tried to we've overridden the payment cuts and that's made it more difficult i think for us to get a long term fix but as a result of ignoring this  at three hundred thirty billion over ten years if we just repeal it and let the f b i go ahead now taking a note from my former colleague in the air force who went to iraq with the army he had and that the army he said he wished he had that goes for me as well i work with the budget i have and not with the budget i wish i had  fortunately we can count on med pac to at least provide us objective advice on how to approve or protect the programs at least to criticize them for us a fairly objective way even if they aren't willing to come up and give us an exact program to follow we asked med pac to analyze options in the in the two thousand and six conference in congress and to discuss the results of their analysis also we have two people who have many of us have worked with in the past who have first hand experience in managing and medicaid services gail remembers that during much of her tenure i chaired the committee when the president's father was in the white house and we worked with the physician community and the republicans and developed the physician pay schedule glen will tell you that one was a very good either but maybe it was better than what we've got i don't know if we'll have a similar success but i look to hearing from glen and i'd like to give dave camp a chance to put his spin on this being session well thank you very much mr chairman again welcome back to share my hackbarth it's good to see you again and i want to thank you and congress to consider including tweaking the existing formula creating a completely different payment formular promoting several new quality and efficiency initiatives and i commend you chairman hackbarth and the med pac staff for completing such a comprehensive report this report wasn't only requested because of the inherent flaws in the s g r formula not only our physician scheduled for a negative five percent payment cut through twenty fifteen the incentives under the s g r formula are inappropriate medicare now pays physicians based on the quantity of services provided but not the quality and as physicians are threatened with payment cuts a natural response is to provide more services in fact c found that between two thousand and two thousand and four the volume of physicians services group nearly five percent a year the payment system for physicians need to be changed so that they are encouraged to provide appropriate high quality services even though med has proposed a wealth of alternatives in developing a long term solution there is no easy answer to address the issue of cost and the cost is significant scrapping the s g r formula and replacing it with an index similar to the medicare economic index costs two hundred sixty two billion dollars over ten years and providing just a freeze in payments from two thousand and seven levels costs thirty four billion dollars over ten years and year after year we've been active temporary fix it is a problem of medicare payments for physicians these temporary fixes failed to address the underlying flaws with s g r only make any future fix more expensive but with a two hundred eighteen billion dollars problem last year is now a two hundred sixty two billion dollars problem this year we need to work together with med tax administration physician groups to come up with reasonable a reasonable solution to the cost issue and once the cost is resolved congress can start looking at long term alternatives to the formula and we start paying physicians for the quality not the quantity of their services and again i thank the chairman for holding th talk about a report on alternatives to medicare system as requested in the congressional mandate med pac is analyze the pros and cons of expenditure targets in general as well as the five options included in the mandate we present to you to alternative policy pads for your consideration one that does not include an expenditure target repeals the s g r and does not replace it the  drawn from clinicians and health care executives and academics and former government officials despite the diversity of the commission we have generally been very very successful in reaching consensus on our recommendations to the congress alas in this particular case it's not going to get them possible to forge a consensus on all aspects of the s g r issue  to help you understand where the commissioners do agree porton areas of agreement as well as where we disagree divided the s g r problem into four dimensions and if you look at the  efficiency what we mean what med pac means is maximizing the benefit to patients for any given level of expenditure the important point is efficiency is not just about reducing costs it also includes consideration of the quality of the service provided so increasing efficiency is important vital goal for the medicare program there is unanimous agreement within med pac that expenditure targets themselves do not establish appropriate incentives for efficiency and you've heard this before in previous testimony on s g r let me give you a couple examples by constraining only the amount paid per unit of service  at least in some instances the expenditure target appropriate or cost increasing behavior that has little or no benefit for patients moreover of course we fear that payments that are too low for example as a result of sustained repeated cuts in the payment rate could end up with pete ing access to important beneficial care to establish proper incentives for efficiency in the medicare program congress must pursue the agenda briefly described on this slide and four points are very broad there's lots of detail behind them i'm not going to in my opening statement go commission is unanimous in believing that these sorts of steps are the policy changes needed to improve efficiency in the medicare program it's not an easy agenda but it's an urgent agenda and one that we're choir's substantial investment in c m s is capability to develop implement and refine payment systems we're making progress on this agenda but at this point it's far too slow given the needs of the medicare program but let me go back to the dimensions of the problem the second encouraging fiscal discipline policy making as you said expenditure targets don't establish appropriate incentives for providers well why would you want to use them here is an issue where there is a division within the commission there is a group of commissioners who believe that expenditure targets could be useful and establishing discipline in the policy making process to be real blunt about what that means targets could be used to limit future increases in medicare payment rates for providers in addition this group of commissioners believes that having an expenditure target system in place may create a change in political dynamic dynamics increase the political leverage to force providers to accept reforms that they might otherwise resist  in important respects if the target succeeded all physicians are punished regardless of their individual performance moreover all regions of the country are treated equally even though there is abundant evidence that healthcare delivery more efficient in some areas than others in finally targets only physicians when medicare has a total cost problem not just a physician cause problem with those points in mind the commissioners who favor expenditure targets believe that it would be possible to develop a fairer more equitable system one that applied to total medicare costs that apply greater pressure and high cost regions than low cost regions and one that allowed an opportunity for groups of providers to band together and what we refer to as accountable care organizations that would then be assessed on their own performance against the congressionally set targets make no mistake making expenditure targets more equitable in this way expanding them to part graphically adjusting and so on is not an easy task time determination not a little money would be required to accomplish that task and without adequate time patience determination and money the risk of unintended consequences would increase last the last of the four dimensions minimizing or offsetting the budget neutrality for medicare advantage plans which save one hundred sixty billion dollars couple that with restraint on updates from other providers as you know med pac is often recommended update factors lower than the baseline in the budget and those proposals add up to a substantial contribution towards that two hundred and some billion dollar cost for repeal of s t r without mr chairman i'll stop and i welcome your questions deal with the system without regard to that yeah we