DUAL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO IMPROVE 

THEIR CARE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 21, 2011 

Serial No. 112–64 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

DUAL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO 

IMPROVE THEIR CARE 

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

72–402 PDF 2012

DUAL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO IMPROVE 

THEIR CARE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 21, 2011 

Serial No. 112–64 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDOLPHUS TOWNS, New York 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement ................................................................................................. 3 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 5 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 5 

Prepared statement .......................................................................................... 7 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 11 

Prepared statement .......................................................................................... 12 

Hon. Bill Cassidy, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 14 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 14 

Prepared statement .......................................................................................... 17 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 188 

Hon. Leonard Lance, a Representative in Congress from the State of New 

Jersey, prepared statement ................................................................................. 190 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 191 

WITNESSES

Melanie Bella, Director, Federal Coordinated Health Care Office, Centers 

for Medicare and Medicaid Services ................................................................... 24 

Prepared statement .......................................................................................... 26 

Answers to submitted questions ...................................................................... 192 

Robert Egge, Vice President of Public Policy, Alzheimer’s Association .............. 74 

Prepared statement .......................................................................................... 76 

Answers to submitted questions ...................................................................... 196 

Billy Millwee, Associate Commissioner for Medicaid/CHIP, Texas Health and 

Human Services Commission .............................................................................. 92 

Prepared statement .......................................................................................... 93 

Denise Levis Hewson, Director of Clinical Programs and Quality Improvement, Community Care Center of North Carolina ............................................ 99 

Prepared statement .......................................................................................... 101 

Answers to submitted questions ...................................................................... 199 

Shawn Bloom, President and Chief Executive Officer, National PACE Association ........................................................................................................................ 131 

Prepared statement .......................................................................................... 133 

Answers to submitted questions ...................................................................... 325 

SUBMITTED MATERIAL

‘‘Better Medicaid coordination would cut costs, help the most seriously ill,’’ 

Washington Post article by Ezra Klein published June 16, 2011, submitted 

by Mr. Burgess ..................................................................................................... 53 

Letter, dated March 1, 2011, from Kathleen Sebelius, Secretary, Health and 

Human Services, to Hon. John Boehner, submitted by Mr. Pallone ............... 60 

Statement, undated, of Mary Kay Henry, International President, Service 

Employees International Union, submitted by Mr. Pallone ............................. 66 

(1) 

DUAL ELIGIBLES: UNDERSTANDING THIS 

VULNERABLE POPULATION AND HOW TO 

IMPROVE THEIR CARE 

TUESDAY, JUNE 21, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:04 p.m., in room 

2322 of the Rayburn House Office Building, Hon. Joe Pitts (chairman of the subcommittee) presiding. 

Members present: Representatives Pitts, Burgess, Whitfield, 

Shimkus, Latta, Lance, Cassidy, Guthrie, Upton (ex officio), 

Pallone, Christensen, Markey, and Waxman (ex officio). 

Staff present: Howard Cohen, Chief Health Counsel; Andy 

Duberstein, Special Assistant to Chairman Upton; Paul Edattel, 

Professional Staff Member, Health; Julie Goon, Health Policy Advisor; Kirby Howard, Legislative Clerk; Debbee Keller, Press Secretary; Peter Kielty, Senior Legislative Analyst; Ryan Long, Chief 

Counsel, Health; Carly McWilliams, Legislative Clerk; Jeff Mortier, 

Professional Staff Member; Katie Novaria, Legislative Clerk; John 

O’Shea, Professional Staff Member, Health; Monica Popp, Professional Staff Member, Health; Andrew Powaleny, Press Assistant; 

Heidi Stirrup, Health Policy Coordinator; Lyn Walker, Coordinator, 

Admin/Human Resources; Tom Wilbur, Staff Assistant; Alli Corr, 

Democratic Policy Analyst; Tim Gronniger, Democratic Senior Professional Staff Member; Purvee Kempf, Democratic Senior Counsel; 

and Karen Nelson, Democratic Deputy Committee Staff Director 

for Health. 

Mr. PITTS. The subcommittee will come to order. The chair recognizes himself for 5 minutes for an opening statement. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Dual eligibles, those individuals who are eligible for both the 

Medicare and Medicaid programs, are one of our sickest, poorest, 

most costly and most vulnerable populations. If we are to simultaneously improve and lower the cost of their care, we must do a better job at integrating Medicare and Medicaid benefits and services. 

Dual eligibles are unique. While more than half of dual eligibles 

live below the poverty line, only 8 percent of Medicare-only beneficiaries have incomes below the poverty line. Nineteen percent of 

2 

dual eligibles live in an institutional setting, while only 3 percent 

of Medicare-eligible-only individuals live in such a setting. They 

are also more likely to be hospitalized, to go to emergency rooms, 

and to require long-term care than other Medicare beneficiaries. 

According to the Centers for Medicare and Medicaid Services, 

more than 9 million people fall into the dual-eligible category. 

Forty-three percent of them have at least one mental or cognitive 

impairment, while 60 percent have multiple chronic conditions. 

According to the Kaiser Family Foundation, dual eligibles, who 

make up only 15 percent of Medicaid enrollment, consume 39 percent of total Medicaid spending. Additionally, in 2005, the Medicare 

and Medicaid programs spent an average of $20,000 per dual eligible, almost five times greater than the average amount spent on 

other Medicare beneficiaries. 

These individuals, who have fewer resources and more complicated health care needs, face the added struggle of trying to 

navigate both Medicare and Medicaid. Medicare covers their basic 

acute health care services and prescription drugs, and Medicaid 

fills in the gaps. Medicaid generally pays the Medicare Part B premium and the cost sharing for Medicare services. For some, Medicaid also covers various benefits not covered by Medicare, including long-term care supports and services, dental care, eyeglasses, 

and other benefits. 

Each State determines its own eligibility standards and which 

benefits will be provided to Medicaid beneficiaries. So, we are able 

to watch various States experiment with different models and designs to better align the care of dual eligibles. Currently, 15 states 

have been selected to receive funding, data and technical assistance 

from CMS to develop a more coordinated model of care for dual eligibles. 

We can improve the quality of care that dual eligibles receive. 

We can make their care more efficient and easier for them to navigate. We can do all this while lowering costs to both the federal 

government and the beneficiary. 

I look forward to hearing from our witnesses today about which 

models are being tried in the States and what we have learned so 

far. 

[The prepared statement of Mr. Pitts follows:] 

3 

4 

5 

Mr. PITTS. At this time I will yield the remaining time to the vice 

chairman, Dr. Burgess. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman. 

In no other area is the lack of coordination at the federal level 

more apparent than when we deal with people who are dually eligible for Medicare and Medicaid. Studies of the population make it 

clear that Medicaid is actually 56 separate programs administered 

by the States and territories in the context of duals. It sometimes 

becomes a game of hot potato. 

Data suggest that duals are sicker when they are hospitalized, 

that their costs are almost 10 percent greater, and they have more 

episodes of avoidable hospitalization. It is a symptom of no one 

being held accountable for their care. Certainly, better alignment 

of Medicare and Medicaid is needed. 

Now, unfortunately, ACOs, accountable care organizations, that 

may have provided a model and a good place to start, it seems that 

once again the bureaucracy has killed any such hope for that happening. The rule that was produced on ACOs was virtually unintelligible and most large groups that thought themselves to be ACOs 

have now moved away from this. 

You want to drive cost savings with better care. This is a problem that really we could solve. Fifteen percent of Medicaid enrollees are duals and they account for almost 40 percent of the program’s spending. The old Willie Sutton law, you rob banks because 

that is where the money is, clearly it should apply here. And these 

patients are fully covered by Medicare and the entire Medicare 

benefits package and still they are five times costlier. These are patients that are defined. We know where they are. We know who 

they are. We know when they are accessing care and why they are 

accessing it, and yet for some reason we lack the fundamental 

amount of consistency for coordinating their benefits. 

I rarely find myself agreeing with Ezra Klein and the Washington Post, but I did last week when he talked about the fact that 

this was an idea whose time has come. What I don’t understand 

is why it takes an entirely new federal agency when CMS has had 

broad waiver authority and demonstration authority for years to 

take care of this problem. 

I will yield back the balance of my time. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

ranking member of the subcommittee, Mr. Pallone, for 5 minutes. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

I really welcome today’s hearing on a critical issue: the coordinating and improving of health care of those dually eligible for 

Medicare and Medicaid programs, otherwise known as dual eligibles, and I appreciate my colleagues for working with us in preparing this hearing and look forward to our discussion. This is an 

6 

area of our health care system that I think has potential for effective change. 

The reality is that dual eligibles are a vulnerable population. 

Their care is both costly and frequently uncoordinated, which is resulting in poor outcomes in many cases. In total, there are 9.2 million Americans who rely on both Medicare and Medicaid. Meanwhile, they are significantly poorer and tend to have extensive 

health care needs. Overall, they are also more likely to suffer from 

chronic conditions such as heart disease, pulmonary disease, diabetes and Alzheimer’s disease, and as such, their care is complicated 

and too often they are not receiving the patient-centered care they 

need and that they deserve. 

In addition, dual eligibles represent less than 20 percent of the 

Medicare and Medicaid programs but bear the responsibility for a 

significant amount of the programs’ expenses. In fact, in 2007, they 

comprised only 15 percent of enrollees but represented 39 percent 

of Medicaid spending and their medical costs were more than six 

times higher than non-disabled adults in Medicaid. Meanwhile, in 

Medicare, they represent 16 percent of enrollees and 27 percent of 

expenditures. Compared to all other Medicare enrollees, the health 

costs are nearly five times as great. 

These are powerful numbers that demonstrate if we can improve 

care coordination and make life better for these individuals, there 

is also an opportunity for savings. That is why, in passing the Affordable Care Act, we created the Federal Coordinated Health Care 

Office at the Department of Health and Human Services, otherwise 

known as the Medicare-Medicaid Coordination Office. Its mission is 

to gain some much-needed efficiency within the system for this 

group of beneficiaries. 

I must admit, the timing of the coordinated office, as well as today’s hearing, couldn’t be better. Congress and this committee are 

increasingly concerned about the rising cost of Medicare health 

care coverage for the 45 million elderly and disabled Americans 

and Medicaid’s 55 million poor patients. So what better place to explore, understand and address than the sickest and most expensive 

populations to cover. But we mustn’t set a price tag on their care 

nor should we shape policy with the goal of only saving money. 

It is clear we have some real big challenges, yet some real big 

opportunities in providing care for dual eligibles. So I look forward 

to hearing from our expert panel today, and I would specifically 

like to welcome Ms. Melanie Bella, the head of the new coordinated 

office. I know that she has a long history of aiming to restructure 

the services of dual eligibles, so I look forward to hearing about her 

innovative work. 

I also look forward to hearing about the successful efforts represented here today by the different panelists. I hope we can hear 

some new ways Congress can be helpful in addressing what has 

been a longstanding problem facing our health care system. 

And I yield back, Mr. Chairman. Thank you. 

[The prepared statement of Mr. Pallone follows:] 

7 

8 

9 

10 

11 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

full committee chairman, Mr. Upton, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. 

According to CMS, more than 9 million Americans qualify for 

both Medicare and Medicaid, including at least 257,000 in Michigan. 

I want to thank our two panels this afternoon for agreeing to 

share their expertise in serving this vulnerable population, often 

referred to as dual eligibles. We look forward to hearing your perspective on the health care needs and the barriers that currently 

prevent them from properly navigating the health care system. 

This hearing is important for two key reasons. First, we must 

better understand the distinctive behavioral and physical health 

care complexities associated with the dual-eligible population. And 

second, we need to better understand what is currently being done 

to help these individuals navigate the health care system. By the 

end of the hearing, we should be able to identify what initiatives 

exist to effectively integrate care for dual-eligible populations, what 

coordination models are working, what prevents these effective 

models from expanding, and building on the positive efforts already 

underway, we must also look for ways to modernize the current 

structure so these individuals are ensured access to quality health 

care with less red tape. 

Most Americans have uniform coverage that guides them 

through the complex health care system, but for the dual eligible, 

that process is more complicated because they have to navigate the 

waters of two different entitlement programs that offer different 

benefits and cover different services and providers. Because of that 

segmented structure, we have come to learn that dual eligibles 

have difficulty identifying where to access good, quality care. Not 

surprisingly, they frequently end up in the ER, which is harmful 

to both patients and taxpayers, who end up with the costly bill for 

preventable hospitalizations. 

Again, we welcome you, and I yield the balance of my time to Dr. 

Cassidy. 

[The prepared statement of Mr. Upton follows:] 

12 

13 

14 

OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. CASSIDY. Thank you, Chairman Pitts. 

Medicare and Medicaid are important programs that are unfortunately unsustainable in their current form. Medicare, per the actuaries who run the program, is going bankrupt in 10 years hastened 

by $500 billion extracted from it by Obamacare. Medicaid is bankrupting States, and this was before the Obamacare mandates that 

usurp States’ rights. 

Now, as a doctor who teaches, who still teaches and treats the 

uninsured in a public hospital, though, my primary concern is patient welfare, and fortunately, there is an opportunity for improvement. As we know, dual eligibles oftentimes have poor outcomes. 

Now, Republican have proposed freeing States from the rigid Medicaid rules, which make it difficult to coordinate benefits between 

Medicaid and Medicare. We have also put forward a plan to save 

Medicare from bankruptcy, to preserve Medicare as it has been 

known for those who are on it, and to preserve it for those who will 

be on it. Now, saving Medicare from bankruptcy is important for 

all Americans, all senior citizens, but particularly for dual eligibles. 

Now, unfortunately, under the current situation, Medicare provides incentives to treat patients in one way and it provides Medicare incentives to treat patients in another way, and these dueling 

incentives oftentimes lead to poor patient outcomes. This is the 

problem of large bureaucracies trying to dictate what happens to 

a patient in the patients’ exam room. We can do better. 

So despite the fact that Medicare and Medicaid spend disproportionate amounts upon dual-eligible patients, again, their outcomes 

are poor, and this is actually the most important issue. Now, we 

should note that we shouldn’t take the policy of do nothing for 

short-term political gain and kick this issue of Medicare’s fiscal solvency as an issue down the road. We have got to address it now. 

I am very interested in the perspectives presented here today. I 

have had the pleasure to speak with Ms. Bella. She is knowledgeable. I just look forward to it. Similarly, the perspective of the 

PACE providers and the States. I will say the Office of Dual Eligibles, I kind of like that. It is the one provision of Obamacare I applaud. As we say in the South, even a blind hog finds an acorn 

every now and then. 

I yield back. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

ranking member of the full committee, Mr. Waxman, for 5 minutes 

for an opening statement. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

As observers of this hearing will note that by and large whether 

you are a Democrat or a Republican, we care about this issue and 

this is a hearing where we have collaborated in providing panels 

that will give us the best information on how we can address the 

problems that are unique to the people who are dual eligibles, or 

both on Medicare and Medicaid. 

15 

This has been a major issue facing both programs. By design, 

these individuals should have access to the best of these programs, 

the best that each one has to offer, but too often they struggle, fall 

between the cracks and cycle in and out of nursing homes, hospitals, specialty care without receiving the coordinated patient-focused care they deserve. 

Dual eligibles are not a homogenous group but they can be considered as several subgroups. Some, such as Medicare beneficiaries 

who are eligible for Medicare by virtue of their age and for Medicaid because they have low income, can be in their mid 60s and 

may not differ significantly from other Medicare beneficiaries in 

their need for care. Others, however, such as adults under 65 with 

developmental disabilities such as cerebral palsy or intellectual disabilities, require significantly more care and resources to live their 

lives. Older Medicare beneficiaries with cognitive impairments such 

as Alzheimer’s are another significant and very frail subgroup, a 

group we are going to hear about today. 

