Oklahoma City, OK - January 12, 2006
TOWN HALL MEETING ON
ECONOMIC IMPACT OF
HEALTHCARE REGULATIONS
+ + + + +
Plaza South
Sheraton Hotel
One North Broadway
Oklahoma City, Oklahoma
(click here for a pdf version of this transcript)
The above-entitled matter came on for public
hearing, pursuant to notice, at 10:00 a.m.
MODERATOR:
Carol Simon, Ph.D.
PANEL MEMBERS:
Experts:
Christopher Conover, Ph.D.
Ted Frech, Ph.D.
Robert Helms, Ph.D.
Tim Size
William Vogt, Ph.D.
William D. Rogers, M.D.
Health Care Community Leaders:
William Pierce
Paul David Moore, D.Ph.
Gary W. Mitchell, D.Ph.
Allan Harder
Bohn D. Allen, M.D.
P R O C E E D I N G S
DR. SIMON: May I be ‑‑ take the pleasure of being the first to welcome you all to the third town hall meeting on the economic impact of healthcare regulation. My name is Carol Simon. I'm with Abt Associates. And it is my pleasure to be your moderator today for this important meeting.
We have a lot of ground to cover, and we have a lot of folks who are here to tell us their stories and to give us their testimony. Let me give you a brief introduction to essentially what the purpose of today's meeting is and a little bit about the logistics.
My main job here is ‑‑ today is to essentially be the traffic cop and to get us in and out efficiently so we can enjoy the beautiful day that's outside.
We have today with us a series of experts from the provider and the stakeholder community who we are going to be introducing shortly who will be providing some testimony on the impact of healthcare regulation for their perspective.
We also have the majority of the day dedicated to be taking public testimony from the floor from providers, from patients, from stakeholders who are going to help us inform our process.
This study is mandated by Congress. It is part of a large project that is evaluating the economic costs, the burdens of healthcare regulation, and attempting to find ways to maintain the quality of healthcare, to maintain the safety of healthcare, and to use our resources a little bit more effectively. That's our goal here today.
We have also with us a panel of experts who've done considerable research in the area who are going to be assisting us in helping to frame many of the comments that we hear today in a way that will help us generalize, help us write a more effective report to Congress.
They are not the stars of the show. Essentially, the folks who are out in the panel are ‑‑ and the folks who are in the audience are the important participants today.
So with no further ado, what I would like to do is introduce a couple of folks who can help explain a little bit more about the context, about why we're here in Oklahoma City, and what we hope to achieve today.
The first person I'd like to call up is Ruth Katz from the Department of Health and Human Services.
Ruth.
MS. KATZ: A big step here.
MS. SIMON: It's a very big ‑‑ well, it's a big step to do this.
MS. KATZ: What a really great thing to see all of you here. This is such a great turnout. One of the problems we have generally working for the federal government is that we work in two dimensions, eight and a half by eleven, and three dimensions, real people, is a wonderful thing to see.
And I don't want to take a lot of time doing this, because I want to hear from real people about real issues. Thank you for taking part in this town hall meeting. The purpose, as Carol said, is to seek your help to quantify the economic impact of federal regulations in the healthcare industry.
This ‑‑ in ‑‑ at its core, maybe, is about bureaucracy, so I'm going to share with you my title, so you can see that I really understand bureaucracy. I am the deputy to the deputy assistant secretary for disability, aging, and long-term care policy in the Office of the Assistant Secretary for Planning and Evaluation.
DR. SIMON: There is no quiz at the end ‑‑
MS. KATZ: Okay. Yes. I took my time that ‑‑ I can do that with one breath, but it's a little intimidating.
When we started work on this project, we realized that many things have changed over the last decade in healthcare. But one of the things that doesn't change is regulation ‑‑ it's kind of a given ‑‑ and people's comments, complaints, criticisms about why and how the government regulates and whether regulation actually distorts practice and to what degree it's needed for quality.
We previously did a little work ‑‑ we started in 2003 ‑‑ with something called SACRR, the Secretary's Advisory Committee on Regulatory Reform. And they finished their work a couple years ago. They put forward 255 recommendations about regulatory reform that could still preserve quality but minimize regulation's burden.
I'm really happy to say that 84 percent of those 255 recommendations from the end of the SACRR ‑‑ from the SACRR report have been implemented with no decrease in quality.
The majority of those recommendations addressed issues that are regulated by the Centers for Medicare & Medicaid Services, or CMS. And as a result of those changes, CMS's outreach and information-sharing processes have really streamlined a bit and probably have improved significantly. We are glad that Dr. William Rogers is here with us today from CMS to serve as one of our panelists.
So with these accomplishments completed, we thought, where could we move on? Well, one of the biggest challenges was figuring out the economic burden of regulations, and that is really what we're here to talk about today. And I know Carol will stay focused on that too as our taskmaster.
After we accepted the assignment to examine the economic impact of regulations, we started to plan how to approach the subject, and we made a few decisions. The first was that we thought, well, this could be a fairly academic exercise.
We ‑‑ as you can tell from my title, have we got analysts. Analysts are us. We could stay in the office, and we could do it all on paper, look to the literature ‑‑ fairly academic, and really get some great data.
But we thought that the real literature is what's in your heads, that we really needed to examine the reports of the people who live these regulations every minute of every day, basically, you all from the healthcare industry. So we asked for comments from the industry first thing.
But then it ‑‑ we thought, well, that might not be quite enough, might not be sufficient. So our second was to ask you to tell us in person just exactly what you're thinking in terms of regulations, quality of regulations, regulatory compliance.
And these two decisions led us to a federal register notice seeking comment and quantification on the issue and to these town hall meetings like the one we're having here today in Oklahoma City. We have also been having numerous conversations with the Washington health care community.
And our third decision was to make what we've called some house calls. We plan to do a series of case studies in the field at a variety of different healthcare settings, hospitals, nursing homes, et cetera, to help us with the analytical work. And Abt, our contractor, will be helping us with that.
So with that said, I'm really chomping at the bit. It's just so great to see all of you here. What I really want to do is hear from you all, and I would love for us to get started. So again, welcome, and thank you all for giving us your valuable time.
DR. SIMON: Thank you very much, Ruth.
I'd like to ask Mr. Don Perkins, who's the Executive Officer of the HHS Regional Office in Dallas, to come forward and offer his welcoming remarks.
Don.
MR. PERKINS: Thank you, Carol.
I'd like to take this opportunity to welcome everyone to Oklahoma City and to Region 6 of the Department of Health and Human Services. I want to especially thank our hosts from the Assistant Secretary for Planning and Evaluations Office and the Office of Management and Budget for coming to Oklahoma City, for choosing this region for one of these meetings.
What a wise and wonderful decision that was. And I can almost assure you that you'll hear some very candid and forthright comments from everyone here today.
I also want to welcome the ‑‑ our panel of distinguished representatives who will be hearing the testimony today, as well as our panel of experts from the healthcare committee who will be providing testimony.
Thanks to each of you who are here today to participate in this meeting, those of you who will be providing comments, as well as those of you who are here just to hear the comments.
I also want to introduce briefly Dr. Randy Farris who's here from our Centers for Medicare & Medicaid services in the Regional Office. Dr. Farris and his staff have been incredibly busy these ‑‑ actually, these past several months and certainly these past few weeks trying to bring up the Medicare Part D program.
And we're really pleased that he was able to take a little bit of time away from that effort today to come and participate in this meeting.
As we in the Regional Office perform our duties of program oversight, we often hear comments about the economic burden of some of these healthcare regulations and federal laws that we are trying to implement. We're charged with the enforcement of these rules to assure that healthcare provided to our beneficiaries is of highest possible quality and that patient safety is assured.
But we also must be sensitive to the costs that are borne by providers as they try to comply with these rules. And we also remember that these costs are ultimately borne, in some portion, by all of us. It's a very delicate and complex balance that we seek to achieve from all of our various perspectives.
And it's an important balance, for if we shift too far in one direction or the other, the consequences obviously can be very significant. I think that the testimony that we will hear today, as well as at the other meetings and the comments that will be provided electronically, are very important and will certainly help us to find that balance.
So I want to thank each of you for your hard work in providing healthcare to our citizens and also for your interest in this particular effort. And I look forward to sharing with everyone else and hearing these comments today. Thank you.
DR. SIMON: Don, thank you very much.
So let's get started. Let me sort of give you an idea of what our game plan is for today. In your packet, you have a lot of very interesting material. And the most important one to go look at right now is our agenda, so we can get a sense of expectations about what we're going to hear and how we're going to hear it.