think that using payment policy to change behavior both to reduce cost and improve  quality makes sense that's not to say that it's an easy thing to do but we think it makes sense we think that there is abundant evidence that providers respond to payment policy and change their behavior accordingly we have i mean the easy way out is to deal with this just for next year and hope that the reimbursement fairy puts the plan so the question is c m s have a lot more a lot of to make your opinion administrative decisions that will resolve some of the volume quality problems that we should be as we call it we believe that there are some services within the tradition fee schedule that we're paying too much for him because we pay too much for them there is a profit opportunity that's attracting capital attracting effort on behalf of physicians and were increasing expenditures without a commensurate increase in value for patients so that pricing agenda bullet for these problems at the same time the clock is ticking financially with the retirement of the baby boom generation so the fiscal pressures facing the program are about to escalate think there are real issues about their capacity to develop implement and refine new payment systems so we need to expand that bottleneck so that we can move some of these ideas from concept  the march one report med pac report says that medicare access to physician services remains stable but i'm hearing different things from my constituents northwestern michigan  d rural areas particularly how will a new physician payment system safeguard access to access frankly well  a couple points from a national perspective we believe that access to care for medicare beneficiaries remains good and we draw that conclusion based concern in some parts of the country is access to good primary care and we think that in fact important respects medicare underpaying for good primary care and that's an important part of the agenda that is in my testimony so that also important and retaining access as you know congress in addition to that has taken a number of targeted actions directed payment for rural physicians where there are  information in the program information whether steps we might take to get additional information on performing well and also to ensure that we're getting quality care not simply volume as well  research we think that's small compared to the magnitude of the task at hand and we think that a much larger investment in what is truly a public good information about what works would  called for and the federal government ought to take the lead in doing that will be looking at some ideas on how such an effort might be structured where it would be housed and hopefully will be making some recommendations on that in the future in follow up to what mr starke mentioned it seems as though some of this could be done administrative leave by c m s and particularly your comment that we're paying too much for some service that seems to me that's not an issue for the congress values some changes were made that resulted in increases in relative payment for evaluation and management services we believe that there are some design issues in that well whether they could resolve this problem whether it could resolve this problem internally or whether we needed to come up again and again and i'm just trying to get a more general understanding of whether that they have the discretion that they need it may be more of an issue of resources discretion as you well know issues like the payment update for physicians and other providers are health support pilot project which was established under m m a this is to help manage patients with chronic illnesses and what i want to focus on is not so much the merits of the design but the fact  was set up as a pilot so here's an idea that congress wanted to explore let's test it in a systematic way and then if it works give the secretary to move towards implementation as opposed to systematic review of those relative values and there are certain indicators that they could look at the possibility of overpayment like changes in technology the practice  expands when a new service is implemented often it comes in with a relatively high value physicians learn by doing over time and the price to come down over time but it doesn't it stays at the high value so there respects pay for performance for physicians is more complex more challenging for hospitals or medicare advantage plans more challenging and complex for a couple  practices they have weaker informational infrastructure than the institutional providers and the like so we think that it's important to move ahead with pay for performance for physicians but to do so carefully and select measures that we have reason to believe could have a particularly important quality benefit for medicare beneficiaries  just speak for myself here as opposed to the whole commission i'm a little concerned about a willy nilly process for developing new measures for physicians more is automatically better we've got to have more measures for every physician type without any attention being paid to the benefit for patients of changing performance on a particular measure or the cost associated with collecting the information so i think some care needs to be with physician pay for performance in particular that we've got a good benefit to cost ratio as we choose and implement new measures been saying that the information that's available out there is not accurate and they're working with two or three year old and they refused to go to the private system for upgraded that and that can you talk to that issue for me not to that specific issue mr johnson and certainly i agree with the premise that too often the congress and med pac for that matter work with outdated information that i'm not aware of c m s has respond you all to name look into that study not in this particular report but we've looked into it in the past so you can talk to how do we fix it in terms of how you revamp the system yes that is a technical question that is beyond the expertise of a commission like ours that's an operation question for operational experts we are consumers of that information and would you like to deal with old information is that true that's precisely the opposite of what i said m johnson is that we have repeatedly said that it's a problem that much of the information we use is outdated and we need invested heavily we're together for ten years at least tell me why no one has figured out how to get current data well med pac is a group of part time commissioners we need seven times a year we don't run the medicare program that's a question best directed to  for immediate activity i don't know that that makes imaging more expensive you know i think that there can be a case made in some instances for having an office imaging as we've said in previous reports so we are concerned however that that can lead to overuse and we've also expressed concern about the quality of the imaging that results  them highly metropolitan and yet one of them was a metropolitan area the other was a rural area and the payment schedule was totally different how are you going to avoid that if you go physicians hospitals all other providers include geographic adjustments they include geographic adjustments to try to match the payment level to the underlying cost of delivering care that continues today that's not old news that's current news what is suggested in the s g r report is something different which is to look at the total expenditures per medicare beneficiary beneficiary so the proponents of a geographic system and they are a subset of the full commission not the entirety the proponents of such a system say if we've got a medicare cost problem we ought to apply of the problem right now is that we have a target in this case for physician services of the g d p that is totally disconnected from the reality of health care delivery so we established a target live payment updates to that target without a plan for how we would actually change utilization patterns to get them in line targets within the commission believe that it's laid out in my testimony pages seventeen and eighteen you've got to do that and then you can't expect expenditure targets by themselves to solve the problem you've got to go through medicare payment systems for physicians and all the others change them and change the incentives if you want to change the long term trend targets by themselves will not do that the other thing i wanted to talk commissions you let's reward the results let's reward a higher quality let's reward better coordinate specially model would get you there are many multi specialty group practices are very good at those those subspecialties other yeah and that's