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KEEPING THE PROMISE: SITE–OF–SERVICE 

MEDICARE PAYMENT REFORMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MAY 21, 2014 

Serial No. 113–148 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

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, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

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 

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) 

(II) 

(III) 

C O N T E N T S 

Page 

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

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

Prepared statement .......................................................................................... 2 

Hon. Mike Rogers, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 30 

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

New Jersey, opening statement .......................................................................... 30 

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

Texas, opening statement .................................................................................... 32 

Hon. David B. McKinley, a Representative in Congress from the State of 

West Virginia, opening statement ...................................................................... 32 

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

prepared statement .............................................................................................. 198 

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

California, prepared statement ........................................................................... 200 

WITNESSES

Mark E. Miller, Executive Director, Medicare Payment Advisory Commission . 66 

Prepared statement .......................................................................................... 68 

Answers to submitted questions ...................................................................... 201 

Barbara Gage, Fellow, Engelberg Center for Health Care Reform, the Brookings Institution ..................................................................................................... 115 

Prepared statement .......................................................................................... 118 

Answers to submitted questions ...................................................................... 216 

Barry D. Brooks, Chairman, Pharmacy and Therapeutics Committee, the 

U.S. Oncology Network ........................................................................................ 131 

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

Answers to submitted questions ...................................................................... 224 

Reginald W. Coopwood, President and Chief Executive Officer, Regional One 

Health, on Behalf of the American Hospital Association ................................. 146 

Prepared statement .......................................................................................... 148 

Answers to submitted questions ...................................................................... 231 

Steven Landers, President and Chief Executive Officer, Visiting Nurse Association Health Group ........................................................................................... 162 

Prepared statement .......................................................................................... 164 

Answers to submitted questions ...................................................................... 237 

Peter W. Thomas, Principal, Powers, Pyles, Sutter & Verville, P.C., on Behalf 

of the Coaltion to Preserve Rehabilitation ......................................................... 173 

Prepared statement .......................................................................................... 175 

Answers to submitted questions ...................................................................... 240 

SUBMITTED MATERIAL

H.R. 2869, the Medicare Patient Access to Cancer Treatment Act of 2013, 

submitted by Mr. Pitts ......................................................................................... 4 

H.R. 4673, the Bundling and Coordinating Post-Acute Care Act of 2014, 

submitted by Mr. Pitts ......................................................................................... 9 

Letter of May 19, 2014, from Dan Weber, President and Founder, Association 

of Mature American Citizens, to Mr. Pitts and Mr. Pallone, submitted 

by Mr. Pitts ........................................................................................................... 34 

Statement of the American Academy of Family Physicians, dated May 21, 

2014, submitted by Mr. Pitts .............................................................................. 35 

Statement of the American Orthotic and Prosthetic Association, dated May 

21, 2014, submitted by Mr. Pitts ........................................................................ 38 

Page

IV 

Statement of the National Association for Home Care & Hospice, dated May 

21, 2014, submitted by Mr. Pitts ........................................................................ 48 

Statement of the American Society of Nuclear Cardiology, et al., ‘‘Site Neutrality: A Race to the Bottom for Patients with Heart Disease,’’ submitted 

by Mr. Pitts ........................................................................................................... 55 

Statement of the Premier healthcare alliance, dated May 21, 2014, submitted 

by Mr. Pitts ........................................................................................................... 60 

Study Highlights, ‘‘Assessment of Patient Outcomes of Rehabilitative Care 

Provided in Inpatient Rehabilitation Facilities and After Discharge,’’ by 

Joan E. DaVanzo, et al., submitted by Mr. Pallone .......................................... 64 

Statement of Bruce M. Gans, Chair, American Medical Rehabilitation Providers Association, dated May 21, 2014, submitted by Mr. Green .................. 98 

(1) 

KEEPING THE PROMISE: SITE–OF–SERVICE 

MEDICARE PAYMENT REFORMS 

WEDNESDAY, MAY 21, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH

COMMITTEE ON ENERGY AND COMMERCE

Washington, DC. 

The subcommittee met, pursuant to call, at 10:16 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Joe Pitts (chairman of the subcommittee) presiding. 

Members present: Representatives Pitts, Burgess, Shimkus, Rogers, Murphy, Lance, Cassidy, Guthrie, Bilirakis, Ellmers, Pallone, 

Schakowsky, Green, and Barrow. 

Also attending: Representative McKinley. 

Staff present: Clay Alspach, Chief Counsel, Health; Gary Andres, 

Staff Director; Mike Bloomquist, General Counsel; Matt Bravo, 

Professional Staff Member; Leighton Brown, Press Assistant; 

Noelle Clemente, Press Secretary; Brad Grantz, Policy Coordinator, 

Oversight and Investigations; Sydne Harwick, Legislative Clerk; 

Sean Hayes, Deputy Chief Counsel, Oversight and Investigations; 

Robert Horne, Professional Staff Member, Health; Chris Pope, Fellow, Health; Heidi Stirrup, Policy Coordinator, Health; Josh Trent, 

Professional Staff Member, Health; Tom Wilbur, Digital Media Advisor; Ziky Ababiya, Democratic Staff Assistant; Eddie Garcia, 

Democratic Professional Staff Member; Kaycee Glavich, Democratic 

Government Accountability Office Detailee; and Amy Hall, Democratic Senior Professional Staff Member. 

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

recognize himself for an opening statement. 

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

OF PENNSYLVANIA 

Today’s hearing is designed to educate members on a topic that 

has come up repeatedly in recent years: site-neutral payments. In 

two recent reports, MedPAC has addressed the differences in Medicare payment rates across sites of care. MedPAC’s March 2012 report recommended that payment rates for certain evaluation and 

management services be equal, whether these services are provided 

in a hospital outpatient department or in a freestanding physician 

office. 

Currently, hospitals are reimbursed for these services under the 

Hospital Outpatient Prospective Payment System (HOPPS), and 

2 

physicians’ offices are reimbursed under the less generous Physician Fee Schedule. 

In its June 2013 report, MedPAC discussed equalizing payment 

rates for certain services in a hospital outpatient setting to those 

of ambulatory surgery centers (ASCs) and reducing the gap in payment between other services. However, the Commission did not 

make a recommendation on payment changes. These discussions 

bring up a number of important issues as it relates to the role that 

Medicare plays in our health care system. MedPAC has estimated 

that seniors could save hundreds of millions of dollars a year if a 

site-neutral payment system were instituted. 

In addition, MedPAC cites an urgent need to address these 

issues because services have been migrating from physicians’ offices to the usually higher-paid outpatient department setting as 

hospital employment of physicians has increased. 

While stating the benefits of site-neutral payments and postacute care (PAC) reform, MedPAC has also expressed some concern 

that these policy changes could cut access to physician services for 

low-income patients, noting that a stop-loss policy could protect 

such patients by limiting hospitals’ losses of Medicare revenue. 

These policies have arisen as potential pay-fors for SGR reform and 

other health care reforms. As the subcommittee with the largest 

health jurisdiction of any committee in the House, we are charged 

with safeguarding the Medicare program and preserving it for future generations. 

As such, I and Ranking Member Pallone felt it important for the 

members of this subcommittee to hear the pros and cons of potential policies in this space. Two pieces of legislation are also before 

us for consideration today. Representatives Mike Rogers and Doris 

Matsui introduced H.R. 2869, a proposal that would require Medicare to pay for cancer services at the same rate regardless of the 

site of service. In addition, Representative McKinley has authored 

H.R. 4673, a bill that would combine the various post-acute care 

payments into one reimbursement payment or bundle. 

I would like to thank all of our witnesses for being here today 

to educate Members on both sides of the issue. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

Today’s hearing is designed to educate Members on a topic that has come up repeatedly in recent years, site-neutral payments. 

In two recent reports, MedPAC has addressed the differences in Medicare payment rates across sites of care. 

MedPAC’s March 2012 report recommended that payment rates for certain evaluation and management (E&M) services be equal, whether these services are provided in a hospital outpatient department or in a free-standing physician office. 

Currently, hospitals are reimbursed for these services under the Hospital Outpatient Prospective Payment System (HOPPS), and physicians’ offices are reimbursed under the less generous Physician Fee Schedule. 

In its June 2013 report, MedPAC discussed equalizing payment rates for certain 

services in a hospital outpatient setting to those of ambulatory surgery centers 

(ASCs) and reducing the gap in payment between other services. However, the Commission did not make a recommendation on payment changes. 

These discussions bring up a number of important issues as it relates to the role 

that Medicare plays in our health care system. 

MedPAC has estimated that seniors could save hundreds of millions of dollars a 

year if a site neutral payment system were instituted. 

3 

In addition, MedPAC cites an urgent need to address these issues because services have been ‘‘migrating from physicians’ offices to the usually higher-paid outpatient department setting, as hospital employment of physicians has increased.’’ 

While stating the benefits of site neutral payments and Post-Acute Care (PAC) 

reform, MedPAC has also expressed some concern that these policy changes could 

cut access to physician services for low-income patients, noting that a ‘‘stop-loss policy’’ could protect such patients by limiting hospitals’ losses of Medicare revenue. 

These policies have arisen as potential payfors for SGR reform and other health 

care reforms. As the subcommittee with the largest health jurisdiction of any committee in the House, we are charged with safeguarding the Medicare program and 

preserving it for future generations. 

As such, I and Ranking Member Pallone felt it important for the members of this 

subcommittee to hear the pros and cons of potential policies in this space. 

Two pieces of legislation are also before us for consideration today. Reps. Mike 

Rogers and Doris Matsui introduced H.R. 2869, a proposal that would require Medicare to pay for cancer services at the same rate regardless of the site of service. In 

addition, Rep. McKinley has authored H.R. 4673, a bill that would combine the various Post-Acute Care payments into one reimbursement payment or bundle. 

I would like to thank all of our witnesses for being here today to educate Members 

on both sides of the issue. 

[H.R. 2869 and the H.R. 4673 draft follow:] 

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Mr. PITTS. I will yield the remainder of my time to the gentleman from Michigan, Mr. Rogers. 

OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. ROGERS. Thank you, Mr. Chairman, for holding this important hearing on H.R. 2869, the Medicare Cancer Patient Protection 

Act. 

The United States is home to the most effective and successful 

cancer care in the world, creating an environment that has resulted 

in the best cancer survival rates across the globe. However, in the 

last 5 years, a troubling change in the delivery of cancer care has 

begun to emerge, a change that has been directly affecting not just 

the continuing rise in the cost of Medicare but also the ability for 

cancer patients to access treatment. 

Since 2008, community oncology clinics have seen the shift from 

physician office setting to the hospital outpatient department as a 

result of the flawed Medicare payment policies that reimburse hospitals at higher rates than oncology clinics for the exact same service. 

Due to the significant changes in Medicare payment policies, 

physician practices are suffering from serious financial difficulties 

and struggling to keep their doors open. These changes have serious implications on patient access, especially in rural areas, where 

radiation therapy is not always available through local hospitals. 

Patients may be forced to travel long distances to receive care, posing a considerable barrier to care for beneficiaries who require radiation treatment therapy daily for months at a time, and by the 

way, we have examples of those very scenarios. 

Moreover, this shift in setting for cancer treatment poses a 

threat to the solvency of Medicare as hospital consolidation of physician practices is driving up costs for the Medicare program, and 

more importantly, driving up cost for cancer patients themselves. 

Reimbursement should be equal for the same service provided to a 

cancer patient regardless of whether the service is delivered in the 

hospital outpatient department or a physician’s office. 

I look forward to working with my colleagues to ensure the future of community cancer care is preserved, and Mr. Chairman, I 

thank you, and I thank you again for taking up and having this 

discussion on this very important issue, and I would yield back my 

time. 

Mr. PITTS. The Chair thanks the gentleman and now recognize 

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

for an opening statement. 

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

Mr. PALLONE. Thank you, Chairman Pitts, and I am glad to see 

the committee taking interest in issues of post-acute care reform. 

For many years, there has been a lot of discussion about how we 

move our health care system into one of quality and efficiency. In 

fact, if we are going to ensure that Medicare is strong for our NaVerDate Mar 15 2010 16:17 Jan 29, 2015 Jkt 037690 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 F:\113-148 MEDICARE PAY AWAIT TAG LINE\113-148 MEDICARE PAY PDF MADE WAY
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tion’s seniors well into the future, we must diligently evaluate how 

we pay doctors and how we incentivize care. 

MedPAC has been reminding Congress of these issues and the 

need for action in this area for some time. Their work and recommendations should be a useful guide for our efforts, and I thank 

Mr. Miller for being here today to review MedPAC’s perspectives 

on such reforms. 

I also welcome the witnesses on the second panel, who have important perspectives to offer to these topics, and thank you all for 

being here today. 

As you know, the Affordable Care Act recognized the need for reform in the post-acute care (PAC) setting and put in motion a number of initiatives that will build towards PAC reform. Medicare is 

testing a number of payment system reforms such as bundled payments, value-based purchasing and accountable care organizations 

that will inform and help to improve care and outcomes in this 

area. 

We know there is a lot of variation in the quality outcomes and 

costs of PAC around the country. Medicare pays indiscriminately 

for care in the PAC setting. We don’t know if one side of care is 

better than another for a patient with a particular condition. We 

don’t know what combination of services produces better outcomes 

or even what level of services is optimal for a given condition. Medicare spends $62 billion on post-acute care in the fee-forservice setting in 2012. That is a big price tag, so it is critical we 

get a handle on these issues quickly. We can’t improve the accuracy 

and efficiency of care if we don’t know what we are buying, and efforts to decrease waste in the system will fall short of our dual 

goals of care delivery and payment reforms. 

Before we can envision a wholesale redesign of the payment system, however, we need more data. We do not have any common 

and comparable data across providers like skilled nursing facilities, 

home health agencies and others to determine which patients fare 

best in which settings or even what appropriate levels of care are 

for patients of varying acuity. 

So Mr. Chairman, I commend the House Ways and Means and 

the Senate Finance Committees for putting out bipartisan draft 

legislation on that issue to get the discussion started, and I hope 

to engage with these colleagues as policy proposals are further considered and refined, and in fact, I think you would agree, the 

House Energy and Commerce Committee should play a part in that 

conversation as we move forward. 

We also know there are efficiencies and improvements to payment accuracy that must be done and can be done now such as ensuring the current payment system is providing the right incentives for quality care rather than encouraging care delivery that 

maximizes profits. Our committee clearly has a role to play in advancing positive beneficiary-focused reforms related to post-acute 

care for Medicare beneficiaries, and I hope that we can continue 

the bipartisan tone in this area and work to develop solutions in 

the near future. 

Thank you again, Mr. Chairman, and thanks, everyone, for joining us today, and I look forward to continuing to strengthen Medicare for the future. 

32 

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

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

opening statement. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman. Thank you for the recognition, and special acknowledgement to a physician from Texas, 

Dr. Barry Brooks, who has joined us in the committee before. It is 

at this point in the hearing where I usually offer the observation 

that one day it is my hope that we will have arrayed on the witness table five physicians, who will tell us how much economists 

ought to be paid, but until that day, we will go with what we have 

got. We do have doctors on the second panel, and for that, I an extremely grateful. 

So we are coming up on the 50th anniversary of the enactment 

of Medicare, in fact, 49 years ago this summer. The practice of 

medicine has changed a lot since 1965. I used to tease my dad back 

then that they had only had two drugs back then, penicillin and 

cortisone, and they were interchangeable. He didn’t think that was 

very funny either. 