We're going to start this morning with our healthcare community leaders panel discussion. And we are very pleased to have here with us a group of individuals who represent varied and considerable interest in the healthcare community who will be providing us with their perspective on healthcare regulations.
And I'm going to introduce them briefly, and we're going to turn to them very quickly.
We have Bohn Allen, who is a general surgeon from Arlington, Texas, and the immediate past president of the Texas Medical Society.
We have Mr. Allan Harder, who's the executive director of the Oklahoma City Area Intertribal Health Board. Mr. Harder.
We have Mr. Gary Mitchell, who is the executive ‑‑ chief executive officer from Newman Memorial Hospital in Chaddick, Oklahoma. Mr. Mitchell, thank you very much.
We have Mr. Paul Moore, who is a pharmacy and rural healthcare consultant in the area.
And finally, last and not least, Mr. William Pierce, who is the president of Baptist Village Retirement Communities of Oklahoma.
And we're going to be hearing from them shortly. The panel discussion and presentation is going to be taking place until approximately 11:15, at which time we're going to be opening up the floor to public comments.
If you intend to present public comments, when you registered, you will have seen a sign-up sheet in the back. And this is a very important vehicle, not only for me, but for me. We have a lot of people here, and no voice is more important than the others.
And so we want to make sure that we have ample opportunity to give everybody a chance to voice their opinion. So we're going to have a few ground rules. I'm going to be calling people as ‑‑ in order of which they have signed up.
And when I call you, I'm going to ask you to come to one of the microphones that are placed out in the audience area, repeat your name, because I may have butchered it inadvertently, and tell us who you are from and who are you representing.
They're going to give by ‑‑ begin by giving you three minutes to present your testimony. And at the end of two minutes, I'll start waving. At the end of three minutes, I'll start making more appropriate gestures, and we're going to try to cut that off.
We're then going to open this up to comments from our panel, who are here today to help us ask you some additional questions that will help us put your remarks into context of other remarks we've heard from other town hall meetings so that we can in many ways take your voice and make it broader in the context of our opinions.
We're going to allow them approximately three to five minutes to do this back-and-forth question-and-answer period, and then I'm going to move to the next person.
And so I appreciate your understanding in the fact that we all have much more to say than three minutes, and even if you talk as fast as I do, it's going to be a little bit of a constraint.
For those of you who are presenting commentary, as well as for those of you who may not have come prepared to talk today, there is a second and very important vehicle for entering comment and opinion in evidence ‑‑ and I do stress evidence, because this is a very evidence-driven study ‑‑ into the public record.
And in your packet ‑‑ and we'll talk a little bit more about it later ‑‑ are a couple of sheets that show you how you can send us information, even if you don't get up to the microphone today ‑‑ or to embellish on those few words that you were able to speak at this point in time.
We have a website for collecting public commentary. And so if you or your colleagues or your friends or your associates want to present us testimony, we encourage it, and matter of fact, we welcome it. We need it.
And so there are ways that are identified in there for sending public testimony to us, apart from the few moments that you're going to have here publicly.
Okay. So with no further ado, I want to also introduce our expert panel. And I will let them speak for themselves, because they do it quite well.
I'm going to start with Dr. Chris Conover.
DR. CONOVER: I'm Chris Conover. I'm an assistant research professor at the Terry Sanford Institute of Public Policy at Duke University. For ‑‑ is it on?
DR. SIMON: There's a switch on the side.
DR. CONOVER: Hello.
DR. SIMON: Good. Thank you.
DR. CONOVER: For those of you who know Duke University, our institute is the one that provides parking spaces for all of Coach Kay and his staff.
I have actually done this work of going through the literature that Ruth Katz was talking about and trying to come up with some estimates of the cost of health-services regulation. And there's a little monograph in your packets that show our preliminary estimates are that regulation costs $169 billion a year.
So that's all I'm going to say. I'm going to be very interested to hear from you today.
DR. SIMON: Great. Thank you.
Our next panelist is Dr. Ted Frech.
DR. FRECH: Hi. I'm an economics professor at UC-Santa Barbara, and my research and also consulting over the years has been heavily in health economics and particularly in regulatory issues.
DR. SIMON: Thank you, Ted.
DR. HELMS: Okay. I'm ‑‑
DR. SIMON: Robert Helms.
DR. HELMS: ‑‑ Bob Helms. I ‑‑ resident scholar at the American Enterprise Institute, which is one of the Washington-based think tanks. And I've been doing health policy in Washington for about 30 years. I also studied the economics of regulation and so on in graduate school with Ted and some other people.
But we published things about CON regulation and so on at AEI. And then I went over in the Reagan years to ASPE, served as the ASPE when Doc Bowen was there, and we passed the original catastrophic bill. So you might say I've had a career associated with a lot of lost causes.
I have a ‑‑ one other interest in this now. I'm now serving on a ‑‑ in a Medicaid commission, which has a little job of ‑‑ we are charged with trying to come up this year ‑‑ about how to reform Medicaid. So if there are regulatory issues that we can ‑‑ recommendations and so on ‑‑ I'm particularly interested in looking for those possibilities. Thank you.
DR. SIMON: Thank you.
Dr. William Rogers.
DR. ROGERS: I'm Bill Rogers. I spent my first 20 years of my career managing emergency departments and working full time clinically and was hired by CMS four years ago to really serve as an ombudsman and an advocate for providers.
And to that end, I do a lot of traveling, speaking to speciality societies and meeting with them also in Washington, D.C. ‑‑ I think I did 42 national speeches last year ‑‑ and basically make myself and my team available 24 hours a day, seven days a week to providers to try and make their interaction with the Medicare program a little less unpleasant.
DR. SIMON: Thank you. That's a big job.
Mr. Tim Size.
MR. SIZE: Good morning. I'm one of the representatives with those people for whom you're trying to make life pleasant, so I appreciate it. I'm the executive director of the Rural Wisconsin Health Co-op. It's owned and operated by 29 rural hospitals. We work in the area of shared service, education, advocacy, policy development.
Today I'm particularly interested in learning more about the effect of regulation on rural providers, who typically are lower-volume providers. And some of the regulations that make sense for one size don't always make sense for all sizes.
Also ‑‑ similarly interested on the impact of regulation on people's ability to access healthcare in rural communities.
DR. SIMON: Great. Thank you.
And finally. Dr. William Vogt.
DR. VOGT: I'm Bill Vogt. I'm an associate professor of economics and public policy at the Heinz School of Public Policy at Carnegie Mellon. I study the healthcare industries, and specifically I'm interested in competition among healthcare providers.
DR. SIMON: Thank you very much, Bill.
So let's, without delay, turn to the meat of the program. What I'd like to do is begin introducing Dr. Bohn Allen from the Texas Medical Society. We're going to ask Dr. Allen to give us comments for approximately five minutes.
We're then going to move through the panel and go ‑‑ and ask Dr. Harder to go next, moving along. At the end of each of the panel presentations, what we would like to do is open the panel ‑‑ give us some time to open up the panel to ask each other questions, because we suspect that they will be presenting perhaps complementary and potentially, you know, different perspectives on many of the problems that face us.
We're going to give the panel another five to ten minutes to talk amongst themselves and amongst us. And then we're going to open it up to general questions from the panel sitting here at the front.
Does that sound fine with you gentlemen? Sounds good.
Dr. Allen.
DR. ALLEN: Yes. I'm Dr. Bohn Allen from Arlington, Texas, immediate past president of the Texas Medical Association. And on behalf of the 40,000 physicians in Texas that are members of the TMA, we want to thank CMS for this opportunity to participate in the town hall meeting.
I basically want to hit three general topics that have a huge economic impact on physicians through the government regulatory process. The first is the calculation of physician reimbursement based on the sustainable growth rate or the SGR.
The second is the fact that we're now beginning our fourteenth year of budget neutrality in the Medicare system ‑‑ and finish with the continued moratorium on physician ownership and facility construction.
As ‑‑ with regard to the SGR, which is a formula to calculate physician reimbursement in the Medicare system, under the current SGR formula, starting in 2006, this year, physician reimbursement over the next five years will be reduced 26 percent. At the same time, the medical economic index of inflation will increase 15 percent, giving a spread which is unsustainable for physicians.
The SGR went into effect basically in 2001 in which there was an increase in physician reimbursement. But since then, schedule reductions were to occur, but Congress has put a band-aid on it with only minimal increases in physician reimbursement.