Many of these individuals may require nursing home level of 

care or home-based support services allowing them to live outside 

of an institution. A disabled person under the age of 65 costs Medicare and Medicaid between $23,000 and $84,000 in 2005 depending 

on whether he or she needed nursing home stay. This is very expensive but not getting this care is worse, resulting in eroding 

health, trips to the emergency room, suffering for the patient and 

his or her family, and astronomical costs for the patient and the 

taxpayer. These costs present both a challenge and an opportunity 

to develop and implement reforms that over time will simultaneously improve care while reducing costs. 

There is a Medicare Payment Advisory Commission and the Medicaid and the child health program have their commissions as well, 

and all these commissions have described how a lack of coordination between Medicare and Medicaid can create harmful and 

wasteful outcomes and misaligned incentives. For example, a nursing facility may find it profitable to transfer a complex patient to 

a hospital even if the facility is capable of managing that patient 

because of different payment rates and benefit rules in each program. 

We have heard in this committee many times over the years 

about problems generated by pure fee-for-service medicine that provides no coordination of benefits. For dually eligible beneficiaries, 

those problems are multiplied because of their intensive care needs. 

We face a lot of challenges in improving care for dual eligibles 

and reducing costs to the taxpayer but it is important to recognize 

that we shouldn’t rush into new programs for purely a budgetary 

focus. We should not assign a price tag to this population and then 

design the policy around it. 

As we will hear today, the best and most successful efforts to integrate care for the duals has been local and it has been focused 

on a small group of beneficiaries. These programs have been built 

around intensive interventions by nurses, physicians, social workers, therapists and others. But these interventions can be difficult 

to scale up to a large population, and I think we need to be wary 

about grand promises regarding this decades-old problem. 

16 

I want to mention that one of the results of the Affordable Care 

Act, which some people call Obamacare, was to extend the Medicare trust fund, and in fact, it was extended over 12 years. Another 

thing to recognize is that whatever cuts some of our colleagues objected to in the Affordable Care Act, they took all of those cuts and 

went way beyond it in their Medicare proposal, which they would 

transform into a whole different system. 

We have opportunities to save money we are spending on dual 

eligibles by examining the drug rebates in Part D where we pay 

a higher price for the dual eligibles than we used to pay in the 

past. Providing better coordinated care and saving money are not 

mutually exclusive goals and for the dual eligibles, this may be the 

key to improved quality of care. 

Thank you, Mr. Chairman, for calling this hearing. 

[The prepared statement of Mr. Waxman follows:] 

17 

18 

19 

20 

21 

22 

23 

24 

Mr. PITTS. The chair thanks the gentleman. 

We have two panels today, and I would like to ask panel one to 

take her seat at the witness table. I want to thank all the witnesses for agreeing to appear before the committee. On panel one, 

we welcome Melanie Bella, who is the Director of the Medicare and 

Medicaid Coordination Office at the Centers for Medicare and Medicaid Services. Your written testimony will be made part of the 

record. We would ask that you please summarize your opening 

statement in 5 minutes and then we will go to questions and answers. Welcome. 

STATEMENT OF MELANIE BELLA, DIRECTOR, FEDERAL COORDINATED HEALTH CARE OFFICE, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Ms. BELLA. Good afternoon, Chairman Pitts, Ranking Member 

Pallone, Chairman Upton, Ranking Member Waxman and members of the subcommittee. Thank you for the invitation to participate in this discussion today. My name is Melanie Bella, and I am 

the Director of the Federal Coordinated Health Care Office at the 

Centers for Medicare and Medicaid Services. 

This office, which we are referring to as the Medicare and Medicaid Coordination Office, to better explain our mission, was created by the Affordable Care Act and our single focus is the topic 

of the hearing today. 

Medicare and Medicaid enrollees, also referred to as dual eligibles, are a heterogeneous group. They include low-income seniors, 

individuals with disabilities as well as those with serious and persistent mental illness. Some individuals start on Medicaid and age 

into Medicare. Other individuals start on Medicare and have a 

functional or a financial decline that makes them Medicaid eligible. 

Either way, these individuals have very complex care needs. Three 

out of five have multiple chronic conditions and two out of five 

have at least one mental or cognitive impairment. Not surprisingly, 

given their higher-than-average health care needs, the cost of providing care for these individuals is significant. Together, Medicare 

and Medicaid spend roughly $300 billion a year to provide care to 

this population. 

Our office is working across Medicare and Medicaid with States, 

providers and other stakeholders on a number of key initiatives to 

ensure better health, better care and lower costs through improvement for Medicare and Medicaid enrollees. Specifically, our efforts 

are focused in three main areas. The first is program alignment, 

the second is data and analytics, and the third is models and demonstrations. I will highlight a few of those efforts today starting 

with program alignment. 

Better coordination begins with program alignment. Currently, 

Medicare and Medicaid enrollees must navigate two completely 

separate systems, Medicare for coverage of basic acute-care services 

and drugs, and Medicaid for coverage of supplemental benefits such 

as long-care care supports and services. Medicaid also provides 

help with Medicare premiums and cost sharing. Although both programs provide important benefits, they operate as separate systems 

with different administrative procedures, statutory provisions and 

payment policies. One of the first objectives of our office was to 

25 

catalog all of the places where Medicaid and Medicare literally 

bump up against each other. This creates barriers to effective care, 

and though internal and external consultation and outreach, we 

use that opportunity to identify places where we can improve alignment between the two programs. We have published a list of these 

alignment opportunities in the Federal Register, specifically to invite public comment. This alignment initiative will allow us both 

to identify barriers to high-quality cost-effective care as well as 

prioritize areas for improvement. 

Another key objective of this new office is to engage our State 

partners. Improving quality and cost of care for Medicare and Medicaid enrollees relies on effective partnership with States because 

we share the responsibility to provide care and to finance that care 

for this population. Our office has recently announced two key initiatives that support our State partners in improving care coordination for Medicare and Medicaid enrollees. One of these initiatives 

was the establishment of a new process for States to access Medicare data for care coordination purposes. Lack of timely Medicare 

data, particularly Part D data, has been a key barrier for States 

in expanding care management efforts for their dual population. 

These data provide States with a powerful new tool to support 

their efforts to improve care for some of their most complex and 

costly beneficiaries. 

The second initiative done in partnership with the Center for 

Medicaid and Medicare Innovation is the State demonstrations to 

integrate for dual-eligible individuals under which 15 States were 

competitively selected to design new approaches to better coordinate care for Medicare and Medicaid enrollees. Through these design contracts, CMS is providing funding to selected States to support their efforts to design person-centered approaches to coordinate care across primary, acute, behavioral health and long-term 

supports and services. The goal of this initiative is to identify and 

validate new care delivery and payment models that can be tested 

and then replicated in other States. Importantly, though, our office 

serves as a resource to all States and is available to provide technical assistance to any State interested in working to improve quality and reduce costs for its Medicare and Medicaid enrollees. 

In closing, a high priority for our office is to significantly increase 

the number of Medicare and Medicaid enrollees that have access to 

seamless, coordinated care. We will get there by eliminating barriers to integration, partnering with States, providers and other 

stakeholders and developing new delivery system and payment 

models. We expect that improved care coordination and quality outcomes for this complex population will result in better care at reduced cost for both the Federal Government and States. Thank you 

very much. 

[The prepared statement of Ms. Bella follows:] 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

Mr. PITTS. Thank you. I want to thank you for your opening 

statement. I will now begin the questioning and recognize myself 

for 5 minutes for that purpose. 

Director Bella, in a 2010 paper entitled ‘‘Options for Integrating 

Care for Dual-Eligible Beneficiaries,’’ you wrote: ‘‘The goals should 

be clear: to provide beneficiaries with the right care at the right 

time in the right places and to give States and other stakeholders 

the flexibility they need to design and test accountable models of 

integrated care.’’ Is it fair to say that you still believe the current 

system does not provide States the sufficient flexibility or incentives necessary to integrate care for duals? 

Ms. BELLA. As I mentioned in my testimony, States are critical 

partners for us and so we have to recognize the variation in the 

States and understand where the States are in being able to develop models to improve care for this population. When I think of 

flexibility for this population, I don’t think of it in the context of 

being able to cut benefits or services. I think about it in terms of 

we have a population with very complex needs and we have to be 

able to adapt to those needs, and by adapting to those needs, it allows us to provide more cost-effective care than might otherwise be 

available in the traditional Medicare and Medicaid systems when 

they are fragmented and not integrated. And so we see potential 

for integrated and coordinated systems to be able to take a holistic 

look at an individual, understand what that individual needs and 

make sure that we are getting those needs met in the most costeffective way. 

Mr. PITTS. What feedback have you received from States, in your 

current capacity, about their interest and willingness to further integrate care for duals? 

Ms. BELLA. It is a great question. Everyone knows States are financially strapped right now, now more than ever before, and they 

recognize a tremendous opportunity to improve quality, and by improving quality, help control costs with this population. I have seen 

more motivation in States than ever before to really understand 

the needs of this population and to develop integrated and seamless systems of care. Again, that improved quality, and by improving quality will lead to reduced cost over time. 

Mr. PITTS. As you know, there are various opinions on how dual 

eligibles should be enrolled in integrated care models or in coordinated care programs. Do you believe that mandatory enrollment 

with an opt-out policy would increase enrollment? 

Ms. BELLA. Certainly, enrollment is a significant issue, and first 

and foremost I should say that the commitment of our office is really to establish beneficiary protections so that the programs we are 

creating are ones that are better than what are available to beneficiaries today. 

In thinking about enrollment, enrollment is one of many issues 

where we have to be open to exploring options to understanding 

what is keeping people out of integrated systems today, and again, 

this is one of the issues on the list that we are committed to exploring with our State partners. 

Mr. PITTS. Your office recently announced the availability of 

Medicare data on duals for States to access on a project basis. Why 

do believe the availability of this data was so important for States, 

39 

and what else can CMS do to improve the availability of real-time 

Medicare data for States and providers? 

Ms. BELLA. Well, I have a personal interest in this. I am a 

former Medicaid director, and when Part D happened and Medicaid 

agencies lost access to pharmacy data, it was like tying their hand 

behind their back because a critical tool was taken away to understand how to provide better care to these beneficiaries. So by giving 

States these data, we support their efforts to identify high-risk individuals to provide the data to primary care providers and care 

managers who are developing care plans to understand opportunities to prevent hospitalizations, for example, or to reduce medication errors or medications that are going to have adverse effects 

with each other. We believe that putting the data out there for 

States that we have will get them exactly where they need to be. 

It is timely. It covers Medicare A, B and D, and it is done in a way 

that allows us to protect the important privacy and confidentiality 

safeguards yet still give this critical tool to States who are trying 

to design programs to improve quality. 

Mr. PITTS. I think I have time for one more question. Realizing 

the Medicaid expansions in PPACA do not directly apply to dual 

eligibles, do you believe implementation of the expansions could 

have a woodworking effect on the overall system that could increase the number of woodworking dual eligibles? 

Ms. BELLA. We have not done—the Office of the Actuary has not 

done as detailed estimates on this as in other populations but our 

early examination of the issue does not lead us to believe that 

there will be a woodwork effect for dual eligibles under the expansion. 

Mr. PITTS. Thank you. 

The chair recognizes the ranking member, Mr. Pallone, for 5 

minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. I was going to ask 

unanimous consent for Ms. Christensen to sit in on today’s hearing, 

Mr. Chairman. 

Mr. PITTS. Without objection, so ordered. 

Mr. PALLONE. Thank you, Mr. Chairman. 

I wanted to try to ask you three questions and try to get in three 

questions here, Ms. Bella. My first relates to budgetary concerns. 

As you heard in my opening statement, I am always concerned that 

decisions about dual eligibles are based on budget concerns. I am 

not suggesting that that is true for you but I always worry that 

that is a big factor or maybe disproportionate to what it actually 

should be. And as we said, you know, it is a very complicated 

group. There are patients like people with developmental disabilities who may be well under 65 but you also have duals who are 

people with cognitive impairments like Alzheimer’s diseases at advanced stages, so because they are not the type of patients that insurance companies are rushing to sign up for, you know, that is another concern I have. It is a very expensive population. So I think 

we have to be creative and assertive in our attempts to improve 

care for duals but we also need to be realistic in our goals and understand that it may be costly and budgetary expedience should 

not drive our treatment of the sickest and the frailest of our citizens. 

40 

So my question is, first question, can you tell us about how you 

and your office are thinking about the dual eligibles as groups? Are 

you looking at them by what kinds of diseases that they might 

have or by the basis for eligibility for the programs, and of course, 

you know, my concern is that it is not budgetary driven. 

Ms. BELLA. You are exactly right. It is a very diverse group. 

There are a few different ways that you can think about slicing and 

dicing the population, and I think that is one of the advantages to 

having this office is we are really going to drill down and look at 

subset analysis of the population. One of the ways we are looking 

is at the highest level over and under 65 to understand the different care needs of those groups and, for example, when the 

under-65 population with disabilities, the presence or absence of 

mental illness, I like to call it a game changer. It significantly 

changes the utilization, the picture. On the corollary, the over 65s, 

the same thing can be said for Alzheimer’s and dementia, and you 

will hear more about that today. So we are looking at those levels 

and we are teasing out the subsets. 

In addition, there is also ways of looking at the population, understanding if their needs are more acute-care driven so folks who 

have five, six, seven or eight physical comorbidities or if they are 

long-term care driven, so these are folks who have needs that are 

more supportive services and those types of needs and the longterm care, some of those individuals are in nursing homes and 

some of them are in the community, so that further distinguishes 

how we have to think about subsetting the population. Now, we 

tend not to think about it by conditions or by eligibility groups. We 

tend to look for care opportunities. So regardless of what the profile 

is in many ways what needs to happen for these patients is an assessment of their needs is the availability of a care team, supports 

to get them the most cost-effective services they need in whichever 

setting they need them. 

So coming back to your question, those are examples of ways we 

are looking at subsetting the population, and then using that information to drive our decisions about what types of care models, 

what types of care needs, what types of payment and measurement 

systems we would have in place. 

Mr. PALLONE. Now I am going to try to get two more things in. 

You mentioned the nursing home population. More than half of all 

nursing facility residents are dual eligibles. In 2007, more than 70 

percent of Medicaid expenditures for dual eligibles were for longterm care. What can be done to improve the care and quality for 

people in nursing homes and what are States proposing that would 

help these individuals? Obviously I would prefer that they not be 

in nursing homes. Are there ways to improve care in nursing 

homes or get them out of nursing homes altogether so they don’t 

have to stay in the nursing homes? 

Ms. BELLA. The answer to that is yes, there are ways to improve 

the care, and there are several States, many States that are looking at rebalancing efforts. I think you will hear about some initiatives in North Carolina in particular to target those folks in nursing homes, but a couple of examples. We can really focus on avoidable hospitalizations of nursing home residents, and I will give you 

some examples. Urinary tract infection, pressure ulcers, dehydraVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
41 

tion, fall prevention, those are all things that are avoidable and 

they are preventable, and by targeting interventions and clinical 

resources on site, we can improve the quality of care, reduce hospital transfers and presumably help toward the cost-effectiveness 

change as well. 