But the practice of medicine has changed, and so has the Medicare benefit, and that is a good thing. Now we are asking themselves if the payment structures must also be modernized so that 

the dollars are spent the way they are intended, that is, efficiently 

and effectively. Payments to doctors’ offices and hospitals are sometimes misaligned with the true cost of care. Sometimes the same 

services are provided to patients at significantly different rates, depending upon location, with no real difference in the quality or the 

outcome. Payments for patient care in inappropriate or less optimal 

settings, of course, can lead to higher long-term costs. 

I think that one of the things on this committee we must be careful about is that we do not create a race to the bottom. It is not 

a question of deciding what is the LD–50 of what doctors can survive on. The lethal dose 50 is 50 percent of what doctors could live 

on. We are not trying to ascertain the figure. The lowest payment 

is not always the most appropriate payment, and we should not 

shy away from paying for better outcomes. 

I would agree with the ranking member of the subcommittee that 

it is important that this committee had an important role to play 

and the jurisdiction of this committee is the appropriate place for 

having these discussions. I know I have done significant work on 

the cost drivers of dual eligibles. It is important for us to guard 

this population by ensuring we are exercising the jurisdiction of 

this committee to improve care in all settings. 

I thank the chairman for the recognition, and I will yield time 

to the gentleman from West Virginia, Mr. McKinley. 

OPENING STATEMENT OF HON. DAVID B. MCKINLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST 

VIRGINIA 

Mr. MCKINLEY. Thank you, Mr. Chairman and Dr. Burgess, for 

holding this hearing on H.R. 4673. 

33 

Alarmists scare seniors by suggesting that cuts to Medicare are 

coming. We hear it all the time, all during the campaigns, all 

through sessions. I am here to say they don’t have to be. 

For the past 2 years, our staff has been working with various 

stakeholders to create a program that would make Medicare more 

efficient and improve health care for seniors without making cuts 

to provider payments. 

The bill before us would do just that. This bill develops a model 

for post-acute care services, which will increase efficiency, encourage more choice and personalize care for patients, and offer significant savings to the program in the process. Estimates by independent experts have determined that this bill could save as much 

as 85 to 100 billion dollars. We are not cutting funding for Medicare. We are encouraging efficiency in services and programs that 

are more patient-centered. 

Similar models have already been developed for primary care 

that has saved 24 percent using efficiency models. By improving 

our efficiency, we will strengthen the Medicare program without 

cuts. 

Some here today have already suggested that we need to study 

this issue further. We have had plenty of studies. In my 4 years 

in Congress this issue has been hanging for 4 years, and we keep 

talking about studying it. It is time we do something about it. It 

is time to paint or get off the ladder. 

Again, thank you, Mr. Chairman, for this opportunity, and I 

yield back my time. 

Mr. PITTS. The Chair thanks the gentleman, and that concludes 

the opening statements. All members’ opening statements will be 

made part of the record. 

We have two panels. Before we do that, I would ask for unanimous consent to include the following statements for today’s hearing record from the AMAC, that’s the Association of Mature American Citizens; from the AAFP, the American Academy of Family 

Physicians; the AOPA, the American Orthotics and Prosthetics Association; from NAHC, the National Association for Home Care and 

Hospice; and a collective cardiology letter on behalf of the ASES, 

the American Society of Echocardiography; the ASNC, the American Society of Nuclear Cardiology; and the CAA, the Cardiology 

Advocacy Alliance; and the Premier Health Care Alliance. Without 

objection, so ordered. 

[The information follows:] 

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Mr. PITTS. Did you have a UC request? 

Mr. PALLONE. Mr. Chairman, I would ask unanimous consent to 

include this A. Dobson/DaVanzo study titled ‘‘Assessment of Patient Outcomes.’’ 

Mr. PITTS. Without objection, so ordered. 

[The information follows:] 

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Mr. PITTS. Dr. Burgess, do you have a UC request? 

Mr. BURGESS. Yes, Mr. Chairman, I ask unanimous consent that 

joint testimony of the American Society for Echocardiology, the 

American Society of Nuclear Cardiology and the Cardiology Advocacy Alliance be submitted for the record. 

Mr. PITTS. Without objection, so ordered. 

We have two panels before us today. On our first panel, we have 

Mr. Mark Miller, Executive Director of the Medicare Payment Advisory Commission. Welcome. Thank you for coming. Your written 

testimony will be made part of the record, and you will be recognized for 5 minutes to summarize. So at this point, the Chair recognizes Mr. Miller for 5 minutes. 

STATEMENT OF MARK E. MILLER, EXECUTIVE DIRECTOR, 

MEDICARE PAYMENT ADVISORY COMMISSION 

Mr. MILLER. Chairman Pitts, Ranking Member Pallone, distinguished members of the committee, thank you for asking the Commission to testify today. 

As you know, Congress created MedPAC to advise it on Medicare 

issues, and today I have been asked to comment on site-neutral 

and other payment reforms for post-acute care in ambulatory settings. 

The Commission’s work in all instances is guided by three principles: to assure that beneficiaries have access to high-quality, coordinated care; to protect the taxpayers’ dollars and to pay providers and plans in a way to accomplish these goals. 

First, some of the problems that we face. Fee-for-service encourages fragmented care because we pay on the basis of location or 

provider rather than the beneficiary’s episodes of needs. Fee-forservice also encourages high volume of service. We know that 

Medicare payment rates send signals, and if they are set too high 

or constructed inconsistently across setting, they can result in patient selection or care patterns that focus on revenue rather than 

patient needs. 

Post-acute care has an additional issue. The clinical guidelines 

regarding when a service is needed are often poorly defined and it 

is hard to know when an episode should begin and when an episode should end. 

With respect to ambulatory care, the last few years of data shows 

that hospitals are aggressively purchasing physician practices, and 

the Commission is concerned that part of the motivation is that 

they can bill for the same service at a higher hospital payment rate 

resulting in more trust fund expenditures and higher out-of-pocket 

for the beneficiary but no change in the service provided. 

So what has the Commission’s guidance been? In the short run, 

in focusing in some instances or in a lot of instances on fee-forservice, the Commission would set all fee-for-service payment rates 

to reflect the cost of the efficient provider. This protects the taxpayer and also protects beneficiaries’ premiums that support the 

program. Of particularly urgent attention are the very high rates 

in home health and skilled nursing facility settings that have been 

set high for over a decade. The Commission would set fee-for-service payment rates to be the same or similar for similar patients 

67 

and similar services. This protects the taxpayer, and again, if there 

is cost-sharing, it protects the beneficiaries’ out-of-pocket. 

As part of a broader recommendation on hospitals that included 

an update, the Commission recommended setting payment rates for 

selected patients the same for long-term-care hospitals and acutecare hospitals and also recommended that payment rates for a selected set of outpatient services be set equal to or near the physician fee schedule. 

In order to protect the hospital’s core mission, these services 

were chosen because they are frequently done in a physician’s office, they are not part of the hospital’s emergency standby services, 

and they are used by patients with comparable risk profiles. 

Just focusing on three services. If continued migration that we 

see in the data now, or if migration continues as we see in the data 

now, by 2021, the program will be paying $2 billion more on an annual basis for just these three services, of which $500 million 

would be paid by the beneficiary. 

The Commission is also exploring policies to normalize payment 

rates between skilled nursing facilities and inpatient rehab facilities. That work as developmental and will be published in the June 

report, but I am happy to take questions on it. 

We have also been concerned that the payment systems are set 

to encourage patient selection. We have longstanding recommendations in skilled nursing facilities and home health settings to take 

down the incentives to see physical-rehab patient and avoid complex medical patients. We think this protects the beneficiary 

against patient selection and it protects providers that take the 

more complex patients. 

The Commission would also create policies to encourage coordination. We have recommended penalties for hospitals, skilled nursing facilities and home health agencies that have excessive readmission rates. This protects the beneficiary by encouraging care coordination and of course the taxpayer from paying for unnecessary 

care. 

In the longer run, the Commission has called on CMS to create 

pilot projects to develop various bundling payment strategies for 

acute and post-acute care and has called for the development and 

implementation of a common assessment for post-acute care. This 

would allow us to consistently assess patient needs, to track their 

change in functional status and quality, and to move towards a 

unified payment system on the post-acute care side. Beyond fee-forservice, a well-functioning managed care program and initiatives 

like the accountable care organizations can also create incentives 

to avoid unnecessary volume and coordinate services for providers. 

The Commission has a broad range of guidance on each of these, 

and we are willing to take questions on that as well. 

In closing, the Commission has consistently tried to make policy 

recommendations that assure beneficiary access to coordinated care 

at a price that the taxpayer can afford. 

I appreciate your attention and I look forward to your questions. 

[The prepared statement of Mr. Miller follows:] 

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Mr. PITTS. The Chair thanks the gentleman. I will begin the 

questioning, and recognize myself for 5 minutes for that purpose. 

Mr. Miller, some have proposed that post-acute care bundling reforms are premature and should not even be considered by Congress until such time as a standardized assessment tool is created 

and data collection is complete. Others have pointed to the fact 

that such perfecting of data collection could take a decade or more, 

and even then, such an assessment will need to be refined. Do you 

agree with the notion that Congressional consideration of bundling 

should only occur after an assessment tool has been created and 

sufficient data collected, or can both be done concurrently? 

Mr. MILLER. OK. I think the Commission’s view on this works as 

follows. I think there is a very strong consensus and a recommendation that we need a common assessment instrument. We 

think that that is a lynchpin to improving both our measurement 

and payment and organization and coordination over the long haul. 

So there is no question that should happen. We have made recommendations. We have given a timeline. We have talked about an 

instrument. And just for the record, we have been pushing for this 

for over a decade, so I have got to make sure that I say that. 

On bundling, I think the Commission believes that bundling is 

a viable option and is one that should be pursued, but there is a 

large set of technical issues that the Commission went back and 

forth on, and I can take you through some of that but we will see 

where you want to go here, and I think their view is that there 

should be experimentation, which is occurring now, and to see 

which of the models tend to jell and work best for both the beneficiary and the program. So I guess what I am saying to you is, we 

should be pursuing both. 

Mr. PITTS. All right. Medicare payments are a huge influence on 

the health care industry, often serving as a baseline for negotiations between hospitals and private insurance. Do private payers 

mimic Medicare site-of-service reimbursement disparities? 

Mr. MILLER. OK. A couple things here. It is correct that you find 

the same phenomenon in the private sector as you find in Medicare 

where if you pay for a similar, or if you see a similar system or 

service in the hospital setting, it is usually paid higher by private 

insurance. I think there is more than—there is more to that than 

just the notion that Medicare does it, so too does the private sector. 

Over the last several years, the private sector and hospital systems have become much more consolidated and they are able to extract higher prices in their negotiations with insurers, and that certainly contributes to the higher prices that you see in the hospital 

setting versus other settings. So I don’t think it is just simply mimicking Medicare but the same phenomenon is observed in the private sector. 

Mr. PITTS. Do private insurers obtain similar discounts for care 

that is provided through physician offices and ambulatory surgery 

centers? 

Mr. MILLER. I am just going to use a slightly different word. I 

think what you will see in the private sector is that the payment 

rates in ambulatory centers and physician offices tend to be lower 

than the hospital. Whether those are extracted discounts is just 

sort of a terminology point. I think it is true that they have lower 

88 

rates in ambulatory surgery centers and the physician’s office for 

the same service relative to the hospital. 

Mr. PITTS. Have any private insurers adopted site-neutral payment policies similar to the recommendations that MedPAC has 

made to Congress? 

Mr. MILLER. I don’t have data, and, you know, really rigorous information on this point. What I can point you to, and I have certainly talked to the committee staffs about this, there is widespread newspaper reports where privately insured folks are showing up at the physician’s office after a physician has transferred to 

a hospital ownership and seeing their cost-sharing go up, you 

know, significantly, and this has been reported on a widespread 

basis, and what we have heard in discussion, but there is not a lot 

of science behind this, is there have been some private insurers 

have refused to pay the additional facility fee for regular office visits in the hospital setting. So I don’t want to overplay that but that 

is more anecdotal and what we are reading and hearing in discussion. 

Mr. PITTS. The respected journal, Health Affairs, this week released a study finding that hospital ownership of physician practices is associated with higher prices and spending. Can you comment on how Medicare’s payment differentials might have spillover 

effects to the private sector and health system? 

Mr. MILLER. Again there, I think part of what is going on, and 

I did look at that when it came along but I am sure I can dredge 

it right back up, but I think part of the explanation there is some 

of the consolidation and the ability of hospital systems on the private side to extract higher prices. I think what you are seeing both 

in the private and in the Medicare payments is this ability to arbitrage, to say if I can move a practice into the billing stream for the 

hospital side, both for private insurance and for Medicare, the hospital will get more revenue. So that certainly seems to be going on, 

and what we are concerned about is, while it is not the only reason 

that a hospital would purchase a physician practice, because there 

are other motivations for doing that, the fact that Medicare’s payments are so much higher on the hospital side certainly encourages 

the migration, and we are seeing a fair amount of it. 

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

the ranking member, Mr. Pallone, 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

Mr. Miller, I am amazed by how much variation exists in the 

care provided in the post-acute setting. There is no uniform assessment of where a patient should go following a hospital stay. Does 

a patient with a hip replacement fare better in a skilled nursing 

facility or home health agency? We don’t really know. And how 

much post-acute care does a typical hip replacement patient need? 

We don’t really know. So given that the Medicare program spent 

$62 billion on post-acute care in 2012, I am amazed we don’t have 

better information about patient outcomes, service use or quality of 

care. 

So my question is, does MedPAC view this as a problem, and 

what do we do about that and how can we quickly move to a place 

where we have info to know what kind of care is being provided? 

89 

Mr. MILLER. OK. You are right. There is significant geographic 

variation, or significant variation, not even just geographic, even 

with the same marketplace and the amount of post-acute care. I 

think there is a couple issues there, the one that you referred to, 

which I will come right back, and the notion that it is hard to define in many instances, you know, the amount of post-acute care 

that a patient should get, when do you stop rehab, you know, for 

some—— 

Mr. PALLONE. I agree. 

Mr. MILLER [continuing]. And where—— 

Mr. PALLONE. I am going to answer the question myself. 

Mr. MILLER. So the Commission, as I said, a little bit in my 

opening comments, many years ago said we need a common assessment instrument. It took a long time, but the Congress then called 

on CMS to develop an instrument and to test it, which they did 

through the care demonstration, and that instrument now exists. 

We believe, and we have made a recommendation along these lines, 

you can take the elements from that instrument—doesn’t have to 

be the whole, giant thing—put them into each of the current collection instruments that exist for SNF, home health, require one for 

long-term-care hospitals and then you will be able to sweep up that 

information across the settings and be able to start making judgments about does a patient have a better outcome in one setting 

versus another, what is the average resources, the very things you 

are saying, for hip replacement as the case may be. We laid out a 

3-year process to get that information integrated into the collection 

instruments and then have a product. So yes, that is what we 

should be doing. 

Mr. PALLONE. And, you know, I do think that is important to 

have but, I mean, it is always going to be individual case too, 

though, obviously. 

There have been a number of proposals to bundle payments for 

post-acute care, and the President’s budget proposed to bundle 50 

percent of PAC spending by 2019. Mr. McKinley is working on a 

bill that would bundle payments for care and pay a reduced rate. 

