:%L'i f 1, I-,DUCATIO-\. A-\ D MEMORANDUM DEPART@\IENT OF HI, PUBLIC f!EAL'1'1-1 SERN'ICE liLALTII RESOL7RCES ADNIINIS-.RArC)N BUREAU OF IIEALTli RE-@OL7RCES DE@-FLCPN'EN-1 TO Barbara Miller, Management Analyst DATE: July 19, 197't Division of Management Policy, 0,11, HRA FROM : Chief, Planning and Policy Branch, DCHP SUBJECT: FY 1976 Staffing Narrative for Health Resources Planning As you requested on July 15, I have revised and expanded the draft staffing narrative for Health Resources Planning. Because of the current lack of authorizing legislation, it is impossible to make simple output comparisons based on program history. it is absolutely clear from the Congressional testimony of tjl,-- '@di-,Iinistra- tion that vie intend to enlai-c-- Federal technical assist-a!,,,,e, rloni@Lo.-inc,, and construction progra,-.i respoiisib4glitie@. This fact fori-,,,s the basis for our staffing request. I certainly hope that @.,hal@,e@,,er inadequacy there may be in the quantitative annual output conipa)-isors provided here is not allo@-,,ed to overshado,,-i the substantive importance of this initiative to our health care delivery sys@Lonland the ecotioriy. There are ti@,,o particularly important matters which il-.us@Ll be Made clear to each office %..,hicii this rcr,,,,nc-+ a i 4-1,@ LJ Fon-iai-d Plan calls for an increase of 3'0 Health Resources Planning positions in FY 1976 and no increase foi- FY 1975, this request is l@or an increase of 63 Health Resources Planning positions in F)' 197z') no further increase in FY 1976. In other @..,,oi-ds, i-tc- do no@L.agree @L- :I all of the i,,orl,,Ioad assti,7@ptions implicit in the H Fo,,-@,:ard Plan. and we believe that the Dep,-irtpie.,it must plan to sta'ff Health Resources Planning adequately in FY 1975 or else fail to meet the @.,oals of the Adniinistration's program. Second, this request combines the requirements of 4L@ie proposed Health Ppr,otiv-rnr, Pl,)nninri At-f- Pneq rise nr;minic@v-.n+irNn ni' C)r)rc-il -Fn%- -Fn@ili+ir-c construction and modernization as described by Dr. Ed,..,,a),ds b@,l@ore the Public Subcommittee on Health, Senate Cornmittee on Labor and ',-,@elfare on June 14, 1974. Howard B. Kelly Staffin_q Analysis - Narrative Justification A) Organizational location: Bureau of Health Resources Development, Loe'a,l th Res,ou,rce's Planning B) Program Title: Health Resources Planning C) Proqram PurDose: The Health Resources Planning Act, as proposed by the Administration, calls for the organization and establishment of local planning bodies, called Health Systems /'%gencies,'to s'er-v@'specific qeocrapfiica_l_at-eas across.--thp--cc,-@-1- These areas will--bL- 'establi'shed'by the-governor of'each'State, sul,,- ject to criteria set forth in the statute, and submitted to the Secretary the Department of Health, Education, and I-lelfare for approval as Health Services Areas. A Health Service Area be a geogra optical. region i-jith'n. which there is available a comprehensive range of health services and v.,hi,,i is of a character suitable for the effective planning and development of health services. The Health Systems Agency will be a private, nonprofit organization, leqal'i,,- indeoendent of all other organizations. It will be required to have a ov- 9 erning grouD composed of leaders from among thle five sectors of the health care system One-half of the members are to be representatives of consum=--r-s -i- and government, and half are to represent providers, health educational ins7' tutions, and third-party payers. The HRP program will provide financial support for the development and ope% of Health Systems Agencies. In addition, technical assistance funds are authorized to enable agencies to assist the implementation of@ actions recc-- mended in their comprehensive health plan. No matching funds are required obtain Federal funds. A companion part of the HRP program is authorization and support for State regulation of selected aspects of the health care enterprise. Grants would be available to support state efforts to regulate the reimbursement for health services and the extent of capital inves7uienL in tne nealth care industry (through carrying out the requirements of Sec. 1122). If a State chooses to administer both regulatory functions through one agency, that is eligible for a one-time bonus payment of 25 percent of its Federal pay:-n-.---. 