U.S. GOVERNMENT PRINTING OFFICE

60–999 WASHINGTON : 1999

ASSESSING HEALTH CARE QUALITY

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

FEBRUARY 26, 1998

Serial No. 105–94

Printed for the use of the Committee on Ways and Means

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COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

JIM BUNNING, Kentucky

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

BARBARA B. KENNELLY, Connecticut

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON HEALTH

BILL THOMAS, California, Chairman

NANCY L. JOHNSON, Connecticut

JIM MCCRERY, Louisiana

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

PHILIP M. CRANE, Illinois

AMO HOUGHTON, New York

SAM JOHNSON, Texas

FORTNEY PETE STARK, California

BENJAMIN L. CARDIN, Maryland

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

XAVIER BECERRA, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

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C O N T E N T S

Page

Advisory of February 19, 1998, announcing the hearing ..................................... 2

WITNESSES

Health Care Financing Administration, Jeffrey Kang, M.D., Chief Medical

Officer, Center for Health Plans and Providers ................................................ 29

Agency for Health Care Policy and Research, John M. Eisenberg, M.D ............ 13

American Association of Health Plans, and Blue Cross of California, Jeffrey

A. Rideout, M.D .................................................................................................... 127

American Medical Association, Randolph D. Smoak, Jr., M.D ............................ 174

Families USA, Ronald F. Pollack ........................................................................... 153

IBM Corporation, and Corporate Health Care Coalition, Jill Kanin-Lovers ...... 106

Institute of Medicine, National Roundtable on Healthcare Quality, and Mount

Sinai School of Medicine, Mark R. Chassin, M.D .............................................. 63

Mulley, Albert, Massachusetts General Hospital, and Harvard Medical

School .................................................................................................................... 79

Stratco, Inc., S. Diane Graham .............................................................................. 101

SUBMISSIONS FOR THE RECORD

American Academy of Family Physicians, statement ........................................... 205

American College of Occupational and Environmental Medicine, Arlington

Heights, IL, Robert S. Rhodes, statement .......................................................... 211

American Society for Quality, Milwaukee, WI, statement ................................... 220

American Society of Plastic and Reconstructive Surgeons, Arlington Heights,

IL, Dennis J. Lynch, statement .......................................................................... 223

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ASSESSING HEALTH CARE QUALITY

THURSDAY, FEBRUARY 26, 1998

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON HEALTH,

Washington, DC.

The Subcommittee met, pursuant to notice, at 10:10 a.m., in

room 1100, Longworth House Office Building, Hon. William Thomas [Chairman of the Subcommittee] presiding.

[The advisory announcing the hearing follows:]

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Chairman THOMAS. The Subcommittee, such as it is, will come

to order.

I want to welcome everyone to today’s hearing, assessing health

care quality. Today, the subcommittee will hear from witnesses

who will help us better understand how health care quality is defined—or not defined, measured—or not measured, and, hopefully,

assured across a wide array of delivery systems and practice settings.

We’ll also hear about what is being done to promote quality in

both the private sector and in Federal government health care programs.

Last week, President Clinton issued an executive order requiring

all Federal health care programs to initiate a timetable for complying with the recommendations of the President’s Advisory Commission on Quality and Consumer Protection in the Health Care

Industry. We all agree that Americans should have access to the

highest quality health care. The challenge, of course, is to assure

quality without stifling innovation, increasing the number of uninsured Americans, making health coverage more costly and more

unattainable, and expanding government bureaucracy. Those are

not desirable side effects from the changes.

That’s why I sent a letter to Secretary Shalala last week requesting information, including cost analysis, that I assumed the administration would have assessed very thoroughly before launching

such a major initiative. I received an answer to my letter, I believe

this morning, and without objection, I’d like to put in the record

at this point both my letter and Secretary Shalala’s response.

[The information was not available at the time of printing.]

Chairman THOMAS. The concern that I have is that the administration’s response fails to provide us with any estimates of the cost

impact of the executive order on seniors and those enrolled in other

public programs, or on the providers, practitioners, and health

plans providing those services to patients. In fact, the Secretary’s

letter—page 1 and at the top of page 2—indicates that these estimates simply don’t exist. In the words of the Secretary that ‘‘although the Office of the Actuary has not completed the analysis of

these estimates,’’ they believe they will not have any significant impact.

My concern is that by using the executive order process, the

President has avoided these new requirements of submitting to the

Office of Management and Budget for assessment their impact on

the American public. It’s doubly disturbing because the President

challenged Congress to extend the requirements in the executive

order to the private sector so that, as he said, they will become the

law of the land for all Americans. Obviously, when Congress considers the President’s challenge in actual legislative language, it

will have to be fully analyzed by the Congressional Budget Office.

In the past, CBO and private economists have estimated that premium increases of one percent resulting from government mandates cause between 200,000 and 400,000 Americans to lose their

health care coverage. I don’t know whether the Secretary assumes

one percent is not significant or not, but clearly the costs are a concern.

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While I recognize there’s an opportunity for partisan advantage

in the debate over health care quality and consumer protection legislation, I had hoped we could begin to address this issue by building on the bipartisan health care reforms enacted during the past

two years to, for example: one, save the Medicare program from

bankruptcy for over a decade; two, provide Medicare beneficiaries

with greater choice of private health plans; and three, expand preventive care for seniors; four, fight health care waste, fraud, and

abuse; and five, limit preexisting conditions and guarantee affordability of private health insurance.

Specifically, there is a recent history of bipartisan quality protections on which to bill. We strengthened Medicare consumer protections in the 1997 Balanced Budget Act by one, guaranteeing access

to emergency coverage under a ‘‘prudent, layperson standard’’—Ben

Cardin has been very helpful specifically in moving that issue forward; and two, allowing physicians to discuss all available treatment options with patients regardless of the cost; three, requiring

health plans to consider appeals from denials of care in emergency

and urgent care situations within specified timeframes; and four,

more importantly and more fundamentally, strengthening the authority of the health care financing administration to collect, monitor, measure and disseminate information about the quality of care

provided to beneficiaries in Medicare Plus Choice plan and fee-forservice.

Instead of entering into a substantive discussion about how best

to ensure quality of care based on sound clinical data in the private

sector, however, it appears the administration is more interested in

playing partisan politics without fully analyzing the issue. It is unfortunate.

Before rushing to enact legislation that may do more harm than

good, stifle innovation, and increase the number of uninsured

Americans, we need to set aside politics and look for ways to empower consumers with clinical data and outcomes to allow them to

make better health care choices. We’ve assembled a group of witnesses today that will help us do just that.

I’m very concerned about movements that are occurring in

States, I’m concerned about what the Federal Government is or is

not doing, and I look forward to today’s testimony to assist us in

making, what I consider to be, some extremely important decisions

for all Americans over the next several months and years.

[The opening statement follows:]

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And with that, I’d recognize my colleague from California, Mr.

Stark, for any comment he may wish to make.

Mr. STARK. Mr. Chairman, thank you. Thank you for holding this

hearing on health care quality and what I’d like to think of as the

search into medical outcomes. But, I notice an undertone in your

opening remarks that I think was perhaps present in your press

release. I just want to come back to that. It deals with an event

which Mrs. Morella and I attended in Wheaton, Maryland last Friday to join with the President in announcing his executive actions

to implement laws which we passed last year under your direction

and with your support.

Now, you had referred to that as a political stunt and I’ll stipulate to that. There were lots of press and people out there. I like

to take credit for the sun coming up every morning, but I can’t get

any press to observe it with me. But, I want to say that those were

commission recommendations that applied to Medicare and Medicaid beneficiaries. Recommendations requiring that beneficiaries

have more complete information; they have a choice of providers

within plans, access to emergency services; full participation in

medical treatment decisions; no discrimination based on race, sex,

and age; privacy of medical records; a system for handling complaints and appeals as you suggested; and a call for consumers and

patients to become more involved in the health—to guide their own

destinies by quitting smoking, exercising, those sorts of things.

Now, these recommendations were basically the Medicare section

of the Balanced Budget Act. And, I guess what I’d like to ask my

Republican colleagues is, and it’s a challenge, which one of those

would you repeal? Which one of those rights for our senior citizens

or the Medicaid beneficiaries would you like us to deny?

Now, I’m prepared this morning to ask unanimous consent to

give you all the right to vote on any one of them or all of them.

But, I don’t think that that’s going to get us where we want to get.

We’ve got a couple of hundred cosponsors on the Norwood Bill. I

presume we’ll get the same number on a bill that Mr. Dingell will

be introducing. We’re prepared to move.

I hear that our Speaker does not want to move ahead this year

to give patient protection in the form that either Norwood or Dingell are proposing. There may be an alternative to that, but I think

that we’re missing a bet. We may not get the expansion of Medicare into the younger people; that’s a tough one to pass and I don’t

know if the public is pushing us that much. But, the public is pushing us on. They are pushing us from both sides of the aisle, in movies, on television, in the press, in States—in California they have

a ballot initiative—and I think we could move ahead.

And I’d like to challenge my Republican colleagues not to move

backward on what the President has done, but to move ahead.

Once more, while Mr. Houghton and Ms. Johnson are in the room,

I’m perfectly willing to ask unanimous consent to have a vote today

to remove any one of the privileges or rights that the President bestowed by executive action for Medicare and Medicaid beneficiaries

last Friday. I think those were all things that we all voted on—I

know the Chairman did. Everybody supported those in the Balanced Budget Amendment of last year. We ought to say, Mr. President, you did it expeditiously and let’s us go on and do whatever

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else we have to do. Change it if you want, but I think we ought

to move ahead.

I’m sorry to be so negative because I do really want to get into

what Dr. Eisenberg wants to talk about in terms of outcomes research and things that will help make these decisions more empirical and less subjective as I am making comments this morning.

But, I want to give some credit, where it is due. As you know, Mr.

Chairman, I tend to think you do a better job in health care, generally, than the President does. So, I am no fan of the President

or his former advisor in that area, as you well know. But, I do

want to give credit in this case where credit is due and it has bipartisan support. Thank you, Mr. Chairman.

[The opening statement follows:]

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Chairman THOMAS. I don’t want to prolong the discussion but I

do believe a brief response would be appropriate.

Pretty obviously, where we came together in a bipartisan agreement and implemented quality aspects under the Balanced Budget

Agreement, I have no quarrel, obviously, with going forward in that

area. But, the gentleman’s statement as to what occurred, I believe,

needs a slight correction. What the President was referring to was

the commission that he created several months before the election,

before we passed the Balanced Budget Agreement, and which include a number of items that are not in the Balanced Budget

Agreement and which apply to something more than Medicare and

Medicaid in terms of all Federal Government health programs.

The gentleman himself mentioned that there should be no discrimination on the basis of age, sex, or race. I have a difficult time

figuring out how that gets implemented, for example, in the Medicaid program based upon who current recipients are in the Medicaid program. Does that mean that able-bodied males can now sue

to get the same kind of benefit that pregnant women or women

with children get in a Medicaid program? That’s my point about

the politics of it. It looks good and it sounds good, but as far as trying to advance a comprehensive quality program, it didn’t help a

whole lot.

And, as far as the gentleman’s statement about the Speaker not

wanting to move quality legislation in this Congress, then why in

the world was I up at a 7:30 quality care task force meeting of all

of the key chairmen of the Commerce Committee, the Ways and

Means Committee, the Education and Workforce Committee, and

all of the pertinent committees that would deal with this legislation

to try to take a look at putting together a decent package of legislation and not one based upon anecdote? The last thing we ought to

do is legislate by myth, rumor or anecdote.

One of the reasons we’re holding this hearing, and I’m glad we

got it early in the session and that we have the kind of quality people that we have here today, is to get an understanding of what

real-world problems there are; what we need to do to be able to get

the tools to measure quality—if, indeed, we can measure quality,

which I believe we can and I hope out of this hearing I’ll get some

support for that argument; and what are the practical and appropriate steps to take both legislatively and administratively to ensure real quality, lasting quality, in a structure that will evolve

over time and not be one designed to last between now and November of 1998. And that’s the context in which I made my statements.

Any other member of the panel wishing to make statements can

certainly submit a written report. It is now my pleasure to turn to

the first panel, and it’s good to see with us someone who’s been

with us a number of times before, Dr. John Eisenberg, who is currently the Administrator of the Agency for Health Care Policy and

Research, an important agency which will assist us in this task,

and I believe, for the first time, Dr. Jeff Kang who is the Chief

Medical Officer, Center for Health Plans and Providers, the Health

Care Financing Administration.

I want to thank you both for being here. Any written statement

you have will be made a part of the record and you may address

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us in any way you see fit on this important subject. Should we

start with Dr. Eisenberg.

STATEMENT OF JOHN EISENBERG, ADMINISTRATOR, AGENCY

FOR HEALTH CARE POLICY AND RESEARCH

Dr. EISENBERG. Thank you very much. I’m pleased to be back

and to join you to address these issues that you’ve raised. In your

invitation to us to testify today, you asked that we talk about how

health care quality is defined and how it’s measured, what the role

of Government and the private sector are in promoting health care

quality, and how legislation might affect quality costs and access.

As you mentioned, I address these questions not only from my

role as Administrator of the Agency for Health Care Policy and Research but from my experiences working with you as Chair of the

Physician Payment Review Commission and having recently left

the position of chief of the medical services at Georgetown, where

these issues were really quite real.

Most importantly, I think we need to emphasize that health care

is a personal decision. It’s a decision that’s made by individuals

and, although many of these decisions are made with some help

from doctors and from nurses and from our loved ones, they remain

personal and they remain very individual decisions. But, they are

decisions that get made in the context of a very complicated health

care system——

Chairman THOMAS. John, I’m going to ask you to move that

microphone just a little bit closer. Something happened——

Dr. EISENBERG. Okay.

Chairman THOMAS [continuing]. To it during the break, I don’t

know——

Dr. EISENBERG. I apologize.

Chairman THOMAS [continuing]. What it is but it’s very hard to

hear and so you’re going to have to get very close to it. I apologize.

Dr. EISENBERG [continuing]. I will do that.

I was alluding to the fact that our decisions about health care

are very personal ones, they’re made with some help from our family, from our friends, from our clinicians, but they’re made in the

context of a very complicated health care system where patients

and clinicians deal with decisions for which they often have inadequate information. I think the bottom line for us is that our job,

whether we’re emphasizing the powerful role of the market to reward quality or whether we’re emphasizing public policy that more

directly promotes quality care, is that we need to determine how

we can assure that quality care is delivered in this country.

Government can assure that consumers have their rights protected, as you’ve mentioned in your opening comments, and that’s

important. But, I think what is also very important is what you

both mentioned in your opening comments and that is that once

those rights are protected, what is the health care to which people

have access? I want to discuss how we as public servants can be

sure that the health care to which we do have access is high quality health care.

Let me mention six ways in which I think we can address your

question of how Government can play a role here. The first is that

we can protect consumers’ rights. Secondly, we can be sure, as Dr.

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Kang will address, that we purchase high quality health care for

our beneficiaries, through Medicaid, through Medicare, through the

Office of Personnel Management. Another way in which we can assure quality care is the care that we provide through the uniformed

health services—the VA, the Defense Department—care that is directly provided by Government. So, those are three ways; we can

protect consumers, we can purchase care of quality, and we can

provide care of quality.

But, as the head of a research agency, I want to emphasize three

other roles that I think are very important for Government in assuring high quality care. First, we need to be sure that we’re sponsoring and that we’re conducting research that’s going to give us

knowledge about what works, that’s going to give us knowledge

about what new tools we can use to improve the quality of care,

and provide us with tested and proven ways of improving quality.

That takes more research. Secondly, we should be tracking the

quality of care in this country. We should be doing a better job of

monitoring where there’s a need for improvement and where

there’s an opportunity for us to do better, to identify where there

are gaps between what we know how to do and what we are doing.

And third, we need to be providing very clear and very unbiased

information to the public so that when they choose a plan or they

choose a provider, hospital, or clinician, or with their clinician they

choose a diagnostic test or as treatment, they can make an informed decision.

You established this agency, AHCPR, in 1989 to do just that; to

be sure that that knowledge is available. We sponsor, we conduct,

we translate research in the science of health care. We apply the

same kind of rigorous evaluation that is applied at the NIH.

What we mean by quality, when we sponsor this research, is usually thought of in three ways: structure, process, and outcome. And

it’s probably familiar to you; by structure, we mean, what’s the

basic construct of the health care system—for example, with breast

cancer, do we have the right mammography equipment out there?

With coronary disease, are clinicians or cardiologists board-certified? Are they well-trained?

But, even if the structure is right, it doesn’t mean we’re practicing right. We need to be looking at the process of care. The process of care asks questions about how we deliver it. In breast cancer,

it asks questions such as are we getting mammography to the

women who need it when they need it, to women at high risk? For

coronary disease, it asks questions such as are we giving people

clot-dissolving drugs when they come in with myocardial infarctions?

Even if we have the right structure and we have the right process, though, you don’t do much for people unless they get good outcomes, unless the end results of their care are good. Just having

the right structure, just having the right process isn’t going to be

sufficient. We need to be asking questions like, was the breast cancer treated at an early stage when we could treat it effectively?

And, did the patient survive the heart attack with a high level of

functioning?

You know well because of your concerns about the AAPCC how

much variation there is in practice in this country. We need to unVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
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derstand that practice better. We need to understand why, in

Miami, the AAPCC is $8,000 and why, in Allegheny County in New

York, it’s $4,400 and why those variations exist. One big reason is

because of the uncertainty that clinicians have and patients have

about what works and when it works. We know from Wennberg’s

work and others that when the uncertainty is the greatest, the variation is the greatest and the opportunity for improvement is the

greatest.

One other area which I’d like to emphasize where information

may help both public policymakers and consumers is by giving

them information about what consumers think about the quality of

care that they’re getting.

We have a big poster here about the consumer assessment of

health plans survey (CAHPS) which we, at AHCPR, have sponsored with collaboration from HCFA, NCQA, and others. HCFA announced recently that it will be adopting CAHPS as has the Office

of Personnel Management. This means that we as Government employees and Medicare beneficiaries will know what other consumers think about the plans. CAHPS gives them information that

they previously didn’t have.

So, Mr. Chairman, I think we’re making progress. We’re making

progress towards an effective system of quality measurement. We

know that consumers, physicians, managers, and other leaders—

public policymakers—need information about what works and what

doesn’t. Neither the public nor public leaders are going to be able

to make decisions about the quality of care without the knowledge

about what works, how to measure it, and how to improve it. Unless we develop better measures of quality and better ways of improving the information that guides both choices about care and

programs to improve it, we’re not going to be able to do what the

public wants us to do: to be assured that the care they have is high

quality care. Thank you.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much, Dr. Eisenberg.

Dr. Kang, welcome to the Subcommittee.

STATEMENT OF JEFF KANG, CHIEF MEDICAL OFFICER, CENTER FOR HEALTH PLANS AND PROVIDERS, HEALTH CARE

FINANCING ADMINISTRATION

Dr. KANG. Thank you, Mr. Chairman and members of the committee. I’m very pleased to be here to describe HCFA’s efforts working to ensure that Medicare and Medicaid beneficiaries receive high

quality health care services.

By way of introduction, since this is the first time I’m here, I am

an internist and a geriatrician who practiced clinical medicine for

10 years and ran a private-group practice. I also am very familiar

with managed care as a provider who took capitated payments, but

also worked for plan management for utilization management and

quality assurance. As a practicing physician, I am pleased to be

here to talk to you about quality.

But, before I begin, I would like to recognize you and Representative Stark and thank you for your strong leadership in passing consumer protection and quality protections in last year’s Balanced

Budget Act.

Because this Subcommittee has jurisdiction over Medicare, I will

focus my comments on that program. With regard to Medicare, I

would like to focus on managed care first because this is where

HCFA’s thinking and its programs, with regard to quality assurance, are most matured.

Our strategy in managed care has two components, as Dr.

Eisenberg suggested, and I’m going to spring off of his comments:

the first really is performance measurement, and then the second

is consumer protection. With regard to performance measurement—and by performance measurement, I’m referring to the processes and outcomes, as Dr. Eisenberg discussed—performance

measurement has two purposes in it also; the first is for plan-toplan comparisons, the second is for internal quality improvement.

With regard to plan-to-plan comparisons, this requires standardized measurement systems. Here we have three efforts in process:

the first, as you know, is HEDIS 3.0 measures. In 1997, we required Medicare managed care plans to report this information to

us and we soon hope to be able to publish this data for consumer

information. The second, as Dr. Eisenberg referred to, was the consumer satisfaction survey, or CAHPS. We are currently in the process of surveying over 130,000 Medicare managed care beneficiaries

and we’ll be able to get this information back to them with regard

to their plan performance sometime in the fall. The last effort is

the Foundation for Accountability. FAcct endorses and promotes a

common set of patient-oriented measurement systems and we anticipate that some of these measures will be incorporated in future

versions of HEDIS.

But, with plan-specific comparative data from these standardized

measurement systems, what can we do with them? Well, as purchasers, we can do four things: we can set minimum performance

level, we can set contractual targets, we can reward good performance, and we can assist beneficiaries in making health plan choice

to create market competition based on quality, not cost.

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The second use of performance measures I’d like to briefly touch

on is for the purposes of internal plan quality and improvement;

not for the purposes of comparison, but for the purposes of internal

improvement. Here, through a contractor, HCFA developed what

we are calling QISMC, Quality Improvement Standards for Managed Care. Plans will be required to show measurable improvement

in specified broad, clinical and non-clinical areas of measures of

their own choosing. So, they have the flexibility of choosing their

own measures and the requirement is that they just show demonstrable and measurable improvement over time.

Now, let me just briefly mention the second component of our

quality strategy, which is consumer protection. As the members—

as Representative Stark and yourself have discussed, as a result of

the Balanced Budget Amendment, I’m happy to report that much

of what’s in the President’s Consumer Bill of Rights is or will be

available to the Medicare beneficiaries and Medicaid beneficiaries.

As you’ve already mentioned, there’s appeals of grievances, the

physician incentive regulation, and the prudent layperson standard.

