tv House Panel Examines Medicare Payment Systems Changes CSPAN May 22, 2017 1:03pm-2:00pm EDT
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. fun fun- [captions copyright national able satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. isit ncicap.org] chairman tiberi: the hearing will come back to order. we have been joined by a few of my colleagues who weren't here when i did the introduction. i want to just recognize the members who are here now. peter roskam from illinois.
erik paulsen from minnesota. id i say that right? and tom reid from new york. ith that i will yield five minutes to the gentleman from the state up north from ohio, mr. levin. mr. levin: you're still bitter about some of the back and forth between our two states. i don't think ron kind was here hen we introduced. and judy chu. and earl was here part of the time. dr. miller, welcome. read your property your testimony and also your 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 that we s and the heck received and how much ontroversy it 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 thist shows how successful has been, this program, that is in some respects a public, not
only public but public and private partnership. and with a lot of back and forth rom the private sector as rehe flected in your report. i just -- reflected in your report. i just want to comment for each of us on this committee, 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 urging pleadings, but i really think your report shows why medicare is such a necessary and popular frame for the -- program for the people of this contry. and not only for those who are covered by t. by by their families who -- by it, but by their families who benefit
because those who are older than others in the family have the security of health care. so without saying i agreed with everything you said, i wanted to congratulate you on your work. and i hope, mr. chairman, that we'll be able to have some further discussions in depth about each of these important components, because i think there's 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 . 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 dwun to -- begun to
look at this issue on my time and others will carry on, thank you. mr. miller: i could just say one thing. i'd 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. chairman tiberi: thank you, mr. levin. with respect to the issue you just brought up i think it's a good suggestion in terms of looking at these things together. i hope we can do that in a bipartisan way. mr. levin: i would like to. start talking about prescription drugs, you have 48 seconds. and others will carry on. mr. miller: ok. we have done two areas of work in prescription drugs. most relevant are current conversation is in part d what we have seen is generally look at part d beneficiaries are more
-- more beneficiaries are being covered. people have high degrees of satisfaction. and the premiums have been relatively level in part d. but if you look a little closer at the program, there's 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's a couple things -- mr. levin: mr. chairman, i want to gavel me down. others will carry on. i keep within the time limit, thank you. chairman tiberi: did you want me to gavel you down? mr. levin: i think everybody wants their five minutes. chairman tiberi: speaking of five minutes. the gentleman from illinois is recognized for five minutes. mr. roskam: thank you. dr. miller, thank you. i'll pick up a little bit on the holistic theme of mr. levin.
there is a general recognition that medicare is a program that everyone celebrates. to his point let me bring up a particular concern that's been brought to my attention based on feedback from an in-patient rehabilitation facility in my district. one of the leading ones in the midwest. the concern is that the march reports recommends an aggregate reduction in payments by 5% for that group. i'm talking specifically about those that are in the nonprofit sector. their margin is only 3.6%. this isis a parochially a crown jewel prohibition facility in my constituency. their margins right now under medicare are minus 20%. so 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 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? mr. miller: i think you have asked and made a completely fair comment. we have talked to a ton of in-patient rehab facilities and people in the industry. we do understand the phenomenon and our data makes your point very clearly. in the post acute care sector in general and in the in-patient rehab facility sector in particular, what you see are very high aggregate margins. then you see differences in financial performance. as you said, it often is between for-profit and not-for-profit. it's offer 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 have seen coding practices that raise questions. patient selection types of practice that is have raised questions. what we have tried do is in all of these instances is say, ok, total payments can be lower, but they have to be redistributed across the different kinds of providers. and we generally try and do that by tying the patient -- payment to particular types of patients. so if you're taking medically -- more medically complex, we would tend to shift the payments in that direction which would have the effect of creating better -- more support for the kind of facility that you're talking about. in the patient -- here's the last thing i'll say. you can get back in. in the in-patient rehab sector, the other thing we said in addition to bringing it down is to increase the size of the outliar pool so more payments would come out of the general
