THE PRESIDENTIAL COMMISSION
on the
HUMAN IMMUNODEFICIENCY
VIRUS EPIDEMIC |

H EARI N G O N Financing the Costs of the HIV Epidemic

April 26-27, 1988

 

 
 

 

August 24, 1988

TO OUR READERS:

The Presidential Commission on the HIV Epidemic held over 45
days of hearings and site visits in preparation for our final
report to the President submitted on June 27, 1988. On behalf
of the Commission, we hope you will find the contents of this
document as helpful in your endeavors as we found it valuable
in ours. We wish to thank the hundreds of witnesses and
special friends of the Commission who helped us successfully
complete these hearings. Many people generously devoted their
volunteer time in these efforts, particularly in setting up
our site visits, and we want to fully acknowledge their work.

The staff of the Presidential Commission worked around the °
clock, seven days a week to prepare and coordinate the hearings
and finally to edit the transcripts, all the while keeping up
with our demanding schedule as well as their other work. In
that regard, for this Hearing on Financing the Costs of the
HIV Epidemic, we would like to acknowledge the special work

of Jackie Knox, Daniel Wartonick and Bert Swift, in putting
together the hearing, and Margo Payne and Macy Moy, in editing
the transcript so it is readable.

For the really devoted reader, further background information
on these hearings is available in the Commission files, as well
as the briefing books given to all Commissioners before each
hearing. These can be obtained from the National Archives and
Records Administration, Washington, D.C. 20408.

One last note--We were only able to print these hearings due

to the gracious and tremendous courtesies extended by secretary
Bowen's Executive Office, especially Dolores Klopfer and her
staff, Reginald Andrews, Sandra Eubanks and Phyllis Noble.

Sincerely,

Poll - Gaul Gloria B. ‘Smith
Executive Director Administrative Officer

 

 
 

 

PRESIDENTIAL COMMISSION ON THE

HUMAN IMMUNODEFICIENCY VIRUS EPIDEMIC

COMMISSIONERS

ADMIRAL JAMES D. WATKINS, CHAIRMAN
UNITED STATES NAVY (RETIRED)
COLLEEN CONWAY-WELCH, Ph.D.

JOHN J. CREEDON
THERESA L. CRENSHAW, M.D.
RICHARD M. DEVOS
KRISTINE M. GEBBIE, R.N., M.N.
BURTON JAMES LEE, III, M.D.
FRANK LILLY, Ph.D.

HIS EMINENCE JOHN CARDINAL O'CONNOR
BENY J. PRIMM, M.D.
REPRESENTATIVE PENNY PULLEN
CORY SerVAAS, M.D.

WILLIAM WALSH, M.D.

 

 
PRESIDENTIAL COMMISSION ON THE
HUMAN IMMUNODEFICIENCY VIRUS EPIDEMIC

FINANCING THE COSTS OF THE HIV EPIDEMIC
The Hearing was held at the
Interstate Commerce Commission Building
Hearing Room B
12th and Constitution Avenue, N.W.
Washington, D.C.

Tuesday, April 26, 1988

COMMISSION MEMBERS PRESENT:
ADMIRAL JAMES D. WATKINS (Ret.), CHAIRMAN
COLLEEN CONWAY-WELCH, PH.D.
KRISTINE M. GEBBIE, R.N., M.N.
FRANK LILLY, PH.D.
CORY SERVAAS, M.D.
POLLY L. GAULT, EXECUTIVE DIRECTOR
COMMISSION MEMBERS NOT ATTENDING:
JOHN J. CREEDON
THERESA L. CRENSHAW
RICHARD M. DEVOS
JOHN CARDINAL O’ CONNOR
BENY J. PRIMM
PENNY PULLEN

WILLIAM B. WALSH, M.D.
I-N-D-E-X-
PAGE

WELCOME
Admiral Watkins, Chairman 1

PANEL ONE
COSTS TO THE INDIVIDUAL WITH AIDS
Larry T. Ellis, Member of Lifelink 2

Kevin Heinz 3

PANEL TWO
HIGH COSTS OF INPATIENT HOSPITAL CARE
Jo Ivey Boufford, M.D., President 24
New York City Health and Hospital
Corporation

John W. Burnside, M.D., Associate Dean 27
for Clinical Affairs, University of Texas

Southwestern Medical Center at Dallas, Texas

and appearing on behalf of National Association

of Public Hospitals

William H. Johnson, Chief Executive Officer 29
University of New Mexico Medical Center and

Chairman, Special Committee on AIDS/HIV Infections

Policy, American Hospital Association

Robert H. Parrott, M.D., Director Emeritus, 35
Children's Hospital Center, and Chairman,

AIDS Task Force, National Association of Children's
Hospitals and Related Institutions, Inc.

PANEL THREE
FINANCING OUT OF HOSPITAL CARE ALTERNATIVES
Pamela Maraldo, Ph.D.,R.N.,F.A.A.N., Chief 73
Executive Officer, National League for Nursing

Robert M. Crane, Vice President, Government Relations 75
Kaiser Foundation Health Plan, Inc.

Steve C. Anderman, Deputy Director 77
Division of Health Care Financing, New York State
Health Department

Paul L. Riger, Executive Director and Chief Executive 81
Officer, Visiting Nurses Association of D.C. on
behalf of the National Association of Home Care.

Benn Brown, Associate Director 82
AIDS Resource Center and Bailey House
I-N~-D-E-X (continued)

PAGE
PANEL FOUR
ASSESSMENT OF TOTAL COSTS AND NATIONAL ECONOMIC
IMPACT
Jane E. Sisk, Ph.D., Health Program 107
Office of Technology Assessment
U.S. Congress
Anthony H. Pascal, Ph.D., Senior Economist 110
The RAND Corporation
John D. Thompson, M.S., Yale University School 113
of Medicine
J. Patrick Rooney, Chief Executive Officer, 115

Golden Rule Insurance Company
P-R-O-C-E-E-D-I-N-G-S
10:07 a.m.

MS. GAULT: Ladies and gentlemen, members of the
President’s Commission, distinguished guests, my name is Polly
Gault. I am the designated federal official here today, and in
that capacity it is my pleasure to declare this meeting open.
Mr. Chairman?

OPENING REMARKS

CHAIRMAN WATKINS: Good morning, and welcome to our
public hearing to discuss financing the costs of the HIV
epidemic. As we’ll hear over the next two days, the costs of the
epidemic are great in terms of the cost to the individual and the
cost to society.

Estimates of lifetime medical care costs to treat an
individual with AIDS range from a low of $23,000.00 to a high of
$168,000.00. Total costs for loss of productivity from sickness
or premature death of persons with AIDS are estimated in the tens
of billions of dollars. The costs of human suffering and loss to
our society are immeasurable.

The panels testifying today and tomorrow will discuss
these costs from their unique perspective, as individuals with
the HIV infection, as care providers, as economic analysts, and
as representatives of private, state and federal financing
sources. These experts are from different geographical locations
in the country, close enough to the battle front to understand
these issues, but with a broad national perspective for making
recommendations.

Issues we will examine will include: how can we
better utilize our resources; how can we provide more cost
effective care; what are the alternative funding streams; and,
how can we find an equitable financing solution to the many costs
of the HIV epidemic. We will evaluate options for financing the
costs of health care and prevention, which the Commission will
consider for inclusion in its final report due on 24 June, 1988.

COSTS TO THE INDIVIDUAL WITH AIDS

CHAIRMAN WATKINS: This morning, we are opening our
hearing with testimony from two people with AIDS, who have
suffered the economic hardships of this illness, Mr. Larry Ellis
and Mr. Kevin Heintz. We would like to commence then with the
statement from Mr. Larry Ellis.

MR. ELLIS: Good morning, and thank you for the
opportunity to share with you on the subject of the financial
costs of being diagnosed with AIDS and living with AIDS. My own
case is not dissimilar to the thousands of persons nationally --
CHAIRMAN WATKINS: Mr. Ellis, would you pull that
microphone just right up next to you there so we can hear you
clearly?

MR. ELLIS: Is that better?
CHAIRMAN WATKINS: That’s better.

MR. ELLIS: Okay. My own case is not dissimilar to the
thousands of persons nationally who have felt, at the most
personal level, the catastrophic financial impact of AIDS.

During my hospitalization with pneumocystis carinii pneumonia in
February, 1987, my insurance was cancelled by my employer on the
guise that I hadn’t worked sufficient hours to remain in the
group. I had been with the company for four years.

It was necessary to apply for Medicaid to meet bills
for hospital, doctors and medications. My personal capital
reserve had been wiped out. Shut-off notices had been sent on
utility bills, regular monthly accounts fell behind, and the
landlord had sent an eviction notice.

At this point, the only thing that kept me afloat was
the kindness of friends and limited direct financial assistance
from local AIDS charity funds.

But, words cannot express to you the level of tension,
stress and frustration operating in my life during this time. I
racked my brain for ways to work out the practical details of
surviving, keeping a place to live, something to eat, sorting out
all the back bills, and, generally, bringing a level of normal
back to my life.

Knowing that Social Security disability benefits would
take months to come, I applied while still in the hospital anda
worked out tentative budgets down to the penny to keep body and
soul together. I knew that Social Security would not be enough
for me to live on, and, again, looked to my friends, without
whose help I surely would have lost my mind.

Later on, additional pressure built up because I
couldn’t work, even though I felt physically able to perform at
least part-time work. Social Security requirements that
applicants perform no gainful work for the first full year is
extremely counter-productive in dealing with the costs of AIDS,
both to the individual directly involved and to the relevant
local, state and federal social service systems.

Once a diagnosis of AIDS has been confirmed, there is
no further doubt about a given amount of disability. Why not
let individuals return to as much gainful employment as possible,
aS soon as possible?
 

 

Presently, the system requires that you be made to
suffer and become destitute in order to prove that you qualify
for not enough to live on.

The same kind of stripping of all stability applies to
Medicaid. Spend it down to destitution in order to qualify for
meager medical assistance, when in some cases people would fare
better if the system allowed them to keep their resources, and
jobs, or work, and receive some rounding out benefit.

So, I suggest that a major overhaul of guidelines and
regulations governing income from employment, while under
consideration for disabled status, be put underway.

Presently, there is a completely negative cash flow
from entitlement programs. Cost of entitlement assistance could
be cut dramatically and immediately, simply by allowing people to
secure work.

With imagination, innovative thinking, strong
leadership systems can be changed, or new ones put into place
which will allow citizens to receive needed support while
remaining a positive force in the tax base. Thank you.

CHAIRMAN WATKINS: Thank you, Mr. Ellis. Mr. Heintz?

MR. HEINTZ: Yes. I’d like to thank you for letting me
testify here.

Due to the early symptoms of AIDS, dementia and
fatigue, my once thriving business began to slip. Since this was
early in the fight against AIDS the symptoms were neither
recognized nor treated. As the symptoms progressed my business
failed and I was forced to close the doors and file chapter 7 for
the corporation and also file personal bankruptcy. Towards the
close of the business my symptoms were so severe that routine
matters were left unattended. One item that was inadvertently
forgotten was regular perusal of mail, and the renewal notice for
my health insurance policy was not acted upon. I also, on
several occasions, forgot to close the store. The loss of my
business was an emotional hardship I was not prepared to bear.
With my life now full of anxiety my health began a rapid decline.

The closing of my business came at a cost of
$257,000.00 in assets, about $180,000.00 of uncompleted business,
and the loss of future profits. Two years later personal losses
due to the bankruptcy are still a problem. The IRS has a lien on
my home for tax assessment and I have no resources to settle the
account. At the time of the bankruptcy I also lost my credit,
automobile, my standing in the community, and my confidence.

 

 
 

 

A month after I closed the business I became so sick
that I was unable to even go grocery shopping. I saw a doctor
three times before he took a chest x-ray, and he then informed me
that he would not be able to treat me and I should look for
another physician. I returned to my old physician in Washington
and he treated me for PCP, pneumocystis carinii pneumonia. My
medical bills for the first bout of PCP were 70 percent paid by
Maryland State Medicaid with the balance outstanding. I was not
given extended eligibility to Medicaid since my income was
$626.00 per month, and Medicaid is cut off after $470.00. In
order to qualify for further Medicaid I have to accumulate
$1,500.00 in claimable medical expenses every six months. This
process is called a spend down and has no consideration for
honest ability to fulfill these debts. Several months later, I
returned to the emergency room with my second bout of PCP. The
hospital called my physician who told them that since I was on
Medicaid he would no longer treat me. After fourteen hours of
trying to find a physician who would accept Medicaid I was
admitted to the hospital under general care without a physician.

During the five months between my initial disability
and eligibility for Social Security disability payments, I had no
income. My SSD award is $626.00 per month. I collect $79.00 per
month in food stamps and receive energy assistance in the winter
months which last year amounted to $240.00. My home maintenance
costs are minimal because I live in a low-income area. I have no
leisure expenses. My monthly expenses are mortgage, $610.00,
electricity, $45.00, cooking gas, $18.00, heating averages
$70.00, transportation to medical care, $80.00, and telephone,
$40.00. Despite the fact that the telephone affords a necessary
link with medical care and family support. C&P has no provision
for the disabled. These costs total $863.00 per months, $237.00
more than my income.

At the time my illness began, AZT was not approved and
was not available for anyone who had PCP. My physician told me
nothing helps, and your life expectancy is six months. This was
substantiated by five other physicians.

I am not willing to die without a fight. I went to the
library to read medical journals, contacted other PWAs, and
subscribed to several treatment newsletters. I discovered that
about 15 percent of PWAs are surviving because they refuse to
accept the medical profession’s "nothing" treatment. At the
time, the three most common alternative treatments were
meditation/visualization, Isoprinosine, and Ribavirin.

Meditation was readily accepted although never prescribed.
Isoprinosine received heavy criticism among the medical community
which made it very difficult to obtain, causing most PWAs to stop
taking it. Three and a half years later, Isoprinosine is the
subject of research and, provided FDA approval results, will be
available in the fight to save lives. In the meantime, many who

4

 

 
 

 

have been denied it have died. Ribavirin has not shown any real
promise in the treatment of AIDS. Ribavirin has shown less
toxicity than many treatments tested at NIH.

By continuing my research, I found medications I could
combine to both inhibit the virus and stimulate the immune
system. Some of these drugs I can get in the U.S., but others
have to be bought from overseas through other channels. Since I
have been on this combination, I feel better than I have in two
years, and my blood count has stabilized. The drugs obtained
from overseas cannot be tested by the FDA for treatment of AIDS
until they have been tested for toxicity. This takes about 18
months.

The costs of these alternative medications vary but the
channels which bring them to the PWA are all non or low profit.
My current cost for alternative drugs is $525.00 per month, which
is paid by friends and memorial funds. The combined cost of
these drugs is less than the cost of AZT.

If the treatment of AIDS remains unattended then
America will continue to experience its own Holocaust.

CHAIRMAN WATKINS: Thank you very much, Mr. Heintz, and
we appreciate the great detail that you put into your statement.
I think those numbers will be valuable to us.

Let me start the questioning this morning, and then I’d
like to move over to my left to Dr. Lee. I’d like to focus on
spend down a little bit. It’s a fascinating area to me, and one
that I think is very critical to the issue of Medicaid, because
there seems to a ring of unfairness. I’d like to know a little
bit more.

If you would take your own situation, Mr. Heintz, for
example, and you were to sit back as an objective observer and
say, what would have been fair in dealing with you, vis-a-vis
Medicaid, getting down to the point where you were justified to
apply? What would have been a fair formula, in your own mind?
Have you done any thinking, looking at the fact that a change
would also impact other diseases, how Medicaid was applied? Is
there a fairer formula that can be worked out, depending on
circumstances of individuals that would make more sense than the
current spend down, go into bankruptcy, poverty and so forth, to
be able to even get the funds that are still inadequate to
survive? Could you give me any ideas about that?

MR. HEINTZ: Sure.

CHAIRMAN WATKINS: Take your particular case and look
back at it.

 

 
 

 

MR. HEINTZ: In the area of spend down, and what’s
available through the Medicaid, the cut-off point for the amount
of finances that you can earn is set at an amount of money that
is far below what anyone could actually live on today. There is
no way possible. Look at the costs for rents for a studio
apartment in this city, and you are talking more money for rent
than what the Medicaid allows you to even make before they will
activate medical care.

Rather than basing the Medicaid benefits on the actual
amount of finances that the person is receiving, draw a
correlation between the finances that the person is receiving and
the honest costs of existence in the community that person is
living.

There is no consideration for many of the very
important aspects of life, particularly, when you have a medical
problem, you have to have a telephone. But, those costs are not
counted against the different costs that the Medicaid issue
considers. They only consider income. It is purely looked at,
income and resources that you might have. So, you don’t have any
resources.

Now, I do a spend down. With that spend down, I have
to accumulate the difference between the cut-off of Medicaid and
what my income is, and bills for the total length of time that
Medicaid will be effective. For me, that’s $1,500.00.

Now, I do not have $1,500.00 to spend on the first
month of my eligibility for Medicaid, but yet, I have to
accumulate the bills for that time period. The way it is written
on the Medicaid laws, it is physically, totally impossible to pay
the bills that are necessary. It is a forced accumulation of
debt with no means of payment. And, that’s not only not fair,
it’s also not fair to the medical comnunity.

If I go in the hospital starting May 1, I have
absolutely no way to pay for that bill until it has gone in
excess of $1,500.00, and there is no way to pay that $1,500.00.
But, that $1,500.00 has to be accumulated prior to Medicaid
kicking in and paying what is then the balance.

CHAIRMAN WATKINS: Mr. Ellis, do you have anything to
add? Have you taken a look at your own situation and this
particular focus on spend down as to what you would do in your
case to have generated a fairer formula and relationship between
survival, living you might say, and what you were able to achieve
through Medicaid?

MR. ELLIS: Well, I think that Kevin has spoken to the
question. If you do not have friends or access to some funds,
some charity, some form of direct assistance to survive, you will

6

 

 
simply cease to exist. Current regulations are a Catch-22. The
system is there to serve you, yes, once you qualify into it, but
what it puts you through to qualify to its standards, that, in
and of itself, is detrimental to your health.

There is an assumption that we’re missing, I think,
also, is that once you’ve got Medicaid your problems are solved.
That isn’t so. Physicians are not required to see you in the
District, right here in Washington, 60 percent of D.C. Medicaid
is concentrated in one medical practice, in an office of two
physicians, because other physicians have either saturated
themselves and will accept no more, or they simply don’t want to
treat people who have to pay by Medicaid. That’s $14.00 for an

office visit in the District.

So, getting Medicaid doesn’t solve your problems. Your
fight is not through, in terms of maintaining a good standard of
health care.

I’m simply lucky. I just have good doctors who take
care of me, so I’m not here to advocate for Larry Ellis. I’m
speaking to all those who don’t my good luck, and maybe some of
the good luck Kevin has had. But, I think that both of us are
here today, as well as we are, just because we’re lucky, not
because Medicaid worked for us, or any of the other systems out
there to which I applied.

The problem simply is that, if you have X numbers of
dollars in an account, or you have assets that can be liquidated
easily, you have to use all of that up in order to entitle. I
say, let the individual keep as much of their financial
independence as possible, and give them something to boost it,
rather than stripping them of whatever cash reserve they may
have, assets they may have. I believe that they will live longer
in a better state of health and general quality of life if they
are able to keep their assets, rather than having them all
stripped away to simply qualify for not enough.

CHAIRMAN WATKINS: So, would you agree with Mr. Heintz
there should be some indexing to some sort of a cost of living
standard, rather than a fixed income concept?

MR. ELLIS: No question.

CHAIRMAN WATKINS: And also, some sort of a more
graduated spend down concept that would give you some potential
to survive over a period of time --

MR. ELLIS: Yes.

CHAIRMAN WATKINS: -- with the resources you have,
coupled with some support, some underpinnings.

7
MR. ELLIS: Exactly. I think that a person will fare
better if they have resources. Let’s look at the population who
had AIDS who have some degree of resources, that they’1l simply
do better if they’re allowed to maintain that rather than having
it snatched away. And, there is no housing if you lose your
apartment.

 

CHAIRMAN WATKINS: Is it your feeling that somebody
pays the bill anyway, at some point, someone other than you? In
other words, if you cannot pay the bill, somebody else is paying
that bill, the government, for example, eventually, or some
hospital that has to pick up unpaid bills? Does somebody pay it,
or is it just that the health care doesn’t get delivered at all?

 

MR. ELLIS: Some of both. The assumption that people
are getting health care is incorrect. There are a lot of people |
who need health care in this country and don’t receive it, AIDS
aside, and the problem is complicated by AIDS.

But, some of both. People don’t necessarily get health
care, and when it is delivered, normally the bill is picked up
somewhere along the line, either by the charity fund in the
hospital itself, or if the doctor is connected with such a fund
to relieve some of that financial load by Medicaid. People are
living longer, SO you are going to see this occur in Medicare,
which raises a host of other questions, because of the SSDI
benefits, you are then expected to pay a part of your
prescription and a part of your health care, and that benefit
already is not enough to survive on. ,

So, it gets very complicated, and it is burdensome to
the individual who is trying to live under this circumstance, and
certainly to the systen.

CHAIRMAN WATKINS: Thank you. Dr. Lee?

DR.LEE: Mr. Chairman, could you elaborate a little
bit on what scheme you are driving at?

CHAIRMAN WATKINS: I’m not really driving at any
scheme, but I’m trying to get some ideas, because we’ve heard
this from many of the persons with AIDS who have come before the
Commission. I was trying to get in mind some concept that they
may have that would make Medicaid work better, more human and
more reasonable. I’m just trying to elicit from their point of
view, because they’ve been through it, and they gave us a lot of
data.

DR.LEE: I work at a hospital in New York City,
Memorial. If you come in, there is no consideration whether you
are going to be accepted as to how much money you have, really.

8
 

 

You come in, and if you don’t have any money, the social workers
get you set up with Medicaid.

Now, what you are driving at, as I understand it, are
the people on the whole, who have a little money, who don’t want
to spend it all before they get into Medicaid. Is that right?
What group that slips through are you talking about then?

MR. HEINTZ: Well, the costs of AIDS are not limited to
only the hospital visit. The cost of dealing with AIDS is very
high-cost medical care that continues far beyond the hospital
visit, and starts long before the hospital visit. That is where
the main source of the problem comes fron.

If you have a prescription, the antibiotics I take cost
anywhere from $70.00, $80.00, $90.00 per shot. Now --

DR.LEE: But, Medicaid pays for that.

MR. HEINTZ: If I’m not on the spend down time period.
If I’m on a spend down time period, I have $626.00 for the month
to live on. During that month, say I have $400.00 worth of
prescriptions and office visits that I have to deal with. That
leaves me $226.00 to pay my rent, my mortgage, but not counting
utilities or anything.

DR.LEE: But the hospital, at least doesn’t make you
pay that. You just run that up, you are eligible for Medicaid --

MR. HEINTZ: Hospitals are the only ones that do that.
What do we do about prescriptions? What do we do about our
doctors’ visits? What do we do about any other form of medical
costs that comes up? The ideal way to deal with the spend down,
and the way that the system works, is to go to the hospital and
let that $1,500.00, or whatever your spend down amount is,
accumulate, and then you start getting collection notices once a
week in the mail hounding you for the payment from the hospital.
That really is very good for my emotional state.

DR.LEE: Now, you are talking about going to the
clinic. I’m not talking about in, I’m talking about outpatient.

MR. HEINTZ: Outpatient clinics are really -- you
know, that’s great if I have an association with an outpatient
Clinic. But, quite honestly, the outpatient clinics only treat
me with verbal -- you know, a pat on the back. I don’t qualify
for AZT, because my blood counts are too low, and there is
absolutely nothing the clinics will do for me. I go to
personal, private physicians that work with me and take a little
risk in trying to treat me. Clinics are useless at this stage.

 

 
 

 

DR.LEE: Well, some clinics may be, certainly not
our’s.

MR. HEINTZ: All of them in this city are.
DR.-LEE: All of them in New York City are?

MR. HEINTZ: In this city, Washington, D.c. I am not
familiar with the clinics in New York. I do know that the main
treatment clinics in this city, mainly speaking of George
Washington University Hospital and Georgetown Hospital, both have
such a conservative approach that the things -- that the only
thing that is used to treat AIDS is AZT.

DR.LEE: Well, let me drop that one. Let me ask you
another question. If the waiting period for Medicare was
dropped, would that solve the problem?

MR. HEINTZ: How would I pay for my prescriptions?
DR.LEE: Medicare --
MR. HEINTZ: Does not pay for prescriptions.

DR.LEE: -- Dr. Boufford, doesn’t Medicare pay
for -- no outpatient coverage on Medicare at all.

MR. HEINTZ: Correct.
DR.LEE: Okay. I/’11 pass.
CHAIRMAN WATKINS: Dr. Lilly?

DR. LILLY: I’d just like a little bit more in the way
of detail about the $525.00 a month worth of alternative drugs
that you acquire.

MR. HEINTZ: You are asking detail or --

DR. LILLY: Just, roughly, what does this consist of?
How much goes to each drug and so forth?

MR. HEINTZ: I’m paying a little over $200.00 a month
for the Salk Polio vaccine which I inject into myself three times
a week. That is probably the most effective alternative I’ve
been on, and that showed a tremendous change in my energy level.
I‘ve been on it for five months now, and it is paid by a memorial
fund which I have connections with out of Baltimore. I also am
experimenting with Dextran Sulfate out of Japan. It has shown
some very strong benefits in stabilizing my blood count. By the
way, my blood is monitored weekly through all of this.

10

 

 
 

 

DR. LILLY: Who does that, or what type person?
MR. HEINTZ: My personal physician.
DR. LILLY: A private physician.

MR. HEINTZ: Yes. I don’t believe that anyone should
do this type of experimentation without letting his physician
know. I take the Dextran Sulfate, and it, in combination with
very low doses of AZT, has shown very strong evidence in
stabilizing the drop of my blood count.

DR. LILLY: You are taking the low doses of AZT?

MR. HEINTZ: I’m taking quarter doses of AZT. And,
I’ve been on that for six months now. My white count continued
to drop the entire time I was on that, until I added in the
Dextran Sulfate. At that point, my blood stopped dropping and
actually --

DR. LILLY: So, that’s it for what you are actually
taking now, or is it?

MR. HEINTZ: No. I am also taking a high dose of
Acyclovir.

DR. LILLY: Of what?

MR. HEINTZ: High dose of Zovirax.

DR. LILLY: Okay.

MR. HEINTZ: I’m also taking very high doses of that.

DR. LILLY: Okay. Now, much of what you are taking
then is experimental, right?

MR. HEINTZ: Correct.

DR. LILLY: And unproven. So, I’m very sympathetic
with the desire to do something.

MR. HEINTZ: Yes.

DR. LILLY: On the other hand, I see difficulties in
trying to get a health insurance set-up, such as Medicaid,
Medicare, et cetera, to finance that type of experimentation. In
essence, self-experimentation. You are the one who is directing
that therapy, right?

MR. HEINTZ: Correct, and I do understand what you are
saying, and I do agree with you to a limited context. However,

11

 

 
 

 

if the system was taking a more honest look at medications and
trying to get those experimentation medications to AIDS patients
through other channels, that would not be necessary.

But, anyone that has a white count that is an obvious
AIDS white count, a low white count --

DR. LILLY: Yes.

MR. HEINTZ: -- is not eligible for protocols, and
then, if you have a low white count, you are also not eligible
for AZT. So, what do you do?

DR. LILLY: I don’t have the answer to that. I wish I
did e

MR. HEINTZ: If there was a way for people to
participate in these protocols under an organized fashion, it
would be one thing, and this underground network for treatment
would not be necessary.

But, under the current restrictions that the FDA has,
grant approval and drug protocol approval takes so long, and it
seems that the more promising ones are the ones that never seem
to get up there to the actual process.

DR. LILLY: Thank you.
CHAIRMAN WATKINS: MRs. Gebbie?

MRS. GEBBIE: First, just a clarification, Mr. Ellis.
I think I was following another train of thought when you said
something about your cancellation of your insurance. Was it
cancelled in connection with loss of a job because you were too
ill, or were you still working and lost your insurance for some
other reason?

MR. ELLIS: Well, I don’t know what my employer or
former employer would tell you if they were sitting here, but it
was cancelled because they saw all the potential of -- well,
Prudential is the insurance company involved. I’m not
necessarily the friend of insurance companies, but Prudential
didn’t cancel me, the employer did. And, I think that was
simply out of fear of seeing a great medical bill develop for me.
And, they certainly had to know it was AIDS related, and the
typical hysteria, they just wanted out, not knowing what I would
do, or assuming that I’d be dead in a few weeks. They tried to
get away with a fast one and cancelled the insurance while I was
in the hospital.

MRS. GEBBIE: But, while you were still on the payroll
of your employer, through whom you had purchased the insurance?

12

 

 
 

 

MR. ELLIS: Oh, yes, absolutely. I was not
terminated, or fired, and had not quit. I had become ill and was
admitted to the hospital. So, I was still technically employed.
I was in the hospital with pneumocystis, and it was at that time
that the hospital social worker, or someone from their business
office, came into the room and announced that my insurance had
been cancelled.

MRS. GEBBIE: Thank you for clarifying that. We have
heard, and I have heard in a number of settings, that group
purchased insurance, as long as one is still employed, generally
remains available, and you, obviously, give us an example of how
that does not always happen.

MR. ELLIS: Well, technically, it does. If the
employer, and sometimes the insurance company, think that you are
naive, or that you won’t sue, or that you won’t pursue the
matter, then there are a lot of things people will try to get
away with. They guess at what your reaction is going to be.

I was not through with the employer and had some things
that I wanted to do with them, so I decided not to sue, even
though I had certainly every opportunity to, and many, many
people encouraged me to do so, but I didn’t for other reasons.

MRS. GEBBIE: You two have both shown a good deal of
perseverance and ingenuity in stretching the resources you have
available and trying to make the system work for you.

Do either of you, through your various contacts, have
any sense of either what number of what proportion of persons ill
with this infection simply do not seek any care at all during the
intervals between such acute illness that they end up ina
hospital without any coverage at all? Do you have any sense of
how many folks just say, the heck with the whole system?

MR. ELLIS: Information that reaches us in the National
Association of People with AIDS, I would say at least a full one
quarter, if not more, of those diagnosed now basically got to
health care too late to enjoy a lengthy survival with HIV.

These are generally poor people, people who are under-
educated, not accustomed to doctors, or simply don’t know how to
use the system. It requires great perseverance to get Social
Security, to get Medicaid, to get food stamps. The attitude of
social workers, and we’ve done a lot of sensitizing and training
around that issue in various departments of governments and
cities, it’s really unbelievable. I wish you could make
yourselves invisible and go to any of these intake offices on any
day of the week and see how clients are treated, the
misinformation, half information and a very dizzy person leaves

13

 

 
 

 

there not knowing what he or she has accomplished or what they
are supposed to do next.

In the District, other large cities, Houston, the West
Coast, most indigent whites, blacks, Latinos, get to the hospital
too late and they simply die. Two weeks ago I had to stand in
the emergency room at D.C. General and raise high holy hell to
get a man admitted who was dying of Wasting Away Syndrome, and
they rehydrated him. After we left, they called his family and
said, come and pick him up, so I had to go right back and do the
same thing first thing Monday morning, threatening lawsuits, and
finally the man was admitted and kept for nearly two weeks and
stabilized.

This is not uncommon and it is just not in Washington,
it’s everywhere. It depends on who you are, how well connected
you are, who you know, whether you know how to work the systen,
as to how you survive with AIDs or any other condition.

If you are the average person who is relying on the
concern of employees in a social service agency to advocate for
you and tell you what you can do, then you are going to die.
It’s just that simple, and those are facts.

MRS. GEBBIE: Do you agree with Mr. Ellis’ estimate
that roughly a quarter of ill individuals are just not getting
care?

MR. HEINTZ: Yes, I would agree with that.
MRS. GEBBIE: Okay.

MR. HEINTZ: I have a personal friend who has been
trying to get on Social Security disability for about a year and
a half now. The fatal mistake that was made was that his case of
pneumocystis was caught early. He didn’t go into the hospital,
and it was treated via prescriptions out of the doctor’s office.
He got over it quite well and is doing pretty well. However,
Social Security disability requires that you be hospitalized with
pneumocystis, and that you have a bronchial examination to
qualify for SSDI. If you don’t have that, you don’t qualify.
This person still does not have SSDI.

MRS. GEBBIE: Does this person have a diagnosis of
AIDS, or --

MR. HEINTZ: Has for a year and a half.

MRS. GEBBiE: It is my understanding that that is a
presumptive enrollment, regardless of the method of treatment.

14

 

 
MR. HEINTZ: Theoretically, yes, but not
realistically.

MR. ELLIS: The payment for SSI, supplemental security
income, would be presumptive for three months. It stretches to a
total of five months, which gets a little complicated. But,
SSDI is a different matter. There would have to be a diagnosis
of frank AIDS, and there would have to have been one episode of
pneumocystis pneumonia and a hospitalization should be involved
in that for the best result in terms of entitling the person to
SSDI.

MRS. GEBBIE: I hope my memory is not faulty. Not many
months ago we had representatives of that agency in front of us,
and in answer to our questions, I think they were very explicit
that the physician’s diagnosis was critical, not the method by
which it had been treated. So --

MR. HEINTZ: Not in the reality.

MRS. GEBBIE: <-- I may do some follow up on what sounds
like -- :

MR. ELLIS: That is not true --
MRS. GEBBIE: -- contradictory policy.

MR. ELLIS: -- in the reality. We entitle people in
Social Security every day, and the number of lab reports, —
bronchoscopy reports, proof of Kaposi’s, whatever, it’s
exhausted. In fact, if you apply for SSI and SSDI, with all the
necessary supporting documents, you will have 28 different pieces
of paper, and much of --

MRS. GEBBIE: 28?

MR. ELLIS: -- yes, and much of that is medical proof
of what you are advancing on paper.

MRS. GEBBIE: In deference to others, I’1ll stop at this
point.

CHAIRMAN WATKINS: Mr. DeVos?

MR. DevOS: I salute you for your persistence. Maybe
you can confirm for me that on hospital care it is probably okay.
It’s when you try to maintain your own dignity and take care of
yourself that you run into this very difficult problem in
maintaining your own lifestyle, and where you live, and your own
home. Is there any central agency, any place you can go,
private or public, that would then coordinate and aid you in
finding your way through this maze? Is there or should there be?