In conclusion—oh, I should mention the—I did promise to talk a

little bit about fee-for-service. Just as we’re interested in getting

performance measurement and improvement and accountability in

managed care, we can do the same in fee-for-service. We are looking at doing HEDIS measures in fee-for-service, we’re developing

an OASIS measurement system for home health providers, the

MDS system for nursing home providers, and the joint commission

has the ORIC system for hospitals. We are also looking at developing a member satisfaction survey instrument to be used in feefor-service. Finally, we are revising our conditions to participation

for providers to reflect the same emphasis as in QISMC for managed care on minimum performance level and demonstrable and

measurable improvement.

In conclusion, there is much work to be done but I think we’ve

gotten a good start. The difficulty really is in developing good performance measurements and outcomes. But, as quality measurements improve, HCFA will be well-positioned in its strategy of emphasizing performance, accountability, and quality improvement.

I’d like to thank the Chairman and Mr. Stark and other members

of the committee for working to enact the quality-related provisions

in the Balanced Budget Act and I agree very much with the Chairman’s notion of empowering consumers to make better health care

choices based on clinical data and outcome measures and we look

forward to continuing to work with you on this vital issue.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much, Doctor.

Probably to both of you, but more directly to Dr. Eisenberg, you

know, given the direction and tone of his testimony because pretty

obviously—and Dr. Kang, you’re correct, we’re focussing primarily

on Medicare—but I’ve discovered that since this committee is one

of the few that actually puts together the product that’s moved

through the system, we’ve had to drive a lot of the system through

the Medicare structure. But, when we talk about quality health

care, as Dr. Eisenberg indicated clearly, it ought to be open to all.

And I was heartened to a certain extent by the President’s Commission concern about patient protections in the use of the term

‘‘confidentiality,’’ rather than privacy because I believe if you use

the terms ‘‘right to privacy,’’ it tips over into an area that oftentimes is not viewed in a way commensurate with our job of collecting data. And so, the confidentiality term is one that I am appreciative of having been used.

My concern about our ability to collect data which is critical to

outcomes, research, and quality comparisons is that there apparently is a move-on in the States and I happen to be over the break

in Minnesota at the Mayo Clinic and got firsthand evidence and information of the difficulty in complying with the Minnesota State

law in restricting the collection and dissemination of data.

My question directly is over what I understand to be the administration’s position that they would not be interested in restricting

States who passed laws which are more stringent than the Commission’s proposal for confidentiality. If indeed that is the case,

how could we possibly move forward in a broad-based, multistate

data collection structure if we allow the States to devise privacy

laws similar to Minnesota’s which requires an affirmative sign-off

with a 60-day window for the use of material?

Dr. EISENBERG. Well, we share your concern. In fact, I often

think about this problem and think about the metaphor of a key

and a lock. I think that we do need to lock up the data that we

have—confidential information for our health care—but we can’t

throw away the key. And the question, of course, that you ask is,

who’s going to control that key and who’s going to control access

to that data.

The Secretary, on September 11, sent the Congress a proposal

from the Department on privacy and emphasized in that letter that

there were several elements that must be maintained and available

because they’re public goods; they include research and quality of

care evaluation. And, I think your point, especially in the context

of this hearing, is very, very important. We need to be sure that

we have not only consistent data but good data that’s available so

that we can evaluate the quality of care and so that we have access

to information for research. Now, given that——

Chairman THOMAS. But, Doctor, is my understanding correct,

that the administration has indicated notwithstanding that floor,

that States could go below it if they so chose and that there was

no interest in dealing with that issue? Is that understanding correct or not?

Dr. EISENBERG. The Department’s and the administration’s comments to the Congress were just that; that this would be a floor

of stringency and if the States decided to be more stringent, they

42

could do so. I think what we need to do as we work through this

process is for the Congress and the administration to work together

to be sure that those public goods are preserved, especially in the

context of this hearing, research and quality. We could do that in

a variety of different mechanisms, including model legislation for

the States, but we do share your concern that those public goods

continue to be available and would look forward to working with

you as this legislation goes through to be sure that they are

available——

Chairman THOMAS. Well, I’m sorry to press you on this but I

think it’s a fundamental point and I want it to be very clear. If

States have the ability to create more stringent restrictions on the

use of patient records than as advocated by the administration, is

that going to be a concern to those people who are trying to establish computer-based information networks for quality control?

Dr. EISENBERG. Yes, it will, and like every element in this confidentiality debate, there are two edges to the sword. As we try to

prevent inappropriate use of these data, we have to be sure that

we preserve the appropriate use with the right safeguards. And,

what we need to do is to work together to be sure that your concerns are taken into account.

Chairman THOMAS. I appreciate your response. It is a difficult

one. I know both of you are in a difficult position on this, but I

think at this point we have got to be as honest as we can about

what the job is with full protections of individual confidentiality of

records but the absolute necessity to collect statistically quantitative data.

Dr. KANG. Mr. Chairman, if I may, give a real live example on

this—and I’m not a legislator so I don’t know how to get out of this

problem, but it is a problem. Medicare is a Federal program. We’re

requiring HEDIS measures for the purposes of ensuring quality.

We did have some problems—in HEDIS, there is a measure with

regard to follow-up care for mental health after an affective disorder and there are some places, States, where we’ve run into problems where we could not collect that information because of confidentiality laws with regard to mental health records. And, this is

an issue and, again, I don’t know exactly how to solve this but I

think you’ve identified a very important issue.

Chairman THOMAS. Dr. Kang, recently I was somewhat disturbed

to find out that your agency’s trying to, for want of a better term,

‘‘water down’’ some of the beneficiary-centered BBP provisions like

the national toll-free number for seniors to report fraudulent activities, toll-free number for seniors to ask questions about their private plan choices. There was an attempt to phase it in or to create

something other than what we had requested in the BBA. Do you

perceive any difficulties in implementing the additional, beyond the

BBA requirements in the President’s proposal since, apparently,

the agency’s having some difficulty swallowing all of the stuff that

we asked them to do?

Dr. KANG. With regard to that, I assume you’re referring to the

Consumer Bill of Rights. As I suggested, much of the protection

proposed in the Consumer Bill of Rights are already present in

Medicare so the incremental changes that are being proposed really

will not present a major administrative problem.

43

Chairman THOMAS. If, in fact, that’s the case, I don’t expect any

additional slippage of any of the items that are critical for consumer information. If you are willing to make that statement about

being able to accept the President’s additional workload, then I

don’t expect any additional concerns about phasing in or not implementing in full the provisions that we agreed to on a bipartisan

basis and I appreciate your statement on that.

I have some concern, and I don’t normally do this but, there’s a

witness that’s coming and this is the last question that I’ll ask,

there are additional witnesses and, frankly, some of the testimony

is very good and I think this is important to get out, especially in

the context of the debate that we’re going to be engaging in in the

House and, I guess, in the Senate, on the question of quality and

where should it be applied.

A member of a panel to come makes this statement in a summary way, if I can find it. I’m looking for it and I can’t find it. I

apologize.

This is a phrase used both as a summary in one of the future

panel participants and from a February 1998 National Healthy Policy forum briefing paper ‘‘Health Care Quality: From Data to Accountability’’ by Mary Darby and I was struck with the similarity

of the phraseology and one, which I think is absolutely critical as

we move forward in this debate. And his statement, Dr. Chassin’s

statement is this: ‘‘Very large numbers of Americans are harmed

by exposure to the risks of health services from which they cannot

benefit. Equally large numbers of Americans fail to receive health

services that save lives and prevent disability. More are injured

when avoidable complications of heath care are not prevented.

Quality of care is the problem, not managed care. These problems

occur in small and large communities in all parts of the country

with about equal frequency in managed and fee-for-service systems

of care.’’ That was from his summary.

And, from the Health Care Policy forum statement, ‘‘The quality

of care, it appears, has always been inconsistent. It is only recently

that awareness of inconsistency has become widespread. This observation runs counter to a popular tendency to associate poor

quality with the spread of managed care and its perceived limited

on consumer choice. In fact, evidence can suggest that managed

care is as good as, worse than, or better than fee-for-service care,

depending upon which research one turns to.’’

And, in that context, my question would be, Dr. Kang, I have

available information that you are now going to send out a questionnaire and it, interestingly enough, is going to about 130,000

Medicare beneficiaries is, as the release indicates, Medicare will

use the consumer assessment of health plans, the CAHPS proposal,

this month to conduct a first-ever survey of beneficiaries in every

Medicare managed care plan to assess their experiences with managed care. Have we done this with the fee-for-service program?

Dr. KANG. We haven’t but we are actively working with AHCPR

to develop a similar instrument to be used in a fee-for-service program.

Chairman THOMAS. What percentage of Medicare beneficiaries

are fee-for-service versus managed care?

44

Dr. KANG. Right now, in the Medicare program, it’s 16 percent

in the managed care program.

Chairman THOMAS. So, we have 85, roughly 85, percent of the

beneficiaries in the fee-for-service program. Unless you with to disagree with Dr. Chassin or the report survey that quality of care is

unequal in both areas, and why haven’t we been trying to do assessments on quality in fee-for-service and why are we launching

the first ever in only the 15 percent portion of the beneficiaries of

Medicare? And this is the concern I have about, in part, politics

driving rather than policy driving a discussion of this issue. Quality care is quality care. But, what’s occurring is a political wave to

focus only on managed care on a quality concern, rather than

across the board, including 85 percent of the beneficiaries in the

fee-for-service. When are we going to have the fee-for-service questionnaire out and in the field?

Dr. KANG. I agree with Dr. Chassin’s position completely. This

notion of tremendous variability in quality of care, whether its

managed care or fee-for-service or whether whatever State we’re in,

it has been known for years. It’s unfortunate, though, that the

movement to managed care has actually brought it to the public’s

attention so this is actually where we’ve started. But, in reality,

HCFA’s viewpoint on this is that we need similar measurements

and accountability in the fee-for-service program——

Chairman THOMAS. Then why aren’t we doing fee-for-service?

Why are we doing managed care first?

Dr. EISENBERG. Let me—since we’re the guys who developed this

instrument, I should help out here.

Chairman THOMAS. Yes, but you’re not the ones who decided to

apply it to managed care before you applied to fee-for-service. That

was HCFA.

Dr. EISENBERG. But we——

Chairman THOMAS. Now, I need to know why HCFA decided that

it was more appropriate to move on 15 percent of the beneficiaries

rather than assist quality care for 85 percent of the beneficiaries.

What was the decision structure that led to the movement to push

this out as a survey to managed care rather than fee-for-service?

Dr. EISENBERG. If I may, the main reason we developed this instrument is because people making choices among plans wanted

help in choosing among those plans. And, in fact, much of the debate that has gone on in this committee in previous years has been

to give people that choice. They didn’t have choice of plans within

Medicare part A and part B and so therefore——

Chairman THOMAS. Yes, but they have choice of doctors——

Dr. EISENBERG. They do, and——

Chairman THOMAS [continuing]. And, frankly, when you talk

about quality in fee-for-service, it is a comparison of folks who were

doing the same thing in different ways.

Dr. EISENBERG. And you’re right on target because the next

phase of the development of this CAHPS instrument is to develop

measures among providers. But, the first step was to address what

people were complaining about, which was now that we have choice

among plans, how to choose——

Chairman THOMAS. The only point I want to make is we have to

be careful in terms of what we’re doing because we may drive

45

through politics the belief that quality of care is, in fact, a ‘‘problem’’ only with managed care when, in fact, quality of care is a concern for all in all of medicine. And that’s my primary concern. And,

from a policy point of view, we should be sensitive to that.

Dr. EISENBERG. Can I just make one other comment on that?

And that is to say that we—AHCPR sponsored a conference this

year during which the theme was the question of what the quality

of care is in managed care, and the conclusion was very much what

you stated, which is managed care is so diverse and so, there’s a

term we use in medicine which is pleomorphic, multi-forms. It’s a

great word for managed care because it comes in so many different

forms. You can’t compare managed care versus fee-for-service anymore.

And, we, as an agency, believe that the right research question

to ask is the one that you’re asking; not whether managed care is

better than fee-for-service, but what aspects of managed care are

good in health and which ones might not be. And that’s the reason

why the CAHPS program is designed to try to tease apart those

element.

Chairman THOMAS. Thank you.

Mr. STARK. Mr. Chairman, I thank you for letting me inquire. I’d

like to follow up on that to suggest that the complaints that I’m

getting, and I think my colleagues are also getting are all about

managed care. I’m not getting any complaints that people in the

fee-for-service system are being denied access to specialists, or are

not having their emergency room bills paid, or can’t appeal. They

can just walk out of one doctor’s office and into the next doctor’s

office and Medicare will pay. The major part of all of our constituents’ unhappiness is coming from managed care. And, I tend to

grease the squeaky wheel. Second, we’re paying $500 a month for everybody in managed

care, healthy and sick. If you’re in fee-for-service and you’re not

going to the doctor, it doesn’t cost us anything. So, that 100 percent

of the people in managed care are clipping the system for, let’s say,

an average of $4,000, $5,000, $6,000 a year, depending upon where

they live. That is an area in which we have a responsibility because the individual has no choice in managed care.

In a fee-for-service plan, Medicare is the broadest choice plan in

the country. There is no facility or no physician, almost, that is denied to a person in the Medicare fee-for-service system. There is a

caveat in that they ought to have Medigap insurance, which could

be a little bit expensive. Nonetheless, some 70 percent of Medicare

beneficiaries have that.

So, I think from this member’s standpoint, going first to managed care makes sense. It is new, it is confusing, it is unusual and

it’s generating a lot of complaints. We might as well start there

and hopefully we would build those efforts.

I wanted to ask Dr. Kang a question regarding this issue of the

HEDIS—is that how you pronounce the acronym?

Dr. KANG. [Witness nods affirmatively.]

Mr. STARK. In your report, you’re suggesting, if I can read into

your report, that many of these plans are not responding accurately. I’m going to be generous. They’re not lying, I don’t think you

would say, but they aren’t responding very accurately. And, I’m

46

guessing that the reason they’re not responding very accurately is

that, rather than fibbing to you, they’re just not keeping good

records. Or, they’re not able to keep good records. For example Oxford health plan. Their computers are down and they’re not able to

pay the doctors, much less respond to your inquiries. But, is there

a legislative action that must be taken to achieve accurate HEDIS

reporting? Should we kick plans out of medicare if they can’t respond? If somebody was honing up their HEDIS figures, would you

suggest kicking them out of the system? Or, do you think given

time, these systems will start providing you with more accurate information?

Dr. KANG. I’d like to take an opportunity to briefly just talk a

little bit about this managed care fee-for-service issue and then I’ll

just——

Mr. STARK. Okay.

Dr. KANG [continuing]. Speak to the HEDIS issue. I think that

there is some confusion with regard to quality care——

Chairman THOMAS. Dr. Kang, as a first time visitor, you need to

know that in terms of the lights and the members’ times, they get

antsy. But, obviously, you want to respond to a question that I

asked and so, it won’t come out of the gentleman from California’s

time.

Dr. KANG. Okay.

Mr. STARK. Take your time.

Dr. KANG. There is some confusion between the access to care

and consumer choice in the fee-for-service system as being a proxy

for quality of care. What we really need to do is actually have good

performance measures. And, it turns out that the peer review program has done a managed care to fee-for-service diabetes quality

improvement project where the initial measurement shows that

there are no differences between managed care and fee-for-service

with regard to those diabetes outcomes.

So, we have to be a little bit careful in terms of how we define

quality of care but it really explains why we need good performance

measures and outcomes measurements.

Chairman THOMAS. Could I ask you just a followup? Did you

read the magazine U.S. News rating of America’s top HMOs? That

their rating—they used HEDIS figures, did they not, in putting

that together? Did they do a pretty good job of rating? Not in terms

of—systematic, I mean, as their procedure. Is that a good way to

build a—it may not be accurate—go ahead. You can criticize U.S.

News and World Report or you can praise them.

Dr. KANG. Let me—shall I answer this question or your first

question?

Chairman THOMAS. Well, either one. I just—[Laughter.]

Dr. KANG. With regard to the HEDIS measures, I do want to say

that HEDIS measures are self-recorded and, given the fact that the

Balanced Budget Amendment calls for us to publicly report these

measures, we felt that our responsibility to make sure that these

measures were accurate and with what confidence that we could

publish these. So, therefore, we did this audit of measures. The

purpose of the audit was not to actually catch fraud or lying. It

turns out we did not see any. But we did find measurement problems and they really speak to the immaturity of this science.

47

There are information system problems, and there are measurement specification problems. There’s ambiguity in those specifications. I believe, though, over time that they will improve.

Now, the problem with some of these U.S. News and Reports is

that there is an issue of what is the underlying accuracy and validity of the measures. And I think that we need to be a little careful

with what we publish as we move forward.

At the same time, though, these kinds of things begin to dialog

and begin to push the importance of quality in the public’s mind,

rather than just comparing plans based on costs and benefits.

Mr. STARK. Let me now jump to the last holiday season——

Chairman THOMAS. Would the gentleman yield on that point?

Mr. STARK. Yes.

Chairman THOMAS. My assumption is, since you’re now into

HEDIS 3.0, as you move to HEDIS 4.0 or 5.0 or 6.0, your shift will

be away from the process analysis aspect and more into outcomes

so, although this kind of a comparison in U.S. News and World Report might be premature and you wouldn’t be able to get a full

reading, clearly you anticipate that as you go forward on this it will

be a much more useful tool in comparing the quality aspects between HMOs. So, they’re a little premature, would that be fair to

say?

Dr. KANG. That is true——

Chairman THOMAS. That your later models will be better in helping us?

Dr. KANG. That is true. In fact, there is a true outcomes measure

in HEDIS for the Medicare population called the Health of Seniors

measure. The problem is this is a longitudinal measure for which

we won’t have data——

Chairman THOMAS. Okay.

Dr. KANG [continuing]. For the next 3 or 4 years.

Chairman THOMAS. Thank you. Thank you.

Mr. STARK. Let me add—Mr. Chairman——

Dr. EISENBERG. May I add just a quick comment to that?

Mr. STARK. Well, I want to ask you a question first. Not knowing

that all the television would be over at the Kyoto hearing this

morning, I have prepared this chart which I’ll share with my colleagues.

[Chart.]

Mr. STARK. But, really, it’s Uwe Rheinhardt’s Christmas card.

[Laughter.]

That’s true. And what it shows, and John Eisenberg has already

seen this, is that between Minneapolis (which is in the neighborhood of the Mayo Clinic), and New York or Miami and probably

San Francisco, there’s an almost 50 percent difference in the

AAPCC. In other words, we’re paying four grand a year for the average health care cost in Minneapolis and we’re paying $8,500 in

Miami. What we need to encourage Dr. Eisenberg to do is to

change this. It isn’t right. There’s no reason why Medicare we

couldn’t fly somebody from Florida to Minneapolis, give them a

pass on Northwest Airlines to do so, and spend half as much. We’d

save money for the Government and make a little money for the

airlines in the bargain.

48

I want to ask Dr. Eisenberg to comment on how the research

that we hope you’re going to do is going to help us to straighten

this out, to make this differential less extreme. And maybe you

could comment on where these numbers came from, Doctor, and

how you would see AHCPR’s ability to address this. I can’t make

that part of the record but it’s a new Christmas card. Thank you,

Mr. Chairman.

Dr. EISENBERG. Many of these numbers about variations among

small areas come from the work of Jack Wennberg who looks at

Medicare data and looks at how we can compare the utilization of

services across areas. It’s not always the case that one region is

high in everything or is low in every area. What is almost always

the case, as I mentioned in my prepared testimony, is that when

there’s variation, there’s uncertainty. And when the uncertainty is

reduced, we can often improve the quality of care, sometimes reduce it’s costs.

AHCPR is sponsoring projects now to try to test that but it’s only

a hypothesis at this point. We believe, given the evidence that’s

available, that if we can get more information to doctors and patients about what works and what doesn’t work, we can both get

rid of the unnecessary services and, have some resources so that

we can provide some services that aren’t being used now that

should be.

Experts in this area say that about 30 percent of services that

are provided to Americans don’t help them, and these services don’t

enhance the quality of their care. There are other services we know

would enhance the quality of their care if they received them. So,

our job is to figure out which is which and then to get that information to the decisionmakers.

Mr. STARK. Thank you, Mr. Chairman.

Chairman THOMAS. Certainly. The gentlewoman from Connecticut is not available. Does the gentleman from New York wish

to inquire?

Mr. HOUGHTON. Thank you, Mr. Chairman. Gentlemen, good to

have you here. Thanks very much for your testimony.

Just picking up a little bit on what Mr. Stark was saying, I think

dollars do make a great deal of difference. You mentioned, Dr.

Eisenberg—I forget whether you mentioned Miami or Houston or

Dallas, but also you did mention Allegheny county, New York,

which is something which I represent—a big, big difference in the

AAPCC. And if I understand correctly, that the higher the amount,

the more frequent the use.

But, I guess the basic question that I was searching for is this:

with all of your testimony and, you know, you’re talking about

standards and you’re talking about peer review and information

and followup and reports and things like that, where is the incentive for quality, for better quality? I know what it is in business,

it’s in terms of higher price.

Dr. EISENBERG. Right.

Mr. HOUGHTON. Or, it’s in terms of greater profit margin. But

where is the incentive for somebody in Allegheny county, New

York, who in many cases has to pay the same costs because they

are in the greater Buffalo, New York area. And, I’m sure that the

Buffalo Children’s Hospital, or something like that, gets a far difVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
49

ferent payment. Where is the incentive for this? As a matter of

fact, where is the incentive—I don’t quite put my fingers on it—

with all the standards and the reviews and things like that, what

is the incentive really to do what you want?

Dr. EISENBERG. Well, let me just comment first on the statistics.

You’re absolutely right about the difference between Allegheny

county and Miami and that would suggest that there’s either

underservice in your area or overservice in Miami, or both. But, we

wouldn’t imagine that all services should be the same across the

country. In fact, we would hope it would be the case that there

would be more skin cancer being treated in Miami than in Allegheny county, New York.

