tv House Panel Examines Medicare Payment Systems Changes CSPAN July 10, 2017 3:23pm-4:35pm EDT
>> great. thank you. thank you so much. >> i understand you have to break. >> when we come back i'll yield to mr. levin for his questioning. we'll be back in a few minutes. thank you. this hearing is recessed until we get back. thank you. our hearing has come back to order. we are joined by a few of my colleagues who weren't here when i did the introductions so i
want to recognize the members here now. peter roskam from illinois. erik paulsen from minnesota. did i say that right? minnesota? and tom reed from new york. with that, i will yield five minutes to the gentleman from the state up north from ohio, mr. levin. >> you're still bitter about some of the back and forth between our two states. judy chu and ron kind. earl was here part of the time. so dr. miller, welcome. as i read your report, your testimony and also the executive summary, i was just struck by
the thoroughness of the work you do. a lot of the issues are controversial. i remember when we first talked about controlling payments to physicians. and the heck that we received and how much controversy there was. and you thought the sky was falling and it would never work out for physicians. and i mention that because i really think your report, and it has areas where there are differences of opinion -- your report shows how successful this has been, this program that is
in some respects a public but not only public but public and private partnership. and with a lot of back and forth from the private sector, as reflected in your report, and i just want to comment for each of us on this committee, on the subcommittee, when we go home, we have lots of meetings with the various providers, the various groups. and they have differences of opinion, and they have some urgent pleadings. but i really think your report shows why medicare is such a necessary and popular program for the people of this country. not only for those who are covered by it, but by their
families who benefit because those who are older than others in the family have the security of health care. without saying i agreed with everything you said, i wanted to congratulate you on your work. and i hope, mr. chairman, that we will be able to have some further discussions in depth about each of these important components, because i think there is a danger that each of us kind of picks and chooses one particular area where we think there is a special problem or grievance, instead of looking at the program more comprehensively. so let me start off. i think others are going to follow up on this because prescription drugs has become so urgent an issue. begin to discuss with us how
medpac has begun to look at this issue. and my time will run out and others will carry on. thank you. >> i can just say one thing. i would like to thank you for saying that. remember, i have a tremendous staff, and also g.a.o. has done a great job of appointing solid commissioners. that's why you have the work that you have in front of you. >> thank you, mr. levin. with respect to the issue that you just brought up, i think that that's a really good suggestion in terms of looking at these things together. and i hope that we can do that in a bipartisan way. >> i would like to. so start talking about prescription drugs. you have 48 seconds. and others will carry on. >> okay. we've done two areas of work in prescription drugs, most relevant to our current conversation is in part d. what we have seen is, you know,
generally you look at part d, beneficiaries are -- more beneficiaries are being covered, people have high degrees of satisfaction, and the premiums have been relatively level in part d. if you look a little bit closer at the program, there is a portion of payment that is covered by the federal government exclusively, the catastrophic portion of the benefit, and that's been growing at a rate of about 20%. so the commission has been concerned about that growth rate. there is a couple things that are -- >> mr. chairman, you want to gavel me down. dr. miller, others will carry on. >> okay. >> so i keep within the time limit. thank you. >> did you want me to gavel you down? >> no, but -- i think everybody wants their five minutes. so -- >> speaking of five minutes, the gentleman from illinois is recognized for five minutes. >> thank you. dr. miller, thank you. i will pick up on the -- a
little bit on the wholistic theme of mr. levin. that there is a general recognition that medicare is a program that everyone celebrates. let me bring up a particular concern that's been brought to my attention based on feedback from an inpatient rehabilitation facility in my district, and really one of the leading ones in the midwest. the concern is that the march report recommends an aggregate reduction in payments by 5% for that group. i am talking specifically about those that are in the non-profit sector. their margin is only 3.6%. so this is a parochially, this is a crown jewel rehabilitation facility in my constituency. their margins under medicare right now are minus 20%. the notion of putting more pressure on them is difficult to
fathom. can you give me a perspective on that. is this a final word? is this dispositive? are you looking for feedback? what's the state of play? i mean, i guess the first question is, do you agree with my characterization? and if so, then what can we do about it? if not, why not? >> so i think you have asked and made a completely fair comment. we have talked to a ton of inpatient rehab facilities and people in the industry, and we do understand the phenomenon. and our data makes your point very clearly. so in the post acute care sector in general and in the inpatient rehab facility sector in particular, what you see are very high ag gra gat margins and you see differences in financial performance. as you said it's often between for profit and not for profit. it's often tied to what kinds of patients the different
facilities tend to focus on. there is a whole section of the report -- i won't go through it in detail because i know we're under pressure in terms of time. but we've seen coding practices that raise questions. patient selection types of practices that have raised questions. so what we have tried to do is, in all these instances is say, okay, total payments can be lower, but they have to be redistributed across the different kinds of providers. and we general try and do that by tying the payment to particular types of patients. so, if you are taking medically -- you know, the more medically complex, we would tend to shift the payments in that direction, which would have the effect of creating better -- or more support for the kind of facility that you are talking about. here is the last thing i'll say and then you can back in. i'm sorry. in the inpatient rehab sector, the other thing we said in addition to bringing it down is to increase the size of the outlier pool so that more