15
MR. HEINTZ: Not in my community. In the Washington
area, and your larger -- most of your larger cities throughout
the nation, at the early onset of the disease, the gay community
centers pull together and created this, but it is not set up on a
general board for AIDS in dealing with in any regards beyond
that. And, those community centers are overrun with work right
now, because they are taking all members of the community that
have the problem, instead of being isolated within their own
groups. And, consequently, they are so overrun with AIDS
patients and getting no help in that regard, and they do not
reach out into the other smaller communities throughout the
nation. The Midwest, as was mentioned a minute ago, doesn’t have
a lot of help.

I lived just down in southern Maryland, and there is no
organized force for helping me deal with my individual problems
whatsoever. The only thing I have that is available in my
community is Maryland State Medicaid. Everything else I have to
drive to Washington for.

MR. DeVOS: Well, it just seems like, one thing we can
get at is a central point where AIDS patients can go. When you
are already sick, it’s bad enough to just deal with living
without having to fish your way through all the other things. If
there was one person who would just work your case through and
help you -- you know, part of the goal is to keep you out of a
hospital so you can maintain your own life, and live on your own,
and I think our goal here is, how do we keep you in a home
setting as long as possible? It’s certainly a lot cheaper than
being in a hospital.

The problem is, the path to the hospital is a lot
easier than the path to doing what you are doing, and yet, that’s
the lower cost way to accommodate you and still give you some
dignity. It just seems like we build the obstacles in the wrong
place, that’s all.

MR. ELLIS: I think you put your finger right on part
of the problem, Mr. DeVos. The path to the hospital is the
easier road. Dump the problem there, rather than do the things
necessary to allow people independent living.

We do have a network in the National Association of
People with AIDS, we have 68 affiliates or coalitions in 37
states, representing 8,000 people living with AIDS. Most of them
have a social service entitlement component. Lifelink does, the
local affiliate here in Washington. We spend most of our time on
social service entitlement. The private social service
providers, and many of the government agencies, are now basically
case dumping on us, simply because we have no other agenda. We
don’t have the bureaucracy, the layers of internal problems.

16
 

 

When we hear of someone with AIDS who needs help, we
get right to that person, sort out what they are entitled to, and
speedily get it to them. But, where Kevin is living, in
southern Maryland, and in other places around the country, rural
or, indeed, in many of the cities still, NAPWA doesn’t have a
chapter capable of doing this kind of work. There is a major
service provider in Washington, D.c., that gets help to many
people, but has a lot of problems of its own, and we’re beginning
to catch their overflow now.

MR. DevOS: It’s just the difference between public and
private, that’s all.

MR. ELLIS: Yes.

MR. DevVOS: When you go public, there are 42
regulations. Everything has got to be in a book, and you just
can’t treat it as you would because your heart tells you this is
what you ought to do a minute.

MR. ELLIS: Or, go private, and you’ve got 42
personalities, so it’s --

MR. DeVOS: If you can funnel that off to a private
group and say, we’re going to find sources to help you, whether
that’s a charitable organization, or a hospital, or, we just look
it up in our book and say, call this number and we’ll get
something done. That isn’t the way it works on the other side.
But, I appreciate the insight into that, and I appreciate your
willingness to fight your battle and want to maintain your own
dignity in the process, and I think it’s an important road for us
to try to open for you and ease up on.

CHAIRMAN WATKINS: Before I go to Dr. Conway-Welch, let
me just follow-up on what Mr. DeVos said. It seems to me that
any time you get into a large bureaucracy, it seems to always
hurt the little people, many of whom don’t want to sue, don’t
want to take on the burden, in fact, don’t even know how to do
it.

Now, you’ve mentioned that. It seems to me that that’s
almost a first step that needs to be cleared up before we really
know where we stand on lots of other things. If we don’t clean
up our own system and have it operate effectively for the people
that need it most, when the system is really there but not known,
we aren’t helping the individual.

So, I guess what I’m hearing out of this, perhaps, is
something that might go this way. There is a protection and
advocacy system for the handicapped. They do the intervention,
so lawsuits aren’t necessary. Is there merit to including those

17

 

 
 

afflicted with the HIV under that system, to make sure we seek
those with HIV to come forward so we can explain what’s there for
their optimum health care.

I really do believe that in the long run by doing that,
we will tend to give some credibility to the system, that we’re
interested in the human being at the end of the string, not
interested in setting up a bureaucracy.

So, would you suggest we take a look at the Protection
and Advocacy system to include those with HIV, and make it much
more aggressive? Let’s have a demonstration project so that
those afflicted are willing to come forward and say, I need help,
I don’t know where to go, this is where I stand financially, are
there things available and can recommendations be made so I can
stay at home, where it is the least cost to me or to others.
Would something like that be attractive to you?

MR. HEINTZ: My initial response is no, because of the
aggression, the forced recognition. You are already dealing with
people that have been humiliated, shoved, have lost confidence in
the system, are fearful of confidentiality, and you are going to
respond to them with an aggressive fashion. You will force them
deeper into the bushes.

You need to deal with them on a much more
compassionate level, and offer some of the things that you are :
talking about in regards to education of how to work with the
system. But, an aggressive stance in this regard, in trying to
flush the bushes, is goirg to send a great deal of panic and fear
in many people, and it is not the means to deal with people that
are suffering from an illness.

CHAIRMAN WATKINS: What I meant by my comments is not
going out and flushing the bushes aggressively, but rather, to
flush the system aggressively so that people come out of hiding
and come forward and say, that’s the kind of advocacy I need to
help me. That’s what I meant by flushing the bushes, not by
stirring up those with AIDS, but stirring up the bureaucracy so
that the people with AIDS can come forward. They would now have
an advocate in their behalf to help them through the bureaucratic
maze that sits out in front of them, that they just are incapable
of dealing with because they don’t even know what exists for
them.

MR. ELLIS: I would agree with that as you just stated
it. I call all of this the system. The system has to be there
in a very responsive way to say we recognize the problem, and
these are the things that at the federal level of government we
are geared up to do now, these are changes that we can make in
state regulations, as services trickle down.

18

 
Much of the problem is that Medicaid is a
discretionary fund of money. Medicaid in the District is not the
same as Medicaid right across the river in Virginia, or in
Maryland, or in Texas, or in Mississippi, or in Arizona, where
they don’t even call it Medicaid, they call it Access. And,
because this is discretionary, and the general federal guidelines
of how these monies can be used are specific and yet vague, at
the state level Medicaid administrators can administratively
literally write out individuals or groups or populations of
people they don’t want to serve.

In Texas, they’ve been changing a lot of their
regulations lately, but I think I’m still correct, a single male
in Texas cannot entitled to Medicaid. In Virginia, the AZT
Payment Assistance Program, until the 14th of this month, you
couldn’t qualify unless you had a diagnosis of frank AIDS. They
liberalized it now to include people who are ARCish. But still,
if you have any co-pay insurance for prescriptions, you don’t
qualify.

_ =

ee —
= =

When federal monies are made available, and programs
established, there must_be-continuity. ~We-have 50 states with 50
different interpretations on how to use this AZT money. Here in
the District, effective January—i, the program was restructured
to include people, because the regulations were so ridiculous, no
one could access it. Virginia just modified their program some,
but you still can’t get into it, and we have many people, many
people walking around with prescriptions for AZT who cannot get
it paid. And, they have insurance, many of them, and it is
working against them. It’s that kind of thing the federal
government can do. It can say, here’s-the money, but here are
the uniform regulations to entitle the people it’s happening to.

CHAIRMAN WATKINS: Thank you, Mr. Ellis. Dr. Conway-
Welch?

DR. CONWAY-WELCH: Just a couple of quick questions. I
think I know the answer to this, but let me clarify. With SSI
and SSDI support, the diagnosis of frank AIDS is required, and
that does not recognize any of the ARC syndromes at this point,
is that correct, or still correct? I’m seeing two different
answers. Help me out.

MR. ELLIS: It is correct. What we often have to do is
build a case. A person will call and will say, I’ve got this
condition, I’ve got that condition. Now, I know it all adds up
to this person having AIDS, but when it comes down to the person
reviewing the application at Social Security, they are paid to
find the proof. They are not paid to entitle people who don’t
meet guidelines. So, we have to prove as much AIDS as possible.

19
But still, you need a diagnosis of AIDS, and because
CDC broadened its definitions doesn’t mean that Social Security
has to follow that. They’ve been pretty liberal so far in their
interpretation, but they don’t have to recognize everything that
cp¢c calls AIDS.

DR. CONWAY-WELCH: So, the Social Security
Administration does not necessarily recognize CDC’s different
or newer --

MR. ELLIS: For the most part, they do, but they
reserve the right on a case-by-case basis to say to the
applicant, prove frank AIDS. That’s why we try to go in with the
initial applications, the whole packet, proving as much AIDS as
possible, so that the application doesn’t become challenged along
the way.

From the initial intake, it goes to the Determinations
Unit, where, based on the medical proofs provided, the hospital
reports, the doctor’s reports, all of that, a decision is made by
Social Security’s doctor whether, in fact, we have a disability
based on a diagnosis of AIDS. So, as much as we can have in that
folder when it gets to the Social Security doctor’s desk, the
better, the more likely we will get a ruling of disability.

DR. CONWAY-WELCH: Your statement that "you have to
prove as much AIDS as possible" is incredible. I understand what
you are saying, but I certainly think I can foresee the problems
that patients would have.

One last question. Mr. Heintz has shared some of his
drug therapy with us. In your experience what are the more
common experimental self-monitored medications that patients are
using?

MR. ELLIS: Well, I know a lot of people who are doing
things similar to what Kevin is doing. AL 721 has gotten kind of
old, but people are still using AL 721. NIAID, National
Institutes of Allergy and Infectious Diseases, has finally
brought that into their study group, I believe. Earlier this
year, in January or February, I was up there and they announced
that.

But, it’s a little late in the day, and, again, I don’t
know that it’s going to help for them to study that now. People
have been doing it for a long time. People want to live. They
are frightened. Only 40 percent of those who began AZT have a
good benefit from it, long term. I’ve been on the drug for over
a year, and, in fact, this week I’ve decided to reduce my dose to
half, and increase the amount of Acyclovir I take. A year of AZT
is a long time at a full dose, and I’ve just made the decision
to reduce that amount because of the problems with the drug.

20

 
 

 

I, basically, follow a Western medicine model, AZT,
Acyclovir and Naltrexone Syrup. Naltrexone is, simply stated,
it’s an immune system modulator in low doses related to HIV
infection. That’s what I do personally, but I’m changing that
also. I think I may increase the amount of Naltrexone, step up
the amount of Acyclovir and decrease the amount of AZT. I
make these decisions for myself. ‘I don’t allow doctors to think
or decide anything for me. Their role is to be advisors, and
that’s as far as I let them go.

DR. CONWAY-WELCH: Thank you, Mr. Ellis.

MR. HEINTZ: Can I add one thing? Mr. Ellis was
talking a minute ago about AL 721, and that it is just now
entering the research realm.

I was speaking earlier with Mr. Lilly about the onset
of getting further research on some of these alternative
treatments more rapidly. AL 721 was introduced into the
alternative network in September of 1983, through the Lancet
Medical Journal publication. Just now it is entering into
research in the United States, five years later.

CHAIRMAN WATKINS: I have two quick follow-ups, Dr. Lee
first, and then Mrs. Gebbie.

DR.LEE: We have heard Medicare waiving the
eligibility time period would be an excellent answer. You don’t
think so. Medicaid, the qualifications surrounding Medicaid are
not satisfactory. If we had socialized medicine, you certainly
wouldn’t be able to go and find your private docs and your
medications that you want. Tell us what you want. How would you
amend the system?

MR. HEINTZ: As I see in dealing with the current
problem we have in regards to the AIDS epidemic, if we look at
some of the past ways that we have dealt with epidemics in this
country, for example, the polio epidemic, that was a very
effective means to pay for the definite needed medical expenses,
all associated expenses. There was a foundation established that
charged the polio patients $20.00, one-time fee. From that point
forward, all medical care, prescriptions, braces, therapy,
hospital care, home care was paid for by these foundations.

DR.LEE: So, philanthropy would be your number one
choice.

CHAIRMAN WATKINS: Mrs. Gebbie?

MRS. GEBBIE: Although I think there is something to be
explored in that philanthropic model, I’m not certain that
everyone who had polio in those days got care for $20.00 from

21

 

 
 

what I’ve heard. My question is to explore just one little bit
further the issue of discrimination, not because of HIV
infection, but because of paying your bill with Medicaid.

I think both of you described experiences in which even
during periods when you were covered you didn’t get care, and I
have some concern about holding out coverage of Medicaid as being
an answer, because, in fact, I hear from people who are covered
by Medicaid because they are single women with children, or
because they are elderly people, that they can’t get in the door
because of the kind of card they are carrying to pay their bill.

Have you done any exploration of that? Have you
differentiated what might be discrimination based on the source
of payment as opposed to the kind of disease you have?

MR. ELLIS: Well, we haven’t investigated it, but we
see all kinds of social problems. There is, indeed, a
discrimination, racially, there is a discrimination based on the
kind of disease you’ve got, there is discrimination through
elitism. It goes on. It really boils down to a case-by-case,
individual-to-individual situation.

When someone comes to our coalition office, and they
are trying to get entitled, or they’ve got problems, whether it’s
an infected mother, or a single male or whatever, we have to
listen to what they are individually experiencing and find out
what we can entitle that individual to.

We are thinking too much on how to service groups, and
we’re getting away from the needs of individuals, and they vary,
they vary greatly. There is a young man 18 years old sleeping on
my hideaway sofa in my living room right now because he was
thrown out of a housing program because he tested HIV positive.
There is no housing program anywhere in the country to
accommodate HIV-infected teenagers. I don’t know how long he can
continue to live with me, but the system has nothing for hin.

We hear these kinds of stories all of the time. We
deal with people with incredible problems all of the time, who
have been neglected by the system. There are many, many areas.
There are nine distinct areas where in the United States we’ve
not responded to housing for people affected, and anywhere in the
range of HIV, and I don’t mean acute care in a hospital, I mean
the time in between. That’s where it really gets touch and go.
What if someone slips into dementia. What about the home care,
the visiting nurse kind of situation, that kind of housing we
need.

I‘m capable of independent living, but that could
change at any time. If it weren’t for a good base of friends, I
would be just one more statistic that the system has not really

22

 

 
 

 

designed -- what you were getting at before about a clearing
house, this is where you can go, this is what’s there. And, once
that is really done in a federal way, and the guidelines and the
standards are uniform for all of the states, counties and
localities, only then have we responded to this. And, this can
be the catalyst to address all of the social ills.

AIDS is a great opportunity if we use it that way.
There is a great silver lining in this black cloud if we would
look at it and recognize that and use this as a catalyst to
change a lot of things.

We could actually solve problems, rather than putting
patches on them constantly. One thing, I would just like to
throw this out, if you’ll allow us just a few more minutes, and
that’s the waiting period to go back to work. One of my pet
peeves is that we’ve got a negative cash flow from social service
entitlement, because you are telling people that you must be
disabled, sit at home and watch soap operas for a full year, when
you might, indeed, be able, physically able to go back to work.
But, if you do that above the table, you are jeopardizing your
Social Security disability application, because if you are
disabled how are you able to work?

So, you live on this SSI, which, in most places, is
about $350.00 or $380.00 a month, it does vary state to state
because there is a state matching contribution to the federal
amount. Let’s waive this waiting period, acknowledge the person
as disabled, give them their benefit. It’s not going to be much
anyway, because this is hitting people at a young age, they’ve
not paid into the Social Security base, so their checks are going
to average about $400.00 a month. Let them go back to work, so
it’s not all outgo from the Treasury, you’ve got an individual
back on the job, paying something back into the tax base, in
effect, paying his or her own way, those who are capable of it.

And yet, if a person is weak and is unable to work,
then let the system have compassion and provide their benefit.
But, I actually could not work, even though I was able to, in
order to protect the $476.00 a month that I had to wait five
months to get, and had to be disabled for a full year before I
could return to any legitimate work. You are fostering an
underground economy here. You are making people go under the
table to get matching monies or enough money to go with their
Social Security check, their SSI check, to live on. If I didn’t
have friends who were well off, if I weren’t lucky in many
respects, I would not have survived, and I have many friends who
Simply carry me. It’s that simple. I have good friends who take
care of me, because on $476.00 a month I could not live. My
friends have been remarkable, wonderful, and it just depresses me
when I see the kind of need that I see, and people who don’t have
well off friends who can help them, as mine have helped me.

23

 

 
 

 

The last thing you want to do is lose your place to
live. That worried me, that worried me more than anything else,
was losing my place to live. I have seen the group housing, and
I have seen the so-called supportive settings that many service
providers set up in their housing programs. And, if you are
willing to chuck your soul and all of your independence and
freedom out the door, then you can live in these housing
programs. But, if you are an independent person, if you have
some dignity about you, and you intend to remain in charge of
your own life, then they don’t really want to see you, many of
these AIDS service providers, because, basically, they want to
own you to perpetuate their own empires and bureaucracies.

Let people work, I really ask that. Let’s change
Social Security. Let’s let people go back to work. Let’s
sensitize employers, get them to hire people. If you are not
sharing needles in the work place, and having sex, there is no
risk, we all know that. Let people get back into the tax base.

MR. HEINTZ: I agree with that fully.

CHAIRMAN WATKINS: Well, we thank you both very much
for coming to the Commission today. It’s been very useful to us,
and this particular set of hearings is focused on finance, but
clearly, we are in that business because what you are talking
about here are some cost offsets, which if they worked, the
total system would pay less and be more compassionate to the
individual. And, I think your cogent, balanced thoughts have
been very useful, and I thank you for then.

We may be in communication with you again because you
have given us tremendous insight. As you know, we’ve talked to
hundreds of persons with AIDS, and, basically, they are all
telling us the same story, but you’ve put it in very clear terms
with some very specific recommendations. We appreciate it.
Thank you very much for coming before the Commission.

HIGH COSTS OF INPATIENT HOSPITAL CARE

CHAIRMAN WATKINS: We’1l1 move to the next panel now,
High Costs of Inpatient Hospital Care. Dr. Jo Ivey Boufford,
President of New York City Health and Hospitals Corporation;
Dr. John Burnside, Associate Dean for Clinical Affairs,
University of Texas Southwestern Medical Center at Dallas.
Also, he’s appearing on behalf of the National Association of
Public Hospitals. Mr. William H. Johnson, Chief Executive
Officer, University of New Mexico Medical Center, and Chairman
of the Special Committee on AIDS/HIV Infections Policies, the
American Hospital Association. Dr. Robert H. Parrott, Director
Emeritus, Children’s Hospital Center, Chairman AIDS Task Force,
National Association of Children’s Hospitals and Related

24

 

 
Institutions, and Mr. Richard N. Yezzo, President of St. Clare’s
Hospital and Health Center of the Archdiocese of New York. Glad
to have you back with us again, Mr. Yezzo.

So, we’ll start then on this panel with Dr. Jo Ivey
Boufford.

DR. BOUFFORD: Good morning. Admiral Watkins and
members of the Commission, we are very pleased to testify before
you on the financing of AIDS care.

The New York City Health and Hospitals Corporation, of
which I am President, is the largest municipal hospital system in
the country, and we care for more people with AIDS than any other
single provider in the United States.

Today, as I speak to you, we have over 450 inpatients
with AIDS in our 11 acute-care hospital beds, nearly 40 persons
with AIDS in our long-term care facilities, and each year are
providing ambulatory care to over 2,000 persons with AIDS.

Seventy-five percent of our AIDS patients contracted
the virus as a result of IV drug abuse, either as users
themselves, sex partners of users, or children of IV drug users.

We believe that the lessons we have learned in our
experiences in treating people with AIDS will be increasingly
applicable to providers and policymakers throughout the country,
because although four years ago, New York City had over 50
percent nationwide of AIDS cases, at this point it is nearer to
30 percent and expected to go down.

Before discussing our specific recommendations, I want
to raise three major concepts that we believe have a bearing on
the issues of financing of care.

First of all, AIDS is a complex disease. The medical
and psycho-social needs require an interdisciplinary approach.
Second, patients’ conditions are volatile, and they move between
levels of care very quickly, so there need to be those linkages
between ambulatory care, acute inpatient care, long-term care and
home care. Third, managing the disease most effectively
requires a primary care approach or case management approach to
assure smooth movement and coordination of services.

Needless to say, the U.S. health care financing system
is not now a unified system, but rather a patchwork of special
programs for certain populations, which really does not lend
itself to the level of coordination needed for persons with AIDS.

25
 

A second general point is that care for persons with
AIDS is costly. In an era of cost containment and DRGs, this
creates a disincentive for providers to care for patients whose
cost is greater than the reimbursement available.

The cost for persons with AIDS is largely a new one to
the health care delivery system. These are, for the most part,
people who would not have been in a hospital, or would not have
been using the kinds of expensive services they now require.

And, from the point of view of municipalities and public
providers, in an era of limited resources, new costs and the need
for new dollars compete with existing program needs and force us
into making very difficult choices for Medicaid dollars, housing
resources and hospital services.

Finally, AIDS patients face very real problems of
access because of the disease itself, discrimination, fear, the
burden on health providers, and because of the cost and the lack
of adequate reimbursement. This lack of access is not unique
to AIDS patients and affects many individuals needing health
services in our country. However, it has been highlighted most
dramatically with the AIDS population, and it potentially
increases the burden on public providers who historically have
stepped in in these kinds of circumstances, and on those
municipalities which have a large number of AIDS patients. It
underscores the role and responsibility of the federal government
in assuring care.

Financing strategies must address the complex array of
services and levels of care needed, assure new dollars into the
system, and assure equitable financing so that there is equal
incentive for all providers to provide services to persons with
AIDS, both assuring access and equitable distribution of
services.

In the short term, we make the following
recommendations for augmenting the current private insurance
system and Medicare and Medicaid. First, support for initiatives
to address the growing problem of the uninsured, such as §.1265,
which requires employers to offer health insurance coverage to
all employees who work at least 17-1/2 hours a week; support for
Senator Moynihan’s bill, which waives the 24-month waiting
period that currently prevents a person from AIDS for qualifying
for Medicare; establishment of a federal AIDS DRG for Medicare
patients that adequately reflects the costs, length of stay and
intensity of illness that at least could be a model for state
Medicaid programs under the DRG system; increased reimbursement
for all patient care to reflect the costs of universal
precautions which are increasingly being implemented by hospitals
for all patients and costs; increasing the federal Medicaid
matching rate for home care; to a minimum of 75 percent for those
states that have a comprehensive program for home health care,

26
 

 

and finally, expanding the CDC definition of AIDS to encompass
the types of care needed by people who have ARC or are HIV
infected.

We, in New York City, at HHC, are very pleased with
the recommendations of this Commission so far, and are eager to
cooperate with you in what may be the most difficult set of
recommendations, those involving the financing of services for
persons with AIDS. Thank you.

CHAIRMAN WATKINS: Thank you, Dr. Boufford.
Dr. Burnside?

DR. BURNSIDE: Good morning, Admiral, and ladies and
gentlemen. I’m from the University of Texas Southwestern Medical
School in Dallas. Our major teaching hospital is Parkland
Hospital, and I’m here to represent that hospital and the
National Association of Public Hospitals.

While there is a plethora of tragedies related to HIV
infection, your focus this morning are on the financial
inequities which befall patients with HIV infections and the
institutions which provide care for then.

Similar to some other deadly and disabling diseases,
HIV infections result in personal financial disaster. Unlike
other diseases, however, we have many instances where the
financial devastation occurs as a result of HIV infection but
before the manifestation of the disease or the use of the health
care settings, such as you’ve heard this morning of loss of
employment and insurance is an all too common result of positive
HIV testing.

This pre-illness financial ruin, together with the
subsequent high costs of care when the illness begins, leads to
disproportionate reliance for care on the public hospitals.

Dr. Androulos of the National Association for Public
Hospitals, in a survey of public and private teaching hospitals,
found 19 hospitals which were caring for more than 100 patients
each in 1985. He further found that of the 169 hospitals he
surveyed, they accounted for just 10 percent of the beds, but
were accommodating 30 percent of the nation’s population with
AIDS.

Fifty-four percent of the 5,393 AIDS patients in that
year served by these hospitals had Medicaid coverage, while
another 24 percent had no insurance, public or private.

In 1985, the total cost estimated for this group of
patients was $380 million. While public hospitals are not
expected to cover their entire cost from patient care revenues,

27

 

 
the discrepancy between the costs and the reimbursements in the
care of the AIDS patient is particularly discouraging.

It must also be reemphasized, as Dr. Boufford has
commented, that this represents a new case load for public
hospitals, and, as such, is added to the already enormous needs
of others who are ill and poor.

Inequity is further compounded geographically.
Economically disadvantaged states, by definition, have more poor
and uninsured citizens. Also by definition, these states have
fewer dollars to contribute to this large need.

While the daily inpatient costs of caring for a patient
with AIDS is much the same throughout the nation, approximately
$630.00 a day in 1985, and about $720.00 a day in 1987-88, the
reimbursement for that daily rate in the south is $282.00 a day,
and in excess of $500.00 a day everywhere else in the United
States.

We feel this very keenly at Parkland Memorial Hospital,
a 782-bed facility supported by the taxpayers of Dallas County.
On any given 24-hour period in Parkland, 108 patients are
admitted, 431 visits to the emergency room, 1,200 patients are
seen in the clinics and 40 babies are born.

In our AIDS outpatient clinic, 679 patients are cared
for, 436 of whom have AIDS or ARC. The annual costs for AIDS
patients at Parkland is $22,000.00, exclusive of costs for AZT,
inhalation pentamidine or other drugs. Fully, 75 percent of our
patients have no insurance, public or private. A calculated loss
of $3 to $4 million in 1987, and these are only the direct costs,
they do not include the additional costs of new therapies
becoming available, universal precautions in the hospitals, and
additional personnel needed.

Our budget projects for ‘89, which include some of
these costs, anticipate an allocation of $11 to $12 million for
AIDS at Parkland. Dallas County is struggling. AIDS in Dallas
County will probably cost $57 million in 1991. The taxpayers
have been supportive. The County Commissioners have been
supportive. Lay groups, professionals, private groups have all
been supportive. We have a model of case management in the AIDS
Arms Network, which is independently funded, with child care,
hospice development underway, and the Gay Alliance has an
extensive help network.

Simply stated, we have a new disease, a disease which
assaults financial resources as surely as it assaults the immune
system. This new disease has produced a new group of poor, sick
people. The resources are limited, and the need has increased.
The waiting line gets longer, not longer just for the AIDS

28
 

 

patient but for all who are poor and sick. The line is long in
New York, it is long in San Francisco, and even longer in the
south.

While we will always have to contend with needs in
excess of our resources, surely we can take a national
perspective of the scheme of allocation. Establishing national
standards of Medicaid eligibility and benefits might accomplish
this. Such an action recognizes that the anguish of AIDS is part
of a larger breach of justice and equity in the United States.

This is not a call for a massive federal bail-out. The
cooperative public, private, national and state efforts must
continue and increase, but the wound is too deep for a band-aid.
Thank you.

CHAIRMAN WATKINS: Thank you, Dr. Burnside.
Mr. Johnson?

MR. JOHNSON: Admiral Watkins, members of the
Committee, my name is Bill Johnson. I’m the Chief Executive
Officer of the University of New Mexico Hospital, and I serve as
the Chairman of the American Hospital Association’s Special
Committee on AIDS. I am pleased to have this opportunity to
share our experience with you and the cost of AIDS and financing
AIDS in New Mexico, as well as the recommendations of our AHA
committee.

The University of New Mexico Hospital is a 344-bed
tertiary teaching hospital located in Albuquerque, New Mexico,
and, as such, we have cared for the majority of the AIDS patients
in our state, as well as a number from surrounding regions. Our
scenario is different from those of my colleagues you just heard
from Texas and New York. However, I think may be more
representative of many areas of the country in which high
prevalence of AIDS is not the same issue as we’ve talked about
before.

To date, the volume of AIDS patients we have served
remain relatively manageable. We are currently providing AIDS
services to about 27 patients, most of whom are being cared for
on an outpatient basis. Critical to our ability to effectively
manage our patients has been the development of an alternative
care network for individuals with AIDS. Outpatient and
community-based services are not only less expensive, but they
often represent the most appropriate and compassionate care as
well. New Mexico is currently one of only three states with a
Section 2176 waiver permitting the state Medicaid program to pay
for a broad range of home and community-based services,
specifically targeted to individuals with AIDS. Due in large
part to this continuum of care and our active outpatient clinic,
we've been able to hold the average length of stay for an AIDS

29

 

 
 

 

patient to only seven days during this first six months of our
fiscal year. Consequently, our lifetime inpatient costs are now
averaging about $20,000.00 per cases, significantly less than a
few years ago.

If the first lesson I have to share with you is that
outpatient and community-based services can be cost effective,
the second lesson, and you heard this repeatedly this morning, is
that these services are not free and do require significant
commitment of resources. While the availability of a network of
support services significantly reduced the use of expensive
inpatient hospital care, there has been a parallel growth in the
use -- and thus, the cost of the outpatient care setting.

For example:

* The number of outpatient visits per patient has
increased dramatically over the past year. In
fiscal year 1987, 27 AIDS patients accounted for
955 outpatient visits to our clinic. In the first
eight months of this fiscal year, the same number
of patients have already logged in 1,121 visits,
more than in the entire previous year.

* The per patient cost of this outpatient care has
also risen dramatically -- leaping from $7,800.00
in 1987, to an average of $14,000.00 during the
first six months of this year, mainly, in large
part, to the introduction of the drug AZT. These
figures do not include the growing number of
individuals with AIDS-Related Complex (ARC) or HIV
infection that are also seeking treatment.

Payment for care rendered varies considerably.
Approximately 30 to 40 percent of our AIDS patients at any given
time are covered by private insurance. However, anywhere from
one-third to one-half of our patients are self-pay. In reality,
the vast majority of self-pay are non-paying patients, as they
lack the resources for their care. In sharp contrast to many
other states, only about 10 to 15 percent of our patients are
covered by Medicaid, because in spite of New Mexico’s efforts to
be responsive through the Medicaid waiver, our basic Medicaid
program is so restrictive that many cannot quality for coverage.

As an aside, I note that you will have individuals
speaking later in these panels, and recognizing that Medicaid is
a state program and it varies dramatically from state to state,
it’s very difficult to draw generalizations regarding those
programs.

But, in New Mexico:

30

 

 
 

 

* An individual who qualifies for Medicaid, by
virtue of eligibility for SSI, as in the case with
most AIDS patients, is permitted to have an income
of only a little more than $4,000.00 per year,
less than 50 percent of the federal poverty level.

* The categorically needy under AFDC are even worse
off; a family of three must be below the 35
percent level of poverty in order to qualify for
assistance.

* And, as indicated before about the spend down
program, although they are programs that might be
offensive to some, they do offer other
opportunities, but there are 14 states, including
New Mexico, that have no medically needy programs.

Even those who meet the strict eligibility criteria,
reimbursement for medical care is very inadequate. On the
average in New Mexico, I receive about 32 percent of charges, or
lose about $3,000.00 per admission for a Medicaid patient under
AIDS.

We have managed to cope with the costs of AIDS care to
date because of our relatively small case load and our success in
meeting the needs of patients outside the hospital setting, and I
think that this is indicative of many, many other settings in
which you have a small amounts of AIDS cases where the
introduction of AIDS in the community can be absolutely
devastating. In the high-prevalence areas, you already have huge
resources and systems set up, but in the smaller rural
environments where three or four cases are introduced ina
community it can be absolutely devastating.

If the number of patients, however, should
significantly increase, or if the nature of the patients’ needs
change dramatically, if we experience an increase in the patients
who are IV drug abusers, which we have not had a substantial
amount of in New Mexico, or if there are additional cost factors
introduced, such as the compliance with the CDC universal
precautions, which is a substantial increase in cost to
hospitals, or additional therapies that develop, our ability to
provide care will be jeopardized.

Moreover, changes in the payer mix may have a dramatic
impact. If private insurance continues its retreat from coverage
of AIDS care, the burden of uncompensated costs will become
unmanageable, and hospitals do not have the resources to absorb
the growing burden.

The most important lesson I have to offer is that we
must come to grips with the need to develop a continuum of care

31

 

 
 

 

that is adequately financed or risk being overwhelmed by the
problem. AIDS has presented new challenges to us in the health
care field, but perhaps more importantly, it has re-illuminated
old problems that have eluded resolutions for years -- the
emotional, social and financial stresses that can result from
catastrophic illness and the worsening problems of medical
indigence and inadequate health care insurance coverage. None of
these are unique characteristics or byproducts of AIDS, but the
rapid escalation of the disease, its particularly savage course,
and its current prevalence among younger people in their most
productive years have added new dimensions to the challenges of
caring for the terminally ill.

The American Hospital Association’s Special Committee
on AIDS, which I serve as Chairman, has given considerable
thought to the complex issues involved in financing care for
individuals with HIV-related illness. This panel of experts
represents a broad spectrum of experience with the AIDS epidemic,
and includes representatives from high-prevalence areas, such as
San Francisco, New Jersey and Florida, as well as individuals
from medium-sized cities and one from small rural. I’ve attached
a copy of this Committee’s recommendation to your report for your
further review and information.

A fundamental issue the Committee has grappled with is
whether the AIDS care and health coverage for HIV-infected
individuals can be addressed adequately within the traditional
pluralistic approach to financing health care, or whether a
separate public program must be created. Such a determination
involves basic philosophical choices that must be made within the
context of harsh political realities.

We believe that every effort should be made to assure
that care for individuals with AIDS and HIV infection can be
addressed under a pluralistic system of private and public
funding. Reliance on this pluralistic system allows for
targeting finite public resources to those most in need, while
distributing the cost burden across a number of payers.

Complete transfer of responsibility for AIDS care to a public
program would not only shift the costs for those who could afford
to pay into an already strained public sector, but would also
raise serious questions about the general long-term viability of
private insurance as the American health care financing mechanism
of choice.

Moreover, the establishment of an AIDS-specific public
program would require a large commitment of financial outlay at a
time when both state and federal governments are confronting
increasing budget deficits. But perhaps even more
significantly, expanding public programs only for AIDS would
overlook the needs of many others with catastrophic illnesses,
such as Alzheimer’s disease and terminal cancer, who have

32

 

 
encountered similar difficulties in financing a range of needed
care. Not only would such a move likely create substantial
pressure for public funding among programs for a variety of other

illnesses, but it would also permit the weaknesses present in our
current insurance and payment system to go unaddressed.

Clearly, if we address AIDS under a pluralistic
financing system, we must take actions to preserve the private
sector role. Steps that might be taken may include:

* Prohibiting coverage exclusions or significant
benefit limitations based on HIV status in small
and large group health insurance policies.

* Providing incentives for creative ways to spread
risk through new pooling mechanisms, such as
multiple employer trusts or state or regional
pools to help make affordable coverage available
to the general population.