But, that notwithstanding, your question about where we’re

going to provide incentives is really a quite fundamental one because, by and large, right now we have incentives on what we can

measure and we can measure cost easily. And so, the incentives

today say all of the studies that are being done are, by and large,

on cost. But, we find that when we survey Americans, 90 percent

of them say that quality is a key issue. Over 40 percent of Americans say that quality is the most important issue, but over 60 percent say they’ve never seen any information on quality.

Mr. HOUGHTON. Yes.

Dr. EISENBERG. Now, consider the U.S. News and World Report

example, as a sort of consumer’s report approach. If I’m buying a

car, I’m going to go to Consumer Reports so I can see what the

quality of that car is going to be based on unbiased observers measures. The U.S. News and World Report measure in some ways was

unfortunate because it amalgamated all the different measures

that NCQA looks at. If I’m looking at a car, I want to know how

fast it goes from zero to 60. I also want to know how comfortable

it is, as well as its cost. If I’m choosing a plan or a doctor or a hospital, I want that information as well.

We don’t have that information yet but Americans want it and

the answer to your question, unfortunately, right now is the incentive is on cost and next it’s on image and after that it’s on something which we can’t give them, which is quality.

Mr. HOUGHTON. Yes, well, maybe Dr. Kang, you’d like to answer.

But, I really think in the final analysis if we talk quality, at least

from any experience I’ve had through my life, that there has to be

some sort of a push, an internal incentive, and I don’t see it there.

I mean, for example, just little things like a quality emphasis in

business and having a Malcolm Baldrige award. I don’t even see

that here.

Maybe you’d like to comment.

Dr. KANG. I think the problem is there is no market for it. (a)

we’re not able to measure quality, but (b), there is no market for

quality. So, I think that—but we’re in somewhat of a chicken and

egg situation. If consumers don’t have information, then they make

their choices based on costs. If we start giving them information on

quality, the demand for that information will increase which will

then put pressure on creating this information.

Mr. HOUGHTON. But, if I could just interrupt a minute, but

whenever I’ve seen quality work, it just doesn’t come from one

source. Let’s say that all the information is available early on to

50

a patient so that they are able to make intelligent decisions about

their own health. And let’s say all those things that you’ve talked

about here in terms of the standards and the peer review, things

like that, are available to the doctors. It still doesn’t——

Chairman THOMAS. Right.

Mr. HOUGHTON. It doesn’t really quite match.

Dr. KANG. There is another thing that HCFA’s interested in. We

do not have the statutory authority for it, but other purchasers do

this, which is the notion of beginning to pay for better quality care.

Just like your car manufacturer or something, you may choose to

pay for better quality parts or whatever. So, I think that as we

begin to develop quality measures and create a market for quality,

the notion of economic incentive for good quality of care gets put

on the table. I think we need to begin to move in those directions.

Chairman THOMAS. Right. Thank you.

Mr. HOUGHTON. Thank you, Mr. Chairman.

Chairman THOMAS. Thank you. I believe this is the last vote of

the day and I would ask the panel if you would indulge us, the subcommittee will adjourn until 25 after. Then we can come back and

continue with the questioning. Is that okay with you?

Thank you very much. Subcommittee stands adjourned until

11:25.

[Recess.]

Chairman THOMAS [presiding]. Does the gentleman from Maryland wish to inquire?

Mr. CARDIN. Thank you, Mr. Chairman. First, let me thank you

for this hearing on quality issues. I think it’s an extremely important subject and one that will become even more dominant in the

health care debate in the very, very near future. I very much appreciate the testimony of our witnesses and the response to the

questions so far.

I’m just curious as to the appropriate role between the Federal

Government and the States here. I know that in my State of Maryland, we have had some State efforts in regard to trying to give

consumers more information on selection of HMOs. The State of

New Jersey has also had a performance report in regards to helping their consumers on selection of HMOs. The Federal Government, obviously, has a responsibility as it relates to the Medicare

population in trying to give better guidance to consumers on selection of HMOs based upon quality. And the Chairman raises a very

good point, that quality goes well beyond just a managed care program, such as the fee-for-service is also Medicare.

So, how do we handle the relationships between what the States

are doing—they’re closer to their people and to the beneficiaries,

they have a better network of getting information out—and to the

work that you all are doing? I appreciate any guidance you might

be able to give us on that issue.

Dr. EISENBERG. Let me start by saying that there is a critical

role for the States in this area and, as an agency, our feeling is

that our methods, our tools ought to be used by whoever is going

to take the lead. In this area, the States in many instances have

taken the lead.

One example is the one you mentioned which is that the consumer assessment of health plan survey, which this poster depicts,

51

is used in the Maryland report on managed care plans and there’s

a booklet that the State puts out, as you know, that’s a side-by-side

comparison of managed care plans along these lines.

I applaud the States for doing this. I think given that we are experimenting and that we’re trying to find the best way to get information to patients, we need to have as much innovation at the

State level as we can. There are certainly some economies of scale

in the area of research and measurement that we ought to be taking advantage of at the Federal level and, to the extent that many

of the plans cross State boundaries, we need to be considerate of

that factor as well. But I’d like to see the States do as much as

they can and would like to continue to work with them in that

area.

Mr. CARDIN. Are you working with the States?

Dr. EISENBERG. We do. We, as an agency, have not only supported the development of tools like this, but we have a program

called the User Liaison Program, which is one of our most popular,

in which we meet with State governments, both administrative and

legislative sides, to help them understand what health services research is bringing forth that they might apply in addressing questions related to the cost, use, access, quality, and outcomes of

health services. We get very good reviews for that program and

look forward to continuing it.

Mr. CARDIN. Dr. Kang.

Dr. KANG. I’d like to just add one other thing: in addition to the

issue of the efficiency with regard to the standardization of measurements and the science of outcomes and performance, I think

there is a role for the Federal Government working with States on

data infrastructure issues and data collection issues and this will

be critical because we want that standardized to the extent that

plans or providers cross States lines.

Mr. CARDIN. It seems like that almost all the work is being done

in trying to give consumers information on a health care plan,

more so than individual providers. Can you just give us any hope

that the technology will ultimately give guidance not just on the

plan itself but to the individuals that participate so that the consumer can not only make a choice on plans but can also know

about the individual components of the plan?

Dr. EISENBERG. We are working on that. In fact, and there is a

plan to move this consumer assessment to the provider level as

well as to deal with the importance of gaining data from large data

sets about providers, both within plans and across plans, to see

how well they do.

One of the challenges, though, is the problem of the sample size

and severity adjustment, which are technical problems but very

tough problems. We don’t want to penalize physicians or hospitals

who take on the toughest cases who then might have poorer outcomes and we don’t want to infer that that’s poor quality care. You

wouldn’t want that to happen to Hopkins in Maryland and we don’t

want it to happen to any hospital in the country that takes care

of the sickest patients.

And so, we don’t yet have the technology, the methodology, to be

sure that we can correct for severity and risk in that area. We do,

though, have good enough data to give back to providers so that

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they can look at it and they can say, here’s an area where we

might be able to improve. And, I’m distinguishing here between the

use of data for choice by consumers or employee benefit managers,

and the use of data for quality improvement. The data for quality

improvement should be corrected as much as possible for severity

but that kind of judgement can be made internally by the organization as well.

Mr. CARDIN. I understand it’s very difficult and I think you need

to go slowly on it. You don’t want to put out material that could

disadvantage those that are willing to really take on the more difficult assignments in our health care delivery system. So, I encourage you to take your time, but it is important that we do make

progress and provide greater guidance.

Dr. EISENBERG. Well, it’s critically important to us, as a department, as an agency, as well.

Mr. CARDIN. Thank you, Mr. Chairman.

Chairman THOMAS. I thank the gentleman. The terms comes up

over and over again, risk assessment, the ability to judge risk in

a number of different areas and I’m just hopeful if we can push forward in some kind of some crude measuring device in a number

of areas dealing with risk assessment; here, in terms of responsibility taken on heavy cases, others, in terms of a fair and equitable

load among similar patients and that sort of thing. It’s very frustrating. Several times in the past if we’d had it, we could have

moved forward in a little bolder way. Good luck to you.

Does the gentlewoman from Connecticut wish to inquire?

Mrs. JOHNSON of Connecticut. Thank you very much, Mr. Chairman. I want to just raise two issues. First of all, I’m interested in

your comments about the need for standard and objective measures

and I respect that need. I also was very reassured by your comments a few minutes ago about the need to correct for severity and

type of illness in a lot of this public information that we’re going

to distribute.

I would also like to raise the issue, because I hope you’re thinking about it but it’s never been thought about very well, and that

is legitimate variation. You do point out in your testimony, Dr.

Eisenberg, variation is not inherently bad. Now, it’s more than

that. Often, the best ideas are not popular at first.

I know we all move from anecdotal evidence but my husband was

trained as an Obstetrician in California and, when he moved to the

East Coast, no one in the hospital had done any delivery by natural

childbirth and he had never done one under general anesthesia. I

mean, this is polar variation. You know, he stuck to his way of

practicing and, over time, there has been change, but, if you look

at what’s happened in the public conversation about caesarian sections, it’s not healthy. It wasn’t good. A lot of the advice that’s been

given to women on that issue has not been good for them, nor good

for the child that they were about to give birth to.

So, there’s a certain fadism in our public conversation about

what treatments are best and the standardization could easily

sock-in current practice as best practice. So, that’s a problem. Now,

I don’t want to spend all of my time having you talk about that

because it’s really just a problem that we all understand but you’ve

really got to make sure that somehow we build in a space for new

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approaches that aren’t popular at first, and that may even be

picked up by a group and dramatized as dramatically bad when,

in fact, in the long run, they may be dramatically good.

The more important issue that I wanted to bring up and Dr.

Kang, you referenced capitation—you know, you need to think

about, because we need your guidance, on how do we merge our research on best practice with our commitment to reimbursement

rates.

Now, a perfect example is the problem we’re having now in oncology—the RBR’S does not reward the physician for the delivery of

the drug and the wholesale price, the Inspector General says, is the

price we’re paying is way too high because he doesn’t take into account the cost of delivery. And, when you’re talking infusion therapy and OSHA regulations and insurance to cover things that have

to be refrigerated for a wide range of kinds of cancer patients, it’s

really wrong for Government not to be able to see this. So, we have

to think honestly about reimbursement rates. Reimbursement rates

destroyed Medicaid. When Medicaid did usual and customary, it

was a one-kind of system. When it stopped doing usual and customary, it was a different kind of system and a lower quality system. And, I personally believe that we’re moving this direction in

Medicare.

So, I think it’s unrealistic for you guys to be ‘‘quality’’ in Government and in the administration and not be willing to talk about

cost of quality. Both cost and reimbursement rates, cost and capitation—I mean, some of the capitation rates I see HMOs proposing

are scandalous and, at some point, the Government has to be able

to say quality care—we don’t see at this point that quality care can

be delivered for that.

Then, lastly, I’d just like to mention to you that our own approach to fraud and abuse is now reducing the very kinds of care

that we want to hold physicians and HMOs accountable for. In my

area, it has eliminated annual physicals because the OIG only lets

you get reimbursed for what it specifically you are supposed to look

at, at that moment, with that patient. And doctors used to say,

fine, you’re in for this, but we’ll also just do all this checkout to be

sure you’re okay. Can’t do that anymore. Fraud and abuse investigations won’t let you.

So, are we going to hold them, then, to the quality standard of

you didn’t get it early enough? Well, you didn’t get it early enough

because you already had your mammogram a month ago or four

months ago or eight months ago or nine months, ten months ago

and it wasn’t quite time for your next one. So, yes, you didn’t get

it early enough. So, I think we have to deal honestly with the conflict between quality as you academicians, in a sense, professionals,

look at it and what we are actually reimbursing for and allowing.

So, are you running into those kinds of problems in your work?

Dr. EISENBERG. Let me respond to one of your first comments

about the variation issue. I couldn’t agree with you more. There

needs to be healthy and legitimate variation to reflect cultural differences, geographical, epidemiologic differences. My response to

you in brief is that variation is not the answer; variation is the

question. We have to follow up to find out why those differences

exist and whether they are legitimate differences.

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Let me let Dr. Kang address the issues that are specific to HCFA

except that I would say this: that one way in which we reward providers for providing high quality care is through the attraction of

patients. It’s the market share issue so that—and I recall my days

when I was on that side—the fact that there were fees that were

constrained or limited didn’t stop us from trying to provide high

quality care or in other ways attract patients because we needed

more patients, more market share. So, that I think your question

does raise some very important issues but it doesn’t preclude the

attraction of patients through a market mechanism.

Mrs. JOHNSON of Connecticut. Well, all I’m saying is there’s a

point at which it does. If the market—if the reimbursement rate

is so low that your volume has to get so high that you literally

don’t have time to listen for that hour, then it does. And that’s

what you also having to be willing to speak up about and think

about.

Dr. Kang.

Dr. KANG. I’ll answer briefly. I think what you’re really raising

is what we’re after, which and what society’s after is value from

the health care system. And it’s really quality divided by cost. So,

you’re absolutely right; we cannot talk about quality in the absence

of cost and the dilemma that we have—I think the Balanced Budget Amendment has given us a lot of tools to look at the cost side

of the equation. What we’re really wrestling with is the quality side

of that equation such that we can have an open discourse on the

tradeoffs between quality and costs, i.e., value of what we’re trying

to get.

Mrs. JOHNSON of Connecticut. Just in conclusion, Dr. Eisenberg,

you mentioned geographic, culture, and those kinds of differences.

That’s the least of our problems. When you get down to outcomes

for a surgeon, you say, given all of that, this works better and that

means you’re not going to reimburse for this other thing that right

now doesn’t look as good because the majority of physicians don’t

do it and don’t like it and for one reason or another, you know,

don’t think it’s the right thing. If you don’t allow that, you don’t

find out in 5 years that, in fact, it was the right thing. That’s the

kind of narrowness that I fear losing. So, these are just warning

thoughts and particularly on the reimbursement issue, we have to

be far more honest or we’ll destroy the system. Thank you.

Chairman THOMAS. I thank the gentlewoman. Does the gentleman from Louisiana wish to inquire?

Mr. MCCRERY. Now, Dr. Kang, when your agency is considering

a payment or a coverage policy change that has clinical implications, what types of experts do you consult with?

Dr. KANG. Actually, I’ll let Dr. Eisenberg answer that question

because we do very much rely on much of the evidence-based practices that AHCPR works on.

Dr. EISENBERG. There is in the organization of AHCPR, the

Agency for Health Care Policy and Research, a mechanism whereby when HCFA asks a question like you just asked, it will say: is

this the kind of question where we can ask the medical directors

of the carriers’ intermediaries to deal with this issue or is this

something where we do need to go to the evidence and get an approach that looks at what the real evidence is?

55

And when that’s the case, HCFA has several options, one of

which is to come to us and ask us to do an evaluation. Sometimes

we do those internally within the agency but increasingly, we ask

one of our evidence-based practice centers to take on that project,

12 centers around the country that have expertise in this area.

They write a report that then would go back to us and we’d then

go to HCFA after we’re confident that the report is of the highest

quality. That helps HCFA to make that decision.

The coverage decision is HCFA’s but what we are able to do is

to provide an arms-length analysis of the science that underlies the

question of whether a service should be covered or not; that is to

say, whether its effectiveness is demonstrated or not.

Mr. MCCRERY. Well, the reason I asked the question, in September, this last September, there was a payment policy change regarding EPOGEN that was issued by the agency and we’re told by

a specialist in that area that this decision could have a dramatic

impact on some of their patients.

When the staff—I’m told when our staff asked HCFA if the agency had consulted with leading nephrologists about this, they were

told that HCFA did not and the rationale for not consulting with

leading nephrologists was that, well, they’re likely to give us a biased answer because of financial interests.

Couldn’t you have found some retired nephrologists? [Laughter.]

Or an academic, someone that didn’t have a financial interest

that could give you a specialist’s view of this change?

Dr. KANG. Well, I think that we actually consulted the available

literature. The dilemma here with regard to EPO is there is scarce

literature on this issue and then we have to make a decision. We

need to make a decision, whether we actually refer this for some

sort of practice or evidence-based practice center evaluation. The

dilemma here is there really is little literature. Then, we have to

make some sort of coverage decision based really on whatever efficacy information that we might have and also, though, there are

cost implications. So, it’s a balancing act here. The dilemma with

EPO is there’s very little information really available on either

side.

Mr. MCCRERY. Well, but, I mean, that just underscores the need

to consult, at least to me it should underscore the need to consult,

some leading nephrologists and we’re told that you did not do that,

that the agency didn’t do that. So, what’s the rationale?

Dr. KANG. I understand that we’re in the process of reevaluating

our EPO policy so I’ll have to get back to you——

Mr. MCCRERY. We hope so.

Dr. KANG [continuing]. On this issue for the record.

Mr. MCCRERY. We keep asking this question and we don’t get a

good answer really. We’re hopeful that HCFA will undertake an expeditious review of this policy and get back to us soon with some

specifics rather than a general answer that you’re looking into it

because that’s all we’ve gotten so far. Thank you.

Chairman THOMAS. Does the gentleman from Nevada wish to inquire?

Mr. ENSIGN. Thank you, Mr. Chairman. I’d like to just briefly follow up on the EPOGEN situation and just give you an anecdote,

56

and being a veterinarian, we’re not supposed to just give anecdotes

when we’re in the medical field.

But, my Aunt is in end-stage renal failure, has been for some

time, and as a personal story there, the EPOGEN policy for her

was almost disastrous recently and it does not take into account—

and we know in medicine, medicine is an art every bit as much as

it is a science. And just like body temperature varies, hematocrit

varies between people. What’s normal and healthy for one person

is not necessarily what another person needs. Your policy does not

take that into account and I would urge you, as a personal request

for people like my Aunt and the many people out there, that your

policy may work for 80 percent of the people but for the 20 percent

that it doesn’t work it can have disastrous consequences.

And it has to cost a lot more money to get somebody back to

bring regulated and get them up to feeling well because they can

end up in the hospital and all kinds of things if they end up, you

know, becoming sick because their hematocrit levels are not high

enough. So, I would definitely add my voice to the other people on

the committee who I would like to see HCFA do this as expeditiously as possible.

Do you have a date when you think that you will—at all, that

HCFA will be finalizing their change in policy?

Dr. KANG. I’m sorry. I’m not close to this particular issue so I

would have to get back to you for the record.

Mr. ENSIGN. Okay. I would appreciate that.

Dr. KANG. I do have a general comment, though, which is that

having worked for other plans, the way other plans will deal with

this issue is that they’ll have a general policy that works for 80 or

90 percent of the population. But, to actually waive that policy for

the 1 or 10 percent individuals who are special cases causes a dilemma for us as an agency. To administer an exceptions policy has

tremendous administrative costs and, quite frankly, we’re not funded to do that.

Mr. ENSIGN. And yet——

Dr. KANG. That’s a major dilemma for us.

Mr. ENSIGN. The other exception—I visited one of these clinics in

Las Vegas and Las Vegas has a lot of people that travel and they’re

not quite there to authorize their next EPOGEN shot but they need

it and that’s another thing I’d like you to look into, is that you

don’t want to restrict people that would like to enjoy that quality

of life, to be able to travel like other people. So, that is another consideration I’d like you to look into.

Dr. Eisenberg, I’d like to ask you a question on measuring quality. Once again, kind of anecdotally, this seems to be one of the

most difficult things to measure because some of the things along

the line that Nancy Johnson was talking about—once again, this

gets back somewhat to the art of science, the art and science of

medicine and what a doctor’s particular experience may be in a

particular area may be different than somebody else’s.

A very good example is my son has gastric reflux. We’re working

with a gastroenterologist, we’re working with a surgeon. This surgeon has done, probably as much work as anybody in the world on

this particular disease process in kids and his recommendation

right now is to do surgery. Her recommendation—and they have

57

different standards by which they measure these recommendation—her recommendation is to go the conservative approach.

And, to measure which one of those is the quality is very, very

difficult and, it’s real judgement call. There are pluses and minuses

whichever way you go and whichever route you turn out, if it turns

out wrong, then that’s going to be negative against that judgement.

But also, along similar lines to that, if you have—for instance,

caesarian rates. You measure caesarian rates across the country

and they vary somewhat, depending upon the plan, and things like

that. My wife and I just went through the Bradley method of natural childbirth.

Now, under the Bradley method, they have about a 4 percent

caesarian rate, okay, even with past caesarian operations. But,

that’s a minor technique used across the country; very few people

use that on a comparison number, although there are significant

enough numbers nationwide. But, that’s not going to be a particular procedure that you all are mostly going to be measuring.

You see what I’m saying?

Dr. EISENBERG. Yes.

Mr. ENSIGN. In other words, depending on who’s giving you the

measurements will depend on, are going to depend on whether or

not something affects their measure of quality.

Dr. EISENBERG. You hit one of the toughest nails on the head

which is that when we make choices about our health care, they’re

individual choices. In making a decision about how to treat reflux,

making a decision between medical and surgical therapy, you don’t

have a simple yes/no question. It’s a question that weighs the advantages and disadvantages, the risks and potential outcomes of

each.

Our belief, and I haven’t seen Dr. Mulley’s testimony but I bet

he’ll talk about this, is that if we can get information to patients

about what the expected outcomes are of the alternatives facing

them, they can make a choice which best meets their individual

needs. Some people will say, I’ll take the chance of surgery, and

some will say, I just don’t want to take that chance. We can let

them make those individual decisions. But without the data about

what the expected outcomes will be, we can’t give them that choice.

That’s the first level.

Now the second is the level of trying to improve quality. We talk

a lot about quality, like it’s a scorecard, and we’re trying to develop

scorecards of quality. But it’s not just a scorecard for others to look

at and grade us. It’s a way of our grading ourselves. You know,

when I and you used to get report cards in school, it was okay because your parents knew how you were doing, but it was most important because you knew how you were doing, and you knew the

areas in which you had to work the hardest to improve.

So what I hope we can do is to recognize this individualism in

health care and give the community, the medical community, the

hospitals, the information so that they can improve themselves.

