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A PERMANENT SOLUTION TO THE SGR: THE 

TIME IS NOW 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JANUARY 21 & 22, 2015 

Serial No. 114–2 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CARDENAS, California 

(III) 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

BRETT GUTHRIE, Kentucky 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

SUSAN W. BROOKS, Indiana 

CHRIS COLLINS, New York 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

GENE GREEN, Texas 

Ranking Member 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

DORIS O. MATSUI, California 

BEN RAY LUJAN, New Mexico 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CARDENAS, California 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

January 21, 2015 

Page 

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

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

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

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

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

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

opening statement ................................................................................................ 6 

Prepared statement .......................................................................................... 6 

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

New Jersey, opening statement .......................................................................... 8 

WITNESSES

Joseph I. Lieberman, Former United States Senator ........................................... 10 

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

Alice Rivlin, Ph.D., Co-Chair, Delivery System Reform Initiative, Bipartisan 

Policy Center, and Director, Engelberg Center for Health Care Reform, 

Brookings Institution ........................................................................................... 29 

Prepared statement .......................................................................................... 31 

Marilyn Moon, Ph.D., Institute Fellow, American Institutes for Research ........ 37 

Prepared statement .......................................................................................... 39 

SUBMITTED MATERIAL

Letter of January 20, 2015, from 17 national nonprofit agencies to the committee, submitted by Mr. Green ......................................................................... 79 

Statement of Stand for Quality, submitted by Mr. Green ................................... 81 

Statement of the Federation of American Hospitals, submitted by Mr. Green .. 83 

Statement of the American College of Clinical Pharmacy, submitted by Mr. 

Pitts ....................................................................................................................... 89

Chart on Medicare spending, Henry J. Kaiser Family Foundation, submitted 

by Ms. Capps ........................................................................................................ 79 

Statement of the National Association of Insurance Commissioners, submitted 

by Ms. Castor ....................................................................................................... 95 

January 22, 2015 

WITNESSES

Richard Umbdenstock, President and CEO, American Hospital Association ..... 98 

Prepared statement 1 ........................................................................................ 101 

Geraldine O’Shea, First Vice President, AOA Board Of Trustees, and Medical 

Director, Foothills Women’s Medical Center in California ............................... 114 

Prepared statement .......................................................................................... 116 

Alan Speir, Medical Director of Cardiac Surgical Services for Inova Health 

System, and Chair, Workforce on Health Policy, Reform, and Advocacy, 

The Society of Thoracic Surgeons ....................................................................... 126 

Prepared statement .......................................................................................... 128 

Kenneth P. Miller, Board President, American Association of Nurse Practitioners ................................................................................................................... 140 

Prepared statement .......................................................................................... 142 

Barbara McAneny, Chair, AMA Board of Trustees, CEO, New Mexico Oncology Hematology Consultants Ltd. ....................................................................... 160 

Page

VI 

Barbara McAneny, Chair, AMA Board of Trustees, CEO, New Mexico Oncology Hematology Consultants Ltd.—Continued 

Prepared statement .......................................................................................... 162 

Eric Schneidewind, President-Elect, AARP ........................................................... 172 

Prepared statement .......................................................................................... 174 

SUBMITTED MATERIAL

Statement of the American Academy of Family Physicians, submitted by 

Mr. Pitts ................................................................................................................ 211 

Statement of the American Ambulance Association, submitted by Mr. Pitts .... 218 

Statement of various groups regarding standards of care and Federal 

healthcare guidelines, submitted by Mr. Guthrie ............................................. 220 

Statement of America’s Essential Hospitals, submitted by Ms. Castor .............. 226 

Chart on out-of-pocket spending, submitted by Mrs. Capps ................................ 229 

1 The attachment to Mr. Umbdenstock’s statement can be found at: http:// 

docs.house.gov/meetings/if/if14/20150122/102827/hhrg-114-if14-wstateumbdenstockr-20150122.pdf. 

(1) 

A PERMANENT SOLUTION TO THE SGR: THE 

TIME IS NOW, DAY 1 

WEDNESDAY, JANUARY 21, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:17 a.m., in room 

2322, Rayburn House Office Building, Hon. Joseph R. Pitts (chairman of the subcommittee) presiding. 

Present: Representatives Pitts, Guthrie, Shimkus, Murphy, Burgess, Lance, Griffith, Bilirakis, Long, Ellmers, Bucshon, Brooks, 

Collins, Upton, Green, Engel, Capps, Schakowsky, Castor, Matsui, 

Lujan, Schrader, Kennedy, Cardenas, and Pallone. 

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

Staff Director; Sean Bonyun, Communications Director; Leighton 

Brown, Press Assistant; Noelle Clemente, Press Secretary; Brad 

Grantz, Policy Coordinator, O&I; Robert Horne, Professional Staff 

Member, Health; Tim Pataki, Professional Staff Member; Michelle 

Rosenberg, GAO Detailee, Health; Chris Sarley, Policy Coordinator, 

Environment & Economy; Macey Sevcik, Press Assistant; Adrianna 

Simonelli, Legislative Clerk; Heidi Stirrup, Health Policy Coordinator; Ziky Ababiya, Minority Policy Analyst; Jeff Carroll, Minority 

Staff Director; Eric Flamm, Minority FDA Detailee; Tiffany 

Guarascio, Minority Deputy Staff Director and Chief Health Advisor; and Arielle Woronoff, Minority Health Counsel. 

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

OF PENNSYLVANIA 

Mr. PITTS. Good morning, ladies and gentlemen. 

The subcommittee will come to order. 

The chair will recognize himself for an opening statement. 

I would like to welcome everyone to the first Health Subcommittee hearing of the 114th Congress and officially welcome our 

new members on both sides. On our side, we have Larry Bucshon, 

Susan Brooks, Chris Collins, and Billy Long, who is on the committee, is now on the subcommittee, Health Subcommittee. So they 

will be a great addition. 

This subcommittee has made permanent repeal of the flawed 

Medicare sustainable growth rate formula, or SGR, a top priority 

for the last 4 years. In 2014, we reached a bipartisan, bicameral 

agreement on a replacement policy that enjoys widespread support 

both in Congress and among the stakeholder community. 

2 

With the current doc fix expiring in less than 2 months, at the 

end of March, we are faced with the best opportunity in a decade 

to permanently dispose of the SGR. We are committed to rising to 

meet this challenge. 

And now, with the policy agreed to, the question we face is how 

to responsibly pay for SGR reform in a manner that can pass both 

houses of Congress and be signed by the President. Coming up 

with approximately $140 billion in offsets will not be easy, but it 

is a task we must embrace. 

Some argue that SGR reform does not need to be paid for. I respectfully disagree. 

First, if Members are serious about seizing this historic moment 

to pass SGR reform, as a purely practical matter, for the bill to 

pass the House of Representatives and Senate it must include sensible offsets. For example, in recent years, the Senate already tried 

to pass a full repeal of the SGR under a Democratically controlled 

Senate. On October 21st, 2009, the Senate considered Senator 

Stabenow’s bill, S. 1776, and that bill failed on a 47-to-53 vote even 

though there were 60 Democratic votes in the Senate. 

Second, the American people expect Congress to live within our 

means. The American people expect Congress to reduce the debt 

and prioritize spending. It is our responsible to lead accordingly. 

Third, not paying for SGR reform would ignore past precedent 

from Congress, whether it was controlled by Democrats or Republicans. As the Center for a Responsible Federal Budget has noted, 

‘‘Lawmakers deficit-financed the first doc fix back in 2003 but since 

then have offset 120 out of the 123 months of doc fixes with equivalent savings. That is 98 percent.’’ 

So today we are here to take the next step in our process, discussing a range of commonsense Medicare policies which can improve, modernize, and strengthen Medicare. Most of the policies we 

will be discussing have been endorsed by Members of both political 

parties, included in the President’s Fiscal Commission recommendations or included in one of the President’s budgets submitted to Congress. 

As we move forward to get SGR reform across the finish line, we 

look forward to be discussing these and other options with the minority and the Members in the Senate. 

And we are very happy to have with us today some extremely 

well-respected thought leaders who have demonstrated they are serious about helping save and strengthen Medicare and doing so in 

a bipartisan manner. 

So I welcome all of our witnesses. We look forward to hearing 

your testimony. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

The Subcommittee will come to order. 

The Chair will recognize himself for an opening statement. 

I would like to welcome everyone to the first Health Subcommittee hearing of the 

114th Congress and officially welcome our new members. 

This Subcommittee has made permanent repeal of the flawed Medicare Sustainable Growth Rate formula, or SGR, a top priority for the last four years. In 2014, 

we reached a bipartisan, bicameral agreement on a replacement policy that enjoys 

widespread support both in Congress and among the stakeholder community. 

3 

With the current ‘‘doc fix’’ expiring in less than 2 months, at the end of March, 

we are faced with the best opportunity in a decade to permanently dispose of the 

SGR. We are committed to rising to meet this challenge. 

Now with the policy agreed to, the question we face is how to responsibly pay for 

SGR reform in a manner that can pass both Houses of Congress and be signed by 

the President. 

Coming up with approximately $140 billion in offsets will not be easy, but it is 

a task we must embrace. 

Some argue that SGR reform does not need to paid for. I respectfully disagree. 

First, if members are serious about seizing this historic moment to pass SGR reform, as a purely practical matter, for the bill to pass the House of Representatives 

and Senate, it must include sensible offsets. 

For example, in recent years, the Senate already tried to pass a full repeal of the 

SGR under a Democratically-controlled Senate. On October 21, 2009, the Senate 

considered Senator Stabenow’s bill, S. 1776. That bill failed on a 47 to 53 vote—— 

even though there were 60 Democratic votes in the Senate. 1

Second, the American people expect Congress to live within our means. The American people expect Congress to reduce the debt and prioritize spending. It’s our responsibility to lead accordingly. 

Third, not paying for SGR reform would ignore past precedent from Congress—— 

whether it was controlled by Democrats or Republicans. As the Center for A Responsible Federal Budget has noted: ‘‘Lawmakers deficit-financed the first ‘‘doc fix’’ back 

in 2003, but since then have offset 120 out of the 123 months of doc fixes with 

equivalent savings. That’s 98 percent.’’ 

So today we are here to take the next step in our process——discussing a range 

of common-sense Medicare policies which can improve, modernize, and strengthen 

Medicare. Most of the policies we will be discussing have been endorsed by members 

of both political parties, included in the President’s Fiscal Commission recommendations, or included in one of the President’s Budgets submitted to Congress. 