precisely why a good example of why the commission didn't say well multi specialty group practice is the answer for medicare there are many parts of the country where it wouldn't work well we don't have the provider infrastructure for that model to work well we don't have the patient volume for that model to work well so it could work well in some places but not others in a rural issue so obviously there might be some resistance from stakeholders as well i wonder in any system of expenditure targets how much we should be worried about all the monthly creating a system where there is rationing how do you assess that risk given the challenges facing medicare in the out years what should we be prepared to do to response is to invest more in understanding the effectiveness of different treatments the ability to actually compare different treatments the way the system works now all too often we just pay for pay even more for something because it's new without a clear understanding of whether in fact it is bringing additional benefit to patients and certainly without an understanding of whether the additional benefit is equal to the added cost you know that's a luxury that's going to be increasingly difficult for the program to afford as the baby boom generation retires and all the demographic forces shift dramatically in a different direction so we think so as to avoid sort of blind rationing of health care what we need is more information to guide thoughtful decisions about appropriate utilization so in the case an expensive new treatment rather than just saying well we can't afford new stuff it may be that that new treatment is useful in the high benefit of applied to a particular subset of the patient population and if we have the right information we can target those expensive new initiatives on those patients who will benefit and help assure that they're not applied more indiscriminately and system of pay for performance judging from your presentation you feel pay for performance is a significant part of the solution and repositioning  medicare system and when it comes to paying physicians i've focused on pay for per frankly pay for performance in some other areas of the medicare system deal believe that with the range of special days with the range of services that we're trying to reimburse here pay for performance can be developed to a degree to be sensitive enough to provide really the right incentives is this a system that we will be able to develop to the degree necessary  achieve real benefits yes i believe the answer to that is yes and although as i said earlier i think that the task is markedly more complex for physicians for reasons that we've talked about and therefore it's important to proceed with care and thoughtfulness focus on areas for example where we think that there would be a particularly large benefit to the medicare population if we can improve care for certain types of illness the gains could be significant if we could improve coordination of for we pay for performance right now it's just a matter of how we define performance right now we define performance as well do more stuff more high tech stuff more new stuff that's what we reward so it's not a question of whether we have pay for performance but what are the signals that we're sending to physicians  thank you for being here with us let me ask you to give us a little bit more information about your stance med pac sense about how c m s can implement and operate with within this new world that we may ultimately devise does c m s in your mind have the resources and capacity to take us to a new level a different place with what it currently has or will it have to reorganize bring in new folks change certain concepts get new technology equipment what will they have to do to get us to a point where they can actually make this very detailed review of the agency its existing operations where the greatest opportunities are and by using the word significant that implies that the way things are right n give us the expertise to try to help implement whatever we do well again bruce and gail can probably address that better than i i am concerned work these days the expectations are enormous the resources aren't growing equal to the expectations it's a tough place and when you create those that environment it can be difficult to recruit and retain the sort of people you need to make a program work so there are complicated issues there and as you say there are well beyond med pac specific expertise what we see is work we're customers of their product much as you are and see good people working hard to do their best for the program for the congress lacking necessary resources in this effort to get away from the cookie cutter approach that we currently live with invariably we're going to run into the tensions that exist between the various interests involved i know that coming from southern california where you have a very high cost ratio for any medical services health care services it's going to be important to know that the tensions between those who are currently getting reimbursement rates that they like try to help adjust for those who are getting what they like your sense of whether or not we can parcel this down to a point where we do a better job of targeting the reimbursement dollar to those who are providing a quality service is given the political environment that we're in possible to get those stakeholders who are currently in the system to make adjustments that will allow us focused on the technical aspects of developing and implementing new payment systems to the extent that your payment changing payment systems often you're distributing money redistributing incomes and shifting resources geographically and obvious from your question experience firsthand how difficult and painful that can be i wouldn't be doing this if i didn't tend to be an optimist were taught before the hearing about the difficulty of improving things like the hospital wage index you know we can come up with ideas for how that could be a better index that more accurately reflects costs in different communities a lot is scattered throughout capitol complex and i guess even at walter reed itself there's a lot of attention being paid to quality care in the veterans administration and of course natural reaction given the revelations about substandard outpatient care what's unique we have similar challenges looking down the road of medicare perhaps not falling plaster and mold but the fact that we are going to have nearly eighty million senior citizens living longer you know the baby we were in generations retirement is imminent the first baby boomer reaches sixty two in just about three hundred days  and so the challenges and we've talked about them we've talked around them some as well the challenges are mind you mental although a bit different than course what's being discussed in the v a system  to kind of piggyback on what my my friend from california and i mean no disrespect by this as far as the geographical alternatives and the proponents i presume that the idea would be that congress would provide i see a mass with additional rulemaking authority the reason i make that presumption is because when the chairman gavel this hearing to order i noticed my good friend from las vegas  los angeles saint alina and fremont hills obviously the west would be well represented my friend from fargo and with due respect to the gentleman from austin having lived through a brac commission and  seeing the politics of the base realignment system you know how do we take politics out and i think sort of a generic comment and i think you were nodding along i presume a mass looking at the cost per you've written but once you write it in it affects the budget baseline and it becomes very difficult to change so introducing some element of secretarial discretion could be a way to take off  statement and so let me let me pull the panel live grenade and if you want to leave that grenade on the table for our next panel so be it one of the things that that you referenced in your bullet points on page seventeen again shared accountability arrangements and you mentioned again sharing yes specifically physicians collaborating with hospitals and in the next bullet point down as well bundling services bundling both the hospital payment and the physician payment for a given d r g and again in the pure policy vacuum of course that's helping to increase efficiency and without naming names of members of this panel there have been some that have been have made some strong statements about those is to get physicians and hospitals to work together to find ways to reduce costs and improve quality on the commission we've hospital executives in physicians competition with