domestic policy subcommittee of the oversight and government reform committee will now come to order today is the second of this subcommittees today hearings examining how their bureaucracy of the private health insurance industry influences the relationship between physicians and their patients yesterday the subcommittee heard the testimony from individuals doctors whistleblowers and policy analysts all of whom related their it says with and opinions about the private health insurance bureaucracy and its impact on health care in america today the subcommittee will hear testimony from top executives of the six largest health insurance companies in the united states and i want to welcome the witnesses and thank them for their presence there and we look forward to hearing from you now without objection the chair in the ranking minority member will have five minutes to make opening statements followed by opening statements not to exceed three minutes by any other member who seeks recognition without objection members and witnesses may have five legislative days to submit a written statement or extraneous materials for the record i want to add that the house has adjourned for the weekend and while generally that means that there would be very few members here i there are a number of members of expressed an interest and you may see them come in throughout the course of the hearing  good afternoon and thank you very much for your presence before the subcommittee yesterday we received testimony from the daughter of a man whose bone marrow transplant was delayed an agonizing one hundred twenty six days while while authorization from his ensure was denied and sustained on appeal she asks would there have been a different end to my dad's story if he had been given approval of the first transplant request in april two thousand and x would be alive today we don't know what we do know is that his chance for survival most assuredly did not increase because and she's talking about the i'm sure built the bureaucratic roadblocks to change the course of my father's treatment and made him wait for his potentially life saving bone marrow transplant we also heard from the father of a two year old who was born with a severe cognitive disorder he's had to struggle to get the coverage to pay to get the coverage his premiums paid for recounting the toll on his family that the repeated delays and denials of care for his daughter caused by his health insurance here's what he told us he said the stress of constantly having to hold the h m o and their agents to their agreed upon obligations has relegated me to the role of my daughter's care manager and all too often rob me of sydney's loving daddy the experiences of these individuals are the tip of an iceberg court and state regulatory records are replete with recent findings of wrongful denial and delay of health care by private health insurance bureaucrats hundreds of thousands of people have been wrongly denied health care coverage hassled with unnecessary documentation request underpaid claims ripped off by fixed databases that underpaid claims the actions of insurance company bureaucrats and causing needless to laze and denials of coverage for prescribe treatment can be as or mental as the disease itself now this was the conclusion of the ohio supreme court when it upheld the largest jury award in ohio history against anthem for denying lifesaving treatment to esther dar like a cancer anthem relentlessly followed its own course uncaring oblivious to what it destroyed seeking only to have its own way from a court decision now regulatory actions and jury awards do not however tell the whole story since these measures consist only of instances in which insurers were caught and punished for a violation there's no record of the silent suffering that  constituents endure without filing a complaint or a lawsuit recently however the research arm of the california nurses association published results of its analysis of claims payment data maintained by the california department of managed health care they found that claim denials by health insurers operating in california averaged twenty one percent in the period two thousand and two to june two thousand and nine unfortunately we learned yesterday from another witness that there is no comprehensive national data source on all health care coverage that has been denied substituted or delayed in this absence of transparency health insurance companies promote the public image that they encourage healthy living all the insurance companies here today want to be represented by their top doctors known as chief medical officers and we allowed that their preferred representatives would have been consistent with the public image that the companies like to project but it may have denied the subcommittee the ability to probe how health insurers really work what what is your business model where their health insurer follows a doctor's order interferes with it by denying a pre authorization it is in large part of business decisions not a medical one financial analysis of the health insurance industry carefully chart the medical loss ratio which are all familiar with the m l r the amount of each dollar received in premiums that health insurers spend on medical expenses investors considered m l r to be a key indicator of insurers ability to control its spending on health care and thereby as a predictor of profitability insurance company executives pay attention first to the concerns of wall street when you stand that according to a former executive one of the nation's largest for profit insurance quote investors want that m l r to keep shrinking and if they see that an insurance company is not down with a thing meets their expectations at the medical loss ratio to punish them i've seen a company's stock price fall twenty percent a single day when it did not meet wall street's expectations with this medical loss ratio that's a quote private health insurers have developed a six a fist to get a bureaucracy to find reasons to avoid paying for expensive treatment they're developing new products with high deductibles and copayments so they're not to pay health bills private health insurers refuse to abandon the practice of rescissions in which they revoke a policy after receiving premium payments once large claims have filed over sixty percent of people entered bankruptcy due to medical costs that cause and become insolvent had private insurance at the start of the onus finally private health insurers are insuring fewer people earning higher profits by avoiding providing coverage t people who get very sick and who have very high medical bills that's what was he wants to see and today thankfully we have before senior executives from the six largest private insurers in the nation who are here to explain to this committee and to congress how you can reconcile the demands of wall street which are quite significant and severe sometimes the fans of wall street with the health care needs our witnesses for being here today yesterday we heard some heartbreaking stories of families dealing with severe illnesses and amount of paperwork they were forced to wade through when trying to get treatment bureaucracy whether the government or frankly private industry should not be the final arbiter of health care decisions my opinion those decisions should be between doctors patients and their families that constituents come into our office and say that their child got sick and their insurance got canceled practice like this are inexcusable people purchase health insurance to guard against the day their child or spouse become gravely ill is precisely these instances when people most need coverage individuals who have acted in good faith paid their premiums and upheld their contracts all responsibilities should in fact be covered and get coverage last year in the full committee we held a hearing on improper health insurance  problem and well california connecticut rescission should only occur and there's a material misrepresentation of fact or other breach of contract must be noted that in rescission even when properly as individual uninsured all stakeholders regulators insurers and consumers should obviously try to prevent these occurrences so what can we do to make sure that all americans have access to coverage of my friends on the other side believe that more and bigger government is the answer i think most americans instinctively realize that trading some challenges with private insurance but the bureaucracy of the federal government is certainly not solution instead we should keep what works best in the current system and try to reform what's not working the plan i support us for principles that i think need to be a part of any health care reform proposal for us all americans must must have access second that coverage should be truly on by the patient thirty must improve the health care delivery structure and finally in reform must attempt to rein in out of control costs as we address these challenges in our health care system is important everyone has a see the table and i'm glad that our witnesses can be here today i look forward to hearing their testimony thank you mr chairman i yield back i want to thank my colleague from ohio we have a bipartisan effort here on these committee hearings and i've always appreciated his  perspective and also the fact that you sometimes offer contrary point of view which is needed to get to the truth so i thank you we have the privilege of having the chairman of the full committee here and  i'm sure all members would agree that it is our responsibility when the chairman of the full committee shows up to provide the chairman of the folk america with an opportunity to be recognized and so at this time i want to thank mr towns for the support that he has given the subcommittee in our effort to get to the bottom of some of these serious health care issues and thank you for your support and a whole range of concerns that the american people have the chair on unfair practices engaged in by private health insurance carriers and let me begin by saying i agree with president obama's statement last week to the joint session that private for profit health insurance companies perform valuable services to their subscribers and our nation i as a president obama rightly call for health care reform legislation that number one that ends discrimination against people with preexisting conditions limits premium discrimination because of age and gender so that seniors and women will pay the same coverage as others prevents insurance companies from dropping coverage when people are sick and need it most caps out of pocket expenses so people do not become broke when they become sick and  eliminates additional charges for preventative care such as mammograms and many state insurance companies can simply cancel persons insurance of any existing medical condition is not listed on the application and this can happen whether the person is even aware of the condition or not we hear repeated reports that insurance companies limit benefits simply drop or deny coverage for high risk patients whose claims eat into the carriers profits and purge small businesses with high claims carriers are doing this at the same time that their executives are receiving millions and millions of dollars compensation packages businesses cannot provide their employees with coverage due to their own eagerness to make a profit on the other hand patients are afraid to disclose health conditions and might even be forced to live in order to receive medical treatment some patients suffer greatly as their help to klein's without necessary medical treatment these insurance carriers practices or unacceptable and must be reformed i believe and church carries must be held accountable if a company sells insurance it must provide insurance coverage when claims are made and that regard it is essential that congress enacts health care legislation that includes provisions designed to ensure accountability and strong in forstmann mr chairman i applaud you and mr jordan for the work that you do and in the members of this committee but i want you to know that we have a lot of work to do because as we look and we see in terms of what people are going through that we must reform it and we must reform it in a positive way on that note i yield back the balance of my time instruments thank you again for bringing holding this hearing and i want to thank our palettes for being here this afternoon and yesterday we had we are chilling testimony shocking to the conscience and to be frank with you after hearing that testimony it was very difficult for me to sleep about what insurance companies do to regular everyday people mike the people that i represent we heard from a  mr potter wendell potter and let me just give you some of the words that he said he said were for weeks now and i quote we've been hearing industry executives saying the same things and making the same assurances and i'm sure you will he have the same refrain tomorrow this time though the industry is bigger richer and stronger and it has a much tighter grip on our health care system than ever before in the fifteen years since see insurance companies killed the clinton plan the industry has consolidated to the point that it is now dominated by a cartel of large for profit insurers the average family doesn't money stand how wall street dictates determine whether they will be offered coverage and whether they can keep it and how much they'll be charged for it but in fact wall street plays and i continue to quote a powerful role the top priority for profit companies is to drive up the value of their stock stocks fluctuate based on one company's quarterly reports which are discussed every three months in conference calls with investors and analysts continuing to quote on these calls wall street investors and analysts look for two key figures earnings per share and a medical loss ratio or medical benefit ratio as some companies now call it that is the ratio between what the company actually pays out in claims and what is left over to cover sales marketing underwriting and other administrative expenses and of course profits and ended the basically what they were telling us is that too many people are paying loyally yaffa year after year but when they want the insurance company to pay the insurance companies quite often slap them in the face and say now we're going up we're going to give you a recession we're going to find a preexisting condition so we can save money but one of the things that was most chilling was the testimony that came when they told us that quite often these panels in the insurance companies get together and they wait out people while they're sick they wait out while they try to get a decision and quite often they wait so they can die that's what we heard in here yesterday and i said to them at that time that if that is the case and that is for part and it is criminal and we as a country can do better than that and so i look forward to the testimony testimony we've been hearing from individuals and i hope you take a moment rather than to read any pro forma statements that you may have made to address in particular issues like the medical loss ratio explain how it is medical costs rise faster than inflation  companies still manage to keep the same ratio the medical loss ratio meaning they're putting less money into actual medical care and more money into profits into salaries for executives and into underwriting and when it gets to underwriting i think we'd like to hear a little bit about why it is that other executives from firms like yours came before congress and said that they would not do away with such practices like rescission where somebody is ill and getting treatment only to find out the company then reaches back and tells them to disqualify for some reason why it is that you won't stop the practice of preexisting conditions unless you are regulated to do it why did you continue to put caps on coverage it's all those reasons and things that lead this congress to think that the only protection we can have for consumers is to put up a viable competitor against