The problem is that this is an overlay to the entire reimbursement system. And the panel will know and understand that physicians, since 1985, have been under wage and price controls through a series of omnibus budget reconciliation acts.
Starting in 1985, physician reimbursement has been frozen. But not only that, in 1988 and 1990, physician reimbursement was reduced as overpriced services. Also in 1988, Congress passed the act which forbid physicians from balance billing, even for patients outside of the Medicare system or physicians that don't participate in the Medicare system.
In 1992, the RBRVS, resource-based relative value system of reimbursement, was established by Medicare, which was based on flawed data and again reduced physician reimbursement.
So over a period of time, physician reimbursement has not only increased or kept up with inflation, it has actually gone down. And the spread in reimbursement has now reached a point where, in Texas at least ‑‑ not all states, but in Texas ‑‑ Medicare reimbursement only pays about two-thirds of your cost, which is an unsustainable process.
So the other problem that we face then is in 1992, Congress passed the Balanced Budget Act of 1992, which put Medicare Part B reimbursement in a global reimbursement system, which means we're now in a zero-sum game, so that if there's increased reimbursement in one segment of B, there is a reduction in reimbursement in another segment.
So it pits all the providers ‑‑ competing for the same pot of dollars. This is an unsustainable system for physicians. There's not another profession in this country that can sustain wage and price controls and budget neutrality for 20 years. We're going on now our fourteenth year of budget neutrality.
So the SGR, which was established as the new payment mechanism, is based on a formula that physicians have no control over, such as the gross domestic product. We have no control over that. The increased technology and demand ‑‑ there are a number of factors that physicians have no control over but are ‑‑ still will be punished if the SGR formula is not changed or we don't get rid of it.
With regard to the continued budget neutrality, starting in 1997 with the continuation of the budget ‑‑ Balanced Budget Act, Medicare instituted volume performance standards to try and reduce the escalating cost of physician reimbursement.
And fortunately, specialists and proceduralists were able to reduce somewhat the number of procedures performed, but the primary-care physicians were trapped in a situation where they could not. So as a result, in '99, the SGR formula was ‑‑ instituted ‑‑ was designed, and like I said, basically went into effect in 2000 and 2001.
The last thing I will ‑‑ want to mention is the continued moratorium on physician ownership and construction of new facilities. Only in, I guess, America, the land of free enterprise, are physicians forbidden from investing in their own business.
It will trap our technology in twentieth-century technology unless we're able to expand the technology, to expand the choice of physicians ‑‑ of patients and to allow the economics of the free-enterprise system to work.
So those are the three areas that I bring as having a tremendous economic impact on physician providers.
DR. SIMON: Dr. Allen, thank you very much, and a superb job in being exactly timely.
Mr. Harder.
MR. HARDER: I'm Allan Harder, the executive director of the Oklahoma City Area Intertribal Health Board. I'd like to thank you for the opportunity to present some issues important to the delivery of health services to the Indian people.
First of all, just a little bit about the health board. Its very name is a little misleading. It is not representing the Oklahoma City municipal area. The Oklahoma City area is the designation that the Indian health service uses for the area that encompasses the states of Kansas, Oklahoma and one of the tribes in Texas.
I sit before you as probably the only person who is employed by all of the tribes that I've mentioned for any particular aspect, whether it be health or any other reason. I'm the only person who is actually employed by those people for ‑‑ across the board.
The Indian health-delivery system is one that's unique in the nation. There is a series of federal treaty obligations that have created the obligation for providing federal health care to the Indian people. While it's an obligation through law, through the treaties, the funding of Indian healthcare is through the discretionary-funding appropriations of our government.
So after everything is done that is not discretionary, we start looking at discretionary funds. And in the days that we have where we have a war going on ‑‑ and the CMS budget's being non-discretionary, we're left with what's left over as far as what's appropriated.
Virtually every regulation there is that comes down affects the healthcare delivery system for the Indian ‑‑ either at IHS, the tribal or the urban delivery systems that exist.
One of the things that's been devastating ‑‑ while the IHS received a 3 percent increase last year in its budget, one of the few agencies to receive that ‑‑ it's also one of the few who received dual decisions. The IHS is actually appropriated through the Interior rather than HHS, and the money's transferred to HHS.
In the Interior appropriations, there was a rescission that was applied. Once the money was appropriated in the Omnibus, then there was a second rescission applied. So the 3 percent became nil. There was no increase, even though the 3 percent was shown as the original appropriation increase.
No regulation is free. Some happen to be funded. Some happen to be funded at a lower level than what the funding is required to implement the regulation.
The example of some of the things that might affect the Indian health system that are not from the HHS regulations would be something like the homeland security regulations, where ‑‑ that they have mandated that federal facilities provide security measures for the entry and access to the federal building that is there.
That requires the Indian health service, for example, to provide security services for entry and access into the building. But there's no money to do that. So the money that's required to be spent by the Indian health service to provide that security comes directly from the dollars appropriated for healthcare delivery.
Even the positives that exist as far as some things you see down the road can have a negative impact immediately. The example ‑‑ the implementation of the electronic health record is something that, once it's fully implemented, will be a great benefit across the nation and across ‑‑ to ‑‑ the country to delivery health services and to track those health services and to make sure that we're getting the best bang for our buck.
However, the implementation is something that there is no funding specifically for. Yet we're implementing it and using, once again, those health dollars that are available for delivery of direct healthcare services to our people.
It's important to understand, too, that the Indian people have a severe disparity problem with ‑‑ both with health issues and with funding issues. The Indian Health Service for the funding for the Indian health, the tribal operations and the urban operations providing the healthcare, are funded somewhere in the vicinity of 60 percent of the need.
The bulk of the remaining balance is either unmet or is met through a third-party billing system whereby the delivery ‑‑ the professionals that are delivering the service or the organizations are billing it back against Medicare and Medicaid.
So every time that we have an obligation to reform CMS and to take $100 million out of the ‑‑ $100 billion out of the CMS ledger over the next few years severely affects the delivery of services, because that's making up, in some cases, 40 percent of the funds that are available for Indian healthcare.
Like I said, there's nothing that is free. And everything that is done affects that delivery, and it more severely impacts ‑‑ that the funds that are available to start with are less than adequate for the needs that are present.
DR. SIMON: Mr. Harder, thank you very much.
Dr. Mitchell.
DR. MITCHELL: Good morning. Thank you for the opportunity to be here and make some brief comments. My biography is in the paperwork that was handed out. A minor note is that even though I am a pharmacist, I'd like to note that I'm not here to do consultation for Part D. We'll let other people do that.
And fortunately, even though I chose that as my first career, I'm not a practicing pharmacist normally, so I really haven't had to deal with that. But Mr. Moore probably could answer more than that ‑‑ Dr. Moore.
DR. SIMON: But we'd give you more than five minutes.
DR. MITCHELL: Yes. It would take more than that for sure.
Newman Memorial is a small rural hospital in northwest ‑‑ far northwest Oklahoma, what is affectionately called by our health department here in Oklahoma as the frontier counties of the state. And indeed, it is quite a frontier.
Our whole population in the county's about 4,200 people. Our community's roughly 1,400. Our service population, however, is about 35,000 because of the outreach that we have and the types of services we've had over the years.
It was established by a pioneering physician many years ago who came from Ohio, had been educated in Minnesota through the Mayo system. And in fact, we've been called the little Mayo of the Plains over the years ‑‑ to do that.
As I thought about preparing for the comments, the first thought I thought a little bit about is that in a small town ‑‑ and many in the room, I'm sure, are from small towns as well as large communities ‑‑ you sometimes get caught in this friction between your sports and your academics at your schools.
Our community has been fortunate to have some tremendous athletes the last three years in our football program and in fact have won three state championships in a row at an eight-man level. We're very proud of that. We're also quite fortunate to seemingly have balanced those aspects with academics as well. We have a lot of tremendous academics.
But, you know, when you get into conversation with people, it's about, well, you know, it's ‑‑ you're against sports or ‑‑ my point is that I ‑‑ move forward in some comments.
I'm not anti-regulation. I basically believe in regulation or we're going to have chaos and just problems. But sometimes we do have, as our distinguished colleagues here have already commented ‑‑ they have consequences that we don't do.
And I certainly agree with Mr. Harder that no regulation has a free cost. It's just as something going to be tied to that. And as he eloquently spoke to, the area of shifting is there, and I think that's the biggest challenge that I probably face.