Mr. PALLONE. My third question is, I know that, you know, they 

worry about passing the buck, in other words, is the State—who is 

responsible for their care, the State, the plan, you know, their insurance plan, and a lot of times there is passing of the buck in 

terms of who takes care of them, who follows up, how to enforce 

their rights and fulfill their medical needs. Who is truly accountable at the end of the day for ensuring that the needs of duals are 

met and that quality care is provided? Is it the plan, the State, the 

Federal Government, and do you see it as part of your office’s mission to clarify that to make the pathway easier? In other words, 

can you play a role in all this so that the buck doesn’t get passed? 

I know I am out of time, Mr. Chairman. Maybe she can be quick 

in her answer. 

Ms. BELLA. I will be quick. States and feds are accountable. We 

share responsibility. Our office is absolutely accountable, and I 

think the reason that was created was to streamline care and to 

help make sure that we do keep the systems together and improve 

accountability for the program overall. 

Mr. PALLONE. So you try to coordinate between these? 

Ms. BELLA. Yes. 

Mr. PALLONE. Thank you. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

full committee chairman, Mr. Upton, for 5 minutes for questions. 

Mr. UPTON. Thank you, Mr. Chairman. 

I appreciate your testimony. In your testimony, of course, you 

said the total annual spending for their care is estimated at $300 

billion annually, and that the 9 million Medicare/Medicaid enrollees accounted for approximately $120 billion in combined Medicaid, 

federal and State spending in 2007, almost twice as much as Medicaid spent on all 29 million children that it covered in that year. 

Now, in responding to Mr. Pallone, you talked about some savings 

you may see in terms of targeting certain innovations. What other 

ideas to eliminate barriers do you think we might be able to 

achieve to actually see some real savings in the program? What innovations should we think about here? 

Ms. BELLA. Sure. I appreciate the question. Unfortunately, there 

is no silver bullet, and the savings tend to happen over time. However, if you think about—I think where we think holds the most 

promise is understanding how do we create systems that are accountable and coordinated for the 9 million dual eligibles. There 

are, by our count, around 100,000 people that are in fully integrated programs, and by fully integrated, I mean, there is an accountability for both Medicaid and Medicare. So the opportunity is 

large for the rest of the dual-eligible population, and absent that 

coordination and integration, we are not as aligned and efficient 

and effective as we could be. And so great opportunity exists to 

look at delivery system and payment reform models that understand how to create a way to take care of the totality of a beneVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
42 

ficiary’s needs and how to ensure that the incentives are aligned 

for doing so. 

Mr. UPTON. Well, can we actually come up with some nuts and 

bolts to see not only the innovations but then lead directly to some 

savings, and if so, what would the savings be either as a percentage or real dollars? 

Ms. BELLA. So as was mentioned, one of the first things we did 

is to engage States in a partnership to work with us in an innovation center to design new fully integrated models. So we have 15 

States. That is exactly what we are doing. We are working with 

them to design the nuts and bolts of what this would take. We are 

in the design phase so we don’t have savings estimates for you at 

this point. Certainly we can expect that there are opportunities, as 

I mentioned, in some of the avoidable hospitalizations, but we also 

have seen in programs in the States that do have them oftentimes 

there is an increase before you see a decrease because there is a 

lot of pent-up demand, there is care management that is occurring, 

there is new services that are taking place in order to reduce other 

services now or down the road. So it needs to balance out, but what 

we will be working on getting some concrete estimates over time 

by working with our States on the models that they would like to 

do. 

Mr. UPTON. So as you are looking at those 15 States, how long 

will it take for them to complete the work that they are doing and 

you can actually look at some accountability in terms of what they 

have done? 

Ms. BELLA. The way we structured this demonstration initiative 

right now is that it is a 12-month design period. It doesn’t mean 

that States that can’t submit a proposal earlier. 

Mr. UPTON. Which started when? 

Ms. BELLA. April. 

Mr. UPTON. April? 

Ms. BELLA. It started in April. Several States are interested in 

putting something forward earlier, and as I mentioned, all States 

are able to put proposals together, we are just working with these 

15 to receive funding, so States aren’t—like I said, they can come 

in sooner with ideas. We designed this, because this isn’t a typical 

CMS demonstration where we are prescriptive about what we want 

to see because that hasn’t worked for us with the States so far, so 

we need to work with the States to design what is going to be most 

effective for each of them. However, this is a complex population 

and we have to do this in a way that makes sure that we are addressing significant issues around beneficiary safeguards, provider 

participation, financial incentives correctly, and that is why we 

have designed it in a design phase. 

Mr. UPTON. Thank you. I yield back. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

ranking member of the full committee, Mr. Waxman, for 5 minutes 

for questions. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

There is an interaction between the issues we are talking about 

today and the Medicare Advantage program is a complicated one. 

Some Medicare Advantage special needs plans have been around 

for a long time and built deep roots in their communities. Others 

43 

have less successful track records and of course the program has 

for a long time been supported by large subsidies provided by taxpayers and other beneficiaries. The Affordable Care Act pared back 

many of the extra payments to Medicare Advantage plans but not 

all of them and not immediately. I was surprised to find that some 

States are proposing to use Medicare Advantage benchmarks as 

the basis for their proposed payments in the duals integration demonstration. Ms. Bella, wouldn’t the use of Medicare Advantage 

benchmarks increase costs to the federal taxpayer if they were 

adopted for duals integration demonstration? 

Ms. BELLA. We certainly think that—as I mentioned, our goal is 

to get more beneficiaries served in integrated systems and so in integrated systems there is an opportunity to achieve savings. You 

are obviously pointing out what we all have seen in terms of the 

differential and the MA rates, and I would just come back to that 

the purpose of the innovation center is to develop and identify delivery system and payment reforms that improve quality and reduce cost, and so as we go forward with these demonstrations, that 

is going to be our overriding principle, so we will work with States 

to ensure that the proposals they are putting in place do both of 

those things, which would mean understanding how we would address the rate issue in a way that would support improving quality 

but not add cost to the system. 

Mr. WAXMAN. Well, we want to highlight that issue to look at 

carefully in your design of these proposals. There are numerous 

cost savings with regard to the Medicaid program that shift costs 

from the Federal Government to the State governments instead of 

lowering cost. The intent of this hearing and the mission of the 

Medicare and Medicaid Coordination Office is to improve care for 

dual-eligible individuals, thereby lowering health care costs in 

Medicaid and Medicare, a better way of saving money than shifting 

responsibility. 

I want to ask about some of these contracts you have been talking about in response to other questions. You recently awarded to 

15 States to design coordination care models. One requirement you 

included was integrating care across primary, acute, behavioral 

health and long-term support services. Can you discuss the importance of integrating care across all these benefits, the barriers to 

integrating care across all these benefits and how prevalent such 

full integration is today? 

Ms. BELLA. Sure. The importance is to get at exactly what you 

talked about, the opportunity to cost-shift, so we need to mitigate 

or eliminate those opportunities, for example, if we have acute care 

in one system and long-term care in another system. But more importantly, if we are going to put together systems of care that are 

better for real people that need them, we have to provide a seamless way of them interacting with the system rather than three different cards, three different doctor networks, three different grievances and appeals, and I say three because most of the duals are 

in separate Part D plans so they are navigating Medicaid, Medicare 

and pharmacy coverage. So that is the importance of putting everything together in a way that is seamless to them. 

The challenges are many. There are certainly always—whenever 

you change a system, there are concerns. We have concerns with 

44 

capacity, with provider capacity, particularly in the long-term supports and services side. We have carve-outs in some States, particularly around behavioral health, so all those issues that we need 

to address, but the opportunity is great, and one of the reasons 

these States were selected was because they are committed to providing full integration. As I mentioned earlier in response to another question, we think only about 100,000, maybe 120,000 folks 

have fully integrated models. You will hear about one of those 

today with the PACE program. But again, our goal is to create 

those types of systems for significantly larger numbers of Medicare 

and Medicaid enrollees. 

Mr. WAXMAN. As you move forward in developing these new systems for dual-eligible beneficiaries, I think it is critical that you 

hear from the individuals and their family caregivers and get their 

input into the process to ensure that any new approaches are simple enough for these individuals and their caregivers to navigate, 

protects the rights currently guaranteed to beneficiaries in Medicare and Medicaid while also meeting their health concerns. How 

will your office ensure that we get these voices heard from the patients and the caregivers? 

Ms. BELLA. Well, first of all, we share your commitment and your 

interest in doing that. We are very vigilant with the States on the 

expectations in terms of stakeholder engagement. We have gotten 

wonderful input from different consumer advocacy organizations 

about how to ensure that is meaningful. We are doing focus groups 

of real dual-eligible beneficiaries around the country so hearing 

from the real people about what is working and what is not working, why did some choose integrated systems, why did others not, 

and so those types of conversations really will be informing and 

driving our efforts. 

Mr. WAXMAN. Thank you very much. Thank you, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

subcommittee vice chairman, Dr. Burgess, for 5 minutes for questions. 

Mr. BURGESS. Thank you, Mr. Chairman. 

In the section of the Affordable Care Act that you referenced that 

creates your office, there is paragraph E says the Secretary shall 

as part of the budget submit to Congress an annual reporting containing recommendations for legislation that would improve care 

coordination and benefits for dual-eligible individuals. When should 

we expect that report? 

Ms. BELLA. So our office was officially created December 30th 

through the Federal Register and so we missed really the typical 

budget cycle. In February the Secretary submitted a letter outlining the progress of the office to date, committing to our priorities 

over the coming year, and now that we are established we will get 

caught up on the regular cycle and provide you that annual report 

as part of the annual budget process as the mandate requires. 

Mr. BURGESS. So when should we expect to receive that report? 

Ms. BELLA. Next year. 

Mr. BURGESS. Next year, January, next year—— 

Ms. BELLA. Next year, February of 2012. 

Mr. BURGESS. It is just interesting, in the law that was signed 

your office was created not later than March 1, 2010. It is always 

45 

interesting how something can be created 3 weeks before the bill 

got signed into law. 

Let me ask you a question. In January, Dr. Berwick was at the 

Commonwealth Fund symposium that they put on every year, and 

of course, he articulated this problem, and I think he was a little 

more dramatic. He said 20 percent of the beneficiaries are costing 

80 percent of the money including blind and disabled in that group 

as well. But that was a pretty startling figure that he related. Now, 

another Member of Congress who was there, and I can’t take credit 

for this, it was actually a Democrat who complained that American 

health care was so complicated that he had to go out and hire a 

concierge physician to manage his care between the two coasts on 

which he lived, and so I asked Don Berwick, why wouldn’t you 

have a concierge doctor for a dual eligible. It seems like it would 

make a lot more sense to pay a physician to manage these conditions. I have got some figures from 2005 where it is $26,000 a year 

that we spend on a Medicare/Medicaid dual-eligible patient unless 

they have five or more conditions in which case that cost doubles. 

It seems like there is some significant efficiencies that could be 

gained here through the integration of that care, whether you call 

it a retainer physician, whether you call it integrated primary care, 

but really putting the doctor and not the agency and not a home 

health aide, putting the doctor in charge of that patient and holding them accountable, of course, to perform its metrics that you 

outlined, the alignment, the data and the models and demonstrations. Why not do that? 

Ms. BELLA. I don’t think these things are mutually exclusive. I 

think there are opportunities depending on what is driving a beneficiary’s needs. Some of them are less medical. They are non-medical and so in those cases it does make more sense to have a care 

manager, a behavioral health specialist or a home health aide. 

Mr. BURGESS. But why not have a physician in charge of all of 

those facets of care? 

Ms. BELLA. There are certainly models that do that, and you may 

hear a little bit about those on the second panel. There are a lot 

of medical-home initiatives underway right now which the primary 

purpose is to support the physician and provide infrastructure support so that the physician is managing the totality of the care and 

is accountable for the financing, so I think there is a lot of promise 

for many of those models and several States are exploring those 

very things. 

Mr. BURGESS. Well, forgive me for seeming impatient. I think 

there is a lot more than a lot of promise. I think there is a deliverable that could be obtained really in a much shorter time frame 

than anything we have heard discussed here this afternoon, and we 

are talking about enormous amounts of money. We are talking 

about people’s lives, people who are medically fragile, whose care 

is of utmost criticality to them and to their families, and I simply 

cannot understand why we wouldn’t move with greater dispatch. 

We are going to have to wait another year for a report from your 

office. I mean, these are things that should have been in the works 

for some time. 

Ms. BELLA. Certainly, developing new delivery system and payment models is first and foremost on what we are doing. We are 

46 

happy to come over and do briefings at any time, and we have done 

that repeatedly with several staffs. And the only other thing I 

would say is, again, it is not that we are not advancing physiciandirected medical-home-type models but we are also looking at different types of care models, some of which are less expensive and 

perhaps better tied to a beneficiary’s needs, which again would I 

think advance what you are charging us to today, which is control 

cost. 

Mr. BURGESS. Well, you do get what you pay for. You know, the 

experience with the accountable care organization rules and regs 

that came down is just so disappointing. So many people had 

placed so much emphasis on this and so much importance, and 

then to find the reg was absolutely unworkable, that clinics who actually considered themselves accountable care organizations said 

we can’t do this, and I worry about the same thing happening in 

this population where it is so critical that we get it right. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

gentleman from Illinois, Mr. Shimkus, for 5 minutes for questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Welcome. We are glad to have you here. Realizing that the Medicaid expansions in the health care law do not in totality affect dual 

eligibles, do you believe that the expansion of Medicaid—and I 

know you mentioned this woodworking aspect—do you fear the 

woodworking aspect with the expansion of Medicaid under the 

health care law? 

Ms. BELLA. We don’t, no. 

Mr. SHIMKUS. The latest MedPAC report included a chapter on 

dual eligibles. In its report, the commission noted that a single program design is not likely to be adopted in every State. They added, 

there is no clear evidence about which programs are most effective 

for every type of dual-eligible beneficiary. Do you agree that a onesize-fits-all strategy for improving the coordination and integration 

of care for duals is a bad strategy? 

Ms. BELLA. We think it is very important that we recognize that 

there are different delivery system designs in the States, and if we 

are going to be effective, we have to work with States to understand what systems are going to work best for a given State, and 

honestly, for a population within that State. 

Mr. SHIMKUS. And following up on that, do you believe that mandatory enrollment with an opt-out policy would increase enrollment? 

Ms. BELLA. As we discussed a little bit ago, enrollment is obviously a significant issue. We don’t have as many people in these 

types of systems as we would like to today so it is one that we are 

exploring to understand. It is one that we are learning from in the 

focus groups as well to understand what it is that is holding back 

enrollment, and that is one of the things that is part of this design 

process in our work with both States and stakeholders. 

Mr. SHIMKUS. And part of the problem in obviously the Medicaid, 

the dual eligibles, the Medicaid and Medicare, is that the 50/50 

share of Medicare and the ownership that the State has versus 

Medicare, which is the federal program, and, you know, the contention is or the fear that some States may not be motivated to help 

solve this based upon depriving them of the 50/50 share if Medicare 

47 

is assuming more of a role, or a role. Can you talk me through that 

and your experience in talking with States and whether this might 

lend itself to a sharing of Medicare as part of this debate of how 

you have inclusive care? 

Ms. BELLA. Sure. Our work with States highlights that an area 

that creates challenges is the misalignment of incentives between 

the Federal Government and the States. The governors have said 

that. NGA has said that. MedPAC has said that. This Administration recognizes that. So that is part of our work with States is to 

understand if we are going to get this right, we have to look at how 

we align the incentives to create systems of care that are better 

than we have today. 