your companies to make them behave at the bait to come back and do more for consumers and less for their own self interest and wall street self interest i see and we're testimony yesterday about all sorts of new plans that you have coming out voluntary benefits limited medical benefits in the voluntary usually means that employees are go a hundred percent of the premiums and that they really the employers pay nothing well limited benefit plans mean that they're provided limited coverage baby prescription drugs or maybe some lab work and x rays maybe a few doctor's visits but essentially the premiums are again paid entirely for by the employees those monthly premiums are usually thirty to fifty percent less than medical major medical plans and the employees get left holding the bag isn't it really covered at the end and i know that some of the companies are sponsoring a medical conference in los angeles month promoting those types of plans i want you to address for us how you think that is that helps small businesses you say that they're doing it because you can't afford it when in fact you're the one to set the rates you determine how high you can raise the premiums what are the policies driving them into policies like this where this small business employees my small business is on impressed with it and they don't want to go in that direction they want their employees to have good solid coverage so i hope you answer all those questions and i look forward to your testimony and maybe discussion afterwards of the i think the sorry direction that we're going in the private health care industry and you can maybe you can convince us why it's not essential that we do something in terms of regulation and competition to put a stop to those practices which really haven't shown or reflected well on your industry and you'll if there are no further opening statements we will proceed to receive testimony from the witnesses before us today i want to start by introducing our first panel mr richard collins welcome mr collins mr collins is the senior vice president of underwriting pricing and house care economics at united healthcare group he also serves as c e o of goldman roll insurance company and president of united health want united health care's individual line of business he served in his capacity sense july two thousand and five mr collins also manages the individual business of american medical security life insurance company and pacific care next mr brian chassis welcome thank you for being here mr sassy is president and c e o of the consumer bill this unit for wellpoint  mr sas is responsible for the company's senior state sponsored and individual under sixty five businesses previously mr sassy was president of the blue cross of california and chief executive officer of its life health affiliate he also served as vice president of operations and strategic initiatives for blue cross of california and general manager of small group accounts for the west region for wellpoint incorporated the parent company of blue cross of california thank you ms patricia a feral welcome this feral miss farrow is senior vice president of national international business solutions for at and incorporated leading divisions which provide health insurance for the federal government tried care and state medicaid programs and other businesses in the u s and abroad previously she was the senior vice president of attn especially products and medicaid this included at the dental life disability long term care involuntary products and at those medicaid and children's health insurance program business miss farrow has also served as senior vice president for strategic planning mr james h bloem is that correct pronunciation bloom bloom mr james h blum mr bloom is senior vice president chief financial officer and treasurer for humana incorporated his primary responsibility to supervise all accounting actuarial analytical financial tax risk management treasury and investor relations activities for that company thank you for being here mr thomas richards appreciate your attendance here mr richards mr richards is senior vice president for product management and new product development for cigna health care and signature choice link subsidiary which provides customer benefits and on line and roman previously mr richards ran cigna stop loss business which provides reinsurance to middle market and national segment customers during his career mr richards has held a variety of product management positions and cigna health care including insignias health care cigna health care its marketing department where he helped design and bring to market preferred provider organization products and networks and finally ms colleen ratan return ten is executive vice president and chief operating officer of health care service corporation's where she's responsible for its internal operations as well as numerous divisions of the company including subscriber services government services enterprise information strategy and management financial services among others previously written was president and chief operating officer of blue cross and blue shield of minnesota twenty years of experience and health insurance field she was also the co creator of the minnesota health information exchange a national model for sharing electronic health information i want to thank you this return for caring and i want to thank all the witnesses for appearing before subcommittee today i have to say in just these first few minutes in looking out at you and looking at your accomplishments and in the insurance industry this hearing is not in any of the questions that are asked  about in the personal we respect who you are but the institutions that you represent are here to be questioned today and challenged today and we're going to need your cooperation in understanding your business model now with that  will proceed to the swearing in it's the policy of the committee on oversight and government reform to swear in all witnesses before they testify i would ask that you please rise each of the witnesses and raise your right hand solemnly swear to tell the truth the whole truth and nothing but the tru chairman just point of information mr chairman you just swear in the witnesses should a witness fail to be truthful with this committee is a penalty connected with  the staff attorneys have just handed this to me this is pretty pro forma for any congressional hearing where witnesses testify and swear under oath there's two sections covered one procedure if anyone fails to answer any question pertinent we would we would have to according to  this certify through the house of representatives the facts as we see them to the united states attorney's office so i you know it's a it's a standard operating procedure in this committee mr cummings that  you know we expect witnesses to tell the truth but if they don't there are penalties under law thank you very much let's go to opening statements  show you may begin with your opening statement thank you and make sure that mike is close so we can hear what you have to say thank you chairman percentage ranking member jordan and members of the subcommittee my name is richard collins on the head of underwriting pricing in health care economics for united healthcare i'm also the c e o of golden rule insurance company united health group company that provides individual health insurance to individuals and their families today i'll start with some relevant facts about united health group our industry and try to demonstrate how we are improving the quality of health care while we do see in cost and streamlining ministration first united health group provides high quality health services and products for more than seventy million people in partnership with five thousand doctors five thousand hospitals and six hundred thousand doctors across all fifty states second we employ seventy five thousand committed and dedicated men and women these people work hard to improve the health care and well being of our health plan members third we have proven we managed our finances during these challenging economic times and come back the promises that we make to our stakeholders forte's our industry is already one of the most highly regulated in the united states united health group has long advocated for comprehensive bipartisan health care reform we have proposed constructive changes that would ensure rates do not vary because of health status and gender it will guarantee coverage regardless of preexisting conditions for those that maintain continuous coverage these reforms would also require that individuals obtain and maintain health insurance coverage so that everyone participates in both the benefits and the costs of the system discussions of administration processes and health began with benefits of a strong provider network our members receive great value from our extensive network which includes more than eighty five percent of the physicians and hospitals in the united states we perform periodic credential reviews to make sure that network physicians and hospitals continue to meet standards of quality our members receive negotiated savings and discounts when they are cared for by one of our contracted providers a key element to the success of this network is health information technology that we use to increase the speed and accuracy of claims processing we pay more than two hundred fifty million claims annually and more than ninety five are processed on our primary commercial platform within ten days in fact over eighty percent are processed automatically across our entire business we have identified one hundred thousand physicians through our premium designation program that consistently deliver quality in accordance with evidence based standards and they do so it costs ten to twenty percent below their peers these physicians use data efficient practice management and evidence based medicine to guide and consistently improve patient care this network the system extends to doctors  hospitals that are best at managing complex medical conditions such as organ transplants cancer and congenital heart disease this helps the sickest patients receive the best possible care often resulting in better outcomes and often at prices that savings as much as sixty percent partnerships with physicians and hospitals are those are critical to streamline streamlining administrative processes and providing greater value to our members to that end we have established two national and numerous local physician advisory committees they provide us with feedback and help us ensure that we maximize the health care quality and minimize the administrative burden we are also introducing innovative and practical tools that allow doctors and nurses and other health care providers to spend more time with their patients and less on paperwork for instance are easing program synchronizes a person's medical history to help identify gaps in care that they should be receiving electronic medical records and  prescribe in technology help physicians practice better medicine through clinical decision reap support and reduce administrative costs through automation and web based transactions in conclusion united health group provides critical services and support at every point in the health care delivery system we are privileged to serve our members and take seriously our responsibilities to serve americans in the socially sense of area of health care through innovative technology and programs as well as close collaboration with the provider community we are successfully improving quality reducing costs and making the administration of health care more efficient thank you mr chairman thank  you recognize from five minutes may proceed make sure you can bring out my collection of thank you chairman q senate ranking member jordan and members of the subcommittee for allowing me to testify before you today i'm brian sasi presidency of the consumer division a well point wellpoint provides insurance and health benefits to thirty five million people across the country representing almost one in nine americans we recognize we have the ability to help change health care for the better and with disability comes a responsibility to our members and to all americans to advance health care quality safety and affordability i look forward to discussing how well point helps create health care value for our customers at one point we developed evidence based medical policy based on the latest clinical research our nurses and other health care professional support our members to ensure that care is safe necessary and timely and looking to the future we continue to explore new ways to reward value over volume and stress safety efficiency and patient satisfaction one of the areas under discussion in the current health care reform debate is health plan administrative costs last year pricewaterhouse coopers conducted an analysis of how the typical health insurance premium dollar is spent by written testimony includes a chart that shows that eighty seven cents of every premium dollar is paid out to cover the cost of health care claims of the remaining thirteen cents six cents goes towards taxes other government payments claims processing and other administrative costs four cents goes to consumer services such as care coordination disease prevention chronic care management provider support and marketing and only three cents of premium dollars remains for profit or surplus i understand the subcommittee is interested in knowing how we determine medical policy and how our medical policy relates to how we process our members health care claims our medical policies reflect input from premier academic institutions and experts within the medical profession as well as consider a considering the standards of care within our local communities these medical policies are available online to all providers and to the public at large last year while point received hundred eighty million claims and we process ninety seven percent of those in thirty days the subcommittees letter asked for some information on deferral of claims i should note that we do not defer claims what happens sometimes is that claims are pending as we await additional information or conduct additional reviews some common reasons for pending claims are that premiums have not been paid the claim is incomplete such as missing diagnosis codes or when members have health coverage other health coverage that may be primary the subcommittee's letter also asked about administrative costs or administrative costs include a variety of initiatives designed to promote the health and well being of our members for instance employs thousands of health professionals including nurses dietitians social workers and pharmacists among others these professionals speak with thousands of members each day encouraging them to learn more about their conditions and how they can better manage their care or health professionals help members schedule unnecessary follow up care and specialist care remind them to pick up important prescriptions and serve as a valuable resource to our members twenty four hours a day seven days a week another example of our clinical research is our clinical research subsidiary health corps which has produced noteworthy studies on best practices for treating low back pain high cholesterol asthma to name just a few we take these recommendations and share them with physicians to help them improve our members health health corps works also works with the f d a and the c d c to improve drug and vaccine safety and has created a sentinel system that helps these agencies monitor emerging drug safety issues in real time my written testimony includes more detail of these types of initiatives which are typically not included in government run programs efforts like these funded out of our administrative expenses are critical to our ability to follow through on our primary commitment which is to improve the lives of the people we serve in the health of our communities in closing i would like to assure the subcommittee that wellpoint supports responsible health care reform but reform must go beyond the insurance marketplace to