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70–828—PDF 2010

S. HRG. 111–1099 

STRENGTHENING MEDICARE AND MEDICAID: 

TAKING STEPS TO MODERNIZE 

AMERICA’S HEALTH CARE SYSTEM 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

NOVEMBER 17, 2010 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

WITNESS 

Berwick, Dr. Donald, Administrator, Centers for Medicare and Medicaid Services (CMS), Department of Health and Human Services, Baltimore, MD ...... 5 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 27 

Berwick, Dr. Donald: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 30 

Responses to questions from committee members ......................................... 46 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 159 

Rockefeller, Hon. John D., IV: 

Prepared statement .......................................................................................... 160 

Snowe, Hon. Olympia J.: 

Prepared statement .......................................................................................... 165 

COMMUNICATION

The Roundtable on Critical Care Policy ................................................................ 167 

(III) 

(1) 

STRENGTHENING MEDICARE AND MEDICAID: 

TAKING STEPS TO MODERNIZE 

AMERICA’S HEALTH CARE SYSTEM 

WEDNESDAY, NOVEMBER 17, 2010 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 10:04 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Rockefeller, Bingaman, Kerry, Wyden, Schumer, Stabenow, Cantwell, Nelson, Menendez, Carper, Grassley, 

Hatch, Snowe, Kyl, Bunning, Roberts, Ensign, and Enzi. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; David Schwartz, Health Counsel; and 

Tony Clapsis, Associate. Republican Staff: Emilia DiSanto, Special 

Counsel and Chief Investigative Counsel; Andrew McKechnie, 

Health Policy Advisor; Susan Walden, Health Policy Counsel; and 

Rodney Whitlock, Health Policy Advisor. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

Montesquieu said, ‘‘All people are born equal, but they cannot 

continue in this equality. They recover it only by the protection of 

the law.’’ 

When it comes to health care, the Affordable Care Act gives seniors, patients, and health care consumers historic protections under 

the law. The new law protects seniors by helping to ensure that 

they get the right care when they need it. 

The old system, before health care reform, was failing too many 

seniors. Take Christine Brown. Christine’s father had a blister on 

his toe. That blister became infected; it would not heal. Christine 

and her father tried everything. Every doctor they went to prescribed a different antibiotic. No one coordinated his care. There 

was no electronic record of his medications. After several months 

without anyone managing his care, it was too late. The infection 

had spread. The only way to save his life was to amputate the leg. 

Christine’s father is now confined to a wheelchair for the rest of 

his life, all because of a blister, all because no one coordinated his 

care. The new law protects patients like Christine’s dad. The new 

law helps doctors coordinate and communicate with each other. 

2 

The old system, before health care reform, was failing too many 

seniors who get hospitalized. Yesterday, the HHS Inspector General released a report, and the IG found that nearly a quarter of 

seniors hospitalized suffer some form of adverse event in the hospital, and almost half of those are preventable. The new law helps 

protect patients from preventable adverse events. 

Under the new law, Medicare and Medicaid will crack down on 

hospitals that do not prevent infections. Before reform, nearly onefifth of seniors who were hospitalized were back at the hospital and 

readmitted. When patients leave the hospital, they clearly do not 

want to come back. They should receive the follow-up care that 

they need to stay well and to stay out of the hospital. The new law 

protects patients from needless readmissions. Medicare will protect 

seniors by penalizing hospitals that do not treat patients right the 

first time. 

The old system, before health care reform, has been failing 

health insurance consumers. Far too frequently, insurance companies would drop coverage when patients get sick. The new law protects patients from this, and other, insurance company abuses. Far 

too frequently, insurance company executives would use premium 

dollars for lavish CEO bonuses instead of patient care. The new 

law requires health insurance companies to spend at least 80 percent of the premiums that they collect on providing health care. 

The new law puts a limit on funds for administrative costs, salaries, and CEO bonuses. 

The old system, before health care reform, was failing the Medicare trust fund. Before health care reform, Medicare would have 

been bankrupt by the year 2017. Medicare would have gone broke 

in 6 years. The new law protects Medicare from going broke. The 

new law extends the life of Medicare by an additional 12 years. 

In the old system, before health care reform, health care costs 

were out of control. In the last 8 years, average wages have increased just 20 percent, while the average cost of employersponsored health coverage has doubled. Family health insurance 

premiums have tripled. The new law will protect American families 

against these increasing costs. The new law transforms Medicare 

payments from paying for quantity to paying for the high-quality 

care that seniors deserve. 

What does paying for quality mean? Paying for quality means 

protecting seniors from duplicative tests; it means protecting seniors from unnecessary procedures that waste time and money; it 

means empowering doctors with electronic medical records that put 

patients’ information at their fingertips. Paying for quality means 

providing doctors with the latest evidence. That way, doctors and 

patients can make the best-informed decisions. Paying for quality 

means investing in primary care so that seniors have an advocate 

to help them navigate the health care system. 

What does paying for quality not mean? Paying for quality does 

not mean cutting benefits that seniors are guaranteed. Paying 

for quality does not mean a one-size-fits-all Washington solution. 

Medicare and Medicaid must seize upon the innovations that work 

at the local level. Paying for quality does not mean interfering with 

the doctor/patient relationship. The doctor/patient relationship is 

sacred. 

3 

The old system, before health care reform, was failing to crack 

down on fraud and abuse. The new law protects the taxpayer by 

giving law enforcement officials new tools to combat fraud. The 

new law puts an end to wasteful overpayments to private insurance companies to participate in Medicare. These overpayments to 

Medicare Advantage plans used to cost the program tens of billions 

of dollars every year. 

Under the new law, seniors on Medicare are protected. Seniors 

can feel confident that Medicare dollars will benefit the patients, 

not line the pockets of insurance companies. The new law slashes 

wasteful payments, and it does so without taking away a single 

guaranteed benefit under Medicare. I want to say that again, because it is important: health reform protects the Medicare program 

without taking away a single guaranteed benefit. In fact, the new 

law adds benefits, like lifetime free annual checkups and closing 

the donut hole. 

The old system, before health care reform, was failing seniors, 

patients, and health care consumers. The new law gives them historic protections. Repealing the new law would return us to the 

failures of the old system. Repealing the new law would cause 

Medicare to go broke in just 6 years. Repealing the new law would 

increase the deficit by hundreds of billions of dollars. Repealing the 

new law would put insurance company bureaucrats back in charge 

of health care. Repealing the new law would threaten seniors’ 

health with duplicative care and poor coordination. 

Today we hear from the point man on the new law. We hear 

from the Administrator from the Centers for Medicare and Medicaid Services, Dr. Don Berwick. Under the new law, CMS is 

charged with strengthening Medicare and Medicaid, and he is in 

charge of making Medicare and Medicaid more efficient and modernizing them for the 21st century. 

Dr. Berwick, the Affordable Care Act provides the protection of 

the law. We look forward to hearing how you will carry it out. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Grassley? 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman. 

I, and the members of this committee, take the importance of 

this committee and our constitutional role as the U.S. Senate very 

seriously. You, Dr. Berwick, were nominated by President Obama 

to serve as CMS Administrator on April 19. You and I personally 

met in my office to discuss—and we did this in June—your nomination. Despite repeated requests from me and my colleagues, we 

were never able to get a nomination hearing. Instead, you were appointed under recess powers July 7. 

Dr. Berwick, I believe that that was incredibly unfortunate for 

you and for the position that you now hold. I think you should have 

had the opportunity to come before this committee and explain and 

defend yourself and make the case, in person, that you are the 

right person to be CMS Administrator. You were nominated 213 

days ago and appointed 134 days ago, and yet this is our first 

4 

chance to get you before this committee to testify and answer questions. The phrase ‘‘better late than never’’ comes to mind. 

Today, the Centers for Medicare and Medicaid Services have over 

4,400 employees, not including thousands of outside contractors 

and an annual budget of over $700 billion. That is a bigger budget 

than even the Pentagon. 

Through the Medicare, Medicaid, and CHIP programs, the Centers for Medicare and Medicaid Services provide health care coverage to about 1 in every 3 Americans, almost 100 million people. 

That is a lot of people, but that number is set to grow even more. 

The partisan health care overhaul will add about 16 million to 

Medicaid, with a price tag for the Federal Government of about 

$434 billion. This expansion will begin under your watch. 

