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THE OBAMA ADMINISTRATION’S MEDICARE DRUG 

EXPERIMENT: THE PATIENT AND DOCTOR PERSPECTIVE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 17, 2016 

Serial No. 114–146 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

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 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

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 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California7 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

BRETT GUTHRIE, Kentucky 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

SUSAN W. BROOKS, Indiana 

CHRIS COLLINS, New York 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

GENE GREEN, Texas 

Ranking Member 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

DORIS O. MATSUI, California 

BEN RAY LUJA ́ N, New Mexico 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

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

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

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

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 4 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 6 

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

New Jersey, opening statement .......................................................................... 7 

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

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

prepared statement .............................................................................................. 116 

WITNESSES

Debra Patt, M.D., Medical Director, U.S. Oncology Network .............................. 9 

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

Michael Schweitz, M.D., National Advocacy Chair, Coalition of State 

Rheumatology Organizations .............................................................................. 28 

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

Marcia Boyle, President and Founder, Immune Deficiency Foundation ............ 43 

Prepared statement .......................................................................................... 45 

Answers to submitted questions ...................................................................... 269 

Heather Block, Patient Advocate ........................................................................... 56 

Prepared statement .......................................................................................... 58 

Joe Baker, President, Medicare Rights Center ..................................................... 63 

Prepared statement .......................................................................................... 65 

SUBMITTED MATERIAL

H.R. 5122, A Bill to prohibit further action on the proposed rule regarding 

testing of Medicare part B prescription drug models, submitted by Mr. 

Pitts ....................................................................................................................... 118 

Letter of May 2, 2016, from Hon. Tom Price, et al., to Andy Slavitt, Acting 

Administrator, Centers for Medicare & Medicaid Services, Department of 

Health and Human Services, submitted by Mr. Green .................................... 120 

Letter of April 29, 2016, from Chuck Grassley, a United States Senator 

from the State of Iowa, to Sylvia Burwell, Secretary, Department of Health 

and Human Services, submitted by Mrs. Blackburn ........................................ 141 

Letter of May 2, 2016, from AARP, et al., to Sylvia Burwell, Secretary, 

Department of Health and Human Services, and Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services, Department of 

Health and Human Services, submitted by Ms. Schakowsky .......................... 145 

Statement of Ariel A. Gonzalez, Director, Federal Health & Family, AARP, 

May 17, 2016, submitted by Ms. Schakowsky ................................................... 149 

Statement of American Federation of Labor and Congress of Industrial Organizations, May 17, 2016, submitted by Ms. Schakowsky .................................. 151 

Letter of May 16, 2016, from Robert Roach, Jr., President, Alliance for Retired Americans, et al., to Mr. Upton and Mr. Pallone, submitted by Ms. 

Schakowsky .......................................................................................................... 152 

Letter of May 16, 2016, from Scott Frey, Director of Federal Government 

Affairs, AFSCME, to Representatives in Congress, submitted by Ms. Schakowsky .................................................................................................................. 154 

Page

IV 

Letter of May 16, 2016, from Judith Stein, Executive Director/Attorney, Center for Medicare Advocacy, to Mr. Upton and Mr. Pallone, submitted by 

Ms. Schakowsky ................................................................................................... 155 

Statement of Doctors for America, submitted by Ms. Schakowsky ..................... 157 

Letter of May 17, 2016, from Lynn Quincy, Associate Director, Health Policy, 

and Victoria Burack, Policy Analyst, Consumers Union, to Mr. Pitts and 

Mr. Green, submitted by Ms. Schakowsky ........................................................ 159 

Statement of Justice in Aging, May 17, 2017, submitted by Ms. Schakowsky .. 161 

Statement of Max Richtman, President and CEO, National Committee to 

Preserve Social Security and Medicare, May 17, 2016, submitted by Ms. 

Schakowsky .......................................................................................................... 163 

Letter of May 16, 2016, from Holly R. Hart, Assistant to the International 

President, Legislative Director, United Steelworkers, to Ms. Schakowsky, 

submitted by Ms. Schakowsky ............................................................................ 166 

Letter of May 6, 2016, from Gary Harbin, President, Public Sector 

HealthCare Roundtable, to Sylvia Burwell, Secretary, Department of 

Health and Human Services, and Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services, Department of Health and Human 

Services, submitted by Ms. Schakowsky ............................................................ 168 

Statement of the International Union, United Automobile, Aerospace and 

Agricultural Implement Workers of America, May 17, 2016, submitted by 

Ms. Schakowsky ................................................................................................... 170 

Statement of Wanda Filer, President, American Academy of Family Physicians, March 10, 2016, submitted by Ms. Schakowsky ..................................... 171 

Letter of May 9, 2016, from Ms. Schakowsky, et al., to Andy Slavitt, Acting 

Administrator, Centers for Medicare & Medicaid Services, Department of 

Health and Human Services, submitted by Ms. Schakowsky .......................... 173 

Letter of May 16, 2016, from Elizabeth Warren, a United States Senator 

from the Commonwealth of Massachusetts, et al., to Sylvia Burwell, Secretary, Department of Health and Human Services, et al., submitted by 

Ms. Schakowsky ................................................................................................... 176 

Letter of May 17, 2016, from Clyde Terry, Chairperson, National Council 

on Disability, to Andy Slavitt, Acting Administrator, Centers for Medicare 

& Medicaid Services, Department of Health and Human Services, submitted by Mr. Pitts .............................................................................................. 180 

Letter of May 17, 2016, from Mary R. Grealy, President, Healthcare Leadership Council, to Mr. Pitts and Mr. Green, submitted by Mr. Pitts .................. 183 

Letter of May 16, 2016, from Susan A. Cantrell, Chief Executive Officer, 

Academy of Managed Care Pharmacy, to Mr. Pitts and Mr. Green, submitted by Mr. Pitts .............................................................................................. 188 

Letter of March 17, 2016, from 1 in 9: The Long Island Breast Cancer 

Action Coalition, et al., to House and Senate leadership, submitted by 

Mr. Pitts ................................................................................................................ 191 

Letter from the Alliance for the Adoption of Innovations in Medicine, et 

al., to House and Senate committee leadership, submitted by Mr. Pitts ........ 202 

Letter of May 9, 2016, from Tony Coelho, Chairman, Partnership to Improve 

Patient Care, et al., to Andy Slavitt, Acting Administrator, Centers for 

Medicare & Medicaid Services, submitted by Mr. Pitts .................................... 205 

Letter of April 27, 2016, from Senate Finance Committee Democrats to Andy 

Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services, 

submitted by Mr. Pitts ......................................................................................... 214 

Letter of May 9, 2016, from Scott H. Peters, a Representative in Congress 

from the State of California, to Andy Slavitt, Acting Administrator, Centers 

for Medicare & Medicaid Services, submitted by Mr. Pitts .............................. 217 

Letter of May 13, 2016, from House Democrats to Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services, submitted by Mr. 

Pitts ....................................................................................................................... 218 

Letter of April 28, 2016, from Senate Committee on Finance Republicans 

to Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid 

Services, submitted by Mr. Pitts ......................................................................... 222 

Letter of May 9, 2016, from Christopher W. Hansen, President, American 

Cancer Society Cancer Action Network, to Sylvia Burwell, Secretary, Department of Health and Human Services, submitted by Mr. Ca ́ rdenas .......... 225 

Letter of May 9, 2016, from Sara Radcliffe, President and CEO, California 

Life Sciences Association, to Andy Slavitt, Acting Administrator, Centers 

for Medicare & Medicaid Services, submitted by Mr. Ca ́ rdenas ...................... 253 

Page

V 

Report by the Memorial Sloan Kettering Cancer Center, ‘‘Examining Congressional comments regarding Medicare’s Part B pilot proposal,’’ May 16, 2016, 

submitted by Mr. Welch ...................................................................................... 255 

(1) 

THE OBAMA ADMINISTRATION’S MEDICARE 

DRUG EXPERIMENT: THE PATIENT AND 

DOCTOR PERSPECTIVE 

TUESDAY, MAY 17, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

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

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

Members present: Representatives Pitts, Guthrie, Shimkus, Murphy, Blackburn, Lance, Griffith, Bilirakis, Long, Ellmers, Bucshon, 

Brooks, Collins, Green, Engel, Capps, Schakowsky, Butterfield, 

Castor, Sarbanes, Schrader, Kennedy, Ca ́ rdenas, and Pallone (ex 

officio). 

Also present: Representative Welch. 

Staff present: Mike Bloomquist, Deputy Staff Director; Sean 

Bonyun, Communications Director; Rebecca Card, Assistant Press 

Secretary; Karen Christian, General Counsel; Paul Edattel, Chief 

Counsel, Health; Tim Pataki, Member Services Director; James 

Paluskiewicz, Professional Staff Member, Health; Graham Pittman, 

Legislative Clerk; Chris Sarley, Policy Coordinator, Environment 

and the Economy; Jennifer Sherman, Press Secretary; Adrianna 

Simonelli, Legislative Associate, Health; Heidi Stirrup, Policy Coordinator, Health; John Stone, Counsel, Health; Sophie Trainor, Policy Advisor, Health; Jeff Carroll, Democratic Staff Director; Tiffany 

Guarascio, Democratic Deputy Staff Director and Chief Health Advisor; Jessica Martinez, Democratic Outreach and Member Services 

Coordinator; Samantha Satchell, Democratic Policy Analyst; Andrew Souvall, Democratic Director of Communications, Outreach, 

and Member Services; and Arielle Woronoff, Democratic Health 

Counsel. 

Mr. PITTS. I will ask all Members to take their seats. The time 

of 10:00 has arrived. 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 will take a closer look at a recent proposed rule 

from the Centers for Medicare and Medicaid Services, CMS, on a 

2 

Part B drug payment model. This proposal represents the biggest 

change in Medicare drug reimbursement in years. 

There are several aspects that are concerning to many, including 

the mandatory nature of this so-called demonstration project, the 

breadth of the experiment essentially across the Nation in virtually 

all primary care service areas and the timing. 

These major changes would take place as early as July and on 

top of the current implementation of MACRA, the new payment 

structure for physicians that replace the SGR, the sustainable 

growth rate. 

But perhaps the most concerning aspect of this proposal is that 

it came from unelected bureaucrats in this administration who 

made the decision behind closed doors affecting our seniors and 

their health care. 

What happened to the transparency in regard to stakeholders 

that we expect when considering proposals of this magnitude? In 

fact, these concerns over provider reimbursement under the Medicare Part B program are so considerable that recently 242 bipartisan Members of Congress wrote to the administration and asked 

that the rule be withdrawn. 

Several others letters from both the House and Senate have been 

sent detailing numerous and serious concerns. Moreover, our 

Health Subcommittee colleague, Dr. Larry Bucshon, recently introduced legislation that would stop this proposal from advancing. 

So today, we’re going to hear from doctors and patient advocates 

about their views on this proposed rule. I want to make it clear at 

the outset that we are not opposed to demonstration programs and 

in fact have supported a number which tests certain models in limited areas to determine positive or negative outcomes and whether 

such demonstrations should be advanced in a larger context. 

However, the health and well-being of seniors is nothing to be experimented with. This particular rule could result in grave consequences for our seniors. CMS is proposing to reduce reimbursement for physician-administered drugs with half of the country’s 

providers seeing dramatic cuts. 

The other half will retain current reimbursement levels, but half 

of those will be used to test out vague value-based purchasing arrangements, and after a very long 5 years CMS will see what happened. 

Keep in mind Medicare is the largest payer of provider-administered drugs. The Part B program covers provider-administered 

injectables and certain other drugs for physician offices and outpatient clinics the provider purchases and administers the product 

before submitting a claim to Medicare. 

After purchasing a drug from a wholesaler or a specialty distributor, the provider will store the product at its location. 

The provider then administers the drug to the patient and after 

the patient receives the drug and any other medical care, the provider then submits a claim for reimbursement, hence term buy and 

bill, because the medical claim is submitted after the provider has 

purchased and administered the drug. 

The Medicare Prescription Drug Improvement and Modernization 

Act of 2003—MMA-requires Medicare to use a drug’s average sale 

3 

price—ASP+6 percent for reimbursing provider-administered 

injectable drugs. 

ASP is based on the manufacturer’s actual selling price minus all 

price concessions. CMS asserts this system somehow gives incentives for physicians to prescribe more expensive drugs and therefore has proposed this nationwide two-phase experiment which 

would allow half of the providers to continue to be reimbursed at 

ASP+6 percent while the other half would receive the lower 

ASP+2.5 percent rate plus a fixed $16.80 payment. 

However, with the impact of sequestration calculated in the reimbursement falls to nearly ASP+0 percent. This proposal is so far 

reaching and has caused so much concern it is difficult to imagine 

any meaningful conclusions can be drawn because marketplace realities will undermine the integrity of this massive and unprecedented experiment on patients and providers. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

The subcommittee will come to order. 

The chairman will recognize himself for an opening statement. 

Today’s hearing will take a closer look at a recent proposed rule from the Centers 

for Medicare and Medicaid Services (CMS) on a Part B Drug Payment Model. 

This proposal represents the biggest change in Medicare drug reimbursement in 

years. There are several aspects that are concerning to many, including: the mandatory nature of this so-called demonstration project; the breadth of the experiment— 

essentially across the Nation in virtually all primary care service areas; and the 

timing—these major changes would take place as early as July and on top of the 

current implementation of MACRA—the new payment structure for physicians that 

replaced SGR (Sustained Growth Rate). 

But perhaps the most concerning aspect of this proposal is that it came from 

unelected bureaucrats in this administration who made decisions behind closed 

doors affecting our seniors and their health care. What happened to the transparency and regard for stakeholders that we expect when considering proposals of 

this magnitude? 

In fact, these concerns over provider reimbursement under the Medicare Part B 

program are so considerable, that recently 242 bipartisan Members of Congress 

wrote to the administration and asked that the rule be withdrawn. Several other 

letters from both the House and Senate have been sent detailing numerous and serious concerns. Moreover, our Health Subcommittee colleague, Dr. Larry Bucshon, recently introduced legislation that would stop this proposal from advancing. So today 

we are going to hear from doctors and patient advocates about their views on this 

proposed rule. 

I want to make clear at the outset that we are not opposed to demonstration programs and in fact have supported a number which test certain models in limited 

areas to determine positive (or negative) outcomes and whether such demonstrations should be advanced in larger contexts. However, the health and well-being of 

seniors is nothing to be experimented with. 

This particular rule could result in grave consequences for our seniors. CMS is 

proposing to reduce reimbursement for physician administered drugs, with half of 

the country’s providers seeing dramatic cuts. The other half will retain current reimbursement levels but half of those will be used to test out vague value-based purchasing arrangements. And after a very long 5 years, CMS will see what happened. 

Keep in mind, Medicare is the largest payer of provider-administered drugs. The 

Part B program covers provider-administered injectables and certain other drugs. 

For physician offices and outpatient clinics, the provider purchases and administers 

the product before submitting a claim to Medicare. 

After purchasing a drug from a wholesaler or specialty distributor, the provider 

will store the product at its location. The provider then administers the drug to the 

patient. After the patient receives the drug and any other medical care, the provider 

then submits a claim for reimbursement. Hence the term, buy-and-bill, because the 

medical claim is submitted after the provider has purchased and administered the 

drug. 

4 

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 

(MMA) requires Medicare to use a drug’s Average Sales Price (ASP) + 6% for reimbursing provider-administered injectable drugs. ASP is based on the manufacturer’s 

actual selling price, minus all price concessions. 

CMS asserts this system somehow gives incentives for physicians to prescribe 

more-expensive drugs and therefore has proposed this nationwide two-phase experiment which would allow half of the providers to continue to be reimbursed ASP + 

6% while the other half would receive the lower ASP + 2.5% rate plus a fixed $16.80 

payment. However, with the impact of sequestration calculated in, the reimbursement falls to nearly ASP + 0%. 

This proposal is so far-reaching and has caused so much concern it is difficult to 

imagine any meaningful conclusions can be drawn because marketplace realities 

will undermine the integrity of this massive and unprecedented experiment on patients and providers. 

Mr. PITTS. My time has expired, so I yield back the balance of 

my time and now recognize the ranking member of the subcommittee, Mr. Green, 5 minutes for his opening statement. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. Good morning. I thank 

our panels for being here today. 

As we know, CMS, through the Centers for Medicare and Medicaid Innovation, recently proposed to test value-driven payment 

models for prescription drugs under Medicare Part B. 

This proposal has garnered significant reaction and response 

from the provider, patient, and the pharmaceutical communities. 

I appreciate the Chair for having this hearing today and hope 

this committee will take the opportunity to examine the proposals, 

merits and drawbacks. 

While the loudest voices have been oppose to the model outright, 

it is important to thoroughly evaluate the issues CMS is attempting to address and look at the proposal with calm and reason, and 

I appreciate CMS’ consistent goal of strengthening the Medicare 

program. However, I have some concerns about the size and scope 

of the proposed demonstration and its potential impact on Medicare 

beneficiaries’ access to physician-administered drugs now and in 

the future. 

I also question how the demonstration may affect physicians’ 

participation in existing and upcoming delivery and payment reform models. 

Currently, Medicare Part B pays physicians and hospital outpatient departments the average sales price, or ASP, of a drug plus 

the 6 percent add-on on payment commonly referred to as ASP+6. 

Medicare pays ASP+6 for drugs regardless of the price paid to acquire the drug. MedPAC and others have raised concern that the 

6 percent add-on may create incentives to use higher priced drugs 

when lower priced alternatives are available and appropriate for 

the patient. 

It’s difficult to know the extent in which a percentage add-on to 

ASP influences drug-prescribing patterns because few studies have 

looked into this issue. 

Prescription drug spending in the United States was about $457 

billion in 2015 and roughly 17 percent of the overall health spending. In 2015, Medicare Part B spent $20 billion on outpatient drugs 

5 

administered by physicians and hospital outpatient departments, 

which has doubled the amount spent in 2007. 

Beneficiary cost sharing under fee for service Medicare Part B is 

20 percent with no out of pocket limit. According to the GAO, some 

seniors and people with disabilities have faced catastrophic expenses amounting to as much as $100,000. The median annual income for Medicare beneficiaries is less than $25,000 a year, and 

one in four have less than $12,000 in savings. 

There’s a national conversation occurring about the cost of prescription drugs. I appreciate CMS for attempting to address this 

issue in part by proposing to test tools that reward value in Medicare Part B similar to the efforts in the private sector. 

Congress should not ask seniors to pay 20 percent of increasingly 

expensive therapies without due consideration of whether their 

money is being well spent. Healthcare delivery systems are rightfully changing and Medicare should not be left behind. 

I’m confident that providers will fulfill their calling and practice 

medicine, delivering the best care for their patients rather than 

pad their bottom lines. 

Yet, on behalf of seniors and the sustainability of the healthcare 

system at large we cannot put our heads in the sand and ignore 

trends. This proposed model is far from perfect and I have serious 

concerns about the aspects of it. 