address system wide challenges and associated costs changing how we finance health care without changing how we deliver health care would be incomplete reform at best i appreciate the opportunity to testify before you today and to respond to your questions thank you mr stassi the chair recognizes miss farrow you may proceed for five minutes good afternoon my name is pat feral animal senior vice president at no it is one of the nation's leading insurance companies providing medical dental pharmacy disability life insurance and other health benefits we provide those products and services in all fifty states and we provide those products and services to thirty seven million americans i'm proud to have worked for over twenty years in a variety of capacities on behalf of the thousands of employees that i look forward to talking to you today about the value we bring to the health care system and in discussing it in its commitment to reforming the health care system the end of today is a health care solutions company that american help americans manage their health care and get the most out of the health care dollar since two thousand and five and a half calls for major fundamental reform of the insurance market so that all americans have guaranteed access to affordable coverage with no exclusion for preexisting conditions this combined with the requirement that everyone have insurance coverage and financial assistance for those who can't afford it and who need it will get and keep everyone covered in our system i expect that many of the issues we'll discuss today illustrate the need for reform and is committed to health reform that address addresses access affordability and quality we operate in a dynamic and highly competitive market our business can only be successful when health care consumers are confident that we can provide the greatest value for their health care dollar and helping them improve or maintain their health care status our employees come to work every day doctors nurses and customer service professionals with the same commitment to make sure our members get the best health care coverage possible much of our focus during the health care reform debate has been on building what works well in the employer sponsored market today while addressing the problems in the small group market in the individual marketplace the solutions which now seem to be broadly accepted should go a long way to addressing the problem of access to health insurance but we strongly believe that for health care reform to be enduring and affordable in a nation we must address the underlying problem of rising health care costs health care costs drive insurance premiums not the other way around over the last decade health care costs have risen about seven and a half percent in premiums have risen that very same amount it's fundamental to our discussion today to understand the value that brings to the health care system and how our business practices are focused on empowering consumers and healthcare providers to make the best decisions possible we process hundreds of millions of claims every year and getting them right every single time is our goal we recognize even a small percentage of problems represent real issues for our customers and for our providers when we do get it wrong we have processes in place to help get it back on track quickly and is driving innovation to improve the lives and the health of our members in just the past four years we've invested over a one point eight billion dollars in health information technology for example some of that investment went to having personal health records that can empower consumers decisions around their health finally we're also leaders in promoting wellness and prevention and the management of chronic diseases refocusing our system to prevent disease and promote wellness can lead to better health for all americans and positively in impact cost systemwide i believe a committed to the competitive marketplace has played and should continue to play an important role in fostering the innovation that's necessary for our country to achieve true and widespread quality and affordability in our health care system thank you and i look forward to continuing to work with congress to pass health care reform this year president and i'm just chief financial officer and treasurer of humana and humana health benefits company headquartered in little kentucky offering health benefit plans for employer groups government programs and individuals we have ten point three million medical members and six point eight million specialty members in all fifty states in washington d c and in puerto rico humana employs twenty thousand six hundred employees in contracts with nearly four hundred thousand physicians around the country we provided extensive written testimony on today's subject matter and i will briefly summarize a few key points here every aspect of humanity operations is governed by federal and or state laws and regulations and humana continues to both support and advocate for responsible health system reform we believe that doing nothing is and is doing nothing is not an option we believe that all americans should have affordable quality health coverage it's essential that everyone participate in the health system was subsidies for those who can afford coverage and in return coverage should be guaranteed and not based on preexisting conditions or else status to ensure affordability reform must focus on improving health outcomes reducing variations in care and reducing costs humana also supports america's health insurance plans comprehensive reform plan which provides for universal coverage with insurance with insurance rating reforms these reforms voluntarily offered will obviate the need for business practices that were put into place because the currently is no requirement that individuals have health insurance coverage the subcommittee has specifically requested that we comment on our processes for both coverage determination and processing claims as well as the physician feedback on these profit on these processes for two thousand and nine humana ranked number one among national payers as the easiest to do business for both doctors and hospitals specifically athenahealth found humana to have the lowest denial rate among all major payers in contrast medicare part b the medicare part b program ranked fifth you can also rank as the fastest payer to physicians with the medicare part b program again ranking in fifth place the subcommittee also asked that we addressed how you manage makes coverage decisions let me summarize coverage decisions are based on evidence based medical criteria developed in approved by physicians under our policy a nurse or a non clinician can authorize any service that's under review however only a license board certified physician medical director can issue a denial based on a medical criterion to the extent that a practicing physician disagrees with the decision there are timely internal appear processes allowing peer to peer employed these grievance an appeal process these are governed by state and federal regulations internal appeal decisions can be further appealed to an independent xterm will review entity whose decision is binding on humana the man has worked effectively over the past few years to streamline and and simplify our ministry of practices we've partnered closely with the hospitals and physicians who care for our members and our members themselves here's one example of ala t is an industry leading multi payer multi use electronic medical provider information exchange humana co founded of aylett with the blues of florida it fulfills the president's and congress's call for a workable health care information technology superhighway it has standardization speed accuracy transparency and it results in significant cost savings today across the country fifty thousand physicians a thousand hospitals one hundred million members and a thousand payers including public payers access or connect with available every year this results in a profit this will resolve this year in approximately six hundred million transactions availably what it does is provide seamless provider interactions and improves patient safety saving money is digitized most of the nonstandard administrative processes that providers have complained about for years and for those who use each prescribing preventable drug adverse drug events have been reduced by sixty one percent and most importantly there are no charges to providers for using available in closing mr chairman let me say that humanise committed to continue to work closely with the administration and congress to increase the likelihood that measures designed to solve the most significant problems in our health care system become the focal points of responsible and real health reform efforts i look forward to your questions thank you very much thank you mr chair recognized mr richard you may proceed for five minutes th shrinking member jordan and members of the subcommittee and appreciate the opportunity to address the subcommittee and to discuss the issues raised in your letter to mr hamlin aug twenty sixth my name is tom richards and i am the senior vice president of product for cigna corporation which is based in philadelphia at the outset i want to emphasize on behalf of the twenty six thousand signon police that we support health care reform to provide security affordability and stability for all americans we believe such a goal is a by strengthening the current system to include both a personal coverage requirement and a helping hand for those who can afford coverage we support guarantee coverage for everyone and no exclusion for any preexisting condition we support reforms in the way premiums are calculated without taking into consideration how status or gender we support providing subsidies to individuals who have difficulty affording health insurance including subsidies to small businesses and we support  standardization in simplification we support a focus on health and wellness further we support the establishment of exchanges to provide a choice of plan options for all americans we also support reimbursement reforms to the current fee for service delivery system it's also important to understand signals role in health care while we have some insurance business nearly eighty percent of cygnus health care business is administrative services only this we means we administer the rahm's for employers in accordance with their policies and pay claims for them is not risk based as would be traditional insurance these employers are self insuring in the claim payments come out of their employer funds there is no financial incentive for our employees to accept or deny claims at cigna in two thousand and eight eighty nine cents of each premium dollar was spent on medical care our support for reform is aligned with what we stand for as a company our mission is to improve the health well being and sense of security of the customers we s results demonstrate our focus on health improvement competitive data from and secure ways two thousand and eight state of health care quality report shows this difference against a baseline of standard care provided by doctors and hospitals in a fee for service on managed situation we have better results if you turn to figure one on page for my written testimony you'll see a chart that reflects these results all of our coverage is all of our coverage policies follow best practices in our evidence based which means they're based on the most recently published scientific evidence we consider safety and effectiveness it's important to know that cost is not a factor unless there are multiple items or services with equivalent safety and effectiveness we are very proud to employ over three thousand clinicians these doctors and nurses make decisions about clinical policy review medical necessity and advocate for individuals that make the system easier to understand they help our customers navigate the healthcare system when they need help and they literally save lives we have included the words of several of these individuals in our written testimony telling you how we have helped them in two thousand and eight cigna processed approximately ninety one million claims for payment more than ninety million of these claims were paid without question a call your attention to figure two on page ten of the written testimony of the approximately one million claims that did require prior authorization all but point zero eight percent were approved on initial review what that means is that cigna more than ninety nine point nine percent of the time the person receive the care that the doctor recommended and the services were covered at cigna all medical coverage decisions are made by doctors and nurses and ultimately the chief medical officer is responsible for all coverage decisions we recognize the doctor patient relationship is critical and do everything we can to enhance it let me cite just a few examples first cigna simplifying and reducing administrative complexities from payment methodology is in claim processing to problem resolution and education second cygnus further innovating our payment methodology is an example of this is our sick is cygnus patient centered medical home initiative such as the one we have with dartmouth hitchcock in new hampshire our joint goal is to improve patient access continuity and coordination of care quality of care for patients in lower medical costs for everyone at cigna we focus on helping people improve their health we believe that health care is a shared responsibility of the individual the private sector the medical community and the government such a shared responsibility is right for individuals families and the country as a please proceed for five minutes good afternoon mr chairman ranking member jordan and members of the subcommittee i'm colleen ray tan and the executive vice president and chief operating officer of health care service corporation we are a mutual legal reserve corporation that does business as the blue cross blue shield plans in illinois new mexico oklahoma and texas by way of background eight c s c is the largest customer owned health insurance company in the nation we are not investor owned we are a customer owned mutual we have a workforce of more than sixteen thousand employees serving twelve point three million members through our blue cross plans in those four states our mission is to promote the health and wellness of health care for our members in the communities that we serve through accessible cost effective high quality care prior to joining h c s c in two thousand and eight i was the president and chief operating officer of blue cross blue shield of minnesota that state's largest health insurer and they are not for profit health plan i have twenty eight years of experience in the blue cross system the areas of accountability i have with n h c s c is for management of our subscriber services division which processes member claims and handles health care inquiries i'm also responsible for information technology finance and actuarial functions we certainly recognize and share the public's concern with the current healthcare system but fundamentally we believe in the strength and the value of the american health care system we believe that insurers like h c s c are uniquely positioned to help foster and inform improvements to the health care system and we were out we really welcome the opportunity to serve in that role h c f has been an advocate of health care reform to that end we support the proposition that health insurance companies are required to offer coverage to all applicants require of their current regardless of their current health status coupled with a personal responsibility for all americans to obtain and maintain coverage secondly support subsidies for those americans who cannot afford healthcare coverage third we support health and wellness initiatives that focus on the prevention of chronic illness and finally we support initiatives that promote effective care and treat meant and for information technologies that improve quality and provide value for every health