As we move forward to get SGR reform across the finish line, we look forward 

to be discussing these and other options with the minority and members in the Senate. 

We are very happy to have with us today some extremely well-respected thought 

leaders, who have demonstrated they are serious about helping save and strengthen 

Medicare-and doing so in a bipartisan manner. I welcome of all our witnesses. We 

look forward to your testimony. 

Mr. PITTS. And I yield the remainder of my time to our new vice 

chair, the gentleman from Kentucky, Mr. Guthrie. 

Mr. GUTHRIE. Thank you, Mr. Chairman. 

And I appreciate you holding this hearing and the opportunity to 

discuss the SGR, a critical issue for our Nation’s seniors. And since 

coming to Congress, I have heard repeatedly from Kentuckians 

that solving the SGR permanently is essential for beneficiaries to 

have continued access to the care they rely on. 

I am proud of the work this committee has done over the past 

few years to get to this point. We have a bipartisan, bicameral replacement proposal that will repeal the SGR and move forward 

with a new payment structure that focuses on quality and innovation. 

Unfortunately, the issue of how we offset the $140-billion price 

tag for SGR is still unresolved. We must continue to focus on finding ways to pay for the SGR proposal, and I want to specifically 

thank our panelists today and tomorrow who have put forward 

thoughtful proposals. 

I am hopeful this hearing will be the beginning of meaningful 

discussions and produce real bipartisan, commonsense solutions to 

the real SGR, reduce Medicare costs, and protect the beneficiaries. 

And to echo what the chairman said, we have a very distinguished panel, very important thought leaders. 

And it is very much appreciated that you guys are here today. 

Thank you. 

4 

Mr. PITTS. The chair thanks the gentleman. 

I am now very pleased to recognize our new ranking member, the 

gentleman from Texas, Mr. Green. 

I look forward to a good session working together. 

Five minutes. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. 

And like you, we have some new members of our subcommittee. 

Congressman Lujan has been on our committee, full committee, but 

he is new to our subcommittee. And also new members to the full 

committee is Congressman Kurt Schrader from Oregon, who is new 

to the Energy and Commerce Committee and obviously new to the 

Health Subcommittee, and also Congressman Joe Kennedy from 

Massachusetts. 

Welcome, both of you, to the full committee and also to the 

Health Subcommittee. 

And, Ben Ray, you have been around a while. I am glad you are 

on Health now. So, appreciate it. 

Our other Members new to our Health Subcommittee and the 

committee: Tony Cardenas, who is not here right now but will be 

on the committee, and so will Doris Matsui and John Sarbanes, 

new members on the subcommittee. 

Thank you, Mr. Chairman, and thank our witnesses for being 

here today. 

Eliminating the sustainable growth rate, or the SGR, formula 

under Medicare will represent a major policy development. It is 

critically important that Congress institute a reasonable and responsible payment policy for physicians and reward value over volume. 

The repeal-and-replace legislation negotiated last Congress made 

a historic agreement between the House and Senate committees of 

jurisdiction. Together, a bipartisan bill was introduced to permanently repeal the SGR and replace it with a value-based system 

that provides stability for physicians and maintains beneficiary access. 

Since 2003, Congress has enacted 17 patches to delay cuts to 

Medicare physician payments derived from the flawed SGR formula. The total cost of these 17 patches has been $169.5 billion. 

This amount exceeds the current cost of the bipartisan repeal-andreplace legislation developed last Congress. The Congressional 

Budget Office projects an SGR fix will cost $144 billion over the 

next 10 years. 

Insisting SGR reform to be fully offset is a tough issue and a policy my Republican colleagues frequently abandon when it is politically convenient. Last week, the House passed a bill changing the 

definition of a full-time employee from 30 hours a week to 40 

hours. It added $53 billion to the Federal deficit over 10 years, but 

it was not paid for. And it passed the House. 

Responsible Federal spending is important; however, offsetting 

the cost of the SGR on the backs of the beneficiaries is unacceptable. Seniors already pay their fair share of Medicare. Half of all 

beneficiaries live on less than $24,000 a year. On average, health 

5 

expenses account for 14 percent of Medicare-household budgets. 

That is nearly three times as much as non-Medicare households. 

Most of the proposals for Medicare savings would increase what 

is already a substantial burden on beneficiaries and increasing outof-pocket costs and limiting access to services. 

It is important to note that the Medicare program is stronger 

than ever. The 2014 Medicare Trustees Report estimates that the 

Medicare Part A trust fund will now be solvent until 2030, 4 years 

longer than it was estimated in 2013. This is in part because of reforms in the Affordable Care Act. 

Projected Federal spending for Medicare and Medicaid has fallen 

by almost $1 trillion since 2010. When compared to the Congressional Budget Office’s August 2010 and August 2014 baselines, 

Medicare spending this year will be about $1,200 lower per person 

than expected in 2010. 

Controlling costs alone without considering revenue is not a realistic approach to Medicare solvency and putting our Nation’s seniors at risk. The flawed SGR formula has plagued our healthcare 

system for too long, but a fix in SGR that harms Medicare beneficiaries because of an insistence on offsets that reduce benefits and 

limit access is not an acceptable tradeoff. And I urge our colleagues 

to work together and enact a long-term, overdue SGR reform for 

our seniors. 

And, with that, Mr. Chairman, I would like to ask unanimous 

consent to place into the record a letter signed by 17 national nonprofit agencies, a statement from Stand for Quality, and a letter 

from the American Federation of American Hospitals. I ask unanimous consent to have that placed into the record. 

Mr. PITTS. Without objection, so ordered. 

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

Mr. GREEN. And, with that, I will yield the remainder of my time 

to our colleague Congressman Kennedy. 

Mr. KENNEDY. Thank you to the ranking member for yielding 

briefly. 

Thank you to the chairman for calling the hearing, and thank 

you for letting me join you. It is an exciting day for me. So, glad 

to be here. 

Like most of my colleagues, I was hopeful that last year’s strong 

momentum to pass an SGR fix would result in bipartisan legislation that meets the needs of both beneficiaries and workers and 

providers as well. I am even more hopeful that we can reach an 

agreement that doesn’t pass these costs to fix the system on to 

America’s seniors. 

Half of all the Medicare beneficiaries live on less than $23,500 

a year, and health expenses accounted for more than 14 percent of 

Medicare-household budgets in 2012. These numbers tell a startling story about the economic reality most seniors face. 

As we take up a renewed push to fix the SGR, let’s keep seniors 

at the forefront of this debate. They have earned their benefits. 

Now let’s make sure we can afford them. 

I also want to thank the witnesses for being here today. 

Senator, thank you for your service to your country. 

Mr. PITTS. The gentleman yields back. 

6 

The chair recognizes the chairman of the full committee, the gentleman Mr. Upton, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Thank you, Mr. Pitts. 

This week’s hearing is indeed an important opportunity to discuss bipartisan reforms to strengthen and improve the Medicare 

program while helping achieve the savings needed to pay for a permanent solution to the flawed SGR. 

Last Congress, this committee, along with our colleagues at 

Ways and Means and Senate Finance, came to an agreement on 

policy to finally remove the uncertainty that has plagued seniors 

and their doctors for way too long. Still to be resolved was a path 

to pay for this important policy change. 

The experts here this week will help us explore some bipartisan 

proposals to both strengthen the Medicare program as a whole 

while also finally removing the threat of the SGR permanently. 

This is an historic opportunity. Securing a permanent solution to 

the SGR is more than tinkering with how we pay doctors who treat 

Medicare patients. This can also be Medicare reform. 

And while it is important to pay for the policy, I want to caution 

us about framing our discussions as one of merely budgets or beneficiaries. The truth is Medicare’s budget is out of control and the 

program is on the fast track to insolvency. That threatens the longterm access to care for millions of deserving seniors who depend on 

the program. That is not right. 

So the most pro-beneficiary reform that we can adopt this Congress are ones that will not only remove the threat of SGR but also 

shore up the Medicare program with sensible reforms that make 

the programs more sustainable for years, perhaps generations, to 

come. 

Failure to pass a permanent SGR before March would not be due 

to a lack of policy options but a failure of Congress to work together on offsets with the same bipartisan spirit that we exhibited 

on the policy itself. This subcommittee has proven that it is indeed 

capable of working together, and I think that we are ready to do 

it again. I am absolutely committed to working with my colleagues 

on this committee and the House and the Senate to finally get it 

done. 

There is a path forward. It involves targeted reforms, which save 

money without cutting care. It involves a balance of pay-fors, which 

are bipartisan policies. And it involves a spirit of cooperation with 

sustained commitment. 

Seniors in my State and others and across the country deserve 

the peace of mind that their trusted doctor will be able to answer 

their calls for care. 

[The prepared statement of Hon. Fred Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

This week’s hearing is an important opportunity to discuss bipartisan reforms to 

strengthen and improve the Medicare program while helping achieve the savings 

needed to pay for a permanent solution to the flawed Sustainable Growth Rate. Last 

Congress this committee, along with our colleagues at the Ways and Means ComVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
7 

mittee and Senate Finance Committee, came to an agreement on policy to finally 

remove the uncertainty that has plagued seniors and their doctors for too long. Still 

to be resolved was a path to pay for this important policy. 

The experts here this week will help us explore some bipartisan proposals to both 

strengthen the Medicare program as a whole while also finally removing the threat 

of the SGR permanently. 

This is an historic opportunity. Securing a permanent solution to the SGR is more 

than tinkering with how we pay doctors who treat Medicare patients. This can also 

be Medicare reform. 

And while it is important to pay for this policy, I want to caution us about framing our discussions as one of merely budgets or beneficiaries. The truth is, Medicare’s budget is out of control and the program is on the fast track to insolvency. 

That threatens the long-term access to care for millions of seniors who depend on 

the program. So the most pro-beneficiary reforms we can adopt this Congress are 

ones that will not only remove the threat of the SGR, but also shore up the Medicare program with sensible reforms that make the program more sustainable for 

years to come. 

Failure to pass a permanent SGR solution before March would not be due to a 

lack of policy options, but a failure of Congress to work together on offsets with the 

same bipartisan spirit we exhibited on the policy. This subcommittee has proven it 

is capable of working together, and I think we’re ready to do it again. 