In addition to this massive coverage expansion, you have been 

given unprecedented authority to implement new payment and delivery models. Your decisions in this area will influence a significant amount of economic activity and determine how the new 

health care law affects health care coverage that millions of Americans rely on. We need to discuss your thoughts on the pending 

$500 billion of Medicare cuts and the massive Medicaid expansion 

that you are charged with implementing. 

Now, the Office of the Actuary and providers across the country 

have expressed serious concerns that the deep Medicare cuts will 

hurt access to care and may hinder quality improvements. Both Republican and Democratic Governors are worried the Medicaid expansion will bankrupt State budgets. While some supporters of 

health care law may label these claims as partisan scare tactics or 

misinformation, we take these claims very seriously. 

With all that is changing in the health care system and the sheer 

number of people who rely upon your agency for care, you have one 

of the most important jobs in government today. That is why it is 

so disappointing that you were recess-appointed without a hearing. 

It contradicts promises made by Candidate Obama about having 

the most open and transparent administration in history. 

As I am sure you know, I take oversight and government transparency very seriously; I hope you share my enthusiasm. I hope 

you will show an even greater commitment to transparency and 

collaboration than any of your predecessors, but, based upon the 

number of letters that are still outstanding, I am concerned about 

the depth of that commitment. The American people deserve nothing less. I thank you, and I look forward to hearing your testimony. 

The CHAIRMAN. Thank you, Senator. 

[The prepared statement of Senator Grassley appears in the appendix.] 

The CHAIRMAN. Now I will introduce our witness, who is Dr. Don 

Berwick, the Administrator for the Centers for Medicare and Medicaid Services. Dr. Berwick, thank you very much for coming. It is 

good that you are here, because many Senators have many questions. I know you will answer them very forthrightly. 

As is our usual practice, your written statement will be automatically included in the record, and I encourage you to speak— 

often we give witnesses about 5 minutes. If you want to take more 

than 5 minutes, go right ahead. 

Dr. Berwick? 

5 

STATEMENT OF DR. DONALD BERWICK, ADMINISTRATOR, 

CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS), 

DEPARTMENT OF HEALTH AND HUMAN SERVICES, BALTIMORE, MD 

Dr. BERWICK. Thank you very much, Mr. Chairman, Mr. Ranking 

Member, members of the committee. Thanks a lot for the chance 

to meet with you this morning. I feel very privileged to be here. My 

full testimony, as the chairman said, is submitted for the record. 

I am a physician. I am the son of a general practitioner who 

practiced for 40 years in rural Connecticut. From my father, I 

learned the image of health care that I still cherish: responsive, 

imbedded in a community and connected to it, and focused on the 

needs of patients and families. 

My father made house calls. He knew everybody’s name in town. 

He did it all. He delivered babies. He took care of people through 

their whole lives. He rounded at the local hospital every single day 

before his afternoon, and sometimes evening, office hours. He took 

his own X-rays, and he read them. 

In my own professional career, which is 40 years long so far, I 

also practice as a doctor. I am a pediatrician. But I practiced in a 

very different kind of health care world than my father started in, 

more interdependent, full of new and wonderful technologies, and 

much, much more complicated. 

When everything goes well, that modern health care world can 

work miracles compared to what my father could do. My father 

watched children die of leukemia—that was always fatal. Most 

children with leukemia today are cured, and they live. He had little 

to offer people who had heart attacks, except oxygen or bed rest 

and hoping. Today, new treatments have cut heart attack death 

rates to less than half of what they were 30 years ago. 

But with the miracles of modern health care have also come 

some major new challenges. Complex drugs and powerful treatments bring hazards with them, like medical errors and complications with treatment. From science, we know often the best way to 

treat disease, like diabetes or congestive heart failure, but then 

that poses us with a question: how can we make sure that that 

treatment, the best treatment, is within the reach of every single 

American? 

We also need to address the rising cost of health care, cost that 

is stretching the Nation’s public and private capacities, cost that by 

itself is a barrier to getting the right care to people and providing 

it. 

These are not abstract problems. They affect real people. On my 

very first day in this new job, I was passing through a metal detector getting into the building on my way in, and I saw a rather 

intimidating-looking security guard on the other side of the metal 

detector staring at me, and he beckoned me to come over to him 

when I went through the detector. He said, ‘‘Can I talk to you?’’ I 

said, ‘‘Sure, you can talk to me. You have a gun.’’ [Laughter.] 

He said, ‘‘You’re Don Berwick, aren’t you?’’ And I was startled. 

I said, ‘‘Yes. Why do you want to know?’’ He said, ‘‘Well my name 

is John McCormick.’’ He said, ‘‘My daughter was Taylor McCormick, and she died when she was 17 months old because of a medical error. I am devoting myself to making sure that doesn’t happen 

6 

to other children,’’ he said, ‘‘and I want to do anything I can possibly do to help you in your new job.’’ 

I do not know the particular error that cost little Taylor McCormick her life. I do know that she was not alone. As the chairman 

said, yesterday the Department of Health and Human Services Inspector General released a report showing, again, that far too many 

Medicare patients suffer, or even die, as a result of medical errors. 

For me, eliminating that harm is a top priority. 

What I also know is that all over this Nation there are hospitals 

and clinics and offices that are making thrilling progress toward 

better, safer care. I have worked with these places for 20 years. 

There are hospitals that have reduced their infection rates to zero, 

that have reduced pressure sores by 90 percent, that have reduced 

waste, that have become truly, excitingly, patient-centered. 

This has to do with cost, also. What is true in every other modern industry is true in health care: poor quality costs more than 

good quality does. Doing things right costs less than doing things 

wrong. Hospitals and clinics all over the country are discovering 

that and proving that. 

Denver Health, for example, has reduced their costs by nearly 

$50 million simply by finding and removing waste, waste like asking nurses to fill out useless forms for hours instead of just using 

their time for what they want to do, which is taking care of patients. Better care leads to lower cost through improvement of care. 

What I mean to say also is that improvement of care is not just 

possible, it is actual. It happens every day in this country. But that 

raises the question, again, how can it happen everywhere? How can 

we as a Nation take full advantage of everything we already know? 

The biggest waste of all comes when we fail to meet the needs 

of patients and families who need us the most: the chronically ill. 

You probably know somebody who has cancer, heart disease, or 

lung disease. You know that they need health care that helps them 

through journeys, not fragments. They need us not to drop the ball. 

They need us not to forget their names, or the problem list, or what 

medications they are on. 

I feel incredibly lucky to be able to join CMS at a historic time, 

a time of enormous promise for the future of our Nation’s health 

care. I think we can, and we should, aim for three goals at once: 

better care for individuals; better health for the American people; 

and lower costs through improvement, through better care delivery; 

and I know that all of that is within our reach. 

In the pursuit of that, the Affordable Care Act is a landmark. It 

is the best opportunity I think we have had in a generation or more 

to make progress toward the health care that our Nation wants 

and needs. We have already started. In the 9 months since the Affordable Care Act went into effect, millions of people have already 

seen benefits from it. Close to 2 million Medicare beneficiaries who 

have fallen into the donut hole have received checks to help them 

with their prescription drug costs. 

Next year, the beneficiaries in the donut hole are going to see a 

50-percent discount on brand-name drugs. The Act makes it easier 

for Medicare beneficiaries to get effective preventive care, like 

mammograms and colonoscopies, available free without any coVerDate Nov 24 2008 18:54 Nov 03, 2011 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 R:\DOCS\70828.000 TIMD
7 

payment at all. That will not just reduce their costs, that will keep 

them healthy. 

We have turned up efforts to target criminals who are stealing 

from Medicare and violating the public trust. We are putting more 

boots on the ground, we are using better technology to detect them, 

we are empowering seniors to help us and report fraud when they 

see it. Through enforcement, we are getting millions and millions 

of dollars back into the trust fund. We have much better ways, new 

ways to measure and report on health care’s performance so that 

beneficiaries can be better informed, so the care providers can 

learn from each other, and so we can reward the system for improving. 

We have a marvelous new Center for Medicare and Medicaid Innovation, which we formally established yesterday, to help accelerate that learning and that invention. The new law strengthens 

our ability to measure quality and to use good market forces on behalf of beneficiaries to find them the best possible deals on health 

plans, on supplies, and medicines. As a result of that, for example, 

I am happy to report that Medicare Advantage premiums, on average, will go down next year. 