In that tone, it is a balance of regulations for what we want to do. I mean, we want them to be there, as an earlier speaker spoke about that, the safety and the quality of what we provide for healthcare. I mean, that's what we're about is trying to provide those things.
And so we need to balance all that. The estimates, as best I recall, from the American Hospital Association show that somewhere around 20, 23 percent of our operating cost is tied to what Dr. Conover said ‑‑ is the cost of providing care. And that's 20 percent of funds that are tight and difficult.
We're not going to care ‑‑ of patients who come to our facility, either for an outpatient or for an inpatient care. So if you look at that ‑‑ and I'm not a statistician or an economist, so I can't tell you whether that's good, bad or otherwise, but it's certainly a good talking point to make that issue.
The other is that clearly ‑‑ and I was speaking to a colleague before we started today too ‑‑ is the volume regulations are very difficult. I would tell you that we probably ‑‑ and I know the ‑‑ one of the CMS administrators are here from Dallas.
And I hate to see this, but we all break rules every day, I imagine, largely because we either don't know them or we don't understand them. And
that's it. Indirectly, there's probably, in the federal level at least ‑‑ in the federal level, probably 43 or 44 regulatory bodies that visit us periodically.
Recently I had an inspector from the FDA come by. I'd never seen an FDA inspector in my life. But they were there to ask us if we were going to reprocess single-use items. Our answer was no, because we had no way to build upon that regulation to do that, and it would be really ‑‑
I think one of the costs that frustrates me the most from a regulatory standpoint is the need for outside people. I went through college. I have a bachelor's degree. I have a master's degree. I think I'm a pretty smart fellow, not the smartest guy in the world, but I think I can understand things.
But, you know, when I have to hire consultants to tell me either how to be a joint-commission hospital or how to meet this or meet that, I have a real problem with that. I ought to be able to read those regulations, do what I need to do, and move forward. So I think that's a ‑‑ sort of a hidden cost also.
I was interested in the regulatory process as we move forward in hospital care, move on the quality indicators and so forth. I think those are real good. But we need to really keep focusing on the issue of whether those are process indicators or outcomes.
You know, what ‑‑ I think we're here ‑‑ and we're all interested as providers ‑‑ is the quality and the outcomes we have. Not necessarily do we do the five steps correctly to do that.
And so far ‑‑ example is that ‑‑ it's very commonly done, probably almost a hundred percent in the emergency rooms, you know, four chewable aspirins when you show up and you have heart pain. Well, that's good, but what happens after that, and what happened to the patient.
In the long run, I think the other issue of regulations ‑‑ we've dealt with regulation, and we've moved forward to adapt to the changes in demand and in technology ‑‑ and do that.
I think a lot of times the benefits that we work so hard to gain in terms of improving quality, therefore lowering costs and improving outcomes, don't necessarily ‑‑ back to the practitioners that provide those services. And I think we need to do that.
I certainly agree with the other issues there. And as Dr. Allen commented about, there have been a couple of years that hospitals also had no increase in payments at the federal level, which does impact, ultimately, the availability of providing care. Thank you.
DR. SIMON: Dr. Mitchell, thank you very much.
Dr. Moore.
DR. MOORE: I'm Paul Moore. I am a country pharmacist from southeastern Oklahoma. Unfortunately, like my colleague Dr. Mitchell here, I did spend the last two weeks doing Medicare Part D consults ‑‑ with the frustration level on the part of the seniors and the pharmacy and the staff.
And I realize from the USA Today and the national news that it's not just my problem. It's all over the country. And I'll address part D briefly in just a moment. But I just want ‑‑ in order for you to hear what I have to say, you have to know where I'm coming from.
I have healthcare in my genetics. My grandmother started the first nursing home in southeastern Oklahoma by taking folks into her home. I tell folks I ‑‑ tell my friends I've already had my nursing-home experience, so ‑‑
I am also educated as a pharmacist, but I've also served ‑‑ in fact, I was Dr. Farris's first administrator of a critical-access hospital in CMS Region 6. It was at that stage in my life that I learned what it was to curl up with the Federal Register at night.
Because really, in the years I'd had in healthcare, I had never come across how important and how voluminous the regulations that affect just a hospital, just a small country critical-access hospital ‑‑ but as I began to relate that to my other lives, I realized that it all affects all of us.
See, it's not just about the hospital and the community, even though in Atoka County, the hospital is the second largest employer in the community. In Atoka County, probably 10 to 15 percent of the employment in Atoka County is healthcare related.
And having used Rural Health Works and learning from economists, I have learned that it's kind of like chopping wood. It can warm you twice. Dollars that are made in your community and stay in your community have an effect even more than their dollar amount, which means the impact on the local community of healthcare dollars is probably somewhere around 20 or 25 percent in a small rural community.
And it's not just about the hospital. It's not just about the community pharmacy. It's about the entire system, how it is over woven and interdependent upon itself in the sense that if you lose one segment of that system, the entire system becomes vulnerable and may fold and may go away.
Not because the healthcare providers can't find work ‑‑ they can. They can go somewhere else. It's because they don't have what they need there to provide access to quality healthcare that Medicare has been given the job of making sure exist.
Now, I don't feel that it's Medicare ‑‑ I don't feel that it's the government's job to make sure that businesses are successful in rural communities. I do feel that it is their job to make sure that they don't work against that. And that's why when I speak of healthcare, I'm speaking of access to healthcare.
And now to bring it to the rural pharmacy part, which is freshest on my mind, obviously ‑‑ is to not do things that will endanger access to services. And in particular, in the case of pharmacy, I'm not talking about access to drugs, because you can get those from Canada and Mexico. You can get them in the mail.
I'm talking about access to pharmaceutical services, the over-the-counter counseling, the insurance advocacy that has been so much a part of our life lately. Those things that the seniors come to you ‑‑ Medicare put out a beautiful website. Medicare made all kinds of efforts to educate our seniors.
But do you know where the number 1 point of entry is into the system now? It is still across my counter with that customer, with them there with a look on their face saying, Tell me what to do. And that ‑‑ and I hear some seniors behind me. That is the case.
There has been so much frustration. And I'm not going to harp on the program. We will get through this, and we will work some bugs out of it.
One minute. Okay.
We will get there. What I want to ‑‑ the point I need to make today is when it comes to government policy, it should not be one that drives access out of business. You see, when it comes to the rural pharmacy, access ‑‑ maintaining that location there for those seniors to come to is what is important.
And policy should not drive them towards mail order. Because in many of the communities, the small communities that have one or maybe two pharmacies, the reason there's only one pharmacy there is there's not enough business for two.
And if that business migrates out to a mail-order ‑‑ PBM mail-order pharmacy, then there won't be enough to keep that one pharmacy there. And once that access is lost, I fear it's lost forever. Thank you for the chance to talk with you about it.
DR. SIMON: Dr. Moore, thank you very much.
Mr. Pierce.
MR. PIERCE: Well, I could say ‑‑ just say ditto at this time, because I've heard a lot of good comments up to now. My comments take rather a broad view. And I'd like to say that I have a lot of colleagues in the room.
And I've read the comments that are in front of me here that Scott Pilgrim wrote, which are in the same field that I'm a part of, which is providing retirement-community services and nursing-care services and home healthcare. And I agree with many of them.
But my comments take a broader view and have to do with balance. And all of us in the room would agree that our healthcare resources are precious. And we seem to be involved in a more-regulation-is-better mind set right now. You know, I think we need to move perhaps away from that and reward quality care.
And a balance is crucial. We seem to have a clock whose pendulum has swung far toward regulations in the areas that we personally provide services. It gives you the ability to say we are doing a good job regulating healthcare providers, but it may be at the expense of healthcare service delivery.
And here's an example, and this is a recent example. I don't have a lot of examples, because my comments are broader and have to do with balance. One recent requirement that nursing facilities have is to, on a daily basis for each shift, post nurse staffing data for the licensed and unlicenced staff directly responsible for resident care in the facility.
Now, some people might say that's a good regulation. I view that as a regulation where the pendulum has swung too far one way. That does not help us use our dollars ‑‑ precious dollars in providing healthcare service delivery.
I also would say that my experience over the years has been that the method of rolling out regulations is extremely expensive. So there's a great dollar expense to the method that regulations are rolled out.
And again, in a broad way, let me say this. We often have the feeling as providers that a healthcare regulation is tossed in our court. The ball is tossed in our court. And providers are left to try to swim, and later a lifeline gets thrown to us with clarification.