payments and go to those kinds of facilities that have the financial circumstance that you're talking about. where there was a recognition and an attempt to get at that. we also think there is coding practices that the secretary or the i.g. or people like that should be looking very hard at on the very profitable side of the industry. mr. roskam: that's helpful for mee. maybe we can engage further. this is the white knight sort of place you want to be successful. they are doing from my point of view all the right things. this is exactly the type -- mr. miller: more than happy to talk to you about that. chairman tiberi: mr. thompson, are you recognized for five minutes. mr. thompson: thank you, mr. chairman. thank you for having this opportunity to talk to mr. miller. miller, thank you for being here. i appreciate the work 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 $1 trillion tax cut that included ad 75 billion reduction in revenues in the medicare trust fund. it's my understanding this is 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 would codify any of the recommendations by medpac to save enough money on the -- in the medicare program o cover that $75 billion loss? mr. miller: i'm not aware of legislation that would offset that loss, if that's what you're asking me. i'm not aware of legislation that includes medpac recommendations that would -- mr. thompson: so $75 billion
taken out of the medicare program will affect the access to care for the millions of americans who rely on them? mr. miller: i can't comment on the effect of that particular provision, but your other question i'm not aware of an offsefment mr. thompson: does medpac have recommendations to find $75 billion worth of efficiencies -- chairman tiberi: just remind. his is about med caps -- medpac's recent report as well as the extenders. mr. thompson: that's what i'm asking, mr. chairman. chairman tiberi: about the report? mr. thompson: i'm asking if there are recommendations -- chairman tiberi: in the march report? mr. thompson: any report. recommendations by medpac that would cover the $75 billion loss that was brought about because of the legislation that was passed -- the republicans in
this committee in march? mr. miller: without comment on the pending legislation, there are an array of recommendations in the medpac report that result in savings. so, nor example, -- for example, the post acute care things we talked through, we don't do estimates. that's c.b.o. and all the rest of t we think we're talking in the neighborhood of $30 billion. i mentioned the m.a. coding issues. there's potentially a savings there for example. we also think the changes in the part d recommendations could yield savings. and then also there is a couple of other places we haven't even talked about where we restrain the updates that would produce savings. mr. thompson: those savings, $30 billion worth of savings, how would they come to fruition? would it require legislation? mr. miller: almost everything i
have referred to would require legislation. i have to think about that for a second, but, yeah, generally legislation. yes. mr. thompson: of the $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 -- to get there we have to pass separate legislation? mr. miller: to get to $30 billion you have to pass separate legislation. and there is more -- i don't know that i could ballpark the number for you. there is more savings in that report than the $30 billion. mr. thompson: that additional savings, would that require legislative action? mr. miller: i think as a blanket response to your question, in general, it would require legislation. mr. thompson: do you happen to know if any of that legislation has been introduced?
mr. miller: i don't happen to know that. mr. thompson: we have $75 billion hole in medicare with no legislative attempt to address that loss? mr. miller: i'm nooth wear of introduced legislation. i wouldn't necessarily be the person who would be aware of introduced legislation. mr. thompson: 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? mr. thompson: again, on that particular provision, i don't feel real versed in talking about what the implications of it would be. mr. thompson: thank you very much. chairman tiberi: the gentleman's time has expired. mr. smith, you are recognized for five minutes. mr. smith: thank you, mr. chairman. thank you, dr. miller, for your presence here today and certainly your responsibilities are large and got a big job to do. we appreciate your effort. it's no secret that rural
america has some challenges. especially with the agriculture economy and many of the challenges have access to care. could critical access hospitals are very important to serving the rural population of america. 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 -- ms. jenkins, has as well is the enforcement of the physician supervision requirements for critical access hospitals. s you know these rules require a physicians' press and supervision over owl routine procedures in hospitals. and this has been especially burdensome for hospitals and doctors in the very rural areas. it seems unnecessary, but 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're about six months in already, i was
wondering if you might have an update on what has been found so far, if anything? mr. miller: i don't at this point. i don't mean to be unhelpful but i don't have anything to say about it at the moment. mr. smith: 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 here, i know that in the pant the -- past the commission has thought about allowing the add-on ambulance payments have expired. despite this recommendation, i hear from suppliers in my district they need these payments s there any cost report data available at c.m.s. that indicates these payments are needed in ruralaire? mipe understanding there is not cost report data available. and i think there has been discussions in the environment. we had some discussion in our
articular -- 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 -- 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 are talking about volunteer fire departments and that type of thing. where full-scale cost report is probably something of an issue. there's probably a way to scare that circle relatively slim cost report that -- ambulance providers and excluding certain small ones from the reporting requirements. which might be a pathway. it's nothing the commission recommended but there is a discussion to that effect in our report. mr. smith: i appreciate that. i know that one size fits all approach is not always helpful t