I am committed to working with my colleagues on the committee, in the House 

and in the Senate finally get this done. There is a path forward, and it involves targeted reforms which save money without cutting care; it involves a balance of payfors which are bipartisan policies; and it involves a spirit of cooperation with sustained commitment. Seniors in Michigan and across the country deserve the peace 

of mind that their trusted doctor will be able to answer their calls for care. 

The time is now. So let us begin. 

Mr. UPTON. I yield the balance of my time to Dr. Burgess. 

Mr. BURGESS. I thank the chairman for yielding. 

I thank Chairman Pitts for calling the hearing. 

Ranking Member Green, it is good to see you sitting at the top 

of the dais as well, sir. 

It is important that this is the first hearing of this subcommittee 

in this term of Congress. This committee continues on a bipartisan 

basis to demonstrate previously unparalleled leadership in our efforts to repeal the sustainable growth rate formula. The countless 

hours of negotiations that Members and staff have devoted to this 

issue over the past 2 years have produced the only bipartisan, bicameral, tri-committee agreement, and that occurred on February 

6th of last year. 

This work——and I was proud to help the chairmen and the 

ranking members——was embraced by organized medicine, beneficiary groups, and payers, producing over 750 letters of support. 

I want to thank the chairman for mentioning the votes that were 

taken in October and November of 2009. That was a particularly 

trying time for me. The Senate, of course, had the 60 votes, but 

they could not pass a repeal of the SGR. Then, in what really can 

only be marked as an episode of legislative futility, after it had 

failed in the Senate, Speaker Pelosi brought it up on the House 

side. Really solidifying my allegiance to the patron saints of lost 

causes, I was the only Republican vote for that bill that was 

brought forward in the House in November of 2009. But this is how 

strongly I feel about this issue. 

If you go to a Web site called MedPage Today, the Number One 

clicked-on article last year was ‘‘Get Me Out of Here: Doctors Looking to Get Out of Medicine.’’ And the SGR is the proximate cause 

for their dissatisfaction with the profession that they work so hard 

for and that they love so much. 

8 

So we have the bill, we have a draft, we are ready to go. All it 

takes is us agreeing to the offsets. It is hard work; I know it is difficult work. But I know this committee, this subcommittee is up to 

the task. 

And I really would ask my colleagues on the other side of the 

dais, let’s work together, let’s get this done for the patients of 

America, for the seniors of America, and the physicians that take 

care of them. 

And I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

At this time is pleased to recognize the former ranking member 

of the Health Subcommittee, now the ranking member of the full 

committee, Mr. Pallone, for 5 minutes. 

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

Mr. PALLONE. Thank you, Mr. Chairman. 

And I want to thank you for ensuring that the issue of a permanent solution to the SGR is at the forefront of this Congress’ agenda. In addition, holding a hearing early in the session allows our 

new Members an opportunity to review both the policy and congressional background on the SGR. 

While I am very interested to hear from our two panels over the 

next 2 days, I strongly believe——and I hope the chairman does 

too——that after this hearing we should wait no longer to roll up 

our sleeves and get down to the work of ensuring the bipartisan, 

bicameral bill agreed to last year is enacted into law before the 

March 31st deadline. 

We all agree on the policy. We all agree that bill, the previous 

bill, is a good compromise. It also, most notably, has the support 

of both provider and beneficiary groups. 

The question that has plagued us, of course, is the offsets. And 

I believe that because the SGR is the result of a budget gimmick 

and we have already spent $169 billion paying to fix the problem, 

that offsets, especially those within our health programs, are not 

necessary. However, if we must include offsets, the war savings, 

which are known as the overseas contingency operations, or OCO, 

funds, could be used. 

I know some on the other side of the aisle do not share my view. 

What I hope is that we can agree first that SGR shouldn’t be paid 

for off the backs of beneficiaries. Beneficiaries will already pay for 

their share of the cost of SGR repeal through higher premiums, 

and half of all beneficiaries live on less than $23,500 per year. 

And, second, this is not the time or the place to introduce controversial Medicare structural reforms or changes. These proposals, 

like raising the eligibility age or raising the deductible or additional means-testing, should not be considered in a vacuum and 

will become poison pills that will thwart the bipartisan progress 

that we have made on fixing the SGR problem. 

And, finally, if there is consensus that offsets are required here, 

then revenue should be on the table. It is shortsighted and arbitrary to cut health programs simply because budget rules say so. 

9 

So I am hopeful that this is the year we can get the SGR done. 

If we do, it will be a bipartisan victory for Medicare, for physicians, 

and beneficiaries alike. 

Mr. Chairman, with the time left, I would like to split it, a 

minute or so to Representative Matsui and then the rest to Representative Schakowsky, if I can. 

Mr. PITTS. Without objection. 

Ms. Matsui? 

Ms. MATSUI. Thank you very much, Ranking Member Pallone, for 

yielding me time today. 

We need to solve the SGR problem for our Medicare physicians 

and their patients, but we can’t do it by causing new problems for 

Medicare beneficiaries. In fact, we should be providing more stability to seniors and people with disabilities by not subjecting the 

programs that they rely on to annual funding threats. 

This committee worked very hard last year with our colleagues 

on Ways and Means and Senate Finance to come up with a bipartisan, bicameral policy solution to the flawed SGR methodology. 

Now is the time that we should be having serious discussions about 

how to move this forward. We should not kick the can down the 

road once again. 

We need to move the system forward to reward value rather than 

volume, and we need to protect, strengthen, and expand Medicare 

and its programs. To do this, we need to make the so-called SGR 

extenders permanent. 

The QI program provides premium assistance, and Aging/Disability Resource Centers provide no-wrong-door resources to the 

lowest-income beneficiaries. As a co-chair of the Seniors Task 

Force, I am acutely aware that more than half of Medicare beneficiaries live on incomes of $23,500 or less and cannot afford to pay 

more for their health care. 

We owe it to our doctors and their patients to provide this muchneeded stability in the Medicare program. 

I yield back. 

Mr. PALLONE. I yield to Ms. Schakowsky. 

Ms. SCHAKOWSKY. Thank you. 

I am also the co-chair of the Seniors Task Force of the Democratic Caucus, and I am concerned because Medicare beneficiaries 

currently find themselves in an all-too-familiar situation, worrying 

that they could lose their doctors if Congress doesn’t reach an 

agreement on the doc fix. 

And we do have an opportunity to end these worries forever. The 

Democrats, as Dr. Burgess, when we were in charge, pointed out, 

actually did that, a permanent repeal of the SGR. Passing the bipartisan, bicameral proposal would repeal the SGR formula and 

continue Medicare’s transformation into a program that pays for 

quality, not volume. 

In passing the legislation, though, we should follow the precedent 

set by Republicans, who consistently pass healthcare legislation 

without offsets. Just earlier this month, the Republicans passed a 

bill to redefine ‘‘full-time’’ under Obamacare that cost $53 billion 

without offsets. 

If we must include offsets, then we must not cut benefits or ask 

beneficiaries to pay more. Let me just say that doing so would exVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
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change beneficiaries’ worries that their doctors will leave Medicare 

for worries that they can no longer afford to see their doctor under 

Medicare. 

I yield back. 

Mr. PITTS. The chair thanks the gentlelady. 

That concludes the opening statements of the Members. As always, any written opening statements of Members will be made a 

part of the record. 

Mr. PITTS. We have two panels——one today, one tomorrow—— 

on this issue. 

And before I introduce the panelists, I have a UC request to 

enter into the record comments of the American College of Clinical 

Pharmacy. Without objection, we will put that in the record. 

So ordered. 

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

Mr. PITTS. On our panel today we have three witnesses: Joe 

Lieberman, highly respected former U.S. Senator——welcome, 

Joe——Dr. Alice Rivlin, Co-chair of the Delivery System Reform 

Initiative, Bipartisan Policy Center, and dDings Institution——I 

might add, former OMB Director under President Clinton and Vice 

Chair of the Federal Reserve——and, finally, Dr. Marilyn Moon, 

Institute Fellow at the American Institutes for Research. 

Welcome. Thank you for coming. You will each be given 5 minutes to summarize your testimony. Your written testimony will be 

placed into the record. 

Senator Lieberman, we will start with you. You are recognized 

for 5 minutes for your summary. 

STATEMENTS OF JOSEPH I. LIEBERMAN, FORMER UNITED 

STATES SENATOR; ALICE RIVLIN, PH.D., CO-CHAIR, DELIVERY SYSTEM REFORM INITIATIVE, BIPARTISAN POLICY CENTER, AND DIRECTOR, ENGELBERG CENTER FOR HEALTH 

CARE REFORM, BROOKINGS INSTITUTION; AND MARILYN 

MOON, PH.D., INSTITUTE FELLOW, AMERICAN INSTITUTES 

FOR RESEARCH 

STATEMENT OF JOSEPH I. LIEBERMAN 

Mr. LIEBERMAN. Thanks, Chairman Pitts and Ranking Member 

Green, members of the committee. It is an honor to be asked to testify before you. 

I must say that, a day ago, I got a call in my office from a reporter for a trade publication, and the essential question was, to 

my executive assistant, why is Senator Lieberman testifying about 

the SGR problem? 

So the answer is that there is a staff member of the full committee, Josh Trent, who used to work for Senator Tom Coburn. And 

in 2011 Dr. Coburn and I spent a lot of time working together to 

try to come up with a bipartisan program to save Medicare and to 

reduce the national debt, and, after a lot of work, we did. And I 

hope that I can bring some of that experience to bear on what you 

are facing now. 

Let me try to put it in this quick context of this morning’s news. 

The President said last night in the State of the Union that the 

shadow of crisis has passed. And I would say, generally speaking, 

11 

insofar as the deep recession we were in, the economic crisis, the 

shadow has passed. But there are other very, very deep, dark shadows over our future that have not passed, one of which is, obviously, our continuing-to-grow national debt. 

When Senator Coburn and I introduced our Medicare reform 

plan in 2011, the national debt was just at about a little over $14 

trillion. It is 3 years later; we are now over $18 trillion. And this 

is really unsustainable. It is sustainable only at the risk of putting 

a terrible burden of taxation on our children and grandchildren or 

forcing really unacceptable cuts in spending in Federal programs. 

The other crisis that has not passed relates to Medicare, which 

also is a big cause of the growing national debt. And the trustees 

of Medicare continue to say, just to make it as specific as I can, 

that Part A, the hospital insurance program, could be insolvent—— 

which is to say, unable to pay the benefits due to seniors——as 

early as 2021 and maybe, under the best of circumstances, as late 

at 2030. So there is a real problem. 