payments would come out of the general payments and go to those kinds of facilities that have the financial circumstance that you are talking about. so where there was a recognition and an attempt to get at that. we also think there are some coding practices that the secretary or the i.g. or people like that should look very hard at on the very profitable side of the industry. >> thank you. that's helpful for me. maybe we can engage further. this is the white knight sort of place that you want to be successful. they're doing, from my point of view, all the right things. >> more than happy to talk to you about that. >> yield back. thank you, mr. chairman. >> mr. thompson, you are recognized for five minutes. >> thank you, mr. chairman. thank you for having this opportunity to talk with mr. miller. mr. miller, thank you for being here. i appreciate the work that you and your staff do a great deal. as you probably know, in march this committee approved
legislation, the republicans did, the democrats voted against it unanimously -- that was a trillion dollar tax cut that included $75 billion reduction in the revenues in the medicare trust fund. it's my understanding this is going to obviously going to shorten the life of the trust fund. do you know, were there any provisions in that legislation, or do you know of other legislation that the -- that would codify any of the recommendations by medpac to save enough money on the -- in the medicare program to cover that $75 billion loss? >> i am not aware of legislation that would offset that loss, if that's what you are asking me. >> the which? >> i am not aware of legislation that includes medpac
recommendations that would -- yeah. >> so $75 billion taken out of the medicare program will affect the access to care for the millions of americans who rely on that? >> i can't comment on the effect of that particular provision, but your other question i am not aware of an offset. >> does medpac have recommendations to find $75 billion worth of efficiencies in the program? >> i'm going to interrupt you. this is about med caps -- medpac's recent report as well as the extenders. >> that's what i am asking, mr. chairman. >> about the report, the march report? >> i'm asking if there are recommendations -- >> in the march report? >> in any report. are there recommendations by medpac that would cover the $75 billion loss that was brought about because of the legislation
that was passed by the republicans in this committee in march? >> so, without, you know, comment on the pending legislation, there are an array of recommendations in the medpac report that result in savings. and so, for example, the post acute care things that we just talked through, you know, we -- we don't do estimates. that's cbo and the rest of it. we think we're talking about the neighborhood of $30 billion. i mentioned the m.a. coding issues. i mean, there is potentially a savings there, for example. we also think, you know, the changes in the part d recommendations could yield savings. and then, also, there are a couple other places we haven't talked about where we restrain the updates that would produce savings. >> so those savings, the $30 billion worth of savings, how would they come to fruition? would it require legislation?
>> almost everything i have referred to would require legislation. i have to think about that for a second, but yeah. generally, legislation, yes. >> so, of the $75 billion -- $75 billion that will be stripped from medicare because of this american health care act, you can identify possibly $30 billion that could make up some of that difference? but that legislation -- but to get there, we would have to pass separate legislation? >> yeah. to get to $30 billion, have to pass separate legislation, and there is more -- you know, i don't know that i could ballpark the number for you. there is more savings in that report than the $30 billion. >> and that additional savings, would that require legislative action? >> i think as a blanket response to your question in general, it would require legislation. >> do you happen to know if any
of that legislation has been introduced? >> i don't happen to know that. >> so we have $75 billion hole in medicare with no legislative attempt to address that loss. >> i am not aware of introduced legislation. i wouldn't necessarily be the person who would be aware of introduced legislation. >> are you the person, or could you in your position give us some idea of what sort of problems a $75 billion loss to medicare would bring about? >> you know, again, on that particular provision, i don't feel real versed in talking about what the implications of it would be. >> thank you very much. >> gentleman's time has expired. mr. smith, you are recognized for five minutes. >> thank you, mr. chairman, and thank you, dr. miller, for your presence here today and certainly your responsibilities are large and you've got a big job to do, so we appreciate your
efforts. it's no secret that rural america has some challenges, especially with the agriculture economy and many of the challenges with access to care. critical access hospitals are very important to serving the rural population of america, and i know that they face challenges with funding and so forth. but one concern that i have been working on and my colleague, miss jenkins, has as well, is the enforcement of the physicians supervision requirements for critical-access hospitals. as you know, these rules require a physician's presence and supervision over nearly all routine procedures administered in hospitals. and this arbitrary regulation has been especially burdensome for hospitals and doctors in the very rural areas. it seems unnecessary. the 21st century cures act requires medpac to report to congress on the economic and staffing impacts of this regulation on rural hospitals by
the end of this year. i was just wondering, we are about six months in already. i was wondering if you might have an update on what's been found so far if anything. >> i really don't at this point in time. i don't mean to be unhelpful but i don't have anything to say about it at the moment. >> okay. well, i would hope that we can have as much information as is practical and possible in a timely fashion. to look at another issue, shifting gears a little bit. i know that in the past the commission has recommended allowing the ambulance add-on payments expire, despite the -- this recommendation, i know i hear from suppliers in my district that they need these payments. is there any cost report data available to cms that indicates these payments are needed in rural areas? >> my understanding is there is not cost report data available, and i think there has been discussions in the environment.