And the regulation becomes a hot potato. We'll throw it to providers; we'll see what happens; we'll clarify it later. And that process carries with it a huge cost.
And it's a continual ‑‑ it goes on a continual basis. There are always regulations that we're dealing with in that way. So from our point of view, we see that perhaps formulating regulations is easier than thinking through change.
We also are dealing with Medicare Part D right now. And the standard answer is, If you have any problems, call this hotline number. And I got an e-mail this morning that kind of illustrates this to a certain degree.
We've been in conversation with CMS regarding the Medicare Part D program on a weekly, daily and even hourly basis in order to resolve the problems our members are experiencing.
So I would submit that the cost of figuring it all out is huge for providers. We're taking precious dollars that we could be spending in healthcare service delivery figuring out the regulations.
One other thing, and that's what I might term ‑‑ this is perhaps too harsh a term, but I might call it the piling-on effect. There are continually regulations added without perhaps ever evaluating regulations that are no longer needed.
And that's perhaps my key point. How does the new regulation fit into the whole? Is there duplication? Is there obsolete regulation? If so, it adds to the expense of the healthcare delivery. So there has to be balance.
And regulations should be used to improve outcomes. Quality outcomes should be rewarded in service delivery. And my main point is that we must continually analyze and reanalyze and roll it out right in the beginning to as far a degree as we can and analyze the regulatory process.
In a world of limited resources, additional regulation often comes at the expense of service delivery. Thank you.
DR. SIMON: Thank you, Mr. Pierce.
We're now going to open back to the panel. Why don't we give the entire panel a round of applause at the close of this? We ‑‑ an open ‑‑ back to the panel and ask if you have questions for each other or perhaps very brief clarifying remarks.
And then our panel up here, who have been incredibly patient, I know are ‑‑ have a number of questions back and clarifying comments to you.
So gentlemen. Excellent. Okay, folks. I'm going to ask you each here to, you know, sort of ‑‑ not jump in, but questions from the panel at the front.
Ted. And you can direct them to any of the individual panelists, to the panelists collectively, and then we'll move forward.
DR. FRECH: Okay. I ‑‑ right now I have a fairly narrow question ‑‑ it's for Dr. Allen ‑‑ on the moratorium on physician-owned facilities. Now, I had thought that that moratorium was only for speciality hospitals, and it had ended.
So if you could expand a little bit on what the status of it is and what you see as the pluses and minuses of it, I'd like to hear it.
DR. ALLEN: Yes, sir. As you know, the Stark 1 and Stark 2 laws have exceptions that allow physicians to invest in hospitals or ambulatory surgery centers or imaging centers, provided that they utilize it themselves and they're not a passive investor in that entity.
Now, the moratorium on specialty hospitals again is a ‑‑ and I think you're correct. I think the moratorium does involve speciality hospitals. But the impact of that is that today technology is changing so rapidly that we are outstripping our ability under our conventional resources to provide that technology.
And as a result, if we wait for just the hospitals to develop and to utilize that technology, we are trapping ourselves in twentieth-century technology. We can't expand and go forward and give patients the types of services that they demand today. And as this continues to expand, physicians need to be a part of it because they are at the heart of what develops and drives most of that technology.
Now, as far as utilization of ‑‑ the big issue is physicians self-referring or capturing patient population. Physicians ‑‑ the return on investment in speciality hospitals is so low when you dilute it out to individual procedures and so forth that profit is not the motive that is driving physicians into specialty hospitals.
What's driving them into speciality hospitals is efficiency and having a say in the technology and how the hospital for their particular services is run. And every study that we've been able, at the Texas Medical Association, to look at ‑‑ when you focus ‑‑ such as a heart hospital on heart disease ‑‑ you by definition are going to be better at it.
So patients get better outcomes, better patient satisfaction, lower cost ‑‑ all the things that a free market ‑‑ normally drives business happens with a speciality hospital.
The problem that everybody perceives is that physicians are skimming off the cream and leaving all of the difficult cases to the hospitals. Well, there are a number of mechanisms that we already address that with. Hospitals get disproportionate share money. Many of them are not for profit and get tax-free ‑‑ have a tax-free status.
They are able to access the bond market at very low rates. So there are a number of things that compensate for that.
The other issue is that physicians have ‑‑ today, time is money for physicians. We're in a fixed-reimbursement system. You cannot pass cost on to patients. So physicians are having to work harder for less. And the only way to do that is to be more efficient.
And part of that is the answer of the speciality hospital where they can become more efficient, turn their cases over faster, have better technology available to them. And everybody in terms of healthcare, particularly the patients, benefit from that.
So that's kind of the issue is that if we continue the moratorium or we prohibit physicians from self-referral and ownership, we will have essentially taken the patient and patient choice out of the mix, which is not what patients want.
DR. SIMON: Thank you. Question.
DR. CONOVER: I had a specific question for Mr. Mitchell and then a general question for all of you.
The specific question is you talked about using outside consultants to interpret things, and I'm curious whether you have some sense of the scale of that, I mean, you know, as a percent of your operating costs. What does that entail? Do you have just even a rough ballpark on that?
DR. MITCHELL: I'm ‑‑ I really don't have a good answer for that, Doctor. I mean, it's variable based on circumstances that we periodically try to review to make sure that we're in compliance and do the things that regulations require.
DR. CONOVER: Right.
DR. MITCHELL: Now, our operating budget at our facility is roughly $7 million of expenses. You know, it's probably ‑‑ it's certainly less than 1 percent of that. I think the issue there is much like, if I could give you a quick analogy, is much like when we decided to stay in joint-commission accreditation.
The base fee just to do that, I think in 1999 when we were looking at it, was like $30,000. That wasn't the issue. We could probably find that money somewhere. The issue was the day-in and day-out direction of resources that we've all spoken fairly eloquently about that we took away from the care that we wanted to provide and the dollars that we had to do that.
And so therein lies a very difficult, hard thing for economists and others to make that understanding ‑‑ is what are those affiliated dollars that just move from one place to another and really don't impact care. So that's really hard.
DR. CONOVER: Right. And that's a great segue way to my general question. So for all of you, if you could imagine optimal regulation for your respective sectors, I'm just curious to know whether the impact of that would be to ‑‑ would you end up providing better quality care if you could reduce what we'll call excess regulatory cost?
Or would you instead pass the savings from not having to, you know, go through these regulatory processes ‑‑ would those get passed along to consumers in the form of lower prices?
DR. MITCHELL: I ‑‑ if I could try that first, in a way. I think that some of my comments would be counter to what Dr. Allen spoke to a minute ago on specialty. But that's like asking any businessman, if you find a way to deliver your product or your service better, do you lower your costs or do you make more money?
I don't know the answer to that. I think the answer in our economy is competition because the next guy will probably do that and take that ‑‑ in the case. And the reason I mentioned Dr. Allen's comments is that ‑‑
And I probably have a jaded view because we have a very small community, and we have a very closely cooperative relationship with our medical staff and work very diligently with them in cooperation to provide the convenience and the access to care that make their jobs well.
I'm a little bit disappointed to hear him say, Well, physicians are working harder for less. I will tell you every provider is working harder for less. And I think Dr. Allen actually would agree with that. I have not known Dr. Allen before today, and I hope that we continue to be friends after today, as well.
But the ‑‑ as he commented about the Stark regulations, from our perspective in hospitals, the regulation is very clear. I can't provide him a return for coming to my facility. That just doesn't work. We're breaking the rules. We can't do that.
It's curious that their facilities can be owned by themselves and then do that service, and they can ‑‑ they have an incentive in that sense. So that's ‑‑ it's ‑‑ about utilization ‑‑ it's a lot ‑‑ about a lot of things. But, you know, fundamentally for us, it's sort of an ethical question about, you know, do we get that same return.
But I think we all have to believe that, as Mr. Harder mentioned, some of the MRs, electronic records ‑‑ a lot of efficiencies are going to build up that are going to help all of us provide the services well and document good outcomes. And that, hopefully, will lower the cost of what we have to do.
DR. SIMON: Mr. Pierce.
MR. PIERCE: The thing that we would do with less regulation which resulted in more dollars being able to ‑‑ spent in healthcare is we would create a pathway to the future, which means that ‑‑ we know that there is culture change available to us right now in the form of new paradigm shifts in nursing facilities and other services that we provide.
There's new technology available to us today that can improve the lives of our residents, can improve the quality and the outcomes, but we have no way to fund it.
DR. SIMON: Dr. Allen.