Recently, I joined members of this committee in sending a letter 

to CMS outlining our concerns with the demonstration and urging 

the agency to address them. 

I ask for unanimous consent, Mr. Chairman, to submit this letter 

for the record. 

Mr. PITTS. Without objection, so ordered. 

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

Mr. GREEN. I look forward to hearing from our witnesses about 

their perspective of the model and concerns we’ve outlined to the 

agency. 

Taking a step back, I’m going to bring up a related issue that has 

become part of the conversation around the demonstration which is 

that of prompt pay. 

I have long had an interest in preserving seniors’ access to quality care by ensuring Medicare pays at a rate that will retain a robust network of providers. 

H.R. 696, also know and the Prompt Pay bill, is a piece of legislation I’ve introduced with my colleague on our committee, Mr. Whitfield, for several Congresses. 

The bill excludes the prompt payment discounts offered by manufacturers to wholesalers from the average sales price for drugs and 

biologics covered under Medicare Part B. 

This became an issue when the Medicare Modernization Act was 

enacted in 2003. It reduces the amount doctors are reimbursed for 

administrative treatments and as a result patients are pushed to 

more expensive settings for their care. 

Reducing the number of options for patients, diminishing the access drives up the costs in both short and long term and is bad policy. The Prompt Pay discount has negatively affected patients for 

many years before sequestration and whether we adopt legislation 

6 

repealing, replacing or otherwise authoring the sequester without 

adopting H.R. 696 the underlying issue will still exist. 

Thank you, Mr. Chairman, and our witnesses here today and I 

look forward to a robust discussion about the proposed demonstration and I yield back my time. 

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

the vice chair of the full committee, Mrs. Blackburn, 5 minutes for 

her opening statement. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I do want to 

say welcome to our witnesses. I think that you can tell from the 

chairman’s statement and you’ll find out from the questions that 

you hear we are all very concerned about a couple of things that 

are happening with the demonstration project. 

Number one, rural areas—they’re already challenged, and I have 

19 counties in my district in Tennessee and some of the more rural 

counties are quite concerned about this and healthcare providers 

are very concerned about this and fear that this may be the type 

component that pushes some of these providers to the brink and 

out of the business in service areas. 

So we are very concerned about that, especially when it comes 

to things like cancer and getting the appropriate treatments. And 

Mr. Chairman, I would like to include for the record a letter that 

is dated April 29th from Senator Grassley to Secretary Burwell. 

Senator Grassley has made specific inquiries of the secretary if 

CMS—if this model is in fact a clinical trial but without the typical 

patient safeguards. 

And I understand that clinical trials are important. In my district we have a lot of physicians and researchers who participate 

in this when it comes to oncology treatment. 

I have had the opportunity to visit with some of them, and they 

are quite concerned about the way this is moving. So I ask permission to submit the letter. 

Mr. PITTS. Without objection, so ordered. 

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

Mrs. BLACKBURN. Thank you, Mr. Chairman, and to each of you 

again, we’re going to look forward to digging a little deeper on this. 

Access to the right type care at the right time is essential for positive outcomes and so we will be seeking your guidance and with 

that I will yield to any other member of the committee seeking 

time or will yield back. 

Mr. PITTS. All right. 

Mrs. BLACKBURN. Yield back. 

Mr. PITTS. Without objection the lady yields back, and now the 

Chair recognizes the ranking member of the full committee, Mr. 

Pallone, 5 minutes for an opening statement. 

7 

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

Mr. PALLONE. Thank you, Mr. Chairman, and thanks to the witnesses who will be testifying today. I think we would all agree that 

it is critical we continue to transform our healthcare system into 

one that incentivizes value over volume. 

That is the theme we heard time and again when we worked together to repeal the SGR and replace it with a payment system 

that rewards doctors for the quality of care they give to seniors and 

we were all in agreement that more care must be replaced with 

better care. The status quo, we said, was unsustainable. 

The success of this kind of delivery system reform, however, is 

not possible if we do not give Medicare the tools to stay in business. 

Medicare must be able to innovate just like the private sector is 

doing and that’s why I support the innovation center that was authorized in the Affordable Care Act because it allows Medicare to 

test new models that improve care and save money. 

Now, we’ve all heard loud and clear that there are concerns with 

the center’s most recent proposal to change the way we reimburse 

doctors for drugs administered in their offices under Part B. I look 

forward to hearing more from our witnesses today about the rule. 

I don’t think anyone here would claim this proposal is perfect. 

I’m particularly interested in hearing about how to ensure that 

seniors have access to necessary drugs. I’m also interested in better 

understanding how we can assure that the evaluation of this proposed model is robust and thorough before it’s expanded. 

To date, there has been widespread engagement ranging from 

comments from stakeholders to letters from Members of Congress. 

This feedback is an important part of the process, and I believe 

the administration will take into account these concerns and make 

changes to address them in the final rule. 

So I’d like to now yield the remainder of my time to Congresswoman Schakowsky. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Thank you Mr. Chairman. And thank you to the witnesses for testifying today. 

I think we would all agree that it is critical we continue to transform our healthcare 

system into one that incentivizes value over volume. That is a theme we heard time 

and again when we worked together to repeal the SGR and replaced it with a payment system that rewards doctors for the quality of care they give to seniors. We 

were all in agreement that more care must be replaced with better care. The status 

quo, we said, was unsustainable. 

The success of this kind of delivery system reform, however, is not possible if we 

do not give Medicare the tools to stay in business. Medicare must be able to innovate, just like the private sector is doing. That is why I support the Innovation Center that was authorized in the Affordable Care Act because it allows Medicare to 

test new models that improve care and save money. 

Now we have all heard loud and clear that there are concerns with the Center’s 

most recent proposal to change the way we reimburse doctors for drugs administered in their offices under Part B. I look forward to hearing more from our witnesses today about the rule. I don’t think anyone here would claim this proposal 

is perfect. I am particularly interested in hearing about how to ensure that seniors 

have access to necessary drugs. I’m also interested in better understanding how we 

8 

can ensure that the evaluation of this proposed model is robust and thorough before 

it is expanded. 

To date, there has been widespread engagement, ranging from comments from 

stakeholders to letters from Members of Congress. This feedback is an important 

part of the process, and I believe the administration will take into account these 

concerns and make changes to address them in the final rule. 

I’d like to yield the remainder of my time to Congresswoman Schakowsky. 

Ms. SCHAKOWSKY. I thank the gentleman for yielding. I strongly 

believe that lowering drug prices is imperative to the sustainability 

of our healthcare system, especially our public insurance programs 

like Medicare, and I support CMS’ proposal to create a demonstration project for drugs paid under Part B. 

Luckily, I’m not alone. Many organizations that represent beneficiaries, insurance companies and consumer organizations, including AARP, Aetna, the AFL–CIO, the Alliance for Retired Americans, AFSCME, the American Federation of Teachers, Center for 

American Progress, Center for Medicare Advocacy, Doctors for 

America, Consumers Union, Families USA, Justice in Aging, Kaiser Permanente, Medicare Rights Center, National Committee to 

Preserve Social Security and Medicare, the National Education Association, the National Partnership for Women & Families and the 

Boilermakers, among others, support this proposal, and I’d like, 

Mr. Chairman, to enter their letters of support for the Part B demonstration project into the record. 

Mr. PITTS. Without objection, so ordered. 

Ms. SCHAKOWSKY. I’d also like to enter into the record several 

additional statements of support from many of those same groups 

as well as the United Steelworkers, the Public Sector HealthCare 

Roundtable, United Auto Workers, and the Academy of Family 

Physicians supporting CMS’ proposal. 

Mr. PITTS. Without objection, so ordered. 

Ms. SCHAKOWSKY. And I—thank you—and I’d also like enter into 

the record a letter signed by 20 Members of the House and a letter 

signed by 11 Senators supporting CMS’ proposal. 

Mr. PITTS. Without objection, so ordered. 

[The information submitted by Ms. Schakowsky appears at the 

conclusion of the hearing.] 

Ms. SCHAKOWSKY. Yet, every time we attempt to do anything to 

rein in drug costs we are met with fierce opposition. We are actively reforming every other aspect of our healthcare system to pay 

for value except pharmaceuticals. 

In fact, drug manufacturers are the only one entity that can 

charge Medicare anything they want for their products. We would 

never accept that from any other entity in our healthcare system 

and we should no longer accept it from pharma. 

The proposal from CMS is not final. They have committed themselves to working with stakeholders to address their concerns. In 

fact, CMS has indicated that they would be open to changes including the scope of the proposal and exceptions for small and rural 

providers. 

But all we hear today is no. With no alternative ideas on how 

to realign incentives and reduce drug costs for beneficiaries and 

that is not good for anyone anymore. 

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We cannot continue on this unsustainable path where drug costs 

rise faster than overall health costs and patients are bankrupted 

in order to pay for the lifesaving drugs that they need. 

You know, in some ways I would rather find out that there is no 

cure for a certain disease that I have than know that that cure is 

right there in front of me, but I simply cannot afford it. Because 

I don’t have the dollars to pay for it, I can’t get that cure. This is 

unconscionable. I think it’s also un-American, and I yield back. 

Mr. PITTS. The gentleman’s time has expired. As usual, all opening statements of the Members will be made a part of the record. 

I have a UC request. as well. I’d like to submit the following documents for the record: statements from the National Council on 

Disability, Healthcare Leadership Council, American College of 

Rheumatology, Academy of Managed Care Pharmacy, letters from 

the ASP Coalition, two dozen members of the patient community, 

Partnership to Improve Patient Care, the American Association of 

People with Disabilities and over 80 other patient advocacy organizations, Senate Finance Democrats, Representative Scott Peters, 25 

Democratic Members, Senate Finance Republicans and we also 

completed a review of 218 comments from State and national 

groups as well as over 800 individuals. The vast majority of comments express concern and urge withdrawal. 

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

Mr. PITTS. So at this point, I’ll introduce the witnesses in the 

order that you will present testimony. First of all, we have Dr. 

Debra Patt, MD, MPH, MBA, Vice President, Texas Oncology Medical Director, the U.S. Oncology Network Chair, Clinical Practice 

Committee of the American Society of Clinical Oncology, Editor-inChief, Journal of Clinical Oncology, Clinical Cancer Informatics 

and Board Member of Community on Oncology Alliance. Welcome. 

Then Dr. Michael Schweitz, MD, FACP, MACR, National Advocacy Chair, Coalition of State Rheumatology Organizations, CSRO; 

Ms. Marcia Boyle, President and Founder, Immune Deficiency 

Foundation; Ms. Heather Block, a patient advocate and Mr. Joe 

Baker, President, Medicare Rights Center. 

Thank you for coming today. Your written testimony will be 

made a part of the record. We ask that you summarize. We’ll give 

you each 5 minutes for your summary. So at this point the Chair 

recognizes Dr. Patt, 5 minutes for your opening statement. 

STATEMENTS OF DEBRA PATT, M.D., MEDICAL DIRECTOR, U.S. 

ONCOLOGY NETWORK; MICHAEL SCHWEITZ, M.D., NATIONAL 

ADVOCACY CHAIR, COALITION OF STATE RHEUMATOLOGY 

ORGANIZATIONS; MARCIA BOYLE, PRESIDENT AND FOUNDER, IMMUNE DEFICIENCY FOUNDATION; HEATHER BLOCK, 

PATIENT ADVOCATE; JOE BAKER, PRESIDENT, MEDICARE 

RIGHTS CENTER 

STATEMENT OF DEBRA PATT 

Dr. PATT. Chairman Pitts and Ranking Member Green, thank 

you for the opportunity to testify today on behalf of Texas Oncology, the U.S. Oncology Network, the Community Oncology Alliance 

and the American Society of Clinical Oncology regarding the oncolVerDate Mar 15 2010 12:04 Sep 01, 2017 Jkt 037690 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 I:\114THCONGRESS\114X146MEDICAREDRUGSJKTREQ083017\114X146MEDICAREDRU
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ogy community’s grave concerns with the proposed Medicare Part 

B drug payment model. 

My written statement provides numerous arguments against the 

CMS-proposed model but with the limited time I have today as a 

physician I will tell you why this is bad medicine for patients. 

I am Dr. Deborah Patt and for 13 years I have been providing 

care to cancer patients in Texas. As a physician, quality care and 

value are the standards by which I practice every day. 

My patients often face life-and-death situations, and my responsibility is to help them choose and then deliver the personalized 

treatment for their disease. Increasingly, the time I have to spend 

with patients is consumed with overcoming a complex maze of administrative obstacles to provide treatment. 

But the CMS-proposed model is not just another hurdle. It’s an 

experiment that is simply unworkable in cancer care. Let me explain. 

CMS has proposed an experiment that randomizes physicians by 

ZIP Codes into test and control groups. The study hypothesis is 

that financial disincentives for use of newer more expensive drugs 

will cause physicians to choose less expensive treatment alternatives. 

In my world, this is clinical research. Unlike the CMS experiment, however, my patients have to volunteer their participation in 

a clinical trial. But there is no opting out of this mandatory national experiment. 

There is no informed consent for patients, no monitoring for adverse events, and no ability to evaluate impact on quality and outcomes. These are central requirements of any ethical research. 

In this experiment, Medicare beneficiaries in certain ZIP Codes 

won’t have access to treatments that have a known survival advantage. This is simply unacceptable. 

More fundamentally, the underlying hypothesis for this experiment that these incentives will result in reduced Medicare spending is simply unfounded. I will let my written testimony explain 

how UnitedHealthcare Project has already disproved the CMS hypothesis. 

Today, I’d like to focus on how few opportunities there are to select therapeutic alternatives based solely on drug price. Ten years 

ago when I met my patient Karen, who has metastatic breast cancer, she couldn’t walk. She couldn’t stand without pain. Her bones 

were riddled with disease and she was told there was no hope. 

Within a year of meeting Karen she developed metastatic breast 

cancer to her brain. Ten years ago, we knew that patients with 

metastatic breast cancer to their brain lived an average of a few 

weeks. Karen had an option of a different treatment because the 

disease amplified a receptor called HER2, and she was given a 

novel and targeted therapy that we know would change her course 

dramatically. 

In the last 10 years, Karen has had some disease progression in 

her brain. But she’s lived to see her son get married and she 

danced at his wedding. She’s lived to see her first grandchild be 

born and grown into school age and she continues to receive targeted treatment today and enjoys a good quality of life. 

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These targeted therapies are expensive but the alternative treatment to these expensive medications would lead to an early death. 

Premature death is not a treatment alternative. 

When I started my fellowship at the MD Anderson Cancer Center in 2003, myeloma patients lived an average of 3 years. Usually 

they were 3 years of toxic therapy. 

Today, an average myeloma patient lives greater than 7 years 

due to new novel therapies and they live better because myeloma 

has become a chronic disease where many patients have remission 

for many years. 

The treatment is expensive, but the lower cost alternative would 

shave years off their life and diminish their quality of life as well. 

I remind the committee that Medicare covers 60 percent of cancer 

patients, and the number of Medicare beneficiaries are growing 

every day. 

The CMS experiment has the potential to affect treatment options and outcomes for the most significant and vulnerable segment 

of the population fighting cancer. Interfering with the physician’s 

ability to act in the patient’s best interest is counter to our core 

values and certainly inconsistent with the good work Congress has 

done to advance high quality, high value care to every American. 

It is not who we are. Like everyone here today, I am very concerned about the increase in cost of treating cancer, especially rising drug prices. 

However, as I outlined in my written testimony, the CMS proposal will not only fail to reduce drug prices, but in fact it will likely increase costs. 

In closing, I want to thank the members of the committee for 

their extraordinary support of community-based cancer care. Many 

on this panel and even more on the full committee have introduced 

legislation, authored amendments, and wrote letters to improve 

cancer care and access for our patients. 

Most recently, thank you to Congressman Bucshon for introducing H.R. 5122. On behalf of oncologists nationwide, thank you 

for holding this hearing to highlight the serious concerns around 

the CMS proposal. 

I know we share the common goal of providing high-quality medical care to Medicare beneficiaries and thank you for your work on 

their behalf. When it’s appropriate I’m happy to answer any questions. 

[The statement of Dr. Patt follows:] 

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

Dr. Schweitz, 5 minutes for your opening statement. 

STATEMENT OF MICHAEL SCHWEITZ 

Dr. SCHWEITZ. Thank you, Chairman Pitts and Ranking Member 

Green, for inviting me to testify today on behalf of the Alliance of 

Specialty Medicine and the Coalition of State Rheumatology Organization. 

The alliance is a coalition of national medical societies representing specialty physicians in the United States. The CSRO is 

a group of State and regional rheumatology societies primarily 

made up of community practitioners formed to ensure access to the 

highest quality care for rheumatologic disease. 

I am a practicing physician and I spend the vast majority of my 

time taking care of patients. I am here today to discuss our concerns regarding the Part B demonstration project and to support 

Dr. Bucshon’s bill, H.R. 5122. 

I note for the committee that our concerns track those expressed 

in the letter CSRO signed together with more than 300 stakeholders urging withdrawal of the demo. 

We have expressed our procedural concerns in my written testimony. But today I will focus on our substantive concerns including 

prescriber behavior, patient access and sustainability. 

First, clinical decision making is not influenced by the add-on 

cost. We take issue with the underlying premise of the rule which 

is the belief by CMS that clinical decision making is driven by the 

opportunity to maximize revenue. 

Data supporting this premise is not existent. In fact, in a recent 

report by Magellan it looked at utilization of rheumatoid arthritis 

medications and found that physicians are not routinely prescribing the most expensive product. 

In fact, in 2014 in the physician’s office the most expensive product was one of the least prescribed. Second, many rheumatology 

practices will be unable to absorb this reduction. The current 6 percent add-on already results in practices without volume purchasing 

power, being underwater on several products. 

A reduction from 6 to 2.5 percent plus a nominal flat fee will result in unsustainable cuts, especially considering that CMS did not 

incorporate the impact of sequestration in its calculations. 

Specifically, the current reimbursement level is actually ASP+4.4 

percent. Accounting for sequestration, the new rate will be 

ASP+0.86 percent with a flat fee. 

Rheumatology is a specialty of small practices. For example, in 

my State there are only a few practices with seven or more doctors. 

Many practices with one or two rheumatologists do not have the 

purchasing power to buy at ASP. 

Third, and most importantly, is the impact on our patients. As 

a result of these unsustainable cuts, if the demo moves forward patients will lose access to office-based infusions. 

CSRO surveyed its members to ascertain the behavioral response 

to the CMS proposal and 73.08 percent of respondents said that infusible Part B biologic options would no longer be available for 

Medicare patients in their offices—44.87 percent of respondents 

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noted that they would refer to hospitals or external infusion centers to continue therapy. 

Hospital referrals will create challenges for patients with rheumatoid arthritis including the distance to an outpatient center and 

increased personal cost to beneficiaries, especially those in rural 

areas. 

