HEW Report: Chapter I

The purpose of Medicare is to protect its beneficiaries against major expenditures for health care. Medicare was not when it began in 1966 and is not now a comprehensive health insurance program.

The administration proposals that ultimately resulted in the Medicare program provided for coverage of hospital inpatient care, hospital outpatient diagnostic services, extended care facility services, and home health services (Part A). Physicians . services were added during the legislative process, as the major covered item in Part B. Services of health practitioners other than physicians are covered, if at all, as components of hospital care or as incident to physicians’ services. With minor exceptions, payment is through approved providers (certified hospitals, extended care facilities, home health agencies, and others) or physicians.

Some nonphysician professional groups have expressed to Congress and to the Department their wishes for changes in coverage to include the services of practitioners in independent practice and in clinics or centers that are not physician-directed. They also want to deal directly with the fiscal intermediary in billing and receiving reimbursement for covered services. All of them want to provide services without direct supervision, but some of them accept and recommend a requirement for physician referral for services. All of them are particularly interested in obtaining these changes for practitioners in private practice.

Some practitioners who are not covered at all under Medicare, such as chiropractors and naturopaths, have requested coverage for their services similar to the coverage provided doctors of medicine and osteopathy.

In response to these requests, the 90th Congress directed the Secretary of HEW to study the needs of the aged for these services. Section 141 of Public Law 90-248 states:

The Secretary shall make a study relating to the inclusion under the supplementary medical insurance program (part B of title XVIII of the Social Security Act) of services of additional types of licensed practitioners performing health services in independent practice. The Secretary shall make a report to the Congress prior to January 1, 1969, of his finding with respect to the need for covering, under the supplementary medical insurance program, any of the various types of services such practitioners perform and the costs to such program of covering such additional services, and shall make recommendations as to the priority and method for covering these services and the measures that should be adopted to protect the health and safety of the individuals to whom such services would be furnished.

Interpretation of Charge

Broad interpretation was given to the phrase “licensed practitioners.” Included, therefore, are those health professions that want changes in their Medicare status and that provide services used by the aged, whatever their licensure status. This interpretation is justified by the erratic nature of State licensure. Theoretically, licensure is to protect the public. In practice it is sometimes sought by a profession as a means of establishing the parameters of its discipline and protecting its title; or it can be a method of control through State registration of practitioners, with little effort to set or enforce standards. For some professions, the absence of licensure in a State is permissive; the profession can be practiced without it. For others absence of a licensure law is intended to prohibit practice of the profession.

Selection of professions for study was based on the following criteria: the profession provides a service used by the aged or frequently ordered by a physician as an aid to his diagnosis and treatment: it has a body of theory and techniques amenable to evaluation; its services are not covered in independent practice (with minor exceptions): it has a professional association that maintains a registry or a membership list of practitioners and that attempts some sort of standard-setting and other professional activities: and the professional association has expressed its wishes for changes in Medicare coverage or methods of reimbursement. Meeting these criteria and therefore included in the study were: chiropractic, clinical psychology, corrective therapy, naturopathy, occupational therapy. optometry, physical therapy, social work, and speech pathology and audiology.

Two additional professional groups, dentists and private duty nurses, were considered for inclusion in the study. However, neither of them has requested any change in coverage of their services. With respect to dental services, only oral surgery or reduction of facial bone fractures is currently covered, although the dental needs of the aged are great. If resources were available for expansion of dental services, further dental coverage would undoubtedly be for independent practice, with provisions similar to those for doctors of medicine and osteopathy, due to the similarity in traditional patterns of practice and controls of qualifications of practitioners. The dentist who is legally authorized to practice dentistry is already defined as a physician in the Medicare law in connection with covered dental services. Hence, the issues in this stud were not pertinent to consideration of extending coverage for dental services. Regarding private duty nursing services, the trend in modern hospital care is toward care in intensive care units. and other gradations in nursing service depending on patient’s nursing care needs, a-s part of hospital services. Hence, the functions of private duty nursing, insofar as they are medically indicated, are already covered by Medicare as hospital services.

These professions vary greatly in the extent to which the prevailing pattern of delivery of services is through private, independent practice. Some of them generally provide services in organized settings with at least some of the elements of supervision and control that accompany an employment relationship. Hence, although the study considered independent practice for each profession, it also considered coverage under other forms of practice. Comparison of alternative methods of coverage was necessary in order to determine under which Medicare beneficiaries would be best served.

Methodology of Study

Primary considerations in the study were to assure that high quality health care is provided to persons 65 and over who are or will be beneficiaries of the Medicare program, and to assure that beneficiaries have adequate access to care.

It was recognized that some of the practitioner groups most interested in coverage under Medicare have not gained acceptance in the Nation’s present physician (i.e., doctors of medicine and doctors of osteopathy) oriented health care system, and that every effort should be made to assure that their requests for coverage receive unbiased, impartial consideration. The approach for the study, therefore, was designed to maximize objectivity through every phase of the undertaking.

In view of the time limitation established in the request from Congress, data from earlier and current related studies were relied upon for consideration of facts about each profession included, In addition, the professional organizations of the practitioners being studied were asked to submit basic ‘information about their professions, including: historical development of the profession; definition and clinical and scientific bases of the practice; education and training; relationships with other health care professionals and with health care institutions; and the needs of the elderly for the services of the practitioner.