DR. ALLEN: Yes. Certainly, physicians want to be partners with their hospitals. I sat on the board of a 13-hospital ‑‑ one of the largest not-for-profit hospital systems in Texas, as well as my individual hospital. And part of this whole issue is how hospitals and physicians can learn to be ‑‑ to partnership and to provide the best resources for their community.
And so it's not an either/or. It's a question of how we can come together to do what is in the best interest of our communities and the best interest of our patients.
Now, with regard to what Dr. Conover said, currently, with the amount of Medicare regulations that physicians and hospitals and all providers have to struggle under, if a physician or a group of physicians wants to participate in Medicare, they many times now have to go out and hire two or three people just to keep them in compliance to make sure they're not violating some Medicare rule, which is a cost to them just to comply with the rules for which they're only getting paid two-thirds of their cost to start with.
So the more and more regulations that you have to abide by and have the threat of an audit or fraud and abuse hanging over your head, it makes doctors less and less interested in participating in the program.
In fact, the largest primary-care physician group in my community, over 55 primary-care docs, refuse to participate in standard Medicare because they were audited one time for not complying with rules that they thought they were perfectly complying with and were fined.
And they said, It is not worth the risk. With a group of 55 doctors, we will have to hire at least four people just to keep us in compliance, and the reimbursement is not enough that we can afford to do that. So they said, We're opting out of the standard Medicare program.
So those are the kinds of issues that impact physicians and access to care. Because as we go down the road, if the SGR is not fixed, our latest survey indicates that at least 38 to 40 percent of physicians are ‑‑ more physicians are going to opt out of the Medicare program.
In Texas, in the ‑‑ in 1990, over 80 percent of physicians participated in Medicare. By the year 2000, that number was down to 78 percent. And in 2004, it's down to 68 percent, and it's dropping because that figure is a jaded figure.
Some doctors that say they take new Medicare patients only see them in the emergency room so they can bill for it. They will not see new Medicare patients in their office. So for the ‑‑ for the patients, the beneficiaries, access to care is becoming more and more a critical problem.
The latest survey at the American Medical Association showed that 40 percent of physicians are going to drop out of the Medicare program if the SGR continues to drop between 2006 and 2011, as it's scheduled to do. So it's a huge issue for Medicare beneficiaries.
And it's not that the doctors don't want to take care of their Medicare patients. In fact, some of them are dropping out of the Medicare program and just seeing the patients outside of Medicare for nothing. The current reimbursement system is so arcane and difficult to understand and so punitive, it's driving physicians out of the Medicare program.
They don't want to get out of the Medicare program, but it's driving them out. So the regulations are now ‑‑ I understand in Medicare are more voluminous than the tax codes. So ‑‑
DR. SIMON: Thank you.
DR. ALLEN: ‑‑ it takes you awhile to understand the rules and the regulations.
DR. SIMON: That's an ominous thought.
Mr. Harder.
MR. HARDER: I'd like to comment that, once again, the Indian healthcare delivery system is somewhat unique in that profit is not a component of it. So if the healthcare delivery system in the Indian world were unburdened of the financial regulations ‑‑ burden currently, certainly the improvement of services and the increase of services would be the net result.
Primarily, the result would be in the implementation of greater speciality care. Speciality care is something that basically does not exist within the Indian health delivery system. In the hospitals and clinics across this area, there is only one speciality medical provider, and that's an orthopaedic surgeon at one of the hospitals.
Outside of that, healthcare delivery in the speciality area is provided through contracts with private physicians, which ‑‑ those dollars probably are the dollars that are the first to be depleted. So oftentimes, we're faced with the decisions about whether to treat a broken arm or to continue treating someone who may have cancer or whatever.
So the increase of services definitely would be the result of the financial unburdening of regulations on the Indian healthcare industry.
DR. SIMON: Thank you, Mr. Harder.
Mr. Moore, do you have any comments? Okay. Thank you.
We'll go first to Mr. Size, then to ‑‑
MR. SIZE: Okay. Is it okay to make a comment and a question?
DR. SIMON: Yes, as long as the comment ‑‑
MR. SIZE: Yes.
DR. SIMON: ‑‑ is brief and the question is focused.
MR. SIZE: Both will be undoubtedly true.
Yes. I mean, I just want to say I have sympathy with Dr. Allen's comments. I think part of the complexity is I see a tapestry of regulatory issues and Congressional decisions about funding levels. And to the degree that we focus on regulation, we have some limits in terms of how we could address the issues you raise.
I wanted to get back to ‑‑ fellow hospital guy, Mr. Mitchell, because I really liked what you said, only because I agreed with it, I guess. The ‑‑ you point out the distinction between process ‑‑ regulation accountability around process and around outcomes.
And I totally ‑‑ I think that's an important point for the panels to consider, because I really do think a lot of what we call regulation is derivative from ‑‑ most of what we've been able to measure and regulate have been processes.
The issue is as we go forward into this new brave world of ‑‑ which I think is a good thing ‑‑ of transparency and outcome measures, when do we start to do the tradeoff? I mean, I would argue, particularly from rural perspective, we're still struggling with good metrics for low-volume rural hospitals.
So intellectually, I really support outcome measurements. And I am enough of an anarchist ‑‑ I guess I'd do away with all licensure, all regulation if we really can measure outcome. The problem is we can't. So then the issue is how do we manage this transition period.
That was a question. It was relatively focused and possible to answer. I'd like to hear comments from ‑‑
DR. SIMON: You'll get lots of gold stars for that.
MR. SIZE: Thank you. I'm interested in people's reactions.
DR. SIMON: Yes.
DR. MITCHELL: In that I've been the lightning rod for two of the questions so far, I'll try to address that. But I agree with your comments as well, sir. And low volume is an issue. As I saw this rolling out and CMS and everybody was participating and the hospital associations, the rural group was back there saying, You know, there's this thing, and we have a real problem that ‑‑
Our hospital, I believe, does a very good job at what we do. If you look at the website, which I don't think most people can figure out, and really figure out what they're trying to look for, our good hospital will come up insufficient data.
Now, the issue of that ‑‑ probably the majority of the population does really understand insufficient data just means that. It doesn't mean that it's bad insufficient data. It just means low. And that is one of the real concerns to do that.
There are groundbreaking measures in all areas of our country ‑‑ really trying to take the process that's been instigated and coordinated by a lot of good folks and good groups of doing quality alliance and moving towards those outcomes. What is it we're really going to get? And if we do that, it's going to be a whole lot better for delivery of care in the long run.
The ‑‑ I wanted to go back just real quickly to Dr. Conover's first question. You ask about if we made a better margin, what would happen in ‑‑ and much like Mr. Harder in a not-for-profit mode, it's got ‑‑ return. Sometimes I think that margin in healthcare seems to be a dirty word, and yet it isn't.
I can't survive if I don't make margin. I have to buy equipment and new things. Our facility just this year has invested over half a million dollars in new technology that's necessary to complement our physicians and our other providers in our community.
And so I think that although we're here talking about regulations and it would impact payment, payment is probably the issue in the long run about whether or not some charges and some of these costs of the individual providers or individual carriers or individual people could actually be lowered because if we continue to have a bad debt problem, we continue to have inadequate payments, as Dr. Allen eloquently spoke about as well, if ‑‑ it all shifts. And that's the real problem that we're facing today.
And I think Dr. Allen would agree that, in his position of working with the hospital ‑‑ unfortunately, hospitals don't have the opportunity to say, I stopped taking Medicare. We don't have that choice. So if the regulations come to us, we're stuck if we're going to stay alive at all. So I hope that I addressed your comments, sir.
DR. SIMON: Thank you very much.
DR. MITCHELL: Thank you.
DR. SIMON: Bob. Same ground rules.
DR. HELMS: Well, I hope ‑‑ I want to get back to something that Mr. Pierce said about ‑‑ and I hope this is relevant to your study. But you mentioned something about you would like to see more evaluations done of individual regulations in order to ‑‑ you know, to avoid this piling-on process.
In other words, before you go issue some new regulation, do some research about sort of what the other one did. I actually tried to promote this when I was in ASPE, and there is a little bit of this kind of research going on at the government, but quite frankly, the government doesn't have a lot of resources to do this kind of thing.
And what I was ‑‑ I'd like to ask you and the other panel members, through your either professional organizations or trade associations or ‑‑ do you do anything to promote this kind of research yourself ‑‑ or evaluation to be able to come in with some data and say, You know, this is really a dumb regulation. We can tell you that it costs so much, and if you did it a different way, you would save so much.