rarely is. as rural providers do face these challenges, i hope you'll certainly keep in mind the flexibility that needs to occur. i appreciate your efforts. mr. miller: unless we're done. i do want to say in our recommendation this it principle i tried to say in the introduction, if you're going to provide support for rural provide e. which the commission fully supports, it's about targeting not duplicating, not supporting to providers who are -- two providers right next door to each other and maybe in effect 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 rurels and redistributed it and target it to counties that had very low population density. we end up covering about 70 --
75% of the same areas, but you can provide a much larger subsidy. basically you are moving the subsidy away from places near metropolitan areas and giving it more truly to the isolated areas. and in our opinion, people disagree, making that dollar go further. mr. smith: thank you. i yield back. chairman tiberi: thank you. mr. higgins, are you recognized for five minutes. mr. higgins: 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 the americanauding people and the medicare program under 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 ustice joined that lawsuit and is rigorously investigating those allegations. if these allegations are true, they would represent, among the a egregious defrauding of 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. mr. miller: let me try and answer what i think might be three questions in there. yes, we're aware of the lawsuit. in fact, we have gone through it in some detail ourselves just 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 email traffic back and forth among the company, people in the company, is certainly an issue. number two on the auditing and i'll get you to something. on number two on the auditing, obviously we're a small operation. we advise the congress. we don't do any of that oversight. that falls to c.m.s. but what we have been doing is we have made estimates of looking at over time the coding and 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. and we have also recommended that it be taken out differentially based on how much activity is occurring within the plans. the only other thing i want to say, i want to say this carefully because you may have different view. not all of it is fraudulent. plans are collecting these codes in order to understand what their mix of patients r mr. higgins: let me reclaim my ty. 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 for others as well. so that says to me that this is a systemic problem within the system that needs to be fixed because they are defrauding the
american people and the medicare program. number one. of united c.e.o. was h care in 2014 compensated $66 million. one person. onalry. one year. -- one salary. one year. the republican health care bill onsed by this house included age 67 a $15.5 million tax cut to united health care's c.e.o. 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 ith 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 paragraphs it any -- parse it any way you want. to me it's a blatant violation of the trust that every member of this congress took an oath to phold and to froket. chairman tiberi: the gentleman's time has expired. thank you for answering that question. i want to remind my colleagues of the scope of this hearing. an going to get -- give opportunity, once again, to remind everybody of mr. miller's valuable time and the scope of this hearing. i don't want to get into 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, i don't want to waste mr. miller's time to get in a tit for tat about the american health care act or the affordable care act. because we could spend all day debating with each other about the affordable care act or the american health care act. mr. mill earn his staff have graciously given their time today to talk about their 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 recognize the gentlelady from the great state of kansas for five minutes. ms. jenkins: 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. in your march, 2017 report, medpac points out that skilled nursing facilities are able to control the amount of money medicare will pay them based on their 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 nurgs facility space. just a couple questions. -- nursing facility space. just a couple 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 nonprofit facilities. could you talk briefly about medpac's belief that the idea will strengthen the skilled
nursing facility system as a whole? mr. miller: if i follow the question, if not just redirect. there is a few things that i think we're saying that you're responding to here. the first is not dissimilar to the conversation with mr. roskam. nursing skilled facility payment system, we think overall spending is too high, but we also think that the way the system is currently structured, 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. peoplesnocent -- incets to take your basic rehab patient and avoiding the more economy patients. the religious he we made would be on patient need and bring great balance and improve the
value for the beneficiary, a greater balance in how that payment works. you mentioned quickly the not-for-profit and for-profit. that isn't it-b making the payment system peculiar to for-profit and not-for-profit that just happens because the way the payments shift based on the patients that those two different types of providers pay. the other two quick comments on value, and i'll get out of your way, we do talk about the notion of tying patients -- payments to different outcomes. avoiding returning to the hospital. avoiding going to the emergency room. and then we have other conversations about re-organizing the entire payment system, having a unified payment system, but also ultimately moving towards 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 costs and higher quality.