But how can we develop a bundled payment rate or develop the 

items that go into a bundle or develop appropriate risk adjustment? 

I mean, it is obvious if we don’t have basic data, that is going to 

be difficult, so that is obviously why you think the data is important. 

Mr. MILLER. And in some ways, this is this question that came 

up, is it an either-other type of thing, and I think the urgency in 

some of what you have laid out at the beginning really requires 

that we proceed on both tracks. So let us just say that there is a 

bundle—there is a lot of complexity in assembling a bundle but just 

for half a second let us pretend that we have some sense of what 

that is. One way that you can kind of mitigate against the fact that 

you don’t have ideal information is, you could continue to use a feefor-service model underneath a set platform, so you don’t have a 

stinting incentive. In order to get paid, the person has to provide 

the services. You put a small portion of the payment, let us just 

for discussion call it 5 percent, and then you do have measures, 

and the Commission had worked with these and there are others 

out there on things like avoiding the emergency room, avoiding the 

90 

hospital and community discharge and say OK, those are the three 

outcomes we are looking for, here is the block of dollars and then 

get providers who are willing to take that risk and manage the patient through that episode, and that is imperfect information but 

we are assuming that the provider will have tools to have more accurate information on the ground while the program is developing 

through this unified assessment instrument. 

Mr. PALLONE. I know we are almost out of time, but could you 

just quickly—— 

Mr. MILLER. Sorry about that. 

Mr. PALLONE [continuing]. Talk about the stinting or potential 

dangers in the bundled payment or capitated payment design? 

Mr. MILLER. It is always an issue when you—I mean, you know, 

fee-for-service has the issues that I have raised, fragmentation and 

generation of volume. Any time you go to an episode, capitated, you 

know, whatever the case may be, you have the reverse problem 

where you create the incentive to under-provide. You have to either 

have a mechanism that encourages that like paying on a service 

basis underneath a cap or you have to have quality—and you have 

to have quality measures that say to the provider, you are not 

going to get paid or not get your withhold back or whatever the 

case may be unless these quality metrics are met. But it is decidedly an issue. It is not something to be brushed past. 

Mr. PALLONE. All right. Thanks a lot. 

Thanks, Mr. Chairman. 

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, and Mr. Miller, thank 

you for being here this morning. 

In the report from June of 2013, you discussed the increase hospital consolidation, particularly in the cardiology space. Has 

MedPAC seen this trend in other specialties? 

Mr. MILLER. I am not sure I can break it down for you by specialty, but yes, we have seen it in other services, not just simply 

cardiology services. But yes, we have seen it in other services. 

Mr. BURGESS. And those other services, examples of those would 

be? 

Mr. MILLER. You know, certainly the E&M, you know, basic evaluation and management visits are shifting. I guess some of the 

ones that immediately come to mind are cardiology, echocardiograms. There are probably some other examples I can’t dredge up 

at the moment. 

Mr. BURGESS. What about clinical oncology? 

Mr. MILLER. OK. So in that, you know, obviously understanding 

that there was going to be a hearing, we looked at it a little bit, 

and just before I answer, yes, there are a few oncology—when we 

went through our recommendations that were in the March 2014 

report, and we have the set of services that we are saying should 

be set to the physician fee schedule rate, there are a few services 

in there, two, three services, that seem to be related to oncology 

but we didn’t approach it as a specialty or a service line approach. 

We had a set of criteria and said if services meet this criteria—I 

won’t drag you through it unless you want to hear it—then the 

91 

service was put into the policy, but we didn’t approach it as oncology, cardiology. 

Mr. BURGESS. Could you perhaps that in writing? I will ask the 

question for a written response. 

Mr. MILLER. Yes. 

Mr. BURGESS. I actually would be interested in the thought process in going through that, but we don’t need to go into that now. 

Have you looked at what happens to patient access and costs 

with hospital acquisitions around different specialties? 

Mr. MILLER. Well, what we look at every year, both in the hospital setting and in the physician setting and in every other setting 

that we look at, we look at access and utilization. Now, if your 

point is—and it may be—well, what happens to access if we get 

this migration into the hospital for oncology services, we haven’t 

looked at that recently. We looked at it several years ago. We 

haven’t looked at that specific phenomenon. But we broadly look at 

access year and report to the Congress. 

Mr. BURGESS. When you say several years ago, like how many 

years ago? 

Mr. MILLER. Longer than I would report the results. 

Mr. BURGESS. So—— 

Mr. MILLER. Eight. 

Mr. BURGESS. So prior to the passage of the Affordable Care Act? 

Mr. MILLER. One more time? 

Mr. BURGESS. Prior to the passage of the Affordable Care Act? 

Mr. MILLER. Yes. 

Mr. BURGESS. So have done any kind of estimate on the return 

on investment to this trend? What are the costs/benefits as far as 

patients and their access to care, the cost-benefit analysis for this 

consolidation? 

Mr. MILLER. So the migration from the physicians’ offices to the 

hospital? 

Mr. BURGESS. Correct. 

Mr. MILLER. At least for the services that we looked at and met 

our criteria, which I realize we haven’t had that conversation, for 

about 66 of them that met our criteria, and if you look at that, it 

is about a billion dollars of program spend and about let us call it 

$200 million in beneficiary out-of-pocket that is being incurred because these are being migrated. We have not seen access issues but 

again, we haven’t gone in by service line or specialty to see that, 

but we have not seen access issues. 

Mr. BURGESS. But there is a dollar impact? 

Mr. MILLER. Oh, yes, and I tried to point that out in my 5 minutes. 

Mr. BURGESS. And one of the reasons I am concerned about this, 

and I don’t have the article in front of me but I think it was in 

August of 2011 in the Annals of Internal Medicine, if I recall correctly, Ezekiel Emmanuel wrote an article about the fact that doctors really shouldn’t fight the concept of being employed by an entity, presumably a hospital or insurance company or even a governmental entity, that this would be a better way to deliver care. It 

frees the doctors from having to worry about the vagaries of running a business, but because of the Affordable Care Act, there is 

this pressure for consolidation, and I ask myself all the time, just 

92 

from a professional standpoint, is this a good thing or a bad thing. 

I come from a long line of a medical family, and our contract was 

always with the patient. Our advocacy was always supposed to be 

for the patient. If I work for the hospital, then suddenly that dynamic changes and I am not certain—and I can’t put a dollars-andcents figure on that. I don’t sense that that necessarily is an improvement in the practice of medicine. Obviously, a philosophical 

article but I am concerned about the effect of consolidation cost 

being used as a driver. 

I have got several other questions I would like to ask you, and 

I will submit those in writing, and the chairman will delineate how 

we get those responses. 

Mr. MILLER. I see 37 seconds, so—— 

Mr. BURGESS. That means I am over, but proceed. That is a surrogate endpoint. 

Mr. MILLER. OK. I mean, one thing I would say is, I don’t think 

the Commission is—I am sure the Commission is not making a 

statement about better or worse ways to organize practice. What 

the Commission is saying is, it shouldn’t be driven by distorted 

prices. Those decisions should be made by a physician saying I 

want to practice this way or I want to practice that way or what 

the best episode and arrangement is for the beneficiary, and it 

shouldn’t be just this price-driven phenomenon. 

Mr. BURGESS. And I agree with you completely. 

Thank you, Mr. Chairman. 

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

the gentlelady from Illinois, Ms. Schakowsky, 5 minutes for questions. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

I want to talk to you about observation status and then what it 

means for post-acute care. This has been a huge issue for constituents in my district who when they get to the hospital and they are 

put into a room think I am admitted to the hospital, and my understanding is that it is open-ended how long observation status can 

actually occur, and then if they end up going to a skilled nursing 

facility, then they find out that Medicare doesn’t pay anything. 

They thought they were admitted to the hospital, for good reason. 

We find frail, elderly people sometimes with certain mental deficiencies, and if they are in the hospital and they are in the hospital 

a few days to assume that they are admitted to the hospital seems 

logical. 

So we have had large numbers and dealt with CMS a lot on this 

question of observation status. So I wonder if you could just clarify 

this for me and how it impacts then the post-acute care status in 

terms of payment? 

Mr. MILLER. OK. I am not as deep for this hearing as maybe on 

some other things. 

So I think the issue that you are getting at—you tell me to redirect if we are not on the same wavelength—is that if somebody enters the hospital and ends up, let us just say for the sake of discussion, in three days of observation care, although lots of observation 

stays last much less than that, then while they by all appearances 

to the beneficiary and their family, they have been in the hospital, 

93 

they won’t have qualified for the 3 days of hospitalization needed 

to qualify for skilled nursing care. 

Ms. SCHAKOWSKY. That is correct. 

Mr. MILLER. I think that is the point that you are driving at. 

Ms. SCHAKOWSKY. That is correct. 

Mr. MILLER. And I think, you know, the dilemma for the Congress is that, you know, when a beneficiary feels, and for almost 

all intends and purposes has been in the hospital, the concern is 

that they should qualify. Of course, the issue that has to be dealt 

with—and them I am going to get you to a happier place in just 

a second—the issue that has to be dealt with is, if you simply remove that 3-day requirement, the estimators, the Congressional 

Budget Office and folks like that, believe that the skilled nursing 

facilities will start to get community admits and then the costs will 

go up significantly. So there is an issue that gets kind of enjoined 

there. 

But the happier place perhaps—— 

Ms. SCHAKOWSKY. I don’t understand what you just said, that 

they will get community admissions. 

Mr. MILLER. So if you say to—if you were today—and this is 

something you should check—this is what I understand, and I am 

a little bit off base, but this is what I understand. If you said today 

there is no 3-day requirement to stay in the hospital to go into—— 

Ms. SCHAKOWSKY. No, no, I am not saying that. 

Mr. MILLER. Well, I am just saying if you did, you would run into 

a cost. 

Ms. SCHAKOWSKY. Yes, OK. 

Mr. MILLER. So there are other avenues to potentially explore 

here. One is—and the two discussions that—and I have some work 

going in the background although I haven’t brought it forward yet 

because it is not far enough along, is looking at the inpatient hospital payment system and creating a short-stay payment so that 

they don’t have to have this choice between observation care and 

short-stay inpatient stay, and then the person would come in in the 

inpatient and it would be classified as an inpatient stay. So there 

is both an observation versus inpatient issue there and it has bearing on your skilled nursing facility question. 

Ms. SCHAKOWSKY. Correct. 

Mr. MILLER. We are not far enough to have a nice, concrete conversation about the specifics but we are working on that. 

Ms. SCHAKOWSKY. OK. I think it is really important. I can’t tell 

you how many elderly individuals and couples have just been astonished at being—they are not really admitted to the hospital. It 

just doesn’t make sense. 

Mr. MILLER. I hope you are hearing that we are taking this seriously because nothing I have said should have given you anything 

other than that. 

Ms. SCHAKOWSKY. And is there any timeline built into this? 

Mr. MILLER. You know, we are working with data, we are talking 

to hospitals. These are kind of messy issues. There is a RAC auditor issue kind of mixed in there as well. We are working on it, is 

the best I can tell you at this point. 

94 

Ms. SCHAKOWSKY. Let me just submit for the record, there is a 

question I want submitted that deals with post-acute providers’ 

high profit margins that I want to get to you as well. Thank you. 

Mr. MILLER. I would be happy to talk about that. 

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

the gentleman, Mr. Rogers, 5 minutes for questions. 

Mr. ROGERS. Thank you very much. 

Thank you, Director, for being here. Over the last 5 years, 47 

community practices have started referring all of their patients 

elsewhere for treatment. Two hundred and forty-one oncology office 

locations have closed and 392 oncology groups have entered into an 

employment or professional services agreement with a hospital. 

That is a fairly staggering shift in 5 years. What would you attribute that significant shift toward a hospital setting? 

Mr. MILLER. You know, with respect to oncology, I am a little bit 

of a deficit here to give you the specifics related to that. The broader trend that we are seeing we think are the trends that I have 

been speaking to up to this point. There is a lot of consolidation 

out there. I think the hospital’s motivations come in a couple of varieties. There is this notion of building systems and coordinating 

care, which may be a good motivation. There is capturing referrals, 

and, to the extent to that the Medicare and the private sector pays 

more when you make that jump, then there is that motivation. 

On the physician side, and this goes to some of what Mr. Burgess 

is saying, I hear both kinds of conversations, ones that are ‘‘I am 

very upset by this trend and I don’t want it to happen,’’ and other 

physicians who say this actually frees me up to kind of focus on 

care, and I am not saying that is the oncology argument but I have 

heard that from other practices. I think this is kind of a complex 

set of currents running in both directions. 

Mr. ROGERS. Although in a market economy, if the hospitals pay 

more for exactly the same services, it is pretty hard to argue that 

that isn’t a significant factor. 

Mr. MILLER. And you do hear us saying that is what we—— 

Mr. ROGERS. I just wanted to clarify that number because I was staggered by it. A $1 billion increase, if I heard you correctly, from 

that migration to the hospital setting of which $200 million is 

borne by the hospital—or excuse me—by the patient. Did I understand that correctly? 

Mr. MILLER. Yes, and just to clarify, for the 66 services that we 

have identified which may or may not encumber the ones that you 

are referring to, we think on an annual basis we are talking about 

a billion dollars, and just for round numbers, let us say the beneficiary carrying 200. 

Mr. ROGERS. That is a significant cost increase for the patient, 

is it not? 

Mr. MILLER. Yes, and—— 

Mr. ROGERS. It is a 20 percent increase. 

Mr. MILLER. Yes. There are examples of these differences. For 

example, for cataract surgery, if you get it in a physician’s office, 

the copayment is $195. If you go into the hospital, it is $490. That 

is the beneficiary’s—— 

Mr. ROGERS. And 20 percent of that increase, according to your 

numbers, would be borne by the patient? 

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Mr. MILLER. No, that is the beneficiary’s increase. 

Mr. ROGERS. That is just the beneficiary’s increase? 

Mr. MILLER. The program increase goes from about $1,000 to 

about $1,800 on the program side. 

Mr. ROGERS. That is a significant out-of-pocket increase for those 

patients, is it not? So if you look at something like—let us talk 

about some kind of radiation treatment, somewhere between 6 and 

8 weeks. So we have had this major displacement of at least places 

that are convenient for treatment, a daily transportation for the 6 

to 8 weeks for these treatments and a roughly 20 percent increase. 

Someone has to tell me why that is good for the patient. 

Mr. MILLER. Again, I can’t speak to your very specific oncology 

examples. Our concern is motivated both by the program dollar and 

beneficiaries out-of-pocket. 

Mr. ROGERS. And I would hope that you would consider travel 

times. When you are getting radiation treatment, obviously I am 

specific to oncology here, but you are already tested to the limit, 

and increased commute times and pay more money doesn’t seem 

like a good idea for care to me. 

I mean, have you done anything that shows a benefit to the patient from moving to hospitals? Is there any white paper I can look 

at? Is there anything that tells me that this is a good idea for people like cancer patients, or in your case, cataract patients? 

Mr. MILLER. I want to answer this carefully. We have not done 

anything, which doesn’t mean it doesn’t exist. It is just that we 

haven’t done anything. So I am unable to point you to something 

but it is not because I know that is the answer. It is just because 

we haven’t done anything. 

Mr. ROGERS. I thank you, and my time is running out, but Mr. 