It also runs counter to the goals of the model as costs of the 

Medicare program will be higher when patients must receive therapy in the outpatient department instead of the physician’s office. 

Fourth, value-based purchasing cannot be one size fits all and 

will require significant stakeholder input through pre-rulemaking 

engagement. One of the concepts in Phase II are interesting to explore while we believe they are not developed enough yet to even 

be in a proposed rule since they do not contain enough detail for 

comment meaningfully. 

In addition, in rheumatology we don’t have comparative affecting 

this data to compare treatments. There are very few studies that 

do that. On average, it takes two or more drugs in sequence before 

finding the one that the patient responds to. 

And finally, the cost of these drugs are closely grouped so there 

is little reason to apply tools such as reference pricing. 

In conclusion, the alliance and CSRO appreciates CMS’ concern 

about high drug prices and would like to work with the Congress 

and the administration to find solutions. 

However, we must oppose the Part B drug payment model as it 

suffers from serious procedural and substantial flaws that we believe render it unworkable and it does nothing to actually address 

the issue of drug costs. 

As such, we have requested that CMS withdraw the model and 

we urge the committee to do the same. The alliance and CSRO 

thank the committee for its attention to this critical topic and for 

the opportunity to provide the views of practicing rheumatologists 

on the Part B model. 

[The statement of Dr. Schweitz follows:] 

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

Boyle, 5 minutes for her opening statement. 

STATEMENT OF MARCIA BOYLE 

Ms. BOYLE. Well, thank you, Chairman Pitts, Ranking Member 

Green and all members of the subcommittee for inviting me to testify today on behalf of the Immune Deficiency Foundation, or IDF. 

IDF is the national patient organization founded in 1980 dedicated to improving the diagnosis, treatment and quality of life of 

people with primary immunodeficiency diseases through advocacy, 

education and research. 

Primary immunodeficiency, or PI, represents a group of more 

than 250 rare chronic genetic diseases in which part of the body’s 

immune system is missing or functions improperly, resulting in decreased ability to fight infection. 

Approximately 250,000 people are diagnosed with PI in the 

United States. Many require lifelong lifesaving treatment with 

immunoglobulin replacement therapy, or IG therapy, to replace 

antibodies needed to fight infection. 

When patients cannot access IG, their lives are threatened and 

they experience more doctor visits, hospitalizations and time away 

from work and school. 

I’m here today representing IDF and patients of PI, including my 

own son, who was diagnosed as an infant. We have serious issues 

with the Part B model and have asked CMS to withdraw it. 

In addition, we signed a letter expressing these concerns led by 

the Arthritis Foundation and 24 groups representing millions 

across the country with wide ranging conditions such as lupus, 

mental illness, cancer and the healthcare needs our veterans face. 

Our concerns are rooted in our experience with the previous 

Medicare reimbursement change that resulted in many of our 

Medicare patients losing access to their lifesaving treatment. 

Starting in 2005, there was significant reductions in reimbursement for IG products as a result of the Medicare Modernization 

Act, which changed Part B drug reimbursement from the average 

wholesale price to ASP+6 percent. 

In 2007, two studies by HHS reported on the difficulties physicians and specialty pharmacies had obtaining IG at the Medicare 

reimbursed price and the impact on patients’ ability to obtain their 

infusions. 

One noted the 61 percent of responding physicians that they had 

sent patients to hospitals for IVIG treatment because of their inability to acquire adequate amounts of IVIG or problems with 

Medicare payment. 

But the problems were even bigger than that. Many patients lost 

access to IG not only in the physician’s office but in the home as 

well. Thankfully, Congress responded by passing the Medicare 

IVIG Access Act with overwhelming support including support from 

every member of this subcommittee who was in Congress at that 

time. 

This demonstration is currently underway and IDF anticipates it 

will lead to a permanent fix in the current Medicare home infusion 

benefit for IVIG. 

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We are not crying wolf. Patients with PI have personally experienced the unintended consequences of major payment changes, 

which is why we wish CMS had engaged in more pre-rulemaking 

dialogue with stakeholders before issuing such a sweeping proposal 

that will dramatically impact beneficiaries. 

In addition, our fear is that the proposed Part B model which explicitly includes the ongoing Medicare IVIG access demonstration 

will undercut this demo. Some specialty pharmacies report that 

they are already close to underwater with ASP+6 and low payment 

for their items and services. 

With regard to the so-called value-based purchasing tools contemplated by CMS for Phase II of the model there is insufficient 

detail on the concepts proposed to comment one way or the other 

and this is particularly troubling because we have never seen any 

definition around what value actually means particularly to patients. 

Our patients have extensive experience with private insurers 

using the word value as a guise for implementing cost cutting tools 

that deny or delay access to needed treatments. 

This experiment needs significant stakeholder input and requires 

true dialogue with those who will be affected, especially patients. 

We also have procedural concerns with the model. The innovation 

center is authorized to test innovative delivery models to reduce 

program expenditures while preserving or enhancing the quality of 

care furnished to beneficiaries. 

However, the model is not a test. It contains a Medicare program 

change. In addition, we are concerned that this policy change does 

not preserve or enhance the quality of care for beneficiaries. In 

fact, we are convinced it will reduce quality and access for our patients. 

In conclusion, IDF has urged CMS to withdraw the Part B drug 

payment model and request the Congress do everything in its 

power to stop this harmful experiment from moving forward. It 

jeopardizes beneficiary access to needed medications, is the result 

of an opaque and poorly thought out process and may actually increase costs to the Medicare program. 

I thank the committee for its attempt to create accountability in 

the CMS process and for the opportunity to present the potential 

implications of the model for patients with PI. 

[The statement of Ms. Boyle follows:] 

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

Ms. Block, 5 minutes for your opening statement. 

STATEMENT OF HEATHER BLOCK 

Ms. BLOCK. Good morning. Thank you, Chairman Pitts, Ranking 

Member Green, and distinguished members of the Subcommittee 

on Health for inviting me to testify today. 

I rarely share my cancer story as I find every cancer story is 

unique to the person and often frightening or boring to everyone 

else. But due to the importance of this hearing, I’d like to share 

my story. 

I found a lump in my own breast while managing aid projects for 

the State Department and the U.N. in Afghanistan. I was mystified 

as no one in my family had ever had cancer before. 

I returned to the U.S. for a diagnostic mammograms, and it was 

negative, so I returned to Afghanistan. My doctor suggested it 

might be a mastitis infection due to an injury. There was a chance 

I had bruised myself when I fled an attack that May. Running and 

jumping into a police truck will leave some bruises. 

I ignored worsening symptoms as the mammogram had been conclusively negative. Within three months, I returned again to the 

U.S. for a second mammogram, and it was invasive breast cancer. 

I continued to work through a mastectomy and six months of 

chemo, by then managing the monitoring and evaluation of aid 

projects in Iraq. 

A year after my oncologist said I was cured, I learned that the 

cancer had returned. It was now in my liver. There was a chance 

to surgically remove the cancer from my liver but cancer cropped 

up in my lungs within days of a pretty brutal liver resection. 

Stage IV, no cure—I was reeling with the news and my 

oncologist told me that 50 percent of women survived 2 years and 

only 20 percent approximately survive 5 years and that I would remain in treatment for the rest of my life. 

At 4 1⁄2 years, I’m living beyond most projections. 

But this isn’t a feel-good story. My personal catch-22 is that 

while drugs are keeping me alive, I’m also going through my savings at an alarming rate. 

I spend a ridiculous amount of time and energy trying to cut 

costs and drafting budgets based on living longer with less money 

and rising drug costs and trying to figure out how to move closer 

to my cancer center—I do live in a rural area—when I cannot sell 

my house. 

It is the only asset that cannot be taken from me if I end up declaring medical bankruptcy. 

I was so relieved when I found out that I qualified for Medicare, 

even though I’m well under 65. For those unaware, one can qualify 

for Medicare after 29 months on Social Security disability income 

if you’re unable to work. 

My drugs are billed through Part B, as most cancer treatment 

drugs are, but my relief was short-lived when I realized that the 

drugs are exceedingly expensive, and I am always on the hook for 

the 20 percent co-pay. 

Medicare right now pays about $2,000 a month for my monthly 

treatment. There’s no out-of-pocket maximum for Medicare Part B. 

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This means I’m responsible for paying 20 percent of ever cancer 

drug that I receive forever more. 

This is why I was pleased to hear about the demo. The CMS 

demo proposes to address rising drug prices in a 5-year evaluation, 

not an overhaul of Medicare Part B. It’s a way for the Government 

to begin to shift pricing incrementally based on what they learn. 

By evaluating payment models over a 5-year period CMS can determine best practices without forcing me to change doctors, hospitals or affecting my drug coverage. 

How else can Medicare continue to ask me to pay for 20 percent 

of increasingly costly prescription drugs without any evaluation of 

whether my money is being well spent. 

I want to know that the drugs that are being used to treat my 

cancer are the ones that will do the best job and not just make my 

doctor the most money. 

Every patient deserves that. In all of the uproar over this proposal I have yet to hear anyone say that the current system is 

working. Where did the payment formula of +6 even come from and 

why would anyone push to keep a system where prescribing choices 

could be motivated by money? 

It seems common sense to remove any possibility of financial incentive and instead create an appropriate handling or storage fee. 

I also think it’s worth mentioning that my 20 percent co-pay is 

based on whatever Medicare pays. My provider may receive rebates 

or discounts. I’m still paying full freight. 

I’m betting also that most patients don’t know that one component to be studies reduces or even waives the 20 percent co-pay 

and I’m hoping that my ZIP Code is selected for that part of the 

demo. 

These proposals simply put new options on the table to evaluate 

tools that are already being used in the private sector. 

As a taxpayer and a patient, this is exactly what I want our Government to be doing—getting the best value for our money. Frankly, we need to start somewhere. The price of drugs is not sustainable. 

CMS needs to test ways to hold down prescription drug spending. 

Patients like me should not have to choose between getting lifesaving drugs or paying our mortgage. No one should have to fear 

bankruptcy as much as cancer. 

Finally, I’d like to share America’s dirty little secret. We already 

have drug rationing. It’s called affordability. Drug innovation is 

meaningless without affordability. 

Thank you for the opportunity to address the subcommittee, and 

I look forward to answering any questions that you might have. 

[The statement of Ms. Block follows:] 

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

Mr. Baker, 5 minutes for your opening statement. 

STATEMENT OF JOE BAKER 

Mr. BAKER. Thank you. Chairman Pitts, Ranking Member Green 

and distinguished members of the Subcommittee on Health, thank 

you for the opportunity to testify on the Part B drug payment 

model. 

As president of the Medicare Rights Center, I lead a national 

nonprofit organization that works to ensure access to affordable 

health care for older adults and people with disabilities through 

counselling and advocacy, educational programs and public policy 

initiatives. 

The Medicare Rights Center supports the proposed model. The 

model seeks to realign perverse payment incentives while ensuring 

that healthcare providers can continue to prescribe the medications 

best suited to the individual needs of patients. 

The model also brings innovative value-based payment strategies 

being used in the private market to the Medicare program. 

Transitioning Medicare to a system that reimburses on the basis 

of value is an aim supported by diverse voices including patients 

and consumers, physicians, hospitals, health insurers and others. 

This objective will not be realized if pursued only in silos, meaning the prescription drugs including Part B medications, must be 

part of these reforms. 

Beyond improving the quality of care delivered to beneficiaries, 

the proposed model may help the Medicare program by promoting 

more efficient use of program funds. Last year, Medicare spent $22 

billion on prescription drugs, double the amount spent in 2007. 

The Medicare Rights Center answers nearly 17,000 questions on 

its national help line and provides educational resources to over 2 

million individuals each year through medicareinteractive.org and 

other means. 

Challenges affording needed health care are a common theme 

heard on our help line. Sky-high cost sharing for Part B drugs is 

a notable concern most often for cancer and immuno-suppressant 

medications. 

Many of these cases involve beneficiaries with original Medicare 

who lack adequate supplemental coverage. Estimates suggest that 

between 10 to 14 of beneficiaries only have original Medicare, making them responsible for a 20 percent coinsurance on all Part B 

services with no out of pocket maximum. These beneficiaries can 

be exposed to catastrophic costs which can reach as high as over 

$100,000. 

Calls to withdraw the Part B payment model fail to acknowledge 

the very real and unrelenting beneficiary access challenges that 

exist under the current payment system, not merely hypothetical 

ones. 

We commend the Centers for Medicare and Medicaid Services for 

proposing to test solutions that have the potential to alleviate calamitous cost burdens which cause too many older adults and people with disabilities to forego care, and we urge Members of Congress to support and strengthen the proposal. 

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The Medicare Rights Center engage in this very process. Our 

comments on the model focus on the need for enhanced monitoring 

and oversight. 

Among the topics we addressed were concerns raised about how 

the model might shift how care is provided such as from community practices to hospital settings. Though we note that such shifts 

are already occurring and that shifts predicted in the past were not 

as draconian or dramatic as projected. 

We identified practical solutions that we believe can address this 

and similar concerns. Such is the creation of a dedicated ombudsman for this payment model. 

We encourage CMS to carefully weigh comments submitted by 

diverse stakeholders and we urge Members of Congress to ensure 

that the proposal moves forward with refinements that reflect concerns identified through the comment process. 

Prohibiting the payment model from moving forward would perpetuate a system that allows patients with less to go without needed care and halt progress in how—in transforming how Medicare 

pays for care and saddle taxpayers and saddle taxpayers with the 

unrestrained costs of prescription drugs. People with Medicare and 

taxpayers deserve a Medicare program that pays for high value innovative health care. 

We believe the Part B drug payment drug model presents an important opportunity to ensure that Medicare meets this high bar. 

Thank you. 

[The statement of Mr. Baker follows:] 

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Mr. PITTS. The Chair thanks the gentleman, thanks each of the 

witnesses for sharing your expertise with us. The Chair would like 

to note the presence of a former member of this subcommittee, a 

very valued member. 

Dr. Phil Gingrey of Georgia is with us, sat for many years here 

with us on the dais. So welcome, Phil. 

I’ll begin the questioning and recognize myself for 5 minutes for 

that purpose. There may be a misperception by some that the 

drugs we’re talking about being impacted in this proposal amounts 

to an issue of simple generic substitution—that patients can be 

easily switched to lower cost treatments without consequences. 

However, I know that many of these drugs do not have alternatives that are clinically interchangeable—that even treatments 

that may appear similar can have different effects on individual patients. Many other patients only have one effective treatment option. 

So, Dr. Patt, we’ll start with you and go to Dr. Schweitz. What 

have you seen in your own practical experience? What are some of 

the adverse effects that could occur if patients aren’t able to access 

their most appropriate prescribed treatment? 

Dr. PATT. Thank you. I think there are many intended consequences of this policy. When Avalere did an analysis of the proposed Part B payment model, they demonstrated that for drugs 

that cost more than $480 that many practices would be underwater. We know that even in the ASP+6, which is not really ASP+6 

model today, that 25 commonly used oncology drugs are in fact underwater. 

So high cost drugs would commonly be underwater and this is a 

disproportionate burden on oncology practices because we have a 

higher percentage of more expensive drugs. 

Unfortunately, many of the new innovative products that we 

have that are very effect don’t have generic treatment alternatives—don’t have interchangeable options that are a lower cost. 

And so by not allowing practices to use or not having practices be 

able to purchase drugs and give them to their patients it diminishes the Medicare beneficiary’s access to care. 

An example of that is pembrolizumab, which is an 

immunotherapy in melanoma. So we all probably know about 

Jimmy Carter’s story with melanoma-that in August he was diagnosed with a metastatic melanoma to his brain. 

Because of the advent of targeted therapy this immunotherapy 

pembrolizumab he informed his Bible school class in December that 

he was in remission. He would not have access to this treatment 

in Medicare under this new model. 

Mr. PITTS. Dr. Schweitz? 

Dr. SCHWEITZ. In rheumatology we have a limited number of 

agents, some with different mechanisms of action. Unfortunately, 

we have no way to predict response. It’s pretty much trial and 

error. 

The average patient goes through at least two drugs before we 

find one that is effective for that patient and one of the tenets we 

like to follow is you don’t change a patient who’s doing well. 

80 

We have concerns about the Phase II that may dictate that we 

change medications into, quote, ‘‘higher value meds’’ and we don’t 

have a definition of that in rheumatology. 

In the private world—in the commercial world—there are, quote, 

‘‘value programs’’ which are really only directed at cost and don’t 

take into account the patient’s individual responses. 

So it’s a difficult problem to try to change medications to a, 

quote, ‘‘more effective’’ or a, quote, ‘‘more value-based medicine’’ 

when it doesn’t exist. 

Mr. PITTS. Ms. Boyle, did you want to add anything? 

Ms. BOYLE. Well, I agree with the sentiments because I’ve seen 

my own son, for instance, be on a 5 percent immunoglobulin product change to a 10 percent and collapse on the floor twice when 

they were trying to get used to it. 

He is now in his late 30s and has been on a wonderful 

immunoglobulin product for years and he’s all of a sudden having 

reactions. He’s having high blood pressure and trying to control the 

reactions, and thankfully there’s a subcutaneous option out there 

that he’s able to take—a higher percent solution. 

I have seen, again, private payers say well, we’re just going to 

use the least expensive. Their value is expense. It’s not patient reactions. If my son or other patients have to change to that least 

expensive option du jour they will have reactions. Their well-being 

will be compromised and it’s unconscionable. 

Mr. PITTS. One more question. There’s a lot of speculation about 

what drives a doctor’s treatment of diseases using injectables. It 

appears that there’s speculation that decisions are made based of 

the ASP. 

So Dr. Patt or Dr. Schweitz, would you please tell us what’s more 

important to you? Is it your patients’ need or preferences, your clinical evidence? Do you decide based on which drugs have a better 

reimbursement? 

Dr. PATT. Obviously, as a physician I provide the care and prescribe the care for my patients that is a mutual shared decision in 

their best interest and that is solely what drives our decisions 

about patient care. 

Mr. PITTS. Dr. Schweitz? 

Dr. SCHWEITZ. I concur 100 percent. The appropriate choice of 

medication is based on what’s best for the patient. I can tell you 

in our practice of seven rheumatologists if you ask any one of the 

doctors what the drugs actually cost or what the reimbursement is 

they will not know. 

Mr. PITTS. Thank you. My time is expired. 

The Chair recognizes the gentleman, Mr. Green, 5 minutes for 

questions. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Baker, the Medicare Rights Center is a trusted and respected organization that advocates on behalf of American seniors. 

The Medicare Rights Center has come out in support of the proposed demonstration. 

Can you explain to the committee how your organization came to 

this conclusion? 

Mr. BAKER. Well, I think, once again, as I said in my spoken and 

my written testimony, we see in a daily way the consequences of 

81 

these high drug prices, which Ms. Block detailed I think so clearly 

as well in her own experience where folks just cannot afford the 

rising prices of these drugs. 