hospitals collaborating in the interest of the patients but let's look at this is competing businesses and each maximize our share of the pie in the long run that's not good for patients that's not good for medicare and so we're trying to find ways to bring physicians together with hospitals to improve care gain sharing and bundling of hospital and physician payments as potential path to get that team work  back into the program importantly changing the payment system so that we paid more accurately for some of the services that are most popular popularly provided through physician hospitals  and blunt about it to take away what we think is an inappropriate profit up opportunity some services some cardiac services for example c m s has taken some initial steps in that direction  but not nearly as far as we recommended in our report we think that is a better approach to dealing with specially hospitals fair pricing we also think it's we ought to give hospital some ways to collaborate together and share in the savings right now if physicians have a better way about how to deliver hospital care the program says to them will go out and start your own hospital and then you can share in the profits if you collaborate with the hospital administration you can't share in this efficiency gains and so the system is towards let's go compete physicians against hospitals as opposed to let's collaborate together in the interest to better care for our patients that are going to say sam johnson's comments hold true for me as well a little bit of frustration here from for my part anyway relative to utter lack of guidance for medivac i mean you're saying that integrated systems produce more beneficial and cost effective results and yet you're not for continuing the moratorium take a look at the s g r problem and think it needs to be maybe there should be a target maybe there shouldn't be should be good if we had to pay for performance but you don't have that fleshed out to me it reminds me really of what the secretary of health and human services said when he said he sure looks forward to working with us on a long term fix and there's not a nickel in the budget passed a one year patch for a long term fix everyone is just kicking this thing down the road and not getting around to any meaningful effort to get their hands around it i mean i think what you've said relative to the strength of integrated delivery systems fries in the face of med pac's position quality at low cost we've done it because the clinics and the hospitals have become single entities and it has produced i think a superior result on the metrics package developed itself to  valuate these things what might you offer us in terms of guidance for incentives that we can put forward to drive this kind of cost effective sit down with you and go through it isn't as much detail as you would like i don't think that it's true that we haven't made specific proposals it is true that we haven't come up with a  single silver bullet but that's the nature of the problem anybody who tells you that they've got a solution for this frankly isn't being honest with you  it's not one change it's a lot of changes and a lot of changes over time subcommittee that relate to this hearing so i will have a little more homework to do at the same time i i think it's just i think any very objective group or institution that really has suggested a solution to the propose that may defer or be a combination of the solutions they suggest i think that the fact that there are split i don't know if i've ever asked why and how higher split out of the colleagues on both sides and how you have how you come together where though a way to meet budget targets you're not going to make you know my nice theory is that when everybody in the room  we've got the right solution you drop the gavel if anybody smiling like you are you got away with something your third quarter and i'm not sure that mr blitzer is going to let you take that out of los angeles so that's what we're faced with  ad and i'm and i'm quite sure at least at this that it's minimally partisan it's a i don't so i i think we have to look to med pac as a good example of what will face the divisions in the provider community of most to all of the interests that are represented and med pac by their by the commissioners and we're going to hear less  we have plenty of time for a quick second round for anybody who wants it but then we'll hear from two people who've worked on this problem before and let me come around again sure well thank you mr chairman i appreciate those comments and you know there's a letter we have in our materials from the acting director of the center for medicare management kind of goes through this problem and talks about the significant growth in volume and intensity of medicare physicians services and then as we have not been able to come to a conclusion as to the causes of the sustained increase so they have now you can come to an agreement as to how and why it's happening much less come to an agreement over solution here which makes it very difficult for a the growth in health care services and spending in general as well as his issuance specifically is a complicated phenomenon lot of it's good you know some of it's too two wonderful new that leads to better outcomes for patients and we sure don't want to discourage that on the other hand intertwine and there is a lot of stuff that expensive low value  principally because the tie profit in so that underlying underlying trend is not either good or bad it's some of each we talked to mr chairman about the split in the commission  you know one way to think about that is we'd like to have the commission says the underlying trend has a lot of good stuff in it we don't want to use their fourth a meat axe approach my damage that good stuff we need much more targeted adjustments refined adjustments and payment policy so that we do as well as we can to encourage the good stuff in penalise the bad stuff the other half of the commission says there's good stuff and bad stuff in that underlying trend but the problems facing the medicare program the fiscal challenges facing medicare and the congress more broadly are so great that we need to run some risk and use more of a heavy handed approach if you will that's a risk worth running and i suspect you talk to you know other groups of quote experts if we can be called that you'll find similar split some people say the cost problem is so urgent dramatic action is required for matic action would be a total cost medicare to for the last few years has really not been acceptable regard to the eleventh hour and finally come up with solutions i mean it's you know it is ultimately you know being a physician is running a business as well and you know they do need some certainty and so i  you know i i think it is it is certainly a very difficult issue but the current process that we've been under for the last few years doesn't seem to be acceptable but again i don't have any clear answers politics even within your group and it must have been difficult but the politics gets really tough when to get over here to this place it's almost a little discouraged discouraging mr chairman that  even with the med pac the differences were so intense that we had two alternatives to that were presented to us which of course means it will turn it into a who knows how many others and so i i don't know how it can be made any easier but you all are considered the experts on this policy wise technically and i think it really would help as much as possible to get  to some degree we fool ourselves don't we if we don't take care of all the other issues in health care generally because medicare is one component of health care and providers are providing health care to recipients of medicare but they're also provided to folks who don't have access to medicare don't have access to any health insurance and we don't really resolve it for all health care providers simply by addressing the problems we have with reimbursement rates under medicare and so question for you how do you see all of that fitting into the greater issue of how we deal with global the global issues of health care a couple points believers i must say though that there are a lot of commissioners who worry about the impact of medicare on the broader health care system and whether or through our payment policies or medicare  encourage a way of delivering health care a style of medical practice that is increasingly unaffordable for the average american so when we have debates within the commission  debates all the time about how slow the increase and medicare costs make the program more efficient increase the value of subtext in that is we need to do that not just for here but for the