Chairman, thanks for having this hearing. I think just the fact that 

we pointed out the significant cost to patients, number one, not 

only in just dollars but the anxiety that comes with getting in that 

car and driving a greater distance just to have access to care 

means that we ought to do something about this yesterday. We already have lost 392 plus the 241 just oncology, just oncology centers are gone, and wrapped up in this system. Two hundred and 

forty-one just closed completely. The longer this goes, the more we 

will lose, the more patients that will be impacted by out-of-pocket 

costs, and again, all of the anxiety and trouble that is caused by 

greater distances is very, very troubling. 

I appreciate you having this hearing. I think this has highlighted 

a very important issue that needs immediate attention. I yield back 

my time. 

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

Dr. Murphy from Pennsylvania 5 minutes for questions. 

Mr. MURPHY. Thank you, Mr. Chairman. I want to follow up on 

some of the issues presented by my friend Mr. Rogers of Michigan. 

So when we are looking at the out-of-pocket costs a Medicare patient may pay, they will pay a copay for some chemotherapy and 

other treatments, and is that a percentage basis or is it a flat dollar? 

Mr. MILLER. It is usually 20 percent just because nothing is simple. It varies a bit in the outpatient department on a percentage 

96 

basis due to some very old historical issues that are being changed 

over time. But for purposes of conversation, think 20 percent. 

Mr. MURPHY. OK. And rather than look at the aggregate 

amounts totally, so if somebody was getting some treatment at a 

clinic—well, those clinics that haven’t closed yet—versus at a hospital, any sense of what the comparative price would be for individual treatments in one place for another? 

Mr. MILLER. For a clinic? 

Mr. MURPHY. A clinic or a physician’s office or a hospital. You 

know, we are talking about the differences in disparity here. 

Mr. MILLER. If I understand your question, some of the data that 

we have put out suggests that evaluation and management issue 

or a visit is paid about 80 percent more in the hospital setting. An 

echocardiogram is paid about 130 percent more in the hospital setting. 

Mr. MURPHY. So if they are paying 130 percent more in the hospital setting, that means the patient is paying more in the hospital 

setting too if they are paying 20 percent, but do you have any idea 

what that dollar value might be. I know it probably varies by region. 

Mr. MILLER. Well, you know, there is some adjustment for wage 

index and things like that but I think this is correct if you don’t— 

I have some scribbled notes that I was writing down last night. I 

think, for example, on the echocardiogram, the beneficiary’s copayment goes from about $40 to $90. The program payment goes from 

about $150 to $360. 

Mr. MURPHY. Which is pretty significant, especially if someone is 

on fixed income. 

Mr. MILLER. I am sorry? 

Mr. MURPHY. If someone is on a fixed income, well, under any 

circumstances, and of course, if a person is chronically ill and receiving a lot of medical care, that can amount to thousands of dollars in a year. 

And so let me ask you another issue too. Now, some centers have 

a 340B program and so they are able to obtain drugs as long as, 

I understand, if they are a nonprofit patient they can quality to 

purchase drugs on a 340B program. Am I correct? 

Mr. MILLER. There may be some more requirements than that 

but I will stay with you for the moment. 

Mr. MURPHY. Well, let us say a private physician’s office or a forprofit clinic or something would not be able to purchase drugs on 

those discounts. Am I correct? 

Mr. MILLER. I am pretty sure that is correct. 

Mr. MURPHY. One of the concerns that I frequently hear about 

the 340B program, first of all, it is a great program. I support it 

strongly in many instances. But we also hear that some are claiming that there are some abuses of that program where some centers 

will purchase drugs at discount but then they will sell them at the 

markup again and get this money. Now, is that something that 

some of these other private clinics or physicians’ offices, are they 

able to purchase drugs from the 340B program? 

Mr. MILLER. Again, I am not deep on this, given the subject of 

the hearing. I didn’t study down on this one. But my sense is no, 

that is not available to them. 

97 

Mr. MURPHY. So this adds another issue here. I mean, what I 

hear frequently across the board, hospitals and physicians saying 

that the reimbursement rates for mc doesn’t really cover their costs 

sufficiently. They complain about the low reimbursement rates. But 

what you are telling me is that if we focus also on—if some of them 

also are making money on the 340B program, and maybe this is 

out of your wheelhouse, but that is another area of disparity if 

there are differences between people who generally qualify versus 

those who may not qualify but the hospital is still getting some 

340B money out of this. 

Mr. MILLER. To the extent that the fact set that you and I are 

talking about here without me doing the homework on it, yes, that 

would be true, and I would say to you similar to what I said to the 

Congresswoman over here, this is an issue that we have not come 

forward on because there is still a fair amount of staff work to be 

done, but we have started to try and look at it. 

Mr. MURPHY. We hope that is information you will provide this 

committee. 

Let me ask one last thing then. So we have heard concerns before of people with non-insurance or Medicaid versus private insurance. The survival rates are very different for people with cancer. 

But that is also according to the Cancer Medicine Journal, it is due 

to a complex set of demographic and clinical factors of which insurance status I just a part. 

But let me look at this in terms of Medicare in terms of where 

a person actually gets their care, a hospital base versus a physician’s office. Are there differences there in survival rates that you 

are aware of? 

Mr. MILLER. I have not looked at that, which doesn’t mean—I 

don’t know the answer to that question. 

Mr. MURPHY. That would be something that would be valuable 

for us to get to. 

I thank you very much, and I yield back, Mr. Chairman. 

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

the gentleman from Texas, Mr. Green, 5 minutes for questions. 

Mr. GREEN. Thank you, Mr. Chairman, and I would like to ask 

unanimous consent to place in the record a written statement by 

Dr. Bruce Ganz, Chair of the American Medical Rehabilitation Providers Association, regarding the post-acute care reforms being discussed today. 

Mr. PITTS. Without objection, so ordered. 

[The information follows:] 

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Mr. GREEN. Thank you and the ranking member for holding this 

hearing. I want to thank Dr. Miller for your testimony. 

Our district in Houston is home to world-class hospitals and community oncology centers. We know that Medicare payment rates 

often vary for the same service provided to similar patients in different settings such as physicians’ offices, hospital outpatient departments or for specific services across any of the post-acute care 

settings. While at the first glance it seems unclear why Medicare 

would pay different rates for the same service, we have heard justifications from both sides of the debate on whether to maintain 

these differential payments or to move to site-neutral payments. 

For example, Representative Rogers has a bill that would equalize 

reimbursements for oncology services received by patients in a hospital outpatient department with those by patients in freestanding 

oncology clinics. The hospital outpatient departments tell us that 

their higher rates are necessary because their additional payments 

help pay for the hospital standby capacity, access to care for lowincome patients, efforts to improve care coordination and community outreach. The freestanding clinics have said the payment system is inadequate, causing them to close their doors, limiting access to care for critically ill patients and increasing total costs as 

hospitals are buying them up. 

Mr. Miller, as you represented a nonpartisan research-driven policy body, I am interested to hear your perspective on the matter. 

I understand that MedPAC has given a considerable amount of 

thought to the subject of site neutrality and establish criteria for 

when it is appropriate to equalize payments across settings including considering beneficiary access and cost-sharing. Could you further describe the Commission’s thinking on the topic? 

Mr. MILLER. Yes, and I actually appreciate the question, and this 

is in some ways what Mr. Burgess and I were almost up to. 

So the way the Commission has approached this in the ambulatory setting, the principal is, assuming and assuring actually that 

the beneficiary has access and quality, Medicare should seek the 

most efficient setting, and so that is the motivation, and the other 

motivation is, we have seen a tremendous amount of data that suggests that it is heading out of the lower payment setting. 

But by the same token, and while there are people in the hospital industry who probably are suspect, we want to be sure that 

the hospital’s core mission, particularly for emergency room and 

standby services, are not undercut, and so the criteria that we 

worked through was, is the service provided in a physician’s office 

frequently so it is safe to do outside of the hospital, is the risk profile of the patients the same, is the unit of payment the same, and 

is it not associated with emergency services, and so then using that 

criteria, we said what services fit this criteria. So we are not just 

sort of sweeping through and saying pay it all, you know, the same, 

we are saying you need to be careful to protect the core mission of 

the hospital but also undercut this incentive that is pulling things 

out of the physician setting and approaches the practice. So that 

kind of high level, that was the criteria that we were using. 

And again, you know, I have gotten some other questions of what 

about oncology, what about cardiology. We didn’t approach it as a 

specialty or service line. We stepped back and said what meets 

107 

these criteria and then let things hit the criteria and said OK, 

these are the ones that qualify. 

Mr. GREEN. Has MedPAC given thought to aligning payment 

rates between hospital outpatient departments and physicians’ offices for other types of ambulatory management, cardiac surgery? 

I think you answered that. 

What further analysis or information would you need before 

being able to comment on the appropriateness of equalizing these 

payment rates between OPDs and the physician offices for oncology 

services? Are there any concerns you can share with us now? 

Mr. MILLER. I mean, what I do want to point out before I switch 

right back to your question is, we looked at this also for equalizing 

rates between ambulatory surgery centers and hospital rates for a 

set of surgeries that also met these criteria that I went through. 

On the oncology side, I am willing, as a matter of questions for the 

record, to try to give you a more detailed answer of what oncology 

services came in under our criteria and the kinds of things one 

might want to think about if they were to look further into it, but 

I am not really tooled up to do that right this second. 

Mr. GREEN. Thank you, Mr. Chairman. 

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

the gentleman from Kentucky, Mr. Guthrie, 5 minutes for questions. 

Mr. GUTHRIE. Thank you, Mr. Chairman. I appreciate it. And I 

guess you almost got to one of the things I was thinking. You have 

to make sure the same person walking into an outpatient isn’t the 

same person walking into a hospital because if you are going to do 

the same procedure—— 

Mr. MILLER. Absolutely. 

Mr. GUTHRIE. What if the person is diabetic? Therefore, they say 

we need to do this in the hospital so you do have paying for capacity for some availability there, so that is just something that I was 

thinking that you kind of addressed that before. 

Mr. MILLER. And the Commission does take that seriously, and 

there was statistical work done by a couple of people behind me 

who said do these patient profiles look statistically different than 

each other, and if they did, they weren’t included in the basket of 

services that we would focus on. 

Mr. GUTHRIE. And do you think some of it could be cost shifting 

such as an outpatient clinic wouldn’t have—they obviously don’t 

have emergency room, and I hear, I think somebody mentioned it 

earlier that people come in with Medicaid and Medicare particularly don’t pay the cost of—it may pay the cost of service for a cardiogram more than if you got it outpatient but it is also keeping 

the emergency room open. I am not saying that is the right way 

to do it. 

Mr. MILLER. I think I understand your question, and if not, immediately redirect because I want to use your time carefully. We 

also took that into consideration. We said if a service is provided 

in an emergency room setting on, you know, any significant basis, 

then again, it was out of the mix, and our point was, we don’t want 

to undermine the core mission of the hospital to have emergency 

standby services. The Medicare payment rates, since those services 

are very—or those costs are very direct—staff, equipment, that 

108 

type of thing—those are built into higher rates that go to the hospitals for those services. We share that concern. We tried very hard 

to work around that and make sure we weren’t undercutting that. 

Mr. GUTHRIE. OK. Thanks. And a couple of questions I wanted 

to ask about the—going from a lot of people in private practice settings into hospital settings. There was a Merritt Hawkins survey 

that asked the students in the final year of medical school. In 2001, 

3 percent said they would rather work for a hospital than private 

practice. Now it is 32 percent. I know there are other factors but 

what extent do you think the Medicare practice expense payment 

disparities are responsible for the decline in attractiveness? 

Mr. MILLER. OK. I think this question is much more complex, 

but before I blow past it, I do want to say, and I think there were 

some other comments along these lines, it is very hard to ignore 

that if a hospital is approaching a practice and saying I have, you 

know, revenue that I can buy out your practice and make it very 

lucrative to you, that is going to be important. But to the extent 

that we have talked to physicians, talked to hospitals, talked to 

folks like that, we hear a very, you know, kind of mixed story on 

the part of the physicians. There does seem to be a generation of 

physicians who are saying care has become very complex, and I 

don’t mean that in a negative way. It means, you know, we all 

have to think about the patient much further and broader than my 

own sets of services that I am providing. It takes more coordination, it takes more understanding of the patient’s medical record, 

and some physicians will say a larger organization that will take 

that overhead off of my hands and allow me just to focus on the 

care is where I want to be, and by the way, I would like some predictable hours and that type of thing. And then you run into physicians who are saying this is the wrong direction to go, I want to 

run my own practice. So I think these currents are more complex 

than any one factor, but I don’t think we should dismiss the notion 

that either in the private sector or Medicare if the revenues are 

there, then it is going to be hard to say no to them. 

Mr. GUTHRIE. That is a good question, it leads into my next one, 

because you said whether Medicare or private sector. Does the private sector, private payers mimic the Medicare site-of-service disparity of payments? 

Mr. MILLER. I wouldn’t use the word ‘‘mimic’’ but the outcome is 

the same. It is generally true that the private sector pays more in 

those settings than in the physician setting. 

Mr. GUTHRIE. So they get similar discounts between hospitals 

and ambulatory areas? 

Mr. MILLER. There are similar price differences between physician office and hospital settings—lower, higher. 

Mr. GUTHRIE. Well, I appreciate that, and I yield back. 

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

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

questions. 

Mrs. ELLMERS. Hi, Mr. Miller. Thank you for being with us 

today. 

I know some of my colleagues have asked about the 340B program, and I believe you said that at this point it is being looked 

109 

at. Is that correct, that you are not ready to kind of weigh in on 

it? 

Mr. MILLER. I haven’t even taken the Commission through it because the research is really still very much at the formative and 

staff level. 

Mrs. ELLMERS. OK. 

Mr. MILLER. But we are not oblivious to the issue. That is the 

point I would like the committee to know. 

Mrs. ELLMERS. Great. Well, I will tell you, it is a concern of mine 

because I do believe that there is—just as you are looking into the 

issue, I think there is a lot of gray area there, and I think that this 

is one of those issues where we are looking at health care savings 

and dollars that are being saved, and of course, first and foremost, 

patient access to care, especially those who are in an economic disadvantaged situation. These programs are very worthwhile and we 

need to make sure that they are sustainable. Unfortunately, I am 

not at this point sure that we really know where those dollars are 

going, and I think that is something that we need to get to the bottom of and, with that, I will just follow up by saying that about 

a year ago, last year, Commander Pedley, the head of HRSA, had 

stated that she was not sure where the dollar savings, where the 

money was going, and I think that that is a significant statement 

because if the Government doesn’t know—I mean, shouldn’t the 

Government know where these dollars are going and how they are 

being utilized? 

Mr. MILLER. I think so. 

Mrs. ELLMERS. And there again, I will just get back to the issue 

of—— 

Mr. MILLER. But I want to assure you that we wouldn’t look at 

that issue strictly as a savings issue. We would look at it as a program integrity issue, assurance for beneficiary access, assurance 

that we are paying fairly and then, you know, if that turns out that 

we are letting dollars go out the door that shouldn’t go out the 

door, then that will be the outcome. 

Mrs. ELLMERS. I think, you know, from my perspective, it is an 

issue of, are those dollars going to the care that those patients who 

require charity care. You know, if the hospital is a 340B hospital, 

are those dollars truly going where they are supposed to go, and 

certainly not ever thinking that a hospital would be playing games, 

but I think if there is a wide and a very gray area there, I think 

that the hospital would utilize them as they need to, and I think 

that might be something that we need to work on into the future. 