* Encouraging formation of reinsurance programs
specifically for AIDS.

* Exploring ways of subsidizing the premiums for the
continuation coverage required by the 1986 COBRA
Act for individuals who are disabled when they
leave employment.

We must also make health coverage available to the
unacceptable number of uninsured individuals in this country -- a
problem that’s being exacerbated by the high cost of AIDS. Some
37 million Americans do not have access to a health care plan,
public or private, although 86 percent of these individuals have
some connection to the work force, either by direct employment or
by being the dependent of someone who is employed. One option
the AHA supports is the mandated employer-provided insurance,
such as proposed in the recent bill sponsored by Senator Kennedy.
We believe that the time has come to make the provision of health
care a societal condition of doing business.

/ Finally, it is clear that many individuals with AIDS
will not be able to afford private coverage, even if it is
partially subsidized. The growing number of intravenous drug
users and poor children with AIDS clearly indicates that,
increasingly, adequate public coverage must become available to
meet the needs of these patients. Unfortunately, today medicaid
covers only about 38 percent of the poor nationwide. Because of
state discretion in establishing income thresholds and covered
services, the adequacy of Medicaid coverage for the poor widely
varies across the country.

33
For the long term, we believe that Medicaid will
require significant restricting if it is to adequately serve the
poor. There are a number of options that might be pursued now to
greatly improve Medicaid eligibility coverage and reimbursement
for individuals with AIDS and other catastrophic illnesses. They
are:

* Establishing a minimum national Medicaid
eligibility floor set at 50 percent of poverty,
with a phased-in plan for moving to 100 percent of
the poverty level.

* Adopting a medically needy program in all states.
Fourteen states, including New Mexico, still do
not use this option.

* Allowing states to establish higher income
thresholds under the medically needy progran,
thereby enabling them to serve a greater
percentage of the poor while accessing federal
dollars. Currently, a state is prohibited from
setting its medically needy threshold at a level
greater than 133 percent of its AFDC payment. In
most states, the AFDC payment level is abysmally
low.

*e Giving states the option of further raising the
income threshold for the disabled, so that they
will have more flexibility in targeting their
dollars.

In addition to improved Medicaid eligibility, the scope
of covered medical services is a very important issue for AIDS
patients. Although expensive hospital care is often covered,
many of the support services that would allow treatment in the
community or at home are not.

One of the components critical to both the quality and
effectiveness of care for AIDS patients is case management.
Congress recently gave states the option for paying for case
management services for selected groups of patients. However,
this option is not widely known nor utilized. One way to
encourage states to utilize it would be to provide an enhanced
federal match, for example, at the 80 percent level.

The availability of support services to maintain AIDS
patients in the community is also essential, as we demonstrated
in New Mexico. Many of these services can be offered to AIDS
patients under the Section 2176 waiver but a number of states
have expressed reluctance to use this mechanism because of the
difficulty in obtaining the waiver. States might benefit from
having the option to provide these targeted services without a

34
waiver. In addition, some of all of these services could qualify
for enhanced match.

It is impossible to talk about improving access to
needed care without discussing reimbursement. As the experience
of my hospital illustrates, we cannot continue indefinitely to
absorb huge losses on medically necessary care provided to
individuals with AIDS or other catastrophic illnesses. We need
to identify new methods of reimbursing providers for heavy care
patients, perhaps through demonstration projects. It is also
imperative that alternatives to hospital care are adequately
reimbursed so that there is an incentive to provide care in the
most appropriate setting.

While many of the initiatives discussed here can go a
long way toward addressing the gaps in our current health care
system, we must recognize that one of the characteristics of the
AIDS epidemic that has distinguished it from other catastrophic
illness is its concentration in certain geographic areas. Even if
we are able to implement sorely needed changes in our financing
system, some areas may still continue to bear a heavy burden,
such as New York, California, Texas. To deal with this strain, a
block grant assistance program based on prevalence might be
explored. However, it is imperative that efforts to deal with
the financing of AIDS care not be limited to a "quick fix"
approach, since regretfully it appears that we will be dealing
with this disease for many years.

Over the past several months your Commission has
conducted a very thoughtful exploration of the multiple
challenges that AIDS has put before us. However, I would venture
to say that few issues are as profound, and as difficult and as
complex as the needs to address the financing of care for
individuals with HIV. Ultimately, our ability to provide the
many services needed by these individuals depends on the
viability of our insurance and payment system. THe efficacy of
the recommendations you make will depend heavily on your ability
to identify mechanisms by which sorely needed action can be
funded.

On behalf of my hospital and the American Hospital
Association, I thank you for this opportunity to share these
views.

CHAIRMAN WATKINS: Thank you. Dr. Parrott?
DR. PARROTT: Mr. Chairman and members of the
Commission, I’m Doctor Robert Parrott. I’m Director Emeritus of

Children’s Hospital and a Professor of Child Health at George
Washington, both here in Washington.

35
Today I’m speaking to you on behalf of NACHRI, which is
the National Association of Children’s Hospitals and Related
Institutions. You have our extended written testimony, and I’1]l
summarize by describing briefly why financing issues are so
critical to the future inpatient care of children with HIV
infection, and will also give you some specific recommendations
for short-term and long-term actions.

There are four basic points. First, children’s
hospitals are major providers of care to children with HIV
infection. NACHRI has found that 19 of our member hospitals
alone care for more children with HIV infection than the number
of pediatric AIDS cases reported to CDC for the whole nation.
That’s using the official definitions. Two hospitals alone
account for nearly 300 cases. This is consistent with the
fact that children’s hospitals are often urban hospitals,
specializing in care for both very sick and very poor patients.

The second point is that the rate of growth in the
number of pediatric cases and adolescent cases that our hospitals
are following is alarming. Since 1983, the number of new cases
seen by children’s hospitals has doubled. NACHRI projects that
by 1991, on the average, one out of every ten pediatric hospital
beds in the country could be occupied by a child with HIV
infection. Our own hospital projects that by 1991, we will have
seen a total of more than 800 cases of HIV infection, almost 500
of which will be still living and undergoing care in that year.

The third point is that everything we know about the
care of children with HIV infection tells us it is more expensive
than caring for either adults with AIDS or other children in our
hospitals, including my own hospital. The average charges for
the care of children with HIV infection are roughly twice those
for other children. This reflects the fact that these children
are sicker and require significantly longer stays, often
including intensive care in the hospital.

Just to give you some examples from our hospital in
fiscal year 1987, in a survey of 45 HIV-infected children who
were predicted probably to need to be in the hospital and a look
back at what happened, the length of stay for the HIV infected
was 13.9 days and about half that for all patients, including
those with HIV infection. The charges per day were $1,460.00 for
HIV infected and $1,261.00 for all, adding then to total charges
of $20,000.00 approximately for the HIV infected, something over
$9,000.00 for all patients.

It’s particularly important to recognize that in
children’s hospitals these data have not yet been inflated by
unnecessary hospitalizations, since until recently we’ve
essentially been successful in placing children who are cleared
to be discharged.

36

 
The final point is that the financing of care for these
children falls (as everyone has said, it’s also true of
pediatrics) largely and increasingly to Medicaid. Again, in this
same study from our own hospital, we examined the payor mix
among agencies responsible for payment for HIV-infected children,
as contrasted with all admissions. The three Medicaid agencies
in this area were responsible for 73 percent of HIV patients as
compared with 29 percent for all patients. Three times more
responsibility than for all patients. Private payers, HMOs, Blue
Cross/Blue Shield covered 8.5 percent of HIV infected patients
versus 68 percent of the total patients in the hospital. The
number of children in so-called "“self-pay" status was 18 percent
for HIV infected, and 11 percent for all.

Children’s hospitals are acutely aware of the
limitations of Medicaid, as have been referred to by others
already. Medicaid is severely inadequate in its payment for
children’s hospital care for all pediatric patients, whether or
not they have HIV infection.

On the average, more than a third of the care that
children’s hospitals give is for poor children, more than a
quarter of the children under Medicaid. Nationwide, Medicaid, on
average, reimburses children’s hospitals for only 62 percent of
their charges and 77 percent of their costs. In some states,
it’s much, much less, depending upon the liberality, if that’s
the way you want to put it, of the Medicaid system in the state,
the amount of matching that the state provides.

These four points lead us to urge the Commission to
recommend a combination of short-term and long-term actions. For
the short term, we urge your support for three legislative
proposals now pending in Congress that could provide relief to
those comparatively few hospitals that are already bearing the
burden of inpatient care for children with HIV infection.

The first is the Pediatric AIDS Resources .Center Act,
S.1871 and H.R.3648. This would authorize $25 million annually
over three years in grants to hospitals already experienced in
the care of children with AIDS. The grants would support their
efforts to establish model centers of care. It would not be a
method of payment per case, but would enhance what the
individual institutions could do.

The second proposal is the Abandoned Infants
Assistance Act, S.945 or H.R. 3009. This would authorize $20
million annually, again, over three years, in grants for foster
care demonstrations to alleviate the problems of children
abandoned or potentially to be abandoned in hospitals,
particularly, those with HIV infection.

37
And, the third proposal is to support Section 302 of
the Medicaid Infant Mortality Amendments of 1988. This would
require, for the first time, that all state Medicaid programs
make payment adjustments for extremely high costs and long-stay
cases of infants who are receiving care in hospitals that already
have disproportionately large numbers of Medicaid patients. This
is particularly important in the face of the growing number of
infants born with AIDS, when you consider that about half of the
states now place absolute limits of some kind on their Medicaid
patient payments.

This last proposal leads to our recommendation for
long-term action. That is, the Commission should advocate
comprehensive reform of Medicaid, the nation’s largest program of
public funding for the health care of children. The incidence of
HIV infection, increasingly, among low-income families, only
magnifies the already serious shortfalls in Medicaid coverage for
poor children, and the burdens borne by their care providers.

Among children’s hospitals, Medicaid accounts for about
one half of all our uncompensated care. We urge comprehensive
reform of Medicaid, because Medicaid reforms, designed only to
respond to the crisis in HIV infection, will aggravate the
limited coverage Medicaid provides for other poor children.
Comprehensive reform must include expanded eligibility, expanded
coverage, particularly for home care services, and increased
funding. Otherwise, states will continue as they have in the
past simply to redistribute their limited pools of Medicaid funds
in response to new Medicaid requirements.

In conclusion, we commend the Commission for its
attention to the special problems of caring for children with HIV
infection, both in your interim reports and in your hearings to
date. And, I’1ll be glad to try to answer any questions you may
have.

CHAIRMAN WATKINS: Thank you, Dr. Parrott. Mr. Yezzo.

MR. YEZZO: Admiral Watkins, Commission members,
distinguished colleajues, the first time that I spoke to you,
about four or five months ago, there were 900 people with AIDS in
hospital beds in Manhattan in New York City. This morning, there
were 1,504. By 1991, there will be 145,000 PWAs in the United
States, with a cost that some experts estimate to be anywhere
between $8 to $16 billion. Medical care costs now for PWAs is
$1.1 billion, and will rise to $8.5 billion in 1991. The
figures do not include AIDS-Related Complex (ARC) or HIV-related
disease. I’m sure the Commission members have heard this
before -- but the distinction between ARC and full-blown AIDS
is becoming a finer and finer line. All people that are HIV
positive must be considered the same.

38
 

 

We have to develop comprehensive care plans. We, the
hospitals, must develop comprehensive approaches to caring for
people with HIV disease. We all recognize, and my colleagues and
I all agree, that people must be moved out of the acute-care
setting as quickly as possible when they no longer need an acute
level of care, and to put appropriate resources into appropriate
levels of care for this very complicated illness and all the
other related illnesses that are associated to this virus.

A hospital providing comprehensive AIDS care must have
an acute unit, and obviously, must have the high-tech intensive
medical and surgical care capabilities for intervention of this
disease. But a hospital must also have the ability of moving the
patient to lower levels of care, into an environment where that
patient can get the appropriate level of medical/surgical
nursing that he or she may need, the appropriate level of psycho-
social intervention, the appropriate level of all of the
ancillary disciplines that are necessary. Not too much of one
and not too little of another, but what is deemed appropriate.

All too often, the history of the reimbursement
methodology in the United States has been driven for
understandable reasons by available dollars. However, when it
applies to this disease, we have learned something with our past
experiences with other diseases: we must programmatically
describe what we as health care providers are going to provide
for people with AIDS.

We must then, in coordination with government, city,
state and federal, come up with a logical game plan, something
that is a little bit of a give and take. Thank God, in New York
State, we have a very good relationship, if I may say, with the
State of New York, Office of Health Systems Management, and I’m
glad to see that there is going to be a person, in Ray Sweeney,
who will be testifying later on.

In the experience of St. Clare’s Hospital the ability
to put together an acceptable reimbursement rate, has been
crucial to the success of the program. It is also significant
that the State of New York has recognized the need to establish
intermediate care facilities. The state did not get hung up on
what I call archaic and outdated nomenclature, such as skilled
nursing facilities, which congers up a Medicaid reimbursement
rate that is totally inadequate to care for people with HIV
disease.

So, I think what we are forced to do, and I say "we,"
because no longer is the onus on the hospitals, or on you as
Commissioners or on the government, but we collectively must come
up with a new nomenclature. We must recognize the need to move
patients with HIV disease into appropriate levels of care to get
them as quickly as possible into as healthy a state as possible,

39

 

 
 

 

and provide competent and comprehensive outpatient services. As
the PWAs before had mentioned, the system must be able to
recognize the fact that many PWAs can go back to work, they can
pay their share back into the system, if they are diagnosed early
enough, treated competently enough, and are pleased in an
environment that focuses on their needs. This is not the way the
system is currently structured.

Don’t make PWAs fit into our system. Let’s make sure
that we can appropriately address their particular needs. When
you are talking about financial resources, we must apply the
appropriate financial resources to their particular needs. This
involves having PWAs able to move in and out of facilities
structured to meet their needs at any particular stage of their
illness. Look at our length of stay in our acute-care
facilities for persons with AIDS.

By having these other sub-systems set up, to be able to
provide sub-acute levels of care, care in the home, better
support in the home, better social service and case management
systems, to keep people with AIDS out of that high-cost area, we
can lower the length of stays in hospitals for PWAs.

Being located in New York State, it is easy for me to
say a lot of these things. In terms of reimbursement, St.
Clare’s Hospital, for example, had an average per diem payment of
about $420.00 a day pre-DRGs. Post-DRG, however, we are paid for
our general medical and surgical patients on the discharge
diagnosis. ;

For patients with AIDS, since we have established a comprehensive
treatment center for the care and treatment of people with HIV
disease, we get $568.00 for an acute stay.

We are now negotiating the addition of a sub-acute
facility at St. Clare’s, which will be on a separate unit, and
we are looking at reimbursement rates in the area of $380.00 a
day.

And then below that, we are now in intense negotiation
with Dr. Boufford’s people in the Health and Hospitals
Corporation, working in collaboration to put together a housing
situation for PWAs that will be a kind of intermediate care
facility, with certain medical and social service intervention.
The facility would also allow the PWA some independence so that
they can move in and out of that facility during the day to the
extent that they are physically able to do so.

The best answer is for people to return to their own

home, but because of the disease and the stigma involved, many
people are abandoned and thrown out of their home.

40

 

 
I echo the thoughts of my colleagues again, especially
those of the American Hospital Association, where in certain
parts of the country the difference between the Medicaid
reimbursement and the amount of money that the hospital is
spending on an AIDS patient could be upwards of $250.00 a patient
day. This is not going to force the cooperation amongst my
colleagues, and I wouldn’t blame them. The system is not one
where people are encouraged to care for people with AIDS.

But, the onus is not only on the Commission, nor should
it be only on federal or state governments. The onus should be
on us together, that we as providers must come up with as
comprehensive a care package as possible, which would enable
patients to move through our health care system as guickly as
possible, to be able to apply available resources to the
appropriate level of care. And, if we can do all of those
things, then I think we will be at least economically managing
an almost unmanageable problem.

We all recognize that the dollars are going to be
spent, albeit, from what we say here today. It’s going to be
necessary. We all look at it, thank God, that in this country,
health care is an inalienable right of any person. But, I think
if health care providers can manage care more economically, and
move people through the system quickly, then I think we’1ll be
able to stretch that dollar further.

There is detail to my testimony, and I will not do the
same thing I did to you the last time by putting everyone to
sleep, but I have some recommendations that I’d like the
Commission to listen to.

Third-party payers, and in particular, the Medicaid
program, must begin reviewing and revising the services eligible
for reimbursement, as well as increase the reimbursement rates
for those services. Again, we need to keep in mind that the onus
should be on the provider to fit into that enhanced reimbursement
system and to provide more appropriate levels of care appropriate
to the manifestation of the disease.

Reimbursement rates must be programmatically driven.
The focus should be on the development of appropriate services
for individuals with HIV-related disease, followed by the
development of licensure categories and reimbursement rates.
Throw away names such as skilled nursing facility, health
related facility and intermediate care facility for people with
HIV disease. Let’s come up with different names, with different
types of rates, with different types of regulations, which are
specific to this illness and which can facilitate the movement of
that patient through the system quicker.

41
 

 

States should be encouraged to provide Medicaid
coverage for optional services, especially home care. Hospitals
and other health care providers must have increased access to
capital, to develop sub-acute facilities and innovative programs
to meet the needs of individuals with HIV-related disease.

We are fortunate in New York State to be recognized by
the Commissioner of Health, and also by an awful lot of
philanthropic organizations, as a model program. But what St.
Clare’s Hospital is doing is showing other facilities in all
parts of New York City and especially, in other parts of the
country, that providing care to PWAs can be done. If we can do
it, then anyone can do it. And, other providers in other states,
and other governments, at the state and local levels must
recognize the ease with which this can be done.

The private sector, including health supporting
foundations, have to demonstrate a greater commitment to meeting
the needs of individuals with HIV-related disease. For example,
private health supporting foundations must allocate additional
funds for AIDS-related projects.

And lastly -- and I thought through this one on the
plane coming down because of a recent discussion in doing my
hospital budget with my pharmacist -- I think it must be one
of the recommendations of the Commission to caution the federal
government, because they are the only ones who can intervene,
to look at not only the high cost of AZT, which I know this
Commission looked at very thoroughly and very carefully, but
all the related antibiotics that and seem to be of some benefit
when used in combination with many of the experimental drugs for
this disease. We are noticing a four-fold increase in cost for
all antibiotics that we have found effective when used in
combination with AZT.

And, as that last throw in, I just caution the
Commission that we do not overspend unnecessarily on drugs that
can be purchased much cheaper if the federal government had an
impact on the way pricing is done by the drug companies.

Thank you very much.

CHAIRMAN WATKINS: Thank you, Mr. Yezzo. Let me open
the questioning, and then I’11 shift over to Dr. Conway-Welch.

Dr. Parrott, I’ve heard reports that children’s
hospitals have actually shouldered what should be local
government’s role in providing social services to the families of
HIV-infected children. Is that the case, and, if so, how long
can you really sustain that kind of "go it yourself" approach?

DR. PARROTT: I think I can introduce the answer to
that by stating that many large cities have not had fully

42
 

adequate social services for poor people, and since many infants
or children fall into that category, or their parents do, this is
another example of how HIV infection compounds an already
inadequate system.

I think anecdotally that what you were told, or you had
heard, is correct. I do not know enough about each of the major
cities at this point to be able to say. I can say that the city
government in Washington is doing its best, and, in fact, we have
been working very closely, our hospital, Howard University, D.C.
General Hospital and the city government, which has a special
Pediatric Working Group, to try to pull the whole system
together. That system has to start with diagnosis, treatment
medical, but when you look at the whole system for infants and
children, the medical is really a small part of it, and, in fact,
the lesson, perhaps, for this panel is that the more that can be
done pre-hospital, after hospital, foster care, social services,
hospice type for children, the more that can be done along those
lines the less there will be the threat of babies being left in
hospitals, or needing to stay in hospitals.

I mean, as some of you know, in the last number of
years there has been a lot of advance in home therapy, and that’s
true also for infants and children. It’s a little more
complicated, and you need people who are adept at it, but you can
do home therapy for children as well. And, we think that would
cost less, and is more likely to give the infant child and family
a life that’s closer to normal, which should be our goal until or
unless there is a cure.

CHAIRMAN WATKINS: We’ve been informed by a number of
witnesses, that in certain cities, such as New York City, in the
public hospitals, that the projected case load of infants who
have contracted the virus perinatally could well bring some of
those hospitals to their knees.

The families don’t have the money in genéral, the work
is going to go on, the intensive care, the human resource costs
are incredible. Do you share that view?

DR. PARROTT: Yes, indeed. In fact, for Washington, as
we project the number of cases, which is three, four years behind
New York/New Jersey, but once the virus is into the drug abusing
community, and some heterosexual spread occurs, infants are going
to be born who are infected. And so, we have projected, as I
mentioned, a doubling of cases for each of the next few years
from infants, and we’re also saying, double the number of new
cases in adolescents.

CHAIRMAN WATKINS: The social work aspect, the social
side of that equation, seems to me to be every bit as complicated
and one that we don’t want to forget in our addressal of the

43

 

 
 

 

integrated approach that Mr. Yezzo was talking about. We have to
consider all aspects of that particular part of this epidemic in
a unique way, perhaps.

We have tried to focus on that a little bit, because of
some of the frightening statistics, that 1 out of 61 babies born
in New York, will have HIV for example. The numbers projected
for 1991 are rather disturbing from the ability of the hospital
system, or the related health care delivery system, to handle
anything like that coming on us that rapidly, for a variety of
reasons, not just dollar resources, but the human resources
needed to handle it.

DR. PARROTT: I agree, and I do think it is the out-
of-hospital aspects that need as much or more attention than the
in-hospital aspects.

CHAIRMAN WATKINS: Let me ask you just one more
question. Is the care for children under age 21 reimbursed for
home care by Medicaid now? I understand it’s not.

DR. PARROTT: It is not.
CHAIRMAN WATKINS: Should it be?
DR. PARROTT: I believe it should, yes.

CHAIRMAN WATKINS: Any of you others have any feelings
about that?

DR. BURNSIDE: Admiral, we’d be delighted in Texas if
they were reimbursed for hospital care. I’m serious about that.
It’s a plea for a level playing field, in that the discrepancies
state to state are just unconscionable.

You might ask, why should someone from New York or
California, that has a very good Medicaid program, why in the
world would they support an increased Medicaid standards in the
south? Well, it would be to their very best interest. For one
thing, I think Greyhound must be making a fortune on one-way bus
trips from the south to New York City and San Francisco. There
is clearly a migration, as you heard this morning, of the
terrible frustration felt by these patients, and the
extraordinary lengths they will go to seek the proper medical
attention.

CHAIRMAN WATKINS: Do you have any data on that,
Dr. Burnside?

DR. BURNSIDE: No, sir, I don’t.
CHAIRMAN WATKINS: Because this has come up before.

44

 

 
DR. BURNSIDE: It is anecdotal.

CHAIRMAN WATKINS: The migratory aspects of the HIV
epidemic, we’ve heard it from San Francisco very loud and clear,
whether it is anecdotal or supported by facts, we don’t know.

DR. BURNSIDE: We see it ina small --

CHAIRMAN WATKINS: Good programs are a drawing card,
a magnet --

DR. BURNSIDE: That’s right.

CHAIRMAN WATKINS: -- where you can obtain these
services more sensitively from the human side, people are
migrating that way. Is this an intent on the part of the State
of Texas, to force migration out?

DR. BURNSIDE: No, I think not. I think that’s a
little ungenerous, but we see it within the state, we’ll see it
that some of the poorer counties, who have no public health
facilities, folks from those areas who are HIV positive, or AIDS,
or ARC, will find their way into Dallas County, or they’1ll find
their way into the Houston area or the San Antonio area to get
care. And, it’s the taxpayers of that county who are providing
that care, not the taxpayers of the state, nor of the nation.

CHAIRMAN WATKINS: Mr. Yezzo?

MR. YEZZO: In recognition that the Medicaid dollar is
50 percent federal, I can speak only for St. Clare’s Hospital,
but what is going on in Texas, from a societal point of view, as
well as from a health care provider’s point of view, is almost
unforgivable. My colleagues in the south get our full support in
addressing the inadequate funding that they are receiving now.

Eventually, providers are going to be forced to put
people with AIDS, or people with uncovered illnesses, out,
refuse to provide care, which is almost unheard of, or close
their doors. That’s basically what we are faced with.

CHAIRMAN WATKINS: Dr. Conway-Welch?

DR. CONWAY-WELCH: Two questions, Mr. Chairman, to Dr.
Boufford and Dr. Parrott.

I heard you particularly talk again about expanding the
cDc definition, and I wondered if you could once again go over
that again. It seems to be something that continues to create
confusion and problems for us.

45
And, Mr. Johnson, you spoke more about reinsurance
programs specific for AIDS, and, perhaps, you could expand a bit
on that. If we could, perhaps, start with Dr. Boufford?

DR. BOUFFORD: Yes. I think, specifically, our
concern and that of Mr. Yezzo is that use of CDC-defined AIDS for
purposes of epidemiology does not encompass the same type of care
needed by people who are HIV infected. As I mentioned, we have
on the average 450 CDC-defined AIDS or ARC inpatients a day, and
we believe there are probably 30 or 40 percent again as many
people in the hospital with HIV-related infection who are not
eligible for social services, who are not eligible for the
enhanced reimbursement rates, which are coming through, at least
in New York State, under the DRG system, and, yet who are
requiring the same intensity of care as many of the AIDS
patients. It’s just a question of the stage of their illness.

And, the, denial, if you will, of recognition of them
for social services and medical insurance purposes is a
disadvantage both to providers and to the individuals when they
seek care following hospitalization.

DR. CONWAY-WELCH: My understanding was that CDC’s
expanded definition was a step in that direction. Am I hearing
that it’s not enough, or it is too --

DR. BOUFFORD: I think it was very important, but as
some of the ambulatory therapies and prophylactic therapies
evolve further. There are probably going to be more people
sustaining an HIV positivity with intervening infections without
progressing to full AIDS or ARC diagnosis. These persons are
going to need to be eligible for these kinds of services. And,
though I think it was an enormous step last July when the
definition was expanded, as the disease evolves so does our
understanding of what’s necessary and a further expansion appears
to be a reasonable next step for purposes of coverage.

DR. CONWAY-WELCH: When we hear the problems that are
currently being encountered by people who do meet the
definition, it seems like there is another infrastructure of
people who don’t who are poised until they get sick enough to
move into that category, and we aren’t even addressing that
properly. We’re leaving that up to you all to deal with. We
aren’t addressing that in terms of the reimbursement:issues at
all at this point.

DR. BOUFFORD: That’s right.

DR. CONWAY-WELCH: And, they’ve kind of hovering,
waiting.

DR. BOUFFORD: That’s correct.

46
MR. YEZZO: One comment, and please correct me, Doctor
Lee, if I’m wrong. Scientists in 1982 said that roughly 30
percent of people who were HIV positive, would eventually get
sick and die.

At that time we didn’t have enough epidemiological data
to measure morbidity and mortality. The numbers now are looking
more like 65 to 70 percent of all those people that are HIV
positive are eventually going te get sick and die. Many people
are now saying that number is more like 95 percent, possibly 99
percent.

So, we now have more information, we see more aspects
of this disease and we know that everybody who is HIV positive
shouldn’t fall into the same category.

DR. PARROTT: You asked if I’d comment on the CDC
definition as well. I think it is important to point out, which
I’m sure you’ve heard before, that the original definition, and
even the current one from CDC, is meant for surveillance to
gather information and to be as sure about it as possible in
reporting.

The problem is compounded with infants. I believe
you've probably heard this too, but a baby born to a mother who
is positive will be born with antibody. And, as of now, there is
no definitive way in the first day, week, month of life to say
this particular baby will be infected.

The figures have changed as to the likelihood from, I
heard a report it was only 5 percent in Haiti, but up to 80
percent, but now most people are saying something around 50
percent, and my own guess is it is ranging toward 70 percent.

So, a baby born may have up to a 70 percent chance of
being infected, which probably means at some point the baby is
going to die, or the person is going to die.

There is a problem even during what is called the
"indeterminate infection" period. That’s what CDC calls the
period up to 15 months of age, if no other evidence, no clinical
or laboratory evidence, has been entered. Now, most babies that
are in that circumstance are already in a difficult situation
because, for the most part, they are born to families that are
not intact and that have an intrinsic problem, primarily drug
abuse. Those babies need to be followed, need to be watched.

So, in terms of funding, one needs, I think, in
relation to HIV infection, to pay attention to this pre-HIV
state. One doesn’t like to label such babies, and tries not to,
but, in fact, it is better to follow them. The consensus is

47
 

 

pegii.tiag te move toward that, that it is better to know, and to
volle-, ane to inform foster parents, et cetera, if this baby has
i wetr wolally 70 percent chance of being HIV infected. And,

it’s setter for the baby, it’s in the baby’s interest to pay
acten ion te immunization, developmental milestones, and

eucov -acemernt for good nutrition, and watching out for that first
 afec™. on.

And, in fact, before long there will be treatment. We
ued (2 say, well, there’s nothing you can do. But things are
comin: along, and there is therapy which is thought to be
orfec ive. One still formally under trial, called intravenous
/amuzs: glebulin, is usable and used by many for babies, because
it peovents the bacterial super-infections that occur.

And, AZT is going to be studied shortly in babies, and
© let of us feel that it is important. I think CDC wants to
Lind . definitive way of saying "this baby is infected." You
ean ¢o 22 pretty well in an adult by identifying antibody
~wesit. vo, but in a baby you can’t yet. There are tests that are
coming along that promise value along that line, but most of us,
i @hssu, new feel the sooner you know, the better, just as with
ail ac...%, the sooner you get whatever treatment is available the
ere@ar.° “ne chance is of preventing serious morbidity and/or

eae .
Ler dare ml Vo

UR. CONWAY-WELCH: Mr. Johnson?

kik. JOHNSON: Mr. Chairman, I am not an reimbursement
axMper . vsutu ET think that if you examine Medicaid as the program
{nat  v-eele tend to look at as the support mechanism for the
oor, on these individuals urdergoing some life catastrophic
‘esue, hen I think that we have substantial problems relative to
Fodis-.1e.

I would refer to a document I think you probably have
yocel-uwG in testimony once from the National Association of

Peblic Eespitals. They have done a very intense study looking at
{oe @ taek of Medicaid, and there are 17 states only that are
consi: ored te have liberal Medicaid programs and 33 considered

restr ctive, and that’s based on a ratio of Medicaid recipients

“o pe.cons living below the poverty levels. Texas, of course, is
ttke ..e third from the bottom, New Mexico close thereafter, but
Luese ace states whose programs are very narrow and very limited.

Lf one is to examine Medicaid as a program, I think
there are three areas that you could look at. Those are
eligi sitlity, coverage, and then reimbursement. I think those are
the taxee components that you would be able to look at.

“xf you look at eligibility, there has been some recent
ywovencat to expand eligibility in Medicaid, particularly, women

48

 

 
and children’s programs, and that has, in fact, offered some help
in increasing the women and children who have access now to
Medicaid.

If you look at the State of New Mexico, however,
remembering that Medicaid is a state program, state options,
state coverages, and that is a discreet decision made within the
state, we have a program that is tied clearly to the aid to
families with dependent children program. The person with ADS
has to move through the SSI system, and although we have tricd to
be very responsive, that tends to get encumbered with a great
deal of bureaucracies that we’ve heard before.

&

The medically needy program, in which there is a svend
down aspect, although that did not sound to be positive, may have
some positive characteristics. Each of those, again, crafted
unique to the states that have those. 14 states, New Mexico
being one, does not.

If you look at the extension of higher income
thresholds as a means of adjusting eligibility, or having a
national eligibility floor, so that states don’t have the options
and they must focus in on certain specific, for 40, 50 percent --

or, 50 to 75 percent of the federal level.

If you’ll excuse my voice, I’m worried about health
care as needing to cure the common cold today. I’m really
struggling.

There is a review, I think, of eligibility aspects that
may be done on a nationwide basis in other states.

Covered services are particularly unique features of
providing the care outside of the hospital. Most programs tend
to be focused, hospital oriented. You’ve heard many, many
testimonies over the fact that there is a broad care continuun,
and whether it be social work services, whether it be case
management, halfway living, all types of things would require
that.

Of course, focus on substance abuse, particularly, IV
drug abusers, aS a programmatic review in order to determine the
spread of the disease through the IV drug abusers.

And, in terms of reimbursement, there are a variety of
issues regarding transitional care, living payments, universal
precaution in corporations. I don’t want to make light of it,
but the DRG factors of the payment factors that have excluded the
review of universal precautions are devastating. We’re going to
spend about $325,000.00 in our hospital alone, again, a fairly
small, rural state hospital, just on implementing universal
precautions. None of these costs are reflected in anything else

49
 

 

you’ve heard, that’s spread through the system. The cost by
social services is spread through the system. So, there are a
number of things that we could do within the Medicaid program at
the federal level to deal with that. We have also heard about
the problems associated with antibiotics, drugs, AZT, which are
dramatically influencing the costs of the outpatient care.

I think these are some of the issues that we could
address as a group, and there are individuals coming who could
speak very technically and very dramatically to these issues.

CHAIRMAN WATKINS: Yes, Dr. Parrott?

DR. PARROTT: I just wanted to mention, this study
that was alluded to is being updated. The National Association
of Public Hospitals, with the Council on Teaching Hospitals, are
now conducting a follow-up in joint venture with NACHRI, so there
will be more pediatric information than there was. The
questionnaire is out, and the results, preliminary, are predicted
to be available this summer. So, you should look for that
information.

CHAIRMAN WATKINS: When this summer? Will there be any
opportunity for us to take a look at some of the early drafts on
that before we have to make our final report to the President?

DR. PARROTT: The man who is staffing it is in the
room.

MR. JOHNSON: Dennis Andrulis from the NAPH is
staffing that particular research study.

CHAIRMAN WATKINS: Perhaps, our staff can then link up,
and at least get the benefit of the information to date, so that
we have the very best picture going in, because I think it’s a
very important area for us. Yes, Mr. Yezzo.

MR. YEZZO: If I could just add one comment. In New
York State, the State of New York’s Office of Health Systems
Management, carries a lot of weight with the other insurers, the
private insurers and Blue Cross. If other state Medicaid
programs are more generous, or more comprehensive, I’m sure that
that would have an effect on your local Blue Cross rates as well
as the other local private insurance rates. It has happened that
way in New York State.