care dollar we're pleased to share with the subcommittee some examples of how each c s c has incorporated evidence based approach into medical policy into two ke tenets that underpin the core values of our company and that of access and quality my written statement outlines our approach in each of these areas in greater detail but a few items are just worth noting before the discussion today first our members access to proven medical care one of h p s use for guiding principles is our belief that the interest of our members are of primary importance to our company the members we serve provide the reason for our existence and the rationale for the resources with which we operate secondly but equally important is to continually improve the quality of care another of our guiding principles is our belief that we as representatives of our members have an obligation to provide leadership in the health care field we're promoting evidence based medicine to increasingly focus our plans around proven health care services we also work closely with our very broad network of doctors and hospitals to invest in data sharing technology that works to improve clinical decision making and these efforts help improve quality and ensure that doctors and hospitals treat patients effectively and get paid efficiently eight c s c is committed to working with the administration and congress to achieve comprehensive health care reform to expand access and improve quality of care for all americans on behalf of our company and its members i thank the subcommittee for the opportunity to discuss these important issues today thank you very much for your testimony without objection the chair and the ranking member will proceed for ten minutes each for questions and each member after the we have five minutes we may have several rounds we'll see how it goes the only thing i want to share with the members of the panel here is that members of congress generally like to get answers and if you're able to give us a brief answer and it's covers a territory that's fine  if you start to go on and on on something i don't want to hear confrontational but i may have to encourage you to hurry up your answer or you know maybe i have to cut you off and i want to do that but i do want you to know that we are here to get answers and we need your help so without objection began i just want to add one other thing we may be joined by the members of congress who are not members of this committee that's not unusual and without objection if other members of the choose to come here from either side of the aisle even though they're not on this committee without objection will permit them to sit in to participate and to ask questions so with that i'd like to start the questioning with mr sassi of well point sir in your testimony you state quote last year wellpoint received three hundred eighty million claims and processed ninety seven percent of them within thirty days now looking at the arithmetic  correct it means that you did not pay within thirty days over eleven million claims would you tell the subcommittee what is the value in dollars to wellpoint the eleven million claims that  not paid in that time period i chairman i don't know the value of that can't can you can you provide the subcommittee with such information there has to be a way to calculate i'm not sure because that is at a point in time the vast majority of those claims most likely were paid at a future point either on the thirty first day or if we had requested additional information that was provided and then subsequently pay maybe you could then chart out thirty days sixty ninety businesses operate that way of course you know and twenty and maybe if you could provide information which what was the average cost of each claim that you did not immediately pay it would be helpful you can either look at as a cost or a value but we will not sacrifice profitability for membership as you know wellpoint was forced to pay fifteen million dollars last year to settle claims or charges by the california department of insurance that you removed coverage from two thousand three hundred thirty members after they submitted claims for expensive medical care and i'm going to submit for the record the article in the settlement from the los angeles times from february this year one point settled similar charges the previous year and paid a ten million dollars fine for removing coverage from seven hundred seventy members of its h m o s in california mr sassy is dropping members just when they need health care what o meant when she said that she wouldn't sacrifice profitability for membership absolutely not i would lean and i believe what was meant was that we would not reduce prices artificially to essentially by membership in the open marketplace and mr says he what characteristics did those two thousand three hundred thirty individuals have in common that resulted in well points decision to drop members just as their medical bills threaten to reduce well points profitability that settlement pertain to a settlement agreement that we reached with the department of health care in the department of insurance in california relative to rescissions in the individual marketplace you unless your counsel is advising you that you can't answer that question and you should answer the question i did and so the questions are well you didn't really say what characteristics those individuals had in common  that result in a well points decision to drop members just as their medical bills threaten to reduce wellpoint profitability you did not answer the question i just ask you if you'd answer the question those members were rescinded in the individual market because they  materially misrepresented their medical history on their insurance application at the time that they apply for coverage ok no how did well point discipline the executives who committed the practices  enforcement action against you well we did not admit we did not agree with the findings of the department of health care that's on public record they did issue a report we did append a report in united healthcare groups social responsibility report in two thousand and eight your c e o writes quote the businesses of united health group are fundamentally organized around advancing our mission of helping people live healthier lives and quote now if your business is fundamentally organized around that mission will you explain united healthcare settlement of charges last year that its pacific care subsidiary wrongfully denied one hundred thirty thousand claims in california paid claims incorrectly lost documents that included medical records fail to acknowledge claims in a timely manner and hassle its members with multiple requests for documentation that was previously provided yes  are we vigorously contesting the findings of the state i do not contest it that there is room for improvement in our california operations we've put a lot of resources into improving our operations and we would a gret inconvenience and to our membership but i don't think our aspiration to provide products services  and financing of the healthcare of american americans as inconsistent inconsistent with our behavior ok then you know that's that's fine and then you you've answered that question but in two thousand and seven what was the compensation of the top executives at pacific air well in two thousand and seven sir pacific air was a wholly owned subsidiary of united healthcare to top executives would have in the other members may have this question but i think i'd be great if each of you could provide i sent compensation information of officers and also information about bonuses and incentives received by pacific care executives and employees that would have  rewarded the denial of claims in california in two thousand and six two thousand and seven we want to see if there's any connection and we we need that information if if you can cooperate and provide it i'm confident that there was no bonuses awarded for denial of claims or  other activity that was illegal and as i said before we are vigorously contest seen the findings of the department in the characterization of the of the actions there as denial of claims counsel mr richards of cigna on page eight of your written testimony you state we do not consider costs in establishing coverage policy in our decisions to provide access to care but we heard from a former senior executive which cigna told us yesterday that cigna has meetings every quarter which are called town hall meetings internal townhall meetings in which executives go over the past quarter's financial statements and talk about how they can tighten utilization to lower their share of cygnus premium income spent on medical expenses isn't it true that cigna has held internal town hall meetings at which those topics are discussed it's absolutely true that we hold town hall meetings to communicate with our employees to reinforce our mission and to talk about our financial results and those town hall meetings are videotaped they are there not an audiotape i do not believe there are video taped we certainly know they are used a padamsee so that individual employees can who are meetings are to communicate to our employees and i began to and we and i understand that they are and were will be in touch with you regarding our request that we get those audiotapes and i just would like to conclude with this question for each and every one of you the premise of this hearing is that health insurers will strong influence in the kind of care whether there is care for their policyholders or become very sick according to american cancer s is a quote cancer patients and survivors maybe lay or forgo care in the face of caution erring that they find difficult to afford a recent study found that five percent of non elderly adults with private health insurance who've been diagnosed with a chronic condition such as cancer reported they went without needed care in two thousand and six american cancer society saying this i want to give you a chance to express for the record what you think about this question and really with a simple yes or no answer and we're going to go down the line and i want you to answer this question do you believe that a health insurers refusal to pay for a patient's cancer treatment can directly or indirectly cause harm or death to that patient when asked the question one more time do you believe that a health insurers refusal to pay for a patient's cancer treatment can directly or indirectly cause harm or death to that person i'd like to go right down the line mr collins and just give me a simple answer go way down a line then my question time decisions are only based on external scientific evidence the answer is yes ok mrs mistretta yes or thank you i want to thank each and every one of you for candour the chair recognizes for ten minutes  premise here the idea that because there's been some as i said in my opening statement that if there's been some problems with the way private insurance works that somehow that should cause us to move to a government run system i just fundamentally disagree with that frankly i think the majority of americans as pointed out the last several months and any poll you look at here of of recent date is it would would would say the same thing so i have a really kind of to focus here in the few minutes that i have with you and again i appreciate you being here i want to get the facts and then i want to get at this idea that i think is fundamental to real reform and what needs to happen in this country and that is a health care system that empowers the patient there's a great i think a great article in this month's atlantic which talks about the idea that it's always somebody else's pain and when somebody else is paying and that's what i mean i think ms farrell said it well she said insurance premiums don't drive health care costs health care costs drive insurance premiums we've got to get health care costs and that only happens when the consumer the patient the family the small business owner out there has has a better handle on what's happening more transparency so they can they can figure this out and make some real market real market type decisions so let me start with this one of things we heard yesterday again in an effort to get to the facts one things heard yesterday was from the panel we had  fifty seven percent of every dollar is all that goes towards health care of the premiums that you take in and so we heard about the cartels and i'm actually looking now at at piece the journal ran this monday and they actually talk about an example in alabama where it was ninety two percent according to two what's happening in the state of alabama where one insurer one blue cross blue shield alabama has seventy percent  the statistic cited to mr stass east testimony coming from a pricewaterhouse coopers study that cites eighty three cents on the dollar that's a credible study it's a recent study there's another study that just came out from sherlock and company just in the last few weeks which corroborates the price waterhouse study what's but what's united what's your and what do you say what do you pay well for every dollar you take and how much goes for for patient care that's done an internal investigation do you know what you have that you have a good idea what united would be sir it's the the loss ratio for two thousand and eight was approximately eighty three and as i also indicated in my testimony there are a number a fair amount of administrative costs that we pay to help manage chronic care chronic can we pay out of our ministry of cost for disease management programs for asthma heart disease diabetes c o p t to help those fifty percent of americans that have chronic illness manage their cost and that's typically not included in the last ratio that's included an administrati grants so if you're looking for a holistic what do we spend this number higher if it's it's north of that and understand i understand the congressman we spend eighty four cents on the dollar directly on medical claims the we do spend a fair amount on administration relative to innovations in the health care industry making sure that we are providing our members and our providers with the most recent tools and technologies and information in order to as you said given the tools to go to make them understand what policies they purchase what's in those policies so that they can make better decisions on behalf of themselves and their famil ranking member jordan we pay between eighty three and eighty five percent then the last seven years last year was the upper end of the range around eighty four six ranking member jordan for cigna last year the number was eighty nine cents that number has gone up each and last five years that our medical care ratio at eight c s e is approximately eighty four percent ok let me let me move to another one according to congressional research service each year one billion claims are submitted to medicare and ten percent of those claims are sixteen cigna forty six here in and around the world and eight c s t twelve point three million so how does your denial rate compare to what the government currently does with the medicare program congressman i'm not prepared to answer that question today i really just don't have those numbers vailable i would like to point out any claims talk how many claims do you have a year now i'm interested medicare population older population is going to be significant more claims but seventy million people compared to forty five in medicare forty five million medicare how many claims you get a year i don't know exactly on our primary processing platform where the vast majority of our claims are processed as in my test as i stated my testimony two hundred fifty million claims so i thin member member jordan i don't have the percentage of claims that were denied if that is the question we process three hundred eighty million we received three hundred eighty million claims the number i read was the amount that we are denied i think what you're trying to get is that the reason that something might be denied for medical necessity and that less than one half