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THE RIGHT CARE AT THE RIGHT TIME:

LEVERAGING INNOVATION TO IMPROVE HEALTH

CARE QUALITY FOR ALL AMERICANS

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JULY 17, 2008

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

DEBBIE STABENOW, Michigan

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CHUCK GRASSLEY, Iowa

ORRIN G. HATCH, Utah

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

PAT ROBERTS, Kansas

JOHN ENSIGN, Nevada

JOHN E. SUNUNU, New Hampshire

RUSSELL SULLIVAN, Staff Director

KOLAN DAVIS, Republican Staff Director and Chief Counsel

(II)

C O N T E N T S

OPENING STATEMENTS

Page

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee

on Finance ............................................................................................................ 1

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3

WITNESSES

Orszag, Dr. Peter R., Director, Congressional Budget Office, Washington,

DC .......................................................................................................................... 4

Hillestad, Richard, Ph.D., principal researcher and professor, RAND Graduate

School, Santa Monica, CA ................................................................................... 6

Halvorson, George C., chairman and CEO, Kaiser Foundation Health Plan,

Inc., Oakland, CA ................................................................................................. 8

Wilensky, Gail R., Ph.D., senior fellow, Project Hope, Bethesda, MD ................ 9

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:

Opening statement ........................................................................................... 1

Grassley, Hon. Chuck:

Opening statement ........................................................................................... 3

Prepared statement .......................................................................................... 35

Halvorson, George C.:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 37

Hillestad, Richard, Ph.D.:

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 50

Orszag, Dr. Peter R.:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 57

Wilensky, Gail R., Ph.D.:

Testimony .......................................................................................................... 9

Prepared statement .......................................................................................... 70

COMMUNICATIONS

Alliance for Better Health Care ............................................................................. 77

Blue Cross and Blue Shield Association (BCBSA) ................................................ 80

Coalition for Health Services Research ................................................................. 81

Tethys BioScience .................................................................................................... 89

(III)

(1)

THE RIGHT CARE AT THE RIGHT TIME:

LEVERAGING INNOVATION TO IMPROVE

HEALTH CARE QUALITY FOR ALL AMERICANS

THURSDAY, JULY 17, 2008

U.S. SENATE,

COMMITTEE ON FINANCE,

Washington, DC.

The hearing was convened, pursuant to notice, at 10:08 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus

(chairman of the committee) presiding.

Present: Senators Rockefeller, Wyden, Stabenow, Salazar, Grassley, Snowe, and Roberts.

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Elizabeth Fowler, Senior Counsel to the

Chairman and Chief Health Counsel; Billy Wynne, Health Counsel;

Shawn Bishop, Professional Staff Member; and Mollie Lane, Law

Clerk. Republican Staff: Mark Hayes, Republican Health Policy Director and Chief Health Counsel; Rodney Whitlock, Republican

Health Policy Advisor; and Lyndsey Arnold, Intern.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. The hearing will come to order.

President Eisenhower’s Treasury Secretary George Humphrey

once said, ‘‘It’s a terribly hard job to spend a billion dollars and get

your money’s worth.’’ So imagine what Secretary Humphrey would

have said about $2 trillion. America spends more than that on

health care every day, and it is by no means clear that we are getting our money’s worth. America spends more per person on health

care than any other industrialized country. America’s health care

spending per person is well over double the average of OECD countries.

Health spending varies widely throughout America. Some States

like Utah and Colorado spend no more per person than other countries; other States like Florida and Louisiana spend twice as much.

But others with high spending do not get better results for better

health outcomes. The geographic variation in health spending cannot be explained by prices, by illness, by patient preference, or

evidence-based medicine. The system is just wasting money, and

the problem is getting worse.

Over-use of services is a striking problem. In high spending

areas, observers find what Elliott Fisher and others call supplysensitive services. Those are services like imaging and discreVerDate 11-MAY-2000 14:11 Sep 16, 2010 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 57962.000 TIMD PsN: TIMD
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tionary surgeries that are used more in places that have more doctors who perform them. These areas often have high ratios of specialists to primary care doctors.

We define ways to identify and encourage more efficient patterns

of care. One recent study found that, if we could reduce spending

in medium- and high-cost regions to the levels of low-cost regions,

then Medicare spending would fall by a full 29 percent. Let me repeat that: one recent study found that, if we could reduce spending

in medium- and high-cost regions to the levels in low-cost regions,

then Medicare spending would fall by 29 percent.

Today we will explore the causes of geographic variation in

health care spending. We will also look at two potential solutions:

health information technology—or health IT—and comparative effectiveness research.

Many observers believe that widespread use of IT would improve

health care quality and efficiency. Unfortunately, health care has

been slow to adopt IT. Barriers such as cost, the lack of a return

on investment, and the difficulty of successful implementation have

slowed adoption. Many argue that the government needs to do

more.

More health IT would support health care delivery. Think of

what happens when a patient receives treatment: doctors, nurses,

and other professionals must gather, sort, and evaluate information

from multiple sources. Sources include patients, their families, laboratories, primary care doctors, consulting doctors, hospitals, and

other providers.

Currently, most health care providers collect and transmit information on paper, over the phone, and via fax machines. More advanced information technology could streamline the process of collecting and analyzing the data.

Now, experts disagree about the benefits of health IT. They differ

especially about its ability to generate savings in the health care

system. But health IT adoption is likely to be a key component of

health care reform, and, if that is so, we need to know what we

are getting and we need to know how quickly we will be able to

reap its benefits.

One of the key drivers of health cost growth is new technology.

Medical advances give providers and patients more complex testing

and treatment options. The problem is, we do not know enough

about whether the newest and most expensive interventions actually work better, and we know even less about whether they improve patient care or outcomes.

The geographic variation in health care spending may be partly

due to information. Providers and patients simply do not have

enough unbiased information about treatments. As a result, treatment decisions have a greater chance of being determined by local

norms and attitudes than by science or by evidence.

Comparative effectiveness research can build a better evidence

base for medicine. Comparative effectiveness research compares the

clinical effectiveness of one medical treatment to another. For pharmaceuticals and devices, this type of research differs from the reviews now conducted by the Food and Drug Administration. When

approving a new drug or device, the FDA compares it to a placebo

to ensure that it registers a clinical effect that is safe. In other

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words, the FDA determines whether the benefits outweigh the

risks.

Comparative effectiveness research compares one treatment to

another rather than to a placebo. Results can provide better evidence concerning the best treatment, results can help with the prevention and management of diseases, and results can allow patients, providers, and insurers to choose services that provide the

most value.

Health IT can facilitate comparative effectiveness research. By

making clinical data easier to collect and analyze, health information technology systems could support rigorous studies of the effectiveness of different treatments. Health IT could aid in implementing changes in the kinds of care provided, and health IT could

help track progress in carrying out the changes.

But who should conduct comparative effectiveness research? Who

should pay for it, and what about the idea of a national research

institute governed by public and private entities? Geographic variation in health care spending is a symptom of the inefficiency in

our health care system. Today we can learn more about the issue.

We can explore strategies for reducing the variation that will pave

the way for a more efficient, high-quality system that delivers the

right care at the right time.

It seems that it is not hard for the health care system to spend more than $2 trillion a year. Today we will look at geographic variations, health information technology, and comparative effectiveness research and we will see if we cannot find a way to get more

of our money’s worth.

Senator Grassley?

OPENING STATEMENT OF HON. CHUCK GRASSLEY,

A U.S. SENATOR FROM IOWA

Senator GRASSLEY. Thank you, Senator Baucus.

At our Health Care Summit that we had a couple of weeks ago,

I made the point that any reform we work for has to address three

areas: increased access for the uninsured, the rate of increases in

the cost of health care, and improving quality. Today’s hearing focuses upon that quality aspect.

In April of 2008, Dartmouth published ‘‘Tracking Care of Patients With Severe Chronic Illness.’’ Researchers made this statement: ‘‘In health care, it matters where you get your care.’’ I think

Senator Baucus has covered that issue, but I can add to what he

said, because I have heard people from Minnesota and Iowa make

these statements that, if medicine was practiced like it is in the

Midwest, we would save that 29 percent. Now, maybe there are

other parts of the country that can say exactly the same thing, but

I have heard that claim over a long period of time in my State of

Iowa.

In addition to that, there is widespread agreement on the potential of health information technology to improve quality, and when

you improve quality, doing things right the first time, you control

cost. If there was widespread adoption of that powerful tool, most

everyone would be getting the right care at the right time. Health

information technology will play a major role in moving the Nation

towards being able to compare treatments.

4

If the Nation can wire every hospital and every physician’s office,

it will be that much easier to see what treatment works and what

does not. It will also reduce duplicative testing and enable clinicians to share information. While it is clear that electronic patient

records will improve efficiency of health care, the economics have

not proven attractive to doctors. They say that the systems are expensive to install and that their practices suffer while they get

used to having electronic systems.

Savings that result from increased efficiencies accrue to insurers

or other payers and not to doctors, so we need to think about how

to make adoption of electronic records more attractive to those who

will use them. I had a conversation with Dr. Coburn yesterday,

where he says it will be very inexpensive to get at least half of the

doctors covered. So, I think we ought to have a conversation with

him, Mr. Chairman, as well. He has studied this.

I will put the rest of my statement in the record. I think I want

to put a full statement in the record.

The CHAIRMAN. Thank you, Senator, very, very much.

[The prepared statement of Senator Grassley appears in the appendix.]

The CHAIRMAN. Now we will turn to our witnesses. First, our

regular panelist, Dr. Peter Orszag, Director of the Congressional

Budget Office. Dr. Orszag, I want you to know we have agreed to

provide you consistently a pitcher of ice for your Diet Coke whenever you want to come and testify.

Dr. ORSZAG. Thank you. Is that part of the benefits of the ‘‘Frequent Witness Program’’?

The CHAIRMAN. That is one of the benefits of the ‘‘Regular Witness Program.’’ [Laughter.]

Dr. ORSZAG. Regular witness. Okay.

The CHAIRMAN. It does not take much to become a regular witness. Then you get those services.

Next, Dr. Richard Hillestad, principal researcher and professor

at the RAND Graduate School. Our third witness is Mr. George

Halvorson, chairman and chief executive officer of the Kaiser Foundation Health Plan. Following Mr. Halvorson is Dr. Gail Wilensky,

senior fellow for Project Hope. Dr. Wilensky is well known to this

committee, having, among other things, been Administrator of the

Health Care Financing Administration in the first President Bush’s

administration. We have a long association with you, Dr. Wilensky,

and we admire your work very, very much.