And I will go back too to the cancer care in the hospital setting 

versus the outpatient or ambulatory care setting. This is something 

that I am very, very concerned about. I am very concerned about 

the cost issue with chemotherapy drugs, especially since the sequester went into effect. We have seen a number of cancer clinics 

that are in our communities basically closing their doors or being 

bought out by hospitals and many of them will cite that it has to 

do with the Affordable Care Act, which is an issue, but then on top 

of it, the sequester has created a very difficult situation for them 

to continue in private practice, and in fact, I will add to that by 

saying that just in my hometown of Dunn, North Carolina, oncology practice was just purchased by a hospital, and now hospital 

110 

care will be given at that clinic. The good news is, they will be 

there in Dunn. The bad news is, now the care is going to be much 

more costly. 

So there again, it gets back to the issue of how do we justify that 

if that the patient receives the care in the hospital, which is wonderful care, great care being provided by health care professionals, 

but then if they go to a more convenient area that they have come 

to appreciate and know and feel comfortable receiving their treatment, now that cost is going to go up simply because the hospital 

now owns that practice. 

Mr. MILLER. You have defined the problem extremely well. This 

is the way the Commission is thinking about it, and the only other 

thing I will say with respect to your comments is, the Commission 

has been on record as saying that, you know, the sequester is not 

a good policy and what we try to offer the committees of jurisdiction on a daily basis in every one of our reports are more thoughtful policies to get you where you need to be without having to do 

the across-the-board type of stuff. 

Mrs. ELLMERS. Well, thank you, Mr. Miller. I truly appreciate it, 

and thank you, Mr. Chairman. I yield back. 

Mr. PITTS. The Chair thanks the gentlelady. 

All right. We will begin a second round. Dr. Burgess, do you have 

questions? 

Mr. BURGESS. Thank you, Mr. Chairman. So Mr. Miller, we have 

been talking today about payment disparities across different sites 

of service, the inpatient hospital, outpatient department, ambulatory surgery centers and physician offices. Outpatient departments 

and ambulatory surgery centers have similar requirements to participate in the Medicare program and to be licensed at the State 

level, and both arguably provide high-quality care. Can you discuss 

the cost benefit of increasing payment rates in certain outpatient 

settings? 

Mr. MILLER. I am really sorry. There was some distraction over 

there, and I apologize. 

Mr. BURGESS. That is all right. Let us wait until it calms down. 

All right. So we have various settings where can be administered. Ambulatory surgery centers, physician offices, outpatient departments, they all have similar requirements to participate in the 

Medicare program and to be licensed at the State level. All provide 

high-quality care. Can you discuss the cost and benefit of increasing payment rates in certain outpatient settings? 

Mr. MILLER. Increasing payment rates in certain outpatient settings? 

Mr. BURGESS. Hospital outpatient department versus an ambulatory surgery center. 

Mr. MILLER. And the question is, should there be differences in 

the rate or—— 

Mr. BURGESS. No. Are there differences in the rate, and then, 

what is the benefit that occurs because of the differences in the 

rate? 

Mr. MILLER. OK. I am sorry. There are differences in the rate. 

I think a figure to carry around in your head is, there is about an 

80 percent difference between the rate in an OPD and an ASC, just 

to focus on that for a second, and I think what the Commission exVerDate Mar 15 2010 16:17 Jan 29, 2015 Jkt 037690 PO 00000 Frm 00114 Fmt 6633 Sfmt 6633 F:\113-148 MEDICARE PAY AWAIT TAG LINE\113-148 MEDICARE PAY PDF MADE WAY
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plored, we made recommendations with respect to some services 

between a physician office and the OPD but over here on the ASC 

side, we also did some research where again we used some criteria, 

which I will take you through, but I understand your time is limited, where we tried to identify similar patients, you know, services 

that could safely be done in both settings and then said that there 

is the opportunity to lower the payment rate on the OPD side to 

the ASC rate. There were 12 services and in total it is in the neighborhood of $500 to $600 million annually. 

Mr. BURGESS. And in this movement from a hospital to an outpatient setting, does that potentially free up the hospital time and 

space for use for other patients who have a greater degree of acuity 

who wouldn’t be satisfactory to be serviced at an ambulatory surgery center? 

Mr. MILLER. Yes, I think that is our—in constructing the criteria, 

that is what we are trying to assure. 

Mr. BURGESS. Let me ask you this. In January of this year, the 

committee voted on recommendations around site neutrality for 66 

ambulatory payment classifications. Is the Commission looking at 

other classifications or codes? 

Mr. MILLER. At least for the near term, the blocks that we have 

looked at are evaluation and management codes. The 66 APCs that 

you just mentioned, we have done analysis on that, and we have 

done analysis on 12 APC/OPD codes, and that is the exchange we 

just had one second or so ago. At the moment, this is kind of where 

we are. I am not 100 percent sure how much more we will do but 

the Commission sort of has to figure out what its cycle is going to 

be for the upcoming cycle. And so at the moment, this is what we 

have and this is where we are. It would be hard for me to point 

to specific things that we are going to do beyond this. 

Mr. BURGESS. Mr. Chairman, thank you for the consideration. I 

will yield back to you. 

Mr. PITTS. The Chair recognizes Mr. Green, 5 minutes for questions. 

Mr. GREEN. Mr. Miller, I am concerned when we are discussing 

payment that we make sure to appropriately account for complexities and differences among patients. I believe if we move forward 

to reform the post-acute care setting, we should also be looking to 

make sure that we are appropriately adjusting provider payments 

to reflect those beneficiary risk scores. Can you discuss the issue: 

Do you believe risk adjustment is an appropriate issue to focus on? 

Mr. MILLER. Yes, and in all of our work, when we talk about 

bundling and we talk about differences, you know, creating either 

bundled payments or when we talk about moving towards a more 

unified post-acute care payment system or if we talk about assuming risk at more of population level, say an accountable care organization, we spend a lot of time talking about the need to measure 

differences in risk, and I will say something a little more specific 

about that, and then also to make sure that we construct quality 

measures so you sort of backstop the patient in a couple of ways. 

You make sure that the payments that go out the door are adjusted 

in a way that they reflect the relative risk of I took this patient, 

you took that patient, and then we have quality metrics to sort of 

112 

make sure that the patient is getting the kind of care that they 

need. 

I think in the post-acute care setting, there are lots of discussions beyond things like diagnosis and the kinds of comorbidities, 

things like functional status, cognitive status, physical status, that 

thing of thing, which probably need to come into the mix in order 

to make the measurement more accurate, and we have got some 

discussion and focus on that in our work. 

Mr. GREEN. You may have already answered that a little bit just 

now, but what steps do you take, for example, in developing a bundled payment would appropriately account for the differences? I 

think you just answered that one. 

Mr. MILLER. And again, I think it is this two-prong thing: try 

and get the risk adjustment as best as you can get it and then have 

a set of quality metrics to stand by the beneficiary to make sure 

that they are getting the necessary care that they need. 

Mr. GREEN. OK. Thank you, Mr. Chairman. I yield back. 

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

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

Mr. CASSIDY. Hi, Mr. Miller. I am sorry for running in and out. 

Mr. MILLER. No problem. 

Mr. CASSIDY. So reading your testimony and listening to it, how 

much is—obviously is we are building through a hospital-based 

practice, I assume that is all Part A. 

Mr. MILLER. And we are talking about outpatient here, and so 

this is B. 

Mr. CASSIDY. So the facility fee would be Part A, wouldn’t it, and 

the procedures oriented, so if they order an EKG and it is a hospital, it is still Part A, correct? 

Mr. MILLER. No, it is still B. I am sorry. 

Mr. CASSIDY. Oh, really? 

Mr. MILLER. Yes. 

Mr. CASSIDY. OK. Well, that helps me. 

Now, it also seems, though, in some of the testimony from others 

suggest that as we migrate towards these hospital-based practices, 

we are increasing costs for both Medicare and for the beneficiary. 

Mr. MILLER. That is right. 

Mr. CASSIDY. Now, if you have an accountable care organization, 

it obviously would increase the cost basis of their care if you have 

hospital-based services. Fair statement? 

Mr. MILLER. That is correct. 

Mr. CASSIDY. It almost seems that this is driving up the cost of 

health care, frankly. I mean, so if you will, it almost seems as if 

the more we emphasize or induce hospital-based accountable care 

organizations to acquire practices, i.e., it increases their profitability and increases their cost basis, we are inducing increase and 

expense both to beneficiaries and to the Medicare program. 

Mr. MILLER. That is correct. 

Mr. CASSIDY. So we actually have a set of policies which are 

working in the exact wrong direction if our goal is to decrease cost 

to beneficiaries and to Medicare. 

Mr. MILLER. Yes, that is correct, and the only modification or addendum that I would say to that is, to the extent that you have 

113 

prices for the same service on the outpatient side that look like this 

relative to the physician’s office, you are creating an economic incentive to move in that direction. End of sentence. Next sentence. 

But of course, there are core hospital services—— 

Mr. CASSIDY. Core, yes, I get that totally. 

Mr. MILLER. OK. 

Mr. CASSIDY. I am a physician by the way. 

Mr. MILLER. We are saying the same thing. 

Mr. CASSIDY. Yes, absolutely, but that is, I think, lost in this debate, that we have created a law which is going to drive up cost. 

Just the behavioral economics of it is such that we are going to create these. 

Let me ask you something else. 

Mr. MILLER. Yes, we are trying to make sure that it is not lost 

in the debate. 

Mr. CASSIDY. And I appreciate that. Thank you. 

Now, also I am very interested in the 340B program, and you 

may decide that you may or may not wish to comment on this, but 

to what degree—I will read this, because it was prepared for me 

but I asked it to be. In the last few weeks, a report by the IMS 

on global oncology trends as well as other things shows that there 

is a different cost for Herceptin in different sites of service, that if 

you have a 340B hospital oncology-based program, that the delta 

between what they are, you know, charging and paying is such that 

it creates a competitive advantage relative to community oncologic 

services. Any comment upon this? 

Mr. MILLER. And I really apologize. I am not deep on that. There 

were a couple other questions on this. The only thing I can offer 

you is the Commission is aware of this issue and I have some work 

going on but it is very developmental at this stage. I haven’t even 

taken it out in front of the Commission. So the only comfort I can 

give you is, we are not tone deaf. We understand that that is going 

on. We will start looking. We are looking at it. 

Mr. CASSIDY. Now, let me ask you then, with my minute and 30 

left, if I go to the behavioral economics, there is a sense in which 

if you put something at two-sided risk, you may mitigate the incentives to increase cost but let me ask, if you put somebody at twosided risk, they get the upside but also swallow the downside, and 

they start off with a higher cost basis because they have acquired 

physicians’ practices, particularly, say, orthopedics and hearts. I 

don’t know this. I am asking. Going forward, if they begin to discharge those practices, those procedures to the outpatient setting, 

do they continue to get the profitability? Did you follow that? 

Mr. MILLER. I think I followed it. So I think you probably have 

a couple of questions in there, and just for purposes of discussion, 

let us frame it in the context of an accountable care organization. 

So if an accountable care organization is hospital-based and they 

have engaged in a lot of this, then arguably—and they get attributed patients in a way for purposes of this conversation occurs, 

then yes, arguably, they would have a higher base. And so that 

raises questions which are bigger than a minute 30 but the Commission has been talking about over time how the Medicare program should be looking at that phenomenon. 

114 

Mr. CASSIDY. But going forward, if they then take this hospitalbased practice and they sell it and it now becomes an outpatient 

and they begin to now that which was originally conceived at a 

higher cost basis they are now putting at a lower cost, do they consider—do they continue to get that delta or will the payments 

ratchet down? 

Mr. MILLER. It is theoretically possible that by moving people 

back, as you used in your example, to a lower cost setting, they 

could show a better performance. In other words—— 

Mr. CASSIDY. So that would be an artificially conceived better 

performance? It would be merely arbitraging the regulations and 

the site of service? 

Mr. MILLER. That is right, but remember, we are talking about 

a very hypothetical situation. 

Mr. CASSIDY. Oh, man, it is not going to be hypothetical, Mr. Miller. I can promise you that. 

Mr. MILLER. And I didn’t mean to imply that. There is two different, you know, ASC ACO programs, and exactly how the baselines are set get a little bit technical. But what I do want to leave 

you with is, the Commission is thinking about these phenomena 

and how to think about setting those basements over time so these 

kinds of phenomena don’t get away from the program. Theoretically, what you have set up there, yes, I see your point. 

Mr. CASSIDY. I yield back, and I thank you very much. 

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

second round. Members will have follow-up questions. We will submit those to you in writing. We would ask you to please respond 

promptly. 

Mr. MILLER. OK. 

Mr. PITTS. Thank you very much, Mr. Miller. That includes the 

first panel. We will take a 2-minute break as the staff sets up for 

the second panel. 

[Recess.] 

Mr. PITTS. We will reconvene. Everyone can take their seats. Our 

second panel, I will introduce in the order which they will speak. 

First, we have Ms. Barbara Gage, Managing Director and Economics Study Fellow, Engelberg Center for Health Care Reform, the 

Brookings Institute. We have Dr. Barry Brooks, Partner, Texas Oncology, and Chairman, Pharmacy and Therapeutics Committee, the 

U.S. Oncology Network. We have work Dr. Reginald Coopwood, 

President and CEO of Regional Medical Center at Memphis; Dr. 

Steven Landers, President and CEO of Visiting Nurse Association 

Health Group; and finally, Mr. Peter Thomas, Coordinator, Coalition to Preserve Rehabilitation, and Principal at Powers, Pyles, 

Sutter and Verville. 

Thank you all for coming. You will each have 5 minutes to summarize. Your written testimony will be made part of the record. 

Ms. Gage, we will start with you. You are recognized for 5 minutes for your opening statement. 

115 

STATEMENTS OF BARBARA GAGE, FELLOW, ENGELBERG CENTER FOR HEALTH CARE REFORM, THE BROOKINGS INSTITUTION; BARRY D. BROOKS, CHAIRMAN, PHARMACY AND 

THERAPEUTICS COMMITTEE, THE U.S. ONCOLOGY NETWORK; REGINALD W. COOPWOOD, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, REGIONAL ONE HEALTH, ON BEHALF 

OF THE AMERICAN HOSPITAL ASSOCIATION; STEVEN 

LANDERS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, VISITING NURSE ASSOCIATION HEALTH GROUP; AND PETER W. 

THOMAS, PRINCIPAL, POWERS, PYLES, SUTTER & VERVILLE, 

P.C., ON BEHALF OF THE COALITION TO PRESERVE REHABILITATION, 

STATEMENT OF BARBARA GAGE 

Ms. GAGE. Thank you, Chairman Pitts and distinguished members of the committee. I appreciate the opportunity to testify today 

on payment reforms for Medicare post-acute care. I have been 

studying these issues for a very long time and have led much of 

the research that underlies this work. 

Post-acute care is a very important issue for the Medicare program. Almost 40 percent of all hospital discharges go on to postacute care, so that is a key point that I want to drive home. We 

heard a bit about the expenses associated with it. 

Second, the patients who are in the acute care hospital for similar conditions we know are often discharged to different settings, 

and the information that we have leaves us a little unclear as to 

whether they are actually different in terms of their medical complexity or their functional complexity or cognitive, although some 

of our results suggest that is the case. 

Third, the standardized assessments developed as part of the 

post-acute care payment reform demonstration showed that these 

patients could be measured consistently and reliably across postacute and acute care settings, and once done, that would allow us 

to answer several questions, many of which came up today, with 

the same type of hospital patient discharged to alternative settings. 