And as this data gets better and more solid, we can also use it for

people to make choice. But your point is well taken—it’s at all of

those levels of decisionmaking that we need to have the data for

people, and we can’t lock ourselves into one single way of getting

to the outcome.

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Mr. ENSIGN. The only caution I would make is when we’re providing these various statistics, and you get the oncologist that will

take on the absolute worst cases, and so his mortality rate is going

to be much higher than somebody else’s that won’t take——

Dr. EISENBERG. Right.

Mr. ENSIGN [continuing]. On those real bad cases. It may be a

disincentive for that oncologist then to take on the bad cases or any

oncologist to want to take on the bad cases in the future. We have

to be careful when we’re reporting these things because the press,

you can’t expect them to be physicians or scientists; they aren’t. So

when they can take something and make a particular group or a

hospital or a particular part of the country look very, very bad, and

what they’re not doing, not based on good evidence, but based on

the way that they read it in an unscientific way.

Dr. EISENBERG. Absolutely. In fact, the old HCFA mortality data

is a good example of that, I think. I think HCFA, quite rightly,

stopped presenting that data because it was so misunderstood by

people who were making the comparisons in the way that you are

describing them—mistakenly.

But as a chief of a service at a hospital, it was immensely useful

to me to see how we compared to our peers, and I could then look

at that information and say, is there an opportunity for improvement here? There was somewhere it was easily explained because

we had the toughest cases; there were others where there were

really some things we could have done that were better. So I think

what we’re saying together is that this data is important, but it’s

got to be used appropriately, when it is used.

Mr. ENSIGN. Thank you.

Chairman THOMAS. I thank the gentleman.

Before I call on Members of Congress who aren’t on the subcommittee, Dr. Kang, in your response to the EPOGEN question,

you indicated that you were somewhat removed from it. So I want

to ask you a question I assume that you are not removed from, although I’m interested to hear.

When Nancy Anne-Min DeParle talked to us on her first occasion

as the Administrator, I had referenced a GAO discovery that the

Technology Advisory Committee had violated five major provisions

of the Federal Advisory Committee Act, and she had indicated that

she understood that, and was canceling the next scheduled meeting, which I believe was supposed to be sometime this month.

IPOGEN is one particular of the high-tech aspect. A lot of it are

devices that are coming in. This committee, Technology Advisory

Committee, obviously, makes assessments to provide opportunities

for the latest technology to be part of Medicare’s basket of services.

What are you doing to make sure that you can continue to make

evaluations, notwithstanding the fact that you were in violation of

the Federal law previous? You’re a member of that committee,

aren’t you?

Dr. KANG. Yes. No, I am.

Chairman THOMAS. Has it met?

Dr. KANG. It has not met since that——

Chairman THOMAS. Does it have a scheduled meeting?

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Dr. KANG. It does not. What we’re trying to do is figure out a different process for obtaining the expert opinion that we actually

need to make our coverage decisions.

Chairman THOMAS. Well, aren’t we concerned about any extensive time of not meeting that we can’t advance new medical technologies which, in fact, would be part of the quality issue?

Dr. KANG. I am concerned about this, and we’re trying to figure

out another vehicle for us to get expert——

Chairman THOMAS. Do you have any timetable for figuring out

the other vehicle?

Dr. KANG. I will have to get back to you on that.

Chairman THOMAS. Yes. I am concerned about it. I just want to

know that you’re resolving it. It doesn’t have to be in any—I’d be

concerned if it was six months from now, but I am concerned about

getting up and running on this important aspect. I’m sorry they

were in violation of the law. I appreciate Ms. DeParle’s voluntary

cancellation of the continued process, which was in violation of the

law, but we’ve got to figure out how to get within the law, so we

can continue to do what you and I both think is an important part

of evaluation.

The gentleman from Washington I believe wishes to inquire. Mr.

McDermott?

Mr. MCDERMOTT. Thank you, Mr. Chairman. The chairman and

I had a discussion walking across the street about the whole question of privacy versus data. I know you’re both aware of the Stanford-Harvard study of the misuses of medical data that have been

accumulated. There are now in the Congress probably six or eight

different approaches to this whole question of privacy—I think

driven at least in part by the Human Genome Project, which is just

about to come to completion. It’s going to give us enormous data

beyond what we already have. The proposal that makes the most

sense to me—obviously, one that I dropped in—is one in which it

would require a patient to sign off that the data was going to ‘‘X’’

place, and if any other use of that was going to be made, they

would have to come to the patient, explain, and make a second

signoff for shifting the data, except for research in which, if it was

going to be a part of a statistical basis, not personally identified,

it could be sent on without a personal signature.

Now I would imagine that a patient in Medicare would send in

their documents to Dr. Kang for payment. You would have the

data, and that you could send it to Dr. Eisenberg for statistical

analysis with no problem under that procedure. I can’t see why

that procedure isn’t the best one for us to adopt in the Federal Government in terms of protecting the privacy of that information. If

HCFA were to release it to the HIAA, then that would be a violation of the law unless the patient were notified of that. And I can’t

see—I would like to hear a dialog from you about why that is not

an effective and simple mechanism to deal with it now, because we

all come from the same basis, believing that we need data. I believe

we need data. We can’t run this thing without data. So we’re on

that. Now let’s figure out how to protect the patient.

Dr. EISENBERG. Let me add one item before I start, which is to

say, no matter which solution we conclude is the right approach for

making information available for research, I’d like to add quality

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improvement and quality assurance activities to that list, because

if we’re going to have oversight groups that look at doctors’ quality,

hospitals’ quality, plans’ quality, we need the data, and that may

be individualized data, in order to do that. Because it’s not literally

research, it might get lost. It might fall through the cracks.

So, first, I hope that we can include quality improvement/quality

assurance activities. Secondly, one of the difficulties that we face

in the research community is the need to link data across different

databases. To do that, we need to have some identifier. It doesn’t

have to be the patient’s name. It could be an encoded and

encrypted identifier, but we do need to have an identifier to link

data across different datasets, maybe an interview that——

Mr. MCDERMOTT. Something other than the social security number, for instance?

Dr. EISENBERG. Well, the social security number is one simple

proposal. There are problems with that. We are, as is the Congress,

working on what the right identifier ought to be, but it would be

an identifier. We need to be sure that it’s adequately encrypted or

somehow adequately protected and that there are firewalls available, so that those people who get these data can’t identify the individual.

Some have pointed out to us, though, that even with a few pieces

of information about an individual, especially for unusual people,

you could figure out who that person is, even if it’s encrypted. So

there are technical challenges to this, and I hope that, no matter

what we do in solving the confidentiality problem, that we maintain the ability to link different databases, so that we don’t throw

out some identifier of people in order to make that linkage.

And then the final comment I would make is that I think that

we need to do a better job of helping institutional review boards

who have the responsibility for overseeing the ethics of research,

understand better how they can assure that the investigators in

these research projects to which you refer have adequate controls

for confidentiality. I think if we can develop standards for them

and we can help them, then we probably could allow more data to

be available to investigators, but still to have appropriate safeguards for that kind of data.

Mr. MCDERMOTT. Do you foresee a problem with saying to a patient who’s submitting their data to Dr. Kang for payment, in your

submitting information, you signed that this will be available for

encryption for research in the agency that you head?

Dr. EISENBERG. I see two problems with it. One is that we may

want to undertake studies that are retrospective, whereby the

waiver that the patient signed would not cover the kind of research

that we might want to do 5 or 10 years later on old data. We ought

to at least leave room for new kinds of questions and new kinds

of research to be done.

My biggest concern is the second, though. I don’t think that most

patients, especially in the heat of arriving in a hospital emergency

room, pay much attention to those waivers, frankly, and I’m not

sure that’s the right time to ask a person whether they want to

waive their privacy rights.

We had a staff person in our agency who told me the story about

going to an emergency room in a hospital out of town, and after

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she signed the form, she went back to see what she had signed, because she just didn’t even know what she had signed.

If we are going to have these waivers signed, we have to be absolutely sure they’re being signed with full knowledge of what people

are signing, and I’m concerned that in most instances it’s not the

right time in a person’s life to be asking them to waive that information, especially when they fear that they might not have access

to care if they don’t sign the waiver.

Dr. KANG. Actually, with regard to our claims data, that’s basically what’s happening right now. We get the claims data in. If

someone like John Eisenberg wants to use it, we strip it of all the

patient identifier information, and then he can use it. The dilemma

is he can’t link data with other sets. That’s one issue.

There is one other issue, that is the medical record itself—we do

not have this in claims data. The medical record itself is a rich

source of clinical data for outcomes and performance measure,

quality assurance, quality improvement, all this stuff. Your proposal speaks to the issues that we have the data in-house to do

claims, but what about the confidentiality or privacy issues around

the medical records, which prevents people from access to that

needed data? So there is that issue also.

Mr. MCDERMOTT. It seems to me that in the bills we passed a

year or so ago, we required every physician to report what’s in the

chart, including what was called ‘‘encounter’’ data, which to me is

a major source of information, but also a major source of potential

abuse. If you were to tell your physician that you thought you were

having a problem with X, Y, or Z, if somebody can retrieve that

data and use it, as the Stanford-Harvard study suggests, to deny

loans or employment or all the other reasons or the other ways it’s

been used, it seems to me that there has to be a way to gather that

chart data, but still protect it.

Dr. EISENBERG. Well, one mechanism is to be sure that those

who have access to the chart understand the restrictions, that

there are penalties for those who misuse the information, and that

the protocol that’s used has been approved by an oversight group.

I recall having sent medical students to the record room to do research for me, to go through charts, and in retrospect, I wonder if

I had instructed them adequately on their responsibilities about

the privacy of that information. And I’m sure as a psychiatrist that

there were times when you didn’t write things on the chart that

you might have otherwise written, and you had to write some kind

of code, so that you knew what it was, but nobody else might. I

think the problem that you’re describing is a critical one.

But we do need a mechanism in place where we have adequate

oversight and protections, but where we don’t throw away the key

to the data that’s going to be so helpful for understanding health

care.

Mr. MCDERMOTT. Do you think the mechanisms that were in

place in Maryland, where the employees of their Medicaid system

were selling cases to HMOs, so that they could do selection of

which patients they wanted to approach—do you think those mechanisms are sufficient?

Dr. EISENBERG. Not knowing the specific details, let me respond

in a general way. I think we need to have restrictions and fireVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
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walls, protections, in place, but there will always be people who undertake criminal activity. My feeling about this is that we ought to

be sure that if people violate the standards that the Congress establishes, that there are penalties in place for those people.

Mr. MCDERMOTT. Thank you, Mr. Chairman.

Chairman THOMAS. I thank the gentleman.

Any additional inquiries?

[No response.]

Then I’ll just ask one, Doctor, to try to sum up the concerns that

we have in the directions that we’re going, because we all want a

measure of quality. But just as the gentleman from Nevada indicated, you can get into a definition, but there are other levels that

you have to deal with.

HCFA has worked with the National Academy of State Health

Policy to develop what you call your QUISMC System, and you’ve

got seven clinical focus areas that you’re dealing with in beginning

to examine managed. And I guess they’re as good as any other

seven you might be able to evaluate, but what I’ve looked at, and

my immediate reaction to it was, that this could easily be applicable to the fee-for-service area, and that what my concern would be,

if you created a kind of a cookie-cutter seven focus, have you taken

into consideration severity of a problem area in terms of numbers

that have occurred, degree?

Clearly, you’ve got down, for example, mental health or substance abuse. That may or may not be an important area, and you

may want to focus more on an area—you know, lousy jobs of fixing

hips or something else that would be far more critical to the senior

population. How are you dealing with weighting these kinds of inquiries on quality? So that we’re getting answers that are useful

for more people and not just we’ve now done a quality check and

we can put seven checks in seven boxes. By the way, how many

boxes could you currently check off in managed care if this system

were in effect?

Dr. KANG. There are actually plans that could satisfy this requirement for the prevention measures, the acute ambulatory, and

the chronic measures here. Let me——

Chairman THOMAS. There are seven. Could any of them comply

with all seven?

Dr. KANG. At this point, no, that’s the reason for the phase-in.

There is a phase-in such that the requirement for seven doesn’t go

into effect until six years out. So there is a very gradual phase-in

to this.

I do want to speak to this. Actually what I think is that there

is a very important issue. What we had to do is balance what I

would call the distribution requirements for performance improvement projects versus trying not to be specific. Health care is local

in nature, and these performance or quality improvement projects

need to be local, based on the local conditions, who are the stakeholders, who are the interested parties, et cetera. So we came up

with this notion of here’s a general distribution, but then within

these categories you have great latitude to pick the project that

you’re interested in. So in the chronic condition one, giving you an

example, you could pick hip fractures for the Medicare population.

I do think that in the Medicare population that the prevalence of

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mental health and substance abuse is quite high. So from a distribution requirement standpoint, you’d probably want to have

something in that area. That’s how we came to this.

I do think, though, that this is part of—this has been the source

of great public comment, and with regard to distribution requirements, we are open to getting into dialog to see——

Chairman THOMAS. And what are you doing in the fee-for-service

area, since I guess six years out, when this thing is supposed to

be implemented, the fee-for-service will have shrunk from 85 percent down to about 80 percent of the beneficiaries? Are we doing

anything in the fee-for-service area such as this?

Dr. KANG. Yes. Again, actually, these QUISMC requirements—

we’re calling them QUAPI—this particular domain, quality assurance performance improvement, is being built into our conditions

of participation for hospitals, nursing homes, home health agencies,

et cetera.

Chairman THOMAS. Okay. I guess you’re getting my drift, and

that is I’m concerned about quality across the board, not just in

those areas that are politically-hot right now, because those winds

blow warm and blow cold, and quality ought to be of concern in any

aspect of medical delivery services.

I thank both of you very much.

Dr. EISENBERG. Thank you.

Chairman THOMAS. You’ve been a great help.

I would ask the next panelists to come forward, and thank you

for your patience. The next panel consists of Dr. Mark Chassin,

who’s chairman of the Department of Health Policy, Mt. Sinai

School of Medicine, New York, New York, and probably more important, he’s co-chair, Institutes of Medicine’s National Roundtable

on Health Care Quality; and Dr. Albert Mulley, who’s an associate

professor of medicine and health policy at the Harvard Medical

School.

Thank you both for accepting our invitation. Any written material you may have will be made a part of the record, and you can

address us in any way you see fit in the time provided to you.

Dr. Chassin?

You’ve done this before. Thank you for the summary. I read all

this stuff, but it’s nice to have it right out in front. I appreciate it.

STATEMENT OF MARK R. CHASSIN, M.D., CHAIRMAN, DEPARTMENT OF HEALTH POLICY, MT. SINAI SCHOOL OF MEDICINE,

NEW YORK, NY, AND CO-CHAIR, INSTITUTE OF MEDICINE’S

NATIONAL ROUNDTABLE ON HEALTH CARE QUALITY

Dr. CHASSIN. You’re very welcome.

Mr. Chairman, Members of the Subcommittee, thank you very

much for inviting me to talk with you this morning about health

care quality. I’d like to make four points. The first is that quality

of care can be precisely defined and accurately measured.

The second is that research using well-defined and documented

measures has shown serious and extensive quality problems in

American medicine.

Third, though some quality improvement programs have succeeded in substantially improving health outcomes for patients,

these efforts generally are sporadic and limited in scope. Much

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broader efforts are needed if we are to realize the full potential

value in improved health of the trillion dollars we spend every year

on health care.

And, fourth, the recent flurry of legislation and regulation aimed

at managed care is important to establish due process and other

procedural rights for managed care enrollees, but it will not materially improve health care quality. Quality is the problem, not managed care.

As the chairman mentioned, I co-chair with Bob Galvin of Motorola the Institute of Medicine’s National Roundtable on Health Care

Quality, which has deliberated for about two years. The Roundtable and the IOM are presently considering statements about

health care quality. Those are in process. So my remarks this

morning are not to be construed as conclusions of the Roundtable

or the Institute of Medicine; rather, they come from my experience

of about 20 years working in the field of health care quality in various forms.

Start with the definition of quality, and I think it’s useful to articulate a specific definition. The best one I know of was created

by the Institute of Medicine in 1990, and it defines quality as, ‘‘the

degree to which health care services for individuals and populations increase the likelihood of desired health outcomes and are

consistent with current professional knowledge.’’ It’s a definition I

believe consumers, providers, and health plans can agree on and

use productively.

The research on quality the last 20 years is clear and compelling.

We have, as I said, serious and extensive problems in quality in

American medicine. These problems come in three varieties: overuse, underuse, and misuse. Many studies have documented substantial amounts of overuse of health services. I believe a conservative reading of that literature supports the conclusion that 20 percent of what we do constitutes overuse; that is, it could be eliminated safely because patients would be spared the unnecessary risk

of those procedures and those services; quality would improve.

One recent study, for example, showed that in 1992 12.6 million

Americans received antibiotic prescriptions for colds and other

upper respiratory infections caused by viruses in which antibiotics

are entirely useless. This represented 21 percent of all adult ambulatory antibiotic use in that year. Overuse of antibiotics is the

major preventable cause of the very serious problem we face now

with bacteria growing increasingly resistant to current treatment

and causing life-threatening illness.

Underuse, too, is very common. Research has documented

underuse of virtually every effective health care service that’s been

studied. These include immunizations, inhaled steroids for patients

with asthma, treatment for early-stage breast cancer, the identification and treatment of patients with depression or high blood

pressure, on and on.

Large numbers of patients in many of these studies, as many as

50 percent—5-0 percent—failed to receive these effective interventions. Research has documented that underuse about equally prevalent in managed care and fee-for-service systems.

Let me just give you one example of the magnitude of these failures. A variety of treatments for heart attacks, when used approVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00067 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
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priately, saves about 80 lives for every 1,000 patients treated.

While as many as 60 percent of heart attack victims may be eligible for these treatments, the research shows that we currently

reach only about half. Since more than 750,000 Americans suffer

heart attacks every year, when you do the math, it works out to

about 18,000 preventable deaths every year, just because we don’t

do what we know already works. Put another way, that death toll

is the equivalent of one TWA Flight 800 plane crash every five

days, and that’s the quality failure for just one disease.

Misuse problems, unfortunately, are also very common. They

occur most commonly in the form of preventable injuries from the

use of medications or from the use of medical and surgical procedures. Patient injuries from medications, for example, alone occur

at a rate of about 2,000 per year at the average large hospital.

Over 500 of those are entirely preventable with current knowledge,

and each one adds about $5,000 to the cost of hospital care.

These problems clearly need to be addressed by a wide variety

of methods directed at their root causes, including improving patient and physician knowledge, creating support systems that remind physicians and other caregivers about when and exactly how

to administer effective treatments, and engaging clinicians in ongoing efforts to measure and improve the quality of care that they

render.

Improvement efforts are being made today, and I don’t want to

minimize them, and some are, indeed, producing impressive results, but, over all, particularly when stacked up against the magnitude of the problems, their impact is small.

Current legislation and regulation aimed at managed care will

not fix these quality problems. Now let me be clear. I do believe

it’s important to establish these procedural rights and other benefits for managed care enrollees, but there is no evidence that those

kinds of rules will affect the kinds of quality problems that I’ve just

described. Improving quality requires a far more concerted and

widespread effort than we’re currently making. Government can

play a vital role, for example, by investing in the development of

specific quality measurement approaches and by disseminating,

evaluation and dissemination, effective improvement methods, as

the Agency for Health Care Policy and Research has been doing.

Government can, and I think should, promote the collection of

standardized data on quality to stimulate improvement by showing

providers where they stand compared with their peers, a comparison that is extremely difficult for individual providers to obtain on

their own.

Creative regulation could improve health outcomes by facilitating

regionalization, particularly of services where we know that high

volume is associated with much better outcomes. We’ve known that

for quite some time, but we still permit very low-volume facilities

to do these procedures.

However, Government should be one part of a much more multifaceted approach that includes components of competition, voluntary and professionally-led quality improvement, and payment

incentives. At its best, health care in the United States is the finest

in the world. Unfortunately, it is very often not at its best, and

Americans bear a great burden because of these failures, a burden

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that’s measured in lives lost, reduced functioning, and wasted resources. Addressing these problems vigorously should be among our

very highest priorities.

Thank you, Mr. Chairman.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much, Doctor.

Mr. Mulley.

STATEMENT OF ALBERT MULLEY, ASSOCIATE PROFESSOR OF

MEDICINE AND HEALTH POLICY, THE HARVARD MEDICAL

SCHOOL

Dr. MULLEY. I, too, want to thank you, Mr. Chairman and committee members, for having me here today. Let me begin by introducing myself. I am a practicing physician and chief of the General

Medicine Division at Massachusetts General Hospital, as well as

associate professor at Harvard, as you mentioned. I’m also cofounder, with Dr. Jack Wennberg of Dartmouth Medical School, of

the Foundation for Informed Medical Decisionmaking, which was

established in 1989, expressly——

Chairman THOMAS. Doctor, excuse me. You’re really going to

have to talk directly in the microphone.

Dr. MULLEY. Okay, thank you.

Chairman THOMAS. It’s very hard to pick it up. Thank you.

Dr. MULLEY. The Foundation was formed expressly to promote

research and to develop educational interventions, with the goal of

improving the quality of medical decisionmaking.

I believe that there are some reasons to feel good about American

health care quality, but, as we’ve heard, there are also compelling

reasons to be concerned. I’d like to make a distinction between two

forms of variation that raise many of the questions that we’ve been

addressing so far today.

First, there is variation when the same interventions are used by

different providers and produce very different outcomes. For instance, four-to five-fold variation in rates of mortality after prostate

surgery or as much as ten-fold variation in rates of mortality after

cardiac surgery to treat coronary artery disease. These kinds of

outcome variations raise serious questions about the processes of

care and suggest that there’s variation in these processes, often unrecognized, that leads to inadequate quality, or misuse, to use Dr.

Chassin’s term.

But even more striking than these differences in outcomes when

the same intervention is used by different providers, are differences

in the rates at which interventions are used in seemingly similar

populations. This form of variation raises questions about decision

quality, and that’s what I want to focus on this afternoon.