Mr. SHIMKUS. And I will just end on this, and again, I appreciate 

your time and look forward to the second panel. Illinois in particular is a struggling State, as many States are, but we have a $12 

billion debt. A lot of it is due to the expansion of Medicaid without 

comparable increase in revenue by the State and so it just was borrowed money and the like. Under the health care law, which leads 

back to the first question, it actually increased enrollment for Medicaid versus over the very lucrative program the State has. That 

is why I would argue that there should be a concern about more 

people coming out into the arena based upon the expanded benefits, and I would hope that you all would take a closer look at that 

because I do think that is going to be additional liabilities for us 

that we are not calculating in costs today. 

Thank you, Mr. Chairman. I yield back. 

Mr. BURGESS. Would the gentleman yield? 

Mr. SHIMKUS. I would yield to Dr. Burgess. 

Mr. BURGESS. Can I go back to the integrated care question that 

I was talking about just a moment ago? So what is being done right 

now as far as making families aware of the availability of integrated type of care? 

Ms. BELLA. It depends on a given State and a given health plan 

so there are opportunities to inform beneficiaries and their caregivers of integrated care options either through State efforts or 

through health plan efforts. 

Mr. BURGESS. Is anything being done to enroll people in integrated care programs? 

Ms. BELLA. Certainly, but there are two different enrollment 

processes, one for the Medicaid half of the person and one for the 

Medicare half of the person. 

Mr. BURGESS. But the estimates I have are less than 2 percent 

of all of the dual eligibles are in some type of integrated care program. 

Ms. BELLA. Correct. 

Mr. BURGESS. And yet the promise these types of programs hold 

is high. Maybe you can get back to me with some additional information on what is being done to foster that information. 

Ms. BELLA. I would be happy to do so. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

gentleman from Ohio, Mr. Latta, for 5 minutes for questions. 

Mr. LATTA. Well, thanks very much, Director, for being with us 

this afternoon. I appreciate your time. 

48 

Just a little background because I didn’t see, where were you director at? 

Ms. BELLA. Indiana. 

Mr. LATTA. And how long were you the director in Indiana? 

Ms. BELLA. From 2001 through 2005. 

Mr. LATTA. I always like to find out a little bit about a person’s 

background because sometimes it is good to see things from the 

other side of the fence. I was in the State legislature in Ohio for 

11 years, and during that time we had our go-arounds, especially 

with the cost of Medicaid going up, what it is costing the State 

budget today, and so I am glad you have that experience. 

And not that I wasn’t fascinated with all of your testimony but 

something struck me on page 4. In the second paragraph when you 

are talking about coordination of the offices, the one thing that 

really caught my attention was the seamless care, and I know that 

years ago when was in the legislature, I had been a county commissioner for 6 years prior to that, we had an individual in the county 

that we had a lot of problems trying to get to the right service, to 

the right place, and I was very proud of my home county in that 

we worked things out, and how we termed it was ‘‘seamless.’’ And 

the reason I find that interesting is that how is it that it has taken 

this long for us to get to this point that after decades that we are 

finally starting to talk about seamless and then also in your testimony talking about the offices working to improve the collaboration 

and the communication out there. And again, I think that goes 

back that you have seen things from the other side of the fence 

that, you know, for decades States have been on the receiving end 

of things and the Federal Government is saying one thing and the 

State is saying, well, how are we going to get this done. So I will 

just ask you that. 

Ms. BELLA. Well, a few thoughts. I mean, when these programs 

were created, I don’t think it was ever envisioned there would be 

9 million people eligible for both and so they work exactly as they 

were designed to work, which is completely separately, and we 

haven’t had the resources to date committed and accountable for 

trying to put them together and create seamless systems, and you 

all fixed that by creating this office, and so I think it is a recognition. Oftentimes it seems to be the most difficult fiscal times that 

drive some good developments that could help real people and coordinate care, and that perhaps is what we are seeing today is one 

of the greatest advantages of having to realize where we need to 

focus is on this population and so we now have a group of people 

that is all we do, and so we are accountable for making that better 

and working with our State partners to do so. 

Mr. LATTA. Let me ask this, if I may because, you know, I hate 

to say it this way, but we do have some established bureaucrats in 

this city that have been here for a while, and in listening to your 

testimony and answering the questions to other members with us 

today, you know, that you are talking about doing focus groups 

around the country, that you are going to be listening and that, you 

know, there is no one size that fits all because, again, like the 

State of Ohio is completely different than what is happening out 

in Idaho or you name it. But I think it is going to take the direction 

from you as someone that has seen it from the other side to really 

49 

impose upon these individuals down here that there is something 

that occurs outside this beltway. I have folks back home ask me, 

I don’t care what it is about, they say don’t they understand what 

is going on back here, and it is very difficult to always have to tell 

them no. And so we are going to be looking for your guidance to 

make sure that these folks down here that have been here for a 

while understand that they do have to take that direction from you, 

that you are going to be listening, that you are going to have these 

focus groups to find out what works best. 

So with that, Mr. Chairman, I appreciate the time and I yield 

back. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

gentleman from Louisiana, Dr. Cassidy, for 5 minutes for questions. 

Mr. CASSIDY. Thank you, Ms. Bella. I appreciated our phone conversation a little while ago and I appreciate your testimony today. 

Now, I have been trying to figure out, you mentioned the buckets 

of dual eligibles, and the partial duals versus the full duals, the 

full duals with the wraparound, and I gather the full duals may 

have custodial care paid for by Medicaid but medical services paid 

for by Medicare, and the partials will the deductible copay paid for 

by Medicaid. What percent of patients who are duals are in each 

bucket, and what percent of the expense of duals are in each bucket? Because clearly wherever—and then what are the medical outcomes of each bucket? Because clearly, if we have poor outcomes 

and higher expense for that more expense and poor outcomes in a 

bucket, that is where we should focus our attention, yet it seems 

as if it should take two different approaches. 

Ms. BELLA. So the biggest bucket would be the full duals who are 

receiving all Medicaid services and Medicare services—— 

Mr. CASSIDY. Not to be rude, but just so I understand, so really, 

in the full duals, there is not that much that Medicaid is paying 

for for acute medical services, I gather; rather, they are paying for 

the custodial care. Is that correct? 

Ms. BELLA. They are paying for largely the custodial care. They 

wrap around and provide some things like behavioral health services or home health, in cases where Medicare—it is wraparound 

acute. It is the wraparound for the cost share for the duals and 

then it is primarily the long-term care service and support. 

Mr. CASSIDY. OK. So then if we can differentiate how much the 

Medicaid dollar is going for custodial versus those medical services 

which Medicare does not pay for, do you all have data on that? Because I am gathering that most of the expense is in custodial care 

which is relatively—— 

Ms. BELLA. I would broaden it to call it long-term care supports 

and services just because people tend to think of custodial as an 

institutional base. So 70 percent of costs are in the long-term care 

bucket, if you will, for those folks. 

Mr. CASSIDY. For the full duals? 

Ms. BELLA. Yes, but again, that is not just the custodial care. 

Mr. CASSIDY. So then if you separate out—oK. Medicare and 

Medicaid together, the duals are a higher percent relative to a cohort, a non-disabled cohort? 

Ms. BELLA. Yes. 

50 

Mr. CASSIDY. OK. So if you just look at the non-long-term-care 

costs for those duals, how does that relate compared to a cohort? 

Do you follow what I am saying? 

Ms. BELLA. So on primarily their Medicare expenditures? 

Mr. CASSIDY. Yes. 

Ms. BELLA. Yes, they are still higher across the board. 

Mr. CASSIDY. And is it as dramatic? 

Ms. BELLA. It is fairly dramatic. I mean, if you think about they 

are qualifying people for both Medicaid and Medicare so they have 

not just the medical needs but they have a lot of psychosocial complexity. 

Mr. CASSIDY. Now, let me ask you, we are going to hear about 

a PACE program, and I am very impressed with the concept of 

PACE but it is clearly not going to scale. I would like your perspective on why a program such as that is unable to go to scale. 

Ms. BELLA. Well, PACE is designed for a very frail population, 

so a couple of things: One is, PACE is for people who are 55 or 

older and you need a nursing facility level of care, so again, that 

is a very, very frail population. 

Mr. CASSIDY. But that must be your highest expense population? 

Ms. BELLA. It is a high expense, although—yes, it is a high expense. 

Mr. CASSIDY. And there must be a heck of a lot more than 20,000 

people or 100,000 or whatever. 

Ms. BELLA. There are opportunities that Shawn will discuss, and 

they have been thinking about to get something that is available 

to more people in more States. It tends to be resource-intensive to 

get some of the programs started but it has very fundamental concepts that we want to replicate. 

Mr. CASSIDY. Well, I accept that, it has got great concepts, and 

say this not to diss but rather to say—that is disrespect—but rather just haven’t gone to scale. 

Ms. BELLA. Yes. He is going to get into a lot more, but I would 

be happy to have another conversation with you offline. 

Mr. CASSIDY. The ACO rules which are just, I mean, place great 

faith in supercomputers to contact, to follow different patient interactions, physician interactions I almost see as counterproductive. 

Have you read the ACO rules and thought about how they are 

going to apply to dual eligibles? 

Ms. BELLA. I have to be honest, I haven’t read every single page. 

I have read a majority and have been thinking about how do you 

take that model for folks that have long-term care, not just acutecare needs, and that have different funding streams, both Medicare 

and Medicaid, and make sure that we are creating a system that 

again doesn’t provide opportunities—— 

Mr. CASSIDY. I understand that is what your approach is but 

what I have just gathered from you, most of the Medicaid expense 

is actually on the long-term care aspect of it and the ACO is going 

to be principally on the acute medical services. In that way, the 

ACO still doesn’t dictate or assign or anything else, it just follows. 

I think you answered the question. The following, it still seems like 

that is what we have now. You are just merely following and paying a lot of money for this coordinated care. 

51 

Ms. BELLA. We are excited about the opportunity to work with 

our States. Again, we are thinking about how do you adapt more 

of a managed fee-for-service approach that has an accountability 

like an ACO that brings in the long-term care side for this population. 

Mr. CASSIDY. Thank you. I yield back. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

gentleman from Kentucky, Mr. Whitfield, 5 minutes for questions. 

Mr. WHITFIELD. Thank you, Mr. Chairman, and Ms. Bella, 

thanks for being with us today. 

When the Affordable Care Act was passed, the method used in 

passing it created a lot of animosity, much of which is still out 

there, and I am assuming that you were not even working at CMS 

when it passed, but the method used, for example, when it was on 

the House Floor, this bill was 2,500 pages, whatever it was, we 

were not allowed to even offer one amendment. So I contrast that 

sort of process to deal with a complicated health care delivery system that has a lot of problems with what you are doing in your coordination office in which you are giving $1 million to 15 different 

States for the purpose of allowing them to explore, be innovative 

and see if they can come up with a system that works so it could 

be replicated in other States, which I think is commendable. But 

that same suggestion has been made for Medicaid regarding the 

grants to the States. A lot of controversy in the Republican budget 

was, we will have a capitated system for Medicaid. 

My question would be, don’t you think that there would be some 

merit in working out a system so that individual States on Medicaid could explore, be innovative? I know we are not talking about 

dual eligibles per se but the Medicaid program. Do you see any 

benefit by setting up a system that would work like that? 

Ms. BELLA. We are really kind of singularly focused on setting 

up coordinated and accountable system for dual eligibles and making sure that there are beneficiary protections, access to care and 

funds sufficient to provide care in such a way that eventually helps 

with the cost conundrum. 

Mr. WHITFIELD. But at least you all are doing that with 15 

States, so I think that is a good idea. 

I would like to yield the balance of my time to Dr. Burgess. 

Mr. BURGESS. Thank you, Mr. Whitfield. 

If I could, let us just go back the fact that the spending per dual eligible in 2005, $26,000, unless they had five or more conditions 

in which case it doubled to $50,000. Obviously more medical conditions are going to cost more but it seems like that amount is greater in the dual-eligible realm than it is for the comparable Medicare 

patient with five or more chronic conditions. Is that a fair statement? 

Ms. BELLA. Across the board, dual eligibles rate higher than 

Medicare-only beneficiaries, yes. 

Mr. BURGESS. So is that increasing cost only because of the cost 

of long-term care or is there something else that is entering into 

that? What accounts for that cost differential? 

Ms. BELLA. Well, this is a much more complex population and so 

the needs that they have and the way those needs translate into 

utilization of services is what drives cost. I mean, across the board, 

52 

again, this population is poorer, sicker, more impaired than any 

other population. 

Mr. BURGESS. Correct, which is why my anxiety about not having 

a knowledgeable medical person in charge of orchestrating all aspects of that care, if you don’t have that, then you are going to get 

what you have got, and the last thing we want is more of what you 

have got because we haven’t got any more to give to pay for what 

you have got. Do you follow me? I mean, this is so critical that we 

have the knowledgeable medical person in charge and responsible 

for that patient’s care. The elderly patient in the nursing home 

doesn’t just get a urinary tract infection, they get urosepsis, and 

they come into the hospital and they die after five days of intensive 

therapy. The outcome is just absolutely dreadful and it costs a lot 

of money. Someone to be able to anticipate that and prevent that 

is literally worth their weight in gold in that situation. Is that not 

correct? 

Ms. BELLA. We are trying to create systems where there is an accountable care team and an entity that is—— 

Mr. BURGESS. You don’t need a team, you need a person. You 

need one person to be accountable. I am sorry, I am old school. I 

am a doctor. In the old days, there was one person in charge and 

accountable. 

Mr. Chairman, against my better judgment, I am going to ask 

that this Ezra Klein article from the Washington Post from June 

16th be entered into the record. Only about half of it is accurate 

but the part that is, is so accurate that I think it is worth sharing 

with our colleagues and the general public. 

Mr. PITTS. Without objection, so ordered. 

Mr. BURGESS. Thank you. 

[The information follows:] 

53 

54 

55 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

gentlelady from the Virgin Islands, Dr. Christensen, for 5 minutes 

for questions. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman, and I thank you 

and the ranking member for allowing me to sit in on this important 

hearing, and I am particularly interested in being here because in 

the dual-eligible population, somewhere around 40 percent of that 

population are minorities, and so I hope, Director, that you are also 

working with the new Office of Minority Health to look at that subpopulation as you plan this coordination. 

So the dual-eligible population disproportionately suffers from racial, ethnic as well as geographic disparities, and these are particularly pronounced in the end-stage renal disease population. There 

has been a successful, I think, completion of a 5-year coordinated 

care demonstration for end-stage renal disease patients, and what 

are your thoughts about expanding this demonstration to the dualeligible population? Is this something that your office can work 

with others to implement? 

Ms. BELLA. Well, we are certainly interested in looking at all 

demonstration opportunities that could be tailored to the dual-eligible population for different subsets of the population so it is certainly something that we can go back and discuss further with our 

colleagues. 

Mrs. CHRISTENSEN. I think it might prove helpful, especially 

since end-stage renal disease, I am sure, accounts for a lot of the 

cost that Medicare puts out. 

Also as a provider, like Dr. Burgess, and having worked with 

AmeriHealth Mercy family of companies, which is one of our country’s largest Medicaid managed care plans to help understand some 

of the challenges, I understand that under current regulations, 

services provided to Medicaid health plan enrollees by institutions 

are not counted in determining payments to providers and this results in fragmented care because states often choose not to enroll 

these populations into Medicaid health plans or they carve out provider services from the plan’s benefit coverage. Are you familiar 

with this problem and barrier to enrollment or expanding enrollment and are there any plans to address this? 

Ms. BELLA. It is certainly something that we have heard from 

some States and some plans, and again, kind of taking that list of 

everything we have to begin to understand and figure out how we 

are going to address greater opportunities to promote alignment. 