We know that some of that varies by geographic area and the 

availability of beds but some of it may also vary by medical functional and cognitive status. Secondly, did the patient outcomes differ depending upon the site of care. 

So why should patients be measured in a standard way? That is 

a basic issue to answering these questions. As noted in your figures, you can see that almost one in five beneficiaries who are admitted to the hospital each year and about 40 percent are discharged from there into the post-acute care setting. Figure 1 is a 

little messy but it shows what a Medicare patient—their trajectory 

of care, and it underscores how these answers are not simple. People have different issues and attend different sites. So the sites include long-term care hospitals, inpatient rehab hospitals, skilled 

nursing facilities and home health agencies, all of which provide 

nursing and therapy services in their sites. Among the 37 percent 

of the PAC users who are discharged from the hospital to home 

health, 39 percent of them continued on to additional services, so 

an episode of care is not just one discharge, it is a continuation. 

The SNF admissions also tended to use multiple PAC services. Of 

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the 42 percent who were discharged first to a NSF, 77 percent continued on to additional services, and about 23 percent of these 

cases return to the hospital while another 32 percent were discharged from the SNF to home health for additional services. 

The probability and the type of post-acute care service used at 

hospital discharge can be partially explained by the reason for hospitalization, but as shown in figure 2, the types of cases that were 

most likely to use post-acute care were patients who had had joint 

replacements among the top five reasons for an admission to the 

hospital in Medicare, or stroke populations. However, the factors 

distinguishing what type of PAC setting would be used were less 

clear, and as you see on figure 2, the shares of these patients who 

were discharged to a SNF, 37 percent were home health with 36 

percent with another 19 percent discharged to inpatient rehab, so 

it is not that there is a little bit of variation going on. Conversely, 

medical cases such as pneumonia and congestive heart failure were 

less likely to continue to post-acute care. Only about 33 percent of 

these cases go from the hospital to post-acute care, but when they 

went, they were most likely to go to SNF or home health, which 

have very different costs. 

The probability of being readmitted to the hospital also varies by 

the reason for hospitalization, and as shown in figure 3, joint replacements may have a very small share who are re-hospitalized 

in that 30-day window because we know technically they are 

healthier if they were strong enough for that surgery. But over 30 

percent of the stroke, the pneumonia and the heart failure cases 

are readmitted during that window, and again, claims provide very 

little information to explain these differences. Additional information about health status is available from patient assessment data. 

In the Medicare program, assessment data is submitted in the inpatient rehab hospitals, through the MVS and the SNFs, through 

Oasis and the home health, and more recently, through the LTEC 

care in the long-term care hospital, and each of these assessment 

tools contain the same types of information including measures of 

their medical status, their functional status and their cognitive status as well as social support information collected by discharge 

planners. The same type of information is collected in the hospital 

as patients are admitted and managed through the stay. Despite 

these similarities in practices, few of the tools use the same items 

to measure the patient complexity. All are measuring primary and 

comorbid conditions, pressure ulcer staging, cognitive impairment, 

mobility and self-care limitations, many of the things we have been 

talking about this morning, as well as documenting whether the 

patient will need assistance at discharge, whether they live alone, 

and the types of medications they are on but without using a common language to measure these characteristics, a patient’s progression cannot be measured across the episode of care. 

So findings from the post-acute care payment reform demonstration, this came up this morning, this was a major initiative mandated by Congress in the Deficit Reduction Act of 2005, which required CMS to develop standardized assessment items for use at 

hospital discharge and at admission and discharge to the postacute care settings. The standardized assessment items were critical to allowing comparisons of the patient acuity, the differences 

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in the complexity across settings, and more importantly, to answer 

these questions about whether outcomes differ across the setting. 

First you need to be able to know that you are looking at the same 

patient in terms of complexity. 

Mr. PITTS. Could you begin to wrap up, please? 

Ms. GAGE. Yes. The care items were based on the science. They 

had the input of over 25 associations and each of the clinical communities working with the post-acute care populations and were 

highly reliable in each of the different settings. 

But what do these results tell us about payment policy? That one 

set of uniform assessment items can be used across acute and postacute care settings. They were reliable in all the settings. They allowed the differences in patient severity to be documented. 

A question about whether a standardized payment system can go 

into effect now based on the post-acute care payment reform data. 

We collected assessments on over 25,000 cases over 55,000 assessments in the data set, and while they were adequate for identifying 

key differences, key drivers of patients associated with one setting 

or another, there are small numbers of certain types of populations. 

So collecting the standardized data nationally for 2 years prior to 

actually finalizing payment systems will increase that sample size 

and allow you to have stronger numbers. 

Why use standardized items across the acute and post-acute settings? Condition severity is independent of setting. Using standard 

language to measure it in each of the three areas of health status 

will improve communication and allow data exchange across different IT systems. There is work underway right now by CMS and 

ONC working with the health IT communities to develop interoperable standards for the care assessment items, which will allow 

exchangeability even if one system is using a Mac and another an 

IBM product. CMS also provides the item specifications and the especifications, the training, the training materials to all providers 

who are required to submit assessment data, and the e-specifications are downloaded. 

So why should the standardized assessments be collected at the 

hospitals? The hospitals already collect this type of information but 

they use different items to do so. A recent review by the American 

Hospital Association showed that the hospitals under the bundled 

payments and under the accountable care organizations were trying to predict readmissions but you couldn’t compare differences 

across hospitals because they were all using their own systems. If 

you standardized the assessment items and include them, you can 

actually compare outcomes. 

[The prepared statement of Ms. Gage follows:] 

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Mr. PITTS. Thank you. The gentlelady’s time is expired. 

For the witnesses, we have a little series of lights on the table. 

It will start green. You will have 5 minutes. When it gets to red, 

that is 5 minutes, so if you can just keep that in mind and begin 

to wrap up at the red light. 

Dr. Brooks, you are recognized for 5 minutes. 

STATEMENT OF BARRY D. BROOKS 

Mr. BROOKS. Chairman Pitts, Ranking Member Pallone, thank 

you for the opportunity to testify on behalf of U.S. Oncology and 

Community Oncology regarding site-of-payment reforms. 

I am Barry Brooks, and for 32 years I have had the privilege of 

taking care of cancer patients in the community setting. Being an 

oncology is challenging but deeply rewarding, and I love it. 

Americans enjoy the best cancer survival rates in the world. One 

reason we have the best cancer care is because the network of community clinics that provides state-of-the-art cancer care close to 

home. Yet in recent years, we have had a sharp decline in community-based cancer care, leaving patients with fewer options and 

more expensive medical bills. Thanks for recognizing one of the 

main drivers in the shift of care. 

To be blunt, cancer care costs more in hospital outpatient departments and hospital-based care is growing by leaps and bounds. 

Congressional action is needed to stem the shift of care and the resulting costs incurred to Medicare, taxpayers and patients. 

I was pleased to hear Mark Miller’s testimony today, and I am 

glad that MedPAC is weighing in on this important issue. Hospitals play a critical role in cancer care delivery, and I am not 

going to try to diminish that today, but instead highlight access 

and cost consequences of an environment that favors hospital-based 

outpatient care. This unlevel playing field should be fixed by any 

support of patient choice and access to affordable, quality cancer 

care. 

In the current environment, hospital-based care enjoys numerous 

advantages over community clinics including up to 50 percent discounts on drugs for the 340B program, tax exemptions, Medicare 

reimbursement for uncollectable patient responsibilities, Government payments for uncompensated care, tax-deductible private contributions, and the focus of today, higher payments for the same 

services. 

In less than a decade, a third of outpatient cancer care has 

moved from the community to the hospital. Hundreds and hundreds of clinics have closed and hospitals are aggressively buying 

up private practice oncology. Many times when this happens, patients see the same physicians, nurses and caregivers in the same 

offices. The only thing that changes, like mentioned by Representative Ellmers, is the name on the door and the amount charged to 

Medicare and the patients. In other cases, outlying clinics are consolidated to be closer to the main hospital campus, as mentioned 

by Representative Rogers. This results in increased travel and hassle for patients undergoing cancer treatment. Either way, patients 

fighting cancer are burdened by new barriers to access, either financial alone or both financial and geographic. A Milliman study 

finds that this costs Medicare $6,500 more per beneficiary each 

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year, $623 million total each year, $650 more out of pocket for each 

senior cancer patient. 

Why should we accept a system that requires the Nation’s most 

vulnerable to pay more for the exact same service in a less convenient setting? Not only do hospitals charge more for the same services, their utilization and overall spending are higher too. An analysis of Medicare data by the Rand Company indicates hospitals 

spend 25 to 47 percent more on chemotherapy and 42 to 68 patient 

more on chemotherapy administration. The latest CMS payment 

rules worsen our problem. The 2014 payment rate for the most 

common chemotherapy infusion is now 125 percent higher in the 

hospital than in the community. A recent IMS study calculated 

prices for 10 common chemotherapy treatments and found hospital 

charges for those treatments 189 percent more on average than an 

independent doctor’s office. Sadly, they also show that patients who 

experience these higher out-of-pocket costs are more likely to discontinue treatment altogether. 

We know the committee has supported policies to equalize E&M 

payments across care settings. We strongly support the efforts of 

Representatives Rogers and Matsui to take an urgent approach for 

oncology services. There is no reason for different payments for the 

same outpatient services to depend on whose name is on the door. 

As proven over the last decade, Government-imposed market advantages will predictably lead to expansion and higher cost centers 

and corresponding reductions in patient access and increases in patient costs. Members of this committee have introduced and supported legislation that enhances cancer patient access like H.R. 

2869 that we are discussing today from Rogers and Matsui, H.R. 

800, Whitfield, Representative Green and DeGette, and H.R. 1416 

from Representative Ellmers and others. Over 30 members of this 

committee, 124 in all, have signed a letter to CMS questioning how 

the administration handled sequestration cuts on our Medicare 

Part B drugs administered in our office. Given the current reality 

facing our community oncology offices, if these solutions are not enacted, by this time next year there will be fewer community oncology clinics and more patients will have to travel farther and pay 

more for the same services. 

The world’s best cancer care delivery system is struggling. We 

need your help. 

Thank you for letting me testify today. I would be happy to answer questions when it is appropriate. 

[The prepared statement of Mr. Brooks follows:] 

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

Dr. Coopwood, 5 minutes for opening statement. 

STATEMENT OF REGINALD W. COOPWOOD 

Mr. COOPWOOD. Good morning, Chairman Pitts, Mr. Green, 

and—— 

Mr. PITTS. Can you poke the little button on there? Yes. Thank 

you. 

Mr. COOPWOOD. Good morning. Chairman Pitts, Mr. Green, and 

distinguished members of the subcommittee, I am Dr. Reginald 

Coopwood, President and CEO of Regional One Health in Memphis, 

Tennessee. I am here today on behalf of the American Hospital Association’s 5,000 member hospitals, and I appreciate this opportunity to share with you and your colleagues the hospital field’s 

perspective on site-neutral payment proposals. 

Regional One Health, which serves a three-State area, includes 

a nationally acclaimed level I trauma center, a level III neonatal 

intensive care unit, the only American Burn Center-certified burn 

center in our region, and a high-risk obstetrical referral center. Annually, there are more than 100,000 outpatient visits to our health 

system. We have four community primary care sites and more than 

32 subspecialty services are provided in our outpatient facilities. 

Nearly one in four people in Memphis live in poverty, and the city 

has a very low health ranking. 

Americans rely heavily on hospitals to provide 24/7 access to 

emergency care for all patients and to respond to every conceivable 

type of disaster. These roles are not specifically funded. Instead, 

they are built into a hospital’s overall cost structure and supported 

by revenues received from providing direct patient care across various settings including hospital outpatient departments. Even 

though this is the case, some policymakers have endorsed proposals 

that would make payments for service provided in a hospital the 

same as when a service is provided in a physician’s office or ambulatory surgery center. These proposals have a number of problems 

and would have devastating consequences for Medicare patients in 

the communities you represent. 

First, it is important to know that hospitals are already losing 

money providing outpatient services to Medicare beneficiaries. The 

Medicare Payment Advisory Commission data says that hospitals’ 

outpatient Medicare margins are a negative 11.2 percent. To make 

matters worse, if site-neutral payment proposals under consideration by some policymakers were enacted, it would result in outpatient payment department Medicare margins of nearly negative 

20 percent. This could force hospitals to curtail these vital outpatient services and threaten seniors’ access to care. 

Second, hospitals have additional financial burdens as compared 

to a physician’s office. As was previously mentioned, this is due to 

the need to provide the community with 24/7 emergency capacity. 

Hospitals are also subject to more comprehensive licensing, accreditation and regulatory requirements. For example, hospitals must 

comply with EMTALA, a State hospital licensure requirement, the 

voluminous Medicare conditions of participation and Medicare cost 

reporting requirements, among others. 

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Finally, when compared to patients treated in physicians’ offices, 

hospitals serve more medically complex patients as well as higher 

percentages of patients who are eligible for both Medicare and the 

Medicaid program and a higher percentage of disabled patients. 

At Regional Medical Center, our hospital-based outpatient departments play an integral role in the health system’s ability to fulfill our mission: to improve the health and well-being of the people 

we serve and to ensure that vulnerable patients have access to effective health care services which provide patients access to acute 

care services, a retail pharmacy that offers a sliding fee scale, medical interpretation services, surgical facilities, nutrition and diabetic care, as well as rehabilitation services. Providing these services has helped us reduce costly emergency department utilization, 

reduce hospital readmissions and improve care continuity for vulnerable patients and their health outcomes. The AHA has estimated that the proposed changes to hospital outpatient payments 

would reduce Medicare payments to my hospital, Regional One 

Health, by approximately $8 million over the next 10 years. Our 

ability to continue to improve the health status of our communities 

by ensuring that individuals have access to the right level of care 

at the right time in the right setting would diminish if those cuts 

were made. We also would have to evaluate our existing services 

as well as any plans to expand our service capacity. This would disproportionately impact the most vulnerable and elderly patients 

that we serve. 

Again, I appreciate your invitation to share the hospital’s perspective on site-neutral payment policies with the committee. I 

urge you to exercise caution and not to propose any recommendations to Congress that would dramatically reduce payments to hospitals until a complete analysis and debate has occurred. Ensuring 

adequate payment for all services will allow hospitals to continue 

to provide access to care for all patients. Thank you. 

[The prepared statement of Mr. Coopwood follows:] 

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

Dr. Landers, 5 minutes for opening statement. 

STATEMENT OF STEVEN LANDERS 

Mr. LANDERS. Chairman Pitts, Mr. Green, thank you so much for 

inviting me to testify today. My name is Steve Landers. I am a 

family doctor and geriatrician. My background is in home visitation 

for frail elders and people with disabilities and also in home health 

agency medical direction. I did my medical training at Case Western Reserve University in Cleveland, Ohio, and my geriatric training at Cleveland Clinic. I later went on to run Cleveland Clinic’s 

home care and post-acute care programs, but the true honor, really 

the greatest honor of my career has been 2 years ago being able 

to leave my post at Cleveland Clinic and become a visiting nurse, 

and I am now the President and CEO of the Visiting Nurse Association Health Group in New Jersey. It is the Nation’s second largest independent nonprofit home health organization in the country 

and the largest in New Jersey. We have been serving our communities for over 100 years. 