The 20 percent co-insurance, if they don’t have supplemental coverage—even those that do have supplemental coverage that might 

cover all or part of that 20 percent they are facing rising premiums 

for that supplemental coverage. 

And then, of course, all people with Medicare see increases in the 

Part B premium based upon the rising cost of Part B medications 

as well as other services under Part B. And so we see the proposal 

as an attempt to, one, restrain those prices and provide relief to 

those individuals that are—cannot afford these drugs and cannot 

get access to them all at all. 

You know, these are patients in effect that are under water, if 

you will, and cannot afford the care that they need. Secondly, we 

think it will help the program overall, once again get at high and 

rising—— 

Mr. GREEN. Let me ask another question. 

Mr. BAKER. Of course. Of course. 

Mr. GREEN. In both your comments of CMS in testimony before 

the committee the Medical Rights Center identified ways the organization believes the model could be improved to ensure access is 

maintained and care is not disrupted. Can you elaborate on these 

and did CMS adopt any of your suggestions on the model? 

Mr. BAKER. Well, as you know, the comments were just recently 

submitted and now CMS has an opportunity to review all of the 

comments that they received. So we don’t know yet whether they’ve 

adopted them. 

But what they have done is said up front that there will be 

claims monitoring in real time so if there are dislocations they can 

be fixed, hopefully in real time. That’s what they said they want 

to do. 

We also have said that we think there should be an ombudsman 

as part of this program. So an ombudsman has been used in the 

DME purchasing project. 

It has been very helpful in identifying problems quickly, helping 

individuals with those problems, also helping suppliers and others 

with those problems and also bringing systemic problems to the attention of not only CMS but to you all here in Congress. 

I think the other thing that we’re really looking for CMS to do 

is engage multiple stakeholders ongoingly and be very transparent 

with that monitoring that they’re doing of claims with all stakeholders including Congress, not only transparent with that monitoring and what they’re finding but also with any corrective action 

or corrective steps that we’re taking. 

So we really think that this has to be done transparently. It 

needs to be shown that there’s clinical effectiveness here. I mean, 

if there aren’t clinically equivalent drugs they won’t move into this 

value-based purchasing kind of system that CMS wants to set up 

in Phase II of the program. 

We think that certainly physicians and other providers with clinical knowledge, pharmaceutical manufacturers with clinical studies, need to come to the table, need to work with CMS to show that 

there is clinical equivalence. 

82 

If there is not there’s nothing in this proposal that would prevent 

coverage for a prescription drug for someone that needs it regardless of price. This is—— 

Mr. GREEN. The proposed demonstration project—I only have 5 

minutes, and if you talk for 4 of them I can’t answer. 

Mr. BAKER. I’m sorry about that. 

Mr. GREEN. The proposed demonstration result in changes in 

Medicare payments is going to be all Part B medications over a 5- 

year period and require 75 percent of the providers to participate 

in either one or both of two phases. 

Patients, providers and other stakeholders raised concern about 

the scope and size of this demonstration, recognizing the demonstration would affect care for our sickest seniors that’s being 

treated for serious illness I have concern—I have concerns and 

urge CMS to reexamine the size of the proposed model. Is that one 

that they share? Because this is a pretty large model—— 

Mr. BAKER. Right. 

Mr. GREEN [continuing]. To do and I know that we need to have 

enough to get good information. 

Mr. BAKER. Right. 

Mr. GREEN. But it seems like they’re actually—the model is impacting the whole system. 

Mr. BAKER. Well, we share that concern and many of the consumer organizations that we work with do share the concern and 

have questioned CMS about that. 

I know that there is concern about rural providers has been mentioned and something that I think CMS needs to take a close look 

at as well as providers that are represented here at this table and 

the switch between facility type of—the types of facilities that are 

providing this care. 

So I do agree that that size and scope needs to be examined and 

needs to be questioned. I also agree that the scope needs to be 

large enough to really test these models for payment. 

Mr. GREEN. Thank you. My time is expired. 

Mr. BAKER. Thank you. 

Mr. PITTS. Chair thanks the gentleman. I now recognize the vice 

chair of the full committee, Mrs. Blackburn, 5 minutes for questions. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and Dr. Patt and 

Dr. Schweitz, I want to come to you first. And I mentioned Senator 

Grassley’s letter to HHS and concerns with the—with this demonstration project and the fact that in the rule you have two different terms used, and I’ll just read from Senator Grassley’s letter. 

It’s more succinct. ‘‘I’m concerned that throughout this proposed 

rule two terms are repeatedly used—study and test. These terms 

seem to indicate there is a component of research going on in this 

proposal.’’ 

So what I want to ask you—each of you to weigh in on because 

you’ve got oncology, rheumatology. When you have read this rule 

do you see this as being clinical research or do you just see it as 

being a test that they have thrown out there? And Dr. Patt, I’ll 

come to you first. 

Dr. PATT. Representative Blackburn, thank you. I do see this as 

an experiment but we conduct clinical research in our cancer center 

83 

and patients have informed consent. They have to electively consent to clinical trials. They can opt out if necessary and we follow 

adverse events and outcomes of those patients. 

In addition, clinical trials are to investigate potential enhancements. We know that this experiment would decrease the availability of some treatments that have a survival advantage. 

So this is an experiment that would never pass an institutional 

review board. You know, as you mentioned your concerns about 

rural clinics, as you know, average sales price is an average. Some 

large groups like hospital systems and large practices are able—— 

Mrs. BLACKBURN. OK. Dr. Patt, let me just interrupt you there 

for the sake of time. So you say it wouldn’t pass an IRB. So should 

they be forced to go in and get an IRB before they embark on this? 

Dr. PATT. I think that’s not a bad idea. 

Mrs. BLACKBURN. OK. All right. Dr. Schweitz? 

Dr. SCHWEITZ. You know, when you look at the goals of this plan, 

initially it appeared that it was to direct a way to save costs. But 

in meeting with CMMI, we were advised that this is budget neutral 

and if you look at the rule it’s budget neutral. 

So the goal of the program then is to collect information, which 

makes it a study—a test. So if the goal is to collect information and 

the patients are part of that process they should be signing informed consent. They should be notified this is going to impact 

their treatment. There may be changes in their treatment directed 

by Phase II, and they should be part of the process of consent. 

Mrs. BLACKBURN. OK. Thank you for that. 

Dr. Patt, I want to come back to you. As I mentioned in my opening, we are very concerned about access and the impact that this 

demo is going to have on access in the rural areas. 

And I have talked with so many of my healthcare providers and 

I want you just to lay out what you see as being the impact on 

rural Medicare access for oncology services. 

Dr. PATT. Thank you for that opportunity. I think that this will 

be a burden disproportionately hitting small practices in rural 

areas and the reason for that is because average sales price is by 

its very nature an average. 

Some people will pay higher amounts for procurement than that 

average and some people will pay lower amounts. Larger hospital 

systems and larger practices have the ability to have contracting 

arrangements where they purchase at a lower price. What this 

means is that smaller practices disproportionately pay a higher 

amount. 

You can imagine if in the new model, which is ASP+.86 percent, 

given Prompt Pay discounts, sequestration and the six-month delay 

in increasing prices that if you have a 1 percent difference in smaller practices they will lose money on all the drugs that they buy. 

And so, you know, it will be impossible for smaller practices in 

rural areas to be open. What I think that you’ll see is a natural 

unintended consequence of this policy is that you’ll have a shift inside of service to hospital outpatient departments and you’ll have 

decreased access where patients in rural areas will have to travel 

further distances to receive care. 

I think that that’s not in our best interest as we already have 

deficiencies in service in rural areas today. 

84 

Mrs. BLACKBURN. I thank you for that and I agree with you. 

I think what we’re going to see this type of disruption in the 

healthcare marketplace is going to lead some people to feel that 

they have to abandon a certain protocol or therapy or course of care 

and go to something that maybe is not as fitted to them. 

So I yield back my time. Thank you, Mr. Chairman. 

Mr. PITTS. Chair thanks the gentlelady. Now recognizes the 

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

questions. 

Mr. PALLONE. Thank you, Mr. Chairman. My questions are of 

Mr. Baker. The Medicare Rights Center’s mission is to advocate for 

access to health care for Medicare beneficiaries. 

In addition to public policy initiatives, Medicare Rights Center 

helps beneficiaries on the ground through educational programs 

and counselling including a national help line that provides direct 

assistance to Medicare beneficiaries and their friends, family and 

caregivers, and with beneficiary access as Medicare Rights Center’s 

sole focus, we in Congress should take seriously your recommendations to ensure the patient access is not disrupted by the proposed 

Part B drug payment demonstration project. 

In your testimony you mentioned some monitoring and oversight 

ideas for the proposed demonstration that CMS should adopt in its 

final rule. 

Could you just please discuss these proposals a little further and 

how they can help ensure that patients are getting the care they 

need and when have similar provisions worked or have they 

worked in other programs in Medicare? 

Mr. BAKER. Of course. Thank you. 

First of all, you know, in the proposal as written there is claims 

monitoring, and CMS is saying that they can fix problems that 

arise in real time with that claims monitoring. 

The thing that we’re asking CMS to add to that protection for 

both providers and for patient is an ombudsman and an ombudsman, an ombudsman office was—should be created for this program, we believe. 

The idea actually comes from one that Congress enacted with bipartisan support with the durable medical equipment competitive 

bidding program. 

The ombudsman would serve both beneficiaries and providers, as 

I said, by tracking complaints, troubleshooting appeals, monitoring 

beneficiary and provider experiences and reporting to CMS and 

Congress on a regular basis. 

We also, as I said earlier, think that CMS should regularly engage multiple stakeholders as part of the demonstration both in 

Phase I and then, of course, in Phase II they need to do that in 

order to find these clinically effective drugs and alternatives. 

So that monitoring of claims about how care is received, where 

it is received and then publicly release the monitoring that they 

are doing and the corrective action that they may have taken or 

they will be taking. 

So that can be, once again, commented on by all the stakeholders 

and, of course, by you in Congress. 

Mr. PALLONE. Now, I was going to ask, unless you think you’ve 

already answered this, what should CMS do to evaluate the results 

85 

of the demonstration projects to ensure that if they move forward 

and expand it that Part B drug payment policy best suits the needs 

of Medicare beneficiaries? 

Mr. BAKER. Yes, I think the claims data monitoring is something 

that is already in there that will help evaluate it. We also think 

there should be additions to that. 

So we think that there should be patient experience surveys and 

focus groups of patients and providers as part of the evaluation to 

track the beneficiary experience with differing payment models. 

I think they’ve also suggested that they might develop patientreported outcome measures, particularly in Phase II of the model. 

And so we strongly support that and we actually think that should 

be part of the Phase II model. 

And I think there should be multiple metrics that CMS uses. We 

don’t have a patent on what those metrics are. It may be an 

iterative process as it moves forward. 

But it should definitely be metrics that focus on patient access, 

access to particular sites as well as care quality and the access to 

particular medications. 

Mr. PALLONE. All right. Thank you, Mr. Baker. 

You did mention in your testimony I noticed a concern that has 

been expressed to me by some of the physicians in my district 

about shifting from community practices to hospital settings. 

Did you want to talk a little bit more about why that might happen and whether that’s a good or bad thing? 

Mr. BAKER. Sure. First of all, I would say, you know, we certainly want to see Medicare beneficiaries have access to care in 

whatever setting is appropriate for them and the most convenient 

setting to them so, you know, that is important to us and I think 

that’s why we urge CMS to monitor any unintended consequences 

vis-a-vis settings. 

I think what we saw when we moved from AWP to ASP was a 

lot of concern about settings and moving to different settings and 

some of those concerns were proved not to be that significant. 

That movement from physicians’ offices to hospital outpatient is 

happening regardless of this model and so it is something that we 

need to be concerned about and that has a larger causation from 

a consolidation that’s happening across the healthcare market. 

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

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

vice chair of the Health Subcommittee, Mr. Guthrie, 5 minutes for 

questions. 

Mr. GUTHRIE. Thank you. Thank you all for being here to testify 

and thank you for your service overseas. I often talk about the experience I had in Yemen when I—not as a service person but in 

my role here and talk about the men and women in uniform over 

there serving and then I always point out—I said there are a lot 

of people in civilian clothes that are serving too from the Department of State and putting themselves in harm’s way as well. So 

thanks for what you do in serving. 

But I do have a couple of questions for the physicians here. I 

know a couple of you said you view this as a test. Some of us believe this is a way—the rule actually amends what we think is a 

statutorial set formula, which is the price plus 6 percent and subVerDate Mar 15 2010 12:04 Sep 01, 2017 Jkt 037690 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 I:\114THCONGRESS\114X146MEDICAREDRUGSJKTREQ083017\114X146MEDICAREDRU
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ject to sequestration, so it’s really quite less—4.2 percent, I believe. 

But and so the concern is they’re using this process to amend the 

statute. 

So wherever you are on what the policy should be I think all of 

us on this dais up here, both sides, should be concerned that our 

essential authority—our legislative authority is being, I think, infringed upon. 

But one thing that we did all agree on was MACRA last year. 

We all wanted to put MACRA in place because we all realized that 

people are in situations like Ms. Block and we need to come up 

with a system that takes care of patients, that’s sustainable, that 

works. 

And I’ve often said when I’m talking about MACRA if we don’t 

have everybody together—patients, providers—if it just comes from 

Washington it’s not going to—and goes out into the—where I think 

Mr. Baker was talking about, unintended consequences that could 

come needs to be monitored—you know the way that you eliminate 

those the most is that you have everybody involved going forward 

and because I don’t know what happens in rheumatology practice. 

I mean, people who practice it tell me but I think if we all sit 

down—fortunately, I haven’t had—been through an oncology practice as well. 

But so I just want to look at the way this rule came about and 

we were troubled that unlike other CMMI initiatives it was negotiated behind closed doors, mysteriously placed on a Web site and 

then taken down, as far as I can tell without any input from providers, patients or other affected stakeholders and can the physicians here—can you speak to CMMI’s engagement with stakeholders prior to issuing this rule? 

Dr. PATT. Thank you, Representative Guthrie. 

So I’ll say that this proposal, unfortunately, did not have stakeholder input prior to it being air dropped and, to your point, was 

put out without stakeholder input during a time of tremendous system change. 

So with the advent of MACRA we’ve had to infuse tremendous 

resources in infrastructure and systems changes. For me as an 

oncologist to do things like providing a standard treatment plan, 

standards survivorship counselling, patient navigation, ways to collect patient reported outcomes, ways in which to collect data for the 

merit-based incentive payment system, it’s been a tremendous infrastructure investment. 

Not only has that been a tremendous infrastructure investment 

but my practice, which treats half of Texans, will participate in the 

oncology care model and that has been a tremendous infrastructure 

investment. 

Mr. GUTHRIE. OK. I have a question. Now I’m going to get Dr. 

Schweitz next. But so my next question to you was how is the way 

this proposal has come forward different than the way that you 

worked on the oncology care model—how that came forth? 

Dr. PATT. We worked in collaboration with 3 years. They got 

oncologists’ input. We were collaborating on how that model was 

formulated and many individuals from the U.S. oncology network 

and Texas oncology participated. This CMS-proposed drug proposal 

87 

had not input. It was put out there without any stakeholder input 

whatsoever. 

Mr. GUTHRIE. The oncology care model was a collaborative effort 

to try to—— 

Dr. PATT. Yes. 

Mr. GUTHRIE [continuing]. Look at costs to people in oncology 

care and try to lower the costs for people in oncology care. 

Dr. PATT. Right. And for us in Texas oncology it brings in parts 

of that value because within the U.S. oncology network we have a 

system of value pathways where we take into account efficacy, toxicity and cost, looking at the incremental cost effectiveness in comparison to the next nearest comparator. 

So when you have interchangeable drug opportunities we will always pick the lower cost alternative. And so that’s incorporated in 

this value-based system that we collaborated with CMS on. 

Mr. GUTHRIE. There was a big effort legislatively to put forth last 

year. 

Dr. Schweitz, I only have a minute left. I’d like for you to comment on. 

Dr. SCHWEITZ. We did have extensive involvement with MACRA 

pre-rule, pre-law. So we were not involved in the development of 

this policy. 

In fact, I believe that there was guidance to the MACs even before the rule was released. So this was being developed without any 

knowledge or input of the stakeholders. 

Mr. GUTHRIE. And I think that’s a frustration from our side who 

are involved along with all of you and patients and MACRA is that, 

you know, we put a lot of—that took a lot of time. The SGR finally 

went away. 

We got MACRA in place and we’re looking at accountable care 

organizations value based. How do we have sustainable systems 

where people get caught in situations like Ms. Block and how do 

we avoid that and then all of a sudden this rule comes out when 

we’re in the middle of that process and that negotiation that we’ve 

all worked so hard on and it came from nowhere and we—or came 

from above without any input and we really appreciate your testimony. My time has expired. 

Mr. SHIMKUS [presiding]. Gentleman’s time has expired. 

The Chair now recognizes the gentleman from New York, Mr. 

Engel, for 5 minutes. 

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

I want to give a shout out to our colleague, Phil Gingrey, who 

served on this committee for many years. Good to see you, Phil. 

Let me say to Ms. Block I was quite moved by your testimony 

and I would like to ask you to talk a bit more about why your personal experiences led you to support this demo even in the midst 

of so many voices saying that the demo that would be harmful to 

patients. 

Ms. BLOCK. Thank you. 

I think, first of all, that we need to all remember why this demo 

was even put out. With all the talk about drugs being under water 

and doctors being under water, patients are already under water. 

We’re already there, and I talk to patients all the time because 

that’s what I do. I end up sitting in chemo rooms talking to other 

88 

cancer patients and everyone is struggling. We’re struggling to stay 

alive. 

We’re struggling to pay for our drugs. We’re struggling to pay for 

our mortgage and take care of our kids and do everything else. We 

have to start somewhere. 

You know, as many things as I’m hearing all of you say that you 

don’t like about this demo, I say, OK, then let’s work together and 

get a better finished product. 

But you don’t throw the baby out with the bathwater, as my 

mother would have said. We need to start somewhere, and this is 

a start. 

I have read the regs through and through and I don’t see any 

issue with access to drugs—my getting access to the drugs. So what 

I see is an attempt to figure out how to support patients. That’s 

what I’m seeing. So thank you very much. 

Mr. ENGEL. Well, thank you. I think your testimony was very, 

very—— 

Mr. SHIMKUS. Eliot, would you get a little bit closer to that mike 

so—— 

Mr. ENGEL. Yes. Sure. 

Mr. SHIMKUS. We want to make sure we hear you. 

Mr. ENGEL. Bring two microphones then. OK. Again, thank you, 

Ms. Block. You know, I also want to thank Ms. Boyle for talking 

a little bit about her son, and they’re all so very courageous when 

we’re asking people to come up and tell personal stories. It’s really 

helpful to us and very, very courageous for the witnesses. 

