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89–802 2014

KEEPING THE PROMISE: ALLOWING SENIORS TO 

KEEP THEIR MEDICARE ADVANTAGE PLANS 

IF THEY LIKE THEM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MARCH 13, 2014 

Serial No. 113–127 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

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 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

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 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

(III) 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

JOHN D. DINGELL, Michigan 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

GENE GREEN, Texas 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

HENRY A. WAXMAN, California (ex officio) 

(V) 

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 .......................................................................................... 2 

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

New Jersey, opening statement .......................................................................... 4 

Hon. Gus M. Bilirakis, a Representative in Congress from the State of Florida, opening statement ........................................................................................ 5 

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

California, prepared statement ........................................................................... 107 

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

prepared statement .............................................................................................. 111 

WITNESSES

Hon. Erik Paulsen, a Representative in Congress from the State of Minnesota .................................................................................................................... 7 

Prepared statement .......................................................................................... 9 

Hon. Jeff Denham, a Representative in Congress from the State of California . 11 

Prepared statement .......................................................................................... 13 

Hon. Dennis A. Ross, a Representative in Congress from the State of Florida . 19 

Prepared statement .......................................................................................... 21 

Hon. Keith J. Rothfus, a Representative in Congress from the State of Pennsylvania ................................................................................................................. 24 

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

Hon. Jackie Walorski, a Representative in Congress from the State of Indiana ......................................................................................................................... 30

Prepared statement .......................................................................................... 32 

Frank Little, Medicare Beneficiary with a Medicare Advantage Plan ................ 36 

Prepared statement .......................................................................................... 38 

Answers to submitted questions ...................................................................... 127 

Mitchell Lew, M.D., CEO and Chief Medical Officer, Prospect Medical System ......................................................................................................................... 41

Prepared statement .......................................................................................... 43 

Answers to submitted questions ...................................................................... 130 

Glenn Giese, Principal, Oliver Wyman Consulting Actuaries ............................. 58 

Prepared statement .......................................................................................... 60 

Answers to submitted questions ...................................................................... 133 

Judith Stein, Executive Director, Center for Medicare Advocacy ....................... 67 

Prepared statement .......................................................................................... 69 

Paul N. Van De Water, Senior Fellow, Center on Budget and Policy Priorities 81 

Prepared statement .......................................................................................... 83 

SUBMITTED MATERIAL

Letter of March 10, 2014 from The 60 Plus Association to the subcommittee, 

submitted by Jeff Denham .................................................................................. 17 

Letter of February 28, 2014 from Majority Members of Congress to Centers 

for Medicare & Medicaid Services ...................................................................... 113 

Letter of February 28, 2014 from Minority Members of Congress to Centers 

for Medicare & Medicaid Services ...................................................................... 116 

Minority Memorandum dated March 13, 2014 ..................................................... 120 

(1) 

KEEPING THE PROMISE: ALLOWING SENIORS 

TO KEEP THEIR MEDICARE ADVANTAGE 

PLANS IF THEY LIKE THEM 

THURSDAY, MARCH 13, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Joseph R. Pitts 

(chairman of the subcommittee) presiding. 

Members present: Representatives Pitts, Burgess, Whitfield, 

Shimkus, Murphy, Blackburn, Gingrey, Lance, Cassidy, Guthrie, 

Griffith, Bilirakis, Ellmers, Pallone, Engel, Green, Barrow, 

Christensen, and Waxman (ex officio). 

Staff present: Clay Alspach, Chief Counsel, Health; Sean 

Bonyun, Communications Director; Matt Bravo, Professional Staff 

Member; Noelle Clemente, Press Secretary; Paul Edattel, Professional Staff Member, Health; Sydne Harwick, Legislative Clerk; 

Robert Horne, Professional Staff Member, Health; Chris Sarley, 

Policy Coordinator, Environment & Economy; Heidi Stirrup, Health 

Policy Coordinator; Josh Trent, Professional Staff Member, Health; 

Tom Wilbur, Digital Media Advisor; Jessica Wilkerson, Legislative 

Clerk; Ziky Ababiya, Staff Assistant; Phil Barnett, Staff Director; 

Eddie Garcia, Professional Staff Member; Kaycee Glavich, GAO 

Detailee; Amy Hall, Senior Professional Staff Member; Karen 

Lightfoot, Communications Director and Senior Policy Advisor; and 

Karen Nelson, Deputy Committee Staff Director for Health. 

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

OF PENNSYLVANIA 

Mr. PITTS. The subcommittee will come to order. The chair will 

recognize himself for an opening statement. 

Nearly 15 million seniors, or almost 30% of Medicare beneficiaries, have chosen to enroll in a Medicare Advantage plan, an 

alternative to fee-for-service or traditional Medicare. Medicare Advantage or MA plans offer benefits not provided under traditional 

Medicare, such as reduced cost-sharing, vision and dental coverage, 

preventive care, and care coordination services. Numerous studies 

show that MA enrollees enjoy better health outcomes and receive 

higher quality care than those in traditional Medicare. 

2 

So who are MA beneficiaries? Medicare Advantage covers a disproportionate share of low-income and minority seniors when compared to traditional fee-for-service Medicare. Four in ten seniors 

with MA plans have incomes of $20,000 or less. Medicare Advantage is fundamentally about offering seniors the choice of better 

healthcare through traditional Medicare. Beneficiaries choose the 

plans that best meet their individual health needs. And, according 

to the latest CMS National Health Expenditures data, more than 

half of new Medicare enrollees are choosing Medicare Advantage 

plans. 

We should be encouraging seniors to take control of their 

healthcare and expanding this proven program. Instead, this Administration’s policies are harming seniors by reducing their 

choices of high quality care through a series of cuts to the Medicare 

program that began with the Affordable Care Act. 

According to the Congressional Budget Office, ObamaCare cut 

more than $700 billion from Medicare and spent the money on new 

government programs not for seniors. CBO also has said more than 

$300 billion of those cuts come from Medicare Advantage. Last 

year, CMS imposed regulatory cuts of 4 to 6% on MA plans, resulting in benefit reductions of $30 to $70 per senior per month. 

And on February 21, 2014, CMS released its 2015 Advance Notice outlining changes to Medicare Advantage payment policies, 

which an Oliver Wyman study estimates will result in an additional cut of nearly 6%. This newest cut is projected to cause seniors to lose an additional $35 to $75 per month in benefits. According to experts, these cumulative cuts from the Democrats’ policies 

on seniors could result in ‘‘plan exits, reductions in service areas, 

reduced benefits, provider network changes, and MA plan 

disenrollment.’’ 

The week before last, this subcommittee held a hearing on the 

Administration’s assault on Medicare Part D prescription drug 

plans. Now, we are learning about more crippling cuts to Medicare 

Advantage. Why is the Administration dead set on pushing policies 

that harm seniors and using their Medicare program as a piggy 

bank to fund other healthcare programs? 

Today, we will hear from a number of Members who have authored legislation that would improve the Medicare Advantage program for seniors. We also have witnesses who can speak to the 

harm that this Administration’s policies have done to them. 

I would like to thank all of our witnesses for appearing today. 

I will yield at this point the remainder of my time to vice chair of 

the subcommittee, Dr. Burgess. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

The Subcommittee will come to order. 

The Chair will recognize himself for an opening statement.Nearly 15 million seniors, or almost 30% of Medicare beneficiaries, have chosen to enroll in a Medicare 

Advantage (MA) plan, an alternative to fee-for-service (FFS) or traditional Medicare. 

MA plans offer benefits not provided under traditional Medicare, such as reduced 

cost-sharing, vision and dental coverage, preventive care, and care coordination 

services. 

Numerous studies show that MA enrollees enjoy better health outcomes and receive higher quality care than those in traditional Medicare. 

3 

So, who are MA beneficiaries? Medicare Advantage covers a disproportionate 

share of low-income and minority seniors when compared to traditional fee-for-service Medicare. Four in ten seniors with MA plans have incomes of $20,000 or less. 

Medicare Advantage is fundamentally about offering seniors the choice of better 

health care than traditional Medicare. Beneficiaries choose the plans that best meet 

their individual health needs. And, according to the latest CMS National Health Expenditures data, more than half of new Medicare enrollees are choosing Medicare 

Advantage plans. 

We should be encouraging seniors to take control of their health care and expanding this proven program. Instead, the Obama Administration policies are harming 

seniors by reducing their choices of high quality care through a series of cuts to the 

Medicare program that began with Obamacare. According to the Congressional Budget Office, Obamacare cut more than $700 billion from Medicare and spent the money on new government programs not for seniors. CBO also has said more than $300 billion of those cuts come from Medicare 

Advantage. 

Last year, CMS imposed regulatory cuts of 4%-6% on MA plans, resulting in ben- efit reductions of $30-$70 per senior per month. 

And, on February 21, 2014, CMS released its 2015 Advance Notice outlining 

changes to Medicare Advantage payment policies, which an Oliver Wyman study estimates will result in an additional cut of nearly 6%. This newest cut is projected to cause seniors to lose an additional $35-$75 per 

month in benefits. 

According to experts, these cumulative cuts from the Democrats’ policies on seniors could result in ‘‘plan exits, reductions in service areas, reduced benefits, provider network changes, and MA plan disenrollment.’’ 

The week before last, this Subcommittee held a hearing on the Administration’s 

assault on Medicare Part D prescription drug plans. Now, we’re hearing about more 

crippling cuts to Medicare Advantage. 

Why is the Administration dead set on pushing policies that harm seniors and 

using their Medicare program as a piggy bank to fund other health care programs? 

Today, we will hear from a number of members who have authored legislation 

that would improve the Medicare Advantage program for seniors. We also have witnesses who can speak to the harm that this Administration’s policies have done to 

them. I would like to thank all of our witnesses for appearing today. 

Thank you, and I yield the remainder of my time to Rep. —————————————————. 

Mr. BURGESS. I want to thank the chairman for yielding. 

We do spend a lot of time in Congress talking about the problems 

in healthcare. The problem is we are so busy triaging the mistakes 

that we don’t think about the things that are actually working. 

And Medicare Advantage is one of those things that is actually 

working. 

What do we always talk about? We talk about disease management, coordinated care. We have talked about that in this committee in a bipartisan fashion for a long time, but guess what? 

Medicare Advantage plans are delivering on that promise. The 

President, however, decided to take money away from a working 

program in order to fund one that is dysfunctional. The President 

sold the Affordable Care Act on a foundation of false promises. You 

can keep your plan: false. You can keep your doctor: also not true. 

President Obama told seniors he would use the money from 

Medicare to fund the Affordable Care Act, and at the same time 

improve Medicare for beneficiaries. In reality, these payment cuts 

are not going back to Medicare but instead they are funding other 

provisions of the Affordable Care Act. Along with less money to 

Medicare Advantage plans, the Affordable Care Act burdened plans 

with additional requirements. 

The most recent proposed cuts to Medicare Advantage are part 

of a historic strategy of provider cuts that have always backfired. 

The sustainable growth rate is the leading example. It limits access 

4 

for seniors and doesn’t reduce cost. It is time for the Administration to shift gears and change strategies. Don’t fix what is not broken. It is time for the Administration to start addressing the real 

problem, the Affordable Care Act, and not look for problems that 

are nonexistent. 

I yield back to the chairman. 

Mr. PITTS. The chair thanks the gentleman and now yields 5 

minutes for an opening statement to the ranking member, Mr. 

Pallone. 

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

Mr. PALLONE. Thank you, Chairman Pitts. Unfortunately, I have 

to begin today’s hearing expressing my disappointment in the tactics and process from your side of the aisle. This hearing has 

morphed from the future of Medicare Advantage, or MA, into what 

your side is now calling a legislative hearing, and we clearly have 

different definitions of what a legislative hearing should look like. 

You have invited seven Republican Members to come and talk 

about bills they have introduced or plan to introduce that will affect Medicare in some way. When we were told of this development, 

there were requests from staff on whether any Democratic bills on 

Medicare could be included today and those requests were ignored. 

In fact, I have a bill on Part D program integrity that is very similar to one presented, but for some reason, that bill was not given 

any consideration. 

So, Mr. Chairman, one bill in particular is quite egregious. It attempts to gut the coverage provisions of the Affordable Care Act in 

order to provide billions of dollars to private insurance companies. 

The others are not new ideas from Republicans; they involve allowing individuals to switch to high deductible health plans which do 

nothing but worsen the risk pool for those in comprehensive MA 

plans. 

Another bill would reinstate the second enrollment period for 

seniors, an issue that has already been litigated and determined to 

be confusing and unhelpful to beneficiaries. 

And I can go on and on about my concerns here, but most importantly, I wish we could hear from substantive witnesses today on 

how these bills would weaken—or as the other side claims, 

strengthen—the MA program, but unfortunately, we were not 

given that opportunity. So I hope that if the chairman intends to 

move forward on any of these bills, that the Administration, stakeholders, and Democratic staff would have an opportunity to weigh 

in. I don’t have to remind you that recent history has shown that 

nothing becomes law out of this committee without bipartisanship. 

While the majority of Medicare’s 52 million beneficiaries are in 

the traditional federally administered Medicare program, MA offers 

beneficiaries an alternative option to receive their Medicare benefits through private health plans. MA has become fairly popular 

among seniors with more than 1⁄4 of all beneficiaries now enrolled 

in such plans across the country. 

The ACA included quality improvements of MA plans by rewarding plans that deliver high-quality care with bonus payments. 

5 

Incentivizing quality patient care over quantity of services provided 

is key to improving health outcomes and reducing the rising cost 

of healthcare. The bottom line is the ACA reined in a program 

whose costs were excessive and put the program on a more sustainable footing. Since passage of the Affordable Care Act, MA enrollment has increased by nearly 1⁄3, premiums have dropped by nearly 

10%, and over 1⁄3 of MA contracts will receive 4 or more stars, an 

increase from 28% in 2013. 

Despite warning cries to the contrary, the program is stronger 

than ever. Now, today, we will hear from some witnesses about a 

study commissioned by the plans themselves. They will claim that 

CMS’ recent proposed cuts could devastate the MA market, but I 

would like to point out that these are not new cuts; these were expected cuts that bring MA plan payments in line with fee-for-service payments as required by law. And since by law MA plans are 

paid based on overall growth of Medicare, it is no surprise that 

when healthcare spending in Medicare slows, payments to MA 

plans will follow. And we should all think that is a good thing, especially those who continually take aim at the percentage of federal 

spending on healthcare. 

So not only were plans prepared for these reductions, Wall Street 

doesn’t seem to think the outlook is as dire. In fact, some company 

stocks skyrocketed because the truth is, as more and more baby 

boomers age into Medicare, and hopefully, unless the Republicans 

mess it up, a permanent replacement for the SGR is passed into 

law, the MA program will become even more robust and will continue to be an area of growth for insurance companies. 

Regardless of the talking points from the other side and industry, 

I continue to believe that removing plan overpayments is the right 

policy for Medicare. To reverse course would raise costs for taxpayers and all Part B beneficiaries, drain from the solvency of the 

trust fund, and expand beneficiary inequities that disadvantage the 

overwhelming majority of Medicare beneficiaries who remain in 

fee-for-service. 

So I look forward to hearing from our second panel today, specifically from Ms. Stein and Mr. Van de Water, because a debate 

about how much we pay private insurance companies is overshadowing some important aspects of CMS’ work in protecting beneficiaries. We should all work together to strengthen and improve 

the program and not weaken it. 

Thank you, Mr. Chairman. 

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

the gentleman from Florida, Mr. Bilirakis, for 5 minutes for an 

opening statement. 

OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. BILIRAKIS. Thank you very much. I appreciate it, Mr. Chairman. 

Thanks for holding this important hearing on how to protect 

Medicare Advantage. My bill, H.R. 3392, the Medicare Part D Patient Safety and Drug Abuse Prevention Act, will reduce fraud and 

abuse without negatively impacting Medicare beneficiaries by enVerDate Nov 24 2008 11:20 Sep 30, 2014 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-127 CHRIS
6 

acting cost-saving measures employed not only by TRICARE and 

the State Medicaid programs but also by private industry. 