I have, through my role as a physician, as a medical director, as 

an administrator, come to admire, frankly, if not revere the work 

done by home and community health professionals, particularly 

nurses, aides, therapists, social workers. These individuals help 

people at the most desperate times in their lives. We know that 

those receiving Medicare home health services are sicker, older, 

more likely to be impoverished, more disabled, have higher disease 

burden than the general Medicare population. Home health services support these patients and families when they are really struggling, living in the shadows with things like Alzheimer’s disease, 

multiple sclerosis, Parkinson’s disease. They bring help to help people transition home from the hospital after a stroke, help patients 

learn to walk again, learn to eat again, support family caregivers 

in their often taxing job, sometimes 24/7 job, of helping their loved 

ones at home. 

Home health care, it is essential to these families and these individuals, but as importantly, it is also essential for the future of our 

country. We have 70 million aging baby boomers that want to remain independent at home. This is our country’s Sputnik moment 

for home care and elder care. We need to develop and improve our 

home care delivery system in order to help these individuals meet 

their needs and also so that the programs, the Medicare program, 

Medicaid programs, don’t suffer unnecessary financial burdens. 

Helping people stay home in a win-win where both the patients 

and families benefit and also the program sees savings. 

The current Medicare home care program, it could be so much 

more. We can do so much more. The current model is limited by 

overly complex paperwork requirements. We have nurses and physicians spending an inordinate amount of time checking off boxes 

and filling out forms. The program has struggled with some integrity issues and fraud issues, particularly in aberrant geographies, 

and that needs to be fixed. There is confusing and unnecessarily 

limiting homebound requirements that make it difficult for certain 

people to get home care services. It doesn’t make much clinical 

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sense to me as a physician, and also there are opportunities around 

technology and care coordination that we are just not achieving yet. 

And so that is why I am here to just share my enthusiasm and 

support for the work being done by Mr. McKinley and your committee on the bundling and coordinating post-acute care initiative 

because this is a true innovation in how we look at post-acute care, 

and the flexibility and the removal of barriers to home care and the 

respect of patient choice that has been engendered in this proposal 

I think are worthy of commendation, and I am thankful to have the 

chance to be here to testify in relation to that initiative. 

My former boss at Cleveland Clinic says that the future belongs 

to those who seize the opportunities created by innovation, and I 

believe that today that we are talking about a proposal that is an 

innovation in the Medicare program that can help us help more 

older Americans stay healthy at home in a sustainable way. 

Thank you so much for the chance to come today. 

[The prepared statement of Mr. Landers follows:] 

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

Mr. Thomas, 5 minutes for an opening statement. 

STATEMENT OF PETER W. THOMAS 

Mr. THOMAS. Thank you, Chairman Pitts, Congressman Green, 

and members of the subcommittee. Today I speak on behalf of the 

consumer-led coalition called the Coalition to Preserve Rehabilitation, or the CPR Coalition. It is about 30 rehabilitation and disability organizations, and it is run by a steering committee of the 

Center for Medicare Advocacy, the Brain Injury Association of 

America, the United Spinal Association, the National Multiple Sclerosis Association and the Christopher and Dana Reeve Foundation. 

My testimony today focuses on post-acute care and the importance of preserving access to rehabilitation, timely, intensive and 

coordinated rehabilitation care, in the context of site-neutral payment proposals and bundling proposals. 

First, I am worried about the importance of rehabilitation. The 

Coalition believes that rehabilitation is truly the lynchpin to improving health, function and independence of Medicare beneficiaries after an illness or an injury, a disability or a chronic condition. But these settings are not all the same, and in fact, the outcomes in these different settings are quite different, and I am 

happy to say that we are beginning to get new data that actually 

demonstrates this rather than just the intuitive sense that that is 

the case. 

Just a quick personal word. Like many Americans, I have personal experience with rehabilitation. When I was 10 years old, I 

spent about 2 1⁄2 months in a rehabilitation hospital, Craig Rehab 

Hospital in Denver, Colorado, following a car accident where I lost 

my legs below the knees, and proceeded to have a goal of walking 

into my fifth-grade class, which I did, and since then have used 13 

different sets of artificial limbs over the past 40 years and have 

had a real front-row seat in what a good rehabilitation program 

and what good prosthetic care really means. All Medicare beneficiaries should have the same access that I did to that care. 

Under Medicare PAC reform proposals, both site neutrality and 

bundling, all Medicare patients should have access to the right 

level of intensity coordination of rehabilitation in the right setting 

and at the right time and on a timely basis, and of course, that is 

easier said than done. We believe that any legislative changes to 

the post-acute care environment on these issues should not have 

the effect of restricting access to rehabilitation care and should 

avoid proposals that will lead to a reduction in Medicare rehab 

benefits or that erect policy barriers that will affect beneficiaries by 

essentially channeling them into settings of care that are less than 

what they need in terms of their individual or medical rehab benefits. 

In terms of the SNF/INF site-neutral payment proposal that has 

been proposed in the last few budgets from the President as well 

as MedPAC, the Coalition opposes this proposal. We believe this is 

little more than an outright financial disincentive for inpatient 

rehab hospitals and unit to accept certain beneficiaries based solely 

on the patient’s diagnosis and not based on their individual needs 

and rehabilitation and functional requirements. 

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And so while that is the case, we do not necessarily oppose bundling. In fact, recognize the different silos of care that often lead 

to inefficient care in the post-acute care environment and we favor 

well-developed bundling proposals that are based on sound evidence and are linked to quality measures and to risk-adjusted payments so that those savings are not achieved by essentially stinting 

on patient care. And with due respect to some of the things that 

I have heard this morning, we do believe that further study is 

needed in this area. This is a very complex area and it impacts 

very vulnerable Medicare beneficiaries. 

In terms of the Bundling and Coordination Post-Acute Care Act 

of 2014, we believe that this is a model—bundling is a model again 

that we do not oppose—but we think that especially to protect vulnerable beneficiaries, there needs to be some improvements, and 

we will just quickly tick off a few of those. Number one, we have 

great concerns about the bundle being held by an acute care hospital or an insurance company. We believe that PAC providers, people that are in the post-acute setting who understand rehabilitation 

and know what the patients’ needs and what they will need in 

terms of services should be the bundle holder in those instances. 

There is a concept known as the continuing care hospital pilot, 

which is mandated by law that CMS implemented and inexplicably 

CMS has not yet moved forward with that pilot. We encourage 

them to do so. A rehabilitation physician should be directing the 

care in a bundled payment system. 

Device exemptions should apply. You should not have prosthetics 

or orthotics, durable medical equipment that are of a customized 

nature included in the bundle because we have got evidence based 

on the SNF PPS many years ago that those kinds of devices are 

simply not provided to beneficiaries under a bundled payment system. They are either delayed or they are denied completely. And 

there are certain vulnerable patient populations such as traumatic 

brain injury, spinal cord injury and other conditions that we do not 

recommend bundling, at least in the initial phases of implementation. 

Risk adjustment and quality measures are obviously the most 

important to make sure that people are not underserved under 

bundled systems, and the rest of the detail on that is in my testimony. Thank you. 

[The prepared statement of Mr. Thomas follows:] 

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Mr. PITTS. The Chair thanks the gentleman. Thanks to all the 

witnesses for their opening statements. I will begin questioning 

and recognize myself 5 minutes for that purpose. 

Dr. Coopwood, in your written testimony, you suggest that the 

facility fees disparity between physician offices and hospital outpatient settings for cancer treatment is justified by the need to 

maintain ‘‘standby capacity that allow hospitals to respond to 

emergencies ranging from multivehicle car chases to hurricanes 

and terrorist attacks.’’ I would respectfully ask how this is relevant 

to the way Medicare pays for chemotherapy. 

Mr. COOPWOOD. Thank you. The way the hospital system’s cost 

structure is built into the payment, we have to—there are many 

things that we have to do that private physician offices do not have 

to do. I am a former surgeon and ran a three-member group, and 

we had a very lean office in order to be able to economically make 

that system work, but in operating a hospital and a hospital system, the costs associated with 24-hour emergency care, the costs 

associated with the accreditation bodies, just to have a hospitalbased clinic in order to qualify for Medicare patients, we have to 

be certified by Joint Commission. That puts a significant amount 

of burden and cost into the system that a private physician does 

not have to have. 

So all of those things that you mentioned built into the actual 

cost to operate a hospital-based clinic, they are not directly tied to 

the chemotherapeutic administration but it is part of the infrastructure costs that this facility must bear in order to deliver that 

high level of care. 

Mr. PITTS. Well, would you respond to this question? Is it fair 

that cancer patients face higher out-of-pocket costs for the same 

care when physician offices are bought by hospitals? 

Mr. COOPWOOD. And I guess ‘‘fair’’ is the key word in your question. When hospitals acquire physician practices, and there are 

many drivers as to why that happens—it is not just to get a higher 

payment—there are physicians in oncology practices that are coming to hospitals to acquire them because of the economics of trying 

to run private practice, the economics of trying to get an electric 

medical record, the difficulties in having continuity of care and 

wanting to be part of a system. So there are many drivers as to 

why these practices are coming into the hospital under the hospital’s continuum. Because of that transition from a less expensiverun entity into a more expensive or higher-cost entity, there is 

where the increase in reimbursement comes in to help pay for that 

higher infrastructure. 

Mr. PITTS. Well, are there any payment reforms or site-of-service 

reforms that you would support that might reduce payments to 

hospitals? 

Mr. COOPWOOD. I think there are—in my testimony, we, we 

being American Hospital Association, want to be a part of the conversation as we look at these payment proposals. I think that we 

don’t want to do in such a way that it jeopardizes the hospitals and 

puts hospitals at risk because if we do drastic measures in a way, 

it will put risk to those emergency services and all that because, 

as I described in my testimony, just changing it from a facilityVerDate Mar 15 2010 16:17 Jan 29, 2015 Jkt 037690 PO 00000 Frm 00193 Fmt 6633 Sfmt 6633 F:\113-148 MEDICARE PAY AWAIT TAG LINE\113-148 MEDICARE PAY PDF MADE WAY
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based payment to a private office payment adds $8 million to my 

hospital on a $300 million cost. I mean, that is significant. 

Mr. PITTS. Dr. Landers, in your written testimony you observe 

that care is much cheaper to deliver in home-based than institutional settings. In long-term care, some worry that a shift to homebased care ends up being more expensive due to more claimants 

coming out of the woodwork. Is this also the case for post-acute 

care? 

Mr. LANDERS. Thanks for your question, Chairman. As you correctly point out, care at home tends to be less expensive than facility-based care. For example, a month of post-acute care at home for 

a Medicare beneficiary is costing the program roughly $1,200 to 

$1,500 for that month versus in a subacute facility $12,000 to 

$15,000 for that same month of care, and we know from the variation that has been referenced earlier in this committee and from 

some of the research that has been submitted that there are many 

instances when the home is a clinically appropriate setting and we 

can get people home as an alternative to institutional care. So one 

of the opportunities in the bundled payment initiatives is to appropriately use home care, which is lower cost, often desired more as 

a substitute for unnecessary facility care, and not just clinically unnecessary. Patients and families don’t want to be unnecessarily 

pushed into facility-based care, so I see this as an opportunity to 

save money, not to spend more. 

Mr. PITTS. The Chair thanks the gentleman. My time is expired. 

The Chair recognizes the gentleman from Texas, Mr. Green, 5 minutes for questions. 

Mr. GREEN. Thank you, Mr. Chairman. 

Dr. Brooks, for the past few Congresses, I have teamed up with 

our Kentucky colleague, Congressman Ed Whitfield, in introducing 

legislation to fix a flaw in the Medicare reimbursement formula 

without impacting providers. This legislation is called the Prompt 

Pay Bill, H.R. 800, as you mentioned in your testimony, and would 

ensure that CMS no longer includes the prompt pay discount when 

reimbursing providers. 

Dr. Brooks, as we talked today about factors that are causing patients to be shifted out of the community settings to more expensive settings, what impact do you think passage of this bill would 

have on helping prevent this shift in care? 

Mr. BROOKS. Well, the prompt pay—thank you, Representative. 

I appreciate your bringing it up. It would help us a great deal. It 

would true up the legislative intent of the original legislation and 

right now we are not given that almost 2 percent on the Medicare 

service fee for managing chemotherapy drugs, and it would, in my 

opinion, metaphorically say take a lot of community practices off of 

life support, and if we were to pair it with the Rogers-Matsui bill 

and the Ellmers bill, we could restore vitality to community oncology, but prompt pay would go a long way standing on its own. 

Mr. GREEN. Do you think addressing that formula flaw would 

benefit both patients and ultimately the taxpayers on the amount 

that is being reimbursed? 

Mr. BROOKS. Absolutely. As I mentioned in my testimony, the 

most recent data suggests that the costs in the hospital outpatient 

department are almost triple what they are in our facilities, 189 

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percent in the IMS study. Certainly patients would benefit, because 

the copays would be so much less in that setting, and our practices 

tend to be located closer to a patient’s home so that the travel is 

less and the patient’s out-of-pocket costs are much less. Medicare 

gets no value from hospital-based outpatient cancer care. The patients get no value from hospital-based outpatient care. 

Mr. GREEN. And have there been studies that show differences 

between hospital-based and outpatient facilities on the quality of 

the care or the results? 

Mr. BROOKS. The care was assessed primarily for equality of the 

type of patient. There are no quality measures within those studies 

but there is no reason to think that the type of patients between 

the two facilities is any different whatsoever, and it is mostly just 

a cost and reimbursement setting issue. It benefits the patients to 

be in our clinics. 

Mr. GREEN. Thank you. 

Ms. Gage, under the current Medicare payment system, hospitals 

are not provided any financial incentives to refer patients to the 

most efficient or effective setting so that patients receive the most 

optimal care at the lowest cost. Whether a patient goes to a home 

health agency or skilled nursing facility, for example, depends more 

on the availability of the post-acute care setting in the local market, patient and family preferences or financial relationships between providers. 

Ms. Gage, since patients access post-acute care after a stay in 

the hospital, how can we best encourage hospitals to help ensure 

patients receive care at the right setting after a hospital stay? 

Ms. GAGE. Thank you for the question. Many of the—one way to 

address it is to keep the hospitals accountable for the post-discharge time period as is currently done with the readmissions policy in the fee-for-service program. Giving the hospitals accountability for the continuing care and the coordination with the subsequent providers is critical to forming the team that is needed to address the patient needs. 

Mr. GREEN. I know we are doing some of that now because of the 

Affordable Care Act, so do you see any recent evidence that that 

is occurring? 

Ms. GAGE. I do, as another hat that I wear is evaluating the bundled payment initiatives, and there is much more discussion in the 

hospitals that are participating in bundles to be communicating 

with the post-acute care setting and following the patient through 

that 90-day period and actually giving information around the entire caregiving team. It has led to reduced readmissions but there 

are two types of patients. There are the medical patients and the 

rehab patients, and in the rehab patients, you have fewer measures 

of outcomes than you have with the medical community except for 

functional change for those who have acute needs. 

Mr. GREEN. That brings up my next question. 

Mr. Thomas, there is resounding consensus that as part of any 

payment reform, robust, meaningful quality measures must be 

available. What challenges are there in measuring these quality 

outcomes of Medicare beneficiaries who receive these post-acute 

care services again in various settings? 