we had some discussion in our particular -- in our particular -- in our particular ambulance report about how cost reports could potentially work. one big issue in trying to go after it is there is very large, you know -- or even reasonable size operators were submitting a cost report probably makes a lot of sense. you also probably have a segment of the industry where you're talking about volunteer fire departments and that type of thing where, you know, a full-scale cost report is probably something of an issue. there is probably a way to square that circle relatively slim cost report that, you know, and ambulance providers and then excluding certain small ones from the reporting requirements, which might be a pathway. it's nothing the commission recommended, but there is sort of a discussion to that effect in our report. >> okay. well, i appreciate that. i know that one-size-fits-all
approach is not always helpful. in fact, it rarely is. as rural providers do face these challenges, i hope you'll certainly keep in mind the flexibility that oftentimes needs to occur. i appreciate your efforts. >> i do want to -- unless we're done. i do want to say, in our recommendation, you know, this principle that i tried to say in the introduction of, you know, if you're going to provide support for rural providers, which the commission fully supports, it's really about targeting, not duplicating, not supporting, you know, two providers who are right next-door to each other and may be, in effect, you know, not -- you know, not able to fully cover their fixed costs, and then you're trying to subsidize both of them. so, in the ambulance situation, we took one of the add-ons that was targeted to rurals and redistributed it and targeted it to counties with very low population density.
we end up covering about 70 -- 75% of the same areas, but you can provide a much larger subsidy. and basically you are moving the subsidy away from places that are near metropolitan areas and giving it more truly to the isolated areas. and in our opinion -- and people disagree -- making that dollar go further. >> okay. thank you. i yield back. >> thank you. mr. higgins, you are recognized for five minutes. >> thank you, mr. chairman. mr. miller, the "new york times" on monday reported that united health care, among the largest private health insurance companies in america, is being sued for defrauding the american people and the medicare program under the medicare advantage program, estimated to be between, well, billions of
dollars each year out of the past decade. the article also went on to name four other private insurance companies that participate in the medicare advantage for defrauding the federal government and the medicare program as well. potentially tens of billions of dollars each year. yesterday the department of justice joined that lawsuit and is rigorously investigating those allegations. if these allegations are true, that would represent among the most egregious defrauding of a federal program in a long time. what is your knowledge of this? and my understanding is several audits have been done over the last several years that
identified a problem, and why hasn't more decisive action from an administrative point occurred, which presumably the consequence of which is this legal action? >> so, let me try and answer what i think might be three questions in there. yes, we are aware of the lawsuit. in fact, we have gone through it in some detail ourselves as a way of educating ourselves. i agree with you. there are some relatively egregious things in there. i don't know how much of it you got into, but the e-mail traffic back and forth among people in the company is certainly an issue. number two, on the auditing, and then i will get you to something. on number two on the auditing. obviously we are a small operation. we advise the congress. we don't do any of that oversight. that falls to cms. but what we have been doing is we have made estimates of looking at, you know, over time the coding in managed care plans
relative to what is assumed and built into the risk models. we think that there is excess coding occurring, and we have recommended that it be taken out. we have also recommended that it would be taken out differentially based on how much activity is occurring within the plans. and the only other thing i want to say, and i want to say this carefully because you may have a different view -- not all of it is fraudulent. plans are collecting these codes in order to understand what their mix of patients are. >> let me just reclaim my time. this is not one company. it's the largest provider under the medicare program. 17 million people in this country get their health care under the medicare program through medicare advantage. it's four others as well. so that says to me that this is a systemic problem within the system that needs to be fixed
because they're defrauding the american people and the medicare program. number one. number two, the ceo of united health care in 2014 was compensated $66 million. one person. one salary. one year. the republican health care bill that was passed by this house included, on page 67, a $15.5 million tax cut to united health care's ceo and their top executives. $15.5 million. in total. the other companies that are being questioned for overbilling, defrauding the medicare program, that bill provided their top executives with a $78 million tax cut.
