B-164031(4) Dear Mr Burke. This 1s in response to your letter of January 15, 1971, enclosing a copy of a letter to you from Mr Charles J Kelley, president of Massachusetts Council of Health Care Facllltles, and requesting our comments on his statements Attached to Mr Kelley's letter were copies of (1) a questlonnalre which our Boston Regional Offlce recently sent to selected Medlcare providers (hospitals and extended-care facll- Ities) that had voluntarily terminated their partlclpatlon in the Medicare program and (2) Mr Kelley's letter in response to that questionnaire Because we were concerned about the large number of providers which had terminated partlclpatlon in the program--Social Security Admlnlstratlon statlstlcs showed that, as of June 30, 1969, about 1,000 extended-care facrlltles and 500 hospitals had terminated their partlclpatlon from lnceptlon of the Medicare program In fiscal year 1967--we furnished these questlonnalres to former providers The pur- pose of the questlonnalres was to obtain their views and comments on the reasons for tennlnatlng their partlclpatlon nn the program and on the effects that their termlnatlons had on the avallabrlrty of serv- ices to Medicare beneficiaries in their locality. We are pleased that Mr Kelley reacted favorably to our approach of directly querying providers as to the reasons for therr termlnatlons from the program and that he provided us wxth meaningful comments. In his letter to you, Mr Kelley stated that Medicare payments for services rendered to patients in extended-care facllltles had decreased by 75 percent, whereas payments to hospitals had continued to increase at a rapid rate He suggested that, in view of these statlstlcs, It appeared that Medlcare beneficiaries were recelvlng care In hospitals when they could be cared for in less expensive extended-care facllltles Under the Hospital Insurance Benefits for the Aged portlon of the Medicare program, an eligible person aged 65 or over 1s provided with basic protection agaxnst the costs of care provided by 11) a hospital during the acute stage of his condltlon and (2) an extended-care facnl- lty when he receives skilled nursing care on a continuous basis for a J!!G%zJ 50TH ANNlVERSARY 1921- 1971 B-164031(4) condltlon which had been treated more intensively during a previous hos- pital stay Benefit payments to hospitals and extended-care facllltles on behalf of eligzble Medlcare beneflcaarles are usually made by organr- zations, such as Blue Cross plans, operating under contracts with the Social Security Admlnlstratlon These organrzatlons are referred to as fiscal lntermedlarres. The leglslatlve history of the Medlcare program indicates that the Congress was concerned that the program be carried out In such a manner that the patient would be provided cJlth necessary hospital care but would remain rn the hospital for only as long as necessary The legls- latlve history indicates also that the Congress intended that every effort be made to move a patient from the hospital to an extended-care faclllty which could provide less expensive care to meet the patlent's medical needs, such as skilled nursing care, durzng the period of his recovery. Mr. Kelley's belief that Medicare payments for care provided to Medicare beneflclarles in hospitals have increased at the same time that payments for care in extended-care facllltles have decreased IS correct; however, his estimate regarding the extent of the decrease in payments to extended-care facllltles, at least on a national basis, appears to be overstated Data developed by the Social Security Admsnlstratlon show that Medicare payments to hospitals in fiscal year 1970 were approxi- mately $4 4 brlllon compared mth approximately $4 2 bllllon in fiscal year 1969--an increase of about 5 percent Payments to extended-care facllltles were about $295 mllllon in fiscal year 1970 compared mth about $390 mllllon in fiscal year 1969--a decrease of about 24 percent One of the most difficult problems of the fiscal lntermedlary In admlnlsterlng the Medicare program has been the determlnatlon of whether the care provided to a patient in an extended-care facility 1s the type of care covered by Medicare Skilled nursing care provided In an extended-care faclllty 1s covered under the Medlcare program, custodial care of the type traditionally provided in nurszng homes is specifically excluded by law from Medlcare coverage In June 1968 and April 1969, the Social Security Admlnlstratlon pro- vided additional guldellnes to fiscal lntermedlarles that were intended to more clearly define the type of care which IS covered by the Medicare pro- gram and to dlstingulsh this type of care from the custodial type of care An official of the Social Security Admlnlstratlon advised us that the guidelines and the efforts of the rntermedlarles to implement these guide- lines were the basic underlying reasons for the decline in the extent of -2- B-164031(4) utlllzation of, and payments for services provided to Medicare benefi- ciarles in, extended-care facllltles during fiscal year 1970 During our reviews of the Medlcare program, we have examrned Into the controls exercised by the Social Security Admlnlstratron, the fiscal ~ntermedlarles, and the providers to ensure that patients remain In hos- petals and extended-care facllltles for only as long as medically neces- sary and that patients receive the appropriate types of care, In an executive sessxon of the House Ways and Means Committee in March 1970, which you attended, we discussed the status of our review of the Social Security Admlnlstratlon's controls over the utlllzatlon of hospitals and extended-care facilities by Medicare patients. We are nearing completion of that review and expect to submit a report to the Congress in the near future A copy of that report knll be furnished to you. As you requested, we are returning the correspondence enclosed with your letter We trust that the information furnished herein will serve the purpose of your request Comptroller General of the United States Enclosures - 2 The Honorable James A Burke House of Representatives -3-
Medicare Payments for Care Provided in Hospitals and in Extended-Care Facilities
Published by the Government Accountability Office on 1971-03-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)