Thank you all for coming here today. The usual rule is all your

statements will be included in the record. We would ask you to confine your remarks to about 5 minutes.

Dr. Orszag?

STATEMENT OF DR. PETER R. ORSZAG, DIRECTOR,

CONGRESSIONAL BUDGET OFFICE, WASHINGTON, DC

Dr. ORSZAG. Thank you very much, Senator Baucus, Senator

Grassley, members of the committee. I will actually be brief because I think most of the points in my testimony have already been

covered.

But let me just make a few points. First, if you applied that 29-

percent factor which the Dartmouth researchers believe could be

5

applied to all of health care, not just to Medicare, the result is that

we are spending $700 billion a year in health care services—MRIs,

surgeries, and hospitalizations—that do not appear to improve

health outcomes.

I cannot think of a single other sector of the economy that even

comes close to having that magnitude of potential inefficiencies.

The biggest opportunity that we face to put the Nation on a sounder fiscal footing is to try to capture that opportunity and improve

the efficiency of our health system, and thereby also help to bend

the curve on Medicare and Medicaid costs.

How do we do that? We have already touched upon it. I think

basically you need to do a lot more research on what works and

what does not. Too much of the health care delivered in the United

States is not backed by specific evidence that it works better than

anything else, and in order to do that you probably do need a much

broader application of health information technology, which is

therefore necessary, but not sufficient, to improving the efficiency

of the health system.

So, if you had a broad system of health information technology,

that could provide the data for a comparative effectiveness research

effort and could also provide a platform for feeding information

back down to medical professionals to effect the practice of medicine. But information by itself is not likely to be sufficient. You

need to change financial incentives. We currently have a system,

a payment methodology that pays for more care rather than better

care. And guess what we get? We get more care. We need to change

that if we want to improve the efficiency of the health system.

Third, I think we need to pay a lot more attention to behavioral

norms, and frankly psychology, both for medical professionals and

for beneficiaries. On the medical professional side, it does seem like

medical practices are influenced by pure effects among doctors. Figuring out how those work and trying to influence them is crucial,

and that includes how doctors are trained and how they are influenced by the people with whom they practice.

On the beneficiary side, we could be doing a lot more to help people live healthy lives, which is what they say they want to do,

through improved exercise, diet, and what have you, making it

easier for people to do what they say they want to do. We could

return to that if you want.

But I want to end on a political economy point, which is, I think

the key constraint at this point is impediments to political action.

The question becomes, why is that? I think part of the reason is,

frankly, that our political system does not deal well with gradual

long-term problems, and rising health care costs are one of those

problems.

Then the question becomes, how do you overcome that? I think

it is going to require a combination of extreme passion among policymakers and the kind of leadership that we are seeing from this

committee and others. It will possibly involve process changes,

some of the things that you have discussed, Mr. Chairman, like a

Federal health board. On that, I would note that the Congressional

Budget Office has already started work on a report on that topic,

laying out the sort of pros and cons and different options for organizing it.

6

Then, finally, and perhaps most importantly, I think it is going

to require a change in the way Americans view their health system, making it more immediately salient that this system is imposing huge costs on State governments, where rising Medicaid costs

are crowding out support for State higher education and thereby

driving up public tuition, and at the Federal level, where our Medicare taxpayer dollars are financing huge variation, as you have already mentioned, in Medicare costs per beneficiary, including at

our leading medical centers. We simply do not understand the benefits of the extra spending, and it is not clear we are getting any

benefit from the more intensive approaches.

Then for American workers, employer contributions for health insurance are reducing take-home pay to a degree that I think is

under-appreciated by the American public and unnecessarily large.

I would just end by saying, I really do hope that we can overcome

those various constraints so that we can move forward and tackle

and try to capture that $700 billion opportunity. Thank you very

much.

The CHAIRMAN. Thank you, Dr. Orszag, very, very much.

[The prepared statement of Dr. Orszag appears in the appendix.]

The CHAIRMAN. Dr. Hillestad?

STATEMENT OF RICHARD HILLESTAD, Ph.D., PRINCIPAL RESEARCHER AND PROFESSOR, RAND GRADUATE SCHOOL,

SANTA MONICA, CA

Dr. HILLESTAD. Good morning, Chairman Baucus, Ranking Member Grassley, and members of the Committee on Finance. I am

honored to testify about the potential benefits and costs of the

adoption and effective use of health information technology, which

I will refer to as HIT.

Simply put, the basic components of HIT are an electronic medical record that replaces the paper medical record and associated

functions to enhance clinical decision-making and reduce errors.

Interoperability to share this information digitally among providers

is also a desired attribute. Although information technology has

transformed much of what we do in other domains—travel, banking, and telecommunications, for example—health care is one of the

largest information enterprises we know, and HIT adoption in the

U.S. is low.

The health records for most people are still stored on paper and

the physician-to-physician transfer of information about a patient,

when done at all, is still most often accomplished by phone or fax.

The important message I would like to leave with you is that HIT

has a significant potential to help make health care more efficient

and effective but, because of certain disincentives to its adoption in

the U.S. health care system, there is an important role for government to play to make adoption happen.

Efficiency savings with HIT would derive from such things as reduced test duplication, lower-cost drug utilization, better scheduling, reduced paper record handling, and improved claims and

billing administration. Care effectiveness would be enhanced by,

for example, reducing errors such as handwriting-based errors, improved management of chronic illness, and improved continuity of

care for those patients seeking care away from their primary proVerDate 11-MAY-2000 14:11 Sep 16, 2010 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 57962.000 TIMD PsN: TIMD
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vider, such as was needed, but generally not available, in the mass

evacuation experienced after Hurricane Katrina.

But we are a long way from realizing these HIT benefits. Our

own estimates of the adoption of HIT systems in the U.S. in 2005

indicated that about 20 to 25 percent of hospitals and 10 to 15 percent of physician offices had adopted systems that could perform at

least some of the functions I just described.

The most recent estimates indicate improvements in hospitalbased adoption, but the functionality of many of the adopted systems remains limited, and there has been relatively little change

in physician adoption.

A major RAND study of HIT, begun in 2003 and published in

2005, made estimates of the potential benefits and costs of a much

broader adoption and effective use of HIT systems. We developed

models to extrapolate the limited event evidence available at that

time, assuming 90-percent adoption, interoperability across providers, and related health care process changes.

Using our models, we estimated that the efficiency savings enabled by HIT could reach approximately $80 billion per year when

adopted by 90 percent of hospitals and physicians. About 75 percent of these savings are associated with hospitals and 25 percent

with physician offices. Potential effectiveness benefits include

avoiding 2.2 million adverse drug events per year and their associated costs of $4 billion pear year.

We estimated the cost to achieve this 90-percent adoption in 15

years would average about $8 billion per year, or $120 billion total.

Given these potential benefits relative to cost, why is HIT adoption

in the U.S. so slow? The primary disincentive is that in most cases

those who must purchase the systems—the hospitals and physicians—are not the same ones receiving most of the savings—the

payers—or the health benefits—the patients. In fact, the physicians

and hospitals could lose revenue.

Thus, there is little financial incentive for them to pay the cost

and undergo the disruption of HIT implementation. There are a

number of actions the government could take. An effective subsidy

could encourage faster adoption and assist smaller offices and hospitals which have trouble affording the cost of implementation of

HIT. An alternative is instituting a pay-for-performance program

in which HIT is a necessary ingredient to measure the quality of

care performance.

In closing, I would like to point out that the adoption of HIT

should not be the end-all, but should be considered a necessary

step toward real health care transformation. We do not know all

the changes that should, or will, take place after widespread HIT

adoption, but it seems clear that a lengthy and uneven adoption of

an HIT system will only delay the opportunity to move closer to a

transformed health care system. The government has an important

stake in not letting this happen.

Thank you.

The CHAIRMAN. Thank you very much, Dr. Hillestad.

[The prepared statement of Dr. Hillestad appears in the appendix.]

The CHAIRMAN. Mr. Halvorson?

8

STATEMENT OF GEORGE C. HALVORSON, CHAIRMAN AND

CEO, KAISER FOUNDATION HEALTH PLAN, INC., OAKLAND, CA

Mr. HALVORSON. Mr. Chairman and members of the committee,

I thank you very much for the invitation to be here today to discuss

the role of information technology in improving health outcomes.

I am George Halvorson. I am chairman and CEO of Kaiser

Permanente. We are the Nation’s largest private integrated health

care system, and we provide comprehensive health care services

and coverage to more than 8.7 million Americans.

As you pointed out, Mr. Chairman, caregivers in America today

tend to operate in functional silos, unlinked and unconnected to

one another in any systematic, patient-focused way. More than 75

percent of the health care costs in this country are attributed to patients with chronic conditions, and more than 80 percent of those

costs come from patients with co-morbidities, patients who have

more than one disease. Having more than one disease means having more than one doctor.

Those doctors tend not to be linked with each other. Most keep

their medical information in separate paper medical records. Far

too often, the physicians do not base important treatment decisions

on consistent and current medical science or on a full set of information about each patient.

Major studies show huge inconsistencies in care delivery across

the country. Diabetes consumes over 32 percent of the total cost of

Medicare, and reliable studies show that the U.S. health infrastructure gets care right for diabetes less than 10 percent of the time.

That level of inconsistency should be completely unacceptable. We

are missing critical linkages between clinicians, and we are not

guaranteeing that patients receive systematic, science-based,

patient-focused care.

Now, the very best solution is to have vertically linked caregivers

functioning in teams to deliver care supported by a secure and comprehensive electronic medical record that gives each caregiver all

relevant information about each patient at the point in time of

care. An electronic medical record by itself, however—and this is

an important point—is not sufficient to provide optimal care. We

also need special support systems that analyze data from the electronic medical record and give doctors and other caregivers reminders and prompts to support the delivery of consistent best care.

The very best approach is a complete medical record supported

by an up-to-date, really well-designed care registry. That is the

package that we need. For those Americans who will not have access to a complete electronic medical record in the near future, we

need to use another computerized care support tool. We need to use

a stand-alone care registry.