When we raise the quality of care for Medicare beneficiaries, we 

raise the quality of care for all Americans. Every single day that 

I come into the CMS office now, I am thinking about the people we 

serve, those 100 million people, and thinking about Taylor McCormick. My brother Bob gave me a sign for my desk when I left for 

Washington, and the sign says, ‘‘How Will It Help the Patient?’’ 

That is the first thing you see when you visit me, and it is the first 

thing on my mind. 

This is crucially important, but we—CMS, HHS, government— 

cannot possibly do this alone. We can help, and we will help, but 

the best roads to better care, the better health and lower costs 

through improvement, are locally built, they are built State-byState and community-by-community. 

This also has to be done in a very strong public/private partnership. Going it alone is not a good plan for CMS. I have been meeting with stakeholder groups of all sorts. They know that change is 

needed, and they all ask me the same questions. It is remarkable. 

They all say, ‘‘How can we help?’’ I think that is really good news, 

because that is the only way we can get this done—together. 

Ever since I became a doctor, I have been trying to help make 

health care better, safer, more reliable, more patient-centered, 

more equitable. What I know is that all of that is possible, that improvement is possible, vast improvement is possible. I believe there 

is no better position in our Nation from which to help pursue those 

goals than the one I am now privileged to occupy, and there is not 

any better time than now when the Affordable Care Act has laid 

an unprecedented foundation for better patient care. 

America needs three things from its health care now: better care, 

no more stories like Taylor McCormick’s; better health so people 

can live full and happy lives, even with chronic illness; and lower 

cost through improvement of everything we do for patients, families, and communities. That is the root of quality, without harming 

a hair on anyone’s head. I know all that is possible. I have seen 

it. 

8 

I am grateful for the privilege of working as your Administrator 

to make CMS a trustworthy partner and a constructive force for 

the improvement of health and health care for all Americans. 

Thank you very much for the privilege of being here, and I will be 

happy to answer questions. 

The CHAIRMAN. Thank you, Dr. Berwick. 

[The prepared statement of Dr. Berwick appears in the appendix.] 

The CHAIRMAN. What are your priorities? You cannot do it all at 

once. You have costs, there are hospitals, delivery system reform, 

extending the life of the Medicare trust fund. There are lots of different areas from which you can work. Do you have a first, second, 

third, or fourth list? 

Dr. BERWICK. Well, my overall top priorities are to protect the 

public trust, the trust fund, and ensure the longevity and viability 

of this system, but it is to protect the beneficiaries, 100 million people who depend on us to do as well as we possibly can for them. 

I have articulated four priorities in CMS at this stage: being a 

much more effective agency, working better with other agencies 

within government and the private sector; reducing waste within 

our own work; improving care of individuals—especially around 

issues like patient safety, Senator, such as you outlined in your 

opening remarks—moving swiftly toward better integrated, coordinated care, helping settings all over this country figure out and 

reach out for better ways to take care, especially, of chronically ill 

people, especially dual-eligibles; and then getting really serious 

about prevention upstream. 

A lot of the illnesses that erode our well-being and erode the 

Treasury are avoidable. If we get very serious about working on 

prevention, problems like obesity and bad perinatal outcomes and 

avoidable heart disease, we can make a lot of progress. I am pushing hard in CMS for forward progress in all of those areas. 

The CHAIRMAN. There is a lot of talk about the cost of chronic 

care. Could you just give us a little sense of how chronic care could 

be better addressed? 

Dr. BERWICK. If you could imagine a Medicare beneficiary, Mrs. 

Jones. I heard from one. I was visiting regional offices, and I visited a senior center in Atlanta, and there was a woman there. I 

said, ‘‘What do you worry about?’’ She said, ‘‘Well, what I worry 

about is, I have five medicines, I see six doctors, I go to four different facilities. I am not sure these people are talking to each 

other. I need them to get together. I need a team.’’ 

What she was saying is what chronic disease care, coordinated 

seamless care, is. It is a net around the patient so we work well 

together. If we drop the ball, things get worse. If one doctor prescribes a medicine for Mrs. Jones that conflicts with the medicine 

that another doctor prescribed and they do not know it, she could 

end up bleeding, she could end up in a hospital and not at home 

where she wants to be. Better care for chronically ill people means 

coordinated care. 

The CHAIRMAN. Right. We have all heard that. So how do we get 

there? How do we get better coordinated care? 

Dr. BERWICK. You need to envision and reward it. Right now, we 

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9 

fers us a tremendous range of possibilities for making it possible 

for clinicians to get together to do the kind of care they want—Accountable Care Organizations, medical health homes in Medicaid, 

and bundled payment. These are ways to support the system to 

come together to do the kind of work that the chronically ill really 

need them to do. 

The CHAIRMAN. Could you tell us a little bit more about Accountable Care Organizations and how far along they are, and what you 

envision them doing, and in what parts of the country? 

Dr. BERWICK. This is a really exciting part of the new law, the 

chance to encourage that kind of coordinated care, especially for 

chronically ill people. An Accountable Care Organization would be 

an entity able to take responsibility for the care of a group of patients with a primary care base, and then to coordinate services 

and to get rewarded for that so that there are bonus payments 

when things go well in the accountable care world. It operates on 

the fee-for-service side of Medicare. We are not talking about Medicare Advantage or managed care, this is in the natural state. 

We are going to be writing the Notice of Proposed Rulemaking 

now that will be out at about the end of the year or so. Very important in that concept, though, is the one-size-does-not-fit-all theory. 

What accountable care is going to look like in a rural part of Montana or in inner city Manhattan, they are going to be different. We 

need to energize exploration toward that. That is one of the reasons 

the new Center for Medicare and Medicaid Innovation is so important. That will allow us additional possibilities to encourage local 

settings to devise the kind of accountable care that really will work 

for them. 

The CHAIRMAN. My time is up. I think my clock was started too 

late. 

Senator Grassley, you are next. 

Senator GRASSLEY. Dr. Berwick, it is not your fault, or anybody’s 

fault, what the schedule of the Senate is. But there is at least 70 

minutes of questioning here, and we have votes starting at 11. So 

I was wondering if you would commit to appearing again before the 

committee after the Thanksgiving break so we would all have a 

chance to ask the questions we want to ask? 

The CHAIRMAN. I think, Senator, that is really the prerogative of 

the chair as to whether to call hearings or not. It is interesting for 

you to get a commitment, but I cannot guarantee when we will or 

will not have another hearing. Although it is my intention to have 

a good number of hearings, because it is very important for this 

committee to hear from this Administrator about his plans. 

Senator GRASSLEY. All right. 

I will go on to the next point. Prior to your nomination, you led 

a group called the Institute of Healthcare Improvement, or IHI. It 

has numerous health care companies as both clients and donors, 

which gives rise to potential conflicts of interest in your new position. 

To help shed some light on these potential conflicts during your 

initial confirmation process, my staff asked you to provide IHI’s 

three most recent Form 990s, including Schedule B, which details 

donors and donation amounts. You agreed to comply with this request. Indeed, you even agreed to have my staff meet with your 

10 

IHI chief financial officer to ensure the financial information provided was accurate and complete. 

It is now November, and the information still has not been provided. No chief financial officer has come to meet with my staff. 

Though your installment subverted the Senate’s constitutional prerogative of advice and consent, it did not subvert its obligation of 

oversight. So I restated my request in an effort to ensure that there 

is transparency for your potential conflicts of interest and accountability at CMS. 

So the question is, Dr. Berwick, you stated in an earlier letter 

that you planned on divesting any interest in companies you may 

oversee and that have interaction with CMS. Is this divestiture 

complete, and, if so, will you provide the committee with records 

documenting the divestiture? 

Dr. BERWICK. Thank you, Senator. I recall that conversation. 

When you asked for that information, I intended to try to provide 

it. As it happened, it was not in my sole authority to provide that 

information and now, of course, I am recused from contact with 

IHI, so I cannot provide it on my own initiative. 

What I can assure you is that all my past activities, my finances, 

were thoroughly reviewed by the appropriate ethics officers under 

congressional rules. Before I took office, I was given an ethics 

agreement to review and sign. I signed and agreed to every single 

condition of this agreement. I have complied with every single one. 