2 The Administration's overall approach to facility construction is one that focuses on targeted assistance to residual areas of need beyond new hospital construction. The original Hill- Burton program was focused on increasing the number and iniprov- ing the distribution of hospital beds. Today, the supply is adequate and the imbalance in distribution largely corrected. The need now is not for additional beds and hospitals, but for the modernization, including replacement of existing hospitals, and for increased ambulatory care facilities. Such assistance will take the form of direct project arants available to public and private nonprofit health care facilities that, among other requirements, serve large numbers of poor patients and are unable tTi obtain a loan through the private capital market without Federal capital assistance. The size of the Federal share would be limited and the grantee institutions would be enabled to participate in normal debt servicing arrangements. Project grants would be directed toward the construction of ambulatory care facilities and the moderniza- tion of health facilities. No new Federal loans and loan guarantees with interest subsidies will be made, because interest subsidies are generally disproportionately expensive in relation to the benefits received. D) Explanation of 1974/1975 Staffing Levels and Activities 1. FY 1974 During FY 1974, the Federal Government provided support for four different programs which had established agencies at the State or areawide level to carry out specific planning activities within the health care system: C'ompre- hensive Health Planning (CtiP), Regional Medical Programs (RMP), Hill-Burton, and the Experimental Health Services Delivery Systems (EHSDS). Legislative authority for three of these four programs expired 3 June 30, 1974, and there is no specific authority for the other program, Recognition of the continuing need to bring the undesirable conseque nces of the health services marketplace under control, along with the experience gained through these proarams, led t--@the,.",rc-pos2l of a new Fede@@al initiative (,represented -@y the Healt,, Reso'Lirces Planning Act) combining the development of effective localized health resources planning capability with encouragement for State-level regulation of capital expenditures and fees. The long-term goal of this new intervention is to plan and develoo an adequate and equitably distributed Supply of high quality health care resources and services at reasonable cost. dards In previous years health planning agencies operated with little substan- tive guidance -from the Department, causing confusion on purpose and function among the agencies. During those years, certain common functional elements were identified which, if performed, have a positive impact on the agency's effectiveness. At the same time there has been increasing emphasis to focus the broad mission of he<h planning on controlling unnecessary duplication of services and facilities thus impacting on rising health care costs and helping to develop a more rational system for healthcare deliverv. During FY 1974, performance standards for health planning agencies were developed and promulgated. Assessment of CHP Agencies By FY 1974, fifty-six (a) agencies and 150 (b) agencies'had achieved the planning stage, and were fully operational. 'Little indeptli evaluation had been conducted to identify major problems. Similarly, little direction or assistance had been provided by the Department to enable agencies to more effectively deal with and solve problems which confront them. To correct this lack of assistance, a management study was conducted to inventory the capability of agencies nation-wide. The results of the study were used to (1) develop regional priorities and sequence for indepth assessment; (2) identify major categories of technical assistance required; and, (3) provide a basis for legislative recommendations. The Regions assessed 206 agencies using a standard methodology. This assessment involved team site visits composed of Federal staff and (a) and (b) agency personnel. Ilajor ageiicy problems %%,ere identified and recommendations made on their solutions. Each assessor participated in a training workshop to fully understand the performance standards and assessment methodology. The use Of MLilti-discipiinary teams, composed of practitioners in health planning as well as Federal staff, added objectivity to the process and provided cross transfer of knowledge 4 within the health planning field. Finally, in conjunction with the steps above, a technical assistar:e strategy was developed and implemented. Such assistance consisted of both one-on-one and generic assitance (training, manuals, elu-c.). An evaluation protocol was also developed to measure the impact of this process on the performance of the agencies. 5 .Capital Expenditures Review In 1973, the Secretary of the Department of Health, Education, and Welfare transferred full responsibility for administration of Section 1122 to the Comprehensive Health Planning Service. Its successful operation der,-,an,@-d that Regions, agencies and providers get good guidance for all aspec ts frD-@? procedures to evaluation. All participating and affected groups were given an opportunity to shape the nature of the regulations, procedures, criteria statements, guidelines, training programs, monitoring systems, and evaluation. 