MR. JOHNSON: Mr. Chairman, if I might take just one
additional moment. In a state like New Mexico, which I think
represents many, many areas of the country that have AIDS in
their community, but not where it is overloading all of the
systems, I would speak for funds for education for those states.
So that, the disease could be limited, that there could be

50

 

 
 

 

education among adolescents, amongst various high-risk groups, so
that we could modify and change behaviors to, perhaps, contain
some of the impact of that disease in those areas that yet have
not been overwhelmed by it. Thank you, Mr. Chairman.

CHAIRMAN WATKINS: Mr. DeVos?

MR. DeVOS: We have panels relative to education, which
is another whole vast subject, which gets down to the fact that
actions have consequences in our lives.

I hear one common plea here, I guess. Everybody is ©
saying "help," and I would ask you a simple question. Are we
trying to put a bunch of band-aids on the Medicare and the
Medicaid program as opposed to starting new? We are starting
with a new category, with children with illnesses that are
persistent. We are dealing with young people, and drug abusers,
poor generally, and Medicare and Medicaid were never designed for
all these categories. And so, now we’re trying to patch this
whole thing together and tweak it a little bit, and I almost
wonder if we just don’t have to take a new page and say, hey,
this is a new category of a disease, it attacks different kinds
of people.

MR. YEZZO: If I could take a shot at that. You are
pretty close to the truth. The reimbursement system -- how we
got to a discharge diagnosis method of payment, and all of
the crazy things in between when Social Security was first
instituted -- really needs to be looked at seriously, especially
as it relates to this disease. Probably, if you look at health
care in the entire country, the terminology that we used in 1950
is not applicable today. In many other illnesses, and I don’t
think it’s just HIV-related disease, but especially because the
disease is so complicated, and because we know it is going to be
so expensive, we really need to redefine the system.

I repeat, we can’t use terms like skilled nursing
facility. They don’t work. They don’t fit. The patients are
not appropriately cared for many times in those environments,
because when you say skilled -- and I can only speak for
facilities in New York State -- when you say skilled nursing
facility, you are really saying $96.00 a day. In New York
State, when you say HRF or health-related facility, you are
really saying $45.00 a day. And, when you say acute-care bed,
you are saying anywhere in the area of $550.00 to $700.00 a day,
depending on the facility.

Okay. We’ve got to get away from that. We’ve got
to say, here’s what this patient needs. Here’s what we have to
provide. This is what it’s goirg to cost, and we’ll give you
80 percent of the cost, or 70 percent of that, and the
philanthropies will make up 15 or 20 percent, and you hospital

51

 

 
 

 

er facility are going to show me some cost-cutting techniques,
and you’re going to come up and make up the other 10 or 15
percent. But, we’re not even starting to do that yet, and
that’s what I’m personally frightened about. In New York State
we supposedly have a generous system, according to the charts,
and we’re still having a difficult time.

MR. DevOS: These are people who want to go back to
work, who want to take care of themselves and it’s a whole new
breed.

MR. JOHNSON: Mr. Chairman, if I might comment, there
are a variety of diseases in our country that are described in
the same way. The same archaic limitations are still in place.

This group of people are just one of many groups of
people that are afflicted the same way on this treadmill in
health. It is a huge group of people. Not just AIDS, but other
people who are caught. I guess we’re distracting from the
subject, but this is pandemic rather than just the AIDS patient.

DR. BOUFFORD: I would just, if I may, support that
statement, especially as a public hospital provider. The
visibility of the AIDS issue, the advocacy of the active AIDS
groups that have brought this situation to the public eye, really
have just uncovered the reality of the major flaws in our health
care financing system. As a public provider, we see all
categories of patients who are uninsured or for whom the
insurance is focused on the acute inpatient catastrophic event
and not on either the preventive side or the aftercare side,
which is really the crucial question.

We see it in very sharp focus with persons with AIDS,
but it’s not a new phenomenon. As one of the Commissioners said
earlier, it’s an exciting opportunity to at least highlight the
need for what I certainly believe is necessary: fundamental
reform in health care financing.

MR. DeVOS: That’s been the Admiral’s theme from the
beginning. It really attacks a much bigger problem with each
clarification.

DR. BURNSIDE: I would add an agreement to that. I
think that the patients with AIDS have been a paradigm of a
problem and I would not urge that we single them out anymore. I
think they’ve been singled out quite enough. To single them out
with very special programs will lead the inevitable perception
that you are doing that at the expense of some other groups who
are going to feel terribly disenfranchised, whether it be real or
just perceived. So, to address it as a much larger problen,
namely the Medicaid dilemma of eligibility and benefits --

52

 

 
 

CHAIRMAN WATKINS: But Dr. Burnside, let’s say you
could sit down and look at Medicaid through the lens of the HIV
and say, "If you’re just going to solve the HIV in Medicaid, I
would go this way," as the first excursion. As the second
excursion you now say, "What did we do to all other health care
delivery in the process? What did it cost and can the nation
afford it? Oops, we went too far."

Now, we go back and we iterate again. It seems to me
that you can use this incredible epidemic that we have, one of
the most insidious that’s ever faced the world, at least to try
to come up with something that makes a more rational approach
for everyone.

Now, we found many, many times that we can lean on
other legislation, other protective features and sweep HIV under
it. So, we are sensitive in this Commission to knowing what
we’re doing in all other areas. We’ve walked on those egg shells
very delicately in our interim report. We can’t solve a lot of
these problems in health care delivery without nurses in the
nation and we can’t stamp on their forehead that this nurse is
going to work on HIV specific cases and not on any other case.
So, it’s very difficult unless you solve the nursing shortage.

So, we’ve tried to find a narrow line of approach
through this labyrinth of complex social and other medical
issues. It seems to me that there’s a way to do this without
trying to say, "We want to solve only the HIV." We can begin
to think in terms of HIV and watch the ramification and the
spin-off.

It seems to me there’s an opportunity here if we can
get specific about improvements to Medicaid and not try to
frighten ourselves too soon by the cost. If we want a more
compassionate and sensitive society that’s in better health in
the future, it seems to me that there’s an opportunity.

I don’t know if it can be done. I don’t know if the
Congress would even be sensitive to it. It may be very difficult
to, at this particular time, a budget deficit because of the
fright of potential cost increases. But it seems to me it
doesn’t cost that much to take a look at new ways of doing
business and finding the boundaries and the limits when you
realize that the excursion into other diseases and not
streamlining health care delivery may add tremendously to the
financial burden.

DR. PARROTT: Admiral, I just wanted to mention that

you might want to look at the Medicaid system in the state of
New Jersey as having taken advantage of what one can do. It’s

53

 

 
basically a liberal program, an all payer system, but with
appropriate waivers to the point that -- at least for children
now...(I don’t know the overall situation). The situation for
children with HIV infection is as good as it can be under current
Medicaid systems. Again, this depends on the state. I see you
have California and Florida on the panel, but I don’t see New
Jersey. You may sometime want to talk with then.

CHAIRMAN WATKINS: Thank you very much, Dr. Parrott.
Mrs. Gebbie?

MRS. GEBBIE: You’ve already explored a good number of
the questions that I had. I think it will be one of the hard
decisions of this panel to figure out how far we fix what’s
really a flawed up system and how far we fix it just for one set
of patients.

We've talked a number of times about those states that
have what appear to be very bad systems, worse at least than
others. I don’t know if any are yet labeled good. That didn’t
just happen. Presumably that happened because the political will
in that state, the combination of citizens at large and elected
officials, think that’s right or think that’s all they can afford
or think something or other about it.

How do you read our collective will to fix this ona
national scale? If we’ve got a third or more of the states that
haven’t been willing to look at taking the most generous
opportunity of advantages available under the present system, can
we find enough collective will, do you think, to ante up -- no
matter how you do it, it’s going to be more cash to fix it more
broadly.

Some of you have been monitoring various federal bills
and state bills. What do you think about that political side of
it?

DR. PARROTT: Let me just address it briefly. I
alluded to one system that a number of states are looking at
which some hospitals and health care providers are a bit
concerned about. It would be a way of distributing the cost of
indigent care. Among all payers - the "all payer" system. In
such a system, the private insurer will pick up more than they
currently do or perhaps used to in the way of indigent care,
Which is what Medicaid is about.

States would either work out systems that incorporate
private paying insurers and businesses into involvement with
indigent care or potentially there would be a mandate from a
federal level that states do it. You still have to get the
money, so the money’s got to come from someplace. But one
approach might be to encourage more all payer systems.

54

 
 

 

MR. JOHNSON: If one examines the array of states that
are considered to be more liberal, you’1ll find they are states
who began with greater wealth, greater industry, both coasts and
as you move forward down into the more southern states over to
the more western states, then you see the programs failing.

Each state makes it own political and economic
decisions on how it will fund its Medicaid program. We attacked
this within our state. Each January, as our legislative session
begins, we vigorously try to increase eligibility coverage. It’s
a very slow process. It’s a political philosophy that’s embraced
in the state of New Mexico. It’s very conservative politically
and has very deep roots in what they believe they should be
doing. It is very difficult to change that.

Most recently in our legislative session, I personally
sat on a legislative committee on AIDS that had 16 legislators
and myself. We met for six months and the net result was some
very marginal good and we didn’t do anything bad. I guess you
would consider that to be extraordinarily successful.

DR. BOUFFORD: I think there are a couple of problems
at a more philosophical level which is, I think, a little bit
of what you were asking. It seems to me from sitting ina
municipality like New York City, in a state like New York that
have had a historical commitment to public service, both social
services and medical services, that there are two basic problems
we face as a public provider which I think could be extrapolated
more broadly.

One, in the era of cost containment is cost. If you’re
adding cost to the system, you either add funding or you
reallocate internally, meaning that you take funding from
someplace else. This decison becomes automatically a political
one.

I think it’s quite clear if you look at the Medicaid
system or other systems that there are ways of redistributing
what are very significant amounts of dollars in this health care
system. For example, in New York City, the state pays $60.00 a
visit for outpatient services at a hospital and $11.00 a visit
for a private physician providing the same services under
Medicaid. That redistribution could take place. For a private
physician in practice, a specialist gets $35.00 or $40.00 for
a certain visit under Medicaid, while a family practitioner
providing the same service gets $11.00. So there are dollars
in the system that could be redistributed. That is a political
issue and requires political will to change.

The second thing, it seems to me, is I think the
citizenry. Even in a city or a state like New York, which has

55

 

 
 

 

had this historical tradition of public service, it’s very hard
for people to see health services as a public service like they
see police protection, fire services and education. I think we
have a situation where the people who depend on the public
services for their health care really are not a very strong
constituency and are not joined by people who have access to
care through their employers and other private mechanisms.

So, it seems to me that in those kinds of instances a
sort of coalescence at the federal level around people in this
society who do not have access really has to raise that
consciousness. When faced in a city like New York with a $500
million deficit, health services versus police protection versus
fire versus public education are very difficult choices to make.
Then the issue is who is the constituency for each of those
services? That’s how the decisions get made.

MR. YEZZO: Mrs. Gebbie, I think that the federal
government can come up with a guideline. All of your
recommendations and all that was said at all these meetings can
be coalesced into one book which becomes a federal policy on
caring for people with HIV disease. But then there’s a question
of responsibility. The federal government will mandate that this
minimum standard be met, regardless of what the locality says or
has said that it is going to do. But they obviously have the
authority to mandate a minimum standard. Right now we have no
standards.

I think that my colleagues from the South and the
Midwest are in need of support from this Commission and the
federal government.

MRS. GEBBIE: If you had to pick one thing to mandate
out of that great array of things you’ve all mentioned -- and I
discovered at least two of us are thinking the same way because
somebody listed three critical pieces and I had already written
them down -- either making what are currently optional programs
mandatory, such as the medically needy or the pre and post
hospital care, or mandating coverage up to higher income levels
or mandating that you paid more fully for the covered services.
Can you put those in any kind of priority order or are they so
intertwined that you can’t separate them?

MR. YEZZO: Can I take a shot at that? The point that
I’ve really been trying to make and it takes me more words than
necessary to make points half the time -- in a comprehensive AIDS
center you need to have all of those pieces that I mentioned.
You need to have outpatient services, you need to have home care
available, you need to have dental services, you need to have
services for the IV drug abuser who is HIV positive, you need to
have acute services and you need to have sub-acute services so
that the system works. If you are stressing one piece in that

56

 

 
 

 

system, then you’ re going to have patients backing up on you.
You’re not going to be able to move them through the system.

In that same way, you need the whole package. I think
it’s too tightly wound. If you took one thing, it’s going to
have a push and pull effect on the rest of it.

MRS. GEBBIE: You simply can’t separate them? You’d
want to do them as a package.

DR. BURNSIDE: I think that you could at a federal
level establish the minimun eligibility point on the federal
poverty scale. Admittedly, that is not going to do much to
assuage the inequities that occur from state to state in terms of
what those benefits are going to be. But at least it defines who
it is that’s eligible on some kind of a national standard. It
leaves the state still with the directive or at least their own
prerogative to decide what it is that’s going to be included in
those benefits.

MRS. GEBBIE: But you’d do that first?

DR. BURNSIDE: I would do that first. I think that
would immediately enable a number of currently disenfranchised to
avail themselves of whatever services are currently available.
That in itself will cost states and the federal government a lot
of money, but at least it declares that we won’t as a society
tolerate the absence of health care below certain levels of
poverty.

MRS. GEBBIE: What is the risk that one of your two
states, if told you have to cover people up to 100 percent of
the poverty level would then slash the services available to all
of those currently covered in order to spread it --

DR. BURNSIDE: Texas would probably become a nation
again. It’s political obviously. You’re going to have a great
deal of difficulty if at the federal level you take what has been
traditionally a state run program and say, "Okay, here are the
rules now." I think you can urge it in that direction.

MR. JOHNSON: In New Mexico, we still are suffering
from the crisis of oil and the state would not have the money to
do it without substantially raising taxes. It would create an
impact, very dynamic impact within the state of New Mexico.

DR. BURNSIDE: Similarly in Texas. In Dallas County,
there current guesstimate is $10 billion worth of property which
is in bankruptcy.

MRS. GEBBIE: Does that argue in your minds then that
not only should we do all of those other three things that Mr.

57

 

 
 

 

Yezzo says have to be done together, but that the federal portion
of the whole thing should be increased from the present split to
some higher rate?

MR. JOHNSON: As I listened to the Chairman, I think he
provided some sage advice. All of the attributes of the AIDS
epidemic are representative of the problem of total health care.
Perhaps if one could develop a model that embraced the HIV
infection and looked at all of the components that are deficient
and defective in our system, you might be able to develop a model
that could be more broadly expanded at the appropriate political
time. I don’t think that there’s anything in AIDS that’s absent
from the crisis in health care.

MRS. GEBBIE: I understand that option that the
Chairman presented and I think that’s a very legitimate one.
My question though is either in that option or in the perfect
fix, because of the problems that Texas and New Mexico and
other states have had, will it be necessary to also look very
seriously at upping the federal proportion in order to avoid
states leaving the Union or whatever they would do.

DR. BURNSIDE: It is a matching program. The more the
state is willing to commit, the more the federal government will
come in with. So, it is a shared program and if you increased
the roles of those who were eligible, it would not only mandate
the state to ante up a bit more, but it would also call ona
greater participation from the federal government.

MRS. GEBBIE: But at the same proportion on an enhanced
proportion?

MR. JOHNSON: An enhanced proportion in specific areas
might encourage states to adopt services that they don’t know.

DR. BURNSIDE: Yes, that’s true.

MR. JOHNSON: Instead of at 50 cents, make it 80 cents
or some enhancement.

DR. BOUFFORD: I think also if some of that targeting
was to the sort of non-hospital services which have been very
often left out of plans or of requirements, that would be
important. Not just for AIDS, but generically and certainly for
AIDS.

And also, the issue of more creative uses perhaps of
federal support in terms of things like paying the difference
that would allow an individual to stay longer on employer
provided insurance if they are disabled, allowing the federal
subsidy for copaying, to keep them on that benefit so they don’t
drop into Medicaid or into uninsured as quickly and then have to

58

 

 
spend down into Medicaid, thinking of the federal role at the
interface of various existing insurance systems at least to keep
people in their system of origin or to upgrade them more into the
private sector. That would probably be more cost effective
rather than what we tend to do which is allow people to just drop
from one catastrophic benefit into another. This ends up being
the most expensive model on the public toll, as it were.

MRS. GEBBIE: Thank you.
CHAIRMAN WATKINS: Dr. Lilly?

DR. LILLY: Most of the questions I had written down
have been dealt with extensively.

I’d like to follow up one thing though. I have some
difficulty putting myself in this position, but let’s say that
I’m a youngish fellow who has very little in the way of income
and I’m becoming ill now. The first thing I’ve got to do is show
up at an emergency room. I have no other way of presenting
myself to the medical profession. Now, of course, having little
previous contact with the medical profession, I’m probably very
ill now so I’m going to require a hospital stay for a period of
time. But that’s not necessarily going to last forever. As
Dr. Boufford pointed out, I’m going to rapidly change between
the levels of care that I need.

How is this managed? It’s basically emergency rooms
that are handling all of these decisions. I’d like just a little
bit more definition as to -- perhaps, Dr. Boufford, you could
help me out with understanding how a person faces this.

DR. BOUFFORD: Well, I can speak about our systen,
when it works, which I hope it does most of the time at this
point. We have essentially had an interdisciplinary team
approach to case managed patient care for persons with AIDS for
several years. What would happen after your initial visit in the
emergency room is presumably you would, if you were ill enough,
either be admitted or be evaluated and referred to an AIDS clinic
or to the primary care internal medical clinic for a follow-up
visit. If you ended up in the hospital, you would have a case
manager, physician team or a nurse practitioner team and a social
worker --

DR. LILLY: And what’s my relationship to that person
then after I get out of the hospital?

DR. BOUFFORD: They would be your ongoing providers.
You would be referred back into a hospital based clinic and
managed out of that clinic. Or increasingly what we’re trying
to do is move into community based settings. For example, with
Bellevue Hospital, we have not only the hospital based clinic,

59
 

but also the Community Health Project in Manhattan, which is a
smaller center providing more intense personal care, more intense
follow-up with referral back to the back-up hospital as you got
sicker or if you had to be readmitted.

DR. LILLY: Now, was this system invented for AIDS or
did you adapt this from something that you were using for other
types of illnesses?

DR. BOUFFORD: No, this is the essence of essentially
a primary care model of care that we have been trying to
implement in our system for the last four or five years in at
least the major specialties of internal medicine, pediatrics and
OB/GYN. But we have focused it especially on the AIDS cases
because it seems to be a much more cost effective and humane way
of managing a complex association of care and the levels of care.

DR. LILLY: It’s only existed for four or five years
and AIDS has been around for a good bit more than that. Sol
would gather that AIDS has been the impetus for putting
something like that together.

DR. BOUFFORD: The primary care notion has been around
for a very long time. I’m speaking really about reorganizing
public hospitals’ delivery of outpatient services, which is what
we’ve been focusing on more recently. But clearly, the essence
of the private physician model is exactly this model. When you
try to extrapolate it to institutions, it requires a little more

juggling.

DR. LILLY: That’s what I was basically trying to
get at. To what extent does the patient who must rely on the
public hospitals and so forth have anything comparable to a
case manager or a private physician?

DR. BOUFFORD: I believe they do. Our system is
designed to provide that and we have been getting enhanced
resources to focus on a team approach to care. And now that
we have all the levels of care available, long-term and acute,
I think we do a reasonably good job with that, especially with
the social worker following up after discharge to make sure
the patient doesn’t get lost in the system.

I think the thing that concerns us as public providers
is the early access question before a person becomes acutely
ill and then our ability to manage the long or complex ambulatory
based care of a patient on various prophylactic or other
medications because the level of organization required in our
high volume ambulatory care systems is much more difficult than
that in a private physician model or a small community health
center model. That’s what we’re looking forward to trying to
prepare for.

60

 
DR. PARROTT: I just wanted to say that pediatrics is,
in a way, a leader in primary care. But there have also been
models within pediatrics for this type of case management system,
as in the management of infants with birth defects of various
kinds or the disease called cystic fibrosis, both of which have
long-term consequences and involve the whole family.

Now one person, the case manager in the kind of system
Dr. Boufford’s talking, about is not necessarily a physician.
It’s usually some professional health worker. But it can
throughout a community be extended to involving volunteers.
That’s what a lot of people are talking about in terms of HIV
case management. ‘

I just want to take one more minute and turn you into a
young woman with the same circumstances that you posed who has
now been pregnant and has had a baby. She’s been a drug abuser.
She and the baby have been identified as HIV positive. The baby
has now entered into a case management system and, whether sick
or not, is being followed.

I think one thing that needs to be given attention is
the probable lack of concentrated attention to the needs of women
in those circumstances. As you’ve heard earlier, there are
organized groups among gay and lesbian persons. The woman
usually is involved in drug abuse, a problem that we have not
addressed well in this country or anyplace in the world probably.
That’s the problem of drug abuse. We are not keeping up, we are
not educating properly, we are not keeping drugs out of the
country, whatever. At least it’s our observation so far that the
mother is lost and we may be taking care of her baby and she may
or may not pay attention to our advising her to go to wherever we
identify to get her into a system. So, I think at some point, if
you haven’t had a panel on women, you should give attention to
their needs as well as those of their children.

CHAIRMAN WATKINS: Dr. Lee?

DR. LEE: First, a few specifics. Mr. Yezzo, did you
say a four-fold increase in those antibiotic costs over the last,
what, year or so?

MR. YEZZO: That’s correct. Specifically! amphotericin
comes to mind and I am only reacting to the recent meeting I had
with my pharmacy director. Just about all the antibiotics that
are used in combination with other types of drugs in caring for
persons with AIDS have gone up in price four-fold.

DR. LEE: That is incredible. You’re talking bactrim
too?

61
MR. YEZZO: Yes. Dr. Lee, not to make light of a very
bad situation, but you know we have 200 people in my clinic
alone on AZT. When the bactrim and amphotericin salesman brings
cakes to the physicians made out of the shape of their pills, I
get very concerned. That’s not meant to be funny.

DR. PARROTT: Did you mean to say that the number of
drugs has increased and therefore the total cost -- the cost per
pill?

MR. YEZZO: That’s correct. The cost per individual
agent has gone up.

DR. BOUFFORD: I’d just like to add one thing. The
cost of rubber gloves has doubled in the last year,
interestingly.

DR. LEE: This was brought up by the people at San
Francisco General. We’ve already taken a lot of note of that in
our Commission reports already. We’re going to, I hope, look at
it further.

CHAIRMAN WATKINS: Do any of you have the answer to the
question? We were given a figure of $80.00 a case now as opposed
to $30.00 a case a couple of years ago at San Francisco General.
I don’t know if that figure is valid.

DR. BURNSIDE: A case of latex gloves?
CHAIRMAN WATKINS: Yes.
MR. YEZZO: It’s $86.00 a case in New York.

CHAIRMAN WATKINS: The question is, is there
indication from your point of view that a kind of pirate
operation is underway or is there a legitimate reason for the
price increase, that is the quality was so enhanced in the
interim period that we expect some kind of increase in cost? I
just don’t know, but we’re hearing it enough and it raises the
question of profiteering on this disease that is always an
anathema to those of us on the Commission. But you brought it
up now. What do we know about it? Mr. Yezzo at St. Clare’s
Hospital, what do you say?

MR. YEZZO: From our experience, there is a definite
shot at profiteering. I just have a generally suspecting mind
and it just seems a coincidence that just about every item that
we are now using in the care and treatment for people with HIV
disease has gone up. Some of the price increases have been
gradual, while some have not been so gradual, but everything

62
has gone up. This is especially true in my emergency room, as
probably in every emergency room in the city. We’re treating
everyone as if they’re HIV positive. There’s no distinction
between patients that come in. If we see an old grandmother
that comes in, she will be looked at the same way that that
single 28 year old male or that 15 year old IV drug abuser.

CHAIRMAN WATKINS: I’m talking unit cost now, not the
degree to which you have to expand the total inventory. I’m
interested in unit cost.

Dr. Boufford, do you and Mr. Yezzo have specific
data on the costs and cost growth on these kinds of universal
protective equipment?

MR. JOHNSON: Mr. Chairman, in 1987, gloves exams
sterile medicine was at 16 cents a pair. In FY 1988 it was
at 34 cents a pair.

CHAIRMAN WATKINS: It was what? What was this for?

MR. JOHNSON: Glove examination sterile. In 1987, it
went from 16 cents to 34 cents. If you look at the small vinyl
gloves, they were -- let’s see, I’m trying to get the comparable

CHAIRMAN WATKINS: Mr. Johnson, could you let us know
for the record what you’re reading from and how authoritative is
the data? What are you reading from?

MR. JOHNSON: This is a document that my purchasing
department put together for me about six months ago so that I
could understand what the cost would be for just gloves. We then
further expanded it by including goggles, aprons and a variety of
other protective devices. This is an internal document. What
the document shows that --

CHAIRMAN WATKINS: Could we have this for the record?
Is this a problem for you to let us --

MR. JOHNSON: No, I’d be happy to provide this for the
record. Yes, sir. 1/’11 have to annotate it to make sense out of
it, but I’d be pleased to do that.

CHAIRMAN WATKINS: I think one of the things I’m most
concerned with is fairness. We need special attention to these
issues, and we ought to have at least a national ethic that says,
"This is not an opportunity for those of you to raise prices."

Now, if prices are going up with inflation or if
there’s additional quality control that had to be applied, you
can understand reasonable profits. But we don’t seem to have

63
 

 

access to that. It seems to be clouded under "proprietary
information". There doesn’t seem to be a reasonable formula
that says, "This is fair." You don’t need to have all the data
on the exact chemical construction process of a latex glove.

It seems to me you can have an audit firm that says,
"Yes, they followed standard procedures, they have a reasonable
cost margin and it’s acceptable." Most of us would say, "All
right, that’s at least a marker laid down," and we know how to
deal with the financing of it. Otherwise, we don’t know whether
we're pouring money down a rat hole, a profiteering rat hole.

I’m not saying there is profiteering, I’m just saying
I don’t know because we can’t get the information to make.a
declaration. So we need your help to say, "We think it’s unfair.
If it’s the same latex glove, what is it two and a half times
what it was two years ago?" What have we done?

MR. YEZZO: Admiral, as an authority, I would reference
the American Hospital Association, only because I think we all
buy from the same group purchasing. No matter where we are in
the country, we kind of buy off the same group purchase. We may
all have individual needs, but AHA would probably have the most
standard history of costs, I guess. No? They wouldn’t?

DR. BOUFFORD: We do, because of public bidding -- I
mean virtually everything we buy is competitively bid. I believe
we could probably identify certain key items and what the
relative manufacturers are offering up. I/’d be happy to provide
that to you.

CHAIRMAN WATKINS: This would be valuable. We’re not
going to solve every line item issue, but if we can raise the
question of fairness, particularly for an emergency of this kind
for the nation where we really want people to pull together and
keep those costs down, do what’s necessary to keep them down and
keep them fair. It seems to me that’s not an unreasonable
position for us to take. But we don’t want to make that kind of
a statement unless there are good grounds to justify such a
statement.

MR. YEZZO: And we’ll ask the Greater New York Hospital
Association to provide that data since they can give some idea on
it.

DR. BOUFFORD: We’1ll send you something too.

CHAIRMAN WATKINS: All right. Good. Thank you very
much.

DR. LEE: Mr. Chairman, I want to point out that
Mr. Yezzo, when he talks about a four-fold increase in

64

 

 
 

 

amphotericin and bactrim, these started off very expensive
drugs. You’re looking at thousands and thousands of dollars
for one hospitalization on one drug. So, we’ll let that drop
for now.

In Texas, I’m a little bit familiar with Dallas. If
you don’t have any money in Dallas, you don’t go to the private
hospitals, correct?

DR. BURNSIDE: That’s correct.
DR. LEE: You go to Parklands.
DR. BURNSIDE: That’s correct.

DR. LEE: And you’re losing, you said, $3 to $4 million
on the AIDS patients?

DR. BURNSIDE: Yes.

DR. LEE: Where in the tax system is that picked up
because you don’t have any state or local taxes.

DR. BURNSIDE: Yes, we have a local tax. We have an
ad valorem tax in Dallas County. Parklands Hospital annual
budget is approximately $218 million a year. About 48 to 50
percent of that is from the tax base of Dallas County taxpayers.

DR. LEE: Is that paid out in the property tax?

DR. BURNSIDE: Yes.

DR. LEE: I see.

DR. BURNSIDE: That’s an add-on, if you will, to
property tax, which is why we’re so concerned when the county
commissioners alert us to the fact that there’s approximately
$10 billion in bankruptcy in Dallas County, which means that,
depending on how the bankruptcy courts rule, whether or not
they will be paying taxes which puts us at very great jeopardy
in addition to all of the other dilemmas we have.

DR. LEE: So, from a political point of view, your
people there have a big incentive to make some changes here --

DR. BURNSIDE: Yes, indeed.

DR. LEE: -- in that Medicaid coverage.

DR. BURNSIDE: Absolutely.

DR. LEE: Dr. Boufford, you said in your text here

65

 

 
that there’s 37 million Americans with no insurance. Where are
you putting Medicaid and Medicare in there? They’re not eligible
for either one?

DR. BOUFFORD: For neither, no. Generally they are
over the cutoff for Medicaid eligibility.

DR. LEE: They’re over Medicaid --

DR. BOUFFORD: Or they’re uninsured or underinsured,
yes.

DR. LEE: 37 million?

DR. BOUFFORD: Yes. Some say the number is higher,
but either uninsured or underinsured. And the other group would
be people who are employees of small employers who provide no
benefits or have part-time seasonal work.

DR. BURNSIDE: Or families of those who are employed
but whose employers benefits only cover the worker and not the
family. And migrant workers, young married couples, single
entrepreneurs who are trying to get a business started and can’t
afford it.

DR. LEE: Right. Now, you people have sent in some
super recommendations in here, but if we added them all up -- I’m
not talking about the money right now, but if you added them all
up, how many of those 37 million uninsured would be covered?

DR. BURNSIDE: If you just addressed the poverty level
and Medicaid coverage, you clearly are going to be encompassing
millions more American citizens who would have some access to the
financing for their health care.

DR. BOUFFORD: If you could do something on the
private insurance side with employers, either to assist the small
employer to sustain a level of benefits and/or larger employers
after disability, you would, I think, again help an enormous
number of people.

DR. LEE: Okay. Well then, I guess what I would finish
up with is we’re trying to address those people that don’t seem
to be covered. Thirty-seven million is more than I thought it
was.

Daniel Wartonick is the staff man that’s handling this
hearing. If you can look very carefully at your recommendations
and add or adjust or whatever on those recommendations to see
how many of those 37 million can we pick up. I noticed that the
staff sent out a very nice form on how much it would cost and if
you can give us any idea of what the total costs are, that would

66
CHAIRMAN WATKINS: Dr. SerVaas?

DR. SerVAAS: I get a lot of mail from prisoners who
worry about their health care in federal and state prisons. Some
of them worry that they aren’t being tested for AIDS and they
worry whether they have AIDS. I checked with a physician who had
worked with prisoners in the D.C. area just recently and he said
that they didn’t have enough money to buy AZT for the prisoners
who have AIDS. They just didn’t. He felt in his work in the
D.C. area that they were afraid to test their prisoners because
then they would be asked to give them AZT and they couldn’t
afford it because they didn’t have the money.

I was interested in what he said. In view of all this
conversation about the federal government, wouldn’t the federal
prisons be a good place to start in getting more help from the
federal government?

Any of you who know about how the prisoners are really
being treated. You can’t always believe all the mail you get
from prisoners. But I did check it out with some doctors who
confirmed this who have worked with prisoners.

DR. BOUFFORD: The public hospitals in the city are
responsible essentially for inpatient care in closed units. We
also take the outposted patients from Riker’s Island, which is
the city correctional facility. I can’t speak for state
facilities.

I think it’s fair to say that the prison health systems
in most cities and most parts of the country are certainly not
what anyone would like them to be in general. Then to
superimpose a rather unusual group of people who become very
acutely ill and some of whom go into long-term care is unusual
for the prison health system and is something we have been facing
in New York City.

In fact, we now have prisoners in long-term care beds
in our long-term care facilities in the city, who cannot,
because of the nature of the crime they’ve committed, be released
on their own recognizance even though they are terminally ill.

So they require a long-term setting with more medical support
than can be provided in the prisons.

In the city system we have tried to put a program
together that assures prisoners with AIDS the same kind of access
to services, in addition they are eligible for testing at their
own request on a confidential basis in the city’s prison system.
We’re trying to mirror, at least, the services available to the
general population, but I think what’s done within the context
of a prison health system could be a lot better.

67
DR. SerVAAS: Thank you.

MR. YEZZO: We at St. Clare’s have a prison unit, but
it’s affiliated with the New York State Department of Corrections
rather than the City. Right now we have 15 beds and we’re going
to be expanding that to 25. It’s another ball of wax. It’s a
completely different theatre because you are not only as
Dr. Boufford pointed out, dealing with a very complicated
illness, but also the majority of the prisoners with AIDS are
IV drug abusers. The manifestation of that virus in the IV drug
abuser seems to create a whole other list of problems. Their
care is multi-dimensional. Psychologically they are more
unstable, and have a lot more problems.

I think New York State is probably one of the best in
the country as far as states providing services for prisoners
but there are problems. For example, in Sing Sing there are 2100
inmates. They claim to have six or seven prisoners per unit who
are HIV positive. I would suspect that the number is more like
11 or 1200 of the 2100 inmates who are HIV positive. So you
don’t know who’s not coming forward for fear of reprisal in the
prison. If and when they have symptoms or are sick, how many
prisoners are hiding and subterfuging those systems. So, I think
the numbers are very large in the prison system in general
throughout the country. People are afraid to say, "Hey, take a
look at me."

DR. SerVAAS: Dr. Parrott mentioned about starting
drugs early is helpful. It seems that the prisoners, would be
an ideal group where you have a high incidence of AIDS to start
drugs very early on if we knew.

You mentioned, Dr. Parrott, that now we’re looking
even at children for vaccines. We were told last week that in
Africa they don’t hold up mumps, measles and rubella now because
it’s such a devastating disease for these African children. But
we don’t give those vaccines to the babies in our hospitals?

My other question to you is, we do give children
pneumonia and influenza vaccines that are killed virus vaccines
and that is beneficial if it’s done early. Is that right?

DR. PARROTT: Yes. You asked a series of questions,
one about prisoners and the use of drugs. There’s a dilemma
there because many of these drugs are experimental. Some years
ago, aS many as 25, essentially prisoners who are not in a good
position to give their own truly informed consent were excluded
from most experimental drug or vaccine trials. So, there’s a
dilemma in that respect. I think as was alluded here, when a
drug as AZT is approved for use, it shouldn’t be excluded from
prisoners.