we have a few threads in this particular area. ms. jenkins: just to follow up on that. reform payment system proposed by the american health care association is based on the clinical groupings that would include an array of different patient types and c.m.s. has studied this tiche payment basis and i'd -- has studied this type of payment basis, and i'd like to move to characteristicics instead of length of stay and if it results in bipartisan outcome and cost savings? mr. miller: yes. our work is sort of -- we think the starting point for this thought process where we construct it a different way to do the payment system based on patient characteristics. we have models that do that. 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 to patient need is not lost in the process of doing that, then it's consistent with the direction that we have been talking about going. ms. jenkins: thank you. mr. miller: if i follow what you're saying. chairman tiberi: mr. blumenauer, you are recognized for five minutes. mr. blumenauer: thank you, mr. chairman. we appreciate your being here, medpac over the years has helped deconstruct the hopelessly complex system that congress routinely makes more complex and helping us dive into some of the details that otherwise we wouldn't have. i appreciate the chairman's latitude so we can explore some of this because otherwise we wouldn't. i'm hopeful one of the things, once we can move past. so current controversies, we can
do a better job of diving into what some these elements are to understand them better, look for areas of being able to rebalance some of the complexities. coax more value and incent more appropriate demavenors -- behaviors, because regardless 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. they pay far less. 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 items that -- item that you had
in your report talking about hospice. this is an area in part because of our debt pam work over the years. spent a lot of time dealing with end-of-life care, hospice treatment. in your report you reference that people can get this medicare hospice benefit if they are terminally ill with a life expectancy of six months or less . they can elect the medicare hospice benefit, but they agree to forgo 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 urge under way looking at what the implications are for
ntinuing curative care while allowing people to access the palliative care in temples hospice treatment. i think there is some evidence that this is a decision point for people approaching hospice at it's a difficult decision to be in that mindset, kind of letting go, forgoing a curative. has kind of 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 curative activity, if they didn't have to be an either-or. could you comment on whether or not there might be some 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? mr. miller: i am aware of the issue. the issue has come up a couple times in the commission conversations. there is no inherent hostility to the notion it. a couple thoughts to follow up on. you're right, there is a demonstration or pilot out there and we're looking to that to sort of see the answer to some these questions. it's very hard to get your arms around it because the counter factual is always difficult to sort out. we also made recommendations that hospice should be included in the m.a. benefit which it currently isn't. we're in a full episode structure, the notion of those tradeoffs being made by the clinicians on the ground makes a lot more sense. this is this typical problem where it might make sense in certain context, but you take it out into fee-for-service where a lot of different things and a
lot of people can get involved t. becomes harder to be sure that you're really making the tradeoffs. again, it's not a hostility to it, it's a concern whether it really plays out the way people hope it will play out. we're looking at that demonstration, too. mr. blumenauer: thank you, mr. chairman. i wholeheartedly concur with the notion it ought to be wrapped in to medicare advantage. makes a lot of sense. watching this pilot project if there is a way to feather it in some fact, to get the best of both. i appreciate having a chance to talk about this. chairman tiberi: thank you for your leadership in the hospice area. mr. paulsen, you are recognized for five minutes. mr. paulsen: thanks for being here today. and testifying on a very important topic on the fuhr of the medicare program. i do think it's critical for members across the board to have a very firm understanding how the program operates as we look for ways to continue to strengthen medicare for the future.