at the same time that that company and four others are under investigation for defrauding the medicare program. you can parse it any way you want. to me, it is a blatant violation of the trust that every member of this congress took an oath to uphold and to protect. i'll yield back. >> the gentleman's time has expired. mr. miller, thank you for attempting to answer that question. i want to remind my colleagues of the scope of this hearing, and i am going to get -- give an opportunity, once again, to remind everybody of mr. miller's valuable time and the scope of this hearing. i don't want to get in a tit for tat. the allegations that the gentleman brought up are very serious. individuals or companies are
innocent until proven guilty. but i want to also remind my colleagues -- and i don't want to waste mr. miller's time to get into a it or tat with the affordable care act or the health care act. we can spend all day debating. mr. miller and his staff have graciously given their time today to talk about the report and how we can work together in a bipartisan way to improve medicare. i hope my colleagues will spend the rest of the time respecting mr. miller's time on how we can work together in implementing some of those recommendations. with that, i will recognize the gentle lady from the great state of kansas for five minutes. >> thank you, mr. chairman. thank you, mr. miller, for being here. medicare is a program that was created with a promise to our seniors. we talk a lot about how we're going to keep that promise and reform the system to shore it up. one way to improve the long-term viability of the trust fund and
the care paid for by that program would seem to be to move to a value-based payment model for services that have not yet moved in that direction. direct. in your march 2017 report, med pac points out that skilled nursing facilities are able to control the amount of money medicare will pay them based on the current payment model. i just want to get your sense of the impacts of a move to a value-based payment model and the skilled nursing facility space. so just a couple of questions. the american health care association has a value-based payment idea that the march 2017 report discusses. it states that the model, while reducing payments to for-profit facilities will increase payments to non-profit facilities. could you talk briefly about med pac's belief that the idea will
strengthen the skilled nursing facility system as a whole? >> so, if i follow the question, and if not, just redirect. there's a few things that i think we're saying that you're responding to. the first dissimilar to the conversation with mr. roskam. inside the snif, the skilled nursing facility, we think it is too high and the way the system is currently structured and we can get into some of the technical, but for the moment, just trust me, the way the system is currently structured, it is not paying properly for different kinds of patients. so it incensed people to take sort of your basic physical rehab patient and it avoided the complex medical patient. the recommendations we've made would be based on patient need
and bring a greater balance, we think, and improve the value for the beneficiary, and a greater balance in how that payment works. you mentioned quickly the not for profit and for-profit. that isn't about making the payment system peculiar to for-profit and not for profit. that just happens because the way the payment shifts based on the payments that those two different types of providers take. the other two quick comments on value, and i'll get out of your way, is we do talk about the notion of tying patients to -- sorry, payments to different outcomes, avoiding returning to the hospital and avoiding going to the emergency room, and then we have other conversations about reorganizing the entire payment system having a unified payment system, but also ultimately moving toward more episode of care in which inside the clinicians would have the flexibility to engage in practices and delivery practices that they would hopefully bring
lower cost and higher quality. so we have a few threads in this particular area. >> okay. just a follow-up on that, the reformed payment system proposed by the american health care association is based on the creation of clinical groupings that would include an array of different patient types and cms has studied this type of payment basis and i'd like to know if you believe that a move to patient characteristics instead of length of stay is feasible for cms and providers and if it results in a better outcome and cost savings? >> yes. and our work is sort of, we think the starting point for the thought process where we constructed the different system based on characteristics and we have models and i think what you're referring to the industry's notion is taking that
and sort of aggregating it up into patient categories. as long as the underlying tying of patient payment, sorry, to payment need is not lost in the process of doing that, then it's consistent with the direction that we've been talking about going. >> okay. thank you -- if i follow what you're saying. >> you are recognized for five minutes. >> thank you, mr. chairman. >> med pac over the years has helped deconstruct the hopelessly complex system that congress routinely makes more complex in helping us dive into some of the details that otherwise we wouldn't have, and i appreciate the chairman's latitude so we can explore some of this because otherwise we wouldn't, and i'm hopeful that one of the things that once we
can move past some of the current controversies, we can do a better job of diving into what some of these elements are to understand them better, look for areas of being able to rebalance some of the complexities and coax more value and innocent more appropriate behaviors because regardless of what happens on obamacare or the republican bill, we still pay about twice as much as anybody else in the world and too many americans get mediocre to poor care. the people in canada and france and great britain and japan live longer than we do. they get well faster. they don't get sick as often and they pay far less, and you're helping us understand some of the elements that are a part of that and how we can use some of these large health care programs that we finance to get better performance. i want to turn to one specific
item that you had in your report talking about hospice. this is an area in part because of the death part over the years and dealing with end of life care and hospice treatment. in your report you reference that people can get this medicare hospice benefit if they are terminally ill with the life expectancy of six months or less. they can elect the medicare hospice benefit, but they agree to forego medicare coverage for conventional treatment of terminal illness and related conditions. i would like you -- whether i may not have hard data on this. i know there is a pilot project currently under way looking at
what the implications are for continuing curative care while allowing people to access the palative care in terms of hospice treatment. i think there is some evidence that this is a decision point for people approaching hospice that it's a difficult decision to be in that mindset, kind of letting go, foregoing a carat f carative. it has a note of finality to it. i wonder if there aren't some incentives, therefore, for some people who would dramatically benefit from hospice care? they and their families and maybe scale down some of the carative activity if there could