68
 

 

My comments about early use of drugs was a bit
predictive for children but we are hopeful that new drugs will be
used for children. If, in fact, we found one that was not
toxic, if AZT does not cause any damage to a fetus, maybe
treatment of the mother during pregnancy would prevent her
infecting the baby. That is a very attractive, although
experimental, idea. So, the idea of early treatment falls in
there.

Now, about the vaccines in this country. Just two
weeks ago the CDC morbidity/mortality weekly reports recommended
a change in the previous recommendations about the live measles,
mumps, rubella vaccine on the basis both of what was observed in
Africa but in this country, deaths in children who were HIV
infected from natural measles, saying therefore that the risk
from the attenuated or weakened virus is probably less than the
risk of getting natural measles.

So, that was changed just a couple of weeks ago as a
general recommendation in this country. And yes, it is
recommended, although an HIV infected person is not likely to
respond as well as a non-infected person. Their immune system
is weakened.

The killed vaccines are recommended, as they are for
other so-called high risk groups. Influenza, pneumococcus
particularly are recommended for people who are at high risk for
lung disease, heart disease and so forth, and now HIV infection.

DR. SerVAAS: To cut down the costs, wouldn’t it help a
lot in the federal prisons and all the prisons to be giving that
vaccine, the pneumococcal vaccine and the influenza vaccine?

DR. PARROTT: These vaccines are recommended for
anybody at high medical risk, not just children with AIDS.

DR. SerVAAS: If we aren’t doing that in the prisons,
that might be a place where we could really make some strides in
prevention.

DR. PARROTT: Yes. Again, I assume when you’re saying
"in the prisons" you’re saying it’s a controlled population and
we could make people do it. I’m not sure that’s entirely true
either. I don’t really know myself what the situation is in the
prisons. I tend to share what I’ve read and what I’ve heard
here, that probably, almost surely, health care in the prisons in
this country is not topnotch.

DR. SerVAAS: If you’re to believe the mail, it is very
bad.

69

 

 
 

 

DR. PARROTT: Incidently, you earlier alluded to D.C.
I know that D.c. is doing in its prisons the same thing that New
York is, offering voluntary testing. It has not reached the
point that the federal government did for routine mandatory
testing in federal prisons.

I don’t know that AZT is not available. You implied
that it was not. I don’t know that it’s not. We could find that
out if you want to know.

DR. SerVAAS: I would like to know. Thank you.

CHAIRMAN WATKINS: We’re going to have to close out
this panel. We’ve kept you longer than we should have here.

We’re going to have a representative from Bailey House
here this afternoon, Mr. Yezzo, but I’d like to have just a very
quick answer from your point of view to a couple of things.

How do we pay for the care of the homeless with AIDS?
Two, where does a Bailey House, New York City, fit into the
comprehensive care plan concept that you had in mind?

MR. YEZZO: Let me answer the second one while I think
of an answer to the first part of that question. Bailey House
has been a resource to all the hospitals in New York City, but
it’s been a very small resource, 45 beds, to provide housing
situations for people with AIDS who can live in a home
environment with some minimal support or no support.

CHAIRMAN WATKINS: And who pays for that?

MR. YEZZO: Well, Bailey House is supported by the City
of New York on a subsistence program that they have developed.
Dr. Boufford, I don’t know what the amount is. Do you know?

DR. BOUFFORD: There’s a Medicaid piece and a
disability piece. It’s paid through the Human Resources
Administration. I’m not sure exactly of the mechanism. I know
Medicaid is involved and the state Department of Social Services.

MR. YEZZO: But they have also packaged the financing
very nicely. They’ve taken a piece from the city to provide
ongoing types of support, but they’ve also have gone to
foundations. Both the Robert Wood Johnson Foundation and Public
Health Service have given money for establishment, renovation,
and a lot of other things that they’re doing at Bailey House.
So, it’s kind of a package deal that they’ve put together.

Again, what we’re trying to do is establish two 18 bed
residences similar to what they’re doing at Bailey House, but out

70

 

 
of Saint Clare’s. But the two residences are just drops in the
bucket. The numbers are just getting out of control.

For example, when another hospital, to go unnamed,
heard that I was opening up two 18 bed houses in Manhattan for
people with AIDS and HIV positive people who could live at home,
they asked me if I was interested to condo them. Now, this isa
hospital that was not designated as a comprehensive AIDS center
so they were not getting an enhanced rate. As a matter of fact,
they were getting paid on a DRG system that doesn’t really
adequately respond to someone being in your hospital for 25 or
30 days.

It would be cheaper for hospitals to own apartments, so
to speak, by paying $20, $30,000 for an apartment and condo-ing
it, which was an interesting concept and I haven’t given them an
answer yet on that one. But that’s how badly off we are for
apartment settings for people with AIDS, especially in those
hospitals that are not comprehensive AIDS centers, because those
patients are backing up. They have no idea of how to get them
out.

CHAIRMAN WATKINS: And the projections for dealing
with the homeless with AIDS, how does it look for New York State?

MR. YEZZO: A number that we had been dealing with
was roughly 1,000 additional apartments immediately and then
500 additional apartments every year. Now, that --

CHAIRMAN WATKINS: Is that going to be forthcoming or
is that one of these things that’s a nice plan but really is not
going to be executed?

DR. BOUFFORD: I think there’s a special effort at
this point to try to look at the numbers. The state of New York
recently issued ICF regulations which are going to permit housing
with supportive services in a more flexible model, the way Richie
had described earlier, which will allow a vehicle that is better
reimbursed, both on the capital side and on the expense side.

CHAIRMAN WATKINS: And that’s all within the state or
lecal authorities to arrange that, is that correct?

MR. YEZZO: That’s correct.

DR. BOUFFORD: That’s right. And any housing that’s
done at this point is generally without the federal support.
It’s through the state and local governments. The city pays 50
percent of any new housing that goes up and the state pays 50
percent. So, it’s a much bigger hit than a Medicaid supported
program like a health related facility such as New York State has
proposed.

71
I think this is exactly the kind of dilemma I mentioned
earlier where in a city that has tens of thousands of homeless
families, how do you make the choice of who goes to the head of
the line for housing: AIDS patients? mothers with children?
These are the kind of issues we’re facing when the responsibility
is left at the municipal level.

MR. YEZZO: Admiral, when the State of New York put out
the ICF regulations or even spoke about them, and again I must
sound like a guy crying with two loaves of bread under each arm
I was a bit disturbed that they were continuing to use old ways
to describe what we wanted to do.

ICF regs, although we have to maintain a baseline of
those regulations, they’ve blown some of the caps off the top of
it in order to meet the needs of this population and giving you
certain waivers, so to speak. But waivers can always be taken
away. What I was trying to push for was a redefinition of that
type of situation and the State didn’t do that. But they did
recognize the need for the houses.

CHAIRMAN WATKINS: Thank you very much. This has been
a very informative and special panel. We appreciate your staying
here longer for us to answer questions. Thanks very much.
We’ll recess now until 1:45.

(Whereupon, at 1:13 p.m., the hearing was adjourned to
reconvene this same day.)

72
 

 

A-F-T-E-R-N-0-O-N S-E-S-S-I-O-N
1:52 p.m.

CHAIRMAN WATKINS: We’1l continue the hearings now with
our first panel this afternoon, Financing Out of Hospital Care
Alternatives.

We have with us Dr. Pamela Maraldo, Chief Executive

Officer, National League for Nursing; Mr. Robert M. Crane, Vice
President of Government Relations, Kaiser Foundation Health Plan;
Mr. Steve C. Anderman, Deputy Director, Division of Health Care
Financing, New York State Health Department; Mr. Paul L. Riger,
Executive Director and Chief Executive Officer, Visiting Nurses
Association of D.C. on behalf of the National Association of Home
Care; Mr. Benn Brown, Associate Director, AIDS Resource Center
and Bailey House.

Welcome to the Commission’s hearing and we’1l commence
with a statement from Dr. Maraldo.

DR. MARALDO: Mr. Chairman, members of the Committee,
Dr. Conway-Welch, I am very delighted to be here and I
appreciate the attention and the emphasis that the Commission has
given to the important component of caring for AIDS patients,
nursing care, and I appreciate the opportunity to testify today.

I’ve submitted a lengthy statement for the record, but
I will in the interest of time summarize my comments in four
major recommendations.

With due respect to the very frightening and
devastating nature of Acquired Immunodeficiency Syndrome, many
of the problems that it presents in the delivery system are
similar to many which currently exist and call for generic
solutions which apply to all chronic illnesses -- that is,
diseases which don’t have a cure.

Primarily, we have predominantly chronic illness in
the nation, and an acute care system based on a medical model
directed at curing, which is increasingly inappropriate and
ineffective in caring for chronically ill patients. Since the
federal government is the largest purchaser of care, then the
fundamental and far-reaching solution, I think, to deal with the
AIDS problem would be to restructure the Medicare and Medicaid
programs which place their emphasis on short to medium term
hospitalization and short episodic treatments when the real need
for coverage is for long-term care, in the home or in skilled
nursing facilities.

I think home care should constitute the centerpiece of
a newly structured Medicare system because it’s less expensive,

73

 

 
 

 

more comfortable, more humane. You’ve heard many of these
reasons. However, a new structured public financing program
should include managed care systems as well that would provide
the most appropriate settings and the most appropriate providers
for chronically ill populations.

So, my first recommendation is a fundamental
restructuring of Medicare and Medicaid which I believe would
be most furthering in caring for the AIDS population.

Secondly, since primarily chronically ill populations,
including those with AIDS, require primarily nursing care, the
nurse provider, we believe, should be paid, reimbursed, as a case
manager who would be responsible for coordinating care across
settings, following discharge from an acute care setting, and
for providing comprehensive care.

I think redirecting Medicare pass-through monies
to graduate nursing education which is eligible under the
regulations currently written for reimbursement would be a
very viable method of financing this provider. Positioning
and reimbursing nurses as independent providers in the role of
case manager would go a long way toward alleviating the nursing
shortage as well, but that’s another commission.

Number three, and I believe most importantly, because
of the magnitude and the imminent threat to society posed by the
AIDS problem and because we’re unlikely to see a restructuring of
our public financing programs in the immediate future, I believe
that we should have a much more immediate solution. We recommend
the establishment of a federal, categorical initiative designed
to circumvent the current problems in the system to deal with
this specific and threatening disease.

A federal AIDS initiative should be appropriately
shaped to deal with the three most pressing problems related
to the development of adequate financing mechanisms, that is
continuity of care problems, the high cost and manpower supply
issues.

Specifically, Congress should authorize a program of
special project grants for individuals living with AIDS, to
provide funding to community agencies to provide comprehensive
care to AIDS patients. These services should focus on outpatient
ambulatory services and have, as a centerpiece of the program,
home care as a setting of choice.

Lastly, number four, mechanisms to recruit and retain
qualified nursing personnel must be included in such a federal
program. These mechanisms should address salary structure,
should address funds for community education about AIDS, its

74

 

 
 

 

prevention by nurses and to nurses and other health personnel.
I’d be pleased to answer any questions and thank you again for
the opportunity of testifying.

CHAIRMAN WATKINS: Thank you, Dr. Maraldo. Mr. Crane?

MR. CRANE: Thank you, Mr. Chairman. I’m accompanied
today by Dr. Robert Lawrence who is the Chief of our Immune
Deficiency Clinic in Portland, Oregon. He can deal with any of
the clinical issues that you may want to explore.

Kaiser Permanente is a prepaid group practice program.
As such, it organizes finances and provides health care services.
We have had extensive experience with AIDS. The majority of our
health plan members are located in urban centers where AIDS is
very prevalent. In San Francisco, where a quarter of the
population is enrolled in our health plan, we are second only
to the county as a provider of care to AIDS patients.

In treating AIDS, we have learned that services can be
provided in a cost effective manner. Indeed, this is essential
if AIDS is not to overwhelm our health care systen.

Prepaid group practice plans like Kaiser Permanente
provide members with comprehensive benefits, ambulatory care as
well as inpatient care. Most aspects of AIDS can be treated
outside the hospital setting on an ambulatory care basis or
through home care.

For example, we have set up an ambulatory infusion
center in a number of our Regions as an alternative to high cost
inpatient treatment. These centers provide outpatient drug
therapy to a large number of AIDS patients who otherwise would
require hospitalization.

In San Francisco, in the first 18 months of operation,
the Center saved an estimated 3500 inpatient days. This not only
conserves resources, but is the preferred method of treatment for
many AIDS patients.

In a study in our Northern California region,
outpatient costs represented about 30 percent of the $35,000
lifetime cost for an AIDS patient in our program.

Planning and organizing services and establishing more
cost effective treatment modalities will moderate the cost of
financing AIDS care. However, there remain significant gaps in
financing this care. These are difficult to consider without
looking at the broader problems of how to increase access to the
37 million Americans who do not currently have health benefits
coverage.

74

 

 
 

Let me summarize our suggestions relating to financing
of care. First, establish state risk pools for the uninsured.
Fifteen states have established such pools with subsidized
premiums. Other states should be encouraged to do the same.
Pools should be financed with a broad base of revenue. If health
plan benefit plan assessment is the mechanism to be used to
finance such subsidies, the risk of preemption should be changed
so that self insured plans can participate as well.

Second, increase employer provided health benefits
coverage. Seventy-five percent of the uncovered are employed
or dependents of workers. Incentives for employers or new
requirements may be needed to accomplish this.

Three, expand Medicare eligibility. If reducing the
24 month waiting period is not feasible, consideration should be
given to ways to coordinate Medicare eligibility with the current
18 month COBRA continuation requirement.

Fourth, encourage health benefits plans to cover and
underwrite AIDS using similar rules. Concern about adverse
selection by health insurers and health plans is likely to lead
those plans to use underwriting and other means to avoid covering
persons with AIDS. More uniformity in rules would remove this
as a competitive issue among plans and expand coverage for
persons with AIDS.

Fifth, examine the need for providing financing relief
for health benefit plans who end up with disproportionately large
number of AIDS patients. Such a safety net under plans would
reduce plans incentives and activities to avoid covering persons
with AIDS. It would keep more AIDS individuals in the insurance
market and reduce reliance on Medicaid.

Finally, increase Medicaid coverage and payment for
persons with AIDS. Extra payment for providers would remove
disincentives for caring for them. In addition, there is a need
for more uniform eligibility standards for AIDS patients across
the states.

In addition, the Commission should consider ways to
make financing less expensive. We have three suggestions.
First, collect and distribute information about cost effective
methods of care. Publicize what works. Infusion clinics, case
management, mental health coverage as an offset to other costs,
the most cost-effective drug therapy, all of these should be
considered.

Also important is the consideration of treatment costs

and methods relating to ARC and those who have been diagnosed as
HIV positive.

76

 

 
 

 

Second, encourage health benefit plans to improve
outpatient coverage. We have seen that coverage influences
practice patterns. The Commission could do a lot by encouraging
more coverage of care in low cost setting of care.

Finally, encourage community action in support of
outpatient and home health care. San Francisco is a model in
this area. How can that model be mobilized elsewhere? I think
federal and state leadership and funding is necessary to create
infrastructures in communities where volunteers and a broad array
of community resources can be pulled into the care process and,
in that process, reduce medical care costs.

There are obviously no easy answers here. I’d be happy
to answer questions about any of the proposals which we have
made.

CHAIRMAN WATKINS: Thank you, Mr. Crane.
Mr. Anderman?

MR. ANDERMAN: Thank you. I had a chance to sit and
listen to some of the testimony this morning,’ so I know you’ve
heard a lot about New York’s comprehensive care model. I’d like
to describe to you briefly how we’ve developed the financing
structure around that.

One of the principles of the financing structure was
the approach that we’ve taken to designated care centers. We
have about 17 of them throughout the State of New York. One of
the primary roles of those designated care centers was to serve
as the locus as well as the case management tool to provide a
continuum of care throughout the system, the first and only
diagnostic groups for AIDS patients for the non-medicare
population which are paying.

We also have given the hospitals an opportunity, if
they would like to, to be considered as exempt units paid for on
a per diem basis. Currently, those run between $600 and $900 a
day and on a case basis at about between $11,000 and $16,000 per
admission.

One of the other interesting things that we’ve done
with the designated centers is we’ve restructured the outpatient
financing program. What we’ve done is we’ve developed a pricing
system which has roughly seven or eight different types of visits
associated with that to try to encourage the hospital to be able
to discharge a patient to an active outpatient progran.

One of the visit types that we have is a comprehensive
visit where a physician would work up a patient. One of the
Commission members asked, “What if they present themselves in an
emergency room?" Hopefully, an AIDS patient can come into an

77

 

 
 

 

outpatient area in a designated center, get a comprehensive work-
up, and then there would be subsequent intermediate care or
follow-up visits as well as if the patient needed chemotherapy or
blood transfusions or subsequent meetings with a counselor and a
case manager.

We have all of those levels of different care needs
defined, serviced, and priced. They range from about $40 a visit
to, on a comprehensive work-up, about $250 a visit. At the same
time, to provide this continuum of care, we have now a need of
between 500 to 800 long-term care beds for AIDS patients in the
state.

We have a very unique financing program for geriatric
patients in this state called "resource utilization groups."
RUGS is the acronym. It defines levels of care needs for
patients without really a need to designate a site for that
patient. These 16 levels of care that we have range from
patients who we call "physical patients," who need just physical
geriatric care, to clinically complex patients who need
rehabilitative care.

We’ve looked at that system and said, "Can we adapt,
given our comprehensive care and designated center approach and
our case management approach, can we retool that RUG system to
fit in the model that we’re trying to do?" Well, we did. We
just released regulations to that, and we priced out what it
would cost to care for AIDS patients in these settings. The
range there goes from anywhere at the low end of about $100 a
day to the high end, some of the clinically complex patients or
the special care patients as we call them, to about $250 a day.

The other piece that we have done is we’ve also as a
continuum looked at home care, the home care patient. In
association with our home care association, we looked at costing
out what the AIDS home care patient would cost. What we found
when we did that is a couple of things. First, the initial
visit took longer for a nurse -- I’m talking about the nursing
visit -- than looking at the typical type of home care patient
that the home care agencies in our state take care of.

We also saw, given the fact that we put ina
regulatory case management effort, that the case management time
naturally was longer. What we’ve done in the home care, and our
regulations are in effect, we’ve structured a home care payment
system that recognizes an increased payment. In different areas
of the state, it’s roughly between $60 and $90 a visit, which is
about 30 percent higher than the typical home care patient.
That’s proven out because of the time studies that we’ve done.
That is in place. So. one of the major obstacles that we are
dealing with now -- in fact, there have just been meetings on it
in the last couple of weeks -- is trying to find the capital

78

 

 
 

 

funds to develop some of the non-hospital based settings. In
meeting with investment bankers, the word that they gave me is
unless there is security, meaning either some kind of overlaying
insurance or some state security or back-up agreement or as we
sometimes call it, moral obligation agreement, they really
weren't interested in doing business or giving us the capital
dollars to get some

of these other plans, non-hospital based plans and home care

and other things up on line. So, that's been a little bit
discouraging. We are working to try to get around ik.

My suggestions really for the Commission are a couple.
First, as Mr. Crane has said, the waiting period on Medicare,
something needs to be done about that in order to get patients
to become Medicare eligible. If we do that, you also have to
he very careful, as you define some of these other layers of
services, to get at the coverage issue. Recause, Medicare only
covers ~-- in the lonaq-term care area, for example, if a natient
is "rehabilitatable." That needs to be looked at as well in
terms of coverage.

As my colleaques said this moriing, I'd like to see a
greater federal match on the Medicaid patient. In the State of
New York, it's roughly 50 cents on the dollar for tne feds, 25
state and 25 local. In the long-term carrier, the state because
of trying to provide property tax relief several years aqn
increased our share of the long-term care business to nick up
that.

And I would also, lastly, to try to be able to get same
of these other alternative sites and plants, physical plants up
on line, I'd like to see some dollars available for some seed
money for canital so I could go to the investment bankers and
basically structure either some type of insurance arrangement
or some type of secured loan program. Thank you.

CHAIRMAN WATKINS: Thank you, Mr. Anderman. Mr. Riger?

MR. RIGER: adies and gentlemen, the National
Association for Hote Care, on whose doard of Jirectors I serve,
represents the interest of nearly 4,009 home healt care
providers, including hospices and homemaker home health aid
organizations.

The home care industry has heen an important player in
the design of a cost effective and humane system of care for
persons with AIDS from the early days of the epidemic when it
became apparent that hospitalization as the major setting for
car* was costly and often unnecessary.

Wome care's role in the care of natients with AIDS may
have emerged for economic reasons, but home care is particularly

79

 

 
appropriate for persons with AIDS because home care enables
persons with AIDS to spend their remaining days in familiar
surroundings providing emotional support for them and their
families. Home care provides maximum independence and dignity
and home care significantly improves the quality of life for
persons with AIDS and provides the opportunity to maximize the
use of their remaining time.

Home care also allows the greatest opportunity for
family members and significant others to become educated about
AIDS and to participate in the care of a person with AIDS. Home
care allows for the use of an appropriate continuum of care based
upon the least restrictive setting. And finally, home care may
cost substantially less than institutional care for appropriate
patients.

Although we have limited national figures on the cost
of home care in AIDS, data from the AIDS Home Care and Hospice
Program of the Visiting Nurse Association of San Francisco, and
the AIDS Project of the Visiting Nurse Service of New York, as
well as our own experience here in Washington, D.C., provide a
good estimate.

San Francisco VNA states that the average length of
stay in their program has been 57 days from the start of care
through discharge. Ninety percent of the patients have died at
home. The average cost per patient day in the program is $94, or
approximately $5,358 dollars per length of stay. In 1984, the
San Francisco program had an average daily case load of 18. By
1987, the case load had increased to 63.

The Visiting Nurse Service of New York calculates their
per diem costs for 1986 as $81.40. Their program supports a
Medicaid contract with New York City. The Visiting Nurse Service
of New York has contracted to provide all of Medicaid’s services
as well as home attendant services and continuous nursing
services. In 1985, VNS of New York had an active case load of
56. By May of 1986, there were 249 patients receiving care.
Since the initiation of the Medicaid program, New York Visiting
Nurse Service has received referrals on 1,255 infants, children,
and adults, and an additional 1,250 patients from other sources.

Here in Washington, we served 32 AIDS patients in 1986,
and 75 in 1987, with an average cost per case of approximately
$1,300, 90 percent of which was reimbursed by Medicaid and only
eight percent private insurance. As has been stated earlier,
Medicaid reimburses substantially below the cost of providing
service, which creates a dilemma for the provider.

Home care for AIDS patients is not without its
problems. Many patients who would be eligible for home care

80
 

 

are homeless. Therefore, institutionalization is the only

option for care. In addition, the nation is experiencing a
nursing personnel shortage, including registered nurses, licensed
practical nurses, and homemaker home health aids. It is this
shortage factor that contributes to the higher utilization of
institutional care and subsequent higher costs in New York City.

Inadequate financing, of course, contributes to the
shortage problem. Homemaker home health aides can make more
money working for McDonalds than they can providing care for
those in need. Medicaid rates do not allow for adequate
reimbursement of these vital components of the health care
delivery system.

As the demographics of the AIDS population shifts from
the male homosexual community to the drug abusing population,
the number of uninsured and under insured patients has increased.
This has placed a terrible burden on public hospitals, public
health home care agencies, and voluntary agencies such as
visiting nurse associations. These organizations must accept
uncompensated care, and while the volume of uncompensated care
has increased dramatically, reimbursement and funding through
contributions and other sources has not increased commensurately.

As has been mentioned earlier, very few AIDS patients
are eligible for Medicare, because they have not reached the end
of the two year waiting period, and Medicaid offers only a
partial solution. In many cases, it does not cover the scope
of the services required by AIDS patients.

It must be kept in mind that 18 percent of Americans
have no insurance coverage whatsoever, including Medicaid, and
the proportion of poor Americans covered by Medicaid had declined
from 65 percent in 1976 to only 38 percent in 1984. Private
insurance when it exists is similarly limited, and in some cases
will not cover home care, which is at least a mandated service
under Medicaid.

In light of these financing problems, the National
Association for Home Care is quite concerned when pronouncements
are made by federal policy makers that home care and/or hospice
care is the answer to cost effective care for AIDS patients.
Certainly, home care is part of the solution, but that solution
must be predicated on adequate financing regardless of the
setting.

Thank you for the opportunity to present our concerns.
I will be happy to answer any questions that you might have.

CHAIRMAN WATKINS: Thank you, Mr. Riger. Mr. Brown?

81

 

 
 

 

MR. BROWN: Admiral Watkins and members of the
Commission, my name is Benn Brown. I’m the Associate Director
of the AIDS Resource Center of New York City. We’re the
sponsoring agency for Bailey House and the Scattered Site
Apartment Programs.

We’re the largest provider of supportive housing for
homeless people with AIDS in the United States. Currently, we
provide housing and supportive services to more than 65 homeless
people. In our last year, we have provided residence for over
220 individuals and families. This number, in fact, is very
small in comparison with the growing number of homeless persons
with AIDS and AIDS-related conditions.

Private funding started our agency and provided us
with our first apartments, but the demands for the private sector
support are greater than ever. Public funding from government
agencies is and must continue to be the major source for
maintaining and developing housing for persons with AIDS.

Our funding has a variety of sources. Our operating
cost at present in the Scattered Site Apartment Program are
$42.50 for each individual resident and $106.25 per family unit
per day. At Bailey House, which is a 44 resident facility on
Christopher Street in New York City, the cost is $94.44 per day.
These costs clearly demonstrate the efficiency of supportive
housing versus the estimated $750 to $1000 per day of New York
City costs for extended hospitalization.

In New York City, our requirements by contract are that
each resident of the Bailey House Program pay $346 of their $425
SSI entitlement toward their room and board. This leaves the
resident with approximately $79 to cover all their personal
expenses for the month that Medicaid does not cover.

At present, there is no SSI level II funding source
available to persons with AIDS due to the category of licensing
which is a prerequisite for SSI level II entitlement. This is
a critical concern for our agency and others trying to provide
assistance to persons with AIDS. It is imperative that the
Social Security Administration review its policy in the face
of this national health crisis and direct state licensing
authorities accordingly.

At present, there are no Medicaid, Medicare funding
streams available to include capital or operating expenses for
supportive housing. There were no accessible funding sources
for housing when our agency began its work in 1983. We were
the front runner of the race, and we have pieced together our
funding on an ad hoc basis. In order for there to be
replications of Bailey House and the Scattered Site Model Housing
Programs, funding streams must be created which do not now exist.

82

 

 
 

 

No one should have to reinvent the wheel in order to provide
services and housing for homeless people with AIDS.

We have four recommendations that we would like to make
to you as a Commission. Our first recommendation is that there
be a form of licensing created enabling group residence for
persons with AIDS that would make them eligible for SSI level II
funding. Our recommendation would be to attach the licensing
requirements to the support services that are provided, rather
than to the physical facility.

Second, we recommend an increase in the SSI personal
allowance entitlement for residents to an amount suitable for
a younger, chronically ill population rather than the current
standards established for a more immobile, institutionalized
population.

The third recommendation is that the U.S. Department of
Health and Human Services issue a directive to state governments
requesting that states develop a new licensing category for
specialized residences for persons with AIDS and AIDS-related
conditions. Only a small portion of persons with AIDS, the
national average is actually less than ten percent, require
medically supervised care on a continuing basis. A non-
institutional housing environment is the most appropriate and
cost efficient residential alternative to extended
hospitalization.

Fourth, enabling legislation must ke drafted to provide
operating and capital funds for residences for people with AIDS
and/or others with chronic disabling conditions in need of
supporting housing, using the current community based models
in place for the developmentally disabled.

Bold steps are needed in response to these issues and
these recommendations. Housing and supportive services for the
increasing number of homeless persons with AIDS is not only
humane, but cost effective.

Over the past three years, the AIDS Resource Center’s
two housing programs have proven to be a life-enhancing
alternative to institutional facilities. We have been able
to provide to homeless people with AIDS a sense of home, a place
of quiet where they can rest, a room with a door that they can
lock at night when they go to sleep, a window with a view of a
world that’s not quite what they wanted it to be, but most of
all a reassurance that people do care. Government action is
necessary to create necessary funding and administrative means to
develop and operate similar programs nationwide. We cannot
afford to delay action any longer. Thank you for your time, and
I would be glad to answer any questions.

83

 

 
 

 

CHAIRMAN WATKINS: Thank you very much, Mr. Brown.
Let’s start the questioning with Dr. Lee.

DR. LEE: Mr. Brown, aS you may or may not know, I’ve
had a special interest myself in Bailey House. I hope that you
and Doug Dornan, who is the head of it, will give us everything
you’ve come up with in the way of really specific
recommendations for how we can create some kind of funding
streams for you. I know we’ve gone into the Medicaid waiver
issue, but anything that’s specific that you can possibly come
up with, please submit it to our staff.

MR. BROWN: Be glad to. In fact, tomorrow there’s a
housing conference in New York City that our agency is providing
for other agencies that are trying to begin the progran.

DR. LEE: Mr. Anderman, I must say I was a little
confused. When you say, "we" are paying this and we are paying
that, who is "we"?

MR. ANDERMAN: I’m referring to Medicaid.
DR. LEE: Medicaid?
MR. ANDERMAN: Medicaid.

DR. LEE: Now, $250 for a comprehensive health exam
from Medicaid?

MR. ANDERMAN: A visit in the designated centers in
the outpatient areas, yes. As part of being a designated center,
we've restructured the outpatient reimbursement streams.

So, the $60 a visit that you heard earlier mentioned
does not apply for AIDS designated centers. This has been part
of the model, and so the reimbursement streams have ranged from
a kind of a follow-up counseling type of session where it’s
roughly priced at about $45, to where somebody presents
themselves and says, "I’m seropositive," and a complete
comprehensive work-up is done. That’s priced at about $250,
$260 a visit.

DR. LEE: Now, you had quite an interesting idea there,
going to private sources and financing your own insurance in some
way? Is that what you had in mind?

MR. ANDERMAN: Well, we have a model that we built
on -- and I don’t know if you’re familiar with trying to rebuild
some of our hospitals which are in areas where there is a
tremendous amount of medical indigence. We have a capital pool
that we’ve put together in the state that we’ve used to develop
an insurance mechanism and we’re looking at that structure.

84

 

 
You have testimony coming down from Matt Scanlon,
who is Deputy Director of our Medical Care Facilities Agency.
We’re looking at some models to try and kind of structure that
financing. Part of the problem, though, is either the state’s
got to put dollars up or the federal government’s got to.
Somebody’s got to create the security that the investment bankers
want to have in order to go out and sell the bonds to the bond
holders.

So, we’re all kind of saying the same thing. Somebody
needs some seed dollars to create an insurance mechanism or
insurance pool.

So, yes, we’ve done it with two hospitals. We’re
going to be doing it with a third this year.

DR. LEE: Why would an investment banker give you
money for this?

MR. ANDERMAN: They won’t now. They won’t right now,
because there’s no security. What we’re doing is we’re saying
the capital dollars and capital flow will come in through the
third party payer rates, Medicaid, Blue Cross, commercial, and
Medicare. In the out-of-hospital settings, you’re dealing with
either all Medicaid patients or indigent patients. I did not
mention that most commercial and Blue Cross plans generally don’t
have very good coverage on out-of-hospital alternatives. Very
few have long-term care coverage. Very few have a minimal amount
of out patient coverage. And so, the investment community is
very reluctant to put dollars up because of a security issue.

DR. LEE: Would a "Big Mac" approach --

MR. ANDERMAN: Well, the Big Mac approach has got
state sales tax dollars pledged behind it. So the answer to
your question is, yes, somebody has got to sit behind and pledge
behind the dollars so that if there’s a default there’s a
mechanism there to pay the bond holder off who’s holding the
mortgage. That’s part of the obstacle that in any of these
programs you have to solve in order to get them up and on line.
I’m sure housing and some of these others are no different than
the medical model.

DR. LEE: It seems to me that might be quite an
inventive approach in these days of serious budget problems
in Washington.

MR. ANDERMAN: Well, the hospital program that we built

is built on a tax that we tax the hospitals. We tax the premium
payers in the State of New York. It’s part of our bad debt and

85
 

charity care pool, which amounts to about $400 million plus.
This works out to about a $14 million or $15 million a year that
gets set aside for what I’ve termed the "secured loan agreement."

So, it’s $14 million a year that basically builds the
security for the investment in the institution.

DR. LEE: Forgive me, but as a taxpayer I’m trying
to get away from the tax.

MR. ANDERMAN: I understand that, but in order to
rebuild about four or five indigent hospitals in the State of
New York with the investment community not willing to do that,
we had to come up and invent this vehicle.

DR. LEE: It sounds interesting. Dr. Maraldo, you had
a couple of interesting things I wish you’d elaborate on a little
bit more. The first is this categorical initiative thing.
Reading what you say here, I don’t understand what financial
stream you’re creating here that’s different.

DR. MARALDO: Well, we’re not really advocating that
a new stream be created, just advocating that since most of the
money that’s gone into dealing with the AIDS problem has gone
into research, that it seems to be a more immediate solution to
a very pressing problem to designate some federal funds to flow
through existing community-based agencies primarily to deal
with the problem because of the Medicaid limitations in Medicaid
eligibility, because of Medicare’s limitations, and also because
it’s an urgent problem.

I know that it’s not very popular these days when
everybody’s worried about our economic situation, but nonetheless
I think there’s a lot of reason to be wary about private sector
solutions. There’s a report that just came out in the end of
February from the Office of Technology Assessment, and I think
it’s commendable what Kaiser has done and the Blues are looking
at a managed care approach. But, I don’t think there’s any
concrete reason to believe that it will be any more successful
in managed care markets than we’ve been in indemnity markets.

In addition, it appears that from the report most
insurers are treating AIDS like any other serious illness, and
that is most serious diseases are uninsurable. So, I think -- it
might sound simplistic and it might sound Quixotic in these
economic times, but I think a federal categorical program modeled
after the programs in the ’60s and ‘70s would be the most
expedient approach to stop the hemorrhaging.

DR. LEE: But, what are you talking about? I mean,
what money is being created?

86
DR. MARALDO: Okay. I’m talking about special project
grants that would be designated to specific agencies that could
be selected in states as the primary agencies -- it could be on
a competitive basis -- that are caring for the most part for
indigent AIDS patients. Or, most cost effectively for
patients, usually that’s a home care setting or a day care
setting. It’s an out-patient setting.

DR. LEE: So, you’re talking about grants coming
through HHS or whatever?

DR. MARALDO: Pretty much.