H.R. 3392 creates a safe pharmacy access program to establish 

a single point-of-sale pharmacy system for the dispensing of controlled substances for high-risk beneficiaries. This will directly address the issue of doctor and pharmacy shopping where individuals 

go to multiple locations to fill multiple prescriptions. 

I would like to thank my cosponsor, Mr. Ben Lujan, and then I 

also want to yield now the balance of my time to Dr. Cassidy. 

Thank you, Mr. Chairman. 

Mr. CASSIDY. Thank you, Mr. Bilirakis. Thank you, Mr. Chairman. 

I submit for the record a letter to the CMS that Mr. Barrow and 

I and over 200 of our congressional colleagues have signed. 

We are concerned about the proposed cuts to the MA program 

and the negative impact it will have on seniors. Over 15 million 

seniors rely on Medicare Advantage, almost 1⁄3 of Medicare beneficiaries. These plans are popular because they have been proven 

to contain costs and improve enrollee health outcomes by focusing 

on prevention and disease management. CMS is planning to cut 

MA plans for overall seniors by 5.9% in 2015. In Louisiana that 

averages out that the MA beneficiary will have about a $55 to $65 

cut per month, which of course is $660 to $780 per year in higher 

premiums, higher cost-sharing, and lower benefits for about 

200,000 MA beneficiaries in my State. 

In response, Members of Congress are coming out of the woodwork to say to CMS stop these cuts, protect Medicare Advantage, 

protect seniors. 

Now, if Mr. Bilirakis will allow me to, I will yield 1 minute to 

the gentleman from Georgia, Mr. Barrow. 

Mr. BARROW. Thank you, Dr. Cassidy, for yielding time, and 

thank you for your partnership on this issue. 

Mr. Chairman, Georgia is home to hundreds of thousands of 

Medicare Advantage beneficiaries who are worried about the stability of the program. The proposed cuts to Medicare Advantage 

would amount to a 5.9% cut. These cuts will reduce benefits and 

increase premiums by $35 to $75 per month for our Nation’s 15 

million seniors with Medicare Advantage. Further cuts to Medicare 

Advantage would dramatically alter the standard of care that folks 

have come to rely on. That is why, as of today, 204 of our colleagues have joined Dr. Cassidy and me to warn Administrator 

Tavenner against these proposed cuts. 

Mr. Chairman, thank you for calling this hearing. I look forward 

to learning much from the witnesses and working with you to 

strengthen this vital program. 

With that, I yield back the balance of my time to Dr. Cassidy. 

Mr. CASSIDY. Would the gentleman yield for one second just to 

welcome our panel and my roommate Mr. Paulsen? 

Mr. PITTS. Thank you. And without objection, the letter that Dr. 

Cassidy submitted will be entered into the record. 

[The information appears at the conclusion of the hearing.] 

Mr. PITTS. We have two panels today. The first is a Member 

panel and I will introduce them at this time and they will speak 

in this order. First, Hon. Erik Paulsen, Member of Congress from 

7 

Minnesota; then Hon. Jeff Denham, Member of Congress from California; Hon. Dennis Ross, Member from Florida; Hon. Keith 

Rothfus, Member from Pennsylvania; and Hon. Jackie Walorski, 

Member from Indiana. 

Thank you very much for coming today. Your written testimony 

will be made part of the record. You will be each given 5 minutes 

for your opening statement, so the chair recognizes Mr. Paulsen for 

5 minutes. 

STATEMENTS OF HON. ERIK PAULSEN, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF MINNESOTA; HON. JEFF 

DENHAM, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF CALIFORNIA; HON. DENNIS ROSS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA; HON. 

KEITH ROTHFUS, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF PENNSYLVANIA; AND HON. JACKIE 

WALORSKI, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF INDIANA 

STATEMENT OF HON. ERIK PAULSEN 

Mr. PAULSEN. Thank you, Mr. Chairman. And, Chairman Pitts 

and Ranking Member Pallone, I want to thank you for holding this 

hearing today to ensure that our seniors and their Medicare Advantage (MA) plans are protected from unnecessary cuts. 

I have received many calls and emails and letters from my constituents, my seniors in my district, who are concerned about cuts 

to the Medicare Advantage program and the impact that it could 

have on their healthcare plans. 

The Medicare Advantage program is a resounding success in providing coordinated care for seniors with better quality, more 

choices, and greater savings for millions of Americans. Over 

175,000 seniors in Minnesota are enrolled in an MA plan, including 

more than 50,000 in my congressional district alone. More than 

half of Medicare-eligible seniors in my district have opted to enroll 

in MA plans rather than the traditional fee-for-service system. 

Nationwide, millions of Medicare beneficiaries have chosen a 

Medicare Advantage plan because they value access to better quality of care, innovative services, and additional benefits. The MA 

program enjoys high patient satisfaction and will reduce the cost 

of Medicare in the long run by providing evidence-based, coordinated care for our seniors. 

Unfortunately, the future viability of the MA program is at risk. 

The MA program is facing ObamaCare-mandated payment cuts, 

the health insurance tax, and the coding intensity cut in last year’s 

fiscal cliff deal. The latest threat is the 12% cut in regulatory cuts 

that have been proposed the last 2 years, including a 6% cut to 

plans this year. Seniors in my district could pay as much as $900 

more per year as a result of these cuts. Many might lose benefits, 

and some could lose their plan completely. 

The Administration is also attacking Medicare Advantage’s innovative delivery system reforms, like in-home risk assessments, that 

have been absent in fee-for-service. Home risk assessments are 

clinical encounters in a beneficiary’s home designed to prevent, to 

detect, and to treat chronic diseases to reduce hospital admissions, 

8 

decrease readmissions, and improve the overall quality of life for 

seniors. 

And instead of increasing costs for seniors and hindering plans’ 

ability to utilize innovative models of care, Congress should be providing more flexibility to plans and make it easier for seniors to 

participate in MA-like plans. 

That is why I have authoring legislation, Mr. Chairman, H.R. 

4177, to allow Medicare beneficiaries to contribute their own money 

to their Medicare Savings Accounts, these MSAs. Medical Savings 

Accounts are health savings accounts for Medicare Advantage 

plans. They allow seniors to utilize money in the accounts to pay 

for healthcare costs, including some costs that aren’t covered by 

Medicare. 

Right now, seniors can’t contribute their own money to their 

MSA like they can to a healthcare savings account. But by giving 

seniors more flexibility with these accounts, we will empower them 

to take charge of their own healthcare decisions. And this will 

strengthen the Medicare Advantage program and it will reduce 

healthcare costs for seniors and the system in the long-term. I encourage the committee to take a look at this legislation and maybe 

bring it up for consideration. 

Thankfully, Mr. Chairman, there is hope that we can avoid these 

additional cuts to Medicare Advantage. Over 200 Members, as was 

mentioned in earlier opening statements, of both parties, including 

myself, sent a letter to the Administration opposing these proposed 

cuts. We must protect our seniors and their healthcare plans by opposing these cuts. 

I sincerely appreciate the opportunity to testify and commend the 

committee for their work to protect seniors in Minnesota and 

around the country. 

[The prepared statement of Mr. Paulsen follows:] 

9 


89802.001
10 


89802.002
11 

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

Mr. Denham, 5 minutes for an opening statement. 

STATEMENT OF HON. JEFF DENHAM 

Mr. DENHAM. This is straightforward legislation. It will serve to 

inform the more than 14 million seniors currently enrolled in Medicare Advantage about how the Affordable Care Act is affecting the 

healthcare plans that they rely on every day. 

For over 60,000 seniors who are enrolled in Medicare Advantage 

in the counties I represent, the Medicare Advantage program has 

been tremendously successful in improving health outcomes when 

compared to traditional Medicare fee-for-service. This is because 

the Medicare Advantage model emphasizes preventive services and 

managed care to keep beneficiaries healthy. 

Medicare Advantage plans also limit out-of-pocket costs, protecting vulnerable seniors from the threat of bankruptcy due to the 

complicated medical conditions. Maybe this is why a survey of 

Medicare Advantage beneficiaries found that 90% were satisfied 

with their coverage, 92% were satisfied with their choice of doctor, 

and 94% were satisfied with the quality of care received under 

Medicare Advantage. 

The 14 million seniors enrolled in Medicare Advantage plans nationwide deserve to know that the massive government overhaul of 

our healthcare system was paid for in part by the $300 billion in 

cuts to Medicare Advantage plans and a health insurance tax that 

has just started this year. 

The combined effects of these payment cuts and the new health 

insurance tax are already being felt through cancelled plans, reduced benefits and increased copays. During this year alone, beneficiaries in over 2,000 counties will have fewer plan options compared to 2013 and on average will see their annual costs increased 

by nearly 10%. Unfortunately, the impact will only grow with time. 

As an example, in 2015, seniors in Stanislaus County in my dis- trict can expect to pay an additional $90 per month, or $1,080 per 

year for their Medicare Advantage plan. A large percentage of the 

33,000 enrollees in Stanislaus County are low-income individuals 

earning under $20,000 per year. This rate increase will force them 

out of participating in the Medicare Advantage program altogether. 

Did the 111th Congress really mean to cut Medicare Advantage in 

order to subsidize the Affordable Care Act? Whether Congress 

meant to or not, seniors have a right to know that these changes 

are coming so that they can actually plan and budget for these increases that they are going to see. 

Mr. Chairman, as you are well aware, there have been at least 

37 major alterations to the Affordable Care Act since it was enacted. Some of these were done in cooperation with the Congress, 

yet on 20 separate occasions, after it became clear that the implementation of the law was failing the American people, the Administration moved unilaterally to change the law. These delays and alterations are proof that the Affordable Care Act is not working as 

intended. Unfortunately for our seniors in our districts, while the 

promises of healthcare remain unfulfilled, the cuts and taxes on 

Medicare Advantage plans required to finance the law are moving 

forward as scheduled. 

12 

Congress must act today to protect the future of Medicare Advantage by repealing the cuts and taxes on the program. This would 

prevent the immediate erosion of health security for Medicare Advantage beneficiaries while we work to replace the Affordable Care 

Act with a healthcare reform that puts patients and seniors first. 

Until we can enact such legislation, seniors have the right to 

know why their Medicare Advantage plans are being impacted and 

I urge this committee to support this bill. 

I would also like to thank the 60 Plus Association and the Association of Mature American Citizens for their support of this legislation and would like to submit their letters for the record. 

[The prepared statement of Mr. Denham follows:] 

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Mr. PITTS. Without objection, so ordered. 

The chair thanks the gentleman and now recognizes the gentleman from Florida, Mr. Ross, 5 minutes for an opening statement. 

STATEMENT OF HON. DENNIS A. ROSS 

Mr. ROSS. Thank you, Chairman Pitts and Ranking Member 

Pallone, committee, for taking the time today to hold this hearing 

to highlight the significant threat facing the Medicare Advantage 

program. 

In 2012, healthcare spending in the United States accounted for 17.2% of our Nation’s economic output, equal to $8,915 per person. 

Mr. Chairman, these statistics tell me that for a country with arguably the best healthcare in the world, we have yet to properly align 

patient and provider incentives to enable our healthcare system to 

be cost-efficient, highly accessible, and ultimately to achieve selfsustaining cost-containment with little need for government intervention. 

More than 3.5 million Medicare beneficiaries reside in my home 

State of Florida; 1.2 million of these beneficiaries have chosen a 

Medicare Advantage plan over Medicare’s traditional and more 

costly fee-for-service structure. In fact, since 2008, the State of 

Florida alone has seen a 30% increase in the number of Medicare 

Advantage plan beneficiaries, while currently, 30% of our Nation’s 

Medicare population have opted for a Medicare Advantage plan, 

serving as a clear testament to the high level of patient satisfaction 

the program has achieved. 

Among the many satisfied Medicare Advantage plan beneficiaries 

in the State of Florida are Michael and Sandra Cox from my hometown of Lakeland, Florida. Michael and Sandra did what so many 

Medicare Advantage plan beneficiaries have done since January 1, 

2014, writing to their Members of Congress expressing a mix of 

anger, confusion, and panic at the senseless cuts that have been 

made to this effective program. Sandra and Michael wrote, ‘‘Please 

explain the logic of the ObamaCare cuts to Medicare Advantage. 

My husband and I have never experienced such a high level of satisfaction with our health coverage as we have with our Medicare 

Advantage plan, and all with a much cheaper monthly Premium.’’ 

Unfortunately, Michael and Sandra learned on January 1 that 

the doctors that they had been seeing for more than 10 years were 

no longer available under the Medicare Advantage plan as a result 

of the continued cuts to the program. They would face the full outof-pocket cost should they choose to continue seeing those providers 

they had come to know over the last 10 years and their health status they treated so well. 

Mr. Chairman, was it not the Administration’s goal to ensure patients develop a relationship with their provider resulting in better 

prevention and a more consistent continuum of care? 

Unfortunately, these cuts to Medicare Advantage, like so many 

other healthcare-related actions by this Administration are contradictory to the purported message. Even more baffling, past cuts 

have already crippled innovative programs like home health visits 

instituted by Medicare Advantage plan sponsors to ensure our seniors are able to maximize the value of healthcare services they reVerDate Nov 24 2008 11:20 Sep 30, 2014 Jkt 037690 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-127 CHRIS
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ceive. Going forward, additional cuts of this magnitude will devastate medical innovation in areas like tele-health that show great 

promise for increasing efficiency and cost-containment in Medicare 

Advantage and the healthcare system at large. 

Overall healthcare spending and utilization habits are a critical 

threat to America’s declining fiscal health. If we are to successfully 

curb healthcare costs, we must preserve and enhance the Medicare 

Advantage program because of its proven ability to achieve cost-efficiency while maximizing patient access to high-quality health 

services and providers. 

To be more specific, data collected between 2003 and 2009 

showed service utilization rates in areas like emergency department use and ambulatory surgery were 20 to 30% lower among 

Medicare Advantage beneficiaries than traditional Medicare. 

Overutilization of healthcare services, however, is only one facet 

of healthcare cost growth tempered by the Medicare Advantage 

plan structure. Although this current Administration has tried to 

discredit the power of market competition in creating organic, selfsustaining incentives for patients, providers, and insurers alike, 

the facts always prevail. Artificial market controls put in place by 

the Federal Government lead to more out-of-control health spending, as we have seen time and time and again. 

As far back as 1995, health economists have shown that combining coverage like that offered by Medicare Advantage with appropriate patient incentives leads to an avoidance of excessive doctor visits and tests, as well as more engaged patients seeking the 

best value for the healthcare service they need. 

In this same vein, I was proud to introduce H.R. 4180, the Preserving Health Savings Accounts for Medicare Beneficiaries Act, 

which would allow for this consistently proven economic strategy 

for reducing healthcare costs across the spectrum. My legislation 

would incentivize younger Americans to establish Health Savings 

Accounts with the promise that upon being Medicare-eligible, they 

are able toTransfer the HSA funds into a Medicare savings account. 

Simple enhancements like this one will help both Medicare Advantage and the entire healthcare system achieve organic alignment between insurers and patients and providers and creating a 

powerful, self-sustaining cost-containment tool. Patients have more 

control over their healthcare dollars, increasing awareness of reasonable health service costs and quality options, while also actively 

engaging providers to offer the highest quality service at the lowest 

reasonable cost in order to earn a patient’s business. 

Mr. Chairman, this is what value in healthcare looks like. Unfortunately, through continued cuts to the Medicare Advantage program, this Administration will eliminate any possibility we currently have to build upon the Medicare Advantage program’s success in curbing healthcare cost. 

And I yield back. 

[The prepared statement of Mr. Ross follows:] 

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Mr. PITTS. The chair thanks the gentleman. 

And now the chair is proud to introduce from the State of Pennsylvania Mr. Rothfus and recognize him for 5 minutes for an opening statement. 

STATEMENT OF HON. KEITH J. ROTHFUS 

Mr. ROTHFUS. Chairman Pitts, Ranking Member Pallone, and 

members of the subcommittee, thank you for having me here today 

to testify about H.R. 2453, the Medicare Beneficiary Preservation 

of Choice Act. I am very pleased to discuss this bipartisan legislation that Congressman Kurt Schrader and I introduced in June of 

2013. 