I have been a great supporter of infusion therapy and I’d like to 

talk about how the model that we’ve been discussing would impact 

patients who rely on such therapy. 

Administering infusion therapies is very much more involved 

than administering oral medications. 

Infusion therapy necessitates specialized equipment, supplies 

and professional services including sterile drug compounding, care 

coordination and patient education and monitoring. 

And currently Medicare fully covers infusion therapy when it’s 

administered in a hospital, a doctor’s office or a nursing home. 

Medicare’s coverage of infusion therapy in the home though is fractured and does not adequately cover the services needed to provide 

home infusions. That’s the patient’s home. 

Not only does this coverage gap force patients into expensive institutional settings but it also puts patients at risk of developing 

additional infections in these environments and on top of that this 

coverage gap prevents patients from receiving the treatment they 

need in the most comfortable setting possible—their homes. 

In 2003, Congress opted to exclude infusion drugs from the average sales price, or ASP pricing methodology, put in place for other 

Part B drugs, and as I mentioned Medicare does not reimburse for 

the services needed for home infusions and ASP pricing is insufficient to cover those necessary services. It just doesn’t make sense. 

I want to highlight it because I think it’s important. 

Unfortunately, we still have not corrected this coverage gap and 

that’s why Congressman Pat Tibiri and I have introduced H.R. 605, 

the Medicare Home Infusion Site of Care Act, which would exVerDate Mar 15 2010 12:04 Sep 01, 2017 Jkt 037690 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 I:\114THCONGRESS\114X146MEDICAREDRUGSJKTREQ083017\114X146MEDICAREDRU
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pressly provide coverage for infusion-related services, equipment 

and supplies. 

Given that this coverage is still not in place though I think we 

need to be cautious when considering changes to the reimbursement structure for infusion drugs. 

While CMS has excluded DME infusion drugs from the Phase I 

of the Part B drug payment model, these drugs have not been excluded from Phase II. 

So let me ask Mr. Baker, would you agree that more work is 

needed to ensure that Medicare beneficiaries can get the infusion 

therapy they need in the comfort of their homes? 

Mr. BAKER. Yes. I think that certainly Medicare doesn’t provide, 

as you said, adequate coverage right now for home infusion services 

and we would agree that this problem could be resolved outside of 

the demonstration. 

It’s not necessarily affected one way or another by the demonstration, and certainly in part two this could be part of the resolution where there could be additional legislation that would bolster this benefit for beneficiaries and make it more available to 

them. 

Mr. ENGEL. This is something that, obviously, is better for the 

patient but ultimately would involve a savings of money, it would 

seem to me. So it seems like a win-win. 

Mr. BAKER. If the setting is as safe as you’re saying and it’s at 

least a less expensive setting and more convenient to the patient 

and that would certainly be a win-win. 

Mr. ENGEL. OK. Thank you. Thank you, Mr. Chairman. 

Mr. SHIMKUS. Gentleman yields back his time. 

The Chair now recognizes myself for 5 minutes for questions. 

And first of all, before we start, I ask unanimous consent that 

the letter on May 2nd signed by 241 Republicans and one Democrat in opposition to this rule be placed into the record. Without objection, so ordered. 

Mr. SHIMKUS. I want to go on, first, to Mr. Baker. Are you at all 

concerned that this proposal will force large numbers of Medicare 

beneficiaries into a mandatory test? 

It was kind of talked about that this is not voluntarily. No one 

is signing consent forms. It’s a mandatory—so does that have 

some—are you concerned about that? I mean, that’s not really how 

tests are operated. 

Mr. BAKER. Well, we have a number of demonstrations that are 

going on throughout the country and, for example, ACOs—— 

Mr. SHIMKUS. Yes. But I mean we’re talking about size too. I 

mean, this is really not a test. This is in actions a rule, you know, 

promulgated because it dwarfs—the test dwarfs the remaining control group. 

Mr. BAKER. Right. 

Mr. SHIMKUS. Significantly. 

Mr. BAKER. And we’ve done these kinds of, if you want to call 

them tests or—— 

Mr. SHIMKUS. Of this size, percentage wise? 

Mr. BAKER. We’ve changed reimbursement before. We were talking about a change in reimbursement. And so what I would posit 

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ment very carefully because whenever we do that there can be unintended consequences. 

Mr. SHIMKUS. OK. Let me ask another question. What’s a larger 

expense to the individual patient? Twenty percent of a doctor office 

oncology service rendered or 20 percent of an oncology services rendered in a hospital setting? 

Mr. BAKER. Typically, the hospital settings can be more expensive than physicians. 

Mr. SHIMKUS. Typically, like, if you find one that’s not please let 

us know. I just don’t think that’s possible, which is part of this debate, because especially in rural districts you’re changing really, in 

essence, a lifestyle in care of patients. We have great concerns. 

I also, Ms. Block, want to—thank you for your service to the 

country. Brats—Army buy, I’m an Army guy so we’ve both done the 

deal. 

But I don’t—so you got Medicare based upon disability. When 

you entered Medicare were you given a choice of supplemental or 

a Medicare Advantage? 

Ms. BLOCK. Thank you for the question. I was not given the 

choice of a supplemental. Supplemental coverage for under 65 is a 

whole another issue. So I welcome a hearing on that. 

Mr. SHIMKUS. Well, no. But were—so you could have? 

Ms. BLOCK. I could not at that time, no. 

Mr. SHIMKUS. And why? 

Ms. BLOCK. They didn’t offer policies in my State. That’s a Stateby-State issue on whether insurers have to offer policies for those 

under 65 that are disabled. Now, you could enter an Advantage 

plan but, unfortunately, I live in a rural area and the Advantage 

plan doesn’t cover any providers. 

Mr. SHIMKUS. Right. OK. Thank you. I wanted to clear that up. 

Appreciate it. 

Dr. Schweitz and Dr. Patt, CMS continues to reiterate that, and 

I quote, nothing in this proposal will prevent doctors or other clinicians from prescribing the treatment that a patient needs. 

Do you believe this proposal will impact your ability to prescribe 

and administer the most appropriate treatments for your patients 

in your office? Dr. Patt first. 

Dr. PATT. Thank you. 

Mr. SHIMKUS. And pull that mike close. 

Dr. PATT. So I don’t believe that this will change my opportunity 

to prescribe the appropriate therapy. It will alter my ability to deliver the appropriate therapy to my patients. 

So I think that, you know, there are two alternatives. One, is 

that you either financially have a hazard for a practice that’s likely 

to have them closed by having them take money out of the practice 

to try to purchase a drug that they cannot afford or they’ll shift the 

patient’s care to a different site of service like the hospitals. 

When we’ve seen the shift occur in the last decade, we know that 

the hospital outpatient department increased 30 percent of the 

chemotherapy infusions that they have in the last decade and the 

reason for the shift are the financial changes. 

We know that during that time period of that 30 percent shift 

that the hospital cost is a higher site of service care—30 percent 

91 

higher—and the patient outpatient cost is higher in the hospital 

outpatient department as well. 

Mr. SHIMKUS. Because the co-pay will have to pay that 30 percent additional cost? 

Dr. PATT. In fact, we recently conducted a study with the Community Oncology Alliance and the Millman Group that looked at 

the 10-year shift from 2004 to 2014, and if you take the drug—if 

you take the costs in 2014 and attribute the cost only to site of 

service shift alone, it’s $2 billion in that 1 year. 

Mr. SHIMKUS. Dr. Schweitz? 

Dr. SCHWEITZ. I agree with Dr. Patt. It won’t impact our ability 

to prescribe but our ability to deliver. If, as a business entity, we 

are unable to make ends meet we will not be able to provide the 

service. 

That’s the central issue, and if we cannot provide the service in 

our office we’re going to have to move the patient to a different site 

of service, i.e. the hospital. 

Mr. SHIMKUS. And I’ll just end on this. My time has expired. It 

doesn’t make sense to move people out of doctor-center oncology 

services and move them into a hospital setting where they—you 

have the chance of other infectious diseases that could occur and 

we all know of the risks that’s involved in that. 

So with that, yield back my time and recognize the nurse, Ms. 

Capps, for 5 minutes. 

Ms. CAPPS. Thank you, Mr. Chairman, and thank you all for 

being here today. I appreciate that this topic is brought up today 

and your expertise on it. 

I believe we can all agree that the current system is not working. 

Providers have long noted that the ASP+6 drug reimbursement formula is inaccurate and some patients have struggled to come up 

with their 20 percent share of the cost of their share in these settings. 

While the Part B program was intended to relieve our most vulnerable from catastrophic costs by providing access to important 

medications, for some—many individuals, I would say, it has fallen 

short. 

While the problems with the current system are well known, how 

to move forward to address it is more controversial—complicated. 

Through this—though this demonstration project is an opportunity to explore strategies that could help transition Medicare into 

a more value-based system, I remain concerned about some elements of the project. 

Last week, my colleagues and I wrote a letter to CMS with concerns about certain components of the demonstration, particularly 

the nationwide scope of the project, the possible impact of it on 

small medical practices in under served areas and the potential 

shifting of patients of provider offices to expensive hospital settings. 

As co-chair of the Cancer and Heart and Stroke Caucuses and as 

a nurse, my biggest concern is that CMS needs to find ways to address problems before they strike and have them place a strong 

mechanism or strong mechanisms to identify barriers to care that 

arise during the demonstration. 

92 

But and the very real fact that patients depend on drug therapies to extend and improve the quality of their lives is critical to 

this. But they and the system need to be able to afford it. In light 

of this, we must proceed thoughtfully and in the best interest of patients who will be most affected by this demonstration. 

Ms. Block, you mentioned in your testimony the difficulties of 

paying the 20 percent co-insurance for vital drugs as a Medicare 

beneficiary. 

And Mr. Baker, is Ms. Block’s experience common for Medicare 

beneficiaries? Should Medicare have an out of pocket maximum 

like the one in the Affordable Care Act to address this? 

Mr. BAKER. There’s about 10 to 14 percent of people with Medicare that do not have supplemental coverage, as Ms. Block does 

not, and they pay the full freight for that 20 percent. 

As you note, there’s no out of pocket maximum in the Medicare 

program so that means that, you know, you’re paying that 20 percent up to infinity. 

There’s never a place where Medicare takes over that coverage 

and provides you with 100 percent of coverage regardless of how 

much you’re spending out of pocket. 

As you say, plans under the Affordable Care Act as well as plans 

available to employed individuals usually have some limit on out 

of pocket spending. 

Ms. CAPPS. OK. As we look at the plans for this demonstration 

program, my primary concern is for the patients and the tools they 

will have to address any barriers to care on the front end rather 

than afterward. 

I know some of my colleagues have touched on this but it is a 

great concern to me. So Mr. Baker, as someone who works to ensure access to affordable health care for Medicare beneficiaries, are 

there aspects of the demo that will help protect patients from disruptions in care? 

Are there any other protections that you would like to see? This 

is demonstration. This is the time—— 

Mr. BAKER. That’s right. 

Ms. CAPPS [continuing]. To look at it. Any other protections you 

would like to see to ensure that patient care is not disrupted? 

Mr. BAKER. Once again, I think that the ombudsman program 

that was used so successfully and the Congress mandated for the 

durable medical equipment program is an important protection, 

would be—would serve to protect consumers as well as this idea of 

getting shared decision-making tools out there for consumers and 

physicians to be able to work together and talk through clinical effectiveness as we move into Phase II. 

But I think the ombudsman is why I haven’t mentioned the preappeals process that would be used in the Phase II and that would 

basically allow providers and/or consumers to do an appeal and to 

get relief if they feel that something is unavailable to them or not 

reimbursed at the right rate in the value-based phase of the program. 

Ms. CAPPS. Thank you. 

You know, just in concluding, in our efforts to improve the Part 

B program we have to keep our eyes on the goal of ensuring that 

93 

patients have timely and affordable access to medications they 

need. That’s got to be the bottom line. 

As we move forward, I urge CMS to pay special attention to the 

impact the demonstration project will have on our Nation’s most 

vulnerable and to continue to work with affected stakeholders to 

address issues and unintended consequences before any changes 

are implemented. This is the time to do that. So I yield back. 

Mr. SHIMKUS. The gentlelady yields back the time. 

The Chair now recognizes the gentleman from Pennsylvania, Dr. 

Murphy, for 5 minutes. 

Mr. MURPHY. Thank you, Mr. Chairman, and I thank the panel 

for being here. 

Before I start, Mr. Chairman, I just want to say I have a letter 

from the National Alliance on Mental Illness I’d like to submit for 

the record. 

Mr. SHIMKUS. Without objection, so ordered. 

I’d also like to correct the record. There were four Democrats on 

my letter, not one. So—— 

Mr. MURPHY. Thank you. That is recognized too. 

Now, starting—Dr. Patt and Dr. Schweitz, you both deal with 

chronic illnesses of cancer and rheumatoid disorders. I want to just 

point a couple of things. 

In the area of mental illness you may be aware that 75 percent 

of people with severe mental illness have at least one chronic illness. Among them are ones within the areas you practice. 

Fifty percent of people with severe mental illness have at least 

two and a third have at least—have three or more other chronic 

illness and it is important we deal with those. 

As a matter of act, Medicaid reports that they—about 5 percent 

of Medicaid recipients are responsible for about 55 percent of Medicaid spending and nearly all of them have a mental illness. 

So in the context of this, I want to ask a couple questions here. 

Both of you discussed in detail some of the concerns about the proposed demonstration, the negative impact on patient access to treat 

cancer and arthritis. 

Hopefully, you’re aware that similar concerns are there also in 

the area of mental illness drugs, particularly long-acting 

injectables, anti-psychotic medications that treat schizophrenia and 

other psychotic disorders. 

And, of course, when a person is more stable they are adhering 

to their other treatments for the diseases that you treat. When 

you’re not stable they’re not following through on this. 

So with regard to this, I see that CMS’ proposal is based on this 

idea that we should be paying for services based on the average patient under this Phase II CMS proposal to provide, quote, ‘‘equal 

payments for therapeutically similar drug products’’, unquote, and 

assuming the most clinically effective drug in a group can be identified. 

But in practice—and I need you to answer this both in about 15 

seconds—what impact will these one-size-fits-all value assessments 

have on patient access to individualized and personal medicine? 

Can’t have a dissertation. Real quick. 

Dr. PATT. I think that they will have decreased access to higher 

cost appropriate therapies. 

94 

Mr. MURPHY. Thank you. Dr. Schweitz, would you so agree? 

Dr. SCHWEITZ. I agree. 

Mr. MURPHY. And so would you say with part of this is that, I 

mean, certainly you would agree that different people respond differently to the same medication with regard to effect and side effects. Would you both agree with that? 

Dr. SCHWEITZ. Right. 

Mr. MURPHY. And also that you need to adjust your prescriptions 

in order to decrease side effects and increase effectiveness and 

therefore increase adherence. Is that correct too? 

And now, the FDA said that medications not taken as prescribed 

occurs about 50 percent of the time and the Center for Disease 

Control tells that nonadherence causes 30 to 50 percent of chronic 

diseases treatment failures and about 125,000 deaths per year. 

So I look at this then that—an important safeguard in current 

law that says CMS cannot use cost effectiveness as a threshold to 

set Medicare average payments or payment policy. 

However, in Phase II of the proposal CMS intends to use cost effectiveness in its analysis to inform value-based pricing. 

Now, would it concern you if CMS said that in order to implement this proposal they would ignore or waive this safeguard? Dr. 

Patt. 

Dr. PATT. It would concern me. 

Mr. MURPHY. Dr. Schweitz. 

Dr. SCHWEITZ. Greatly. Greatly. 

Mr. MURPHY. And with regard to this, it also seems to me that, 

you know, obviously people more likely to take a medication that 

they—that deal with the side effects—some may actually take a 

certain medication because they find the side effects less objectionable and another one will say I’ll deal with the side effects but I’ve 

got to have the treatment for this too. 

But these are all tradeoffs. But it seems to me that the way this 

proposal is coming through that it would limit the patient choice— 

your choice—and when a patient is not adhering to those drugs we 

saw from those statistics from FDA and CDC it may actually complicate the diseases tremendously and increase the cost. Now, can 

you elaborate on that, Dr. Patt and Dr. Schweitz? 

Dr. PATT. So as I said before, I think that we would continue to 

prescribe the drugs we think that are appropriate. But this proposal would impact the patient’s ability to receive those drugs. 

Mr. MURPHY. And with that, isn’t it—it’s best that—I understand 

adherence works best if you actually have a conversation with a 

patient with regard to the drugs. 

Dr. PATT. Absolutely. 

Mr. MURPHY. But if that—and I know you’re saying you would 

prescribe it anyways—but if there’s a difference in reimbursement 

or—— 

Dr. PATT. Well, I’m saying that I would prescribe the drug anyway. But you can imagine a scenario if someone was in a rural 

clinic and a drug is prescribed for them that they cannot receive 

in that rural clinic and they have to travel a distance to a hospital 

that may be two or 3 hours away to be able to receive that therapy. 

That would likely diminish compliance with a therapeutic regimen. 

Mr. MURPHY. Dr. Schweitz? 

95 

Dr. SCHWEITZ. I would add to that. I’m in a relatively urban 

area, and there is no nearby hospital that I can send the patient 

to for an infusion. 

Most of the hospitals are not treating our patients unless they’re 

340Bs. So there is decreased access in that way as well and our 

fear is that our patients are going to drop out—that compliance 

will drop and they won’t get treated. 

Mr. MURPHY. And my fear is they’re going to drop dead, according to statistics that CDC gives us and that’s pretty frightening. 

And so we may save a little money in the front end by not prescribing the drug but the complications of the overall cost increases 

need to be taken in account. I thank you for your insights, and I 

yield back. 

Mr. SHIMKUS. Gentleman yields back. 

At this time the Chair now recognizes my colleague from the 

great State of Illinois, Ms. Schakowsky, for 5 minutes. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

I want to make a couple of comments and then I want to get to 

Ms. Block and Mr. Baker with some questions. 

But, you know, I just feel like if you are offended at all at the 

suggestions that physicians would prescribe higher cost drugs because you want to make more money then it seems to me that the 

suggestion of CMS, which is that there be a percentage plus, a 

lower percentage, plus a flat rate would be something that would 

not be objectionable. 

Also, I wanted to mention that I found it very curious in testimony of Dr. Patt as well that there’s over two pages within your 

testimony that are exactly the same language—exactly the same 

language. Even the highlighted important parts are highlighted in 

the same—in the same way. I thought that odd. 

But I also wanted to mention that there was a difference. Dr. 

Patt and Dr. Schweitz touched—both touched on something in their 

testimony. 

Dr. Patt, you claimed that drug prices are not truly increasing 

faster than the rate of overall health costs. Yet, Dr. Schweitz, in 

your testimony you stated that you are keenly aware of 

unsustainable rise in drug costs and the effects of those costs on 

our patients’ ability to adhere to treatment regimens. That’s your 

quote. 