The second thing I want to say is thank you. I mean, beginning 

in this subcommittee, working with colleagues on other subcommittees in the House and Senate and both parties, you have done 

something that has been really generally unheralded in a time 

when Congress has been so gridlocked and unproductive: You have 

come up with not a fix, but a solution, a replacement, a reform of 

the sustainable growth rate formula for physician reimbursement, 

which hasn’t worked. And now the question is, how do you pay for 

it? 

Let me just say in passing, as others who have spoken have, as 

a Member of the Senate, certainly the public following this, certainly doctors, the SGR was a perpetual recurring crisis, a process 

crisis. People would use the need to fix it to attach all sorts of conditions to it and the rest. 

But there are two positive notes out of that suffering that we all 

went through. One is, as you have said, that in almost all the 

cases, 98 percent, the cost of the fix was offset. The second, to me, 

encouraging reality was that, generally speaking——well, let me 

put it this way: that the most significant Medicare reforms that 

have passed in the last decade were passed to finance fixes for 

SGR. 

So I would say first that I hope that you offset the cost of the 

solution, the repeal, the reform that you have come up with, because otherwise you are going to increase the national debt. That 

shadow is over our future. 

The second thing is to say that I hope you build on this hidden 

story of offsetting your repeal and reform of SGR, replacing it, as 

predecessor Congresses have, by using it as an opportunity to reform some elements of Medicare. 

And, obviously, I am happy to answer questions in the next section of the hearing, but I offer the work that Dr. Coburn and I did 

as an example. You don’t fix the Medicare problem by making everybody happy, but the main thing you can do is to sustain this incredibly important, humane program for the long term. 

Dr. Coburn and I negotiated back and forth, and we did some 

things that are not popular with everybody. We replaced Medicare’s 

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nual deductible of $550. But we also created an out-of-pocket maximum of $7,500 so every Medicare recipient would have a cap on 

annual medical costs to protect them from financial hardship or 

bankruptcy. 

The Fiscal Commission, the President’s commission, estimated 

that that kind of restructuring, along with the Medigap reform that 

we included, would save $130 billion over 10 years. The total savings estimated by the Centers for Medicare and Medicaid and the 

President’s Fiscal Commission and CBO were somewhere in the 

$500 billion to $600 billion range over the next decade. And, startlingly, because this is big numbers, over the long term, our proposal would have reduced the unfunded liabilities of Medicare by 

$10 trillion because it just continues to grow. 

We did reform Medigap to increase consumer utilization in a way 

that makes the system work better. We did recommend raising the 

eligibility age. We did it, incidentally, in what I thought was a very 

genuine compromise by Dr. Coburn, who opposed the Affordable 

Care Act, by referring to the Affordable Care Act and saying, at 

every point that we raise by 2 months the age of eligibility for 

Medicare, the eligibility for access under the Affordable Care Act 

also goes up 2 months. So you are giving people essentially a floor 

or an alternative to what they have now. 

The bottom line here is that this must be done and it can be 

done. And if you and your colleagues in both parties, both houses 

can get together with that same spirit as——and Dr. Coburn and 

I always used to say, when people from different interest groups 

would come, as they have and will to you, and say, ‘‘You can’t do 

this,’’ we would always say to ourselves, privately of course, Tom, 

Joe, we have to think of our grandchildren. In other words, is 

Medicare going to be around for our grandchildren? And is the 

country going to be cutting back the debt so that they are not paying unreasonable parts of their income in Federal taxes or losing 

some of the basic benefits that government gives? Because our successors in Congress will have no choice but to cut Federal spending 

in discretionary programs to sustain Medicare. 

Bottom line, you have heard before, is that the only way to save 

Medicare is to change it, to reform it. And I think this is a committee where that can begin, and, ironically, the SGR repeal can 

be the occasion for doing that. I think you have the opportunity to 

confound the skeptics who don’t believe this Congress can do that. 

Neither Democrats nor Republicans nor the administration will 

get all of what anybody wants in a final bill, if you get to a final 

bill, but you will get something much more important, which is a 

solution to a big problem, a real problem. And that, I think, is what 

the American people want of this Congress more than anything 

else. 

Thank you very much. 

[The prepared statement of Mr. Lieberman follows:] 

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

Dr. Rivlin, 5 minutes, for summary of her testimony. 

STATEMENT OF ALICE RIVLIN, PH.D. 

Ms. RIVLIN. Thank you, Mr. Chairman. 

I, too, am delighted that this committee is holding this hearing. 

I think you have a historic opportunity to do two things at once: 

You can replace the Medicare sustainable growth rate and halt this 

unfortunate budgetary practice of kicking it down the road every 

year, and at the same time you can begin phasing in new payment 

incentives that will nudge Medicare and, indeed, I believe, the 

whole health system toward high-quality, more cost-effective delivery of care. 

I would like to make four brief points. 

First, the point you have made yourself and others have made, 

the SGR should be fixed permanently. This formula, with its pending 20 percent or thereabouts cut in Medicare physician fee schedule payments, just creates unnecessary uncertainty for doctors and 

their patients. Keeping the formula in the law but postponing its 

impact every year just makes our legislative process look ridiculous. 

Second, replacing the SGR can advance payment reform. It can 

move the healthcare delivery system away from fee-for-service, 

which is still very prevalent in Medicare, which rewards volume 

rather than value, and move it toward higher quality and less 

waste. And that is good for everybody, especially beneficiaries of 

Medicare. 

Now, the tri-committee bill that you have spoken of, Dr. Burgess’ 

authored bill, is a very promising approach and does just that. It 

proposes that future Medicare payment rate updates for physician 

fee schedule providers be contingent on participation in alternative 

payment mechanisms beginning in 2023. 

This bill is a good foundation, but we and many others think it 

could be strengthened. My colleagues at the Bipartisan Policy Center are releasing two papers today, which I believe you all have, 

which recommend accelerating the introduction of higher payments 

for providers that participate in alternative payment mechanisms 

from 2023 to 2018——you don’t need to wait that long——and applying the incentives to all Medicare providers. 

Other recommendations involve other alternative payment mechanisms and, particularly, strengthening accountable care organizations and relating the updates to the amount of risk that they are 

willing to take on. 

These changes could alleviate many of the challenges that providers are struggling with today as they work to implement new 

models of care. 

Now, payment reform is still a work in progress, with many details to be developed. Nevertheless, Congress can develop, at this 

point, a roadmap that will give providers more certainty that it is 

worth investing in the infrastructure necessary to develop alternative payment mechanisms and that the future of healthcare delivery is rooted in shifting to new models of care. These types of 

reform, I believe, have the most potential to deliver on the promise 

30 

of improved healthcare delivery that should be at the heart of 

every SGR fix. 

Bipartisan Policy Center is not alone in proposing the various 

ways of strengthening the bipartisan bill. My colleagues at the 

Brookings Institution have a set. We strongly endorse the thrust of 

the bill but urge beefing it up in many dimensions. And we are 

very happy to supply more information on that subject. 

Third, I believe that the SGR reform must not add to future deficits. Cost growth in health care has slowed in recent years, which 

makes projected health spending appear less daunting than it did 

in the past. Nevertheless, Medicare spending under the new payment model would be higher, about $144 billion higher over 10 

years and more if you include Medicare extenders, than under the 

present SGR formula. That must be offset. The Congress should 

not set a precedent of not paying for anything, but especially not 

for a reform like SGR. 

But paying for the SGR is also an opportunity to find offsets that 

are also good health policy. There are a whole bunch of lists of such 

offsets, and I don’t have time to go into them here orally, but I 

have referenced them in my testimony. And I think there are a sufficient number of quite plausible offsets, that the Congress should 

not have trouble finding a good set. 

That being said, if you have too much difficulty finding offsets, 

which will clearly be a heavy lift, we do have a suggestion for a 

semipermanent fix, working with 5 years instead of 10, which 

might be a helpful way out of that dilemma. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. Rivlin follows:] 

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

Dr. Moon, 5 minutes, for her summary. 

STATEMENT OF MARILYN MOON, PH.D. 

Ms. MOON. Thank you, Mr. Chairman. 

I am very pleased to be here today to testify. This is an area that 

I feel very strongly about. All of my research for many years, from 

initially working with Dr. Rivlin at CBO until today, has focused 

a lot, most of it, on beneficiary issues, protecting beneficiaries in 

the Medicare program. And that is where I am going to focus my 

testimony today. 

Eliminating the sustainable growth rate under Medicare would 

constitute a major policy improvement. And I believe that the instability in payment toward physicians and the contribution that 

that has made toward the many physicians opting out of the program is a serious problem for beneficiaries and qualifies, itself, as 

a beneficiary issue as well as an important payment issue for physicians. 

But I am concerned about the whole issue of offsets, and that is 

where I am going to spend most of my time today. There is a sense 

that there needs to be an offset to pay for this policy change, but 

I would point out that there is nothing about Medicare’s stability 

that requires that Part B changes be covered by benefit cuts elsewhere. And that, I think, is a very important concept. 

Nonetheless, many of the SGR reform proposals are paired with 

changes in Medicare at the expense of beneficiaries. If offsets are 

deemed essential, a reasonable alternative would be to look for 

policies across the Federal Government that are similarly unwise 

for which repeal could generate savings and, in many cases, represent the same kind of poor policy that has been recognized over 

time but not dealt with. 

Part of the justification for focusing on Medicare, however, stems 

from the notion that the program is too large or out of control. But 

I would point out that Medicare’s per-capita growth rates have 

been less than the rates of growth in the private insurance world 

for more than 40 years. Medicare has simply done a better job than 

the private healthcare sector in controlling costs over time. 

And another source of growth in Medicare that causes people 

sometimes to be concerned about the program is the increase in the 

number of beneficiaries, to this point largely caused by an increase 

in life expectancy——again, a success story for Medicare, not something for which Medicare should be condemned. 

Finally, the rate of growth in spending on Medicare has declined 

in recent years. Efforts to introduce new ways to control costs seem 

to be working. And, indeed, building the SGR change on top of 

some of those promising reforms, as is part of your legislation that 

has been considered, is a good idea. 

But most of the major reform options being discussed for reducing Medicare spending focus on increasing the share that beneficiaries pay or reducing the number of people eligible. Since people 

must still get care somewhere, such options are essentially ways of 

asking beneficiaries to pay more. 

Medicare is in no way, however, an overly generous program. 