Enacting H.R. 2453 is one small fix we can make to Medicare 

Advantage that can have a big impact on the lives of the seniors 

utilizing the program in our districts. It simply restores the open 

enrollment period that existed prior to 2011. This open enrollment 

period permitted seniors to change Medicare Advantage plans once 

between January and March if needed. It essentially let seniors 

test drive the Medicare Advantage plan they would have just selected and change plans if it turns out the plan is not working for 

them. H.R. 2453 is about choice and fairness for seniors.It is about 

empowering them to make decisions about their healthcare needs. 

Restoring the January to March open enrollment period also 

makes sense in light of the 2014 Medicare Advantage cuts and the 

new cuts just proposed by CMS. Last November, the Wall Street 

Journal reported that one of the Nation’s largest Medicare Advantage providers had dropped thousands of doctors from network due 

to ‘‘significant changes and pressures in the healthcare environment.’’ 

This is significant because seniors may not have known about 

the change in time to adjust their decisions during the October to 

December enrollment period. So if they liked their doctor, seniors 

may be finding out just now that they cannot keep him or her because they are no longer included in the plan. Passing H.R. 2453 

and restoring the 90-day open enrollment period during the first 

quarter of the year would let seniors react to these types of plan 

changes, many of which are driven by the harmful cuts to Medicare 

Advantage that we see happening as the result of the Affordable 

Care Act. 

H.R. 2453 is a patient-centered option for improving Medicare 

Advantage. It will provide choice for seniors and it will ensure that 

they have access to the doctors they know and trust. That is why 

it is supported by America’s Health Insurance Plans, the Association of Mature American Citizens, and the 60 Plus Association. 

The subcommittee members and its chairman should be thanked 

for their efforts to strengthen Medicare Advantage. Medicare Advantage delivers quality healthcare and peace of mind with consistently superlative satisfaction ratings from participants. Preserving 

the program and preventing more cuts to Medicare Advantage is 

a top priority for me and for the seniors in Pennsylvania’s 12th 

District. Incidentally, in my district, utilization of Medicare Advantage is in excess of 60%, more than double the national rate. 

Additional cuts to Medicare Advantage will lead to higher out-ofpocket costs, reduced benefits, and fewer plan options. Instead of 

25 

limiting access to a successful program which 9 out of 10 seniors 

are satisfied with, we should be empowering them to make choices 

about what best suits them. We should make sure seniors have access to the healthcare providers they know and trust. Instead of 

cutting Medicare Advantage, we should be finding solutions to 

lower costs for seniors and sustain the program for the long run. 

I had an incident this past Monday with a senior in my district 

at a restaurant. She was the hostess and she expressed to me a 

real concern about the cuts to Medicare Advantage personally impacting her. I asked her to call my office and give us more background because I wanted to tell that story here in Washington. And 

she simply looked at me and said why? So the politicians can accuse me of lying? That is what is happening out there in the country. People are very concerned about what is happening with Medicare Advantage. 

I thank the chairman and I yield back. 

[The prepared statement of Mr. Rothfus follows:] 

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Mr. PITTS. The chair thanks the gentleman and now introduces 

the gentlelady from Indiana, Ms. Walorski. I recognize her for 5 

minutes for an opening statement. 

STATEMENT OF HON. JACKIE WALORSKI 

Ms. WALORSKI. Thank you, Mr. Chairman. Chairman Pitts, 

Ranking Member Pallone, members of the subcommittee, it is an 

honor to be here today and I thank you for holding this hearing to 

examine Medicare Advantage, a vital program that is critical to the 

health and well-being of many of our nation’s seniors. 

Over 15 million Americans depend on Medicare Advantage. 

Through this popular program, seniors and individuals with disabilities are able to select a private health plan of their choice that 

provides affordable, comprehensive coverage, disease management, 

and care coordination. 

The Affordable Care Act and other regulatory changes have 

placed significant financial strain on this program, the brunt of 

which will be borne by the seniors we have promised to protect. 

Cuts to Medicare Advantage mean higher out-of-pocket costs, a 

more limited choice of doctors, decreased management of chronic 

conditions, and decreased coverage for dental and vision services. 

In my home State of Indiana, 22% of Medicare-eligible Hoosiers 

have chosen to enroll in Medicare Advantage, and enrollment in 

my district is even as high as 27%. This program serves my constituents well, and I am deeply concerned about how cuts will impact seniors in theHoosier State. 

Marcia from Mishawaka told me she is very pleased with her 

Medicare Advantage program. She loves the quality of the services 

provided and the prescription drug program that is included. She 

is worried about the looming cuts because she wants to keep her 

current doctor. As a senior citizen living on a fixed income, it is important that her premiums remain low and she wonders who will 

take care of seniors if the cuts continue. 

Eighty-seven-year-old Phyllis and her 93-year-old husband Owen 

like the peace of mind that comes with knowing they will receive 

excellent care through their current healthcare plan. Back in June, 

Phyllis fell and broke her hip. She was promptly picked up by an 

ambulance, admitted to surgery, and received excellent follow-up 

care in rehab. Her Medicare Advantage plan took care of the costs. 

Owen had a pacemaker inserted last year, which was also taken 

care of by his MA plan. Originally, there was no premium for this 

plan. Now they pay $34 a month. Although $34 a month may not 

seem like much, Phyllis told me if their premiums become too high, 

they will have to cut back on other necessities. Phyllis and Owen 

never imagined the Affordable Care Act would negatively impact 

them, especially when the President said that you can keep your 

healthcare plan if you like it. But now their healthcare plan is in 

jeopardy, too. 

Medicare Advantage plans are particularly critical to low-income 

and minority beneficiaries. According to a study by America’s 

Health Insurance Plans, 1 of 5 of those enrolled in Medicare Advantage are minorities and 41% of enrollees have annual incomes 

of less than $20,000. Cuts to the program have the potential to disproportionately affect these most vulnerable populations. 

31 

That is why I introduced H.R. 4211, the Advantage of Medicare 

Advantage for Minorities and Low-Income Seniors Act of 2014. This 

legislation directs the Government Accountability Office to study 

the number of minority and low-income seniors enrolled in Medicare Advantage and to assess the impacts of Medicare Advantage 

payment reductions resulting from the Affordable Care Act and 

other administrative actions. 

Studies show that enrollees in Medicare Advantage have lower 

hospital readmissions, receive higher quality of care, and enjoy better health outcomes as compared to their counterparts in traditional fee-for-service Medicare. Medicare Advantage serves as a 

vital source of coverage for low-income and minority beneficiaries. 

On behalf of my constituents in the 2nd District and all Hoosiers, 

I look forward to working with both Congress and the Administration to keep the promise to maintain the integrity of Medicare Advantage. Thank you for the opportunity to appear before you this 

morning. 

[The prepared statement of Ms. Walorski follows:] 

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Mr. PITTS. The chair thanks the gentlelady and again thanks the 

Members for the testimony on your initiatives. We will be happy 

to work with you on those. Thank you for taking time out of your 

busy schedules to appear before us today. 

There will be no questions. I will excuse panel one at this time 

and call the second panel to the table and introduce them in the 

order that they will make presentations. 

First, Mr. Frank Little, a Medicare beneficiary with a Medicare 

Advantage plan; secondly, Dr. Mitchell Lew, CEO and Chief Medical Officer of Prospect Medical Systems; thirdly, Mr. Glenn Giese, 

Principal, Oliver Wyman Consulting Actuaries; and then Ms. Judith Stein, Executive Director, Center for Medicare Advocacy; and 

finally, Dr. Paul Van de Water, Senior Fellow, Center on Budget 

and Policy Priorities. 

Thank you all for coming today. Your written testimony will be 

made part of the record, and we will give each of you 5 minutes 

to summarize your testimony. 

Mr. Little, we will start with you. You are recognized for 5 minutes. 

STATEMENTS OF FRANK LITTLE, MEDICARE BENEFICIARY 

WITH A MEDICARE ADVANTAGE PLAN; MITCHELL LEW, M.D., 

CEO AND CHIEF MEDICAL OFFICER, PROSPECT MEDICAL 

SYSTEM; GLENN GIESE, PRINCIPAL, OLIVER WYMAN CONSULTING ACTUARIES; JUDITH STEIN, EXECUTIVE DIRECTOR, CENTER FOR MEDICARE ADVOCACY; AND PAUL N. VAN 

DE WATER, SENIOR FELLOW, CENTER ON BUDGET AND POLICY PRIORITIES 

STATEMENT OF FRANK LITTLE 

Mr. LITTLE. Chairman Pitts and members of the committee, 

thank you for providing me this opportunity to testify about my 

personal experience with the Medicare Advantage plan. 

My name is Frank Little. I am a retired small business owner 

from Virginia Beach. I am 70 years old. My wife and I have been 

enrolled in three different Medicare Advantage plans over the past 

5 years. We have received high quality, affordable coverage 

through our Medicare Advantage plans, but we are concerned that 

our plan choices are shrinking due to the deep funding cuts in this 

program. 

When I first became eligible for Medicare, I had a choice of four 

different Medicare Advantage plans that offered prescription drug 

benefits with no additional premiums. Over the years, uncertainty 

about the program funding has forced several of these plans to either withdraw from my area or increase premiums. 

Today, I am enrolled in a Medicare Advantage plan offered by 

Humana, which is still the only plan in my area offering a plan 

that includes prescription drug coverage with no additional premium. I am very satisfied with my Medicare Advantage plan and 

feel fortunate to have this option. 

To help the committee understand why my Medicare Advantage 

plan is important to me, I want to explain my experience over the 

last several years. I have had three major medical problems since 

I retired. I have had open-heart surgery, colon cancer, and a medVerDate Nov 24 2008 11:20 Sep 30, 2014 Jkt 037690 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-127 CHRIS
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ical procedure on my lungs. I estimate that my medical bills for 

these conditions have totaled approximately $750,000 over the last 

5 years, and I am pleased to tell you that my Medicare Advantage 

plans have covered almost all of these expenses. I have paid only 

a few hundred dollars in out-of-pocket costs. Without my Medicare 

Advantage plan, I would have faced a high deductible and 20% copayments if I had not been enrolled in the original Medicare program. 

Like many seniors, I live on a fixed income and such high costs 

would have had a devastating impact on my budget. I also want 

to emphasize that my Medicare Advantage plan has allowed me to 

receive high quality care from my personal physician, from outstanding specialists, and from an excellent hospital in my community. 

Other seniors in my community have several stories to tell about 

the quality coverage they receive through their Medicare Advantage plan. We appreciate that our plan provides prescription drug 

coverage as part of our medical coverage, while also taking care of 

our expenses to ensure that our out-of-pocket expenses are affordable. 

My message to Congress is that I want you to make sure that 

Medicare Advantage continues to be a strong and adequately funded program. I am asking you to block any additional funding cuts. 

I am counting on both Congress and the Obama Administration to 

do the right thing and protect this program from any further funding cuts. 

In closing, I want to say that I love my Medicare Advantage plan 

and I will be deeply disappointed if I lose my plan. Thank you for 

considering my comments on this important issue. 

[The prepared statement of Mr. Little follows:] 

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Mr. PITTS. The Chair thanks the gentleman. I now recognize Dr. 

Lew 5 minutes for an opening statement. 

STATEMENT OF MITCHELL LEW, M.D. 

Dr. LEW. Thank you, Chairman Pitts, Ranking Member Pallone, 

and members of this committee for the invitation to testify today. 

My name is Dr. Mitchell Lew, and I am part of the CAPG National 

Board and am pleased to testify on behalf of CAPG, which is the 

largest association in the country of physician organizations that 

practice capitated coordinated care. 

CAPG members represent 160 medical groups in 20 states and 

serve 1.2 million Medicare Advantage enrollees. I also address you 

as a physician who practiced for 10 years before transitioning to a 

physician executive role 15 years ago. I am CEO of Prospect Medical Group, which is an IPA model with over 4,500 physicians in 

three States and serving 225,000 members. This model allows us 

to contract with smaller physician practices under the umbrella of 

one large organization. 

For background, Prospect Medical began in 1985 and we have 

evolved over the years and we now offer a full range of coordinating care services and programs, and this has resulted in better 

value to our seniors. It is better care, better health with cost control. Prospect has grown and we now have physicians and hospitals 

in California, Texas, and Rhode Island. 

I come to emphasize the merits of Medicare Advantage and the 

coordinated care model and the need to preserve the financial support for Medicare Advantage and to continue our investment into 

the model. Medicare Advantage takes a population-based payment 

approach, which reduces the high utilization incentives of traditional Medicare. It is value over volume. It is team-based. Physician organizations are structured to provide the best care at the 

right time in the most appropriate setting. Seniors are managed 

across an entire continuum of care. They get preventive services, 

home visits, high-intensity case management for the sickest members, chronic disease management, palliative care. It allows for innovation. Physicians are held to performance standards and they 

receive quality incentive payments. Social and behavioral services 

are also delivered in a coordinated manner. 

The impact of Medicare Advantage is better care, lower admissions, lower readmissions, lower lengths of stay, better outcomes, 

higher member satisfaction, more benefits, and higher interest 

among the new seniors. And that is particularly important for the 

low-income seniors who like the enhanced benefits and they need 

the enhanced benefits. Medicare Advantage has grown by 30% over 

the last 3 years and now 50% of new Medicare enrollees are choosing Medicare Advantage. 

The proposed reductions and cumulative cuts pose very serious 

threats. It will cause an erosion of the coordinated care infrastructure, higher cost-sharing, which will have a profound impact on the 

lower-income and minority seniors, fewer benefits. These cuts will 

undermine all of the progress that we have made in developing the 

healthcare delivery system. 

Medicare Advantage should be the infrastructure that all of the 

newer models in fee-for-service should use to build coordinating 

42 

care such as the ACOs and the medical homes. I urge Congress and 

the Administration to find ways that will strengthen, not cut Medicare Advantage, develop policies that will promote populationbased payments. 

Medicare Advantage should be the foundation upon which the 

entire healthcare delivery system builds coordinated care. As you 

develop Medicare and fiscal policy, I ask that you consider all that 

Medicare Advantage has to offer and know that additional cuts will 

have very serious consequences on the coordinated care model and 

the seniors that it serves. Without Medicare Advantage, we have 

very little chance to transform our healthcare delivery system. 

Thank you very much, Mr. Chairman, and I look forward to your 

questions. 

[The prepared statement of Dr. Lew follows:] 

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

Mr. Giese 5 minutes for an opening statement. 

STATEMENT OF GLENN GIESE 

Mr. GIESE. Chairman Pitts, Ranking Member Pallone, and members of the subcommittee, thank you for the opportunity to testify. 

I am Glenn Giese, a senior principal with Oliver Wyman Actuarial 

Consulting. My testimony today will focus on the findings of a recent analysis by Oliver Wyman commissioned by America’s Health 

Insurance Plans, which estimates the potential impact of funding 

cuts that would be imposed by Medicare Advantage program by 

proposed changes to the MA payment methodology in 2015. 

Our analysis focused on the combined impact of preliminary payment policies and regulatory changes announced by CMS on February 21, 2014, in its 45-day notice and draft call letter, cuts included in the Affordable Care Act and other legislative provisions 

addressing MA payments. 

Specifically, we identified nine different factors that would impact MA payments in 2015, most of which would reduce payments. 

A detailed explanation of these factors is outlined in the appendix 

to my testimony. We have calculated that the projected overall impact of these policies would be to reduce MA payments by an estimated 5.9% in 2015. We note that the impact of these changes on 

individual plans will vary based on a number of factors, including 

the geographic area in which the MA organization participates. 

We further estimate that the 5.9% funding cut translates into a potential reduction of $35 to $75 per month or $420 to $900 for the 

year in funding that will be available to support the benefits of MA 

enrollees in 2015. These cuts, if implemented, would represent a 

second consecutive year of deep cuts in MA funding. Due to a combination of legislative and regulatory policies implemented for 

2014, MA payments already have been cut by 4 to 6% this year, 

resulting in cost increases and benefit cuts of $30 to $70 per month 

for beneficiaries. If the new changes proposed by CMS are implemented, the program would be hit by a double-digit cut over just 

a 2-year period, causing cost increases and benefit reductions that 

could total as much as $1,740 per enrollee over 2 years according 

to our projections. 