broader health care system to pass we're on is unsustainable we we can be certain that more and more americans are going to be without insurance coverage and diminished have diminished access to care each year if we continue on this path so we need to improve medicare not for the best just for the beneficiaries but for the american people as a  whole i want to say if you can i guess we'll see you again tomorrow for some more enlightened and i look forward to that thanks for spending all a long day here on the hill and  we'll now have our second panel people but many of us have worked with over the years bruce platic whose address here is the president i notice that we're just two days short of celebrating your first birthday as interim president of the university of medicine and dentistry is  project hope and a variety of other policy and research organizations who served also as head of what was then large medicare provider but as a former administrator of the health care financing administration who spent four and a half years grappling with many of the same problems you are addressing today and i am not sure i can claim a substantially greater success in an observation of your rules about time let me just summarize very quickly a few of the points i sought to make in you in the possible situation of having to choose every year between reductions in physician fees which might eventually imperil beneficiaries access to decision services and modest increases which turn to at least some extent from this extraordinary growth in procedural services especially diagnostic procedures being provided to the medicare population the rate of growth which many observers think is probably not clinically optimal in my view however the principal shortcoming of the payment system is now operating is the way in which it has been reinforcing the continuing erosion of primary care in the distribution of medical services in many communities one of the principal goals of the congress in the executive branch when the system was first created was to provide incentives to increase the supply of primary care services to the medicare population and to communities in general by shifting payments away from diagnostic and surgical procedures to so called cognitive services for the first few years of the new payment system that desired goal seen to be met but in more recent years the ero primary care availability has accelerated do at least in some part to the effects of the s v r itself as the as med pac's report notices notes as well as to the inadequate characterization and price setting for primary care services in the fee schedule as is not just a matter of taste i don't believe many of the most serious problems in the performance of the health care system particularly for medicare beneficiaries now with their higher burden of chronic illness and multiple medical problems can be attributed least in part to the inadequate availability of an economic pressures on family practitioners general geriatricians and other primary care providers if you look at all the nations of the world which perform better than we do in terms of controlling health care costs well having  universal access to health care and which have older populations that we do in the united states you see one of the few eric or six that they have in common is a higher ratio of primary care providers to specialty providers and we have in the united states  in my view it's it's impossible to do everything at once and so complex an area as physician payment policy as is evidenced by the med pac report itself so we should focus on meeting a few key objective priority would be to focus on reform of the payment system to redress the balance between primary and specialty clear by doing the following one going back to the basic coding scheme and waiting for evaluation and management services second then replacing the s g r with a formula similar to the volume performance standards which existed prior to the s g r which i think the doctor lensky was responsible for some of the original formulation in which we established separate growth targets for evaluation and management services and other kinds of procedures and courage the faster growth of those services at the expense of others i would also support expanded experimentation with additional case management of care coordination fees for primary care and adoption of economic incentives for the further development of multi specialty group practices which tend to internalize across subsidization or primary care services given how complicated both the medicare payment system is and physician services are out in the communities i don't think there's a single set of changes that are likely to solve all of the problems with the current system nor are we likely to get everything right the first time or the second or the third but i believe that adoption of the proposals i've suggested would at least begin the process of turning around and moving us back in the right direction towards an during the primary care services will be the central building block of a more accessible and effective system for medicare beneficiaries chairman mr camp it's a pleasure to be back here as you noted i'm currently a senior fellow at project hope and also which many of you may not know co chairing a congressionally mandated taskforce on the future of military health care for four years the medicare payment advisory commission and my views are shaped by those complex set of experiences i think we all agree on the goals of what we're trying to accomplish which is moderate spend spending maintain access encourage quality and efficiently provided services by the provider community the spending goal is quite clear i am definitely one of those who are extremely worried about the future sustainability and the financial impact on beneficiaries that not maintaining some control on medicare spending will have for the federal budget and for the country as a whole i agree with  glen hackbart assessment that nationally access is not currently problem in any systematic way but it is something we need to monitor as we go forward in the future particularly if we try more aggressively to attack the spending problem when it comes to the provision of appropriate efficiently providing quality care there we do have a problem and it's not just medicare's problem we have many indications medical errors in patient safety says six if you look at the assessment of who receives appropriate care when they're in patient hospital the average is about fifty five percent a large variations in medicare spending with very little to show at the high side for it so we have many signals that when it comes to appropriate efficiently providing quality care medicare has a problem and as does the rest of the health care system in general in the trying to moderate spending without having to resort to expenditure targets the history of the physician payment changes as you know has had a different history i would give mr starke much more credit for  introduction of the value performance standards i was the administrator who got to implement the resource base relative value scale and the value performance standards relative to the problems that occurred in the past it attempted to s many of those problems increase payment for primary care redistribute payments across urban and rural areas and slow down what had been very rapid growth in spending when only the m e i had been use for the update there were some anticipated problems with regard to volatility and volume performance standard was replaced with the sustainable growth rate in the balanced budget act we can debate whether or not that is actually a wrist change the volatility much there still is a big volatility issue when you look at the s g r or the volume performance standard it is clear that spending limits will limit spending if they  fact are invoked which as you know for the s g r has not been the case since two thousand and two the problem though is that it doesn't affect the volume and intensity behavior at the individual physician level and that's where the problem is that and that is a problem because we do have evidence that financial incentives can change behavior you know we have to pass that have been identified by med pac repealing the s g r and trying to change the payment or putting the s g r everywhere i actually regard them more appropriately being sequential i think you need to change the payment mechanism to move to more of a bundling of payment and you can think about that on many dimensions and i would go for almost any of them when i was the administrator we had the cabbage demonstration where part and part b payments got bundled into a single payment that seem to have some good as comes