Why is it that a man in Washington State is six times more likely to have radical surgery for prostate cancer than a man living in

Connecticut? Why is it that a resident of New Haven is twice as

likely to have coronary artery bypass surgery than a resident of

Boston, and that a resident of Boston is twice as likely to have carotid endarterectomy? Why is it that a woman living in Pittsburgh

is 15 times more likely to have breast-conserving surgery if she has

breast cancer than a woman living in Ogden, Utah?

There are many explanations for practice variation. Dr.

Eisenberg has focused on professional uncertainty, but there are

also enormous geographic variations in capacity to deliver certain

services. There are variations in the ways physicians interpret the

same evidence. And different professionals bring different preferences and attitudes to patients’ decisions. And sometimes the

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professionals’ preferences and attitudes seem to overrule or override the preferences of a particular patient.

The result from the perspective of policymakers and payers is

concern about underutilization and overutilization of services, as

we’ve just heard, but the result from the perspective of patients is

that the care received may depend more on where you live and who

you see than who you are and what you care about.

The implication for the profession is that we need to pay far

more attention not only to doing something right, but to doing the

right thing, and I would term that ‘‘decision quality.’’

Consider what that means for a man with benign prostatic

hyperplasia, something that all of us men will experience if we live

long enough. Whether or not he has surgery should depend on how

bothered he is by his symptoms of urinary dysfunction, but it also

should depend on how bothered he is by the prospect of compromised sexual function, which may follow surgery.

Practice variation tells us that these personal preferences, more

often than not, are overruled by professional conventional wisdom

that may vary from place to place, but does not vary sufficiently

from patient to patient. Now, we’ve tried to respond to this by developing guidelines, and improvement in decision quality does require reduction in the variation in professionals’ access to, interpretation, and application of clinically-relevant scientific information.

Guidelines have been developed that can accomplish this. But decision quality also requires that the variation among patients with

regard to preferences and attitudes be recognized and honored in

the decision process. Guidelines can rarely accomplish this.

More often, they rely on assumptions about average preferences

and average values. If these guidelines are followed, interventions

will be given to people who, if informed, would not choose them,

while they are withheld from patients who would choose them.

This is bad medicine and it’s bad economics.

Approaches to decision support can make a difference. Some approaches have been developed and have been subjected to extensive

evaluation, including randomized trials. The results are noteworthy. Patient satisfaction with care and decisionmaking is generally increased. Confidence in treatment choice is generally increased, and patients’ participation in prospective outcome studies

has been facilitated, thereby producing new knowledge to better

support decision quality.

Also importantly, utilization rates of some costly interventions

have fallen. Most noteworthy is evidence that programs to support

decisionmaking shared by doctors and patients together produce

very strong associations between what patients care about and the

treatments they get. For example, with shared decisionmaking,

men who are very bothered by symptoms that can be relieved by

surgery are seven times more likely to have surgery. Men who are

very bothered by the prospect of having their sexual function compromised are one-fifth as likely to have surgery.

These kinds of measures applied broadly could assure that

health plans and providers deliver care that is consistent with the

wants and needs of the patients who live with consequences. Given

that we live in a time of constrained resources, the potential impact

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of this approach on utilization and the cost of care deserves some

emphasis.

When shared decisionmaking was used among men in staff

model HMOs who were being operated upon at a rate that was 40

percent below the national average, the rate fell 40 percent. If this

rate of surgery existed in the 306 hospital referral areas in the

country, there would have been 160,000 fewer operative procedures

done in the Medicare population. Similarly, if we look at coronary

artery bypass surgery in New York, we see that it’s done about

twice as often per capita in New York as it’s done in Ontario. If

we look at clinical characteristics and look at people based on their

coronary anatomy, those who are least likely to benefit because of

the location and extent of their blockages, and are most likely to

be harmed because of their age and the concomitant risk of stroke,

are 17 times more likely to have surgery in New York than in Ontario. When this approach to decision support was used in a randomized trial in Toronto, despite the much lower baseline rates,

the rate of surgery fell 22 percent.

The relative inattention to decision quality and health care is a

serious problem with enormous consequences in the trillion dollar

health care economy. The dual challenge is to raise the level of

awareness about the problem among all stakeholders, especially

patients, while developing tools to measure and improve decision

quality.

The common thread that runs through the problems and challenges that I’ve talked about is the need for unbiased, objective,

and balanced information. This information and its flow to patients

and doctors, when they need it to improve the quality of decisions,

are enormously important public goods.

Thank you.

[The prepared statement follows:]

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Chairman THOMAS. We thank both of you very much.

As you know, we’re engaging in what some folks in Congress believe is a major debate over quality. I’m just looking at the press

table and all of the empty seats over there, so perhaps it may not

be as burning an issue as some folks thought. Or I guess the way

in which we approach trying to deal with legislative remedies is

not nearly as exciting as some other folk who aren’t trying to get

to the bottom of it and solve it in a way that I think is the only

way to deal with these issues. I don’t know which, but they’re not

here.

Interestingly enough, both of your testimony is just about 180 degrees off of what I hear on the floor or in the cloakroom or see as

what the argument is when I read the legislation that we’re supposed to be looking at, because you’ve clearly indicated—I mean,

choice is a term that everybody is using now. Quality—if you have

choice, you have quality, and what you’ve said is that more isn’t

necessarily better. In fact, it can clearly be harmful.

But my problem is I’ve still got to deal with what some folks believe is an issue, and that perhaps we can get outfront in doing it

right. Dr. Mulley, your decision quality statements could be fairly

defeatist if what I took away from what you said was, gee, we need

a clean sheet of paper; we need different folks going through medical school; we need different patients coming to those doctors. I

mean, it’s pretty fundamental that a lot of these problems apparently are political, cultural, or geographic, and that’s darn tough to

get to from a legislative point of view.

So I want to try to see if you can give us some pointers here that

we can take away and apply directly to what we’re going to have

to be doing over the next several months. You heard the earlier

questions and testimony from people who are more in the public

sector. If you gave us the three most important things that we

needed to do to provide quality—I mean, I’m kind of focused on the

collection and dissemination of data, so that we’ve got the outcomes, so that we can talk about guidelines and maybe we would

also need to deal with enforcement, but that gets into some sensitive areas.

You’ve seen also a great concern, and I think rightly so, about

patient records in terms of how they’re used and what they’re used

for, beyond the patient’s approval, but if you have a patient approval, you’ll never be able to get to the collection and dissemination of data.

So if I’m a legislator who’s got to put a bill together that would

disregard all of the arguments that are being made by folks as to

what quality is because most of them are Trojan horses protecting

particular interests, and they are getting to the fundamental question of improving quality. What would you like to see us do within

the realm of what we’re able to do from a legislative point of view?

And if you’ve got more than three, I’ll take them, but I didn’t want

to create too long a list for you.

I am very concerned about the movement in States’ denying the

access to data. I’m very concerned about creating a system which,

in fact, allows businesses in Maryland to mail to you based upon

what folks thought were confidential medical lists. Is the collection

of data critical? How can we get to it? What other things can be

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doing, if that’s not the most important thing? Give me one, two,

three, four, or what do you think—from a legislative point of view,

not from your point of view, because we’ve got to legislate?

Dr. MULLEY. Well, let me begin by saying that I think that the

kind of research necessary to collect data, both on quality and on

outcomes and effectiveness, is critically important, and let me just

say that I think supporting the kind of research that has led us to

where we are in being able to measure quality research done by

AHCPR, and research of the same kind done by NIH, is critically

important.

But for the hearing now——

Chairman THOMAS. Could you submit—you don’t have to do it

now—some example, a list of the kind of research that is most useful in moving forward in that kind of approach?

Dr. MULLEY. Yes. It’s included in my written testimony.

Chairman THOMAS. It’s in your presentation?

Dr. MULLEY. Yes.

Chairman THOMAS. Okay.

Dr. MULLEY. What I focused on in my written presentation is the

kind of research that brings patients more into the quality equation, because I really do believe that there is an enormous patient

choice dividend in the health care economy that addresses many of

the cost issues that we’re all concerned about.

Second, I would also say that there are opportunities to test this

model of patient involvement in treatment choice. Certainly trying

to develop some demonstration projects in the Medicare population,

and seeing the extent to which attention to quality decisionmaking

would have the same kinds of results it’s had in these experiments

that I’ve described to you—that is, increases in the quality of outcomes, increases in patient satisfaction, decreases in utilization. To

be able to intervene on a broader scale and further test the hypothesis will be very important. And it would certainly be consistent

with the current focus on patients’ involvement in treatment

choice.

I want to make the distinction between choice of plans, choice of

doctors, and the fateful choices that people make about the treatment they get, because they live with the consequences. With

ischemic heart disease, we don’t, that’s right. With ischemic heart

disease, we’re talking about an enormous knowledge gap among patients because there’s enormous knowledge gap among professionals, about the risk of cerebral vascular events when people

have bypass surgery, because we did the randomized trials in people who are younger than 65 and people who are over 65, who now

often get the surgery, are the ones who are at greatest risk for this

complication.

So I think that if we could find ways to create some demonstration projects where people in the Medicare population, in particular, are given balanced, objective information about the potential harms and benefits of procedures that are used 800,000 times

a year in this country, that we would really learn something important.

Third, I want to pick up on something that Mr. Houghton mentioned, and that is the need for incentives that encourage decision

quality. And by that, I mean decision quality with the information

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that we currently have available, but also incentives that reward

providers who capture collective experience, so that we can improve

future decisions. I could cite many examples; Dr. Chassin could cite

many examples of databases that have provided more information

to professionals in this country and around the world than all of

the collected randomized trials in the area.

In finding ways to award fee-for-service physicians in academic

centers or in large settings to participate in those kinds of objective, balanced, prospective cohort studies, so that we’re learning

from collective experience, rather than not learning from it, is

something that I would like to see in legislation.

Those are three responses.

Dr. CHASSIN. I think I have four maybe. I think certainly the

protection of the ability to collect clinical information and use it

properly and appropriately, with appropriate confidentiality safeguards, is of the highest priority, and I have followed this issue as

it’s developed over the last many months, and some of the solutions

that have been proposed are extremely worrisome. I would certainly agree with Dr. Eisenberg that exceptions for properly-overseen research and quality assurance and quality improvement activities that have also been duly constituted should be in any consideration of legislative action there.

I would distinguish between the kind of research support, which

I think clearly needs to increase, of the kind that the agency has

done and sponsored in the past with respect to finding out better

what works and what doesn’t work. We need an awful lot more of

that. But the kind of research that I think we also need is how to

do what we already know works when we ought to be doing it, and

that has lagged even further behind the effectiveness and efficacy

research that tells us more about what does work and what doesn’t

work.

We’ve known that antibiotics don’t help colds ever since there

were antibiotics and we understood colds were viral infections, and

yet, 50 percent of adult office visits for colds result in an antibiotic

prescription, leading to the problem that I mentioned.

We don’t know how to solve that problem. We haven’t figured out

how to measure it very well and how to intervene to improve it,

and yet we know from a couple of small examples in other countries where massive programs have been put in place that not only

is that problem solved, but this problem with growing bacterial resistance is also greatly helped. So there are tremendous gains to

be had here, if we were to focus research efforts on specific measurement and improvement attempts, and then even more important, disseminate those, make them easy for others to do.

One of my jobs, in addition to my academic job, is to lead our

hospital and health systems’ quality improvement efforts that are

clinically directed and focused on improving outcomes. Now when

we try to figure out how to improve treatment for women with

breast cancer or for patients with heart attacks, we almost have to

start from scratch. We ought to have an easily-available library of

tools, of instruments, of methods, of materials that others have

used, that are proven to be effective, that we can pull off the shelf

and just use. That does not exist, and I think it would facilitate improvement enormously.

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Chairman THOMAS. I know you haven’t finished your list, but on

that point, let me ask you a quasi-loaded question, because I don’t

know the answer to it, and it may not be appropriately phrased.

But it gets back to this question of quality, because what you have

talked to me a little bit about is, okay, obviously, I agree we’ve got

to get informed patients; the first-dollar, third-party payment system created a bunch of ignorant consumers, and we’ve got to get

the material to them and let them—but it just seems to me it

starts also with those professionals who went through professional

training, who perpetuate myths and failures to collect data that’s

most recent and most appropriate.

Which system has the better chance of propagating the better

materials, a managed care structure or a fee-for-service structure?

Dr. CHASSIN. Well, I think looking at——

Chairman THOMAS. Or is that an unfair question because, as I

said——

Dr. CHASSIN. I think both have opportunities in slightly different

ways. A managed care setting has, if it’s tightly controlled—I

mean, as Dr. Eisenberg said, there is no such thing as managed

care anymore. There’s so many different varieties, it’s hard to know

what one means by that.

Chairman THOMAS. I guess I don’t mean it that way. Let me put

it slightly differently, and that is, if we have all these problems in

a system in which doctors were totally in control, I think the political and cultural tends to dominate almost as much as the scientific. To what extent have we broken down the great man concept, and is that a help or a hinderance in terms of trying to move

forward?

Dr. CHASSIN. Well, I think that a number of things have been

changing at the same time over the last, say, 10 or 15 years, including the tremendous and dramatically-accelerating weight of

new information about what works and what doesn’t work. It is

simply not possible anymore for an individual physician practicing

on his own or her own to keep in his or her head everything that

they need to know to practice good medicine, but that was not true

20 or 25 years ago. It was possible. We haven’t kept pace with that

enormous explosion of information, with the systems to provide information that is necessary at the right time, and we haven’t yet

trained up our physician and other care-giving workforce to understand that working together in teams is going to be a much more

effective way of making use of this information.

Chairman THOMAS. And I apologize for getting you off the track.

Dr. CHASSIN. No.

Chairman THOMAS. You gave us our second one. I’m looking forward to your third and fourth.

Dr. CHASSIN. So the second one I think is to recognize that there

is an enormous public education effort that needs to go along with

the professional education effort. I think one of the problems that

we have faced in trying to combat—I go back to the antibiotic example, antibiotics for colds and other overuse problems—is a pervasive belief on the part of a lot of the consuming public that more

is, in fact, better, and that’s not, certainly not always true in health

care. It may not be true most of the time.

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And I, going back to Mr. Houghton’s comment of earlier, I think

we do need a Baldrige Award in health care, and I understand that

that is in process. I think that highlighting in that very public,

very visible way voluntary, professionally driven efforts to improve

could make a big difference.

Chairman THOMAS. Does the gentleman from California wish to

inquire?

Mr. STARK. Gentlemen, thank you for your work in this area.

The only thing I’ve thought about as I’ve gone through your testimony Dr. Mulley, is a story I often use anecdotally. It is a managed

care plan in Florida that was hustling male patients into castration

rather than giving them a costly drug that is the alternative therapy castration. And I always say, I don’t know what castration

costs because every time I ask doctors, they all volunteer to do it

for free. So, I get a biased opinion of what it would cost. But I suspect its lot less then the drug therapy. It saves a lot of money,

$7,000 to $8,000 for every patient they can castrate rather than

put on a regimen of drug at $300 a month. But it doesn’t seem

proper to me. I gather both are effective in stopping testosterone.

So I don’t know what you do about that. However, if that patient

knew their options I think that that health plan might not have

had such a high degree of members of their plan electing surgery.

My question to both of you is that I have not seen in your testimony—and maybe I didn’t read it as thoroughly as I should have

here—any reference to free markets or competition. Now I know

Jerry Austin in your institution took the same economics course I

did when we were both students a thousand years ago. So he

knows all about competition and free markets. I don’t know whether every other member at Mass General hospital does, Why is that?

How does competition help you? You guys didn’t mention it but the

AMA is going to talk about it. They say that their members should

have the benefits of competition. I think that just means more

money, which is usually all the AMA is interested in. But what

does the free market do for us? What does competition do?

The poster child of competitive models would be Columbia Hospital. They are the best at doing what they learned to do at the

Harvard Business School and applying free market and competitive

business practices to the delivery of medical care. How does that

factor into your studies?

Dr. MULLEY. Well, I think that free market competition has provided very strong incentives for providers and provider organizations to compete on costs, but on also perceived quality. And the

problem is that we haven’t been able to measure more than perceived quality. To a great extent, health care organizations have

competed on the basis of amenities. We’ve measured satisfaction

with food or with quality of the rooms or the ambience of the facilities that people see rather than measuring the core issues that

really are unique to health care. That’s one area where I think we

need to do a good deal more work, and some of that work is research and some of it is demonstration projects using what we already know.

I think that the ability to compete on perceived quality without

adequate measures is potentially dangerous for lots of reasons.

Some of it was referred to earlier today—when the wrong incenVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00095 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
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tives are put in place for providers to compete on the basis of scorecards, when outcomes are measured only for people who get a surgical intervention as opposed to all people with the condition. Obviously, there’s an incentive to not take on the riskier patients. If the

denominator includes all of the people with the condition, then

you’re able to monitor that kind of change in behavior and really

provide more accurate measures of quality.

With regard to the focus that I brought to the committee, decision quality, I think there are some enormous opportunities to create competition in the marketplace with individual providers and

provider organizations demonstrating their ability to provide care

that is most consistent with what patients care about. As I’ve said,

the story about the care you’re getting depending more on where

you live and who you see than who you are and what you are about

is compelling to individuals. And if one plan was able to show

strong associations between what people said they cared about and

the treatment they received, and another plan wasn’t, the marketplace would reward the plan that tailored care to what people really cared about and what they defined as quality of life. And the

kinds of measures that I cited earlier could do that and could allow

plans to compete on that kind of attention to patient wants and

needs.

If we were to talk to Jerry Austen about this, Jerry might say,

‘‘Well, what about decreasing the rate of bypass surgery as a result

of providing this information to patients? I think the answer to

that, for some who are into competing in the marketplace, is that

the absolute number of operations that are done depends not just

on the rate at which you do them; it depends on your denominator;

it depends on your market share. I think there are lots of leverage

points in the health care economy now whereby one can increase

their market share by virtue of decreasing their rate, because of

the overutilization and supplier-induced demand that drives decisionmaking.

Mr. STARK. We have an example in The Washington Post today.

George Washington wants to build a new hospital, 400 new beds.

We’ve got more hospital beds around here than we know what to

do with. But the key is—and one of the things they mentioned—

is that every room is going to be private with its own shower or

bathtub. They don’t talk about better equipment or better lighting

in the surgical amphitheater or any of that. I’m not sure what that

does for outcomes as opposed to sharing a room. It’s nicer, I suppose, particularly if somebody snores like I do. Nonetheless, for us

to be building these huge new hospitals when the use of hospitals

is decreasing is exactly what Dr. Mulley is talking about, I think.

Dr. MULLEY. Yes, exactly.

Mr. STARK. They’re building bells and whistles and extra chrome

grills when they should be looking to put in seatbelts and anti-lock

brakes.

Dr. MULLEY. That’s what I was referring to when I was talking

about competition and amenities.

Mr. STARK. Yes. That’s a perfect example. Well, I don’t want to

belabor this, and my colleagues would like to inquire. Thank you

both for your work in this area, and godspeed. Do it faster,

wouldn’t you? We need it.

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Chairman THOMAS. Does the gentleman from New York wish to

inquire?

Mr. HOUGHTON. Mr. Stark, I’m sitting next to a very distinguished physician here, and he has told me that an alternate word

to castration is orchiectomy, and you might want to consider using

that at another time. [Laughter.]

Well, anyway, gentlemen, I’m delighted to be here with you and

to hear your words of wisdom. I really have sort of two basic questions.

One—and this is something we’ve been talking up here about,

about the basis information system which Dr. Chassin was talking

about—that it seems to me that, my impression—and most of this

comes from rural America—is that doctors are so involved in caring

for patients, they do not have the information of what’s going on

in the rest of the world, and they don’t have time to look it up.

They’re not next to a teaching or a research university, and therefore, they do the best they can.

But that information is available, and the vehicle for it is there,

as long as somebody does it. I mean, whether it’s Microsoft or

whether it’s HCFA or what—I mean, I can’t imagine a local doctor

developing his own software for something like this. It’s just impossible.

But that information is available, and then it feeds right into

what Dr. Mulley is saying, being able to share that with a patient.

So the question is, it’s there, but how do we get it here? And that’s

something I think that might lend itself to understanding and legislation. So maybe you’d want to comment on that.

And then I’ve got another question for Dr. Mulley.

Yes?

Dr. CHASSIN. Sure. I think you’re absolutely right, that we have

the technology, the technical know-how to build support systems

that really are quite effective, and in fact, we know from the isolated cases where they’ve been used and evaluated that, in fact,

they can have dramatic effects. One LDS hospital in Salt Lake put

in a series of programs to reduce antibiotic adverse drug events, injuries due to antibiotics, reduced the frequency by 30 percent, reduced mortality by 27 percent, and reduced antibiotic costs by 58

percent for every treated patient. So these systems can work; they

require enormous investment, and they require organizations, not,

as you’ve pointed out, individual physicians or small, one- or twoor three-person practices to be able to do that.

Where we’ve now started moving away from hospitals, and in

places like the Northwest, where big, multi-specialty physician

groups don’t exist by culture or tradition, those organizations are

few and far between. Hospitals are harried because of competition

and reduced reimbursement.

So finding the capital to make those investments is one problem,

and then adapting the culture of physicians and other caregivers

to an understanding that they need that information is another

part of the problem. The current generation of physicians I think,

by and large, still believe they ought to be carrying everything in

their heads and that requires an educational effort that will take

some time.

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But, technically, you’re absolutely right; we have the technical

know-how to build systems that could make an enormous difference.

Mr. HOUGHTON. Yes, because I think we’re searching for ways to

increase quality; we’re searching for ways to increase coverage;

we’re searching for ways to help those people who are the suppliers, and it’s all there. The question is, how can we put it together?

And I don’t know whether you gentlemen would like to make

some sort of proposal to us—it doesn’t have to be long, just some

general thoughts, but, I mean, of all the things we’re talking about,

this may be one of the most important things we can do, and it’s

possible; it’s not technically impossible.

Now the other thing is what Dr. Mulley was talking about, is—

the chairman is now on the phone—but my sense is that what

you’re talking about doesn’t have anything really to do with law.

It doesn’t have anything to do with data. I mean, it’s really a matter of standard operating procedures. It’s really a matter of attitude.