MA cuts proposed for 2015 could have far-reaching implications 

for over 15 million seniors and individuals with disabilities who are 

enrolled in MA plans. In our report we explained that these cuts 

‘‘could result in a high degree of disruption in the MA market,’’ including the potential for plan exits, reductions in service areas, reduced benefits, provider networks changes, and disenrollment from 

MA plans. 

We further cautioned that the proposed funding cuts would disproportionately affect beneficiaries with low incomes, including the 

41% of MA enrollees who have annual incomes below $20,000. For 

these beneficiaries, the potential increase in out-of-pocket costs resulting from cuts would constitute a significant burden. 

Another serious concern we highlight is that individuals who utilize healthcare services the most would adversely be affected if 

they lose their MA plans and are forced to move back through the 

Medicare fee-for-service program with its higher cost-sharing and 

59 

lack of coordinated care. This is a particular concern for enrollees 

in Special Needs Plans that serve beneficiaries who have severe or 

disabling chronic conditions or who reside in institutions. 

For example, Chronic Care SNPs offer services that are tailored 

to meet the specific medical needs of patients with diabetes, cardiovascular disease, and other conditions. The loss of these specialized 

services would be a serious blow to beneficiaries whose medical 

conditions require customized treatments and care. 

Thank you again for the opportunity to testify and I encourage 

the subcommittee and Congress to consider the findings of our 

analysis as you communicate with CMS about its proposed payment policies and regulatory changes to the MA program for 2015. 

[The prepared statement of Mr. Giese follows:] 

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

Ms. Stein 5 minutes for an opening statement. 

STATEMENT OF JUDITH STEIN 

Ms. STEIN. Mr. Chairman Pitts, Ranking Member Pallone, and 

distinguished members of the subcommittee, thank you for inviting 

me to testify. I am Judith Stein, founder and Executive Director of 

the Center for Medicare Advocacy. I have dedicated my legal career 

to representing Medicare beneficiaries exclusively since 1977. The 

Center is a private, nonprofit organization based in Connecticut 

and Washington, D.C., with offices throughout the country. We responded to over 7,000 calls and emails from Medicare beneficiaries 

and their families each year. 

Medicare beneficiaries have had the option to enroll in private 

health plans since the ’70s. The Medicare private plan option, now 

called Medicare Advantage, prior Medicare Plus Choice, was supposed to provide equal or better coverage for beneficiaries at a 

lower cost than traditional Medicare. Unfortunately, that has not 

been the case. As you know, in fact on average, private MA plans, 

Medicare Advantage, are paid significantly more than it would cost 

to provide similar coverage in traditional Medicare. 

Now, we recognize that MA plans can be a viable option for some 

enrollees, but I must remind the committee that the vast majority, 

36 million or more older and disabled people, are enrolled in traditional Medicare, which is no longer a fee-for-service program, and 

50% of all Medicare beneficiaries have incomes under $23,500 a 

year. 

At the Center, we regularly hear from families and individuals 

who have had problems with their MA plans. One of the most frequent issues we encounter concerning MA coverage relates to postacute care. For example, over the last year the Center has received 

complaints from across the country about MA plans that have denied coverage for skilled nursing facility care despite the fact that 

the individuals at issue were receiving nutrition through feeding 

tubes, which under federal regulations and common sense is a 

skilled service. We have heard this from Ohio, Pennsylvania, Minnesota, and of course Connecticut. 

In fact, one of the beneficiaries who called us, or the family did, 

was granted coverage on appeal but the MA plan actually appealed 

that case to federal court. And we, a nonprofit that is not paid by 

our clients, had to go to federal court to make sure that that individual and the others like him in that MA plan would get coverage 

and care. 

These issues are not new and occurred even at the height of MA 

overpayments when plans were paid at an average of 114% of the 

amount traditional Medicare would spend on a similar individual. 

In 2009, for example, the Center had to take another case to federal court in order to obtain coverage for an individual receiving 

tube feeding. But the MA plan was so determined to deny coverage 

it continued that case into federal court in Minnesota. 

One of the most important health considerations for individuals 

is the ability to choose one’s doctors and healthcare providers. This 

is the choice that people really care about. By design, as you know, 

MA plans contract with a limited network of providers to care for 

68 

enrollees. Some coordinate care, but that is far from the normal 

course we have found with their beneficiaries over the 30 plus 

years I have done this work. 

For example, a Connecticut resident was referred to us by his 

Congressman because he had almost $100,000 in outstanding medical bills for his recently deceased wife that would have been covered had he been in traditional Medicare. That is because he traveled to Florida to be with his daughter where his wife fell. And 

while her fractured hip was taken care of and paid for by the plan, 

it turned out she had a brain tumor, and all the services related 

to the brain tumor were not covered by the MA plan. 

Sometimes Medicare Advantage enrollees face barriers close to 

home. When MA plans change their provider networks, as they 

often do annually, enrollees often have to make sure that their doctors will be in the plan in the coming year. As you may know, the 

largest plan in our State of Connecticut and in New York, Ohio, 

and Florida cut many, many providers, 2,250 doctors and 

healthcare facilities in Connecticut alone, including Yale New 

Haven Hospital where my mother, who is on traditional Medicare, 

recently had urgently needed neurosurgery, which she would not be 

able to have if she was in a Medicare Advantage plan. Neither physicians nor Medicare patients in that plan, the largest in Connecticut—and in Ohio, Florida, New York—were given adequate 

notice regarding these extraordinary provider cuts. 

In addition to the concerns raised for Medicare beneficiaries by 

MA networks, too many plans fail to provide adequate coverage 

and access to care when enrollees are seriously ill. While I am 

grateful for the care that my co-presenter has received from his MA 

plan, too often we find that when people become truly ill or injured, 

they are less satisfied with their MA plan. That has been the case 

with my uncle just this year, my mother’s brother, who is 92 and 

has been in an MA plan all these years despite my protestations. 

He is not receiving coordinated care or the care he needs. 

Mr. PITTS. Can you wrap up, please? 

Ms. STEIN. Instead of focusing on how much Medicare payments 

are being cut, which is not really a cut, Congress should focus on 

making sure they provide what we are paying for. It is simply unfair to ask beneficiaries and taxpayers to shoulder extra payments 

to private plans that truly don’t provide uniformly better value. Enrollees in poor health often receive less coverage and all have less 

options of providers. 

Thank you. 

[The prepared statement of Ms. Stein follows:] 

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Mr. PITTS. The chair thanks the gentlelady and now recognizes 

Dr. Van de Water 5 minutes for an opening statement. 

STATEMENT OF PAUL N. VAN DE WATER 

Mr. VAN DE WATER. Mr. Chairman, Ranking Member Pallone, 

and members of the subcommittee, I appreciate the opportunity to 

be with you this morning. My statement reviews the role of private 

health plans in Medicare, identifies the factors that will hold down 

payments to Medicare Advantage plans in 2015, and explains why 

the Administration and Congress should reject demands from some 

quarters to freeze Medicare Advantage payment rates in 2015 at 

their 2014 levels. 

For 40 years, Medicare beneficiaries have been able to receive 

their benefits through private health plans. And as you have heard, 

in 2014, 29% of beneficiaries are enrolled in a private health plan 

through Medicare Advantage and virtually all beneficiaries have 

access to such a private plan. The remaining 70% or so of Medicare 

beneficiaries are in traditional Medicare. 

Congress’ advisory body, the Medicare Payment Advisory Commission, has long recommended that Medicare’s payment system be 

neutral, favoring neither Medicare Advantage plans nor traditional 

Medicare. But in recent years, the system has been substantially 

tilted in favor of private plans, the result of a large increase in MA 

payments enacted in the 2003 Medicare prescription drug law. 

In 2009, Medicare paid MA plans 14% more per enrollee than 

what it would have cost traditional Medicare to cover comparable 

enrollees. The Affordable Care Act is gradually reducing MA payment rates to bring them more in line with payments in traditional 

Medicare. This year in 2014, Medicare Advantage payments average only 6% higher than the levels in traditional Medicare. These 

overpayments, I must add, drive up premiums for beneficiaries and 

weaken Medicare’s finances. 

The Centers for Medicare and Medicaid Services has recently announced preliminary 2015 payment policies for Medicare Advantage plans. Although the health insurance industry’s trade association AHIP says that the CMS announcement includes ‘‘new proposed cuts,’’ the agency CMS is simply applying current law. 

The announced payment policies reflect four factors that will 

hold down MA payments in 2015. First, CMS continues to phase 

in the payment reductions that health reform requires, which curb 

some, but as I said, not all, of the excessive payments to MA plans. 

Second, since MA payments are tied in part to the cost per enrollee in traditional Medicare, the continuous slowdown in fee-forservice spending lowers MA payment rates. 

Third, CMS is implementing more accurate risk adjustment procedures as health reform requires. It will modestly reduce MA payments to address the problem of up-coding. Also, CMS will no 

longer include diagnoses identified during a home assessment visit 

rather than a clinical encounter in determining an enrollee’s health 

status since these tend to make enrollees appear sicker than comparable enrollees in traditional Medicare. 

And fourth, ending a demonstration project that pays higherquality bonuses to some plans will effectively lower payments in 

those plans in 2015 compared to 2014. 

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Now, AHIP and other interest groups charge that the preliminary 2015 payment policies will substantially increase costs to MA 

participants and will reduce the choice of plans. They ask that MA 

payment rates be frozen in 2015 at their 2014 levels, but I would 

argue that the Administration and Congress should reject those demands. 

The predictions of doom and gloom are greatly exaggerated. 

AHIP issued these same warnings about the MA payment cuts that 

were made in 2014, but MA enrollment, as you have noted, has 

nonetheless reached record levels. And the Congressional Budget 

Office projects that MA plans will continue to thrive despite further 

payment cuts. Nationwide, the number of plans available dropped 

by only 3% in 2014, a small change that reflects both the offsetting 

effects of newly entering plans and those departing the market. 

Plans also responded to the payment reductions by becoming 

more efficient. The unweighted average monthly premiums for MA 

plans with prescription drug coverage actually fell from 2013 to 

2014 and is lower today than in 2011 or 2012. And again, this is 

also despite the payment reductions. 

Wall Street certainly isn’t pessimistic about Medicare Advantage. 

In the wake of the CMS announcement, shares of Humana, the second largest insurer in the MA market, recorded their biggest single-day increase in 4 years and reached their highest level in more 

than 30 years. Standard & Poor’s overall index for managed 

healthcare plans also climbed. 

Finally, preventing overpayments to Medicare Advantage plans 

is sound policy. Along with the other cost-saving provisions in the 

Affordable Care Act, eliminating overpayments reduces premiums 

for all beneficiaries, including the large majority who are not enrolled in MA plans and extends the solvency of Medicare’s Hospital 

Insurance trust fund. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Van de Water follows:] 

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Mr. PITTS. The chair thanks the gentleman. That concludes the 

opening statements. We will begin questioning. I will recognize myself for 5 minutes for that purpose. 

Mr. Little, I will go first to you. What would have happened to 

you if you had had a health episode and were not on an MA plan? 

How did your MA plan compare to what service you might have received under traditional Medicare if you could explain? 

Mr. LITTLE. If I would have had traditional Medicare with my problems that I had, instead of being approximately $400 out-ofpocket cost because I stayed 2 extra days at the hospital when I 

had the open heart, if I had had traditional Medicare, it would 

have cost me $150,000 and that is a financial burden. 

Mr. PITTS. Now, what would happen to you if you would lose 

your MA plan that you have today? 

Mr. LITTLE. Well, if I had looked at the closest Medigap and it 

would add about $700 to $800 a year to my cost, which, because 

I am retired, something would have to be taken out of the budget 

to pay for the plan. 

Mr. PITTS. All right. Well, according to the Congressional Budget 

Office, the Affordable Care Act cut more than $300 million from 

the Medicare Advantage program to spend on new government programs, new entitlement not for seniors. What is your reaction to 

that? 

Mr. LITTLE. Well, I have seen the cuts. When I turned 65 5 years 

ago, we had four plans to choose from and Medicare Advantage 

plans and I had always been with Blue Cross Blue Shield so I 

signed up with them. I was informed the following year that they 

were dropping that plan so I went to Optima. They had the nextbest plan. The following May I got my letter that they were dropping me, and the third year I went to Humana because they were 

basically the only one left. And in my area that I live in, Virginia 

Beach, Humana offers the only Medicare Advantage plan available. 

The others said they had to drop it because of the higher cost and 

cuts. 

Mr. PITTS. Can you describe what your plan has done for you 

that you think may have prevented a hospitalization or from returning to the hospital? 

Mr. LITTLE. Yes, sir. Every January and June part of the plan 

is to go into your GP and have a thorough checkup. And of course 

I have to go to my cardiologist and have a thorough checkup. But 

even the co-pay for those preventive is zero for a GP and of course 

my specialist is $35, which is easily affordable. So they keep me 

running. 

Mr. PITTS. If you could do a ballpark, how much do you think 

your health plan has saved you in costs out-of-pocket, you know, 

costs for the services you need so far? 

Mr. LITTLE. Well, I know in the last 5 years it has saved me 

$140, $150,000. 

Mr. PITTS. Now, due to cuts in Medicare Advantage under the Affordable Care Act, some seniors may get to keep their plan at least 

this year but might still lose their doctor or lose affordable premiums or lose needed benefits. Have you lost your doctor or plan 

before? 

Mr. LITTLE. No, sir. 

88 

Mr. PITTS. Have you or your friends with Medicare Advantage 

plans experienced fewer choices and higher cost? 

Mr. LITTLE. We have experienced fewer choices but the low cost 

is still there. And in fact, with all respect to Ms. Stein, I don’t know 

which Medicare Advantage plan they have, but they need to 

switch. 

Mr. PITTS. All right. Let me go to Mr. Giese. What are the tools 

that CMS has at its disposal to legally reduce the impact of the 

cuts and the advance notice through administrative or regulatory 

means? 

Mr. GIESE. Some of the cuts are statutory and some of the cuts 

are discretionary, so if Congress were to act, things like the ACA 

reductions, the demonstration plan, and the risk score stuff could 

be changed. But the other stuff that is discretionary is decided by 

CMS, so the rate book change, which are the trends in Medicare 

Advantage, we are not quite sure how CMS develops the trends. 

They are not really released to the public. So that could change. 

That is partially discretionary and I would say that is the biggest 

one. 

Mr. PITTS. My time has expired, unfortunately. The chair recognizes the ranking member 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

I wanted to ask questions initially of Mr. Van de Water. I have 

heard different views on whether the quality of care that Medicare 

beneficiaries receive from an MA plan is any different than fee-forservice Medicare. What is your take on the relative quality of care 

provided in fee-for-service versus MA plans? 

Mr. VAN DE WATER. Mr. Pallone, I think the short answer is that 

we don’t really have clear data. I like to rely on the Medicare Payment Advisory Commission. They are a good impartial source. And 

in their report from last March on Medicare payment policies, they 

said that according to them we have little information on which to 

base a comparison of MA quality indicators with those in private 

fee-for-service. 

That having been said, the evidence is mixed. There are some 

studies which some of the Members have referred to that suggest 

that at least in some particular MA plans, quality may be better. 

There is other data, for example, that MedPAC sites that suggests 

that the quality is about the same on average in Medicare Advantage plans and traditional Medicare. So I think the right answer 

is that the record is probably mixed that in some cases the quality 

is probably better but we can’t make that conclusion across the 

board. 

Mr. PALLONE. Well, I think we should strive to improve the quality provided to all Medicare beneficiaries both in the fee-for-service 

system and the Medicare Advantage program. Now, fee-for-service 

has undertaken new payment models such as accountable care organizations, medical homes, and other initiatives, and Congress, including our committee, has made great bipartisan progress towards 

tying physician Medicare payments more closely to the quality of 

care provided. And now that MA plan payments are linked to quality performance, the plans are also working to improve quality. So 

what is your recommendation for steps we can take to continue to 

improve quality for all Medicare beneficiaries? 

89 

Mr. VAN DE WATER. Well, I think you are exactly right to focus 

on the whole system. You know, we are developing—this is referred 

to a mix of payment models. We have not only traditional Medicare 

on the one hand and Medicare Advantage plans, but we are developing intermediate models such as accountable care organizations. 

