persons eligible at its own expense for bene-
for substantially the same purposes.)
fits under its AFDC program. Indeed, in many States with benefit
levels higher than those provided under the guaranteed employment
Grants to States for Establishment of Model Day Care
program, AFDC-type families participating in the work program
would receive supplemental payments under the State program suffi-
The Committee expects that much of the child care offered by the
cient to bring their incomes up to the payment standards generally ap-
Bureau of Child Care will be similar to that provided by mothers in
plicable in the State. Specifically, the families not required to be cov-
their own home, since experience has shown that most working mothers
ered by the State program (although it can be anticipated that many
prefer family day care because of its convenience and its informality.
States will continue to supplement them) are families headed by an
However, the Committee has also provided a 3-year program of grants
able-bodied male and families headed by an able-bodied female if all
to States to permit them to develop model child care. Appropriations
her children have reached age six.
would be authorized to permit each State in fiscal years 1973, 1974 and
1975 to receive a grant of up to $400,000 per year to pay all or part of
Definition of "Incapacity" Under Aid to Families with Dependent
the cost of model care, whether through the establishment of one child
Children
care center or a child care system. Special emphasis would be placed
on utilizing the model child care for training persons in the field of
Under present law the Federal Government will match payments
child care.
to families where the father is incapacitated. The definition of "in-
capacitated" is left up to the States. Under the Committee bill the
term "incapacitated" would be defined as "inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment." This is the same definition as is used
in determining disability under the social security disability insurance
program, except that the definition suggested would also apply to
(93)
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95
short term, temporary disability while social security benefits are
6. The individual arranges for the care of the child when his mother
available only to persons whose disability will last at least 12 months.
is ill or absent from the home;
7. The individual assumes responsibility for the child when there
Ineligibility of Unborn Children
occurs in the child's life a crisis such as illness or detention by public
authorities;
Regulations of the Department of Health, Education, and Welfare
permit Aid to Families with Dependent Children payments for a
8. The individual is listed as the parent or guardian of the child
child who has not yet been born. The Committee bill would make un-
in school records which are designed to indicate the identity of the
parents or guardians of children;
born children ineligible for AFDC.
9. The individual makes frequent visits to the place of residence of
the child; and
Children Living in a Relative's Home
10. The individual gives or uses as his address the address of such
Under the present law an AFDC mother with more than one
place of residence in dealing with his employer, his creditors, postal
child can enable a relative to become eligible for welfare by lend-
authorities, other public authorities, or others with whom he may have
ing the relative one of her children. The Committee bill would per-
dealings, relationships, or obligations.
mit a State to deny welfare aid to the relative in such situation.
The relationship between an adult individual and a child would be
determined to exist in any case only after an evaluation of the factors
Cooperation of Mother in Identifying the Father and Seeking
as well as any evidence which may refute any inference supported by
Support Payments
evidence related to such factors. Under the Committee bill any natural
parent or step-parent would meet these criteria.
The Committee bill would require, as a condition of eligibility, that
Under the Committee bill, the use of this provision would be
a mother cooperate in efforts to establish the paternity of a child born
optional with the States. If a State affirmatively exercised its op-
out of wedlock, cooperate in seeking support payments from the
tion, however, it would have to comply with this method in determin-
father, and assign the right to collect support payments on her behalf
ing the child-father relationship.
to the Government.
The provisions related to child support and establishing paternity
Income Disregard
are described in greater detail under the heading "Child Support."
Under present law States are required, in determining need for Aid
Families Where There is a Continuing Parent-Child Relationship
to Families with Dependent Children, to disregard the first $30 earned
monthly by an adult plus one-third of additional earnings. Costs re-
The Committee has approved a provision which would clarify con-
lated to work (such as transportation costs) are also deducted from
gressional intent with respect to the meaning of the term "parent"
earnings in calculating the amount of the welfare benefit.
under the AFDC program. In most cases, AFDC families are eligible
Two problems have been raised concerning the earned income dis-
on the basis that the children in the family have been deprived of
regard under present law. First, Federal law neither defines nor limits
parental support by reason of the continued absence from the home of
what may be considered a work-related expense, and this has led to
a parent. In 1968, the Supreme Court ruled that a State could not
great variation among States and to some cases of abuse. Secondly,
consider a child ineligible for AFDC when there is a substitute father
some States have complained that the lack of an upper limit on the
with no legal obligation to support the child. This court decision was
earned income disregard has the effect of keeping people on welfare
based on an interpretation that Congress did not intend that such a
even after they are working full time at wages well above the poverty
person would come within the meaning of the term "parent." The
line.
Committee bill would authorize States to determine whether a man
Until the Committee's new employment program becomes effective
is a "parent" on the basis of a total evaluation of his relationship with
in January, 1974, the earnings disregard formula would be modified by
the child and not solely on the question of his obligation to support.
allowing only day care as a separate deductible work expense (with
The determination would have to consider the following indications
reasonable limitations on the amount allowable for day care expenses).
of the existence of a parental relationship:
States would be required to disregard the first $60 earned monthly by
1. The individual and the child are frequently seen together in
an individual working full time ($30 for an individual working part
public;
time) plus one-third of the next $300 earned plus one-fifth of amounts
2. The individual is the parent of a half-brother or half-sister of
earned above this. This differential between full time and part time
the child;
employment is designed to encourage those who are able to move into
3. The individual exercises parental control over the child;
full time jobs.
4. The individual makes substantial gifts to the child or to mem-
Once the employment program under the Committee bill becomes
bers of his family;
effective, however, these earned income exemptions under the residual
5. The individual claims the child as a dependent for income tax
welfare program would be replaced by a flat monthly exemption of
purposes;
$20, applicable to all kinds of income (with a separate $20 disregard
96
97
applicable to child support payments). It would be expected that
that Aid to Families with Dependent Children shall be furnished
mothers interested in working would receive their work incentives
with reasonable promptness to all eligible individuals.
through participating in the employment program rather than by re-
The Committee bill would reiterate this provision, but would make
maining on welfare.
clear the requirement that aid be furnished "with reasonable prompt-
In order to prevent the State welfare program from undermining the
ness" could not be so construed as to interfere with other requirements
objectives of the Federal employment program, the States would have
of the law such as seeking a mother's cooperation in establishing
to assume for purposes of supplemental payments provided under
paternity and seeking support payments, or verifying information on
AFDC or any welfare program that individuals, who are eligible to
income, resources and other eligibility factors.
participate in the employment program (but no longer eligible to re-
ceive their basic income from AFDC), are actually participating full
Community Work and Training Programs
time in the employment program and thus receiving $200 per month.
volunteer. A similar rule would apply to mothers with children under age 6 who
Prior to the enactment of the Work Incentive Program as part of
the 1967 Social Security Amendments, the Federal statute permitted
Futhermore, the State would be required to disregard any earnings
Federal matching of AFDC payments made to recipients participating
between $200 a month and $375 a month (the amount an employee
in a community work training program. Since the enactment of the
would earn working 40 hours a week at $2.00 per hour) to ensure that
Work Incentive Program, however, the Department of Health, Edu-
the incentive system of the workfare program is preserved. These
cation, and Welfare has taken the position that the Federal Govern-
earnings disregards would be a flat requirement; States would not be
ment will not share in AFDC payments to recipients who are required
required to take into account work expenses. The effect of this require-
by State law to participate in an employment program-unless the
ment would be to give a participant in the work program a strong in-
program is part of the Work Incentive Program. The Committee bill
centive to work full time (since earnings of $200 will be attributed to
provides that during the period between enactment of the House bill
him in any case), and it would not interfere with the strong incentives
and the effective date of the new Federal employment program, the
he would have to seek regular employment rather than working for
community work training provisions in the law prior to the 1967
the Government at $1.50 per hour.
amendments would be applied so that States wishing to have such
The table below shows how wages under the employment program
programs in the interim could do so.
would be treated for State welfare purposes:
Protective Payments for Children
The Committee bill requires States under the AFDC program
Hours worked per
None
20
32
40
Hourly wage
to take certain actions to assure that welfare payments are being
$1.50
$1.50
$2.00
Approximate actual monthly income
0
$130
$200
$375
used in the best interests of children. Existing law provides that when
Income deemed available for State welfare
the welfare agency has reason to believe that the AFDC payments are
purposes
$200
$200
$200
$200
not used in the best interests of the child, it "may" provide counseling
and guidance services SO that the mother will use the payments in the
best interests of the child. This failing, the agency "may" resort to
protective payments to a third party who will use the funds for the
Assistance Levels
best interest of the child. The Committee bill makes these procedures
mandatory in such cases.
Under existing law, each State decides the level of assistance it
will provide for AFDC families. The Committee bill generally re-
Emergency Assistance-Migrant Workers
affirms the right of the State to make this determination. In moving
to a block grant approach which involves substantial fiscal relief,
Under existing law, emergency assistance may, at the option of the
however, the Committee feels it is appropriate to require that States
States, be provided to needy families in crisis situations, and it may
could not reduce payments levels to AFDC recipients below $1,600
be provided either statewide or in part of the State. Emergency assist-
for a two-member family, $2,000 for a three-member family, and
ance programs have been adopted in about half of the States, and they
$2,400 for a family of four or more; or, if payment levels are already
receive 50 percent Federal matching. Under the law, assistance may
below these amounts, they could not be reduced at all.
be furnished for a period not in excess of 30 days in any 12-month
period in cases in which a child is without available resources and the
Right to Apply For Aid to Receive it With Reasonable Promptness
payments, care, or services involved are necessary to avoid destitution
of the child or to provide living arrangements for the child. The Com-
The present law requires that
mittee bill (1) requires that all States have a program of emergency
All individuals wishing to make application for Aid to Families
assistance to migrant families with children; (2) requires that the
with Dependent Children shall have opportunity to do so, and
program be statewide in application; and (3) provides 75 percent
Federal matching for emergency assistance to migrant families.
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99
Making Establishment of Advisory Committee Optional
TABLE 10.-RECIPIENTS OF AID TO FAMILIES WITH DEPEND-
Regulations issued by the Department of Health, Education, and
ENT CHILDREN, DECEMBER OF SELECTED YEARS
Welfare in 1969 require States to establish a welfare advisory com-
mittee for AFDC and child welfare programs "at the State level and
Number of
Percent increase
at local levels where the programs are locally administered," with the
Year
recipients
since 1960
cost of the advisory committees and their staffs borne by the States
(with Federal matching) as part of the cost of administering the wel-
fare programs. The Committee bill makes the establishment of such
1940
1,222,000
committees optional with the States.
1945
943,000
1950
2,233,000
Administrative Costs
1955
2,192,000
The Committee agreed that the Federal Government would continue
1960
3,073,000
to pay 50 percent of the cost of administration of the AFDC program
1961
3,566,000
+16
including Services. administrative costs related to the provision of Social
1962
3,789,000
+24
1963
3,990,000
+28
Federal Financial Participation in Welfare Payments
1964
4,219,000
+38
The Committee bill would make a major change in the basic method
1965
4,396,000
+44
of Federal funding for AFDC by providing a block Federal grant
1966
4,666,000
+52
with substantially more Federal funds than are now provided under
1967
5,309,000
+73
"Fiscal Relief for States."
present law. This approach is described in detail under the heading
1968
6,086,000
+98
1969
7,313,000
+138
1970
9,659,000
+215
1971
10,651,000
+247
1972 1
12,573,000
+311
1973: 1
Current law
13,800,000
+349
Committee bill
2 13,800,000
+349
1974:
1
Current law
14,900,000
+385
Committee bill: persons eligi-
ble to receive basic income
from AFDC
3 8,940,000
+191
1 Estimated.
2 Some reduction of caseload may be anticipated because of committee amend-
ments related to eligibility rules and administration; the extent of the reduction
will largely depend upon State action.
3 Reflects estimate that about 40 percent of current caseload will no longer be
eligible to get basic income from AFDC.
Source: Department of Health, Education, and Welfare.
100
101
Statistical Material
TABLE 11.-AID TO FAMILIES WITH DEPENDENT CHILDREN:
INCOME ELIGIBILITY LEVEL FOR PAYMENTS AND LARGEST
TABLE 11.-AID TO FAMILIES WITH DEPENDENT CHILDREN:
AMOUNT PAID TO FAMILY OF 4, BY STATE, DECEMBER
INCOME ELIGIBILITY LEVEL FOR PAYMENTS AND LARGEST
1971-Continued
AMOUNT PAID TO FAMILY OF 4, BY STATE, DECEMBER 1971
Income
Largest
Income
Largest
eligibility
amount
eligibility
amount
level for
paid for
level for
paid for
payments
basic needs
payments
basic needs
Ohio
$258
$200
Alabama
$81
$81
Oklahoma
189
189
Alaska
400
300
Oregon
224
224
Arizona
266
173
Pennsylvania
301
301
Arkansas
210
106
Rhode Island
255
255
California
314
261
South Carolina
198
103
Colorado
235
235
South Dakota
270
270
Connecticut
335
335
Tennessee
217
129
Delaware
287
158
Texas
148
148
District of Columbia
245
245
Utah
224
224
Florida
223
134
Vermont
319
319
Georgia
158
149
Virginia
261
261
Hawaii
268
268
Washington
282
270
Idaho
241
241
West Virginia
138
138
Illinois
273
273
Wisconsin
217
217
Indiana
355
175
Wyoming
260
227
Iowa
243
243
Kansas
Source: Department of Health, Education, and Welfare.
290
226
Kentucky
193
193
Louisiana
104
104
Maine
349
168
Maryland
311
200
Massachusetts
283
283
Michigan
293
293
Minnesota
309
309
Mississippi
277
60
Missouri
338
130
Montana
225
206
Nebraska
275
226
Nevada
176
176
New Hampshire
314
314
New Jersey
324
324
New Mexico
203
179
New York
313
313
North Carolina
172
172
North Dakota
300
300
CHILD SUPPORT
The Committee has long been aware of the impact of deserting
fathers on the rapid and uncontrolled growth of families on AFDC.
As early as 1950, the Congress provided for the prompt notice to law
enforcement officials of the furnishing of AFDC with respect to a
child that had been deserted or abandoned. In 1967, the Committee in-
stituted what it believed would be an effective program of enforcement
of child support and determination of paternity. Due to a total lack
of leadership by the Department of HEW, most States have not im-
plemented these provisions in a meaningful way. The Committee be-
lieves, therefore, that a new legislative thrust is required in this area
which will create a mechanism to obtain compliance with the law.
The major elements of this proposal have been adapted from those
States who have been the most successful in establishing effective
programs of child support and determination of paternity. Some of
the modes of assistance which are created by the Committee plan will
be available to deserted families generally, regardless of welfare
status. It is hoped that making these provisions available to all de-
serted families will prevent further expansion of the welfare rolls.
Present law requires that the State welfare agency establish a sep-
arate, identified unit whose purpose is to undertake to determine the
paternity of each child receiving welfare who was born out of wed-
lock, and to secure support for him; if the child has been deserted
or abandoned by his parent, the welfare agency is required to secure
support for him from the deserting parent, utilizing any reciprocal
arrangements adopted with other States to obtain or enforce
court orders for support. The State welfare agency is further required
to enter into cooperative arrangements with the courts and with law
enforcement officials to carry out this program. Access is authorized
to both Social Security and (if there is a court order) to Internal
Revenue Service records in locating deserting parents. The effective-
ness of the provisions of present law have varied widely among the
States.
Assignment of Right to Collection of Support Payments
In some instances, mothers may have personal reasons for fearing to
cooperate in identifying and securing support payments from the
father of the child. To protect the mother, and also to allow for a more
systematic approach for the collection of support payments, the Com-
mittee approved an amendment requiring a mother, as a condition of
eligibility for welfare, to assign her right to support payments to the
Government and to require her cooperation in indentifying and locat-
ing the father and in obtaining any money or property due the family
or Government. The assignment of family support rights would be
to the Federal Government, and the Department of Justice would
(103)
79-184 o 72 8
104
105
be authorized to delegate these rights to those States which have
effective programs of determining paternity and obtaining child sup-
If, however, the actual collection and determination of paternity
port. The Attorney General would also be authorized to delegate such
mechanism is carried out by local authority, the State would pay 25
collection rights to counties that have effective programs, but only if
percent of the governmental share of the support collections to such
the State as a whole did not.
authority.
If the Attorney General found that a State did not have an effec-
In the situation where the location of runaway parents and the
tive program, the collection rights would remain with the Federal
enforcement of support orders is carried out by a State other than
Government and would be enforced by Federal attorneys in either
that in which the deserted family resides, the State or local authority
State or Federal Courts. OEO lawyers would be made available to as-
which actually carries out the location and enforcement functions
sist Justice Department-attorneys in carrying out their responsibility.
will be paid the 25 percent bonus.
In this situation the Federal Government would retain the full amount
The Committee bill provides, that the Federal Government would
not payable to the family.
have to be reimbursed for any Federal costs incurred by the States
The House bill provided that the Federal share for State expenses
and localities in their collection and determination of paternity
for establishing paternity and securing support should be increased
efforts.
from 50 to 75 percent. The Committee adopted this provision, but
Voluntary Approach Stressed
with a proviso that there be no Federal participation in such State
programs which do not meet the Attorney General's standards of
Once located, the parent would be requested to enter voluntarily into
effectiveness.
an arrangement for making regular support payments. Primary re-
liance would be placed on such voluntary agreements as the most effec-
Locating a Deserting Parent; Access to Information
tive and efficient means of collecting support, avoiding the need for
court action and formal collection procedures. The record of the State
Under the Committee bill, the State or local Government would pro-
of Washington in collecting support payments voluntarily was high-
ceed to locate the absent parent, using any information available to it,
lighted in a recent study by the General Accounting Office as a key
such as the records of the Internal Revenue Service and the Social Se-
element in their highly successful support collection program; hope-
curity Administration. The Committee bill extends access to these Fed-
fully, the experience of Washington State can serve as a model for
eral records to any parent seeking support from a deserting spouse
all States.
regardless of whether the family was on welfare. Non-welfare families
desiring to use this means of finding the absent parent would make the
Civil Action To Obtain Support Payments-Residual Monetary
necessary application at local welfare offices. The Federal Govern-
Obligation
ment would have to be reimbursed for the cost of these services by the
welfare agency or the individual if a welfare case was not involved.
In the event that the voluntary approach is not successful, the Com-
As a further aid in location efforts, welfare information now with-
mittee's bill provides for strong legal remedies. The States, as agents
held from public officials, under regulations concerning confidential-
of the Federal Government, in enforcing the support rights assigned
ity, would be made available by the Committee bill; this information
to them by welfare applicants would have available to them all the
would also be available for other official purposes.
enforcement and collection mechanisms available to the Federal Gov-
ernment, including the use of the Internal Revenue Service to garnish
Incentives for States and Localities to Collect Support Payments
the wages of the absent parent. As stated previously, if these mecha-
nisms are utilized the Federal Government would have to be reimbursed
Under present law, when a State or locality collects support pay-
on a cost basis. Support monies received would be distributed accord-
ments owed by a father, the Federal Government is reimbursed for its
ing to the formula described under "Incentives for States."
share of the cost of welfare payments to the family of the father; the
The welfare payment would serve as the basis of a continuing mone-
Federal share currently ranges between 50 percent and 83 percent, de-
tary obligation of the deserting parent to the United States. The
pending on State per capita income. In a State with 50 percent Federal
obligation would be the lesser of the welfare assistance paid to the
matching, for example, the Federal Government is reimbursed $50
family, or 50 percent of the deserting spouse's income but not less than
for each $100 collected, while in a State with 75 percent Federal
$50 a month.
matching the Federal Government is reimbursed $75 for each $100
A waiver of all or part of the Federal obligation might be allowed
collected.
upon a showing of good cause.
Consistent with the Committee's block-grant approach for AFDC,
and as an incentive for the development of effective State and local
Criminal Action
programs, the Committee bill provides that the entire amount of wel-
fare payments from support collections would remain with the State.
The Committee bill has provided for Federal criminal penalties for
an absent parent who has not fulfilled his obligation to support his
family and the family receives welfare payments in which the Federal
106
107
Government participates. His obligation to support would be deter-
made in Federal law that blood tests be made mandatory. The services
mined by applying State civil and/or criminal law. The sanctions for
of the laboratories would be available with respect to any paternity
failure to support could include a penalty of 50 percent of the amount
proceeding, not just a proceeding brought by, or for, a welfare
owed or a fine of up to $1,000 or imprisonment for up to 1 year or a
recipient.
combination of these.
Leadership Role of Justice Department
Determining Paternity
To coordinate and lead efforts to obtain child support payments,
The Committee believes that an AFDC child has a right to have its
the Committee action would require each U.S. Attorney to designate
an assistant who would be responsible for child support. This Assistant
paternity ascertained in a fair and efficient manner. Although this may
U.S. Attorney would assist and maintain liaison with the States in
in some cases conflict with the mother's short-term interests, the Com-
their support collection efforts and would undertake Federal action
mittee feels that the child's right to support, inheritance, and his right
as necessary. The Attorney General would be required to submit a
to know who his father is deserves the higher social priority. In 1967,
quarterly report to Congress concerning child support activities.
Congress enacted legislation requiring the States to establish programs
The Committee bill requires that records be. maintained of the
to establish the paternity of AFDC children born out of wedlock so
amounts of support collected and of the administrative expenditures
that support could be sought. The effectiveness of this provision was
incurred in the collection effort. Amounts collected but not otherwise
greatly curtailed both by the failure of the Department of Health,
distributed would be deposited in a separate account which would
Education, and Welfare to exercise any leadership role and also by
finance the expenses of the Federal collection efforts. An authoriza-
Court interpretations of Federal law in decisions which prevented
tion for an appropriation would be included for the contingency of
State welfare agencies from requiring that a mother cooperate in
a deficit in this fund in order to reimburse the Departments of Justice
identifying the father of a child born out of wedlock.
and Treasury for their expenses in this area.
1. Cooperation of Mother
Attachment of Federal Wages
As noted earlier, the Committee has made cooperation in identifying
State officials have recommended that legislation be enacted per-
the absent parent a condition for AFDC eligibility. As a further in-
mitting assignment and attachment of Federal wages and other obli-
centive for cooperation, the first $20 a month in support collections
gations (such as income tax refunds) where a support order or judg-
would be paid to the family and disregarded for purposes of determin-
ment exists. At the present time, the pay of Federal employees,
ing the amounts of welfare payments to the family. Thus, the family
including military personnel is not subject to attachment for purposes
would always be better off if support payments were made by the
of enforcing court orders, including orders for child support or
absent parent.
alimony. The basis for this exemption is apparently a finding by the
2. Blood Grouping Laboratories
courts that the attachment procedure involves the immunity of the
United States from suits to which it has not consented.
The Committee has also taken additional steps to provide for a more
The Committee bill would specifically provide that the wages of
effective system of determining paternity.
First, a father not married to the mother of his child would be re-
Federal employees be subject to garnishment in support and alimony
cases. This Committee amendment would be applicable whether or not
quired to sign an affidavit of paternity if he agreed to make support
payments voluntarily in order to avoid court action. Most States do
the family bringing the garnishment proceeding is on the welfare
rolls.
not permit initiation of paternity actions more than two or three
years after the child's birth; the affidavit would serve as legal evi-
Child Support Under Workfare
dence of paternity in the event that court action for support should
A deserted parent participating in the workfare program could take
later become necessary.
advantage of the support collection and, where applicable, the pa-
Second, there is evidence that blood typing techniques have devel-
ternity determination mechanism provided in the Committee bill. The
oped to such an extent that they may be used to establish evidence of
cost of collection, however, would be deducted from the amounts re-
paternity at a level of probability acceptable for legal determinations.
covered and the balance would be turned over to the deserted family.
Moreover, if blood grouping is conducted expertly, the possibility
of error can all but be eliminated. Therefore, the Committee adopted
Effective Dates
a provision to authorize and direct the Department of Health, Educa-
tion, and Welfare to establish or arrange for regional laboratories
Unless otherwise indicated in the bill, new features added by the
that can do blood typing for purposes of establishing paternity,
collection of support and determination of paternity provision would
SO that the State agencies and the courts would have this expert evi-
be effective January 1, 1973.
dence available to them in paternity suits. No requirement would be
108
109
Statistical Material
TABLE 14.-AFDC FAMILIES BY STATUS OF FATHER, 1961,
1967, 1969, AND 1971
TABLE 12.-AFDC FAMILIES BY PARENTAGE OF CHILDREN, 1971
Percent of families in—
Parentage
Number
Percent
Status
1961
1967
1969
1971
Total
2,523,900
100.0
Total
100.0
100.0
100.0
100.0
Same mother and same father
1,800,200
71.3
Same mother, but 2 or more different fa-
Dead
7.7
5.5
5.5
4.3
thers
638,400
25.3
Incapacitated
18.1
12.0
11.5
9.8
Same father, but 2 or more different
Unemployed
5.2
5.1
4.8
6.1
mothers
5,200
2
Absent from the home:
2 or more different mothers and 2 or more
Divorced
}
-
12.6
13.7
13.7
14.2
different fathers
53,400
2.1
Legally separated
2.7
2.8
2.9
Unknown
26,700
1.1
Separated without court
decree
8.2
9.7
10.9
12.9
Deserted
18.6
18.1
15.9
15.2
Source: Department of Health, Education, and Welfare.
Not married to mother
21.3
26.8
27.9
27.7
In prison
4.2
3.0
2.6
2.1
TABLE 13.-AFDC FAMILIES WITH SPECIFIED NUMBER OF
Absent for another reason
.6
1.4
1.6
1.2
ILLEGITIMATE RECIPIENT CHILDREN, 1971
Subtotal
66.7
74.2
75.4
76.2
Number of children
Number
Percent
Other status:
Stepfather case
1.9
1.9
2.6
Total
2,523,900
100.0
Children not deprived of sup-
}
2.2
port or care of father, but
{
None
1,426,000
56.5
of mother
1.3
.9
.9
1
559,600
22.2
Not reported
(1)
.1
2
262,400
10.4
3
129,600
5.1
4
71,700
2.8
1 Less than 0.05.
5
37,300
1.5
Source: Department of Health, Education, and Welfare.
6 or more
37,300
1.5
Source: Department of Health, Education, and Welfare.
110
TABLE 15.-AFDC FAMILIES BY WHEREABOUTS OF FATHER,
1971
Whereabouts
Number
Percent
FISCAL RELIEF FOR STATES
Total
2,523,900
100.0
The Committee is well aware that the growth of the welfare rolls
In the home
In an institution:
472,900
18.7
since 1967 has been one of the significant factors in bringing about the
fiscal crisis currently facing state and local governments. Much of this
Mental institution
Other medical institution
8,000
.3
growth has been due to increased Federal intervention in the control
11,200
.4
of the welfare programs by the State. The Committee feels that having
Prison or reformatory
Not in the home or an institution; he is
75,300
3.0
the Federal Government take over the control of the welfare program
is not now a step that should be taken. It believes that the correct ap-
residing in:
proach is in the opposite direction. Accordingly, the Committee care-
Same county
469,200
Different county; same State
18.6
fully designed many parts of this bill SO that the State's control of
156,300
Different State and in the United
6.2
welfare programs would be strengthened rather than weakened. The
Committee recognizes, however, that this represents a long-range solu-
States
230,900
9.1
tion and that many States feel an acute need for immediate relief from
A foreign country
Whereabouts unknown
27,100
1.1
the pressures of swollen welfare budgets. Under the Committee bill
Inapplicable (father deceased)
959,600
38.2
therefore, the fiscal burden on the States will be substantially de-
113,400
4.3
creased through increases in the Federal funding of assistance pay-
ments as well as through indirect fiscal relief resulting from improve-
Source: Department of Health, Education, and Welfare.
ments which the Committee bill makes in the general structure of the
welfare programs.
Over the next 21/2 years, the bill provides $5 billion in fiscal relief
to the States. Of this, $2.6 billion represents fiscal relief in 1974, the
first year the new employment programs are fully effective. The table
below shows the detail for each of the years 1972-74.
[Dollars in billions]
1972
1973
1974
Tota
Aid to the aged, blind, and
disabled
$0.2
$1.0
$1.2
$2.4
Aid to families with dependent
children
.4
.8
1.4
2.6
Total
.6
1.8
2.6
5.0
The estimated fiscal relief provided for each State in calendar year
1974, with respect to cash public assistance payments is shown in the
table below.
(111)
TABLE 16
STATE SAVINGS IN WELFARE PAYMENT COSTS, 1974 1
[In millions of dollars]
Committee proposal
Estimated
Family welfare
savings
State
Adult categories
benefits
Total
under H.R. 1
(1)
(2)
(3)
(4)
Total
1,230.4
1,378.9
2,609.3
1,859.2
Alabama
27.1
12.9
40.0
31.1
Alaska
2.6
2.9
5.5
3.5
112
Arizona
10.6
32.0
42.6
40.5
Arkansas
14.0
7.5
21.5
21.5
California
298.9
163.3
462.2
180.9
Colorado
15.9
15.3
31.2
16.5
Connecticut
10.4
11.5
21.9
16.7
Delaware
4.5
3.7
8.2
4.7
District of Columbia
10.4
45.4
55.8
50.8
Florida
32.6
90.3
122.9
135.3
Georgia
24.9
36.5
61.4
58.9
Hawaii
3.6
8.7
12.3
9.4
Idaho
1.7
1.8
3.5
2.0
Illinois
45.4
100.6
146.0
167.0
Indiana
9.2
29.2
38.4
28.2
19.4
10.1
29.5
22.7
Iowa
Kansas
7.0
13.2
20.2
12.1
Kentucky
15.4
10.8
26.2
15.3
Louisiana
32.8
39.5
72.3
68.8
Maine
4.4
3.2
7.6
2.5
Maryland
17.1
52.8
69.9
72.3
51.5
39.9
91.4
64.8
Massachusetts
Michigan
45.3
94.9
140.2
97.4
Minnesota
13.1
14.5
27.6
17.5
Mississippi
14.6
5.5
20.1
20.8
Missouri
34.3
15.0
49.3
10.8
1.8
1.7
3.5
1.7
Montana
2.4
4.4
6.8
7.1
Nebraska
.8
1.9
2.7
1.7
113
Nevada
New Hampshire
4.0
1.2
5.2
2.2
20.1
30.0
50.1
48.5
New Jersey
New Mexico
4.0
3.6
7.6
3.7
168.5
135.8
304.3
168.3
New York
North Carolina
19.9
16.7
36.6
31.2
North Dakota
2.1
2.2
4.3
1.2
Ohio
29.9
94.0
123.9
103.0
Oklahoma
33.5
14.1
47.6
39.0
6.7
14.9
21.6
15.4
Oregon
Pennsylvania
46.8
57.1
103.9
70.0
Rhode Island
4.4
9.4
13.8
7.1
See footnote at end of table.
114
115
Federal Funding of Aid to the Aged, Blind, and Disabled
Estimated
savings
(4)
under H.R. 1
12.9
1.4
26.8
44.8
5.2
3.7
20.8
12.0
14.4
44.6
.5
The Committee bill establishes minimum Federal standards for as-
sistance to the aged, blind, and disabled, but leaves to the States the
administration of the program under State eligibility rules. To give
the States both substantial fiscal relief and a fiscal stake in good ad-
ministration, the cost of making assistance payments meeting the
Federal payment level requirements would be borne entirely by the
Federal Government up to a specified base amount under the follow-
Total
(E)
12.9
2.1
29.5
74.9
8.1
3.9
21.6
30.0
15.5
49.9
1.3
ing formula:
Federal funding would be provided for the costs of assistance
to the aged, blind, and disabled up to the standards required by
the bill ($130 for an individual, $190 for a couple with a $50
disregard of all income and additional disregards of earned in-
come). These costs would be fully Federal up to the higher of
(1) the cost of meeting these standards for a State's existing case-
benefits
(2)
7.0
1.4
16.3
32.5
5.6
1.6
12.1
14.6
7.0
.8
load; or (2) the State's share of $5 billion distributed among the
STATE SAVINGS IN WELFARE PAYMENT COSTS, 1974:-Continued
Committee proposal
Family welfare
32.0
States in proportion to the number of aged individuals with
income below $1,750 and aged couples with income below $2,200 in
1969. If State costs involved in meeting the Federally required
payment levels exceeded the higher of these amounts, the Federal
Government would also pay 90 percent of the excess. There would
be no Federal funding with respect to assistance provided at
(1)
5
levels above those required by the Committee decision.
5.9
.7
[In millions of dollars]
Adult categories
13.2
42.4
2.5
9.5
15.4
8.5
17.9
Under this formula most States would be required to pay a relatively
small proportion of the costs involved in the Committee decision. À
number of States, however, would have no costs at all for 1974; but
these States would be required to pay small amounts in future years
when their caseload grows to the point that the fully Federal base
amount is no longer sufficient to cover the payments required by the
Federal standards. As a result, all States would be relieved of all but a
very small amount of responsibility for the funding of aid to the aged,
blind, and disabled and would enjoy the savings shown in column 1 of
the preceding table. However, there would be an incentive for the
States to exercise control over caseload growth since they would be
required to pay a part of the costs related to all additional recipients
once the Federal base amount is exceeded.
In 1974, it is estimated that this formula would result in Federal
payments to the aged, blind, and disabled of $4.2 billion (compared
with $2.0 billion under existing law). State costs under the bill would
be $0.2 billion compared with $1.4 billion under existing law, yielding
fiscal relief for the States of $1.2 billion. The same formulas would
apply with respect to assistance for the aged, blind, and disabled in the
State
South Dakota
West Virginia
Based on fiscal year 1974 data.
remaining months of 1972 and in 1973. It is estimated that this will
result in State savings of $0.2 billion this year and $1.0 billion in 1973.
Federal Funding of Aid to Families with Dependent Children
South Carolina
In the Aid to Families with Dependent Children program, the Com-
Tennessee
Texas
Utah
Virginia
Washington
mittee bill changes the funding mechanism from the present formula
Vermont
Wisconsin
Wyoming
matching to a block grant approach. This new method of providing
Federal funds for AFDC results in substantial immediate fiscal relief
and is also consistent with the Committee's desire to return to the
States a greater measure of control over their welfare programs. For
the last 6 months of calendar year 1972 and for 1973 the block grant
would be based on the funding for calendar year 1972 under current
law. Starting in 1974 the grant would be adjusted to take into account
116
the effects of the work program. The following formula would be
used:
The grant for 1973 would equal the 1972 Federal share, plus an
additional amount equal to one-half of the 1972 State share, or if
less the amount needed in 1972 to bring family income up to $1,600,
Internal Revenue Amendments
$2,000 or $2,400 for families with two, three, or four or more
members, respectively. In no case, however, would the Federal
Retirement Income Credit
block grant be less than 110 percent of the Federal share in 1972.
For the last 6 months of calendar year 1972, the grant would be
Under present law, a retirement income credit of up to $1,524
one-half of the 1973 grant.
multiplied by 15 percent ($229) is allowed for single persons age
After the employment program becomes effective in January
65 or over having "retirement income"-that is, income from pen-
1974, the Federal grant for AFDC would be reduced somewhat
sions, dividends, interest, rents, and other passive income. The income
in recognition of the fact that families with no children under age
eligible for this credit is reduced, however, by social security, railroad
6 would no longer be eligible for AFDC. This reduced grant
retirement, or other tax-exempt pension income. It is also reduced by
would remain the same in future years, except that it would be
50 percent of earnings between $1,200 and $1,700 and on a dollar-for-
increased or decreased to reflect changes in total State population.
dollar basis as income rises above $1,700. For most married couples,
For example, it is estimated that the Federal block grant for AFDC
the limitation on the credit is $2,286, one and one-half times the
in California would be $689.4 million in 1973. After the employment
amount allowed a single person, and the maximum benefit is $342.90.
program becomes effective, this would be reduced to $526.7 million. The
In addition, under present law, the retirement income credit, de-
$526.7 million would remain as the annual amount of the Federal grant
termined substantially as indicated above, is available for retirement
to California for AFDC except that it would be adjusted each year to
income received from governmental units where the individual is
reflect any percentage increase or decrease in the State's population.
under age 65, except that if he is also under age 62, earnings in excess
The below shows the State savings under AFDC over the next
of $900 reduce the $1,524 limitation on a dollar-for-dollar basis.
21/2 years.
The Committee bill includes, with minor modification, the liberalized
and simplified retirement income credit contained in the House bill.
TABLE 17.-STATE SAVINGS IN AFDC COSTS UNDER
As adopted by the Committee, the limitation would be raised to $2,500
COMMITTEE BILL
for a single person and $3,750 for a couple. Thus, the maximum credit
will be $375 for a single person and $562.50 for a couple. The Finance
(In billions)
Committee did not include in its bill the feature of the House pro-
vision which would have extended the credit to persons who have
Current law
Committee bill
not yet retired.
Non-
Non-
Fiscal relief
Year
Federal
Federal
Federal
Federal
to States
Social Security and Unemployment Tax of Affiliated Corporations
The Social Security tax is based on the wages paid an employee,
1972
1
$2.2
$1.8
$2.6
$1.4
$0.4
with a limitation on the amount subject to tax. Under present law,
1973
4.4
3.6
5.2
2.8
.8
the limitation is $9,000 ($10,200 under the Committee bill). In some
1974 2
4.8
3.9
3.7
2.5
1.4
instances, an employee on the payroll of one member of an affiliated
group of corporations may perform services for other members of
1 Last 6 months only.
the group; in these cases, he may be treated as a separate employee
2 Total AFDC costs are reduced under Committee bill because many current law
of each member of the group for which he performs services and the
recipients would no longer be eligible to receive their basic income from AFDC.
remuneration he receives may be attributed to them. As a result, the
$9,000 limitation on wages subject to social security is applied to the
Federal Funding Costs of Public Assistance Administration
remuneration attributed to each company separately, rather than to
the total remuneration received by such employee, and the FICA tax
The Committee bill would retain the present financing arrangement
collected with respect to his employment may be based on compensa-
with respect to the costs of administration of the AFDC program.
tion considerably in excess of the statutory limit. While the employee
Under this arrangement, such costs are shared on a 50 percent Fed-
may obtain a refund of any excess social security tax paid, the related
eral-50 percent State basis.
employers may not.
In the programs of aid to the aged, blind, and disabled, the Com-
The Committee approved an amendment to eliminate duplication of
mittee bill would provide Federal funding equal to 100 percent of the
FICA tax in the situation described. The amendment also applies to
administration costs in calendar year 1972 plus 50 percent of any
(117)
costs above this base. The additional Federal funding would be needed
because several States may have substantially greater administrative
costs due to the new Federal assistance standards for the aged, blind,
and disabled.
118
eliminate the duplication of the Federal unemployment taxes which
may occur under similar circumstances. Under the amendment, an
individual who performs services for more than one member of an
affiliated group of corporations would be treated as an employee only
of the member or members of the group by which he is employed and
from which he receives his compensation. Under the committee action
the present practice of attributing payments of compensation to other
members of an affiliated group would no longer prevail.
Analysis of Cost of Committee Bill
(119)
to
anoillid
79-184 72 9
120
121
Chart 1
Chart 1
Cost Increases in H.R.1 and Committee Bill
Cost Increases in H.R. 1 and Committee Bill
(in billions)
1973
The chart shows the net increase in cost over current law for cal-
1974
endar years 1973 and 1974 for H.R. 1 and the Committee bill. Details
H.R.1
Committee
for each of the program categories are shown in the succeeding charts
bill
H.R.1
Committee
bill
and text.
General Funds
The estimated costs for H.R. 1 are those prepared by the Depart-
ment of Health, Education, and Welfare. As discussed in the text
Medicare Part B
$0.4
$0.3
$0.4
$0.6
accompanying chart 5, some of these costs are believed to be signifi-
cantly understated.
Medicaid
-0.5
...
-0.5
---
The cost estimate for the tax credit provisions relates to the retire-
ment income credit provision in the House bill plus the credit added
Aged, blind, disabled
1.1
2.0
by the Committee for employers hiring persons who have been in
2.6
2.2
the Committee's employment program. This estimate was prepared
by the staff of the Joint Committee on Internal Revenue Taxation.
Programs for families
1.3"
2.7
2.5¹/
4.5
In summary, the Committee bill would cost $5.7 billion more than
the House bill in 1973 and $6.3 billion more in 1974. Of the 1974
Tax credit provisions
0.4
0.4
0.4
0.5
increase, $3.9 billion represents increased social security benèfits and
$2.4 billion represents increased general fund costs (principally pay-
SUBTOTAL
2.7
5.4
5.4
7.8
ments to low-income working persons).
The Committee bill would cost $17.6 billion more than existing law
Increase in Committee bill
(+2.7)
in 1974, as shown below:
(+2.4)
Trust Funds
[In billions of dollars]
Social security cash
3.9
7.0
4.3
7.4
Present
Commit-
law
tee bill
Increase
benefits
Medicare Part A
1.5
1.4
1.6
2.4
Social security cash benefits
$43.2
$50.6
+$7.4
Medicare Part A
8.3
10.7
+2.4
SUBTOTAL
5.4
8.4
Medicare Part B
3.3
3.9
+.6
5.9
9.8
Medicaid
6.1
6.1
Increase in Committee bill
Aid to the aged, blind, and disabled
2.7
4.9
+2.2
(+3.0)
(+3.9)
Programs for families
7.0
11.5
+4.5
Increase in tax credits
+.5
TOTAL
8.1
13.8
11.3
17.6
Total
+17.6
Increase in Committee
(+5.7)
(+63)
bill
1/ Based on HEW estimate; Committee
estimate is $2.0 billion higher
in 1974.
122
123
Chart 2
Chart 2
llid Social Security Cash Benefits
H.R. 1 as passed by the House of Representatives provided for a
Social Security Cash Benefits
first year increase in the cost of social security cash benefits of $3.9
billion. A 5 percent general benefit increase accounted for $2.1 billion
(First full year costs, in billions)
of this total. Under the Committee bill, there would be an additional
increase in social security cash benefit costs of $3.1 billion for a total
increase over existing law of $7.0 billion. The 10 percent general
Increases in House Bill
benefit increase in the Committee bill represents a cost of $2.2 billion
over the 5 percent increase in the House bill.
8
5 percent benefit increase
$2.1
2.0
2.0-
bisoibeM
Widow's benefits
0.9
SS
as
0.5
11
Increase in earnings limit
0.6
a.A
as
T.S.
E.I
2.0
AO
AO
AO
Other changes
0.3
8.1
A.Z
A.C
Г.Я
SUBTOTAL
3.9
(AS+)
(R.S+)
Increases in Committee Bill
A.Γ
E.A
O.Γ
e.e
Benefit increase of 10%
2.2
rather than 5%
AS
2.1
Al
at
A
8.0 e.a 48 A.C
JATOTRUS
Special minimum up to $200
0.3
(8.8)
(O.E+)
llid
Credit for delayed retirement
0.2
251 EN 8.81 1.8
JATOT
Other changes
0.4
(E.a+)
(Γ.2+)
settimmo) sessionl
SUBTOTAL
3.1
the
TOTAL INCREASE IN
estimmo) istemitas WEH no bear8
COMMITTEE BILL
7.0
harigirl noillid 0.50
OVER PRESENT LAW
124
125
Chart 3
Chart 3
Medicare and Medicaid, 1974
Medicare and Medicaid
Medicare Part B
GENERAL FUNDS
(dollars in
The principal increased cost in the committee bill is attributable to
Medicare Part B:
billions)
covering the disabled under Medicare on a basis similar to that ap-
proved by the House.
The Committee also approved adding coverage of chiropractors
Present law
$1.8
under Medicare and limiting the percentage by which the Medicare
Part B premium paid by older people could be raised from one year
Extend coverage to disabled
0.4
to the next.
In addition, other changes were approved that were designed to
Cover chiropractic, limit
0.2
smooth Medicare operation.
Medicaid
premium, other changes
The Committee bill would for the first time cover eligible mentally
ill children under age 21 receiving treatment in an accredited medical
Medicaid:
institution.
The Committee also provided that workfare participants otherwise
Present law
5.3
ineligible for Medicaid would have the opportunity to "buy in" by
paying premiums, with Federal subsidy for any remaining costs of
Mentally ill children
0.1
benefits.
The principal change resulting in a decrease in Medicaid costs was
Coverage of workfare participants
0.2
the Committee's repeal of Section 1902 (d) which presently prohibits
States from moderating their programs.
Other changes
-0.3
Medicare Part A
Extension of hospital insurance for the disabled accounts for the
major cost increase shown on the chart.
A new benefit was added by the Committee covering a limited num-
NET INCREASED GENERAL
+0.6
ber of drugs appropriate for use in treating the chronically ill.
FUND COSTS
The definition of eligibility for services in an extended care facility
was liberalized in the committee bill SO as to simplify administration
TRUST FUNDS
S.O. availability of benefits.
Medicare Part A:
AO
Present law
8.3
1.8
Extend coverage to disabled
1.5
Coverage of drugs
0.7
И INCREASE JATOT
0.5
COMMITTEE
Extended care definition,
0.2
WAJ ТИЗЕЗЯЯ REVO
other changes
NET INCREASED TRUST
+2.4
FUND COSTS
126
127
Chart 4
Arer bissibe Chart 4 Mississe
Aid to the Aged, Blind and Disabled, 1974
Aid to the Aged, Blind, and Disabled
cost in billions
Under the Committee bill, the Federal share of aid to the aged,
Present law:
blind, and disabled for 1974 is estimated to be $4.9 billion, including
$4.4 billion in assistance payments ($2.2 billion more than under
Welfare payments
$2.2
current law) and $0.5 billion for administrative costs ($0.3 billion more
than existing law). This $2.5 billion increase in Federal expenditures is
offset by a reduction of $0.3 billion in food stamp costs for a net in-
Administration
0.2
creased Federal cost of $2.2 billion. (Recipients would be ineligible for
food stamps but would get offsetting increases in cash assistance.)
Food stamps
0.3
The increase in Federal costs results from the new Federal standards
for assistance to the aged, blind, and disabled, and from the changed
TOTAL
2.7
funding mechanism under which the Federal Government assumes
most of the cost of assistance payments and an increased share of
administrative costs.
Committee increases:
8.2
Welfare payments (including
+2.2
cashing out of food stamps)
so
Administration
8.0
+0.3
Food stamps
- 0.3
ТЭИ
TOTAL INCREASE
+2.2
11.5
A
E.8
wel tnsest9
7.0
7.0
2.1
beldsaib at coversge bristx3
11.0
4.5
Γ.O
agunb 70 systeva)
S.O
noitinitsb 9780 bebnstx3
asgnedo herito
AS+
тгият ТЗИ
STSOO ONUR
128
129
Chart 5
Chart 5
Cost of H.R.1 and Committee Bill, 1974:
Cost of Programs for Families: H.R. 1 and the Committee Bill
Programs for Families
The table shows the total cost of the program for families in H.R. 1
H.R.1
and the Committee bill for calendar year 1974. The comparable cost of
(dollars in billions)
Committee Bill
present law is $7 billion. Two estimates are shown for each bill, one pre-
HEW
Committee
HEW
Committee
estimate
estimate
estimate
estimate
pared by the Department of Health, Education and Welfare, and the
other by Mr. Robert Myers, consultant to the Committee and former
Government employment
---
---
$5.7
$2.6
Chief Actuary of the Social Security Administration. The detailed
bases of these estimates were submitted to the Committee.
Wage supplement
---
---
1.7
0.3
Children's allowance
---
---
0.5
10% work bonus
---
1.1
1.2
Welfare payments
$5.1
$7.1
3.2
3.7
Cost of cashing out
1.5
1.5
1.8
1.8
food stamps
Child care: Additional
0.8
0.8
1.5
0.8
Included in Gov't
---
---
---
(0.4)
employment
Public service jobs
0.8
0.8
Services, training
0.6
0.6
0.8
0.4
Administration:Additional
0.7
0.7
1.7
0.7
Included in Gov't
---
---
...
(0.4)
employment
TOTAL
9.5
11.5
18.0
11.5
Present law
7.0
7.0
7.0
7.0
NET INCREASED
2.5
4.5
11.0
4.5
COST
66
to benefits under both the social security and railroad retirement
systems.
people, you
A Ji ving individual with entitlement to both secial security and
visory coun
railroad retirement benefits may receive benefits separately under
recommen I
both systems. If he dies, however, his survivors may receive benefits
with respor
from only one system, based on his combined earnings under both
extension of
systems. Thus, upon his death a recomputation is necessary. The
mittee belie
language of the law has been interpreted as preventing the Social
recommends
Security Administration from automatically recomputing survivor
clear, for ex
benefits based on combined social security and railroad retirement
protection e:
earnings where the deceased person retired before 1966 and had no
who are seve
disabled. Di:
earnings after 1965. A specific provision in the law is needed to make
it clear that survivor's benefits will continue to be based on the
security prog
about three
worker's combined social security and railroad earnings.
The bill would provide that a deceased individual who during his
disabled pop
lifetime was entitled to social security benefits and railroad compen-
and the subs
Yet the disa
sation and whose railroad remuneration and earnings under social
security are, upon his death, to be combined for social security pur-
are not disab
poses would have his primary insurance amount recomputed on the
purchase ade
basis of his combined earnings, whether or not he had earnings after
such insuranc
1965.
tion Accordingly to social
Retroactive payment of disability benefits
include disabl
Under a 1967 amendment certain disabled people were allowed to
widowers bet
establish a period of disability-the so-called disability freeze-even
who receive S
though the period provided in the law for filing effective applications
before reachin
had terminated. This 1967 provision was designed to protect a limited
annuitants.
number of people who, when the disability program was new, had
While your
been SO severely disabled that they did not have the opportunity or
policy dictate
ability to file an application.
your committe
Your committee has been informed that these people also lost
tions involved
benefits which would otherwise have been paid. Therefore, your com-
conservative ba
mittee's bill would provide for the payment of cash disability benefits
health insurance
for periods of disability prior to 1968 that have been established
entitled to socia
by those persons under the 1967 amendment.
secutive months
within reasonab
B. PROVISIONS RELATING TO MEDICARE, MEDICAID, AND MATERNAL AND
protection, part
CHILD HEALTH PROGRAMS
continue his me
time following t]
1. Eligibility and payment for benefits
istrative problen
(a) Coverage for disability beneficiaries under medicare.-Over the
ment to disabili
years your committee has given extensive consideration to proposals
application is m:
to provide health insurance protection under title XVIII for persons
Moreover, this
entitled as a result of disability to monthly cash benefits under the
tion will be avai
social security and railroad retirement programs. While your commit-
severe and long 1
tee has always believed that there are compelling reasons for extending
Under this pr
the protection of medicare to disability beneficiaries, it has in past
tion would begin
years regretfully concluded that considerations of cost precluded rec-
consecutive mont
ommending such an extension of coverage. Your committee believes,
disability benefits
however, that the present unmet need for health insurance protection
(b) Hospital in
among the disabled of our Nation is SO great that propriate legisla-
under transitiona
tive action should no longer be deferred.
protection under
In an effort to ascertain the dimensions of the health insurance
are not qualified f
problem confronting the disabled and to evaluate all the possible
retirement program
approaches to providing or assuring adequate health insurance for such
eral employee, or
could have been
59-948
o, ON WAY
67
road retirement
people, your committee has in recent years directed a number of Ad-
visory councils to study this question and to report their findings and
ial security and
recommendations to the Congress. In each case, the council charged
eparately under
with responsibility for examining the issue has recommended the
receive benefits
extension of medicare coverage to the disabled. Moreover, your com-
ings under both
mittee believes that the findings on which these councils based their
necessary. The
recommendations are too impressive to be ignored or minimized. It is
nting the Social
clear, for example, that a major unmet need for health insurance
puting survivor
protection exists among the disabled. Use of health services by people
road retirement
who are severely disabled is substantially higher than that by the non-
966 and had no
disabled. Disabled workers receiving cash benefits under the social
needed to make
security program use about seven times as much hospital care, and
c based on the
about three times as much physicians' services as does the non-
gs.
disabled population. These facts account both for the great need for
who during his
and the substantial costs of covering the disabled under medicare.
ailroad compen-
Yet the disabled have limited incomes in comparison to those who
igs under social
are not disabled, and most disabled persons are unable financially to
ial security pur-
purchase adequate private health insurance protection, or to obtain
omputed on the
such insurance at all.
d earnings after
Accordingly, your committee's bill would extend medicare protec-
tion to social security disability beneficiaries. Those covered would
include disabled workers, disabled widows and disabled dependent
were allowed to
widowers between the ages of 50 and 65, people aged 18 and over
ity freeze—even
who receive social security benefits because they became disabled
tive applications
before reaching age 22, and disabled qualified railroad retirement
protect a limited
annuitants:
n was new, had
While your committee has concluded that considerations of public
opportunity or
policy dictate the extension of medicare protection to the disabled,
your committee also believes, given the cost and financing considera-
people also lost
tions involved in such coverage, that it is imperative to proceed on a
efore, your com-
conservative basis. Consequently, your committee's bill would provide
isability benefits
health insurance protection only after the disabled beneficiary has been
been established
entitled to social security disability benefits for noticless than 24 con-
secutive months. Such an approach would help to keep program costs
within reasonable bounds, avo overlapping private health insurance
MATERNAL ANJ
protection, particularly in those cases where a disabled worker may
continue his membership in & group insurance plan for a period Oi
time following the onset of his disability, and minimize certain admin-
istrative problems that might otherwise arise in cases in which entitle-
ware.-Over the
ment to disability benefits is not determined until some time after
tion to proposals
application is made because of delays due to the appellate process.