Medicare pays only about 70 percent of the costs of just the servVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
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ices it covers, forgetting the other things like vision and dental and 

other things that Medicare does not cover. Beneficiaries or their 

families or former employers are responsible for the remainder. 

And just as costs to the Federal Government have risen over 

time, so have the costs to beneficiaries. Beneficiaries’ incomes have 

certainly not kept up with the increased costs in healthcare spending that they must themselves undertake over time. 

And the problem is particularly severe for those with modest incomes whose resources keep them above eligibility for Medicaid or 

special low-income protections but low enough to make it difficult 

to afford care. 

One of the most urgent areas of need is for better low- and moderate-income protections for Medicare beneficiaries, not increasing 

their burdens. Yet some of the proposals that even seem to be more 

neutral or across-the-board can have unintended consequences that 

harm beneficiaries, particularly these more vulnerable ones. 

For example, raising the age of eligibility is something that often 

sounds good, usually to people like me who like to continue working well past the age of eligibility. But for lower-income individuals 

who have poor skills and poor health, that simply is a major cut 

in benefits, and it is a major problem for those beneficiaries. 

Similarly, raising the premiums to beneficiaries over time would 

cast an enormous burden on, for example, a woman who is earning 

just above the paltry level that Medicare provides special benefits 

for of $18,000 a year, raising her out-of-pocket costs from about 15 

percent of her income to 17 percent of her income——certainly not 

moving in the right direction in terms of the changes. 

So I believe that it is important to recognize that any fix to the 

SGR that raises Medicare spending will also result in higher costs 

to beneficiaries when the payments to physicians rise. Beneficiaries 

will pay more by any fix that you do to the SGR because we are 

going to increase payments to physicians. 

The sustainable growth rate is poor public policy and ought to be 

fixed, but beneficiaries, I believe, should not be penalized for the 

poor policymaking that occurred so many years ago. 

Thank you. 

Mr. PITTS. The chair thanks the gentlelady. 

[The prepared statement of Ms. Moon follows:] 

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Mr. PITTS. That concludes the opening statements of our witnesses. I will begin the questioning and recognize myself 5 minutes 

for that purpose. 

Senator Lieberman, you were eloquent in your testimony about 

the need to pay for the SGR, yet I am concerned that some voices 

continue to suggest that it need not be offset. 

As a practical matter, House leadership has said that a bill must 

be offset to be put on the floor for a vote. So I fear that Members 

or organizations who continue to suggest moving SGR without offsets actually are maybe at best not serious or at worst could doom 

SGR reform to certain defeat. 

In your opinion as a former legislator, do you believe that SGR 

reform can pass this Chamber without offsets? 

Mr. LIEBERMAN. Obviously, in the end——thanks, Mr. Chairman——you all will notice and determine it more than I, but my 

sense, based on the results of the election last November and the 

stated opinions of those in the majority here and some in the minority, that this extraordinary achievement that began here in the 

subcommittee, which is to come to a bipartisan agreement on replacing the failed SGR formula, will not make it into reality unless 

there is an offset. 

And, again, there is nothing particularly, based on history here, 

radical about this. As you said, I believe, Mr. Green, maybe both 

of you, in 98 percent of the time the doc fixes have been offset for 

exactly the same reasons that your question raises. 

Mr. PITTS. What would your advice be for organizations considering making a push for an unpaid-for SGR bill in this Congress? 

Mr. LIEBERMAN. Well, my advice——gratuitous, but you have 

asked me——is to think of what your goals are. And if you are an 

organization representing physicians, for instance, and you push 

for this SGR replacement reform with no offset, the danger is—— 

and it is a high risk——that nothing is going to happen and physicians are going to suffer and, as has been said earlier, people are 

going to leave the medical profession, patients will suffer. If you 

are representing beneficiaries, obviously the same is true. 

So we have to give a little bit here to preserve the essential system, which is a great system. We are about to come to the 50th, 

if I am not mistaken, anniversary of Medicare, and it would be a 

tragedy in the midst of this year to have a failure of, I would say, 

will to find the money to fund this bipartisan agreement you have 

made. 

Incidentally, you can pick and choose from——you don’t have to 

look to the Coburn-Lieberman proposal——although, frankly, we 

did this, too. We took a lot from the President’s Fiscal Commission. 

And the President himself has recommended some changes in the 

last couple of budgets that would fund $50 billion. That is the part 

where he increases the premiums on wealthier beneficiaries. 

Mr. PITTS. Thank you. 

Dr. Rivlin, there has been a lot of discussion in recent years 

about the slowdown in the annual growth rate of Medicare spending. You have probably been following the literature and CBO’s 

analysis pretty closely, but my question is pretty simple. 

In your opinion, is the slowdown in Medicare spending a reason 

not to offset SGR reform? And based on your historical perspective, 

50 

do you think it is likely to rebound in coming years closer to historical averages? 

Ms. RIVLIN. I don’t think we should use the slowdown as an excuse not to pay for the SGR reform. 

Whether this slowdown will continue, I think, depends in part on 

whether we make bolder moves to make the health system more 

efficient and more cost-effective. And the movement toward alternative payments, alternative payment mechanisms of various 

sorts——accountable care, medical homes, bundled payments——is 

an effort to do exactly that. 

It seems to be working, and it may be part of the reason why 

the slowdown has occurred, but we can’t be sure. And we do know 

there are going to be a lot more seniors in the future who are eligible for Medicare. And there are a lot more things that docs can do 

for us——really interesting and exciting things coming on line, and 

we are all going to want it. 

So the upward pressure on healthcare spending generally and 

Medicare in particular is going to continue. And that is the reason 

I think that we should combine fixing the SGR with strong incentives to use alternative payment mechanisms. 

Mr. PITTS. Thank you. 

My time has expired. The chair recognizes the ranking member, 

Mr. Green, 5 minutes, for questions. 

Mr. GREEN. Thank you, Mr. Chairman. 

Dr. Moon, some have suggested that the SGR and other reforms 

proposed should be paid for by shifting additional out-of-pocket 

costs on to Medicare beneficiaries. However, seniors already bear 

a significant out-of-pocket cost in Medicare now, and most are living on very modest incomes. For example, half of all Medicare 

beneficiaries have incomes below $23,500. 

A Kaiser Family Foundation study found that an average Medicare household spent almost three times more out of pocket on 

health care as a percentage of income than the non-Medicare 

households, 14 percent versus 5 percent. 

To me, this a clear illustration that we should not be shifting 

costs to seniors. Instead, we should be working to strengthen and 

expand the programs that provide an assistance to the moderateincome seniors. 

Can you discuss the cost burden beneficiaries already bear on 

their relatively low income? 

Ms. MOON. Thank you, Mr. Green. 

Yes, I agree with you that the burdens are substantial. And particularly for those modest-income individuals that I mentioned, 

whose incomes are between 150 percent and, say, 250 or 300 percent of poverty in the United States, receive no protection of any 

sort beyond the basic Medicare program. They are the ones that 

are particularly vulnerable and for whom even fairly simple and 

small changes in cost-sharing can have devastating impacts, because they could cause people to not go and get care, which then 

ends up costing the system more, ultimately, when they become 

sicker. 

I believe that the aspect that we need to think about in terms 

of this is that Medicare is not a really generous program. It is a 

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vided insurance or the standard programs that are offered through 

the ACA have, for example. So when you begin to raise premiums, 

raise cost-sharing, you are effectively cutting that back even further and making it a less and less generous program over time. 

Mr. GREEN. Well, and I think most of us don’t actually object to 

paying for it, it is just how you do it. Although I have to admit, 

last week we passed a bill on the floor that cost $54 billion that 

wasn’t paid for that affected the Affordable Care Act. So if it is 

good for the goose, it is good for the gander——but paying for it 

out of Medicare and making seniors come up with more cost-sharing. 

My next question: Aren’t Medicare premiums already income-related? More specifically, can you talk about the existing income-related premiums and what income levels it affects and how these income levels compare to what is considered upper or higher income 

in other Federal policy, such as tax policy? 

Ms. MOON. Yes. Medicare does have an income-related premium 

for both Part B and Part D now, and it starts at a level of $85,000 

a year. So I rankle when I hear people talk about asking wealthy 

Medicare beneficiaries to pay higher premiums because, as a society, we like to talk about ‘‘middle income’’ stretching up to 

$250,000 a year of income but we are willing to talk about 

‘‘wealthy’’ seniors at $85,000 a year. 

The reason for that is it is very difficult to get high levels of revenues from income-related premiums because there simply aren’t 

enough seniors with such high incomes or persons with disabilities 

with such high incomes that make it easy to get more money. 

So when you begin to talk about further raising income-related 

premiums, you either have to make even lower-income individuals 

subject to such premiums or you have to raise those premiums to 

such a level that no longer is Medicare a good deal for high-income 

individuals. And that concerns me, as well. 

Mr. GREEN. OK. 

Dr. Moon, we have heard a great deal over the past few years 

about entitlement reforms. And these entitlement reforms, particularly in Social Security, are the safety net for our society——Medicaid and Medicare for the seniors and most vulnerable in our society——without considering the fiscal impact of tax entitlements, 

tax deductions, exclusions, credits, and other tax preferences which 

disproportionately benefit well-to-do Americans. And I think the 

President talked about that last night. 

Can you talk about entitlements, both those providing essential 

services to seniors and low-income Americans and those providing 

tax breaks to more affluent Americans, and the relative role of 

each of these in the context of protecting the most vulnerable in 

our society and at the same time addressing our long-term debt? 

Ms. MOON. A small question. 

Mr. GREEN. In 15 seconds, by the way. 

Ms. MOON. Fifteen seconds. 

In addition to Medicare and Medicaid, Social Security is also considered an entitlement program. These programs all help support 

older people when they have retired. They enjoy enormous support. 

And they are also important in reducing some of the inequality 

that occurs as people go through their lifecycles and have bad 

52 

things happen to them. Medicare and Social Security provide that 

underpinning of support. 

I believe they are really important programs. And if we are going 

to talk about changing programs like that, we ought to talk about 

revenue sources from other places if we are going to talk about 

making changes or looking for offsets. 

Mr. GREEN. Thank you, Mr. Chairman, for your patience. 

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

the vice chair of the subcommittee, Mr. Guthrie, 5 minutes, for 

questions. 

Mr. GUTHRIE. Thank you, Mr. Chairman. 