I am fully in compliance now with the conditions of that agreement, which were supplied to the committee. 

Senator GRASSLEY. The waivers were not supplied to the committee. Could we have copies of the waivers? 

Dr. BERWICK. I have requested no waivers yet, Senator. I am 

recused from contact. But because there are a couple of organizations from which I am recused that I think have important potential information for CMS, I requested and received the right to request a waiver when and if needed. I have not done so yet. 

Senator GRASSLEY. All right. Then let me be specific. You also 

stated in an earlier letter that you were ‘‘seeking ethics waivers 

due to your connections with Kaiser Permanente and the Commonwealth Fund.’’ Did you obtain these, or any other, waivers? That 

is what I would like to have provided for the committee. 

Dr. BERWICK. I understand, Senator. Yes, those two organizations—I asked permission to seek a waiver, when necessary, for the 

conduct of my particular duties as CMS Administrator and not for 

particular party matters. I have not yet requested those waivers 

because that issue has not arisen. 

Senator GRASSLEY. Dr. Berwick, health reform was supposed to 

improve the Medicare program, but these findings—which I am not 

going to take time to give now, but I made reference to them, particularly what the actuary said—indicate that some Medicaid cuts 

in the new health care law will move the program in an opposite 

direction by jeopardizing access for beneficiaries. 

Dr. Berwick, would you agree with Rick Foster when he made 

those comments about the health care bill potentially jeopardizing 

health care for beneficiaries, whether these cuts will jeopardize access to Medicare Part A providers? 

Dr. BERWICK. You say Medicare, not Medicaid? 

11 

Senator GRASSLEY. I am sorry if I said Medicaid. This is all 

Medicare. 

Dr. BERWICK. Yes. The actuary’s estimates are just that, they are 

estimates. They are based on his best judgment. What we can look 

at now is facts as they are developing. Our intention is to increase 

access to care for Medicare beneficiaries. We are strengthening 

Part A, Part B, and Parts C and D as we go, and I think those will 

be more and more attractive to beneficiaries. I think they will find 

themselves in better shape after implementation of this Act is fully 

engaged. 

Senator GRASSLEY. I am done. 

The CHAIRMAN. Thank you, Senator. I would like to, for the information of Senators, indicate the order. Next is Senator Rockefeller, 

then Senator Hatch, Senator Bingaman, Senator Bunning. Those 

are the next four. 

Senator Rockefeller? 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

Dr. Berwick, I would like to ask three quick questions in a row. 

The CHAIRMAN. Senator Roberts would like to be recognized. He 

is not going to make a statement. 

Senator ROBERTS. Did the chairman indicate to the ranking 

member that we will have an opportunity, we will try to have an 

opportunity, to talk to Dr. Berwick after Thanksgiving, or before 

Thanksgiving? 

The CHAIRMAN. I did not. We should sometime, but I did not say 

when. 

Senator ROBERTS. Sometime. All right. 

The CHAIRMAN. In good faith, that would be reasonable. 

Senator ROBERTS. Well, I think the obvious statement by the 

Senator from Iowa, and our ranking member, is that, in 5 minutes, 

obviously, I cannot do this because I have other obligations, and I 

have to leave, and I apologize for that. But I would hope we would 

have an opportunity to do that. 

I would like, then, to ask unanimous consent to submit some 

questions for the record. 

The CHAIRMAN. Without objection. 

[The questions appear in the appendix.] 

Senator ROBERTS. And thank you, Dr. Berwick, for coming. 

Dr. BERWICK. Thank you, Senator Roberts. 

The CHAIRMAN. Senator Rockefeller? 

Senator ROCKEFELLER. Can the time be put back to the original? 

The CHAIRMAN. Absolutely. 

Senator ROCKEFELLER. Thank you. 

Dr. Berwick, under health reform, the Federal Government is 

paying for the vast majority of the Medicaid expansion under the 

health care reform act. It averages about 95 percent on a nationwide basis, actually up to 100 percent in four or five States, between 2014 and 2019. 

So the first question is, if States reject this funding and do not 

expand their Medicaid programs, where else could these vulnerable 

citizens get coverage? That is question number one. 

Question number two is an interesting one, I think. I want to ask 

you about the practical impact of Medicare. When people are uninsured for 10 to 15 years before they sign up for the Medicare proVerDate Nov 24 2008 18:54 Nov 03, 2011 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 R:\DOCS\70828.000 TIMD
12 

gram, as a physician, can you tell us what would happen to your 

efforts to improve quality and lower the cost of care if we do not 

move forward with covering 32 million uninsured Americans under 

health reform? And you see the link there. 

The third question is, could you explain how this law gives 

States flexibility? Everybody says it is government-run. In fact, it 

is State-run—exchanges, et cetera. Could you explain how this law 

gives States flexibility in reforming health care delivery? You referred to that in your statement. Could you talk about how it gives 

health care providers the ability to innovate and improve health 

care for patients? Those are the three questions. 

Dr. BERWICK. Thank you for them, Senator. 

With respect to the first—the choices States make about their 

participation in Medicaid—my job is to make the Medicaid program 

ever stronger and more attractive and more viable for States. I understand that States are dealing with a lot of very serious financial 

issues right now, and they are very much on my mind. As you 

pointed out, the new law gives us the chance to help States with 

this transition to broader coverage for people who really need it. 

The same things that are making the States suffer under the recession are hurting people of marginal income, and they will find 

themselves with no insurance and nowhere to go without the benefit of this new law in place. We are doing a 100-percent Federal 

match for the newly eligible Medicaid beneficiaries, and, as you 

say, over a multi-year period after that it goes down only to 90 percent and stays there. 

We are reaching out to States with a 90/10 match, that is, 90 

cents out of every dollar the States are going to spend to smooth 

their enrollment procedures across these new forms of enrollment, 

we are reaching out to States with that. We are helping them with 

waiver authority, and we are strengthening Medicaid every day. It 

is a much stronger program now than it has ever been before. 

With respect to the practical impact on Medicare of failing to insure people in the pre-Medicare area, you are absolutely right. I 

mean, someone does not get chronic congestive heart failure on the 

day they become a Medicare beneficiary. Their diabetes does not 

suddenly occur at age 65 or 66—it has been there all along. When 

people, especially people with these underlying risks or chronic illness, cannot get access to health care, their care deteriorates. Their 

kidneys get damaged, their hearts get damaged, they lose their 

way. Then Medicare ends up, you are right, holding the bag for 

that. 

But the States are paying for that anyway with the uninsured 

prior to that. That person who has undetected hypertension or diabetes that is hurting their kidneys will get worse, and eventually 

that care will be given, and in most States that means the States 

will pick up the tab a different way. So it is, you pay me now or 

you pay me later. The best way to provide care is to anticipate the 

needs of patients at all stages of life, not just in the Medicare 

group. You are absolutely right about that. It always is reflected 

in the care of the chronically ill. 

An enormous burden on the States right now is the dual-eligible 

population. Nine million Americans in the dual-eligible population 

account for 40 percent of the costs in Medicaid, and that is one of 

13 

the reasons the States are having these terrible problems. The best 

thing to do for them is to help them heal, to get them better care, 

and that will reduce the burdens on States. 

Flexibility is essential to the future. We do not have a one-sizefits-all solution here. State-by-State, there will be innovations that 

will surface. We can support that through waivers, through the 

demonstration projects that are now anticipated in the new law, 

and in preexisting legislation. 

Now we have these new wonderful assets in the law, the Center 

for Medicare and Medicaid Innovation, and the Center for DualEligibles, which will soon be established. These will be able to support States with inventive, locally designed ways to get better care 

to people who really need it. 

Just yesterday, when we set up the Center for Dual-Eligibles, we 

announced the possibility for up to 15 States to get grants now of 

up to $1 million just to plan better care for dual-eligibles in those 

States. 

Senator ROCKEFELLER. Physicians, others, would have initiative? 

Dr. BERWICK. Imagination around this country is extraordinary. 

In my work prior to coming here I had the chance to work with 

thousands of clinicians all over the country, hundreds of hospitals. 