Is ‑‑ have any of you ‑‑ aware of or attempted to do these kinds of studies?
MR. PIERCE: I regret that I cannot point as to a study today that would have that information, although that is discussed regularly in the associations that I'm part of, both in Oklahoma and nationally. And it's needed very much.
I cannot even think of a ‑‑ I would not even venture to throw out a specific instance right now. But I do know this. When we look at regulations, we should ask ourselves, Does this regulation improve the outcomes?
And if it does not improve the outcomes, because of our limited resources that we have available for healthcare, we should be asking ourselves, Do we need ‑‑ really need that regulation, because it's taking away from service delivery?
So that goes on all the time. I would also say that providers do know how these regulations affect them. And I guess that's one of the reasons we're having this forum, this town hall meeting today. They do know, and so they should be consulted.
And I also would say to Dr. Size's comment that we do not believe that we should live in a world any longer where every provider receives the same amount of money per patient, day or for a certain procedure.
We believe that we're in a new world where providers should be reimbursed for quality outcomes and that that will strengthen quality providers, and it will drive providers who are not quality providers out of the marketplace. So we do support a system like that.
DR. SIMON: Dr. Allen.
DR. ALLEN: Yes. Dr. Helms, the Texas Medical Association has a sister organization called the Texas Medical Foundation, which is the Texas quality institute, which is in the process of evaluating a number of the regulations and particularly the quality indicators and other regulations to see what the impact is and to see what the benefits are.
And one of the problems that we have come across is that frequently the regulations will be promulgated, and they will do demonstration projects to try and determine what the effect is going to be, but because of Congress or budgetary constraints or whatever reason, they go ahead and implement the rules before the demonstration projects are even finished to know what the results of the demonstration projects are going to be.
So that is another problem. So the answer is yes, we are trying to, as organizations, at least physician organizations, to drill down into the benefits of some of the regulations and whether they even work at all.
Like on some of the long-term care projects ‑‑ some of them haven't been going on long enough to know if they really are going to produce the savings that we thought they were going to save. Some of them are actually showing we're spending more and getting less results than we thought we would.
So you're absolutely correct. We need to follow and to study the outcomes and find out what really works and what doesn't work before it becomes a cut-and-dried federal regulation that costs not only the provider money ‑‑ winds up costing the government money.
DR. SIMON: Thank you.
DR. HELMS: Do you have time for me to make ‑‑
DR. SIMON: Yes, I do, as soon as we've had a chance to ‑‑
DR. HELMS: Okay.
DR. SIMON: Any other comments to your first question?
MR. HARDER: Certainly in the Indian world, the comment period on regulations that are proposed is taken advantage of. Only this week, I sent a letter to CDC commenting on the impact of the quarantine-proposed rule that is open for comment as we speak.
Those comments don't always impact the economic impact of the regulations. Also the comments address some things as a cultural impact and the impact on implementation that aren't necessarily economic.
But unfortunately, in the Indian health world, too many go without comment because we lack some of the expertise, and we would have to go again, once ‑‑ like we said before, in hiring someone with a consultation package to provide those comments for us because we lack some expertise in that area.
DR. SIMON: Thank you.
Dr. Moore.
DR. MOORE: Dr. Helms, If I could give you an example of where I was intimately involved in what you're talking about, and that was the proposed regulation on the sun setting of the necessary-provider status of the critical-access hospitals.
They came out. And during the process, the time for comment on the proposed regulation, we did everything we could do. We pulled out the stops, associations, individuals. I walked around to the doughnut shop and got ‑‑ told people the situation, got them to write letters to CMS. And that was an interesting thing to do.
And it made a difference. Now, the point being ‑‑ I mean, true, we're given that comment period. But sometimes the way the regulation makes sense where it's regulated and the way it's perceived ‑‑ and you know it will ‑‑ it is a universe away from making sense out in the field.
I'm not sure that ‑‑ this was a successful time. We got the ‑‑ it had to do with how far you could move a hospital if you're building a critical-access hospital and it would still be the same entity and it would still be ‑‑ have its status as a critical-access hospital.
Fortunately, we were heard on this situation, and they ‑‑ the position was changed on that. They're not all that fortunate, though.
DR. SIMON: Thank you.
I'm going to ask if any ‑‑ Bob, I know you have a question in waiting.
And the panelists who haven't had a chance to ‑‑
MR. SIZE: A brief comment ‑‑
DR. SIMON: Yes. Brief comment. Absolutely.
MR. SIZE: I was also heavily involved in that particular advocacy issue. And I think part of the frustration on our part is that the reg is published; you got time to feed back. It's not a conversation. There's one question, one answer.
And so much of what we deal with is so much more complex than that, so I think we need more opportunities to have dialogue rather than just one question, one answer, and it's done.
DR. SIMON: Okay.
DR. HELMS: Well ‑‑
DR. SIMON: Bob, I can give you one minute ‑‑
DR. HELMS: Okay.
DR. SIMON: ‑‑ for question and answer ‑‑
DR. HELMS: We'll put this to ‑‑
DR. SIMON: ‑‑ and then ‑‑
DR. HELMS: One of the first things that I was assigned to do when I went to HHS in 1981 was to have a ‑‑ to head an internal task force to look at what was called in the hospital conditions of participation. And this was the Reagan administration, so we were going to deregulate.
And so we had the principle that we wanted to try to strip away a lot of the detailed regulations in there and substitute outcomes, in other words, say, Here's the purpose we're trying to achieve and let it ‑‑ leave it more to the hospitals to get there.
Well, just to make a long story short, that's when I learned there were associations of hospital dieticians, and there's also an association of hospital librarians because one of the things we did was ‑‑ we were not against the hospital having a library, but we really didn't think the federal government had to require that, you know.
So anyway, you get beat up when you do things like that. But I would really like to hear from Dr. Rogers because he represents CMS, and it seems to me that the discussion back about the moratorium ‑‑ I thought it ‑‑
DR. SIMON: Actually, I think that's an excellent idea.
Dr. Rogers ‑‑
DR. HELMS: But also, I'd like to ask him ‑‑
DR. SIMON: ‑‑ you ‑‑ can we ‑‑
No alsos, Bob. We're over time. We're ‑‑ you had your alsos. But I'm going to give Mr. ‑‑ Dr. Rogers the floor for about a minute or two to see if he has any comments or questions to wrap that up. And then we do need to move on to the rest of the audience.
DR. ROGERS: Well, I just wanted to agree with Dr. Helms's observation. I can think of a regulation that's near and dear to my heart as a physician. We require that if somebody's going to have restraints put on ‑‑ somebody's confused and trying to fall out of bed or something like that -- that they have to be seen by a provider when that's done.
And there are all kinds of regulations about how frequently they have to be seen and things like that, all well-intentioned. Safety is very important, and there have been abuse of practices in the past, but the second we try to touch those regulations to simplify them a little bit, we are besieged by all sorts of advocacy organizations.
So although you're hearing unanimity in this room that regulations are excessive and too difficult to comply with, we could fill a room ten times this size with people that say we need more regulations having to do with the restraints and seclusions or having to do with physicians prescribing or having to do with speciality hospitals.
I could have a thousand people in here who could tell you that speciality hospitals are going to take the good business and move to the good part of town and leave the general hospitals underpaid and in bad parts of the neighborhood.
So it really is a lot more complex than you can possibly imagine until you're on the receiving end of these comments, but I appreciate you all coming in here, and I think your opinions are very valuable to us.
DR. SIMON: Right. Thank you very much.
At this point, I would like to heartily thank our panelists for their wisdom, and if anybody wants to offer a round of applause ‑‑ And end with a couple of housekeeping comments that will make their comments even more important to us. Gentlemen, if you have brought written copies of your comments today, would you kindly make sure that one of the ladies out at the desk has received your comments so that they go into our official files?
And perhaps equally if not more important is that if you have additional evidence ‑‑ and I'm sure you do ‑‑ that you would like to bring to the attention of our study that ‑‑ please also make sure that we arm you with the appropriate website and vehicles for getting them to us because this is how we make the changes you want to hear. Thank you very much for your time.
And we have reserved some chairs behind there for you so that we can then move on to the next part.
As I indicated previously, we're now going to be taking testimony from the public. I'm going to be operating off of the sign-up sheets that you signed up on for giving public testimony on your way in in an order of first-come first-serve.
Ground rules are approximately three minutes for your time. I will make all sorts of interesting hand gestures as you begin to run out of time. And then we will open to the panel for clarifying questions.