'ithese participating groups included (to varying degrees) SSA, AACHP, pro- viders, Regions, SRS, MCH, 314(a) and 314(b) Agencies, Hill-Burton Agencies, and other selected Federal units. During-FY 1974, regulations were developed and published, and agreements were negotiated-with 39 States. Regional Medical Pro ram During FY 1974, staff efforts of the Division of RMP were principally directed towards the 1. Allocation and Award of Grant Funds to RMPS: This entailed two quarterly allocations, made essentially on an entitlement basis, and award of grant funds to the 53 Ri",IPs in first half of the fiscal year. Subsequent to release of the pounded FY 1973 funds and the remaining unapportioned 1974 fur--'s, which totalled roughly $114 million', this involved a full-scal-2 review, 'using an outside peer group, of applications for both na-,; and continuation activities that will permit the Ri'@'lPs to contii-.ue through June 30, 1975, 2. Pilot Arthritis Center Program: A special program initiative was undertaken pursuant to a Congress- ional appropriations earmark with respect to the planning and daVn@OD- i ment, through the Ri'lPs, of such centers. Grants totalling $4. lion were awarded late in the fiscal vear, which permitted the funding of pilot arthritis center programs in 27 Regions. 3. Program Monitoring and Assistance: DW4P staff continued to monitor activities of the 53 Ri',IPs durino the year and to provide such management, technical and other as@i:-z-L- e_ ance as was requested or diminished staff made it possible to 4. Policy Development and Communication: Considerable time was spent in shifting from phase-out to in@Leri,- 6 continuation. Earlier polici .es had to be rescinded or modified, previously existing policies reinstituted, and new guidelines developed, particularly as it related to the use of the released FY 1973 and 1974 funds. 5. HRP Implementation: DRMP staff participated with the staff from the CHP and Hill" Burton programs in various working groups concerned with plan- ning for the new program. Hill-Btjrton Program The Division of Facilities Utilization administered the award of previously impounded FY 1973 funds in addition to amounts appropriated for FY 1974. These included the Ilill-Burton grants for construction or modernization of public and voluntary non-profit facilities. These grants were Watched from local sources, usually non-govern..-.iental. In addition, DFU staff operated the new Hill-Burton loan and loan guarantee program. This pro- graiii provided loan guarantees with interest subsidies to private non- profit agencies, and direct loans to public agencies, for modernizing or constructing health care facilities. 2. FY 1975 During FY 1975, considerable effort will be devoted to developing the national network of locally-based planning agencies and statewide renula- tion programs as well as providing transitional technical assistance to existing planning agencies and supporting the continued operation of existing State regulatory agencies (Sec@L-ion 1122). The specific materials required for designation of geographic areas, selection of agencies, pro- vision of technical assistance, development of an automated management information system, and adininist-.--@L-.ioti of existing Federal responsi6ilities during transition period will be developed. in addi-cion, guidance to regional offices will be provided. Program activities during FY 1975 will be largely organizational. Health service areas will be designated in all areas of the country, and a majority of the Health Systems Agencies will be selected. Performance standards and program guidelines will be promulgated, and considerable technical assistance will be provided to agencies seeking to become Health Systems Agencies. As a result of various projects begun in FY 1974, major gaps in health planning technology will havebeencleai,ly identified by the middle of FY1975. A program of targeted research aimed at closing gaps in tile state of the art will be initiated through a small number of %.,@ell defined projects which are vigorously monitored. Technical Assistance projects will be implemented to 7 raise health planning and regulatory practice to-standards limited only by the state of the art and available resources. In addition, substantial efforts will be required to administer grants and contracts made under FY 1974 and earlier authorities for each of the expir- ing programs. This includes frequent program interaction with 274 State and areawide Co:iiprehensive Health Planning agencies, 53 Regional Medical Programs, 19 Experimental Health Services Delivery Systems, each State Hill- Burton agency, and with the multitude of indivi-,4uals and Federal , State local, and private organizations which are affected by these agencies. These efforts will extend into FY 1976 in the case of certain projects initiated by local Regional Medical Programs; and, in the case of Hill-Burton, .residual construction grant efforts will be needed through FY 1980, and resi- dual loan guarantee efforts will be required for many years beyond that. During FY 1975, final plans will be developed and first steps will be initiated for the orderly phaseout of these agencies and the transition to the new planning agency network of those agencies which meet the required qualifications. E) @x lanation of 1976 Staffing-l-evel and Activities By FY 1976, some