i'm a proponent of gain sharing getting hospitals and physicians to work together and share their games i like the disease management demos i think pay for performance has a lot to say for it to work a lot better integrated systems than the visual and center of realigning incentives is critical but i have also as of late been focusing on one other area and that's the need for better information i believe if we are going to have smarter spending which is critical we need to allow payers and clinicians and the public to understand better what works when for whom under what circumstances and that means a significant investment i even have some ideas about what that significant investment might be if we're going to go forward the bottom line is we need to know more and we need to pay for it better if this doesn't slow down medicare spending then i suspect we will move to an across the board expenditure cap for medicare's future because we do need to moderate spending or we will have major problems for both the federal budget in the american public thank you well thank you both as he'll you'll remember when we wrote the first reimbursement plan my counterpart part on the other side was passing on of voided excess capacity costs you americans love to canadians in the form of much less expensive health care only movie i suppose could come up with that but i want to ask each  thousand dollars a year and they at least they have enough math in your medical school so they can figure that one out with their shoes and socks on as to how much more quickly they can pay back the loans that you've given them it i hope an excessive interest rate my my  theory is that one of the things we could do and i share this idea of disease management a medical home and rather than let these commercial companies that are out there develop this and sell it to us that we somehow empower the primary care docs to take on that responsibility get paid for it whether they use physicians assistants or i don't care bill collectors to call me and remind me to take zocor whatever they they do but it occurs to me that we have a chance there i'm not sure i like the idea of there being gatekeepers but as i say to manage and be responsible for our beneficiaries particular in those areas where you don't you don't have enough population to have a an h m o or a managed care plan that they they could fulfill this role would that would that do to your graduates and to the medicare system i actually think there would be there would be a lot to be said for it the problem is given the economics of practice we would need  upfront investment that probably because really in the area of information systems get to that in a minute individual or a small group primary care physicians were the most disadvantaged in terms of their and lagging i think  this behind so but the fact we have a little bit of experience with an approach similar to that under very different circumstances which was up until the early one nine hundred ninety s the most the largest form of medicaid managed care in terms of enrollment with so called primary care case management programs which sought to do very similar sorts of things a very different kind of environment a very different setting and not enough financing i think but at least in some areas of maternity care and well child care i think the track record was encouraging so i would be very supportive of that sort of front and the other issue for galen you've mentioned in your last bullet here you talked about the need to know more and i've been concerned well as you remember bill gratis and i were talking about outcomes research fifteen years ago and without any kind of a database you can't get much outcomes research so you wouldn't  go what to advise a woman in terms of where to go for breast cancer which is the best procedure there's a very good schools around the country good centers of excellence each of which would use a different procedure where bruce gets prostate cancer he is going to get the same answer at hopkins is easier to get at in austin and maybe the procedures are equally efficacious but you really don't know where there was some kind of statistical certainty which is that i think we could know that and i and my my solution is and this is by way of asking for your comment that i don't think we're going to have a universe universe buil be able to build a universal database which obviously would have to take advantage of information technology and some kind of uniform reporting or record keeping on less or until probably medicare drops the hammer and says you won't get paid if you don't keep your records hospital medical school doctor in this format and the sanitized information on each patient goes into a i don't care nationalised to the health bruces medical to some place where it's kept and over it nobody gets a name and plus there's a need to go but researchers can use the data to build the kinds of things pay for performance how do we know if performance is  cheney just because he's had some blood thinner i know that and you certainly don't want to pay doctors a for anything i know and so my thought is one somebody has to mandate it to it has to be universal it will nobody will like it i'm convinced that whatever system is perfect ninety percent of the providers are going to hate it because it ain't their system but will be improving one system and the third part is that in spite of the complaints i've heard about stark laws the federal government would have to pay for it we would have to pay over five years say we don't and front end loader that means people who already have the system get their money back the doc who hasn't bought his laptop yet gets the money and so we go ten eight six four two and out but i somehow think we won't get all of these good things we want to get to unless we buy hard on the board comparative clinical effectiveness and i had a recent paper that was released and been spending a lot of time thinking about where it should lie and how to fund it i see that is somewhat separate although the information that could come from experiences in medicare and patient records would help that i actually see a whole combination of randomized clinical trials combined with administrative record analysis combined with consensus information so i see that as somewhat different but the question of how to try to get consistent information and to what extent you rely on electronic records is a very important one if you believe in pay for performance or pay for results which i do it requires having uniform measurement systems and it would be made much easier with regard to the support by electronic medical records as well i don't know whether i think you need to actually pay for it directly and the reason is we don't pay directly for the construction of cath lab and open heart surgery centers we pay for it by how we reimburse and that's what i'm talking about i mean increase on a procedure payment over a period of time to compensate to the extent that we pay for the kind of results that you can get with electronic medical records that is a different way than paying for it explicitly you can drive behavior we have a lot of open we have a lot of cath lab we have a lot of imaging centers and it is probably the best signal we have  our skewed reimbursement system to the extent we pay more for the kinds of things that you can get usually with information systems you can do the same thing i worry a little bit about whether we're going to step a step it i think are what we're trying to do is similar and we could debate exactly which of the strategies would work best but i don't disagree with what you're trying to do i also don't have a problem with saying you don't have to participate in medicare but if you want to produce a medicare this is how you have to submit your bills is i recall the congress has been reticent in the past to require that for physician reimbursement because of concerns and roy areas but if you had some payments that looked like it would make that more feasible that concern may go away so again it there there are certainly areas of overlapping interest  yes thank you mr chairman i thank you very much both of you for your testimony i'm interested in the idea of giving more discretion to c m s in the operation of payment system saying dr  the way in which hospital dates have been done under the perspective payment system for hospitals and medicare and compare that with a rigid formula like the s g r there's a r achieve some of the same facts in doing it certainly send very much the same signals to the provider community but without locking yourself into the kinds of mass frankly that the s g r has has now produced now what both some of the some of the criticisms of