And I have to say, Dr. Schweitz, that I agree with you that 

spending on prescription drugs has risen significantly in recent 

years, driven by high and rising drug prices and recent IMS health 

report found that list prices for brand name drugs increased by 

more than 12 percent in 2015, representing the second year of double-digit increases and on and on. 

But I want to get to Ms. Block. Thank you so much for coming 

here today and telling your story. I know that there isn’t a family 

including my own that hasn’t gone through the issue of—related to 

cancer and treatments that are required and the issue of affording 

those treatments. 

So you testified that your cancer treatment has been incredibly 

expensive. Can you detail some of the costs and how they’ve impacted your personal finances? 

96 

Ms. BLOCK. I guess I can begin—thank you, first of all—I think 

I can begin to say that when you enter cancer world it’s a different 

world and no one talks about cost at first. 

So it’s very interesting when costs—when you start to ask questions and you have difficulty getting answers. I’ve had probably— 

I think I’ve had six surgeries by now, including one with a long 

stay in the hospital. 

I’ve been through full ranges of chemo. This is the third type of 

drug that I’m on now. Having metastatic cancer, what that means 

is you’re constantly changing drugs to keep up with the cancer, so 

it’s always changing. And the future is stacking drugs, which 

means more than one drug at a time. So my expenses will only go 

up. 

I make up budgets all the time. I think they’re probably meaningless because we don’t know how long I’m going to live. But you 

do the best you can to try and stay on top of it, and that’s what 

life is like living with cancer in a country like ours where the drug 

prices just continue to rise. 

I’ve actually done my own studies on what my drug costs in 

other countries as opposed to the U.S. I did it on social media. It’s 

an amateur study. 

But I was able to find out that I’m paying much more than every 

other country that I found, including Dubai, U.K., Denmark, you 

know, Norway, Sweden, on and on. Every other country that I have 

friends that were able to come back and tell me the monthly cost 

of their drug. 

Again, it’s an informal amateur study, but I keep looking at am 

I going to have to move eventually—is that what my recourse is as 

the drug prices continue to rise and my savings dwindle? 

Ms. SCHAKOWSKY. Thank you. I want to wish you the best, too. 

Mr. Baker, why is it important that we work to reduce or eliminate cost sharing for beneficiaries? What impact would this have 

on one’s ability to access care? 

Mr. BAKER. I think, once again, certainly for the folks that go 

bare, as it were, on the 20 percent it will increase their ability to 

access these treatments. 

They’re disproportionately folks with lower incomes, anywhere 

from $10,000 to $25,000 a year, disproportionately African American. 

Ms. SCHAKOWSKY. I want to tell you, I have talked to—at my 

pharmacy. I said, ‘‘What happens when people are told it’s $1,000?’’ 

He says that often, not most, but often they just walk away. 

Mr. BAKER. They walk away. Right. Or they find a way to pay 

for it with family friends mortgaging their home and other situations like that. 

So they are, as we were saying, underwater and unable to access 

the care. 

Mr. SHIMKUS. Gentlelady yields back her time. 

Chair now recognizes the gentleman from Missouri, Mr. Long, for 

5 minutes. 

Mr. LONG. Thank you, Mr. Chairman. 

We are in the 114th Congress which each Congress, of course, 

runs for a 2-year period. During the 113th Congress, I did not miss 

a single vote in that 2-year period, which there was about a half 

97 

dozen of us that had that type of a voting record, and it’s tough 

when you catch flights, you miss flights, there’s connections, everything. 

There’s 2-minute votes. You have to be paying attention. And so 

voting is very important to me. In this Congress, the 114th Congress, I missed two solid weeks of votes. 

Didn’t go to the floor for two weeks because our 25-year-old 

daughter, youngest daughter, was diagnosed with non-Hodgkins 

lymphoma and so I kind of realized what it’s like to go through 

that process. Thankfully, she’s doing great, had her 12 rounds of 

chemotherapy, lost all her hair, got all her hair back, curls and all. 

So we’ve been very, very fortunate with the—what’s happened in 

oncology over this last 20-some years because I think that if it 

would have been 20 years ago we might not have had the same 

outcome. 

So with that as a little background on my personal story with 

our daughter’s battle, Dr. Patt, supporters say this proposal will remove incentives to use higher-priced medications that are no more 

effective than alternative therapies. Can you talk about therapeutic 

alternatives in oncology? 

Dr. PATT. Yes, sir. First of all, I wish your daughter the very 

best. 

Mr. LONG. She’s doing great. 

Dr. PATT. I think most of us have a personal experience that 

we’ve been touched by at least someone with cancer. And so being 

able to deliver high-quality care close to one’s home is critical to 

maintain quality cancer care for Americans. 

With regards to therapeutic alternatives, I’ll say that, you know, 

this proposal what it does is it disincentivizes utilization of highcost options for treatment. 

And so if there is a high cost alternative and a low cost alternative that’s equivalent in terms of efficacy and toxicity obviously—— 

Mr. LONG. And they were closing the door. I didn’t hear—in 

terms of what? 

Dr. PATT. In terms of efficacy and toxicity. Then, you know, we 

would want to facilitate utilization of the lower cost alternative. 

In fact, the U.S. Oncology Network—my network, which treats 

over 12 percent of Americans with cancer—we use a pathway system in the network which brings in drugs if there are alternatives 

that we only have the option of using the lower cost alternative. 

The problem is is there are actually few instances where a therapeutic alternative that is equivalent actually exists. 

And so, like, my patient in my testimony who receives Recepten, 

or a monoclonal antibody, against HER2 there is not a therapeutic 

equivalent for that drug and it’s changed her survival from weeks 

to over a decade. 

And so, you know, the therapeutic alternative would be to give 

no treatment because there’s not a low cost alternative to that 

drug. 

So it’s either our sum scenarios—you know, I think that the 

stage two—stage IV second-line treatment colon cancer drugs are 

a commonly discussed alternative where there are drugs that are 

of equal efficacy and similar toxicity profile that have a difference 

98 

in costs. Non-small cell lung cancer is also another area that’s frequently talked about. 

But the truth is oncology is a collection of many different diseases and many of them don’t have equivalent therapeutic alternatives. 

And so a decision to provide a lower-cost drug may convey a diminished survival benefit for patients and that’s not an alternative. 

We want patients to live better. 

We want patients to live, you know, on chronic therapy—to have 

even advanced cancer be a chronic disease where they can live a 

good quality of life and live a longer life. 

Mr. LONG. You sound like Michael Milken. That’s what he told 

me. He said he wanted to make cancer a chronic disease and 

they’ve done a lot of good work in that area. 

Also, Dr. Patt, what impact will this proposal have on consolidation in the oncology space and the continued shift of care from the 

physician office to the hospital? 

Dr. PATT. That’s a great question. 

So as you know, in the last 11 years we’ve seen an over 30 percent shift from community clinics to the hospital outpatient department. 

We recently conducted a study with Millman that demonstrated 

that community clinics gave about 84 percent of therapy in 2004 

and only 54 percent in 2014. 

We know that that site of service shift would be augmented with 

other financial pressures on community oncology practices and that 

the natural consequence of that action would be higher cost for 

payers and patients. 

Mr. LONG. OK. Thank you, and I’ll yield back my four seconds, 

Mr. Chairman. 

Mr. SHIMKUS. We appreciate that. Thank you very much. 

Chair now recognizes our veterinarian from Oregon, Dr. Schrader, for 5 minutes. 

Mr. SCHRADER. Thank you very much, Mr. Chairman. Appreciate 

it. 

I, like many others, have submitted a letter to CMS regarding 

the scope of this demonstration project and also sympathy particularly for the special need groups and the types of medications you 

administer. 

You just can’t go to a generic. I mean, oftentimes even in my little world of veterinary medicine there were brand names drugs 

that would work and only be the drug that would work for certain 

patients of mine. 

So I’m hoping and based on past track record that CMS will be 

responsive to a lot of the concerns you’re talking about as we go 

forward and the trick is, as everyone I think has alluded here tonight or today, is get it right. You know, make sure we get it right. 

I don’t think the appropriate way though is to just stop the rule 

altogether. I think we’re losing a little bit of focus and this is a proposed rule. CMS hopefully will be listening to this testimony and 

come back with something that is better than what we have seen 

so far. 

99 

I’d be probably not smart to legislate before I actually see the 

proposed rule. And the goal is to get to a value-based, you know, 

outcome and value-based purchasing is part of that. 

I think there’s some alternatives that are being discussed. The 

second phase I think is pretty interesting. But aside just dealing 

with this individual drug or that individual drug, different incentives are probably very, very appropriate and I guess I’m hoping 

that as we talk through this that this—we can—it continues to be 

very constructive as we go along. 

Shifting gear a little bit, I guess, Dr. Baker, you talk a little bit 

about Phase II. We focused here pretty much on Phase I, but Phase 

II offers some options and I’d be curious your take on that. 

Mr. BAKER. There are many physicians on the panel, but I’m not 

one of them so—— 

Mr. SCHRADER. Mr. Baker, I do apologize. 

Mr. BAKER. So, first off, I think there are a number of valuebased initiatives in phase two of this project, reference pricing, indication-based pricing, outcomes-based risk sharing agreements 

and others and, you know, for example, Express Scripts is looking 

at implementing a system—is implementing a system of indication 

specific pricing with some of its clients including with cancer drugs, 

several pharmaceutical companies and ensures health plans are 

partnering on outcomes risk—outcomes-based risk sharing 

Novartis with Anthem and Cigna on Entresto for treating heart 

failure, others with other drugs around moving cholesterol range, 

United Health with Gilead on Harvoni for hepatitis C. 

CALPERS, the large California insurer for public sector employees and Safeway are using reference pricing. 

First Safeway used it for colonoscopies because of the differences 

in prices in the markets across the country that they were seeing 

and within markets where they were—they had stores and now 

they’re expanding that to other aspects of health care. 

So we see this in use in the private sector, these models being 

used—being heavily evaluated and monitored once again in the private sector and we do believe Medicare in phase two of this project 

can take advantage of that experience but also needs to be very 

transparent, needs to be very engaged with stakeholders because 

as we’ve heard there are instances where there are not clinically 

equivalent pharmaceutical products. And so we went to make sure 

that there is access to all of the products and that an individual 

determination will still be able to be made with a patient in a doctor. 

That’s why the pre-appeals program is important that CMS has 

put in there with balance building protection to consumers which 

is very important as well to keep their access to all of the drugs 

that might be useful for their condition. 

Mr. SCHRADER. Yes, and I do appreciate the tone of your response because the goal here is to treat the patient. I mean, we’ve 

heard everyone testify that is our goal and, you know, certainly, 

the—historically we’ve seen that through the prism of our own particular specialty or practice mode and I think one of the goals of 

healthcare treatment going forward, whether or not we like the 

ACA or not, is to treat the whole patient. 

100 

And that usually involves, frankly, getting together as groups of 

doctors and hospitals and organizations, not necessarily giving up 

their private practice but working with your colleagues and having 

a relationship so that Ms. Block or whoever can get the right referral. 

You come in for one issue and you discover another one maybe 

much more serious—you want to make sure that that group takes 

care of you and I think the focus of this hearing has been on just 

a fee for service piece and the real goal, I think, is to get to bundle 

payments where different doctors with their patients get to make 

that particular choice of what type of treatment, what medication 

to get, if a medication is better than perhaps psychological behavioral treatment. 

There’s a lot of what we’re talking about here focussing only on 

a fee for service and I think that’s an old way of treating things. 

We need to be moving forward and value-based bundle payments 

would, I think, a lot of the concerns that have been expressed here. 

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

Mr. PITTS [presiding]. Chair thanks the gentleman. 

Now I recognize the gentleman from Virginia, Mr. Griffith, 5 

minutes for questions. 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

I’ve heard from ophthalmologists about the proposed demonstration’s potential impact on access to sight-saving treatments for numerous blinding conditions including age-related macular degeneration—AMD—which is the leading cause of blindness in the 

United States. 

Currently, there are three treatment options for AMD and other 

ocular conditions. Two are name brand drugs approved for ocular 

use and one is a cancer drug, Avastin, that is repackaged for offlabel use by ophthalmologists for the eye. 

The demonstration seems to assume that lower cost alternatives 

are always available. However, many ophthalmologists are experiencing increasing difficulties accessing the lower cost drug, in this 

case Avastin, due to new Federal and State regulations on the 

compounding and repackaging of drugs. 

Also, notwithstanding the fact this committee worked very hard 

to allay fears—the fears related to compounding drugs as a result 

of the New England Compounding Center scandal and tragedy has 

made many patients reluctant to receive a drug that is compounded and repackaged. 

Both of these factors are leading to increased use of the more expensive brand drugs. Further, I am told that the continued access 

to Avastin for the treatment of AMD and other ocular decisions will 

effectively end if the FDA finalizes its pending February 2/15 draft 

guidance that calls for a maximum five day beyond use date for 

compounded or repackaged biologics. 

So I know that it’s not directly on point with what you all have 

been testifying to this morning and you may not wish to comment 

on this. 

But I’m just curious if you all would think that perhaps CMS 

ought to go back and take a look and instead of including all Part 

B drugs if the agency ought to give consideration to excluding certain classes and, obviously, the one that I just talked about are 

101 

classes of drugs that include compounded repackaged drugs or 

drugs that are used off label for demonstration. 

So do you think that—and I guess I’ll ask you, Dr. Patt, although 

I understand it’s a little off your subject area. 

Dr. PATT. Thank you, Mr. Griffith. So I’m not an ophthalmologist. But I will say that there have been discussions of carving out 

the oncology care model, of carving out certain segments. 

In my opinion, there’s not a right way to do the wrong thing. We 

need stakeholder engagement from the beginning to engage with 

CMS and value-based ways in which we can move forward like we 

did with the oncology care model. We want to participate. 

In our oncology practices we have many value-based programs 

and have demonstrated pilots that have saved tens of millions of 

dollars. And so want to work with CMS on that kind of work. I 

don’t think that there’s a way to exclude certain segments from 

this pilot and make it make it better. 

I think that we need to go back to the drawing board and look 

to projects like the oncology care model that are collaborative and 

value-based and have a better path forward. We would like very 

much in the oncology community to participate in that. 

Mr. GRIFFITH. Anyone else have a comment on that? 

OK. Sticking with you, Dr. Patt, I noticed on Page 11 of your 

written testimony—I didn’t hear it in your oral testimony but in 

your written testimony you did talk about the era of hospital acquisitions and consolidation in the oncology space where doctors’ practices are being taken over by the hospital and you think this experiment by CMS will push more of that and then that makes it even 

harder for rural districts like my own and earlier one of the folks 

said they had a rural district—they had 19 counties. I have 29 geopolitical subdivisions, most of whom are rural counties. 

Dr. PATT. Yes, sir. So as we mentioned, the current model which 

is not really ASP+6, because you have to take out Prompt Pay sequestration and the six-month lag, has to take into account not 

only acquisition but also inventory storing of drugs, specialized 

handling of drugs and then—and then disposal of drugs. So there’s 

a lot that has to go in there. 

If you bring it down to ASP+.86 percent you have to know that 

average sales prices by its very nature an average. There are people that pay more than that average and people that pay less than 

that average. 

Hospital systems in large practices are going to get preferential 

contracting to pay less than average on average and smaller practices are going to have less bargaining ability because of less volume-based purchasing and have to pay more. 

So you can imagine if you’re at ASP+6 percent it has to pay for 

all of these other functions and you’re paying 1 percent higher. 

How will you be able to keep your doors open? 

And so what we’ve seen with these financial pressures over the 

last decade is the natural consequence of the shift from community 

practices to the hospital outpatient department and we know that 

that’s a 30 percent shift in the last 11 years. 

We also know that that conveys on average a higher cost of over 

30 percent and a higher co-pay for patients. And again, if we look 

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at the cost of that shift in 1 year for cancer spending, just attributed to the distribution of site of service alone it’s about $2 billion. 

Mr. GRIFFITH. I do appreciate it. Thank you very much and I appreciate all of you being here today. Yield back. 

Mr. PITTS. Chair thanks the gentleman and yields 5 minutes to 

the gentlelady, Ms. Castor, for questions. 

Ms. CASTOR. Thank you, Mr. Chairman. Thank you to all of our 

witnesses for participating today. 

Ms. Block, you’ve heard the testimony from the doctors on the 

panel that find the proposed model very problematic. They say that 

this will actually harm patient care, that oftentimes the doctors do 

not know the cost of drugs. They are focussed on what is best for 

the patient. How does this—what’s your response to that? 

Ms. BLOCK. I guess I would start by saying in all of the work 

that I did in many countries around the world we were told that 

you could never even have the appearance of impropriety. So that 

we couldn’t take a cup of coffee from someone because there could 

never even be an appearance of impropriety. 

So I guess what I would say is that if there’s a chance that 

there’s financial incentives involved here then we remove them and 

come up with an appropriate storage and handling fee. 

But as long as there is an appearance of financial impropriety 

I’m going to question that, number one. And the second thing is I 

am just still not reading where there’s going to be a specific issue 

with access to any of the drugs. 

I know my doctor is limited to what drugs I can get at this point 

too. But when I asked him he said he didn’t see any issue with access after reading this demonstration project. 

So I understand that maybe in some areas there’s some drugs 

they’re saying that maybe they can’t afford to get. But is the 6 percent really making the difference? 

So as a patient I really question some of this and just want to 

keep bringing the focus back to the patients are already under 

water. We already, you know, don’t have enough money to pay for 

this. 

So when everyone’s talking about all these issues and obstacles 

in the way how do we get back to how to make the system work 

better for the patients. 

Ms. CASTOR. And Dr. Schweitz, I mean, the cost of drugs now is 

astronomical for many families. You know, it just—it does oftentimes push care out of reach for them and then when we have 

anecdotes about how costs are so much lower in other countries a 

lot of my neighbours at home say why, why in America are drugs— 

why do they cost so much more. 

So what advice can you provide about how we better control drug 

prices and Medicare spending? 

Dr. SCHWEITZ. That’s a very good question. Unfortunately, I don’t 

have a clear answer. I do know that access to medications across 

all medications including generics is becoming problematic for our 

patients. 

But it’s not an easy problem. There is no easy answer. I think 

we all have to sit down at the table—patients, providers, payers 

and manufacturers—to see how we’re going to work out that problem so that our patients have better access. 

103 

Ms. CASTOR. Dr. Patt, do you have any advice on how we address 

the high cost of drugs? 

Dr. PATT. Ms. Castor, as you know, I’m very concerned and 

oncologists are very concerned about the increase in drug prices. I 

know you’ve heard from Dr. Diaz in your district with Florida cancer specialists and from others that this is a great problem. 

Unfortunately, doctors don’t set the prices for cancer drugs, and 

when we look historically at what’s happened as a natural consequence of CMS decreasing reimbursement like the Prompt Pay 

discount and sequester, we see that during that time interval that 

costs went up tremendously. 