VIII for persons
Moreover, this approach would provide assurance that the protec-
enefits under the
tion will be available to those whose disabilities have proven to be
ile your commit-
severe and long lasting.
ons for extending
Under this provision of your committee's bill, medicare protec-
it has in past
tion would begin with the !ater of (a) July 1972, or (b) the 25th
st
precluded rec--
consecutive month of the individual's entitlement to social security
nmittee believes
disability benefits.
rance protection
(b) Hospital insurance benefits for uninsured individuals not eligible
propriate legisla-
under transitional provision.-Present law provides hospital insurance
protection under the "special transitional provision" for people who
ealth insurance
are not qualified for cash benefits under the social security or railroad
all the possible
retirement program. (The provision excludes an active or retired Fed-
surance for such
eral employee, or the spouse of such an employee, who is covered or
could have been covered under the provisions of the Federal En-
59-948 0-71-6
68
ployees Health Benefits Act of 1959; aliens residing in the United
States for less than 5 years; and people who have been convicted of a
crime against the security of the United States, including sabotage,
espionage, treason, etc.) The "special transitional provision" covers
people who are not qualified for cash benefits under the social security
or railroad retirement program and who reached age 65 before 1968
even though they had no work under social security (or in the railroad
industry). Those who attained or will attain age 65 after 1967 must
have had specified amounts of work under these programs in order
to be eligible for hospital insurance protection. The transitional provi-
sion will phase out as of 1974 as persons attaining age 65 in that
year must be insured for cash benefits under one of the two programs
in order to be eligible for hospital insurance protection.
Since the transitional provision is designed to provide hospital in-
surance coverage for only a part (though a large part) of the uninsured
aged and to eventually phase out, a portion of the aged, though small
in number (as of July 1, 1971, it is estimated that this portion will num-
ber approximately 344,000 or 1½ percent of the aged population), are
and will be, for one reason or another, excluded from hospital insurance
coverage. (The 344,000 people include 50,000 recent immigrants, who
would continue to be excluded from coverage; 150,000 active or retired
Federal employees, who are not eligible for the transitional provisions;
and 144,000 others.) Although these ineligibles include a substantial
number of people who were eligible for social security coverage but
who did not elect (or whose employers did not elect) to be covered
(including employees of State and local governments), they also
include several other groups: (1) wives who have never worked under
covered employment and whose husbands are eligible for hospital
insurance under the transitional provision, (2) women who are not
insured on their own account and who cannot qualify for dependent's
benefits (such as dependent aged sisters of insured workers and the
dependents of uninsured workers), and (3) workers, such as agricul-
tural and domestic workers, whose earnings may have been so low or
sporadic they were unable to acquire insured status.
Further, it has become very difficult for many in this group to obtain
private hospital insurance comparable to coverage under medicare.
Since the passage of the medicare law, private insurance companies
have generally changed their hospital insurance plans available to peo-
ple age 65 and over to make their coverage complementary to medi-
care. While there is generally some type of hospital insurance available
to persons age 65 and over, most of that which is offered is in the form
of specified cash payment insurance, paying from $25 to $200 per week
for limited periods of hospitalization. Few private health insurance
companies offer their regular hospital expense plans to the aged.
Your committee's bill would make available hospital insurance cov-
erage under medicare on a voluntary basis to persons age 65 and over,
including Federal civil service employees or annuitants and their
spouses, who are not entitled to such coverage under existing law. A
State or any other public or private organization would be permitted
to purchase such protection on a group basis for its retired or active
employees age 65 and over. The intent is that the cost of such coverage
would be fully financed by those who elect to enroll for this protection.
Enrollees would pay a monthly premium based on the cost of hospital
insurance protection for the uninsured group. The premium would be
$31 a month beginning with January 1972 and up to and including
69
June 1972, and would be recomputed each fiscal year and increased in
a
the same proportion as the inpatient hospital deductible. The same re-
strictions on enrollment and reenrollment (including a 10-percent-per-
year charge for late enrollment) would apply as now apply to enroll-
ment for supplementary medical insurance (including the changes in
such enrollment provisions made by other provisions in the bill).
Your committee's bill would provide that whenever a person enrolled
for voluntary hospital insurance becomes eligible for such coverage as a
result of becoming eligible for monthly cash social security or railroad
retirement benefits or under the special transitional provision, his
coverage under the provision would be terminated; and to insure that
his hospital insurance coverage continued uninterrupted he would be
deemed to have filed the application required for establishing hospital
insurance under the other provision in the month he becomes eligible
under the other provision.
all
The effective date for coverage provided under this provision would
be January 1, 1972.
(c) Amount of supplementary medical insurance premium.-Under
present law, the Secretary of Health, Education, and Welfare is
directed to determine and promulgate a premium in December of each
year for individuals enrolled in the supplementary medical insurance
program. The dollar amount of the premium is the amount the Secre-
tary estimates to be necessary so that the aggregate premiums for the
12-month period commencing July 1 in the succeeding year will equal
one-half of the total supplementary medical insurance program costs
that will be payable during that fiscal year. (The Federal Government
pays the other half of the costs by matching the premium amount paid
by each enrollee.) During the first five years of the program it has been
necessary to increase the premium almost 87 percent-from $3 in
July 1966 to a scheduled $5.60 rate as of July 1971.
Your committee is concerned about the increasingly severe financial
burden that the premium amount, established under this method, will
come to represent in future years. The premium is not only likely to
continue to rise significantly but will do so without regard to the
ability of beneficiaries living on reduced retirement incomes to bear
the increased financial burden.
Accordingly, under your committee's bill, the supplementary medi-
cal insurance premium generally would increase in any given year only
if monthly cash social security benefits had been increased in the in-
terval since the premium was last increased. Moreover, the premium
would rise by no more than the percentage by which cash benefits had
been increased across the board (whether by act of Congress or auto-
matically under the provision in the bill which provides automatic
increases in cash benefits under certain cirumstances). Thus, enroll-
ment in the supplementary medical insurance program would remain
voluntary and premium payments by enrollees would still be required,
but premiums would be increased only at times and by amounts that
would be related to the beneficiary's ability to meet the cost.
The revised procedure for establishing the medical insurance
premium would operate as follows. The medical insurance premium
would be allowed to rise to $5.60 on July 1, 1971, as presently sched-
uled. During December of 1971, and each year thereafter, the Secretary
would be required, as he is under present law, to determine and
promulgate the monthly premium amount for the 12-month period
beginning the following July. As one step in determining the premium
70
amount, however, he would determine a monthly actuarial rate for
aged enrollees representing the dollar amount he estimates will equal,
hos
in the aggregate over the 12-month period, one-half of the total
pre
benefit and .administrative costs (plus a small contingency reserve)
ser
that the program will incur with respect to enrollees age 65 and over.
equ
The premium for all rollees (including disability beneficiaries) would
res
then be set to equal the lesser of (a) the actuarial rate described above
life
or (b) the most recently promulgated premium rate, increased by the
bei
total percentage by which monthly cash benefits have increased or are
dis
scheduled to increase during the fiscal year to which such recently
to
promulgated rate applies. When he promulgates the premium the
in
Secretary would be required to issue a public statement setting forth
ins
the actuarial assumptions and bases used in arriving at the actuarial
rate, and the drivation of the premium amount.
th
Your committee's bill would also authorize the appropriation from
de
the general revenues of sufficient funds to meet all supplementary
B
medical insurance program costs above those met by the aggregate
premium amounts paid by aged and disabled enrollees.
(d) Change in supplementary medical insurance deductible. -Under
present law, a deductible is applied to the first $50 of expenses in-
curred by a beneficiary for services of the type covered under the
supplementary medical insurance program.
Recognizing that medical costs have risen considerably since the
beginning of the medicare program, your committee has concluded
that it would be appropriate to increase the supplementary medical
insurance deductible to $60 as of January 1, 1972. Thus, beneficiaries
would continue to bear a reasonably representative portion of their
medical insurance costs. The $60 figure is below the amount ($70) that
would be necessary to maintain the same relationship between the
deductible and program costs as existed between $50 and program
costs when the program began.
(a) Increase in lifetime reserve days and change in hospital insurance
coinsurance amount under medicare.-Under present law, payment may
be made for up to 90 days of inpatient hospital services furnished
during a benefit period (spell of illness), with the beneficiary being
responsible for an inpatient hospital deductible (currently $60) and,
beginning with the 61st day of his stay, a daily coinsurance amount
equal to one-fourth of the inpatient hospital deductible (now $15). In
addition, present law provides each beneficiary with a nonrenewable
lifetime reserve of 60 days of inpatient hospital coverage upon which he
may draw after having exhausted the 90 days of covered care regularly
available to him in a benefit period; a coinsurance amount equal to
one-half of the inpatient hospital deductible is applicable to each
lifetime reserve day used.
Your committee believes there is a need to more fully protect medi-
care- beneficiaries against the very high costs associated with those
illnesses that require prolonged use of inpatient hospital services; it has
also been mindful of the need to promote the most effective possible
utilization of such services and to maintain an awareness of the cost of
hospital care among the beneficiaries of the program. To further the
objective of the medicare program to protect the aged against the very
heavy expenses of major illness, your committee's bill would provide
for an increase from 60 to 120 in the number of "lifetime reserve" days
for which inpatient hospital benefits may be paid. Thus, each medicare
beneficiary would have available to him at least 210 days of covered
71
rate I..
ill equa
pitalization, even if he had only one benefit period. As under
the tot
resent law, to guard against any possible unnecessary utilization of
reserve
rices, the beneficiary would be responsible for a coinsurance amount
and over
al to one-half of the inpatient hospital deductible for each lifetime
s) would
arve day used. Your committee believes that this increase in the
ed abov
time reserve would sufficiently protect the large majority of
d by the
neficiaries against the most expensive illnesses without, however,
ed or ar
rupting the intended effect of the benefit period provision, which is
recenth
provide some objective means for discontinuing benefit payments
ium the
those cases where the individual is more or less permanently
ng fort
stitutionalized.
ctuarial
Your committee has also examined the cost-sharing requirements
were established at the time of medicare's enactment in order to
on from
ermine whether they were accomplishing their intended purposes.
nentary
used on its examination, your committee has concluded that cost-
gregate
aring beginning at an earlier point in the benefit period than is
quired under present law would serve to increase the incentive for
-Under
th beneficiaries and their physicians to participate in efforts to bring
ises in-
bout more effective control of the utilization and cost of inhospital
ler the
rvices. Your committee's bill provides for the application of a daily
insurance amount equal to one-eighth of the inpatient hospital
ice the
ductible for each day of inpatient hospital coverage during a benefit
cluded
riod beginning with the 31st day and through the 60th day. The
medical
insurance amount for the 61st through the 90th day would remain,
ciaries
under present law, equal to one-fourth of the inpatient hospital
f their
ductible. Present experience indicates that about 10 percent of the
)) that
spitalized aged use more than 30 days of hospital care during a
en the
nefit period and it may very well be that in some of those cases
ogram
are beyond 30 days is really not needed.
These amendments would be effective with respect to inpatient
trance
pital services furnished during hospital stays beginning after
t may
December 31, 1971.
hished
(f) Automatic enrollment for supplementary medical insurance.-
being
!
tuler present law an individual eligible for supplementary medical
and,
surance must take the positive action of enrolling to obtain coverage
rount
such insurance. If he does not act within the time imposed by
5). In
law, he stands to lose several months of medical insurance
vable
verage. In recognition of the importance of timely enrollment, a
ch he
ncerted effort is made to notify people of their opportunity to enroll
darly
medical insurance as they become eligible and, in fact, nearly 96
al to
rrcent of eligible individuals are enrolled. Some few, however, fail
each
enroll at their first opportunity due, for example, to inattention, or
cause they are incapable of managing their own affairs.
nedi-
Your committee believes, therefore, that it would be good public
hose
policy to assure that individuals are enrolled for supplementary medical
has
surance when they are first eligible, unless they elect not to have the
sible
overage. Accordingly, under your committee's bill, the aged and the
st of
isabled would be automatically enrolled for supplementary medical in-
the
irance as they become entitled to hospital insurance. Persons already
very
ceiving monthly social security or railr bad retirement benefits would
vide
deemed to have enrolled in the month before the month for which
ays
become entitled to hospital insurance, so that their medical and
are
spital insurance coverage will start at the same time. Others, not
red
ady on the cash benefit rolls, would be deemed to have enrolled
supplementary medical insurance in the month in which they file
72
an application establishing their entitlement to hospital insurance, and
The ]
their coverage under medical insurance would begin at the time speci-
designe
fied by existing law for people enrolling in that month.
They r
Your committee expects that persons eligible for automatic en-
general
rollment will, to the extent possible, be fully informed and given an
The
opportunity to decline the coverage. They would be deemed to have
reflect
enrolled if they do not ecline coverage before it is scheduled to begin.
mental
Once their coverage has begun they would of course be free to disenroll
rarely
if they wish in accordance with existing law.
State
The automatic enrollment provisions would be applicable only to
active
persons who become entitled to hospital insurance after 1971, because
medic
of the practical difficulties that would be involved in locating non-
provi
enrollees whose eligibility for medical insurance was established
Th
prior to 1972 and giving them an opportunity to decline the coverage.
towa:
Establishment of incentives for States to emphasize comprerensive
inter
health care under medicaid programs.-Your committee has been
by t
concerned about the need to improve the utilization of services under
that
the medicaid program and to encourage more effective lower cost
belo:
patterns of service. The present law has a uniform Federal matching
suit
percentage applied to all forms of health services covered under the
Seci
State medicaid plan. In order to encourage the States to make more
pro!
efficient use of health services, your committee's bill would create
mai
incentives for States to contract with health maintenance organizations
lev
or similar organizations and disincentives to discourage prolonged
me
stays in institutional settings. Specifically, the bill would provide for
ha'
(1) an increase of 25% (up to a maximum of 95%) in the Federal
it
medicaid assistance matching for amounts paid by States under con-
eff
tracts with health maintenance organizations or other comprehensive
m
health care facilities; (2) a decrease in the Federal medical assistance
percentage by one-third after the first 60 days of care (in a fiscal year)
m
in a general or tuberculosis hospital; (3) a reduction in the Federal
n'
percentage by one-third after the first 60 days of care (in a fiscal year)
el
in a skilled nursing home unless the State makes a showing satisfactory
p
to the Secretary that there is in the State an effective program of con-
trols over utilization of such institutional care, (4) a decrease in
Federal matching by one-third after 90 days of care except that an
additional 30 days care would be allowed if the State shows that the
patient will benefit from such additional period of hospitalization in
a mental hospital and provision for no Federal matching after a total
of 365 days of such care during an individual's lifetime, and (5) au-
thority for the Secretary to compute a reasonable cost differential for
reimbursement purposes between skilled nursing homes and inter-
mediate care facilities.
These changes would be effective with respect to services furnished
after June 30, 1971, except that the provision relating to the compu-
tation of a reasonable cost differential between skilled nursing homes
and intermediate care facilities would be effective for any calendar
quarter beginning after December 31, 1971.
The proposal to increase by 25 percent, up to a maximum of 95
percent, Federal matching on premiums paid by states under contracts
with health maintenance organizations, neighborhood and community
health centers and similar organizations is intended to encourage states
to contract with such organizations. Organizéd plans, particularly
those on a pre-paid basis, have been shown in some cases to discourage
overutilization of expensive inpatient care.
73
The limitations on care in general and tuberculosis hospitals are
med to encourage transfer of patients to less expensive facilities.
They
reflect the assumption that treatment in acute institutions is
nerally of short duration, rarely exceeding 60 days.
The proposed limitations on length of stay in mental institutions
the assumption that for patients over 65 medical treatment of
disease inpatients generally does not exceed three months and
earely continues beyond a year. However, in those cases where the
agency demonstrates that the patient is continuing to receive
live treatment and the prognosis is for further improvement the
dicaid percentage would not be reduced until 120 days. This will
provide needed flexbility under the basic provision.
The reduction in matching for skilled nursing homes is directed
ward early transfer of patients to alternative facilities (such as
termediate care facilities). There is a good deal of evidence found
or the General Accounting Office and by the HEW audit agency
that patients now in skilled nursing homes in many States do not
belong there. A lower level of care than skilled nursing care would
uit the needs of a large number of these patients. In the 1967 Social
Security Amendments, the Congress attempted to meet these kinds of
problems by funding intermediate care facilities at the medicaid
matching rate (so as to avoid any financial incentive to use the higher
level of care) and by requiring regular professional independent
medical audit of the needs of nursing home patients. Some States
have used the intermediate care facility as the less expensive option
il was intended to be. Others have not used it all or have not used it
effectively. Some few States have set up the required professional
medical audits.
Your committee recommends a reduction in the Federal medicaid
matching rate by one third after the 60th day of stay in a skilled
nursing facility unless the State can show that it is carrying out an
effective program under requirements for effective utilization review
procedures and for regular professional medical audits. A State could
maintain its full Federal share by complying with these necessary
requirements. If it did not, the matching rate would be reduced with
respect to stays. The 60 day period would provide an adequate period
of time for the necessary review and certification requirements to be
carried out.
The provision granting authority to the Secretary to compute (for
reimbursement purposes) a reasonable cost differential between the
cost of skilled nursing home services and the cost of intermediate
care facilities is designed to assure that supporting care in these
alternate institutions actually does result in decreased costs to the
program.
(h) Cost-sharing under medicaid.-Your committee has been con-
cerned that costs of the medicaid program have been escalating much
more apidly than anticipated and believes that an element of cost
consciousness on the part of patients and their physicians should be
introduced into the program primarily as a cost control device. Your
committee bill would, therefore, require that States participating in
the medicaid program impose on the medically indigent (those not
eligible for cash assistance) under the program a premium enrollment
fee graduated by income in accordance with standards prescribed by
the Secretary. No other premium or enrollment fee could be imposed
on the medically needy under the State plan. In the case of cash
74
assistance recipients, nominal deductible and cost-sharing charges,
while prohibited with respect to mandatory services required under the
plan, would be permitted with respect to optional services.
States could, at their option, impose deductibles and copayme it
features on the medically indigent (in addition to the required
graduated premiums) which would not have to vary by level of
income. Your committee recommends these provisions in order to
discourage possible unnecessary overutilization and to encourage
cost-consciousness on the part of those covered under medicaid.
Your
(i) Elimination of medicara work disincentive.-You committee bill
would amend title XIX to assure that medicaid eligibility require-
ments for families with children are structured in a way which
relates them to family income and medical expenses, removes work
disincentives, and concentrates medical assistance resources on those
families most in need.
The medicaid statute has from the beginning required those States
which elect to have a medicaid program to cover everyone who was
eligible for cash assistance payments. With the introduction of the
earnings disregard provisions under the 1967 amendments, and the
consequent gradual loss of cash benefits as earned income increased,
families on the assistance rolls can have a substantial total income,
and still receive full medicaid protection. The medicaid program has,
therefore, a work disincentive effect at some point in the earnings
scale-the earning of an extra dollar can mean the phaseout of cash
assistance, and the abrupt and complete loss of medicaid.
In the 24 States which had made no provision for covering the
medically needy (the groups related to the welfare categories but
with income in excess of the standard for public assistance), the loss of
medicaid was complete. The family could not re-establish eligibility
for medical assistance without dropping back on the public assistance
rolls. In the 28 States and jurisdictions with programs for the medi-
$720
cally needy, the situation was only slightly better. Since the maximum
eligibility level for the medically needy was one hundred thirty-three
and one-third percent of the payment level (and the payment level
was often below the cash assistance standard), this standard is in some
of these States several thousand dollars below the income level where
cash assistance phased out under the earnings disregard provisions.
This meant that the family which had lost medicaid coverage with
their loss of cash assistance could re-establish their eligibility for
medicaid only after incurring substantial medical expenses (equal to
the amount by which their income exceeded the medically needy
standard for families of that size).
Your committee proposes to correct these deficiencies by providing
complete medicaid coverage to cash assistance families with children
only if their income falls below the eligibility level established for
medical assistance. In determining income for this purpose, the first
$720 of earned income would be disregarded (this amount is allowed
for work related expenses under the family program provisions in
the bill).
The medical assistance eligibility level would be defined by the
State in the range between the payment level for an eligible family of
given size without income up to one-hundred thirty-three and one-
third percent of that payment level. Cash assistance families with
incomes above the eligibility level would receive medicaid coverage
only after incurring medical expenses equal to the amount by which
75
their total income (including cash assistance payments) exceeded the
medicaid standard; they would be required to "spend-down" by this
amount to establish their eligibility for medicaid. In effect, this
amount would be a deductible, increasing in amount as earnings rise
and, therefore, avoiding the situation where one dollar of earnings
can result in the loss of protection worth several hundred dollars.
Medical expenses for this purpose would be defined as those in section
213 of the Internal Revenue Code.
Your committee does not propose to change medicaid eligibility for
the adult categories except to allow a uniform amount of earnings in
the amicunt of $720 ($1,020 for the blind and disabled) to be dis-
regarded as work related expenses in determining income for purposes
of medicaid eligibility. States would continue to have the option of
operating programs for the medically needy for the aged, the blind, the
disabled, foster children, families as defined in section 405(b), and all
needy children under 21 who are not recipients of cash assistance.
Eligibility standards for the medically needy would be tied to the
payment level for families under title XXI plus the supplementary
payment, if any, provided by the State, with appropriate adjustments
to account for family size. States with medical assistance eligibility
levels higher than the payment level, but less than 133½ percent of
that level, would be required to provide medical assistance to all
individuals, whether recipients of cash assistance or not, whose income,
after deducting medical expenses falls below the medical assistance
level. These latter changes are essentially those necessary to preserve
the effects of present law.
The proposed amendment is estimated to result in a saving of
approximately $140 million in Federal medicaid funds in the family
category. This saving results from the elimination of some of the
medical costs of cash assistance recipients who have earnings in excess
of $720 (the amount allowed for work expenses).
The estimate was prepared on the assumption that States without
current programs for the medically needy would set the eligibility level
at their current payment standard or $2400, whichever was higher; and
States with a current program for the medically needy would maintain
the medicaid eligibility level at the current medically needy standard.
(j) Payment under the medicare program to individuals covered by
Federal employees health benefits program. present law, Fed-
eral employees and retirees age 65 and over who are enrolled for Fed-
eral employees health benefits (FEHB) are also covered under the
medicare hospital insurance plan (part A) if they have worked in
employment covered by social security or railroad retirement and are
aligible for monthly cash bencfits under these programs. in addition.
Federal employees, whether or not eligible for part A benefits, may
enroll in the medicare voluntary supplementary medical insurance plan
part B) which is available to essentially all persons age 65 and over.
Part A hospital insurance protection under m edicare is earned during
a person's working years through a separate tax on his earnings and
no payments are made by those entitled to benefits after they have
stopped working. In contrast, persons who are eligible for health insur-
ance protection under a FEHB plan continue to pay the same premium
rates for their coverage after retirement as they did when they were
active omployees (although the coverage may be more valuable since
older prople use more medical services). The Federal Government cur-
rently pays about 40 percent of the overall cost of FEHB protection.
76
When the medicare program was enacted in 1965, it was intended
that it would provide basic health insurance protection for people ag.
65 and over and that it would pay its benefits in full without regard to
any other benefits that might be payable under an employee health
benefits plan. At the same time, it was expected that such plans would
adjust their benefit policies to complement the protection provided
under medicare rather than to duplicate the benefits.
Unlike most employers, the Federal Government has not arranged
the health insurance protection it makes available to its employees
age 65 and over (active or retired) so that such protection would be
supplementary to medicare benefits. It is true, however, that some
individual plans have afforded more protection to those enrollees with
medicare coverage than those without such coverage.
Although most Federal employment covered by a Federal staff
retirement system is excluded from social security coverage, many
Federal employees become insured under social security on the basis
of other employment. About 50 percent of retired and active Federal
employees age 65 and over are entitled to hospital insurance benefits
under medicare.
Several problems arise under the present situation. The FEHB plans
cover many of the same health care expenses that are covered under
medicare. In cases where health care expenses are covered under both
medicare and a Federal employee plan, the medicare benefits are paid
first, and the Federal employee plan then pays its benefits in an amount
which, when added to the benefits payable under medicare, may not
exceed 100 percent of the expenses allowable under the FEHB plan.
A Federal employee who is covered under a high-option FEHB plan
as well as the medicare plans has somewhat better protection than is
afforded under the FEHB plan alone. But, because of the nonduplica-
tion clauses in the FEHB contracts, he does not derive the full value of
the protection of the FEHB contracts. If a Federal retiree entitled
under medicare cancels his enrollment under a FEHB plan because of
the high total cost of his health care protection, he will lose the high
level of protection he previously enjoyed under the FEHB program at
an age where his health care costs can be expected to increase sub-
stantially.
Federal retirees and employees who are covered under an FEHB
plan generally do not find it advantageous to enroll in the medicare
voluntary supplementary medical insurance plan, because of the over-
lapping of FEHB benefits and benefits under the supplementary plan.
Thus, Federal retirees and employees do not receive the advantage,
available to virtually all other persons age 65 and over, of the 50-per-
cent Government contribution toward the cost of the protection under
the supplementary medical insurance program.
In order to assure a better coordinated relationship between the
FEHB program and medicare and to assure that Federal employees
and retirees age 65 and over will eventually have the full value of the
protection offered under medicare and FEHB, your committee's bili
would provide that effective January 1, 1975, the medicare program
(both parts A and B) would not pay for any otherwise covered service
if such service is covered under the FEHB plan in which the benefi-
ciary to whom the service was provided is enrolled. This provision
would not go into effect (or would be suspended, if already in effect)
if the Secretary of Health, Education, and Welfare certifies that the
the FEHB program has been SO modified as to assure (1) that there
is available to Federal employees or retirees age 65 and over one or
77
intended
more Federal health benefit plans which offer protection supplementing
eople age
the combined protection of parts A and B of medicare, and the pro-
regard to
tection of part B alone, and (2) that the Government is making a
ee health
contribution toward the health insurance of all Federal employees or
ns would
retirees age 65 and over which is at least equal to the contribution it
provided
makes for high option coverage under Governmentwide FEHB plans.
Nor would this provision apply with respect to an individual plan if
arranged
the Secretary of Health, Education, and Welfare certifies that such
nployees
plan (1) has made available to its enrollees age 65 and over protection
vould be
supplementing the combined protection of parts A and B of medicare,
at some
and the protection of part B alone, and (2) is making a contribution
lees with
toward the health insurance of its enrollees age 65 and over which is
at least equal to the contribution made by the Federal Government
ral staff
for high option coverage under Governmentwide FEHB plans. The
e, many
contribution, whether by the Federal Government or by the individual
he basis
plan, could be in the form of a contribution toward the supplementary
Federal
FEHB protection or a payment to or on behalf of the individual
benefits
employee or retiree to offset the cost of his purchase of medicare
protection, or a combination of the two. The Secretary would, of
IB plans
course, prepare his certification on the basis of information he obtains
d under
from the Civil Service Commission about the characteristics and
ler both
operations of each of the various plans as well as the Federal program
are paid
as a whole. It is the hope and the intent of your committee that the
amount
Secretary will be able to make this certification for each of the plans
nay not
under the FEHB program before January 1975.
B plan.
(k) Payment under medicare for certain inpatient hospital and related
HB plan
physicians' services furnished outside the United
than is
present law, services furnished outside the United States are excluded
luplica-
from coverage, with the single exception that hospital insurance
value of
benefits are payable for emergency inpatient services provided in
entitled
nearby foreign hospitals if the beneficiary is physically present within
ause of
the United States when the emergency arises and the foreign hospital
he high
to which he is admitted is closer to the place where the emergency
;ram at
arose or more accessible than the nearest United States hospital
se sub-
that is adequately equipped and available for his treatment. Your
committee is concerned that under present law border residents who
FEHB
find that the nearest hospital suited to their inpatient care needs
edicare
is located outside the United States may not receive protection against
e over-
the health costs they incur in using these nearest hospitals except in
y plan.
the indicated emergency situations.
intage,
Your committee's bill would include a provision which would ex-
50-per-
pand medicare coverage of services outside the United States to take
under
account of the special problems of border residents. Medicare benefits
would be payable for inpatient hospital services furnished outside the
en the
United States if the beneficiary is a resident of the United States and
loye es
the foreign hospital was closer to, or substantially more accessible
of the
from his residence than the nearest hospital in the United States which
e's bill
was suitable and available for his treatment. For such beneficiaries,
ogram
benefits would be payable without regard to whether an emergency
ervice
existed or where the illness or accident occurred. Only inpatient serv-
eneñ-
ices furnished by a hospital which has been accredited by the Joint
vision
Commission on Accreditation of Hospi+ als or by a hospital approval
effect)
program having essentially comparable standards would be covered.
at the
The present provisions covering emergency inpatient hospital serv-
there
ices outside the United States would be retained.
ne or
78
Payment for all covered hospital services furnished outside the
healt]
United States would be made on essentially the same basis as pay ment
areaw
for emergency services furnished by a nonparticipating hospital within
posef
the United States. Where the hospital elected to bill the medicare pro-
of suc
gram it would be reimbursed on the basis of the reasonable cost of the
is cur
covered services furnished the beneficiary, as is now done with respect
provis
to emergency services furnished by a nonparticipating hospital which
ing he
furnishes actual cost data. Where payment could not be made solely
are be
because the hospital did not elect to bill the program, benefits would be
aid, a:
payable directly to the beneficiary on the basis of an itemized bill if he
wheth
filed an acceptable application for reimbursement. Subject to the ap-
health
propriate deductibles and coinsurance, the beneficiary would be reim-
betwe
bursed in an amount equal to 60 percent of the hospital's reasonable
funds
charges for "routine services" in the room occupied by him or in semi-
costs a
private accommodations, whichever is less, plus 80 percent of the hos-
assure
pital's reasonable charges for "ancillary services," or, if separate
progra
charges for routine and ancillary services are not made by the hospital,
efforts,
two-thirds of the hospital's total charges.
where 1
To assure that medicare beneficiaries would be adequately protected
care fa
against other medically necessary health care costs they may incur
At P
while receiving covered foreign inpatient hospital care, your committee's
levels t
bill would also provide for coverage under the medical insurance
health
program of medically necessary physicians' services and ambulance
and con
services furnished in conjunction with covered foreign inpatient
ning leg
hospital services.
funding
Payment for physicians' services would be limited to the period of
agencies
time during which the individual is eligible to have payment made for
territori
the foreign hospital services he receives. Further, the Secretary would
On the
be authorized to establish, by regulations, reasonable limitations upon
grants:
the amount of a foreign physician's charge that would be accepted as
areawid
reimbursable under the medical insurance program. In recognition of
June 19'
the administrative difficulties that would arise in applying the assign-
To ai
ment method of reimbursement to medical services furnished in other
expendit
countries, your committee's bill would provide that benefits for foreign
ning act
physicians' and ambulance services would be payable only in accord-
the Secr
ance with the itemized bill method of reimbursement provided for
reimburs
under present law.
nance or
These provisions would apply to services furnished with respect
in the (
to hospital admissions occurring after December 31, 1971.
related
2. Improvements in operating effectiveness
inconsist
would be
Limitation on Federal participation for capital expenditures.-
inpatient
Under title XVIII depreciation on buildings and equipment, and inter-
est on loans used to acquire them, are reimbursable as part of the cost
for the I
of providing services to medicare beneficiaries. Such reimbursement
and equ.
is paid without regard to whether the items were constructed or pur-
capacity
chased in conformity with any type of health facility planning re-
services ]
action of
quirement. Similarly, reimbursement on a cost basis for inpatient
hospital services provided under titles V (maternal and child health)
him by V
after cons
and XIX (medicaid) of the Social Security Act includes a recognition
& disallow
of certain capital costs without regard to conformance to planning
organizat
requirements.
of titles 1
There are few aspects of the health care system in the United States
which have been so thoroughly explored as the need for comprehensive
expenses.
areawide planning for the development and utilization of all types of
The Se
the State:
79
ed outside the
ealth care facilities. But the acceptance of the purposes of State and
asis as payment
hospital within
reawide health facility planning has not always been matched by pur-
seful application of the incentives required to achieve the end result
medicare pro-
I such planning. Thus, while a significant amount of Federal money
uble cost of the
currently being expended under the comprehensive health planning
ne with respect
rovisions of the Public Health Service Act in the interest of further-
hospital which
be made solely
mg health facility planning at the State and local levels, Federal funds
are being expended for health services provided under medicare, medic-
nefits would be
sid, and the maternal and child health programs without regard to
mized bill if he
whether the facilities providing the services are cooperating in such
ject to the ap-
health facility planning. Your committee believes that the connection
would be reim-
between sound health facility planning and the prudent use of capital
al's reasonable
funds must be recognized if any significant gains in controlling health
im or in semi-
costs are to be made. Thus, your committee believes it is necessary to
ent of the hos-
assure that medicare, medicaid, and the maternal and child health
r, if separate
programs are consistent with State and local health facility planning
y the hospital,
efforts, in order to avoid paying higher costs unnecessarily in the future
where these costs result from duplication or irrational growth of health
tely protected
care facilities.
ey may incur
At present, efforts are being made on the Federal, State, and local
ur committee's
levels to assure that the need for the expansion and modernization of
cal insurance
health facilities is evaluated, coordinated, and planned on a rational
d ambulance
and controlled basis. At the Federal level, comprehensive health plan-
ign inpatient
ning legislation provides for Federal grants for the establishment and
funding of areawide and comprehensive State health care planning
the period of
agencies. Currently, all 50 States, the District of Columbia, and five
ent made for
territories have State comprehensive health care planning agencies.
:retary would
On the areawide level, 125 planning agencies are receiving Federal
itations upon
grants: 72 of such agencies are operational. It is estimated that 140
e accepted as
areawide planning agencies will be receiving grants by the end of
ecognition of
June 1971 and that more than 90 such agencies will be operational.
ig the assign-
To avoid the use of Federal funds to support unjustified capital
shed in other
expenditures and to support health facility and health services plan-
its for foreign
ning activities in the various States, your committee's bill authorizes
ly in accord-
the Secretary of Health, Education, and Welfare to withhold or reduce
provided for
reimbursement amounts to providers of services and health mainte-
nance organizations under title XVIII for depreciation interest, and,
with respect
in the case of proprietary providers, a return on equity capital,
related to certain capital expenditures that are determined to be
inconsistent with State or local health facility plans. (Similar authority
penditures.-
would be provided with respect to the Federal share of payment for
it, and inter-
inpatient hospital care under titles V. and XIX.) Capital expenditures
t of the cost
for the purposes of this provision include expenditures (1) for plant
mbursement
and equipment in excess of $100,000; (2) which change the bed
cted or pur-
capacity of the institution; or (3) which substantially change the
planning re-
services provided by the institution. The Secretary would take such
or inpatient
action on the basis of findings and recommendations submitted to
hild health)
him by various qualified planning agencies. If he determines, however,
recognition
after consultation with an appropriate national advisory council, that
to planning
a disallowance of capital expenses would be inconsistent with effective
organization and delivery of health services or effective administration
nited States
of titles V, XVIII, or XIX, he would be authorized to allow such
nprehensive
expenses.
all types of
The Secretary would be authorized to enter into agreements with
the States under which designated planning agencies would submit
80
their findings and recommendations (along with those of other qual-
ified planning agencies) with respect to proposed capital expendi-
tures that are inconsistent with the plans developed by such agencies.
(All such health facility and health services planning agencies must
have governing bodies or advisory bodies at least half of whose mem-
bers represent consumer interests.) An adverse decision by a State
planning agency may be appealed to an appropriate agency or in-
dividual at the State level. The Secretary would be authorized to
pay from the Federal Hospital Insurance Trust Fund the reasonable
costs incurred by the planning agencies in preparing and forwarding
findings and recommendations. The bill would in no way change the
autonomy or authority of existing State or local planning agencies,
or the relationships between such agencies, either within States or
across State lines.
These limitations would be effective with respect to obligations for
capital expenditures incurred after June 30, 1972, or earlier, if re-
quested by the State.
(b) Report on plan for prospective reimbursement; experiments and
demonstration projects to develop incentives for economy in the provision
of health services.-Under present law, institutional providers furnish-
ing covered services to medicare beneficiaries are paid on the basis of
the reasonable cost of such services. Payment on this basis, with retro-
active corrective adjustments, is consistent with the long history of
th
public and private third party agency reimbursement for institutional
ov
health care on a cost basis. However, as experience under the medicare,
medicaid, maternal and child health, and other third party programs
has clearly demonstrated there is little incentive to contain costs or
ou
to produce the services in the most efficient and effective manner.
Your committee believes that payment determined on a prospective
bi
basis offers the promise of encouraging institutional policymakers and
managers, through positive financial incentives, as well as the risk
of possible loss inherent in that method, to plan, innovate and gen-
Sec
erally to manage effectively in order to achieve greater financial reward
for the provider as well as a lower total cost to the programs involved
Prospective reimbursement differs from the present method of reim-
giv,
bursement in that a rate of payment is set in advance of the period
over which the rate is to apply. The theory is that once the rate is set
provider will institute cost saving measures which will maximize the
difference between its actual costs and the higher prospective rate
va.
This difference could be expressed as the "profit." Of course, if th
provider's costs turned out to be higher than the prospective rate
men
there would be a loss. Theoretically, this approach to reimbursement
a
introduces incentives not present under the existing reimbursement
A
method which, since it tends to pay whatever the costs turn out to b
live
provides no incentives for efficiency.
men
However, your committee is well aware that in considering such
elie
fundamental change in the present reimbursement method, possib
disadvantages as well as the potential advantages must be taken in:
account. While it is clear for example, that prospective rate settir
will provide incentives for health care institutions to keep costs At
nd
level no higher than the rates set, it is not clear that the rates set wou
result in government reimbursement at levels lower than, or even
low as, that which would result under the present retroactive cost fin
ing approach. Providers could be expected to press for a rate th
81
of
other
qual.
would cover all the costs, including research costs and bad debts, as
expendi-
well as margins of safety in the prospective rates that might result in
such
agencies.
reimbursement-if their requests were met-in excess of the costs that
agencies
must
would have been reimbursed under the present approach. Moreover,
whose
mem-
any excess of reimbursement over costs to voluntary providers would
by
a
State
probably be used to expand services, and the new level of expenditures
agency
or
in-
might be reflected in setting higher prospective rates for future years.
authorized
to
Also to be considered is the fact that under prospective reimburse-
the
reasonable
ment it will be necessary to take steps to assure that providers do not
forwarding
cut back on services necessary to quality care in order to keep actual
change
the
costs down and thus increase the difference between costs and the pro-
agencies,
spective rate established. The development of adequate and widely-
States
or
agreed-upon measures of quality of care will clearly be needed to
provide that assurance and should be immediately developed by the
bligations
for
Department.
earlier,
if
re-
In view of the far-ranging implications of such a change in the
approach to reimbursement, your committee's bill provides for a
eriments
and
period of experimentation under titles XVIII, XIX and V with various
the
provision
alternative methods and techniques of prospective reimbursement.
furnish-
It is the intent of your committee that experimentation be conducted
the
basis
of
with a view to developing and evaluating methods and techniques that
with
retro-
will stimulate providers through positive financial incentives to use
history
of
their facilities and personnel more efficiently, thereby reducing their
institutional
own as well as program costs while maintaining or enhancing the
he
medicare,
quality of the health care provided.
programs
The experiments and demonstration projects directed to be carried
costs
or
out under this provision are to be of sufficient scope and on a wide
manner.
enough scale to give assurance that the results would obtain generally
prospective
(but not so large or comprehensive as to commit the programs to
makers
and
any prospective payment system either locally or nationally). No
as
the
risk
experiment or demonstration project is to be undertaken by the
and
gen-
Secretary until he consults with and takes into consideration the advice
reward
and recommendations of recognized specialists in the health care field
involved.
who are qualified and competent to evaluate the feasibility of any
of
reim-
given experiment or demonstration project.
the
period
Under your committee's bill, the Secretary would be required to
rate
is
set
a
submit to the Congress no later than July 1, 1973, a full report of the
aximize
the
results of the experiments and demonstration projects, as well as an
ective
rate.
evaluation of the experience of other programs with respect to pro-
if
the
spective reimbursement. The report is to include detailed recom-
ective
rate,
mendations with respect to the specific methods that might be used
nbursement
in the full implementation of a prospective reimbursement system.
abursement
Although recognizing the promise and potential offered by prospec-
out
to
be,
tive reimbursement your committee does not wish to preclude experi-
mentation with other forms of reimbursement. Your committee
such
a
believes that a solid foundation of experience is required with all pos-
possible
sible alternative forms of reimbursement before permanent changes
taken
into
can be made. The bill therefore includes authorization for the Sec-
setting
retary of Health, Education, and Welfare to engage in experiments
costs
at
a
and demonstration projects involving negotiated rates, the use of
set
would
rates established by a State for administration of one or more of its
even
as
laws for payment or reimbursement to health facilities located in
cost
find-
such State, and alternative methods of reimbursement with respect to
rate
that
the services of residents, interns, and supervisory physicians in teach-
82
ing settings. Authority is also provided to make payments, on an
To
experimental or demonstration project basis, to organizations and
result
institutions which have the capability of providing comprehensive
scope
health care, mental health care, and ambulatory health care, for serv-
limite
ices which are not currently covered under titles V, XVIII, XIX,
as re
and which are incidental to services covered under the programs, if
costs
the inclusion of the additional services would, in the judgment of the
ment
Secretary, offer some prospect of resulting in more economical pro-
stant
vision and more effective utilization of services for which payment
W
may be made under such programs.
in ex
The bill would authorize experimentation with the use of areawide
the e
or communitywide peer review, utilization review, and medical
thele
review mechanisms to determine whether they would help to assure
tient
that health services provided to beneficiaries conform to appropriate
servi
professional standards and that payment will be made only for medi-
are 1
cally necessary services that in each case are rendered in the most
tient
economical setting that is consistent with professionally recognized
Si
standards. Authority is also provided to experiment with the use of
of n
fixed price or performance incentive contracts to determir e whether
from
they would have the effect of inducing more effective, efficient, and
tion
economical performance by medicare intermediaries and carriers.
form
It is intended that benefit costs and administrative costs incurred
the
under this section would be paid out of the Federal Hospital Insurance
anis
Trust Fund and the Federal Supplementary Medical Insurance Trust
pres
Fund in reasonable proportion to the participation of medicare in the
that
project. Medicaid and private funds would also be used proportion-
that
ately when medicaid and private programs participate in the project.
reas
These provisions will be effective upon enactment of the bill.
P
Your committee is concerned about the difficulties some beneficiaries
not
who need extended care and their physicians face as a result of the
effe
present title XVIII provision under which payment may be made for
sub
services funished in an extended care facility only if the beneficiary
cost
was transferred from a hospital after a stay of at least three days.
sinc
Therefore, in addition to the other experiments the Secretary will be
unt
undertaking, your committee expects him to conduct studies and
line
engage in experiments to determine the effects of eliminating the
rio
three-day prior hospitalization requirement, which he has authority to
ity
waive for the purpose of such experimentation, and report to your
cas
committee his findings together with any recommendations he may
cos
have for changes in this provision of existing law.
che
(c) Limitations on coverage of costs under medicare.-Your com-
and
mittee is mindful of the fact that costs can and do vary from one
car
institution to another as a result of differences in size, in the nature
or
and scope of services provided, the type of patient treated, the location
Ur
of the institution and various other factors affecting the efficient de-
iro
livery of needed health services. Your committee is also aware, how-
ever, that costs can vary from one institution to another as a result of
CCI
variations in efficiency of operation, or the provision of amenities in
ex
plush surroundings. Your committee believes that it is undesirable
WC
from the standpoint of those who support Government mechanisms
th
for financing health care to reimburse health care institutions for
re
costs that flow from marked inefficiency in operation or conditions of
ha
excessive service.
CO
83
on
an
To the extent that differences in provider costs can be expected to
and
result from such factors as the size of the institution, patient mix,
ehensive
for
scope of services offered or other economic factors, wide, but not un-
serv-
limited recognition should be given to the variations in costs accepted
XIX,
as reasonable. However, data frequently reveals wide variations in
if
costs among institutions that can only be attributable to those ele-
of
the
ments of cost that would ordinarily not be expected to vary sub-
pro-
stantially from one institution to another.
ayment
Where the high costs do in fact flow from the provision of services
in excess of or more expensive than generally considered necessary to
reawide
the efficient provision of appropriate patient care, patients may never-
medical
theless desire such services. It is not the committee's view that if pa-
assure
tients desire unusually expensive service they should be denied the
ropriate
service. However, it is unreasonable for medicare or medicaid (which
medi-
are financed by almost all people in the country rather than the pa-
most
tient or community that wants the expensive services) to pay for it.
ognized
Similarly when the high costs flow from inefficiency in the delivery
use
of
of needed health care services the institution should not be shielded
vhether
from the economic consequences of its inefficiency. Health care institu-
and
tions, like other entities in our economy should be encouraged to per-
form efficiently and when they fail to do so should expect to suffer
ncurred
the financial consequences. Unfortunately a reimbursement mech-
surance
anism that responds to whatever costs a particular institution incurs
Trust
presents obstacles to the achievement of these objectives. It is believed
in
the
that they can only be accomplished by reimbursement mechanisms
ortion-
that limit reimbursement to the costs that would be incurred by a
project.
reasonably prudent and cost-conscious management.
iciaries
Present law provides authority to disallow incurred costs that are
not reasonable. However, there are a number of problems that inhibit
of
the
effective exercise of this authority. The disallowance of costs that are
for
substantially out of line with those of comparable providers after such
eficiary
costs have been incurred creates financial uncertainty for the provider,
days.
will
since, as the system now operates, the provider has no way of knowing
be
until sometime after it incurs expenses whether or not they will be in
and
line with expenses incurred by comparable providers in the same pe-
the
riod. Furthermore, present law generally limits exercise of the author-
to
ity to disallow costs to instances that can be specifically proved on a
your
case-by-case basis. Clear demonstration of the specific reason that a
may
cost is high is generally very difficult. And, since a provider cannot
charge a beneficiary more than the program's deductible and coinsur-
com-
ance amounts for covered services, exercise of either type of authority
one
can leave the provider without reimbursement for some costs of items
ature
or services it has already incurred for patients treated some time ago.
de-
Under these circumstances the provider would have to obtain funds
how-
from some other source to make up for its deficit.
ult
of
1 he proposed new authority to set limits on costs recognized for
in
certain classes of providers in various service areas differs from
irable
existing authority in several ways and meets these problems. First, it
would be exercised on a prospective, rather than retrospective, basis so
for
that, the provider would know in advance the limits to Government
of
recognition of incurred costs and have the opportunity to act to avoid
ns
having costs that are not reimbursable. Second, the evaluation of the
costs necessary in delivering covered services to beneficiaries would be
exercised on a class and a presumptive basis-relatively high costs
59-948 0-71-7
84
that cannot be justified by the provider as reasonable for the results
obtained would not be reimbursable-so that implementation of
to pat
the proposed authority would appear more feasible than present
service
authority. Third, since the limits would be defined in advance, pro-
Prov
vision would be made for & provider to charge the beneficiary for the
of thei
costs of items or services in excess of or more expensive than those that
obtain
are determined to be necessary in the efficient delivery of needed
of the
health services. Public notice would be provided where such charges
Prov
are imposed by the institution and the beneficiary would be specifically
ceilings
advised of the nature and amount of such charges prior to admission so
physici
that there is opportunity for the public, doctors, and their medicare
where
patients to know what additional payment would have to be made.
expensi
Your committee expects that the provision will not be applicable
services
where there is only one hospital in a community-that is, where, if
informe
the provision were applied, additional charges could be imposed on
assesse(
beneficiaries who have no real opportunity to use a less expensive.
Your C(
non-luxury institution, and where the provision would be difficult
to it a
to apply because comparative cost data for the area are lacking.
charges
Your committee recognizes that the initial ceilings imposed will of
being cl
necessity be imprecise in defining the actual cost of efficiently deliver-
The
which t
ing needed health care. And your committee recognizes that these pro-
visions will apply to a relatively quite small number of institutions. The
costs pr
data that are available for this purpose will often be less than perfectly
food ser
reliable-for example, it may be necessary to use unaudited cost reports
area ran
the limi
or survey or sampling techniques in estimating the costs necessary to
the efficient delivery of care. Under medicare's administrative system.
day, the
however, cost reports prepared by the providers are now being sub-
charge F
mitted more promptly after the close of the accounting period and
reimburs
should be available for analysis in the next year and for the estab-
billed fo
lishment of limits in the second following year. Also, the precision of
will be di
the limits determined from these data will vary with the degree to
would no
which excessive costs can be distinguished from the provision of higher
in the pr
quality or intensity of care.
In add
For costs that would not generally be expected to vary with essential
are below
quality ingredients and intensity of medical care-for example, the
it from I
costs of the "hotel" services (food and room costs) provided by hos-
charges E
bill.
pitals-the Secretary might set limits sufficiently above the average
costs per patient day previously experienced by a class of hospital-
to make allowance for differing circumstances and short-term economi
beginning The pr
fluctuations. Hotel services may be easiest to establish limits for and Ix
(d) Lir
among the first for which work can be completed. Attention might be
tive polic
given as well to laundry costs, medical record costs, and administratio:
charge fo
level no
costs within the reasonably near future.
Setting limits on overall costs per patient day and specific costs the
of custom
vary with the quality and intensity of care would be more difficul:
illustrate,
but the Secretary might be able to set reasonable limits sufficient
vere at fi
above average costs per patient day previously experienced by a clas
ians who
hysicians
of institutions so that only cases with extraordinary expenses wou.
be subject to any limits. In addition, special limits could be esta
harge $2.
lished on cost elements found subject to abuse. For example, 11
ad with
Secretary might establish limits on the level of standby costs the
excess
would be recognized as reasonable under the program to prevent Gos
vel that
ernment programs from picking up the cost of excessive amounts
Custom:
idle capacity-particularly relatively high personnel costs in relati
mit are g
tuations
tharges.)
85
patient loads where occupancy rates are low-in reimbursing for
prices to covered patients.
Providers would, of course, have the right to obtain reconsideration
their classification for purposes of cost limits applied to them and to
or
btain relief from the effect of the cost limits on the basis of evidence
e
of the need for such an exception.
need
Providers will be permitted to collect costs in excess of the medicare
fical
ilings from the beneficiary (except in the case of admission by a
hysician who has a direct or indirect financial interest in a facility)
ion
here these costs flow from items or services in excess of or more
made
expensive than those necessary for the effective delivery of needed
icabl
ervices, provided all patients are so charged and the beneficiary is
informed of his liability in advance. Information on additional charges
ere,
assessed would also be made available generally in the community.
ed O:
Your committee is also requesting that the Secretary submit annually
insive
fficult
to it a report identifying the providers that make such additional
charges to beneficiaries and furnishing information on the amounts
will of
being charged by such providers.
The determination of the cost of the excess items or services for
eliver-
which the beneficiary may be charged will be made on the basis of
le pro-
S. The
costs previously experienced by the provider. For example, if costs for
fectly
food services experienced in 1969 among a group of hospitals in an
area ranged from $4 to $9 a day with a median cost of $5 a day and
eports
the limit for food services set by the Secretary for 1971 was $7.20 a
ary to
day, the hospital previously experiencing costs of $9 a day could
stem,
gn sub-
charge patients $1.80 a day for food services. However, should total
d and
reimbursement for covered services from the program plus charges
estab-
billed for such services exceed actual costs in any year, the excess
ion of
will be deducted from payments to the provider. Thus, the provider
would not profit from charges to beneficiaries based on excess costs
ree to
higher
in the prior year.