But when you talk about a process which reduces cost and helps

the customers, it saves assets, and doesn’t cost very much, it’s very

attractive. And it is really just sharing information not on a postoperative basis, but on a pre-operative basis, with people, and the

willingness to take upfront time and knowledge and care, rather

than having all the downstream complications which come. Some

of the statistics you mentioned, the coronary issue with something

like 17 times more whatever the procedure was in New York

versus Toronto, those are very compelling figures.

So I don’t know whether it takes a tremendous investment,

whether it takes law, or what it takes, but it just seems to me that

there, again, that’s all there to do, if the attitude is changed.

Maybe you could help me on that?

Dr. MULLEY. Yes, I agree with everything you’ve said. It’s a very

simple idea with a lot of compelling implications. I’d come back to

something that the chairman raised a couple of times, which is

that social and political issues sometimes really get much more

complicated than the actual idea that you’re trying to implement.

In order for this approach to decision quality to work, there really

has to be a recognition of a change in roles on the part of both providers and patients. Patients are often very happy to defer decisions to doctors because they’re feeling very vulnerable, and they

anticipate that there might be a bad outcome, and they might not

want the responsibility for the decision that led to the bad outcome.

So there needs to be, I think, a major educational effort, as Dr.

Chassin has also suggested, to help people understand their role in

a health care economy, particularly since we’ve unleashed some

market forces in that health care economy.

I want to come back to the issue that you raised with Dr.

Chassin because it’s related to this. We certainly have the wherewithal with information technology today to deliver existing information and to inform decisions. We can give people probabilities of

good and bad outcomes, and give them vicarious experience of what

other patients have gone through, so they can recognize their role

and make choices with regard to the quality-of-life implications of

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the different available treatments. But that same technology gives

us the wherewithal to capture their experience, so that the next

generation of decisions are even better informed.

And the point I want to make is that, yes, we do have some information that we could do a better job of delivering, but we don’t

have nearly enough information about the most common conditions

and the most common procedures that we do. We do 400,000 coronary artery bypass operations a year in this country. We do about

400,000 angioplasties a year. I estimate that worldwide we’ve randomized about 1 in 5,000 patients who’ve had coronary artery bypass surgery, and as a result of that, the few, 1,400 or so, who have

been randomized aren’t nearly as representative of the population

we treat as we would like. You’ve heard some examples of the problems this creates already.

We should have ways of capturing experience that patients have

as they make treatment decisions and after they make treatment

decisions, regardless of which treatment they end up having. And,

again, information technology makes it possible for us to do that

and dramatically improve what we know about what works, at the

same time we’re improving decision quality at the outset.

The reason I think that’s important—and to some extent related

to the issue of confidentiality and privacy that keeps coming up—

is that the feasibility of this kind of research, when it’s focused on

a particular condition, and the alternative treatments for it, has

been shown over and over again. Patients are happy to participate

in focused outcomes research. It’s very different than the vague,

administrative database research. Over and over, patients have

been asked to participate, and they do it. In fact, when they’re

given a choice between one therapy or another therapy, or perhaps

randomization, which gives us the strongest evidence, they’re

happy to participate in that kind of study as well. That’s been

shown in the UK repeatedly, and more recently, it’s been shown

here.

So I’m just agreeing with what you said and what Mark said. We

have the technology to deliver the best available current information, but that technology also gives us the capacity to continuously

improve it in ways that we haven’t been organized to do in medicine in the past.

Chairman THOMAS. Does the gentlewoman from Connecticut

wish to be recognized?

Mrs. JOHNSON of Connecticut. Yes, briefly, thank you.

I appreciated your testimony very much. I’m sorry I had to be so

in and out during the question period.

I just wanted to ask you if you are working in any areas like nutritional services. One of the problems that we’re going to have is

focusing on those things that hit you in the face, like the difference

between New Haven and Boston in certain areas, and regionally,

and things like that. But the ability of nutritional services to either

improve the quality of recovery, reduce the cost of recovery, or prevent surgery, that kind of thing, is increasingly interesting to me.

Are you doing anything looking at those new areas? Because, eventually, if we’re going to turn the system around to a more preventive approach and a higher-quality approach, we have to start

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thinking about those kinds of ancillary services that may not be so

clearly related to illness, treatment, the model of medicine.

Dr. CHASSIN. Well, I think you’re right, and I think you point to

an area that has been understudied greatly. But particularly I

think in recent years with the development of our capacity to better measure functional outcome, that nutrition will become an increasingly important ingredient in producing better functional outcomes. A study that we’re doing, for example, now, funded by

AHCPR, is looking at the effect of a variety of inpatient interventions on risk-adjusted functional outcome after hip fracture repair,

and nutritional services, along with physical therapy and rehab

and a lot of others, are in that mix. I think as we do more with

measuring functional outcomes in the course of disease following

treatment or in the course of chronic disease, we will need to pay

more attention to nutritional services and other services that have

to date been very underevaluated.

Mrs. JOHNSON of Connecticut. There’s, I think a new Lewin

Study, or fairly recent Lewin Study, on just the Medicare population of access to nutritional services on a cost-free basis. It’s had

some very interesting implications. So there’s somewhat more work

being done in this area than there has been, but I think some of

those things that are systemic we need to be looking at, as well as

the particular things, because those we need to be building into the

coverage network of Medicare, so that the system can evolve in a

way that’s comprehensive.

Dr. MULLEY. I’m certain that access to nutritional services varies

enormously across the country in terms of the manpower available

to provide those services, but that, too, I think is something that

we can expect to change with the availability of new information

technology and access to information. My guess is that the whole

structure, and our very definition, of nutritional services and

health care will look radically different five years from now because

of available information technology.

Mrs. JOHNSON of Connecticut. And then, just lastly, I’d just like

to comment. In your work, does it come to your attention, the relationship between decisions and reimbursement rates? Aren’t we

driving——

Dr. CHASSIN. All the time.

Mrs. JOHNSON of Connecticut [continuing]. Patient care decisions

yet by reimbursement rates?

Dr. CHASSIN. Well, I think that reimbursement, in whatever form

it occurs, is a very powerful motivator, and like competition, another very powerful motivator, we haven’t yet figured out how to

use financial incentives and line them up with quality incentives,

so that excellence gets rewarded. We have fee-for-service, which encourages overuse—one kind of quality problem; capitation encourages underuse, another kind of quality problem. We don’t have a

payment system that consistently and effectively rewards excellence, like competition. Competition now occurs on price. It’s a wonderful motivator. If we could only figure out how to harness it to

quality improvement, potentially it could be very effective, but that

doesn’t exist in any market in health care that I’m aware of. So

we’ve got a lot of challenges before we can make these motivators

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that work in other areas, particularly in business, very well work

to improve quality.

Mrs. JOHNSON of Connecticut. At a very crude level, I do see employee dissatisfaction resulting in employers looking not just at the

price of a plan, but also quality issues and what the plan can tell

them about response to consumers and appeal procedures, and

things like that. I see some bottoming-out of price being the only

consideration, and I think that brings the market back into quality

issues. Do you see that?

Dr. CHASSIN. Well, I hope you’re right, although with the current

trend up again in premiums, I don’t think it takes much to get people thinking again about cost. I don’t yet see a market where quality considerations are even a significant part of the purchasing decisions.

Mrs. JOHNSON of Connecticut. Thank you.

Chairman THOMAS. My only concern in that conversion of ideals

to reality is that some bureaucracy and some Congress will create

a link between you get more money if you do this procedure, legislate it. I’m very concerned about the collection of data to be used

as required behavior procedure to receive specific amounts of

money. Incentives are good; collection of data and outcomes research is good, but it’s a very tempting governmental role to link

the two produce, quote-unquote, ‘‘quality medicine’’ as defined by

the last majority vote of Congress. That’s what really worries me

as a down side on all of this, and it’s just now come up in a form

that I could capsulate it.

Dr. CHASSIN. Yes, I’m not at all sure that Federal legislation or

legislation anywhere is the right way to use payment incentives. I

think that provider organizations and other structures that are

much closer to where patients actually receive care are probably

better, although there may be some exceptions to that, where the

data are really excellent and could support payment incentives.

Chairman THOMAS. I’m quite sure that it would be the exception

to the rule rather than the rule where it should be done.

Not a member of the committee or the subcommittee, but someone who, obviously, as the gentleman from New York indicated, has

an interest in what we’re doing—it’s a pleasure to have with us

once again the gentleman from Louisiana, Dr. Cooksey. Do you

wish to inquire?

Dr. COOKSEY. Thank you, Mr. Chairman.

Dr. Chassin and Dr. Mulley, I assume you’re both internists,

right?

Dr. CHASSIN. Training, but specialty——

Dr. COOKSEY. What do you have in your own department in

terms of computerized medical records, and what’s available in the

rest of your respective universities? And what departments utilize

computerized medical records? Or do you still use pen and paper?

Dr. CHASSIN. We, I think like most places, still use largely paper

records. There are information systems that are helpful in a number of specific areas, in the laboratory and radiology, and some others, but we have not gotten even to a minimal implementation of

a computerized medical record. It’s in the planning, but it hasn’t

arrived yet.

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Dr. MULLEY. A colleague of mine at MCH, Dr. Barnett, is a leader in medical computing and has been for decades. So that in our

ambulatory practices we have something called COSTAR, which he

invented some time ago. It needs major modification, major simplification, but we use that.

Some of the modification and simplification that’s necessary has

been accomplished for one service now. The obstetrics and gynecology service has an entirely electronic record; it’s paperless. And

the plan is to move that throughout the hospital and throughout

the partners’ system.

Dr. COOKSEY. Good. The Mayo Clinic in Phoenix was the first

clinic to put a system like this in place. I mean, it was really a software company from Wisconsin that developed the software, and it

was all, you know, a Windows-based system.

You might be interested to know that I’ve had my medical

records on a computer since 1985, and the software company was

Computers in Medicine from Boston. It was a Digital, a DEC outgrowth, and it works very well. I have a specialty that lends itself

to it.

I happen to think that the solution to the quality problem is exactly what my colleague from New York said: information systems.

As physicians, we have been very provincial in taking advantage

of the information age. There’s some wonderful physicians out

there who are very well-educated and very skilled technicians, and

still limping along without taking advantage of the information

age. And I think that’s a travesty.

I think that HCFA has got the same problems. They have archaic information systems. It contributes to their problems, our

problems. But the ultimate solution to the quality issue is to have

the information available out there, have it available to the patients, to the physicians in different geographic areas of the United

States, and even around the world. It should be out there on the

internet. You do have the problem of confidentiality, confidentiality

is important, but I think it can be done, and I think it would really

be worthwhile for those of you that are still making an honest living in the medical profession to go back to your respective medical

schools and do whatever you can to jump-start that process. I think

it will help us, as Members of Congress, to address the quality

issue.

You know——

Dr. MULLEY. I agree.

Dr. COOKSEY. [continuing]. I look at the health care profession

now as comparable to what the airline industry was in the late seventies. It was a regulated industry with a lot of bureaucrats in

Washington and a lot of politicians in Washington, not my two colleagues here, but the other politicians in Washington, and they

were running an airline system. The airlines were not available to

everybody; they were only available to the people that had the

money to afford them. And there were some problems in the industry, and there was some problems when we went through deregulation. None of us has flown Braniff Airlines lately, or none of us has

flown PanAmerican, and I’m not saying that Braniff is the HMO

or PanAmerican is fee-for-service, but deregulation and devolving

the power back to the patients with good, quality information is the

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ultimate solution. I don’t have a lot of confidence in politicians and

bureaucrats and insurance companies coming up with a solution.

Do you?

Dr. MULLEY. I agree with you. I think that a friendly qualification would be that the information that’s provided to doctor and patient needs to mesh, and that it needs to be balanced and objective,

and its source and its auspices must not have clear interests behind it to decrease utilization or perhaps increase utilization, depending on where it’s coming from. And that, too, is a difficult social and political accomplishment.

Dr. COOKSEY. Yes, Dr. Chassin? I am from Louisiana. We would

pronounce your name ‘‘Chessae’’ in Louisiana. How do you pronounce it?

Dr. CHASSIN. Chassin.

Dr. COOKSEY. Chassin.

Dr. CHASSIN. Chassin, yes.

Let me give you an example of a program that was initiated by

government, but that facilitated quality improvement that would

not have been possible otherwise. It’s a program that, when I was

Commissioner of the New York State Health Department, that we

inaugurated as a quality improvement effort. It involved collecting

clinical information in order to produce risk-adjusted data on mortality after coronary bypass surgery—by hospital and by physician.

Since 1990, those data have been made public on an annual basis.

But that wasn’t really the innovation of the program, although

it is the oldest, ongoing program of public release of that kind of

information in the country. The innovation was to make that information usable for cardiac surgery programs and hospitals to find

out how to improve problems that they didn’t know existed until

they were able to compare their results with that of their peers.

One hospital, for example, in Albany, for two years running, had

the highest, statistically the highest mortality rate in the State;

looked at their data, used the standard peer review surgical mortality and morbidity conference; couldn’t find a problem. And it was

only when we helped them parse those data that they found that,

for their emergency cases, their mortality was 26 percent compared

with the statewide average of 7 percent. That clue allowed them to

look in great detail at how they were managing those emergency

cases, completely overhauled it, and the very next year their mortality rate dropped from 11 in 42 to 0 in 54.

In case after case now, we’ve discovered using this dataset,

where hospitals didn’t even know there was a problem. Now these

data, which are collected by each program, but are audited and

really centralized in terms of accuracy and quality and viability of

the data by a State government agency, have been enormously

helpful in actually resulting in improvements. Now New York, in

recent research, has the lowest mortality rates across the State for

Medicare patients and the most rapid rates of decline. So that program has really been very effective.

Dr. COOKSEY. Well, that’s the kind of result that we will get with

open and comprehensive information systems. I think it’s there; the

technology is there. I don’t really have confidence in government’s

ability to develop the system. I think that some entrepreneurial

private sector company that can write software should develop it,

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and do it in concert with physicians, not necessarily politicians,

maybe a few regulators.

But thank you, Mr. Chairman.

Chairman THOMAS. I’d tell the gentleman I’ve been tempted to

try to work a deal with Microsoft in exchange for whatever help we

might be able to deal with their group, but we could get some software. [Laughter.]

Dr. COOKSEY. That would be a good start.

Chairman THOMAS. That might be useful.

We thank both of you very much. It’s clear that an informed consumer is going to be an important link, but when you tell me that

health care professionals don’t have the time to stay up with what’s

going on—I mean, we’ve got to look at realistic roles for informed

consumers as well. But your information, I just want to assure you,

is going to be very, very helpful to us, as we begin talking about,

quote-unquote, ‘‘quality health care’’ legislation. Thank you very

much.

And I also want to thank our panelists on the last panel for

being patient. My belief is we’re not going to get too many opportunities to have a full and complete hearing on this subject, and so

I appreciate your patience.

I’d ask now that Dr. Graham—excuse me, Diane Graham, who’s

chairman/chief executive officer of STRATCO; Jill Kanin-Lovers,

who’s vice president of Global Operations, Human Resources, IBM

Corporation; Dr. Jeffrey Rideout, who although he’s the medical director and vice president of Quality Management of Blue Cross of

California, he’s here on behalf of the American Association of

Health Plans; Ron Pollack, executive director of Families USA

Foundation, and Dr. Randolph Smoak, vice chairman, Board of

Trustees, American Medical Association.

We thank all of you for coming. I would indicate that any written

testimony that you may have will be made a part of the record, and

that you can in the time that you have address us in any way you

see fit. Could we just start, Ms. Graham, with you, and then we’ll

move across the panel.

And as I indicated to other panelists, you have to talk directly

into these microphones or other folk can’t hear you.

STATEMENT OF DIANE GRAHAM, CHAIRMAN AND CEO,

STRATCO, INC.

Ms. GRAHAM. My name is Diane Graham, and I am chairman

and CEO of STRATCO, a chemical and mechanical engineering

company serving mainly the refining industry. My small business

has become the worldwide leader in alkylation technology, a chemical process essential to the creation of high octane and reformulated gasoline. Though we compete against three Fortune 100 companies, we are now number one in market share.

Mr. Chairman, I want to thank you for giving me the opportunity

to testify today and to add my voice to the congressional debate

about health care quality. I am here today wearing several hats.

I sit before you as a small business owner; a mother of 4 children,

and as an employer who provides health insurance for more than

50 people and more than 100 of their dependents. I also sit before

you as someone who is honored to be asked by President Clinton

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to serve on his Commission on Health Care Quality and Consumer

Protection. And, finally, I sit before you as the only member of that

commission to dissent from its recommendation that Congress

should pass a consumer bill of rights. With your permission, I

would like that a copy of my dissent be included in the record.

Chairman THOMAS. Without objection.

Ms. GRAHAM. I would like to use my time here to explain why.

I will do so by telling you why my company provides health insurance; what it’s like to provide health insurance, and why my personal experience makes me deeply concerned with all proposals to

pass Federal mandates on private health plans. STRATCO is celebrating our 70th year in business. My company has provided

health insurance for our employees for decades because the previous owner including my father and I believe it is good business

to treat employees as if they were our extended family, and I try

to offer a health plan that best meets the needs of my employees.

An employee with good benefits is a loyal, productive employee.

But health benefits are not cheap. Next to direct payroll, they’re

the greatest business cost we incur. Over the last decade

STRATCO’s health care costs have grown far more quickly than

any other cost of doing business. Do we keep providing health insurance despite cost increases? Yes. Is it a struggle? Definitely. Is

there a limit to how much my company and our employees can afford to stay covered with the kind of plan we want? Of course. And

here’s my big question: Do I want Congress to do anything at all

that would make this struggle of health insurance affordability

worse? Absolutely not. In fact, two years ago, we had to reduce the

company paid coverage from 100 percent to 75 percent.

I believe that many in Congress and the administration are giving the affordability issue minimal attention. I am concerned that

in the rush to protect consumers we may protect them right out of

their coverage, and there is plenty of evidence that Government

mandates on private health plans raise costs and reduce coverage.

The Chamber of Commerce says three out of four insured working Americans receive their health care coverage through their employers. Ninety-six percent of businesses have 50 or fewer employees. At a time when 42 million Americans do not have any health

insurance and when small businesses are still identifying the cost

of health insurance as their number one business problem, I do not

want Congress passing mandates on private health plans.

Some of you may say you just want to pass a few small mandates

to keep the costs down. You may seek out harmless mandates that

you will say nobody can or should disagree with. I ask you not to

go down that road either. It will only take you to where the States

are; over 1,000 coverage mandates from coast to coast. This does

not take in account future mandates that may be imposed on the

States by Congress.

Do I want quality health care protected? Of course. After all, I

am not just a business owner, employer, and commissioner, I am

a mother and occasionally a patient. We all support quality; it’s

just a question of who gets to preserve it and improve it. I, myself,

vote for the private sector: for small business owners, providers,

health plans, and benefit managers to work hard to meet the needs

of consumers; different consumers with different needs in different

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parts of the country. Please stick with this formula and avoid costly

one-size-fits-all Government solutions. And please, whatever you

do, make the affordability issue a key component in all your deliberations. Thank you.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much.

Ms. Kanin-Lovers.

STATEMENT OF JILL KANIN-LOVERS, VICE-PRESIDENT, GLOBAL HUMAN RESOURCES OPERATIONS, IBM CORPORATION

Ms. KANIN-LOVERS. Mr. Chairman and members of the committee, my name is Jill Kanin-Lovers, and I am vice president for

global human resources operations for the IBM Corporation.

Before I get into the specifics about my testimony, I would like

to reach back to something from the other panel and let you know

IBM would love the opportunity to come back and share with you

the tools that are available to manage data and assess quality programs. Those things do already exist, and we would certainly be

willing to share that with you.

Chairman THOMAS. I’m more than willing to take you up on your

offer, and I’ve also been very pleased that a number of managed

care companies, although that information may be somewhat proprietary, are willing to share as well, I’m concerned about the inability to have a clearing house available for maximum collection

of this data. I appreciate your offer.

Ms. KANIN-LOVERS. Great, thank you. I don’t have to explain

what IBM is all about; I think most people know that, but we operate in a very intensely competitive and rapidly changing technology

environment. We are totally committed to attracting and retaining

the highest caliber work force and by offering high quality cost effective health care benefits that cover our employees and their families is one important way that we do that. This is part of our work

force strategy.

We are a major purchaser of health care. We currently provide

health care benefits for over 500,000 people in the United States.

That includes our employees, our dependents, and retirees. Last

year, we paid over a billion dollars in premiums for health care, so

we are very much an aggressive purchaser.

I am here today on behalf of the Corporate Health Care Coalition. This is a group of 26 large self-insured, multi-State corporate

purchasers of health benefits who joined together in 1993 to address health care reform issues. Our coalition members have really

been in the forefront of efforts to provide high quality, cost effective

benefits for employees. What I want to do today is to talk about

four different things. First, I want to talk about the purchaser’s

role. I want to use that——

Chairman THOMAS. Ms. Lovers, if you’ll talk directly into that

microphone, it’s going to be easier for people to hear you.

Ms. KANIN-LOVERS. I’m sorry. Okay, I apologize. Thank you.

Chairman THOMAS. No, it’s a lousy microphone. [Laughter.]

Ms. KANIN-LOVERS. I want to talk about the corporate purchaser’s role in general, and then I want to talk about IBM and

what we do. I want to talk about the importance of ERISA and

ERISA preemption and then the harm that we believe could be

done by some of the pending legislation.

As long as our health care system remains voluntary, employers

will play a critical role, we believe, in pooling risks; making coverage affordable; demanding quality, and informing and advocating

for our employees. That is a very important role that we play. It

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would be impossible to replicate this in an individual purchasing

system without extensive Government intervention. We view managed care as an important tool for quality. It helps us in organizing

health care providers to gain accountability at the plan level. We

think it helps to learn what treatments have worked. It helps in

modifying them and continually improving patient outcomes. Our

goal is to move toward evidence-based medicine.