DR. LEE: Okay. Now, the last thing was you had an
interesting thing here about posing the nurse as the primary
provider and have her following the case through and so forth.
Develop that a little bit. Is that feasible in these days of no
nurses? I mean, you’ve got fewer nurses than you do doctors,
don’t you?

DR. MARALDO: Yes, we do. But, I think that this
would be most effective, not only in dealing with the problem
of chronic diseases in the system, but I also think it woulda
be a mechanism to attract more nurses into the system.

We’ve done a lot of studying of this problem over the
years, and the autonomy issue is a central issue. I think that
it’s also been demonstrated that nurses in primary care
Situations are lower cost providers. They enjoy practicing
independently and they’re prepared to practice across settings.
So, I think that it might kill a couple of birds with one stone.

DR. LEE: It’s an interesting solution.
DR. MARALDO: Thank you.

DR. LEE: Thank you, Mr. Chairman.
CHAIRMAN WATKINS: Dr. Lilly?

DR. LILLY: I’d like some more information, Mr. Brown,
about the homeless that you treat. I know a little bit more
about the people for whom you provide housing than I do about how
you cope with the homeless.

A couple of hearings ago when we were in San
Francisco, we were told there that the best estimate that anyone
could come up with of the number of homeless people with AIDS in
San Francisco -- correct me if I’m misquoting this -- was 200 to
600, which was a horrifying number. I’m wondering how you deal
with homeless people, and in New York is it the same magnitude
of problem?

87
MR. BROWN: The off-the-record estimate in New York,
because New York City is still documenting officially, its
homeless AIDS count is that on any given day there are 600 or
more people in the City of New York who are homeless, who have
AIDS, who would be eligible for our housing program if we were
a larger agency and had the housing to provide for then.

Our current contractual obligations are that the
people that become residents in our program are medically able
for discharge from a hospital in the New York City area and they
have nowhere else to discharge to except to the street. Then,
by meeting those city criteria, we then do an intake with them
to make sure that they’re suitable for living in a community
environment.

DR. LILLY: So, how in the world do you select among
these people to fill the totally inadequate number of spaces that
you have to offer?

MR. BROWN: We never have a problem in trying to fill
a bed.

DR. LILLY: No. I know you don’t have a problen.
But, don’t you have to -- do you have criteria for choosing
among the people who want housing?

MR. BROWN: The criteria is that we have two
alternatives. We have Scattered Site Apartment, which are the
people who are in a terminal stage of the disease but are still
self-care capable and very ambulatory. They can pretty well
provide for themselves in an apartment with minimal supervision
on a day to day basis by our staff.

People who are more medically dependent on food, more
support services, we try to place them in Bailey House which is
a 44 resident facility. All three meals are provided. Support
services are provided around the clock. There’s more supervision
of the residents in that progran.

DR. LILLY: Okay. Are these people who have become
homeless because they have AIDS, or who were homeless and then
developed AIDS?

MR. BROWN: Both.

DR. LILLY: Both. Roughly equal proportions?

MR. BROWN: The percentages are probably pretty well
split. I would say right now our current population is about
60 percent homeless prior to diagnosis, 40 percent homeless
after diagnosis.

88
 

 

DR. LILLY: I’d like to know a little bit more about
how you raised the money for the operation. Your summary
statement was that you depended on private money to get going
and to sort of qualify you for public support. Could you
elaborate a little bit on that?

MR. BROWN: It began as a small organization of
business people and clergy in the West Village of New York City
that created the organization and got the first two apartments.
From that point, the apartments began to expand. We then made
application to the City of New York for a contract to provide
housing for homeless persons with AIDS. That was the first
source of "public funding" that we obtained.

Since that time, we are a part of the New York City
AIDS Service Delivery Consortium, which qualified us for part
of the DEMO grant from the U.S. Public Health Service, which is
a three year DEMO grant. We also qualified for part of the money
from the Robert Wood Johnson Foundation. We have a DSAS grant
through the Department of Substance Abuse of the State of New
York. And we are currently seeking corporate foundation support.

DR. LILLY: At the current time, what percentage of
your operating budget is from government sources, federal, state,
and local?

MR. BROWN: All of our operating budget for the Agency,
23.5 percent is private dollar, individual. Everything else is
either contract, foundation, or federal.

DR. LILLY: All right. Let’s see. Well, I pass.
I may want to come back.

CHAIRMAN WATKINS: All right. Mrs. Gebbie?

MRS. GEBBIE: A couple of different areas I’d like
to explore.

First, Mr. Crane, some states I know buy pre-paid
coverage, such as from Kaiser, for some categories of Medicaid
eligible individuals. [In Oregon, it’s mothers with dependant
children. Do you have any experience in any of your locations
with groups that might include HIV-positive or ill persons for
whom Medicaid coverage has been purchased?

MR. CRANE: Yes. In a number of regions we do. In
both Northern and Southern California regions we have Medicaid
contracts. One of the interesting things that California has
done in the past year is to establish a higher level of per
capita payment for beneficiaries with AIDS as an incentive for
pre-paid health plans, as they’re called in California, to take

89

 

 
 

 

AIDS patients or at least to remove the disincentive. So, we
have programs in both the California regions and we have one in
Oregon as well, and a number of other states.

MRS. GEBBIE: That higher rate is necessary? They
consume more care than your average enrollee?

MR. CRANE: Yes, considerably more.

MRS. GEBBIE: Is that something that is being pursued
by other states, do you know, or other areas?

MR. CRANE: Well, I’m not sure about other states,
but in my written testimony we talked a little bit about the
California model and suggested it as a way in which states can
encourage Managed care programs to care for these individuals.
Once in the managed care program the Medicaid- -eligible AIDS
patient is more likely to get a proper mix of services, an
emphasis on ambulatory and home care and a deemphasis on
institutionalization.

MR. ANDERMAN: Could I just add something?
MRS. GEBBIE: Yes.

MR. ANDERMAN: In the design of the New York progran,
one of the things that’s difficult to do, especially with
providers, when you do a pre-paid or capitate arrangement, you’re
asking people to go at risk. And with this population and with
the changes in care and the changes as you heard this morning
about pharmacy costs and costs going this way and that, providers
are a little reluctant to go totally in a pre-paid arrangement
yet.

That’s something that we are looking at about trying
to do a managed care and a capitated arrangement for a Medicaid
population. But, folks are reluctant for a lot of the reasons
that you’ve been hearing about.

MRS. GEBBIE: But, you’ve been willing to do it, at
least with the slightly higher rates, or lots higher rates?

MR. CRANE: I can’t tell you precisely what the
aifference is, although I’d be happy to furnish that to you for
the record if you would like. We have Medicaid contracts and
some of the individuals under those contracts either have or get
AIDS. As far as our program, we don’t differentiate among them,
although the government does differentiate among them in terms of
payment amount.

And so, it’s helpful to all the plans that have Medical
or Medicaid contracts to receive increased reimbursement. For

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the same reason that Mr. Anderman gave, when you have an AIDS
patient, you have some certainty that the costs are going to be
higher. It’s just a fact.

MRS. GEBBIE: Yes. The reason I’m pursuing it a little
bit is that we’ve heard a great deal today about problems under
Medicaid. I don’t want to put words in your mouth, but it sounds
like under present Medicaid rules if a state is willing to pay
your rate, that package of services that patients have been
telling us they want is in fact available. Is that your
impression?

MR. CRANE: I think that’s right, yes.

MRS. GEBBIE: I’m looking also to Mr. Anderman, who’s
a purchaser. Is that --

MR. ANDERMAN: Again, I don’t want to put Bob on the
spot, but ask him if he had 5,000 AIDS patients.

MR. CRANE: Five thousand AIDS patients?
MR. ANDERMAN: Yes.

MR. CRANE: Well, I think --

MR. ANDERMAN: It’s orders of magnitude.
MR. CRANE: That’s right.

MR. ANDERMAN: It’s orders of magnitude. If you have
10, 20, 30 patients and all of a sudden a lot of them convert and
are seropositive and have AIDS and require hospitalization and
the continuum of stream of care, this is the problem. Ona
capitated arrangement, the question is who’s carrying the risk.
Is it the provider? Is it the State?

Who’s going to be the ultimate deep pocket if it does
turn out that in Kaiser’s case all of a sudden that patient needs
AZT? AZT costs of $9,000 a case wasn’t built into the actuarial
premium that determined his payment. You’re going to be careful
and you’re going to look at your mix and all the other types of
things that you do in that line of business.

But, we have some Medicaid pre-paid programs up, but
they are not actively trying to enroll this population. They are
enrolling the population because of the conversions and what you
have heard about in the testimony this morning with the AFDC case
load and the mothers and infants, mothers becoming seropositive
as well as the increasing number of infants.

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MRS. GEBBIE: So, they’re going to have some one way
or the other.

MR. ANDERMAN: It’s going to happen.
MRS. GEBBIE: Did you have something else to add?

MR. CRANE: If you’re heading to a point where one easy
solution to this is to take all those in Medicaid who get AIDS
and put them in managed care, you would have a problem unless
there was a substantial increase in reimbursement. Even then an
HMO will want a balanced membership and may have capacity
problems.

But, I think you are right that in those systems of
care the Medicaid beneficiary is more likely to get a cost
effective array of services and that overall that will cost the
system less. Most plans would want a balanced membership,
however.

MRS. GEBBIE: I’m quite convinced there’s no single
point solution to any of this. The other area I think it would
help all of us to hear discussed -- and I think this may take
several of you -- we’ve heard at various points in time,
concerns about doing some things that would fix the Medicaid
system. And then, we’ve also heard people express concerns about
speeding up enrollment in the Medicare system for a person with
AIDS or who is HIV positive.

I sometimes think the real reason for pushing
enrollment in Medicare is the protection of the state dollar.
Because, in fact, mere enrollment in part A of Medicare leaves
you uncovered for several critical services, including drugs and
some long-term benefits and I think some out-patient benefits
that would otherwise be covered if you were on Medicaid.

So, as I think about it, maybe that’s a false solution.
It just sounds simple, and it maybe sounds appealing from a state
legislature viewpoint. Maybe fixing the Medicaid side is better
with one or all of those three things we heard about earlier
today of broadening the services, increasing eligibility, paying
a fairer share, which also has some appeal because it’s a mixed
state/federal solution. But, maybe I’ve lost something in the
twists and turns of this argument. Could somebody --

MR. ANDERMAN: No. I don’t think you’ve lost anything.
The Medicare program is 100 percent federal dollars. If you
drop the eligibility and now somebody is eligible for Medicare,
in-patient hospital stay in our state is about, at last estimate
and going up, is about $335 million out of a half a billion
dollars in terms of care being provided. So, there’s $335
million that is a number that is being increasingly borne by

92

 

 
 

state and local government that’s going to go increasingly in
the federal share.

You’re right. You could do the same thing, perhaps,
by saying, "Well, we’ll take over for AIDS patients like we did
for kidney disease and end stage renal disease, the care for
those specific patients." So, that becomes 100 percent federal
dollars. There are very few Medicaid dollars in kidney
dialysis, because you took it over. The federal government
took it over years ago.

Your logic is not off. It’s basically looking to
relieve some of the state and local dollars to a more national
basis as opposed to particular areas, particular communities,
and particular regions in the country bearing the brunt of AIDS.

MRS. GEBBIE: But, from the point of view of the
patient, the person who’s sitting here trying to figure out
how to get care and miserable because of Medicaid because they
happen to be in a state that might not do anything right for
them -- and, therefore, hearing all this testimony thinking
Medicare is going to be my answer, if we simply put the person
in regular Medicare --

MR. ANDERMAN: I agree.

MRS. GEBBIE: -- will I be just as disappointed because
I’11 suddenly find a bunch of bills arriving on my doorstep? I
see some heads nodding. So, it would be --

MR. ANDERMAN: I’m agreeing with you, yes.

MRS. GEBBIE: -- more than just, if we were going to go
that federal route, because we decided we didn’t want to leave
the burden with the states. We would not only have to, say, make
eligibility available earlier, but make it cover a wider range of
services in some way?

MR. ANDERMAN: Absolutely. You have the eligibility
question and you have the coverage issue. I mean, take Medicare
long-term care services. In our state, 85 percent of the long-
term care business is Medicaid because ultimately people spend
down and become Medicaid eligible or they exhaust their private
resources when it costs $30,000 a year to be in a long-term care
facility in our state.

So, if the Medicare coverage now says, "We’re only
going to cover patients who are rehabilitative patients," and an
AIDS patient, although maybe requiring some rehabilitation, may
have dementia issues and may have some other issues, Medicare
could turn around and say, "This patient’s no longer Medicare
covered." And then, the whole process starts all over. You

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spend down and then you become Medicaid eligible again. Yes,
I think you’re on the right track of a combination of issues
related to coverage, eligibility and matching programs. So, it’s
a combination of all three.

If you want to put an immediate patch in the hole in
the dike, you make everybody Medicare eligible and then you take
the load off on the in-patient care side.

MRS. GEBBIE: Except that we’ve been trying to get
people out of the in-patient care setting. So, we’ve still left
the load in that part of the setting where we really want to
push care.

MR. ANDERMAN: That’s right. And you still have all
the issues that you pointed out correctly on part A and part B
of Medicare, which have some gaps that you hear about all the
time that geriatric patients face.

MRS. GEBBIE: Because this hasn’t been talked about in
this context before, I think it would be very helpful to the
Commission if one of you or a couple of you who are particularly
knowledgeable about these systems might just sketch out for a
typical patient what would and wouldn’t be covered, say, in New
York today, if suddenly your typical AIDS patient went on
Medicare, from what you’re getting now under your state Medicaid
program. I think too many people have held out Medicare as a
quick fix and it’s clear to me the more I listen that it simply
opens a different set of problems to be addressed.

MR. ANDERMAN: Yes. I think it’s basically the

hospital, the in-patient hospital benefit, perhaps some
long-term care, and perhaps some home care.

MRS. GEBBIE: Yes.

MR. ANDERMAN: And then, you’re going to run out.

MRS. GEBBIE: And so, you’ll be back to the state
Medicaid system, which may still not take care of home care
benefit or certain long term care benefits and then you’re back
to some of the issues you heard this morning.

MRS. GEBBIE: I/’11 stop for me. Thank you.

CHAIRMAN WATKINS: Mr.DeVos.

MR. DevOS: Earlier today we were discussing the moving
population, how people move towards certain areas where, perhaps,

they get better care. Mr. Anderman, if you can find all these
nice new housing units, would you use it to attract a lot of

94

 

 
other people to your state, increase your costs? Is there a
better way to care for people at a lower level of costs in other
settings or is that -- everybody screams at me when I say that.

I say, well you can’t ask them to move away for better care, but
at the same, if they’re homeless and the costs are very high in
New York --

MR. ANDERMAN: It’s also, I’m sure --
MR. DevOS: And so you attract people.

MR. ANDERMAN: -- it’s also hard to find property in
New York City, too, that you can build something on.

MR. DevOS: So you attract people? You don’t have any
idea how many people who really live elsewhere?

MR. ANDERMAN: No. I heard you answer the question.
We would have the data probably for ‘87 and I can go back and ask
the people in the AIDS Institute, at least in the in-patient
hospital setting. I would be able to get the data for people who
are coming in and receiving services, because we collect data on
hospital admissions in the state.

MR. DevoS: It’s just if there’s the inconsistency of
some states doing virtually nothing, and some of their citizens
may well have migrated towards some other place. The burden on a
city like New York or the state of New York just goes and on and
on, and New Jersey. It’s staggering.

What are you going to appeal to those other states and
say, “You owe us something?" Is there some way to say, "Wait a
minute. This guy worked and paid taxes in your state for years.
Now you got to come in and kick in a little bit on this bill." I
know that’s not the way it is today. But, you know, if you keep
providing the way you are, you’re attempting to, it will be
expected of you. People out in the country don’t really care
much sometimes.

MR. ANDERMAN: As we got the hospital program up and
seeing that we had problems there, we’re turning our attention
to long term care and to home care and trying to restructure at
least from my responsibilities the financing programs, the
financing programs there. I think the issues related to the
housing and some of the dollars that are available to that don’t
even fit into Medicaid because Medicaid’s a health insurance
entitlement and the needs of some of these patients are greater
than that. So anything you might be able to do creatively ina
Medicaid program, which we’re trying to do, you then reach a
point where it falls off.

95
MR. BROWN: Mr. DeVos, if I could speak to that issue?
Part of that very situation that you’re talking about addresses
the stigmatization of AIDS. Everybody has the "not in my own
backyard" issue and the small town community that has its first
AIDS case, that person’s going to migrate for a lot of reasons.
They’re going to migrate to an urban area where they can be
treated without the stigmatization. I think part of that comes
back to the fact that it’s time that someone besides the Surgeon
General of the United States speak up strongly in the area of
AIDS education. And until the country accepts the responsibility
in the local community that they can provide a visiting nurse
service and that the person with AIDS can reside in their home
without stigmatization, we’re always going to be faced with
migration problen.

MR. DeVOS: Because ideally you’d reverse it. They
would return home where they’ve had better care and loving care.

MR. BROWN: I think there could be some incentives to
the local community hospitals and the local community health
providers to make it cost effective for them to encourage the
person with AIDS to remain in the community.

MR. DevOS: I visited with the people at Henry Ford and
they said, "Well, all the little hospitals say we don’t know how
to do." And Ford answered this "we don’t know how to do it
either and you’re going to have to learn just like we did how to
care for these people." But that’s a tough problem and a tough
educational problem, as you point out.

. MR. BROWN: Telephones work. ‘They can call and ask
questions.

MR. DevVOS: Otherwise it just concentrates in certain
areas of the country and the problem gets staggering.

CHAIRMAN WATKINS: And also it misleads a lot of
Americans as to what’s going on. They say, "Well, it’s all
happening in New York, why should we be in on it?" In San
Francisco we were inundated with statements that many of these
people migrate there because they have the most sensitive
alternative care settings that can be made available. Well,
we need the data on that.

From the existing files of information you have on the
various hospitals or other settings, can tell us, who are the
people that are coming from other sites, when do they come to
you? Not that you want to solve that problem directly, but it’s
an indication of the national status of this epidemic and it
doesn’t allow people to say this is a New York or San Francisco
or Miami problem.

96
 

 

If it is in fact because of stigmatization they are
migrating to areas where there’s more sensitivity to them both
in getting quality health care and an accepting point of view, it
seems to me that that kind of information will be very useful to
air. And let’s find out if there is a migration out of Texas,
for example, to California, to the San Francisco area? If SO, we
ought to know that. Probably we have the data somewhere and \if
we can extract it, we can air this and use it as a wedge
nationally to demonstrate that this is a national issue and not a
local issue.

MR. LAWRENCE: You may, indeed, have some of that data
available through the Centers for Disease Control because on the
reporting forms for AIDS are the birthplaces of the individuals
plus the names or listing of where the person has been diagnosed.
So you may get some, at least baseline, evidence from that.

CHAIRMAN WATKINS: Can we task Mr. Anderman to do some
homework in that area for the state of New York? It seems to me
that it’s to your advantage and we can certainly write your
counterpart in the state of California. But coming from the
health care financing people this seems to me would be a very
important tool for us to have in our kit bag.

MR. BROWN: If I could raise one question to that.
Since CDC has more money than any of us at this table and has
more staff, couldn’t they put a project -- personnel --

CHAIRMAN WATKINS: Does CDC have access to the
information that--

MR. BROWN: They can qualify the birthplace and the
diagnoses location and treatment facility on--

CHAIRMAN WATKINS: Well, Dr. Mason will be here
testifying before us tomorrow, we’ll hit him with that task and,
Mr. Anderman, we’ll let you off the hook. However, if you have
information --

MR. ANDERMAN: We’1l take a look, yes.

CHAIRMAN WATKINS: I think it’s to your best interest
in the state, it seems to me, to know this, who is migrating in
and out relative to this disease. I think it gives you a lot
more leverage in your discussion about this thing not being
solely a New York issue. Go ahead, Rich, I’m sorry.

MR. DevOS: No, that’s fine. I’m all set. You’re just
doing great.

CHAIRMAN WATKINS: Dr. Conway-Welch?

97

 

 
 

 

DR. CONWAY-WELCH: Mr. Chairman, I’d like to make a
comment and then ask two short questions. In the hearings that
we've had before there have been some issues regarding financing
and nursing that we’ve saved for the finance hearing. I just
wanted to briefly summarize some of those that have been
presented to the Commission for the record and then ask two
questions.

There were several points that I think are important.
One is that there needs to be some kind of a tuition and stipend
loan program to nursing students with a forgiveness clause for
those who work in medically underserved areas as defined with
the expanded definition that includes community health centers,
et cetera.

Another recommendation was that models of nursing care
that utilize nurses in different job descriptions based on
different levels of education should be explored in order to more
efficiently use nurses based on their educational background.

Another recommendation was that direct reimbursement
for nursing care from Medicaid/Medicare and private sources
should be able to be received directly by professional nurses for
that care.

Another recommendation was that recruitment monies for
people interested in advanced levels of nursing care need to be
identified but there also needs to be a focus on minority
recruitment. If continuing demographic rates hold steady,
something like one in three United States citizens will be a
minority by the early 2000s. Asian, black and Hispanic. And if
we don’t have nurses from those groups able to be culturally and
linguistically sensitive to patients, we’re going to have an
additional care deficit.

One of the other recommendations had to do with
Medicare passthrough monies that are currently being used for
graduate medical education alone. Even though regulations state
that these funds should be available for graduate clinical
education which includes more than physicians this needs to be
clarified to ensure that nursing is clearly included.

We've heard some different ideas about the
effectiveness of case management and one recommendation that has
come to us has been for nurses to assume a greater rule in the
area of case management. I wondered if Dr. Maraldo could expand
on that briefly and then I’d also like to ask Mr. Anderman if he
could give us a bit more of a snapshot of the RUGS model that
might have some usefulness in terms of an AIDS population? You
may have written information on that that might be appropriate.
Dr. Maraldo?

98

 

 
 

DR. MARALDO: Surely. Given that the case management
approach is preferable in treating a chronic illness and
controlling costs, and given that the ala carte fee for service
approach in treating AIDS patients would probably be financially
untenable, then it becomes furthering to think of treating AIDS
patients by combining the best possible combination of services
in the best possible settings for the lowest cost. And in that
sort of a mode, since nurse providers have been shown to deliver
just as high quality of care for lower costs, it would seem that
the primary care giver that would follow patients across settings
post discharge from the acute care setting should be -- could be
the nurse provider as case manager.

DR. CONWAY-WELCH: How would you pay that individual?
DR. MARALDO: That is --

DR. CONWAY-WELCH: That’s where you usually get hung
up.

DR. MARALDO: That individual should be reimbursed in
private insurance packages by private and commercial insurers as
well as under the Medicare program.

I think that the model that the VNA’s currently use
is -- the home health industry uses is a viable model. The
problem from the nurse’s perspective is that the nurse is
primarily involved in carrying out the medical regime or the
medical plan of care when, for chronic illness, which by and
large you see out of the acute care setting, it’s inappropriate;
so that the nurse is in a position to provide that care, provide
nursing care, independently. But I think it would be built on
that model.

DR. CONWAY-WELCH: Thank you. Mr. Anderman?

MR. ANDERMAN: The quicker snapshot or a quick
snapshot is RUGS basically defines for the long term care patient
16 different levels of care and the lowest level of care we
call physical A,B and C. These are patients who are fairly
ambulatory--

DR. CONWAY-WELCH: Now are they reimbursed differently?
Are those levels --

MR. ANDERMAN: Yes. There are 16 different levels of
reimbursement which are linked to the care needs of the patient.
And what we did with the model that we developed is we looked at
the AIDS patients and the levels of care that we define for the
RUG categories which have to do with activities of daily living,
dementia issues, a variety of other kinds of care needs of

99
patients. And then we looked at the other issues that you’ve
heard discussed, the pharmacy costs, infectious disease issues,
education, the case management issues and we basically
restructured the payment system for the RUGS program. And so

as an AIDS patient comes into a long term care facility, that
patient will get looked at just like a patient who we would try
to categorize in RUGS and then the financing of it has been
increased to reflect the levels of care needs for those patients
to that. It roughly has worked out to be about $45 to $50 a day
more for that patient over on top of the RUG patient.

Now, in the smaller facilities you’ve heard earlier
mentioned, the ICS, there are some diseconomies of scale because
of the size of the unit and the requirements, federal minimum
requirements for Medicaid participation for a nurse and around
the clock staffing, which cause some dis-economics. Because we
want to get the programs operating in some of the smaller units,
we think would be very good care providers as well as there’s
certainly a savings to get the patient into this setting from a
hospital, we’ve bit the bullet on the diseconomies of scale and
have recognized that in the payment.

DR. CONWAY-WELCH: The reason I’m asking the question
is that Mr. DeVos raised the issue this morning about whether or
not we haven’t Band-Aided Medicaid and Medicare to death. And
Mr. Yezzo, who is the Administrator at St. Clare’s Hospital, of
reinforced that but different models needs --

MR. ANDERMAN: Yes, I know Rich. Rich misspoke, I
think. That this was not a Band-Aid. This was basically taking
the patient --

DR. CONWAY-WELCH: No, no. What I’m hearing is
that this is not a Band-Aid. This is a model that might take
us beyond the Medicaid and Medicare Band-Aids that we’re so
desperately trying to put back together and to find some,
alterative models.

I appreciate what you’re suggesting and I think it
would be useful for us to look at that. Is that collated in
a-=-

MR. ANDERMAN: We have lots of information written up
on RUGS. I’d be happy to send it to you and the additional
things --

DR. CONWAY-WELCH: I think that would be helpful.

MR. ANDERMAN: -- that we’ve done in regards to the AIDS
patients, we can give that to you.

100
DR. CONWAY-WELCH: Mr. Chairman, would that be
acceptable?

CHAIRMAN WATKINS: Absolutely.
DR. CONWAY-WELCH: Thank you.

MR. RIGER: If I may, you raised the question earlier
of direct reimbursement to nurses to care for AIDS patients.
While I think in some instances it may be appropriate, in the
larger prospective that may, indeed, have negative effect
because of the complex mix of services, disciplines and the need
for round the clock coverage in some cases, supervision of
paraprofessionals and so on. One needs a coordinated systen,
one needs relief for the care givers. In very many of the cases
the spectrum of care has moved down one notch further. Not only
has it moved from the physician to the nurse, it has now moved to
the paraprofessional where many of our patients require basically
unskilled care, that is assistance with the activities of daily
living, the feeding, dressing, tolieting activities which need
to be supervised, of course, by a nurse but in the long run the
focus of care has moved downward in the spectrum of the health
care providers. And one needs a coordinated approach that
involves all disciplines. It would be very difficult to envision
a system that pays each one of, perhaps, ten providers as
independent practitioners around the care of one patient.

DR. CONWAY-WELCH: I think that your point is well
taken. I think you may have just made the case for nursing case
management. I’m not suggesting that every individual provider
bill separately, but that a certain level of nurse with certain
skills may well be in a case management position where they
are, in fact, coordinating the care. There would be some
paraprofessionals who would be involved sometimes in the
day-to-day management of the patient, but the nurse case
manager is involved in coordinating that care.

I certainly am not interested in seeing a more
fractured system than we already have, but I also think that
the physician as the gatekeeper of reimbursement is a model] that
is not serving us well not only in this crises, but in other
crises. There needs to be a way of moving toward more coordinated
care with different stake holders involved in trying to be part
of that care. Would you care to comment on that, Dr. Maraldo?

DR. MARALDO: I quite agree. Thank you.

DR. CONWAY-WELCH: But the point you raised is an
important point because that’s the first point that’s raised in
terms of identifying a problem with that suggestion. It’s
important to get information out as to what some of the
underlying issues are regarding that.

101
DR. MARALDO: Dr. Conway-Welch, if I could reinforce
something that I said earlier to Dr. Lee along these lines. The
problem currently in not using the nurse in their appropriate
role of patient coordinator and coordinator of the
interdisciplinary team when dealing with chronic illness, not
acute chronic illness, is that it’s provided a very strong
disincentive for nurses to come into the discipline. And I
reiterate that I think it’s a major, major factor as to why
we’re -- little girls don’t want to grow up and be nurses
anymore and little boys never did.

DR. CONWAY-WELCH: Little girls are becoming
physicians.

DR. MARALDO: That’s right.
DR. CONWAY-WELCH: Thank you.
CHAIRMAN WATKINS: Mrs. Gebbie?

MRS. GEBBIE: A request for some clarification and
additional numbers, not something I think can be answered right
here. I think it would helpful, Mr. Crane, if we could see from
Kaiser some breakdown of how you put together a package of care
and what it costs for a sample of a 100 patients with HIV or for
an individual, how you fit in whoever it is you use to manage
the care. I think you use nurses, at least somewhat, in that
role as well as physicians somewhat, but maybe others. And I
think it would be helpful to us to see that.

The other question I have. In my notes, I direct this
to Mr. Anderman and Mr. Riger, but others of you may have done
this. I get very nervous when I see the cost for hospital days
compared with the cost for home care days because generally when
I’ve asked the home care days only include the health care
portion of the home care days, not the rent and the food and the
other things that are not necessarily being provided by separate
fees when the person is hospitalized. So could you double check
any of you that gave us that kind of comparison, that you include
actually what it would cost for equivalent maintenance of the
patient, being able to eat and everything while they were getting
that care so that we can look at the numbers a little more
plainly?

MR. RIGER: Yes, I think your point is very well taken
that we have to be sure we’re comparing apples and apples here.
But if you really look at the question, it is appropriate
expenditures of dollars more than absolute dollars expended.

If it costs $1,000 in the hospital per day for some cases and we
can treat them at home even with a drug regimen and so on, for
approximately $100 a day. So let’s say you add $50 or $100
additional for the overhead cost of keeping a patient at home,

102
 

 

it still compares very favorably with the $750 to $1,000 ina
hospital. But we have to be careful when we quote this kind of
data.

MRS. GEBBIE: I have no question about the more
appropriateness of that care even if it were a dollar for dollar
shift. In the case of many patients it is appropriate to be at
home. My concern is if we start running out costs and give out
the idea that you can maintain people at home for a number
that’s wrong because it doesn’t include what it’s going to take
to feed them, we can end up with some very skewed numbers in our
report. So I just am trying to be very accurate in what we pin
down.

MR. RIGER: I would add one more thing to that, too.
Often a hidden cost that never shows up in anybody’s data is
some of the unreimbursed .care that’s provided, not only by
agencies and professional providers, but also by volunteers,
by friends, relatives and so on. All of those have to be added
into equation.

MRS. GEBBIE: If you can give us an equation that adds
that in for the typical patient in your care, that would be very
helpful.

MR. CRANE: Our Northern California Region has just
completed a comprehensive study for the Office of Technology
Assessment on the impact of AIDS in Northern California. In
that report we did a sampling of costs and provide a breakdown
of costs by type of service. And we’d be happy to provide that
to the Commission.

MRS. GEBBIE: Thank you very much.

CHAIRMAN WATKINS: Well, let me ask it in another way,
and maybe this should be to Mr. Anderman since you’re in that
direct business in the state. Are there legitimate cost benefit
analyses which show the wisdom of up front investment so that we
don’t end up always being frightened by the initial investment
and can see some amortization over time.

I have yet to find anyone who has really done this
type of work well in a concerted way, that is not just anecdotal
information.

It all sounds good -- we can avoid a prison slot and
maybe close a prison as a matter of national self pride at some
point in time as an objective because we have done all this
preventive work that’s so cost effective. Who does that
analysis? Is it ever done except in a kind of a anecdotal way
that doesn’t seem to make the impact on the nation? If we want
legislators to vote the kind of dollars we’re talking about

103

 

 
 

 

here today, we’ve got to demonstrate that four ounces of
prevention is still worth a pound of cure. And I don’t see
that coming out of the cost analysts. Even your "AIDS in New
York State," it’s an excellent document, but what it doesn’t
show is amortization regimes on costly up front health care
concepts.

I recognize we’ve got human beings. and I recognize
there are social benefits besides cost. Let’s get the data
where we can to really demonstrate that certain projects that
we’ve been involved in are, in fact, cost effective.

Now we’ve had some impressive information coming out
of San Francisco on real hard data that gives us a cost per HIV
infection that is considerably less than the data I’ve seen come
out of the East. Now how good is that? What kind of objective
and analytic approach has been taken so it doesn’t become a
self-serving sort of a document? "Look how good we’re doing
with our program,therefore give us more dollars." It’s got to be
something much more objective than that. And it seems to me that
the states that are heavily impacted here would be looking very
hard with green eye shades at the kinds of programs that we can
demonstrate to our state legislators that really make a lot of
sense and that we -- yes, we have to make this $100 million up
front investment, but we will track it, know how to track it and
can demonstrate amortization. We’1ll be back to you in two years
and then four years to demonstrate our facts. What I’ve seen so
far doesn’t look like it has the rigor of the kinds of things
that we would have to do in Defense to ever get a program going
off the ground.

And I think, too, we’ve waited too long in the human
resource side to try to find the mechanism to convince ourselves
that this makes a lot of sense. Prevention is a good program
not only from the social side or the social benefits, but just
as importantly from the cost benefit side.

MR. ANDERMAN: Well, I think, Admiral, I’ll answer your
question in two ways. I think, first, we’ve just taken a big
breath and finally begun to cost the various different modalities
of service. We’ve just finished that in the last two months with
the long term care component and the home care component. And I
think you’re right. In the book that I’ve given to the Commission
members, we did do an estimate, for example, time loss and the
amount in the state and it’s a staggering number like $1.7
billion of the economy of New York state.

We’re going to be starting what you’re asking for. But
we haven’t done the kinds of cost benefit analysis that we expect
to do. We’re starting to do that with some of our public health
activity. We’re starting to look at some of the economics of
trying to provide, especially in the obstetrical-pediatrics area

104

 

 
and we made the decision to go ahead and pay for testing and
counseling for any mother who is involved in any of our public
héalth programs in prenatal care because it clearly is a cost
benefit there. And we convinced the legislature to fund that,
which they did do this year.

So I can answer your question in two ways. We’ve got,
I think, the cost side now costed. And I think we’re beginning
to turn our attention to the benefit question. And --

CHAIRMAN WATKINS: What would you recommend that we do
as a Commission in forwarding our report along these lines to
bring the proper people together, particularly in the heavily
effected states, to sit down and to look more critically, at
those elements that can be costed out properly. We need to
identify cost offsets that would otherwise have to be there for
health care that we could have avoided. Those things that we
don’t think are that cost effective, we shouldn’t be selling on
a cost effective basis, we ought to be selling on some other
basis if, in fact, they’re still valid.