In addition it should be noted that the fact that a provider's costs
sential
are below the ceilings established under this provision will not exempt
e, the
it from application of the ceiling of customary charges where such
y hos-
charges are less. than cost under another provision in the committee
bill.
verage
spitals
The provision would be effective with respect to accounting periods
nomic
beginning after June 30, 1972.
and be
(d) Limits on prevailing charge levels.-Under present administra-
rht be
ti polices under medicare, the prevailing limit on the reasonable
ration
charge for a service is intended, over the long run, to be set at a
level no higher than is necessary to. embrace the 75th percentile
that
of customary charges for that service in the physicians' locality. To
ficult,
illustrate, if customary charges for an appendectomy in a locality
iently
were at five levels, with 10 percent of the services rendered by physi-
class
cians whose customary charge was $150, 40 percent rendered by
vould
physicians who charge $200, 40 percent rendered by physicians who
stab-
charge $250 and 5 percent rendered by physicians who charge $300
the
and with the remaining 5 percent rendered by physicians charging
that
in excess of $300, the prevailing limit would be $250, since this is the
Gov-
level that would cover at least 75 percent of the cases.
ts of
Customary charges for services that are within the prevailing fee
tion
limit are generally recognized in full. (In a relatively small number of
situations additional rules are used to judge the reasonableness of
charges.)
86
Your committee believes that it is necessary to move in the direction
of an approach to reasonable charge reimbursement that ties recogni-
in that fis
years. Hov
tion of fee increases to appropriate economic indexes so that the pro-
therwise
gram will not merely recognize whatever increases in charges are estab-
lished in a locality but would limit recognition of charge increases to
duced tc
rates that economic data indicate would be fair to all concerned.
ithin the
Under your committee's bill, the prevailing charges recognized for
hat were
a locality could be increased in fiscal year 1973 and in later years only
dar year
to the extent justified by indexes reflecting changes in the operating ex-
he relate
penses of physicians and in earnings levels. What the bill provides is a
eded, in
limit on the increases that would be recognized on the basis of the other
972 by t
reasonable charge criteria. Increases in the customary charges of in-
roportion
rvices in
dividual physicians and in the charges prevailing among physicia as in
a locality would continue to be recognized only on the basis of adequate
Liling ch:
reentile
evidence that such increases had been in effect for a period of time.
that the
The new ceiling on recognition of increases in prevailing charge limits
that is provided would come into play only when the adjustments
It is, of c
e, both in
necessary to meet increases in the actual charges prevailing in a
.n be deve
locality exceeded, in the aggregate, the level of increase justified by
other changes in the economy.
the prop
The Secretary would establish the statistical methods that would
he object
be used to make the calculations to establish the limit on the increase-
use of a
allowed by this provision.
indexes
The base for the proposed economic indexes would be calendar year
at would
1970. The increase in the indexes that occurs in a succeeding calendar
ke accour
year would constitute the maximum allowable aggregate increase is
rious typ
prevailing charges that would be recognized in the fiscal year beginning
ductivit
after the end of that calendar year.
rate as
Initially, the Secretary would be expected to base the propose
a carrier
economic indexes on presently available information on changes in
tomary {
expenses of practice and general earnings levels combined in a man-
the shifti
ner consistent with available data on the ratio of the expenses of prac-
us, whetl
tice to income from practice occurring among self-employed physician.
determi
as a group. If, for example, available data indicated that for self-
ich physi
employed physicians as a group, expenses of practice absorbed approx-
gate was
mately 40 percent of gross receipts of practice (the proportion indicate
Iin earni
by data compiled by IRS from tax returns), the Secretary could dete:
Your con
mine that the maximum aggregate increase in prevailing char,
itations (
levels that could be recognized would be 40 percent of the increa-
medicare
in expenses of practice indicated by IRS data plus 60 percent of
reasonab
increase in earnings levels indicated by social security data. Thus,
Tier and f
during calendar year 1971 the area increase in expenses of practi
be localit
was 3 percent and the area increase in earnings was 5 percent,
-1, on the
allowable aggregate increase in prevailing charges recognized by
retary, W
carrier in each locality during fiscal year 1973 would be 4.2. percent:
ilar servi
elapsing
(.40X.03)+(.60X.05)=.042
While tyir
general es
The carrier would apply the prevailing charge criteria now in
age deter:
law to data on charges in calendar year 1971 to determine the increas
.mittee b
in prevailing charges that it would be appropriate to recognize dur.
rminatio
fiscal year 1973. If the aggregate increase in prevailing charges
that do n
determined was less than 4.2 percent, the adjustments would be P
his is so 1
mitted and the portion of the allowable aggregate increase not the
"ges in ex
Ices can 1
87
irection
in that fiscal year could be carried forward and used in future fiscal
recogni-
the pro-
years. However, if the aggregate increase in prevailing charges found
otherwise appropriate exceeded 4.2 percent, such increases would be
e estab-
reduced to the extent necessary to bring the aggregate of all increases
eases to
ed.
within the 4.2 ceiling-that is, if the new prevailing charge limits
lized for
that were indicated for fiscal year 1973 by the 75th percentile of cal-
ars only
endar year 1971 charges weighted in proportion to the representation of
iting ex-
the related services in aggregate services in calendar year 1971 ex-
ides is a
ceeded, in total, the prevailing charge limits indicated for fiscal year
the other
1972 by the 75th percentile of calendar 1970 charges weighted in
es of in-
proportion to the representation of the related services in aggregate
icians in
services in calendar year 1970 by 8.4 percent, then each of the pre-
dequate
vailing charge increases indicated for fiscal year 1973 by the 75th
of time.
percentile of calendar year 1971 charges would be reduced by one-half
ge limits
SO that the aggregate increase allowed would be within the 4.2 ceiling.
It is, of course, contemplated under the bill that the Secretary would
istments
ing in a
use, both initially and over the long run, the most refined indexes that
tified by
can be developed. However, your committee believes that the viability
of the proposal does not depend on a great deal of further refinement.
at would
The objectives of the proposal could be attained with equity through
increases
the use of an approach such as that described above. This is SO because
the indexes are not to be applied on a procedure-by-procedure basis
ndar year
that would raise serious questions of equity in absence of refinements to
calendar
take account of variations in the mix of factors of production among
icrease in
various types of medical services and to take account of changes in
beginning
productivity with respect to various services. Rather, the indexes will
operate as overall ceilings on prevailing fee level increases recognized
proposed
in a carrier area under which adjustinents permitted by the present
hanges in
customary and prevailing charge criteria could be made to take account
in a man-
of the shifting patterns and levels and actual charges in each locality.
es of prac-
Thus, whether the new limit on prevailing charges will actually affect
physicians
the determination of reasonable charges depends on the degree to
t for self-
which physicians' fees rise in the future. If the rise in fees in the ag-
d approxi-
gregate was no more than the rise in operating expenses of physicians
indicated
and in earnings, the rise in fees would be allowed in full.
ould deter-
Your committee believes it desirable to embody in the statute the
ng charge
limitations on medical charges recognized as prevailing now set forth
e increase
in medicare regulations under which no charge may be determined to
ent of the
be reasonable if it exceeds the prevailing charge recognized by the
1. Thus, if
carrier and found acceptable to the Secretary for similar services in the
f practice
same locality on December 31, 1970, or the prevailing charge level
rcent, the
that, on the basis of statistical data and methodology acceptable to the
ed by the
Secretary, would cover 75 percent of the customary charges made for
percent:
similar services in the same locality during the last preceding calendar
year elapsing prior to the start of the fiscal year.
While tying the allowability of future increases in prevailing charges
to general economic indicators is an appropriate method for reasonable
DW in the
charge determinations with respect to the services of physicians, your
increases
committee believes it would be inappropriate for reasonable charge
ze during
determinations with respect to medical supplies, equipment, and serv-
harges so
ices that do not generally vary in quality from one supplier to another.
d be per-
This is SO because no program purpose would be served by allowing
not used
charges in excess of the lowest levels at which supplies, equipment, or
services can be readily obtained in a locality. For this reason, the com-
88
mittee bill permits deviation from generally applicable reasonab)
charge criteria where it is determined that medical supplies, equi;
ment, and services do not generally vary in quality from one suppli-
to another.
Your committee recognizes that it will not be possible for the Secn
tary to immediately establish special charge or cost limits for even
item or service not materially affected in quality by the supplier wh
actually furnishes it to the patient. However, the committee believe
that it is important to make explicit the Secretary's authority and
is expected that he will assert such authority to impose rules for deter.
mining reasonable charges when, after due consideration, he determine.
that a particular item or service does not vary in quality from on
supplier to another and devises special rules for reasonable charg.
determinations that he considers equitable and administratively feasi-
ble. Until the Secretary designates an item or service as falling within
the scope of this provision and establishes rules for determining rea-
sonable charges for that item, the presently applicable rules, including
any special rules imposed by the carrier, would generally remain in
effect.
The effect of the new limits established under this provision would
be extended to the medicaid and child health programs by providing
that payments under these programs in fiscal year 1972 and thereafter
may not be made with respect to any amount paid for items and serv-
ices that exceeds these new limits. This would be consistent with the
situation in the present medicaid program.
The medicaid provisions of the Social Security Amendments of 1965
contained nothing which attempted to limit the charges by physicians
that States could pay under their medicaid programs. States could and
usually did set some type of limits of their own, typically less than-
usual or customary charges. The Social Security Amendments of 1967
added a new medicaid provision which required that a State plan
must provide assurances that "payments (including payment for any
drugs under the plan) are not in excess of reasonable charges consistent
with efficiency, economy, and quality of care." On June 30, 1969, HEW
issued an interim regulation which limited fees paid to physicians, den-
tists, and other individual providers of medical services under medic-
aid. The HEW regulation stipulated that payments to providers would
be limited to those received in January 1969, unless payments were
below the 75th percentile of customary charges. States whose payment
structures provided fees above the 75th percentile of customary charges
were required to adjust their payments SO that they did not exceed rea-
sonable charges as determined under medicare. The regulation also
stipulates that after July .1, 1970, States may request permission to
increase fees paid to individual practitioners only if two conditions
are met:
(1) The average percentage increase requested above the 75th
percentile of customary charges on January 1, 1969, may not exceed
the percentage increase in the all-services component of the Consumer
Price Index (adjusted to exclude the medical component) or an
alternative designed by the Secretary; and
(2) Evidence is clear that providers and the States have coopera-
tively established effective utilization review and quality control
systems.
89
able reasonable
The proposed amendment is substantially along the lines of the
supplies, equip-
m one supplier
present regulation.
(6) Limits on payment for skilled nursing home and intermediate care
e for the Secre-
facility services.-Yo committee is concerned that costs for skilled
nursing homes and intermediate care facilities have been escalating
imits for every
at a rate which is undesirable from the standpoint of Federal, State
1e supplier who
mittee believes
and local governments and the private sector. Your committee
therefore recommends that limits be placed on Federal financial
uthority and it
rules for deter-
participation for costs of such facilities with a view toward exerting
1, he determines
pressure on both the public and private sectors to limit further
cost increases. The bill would provide that for any calendar quarter
ality from one
beginning after December 31, 1971, the average per diem cost for
sonable charge
stratively feasi-
skilled nursing homes and intermediate care facilities. countable for
Federal financial participation be limited to 105 percent of such cost
S falling within
for the same quarter of the preceding year. However, in computing
etermining rea-
rules, including
the per diem costs any amounts ascribable to increases in the Federal
minimum wage, or other Federal law enacted after the enactment of
rally remain in
the bill, would be disregarded.
provision would
(f) Payments to health maintenance organizations.-Under present
is by providing
law, organizations providing comprehensive health services on a per
2 and thereafter
capita prepayment basis cannot be reimbursed by medicare through a
items and serv-
single capitation payment encompassing all covered services provided
sistent with the
to medicare enrollees. Instead, medicare reimbursement to group
practice prepayment plans, whether it is made on a cost or charge
adments of 1965
basis, must be related to the costs to the organization of providing
IS by physicians
specific services to beneficiaries, so that the financial incentives that
States could and
such organizations have in their regular business to keep costs low and
ically less than
to control utilization of services do not carry over to their relationship
with medicare.
dments of 1967
it a State plan
Your committee believes that a serious problem in the present ap-
proach to payment for services in the health field, either by private
ayment for any
arges consistent
patients, private insurance, or the Government, is that, in effect, pay-
30, 1969, HEW
ment is made to the provider for each individual service performed,
physicians, den-
so that other things being equal, there is an economic incentive on the
es under medic
part of those who make the decisions on what services are needed to
providers would
provide more services, services that may not be essential, and even
payments were
unnecessary services. A second major problem is that, ordinarily, the
whose payment
individual must largely find his own way among various types and
stomary charges
levels of services with only partial help from a single hospital, a nurs-
not exceed rea-
ing home, a home health agency, various specialists, and so on. No one
regulation also
takes responsibility, in a large proportion of the cases, for determining
t permission to
the appropriate level of care in total and for seeing that such care, but
two conditions
no more, is supplied. The pattern of operation of health maintenance
organizations that provide services on a per capita prepayment basis
bove the 75th
lends itself to a solution of both these problems with respect to the care
may not exceed
of individuals enrolled with them. Because the organization receives a
of the Consumer
fixed annual payment from enrollees regardless of the volume of serv-
iponent) or an
ices rendered, there is a financial incentive to control costs and to pro-
vide only the least expensive service that is appropriate and adequate
have coopera-
for the enrollee's needs. Moreover, such organizations take responsi-
quality control
bility for deciding which services the patient should receive and then
seeing that those are the services he gets.
Your committee believes it would be desirable for medicare to relate
itself to health maintenance organizations in a way that conforms more
90
nearly to their usual way of doing business. The objective is to provide,
in the case of medicare beneficiaries, the same kind of financial incen.
isminatio eed by t]
tives that health maintenance organizations have with respect to their
require
other enrollees.
riod, a ]
Accordingly, your committee's bill provides for medicare payment
..) the ro
to such an organization with respect to beneficiaries enrolled with it to
the re
be made on a prospective per capita basis, encompassing all medicare.
a group.
covered services for which its enrollees are eligible to receive payment.
rollees "
(Group practice prepayment plans could, of course, choose to continue
subject
to be reimbursed under the provisions of existing law if they wished.)
organi
The payment would be determined annually in accordance with
nefits 01
regulations of the Secretary, at a rate equal to 95 percent of the estimat-
to refux
ed amount(with appropriate adjustments-such as age and morbidity
For pur
differentials-to assure actuarial equivalence) that would be payable
finarily
if such covered services were furnished outside of the framework of
eeds th
a health maintenance organization. For beneficiaries who are covered
wever,
by both the hospital and medical insurance plans, payments to health
1th m:
maintenance organizations would be made from both the hos pital
ention
insurance and supplementary medical insurance trust funds, with
Mich ex
the portion from the supplementary medical insurance trust fund
rable t:
being the product of the total monthly premium (beneficiary and
vision
Federal Government amounts combined) times the number of medi-
mporar
care beneficiaries enrolled in the organization. The remainder of the
inbers]
payment would be made from the hospital insurance trust fund.
whi
The 95 percent payment rate for any health maintenance organiza-
org:
tion would be based upon the reimbursement amount per capita for
Under
services furnished by other than health maintenance organizations,
least 5
adjusted for variations in unit benefit cost due to service areas, reason-
neficial
able availability of services, and underwriting rules. The service area
More im'
concept encompasses the geographical locality where the health
nance
maintenance organization is providing the service, and in which
five to I
there is a reasonable cross section of different types of institutions
reanizat
and practitioners and utilization rates. Where there is an abnormal
additio
scarcity of services or excessive services for persons not in the health
enroll
maintenance organization in a particular locality, but the needs
The in
of health maintenance organization members are fully met, the
medi
actuarial equivalent cost would be determined by established actuarial
supp
methods which include the consideration of costs in comparableloca-
ho are
tions where the covered services are reasonably available. The actuarial
receive I
determinations should be performed by qualified actuaries experienced
ganiza
in health care program costing. This expertise also would be needed
other pl
to appraise whether enrollment of poorer risks, such as institution-
ganiza
alized persons or persons of low income, were less than in proportion
gency St
to the population in the service area and to determine the effects on
brough
costs. Similarly, special limitations of the health maintenance organi-
woul
zation on access of members to care, and limitations on the provision
wh
of teaching and community services should also be taken into account
out
in considering cost equivalence.
fu
To guard against potentially, excessive profits from the medicare
To q
payment, your committee has included a provision to assure that the
organiz
rate of retention (gross revenues less costs) for medicare enrollees
three
would not be permitted to exceed the rate for other beneficiaries of
cap
the health maintenance organization. Since an acceptable rate of
the
retention cannot be prospectively assured, the provision calls for an
91
re is to provide,
namination by the Secretary of the actual rates of retention experi-
financial incen-
,need by the organization. The health maintenance organization would
respect to their
required to submit to the Secretary, following each accounting
riod, a public accounting report which identifies (by amount and
licare payment
ate) the retention for all medicare beneficiaries, considered as a group,
rolled with it to
and the retention for all other enrollees of the organization, considered
g all medicare-
a group. Any report showing a positive rate of retention for medicare
ceive payment.
carollees which exceeds 90 percent of its rate for other enrollees would
ose to continue
subject to full audit. Where an excessive rate of retention is verified,
f they wished.)
the organization would be required to utilize such excess for additional
:cordance with
nefits or reductions in premiums charged to medicare beneficiaries
of the estimat-
of to refund the excess to the trust funds.
and morbidity
For purposes of this provision, an "excessive rate of retention" would
uld be payable
ordinarily be any positive rate of retention for medicare enrollees which
2 framework of
xeeeds the organization's rate of retention for enrollees under age 65.
tho are covered
However, if persons over age 65 comprise more than one-half of the
nents to health
health maintenance organization's enrollment, an excessive rate of
h the hospital
retention would be any rate with respect to its medicare enrollees
st funds, with
which exceeds the rate of retention generally experienced by com-
nce trust fund
parable types of organizations for enrollees under age 65. This latter
beneficiary and
provision is intended to assure that those organizations which are
umber of medi-
temporarily exempted from the requirement that one-half of the
mainder of the
membership be under age 65 are nevertheless subject to a retention
rust fund.
limit which accurately reflects the retention experienced by prepay-
nance organiza-
ment organizations which operate primarily in a true market situation.
per capita for
Under this payment formula, the program is assured of saving for
organizations,
at least 5 percent over average payments made on behalf of medicare
e areas, reason-
beneficiaries who are not enrolled in health maintenance organizations.
'he service area
More importantly, the payment mechanism rewaids the health main-
ere the health
tenance organization with earnings proportional to its efficiency rela-
and in which
tive to the traditional system and permits the especially efficient
of institutions
organization an opportunity to provide special incentives (in the form
is an abnormal
of additional benefits or premium reductions) for medicare beneficaries
st in the health
to enroll and thus to maximize its returns.
but the needs
The individuals with respect to whom such payment would be made
fully met, the
are medicare beneficiaries who are entitled to both hospital insurance
lished actuarial
and supplementary medical insurance or to medical insurance only and
omparableloca-
who are enrolled with a health maintenance organization. They would
e. The actuarial
receive medicare-covered services only through the health maintenance
ries experienced
organization, except for those emergency services as are furnished by
ould be needed
other physicians and providers of services. The health maintenance
as institution-
organization would be responsible for paying the costs of such emer-
n in proportion
gency services. If an enrolled individual received nonemergency care
e the effects on
through some other means than the health maintenance organization,
tenance organi-
he would have to meet the entire expense of such care, except in the
n the provision
case where a determination has been made that the individual received
en into account
care outside the health maintenance organization which should have
been furnished by the HMO.
n the medicare
To qualify to receive payment in this way, a health maintenance
assure that the
licare enrollees
organization would have to be one which provides: (1) either directly
or through arrangements with others, health services on a prospective
beneficiaries of
per capita prepayment basis; (2) all the services and benefits of both
ptable rate of
the hospital and medical insurar ce parts of the program; (3) physi-
on calls for an
cian's services, either directly by physicians who are employees or
92
partners of the organization, or under an arrangement with an org.
such as scheduling
nized group of physicians under which the group is reimbursed for
ranted delay in sch
its services primarily on the basis of an aggregate fixed sum or on a
nation against poo
capita basis. Since physicians play the major role in determining util
service aimed at e
zation of all covered services, such payment arrangement should COL.
The Secretary is I
tain an element of incentive for such physicians to assure that medicar
fiscal abuse of the
patients are provided needed services in the most efficient and eco.
ception to) any
nomical manner. (The group of physicians which has the arrangemen:
may have with
with the health maintenance organization could, in turn, pay it
appear to result
physician members on any other basis, including fee-for-service.)
state the value of
A health maintenance organization must have at least half of it.
If the health m
enrolled membership under age 65 or be expected to meet this require-
c vered by the me
ment within a period not exceeding 3 years with evidence of positiv.
C arge its enrollee
and continuing efforts to achieve the required enrollment distribution
provisions of the
The organization must also hold an annual open enrollment period
of the medicare
during which it accepts enrollees on a nondiscriminatory basis up 1,
enrollees services
the limits of its capacity. Additional requirements are: (1) tha:
inform enrollees (
the organization furnish to the Secretary proof of its financial responsi-
tional services, ar
bility and its capacity to provide comprehensive health services.
may not exceed t
including institutional services, effectively and ecohomically; (2) tha:
medicare progra
the organization assure that the health services required by its enrollee-
beneficiaries enr
are received promptly and appropriately and that they measure up
fully from their
to quality standards. The various elements of a health maintenance
than the deducti
organization, such as the hospital, the extended care facility or clinica!
assure that they
laboratory, would each continue to have to meet the conditions of
included in the }
participation or other quality standards which apply to such organi-
tions which is ir
zations under present law.
Beneficiaries
The Secretary would execute an individual contractual agreement
are dissatisfied
with each qualified organization desiring to function as a health
would have the
maintenance organization. Such contracts would be automatically
health mainten
renewed annually in the absence of reasonable advance notice by either!
to judicial revi
party of intention to terminate at the end of the current term, except
ceeding specifie
that the Secretary could terminate the contract at any time (after
Beneficiaries
reasonable notice and opportunity for hearing) if he finds that the
tenance organiz
organization has failed substantially to carry out the contract,
in accordance V
carrying it out in a manner inconsistent with efficient, effective, and
ment would ta.'
economical administration or no longer meets all requirements to
as is the case
qualify for payment as a health maintenance organization. Such con-
mentary medic
tracts will include provisions giving the Secretary appropriate access
Your comm
to organization records to evaluate the quality of its performance
maintenance o
with respect to provision of services as well as to determine compliance
continue meml
with fiscal requirements. In negotiating the contracts, the Secretary
to receive COV
may disregard other laws and regulations which impose conditions or
seem inequita
restraints on the contractual process, but only where such conditions
diately or inv
or restraints are inconsistent with the purposes of the medicare
services, your
program.
maintenance
Under this provision, your committee expects that the Secretary will
reimbursed fo
issue regulations establishing means for effective implementation of an
bers prior to
ongoing review program to assure that the health maintenance orga-
payments in
nization effectively fulfills beneficiary service needs by adhering to
similar to th
specified minimum requirements for full-time qualified medical staff.
priate payme
keeping beneficiaries fully informed on the extent of coverage of
such enrollee
services received outside the organization, taking positive actions to
The health
assure that beneficiaries are not deprived of benefits through devices
effective with
93
ent
is twith an or
4nch as scheduling appointments at inconvenient times or unwar-
ted sum or on
?anted delay in scheduling of elective surgery, and avoiding discrimi-
determining u'
stion against poor health risks through selective enrollment or poor
<<rvice aimed at encouraging disenrollment of high users of services.
ement should
The Secretary is also expected to take precautions against possible
sure that medi
efficient and
Escal abuse of the program by examining (and, where required, taking
is the arrangem
exception to) any arrangement the health maintenance organization
may have with providers, including related organizations, which
e-for-service.) in turn, pay
appear to result in an unwarranted increase in costs or to over-
at least half of
state the value of any added coverage or reduction of premiums.
If the health maintenance organization provides only the services
meet this requir
covered by the medicare program to its enrollees, the premiums it may
vidence of positi
Iment distributi
charge its enrollees cannot exceed the actuarial value of the cost-sharing
enrollment peri
provisions of the hospital and supplementary medical insurance parts
of the medicare program. If, however, the organization provides its
natory basis up
enrollees services in addition to those covered under medicare, it must
ents are: (1) th
inform enrollees of the portion of the premium applicable to such addi-
financial respon-
tional services, and the portion applicable to medicare-covered services
re health service
may not exceed the actuarial value of the cost-sharing provisions of the
nomically; (2) th
ired by its enrolle
medicare program These requirements are intended to assure that
beneficiaries enrolled with health maintenance organizations benefit
t they measure u
ealth maintenan
fully from their medicare coverage and are, in effect, charged no more
than the deductible and coinsurance amounts. This provision will also
e facility or clinic.
assure that they are made aware of the exact cost of any coverage
the conditions
ply to such organi
included in the benefits provided by the health maintenance organiza-
tions which is in addition to medicare coverage.
Beneficiaries enrolled with a health maintenance organization who
tractual agreemen
are dissatisfied with decisions of the organizations on benefit coverage
action as a healt!
be automaticall:
would have the right to a hearing before the Secretary, in which the
health maintenance organization would be an interested party, and
nce notice by either
to judicial review with respect to disputes involving amounts ex-
urrent term, except
ceeding specified limits.
at any time (after
Beneficiaries could terminate their enrollment with a health main-
he finds that th
tenance organization and revert to regular coverage under the program
ut the contract, i-
cient, effective, and
in accordance with regulations. It is expected that, generally, disenroll-
all requirements to
ment would take effect the same time after the disenrollment request
nization. Such con-
as is the case now with respect to disenrollment under the supple-
mentary medical insurance program.
appropriate access
of its performance
Your committee also notes that some potentially qualified health
termine compliance
maintenance organizations currently have enrollees who may desire to
continue membership in the organization but who do not wish to agree
racts, the Secretary
mpose conditions or
to receive covered services only from that organization. Since it would
seem inequitable to require such individuals to either disenroll imme-
such conditions
of the medicare
diately or involuntarily accept a limitation on their access to covered
services, your committee has added a provision under which a health
the Secretary will
maintenance organization could continue through December 1974 to be
aplementation of an
reimbursed for covered care provided to beneficiaries who were mem-
maintenance orga-
bers prior to January 1972 but who do not elect the option. Program
by adhering to
payments in such cases would be determined on a per capita basis
similar to that used for enrollees who elect the option, with appro-
medical staff,
priate payment reductions for out-of-plan use of covered services by
positive actions to
of
such enrollees.
through vices
The health maintenance organization provisions in the bill would be
effective with respect to services furnished on or after January 1, 1972.
94
(g) Payment under medicare for services of physicians rendered at 0
even though he may
teaching hospital.-When medicare was enacted, the general expecta-
care. In other cases,
tion was that physicians' services to patients (but not intern or
that were out of all
resident services) would generally be paid for on a fee-for-service
billed to other patie
basis. However, the issue of how medicare should reimburse for the
Your committee
services of a physician when he supervised interns and residents in
ervice payment fo
the care of patients was not specifically detailed. Nevertheless, it was
hospital and other
clear that charges paid for a physician's services under medicare
pay fees for these $
should be reasonable in terms of both the patient care services that a
mmunity physici
particular physician provided as well as the charges made for similar
cord with the us
services to other patients-that is, if a physician merely took legal
and patients who P
responsibility for care, no fee for service was intended to be paid.
On the other har
Or, if the physician performed the services differently than is usually
ns in many large
done when a patient engages his own private physician, the differences
titutions where
were to be reflected in the charge paid by medicare.
ns' services or 0
Under present law, hospitals are reimbursed under the hospital
ill charges represe
insurance part (part A) of the medicare program for the costs they
give medicare 1
incur in compensating physicians for teaching and supervisory
lyments tend to
activities and in paying the salaries of residents and interns under
some cases.
approved teaching programs. In addition, reasonable charges are paid
Therefore, your
under the medical insurance program (part B) for teaching physicians'
: services of tea
services to patients.
ould be include
There is a wide variety of teaching arrangements. At one extreme
st" basis. A mec
there is the large teaching hospital with an almost exclusively charity
sory physicians
clientele in which the treatment of medicare beneficiaries may, in fact.
ould be develop
though not in law, be turned over to the house staff; in such hospitals
erage salary (e:
many teaching physicians have had the roles exclusively of teacher-
ther than hous
and supervisors and have not acted as any one patient's physician
me salaried ph:
Since in these cases the services of the teaching physicians are pri-
our committee
marily for the benefit of the hospital teaching program and hospital
hether the size
administration rather than being focused on the relationship between
provide the 1
doctor and patient, the services of these physicians should be reim-
ould take into
bursed as a hospital cost rather than on a fee-for-service basis under
aff members a
the supplementary medical insurance program.
erage salary
At the other extreme, there is the community hospital with a resi-
urly rate COV
dency program which relies in large part for teaching purposes on
plied to the {
the private patients of teaching physicians whose primary activities
rect patient C
are in private practice. The private patients contract for the services
heduled basis
of the physician whom they expect to pay and on whom they rely "
: by the orgar
provide all needed services. The resident or intern normally acts as
and designated
a subordinate to the attending physician, and the attending physician
Medicare wo
personally renders the major identifiable portion of the care and di-
-Is comparab
rects in detail the totality of the care. Moreover, there are teaching
ade for the Si
hospitals in which a teaching physician may be responsible both for
wance wou
private patients whom he has admitted and for patients who have
h services.
presented themselves to the hospital for treatment at no cost and who
dical staff ti
have been assigned by the hospital to his care.
ployed staff
It has proved to be difficult to achieve effective and uniform applica-
made avails
tion of present policies to the large number of widely varying teaching
staff for th
settings. In some cases, charges have been billed and paid for services
hancing the
rendered in teaching hospitals which clearly did not involve any degree
to add nec
of teaching physician participation. In some cases charges were billed
lication pro
for the services that residents and interns rendered in every case where
nal purpose
a supervising physician had overall responsibility for their actions.
h funds W
95
physicians rendered at a
even though he may not actually have become involved in the patient's
ted, the general expecta-
care. In other cases, charges for covered services were billed in amounts
ients (but not intern or
that were out of all proportion to the covered service or the charges
for on a fee-for-service
billed to other patients.
should reimburse for the
Your committee does not question the appropriateness of fee-for-
interns and residents in
service payment for physicians' services in the typical community
iled. Nevertheless, it was
hospital and other teaching settings where patients are expected to
services under medicare
pay fees for these services. For example, payment for the services a
tient care services that a
community physician provides to his private patient is clearly in
charges made for similar
accord with the usual practices of other health insurance programs
vsician merely took legal
and patients who pay their bills out of pocket.
vas intended to be paid.
On the other hand, in the case of all the ward or other accommoda-
lifferently than is usually
tions in many large hospitals and the service wards of other teaching
physician, the differences
institutions where patients are not expected to pay any fees for physi-
dicare.
cians' services or only reduced fees are normally paid, the payment of
irsed under the hospital
full charges represents an expense to the program that is not necessary
ogram for the costs they
to give medicare patients access to the care they receive. Also, the
aching and supervisory
payments tend to support the maintenance of two classes of patients
dents and interns under
in some cases.
asonable charges are paid
Therefore, your committee's bill would provide that reimbursement
) for teaching physicians'
for services of teaching physicians to a nonprivate medicare patient
should be included under part A, on an actual cost or "equivalent
gements. At one extreme
cost" basis. A mechanism for computing payment for services of super-
Imost exclusively charity
visory physicians on the unpaid voluntary medical staff of a hospital
beneficiaries may, in fact,
would be developed on a reasonable "salary equivalency" basis of the
se staff; in such hospitals
average salary (exclusive of fringe benefits) for all full-time physicians
IS exclusively of teachers
(other than house staff) at the hospital or, where the number of full-
one patient's physician.
time salaried physicians is minimal, at like institutions in the area.
ching physicians are pri-
Your committee expects that any determination with respect to
ng program and hospital
whether the size of a particular hospital's salaried staff is sufficient
the relationship between
to provide the proper basis for reimbursement of donated services
ysicians should be reim-
would take into account the ratio of salaried to voluntary nonpaid
e-for-service basis under
staff members as well as the absolute number of salaried staff. The
DI.
average salary equivalent, which would be distilled into a single
nity hospital with a resi-
hourly rate covering all physicians regardless of specialty, would be
or teaching purposes on
applied to the actual time contributed by the teaching physician in
whose primary activities
direct patient care or supervisory voluntary service on a regularly
contract for the services
scheduled basis to nonprivate patients. Such services would be billed
nd on whom they rely to
for by the organized medical staff of the hospital and reimbursed to a
intern normally acts as
fund designated by the organized medical staff.
I the attending physician
Medicare would pick up its proportionate share of such costs on a
rtion of the care and di-
basis comparable to the method by which reimbursement is presently
'over, there are teaching
made for the services of interns and residents. The salary-equivalent
be responsible both for
allowance would provide reasonable and not excessive payments for
I for patients who have
such services. The payment represents compensation for contributed
ment at no cost and who
medical staff time which would otherwise have to be obtained through
employed staff on a reimbursable basis. Such funds would in general
ive and uniform applica-
be made available on an appropriate legal basis to the organized medi-
widely varying teaching
cal staff for their disposition for purposes such as payment of stipends
led and paid for services
enhancing the hospital's capacity to attract house staff or to upgrade
d not involve any degree
or to add necessary facilities or services, the support of continuing
cases charges were billed
education programs in the hospital, and similar charitable or educa-
lered in every case where
tional purposes. Contributions to the hospital made by the staff from
Ebility for their actions,
such funds would not be recognized as a reimbursable cost when
96
expended by the hospital nor would depreciation expense be allowed
A :
with respect to equipment or facilities donated to the hospital by
the I
the staff.
elect
There are also teaching physicians whose compensation is paid by
the e
a medical school. With respect to reimbursement for their direct or
redue
supervisory services for nonprivate medicare patients, payments
adva
should be made on the basis of actual or salary-equivalent costs.
the I
The funds so received may be assigned by such physicians to an
could
appropriate fund designated by the medical school for use in com-
furni
pensating teacher physicians, or for educational purposes. Where
deter
States elect to compensate for services of teaching or supervisory
Y
physicians under medicaid, Federal matching should be limited to
conce
reimbursement not in excess of that allowable under medicare.
cians
Fee-for-service would continue to be payable for medicare bene-
basis
ficiaries who are bona fide "private patients." This would ordinarily
An
be a patient who was seen by the physician in his office prior to
woul
hospital admission; for whom he arranged admission to the hospital,
reim
whose principal physicians' service were provided by him, who was
patie
visited and treated by him during his hospital stay; who would
visio
ordinarily turn to him for followup care after discharge from the
the I
hospital; and who is legally obligated to pay the charges billed,
prese
including deductibles and coinsurance, and from whom collection of
activ
such charges is routinely and regularly sought by the physician. Of
Y
course, appropriate safeguards should be established to preclude fee-
hos
for-service payment on the basis of pro forma or token compliance
medi
with these private patient criteria.
servi
Your committee recognizes, however, that this concept of a private
perm
patient is not a complete definition primarily because it does not
ost
take account of the customary arrangements for reimbursing con-
if pr
sultants and specialists who are not serving as the patient's attending
Losp
physician, but who may provide a service to the patient for which
re
a fee-for-service payment is appropriate and for which services the
the i
patient is legally obligated and which he expects to pay. For example,
T1
where a general practitioner refers his patient to a surgeon for neces-
sary operative work and where the surgeon ordinarily charges and
(h
collects from all referred patients for his services. Furthermore, in
di
some cases hospitals that normally do not bill for physician services
:dy
have special centers,s uch as a center for severely burned people, where
ns
patients able to pay are regularly admitted and pay charges. It would
be intended that medicare follow the pattern of the private patient
in such centers.
The second exception to the cost-reimbursement coverage of teach-
ing physician services is intended to permit the continuation of fee-
for-service reimbursement for professional services provided to medi-
care patients in institutions which traditionally billed all patients (and
the majority of whom paid) on a fee or package charge basis for pro-
fessional services. This exception would apply if, for the years 1966.
1967, and each year thereafter for which part B charges are being
claimed: all of the institution's patients were regularly billed for pre
fessional services; reasonable efforts were made to collect these bille
charges and a majority of all patients actually paid the charges
whole or in substantial part. The hospital would have to provide
evidence that it meets these tests for fee-for-service reimbursement
before the payments could be made.
97
llowed
A hospital eligible for fee-for-service reimbursement on the basis of
tal by
the requirement described in the above exception could, if it chose,
elect to be reimbursed on the cost basis provided for by the bill if
aid by
the election would be advantageous to the program in that it might
rect or
reduce billing difficulties and costs. Similarly, where it would be
yments
advantageous to the program and would not be expected to increase
costs.
the program's liability, the cost reimbursement provisions of the bill
to an
could serve as the basis for payment for teaching physicians' services
n com-
furnished in the past where procedural difficulties have prevented a
Where
determination of the amount of fee-for-service that is appropriate.
rvisory
Your committee expects that in any borderline or questionable areas
ited to
concerning whether reimbursement for the services of teaching physi-
e.
cians in a given institution or setting should be on a costs or charges
e bene-
basis, reimbursement would be on the basis of costs.
dinarily
An important effect of these various coverage and co-pay provisions
prior to
would be that, where the cost-reimbursement approach is applicable,
nospital,
reimbursement for the physician's teaching activities and his related
who was
patient care activities would always be provided under the same pro-
would
visions of the law. This would greatly simplify the administration of
com the
the program by making it unnecessary to distinguish, as required by
3 billed,
present law, between a physician's teaching activities and patient care
ction of
activities in submitting and paying bills.
cian. Of
Your committee's bill also provides that the law be amended so that
.ude fee-
a hospital could include the actual reasonable costs which an affiliated
npliance
nodical school incurs in paying physicians to provide patient care
services to medicare patients in the hospital. The bill would also
1 private
permit including in a hospital's reimbursable costs the reasonable
does not
cost to a medical school of providing services to the hospital which,
ing con-
if provided by the hospital, would have been covered as inpatient
ttending
hospital services or outpatient hospital services. The hospital would
or which
be required to pay the reasonable cost of the services in question to
vices the
the institution that bore the cost.
example,
The above provisions would become effective with respect to ac-
or neces-
counting periods beginning on or after July 1, 1971.
rges and
(h) Advance approval of extended care and home health coverage under
:more, in
medicare.-Under present law, extended care benefits are payable
1 services
nly on behalf of patients who, following a hospital stay of at least 3
ole, where
consecutive days, require skilled nursing care on a continuing basis for
It would
further treatment of the condition which required hospitalization. The
e patient
post hospital home health benefit is payable on behalf of patients
who, following hospitalization or an extended care facility stay, con-
of teach-
tinue to require essentially the same type of nursing care on an inter-
of fee-
mittent basis, or physical or speech therapy. However, extended care
to medi-
facilities and home health agencies often care for patients who need
(and
less skilled and less medically oriented ervices in addition to patients
for pro-
requiring the level of care which is covered by the program.
1966,
Under current law, a determination of whether a patient requires the
being
level of care that is necessary to qualify for extended care facility or
for pro-
home health benefits cannot generally be made until some time after
billed
the services have been furnished. Yo ir committee is aware that in
harges in
many cases such benefits are being denied retroactively, with the harsh
provide
result that the patient is faced with a large bill he expected would be
ursement
paid or the facility or agency is faced with a patient who may not be
able to pay his bill. The uncertainty about eligibility for these benefits
98
that exists until after the care has been given tends to encourage phy-
provider of services,
sicians to either delay discharge from the hospital, where coverage may
abuses the program
less likely be questioned, or to recommend a less desirable, though fi-
payment for past or
nancially predictable, course of treatment. The aggregate effect is to
basis where the servi
reduce the value of the post-hospital extended care and home health
of illness or injury or
benefits as a continuation of hospital care in a less intensive-and
payment information
less expensive-setting as soon as it is medically feasible for the patient
Your committee 1
to be moved.
medicaid, and mater
Your committee believes that to the extent that valid criteria can
ficiaries from those S'
be established posthospital extended care and home health benefits
furnishing inferior or
should be more positively identified by type of medical condition
lent activities, or co
which ordinarily requires such care and that minimum coverage periods
protection is not no
should be assured for such conditions. To achieve its purpose, your
physician is found g'
committee's bill authorizes the Secretary to establish, by medical
of services to a me
conditions and-length of stay or number of visits, periods for which
pres law to bar P
patient would be presumed to be eligible for benefits. These periods of
phy: ician remains leg
presumed coverage would be limited to those conditions which program
do, bar from medica
experience indicates are most appropriate for the extended care or
are not now required
home health level of services following hospitalization, taking into
Under your commi
account such factors as length of hospital stay, degree of incapacity,
to terminate or susp
medical history and other health factors affecting the type of services
services rendered by I
to be provided.
to be guilty of progra
Your committee recognizes that, in order to avoid the risk of presum-
of such persons or or;
ing coverage (by general medical category) in substantial numbers of
informed about whic
cases where extended care or home health care may not be required,
The situations for V
presumed coverage periods must necessarily be limited in duration and
include overcharging,
will not, in many cases, encompass the entire period that the patient
ices, or making a false
will require covered care. Nevertheless, these minimum presumed
be no Federal financ
periods will provide a dual advantage over the present system of
medicaid and matern
coverage determination by (1) encouraging prompt transfer through
respect to services fi
assurance that the admission or start of care will be reimbursed and
would not make medi
(2) identifying in advance the point at which further assessment
Program review ten
should be made, on an individual case basis, of continuing need for
retary, following cons
extended or home health care. Where request for coverage beyond the
health services, State
initial presumed period, accompanied by appropriate supporting
priate intermediaries
evidence, is submitted for timely advance consideration, it is expected
title XVIII benefits.
that a decision to terminate extended care or home health coverage
members of the pro
would ordinarily be effected on a prospective basis. For those condi-
reviewing and report
tions for which specific presumed periods cannot be established,
(which the Secretary
current procedures for determining coverage would continue to apply;
entire program revie
however, fiscal intermediaries should be able to make coverage
charging; however, 0
determinations on a more timely basis for such admissions.
review teams would TO
To prevent abuse of the advance approval procedure, intermediaries
inferior, or harmful S(
and facilities would be expected to monitor, through periodic review
will review other prof
of a sample of paid stays, utilization review committee studies, and
It is not expected tl
similar measures, the reliability of individual physicians in describing
ices will be suspende
the patients' conditions or certifying patients' needs for posthospital
However, the existenc
extended care and home health services. The Secretary could suspend
few cases is expected
the applicability of the advance approval procedure for patients
The provisions relat
certified by physicians who are found to be unreliable in this respect.
to determinations ma
This provision would be effective January 1, 1972.
The provisions relatir
(i) Authority of Secretary to terminate payments to suppliers of
respect to items or sei
services.-Present law does not provide authority for the Secretary
Any person or orgai
to withhold future payments for services furnished by an institutional
to terminate payment
and to judicial review
59-948
99
to encourage
wider of services, a physician, or any other supplier who either
there coverage
esirable, though
couses the program or endangers the health of beneficiaries, although
wment for past or current claims may be withheld on an individual
gregate effect i.
where the services are not reasonable or necessary for treatment
e and home hea
illness or injury or where the supplier fails to provide the necessary
ess intensive
avment information.
ible for the pati,
Your committee believes it important to protect the medicare,
edicaid, and maternal and child health programs and their bene-
valid criteria
ciaries from those suppliers of services who have made a practice of
ne health benef.
rnishing inferior or harmful supplies or services, engaging in fraudu-
medical conditi
ent activities, or consistently overcharging for their services. Such
n coverage perio
rotection is not now provided under the law. For example, if a
its purpose, yo
hysician is found guilty of fraud in connection with the furnishing
blish, by medica
of services to a medicare beneficiary, there is no authority under
riods for which
present law to bar payment on his subsequent claims so long as the
These periods
physician remains legally authorized to practice. States can, and some
ns which progr:
do, bar from medicaid providers who abuse the program, but they
extended care
are not now required to do so.
tion, taking int
Under your committee's bill, the Secretary would be given authority
ee of incapacity
to terminate or suspend payments under the medicare program for
type of service.
services rendered by any supplier of health and medical services found
to be guilty of program abuses. The Secretary would make the names
10 risk of presum.
of such persons or organizations public so that beneficiaries would be
ntial numbers of
informed about which suppliers cannot participate in the program.
not be required.
The situations for which termination of payment could be made
I in duration and
include overcharging, furnishing excessive, inferior, or harmful serv-
that the patient
ices, or making a false statement to obtain payment. Also, there would
mum presumed
be no Federal financial participation in any expenditure under the
esent system of
medicaid and maternal and child health programs by the State with
ransfer through
respect to services furnished by a supplier to whom the Secretary
reimbursed and
would not make medicare payments under this provision of the bill.
her assessmen!
inuing need for
Program review teams would be established in each State by the Sec-
retary, following consultation with groups representing consumers of
age beyond the
health services, State and local professional societies, and the appro-
ate supporting
priate intermediaries and carriers utilized in the administration of
1, it is expected
title XVIII benefits. Both the professional and the nonprofessional
ealth coverage
members of the program review teams would be responsible for
or those condi-
reviewing and reporting on statistical data on program utilization
De established,
tinue to apply,
(which the Secretary would periodically provide). In addition, the
entire program review team would review cases involving over-
hake coverage
charging; however, only the professional members of the program
ons.
review teams would review cases involving the furnishing of excessive,
eriodic intermediaries review
inferior, or harmful services in order to assure that only professionals
will review other professionals under this provision.
e studies, and
in describing
It is not expected that any large number of suppliers of health serv-
ices will be suspended from the medicare program because of abuse.
posthospita!
However, the existence of the authority and its use in even a relatively
could suspend
for patients
few cases is expected to provide a substantial deterrent.
this respect.
The provisions relating to title XVIII would be effective with respect
to determinations made by the Secretary after enactment of the bill.
The provisions relating to titles V and XIX would be effective with
suppliers of
respect to items or services furnished after June 30, 1971.
institutional le Secretary
Any person or organization dissatisfied with the Secretary's decision
to terminate payments would be entitled to a hearing by the Secretary
and to judicial review of the Secretary's final decision.
59-948
100
It is not intended that this provision would in any way change the
Secretary's present right to withhold payment where necessary pay-
required to
ment information is not provided. Nor would the supplier of services
the basis of
be entitled to a hearing or judicial review with respect to payments
States have
withheld under such existing authority.
medicare fo
(j) Elimination of requirement that States move toward comprehensive
paying more
medicaid programs.-Section 1903(e) of the medicaid statute requires
eligible for n
that each State make "a satisfactory showing that it is making efforts
requires that
in the direction of broadening the scope of the care and services made
for both pro
available under the plan and in the direction of liberalizing the
as the differi
eligibility requirements for medical assistance." Under an amendment
Your com
adopted by the Congress in 1969 (Public Law 91-56, enacted August 9,
methods and
1969), the operation of this provision was suspended for two years,
flexibility in P
until July 1, 1971, and the date by which the States were to have
hospitals. Th
comprehensive medicaid programs (applying to everyone who meets
shown to his
their eligibility standards with respect to income and resources) was
changed from 1975 to 1977.
would not les.
Your committee has been concerned with the burden of the medic-
reasonable cos
aid program on State finances and has included a provision in the
Your comm
bill which would remove section 1903(e) from the Act. When the
operations of the State medicaid programs have been substantially
non-medicaid of this section
improved and there is assurance that program extensions will not
restricted in th
merely result in more medical costs inflation, the question of required
ment of inpati
expansion of the program could then be reconsidered.
The bill wou
(k) Reductions in care and services under medicaid program.-
maternal and c
Under current law (section 1902(d) amended by P.L. 91-56) a State
July 1, 1972, or
cannot reduce its expenditures for the State share of medicaid from
(m) Amount 0
one year to the next. If a State wishes to modify its State plan so as
are less than rea.
to reduce the extent of care and services provided or to terminate
the medicare p:
any of its programs, the Governor must certify to the Secretary that
providers of ser
a) the State share of medicaid expenditures will not be reduced, b)
medicaid and t]
the State is complying with the provisions in its plan relating to
services to indi
utilization and costs of services, and c) the modification is not made
some cases, in
for the purpose of increasing the standard or other formula for deter-
received by cove:
mining payments.
if they were not
Your committee is concerend with the effect of section 1902 on
provider's custoi
States which are faced with fiscal crises. Your committee is also
which does not r
concerned, however, that such crises should not operate to prevent
Your committ
the poor from receiving basic medical care and services, particularly
medicaid, and the
the six specific services mandated by present law.
the provider chai
Your committee wishes to assure maintenance of effort with
vider's costs are ]
regard to the basic services-physician, inpatient hospital, outpatient
osts are expected
hospital, laboratory, x-ray and home health services, as well as nursing
atient care-for
home care for those over 21 and early and periodic screening, diag-
The bill. would P
nosis, treatment for those under 21. The bill would, therefore, amend
nder the medica
section 1902(d) by restricting the maintenance of effort requirement
rceed the lesser 0
to these basic services. The State would be able to modify the scope
der section 186
and extent of optional services provided, such as drugs, dental can
arges to the gen
and eyeglasses. This would enable the States experiencing fiscal crises
However, your
to respond to such crises without reducing their expenditures for
ply this provisio
those services most urgently needed by the poor.
ulers of services 1
(l) Determination of reasonable cost of inpatient hospital services under
der of services fro
tovide, therefore,
medicaid and maternal and child health programs.-Under present law,
as defined in earlier regulations issued by the Secretary, States are
all specify by reg
sts generally allov
101
7 way change the
e necessary pay-
required to reimburse hospitals for inpatient care under medicaid on
pplier of services
the basis of the reasonable cost formula set forth in medicare. Several
ect to payments
States have objected to this requirement, asserting that use of the
medicare formula for medicaid reimbursement can result in their
ard comprehensive
paying more than the actual cost of providing inpatient care to those
statute requires
eligible for medicaid. There is nothing in the legislative history which
is making efforts
requires that reasonable costs should be defined precisely the same way
nd services made
for both programs, and there are reasons why they should not, such
liberalizing the
as the differing characteristics of the two populations served.
r an amendment
Your committee's bill would allow States to develop their own
nacted August 9,
methods and standards for reimbursement, thereby giving them
d for two years,
flexibility in working out satisfactory payment arrangements with their
es were to have
hospitals. The Secretary could disapprove a State's plan if it were
yone who meets
shown to his satisfaction that the method developed by the State
1 resources) was
would not pay the actual and direct cost of providing care to medic-
aid eligibles. Reimbursement by the States would in no case exceed
en of the medic-
reasonable cost reimbursement as provided for under medicare.
provision in the
Your committee bill wishes to make clear that it is not the intention
Act. When the
of this section to shift the burden of costs from medicaid recipients to
en substantially
non-medicaid recipients. However, the States should not be unduly
nsions will not
restricted in the methods with which they might experiment for pay-
tion of required
ment of inpatient hospital services.
The bill would apply the same determination of reasonable costs to
aid program.-
maternal and child health programs. The provision would be effective
91-56) a State
July 1, 1972, or earlier if the State plan so provides.
medicaid from
(m) Amount of payments where customary charges for services furnished
State plan so as
are less than reasonable cost.-Under present law, reimbursement under
r to terminate
the medicare program is based on the reasonable costs incurred by
Secretary that
providers of services (but, only for inpatient hospital services under
be reduced, b)
medicaid and the maternal and child health programs) in providing
an relating to
services to individuals covered by these programs. This results, in
on is not made
some cases, in these programs paying higher amounts for services
nula for deter-
received by covered individuals than such individuals would be charged
if they were not covered by these programs, because, in some cases, a
on 1902 (d) on
provider's customary charges to the general public are set at a level
mittee is also
which does not reflect the provider's full costs.
te to prevent
Your committee believes that it is inequitable for the medicare,
S, particularly
medicaid, and the child health programs to pay more for services than
the provider charges to the general public. To the extent that a pro-
f effort with
vider's costs are not reflected in charges to the public generally, such
al, outpatier t
costs are expected to be met from income other than revenues from
ell as nursing
patient care-for example, from endowment or investment income.
reening, diag-
The bill would provide, therefore, that reimbursement for services
refore, amend
under the medicare, medicaid, and child health programs could not
t requirement
exceed the lesser of the reasonable cost of such services as determined
lify the scope
under section 1861 (v) of the Social Security Act, or the customary
δ, dental care
charges to the general public for such services.
g fiscal crises
However, your committee believes that it would be undesirable to
enditures for
apply this provision in the case of services furnished by public pro-
viders of services free of charge or at a nominal fee. The bill would
services under
provide, therefore, that where services are furnished by a public pro-
present law,
vider of services free of charge or at a nominal charge, the Secretary
y, States are
shall specify by regulation reimbursement based OI. those elements of
costs generally allowed in the determination of reasonable cost that he
102
finds will result in fair compensation for such services. In such cases
fair compensation for a service could not exceed, but could be less than
Under
the amount that would be paid under present law.
pitals accr.