be an either/or. could you comment if there would be savings overall in terms of health care if people were given hospice care that might be more appropriate to them and not force them to jump off that cliff? >> i am aware of the issue. the issue has come up a couple of times in the commission's conversations. there is no inherent hostility to the notion. a couple of thoughts to follow up on. you're right, there is a demonstration or some kind of pilot out there, and we are looking to that to sort of see the answer to some of these questions. it is very hard to get your arms around it, because it is always difficult to sort out. we've also made recommendations that they've made benefit and we're in a full episode, beneficiary structure and the notion of those tradeoffs being made by the clinicians on the ground makes a lot more sense and it's a typical problem where it might make sense in a certain
context and you take it out of fee for service where a lot of different things and a lot of people get involved and it becomes harder that you're making the tradeoffs. again, it's not a hostility to it. it's a concern whether it plays out the way people would hope it plays out in fee for service. we're looking at that demonstration, too. >> thank you, mr. chairman. i wholeheartedly agree with the notion that it ought to be wrapped in, and it makes a lot of sense and watching this pilot project, if there is a way to feather it in some effect to get the best of both, and i appreciate having a chance to talk about this. >> thank you for your leadership in the hospice area. >> sure. >> mr. paulson, you are recognized for five minutes. >> thanks for being here today and testifying on a very important topic, obviously. on the future of the medicare program. i do think it's critical for members across the board to have a firm understanding on how the
program operates as we continue to strengthen medicare for the future. as had been discussed the medicare program plays a critical role within the medicare system. almost a third of the beneficiaries around the country are now enrolled in a medicare advantage plan and those numbers will only continue to grow and they're projected also to continue to grow. i know in minnesota our seniors aren't interestly guilty of enrolled in an m.a. plan which was the highest in the country and that's why i remain focused on the fact that this program will continue to deliver high quality bennetts if for seniors. it highlights the growing trend of seniors in the fee for service plans choosing to enroll in medicare part a only instead of enrolling in both medicare part a and part b and given that medicare advantage enrollees enroll in parts a and b, can you
briefly discuss the impact of more beneficiaries enrolling in part a and what's that's had on the m.a. program? >> you picked up on something that we -- we said in the report and talked about in the report. so you are getting more of of this phenomenon of beneficiaries getting enrolled in a only or b only. the b only is kind of a small phenomenon. it's really a only. and so what happens in that circumstance is if you're an a-only beneficiary, your expenditures tend to be below average, and then if you think about the way the payment system works which is sound versed and for a given county, you accumulate all of the fee for service beneficiaries and you set a benchmark and you know there's some administrative adjustments to the benchmark and plans bid against them. and so what we started to become concerned about is to the extent that you get more a only and somewhat, this is geographic in
its impact across the country, but we're concerned it will grow over time, you are basically saying i'm going to set a benchmark that includes a large body of people or a growing body of people that the plans can enroll and compresses the benchmark. and so we've said, you know, this is something that cms needs to look at because it may be -- we may need to be a different way to set the benchmark in using the a.b. beneficiaries in setting that benchmark. >> want to quickly add something here. so this would add cost, you know, because it would potentially raise the benchmark that the plans are betting against and we have pointed out at the same time that there is this coding phenomenon that also needs to be taken into account and those dollars need to be taken back out. >> let me just follow up on that. you mentioned the possibility of adding cost, but can you mention what would the benefits be to
the beneficiaries themselves if we moved to the system of calculating the medicare benchmark only using data fee for service and beneficiaries used in part a and b. >> i hadn't thought about the question quite that way. so i think it's a good question. i mean, what happens now is to the extent that you bid below the benchmark, a portion of that dollar has to be converted to a benefit that goes back to the beneficiary. mostly plans do it through lower cost sharing and arguably, and the plans are basically betting below the benchmarks now. and they'll be able to offer in theory all else equal, and there's behavioral response and they would be able to, you know, if they can continue to bid below that benchmark which in theory they should, they should be able to offer more benefits. >> all right. thank you, mr. chairman. i am also hopeful -- thanks, mr.
miller, that over the next few months we'll be able to continue to examine and explore and address the medicare extender policies that are in place such as the therapy cap, exceptions process, the ambulance, add-on pages and it's critical to ensure there's not a disruption that the critical services that are provided to seniors around the country as we strengthen the overall program in the future. thank you. i yield back. >> mr. klein, you are recognized for five minutes. >> thank you. mr. miller, thank you for your testimony here today and the good work that you and your staff do and the report that you submit to us every year. just to follow up my colleague from minnesota. your benchmark caps and what you're recommending and for my colleague's edification, i introduced legislation last year hr-4275 along with my colleagues, mark kelly and brett doyle and guthrie, and we are glad to see med pac focusing additional tension on the
benchmark cap issue and we'd be interested in following up with you as far as any type of cost impact that this is going to have a little bit more data that you're looking at that would benefit us from the legislation that we're moving forward. also along those lines, you're probably aware that chairman brady and i post a reform bill in order to have the conversation and we're appreciative of the effort that med pac and the work that you're doing in this field, we'll be looking forward to following up with you on policy recommendations because we feel there's coordination and more efficiency and better outcomes and a better price within the post-acute care world and that might be the next iteration of health care reform and where we can get better outcomes and a much better price cost savings ultimately and we'll tray to follow up with that. >> i too, share the concern that we heard from the deus from a number of my colleagues of the impact that $75 billion worth of cuts in the medicare program
under the republican health care bill proposal and the impact that's going to have on my rural health care providers and that will be on top of the 800 billion in cuts with medicare and the disproportionate impact, and the rural providers and i'll be following up with med pac and it's my understanding that you're not in a position with detail with the impact that will have and to lolly up with you in the future so we know what to prepare for with the adverse consequences of the huge cuts that are being proposed and the impact it will have in rural america and the rural providers. they're struggling already with the thin margins as it is and this could be adding on to their walls and then finally, getting back to mr. higgins' line of questioning, too, in "the new york times" article and it's in front of me now and i would ask to have that article submitted for the record stated may 15, 2017, authored by mary williams