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Mr. THOMAS. Thank you very much for the question. Well, I 

would say first that the quality metrics across the different settings, the primary areas of post-acute care are not uniform and so 

it is very difficult to measure quality across different settings with 

different systems. I think that there is a lack of functional measures but in particular quality-of-life measures, and it is very important that after a post-acute care stay, it is not necessarily the 

range of motion that a person is able to achieve in their rehabilitation through their rehabilitation stay, it is whether that person can 

dress themselves again or whether they can play golf or whether 

they can go back to work if that is appropriate. It is returning to 

life roles, and that is—those kinds of measures, there are data sets 

that measure those kinds of things but that is where the consumer 

groups or disability groups would like to see much more emphasis 

on measuring those kinds of things of returning back to community 

life and living as independently as possible, and if you can’t do that 

as a result of a particular post-acute care stay because you weren’t 

set to the proper or the more intense setting of care with that set 

of services that you really need to meet your individual and unique 

needs, then you are really not getting all you can out of the Medicare program, and that would be a real shame. 

Mr. GREEN. Thank you, Mr. Chairman, and we will probably 

have some other follow-up questions of the panel. Thank you. 

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

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

questions. 

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

panel for being here today. These are issues that are very, very important to me, having been a nurse for over 20 years prior to coming to Congress, and again, also, my husband being a general surgeon and actually having had his own solo practice and now has 

joined a practice owned by a hospital, and I would say to that 

point, there are significant economic factors that play into that, especially now with the Affordable Care Act, and many of the costs 

that our physicians in private practice are faced with, and we understand the hospitals are also faced with many of those same situations, and I think it is important to point out and recognize that 

individual patient offices, small businesses are faced with many, 

many issues of overhead, Dr. Coopwood, you mentioned electronic 

medical records being one of them, great cost to individuals and 

practitioners, and those are definitely hurdles. 

But on that, I do want to talk—Dr. Brooks, you had mentioned, 

and I would like to talk a little bit about my bill, H.R. 1416, addressing the sequester cuts to Medicare Part B drugs as a result, 

as we know, of the sequester cut. Unfortunately, now, it has been 

over a year since I introduced that bill, and we do have a number 

of cosponsors. However, it is one of those things where information 

has to be gathered as we move along, and unfortunately, the results are playing out. There are many community cancer settings 

that are closing their doors or are being bought up by hospital 

practices. In fact, I had mentioned this in the previous panel with 

Mr. Miller, that a practice in my hometown that has been a 30- 

year oncology practice, private practice, has now been purchased by 

one of the hospitals. Now those same patients, although they will 

193 

be able to receive the care in that same clinic, will be paying more 

money, and I do think that this is significant and something that 

we must draw attention to. 

So I guess my question to you very simply and very plainly is, 

if we were to pass H.R. 1416—and again, when I talk about Medicare Part B drugs, it is not just chemotherapy drugs. We are talking about other drugs that any physician would have to be responsible for administering in the outpatient setting. Would there be a 

cost savings to that patient and would there be a cost savings to 

Medicare overall? 

Mr. BROOKS. If we were to pass 1416, and right now, for those 

of you who are not familiar with the perverse interpretation of 

CMS on our Part B payments, they decreased our service fee for 

managing chemotherapy and oncology offices not by 2 percent as 

we anticipated but by 28 percent when one does all the calculations 

because they included the entire cost of the drug. And so our service fee was decreased by 28 percent. This has caused great hardship in the oncology communities, and even with my own U.S. Oncology Network, we have practices now in peril, and prior to sequestration, really those practices were fine. So this additional 

blow on top of the lack of prompt pay relief and the lack of site 

neutrality payments—I mean, CMS decreased our reimbursement 

for chemotherapy infusion again this year—those triple burdens 

are causing practices even in our very robust, efficient network to 

be financially imperiled, and if we got 1416 passed, we got relief 

from that, that would put us back just like Representative Green’s 

question, it would take us off of life support. Right now, we are impoverished and barely paying the light bills. 

Mrs. ELLMERS. Thank you, Dr. Brooks. 

And Dr. Landers, I do have a question for you. I am a huge proponent of home care services. I think we are helping our patients, 

especially our Medicare patients, our most vulnerable, to stay out 

of the hospital setting where they can be at home receiving care. 

One of the other issues, as we know, and I am sure you are aware 

as well, and I just want to get your verification on this. We are 

talking about a patient population of Medicare patients who are 

largely women and we are also talking about an employee population that is by and large women as well. You know, we are faced 

with this question here in Washington all the time: how can we 

empower women and what is the true war on women. How do you 

feel about that situation? 

Mr. LANDERS. Congresswoman, thank you for the question. In my 

experience, one of the best things about my work has been with 

many nurses and patients and family caregivers, quite frankly in 

home care most of them have been women, and if you look at the 

Affordable Care Act re-basing cuts that are sort of just across-theboard, non-risk adjusted, non-outcomes-based cuts, they are hurting women disproportionately because that is where—that is who 

is involved with home care by and large, our employees, our 

nurses, our therapists, our social workers, our aides are disproportionately women. The patients tend to be women and also we can’t 

forget family caregivers. Although some of us men chip in every 

once in a while, the women nationally are bearing the brunt of the 

family caregiving responsibilities and home care is their support 

194 

and their lifeline. So I am glad that you brought that up, and I 

think it is important that we are focused on payment reform and 

innovation based on value rather than these across-the-board disproportionate cuts on things that hurt a lot of people including a 

lot of women. 

Mrs. ELLMERS. Thank you, Dr. Landers, and thank you, Mr. 

Chairman, for indulging me and letting me go over a little bit. 

Mr. PITTS. That is all right. Thank you. The Chair thanks the 

gentlelady. 

We are voting. We have got 12 minutes left in the vote. We will 

go to Mr. Rogers, 5 minutes for questions. 

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

Mr. Brooks, can you tell me in your experience as a community 

oncologist what this shift that we talked about earlier of the closure of so many, 241, I think, practices around the country, what 

impact does that have on a patient that is in one of those 241 

closed facilities? 

Mr. BROOKS. Thank you for the question. I have had the opportunity to talk to some of my friends who have been acquired by the 

hospital, and I have been curious about some of the hospital assertions that licensing requirements and other things are more onerous under that situation. I have not been able to discern any additional licensing requirements that were required for these offices 

that were taken over, but one of my friends in another State, I 

talked to him recently, and when he transitioned his patients who 

were on chemotherapy from his bills to the hospital bills, he had 

several patients come in with their bills and say what is this, because the bills were over 100 percent more than what he had 

charged them from his own thing, and the door had changed names 

but the nurse was the same, the doctor was the same, the office 

was the same, and the patients were confronting him and he had 

substantial angst, but in his defense, their practice was in peril financially. They were not doing well, and they could have hung on 

a while longer but they were on an intolerable course based on, in 

his case, mostly sequestration. 

So there have been serious displacements among my colleagues 

and they are not happy to go to the hospital. They would prefer to 

be independent but in many cases want to continue to take care 

of their cancer patients and that was their only option. 

Mr. ROGERS. And what about those that have been closed? I 

mean, we talked a lot of numbers. I could talk to you all day long 

about the cost disparities or not, the payment disparities or not, 

but a patient is in that mix and in that number somewhere. So my 

center closes. What happens? If you are an average patient there, 

you are in the middle of some radiation treatment that is not an 

easy process to go through, talk about the patient, Doctor, if you 

would. 

Mr. BROOKS. Oh, the patients are at the center of our concern 

here, and if our centers in rural Texas close, we are the only providers. Hospitals are always talking about being the only provider 

but we are the only provider for cancer care in most of rural Texas, 

and if our center, say, in Paris, Texas, where we are 70 percent 

Government pay, if that center were to be deemed by our organization to be no longer financially viable and we had to close that, 

195 

those patients would have to drive more than 100 miles each way 

for a radiation center. 

Mr. ROGERS. And what does that mean? If I am a patient undergoing treatment, what does that 100 miles mean to me? 

Mr. BROOKS. Well, Representative Rogers, if you are frail 

enough, you can’t do it. You can’t continue 100-mile commute every 

day for five weeks, and it is an issue that comes up for us all the 

time. Frail, elderly patients cannot make long commutes. They are 

not able to. And they choose to discontinue treatment and not get 

adequate care. 

Mr. ROGERS. And I have heard examples and I am sure you have 

heard examples of people who are choosing not to continue care or 

treatment because of the distance to travel. 

Mr. BROOKS. Yes, sir. 

Mr. ROGERS. Well, that is one way to save money, I guess. 

Mr. BROOKS. Yes, sir, it is a perverse way to save money, but it 

is true that patients discontinue therapy because of travel burdens, 

particularly in States that are spread out like Texas. 

Mr. ROGERS. My frustration with this is exactly what you said, 

so one day the shade goes down and it is whatever the rate is, the 

next day it opens up under this new contract because a hospitalaffiliated center now and the price goes up, and I think the number 

we heard was roughly 20 percent on average across all of the specialties. What is the difference in care that that person gets from 

the day that the shade goes down until the day the shade goes up? 

What is the difference in care? 

Mr. BROOKS. There is no measurable added value for those patients, and there is no measurable added benefit to Medicare for 

transferring the care. 

Mr. ROGERS. Are there more regulations they have to follow? 

Mr. BROOKS. I have actually—the hospitals assert that. I have 

looked into that, and I have asked my friends who have been acquired by the hospital and have not been able to find any additional licensure requirements or other regulatory burdens that they 

had to bear after hospital acquisition. I sought that information 

and was not able to find any. 

Mr. ROGERS. Again, Mr. Chairman, I think we would all be remiss in our duties if we stand by and allow one more cancer patient not to be able to make travel, select not to get treatment or 

their costs go up so prohibitively they can’t continue treatment. 

Shame on all of us if we can’t pull this together pretty soon so that 

we don’t lose any more of these centers. I think it is awful important we deal with this issue soon. Thank you, Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman. There is 6 minutes 

left to vote on the floor. Dr. Burgess, you are recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman, and again, I want to 

thank our panel. I appreciate you being with us today and your forbearance through what has been a long morning. 

Dr. Brooks, as you were answering Mr. Rogers’ question, I think 

he asked specifically about someone who was receiving radiation 

therapy, but a chemotherapy patient then has that 100-, 120-mile 

drive home, I can’t quite do the calculation on how many sublingual Zofran may have to be consumed on that drive but you are 

196 

adding a significant burden to the clinical course of that patient, 

are you not? 

Mr. BROOKS. Yes. Travel is a burden when you are ill. I mean, 

any of us who have just had the flu and tried to drive to your local 

doctor’s office understand how crummy you feel in a reasonable 

commute. But in very long commutes for people that are chronically and acutely ill, it is intolerable, and people do select to discontinue care for that reason. 

Mr. BURGESS. I am old enough to remember when your partners 

came to our community hospital, and we were grateful for that, to 

have the services for our patients, but I also remember not being 

able to electively hospitalize a patient on a Tuesday because that 

is the day your partners filled the hospital up with their chemotherapy patients, so it was also a great day when they opened their 

own center and now the chemotherapy was administered as an outpatient. So are we in fact driving back the other way? Is hospital 

bed availability going to become an issue because of the occupancy 

of those beds with chemotherapy patients? 

Mr. BROOKS. Well, it is a little different these days. We don’t actually put people in inpatient beds like we did—I actually didn’t 

know you were that old. But in my youth as an oncologist, we did 

in fact hospitalize patients, put them in hospital beds. Nowadays, 

most hospitals have outpatient treatment departments that look 

quite similar to our physician offices, and they do not occupy inpatient beds in most cases. So that is not a concern per se. 

But the migration, like Mark Miller said earlier, from the lower 

cost, more efficient to the higher cost, less efficient because of the 

economic incentive, and that is what we are looking at here. 

Mr. BURGESS. Yes, and I actually tried to encourage him to be 

a little bit more vocal about that, and I wasn’t able to draw it out 

of him, so I appreciate your articulating that concept because I 

think it is important. 

I used to be a student of medical irony but now I have kind of 

branched out. I just cannot tell you the frustration of dealing with 

the Centers for Medicare and Medicare Services trying to get them 

to calculate a correct arithmetic equation of the 2 percent reduction 

in the sequester of ASP Plus 6, and this was the subject of a letter. 

We had a lot of people that signed on. To their credit, they wrote 

me back but they wrote me back to me indicating that they didn’t 

understand how to do simple arithmetic. ASP Plus 6, for people 

who don’t understand what that is, that means you take the average sales price of, in this case, a drug, and you add 6 percent, 

which arguably should cover the cost of storage, administration, 

your staff’s time, the IV tubing, all of the things that are connected 

with administering that drug. I recognize that the plus 6 doesn’t 

really cover that, but still, in theory, the plus 6 should cover that. 

But it makes no sense if you are going to apply an across-theboard reduction with the sequester of 2 percent. You would never 

begin with the ASP part of that equation. The ASP part of that 

equation is a fixed cost. That is a direct cost. That is like saying 

well, we are going to reduce—someone is going to come in and reduce your light bill by 2 percent because Medicare is cutting you 

2 percent. They are not going to do that. Your electricity charge for 

keeping the drug refrigerated, your carrying charge is all the same. 

197 

It has not been impacted. No one has cut you a break because 

Medicare is reducing your reimbursement. 

So I continue to be frustrated with that. I continue to try to educate our good friends over at the agency. So far, I have not been 

successful, but like you, I fear that the consequence of this error 

in calculation is going to be a big driver. Again, you so well articulated what the actual reduction means to your clinic and your office 

and how hard it will be to keep your doors open. 

Let me just ask one last thing before we finish up and I have 

to go vote. The issue of EMTALA came up, and Dr. Coopwood, I 

think you referenced that, that this is of course something that the 

hospital bears, but doctors bear it too. I mean, EMTALA applies to 

both providers that are both physicians and hospitals. So the question on the EMTALA mandate actually affects both physicians and 

hospitals. Is that not correct? 

Mr. COOPWOOD. I am really just aware of the responsibility of a 

hospital’s role in EMTALA. Someone shows up on their perimeter 

property, they have a responsibility to treat them and at the minimum stabilize them. I am not sure if that extension goes into the 

physician’s office practice because they are not obligated to see everyone who presents to them as a hospital is obligated to see everyone in emergency situations. 

Mr. BURGESS. Let me elaborate on that just a little bit, because 

as a member of the hospital staff of your hospital, if your emergency room doctor calls me because of a woman in labor, for example, I got to show up. I have got to show up within 30 minutes or 

a $50,000 fine comes my way. So I would just argue that it does 

affect the doctors as well as the hospitals. It might not affect the 

bottom line in our office practice, but as far as the taking of our 

professional services, it still occurs under EMTALA as it does for 

you. 

Mr. COOPWOOD. Absolutely. 

Mr. BURGESS. Mr. Chairman, I know we have a vote on. 

I want to thank our panel again. It has been very informative. 

I have got some questions I am going to submit for the record. 

Thank you for being here, and I will yield back. 

Mr. PITTS. The Chair thanks the gentleman. 

There is no time left on the clock for voting, so I urge members 

to get over to vote. We still have some 250 people who haven’t 

voted. 

Thank you for your responses, for the questions. Some additional 

questions we will send to you in writing. We ask that you please 

respond promptly. I remind members that they have 10 business 

days to submit questions for the record, and I ask the witnesses to 

please respond promptly. Members should submit their questions 

by the close of business on Wednesday, June 4th. 

A very good hearing. Thank you so much for sharing your expertise with us. Without objection, the subcommittee hearing is adjourned. 

[Whereupon, at 12:48 p.m., the subcommittee was adjourned.] 

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