Your committee recognizes that a provider's charges may be lower
pitals) wou
than its costs in a given period as a result of miscalculation or special
medicare Pr
circumstances of limited duration, and it is not intended that provid-
an operatin
ers should be penalized by such short-range discrepancies between costs
would be ex
and charges. Nor does the committee want to introduce any incentive
provided in
for providers to set charges for the general public at a level substan-
(including
tially higher than estimated costs merely to avoid being penalized by
acquisition
this provision. Thus, your committee recognizes the desirability of per-
ernization,
mitting a provider that was reimbursed under the medicare, medicaid
proposed me
and child health programs on the basis of charges in a fiscal period to
under the di
carry unreimbursed allowable costs for that period forward for perhaps
committee c
two succeeding fiscal periods. Should charges exceed costs in such suc-
tive staff an
ceding fiscal periods, the unreimbursed allowable costs carried forward
may be prep
could be reimbursed to the provider along with current allowable costs
itemization 1
up to the limit of current charges.
immediately
Your committee intends that for purposes of administering this
accounting 1
provision, "customary charges" shall mean (1) the charges listed in an
assure that it
established charge schedule (if the institution has only a single set of
The plan
charges applied to all patients), or (2) the most frequent or typical
or any of its
charges imposed (if the institution uses more than one charge for a
such instituti
single service). However, in order to be considered to be the "customary
not intended
charge," a charge would have to be one that was actually collected
The new c
from a substantial number of individuals. A charge set up in name only,
spect to any
perhaps primarily to avoid the effect of this provision, is not intended
beginning aft
to determine medicare reimbursement.
(o) Paymen
The provisions relating to medicare would be effective with respect
peration of el
to services furnished by hospitals, extended care facilities and home
resent law,
health agencies in accounting periods beginning after June 30, 1971.
!cemed neces
Provisions relating to medicaid and maternal and child health would
fram. Federa
be effective for accounting periods beginning after June 30, 1971.
osts and 75
(n) Institutional planning under medicare.-Under present medicare
nnel. Despit
law, there is no requirement for providers of services to develop fiscal
laims admini
plans such as operating and capital budgets. However, your committee
rieval systems
is aware of the fact that health care facilities have come under increas
develop the
ing criticism on the grounds that they fail to follow sound business
Your comm
practices in their operations. The Advisory Committee on Hospital
lities by aut]
Effectiveness established by the Secretary of HEW in its report
ry to design,
stated,
the fact must be faced that deficiencies in hospital
formation re
management owe something, at least, to inattention, indifference, or
deral Gover
lack of information on the part of some hospital boards, and some
sistance, incl
trustees with the best intentions and energy have not been adequately
crating a in
informed by administrations on what the functions of a hospital
trustee, or a hospital should be." In recommending the requirement
ministration
contained in the bill, the Secretary's committee stated, "The require-
Your commi
ment that detailed budgets and operating plans be prepared annually
oviding in t]
as a condition of approval for participation in Federal programs cat
:e for the op
be expected to disclose management inefficiencies in such health care
States would
institutions as a necessary first step toward bringing about needec
port until
improvements. Especially, the committee believes this requirement
ormation to I
will compel the attention of many hospital trustees to lapses in man-
names of th
agement that would not be permitted in their own businesses."
the amour
gram indica
103
such
cases
be
less
than
Under your committee's bill, providers of services (including hos-
pitals accredited by the Joint Commission on Accreditation of Hos-
be
lower
pitals) would be required, as a condition of participation under the
medicare program, to have a written overall plan and budget reflecting
or special
that
an operating budget and a capital expenditures plan. The overall plan
provid-
would be expected to contain information outlining the services to be
etween
costs
incentive
provided in the future, the estimated costs of providing such services
substan-
(including proposed capital expenditures in excess of $100,000 for
penalized
by
acquisition of land, buildings, and equipment and replacement, mod-
of
ernization, and expansion of the buildings and equipment), and the
per-
medicaid
proposed methods of financing such costs. It would have to be prepared
under the direction of the governing body of the institution, by a
period to
for
committee consisting of representatives of that body, the administra-
perhaps
in
such
tive staff and the medical staff. The required annual operating budgets
suc-
forward
may be prepared by groupings of cost or income rather than a detailed
owable
itemization for each type of cost or income. The plan would cover the
costs
immediately following year and the immediately following 3-year
istering
this
accounting period and would be reviewed and updated annually to
listed
in
assure that it is consistent with the budgetary program of the provider.
an
set
of
The plan would not be reviewed for substance by the Government
typical
or any of its agents. The purpose of the provision is to assure that
or
charge
for
such institutions carry on budgeting and planning on their own. It is
a
not intended that the Government will play any role in that process.
"customary
collected
The new condition of participation would have to be met with re-
name
only,
spect to any provider of services for fiscal years of the provider
intended
beginning after the fifth month after the month of enactment.
(o) Payments to States under medicaid programs for installation and
with
operation of claims processing and information retrieval systems.-Under
respect
and
home
present law, States are required to use methods of administration
deemed necessary by the Secretary for efficient operation of the pro-
30,
1971.
ealth
would
gram. Federal matching is now set at 50 percent for administrative
1971.
costs and 75 percent for compensation of professional medical per-
medicare
sonnel. Despite this requirement, many States do not have effective
evelop
fiscal
claims administration or well-designed information storage and re-
committee
trieval systems; nor do they possess the financial and technical resources
increas-
to develop them if required to do SO by the Secretary.
business
Your committee proposes to aid the States in meeting their responsi-
Hospital
bilities by authorizing 90 percent Federal matching for the cost neces-
its
report
sary to design, develop, and install mechanized claims processing and
in
hospital
information retrieval systems deemed necessary by the Secretary. The
ifference,
Federal Government acknowledges the obligation to provide technical
or
and
assistance, including the development of model systems, to each State
some
adequately
operating a medicaid program. It is expected that this financial and
a
hospital
technical support will aid the States in realizing efficient and effective
requirement
administration of the program, and that it will reduce program costs.
The
require-
Your committee also recognizes the importance of this activity by
annually
providing in the bill for Federal matching funds at the 75 percent
ograms
rate for the operation of the system approved by the Secretary.
can
health
States would not be eligible to receive this increased Federal
care
needed
support until they have developed the capacity to provide basic
equirement
information to recipients on vices paid for by the program, including
in
the names of the providers, the dates on which services were furnished,
man-
and the amount of payment made. Experience with the medicare
program indicates that beneficiary complaints about discrepancies
104
between the "explanation of benefits" form they receive, and the care
(g)
actually provided, has been the largest single source of information on
home
possible abuse and fraud. It is appropriate to combine the requirement
prese
that States provide such explanations with the increased Federal
requir
matching which would support such an activity. Savings resulting
cases
from improved administrative efficiency would more than offset the
tions
cost of this provision.
hospit
This provision of the bill would be effective July 1, 1971.
mitte
(p) Prohibition against reassignment of claims to benefits.-Under
cases,
present law, payment for services furnished by a physician or other
You
person under the supplementary medical insurance program is made:
nursing
(1) to the beneficiary on the basis of an itemized bill, or (2) to the
health
physician or other person who provided the services on the basis of an
commi
assignment under the terms of which the reasonable charge is the full
by a co
charge for the service. Present law also provides that payment for such
States
services under the medicaid program is made to the physician or other
they m
person providing the services. The law is silent with respect to reas-
earlier I
signment by physicians or others who provide services of their right to
younger
receive payment under these programs The Department of HEW
This
makes such reassigned payments under medicare without specific
(r) N
legislative authority.
care fac
Experience with this practice under these programs shows that some
review e
physicians and other persons providing services reassign their rights
care faci
to other organizations or groups under conditions whereby the organi-
admissio
zation or group submits claims and receives payment in its own name.
review c
Such reassignments have been a source of incorrect and inflated claims
not medi
for services and have created administrative problems with respect to
the phys
determinations of reasonable charges and recovery of overpayments.
medicare
Fraudulent operations of collection agencies have been identified in
day follo
medicaid. Substantial overpayments to many such organizations have
Your (
been identified in the medicare program, one involving over a million
similar pa
dollars.
review CO
Your committee's bill seeks to overcome these difficulties by pro-
case wher
hibiting payment under these programs to anyone other than the pa-
never was
tient, his physician, or other person who provided the service, unless
anomaly (
the physician or other person is required as a condition of his employ-
committee
ment to turn his fees over to his employer, or unless the physician or
admission
other person has an arrangement with the facility in which the services
would mal
were provided under which the facility bills for the services. It is not
reviewed 0
the intent of your committee that this provision apply to payments to
This pro
providers of services that are based on the reasonable cost of the
after the St
services.
(s) Use
Your committee's bill would not preclude a physician or other person
perform cer
who provided the services and accepted an assignment from having the
programs.-
payment mailed to anyone or any organization he wishes, but the pay-
sponsibility
ment would be to him in his name.
care progra
The provision would in no way interfere with the fiscal relationships
between physician and hospitals, in the case of hospital-based pathol-
participatio Your comm
ogists and radiologists, for example.
tion of and
This provision as it applies to medicare would be effective with re-
is unnecessa
spect to bills submitted after the enactment date. For medicaid the
ble. Your co
provision would be effective July 1, 1972, or earlier if the State plan SO
State health
provides.
facilities) sh
the materns
105
the care
(q) Utilization review requirements for hospitals and skilled nursing
ation on
homes under medicaid and maternal and child health programs.-Under
airement
present medicare law, each hospital and extended care facility is
Federal
required to have a utilization review committee to review all long-stay
resulting
cases as well as review, on a sample or other basis, admissions, dura-
ffset the
tions of stay and professional services. The reasons for requiring
hospitals and extended care facilities to have utilization review com-
mittees for medicare cases apply with equal force to review of medicaid
-Under
cases, but there is now no such requirement in the medicaid law.
or other
Your committee's proposal would require hospitals and skilled
is made:
nursing homes participating in the medicaid or maternal and child
2) to the
health program to have cases reviewed by the same utilization review
asis of an
committee already reviewing medicare cases or, if one does not exist,
is the full
by a committee which meets the standards established under medicare.
t for such
States could, if they wish, impose more stringent requirements, e.g.,
1 or other
they might request that the committee review medicaid patient stays
t to reas-
earlier than medicare cases since the medicaid population is generally
ir right to
younger than that covered under medicare.
of HEW
This provision would be effective July 1, 1972.
t specific
(r) Notification of unnecessary admission to a hospital or extended
care facility under medicare.-Under present law, the utilization
that some
review committee required to function in each hospital and extended
heir rights
care facility must review all long-stay cases and at least a sample of
he organi-
admissions. When in the review of a long-stay case the utilization
wn name.
review committee determines that further stay in the institution is
ted claims
not medically necessary, the committee is required to notify promptly
respect to
the physician, the patient, and the institution of its finding. No
payments.
medicare payment is made for any services furnished after the third
entified in
day following such notification.
tions have
Your committee's bill would require a similar notification, and a
a million
similar payment cut-off after 3 days, to be made where the utilization
review committee in its sample or other review of admissions finds a
by pro-
case where hospitalization or extended care is no longer necessary (or
in the pa-
never was necessary). Thus, your committee's bill would remove the
ce, unless
anomaly of continuing payment in a case where the utilization review
employ-
committee determined in the course of sample or other review that
ysician or
admission to the institution or further stay was not necessary and
e services
would make parallel the treatment accorded long-stay cases and cases
It is not
reviewed on a sample basis.
ments to
This provision would be effective with respect to services furnished
st of the
after the second month following enactment of the bill.
(s) Use of State health agency or other appropriate medical agency to
er person
perform certain functions under medicaid and maternal and child health
aving the
programs.-Under present law, one State agency may have the re-
the pay-
sponsibility for certifying health facilities for participation in the medi-
care program and another agency for certifying health facilities for
tionships
participation in medicaid and maternal and child health programs.
d pathol-
Your committee believes that this duplication of effort in the verifica-
tion of and in the establishment and maintenance of health standards
with re-
is unnecessary and inefficient and should be limited to the extent feasi-
icaid the
ble. Your committee's bill would require the State to provide that the
plan so
State health agency (or the State medical agency which licenses health
facilities) shall perform these functions for medicare, medicaid, and
the maternal and child health programs. Your committee would
106
authorize the use of the appropriate State medical agency rather than
alth and safety criteria
limiting the designation to "State health agency."
roviders of service in the in
Your committee also believes that the effectiveness and economy of
is necessary to establish
the medicaid program would be enhanced through development of
tency and qualifications
capability in each State to perform utilization reviews, to establish
ledicare and medicaid r
standards relating to the quality of health care furnished to medicaid
mining courses and pro
recipients, and to review the quality of the services provided. Activities
rofessional competency.
such as these would provide information on the under-or over-utiliza-
Your committee agrees
tion of resources and the quality and appropriateness of care.
prima facie evidence of
To encourage the development of the capabilities upon which these
ommittee is concerned tl
improvements would be based, your committee bill would provide
on or training, or memb
that Federal participation in medicaid payments be contingent upon
night serve to disqualify
the establishment of a plan, acceptable to the Secretary, for utilization
night make them equall
review, the establishment of standards relating to the quality of care
the existing requirements
furnished to medicaid recipients, and review of the quality of services
make the fullest use of
provided. Federal matching at the 75-percent rate is available for
concern because of the sh
the costs of the health professionals and their supporting staff found
Your committee's bill,
necessary in carrying out such functions.
develop, and apply appr
This provision would be effective July 1, 1972.
of health personnel dis
(t) Relationship between medicaid and comprehensive health care
present regulations. A
programs.-Present law provides that under Title XIX all eligible
make greater use of oth
recipients should receive the same scope of services; that those services
nicians who do not now
should be available throughout the States; and that recipients should
rofessional competency
have freedom of choice to determine where they shall receive their
procedures are capable
care. The law also provides that recipients may choose to obtain
determine qualifications
medical services from organizations providing them (or arranging for
Your committee obt
their availability on a prepayment basis).
year to institute such
These requirements for State plans, called "comparability and
personnel and asked for
"statewideness", have limited states in their ability to contract with
committee is looking fc
organizations such as neighborhood health centers or pre-paid group
The amendment wo
practices to provide services to medicaid recipients. These organiza-
(v) Penalties for fra
tions provide services which are often broader in scope than the
and medicaid.-Under
services received under the medicaid plan, and, therefore, are not
of a material fact in an
available throughout the State. Under current law States are able
programs is defined as
to contract with such organizations only a) through a waiver under
one year of imprisonm
a provision in present law that the particular contract is a demonstra-
Your committee bel
tion project, or (b) through establishing a separate premium rate
jeet to penalty under
for the particular set of services offered under the State plan.
included to provide I
Organized plans, primarily those on a prepaid basis, have been
been regarded by pre
shown to discourage overutilization of expensive inpatient care and
unlawful in some jur
to encourage less costly ambulatory care and preventive health
isson cost of the medi
measures.
committee bill, the
Your committee bill would enable States to waive Federal state-
practices as the solicit
wideness and comparability requirements, if a State contracts with an
including the rebatit
organization which has agreed to provide health care and services
referral, involving 1"
in excess of the State plan to eligible people who reside in the geographic
provision would incl
area served by such an organization, and who elect to obtain such
knowledge of any ev
care and services from such an organization. Payments to such organi-
thent with the inten
zations could not be higher on a per capita basis than per capita pay-
verting benefits or
ments expended for medicaid eligibles in the same general geographic
penalty for such ne
area not under the proposed arrangement.
material facts in
The amendment would be effective upon enactment.
and medicaid progr
(u) Program for determining qualifications for certain health care
prinonment, or both
personnel.-Under present law, the Secretary establishes various
107
rather than
health and safety criteria as conditions for the participation of
providers of service in the medicare program. In setting these standards
economy of
it is necessary to establish criteria for judging the professional com-
lopment of
petency and qualifications of key personnel in these health facilities.
0 establish
Medicare and medicaid regulations have relied heavily on formal
to medicaid
training courses and professional society membership in judging
1. Activities
professional competency.
ver-utiliza-
Your committee agrees with the Secretary that appropriate criteria
are.
AS prima facie evidence of competence are necessary. However, your
which these
committee is concerned that reliance solely on specific formal educa-
uld provide
tion or training, or membership in private professional organizations
ingent upon
might serve to disqualify people whose work experience and training
r utilization
might make them equally or better qualified than those who meet
ality of care
the existing requirements. Your committee believes that failure to
y of services
make the fullest use of competent health personnel is of particular
vailable for
concern because of the shortage of such personnel.
; staff found
Your committee's bill, therefore, requires the Secretary to explore,
develop, and apply appropriate means of determining the proficiency
of health personnel disqualified or limited in responsibility under
health care
present regulations. A proficiency testing program would help to
all eligible
make greater use of otherwise qualified health personnel and tech-
hose services
nicians who do not now meet medicare's formal criteria for judging
bients should
professional competency and qualifications. Appropriate methods and
receive their
procedures are capable of being promptly developed and applied to
se to obtain
determine qualifications and to upgrade skills to qualifying levels.
arranging for
Your committee obtained agreement from the Department last
year to institute such a program with respect to clinical laboratory
rability and
personnel and asked for a report on the matter by July 1, 1971. Your
contract with
committee is looking forward to receiving that report.
re-paid group
The amendment would be effective upon enactment.
ese organiza-
(v) Penalties for fraudulent acts and false reporting under medicare
pe than the
and medicaid.-Under present law, a false statement or representation
fore, are not
of a material fact in any application for payment under social security
ates are able
programs is defined as a misdemeanor and carries a penalty of up to
waiver under
one year of imprisonment, a fine of $1,000, or both.
demonstra-
Your committee believes that a specific provision defining acts sub-
remium rate
ject to penalty under the medicare and medicaid programs should be
an.
included to provide penalties for certain practices which have long
have been
been regarded by professional organizations as unethical, as well as
ent care and
unlawful in some jurisdictions, and which contribute appreciably to
ntive health
the cost of the medicare and medicaid programs. Thus, under the
committee bill, the criminal penalty provision would include such
ederal state-
practices as the soliciting, offering, or accepting of kickbacks or bribes,
acts with an
including the rebating of a portion of a fee or charge for a patient
and services
referral, involving providers of health care services. In addition, the
e geographic
provision would include penalties for concealing or failing to disclose
obtain such
knowledge of any event affecting a person's right to any benefit pay-
such organi-
ment with the intent to defraud, or for knowingly and willfully con-
capita pay-
verting benefits or payments to improper use. Under the bill, the
1
geographic
penalty for such acts, as well as false statements or representations
of material facts in any application for payment under the medicare
and medicaid programs, would be a fine of $10,000, 1 year of im-
health care
prisonment, or both.
hes various
108
Continuing investigation and review of reports by the General
bursement Rev
Accounting Office have indicated that false statements may have been
or the Govern
made by individuals and institutions with respect to health and safety
before it that
conditions and operating conditions in health care facilities in order to
raised in the aj
secure approval for participation in the medicare and medicaid pro-
A decision of
grams. While the numbers of different individuals and institutions
final unless the
involved in such fraud may not be large in relation to the number
sfter the prov
participating in the program, your committee believes that a specific
verses or mo
penalty for such acts should be provided to deter the making or in-
In any case who
ducing of such statements. Thus, your committee's bill includes specific
rvices would I
provisions under title XVIII (medicare) and under title XIX (medi-
the United Stat
caid) of the Social Security Act whereby anyone who knowingly and
in the United
willfully makes, or induces or seeks to induce the making of, a false
an aggrieve
statement of material fact with respect to the conditions and operation
ctwithstanding
of a health care facility or agency in order to secure certification or
Security Act.
approval to participate in the medicare and medicaid programs would
The amendme
be subject to imprisonment for up to 6 months, a fine not to exceed
respect to account
$2,000, or both.
These provisions would be in addition to and not in lieu of any other
3. Miscellaneous
penalty provisions in State or Federal law.
(a) Physical t
The amendment is effective upon enactment.
are.-Under pr
(w) Provider reimbursement review board.-Under present law there
hospital service,
is no specific provision for an appeal by a provider of services of a
ervice, and a ser
fiscal intermediary's final reasonable cost determination. Although
also covered
the HEW has developed administrative procedures to assist providers
articipating hos
and intermediaries to reach reasonable and mutually satisfactory
linic, rehabilitat
settlements of disputed reimbursement items, your committee believes
The physical the
that it is desirable to prescribe in law a specific procedure for settling
acility or he m:
disputed final determinations applying to the amount of program
rrangements wi
reimbursement. This procedure would not apply to questions of
The limitation:
coverage or disputes involving individual beneficiary claims.
al therapy have
Your committee's bill, therefore, provides for the establishment of
cen difficult to
a Provider Reimbursement Review Board. The Board would be com-
ished in the the
posed of 5 members, knowledgeable in the field of cost reimbursement,
hore accessible 1
appointed by the Secretary of Health, Education, and Welfare. At
btain the servic
least one member of the Board would have to be a certified public
Your committ
accountant, and two members would be representative of providers
upplementary I
of services.
herapist in ind
Any provider of services which has filed a timely cost report may
be patient's ho
appeal an adverse final decision of the fiscal intermediary with respect
ther than an i
to the period covered by such a report to the Board where the amount
killed health ca
in controversy is $10,000 or more. The appeal must be filed within 180
uch licensing a
days after notice of the fiscal intermediary's final determination.
he Secretary m
Implementation of the intermediary determinations would not be
furnished pu
held in abeyance pending the Board's decision.
physician whi
The provider would have the right to reasonable notice as to the
es to be furn
time and place of hearing and reasonable opportunity to appear at the
Idition to Sta
hearing; to be represented by counsel; to introduce reasonable and
nder this provi
pertinent evidence to supplement or contradict the evidence considered
sh regulations
by the fiscal intermediary; and to examine and cross-examine wit-
rvices would }
nesses Under your committee's bill, all decisions by the Board would
guided by tl
have to be based upon the record made at such hearing, which may
hysical theraj
include any evidence submitted by the Department. Such evidence
cilities genera
would include the evidence or record considered by the intermediary
gulations pro
Based upon examination of all of the evidence, the Provider Reim-
hysical therap
109
the
General
bursement Review Board may find in whole or in part for the provider
have
been
: the Government (including a finding based upon the evidence
and
safety
t-fore it that the provider owes sums in addition to the amount
in
order
to
raised in the appeal).
edicaid
pro-
A decision of the Provider Reimbursement Review Board would be
institutions
Anal unless the Secretary, on his own motion, and within 60 days
the
number
sfter the provider of services is notified of the Board's decision,
a
specific
everses or modifies the Board's decision adversely to the provider.
or
in-
In any case where such reversal or modification occurs, the provider of
specific
rvices would have the right to obtain a review of such a decision by
(medi-
the United States District Court for the district in which it is located
wingly
and
or in the United States District Court for the District of Columbia,
of,
a
false
as an aggrieved party under the Administrative Procedure Act,
operation
notwithstanding any other provision in section 205 of the Social
ification
or
Security Act.
would
The amendments made by this section would be effective with
to
exceed
respect to accounting periods beginning after June 30, 1971.
other
3. Miscellaneous and technical provisions
any
(a) Physical therapy services and other therapy services under medi-
care.-Under present law, physical therapy is covered as an inpatient
law
there
hospital service, an inpatient extended care service, a home health
of
a
service, and a service incident to physicians' services. Physical therapy
Although
is also covered when furnished under prescribed conditions by a
providers
participating hospital, extended care facility, home health agency,
tisfactory
clinic, rehabilitation agency, or public health agency to its outpatients.
believes
The physical therapist may be either an employee of the participating
settling
facility or he may be self-employed and furnish his services under
program
arrangements with and under the supervision of the facility.
of
The limitations imposed under present law on the coverage of physi-
cal therapy have been a source of some difficulty. For example, it has
hment
of
been difficult to explain why physical therapy services cannot be fur-
be
com-
nished in the therapist's office, especially in cases where the latter is
irsement,
more accessible than the facility to which the beneficiary must travel to
At
obtain the service.
public
Your committee's bill would include as covered services under the
roviders
supplementary medical insurance program the services of a physical
therapist in independent practice, when furnished in his office or in
may
the patient's home (including a place of residence used as his home
respect
other than an institution which is primarily engaged in furnishing
amount
skilled health care services). These services would be furnished under
thin
180
such licensing and other conditions relating to health and safety as
the Secretary may find necessary, such as requiring that the services
not
be
be furnished pursuant to a written plan of treatment established by
a physician which prescribes the amount, type, and duration of serv-
to
the
ices to be furnished, and setting out, professional qualifications in
at
the
addition to State licensure for the physical therapists participating
and
under this provision. The bill would provide that the Secretary estab-
sidered
lish regulations governing other conditions under which the proposed
wit-
services would be furnished. Your committee expects the Secretary to
would
be guided by the conditions now in effect for providers of outpatient
may
physical therapy services, taking into account the less elaborate
facilities generally present in the office setting, but assuring that the
regulations provide for the availability of an adequate program of
Reim-
physical therapy services in the therapist's office.
110
With respect to present law as it covers physical therapy services
(b) Coverag
furnished to an inpatient of a hospital or an extended care facility
edicare for
there are a few cases where an inpatient exhausts his inpatient benefit.
lostomies (
and can continue to receive payment for the physical therapy treat.
hich is ofter
ment (as a covered expense under the supplementary medical insur: nce
not specific
program) only if the hospital or extended care facility is able to ar-
urgical dress
range for another participating facility to furnish the physical therapy
supplies used
treatment as an outpatient service. Your committee's bill would au-
orrect this
thorize a hospital or extended care facility to furnish outpatient
bags and suj
physical therapy services to its inpatients. This would permit an in-
devices.
patient of a participating hospital or extended care facility to continue
This provi
to receive covered physical therapy services under the supplementary
(c) Covera
medical insurance program in those cases where he had exhausted his
medical insu
inpatient benefits through which physical therapy services were cov-
of leg, arm, I
ered under the hospital insurance program or where he is otherwise
ised to supp
ineligible for hospital insurance inpatient benefits.
in a diseased
Your committee is concerned over the increasing costs of physical
pay for pto:
therapy services and other therapy services furnished in hospitals and
suffering fro
extended care facilities. Accordingly, the committee bill includes two
Your comm
provisions for controlling program expenditures for therapy services
other suppe
and services of other health related personnel and for preventing abuse:
of course, f
(1) Total charges on which payment may be made in a calendar
This pro'
year with respect to an individual for physical therapy services
(d) Inclu
furnished to him in practitioners' offices or in his home by independ-
In order "
ently practicing physical therapists may not exceed $100 (such pay-
nursing ho
ment would be subject to the deductible and coinsurance provisions
to Title y
of the supplementary medical insurance program). Program reim-
matching
bursement for the reasonable charges for the covered services would
care facilit
be made either to the beneficiary or, on assignment, directly to the
appropriat
physical therapist.
need of ins
(2) With respect to physical, occupational, and speech therapy
The into
services, or the services of other health specialists, furnished by a
was essen
provider of services, a clinic, rehabilitation agency, or a public health
intended
agency or by others under arrangements with such providers or other
would no
organizations, payment for the reasonable cost of such services may
as a plac
not exceed an amount equal to the salary which would have been
wholesale
payable if the services had been performed in an employment rela-
homes to
tionship, plus the cost of such other expenses an individual not working
review of
as an employee might have, such as maintaining an office, travel-time
Many
and expense, and similar costs. Your committee expects that the
not need
Secretary will, in establishing the criteria for determining the reason-
Office at
able cost of such services, consult with the professions directly affected
skilled 11
and give thorough consideration to procedures used in other public
interme
and private plans that may be local, regional, or national in scope.
Your
The provisions for covering additional physical therapy services
congres:
under supplementary medical insurance would be effective for serv-
such cal
ices furnished on or after January 1, 1972. The provision relating to
to cost!
the coverage of outpatient physical therapy services furnished to
Your
inpatients of hospitals or extended care facilities would be effective
mediat
on enactment of the bill. The provision relating to determining the
range i
reasonable cost of services of therapists and other health specialists
not inc
You
would be effective with respect to accounting periods beginning on
or after January 1, 1972.
facility
deeme
111
rapy services
(b) Coverage of supplies related to colostomies.-Payment under
care facility.
medicare for the bags and straps used in conjunction with some
tient benefits
colostomies (an artificial opening of the bowel to the abdominal wall
erapy treat-
which is often necessary in surgical treatment of cancer of the bowel)
cal insurance
is not specifically authorized by the law. Medicare pays for these as
S able to ar-
surgical dressings, but does not pay for the irrigation equipment and
sical therapy
supplies used in treating a colostomy condition. The provision would
Il would au-
correct this inequity by providing specific coverage for colostomy
1 outpatient
bags and supplies directly related to colostomy care, as prosthetic
ermit an in-
devices.
to continue
This provision would be effective on enactment.
pplementary
(c) Coverage of ptosis bars.-Under medicare's supplementary
xhausted his
medical insurance program, specific provision is made for the coverage
es were cov-
of leg, arm, back, and neck braces, which includes a variety of devices
is otherwise
used to support weak or deformed body members or to restrict motion
in a diseased or injured part of the body. However, medicare does not
of physical
pay for ptosis bars used to support the drooping eyelids of patients
ospitals and
suffering from paralysis or atrophy of the muscles of the upper eyelid.
ncludes two
Your committee's bill would cover these devices in the same way as
apy services
other supportive devices or appliances. No payment would be made,
nting abuse:
of course, for eyeglasses to which such devices may be attached.
a calendar
This provision would be effective on enactment.
py services
(d) Inclusion under medicaid of care in intermediate care facilities.-
y independ-
In order to provide a less costly institutional alternative to skilled
(such pay-
nursing home care, the Congress approved in 1967 an amendment
e provisions
to Title XI of the Social Security Act which authorized Federal
gram reim-
matching for a new classification of care provided in "intermediate
vices would
care facilities." The provision was intended to provide a means for
ectly to the
appropriate placement of patients professionally determined to be in
need of institutional care but not care at the skilled nursing home level.
ch therapy
The intermediate care benefit was not intended to cover care which
ished by a
was essentially residential or boarding home in nature. It was not
ublic health
intended to provide a refuge for substandard nursing homes which
ers or other
would not or could not meet medical standards. It was not intended
ervices may
as a placement device whereby States could reduce costs through
have been
wholesale and indiscriminate transfer of patients from skilled nursing
ment rela-
homes to intermediate care without careful and independent medical
not working
review of each patient's health care needs.
travel-time
Many thousands of patients are in skilled nursing homes who do
is that the
not need that level of care, according to recent General Accounting
the reason-
Office and HEW audit reports. Thousands of those people are in
tly affected
skilled nursing homes because their States have not as yet established
ther public
intermediate care programs.
scope.
Your committee has, therefore, included an amendment to clarify
py services
congressional intent with respect to intermediate care and to make
for serv-
such care, where appropriate, more generally available as an alternative
relating to
to costlier skilled nursing home or hospital care.
rnished to
Your committee's amendment is designed to make it clear that inter-
effective
mediate care coverage is for persons who require care in the entire
the
range from just above simple boarding home arrangements up to, but
specialists
not including, the skilled nursing home level.
ginning on
Your committee amendment would require an intermediate care
facility to meet such standards, prescribed by the Secretary, as are
deemed necessary to assist in meeting the needs of the types of patients
112
expected to be placed in such institutions. The Secretary could estab-
The amend
lish several levels of standards depending upon the type of care
(e) Covera
involved. As indicated, the term intermediate care is a broad one en-
present law,
compassing institutions which are just above the boarding home level
care provided
up to the institution which has a level of health care just below that
prior to his a
of the skilled nursing home.
to provide th
The amendment would provide for the transfer of the intermediate
for medicaid
care provisions from Title XI of the Social Security Act to Title XIX
received care,
(Medicaid). This action will enable the medically indigent, presently
eligibility req
ineligible for intermediate care, to receive such care, when a State
prevented the
has a medically needy program and when such care has been deter-
Your comm
mined as appropriate to their health care needs. This change should
Your commit
also serve to end the practice in some States of keeping medically
age for care a1
indigent patients in skilled nursing homes when they could more
application fo
appropriately be cared for in intermediate care facilities. Such States
services were ]
may do SO because, under present law, Federal matching funds are
This provisi
available toward the costs of skilled nursing home care provided med-
(f) Hospital
ically indigent persons but not for care of such people in intermediate
present medic
care facilities.
nection with t
Your committee's amendment would also authorize Federal match-
ment may be
ing under medicaid for care of the mentally retarded in public insti-
other impairm
tuitions which have a primary purpose of providing health or rehabili-
some cases, in
tation services and which are classified as intermediate care facilities.
medical necess
Matching would be available only in a properly qualified institution
dinarily not n
meeting standards (in addition to those required of an intermediate
such a certifica
care facility) established by the Department for mentally retarded
dental procedu
persons receiving an active program of health-related treatment or
certification.
rehabilitation. States would not be eligible for the additional Federal
Your commi
matching funds unless they maintained present levels of State and
the patient to
local funds expended for care of the mentally retarded. The purpose
hospital admis
here is to improve medical care and treatment of the needy mentally
circumstances
retarded rather than to simply substitute Federal dollars for State
physician. You
dollars. The provision would not provide Federal participation in
dentist is in a
payments to institutions that are primarily residential or custodial in
the patient's co
character even though these may provide some health or rehabilitation
is a physician \
services.
nature of the d
Intermediate care would, under another provision in the bill by
This provisio
definition be less expensive than skilled nursing home care; therefore,
ring after the se
the cost of intermediate care should generally be significantly less
(g) Extension
than skilled nursing home care in the same area.
insurance covero
In view of the rapidly increasing expenditures for intermediate
Under present I
care and in view of the extension of intermediate care to the medically
medical insura
indigent, your committee has added another provision to its amend-
of premiums. T
ment requiring regular independent professional review of patients in
regulations whi
those intermediate care facilities which have a significant health con-
(not in excess
tent. Teams headed by either a physician or a registered nurse would
paid and cover
regularly review, on site, the nature of the care required and provided
Several types
to each such intermediate care recipient. That review would be under-
vidual's supple
taken on a patient-by-patient basis and may not be performed at a
pay all premiur
distance or without reference to the specific circumstances of the
ple, there have
individual patient. The Secretary of HEW would be expected to
incapacity the
establish two or more levels of care encompassed under the inter-
within the allow
mediate care concept and then vary his regulations for such reviews
to protect his i
based on the characteristics of the patients in the various levels of care.
because the en
made when act
113
Id estab.
The amendment would be effective January 1, 1972.
of care
(e) Coverage prior to application for medical assistance.-Under
one en-
present law, a State may, at its own option cover the cost of health
me level
care provided to an otherwise qualified recipient for the three months
low that
prior to his application for medicaid. Thirty-one States have elected
to provide this coverage, thereby protecting persons who are eligible
rmediate
for medicaid but do not apply for assistance until after they have
itle XIX
received care, either because they did not know about the medicaid
presently
eligibility requirements, or because the sudden nature of their illness
a State
prevented their applying.
en deter-
Your committee believes such coverage is reasonable and desirable.
e should
Your committee's bill would therefore require States to provide cover-
medically
age for care and services furnished in or after the third month prior to
dd more
application for those individuals who were otherwise eligible when
ch States
services were received.
unds are
This provision would be effective July 1, 1972.
ded med-
(f) Hospital admissions for dental services under medicare.-Under
rmediate
present medicare procedures, when a patient is hospitalized in con-
nection with the performance of noncovered dental procedures, pay-
11 match-
ment may be made for inpatient hospital services if the patient has
olic insti-
other impairments SO severe that hospitalization is necessary. In
rehabili-
some cases, intermediaries require that a physician certify to the
facilities.
medical necessity of dental admissions, since hospitalization is or-
stitution
dinarily not necessary for the provision of dental services. Where
rmediate
such a certification is required, the dentist who will be performing the
retarded
dental procedures must arrange for a physician to make the necessary
tment or
certification.
1 Federal
Your committee's bill would authorize the dentist who is caring for
tate and
the patient to make the certification of the necessity for inpatient
purpose
hospital admission for noncovered dental services under the above
mentally
circumstances without requiring a corroborating certification by a
for State
physician. Your committee believes that in these kinds of cases the
pation in
dentist is in a better position to make the necessary evaluation of
stodial in
the patient's condition and probable reaction to dental surgery than
bilitation
is a physician who may not be familiar either with the patient or the
nature of the dental procedures to be performed.
e bill by
This provision would be effective with respect to admissions occur-
therefore,
ring after the second month following enactment of the bill.
antly less
(g) Extension of grace period for termination of supplementar medical
insurance coverage where failure to pay premiums is due to good cause.-
ermediate
Under present law, an individual's coverage under the supplementary
medically
medical insurance part of medicare is terminated for nonpayment
S amend-
of premiums. The termination is effective on a date determined under
atients in
regulations which may be established SO as to provide a grace period
alth con-
(not in excess of 90 days) during which overdue premiums may be
rse would
paid and coverage continued.
provided
Several types of cases have arisen in which termination of an indi-
be under-
vidual's supplementary medical insurance protection for failure to
med at a
pay all premiums due within 90 days is clearly inequitable. For exam-
es of the
ple, there have been cases where for reasons of physical or mental
bected to
incapacity the enrollee was unable to make the premium payment
the inter-
within the allowed time limit and there was no one acting on his behalf
h reviews
to protect his interests. In other cases, coverage has been terminated
Is of care.
because the enrollee mistakenly believed that payment had been
made when actually it had not.
114
Your committee's bill would extend the 90-day grace period for an
that some
additional 90 days where the Secretary finds that there was good cause
the autom
for failure to pay the premium before the expiration of the initial
Your co
90-day grace period.
rights und
This provision would apply to such cases of nonpayment of pre-
because of
miums due within the 90-day period preceding the date of enactment.
he should
(h) Extension of time for filing claim for supplementary medical
authorizes
insurance benefits where delay is due to administrative error.-Under
necessary to
present law, a claim for benefits under the supplementary medical in-
ing (but n
surance program must be filed by December 31 of the year following
subsequent
the year in which the services were provided. (For this purpose, serv-
the basis th
ices furnished in the last 3 months of a year are deemed to have been
This prov
furnished in the following year.) The present time limit is adequate
beginning 0.
for the vast majority of supplementary medical insurance claims. In
(j) Elimi
some few cases, however, beneficiaries have failed to file a timely
mentary med
claim due to a mistake or other action on the part of the Government
tunity.-Un
or one of its agents. For example, misinformation from an official
time in the
source or delay in establishing supplementary medical insurance en-
initial 7-mo
titlement has resulted in late filing of claims.
before the m
Your committee's bill would provide that where a claim under sup-
period (duri
plementary medical insurance is not filed timely due to error of the
3 years after
Government or one of its agents, the claim may nevertheless be
enrollment h
honored if filed as soon as possible after the facts in the case have
plementary I
been established. This provision would assure that claimants would
period which
not be treated inequitably because of such an error.
termination.
This amendment would apply with respect to bills submitted and
The 3-year
requests for payment made after March 1968.
limitations or
(i) Waiver of enrollment period requirements where individual's rights
gram) in the
were prejudiced by administrative error or inaction.-Under present law,
under the pr
an individual can enroll in the supplementary medical insurance pro-
eligible to enr
gram during his initial 7-month enrollment period, beginning with
relatively hea
the third month before the month he attains age 65, or during any
65 and have b
general enrollment period (during the first 3 months of each year),
substantial be
which begins within 3 years after the end of his initial enrollment
since there is I
period. (The committee's bill includes a provision which would elimin-
since the vast
ate the 3-year limit on enrollment. That provision is discussed im-
there would se
mediately following discussion of this provision.)
ment. Further
There have been some relatively rare cases in which it has been dis-
are increased
covered that due to an action, inaction, or error on the part of the
time they coul
Government an individual is in fact enrolled, or is in fact not enrolled.
would be reta
under supplementary medical insurance when both the individual and
antiselection a
the Government had until then believed that the reverse was true.
enroll at older
Although rare, such cases may be a cause of considerable hardship
which the law
and distress to the individuals involved, and present law permits no
!ing would app
relief to be given. Your committee recognizes that enactment of the
Your commi
provision (discussed above) under which supplementary medical
to both initial
insurance enrollment would be automatic for individuals who are
tion. Enrollme
entitled to hospital insurance would in all likelihood result in a lesser
restriction limi
number of problem cases involving supplementary medical insurance
only once woul
enrollment than are encountered under present law. However, since
This provisio
not all supplementary medical insurance enrollees will be entitled to
because of the
hospital insurance and therefore will not be automatically enrolled
(k) Waiver o
for supplementary medical insurance, it is reasonable to expect there
without fault u
will continue to be such problem situations. It can also be expected
whom (or on b
59-948 0-71-
115
criod for an
that some problem cases involving enrollment status may result from
good caus,
the automatic enrollment of eligible persons.
the initia
Your committee believes that where an individual's enrollment
rights under supplementary medical insurance have been prejudiced
ent of pre-
because of the action, inaction or error on the part of the Government,
enactment
he should not be penalized or caused hardship. The bill, therefore,
ary medical
authorizes the Secretary to provide such equitable relief as may be
ror.-Under
necessary to correct or eliminate the effects of these situations, includ-
medical in-
ing (but not limited to) the establishment of a special initial or
ar following
subsequent enrollment period, with a coverage period determined on
irpose, serv.
the basis thereof and with appropriate adjustments of premiums.
0 have been
This provision would apply to all cases which have arisen since the
is adequate
beginning of the program.
e claims. In
(j) Elimination of provisions preventing enrollment in supple-
ile a timely
mentary medical insurance program more than 3 years after first oppor-
Government
tunity present law, an individual can enroll for the first
1 an official
time in the supplementary medical insurance program during his
isurance en-
initial 7-month enrollment period, beginning with the third month
before the month he attains age 65, or during any general enrollment
1 under sup-
period (during the first 3 months of each year) which begins within
error of the
3 years after the end of his initial enrollment period. A person whose
ertheless be
enrollment has terminated may not enroll for the second time in sup-
e case have
plementary medical insurance unless he does SO in a general enrollment
nants would
period which begins within 3 years after the effective date of such
termination. An individual may reenroll only once.
bmitted and
The 3-year enrollment limit was included in the law (as are other
limitations on enrollment in the supplementary medical insurance pro-
'dual's rights
gram) in the interest of avoiding antiselection in case the enrollment
present law,
under the program was not a very substantial proportion of people
surance pro-
eligible to enroll. For example, substantial numbers of people who are
ginning with
relatively healthy might delay enrollment until they are well past age
during any
65 and have become sick, at which point they would enroll and receive
each year),
substantial benefits without having paid much in premiums. However,
I enrollment
since there is now a 95-percent rate of participation in the program and
ould elimin-
since the vast majority of enrollees enroll at the earliest possible time,
iscussed im-
there would seem to be no reason to retain the 3-year limit on enroll-
ment. Further, present law provides that premiums for late enrollees
has been dis-
are increased 10 percent for each full 12 months elapsed between the
part of the
time they could have enrolled and actually do enroll and this provision
not enrolled,
would be retained. Such late-enrollment charges serve to prevent
dividual and
antiselection and to meet the higher costs associated with those who
se was true.
enroll at older ages. It is not intended, of course, that the months for
ble hardship
which the law itself precluded individuals from enrolling or reenrol-
N permits no
ling would apply in determining the late-enrollment charges.
ment of the
Your committee's bill would eliminate the 3-year limit with respect
ary medical
to both initial enrollment and reenrollment after an initial termina-
als who are
tion. Enrollment periods would remain as presently defined and the
It in a lesser
restriction limiting individuals who terminate enrollment to reenroll
cal insurance
only once would be retained.
wever, since
This provision would apply to all those who are ineligible to enroll
e entitled to
because of the 3-year limit in effect under present law.
ally enrolled
(k) Waiver of recovery of incorrect payments from survivor who is
expect there
without fault under medicare.-Under present law, an individual to
be expected
whom (or on behalf of whom) a medicare overpayment is made is
59-948
116
subjected to recovery action with respect to such overpayment,
except that the recovery action may be waived if the individual is
road-rene
without fault and if recovery would defeat the purposes of the cash
the Sowe
social security title (title II) of the Social Security Act or would be
dependup
against equity and good conscience. If such individual dies, recovery
ment. S a
action is initiated as necessary against any other individual who is
which son
receiving cash social security benefits on the same earnings record
insura pro
as the deceased overpaid beneficiary. In the latter situation, however,
individs (1
waiver of recovery action is not permitted even though the surviving
enrollat)
beneficiary-a widow, for example-is without fault with respect to
numb; oth
the overpayment.
and nenrol
The Social Security Amendments of 1967 included a provision
thus jy hav
which permitted recovery to be waived in the case of cash benefits if the
fits uler par
individual from whom recovery is being considered is without fault,
undeboth pa
even though the overpaid individual was at fault. However, the com-
correted, are
parable change with respect to medicare overpayments was not
unneessary a
made. As a result, there are situations in which, for example, an
Abo, the p
overpayment made to a deceased beneficiary is the responsibility
to require tha
of his widow even though she was without fault in causing the over-
ficiaries be ha
payment, whereas if the overpayment had been made to or on behalf
ance Compar
of the widow herself, the waiver provision would apply if she were
ben eficiaries
not at fault.
not identified
Your committee's bill would rectify this anomaly by permitting any
ficiary does n
individual who is liable for repayment of a medicare overpayment to
are submitted
qualify for waiver of recovery of the overpaid amount if he is without
surance Com
fault and if such recovery would defeat the purposes of title II or
payments.
would be against equity and good conscience.
Your comi
The provision would be effective upon enactment for overpayments
Board shall 1
outstanding at that time.
insurance pre
(l) Requirement of minimum amount of claim to establish entitlement
program. Thi
to hearing under supplementary medical insurance program.-Under
and administs
present law, people enrolled in the supplementary medical insurance
present law.
program are assured an opportunity for a fair hearing by the carrier
Retirement B
when requests for payment under supplementary medical insurance
of servicing its
are denied or are not acted upon with reasonable promptness, or when
ment presenti
the amount of the payment is in controversy, regardless of the dollar
Security havi
amount at issue. Experience under the program indicates that the
Retirement B
holding of a full fair hearing is unwarranted in cases where the amount
Board to mak
in controversy is relatively small. Carriers have reported cases involv-
between reaso
ing $5 and $10 claims for which the cost of holding a fair hearing has
mined by the
exceeded $100. Approximately 45 percent of the hearings held since the
reasonable cha
beginning of the program have involved an amount less than $100. Fur-
these are det
ther, regulations require carriers to have a reconsideration review of all
Administration
denied claims. Such review involves different claims personnel than
This provisi
those who acted on the original claim and should be sufficient protec-
payable after t
tion in small claims cases.
(n) Prosthet
Your committee's bill would require that a minimum amount of $100
medical insura
be at issue before an enrollee in the supplementary medical insurance
re not cover
program will be granted a fair hearing by the carrier.
itting and su
The provision would be effective with respect to hearings requested
Your committ
after the enactment of the bill.
limitation on c
(m) Collection of supplementary medical insurance premiums from
The commit
individuals entitled to both social security and railroad retirement
that a physicia
benefits. -Under present law, the responsibility for collecting supple-
ment for cover
117
verpayme
mentary medical insurance premiums for enrollees entitled to both rail-
individual
road retirement benefits and social security benefits is vested in either
of the Ca
the Social Security Administration or the Railroad Retirement Board,
or would t
depending upon the circumstances of entitlement at the time of enroll-
ies, recover
ment. This arrangement requires an administrative procedure under
dual who
which persons SO entitled can enroll in the supplementary medical
hings recor
insurance program with either agency. The result has been that some
on, howeve:
individuals (because all the facts are not made known at the time of
he survivin
enrollment) are enrolled twice and have two different identifying
h respect t.
numbers; others are enrolled by the Social Security Administration
and not enrolled by the Railroad Retirement Board, or vice versa, and
a provisio:
thus may have two medicare cards-one showing entitlement to bene-
enefits if th
fits under part A only and the other showing entitlement to benefits
thout fault
under both parts A and B. Such discrepancies, even though ultimately
er, the com-
corrected, are a source of confusion to beneficiaries and a cause of
ts was no:
unnecessary administrative expense.
xample, al.
Also, the processing of medical insurance claims is established SO as
sponsibility
to require that all claims submitted by or on behalf of railroad bene-
g the over-
ficiaries be handled by a single carrier, presently the Travelers Insur-
r on behalf
if she were
ance Company. Because the account numbers assigned to railroad
beneficiaries who enroll with the Social Security Administration are
not identified as applying to railroad beneficiaries (because the bene-
nitting any
ficiary does not make this known), many railroad beneficiary claims
payment to
are submitted to other carriers and require rerouting to Travelers In-
is without
surance Company. This is expensive and a cause of delay in making
title II or
payments.