form of national health insurance is likely to have been enacted. It is critical to the national interest and the interests of the Federal government that an adequate Health Resources Planning progrFm be in place to serve as the foundation for eiiiiiit,,ating unnecessary dup-ii- cation, providing improved access to care, controlling costs, and targ@,ing assistance to health care facilities and services which meet real needs .in local corp..munities. At the local level, many planning agencies will have published official areai,jide plans and they will have begun to approve technical assistance awards which foster the implementation of those plans. At the State level, regulatory activity will be increased considerably with the application of controls enviisoned as part of the various national health insurance proposals, and the extension of State regulatory legislation. At the Federal level, it is essential that an adequate staff be assembled to provide the leadership and management necessary to insure the effective- ness of this program. The health care industry be consuming approxi- rotely $100 billion per year from our economy; and it is clear that the Federal government cannot hope to improve, regulate or change this system without providing the minimum staff necessary to cope with tile size and complexity of the issues involved. The requested staffing level of 355 permanent positions does not include approximately 40 Regional Office positions funded under other authorities which have been assigned major responsibilities for health planning and facilities construction programs. Those 40 positions must continue to be so assigned in addition to the positions described here. 8 During FY 1971, when the three major predecessor programs (CHP, RR.IP, and Hill-Burton) were administering programs similar in complexity to thos'e proposed for HRP, they had a combined authorization of 589 positions, of which 449 were filled. For FY 1972, the comparable figures are 460 authorized and 417 filled. Even in FY 1971, when funds were impounded and the programs were to be phased out, the,-e wer;-- @49 authorized posi- tions, of which 304 were occupied at yQar-ei-id. The above comparisons provide a useful perspective to the current request for 355 positions. He cannot successfully meet the increased Federal responsibilities required by the proposed legislation with the same staffina level required to administer the predecessor programs during what was intenied to be the final year of operation for both Regional @ledical Programs and Hill-Burton. 'In fact, this request is far below the combined level authorized when those two were fully operational, and it only exceeds the level authorized when f-unds were first impounded by 6 positions (2 percent of the total aut@-horl- zation). In our preliminary planning, in preparation for the enactment of legislation, various working groups have outlined the major activities to be undertaken. These activities or subprograms are descri@ed in Table I, below. Natul-@ ly these estimates will be refined once legislation is enacted. State and Local Planninq Proqrani During FY 1975, the thirty-three headquarters staff will be heavily engaged in the development of policy, guidelines, and regtilations@related to agency selection, board composition, agency functions, and performance standards The thirty-six Regional office staff will be focusing their efforts on the designation of geographic areas, the selection of agencies, and the neqo- tiation of agreements with both State and local agencies. Regional office and headquarters staff will also be sharing the responsibility for assisting existing agencies in their efforts to make the transition from their previous operations to those required under Heaith Resources Planning. In FY 1976 many of the policy formulation and agency selection functions will continue, and there will be additional program demands placed on Federal staff. For the forty-tvio headquarters staff this will include the operation of a national monitoring system designed to provide the information feedback essen- tial to program evaluation, planning, and control. The sixty regional office staff will be conducting site visits, agency budget revie,,,is, grants mianacll- ment, and regional technical assistance programs to insure that the operations of individual agencies in the State and local planning program are consistent with program objectives and regional requirements. 