That would be part of what we have on that list. 

Mrs. CHRISTENSEN. Just one more question. Ms. Hewson from 

Community Care of North Carolina in her testimony, one of the 

things she notes is that programs targeting at-risk pre-duals may, 

you know, be something to really start looking at, not only for the 

care of those patients, better care of those patients, but also for the 

larger budget impact. Is this something that the office is working 

on? 

Ms. BELLA. Absolutely. There is a huge opportunity with the preduals, particularly preventing their decline or their spend-down of 

resources and being smart about how we can make an investment 

on the front end and prevent migration into dual status. So yes, it 

is something that we are looking at. 

56 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentlelady. 

Mr. PALLONE. Mr. Chairman, could I ask unanimous consent 

that Mr. Markey be allowed to participate in the subcommittee 

today? 

Mr. PITTS. Without objection, so ordered. Do you want to ask 

questions of this panel? 

Mr. MARKEY. If you don’t mind, Mr. Chairman. 

Mr. PITTS. All right. The chair recognizes the gentleman for 5 

minutes for questions. 

Mr. MARKEY. I thank you, Chairman Pitts and Ranking Member 

Pallone, for holding this hearing, and I would like to thank Melanie 

Bella for helping to lead the charge at CMS to improve care for 9 

million patients who by definition are the sickest, poorest, costliest 

individuals covered by either Medicaid or Medicare. The landmark 

health care law included language that I authored to create a pilot 

program called Independence at Home to address the unique needs 

of Medicare patients who have multiple conditions including Alzheimer’s, Parkinson’s, et cetera. Caring for these patients is disproportionately expensive yet this population often receives substandard and uncoordinated care that products conflicting diagnoses and confusing courses of treatment. Further, many of these 

individuals wish to remain at home rather than nursing homes or 

hospitals and they could do so if they were given some help. The 

Independence at Home program gets at the root of the problem by 

creating teams of health care providers who will work together to 

coordinate care for these patients and provide primary care services at the patient’s own home. If they succeed in lowering costs beyond 5 percent, the providers will share in the additional savings, 

so there is a stake in lowering costs to the system. 

It seems to me that Independence at Home could also help us improve care for the patients who are eligible for both Medicare and 

Medicaid by integrating health care services provided by Medicare 

with long-term supports and services provided by Medicaid. For 

years we have seen the success of Independence at Home-style programs at more than 250 VA locations and elsewhere throughout 

the country. The VA programs have reduced nursing home care by 

88 percent and reduced overall costs by 24 percent on the highest 

cost, chronically ill patients all while achieving record-high patient 

satisfaction rates. ElderPAC, which has been operating this style 

of program for the dual population, shows savings to the Medicaid 

program of 23 percent over the past decade. 

So let me as you this, Ms. Bella. In light of the fact that the 

Independence at Home model has proven successful in lowering 

costs and improving outcomes among some of the most challenging 

Medicare patients. Don’t you agree that your office should look at 

expanding this model of patients that are eligible for both Medicare 

and Medicaid? 

Ms. BELLA. Well, first of all, we thank you for your leadership 

and support on this issue. We are very committed to models that 

allow dual-eligible beneficiaries to stay at home with supports. We 

are in discussion with our colleagues about the Independence at 

Home demonstration. As you know, it is still in development. It 

will be available the first of 2012 and we are looking for opportuniVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
57 

ties to make sure that it is in the mix of models that could be considered for dual eligibles. 

Mr. MARKEY. Is there in your experience a reason to believe that 

this is a good way of looking at how we keep these Alzheimer’s and 

other patients at home longer and save the system money because 

they don’t have to go to nursing homes? 

Ms. BELLA. Certainly we are very interested in models that allow 

individuals to stay in care preferences of their choice and that are 

also cost-effective and so we do believe a model like this holds 

promise. Again, we look forward to understanding how we can 

adapt that in our work with States and others as we develop new 

delivery system models. 

Mr. MARKEY. And do you think that it makes some sense to 

incentivize the health care providers that they make money if they 

can figure out ways of saving money by keeping patients at home? 

Do you think that that will incentivize them to think anew about 

how to take care of these patients? 

Ms. BELLA. Well, we always want to make sure that there is appropriate beneficiary safeguards in place and that people are getting the services that they need, but opportunities where we know 

that there are opportunities to align incentives, it certainly is a direction that the agency has been heading in terms of being able to 

do some performance-based outcomes payments. 

Mr. MARKEY. You know, I did that bill in conjunction with the 

Alzheimer’s Association. As you know, there are 5 million Americans right now with Alzheimer’s and 15 million baby boomers are 

going to have Alzheimer’s, so it is obviously important that there 

be a plan that coordinates with families, you know, who are the 

principal caregivers so that they can have the maximum amount 

of help at home, because once they go to a nursing home, it is 

$60,000, $70,000 a year on Medicaid, you know, for those families, 

so this is just a program that obviously meant to help keep them 

at home, save the system money, make the families happier and 

the patient as well in a setting where they would feel more comfortable, so we thank you, and I would like to continue to work 

with you on developing that program. 

Ms. BELLA. I would be happy to do so. 

Mr. PITTS. The chair thanks the gentleman. That completes 

round one of questions. We have one follow-up. Dr. Cassidy. 

Mr. CASSIDY. Ms. Bella, I should know this and I don’t, and I 

apologize, but you mentioned a couple times that mental health 

issues are going to—you know, it is an independent variable, it 

sounds like. You do a retrogression analysis and it comes out mental health is a big issue. So a couple questions. Is this related to 

addictive disorders or is it related to, if you will, classical mental 

health issues, number one, you know, paranoid schizophrenia, for 

example. Is the issue that they are noncompliant with medical 

services and are going in and out with poorly controlled 

comorbidities or is the issue that they are going in and out with 

mental health admissions? And clearly, it seems as if that would 

be something that a wraparound managed care organization could 

theoretically improve outcomes and strengthen stability of the programs’ finances. What is the track record of such programs? 

58 

Ms. BELLA. Let me try to take your questions in order. So the 

first, I mean, when we think about the folks that have behavioral 

health issues, it is mental illness, it is also substance use. There 

tends, as you know from treating patients, there is a higher prevalence of substance use in folks who—— 

Mr. CASSIDY. So that is a third category, if you will, combined? 

Ms. BELLA. But you have the serious mental illness, schizophrenia, bipolar, and then you have folks that have depression and 

other symptoms. Clearly the utilization is different for those populations. What drives part of the trouble is there tends to be a disconnect in the physical and behavioral health systems, as you 

know, and a real lack of information sharing so that one half 

doesn’t know what the other half is doing with regard to this patient, and again, as a practicing physician, you can understand why 

that would be so detrimental because the effects of—— 

Mr. CASSIDY. And again, that is why it just seems like managed 

care would be custom made, that this is where it would integrate 

and bring things together. 

Ms. BELLA. Certainly. I mean, there’s been different—States 

have tried different approaches. Some have given responsibility for 

everything to a health plan. Some have carved out behavioral 

health services to a health plan while physical health services have 

stayed in fee-for-service or sometimes physical health services have 

gone to yet another health plan. So there tends to be different 

mechanisms States have tried. There also have been a couple of 

really great pilots, one in Pennsylvania, that it was within a feefor-service system but what they focused on was sharing information and aligning incentives between the physical health and the 

behavioral health world, and that made a huge difference. 

Mr. CASSIDY. That was not managed care, that was just—there 

must have been some integration between the practice groups. 

Ms. BELLA. There was management on the behavioral health side 

and it was fee-for-service with PMPM overlay on the physical 

health side but no structural or organizational integration, if you 

will, and it all got down to really understanding, making sure all 

people involved in that care had a clear picture of what the beneficiary was getting on both sides. 

Mr. CASSIDY. Now, they couldn’t have been doing that with Medicaid rates. They must have been paying Medicare rates to providers, correct? Because that would be time-intensive to transfer 

that. 

Ms. BELLA. It was time-intensive. They had some outside support 

during the pilot phase but also they got smarter about how they 

delivered care. They used other types of practitioners. They did a 

lot with peer support specialists, and the cost dynamic is different 

when you—— 

Mr. CASSIDY. Do you have an analysis of that you could share 

with us? Because I think it is very intriguing. 

Ms. BELLA. I am not sure that any final sort of journal-ready 

analysis has been published but I would be happy to share with 

you what has been done to date and certainly some descriptive 

analysis and the metrics that they are using. 

Mr. CASSIDY. Sounds great. And my second question, which was, 

since we went to the third, is the increased expense due to multiple 

59 

admissions for mental illnesses, for the paranoid schizophrenic, for 

example, or is it noncompliance with medical illnesses so it is 

bouncing in and out because their diabetes is poorly controlled, for 

example? 

Ms. BELLA. It is hard to generalize. I mean, both, but clearly two 

things that both could be improved with integrated, coordinated 

and accountable systems. 

Mr. CASSIDY. Do you have any idea of the—that will be a followup question at a later time, but I would be interested, again, I trying to understand which of this is compressible, long-term care is 

not as compressible, whereas perhaps this would be. What percent 

of the increased expense is related to this subgroup of populations, 

those with mental health and physical health issues simultaneously? 

Ms. BELLA. We will call that our bucket analysis and we will 

work on getting you some analysis in those different categories 

across the board for the committee’s consideration. 

Mr. CASSIDY. Thank you. 

Mr. PITTS. The chair thanks the gentleman. We have a followup questions from Dr. Christensen. 

Mrs. CHRISTENSEN. Just a very brief question. As you know, the 

territories with Medicaid cap and not all of the help for Medicare 

either really have struggled to provide services for our dual eligibles so I just wanted to know if this process of coordination, if your 

office also looks at this issue in the U.S. territories. 

Ms. BELLA. Our office is intended to be a resource for the States 

and the territories who are interested in improving care, so yes, we 

are available to work with the territories, absolutely. 

Mr. PITTS. The chair thanks the gentlelady. That concludes panel 

one. The chair thanks the Director for her excellent testimony and 

yields to the ranking member for a unanimous consent request. 

Mr. PALLONE. Thank you, Mr. Chairman. I would ask for unanimous consent to submit for the record the first report that Ms. 

Bella’s office submitted to Congress as required by the ACA that 

one member, I think Dr. Burgess, was asking about. 

Mr. PITTS. Without objection, so ordered. 

[The information follows:] 

60 

61 

62 

63 

64 

65 

Mr. PALLONE. And then I would ask unanimous consent to enter 

the statement of Mary Kay Henry, who is the president of SEIU, 

and I think you have both of these. 

Mr. PITTS. Without objection, so ordered. 

Mr. PALLONE. Thank you. 

[The information follows:] 

66 

67 

68 

69 

70 

71 

72 

73 

74 

Mr. PITTS. Thank you. 

At this time I will ask the second panel to come forward, and I 

will introduce them in the order of testimony. Robert Egge is the 

Alzheimer’s Association’s Vice President of Public Policy and Advocacy. Billy Millwee is the Associate Commissioner for Medicaid and 

Children’s Health Insurance Program at the Texas Health and 

Human Services Commission. Denise Levis Hewson is the Director 

of Clinical Programs and Quality Improvement at Community Care 

of North Carolina. And Shawn Bloom is the President and CEO of 

the National PACE Association. Your written statements will be 

made part of the record and we ask you to summarize each of your 

opening statements in 5 minutes before the question-and-answer 

period. 

At this point the chair recognizes Robert Egge. 

STATEMENTS OF ROBERT EGGE, VICE PRESIDENT OF PUBLIC 

POLICY, ALZHEIMER’S ASSOCIATION; BILLY MILLWEE, ASSOCIATE COMMISSIONER FOR MEDICAID/CHIP, TEXAS HEALTH 

AND HUMAN SERVICES COMMISSION; DENISE LEVIS 

HEWSON, DIRECTOR OF CLINICAL PROGRAMS AND QUALITY 

IMPROVEMENT, COMMUNITY CARE OF NORTH CAROLINA; 

AND SHAWN BLOOM, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL PACE ASSOCIATION 

STATEMENT OF ROBERT EGGE 

Mr. EGGE. Good afternoon, Chairman Pitts, Ranking Member 

Pallone and distinguished members of the subcommittee. I am Robert Egge, Vice President of Public Policy of the Alzheimer’s Association, and I thank you for the opportunity to appear here today. 

I want to begin by telling you about John and his wife Emma. 

John and Emma are an elderly, low-income couple who depend on 

both Medicare and Medicaid. John has Alzheimer’s disease and diabetes. John’s physician has been consistently attentive to his diabetes but not to his Alzheimer’s. He has given John good diabetes 

treatment plan, but because of John’s impairments due to his Alzheimer’s, John has been increasingly unable to comprehend or follow those instructions. So despite his physician’s efforts, John’s diabetes and his overall health has steadily deteriorated. For her part, 

Emma has been ill-equipped to help John manage the demands of 

his dementia and his diabetes because of her own health and the 

lack of caregiver training and support that has been offered to her. 

Because of all of this, John and Emma began taking frequent trips 

to the hospital ER where John was regarded as a noncompliant, 

difficult diabetic. 

Most of the hospital staff did not seem to recognize John’s dementia and that his noncompliance with diabetes treatments 

wasn’t about John being obstinate or unmotivated but was due to 

his inability to self-manage his care. Those that did recognize the 

presence and the implications of his dementia were at a loss for 

what to do about it. So John continued to show up at the emergency room for diabetes-related conditions at ever more frequent 

intervals. Each time he was sent home with discharge orders often 

explained to him without Emma even present that he had no hope 

of following. These ER episodes were disconnected from his physiVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
75 

cian’s care. John’s hospitalizations increased, his health deteriorated, claims to Medicare and Medicaid mounted. Reluctantly, John 

and Emma decided he could no longer live in his home but had to 

enter a Medicaid-funded nursing home much sooner than either of 

them had hoped or expected. 

As reported in the Alzheimer’s Association’s 2011 Alzheimer’s 

disease facts and figures, there are an estimated 5.4 million Americans like John with Alzheimer’s, currently a terminal disease with 

no known means to prevent, stop or slow its progression, and there 

are almost 15 million unpaid caregivers, many like Emma, who 

help care for them. Those millions of Americans with Alzheimer’s 

form a disproportionate share of the dual-eligible population. Sixtyone percent of dual-eligible individuals are cognitively or mentally 

impaired. Nearly one in every six dual eligibles has Alzheimer’s 

disease or other dementia. Alzheimer’s and other dementias are 

also extremely prevalent among dual eligibles in nursing homes 

where 59 percent of residents live with these conditions. Similarly, 

at any point in time, about one-quarter of all hospital patients age 

65 and older have Alzheimer’s or other dementias. 

So this population of duals with Alzheimer’s is large in scale and 

it is also very large in cost. Medicare payments for beneficiaries 

with Alzheimer’s and other dementias are three times greater than 

for comparable beneficiaries without these conditions, and Medicaid 

payments are nine times higher. These facts lead to the first of two 

points I want to conclude with today. 

Individuals with Alzheimer’s that depend on Medicare and Medicaid make up such a large, vulnerable and cost-intensive share of 

the dual-eligible population that policymakers should focus on 

these beneficiaries in pilots, demonstrations and broader system reform efforts. Recognizing this group is offering a leading opportunity to improve care while controlling cost. 