Forty-eight consultants were appointed to examine the collected material and present their opinions in an advisory capacity. Twenty-two were members of an Ad Hoc Consultant Group established to advise on over-all aspects of the study, and 26 served on five specialty expert review panels, composed of three to eight members each. Consultant appointees were sought for their lack of bias and their knowledge ability; none served as a representative of any health profession with vested interest in the conclusions to come from the study. (See Appendix A for lists of consultants.)

The five expert review panels (one each on chiropractic and naturopathy; optometry; physical therapy, corrective therapy, and occupational therapy; psychology and social work: and speech pathology and audiology) served as technical and scientific advisors to the Ad Hoc Consultant Group. The panel members were selected on the basis of their scientific background and high professional reputations in their respective fields. These panels evaluated data submitted by each of the professional organizations, together with that collected by the staff of the Department. They brought to bear on the matters before the Ad Hoc Consultant Group their own knowledge of the education of the health professionals studied and of basic and clinical science.

The Ad Hoc Consultant Group served in an advisory capacity for the total study. Its members were Medicare beneficiaries and citizens, doctors of dentistry, medicine, and osteopathy, and other persons knowledgeable about health care delivery systems and financing, the needs of the elderly, and the education and qualifications of health professionals. This group discussed with representatives of each of the professional associations its position on independent practice in the Medicare program. They also reviewed analyses from the expert review panels and staff and reports from the professional associations of the disciplines studied.

Analyses requested and considered by the Ad Hoc Group identified possible changes in quality of services and patterns of delivery of medical care that might result from the requested changes in type or scope of Medicare coverage. Areas explored included the practitioner’s ability to institute proper treatment, to recognize problems beyond his competence, and to make a proper referral. Also included was analysis of the validity of the diagnostic or evaluation and treatment methods utilized by the various disciplines. The Ad Hoc Group considered the needs of the elderly for additional health services and advised as to measures to protect the health and safety of the beneficiaries.

Professional associations representing the practitioners being studied presented their points of view directly to the Ad Hoc Group and submitted in writing information they wished considered in the study. They did not, however, participate in the drafting of the final recommendations lest the Medicare beneficiary lose his position of primary consideration.

The Community Health Service, Health Services and Mental Health Administration, PHS, had primary responsibility for the staff work, supplemented by staff of the Bureau of Health Insurance, SSA. The National Institute of Mental Health, HSMHA, PHS, provided expert assistance in specific areas of the study. The Bureau of Health Professions Education and Manpower Training. National Institutes of Health, PHS, assisted in development of data on manpower. and the Office of the Actuary, SSA, prepared the actuarial estimates

Concept of Coverage for Independent Practitioners

Years of debate, discussion, and planning preceded passage of the Medicare legislation, but most of it centered on the benefit package known as the Hospital Insurance Program. In working Out this coverage, the planners had ample precedent and experience to call upon because of the similarity of the proposed Medicare coverage to traditional prepayment mechanisms for hospital care. The ideas and experience of the prepayment movement, with service benefits, comprehensive coverage (an ideal never realized), reimbursable cost, and vendor payments, were easily applicable to the objectives of Medicare hospital coverage under Part A. Hence, this part of Medicare was not experimental; the mechanisms to be employed were familiar, utilization data were available, and hospitals and fiscal intermediaries were relatively familiar with their functions under the program.

With the supplementary medical coverage, principally for physicians’ care but also for a few other related services, the situation was quite different. Added later in the planning for Medicare, this component of the program did not undergo the years of pre-planning in which concepts and mechanisms for coverage could be worked out in detail. Since physicians are predominantly in private solo or partnership practice (with the exception of hospital-based specialists and those in the scattered prepaid and other group practice plans), a method had to be devised to cover independent practitioners, This was not a matter of choice; it was a necessity. Previous experience with insurance coverage for physicians’ services was generally not applicable, since most insurance did not cover home and office calls and the only benefits of a comparable scope were those of prepaid group practice plans. Utilization data on use of physicians’ services under such a broad program were not available.

Hence, with Part B a new and untried mechanism of insurance coverage was introduced. Certain assumptions had to be made because of lack of precedent, experience, and applicable statistics. Problems were anticipated, but experience had to be gained before the assumptions could be tested. Part B was, in fact, an experimental program.

Present Medicare Coverage

With certain minor exceptions, physicians are the only practitioners whose services in independent practice are covered under the present Medicare law. The law defines “physician” to mean a doctor of medicine or osteopathy and, for certain of their services, dentists and podiatrists. Services of most of the practitioners included in this study are covered only if given as part of the services of Medicare-approved providers, or if provided as incident to the services of a physician.

When the service is furnished as a provider service. the practitioner may be an employee of the provider, or he may be self-employed or employed by another agency and perform the service under a contractual arrangement with the provider. In either case, billing for the practitioner’s services must he by the provider and Medicare reimbursement is made to the provider on the basis of reasonable cost of the services. A contractual agreement between a practitioner and a provider of services must indicate that payment by the Medicare program to the provider for the practitioner’s services discharges the liability of the beneficiary or any other person to pay for the services.

To be covered as incident to a physician’s care, services must be of kinds that are commonly furnished in physicians’ offices or clinics and are commonly rendered without charge or included in physicians’ bills. The intent is that only those services that are administered as an integral part of the physician’s professional services of diagnosis or treatment and that represent an overhead expense to his practice may be covered under this provision.

Generally, if a practitioner is an employee of the physician and furnishes the services under the physician’s supervision in his office. his services are covered. Services may also be covered if provided in a physician-directed clinic, under the supervision of a physician other than the attending physician. Payment to the physician is on the basis of reasonable charges.

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