I can see the inventive energies out there. I have met with physician groups now since I have arrived, almost every major physician 

organization, and they are raring to go to help physicians discover 

new ways to better coordinate their care, to get involved in patient 

safety. We can support them also through the new Center for Medicare and Medicaid Innovation, and we can now make them more 

and more aware of what is possible. 

The new law has in it the capacity for more transparency so we 

can see where high performance lies in this country among hospitals, among physicians. For hospitals, we can tie that to payment 

as well. That kind of transparency builds knowledge, and people 

can begin to learn from each other. That will help physicians as 

well. 

The CHAIRMAN. Senator Hatch? 

Senator ROCKEFELLER. Thank you, Dr. Berwick. 

The CHAIRMAN. Thank you. 

Senator HATCH. Well, thank you, Mr. Chairman. Welcome, Dr. 

Berwick. Happy to have you here. 

Let me just make a brief observation before I ask a question or 

two. Today is simply the first of many opportunities for us to have 

an open and honest dialogue on the impact of the new health care 

law. Now, the Centers for Medicare and Medicaid Services, CMS, 

are in charge of the largest Federal health care programs, Medicare, Medicaid, and of course the Children’s Health Insurance Program. This agency has a larger budget than the Pentagon, and its 

actions directly impact the lives of almost, or a little more, perhaps, 

than 100 million Americans. 

Since the passage of this new health law, we have seen that the 

reality has failed to match the rhetoric, on everything from the 

promised cost reductions, to Americans keeping the coverage of 

their choice, et cetera. I fear that this is only the beginning of these 

impacts, and that it is essential that we fully understand the consequences of this new law. 

14 

On November 2, the American people issued a clarion call for 

more transparency and responsiveness out of Washington. It is our 

responsibility to listen and respond to their concerns. Obviously, 

asking us to cover all of our concerns in this hour-long hearing 

with only 5 minutes per person is like asking us to drain the Pacific Ocean with a thimble. This cannot simply be a check-the-box 

exercise. 

Although this hearing has been a long time in coming, almost 8 

months since the passage of the health law, I am glad you are finally here. I plan to make sure that my constituents and the American people are fully informed of all the important actions being 

undertaken at CMS. I sincerely hope that you and your staff will 

be willing and responsive partners in this exercise. 

Keep in mind, usually the President makes a nomination, the 

nominee comes up and talks to members of this committee, we 

have a hearing, and then we have a mark-up. For this $800 million 

agency, the President just recess-appointed you without any of 

that. Now, I think many constituents are outraged. I have a high 

respect for you as a doctor. 

Now, Dr. Berwick, as I was reading through your testimony I 

came across a claim on page 3 that the new health care law will 

actually increase Medicare Part A trust fund solvency by 12 years, 

to 2029. I have also found this claim to be very puzzling. 

As you may already know, I sent a letter to the Medicare trustees on June 24 of this year, along with Senator Gregg, on the issue 

of double-counting Medicare savings in the new law. The health 

care law contains more than $500 billion in cuts to the Medicare 

program, which were claimed by the administration not only to improve Medicare solvency, but also to fund new entitlement spending at the same time. 

Now, this is like claiming that the American families can use the 

same magical dollars to pay their mortgage and their grocery bills 

at the same time, and it is really nonsensical. Now, do not just 

take my word for it. Here is what the nonpartisan Congressional 

Budget Office said on December 23, 2009: ‘‘The key point is that 

savings to the Hospital Insurance Trust Fund under the health law 

will be received by the government only once so they cannot be set 

aside to pay for future Medicare spending, and at the same time 

pay for current spending on other parts of the legislation or on 

other programs.’’ 

In fact, your own actuary at CMS also agreed with this viewpoint 

in his memorandum on April 22, 2010, when he said the following: 

‘‘In practice, the improved HI financing cannot be simultaneously 

used to finance other Federal outlays, such as coverage expansions 

under PPACA, and to extend the trust fund, despite the appearance of this result from the respective accounting conventions.’’ 

So my question is a pretty simple one: do you agree with your 

own actuary, whom I strongly believe was rightly telling us that 

you cannot use the same magical dollar to extend the solvency of 

the Medicare Part A trust fund, while also using it to pay for new 

Federal spending? Now, is this not budgetary gimmickry? 

Dr. BERWICK. No, Senator. In estimating the effects on the trust 

fund, the actuary is following standard accounting principles. It 

15 

has been done correctly. It is not double-counting, as I understand 

it. The Congressional Budget Office—— 

Senator HATCH. It is. 

Dr. BERWICK. My understanding is, we are following standard accounting principles, and that money will go into helping extend the 

life of the trust fund. 

The Congressional Budget Office has also estimated, I think, $140 billion of savings over the first 10 years of this new law, 

below business as usual, and $1 trillion for the decade following 

that. We are seeing the results now. In a lot of the implementation 

of the new law, we can see some of the savings now beginning to 

accrue. 

Prior to the law, you know we engaged a trial of competitive bidding for durable medical equipment. We saw costs of DME fall 32 

percent just in that trial, returning something like $150 million, I 

think, back to beneficiaries in those nine trial areas. We are 

strengthening Medicare Advantage, resulting in lower costs there 

by working very hard with those plans in strong negotiations. 

Senator HATCH. By cutting a lot of people out of Medicare Advantage, you are not strengthening Medicare Advantage. You have cut 

a lot of people out of Medicare Advantage, especially in rural America. 

Dr. BERWICK. There is normal turnover, Senator, in Medicare 

Advantage. 

Senator HATCH. It is not normal. 

Dr. BERWICK. More than 99 percent of Medicare beneficiaries 

have access to Medicare Advantage plans under the new arrangements. 

Senator HATCH. They are a lot more expensive. My time is up. 

Let me just say this. I have a lot of questions for you, but this 

hearing is not going to allow us time. Normally you can count on 

me supporting all administration officials if I can. I think the 

President won, and he ought to have the people he wants around 

him. 

Now, I hope when we send you questions in writing, that this administration will permit you to answer our questions, because this 

is a doggone important committee, and we oversee 60 percent of 

the spending in this country. I want to know what is going on, and 

I want answers to my questions. 

So I just hope that you will answer our questions when we send 

them in writing to you and take the courtesy to show them to you, 

because we clearly do not have time in this hearing, and we certainly have not had time, since you were recess-appointed, to even 

get down to some of these questions that are very important. I 

have no doubt that you will be able to answer some of them. 

Thank you, Mr. Chairman. Sorry. 

The CHAIRMAN. Thank you. I would just reinforce what you said, 

Senator. I do expect CMS, and those in the White House, and 

whatnot, to allow full response to questions. One of your first 

words were, do it right the first time. So do it right the first time 

and answer it fully the first time. 

Senator HATCH. Mr. Chairman—— 

The CHAIRMAN. And there are other Senators who have to speak. 

I appreciate it. I am trying to help you out, Senator. 

16 

Senator HATCH. I agree with that. But let me just say that this 

is pathetic. I am not meaning to be critical, because we are in a 

recess period. But my gosh, we ought to have time to ask the most 

important man in America on health care, questions that are relevant and important. 

The CHAIRMAN. We will have sufficient hearings. 

Senator HATCH. All right. 

The CHAIRMAN. Next on the list is Senator Bingaman. 

Senator BINGAMAN. Thank you, Mr. Chairman. 

Dr. Berwick, thanks for being here and thanks for your willingness to serve in this very important position. 

I would like to go back to this Office of Inspector General report, 

that you referred to, on medical errors. I think the euphemism that 

the report uses is ‘‘adverse events’’ in hospitals. I guess what I am 

interested in hearing from you, if you could tell me, is your reaction 

to some of the recommendations. 

One of the recommendations in the report is that CMS ‘‘should 

provide further incentives to hospitals to reduce the incidence of 

adverse events through its payment and oversight functions,’’ and 

then further down it says, ‘‘CMS should look for opportunities to 

hold hospitals accountable for adoption of evidence-based practice 

guidelines.’’ This is something you have spent the last several decades working on. I would be interested in your views as to what 

opportunities you think you have under this new law to make 

progress on this. 

Dr. BERWICK. Thank you, Senator Bingaman. Yes, you are correct. Patient safety has been an object of my ongoing professional 

concern and work for well over 2 decades. Unfortunately, the Inspector General’s report was not a surprise. We know that patients 

are injured in American health care far too often. 