the old d p s formula that were both in the in the med pac report and and there gail referred to in terms of volatility was b was in part because the basic structure of those really trying to encourage this kind of category we're going to put it in the bucket that we're going to accept a larger rate of growth and so forth you might be able to get away from some of the rigidities that are in the current formulas and to create well i think one of the  things that have happened is the formulas get more complex need the diff a distortion the formulas don't get any less i mean i think s g r was viewed as a proposal that would even things out even more yet the complexity of these formulas makes it very difficult as well as well well i don't disagree on the other hand i would say part of the problem is that the complexities accumulate and you're never going to get it right entirely in any one year anyway and so we're now in a position where in water to change a formula that's not working well the congress has to legislate a new formula if there were some what and i don't know exactly how to do somewhat broader and vaguer legislative authority to c m s to set targets or to the secretary to set targets that gave them where the ministry of flexibility the fact is that every few years   with significant budgetary implications in order shame thank you thank you very much mr  thank you for the opportunity to you for your testimony and i have to make one comment mr hackbarth the still here so either he lost his right or he really is interested in what's going on here the first witness i've ever seen who stayed beyond his or her times though i do still he in that area and i'm going to give me your sense as we look around the world at other systems healthcare systems and i guess do we try to compare apples with apples in developed countries first what countries are there any countries that are having the type of difficulty we have and i guess here we're talking about the segment of the population that receives medicare so it's principally the elderly population are there any countries in the world comparable to us w having the same kind of money problems we were having when it comes to trying to drive provide health care to its elderly population well i think everybody is having money problems in the sense that health care costs are going up in many instances more quickly than government revenues and the population is getting older and those in and everywhere in fact they're probably having an aging out problem more than we are in some cases that my understanding is of i remember the data correctly that of the nations of the o e c d which is a good subset of the industrial nations of the world minus some of the newer ones in asia we are tied with australia and new zealand for having the youngest population of the o e c d countries so many of them have substantially older populations they all have problems health care cost inflation but they are not as severe as ours ours and i think there's increasing amount of data that suggests that's not the result of significant queuing for services in in many of those countries it's not the result of less utilization of services the germans use imaging six services like crazy but it has to do with one systems that are much more organized around primary care in which there is the ratio of services provided by primary care practitioners the services provided by specialists is a lot higher this is united states and to lower lower prices for things that are partially result of that differential balance between primary especial difficult for us to try to emulate because in this in this country you're better off if you're a doctor than the general pop far better off than you are that if in the general population you make more money it's a more lucrative career even though these days a lot of position would tell you still not not that as good as it used to be so in britain or other countries you're probably making less of your position which obviously keep some of your costs down some of your expectations as well but at the same time as you mentioned i think they're more organized and they are more organized giving care at the beginning than say at the end and so is there some way to pare what we have which is very high quality in some areas but proportion with the need to have morgan is a nation within our system and focused at the beginning stages so let me just say very quickly i think it's a complicated question and  i want to add something that is but i always say when fifteen and twenty years ago when most of the specialty and subspecialty societies strictly limited the number of residency slides and the opportunities to enter those as we all accuse them of anti competitive behavior we all told them they were unfairly monopolizing economic opportunities for people we can use them of making it impossible to get some specialists in a rural communities around or serv less populated geographic areas so part of the reason we're more expensive is just because we're so big and it is so far from one place to another in a lot of communities and we have rejected regionalization in most of the country as a policy  which prevails and in many of these other countries but i think again one of the things that they do elsewhere is very significantly limited the supply of specialty physicians through the complicated but the other countries tend to limit specialty and they tend to limit the expenses specialized support for the specialists in terms of equipment and specialized hospitals or the beds that are supporting specialized hospitals the good news in terms of having a high base of spending per capita is that we have a lot of one off savings potentials if we could get begin to get a more efficiently driven health care system most of these countries actually have more similar spending growth rate problems and it's really that base that is so different there are very similar kinds of problems that you and i have spoken in the past about using loan forgiveness as a way to drive more people into primary care i continue to think it is an excellent way given the kinds of indebt people are coming out of medical school are having now of saying that we will waive your medical school debt if you go into any one of the primary care areas that were in short supply that  cro ing so rapidly and those have reversed you are also quite correct in saying that the relative differential in terms of income for physicians in this country relative to most other countries  is much greater here than it is there and i don't know that you want to actually try to take that on as much as trying to do things that shift the balance by changing the mix in terms of specialty and primary care physician but that seems to me an easy way to start this issue about regionalisation maybe we can drive it with regard to quality if we really start monitoring and attempting to reward those groups that provide high quality and efficiently produce care they are frequently in either in integrated settings where they're focused in some areas and it's why i'm very much supportive of the strategy that glen raised rather than kill off specialty hospitals pay them right which is much less than a community hospital which has to be available twenty four seven and provide a lot of non funded services like byrnes and others it's possible they can actually do it better or do it cheaper but they certainly should be getting reimbursed at the average rate that they're now getting reimbursed i think we need to think about these ways and how can we try to target or reward places clinicians institutions that do it better and do it cheaper and i don't mean it just as an add on i mean it or at the very least a budget really entering the health policy discussion is having met each of you when i was a state insurance commissioner and kind of away from the action and now this committee is letting me get back into the action i'm eager to get back in year medical school which for a population of our size is a real undertaking it's family practice oriented primary care residencies and they're having trouble filling some of those primary care family practice residency and i think the student loan has a lot to do with it but maybe there are some other things as well as presented well some of the positive things we can look at maybe to try and put this back to try and we invigorate tract increases and but the cap is a function both of fees and volume and of the volume you radiology procedures are going to play fast and your volume of them service evaluation management services is going  break very slowly but you have money capped and then what that does is it caps the fees of everybody at the in the same way even though you're probably paying