of one percent of claims are denied because of medical reasons you ranking member jordan i cited the athenahealth study which i commented that we ranked first in terms of the lowest and the lowest denial rate our denial rate in that survey was five point seven percent ok the is five hundred sixty five hundred sixty thousand claims a day and we deny for the medical necessity coverage three tenths of a percent wonderful mr bloom in your test me  you talked about some things you are doing to make it easier for the folks who you do business with people you insure to deal with this and that's the one thing you hear from folks in our own lives you get the statement benefits try to figure out what the heck it says i think it's a lot of americans like me they look and if it says it's not a bill they don't they can file it away and not worry about it too much but you talk about some things you do and i'd like to elaborate on that a little bit because you know one things we hear from health care professionals is it like necessarily and it like the reimbursement rate they get from medicare medicaid but in some ways it's not as cumbersome as some the other things have to do is so i'm curious what you're doing to to make it easier for people to deal with  and figure out what's going on and again getting at this idea of empowering the patient which i believe to lower the cost ok a couple things i mentioned in my written testimony i'd just like to quickly summarize first of all when we talk about the the problems that have existed between  the various constituencies obviously we have three people involved we have us as the payer we have the member and we have the provider so to make things simpler and to make things easier what we've done as in florida but now throughout the country has come up with a joint venture that we have with a number of companies that helps providers get instant adjudication real time adjudication in terms of what a member's responsibility is what ours are we're trying to provide certainty against for all of our constituencies the other thing the providers are like in it and the patients are like i mean because it's because it's electronic and it basically tells people when they go to the doctor this is what's going to be expected of you this is what you man is going to pay this is what you're going to pay that is what the providers going to charge we also if i could be real brief we also have a document called a smart summary that we mailed to the ten million of the ten point three million members that we have every quarter and it basically tells all the claims that they've had what those claims are for what doctors what hospitals they went to what pharmacy what drugs are taking it gives them sort of a quick summary of what their situation was for that quarter much like you get with  be investment count you have had be very happy to provide this including a quarterly statement that you get on your bill that people understand they can begin to have the knowledge that you're talking about in order to take effect of control of their albums health status and their insurance thank  don't issue bonuses for people at the nih coverage or is it a part of their evaluation i'm going to ask you to one of you the same question is it a part of the evaluation those are the is there any kind of incentives with regard to evaluation regarding the denial of coverage that is claims i'm sorry congressman without going back and doing research on that topic i really could not you don't know that response of answer that quite you know you don't know the answer that question is that what you're telling me yes or all right i can tell you the wellpoint does not have any policies in place to reward people for denying so there's no policies and you do not do that is that correct it's know and we have absolutely no incentives financial incentives tied to that decision making process so employees only there is a right you know you said physicians but what about employees physicians are the only ones that can action other words do they ever physicians are the only ones who can did you ever have that policy of giving incentives for denying claims you say ever i can't speak for after your knowledge that you have yet to my knowledge i see a because the testimony we got yesterday was just the opposite of that but we'll we'll go forward very interesting lee you when you all were answering mr jordan's question you talking about this whole idea of claims and mr richards you in your oral testimony and your written testimony saying you know was very proud and i think you should be i think when you said that over ninety nine percent of the claims that convert people are receiving the services that the doctor recommended is accurate that's correct now mr richard when you say claim what do you mean by that when i refer to that i'm talking about the  determination of whether the particular procedure is covered in other words those of services that were already done is that right actually a lot of times a physician the individual solution would check with us prior to the procedure being done on what's called a prior authorization to see if the procedure would be cost so you are included when you look at this when you are giving us this figure you're telling us that in those cases before services were  rendered you include those and you include those after service were rendered that you paid quote claims is that what you mean by christ because i want to make show all you know is going from the same page because the testimony we got yesterday is that you know the industry has a definition for claims and claims means some services that have already been rendered and then and then you're talking about it now but a lot of the problems that we heard yesterday were things leading up to that where the doctor calls we had one doctor yes they said he literally had to double his number of employees just to deal with getting authorization to do new procedures so so just answer my question when you say ninety nine point nine percent what do you mean i mean a of the of the claims that we get ninety nine point nine percent of those are approved without any need for appeal i think i personally appreciate congressman the  chance to clarify this because i don't think it's well understood by the public cigna and i suspect other insurance companies get submitted a lot of claims that are duplicate or are that are for people that also understand you're very interested in the administrative procedures i'm trying to clarify that fraud abuse would be another reason why a claim might be denied and for instance you know that that's extremely important to medicare and the office of the inspector general so we for instance denied or did not pay two hundred fifty million claims for fraud and abuse now in these would be situations where the individual has already received the care but that the doctors  or providers inappropriately billing for that and there's duplicate ways idealogy you mean a case where somebody may have been denied and then they try again no i mean to a billing error we would have our for instance paid the claim and it was submitted again sometimes things cross in the mail congressman so it is that the only other thing that that may not be included in your denial rate and i think those are the the major categories the only other thing i might mention is in california there's a fair we pay them whether the individuals see see care from that doctor that month or not we occasionally we sometimes do get cleans from those doctors again erroneous lee for cure that we've already paid on the prepayment and in the case those claims would also not be paid to try to make this quick it seems as we we just discussed health care in and the rising costs of health care the focus seems to be on you know who's paying for it and to me it doesn't matter whether your state government providing medicaid a federal government providing medicare or a private business or individual pain for a privately the issue is a huge rising costs my question to all of you in the private pay business is within your respective organizations i'm assuming when you negotiate with pay with rates to your preferred providers you ask for some justification in costs and what there seems to be very little discussion about is the rise in cost some of that is true operating costs of the words new x rays new m r i s new technologies staff and some of the rising cost is also a cautious to other words the  great debate this year is whether or not we should cut medicare rates by sixteen percent and we seem to pat ourselves on the the back when we leave and say well we didn't you know we staved off cust again this year well we may have staved off cuts but we didn't adequately reimburse the providers for the true increase in their costs therefore requiring them to shift that cost to those in the private pay industry so my question to each one of you is have any of you within your organization looked at the increase in reimbursement rates that you all are required to pay enough raising your premium rates what percent of that is a true cost increase in terms of cost to the recipient and what percent of that cost increase is because of cost shifting as a result of the state and federal government not adequately paying for their patients mr collins thank you for the question congressman the trend in unit costs so negotiated rates that we have with providers and doctors has been running in the range of four and a half to six percent for many years now that's an excess of c p i i don't know the exact percentage of what our costs are due to cost shifting but according less than ninety percent of cost and that medicare pays less than one hundred percent of cost so there is cause shifting has been a constant pressure on unit cost in the private side and it's it's a it's  ongoing and major driver of the unit cost inflation and health care on the private side you said your premiums went up on the average of four to six percent unit cost trend over time in the industry has been running around forty six percent and that's over a long period of time with annual cost and you'll just the unit cost other components of inflation are utilization increases tech new technologies those sorts of things but just straight unit cost has been running for and if you look at what percent of that is the cost of doing business and what percent of it is it is a shift i'm sorry so i couldn't answer that that precise question but but eighty billion over the private sector is which equates to about an overall increase across the board for commercial members about ten percent or i believe the study says six hundred dollars per covered member it would be very difficult for us to identify on a facility by facility doctor by doctor understanding their entire cost oxer what goes into that right to identify at that level but i believe that the milam and study is credible because i'm tight on time i'm not going to ask everyone to repeat the same thing but has anybody done you know i'm just i guess i understand provider by provider it's not possible to know if you've actually looked at done some independent study and you know a sampling pool of of pervert providers and on what their what their justification an increase in c congressman first of all i do agree with the underpayment of the by medicare medicaid is absolutely huge problem for hospitals and doctors and it is definitely increasing medical question cigna has done some analysis of the disparity in one of the question because i'm going to be cut off here i wish i had more time it seems to me again as we talk about controlling costs i found it very interesting i met with the consul general of canada and he's very  much supportive of their canadian health care system but one thing i thought was very interesting your discussion was that he said you know congressman schock he said it's still too easy in your country to sue doctors and i kind of sat back in my chair and i said excuse me and he said well our health care system in canada would not be continued to function if comprehensive tort reform were not a part of the health care plan when we passed it in our country my question obviously my view on this is that we shouldn't wait for a single payer system in our country to have comprehensive tort reform as a part of reducing not only the premiums that that that the health care community pays and more importantly to the the unnecessary medicine that's ordered a result my question to you again is whether or not within your respective companies you've looked at the amount of reimburse care that you give through the insurers folks what percent of that is done through defensive medicine as a result of the fear of these physicians being sued i actually don't have the data with me but i know the blue cross blue shield association has done some work on this exact issue so we'd be happy to submit that follow up could you provide us a copy of that yes  else tort reform would be very helpful because tort reform the absence of tort reform increases the intensity of procedures that doctors perform which is one key aspect of utilization which you talked about before if i may i would just like to go back to your question about thing with with government programs one of the things that happens with medicare and medicaid is that they they lower reimbursement rates in an effort to get more efficiency out of the health care system that in part does happen but when it doesn't it doesn't fully pay for the reimbursements then what happens is there is a cautious and the commercial segment the commercial products pay for that shortfall that's not made up by efficiency that comes from those reimbursement cuts and that's estimated to be fifteen hundred dollars for a family of four who has private health insurance that's a and if you look at the total cost of private health insurance that is a major component of thank you and thank you chairman for your generosity well we're glad that you're on his committee and we appreciate your participation in the chair i will recognize the distinguished chairman of the judiciary committee has joined us mr conyers you may proceed thank you for this permission chairman consented and i i want to thank you for the hearing these are the stings wish experience members of the health insurance industry and i'm sure the testimony has been very important as we work through our a reform of health care and i also to commend the ranking republican member aaron schock who is carrying out quite a record of it stinks in for him so i'm glad he's here with us as well my view of the public option is that i think we really need to focus our efforts on understanding what problems that we're trying to solve around access and quality and affordability and then ask ourselves at the end of that whether or not a public plan would actually progress further down the path than some of the bills that have already been put in place you know i do believe well it might just a little close one of the things that is concerning about a public plan which the congressman schock was just referencing is the caution after i mean if if a public plan were to reimburse medicaid or medicare rates there would be quite a cautious to the commercial segment which would in turn result in increased cost in the commercial sector and therefore increase premiums which is really empathetic will to what we're trying to achieve in health care reform  w mr richards it's it was my impression that the public option would be designed to save money not cost more money and that it would provide a choice between citizens as whether they want to a private insurance plan of which there are literally hundreds or they want a public plan that's your impression well congressman cigna supports many of the reforms that are being debated in the debate plan is not necessary so so mr so your ear if you agree with that last comment then you don't want any competition and  then surance health insurance for you well i think i think it is it's our position that there is a lot of competition today in the health insurance industry there are over thirteen hundred health insurers in this