and as has been discussed, the medicare advantage program plays a critical role within the medicarecies tefment almost a third of all beneficiaries around the country are now enrolled in a medicare advantage plan. those numbers are only going to continue to grow. they are projected to also continue to grow. i know in minnesota our seniors are particularly interested in enrolling in a program. last year i think 55% of minnesota's seniors were enrolled in an m.a. plan, the highest in the contry. that's why i remain focused on ensuring this program will continue to deliver high quality benefits for seniors. so the report you released in march 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 will medicare advantage enrollees must enroll in both parts a and b, can you briefly discuss the impact of more beneficiaries enrolling in
part a, what that's had on the m.a. program? mr. miller: you have picked up on something that we said in the report. talked about in the report. are you getting more of this phenomenon of beneficiaries being enrolled in a only or b only. but really the b only is kind of a small phenomenon. it's really a only. so what happens in that circumstance is if you're an a only beneficiary, your expenditures tend to be below average. then if you think about the way the payment system works, which you sound versed in, for a given county you accumulate alt fee-for-service beneficiaries and set a benchmark and you know there is some administrative adjustments to that benchmark. plans bid against it. what we started to become concerned about is to the extent you get more a only, somewhat this is geographic in its impact across the contry, but we're concerned it's going to --
country, but we're concerned it's going to grow over time. you are basically saying i'm going to set a benchmark that includes a growing body of people the plans can enroll and it compresses the benchmark. so we have said this is something that c.m.s. needs to look at because it may be a different -- we may need to be a different way to set the benchmark using the a, b, beneficiaries in setting that benchmark. i want to quickly add something here. this would add costs. because it would potentially raise the benchmark that the plans are bidding 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 aken back out. paulsen: you mentioned the possibility of adding costs. can you you mentioned what would the benefits be to the beneficiaries themselves if we move to that system of
calculating the medicare benchmark only using data fee-for-service beneficiaries enrolled in part a and b? mr. miller: i hadn't thought about the question quite that way. i think it's good question. what happens now is to the extent that you bid below the benchmark, a portion of that dollar has to be converted to bean fit that goes back to the beneficiary. mostly plans do it through lower cost sharing. arguably -- plans are basically bidding below the benchmarks now and offering those additional benefits. if the benchmark went up in theory, they would be able to offer, in they'rery, all else equal, there is a lot of behavioral response out there, they would be able to -- if they can continue to bid below that benchmark, which in theory they should, they should be able to offer more benefits. mr. paulsen: thank you, mr. chairman. i'm also hopeful that over the next few months we'll be able to
also continue to exam -- examine and explore the medicare extender policies in place such as the therapy cap, exceptions pros serks ambulance add-on payments. think it is critical we ensure it is not a disruption. those critical services provided to seniors around the country and rely on as we strengthen the overall program in the future. i yield back. chairman tiberi: thank you. mr. kind, you are recognized for five minutes. mr. kind: thank you, mr. chairman. dr. miller, thank you for your testimony here today. and good work you and your staff do anti-report you submit to us every year. just to follow up with my friend and colleague from minnesota. i appreciate his interest in it and appreciate the medpac's report as far as the benchmark caps and what you are recommending. from my colleagues' edification, introduceds legislation last year, h.r. 4275, along with our colleagues, mike kelly, mike doyle, and brett guthrie that gets at this very issue as well. we're glad to medpac focusing additional attention on the benchmark cap issue. we would be interested in
following up with you as far as any cost impact this will have. a little bit more data you are look at that would benefit us in the legislation moving forward. also you are probably aware chairman brady and i have introduced a post acute care reform bill to begin the conversation and start getting feedback. we're appreciative of the effort that medpac of the work you are doing in this field. we'll look forward to following up with you on policy recommendations because we feel there is more coordination and integration that could be had. more efficientcy. better outcomes, better price within the post acute care world. that might be the next iteration of health care reform. where we can get better outcomes at a better price, cost savings. we'll try to follow up with that. i, too, share the concern we have heard here from unanimous of my colleagues of the impact that $75 billion worth of cuts in the medicare program under the republican health care bill proposal, the impact that's