It seems to me it’s time to start moving along those
lines, otherwise because we keep getting hit with who is going to
pay for this. We’ve even been accused of throwing dollars at the
problem. I don’t think we are throwing dollars. I think we’ve
been very responsible that way to try to walk on the line and as
narrowly as we can to define it around the HIV. I don’t get the
hard ringing answers that I’d like to get out of cost benefit
analysis. We’re not going to sell new money for AIDS to people
who are facing tremendous deficits on that basis. We might be
able to do it with people like American industry who know that
their own investment is saving them dollars where they have used
good management procedures, such as Mr. DeVos uses in Amway.

They can see the importance that work force keep its moral up,
keep people in the workplace, keep their health insurance and
keep working the problems. And, obviously, they’re making a
major contribution to society.

We ought to start looking at cost-effective programs
now because it may take several years to get them in place, and
it seems to me we have a tremendous set of health care problems
were AIDS never to have arrived that are almost every bit as
serious. AIDS is only exposing all of the flaws in the system.

MR. ANDERMAN: I would recommend to you that through
various different organizations at the federal levels that
dollars become available or additional dollars become available
to fund these types of projects. Maybe what you’re asking is the
health service research activity to look at the cost benefits of
programs to treat this particular type of illness.

105
CHAIRMAN WATKINS: If you were interested in doing that
and you were a member of the Commission, how would you draft up
that tasking so that it read right, and people in your business
looking at it would say, "Yes, that’s a smart thing to do, it’s
about time we did it"? If you had to write up a request for
proposal, for example. Can you submit something like that for
the record? Here’s an opportunity for us to make a proposal
that might assist you in your own work at the federal level,
state level and even local level if we can stage it right.

MR. ANDERMAN: Well, I think you’ve --

CHAIRMAN WATKINS: I wouldn’t want you to try and
answer today. I’m just asking you if you think it’s a tasking
that’s worthy of giving with some help on the way to effect it.

MR. ANDERMAN: I/’d be happy to give it some thought.
CHAIRMAN WATKINS: Would you?
MR. ANDERMAN: Yes.

CHAIRMAN WATKINS: And would you either give us a call
or give me a me or write me a note saying, "Yes, this is the way
I would task it up and this makes some sense."

Any of the others that would like to join in on it, I
think it would be useful for us to have it from Mr. Crane’s point
of view, for example, coming in from your angle because I think
you should be a joint participant in this. I see the variety of
funding entities coming together and being satisfied that we’re
incorporating the mix of funding sources properly in this
analysis.

MR. CRANE: I would agree. One piece of information
which the Commission may have already been exposed to is within
the National Center for Health Services Research. They are
sponsoring a project to design a long term study of the cost of
AIDS care in different settings. I’m not exactly sure of its
status, but there are people in academic settings that are
working on protocols, as I understand your question, that would
address it almost directly.

CHAIRMAN WATKINS: Will this be ready for us in fiscal
‘99 or is this something that’s being done at the right level of
urgency for this emergent disease?

MR. CRANE: Well, that is a good question.

CHAIRMAN WATKINS: Do you have access to that
particular piece of information?

106

 
MR. CRANE: I do not, but I know some of the people who
are involved in it.

CHAIRMAN WATKINS: Well, any of you that feel like you
coula@ make a contribution to us on it, we’d appreciate it and I
would like to know specifically from Mr. Anderman if you think
this has merit and if you think you could phrase something for
us that would make some sense. We’1ll be listening to have more
witnesses tomorrow on the same subject, so it’s not the sole
source but an independent source is sometimes useful to us to us.

And we thank you for coming before the Commission
today. It’s been helpful to us and we’ll possibly want to have
continuing dialogue with you between now and the time we put our
report together. Thanks very much.

(Whereupon, a recess.)

CHAIRMAN WATKINS: The last of our panels this
afternoon on assessment of total cost and national economic
impact. Dr. Jane Sisk, Health Program, Office of Technology
Assessment, Congress. Dr. Anthony Pascal, Senior Economist, The
Rand Corporation, who has to leave at 5:00 so let’s watch our
questioning and make sure that we get all the questions focused
on Dr. Pascal we need to him by that time. We have returning to
us John Thompson, Yale University School of Medicine. We’re glad
to have you back with us, Mr. Thompson; and J. Patrick Rooney,
Chief Executive Officer, Golden Rule Insurance Company.

We'd like to commence now with testimony from Dr. Sisk.

DR. SISK: Good afternoon. I’m Jane Sisk from the
Office of Technology Assessment. And I’1l be drawing my remarks
today primarily from an OTA study in which we reviewed several
studies on the cost of AIDS.

With the survival and treatment patterns documented in
studies through mid 1987, AIDS lifetime hospital costs have most
likely been under $100,000 and estimates of annual treatment
costs for patients alive at any time during the year have been
under about $40,000.

These figures put the costs of treating AID in about
the same category as the cost of treating some other serious
illnesses, such as end-stage renal disease for patients
undergoing dialysis. These figures are clearly incomplete,
though. They count almost exclusively in-patient hospital
expenses, sometimes ambulatory drugs and ambulatory physician
services, and almost never nursing home and home care costs.
Studies have not looked at the costs of HIV infection as opposed
to outright AIDS and have almost never have included ARC. None
has examined the lost of pediatric AIDS cases.

107
It’s not clear that all the costs associated with AIDS
treatment have been counted in these studies. One reason is that
the studies have been done retrospectively from whatever records
were available, and that’s mainly been in-patient records.

That’s not the fault of the researchers who were doing the work.
They did a commendable job with what they had available. It’s
just that data on costs of particularly illnesses across
different parts of the health care system are simply not compiled
routinely in this country.

The results from the studies I’ve mentioned also may
not be generalizable. For the most part, they pertained to a
small sample of hospitals, and a small number of patients and
mostly come from California and New York.

Another factor to consider in looking at these studies
is that they were done primarily from 1984 through 1986. The
way that AIDS care is managed has changed in ways important since
that time. AZT, for example, is more generally used now than it
was then and that may add costs in the ambulatory area, but it
may subtract them from the in-patient area. On balance we don’t
know what the result of changes in those kinds of therapies as
well as other changes have had on total costs.

We also lack definitive information about who is paying
for AIDS care. Medicare has paid one to three percent, which is
much less than Medicare pays for general medical care because
AIDS patients have been young and have not lived long enough to
become eligible for Medicare as disabled people.

HCFA has estimated that Medicaid has paid for about
23 percent of costs for about 40 percent of patients. That’s
much higher than for other medical care, but the estimates from
particular studies vary widely as to what Medicaid actually pays
for. Tony Pascal may speak to that later.

There’s not much information, certainly not much
systematic information, on what private insurers are paying and
to what extent people with AIDS have no health insurance coverage
and must rely on their own assets or on government programs.

The most comprehensive and rigorous study of national
costs was conducted by Anne Scitovsky and Dorothy Rice, who
estimated the total costs associated with AIDS, including
direct medical costs of caring for patients and indirect costs
associated with the illness (measured mainly in terms of working
loss) those total costs were estimated to be $8.7 billion in
1986 and were predicted to reach $66.5 billion in 1991. Indirect
costs in those calculations were about 80 percent of the total,
mainly because of premature mortality.

108

 
 

 

In 1986 an estimated $1.1 billion was spent on treating
AIDS patients. About half of that amount, about half a billion
dollars, was spent on preventive activities, according to the
estimates of Scitovsky and Rice. About half of prevention
expenditures went to screening the blood supply, 43 percent
went to research, and only six percent went to education.

These cost estimates, it goes without saying, are
also incomplete for the same reasons I gave before. It’s also
unlikely that they took into account work regarding AIDS that’s
going on in clinics for sexually transmitted diseases, for
example. And they suffer from what all cost estimates do, and
probably will in this field -- the fact that treatment is
evolving and the costs of care are changing over time.

What this paints is a picture that we need the
following cost data to improve public and private decision
making. We need comprehensive information on the total costs
of care in all settings and from all providers. Those data
should be collected respectively and include the costs of HIV
infection, not just AIDS, and the costs of pediatric cases,
not just adult ones. I know of only one such study that’s
underway for a small number of patients in California, and
Ann Scitovsky is involved in it.

We also need costs by payer, so we know what the
needs are and who’s paying for what now. The information so
far, including from Dennis Andrulis’ study through the National
Association of Public Hospitals, suggests not surprisingly that
compared with private hospitals, public ones are caring for
many more Medicaid patients and patients with no insurance.
Especially in the south, where Medicaid rates are lower and
charity care higher, revenues seem to be falling far below the
reported costs of caring for AIDS in-patients.

Such cost information would help public and private
decision makers determine the most cost-effective methods of
delivering care and the mix of hospital, home, and community
services that are most appropriate, for example. Such cost
information would also let policy makers predict the personnel
and facilities needed to care for people likely to become ill in
coming years and plan how to marshall those resources. And such
cost information would inform policy discussions about how to
share HIV costs equitably among payers.

What makes HIV infection and AIDS a special case is
the increasing prevalence of the disease and the age groups
effected. Besides the needs for data just outline, AIDS is
raising once again long-standing issues of how to pay for the
catastrophic costs of illness and how to allocate resources
between prevention and treatment.

109

 

 
It’s clear that the costs associated with HIV infection
will be paid by different payers: private insurers; federal,
state, and local governments; and patients, their families, and
friends. How the costs will be distributed among these payers
depends a great deal on public policy. Thank you.

CHAIRMAN WATKINS: Thank you, Dr. Sisk. Dr. Pascal?

DR. PASCAL: Thank you, Admiral Watkins, for inviting
me here today and the other Commission members. What I would
like to speak about are some conclusions from a report that we
prepared at RAND for the Health Care Financing Administration
on the cost of AIDS under Medicaid which required us to make some
national projections of AIDS cost using studies already extant.
We did no original data collection for that study. And then go
on to talk to you about some current studies underway that
perhaps will begin to answer some of the questions that were
posed on the earlier panel.

I’d like to put my sort of central table up with
estimates that I derived for that report. These are revised a
bit from the report because of changing information about how the
costs were coming out. And these are estimates of cumulative
events over the period 1987 to the early '90s, ’91, ‘92. And I
want to talk about the intermediate forecast because I think it’s
the most reasonable one.

The nation will have experienced by that time something
like 400,000 cases of AIDS and will have been through that many
experiences with the illness. But about 30 percent by that time
of the patients with AIDS -- and this is not adjusted for the
new definition that came out after our report was published,
although I would think the 400,000 would be fairly close because
the heterosexual spread has been somewhat less than we were
anticipating but, on the other hand, the new definition brings
more people into the case load.

The percent on Medicaid, we think by then, will be
something like 30 percent of all cases. The costs will be down to
$70,000 lifetime or lower. And that Medicaid will reimburse at
about 60 percent of the charge level as they’ve been doing. So
that gives us a national costs for that time period of something
like $28 billion cumulative and Medicaid costs of something like
$6 billion. And this will account for a fairly small fraction of
total national health care expenditures, maybe two percent or so.
A somewhat larger fraction of total Medicaid expenditures.

I think what would be interesting to talk about is what
would make these figures go up, and what would make them go down
over the estimates that we have made here. If we can first
concentrate on the national figures, I would say the following

110
 

 

would do so. If the conversion rates from HIV positive status
to symptomatic AIDS are higher than has been anticipated, of
course the case load will grow and so will these costs.

I think if there are more drugs that work as AZT
works -- not that I am against it by any means, I think it does
help patients -- but, that I think on net is going to raise
costs because of the treatment of side-effects, because of
the cost of the medication itself, and because of the longer
survival. When you bring them all together, I think the tendency
for these kinds of therapeutic drugs is to raise costs to some
extent.

I think if the case management approach developed in
San Francisco does not spread as rapidly as it has been doing
and bringing costs down to the $30,000 to $40,000 per year level,
then I think the costs will be higher than I’ve been talking
about. But, we also know that the San Francisco model is
heavily dependent on the use of volunteers and volunteer
networks. If we can’t expect those to develop in other parts
of the country, costs may be higher than anticipated.

Finally, if new viral strains come along and
contaminate the blood supply again, then our case load
estimates will go up.

A few points about what would change the balance
between the share that Medicaid pays, the public side, and the
private side. Longer survival tends to mean more patients
on Medicaid. They run out of private health insurance. They
even -- some people on AZT are living beyond the COBRA protection
that they get when their large group health plan ends with
the end of the job and then you get 18 months of a guaranteed
continuation policy. People who live beyond that 18 month
period usually go on to Medicaid for the final days.

There’s talk about reducing the Medicare waiting period
from the 24 months. Clearly, if the Medicare waiting period gets
reduced, people will prefer Medicare to Medicaid. And so, that
will probably raise public costs generally because Medicare
reimbursement rates tend to be a bit higher. But, it will reduce
the Medicaid side.

If the heterosexuals who become infected from tertiary
infections have the same kinds of pathologies and the same kinds
of socioeconomic status that the IV drug users have, then I think
we'll see higher public sector costs again, because these will
be more likely indigent people who will not have private health
insurance.

If insurance companies begin to screen more
intensively -- they’re not doing this very much at all now for

111

 

 
 

 

large group policies, although people have alleged that the
insurance companies are considering screening in large group
policies -- again, the public sector end is going to go up.

If insurance companies are able to institute caps
for AIDS treatment in the way they do, say, for psychiatric or
maternity treatments, again, people will run out of benefits on
the private side and go on to the public side. Prior condition
exclusions, if they are more heavily used, say, in large group
plans, will have a similar kind of effect.

Finally, I think if there are plans afoot to extend
COBRA beyond the 18 months -- many states have what are called
"mini-COBRAs," which gives COBRA protection to people in small
group plans and even guarantees continuation of individual
policies at fixed rates -- again, if none of these things occur,
again, the public side is going to rise. I think all of this
suggests the criticality of more information on who’s paying what
for AIDS treatment and who
ought to be paying what. I think the Commission has a real
responsibility to come up with a wise and effective and
compassionate plan for sharing this burden.

I just want to mention a couple of studies we’re doing
now that emphasize to me how important this is. We are working
with a panel of 40 AIDS patients in Los Angeles, along with
Anne Scitovsky, whose collecting provider cost aid, and we’re
collecting "How did you pay for the cost of your disease?" data
directly from the patient. "What did you do? How does your
insurance policy work? How much was your co-payment and your
deductible? How did you loose the policy and have to go on
Medicaid? To what extent has your family helped with expenses?
To what extent have your own assets been devoted to this?

From very early indications, we are finding a
substantial amount of self-pay amongst these patients. That
is, payments that come directly out of pocket from the patients
themselves or their families. We have proposals in to launch
similar panels in New York City, Chicago, Houston, and the
District of Columbia, and we’re hoping that those will be
approved so that we can begin collecting this information on
"How did you pay for the cost of your disease?" How was AIDS
care financed on a national basis?

We’ve also been talking about trying to use, in
collaboration with the health insurers in the United States,
claims data that preserves confidentiality and individual company
security to begin to get a feeling for how treatment has evolved
in the private sector, how it’s changed over time, and how it
differs on a regional basis from one city to the next, and
finally how people loose their insurance before death and what
conditions might apply.

112

 

 
 

 

I just want to end by saying that the early reports of
the Commission have been extremely commendable, the preliminary
interim reports, and I hope that the good work continues and I
hope the people in the federal government who’ve been supporting
RAND in dcing these studies, and the other groups that have been
engaged, will be encouraged to continue doing that, because I
think these are critical questions for the nation. Thank you.

CHAIRMAN WATKINS: Thank you, Dr. Pascal.
Mr. Thompson?

MR. THOMPSON: Thank you, Admiral. It’s nice to be
back and to see that you have progressed as far as you have.

Dr. Pascal has been talking about societal costs,
which are important, but we must not forget to track treatment
costs. Treatment costs are analogous to production costs, in
that they reflect the volume and price of all resources expended
in the care of the patient, the cost of the actual treatment
process itself.

We need to develop monitoring systems for the care and
financing of treatment of persons with AIDS by merging clinical
and epidemiologic with claims and cost data into a planning and
management information system to permit government use to project
future strategies in the treatment of AIDS:

1) to identify the need for new programs;

2) to assist in the fashioning of new waivers that
would be necessary to finance alternative programs;

3) to inform legislatures of the cost implications of
the treatment of AIDS patients, particularly as it refers to the
Medicaid program;

4) to inform official and other involved agencies on
the volume of institutional services given to persons with AIDS
and the effect of that volume on the spectrum of health services
offered by the licensed institutions;

5) to assist in the utilization review function;

6) through exploration of alternative delivery sites,
to encourage other community agencies including hospitals to
respond to some of the promising new approaches in the treatment
of AIDS patients;

7) to add to the general knowledge of the economic
implications of the treatment of persons with AIDS.

113

 

 
 

 

I’d like to present today some examples of the kind of
information needed to support the planning of treatment programs
drawn from two preliminary studies from Connecticut.

May I have the first slide, please?

The Panel has these slides, and so you don’t have to
crane your necks. The first three pages are a cooperative study
done with the Department of Income Maintenance, which runs our
Medicaid program in Connecticut. And although people have been
critical of Medicaid, it happens to be one of the single places
where you can get charges for care for inpatients, outpatients,
physicians and drugs, all in one record.

This is just a preliminary study of the study we’re
going to, we hope, complete this summer. This involved only 74
adults and 12 children. You can see that the total charges for
the time covered of 14 months was $35,000. Inpatient costs were
76 percent of that number. Outpatient charges are relatively low
at 8.6 percent. Physician charges are 9.1 percent and drug
charges are 4.7 percent.

MR. THOMPSON: When you look at the children’s data,
you will see that the mean charge is a little higher. This
happened to be very heavily distorted by an outlier case. But
the percent of hospital expenses or charges are still 90.1,
higher than for adults. Lower in outpatient and physician
charges and drug charges.

The hospitals and physicians were reimbursed at about
the rate very close to the one that Dr. Pascal mentioned.
Approximately 56 percent of charges was the actual reimbursement
rate.

The next chart just shows you the real problems of the
distribution of these cases. As you can see, it is quite a wide
variation. The important thing is here that good utilization
review covering relatively few long-term patients could really
cut the average cost down. This is what.we’re talking about and
you were talking about, managed care. This is what managed care
would do. It would cut the cost down for adults and also for
children. Of course, there’s only 12 children there. That’s the
target for managed care.

Now, the next chart attempts to obtain what we call a
charge profile. These are the average of 24 admissions where
the data is broken down by hospital components. This was in one
single hospital. It averaged $13,800. Fifty one percent of the
charges were for room and board.

The influence of AZT is beginning to show. Fifteen
percent of the charges were for pharmaceuticals. Laboratory

114

 

 
charges were the next costly type of services. There are two
important findings in the chart. The first is a relative
unimportance of the high tech aspects of hospital costs such
as operating rooms, CT scans, cardiovascular laboratories, et
cetera. This is evidence that many of these individuals could
have been treated in alternative sites.

The second finding is the importance of nursing care.
Fifty percent room and board costs are for nursing. Nurses
administer the medications and monitor the intravenous infusions
and the oxygen. These patients are in the hospital primarily for
nursing care.

CHAIRMAN WATKINS: Thank you, Mr. Thompson.
Mr. Rooney?

MR. ROONEY: Thank you. My name is J. Patrick Rooney.
I’m Chairman of the Board of Golden Rule Insurance Company. My
subject deals with coverage in connection with individual health
insurance. That is the kind of insurance that a person would
apply for individually and provide to the insurance company
evidence of good health.

Today, Golden Rule is the largest writer of individual
major medical insurance in the country. There are some 75,000
independent agents and brokers who write Golden Rule Insurance.
Also, several of the nation’s largest companies have contracted
with Golden Rule to have our individual major medical insurance
available through their career agents.

Golden Rule has done some HIV testing. In fact, in
Washington, D.C. when the city council passed a law that forbad
HIV testing, Golden Rule withdrew from the market along with
other insurance companies.

Today however, because of the agony over the matter of
testing, Golden Rule has come up with a positive alternative, an
innovative policy that permits people to get individual health
insurance without doing HIV testing. The new policy stems from
our recognition that many reasonable people object to mandatory
testing.

For my own part, I’ve been a long-time member of the
Civil Liberties Union and I’m on the Board of the Indiana Civil
Liberties Union and I have at least some understanding of the
concern about mandatory HIV testing.

Another factor that influenced our decision to come up
with a new policy was an article that appeared in THE WALL STREET
JOURNAL] last year. 1/11 quote one paragraph out of that
article. THE WALL STREET JOURNAL article said, "The number of
Americans without health insurance has risen to 37 million from

115
29 million people in 1979 and breakthroughs in genetic testing
may soon make it possible for insurance companies to deny health
insurance coverage to additional Americans deemed susceptible to
serious diseases, much as many carriers of the AIDS virus are
denied insurance today."

Well, we think something should be done about the
public relations problem for the health insurance industry.
So, Golden Rule has come up with an innovative policy that does
three things. One, we would not require HIV blood testing for
applicants. Two, however, we would not cover AIDS during the
first 12 months that the policy is in force. Third, we would
provide full coverage for AIDS treatment if the condition
commences after the policy has been enforced 12 months.

Incidently, another aspect of this policy is we are
also using unisex rates. The reason for doing so is we might
as well get rid of all the social controversy we can all at one
time. So, since that’s an item of controversy, we figured we’d
take care of it at the same time.

This policy provides a million dollar major medical
coverage and does include coverage for home health care, nursing
home care and hospice care. Historically, Golden Rule has been a
low priced provider in the marketplace and that will also be true
of the new policy. One of the things we have provided to the
Commission is a dossier that includes the rates on the new
policy.

Next issue is, is Golden Rule’s position irrational?
We believe that it is a rational response to the data that we
have on the incidence of HIV claims as they affect our business
in the individual major medical field. We believe it would be
better for us not to spend policyholder money, and you know
anything that the insurance company does, eventually the policy
holders pay for. We believe it would be better not to spend
our policy holders money on unnecessary tests if it would be
necessary that the individual carry the insurance for a
reasonable period of time before they could present a claim for
AIDS. Therefore, we came up with the proposition that it would
not cover AIDS until the policy had been in force one year.

Next, I want to say that I do not think it is our role
to provide welfare payments to the testing industry. Every AIDS
case we cover is a case that the taxpayer will not have to pay
for.

We’ve introduced this policy this year. At the present
time, six states have approved the policy for issuance in their
states. One of the things, however, we have encountered is that
a number of states object and will not approve it because it
does contain a one year restriction, that is a one year waiting

116
period. We will not cover AIDS during the first 12 months.
People have to carry the policy for 12 months before we’ll cover
AIDS and some states object to that.

The answer that those states offer to us is you can
test. Well, of course, we can test, and we are testing where it
is necessary. But, every time we test and we decline people for
insurance, we are not going to pay for their medical care and
the taxpayers are going to. It seems to us that in the best
interest of the taxpayers, it would be better to permit an
alternative to mandatory testing. One of the things that this
Commission can do is to advocate, if you wish, alternatives to
mandatory testing.

I think that summarizes my statement. I/’11 be glad to
answer questions.

CHAIRMAN WATKINS: Thank you, Mr. Rooney. We’1ll open
the questioning from Dr. SerVaas.

DR. SerVAAS: My question is to Mr. Rooney. As I
understand it, if the insurance applicant is positive for the
AIDS antibody and knows he is, he can come to your insurance
company and he or she can. If he gets sick any time during that
year, you don’t pay for it. But, if he gets sick after his first
anniversary, you pay for all of his health care.

MR. ROONEY: That’s right.

DR. SerVAAS: What I don’t understand is why the states
are saying you can’t do this. In six states, you’ve done it?

MR. ROONEY: That’s right.

DR. SerVAAS: It’s working and they’re coming to you
and you’re selling this insurance in the six states where you’re
operating?

MR. ROONEY: Oh, we are licensed in 49 states.

DR. SerVAAS: But, there are only six states -- did
I understand you right -- there are only six states where you
are now operating with this policy?

MR. ROONEY: Where this policy is now approved for
issuance. Now, there is an aside. I need to give you another
piece of information. It has not been submitted in every state,
because many states require that you first have to have the
approval of your home state. Our home state is the State of
Illinois. That’s where we come from, and Golden Rule is an
Illinois domestic company. The State of Illinois has not acted
either affirmatively or negatively.

117
So, until Illinois does act, there are maybe 20 states
that we will not submit the policy to. But, all the other states
that we have submitted it to, six have approved and probably
about twice that many have positively disapproved on the basis
that the policy may not contain any restriction on AIDS.

The only thing that the state would allow is for the
company to test. Of course, the fact is if we test and we find
this person has positive antibodies, we will turn that person
down for insurance. Those states seem to think it would be
better for us to test and turn those people down than to have a
one year waiting period which we’re proposing.

DR. SerVAAS: Well, they mostly don’t get sick the
first year anyway.

MR. ROONEY: That’s right.

DR. SerVAAS: Most AIDS persons aren’t going to be
getting sick the first year they’re infected, most aren’t. So,
I don’t know why these states wouldn’t think you’re doing a real
service to humanity.

MR. ROONEY: Dr. SerVaas, I don’t know either, except
of course -- so help me, I don’t understand why.

You might possibly look at what happened in
Washington, D.C. The law here forbade testing, and it also
contained a provision that said, "No health insurance policy
shall contain any exclusion, reduction, or limitation." It may
be that what has happened is that as other states have said,
"Well, you can test and you can turn people down for insurance,"
they have still kept this provision that says, "You can’t have
any restriction."

There’s no doubt that what we’re proposing does involve
a restriction for 12 months. For 12 months, we will not cover
AIDS. We’ll only cover AIDS if it first commences, or the actual
full onset of the AIDS happens after the first 12 months.

DR. SerVAAS: Well, what are you exactly asking? How
can we help you? How can the Commission in our report to the
President help you get the option?

MR. ROONEY: The Commission is very influential, and is
concerned with the national concern about AIDS. The Commission
can use its moral suasion to influence the states to permit
alternatives to testing.

Now, the insurance companies are not going to put their
neck in a noose. No company is going to wish to go broke over

118
this matter. Certainly, we are not going to. But, the way we
can do without testing is we can do with out it with some
limitation, some 12 months limitation. After the 12 months, the
people will have full coverage, not a dollar limitation. They
would have the full million dollars coverage, but they wouldn’t
have it until they carried the insurance for 12 months.

MRS. GEBBIE: May I ask for clarification, because I
think I heard you say two different things and I just want to
make sure I understand. When I first heard you describe your
coverage, I thought you said you would cover anything AIDS-
related after the first 12 months. Now, I heard you say you will
cover AIDS-related care if the AIDS itself commences after the
first 12 months.

MR. ROONEY: That’s correct. If I said otherwise, I
misspoke.

MRS. GEBBIE: Okay.

MR. ROONEY: It would be that if it’s first
manifested --

MRS. GEBBIE: Twelve months after enrollment in the
policy?

MR. ROONEY: That’s right. Now, manifestation is not
HIV-positive. It’s coming down with a full-blown AIDS or ARC.

MRS. GEBBIE: Or any other symptoms? What if the
person was symptomatic, but not fitting the classic AIDS
definition in the first 12 months?

MR. ROONEY: We are attempting to live with the
definition. Our intent, at least, as the policy is drafted is
to use the definition that is accepted by the Center for Disease
Control.

MRS. GEBBIE: Okay.

DR. CONWAY-WELCH: And which definition is that? How
do you define that?

MRS. GEBBIE: That’s defined by several opportunistic
infections.

DR. CONWAY-WELCH: Right.
MRS. GEBBIE: But you are very clear that if that

definition were applied to the person prior to the 12th month,
then there would be no coverage at all?

119
MR. ROONEY: That’s right. Absolutely.
MRS. GEBBIE: Okay. Thank you.

DR. CONWAY-WELCH: But does that also cover some of the
manifestations of ARC as well as the opportunistic infections of
AIDS?

MR. ROONEY: Yes, that’s right, AIDS and ARC.
MRS. GEBBIE: ARC is not a definable condition by CDc.

DR. CONWAY-WELCH: I understand that but several of the
symptoms of ARC are included in there --

MRS. GEBBIE: They’re symptoms of AIDS.

DR. CONWAY-WELCH: -- as symptoms of AIDS. That’s what
I was trying to get at. At what point do you deem something?

MRS. GEBBIE: Oh, it’s very clear in that definition.

DR. SerVAAS: What about AIDS dementia complex. Do you
count that?

MR. ROONEY: If the manifestation occurs within the
first 12 months and the doctors define this to be AIDS, then it
isn’t covered.

DR. SerVAAS: But his policy isn’t canceled, you just
don’t pay any of this health care that --

MR. ROONEY: That’s right. Thank you. That’s an
important point that I failed to mention. The policy, of course,
covers anything else. If the person has an automobile accident
or has a heart attack or cancer or whatever else you can imagine,
the limitation only applies to the matter of AIDS and ARC.

DR. SerVAAS: But if he comes down with AIDS the first
year, then the second year you do pay his AIDS premiums? Not
premiums, you pay for his AIDS costs, his hospital costs?

MR. ROONEY: Yes. If it is manifested after the first
12 months, if the condition has its onset within the first 12
months, then sorry, no benefits. But if the person pays in --
you know, like the rest of us pay in for heart trouble. We don’t
know that we have heart trouble, but we buy our insurance when
we’re in good health so we’ll have it when we’re sick. Most of
us have to buy it well ahead of time because we don’t know when
we're going to get sick. The unique phenomenon with AIDS is the
person may go and get confidential testing and know that I am HIV
positive and then go buy the insurance and have the first claim

120
 

 

next month. Well, we’re not running a charitable organization.
We’re trying to collect enough revenue to pay the claims. So,
we’re saying, "You’ve got to pay in for 12 months before you’re
going to have to have coverage for AIDS.

I didn’t mean to advocate too strongly, I just wanted
to be clear.

DR. SerVAAS: How many policies would you think you’ve
sold, Mr. Rooney?

MR. ROONEY: Well, we counted up. From 1984 through
now, through the first three months, we have written insurance on
;1,200,000 new applicants. Of that, probably half of that
business has been written in the last 18 months. So, let’s say
we’re writing insurance on 600,000 people every 18 months.

DR. SerVAAS: But on this AIDS insurance policy that
doesn’t require testing.

MR. ROONEY: Oh, the new policy is we do not yet have
it on the market. This is merely a technical problem. To be
efficient, we need to have more jurisdictions. Now, we know
we'll get more. I tell you six have approved it. We believe
maybe a dozen, maybe 20. So, of the six states that have
approved it, we probably will not actually offer this policy on
the market until we have a dozen for technical efficiency, data
processing reasons. The policy therefore will probably be
offered on the market July or August. Have I answered you?

CHAIRMAN WATKINS: So there’d be no opposition from
your company’s point of view, for example, for a person to know
they’re HIV positive, asymptomatic, have that made aware
publicly? You would certainly sign them up for your particular
policy?

MR. ROONEY: Assuming he can get through the first year
without any AIDS or ARC.

CHAIRMAN ‘WATKINS: Let’s say that an individual knows
that they’re HIV positive, has been tested and they’re
asymptomatic. Let’s say they’re in the first couple of years of
the infection. They feel healthy, they look healthy, they’re
normal people from a health standpoint. Yet you are aware that
they’re HIV positive because you’ve been told that, and
asymptomatic at this point. So, they don’t come down with ARC or
AIDS for two years. So, they qualify, even with your knowledge
that they’re HIV positive from the very outset, for your policy.
Is that correct?

MR. ROONEY: Not necessarily, no. If we were told that
the individual were HIV positive. Now that, I want to add, does

121

 

 
 

 

not seem to speak to the reality. We are not told. We’re not
told that the person is HIV positive. We believe the only way
we're going to learn if the person is HIV positive is to test.
But if the person would volunteer on the application, "I am HIV
positive," I don’t know what we would do. All I can tell you is
we don’t face that issue because, in fact, we’re not told.

CHAIRMAN WATKINS: Yes, but what if you ask? Will that
mean the person will be rejected?

MR. ROONEY: Probably so, sure. This is all
hypothetical.

CHAIRMAN WATKINS: Then I don’t understand what you’re
offering more than anybody else is offering. It seems to me that
the encouragement would be for those who are HIV positive to come
forward and take advantage because you’re basing everything on
whether you’re told or not. Supposing you find out the day after
you sign the contract with them that they withheld information
yesterday that they were HIV positive, therefore what would you
do?

MR. ROONEY: Well, all of this is hypothetical.

CHAIRMAN WATKINS: It’s very real because people are
looking for alternative insurance options and you’re one to
provide that option. It seems to me you’ve done it. It’s all
written on the base of whether or not you get information that he
or she is HIV positive, asymptomatic. That’s the whole issue
we’re facing on discrimination and all the other -- whether or
not they keep their job and so forth. We understand that
insurance companies have exchanges between them that can provide
certain information that leaks out from a variety of sources. It
sounded very good at the outset and I’m beginning to question
whether or not it really gets into the area of encouraging people
to come forward who can continue to survive in this life with
some expectations. If it leans on whether information leaks out
that a person is HIV positive or not within the year, then I
don’t see what it does.

MR. ROONEY: The insurance company ~-- you said
insurance companies exchange information. I presume you/’re
referring to the MIB files. We do not do MIB searches on health
insurance ever. It’s just not economically worthwhile to do.
But when we ask a person on the application if the person is
in good health and the person said, "Well, I am HIV positive,"
you’re posing a question that I don’t know what we would do with.
We do know that people don’t tell us that and that
it is readily available for people to get HIV tests and know
themselves whether they’re positive. But they do not volunteer
it to us. Now, the issue is whether we are wiling to write
health insurance without HIV testing and we’re proposing we are.

122

 

 
 

 

DR. CONWAY-WELCH: May I ask a question?

CHAIRMAN WATKINS: Dr. SerVaas, are you finished?
DR. CONWAY-WELCH: No, I meant relative to this.
CHAIRMAN WATKINS: Okay.

DR. CONWAY-WELCH: Let me take another cut at this. If
someone came to you and they knew they were HIV positive and you
asked them if they were healthy and they said yes. They did not
identify that they knew that they were HIV positive and then they
became sick two years after their policy went into effect and you
could document by virtue of a chart review or a mechanism that
this individual knew that he was HIV positive when he signed up
and did not volunteer that information, would you cover his
illness, his HIV illness?

MR. ROONEY: If the person buys our insurance,
regardless of what the ailment is, and lies to us on the
application and there is a time limitation on how the insurance
company can rescind or revoke the policy because the person lied,
there is no dispensation from lying for anybody, regardless of
the ailment.

DR. CONWAY-WELCH: So, if somebody is HIV positive and
knows that and comes to you and when you ask them if they’re
healthy they say yes and they don’t volunteer that information.
Then they come down with an HIV related illness 18 months or two
years into the policy, at that point by virtue of chart review or
of prior knowledge in some way, would you deny that policy?