8a Table I._Major Activities Central Reqio,-,al Office Office FY 75 FY 76 FY 75 r@Y 76 State and Local Planning 33 36 42 60 Regulatory Activities 24 26 28 40 Planning Technology/Technical Assistance 36 39 0 0 Facilities Construction/Modernization 43 43 65 55 Residual Functions 20 12 20 0 Program Direction and Administration 24 24 20 20 180 180 175 175 9 Regulatory Activities The program of review of capital expenditures under Section 1122 of the Social Security Act will expand somewhat in FY 1975. The present 39 States participating in the program will probably increase by three to four. We assume the level will remain approximately the same in FY 1976. @ - The Administration has proposed, as an additional means of containing rising health care costs, a program of rate review. This would be voluntary with the States, and we estimate that 20 States will participate in FY 197'D and .40 in FY 1976. The rate review and capital expenditures review programs will be coordinated with existing programs for review of applications for Federal funds., which will continue to be performed by the new Health Systems Agencies. For FY 1975, twenty-four headquarters staff will be required for administration of these programs, and twenty-six will be needed in regional offices for review, monitoring, and assistance to the review agencies. During FY 1976 a minimum of twenty-six headquarters staff and forty regional office staff will be needed to administer the expanded program. Plannin.q Technology and Technical Assistance Major efforts in the development of planning technology will be made in FY 1975, buildinn on the initial efforts of FY 1974. Through contracts and grants, as well as by staff efforts, the "tools" of health planning wi '11 be developed or refined: criteria and standards for determining the need for specialized health care services; techniques for development of health plans for areas; model data sets for specialized planning; etc. As these i,,iethods, and standards are developed, the technical assistance staff will disseminate them to health planning agencies. @lhile headquarters staff will provide a modest amount of one-to-one technical assistance, their major effort will be in activities which will assist all agencies. These include preparation of manuals; packaging of slide presentations; distribution of bibliographies, abstracts and PL:,-)Iished materials from a national health plan- ning information center; and administration of contracts for specialized technical assistance. The staff of thirty-six headquarters staff needed in FY 1975 will rise slightly to ihirty-nine in FY 1976 as the newly established Health Systems Agencies draw increasingly on general technical assistance resources. Assistance to individual States and local agencies will be pro- ,vided by Regional office staff who are included in other sub-program categories. Facilities Construction/1,1@odernization While not included in the Planning bill, the Senate has before it a separate Construction bill spons'ored by Senator Kennedy. In broad outlines it pro- vides for Federal grants, loans, and loan-guarantees for specific projects. There is no State agency and the present Hill-Burton formula is abandoned. 1 0 The Administration has testified in favor of a program along the iines of this bill, but limited to direct Federal project grants. To implement this program, $100 million has been requested. It is estimated that aoproximately $50 million of this would be for the modernization of targeted hospital facilities, $40 million - would be for ambulatory care facilities, and the remaining $10 million would be applied tO@-4ard modernization of high risk longterm care facilities, either as part of a general hospital or of free-standing nursing homes. The great majority of these positions are required in connection with onaoing Federal responsibilities for the Hill-Burton program which carries a three year standard period for obliga- tion of appropriated funds. Staff for this program would be engaged in financial analysis, grants management, architectural and engineering review, State agency monitoring, hospital consultation, training, and program management. In addition, certain architectural and engineering functions performed by State agencies under the earlier program will have to be performed by the DeDartment under the new program. Residual Functions During FY 1975 it will be necessary to emoloy a minimum Of twenty headquartersostaff and twenty regional office staff in the administration of resources, grants, and contracts which resulted from Drevious CFIP and RTIP legislative authorizations. During FY 1976 these requirements will be reduced to ten headquarters posi- tions. Residual functions associated with Regional i'ledical Programs are mainly the result of the need for proper stewardship of Federal Funds. Local Ri'lPs will be operating throughout FY 1975, and some of the projects they fund will be operating in FY 1976. A minimal grants management function is required at headquarters to process expenditure reports and other financial documents. In addition, during FY 1975 various program functions will be performed in connection with the review of applications for previously impounded FY 1973 funds. Finally, the 218 areawide C@IP agencies and 56 State CHP agencies will require monitoring, policy clarification and technical assistance throughout FY 1975. In FY 1976, current plans would require only that recovery of Federal assets be completed and final expendi- ture reports be submitted. Program Direction and Administration At headquarters, this category would include the Office of the Director of the