going to have on my rural health care proviresd. that's going to be on op of over $800 million in medicaid. badger care as we know in wisconsin. and the disproportionate impact it will have on our rural proviresd. and i look forward to medpac -- are you not in a position today to comment i understand as far as the impact that will v but follow up in the future so we know what to prepare for with the adverse consequences of those huge cuts that are being propose -- proposed in the legislation and the impact it will have. the rural proviresd are strullinging already with the thin margins and this can just e adding on to their woes. finally, getting back to mr. higgins' line of questioning in the "new york times" article that he cited in front of me today. mr. chairman, i ask unanimous consent to have that submitted for the record. dated may 15, 2017, authored by mary williams wash, titled a
whistleblower tells of health insurers' bilking medicare. chairman tiberi: without objection. mr. kind: we're talking billions of dollars potentially being affected by the upcoding issue. d.o.j. has an interest in it. we're going to need i think more guidance an information from medpac as far as how real this problem is. what policy steps we taught to think about taking to guard against the upcoding that potentially could be occurring. and costing the medicare program billions of dollars every year. i think medpac's focus in this area in a more detailed fashion and recommendations that you are willing to bring forth would be helpful. finally, i have been almost the johnny one note on the need of delivery system reform and payment reform getting to a more quality value outcome based reimbursement system within medicare but throughout the entire health care system. with your analysis with the medicare program, what's your assessment of the progress being
made as far as the integration and the delivery system reform proposals that are part of the affordable care act or obamacare now, sfellsswels the alternative payment mod -- as well as the alternative payment models and the value payments. are we making progress? moving the needle? mr. miller: 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 of organization in terms of things like accountable care organizations. for example. that tiche thing. i think what remains to be seen is how large of an impact those models -- that type of thing. i think what remains to be seen is how larling of an impact those models have. quality seems to be good or slightly better in those models. not to be dismissed. the large spending impacts, that hasn't really materialized yet.
so -- there does seem to be a loft motion out in the -- lot of motion out in the environment. so i think there are still things to be seen there. the other thing i'll say quickly about that is that this is a period where utilization slowed down historically. then these models come in to try to control utilization. maybe have a hard time of it at the moment. mr. kind: thank you. chairman tiberi: thank you. ms. chu, i'm sorry i did not recognize you properly. it had nothing to do with my friend being from wisconsin and big ten contry. you are recognized for five minutes. ms. chu: thank you so much, mr. chair. mr. miller, i am a always concerned about my dual elinge inls in my district. about -- eligibles in my district. about one in five in both the medicaid and medicare program. these people are often low-income seniors that rely on both programs for their care which is often chronic and expensive. nationally about 10 million
people are duly eligible. i know that you have numerous proposal here to rein in spending on medicare. what would happen if there was drastic cut to medicaid? for instance, in the acha there is proposed $838 billion cut in medicaid. but i would like to know what the impact on a big cut in medicaid would be to medicare. mr. miller: in medicaid you're saying? i don't feel like i have 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 four at the moment. ms. chu: ok. 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 d and part b drug coverage to bert manage prescription drug costs. but -- better manage prescription drug costs. but this thing medpac voted 15-0 to recommend changes how medicare pays for prescription drugs under part b and that's expected to appear in your june report. you had several options for reining in those costs. and i noted with interest the ones to require prescription drug manufacturers to pay rebate to medicare if their drug price increase exceed 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 did these proposals rise to the top? and how valuable would they be to rein in costs and how viable
are these proposals? mr. miller: the commission has been very concerned about drug costs and spending in 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 something like an 8% or 9% growth rate. we think a lot of that was price driven. that's why these things rose to the attention of the commission. you are correct in describing both of the things that you said. there is a rebate that says if prices grow faster than x, then the manufacturer is asked to rebate the difference back to the program. then we would also tie the beneficiaries' cost sharing to the lower growth rate so the beneficiary also gets the benefit of the restraint on the -- gets the benefit as well. and then your second point that you raised, we also said maybe
like part d you have the physicians in part b, this is a physician administered drug situation, organize, create form layerries, and negotiate directly with the -- formularies, and negotiate directly with the manufacturers to see if they can bring the price down even below what is paid now in the standard buy and build sectors. we have -- bill sectors. we have said both those thifpblgts ms. chu: why those proposals came to the front, was it because of viability or rein in the costs more fee -- efficiently? mr. miller: this is a concern to growth rate. this is a big spent. yes, this would result in sanchingse. is that what you're asking? ms. chu: i guess it's a ginavings viability and reining in the costs. mr. miller: viability? ms. chu: yes. whether the proposal would have chance of succeeding. mr. miller: i have to defer to you on that. these proposals take legislative changes.