Care registries can focus on the 5 percent of the total population

with chronic diseases that drives 55 percent of the care costs in

this country, and make a huge difference in the outcome of their

care. If we want consistent, better care for those patients, we

should insist that all chronic care patients with serious comorbidities have their care supported by electronic care registries,

and we should adjust the payment system so that clinicians who

choose not to use care registries and choose not to interact with

them will be financially affected by that decision.

9

When care is fully supported by an electronic support tool, the

outcome improvement can be huge. If we had fully computersupported care, I believe we could set a national goal to decrease

hospitalization rates for asthma patients by 50 percent, reduce congestive heart failures by 50 percent, and reduce kidney failures by

50 percent.

In one pilot program with Kaiser Permanente, by using electronic medical records supported by a focused care registry and

running every single Kaiser Permanente heart patient through the

program, in 2 years we cut the death rates from the two major

forms of heart disease by more than 50 percent.

Keep in mind that the electronic medical record is essential, it

is wonderful, but it does not do the work alone. The electronic medical record must be supported by panel management tools that scan

the data and give advice to clinicians about needed care. It takes

a package to get that whole job done, not just one tool.

So my advice for you today is this: as a Nation, we need to focus

our care improvement agenda on those conditions that are driving

the majority of health care costs in this country. We need a focused

agenda, not an agenda that reaches across the entire spectrum of

care. And we should put well-designed computer systems in place

to significantly improve care for those patients, for the patients

with chronic conditions and the co-morbidities.

So I thank you again for the opportunity to be here, and I look

forward to your questions.

The CHAIRMAN. Thank you very much, Mr. Halvorson. Very, very

much.

[The prepared statement of Mr. Halvorson appears in the appendix.]

The CHAIRMAN. Dr. Wilensky?

STATEMENT OF GAIL R. WILENSKY, Ph.D., SENIOR FELLOW,

PROJECT HOPE, BETHESDA, MD

Dr. WILENSKY. Thank you, Mr. Chairman. It is a pleasure to be

here this morning.

I hope you will note how much agreement there is in many of

the areas that we are covering in this morning’s hearing. I am particularly aware, as someone who has focused a great deal of attention over the last 2 years on trying to promote the notion of comparative clinical effectiveness, of how important it is to understand

geographic variation, because it, along with information about high

cost, will help provide important guidance as to where we should

focus our first efforts in comparative effectiveness. And the development of health IT, as has already been suggested, will be important in order to be able to generate new information.

Let me reiterate the rationale for why I am so interested in developing a Center for Comparative Clinical Effectiveness. In a time

in which there is a lot of dispute about how precisely to reform

health care, there seems to be little disagreement that we need better information as to how to treat various medical conditions using

various types of therapeutic interventions, so that we can learn to

treat better and to spend smarter, both very urgent matters in a

country where, as you have said, we have unsustainable spending

10

health growth rates, and we have unacceptable quality and clinical

appropriateness.

Let me share with you something about the type of center and

the role for the center that I am thinking about. The center that

I have envisioned is one that provides an information function

rather than being a decision-maker. Some countries use the latter.

I do not think that is what we need here. We need to be able to

provide objective, credible information so that clinicians and patients, as well as payers, can make better decisions.

It will require substantial funding for new research in addition

to systematic research of existing data, and also disseminating

what it is we know about the likely clinical result of different treatment options for various subgroups in the population, recognizing

that it is the medical condition that we should be focusing on and

not just merely on drugs and devices.

Data should be used from many sources, although it will be important to indicate how robust that data is, whether there are biases, whether there are limitations in terms of the methodologies

that were used when it was collected. We need to also find ways

to reduce the cost of doing prospective trials, because in some cases

we will only know the answer about what works when, for whom,

under what circumstances if we do new randomized prospective

trials.

Several individuals who are known to you—Bryan Luce, Sean

Tunis, and others—are trying to come up with strategies that will

allow for these real-world clinical trials that do not take as long

and cost as much as, historically, they have done.

There has been some discussion about where to place such a center. Let me say, first, I do not think there is a right answer. All

of the choices have trade-offs. Most important is they have data

that is regarded as credible, objective, and transparent, protecting

it as much as possible from the political process and from interested parties. Some have argued to keep it in AHRQ. I would personally like a little distance from AHRQ. One of the strategies is

to have a federally defined research and development——

The CHAIRMAN. Could you explain ‘‘AHRQ,’’ please?

Dr. WILENSKY. Oh. Excuse me. AHRQ, the Agency for Healthcare

Research and Quality. It is a part of the Public Health Service that

is already doing small amounts of this type of research as a result

of the Medicare Modernization Act.

A freestanding entity like a Federally Funded Research and Development Center could be attached to AHRQ. We use these in

other places—Lawrence Livermore Labs, for example. There is an

FFRDC, as they are called, that is attached to a part of government—or you could establish a new entity that is like the FTC or

the Federal Reserve Board.

Governance will be very important. All of the stakeholders need

to have a seat at the table, otherwise they will spend their money

lobbing grenades inside the tent. Having staggered-year appointments so that no administration or no particular Congress will entirely dominate the governance of this type of center will also be

important.

Let me talk a minute about funding. You could argue for direct

appropriation, the way we fund the National Institutes of Health.

11

But having spent as much time in Washington as I have, I do not

think that is a realistic way to have a significant amount of funding. So as an alternative, I would suggest a mix of a direct appropriation, a contribution from the Medicare trust fund, and a small

assessment on all privately covered lives.

The reason I say that is that, while many groups will benefit,

like clinicians and patients, the people who will benefit the most

are the payers, in precisely the way we heard about health IT, public payers and private payers, but all the privately insured must be

included.

A word about whether or not to include cost effectiveness or cost/

benefit analysis. This is an area where I separate from some of my

colleagues. I think these are important in setting reimbursement

strategies, but they ought not to be a part of a Center for Comparative Clinical Effectiveness. They are too controversial. The methodologies are too controversial, and the politics are too great. We

cannot start this process of learning how to spend smarter if we do

not know more, and so anything that protects the development of

comparative effectiveness research is very important.

But ultimately, information alone will not be enough. We need to

change the reimbursement system so we realign financial incentives, rewarding the clinicians and institutions that do it right the

first time, provide quality, and do it in an efficient way, and promote healthy lifestyles by individuals as well. But without more

and better information, we will not be able to accomplish our goals

either. So, I hope that this will be an area that you will remember

as you go forward in your reform proposals.

[The prepared statement of Dr. Wilensky appears in the appendix.]

The CHAIRMAN. Well, thank you, Dr. Wilensky. I think, frankly,

more than remember, it is something we are going to pursue. I

think it is so important.

I would like to ask the other panelists, do the other panelists basically agree with Dr. Wilensky that we need some kind of semiindependent outfit to somehow look at the comparative effectiveness of drugs and treatment? Do the panelists agree or disagree?

I will start down with Dr. Orszag. On the surface, does that make

some sense or not?

Dr. ORSZAG. As CBO has said before, a significantly expanded

comparative effectiveness effort, especially if it were combined with

changes in financial incentives, holds substantial potential for reducing health care costs over the long term and improving the

quality of our system.

The CHAIRMAN. Dr. Hillestad?

Dr. HILLESTAD. I think it is a good idea. I think that it is also

another incentive for moving forward with the adoption of HIT so

as to be able to provide this comparative effectiveness measure.

The CHAIRMAN. Mr. Halvorson?

Mr. HALVORSON. Yes. We are not using everything we know now

as well as we could use it. We need this level of evaluation. We

need to look at new things that are happening. We need to track

things that have happened. We need to track the performance of

treatments that are in place and technology in place. All of that

needs to be done, and what we really need to do is create great conVerDate 11-MAY-2000 14:11 Sep 16, 2010 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 57962.000 TIMD PsN: TIMD
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sistency in the application of it. So, we need both ends of that

equation.

The CHAIRMAN. And Dr. Wilensky, how much, reasonably, is necessary to conduct this enterprise?

Dr. WILENSKY. I do not want to scare you, so I will try to slide

into that answer.

The CHAIRMAN. All right. Slide in however you want.

Dr. WILENSKY. For the last 40 or 50 years we have had a huge

amount of innovation that has been introduced, almost none of

which has been subject to the kind of systematic evaluation that

I am suggesting ought to be occurring. And the reason is, one of

the two of you, I am not sure whether you, Chairman Baucus, or

you, Senator Grassley, indicated that the FDA requires very different information, whether something is safe or effective relative

to a placebo or a single state-of-the-art activity.

What I am suggesting is the need for questions looking at broad

medical conditions, like the treatment of cardiovascular disease or

the treatment of back pain, and the various strategies that are

available and what we know about what works, when. That kind

of information has not been generated because only payers would

have the benefit, and they have not been willing to fund it, to date.

To start, I think you would probably need several hundred million dollars to get going at a level where you could begin to do systematic reviews of existing information. There was an Institute of

Medicine study released in January, indicating a lot more difficulty

in making use of existing information because there has not been

agreement about what constitutes valid and reliable data, or how

to summarize data that has been collected in various strategies. Ultimately, I think we are talking about a center running at $4 or $5 billion on an annual basis, but that is at a steady state. It

is a lot of money, but it is not a lot of money compared to $2 trillion, which is what we are spending on health care.

The CHAIRMAN. How much would that reduce the 29-percent gap

that has been referred to here at this hearing?

Dr. WILENSKY. Well, it depends how aggressively you move on

also trying to realign financial incentives. Right now, the most broken part, in my view, of Medicare is the physician fee schedule. It

provides strong incentive to do more and more complex treatment,

even if more conservative treatment would give you better results.

I was pleasantly surprised when CBO estimated that the presence of comparative effectiveness could provide a small savings

over a 10-year period, but as Dr. Orszag has said, and I agree, if

you also financially realign incentives, you could drive a big

change. It will be hard, though, to get what you can in terms of

spending smarter if we do not know more.

People honestly cannot know the best treatment for particular

subsets of the population if nobody has looked at what you gain in

terms of angioplasty versus bypass surgery or conservative medical

treatment, or now, ablation therapy in cardiovascular disease for

atrial fibrillation, versus conservative treatment by drugs.

There was an article about 6 months ago in the New York Times

about how ablation therapy has become a very popular strategy to

use in treating patients, with very little knowledge about what it

actually means for these patients. And a more recent article about

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CT angiography was on the front page of the New York Times. It

just indicates how big an issue this is in terms of the impact on

spending.

The CHAIRMAN. My time has expired. But in the next round I am

going to ask you, Mr. Halvorson and Dr. Hillestad, just what are

some of the barriers to IT, what practical barriers, and how we

might overcome them. I will get to that in the next round of questions.