Your committee's bill provides that the Railroad Retirement
rpayments
Board shall be responsible for collection of supplementary medical
insurance premiums for all enrollees who are entitled under that
entitlement
program. This change will eliminate the confusion, payment delay,
n.-Under
insurance
and administrative expense deriving from the related provisions of
the carrier
present law. Your committee's bill also provides that the Railroad
insurance
Retirement Board shall contract with a carrier or carriers for purposes
of servicing its beneficiaries with respect to part B benefits, an arrange-
S, or when
the dollar
ment presently in effect as a result of the Commissioner of Social
that the
Security having delegated his authority to do this to the Railroad
Retirement Board. Your committee expects the Railroad Retirement
le amount
Board to make continuing efforts to assure that there is conformity
es involv-
between reasonable charges for covered services as these are deter-
earing has
mined by the carrier or carriers under contract with the Board and
since the
$100. Fur-
reasonable charges for comparable services in the same locality as
view of all
these are determined by carriers acting for the Social Security
Administration.
nel than
This provision would be effective for premiums becoming due and
it protec-
payable after the fourth month after the month of enactment.
it of $100
(n) Prosthetic lenses furnished by opiometrists under supplementary
medical insurance program.-Under present law, optometric services
insurance
are not covered except with respect to services incidental to the
fitting and supplying of prosthetic lenses ordered by a physician.
equested
Your committee's bill does not provide for any change in the present
limitation on coverage of optometric services.
ms from
The committee believes, however, that the medicare requirement
etirement
that a physician's prescription or order accompany requests for pay-
supple-
ment for covered prosthetic lenses when such lenses are furnished by
118
an optometrist unduly limits both patient and optometrist and should
would not
be eliminated. The patient's freedom to choose either an ophthal-
care facil
mologist or an optometrist to furnish him with prosthetic lenses should
services a
no longer be restricted by this requirement.
recognize
The committee bill would reccgnize the ability of an optometrist
(p) Ref
to determine a beneficiary's need for prosthetic lenses by amending
law, wher
the definition of the term "physician" in title XVIII to include a
enrollee, :
doctor of optometry authorized to practice optometry by the State in
legal repr
which he furnishes services. An optometrist would be recognized as a
sentative
"physician" only for the purpose of attesting to the patient's need for
refund m
prosthetic lenses. This change would not provide for coverage of serv-
on behalf
ices performed by optometrists other than those covered under present
It has <
law.
it was re
The amendment would become effective upon enactment.
enrollee c
(o) Prohibition against requiring professional social workers in ex-
represent
tended care facilities under medicare.-In order to participate as an
subseque
extended care facility under the medicare program, institutions are
relatives
now required to engage the services of a professional social worker.
eligible o
This requirement is not specified in the statute but was promulgated
has advis
by the Secretary under his authority to establish conditions deemed
authority
necessary for the health and safety of patients. The regulation requires
procedur
an extended care facility to designate one staff member to be responsi-
premium
ble for attending to medically related social problems of patients; if
A simi
this staff member is not a qualified social worker (that is, one who was
in advan
graduated from a school of social work accredited by the Council on
cost of $
Social Work Education), the facility must have effective arrangements
people w
with a public or private agency (which may be a local welfare depart-
erage un
ment) to provide social service consultation. In addition, a qualified
The co
social worker must participate in staff training programs, case con-
retary to
ferences, and arrangements for staff orientation to community services
and exce
to meet patients' needs.
medical
Your committee recognizes and appreciates the value of medical
effective
social services, particularly for the medicare patient receiving extended
(q) W
care, since these services promote emotional and social adjustment of
nursing 4
the patient and his family, aid rehabilitation, and contribute to effec-
tee is ed
tive discharge planning. However, the need to make such specialized
nursing )
services generally available from or under the direction of professional
requiren
social workers can, in some cases, represent a substantial cost to the
under the
extended care facility which cannot be justified by the value derived
several
by its total patient population. Your committee also notes that,
medicai
although conditions for participation by hospitals include standards
in such
for a medical social service department, a hospital which does not have
Your
such a department may, nevertheless, be certified to participate in the
year at $
program. It seems inconsistent with the medicare concept of movement
quireme
homes IT
of patients to progressively lower levels of care that provision of such a
specialized ancillary service as medical social services would be optional
granted
area and
for a hospital but required of an extended care facility.
is not -
While agreeing that services of professional social workers are
appropriate for medicare reimbursement to those extended care
qualify
ficiaries
facilities which provide them to their patients, your committee believes
to mak
that the individual facility should hav e greater latitude in determining
such col
whether the medical social needs of its pacient population require
in such
availability of professional assistance. Therefore, your committee's
shift.
amendment would specify that provision of medical social services
119
should
would not be required as a condition of participation as an extended
ophthal-
care facility under the medicare program. Of course, where such
should
services are being provided it is expected that they would conform to
recognized standards.
tometrist
(p) Refunding of excess premiums under medicare.-Under present
amending
law, where part B entitlement terminates due to the death of the
include
is
enrollee, refund of any excess premiums is made, upon claim, to the
State
in
legal representative of the enrollee's estate. If there is no legal repre-
as
a
sentative and it is reasonably certain that none will be appointed,
need
for
refund may be made, only upon claim, to a relative of the deceased
of
serv-
on behalf of the estate.
present
It has come to the committee's attention that early in the program
it was recognized that excess part B premiums paid by a deceased
enrollee could be best disposed of, in those cases where there is no legal
in
ex-
representative of the deceased's estate, by adding them to benefits
as
an
subsequently payable on the same medicare claims number or to those
are
relatives who would (except for age or dependency requirements) be
worker.
eligible on the same record. However, the Office of General Counsel
omulgated
has advised that this could not be done in the absence of necessary
deemed
authority in the law. Consequently, the much more cumbersome claims
requires
procedure has had to be used. Where there is no claim for the excess
responsi-
premium payments, no refund is made.
atients;
if
A similar problem is likely to exist with respect to premiums paid
who
was
in advance under the provision of the bill which would provide, at a
Council
on
cost of $31 per month per enrollee, hospital insurance coverage for
angements
people who are age 65 and over and who are not eligible for such cov-
depart-
erage under present law.
qualified
The committee bill, therefore, would provide authority for the Sec-
case
con-
retary to dispose of excess supplementary medical insurance premiums
services
and excess hospital insurance premiums in the same manner as unpaid
medical insurance benefits are treated. This provision would be
of
medical
effective upon enactment.
extended
(q) Waiver of requirement of registered professional nurses in skilled
stment
of
nursing homes in rural areas under medicaid program.-Your commit-
to
effec-
tee is concerned that an undue hardship may be imposed on skilled
specialized
nursing homes in rural areas through implementation of the medicaid
ofessional
requirement that all such facilities have an organized nursing service
to
the
under the direction of a full-time professional registered nurse. In
derived
several rural areas such facilities would be unable to meet the
that,
medicaid requirements due to the scarce supply of nursing personnel
standards
in such areas.
not
have
Your committee bill would therefore au thorize waivers (for up to one
in
the
year at a time and ending no later than December 31, 1975) of the re-
novement
quirements for skilled nursing homes in rural areas providing such
of
such
a
homes make certain showings to the Secretary. Waivers would only be
e
optional
granted in those cases where (1) the nursing home is located in a rural
area and the supply of other skilled nursing home services in such area
rkers
are
is not sufficient to meet patient needs, (2) the failure of such home to
ded
care
qualify would seriously reduce the availability of services to bene-
e
believes
ficiaries in the area, (3) the nursing home has and is continuing
termining
to make a good faith effort to comply with this requirement but
n
require
such compliance is impeded by the lack of qualified nursing personnel
mmittee's
in such area, and (4) the requirements were met for a regular daytime
1 services
shift.
120
Your committee wishes to assure that in no case will this provision
rise in hosp
result in the encouragement of substandard nursing services and that
eligible for
every effort is being made by the facilities to comply with the nursing
were establ
requirements.
Your con
(r) Exemption of Christian Science sanatoriums from certain nursing
of health c
home requirements under medicaid.-Under present law, Christian Sci-
Medicaid 1
ence sanatoriums are permitted to participate in the medicaid program
substantial
as skilled nursing homes, and as such, are required to meet the general
blished
requirements established for skilled nursing homes.
Your co
Your committee believes that Christian Science sanatoriums, which
ceiling on
do not actually provide medical care, should not be required to have
million effe
a skilled nursing home administrator licensed by the State, to maintain
The 50 per
an organized nursing service under the direction of a registered nurse,
(v) Stud:
to maintain detailed medical records, or to have diagnostic and other
require the
service arrangements with general hospitals. The bill would therefore,
ed under S
exempt Christian Science sanatoriums from the requirements for a
the study
licensed nursing home administrator and other inappropriate medical
practic ser
requirements of the medicaid program. Such sanitoriums will be ex-
insurance 1
pected to continue to meet all applicable safety standards.
linitations
This provision would be effective upon enactment.
amounts to
(s) Requirements for nursing home administrators.-Your committee
study wou
is concerned that persons who have demonstrated their capability as
assist in I
nursing home administrators over a period of time should not be pre-
necessary
cluded from serving in this capacity because they fail to meet certain
would be r
formal requirements imposed for purposes of the medicaid program.
within 2 y
Your committee bill would, therefore, permit the States to establish a
his finding
permanent waiver from such requirements for those persons who served
information
as nursing home administrators for the three-year period preceding
plans which
the year the State established a program for the licensing of nursing
home administrators.
C.
(t) Termination of National Advisory Council on Nursing Home
Administration.-The 1967 Social Security Amendments required
State licensure of nursing home administrators. The statute also
established the National Advisory Council on Nursing Home Admin-
Consiste
istration in order to study, develop, and advise the Secretary and the
on a sound
States concerning matters relating to the qualifications, training and
bill would
other areas related to a proper program of licensure. The Council was
program. A
scheduled to terminate on December 31, 1971.
in close
Your committee has noted that the Council has essentially com-
in actuaria
future the
pleted its work and has passed a resolution to that effect. Therefore
your Committee bill would provide for the termination of the National
ably less t
Advisory Council on Nursing Home Administration thirty days after
anded ca
enactment of this bill. It is expected that the Medical Assistance
the hospiti
intribution
Advisory Council would assume responsibility for any continuing
ease-the
need for advice and assistance with respect to licensing of nursing
and (
home administrators.
(u) Increase in limitation on payments to Puerto Rico for medical
(iI) Incl
in
assistance.-Under present law, Federal matching funds for Puerto
1972, ri
Rico's Medicaid expenditures are at the rate of 50 percent, except
that the total amount of Federal funds may not exceed $20 million
provi
to fin
in any fiscal year.
in
Your committee believes that the $20 million Federal maximum on
a
Medicaid payments to Puerto Rico should be adjusted to reflect the
pere
wided a
the hig
121
rise in hospital and health care costs, as well as the number of people
that
eligible for Medicaid since 1967, when the ceiling and matching rate
were established.
Your committee recognizes the effective improvement in the delivery
of health care to the poor which has characterized the Puerto Rico
Sci-
Medicaid program and the fact that the cost of health care has
substantially increased since 1967 when the original ceiling was
eneral
established.
Your committee's bill would therefore provide that the Federal
which
ceiling on title XIX payments to Puerto Rico be increased to $30
have
million effective with the fiscal year 1972 and fiscal years thereafter.
intain
The 50 percent Federal matching rate would remain unchanged.
nurse,
(v) Study of chiropractic coverage.-Your committee's bill would
other
require the Secretary to conduct a study of chiropractic services cover-
refore,
ed under State plans approved under title XIX. The objectives of
for
a
the study would be to determine whether and to what extent chiro-
nedical
practic services should be covered under the supplementary medical
be
ex-
insurance program of title XVIII, giving particular attention to the
limitations which should be placed on such coverage and on the
amounts to be paid for whatever services might be provided. The
nmittee
study would include one or more demonstration projects designed to
as
assist in providing (under controlled conditions) the information
be
pre-
necessary to achieve the objectives of the study. The Secretary
certain
would be required to report the results of the study to the Congress
rogram.
within 2 years after the date of enactment of this bill, together with
ablish
a
his findings and recommendations based on the study, and on the
served
information he obtains concerning the experience of public and private
receding
plans which now or did cover chiropractic services.
nursing
C. ACTUARIAL COST ESTIMATES UNDER THE BILL
Home
required
1. FINANCING
also
Admin-
Consistent with the policy of maintaining the social security program
and
the
on a sound financial basis, which has been followed in the past, the
and
bill would make provision for meeting the cost of the expanded
was
program. At the present time, the social security cash benefits program
is in close actuarial balance, while the hospital insurance program has
com-
an actuarial deficiency; that is, it is expected that over the long-range
Therefore
future the income to the hospital insurance program will be consider-
National
ably less than the costs of the program. To meet the cost of the ex-
days
after
panded cash benefits and hospital insurance programs and to bring
Assistance
the hospital insurance program into actuarial balance, the schedule of
continuing
contribution rates would be revised and the contribution and benefit
of
nursing
base-the maximum amount of annual earnings subject to contribu-
tions and used in computing benefits-would be increased.
medical
(c) Increase in the contribution and benefit base.-The proposed
Puerto
increase in the contribution and benefit base from $7,800 to $10,200
except
in 1972, rather than to $9,000 as provided in present law, would not
million
only provide higher benefits at higher earnings levels, but also would
help to finance the changes made by the bill. An increase in the base
ximum
on
results in a reduction in the overall cost of the social security program
reflect
the
has a percent of taxable payroll. This occurs because the benefits
provided are a higher percentage of earnings at the lower levels than
at the higher levels, while the contribution rate is a flat percentage of
CONDITIONS OF PARTICIPATION:
EXTENDED CARE FACILITIES
NATURE DEPARTM GNV SNT OF NOIN HEALTH
U.S.A.
FEDERAL
HEALTH INSURANCE
FOR THE AGED
(CODE OF FEDERAL REGULATIONS,
TITLE 20, CHAPTER III, PART 405)
REGULATIONS
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
SOCIAL SECURITY ADMINISTRATION
HIR-11 (2-68)
REPRINT DATE (2-70)
BERRLD
405.1101(d)
SUBPART K
(7) provides appropriate methods and procedures for the
dispensing and administering of drugs and biologicals;
(8) has in effect a utilization review plan which meets
Conditions of Participation; Extended Care
the requirements of subsection (k) ;
Facilities
(9) in the case of an institution in any State in which
State or applicable local law provides for the licensing of
NOTE: §§ 405.1101 to 405.1137 issued under sec-
institutions of this nature, (A) is licensed pursuant to
tions 1102, 1861 (j), 1864, and 1871, 49 Stat. 647,
such law, or (B) is approved, by the agency of such State
as amended, 79 Stat. 317, 79 Stat. 326, 79 Stat.
or locality responsible for licensing institutions of this
331; 42 U.S.C. 1302, 1395 et seq.
nature, as meeting the standards established for such
licensing; and
405.1101 General.-(a) In order to participate
as an extended care facility in the health insurance
(10) meets such other conditions relating to the health
and safety of individuals who are furnished services in such
program for the aged, an institution must be an
institution or relating to the physical facilities thereof as
"extended care facility" within the meaning of
the Secretary may find necessary (subject to the second
section 1861 (j) of the Social Security Act. This
sentence of section 1863) ;
section of the law states a number of specific re-
except that such term shall not (other than for purposes of
quirements which must be met by participating
subsection (a) (2)) include any institution which is primar-
ily for the care and treatment of mental diseases or tubercu-
extended care facilities and authorizes the Secretary
losis. For purposes of subsection (a) (2), such term in-
of Health, Education, and Welfare to prescribe
cludes any institution which meets the requirements of
other requirements considered necessary in the in-
paragraph (1) of this subsection. The term "extended care
facility" also includes an institution described in paragraph
terest of health and safety of beneficiaries.
(1) of subsection (y), to the extent and subject to the
limitations provided in such subsection.
SEC. 1861. For purposes of this title—
(b) The requirements included in the statute and
(j) The term "extended care facility" means (except
the additional health and safety requirements pre-
for purposes of subsection (a) (2)) an institution (or a
scribed by the Secretary are set forth in the Con-
distinct part of an institution) which has in effect a trans-
ditions of Participation for Extended Care Facili-
fer agreement (meeting the requirements of subsection
(1)) with one or more hospitals having agreements in
ties. An institution which meets all of the specific
effect under section 1866 and which-
statutory requirements and which is found to be
(1) is primarily engaged in providing to inpatients (A)
in substantial compliance with the additional condi-
skilled nursing care and related services for patients who
tions prescribed by the Secretary may, if it so
require medical or nursing care, or (B) rehabilitation
services for the rehabilitation of injured, disabled, or sick
desires, agree to become a participating extended
persons;
care facility.
(2) has policies, which are developed with the advice of
(and with provision of review of such policies from time
(c) The Secretary may, at the request of a
to time by) a group of professional personnel, including
State, approve higher health and safety require-
one or more physicians and one or more registered pro-
ments for that State. Also, where a State or political
fessional nurses, to govern the skilled nursing care and
related medical or other services it provides;
subdivision imposes higher requirements on insti-
(3) has a physician, a registered professional nurse, or
tutions as a condition for the purchase of services
a medical staff responsible for the execution of such
under a State plan approved under title I, XVI,
policies;
or XIX of the Social Security Act, the Secretary is
(4) (A) has a requirement that the health care of every
required to impose like requirements as a condition
patient must be under the supervision of a physician, and
to the payment for services in such institutions in
(B) provides for having a physician available to furnish
necessary medical care in case of emergency;
that State or subdivision.
(5) maintains clinical records on all patients;
(d) (1) The extended care benefit provided by
(6) provides 24-hour nursing service which is sufficient
the health insurance program for the aged is in-
to meet nursing needs in accordance with the policies de-
veloped as provided in paragraph (2), and has at least one
tended to be a benefit for those persons who, though
registered professional nurse employed full time;
they no longer require the level of intensive care
405.1101
ordinarily furnished in a general hospital, continue
initiate a rehabilitation regime. A rehabilitation ex-
to need for medical reasons a level of care entailing
tended care facility, on the other hand, would be
medically supervised skilled nursing and related
staffed and equipped to continue and modify such a
services on a continuing basis in an institutional
regime during the patient's convalescence.
setting. The extended care benefit covers not only
(3) Thus, neither the title used by an institution,
postacute hospitalization where the individual is
nor the statute under which it is licensed. necessarily
convalescing or being rehabilitated but also those
identifies its function as being that of either a hos-
types of cases where the patient may continue to be
pital or an extended care facility in the context
severely ill and indeed have little or no prospect of
of title XVIII. Its primary purpose and the way
recovery. (The physician's certification required
it carries out its program of services must be
by section 1814 (a) (2) (D) of the Social Security
evaluated and determined. In the final analysis, the
Act is, in part, that the extended care facility serv-
hospital is designed to initiate care, including diag-
ices are required because the patient needs "skilled
nosis and treatment. The extended care facility is
nursing care on a continuing basis" for any of the
designed to continue care, with appropriate modi-
conditions for which he had just been previously
fications as the patient's condition changes.
hospitalized. Thus, a terminal cancer patient who
may receive only palliative treatment but whose
(e) Attention is invited to the requirements of
condition requires skilled nursing services available
Title VI of the Civil Rights Act of 1964 (78 Stat.
at all times would qualify for extended care bene-
252; P.L. 88-352) which provides that no person
fits.) The underlying program purpose of the ex-
in the United States shall, on the ground of race,
tended care benefit is to encourage the most effec-
color, or national origin be excluded from partici-
tive and economical utilization of available medical
pation in, be denied the benefits of, or be subject
care resources and facilities. Since it will be neces-
to discrimination under any program or activity
sary for many aged patients who are hospitalized
receiving Federal financial assistance (sec. 601),
for intensive treatment of an acute phase of illness
and to the implementing regulation issued by the
to undergo a period of medically supervised con-
Secretary of Health, Education, and Welfare with
valescence or care in a facility which is staffed
the approval of the President (Part 80 of this
and equipped to provide skilled nursing and other
title).
restorative services, the extended care benefit was
provided to enable physicians to transfer patients
405.1102 Conditions of Participation; Gen-
(when the physician determines the transfer is med-
eral.-For an institution to be eligible for partici-
ically appropriate), to such facilities rather than
pation in the program, it must meet the statutory
allowing patients to continue unnecessarily to oc-
requirements of section 1861(j) and there must be
cupy high-cost hospital beds.
a finding of substantial compliance on the part of
the institution with all the other conditions. These
(2) Accordingly, an extended care facility,
conditions which include both the statutory require-
whether it is a distinct part of an institution or a
ments and the additional health and safety require-
separate institution, is a facility which provides a
ments prescribed by the Secretary are set forth
level of care distinguishable from the level of in-
in §§ 405.1120 through 405.1137. They are re-
tensive care ordinarily furnished by a general hos-
quirements relating to the quality of care and the
pital. This level of care is reflected in the conditions
adequacy of the services and facilities which the
of participation. While the conditions c II for a
institution provides. Variations in the type and
wide range of specialized medical services and the
size of the institutions and the nature and scope
employment by the facility in adequate numbers
of services offered will be reflected in differences
of a variety of paramedical and skilled nursing per-
in the details of organization, staffing, and facilities.
sonnel, the emphasis is on the provision of skilled
However, the test is whether there is substantial
nursing and related care rather than the type of
compliance with the prescribed conditions of par-
care and treatment required in the acute phase of
ticipation.
an illness. Similarly, although the legislative lan-
guage concerning rehabilitation services is the same
with respect to hospitals and extended care facili-
405.1103 Standards; General.-As a basis
ties, the general concept of an extended care facility
for a determination as to whether or not there
is that of an intermediate institution which provides
is substantial compliance with the prescribed con-
post-hospital, subacute services. Hence, a rehabili-
ditions in the case of any particular extended care
tation hospital would be equipped and staffed to
facility, a series of standards, almost all interpreted
diagnose and evaluate the patient's disability and to
by explanatory factors, are listed under each con-
REGULATIONS NO. 5-SUBPART K
405.1107(a)
dition. These standards represent a broad range
quirements of section 1861(j) and is found to be
and variety of activities which such facilities may
operating in accordance with all other conditions
undertake or be pursuing in order to carry out the
of participation with no signfiicant deficiencies, or
functions embodied in the conditions. Reference
(b) The facility meets the specific statutory re-
to these standards will enable the State agency sur-
quirements of section 1861 (j) but is found to have
veying a facility to document the activities of the
deficiencies with respect to one or more other con-
institution, to establish the nature and extent of
ditions of participation which:
its deficiencies, if any, with respect to any particular
function, and to assess the facility's need for im-
(1) It is making reasonable plans and efforts to
provement in relation to the prescribed conditions.
correct, and
In substance, the application of the standards,
(2) Notwithstanding the deficiencies, is render-
together with the explanatory factors, will indicate
ing adequate care and is without hazard to the
the extent and degree to which an extended care
health and safety of individuals being served, taking
facility is complying with each condition.
into account special procedures or precautionary
measures which have been or are being instituted.
405.1104 Certification by State Agency.-
(a) The Health Insurance for the Aged Act pro-
405.1106 Time Limitations on Certifica-
vides that the services of State agencies, operating
tions of Substantial Compliance.-(a) All
under agreements with the Secretary, will be used
initial certifications by the State agency to the effect
by the Secretary in determining whether institu-
that an extended care facility is in substantial com-
tions meet the conditions of participation. Pursuant
pliance with the conditions of participation will
to these agreements, State agencies will certify to
be for a period of 1 year, beginning with January
the Secretary, extended care facilities which, are
1, 1967, or if later, with the date on which the
found to be in substantial compliance with the con-
facility is first found to be in substantial compliance
ditions. Such certifications shall include findings
with the conditions. State agencies may visit or
as to whether each of the conditions is substantially
resurvey institutions where necessary to ascertain
met. The Secretary, on the basis of such certifica-
continued compliance or to accommodate to pe-
tion from the State agency, will determine whether
riodic or cyclical survey programs. A State find-
or not an institution is an extended care facility
ing and certification to the Secretary that an in-
eligible to participate in the health insurance pro-
stitution is no longer in compliance may occur
gram as a provider of services.
within a 1-year or subsequent period of certification
(b) The decisions of the State agency represent
and will thereby terminate the State certification
recommendations to the Secretary. Notice of de-
as to compliance.
termination of eligibility or noneligibility made by
(b) If an extended care facility is in substantial
the Secretary on the basis of a State agency deci-
compliance under the provisions of § 405.1105(b),
sion will be sent to the institution concerned by the
the following information will be incorporated in
Social Security Administration after such review
the Secretary's finding and into the notice of eligi-
and professional consultation with the Public
bility to the facility:
Health Service as may be required. If it is deter-
mined that the institution does not comply with the
(1) A statement of the deficiencies which were
conditions of participation, the institution may re-
found, and
quest that the determination be reviewed. For pro-
(2) A description of progress which has been
cedures relating to the appeals process, see Subpart
made and further action which is being taken to
o of this Part 405.
remove the deficiencies, and
(Par. (b) amended 12-18-68.)
(3) A scheduled time for a resurvey of the insti-
tution to be conducted not later than the ninth
405.1105 Principles for the Evaluation of
month (or earlier, depending on the nature of the
Extended Care Facilities to Determine
deficiencies) of the period of certification.
Whether They Meet the Conditions of Partici-
(Par. (b) amended 12-18-68.)
pation.-Extended care facilities will be considered
in substantial compliance with the conditions of
405.1107 Certification of Noncompliance.
participation upon acceptance by the Secretary of
-(a) The State agency will certify that an insti-
findings, adequately documented and certified to
tution is not in compliance with the conditions of
by the State agency, showing that:
participation or, where a determination of eligibil-
ity has been made, that an institution is no longer
(a) The facility meets the specific statutory re-
in compliance where:
405.1107(b)
REGULATIONS NO. 5-SUBPART K
(1) The institution is not in compliance with
tification to the Secretary is that an institution is
one or more of the statutory requirements of sec-
not in compliance with the conditions of partici-
tion 1861 or
pation, such documentation should include a report
(2) The institution has deficiencies of such char-
of all consultation which has been undertaken in
acter as to seriously limit the capacity of the insti-
an effort to assist the institution to comply with
tution to render adequate care or to place health
the conditions, a report of the institution's responses
and safety of individuals in jeopardy, and consulta-
with respect to the consultation, and the State agen-
tion to the institution has demonstrated that there
cy's assessment of the prospects for such improve-
is no early prospect of such significant improve-
ments as to enable the institution to achieve sub-
ment as to establish substantial compliance as of
stantial compliance with the conditions.
a later beginning date, or
(3) After a previous period or part thereof for
405.1110 Authorization for Special Certifi-
which the institution was certified under circum-
cation.-(a) Where, because of the absence of
stances outlined in § 405.1105(b), there is a lack
any participating extended care facility or hospital
of progress toward a removal of deficiencies which
in an area, the denial of eligibility of an institution
the State agency finds are adverse to the health and
to participate in the program would result in bene-
safety of individuals being served.
ficiaries not having access to needed services, an
institution may, upon recommendation by the State
(b) If, on the basis of a State agency certifica-
agency, be approved by the Secretary as an ex-
tion, it is determined by the Secretary that the in-
tended care facility. Such approval will be granted
stitution does not substantially meet, or no longer
only where there are no deficiencies of such char-
substantially meets, the conditions of participation,
acter and seriousness as to place health and safety
an agreement for participation may not be accept-
of individuals in jeopardy. An institution receiving
ed for filing, or if filed, may be terminated. The in-
this special approval shall furnish information
stitution may request that the determination be re-
showing the extent to which it is making the best
viewed. For procedures relating to the appeals
use of its resources to improve its quality of care.
process, see Subpart O of this Part 405.
Resurveys of such institutions will be made at
(Section heading and par. (b) amended 12-18-68.)
least semiannually.
(b) Each case will have to be decided on its
405.1108 Criteria for Determining Substan-
individual merits; and while the degree and extent
tial Compliance.-Findings made by a State
of compliance will vary, the institution must, as
agency as to whether an extended care facility
a minimum, meet all of the statutory conditions in
is in substantial compliance with the conditions of
section 1861 (j) (1)-(9), in addition to meeting
participation require a thorough evaluation of the
such other requirements as the Secretary finds nec-
degree to which operation of a facility demonstrates
essary under section 1861 (10).
adequate performance of the functions which are
embodied in the conditions. The State evaluation
405.1120 Condition of Participation-Com-
will take into consideration:
pliance With State and Local Laws.-The ex-
tended care facility is in conformity with all appli-
(a) The degree to which each standard, as well
cable Federal, State, and local laws, regulations
as the total set of standards relating to a condition
and similar requirements.
of participation, is met;
(a) Standard; Licensing of Institution.-In any
(b) When there is a deficiency in meeting a
State in which State or applicable local law provides
standard, whether the deficiency is one concerning
for the licensing of extended care facilties, the
the statutory requirements which must be met by
institution (1) is licensed pursuant to such law,
all extended care facilities (sec. 1861(j))
,
or (2) is approved by the agency of the State or
(c) Whether the deficiency creates a hazard to
locality responsible for licensing such institutions,
health and safety; and
as meeting the standards established for such li-
(d) Whether the facility is making reasonable
censing.
plans and efforts to correct the deficiency within a
(b) Standard; Licensing of Staff.-Staff of the
reasonable period.
extended care facilty is currently licensed or regis-
tered in accordance with applicable laws.
405.1109 Documentation of Findings.-The
(c) Standard; Conformity With Laws.-The ex-
findings of the State agency with respect to each
tended care facility is in conformity with laws re-
of the conditions of participation should be ade-
lating to fire and safety, communicable and report-
quately documented. Where the State agency cer-
able diseases, and other relevant matters.
405.1122(a)
405.1121 Condition of Participation-Ad-
(1) Current employee records are maintained
ministrative Management.-The extended care
and include a résumé of each employee's training
facility has an effective governing body legally re-
and experience.
sponsible for the conduct of the facility, which
(2) Files contain evidence of adequate health
designates an administrator and establishes adminis-
supervision such as results of preemployment and
trative policies. However, if the extended care
periodic physical examination, including chest
facility does not have an organized governing body,
X-rays, and records of all illnesses and accidents
the persons legally responsible for the conduct of
occurring on duty.
the extended care facility carry out or have carried
(3) Work assignments are consistent with qual-
out the functions herein pertaining to the governing.
ifications.
body.
(a) Standard; Governing Body.-There is a
(d) Standard; Notification of Changes in Pa-
governing body which assumes full legal responsi-
tient Status.-There are appropriate written policies
bility for the overall conduct of the facility. The
and procedures relating to notification of respon-
factors explaining the standard are as follows:
sible persons in the event of significant change in
patient status, patient charges, billings, and other
(1) The ownership of the facility is fully dis-
related administrative matters. The factors ex-
closed to the State agency. In the case of corpora-
plaining the standard are as follows:
tions, the corporate officers are made known.
(2) The governing body is responsible for com-
(1) Patients are not transferred or discharged
pliance with the applicable laws and regulations of
without prior notification of next of kin or sponsor.
legally authorized agencies.
(2) Information describing the care and services
provided by the facility is accurate and not mis-
(b) Standards; Full-Time Administrator.-The
leading.
governing body appoints a full-time administrator
who is qualified by training and experience and
delegates to him the internal operation of the facil-
405.1122 Condition of Participation-Pa-
ity in accordance with established policies. The
tient Care Policies.-There are policies to govern
the skilled nursing care and related medical or other
factors explaining the standard are as follows:
services provided, which are developed with the
(1) The administrator is at least 21 years old,
advice of professional personnel, including one or
capable of making mature judgments, and has no
more physicians and one or more registered pro-
physical or mental disabilities or personality dis-
fessional nurses. A physician, a registered profes-
turbances which interfere with carrying out his
sional nurse, or a medical staff is responsible for
responsibilities.
the execution of these policies.
(2) It is desirable for the administrator to have
(a) Standard; Policies Regarding Nursing and
a minimum of a high school education, to have
Medical Care.-(1) The extended care facility has
completed courses in administration or manage-
written policies which are developed with the ad-
ment and to have had at least 1 year of work ex-
vice of (and with provision for review of such
perience including some administrative experience
policy from time to time by) a group of profes-
in an extended care facility or related health pro-
sional personnel, including at least one or more
physicians and one or more registered professional
gram.
nurses, to govern the skilled nursing care and re-
(3) The administrator's responsibilities for pro-
lated medical or other services it provides. Policies
curement and direction of competent personnel are
reflect awareness of and provision for meeting the
clearly defined.
total needs of patients. These are reviewed at least
(4) An individual competent and authorized to
annually and cover at least the following:
act in the absence of the administrator is desig-
nated.
(i) Admission, transfer, and discharge policies
including categories of patients accepted and not
(5) The administrator may be a member of the
accepted by extended care facility.
governing body.
(ii)
Physician services.
(c) Standard; Personnel Policies. - There are
(iii) Nursing services.
written personnel policies, practices, and procedures
(iv) Dietary services.
that adequately support sound patient care. The
(v)
Restorative services.
factors explaining the standard are as follows:
(vi) Pharmaceutical services.
405.1122(b)
(vii) Diagnostic services.
prior. to or at the time of admission, patient in-
(viii) Care of patients in an emergency, during
formation which includes current medical findings,
a communicable disease episode, and when critically
diagnoses, rehabilitation potential, a summary of
ill or mentally disturbed.
the course of treatment followed in the hospital, and
(ix) Dental services.
orders from a physician for the immediate care of
(x) Social services.
the patient. The factors explaining the standard
(xi) Patient activities.
are as follows:
(xii) Clinical records.
(1) If the above information is not available in
(xiii) Transfer agreement.
the facility upon admission of the patient, it is
(xiv) Utilization review.
obtained by the facility within 48 hours after ad-
mission.
(2) The factors explaining the standard are as
follows:
(2) If medical orders for the immediate care of
a patient are unobtainable at the time of admis-
(i) It is desirable that the group of professional
sion, the physician with responsibility for emer-
personnel responsible for patient care policies in-
gency care gives temporary orders.
cludes health personnel such as social workers,
(3) A current hospital discharge summary con-
dietitians, pharmacists, speech pathologists and
tain!' : the above information is acceptable.
audiologists, physical and occupational therapists,
(b) Standards; Supervision by Physician.-The
and mental health personnel. Pharmacy policies
facility has a requirement that the health care of
and procedures are preferably developed with the
every patient is under the supervision of a physician
advice of a subgroup of physicians and pharma-
who, based on an evaluation of the patient's im-
cists, serving as a pharmacy and therapeutics com-
mediate and long-term needs, prescribes a planned
mittee.
regimen of medical care which covers indicated
(ii) Some members of this group are neither
medications, treatments, restorative services, diet,
owners nor employees of the facility.
special procedures recommended for the health and
(iii) The group meets at regularly scheduled in-
safety of the patient, activities, plans for continuing
tervals and minutes of each meeting are recorded.
care and discharge. The factors explaining the
(iv) The group may serve one or more facili-
standard are as follows:
ties.
(1) The medical evaluation of the patient is
(b) Standard; Responsibilities; Execution of Pa-
based on a physical examination done within 48
hours of admission unless such examination was
tient Care Policies.-The extended care facility has
a physician, a registered professional nurse, or a
performed within 5 days prior to admission.
medical staff responsible for the execution of pa-
(2) The charge nurse and other appropriate per-
tient care policies established by the professional
sonnel involved in the care of the patient assist in
group referred to in paragraph (a) (1) of this sec-
planning his total program of care.
tion. The factors explaining the standard are as
(3) The patient's total program of care is re-
follows:
viewed and revised at intervals appropriate to his
needs. Attention is given to special needs of pa-
(1) If the organized medical staff is responsible,
tients such as foot, sight, speech, and hearing prob-
an individual physician is designated to maintain
lems.
compliance with overall patient care policies.
(4) Orders concerning medications and treat-
(2) If a registered professional nurse is respon-
ments are in effect for the specified number of days
sible, the facility makes available an advisory phy-
indicated by the physician but in no case exceed a
sician from whom she receives medical guidance.
period of 30 days unless recorded in writing by
the physician.
405.1123 Condition of Participation-Phy-
(5) Telephone orders are accepted only when
sician Services.-Patients in need of skilled nurs-
necessary and only by licensed nurses. Telephone
ing care are admitted only upon the recommenda-
orders are written into the appropriate clinical
tion of a physician; their health care continues
record by the nurse receiving them and are counter-
under the supervision of a physician; and the facil-
signed by the physician within 48 hours.
ity has a physician available to furnish necessary
(6) Patients are seen by a physician at least
medical care in case of emergency.
once overy 30 days. There is evidence in the clin-
(a) Standard; Medical Findings and Physicians'
ical record of the physician's visits to the patient
Orders.-There is made available to the facility,
at appropriate intervals.
405.1124(d)
(7) There is evidence in the clinical record that
number and levels of nursing personnel to be em-
the physician has made arrangements for the med-
ployed, participating in their recruitment and selec-
ical care of the patient in the physician's absence.
tion, and recommending termination of employ-
(8) To the extent feasible, each patient or his
ment when necessary;
sponsor designates a personal physician.
(3) Assigning and supervising all levels of nurs-
ing personnel;
(c) Standard; Availability of Physicians for
Emergency Care.-The extended care facility pro-
(4) Participating in planning and budgeting for
vides for having one or more physicians available
nursing care;
to furnish necessary medical care in case of emer-
(5) Participating in the development and imple-
gency if the physician responsible for the care of
mentation of patient care policies and bringing
the patient is not immediately available. A sched-
patient care problems requiring changes in policy
ule listing the names and telephone numbers of
to the attention of the professional policy advisory
these physicians and the specific days each is on
groups;
call is posted in each nursing station. There are
(6) Coordinating nursing services with other
established procedures to be followed in an emer-
patient care services such as physician, physical
gency, which cover immediate care of the patient,
therapy, occupational therapy, and dietary;
persons to be notified, and reports to be prepared.
(7) Planning and conducting orientation pro-
grams for new nursing personnel, and continuing
405.1124 Condition of Participation-
inservice education for all nursing personnel;
Nursing Services.-The extended care facility
(8) Participating in the selection of prospective
provides 24-hour nursing service which is suf-
patients in terms of nursing services they need and
ficient to meet the nursing needs of all patients.
nursing competencies available;
There is at least one registered professional nurse
(9) Assuring that a nursing care plan is estab-
employed full time and responsible for the total
lished for each patient and that his plan is reviewed
nursing service. There is a registered professional
and modified as necessary.
nurse or licensed practical nurse who is a graduate
of a State approved school of practical nursing in
(c) Standard; Supervising Nurse.-Nursing care
charge of nursing activities during each tour of
is provided by or under the supervision of a full-
duty. The terms "licensed practical nurse(s)" and
time registered professional nurse currently licensed
"practical nursing" as used in this section are
to practice in the State. The factors explaining the
synonymous with "licensed vocational nurse(s)"
standard are as follows:
and "vocational nursing."
(1) The supervising nurse is trained or experi-
(a) Standard; Full-Time Nurse.-There is at
enced in areas such as nursing administration and
least one registered professional nurse employed
supervision, rehabilitation nursing, psychiatric or
full time. If there is only one registered profes-
geriatric nursing.
sional nurse, she serves as director of the nursing
service, works full time during the day, and devotes
(2) The supervising nurse makes daily rounds
full time to the nursing service of the facility. If
to all nursing units performing such functions
the director of nursing has administrative respon-
as visiting each patient, reviewing clinical records,
sibility for the facility, she has a professional nurse
medication cards, patient care plans and staff as-
assistant so that there is the equivalent of a full-
signments, and to the greatest degree possible ac-
time director of nursing service. The director of
companying physicians when visiting patients.
nursing service is trained or experienced in areas
(d) Standard; Charge Nurse.-There is at least
such as nursing service administration, rehabilita-
one registered professional nurse or qualified li-
tion nursing, psychiatric or geriatric nursing.
1
censed practical nurse who is a graduate of a State-
approved school of practical nursing on duty at all
(b) Standard; Director of Nursing Service.—
times and in charge of the nursing activities dur-
The director of the nursing service is responsible
ing each tour of duty. The factors explaining
for:
the standard are as follows:
(1) Developing and/or maintaining nursing
(1) A State-approved school of practical nursing
service objectives, standards of nursing practice,
is one whose standards of education meet those
nursing procedure manuals, and written job de-
set by the appropriate State nurse licensing author-
scriptions for each level of nursing personnel;
ity.
(2) Recommending to the administrator the
(2) Some State laws grant practical nurse li-
405.1124(e)
censure (nonwaivered) to certain individuals who
pital is continued immediately upon admission to
have an educational background considered to be
the extended care facility.
equivalent to graduation from a State-approved
(2) Nursing personnel are taught restorative
school of practical nursing. Such licensure determi-
nursing measures and practice them in their daily
nation is made by the appropriate State nurse licens-
care of patients. These measures include:
ing authority on the basis of evaluation of the
individual's educational achievements, as well as on
(i) Maintaining good body alignment and
successful completion of the appropriate State li-
proper positioning of bedfast patients;
censing examination. Licensure under such con-
(ii) Encouraging and assisting bedfast patients
ditions may be accepted as meeting the require-
to change positions at least every 2 hours day and
ment of graduation from a State-approved school
night to stimulate circulation, and prevent decubiti
of practical nursing.
and deformities;
(3) It is desirable that the nurse in charge of
(iii) Making every effort to keep patients active
each tour of duty be trained or experienced in
and out of bed for reasonable periods of time, ex-
areas such as nursing administration and super-
cept when contraindicated by physicians' orders,
vision, rehabilitation nursing, psychiatric or geri-
and encouraging patients to achieve independence
atric nursing.
in activities of daily living by teaching self care,
transfer and ambulation activities;
(4) The charge nurse has the ability to recog-
(iv) Assisting patients to adjust to their dis-
nize significant changes in the condition of pa-
abilities, to use their prosthetic devices, and to re-
tients and to take necessary action.
direct their interests if necessary;
(5) The charge nurse is responsible for the
(v) Assisting patients to carry out prescribed
total nursing care of patients during her tour of
physical therapy exercises between visits of the
duty.
physical therapist.
(e) Standard; 24-Hour Nursing Service.-There
(3) Consultation and instruction in restorative
is 24-hour nursing service with a sufficient number
nursing available from State or local agencies are
of nursing personnel on duty at all times to meet
utilized.
the total needs of patients. The factors explaining
the standard are as follows:
(g) Standard; Dietary Supervision. - Nursing
(1) Nursing personnel include registered pro-
personnel are aware of the dietary needs and food
fessional nurses, licensed practical nurses, aides and
and fluid intake of patients. The factors explain-
orderlies.
ing the standard are as follows:
(2) The amount of nursing time available for
(1) Nursing personnel observe that patients are
patient care is exclusive of nonnursing duties.
served diets as prescribed.
(3) Sufficient nursing time is available to assure
(2) Patients needing help in eating are assigned
that each patient:
promptly upon receipt of meals.
(i) Receives treatments, medications and diet as
(3) Adaptive self-help devices are provided to
prescribed;
contribute to the patient's independence in eating.
(ii) Receives proper care to prevent decubiti and
(4) Food and fluid intake of patients is observed
is kept comfortable, clean, and well-groomed;
and deviations from normal are reported to the
(iii) Is protected from accident and injury by
charge nurse. Persistent unresolved problems are
the adoption of indicated safety measures;
reported to the physician.
(iv) Is treated with kindness and respect.
(h) Standard; Nursing Care Plan.-There is a
(4) Licensed practical nurses, nurses' aides, and
written nursing care plan for each patient based
orderlies are assigned duties consistent with their
on the nature of illness, treatment prescribed, long-
training. and experience.
and short-term goals and other pertinent informa-
(f) Standard; Restorative Nursing Care-There
tion. The factors explaining the standard are as
is an active program of restorative nursing care di-
follows:
rected toward assisting each patient to achieve and
maintain his highest level of self care and inde-
(1) The nursing care plan is a personalized,
pendence. The factors explaining the standard are
daily plan for individual patients. It indicates what
follows:
nursing care is needed, how it can best be accom-
plished for each patient, how the patient likes things
01) Restorative nursing care initiated in the hos-
done, what methods and approaches are most suc-
REGULATIONS NO. 5-SUBPART K
405.1125(c)
cessful, and what modifications are necessary to
is not a professional dietitian, regularly scheduled
insure best results.
consultation from a professional dietitian or other
(2) Nursing care plans are available for use
person with suitable training is obtained. The fac-
by all nursing personnel.
tors explaining the standard are as follows:
(3) Nursing care plans are reviewed and revised
(1) A professional dietitian meets the Ameri-
as needed.
ican Dietetic Association's qualification standards.
(4) Relevant nursing information from the nurs-
(2) Other persons with suitable training are
ing care plan is included with other medical in-
graduates of baccalaureate degree programs with
formation when patients are tranferred.
major studies in food and nutrition.
(i) Standard; Inservice Educational Program.-
(3) The person in charge of the dietary service
There is a continuing inservice educational program
participates in regular conferences with the admin-
in effect for all nursing personnel in addition to
istrator and other supervisors of patient services.
a thorough job orientation for new personnel. Skill
(4) This person makes recommendations con-
training for nonprofessional nursing personnel be-
cerning the quantity, quality and variety of food
gins during the orientation period. The factors
purchased.
explaining the standard are as follows:
(5) This person is responsible for the orienta-
tion, training and supervision of food service em-
(1) Planned inservice programs are conducted
ployees, and participates in their selection and in
at regular intervals for all nursing personnel.
the formulation of pertinent personnel policies.
(2) All patient care personnel are instructed and
(6) Consultation obtained from self-employed
supervised in the care of emotionally distuibed and
dietitians or dietitians employed in voluntary or
confused patients, and are helped to understand
official agencies is acceptable if provided on a fre-
the social aspects of patient care.
quent and regularly scheduled basis.
(3) Skill training includes demonstration, prac-
tice, and supervision of simple nursing procedures
(b) Standard; Adequacy of Diet Staff.-A suf-
applicable in the individual facility. It also in-
ficient number of food service personnel are em-
cludes simple restorative nursing procedures.
ployed and their working hours are scheduled to
(4) Orientation of new personnel includes a re-
meet the dietary needs of the patients. The factors
view of the procedures to be followed in emer-
explaining the standard are as follows:
gencies.
(1) There are food service employees on duty
(5) Opportunities are provided for nursing per-
over a period of 12 or more hours.
sonnel to attend training courses in restorative nurs-
(2) Food service employees are trained to per-
ing and other educational programs related to the
form assigned duties and participate in selected in-
care of long-term patients.
service education programs.
(3) In the event food service employees are
405.1125 Condition of Participation-Di-
assigned duties outside the dietary department, these
ctary Services.-The dietary service is directed
duties do not interfere with the sanitation, safety,
by a qualified individual and meets the daily dietary
or time required for dietary work assignments.
needs of patients. An extended care facility which
has a contract with an outside food management
(4) Work assignments and duty schedules are
company may be found to meet this condition of
posted.
participation provided the company has a 'dietitian
(c) Standards; Hygiene of Diet Staff.-Food
who serves, as required by the scope and complex-
service personnel are in good health and practice
ity of the service, on a full-time, part-time or con-
hygienic food handling techniques. The factors
sultant basis to the extended care facility, and pro-
explaining the standards are as follows:
vided the company maintains standards as listed
herein and provides for continuing liason with the
(1) Food service personnel wear clean washable
medical and nursing staff of the extended care fa-
garments, hairnets, or clean caps, and keep their
cility for recommendations on dietetic policies af-
hands and fingernails clean at all times.
fecting patient care.
(2) Routine health examinations at least meet
(a) Standard; Dietary Supervision.-A person
local, State, or Federal codes for food service per-
designated by the administrator is responsible for
sonnel. Where food handlers' permits are required,
the total food service of the facility. If this person
they are current.
405.1125(d)
REGULATIONS NO. 5-SUBPART K
(3) Personnel having symptoms of communica-
planned in advance and food sufficient to meet the
ble diseases or open infected wounds are not per-
nutrition needs of patients is prepared as planned
mitted to work.
for each meal. When changes in the menu are
necessary, substitutions provide equal nutritive
(d) Standard; Adequacy of Diet.-The food and
value. The factors explaining the standard are as
nutritional needs of patients are met in accordance
follows:
with physicians' orders, and, to the extent med-
ically possible, meet the dietary allowances of the
(1) Menus are written at least 1 week in ad-
Food and Nutrition Board of the National Research
vance. The current week's menu is in one or more
Council adjusted for age, sex and activity. A daily
accessible places in the dietary department for easy
food guide for adults may be based on the following
use by workers purchasing, preparing, and serving
allowances:
foods.
(2) Menus provide a sufficient variety of foods
(1) Milk: Two or more cups.
served in adequate amounts at each meal. Menus
(2) Meat group: Two or more servings of beef,
are different for the same days of each week and
veal, pork, lamb, poultry, fish, eggs. Occasionally
are adjusted for seasonal changes.
dry beans, nuts, or dry peas may be served as alter-
(3) Records of menus as served are filed and
nates.
maintained for 30 days.
(3) Vegetable and fruit group, four or more
(4) Supplies of staple foods for a minimum of
servings: A citrus fruit or other fruit and vegetable
a 1-week period and of perishable foods for a min-
important for Vitamin C; a dark green or deep
imum of a 2-day period are maintained on the
yellow vegetable for Vitamin A, at least every other
premises.
day; other fruits and vegetables including potatoes.
(5) Records of food purchased for preparation
(4) Bread and cereal group: Four or more serv-
are on file.
ings of whole grain, enriched or restored.
(h) Standard; Preparation of Food.-Foods are
(5) Other foods to round out meals and snacks,
prepared by methods that conserve nutritive value,
to satisfy individual appetites and provide addi-
flavor, and appearance, and are attractively served
tional calories.
at the proper temperatures and in a form to meet
(e) Standard; Therapeutic Diets.-Therapeutic
individual needs. The factors explaining the stand-
diets are prepared and served as prescribed by the
ard are as follows:
attending physician. The factors explaining the
(1) A file of tested recipes, adjusted to appro-
standard are as follows:
priate yield, is maintained.
(1) Therapeutic diet orders are planned, pre-
(2) Food is cut, chopped or ground to meet indi-
pared, and served with supervision or consultation
vidual needs.
from a qualified dietitian.
(3) If a patient refuses food served, substitutes
are offered.
(2) A current diet manual recommended by the
State licensure agency is readily available to food
(4) Effective equipment is provided and proce-
service personnel and supervisors of nursing serv-
dures established to maintain food at proper tem-
ice.
perature during serving.
(3) Persons responsible for therapeutic diets
(5) Table service is provided for all who can
have sufficient knowledge of food values to make
and will eat at a table including wheelchair pa-
appropriate substitutions when necessary.
tients.
(6) Trays provided bedfast patients rest on
(f) Standard; Quality of Food.-At least three
firm supports such as overbed tables. Sturdy tray
meals or their equivalent are served daily, at regu-
stands of proper height are provided patients able
lar times, with not more than a 14-hour span be-
to be out of bed.
tween a substantial evening meal and breakfast.
Between-meal or bedtime snacks of nourishing qual-
(i) Standard; Maintenance of Sanitary Condi-
ity are offered. If the "four or five meal a day"
tions.-Sanitary conditions are maintained in the
plan is in effect, meals and snacks provide nutri-
storage, preparation and distribution of food. The
tional value equivalent to the daily food guide pre-
factors explaining the standard are as follows:
viously described.
(1) Effective procedures for cleaning all equip-
(g) Standard; Planning of Menus.-Menus are
ment and work areas are followed consistently.
REGULATIONS NO. 5-SUBPART K
405.1126(c)
(2) Dishwashing procedures and techniques are
(1) Physical therapy is given or supervised by
well developed, understood and carried out in com-
a therapist who meets one of the following require-
pliance with the State and local health codes.
ments:
or
(3) Written reports of inspections by State or
(i) He has graduated from a physical therapy
local health authorities are on file at the facility
curriculum approved by-
help
with notation made of action taken by the facility
(A) The American Physical Therapy Associa-
for
to comply with any recommendations.
tion; or
(
(4) Waste which is not disposed of by mechan-
(B) The Council on Medical Education and
pat
ical means is kept in leak-proof nonabsorbent con-
Hospitals of the American Medical Association; or
to
tainers with close-fitting covers and is disposed of
(C) The Council on Medical Education of the
niz
daily in a manner that will prevent transmission of
American Medical Association in collaboration with
sar
disease, a nuisance, a breeding place for flies, or
the American Physical Therapy Association; or
ing
a feeding place for rodents. Containers are thor-
(ii) Prior to January 1, 1966-
oughly cleaned inside and out each time emptied.
(A) Has been admitted to membership by the
fin
(5) Dry or staple food items are stored off the
American Physical Therapy Association; or
to
floor in a ventilated room not subject to sewage or
(B) Has been admitted to registration by the
hi
waste water backflow, or contamination by con-
American Registry of Physical Therapists; or
m
densation, leakage, rodents, or vermin.
(C) Has graduated from a physical therapy
fa
(6) Handwashing facilities including hot and
curriculum in a four year college or university ap-
cold water, soap, and individual towels, preferably
proved by a State department of education, is li-
paper towels, are provided in kitchen areas.
censed or registered as a physical therapist, and
S.
(Par. (d) (3) amended 12-18-68.)
where appropriate, has passed a State examination
tl
for licensure as a physical therapist; or
W
405.1126 Condition of Participation-Re-
(iii) If trained outside the United States-
n
storative Services.-Restorative services are pro-
(A) Has graduated since 1928 from a physical
vided upon written order of the physician.
therapy curriculum approved in the country in
(a) Standard; Medical Direction.Restorative
which the curriculum was located and in which
loyea
services are provided only upon written order by
there is a member organization of the World Con-
wh
the physician, who indicates anticipated goals and
federation for Physical Therapy; and
is responsible for general medical direction of such
(B) Is a member of a member organization of
services as part of the total care of the patient. The
the World Confederation for Physical Therapy; and
physician prescribes specific modalities to be used
(C) Ha3 completed one year's experience un-
and frequency of physical and occupational therapy
der the supervision of an active member of the
services.
American Physical Therapy Association; and
(b) Standard; Maintenance of Patient's Func-
(D) Has successfully completed a qualifying
tions.-At a minimum, restorative nursing care de-
examination as prescribed by the American Phy-
signed to maintain function or improve the patient's
sical Therapy Association.
ability to carry out the activities of daily living is
(2) Physical therapy includes such services as:
provided by the extended care facility. (See
§ 405.1124(f).)
(i) Assisting the physician in his evaluation of
(c) Standard; Therapy Services.-If restorative
patients by applying muscle, nerve, joint, and func-
services beyond restorative nursing care are offered,
tional ability tests;
whether directly or through cooperative arrange-
(ii) Treating patients to relieve pain, develop or
ments with appropriate agencies such as hospitals,
restore function, and maintain maximum perform-
rehabilitation centers, State or local health depart-
ance, using physical means such as exercise, mas-
ments, or independently practicing therapists, these
sage, heat, water, light, and electricity.
services are given or supervised by therapists meet-
(3) Speech therapy is given or supervised by a
ing the qualification set out below. When super-
therapist who meets one of the following require-
vision is less than full time it is provided on a
ments:
planned basis and is frequent enough, in relation
to the staff therapist's training and experience to
(i) Has been granted a Certificate of Clinical
assure sufficient review of individual treatment plans
Competence in the appropriate area (Speech Path-
and progress. The factors explaining the standard
ology or Audiology) by the American Speech and
are as follows:
Hearing Association; or
mm
(d)
405.1126(d)
REGULATIONS NO. 5-SUBPART K
(ii) Meets the equivalent educational require-
receives supervision from a qualified occupational
ments and work experience necessary for such cer-
therapist.
tificate; or
(8) In a facility with an organized rehabilitation
(iii) Has completed the academic and practicum
service using a multidisciplinary team approach to
requirements for certification and is in the process
all the needs of the patient, and where all ther-
of accumulating the necessary supervised work ex-
apists' services are administered under the direct
perience required for certification; or
supervision of a physician qualified in physical
(iv) Until January 1, 1970, has a Basic Certifi-
medicine who will determine the goals and limits
cate or provisional basic certification and is in the
of the therapists' work, and prescribe modalities
process of acquiring 4 years of sponsored profes-
and frequency of therapy, persons with qualifica-
sional experience; or
tions other than those described in subparagraphs
(v) Had a Basic Certificate or sponsor privilege
(1), (3), and (5) of this paragraph could be as-
as of December 31, 1964, cannot complete 4 years
signed duties appropriate to their training and ex-
erience.
of sponsored professional experience before Jan-
uary 1, 1970, but passes a special examination given
(9) Therapists collaborate with the facility's
by the American Speech and Hearing Association
medical and nursing staff in developing the pa-
during 1969.
tient's total plan of care.