We demonstrate our commitment to quality at IBM everyday. We

offer a very wide range of plan choices including a fee-for-service

plan, and this year we offered 183 HMOs to our employee population. What’s interesting about that is 50 percent of our employees

have chosen to be in managed care options. They can choose either

one, and they go into managed care. On our own and through a national purchasing coalition of 11 major companies, we have set extensive purchasing requirements; we monitor plan performance,

and we encourage improvements in quality. We think we play a

very important role in moving the ball on quality.

We offer employees access to a substantial amount of information. I can’t emphasize how much employee education is critical to

making sure that they get the right type of care that supports their

specific needs and that supports the needs of their families. We’ve

provided you with samples of what we call our HMO fact sheets,

that is materials that go out to employees every single year so they

can make reasoned decisions about what plan they should be in.

We also provide our employees with access to a 24 hours a day, 7

days a week nurse hotline. In addition our employees have access

to a telephone service if they’ve got questions about health care if

they have any problems. We also have a lot of information available on IBM’s internal internet side which employees can access.

Recently, we launched a disease management program—it’s a pilot

project for us—to help employees in managing diabetes when

they’re chronically ill. That’s the framework of what we’re doing in

the context of quality and how we go about offering health care to

our employees.

ERISA is extremely important to us as corporate purchasers of

health care. We think it was a brilliant stroke. When there was no

requirement to have a plan in the first place, it did not make sense

to regulate the contents of plans. Congress, instead, provided participants through ERISA with something that we call a tool kit. Its

rights and responsibilities are laid out for us. It includes information disclosure, fiduciary obligations for the employer, internal review, and external Federal remedies. ERISA preemption of State

law is a critical part of the overall structure. We think we are then

able to operate with a single plan. IBM wants to be one employer

in the United States. We have employees in all 50 States of the

Union. We want to be able to have the same plan regardless of

where our employees and their families live and work. ERISA has

done more to protect the voluntary system of benefits and quality

assurance than any other law.

This brings me to my last point. We are concerned about legislation like PARCA. We believe it would harm employer efforts to improve quality. This is for two reasons. First, Federal health plan

standards would mandate benefits for voluntary plans. We think

that’s going to result in a huge enforcement bureaucracy. We think

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it will duplicate efforts that are already underway in private sector

accreditation and would freeze current treatment preferences that

are in place.

Second, we believe any proposal that creates liability under State

tort law for benefit coverage decisions of health plans is troubling.

People in Federal and private sector plans now have access to internal reviews and Federal remedies, not to State torts or jury

trials, and punitive damages. We administer millions of claims

each year, and very few of those need to be resolved in court. We

have an internal review process that works quite effectively. Cases

are rarely appealed. When they are, more than likely, it is the result of lack of medical consensus. In some cases employees are

looking for an answer that isn’t even out there in the medical profession. We believe State tort liability would put juries in a position

of deciding treatment and interfering with the move to evidencedbased medicine. Patients deserve to have evidence-based reviews in

real time, not in a protracted legal battle.

Let me just conclude with some comments. It appears that there

may be some action on health care this year. If this process moves

forward, I would caution you to keep in mind the basic framework

for any activity in this area. First of all, we would like to see you

build on accreditation, quality measurement, and employee education efforts that are now underway. We think the Federal Government could really help here as the significant purchaser of

health care.

We also would like to see ERISA’s federal framework preserved.

We think that any issues that are raised should be in this framework of the tool kit which is already provided in Federal law, and

we should reaffirm preemption of State regulations and remedies.

We’d like to see you focus on the real issue which is solving the

problems for the patient. The patient wants a quick decision to get

appropriate treatment when needed. Neither litigation nor Federal

health care standards meet this need.

We’d like to retain and reinforce the reliance on evidence-based

decisions, systems of care, and accountability.

And, lastly, we would like to entitle participants to a fair process,

not a perfect result. Hold plans accountable for a fair process to resolve disputes; don’t punish them for adverse outcomes that modern medicine cannot prevent. Thank you for the opportunity to address you.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much.

Dr. Rideout.

STATEMENT OF JEFFREY A. RIDEOUT, M.D., MA., MEDICAL DIRECTOR AND VICE PRESIDENT, QUALITY MANAGEMENT,

BLUE CROSS OF CALIFORNIA, ON BEHALF OF THE AMERICAN ASSOCIATION OF HEALTH PLANS

Dr. RIDEOUT. Mr. Chairman, members of the Subcommittee, my

name is Dr. Rideout. I am the medical director for quality management for Blue Cross of California, a diversified managed care organization which serves over 5 million members in California through

a range of medical and specialty products including HMOs, PPOs,

medicare supplement pharmacy plans, and medicaid plans. Today,

I am testifying on behalf of the American Association of Health

Plans which represents over 1,000 HMOs, PPOs, and similar network plans, providing care to over 150 million Americans.

Blue Cross is also a member of the Blue Cross and Blue Shield

Association and the Health Insurance Association of America.

HIAA and BCBSA strongly support consumer protections in the

marketplace, and their members have agreed to consumer protection principles that preserve the private health care system while

improving quality.

In addition to my position at Blue Cross, I serve on several committees and organizations devoted to health care quality such as

the Technical Advisory Committee for the State of California’s Office of Statewide Health Planning and Development. I am a board

certified internist and maintained a part-time medical practice at

the University of California at San Francisco until December of

last year.

As a physician that was largely educated, trained, and practiced

exclusively in a managed care environment and as a consumer who

has also been treated almost exclusively in managed care delivery

systems, I’ve always considered the most important question not,

should care be managed but how should care be managed to improve quality? While quality means different things to different audiences important attributes must include timely access to appropriate care; prevention of illness; continuity and coordination of

high quality care; a respect for patient’s rights; a mechanism to respond to patient concerns; the availability of health care information for patients, and a commitment to research and technology assessment.

My goal, today, is to highlight several examples of voluntary, innovative, and collaborative approaches for quality improvement

that already are occurring in the current health care delivery system. Each example has had a significant, positive impact on the

quality of care received by consumers and has taken place without

legislative mandates.

The first is the California Cooperative Health Care Reporting initiative which seeks to disseminate preventive health care information using HEDIS measures. For the last five years, the California

industry represented by purchasers such as GTE; physician organizations such as the California Medical Association, and health

plans operating in California have cooperatively collected, audited,

and publicly reported comparative preventive health information

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for things such as mammography screening and childhood immunizations. The primary goal of this effort is to provide consumers

credible information to assist them in their selection of a health

plan. The rigor of comparability used in CCHRI has been a model

for many other areas of the country as well as organizations such

as NCQA and also HCFA, and it’s also significantly reduced the

cost and burden on physicians compared to individual plan efforts

to collect similar information. Given the success and the cooperation of the original process, 15 health plans and over 50 medical

groups have voluntarily agreed to participate in an additional quality improvement initiative for California members with diabetes.

The second is Blue Cross’ own outreach to diabetic members. In

1997, we directly contacted nearly 4,000 members with diabetes to

assess their individual status regarding critical screening exams.

The members contacted report high rates of screening ranging from

65 percent for foot exams and 88 percent for glycemic blood sugar

testing. This says a lot about the quality of care delivered everyday

by the physicians and other practitioners in California. Through

this effort, we have also been able to identify select groups at higher risk, which include those where English was not the primary

language and those that have not had any previous health education about their disease. Altogether, Blue Cross had to use interpretive services for over 30 different languages in order to reach

our members with diabetes and discuss clinical education.

The third example is a collaborative research project with the

University of California-Berkeley and Blue Cross. Initiated in 1997

through a Robert Wood Johnson grant, this public, private collaboration between a health plan and a major university is increasingly

common, and it’s an excellent example of innovation at work in the

current environment. The research project is attempting to find out

if first dollar coverage of nicotine replacement and smoking cessation counseling generates better quit rates in current smokers.

Of note, we are using smoking cessation guidelines developed by

AHCPR in this study. The physicians and other clinicians affiliated

with Blue Cross already have an excellent track record regarding

smoking cessation counseling. This study seeks to modify quality

improvements already in place.

With these three examples, I hope the committee can appreciate

at least some of the innovation and collaboration effort that exists

in the current environment. I believe all participants in health care

delivery share a common goal: that the quality of care and service

delivered to consumers must be exceptional. As a clinician, I believe that, and as a health plan medical director, I promote that.

As you consider the testimony given, I would ask that you also

consider that the more efficient coordination of existing oversight

already in place through Federal, State, and private sector organizations may, in fact, be a more rapid and significant and long lasting step in improving the quality of care delivered to individuals.

Thank you for your consideration of my comments. I look forward

to answering any questions you may have.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much.

Mr. Pollack.

STATEMENT OF RONALD F. POLLACK, EXECUTIVE DIRECTOR,

FAMILIES USA FOUNDATION

Mr. POLLACK. Mr. Chairman, thank you for inviting me to this

hearing, and thank you for your perseverance at this late hour. I

wanted to focus on the need for consumer protections as part of the

arsenal of achieving quality of care, not as the exclusive vehicle for

achieving that. And in doing so, since people characterize regulations in so many different ways, I really would like to make sure

that we don’t exaggerate what we are talking about in terms of

consumer regulations in this context.

I’m referring, specifically, to two types of documents that the

committee undoubtedly has in front of it. First, the recommendations of the President’s commission of which I was a member, and

I was a member of the subcommittee that drafted the bill of rights

and, secondly, the agreement that Families USA together with

AARP reached with three very distinguished HMOs: Kaiser

Permanente, HIP, and Group Health Cooperative of Puget Sound.

I’ve provided a copy of that agreement to you. I want to stress

these because with respect to the President’s commission, the reasonableness of what was presented was really the product of a virtually unanimous panel that was extraordinarily diverse. It involved four to five health plans, insurance companies, provider organizations, business, labor, academic people, and consumer organizations, and the product of this was the result of all those organizations working together.

Having said that, what I’d like to do is present five reasons why

we need these kinds of modest regulations. First of all, I believe

that we need these kinds of modest regulations because the public

very much needs it as part of the process of rebuilding public confidence in our evolving health care system. With respect to that, I

would refer your attention to a survey that was released last November by the Henry J. Kaiser Family Foundation and the Harvard School of Public Health which surveyed the public’s attitudes

about our health care system and, in particular, managed care,

and, clearly, the findings are not something any of us in this room

are particularly happy about. The majority of Americans say that

managed care plans make it harder for sick people to see medical

specialists. Over half say managed care has decreased the quality

of care for people who are sick. Over three out of five say managed

care has reduced the amount of time doctors spend with patients,

and over half say they are at least somewhat worried that if they

are sick their health plan would be more concerned about saving

money than about what is the best medical treatment. That is not

to say that any of us, including myself, want to go back to fee-forservice health care, but it does show that we really do have a lack

of confidence, and this lack of confidence is growing on the part of

the public. I think the modest public regulations embodied in the

President’s advisory commission and the Kaiser Permanente agreement, are needed. Certainly, we’re seeing more and more States

find that this is true, and I think that’s very reflective of the views

of grassroots constituency.

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Second, is the real alternative to this is a market-driven approach, and I would suggest to you that, from a theoretical standpoint, a market-driven approach might make a great deal of sense.

Unfortunately, it flies in the face of reality in terms of what exists

in today’s health care system. The way a market-driven system

would work is that consumers, in effect, would vote with their feet,

and they would drive quality by going into good plans and leaving

bad plans. Unfortunately, today, half of the people who get their

health coverage through an employer do not have a choice of plans,

so that the market system simply does not exist to hold plans accountable. If we had such a system, that would be a meaningful alternative to regulations, but the reality is we don’t have that today.

Thirdly, to the extent that we have some kind of a market system in some areas—and let me illustrate through the Medicare

program where there are some choices, particularly, in some of the

States where there has been greater penetration of health plans,

I would tell you that I don’t think the marketplace has actually

driven quality and weeded out the bad plans from the good plans.

Let me illustrate. We released a study—I don’t know whether the

committee has it—that looked at the disenrollment rates, literally,

of every HMO in the country serving Medicare beneficiaries. This

was the first time such numbers were released. They are provided

by the HMOs themselves, and we took a look at the disenrollment

rates. Particularly, we looked at every one of them in every one of

the States, but we examined very carefully the HMOs in Texas and

in Florida. The reason for that is that there were a significant

number of HMOs serving Medicare beneficiaries in those States,

and those two States had the highest disenrollment rates. And, so,

what we did was we took a look at those plans that had extraordinarily high disenrollments rates—and my definition, it’s an arbitrary one, of an extraordinarily high disenrollment were those

plans that had a disenrollment rate in excess of 20 percent, meaning more than 1 out of 5 of the enrollees disenrolled during the

course of the year.

In Texas, there were five such plans. Every one of those five

plans in Texas, notwithstanding the extraordinarily high

disenrollment rate, had a higher enrollment at the end of the year

than they had at the beginning of the year. Every one of those

plans had a higher market share at the end of the year than they

had at the beginning of the year. In Florida, we saw something

very similar. There were 14 plans in the State of Florida that had

disenrollment rates in excess of 20 percent. Nine of those 14 had

a higher enrollment at the end of the year than they had at the

beginning of the year, and, clearly, what this is indicating is that

these plans did a very good job of marketing and luring people into

plans, but they were not doing the same kind of job of servicing

those people and retaining them. I suggest to you that this is reflective that the market, even where there is some market, has

really not held plans adequately accountable in driving quality.

The fourth reason is that we do have a regulatory system today,

but it’s a patchwork quilt that is absolutely indecipherable by the

American public. We have one set of rules for people in Medicare.

We have a different set of rules for people in Medicaid. We have

another set of rules for people in fully insured plans; another set

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of rules for people who are in self-insured plans. You cross State

lines and you don’t know what kind of protection you receive. Even

within the same State if you get your coverage through an employer who’s fully insured versus an employer who’s self-insured,

there’s a vast disparity in the protection that you receive. I suggest

to you that it is only this Congress that can establish some kind

of rationality among these very diverse plans, and it is this Congress that I believe that can provide greater predictability by establishing a floor under which nobody can fall through, and I think

that would be a very valuable service.

The last point I want to make goes to the question of cost and

cost effectiveness. I believe that the kinds of provisions that are

embodied in the President’s commission and that are embodied in

the Kaiser Permanente agreement are extraordinarily cost effective. Now, I’ve heard some wild numbers about different bills. I’m

not here to talk about PARCA or any other bill. I’m here to discuss

what’s recommended in the President’s commission as well as in

the Kaiser Permanente agreement, and I would suggest to you that

any reasonable cost analysis would show that consumer proteciton

legislation makes a great deal of sense.

Now, let me just illustrate that. With respect to one of the key

agreements in the President’s commission, we recommended the

procedural right of an external appeal. That is, if you’re denied a

service, if you’re denied a referral if you’re terminated for a specific

service, there should be some opportunity to have that heard by an

external body that’s independent of the original decision-making

body and that is dispassionate and has a competence to render a

decision in a reasonably prompt manner. We did receive estimates

on the cost of this, and the health plans that were part of the

President’s commission played a very important role in helping the

Lewin Group develop the numbers for this. What the Lewin Group

gave to the President’s commission is that the cost of this very important recommendation ranges from three-tenths of one cent per

person per month to seven cents per person per month. If you take

the upper end of that range, we are talking about 84 cents per person per year. I suggest to you that this modest but very important

procedural protection would do a great deal for consumers to give

them greater confidence that when they are denied care, they have

some recourse and that they’re not totally disempowered. Let me

suggest a couple of the other issues that——

Chairman THOMAS. Mr. Pollack, I understand that you have a

written testimony which has been made a part of the record, and

I’ve let you go over twice the time, so if you can begin to move toward a wrap-up.

Mr. POLLACK. I’d be happy to, Mr. Chairman.

Chairman THOMAS. Thank you.

Mr. POLLACK. Let me just take two last issues about costs, and

then I’ll conclude. With respect to emergency care, the prudent

layperson rule, that’s not an issue resulting in new costs. The cost

is incurred when somebody goes to an emergency room. The regulation that’s at issue is who pays that cost, not whether there is a

new cost. The question is should the hospital which provided that

service eat that cost or should the patient eat that cost or should

the plan that has received a premium for the care of that enrollee

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pay for that cost? I believe that the allocation of that cost is more

properly located with the plan that has received a premium to provide health services.

With respect to one last issue, the question of direct access to

specialists, say to an Obgyn is very important for women. I suggest

to you that this proposal saves money. It doesn’t cost money, it

saves money, because for a woman who wants to see an obstetrician or a gynecologist, now she only needs to make one visit rather

than two visits for the exact same service. So, I suggest to you that

what we’re talking about here is extraordinarily cost effective. We

are not talking about mandates here. We are not talking about the

kinds of services that States require with respect to a whole bunch

of services. We’re talking about procedural protections. Thank you,

Mr. Chairman.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much.

Dr. Smoak.

STATEMENT OF RANDOLPH D. SMOAK, JR., M.D., VICE CHAIR,

BOARD OF TRUSTEES AMERICAN MEDICAL ASSOCIATION,

CHICAGO, ILL

Dr. SMOAK. Thank you, Mr. Chairman and members of the committee. I appreciate your perseverance in hearing all this testimony, and I’ll wrap mine up in five minutes.

My name is Randolph D. Smoak, Jr., and I am a practicing surgeon from Orangeburg, South Carolina and vice-chair of the American Medical Associations’ AMA Board of Trustees. I’m also Chair

of the governing body of the AMA’s program that establishes qualifications and performance standards for individual physicians,

known as the American Medical Accreditation Program, or AMAP.

On behalf of our 300,000 physicians and medical students, I want

to thank you for the opportunity to testify on this issue of health

care quality and patient protection and the AMAP program.

For many years, the cost was a major concern with America’s

health care system. Efforts to control cost through utilization management, managed care, and a variety of regulatory and marketbased incentives have dominated the public policy agenda for quite

some time. Today, however, the focus has shifted to quality, but we

want to preserve quality and also to continuously improve it. For

that reason, we welcome the attention of Congress and the President to this issue.

The AMA’s committed to setting standards for all physicians and

measuring and evaluating physician qualifications. To achieve

these goals, the AMA established AMAP. It is designed to set national standards of physician performance through accreditation of

individual physicians. AMAP is also a private sector initiative undertaken in conjunction with other private sector organizations and

Government agencies. It seeks to find solutions to problems in the

delivery of health—quality health care by eliminating redundancy;

focusing on quality, and improving patient care.

AMAP works by measuring and evaluating individual physicians

against national standards criteria and peer performance in five

areas: credentials, personal qualifications, environment of care,

clinical performance, and patient care results or outcomes. AMAP

provides the first credible, consistent, comprehensive national

standard and physician quality; a standard that is meaningful not

only to physicians but also for patients and purchasers.

The AMA is engaged in a number of other quality initiatives

such as the Clinical Practice Guidelines Recognition program. This

program identifies guidelines that meet criteria developed by the

AMA, national medical specialty societies, AHCPR, AHA, and the

Joint Commission. In particular, the program identifies those practice guidelines that are evidence based. The AMA is especially

pleased to be adding to the work of the AHCPR along with the

American Association of Health Plans. Together, we are working to

develop the national guideline clearing house, a comprehensive,

internet-based source of clinical practice guidelines. Further, the

AMA has developed a bulletin we believe will improve physician

clinical performance. This quality care alert will be a periodic mailVerDate 20-MAR-2000 11:10 Apr 17, 2000 Jkt 060999 PO 00000 Frm 00177 Fmt 6633 Sfmt 6602 E:\HEARINGS\60999 pfrm07 PsN: 60999
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ing to alert physicians to major quality issues. Finally, the AMA

has issued a document entitled, Essential Characteristics of a

Quality Health Plan that describes the elements all quality health

managed care plans should actually meet. We urge Congress to

carefully consider these workable private sector initiatives as it

evaluates existing legislation.

Mr. Chairman, while discussing quality I would be remiss if I did

not mention the importance of patient protections. The AMA believes that certain basic rights are essential if all patients are to

receive quality care from health plans, and these include comparative information; access to emergency services; external appeals;

prohibition against gag practices, and the elimination of incentives

to limit necessary care. After all, what good is quality care if you

cannot access it.

The Federal Government expanded patient protections and Medicare Plus Choice plans when it passed the BBA in 1997. States,

too, have passed patient protection laws to protect their citizens.

ERISA, however, has literally preempted States from protecting

their citizens with the same patient protection laws enjoyed by all

other privately insured individuals in the State. The AMA supports

legislation that removes ERISA preemption so patients could recover damages for personal or financial injury or wrongful death.

Specifically, the AMA supports Representative Norwood’s bill, H.R.

2960, the Responsibility in Managed Care Act of 1997 and urges

Congress to expedite its consideration of this bill.

I appreciate the opportunity to appear before you today and

would be happy to answer any questions. Thank you, sir.

[The prepared statement follows:]

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Chairman THOMAS. Thank you very much, doctor.

Mr. Pollack, if the President’s proposals were limited to prudent

layperson in the emergency room, anyone has to look at the BBA

and realize that we worked that problem out for Medicare and it’s

pretty obviously going to be part of that package. Had we had a

working cooperative relationship, it would have been done sooner.

You also need to know that I don’t normally do personal stuff in

making points, but I’m a member of an HMO, and one of the reasons I selected it is because in that HMO my wife would be able

to have her OB/GYN who she had collected prior to that as her doctor to be her primary care provider, and, obviously, there are enormous benefits to doing that, and that, again, is certainly an item

that makes all kinds of sense; it’s overdue. After all, this President’s been President for six years, and he could have issued an executive order at any time during those six years. The commission

you served on was appointed just prior to the last election, and as

we heard in earlier testimony, Medicare has no problem at all conforming to it, because, after all, in conforming to the ‘‘President’s

proposal,’’ quote, unquote, they will be implementing what we

passed in a bipartisan way in legislation. So, my early comment

about the degree of politics that have been involved in trying to

move forward in this area, I think, is only underscored by some of

the comments that have been made.

A couple of other specific questions, and then I want to ask you

some general ones so all of you can respond, because you come

from a number of very interesting directions on some of my broader

questions. Ms. Kanin-Lovers, in IBM’s portfolio, do you currently

offer MSAs? Are you thinking about offering them? Is that a product that you haven’t looked at? That you’ve looked at and rejected?