wash titled "a whistle-blower tells of health insurers bilking medicare". >> without objection. >> thank you. >> obviously, we're talking billions of dollars being affected by the upcoating issue. the doj obviously has an interest in it. we'll need more guidance and information from med pac as far as how real it is and what policy steps we are thinking to guard against upcoding is costing the medicare program billions of dollars every year. med pac's focus in this area in a more detailed fashion and recommendations that you're willing to be helpful. i've been also a johnny one note on the eve of delivery system reform and payment reform getting to a more quality value and outcome-based reinforcement system with medicare and throughout the entire health care system and -- what's your
assessment of the progress being made. can we move the needle? >> i mean, what i would say is that there is progress in the sense that i think there is movement out in the environment and there is greater degrees, for example, i think what remains to be seen is how large of an impact the models are going to have and also on the quality front, they're slightly better so as not to be dismissed, but the kind of large spending impacts, that hasn't
really materialized yet. all of those are correct. going back a number of years, at least five years and probably further, not only the united states government, but the west in general has been trying to engage with russia on internet issue i'm sorry that i did not recognize you properly and it had nothing to do with my friend being from -- and i am concerned about my dual eligibles in my district about 35,000 people are dual eligible in the medicare program. these people are often low-income seniors that rely on both programs for their care which is often chronic and
expensive, and naturally about 10 million people are dually eligible, and i know we have numerous proposals here to rein in spending on medicare, but what would happen if there was a drastic cut to medicaid, for instance, in the cha there is a proposed $38 million cut in medicaid, but i would like to know what the impact on big cut in medicaid would be to medicare. >> in medicaid? >> yeah. i don't feel like i've done enough work to either understand the nature of the cuts and what its backlash would be on medicare. i don't feel very versed in being able to answer this question for you at the moment. >> okay. then i will talk about a different topic which is -- i was interested in the proposals
to rein in spending on prescription drugs, and i know that there was the proposal to realign medicare part b and part d drug coverage to better manage prescription drug costs, but this spring med pac vote offed 15-0 changes for how medicare pays for prescription drugs under part d and that's expected to appear in your june report. you had several options for reining in those costs. i noted with interest the ones to require prescription drug manufacturers to pay rebate to medicare if their drug price increase exceeds inflation which is similar to the medicaid inflation rebate and also the proposal to create new private entities that could negotiate drug prices on behalf of physicians. >> why do these proposals rise
to the top and how valuable would they be to rein in costs and how valuable are these proposals. >> the commission has been very concerned about drug costs and spending and medicare and price growth. we spent a lot of time looking at part d and it seemed natural to move to part b. part b, $26 billion growing at an 8% or 9% growth rate and we think a lot of that was price driven and that's why these things rose to the attention of the commission. you are correct in describing both of the things that you said, was there a rebate if prices grow faster than x, the manufacturer is asked to rebate the difference back to the program and we would tie the beneficiary's cost sharing to the lower growth rate so that the beneficiary also gets the benefit of the restraint on the -- and gets the benefit, as well and then the second point that you raised was we also said
maybe like part d, you have the physicians in part b because this is a physician-administered drug situation organized, create formularies and negotiate directly with the manufacturer to see if they can bring the price down even below what is paid now in the standard buy and build sector. so we've -- we have said both of those things. >> i guess what i was wondering is yet proposals came to the front and would it rein in the costs more efficiently? >> yeah. i'm sorry. i thought that was the first part of the response. this is a concern to growth rate. this is big spend, yes. this will result in saving. is that what you're asking? >> i guess it's a combination of viability and reining in the cost. >> viability? >> yeah. whether the proposal would actually have some chance of succeeding.
>> i would have to defer to you for that. these proposals take legislative changes. so whether they come to fruition is up to the congress. is that what you're asking or am i missing you? >> i'll change to a different question which is about the astonishing price of generics and their drug prices increasing by 57% and even more astonishing, the brand drugs increasing by 142%. can you discuss why this dynamic is occurring and how this is affecting out of pocket cost to beneficiaries. >> yeah. i believe both of those numbers come right out of our report. we track prices overall and separately. those are contributing to the point i made in the opening statement of driving more beneficiaries into the catastrophic cap and that drives the federal expenditures and obviously to the extent that the beneficiary has to take a name-brand drug and there isn't
a generic substantive then they're likely to be facing more out of pocket throughout the benefit period until they hit the catastrophic cap. >> thank you. >> i'm sorry i missed your other question there. >> the gentlelady from tennessee is recognized for five minutes. >> thank you, mr. chairman. thank you, mr. miller, for coming here and discussing the recommendations that are in the large report. as we take a deeper look into the recommendations and the possible extension of the specific medicaid programs that are set to expire this year. i think it's also important that we continue to pay attention to the future of medicare program as a whole. i know these are specific thing, but on both the report and your testimony discussed solutions that go beyond simply updating payment provisions and try to more broadly address the fundamental problems with the fee for service program. i also noted in your testimony that you wrote that congress
should and i quote this, enhance delivery system reforms that have potential to encourage high-quality care, better care transitions and more efficient provision of care. so with that, can you tell us what types of reforms? i know there are specifics in here, but other types of reforms that med pac would envision considering the statement of the three pieces here, higher quality care and better care transitions and more efficient provision of care? >> yeah. >> let me just -- okay. i think we would approach this from a couple of different perspectives. first of all, in the existing systems and even without major reform, we have tried to create payment incentives as i described a couple of times so there's not patient selection and not arbitraging and we're