The other major point I wanted to close with is that focusing on 

improving care for dual-eligible individuals with Alzheimer’s won’t 

only deliver benefits for these millions of Americans but will also 

have health benefits more generally. Over the years, our growing 

awareness of the significance of manageable chronic conditions like 

diabetes has led to an important emphasis on prevention, self-management and patient-centered care. Today, in a similar way, our 

growing awareness of the widespread impact of cognitive impairments due to Alzheimer’s and other causes should draw muchneeded attention to themes such as reducing program complexity, 

the detection, diagnosis and documentation of medical conditions 

like Alzheimer’s, and to putting in place care plans that recognize 

not only an individual’s cognitive abilities but fully recognize and 

support the critical role of the unpaid family caregiver. 

The foundation of effective care is in diagnosis, care planning 

and medical record documentation, principles contained in Mr. 

Markey’s bill, the Hope for Alzheimer’s Act, which the association 

strongly supports. Moreover, the insights underpinning this bill 

apply across the dual-eligible and Medicare populations. 

So again, thank you. The Alzheimer’s Association greatly appreciates the opportunity to address these issues, and we look forward 

to our continuing work with the subcommittee. 

[The prepared statement of Mr. Egge follows:] 

76 

77 

78 

79 

80 

81 

82 

83 

84 

85 

86 

87 

88 

89 

90 

91 

92 

Mr. PITTS. The chair thanks the gentleman and recognizes Mr. 

Millwee for 5 minutes. 

STATEMENT OF BILLY MILLWEE 

Mr. MILLWEE. Thank you, Mr. Chairman, members of the committee. I would like to spend a few minutes speaking to you about 

the STAR+PLUS program. The STAR+PLUS program is a 

capitated managed care model that integrates acute and community-based care services for the aged, blind and disabled population 

in Texas. This includes the dual-eligible members. 

A little bit about the Texas Medicaid population. There are about 

3.2 million people on Medicaid in Texas today. Of that number, 

about 700,000 are classified as aged, blind and disabled, and of 

that number, about 400,000 are duals. ABDs represent about 25 

percent of the Medicaid population but approximately 58 percent of 

the total Medicaid cost. 

Where does STAR+PLUS originate? STAR+PLUS originated in 

1998 as a pilot in Harris County in Houston. It was created largely 

to address concerns about cost, quality and access to services for 

the aged, blind and disabled population, also the subset we refer 

to as duals, and to address how we could better integrate acute and 

long-term care for that population. The program was started with 

about 58,000 people in 1998. Today, STAR+PLUS now serves 42 

Texas counties and 257,000 people. By March 2012, the program 

will be expanded to serve another 370,000 people in Texas in 80 

counties. 

And here is how the program works at a very high level. It is 

an integrated care delivery model in a capitated managed care environment so we take acute care services and long-term care services and bundle those together, deliver them to the HMO. Central 

to that model is a primary care provider and a service coordinator 

who really work with that patient to get them the services that 

they need, whether those services are acute care or long-term care. 

The service coordinator is responsible for assessing that person’s 

need and ensuring that the needs are met, and by doing that, it 

provides that early intervention so we keep people out of the hospital, out of the emergency room and out of the nursing institutions. 

Several studies to date by our external quality review organization have shown the model is effective. We have decreased inpatient services, hospitalizations about 22 percent, reduced ED visits 

by 15 percent, and, more importantly, people who are involved in 

the program report a high degree of satisfaction with the program. 

We are excited about the opportunity now to work with CMS on 

how we can better coordinate care and I look forward to working 

with Melanie Bella in her program that she just started. 

[The prepared statement of Mr. Millwee follows:] 

93 

94 

95 

96 

97 

98 

99 

Mr. PITTS. The chair thanks the gentleman and recognizes Ms. 

Hewson for 5 minutes. 

STATEMENT OF DENISE LEVIS HEWSON 

Ms. HEWSON. Good afternoon, Chairman Pitts and Ranking 

Member Pallone and the other distinguished members of the subcommittee. I am Denise Levis Hewson. I direct the clinical and 

quality programs for Community Care of North Carolina, and I appreciate the opportunity to tell you about our program. It is a collaborative organization of regional networks of health care providers, physicians, hospitals, health departments, social service 

agencies and other community organizations. Each network is a 

nonprofit organization and I work for the central office that helps 

coordinate and provides supports to all of the 14 networks. 

We create medical homes matching each patient with a primary 

care provider who leads an interdisciplinary team, professionals 

who coordinate seamless medical services aimed at producing better outcomes. Our challenge is not only to improve the quality of 

care but to cut costs without changing benefits and fees. As you 

start looking at changing the benefit package and fee structures, 

oftentimes you are pushing the patient into other delivery areas 

like the emergency room. You need engaged providers to do this 

program and engaged patients to be successful. 

Sustainable savings come only from learning to deliver care in a 

smarter and more coordinated way. We have been doing this for 10 

years. We started as a pilot in 1998 and we have been adapting 

and refining this model, most recently really targeting the highest 

costs and highest risk. 

What is different about program is that it is led by physicians 

who are charged with changing the face of health care at the local 

community level. It is a bottom-up governance. It is key to getting 

buy-in at the practice level. We have begun to make some significant changes in local delivery systems. It is built on a model where 

each patient has a medical home. We have 1,400 medical homes 

across North Carolina in our 14 networks that provide the infrastructure to provide wraparound support to the medical homes. We 

have about 600 care managers. We have 30 medical directors, 14 

network directors, 18 clinical pharmacists and 10 local psychiatrists. These are local people managing local patients and driving 

improvements in their systems. The physicians are engaged because they are part of the solution. They lead the local teams. They 

decide how to collaborate best to get the best results. 

Efforts to improve care and save money are owned by those who 

directly provide that care. Our care managers know their patients. 

They know the community and the resources and that varies greatly in some of our rural communities. Care managers are the boots 

on the ground. They connect the dots between the patient, the physician, the specialist, the hospital, home health and other community resources. We believe that all health care is local and that 

community support for individuals with multiple chronic conditions 

can significantly improve health outcomes. 

One of the challenges in this program is defining the impactable 

population. You have to have the information and data to go after 

100 

those patients and manage them and provide the right support so 

that they can have better outcomes. 

We serve over a million Medicaid recipients. We started as a 

Medicaid program. Now we have about 80,000 duals that are enrolled with our program. In addition, about 180,000 of those are 

aged, blind, disabled so those represent fairly large, significant 

high-cost patients. We get hospital data. Hospitals and community 

providers are partners in this organization. To manage these individuals, you have to follow them across different providers and delivery systems. 

We hope that this committee will look hard at better aligning 

Medicare and Medicaid services at the patient and community 

level, allow for shared savings in per-member, per-month management fees that provide patient management without capitation or 

risk models. We are a fee-for-service system. The delivery system 

must be patient centered. The important thing to remember is that 

patients need changes over time so a system must follow their 

needs across settings and providers. Our community-based medical 

home and network infrastructure focuses on population management strategies, and we aim to achieve the triple aims that we 

hear a lot in the literature, which is not only about improving quality, access and reliability but reducing the cost of that care. We 

have learned some key lessons in North Carolina with the dual 

population, and you have heard it by several of the other testimonies today that they have multiple comorbidities. They use the 

system more than a lot of other populations. They take a lot of 

medicines. And so they truly do benefit from a wraparound support 

at the community level. Our total annual budget for Community 

Care is about 1 percent of the total Medicaid costs in North Carolina. 

Our commitment to quality doesn’t just mean better care, it also 

leads to significant program savings. We asked the analytics company, Trio Solutions, to help us estimate savings, and they have 

done that and you have got more information of that in some of the 

handouts. Our trend data is fairly significant in terms of costs and 

savings. 

Mr. Chairman, I would like to thank you and the members of 

your subcommittee for the opportunity to be here today and discuss 

these issues, and we hope we can be a resource to you as you move 

ahead. 

[The prepared statement of Ms. Hewson follows:] 

101 

102 

103 

104 

105 

106 

107 

108 

109 

110 

111 

112 

113 

114 

115 

116 

117 

118 

119 

120 

121 

122 

123 

124 

125 

126 

127 

128 

129 

130 

131 

Mr. PITTS. The chair thanks the gentlelady and recognizes Mr. 

Bloom for 5 minutes. 

STATEMENT OF SHAWN BLOOM 

Mr. BLOOM. Thank you very much, Chairman Pitts, Ranking 

Member Pallone and distinguished members of the subcommittee. 

I am Shawn Bloom, CEO of the National PACE Association. On behalf of NPA and its members, I am honored to testify today, and 

I appreciate the time that you have allotted us. 

I would like to kind of focus on three things, very briefly describe 

PACE to you and then offer some suggestions regarding ideas with 

respect to overcoming barriers that we have identified in expanding 

PACE, and three, identify some voluntary demonstration programs 

that we have generated in which we could expand the availability 

of PACE to additional eligible categories of dually eligible. 

First and foremost, PACE is a fully integrated model of care that 

exclusively serves the frailest, oldest and sickest subset of the 

duals, that is, the nursing home-eligible seniors. We do so in a 

manner that is really focused in the community in the sense that 

we are community based. Our goal in PACE is to allow individuals 

to remain living in their homes in the community. We do that 

through reducing nursing home use, reducing hospitalization, and 

we do that in a comprehensive fashion through integrated use of 

Medicare and Medicaid bundled payment, and the heartbeat within 

PACE is the interdisciplinary team, or the concierge team, if you 

want to call it that, in the sense that they are a fully employed 

staff that on a daily basis are involved in the care, delivery and 

management of the care of the individuals that we serve. And the 

third key feature of PACE is, we are accountable. We are accountable in the sense that we are accountable to government for the 

payment provided to PACE, 90 percent of which comes from Medicare and Medicaid, and we are accountable to the families and the 

frail that we serve. And I think those three things taken together 

have very effectively aligned incentives for PACE. We are fully accountable for the cost and quality of care that we directly provide. 

So to the extent that we do a good job, those that we serve are able 

to stay out of the hospital, in their homes and achieve good health 

care. 

I think recognizing the effectiveness of PACE, a recent June 15th 

MedPAC report states: ‘‘Fully integrated managed care plans and 

PACE providers offer the best opportunity to improve care coordination for dual-eligible beneficiaries across Medicare and Medicaid 

services.’’ Authorized by the Balanced Budget Act of 1997, we have 

been around for 20 years. We are a tested model of care, and we 

are very interested in finding ways to kind of growth. 

I think as has been mentioned earlier, and I think Melanie mentioned it, there have been significant obstacles to PACE growth, 

and we would like to kind of talk just a minute about those now. 

One, some of the regulatory requirements certainly focus on the required process of care rather than the outcomes of care, and those 

particular regulatory requirements have so far hindered growth, innovation and efficiency and how we deliver care. Two, fairly significant capital startup costs and long lead times for programs that accept full financial risk for a population that on average is about 

132 

300 people, that is a significant undertaking, and our eligibility for 

PACE is very narrow. We serve, as I mentioned earlier, a very 

small subset of the duals 55 years of age or older, and you have 

to be nursing home eligible. We believe there are opportunities to 

expand the availability of PACE. 

So to overcome these barriers, we recommend the following modifications to the PACE statute and regulation, and this is based on 

a decade of operational experience under the current regulation. 

One, allow us to more appropriately use contract community-based 

physicians rather than full employed physicians; two, take full advantage of the State license capability of nurse practitioners and 

physician assistants to practice up to their level of standards within the State practice acts; and then without compromising PACE 

participants’ receipt of comprehensive care and assessment, allow 

more flexibility to personalize and individualize the use of interdisciplinary teams based on the individuals’ needs, not using a onesize-fits-all approach. And lastly, allow States, and this is something of great interest to PACE providers right now, really begin 

to look at States and encourage them to see PACE as a means by 

which to pull people out of nursing homes. Some of our PACE programs throughout the States without great State support have had 

the ability to do that. 

With respect to voluntary demonstrations, we have five ideas 

with the goal of kind of expanding PACE and finding additional 

regulatory modifications. One, we would like to expand the availability of PACE to individuals under the age of 55 that are nursing 

home eligible. These are typically the physically disabled individuals that we believe would benefit from PACE. Two, allow at-risk 

or what we call high-need, high-risk, high-cost beneficiaries to have 

access to PACE, many of which are not currently nursing home eligible but we believe would benefit from PACE services. Three, reduce PACE organizations’ reliance on the PACE center, which is 

really the focal point for the organization of services but not necessarily the need to kind of do it all there. Fourth, the ability to 

kind of implement alternative approaches to providing Part D 

drugs. Right now, we have to implement Part D in the context of 

a very small program whose benefit was designed for large health 

plans. And lastly, a demonstration with the objective of increasing 

Medicare-only beneficiaries’ enrollment in PACE. Currently, about 

90 percent of all beneficiaries in PACE are duals but we believe it 

is a model of care that should be applicable to others. 

If I had more time, I could give you a great story about the actual benefits of PACE to a consumer but unfortunately I have run 

out of time, but we appreciate the opportunity to testify before the 

care, and as mentioned before, PACE is a tangible, proven model 

of care and we look forward to working with the committee to find 

ways to expand its reach. Thank you very much. 

[The prepared statement of Mr. Bloom follows:] 

133 

134 

135 

136 

137 

138 

139 

140 

141 

142 

143 

144 

145 

146 

147 

148 

149 

150 

151 

152 

153 

154 

155 

156 

157 

158 

159 

160 

161 

162 

163 

164 

165 

166 

167 

168 

169 

170 

171 

172 

173 

174 

175 

Mr. PITTS. The chair thanks the gentleman and thanks the panel 

for your opening statements, and we will now do a round of questioning and the chair recognizes himself for 5 minutes for that purpose. 

Mr. Millwee, as you know, States are generally not informed 

about hospitalizations or prescription drug information for dual eligibles. How important is Medicare data to States in coordinating 

care and reducing costs associated with dual eligibles? 

Mr. MILLWEE. Well, you are certainly correct. Without that data, 

we can’t know the health condition of the dual-eligible member, 

and I think it is going to be critical as the Centers for Medicare 

and Medicaid coordination forms to provide States with that data 

so that we can implement the disease management programs that 

can be more cost effective if we were to have that data. 

Mr. PITTS. How does Texas share in the savings generated 

through the STAR+PLUS program with the Federal Government? 

How important is it for States to be able to share in the savings 

generated by integrated care programs for duals? 

Mr. MILLWEE. Well, today we don’t share in that savings. The 

program was put in place to serve the population absent the need 

to share in that savings, and it has been recent that CMS was open 

again to discussions with the State about potential gain-sharing arrangements. So as we get that Medicare data, we believe that we 

can take to CMS a proposal that will demonstrate that 

STAR+PLUS has created savings not only for the State on the 

Medicaid side but also for the Federal Government on the Medicare 

side, so we will be developing a proposal to take to CMS. 

Mr. PITTS. Thank you. 

Mr. Bloom, you wanted to talk about the benefits of PACE to 

consumers. Please explain in more detail your idea to modernize 

the PACE program to include alternative settings of care. And why 

is the facility requirement a burden on the program today? 

Mr. BLOOM. Yes, you know, I think historically the PACE program, if you drive by PACE program you will see what appears to 

be a very large day center within which there is space for a medical 

clinic, rehab, social services, personal care and possibly a kitchen. 

It has been a very convenient kind of focal point of care organization and deliver but what we have discovered over time is that the 

ability of PACE to grow is somewhat geographically constrained by 

the center. To the extent that we can begin contracting out, for example, for day center services using existing infrastructure down 

the street by an existing daycare provider would allow us to grow 

the program without undertaking significant capital costs and setting up a new center every time we want to expand our geographic 

market. That is but one example, and I could certainly offer you 

more. 

Mr. PITTS. Thank you. 

Ms. Hewson, you note in your testimony that the CCNC could 

have saved the State of North Carolina approximately $1.5 billion 

between 2007 and 2009, and that 100 percent of all Medicaid savings remain in the State. How are those savings shared with your 

organization? 