Let me take that a step further. Would you by virtue
of the fact that we assume a certain time lag of HIV positivity
before they move into ARC or AIDS, if that happened within 14 or
18 months, would your assumption be that they had lied to you?
Am I making myself clear?

MR. ROONEY: You said is there an assumption that
they’ve lied to us? The answer is no. For the most part, the
people that are HIV positive, that knowledge exists between them
and whatever testing laboratory that they were able to get to do
it confidentially and that’s readily available. If the person
came down with AIDS at the end of 12 months and one week, our
belief is we don’t know when the person contracted it. We don’t
know whether the persen knew. That information is not available.

DR. CONWAY-WELCH: Thank you.

DR. SerVAAS: I guess I would still have a question
about what do you ask, Pat Rooney, on your application when
you’re selling this policy? Do you need to know if somebody

123

 

 
 

 

has Huntington’s chorea or diabetes or some other chronic
disease that --

MR. ROONEY: Yes. We have a list of questions, a
considerable list of questions. Of course, with the typical
disease -- example, you or I applied and we said, "No, we’ve
never had a heart condition." But if we have had a heart
condition, there are probably medical records that will make it
available that we’ve lied. That tends not to be true with AIDS,
unless the person was under treatment for AIDS.

Now, we get a few people that -- some of our AIDS
claims, we are able to demonstrate that the person was under
prior treatment for AIDS. Of course they’re in the same boat
that the person with the heart condition is. That’s fine if they
can get away with it, but lots of times they don’t get away with
it, nor would you and I with the heart condition.

The thing we are offering that is unique is the offer
to write the health insurance without the blood testing that
would discern information that wouldn’t otherwise be available
to us.

DR. SerVAAS: Do you know if you just ask them
outright on your form when they apply? Do you ask, "Have you
been tested?"

MR. ROONEY: No, we don’t.
DR. SerVAAS: You don’t ask that?

MR. ROONEY: No. Maybe we should, but we’re not.
Dr. SerVaas, I think I’d amplify that one further. Those
questions, similarly to questions about venereal disease are --
in my entire career in selling insurance, only once did I ever
have a person admit to having had a venereal disease. That was a
young boy about 19 years old. We know there’s a lot more
venereal disease than that. People just don’t acknowledge that.

CHAIRMAN WATKINS: We’re going to shift questions that
any of the Commissioners may have that focus on Dr. Pascal so
that he can move out then when he needs to for his travel.

I know that Mr. DeVos has one question. I’d like to
focus on questions for Dr. Pascal now.

MR. DevOS: I salute you, all three of you on your
fine work in this. We’re struggling with this whole matter of
incidence and prevalence. We’ve had testimony on it from a
variety of people. You come here with some very interesting
data, I’m sure based on a lot of research you’ve done, cost
analysis. While this is a cost group, it’s got to be based on

124

 

 
the incidence and prevalence estimate that you’re making. CDC
has estimates and you’ve come in here with this.

Dr. Sisk, you must have similar data that you have
done to get some of your numbers out of that. Are you two close
at all? I know you’re sitting next to each other. Are you close
at all on your numbers? Do you agree with each other?

DR. SISK: One thing that Dr. Pascal menticned that I
didn’t, but is also true of the work that I’ve done, is that
there’s no original data collection that was involved in what I
put together. What I did was look at estimates that were made
in connection with other work.

The national estimates that I mentioned as the most
rigorous and comprehensive by Scitovsky and Rice were based on
projections of prevalence from the Centers for Disease Control.
So, Scitovsky and Rice did not come up with any original
estimates of prevalence.

All of the other work, that I can think of at this
point was drawn from what was happening in a particular state
or what was happening in a particular hospital, so there were no
estimates there. It was a matter of going through records and as
best anyone could detect after the fact, which is a big caveat,
the various researchers enumerated the number of cases of AIDS.

MR. DeVOS: When I read your bio and all the history
and all the great things you’ve done, I’ve just got to infer you
know it all.

DR. PASCAL: I used a higher estimate of case load
than CDC has been projecting for a number of reasons. There’s
been some work at RAND that’s not finished yet in trying to model
AIDS which takes into account not only extrapolations from what
we now know about the incidence and prevalence, but also takes
into account behavioral change and the natural history of the
virus which CDC does not include in its estimates.

That combined with reading about the number of sero-
positives in the country and the conversion rates that people
have been observing leads me to feel that the CDC case load
numbers are on the low side. I did use them in my low estimate,
but for my intermediate estimate, I used a higher number of
400,000, where theirs would come out to about 270,000 or maybe
by 1992, 300,000. So my numbers are somewhat higher than CDC’s
for my intermediate estimate.

MR. DevOS: Well, I’m very interested in your numbers
and in your conclusions on costs and their allocation to
changing age demographics. I tell you, that’s very valuable
information. We certainly are interested in your further work

125
on costing that you’re doing in the West Coast. It may not be in
time for our report, but anything you can share with us will help
us.

DR. PASCAL: Well, we hope to have -- this again is
Health Care Financing Administration. It’s sponsored this work
through the RAND HCFA Center. And Penny Pine, who is sitting in
the room here, has been instrumental in arranging for that. We
are doing this pilot study in L.A. which will give us, we think,
the best information that anybody has now got about how AIDS is
financed. But it’s only going to be one city and a small group,
in fact, in this pilot. But by next year at this time, we’ll
have done five or six of these around the country and be able to
say something much more definitive on financing.

MR. DevOS: Well, let’s face it, we’re dealing with a
moving target. We’ve got to go with a report on a certain date,
but the data is changing so fast that we don’t know. But you’ve
got such a great reputation and high regard for the work you
people do that we’re very, very appreciative of that.

DR. PASCAL: Thank you very much.

CHAIRMAN WATKINS: Is it possible at this point in
time, either through HCFA or you directly, to get some of the
supporting assumptions and other things underneath the data or is
that premature?

DR. PASCAL: We couldn’t provide it to you now. I
think by the end of the summer we’ll have that.

CHAIRMAN WATKINS: I see. Okay. Thank you.
Mrs. Gebbie?

MRS. GEBBIE: A couple of questions. Dr. Pascal, you
mentioned that there is a substantial amount of self-pay.

DR. PASCAL: I’m so eager on this subject that I look
at the questionnaires as they come in from this small panel in
L.A., and I’m seeing a lot of self-pay.

MRS. GEBBIE: Okay. My question about that was
whether you will be in a position to put that in any kind of
perspective. I think there’s a good deal of self-pay in almost
every major illness that I know about. I would not want to look
at the effect of that on AIDS patients in absence of information
about whether that’s typical or whether they have an unusual
burden in that area.

DR. PASCAL: We won’t be able to study anybody else
directly, but we will relate it to whatever literature we can
find on self-pays.

126
 

 

MRS. GEBBIE: My other question is, I’d like you to
be at least one of the answerers, although others might have
comment. I’m persuaded we’re probably not going to get a whole
lot of different information between now and our final report
than the kinds of preliminary things we have to go on right now
and that we will come up feeling somewhat frustrated. I think
we may well want to say something about forward looking data
collection that will allow future course corrections or changes.

Are there some things we should say or some
recommendations we would make that would make the kinds of
research you are trying to do easier, either policy statements or
directions to federal agencies or directions to data sources that
would make all of this better so that looking at this in 1990,
say, we would have a much better data source?

DR. PASCAL: Well, one thing that does occur to ne,
because it was part of our original charter from HCFA but we
weren’t able to get very far on it, we’re aware that many states
are conducting studies. In California you’ve seen the reports
that have come out. Other states are doing this as well. It’s
very hard to determine whether these state studies are on a
common ground, using the same sorts of definitions, using the
same sorts of estimation techniques and so forth. If they were,
if the federal government could in some fashion give direction to
the states or to encourage them in some way to do studies that
are comparable so we could put these together when they’re done
into a national database on AIDS, number one I think that would
be very important.

Number two, I think that you should commend the work
that NCHSR has done in commissioning this cost methodology study
by Anne Scitovsky, whose name isn’t mentioned here, which will be
coming out quite soon and should guide future work and give again
common ground as to how things should be defined and estimated
how samples should be selected and so forth. I think that’s very
important as well.

MRS. GEBBIE: Other comments?

DR. SISK: I think that the work that’s been funded
through the National Center for Health Services Research is
supposed to be completed this coming fall. But that, as Dr.
Pascal said, is going to be a methodology for collecting data,
not the actual collection of the data.

One possibility, again building on what he said, would
be for the Health Care Financing Administration to use those
methodologies and require or offer funding for states to use
that methodology to collect data and develop the necessary
information. One hook might be through Medicaid programs. I

127

 

 
 

 

can imagine that either certain sums of money could be made
available to the states to do that kind of work, or it might
even be a requirement of Medicaid participation.

DR. PASCAL: Yes, I think Dr. Sisk is absolutely right
in what she’s proposing. I also want to reiterate that I think
there’s lot’s of really valuable information in insurance claims
files. If the Commission could somehow suggest ways in which the
companies could make those data available to researchers without
violating confidentiality rules and without violating anti-trust
and liability problems that the insurance companies are fearful
about in providing such data, I think that would be an important
step forward as well.

I think those data need to be analyzed, but the
companies I think for both commercial and legal reasons are a
bit reluctant about releasing it even to impartial researchers.

MRS. GEBBIE: Neither of you said anything about
broadening the questions to include the full spectrum of HIV
infection rather ‘than just focusing the studies on diagnosed
AIDS. Is that sdmething you’ve encountered?

DR. SISK: I did in my original statement.
MRS. GEBBIE: I’m sorry. Maybe I missed it.

DR. SISK: There is another problem that I don’t
recall whether I mentioned before with developing information
on the cost of any medical condition in this country. The data,
like our health care system, are fragmented. So it’s very
difficult to get a comprehensive picture. One has to piece
together data from different sources to get the total cost of any
particular condition. Any studies that would be funded through
the federal government would be well advised to use and to
support methodologies that would get that comprehensive picture.

A very simple problem is putting together physician
and hospital costs and identifying costs that are accounted for
by particular diagnoses. Some methodologies are being developed
specifically for AIDS. But these are general problems that
should be attended to.

DR. PASCAL: And in both the work that we are doing
with the patient panels and in extensions of that work and, if
it’s feasible, with insurance claims data, we would look at
pre-AIDS expenses, expenses that had been incurred by patients
before the official diagnosis. So, we hope to get at that as
well.

MRS. GEBBIE: I think we’re very reluctant to sound
like we’re putting money other than into direct services, but

128

 

 
sometimes you need back-up information in order to spend the
service money well. Are we putting approximately jthe right
proportion of our resources into the kinds of questions you
could help us answer or are we, in fact, short changing
ourselves on this end in order to think we’re doing something?

I know all researchers always want more money. We’1ll
discount it for that regard now.

DR. PASCAL: From what I hear about fiscal ’89 funding
for AIDS research, it looks like it’s getting closer to the right
level. I think it’s been short up until now, but I’m hoping that
89 will be a lot better.

MRS. GEBBIE: Could the two of you collaborate in
writing out for us the five most important things in this area
that you think we should say in our report? Who knows what we
will say, but I think if we could see through your eyes what
would be helpful in this area. Thank you.

CHAIRMAN WATKINS: Just as a quick follow-up while
we've got you here, Dr. Pascal. Is HCFA your only funding
source?

DR. PASCAL: I’m sorry, I didn’t hear you, Admiral.

CHAIRMAN WATKINS: Is the Health Care Financing Agency
your only source of funds?

DR. PASCAL: At this point, yes. We have a proposal
into National Center for Health Services Research for this New
York study and we’re preparing proposals for the insurance study
and for the additional cities on the patient panels and we’re not
sure yet where those will be submitted.

MRS. GEBBIE: I do have one more question.
CHAIRMAN WATKINS: Yes.

MRS. GEBBIE: One other thing I almost forgot. I can’t
follow my own scribbles here.

I’ve at least had some trouble following who all is
involved in various parts of this research. I guess it was
last week, we stumbled across another whole set of research on
modeling the epidemic that involves the Bureau of the Census and
AID, I think, or one of the other federal agencies. Are you
familiar with how they fit into what we’re doing? I had looked
at mostly CDC based data then being pulled out.

DR. PASCAL: I’m familiar with the university
activities and CDC and RAND’s own, of course, but I had not heard

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about a Census Bureau modeling effort. With AID, the foreign aid
people?

MRS. GEBBIE: Yes, that’s who I think it was. They
indicated, at least, that they’re --

CHAIRMAN WATKINS: Also, the Center for Population
Options was involved in it.

MRS. GEBBIE: They indicated that they had been
involved in some substantial critique of the modeling efforts
with other agencies and so on?

DR. PASCAL: This is for getting world wide estimates
of case loads, do you think?

MRS. GEBBIE: Yes. Are you familiar with that effort?
DR. PASCAL: I’m not.

CHAIRMAN WATKINS: This points up, though, one of the
reasons why your recommendations to us become very important. If
we're launching off on a lot of these studies independent of each
other, you know what that means downstream for chaos. We asked
the question of the effort to try to get a global picture on this
modeling. Is there within that model an element that can be
tried here in the United States so that the sub-element in their
modeling techniques would give us good results?

The question is about modeling. We got turned off a
little bit about modeling because it doesn’t sound like you’re
interested in people. But from the financial point of view, we
think it’s very critical. Certainly, we think the right people
ought to be together. Maybe in your recommendation you can say,
"Who are the right people to pull together the various elements,"
so that our representative at the World Health Organization in
the AIDS task force there, Dr. Jonathan Mann, has the benefit
and we have the benefit of their input as to what their modeling
concepts might be.

DR. SISK: If I understood the point you’re making,
I’d like to make another one, although ultimately coming up with
estimates of the total costs of AIDS requires information from
somewhere about the number of people who were going to be
affected, nevertheless there are two efforts going on and that
can go on independently, at least for a while. People can be
collecting data on the costs of treating AIDS separately from
people who were putting together models to predict the spread
of the epidemic.

For example, at a conference I think it was last fall,
sponsored by the Institute of Medicine on modeling the spread of

130

 

 
AIDS, which had people from other countries as well as the United
States, there seemed to be a consensus, if not unanimity, that
modeling the spread of the epidemic was at such a rudimentary
point that it was really preferable to let a thousand flowers
bloom, to have many different researchers working on the

elements to put into the model instead of coming up with one
favorite model at this point. The feeling was that it was
premature to do that, at least at that point, and I would think
at this point as well.

But these two efforts could go on simultaneously with
the intention that ultimately they could come together.

CHAIRMAN WATKINS: If you have a long term objective
that you’re looking for the ultimate model then you need a
strategy that says, "This is what’s doable today, but we ought to
be more aggressive. We ought to go after this information, we
ought to keep working towards that final objective." We’d be
very interested in that sequence of events as you see it. Then
your ideas of how we would focus resources to achieve those long
term, mid-term and short-term objectives. It seems to me that’s
what we ought to do, not try to say, "Now it’s so big we can’t
handle it."

DR. PASCAL: I’d like to express a slightly different
take than Dr. Sisk on the coordination between modeling and case
load forecasts and cost studies. I think that they are
independent efforts except at one point, that the sub-
populations you look at in both have to be the same. In other
words, if the case load numbers are going to come out in terms of
Iv drug users, gay/bisexual males, pediatric, other heterosexual
transmission, then you have to do the costing on those same
categories in order to put the two together. So, to that extent,
coordination is called for, I think.

MRS. GEBBIE: One other request to Dr. Sisk. If you
have a written report of that meeting you participated in last
fall that looked at models, we’ve gotten so much paper, but I
don’t think we’ve seen that. It would be helpful.

DR. SISK: I don’t have whatever report came out of
there, but I could ask people from the Institute of Medicine.

MRS. GEBBIE: Or point us in the right direction to
find it.

CHAIRMAN WATKINS: Dr. Lilly?

DR. LILLY: I wanted to bring up that point that you
just stressed there a little bit. I was quite fascinated in the
written material that you provided for us in our briefing books,
Chart Number 8 and 9 in which you compare the --

131
DR. PASCAL: I’m sorry the reproductions are so bad,
but it’s in my HCFA report, the same table.

DR. LILLY: Right. I was quite struck by the fact that
what you’re doing actually is comparing the period of disease of
a 35 year old homosexual of middle income with a 30 year old
intravenous drug user who is destitute. You come to the
conclusion, for example, that the total cost of medical care are
inversely proportional to the length of life following diagnosis
essentially.

DR. PASCAL: Yes. These are hypothetical cases to
illustrate your point.

DR. LILLY: They’re hypothetical, but I assume you have
some basis for this.

DR. PASCAL: Yes, much heavier hospital care typical
of the drug users because of no alternative sites to provide
care in. That’s the main consideration there. And much poorer
physical condition when the drug user comes down with AIDS,
which exacerbates his medical problems.

DR. LILLY: Right. Well, I think these two charts are
very interesting. The other question that I’d like to bring up
is cost variations over calendar time. Do you have any
information about how the cost of AIDS has evolved from 1982,
say, to 1988 and any projections as to -- for the same type of
person.

DR. PASCAL: Yes. Right. I think that’s the only
good news about AIDS, is that the lifetime costs have been
falling rather substantially. Ann Hardy’s figures of $150,000,
despite any complaints people might make about methodology,
still the costs were very high at the period that she was
studying the disease. I think they have come down substantially
on a lifetime basis, no matter what you control for, means of
transmission or pathology or diagnosis.

DR. LILLY: Do you expect that to continue into the
future?

DR. PASCAL: No, I think it’s -- I talk to a lot of
people who study these things. They’re beginning to see kind of
a plateau now in the last year or so. They’ve come down to the
$50 to $70,000 range lifetime. I don’t hear many reports, except
in San Francisco, of costs much below that. That includes
inpatient/outpatient, home care, drugs and all the rest. It
could be that some new intervention will occur that will get us
below that plateau, but I think we’ve been stuck there for a
year, 18 months.

132

 
DR. LILLY: And what is the influence on this -- it was
something you referred to, but I didn’t quite catch in what sense
-- the influence of the prolongation of life that is taking place
now, to some extent under the influence of AZT treatments and
which hopefully will continue to --

DR. PASCAL: I would only be able to speculate here.
I’ve not seen any direct studies of the relationship between AZT
and lifetime costs. But from the people that I talked to, they
think it’s a wash or that it’s caused a slight increase in costs
because of the increased survival time which means over time
that even though you’ve spent fewer days per month in the
hospital, you’re alive enough more months that the total hospital
costs really don’t decline. When you add the treatment of the
side effects, the extreme anemia and transfusions and so forth.
Some of these patients, they think if they live long enough,
they’1l have to do bone marrow transplants to combat the anemia.

Then the cost of the drug itself is now $8,000 a year.
I think that the total effect of AZT has probably been to
increase costs to some extent.

DR. LILLY: Thank you.

CHAIRMAN WATKINS: Dr. Lee, you have a question for
Dr. Pascal?

DR. LEE: I’m very interested in how economists come up
with this indirect cost business. It’s getting very fashionable
now in the AIDS world to talk about future lifetime earnings and
these indirect costs. What is the multiplier? How do you come
up with that? Why don’t we calculate how many suits he would
have bought over 50 years or something? I mean why is this of
any meaning to us? Why don’t we compare it to the indirect costs
and earning capacity loss of the common cold or the stubbed toe
or falling off ladders? I’m just being cynical. Aren’t you
inflating the numbers here to make a point that is a little
flaky?

DR. PASCAL: Well, I haven’t done these estimates
myself. But if I could defend my profession a little bit, I
think people have done these sort of human capital approaches to
disease costs for many different diseases, coronaries, cancer and
auto accidents and many other kinds of diseases and try to take
account of the product that is not produced as a result of the
morbidity or mortality that occurs. People’s working lives are
interrupted or ended in their prime working age and all of the
things they would have produced don’t get produced.

Now, I think you’re right to make the point that you
did about how many suits would this person have bought. The AIDS

133
population is peculiar in this country compared, say, to auto
accident victims or cancer victims or coronary victims in that
on average they have fewer dependents than would the typical
auto crash victim. Well, maybe not auto crash because those are
mostly young men before they marry. But say the coronary. So,
they might have fewer dependents because of their socio-economic
and demographic situation.

So, if you were to calculate a net loss, that is the
production loss minus the consumption that would have occurred
by that same production, you might come up with a smaller figure
because of a smaller number of dependents. But still, it would
be substantial, I think, even the net product loss and it would
be many time what the direct medical cost would be.

DR. LEE: Well, who is interested in the figure?

DR. PASCAL: Well, I think as a nation we’re
interested.

DR. LEE: Are the people calculating the GNP
interested in it? Is that it?

DR. PASCAL: I didn’t hear you.

DR. LEE: Who is interested in that total loss, et
cetera? Is it GNP people, is it OMB? Are we interested in
that figure?

DR. PASCAL: I think you should be. It seems to me
that the way the nation allocates its health care resources
should partially reflect the savings that are going to be made
on an national basis in terms of these kinds of social costs.

DR. LEE: Well, unless we cure the disease, I’m at a
loss to see the true relevance of it. Congress doesn’t have to
raise money for that. We don’t have to allocate any funds for
that. Anyway, let’s get back to the basic health care costs.
AIDS is two percent of the total health care cost? Is that the
figure?

DR. PASCAL: That’s my forecast into the 1900s, yes, on
a cumulative basis.

DR. LEE: So, in your mind, this is an impressive
number? Is this something that is going to really rock the
boat?

DR. PASCAL: I don’t think it will destroy our health
finance system, no. But I think the numbers are significant
enough that we have to pay close attention to it and to try to
minimize the resource costs that are involved, sure.

134
DR. LEE: Okay. I could explore that a lot further,
but let me get to the last part. The second part of the two
questions here, how much, which I really wonder about all these
figures, how meaningful they are. But the second one is more
critical to us, I think, and that’s who should pay. Okay? Who
should pay?

DR. PASCAL: I think that we should depend as much as
we can on the private health care system to cover as much of
these costs as possible, as we do with other diseases, and that
we have to have the public system as a backup, Medicaid and the
VA and maybe eventually Medicare, I don’t know, to deal with
people who have no recourse to private health policies of these
kinds. What should be the fraction? How much should each pay?
I don’t think--

DR. LEE: The pressure is on us to do AIDS
differently. Should we be doing it differently or should
we just use the regular system here and modify it?

DR. PASCAL: I think there are some important
modifications such as the home and community waivers for Medicaid
so that people can get treated at home at a lower cost and in
a more satisfactory way, for example. I think that we should

extend the Comprehensive Omnibus
COBRA system so that it protects
also that it protects members of

DR. LEE: Well, we got
what you’re doing is all four of

Budget Reconciliation -- the
people for longer periods and
small groups.

all those. And in general,
you are saying that you agree

with these alterations in the present system. Is that correct?

DR. PASCAL: Yes.
DR. LEE: We/’re not looking for the taxpayer to pay
for this or the government to pay for this? You’re not looking

for any dramatically different solution here?

DR. PASCAL: No. I don’t have a magic figure in my
mind that the taxpayer should pay 70 percent and the insurers
30 percent. I don’t see any basis to come up with such an end
result as that.

CHAIRMAN WATKINS:
you must leave.

We’re informed, Dr. Pascal, that

DR. PASCAL: I have a plane to catch.
CHAIRMAN WATKINS: Your presentation was excellent
The mistake you made was telling us you had to leave at

so you got all the questions, and nobody else has had to

today.
5:00,

135
say anything. But anyway, thank you for coming here. We may
want to follow up with you because this is one area of weakness
that we have found, getting the hard information we need on cost
analysis. I think you might have heard some of the discussion
before this panel came on. So, thank you for being with us.

We'll start back on my right with Dr. Conway-Welch
for any other questions she may have for the other panelists.

DR. CONWAY-WELCH: I had two questions. I’d like to
address the first one to anyone who’d be interested in trying to
answer it. Perhaps this isn’t quite the right group, but can you
give any kind of a synthesis or a summary of the Medicaid waivers
that are being suggested and talked about in terms of providing
some efficiency in the Medicaid system.

While you’re thinking about that, I would also like to
ask Mr. Thompson a question regarding this chart that he spoke of
with the 24 admissions. The room and board category accounts for
50 percent. I wanted to make sure I understood your statement.
Did you say that half of that 50 percent accounts for the nursing
piece or that the 50 percent accounts for the nursing piece?

MR. THOMPSON: Half of the 50 percent.

DR. CONWAY-WELCH: So, 25 percent of the total
services are actually nursing and 25 percent are the room and
the food. Thank you. Could I go back then? Do you have any
information in terms of the discussions that are circling around
regarding Medicaid waivers or is this not the appropriate group
to address this question to?

MR. THOMPSON: I don’t have too much information
because Connecticut has done voluntarily most of the programs
that other states have applied for waivers for.

DR. CONWAY-WELCH: I see.

MR. THOMPSON: AZT funding, for example, and beefed up
home care. They have tried managed care in three localities in
Connecticut. I know that they are putting in for a waiver to
continue the managed care, but that’s about all that Connecticut
is doing.

DR. CONWAY-WELCH: Okay. I1’11 address that to another
group.

MR. THOMPSON: I think there’s one question though that
Dr. Gebbie brought up. That’s this question about is Medicare a
quick fix for your problem?

DR. CONWAY-WELCH: Right.

136

 
 

 

MR. THOMPSON: I don’t think Medicare is a quick fix
for your problem for a couple of reasons. One is the incentives
are all wrong. The incentives under Medicare are to hospitalize
patients. The only way we can make any kind of push on AIDS is
to keep patients out of the hospital. The present Medicare
ambulatory benefits and home care benefits are not strong enough
to enable us to really move patients out of the hospital.

Somebody else spoke about the absolute lack of Medicare
payments for nursing homes. So, that’s no quick fix. I know
that you’re under pressure because somebody will say, "Well, we
fixed ESRD this way. We’ll fix AIDS this way." I think that’s a
slippery slope, if you don’t mind my saying so, unless you
really want to radically change Medicare and the economies, the
economics of Medicare won’t let you radically change Medicare.

DR. CONWAY-WELCH: Thank you.

CHAIRMAN WATKINS: Dr. SerVaas, you have any further
questions for the panelists? Mr. DeVos?

MR. DevVOS: No, I’m pretty well set, I think, Admiral.
CHAIRMAN WATKINS: Mrs. Gebbie?

MRS. GEBBIE: No, I think I’ve got it here.

CHAIRMAN WATKINS: Dr. Lee?

DR. LEE: I don’t think I’m going to be able to come to
grips with this.

CHAIRMAN WATKINS: Mr. Thompson, at least I was struck
by your closing statement because it hasn’t been put quite that
powerfully to us today. But your data seems to be compelling.
Basically these individuals for the most part are in the hospital
for nursing care, which could be provided elsewhere at lower
costs.

Can you take the data you have here and convert me to
the alternate concept? Have you done a comparative analysis on
that which takes you from the data here and displays it with that
of the alternate health care sites. How would this whole picture
shift then? What would be the profile on that one slide that
you’ve given us?

--MR. THOMPSON: Well, you would keep the hospital
only for those cases that really needed a hospital’s unique
facilities. In other words, the unique facilities that these
people required were oxygen. You can give that at home.
Laboratories, you can send the stuff down to the corner for

137

 

 
 

 

laboratories. We were struck by the absolute lack of high
tech charges in the hospital bill.

Now, this is not unusual. We find this in, if you
don’t mind my saying so, DRG 147, which is cardiac shock where
the patients are in a hospital because they have not been able
to make it at home. They become decompensated at home. They’re
brought back in and it’s all nursing. It’s watching then,
giving them the drugs at the right time and that sort of
business. We’ve got to start thinking of hospitals as very
super intensive care units and limit admissions to those people
who need those high tech resources.

CHAIRMAN WATKINS: Well, I think we agree and what I’m
trying to do is get a more definitive projection of what we might
have. Now, you testified once before in which you had a very
exciting concept of information exchange between a number of
entities that really had not communicated well in the past. The
primary health care provider would have an opportunity to make a
cost effective selection for the patient.

So, I’m trying to go from your last discussion with us
to the conclusions you gave us on this particular occasion and
pull the two together.

MR. THOMPSON: Well, let’s address a question that you
addressed to the last panel and this is the "cost effectiveness"
of home care. You were concerned that there were many hidden
costs in home care that didn’t come out and therefore when people
said $100.00 against $1,000.00, they were loading the dice.

This argument has been with us for a long time. You
have to start both groups out on an even playing field. When a
patient goes to a hospital, the family still pays rent. All the
family expenses still go on when the patient is in the hospital.
When the patient leaves the hospital and goes home, that money
is still being spent. So, you don’t have to worry about rent,
you don’t have to worry about -- maybe a little extra food.

What you do have to worry about, which somebody brought
up, is the value of the services rendered by the relatives
because don’t kid yourself, home care depends on a supportive
home. It’s extremely difficult without it.

Now, we will begin to learn those costs for the first
time with some of the new AIDS programs where we have to provide
homes for people who don’t have homes. In other words, we are
now going to be giving home care in a substitute for the home.
The people from New York spoke about their substitute for the
home and there are other such places coming up primarily through
the pressure of AIDS. There’s a cottage just beginning, for
example, in Connecticut. We will now know how much it really

138

 

 
 

 

costs to keep people in their homes. We can add that on top of
the home care costs and answer some of your questions about is it
effective or not.

But up until now, the costs have been the same whether
the patient is in the hospital or here, the social costs and all
the rests of the support costs, the family costs.

What we’ve found was that’ those differences were fairly
real. Now, some people have suggested that we pay the family for
the care. That, I would think, would be a very good way of
strengthening home care. We would pay members of the family for
care. It would still be very cost effective.

So, those are the kinds of situations I understand
you’re in. But I think you’re kind of overemphasizing them. But
we’ll find out when we get the data from the homes now that we’re
studying.

CHAIRMAN WATKINS: I don’t want to mislead you. I’ma
home care fan. What I was trying to say, I think the last time,
was that we have witnesses come before us that say you’ve got to
be cautious about your cost analysis. So, all I’m trying to do
is find the ammunition to counter that in such a way that we can
show exactly what we’re talking about in all of its ramifications
so that we don’t have that constant rejoinder coming up
criticizing our recommendations.

MR. THOMPSON: I couldn’t agree with you more. The
best frame that you can figure that out in is what are the
additional costs for home care.

CHAIRMAN WATKINS: Right.

MR. THOMPSON: Not the costs that the family has got
already. That’s the only way you can look at it. If a person
has to quit their job to take care of that person, then that’s
an additional cost that’s got to be replaced. If the father or
mother --

CHAIRMAN WATKINS: Is that factored into your
information interchange program that you were telling us about
before?

MR. THOMPSON: That’s going ahead. In Connecticut,
we've accomplished the first task which was try to match DIMS
data with Department of Health data. I’ve told you there are
nine agencies up there, all of whom have a piece of the action.
They all have their own information systems and they’re not at
all compatible. We are getting a grant from Connecticut to set
up a single access, single entry system to preserve anonymity
that will gather data from all state agencies. That’s one place

139

 

 
 

 

where we’ll begin to do some of these kind of studies and some of
these program plannings and we will be depending upon Mrs.
Scitovsky for some of the cost data when she gets her report

out, although we would use a DRG model.

MR. DevOS: I think, Mr. Thompson, one interest in this
is to support the system to where the person with AIDS will
return home, to their parental home, wherever that was. If those
providing home care would just break even in some form to do
that, we think that’s all our ideal solution wherein sick people
would have a place to return to. That would break up, to some
extent, these groupings where so many of them end up homeless in
these major centers where they drifted to at a different time in
their life. They would be encouraged in a different way to go
back home where they came from, where they can get good home
care. So, we’re very interested in what you’re working on and
we're right on board with you.

MR. THOMPSON: I would only add one thing. A home or
a substitute for the home.

MR. DevOS: Either way. I mentioned the substitute
home because I know they won’t all be able to go back. I look
at a substitute home. How far can you move them away from where
they’re living? The cost in West Virginia or someplace may be a
whole lot different than those costs of keeping them comfortably
in New York City. That’s a psychological thing that’s very
difficult to deal with and you can’t treat that purely as a cost
function. But we’re going to have to examine that.

MR. THOMPSON: We are treating one-third of the AIDS
cases in Connecticut at Yale New Haven Hospital simply because we
have a very active clinic and word gets around. So, people from
Connecticut and even New York come up for treatment. You can’t
turn them away.

MR. DevVOS: No, but let’s assume you work towards where
there was adequate support in a different community.

MR. THOMPSON: I don’t have to tell you. You’ve had
enough witnesses tell you this. There aren’t that many places
where discrimination doesn’t exist, where programs are known and
publicized and where you have a sympathetic staff that’s always
reaching out for new patients. There just aren’t very many of
them around.

MR. DeVOS: I agree with you historically, but I
think we’re also into a fast changing scene where those things
do move differently. That line of sympathy is expanding, not
diminishing in my experience, as people know how to handle the
HIV epidemic and cope with it and I think you’1l find that more
reaching out in other parts of the country. I hope.

140

 

 
 

MR. THOMPSON: So do I.
CHAIRMAN WATKINS: Any other questions?

DR. LILLY: A comment. I/’d like to comment to Mr.
DeVos and remind him, as he already knows I’m sure, that in
fact, particularly among the homosexual population, a lot of
them are not welcome back home.

MR. DevOS: I understand that, Frank. That’s why I
think of the alternative. You can answer it maybe better than
anybody else. Does it have to be right here or if there’s a
group, can they be as comfortable, maybe even happier in a
different setting? Is that a major psychological break or not?

DR. LILLY: Well, if you’re worrying just about the
cost, then maybe we should ship everybody back to someplace where
it’s cheap.

MR. DevOS: I told you I wasn’t worried just about the
cost. I was trying to evaluate both of them. It’s like saying,
"tl want to live in New York or I want to live in the Plaza," when
you have never lived there and you can’t afford it anyway. A lot
of those people didn’t come from there.

MRS. GEBBIE: But a lot of people chose to live where
they were living when they became ill. I think when we want to
ask that question we should ask it of ourselves. If you became
ill today, how far away from where you now live would you like to
be relocated? I’m not sure that the question for the patients
diagnosed with this disease is terribly different than it would
be for any one of us.

MR. DeVOS: I wrestled with that one. But if I also am
homeless, then I’ve got to make some new friends someplace.

MRS. GEBBIE: Yes.

MR. DevoS: Then I maybe have to take another look at
it.

MRS. GEBBIE: But I don’t think that’s uniquely
different to AIDS patients.

MR. DevOS: No. Oh, no, I agree.

MRS. GEBBIE: I think that cuts across a whole bunch.

MR. DevOS: But somebody else is paying the bill.
When you’re there, you’re paying the bill. When somebody else

pays the bill, they’re going to ask these questions. If the

141