trying to make link payments to quality measurements like avoiding readmissions and avoiding unnecessary hospitalizations and avoiding emergency room use, that type of thing so that the experience of the patient is they get their care and then something doesn't go wrong and then they have to go back to the hospital or go to the emergency room and build in financial incentives to the provider that says if this happens this is not going to play well in terms of your finances and that type of thing, but then we also have a set of thoughts where we have talked about delivery system reform where you're trying to take the risk and the delivery of the care to the entire patient, and so there -- i mean, we've made a number of recommendations inside the managed care space in order to address those types of issues because there you have a model and a payment system where you're directed to the entire patient and you're trying to measure quality and outcomes for that patient and we've made recommendations there that i
won't blow through, and then the other thing that we've tried to do is, you know, support the development of similar models in the fee for service environment, like an accountable care organization and how a set of fee for service providers could have a top line benchmark and manage against that with quality metrics and manage against that benchmark so that they can control expenditures and improve the quality of the beneficiary, but again, thinking about the beneficiary as to the entire experience and not a specific, this service or that service and we've made a set of recommendations and given advice to the secretary about how to improve the care organization. the very last thing i'll speak to very quickly is we've also, and this will be in our june report, been having some conversations about how to reorient nips on the physician side and on the apms on the physician side and broader than
the physicians, but on the physician side in order to get more of of this movement to kind of an organized look at the beneficiary as a whole experience rather than service by service. so sort of three, four areas in there. >> yeah. so you just spoke about models. are there any models that are being testeded that you would come back and say these models are being tested and this is working or not working. >> there are models being tested in the cmmi and both at the patient level and acos. there is a model around chemotherapy and oncology services and sort of building a bundle around that. there are models around different post-acute care types of experiences, kind of a smaller episode and not the whole patient episode. there's not a tremendous amount of final, clear evidence and this is sort of related to a question over here that says this is working and everything's
good to go, that still feels like it's not quite there yet. >> thank you. i yield back. >> thank you, and last, but not least, you are recognized for five minutes. >> thank you, mr. chairman. thank you, dr. miller for being here today and giving us your insight on the current state of medicare. my home state of alabama has the fourth highest rate of medicare beneficiaries in the country and the lowest hospital medicare reimbursement. our population is very dependent upon medicare and we often feel that the wage index works against us is not very fair. this is quite alarming to me, not only because it seems unfair, but also when you think about the fact that we are contemplating making medicare trust fund less solvent, it just means we need to be sure as
policymakers that we're not going in the wrong direction when it comes to medicare and medicaid. as i visit my hospital administrators and physicians across my district, i am interested in the proposed medicare cuts and medicaid's uncertain owe primary care shortage. i have an article that i'd like to submit for the record about the primary care physician shortage in the black belt rural counties of alabama that was in yo "the new york times". >> without objection. >> thank you. perry county, in my district, not only does it have one of the lowest number of doctors. i think it only has two, and only has two ambulances, but most recently it had a ter ribl outbreak of tb, tuberculosis and it was a hundred times higher than the national average and higher than rates in india and kenya. you can imagine, i was quite alarmed having that right in my backyard, right in my district
and there are only three physicians county wide and only one in marion which is where it was. the addition of a single care clinician causes the local economy to grow. unfortunately, it's predicted that america will be short as many as 30,000 primary care doctors by 2025, and your march 2017 report, the nature of the fee for service payment leads to, quote, undervaluing of primary care, end quote. mr. miller, my question is can you expound upon the report's findings when it comes to primary care and the salary disparity between primary care and specialty care and the impact that it has on our shortage? >> i think i can, and you know, this is an issue that the commission has pursued for several years and so it shows up in several reports, and a couple of things to keep in mind, and then i'll get you to what we've
said about it. you know, one of the phenomenon is if your procedural issue, you get new codes and they get priced at a certain level and then if they, over time should come down because people become more efficient, spend less time. they don't necessarily always come back down and also as a procedural issue generally have more opportunities to generate volume. so for many years, there's been this problem in the fee schedule and you tracked on it exactly and your earnings if medicare were to pay for everything, but even if you look at it as a payer you look at it with the procedure. >> and also has an effect on rural hospitals and more communities. >> that's correct. in rural areas there are more primary care physicians. we've made recommendations over time to increase the payments to
the primary care site of the fee schedule. the congress actually did take action on that, but then it sun set, and so that issue is out there. you're exactly right. i was going to say this, but you said it first. it does have an indirect effect on rural areas because they tend to have more primary care and the other thing we've been talking about lately, this isn't a hard and fast recommendation, or actually we did make this recommendation, at one point, i think, where you might begin to say for the primary care physician, if you make that add-on payment, instead of making it service by service, you make it per patient and that way the provider has flexibility and the it doesn't have to keep seeing patients to generate revenue, but can use the revenue to do things like spend the afternoon on the phone, hire a nurse practitioner to help with the coordination in the office and whatever the case may be. there's been thinking like that
along those lines. >> you know, since my home state of alabama has one of the lowest wage index, i've introduced a bipartisan bill with my colleague, and diane black, i want to thank you for that which would provide more equity in the area by creating a floor of.876. many argue that hospitals in low-cost areas should simply raise their wages. what reforms need to be made to the formula to provide more equity to the current reimbursement structure? >> the gentle lady's time has expired. can you reply in writing? >> can i say five words? >> we can help you. >> that was pretty impressive. >> mr. reed, you are recognized for the final five minutes as the vote has begun. >> thank you, mr. chairman. i am way over here, and it's good to see you way over there.