country that compete for business know the challenge is that when the government could come in and have the ability to set reimbursement rates that it creates an unlevel playing field between private industry and the government and that certainly has the potential to exasperate the cost shift that already occurs between medicare and medicaid and the private sector but we also fear that as a result of that since we don't have we would not have a level playing field since insurers are subject to taxes and other types of expenses that lower reimbursements coupled with taxes that we pay create dramatically unlevel playing field and that could reduce choice for the american public with with this unanimity against the pub the option we're we're putting in a provision that everybody's got to get insurance and if you can't afford it guess who will pay for it the government and and we're talking about the public option will cost someone is talking about it not you but how could one public option to stabilize thirteen hundred private insurance companies we our company agrees with the statement that was made earlier that when you implement some of the reforms that are being discussed that require insurers to offer coverage to all individuals regardless of their health status as long as they have a requirement to be able to afford health care coverage so we believe if you pass reform with all those elements we actually will have a more well functioning health care system today and have the ability to put in the market plans that can be affordable have never been in existence and united states and so by passing them we think that can significantly improve the health insurance system and make coverage both more accessible and more affordable health care a robust private health care sector i believe that the private health care sector brings a lot of value to the overall system that we have here of course we have a robust public system with medicare medicaid the v a system tri care those are all components of the public system i believe the private system is important because it brings innovation it brings energy it brings change it brings ideas that are often used in the in the public sector system as well i think we can have both a private and public system we can build on what's good in the public system and our in the private system and use that as those things to improve the private system as well for all that that's in courage ng then why couldn't there's that does that mean the private system goes on if you have a single payer system i think the primary concern congressman is the fact that we mentioned before with respect to the kashif to the medicare and the government programs the v a all of those programs have lower rates of reimbursement so that in the entire system not all the costs are being covered by not the not the proportional cost of that of care that those programs that those programs give are being borne by the government so there is a shift as i mentioned to congressman shell shock of about fifteen hundred dollars for a family of four every year and so i think one valid concern would be that if all of there was a single payer and all of the costs were borne by the government then there would be none of the innovations that the others have have discussed it would be the end of the commercial but you would then have to have the government would then have to absorb all that other all that other cost and that would make it that would make it more expensive for everyone there is also i want to remind everybody what was said to was said about the value of the what the private sector provides but what about all the costs increases that the health industry is imposing upon poor people with health care not only in their premiums but also in the pharmacy a prescription zzz that are being raised i mean you talk about ca shifting the you ladies and gentlemen are representing companies that keep raising the costs a premium and every single year and yet you're worried about somebody else shifting costs the chair mr conyers time is expired but you know each one of you that way which is to respond to his question please do so and i would and they are all of you to do it good care to respond could we could restart miss farrel could you help me understand how i can increase my sympathy for health insurance companies your way we look at premium increases every year and the way they are calculated is based on the underlying increase in medical costs and so you have to do it but the prophet said greater and help the only people i can think of that make more profit than the industry that you six represent is oral and pharmacy the gentleman's time has expired that's ok now we're grateful that you're here i thank you very much and the chair recognizes mr kennedy and we're grateful that you're mr kennedy and i'm grateful for your public option and given the environment right now in congress with respect to the political viability of the public option i wanted to get to how we  going to implement savings in the event that a public option isn't passed strong favor a public option and want that on the record but i understand that you know the political reality of going on right now in congress shows that that may or may not happen if that doesn't happen i want to hear today what insurance companies are going to do to step up to the plate to make sure that we don't waste a lot of time before we put into place what will be the alternative to a public option that is perhaps a trigger of the public option which means that we're going to have to wait for  show that insurance companies aren't doing their job before a public option then gets kicked into place and of course that's you know an ugly kind of scenario because it basically is saying ok we're going to wait until things go wrong before we fix them and and that presupposes things are going to go wrong so obviously we don't want things to go wrong and what i'd like to system that leads not only two ways to dollars and poor health outcomes for patients but also huge administrative headaches and red take for patients health care information technology as i know is one of the tools we talk about achieving efficiencies but another area where we could generate savings and quality improvements is through a process called improve improvement tools such as value these as potential to save money through the process of administrative improvements and what can be done to incentivize the use of these tools and not  only making clinical improvements but also making you know improvements and the whole process of administrative making i'm cutting out a lot of that red tape that everybody always acknowledges is a big c part of your business because you tell us how do we incentivizing government a way for you to do the right thing congressman i think there are many things that the private sector can work with government on i think you brought up an important element health information technology i think you know there are certainly my company well point is very interested in actually ninety system that's working to the maximum effect so we all know i t can work but it doesn't do a lot of good to have i t and say all those great buzzwords about he prescribe ing and you know doctor you know  supported protocols and all that stuff it's not going to do well if you don't have a way of monitoring whether the system is actually running efficiently and when the doctor says oh go out for these five referrals and they go out to the front and the mistretta clerical will give some three of the five who now who picks up that it was only three of the five how do you measure whether your system is working up to speed who's going to be testing to make sure that you're doing the job in terms of getting the most efficient c out of the i t system i think each company owns that for their own i t areas but i think as a shared acts the problem that's a problem because you cut can't have all these you know proprietary systems out there everybody thinks we got this new age i t thing going and then you know they've all got different systems for we're going to try to do this process more efficiency here fission we here in this process here when we don't have standards we have basic metrics for our clinical care where the metrics for making sure that you're going to do the best administratively and we can do all the protocols in the world when you come into any yard so you know wash your hands get this glove get back love cooperate this way we want this person to be treated so that they don't get an infection what i want to know is what are you doing to standardize so no matter what i t system there is and what health system we know that you all are doing you know not your own for private thing but it's whatever proprietary thing is doing it's it's a good housekeeping seal of approval proprietary system that is squeezing out every bit of waste and duplications and redundancy there is out there how do we know that it's really going to work in to the best effect that asked mr richards for information about his town hall meetings you know about all of our town hall meetings we want to know about yours and so you have internal town hall meetings throughout your audio tapes as well as copies of all minutes of those meetings and all memoranda that discuss that those meetings or actions decided at those meetings so you'll be hearing from ice in a in an even more formal way but just understand that we are going to we do want that information and i've just announced it cummings request that we will ask so we're not singling you out mr richards will ask everybody to produce the same information you may not call in town hall meetings but we'll try to find out what it is you have to try to organize  actual tangible recommendations as i pointed out to what we can do to standardize incentives for them to have widespread standard of the option of i t to incentivize those saving i think mr kennedy this is you know not solely an investigative subcommittee we also look for recommendations as to how the existing system can be improved so long as we have this system i would imagine you  gentlemen probably have some pretty good ideas so thank you mr kennedy and now miss farrow let's talk about it it is the third largest private for profit insure a cordon of fortune magazine but your current management returned your company to profitability by shedding members you made bigger profits with fewer premium payers is history where we were as an enterprise not profitable and one of the reasons the big reason why we were not profitable is we had underestimated medical costs i'm sure that's exactly the point so how many customers did you have to lose in order to return to profitability i don't recall it was looked at in terms of how many members we had to lose it was looked at in terms of how what is the underlying rate of medical cost and how are we going to price appropriately appropriately for that important place forbes magazine said you had to lose about eight million we're going to put that article in the record does that now have an estimate of how much medical expenses the company  actuarial you should be able to figure out how much money actually saved by shedding eight million policyholders i can look at that and i'd appreciate if you look at that all children almost all of those eight million people receive their health insurance through employers and they lost their at the health insurance were netting a raise prices of the group plan beyond what the employers could pay i mean it's not true i would say that if they left us that was beyond  that which they thought was a reasonable premium and thanking us for all now your c e o is spoken publicly about the significant investment in sophisticated information technology he authorized at the start of his leadership i assume those i t investments helped at no identify employers for repricing so i'm wondering could you tell the subcommittee if picks employers to shed by for example the type of occupati workers performed you know that's not the way that we would do that age in a plan the age of the workers so you're asking about our underwriting practices do you do you  does your i t system identify people by age and and do you pick employers to shed by the age of the workers in the plan our i t system does not and of identify people by age the way it works is that an employer will provide us with a list of their employees and along with that list would be other requirements in order to underwrite can scan it one handed identify how long someone has been in the system it would identify how long they have been a member ok now does do you pick employers to shed by claims histories of the workers in the plant such as frequency of emergency room visits or disease clusters like cancer there's a number of people cancers do you make decisions based on some of those principles or any of those programs in your information technology the no we never drop a member it does not happen and you don't screen by location or zip codes for that might be a or do you do you screen by location or is that quote one of the one of the ways the price our business is to actually look at geography because there are significant cost variations by geography across the united states are those are those cost variations determined by among other things epidemic logical factors they are determined by looking at the underlying costs by geography in there can be significant variations just tell is away from one another and that's one of the things that we do take a look at my time round but what i'd like to do miss farrow is so that we can better understand the relationship between your information technology and how it serves as a tool for decision making if you could provide the subcommittee with  narrative so that we can come to an understanding of the relationship between the data that you gather and the way that's used as a tool for your for your decision making with respect to your customers and whether they will continue to have policies that should do this with shedding rescissions even  you know any any use of information technology that would be used to shed any of those eight million customers yes and you know since we're trying to be fair to each and every one of you this subcommittee is going to ask each and every one of you by by letter to provide that information with the information technology that you have how does it help you know does it help you decide which customers to show you how does it do that ok my time has expired we're going to go to mr shack five minutes you ma you mr chairman you know i guess in response to some of the concerns raised i would only say that you know i think most of us agree at least i agree with the th comments were made earlier that health care premium costs are a function of reimbursement rates and so i think it's disingenuous to compare a government run plan to a private plan when a private plan cannot control for costs and a government plan can neither words in a truly static system where all reimbursement rates are set at a medicare or medicaid reimbursement level the system then would be forced to control their costs either by reducing quality or d s reducing options and i think for those of who share the concern of the movement towards a single payer system is it is  clearly focused on the quality of the care the patient will receive and continuing the progress that this country and its health care system has made over those countries with a different plan in terms of the innovation and the technology that we have here in our country i can only speak from my experience prior to being in congress which was in the state legislature in illinois and i witnessed firsthand what happened in illinois u is health care proposal which was all kids which did similar to what the majority wants to do here which was basically offer health care a government plan for all kids in the state of illinois regardless of income i saw firsthand in my congress my legislative office individuals who had children insured individuals who were duly employed by a a an employer who offered a private health care plan and who opted for the