The good news is, we know those injuries are preventable. We 

can find hospitals and clinics all over this country that are reducing injury rates to extremely low levels, and there are all types of 

places, little tiny hospitals. I got a communication a while ago from 

a hospital in upstate New York, in Ogdensburg, I think, ClaxtonHepburn Hospital. It almost eliminated infections that I thought 

were inevitable. Sentara Norfolk Hospital near here has gone almost 5 years, I believe, without a central line infection. 

So we can really make substantial progress, but we have to make 

it more possible for hospitals to do that, including making it more 

in their interest. The Affordable Care Act has tremendous opportunities for doing that. There is a lot of focus in that Act on health 

care-acquired conditions and hospital-acquired infections, that is, 

other names for adverse events. We now can make them more 

transparent, more public, measure them better, post those measurements on Hospital Compare so beneficiaries know about that, 

and tie payment to hospitals to their ability to reduce those avoidable forms of harm and injury. 

I will tell you, I have reached out to the hospital community and 

talked with the hospital leadership, the hospital associations, a 

number of times since I have arrived. They are enthusiastic about 

this. There is not resistance. Everyone knows that we need to 

promise every single American the safest possible health care that 

anyone can find anywhere. 

17 

Senator BINGAMAN. Let me also ask about a related issue, and 

that is the measurement of outcomes. We made provision in this 

law for trying to accelerate the adoption of outcome measures for 

the health care industry, and I believe the way we have it, the way 

the law reads, the first set of acute and chronic measures are required to be released by CMS within 24 months of enactment; the 

first set of primary care and preventative care measures are due 

within 36 months. I would be interested in any views you have 

about the importance of these outcome measures and what you anticipate being able to do in that regard. 

Dr. BERWICK. I am aware of your leadership on that issue, Senator. I am very grateful for it and excited by that provision of the 

Act. 

In proper stewardship in any exchange, what needs to be measured, defined, and paid for is what you really want in health care. 

We do not really want fragments, we do not want pieces of care, 

we want what health care achieves, which is good health, long life, 

comfort, relief of anxiety. Those are outcomes. That is about what 

happens to the patient. 

Maturing our measurement systems and linking that to payment, so we move more toward purchasing what we really want, 

will be better for patients, and all our beneficiaries—and not just 

beneficiaries, but all of America. That involves investment in the 

development and use of those outcome measures. They are hard to 

develop. We are well under way, though. 

A lot of the work on hospital value-based purchasing, the Medicare Advantage star rating system, is having more and more outcome measurements, one of which, by the way, is what the beneficiary, the patient, reports about their own experience. That is an 

outcome, too. 

This involves public/private partnership because, the more we 

can align those measures with what is happening on the private 

side in private plans and private delivery systems, it will rationalize and make more sensible to physicians and hospitals what we 

really expect of them. It involves work with the National Quality 

Forum and other consensus-based entities to help us develop these 

measures all together, and I have been meeting with all of these 

stakeholders since I have arrived. You are absolutely right: that is 

the direction to move measurement. 

Senator BINGAMAN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Senator Bunning? 

Senator BUNNING. Yes. I would like to point out that the opening 

statements took almost 30 minutes. Although Senator Baucus will 

not make a commitment to bring you back to testify before the end 

of the year, I can assure you that you will not get special treatment 

next year. I suspect that you will be spending a lot of time testifying before the House of Representatives, partly because we in the 

Senate have been shut out. 

Why did you decide to accept a recess appointment by President 

Obama in July? You certainly had a choice to say ‘‘no’’ and that you 

wanted the nomination to work. I have heard people argue that the 

nominations had stalled; however, that is clearly untrue. You were 

not nominated until April, a mere 4 months before your recess apVerDate Nov 24 2008 18:54 Nov 03, 2011 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 R:\DOCS\70828.000 TIMD
18 

pointment, and the Finance Committee, which is run by a Democratic chairman, did not even hold a hearing on your nomination 

as of this day. 

Senator Hatch brought out some things about some early statements about 12 years, and 2029, and how the bill has helped Medicare. But it also failed to mention that the biggest problem Medicare faces, the dramatic cuts to the physician payment rate, was 

not addressed in the health care bill and still is not fixed. 

On December 1, doctors started getting a 23-percent cut when 

they see Medicare patients. The cost of fixing this formula is probably somewhere around $300 billion, which will require more cuts 

to Medicare, adding to the deficit for future generations. 

According to the AMA press release, about 1 in 5 physicians 

overall, or nearly one-third of primary care physicians, are restricting the number of Medicare patients in their practice because of 

low reimbursement rates and the threat of future cuts. So, as I see 

it, Democrats were able to extend the solvency of Medicare by 18 

years, but did not bother to fix one of the most expensive problems 

Medicare faces each year, which will require more cuts in the future and make it harder for seniors—seniors—to find doctors to 

treat them. To me, this is not success. 

Dr. BERWICK. Thank you, Senator Bunning. You asked a number 

of questions. Let me begin with SGR, with the physician payment. 

The President has stood firmly behind a call for the SGR receiving 

a permanent fix. I completely agree with that. I believe the AMA 

has requested a 13-month extension of the SGR to give us time to 

work that out. I hope that Congress acts on that, and I support the 

President’s—— 

Senator BUNNING. We have not had a bill before us. 

Dr. BERWICK. It is not acceptable for physicians and beneficiaries 

to be facing a Sword of Damocles of a 23-percent cut on this. It just 

is not a good idea. 

With respect to the recess appointment, the reason I accepted it, 

sir, is that the President asked me, and I want to serve this country. It is an immense privilege to be able to do this work. It was 

not my choice to be recess-appointed or not; when asked, I came 

because it is my duty to do that. 

Senator BUNNING. But did you not know your recess appointment 

was very, very controversial? 

Dr. BERWICK. What I know is that the President of the United 

States asked me to serve to help my country to get to the better 

health care system we all want and need. That is what my career 

has been devoted to. As long as Congress, in its wisdom, chooses 

to have me do this service, I feel just very privileged to do it. That 

is all I can say about that. 

With respect to communication, as you and Senator Hatch said, 

I want to have dialogue with you and all the members of Congress. 

I tried, before my appointment, to visit with each of you, and many 

who wished to see me, I saw and spoke with. Since then, any request at an individual level to meet with any member of Congress 

that has come my way, I have said ‘‘yes’’ to and done it. I look forward to ongoing dialogue and exchange with this committee, and 

all members of Congress. It is my job to do that. 

19 

Senator BUNNING. I want to ask one more question before my 

time runs out. I was struck by the conclusion in your testimony 

where you promise that you and others at CMS ‘‘will continue to 

be as open and as transparent as possible.’’ You have to realize 

that many people may be a little skeptical of this comment, particularly considering the administration that you work for. For 

starters, your recess appointment was an end-run around Congress, which clearly was not an open and transparent process. The 

health care reform debate was far from open and transparent. 

Republicans got locked out of any negotiations, and Democrats 

ended up having to jam a reconciliation bill through Congress to 

get the final bill passed. In fact, I could not even get all members 

of this committee to support an amendment I proposed that said 

we needed to have final and complete CBO scores, just the scores, 

along with the legislative language, before the committee passed 

the Health Care Reform bill. So open and transparent, we have not 

been. 

Dr. BERWICK. I look forward to any forms of dialogue that I can 

engage in with you, Senator. 

Senator BUNNING. I will guarantee you this: you will get open 

and transparent, and it will be on the other side in the House. 

They will see to it that you are open and transparent because they 

are going to oversee CMS very closely. Thank you very much. 

The CHAIRMAN. Thank you, Senator. I might just also say that 

we are working with your side of the aisle to make sure that doctors do not get suspended cuts in Medicare. We are working on 

that right now and hope to get that enacted this year so doctors 

do not face that cut. We will find a way. 

Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Dr. Berwick, you cannot find a more important issue in health 

care than end-of-life care. The approach that I have supported is 

the opposite of rationing. For example, right now, traditionally, patients had to give up the prospect of curative care in order to get 

the hospice benefit. I do not think that is right. I think they ought 

to have all the choices. 