And, Dr. Rivlin, I know you have been involved in a lot of different groups and think tanks in working on this issue. And a lot 

of times in Congress, we keep hearing, we need a lot more information, we need more information, we need more studies. I think Senator Lieberman said we just need some good courage and cooperation. 

And so my question is, do you believe the information is there 

for us to move forward, or do we need another study, or is it time 

for bipartisan negotiations to begin and move forward? 

Ms. RIVLIN. I am a studier, so I don’t want to say you don’t need 

another study, but I think you have enough information to move 

ahead now and, indeed, that you should. 

And, in my testimony, I endorse the idea of actually accelerating 

the impact of the incentives to use alternative payment mechanisms that are built into the tri-committee bill. I think we know 

enough now to do that and to start them in, say, 2018 rather than 

2023 and phase in over several years a movement to incent the 

medical profession to be in new kinds of organizations that take 

risk. 

That is not going to be easy. We will learn along the way. But 

I think you can start now. 

Mr. GUTHRIE. The trick is it is——the way you can measure, it 

is easier when somebody walks into an office, to know they walk 

in and pay for volume. It is hard to figure out how you pay for 

value, because it is hard——how do you determine in value. That 

is what is going to be interesting over the next few years to develop 

those models. So——— 

Ms. RIVLIN. Right. 

Mr. GUTHRIE [continuing]. There will be more studies with that 

for sure, so we will keep you studying. 

I know alternative payment models in the SGR. Is there specific 

things within Medicare currently today you think should be reformed in the current offsets to pay for it? Some suggestions in the 

current Medicare program? 

Ms. RIVLIN. Yes, I think I do favor more means-testing of the 

premium. I think you can do that without hurting low-income people. I also think that the restructuring of the benefit package and 

the deductibles so you put together Parts A and B with a reasonable deductible, and then, in order to protect lower-income people 

but also not to discourage anybody from going to the doctor, you 

could have it not apply to physicians visits. 

And there are other things that you could do. Accelerating the 

movement, the incentives for moving to stronger accountable care 

53 

organizations, for instance, would produce savings, we think, over 

time. 

I am not in favor, unlike Senator Lieberman, of raising the age, 

partly because it just doesn’t save very much money because if you 

are going to do it, you do have to put those people into some other 

plan like the Affordable Care Act. 

Mr. GUTHRIE. Thank you very much. 

And, Senator Lieberman, you had an op-ed in The Hill, and you 

said earlier today about a final bill, nobody is going to get everything that they want——I think that is what you said——but we 

can work together so we can tackle big problems. And in the President’s fiscal year 2015 budget, he did include a proposal to charge 

wealthier seniors on Medicare more for Part B and Part D premiums. And it would save $50 billion——I think is what was in his 

budget——and roughly a third of the cost of the entire SGR bill. 

Do you think there could be bipartisan consensus for the President’s proposal in 2015, for the 2015 budget? 

Mr. LIEBERMAN. Well, that certainly should be the beginning of 

it. Bipartisanship always comes as a result of negotiation and compromise and understanding that you are putting a larger interest, 

which is a national interest, ahead of a more focused interest so 

you couldn’t just sort of pass that one alone. But that takes care 

of——the President’s proposal takes care of more than a third of 

the cost of the SGR replacement reform. And I think you would 

have to come up with some others that would appeal to people on 

both sides that could get you to the numbers you need to get it 

passed. But, no, I think that is a very strong beginning. 

Mr. GUTHRIE. Thank you, Senator. 

I just have 17 seconds. I just want to say remember if we do 

nothing with Medicare Part A, by 2030, the most optimistic assessment——and I was born in 1964. That is when every baby boomer 

will be retired. And if you look at other parts of the budget, about 

that time, that is when Medicare, Social Security, and Medicaid, 

and the national debt will be 100 percent of federal revenues. And 

even if you took the President’s proposal in his campaign and went 

to the fiscal cliff and added, that is only another $40 billion. So unless you are going to go deeper into taxes and tax more people or 

you are going to reform these programs, they won’t exist after 2030 

unless we step forward. 

Mr. LIEBERMAN. I agree. I agree with Dr. Rivlin. The facts are 

there, and the question is what you and we all as a country are 

going to do about them. 

Mr. GUTHRIE. I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

The chair recognizes the gentlelady from Illinois, Ms. 

Schakowsky, for 5 minutes of questioning. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

I want to say that we do have a serious crisis in this country 

when it comes to budget. And, for me, it is the budget of the senior 

citizens. And right now we have a retirement crisis. People cannot 

afford to retire in the United States of America. And I say this at 

a time that our country has never been richer. This is the richest 

country on the face of the earth, and per capita GDP has never 

been higher, but as we all know, that is so unequally distributed 

54 

that ordinary Americans have not seen an increase in wages for 

the last three decades, and all of the growth has really gone to the 

top 1 percent. And now we have a situation where I think we all 

agree that the SGR has got to go. And, as I said, when the Democrats were in the majority, we did exactly that. 

But this idea that we have to ask senior citizens, who are absolutely struggling right now, on this 50th anniversary of Medicare——one of the most successful programs we have ever seen, 

and undoubtedly this pay-for that we are talking about would put 

additional burdens on seniors: $85,000, as Dr. Moon pointed out, is 

now a rich senior. Some proposals have talked about lowering the 

income to $45,000, making people——seniors who make $45,000 

considered rich enough to pay higher premiums. 

I say shame on us as a country that we can’t afford to provide 

health care to our seniors and persons with disabilities. There are 

plenty of places to look. We just passed——what did we call it—— 

the Tax Increase Prevention Act; extenders, $45 billion unpaid for. 

As I said in my opening remarks, just earlier this month, the Republicans passed a bill to redefine ‘‘full time,’’ and that cost $53 billion, unpaid for. 

But now we are saying in order for doctors to get what they deserve and continue to serve seniors, we are going to ask senior citizens to pay more. I find that repugnant——I am sorry, and my hair 

is on fire——to say that we should go to the elderly and the disabled in our country. I agree that we have debt, but you know, projected Federal spending for Medicare and Medicaid have fallen by 

almost a billion dollars since 2010. If we compare the CBO’s August 2010 and the August 2004 base lines, Medicare spending in 

2015 will be about $1,200 lower per person than expected in 2010. 

So we are adding incredible savings because of the reforms in the 

Affordable Care Act, et cetera, to lower the cost of Medicare. And 

now we are going to turn around and say the seniors in this country are just having to spend more in order to save future generations from debt. I say we have plenty of money, and if we don’t 

start talking about reasonable revenue, as the President did last 

night in his State of the Union, then, again, I say shame on us. 

And I hope the senior citizens and the people with disabilities are 

paying attention to this important debate. 

I wanted to ask Dr. Moon, one of the things we expect to see in 

the budget that is proposed by the Republicans is, once again, this 

idea of a voucher program for Medicare. I wonder if you would comment on that and the kind of effect that that would have on Medicare beneficiaries. 

Ms. MOON. My concern about a voucher program is that if we 

turn over to the private sector the responsibility for meeting the 

same kind of challenges that now have to face the traditional Medicare program, we won’t necessarily have solved anything. The only 

way that you can, quote-unquote, solve the problem and make the 

budget burden for the Federal Government lower is if you insist 

that you are going to pay in terms of those vouchers less and less 

over time as compared to what Medicare would otherwise cost. 

Then the question is whether or not private entities will do a better job at holding down the costs than Medicare does. I see no evidence of that over the last 40 years. And if that is the case, it will 

55 

simply be then the shifting of costs on beneficiaries so that instead 

of premiums going up at the slow rate they have been going up in 

the last few years, they would have to go up faster and faster, unless we really find a way of either magically empowering the private sector to do a better job than it ever has, or we find a way 

to assume that simply handing it over to the private sector causes 

people to use fewer services and fewer numbers of people to age 

into the program. I just don’t see it as a solution per se. It is only 

a solution in a budgetary context if what you do is pay less. 

Ms. SCHAKOWSKY. I referred to in my——well, we can call it a 

rant——the Affordable Care Act made some significant changes 

that actually has reduced the cost of Medicare. I wonder if you 

could talk a little bit about that and what we might expect going 

forward that will actually lower those costs even more. 

Ms. MOON. I think we have not as yet seen the full impact of the 

reforms that the Affordable Care Act was hoping to put into place. 

I think we have seen some reductions in spending on Medicare that 

are attributable to that in part because of anticipating what the 

impact will be. Because as yet we are still experimenting. 

We are still trying to figure out what these things will do, how 

well they will work, et cetera, but they are very promising at this 

point because, as Dr. Rivlin pointed out, they are really trying to 

emphasize quality and value rather than volume. That means coordination of care, which is a really essential part of improving 

health care in the United States of America. As a very recent primary caregiver for a very sick Medicare beneficiary, I can tell you 

coordination of care is very poor in the Medicare program now. A 

lot of efficiencies can be found if we make improvements in that 

area. That is what medical homes and ACOs have at their heart 

of what they are trying to do. We need to push for that, and I think 

it will pay off over the long run. 

Ms. SCHAKOWSKY. Thank you. I yield back. 

Mr. GUTHRIE [presiding]. Thank you. The lady yields. 

Dr. Murphy, from Pennsylvania, is recognized. 

Mr. MURPHY. Thank you. 

Great to have you all here. This is very insightful. 

First of all, I want to say with regard to some of the issues of 

persons paying more their first dollar as a way of trying to save 

money, I recall the Gallup poll that was done, I think, last November or December that said 38 percent of middle class people with 

a household income between $30,000 and $75,000 have delayed 

medical care because of costs. 

So I ask this, Dr. Rivlin, if people delay care, does it lead to an 

increase in costs? 

Ms. RIVLIN. Yes, and that is one of the reasons that I think you 

have to be very careful in how you do the cost sharing, and one of 

the proposals that we have looked at is to not have the deductible 

apply, as I said earlier, to physicians visits. I think that is a good 

idea. That means you aren’t discouraging people, especially low-income people, from seeking physician care. 

Mr. MURPHY. I have to keep moving. You support the Alternative 

Payment Model. I think that is an important point to acknowledge. 

I read here in the report from the Center for Healthcare Quality 

and Payment Reform, they say that the vast majority of healthcare 

56 

spending doesn’t go to physicians. These scheduled payments represent only 16 percent of total spending in Medicare Parts A, B and 

D. Physician fee-scheduled payments over the next decade are expected to represent only 12 percent of total Medicare spending. 