Senator Grassley?

Senator GRASSLEY. Dr. Orszag and Mr. Halvorson, we in Congress have not been very successful in tweaking Medicare’s reimbursement system in our efforts to reduce geographic variation in

medical practice. A question to Dr. Orszag, and then I am going to

ask the question right away of Dr. Halvorson, so you know what

I am going to ask you.

Dr. Orszag, do you think that the Medicare payment structure

actually encourages geographical variation, and Dr. Halvorson,

Kaiser uses salaried positions in an integrated care model. What

lessons could Medicare learn from the way Kaiser reimburses?

Dr. ORSZAG. I would say that the Medicare reimbursement facilitates geographic variation, because we pay for basically whatever

the doctor orders. Even if it is very low-value or zero-value care,

we pay for it. Of course, that does encourage more of that kind of

care.

Senator GRASSLEY. Mr. Halvorson?

Mr. HALVORSON. What we are doing within Kaiser Permanente

is, we have put an electronic medical record in place for all of our

doctors. We have created a single database about all patients, and

we are now putting on top of that electronic medical record care

support tools and panel support tools that help remind each doctor

at the point of care what each patient needs. We are finding that

to be a very powerful and effective tool that is very useful.

We are doing it a little bit differently from State to State to get

a sense of what works best, for asthma patients, for example, with

the goal of standardizing back to the best practices. One of the

things that is true about medical science today is that not everything is known, so we need to do our own internal research on

something like asthma care to identify the best possible treatment.

But the goal is to do it consistently to track the results to know

what happened, and then to embed those advisories into a computer support system so the doctor gets that information on the delivered care.

Senator GRASSLEY. Then could I follow up, because I think the

key point I want to have you express is the difference that salary

makes, paying doctors by salary.

Mr. HALVORSON. Paying doctors by salary removes all disincentives relative to doing unnecessary and inappropriate procedures.

So the procedures that are done are done because they are medically appropriate, not because there is a financial consideration.

Senator GRASSLEY. All right.

Dr. Wilensky, some stakeholders suggest that by the time comparative effectiveness research would be completed, it would be

outdated and a poor basis for clinical decision-making. Would you

address the challenges of getting this comparative effectiveness reVerDate 11-MAY-2000 14:11 Sep 16, 2010 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 57962.000 TIMD PsN: TIMD
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search from the journals to the bedside in a timely manner that

minimizes the likelihood of it being outdated?

Dr. WILENSKY. Health IT. An obvious answer is, if you can access

information quickly, that would cut down the time involved in the

process. It needs to be understood that comparative clinical effectiveness research is not a one-time effort: make an investment, find

out what is true as of that moment in time, and you are done forever. It is going to require continually updating research as appropriate, as goes on in biomedical research at the NIH.

But it is too important to say we do not have the time to understand better about what will work more effectively. Physicians

have to make decisions when they need to make decisions. The rest

of us need to help provide them with the best ongoing information

and make it available to them as quickly as possible.

Senator GRASSLEY. A follow-up for Dr. Wilensky in a little different area. There will certainly be instances where a clinically accepted norm that is developed through comparative effectiveness

will not work for specific patients in a specific instance. What do

you think an exceptions process would look like that would allow

providers to appeal the clinically accepted norm? If a provider’s reimbursement is linked to providing the clinically accepted norm,

how would we create a system that allows for exceptions?

Dr. WILENSKY. Let me back up and say that the center I am trying to get going is to provide the basic information that everybody

will have available to them, public payers and private payers. How

that information is used will probably differ by public payers and

some private payers. Unless we force it otherwise, we need a common base of information about the best that is known in terms of

likely clinical outcomes if you use a drug, device, or medical procedure in treating a particular medical condition.

Your question goes to the issue of, how do payers now decide

whether or not they will reimburse for a particular medical condition? What does the standard of care suggest is appropriate? What

clinical information can do is provide a better basis for making that

decision, one that is much more open and transparent.

Senator GRASSLEY. Thank you.

The CHAIRMAN. Thank you very much, Senator Grassley.

Senator Wyden?

Senator WYDEN. Thank you, Mr. Chairman. Mr. Chairman, I

want to start by commending you. You promised people at the

Summit that we were going to stay at it and continue these hearings, and I think this is a great next round and a way to show that

we are going to continue to prosecute this cause of fixing health

care.

I want to start with you, Dr. Orszag, if I might. You once again

highlighted the extraordinary inefficiencies in the health care system. I have come to the conclusion that the system is now so riddled with inefficiencies, I believe that the only way to bend the cost

curve downward is to take two very concrete steps: (1) to demonstrate to our people directly how much the inefficiencies cost, for

example, reduced take-home pay; and (2) to pass health reform legislation so that, in a more efficient, fairer system, our people have

a new financial incentive to select health care carefully.

Would you agree with that?

15

Dr. ORSZAG. Yes. I like short answers.

Senator WYDEN. You have analyzed the Healthy Americans Act,

and I believe we take those two steps, give people a real sense of

what they lose in wages, and in effect make it possible for them

to have financial incentives to choose plans carefully. Would you

agree that the Healthy Americans Act, 16 Senators, takes those

two steps?

Dr. ORSZAG. Yes, although there are also other ways of taking

those steps. But, yes.

Senator WYDEN. That has really been my view, that now we have

at least one way of getting there. I share your view that there are

a lot of other ways, and that is what, under Senator Baucus’s leadership and Senator Grassley’s leadership, we are going to explore.

But you have now identified, and it is good to have it on the record,

that there is one way to actually bend the cost curve downward

and squeeze out some of these inefficiencies, and I thank you for

that.

My second question deals with you other three panel members

who have done such great work in this field. When I get around

the country and talk about innovation and quality, people say, by

God, they are doing a great job at Kaiser, they are doing a great

job at Inter-Mountain, they are doing a great job at Mayo.

But how do we take those lessons from those terrific programs

and make them apply in small communities around the country

where there is not that network of integrated kind of services? So

for you three, how do we take some of these lessons from programs—I will start with you, Mr. Halvorson—and export them

around the country or, say, to small towns in Oregon.

Mr. HALVORSON. I have a long history of small-town life, and I

understand exactly what you are talking about. The issue for us is

to prove that vertically integrated care can perform at a very high

level in particular areas, and we are doing that. The key word

there is ‘‘integrated.’’ What we need for the rest of the country is

vehicles and tools that accomplish that integration process.

Chronic care is a team sport. A team sport needs a captain.

Somebody has to be the integrator. In the small towns, an integrator can be a computer system, it can be a care registry, it can

be a local vertically integrated care system where different things

can be used, but that function must exist. If the function does not

exist, coordination will not happen. So the challenge going forward

from a policy perspective is: how do you make sure that function

happens every place in America where care is delivered so that

there is a way of connecting the caregivers?

In my own view, when electronic medical records feed that system, it is an optimal system, but you can also feed them from a

claims database, you can feed them from other databases that are

locally available. But if you do not feed them from something and

if there is not a coordination function in the middle, then it cannot

happen in small-town America. So, we need to move in that direction.

Senator WYDEN. Dr. Wilensky, do you want to add to that?

Dr. WILENSKY. I thought that we were, as a country, moving

more toward vertically integrated care in the 1990s, but I was

wrong. Many people who have had an opportunity to do so, for

16

whatever reasons, do not seem to have chosen it; financial incentives may be wrong, et cetera. There also are not as many multispecialty physician groups that have organized outside of some of

the very well-known ones, or at least they are not available everywhere in the country. Why that is the case is also not clear to me.

So we need to begin to think about how we structure virtual systems that allow for people who do not have easy access to integrated groups to gain from what they can offer. There are some interesting areas that we can look to.

One of my experiences over the last 15 years is working as a

trustee for the United Mine Workers’ health and retirement funds.

They are providing support to a frail, elderly population that is frequently not in areas where there is much of a medical infrastructure, and they have made use of geriatric case managers, very

proactive involvement with poly-pharmacy management for people

who are heavy users of pharmaceuticals to make sure that the care

is integrated, along with other strategies to try to mimic some of

what happens in an integrated system.

Doing virtual groups will be much easier if we can promote

health IT. You have taken, now, a first step with the push for eprescribing—a little step, but an important step—in the bill that

was just passed. I think that may ultimately allow people to have

better insight as to the gains they could have if they were part of

an integrated system.

The CHAIRMAN. Thank you, Senator, very much. Appreciate it.

Thank you, Dr. Wilensky.

Senator Roberts, you are next.

Senator ROBERTS. Thank you, Mr. Chairman. Let me say that

you deserve some credit, along with the rest of the bipartisan group

who passed the recent Medicare bill, because in that bill there is

a push for e-prescribing by physicians under Medicare. But obviously we need to do a great deal more to get adoption of the electronic medical records.

Dr. Orszag, thank you for your comments and your frequent testimony. We actually have a company in Kansas that is doing great

work in regards to this issue, and I am thinking about the Cerner

Corporation. I recently visited their outfit and saw firsthand the

great benefits of electronic medical records and how they are the

future of the health care system. In remarks that I make, I compare the health IT challenge to our banking industry—perhaps not

the banking industry right now in terms of the health of the banking industry.

But each of us, with our ATM cards, can go to any bank or any

ATM in the world and access all of our financial information, but

we are nowhere near that point in the health care industry. That

is not an exact comparison, but it is one that I think that people

understand. We have a situation where patients and providers still

rely on paper, cannot easily share health care information, a patient’s history, which leads to, as you have pointed out, unnecessary tests and drives up the cost of care.

I am a co-sponsor of legislation approved by the HELP Committee, championed by Senator Kennedy and Senator Enzi. It is

called the Wired for Health Care Quality Act. It has a long list of

bipartisan supporters. Under this office, which would be under

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HHS, an American health information collaborative would be created to provide recommendations on developing this infrastructure,

a public/private partnership known as the Partnership for Health

Care Improvement. The bill also includes four separate grant programs. What we are trying to do here in this legislation is set

standards. Now, standards are one thing if we could get that done,

but what we need are incentives for the medical profession to latch

onto this.

At any rate, I think that providing grants to institutions and others for the adoption of HIT would be very helpful. I am thinking

of the small-town doctors and people who have practiced medicine

for years, and people who are not that computer literate, still have

sort of a fear of the computer, as opposed to the medical record

hanging on the back of the bed, that we need some education there

if we possibly could get that.