savings of anywhere from fifty to seventy dollars a month to take their child out of the private plan and enroll them in the all kids medicaid reimbursement level health care plan now did two things number one i had a very poor legislative district forty thousand voters twenty thousand a month food stamps the for the the people living in poverty who otherwise had access to care their access dried up and went away today there is not a dentist in the city of puerile annoyed that will take in all kids patients second it ballooned the deficit within the state of illinois medicaid program all kids program we are now nine months late in our reimbursement levels so i would just throw this out there as a case in point example of micro cause i'm in our country we have tried a similar option a competition if you will against private insurers second and to that point i just don't i don't buy the concept that the solution to greater quality greater access and lower costs is the government to that point though i think we need to do a better job of providing if we if we understand we're trying to control costs if everyone under everyone accepts the fact that health care premiums rising are making it more difficult for businesses to provide health insurance for individuals to provide health insurance how do we lower the health care premium costs will then we have to lower the the request for services and or the rates that we're we're paying back my question to you would be  how do we give those tools to the consumer because my view right now as consumers if i have a private play health care plan whether it's provided to me as an individual or whether it's provided to me by my  employer i don't have the tools necessary there's been a lot of competition i'm digressing though but there's a lot of there's been a lot of talk about health insurance being compared to automobile insurance well biggest difference i see an automobile insurance is that if my car gets in wreck i'm going to do want to do things i'm going to go around and i'm going to get probably two or three estimates not because i'm going to pay for out of pocket but because i know when i turn in my automobile expenses my automobile insurance rates are going to go up that connection doesn't seem to be there while it's true but that comment connection doesn't seem to be in the mind of the patient as he or she accesses the health care system so what tools can you in the insurance industry give to consumers how can we look at maybe reforming the way in which people buy their health care not the premium not not the premium but rather the actual service how they buy and i understand you can't do with emergency here but if i go in there you know i live in a relatively large city hundred fifty thousand people a lot of places offer m r i s and each one of those locations charges a different rate yet that information is not readily available to me as a consumer i think that is part and parcel to us doing a better job of controlling the costs that go and drive up healthcare premiums so if you could answer that question i'd appreciate it what are you doing now and what could we be doing to give those tools better to consumers general it's time just the witnesses can answer the question congressman i can answer that for my company well point several years ago we embarked on a journey to increase the transparency so that consumers could more easily compare the prices of commonly used services within their geographic area because you're right there is a large disparity between an m r i one part of the city and another part of the city cost for commonly knee replacement in one part of the city versus others so we created what we call anthem care compare which is a web site that identifies the top thirty for elective type procedures  can go into that web site type in their zip code and it will call identify different providers within the area and the costs associated that would be charged by the different facilities for those areas plus we try and tie in as much quality publicly available quality information that is available to members so that if you're considering having your knee replaced at a certain facility how often do they do that procedure and what is the success rate what are the readmission rate for that we've rolled that out in many of our markets across the country and actually we're now providing that service to many blue cross blue shield plants across the country so that's one example of how we can increase the transparency congressman you mentioned m r i s which is a great example in some geographies the cost of an m r i can vary by one hundred percent or more depending on where you go at cigna we've provided the cost of m r i s on our website so individuals can go and look it up the vast majority of the health care providers that work with us allow us to do that there are some that do not allow us to show the transparency but vast majority do and it does help the other thing i would say crease the cost and quality transparency because it's not just cost it varies the quality varies as well among their employees so that they can get the right care on get it at the at the most efficient price they also insane people for appropriate behaviors whether that's not using tobacco or exercising because at the end of the day for safeway if you have a healthier employee it's also going to be a lower cost employee  boy they sound real nice i mean it sounds like everything's rosy and you know when we it's amazing the people who sat here  to the to what you all do every day and i don't much you law individually of course and the thing i said i'm just sort of wondering about and they made a big deal of this whole denial of claims and i specifically asked him the question about whether they felt that things were worse or better sense the clintons tried to get through health care reform and they said that they were far worse  with regard to denial of claims and so miss farrow i'm going to go to you because i for one reason because you said something that interests me you had talked a little bit earlier about claims that there were no there was no one did it only i think it was a maybe it was several views that only doctors deny claims is that right so you all the telling me that there are no other nine medical people who make decisions that a person cannot get a certain treatment pay for it is that what you're telling me just to clarify what i said was that there are no medical decisions or no medical denials that are made by somebody who is not a physician you can deny a claim for a non medical reason and that decision can be made obviously by a non clinician and and struggling with what the definition of a denial of a claim is ok to me a claim when i cited what the survey said on about us a claim there are basically three kinds of claims and the first kind has been really enunciate here quite well that's when you get a duplicate claim ok when you've done your rendered service as you said and then you get a claim that comes in and then another claim comes in and you probably paid the first one in the denial rate in the numbers i cited the five point seven that we have point four that we have in the eight point seven that medicare part b has in those claims those those the biggest cause of that is duplicate claims the next kind of claim is for experimental or investigation all where there wasn't any  preauthorization which was also discussed earlier than the last kind is where the employer has not decided as it has through the policy terms decided we are not going to cover that kind of a claim that kind of a process that kind of a procedure now the other thing that we're struggling with when you are asking questions i believe you're also talking about coverage determination gets a people have coverage in advance of when services are covered ok i've got to ask you this why understand that a person can have that treatment pre authorized and even get pre authorization number get treatment and still the payment for that same procedure may be denied is it true in a coverage determination there's an initial decision made about whether this procedure is covered and that in our company like in the case of this ferals company that's done on  denial of coverage is only for medical reasons is only done by a licensed board certified medical director and so and so he's not of you all then nobody up here has anyone who financial incentive for denial of treatment nobody right i answer before neither ok i just think that i think that they based upon the testimony that we got yesterday  testimony was clear that there were many many instances that were insurance companies are basically intentionally and maybe coverage make one call the coverage make all the claims whatever holding back decisions and literally waiting for certain things to happen and sadly in some instances death and then you know that and the person is denied one way or the other so  as the chairman said he would automobile person dies and that's a sad sad situation of the report from health care for america now on july fifteenth that reported that profits at the ten largest publicly traded insurance companies i am not aware of the specific report that you're referencing but as profits for every dollar we take in we pay about we make about five cents in profit paid out eighty four cents in medical cla sixty six per customer per month i see mr ceci have you ever heard of this statement i am not aware of that report either ok and  to you you must have heard about this i have not heard of it and you wouldn't be in there because we are not investor owned company but i know mr collins has as a matter of fact chairman conyers i've seen that  report in the newspaper and i believe it's just it's somewhat deceptive in the way it's framed what it there's been an enormous amount of growth among the top companies and  it's simply ad up the gross profits of companies as they've grown over time so there is a larger share of profitability today you know and those top companies you know than it was ten large and years ago but that is not mean that profits have grown per member per unit of business per per customer that it doesn't one necessarily doesn't flow from the other it's a function of the lie you you know about this don't you i'm not familiar with that study but let me comment on my company well wait a minute i don't want you to comment on your company you know for me with the statement i'm i'm not you know i'm not you know you're not i'm not familiar with the with the study or the statement well how long have you been in the business i've been at my company since the beginning of two thousand and one and it ok every ever heard of health care for america no no i've not ok well well let me let me ask you this question are you familiar with a recent study of the american medical association that ninety four percent of the insurance markets in the united states are highly concentrated i'm not i would you know them anyhow i'm not familiar generally with those statistics but it's not an unfamiliar statistic that in terms of some markets don't have a lot of competition but when i was markets have much competition scuse me farrel you're a student of the i know you subscribe to mit anime journals you've heard of it i am not aware of that you never heard of it richards you never heard of it no i have not congressman well let me just ask you the same time as anybody ever heard of as anybody ever heard of the a m a yes yes largest companies and health insurance the c e o s compensations totaled one hundred eighteen point six million dollars an average of eleven my annual compensation is something that is very private to me as well larry let me just admit you don't want to tell me is that what you say i'm saying that it's it's i consider my compensation to be very private you know that i would be happy to submit it to the committee in writing but you don't want to say it publicly you know because like do you consider it to be private mr connor's before you came we asked the witnesses to submit information about their compensation in writing or that they choose not to answer at this committee meeting but they well presented to us all and writing ok we could we can still get that if american dream last question does anybody here i've never had a hearing where six executives of health insurance well in the same panel this is a new experience for me do any of you want to tell me what your annual compensation is just for the record without having to submit it in writing it in writing but it's a privacy issue it's what i consider it a privacy issue and i'd be happy to submit it ok well john yes so you you've agreed to submit this information to the committee as long as we have that agreement that's fine you can choose to answer the question now or you can choose answer in writing clearly your choice and s set up by our society to earn what they're doing and nothing wrong with that i think what is wrong as the gentleman is trying to point out is that last year the head of cigna earned eleven million dollars now if you're go talk about where that money's coming from is clearly coming from denied claims the head of the united health group earns nine point four million dollars now these are public records so you don't have to ask anybody here they're they're  nice to me i'm sure they love to be called senior executives but frankly i think they hope to be senior executives without those kinds of pay scales but they're i'm sure not at that level yet but the point is we're trying to make the point that the industry is allowing for these kinds of exorbitant pay at the very top which just begs the question we it's an allowable industry in our country but we need to know you know kind of what is this a matter of where these dollars a comment from when people are paying these previous and people are getting rejected for health care how these compensation so it's all about it so i appreciate the questions you're asking i also understand the fact that these individuals here have every right to say and do what they're doing because the kennedy we're going to get an injury if i may miss canada mr conyers time's expired however we will now go to use you mr kennedy help the government or the society change reimbursement reform if we known for years that our system is upside down that all we do is pay for sick care rather than health care if there are simple ways for us to keep people from being frequent fliers in our emergency rooms if we just did x y and z and that that would lessen the pressure on  to charge your customers exorbitant premiums then why haven't you and your industry taken upon yourself to be the biggest advocates for insurance reform over the last twenty years and furthermore what i don't get is that back home like most of my businesses like our for most part are passive when it comes to their insurance premiums they let their insurer insurance carrier is going to dictate to them they said all we hear is your premium this year and in fact it's the insurance companies that work for their the company that they are  you know subscribing for and they've been hired to do their policies for and so i just don't for the life and they understand why if it's in the interest of their client to reduce premium costs and so forth and health  insurers in this country haven't been at the forefront of this healthcare debate saying listen we've got us here are the ways we can stray structure the health care market based upon a capitalist system whereby it pays to have better care at reduced costs that's what i can't figure out mr chairman if this is really about making money we know there's plenty of money to be made why can't they build a better mousetrap to make money and also saved save money and give us the answers you know we're just trying to do what i think is cohen's consistent with that what they're trying to do and that's lower cost and build quality they're the experts that keep saying they've got all the innovation because where they're in the private sector then why are they giving it to us why do i have to sit up here and ask about things that i frankly i'm not all that educated about because