And so what we see is that that’s not effective at controlling drug 

prices. What I’d like to see—what I think doctors can do and what 

we can partner with CMS to do within our realm is to change our 

system of care delivery to value-based systems and, again, like I’ve 

said before, we would like to be partners with CMS in that endeavor like we have been with the oncology care model and like we 

have done in our practice, the U.S. Oncology Network, that treats 

12 percent of Americans with value-based pathways for a decade. 

Ms. CASTOR. So Mr. Baker, you’ve heard what they’ve said. It’s— 

gosh, it’s very difficult, they don’t have all the answers on drug 

costs. Dr. Patt says we can look at value-based and indeed the second phase of the model proposed to examine the impact of certain 

value-based and you’ve mentioned that. 

What I haven’t heard is how we link this to outcomes as well. 

When you’re talking about value is there no—is there no ling currently under Part B prescribing to outcomes? Do we not have the 

data and are you confident that this model is actually gathering 

that data? 

Mr. BAKER. I think that right now we don’t have a lot of that 

data. I think we’re starting to get this data in part of the private 

sector value-based experiments that I talked about earlier. 

I think those models can lead to further outcomes-based information that we can use in this space to this model. But I do think 

part of the challenge of getting to a good place on this Phase II is 

making sure we have the right metrics, that we have the right 

feedback loop on outcomes. 

And so we recommended that that definitely be a part of Phase 

II. 

Ms. CASTOR. Yield back. 

Mr. PITTS. Gentlelady yields back. The Chair recognizes the gentleman, Mr. Bilirakis, 5 minutes for questions. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it. I thank 

the panel for their testimony today as well. 

Many conditions, especially within the rare disease community, 

lack treatment and those that have a treatment do not have multiple therapies to choose from. 

Ms. Boyle and Dr. Patt, under the proposed rule it seems like it 

would encourage physicians to prescribe cheaper or generic alternatives to benefit from a flat fee in the reimbursement payment. 

Do many of the Part B drugs have interchangeable alternatives? 

Ms. BOYLE. Well, representing the Immunodeficiency Foundation 

we have a number of conditions that only have drug. There is not 

an alternative. 

104 

Whether it’s a generic or nongeneric, there’s only one drug and, 

again, if this experiment reduces the ability of the physician to provide that drug, when you’re talking rare diseases there are very 

few physicians or hospitals around that have the ability to treat 

the patients. 

We experience this with intravenous immunoglobulin back in 

2005, ’06 and ’07 with the change in the MMA and our patients 

were shifted from the physician office. Those that could find hospitals, and that was not always an easy thing to do to infuse 

immunoglobulin and where there are no generics but there are a 

number of products, we’re lucky to find a site of care. 

Very often they had to change their product and there were 

many who could not find a site of care and had to go without. 

There were—the OIG and the ASPE reports did report on adverse 

events for these patients—sickness, hospitalizations—and there 

just aren’t alternatives for the rare disease community. It’s not just 

our patients, it’s many other patients with rare disorders. So this 

is very frightening. 

Mr. BILIRAKIS. Thank you. Dr. Patt. 

Dr. PATT. So I’ll say in the oncology community there are a few 

examples of treatment alternatives with equal efficacy and toxicity 

that have differences in cost. And in those scenarios, you know, we 

think that utilization of the lower cost alternative would absolutely 

be appropriate. 

The problem is is that these instances are few and far between. 

But in order to optimize the ability to give value-based prescribing, 

as I mentioned the U.S. Oncology Network had pioneered value 

pathways. 

ASCO, the American Society of Clinical Oncology, has come out 

with a pathways policy statement. There are other pathway systems which utilize this and the community oncology alliance has 

come out with a patient-centered oncology medical home also trying 

to utilize a pathway system really to facilitate appropriate utilization because most of the time there are not alternatives that are 

equally efficacious and toxic that are of different costs where a 

lower cost alternative is truly therapeutically interchangeable. 

Mr. BILIRAKIS. Thank you. The second part of the question—Ms. 

Boyle again and Dr. Patt-under the proposed rule one value-based 

tool is the use of reference pricing. This requires setting a standard 

payment rate for an entire group of drugs, usually using the most 

clinically effective drug in a group for therapeutically similar 

drugs. 

Can you do reference pricing when there are no alternative drugs 

available? 

Ms. BOYLE. Well, for instance, in the immunoglobulin products 

there are 13 of them. There have never been any trials—head on 

trials comparing them. They all are approved by the FDA but 

they’re all very different. 

Some have high sugar content. Some have high salt content that 

would be bad for patients with heart conditions or diabetes. They 

all have different formulations and patients react differently. 

Some are appropriate for subcutaneous infusion, which some patients need because they have poor venous access or they have 

other adverse events to IV. 

105 

Some patients cannot do subcutaneous. They are really not appropriate. So I don’t know how you would put these together. Patients react differently and when you look at the administration 

and talking precision medicine and let’s take best product for the 

individual patient this proposal runs counter to that. 

Mr. BILIRAKIS. Dr. Patt, briefly, because I want to ask another 

question. 

Dr. PATT. And I’ll say that we don’t today have a way to do reference and value-based pricing in oncology. But we would love to 

partner with CMS to do that instead of having a policy just drop 

down to us. 

Mr. BILIRAKIS. Thank you very much. Mr. Chairman, I know I 

have seven seconds so more than likely I’ll yield back if you’ll give 

me a couple more. Can I have a few more seconds to ask another 

question? Yes? OK. Thank you. 

Ms. Boyle and Dr. Patt again, under the proposed rule one of the 

value-based tools would have CMS pay more for effective treatments. Does CMS actually define what an effective treatment is? 

In the world of oncology or IG where treatment is more personalized, as you said, is it wise to have an unelected bureaucrat declare 

what is effective for all seniors, and I’ll start with Ms. Boyle. 

Ms. BOYLE. No, it’s not. Essentially, we want our trained immunologists who are specialists in treating our patients to make these 

decisions. Again, this is important for any condition. 

Let’s not take the decision away from the physician that works 

with the patient in what is the best treatment and the best outcome for that patient. 

Mr. BILIRAKIS. Thank you very much. Dr. Patt? 

Dr. PATT. I completely agree. I think that think that this is not 

something that we want outside of our specialty’s hands—outside 

of a physician’s hands and we would love to ask in partnership 

with CMS to think about a better path forward to try to institute 

value-based mechanisms for implementation of cancer care. 

Mr. BILIRAKIS. Makes sense to me. Thank you very much. Mr. 

Chairman, I yield back. 

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

Mr. Ca ́ rdenas, 5 minutes for questions. 

Mr. CA ́ RDENAS. Thank you very much, Mr. Chairman, and I appreciate all the panellists for sharing your expertise with us. 

I’m not going to have enough time to ask all the questions that 

I’d like to ask. But at this time, Mr. Chairman, I request that I can 

submit two letters for the record. Request unanimous consent to 

submit the—— 

Mr. PITTS. Without objection, so ordered. 

Mr. CA ́ RDENAS. One is by the American Cancer Society, Cancer 

Action Network, and the second is the California Life Sciences Association to the CMS on the proposed demonstration. Thank you, 

Mr. Chairman. 

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

OK. With that, my first question is the proposed demonstration 

would be made so that three out of four Medicare Part B providers 

across the country would have to participate once we entered Phase 

II of the demonstration. 

106 

I have concerns about the nationwide scope of this demonstration. Mr. Baker, do you think it’s possible for CMS to modify and 

narrow the scope of the model and yield efficiently reliable results 

to evaluate with respect to the goal of the model? 

Mr. BAKER. Our understanding is that the breadth of the model 

is in order to, you know, test the model and make the results generalizable or scalable. That said, I believe that they have been— 

they have said that they’re open to suggestions about the scope and 

breadth of the model. 

So I know folks have commented on that in this comment period 

and I hope and expect that CMS would take those comments into 

consideration in the comment period. 

Mr. CA ́ RDENAS. Dr. Patt, what do you think? 

Dr. PATT. I think that, again, as I mentioned we need to do the 

right thing. There’s not a right way to do the wrong thing. 

I think this proposal needs to be pulled back completely. I think 

that we would really look forward to the opportunity to work with 

CMS on better value models. I sat with four of the leaders of CMS 

a month ago and gave them information on value pathways and 

how to work towards pathway systems or other alternative systems 

to reduce cost. I’ll meet with CMS again tomorrow. 

The oncology community would really look forward to the opportunity to focus on value in a collaborative way and not have a proposal that’s bad medicine put down for patients that would decrease their access to care. 

Mr. CA ́ RDENAS. OK. Thank you. 

This next question is to Mr. Baker and Dr. Patt and also Ms. 

Boyle. I’m going to give you a scenario. If I am a senior who is seeing my doctor for a medicine that’s administered in his or her office 

and I disagree with the coverage or payment decision made by 

Medicare, it can seem daunting to file an appeal and many patients 

aren’t aware that there is even an appeal process. 

CMS is proposing that a new pre-appeals process would be most 

applicable to Phase II of this demonstration. Beneficiaries and/or 

providers can request a review of a claim before it’s submitted for 

payment, giving the provider the opportunity to discuss why a particular drug or treatment would be best for a particular beneficiary. 

Currently, appeals are handled by the Department of Health and 

Human Services Office of Medicine, Hearings and Appeals, otherwise known as OMHA. OMHA has a significant backlog in the 

processing cases. 

Although beneficiary appeals generally can be expedited and the 

demonstration will establish a separate appeals process, apparently. 

Mr. Baker, what’s your experiences been with the Medicare appeals process and do you think that there should be an expedited 

appeals process for patients established in the demonstration? 

Mr. BAKER. I definitely think there should be an expedited appeals process for the demonstration not only in the pre-appeals 

process but we’ve also recommended to CMS, as I’ve said before, 

that there be an ombudsman both in Phase I and Phase II. And 

I might add that in Phase II a lot of the consultation that some 

of the other panel members are talking about will occur with regard to, you know, value-based payments. 

107 

So I do believe that consultation will ultimately occur before 

Phase II value-based ideas are implemented. 

Mr. CA ́ RDENAS. Ms. Boyle or Dr. Patt, do you have any comments 

on that? 

Dr. PATT. I would be concerned about an appeals processing 

causing inappropriate delays in patients receiving treatment. 

Ms. BOYLE. I would agree on that sentiment because our experience with appeals through the years have been people making the 

decisions on the side of the insurers are not specialists, particularly 

when it comes to rare diseases, and we’ve just seen patients go 

through delays getting their lifesaving infusions. 

Mr. CA ́ RDENAS. Thank you all very much. I yield back. 

Mr. PITTS. The Chair thanks the gentleman. Now recognize the 

gentlelady from North Carolina, Ms. Ellmers, 5 minutes for questions. 

Ms. ELLMERS. Thank you, Mr. Chairman, and thank you to the 

panel. This is a very important subcommittee hearing and I appreciate all of the testimony I am hearing, especially from the personal 

side, and I want to take my congressional hat off for a moment and 

put my nursing hat on, and I do want to ask Ms. Block—you have 

such a compelling story with your cancer treatments. 

You know, I understand whether we’re talking about oncology, 

whether we’re talking about rheumatology or immunology, I know 

that the care that is provided is a multi-disciplinary educationbased treatment where physicians and nurses, other healthcare 

providers are working with the patients and families to give the 

best care possible. 

So I am—I am very concerned about some of the issues that you 

have brought as patient, especially in your unique situation with 

Medicare and the inability to have basically a secondary or Medicare Advantage availability. 

So my question is where are you getting your care? Are you getting your care at a hospital or are you getting your care at a community-based oncology clinic or independent physician? 

Ms. BLOCK. Sure. Thank you very much for the question. 

First of all, for the record, I now have a supplemental plan only 

because I drafted a bill and passed it in my own State legislature. 

Ms. ELLMERS. Wonderful. 

Ms. BLOCK. The only way that I could get it. 

Ms. ELLMERS. Congratulations. That’s great. 

Ms. BLOCK. There’s more problems coming in the weeds since 

Congress last year did away with some of the—selling some of the 

plans in the future. So I’m not going to be able to switch. But 

that’s, again, it’s trying to stay ahead of these bills. 

Ms. ELLMERS. That’s what we—unfortunately, what we do so 

many times is try to keep putting out those fires. 

Ms. BLOCK. Right. So I’ve got problems that are going to be coming as my premiums rise to the point that I can no longer afford 

to pay them. I do—I get my treatment now at a hospital outpatient 

location. 

Ms. ELLMERS. OK. So but it is a hospital-based facility? 

Ms. BLOCK. Yes, and the irony is we don’t have any private oncology practices in the State so that I had great difficulty at one 

108 

point because my co-pays would have been so much less expensive 

to go to a private practice but there wasn’t one. 

Ms. ELLMERS. Right. Great. OK. Well, I do—I do think that it’s 

very important that we clarify that point because that gets back to 

the issue of cost based on site. The difference between the availability of having—being a patient at a primary care or a private 

practice versus a hospital-based, I mean, because we’re talking 

about kind of two different beasts there when we’re talking about 

Medicare. So that is a very important point to make. But thank 

you for that because that was part of my concern. 

I guess the next issue I would—this last question for you as a 

patient have you had that conversation with your oncologist? Have 

you—have you actually asked is there a less expensive treatment 

because of this issue that I’m faced with financially? Is there something else that I could be receiving? 

Ms. BLOCK. My oncologist is a rare bird and, when I was diagnosed with metastatic disease, he sat me down and talked to me 

about my finances and I found when—— 

Ms. ELLMERS. Wonderful. 

Ms. BLOCK [continuing]. When I talked to other patients that 

that was unusual because he said, you know, things are going to 

be changing dramatically for you. 

Ms. ELLMERS. It’s an issue. Yes. Definitely. 

Ms. BLOCK. But that said, I ask—every single time that I go for 

treatment I ask the nurses giving me the treatment, I ask the doctors I talk to, do you know how much this costs. 

Ms. ELLMERS. Uh-huh. And they don’t, do they? I mean, the answer is usually no, right? 

Ms. BLOCK. For the most part. Especially the people the administering it. 

Ms. ELLMERS. Yes. 

Ms. BLOCK. No one, and they’re all amazed when I tell them. 

Ms. ELLMERS. Yes. No, and that is typical because, you know, the 

healthcare provider is so concerned with providing for you the best 

possible care that you can receive that the issue of cost is not their 

focus. 

It’s really the focus of us and for you and we want to do everything we can to make sure that you are getting that really good 

care and I just—there again, I’ve only got 50 seconds left. 

Thank you, Ms. Block, for your testimony today, and I just want 

to thank the physicians who are here—Ms. Boyle and Mr. Baker 

as well. 

I think we’re all in agreement here. Even though this is a possibility of moving forward, I think we really do need to put the 

brakes on this because there are other ways that we can achieve 

decreasing costs and I’m kind of a little amazed at some of my 

Democrat colleagues—not all, because I think we all care about patients—but I’m a little concerned because they seem to have a little 

bit of amnesia. 

And there again, I’ll ask Ms. Block—are you aware of our 21st 

Century Cures Initiative that we passed here in the House? 

Ms. BLOCK. No. 

Ms. ELLMERS. This is actually an effort that we are putting forward. The Senate is working on their version right now and basiVerDate Mar 15 2010 12:04 Sep 01, 2017 Jkt 037690 PO 00000 Frm 00114 Fmt 6633 Sfmt 6633 I:\114THCONGRESS\114X146MEDICAREDRUGSJKTREQ083017\114X146MEDICAREDRU
109 

cally we are looking at all these issues and we have—we have gone 

globally. 

We have, you know, worked with other countries—how are you 

providing care that’s less expensive. We’ve worked with our universities, our patient advocacy groups, our hospitals, our high-end universities, NIH, CMS, FDA, so that we can get drugs through the 

process in a more efficient less expensive manner that takes care 

of our patients. 

So I think we need to stay on that front and move forward and 

give the best possible care we can and keep those drugs costs down 

as well. So thank you all again. I apologize, Mr. Chairman. I went 

over. 

Mr. PITTS. The Chair thanks the gentleman. 

The Chair now recognizes Dr. Bucshon, 5 minutes for questions. 

Mr. BUCSHON. Thank you very much and thank you to all the 

panellists for coming and, you know, I’m reading the legislation to 

restart this discussion and let me tell you why. 

First of all, one thing I want to—I was a practising cardiovascular and thoracic surgeon for 15 years and to me discussing 

the and putting forth the premise of physicians out there basing 

therapy, whether it’s heart disease like I did or cancer therapy, 

based on how much they’re going to get reimbursed from Medicare 

is just—it’s almost an insult to the medical profession, from my 

perspective, because are there bad actors? 

There are in all fields. But I can tell you the doctors that I know 

and myself never consider that—that we can make more money if 

we prescribe something else. 

Now, that said, you also can’t have something like this that could 

force independent practitioners to lose so much money on these 

medications that it limits access and puts them out of business. So 

I think we have to address that. You know, but cutting provider 

reimbursement without addressing the ASP—the actual costs of 

the drug in the first place is just the wrong approach. 

And, you know, for the last 30 years CMS has tried to control 

healthcare costs by cutting provider reimbursement almost exclusively and look where we are today. It hasn’t solved the problem. 

This is a big problem. I empathize with everyone including myself and my own family. I’ve got—my father’s had all kinds of— 

have had four different cancers. My mother has had problems, and 

it is very expensive and costs are a real issue—no doubt about that. 

But it seems CMS proposed this without any substantial stakeholder input other than MEDPac and threw mud at the wall, and 

they’re now trying to figure out what’s going to stick and what 

isn’t, and that’s just the wrong approach. This should be scrapped, 

and we should start from scratch. 

We do need to address costs, no doubt about it, but we should 

get stakeholder input, and let’s all work together—patients, patient 

advocates, physicians, and CMS and Congress to address this 

issue. 

You know, I’m going to ask a question of the physicians. First, 

say, for example, there are two practices within the proximity—in 

the same geographic area, and for whatever reason their ZIP Code 

isn’t picked. 

110 

How is that going to affect the local or regional care, potentially, 

of patients? Dr. Patt, do you want to—I mean, that could potentially happen, right? You have an urban area—half this town has 

this, half doesn’t and half the patients are at one place, half at the 

other. How is that—how might that affect this? 

Dr. PATT. I think that if I was in a ZIP Code that was randomized to the experiment, having decreased reimbursement, that I 

would recommend my patient get the appropriate care not at my 

center. 

Mr. BUCSHON. So you can see—you have the Federal Government in Washington, DC, affecting the local marketplace and 

health care and picking winners and losers. 

Dr. SCHWEITZ. In rheumatology it’s a little more problematic. 

There aren’t many of us and there is usually a significant backlog 

to get in to see a rheumatologist. 

So if I’m going to refer my patient to the ZIP Code across the 

county there’s going to be a delay in that patient being seen and 

a delay in that patient getting medication—his treatment. 