However, physicians prescribe, control or influence most lab tests, 

images, drugs, hospital stays and other services that make up the 

other 88 percent. Does that sound correct? 

Ms. RIVLIN. I didn’t quite follow. 

Mr. MURPHY. Well, basically that physicians’ fees are a very 

small slice of that pie, but all the tests and everything else are the 

larger costs. 

Ms. RIVLIN. Yes. And the hospitals are the big cost centers in 

health care. 

Mr. MURPHY. And so the current system that is up there, I just 

want to get these points out to make sure we are looking into proper savings areas. Physicians lose revenue if they perform fewer procedures or lower-cost procedures, even if their patients are better 

off. Would you say that is correct in the current system? 

Ms. RIVLIN. Well, that may be right, but as Dr. Moon was pointing out, there are a lot of things that could be better if physicians 

coordinated better. 

Mr. MURPHY. I agree. I want to get to that. Well, that is what 

I mean. For example, one area of coordinated care, we don’t even 

have integrated electronic medical records. Behavioral medicine 

and physical medicine are just completely disjointed. And as a cap 

on, for example, psychiatric days, we don’t do that for heart disease 

or diabetes and say, I am sorry; you are only going to get so many 

pills, or you are only going to have so many visits for your kidney 

problems. But persons who have a chronic illness double their risk 

for depression, very high amongst seniors, very high. Untreated depression and chronic illness doubles healthcare costs, but we keep 

ignoring this. 

So would you see an alternative payment model for you and Dr. 

Moon that really looked at pushing and rewarding medical care to 

coordinate their care to really improve health as a way to get savings out of this system far more than what we are trying to 

squeeze out in some of these SGR things? 

Ms. RIVLIN. Yes, and I think you not only get savings; you get 

better medical care. You get better outcomes. 

But it has to be said, the knowledge here is very much a work 

in progress. We are learning how to do that. Accountable care organizations seem promising, and I would suggest we strengthen 

them, but we don’t know all the answers here. 

Mr. MURPHY. Well, let me add one other thing here then. And 

that is that Medicare has a couple of times invoked some models 

that they said we want to do this as a pilot study, and sometimes 

a set of across-the-board changes that they have made with the 

DRGs or the RBRVS physician fee schedules, they have just done 

that. So should we also include here a mechanism whereby physicians could voluntarily go into an accountable payment system, so 

an alternative payment system, because not everybody will be 

ready for it, as an incentive to say, Let’s move you toward this as 

a mechanism for reviewing this for the next year. 

Dr. Moon, Dr. Rivlin, should we offer that? 

57 

Ms. MOON. I think something like that is potentially a good idea. 

One of the problems we still have, however, is that it is very spotty 

where these organizations exist and where there is the capability 

to do that. And when we think about rural or isolated areas, we 

also don’t want to penalize physicians that are kind of trying to do 

it on their own and doing a very good job. 

Mr. MURPHY. That is why I say voluntary so that some who are 

ready can do it. Some who are not will need a few more years. That 

will give them more time but not force it upon them. 

Ms. MOON. But I just hope that it doesn’t become something that 

is cost neutral and you say we are going to take it out of the hides 

of the folks who don’t get involved because they may not be able 

to at this point. 

Mr. MURPHY. I understand. 

Dr. Rivlin, final comment? 

Ms. RIVLIN. Yes. I think that is the spirit of what we are suggesting. Reward physicians who are willing to go into alternative 

payment mechanisms. 

Mr. MURPHY. Thank you. 

I yield back. 

Mr. PITTS [presiding]. The chair thanks the gentleman. 

I now recognize the gentleman from Oregon, Mr. Schrader, 5 

minutes for questions. 

Mr. SCHRADER. Thank you, Mr. Chairman. I appreciate the opportunity. 

To kind of follow up a little bit on Dr. Murphy’s line of questioning with the Affordable Care Act, the incentives in there for incentive-based outcomes, for accountable care organizations, the coordinated care that I think is so important to really deliver the 

long-term health benefits, better quality care, as well as the big 

savings compared to all the other little things we are talking about 

and arguing about right now. 

Could you talk a little bit about how the accountable care organizations and increased utilization of patient-centered medical 

homes, where the primary care physician gets involved, how that 

could actually help in generating a lot of savings for Medicare 

going forward? 

Ms. MOON. I think that coordination, as I mentioned, is the real 

key here. One of the things, the low-hanging fruit, obviously, is 

making sure that you don’t duplicate tests, that you don’t duplicate 

things that don’t need to be duplicated. When you don’t have good 

recordkeeping and transportable electronic records, that is a problem. You want to improve in that area. 

You also want to try to encourage and find ways to provide the 

right incentives for the care to be delivered in the right place at 

the right time. And one of the things that we still don’t quite know 

how to do is think about making that happen. Consider the example of bundled payment, where you are putting together payments 

to hospitals and post-acute care providers, like skilled nursing facilities and home health. Who do you put in control of that bundled 

payment? It probably makes a big difference in terms of then 

where the care is delivered. If the hospital is in control, more is 

going to be done in the hospital and less in the skilled nursing facility and home health. 

58 

So there are a lot of things that still have to be worked out, and 

we have to figure ways to coordinate care. 

The other thing that I would mention that I think is really important and a challenge is how to get consumers involved. One of 

my big pet peeves is when people talk about a patient-centered 

medical home, and they don’t really involve the patient. They simply say we will do what is best for the patient. Patients need to 

be involved, not only to think about what care they need and don’t 

need but also to cooperate and coordinate themselves to the extent 

to which they can. And we need to be realistic about it, but we 

need to get the patients involved. 

Mr. SCHRADER. And that is where the primary care physician or 

healthcare practitioner or nurse practitioner can help make that 

actually happen. 

Ms. MOON. Absolutely. 

Mr. SCHRADER. Dr. Rivlin, with regard to some examples, you 

have talked again, just like Dr. Moon and Senator Lieberman, 

about good outcomes, value-based outcomes. The discussion has 

been, well, how did you measure that? Can you really measure 

value-based outcomes? I think the answer is obviously yes. Could 

you give us some examples of value-based outcomes that are, indeed, very measurable? 

Ms. RIVLIN. One success so far has been not rewarding hospitals 

when the patient is readmitted in a very short period. That is 

measurable. Maybe sometimes it is unfair, but it has had a serious 

effect on a hospital’s being much more careful not to discharge a 

patient who might come back really quickly. So that is one example. 

Mr. SCHRADER. I will give you several others too. My state, we 

have gone to the, we call them coordinated care organizations, and 

we include rural areas. It is not impossible to do that in a rural 

area, quite frankly, especially in this day and age of telemedicine, 

where we have been able to actually drop the readmission rate in 

our hospitals anywhere from 10 to 20 percent. Stays for chronic obstructive pulmonary disease and heart issues, again dropping anywhere from 18 to 30 percent. Patient-centered medical home visits 

up 11 percent. I think it is important for the committee and subcommittee to understand there are ways to actually measure these 

things. 

The last comment I would make, Mr. Chairman, is while I agree 

that Congress historically plays loose and fast with what the payfors are, whether or not we actually do pay-fors going forward, I 

think is extremely important that we do pay for this. The nearterm situation is such that while our Medicare costs are, indeed, 

going down, I think it is part of the ACA. It is undoubtedly part 

of the ACA. It is also undoubtedly part of the economy. But we 

can’t rely on that with the math problem we have in this country. 

We have a tsunami of folks my age and a bit younger becoming 

senior citizens, becoming eligible for Medicare. And that is not 

going to be cured under the current deficit reductions we are seeing. It would be unconscionable for us to avoid addressing this 

problem. We are so close. This committee and the other committees 

have come up with a very excellent solution for going forward on 

the SGR. We are this close to coming together on it. I think SenVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
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ator Lieberman made a good point. All the points are out there 

that we need to figure out how to pay for this, $140 billion, $144 

billion is probably the least costly fix to the SGR that we are going 

to see in our lifetime. And I would respectfully suggest that maybe 

the subcommittee, under the rubric of the committee, put together 

a task force to pick the least offensive ones. 

We can protect the low-income folks. We came up with a definition in this committee of what we consider more low income. Certainly it is well below $250,000. I don’t know if it is $85,000 or less, 

but we can figure that out. And I would really urge the committee 

to sit down and work together and figure this thing out because we 

are going to pay for it under this Congress. Time to get the job 

done. 

I yield back. Thank you very much, Mr. Chairman. 

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

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

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

I appreciate it. Thanks for holding this very important hearing. 

I am constantly reminded about the importance that Medicare 

plays in the lives of my constituents when I am back in my district 

in Florida in the Tampa Bay area. In 2012, there were about 

145,000 Medicare-eligible beneficiaries in my district. Medicare is 

an important program. I want to make sure whatever we do in 

Washington, that we protect current beneficiaries and future beneficiaries. We need to make sure that Medicare is on strong financial footing to be there for our parents, for us, and for our children. 

Senator Lieberman and Dr. Rivlin, in your Medicare modernization proposal, you talked about providing a unified deductible access across Part A and B. Can you talk about how this would provide clarity to seniors when understanding their Medicare benefit 

and discuss how this would reduce overutilization. 

Mr. LIEBERMAN. Thanks, Congressman. 

Very briefly, it is actually very hard to describe the current system of deductibles under Medicare. It is so confusing. So I think 

the first benefit of combining Part A and Part B into a single deductible——Senator Coburn and I recommended $550 annually—— 

is the clarity. And incidentally, in most private insurance plans, 

there is a clarity in deductibles. There is no reason why we 

shouldn’t give the Medicare beneficiaries the same clarity. The second hope, obviously, is that as you create that clarity, you will create in the beneficiary kind of a second thought about overutilizing 

services. You don’t ever want anybody to not go to the doctor or the 

hospital or get a prescription drug because they are worried about 

the cost, talking about hospitals and doctors in this combined deductible. 

But there is clearly overuse. One of the more controversial recommendations that we made, but it has been included in some of 

the other studies done, is to limit the availability of the Medigap 

coverage because, for instance, not to have it pay for all of the deductible and have it pay for a limited amount of the out-of-pocket 

because there is study after study that show that people who have 

Medigap use 25 percent more Medicare services than people who 

don’t without any discernible increase in healthcare results. So, 

look, if we are going to solve this problem, everybody is going to 

60 

have to help do it, including the beneficiaries, and this is a way to 

try to incentivize them——not to stop going to the doctor or the 

hospital——but to make sure they need to before they do. 

Mr. BILIRAKIS. Thank you. 