thank you, dr. miller, i want to follow up on hospice and the hospice recommendation in your bill. i also am very committed to hospice and palliative care across america and i worked with my colleague quite a bit on it. if you don't recommend an update on the med pac recommendation, my understanding is you also look at quality of care, can you give me any feedback as to what you're seeing in the quality of care in the hospice environment that you saw in the report? >> this has been very difficult to track because there hasn't been until recently, a lot of good measures of quality and recently cms has begun to collect measures and so i'm not exactly prepared to tell you how the quality profile looks these days because it's sort of just coming online. it might be actually measurable, but at this particular moment i
am not able to pull it up, but i will say this. one of the things that we've been thinking about beyond what has been being collect side looking at things like this. live dischargees and we think live discharges if you have a lot of those are an example of potential quality issues and other issues, quite frankly, and there are issues around the skill -- with the presence of a hospice provider in the patient's home in the late stages and whether there is enough of that going on when the patient enters their late stages. those are a couple of areas that we've been looking at and as i'm trying to say not very articulately, there is a new set of measures that are put in place and are starting to come in now, i think, although i may need to double-check exactly
where all that stands. >> i would appreciate if you get that information and if you could share it with our office. i'm very interested in looking at those impacts because i'm a firm believer not only does this hospice and palliative care make good fiscal sense for the purposes it serves, but also the quality of care to patients. being a hospice volunteer myself here in d.c., i can attest anecdotally to the benefit i've seen in patients of hospice and palliative care. so on another topic and another issue, i come from a rural section of new york where the finger lakes is my hometown, and one of the things i work down here extensively since 2010 is on the medicare dependent low-volume reimbursement policy. peter welch and i on the other side, and peter welch off this committee, but teamed up on this issue. can you give me any indications to why that reimbursement policy makes sense especially in a
rural environment and will what do you see on the horizon, the pros and cons of extending that permanently? >> and the it in this sentence is the low volume and the medicare dependent. >> medicare dependent and two different reimbursement policies. >> two quick comments and i realize we are time limited here. we are the people who actually recommended a low-volume adjustment. we support that in concept. unfortunately, the way it was implemented was not the way to implement it so here's the way to think about it. say you have a 1,000-person admit hospital and i have a 1,000-person admit hospital. that's low volume and we're probably struggling covering the fixed cost, but the way it was implemented it said medicare admissions and so that means if most of your admissions are medicare, but only some of mine are medicare i get help, you don't, and yet we both might be in the same boat.
so we are thinking reset the metric so it ties to total admissions and we have some ideas of where the cutoff should occur and the other thing i would say on the medicare dependent and the low volume is they're often aimed at the same objective, holding -- and helping a hospital that's struggling with fixed cost. we are concerned about some duplication, some hospitals are pulling both and maybe that's not an exact great use of the federal dollar and then on the medicare-dependent hospital issue, there's this notion. it may make sense as an adjuster and all of those rural adjusters be conscious of the fact that you're not giving them to hospitals that are ten miles away from each other and you may be propping up two operations that just aren't going to economically ever be efficient and maybe it needs to be some consolidation and then a subsidy there. >> okay. >> so that's the two thoughts. >> well done. >> with that, i yield back. >> thank you, mr. reed, for your leadership on this issue, as
well. >> dr. miller, thank you for your time. your incredible patience and your expertise in sharing that with us today. these are important issues in, ensuring the future of medicare is something that should be in a bipartisan way all working together on, not just in this congress, but in future congresses. >> we look forward to having you back in the future. >> thank you. members will have two weeks to submit questions to be answered later in writing and those answers will be made a part of the formal hearing record. with that, this hearing is adjourned.
and it's really, really exciting. >> meredith baker and what the 5g network will look like to consumers. she talks about the building out of broadband and rural areas and the recent spectrum options and as they have the politico reporter margaret harding mcgill. >> what are the ramifications in 5g, how do carriers mach a return on that? >> it will mean $500 billion to our economy. 3 million jobs. so one out of every hundred person will have a 5g job, but again, it's only if we get it right and that really does mean we have to move on spectrum and we have to get a pipeline of low, medium and high band and we've got to get this infrom struck are rig infrastructure right because as we move forward we have to build 300 small cell sites in the next few years and what a small cell looks like is maybe a pizza box. it's small and it will be
attached to everything because these will be much moefr dense networks. they'll be on traffic lights and treat lights, the sides of buildings and so what we really need and this is really important, we need an infrastructure that rethinks how we site. >> watch the communicators tonight at 8:00 p.m. eastern on c-span2. the commander of naval sea systems command recently talked about maritime security and the challenges of maintenance. this is 1:20. >> good morning, everyone. i am tom carico. i am a senior fellow in the international security program at csis, and i am delighted to kick off this morning's maritime security dialogue with vice admiral moore. the maritime security dialogue represents a co-host and series between csis and the u.s. naval institute or usni, and it