whether they come to fruition is a function of the congress. is that what you're asking? am i missing you? miss clune i'll change a different question about the astonishing -- ms. chu: i'll change the question about the astonishing price of generics and their price increasing by 57%. but the brown drugs increasing by 142%. can you discuss why this dynamic is occurring? and how this is affecting out-of-pocket costs to beneficiaries? mr. miller: i believe both of those numbers come right out of our report. we tracked prices overall and separately. those are contributing to the point i made in the opening statement of driving more beneficiaries into the catastrophic cap. 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 substitute, they are likely to be facing more
out-of-pocket throughout the benefit period until they hit the catastrophic cap. sorry i missed your other question there. chairman tiberi: the gentlelady from tennessee is recognized for five minutes. mrs. black: thank you, mr. chairman. thank you, dr. miller, for coming here and discussing the religiouses in the march report. as we take a deeper look into the recommendations and also the possible extension of several 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 very many specific things. both the report and your testimony discusses solution that is 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 -- i quote this --
enhance delivery system reforms that have potential to encourage high quality care, better care transitions, and more efficient provision of care. with that can you tell us what types of reforms -- know there are specifics in here, other types of reforms that medpac would envision considering the statement of the three pieces here, higher quality care, better care transitions, and more efficient provision of care? let me just -- ok. i think we would approach this from a couple of different perspectives. first of all in the existing systems, even without major reform, we have tried to create payment incentives, as i described a couple times so there is not patient selection, there is not arbitraging, and we're trying to make link payments to quality measurements like avoiding readmission,
avoiding unnecessary hospitalizations, avoiding emergency room use. that type of thing. so the experience of the patient is they get their care and then something doesn't go wrong and they go -- they have to go back to the hospital or go to the emergency room and build in financial incentives to the provider that says, you know, if this happens, this is not going to play well in terms of your finances. that tiche thing. but then we also have a set of -- that type of thing. but then we also have a southwest thoughts where we talk about delivery where you are trying to taketrisk and deliffry of the care to the entire patient. -- take the risk and delivery of the care to the entire patient. there you have a model and a payment system where you are directed to the entire patient and you are trying to measure quality and outcomes for that patient. so we have made recommendations there which given time -- won't blow through. the other thing that we have tried to do is 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 can have a top line benchmark and manage against that with quality metrics and manage against that benchmark so that they can control expenditures, improve the quality of the beneficiary, but again thinking about that beneficiary as their entire experience not a specific set -- this service or that service. we have made a set of recommendations and given advice to the secretary on how to improve the accountable care organization. the very last thing i'll speak to quickly is we have also, this will be in our june report, been having some conversations about how to reorient m.i.p.s. on the physician side and the a.p.m.'s on the physician side or broader than the physicians, but on the physician side in order to get more of this movement to kind of
an organized look at the beneficiary as a whole experience rather than service by service. sort of three, four areas in there. mrs. black: you just spoke about models. are there any models being tested you would come back and say these models are being tested and this is working or not working? mr. miller: there are a number of models being tested both at the patient level, a.c.o.'s. there is a model around chemotherapy and oncology services, building a bundle around that. there is models around different post acute care types of experiences. kind of a smaller episode, not the whole patient episode. there is not a tremendous amount of kind of final, clear evidence that says, this is sort of related to a question over here that says, here's -- this is working. everything's good to go. that is still