Medical Savings Account.

Ms. KANIN-LOVERS. Medical Savings Account, thank you very

much. I thought, ‘‘Oh, my goodness.’’

Chairman THOMAS. Sorry. I don’t like jargon, and I apologize.

Ms. KANIN-LOVERS. That is not something that we currently

have available although we do have something called life planning

accounts, which is an amount of money that we have put aside for

employees to use in certain areas, if they want to join a health facility or something like that. But, we evaluate our plans every single year and we will be looking at design again and again to see

what’s appropriate for the workforce. The workforce has been

changing a lot and so their issues are very different.

Chairman THOMAS. Well, as the workers have been changing, the

whole concept of employment—who’s an employer and how people

work jobs—is also changed since the ERISA was written into law.

One of the problems we’ve dealt with over the last several Congresses are what are sometimes called the MEWAs, the Multiple

Employer——

Ms. KANIN-LOVERS. Right.

Chairman THOMAS [continuing]. Associations which don’t fit well

under the current ERISA structure and some of the members who

are interested in making changes in this area see the basic ERISA

concept as a kind of a model to try to bring more in and what that

does, of course, is remove a State particulars and allow interstate

corporations to function in a more reasonable way.

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My problem is when I listen to the President in terms of the

changes that he believes need to be made by Government with

Government-initiated programs because people, for example, in the

near-senior group don’t have jobs or people who are 55 and retired

don’t have jobs—over and over again the problem with health care.

And, Ms. Graham, you pointed it out in terms of the number of

people who get their health care through their employer. One of

the discussions that’s beginning to come to the fore is to what extent is this concept written into the Tax Code that the employer

is the one who gets the exclusion and carries out the various procedures and, Mr. Pollack, I think you alluded to it.

Why can’t we change the Tax Code and have the provision available to an individual who then may use the employer as a collection site, and, obviously, Ms. Lovers, with the attraction that you

have and the program, that you’re willing to offer and if you wish

to continue it, would certainly be a magnet for folks to use that as

the collective group. But, it could be other groups that could be utilized as well.

And that—I can’t go through all the particulars in the time that

we have—but that concept of taking it away from something that

really was a World War II development and currently is significantly mal-distributed as a benefit in the society, to some people

who work for a corporation and don’t have it and others do, and

create a more equitable redistribution of benefit availability

through the Tax Code.

What is the interest, approach, concern about Congress doing

that kind of a radical change instead of waiting for folks to come

up with here’s a group who have a problem and let’s have a Government program go into solve that problem. Any reaction from

any of you?

Ms. KANIN-LOVERS. I——

Chairman THOMAS. Let’s just start with Ms. Graham and go

across——

Ms. KANIN-LOVERS. I’m sorry.

Chairman THOMAS [continuing]. So everybody gets it in kind of

a—in turn.

Ms. GRAHAM. Well, I would really like to explore, learn more

about that idea. I just know what the different State involvement,

Federal involvement has done to our company and, again, I think

that the private sector—when I look at—we have to go out and buy

steel for our reactors that go into refineries and we do that by

going to the marketplace and finding the best suppliers. We’ve

done the same thing in the health care; however, every year for the

smaller companies, it just gets harder and harder to find affordable

and quality plans. And when we and several of the States have

pooling available, I think that if there was more pooling available,

that could be one solution. And certainly a lot less liability and

malpractice—-malpractice reform would be wonderful, also.

Chairman THOMAS. Well, obviously, malpractice reform, I think,

is part of that package. But, my concern is that you will be loaded

with so many requirements that eventually you simply say Uncle

and then there’s a problem because here are people who have

joined the group of the uninsured and, to a certain extent, the

group of uninsured are an artificial creation because of the Tax

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Code structure of how benefits are distributed. And, if we address

the underlying problem, I think we can solve some of the others

and I’m pleased to hear there is someone who takes it on as a personal responsibility, not just a corporate one, and I think that’s the

best way to look at it.

These individuals could, then, deal with an approach which

might allow for a more responsive marketplace, if they were the

ones making the choices, including employers being more responsive because you’d have to offer what the employees wanted or they

would go someplace else.

Ms. GRAHAM. Right.

Chairman THOMAS. Ms. Lovers?

Ms. KANIN-LOVERS. I’d like to answer that question in two parts.

Chairman THOMAS. Sure.

Ms. KANIN-LOVERS. First of all, I do want to confess that I can’t

give you any comment on the Tax Code.

What I would like to talk about is kind of the employer view and

the——

Chairman THOMAS. I won’t ask why. [Laughter.]

Ms. KANIN-LOVERS. I don’t think I’m quite the expert there.

But, I think that what we need to recognize is the role that the

employers play in defining quality and I do think that we are very

actively involved in improving quality of health care in the United

States. When IBM goes out to bid to the 183 HMOs that we currently offer, we are very aggressive in setting standards, in telling

them the records we want to see, we’re looking at outcome, we’re

really pushing hard to make sure that that bar is raised every

year. I believe that’s not something that an individual employee, if

they were operating as a sole person buying health care, could do.

And so, we are able to do that and I think it benefits the entire

United States. That’s kind of one part.

The other part that’s important to recognize is, as a major employer, I do not view my benefit strategy as a snap-on; it’s not an

add-on thing. What I do for health care is very much focussed on

the needs of my employees; it’s part of my strategy. When I go out

to recruit—last year, IBM hired 15,000 people—we’re out there

fighting for the top-quality people and we’re actually doing that

through the design of our benefits plan. That’s one component of

it.

And, I’ve also mentioned that the workforce is changing a great

deal. One observation that I wanted to make is, you know, we’re

hiring what’s been called the ‘‘Generation Xers’’ now. You know

that group? That’s actually a group that has a stronger affinity for

managed care than our longer-term employees and so we’ve had to

change our plan to be responsive to those kinds of shifts. And, I

think that’s something we can do more effectively as a major negotiator for health care coverage; that we could allow our employees

to do. We also can improve quality more effectively than they can.

Chairman THOMAS. I agree with that in the current environment,

but if you then gave the power to each individual, you would have

to compete for their attentions because they’re still your employees

and you want to do what you’re doing. But, why can’t you be an

icebreaker then so that other groups can say, we want what IBM

has and if someone doesn’t provide it either through the insurance

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agent writing it, they would go to some other group and you can

then get collections of groups. And, of course, in California we have

the group purchasing structures, which could utilize what these

large corporations have been very successful in doing, in terms of

packaging health care, and say, I want what they have or we’ll go

to someone who will give it to us.

I don’t see why that doesn’t create a more competitive market for

a better quality product for more people than just those who work

at IBM because there’s someone else in the computer software field

who has no insurance whatsoever through no fault of their own but

because of the mal-distribution of benefits in the Tax Code. That’s

the way I’m trying to get folks to look at it. I never said you guys

have not done a great job of pushing quality; I just want to try to

figure out a way that more people can share in it.

Dr. Rideout, a comment?

Dr. RIDEOUT. My main comment on that would be that, at least

in California, in my experience the purchaser cooperatives have

been the primary driving partner of the quality initiatives that we

undertake, although it’s very much a two-way street. And, just as

an example, they were very instrumental in pushing, say, HEDIS

in preventive health rates as a standardization activity but it was

the plans and the medical groups that said, hold on, the way we’re

organized here, we need to do this cooperatively and we would be

willing to audit that data five years before it was ever done by

HCFA or anybody else in this country to do that.

I think the other thing that I would add to that is the enormity

of the data problem is real. And in the State last year, we had to

audit 80,000 medical records in a three-month period in order to

meet the combined requirements of 23 HMOs trying to supply information to their commercial purchaser partners, as well as

HCFA. And, also, in our State, we need to do Medicaid reporting

and sometimes it may be on a contractor county specific basis. So,

the problem is enormous and I think the purchaser community has

been, at least in California, instrumental in bringing this together

and they are willing to take on the real issues and make solutions

out of them for us.

Chairman THOMAS. Well, I would be remiss if I didn’t compliment the California Blues for the very aggressive way you’ve

gone into the purchasing cooperatives and, in fact, were a leader

to make sure that it worked.

Mr. Pollack.

Mr. POLLACK. Mr. Chairman, what you raise is a question of an

individual-based system and let me first start where theoretically

I think that I have some common views with you. Then let me express my concerns about what you propose.

Theoretically, I do believe that ultimately we have an individualfinanced system. When employers purchase care, it ultimately is

individual-purchased care because it results in wages that actually

subsidize care provided by an employer.

My concern about the proposal that you’re suggesting is really

two-fold. The first concern is from a political standpoint and the

second from a substantive standpoint. From a political standpoint,

I believe one of the things that has made health reform an intractable difficulty is that, when you deal with such significant change,

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you wind up having a massive redistribution of resources. Moving

from an employer-based system essentially to an individual-based

system would involve an enormous redistribution of resources. I

suggest to you, from just a political standpoint, that kind of massive redistribution has confounded all attempts at significant

change.

The more significant problem that I’d like to raise is substantive.

That is, if you move towards an individual based systems, there’s

a concomitant step that must occur. We need to have a regulatory

framework to enable that to work. An essential component of that

framework is we need to have serious insurance reform so that

those people who are sicker, those people who are older, those people who are less desirable from an insurance company’s standpoint

are protected so that they can purchase health coverage. I suggest

to you that, to the extent that such a proposal is viable, what must

go with it is significant insurance reform.

I was slightly bemused at the first question relating to MSAs and

I don’t want to talk about MSAs. But, there was an interchange

that I thought was very instructive that relates to an important

issue here. Ms. Kanin-Lovers, who is obviously a very distinguished, knowledgeable, and thoughtful person working for a very

distinguished company, was for a moment a little lost by the MSA

alphabet soup. She is probably in the 99th percentile of knowledge

in the country. I suggest to you that one of the things that those

people who wish to promote a market-driven system to ensure

quality vis-a-vis those who lean more toward a somewhat greater

regulatory approach have in common is that we need to have a better system of information for consumers and ways to help consumers. If we don’t have that, the marketplace cannot work.

I would like to suggest what I hope is a bridge between these two

approaches, an ombudsprogram run by a non-governmental organization. It’s being tested in a variety of ways in California, so you’re

probably as familiar about this as anyone. Such a program is often

called a consumer assistance program. Others call them an

ombudsprogram. I think this is an extraordinarily important nongovernmental organization approach to providing assistance that

would help the market-based approach as well as the regulatory

approach.

People simply are bewildered today about the choices that they

have. They are bewildered about their choices, their rights, and

their responsibilities and they need help. I think this role should

be done through non-governmental organizations.

Chairman THOMAS. I’m familiar with the argument that you

make, Mr. Pollack.

Dr. Smoak, did you want to comment on that?

Dr. SMOAK. Yes, Mr. Chair. MSAs certainly are a tag line to the

AMA in terms of our Medicare transition plans and I won’t go into

the specifics as to why but we certainly wholeheartedly endorse

that concept and believe that it’s a way to afford some alternate in

terms of the financing mechanism of some of our health insurance

needs.

I would suggest that the individually-owned as well as the individually-selected plan would be an excellent choice because it gives

a patient the opportunity to have additional choices that he or she

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might not have otherwise, which leads me, then, to the idea of a

defined contribution which would merit a lot of value in terms of

government, employers, et cetera, knowing what their outlay is and

would have a particular benefit, I think, overall in our planning for

financing of care.

I, myself, am a small businessman. I offer options to my employees and I think that the trust that we develop in our patient-physician relationship—this is the cornerstone, right here, of quality

health care and given them a choice and opportunity to properly

balance the quality, the cost, and the access to appropriate care.

Chairman THOMAS. I appreciate your comments and to pick up

some points that you made, Mr. Pollack. I didn’t want to continue

to intervene. There’s no question that you’re going to have to deal

with insurance reform; the question of risk adjustment is a critical

one.

As was mentioned by Ms. Graham, malpractice reform needs to

be involved. Clearly, with the current Tax Code mal-distribution

where there are individuals who have, in essence, open-ended opportunities for fringe benefits based upon negotiating with an employer and others who don’t, one of the key restrainers would be

that beyond some amount that’s determined, additional health care

would be after-tax dollars and, until we get a fringe benefit dollar

equated to a wage dollar, you’re never going to get reasonable control of health care cost in this country, in my opinion.

The defined contribution is clearly one way to approach that dollar amount, especially when it’s other people’s money. My colleague

from Louisiana on the subcommittee is fond of saying that people

will consume as much health care as other people are willing to

pay for and what is long overdue, frankly, in this society is a debate in a budgetary way of how much money we’re willing to spend

in that area and make it a policy debate.

Currently, in Medicare on part B, 75 cents out of every dollar is

a subsidized dollar but you don’t really see it; it should be a public

policy debate as to how much that should be. I think in the long

run that’s the only way we’re going to operate and, of course, the

easiest device to do that is a defined contribution above which taxpayers dollars would be purchasing health care.

If you say that, then, you have to look at the other end of the

spectrum of those who are not able either through a tax credit

structure by not having an income tax, or a low enough income not

to be able to deal with that issue, that there’s got to be a way to

make sure that they’re participants in the system as well at whatever the defined contribution level is.

So, yes, it’s a fairly radical discussion but I don’t know any other

way to get to the fundamental problem of dealing with it and maximizing the private sector’s involvement in that ultimate health

care structure because the current approach is wait for some group

that either has a real or apparent problem and, for political purposes, create a plan which almost inevitably stretches a Government proposal to cover them, or, perhaps even worse under the current system, figure out a way to pony it up on the back of the employers either to cover those that are directly employed or, through

increased tax schemes, get money to cover them as well.

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So, what I’m looking at is a way to try to maximize the private

health care market while answering, I think, legitimate critics

about the maldistribution of benefits currently today. And, while

we’re doing all that, of course, we will be looking at questions of

quality and providing consumers with tools that allow them to

make those decisions. But, it is a massive, massive undertaking

and to talk about it is not to do it and the two are worlds apart

right now.

The gentlewoman from Connecticut?

Mrs. JOHNSON of Connecticut. Thank you and thank you very

much for your testimony today. I am going to have to leave fairly

soon so I just wanted to ask a couple of questions.

First of all, Ms. Lovers, you provide a lot of choice to your employees. You talked about a single plan but you also provide—

talked about all the choices?

Ms. KANIN-LOVERS. Yes.

Mrs. JOHNSON of Connecticut. How does that work? Very briefly.

Ms. KANIN-LOVERS. We go through an open enrollment period

every year and, before enrollment starts, we send out to all employees information about the way the indemnity plan works and——

Mrs. JOHNSON of Connecticut. Kind of like the Federal Government does.

Ms. KANIN-LOVERS. Sorry?

Mrs. JOHNSON of Connecticut. Kind of like the Federal Government does.

Ms. KANIN-LOVERS. I’m not sure what the Federal Government

does but I assume that they would send out information on how

the plan works, and then there would be information on the HMOs

that are in your specific neighborhood, what those look like. We’ve

provided copies of what we call our fact sheets——

Mrs. JOHNSON of Connecticut. Yes, that was very helpful——

Ms. KANIN-LOVERS [continuing]. And it kind of——

Mrs. JOHNSON of Connecticut. Because I don’t have much time,

do most Fortune 500 companies provide choice, to your knowledge?

Ms. KANIN-LOVERS. Yes. To my knowledge, yes.

Mrs. JOHNSON of Connecticut. Do you know anything about the

group just below you? Do they generally provide—the bigger companies in America generally provide more than one plan?

Ms. KANIN-LOVERS. That would be my suspicion, yes.

Mrs. JOHNSON of Connecticut. Ms. Graham, do you provide more

than one plan?

Ms. GRAHAM. We used to about five years ago. In the last few

years, we’ve changed and now we—everyone has a PPO. But, we

have—we employ 57 people in 7 different States so each plan—and

that’s not a lot of people to spread over 7 States, and so we’ve come

up with the best plan that our managers spend a lot of time on

evaluating and they’re saying it’s the fairest for all 7 States——

Mrs. JOHNSON of Connecticut. And why did you go from a number of plans to one plan?

Ms. GRAHAM. It was really cost and it was also taking so much

time to evaluate different plans that—I mean, we’re a small company and we just don’t hire anybody to just review the plans so it’s

whatever——

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Mrs. JOHNSON of Connecticut. I just think it is very important

in looking at the Norwood, some of the bills before us to recognize

that Government provides multiple choices; that’s all Federal,

State and local governments, to my knowledge. All the big companies do, and a lot of the little companies that no longer do don’t

because they can’t afford it. So, I think you have to be very careful

about this issue of mandating because a lot—some of the most destructive changes that are going on are coming as the result of

mandating.

I just want to ask you one other question about your analysis of

disenrollment rates. Now, my friend, Lynn Martin, went to work

for one of the big accounting firms and one of her first tasks was

to figure out why, when they were making such an aggressive effort to hire very, very talented women, that had so few women

moving up the ladder. And, when they—when she first got the data

together and she went to the CEO, he basically said, well, I guess

they’re retiring to have children. And that was it. The firm simply

assumed that these women were leaving the firm because they had

worked a number of years and now they were starting families and

blah, blah, blah.

In fact, they weren’t doing that. When Lynn went back and

looked and did all the exit work, they found out they were going

to other firms because they were not getting good choice of assignments. There was a glass ceiling and their private—all I’m saying

is it really doesn’t tell me anything for you to say there’s a 20 percent turnover disenrollment rate because I see too much of that out

there.

Seniors don’t know to be sure their own physician is in the plan

first. It is confusing. It’s happening very fast in my part of the

country. I need to know far more about that and I can’t conclude

from the numbers you give me that service was the problem, that

they were better at marketing than they were at serving. Unless

you have some better information than you’ve given in your testimony, we shouldn’t be drawing those kinds of conclusions from that

kind of data.

Mr. POLLACK. Congresswoman Johnson, let me say a couple of

things about this. First, in our report, we were very clear in saying

that disenrollment rates are not determinative of quality; we were

very clear about that.

Mrs. JOHNSON of Connecticut. But, you’re putting an awful lot of

weight on it——

Mr. POLLACK. But, let me finish the point. However, there really

is a conundrum, I think, for those who believe in a market-driven

system who feel that a market-driven system is a better way to

achieve quality. I think it is ironic that when people disenroll, say

that this tells us nothing about quality.

The whole notion of a market-driven system is that people can

vote with their feet and, by people voting with their feet, the market drives quality. And then, when one makes an observation about

that, the very person who——

Mrs. JOHNSON of Connecticut. I’m absolutely not suggesting that

we not be concerned about that data. But, to draw the conclusions

you do from it, I think, is unwarranted. And, the other thing I

would point out is that the market-driven health care system we

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have is doing more about quality than the fee-for-service marketdriven system ever did. For the first time, we are looking at patterns of practice. For the first time, we were looking at outcomes.

The fee-for-service system never stimulated that.

That isn’t to say that there aren’t problems but I think, you

know, one of the reasons we see these statistics about people feeling, say, 55 percent can’t get access to care is because we talk

about the fears. We don’t talk about the reality. And this body has

got to look at the reality. It’s helpful to us that almost all the

States have passed the very same consumer protection provisions

that we passed last year. I think that’s true; we’re going to try to

document that. But, we’ve got to be careful that we don’t legislate

on the basis of rather slippery information.

Let me just say one thing to Dr. Smoak. It does concern me that

you have so little concern about the liability provisions in the Norwood bill. In my estimation, and I think this is universally accepted, it was, in a sense, malpractice, our malpractice laws driving

very defensive medicine; driving the kind of medicine that didn’t

look at whether you needed the care, just whether this could possibly be something you might a few years later look back and say,

we should have done. That really, in a sense, bankrupted the feefor-service system.

So, unfortunately, in some of the legislative proposals before us,

some of my colleagues are trying to solve the problems of managed

care by bringing all that liability stuff back into this system which

will have exactly the same effect. So, I don’t see that as the answer, as important as I think rectifying the balance between the

physicians and restoring to the physician the control over the care

decisions. But, I don’t think exposing systems to malpractice in the

way we expose individual physicians to malpractice is going to be

a constructive part of the answer.

So, I’m much more interested in other things that will restore

power to physicians and the physician-patient relationship but

maintain and oblige the physician to be accountable for the kind

of discipline that we know can produce better quality care, as we

heard from the earlier panel. So, I would hope that you would help

us rethink what’s constructive about the proposals before and what

is really either terribly premature and terribly, possibly destructive

because we are in a period of change and we don’t want to truncate

evolution; at the same time, we want to protect American health

care consumers from possible significant disadvantages.

I’m sorry. I have to leave and thank you, Mr. Chairman.

Chairman THOMAS. The gentlewoman’s time has expired.

For a brief final intervention, the gentleman from Louisiana.

Mr. COOKSEY. You know, I think that we all have the same motivation and that’s to come up with an economic system of delivery

of health care and we need straight answers, we need people to

look at it objectively, people need to leave off their own biases. As

a physician, I need to leave off some of mine. As managers of insurance companies, you need to leave off some of yours. And we need

to look at it with a whole new perspective.

You know, in this century, we’ve gone from health care being a

cottage industry—one solo practitioner—through a corporate entity

through a Government-regulated entity—corporate in World War II

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with people getting health benefits instead of—in lieu of salary increases. And, it became corporate-oriented and in Government-oriented, in 1965 with the passage of Medicare, and then you interspersed labor unions, labor unions’ leaders, you interspersed regulators with Government care.

And it just—the chain gets longer and we need to get back to

that patient-physician relationship. We need to get away—clear out

all the regulators and we need to use information systems much

better than what the health care profession and the insurance companies are doing. And then we need to get all the people out that

are out there, just, in the health care system just to make money.

They’re too many of them making too much money and not contributing anything to the quality of health care.

Thank you, Mr. Chairman, and good day.

Chairman THOMAS. Thank you very much and I thank all of you

for your patience and, more importantly, for your testimony. This

is a critical area that we may very well be legislating and we need

all the help we can get.

So, the hearing stands adjourned.

[Whereupon, at 2:30 p.m., the Subcommittee was adjourned subject to the call of the Chair.]

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