Now, you mentioned in your testimony the need for financial incentives. You have here the 2006 number: ‘‘Despite the potential

gains from health IT, relatively few providers have adopted it,

about 12 percent of physicians, 11 percent of hospitals.’’ That is

rather amazing, the testimony that has been provided, that that is

where we are, so we obviously have a great challenge for the need

for some kind of financial incentive.

Can you talk more about what those incentives might look like,

especially in the rural areas? Senator Salazar and I have similar

States. I am the co-chair of the Senate Rural Health Caucus, and

the adoption of Health IT has been especially difficult for us because of the cost associated with adopting the technology and the

perceived lack of benefit, even harm, to invest because of the limited return.

So how do we change this?

Dr. ORSZAG. All right. Well, there is either the carrot or the stick.

The carrot is a subsidy to adopt health IT. The problem with especially small subsidies—and the subsidies tend to be small so that

the budget cost does not become extraordinarily high—is that you

are only sort of pushing over the line those providers or doctors

who would have been close to adopting voluntarily anyway.

So, some doctors look at the current situation and say, it is in

my interest to adopt and there is some net benefit, and I will do

it. If you provide a small subsidy, the only people you are kind of

kicking over the line are those who were pretty close to adopting

anyway and you then made it in their interest to do so, and you

are also buying out the base for everyone who would have adopted

anyway. You are providing them the subsidy also.

The alternative is, and these could be done in combination, is to

say after some period of time, and assuming that there are standards for interoperability, privacy, and what have you, that if you

do not have a system in place you will not be reimbursed under

Medicare. There is the stick. Part of my job is to say unpopular

things. If you wanted to get to nearly——

Senator ROBERTS. Well, you have done that. [Laughter.]

Dr. ORSZAG. All right. I have succeeded.

But let me be clear: if you want to get to nearly universal health

IT within the foreseeable future—and by that I mean the next 5

or 10 years—unless you are going to pay a very high subsidy cost

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and buy out a massive amount of health IT adoption that would

have occurred anyway, I really do not see an alternative to the

stick.

The CHAIRMAN. Thank you very much.

Senator Rockefeller?

Senator ROBERTS. May I have just 1 minute?

The CHAIRMAN. You are over a minute already, but go ahead.

Senator ROBERTS. I will yield.

The CHAIRMAN. Go ahead.

Senator ROBERTS. We have just gone through an exercise in the

Medicare reform bill to provide to health care providers, everybody,

clinical labs, ambulance drivers, pharmacists, hospitals, home

health care folks, and the doctors—God bless the doctors—10 percent. We are in a position now where, in order to bring the Medicare costs down, simply because of the lack of reimbursement, people are turning away from Medicare patients.

Two pharmacists in a small town I just recently visited, one did

not, one did, serve Medicare. The guy who served Medicare ought

to be a GS–16, because he has to tell everybody what to do with

Medicare Part D. It is called triage. It is called rationing health

care. It is not right. So, if we are going to use a stick to try to bring

health care costs down to force some doctor who is 68 years old in

Beloit, KS, America, or Dodge City, KS, America to do that, I

would certainly prefer not to do that. We are really on the edge

right now. So, I appreciate your straight-talk express. It must be

the tea or the Coke that you are drinking. [Laughter.]

Dr. ORSZAG. I would say, I do not need to get elected either, so

that is a luxury there.

Senator ROBERTS. All right. I just wanted to toss that in, because

that was the main issue that we just faced in this Congress. Senator Grassley said ‘‘tweaking.’’ We did not tweak, we saved an

awful lot of people in regards to Medicare services.

The CHAIRMAN. Thank you, Senator, very much.

Senator Rockefeller?

Senator ROCKEFELLER. Dr. Orszag, I like you. I think you are

good. One of the things that you have said that interests me is

that, in 2006, only 12 percent of the physicians and 11 percent of

providers took advantage of health information technology.

Dr. ORSZAG. Why?

Senator ROCKEFELLER. No, not why, unless you want to answer

that. So this, to me—and I will say this with Senator Roberts in

the room—I am almost tempted to make a comparison between the

health care industry and the intelligence establishment, where you

have these wild variations from the Mayo Clinic, which you talked

about the last time and again this time, and very, very high expenses per person in West Virginia. Why, why, why, why? The answer is, you need to share information. That is HIT, in one sense.

The intelligence community declines to do that. They decline to

do that because the people have been there a long time, because

of habits, because of pride, because of ego, because of a fear they

might be wrong, or whatever. What we did was, we put in something called the Director of National Intelligence, who has quite a

lot of power but does not tell people how to run their organizations.

It is beginning to have a very good effect, primarily because he is

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a very good person and he observes behavior, comments on behavior, and has the power to adjust behavior as a result of that.

Now I switch back to health care. If you have so few people taking advantage of HIT in 2006, the idea that somehow, through carrots or sticks, you are going to really make a fundamental difference in what I think is a much more turf-conscious body, which

is the health care industry—that is all the lobbyists, that is all the

hospitals—they all have the best way of doing it. Doctors are very

much that way.

I agree that some doctors in their 60s or 70s may not be very

good on the computer, but I am going to suggest an idea to you,

and you can shoot it down if you want.

If we are going to make progress on this, a health information

and collaboration center which people can or cannot attach themselves to, based upon your 2006 analysis, has less interest to me.

What has more interest to me is too radical to pass. But I would

like your views on it, and any other members, too. That is, you say

that as a precondition to taking Medicare, receiving Medicare, receiving Medicaid—that is, the institutions and the providers—children’s health insurance, these kinds of things, that you do agree

to participate in HIT, which is quite a massive behavior modification. Pride, diminution, anger, lots of things. But if you are going

to have health care information, then people had better use it.

Dr. ORSZAG. Senator, let me just repeat what I said earlier,

which is, if we were serious about getting to nearly universal

health IT adoption, I frankly do not see a practical alternative unless you are willing to expend a lot of Federal resources for very

deep subsidies for the adoption of the kinds of approaches that you

were mentioning, painful though that is to say.

Senator ROCKEFELLER. You see no alternative, but just to pay

people a great deal for doing the right thing?

Dr. ORSZAG. You could either pay people a great deal, and it will

wind up being very expensive because you will have to buy out the

base for people who would have been doing it anyway, and also

provide a sufficiently rich incentive so that even people who do not

want to do it will do it voluntarily, or you need to say, it is up to

you. We will provide some subsidies for 2 or 3 years so that you

adopt this, closer to what you did in electronic prescribing. We’ll

adopt some subsidies for some period of time, and you have 3 or

4 years to have a system in place, but thereafter, you will not get

reimbursed under Medicare or Medicaid. That would get you nearly

universal very fast.

Senator ROCKEFELLER. Thank you.

Others?

The CHAIRMAN. Very briefly. Your time has expired.

Dr. WILENSKY. The other change that would drive adoption very

quickly is if you change how and what you reimburse for. So I

agree with what Peter just said, but, if you change what you are

rewarding, that is an even better strategy. You cannot keep doing

what you are doing in terms of reimbursing physicians. You have

to bundle what you pay for, what you are rewarding. That would

make the adoption of health IT much more attractive, especially if

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cians and small hospitals. The big guys, I don’t think, need that

kind of help.

The CHAIRMAN. Senator Snowe?

Senator SNOWE. Thank you, Mr. Chairman.

Dr. Wilensky and Dr. Orszag, on the issue of health information

technology, Senator Stabenow and I have introduced legislation to

do just that, to provide an integrated process here. I think that certainly Congress should take steps in that direction. I mean, that

is certainly the wave of the future, and we ought to be adopting

those efforts now to provide incentives.

I understand what you are saying, Dr. Orszag, about not being

able to provide a large enough subsidy to individual practices. But

in other words, do you not think we should begin this process, because certainly it would help, I think, to buttress what Dr.

Wilensky is recommending in the Center for Effectiveness, being

able to determine the performance and measure the savings from

specific treatments, therapies, practices, or prescriptions.

So, do you not think we should take some steps in that direction?

I mean, we provide grants and tax credits to help initiate that. I

know a lot of physicians who want to adopt and integrate these

systems. We should make them interoperable. It is certainly going

to happen, and it is in our interests to do so, to make sure that

Medicare and Medicaid can achieve the savings that can result

from it.

Dr. ORSZAG. I think the more that we can spur health IT adoption, the better. The only question is, what will actually succeed in

rapidly and dramatically expanding health information technology

adoption.

The other thing, of course, as has already come up, is by itself,

that is not enough. You need to have some system for using the

data intelligently and for changing reimbursement so that we are

steering care towards better care rather than more care.

Senator SNOWE. Dr. Wilensky, do you agree?

Dr. WILENSKY. Yes. It really is a combination of knowing what

you are trying to incent, changing the reward rules so that you reward the physicians and institutions that are behaving the way

you want them to, making money available to those groups that

have a hard time accessing the capital market, which seem to be

the smaller hospitals and the smaller physician practices, and

making sure that the rest of the changes are encouraging that use.

Senator SNOWE. Would that be useful for the center?

Dr. WILENSKY. Oh, absolutely. Being able to have health IT will

help generate information, help generate the data so that you will

understand what appears to be working well through natural variation, although you might need to sometimes verify that with prospective trials in areas that are very important. It will also allow

for rapid updates of information and dissemination. It will be much

harder to have a robust Center for Comparative Clinical Effectiveness if we do not push forward on health IT.

Senator SNOWE. Mr. Halvorson, what can you recommend to us

from your experience in all of this on how to proceed?

Mr. HALVORSON. My sense is, we should focus on what we really

want the system to do, which is to take care of the people who really need coordinated care. The only way the care can be coordinated

21

is by having computer support, because individual doctors and individual officers with no other connectivity cannot coordinate care for

patients. There has to be a linking tool. If we mandate that individual providers, in order to get paid by Medicare at a certain point

in time, submit claims electronically, if we also mandate that, after

a certain point in time for all of the patients with co-morbidities

and chronic disease, that they interact with a care registry or an

electronic medical record—if we mandate those two things and if

we pay them a little bit for the connectivity, the combination of

that, with the ingenuity of the American software world, will result

in, I believe, a whole new series of products that will connect everyone.

But I think we need to start with the two mandates, start with

electronic claim submission, start with the mandate to use the registry for the patients who need it the most, because 80 percent of

the chronic care patients have co-morbidities. We could cut the

number of kidney failures in half if we did a better job on their

care. We need a computer tool to get there.

