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Charles Heisterkamp, III M.D., F.A.C.S
HOGG and HEISTERKAMP
721 North Duke Street
Lancaster, P.A. 17602
June 24, 1985
George Fisher, M.D.
Chairman, Council on Medical Economics
829 Spruce Street Ste 308
Philadelphia, PA 19107
I thought you would be interested in the two publications from the Lancaster County Business group on health.
As you can see from the first one that they are supporting this proposed Pennsylvania Health Data Council. This appears to be an area where we will have to establish a strong argument either to deny its value or as a possible alternative suggest that this type of data is important for purchases and that quality and efficiency of a number of services are difficult to determine. This should include automobile repair, electrical repair, plumbing, etc. An interesting counter-proposal might be that this type of data needs to be made available for all services. It is not really an idea that I am very fond of but I suspect its subtle suggestion would send shivers up a few spines.
Charles Heisterkamp, III, M.D.
LANCASTER COUNTY BUSINESS GROUP of HEALTH
30 W. Orange Street, P.O.Box 1558, Lancaster, PA 17603 (717) 397-3531
PA Chamber to Introduce Health Care Cost Containment Legislation
Since mid-1984, the Pennsylvania Chamber of Commerce's Health Care Committee has been working to develop a package of legislative initiatives designed to introduce more competition into the Commonwealth's delivery system for healthcare. That package is now complete and was expected to be introduced into the legislature the week of June 10.
The package, composed of four separate but related bills, will enable Pennsylvania to undergo a rapid shift toward becoming a predominantly competitive marketplace.
As the core of the PA Chamber legislative package is a realization of the need to collect and disseminate comparative data on the cost, utilization, quality, and efficiency of medicare care on a provider-specific basis. This information, necessary for payers and consumers to make prudent purchases of healthcare, is currently difficult or impossible for anyone but self-insured employers to secure.
Through a proposed PENNSYLVANIA HEALTH DATA COUNCIL, envisioned as a quasi-public entity, data would be collected, analyzed, and disseminated. Coalitions across the state are particularly enthusiastic about this aspect of the proposed legislation since data collection has been a stumbling block for coalition members attempting to identify price and quality criteria by specific physicians and hospitals.
The second of the four bills in the package would place a temporary cap on hospital expansion. The intent of this action is to strengthen the present certificate of need (CON) process for healthcare providers. The bill's proponents believe that present financing programs have encouraged hospitals to undergo renewal at a rate which exceeds that which is necessary for Pennsylvania given its population, size, and industry mix. Pennsylvania led the nation in 1983 by spending $650 million on hospital expansion. Part of the reason for this huge sum is the state's liberal financing mechanism for hospital renewal. The Chamber's proposal would cap on a temporary basis the expenditures permitted by hospitals and free-standing technology centers.
Based on the current total value of hospital assets, and allowing a 4% growth rate, a $200 million limit would be imposed for each of the next four years.
Cost containment through utilization review constitutes the third of the four bills. This would require the Departments of Health and Insurance to promulgate standard utilization review requirements. This would provide coverage for second surgical opinion frequently varies as to prescribed treatment. Surgery which can be performed on an ambulatory basis will be encouraged.
The proposed legislation would also require hospitals to cooperate with utilization review providers when conducting effective utilization review programs.
The final part of the cost containment package addresses the troublesome issue of mandated benefits legislation. This proposal would provide that all mandated health insurance coverage and mandated health benefits be accompanied by certified documentation regarding the social, medical, and financial impact o such mandates. The legislature would take action only after such documentation would be made available.
The PA Chamber Is not alone in introducing a legislative package aimed at health care cost containment. Organized labor has developed and introduced its own legislation package creating regulation through a proposed Health Care Cost Reform Commission.
Health Care Issues in the 99th Congress
The 99th Congress has begun work on a variety of health care issues, most of which are left over from the 98th Congress. Several proposals designed to contain costs have been introduced. In March, Rep Gephardt (D-MO) introduced H.R. 1801, his all payor rate regulation from the 98th Congress. This bill would impose revenue limits on hospitals and physicians and would require states to cover care for low-income, uninsured, and under-insured individuals.
Rep. Dannemeyer (R-CA) has introduced H, R, 1791, the "Employee Health Care Cost Reduction Act," which would give workers incentive to accept higher deductibles in return for a contribution by their employers to an IRA account. When medical expenses subject to the deductible are incurred, the account holder could withdraw a like amount from the pay tax on the amount withdrawn, or pay the expenses out-of-pocket.
Two other cost containment measures have been reintroduced from the 98th Congress. Senator Specter has introduced S. 379 which would permit health plan payers to collect data cooperatively and negotiate jointly with providers, without violating antitrust laws or the Federal Trade Commission Act.
H.R. 733 introduced by Rep. Wyden (D-OR) would remove obstacles to PPO's by permitting group health plan payers and providers to negotiate "alternative" payment rate agreements, notwithstanding some state laws that appear to prohibit such arrangements.