I think that what Congress has done to encourage these different 

payment models is exactly the right thing. In your proposed SGR 

legislation you have additional steps to develop models of that sort. 

The quality bonuses in MA plans, that makes sense. So I think in 

general you are on the right track. 

Mr. PALLONE. All right. Let me ask you a question about the mechanics of how Medicare Advantage plans are paid. CMS reported 

that the proposed reductions will result in a 2.4 decrease to MA 

plan benchmarks in 2015 while the witness from Oliver Wyman 

testified on their recent report and that is a report that I remind 

everyone that the insurance industry paid for, which claims that 

the plans’ rates will be cut by 5.9%. And the plans are saying these 

reductions are going to either put them out of business, force them 

to hike premiums, reduce benefits, or take other drastic measures. 

On the other hand, they said this last year, too, and yet nothing 

really happened. But I know this is a very complex issue and I 

would like to get to the bottom of it. 

So let’s just talk about the facts. Can you please explain the mechanics of how Medicare Advantage plans are paid, like what a 

benchmark is, what a bid is, and how plans’ payments are determined? 

Mr. VAN DE WATER. I will try to give a simple answer which will 

necessarily be a bit oversimplified, but, as you say, the key factors 

in determining what a plan gets paid are, one, the plan’s bid, which 

represents how much the plan estimates that it will cost to provide 

Part A and Part B services to a representative group of people, that 

is people of sort of an average—— 

Mr. PALLONE. What I am trying to get at is whether the reductions that CMS has proposed to the plan, you know, whether the 

reductions are to the payments or the benchmarks? And given the 

reductions in benchmarks, will the plans on average end up getting 

less money than fee-for-service? But, you know, go ahead. 

Mr. VAN DE WATER. OK. The answer is that the reductions that 

are being discussed are the reduction to the so-called benchmarks. 

What the plans actually get relates both to the benchmarks and to 

what they bid and to other factors, so there is a lot of intervening 

steps, and reductions in the benchmarks don’t translate one-for-one 

into reductions in the plan payments. 

Mr. PALLONE. So can we say that the proposed reductions and 

benchmarks will on the average end up that the plans get less 

money than fee-for-service Medicare? 

Mr. VAN DE WATER. Other things being equal, they will tend to 

reduce what the Medicare Advantage plans get paid, but on average, in 2015 MA plans are still going to get paid, somewhat more 

than what it would cost to cover their enrollees under traditional 

Medicare. 

Mr. PALLONE. All right. Thank you. 

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

the vice chairman of the subcommittee, Dr. Burgess, 5 minutes for 

questions. 

Mr. BURGESS. Thank you, Mr. Chairman. I would like to address 

this to Dr. Lew and Mr. Giese. I mean you heard the ranking member’s question to Dr. Van de Water about the issue of quality between Medicare Advantage and traditional Medicare. Can you offer 

us your perspectives on that? Is there a difference in your estimation on the difference between the quality of care provided the 

enrollee in traditional Medicare versus Medicare Advantage? Dr. 

Lew, let’s start with you. 

Dr. LEW. Yes. Thank you for that question. Absolutely I can attest to that, that the quality of care delivered in a coordinated care 

model is far superior to a fragmented fee-for-service system because you have got the whole continuum of care. Again, as I mentioned, the home visits coordinated with inpatient, outpatient visits, palliative care and disease management. It is a team approach 

where you have got providers, nurses, pharmacists, social workers 

taking care of patients across the continuum. 

There was a mention about home care. Home care absolutely is 

an essential piece of this. You take out home care; that leaves a 

gap in our system. You know, it is not an up-coding situation. It 

is a situation where we do actually recognize what could be admission drivers. We look for areas where a patient, perhaps he would 

be at a fall risk. So there is a lot of information gathered at a home 

visit. But absolutely, quality measures, there is no question. We 

can reduce bed days, we reduce lengths of stay, we reduce costs, 

we get better outcomes and obviously patient satisfaction, and that 

is why members are wanting to migrate to Medicare Advantage. 

Mr. BURGESS. Thank you. 

Mr. Giese? 

Mr. GIESE. Thank you. There are studies out there that show 

that the quality in fee-for-service is lower than in MA on average, 

in fact, a number of studies. But going beyond that, think about 

your parents and if they are sick. They want to be taken care of. 

These people who sign up for Medicare Advantage plans are so 

happy that they are taken care of. They are called by the plan to 

say, did you take your prescription? Did you get a checkup? And 

the people love this. It is so important to these people who signed 

up for these plans. 

Mr. BURGESS. Have there been any efforts to identify—you know, 

we talk on this committee a lot about readmission rates for patients with certain diagnoses. Is there any evidence to point to, say, 

the readmission rate for someone who is hospitalized with congestive heart failure that is partly controlled, that is hospitalized, gets 

toned up, gets sent home? Do they do better or worse on Medicare 

Advantage? 

Mr. GIESE. Readmission rates are lower in Medicare Advantage. 

There have been some studies that show that. 

Mr. BURGESS. Well, let me ask you a question and then because 

part of this is we overpay Medicare Advantage. But you have just 

identified one of the larger cost drivers and you say that is less 

with Medicare Advantage. So how can it be? A program that costs 

more is actually costing less? It is paradoxical, isn’t it? 

91 

Mr. GIESE. Well, all of the—— 

Mr. BURGESS. It is a trick question, Mr. Giese. I am sorry. I 

couldn’t help myself. Dealing with the Congressional Budget Office 

all the time—— 

Mr. GIESE. All of the so-called overpayments to Medicare go directly to beneficiaries. The rules for bids and the way the bids 

work, everything goes back to the beneficiary. 

Mr. BURGESS. And I thank you for that. I did just want to point 

out we deal with the tyranny of the Congressional Budget Office 

all the time and it is bipartisan. Both sides of the dais feel the tyranny of the Congressional Budget Office. 

Mr. Little, I just have to ask you a question. 

Mr. LITTLE. Yes, sir. 

Mr. BURGESS. Your written testimony you have provided you said 

you were a small business owner? 

Mr. LITTLE. Yes, sir. 

Mr. BURGESS. So were you self-employed? 

Mr. LITTLE. Yes, sir. 

Mr. BURGESS. So being self-employed, you know of course you 

paid your taxes, your payroll taxes? 

Mr. LITTLE. Yes, sir. 

Mr. BURGESS. And for Medicare Part A, what was the payroll tax 

that you paid during most of your years? 

Mr. LITTLE. Well, nobody in my organization was that old at that 

time. 

Mr. BURGESS. Well, but I mean as you worked, in your working 

years you pay Social Security and Medicare—— 

Mr. LITTLE. Oh, yes. 

Mr. BURGESS [continuing]. Every paycheck, right? 

Mr. LITTLE. Oh, yes, sir. 

Mr. BURGESS. Do you remember what the percentage was that 

you paid for Medicare? 

Mr. LITTLE. The FICA was 6.2. The Medicare was—I don’t know. 

Mr. BURGESS. 1.3, I have it on good authority. It is said it is 1.3 

so let’s stipulate that that is correct. But you were a small business 

owner so for yourself you paid both the employer and the employee 

contribution, is that correct? 

Mr. LITTLE. Yes, sir. 

Mr. BURGESS. So you paid 2.6% of your earnings throughout your 

lifetime. So let me just ask you. Do you feel that what you are receiving now and Medicare is an entitlement or is that something 

for which you have paid? 

Mr. LITTLE. Oh, I think it is something I have earned. 

Mr. BURGESS. Yes, exactly. Exactly so. And I just wanted to 

make that point. It is then incumbent upon us to make sure you 

get the very best of what is available, and in your case, it sounds 

like that would be Medicare Advantage. 

I have gone over time. I will yield back. 

Mr. PITTS. All right. The chair thanks the gentleman. I now recognize the gentleman, Mr. Green, 5 minutes for questions. 

Mr. GREEN. Thank you, Mr. Chairman. 

CMS proposed to disallow the use of the home assessment diagnoses unless the beneficiary received appropriate follow-up care as 

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lowed to use beneficiary diagnosis information obtained during 

home assessment visits to increase their risk adjustment payment. 

Basically what happened is that the plans were providing assessments for beneficiaries finding that there were certain diagnoses 

and using that information for increased payment. 

But this is important in that plans were not following up and 

providing the services the patient required as a result of that diagnosis. So the plans get more money and the patient doesn’t receive 

anything. This seems like it is a scam on tax dollars. Just so we 

are clear, can you please explain exactly what CMS has proposed? 

Mr. VAN DE WATER. Yes, sir. I think you actually provided a very 

good summary yourself. All I would add is that what CMS is proposing to do is not an anyway suggesting that these home assessment visits cannot be helpful or useful, but as you say, it is important that if a home assessment visit takes place and a condition is 

found, that the appropriate follow-up is provided. CMS is not saying that diagnoses identified during home visits are never going to 

be considered but simply they do have to be recognized by the subsequent encounter with a doctor or health professional to make 

sure that the appropriate follow-up is indeed taking place. 

Mr. GREEN. It seems like if they are getting paid for that assessment of that illness, they should be actually treating that patient—— 

Mr. VAN DE WATER. Exactly. 

Mr. GREEN [continuing]. Instead of just building up their payment. 

What is your take on this policy? Is it reasonable to require a 

plan if they wish to receive higher payments with identifying a diagnosis to require they provide that patient with those services? 

Mr. VAN DE WATER. I am not sure we need to make the requirement but we certainly shouldn’t allow plans to get the higher payments for the diagnoses if they are not followed up on. 

Mr. GREEN. In other words, that is a cost savings we could do. 

But we hear about in Medicare is overpayment if they are not receiving the services that they are actually being paid for. 

Mr. VAN DE WATER. Yes. That is precisely what CMS has tried 

to do in the proposed policy. 

Mr. GREEN. Medicare Advantage overpayment often hurt beneficiaries and Medicare in the long run. Ms. Stein, I know that you 

have been a strong advocate for strengthening Medicare and ensuring it remains secure in the long run. That is why I have concerns 

about continuing to overpay Medicare Advantage. First, Medicare 

Part B premiums are based on program spending, so the extent 

Medicare is paying too much, it drives the beneficiary premiums 

up, isn’t that right? 

Ms. STEIN. That is exactly correct. The overpayments to the 

Medicare Advantage program are a problem not only for Medicare 

Advantage enrollees but for all Medicare beneficiaries because 

their Part B premiums increase and of course taxpayers pay more 

for Medicare as a whole. 

Mr. GREEN. We know that most beneficiaries have modest incomes, fixed incomes. They don’t have a lot of disposable income to 

pay extra to manage care. How are beneficiaries affected by unjustified overpayments to private insurance companies while the 

93 

minority who are enrolled in plans might see some additional benefits but how the vast majority of Medicare beneficiaries are affected? It seems like if you are raising premiums for—and I will 

take a number out of the air—70% of the folks in my district, last 

numbers I saw, received regular Medicare, about 30% do Medicare 

Advantage. So you raise the premiums for 70% to provide some additional benefit to the 30%. 

Ms. STEIN. That is correct. And I have to even question the additional benefits. I mean what were mentioned were vision, which is 

usually some help with some eyeglasses, not very much, and preventive services, which are now zero based in Medicare as a result 

of the Affordable Care Act. And I have not seen a great deal of actual coordination. When there is true coordination, I applaud it, 

but very often, we have as much siloing of care in Medicare Advantage as we have in traditional Medicare. It is costing everybody 

more, even the vast majority who don’t choose Medicare Advantage 

but stay in traditional Medicare. 

Mr. GREEN. Well, I only have a few seconds left and I have heard 

some folks argue that we can’t take away access payments to plans 

and put them on parity with fee-for-service because some beneficiaries are low-income, rely on these plans for additional benefits. 

And they do. I know Medicare Advantage offers other things, but 

the problem is plans can change their benefits and cost-sharing 

from year to year. Just because a low-income person has a plan 

that would reduce cost-sharing today, that plan doesn’t necessarily 

have to offer that extra benefit over that year. 

Ms. STEIN. That is right. The plans can change the benefits from 

year to year so long as they are actuarially equivalent to traditional Medicare. 

And I just want to say CMS did do a study in 2012 that showed 

about low-income people, people with high-risk needs and health 

issues disproportionately disenroll from Medicare as they are dealing with those issues across the country. 

I have no skin in this game. My entire career is just representing 

mostly low- and moderate-income Medicare beneficiaries and protecting Medicare. That is all I care about here and getting access 

to care. And I think the Medicare Advantage plan is providing way 

too much money for way too little uniform value and it is hurting 

the Medicare program and most Medicare beneficiaries. I say that 

as an advocate, as a cancer survivor, and as the daughter of a 

woman who is just going through an extraordinary neurosurgery 

that was available to her because she was in traditional Medicare. 

I can’t understand why it would cost Mr. Little $100,000 and I 

hope he will call my office if we can ever help him. We don’t charge 

for our services. 

Mr. GREEN. OK. Thank you, Mr. Chairman. I know I am over my 

time but I thank all of our witnesses for being here. 

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

the gentlelady from North Carolina, Mrs. Ellmers, 5 minutes for 

questions. 

Mrs. ELLMERS. Thank you, Mr. Chairman, and thank you to our 

panel for being here today. 

I just want to start off by associating myself with some of the 

comments, Dr. Lew, you said our seniors enjoy their Medicare AdVerDate Nov 24 2008 11:20 Sep 30, 2014 Jkt 037690 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-127 CHRIS
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vantage plans, and it is so important that we work in Congress to 

protect them from these large cuts that will negatively affect 

476,000 North Carolina seniors that I have the incredible honor to 

represent. 

I am very concerned about this issue because I do believe it is 

a choice that our seniors are able to make. I think that our seniors 

are in jeopardy when they cannot make choices for themselves. Mr. 

Little has made a choice of what it is that he would like to see for 

his coverage, and I don’t understand why we would consider jeopardizing that ability. When something works for someone, they 

should keep it. Isn’t that what our President said? If you like your 

healthcare plan, you should be able to keep it. Yet, now we are saying no, as a matter of fact, you can’t. 

And, Dr. Lew, thank you for your comments about patients in 

the home-health setting. You know, our seniors want to take care 

of themselves. Our seniors want to be able to be independent, and 

if they are going to do a better job recovering from surgery or sickness, illness at home, I think that is where they need to be. I think 

these are all the things that are jeopardizing our system. 

And to the point that Dr. Burgess was making earlier about savings in one part of Medicare only to spend more money in another, 

if we are helping to keep seniors out of the hospital or the inpatient 

setting, that is a dramatic savings within Medicare. So it only 

makes sense to me that we would continue to advocate another 

program, or Medicare Advantage would help seniors be able to do 

that. You know, keeping people out of the hospital is the best way 

we can keep people healthy and safe in this country. 

Dr. Lew, as a physician, do you believe seniors in rural areas— 

I have a large rural area in my district. How do you feel about seniors in the rural setting? How do you feel that they respond to the 

higher premiums or potentially no Medicare Advantage offered? I 

mean, how will that affect them? 

Dr. LEW. Well, if Medicare Advantage plans pull out of certain 

markets, that will certainly leave seniors very vulnerable. You 

know, there are some parts of certain States that we do business 

in where there are very few Medicare Advantage plans. In fact, recently, one plan pulled out of one of these States where we do business and that left one dominant player, which is very vulnerable, 

because after that one player pulls out, the seniors are going to be 

left without physicians and without a network. But hopefully that 

won’t happen. 

And, to your point about seniors liking choice and having choice, 

and having the better outcomes on the back end, that is all a result 

of what we have built, this coordinated-care model and what I consider an investment, not an overpayment, but an investment into 

this model that we have shown has worked that we are threatening 

now to jeopardize by cuts. That is what I am concerned about because that is going to impact the physicians and the seniors. 

Mrs. ELLMERS. Absolutely. And, there again, to me it is a matter 

of common sense. I struggled with the idea that the Obama Administration and that CMS would choose to hit something that is working so well as Medicare Advantage when we have numerous programs that don’t work at the federal level. As a fiscally responsible 

95 

individual representing my constituents, this is simply not the 

place that we should go for savings. There are many others. 