(10) Therapists participate in the facility's in-
(4) Speech therapy is service in speech, path-
service education programs.
ology or audiology, and may include:
(d) Standard; Ambulation and Therapeutic
(i) Cooperation in the evaluation of patients
Equipment.-Commonly used ambulation and ther-
with speech, hearing, or language disorders;
apeutic equipment necessary for services offered is
(ii) Determination and recommendation of ap-
available for use in the facility. The factors ex-
propriate speech and hearing services;
plaining the standard are as follows:
(iii) Provision of necessary rehabilitative serv-
ices for patients with speech, hearing, and language
(1) Recommended ambulation equipment in-
disabilities.
cludes such items as parallel bars, hand rails, wheel
chairs, walkers, walkerettes, crutches and canes.
(5) Occupational therapy is given or supervised
(2) The therapists advise the administrator con-
by a therapist who is registered by the American
cerning the purchase, rental, storage, and mainte-
Occupational Therapy Association or is a graduate
nance of equipment and supplies.
of a program approved by the Council on Medical
Education of the American Medical Association in
collaboration with the American Occupational
405.1127 Condition of Participation-
Therapy Association and is in the process of ac-
Pharmaceutical Services.-Whether drugs are
cumulating supervised clinical experience required
generally procured from community or institutional
for registration.
pharmacists or stocked by the facility, the extended
care facility has methods and procedures for its
(6) Occupational therapy includes duties such
pharmaceutical services that are in accord with
as:
accepted professional practices.
(i) Assisting the physician in his evaluation of
(a) Standard; Procedures for Administration of
the patient's level of function by applying diag-
Pharmaceutical Services.-The extended care fa-
nostic and prognostic tests;
cility provides appropriate methods and procedures
(ii) Guiding the patient in his use of therapeutic
for the obtaining, dispensing and administering of
creative and self-care activities for improving func-
drugs and biologicals, developed with the advice
tion.
of a staff pharmacist, a consultant pharmacist, or
a pharmaceutical advisory committee which in-
(7) Other personnel providing restorative serv-
cludes one or more licensed pharmacists. The fac-
ices are specially trained and work under profes-
tors explaining the standard are as follows:
sional supervision in accordance with accepted pro-
fessional practices. For example, an occupational
(1) If the extended care facility has a pharmacy
therapy assistant has successfully completed a
department, a licensed pharmacist is employed to
training course approved by the American Occupa-
administer the pharmacy department.
tional Therapy Association, is certified by that body
(2) If the facility does not have a pharmacy de-
as a certified occupational therapy assistant, and
partment, it has provision for promptly and con-
405.1127(d)
veniently obtaining prescribed drugs and biologicals
ical or nursing personnel in accordance with the
from community or institutional pharmacists.
Medical and Nurse Practice Acts of each State.
(3) If the facility does not have a pharmacy de-
Each dose administered is properly recorded in the
partment, but does maintain a supply of drugs:
clinical record. The factors explaining the stand-
ard are as follows:
it The consultant pharmacist is responsible for
11. The nursing station has readily available
the control of all bulk drugs and maintains records
items necessary for the proper administration of
of their receipt and disposition.
medication.
(ii) The consultant pharmacist dispenses drugs
(2) In administering medications, medication
from the drug supply, properly labels them and
cards or other State approved systems are used and
makes them available to appropriate licensed nurs-
checked against the physician's orders.
ing personnel. Wherever possible, the pharmacist
in dispensing drugs works from the prescriber's
(3) Medications prescribed for one patient are
original order or a direct copy.
not administered to any other patient.
(iii) Provision is made for emergency with-
(4) Self-administration of medications by pa-
drawal of medications from the drug supply.
tients is not permitted except for emergency drugs
on special order of the patient's physician or in a
(4) An emergency medication kit approved by
predischarge program under the supervision of a
the facility's group of professional personnel is kept
licensed nurse.
readily available.
(5) Medication errors and drug reactions are
(5) The extended care facility has written poli-
immediately reported to the patient's physician and
cies covering pharmaceutical services which are
an entry thereof made in the patient's clinical rec-
developed with the advice of a group of professional
ord as well as on an incident report.
personnel and which are reviewed at least annually.
(6) Up-to-date medication reference texts and
Pharmacy policies and procedures are preferably
sources of information are provided, such as the
developed with the advice of a subgroup of phy-
American Hospital Formulary Service of the Amer-
sicians and pharmacists serving as a pharmacy and
ican Society of Hospital Pharmacists or other suit-
therapeutics committee.
able references.
(b) Standard; Conformance With Physicians'
(d) Standard; Labeling and Storing Medications.
Orders.-All medications administered to patients
-Patients' medications are properly labeled and
are ordered in writing by the patient's physician.
stored in a locked cabinet at the nurses' station.
Oral orders are given only to a licensed nurse, im-
The factors explaining the standard are as follows:
mediately reduced to writing, signed by the nurse
(1) The label of each patient's individual medi-
and countersigned by the physician within 48
cation container clearly indicates the patient's full
hours. Medications not specifically limited as to
name, physician's name, prescription number, name
time or number of doses, when ordered, are auto-
and strength of drug, date of issue, expiration date
matically stopped in accordance with written policy
approved by the physician or physicians respon-
of all time-dated drugs, and name and address, and
sible for advising the facility on its medical admin-
telephone number of pharmacy issuing the drug.
istrative policies. The factors explaining the stand-
It is advisable that the manufacturer's name and
ard are as follows:
the lot or control number of the medication also
appear on the label.
(1) The charge nurse and the prescribing phy-
(2) Medication containers having soiled, dam-
sician together review monthly each patient's medi-
cations.
aged, incomplete, illegible, or makeshift labels are
returned to the issuing pharmacist or pharmacy for
(2) The patient's attending physician is notified
relabeling or disposal. Containers having no labels
of stop order policies and contacted promptly for
are destroyed in accordance with State and Federal
renewal of such orders so that continuity of the
laws.
patient's therapeutic regimen is not interrupted.
(3) The medications of each patient are kept
(3) Medications are released to patients on dis-
and stored in their originally received containers
charge only on the written authorization of the phy-
sician.
and transferring between containers is forbidden.
(4) Separately locked, securely fastened boxes
(c) Standard; Administration of Medications.-
(or drawers) within the medicine cabinet are pro-
All medications are administered by licensed med-
vided for storage of narcotics, barbiturates, am-
405.1127(e)
phetamines and other dangerous drugs subject to
(2) The physician is notified promptly of the
the Drug Abuse Control Amendments of 1965.
test results.
(5) Cabinets are well lighted and of sufficient
(3) Arrangements are made for the transporta-
size to permit storage without crowding.
tion of patients, if necessary to and from the source
(6) Medications requiring refrigeration are kept
of service.
in a separate, locked box within a refrigerator at
(4) Simple tests, such as those customarily done
or near the nursing station.
by nursing personnel for diabetic patients, may be
(7) Poisons and medications for "external use
done in the facility.
only" are kept in a locked cabinet and separate
(5) All reports are included in the clinical rec-
from other medications.
ord.
(8) Medications no longer in use are disposed
of cr destroyed in accordance with Federal and
405.1129 Condition of Participation-Den-
State laws and regulations.
tal Services.-The extended care facility assists
(9) Medications having an expiration date are
patients to obtain regular and emergency dental
removed from usage and properly disposed of after
care. However, the services of dentists to individual
such date.
patients are not included as a benefit in the basic
hospital insurance program, and only certain oral
(e) Standard; Control of Narcotics, etc.-The
surgery is included in the supplemental medical in-
extended care facility complies with all Federal
surance program.
and State laws and regulations relating to the pro-
(a) Standard; provision for dental care: Pa-
curement, storage, dispensing, administration and
tients are assisted to obtain regular and emergency
disposal of narcotics, those drugs subject to the
dental care.
Drug Abuse Control Amendments of 1965, and
(b) The factors explaining the standard are as
other legend drugs. The factor explaining the
follows:
standard is as follows: A narcotic record is main-
tained which lists on separate sheets for each type
(1) An advisory dentist provides consultation,
and strength of narcotic the following information:
participates in in-service education, recommends
date, time administered, name of patient, dose,
policies concerning oral hygiene, and is available
physician's name, signature of person administering
in case of emergency.
dose, and balance.
(2) The extended care facility, when necessary,
arranges for the patient to be transported to the
405.1128 Condition of Participation-Di-
dentist's office.
agnostic Services.-The extended care facility
(3) Nursing personnel assist the patient to carry
has provision for obtaining required clinical labo-
out the dentist's recommendations.
ratory, X-ray and other diagnostic services.
(a) Standard; provisions for diagnostic serv-
405.1130 Condition of Participation-So-
ices: The extended care facility has provision for
cial Services.-Services are provided to meet the
promptly and conveniently obtaining required clin-
medically related social needs of patients.
ical laboratory, X-ray and other diagnostic serv-
ices. Such services may be obtained from a phy-
(a) Standard; Provision for Medically Related
sician's office, a laboratory which is part of a
Social Needs.-The medically related social needs
hospital approved for participation in the Health
of the patient are identified, and services provided
Insurance for the Aged program or a laboratory
to meet them, in admission of the patient, during
which is approved to provide these services asian
his treatment and care in the facility, and in plan-
independent laboratory under the Supplementary
ning for his discharge. The factors explaining the
standard are as follows:
Medical Insurance for the Aged program. If the
facility provides its own diagnostic services, these
(1) As a part of the process of evaluating a
meet the applicable conditions established for cer-
patient's need for services in an extended care fa-
tification of hospitals that are contained in
cility and whether the facility can offer appropriate
§§ 405.1028 and 405.1029.
care, emotional and social factors are considered
(b) The factors explaining the standard are as
in relation to medical and nursing requirements.
follows:
(2) As soon as possible after admission, there
(1) All diagnostic services are provided only
is evaluation, based on medical, nursing, and social
on the request of a physician.
factors, of the probable duration of the patient's
405.1131(b)
need for care and a plan is formulated and re-
sonal and family problems related to the patient's
corded for providing such care.
illness and care, are made available only to the at-
(3) Where there are indications that financial
tending physician, appropriate members of the
help will be needed arrangements are made promptly
nursing staff, and other key personnel who are di-
for referral to an appropriate agency.
rectly involved in the patient's care, or to recog-
(4) Social and emotional factors related to the
nized health or welfare agencies. There are appro-
patient's illness, to his response to treatment, and
priate policies and procedures for assuring the
to his adjustment to care in the facility are recog-
confidentiality of such information. The factors
nized and appropriate action is taken when neces-
explaining the standard are as follows:
sary to obtain casework services to assist in resolv-
(1) The staff member responsible for social serv-
ing problems in these areas.
ices participates in clinical staff conferences and/or
(5) Knowledge of the patient's home situation,
confers with the attending physician prior to ad-
financial resources, community resources available
mission of the patient. at intervals during the pa-
to assist him, and pertinent information related to
tient's stay in the facility, and prior to discharge
his medical and nursing requirements are used in
of the patient, and there is evidence in the record
in
making decisions regarding his discharge for the
of such conferences.
facility.
(2) The staff member and nurses responsible for
(b) Standard; Staff Members Responsible for
the patient's care confer frequently and there is
(5)
Social Services.-There is a designated member of
evidence of effective working relationships between
the staff of the facility who will take responsibility,
them.
when medically related social problems are recog-
(3) Records of pertinent social information, and
nized, for action necessary to solve them. The fac-
of action taken to meet social needs, are maintained
tors explaining the standard are as follows:
for each patient; signed social service summaries
are entered promptly in the patient's clinical record
(1) There is a full-time or part-time social worker
for the benefit of all staff involved in the care of
employed by the facility, or there is a person on the
the patient.
staff who is suited by training and/or experience
in related fields to find community resources to
405.1131 Condition of Participation-Pa-
deal with the social problems.
tient Activities.-Activities suited to the needs
(2) The staff member responsible for this area
and interests of patients are provided as an im-
of service has information promptly available on
portant adjunct to the active treatment program
health and welfare resources in the community.
and to encourage restoration to self-care and re-
(3) If the facility does not have a qualified
sumption of normal activities.
social worker on its staff, there is an effective ar-
(a) Standard; provision for patient activity:
rangement with a public or private agency, which
Provision is made for purposeful activities which
may include the local welfare department, to pro-
are suited to the needs and interests of patients.
vide social service consultation.
(b) The factors explaining the standard are as
(4) A qualified social worker is a graduate of
follows:
a school of social work accredited by the Council
on Social Work Education.
(1) An individual is designated as being in
charge of patient activities. This individual has
(c) Standard; Social Services Training of Staff.
experience and/or training in directing group ac-
-There is provision for orientation and in-service
tivity, or has available consultation from a qualified
training of staff directed toward understanding
emotional problems and social needs of sick and
recreational therapist or group activity leader.
infirm aged persons, and recognition of social prob-
(2) The activity leader uses, to the fullest pos-
lems of patients and the means of taking appro-
sible extent, community, social and recreational op-
priate action in relation to them. Either a qualified
portunities.
will worker on the staff, or one from outside the
(3) Patients are encouraged. but not forced. to
ility, participates in training programs, case con-
participate in such activities. Suitable activ ities are
ferences. and arrangements for staff orientation to
provided for patients unable to leave their room.
munity services and patient needs.
(4) Patients who are able and who wish to do
(d) Standard; Confidentiality of Social Data.-
so are assisted to attend religious services.
Pertinent social data, and information about per-
(5) Patient's requests to see their clergymen are
405.1132(a)
honored and space is provided for privacy during
(9) Consultation reports;
visits.
(10) Dental reports;
(6) Visiting hours are flexible and posted to
(11) Social service notes;
permit and encourage visiting by friends and rela-
(12) Patient care referral reports.
tives.
(b) Standard; Retention of Records.-All clin-
(7) The facility makes available a variety of
ical records of discharged patients are completed
supplies and equipment adequate to satisfy the indi-
promptly and are filed and retained in accordance
vidual interests of patients. Examples of such sup-
with State law or for 5 years in the absence of a
plies and equipment are: Books and magazines,
State statute. The factors explaining the standard
daily newspapers. games. stationery, radio and tele-
are as follows:
vision, and the like.
(1) The extended care facility has policies pro-
405.1132 Condition of Participation-
viding for the retention and safekeeping of patients'
Clinical Records.-A clinical record is main-
clinical records by the governing body for the re-
tained for each patient admitted, in accordance with
quired period of time in the event that the extended
accepted professional principle
care facility discontinues operation.
(a) Standard; Maintenance of Clinical Record.-
(2) If the patient is transferred to another health
The extended care facility maintains a separate
care facility, a copy of the patient's clinical record
clinical record for each patient admitted with all
or an abstract thereof accompanies the patient.
entries kept current, dated, and signed. The record
includes:
(c) Standard; Confidentiality of Records.-All
information contained in the clinical records is
(1) Identification and summary sheet(s) includ-
treated as confidential and is disclosed only to au-
ing patient's name, social security number, marital
thorized persons.
status, age, sex, home address, and religion; names,
(d) Standard; Staff Responsibility for Records.-
addresses, and telephone numbers of referral
If the extended care facility does not have a full or
agency (including hospital from which admitted),
part-time medical record librarian, an employee of
personal physician, dentist, and next of kin or other
the facility is assigned the responsibility for as-
responsible person; admitting diagnosis; final diag-
suring that records are maintained, completed and
nosis, condition on discharge, and disposition, and
preserved. The designated individual is trained by,
any other information needed to meet State require-
and receives, regular consultation from a person
ments;
skilled in record maintenance and preservation.
(2) Initial medical evaluation including medical
history, physical examination, diagnosis, and esti-
405.1133 Condition of Participation-
mation of restoration potential;
Transfer Agreement.-The extended care facil-
(3) Authentication of hospital diagnoses, in the
ity has in effect a transfer agreement (meeting the
form of a hospital summary discharge sheet, or a
requirements of section 1861 (1) of the Social Se-
report from the physician who attended the patient
curity Act) with one or more hospitals which have
in the hospital, or a transfer form used under a
entered into agreements with the Secretary to par-
transfer agreement;
ticipate in the program. (See paragraph (e) of
(4) Physician's orders, including all medica-
this section where facility attempted to enter into
tions, treatments, diet, restorative and special med-
a transfer agreement.)
ical procedures required for the safety and well-
(a) Standard; Patient Transfer.-The transfer
being of the patient;
agreement provides reasonable assurance that trans-
(5) Physician's progress notes describing signifi-
fer of patients will be effected between the hospital
cant changes in the patient's condition, written at
and the extended care facility whenever such trans-
the time of each visit;
fer is medically appropriate as determined by the
(6) Nurse's notes containing observations made
attending physician. The factors explaining the
by the nursing personnel;
standard are as follows:
(7) Medication and treatment record including
all medications, treatments, and special procedures
(1) The agreement is with a hospital close
performed for the safety and well-being of the pa-
enough to the facility to make the transfer of pa-
tient;
tients feasible.
(8) Laboratory and X-ray reports;
(2) The transfer agreement facilitates continuity
405.1133(e)
of patient care and expedites appropriate care for
(c) Standard: Execution of Agreement.-The
the patient.
transfer agreement is in writing and is signed by
(3) The agreement may be made on a one-to-one
individuals authorized to execute such agreement
basis or on a community wide basis. The latter
on behalf of the institutions, or, in case the two
arrangement could provide for a master agreement
institutions are under common control, there is a
to be signed by each hospital and extended care
written policy or order signed by the person or body
facility.
which controls them. The factors explaining the
(4) When the transfer agreement is on a com-
standard are as follows:
munity wide basis it reflects the mutual planning
(1) When the hospital and extended care facility
and agreement of hospitals, extended care facilities
are not under common control, the terms of the
and other related agencies.
transfer agreement are established jointly by both
(5) The institutions provide to each other infor-
institutions.
mation about their resources sufficient to determine
(2) Each institution participating in the agree-
whether the care needed by a patient is available.
ment maintains a copy of the agreement.
(6) Where the transfer agreement specifies re-
strictions with respect to the types of services avail-
(d) Standard; Specification of Responsibilities.
able in the hospital or the facility and/or the types
-The transfer agreement specifies the responsibili-
of patients or health conditions that will not be
ties each institution assumes in the transfer of pa-
accepted by the hospital or the facility, or includes
tients and information between the hospital and
any other criteria relating to the transfer of patients
the extended care facility. The agreement estab-
(such as priorities for persons on waiting lists),
lishes responsibility for notifying the other insti-
such restrictions or criteria are the same as those
tution promptly of the impending transfer of a
applied by the hospital or facility to all other po-
patient; arranging for appropriate and safe trans-
tential inpatients of the hospital or facility.
portation; and arranging for the care of patients
(7) When a transfer agreement has been in effect
during transfer.
over a period of time, a sufficient number of patient
(e) Standard; Presumed Agreement Where Nec-
transfers between the two institutions have occurred
essary for Provision of Services.-An extended care
to indicate that the transfer agreement is effective.
facility which does not have a transfer agreement
in effect but which is found by the State agency
(b) Standard; Interchanges of Information.-
conducting the survey (or, in the case of a State
The transfer agreement provides reasonable assur-
in which there is no such agency, by the Secretary)
ance that there will be interchange of medical and
to have attempted in good faith to enter into a
other information necessary or useful in the care
transfer agreement with a hospital sufficiently close
and treatment of individuals transferred between the
to the facility to make feasible the transfer between
institutions, or in determining whether such indi-
them of patients and medical and other informa-
viduals can be adequately cared for otherwise than
tion, shall be considered to have such an agreement
in either of such institutions. The factors explaining
in effect if and for so long as it is also found that
the standard are as follows:
to do so is in the public interest and essential to
(1) The agreement establishes responsibility for
assuring extended care services for patients in the
the prompt exchange of patient information to en-
community eligible for benefits. The factors ex-
able each institution to determine whether it can
plaining the standard are as follows:
adequately care for the patient and to assure con-
tinuity of patient care.
(1) If there is only one hospital in the commu-
(2) Medical information transferred includes
nity, the extended care facility has attempted in
good faith to enter into a transfer agreement with
current medical findings, diagnosis, rehabilitation
potential, a brief summary of the course of treat-
that hospital.
ment followed in the hospital or extended care fa-
(2) If there are several hospitals in the com-
cility, nursing and dietary information useful in
munity, the extended care facility has exhausted all
the care of the patient, ambulation status, and per-
reasonable possibilities of entering into a transfer
tinent administrative and social information.
agreement with these hospitals.
(3) The agreement provides for the transfer of
(3) The extended care facility has copies of
personal effects, particularly money and valuables,
letters, records of conferences, and other evidence
and for the transfer of information related to these
to support its claim that it has attempted in good
items.
faith to enter into a transfer agreement.
405.1134(a)
(4) The State agency has found that hospitals
(5) Unless the facility is of fire resistive con-
in the community have, in fact, refused to enter
struction, blind and nonambulatory or physically
into a transfer agreement with the extended care
handicapped persons are not housed above the street
facility in question.
level floor.
(5) The State agency has taken into considera-
(6) Reports of periodic inspections of the struc-
tion the availability of extended care facilities in
ture by the fire control authority having jurisdiction
the community and the expected need of such serv-
in the area are on file in the facility.
ices for eligible beneficiaries under the law.
(7) The building is maintained in good repair
and kept free of hazards such as those created by
405.1134 Condition of Participation-
any damaged or defective parts of the building.
Physical Environment.-The extended care fa-
(8) No occupancies or activities undesirable to
cility is constructed, equipped, and maintained to
the health and safety of patients are located in the
insure the safety of patients and provides a func-
building or buildings of the extended care facility.
tional, sanitary, and comfortable environment. The
following standards are guidelines to help State
(b) Standard; Favorable Environment for Pa-
agencies to evaluate existing structures which do
tients.-The extended care facility is equipped and
not meet Hill-Burton construction regulations in
maintained to provide a functional, sanitary and
effect at the time of the survey, and to evaluate in
comfortable environment. Its electrical and me-
all facilities those aspects of the physical environ-
chanical systems (including water supply and
ment which are not covered by such Hill-Burton
sewage disposal) are designed, constructed and
regulations. They are to be applied to existing con-
maintained in accordance with recognized safety
struction with discretion and in light of community
standards and comply with applicable State and
need for service.
local codes and regulations. The factors explain-
(a) Standard; Safety of Patients.-The extended
ing the standard are as follows:
care facility is constructed, equipped, and main-
tained to insure the safety of patients. It is struc-
(1) Lighting levels in all areas of the facility
turally sound and satisfies the following conditions:
are adequate and void of high brightness, glare,
and reflecting surfaces that produce discomfort.
(1) The facility complies with all applicable
Lighting levels are in accordance with recommenda-
State and local codes governing construction.
tions of the Illuminating Engineering Society. The
(2) Fire resistance and flamespread ratings of
use of candles, kerosene- oil lanterns, and other open
construction, materials, and finishes comply with
flame methods of illumination is prohibited.
current State and local fire protection codes and
(2) An emergency electrical service, which may
ordinances.
be battery operated if effective for 4 or more hours,
(3) Permanently attached automatic fire-extin-
covers lights at nursing stations, telephone switch-
guishing systems of adequate capacity are installed
board, night lights, exit and corridor lights, boiler
in all areas considered to have special fire hazards
room, and the fire alarm system.
including but not limited to boiler rooms, trash
(3) The heating and air-conditioning systems
rooms, and nonfire resistant areas or buildings. In
are capable of maintaining adequate temperatures
an extended care facility of two or more stories
and providing freedom from drafts.
fire alarm systems providing complete coverage of
(4) An adequate supply of hot water for patient
the building are installed and inspected regularly.
use is available at all times. Temperature of hot
Fire extinguishers are conveniently located on each
water at plumbing fixtures used by patients is auto-
floor and in special hazard areas such as boiler
matically regulated by control valves and does not
rooms, kitchens, laundries, and storage rooms. Fire
exceed 110° F. (110 degrees Fahrenheit).
regulations are prominently posted and carefully
observed.
(5) The facility is well-ventilated through the
use of windows, mechanical ventilation, or a combi-
(4) Doorways, passageways, and stairwells are
nation of both. Rooms and areas which do not
wide enough for easy evacuation of patients and
are kept free from obstruction at all times. Cor-
have outside windows and which are used by pa-
ridors are equipped with firmly secured handrails
tients or personnel are provided with functioning
on each side. Stairwells, elevators, and all vertical
mechanical ventilation to change the air on a basis
shafts with openings have fire doors kept normally
commensurate with the type of occupancy.
in closed position. Exit facilities comply with State
(6) All inside bathrooms and toilet rooms have
and local codes and regulations.
forced ventilation to the outside.
405.1134(h)
(7) Laundry facilities (when applicable) are
unless provided in adjacent toilet or bathroom
located in areas separate from patient units and
facilities.
are provided with the necessary washing, drying,
(4) On floors where wheelchair patients are
and ironing equipment.
located, there is at least one toilet room large
enough to accommodate wheelchairs.
(c) Standard; Elevators.-Elevators are installed
in the facility if patient bedrooms are located on
(5) Each bathtub or shower is in a separate
floors above the street level. The factors explaining
room or compartment which is large enough to
accommodate wheelchair and attendant.
the standard are as follows:
(6) At lerst one water closet, enclosed in a sepa-
(1) Installation of elevators and dumbwaiters
rate room or stall, is provided for each eight beds.
complies with all applicable codes.
(7) Substantially secured grab bars are installed
(2) Elevators are of sufficient size to accommo-
in all water closet and bathing fixture compart-
date a wheeled stretcher.
ments.
(8) Doors to patient bedrooms are never locked.
(d) Standard; Nursing Unit.-Each nursing unit
has at least the following basic service areas:
(f) Standard; Facilities for Isolation.-Provision
Nurses' station, medicine storage and preparation
is made for isolating infectious patients in well-
area, space for storage of linen, equipment and sup-
ventilated single bedrooms having separate toilet
plies, and a utility room. The factors explaining
and bathing facilities. Such facilities are also avail-
the standard are as follows:
able to provide for the special care of patients who
develop acute illnesses while in the facility and pa-
(1) A nurses' call system registers calls at the
tients in terminal phases of illness.
nurses' station from each patient bed, patient toilet
room, and each bathtub or shower.
(g) Standard; Examination Rooms.-A special
room (or rooms) is provided for examinations,
(2) Equipment necessary for charting and rec-
treatments, and other therapeutic procedures. The
ordkeeping is provided.
factors explaining the standard are as follows:
(3) The medication preparation area is well-
illuminated and is provided with hot and cold run-
(1) This room is of sufficient size and is equipped
ning water.
with a treatment table, lavatory or sink with other
(4) The utility room is located, designed and
than hand controls, instrument sterilizer, instrument
equipped to provide areas for the separate handling
table, and necessary instruments and supplies.
of clean and soiled linen, equipment and supplies.
(2) If the facility provides physical therapy,
(5) Toilet and handwashing facilities are pro-
areas are of sufficient size to accommodate necessary
vided.
equipment and facilitate the movement of disabled
patients. Lavatories and toilets designed for the
(e) Standard; Patients' Bedrooms and Toilet Fa-
use of wheelchair patients are provided in such
cilities.-Patients' bedrooms are designed and
areas.
equipped for adequate nursing care and the comfort
and privacy of patients. Each bedroom has or is
(h) Standard; Dayroom and Dining Area.-The
conveniently located near adequate toilet and bath-
extended care facility provides one or more attrac-
ing facilities. Each bedroom has direct access to a
tively furnished multipurpose areas of adequate
corridor and outside exposure with the floor at or
size for patient dining, diversional and social ac-
above grade level. The factors explaining the stand-
tivities. The factors explaining the standard are as
ard are as follows:
follows:
(1) Ordinarily rooms have no more than four
(1) At least one dayroom or lounge, centrally
beds with not less than 3 feet between beds.
located, is provided to accommodate the diversional
(2) In addition to basic patient care equipment
and social activities of the patients. In addition,
each patient unit has a nurses' call signal, an indi-
several smaller dayrooms, convenient to patient
vidual reading light, bedside cabinet, comfortable
bedrooms, are desirable.
chair, and storage space for clothing and other
(2) Dining areas are large enough to accom-
possessions. In multiple bedrooms, each bed has
modate all patients able to eat out of their rooms.
flameproof cubicle curtains or their equivalent.
These areas are well-lighted and well-ventilated.
(3) It is desirable that each patient room have
(3) If a multipurpose room is used for dining
a lavatory with both hot and cold running water,
and diversional and social activities, there is suf-
405.1134(i)
ficient space to accommodate all activities and pre-
the facility. Pest control services are provided by
vent their interference with each other.
maintenance personnel of the facility or by con-
tract with a pest control company. Care is taken
(i) Standard: Kitchen or Dietary Area.-The
to use the least toxic and least flammable effective
extended care facility has a kitchen or dietary area
insecticides and rodenticides. These compounds
adequate to meet food service needs and arranged
are stored in nonpatient areas and in nonfood
and equipped for the refrigeration, storage, prepa-
preparation and storage areas. Poisons are under
ration, and serving of food as well as for dish and
lock.
utensil cleaning and refuse storage and removal.
(2) Windows and doors are appropriately
Dietary areas comply with the local health or food
screened during the insect breeding season.
handling codes. Food preparation space is arranged
for the separation of functions and is located to
(3) Harborages and entrances for insects and
rodents are eliminated.
permit efficient service to patients and is not used
for nondietary functions.
(4) Garbage and trash are stored in areas sepa-
rate from those used for the preparation and stor-
405.1135 Condition of Participation-
age of food and are removed from the premises
Housekeeping Services.-The extended care fa-
in conformity with State and local practices. Con-
cility provides the housekeeping and maintenance
tainers are cleaned regularly.
services necessary to maintain a sanitary and com-
(c) Standard; Linen.-The facility has available
fortable environment.
at all times a quantity of linen essential for the
(a) Standard; Housekeeping Services.-The fa-
proper care and comfort of patients. Linens are
cility provides sufficient housckeeping and mainte-
handled, stored, and processed so as to control the
nance personnel to maintain the interior and ex-
spread of infection. The factors explaining the
terior of the facility in a safe, clean, orderly, and
standard are as follows:
attractive manner. Nursing personnel are not as-
signed housekeeping duties. The factors explaining
(1) The linen supply is at least three times the
the standard are as follows:
usual occupancy.
(2) Clean linen and clothing are stored in clear,
(1) Housekeeping personnel, using accepted
dry, dust-free areas easily accessible to the nurses'
practices and procedures, keep the facility free from
station.
offensive odors, accumulations of dirt, rubbish,
dust, and safety hazards.
(3) Soiled linen is stored in separate well-
ventilated areas, and is not permitted to accumulate
(2) Floors are cleaned regularly. Polishes on
in the facility. Soiled linen and clothing are stored
floors provide a nonslip finish; throw or scatter rugs
separately in suitable bags or containers.
are not used except for nonslip entrance mats.
(4) Soiled linen is not sorted, laundered, rinsed,
(3) Walls and ceilings are maintained free from
or stored in bathrooms, patient rooms, kitchens or
cracks and falling plaster, and are cleaned and
food storage areas.
painted regularly.
(4) Deodorizers are not used to cover up odors
405.1136 Condition of Participation-Dis-
caused by unsanitary conditions or poor house-
aster Plan.-The extended care facility has a
keeping practices.
written procedure to be followed in case of fire or
(5) Storage areas, attics, and cellars are kept
other disaster.
safe and free from accumulations of extraneous ma-
(a) Standard; Disaster Plan.-The facility has
terials such as refuse, discarded furniture, and old
a written procedure to be followed in case of fire,
newspapers. Combustibles such as cleaning rags
explosion or other emergency. It specifies persons
and compounds are kept in closed metal containers.
to be notified, locations of alarm signals and fire
(6) The grounds are kept free from refuse and
extinguishers, evacuation routes, procedures for
litter. Areas around buildings, sidewalks, gardens,
evacuating helpless patients, frequency of fire drills,
and patios are kept clear of dense undergrowth.
and assignment of specific tasks and responsibilities
to the personnel of each shift.
(b) Standard; Pest Control. The facility is
(b) The factors explaining the standard are as
maintained free from insects and rodents. The fac-
follows:
tors explaining the standard are as follows:
(1) The plan is developed with the assistance of
(1) A pest control program is in operation in
qualified fire and safety experts.
405.1137(e)
(2) All personnel are trained to perform as-
(4) Costs incurred in connection with the im-
signed tasks.
plementation of the utilization review plan are in-
(3) Simulated drills testing the effectiveness of
cludable in reasonable costs and are reimbursable
the plan are conducted on each shift at least three
to the extent that such costs relate to health insur-
times a year.
ance program beneficiaries.
(4) The plan is posted throughout the facility.
(c) Standard; Responsibility for Plan.-The op-
eration of the utilization review plan is a responsi-
405.1137 Condition of Participation-
bility of the medical profession. The plan for
Utilization Review Plan.-(a) Condition.-The
reviewing utilization in the facility is developed with
extended care facility has in effect a plan for util-
the advice of the facility's group of professional
ization review which applies at least to the services
personnel referred to in § 405.1122 and has the ap-
furnished by the facility to individuals entitled to
proval of the facility's medical staff, if any, and the
benefits under title XVIII of the Act, and meets all
facility's governing body.
other requirements of section 1861 (k) of the Social
(d) Standard; Statement of Plan.-The extended
Security Act. An acceptable utilization review plan
care facility has a currently applicable, written de-
provides for: (1) The review on a sample or other
scription of its utilization review plan. Such descrip-
basis, of admissions, duration of stays, and pro-
tion includes:
fessional services furnished; and (2) review of
each case of continuous extended duration.
(1) The organization and composition of the
(b) General.-(1) There are many types of plans
committee(s) which will be responsible for the util-
which can fulfill the requirements of title XVIII
ization review functions;
of the Act. Extended care facilities wishing to es-
(2) Frequency of meetings;
tablish their eligibility to participate will be re-
(3) The type of records to be kept;
quired to submit a written description of their
(4) The method to be used in selecting cases on
utilization review plan and a certification that it
a sample or other basis;
is currently in effect or that it will be in effect no
later than the first day on which the extended care
(5) The definition of what constitutes the period
or periods of extended duration;
facility expects to become a participating provider
of services. Ordinarily, this will constitute sufficient
(6) The relationship of the utilization review
evidence to support a finding that the utilization
plan to claims administration by a third party;
review plan of the extended care facility is or is
(7) Arrangements for committee reports and
not in conformity with the statutory requirements.
their dissemination;
(2) The review plan of an extended care facility
(8) Responsibilities of the facility's administra-
should have as its overall objectives the maintenance
tive staff in support of utilization review.
of high quality patient care, more effective utiliza-
tion of extended care services (through the mecha-
(e) Standard; Conduct of Review. - (1) The
nism of an educational approach involving study
utilization review function is conducted by one or
of patterns of care), the encouragement of appro-
a combination of the following (except that with
priate utilization, and the assurance of continuity
respect to facilities lacking an organized medical
of care upon discharge (through, among other
staff, review is conducted only as in subdivision
things, the accumulation of appropriate data on the
(ii) or (iii) of this subparagraph):
availability of other facilities and services).
(i) By a staff committee of the facility, which is
(3) The review of professional services furnished
composed of two or more physicians, with or with-
might include study of such conditions as overuse
out the inclusion of other professional personnel;
or underuse of services, proper use of consultation,
or
and whether the required nursing and related care
(ii) By a committee(s) or group(s) outside the
is initiated and carried out promptly. While review
facility composed as in subdivision (i) of this sub-
of lengths of stay for purposes of determining
paragraph which is established by the local medical
whether continued inpatient stay in the extended
society and some or all of the hospitals and ex-
care facility is medically necessary, must be based
tended care facilities in the locality; or
on medical factors, the plan should take into ac-
(iii) Where a committee(s) or group(s) as de-
count the need to assure that assistance is available
scribed in subdivision (i) or (ii) of this subpara-
to the physician in arranging for discharge plan-
graph has not been established to carry out all the
ning.
utilization review functions prescribed by the Act,
405.1137(f)
by a committee or group(s) composed as in
extended duration is reasonable and consonant with
subdivision (i) of this subparagraph, and spon-
the intent of the benefit. The extended care facility's
sored and organized in such manner as approved
utilization review plan specifies the number of con-
by the Secretary.
tinuous days of stay in the extended care facility
following which a review is made to determine
(2) The factors explaining the standard are as
follows:
whether further inpatient extended care services are
medically necessary. The plan may specify a dif-
(i) The medical care appraisal and educational
ferent number of days for different classes of cases.
aspects of review on a sample or other basis, and
the review of long-stay cases need not be done by
(2) Reviews for such purpose are made no later
the same committee or group.
than the seventh day following the last day of the
(ii) In a facility with an organized medical staff,
period of extended duration specified in the plan.
all of the review functions may be carried out in
No physician has review responsibility for any case
the facility by a committee of the whole or a med-
of continuous extended duration in which he was
ical care appraisal committee.
professionally involved.
(iii) The committee(s) include at least one phy-
(3) If physician members of the committee de-
sician member who does not have a direct financial
cide, after opportunity for consultation is given the
interest in the institution.
attending physician by the committee, that further
inpatient stay is not medically necessary, there is
(iv) Under subparagraph (1) (iii) of this para-
to be prompt notification (within 48 hours) in
graph, any sponsorship of a utilization committee
writing to the facility, the physician responsible for
or group is ordinarily acceptable if it is composed
the patient's care, and the patient or his representa-
as in subparagraph (1) (i) of this paragraph.
tive. Because there are significant divergencies in
(f) Standard; Basis for Review.-(1) Reviews
opinion among individual physicians with respect
are made, on a simple or other basis, of admissions,
to evaluation of medical necessity for posthospital
duration of stays, and professional services (includ-
extended care services, the judgment of the attend-
ing drugs and biologicals) furnished, with respect
ing physician in an extended stay case is given
to the medical necessity of the services, and for the
great weight, and is not rejected except under un-
purpose of promoting the most efficient use of avail-
usual circumstances.
able health facilities and services. Such reviews
(h) Standard; Maintenance of Records of Re-
emphasize identification and analysis of patterns of
view.Records are kept of the activities of the
patient care in order to maintain consistent high
committee; and reports are regularly made by the
quality. The review is accomplished by considering
committee to the executive committee of the med-
the data obtained by any one or any combination
ical staff (if any) or to the facilities, institutions,
of the following:
and organizations sponsoring the utilization review
(i) By use of services and facilities of external
plan, and relevant information and recommenda-
organizations which compile statistics, design pro-
tions are reported through usual channels to the
files, and produce other comparative data; or
entire medical staff and the governing body of the
(ii) By cooperative endeavor with the fiscal in-
facility, and the sponsor of the plan. The factors
explaining the standard are as follows:
termediary or State agency; or
(iii) By studies of medical records of patients of
(1) The extended care facility administration
the institution.
studies and acts upon Administrative recommenda-
tions made by the utilization review committee.
(2) The factors explaining the standard are as
follows:
(2) A summary of the number and types of cases
(i) Some review functions are carried out on a
reviewed, and the findings, are part of the records
continuing basis.
of the committee and the participating facilities
and institutions.
(ii) Reviews include a sample of physician re-
certifications of medical necessity for extended care
(3) Minutes of each committee meeting are main-
facility services, as made for purposes of the Health
tained.
Insurance for the Aged program.
(4) Committee action in extended stay cases is
recorded, with cases identified only by case number
(g) Standard; Extended Duration Cases.-(1)
when possible.
Reviews are made of each beneficiary case of con-
tinuous extended duration. The definition of such
(i) Standard; Staff Cooperation With Review
405.1137 (i) (cont.)
Committee.-The committee having responsibil-
(2) In order to encourage the most efficient use
ity for utilization review functions have the sup-
of available health services and facilities, assistance
port and assistance of the facility's administrative
to the physician in timely planning for care follow-
staff in assembling information, facilitating chart
ing extended facility care is initiated as promptly
reviews, conducting studies, exploring ways to im-
as possible, either by the facility's staff, or by ar-
prove procedures, maintaining committee records,
rangement with other agencies. For this purpose,
promoting the most efficient use of available health
the facility makes available to the attending physi-
services and facilities, and in planning for the pa-
cian current information on resources available for
tient's continuity of care upon discharge. The fac-
continued noninstitutional or custodial care of pa-
tors explaining the standard are as follows:
tients and arranges for prompt transfer of appro-
(1) With respect to each of these activities, an
priate medical and nursing information in order
individual or department is designated as being
to assure continuity of care upon discharge of a
responsible for the particular service.
patient.
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Social and Rehabilitation Service
Office of Public Affairs
NEWS
Washington, D. C. 20201
KAPLAN- - (202) 963-3054
(Home) - (301) 657-2557
KELSO- - (202) 963-4241
(Home) (202) 833-2012
FOR IMMEDIATE RELEASE
Friday, June 30, 1972
A massive Federal effort to upgrade long term care facilities will
reach a milestone on Saturday, July 1, the deadline announced last November
30 by HEW Secretary Elliot L. Richardson for cutoff of Federal support to
substandard nursing homes.
As of that date, established as part of a multi-pronged program to
upgrade long term care facilities ordered by President Nixon last August 6,
each State must have completed certification of all skilled nursing homes
providing care to Medicaid patients.
Those States that are determined by HEW to have failed to complete
the inspection and certification of all skilled nursing homes may face
formal compliance hearings. All States will lose Federal Financial Partici-
pation (FFP) for the homes they have not yet certified. If valid certification
of these homes is achieved at a later date, FFP will resume on the first
day of the month in which certification occurs.
Those homes failing to meet Federal Medicaid standards for patient
care and safety will no longer be eligible to participate in the Medicaid
program. States will no longer receive Federal funds for them.
Summary reports on the progress of State certification programs and
on the number of nursing homes properly certified by July 1 will be sent
to HEW in Washington by the Department's ten Regional Offices by July 6.
(more)
- 2 -
The reports will be analyzed by the Department and the results made
public in mid-July.
At that time the Department will announce which States have not
met the July objective and what further action will be taken. Information
will also be released in Washington and HEW's Regional Offices about other
results of the certification program.
HEW is recommending to State Medicaid agencies that in mid-July
they release or make available to the public the results of survey reports
of individual homes they have inspected.
# # #
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HE
Office of the Secretary
Washington, D.C. 20201
NEWS
DOTEN-- (301) 443-1460
FOR RELEASE IN A.M. PAPERS
HEW-B76
Tuesday, May 23, 1972
The Department of Health, Education and Welfare today announced a
$139,000 contract with the American Nursing Home Association to train 10,000
personnel in ways to expand, develop, and enrich the lives of the Nation's
nursing home patients.
Marie Callender, Special Assistant for Nursing Home Affairs, said that
each of those in the program would receive about 36 hours of continuing
education over a period of three months.
According to Mrs. Callender, the program is an outgrowth of recommendations
hade last year in a report of a joint government-American Hospital Association
conference on activity programs for long-term care institutions.
Under the program, directors of nursing home patient activities will be
trained through a series of workshops in every State. It is sponsored under
the Division of Health Resources, Community Health Service, a component of
the Department of HEW's Health Services and Mental Health Administration.
Mrs. Callender said the program is part of HEW's overall drive to
upgrade the Nation's nursing homes and cited "President Nixon's determination
that the nursing homes of America should be shining symbols of comfort and
concern," and called it an example of joined sponsorship between HEW and
nursing home groups.
"Nursing homes must stress personal as well as medical care," she
said. "One of our goals is to make it possible for patients to pursue
(more)
GERALD
-2-
HEW-B76
independently those activities which will enrich their lives. This contract
is aimed at training the directors of patient activities at nursing homes
to / help patients fulfill their non-medical needs."
The project includes evaluation of the patients' improved independent
development as a result of the training program.
First phase of the contract will be a regional two-day orientation
program for State planning teams. These teams later will hold three to
five day training sessions for the local instructors who will teach patient
activities personnel in each State.
State planning teams will include ANHA and State official agency
personnel, as well as representatives of the occupational therapy, therapeutic
recreation, and social work professions.
###
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Office of the Secretary
Washington, D.C. 20201
Office of Public Affairs
NEWS
GEREMIA--(202) 962-2548
FOR RELEASE IN A.M. PAPERS
Thursday, October 7, 1971
HEW Secretary Elliot L. Richardson today asked the Governors of all 50
States to assist in an immediate upgrading of the Nation's nursing homes through
strict enforcement of standards established under Medicaid.
Secretary Richardson cited President Nixon's call on August 6 for "in-
creased Federal attention to the problems of aged citizens confined to nursing
homes. If Richardson told the Governors that Federal efforts to carry out the
Presidential mandate "will place greater demands upon your State personnel, and
we hope that you can give them the administrative support and encouragement they
will need to respond quickly and effectively."
The Secretary promised Federal assistance to State enforcement officials
to back up the Presidential order, including training materials and courses for
State nursing home inspectors, and "a request for Congressional authorization to
pay for 100 percent of these costs in the Medicaid program.
Such costs already are reimbursed for the Federally administered Medicare
program. Medicaid programs, however, are State administered. Under Medicaid,
States enforce nursing homes standards similar to those under Medicare, and
administer payments to certified establishments.
In writing his letter, Secretary Richardson, in effect, called on the
Governors to assist the Federal Government in policing those nursing homes under
Medicaid for which the States have primary enforcement responsibility.
The Secretary told the Governors that "substantially increased State
efforts are requested to insure that acceptable standards of care are provided
(More)
-2-
in nursing homes" in their respective States. Toward this end he asked that
each Governor appoint a representative to work with Dr. Merlin K. DuVal, HEW's
Assistant Secretary for Health and Scientific Affairs, "to work to insure
coordinated and effective enforcement of regulations governing all levels of
care in the nursing homes in your State."
# # #
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Social and Rehabilitation Service
Office of Public Affairs DAVISON (202) 963-3054
Washington, D. C. 20201
(Home) (202) 543-5570
NEWS
KELSO- (202) 962-4811
(Home) (202) 833-2012
FOR RELEASE IN A.M. PAPERS
HEW-A97
Thursday, September 9, 1971
A move to strengthen the hand of States in raising and enforcing nursing
home standards was announced today by John D. Twiname, Administrator of
HEW's Social and Rehabilitation Service.
Mr. Twiname issued a proposed regulation, tied to the Medicaid program,
which would prohibit a State board responsible for licensing nursing home
administrators from having a majority of its members made up of represent-
atives of nursing homes, such as administrators, operators, or investors.
Neither could members of single professions, such as physicians or nurses,
constitute a majority on licensing boards.
The regulation also brings institutions such as large State, county,
and municipal long term care institutions serving Medicaid patients under
the requirements for supervision by licensed nursing home administrators.
"Secretary Richardson is determined to fulfill the President's
commitment to raise the standards of care in all nursing homes receiving
Federal money," Mr. Twiname stated.
"A number of senior citizen organizations have complained to me that
in some States, the licensing board is controlled by a single group that
may stand to profit personally from nursing home operations. This new
regulation should help to build public confidence in the procedures by
which nursing home administrators are licensed under the Medicaid program,
while allowing time for legislatures, where necessary, to make conforming
amendments to State licensing laws."
(more)
-2-
HEW-A97
Skilled nursing facilities and extended care units that are integral
parts of hospitals, and thus not separately licensed or formally approved as
nursing homes by States, are exempt from the nursing home administrator
licensing requirement.
The proposed regulation would broaden the definition of a "Provisional
license" to provide for such an emergency as a facility being unexpectedly
without a licensed administrator.
Approval procedures for Federal financial participation in the training
of nursing home administrators now serving with provisional rather than full
licensure are spelled out in detail in the proposed regulation.
Comments and suggestions on the proposed regulation may be sent within
the next 30 days to the Administrator, Social and Rehabilitation Service,
Department of HEW. Comments received will be available for public inspection
in Room 5121 of the Department's offices at 301 C Street, S.W., Washington,
D.C. on Monday through Friday of each week from 8:30 a.m., to 5:00 p.m.
The notice of Proposed Rule Making appears in today's Federal Register.
Copies may be obtained from the Medicaid Public Information Office, Room 4609,
HEW South Building, 330 C. Street, Washington, D.C. 20201.
###
EMBARGOED FOR RELEASE ON DELIVERY
AUGUST 6, 1971
(Estimated at 3:30 p.m. EDT)
Office of the White House Press Secretary
(Nashua, New Hampshire)
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
The vast majority of Americans over 65 years of age are eager and able
to play a continuing role as active, independent participants in the life of
our country. Encouraging them to play this rele -- and providing greater
opportunities for them to do 80 -- is a cornerstone of this administration's
policy concerning older Americans.
For almost one million of our 20 million senior citizens, hawever, a
dignified and humane existence requires a degree of care from others that
can usually be found only in a nursing home or extended care facility. For
those who need them, the nursing homes of America should be shining
symbols of comfort and concern.
Many of our nursing homes meet this standard most admirably. Day after
day and year after year they demonstrate the capacity of our society to
care for even the most dependent of its elderly citizens in a decent and
compassionate manner. It is the goal of this administration to see that all
of our nursing homes provide care of this same high quality.
Unfortunately, many facilities now fall woefully short of this standard.
Unsanitary and unsafe, overcrowded and understaffed, the substandard
nursing home can be a terribly depressing institution. To live one's later
years in such a place is to live in an atmosphere of neglect and degradation.
In my speech to the regional convention of the National Retired Teachers
Association and the American Association of Retired Persons in Chicago on
June 25th, I pledged action to meet this challenge. Members of my
administration have been vigorous in their development of specific plans to
carry out that pledge. Today I am announcing certain decisions which we
have already made in this important area.
A Plan For Action
Nursing homes presently receive over $1 billion or 40 percent of their total
income from the Federal Government -- most of it through Medicare and
Medicaid payments. (An additional $700 million comes from the States and
localities and $900 million comes from private sources.) As I emphasized
in my Chicago speech, "I do not believe that Medicaid and Medicare funds
should go to substandard nursing homes in this country and subsidize them."
This is not only a matter of personal belief, it is also the law of the land --
and has been since 1965.
The reason that many substandard facilities have often continued to
receive such payments are many and complex. It has been difficult to
enforce the law that requires participant homes to meet certain standards.
In the final analysis, however, there can be no excuse for lax law enforcement
-- and I therefore am taking a number of steps to improve enforcement
efforts.
(MORE)
1
-2-
1.
I am ordering that the Federal program for training State nursing home
inspectors be expanded so that an additional 2, 000 inspectors will be trained
over the next 18-month period. The major responsibility for surveillance and
regulation in the field is now carried out by State governments and this action
will enable them to increase their effectiveness most significantly.
One of three places in the country where such training is now provided is the
W.K. Kellogg Center for Continuing Education at the University of New Hampshire
in Durham. This program trains people not only to inspect nursing homes but
also to provide technical assistance and consultative services which can help
improve these facilities. This New Hampshire program is funded through a
grant from Department of Health, Education and Welfare and it is our intention
to establish similar programs in other areas of the country. This expansion
effort will cost approximately $3 million.
2.
Toward this same end, I am asking theCongress to authorize the Federal
Government to assume 100% of the necessary costs of these State inspection
teams under the Medicaid program. This will bring the Medicaid law, which
now requires the States to pay from 25 to 50 percent of these costs, into line
with the Medicare law, under which the Federal Government pays the entire
cost for such inspections. Again, State enforcement efforts would be significantly
enhanced by this procedure.
3.