Ms. HEWSON. At this point they are not shared. It goes back into 

the Medicaid budget. But we have been able to maintain provider 

176 

fees at 95 percent of Medicare. So in a way, that is a way to provide the infrastructure building and sustainability, but the money 

goes back into keeping the Medicaid program and dealing with the 

State budget issues. 

Mr. PITTS. Do you have more information on what portion of 

those savings are associated with the 80,000 dual eligibles you 

serve? 

Ms. HEWSON. I don’t have it on hand but we could certainly get 

that information for you. We are missing some of the Medicare 

data to be able to tell a complete story on the duals at this point. 

Mr. PITTS. How are the duals enrolled in your program? Is that 

mandatory enrollment? 

Ms. HEWSON. It is voluntary. They typically choose—they are 

going to a provider that is participating with us, and oftentimes it 

is the provider that encourages them to enroll because they can 

then provide the wraparound support service of the care coordinators. 

Mr. PITTS. Are the other 220,000 duals in North Carolina mostly 

served through fee-for-service or are there other coordinated care 

programs in the State to serve those duals? 

Ms. HEWSON. We have, I think, two PACE programs and several 

in application and then there is the Medicare Advantage program, 

a few of those, but primarily the rest are in fee-for-service. 

Mr. PITTS. Thank you. 

Mr. Egge, in your testimony you note several beneficiary examples where the complexity and fragmentation of the system prevent 

frail duals from gaining access to available services. You note that 

fully integrated system could alleviate administrative barriers. Do 

you believe such a system is a one-size-fits-all or do you believe 

there could be a variation of models that could be used to help improve beneficiary access to care? 

Mr. EGGE. First of all, there is great variety in the experience of 

people with Alzheimer’s and other dementias. Our suspicion is that 

there could be very some important common elements that we can 

use and design any kind of system, but at this point, innovation 

and looking at different kinds of approaches and how they work is 

very appropriate as we learn what is going to work best. 

Mr. PITTS. The chair thanks the gentleman and recognizes the 

ranking member, Mr. Pallone, for 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. I wanted to ask initial 

questions of Ms. Hewson and also Mr. Bloom. In Medicare, we have 

always maintained the principle that enrollment in managed care 

plans is voluntary for all Medicare beneficiaries. So let me start 

with Ms. Hewson. 

As I understand it, your program of coordinated care, although 

not a managed care plan, is voluntary for Medicare beneficiaries. 

Is that correct, and how does that impact the program, that it is 

voluntary? 

Ms. HEWSON. Well, it is correct. I think by being voluntary, there 

is probably less enrollment than if it was an opt-out program, but 

typically they are enrolling because they want to have assured access to a primary care physician that they go to, and that physician 

is encouraging them so that they can use the resources of the network that supports the physician in leading their care. 

177 

Mr. PALLONE. And then similarly, Mr. Bloom, I know that the 

PACE association has long believed that it is important to have 

beneficiaries buy in through voluntary enrollment rather than requiring dual eligibles into PACE. Do you want to comment on that 

too? 

Mr. BLOOM. Yes. Dually eligible beneficiaries have the opportunity to opt in and out of PACE, and that has been the longstanding track record within the PACE program since its inception. 

Having said that, we have very, very low levels of disenrollment 

which I think certainly aligns the incentives for us to keep our eye 

on the quality and the satisfaction to the beneficiary. 

Mr. PALLONE. And I note that in MedPAC’s chapter on dual eligibles released last week, they said that many of the groups they 

interviewed raised concerns about access to care for beneficiaries, 

particularly individuals with disabilities who have established relationships with doctors already, and I just want you to know, I support efforts to get duals into better care relationships but we need 

to be careful not to take away Medicare protections for the lowest 

income Medicare beneficiaries because they are trying to access 

help though Medicaid as well. 

Let me go back to Mr. Bloom. We recognize that PACE is a specialized program focused on the very medically needy and the fragile population so it not intended to nor would it be appropriate to 

serve all 9 million dual eligibles but currently PACE organizations 

have an enrollment of about 22,000 people nationwide, and while 

we don’t know exactly how many people could theoretically be eligible, we know it is not 9 million but it is obvious that there are a 

lot more people that you could serve. You described the desire of 

PACE organizations to expand enrollment, can you just tell me a 

little bit about what Congress could do to help PACE grow and the 

cautions you have about growing too fast. You know that PACE 

has long been supported by bipartisan members of the committee 

but we want to make expansions that would work and help improve care for people and not create problems. 

Mr. BLOOM. Very good question, very good question. First off, I 

think as Melanie testified earlier, it is very important to note that 

the duals are a very diverse population. This ranges from the 

young disabled to the elderly that are simply low income to the elderly that are frail to older individuals with intellectual disabilities. It is a very diverse population. And I think based on our experience and experience working with other integrated-type providers, there are different approaches for different populations that 

we need to look at. In the context of PACE, PACE is very well designed for a very high-need, very frail, very functionally impaired 

population. The examples I gave earlier with respect to barriers to 

growth were really focused on the federal side. 

I would argue that there are an equal number, if not a greater 

number, of barriers that exist on the State side, one of which, and 

I will just throw it out, in this era that we live in today, you can 

get into a nursing home within a day typically. It often takes you 

4 to 6 weeks to get into a community-based service program like 

PACE. That is because of the eligibility determination process in 

most States as well as some other administrative and other obstaVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00183 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
178 

cles that exist. That is a significant barrier for growth in addition 

to some other kind of State-specific examples. 

Mr. PALLONE. What is your sense of how many additional people 

could be helped, you know, could go into PACE if we made the improvements, you know, if we managed to do things that you are 

suggesting to make it more accessible? 

Mr. BLOOM. Good question as well. You know, it is probably to 

note, we are not a health plan. At the heart of PACE is the provider. We fully employ all—I mean, I think 90 percent of all care 

is provided directly by PACE employees, physicians, nurses and the 

like, so we are not going to be able scale each individual program 

on par with the United Health Plan or other large commercial 

health plans. Having said that, we do have programs that are as 

large as 2,600 people. We have programs in Appalachia as small 

as 40. So this is a program that can move large and small, so I do 

think each individual program is capable of serving several thousand people but I think you need multiple programs on the ground. 

Mr. PALLONE. So theoretically, if you had a lot of them you could 

handle a lot more people? 

Mr. BLOOM. Correct. 

Mr. PALLONE. But they are going to have to be relatively small? 

Mr. BLOOM. The solution to PACE growth is not to scale upon 

76 that are on the ground today but to replicate the availability of 

the model throughout the country. The other witness testified, the 

State of North Carolina has two on the ground. They are filling the 

entire State with PACE. They will have 10 in development within 

2 years. The State of Pennsylvania is another State where almost 

the entire State is full. The State of New Jersey within 2 years will 

probably have PACE available to every senior in the State. It takes 

a lot of leadership on the State. It takes a long-term vision, and 

I think it takes a strategic kind of approach to budgeting for Medicaid long-term care costs, which looks beyond the next 6 to 9 

months, and that is difficult in this current era, admittedly. But I 

think it is possible and you are seeing examples of that across the 

States today. 

Mr. PALLONE. All right. Thank you. 

Mr. BURGESS [presiding]. The gentleman’s time is expired. 

Let me just ask each of you, what we have heard from this panel 

in various forms is the fact that an integrated-type model is possible and it does work seemingly every time it is tried. Is that 

something that I understand? Although the programs may be different that we have heard about, they all basically involved an integrated model of care with someone being responsible for the patient. I will start with Mr. Millwee from Texas. 

Mr. MILLWEE. Well, I think you are right. There are integrated 

care models out there, and what strikes me is none of these are 

mutually exclusive. There is no best answer. We have the 

STAR+PLUS program because it works for us. We also have PACE. 

STAR+PLUS and PACE can coexist, or they work well together. I 

am familiar with the North Carolina model and it could work very 

well for Texas in a rural area where we have STAR+PLUS in 

urban areas. So I think the answers are out there. I think States 

have done a lot of work, a lot of innovative work on this very important issue for us because of the Medicaid expenditure and also 

179 

Medicare is going to benefit from that too. So the models are out 

there. 

Mr. BURGESS. Yes, Mr. Bloom. 

Mr. BLOOM. Yes, I think that is exactly the answer. I couldn’t 

agree more. The only thing I would add is that if you look at commercial health plans which typically are the approach to integrating care for the duals, they do receive integrating financing. 

They attempt through their contract network to integrate care but 

do they do a wonderful job I think at improving the coordination 

of care for the most part but they often will carve-out long-term 

care risk from their payment and that is the population we serve 

so I think as Mr. Millwee mentioned, these are programs that work 

very complementary, albeit for very distinct populations and segments of the duals. So if done right, I think Texas is a good example, they have a very good vision for how they want this to roll out. 

It provides great hope, great opportunity and also provides the 

rights to service product for the right population based on their 

unique needs at a particular point in time. But I do think this is 

the direction to go. 

Mr. BURGESS. Mr. Egge, obviously the Independence at Home is 

a little bit difference but still it is care coordination. Is that not correct? 

Mr. EGGE. That is right. With Independence at Home and other 

models, our aim is not to create a certain silo just for those with 

Alzheimer’s and dementia but to make sure that every system like 

Independence at Home is fully dementia capable. Many people with 

Alzheimer’s, for example, have greatly appreciated PACE programs 

and their enrollment there, so we just want to make sure that 

whatever systems are there, we fully recognize the importance of 

dealing with cognitive impairment and the caregiver. 

Mr. BURGESS. I just have to say, your story about the gentleman 

with Alzheimer’s who also had diabetes who accessed care the best 

that he could, that is a tough thing to listen to as a physician, that 

someone could be exposed to that many gaps in their care in seemingly a caring and competent environment of a major hospital 

emergency room. That is just tough to hear. 

Ms. Hewson? 

Ms. HEWSON. I agree with the other panelists, other than I don’t 

think just having integrated care assures that you are doing the 

right thing. I think you have to have a delivery system that does 

the right thing, and integrated care just is a way to align the incentives and the reimbursement strategies, and in North Carolina, 

we are not yet aligned in the reimbursement strategy although we 

are one of the 15 States that will be working with the coordinated 

office to develop a plan along that line, but we also have a very 

strong bias towards the medical home and keeping folks in the 

community, you know, delivered primarily through primary care 

providers is probably a model that has worked really well for us. 

Mr. BURGESS. But primarily you do have to have—someone has 

to be responsible for that patient’s care, and in my limited view of 

the world, that is obviously a physician, a single physician, but 

nevertheless, somebody has to be accountable for that patient’s 

care on an ongoing basis. 

180 

Well, what do you make of the fact that the MedPAC report from 

this year, the current one, says less than 2 percent of all duals are 

enrolled in some type of integrated care program? Are they just not 

counting accurately because they are missing all of you out there 

or is that truly that we are only capturing a very, very small percentage of the dual eligibles? 

Ms. HEWSON. I think MedPAC is counting when Medicaid and 

Medicare are putting funding together as an integrated approach 

which the PACE model is an example where both Medicare and 

Medicaid are funding the care of that individual. Our program, 

which serves over one million, is still a fee-for-service system so 

none of our individuals are counted in the MedPAC report. So the 

delivery system is integrated; the financing is not. 

Mr. BURGESS. And what are the barriers to, or is there a problem 

with it being a fee-for-service system? Does that work well for you? 

Ms. HEWSON. Well, I think you have to align the incentives. 

There are still silos and there is cost shifting that occurs so I think 

aligning the financial strategies and having, you know, Medicare 

and Medicaid sharing in those responsibilities, taking care of, in 

this instance, the duals is really important. So I think that is why 

we wanted to be one of those 15 States to develop that integrated 

model which aligns the integration with financing in addition to delivery. 

Mr. BURGESS. Well, do you think more federal control is necessary? I mean, could you do your job better with a bigger and 

more powerful—— 

Ms. HEWSON. Well, I think you have heard ours is very local. 

Mr. BURGESS. Yes, I think so too. 

OK. My time is expired. I will recognize Dr. Cassidy for 5 minutes. 

Mr. CASSIDY. The STAR+PLUS program, now, I am just trying 

to understand it. Ms. Bella said that 70 percent of the costs of dual 

eligibles in Medicaid is related to the long-term care aspect of it 

and most of the Medicaid acute medical expense, is the wraparound for that which Medicare does not cover. It seems like your 

savings are quite substantial if the—and I am not challenging, I 

am just trying to learn—that the provider or the Medicare managed care organization with which you are contracting, the only 

place they can lower cost is in the Medicaid component of the acute 

care. Is that correct? 

Mr. MILLWEE. That is not the only place that have to manage 

cost and achieve effectively better utilization. I think it is through 

a number of mechanisms on the acute and long-term care support 

side. Remember, we are talking in STAR+PLUS about the entire 

aged, blind and disabled population. It is not just a model for dual 

eligibles. So about 40, 50 percent are dual eligibles. 

Mr. CASSIDY. I see. 

Mr. MILLWEE. So you have an acute care model of care that is 

integrated with the long-term care and what the HMO will likely 

do, particularly for the Medicaid that is aged, blind and disabled, 

is leverage those less expensive community-based services to keep 

them out of the more expensive acute care services, which is what 

we both want to do. We want to keep people out of nursing faciliVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00186 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
181 

ties and out of hospitals and sometimes a personal attendant will 

do that for you relatively inexpensively. 

Mr. CASSIDY. So just for a specific example, if you can use your 

Medicare dollar to get a personal attendant for a patient who is 

pre-nursing home, if you will, then that can save money on the 

Medicaid side, which would be a much greater expense, by using 

the Medicare dollar to pay for a service that would not be available 

under Medicaid. Is that a good example? 

Mr. MILLWEE. That is correct. In fact, you might use a Medicaid 

cost to save Medicare money on the acute care side, and that is 

what we need to work through with CMS to talk about how we can 

leverage that to talk about some gain-sharing opportunities. 

Mr. CASSIDY. Now, Mr. Bloom, although you said that you are 

not a health plan, you really do appear to be a staff model HMO. 

I mean, you are at risk, and you are using your own people. If you 

will, you are the Kaiser Permanente of the frail and fragile. Is that 

a fair statement? 

Mr. BLOOM. That is an absolutely fair statement, absolutely, and 

I think we feel that burden every day in some of the requirements 

that we have to shoulder with respect—— 

Mr. CASSIDY. Let me ask you, I mean, because I only have a couple minutes, I don’t mean to be rude. So when you speak of going 

beyond the duals into the Medicare only, again, effectively, you are 

becoming a staff model HMO for Medicare patients? 

Mr. BLOOM. Correct. I would argue, however, that what we are 

suggesting is not all Medicare patients but those that we believe 

are high need, high risk and need kind of a medical home. 

Mr. CASSIDY. Now, next, I have been fascinated since Dr. Nelson 

came from Baton Rouge to speak to her, and of course, we know 

each other personally and I have read about your program, but I 

have spoken to folks who criticize it and saying that really the cost 

savings are not there. In your testimony, you gave an anecdote 

which spoke of an individual but that when you actually kind of 

run the numbers with a big spreadsheet, that PACE has not been 

shown to save money. Is that a fair or unfair criticism? 

Mr. BLOOM. I think it is an unfair criticism. There have been definitive government studies, two of which actually that looked at 

the Medicare cost in PACE and found that at worst we were budget 

neutral. On the Medicaid side, there has never been a definitive 

longitudinal study of PACE cost. Having said that, we continue to 

see States added to the list of PACE states. I think that what we 

have told States from day one is to the extent you set your rates 

appropriately, all of which are significantly below nursing home 

costs, then you in the longitudinal measurement will save money. 