I wrote a provision that is in the bill that begins the program 

that, for the first time, we give patients the right to get both the 

hospice program and curative care. So we start with two principles, 

empowering patients to make choices, and making sure they have 

all the options: hospice care, curative care, all of the options. Are 

those the kinds of principles that you believe would really enhance 

quality of life in this area of end-of-life health care? 

Dr. BERWICK. First, thanks for your leadership on that, Senator 

Wyden, and some of the other important issues. I am very grateful 

for it. My principle is that every person in America, certainly every 

beneficiary in Medicare and Medicaid, should be able to get all the 

care they want and need when and how they want and need it. If 

someone in hospice care also needs and wants curative care at the 

same time, I am completely in agreement with you. As a physician, 

I am. When I saw patients, my question always was, what does 

that patient want and need and how will I get it for them? In this 

particular case of being able to offer curative therapy to patients 

20 

who are also in hospice care, that sounds totally consistent with 

that idea. 

Senator WYDEN. The second question I want to ask you about is, 

at page 13 you make some very commendable statements about 

how States ought to have a key role in making sure that there are 

a wide array of options for innovation in health care. This is something I feel very strongly about. I was involved in writing the provision empowering the States to innovate. 

My new Governor, Dr. John Kitzhaber, and there are going to be 

others, very much wants to speed up the opportunity for the States 

to be innovative, to have a chance to champion approaches that ensure we do not have one-size-fits-all health care, that they have an 

opportunity for flexibility, more choice, and more competition. 

Would you be open within the department, because it has to be 

a departmental effort, to start reaching out now with the Governors to start looking for ways to be encouraging of this approach 

that would give not just my State, but every State, as much flexibility as possible, as soon as possible, to be innovative? 

Dr. BERWICK. Yes, Senator, I would. The cliche ́ about States as 

the laboratories of democracy is not just a cliche ́, it is true in the 

diversity of approach that we are seeing emerge State by State. It 

has been there for a long time. I think we should be doing everything we can to converge it, consistent with protecting the trust 

fund and protecting the well-being of beneficiaries. 

We have duties to discharge from the Federal level, but releasing 

this kind of State energy is an extraordinarily important thing to 

do. We are doing it. There are demonstration authorities. Just yesterday we announced the multi-payer demonstration project, which 

was originally intended for six States, and I expanded it to eight 

States so we can get multi-payer work going on organizing care for 

the chronically ill. 

May I take the liberty of saying it is not just States, it is communities and localities also that need the same latitude and flexibility. 

We have seen tremendous examples at the community level. 

Senator WYDEN. Let me see if I can get one other one in. But 

I appreciate your answer, because we do want to speed up the opportunity for Oregon, and every other State, to have a chance to 

be innovative. 

On Medicare Advantage, it was pretty clear to us that not all 

Medicare Advantage was created equal. 

Dr. BERWICK. Yes. 

Senator WYDEN. That there were some programs of very exceptional quality, and there were some others that, frankly, some of 

the CEOs ought to be put in jail, some of the hearings that Chairman Baucus had. So we created in the legislation an opportunity 

for bonus payments for high-quality plans based on these star ratings in the department. The whole point of this is to drive quality. 

How do you see bonus payments making Medicare Advantage more 

choice-oriented and more competitive by focusing on quality? 

The CHAIRMAN. If I might, too, a vote has started. I want to give 

as many Senators as possible a chance to ask questions, so, if you 

could just answer that question, because time has expired, in about 

15 seconds. 

21 

Dr. BERWICK. The law gives us the opportunity to measure and 

rate the quality of these plans and to attach payment to it. The 

star rating system is a strong step in which we reward plans as 

they improve their quality. It is only logical, and it will help plans 

and beneficiaries both. 

The CHAIRMAN. Thank you, Senator. 

Senator WYDEN. Thank you. 

The CHAIRMAN. Thank you, Dr. Berwick. 

Senator Roberts is next, and he is not here. I have, next, Senator 

Stabenow and Senator Ensign. 

Senator Stabenow? 

Senator STABENOW. Thank you, Mr. Chairman. Welcome, Dr. 

Berwick. I very much appreciate your leadership and your experience. I think you are in the right place at the right time, and we 

are fortunate to have you. 

I did want to first just comment. As you know, the Keystone Initiative put forward by the Michigan Hospital Association has been 

a real driver in terms of quality initiatives dealing with hospitalborne infections, reducing costs by saving lives, and focusing on 

quality. I know that this model is a part of, as you move forward, 

the way you are looking at improving care. Also, just for my colleagues, there was a comment made that we had not tried to fix, 

for doctors, the SGR. In fact, my legislation, S. 1776, we did put 

forward—thank you for the administration’s support—and we could 

not get past a filibuster, unfortunately. But we are going to keep 

working on that. 

I have a few just quick items I would like to speak to specifically 

about what repealing the new law on services would mean to seniors, to families, to moms, and children. We have now a new prescription drug benefit that, first of all, this year provides a $250 

rebate or help to seniors. I know many are very grateful for having 

that help if they fall in the donut hole. Next year, half of the cost 

of folks who fall in the gap in prescription drug coverage for their 

brand name prescription drugs will be reduced, so a 50-percent reduction. 

Could you speak, Dr. Berwick, about what would happen, in your 

judgment, to seniors in terms of higher prescription drug prices if 

this were repealed? 

Dr. BERWICK. I cannot think of a worse plan than repealing this 

law, Senator, on that and so many other counts. It means seniors 

would not be getting the 50-percent discount on prescription drugs 

in the donut hole. We would ask them to return 1.8 million $250 

rebate checks that they are getting this year. We tell them they 

look forward to the donut hole not closing, so they will not be able 

to afford lifesaving medicines. 

We tell them we are not going to improve their access to preventive services, like colonoscopy and mammography, with first-dollar 

coverage, that we will not work on the safer care that I have been 

asked about, that we are not going to study and improve health 

care-acquired conditions, or work on unnecessary readmissions, 

that we are not going to improve chronic illness care the way the 

new Accountable Care Organizations and medical homes would 

allow us to do, that we are not going to be more transparent about 

performance. 

22 

There are all sorts of things in this new law that let beneficiaries 

know the performance of the health care that they are getting. 

That we are not going to work hard on fraud and abuse and criminal behavior with respect to stealing from the public trust fund, or 

that we are not going to extend the trust fund’s life by 12 years, 

and it is just over in 2017—it would be a terrible plan. 

Senator STABENOW. So prescription drug costs for seniors will go 

up next year if this provision is repealed, is that your judgment? 

Dr. BERWICK. If it were repealed, their 50-percent discount on 

their drugs would be gone. 

Senator STABENOW. We have also looked at coordinating mental 

health and primary care. One of the things that is very important 

in this new law, which was something very important to me, was 

to look at total health. I know that early-warning signs of Alzheimer’s and dementia are often missed, and so having the ability 

to see the doctor to be able to get the screenings at no cost, to be 

able to look broadly at mental health and physical health, if that 

is taken away, if that is repealed and seniors are more at risk for 

these conditions, do you think that we are going to see more cases 

of undiagnosed Alzheimer’s and dementia for seniors and their 

families? 

Dr. BERWICK. Sure, Senator. I was delighted to see the attention 

to behavioral health and mental health issues in the law. The annual wellness physical, which this law now provides and will not 

be provided without it, includes important steps toward really responsible screening for these conditions. Detected early, we can intervene early and save a lot of damage. 

Senator STABENOW. And then one final area, because there are 

so many ways in which, unfortunately, taking away services is 

really not in the interest of families and seniors, and taking away 

tax cuts for small businesses, and so on in the bill. 

But we know that about 60 percent of the policies in the individual insurance market offered up to this point have not included 

maternity care. One of the things I am proudest about—and I know 

some folks have called you a baby doctor—is the fact that, going 

forward, moms and babies will be covered. I wondered if you might 

just speak to what happens to women and their unborn children 

if in fact health care reform is repealed. 

Dr. BERWICK. Well, thanks for your leadership on that. I thank 

you as a pediatrician and as the CMS Administrator. 

The CHAIRMAN. Again, Doctor, very briefly. 

Dr. BERWICK. Yes. The new law allows extension of more services 

in perinatal care and coverage of children. I think something like 

2.6 million children are already covered, and the Secretary has declared her intention to lead national efforts to get the 5 million remaining kids covered who are eligible for CHIP but not in that program. 