I am ordering that all activities relating to the enforcement of such stan-
dards activities which are now scattered in various branches of the Department
of Health, Education and Welfare be consolidated within the Department into
a single, highly efficient program. This means that all enforcement responsi-
bility will be focused at a single point that a single official will be accountable
for success or failure in this endeavor. I am confident that this step alone
will enormously improve the efficiency and the consistency of our enforcement
activities.
1
4.
I am requesting funds to enlarge our Federal enforcement program by
creating 150 additional positions. This will enable the Federal Government
more effectively to meet its own responsibilities under the law and to support
State enforcement efforts.
5.
I have directed the Department of Health, Education and Welfare to
institute a new program of short-term courses for physicians, nurses, dieticians,
social workers and others who are regularly involved in furnishing services to
nursing home patients. Appropriate professional organizations will be
involved in developing plans and course materials for this program and
the latest research findings in this complex field will also be utilized.
In too many cases, those who provide nursing home care -- though they
be generally well prepared for their profession have not been adequately
trained to meet the special neede of the elderly. Our new program will
help correct this deficiency.
6.
I have also directed the Department of Health, Education and Welfare to
assist the States in establishing investigative units which will respond in a
responsible and constructive way to complaints made by or on behalf of
individual patients. The individual who is confined to an institution and
dependent upon it is often powerless to make his voice heard. This new program
will help him deal with concerns such as accounting for his funds and other
personal property, protecting himself against involuntary transfers from one
nursing home to another or to a mental hospital, and gaining a fair hearing
for reports of physical and psychological abuse.
MORE
-3-
7.
I am also directing the Secretary of Health, Education and Welfare to
undertake a comprehensive review of the use of long-term care facilities
as well as the standards and practices of nursing homes and to recommend
any further remedial measures that may be appropriate. Such a review is
badly needed. Study after study tells us -- compellingly that many things
are wrong with certain nursing home facilities, but there is not yet a clear
enough understanding of all the steps that must be taken to correct this picture.
Of course, I am also looking to the White House Conference on Aging, which
meets this December, to offer specific recommendations regarding this same
difficult question.
8.
Finally, I would emphasize my earnest hope that all these efforts will
bring about the improvement of existing substandard homes rather than their
abolition. The interests of the elderly are far better served when a home
is reformed and renewed than when a home is eliminated. But let there be no
mistaking the fact that when facilities fail to meet reasonable standards, we
will not hesitate to cut off their Medicare and Medicaid funds.
We are particularly hopeful that our efforts will bring reform, since any
reasonable expenses incurred as a result of improving care can often be
financed under the existing Medicare and Medicaid programs. We are fully
prepared to budget the necessary funds to meet reasonable cost increases
which result from such improvements.
The Federal Government stands ready to help in this great reform effort in
other ways as well. Under the Hill Burton Act, for example, we are able to
provide loan guarantees and direct loans for the modernization of old nursing
home facilities and the construction of new ones. The Federal Housing
Administration also provides help in this field by insuring mortages to finance
construction or rehabilitation of nursing homes and intermediate care facilities.
And the Small Business Administration also guarantees loans and makes direct
loans to assist proprietary nursing homes in constructing, expanding or
converting their facilities, in purchasing equipment or materials, and in
assembling working capital.
In addition to all of these efforts, the administration is working in a number of
otter ways to improve the life of all older Americans -- whatever their place
of residence. Some of our strongest initiatives to help older people -- including
major reforms in both the welfare and social security systems -- are contained
in the legislation designated H. R. 1 which is now pending in the Senate. I
would emphasize again the passage of this legislation could make a major
impact for good in the lives of older Americans, including those who need
to live in nursing homes and extended care facilities.
As we work to improve the quality of life for the elderly -- and especially for
those who must rely on the care provided in the nursing homes of our country--
we should not expect overnight miracles. The problems we face have developed
in too many places over too long a time. But we can expect that our efforts
will result in significant and continuing progress. With the cooperation of
the Congress, the State governments, and the nursing home industry, we can
truly transform substandard nursing homes so that the very best nursing
homes of today will be the typical nursing homes of tomorrow.
#
#
Friday, February 4, 1972
STATEMENT
BY
JOHN G. VENEMAN
UNDER SECRETARY
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
Last November HEW established February 1 as the
date by which all States must have in place and ready to
operate a mechanism for surveying and certifying skilled
nursing home providers.
All but one State has met this objective, and even that
State -- Pennsylvania -- is substantially in accord with regu-
lations.
We are pleased that all States were able to make such
exceptional progress in just two months.
On November 30, we had identified 105 items requiring
correction in the certification process in the 38 states we
identified then as having "substantial deficiencies" and another
16 in the other 9 States with skilled nursing home programs.
As of February 1, there was only one such deficiency.
Secretary Richardson has asked Mrs. Marie Callender,
Special Assistant for Nursing Home Affairs and Mr. John D. Twiname,
GERALD LIBRARY
-2-
Administrator of the Social and Rehabilitation Service, to move with
all possible speed to resolve the remaining deficiency.
While SRS will initiate the action necessary to call a hearing
for Pennsylvania, we hope the State will quickly correct the remain-
ing deficiency and make the hearing unnecessary.
I want to point out that although we consider the elimination
of-deficiencies in the certification process a significant achievement,
it is only the first essential step in carrying out President Nixon's
directive to upgrade the Nation's nursing homes.
The States, with our help, must turn attention now to the
program for certifying that all skilled nursing homes participating in
Medicaid comply with Federal regulations.
This must be done by July 1, 1972,
This is a massive task but it must be done if we are to
improve the quality of life for those who must depend on nursing home
care.
I want to point out that we are not interested in simply
decertifying a lot of homes, although we will do this if we find it
necessary.
Our goal is rather to do everything humanly possible to
assure that nursing home care is upgraded wherever necessary. This
-3-
is an entirely different effort, and a much more difficult one,
but it is the only one that will make a real difference in the
lives of nursing home patients. In this matter, we are determined
to take the high road of excellence instead of the low road of
expediency.
If the States respond to this effort with the same
interest and support that enabled them to eliminate their
deficiencies in certification procedures, I feel confident the
certification program will be completed successfully and on time.
######
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Social and Rehabilitation Service
Office of Public Affairs
NEWS
Washington, D. C. 20201
KAPLAN - - (202) 963-3054
(Home) - - (301) 657-2557
NEWKIRK - - (202) 962-3529
(Home) - - (703) 430-6074
FOR IMMEDIATE RELEASE
Friday, February 4, 1972
HEW Secretary Elliot L. Richardson announced today that 48 States out of.
49 which provide skilled nursing home care under the Medicaid program
have met a February 1 deadline for installing systems for surveying and
certifying skilled nursing homes.
He said even that State - Pennsylvania - had only one deficiency
and that was readily correctable.
On November 30, the Secretary announced that 38 States had "substantial
deficiencies" in their nursing home certification processes and that Federal
hearings would be initiated for those who were not meeting Federal certifi-
cation requirements by February 1. Nine other States had deficiencies of a
less significant nature. Two States had no defects.
"It is particularly gratifying that so many States were able to make
r
this exceptional progress in just two months" the Secretary said. "On
November 30, there were 105 items requiring correction in the certification
process in the 38 States we identified as having 'substantial deficiencies'
and another 16 in the other nine States with deficiencies.
"Today, there is only one such deficiency remaining in the Nation."
-2-
Secretary Richardson said that he had asked Mrs. Marie Callender,
Special Assistart for Nursing Home Affairs, and Mr. John D. Twiname,
Administrator, Social and Rehabilitation Service (SRS) to move with all
possible speed to resolve the remaining deficiency in Pennsylvania.
He said that SRS would initiate at once the procedures necessary to
call hearings but that he hoped the State would act speedily to install
fully certification processes and thus make a hearing unnecessary.
The Secretary said he is sending messages today complimenting the
Governors of the States that have installed acceptable certification
processes.
Mr. Richardson pointed out that while elimination of deficiencies
in the certification process was a significant achievement, it was only
the essential first step in carrying out President Nixon's directive
to upgrade the Nation's nursing homes.
"The States, with our help, must turn attention now to the next
major step in the program -- the actual certifying that each skilled
nursing home participating in Medicaid complies with Federal standards.
This is a massive task that involves detailed inspection of all such
homes and, where necessary, assuring that they are upgraded or de-
certified."
This must be done by July 1, 1972, the Secretary said.
"HEW people in the regional offices and in Washington are available
to help States meet this target,' Mr. Richardson said. "In addition, I
have assigned an additional 142 positions for SRS to augment their
capability to provide assistance to the States."
3
"If the States respond to this effort with the same interest and
support that enabled them to eliminate deficiencies in their certification
procedures, I feel confident the certification program will be completed
successfully and on time. The beneficiaries will be the Nation's nursing
home patients."
In Pennsylvania, the State has a newly revised fire and panic code
which is now being reviewed in HEW to determine whether it agrees with the
Title XIX standards. The problem is that the new code does not apply to
Philadelphia, Pittsburgh or Scranton which use their own local fire codes,
not approved by HEW. Although the State has indicated its intention to
apply the fire and panic code to the three cities, this has not yet happened
and the State code is, therefore, not applicable State-wide as is required.
As of today, February 4 at 10:00 A.M., only Pennsylvania does not have in
place a completely acceptable procedure for certifying skilled nursing
homes.
The problem is that the newly revised fire and panic code that is now
being reviewed in HEW does not apply to Philadelphia, Pittsburgh, or
Scranton which apply local ordinances.
SELECTED
TN
OPTIFICATION
or
SKILL
NURSING HOMES FOR PARTICIPATING IN THE TITLE XIX PROGRAM AS OF
November 30, 1971
FAILURE OF STATES TO:
EXPLANATION OF COLUMNS:
A. Agreements for Facility Surveys
Written agreement or memorandum of under-
standing between the State Medicaid agency
Have agreements for facility
and the survey agency (which performs on-
surveys
Use Medicaid standards in
Have written agreements with
'skilled nursing homes
Place required time-limits
Have other required survey
site reviews of skilled nursing homes).
The agreement should delineate the respon-
sibilities of each agency and provide for
the exchange of pertinent information.
45 CFR 205.190(a) (3) & 45 CFR 249.33 (a) (2) (i).
surveys
on agreements
procedures
B. Medicaid Standards in Surveys
The application by the survey agency of
Federal Medicaid standards relating to:
(1) health, (2) sanitation, (3) construction,
(4) physical plant including fire safety,
STATES
A
B
C
D
E
(5) patient records, (6) admission policies
TOTAL
14
20
13
30
44
and procedures, and (7) administrative and
fiscal records as prescribed by regulations
Alabama
X
45 CFR 249. (4) (i) & 45 CFR 249.33.
Arkansas
X
X
California
X
X
C. Written Agreements with Skilled Nursing
Colorado
X
X
Homes
Connecticut
X
Formal written agreement between the State
D.C.
X
X
X
Medicaid agency and the skilled nursing home.
Delaware
X
X
which receive Medicaid payments. These
Florida
X
agreements should conform with the applicable
Georgia
X
requirements of Federal regulations
Hawaii
X
X
X
45 CFR 249. (b) (4) (h); 45 CFR 249.33; and
Idaho
X
X
45 CFR 250.21.
Illinois
X
X
Indiana
X
X
D. Time Limits on Agreements
Lowa
X
X
One year agreements with skilled nursing
Kansas
X
X
X
homes which meet all Medicaid requirements.
Kentucky
X
X
X
Six month agreements with skilled nursing
Louisiana
X
X
X
homes which have "correctable deficiencies,"
Maine
X
X
X
or deficiencies which the Medicaid agency
Maryland
X
X
X
X
X
can waive in accordance with regulations
Massachusetts
X
45 CFR 249.33 (a) (2) (iv)
Michigan
X
X
Minnesota
X
X
E. Other Required Survey Procedures
Mississippi
X
X
These include review of survey agency report:
Missouri
X
X
by the Medicaid agency to determine whether
Montana
X
X
facility meets Medicaid standards, appro-
Nebraska
X
priate follow-up with facilities which have
Nevada
X
X
X
correctable deficiencies obtaining and
New Hampshire
reviewing staffing reports on a quarterly
New Jersey
basis; and ascertaining that facilities are
New Mexico
licensed by the State licensing authority
New York'
X
X
45 CFR (4) (i) & 45 CFR 249.33.
North Carolina
X
X.
North Dakota
X
X
X
Ohio
X
X
NOTE: The information in this chart is
Oklahoma
X
X
X
based on recent findings by the Regional
Oregon
X
X
Office survey teams and is not necessarily
Pennsylvania
X
X
X
complete. The States have been advised of
khode Island
the deficiencies and have been asked to
South Carolina
X
X
submit plans for correction. The degree of
South Dakota
X
X
deficiency in each area varies from State
Tennessee
X
X
to State.
Texas
X
Alaska and Arizona do not participate in
Utah
X
X
the title XIX program. Guam and the
Vermont
X
X
X
Virgin Islands do not have any skilled
Virginia
X
X
nursing homes. In Puerto Rico no nursing
Washington
X
X
home facilities have been certified for
Wisconsin
X
X
title XIX participation.
West Virginia
X
X
X
X
Wyoming
X
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Office of the Secretary
Washington, D.C. 20201
Office of Public Affairs
NEWS
KELSO--(202) 963-4241
(Home (202) 833-2012
FOR RELEASE AT 12:15 P.M.
Tuesday, November 30, 1971
HEW Secretary Elliot L. Richardson told the White House Conference on
Aging today that 38 states have "substantial deficiencies" in their nursing home
certification process under Medicaid and called for rapid corrections.
The Secretary said that "appropriate officials in all 38 of these states
are being notified today" of the results of a recent survey of certification
procedures "and advised that they have until February 1 to significantly improve
their Medicaid processes."
Under the Federal-State Medicaid program, Federal regulations require states
to certify that nursing homes meet Federal, State and local standards covering
fire, sanitation, and safety, and for medical, nursing and general care services
for patients.
In his address to conference delegates meeting here through December 8,
Secretary Richardson said "the States also have been informed that HEW stands ready
to assist them, in any way the Department can, in upgrading their procedures.
"And they have been further informed," he said, "that unless such improvements
are validated by the February 1 target date, HEW intends to initiate a non-
compliance procedure that could ultimately result in witholding all Federal
Medicaid funds from any or every one of the 38 States."
Secretary Richardson said, "Finally, all States and territories receiving
Federal Medicaid funds have been given until July 1 of next year to inspect
every participating skilled nursing home to insure that such homes are in
(more)
-2-
compliance or in substantial compliance with the Medicaid certification procedure
that the State must have in place by February 1."
The deficiencies in certification procedures in the 38 States were found
during a special survey of State Medicaid inspection and enforcement efforts
undertaken at President Nixon's request and completed November 15.
Secretary Richardson told the conference that "I am sure we can expect that
some will accuse the Federal government of exhibiting too much muscle in this
matter.
"But I am hopeful," he said, "that strong Federal action will, in the end,
prove unnecessary. I believe that none of the 38 States face insurmountable
difficulties in meeting the February 1 target date.
"But let there be no mistake about it," he said, "the President has said
Federal funds will no longer be used to subsidize nursing homes that are little
more than 'warehouses for the elderly. dumping grounds for the dying'- - -
and I mean to enforce that Presidential directive."
In letters sent Monday to State officials responsible for the Medicaid
program in the 38 States, John D. Twiname, Administrator of HEW's Social and
Rehabilitation Service, outlined steps States must take if they are to avoid loss
of Medicaid funds.
By December 15, all States with deficiencies must submit to HEW Regional
Offices written plans and timetables for correcting deficiencies.
Mr. Twiname emphasized that if the target dates announced by Secretary
Richardson to the Conference delegates are not met, he would "have no alternative
but to initiate" the non-compliance hearings process.
HEW acted to carry out the Presidential directive to upgrade nursing homes
by developing plans to train 2000 additional State nursing home inspectors over
(more)
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the next 18 months, planning short-term courses for those who regularly furnish
services to patients, and helping States set up "ombudsman" units to check
complaints by patients.
The Department has asked Congress to amend the Social Security Act so that
the Federal Government can pay 100 percent of the cost of Medicaid inspections,
and has asked for funds to add 150 Federal positions for enforcement of nursing
home standards.
To expedite the job, Secretary Richardson mobilized task forces in each
HEW region which, on October 18, began the survey of Medicaid certification
standards in each State.
###
NOTE TO CORRESPONDENTS: List of 38 States, copy of the letter to State officials,
and a background sheet are attached.
SELECTED AREAS REQUIRING SIGNIFICANT IMPROVEMENT IN THE CERTIFICATION OF
SKILLED NURSING HOMES FOR PARTICIPATION IN THE TITLE XIX PROGRAM
FAILURE OF STATES TO:
EXPLANATION OF COLUMNS:
A. Agreements for Facility Surveys
Written agreement or memorandum of understanding
between the State Medicaid agency and the survey
agency (which performs on-site reviews of skilled
Have agreements for
facility surveys
Use Medicaid standards
in surveys
Have written agreements
C with skilled nursing
Place required time
limits on agreements
Have other required
homes
survey procedures
nursing homes). The agreement should delineate
the responsibilities of each agency and provide
for the exchange of pertinent information.
45 CFR 205.190(a) (3) and 45 CFR 249. (a) (2) (1).
B. Medicaid Standards in Surveys
The application by the survey agency of Federal
STATES
A
B
D
E
Medicaid standards relating to: (1) health,
(2) sanitation, (3) construction, (4) physical
Total
11
19
13
24
38
plant including fire safety, (5) patient records,
(6) admission policies and procedures, and
Arkansas
X
X
(7) administrative and fiscal records as prescribed
California
X
X
by regulations 45 CFR 249.10(b) (4) and
Connecticut
X
X
X
X
45 CFR 249.33.
D.C.
X
X
X
Delaware
X
X
X
X
X
C. Written Agreements with Skilled Nursing Homes
Georgia
X
X
Formal written agreement between the State
Hawaii
X
X
X
X
Medicaid agency and the skilled nursing homes
Idaho
X
X
X
which receive Medicaid payments. These agreements
Illinois
X
X
should conform with the applicable requirements of
Indiana
X
X
Federal regulations. 45 CFR
Iowa
X
X
X
45 CFR 249.33; and 45 CFR 250.21.
Kansas
X
X
X
Kentucky
X
X
X
X
D. Time Limits on Agreements
Louisiana
X
X
X
One year agreements with skilled nursing homes
Maine
X
X
X
which meet all Medicaid requiréments. Six month
Maryland
X
X
X
X
agreements with skilled nursing homes which have
Michigan
X
X
"correctable deficiencies," or deficiencies which
Minnesota
X
X
the Medicaid agency can waive in accordance with
Mississippi
X
X
regulations. 45 CFR (2) (iv).
Montana
X
X
X
Nevada
X
X
X
E. Other Required Survey Procedures
N. Carolina
X
X
These include review of survey agency reports by
N. Dakota
X
X
X
the Medicaid agency to determine whether a facility
N. Mex.
X
X
meets Medicaid standards; appropriate follow-up
New York
X
X
with facilities which have correctable deficiencies;
Ohio
X
X
obtaining and reviewing staffing reports on a
Oklahoma
X
X
X
quarterly basis; and ascertaining that facilities
Oregon
X
X
are licensed by the State licensing authority.
Pa.
X
X
X
45 CFR (i) and 45 CFR 249.33.
S. Carolina
X
X
S. Dakota
X
X
Tennessee
X
X
X
NOTE: The information in this chart is based on
Utah
X
X
recent findings by the Regional Office survey teams
Vermont
X
X
X
and is not necessarily complete. The States have
Washington
X
X
been advised of the deficiencies and have been
Wisconsin
X
X
asked to submit plans for correction. The degree
W. Virginia
X
X
X
X
of deficiency in each area varies from State to
Wyoming
X
X
State.
GERALD
LIBRARY
COPY
LETTER FROM THE ADMINISTRATOR, SOCIAL AND REHABILITATION SERVICE, DHEW,
TO THE DIRECTORS OF TITLE XIX AGENCIES IN THE 38 STATES WHERE NEED FOR
SIGNIFICANT IMPROVEMENT IN THE SKILLED NURSING HOME CERTIFICATION PROCESS
HAS BEEN IDENTIFIED
Staff from the Department of Health, Education, and Welfare Regional Office
have recently visited your State to survey the skilled nursing home certification
process. The information they gathered has been transmitted to me by the Regional
Office and has been subjected to an analysis by the staff of the Medical Services
Administration in Washington. Review of this report indicates that there are
substantial deficiencies in your skilled nursing home certification process which
require significant corrective action. Thus, there is a question of compliance.
Social and Rehabilitation Service staff will assist any State where the need for
significant improvement has been identified in upgrading its procedures. We
hope and anticipate that it will not be necessary to institute compliance pro-
oeedings that would result in the withholding of Federal funds.
Where the Regional Office has not already received a written plan and timetable
for correction of deficiencies from the State, the State must submit this by
December 15, 1971. Where insufficient information has been obtained by the
survey team regarding the certification process, they will be in touch with you
to obtain this further information by December 6, 1971.
I am anxious to have all States come into compliance with title XIX regulations
for certification of skilled nursing homes without the necessity of calling a
conformity hearing.
To accomplish the certification goal, we have set the following target dates for
full compliance in all States:
February 1, 1972 -- all States must have in place and ready to
operate a mechanism (including organisation, procedures, and
staff) for surveying and certifying skilled nursing home pro-
viders. Beginning on that date, each State will be expected
to process all new provider applicants through that mechanism.
July 1, 1972 - all States will be expected to have examined
all participating skilled nursing homes and to have established
that they have valid provider agreements and that they are in
compliance or substantial compliance with Federal standards.
As stated above, the Regional Commissioner is available to assist you in any way
that he can to meet these deadlines. If, however, the target dates listed in the
immediately preceding paragraph are not met, I will have no alternative but to
initiate the conformity hearing process. Under Section 1904(a) of the Social
Page 2
Security Act, the Secretary of Health, Education, and Welfare is required to
provide opportunity to a State for a hearing to determine if there is failure to
comply with Federal requirements. If the State is found to be out of compliance,
all or part of the Federal funding for the title XIX program in the State must
be withheld.
The above procedures and deadlines relate only to the certification process.
We will shortly plan for the review of other aspects of the skilled nursing home
program in your State that will cover utilisation review, medical review, and
other requirements of title XIX.
Sincerely yours,
John D. Twiname
Administrator
November 30, 1971
Background Paper
Certification of Skilled Nursing Homes
A skilled nursing home qualified to care for Medicaid patients and receive
Medicaid payments is a facility, or distinct part of a facility, that has
been surveyed and certified as meeting the conditions and standards set
forth under Federal, State and local regulations. These regulations
define standards for the physical attributes of the institution (fire,
sanitation and safety rules) and for the medical, nursing, and general
care and services to be provided for patients.
Since Medicaid is a Federal grant-in-aid program administered by the
States in accordance with Federal regulations, State Medicaid agencies
are responsible to the Department of Health, Education, and Welfare
(SRS) for making sure that State programs operate in accordance with
all Federal regulations as well as with State and local rules.
A State can give the Department of HEW assurance that this is so
only if it demonstrates that homes are inspected, that standards are
enforced, and that only homes that meet Federal, State, and local
standards are "certified" to participate in the Medicaid program and
receive Medicaid funds.
How does a State do this? The staff of a State Medicaid agency has
neither the personnel or expertise to survey homes to find out whether
they meet the standards for fire safety, or nursing care, or dietary
planning. The Medicaid agency therefore arranges for the "survey" or
inspection function to be done, usually employing the State licensing
-2-
authority or the State authority designated to survey for the Medicare
program. This is accomplished thru an "interagency agreement." The
agency responsible for surveying inspects homes, notes deficiencies,
makes recommendations, and forwards its report to the Medicaid agency.
The next step is up to the Medicaid agency which must review the survey
findings, inform the home of deficiencies, discuss the possibility of
prompt remedial action, and decide whether or not the home meets all
requirements for certification. If the home meets standards the
Medicaid agency may enter into a "provider agreement" with it. The
provider agreement will be in effect for a maximum of a year, and
will specify the services to be made available to Medicaid patients and
the rate at which the home will be reimbursed for these services.
If the Medicaid agency decides that the home is in substantial compliance
with requirements except for some deficiencies which individually or
collectively do not jeopardize patients' health and safety, the State
agency may enter into a provider agreement with it for a maximum of
six months, providing it is reasonable to believe that the deficiencies
can be corrected within that period and the nursing home provides a
written plan indicating how it will do SO. No more than two successive
6-month agreements may be executed with any nursing home having deficiences.
The second agreement may be signed only if the home can document its
remedial effort and progress.
-3-
The reports of the regional survey teams that recently inspected State
efforts to enforce nursing home standards noted deficiencies relating to
interagency agreements, certification procedures, and provider agreements -
deficiencies serious enough to have made us inform 38 States that
"significant improvements are needed" in their enforcementyprognams.
Interagency agreements may have been ambiguous about the respective
responsibilities of the agencies involved, or they may have failed to
set standards for the professional qualifications of surveyors, or
may have failed to call for recommendations for the correction of the
deficiencies found, or may have been totally nonexistent.
Certification procedures were deficient in that they permitted the
certification of homes which did not meet Federal standards. For example,
in some cases States did not use Medicaid standards in surveying homes
or the Medicaid agency did not review the survey agency's findings before
approving Medicaid payments to a home.
Provider agreements were sometimes signed with homes although they did not
meet the conditions for such agreements. Some agreements were issued
for an indefinite period. Twelve-month agreements were sometimes signed
when six-month agreements were called for. Or successive six-month
agreements were signed when they could not be justified.
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Office of the Secretary
Washington, D.C. 20201
Office of Public Affairs
NEWS
BROUDY--962-8897
FOR RELEASE IN A.M. PAPERS
Friday, October 29, 1971
Dr. Merlin K. DuVal, HEW's Assistant Secretary for Health and Scientific
Affairs, today named Mrs. Marie Callender to serve as his Special Assistant for
Nursing Home Affairs.
Mrs. Callender, 39, a member of the faculty of the University of
Connecticut School of Medicine, has had a varied career in public health practice,
teaching and research. Her research has included studies of patient progress
in nursing homes, the organization of patient care in extended care facilities,
and home-based chronically ill adults.
Dr. DuVal said that Mrs. Callender would serve as a focal point for HEW
efforts in the area of nursing home affairs, starting in early November.
"We are extremely fortunate in having been able to enlist Mrs. Callender
in this national effort to upgrade the quality of long term care," said Dr. DuVal,
who has been given responsibility for over-seeing all nursing home enforcement
activities. "She brings to this demanding assignment a rare understanding of the
dimensions of the problem as well as the administrative ability to coordinate and
develop, within the health structure of the Department, program activities related
to nursing home initiatives. We will draw heavily on her talents and experience
in carrying out the President's August 6 directive to take specific action to
improve the standards and quality of nursing home care."
At the University of Connecticut School of Medicine Mrs. Callender was an
assistant professor in the Department of Community Medicine and Health Care. She
taught medical and dental students the organization and delivery of health care
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and conducted courses in the epidemiology of medical care for doctoral candidates
in sociology, psychology and anthropology. In addition, she was director of the
Community Studies Unit.
A native of Rupert, Idaho, who now lives in Pine Orchard, Connecticut,
Mrs. Callender holds the Bachelor of Science degree and Public Health Nursing
Certificate from the University of California at Los Angeles and the Master of
Public Health degree from the University of California at Berkeley. She is
completing requirements at Yale University for the Ph.D. degree in Epidemiology:
Medical Care.
Before coming to the University of Connecticut in 1970, she was a research
associate in the Department of Epidemiology and Public Health at Yale University.
Mrs. Callender began her work in public health in 1954 as a staff nurse
in the Alameda County, California, Health Department. From 1959 to 1961 she was
an instructor in the School of Nursing at the University of California, San
Francisco. In 1961 she became staff consultant for chronic diseases and adult
health in the Westchester County, New York, Health Department, and from 1964 to
1966 was Associate Director of that Department's Division of Chronic Diseases
and Adult Health.
During 1966 Mrs. Callender held a joint appointment as administrative
assistant at the Yale-New Haven Hospital and Research Associate at the Yale
University Medical School.
In addition to her studies of nursing homes, Mrs. Callender has conducted
research and demonstration projects on health aides, neighborhood health centers,
and prepaid group practice.
#
#
#
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
HEW
Office of the Secretary
Washington, D.C. 20201
Office of Public Affairs
NEWS
BROUDY--(202) 962-8897
(Home)--(301) 654-7120
FOR RELEASE
Sunday, October 24, 1971
The Department of Health, Education, and Welfare spelled out today some
of the steps it will take to assist the States in carrying out their role in
the national effort to improve the quality of nursing home care.
In a letter to the Governors of all 50 States Dr. Merlin K. DuVal,
Assistant Secretary for Health and Scientific Affairs, promised Federal help
on nursing home inspections, training of personnel, and establishment by the
States of "ombudsman" units to check complaints by patients.
"We are most anxious to assist you, as well as to receive assistance
from you and your staff in a joint effort to improve the performance of Federal
and State responsibilities," he said.
President Nixon on August 6 called on HEW to take specific action to
improve the standards and quality of nursing home care. Dr. DuVal has been
given the responsibility for overseeing all nursing home enforcement activities.
In his letter, he said that State inspectors should be strongly urged to
enforce Federal and State standards for mursing homes.
State personnel inspect nursing homes for Medicare under full Federal
reimbursement and inspect for Medicaid on behalf of the State Medicaid program.
HEW has asked Congress to amend the Social Security Act so that the Federal
Government can pay 100 percent of the cost of Medicaid inspections.
"In the meantime," Dr. DuVal told the Governors, "we will provide you with
as much short term help as possible in the form of teams of Federal personnel who
are qualified to do inspections and who can provide technical assistance, advice
and supplementation to your staff.'
(More)
-2-
The letter also promised the Governors that the Federal Government would
provide training for State nursing home surveyors and for professional and
paraprofessional health workers who take care of mursing home patients.
Dr. DuVal also asked the Governors to implement another element in
President Nixon's plan for nursing home improvement--the establishment of
investigative units to review and follow up complaints made by or on behalf of
nursing home patients. Governors are being requested to develop plans for such
"ombudsman" units in their offices.
In States where homes have been decertified from participation in the
Medicare program this year a list of these homes was sent to the Governor
together with the letter. Dr. DuVal suggested an inspection of these homes
for Medicaid compliance and requested a report by December 1.
# # #
NOTE TO CORRESPONDENTS: A list of these decertified homes and a copy of a
letter to the Governors are attached.
FACILITIES TERMINATED BY THE SOCIAL SECURITY ADMINISTRATION
FROM PARTICIPATION IN MEDICARE
Arizona - 1971
Facility
Termination Date
Beverly Manor
2/1/71
Phoenix, Arizona
California - 1971
Facility
Termination Date
Hyde Park Convalescent Home
3/10/71
Los Angeles, California
Arrowood Conv. Hospital
5/27/71
Ukiah, California
Convalescent Hospital - Valley Branch
5/1/71
Van Nuys, California
Sherwood Conv. Hospital
5/1/71
Van Nuys, California
*Ygnacio Convalescent Center
10/25/71
Walnut Creek, California
*Governor Reagan received information about this termination earlier in a
telegram from Dr. DuVal dated October 4, 1971.
Michigan - 1971
Facility
Termination Date
*Avonside Nursing Home
10/25/71
Detroit, Michigan
*Fairlane Memorial ECF
10/25/71
Detroit, Michigan
Longfellow Nursing Center
4/30/71
Detroit, Michigan
*Governor Milliken received information about these terminations earlier
in a telegram from Dr. DuVal dated October 4, 1971.
FACILITIES TERMINATED BY THE SOCIAL SECURITY ADMINISTRATION
FROM PARTICIPATION IN MEDICARE
Ohio - 1971
Facility
Termination Date
Pearlview, Inc.
9/15/71
Brunswick, Ohio
Madeline Marie Nursing Home
2/16/71
Cincinnati, Ohio
*Avon Convalescent Center
10/25/71
Cincinnati, Ohio
*Curtis Nursing Home, Inc.
10/25/71
Cleveland, Ohio
*Governor Gilligan received information about these terminations earlier in
a telegram from Dr. DuVal dated October 4, 1971.
Pennsylvania - 1971
Facility
Termination Date
Norwood Nursing and Convalescent Home
2/12/71
Philadelphia, Pennsylvania
Texas - 1971
Facility
Termination Date
Four Seasons Nursing Center
7/21/71
of Brookhaven
Dallas, Texas
Waldrop Sanitarium
5/10/71
Houston, Texas
The Pavilion
4/16/71
McKinney, Texas
LaCasa Canyon Nursing & Conv. Home
5/8/71
Canyon, Texas
Victoria Conv. Center
2/4/71
Victoria, Texas
HEALTH.
EDUCATION:
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
OFFICE OF THE SECRETARY
U.S.A
WASHINGTON, D.C. 20201
Dear Governor
In early August the President announced a major new Federal effort to
improve the quality of nursing home care. Secretary Richardson has
already told you about some of our plans, but I would like to take this
opportunity to give you some further details and enlist your support of
our activities.
A major thrust of the new effort is enforcement of existing standards
for nursing homes. This includes full enforcement of the Federal and
State standards for extended care facilities under Medicare and for
skilled nursing homes and intermediate care facilities under Medicaid.
The effort will necessitate the termination of payments to substandard
facilities under both of these programs in as expeditious a manner as
possible unless standards of care are raised to meet the minimum re-
quirements. To accomplish this, your State inspectors-both those who
inspect for Medicare under full Federal reimbursement by that program,
and those who inspect for Medicaid on behalf of your State Medicaid
agency--must be encouraged to enforce the standards stringently through
complete inspection of all homes, documentation of deficiencies, and
consultation with providers to help them improve their facilities.
We are fully aware that this enforcement program may place even greater
strains upon your State's personnel and financial resources. Consequently,
we have asked Congress to amend Title XIX of the Social Security Act so
that we can pay 100 percent of the costs of inspection for the Medicaid
program. In the meantime, we will provide you with as much short term
help as possible in the form of teams of Federal personnel who are quali-
fied to do inspections and who can provide technical assistance, advice,
and supplementation to your staff on an ad hoc basis. Arrangements for
these teams will be made with your State agency through our HEW Regional
Office.
Many of the nursing homes in your State participate in both Medicare and
Medicaid. Since the standards for Medicare extended care facilities and
Medicaid skilled nursing homes are nearly identical, the inspections and
decisions made for one will often apply to the other. I would expect,
therefore, that if a Federal decision to terminate Medicare payments is
Page 2
made, Medicaid payments are also apt to be terminated by your State
agency, unless adequate justification is presented for continuing the
home in the Medicaid program. If any homes in your State have been de-
certified from participation in the Medicare program this year, a list
of those homes is enclosed. I assume that you will want to inspect
these homes as soon as possible for compliance with Medicaid standards,
and I would appreciate a report from your designated representative on
these homes as soon as inspections are completed, hopefully no later
than December 1. Such a report may be sent to the Regional Director
in the HEW Region serving your State. Should any home fail to take the
necessary steps to comply with Federal and State regulations, and Medicaid
payment termination is in order, we will, of course, work with your staff
to assure that any patients in facilities terminated are placed in other
facilities.
To enhance the capability of your staff to enforce standards, we will
provide training for State nursing home surveyors under contracts we
have with university training centers. Within 18 months, we hope that
all of your staff conducting surveys and inspections under Medicare and
Medicaid and your State licensure programs will have received this
training. Although this training will take inspectors away from their
jobs for 3-4 weeks, I solicit your complete support in encouraging their
participation in this training because it represents a critical part
of our joint enforcement activity. If your policies currently restrict
out-of-State travel, or otherwise deter the possibility of staff partici-
pation, I would hope that you could reexamine these policies and support
us in this effort.
Another element of the President's proposal envisions the establishment
of investigative or "ombudsman" units in the States to review and follow-
up complaints made by, or on behalf of, nursing home patients. I would
appreciate your having plans developed for establishing such a unit in
your office. Some modification of Federal regulations and some Federal
support may be necessary in this area, and I look forward to working
with you on this.
Finally, there are other actions we will be taking to improve nursing
home care. A study of long-term care is under way through which we
hope to reexamine our national policy. Also being developed are short-
term training programs for health workers--both professional and para-
professional-who work with nursing home patients.
We are most anxious to assist you, as well as to receive assistance from
you and your staff in a joint effort to improve the performance of
Page 3
Federal and State responsibilities. Please let me know if you have
specific problems or suggestions. I look forward to hearing from you
or your designee.
Sincerely yours,
Merlin K. DuVal, M.D.
Assistant Secretary for
Health and Scientific Affairs
FOR IMMEDIATE RELEASE
JULY 19, 1972
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
NURSING HOME PROGRAM
Background
At Nashua, New Hampshire, on August 6, 1971, in an announcement made at
the Greenbriar Nursing Home, the President said that "for those who need
them, the nursing homes of America should be shining symbols of comfort
and concern."
Noting that "many facilities now fall woefully short of this standard, " the
President said that it is the goal of his Administration "to see that all of our
nursing homes provide care of high quality. "
Repeating a pledge for action made before the joint convention of the National
Retired Teachers Association and the American Association of Retired Persons
in Chicago on June 25, 1971, the President announced an eight-point plan aimed at
upgrading long term care facilities throughout the nation and at developing new
Federal initiatives in institutional and non-institutional long term care.
Progress on the President's Plan for Action
1. Cut+off of Federal funds to substandard nursing homes.
Action:
The Department of Health, Education, and Welfare surveyed 47 States,
Puerto Rico and District of Columbia Medicaid nursing home standard
enforcement programs and found 39 States deficient as of November 30,
1971. States were given until February 1, 1972, to upgrade certification
programs, and until July 1, 1972, to act on certification of all 7, 000
Medicaid skilled nursing homes. As of this date, 579 facilities have
been decertified or have withdrawn from the program in face of strict
application of Federal standards; 4, 766 have been certified with six-
month timetables to correct deficiencies not affecting patient health
and safety; 1, 469 have been found in full conformity with all Federal
standards; and 244 remain in process of certification with final action
expected on or before July 31.
2. Consolidation of all activities related to enforcement of Federal nursing
home standards into a single office.
Action:
Creation of HEW Office of Nursing Home Affairs and appointment of
Mrs. Marie Callender as Special Assistant for Nursing Home Affairs.
New office was charged with coordinating enforcement programs of
Social and Rehabilitation Service, Medical Services Administration,
Social Security Administration and Health Services and Mental Health
Administration.
3. Training of State nursing home inspectors.
Action:
Four-week, university-based training provided for 700 of nation's
1, 100 State health facility surveyors as of July 1. Remainder
expected to be reached within the year.
(MORE)
- 2 -
4. Federal assumption of State Medicaid nursing home inspection cost.
Action:
The President requested this legislation from the Congress on
October 7, 1971. Upon enactment, this legislation would encourage
States to further expand enforcement resources and upgrade health
facility survey programs.
5. Expansion of Federal nursing home standards enforcement resources.
Action: A staff expansion was requested and authorized by Congress as part
of a $9.6 million Nursing Home Supplemental Appropriation sent to
the Congress on October 7, 1971 and signed by the President on
December 28, 1971. The new funds enabled deployment of 227
additional enforcement personnel, with most distributed among 10
HEW regional offices to provide technical assistance to State
inspection programs.
6. Training of medical and allied health professionals working in nursing homes.
Action: Federally-sponsored programs operated in conjunction with nationally
professional associations and nursing home groups are programmed to
reach 20, 000 of nation's 500, 000 long term care personnel this year,
an additional 20, 000 next year. Primary focus on physicians, nurses,
nursing home administrators and patient activity directors.
7. Assistance to States in establishing nursing home patient "ombudsman" units.
Action: Five models developed for testing this year. Contracts with four
States and a national organization to be announced shortly. Pending
outcome of field tests, 885 Social Security District Offices were
ordered to receive complaints from patients and relatives for
forwarding to appropriate State agencies. More than 2, 000 complaints
acted on to date.
8. Comprehensive review of the use, standards and practices of long term
care facilities and development of new Federal policy and program proposals.
Action: Office of Nursing Home Affairs has initiated exhaustive study of all
modes of institutional and non-institutional long term care with focus
on development of comprehensive Federal plan to encourage
development of improved facilities and new alternatives to institutional
care. Study and recommendations to be completed within one year.
Some Facts on Nursing Homes
Number of Institutions for the Aged
23,000
Type of Ownership:
Proprietary-for profit
71%
Private Non-profit
20%
Governmental (State and Local)
9%
Average monthly charge per resident (1971)
In skilled nursing homes
$420
In intermediate care facilities
$270
(MORE)
- 3 -
Number of persons 65 and over (1971)
1,000,000
in long term care institutions
Federal support of nursing home
patient care (1971)
$1. 5 billion
State and local governments spend
$1.1 billion
Private sources spend over
$900 million
Nursing home "industry" is close to $3. 5
billion of which public funds represent
almost 75%
Skilled nursing beds certified as Medicaid
430,997
providers as of 7/17/72
#
#
#
TABLE 1
SUMMARY OF SKILLED NURS ING HOME CERTIFICATION STATUS BY STATE, JULY 1, 1972
NUMBER
PERCENTAGE DISTRIBUTION
SNH Still
SNH No Longer
No
STATE
SNH Properly
in the
in Program
Still
Longer
Certified
Certifica-
Decertif-
With-
Certi-
in
in
as of 7/1/72
tion Process
ication
drawn
fied
Process
Program
TOTAL
5704
869
187
248
81
12
7
Alabama
154
--
--
--
100
--
--
Arkansas
16
--
--
--
100
--
--
California
1206
--
4
33
97
--
3
Colorado
143
--
1
17
89
--
11
Connecticut
191
1
8
32
83
*
17
Delaware
12
--
--
1
92
--
8
Dist. of Col
4
--
--
1
80
--
20
Florida
238
--
2
--
99
--
1
Georgia
237
--
6
8
94
--
6
Hawaii
20
--
1
1
91
--
9
Idaho
43
12
--
--
78
22
--
Illinois
168
77
--
3
68
31
1
Indiana
93
--
--
4
96
--
4
Iowa
50
--
--
7
88
--
12
Kansas
63
--
--
3
95
--
5
Kentucky
81
--
--
--
100
--
--
Louisiana
140
--
--
1
99
--
1
Maine
21
--
--
--
100
--
:
Maryland
91
--
--
5
95
--
5
Massachusetts
173
51
--
1
77
23
*
Michigan
293
10
1
--
97
3
*
Minnesota
222
1
--
8
96
*
4
Mississippi
80
--
--
--
100
--
--
Missouri
97
5
8
16
77
4
19
Montana
64
--
--
1
98
--
2
Nebraska
45
--
3
4
87
--
13
Nevada
17
--
--
--
100
--
--
New Hampshire
14
--
--
--
100
:
:
New Jersey
221
--
1
4
98
:
2
New Mexico
19
--
--
1
95
--
5
New York
62
370
94
18
11
68
21
North Carolina
101
--
4
4
93
--
7
North Dakota
48
--
1
--
98
--
2
Ohio
121
125
39
1
42
44
14
Oklahoma
5
--
--
3
63
--
37
Oregon
17
50
4
10
21
62
17
Pennsylvania
4
65
1
1
6
92
2
Puerto Rico
7
--
--
:
100
--
--
Rhode Island
43
--
--
16
73
--
27
South Carolina
76
--
--
--
100
--
--
South Dakota
53
--
--
1
98
--
2
Tennessee
49
--
--
3
94
--
6
Texas
325
--
5
24
92
--
8
Utah
28
--
--
--
100
--
--
Vermont
22
--
--
--
100
--
--
Virginia
51
--
2
8
84
--
16
Washington
175
102
1
3
62
36
2
West Virginia
20
--
--
--
100
:
--
Wisconsin
263
--
1
5
98
:
2
Wyoming
18
--
--
:
100
--
:
*Less than 1%.
July 17, 1972
TABLE 1 A
SUMMARY OF SKILLED NURSING HOME CERTIFICATION STATUS BY STATE, July 17, 1972
NUMBER
PERCENTAGE DISTRIBUTION
SNH Still
SNH No Longer
No
STATE
SNH Properly
in the
in Program
Still
Longer
Certified
Certifica-
Decertif-
With-
Certi-
in
In
as of 7/17/72
tion Process
ication
drawn
fied
Process
Program
TOTAL
6,235
244
327
252
88
4
8
Alabama
154
--
--
--
100
--
--
Arkansas
16
--
--
--
100
--
--
California
1206
--
4
33
97
--
3
Colorado
143
--
1
17
89
--
11
Connecticut
191
1
8
32
83
*
17
Delaware
12
--
--
1
92
--
8
Dist. of Col
4
--
--
1
80
--
20
Florida
238
--
2
--
99
--
1
Georgia
237
--
6
8
94
--
6
Hawaii
20
--
1
1
91
--
9
Idaho
55
--
--
--
100
--
--
Illinois
208
37
--
3
84
15
1
Indiana
93
--
--
4
96
--
4
Iowa
50
--
--
7
88
--
12
Kansas
63
--
--
3
95
--
5
Kentucky
81
--
--
--
100
--
--
Louisiana
140
--
--
1
99
--
1
Maine
21
--
--
--
100
--
--
Maryland
91
--
--
5
95
--
5
Massachusetts
190
19
11
5
84
8
8
Michigan
302
1
1
--
99
*
*
Minnesota
223
--
--
8
97
*
3
Mississippi
80
--
--
--
100
--
--
Missouri
102
--
8
16
81
0
19
Montana
64
--
--
1
98
--
2
Nebraska
45
--
3
4
87
--
13
Nevada
17
--
--
--
100
--
--
New Hampshire
14
--
--
--
100
--
--
New Jersey
221
--
1
4
98
--
2
New Mexico
19
--
--
1
95
--
5
New York
270
34
222
18
50
6
44
North Carolina
101
--
4
4
93
--
7
North Dakota
48
--
1
--
98
--
2
Ohio
156
90
39
1
55
31
14
Oklahoma
56
--
--
3
95
--
5
Oregon
67
--
4
10
83
0
17
Pennsylvania
6
62
2
1
9
87
4
Puerto Rico
7
--
--
--
100
--
--
Rhode Island
43
--
--
16
73
--
27
South Carolina
76
--
--
--
100
--
--
South Dakota
53
--
--
1
98
--
2
Tennessee
49
--
--
3
94
--
6
Texas
325
--
5
24
92
--
8
Utah
28
--
--
--
100
--
--
Vermont
22
--
--
--
100
--
--
Virginia
51
--
2
8
84
--
16
Washington
276
--
1
3
99
0
1
West Virginia
20
--
--
--
100
--
--
Wisconsin
263
--
1
5
98
--
2
Wyoming
18
--
--
--
100
--
--
* Less than 1%.
July 17, 1972
TABLE 2
NUMBER AND PERCENT DISTRIBUTION OF PROVIDER AGREEMENTS BY DURATION
IN CERTIFIED SKILLED NURSING HOMES BY STATE, JULY 1, 1972
Skilled Nursing
State
Homes Properly
Number
Percentage Distribution
Certified
6 Months
12 Months
6 Months
12 Months
Total
5,704
4,415
1,289
77
23
Alabama
154
50
104
32
64
Arkansas
16
16
0
100
--
California
1,206
989
217
82
18
Colorado
143
143
0
100
--
Connecticut
191
73
118
38
62
Delaware
12
0
12
100
--
Dist. of Col
4
4
0
100
--
Florida
238
39
199
16
84
Georgia
237
165
72
70
30
Hawaii
20
17
3
85
15
Idaho
43
38
5
88
12
Illinois
168
133
35
79
21
Indiana
93
75
18
81
19
Iowa
50
49
1
98
2
Kansas
63
60
3
95
5
Kentucky
81
31
50
38
62
Louisiana
140
132
8
94
6
Maine
21
2
19
95
5
Maryland
91
87
4
95
5
Massachusetts
173
172
1
99
1
Michigan
293
187
106
64
36
Minnesota
222
219
3
99
1
Mississippi
80
57
23
71
29
Missouri
97
97
0
100
--
Montana
64
64
0
100
--
Nebraska
45
42
3
93
7
Nevada
17
15
2
88
22
New Hampshire
14
0
14
--
100
New Jersey
221
221
0
100
--
New Mexico
19
5
14
26
74
New York
62
34
28
59
61
North Carolina
101
42
59
42
58
North Dakota
48
48
0
100
:
Ohio
121
62
59
51
49
Oklahoma
5
0
5
--
100
Oregon
17
17
0
100
:
Pennsylvania
4
1
3
3
97
Fuerto Rico
7
0
7
--
100
Rhode Island
43
23
20
54
46
South Carolina
76
66
10
87
13
South Dakota
53
53
0
100
--
Tennessee
49
9
40
18
82
Texas
325
325
0
100
:
Utah
28
15
13
54
46
Vermont
22
19
3
86
14
Virginia
51
51
0
100
--
Washington
175
174
1
91
1
West Virginia
20
13
7
65
35
Wisconsin
263
263
0
100
--
Wyoming
18
18
0
100
:
July 17, 1972
TABLE 2 A
NUMBER AND PERCENT DISTRIBUTION OF PROVIDER AGREEMENTS BY DURATION
IN CERTIFIED SKILLED NURSING HOMES BY STATE, JULY 17, 1972
Skilled Nursing
STATE
Homes Properly
NUMBER
PERCENTAGE DISTRIBUTION
Certified
6 Months
12 Months
6 Months
12 Months
TOTAL
6,235
4,766
1,469
76
24
Alabama
154
50
104
32
64
Arkansas
16
16
0
100
--
California
1,206
989
217
82
18
Colorado
143
143
0
100
--
Connecticut
191
73
118
38
62
Delaware
12
0
12
100
--
Dist. of Col
4
4
0
100
--
Florida
238
39
199
16
84
Georgia
237
165
72
70
30
Hawaii
20
17
3
85
15
Idaho
55
50
5
91
9
Illinois
208
158
50
76
24
Indiana
93
75
18
81
19
Iowa
50
49
1
98
2
Kansas
63
60
3
95
5
Kentucky
81
31
50
38
62
Louisiana
140
132
8
94
6
Maine
21
2
19
95
5
Maryland
91
87
4
95
5
Massachusetts
190
189
1
99
1
Michigan
302
194
108
64
36
Minnesota
223
220
3
99
1
Mississippi
80
57
23
71
29
Missouri
102
102
0
100
--
Montana
64
64
0
100
--
Nebraska
45
42
3
93
7
Nevada
17
15
2
88
22
New Hampshire
14
0
14
--
100
New Jersey
221
221
0
100
--
New Mexico
19
5
14
26
74
New York
270
158
112
59
41
North Carolina
101
42
59
42
58
North Dakota
48
48
0
100
--
Ohio
156
80
76
51
49
Oklahoma
56
0
56
--
100
Oregon
67
67
0
100
--
Pennsylvania
6
2
4
33
67
Puerto Rico
7
0
7
--
100
Rhode Island
43
23
20
54
46
South Carolina
76
66
10
87
13
South Dakota
53
53
0
100
--
Tennessee
49
9
40
18
82
Texas
325
325
0
100
--
Utah
28
15
13
54
46
Vermont
22
19
3
86
14
Virginia
51
51
0
100
--
Washington
276
275
1
100
*
West Virginia
20
13
7
65
35
Wisconsin
263
263
0
100
--
Wyoming
18
18
0
100
* Less than 1%
July 17, 1972
FIGURES SUPPLIED BY STATES--NOT VERIFIED BY REGIONAL OFFICES
TABLE 3
PATIENTS IN SKILLED NURSING HOMES DECERTIFIED AND/OR WITHDRAWN FROM THE PROGRAM
BY STATE, JULY 17, 1972
Skilled
DISPOSITION OF PATIENTS
Nursing
STATE
Homes
Total
To Inter-
Decerti-
Number
To
mediate
fied and
of
Other
Care
To
To
Cash
a
b
Withdrew
Patients
SNHs
Facilities
Residence
Hospital
Grant
Other
/
TOTAL
579
28,179
2,860
15,866
2
1
427
9,023
Alabama
--
Arkansas
--
California
37
1,272
52
3
1,217
Colorado
18
392
111
278
3
Connecticut
40
581
2
579e/
Delaware
1
19
19
Dist. of Col
1
320
320
Florida
2
158
158
Georgia
14
292
292
Hawaii
2
82
31
51
Idaho
--
Illinois
3
*
Indiana
4
6
1
2
1
2
Iowa
7
*
Kansas
3
*
Kentucky
--
Louisiana
1
22
2
20
Maine
--
Maryland
5
17
1
16
Massachusetts
16
NA
NA
NA
NA
NA
NA
NA
Michigan
1
13
13
Minnesota
8
12
6
6
Mississippi
Missouri
24
577
91
200
286
Montana
1
1
Nebraska
7
19
19
Nevada
--
New Hampshire
--
New Jersey
5
199
199
New Mexico
1
*
New York
240
23,433
1,633
15,000
6,800 g
North Carolina
8
98
55
41
2
North Dakota
1
25
25
Ohio
40
60
30
30
Oklahoma
3
4
4
Oregon
14
42
42
Pennsylvania
2
3
3
Puerto Rico
--
Rhode Island
16
NA
NA
NA
NA
NA
NA
NA
South Carolina
--
South Dakota
1
26
3
23
Tennessee
3
31
30
1
Texas
29
217
36
101
80
Utah
--
Vermont
--
Virginia
10
30
30
Washington
4
60
60
West Virginia
--
Wisconsin
6
168
1
167
Wyoming
a / Patients for whose care the State pays a direct cash grant to the patient rather than a
vendor payment to the facility.
b/ Examples of other: Transferred to convalescent, rest or boarding homes; remaining in
facility pending suitable alternate placement.