too much for those diagnostic radiology services and too little for the amp services and over time it compounds that effect part of the problem always with designing the system says bid that if the service consists primarily of a physician or other health professional interacting with another human being by doing the physical by taking history by counseling them or whatever there's only so much more volume that you can produce them is the underlying problem of primary care if you're taking pictures first of all you're the radiologist you're not taking pictures at all anyway you're the technician and every year you can get an additional computerized thing that's going to screen them more quickly for you so if you used to read one hundred mammograms  that you don't particularly want to encourage more of like the imaging is growing faster in the stuff you want to encourage more of you have a sort of perverse effect of of taking a double whammy of the stuff that you may be underpaid for that's th phenomenon they know that i also know and i think that's the problem with that is it's a problem really with the cap altogether is that even among the radiologist for example you know you probably have some that are very conservative in their practice style and others that are very aggressive this is a very crude instrument instrument it will limit spending but it makes no distinction between the physician that is very careful and conservative and the very aggressive ones there's been mention of looking more seriously at and i don't i think that's something that c m s to be encouraged to do we know that there are some physicians or some practices that are very aggressive progress in what they do maybe they really do have sicker patients but that's the kind of thing analysis of the top one percent five percent of the most resource intense practices might find either reassurance that their patients really are sick or were very different practice  silent thinking about how to try to change behavior through all the kinds of strategies we could think of really could help and we know concentration in health care spending is a problem it's a different way to look at the concentration problem but  successful and i just say this also gets back not only to the discretion issue but to some extent the resource issue for c m s because they don't merely the kind of analysis of  patterns of claims and just basic statistical analysis for these purposes that the most sophisticated private insurers doing to a large extent that's just because they don't have the money and the resources to do it they don't have the in house data processing capability and under discussion says was sure his condition today is just really astounding given the percentage of the national budget going this way and they accelerated growth of spending in this area that we've got so little built in analytical capacity they'd be it happens because the benefits come out of the  entitlement fund and the administrative support is a direct appropriation and that means that every time there is consideration for in a straight it increases it's competing against all those other areas of appropriations although with to the medicare fraud there was a trust fund type of mechanism that was set up and this might be another way to model it so that if aggressive use of claims auditing or practice assessment would in fact produce ask questions i don't know of answer but do you think do you think it's important to continue medicare as an entitlement comfortable with having the contributions that the government would make range more by income than it does but it actually has been moving that direction in a number in a number of cases but on the other hand it's already perhaps the most progressive tax the figure that somebody makes ten million in salary pays the same medicare taxes somebody at the minimum wage but they both get the same benefit then to add on sort of insult to injury and i've always worried that we would create a sense of turning it into a welfare program by discouraging those among us who are more more well to do it i mean i wouldn't mind if they want to adjust the tax which is the same way of getting there again i and i worry that a being made into a some of the contribution but i share your concern i actually am we're concerned about not doing enough for individuals who are just above the medicaid cutoff one you serve on the on the maryland yes i'm actually at the moment gives them their all payer right how would that work because i remember that i think the history of that is that when it was organized or form i think it's a good system for reversing hospital it takes all the gaming of quality discounts and major purchasers from getting special discounts and getting the hospitals but i have canceled my california spittles but i still think it's good but at the time it was propounded the physicians screamed and yelled and stayed out of it would that kind of a system work well it's an addition well i mean in the the rate setting goes on for into that kind of that type of a rate setting system rather than what we're doing no the part it's i think fundamentally we need to bundle the physicians services in the question about how you do that whether you  you've got a bundle services in some way to get around the problems of the s g r the s g r or the vs was put in place because with a very to stagger dated fee schedule we had abundant evidence that spending would go up even more rapidly than other areas in medicare and i think we shouldn't ignore that past so the way to try to figure it out is what's the best way to try to bundle services is a by chronic care so that you do  cross those medical silos so you get around it really micro level of fees that's the killer that's the part that drives you to the spending limit which then puts you back into penalizing the good guys the conservative practicing physicians so that's a basic directions to me almost anything that gives you more bundling is moving in the right direction now some of their power shifts ago and that was really what i think physician is a recognition that one group or entity was going to be the holder of all the money and that will be difficult up until now they've all been voluntary and that mean having the groups form figuring out how to have groups form bundles of services i think is the best the direction of the answer to the are different ways you have bundling for a surgical fee because there's a flat fee that includes the whole surgery plus the pre care and the post here so that for the for the event so you together and negotiated with saying here's what we used to charge all separately but we're going to come together and we're going to propose a lower cost that will cover all the physicians that drop in on the patient while the patient is having the bypa procedure or the valve replacement and include the hospitalization and it was less money and as best you could tell as good or higher quality care it eliminated some of the various specialists who used to drop in as consultants for whatever those numbers seem to go down you now had a more integrated group for what was a complicated procedure some of our and i said and then only that you'll have better outcomes because you will drive the various physicians who are working together in this complex case to work together so i think it will be sitting down to to look at for chronic care which by its nature is not a single visit i mean that's the nature of the kind of care disease how can you bundle the payments so the primary care physician that's taking care of the complex diabetic or the congestive heart failure can get a payment and then you don't have to bug him for every little thing they do in between it's why you don't have to bug hospitals anymore for all the little things they order once you've got the d r g the their problem and it's not medicare is from c m s a good guide that because the last thing you want us to do to understanding these procedures and it seems as though they have the authority to i'm not sure about at least begins some of that they can do what they can do is demonstrations the only frustration is demonstrations even successful ones do not have a good track record of making it into legislation i believe although i'm not a lawyer so i am maybe wrong on this i think ultimately they would need history south carolina which was normally not the place for a lot of innovations and medicaid had used a very successful model figuring out what the right bundle is will take some intellectual  capital and horsepower but when you think about how much goes into maintaining this incredibly complicated area i mean this would be time so much better spent well and many physicians complain about the administrat