The CHAIRMAN. Thank you. 

Senator Ensign? 

Senator STABENOW. Thank you. 

Senator ENSIGN. Thank you, Mr. Chairman. 

A provision that Senator Carper and I worked on dealing with 

healthy behaviors in the Health Care Reform bill—we are having 

difficulty. It is not your role, but we are having difficulty getting 

23 

answers from HHS. But dealing with the whole healthy behaviors 

issue, do you see—because the healthy behaviors issue does not 

apply to the Medicaid or Medicare populations—ways that we could 

implement this idea of encouraging healthier behaviors to Medicare 

or Medicaid patients? 

Dr. BERWICK. Oh, definitely, Senator. And by the way, if you are 

having trouble with a response to an issue as important as that, 

please, let us deal with that afterward. I would be happy to look 

into it further and work with you on it. 

Senator ENSIGN. I appreciate that. 

Dr. BERWICK. Yes. Prevention is such a crucial area. So much of 

the morbidity we deal with comes out of the behaviors that we 

choose or the conditions of the environment that we can alter. And 

yes, it does affect elders substantially. So working with the Medicare and Medicaid beneficiaries both on choices that they make, 

helping them discover better patterns of nutrition, and the choices 

they make about the substances that they use, that is very important. 

The extension in the Affordable Care Act of wellness visits for 

seniors will allow physicians and seniors to get together now to 

talk about how to stay healthy for as long as possible. The extension of coverage for children under Medicaid through CHIP and 

getting some of the single adults into that system, although it is 

not accomplished through CMS, is an important step forward to 

what you want. 

Senator ENSIGN. But the incentive is financial incentives for 

healthy behaviors. That is just not preventative services. We have 

tried preventative services, and those do not save nearly the 

money. As a matter of fact, when you look at CBO, they say preventative services actually cost money. But rewarding healthier behaviors, we know saves money. I mean, Safeway has a pretty good 

model on this, and that is the reason that we were able to get that 

part in the bill. That is what I am talking about. 

Do you see ways for financial incentives within the Medicare or 

Medicaid program to be applied so that we change people’s behaviors? Because, if we do not change people’s behaviors, the cost of 

health care in this country is going to continue to skyrocket. 

Dr. BERWICK. I think helping people understand their selfinterest when it comes to healthy behaviors is crucial. It is an interesting area that you are exploring, and I would be happy to talk 

with you more about it, Senator. 

Senator ENSIGN. All right. 

Lastly, one of the other things that Safeway did is, they provided—and because Medicare and Medicaid have this information 

that can be applied to the private sector, Safeway is a large enough 

organization to be able to put together enough data for transparency to help their employees shop, to basically become shoppers 

in the marketplace, for health care. An example: around the San 

Francisco area, because they are self-insured for the first 25,000, 

they pay for things like colonoscopies. 

Well, they just paid, and they looked at 1-year data, and they 

paid as little as around $800 for a colonoscopy and as much as 

$8,400 for a colonoscopy in the same year. That kind of informaVerDate Nov 24 2008 18:54 Nov 03, 2011 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 R:\DOCS\70828.000 TIMD
24 

tion, if you could provide cost and quality transparency in the marketplace, you could get more market forces. 

Is that something that you could foresee that Medicare and Medicaid could provide, just as information? Obviously we are protecting privacy, but I am talking about just with outcomes, with 

costs, so that more people could actually shop, and market forces 

could play more of a role in the health care field. 

Dr. BERWICK. Senator, I remember you mentioning that to me 

when we met in your office. That is a very interesting area. I think 

in general the whole idea of empowering beneficiaries with more 

information about what is available to them, about their options, 

and about where they can find the care they need, to use that 

power of the beneficiaries’ decision-making to help drive quality up 

across the board, is a very important principle, and I agree with 

you on the importance of exploring that everywhere we can. 

Senator ENSIGN. I guess, can I get a commitment from you that 

you will, within your agency, work to try to figure out ways that 

you can make this kind of information public? 

Dr. BERWICK. Making more and more information available from 

the Medicare data—— 

Senator ENSIGN. No. I am talking about cost and quality. I am 

talking about cost and quality across the board. Like, what hospitals charge for a total hip replacement, all of those things. Not 

just what Medicare pays, but what doctors charge and things like 

that. If we had more of that information available, I just think we 

could have a lot better shoppers in America on health care. 

Dr. BERWICK. Yes, Senator. I share with you an interest in that 

information. 

The CHAIRMAN. Thank you. 

Dr. BERWICK. Let us certainly explore it further. 

The CHAIRMAN. Thank you very much. 

Senator Cantwell, you are next. You are in charge, so, when you 

are finished, you can adjourn the hearing. 

Senator CANTWELL. Well, thank you, Mr. Chairman. I think I 

could go on forever, because I think this is an important hearing, 

and I think, Mr. Chairman, you stated at the beginning with your 

opening comments that this is about legislation that is estimated 

to save, you said, hundreds of billions of dollars in the reform of 

our Medicare system. Some people are saying, oh, let us do vouchers instead, or privatize it, or do something else. 

But the truth is, this legislation has very powerful tools for reducing the cost of Medicare moving forward. If we get rid of them 

somehow, we are going to be in a world of hurt. So I just wanted 

to get your commitment on some of those provisions. 

One, the rebalancing away from nursing home care to community-based care. Our State has saved about $243 million in about 

a 10-year time period by shifting away from nursing home care, 

and so I think the estimates are that it could save $10 billion federally over 5 years. How integral do you think that shift is? 

Obviously, there is also a provision in this legislation that allows 

people in community-based care to hold on to their assets, so it 

really is going to have more people staying at home and having the 

benefit of getting home-based service. 

25 

The value index, moving away from fee-for-service to a cost effi- ciency model, we think that could save anywhere up to $100 billion 

for our health care system, moving that 30 percent of waste, fraud, 

and abuse in the system to a model that is based on quality care. 

So I am curious as to how essential you think that is to the success 

of Medicare moving forward. 

The basic health plan. Another tool to give States the ability to 

negotiate on rates, for lower insurance rates for their consumers. 

Is CMS going to give technical assistance to States on how to implement that and obviously not penalize States who have already 

gone down that road? 

The Pharmacy Benefit Managers transparency provision, we 

think, is probably another provision that could save as much as 10 

percent on brand-name drugs by giving the aggregate types of rebates and price concessions to CMS so that we really understand 

that. So all of those are tools that we put in this legislation. How 

critical do you think they are? How will you work to implement 

them, and how can we get your guarantee that these are the critical frameworks for cost controls? 

Dr. BERWICK. I agree with you, these are all important levers for 

doing what I said in my opening statement we can do: making care 

better and more affordable at the same time. Take the rebalancing 

work and the work we are progressing on now on home- and 

community-based services. People do not want to be in institutions, 

they do not want to be in hospitals, so a way to get them into communities, with the proper supports, it is better for them, it is better 

for their families and loved ones, and it will in general lower costs 

substantially. It is a very important example of progressive work. 

And yes, there is new authority in this law and in older legislation 

to help States try out their forms of home- and community-based 

services. I am totally in favor of that. 

Integrating care through Accountable Care Organizations and 

medical homes will save money. Using the value index idea. The 

idea there is that we should pay for what we want. We want quality, we want better outcomes, we want satisfaction on the part of 

beneficiaries. Why would we pay for fragments, little piece by little 

piece, instead of understanding where the value really lies? In 

order to do that, we have to have tools like the value index. 

Senator CANTWELL. And how big of a component do you think 

that is for the success of Medicare in reducing Medicare costs moving forward, a small piece or a very large piece? 

Dr. BERWICK. A large piece. Measuring what we want and attaching incentives and rewards for going there is logical and powerful. 

Senator CANTWELL. Great. Well, we have a vote on. I am sure 

we will have a chance to talk to you again about these. But I think 

it is very important that we understand that the tools are here. 

They are already law. We now have to get about implementing 

them. The more people talk about delaying them, the more we are 

going to delay cost controls. The public will greatly benefit by this. 

So, I thank you. 

Dr. BERWICK. Thank you, Senator Cantwell. 

Senator CANTWELL. The hearing is adjourned. 

[Whereupon, at 11:23 a.m., the hearing was concluded.] 

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