And again, Mr. Little, I just want to thank you on behalf of my 

constituents, my seniors for coming forward and sharing your stories and your experience with the healthcare issues that you had 

to deal with, with heart disease and cancer, because that is just so 

important. Your recovery and your ability to recover on your own 

terms probably had a lot to do with the Medicare Advantage plan 

that you chose. 

Mr. LITTLE. Yes, it did. And one thing I would like to interject 

that I didn’t before, I have noticed it because I have been with the 

Medicare Advantage plan for 5 years. The costs are kept down 

mainly because of what they pay the hospitals, the physicians. 

Mrs. ELLMERS. Yes. 

Mr. LITTLE. I have noticed my checkup this year was $300. My 

doctor—— 

Mrs. ELLMERS. Yes. 

Mr. LITTLE [continuing]. Got $74. There it is. 

Mrs. ELLMERS. Yes. 

Mr. LITTLE. There is your savings. It is not costing the government any extra money. They are negotiating, but of course that is 

why—— 

Mrs. ELLMERS. That is right. 

Mr. LITTLE [continuing]. Several of the Medicare Advantage 

plans dropped out because they couldn’t get down—— 

Mrs. ELLMERS. Yes. 

Mr. LITTLE [continuing]. To that price. 

Mrs. ELLMERS. Yes. 

Mr. LITTLE. And also with every claim that I do, and they send 

me what I did, they also send a letter if you see any fraud or anything that was done that wasn’t really done, please let us know immediately. So they self-govern themselves and I think that is how 

they are keeping the cost down. 

Mrs. ELLMERS. Well, thank you again for being such a great advocate on this issue. We truly appreciate it and my constituents 

thank you. 

Mr. LITTLE. You are welcome. 

Mrs. ELLMERS. Mr. Chairman, I would like to submit to the 

record a letter that we sent to Ms. Tavenner from the Doctors Caucus. Members of the Doctors Caucus put it together; I would like 

to submit it for the record. 

Mr. PITTS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mrs. ELLMERS. Thank you, sir, and I yield back the remainder 

of my time. 

Mr. PITTS. The chair thanks the gentlelady and now recognizes 

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

questions. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. 

Ms. Stein, we have heard a lot today about Medicare Advantage 

plan choices and how seniors need to have a lot of choices of different plans, but like you, I believe that the most important choice 

that a senior can have is a choice of a doctor, the ability to access 

96 

your physician or even a hospital where you are familiar with the 

services and you know you will get good care. 

You spoke about Connecticut where you are headquartered and 

where there was a serious problem when Medicare Advantage 

plans abruptly dropped providers from the network leaving beneficiaries, who had selected a plan based on being able to continue 

to see their doctors, in the lurch. To me, this highlights a very serious problem with Medicare Advantage. Plans make these choices 

to contract with a provider and that is a result of really business 

decisions. This is part of the downside of having private insurance 

companies whose main goal it is to make a profit serving vulnerable seniors. What recommendations might you have for how Congress and CMS could better protect seniors that Medicare Advantage plans from such disruption? 

Ms. STEIN. Thank you. I appreciate this opportunity. 

I think that the choice that people want of whatever age is the 

choice of who is going to take care of them and where they are 

going to be taken care of. And traditional Medicare is pretty much 

an open network. You can go around the country. So, for example, 

my mother has just come from western Connecticut to eastern Connecticut to be in a nursing home near me. If she was in a Medicare 

Advantage plan in our State, that wouldn’t be possible. 

So you can go near family, you can choose pretty much all the 

doctors that are providing care, not all but most, and also, as I 

said, Yale New Haven Hospital is no longer in the largest Medicare 

Advantage plan in our State and that is certainly not because of 

quality of care and that is because before these further level playing field of Medicare Advantage to the costs of traditional Medicare. 

One of the things I think is that we should relook at the definition of an adequate network in Medicare Advantage plans and 

make sure that the definition is truly going to meet the needs of 

the people who enroll. We should look to providing enrollees whose 

plans terminate contracts with their doctors, that they must be 

given notice regardless of what the plan thinks of the adequacy of 

the network after that doctor and their hospital is terminated. If 

the physician or local hospitals that this person is known to use 

have been terminated from that plan, they should be given notice 

of that before it is effective. 

We should ensure clear, meaningful differences between the different Medicare Advantage plans that a given sponsor is offering 

because it is very hard for people to know what they are choosing 

very often. We should standardize benefits within plans, as Congress intelligently did with Medicare supplement, Medigap, plans 

many years ago. You can really tell apples to apples and know 

what you are getting. 

I would say finally, perhaps most importantly, we should make 

sure that there is a true even, level playing field in benefits and 

payments to traditional Medicare and Medicare Advantage. If we 

want people to truly have choice, besides of their doctors, between 

Medicare Advantage and traditional Medicare, we should make 

sure that the benefits are available in both. Now, because of the 

Affordable Care Act, we have mostly zero cost preventive services 

in traditional Medicare. We should have the same reimbursement 

97 

structure for those who provide care in traditional Medicare as in 

Medicare Advantage. 

We should offer prescription drug coverage in traditional Medicare because people often go to Medicare Advantage now because 

it is the only one-stop shopping. It is the place where it is simpler. 

You go there, you get your prescriptions usually and your other 

services. So they feel they don’t have that choice. 

Also, it is called Medicare Advantage. People think they have 

some advantage. They think they are getting something on top of 

Medicare. There should be a level playing field between the two operating choices, the two models. 

Mrs. CHRISTENSEN. Well, thank you. And I think some of those, 

especially the adequate network, could be applicable. There is a 

very troubling situation happening in Tennessee, Florida, and 

Texas in dental Medicaid managed care where providers are being 

dropped, and I hope that maybe at some point we can have a hearing on Medicaid managed care as well. 

Thank you for your time. 

Ms. STEIN. It has been a huge issue in our State and we lost almost all our Medicare Plus Choice plans. And now, before these reductions and overpayments are in effect, United Healthcare 

dropped 2,250 physicians and hospitals and other care providers in 

Connecticut. That was a provider for 1 for every 200 Medicare 

beneficiaries in our State. It has been stunning. And I fear this is 

going to be used as an argument for even higher payments to Medicare Advantage when, if we could put that money into traditional 

Medicare, all 50 million Medicare beneficiaries would benefit and 

taxpayers would pay less. 

Mr. PITTS. The chair thanks the gentlelady, recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes for questions. 

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

I recently had a constituent contact me to inform me that her 

Medicare Advantage plan had been canceled and her new plan requires her to pay $600 per month, which is $50 more than her previous plan, with no indication that she will maintain her current 

plan benefits or the doctor she likes. It is my experience that this 

woman, my constituent, is not alone. According to Oliver Wyman 

actuaries, New Jersey, the State I represent, will be one of the 

States hardest hit by these proposed cuts. Approximately 217,000 

New Jerseyans are enrolled in Medicare Advantage and they may 

see a reduction in benefits. 

And, Mr. Little, thank you for being here with us today, and I 

am hoping you can tell us a little more about your experience with 

Medicare Advantage and I imagine it is similar to the experience 

of those in the district I serve who have reached out to me. Would 

you please explain, sir, to the committee why you chose a Medicare 

Advantage plan over traditional Medicare? 

Mr. LITTLE. Well, I go to the gym. 

Mr. LANCE. Yes. My wife tells me I should go more often. 

Mr. LITTLE. Well, you will find it is really a convention of old 

people talking. We shoot the bull more than we exercise to be 

exact. But when I first became of age, 65—— 

Mr. LANCE. Yes, sir. 

98 

Mr. LITTLE [continuing]. All the men that were in the gym and 

stuff say, well, make sure you look at the advantage plan; that is 

what you want to go with. 

Mr. LANCE. Yes, sir. 

Mr. LITTLE. And so I Googled it and, of course, came up with four 

plans that were available. All of them were great. I took Blue Cross 

Blue Shield because I had been with them all my life when I was 

in business in a regular plan. Of course, they dropped it the following year due to financial things. Then, I shifted to Optima and 

then they dropped it the following year. So then I only had 

Humana left. That is the only one left in my place. And they had 

been great. Whatever my GP says, when he found the mitral valve 

going bad in my heart, he immediately sent me next door to the 

cardiologist, and at 6:00 a.m. the next morning they had my heart 

laying on the table fixing it. And of course Norfolk Heart is one of 

the top 10 in the Nation. 

There is never, ever in the last 5 years, between my pulmonary 

and my other physicians, anything about not being able to have the 

best service there is and the one of my choice. And of course for 

the last 12 years since I retired I have kept my same doctor. 

Mr. LANCE. When you had your open-heart surgery, your primary care doctor worked with your specialist to ensure that you received the care you needed. Is that your testimony? 

Mr. LITTLE. Yes, sir. He called right then. He said you need to 

go right now because he heard something. And I went to the cardiologist, which happened to have his office next door, and he picked 

up the phone and he said be at Sentara Heart tomorrow morning 

at 6:00 a.m. So it was fairly quick. 

Mr. LANCE. Thank you. Under traditional Medicare without a 

supplemental policy I think that some senior citizens could face financial difficulty and perhaps even worse than financial difficulty 

due to the unpredictable cost-sharing from unexpected illnesses or 

hospitalization, and that is certainly one of my concerns. 

Dr. Lew, in your testimony you described how Medicare Advantage incentivizes value and coordinating care whereas that is not 

always the case with the fee-for-service Medicare program. Would 

you please elaborate on the importance of coordinated care and 

what this means for our Nation’s senior citizens? 

Dr. LEW. Right. Coordinated care, essentially, is it is a team—— 

Mr. LANCE. Yes. 

Dr. LEW [continuing]. Not just physicians, the whole, you know, 

team of pharmacists and social workers and case managers working along a continuum of care. So it is not just when a patient 

comes into a hospital. It is home, hospital, office. It is throughout 

no matter what type of problem that they have. 

You know, and the other thing I wanted to note is we are not 

a health plan. We are a physician group. 

Mr. LANCE. Yes, sir. 

Dr. LEW. And so we get 85 cents on the dollar that is passed to 

us. So what might look like a level playing field is not when it gets 

down to the physician level, and that is what we are dealing with 

when we are trying to deliver these extra services and provide the 

great care to the seniors. 

99 

Mr. LANCE. Thank you. I think the testimony has been compelling and certainly I hope that Medicare Advantage can continue. 

That is a certainly my perspective based on my representation of 

New Jersey. 

Thank you, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentleman. OK. I guess Mr. 

Guthrie is here. The chair recognizes Mr. Guthrie 5 minutes for 

questions. 

Mr. GUTHRIE. Thank you, Mr. Chairman. Let me move over to 

the microphone so it will be picked up. Thank you, Mr. Chairman. 

I have a question for Dr. Lew. 

Some people have suggested that insurance companies are being 

overpaid for Medicare Advantage and rates should be cut to fee-forservice levels for equity. What do you think the impact would be 

for patients if it was cut to fee-for-service levels? 

Dr. LEW. Well, I think that the investment that was made has 

been made over the years to build this model, which I think now 

we are seeing the results of and the seniors like it and that is why 

they are migrating over. I think that was a smart investment. 

Now that we are facing cuts, which are really starting to roll in 

right now—just January of this year I see it happening with our 

company—you know, it is going to impact physician payments. It 

will impact programs and services that we are able to provide to 

seniors. And as these cuts continue throughout ’14 and ’15, I think 

that is just going to get worse. 

Mr. GUTHRIE. And how long have you cared for seniors with 

Medicare Advantage plans and what do you think they like the 

most about being in Medicare—— 

Dr. LEW. I am sorry. I didn’t hear that first question. 

Mr. GUTHRIE. How long have you cared for seniors in Medicare 

Advantage plans and what do you think they like the most about 

being in Medicare Advantage? 

Dr. LEW. Our company has been taken care of Medicare Advantage patients for 20 years and, you know, what I think the seniors 

like is, again, the coordinating care that it is not just the primary 

care and the specialist and the case manager or the touches with 

member services. They like that comprehensive treatment. And obviously we had given more benefits, too. I mean we provide transportation and a lot of other extra services. 

Mr. GUTHRIE. OK. Thanks. 

Mr. Giese, can you explain what types of choices plans face with 

the projected cuts under the ACA, what kind of choices will the 

plans have under these projected cuts? 

Mr. GIESE. Plans have a bunch of levers that they have at their 

disposal to try to ward off these cuts. Those changes or these adjustments include increases in benefits, increases in premiums but 

of course CMS limits the amount of premiums and benefits they 

can change in a given year. 

They also can try to incorporate more care management programs, but that sometimes is a leap of faith because in their pricing, if they assume a certain level of care management and don’t 

achieve it, it could lead to not successful results. 

100 

Plans could exit, they could change their service area, they could 

limit their network, making it a stronger network with better physicians, more quality care that would help lower their costs as well. 

Mr. GUTHRIE. But less choice for the patient? 

Mr. GIESE. But less choice for their patients. 

Mr. GUTHRIE. So if you like your doctor, you might not be able 

to keep that? 

Mr. GIESE. Correct. 

Mr. GUTHRIE. Well, thank you, Mr. Chairman, and I will yield 

back. 

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

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

Mr. SHIMKUS. Thank you, Mr. Chairman. 

I really appreciate your attendance. It is a great debate. I know 

there is some diversity of views. 

[Slide] 

Mr. SHIMKUS. When we talk about budgeting, that is the 2012 

fiscal budget. The red is mandatory spending. You will see Medicare is in there. The blue is discretionary budget, which is what we 

fight and shut down government about. Mandatory spending is 

spending that we can’t control. Medicare is part of that, Medicare, 

Medicaid, Social Security, interest payments on the debt. 

I do this all the time because if you have a national debt, it is 

based upon mandatory spending and Medicare is part of that actuary problem that we have for future generations. 

Do you know why we are having this debate on Medicare Advantage? The President, through ObamaCare, cut $716 billion from 

Medicare. And that is not disputed. Secretary Sibelius was right 

there. She admitted in testimony to me in front of this committee 

that she double counted Medicare cuts. 

So now we have got to find the money. Now we are going after 

seniors and programs that—we should have both. We should have 

traditional fee-for-service for those who want it and we should have 

the Medicare Advantage plans that we promised them. This is the 

same debate we had last week on Medicare D. We were able to stop 

the Administration from hurting seniors and cutting Medicare D 

program. And so that is why these hearings are very, very important. 

And I know it is tough but, you know, facts and numbers are 

hard to dispute. That is why we are here, because of the attack on 

seniors from ObamaCare and the cutting of $716 billion. 

Dr. Lew, only 20% of this cut has been actualized right now. My 

guess is there is still 300 billion more projected to go in the future. 

What do you think for this big portion of seniors, if that is the true 

number, what is the future of Medicare Advantage and Mr. Little 

and the plan and healthcare that he enjoys writing out? 

Dr. LEW. Thank you for the question. As I said, we just are starting to feel the pain of the cuts, 20% or less, and as these cuts roll 

out, it is going to be very difficult and very unlikely that we can 

continue at the same level of programs and payments to physicians. 

Mr. SHIMKUS. So you are saying 300 billion more in cuts, Medicare Advantage might not even be—— 

Dr. LEW. We are looking at double digit cuts—— 

101 

Mr. SHIMKUS [continuing]. Available as a program—— 

Dr. LEW [continuing]. In 2014 plus 2015. I don’t see how what 

we can do can be sustainable. 

Mr. SHIMKUS. All right. Let me go quickly because time runs 

fast. And talk to me about the better healthcare aspects of Medicare Advantage and the diversity of population that you see in 

Medicare Advantage plans. 

Dr. LEW. Better healthcare, you know, we can reduce hospitalizations, readmissions, we get better outcomes, shorter lengths of stay. 

Mr. SHIMKUS. Saving dollars? 

Dr. LEW. Absolutely saving. I mean investment with a great return. In terms of diversity in the markets that we are in, it is all 

demographics. 

Mr. SHIMKUS. Explain that. I mean it is a senior population so 

you are—— 

Dr. LEW. Ethnicities, socioeconomic levels. 

Mr. SHIMKUS. Rich, poor, different ethnic backgrounds. 

Dr. LEW. Different ethnic backgrounds. 