Senator SNOWE. That is helpful. Do you think we should take

those steps immediately?

Mr. HALVORSON. I think we should set up that pathway immediately and then give the physicians and give the providers a couple of years to comply. I think it should be an immediate decision

to move in that direction, yes.

Senator SNOWE. On the issue—and I think, Dr. Wilensky, your

idea for a Center for Comparative Clinical Effectiveness is outstanding, frankly because I think we have to kick-start this process. We are just not going to be able to do it without something

that is going to measure and evaluate these savings, and in terms

of the methods that are used, and for the future, too, not only for

existing practices, but also for the future.

I know that budget scoring is a problem, and it is up to us to

make decisions with respect to, how do we change budget scoring

under this scenario with a Center for Effectiveness? Do we do it for

mandated studies or exception for scoring rules in order to examine

these performances? What would you recommend, Dr. Orszag, or

how do you see it? I mean, obviously it is up to us. We have to

change the budget scoring rules.

Senator WYDEN. And if we could, briefly, because Senator

Salazar has been waiting.

Senator SNOWE. Yes.

Dr. ORSZAG. Sure. Just very briefly, I would say I think there are

potential changes that could be made to the budget scoring rules

that have to be explored in consultation with the Budget Committees. I would just say, we are in the midst of putting together a

whole series of options, hopefully many of which will generate

budget savings, and we will have two significant volumes out at

the end of the year that will provide options for you, including on

regional variation.

I know we need to move on, but since Senator Salazar is one of

these people too, I just noticed on this map that the two places that

I am taking my children to this year, including Lake Sebegla in

Maine, and Colorado, are very low-cost areas. [Laughter.] I do not

know if that was on purpose or not, but there you have it.

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Senator SNOWE. It is just gravitating. [Laughter.]

Thank you.

Senator WYDEN. Senator Salazar?

Senator SALAZAR. All we have to do is replicate what we are

doing in western Colorado, and we will solve the problem, Mr.

Chairman.

Let me just ask a question on the Center for Comparative Clinical Effectiveness. First of all, Dr. Wilensky, my own sense is that

we have to find simpler ways of describing what it is that we are

doing, because all the experts we are hearing, and maybe people

on this committee, might be able to describe that. I think it is

meaningless to the rest of the world. Frankly, the terminology that

we use around the health care system, I think, is part of the problem and creates tremendous confusion.

But let me take that concept, and I want to ask for a response

from each of you. I know that in your testimony, Dr. Orszag, you

refer to the concept which Senator Baucus and Chairman Bernanke talked about with respect to a Federal Reserve Board lookalike that might help us in terms of setting out protocols for health

care. I think that is what you are trying to get to in terms of your

Center for Comparative Clinical Effectiveness, Dr. Wilensky, in

some way.

I would like your sense of what it is that we would do with setting out those clinical guidelines or protocols. I want to be specific.

My understanding is, 80 percent of the health care dollars are

spent on a person in the last 2 years of life. How would a Federal

health board, Center for Comparative Clinical Effectiveness, constitute that so that we have effectiveness in terms of how we are

treating people in those last 2 years of life? Would you talk about

a board that would have a regulatory authority, or is it simply

some board that is giving advice?

Dr. Orszag, why don’t we start with you and then just go down

the row?

Dr. ORSZAG. Sure. Just very briefly. CBO is going to be putting

forward a report that lays out the options, so I do not think any

of this is kind of settled in whether it is integrated with the comparativeness effective entity or separate from that, or what have

you. But conceptually, I think the question is, would it be beneficial

to have a technical body that is politically insulated have a larger

role in, for example, Medicare policy? We already have MedPAC,

which is an advisory committee. One could imagine MedPAC’s recommendations, instead of just being recommendations, being a set

of policies that would be implemented unless the Congress overruled them as a package. That is for you all to decide.

Senator SALAZAR. How far away are you from that report?

Dr. ORSZAG. We will have it out before the end of this calendar

year.

Senator SALAZAR. Before the end of the calendar year? All right.

Thank you.

Dr. Hillestad?

Dr. HILLESTAD. First of all, that is not my area of expertise. I

will not say much about it. But certainly——

Senator SALAZAR. Then that is fine. Mr. Halvorson?

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Mr. HALVORSON. Generally, we as a country need to become a

culture of continuous medical learning. We are not a continuously

learning culture right now. We do not collect data, we do not compare data, we do not have good information about what works and

what does not work, and we need to build that database to deliver

optimal care. We figured out that Vioxx was causing a problem.

Senator SALAZAR. So would you support the concept of a protocol

set by some Federal Reserve Board?

Mr. HALVORSON. I definitely do not think a protocol should be set

by the Federal Reserve Board, because medicine changes all the

time and people get smarter all of the time. So, no, I would not like

a federally set protocol. But good, solid research on what works and

what does not work, relative effectiveness is extremely important,

and that information needs to be there, and it is not there now.

Senator SALAZAR. Dr. Wilensky?

Dr. WILENSKY. I am not envisioning a regulatory entity in what

I am describing. First, we need to have better information available

about what works, when, for whom, under what circumstances. The

term ‘‘comparative effectiveness,’’ without the middle clinical part,

is fine if it makes it easier for people to understand. We need to

get the information out there.

For Medicare, there could be a decision that either a separate

body, MedPAC or somebody else, makes decisions about reimbursement based on the information that is available through this Comparative Clinical Effectiveness Center so that the strategies that

look like they have a lot of clinical payoff get a high reimbursement

or a low co-payment, or waive the co-payment, and others that are

safe, FDA approved, but not as effective, can be provided at a higher cost.

Senator SALAZAR. All right. Let me say, I appreciate that, and I

am very much looking forward to, Dr. Orszag, CBO’s report on the

board.

A question just on HIT, Dr. Orszag. You say carrots and sticks.

So, if we do something like e-prescribing, carrots at the beginning,

maybe mandatory for 3 years or 4 years on down the road. Do we

have any concept of what the quantum of dollars are that we are

talking about in terms of a program that would implement HIT nationwide?

Dr. ORSZAG. Do you mean the expenditures that would be required?

Senator SALAZAR. Cost. If we wanted to get to 90 percent like

many of the European countries are now, what would it cost?

Dr. ORSZAG. It would likely involve tens of billions of dollars a

year over many years. Who bears those costs is one of the questions.

Senator WYDEN. Let us go to Senator Stabenow, and then we will

have a second round when the chairman returns.

Senator Stabenow?

Senator STABENOW. Thank you very much. Thank you to all of

you. As many of you know, this is an area that I have been working on for some time, and I personally believe that this is at the

heart of our ability to go forward on the quality side, and to be able

to address costs, but particularly preventing deaths, saving lives,

being able to do what we all want to do.

24

Just a quick story. A woman came into my office as part of a

small business group, and we were talking about health IT—this

was a few years ago—and she told me a story. She lived in northern Michigan, and her son was chronically ill. She took him to

western Michigan, down a few hours, to drive to one doctor and

over to the University of Michigan Children’s Hospital for other

treatments.

Because of her concern about the fact that they did not have

complete information at all places, including X-rays and so on, she

developed a filing cabinet in the trunk of her car. I would hope

that, in America, we could do better than a filing cabinet in the

trunk of a mom’s car to be able to make sure all the information

is available. That is really what electronic medical records are all

about.

A question as it relates to comparing treatments and so on.

There is an article in the New York Times today that says what

many of us have known, which is that we are spending more than

twice as much on each person for health care as most other industrialized countries. But to add insult to injury, we have fallen to

last place among those countries in preventing deaths through use

of timely and effective medical care. This is the Commonwealth

Fund that did this research.

So my question is, and I guess I would start with Mr. Halvorson

because you have an organization that has 9 million people together there, and is developing electronic medical record systems,

which I think is terrific. But do you find with any of your systems

that you are able to use the data that you have to compare different treatments and their effectiveness, both from a clinical

standpoint as well as a cost standpoint?

Mr. HALVORSON. The answer is, yes, we do that. We look back.

The Vioxx information that hit the public was the result of a study

that we participated in, taking a look at the impact of Vioxx on our

patients. We discovered that there was a higher death rate, and we

announced that and triggered that whole series of dominoes. We

did the same work on hormone replacement therapy, and we have

done it in a number of other areas. So we used that database and

worked backwards to figure out some important things.

One of the reasons that we are committed to a complete and full

electronic medical record is, we want to have all of that information

about all of the patients all the time so that we can track over

years whether or not things that we thought worked initially—

heart stents are a really good example—are actually good for patients in the long run. We are doing a lot of heart stents in this

country. There is a lot of data showing a really good early impact.

We do not know what the impact is over time.

Somebody needs to track that. We will definitely be tracking

that, and we will be tracking it based on the variation of stents,

as well as the diseases that people have, identifying whether or not

diabetics have a different outcome in 5 years than people who are

asthmatic or have other conditions. So it is really critically important to do that work and to have that kind of data, because without

that work you do not know.

We just did a study on the type of glue to be used in hip implants and discovered that one type of glue had a failure rate three

25

times higher than any other glue. Because we had a large enough

database to track that, we could know that. But no given hip surgeon has a couple of hundred patients that they can track over

time and identify that there is a difference in outcomes. I mean,

somebody has to do that work, and the work needs to be shared.

Senator STABENOW. We found in e-prescribing—and I am so

pleased we have developed the first step in Medicare, both carrot

and stick, because it does have a mandatory requirement a few

years down the road. But in southeastern Michigan, since 2005, we

have had about 2,500 physicians signed up through Blue Cross, the

auto industry, and United Auto Workers, and so on.

I believe it is about 30 percent of the time when they have started to prescribe a medicine, the software, of course, shares the fact

if there are medical interactions, allergies, and so on, and they

have actually changed the prescription before sending it to the

pharmacy, and as well, other data. So it is very clear that giving

physicians more tools and more information, even starting with eprescribing, makes a huge different in outcomes and people’s treatment and people’s lives.

Mr. HALVORSON. Yes.

Senator STABENOW. Thank you very much.

The CHAIRMAN. Thank you, Senator.

Mr. Halvorson, how did you get your health IT up and going? Did

you just, by fiat, do it? What were the costs, and what is the return

on investment, for example? Just some guidance here for us.