/ Totals exclude information from Massachusetts and Rhode Island.
d
/ Patients remaining in facilities pending certification determination upon change of
ownership.
/ 422 placed in convalescent homes; 140 to rest homes; and 17 to boarding homes.
f/
Remaining in facilities.
g
Patients in homes under litigation.
62 remaining in facilities.
*
No Medicaid patients in facilities.
July 17, 1972
FIGURES SUPPLIED BY STATES--NOT VERIFIED BY REGIONAL OFFICES
TABLE 4
NUMBER AND PERCENT DISTRIBUTION OF SKILLED NURSING HOME BEDS BY CERTIFICATION
STATUS AND EY STATE, JULY 1, 1972
NUMBER
PERCENTAGE DISTRIBUTION
Total
XIX
XIX Beds
Beds
in SNH
STATE
Number
Total
In
Still in
XIX Beds
No
Certi-
Beds
Total
Certi-
Certifi-
In SNH No
Still
Longer
fied
In
XIX
fied
cation
Longer In
Certi-
In
In
SNH
SNH
Beds
SNH
Process
Program
fied
Process
Program
TOTAL
5704
609,620
516,031
430,997
85,034
27,504
79
16
5
Alabama
154
11,805
8,912
8,912
--
--
100
--
:
Arkansas
16
2,473
2,473
2,473
--
--
100
--
--
California
1206
100,509
96,417
96,417
--
2,337
98
--
2
Colorado
143
13,872
10,976
10,976
:
597
92
:
8
Connecticut
191
17,648
16,067
15,792
275
1,322
91
1
8
Delaware
12
913
913
913
--
39
96
--
4
Dist. of Col
4
1,624
871
871
--
320
73
--
27
Florida
238
23,600
23,600
23,600
--
158
99
--
1
Georgia
237
21,718
2,491
2,491
--
440
87
:
13
Hawaii
20
1,680
1,680
1,680
--
82
95
:
5
Idaho
43
4,983
3,573
3,096
477
--
87
13
--
Illinois
168
24,220
24,220
20,695
3,525
119
85
14
I
Indiana
93
6,952
6,952
6,952
:
134
98
I
2
Iowa
50
3,280
1,786
1,786
--
309
86
--
14
Kansas
63
3,445
3,092
3,092
--
89
98
:
2
Kentucky
81
5,646
5,026
5,026
--
--
100
--
:
Louisiana
140
8,493
7,433
7,433
--
32
100
:
*
Maine
21
2,862
749
749
--
--
100
--
:
Maryland
91
10,362
7,626
7,626
--
274
97
:
3
Massachusetts
173
21,398
15,414
11,565
3,849
50
75
25
*
Michigan
293
23,892
23,892
23,705
187
25
99
1
*
Minnesota
222
16,637
16,637
16,497
140
246
98
*
2
Mississippi
80
4,881
4,881
4,881
--
--
100
--
:
Missouri
97
11,214
10,529
8,969
1,560
2,002
75
12
13
Montana
64
3,230
2,462
2,462
--
29
99
:
1
Nebraska
45
4,723
3,221
3,221
--
301
92
:
8
Nevada
17
912
912
912
--
--
100
--
:
New Hampshire
14
1,208
746
746
:
:
100
--
--
New Jersey
221
20,430
19,777
19,777
:
183
99
--
1
New Mexico
19
910
814
814
--
18
98
:
2
New York
62
61,575
46,321
8,157
38,164
11,102
14
67
19
North Carolina
101
6,489
5,523
5,523
--
166
97
:
3
North Dakota
48
3,451
3,451
3,451
--
25
99
--
1
Ohio
121
20,374
20,374
12,999
7,375
3,207
55
31
14
Oklahoma
5
884
674
674
--
107
86
:
14
Oregon
17
6,612
4,299
1,095
3,204
787
22
63
15
Pennsylvania
4
19,143
18,836
2,250
16,586
99
12
88
*
Puerto Rico
7
573
573
573
--
--
100
--
--
Rhode Island
43
2,988
1,433
1,433
:
449
76
--
24
South Carolina
76
5,592
4,653
4,653
--
--
100
--
:
South Dakota
53
3,393
3,137
3,137
:
34
99
:
1
Tennessee
49
13,576
2,164
2,164
:
350
86
:
14
Texas
325
17,751
14,529
14,529
:
1,263
92
--
8
Utah
28
2,375
1,925
1,925
:
--
100
:
:
Vermont
22
1,522
1,250
1,250
--
:
100
--
--
Virginia
51
4,942
2,745
2,745
:
436
86
--
14
Washington
175
27,262
24,404
14,712
9,692
129
60
40
*
West Virginia
20
1,156
1,156
1,156
--
:
100
:
:
Wisconsin
263
33,163
33,163
33,163
--
244
99
:
1
Wyoming
18
1,279
1,279
1,279
:
:
100
--
--
* Less than one percent.
1/ Represents 5% of the beds in the title XIX program as of February 1, 1972.
July 17, 1972
TABLE 5
HEW REGIONAL OFFICE VALIDATION BY TYPE OF ACTIVITY BY STATE, JULY 1, 1972
Number of
Provider Files
In-depth File
Survey Report
SNH Validation
STATE
Certified
Review
Examination
Review
On-site Surveys
Homes
Number
Percent
Number
Percent
Number
Percent
Number
Percent
TOTAL
5704
5203
91
2411
42
1785
31
281
5
Alabama
154
75
49
75
49
35
23
2
1
Arkansas
16
11
69
11
69
11
69
3
19
California
1206
1197
99
183
15
210
17
40
3
Colorado
143
143
100
143
100
35
25
0
0
Connecticut
191
151
79
40
21
54
28
1
*
Delaware
12
12
100
12
100
12
100
3
25
Dist. of Col
4
4
100
4
100
4
100
0
0
Florida
238
75
32
40
17
40
17
3
1
Georgia
237
46
19
46
19
46
19
5
2
Hawaii
20
10
50
10
50
10
50
10
50
Idaho
43
43
100
12
28
16
37
5
12
Illinois
168
168
100
35
21
35
21
8
5
Indiana
93
93
100
93
100
93
100
0
0
Iowa
50
50
100
50
100
50
100
2
4
Kansas
63
63
100
63
100
40
64
3
5
Kentucky
81
48
59
27
33
20
25
2
3
Louisiana
140
140
100
48
34
64
46
12
9
Maine
21
21
100
19
91
19
91
2
10
Maryland
91
88
97
40
44
40
44
8
9
Massachusetts
173
173
100
35
20
0
0
1
*
Michigan
293
293
100
57
20
10
3
3
1
Minnesota
222
2231/
100+
45
22
32
15
2
1
Mississippi
80
50
63
20
25
20
25
2
3
Missouri
97
92
95
48
50
20
21
3
3
Montana
64
64
100
64
100
17
27
2
3
Nebraska
45
45
100
45
100
10
22
2
4
Nevada
17
17
100
17
100
8
47
8
47
New Hampshire
14
14
100
14
100
14
100
3
21
New Jersey
221
2261/
100+
226
100
226
100
8
4
New Mexico
19
19
100
19
100
19
100
3
16
New York
62
62
100
1251/
100+
20
32
20
32
North Carolina
101
75
74
25
25
30
30
2
2
North Dakota
48
48
100
30
63
23
48
0
0
Ohio
121
121
100
121
100
70
58
2
2
Oklahoma
5
5
100
5
100
91/
100+
3
60
Oregon
17
191/
100+
14
82
211/
100+
8
47
Pennsylvania
4
0
0
401/
100+
401/
100+
61/
100+
Puerto Rico
7
3
43
3
43
3
43
3
43
Rhode Island
43
35
81
35
81
12
28
1
2
South Carolina
76
76
100
61
80
26
34
5
7
South Dakota
53
53
100
14
26
20
38
3
6
Tennessee
49
49
100
30
61
10
20
3
6
Texas
325
325
100
80
25
103
32
23
7
Utah
28
28
100
28
100
28
100
0
0
Vermont
22
22
100
22
100
22
100
1
5
Virginia
51
51
100
40
78
3
6
6
12
Washington
175
2761/
100+
54
31
25
14
43
25
West Virginia
20
20
100
20
100
2
10
2
10
Wisconsin
263
263
100
105
40
90
34
3
1
Wyoming
18
18
100
18
100
18
100
1
6
Validation activity conducted prior to certification decision accounts for over 100% of
certified homes.
*
Less than 1%
July 17, 1972
NOTES ON STATES WITH CERTIFICATION ACTIONS PENDING ON JULY 1, 1972
Idaho
No.
% Distrib.
Skilled nursing homes as of 2/1/72
55
100
Properly certified as of 7/1/72
43
78
Still in the certification process
as of 7/1/72
12
22
Pending decisions on waiver criteria for the sprinkler requirement
in the Life Safety Code, these surveys were delayed in the State. As
a result, 12 out of 55 homes did not have signed provider agreements.
However, all certification actions have been completed except for the
return of the signed contract by the facility. All of the remaining
12 skilled nursing homes returned their signed provider agreements
by July 14, 1972. Idaho has now completed all certification action.
Illinois
No.
% Distrib.
Skilled nursing homes as of 2/1/72
248
100
Properly certified as of 7/1/72
168
68
Voluntarily withdrawn
3
1
Still in the certification process
as of 7/1/72
77
31
(Certification still unfinished
as of 7/17/72
37)
Illinois is expected to have all title XIX skilled nursing homes
certified by the end of July and has met all of the HEW requirements
for surveying skilled nursing homes and issuing agreements for signa-
ture to nursing home operators.
Currently, there are 208 homes certified, 37 remain to be certified, and
3 have withdrawn. The 37 remaining homes will be certified by the end
of the month.
Massachusetts
No.
% Distrib.
Skilled nursing homes as of 2/1/72
225
100
Properly certified as of 7/1/72
173
77
Voluntarily withdrawn
1
--
Still in the certification process
51
23
as of 7/1/72
(Still uncertified as of 7/17/72
19)
- 2 -
Of the 51 homes still in the certification process as of July 1, 30
had surveyed and were awaiting review of the survey and issuance of
the provider agreement. Twenty of these 30 required the return of
a properly signed provider agreement by the home in order to complete
the process. The other 10 required either waivers or acceptable
plans of correction. These actions should be completed this month.
The files for the balance of the homes (21) remained in the survey
agency. These files required additional information from the nursing
home before the processing of the provider agreement can continue.
Massachusetts' certification delays were due to: (1) lack of sufficient
staff in the certification agency, and (2) the absence of proper docu-
mentation in fire safety surveys. Documentation of deficiencies is
essential before the certification agency can decide whether a home is
qualified to participate in the Medicaid program as a skilled nursing
facility.
Michigan
No.
% Distrib.
Skilled nursing homes as of 2/1/72
304
100
Properly certified as of 7/1/72
293
97
Decertified
1
-
Still in the the certification
process as of 7/1/72
10
3
(Still uncertified as of 7/17/72
1)
Michigan is expected to have all Medicaid nursing homes certified
by the end of July. Only 1 agreement remains to be certified.
Missouri
No.
% Distrib.
Skilled nursing homes as of 2/1/72
126
100
Properly certified as of 7/1/72
97
77
Decertified
8
6
Voluntarily withdrawn
16
13
Still in the certification process
5
4
as of 7/1/72
Five of the 103 skilled nursing homes in the State lacked proper pro-
vider agreements as of July 1. Information as of July 14, indicates that
all homes have now been certified.
- 3 -
New York
No.
% Distrib.
Skilled nursing homes as of 2/1/72
544
100
Properly certified as of 7/1/72
62
11
Decertified
94
17
Voluntarily withdrawn
18
03
Still in the certification process
as of 7/1/72
370
68
(Still uncertified as of 7/17/72
34)
State has now certified 270 facilities and has moved to decertify
a total of 222, including 189 which have entered court action to
block final State decertification. State has mailed provider
agreements to another 34 homes with request that these be returned
by July 31. When all are returned, New York will have completed
all certification activity. Delay in State's certification program
was due to: late start by survey agency; inadequate staff in Title
XIX agency; and diversion of survey agency personnel to planning for
series of more than 100 hearings on individual facilities mandated
under court order.
Ohio
No.
% Distrib.
Skilled nursing homes as of 2/1/72
286
100
Properly certified as of 7/1/72
121
42
Decertified
39
14
Voluntarily withdrawn
1
-
Still in the certification process
as of 7/1/72
125
44
(Still uncertified as of 7/17/72
90)
Ohio has met the HEW requirements which call for surveying homes and
issuing the agreements to nursing home operators. A court restraining
order, obtained by the Ohio Nursing Home Association, had prevented 125
nursing homes from signing agreements and returning them to the State.
Since that time, 35 homes have returned signed agreements. The re-
maining 90 homes are restrained from signing the agreement due to a
preliminary injunction by the court. Certification process cannot be
resumed until court action is complete.
- 4 -
Oregon
No.
% Distrib.
Skilled nursing homes as of 2/1/72
81
100
Properly certified as of 7/1/72
17
21
Decertified
4
5
Voluntarily withdrawn
10
12
Still in certification process
as of 7/1/72
50
62
Fire safety surveys were delayed in the State pending decisions on
waiver criteria to the sprinkler requirement in the Life Safety
Code. All 67 facilities had been surveyed by July 1 and of these
17 had signed and returned their provider agreements. All of the
remaining 50 skilled nursing homes returned their signed provider
agreements by July 17, 1972. Oregon has now completed all certifi-
cation activities.
Pennsylvania
No.
% Distrib.
Skilled nursing homes as of 2/1/72
71
100
Properly certified as of 7/1/72
4
6
Decertified
1
1
Voluntarily withdrawn
1
1
Still in certification process
as of 7/1/72
65
92
(Still uncertified as of 7/17/72
62)
In June, large portions of Pennsylvania were devastated by floods
caused by tropical storm Agnes. As a result, most State staff were
diverted to emergency assignments to provide food, shelter, and other
assistance to persons dispossessed by the flood. The certification
activity is only now beginning to resume.
Because the flood caused the certification effort to be completely
halted, the Department has decided that Pennsylvania should be permitted
an extension of 60 days from July 1 to complete the certification
process.
Washington
No.
% Distrib.
Skilled nursing homes as of 2/1/72
281
100
Properly certified as of 7/1/72
175
62
Decertified
1
-
Voluntarily withdrawn
3
1
Still in the certification process
as of 7/1/72
102
37
- 5 -
The problem in Washington was that the State was slow in developing
and applying the certification mechanism and in hiring and training
necessary staff in the survey unit. Also, the State Fire Marshal
was late in starting Life Safety Code surveys which were not completed
until the last days of June. Of the 281 facilities in Washington, a
total of 175 skilled nursing homes had valid provider agreements, 91
were complete except for the provider's signature, 4 were decertified or
withdrawn, and of the balance only 4 facilities still had problems on
July 1. All skilled nursing homes had signed provider agreements by
7/17/72. Washington has now completed all certification activities.
July 19, 1972
Background Paper
The Certification Process
Six-Month, 12-Month Provider Agreements and the Use of Waivers
A skilled nursing home qualified to care for Medicaid patients and receive
Medicaid payments is a facility, or distinct part of a facility, that has
been inspected and certified as meeting the conditions and standards set
forth under Federal, State and local regulations. These regulations define
standards for the physical environment of the institution (fire, sanitation
and safety) and for the medical, nursing, dietary and general care and
services to be provided.
Since Medicaid is a Federal grant-in-aid program administered by the States
in accordance with Federal regulations, State Medicaid agencies are
responsible to the Social and Rehabilitation Service in the Department of
Health, Education, and Welfare for making sure that State programs operate
in accordance with all Federal regulations as well as with State and local
rules.
A State can assure HEW of this by demonstrating that homes are inspected,
that standards are enforced, and that only homes that meet Federal, State,
and local standards are "certified" to participate in the Medicaid program
and receive Medicaid funds.
How does a State do this? The staff of a State Medicaid agency usually has
neither the personnelnor expertise to survey homes to find out whether they
meet standards. The Medicaid agency, therefore, usually delegates
responsibility for the survey and inspection function to the State licensing
authority or the State authority designated to survey for the Medicare program.
- 2 -
This is arranged through an "interagency agreement" or contract. The
responsible agency inspects homes, notes deficiencies, obtains a plan of
correction of deficiencies from the home, and then forwards reports and
recommendations to the Medicaid agency.
The next move belongs to the Medicaid agency which must review the survey
findings and recommendations, and decide whether or not the homes can be
certified.
Certification is accomplished by the Medicaid agency's issuance of a
"provider agreement" specifying the services to be made available to Medicaid
patients and the rate at which the home will be reimbursed. The agreement
may be issued for one year or for six month.
A one year agreement is issued if the Medicaid agency decides the home
meets all Federal, State and local standards, as evidenced by survey reports.
A six-month agreement is issued if all the following conditions are met:
1. The home meets standards except for deficiencies which
individually or collectively do not jeopardize patients'
health and safety;
2. It is reasonable to believe that the deficiencies can be
corrected within the six-month period; and
3. The nursing home provides a written plan indicating how and
when correction will be made.
- 3 -
No more than two successive 6-month agreements may be issued to any nursing
home. The second agreement may be issued only if the home documents its
remedial effort and progress.
In issuing either a 6-or 12-month agreement to a nursing home, a State agency
may waive one or more specific requirements related to environment and
sanitation, and fire and safety requirements including the Life Safety Code
if there is documented evidence that:
1. The waiver of specific requirements does not adversely affect
patients' health and safety, and
2. The standards, if rigidly applied, would result in unreasonable
hardship for the skilled nursing home; and
3. A written justification of such a finding is maintained on file.
The requirement regarding hospital agreements may be waived if the home's
location is remote from a general hospital, or if the home unsuccessfully
tried to enter into an agreement with one or more hospitals.
A waiver remains in effect only as long as the provider agreement to which
it applies. It must be fully re-evaluated and re-justified whenever a new
agreement is issued.
The DHEW set July 1 as the date by which States were to have surveyed all
skilled nursing homes participating in the Medicaid program to be sure they
were certified in accordance with the procedures described above. A previous
effort completed on February 1 of this year corrected deficiencies in States'
certification procedures.
THE OUTLOOK ON NURSING HOMES
MRS. MARIE CALLENDER
SPECIAL ASSISTANT FOR NURSING HOME AFFAIRS
DEPARTMENT OF HEALTH, EDUCATION AND WELFARE*
*To BE PRESENTED AT THE VIRGINIA NURSING HOME ASSOCIATION MEETING,
ARLINGTON, VIRGINIA ON WEDNESDAY, MAY 10, 1972.
GERALD
THE OUTLOOK ON NURSING HOMES
IT IS WITH SOME HUMILITY THAT I APPROACH A TOPIC AS BROAD
AS "THE OUTLOOK ON NURSING HOMES." FOR NOT ONLY ARE YOU, OF
THE VIRGINIA NURSING HOME ASSOCIATION INVOLVED IN THE IMMEDIATE,
PERSONAL JOB OF CARING FOR PATIENTS IN NURSING HOMES, BUT ALSO AS
VIRGINIANS YOU ARE TOO CLOSE TO WASHINGTON TO HARBOR ILLUSIONS
ABOUT THE WISDOM OR GRANDEUR OF FEDERAL POWER, You CAN GAZE ACROSS
THE PoToMac AND WITNESS THE LEGISLATIVE JUNGLE THROUGH WHICH A
PROGRAM MUST PASS IN CONGRESS TO BECOME LAW, AND YOU CAN OBSERVE
THE DIFFICULTY IN TRANSLATING AN ADMINISTRATIVE POLICY CONCEIVED
IN THE HEW NORTH BUILDING INTO A REALITY IN ARLINGTON COUNTY. So.
YOU KNOW THAT THOSE OF US WHO SERVE THE FEDERAL GOVERNMENT TODAY
DO NOT COME EQUIPPED WITH ALL THE ANSWERS - READY TO DISPENSE
THE BALM OF GREAT PERSONAL WISDOM TO HEAL ALL WOUNDS AFFLICTING
A TROUBLED SOCIETY,
I COME BEFORE YOU TODAY THEN NOT TO OFFER READY-MADE PRE-
SCRIPTIONS OR ROCK-HARD CERTAINTIES, BUT TO DESCRIBE TO YOU SOME
OF THE PROBLEMS WE SEE AND THE ANSWERS WE HAVE DEVISED. AND I WANT
TO ENLIST YOUR AID IN HELPING US FIND AND REALIZE SOLUTIONS TO THE
PROBLEMS FACING THOSE WHO NEED OR ARE RECEIVING NURSING HOME CARE.
THE FEDERAL GOVERNMENT HAS BECOME INCREASINGLY INVOLVED IN
NURSING HOME CARE OVER THE LAST TWENTY YEARS, PARTICULARLY SINCE
THE ENACTMENT OF THE MEDICARE AND MEDICAID PROGRAMS IN 1965. IN
1970 THE FEDERAL GOVERNMENT SPENT OVER $2 BILLION IN SUPPORT OF
NURSING HOME PATIENTS, WHILE STATE AND LOCAL GOVERNMENT SPENT
ANOTHER $700 MILLION,
2
THE DIFFICULTY WITH SUCH MASSIVE INVOLVEMENT IS IN ASSURING
THAT DESIRED AND DESIRABLE IMPACT IS ACHIEVED. WITH RESPECT TO
CONTINUITY OF CARE BETWEEN HOSPITAL AND ENTENDED CARE FACILITY,
I BELIEVE THE FEDERAL ROLE HAS BEEN USEFUL AND IMPORTANT. THE
PRESIDENT'S 8-POINT PLAN FOR ACTION TO IMPROVE NURSING HOMES,
ANNOUNCED LAST AUGUST IN NEW HAMPSHIRE, IS DESIGNED TO STRENGTHEN
AND IMPROVE THAT ROLE. THE IMPLEMENTATION OF THAT PLAN HAS ABSORBED
MOST OF MY TIME SINCE I ASSUMED MY NURSING HOME RESPONSIBILITIES
LAST DECEMBER - MORE OF MY TIME THAN I HAD IMAGINED, 1 MIGHT ADD -
AND I WOULD LIKE TO DESCRIBE FOR YOU SOME OF THESE EFFORTS, BUT I
WOULD ALSO LIKE TO DESCRIBE FOR YOU THE PROBLEMS AT THE OPPOSITE
END OF THE SPECTRUM - CONTINUITY BETWEEN INSTITUTIONAL CARE AND THE
HOME. I BELIEVE THAT THE FEDERAL ROLE HAS BEEN LESS CONSTRUCTIVE
IN THAT AREA, WHICH REPRESENTS TOMORROW'S CHALLENGES, AND THESE.
CHALLENGES FACE US ALREADY IN WAYS I SHALL DESCRIBE.
THE EXTENDED CARE FACILITY PROGRAM UNDER MEDICARE WAS DESIGNED
TO COVER THE EXTENSION OF CARE FOR A PATIENT WHO NO LONGER REQUIRES
THE FULL MEDICAL RESOURCES OF A HOSPITAL, BUT STILL NEEDS RELATIVELY
INTENSIVE MEDICAL SERVICES, THE SKILLED NURSING HOME PROGRAM UNDER
MEDICAID, ALTHOUGH THE PHILOSOPHIC INTENT WAS SOMEWHAT DIFFERENT,
ADOPTED VERY SIMILAR STANDARDS, ACUTE ILLNESS, IN WHICH THE PATIENT
IS EXPECTED EVENTUALLY RECOVER, IS THE BASIC MODEL FOR WHICH THIS
SYSTEM IS DESIGNED, AND THE EMPHASIS HAS BEEN ON MEDICAL RATHER THEN
SOCIAL AND PERSONAL SERVICES, THIS APPROACH HAS LED TO VERY REAL
PROBLEMS WHEN APPLIED TO PATIENTS WITH CHRONIC ILLNESS, WHO MAKE UP
A LARGE PROPORTION OF THE ELDERLY NURSING HOME POPULATION - I SHALL
DISCUSS THESE PROBLEMS LATER,
GERALD
LIBRARY
3
THE PRESIDENT'S PLAN FOR NURSING HOMES ACCEPTED THE RESPONSI-
BILITY TO ASSURE THAT NURSING HOMES DELIVER CARE AT LEAST AT THE
LEVELS OF FEDERAL STANDARDS AND REGULATIONS, A MAJOR GOAL OF THE
PLAN IS TO IMPROVE FEDERAL ENFORCEMENT OF NURSING HOME STANDARDS,
As YOU KNOW, THE TERM "NURSING HOME" IS APPLIED TO A WIDE RANGE OF
FACILITIES, FROM THOSE PROVIDING PRIMARILY CUSTODIAL CARE TO THOSE
DELIVERING HIGHLY SKILLED POST-HOSPITAL AND REHABILITATIVE SERVICES,
THESE DIFFERENT TYPES OF FACILITIES ARE ACCREDITED THROUGH DIFFERENT
MECHANISMS, AND FEDERAL LEVERAGE IN ENFORCING STANDARDS VARIES
WIDELY, MEDICARE CERTIFICATION OF EXTENDED CARE FACILITIES IS A
FEDERAL PROGRAM MEDIATED THROUGH STATE AGENCIES, MEDICAID IS A
FEDERAL-STATE PROGRAM, FINANCED AND ADMINISTERED THROUGH BOTH FEDERAL
AND STATE FUNDS AND ACTIVITIES. INTERMEDIATE CARE FACILITIES UNTIL
RECENTLY WERE REQUIRED TO MEET ONLY STATE LICENSING REQUIREMENTS TO
RECEIVE FEDERAL FUNDS, THESE DIFFERENCES HAVE COMPLICATED THE ENFORCE-
MENT OF STANDARDS, IF H.R. 1 AS CURRENTLY AMENDED BY THE SENATE FINANCE
COMMITTEE IS PASSED, THEM SOME OF THESE DIFFERENCES WILL BE MINIMIZED
AND MORE UNIFORM STANDARDS AND CERTIFICATION PROCEDURES WILL BE ADOPTED
FOR MEDICARE AND MEDICAID. IN ANTICIPATION OF THESE CHANGES, A COMMON
SET OF STANDARDS FOR BOTH PROGRAMS IS BEING DEVELOPED UNDER THE
AUSPICES OF MY OFFICE, BUT THE STATE AGENCY WILL RETAIN ITS INSPECTION
ROLE. AND THE FEDERAL GOVERNMENT, WHICH IS RESPONSIBLE FOR THE
QUALITY OF CARE WHICH IT FINANCES, MUST AID IN ENHANCING THE CAPABILITY
OF THE STATE AGENCIES TO REGULATE AND IMPROVE THE QUALITY OF NURSING
HOME CARE. To IMPROVE ENFORCEMENT OF NURSING HOME STANDARDS, THE
PRESIDENT'S PLAN PLEDGED THE FOLLOWING STEPS:
4
1. CONSOLIDATION OF RESPONSIBILITY FOR NURSING HOME AFFAIRS
NURSING HOME ACTIVITIES HAVE BEEN SCATTERED AMONG SEVERAL BRANCHES
OF THE DEPARTMENT OF HEW, INCLUDING THE SOCIAL SECURITY ADMINI-
STRATION, THE SOCIAL AND REHABILITATION SERVICE, AND THE HEALTH
SERVICE AND MENTAL HEALTH ADMINISTRATION. THE PRESIDENT ORDERED
THAT ALL FEDERAL ENFORCEMENT RESPONSIBILITY BE CONSOLIDATED IN A
SINGLE OFFICE, AND DR. MERLIN K. DUVAL, THE ASSISTANT SECRETARY
OF HEALTH AND SCIENTIFIC AFFAIRS, WAS DESIGNATED AS THE RESPONSIBLE
OFFICIAL. DR. DUVAL APPOINTED ME TO WORK WITH HIM ON THESE ACTIVITIES
AND TO FUNCTION AS A FULL-TIME COORDINATOR OF NURSING HOME ACTIVITIES.
2. ENLARGEMENT OF FEDERAL STAFF FOR ENFORCEMENT OF NURSING HOME
STANDARDS.
THE SOCIAL AND REHABILITATION SERVICE, WHICH ADMINISTERS THE MEDICAID
PROGRAM, HAS BEEN ASSIGNED 142 ADDITIONAL POSITIONS TO CARRY OUT
ITS INCREASED RESPONSIBILITIES. ONE HUNDRED TEN OF THESE POSITIONS
WERE ALLOCATED TO THE REGIONAL OFFICE OF HEW. THE SOCIAL SECURITY
ADMINISTRATION RECEIVED THIRTY-FOUR ADDITIONAL POSITIONS TO INCREASE
THEIR AUDITS OF NURSING HOME OPERATIONS, THE NATIONAL CENTER FOR
HEALTH SERVICES RESEARCH AND DEVELOPMENT RECEIVED SEVEN NEW POSI-
TIONS FOR EFFORTS TO IMPROVE NURSING HOME DATA SYSTEMS AND TO DEVELOP
DATA IN SPECIAL FIELDS RELEVANT TO NURSING HOME CARE.
3. FEDERAL SUPPORT OF 100% OF THE COST OF STATE MEDICAID INSPECTIONS.
WE RECOGNIZE THAT AN INCREASED LEVEL OF ENFORCEMENT ACTIVITY IN-
VOLVES ADDITIONAL COSTS TO THE STATES. MEDICARE INSPECTION COSTS
HAVE ALWAYS BEEN FULLY PAID FOR BY THE FEDERAL GOVERNMENT, BUT UNDER
THE MEDICAID PROGRAM STATES HAVE PAID 25 TO 50 PERCENT OF THESE
COSTS. SECRETARY RICHARDSON SUBMITTED TO CONGRESS IN OCTOBER, 1971,
GERALD R
5
AN AMENDMENT TO H.R. 1. AUTHORIZING THE FEDERAL GOVERNMENT TO
ASSUME 100 PERCENT OF INSPECTION COSTS UNDER MEDICAID; THIS STEP
WILL PLACE BOTH PROGRAMS ON AN EQUAL FOOTING AND LESSEN THE FINAN-
CIAL BURDEN TO THE STATES.
4. TRAINING STATE NURSING HOME INSPECTORS,
NURSING HOME SURVEYORS HAVE BEEN TRAINED IN SURVEY AND COUNSELLING
TECHNIQUES UNDER A PROGRAM SPONSORED BY THE HEALTH SERVICES AND
MENTAL HEALTH ADMINISTRATION SINCE MARCH, 1970. THESE FOUR-WEEK
COURSES HAVE BEEN PRESENTED IN UNIVERSITY CENTERS IN NEW HAMPSHIRE,
LOUISIANA, AND CALIFORNIA, IN HIS AUGUST SPEECH, THE PRESIDENT
PLEDGED AN EXPANSION OF THIS PROGRAM so THAT 2,000 SURVEYORS WOULD
BE TRAINED IN THE ENSUING EIGHTEEN MONTH PERIOD. As A RESULT OF
THE PRESIDENT'S ORDER THE PROGRAM HAS BEEN ACCELERATED so THAT
MORE THAN 700 SURVEYORS WILL HAVE BEEN TRAINED BY JULY 1.
CONTRACT NEGOTIATIONS ARE IN PROCESS TO ESTABLISH THREE ADDITIONAL
UNIVERSITY CENTERS, IN ADDITION, A STUDY WAS PERFORMED BY MACRO,
SYSTEMS, INC., TO EVALUATE THE EFFECTIVENESS OF THE TRAINING COURSES,
AND THESE HAVE NOW BEEN MODIFIED TO REFLECT THE RESULTS OF THAT
STUDY,
THESE EFFORTS TO ACHIEVE COMPLIANCE WITH FEDERAL STANDARDS
AND REGULATIONS ARE NOT DESIGNED TO ELIMINATE FACILITIES AND THUS
TO DEPRIVE PATIENTS OF NEEDED NURSING HOME CARE. WE ARE WORKING
RATHER TO COORDINATE FEDERAL AND STATE PROGRAMS AND STATE AGENCIES
TO SHARE THEIR RESOURCES AND EXPERTISE so THAT SUBSTANDARD FACIL-
ITIES CAN BE UPGRADED, THE FEDERAL PROGRAM TO TRAIN NURSING HOME
SURVEYORS, FOR EXAMPLE, EMPHASIZES THE DEVELOPMENT OF SKILLS TO
AID NURSING HOME ADMINISTRATORS IN MAKING NEEDED IMPROVEMENTS.
FEDERAL FINANCIAL ASSISTANCE IS AVAILABLE FOR NURSING HOME
MODERNIZATION AND NEW CONSTRUCTION FROM THE FEDERAL HOUSING
6
ADMINISTRATION AND SUCH PROGRAMS AS HILL BURTON. THE STANDARDS
THEMSELVES ARE BEING REVISED AND STRENGTHENED. WE ARE DEVELOPING
PROGRAMS TO IMPROVE NURSING HOMES DIRECTLY-I SHALL DESCRIBE THEM
IN A FEW MOMENTS,
BUT AS THE PRESIDENT WARNED LAST AUGUST," LET THERE BE
NO MISTAKING THE FACT THAT WHEN FACILITIES FAIL TO MEET REASONABLE
STANDARDS, WE WILL NOT HESITATE TO CUT OFF THEIR MEDICARE AND
MEDICAID FUNDS." BETWEEN AUGUST 6, 1971, AND FEBRUARY 11, 1972,
13 EXTENDED CARE FACILITIES WERE DECERTIFIED FOR MEDICARE PARTICI-
PATION. ON NOVEMBER 30, 1971, THIRTY-NINE STATES WERE DECLARED
OUT OF COMPLIANCE WITH TITLE 19-MEDICAID--CERTIFICATION PROCEDURES,
By FEBRUARY 1, 1972, IN RESPONSE TO SECRETARY RICHARDSON'S DEADLINE,
ALL BUT ONE OF THOSE STATES HAD MADE THE IMPROVEMENTS REQUIRED FOR
COMPLIANCE. By JULY 1, 1972, ALL TITLE 19 FACILITIES IN ALL STATES
ARE TO HAVE BEEN INSPECTED AND CERTIFIED THROUGH THE CORRECT PRO-
CEDURES, THE FEDERAL GOVERNMENT IS PLEDGED TO MEET ITS RESPONSI-
BILITY TO ASSURE THAT FEDERAL DOLLARS DO NOT FINANCE SUBSTANDARD
CARE,
IN ADDITION TO IMPROVED ENFORCEMENT OF NURSING HOME STANDARDS,
TWO OTHER POINTS IN THE PRESIDENT'S PLAN INITIATED MORE DIRECT STEPS
TO IMPROVE NURSING HOME CARE, THE PRESIDENT DIRECTED THE DEPARTMENT
OF HEW "To INSTITUTE A NEW PROGRAM OF SHORT-TERM COURSES FOR
PHYSICIANS, NURSES, DIETICIANS, SOCIAL WORKERS AND OTHERS WHO ARE
REGULARLY INVOLVED IN FURNISHING SERVICES TO NURSING HOME PATIENTS.
HEW HAS SUPPORTED SUCH TRAINING FOR SEVERAL YEARS, AND HAS DEVELOPED
CLOSE WORKING RELATIONSHIPS WITH PROFESSIONAL ASSOCIATIONS AND
WITH TRAINING CENTERS. IN RESPONSE TO THE PRESIDENTS' DIRECTIVE,
SUCH PROGRAMS HAVE BEEN EXPANDED UNDER THE LEADERSHIP OF THE
COMMUNITY HEALTH SERVICE, HEALTH SERVICE AND MENTAL HEALTH ADMINI-
STRATION, AND IT IS ANTICIPATED THAT APPROXIMATELY 20,000 PERSONS
7
WILL BE TRAINED IN FISCAL YEAR 1972 AT A COST OF $2.5 MILLION,
TRAINING PROGRAMS WILL FOCUS INITIALLY ON FOUR MANPOWER AREAS
SELECTED BECAUSE OF THEIR DIRECT DAY-TO-DAY RELATIONS WITH NURSING
HOME PATIENTS: NURSING HOME ADMINISTRATORS, PHYSICIANS, NURSES,
AND PATIENT ACTIVITIES DIRECTORS, MANY OF THESE TRAINING PROGRAMS
WILL BE OPERATED UNDER CONTRACTS WITH PROFESSIONAL GROUPS,
APPROACHES TO MENTAL HEALTH PROBLEMS OF NURSING HOME PATIENTS WILL
BE DEVELOPED BY NATIONAL INSTITUTE OF MENTAL HEALTH STAFF WORKING
WITH THE GERONTOLOGICAL SOCIETY. OTHER TRAINING MECHANISMS WILL
ALSO BE EXPLORED, SUCH AS PROGRAMS SPONSORED BY STATE HEALTH
DEPARTMENTS AND STATE AGENCIES, THESE PROGRAMS WILL BE DIRECTED
TOWARD MAKING NURSING HOME STAFF-BOTH PROFESSIONAL AND ALLIED HEALTH-
MORE SENSITIVE AND EXPERT IN THE SPECIAL PROBLEMS OF CARE FOR
GERIATRIC PATIENTS AND THE CHRONICALLY ILL. THEY ARE INTENDED TO
BE THE BEGINNING OF A SYSTEM FOR NATIONWIDE, CONTINUOUS TRAINING
FOR NURSING HOME PERSONNEL WHICH WILL BECOME STANDARD PRACTICE IN
THE NURSING HOME INDUSTRY OF THE FUTURE,
As THE SEVENTH POINT IN HIS PLAN, THE PRESIDENT DIRECTED THE
DEPARTMENT OF HEW "TO ASSIST THE STATES IN ESTABLISHING INVESTI-
GATIVE UNITS WHICH WILL RESPOND IN A RESPONSIBLE AND CONSTRUCTIVE
WAY TO COMPLAINTS MADE BY OR ON BEHALF OF INDIVIDUAL PATIENTS.
SINCE I ASSUMED MY NURSING HOME RESPONSIBILITIES, I HAVE RECEIVED
MANY LETTERS FROM NURSING HOME PATIENTS-TOUCHING IN THEIR APPEAL
FOR CARE OFFERING SIMPLE DIGNITY AND RIGHTS OF PRIVACY, HARROWING
SOMETIMES IN THEIR DESCRIPTIONS OF PHYSICAL OR PSYCHOLOGICAL ABUSE,
THESE PATIENTS ARE OFTEN HELPLESS IN THEIR DEPENDENCE ON THE IN-
STITUTION IN WHICH THEY LIVE. THEY DESERVE A FAIR HEARING, AND AN
ADVOCATE WHEN THEY ARE POWERLESS, THE HEALTH SERVICES AND MENTAL
HEALTH ADMINISTRATION HAS DEVELOPED FIVE MODELS FOR OMBUDSMAN
8
UNITS TO FILL THIS ROLE, PLACED AT VARIOUS LEVELS WITHIN THE
STATES AND DEMONSTRATING DIFFERENT MECHANISMS FOR ACTION,
CONTRACT PROPOSALS TO TEST THESE MODELS ARE BEING SOLICITED,
AND $600,000 HAS BEEN BUDGETED FOR FISCAY YEAR 1972 FOR THIS
ACTIVITY.
IT WILL TAKE TIME TO TEST AND DEVELOP SUCH AN OMBUDSMAN
SYSTEM, TIME INAPPROPRIATE TO THE URGENCY OF THE PROBLEM, So
AN INTERIM OMBUDSMAN MECHANISM HAS BEEN ESTABLISHED WITH THE
855 SOCIAL SECURITY ADMINISTRATION DISTRICT OFFICES DESIGNATED
TO RECEIVE AND INVESTIGATE COMPLAINTS. THIS MECHANISM IS CURRENTLY
IN EFFECT, AND HAS RECEIVED OVER A THOUSAND RESPONSES,
FOR THESE NURSING HOME INITIATIVES, A SUPPLEMENTAL APPRO-
PRIATION OF $9,572,000 HAS BEEN REQUESTED FOR FISCAL YEAR, 1972.
WE FEEL THAT BY MEANS OF THESE PROGRAMS A SIGNIFICANT IMPROVEMENT
IN NURSING HOME CARE CAN BE ACHIEVED IN A RELATIVELY SHORT PERIOD
OF TIME.
I WOULD LIKE TO EXAMINE NURSING HOMES NOW IN A DIFFERENT
PERSPECTIVE. I HAVE MENTIONED THAT MEDICARE FINANCES NURSING
HOME CARE AS AN EXTENSION OF HOSPITAL CARE - THE PRIOR HOSPITALI-
ZATION REQUIREMENT AND THE TIME LIMITATIONS PER SPELL OF ILLNESS
ARE MANIFESTATIONS OF THIS PRINCIPLE. MEDICAID REQUIREMENTS FOR
SKILLED NURSING HOMES, WHILE THEY ARE NOT BASED ON THE SAME CONCEPT
OF EXTENDED CARE TEND TO EMPHASIZE AND PROVIDE COVERAGE FOR MEDICAL
SERVICES AS OPPOSED TO SOCIAL AND PERSONAL CARE.
9
THE ELDERLY OF COURSE SUFFER FROM ACUTE DISEASE, BUT THEY
ARE MUCH MORE SUBJECT THAN YOUNGER PEOPLE TO THE DEPENDENCY OF
CHRONIC ILLNESS, THE TERM "SPELL OF ILLNESS" MAKES LITTLE SENSE
WHEN APPLIED TO A DISEASE PROCESS WHICH WILL NEVER BE CURED.
MOREOVER, ALTHOUGH THE CHRONICALLY - ILL PATIENT MAY BENEFIT FROM
INTENSIVE MEDICAL SERVICES, HE IS MORE LIKELY TO REQIRE LESS IN-
TENSIVE BUT CONTINUOUS MEDICAL CARE IN COMBINATION WITH SOCIAL AND
PERSONAL SERVICES TO HELP HIM LIVE WITH HIS CHRONIC DISABILITY,
So THE HEALTH FACILITY WHICH CAN BEST SERVE HIM MAY BE VERY DIFFERENT
FROM THE EXTENDED CARE FACILITY WHICH IS IDEALLY SUITED TO A PATIENT
RECUPERATING FROM A MYOCARDIAL INFARCTION OR A BROKEN HIP, OR HE
MIGHT NOT REQUIRE INSTITUTIONAL CARE AT ALL - HE MIGHT BE PERFECTLY
ABLE TO LIVE IN HIS OWN HOME WITH THE AID OF HOMEMAKING AND HOME
HEALTH SERVICES.
THESE PATIENTS WITH CHRONIC ILLNESSES - WHICH INCLUDE A DIS-
PROPORTIONATE SHARE OF THE ELDERLY - AND THOSE SUFFERING THE IN-
CREASED DEPENDENCY OF OLD AGE ITSELF-DEMONSTRATE THE WEAKNESSES OF
LONG TERM CARE AS SUPPORTED BY THE FEDERAL GOVERNMENT.
FIRST, MEDICARE AND MEDICAID TEND TO BE MORE CONCERNED IN
TERM OF STANDARDS AND COVERAGE WITH THE MEDICAL COMPONENT OF NURSING
HOME CARE. THIS HAS BEEN TRUE FOR BOTH STATUTORY AND HISTORICAL
REASONS BASED ON THEIR ORIGIN AS HEALTH INSURANCE PROGRAMS, I DO
NOT THINK IT IS HELPFUL TO SEPARATE THE PHYSICAL, EMOTIONAL, SOCIAL,
AND ENVIRONMENTAL COMPONENTS OF CARE, PARTICULARLY FOR THE ELDERLY,
THESE ARE IMPERMANENT SEPARATIONS OF INTEREST, EMPHASIS, ORGANIZATION
AND PREFERENCE; THEY REST MORE UPON TRADITION AND ARBITARY BOUNDARIES
THEN THE APPLICATION OF KNOWLEDGE TO LONG TERM CARE,
LIGRARY
10
SECOND THE PRESENT HEALTH FINANCING SYSTEM OFFERS MORE
COMPLETE COVERAGE FOR PATIENTS INSIDE INSTITUTIONS THAN FOR
THOSE WHO REMAIN OUTSIDE, So OUR FINANCING STRUCTURE TENDS
TO PUSH THE ELDERLY INTO NURSING HOMES, SOMETIMES PREMATURELY.
SOCIETY PAYS A PRICE FOR THIS. INSTITUTIONAL CARE IS MORE
COSTLY THEN HOME HEALTH CARE, MORE IMPORTANT, THERE IS IN-
CREASING EVIDENCE THAT THE DISPLACEMENT, LOSS OF STATUS,
AND ISOLATION CAUSED BY INSTITUTIONALIZATION MAY EXACERBATE
IF NOT PRECIPITATE ACTUAL PHYSIOLOGIC DISEASE, THE TRANSFER
OF A PERSON FROM HIS HOME TO AN INSTITUTION MAY MAKE HIM
MORE ILL AND MORE DEPENDENT,
IF A NURSING HOME IS NOT THE MOST APPROPRIATE PLACE FOR
A PERSON'S PARTICULAR NEEDS, THEN HE SHOULD NOT BE REQUIRED
TO GO THERE. IF IT IS PERSONAL CARE RATHER THEN HEALTH
CARE THAT IS REQUIRED, THEN THAT SHOULD BE AVAILABLE. IF IT
IS APPROPRIATE HOUSING RATHER THEN INSTITUTIONAL CARE THAT
IS NEEDED, THEN THE EMPHASIS SHOULD BE ON HOUSING. THE ELDERLY
SHOULD HAVE MORE OPTIONS AVAILABLE.
THESE SEEM TO ME BASIC AND VALID CRITICISMS OF OUR PRESENT
SYSTEM - THE SEPARATION BETWEEN MEDICAL AND PERSONAL CARE AND THE
FAILURE TO PROVIDE ADEQUATE ALTERNATIVES TO INSTITUTIONAL CARE,
AND IN THESE AREAS, FEDERAL PROGRAMS HAVE HAD AN UNFORTUNATE IF
UNINTENDED IMPACT. THESE ISSUES CANNOT BE POSTPONED, ON
DECEMBER 28, 1971, PRESIDENT NIXON SIGNED INTO LAW PUBLIC LAW
92-223, WHICH AUTHORIZES THE TRANSFER OF INTERMEDIATE CARE FACIL-
ITIES INTO THE MEDICAID PROGRAM. AN INTERMEDICATE CARE FACILITY
PROVIDES HEALTH RELATED SERVICES FOR PATIENTS WHO DO NOT REQUIRE
CARE IN SKILLED NURSING HOMES, BUT NEED INSTITUTIONAL CARE BEYOND
11
ROOM AND BOARD. As YOU KNOW, ICF's WERE PREVIOUSLY FINANCED
BY PUBLIC ASSISTANCE PROGRAMS FOR THE AGED, THE BLIND, AND THE
DISABLED, AND WERE SUBJECT ONLY TO STATE LICENSING, TRANSFER
OF FINANCING TO THE MEDICAID PROGRAM MEANS NOT ONLY THAT A LARGER
GROUP OF PEOPLE - INCLUDING THE "MEDICALLY NEEDY" - MAY POTENTIALLY
BE ELIGIBLE FOR BENEFITS, BUT ALSO THAT THE FEDERAL GOVERNMENT IS
EMPOWERED TO SET PHYSICAL AND SAFETY STANDARDS AND DEFINE THE
CARE AND SERVICES THAT MUST BE PROVIDED. THE MEDICAL SERVICES
ADMINISTRATION OF THE SOCIAL AND REHABILITATION SERVICES AND
MY OFFICE OF NURSING HOME AFFAIRS ARE CURRENTLY EXAMINING SUCH
ISSUES AS WHO SHOULD BE IN THESE FACILITIES, WHAT SERVICES MUST
THEY PROVIDE, AND WHAT SHOULD BE THE LEVEL OF BENEFITS IN ATTEMPT-
ING TO DEVELOP STANDARDS FOR INTERMEDIATE CARE FACILITIES. So
THESE FACILITIES ARE FORCING A RE-EXAMINATION OF COVERAGE ISSUES,
AND THE BALANCES OF MEDICAL AND PERSONAL SERVICES WITHIN IN-
STITUTIONS. THE "PROBLEMS TO COME" ARE HERE ALREADY.
I WOULD LIKE TO MENTION ONE MORE PROBLEM THAT HAS DEMANDED
ATTENTION, AND THAT IS THE PLANNING PROCESS ITSELF. AN IMPORTANT
REASON FOR THE INSUFFICIENT AND SOMETIMES INAPPROPRIATE IMPACT OF
FEDERAL PROGRAMS FOR LONG TERM CARE HAS BEEN THE LACK OF PLANNING
AND COORDINATION BETWEEN FEDERAL, STATE, AND LOCAL PROGRAMS.
PLANNING FOR LONG TERM CARE SHOULD MOVE FROM IDENTIFICATION OF AN
ISSUE OR PROBLEM TO ITS SOLUTION, WITH IDENTIFIABLE GOALS GUIDING
THE PROCESS, MOVEMENT TOWARD A GOAL SHOULD NOT BE INTERRUPTED BY
CHANGES IN ADMINISTRATION. WHAT IS TRULY IMPORTANT TODAY SHOULD
NOT BE CAST ASIDE TOMORROW. NEW PROGRAMS SHOULD NOT BE APPENDAGES
TO SATISFY THE INTERESTS OF A FEW, NOR SHOULD THEY BE ADDED AS
PACIFIERS TO THE MANY, PROGRAMS DEVELOPED THROUGH A RATIONAL PLANNING
PROCESS SHOULD THEN BE ADMINISTERED THROUGH AN EFFECTIVE AND COORDI-
NATED MECHANISMS.
12
THE ESTABLISHMENT OF THE OFFICE OF NURSING HOME AFFAIRS
WITHIN HEW WAS A STEP TOWARD IMPROVING COORDINATION. THE EIGHTH
POINT OF THE PRESIDENT'S PLAN IS A MANDATE FOR A TASK FORCE ON
LONG TERM CARE. THIS TASK FORCE WILL RE-EXAMINE ISSUES AND SET
NEW GOALS, DEVELOP A NATIONWIDE DATA SYSTEM NECESSARY FOR POLICY
FORMULATION, AND RECOMMEND AN ORGANIZATION FOR LONG TERM CARE WITHIN
HEW AND FEDERAL STATE AND LOCAL PROGRAMS WHICH CAN ACHIEVE ITS
GOALS MOST EFFECTIVELY.
A NATIONAL POLICY COURSE FOR THE CHRONICALLY ILL AND FOR
THE ELDERLY SHOULD BE SET, IT SHOULD BE SET BY GOVERNMENT, WITH
THE FULL AND CREATIVE CONTRIBUTION OF THOSE IN OTHER AGENCIES
AND ORGANIZATIONS, THOSE IN ACADEMIC TEACHING AND RESEARCH, THOSE
IN VOLUNTARY AND UNSALARIED SERVICE, AND THOSE WHO RECEIVE THAT CARE.
WE CAN DO MUCH BETTER FOR OUR ELDERLY, WE MUST OF COURSE
PROTECT THEM FROM INSTITUTIONAL ABUSE, RECOGNIZING THAT SOME
ARE WEAK AND DEPENDENT. BUT WE CAN ALSO MAKE POSSIBLE A WIDE
VARIETY OF SUPPORTING SERVICES AND LIVING ARRANGEMENTS, so THAT
THE INFIRMITIES OF ADVANCING AGE DO NOT BECOME A PRISON OF THE
SPIRIT. THE ELDERLY WITH OUR HELP CAN HAVE ACCESS TO THE VARIETY
AND FREEDOM WE ASK FOR OURSELVES.
LIBRARY
BERALD