Mr. BUCSHON. You know, and this is Washington, DC, so I’ll say 

there very well could be politics involved in ZIP Code selection, believe it or not. I just want to put that out there, and for anyone 

to think that there won’t be is just—doesn’t know Washington, DC. 

And people that have substantial political pull in this town will 

not be selected to have their reimbursement cut. I’m just here to 

tell you. That’s what’s going to happen, and it’s going to substantially affect practitioners’ ability in different communities to continue to treat their patients. 

I mean, again, the other thing is as it relates to alternative payment models, Dr. Patt and Schweitz, do you see this affecting the 

development and resources going into implementing APMs, for example? Do you see this as an issue? 

Dr. PATT. It does. I can say that as a network, the U.S. Oncology 

Network will put 10 percent of Medicare beneficiaries with cancer 

on the oncology care model and it’s been a tremendous infrastructure investment. 

How do you then account for having to not have patients receive 

care in your practice because all of a sudden they’re in this experimental arm of this experiment as well? I can’t imagine a foreseeable situation where that will work. 

And I’ll just say that, you know, we, as a large practice, have 

bought into a lot of infrastructure investment in procuring for 

these alternative payment models. I cannot imagine how a smaller 

practice will buffer that change. 

Mr. BUCSHON. Yes. My time has expired but I just want to say 

this at the end is that I would urge CMS to scrap this proposal and 

come to the table with stakeholders and look at other ways that we 

can address patient medication costs. 

They are—it is an issue. We all know it. But cutting provider reimbursement, as I said in my opening, is not the solution to a very, 

very complicated problem that we all, I think, agree needs to be addressed. 

I yield back. 

Mr. PITTS. Chair thanks the gentleman. Now recognizes the gentleman from Massachusetts, Mr. Kennedy, 5 minutes for questions. 

111 

Mr. KENNEDY. Thank you, Mr. Chairman. 

In recent years, the cost of prescription medication has risen 

sharply, raising concerns for patients and their families about how 

to access and pay for needed drugs. 

The Boston Globe has reported that prescription drugs represent 

the fastest-growing component of health care, and spending on prescription drugs increased 13 percent from 2014 to 2015. 

Given that, in 2016 alone Medicare is expected to cover about 57 

million people. This hearing on Part B could not be timelier, especially as the entire healthcare system of the United States moves 

toward quality and value-based systems. 

Delivery system reform are a key part to the future of medicine 

and finding ways to reduce costs and ensure patients have access 

to affordable effective medications while spurring innovation is absolutely critical. 

Ms. Block, thank you for sharing your deeply personal story in 

your testimony earlier this morning. As we know, Medicare Part B 

beneficiaries pay 20 percent co-pays with no out of pocket money. 

Can you tell us more about how your doctor decides what course 

of treatment is right for you? 

Ms. BLOCK. Thank you, sir. 

Right now, I have limited options because I’ve already been 

through a range of drugs. So there are limits on what my doctor 

can offer me, though he is very cognizant of the co-pay and we 

spend a lot of time talking about the co-pay and what I can do to 

afford it and how to make that work in my life. 

Mr. KENNEDY. Have you ever had to forego, Ms. Block, treatment 

because of those costs and if you have an idea of how this demo 

might affect you and patients like you? 

Ms. BLOCK. OK. I have never foregone treatment under Part B. 

I still have a prescription under Part D sitting in CVS right now 

waiting for me to pick up since I can’t afford to get it. But under 

Part B I have not foregone treatment. 

I believe this demo will enhance my life. I think that it’s going 

to reduce my co-pays. Number one, just off the bat, if they reduce 

that +6 percent after the—you know, with ASP that’s a reduction 

in my co-pay right there. So that’s number one. 

Phase II, if I’m lucky enough to be in an area that reduces or 

waives the co-pays then again I get a win-win. So I see this as a 

very positive move. 

Mr. KENNEDY. I appreciate that, Ms. Block. 

Mr. Baker, in your testimony you highlight that Medicare paid 

$22 billion for prescription drugs last year, more than double the 

amount that was spent in 2007. 

And as we all know, co-pays for beneficiaries aren’t decreasing either, which means that they already face access problems. As CMS 

moves forward with the demo, how can they ensure that the demo 

doesn’t hinder access? 

Mr. BAKER. I think some of the key pieces are that real-time 

claims monitoring that I’ve been talking about. The other piece is 

the ombudsman program that we recommended and that was used 

in the durable medical equipment area I think to such great effect. 

And once we’re moving into Phase II and the value based models 

that could be used in various specialities and with various drugs 

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the pre-appeals process would be a way of, once again, getting access where access is needed and ensuring that it occurs. 

And then finally, those kinds of outcomes measures that we were 

talking about earlier would be a way not only of protecting patients 

but also of gathering research and data. And finally, we believe 

focus group testing, patient engagement surveys as well as provider engagement surveys to make sure that CMS has a full range 

of information about the effect of the model. 

Mr. KENNEDY. And so I wanted you to clarify as well, sir, and 

I think you touched on it a little bit from your testimony earlier. 

But can you clarify if this proposal would require to pick one 

drug over another or will doctors retain the ability to pick the most 

appropriate treatment for their patients? 

Mr. BAKER. The proposal—the model as written would allow doctors to prescribe, you know, whatever drug. This isn’t a formulary, 

a list of approved drugs or a limited group of drugs. 

Doctors would be allowed to prescribe any drug that they felt 

was necessary for their particular patient and if there were some 

value-based program that indicated that maybe that drug wasn’t 

the most clinically effective drug, once again, that doctor or that 

patient could use the pre-appeals process to or an ombudsman program, we would hope, to make the case that no, this is the most 

clinically effective drug for this particular individual because of 

their particular health profile or clinical needs. 

Mr. KENNEDY. I appreciate that, and just before I run out of time 

I also want to echo some of the concerns raised by my colleagues 

that noted the similarities between testimonies today. I think that 

raises some important questions as well. I yield back. 

Mr. PITTS. Chair thanks the gentleman. 

Now, I recognize the gentleman from New York, Mr. Collins, 5 

minutes for questions. 

Mr. COLLINS. Thank you, Mr. Chairman. I want to thank all the 

witnesses. This has been very enlightening. And just to bring a 

couple of things up and Ms. Block, I know you said that you 

thought your co-pays would go down with this. Well, it doesn’t 

work that way. 

I don’t want to be too contradictory but a $100 drug with a 20 

percent co-pay is $20 whether it’s +6 or +2.5 because it’s—the ASP 

doesn’t change. So your co-pay doesn’t go down. 

But Dr. Patt, in the big picture what I’ve heard is doctors don’t 

even know what the drugs cost, by and large. Maybe their office 

manager does. 

They’re prescribing to treat their patients, as Dr. Bucshon indicated. So I kind of reject CMS’ whole premise that nuancing the 

+6, which we know is really 4.3, or the 2.5 which is really .86, that 

would only make an impact in prescribing drugs if these doctors, 

before they treated a patient, would be bringing out the spreadsheet to figure that out, which I don’t see happening. 

Now, let me go through the math as well. Let’s say you’ve got 

a drug that’s $1,000 and you go to the 2.5 percent but under sequester it’s .86 and you’re one of the randomized, you’re going to 

get $8.60 as your markup. Then you get $16.80 flat fee. So you get 

$25.40 for that $1,000 drug. 

113 

Now, if there was a $500 version you get $4.30 instead of $8.60. You get the same $16.80. So now you have $21.10. So if somebody 

said that switching it from six to—you know, changing that would 

drive a physician to prescribe the lower cost, I guess I kind of reject 

that because under the higher cost you’re getting $25.40. Under the lower one you’re getting $21.10. I don’t think either one is adequate. But I think a physician would rather have $25 

than $21. 

So the whole idea of driving someone to a lower cost drug you 

reject it categorically because the practice is still going to get more 

money with a higher priced drug. 

The co-pay to the patient may switch with a lower cost. I don’t 

know that doctors are facing that. So I guess—I just don’t see in 

the big picture that any of this is going to impact the cost of drugs. 

And I guess I’ll throw out there, because I’ve become the subject 

matter expert on 340B pricing, if there’s a problem in the cost of 

drugs and cancer drugs, it’s all the private oncology practices being 

purchased by hospital systems—DSH hospitals who then get a 50 

percent break from the pharmaceutical companies on these expensive drugs and you’re seeing oncology practices bought up every 

single day so that the hospitals can cheat and get their 50 percent 

discount, which goes to their bottom line, which comes out of the 

hide of the pharmaceutical companies. 

And at the end of the day, you want to talk about why prescription—why prices may be high? Every time one of these drugs is 

now getting a 50 percent discount, what do you think the pharmaceutical companies have to do? 

I think the bigger savings is to stop the cheating on 340B pricing 

where fully covered patients the DSH hospitals are getting a 50 

percent discount and yet the hospital is getting fully reimbursed by 

Blue Cross/Blue Shield. I’m just venting a little. 

But, you know, Dr. Patt, as I’m sure you’ve seen these oncology 

practices bought out and I’m sure you’ve seen them go to DSH hospitals where under 340B now there’s this huge discount which has 

to impact you. Would you care—— 

Dr. PATT. Yes, sir, and also imagine a scenario that’s different 

than the one that you gave. Imagine that you’re in a rural clinic 

where you purchased 1 percent above ASP, because again, ASP is 

an average. 

Mr. COLLINS. Well, that’s the other thing. People think ASP is 

the price. It’s not. Some smaller practices pay more than ASP. 

Dr. PATT. Right. So imagine you’re in a scenario where you purchased a drug for 1 percent more and let’s say it’s a high cost drug. 

Let’s say it costs $10,000 per month to administer. 

You can imagine that that would be a substantial loss to the 

practice—that if you transition that patient to the hospital outpatient department—let’s say it’s an hour away—where they may 

have the 340B preferred vendor program and the ability to purchase drugs at a 30 to 50 percent reduction in cost then you would, 

you know, transition that patient’s care. And I think that that 

trend is a trend we’ve seen over the last 11 years and we would 

see it continue to be propagated. 

Mr. COLLINS. Well, and that’s—you know, I’m concerned about— 

I have a very rural area—access and it’s exactly what we’re seeing, 

114 

that the private practices are being bought up for one sole purpose 

and that’s so the DSH hospitals can cheat. 

Get the 30 to 50 percent discount on the most expensive drugs— 

the $10,000 drugs—driving that to their bottom line and 

disadvantaging healthcare systems in total, pharmaceutical companies and ultimately patients. 

I yield back. 

Mr. PITTS. Chair thanks the gentleman. Without objection, we 

have a Member who’s not on the subcommittee present who would 

like to ask questions. 

The Chair now recognizes Mr. Welch, 5 minutes for questions. 

Mr. WELCH. Thank you very much, Mr. Chair, and I thank my 

colleagues for allowing me to sit in. 

I have some sympathy with the point that Dr. Bucshon made and 

Mr. Collins made about the cost and the complexities that are involved. But this is not a case of cutting provider reimbursement as 

much as it is about linking physician reimbursement to the cost of 

drugs they prescribe. 

I share the concern about cutting to the bone the providers but 

there is no transparency whatsoever in what medical care costs 

are. 

Nobody knows, and it’s really true with respect to prescription 

drugs. And I have to say—I’ve been in and out but I am very 

alarmed at the lack of sense of urgency about something that is absolutely intolerable—prescription drug prices. 

First of all, prescription drugs save lives. They alleviate pain. 

But the market is broken and the cost that the pharmaceutical 

companies are charging is starting to kill patients they’re trying to 

save, and no one’s in charge. The doctor, Mr. Collins says, doesn’t 

know how much the drug is. I think they should, like Ms. Boyle 

said. 

That’s relevant to the everyday lives of people. And what I’ve 

heard Dr. Patt, from you, and Ms. Boyle is sort of the situation normal. It’s all complicated. We want to collaborate. 

We have value pathways. But I don’t know what that means if 

I’m a patient. I literally don’t know what it means. What it sounds 

like to me is that let’s keep rolling. 

The problem I have with the prescription drugs is that it’s not 

a value proposition. It’s a broken market. So the price is set by the 

pharmaceutical companies and it’s whatever the traffic will bear, 

and they’re protected by patent protection and they’re entitled to 

that because it’s intellectual property. 

But should they be charging $1,000 a day to a patient or to the 

taxpayers that have no recourse whatsoever but have a desperate 

need for the medication? And where you have—what we’re talking 

about here is not the global mess of pricing and health care. 

We’re talking about this system where the prescriber makes 

more money when he or she prescribes a more expensive drug. Dr. 

Patt, is that true or not? 

Dr. PATT. So I’ll say that in my practice that is not true because 

our physician compensation model is not in any way dependent 

upon the drugs that I write. 

Mr. WELCH. All right. But the—— 

115 

Dr. PATT. But there is variability between practices. But I’ll say 

in my practice. 

Mr. WELCH. Right. So just—if I am—work at a car store—you’ve 

rented a car and you’ve seen how much people try to upsell what 

it is you’re trying to rent, and there’s an incentive for that salesperson, right? Now, if a doctor’s going to prescribe something, let’s 

say a regular—anybody who’s got—and they’ve got their challenges, like Dr. Bucshon said. 

They’ve got to pay their assistants and they want to do the right 

thing. But the model by which they’re paid is affected by whether 

they prescribe the $50,000 drug or a $3,000 drug. 

So just isn’t that an incentive that would make one question 

whether that affected their decision? 

Dr. PATT. Mr. Welch, I think you make some very good points. 

But I’ll say again that my personal income from my practice that 

treats half of Texans is not dependent upon the drugs that I write. 

Mr. WELCH. You know, that’s great, and I’m talking just about 

the pricing model here. 

Dr. PATT. Right. So I think there are limitations because when 

we talk about value pathways and when you have opportunities to 

exchange therapeutic alternatives, to use those opportunities for 

better value choices, that that’s really important. 

But the issue of drug pricing—— 

Mr. WELCH. But I mean, I don’t have much time so let me interrupt. But thank you. 

In this proposal the medical provider is going to be in control of 

the final decision about what’s the most efficacious drug. That is 

agreed, because the patient’s entitled to that. 

Mr. BUCSHON. Will the gentleman yield real quickly? That depends, I would say, Peter, on whether or not the pricing results in 

a massive loss to the practice, and then they may not be able to 

absorb that without closing their practice. 

Mr. WELCH. Thank you. Reclaiming my time. 

Then that gets us to the heart of another problem. If we create 

this Rube Goldberg situation where you’ve got to do all of these 

maneuvers to try to get your practice to be solvent instead of paying fair value for the procedure you do but then not linking your 

bottom line to whether the prescriptions are the most expensive 

drugs then we’re going to get a chance to deal with this. 

But I just want to say this is—this is a disaster looming. The 

taxpayer can’t afford it, employers can’t afford it and patients 

like—my first wife had cancer 9 years. We had a fantastic 

oncologist. 

Drugs extended her life. They alleviated her pain. They made our 

family much stronger. But you know what? That’s out of reach for 

more and more Americans and this economy can’t support it. 

I really was upset about the lack of urgency on the part of some 

of the witnesses here to what I think is a very urgent problem. 

Thank you, Mr. Chairman. 

Mr. PITTS. Chair thanks the gentleman and recognizes Dr. 

Bucshon for UC request. 

Mr. BUCSHON. Yes, I just want to ask unanimous consent to introduce an article from the New York Times from an oncologist 

116 

from New York describing how this type of thing may limit their 

ability to properly treat cancer patients. 

Mr. PITTS. Without objection, so ordered. 

Mr. Welch. 

Mr. WELCH. I’d like to introduce into the record an article examining congressional comments regarding Medicare’s Part B pilot 

proposal. 

Mr. PITTS. Without objection, so ordered. 

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

Mr. PITTS. That concludes the questions of the Members present. 

We will have some follow-up questions. We’ll send those to you in 

writing. We ask that you please respond. 

Thank you very much. This is a very important hearing, very 

timely, lots of good information. Members have 10 business days to 

submit questions for the record. So they should submit their questions by the close of business on Tuesday, May 31st. 

Without objection, this hearing is adjourned. 

[Whereupon, at 12:42 p.m., the committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today’s hearing is an important exercise in Congressional oversight on a recently 

proposed rule from the Centers of Medicare and Medicaid Services (CMS) on Part 

B drugs. There is bipartisan concern that this proposed Medicare drug experiment 

will threaten the care of our most vulnerable seniors in Michigan and throughout 

the country, and reduce access and availability of lifesaving drugs. 

There are several characteristics that make this proposal unique when taken together. The new model is mandatory. CMS proposes to waive entire sections of statute and carefully negotiated Medicare reimbursement policy, effectively rerewriting 

at least seven payment provisions established by Congress over the years. 

Currently, Medicare pays for Part B drugs by reimbursing providers the Average 

Sales Price (ASP) plus 6 percent. In the first phase of the new model, providers in 

half the country would be reimbursed ASP plus 2.5 percent and an additional flat 

fee of $16.80 per drug per day. Application of sequestration would effectively bring 

this payment to 0 percent. Translation: reimbursement will fall short in covering the 

costs of acquisition, storage, and administration of many drugs that seniors with serious medical conditions need—quite a dangerous policy change. 

CMS has also suggested value based purchasing arrangements be applied in half 

of the country under Phase II, including reference pricing and Indication Based 

Pricing. CMS would set payment rates for drugs they believe are therapeutically 

similar, despite which drug a patient needs and vary payments for drugs based on 

what the Federal Government determined is their clinical effectiveness. These tools 

are dramatic departures from how we approach prescription drugs access in this Nation and give the Federal Government far too much control over decisions that 

should be left between a doctor and their patient. Another dangerous policy change. 

I do support efforts to test models that seek to improve quality of care, lower cost, 

and increase access. These themes are the backbone of our SGR reform legislation, 

MACRA. In the past, patient rights and access to care have always been given serious attention and weight but they are disturbingly lacking in this proposal. There 

was no input from patients or providers. In fact, this proposal threatens to disrupt 

many important Medicare models from Accountable Care Organizations to the 

CMMI sponsored Oncology Care demonstration. This is unnecessary and disruptive 

as providers prepare for MACRA. 

Fundamentally though, there is a serious separation of powers issue that cannot 

be overlooked. This model represents a dangerous precedent where future administrations could change the statutory reimbursement for any provider or service, anywhere or everywhere in the country, under the guise of a demonstration, without 

any input from patients, providers, or Congress. 

Each reason by itself should cause us pause. Taken together, there is no question 

that the policy must be withdrawn. And today, we will examine thoughtful legislation by Dr. Bucshon to do that and protect seniors. 

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The potential for harm from the administration’s alarming proposal for seniors in 

Michigan and across the country is real. Doctors, patient advocates, and patients 

are standing up and vocally declaring the threat this model could have on their 

care. We are talking about our moms and dads, grandparents, friends, neighbors, 

and our Greatest Generation—and the Government wants to experiment with their 

care. Seniors deserve our respect. They deserve to be treated with nothing but dignity. 

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