Mr. HALVORSON. Well, we are a vertically integrated care system,

so we have hospitals, clinics, pharmacies, imaging centers, and we

not only insure the care, we also provide every element of the care.

It was obvious to us that we did not have all of the communication

that we needed between caregivers, and we had caregivers in

multi-specialty practice, with patients coming in and they would

not understand all of the issues that the patient had, all of the prescriptions that had been written.

So we decided that a paper file, being carried from room to room,

is not as good as an electronic record. So we decided to invest in

an electronic system to have all of that information about all of our

patients on the computer so the doctor can look at that information

in real time at the point of care.

The CHAIRMAN. Right. But what is the return on investment

then?

Mr. HALVORSON. We finished the entire roll-out. The last clinic

was 6 weeks ago. But we have some clinics that have been in place

for a couple of years. We phased it in across our system. The return

has been extremely good in each of the places that we have full implementation.

But as I said earlier, we have to take the computer system, build

the database, and then on top of that do an extract, and then figure

out from the extract, for each doctor and their panel of patients,

which patients need what follow-up care, and create the reminder

system. That is how we managed to have over a 50-percent reduction in heart deaths in Colorado by doing the right follow-up on

every patient.

The other thing we were creating was electronic visits. We have

an ad that is going to come out pretty quickly that says, ‘‘Two milVerDate 11-MAY-2000 14:11 Sep 16, 2010 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 57962.000 TIMD PsN: TIMD
26

lion visits, not one gallon of gas,’’ because we had 2 million electronic visits last year with patients interacting with their doctor by

computer. That creates an efficiency, it reduces costs, it makes a

big difference in people’s lives, because they do not have to drive

to a clinic and sit in a waiting room.

So what we are trying to do is re-engineer the system using computer data at the core to deliver better care, and we are doing it

because we think it is the right thing to do. But we also are doing

it because we know that 1 percent of our patients is 35 percent of

our costs. If we can intervene earlier in the progress of the disease

for each of those patients, we are going to make a significant

change in the cost outcome of care.

We know that, when we do the right intervention, on congestive

heart failure patients, for example, we can cut the number of hospitalizations by over half, but we have to do it systematically. We

have to identify them, we have to put them into the system, into

the process, interact with the patients. A single doctor in a solo environment, without the connectivity, would have a very hard time

getting that outcome and would have twice as many people.

The CHAIRMAN. And you developed the software to do all this,

too?

Mr. HALVORSON. We actually purchased the core software for the

medical record, and we have added on the care management tools.

The CHAIRMAN. But you also mentioned, in health IT, that it is

also important to have the—I have forgotten how you phrased it—

alert system, or some kind of——

Mr. HALVORSON. Yes.

The CHAIRMAN. And could you elaborate on that a little more,

please?

Mr. HALVORSON. Well, when the physician has all of the data on

a patient, that is a very good thing. It is an even better thing if

the computer reminds the doctor that this particular patient has

not had this test, that we need to do this kind of follow-up, that

the patient has not had either a mammogram, or the patient has

not had a current blood test.

What the system does is, it reminds the physician of what the

next care steps should be. It also tells the physician that the patient did not refill their prescription, so they can have a conversation about why, if you need blood pressure control.

The CHAIRMAN. This all sounds too good. What is the down side?

Mr. HALVORSON. I do not see a down side to it. I think it is the

future of health care.

The CHAIRMAN. What are some of the problems you have run up

against that you had to deal with? Maybe doctor resistance——

Mr. HALVORSON. I actually received some minor care last night

from one of our doctors in Washington, DC, and she told me that

she would kill anybody who tried to take that system out. She said

she absolutely loved it.

The CHAIRMAN. That is pretty serious. [Laughter.]

Mr. HALVORSON. Well, I think she might have meant damage or

something. [Laughter.] But she basically said, when she first heard

that we were doing that, there was some reluctance on her part.

Now that she has all of the information about the patients and she

27

has it immediately, she could interact with me in a fully informed

way.

The CHAIRMAN. But again, there must be some problems you run

up against.

Mr. HALVORSON. Initially, we learned that we had to make sure

that we had the computers available all the time. You have a different standard of availability if you have patient information on

the computer. We have worked on that, and it is coming along

quite nicely, Senator.

The CHAIRMAN. I understand the benefits. But what resistance

do you think you would run up against the more we encourage

this?

Mr. HALVORSON. I think there is a timing issue to any major

change. I think, when I change from one cell phone to another, I

go through a period of adjustment.

The CHAIRMAN. And Dr. Hillestad, your take on this?

Dr. HILLESTAD. Well, the biggest barrier is clearly financial. I

mean, that is borne out by surveys and by the pattern of the——

The CHAIRMAN. So how do we solve that one?

Dr. HILLESTAD. Well, there are several——

The CHAIRMAN. Dr. Orszag says that it is a whole lot of money,

just sock it to them.

Dr. HILLESTAD. There are incentives. You could do it part of the

way with incentives. I would not give up on the idea of some form

of subsidy incentive that you could get at significant levels.

The CHAIRMAN. Yes. But, Mr. Halvorson, would you not be upset

if Congress gave a big subsidy to all those who have not yet provided health IT, and you have already done it?

Mr. HALVORSON. No.

The CHAIRMAN. You would not?

Mr. HALVORSON. I would strongly encourage it, and would welcome that. If Congress decided they wanted to pay us something

additional for doing it, we would take that. [Laughter.] But I would

not feel bad about it.

The CHAIRMAN. All right.

Senator Grassley?

Senator GRASSLEY. Dr. Orszag, you mentioned in your opening statement that we are spending $700 billion that is wasted on not

improving outcomes. Now, if we instituted policies that would reduce that, would CBO score that favorably for those policies?

Dr. ORSZAG. So, for example, the $700-billion number is coming

from regional variation calculations and others, and we are exploring and putting together options to try to capture some of that

money, and you will see those in December. So, the short answer

is yes. But obviously, how much of that you capture—first of all,

that number is not just Federal Government savings, it is overall

savings.

Senator GRASSLEY. Yes, I know.

Dr. ORSZAG. And second, how much of it you capture depends directly on how aggressive you are in attacking this problem.

Senator GRASSLEY. Do you have any idea what some of those proposals might be?

Dr. ORSZAG. Yes. [Laughter.]

Senator GRASSLEY. Just a couple examples.

28

Dr. ORSZAG. Well, there are a couple of different strategies. One

is that you can go the route of comparative effectiveness research

and reimbursement rate changes, which I think will drive some decline in the regional variation. The variation is most severe where

we have the least idea of what works and what does not, so, where

there is most ambiguity about appropriate care, there is more variation.

But beyond that, you could imagine, for example, introducing

some variation in the reimbursement rate under Medicare in order

to try to offset some of this variation, so that, in regions where

there are services that are delivered more intensely, you try to

ratchet back a little bit on the financial incentives that providers

in that area face. That is one hypothetical example.

Senator GRASSLEY. All right.

Mr. Halvorson, what was your experience in dealing with geographic variations between those States, and how did you overcome

those differences? I have to assume in my question that when you

put together a system that covers so many different States from

one end of the country to the other, you found great differences.

Mr. HALVORSON. We have had variation in our care delivery from

State to State. It has not been in sync with the local State variation. There are some cost differences because nurses in some communities are much more expensive than nurses in others, and you

get those kinds of differences.

But in terms of patterns of care, we have not found that our

practices directly reflect the community practice, because we are a

closed system. We work with ourselves, and our physicians are organized as a multi-specialty group practice. There are no fee-forservice incentives in our system, so we do not make more money

by doing unnecessary things.

Senator GRASSLEY. All right. So I think I interpret what you are

saying as, you have narrowed differences but you have not eliminated them geographically.

Mr. HALVORSON. Right. We have not eliminated differences. In

some areas, we do not want to eliminate differences because medical science is not perfect. So we have one program for taking care

of heart patients in northern California that has had a really good

result; we have another one in Colorado that has had a spectacular

result. They are slightly different. We want to learn from both of

them and then incorporate into the computer support tools the best

features of both.

So we do not think medicine is at the point of science when it

makes sense to say there is one perfect way of doing things, but

we think we need to do it in a consistent way, we need to track

it, we need to support it, we need to compare it, and we do internal

comparisons so we know the difference in our system of various approaches.

Internally, our commitment is to be an organization that learns

from itself, shares that, and transplants the learning. But right

now, science and medicine are not at a point where we could say

there is only one right way of doing any single thing. We know

there are some very wrong ways of doing things, but there are various pathways to getting it right.

29

So, the congestive heart failure model: in some States it works

extremely well, heavily dependent on nurse interaction with patients; in other States, it might be a primary care doctor who has

the patient interaction. The key is to have the interaction to anticipate when the patient is beginning to go into crisis and do an intervention to educate the patient. There are key steps that need to be

done, but different people can do them and you can do them in a

slightly different order.

Senator GRASSLEY. Thank you, sir.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Senator Wyden?

Senator WYDEN. Thank you, Mr. Chairman.

On the comparative effectiveness issue and the health information technology issue, I do not think it is by design, but most of the

discussion always seems to focus upon insurance companies, payers, providers. It seems that, very often, the patient and their family are almost an after-thought. I would be interested in changing

that, particularly now, since we are going to be talking about the

architecture.

Chairman Baucus and Senator Grassley are going to be leading

our efforts here. We are going to be talking about the architecture

of how to pull the patients and their families into this discussion

about comparative effectiveness and health IT. We are, frankly,

looking for ideas. For example, in the Healthy Americans Act we

put in a requirement that there should be online information about

providers that is searchable by zip code so that you could easily

find a way to locate people who offer good-quality, affordable services in your geographic area.

As with all of this, I am not saying this is the last word, but I

would be interested, and I think it tracks the chairman’s question,

in getting a sense of what we can look at, again in a bipartisan sort

of way, to shore up the architecture of health information technology and comparative effectiveness in a way that boosts the patient and the patient’s family. Why do we not just go down the

row? I think I have time to start with Dr. Orszag, and I know Mr.

Halvorson and Dr. Wilensky have thought a lot about it, and

RAND, too. Go ahead.

Dr. ORSZAG. Let me just say, as a patient myself, that I have encountered situations in which I have felt like the medical information that would be necessary to make a good decision is simply not

available. And so this effort at comparative effectiveness research,

regardless of your grand vision for the health system—whether it

is a consumer-directed health system in which consumers need that

information, or a single payer system in which the single payer

needs the information, or something in between—the information

is necessary, and beneficiaries—otherwise known as people—do

need that information. In the absence of that, we are sort of flying

blind to a degree that is quite unfortunate.