May I call at this time Sandra Gadson and ask Ms. Gadson if she would introduce herself and briefly indicate who she is representing this morning?
Ms. Gadson. Thank you.
And if somebody could assist to make sure that her microphone is on? Thank you.
DR. GADSON: Good morning. Thank you. I am Dr. Sandra Gadson. I am president of the National Medical Association. And I want to thank you for the opportunity to speak today on a very challenging issue. I have printed a statement so I will go through it very quickly because I cannot get all this done in three minutes.
First and foremost in importance to the National Medical Association ‑‑ and let me just say the National Medical Association is the oldest and largest membership organization for physicians of African descent, representing over 35,000 physicians and the patients that they serve.
One of the key elements that we are very interested in is that of quality. The other is actual cost of healthcare regulations and the cost benefit ‑‑ regulation. Dr. Conover has already told us ‑‑ and this is was actually in my statements ‑‑ with regards to the financial burden of healthcare regulations, which is at about $1 trillion, and that was in 2004.
Perhaps the most compelling rationale for measuring economic burden is that such a measurement can help us to determine how many lives could be saved if we were to identify and trim regulations that pose greater costs than benefits and then redirect the economic savings to the goal of saving lives.
For example, one of the troubling preliminary findings represented by the Duke investigation is that the cost of regulation probably overshadows the benefit by $169 billion a year. Here are two good places to put that money.
One, we have over 44 million medically uninsured citizens in our country. Two, we have a national crisis of severe and persistent racial and ethnic disparities in healthcare across virtually every major disease, and this applies to citizens who do have medical insurance.
Clearly, the question is not should we measure economic impact, but how do we do that. I take a principle approach. And we at the NMA hold a position that such a principle approach should have three elements to it.
One is an independent framework for analysis. The framework must be ‑‑ must measure and project both short- and long-term outcomes. Having independent econometric projections available before regulations are crafted is a forward-thinking approach, and it is a recommendation that an independent body such as the Institute of Medicine do that.
The next is having coherent efficient data collection which will represent all of our society.
And thirdly is being very aware of the massive and growing body of evidence to support the increase in health disparities. And it is so important that our regulations don't increase health disparities, but as was federally mandated ‑‑ that we can help to eliminate health disparities.
So in conclusion, it is in keeping with the core principles of diversity and cultural competence in that we in the healthcare system be inclusive of minority researchers and also have well-represented at all levels our cost-benefit analysis project and include patients at all levels when we talk about cost-benefit analysis.
In closing, I want to underscore the NMA's commitment to support the advancement of a principled approach to measuring the cost-benefit analysis and the dynamics of healthcare regulations. Thank you for allowing me to speak.
DR. SIMON: Dr. Gadson, thank you very much. If you could remain for a moment, we could open this up to questions from the panel.
DR. VOGT: Dr. Gadson, thanks for that statement. I thought that was really interesting. Can you think of maybe one or two regulations that you think are ‑‑ have a particularly unfavorable cost-benefit ratio or that perhaps exacerbate racial and ethnic disparities?
DR. GADSON: Well, I can think of one. I'm a nephrologist, and I work actually in northwest Indiana, so I've had the opportunity to see both sides of the chasm, especially working in northwest Indiana. When I practice in Gary, which is 95 percent African-American ‑‑ and there's a town nearby, Maryville.
So I can see both sides of it. And I can tell you one regulation that does, I think, increase costs at an unnecessary rate. There is the ‑‑ not the rehab units where patients go, but the progressive step-down units, which was supposed to be, especially for Medicare patients ‑‑ when they left the hospitals, they weren't able to go home. They didn't qualify for the nursing home, so they would go down ‑‑ go to a step-down unit. Well, if they're dialysis patients, instead of them being dialyzed in the hospital, they have to leave the hospital, go out of the hospital to a dialysis unit, which could be 20, 30 miles away ‑‑ their unit, and then come back to the hospital. And they do this three times a week.
Well, look at the costs that that serves, I mean, the cost of the transportation, the cost of those who get them ready to go there, to bring them back. And you're doing this three times a week for maybe a month or so. And you'd multiply that times the number of people that do that.
I could never understand why that regulation was there. I know those entities are not considered ‑‑ they have a different provider number than the hospitals, but still, they're within the confounds. So that is one example of, I think, a measure that serves no good reason. It doesn't improve quality. It actually, I think, puts the patient at risk.
But we do it all over this country. And it definitely ‑‑ it's a regulatory issue which I often question.
DR. SIMON: Thank you.
Chris.
DR. CONOVER: In the current system, regulations ‑‑ the OMB has rules for scoring regulations and doing sort of the cost-benefit analysis you're talking about. And there's a comment period, and so people can weigh in on those estimates.
You're recommending ‑‑ is it ‑‑ are you recommending a system to displace that or to be in parallel to what's already going on?
DR. GADSON: To be in parallel to what's already going on. Not to displace it, but to be in parallel with it and to have more of an involvement of minority populations in that evaluation.
Now, one issue I understand is that in many cases it's difficult to get those populations to become a part of what happens in terms of regulation. But perhaps these town hall meetings can also go to those points to bring those people in to actually discuss. I think it would make a difference.
DR. SIMON: Other questions?
DR. ROGERS: I just ‑‑ I'd like to talk to you offline about that issue of transferring patients for dialysis because that isn't actually required by regulation. It's actually driven by the economics of the dialysis and the way those units are paid.
So we haven't written a regulation that said it would be illegal for them to go to the hospital dialysis unit, but because of the way the hospitals are paid, it wouldn't be a profitable thing to do.
DR. SIMON: Thank you.
Any other quick clarifying questions? Bill? Quick followup. Yes.
DR. VOGT: It's often the case that in prospect, before a regulation goes into effect, we don't anticipate exactly how it's going to interact with other regulations and how it's going to interact with economic incentives and so often we can't tell beforehand how costly a regulation would be.
And I'm wondering if you would also favor a mechanism or a better mechanism to comment on or induce studies of already existing regulations which are irrational or which have a larger cost than anticipated.
DR. GADSON: I would favor that.
DR. SIMON: Thank you.
DR. GADSON: And I did say in my recommendations that the Institute of Medicine perhaps could be one of the bodies that would put that together in a very succinct way.
DR. SIMON: Great. Dr. Gadson, thank you very much this morning and for making the trek from Indiana down to Oklahoma to be with us.
Our next commenter is Mr. Kent Abbott.
DR. ABBOTT: I'm Kent Abbott, and ‑‑ excuse me ‑‑ and I am president of Pharm Care of Oklahoma, a pharmacy company that supplies and takes care of patients in nursing facilities. Principally, I'll drill down to the Medicare D issues that we're faced with, starting with ‑‑ well, let me give you just a little further history.
I'm approaching 30 years in pharmacy now, which ‑‑ I should have already burned out, but I haven't made that burnout point yet. So having said that, from 1977 to current, we have been reduced in reimbursements, so I'll follow with the physicians and the hospitals that the reimbursements continue to dwindle, but we're requested to do more work.
And so we need to relook at that Medicare D continues that thought process. So from that point, I would say that we need to look at the economic situation that is occurring for Medicare D and for the pharmacies.
The pharmacies are in fact, since January 1, funding this program. There is no money coming in. Most pharmacies are used to getting ‑‑ and require, because of the reimbursement, to get reimbursed weekly. Their wholesale drug sources require weekly payment. They have a simple system: You don't pay; you don't eat. So now we do not expect any payments until February. At the very least, February 15 is my estimate that we will receive our first payment. So pharmacies are funding this operation, if you will, across the nation.
Seventy percent of the long-term care patients in the nation were on a Medicaid system, and, in fact, are being switched over to a Medicare PDP system. Which PDP remains a mystery to many pharmacy providers, so I would ask that you consider that.
The ‑‑ some of the problems that pharmacies are facing is the lack of accurate information. They set up several avenues to get the information for the providers, both the facilities and the pharmacies. Most of the time, if that patient made an election to choose a different ‑‑ and again, I'm going to narrow this down to most of the dual eligibles.
If they made an election to switch from the one that they were possibly going to be assigned to to a more preferable PDP and formulary, that information is not available. And I'm already getting close. So that ‑‑
DR. SIMON: Close is an understatement.
DR. ABBOTT: ‑‑ information's not really available.
Let me quickly move on and point out that in the financing of this transition from a Medicaid system to a Medicare D system, I do believe that it, in the end, will be simpler, and it will be better f |