Mr. CASSIDY. Now, but again, maybe the criticism was that by 

keeping people out of the nursing home but still getting nursing 

home per diems, that again there are Medicaid savings that are not 

realized. Now, again, I am channeling right now. 

Mr. BLOOM. I think what you are suggesting yes, our PACE rate 

includes a component of costs that reflect the full risk that we are 

assuming for long-term placement, and there are, you know, roughly on any given day 7 to 8 percent of the people we serve are permanently placed in a nursing home at cost to us, not to the State. 

So again, the true benefits of the—— 

182 

Mr. CASSIDY. So it is a cohort savings, if you will? 

Mr. BLOOM. It is a cohort savings, so the State is literally in 

many ways similar to—— 

Mr. CASSIDY. I am about of time. Sorry. Can you send those two 

articles that you have? 

Mr. BLOOM. Yes. 

Mr. CASSIDY. Now, Ms. Hewson, the savings that you have, you 

actually have your pediatric population in your CCN and you have 

your duals in the CCN. You savings you describe are global. What 

percentage of those are attributable to the dual eligibles? And that 

is my last question. 

Ms. HEWSON. Well, I would say a greater percentage are due to 

the aged, blind and disabled, which include the dual eligibles, so 

we have over 100,000 straight Medicaid aged, blind, disabled so 

when we look at savings we are looking primarily at the aged, 

blind and disabled that are straight Medicaid because we don’t 

have all the data on the Medicare so we are missing some of the 

hospital data in Part D and Part B data. 

Mr. CASSIDY. You have done a good job of analyzing your data. 

Could you forward the more complete report on that? 

Ms. HEWSON. Yes. 

Mr. CASSIDY. Thank you. I yield back. 

Mr. BURGESS. The gentleman’s time is expired. The chair recognizes the gentlelady from the Virgin Islands, Dr. Christensen, 5 

minutes for the purposes of questions. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. 

I guess I have a pretty broad question that anyone can answer. 

I probably would address is mainly to Mr. Millwee and Mr. Bloom 

and Ms. Hewson. I know that minorities figure very disproportionately in Alzheimer’s cases as well, but some of the sickest individuals in Medicare and Medicaid of course are racial and ethnic minorities, so can each of you tell me what percentage of your population are people of color of those that you serve? Are the referrals 

proportional to the need? Is more outreach needed and are you experiencing the same positive outcomes and cost savings in the racial and ethnic minority population compared to the others? 

Mr. MILLWEE. I don’t have those numbers with me today. I do 

know that there is an equal benefit but I just don’t have those 

numbers with me today but we would be glad to get those for you. 

Mr. BLOOM. Yes, I can’t cite specific statistics but I am fairly confident that the majority of people served by PACE are minorities. 

I anecdotally note many programs where it is literally nearly 100 

percent minority based on the neighborhood within which they 

exist and the like, but I would be happy to get you the specific figures. But yes, it is a program that is focused on that segment of 

the population. 

Ms. HEWSON. We serve all the minority Medicaid population in 

the State. We have all the safety-net providers participating in our 

program, and in the medical home models when you actually look 

at some of the quality performance metrics have been able to really 

show improvement in disparities because if you are providing best 

care for diabetes, you are doing it across the board for all your patients and so that has been a very rewarding quality metric that 

183 

we have been tracking. I will be glad to send you more information 

if you would like. 

Mrs. CHRISTENSEN. Thanks. I know that they are there. We just 

weren’t hearing about them, and I would expect that the models 

that you are talking about would be improving the care across the 

board. 

Mr. Bloom, have you had occasion to look at or been asked to 

look at the PACE model in any of the territories, and if you know, 

do you foresee any barriers that would prevent you from setting up 

one of the PACE programs in one of the offshore areas? 

Mr. BLOOM. We did have some initial and very preliminary discussions with Puerto Rico a number of years ago. They didn’t 

progress on anything constructive after that, however. Having said 

that, we are always open, and I am not aware of any barriers to 

expanding PACE into any of the territories and actually would 

argue what little I know about the Medicaid program for the territories that I think it would be very mutually beneficial, so I would 

be happy to talk to you about that. 

Mrs. CHRISTENSEN. Everybody has talked about, you know, the 

need for your programs and the fact that your programs are really 

community based. One of the amendments that I was involved in 

in the Affordable Care Act had to do with grants for community 

health workers, and I was just curious as to whether you utilize 

them in your programs. Mr. Egge, do you think that the community health worker would be a program that would be of assistance 

in care giving, even as the alternate caregiver in the Alzheimer’s 

situation? 

Mr. EGGE. Yes, we certainly found that is the case, that services 

that are provided in the community by social workers and by others can be tremendously important, especially at the early stages 

of Alzheimer’s and other dementias while people are still able to 

live quite successfully in the community if they have that kind of 

support. We have found that is extremely important to well being 

for both the individual, and if they are living with somebody else, 

for their caregivers as well. 

Mrs. CHRISTENSEN. Everybody uses community health workers? 

Ms. HEWSON. In North Carolina—— 

Mrs. CHRISTENSEN. Promotores? 

Ms. HEWSON. Promotores, and with the self-management of 

chronic disease, we engage lay community health advisors that actually live in the community that they are doing the chronic selfmanagement programs so they have been very, very beneficial. 

Mrs. CHRISTENSEN. Thank you. I am always concerned that the 

issue of quality of health care is often pitted against whether 

health care costs—if you are bundling and trying to bring these 

programs together, do you see any problems in moving forward to 

ensure that the dual-eligible health care quality and access in the 

health outcomes are not pitted against or held hostage to the 

health care cost containment issues? 

Mr. MILLWEE. Well, in STAR+PLUS, we believe that critical to 

that is the external quality review organization where we aren’t dependent upon just the State’s data, we aren’t dependent upon the 

HMO data but have an independent source to verify and look at 

the data that can measure, sure, the program is cost-effective but 

184 

is it providing high-quality service or access to services where they 

should be. So we believe that is critical, and as we learn more 

about quality and its importance on the program to change the program to respond to those concerns. 

Mrs. CHRISTENSEN. Anyone else? 

Mr. BLOOM. I would simply say that in PACE, we are, as I mentioned, we operate at full financial risk for all Medicare, Medicaid 

and medically necessary services with no carve-out, no copay, no 

deductible, no benefit limitations. We are immensely motivated and 

incentivized to provide good health outcomes. As the provider of 

care and the bearer of risk at the end of the day we are accountable, and it is truly in our best interest to get out in front of individuals’ care needs and so that is what perfectly aligns the incentives within PACE. 

Mr. BURGESS. The gentlelady’s time is expired. The chair now 

recognizes the gentleman from New Jersey, Mr. Lance, for 5 minutes for the purposes of questions, please. 

Mr. LANCE. Thank you, Mr. Chairman, and I yield my time to 

you, Mr. Chairman. 

Mr. BURGESS. That is very kind of you. 

Let me just ask you, Mr. Millwee, since we have a little additional time, you have talked in your testimony about the service coordinators, but some people look at that and say well, you are adding personnel so you are going to be adding cost. How does that 

work? How do you justify that? 

Mr. MILLWEE. Well, some might speculate that would increase 

cost but actually that service coordinator, remember, that service 

coordinator is a clinical person who is working with that client so 

that clinical service coordinator is actually a dollar saver in many 

ways because they are identifying what that patient needs and how 

to get that for them so that we can have those early interventions 

so we don’t have the hospitalizations or the nursing facility admits 

or the emergency department visits. So they literally pay for themselves time and again by having that intervention to make sure 

that the people who need those services, whether they are Medicaid 

or Medicare, that they are getting those things. 

Mr. BURGESS. So you have demonstrable savings that you can 

point to in your program in Texas? 

Mr. MILLWEE. Absolutely. 

Mr. BURGESS. And do you think that works in Texas, do you 

think it would transition or translate to work on a national scale? 

Mr. MILLWEE. Well, I think it could work in other States. I think 

the model is transferable. I don’t think that people who are sick in 

Texas are any different that much really than people in Washington or California but I think that they could—the model is completely transferable to other States. 

Mr. BURGESS. Do you have, can you share data with the committee, not necessarily right now, but is there data that you can 

share with us as to the actual dollar figures that have been saved? 

Mr. MILLWEE. We certainly can. We can provide the committee 

with that information. 

Mr. BURGESS. And how do you get around HIPAA? 

185 

Mr. MILLWEE. Well, we wouldn’t provide you with client-specific 

data. We would provide you with deidentified aggregate information that would—— 

Mr. BURGESS. But more generally, how do the service coordinators themselves, how do they navigate the system under the constraints of HIPAA? 

Mr. MILLWEE. Well, they are working with the client as an agent 

of the client, so they can—— 

Mr. BURGESS. So they are fully integrated into it? 

Mr. MILLWEE. They are fully integrated into it, so they are not 

really burdened by HIPAA. 

Mr. BURGESS. Generally, how do they monitor the day-to-day 

health of a patient? Is it telephonic, or how do they do that? 

Mr. MILLWEE. It is not high tech, it is high touch. It is people 

talking to people, picking up the phone and talking to that person, 

finding out how they are doing. We do use electronic health 

records. A lot of the HMOs are moving to that. But it really comes 

down to relationships and somebody caring about another person, 

picking up the phone and calling them and seeing what they need. 

Mr. BURGESS. That is what is so crucial, somebody caring about 

someone else. And Mr. Egge’s story that still haunts me, you know, 

somebody caring about someone else, that wouldn’t be happening. 

Mr. MILLWEE. Right. 

Mr. BURGESS. I am going to yield back the balance of my time 

and recognize the gentleman from Massachusetts for 5 minutes for 

the purpose of questions. 

Mr. MARKEY. Thank you, Chairman Burgess, very much. 

Mr. Egge, you did a good job in highlighting the important place 

for Alzheimer’s patients in this discussion. More than 22 percent 

of seniors with Alzheimer’s disease qualify for both Medicare and 

Medicaid coverage. Often these seniors rely on Medicaid to pay for 

expensive nursing home services. Since Alzheimer’s patients can 

require constant attention, nursing home care for patients and Alzheimer’s can ultimately wind up being three times as expensive as 

nursing home care for those without it. As a result of those costly 

nursing home stays, in 2004 the average Medicaid payment for a 

Medicare beneficiary over 65 with Alzheimer’s was nine times larger than the average Medicaid payment for other beneficiaries in 

the same group. As such, seniors with Alzheimer’s represent an extremely vulnerable portion of the dually eligible population. 

I also have a particular interest in Alzheimer’s since my mother 

passed away from it, which is why I created the Alzheimer’s Caucus with Congressman Smith from New Jersey 13 years ago. I have 

seen it firsthand and I know the incredible commitment that our 

family had to make to keep my mother at home during that entire 

period of time. 

One ongoing problem is the disconnect between those in the medical office seeing patients and those in the home caring for them. 

In your testimony, Mr. Egge, you mentioned the bill that Dr. Burgess and I have introduced, the Hope for Alzheimer’s Act, which 

would encourage doctors to diagnose Alzheimer’s patients earlier. 

After an Alzheimer’s diagnosis is made, the bill that allows caregivers to be included in a conversation between doctors and patients to help plan for the disease and treatments. That conversaVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00191 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
186 

tion would give caregivers and doctors a reason to be working together because it will be the caregiver who will help the patient remember their diabetes medication and avoid ending up in a hospital. 

In your testimony, you talked about John, who suffered from diabetes but because of his Alzheimer’s disease found it difficult to follow his doctor’s instructions. As a result, he ended up in the emergency room, and the doctors there were unaware of the Alzheimer’s 

disease which created a struggle to provide further care. Can you, 

Mr. Egge, explain how a formal and documented diagnosis of Alzheimer’s will help to improve care amongst different providers and 

settings? 

Mr. EGGE. Yes, we found from our experience that the documentation of Alzheimer’s or other forms of dementia is critical care 

and it is critical to coordinated care. So the reason it matters is because you cannot provide appropriate care if you don’t know dementia exists, and we talked about how that pertains of course to 

how you handle instructions for compliance, for instance, whether 

that can be directed to the individual or provided to a caregiver if 

available or perhaps to a surrogate when not, so in that sense it 

is fundamental. It is also fundamental when we think about documentation of the condition, the medical record, follows that person 

with a well-functioning system from setting to setting. We know 

that care transitions are one of the most risky moments for those 

with Alzheimer’s and other dementias because of all the problems 

that can happen, especially in a hospital setting and others as they 

transition in and out. So it is critical to this committee that there 

is that documentation, diagnosis and then documentation. 

Mr. MARKEY. So this is an amazing number, but just one disease, 

Alzheimer’s, last year cost the Federal Government $130 billion out 

of Medicare and Medicaid. It is just an astounding number. You 

know, it is about a quarter of the entire defense budget, and that 

is just one disease, Alzheimer’s. How with the Hope Act support 

caregivers and help provide them access to the resources they need 

to care for their loved ones, to keep them at home and as a results 

keep down the costs to the program? 

Mr. EGGE. That is a great question, and one element of the Hope 

Act in particular is groundbreaking in that it provides for the first 

time for the health care provider to have consultations with the 

caregiver, whether or not the individual with Alzheimer’s or other 

dementia is present, which is extremely important because sometimes it is most appropriate for the conversation to happen in number of different ways, so we applaud that and it is built on the recognition of how important a caregiver is for these individuals. 

Mr. MARKEY. Thank you, Mr. Egge. You know, it is $130 billion 

now. By the time all the baby boomers have it, 15 billion, the bill 

for Alzheimer’s will equal the defense budget. It will be about $500 

billion or $600 billion a year. So I think it is also calling upon us 

to increase the NIH research budget so that we can find a cure because ultimately we can’t balance the budget if we have a problem 

like this that is on the horizon. 

Thank you, Mr. Chairman, so much. 

Mr. BURGESS. The gentleman’s time is expired, and actually that 

concludes today’s hearing. I remind members they have 10 busiVerDate Nov 24 2008 10:26 Jan 31, 2012 Jkt 037690 PO 00000 Frm 00192 Fmt 6633 Sfmt 6633 F:\112-064 DUAL ELIGIBLES-SUBMIT FOR OK 1-24\112-64 DUAL ELIGIBLES-AWAIT OK
187 

ness days to submit questions for the record, and I ask that the 

witnesses all agreed to respond promptly to these questions. 

The committee is now adjourned. 

[Whereupon, at 4:27 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

188 

189 

190 

191 

192 

193 

194 

195 

196 

197 

198 

199 

200 

201 

202 

203 

204 

205 

206 

207 

208 

209 

210 

211 

212 

213 

214 

215 

216 

217 

218 

219 

220 

221 

222 

223 

224 

225 

226 

227 

228 

229 

230 

231 

232 

233 

234 

235 

236 

237 

238 

239 

240 

241 

242 

243 

244 

245 

246 

247 

248 

249 

250 

251 

252 

253 

254 

255 

256 

257 

258 

259 

260 

261 

262 

263 

264 

265 

266 

267 

268 

269 

270 

271 

272 

273 

274 

275 

276 

277 

278 

279 

280 

281 

282 

283 

284 

285 

286 

287 

288 

289 

290 

291 

292 

293 

294 

295 

296 

297 

298 

299 

300 

301 

302 

303 

304 

305 

306 

307 

308 

309 

310 

311 

312 

313 

314 

315 

316 

317 

318 

319 

320 

321 

322 

323 

324 

325 

326 

327 

328 

329 

Æ