Dr. HILLESTAD. One of the important benefits of HIT should be

the connectivity, not just between providers, but with the providers

and the patients. That becomes particularly important as you move

into chronic illness, where you really have to involve the patient as

a member of the care team and monitor them, keep them heavily

30

involved in what they are doing. So I think the HIT provides a conduit that should improve health care and should improve communication between provider and patient.

Senator WYDEN. Mr. Halvorson?

Mr. HALVORSON. I would agree. We need data for patients. Patients need to know about comparative data about their caregivers,

and they need to know comparative information about the care options they have in front of them. That data is typically not available. If somebody was diagnosed right now with cancer and there

are two or three alternative treatment modes for that cancer, the

patient should know what the average 3-year survival rate is for

each alternative.

Right now, none of that data is fully understood, so people are

making really important decisions about their own life and death

in a very uninformed way, and we should not allow that to happen.

We should have that data, we should track that data, we should

compare that data, and we should make that data available to individual patients so patients can make informed decisions about their

own care.

Senator WYDEN. Dr. Wilensky?

Dr. WILENSKY. One of the problems we have now is that there

is a lot of information that is available on the Internet, but there

are no quality screens. So, if you want to go find out about various

ways to treat your cancer or other illness, you need to know the

source and how reliable the source is, and then you can try to figure it out.

If there was a place people could go to look that had good, reliable information—I talked about it as a tool for payers, but clinicians and patients are clearly the ones who would benefit in terms

of having available the best that is known. The question is, how

do you get going on this strategy?

It may be to try to help people understand that there is information they can get now that is available in making health care decisions. Medicare has Hospital Compare, and the nursing home deficiency information, getting people used to the notion that they can

search out information and maybe push the physicians and health

plans to make more information available, and make more frequent

use of electronic exchange of information.

This notion that people do not always feel comfortable asking,

that it is their data, their medical record, and they ought to be able

to get access to it, is part of the other efforts that are needed to

develop standards and to promote health information technology.

People need to be comfortable that that is an easy way to get information. But they seem to do it at Kaiser, so presumably, if it were

available, large numbers of people would indeed go access it.

Senator WYDEN. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator.

I would just like your general reaction, panelists. It seems to me

that one of the explanations of geographic variation, partly, is it is

just nice to live where the sun shines. I mean, there are a lot of

doctors in these areas that have very high utilization, which is not

directly related to outcomes. Whereas, the States that are more efficient, like mine and Minnesota, it is at times a little colder—and

Oregon.

31

So, if we were to pursue this—and I think we should, health IT

and comparative effectiveness, et cetera—it seems to me that, logically, doctors all over the country would provide services and procedures based on the right quality of care, the right outcomes and so

forth, which necessarily means that a lot of doctors living in Miami

or whatnot would not get the same reimbursement that they are

currently getting. They will not like that.

I am just trying to figure out how we can kind of realign the reimbursement system based on quality, outcomes and so forth that

addresses that. I suspect that it is going to be very difficult to cut

back on their payments. You heard Senator Roberts say we cannot

use sticks, although I think some kind of a reduction in some

areas, in some places, probably does make some sense, depending

on how you do it. I apologize for rambling here.

But what ideas do you have for how we deal with those parts of

the country where there is over-utilization, where there are an

awful lot of doctors, an awful lot of procedures and so forth, and

solve it in a way that is certainly fair to States where utilization

is not quite as high and it is also fair to those States where it is

very high. Any thoughts that you might have on how to begin to

tackle that one? Dr. Orszag, I will start with you.

Dr. ORSZAG. I guess I would say that I agree with you, that the

changes that will be necessary are going to be difficult to do, which

may be one of the motivations for the kind of idea that you have

floated for a Federal health board or some other decision-making

possibility.

The CHAIRMAN. Right.

Dr. ORSZAG. But we cannot continue the existing system and perpetuating these inefficiencies. So I do not have the magic bullet for

avoiding any pain or avoiding any political economy difficulties in

the kinds of adjustments that gradually would be necessary, but I

also do not see an alternative, which is the problem that we face.

The CHAIRMAN. I think you are right.

Dr. Hillestad?

Dr. HILLESTAD. Well, one thing that is potentially possible that

tries to deal with both the quality issue and with the adoption

issue, is a pay-for-performance type of incentive that pays physicians for measured performance. But that performance has to be

measured with an electronic medical record system so that there is

an incentive to adopt in order to get this pay-for-performance, and

there is an incentive to do the right kind of performance to get the

payment. That is another kind of incentive that I would suggest as

an option.

The CHAIRMAN. All right.

Mr. Halvorson?

Mr. HALVORSON. I think there are two major spending streams

in American health care: chronic care and acute care. Chronic care

is about 75 percent of the cost. It needs to be a team sport. I think

we should put in place care protocols, best practices, and tools that

link the doctors with one another, and there should be a payment

mechanism involved that includes either a penalty or a reward, either one, or a combination, for not using the linking mechanism.

I think on the acute care side, the 25 percent of the cost, we need

to start putting out scorecards for patients and we need to start

32

building the database so that we know on knee surgery what the

outcomes are, we know on cancer treatment what the survival

rates are so patients can make informed choices. I think we need

two pathways.

The CHAIRMAN. Are your efforts similar to those that I hear, like

at Mayo, Cleveland, or other systems or not?

Mr. HALVORSON. Quite similar. Mayo and the Cleveland Clinic,

Geisinger Clinic, quite a few clinics—almost all of the major multispecialty practices in the country are doing electronic medical

records and are trying to coordinate the care for all of the patients

that they have. Some of those clinics are focused on specialty care,

and so we differ on this focus. But certainly we are doing very similar things and sharing information with each other.

The CHAIRMAN. All right.

Dr. Wilensky?

Dr. WILENSKY. It is easier for the people who are part of multispecialty clinics or full integrated groups like Kaiser. You need to

worry about the vast majority of people who go to physicians that

are part of small groups. You need to change physician reimbursement, to bundle payments so that physicians get paid for the care

of diabetes, of another chronic disease, or multiple chronic diseases,

an amount that will cover the cost of caring for the patient for the

year.

You need to think about putting together all the costs associated

with high-cost interventions like bypass surgery—either all of the

physicians who take care of that patient get a single payment, or

even extend it to the hospital to including the cost of it as well. You

need to recognize that, if you effectively slow the rate of growth in

spending, which we must do, the people who have been used to

having a high growth in spending—physicians, industry, hospitals—are not going to like it.

The CHAIRMAN. Yes.

Senator Wyden?

Senator WYDEN. Mr. Chairman, do we have time for one additional question?

The CHAIRMAN. We certainly do, for you.

Senator WYDEN. You are great. Thank you very much.

I want to explore this question that Senator Baucus raised about

the idea of a board. It also touches on what Dr. Orszag talked

about with respect to political economy. I am not convinced that

using a base-closing model will work for health care. Part of this

discussion with respect to recommendations in the health care area

almost seems to touch on that as the example for the way to go.

The reason I think it is different is that, in the base-closing kind

of area, you got the sense that those were judgments that were

really locally driven. People cared passionately about their base

and they were going to fight like crazy for it, and they would be

heard and the decision would be made.

The issues that we are talking about here are national in scope.

Chairman Baucus just raised one of the most important ones,

which is, how do we figure out a way to wring more efficiency out

of the payment system and do it in a fashion that is going to be

acceptable politically?

33

So, to get your sense, perhaps, Dr. Wilensky, because you have

been in an administration—lots of us ask you for your advice from

all political philosophies—how would you draw the line with respect to what, say, independent experts ought to be doing in terms

of making recommendations to the Congress, and then what elected

officials ought to be doing? Because I am trying to find a role that

is satisfactory that incorporates both of those. I think Chairman

Baucus’s last question really touches on it. We have to figure out

how to sort those two roles out.

Dr. Wilensky?

Dr. WILENSKY. The notion of an entity that would make decisions

about clinical protocols that would have the force of law for either

all public programs or for public and private programs, does not

seem consistent with my view of what the American population will

accept.

Getting information out that is regarded as untainted, reliable,

valid, credible, in a center like the NIH—in the sense that its biomedical research is not regarded as tainted—will be very important. Providing guidance to the Medicare program, which is a Federal responsibility, about using that information to reimburse

smarter, differentiate the co-payments, use value-based insurance,

makes a lot of sense to me. That is a power that Medicare does not

now have.

This means there are areas when it comes to public programs

where information that is available to all payers, patients, and clinicians could be used to change reimbursement and, therefore, the

incentives that now exist in addition to these broader changes.

There is so much that is unknown, and the ‘‘art’’ is still part of

medicine. To have declaratory judgments made that affect the way

medicine is provided outside of public programs, if that is the kind

of regulatory function you are considering—which may be an extreme interpretation, more like Senator Salazar was thinking

about—that to me is not the right function.

Having coordinated, integrated information so everybody does

not have to re-learn what we know about clinical effectiveness and

how it translates into clinical protocols, getting the colleges like

ACC and STS involved, and other various experts, that is very important and that needs to be organized in a way so that it is not

repeated by the public and private sector.

Senator WYDEN. Dr. Orszag, did you want to add anything to

that?

Dr. ORSZAG. I am going to come back to what I said in my opening statement, which is that I think the key issues here are not

just technical, but ones of a political economy. I mean, imagine the

world that we heard about from Kaiser in which electronic health

records are widely available and you can have electronic visits. I

mean, who among us is not annoyed that we have to fill out those

forms every time we go to a different doctor? I mean, personally,

I am. I would love a system in which we did not have to do that,

let alone the more advanced benefits that come from electronic visits and what-have-you.

So the question then becomes, we are stuck, and how do we

jump? I do not have the answer to that, but I think we need to be

very carefully thinking through ways in which we can get to where

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we need to be, again underscoring that continuing on the same

path is not a viable option because you will create a fiscal crisis

at some point.

Senator WYDEN. Mr. Chairman, thank you.

The CHAIRMAN. Thank you all very much. This has been one of

the more thoughtful, productive hearings we have had, and I deeply appreciate the time and attention that you all have devoted to

the subject. Eventually we are going to be revisiting this, all of us

together, many, many times. But thank you very, very much.

The hearing is adjourned.

[Whereupon, at 11:56 a.m., the hearing was concluded.]

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