Mr. SHIMKUS. Doesn’t discriminate? 

Dr. LEW. No. No. It is all comers and it is not one particular demographic. 

Mr. SHIMKUS. All right. Let me ask you one more question and 

no one has raised this, but because of the funding problem, waste, 

fraud, and abuse is a big aspect on Medicare spending, right? And 

I have always argued because of fee-for-service, what do we do? We 

chase costs. We don’t manage the illicit theft of the Medicare fund 

at the point of entry. We have to wait until there is 5, 10 years 

of data before we go after the provider. 

You may not know this but I would like for all of the panel to 

look at what is a better plan to address the waste, fraud, and abuse 

that we currently know in Medicare today, especially fee-for-service, and does Medicare Advantage provide a more timely response 

to fraud? And I think, Mr. Little, you kind of mentioned that, did 

you not? 

Mr. LITTLE. Yes, sir. I get a monthly statement from Humana 

showing everything I spent and they caution you on the bottom if 

you have anything that you didn’t have done, please call us immediately. 

Mr. SHIMKUS. Dr. Lew, do you want to jump in? 

Dr. LEW. Yes. I think that is the value of a population-based payment. It is a fixed payment that forces us to manage the care quality, and so we contract with good providers that won’t commit 

fraud, whereas you have got a fragmented fee-for-service that 

incentivizes volume, a lot of potential for fraud. 

Mr. SHIMKUS. I appreciate it. Thank you, Mr. Chairman. 

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

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

Mr. CASSIDY. Thank you, Mr. Chairman. 

I like Medicare Advantage because I think it aligns incentives. 

Ms. Stein, I am sure we can find horror stories with fee-for-service 

Medicare. I am a practicing doctor so I know some of those horror 

stories. But the nice thing I like is effectively it is a capitated payment which physicians are at risk. If they do what I think Dr. 

102 

Lew’s organizations do, they go two-sided risk with someone like 

Humana. So you align incentives and frankly you make money by 

keeping people out of the hospital and improving outcomes. If you 

don’t, you lose them. 

Now, I am struck, Dr. Lew. I am so frustrated I can’t open up 

my email account, but a physician practicing from southern California sent me a document about the dual-eligible project that is 

happening in southern California. And in this dual-eligible project, 

so far, there is not a company which is certified. They all have the 

poor rating for quality and outcomes than the better rating. Now, 

that is not your organizations. This is something specifically set up 

for the dual-eligibles. 

And speaking to some folks like WellMed out of Austin, Texas, 

I gather that they selectively go after the dual-eligibles, that they 

improve outcomes, that they are focusing resources knowing that 

if not, it breaks the bank. They are a two-sided risk and so with 

prospective assignment of patients and so that is where they earn 

the money, keeping that patient out of the hospital and in better 

health. Would you like to comment on that, please? 

Dr. LEW. Yes. Thank you, Mr. Cassidy. That is absolutely correct. 

In our model we don’t make money unless we keep the population 

healthy. It is very simple. 

Mr. CASSIDY. And the patient can change at the end of the year 

and you have quality indicators, so it is not like if you stiff them, 

you lose them, and if you stiff them, you get dinged. 

Dr. LEW. Right. There is transparency in quality metrics and so 

members can choose to opt out or switch to another plan. 

Mr. CASSIDY. So what percent can you give me of a typical plan 

that you might represent would be dual-eligibles? 

Dr. LEW. Health Net. Is that what you mean? An actual plan? 

Mr. CASSIDY. Medicare/Medicaid. Pick a typical plan that if dualeligibles, would they be 10% of an enrollee group or 15%? 

Dr. LEW. OK. I would say out of the senior population it is probably 20%. 

Mr. CASSIDY. OK. Now, a lot of these would be in the special 

needs plans as well? 

Dr. LEW. Special needs plan. 

Mr. CASSIDY. Now, there has been specific cuts targeted to the 

special needs plans. I assume that that could in particular negatively impact folks who are most vulnerable. Is that a correct intuition? 

Dr. LEW. Definitely. I mean these patients, you know, by definition have more medical problems, chronic illness, chronic disease, 

and require a lot more intensive management. And so without an 

infrastructure to take care of them, those are the ones that are 

really going to be hurt. 

Mr. CASSIDY. Well, and my concerns I think in some of the cuts 

they kind of make the home visit a second-class visit. Again, I treat 

lot of cirrhotics, and cirrhotics would typically be in a special needs 

plan. You want to go home and you want to look at their diet and 

you want to look at their cabinet. You want to see where their salt 

is coming from. Cirrhotics are very sensitive to salt overload. I kind 

of like that special needs visit, that home visit which looks at that. 

103 

Again, any comments on the impact of decreasing the emphasis 

upon that? 

Dr. LEW. Yes. Well, that is again at a point—home visits for the 

special needs patient that are bed-bound or home-bound don’t have 

transportation. It is essential that we get to the home and take 

care of them to look at, you know, cirrhotics that may have fluid 

overload and you have got to see what they are eating and what 

their diet is. It is important. You can assess a lot more from a patient in the house than you ever can in the clinic. 

Mr. CASSIDY. I once visited a patient of mine and I saw he had 

a jar of salsa by his bed. I pointed out that salsa has a lot of salt 

and so, oh, really? 

Dr. LEW. Yes. 

Mr. CASSIDY. I figure most men are pretty ignorant when it 

comes to their food and he was a man. 

OK. Now, Ms. Stein, you probably disagree with what I have 

been saying. What are your thoughts? 

Ms. STEIN. My experience tells me, as does the research in report 

by CMS, that people with high medical needs and low income are 

disproportionately disenrolling from Medicare Advantage plans. 

And I don’t think I am here to talk about horror stories. As I said 

earlier, I have no skin in this game. My job is solely to represent 

low-income—— 

Mr. CASSIDY. But in fairness, you are mentioning the person who 

went to Florida and his brain tumor wasn’t covered. 

Ms. STEIN. One of your colleagues referred to my office and, yes, 

there are problems in both models. But the point is that we are 

paying as taxpayers and your colleague earlier put up the pie chart 

which showed all the cost to Medicare. And the CBO says that we 

are spending as taxpayers $150 billion more than we would if these 

individuals were paid for in traditional Medicare. 

Mr. CASSIDY. We can argue about that. I will point out—and I 

will finish with this, Mr. Chairman—that when Medicaid and 

Medicare pay differently, it disaggregates payment. When you 

disaggregate payment, you disaggregate care. So the dual-eligibles 

are a particular interest of mine. That is why I have been looking 

at the demonstration projects in southern California. I am very disappointed that the companies that are running this are being rated 

so poorly, and I do contrast that with some of the folks who are 

doing kind of subcontracting for Humana and others and just seeing that they are getting superior outcomes. I think that kind of 

shows you the benefit of the special needs plans in Medicare Advantage. 

Ms. STEIN. Actually, I suspect that my organization represents 

more dually eligible home health and nursing home organizations 

that anyone in the country. We have about 11,000 open cases right 

now. I just completed a training seminar with all the home health 

agencies in Connecticut and one of the questions was do the rules 

with regard to coverage for home health—these are home health 

agencies—for people in traditional Medicare also apply for people 

in Medicare Advantage plans? And I said of course, yes. And there 

was general agreement in the group of home health agency providers that they have a much greater difficulty getting access to 

104 

coverage admission, particularly from the community for people in 

Medicare Advantage plans—— 

Mr. CASSIDY. We are out of time—— 

Ms. STEIN [continuing]. And earlier—— 

Mr. CASSIDY [continuing]. But let me just say the nice thing 

about it is that if the beneficiary doesn’t like the MA plan, they can 

change the next year. And that is the wonderful thing about markets. We have to yield back. I am sorry. 

Mr. PITTS. The chair thanks the gentleman. 

Ms. STEIN. That is only helpful if the person can survive the year 

and that often doesn’t happen. 

Mr. PITTS. The gentleman’s time is expired. 

The chair recognizes the gentleman from New York, Mr. Engel, 

5 minutes for questions. 

Mr. ENGEL. Thank you very much, Mr. Chairman and Mr. 

Pallone. Thank you for holding today’s hearing. 

Let me try to put some things in perspective here. In 2009, prior 

to the passage of the Affordable Care Act, the rates paid to Medicare Advantage plans exceeded that of traditional Medicare by approximately 18%. The Affordable Care Act required changes to 

Medicare Advantage payment rates to better align them with the 

costs associated with traditional Medicare. These changes were estimated by the Congressional Budget Office to save over $135 billion over 10 years, something that I think my Republican friends 

would love. The ACA did not make any cuts to the benefits guaranteed to all Americans over the age of 65, whether or not they are 

in traditional Medicare or Medicare Advantage. 

So I think it is worth noting that while Republicans are aghast 

at this Administration that is moving forward and implementing 

the provider payment cuts included in the Affordable Care Act, my 

Republican friends included and voted in support of these very 

same provider payment cuts and their budget proposals for the last 

several years. So to act horrified about the changes that are being 

made to Medicare Advantage now after voting to support them for 

years strikes me as being disingenuous. 

I know in the past there have been concerns about Medicare Advantage plans cherry picking and sticking to enroll the healthiest 

of seniors leaving sicker beneficiaries enrolled in traditional Medicare. Ms. Stein, in your written testimony you mentioned a 2012 

report from CMS that found disenrollment by individuals from 

Medicare Advantage plans back to traditional Medicare—and I am 

going to quote what you wrote—‘‘continues to occur disproportionately among high-cost beneficiaries, raising concerns about care experiences among sicker enrollees and increased costs to Medicare.’’ 

So let me ask you, given your organization often assists patients 

when they have issues with the Medicare program, can you elaborate on some of the challenges sicker beneficiaries sometimes have 

with their Medicare Advantage plans? 

Ms. STEIN. Yes, sir. Thank you very much. 

As Dr. Van de Water said a little earlier, there isn’t a lot of data 

about actual healthcare outcomes, but we do know about 

disenrollment patterns, and you just expressed one of them, which 

is that people at risk, low-income and people who are ill, tend to 

disenroll from Medicare Advantage plans. And that is because they 

105 

have much more difficulty in accessing a variety of specialists, different hospitals where they might get the treatment they want, 

being able to move around the country to be near their families because there are network limitations, and a variety of other problems. 

And we very, very often get calls from people who think that because the program itself is called Medicare Advantage, that they 

have got something on top of their Medicare. And when they find 

that they are ill and they need to go see a specialist and the doctor 

isn’t in their network, they are terribly confused and didn’t understand that when they enrolled initially. 

And while I don’t think that Medicare Advantage plans are purposely closing their doors to people with particular conditions, we 

do know that of the 2,250 doctors and hospitals that were terminated in Connecticut alone, a very small State, this year by an MA 

plan, a lot of specialists who provide care for long-term illnesses, 

for instance, nephrologists were on the termination list and particularly in areas of low-income in Bridgeport and other areas in 

our State leading to significant problems for people who are ill with 

chronic conditions in MA plans. 

Mr. ENGEL. Well, thank you. My home State of New York, which 

is of course right next to Connecticut, we have countless doctors, 

hospitals, and health insurance plans that have always made it 

their mission to provide quality care to all New Yorkers regardless 

of whether or not their patients have private insurance, Medicaid, 

Medicare, or pay for their healthcare costs out of their own pockets. 

And we also have several Medicare Advantage plans which focus 

on providing Medicare coverage for the dual-eligible and low-income population in particular, often with more than half of their 

plan participants eligible for Medicare and Medicaid or receiving a 

low-income subsidy. Yet an overwhelming number of these plans 

have found it challenging to achieve the four stars needed to earn 

a bonus in 2015 despite having scored high on improvement measures. 

The let me again ask you, Ms. Stein or Mr. Van de Water, how 

can we better incentivize Medicare Advantage plans to take on 

more challenging beneficiaries so that these patients enjoy the 

same access to high-quality plans and choices available to 

healthier, more well-off beneficiaries? 

Mr. VAN DE WATER. Well, I think the improved risk adjustment, 

which we have talked about this morning, is actually one of those 

ways. What we want to do is make sure that health plans are encouraged to attract customers through providing better quality 

service and not to make money through attracting healthier beneficiaries. So while this has been, you know, criticized on the one 

hand, actually I think it is a very positive step. 

Mr. ENGEL. Thank you. Thank you, Mr. Chairman. 

Ms. STEIN. I also suggest that—— 

Mr. PITTS. The chair thanks the gentleman. 

Ms. STEIN [continuing]. I think it was a MedPAC study in March 

of 2013 that showed that about 20% of dual-eligible special MA 

plans did score well on the star model rating, and I think that we 

should look at what they are doing and encourage the other plans 

106 

to do that because apparently it is possible to score well on that 

rating. 

Mr. PITTS. The gentleman’s time is expired. 

Mr. ENGEL. Thank you. 

Mr. PITTS. The chair recognizes the gentleman from Virginia, Mr. 

Griffith, 5 minutes for questions. 

Mr. GRIFFITH. Thank you, Mr. Chairman, I would say to you all, 

and appreciate you all being here. I would say that my 83-year-old 

mother likes her Medicare Advantage plan. She has had to pay a 

little bit more for it than she had in some of the previous years. 

And even though we had Secretary Sebelius here April of last year 

saying that the plans were costing less nationwide, that hasn’t 

been my mother’s experience. 

I surveyed, and it was a very small group of constituents in my 

district that responded, but they responded that theirs were either 

staying the same or going up. So it does appear that there are 

some increases. Has that been your experience as well, Mr. Little? 

Mr. LITTLE. They didn’t increase the base but I have noticed this 

year that I am a paying 25% more for my prescriptions. 

Mr. GRIFFITH. OK. I understand that. Mr. Giese, you have been 

kind enough. I am just wondering if there is something we haven’t 

touched on? I have got some questions for Dr. Lew; I don’t have 

any questions for you, but I thought maybe there was something 

that you have been sitting here that you wanted to say that you 

haven’t had an opportunity to get out and I am going to give you 

that opportunity. 

Mr. GIESE. No, not really. 

Mr. GRIFFITH. All right. I appreciate that. You know, we sometimes have folks here and you have a lot of very good witnesses 

and then somebody, because of the way the flow of the discussion 

is going, they get left out and I always hate to see that because 

I know that your time is just as valuable as everybody else’s. So 

I do appreciate that. 

Mr. GIESE. A lot of people have read the report, I can tell, and 

have quoted it and so—— 

Mr. GRIFFITH. Very good. Dr. Lew, according to the CBO, the ACA cut more than $300 billion from Medicare Advantage programs to spend on new government programs that weren’t necessarily for seniors. What types of 

important health benefits do you think that the MA plans help provide the seniors that would have to be cut if the proposed cuts 

occur? 

Dr. LEW. Well, we have to look at what the investment from 

prior years did into building up the model—— 

Mr. GRIFFITH. Yes. 

Dr. LEW [continuing]. The coordinator care model and all the additional benefits that the seniors get. And we would have to look 

at how can we even sustain that with the 10% cuts over the next 

2 years? So you are looking at jeopardizing programs, reduced payments to our physicians, and subsequently, it could impact care to 

the seniors. 

Mr. GRIFFITH. Now, I don’t know anything about the Connecticut 

situation, but with those 2,200 some healthcare providers that 

were eliminated from an MA plan there, is it at least reasonable 

107 

to assume that maybe they couldn’t afford to pay those doctors the 

rates that they previously were paying and that maybe one of the 

reasons—I know it has got to be more complicated than that—but 

could that be one of the reasons why? 

Dr. LEW. That is likely one of the reasons, sure. 

Mr. GRIFFITH. Yes. In a recent letter, more than 140 physician 

groups called on Medicare officials to hold MA rates flat. In the letter they said, ‘‘cutting Medicare Advantage year after year will result in deterioration of the care coordination infrastructure and 

seniors will see a deterioration of benefits, and we are worried we 

will ultimately move back into fragmented fee-for-service care delivery models. This would be a bad outcome for seniors and a step 

backward on the healthcare delivery system.’’ You have been saying the same thing—— 

Dr. LEW. Saying exactly that same thing, yes. 

Mr. GRIFFITH. And can you elaborate on that some? 