program as well as the staff concerned with administrative management. Twenty-four staff are needed for these functions in FY 1975 and this figure would not be expected to change in FY 1976. In the regional offices, these would include the branch heads and their clerical support. Twenty staff would be needed in F Y 1 9 7 5 a n,-4 --nty rv 1076. Major Program Ininacts and Outputs The proponents of a Comr)rehensive Health Insurance Plan and other national health insurance proposals widely acknowledge the need for a comprehensive approach to protect all Americans against the rising costs of medical care to assure adequate access to care and to improve medical care Quality. The benefits, cost- sharing, and reimbursement methods of most health insurance DolicieS Dromote such nia.ior problems 'as overuse of hospital --,ervicp.-,. nd r- 1 2 utilization of preventive services and outpatient care, and excessive rates of inflation. Strong measures must be taken to place any system of national health insurance within a framework of effective local planning, capital expenditures review, reimbursement regulation, and quality control in order to.' moderate and cure cost increases, services shortages, and improper use of services. Under the Administration health insurance proposal, State agencies would determine reimbursement rates, subject to Federal guidelines, for all covered services. States would be required to-consult with both providers and con- .sumers in establishing these rates. Furthermore, under this proposal, any State participating in the health insurance plan must also implement a pro- gram of capital expenditures review as authorized by Section 1122 of the Social Security Act. If a health care facility makes an unapproved capital expenditure, it becomes ineligible to receive reimbursement for services under any Federally-sponsored program. The crucial administrative role in these determinations will be played by local Health Systems Agencies and State, Agencies supported in part by the Federal Health Resources Planning program. In addition the planning agency network will provide a focus for rational planning for services, facilities and manpower. As a result of a sound plan- ning process, unnecessary duplication of facilities and services will be identified and prevented. Technical assistance grants and contracts @-,,ill be used to stim,-,Ia".-e needed services as well as to allow for redirection of existing resources. The increase from a level of $175 million in FY '75 to $205.1 million ill FY '76 for Health Resources Planning reflects our basic assL,,:iiptions about the rate of implementation of this new program. 1,4e are assuming that even if the legislation passes early in FY '75, it will not be possible to have Health Systems Agencies started all across the country during the sal,-,e fiscal year. Some will of necessity start in FY '76. In addition, since most of the new Aoenc,ies will be in the organizational staoe during FY '75,. a vet,v smai' amount of funds is included for Technical .Assistance Grants and Contracts in FY '75 ($2.5t4). By FY '76, howeve- these agencies will be developed enough to begin ipipleillenting sections of their comprehensive plans. Thus, vie have established a level of $12 million for such grants and contracts in FY '76. The two other areas of increase are tied to the number of agreements with States to carry out certain regulatory functions. Projected expenses for. capital expenditures review and associated planning (Section 1122) vlill rise from $12 million in FY '75 to $14 million in FY '76. In the case of rate review agreements, we are estimating that 20 States will be involved in the program, in FY '75 at a cost of $6 million. In FY '76, 40 States are expected to have started such programs at an expanded level of activity and a budget of $16 million. 1 3 Thus, in sum, the $30.1 million increase reflects the following basic assumptions and related costs with regard to the rate of implementation. FY '75 FY '76 Number of Heaith Systems Agencies (HSA) 130 150 $42.9M $49.5M Number of HSA Technical Assistance Grants & Contracts 125 600 HSA TA Awards $2.5M $12.0@vl Number of State agreements for capital expenditures review 40 40 Cost of Agreements $12M $14M Number of State rate review agreements 20 40 Cost of Rate Review agreements $6M $16M Planning Technology and TA Projects $5M $7m Direct Operations $6.6M $6.6M Sub-Total Funding Required $75-.OM $105.1m Facilities Construction/llodernization $100.oi,,i $100-OM Total Funding Required $175.om $205.IM Major Outputs o-r the Health Resources Planning program are summarized in the following table. Ln n cLn C) 4i 0 Cl $4 v@ C:) (:D C:) 4i Lr> C:) CY) 0) .14 LCIY')) .1 cLyr, C) VI' 4-J C:) Lr) CY) C\i C:) C\i CY) >4 u 4-) 4i 4-) s- ro co 4-) U CD (A 4-) .@ 0 4-3 ei < C) 4-3 r- (,i u c (1) < > ei E ei CL cli cli co -0 E >< -0 = tn 0 -P u c: (D LLI c: 4-) co cn (v a c 4-J C) V) U) 0) co CZ -- u -0 4-3 Q) Fi -a a) c: ci ro 0) > C) S- S- 4-) rU a) ea LO co CL ri t) +i ro C) U) LL- 14 Ln 0) 1, (D C@ 0 4-i ro G)