my staff person puts in a front man they're going to promise to get back to me on you know value based streamlining and engineering that cannot apply to health care you know all of these kinds of things that we're going to have to try to what have you put in law so as to enforce insurance companies to bring their costs down why do we have to put that in the law i'm sure they don't want to be regulated anymore than they are being regulated so tell us why because we're being pressured to bring our deficit down we've got this enormous deficits going to swallow up all our future dollars taxpayer dollars our taxpayers are going crazy because they're going on our tail for having a big deficit and what we're trying to do is respond to them and say health care is one of the biggest financial nuts our country has going forward so we're asking you help us because one way or the other money's going to get have to be streamlined and it's a question of whether it's going to be done the expense of our consumers which we don't want or it's going to be done efficiently and with quality in mind so that people don't get their healthcare cut just because we haven't been the on the forefront of making the right decisions policy wise that allows them to continue their health care in a most efficient way possible maybe you could comment on why you don't think you guys have been on the head of the game in terms of getting better reimburse reform prior to this year why does the government have to all all this incentivizing for health rather than secure why why are we the ones out to do this why can't why haven't you been there for years doing this stuff congressman they'd love to respond your question first of all i think there are some things that we can do individually certainly at cigna we do several things to improve the health of our customers for instance we have a gaps in care program where we monitor for evidence based care to identify if our customers aren't getting the care they need for instance somebody who has recently had a heart attack who is not on the proper medication a beta blocker by mining that data we can then outreach to that individual's doctor and to the individual and say shouldn't this person beyond a beta blocker medical evidence would say that for most people that's appropriate and if they don't take that drug they're much more likely to have another heart attack so that's an instance where we are using technology in our people to actually increase pharmaceutical claims  for the better health of the individual that's something we can do and do do alone today relative to your payment reform question again cygnus i'm working with a variety of health care professionals referenced dartmouth hitchcock in new hampshire we're actually working with five other entities around the country for payment reform or we have a patient centered medical home where primary care doctor can coordinate the care because it's it is a complex system if somebody is very sick they tend to need a lot of different doctors and having that primary care person look after the care is very important a lot of primary care doctors can afford to do that today because the the reimbursement medicare and private insurers pay them it's very tough for them to be able to that's the medical home is a promising pilot that we're trying we're paying extra money to those primary care physicians to allow them the time to help coordinate the care so i think there are things that we can do individually there are things we can do in partners ship with health care professionals the doctors and hospitals and then i think there are things that the government needs to help on as well and cigna in the industry have definitely supported reforms for a variety of things that we've mentioned at the at the committee today where we really need government to work with us to to help in x and reform as well we look forward to working with you in the in this debate congressman kennedy my point is that medical only known for a long time works wh piloting i know it's what we're highlighting in the legislation but we're only doing it because we're slow walking something and we know works it's been demonstrated over and over again and it makes so much common sense it's like this whole trigger saying we're doing what is inevitable what we're doing going to take us extra four or five years before we take the whole medical home thing to scale because we're just you know see how many financial interests that we're going to have to tiptoe around in order to get this thing implemented but if you guys stood up and said hey we all know medical homes are about making more efficient getting the primary care doc and gatekeeper more time to help coordinate care because eighty percent of the dollars spent on twenty percent of the people they're the chronic users they're the highest paid users of health care that's where we get the most money let's do it bomb let's go with slowing down for the reason we're slowing down is because there's this inertia out there because everybody's trying to protect their piece of the turf and we won have that if insurance was more proactive it's in in your interest to be more proactive because at the end of the day we're going to hit the wall and we hit the wall you know everyone else is well off is going to be fine it's the people in the middle in the bottom a going to be the ones that get hurt you know the potential savings i want over what period of time over over a period of time from two thousand and ten to two thousand one team and i will submit this report to the committee as part of the record how much was that again it was five hundred forty billion dollars so  i'm sure that the insurance company executives who are here recognize that everything changed with respect to health care in america you're facing a totally new environment than when you started your careers in health care forty seven million people uninsured another fifty million under insured as you know many people are losing everything they have because they can't afford to pay their hospital bills and many of those people had insurance and so today we're talking about this business model but we also have to understand i mean we have great respect for you being here but we also have a great understanding of your position and your political  power let me give you an example the insurance companies are so powerful that you were you were able to take h r six seven six medicare for all right off the table right at the beginning of th for either party just about one party or another both parties took it off the table there's eighty five members of congress are signed onto its ability as your god is now drafted eighty six thank you but but the point the point is that you were able to exert your influence and you gave some of the reasons here today you know very clearly clashes with your business model we understand that that you very influential here based on your influence we're seeing the so called public option which would provide some competition we understand you feel that it would be productive but based on your influence the public option looks like it's it's going to be very difficult to get into a final bill and of course the industry is that an influence in shaping issues such as triggers and  would mr kennedy had to say that i think is so important and where mr kennedy's comments lead to is that you should be thinking about the fact that the business model that you have could end up being could end up killing the goose that laid your golden egg you may be reaching an end point as as to how much medical loss ratio you can go before people start to say what's going on here how far can your executives go making millions of dollars a year people's claims are being denied you say you might say there's no connection but the public does make a connection  and look at where we're headed towards this is where your presence here is not a small matter we could very well be headed towards a condition where health care reform in america is really more of a continuation of what i call insurance care whereby the thirty million people according to c b o would be potentially covered by h r thirty two hundred without a public option thirty to thirty million people would be pushed into private plans they have to choose among start to think about a different model of businesses social responsibility lecturing you have a sharing and sharing some thoughts the insurance industry because of changes in the global climate is to take an enormous hit to clean coastal areas over the next forty years there are areas we should be working together but on health care you may eventually to think about what it's going to be like when you wind down your health care products these are i frankly mr chairman i think sooner or later whether it's this decade or another decade we're moving towards a condition where more people are going to be uninsured more people be under insured premiums co pays and deductibles are going to be out of the reach of more and more americans and they're going to put it on you and you know that and so you know i didn't call you in front of this committe today to embarrass you that's not my intention at all we need to get information about how your business model works because people really need to understand it we understand you're not charitable organizations that's not why you were formed you're responsible to shareholders who understand that if you if your medical loss ratio changes to significant wall street will punish you we understand that two question is is this business model sufficient to provide health care for the american people at a cost that's affordable there's a collision here and you are you have to be at the time and place where this collision is happening i'm going to ask one final question as i wrap up my time here yesterday we received testimony from aaron denied coverage on four separate occasions causing a delay of one hundred twenty six days in his cancer treatment he ended up dying from the cancer now aaron ackley told this committee that he had been enrolled in medicare that that had he been enrolled in medicare he would have received his bone marrow transplant right away and government run medicare provides primary health insurance to most senior citizens has developed standardize forms standardized benefits it's administrative cost as you know a fraction of yours as a percentage of revenues now i'm just like to go down the line and answer this question isn't it true that your reason for not adopting medicare is coverage standards as your own is that you could not deny payment for expensive treatments such as the one i just referred to because because i got a chance to to ask you about your town hall meetings and i'm really interested in that so thanks for being a mr richards is great i've got the same problem that everyone else mentioned are one of our chief medical  officers couldn't answer that question i mean you know where you may not be as familiar with the medicare standards and i'll accept that answer but i think you understand why it's a question and that is we're trying to get to the genesis of the business model here how to make money now many americans believe that insurance companies make money not providing health care that you first obligation is to the stockholders shareholders and then you have an obligation somewhere down the road to the people are your property holders you have to have some obligation you do pay you said you have you have a pretty good batting average in a lot of that when you get into the mechanics of analyzing it the raising questions which is what we did here today mr conyers do you have five more minutes for questions or do you wish to do so nearly exhausted mr chairman i hardly have anything else to say but the think you for this  our witnesses for holding up but you know it's been made public that the american medical association sort of come out for  with obama or not what about your companies have ever companies said anything one way or the other about obama's strategy of health reform anybody you know yes a congressman cygnus come out as have many others in the industry and supported many aspects of residence plan oh ok well let me put it more accord with that about vera and that everybody shakes their head that the part you're going to go along with and some parents obviously public option is not one of your favorite parts of the bill you let me let me just ask you about  now you've got a reaction did he make a little impression on you somewhat favorable i'm not as how does that resonate it's been on television newspapers commentators doctors come on i mean how long do you have to congressmen how much  my understanding there's no legislative language actually that's been shared yet but again we are studying at least what has been released really but that's my understanding yes but he's been preaching about i bill and copping headlines all over the place you say there's been nothing specific there's a bill out it's got the chairman of the finance committee of the senate million medical bankruptcies in the united states that is personal bankruptcies caused by medical bills every year  individual bankruptcies in the united states are due to medical bills that people couldn't afford you'd be concerned well may i send you some things you're sending us a lot of things and i send you some more information about that subject ok thank you mr chairman for  forward to getting responses to the ones that i asked earlier i would ask all of you if you just give me affirmative in terms of working with my office and closing a loophole that the university so the bill talks about this as covering sloyd the based health insurance plan so you see the wrinkle there and as a result since students aren't considered employees they're not subject to the requirement that there's a chance companies are who do who insure students aren't subject to the requirement for parity and because suicide amongst kids is the third larding largest cause of death i would ask all of you now would you be willing to work with me to close that loophole in this health bill with language that ensures that the spirit of the law that's applying to all of you for every other health insurance plan  trying to make sure we get that facilitated in this bill so that the kids don't get you know disrupted and their health insurance coverage obviously a lot of other things but just want to make sure we domestic policy subcommittee of the oversight and government reform committee we have gone over three hours now and the witnesses have been much appreciated in your presence there the title of today's hearing between you and your doctor the private health insurance your accuracy i feel as mr kennedy just implied that we've barely scratched the surface here but i hope that the witnesses understand and i hope that you feel that this committee has treated you fairly there's no browbeating here there's no trick questions just no attempt to try to force you to give an answer over something that you're not ready to do at this moment and that's the way we're going to continue to proceed we are fact finding investigative subcommittee are going to continue to try to get information from the industry so but i don't let that interfere with the conduct of this meeting i want to make sure that you're given a chance to put your point of view on the record and so will you're treated fairly here we're hopeful that you're going to  treat to the american people fairly and i think as we as we move forward this issue of awareness as a counter is going to send information i think it's just a time that we can become more aware of your business model and maybe you can become more aware of why we have such great concerns and why there's a national movement right now to really move away from the model that you've spent your life building so it's a great time for this debate in the country  health care ends up being a flashpoint you know this people losing their jobs their homes their retirement security their investments and you're right at the point where it's a it's a flashpoint so let's see if there is a way that we can find t