Dr. LEW. Yes. Well, I think that rather than going backwards is 

we need to use the platform that we have built to build more, to 

build more coordinated care. And even some of the newer models 

within fee-for-service such as ACOs, medical homes, you know, how 

can we take all that we have learned from the Medicare Advantage 

coordinated care model, how can we use that to build the newer 

models that we are trying to do in fee-for-service? 

But this impacts all of the healthcare delivery system. It is not 

just Medicare Advantage. It is care for everybody in the country. 

And so, you know, if we want to really transform the delivery system, we don’t want to touch Medicare Advantage and all that we 

have built. 

Mr. GRIFFITH. All right. I appreciate that very much. 

Thank you all again, and, Mr. Chairman, I yield back. 

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

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

for questions. 

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

I want to point out that there are a lot of things going on at the 

same time, additional subcommittee and another committee that I 

am involved with, so I haven’t been here the full time. 

But, Mr. Chairman, I would like to ask unanimous consent to insert my opening statement in the record. 

Mr. PITTS. Without objection, so ordered. 

[The prepared statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

The topic of today’s hearing started out as a look at Medicare Advantage. But now 

we are also considering a hodge podge of GOP bills that do not improve the Medicare Advantage program. I will return to those bills, but first I want to focus on 

the state of the Medicare Advantage program itself. 

In the five years since the enactment of the Affordable Care Act, the Obama Administration has accomplished what the Republicans couldn’t accomplish in the 12 

preceding years—even with tens of billions of overpayments that drained the Medicare Trust Fund. 

As a result of the ACA, the Medicare Advantage program is stronger than ever. 

Enrollment is at an all-time high and growing, premiums have declined, and benefits have improved along with the health of the Medicare Trust fund—while we have 

reduced overpayments and improved efficiency. 

Chicken Little, the sky is NOT falling. 

108 

Mr. Chairman, I want to put a Democratic Staff memo into the record that details 

this history of exaggerated claims by some in the industry and critics of the ACA. 

Since the ACA was enacted, premiums are down by 10% and enrollment is up by 

30%. Since CMS released its 2015 payment notice, independent analysts and the financial markets have expressed an optimistic view of Medicare Advantage plans. Insurance company stocks have risen rapidly and Medicare Advantage is poised for 

growth, even as we gradually reduce the overpayments they have received for years. 

Why did the ACA address Medicare Advantage over-payments? At the time, Medicare was paying on average $800 more per year for beneficiaries enrolled in private 

plans. Those excess payments drained the Trust Fund and drove up costs for all of 

Medicare. 

Even today, the overpayments are not yet completely phased out, and this year 

alone Medicare is paying on average 106% more than for care in Medicare Advantage. And as a result, ALL beneficiaries pay higher Part B premium costs. 

Seniors also didn’t have a lot of confidence in the Medicare Advantage program 

before the ACA. Too many plan choices made picking one confusing. Differences 

among plans—on quality or value—were too difficult to discern. Consumer confidence was not strong as patients had no guarantee plans were even spending a 

minimum amount of their premiums on medical care. 

The ACA and the Obama Administration addressed that situation too. 

We need Medicare to be solvent for beneficiaries today and in the future. That’s 

what the ACA did, and the Administration should be staying the course to improve 

quality and value. 

Some of the bills considered today turn back the clock on Medicare Advantage. 

The two tax bills would encourage healthier and wealthier people to switch to 

high-deductible health plans for tax sheltering purposes. 

Another bill would bar CMS from disapproving private insurance company marketing material—no matter how misleading, incomplete, or biased. A fourth bill 

would reinstate the second open enrollment period for Medicare Advantage—which 

was eliminated because it caused confusion for beneficiaries. And finally one of the 

bills eliminates the ACA’s cost sharing reductions, which provide critical protections 

for lower income Americans, with the vague goal of giving those funds to Medicare 

Advantage plans. 

All of these bills have significant problems and I cannot support them as drafted. 

I hope today’s hearing takes an honest look at the healthy state of the Medicare 

Advantage program. Demonizing the Affordable Care Act and falsely claiming that 

the sky is falling is not a productive use of our time. 

Mr. WAXMAN. And there is an awful lot of fear-mongering going 

on about Medicare Advantage program and it is not based on the 

facts. The Democratic staff released a memo this morning. The first 

one is that independent analysts and the financial markets do not 

agree with the industry’s dire claims about the future of Medicare 

Advantage. And then the second point is that this scare campaign 

is not the first time the industry has cried wolf about commonsense 

reforms being flat wrong. The memo looks at the facts, not anecdotes or claims by industry-backed groups. 

And here are the facts we point out: Since the ACA was enacted, 

Medicare Advantage premiums are down almost 10% and enrollment is up 30%. After CMS released its payment notice and the industry claimed the sky was falling, independent experts examine 

the issue and found that the industry was wrong. They predict the 

future is bright for Medicare Advantage, and as a result, insurer 

stock rises have risen, not fallen, since the CMS announcement. 

And this is not the first time the industry has cried wolf on 

Medicare Advantage or other commonsense reforms. They said that 

the ACA would destroy Medicare Advantage but it is stronger than 

ever. They said the requirement that they pay back rebates if they 

spend more than 20% of premiums on profits and overhead would 

put patients at risk and it did not. Instead, it has resulted in more 

than $1.5 billion in rebates and $5 billion in lower premiums. 

109 

Mr. Chairman, I would like to ask unanimous consent to insert 

the memo I referred to in the record. 

Mr. PITTS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. WAXMAN. And the next thing I want to ask in the time I 

have is, Mr. Van de Water, we have heard a lot today about the 

Medicare Advantage changes in the Affordable Care Act. These 

changes strengthen the program in my view and help to improve 

the solvency of the Medicare trust fund as well preserving Medicare’s health for a number of years. If you listen to my colleagues 

on the other side of the aisle, you would think these cuts were killing the program, but in fact, this has not been the case. Could you 

comment on what has happened in Medicare Advantage enrollment 

and premiums since the Affordable Care Act was enacted? 

Mr. VAN DE WATER. Yes, Mr. Waxman, I would be happy to. In 

fact, in my prepared statement I cite some of the same figures that 

you have just reiterated about how enrollment has indeed grown 

over the past several years and how premiums have actually gone 

down. And you are absolutely right that the efficiencies in Medicare payments that were enacted as part of the Affordable Care Act 

had indeed made an important contribution to strengthening Medicare’s Hospital Insurance trust fund. My recollection is that the 

CBO estimate is that the Affordable Care Act extended the life of 

the Hospital Insurance trust fund by roughly 8 years. 

Mr. WAXMAN. Well, if the health insurance companies like getting more money and the 30% of beneficiaries who are in these 

plans are generally happy, why not keep overpaying them? 

Mr. VAN DE WATER. Well, one of your colleagues on the other 

side of the aisle showed a chart a few minutes ago showing that, 

you know, Medicare, as we all know, is a substantial part of the 

federal budget and we are concerned about reducing projected large 

deficits. So we—— 

Mr. WAXMAN. Well, that gives us ideas about how we should 

make the elderly pay more for their healthcare costs but they don’t 

want to reduce the cuts of overpayments to these Medicare Advantage plans. 

We have heard a great deal about ObamaCare cuts to Medicare 

Advantage, but didn’t the Republican budget led by Representative 

Paul Ryan include the very same so-called cuts that were in the 

Affordable Care Act? 

Mr. VAN DE WATER. Yes, it did. 

Mr. WAXMAN. I have been in Congress for 40 years. That is why 

I am retiring, among other reasons. And I remember when we first 

made Medicare managed plans available for Medicare reimbursement if the beneficiary chose to go with such plans. And we had 

it less than what the fee-for-service would be because they selected 

out some of the lowest risk people and the fee-for-service were covering the highest risk. We went from a little less than what feefor-service was to way more than the fee-for-service without doubt 

in my opinion as I look at this program. 

Medicare Advantage is important. It serves a very useful purpose 

to beneficiaries free to choose it and many of them are very happy, 

but that is just not a reason to overpay them. 

Thank you, Mr. Chairman. I yield back my time. 

110 

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

the gentleman from Florida, Mr. Bilirakis, 5 minutes for questions. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it very 

much. And I have been going back and forth as well from CMT, 

but this is a very important hearing. 

Mr. Giese, 40 to 45% of my seniors in my district—and I have 

over 100,000 seniors in the Tampa area; I represent an area, the 

12th Congressional District of Florida—on Medicare Advantage, 40 

to 45%. That is higher than the national average. So, they really 

love their plans, and they love the fact that they have all these 

choices. 

I am concerned with some of the changes that CMS is doing to 

their risk model. It seems to me that CMS is ignoring or not factoring in certain chronic conditions when determining their risk 

model. When considering the risk adjustments, CMS seems to ignore or not count patients with certain chronic conditions. What is 

the impact of the 2014 changes to the risk model on sick and frail 

Medicare beneficiaries and particularly to those on the Special 

Needs Plans area? 

Mr. GIESE. Well, changes to the risk model result in reductions 

in payments to plans, which means the plans have to react by increasing benefits to everyone, but in particular to the poor and actually sicker people who pay the cost-sharing. So these people have 

to pay more as a result of changes to the risk adjustment model. 

Mr. BILIRAKIS. Thank you. The next question is for Dr. Lew. In 

the 2015 Advance Notice, CMS eliminated the home health assistance assessments as part of the risk model. As I understand their 

change, CMS would only count the diagnosis identified in a home 

visit if and when it was confirmed in a later in-office doctor’s visit. 

Can you explain the dangers of the payment change related to the 

home-based health assessments, especially for the elderly? 

Dr. LEW. Yes, thank you. As I had mentioned, home visits are 

part of the continuum of care and you take out home care and the 

benefits, it leaves a gap. If you are only going to count a visit or 

a diagnosis obtained at a visit if the patient is followed up in the 

office, a lot of these patients go to the hospital because, you know, 

that is the value of going to the home, early detection, catching 

something as opposed to a 911 phone call and something a lot more 

serious. The patient can be sent to the hospital for care. 

So, you know, to only count a diagnosis where the patient has 

a follow-up visit in the doctor’s office, that is very narrow in scope 

and it really discounts the advantage and the benefits of a home 

visit. 

Mr. BILIRAKIS. Thank you very much. 

Mr. Giese, this question is for you. For all these cuts to Medicare 

Advantage, these plans are dependent on the Star Ratings to survive. However, it seems to me that Special Needs Plans may be disadvantaged because of their unique population. Can you describe 

some of the challenges that Special Needs Plans face in the Star 

Rating program? 

Mr. GIESE. Sure. First of all, a lot of the star ratings are based 

on survey data and sometimes it is hard to get to these people. 

Some of them are homeless, some of them, they don’t know where 

they live. So it is hard to find them in these surveys. So special 

111 

needs plans tend to have lower star ratings because we can’t find 

the people and they don’t respond well to the survey as well. 

Mr. BILIRAKIS. OK. Now, for Dr. Lew and Mr. Giese again, if the 

proposed cuts occur, what kind of benefits would no longer be provided to seniors in your opinion, an example of some of the benefits 

that they might lose if the cuts take place? 

Dr. LEW. Well, from our delivery side, you know, I think you are 

going to jeopardize all of the extra home visits perhaps. I mean 

that would be one example. I mean we have a lot of programs built 

around, again, the continuum of care, visits from pharmacists and 

social workers, which have sufficient costs. And, you know, if we 

are on a budget and our revenue is reduced, that is obviously going 

to jeopardize a lot of our programs. 

Mr. GIESE. Remember that cuts and benefits are not just additional benefits over Part A and B; they are also changes in costsharing. So if the plan has to increase their cost-sharing, that is 

a reduction in benefits. 

Mr. BILIRAKIS. OK. Very good. Thank you very much. I appreciate it. 

I yield back, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentleman. That concludes the 

questions from the Members who are present. There are several 

committee meetings going on so other Members will have questions. We may have follow-up questions. We will submit those to 

you in writing. We ask that you promptly respond. 

And I recognize the ranking member for a UC request. 

Mr. PALLONE. Mr. Chairman, I would just ask unanimous consent to submit for the record some Democratic comments in a letter 

to CMS. 

Mr. PITTS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. PALLONE. Thank you. 

Mr. PITTS. Thank you very much for your testimony. This is a 

very important issue and we appreciate you coming today. 

And I remind Members that they have 10 business days to submit questions for the record. Members should submit their questions by the close of business on Thursday, March 27. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 12:18 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today we examine the future of the popular Medicare Advantage program under 

the president’s health care law. Before this law passed, the president repeatedly 

promised, ‘‘If you like your health care plan, you will be able to keep your health 

care plan, period. Nobody is going to take it away from you, no matter what.’’ Unfortunately, many seniors who like the Medicare Advantage plan they have, are joining 

the millions of Americans who have learned the hard way that this is a promise 

the president cannot keep. 

The president’s health care law raided more than $700 billion from Medicare to 

spend on new government programs that do not improve health care for seniors. 

More than $300 billion of this came from the Medicare Advantage program. These 

cuts threaten the high quality, affordable health coverage that seniors enjoy. As numerous media outlets have already reported, Medicare Advantage plans have been 

forced to reduce seniors’ benefits, increase their premiums, and reduce plan offerings in light of these cuts. Sadly, the situation is only going to get worse as only 

112 

about 20% of the health law’s cuts to Medicare Advantage have already been realized, with significant cuts in the hundreds of millions of dollars still on the horizon. 

According to Medicare data, in 2014 Medicare Advantage enrollment will total approximately 15 million enrollees—roughly 29% of seniors in Medicare. The MA program also enjoys high popularity among seniors, evidenced by CMS’ figures that MA 

enrollment as a percentage of total Medicare enrollment has increased by 173% over 

the past 10 years. 

Medicare Advantage provides millions of seniors better health care than traditional Medicare. MA plans provide seniors a cap against unlimited cost-sharing in 

the case of catastrophic medical event or hospitalization. The plans provide seniors 

coordinated care with medical teams working together, provide disease management 

programs, hotlines to access medical advice, and tools to help better manage chronic 

disease. All of these are benefits that traditional Medicare does not offer its patients. As a result, it is no surprise that studies and clinical research shows that 

seniors with MA plans have lower rates of hospitalization and emergency department utilization. 

Surveys also confirm that seniors are happy with their high quality, affordable 

Medicare Advantage options. Seniors who have MA plans they like should be able 

to keep them—just as the president promised so many times. Today, we will hear 

from witnesses on this important issue, including several of my colleagues who have 

brought forth ideas to improve the MA program and keep the promise to seniors. 

I appreciate their work. 

I want to thank Rep. Dennis Ross for his bill, H.R. 4180, which would permit rollovers from health savings accounts to Medicare Advantage savings accounts. 

I want to thank Rep. Erik Paulsen for his bill, H.R. 4177, which would allow 

Medicare beneficiaries participating in a Medicare Advantage savings account to 

contribute their own money to such an account. 

I want to thank Rep. Keith Rothfus for his bill, H.R. 3392, which would restore 

the Medicare Advantage open enrollment period that existed prior to the health law. 

This will once again allow seniors to try out their newly selected plan from January 

to March and make one switch if they discover the selected plan is not meeting their 

needs. 

I want to thank committee member Rep. Gus Bilirakis for his bill, H.R. 3392, 

which would establish a patient-assignment program in MA and Part D drug plans 

to protect patients who have demonstrated drug-abuse behavior and would help prevent drug diversion. 

I want to thank Rep. Jackie Walorski for her bill, The Advantage of Medicare Advantage for Minorities and Low-Income Seniors Act, which would require the Government Accountability Office to use data reported to the government to produce a 

study showing how the Medicare Advantage program is particularly beneficial to 

participants of lower-income and ethnic or racial minority status. 

I want to thank Rep. Bill Johnson for his bill, H.R. 4196, which would eliminate 

Obamacare’s cost-sharing subsidies and reinvest the savings from that policy in the 

Medicare Advantage program. 

I want to thank Rep. Jeff Denham for his bill, H.R. 4201, which would enable 

Medicare Advantage plans to inform potential enrollees of how Obamacare’s cuts to 

the program may impact their choices of plans. 

I commend all of these members for their contributions in the effort to keep the 

promise to America’s seniors. 

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