Dr. Rivlin? 

Ms. RIVLIN. Yes, I agree with that and especially would like to 

emphasize the part of that about Medigap. The effect of Medigap 

very often is to make health care free, and when it is free, you tend 

to overuse it. So putting some limits on that I think is important. 

One other proposal that often goes with restructuring the 

deductibles is to put a limit on the out-of-pocket costs, which we 

don’t now have. That goes in the other direction. It would cost 

something, but it would be a big benefit to especially low-income 

seniors who run up against high out-of-pocket costs. 

Mr. LIEBERMAN. That was one of the gives and takes——excuse 

me, Mr. Chairman——that Tom Coburn and I were involved in. So 

we did what we just did about the deductible and Medigap, but 

Tom agreed that we should put a limit on how much out of pocket 

a Medicare beneficiary would have to pay, and that will have a significant——real but also psychological——effect on our seniors. 

Mr. BILIRAKIS. Interesting. 

I have one more question, Mr. Chairman. 

Dr. Rivlin, in your testimony, you mentioned one idea was rewarding beneficiaries for using generic drugs. Can you elaborate on 

how to incentivize beneficiaries to choose lower-cost options? 

Ms. RIVLIN. Yes. I think it is——often the beneficiary doesn’t 

care whether the doctor prescribes the generic or the brand name. 

It doesn’t matter to them. It should matter. They should pay a little less if the generic is prescribed. 

Mr. BILIRAKIS. Thank you. 

I yield back, Mr. Chairman. I appreciate it. Thank you. 

Mr. PITTS. The chair thanks the gentleman. 

I now recognize the gentlelady from California, Ms. Capps, 5 

minutes for questions. 

Mrs. CAPPS. Thank you to Chairman Pitts and to Ranking Member Green for holding this important hearing. 

I have long been a supporter of fixing the SGR. It harms providers and consumers alike, the SGR. It keeps us from true innovation in the healthcare sector, but the conversation often stops right 

at the crisis point, how to make it to the next paycheck, and rarely 

moves to one where we can really discuss our vision for our 

healthcare system in the future and how to get there. Last year we 

finally got everyone on the same page, both in the provider community and here in Congress, but despite the massive effort undertaken by many of us here on this subcommittee in the last Congress to come up with a solid plan to end SGR and once and for 

all set Medicare on a path toward improved quality and stability, 

we never made it to the last mile. In the end, it was political disagreements, not policy concerns, that kept us from the finish line. 

And I don’t believe we can afford to do that again. 

Mr. Chairman, I am a longtime member of this Health Subcommittee and a healthcare professional myself. And a permanent 

solution to the SGR problem must be our top priority, so I urge you 

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ward passage of a bipartisan, bicameral compromise legislation, 

agreed to last year by March 31, not just a box being checked before moving on to other matters. Anything less would be so unfair 

to Medicare patients, to the provider community, and to all who 

put their differences aside, which we did last year to find a strong 

policy compromise. 

I would like to also take a moment to remind the chairman and 

my colleagues that while SGR, the replacement policy for SGR, 

should not be reopened, we shouldn’t forget the additional policies 

that need to be included with this bill. Commonly known as extenders, these programs, like lifting the Medicare outpatient therapy session cap and extending the qualifying individual programs 

that help low-income seniors afford their Medicare premiums, these 

are all critical to ensuring the strength of the Medicare system and 

must not be forgotten. 

And I have a concern that some of the conversations here today 

represent a step backward in finding a permanent solution, and I 

think we need to be clear. Reform the SGR on the backs of seniors 

and persons with disabilities who receive care is one of those damaging conversations. 

Now I have a question for you, Dr. Moon. We have heard a number of proposals that would reduce the Medicare benefit for those 

currently on the program or even eligible for Medicare. For example, Mr. Lieberman mentioned in his testimony that his proposal 

would gradually raise the Medicare eligibility age from 65 to 67. 

We have heard this proposal from leaders on the other side of the 

aisle as well. 

And I want to be clear about my view: This is a bad policy. It 

is shortsighted, and its consequences are so far reaching. It would 

break our Nation’s longstanding promise to its people that if you 

work hard and pay into the system, it will be there for you when 

you turn 65. It would raise healthcare costs for these individuals 

at a time when they are most often in need of saving. 

In fact, the Kaiser Family Foundation estimates that two-thirds 

of 65- and 66-year-olds——and that is 3.3 million people——would 

have to pay on average $2,200 more dollars for coverage than they 

would if they were on Medicare. So I would like to ask you, Dr. 

Moon, to speak to the policy effects of raising the Medicare eligibility age. 

Ms. MOON. Congresswoman, I agree with you that raising the 

age of eligibility has a lot of problems, particularly for the modestincome individuals who would find it difficult to afford that. Higher-income individuals now actually are pretty well taken care of by 

this because we have a Medicare secondary payer program in 

which if you have insurance through your employer and you are 

still employed, Medicare is secondary, and it is not very costly at 

all. 

Moreover, you would keep eligible those who are disabled in the 

program who are 65 and 66, and they are the expensive folks, so 

you wouldn’t save very much money, but you would put at considerable risk folks who wouldn’t qualify for disability, wouldn’t qualify for low-income protections, and would have to pay these substantially higher premiums to get their insurance somewhere else. 

62 

Mrs. CAPPS. Thank you. You know, I have a Kaiser Family Foundation chart here that I would like to submit for the record that 

shows that Medicare beneficiaries aged 70 and over account for 63 

percent of Medicare spending, with persons with disabilities accounting for another 22 percent. Aren’t most of the costs in Medicare programs generated by those older than 67? 

Ms. MOON. Yes, they are, and when you take the 65- and 66-year 

olds out of the program, the other thing that will happen is the 

premiums will go up in Medicare for everyone else because you are 

taking inexpensive people out of the program and leaving only the 

more expensive people in the program, another unintended consequence. 

Mr. PITTS. Without objection. We will enter that into the record. 

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

Mrs. CAPPS. Thank you very much. 

Mr. PITTS. The gentlelady yields back. 

The chair recognizes the gentleman from Indiana, Dr. Bucshon. 

Mr. BUCSHON. Mr. Chairman, I was a practicing cardiovascular 

and thoracic surgeon for 15 years prior to coming to Congress, so, 

first of all, I would like to say I am grateful to be on the committee 

and on the subcommittee and discuss this very important topic. 

Briefly, I am going to comment on another thing that we are not 

really talking about today but to help the Medicare program is to 

really get overall healthcare costs, bending the cost curve; price 

transparency; quality transparency; work towards a more marketdriven economy in health care versus a price-fixed economy; of 

course, tort reform to decrease the cost of defensive medicine, 

among many others. Coordination of care is very important, including coordinating medical records, electronic medical records, to be 

able to communicate with each other. This is a significant problem 

even within my own community. 

With that, Dr. Rivlin, in Senator Lieberman’s testimony, he 

states that if we do nothing, Medicare Hospital Insurance Trust 

Fund will become insolvent at some point in the next decade. That 

means it will have exhausted its reserves, and it will pay out more 

in claims than it receives in taxes. As a former CBO Director, how 

real do you take this threat if Congress fails to act to improve the 

financing of the Medicare program? 

Ms. RIVLIN. Oh, it is very real. Now, there isn’t an exact dropdead date. We change that estimate every year, depending on how 

rapidly costs are going up, but it is clear that on almost any trajectory you can imagine, that we will not have enough revenues coming in to support the current program for beneficiaries. Now, that 

doesn’t tell you what to do about it, but it is a real problem. 

Mr. BUCSHON. And what might be the result of that to seniors? 

Say that did happen, the next day, what would happen? What 

would be necessary with the program if we didn’t change it and it 

got to that point? 

Ms. RIVLIN. Well, you are assuming that Congress doesn’t do 

anything. The Congress would do something, but it would be more 

expensive to wait than to gradually phase in the kinds of reforms 

that we have been talking about today, which we all hope will 

make the health system more efficient and give the beneficiaries of 

Medicare better care for less money or less rapidly increasing costs. 

63 

Mr. BUCSHON. The Congressional Research Service in a memo 

dated April 16, 2012, opined on what would happen should Congress fail to address the coming bankruptcy or insolvency date of 

the Medicare Hospital Insurance Trust Fund, and I quote, There 

are no provisions in the Social Security Act that govern what would 

happen if insolvency were to occur. For example, there is no authority in the law for the program to use general revenue to fund 

hospital services in the event of a shortfall. Plainly put, Medicare 

is not authorized to pick which claims to pay and which not to pay 

in the event the program no longer has funds to cover overall costs. 

Senator Lieberman, on that point, which I think is very important, if we do nothing, the Medicare Hospital Insurance Trust Fund 

will become insolvent. The Congressional Research Service says 

that there is no authority for Medicare to pay hospital claims in 

the event the program does go insolvent. I think you will probably 

agree with Dr. Rivlin that the problem is real, but how might this 

impact if there isn’t action, how might this impact access to health 

care for senior citizens? 

Mr. LIEBERMAN. Thanks, Doctor. 

The problem obviously is real statistically, as Dr. Rivlin said, 

under almost any imaginable set of scenarios. This prospect, Dr. 

Rivlin is probably right, in an atmosphere as we got up to midnight 

and it looked like the Hospital Insurance Trust Fund was going 

bankrupt, Congress would probably come in and fix it. But you just 

think about the instability that would cause in our healthcare system and the high anxiety it will cause among seniors. So this is 

a question of whether, like so many, whether Congress and the Executive work together to solve a problem before it becomes a crisis 

or a catastrophe, because, inevitably, that is what is going to happen. The people that have spoken today I respect. Obviously, to fix 

this you have got to ask people to do things they don’t want to do. 

Dr. Coburn and I, I think, came up with a proposal that was ultimately pretty progressive and tried to share the responsibility for 

avoiding the catastrophe that you described. If that catastrophe 

was not on the horizon, of course, none of would do any of this. We 

would just keep going along, but that is putting our heads in the 

sand, and that is not what I know any of you came here to do. 

Mr. BUCSHON. I think we can make the case for incremental reform, and the SGR proposal may be a great opportunity. 

I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

I now recognize the ranking member of the full committee, Mr. 

Pallone, for 5 minutes of questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

I have been going back and forth between the other subcommittee; so I apologize for that. But I do want to state for the 

record that even though I have a ‘‘D’’ next to my name, I do not 

associate myself with the comments of two witnesses here today. 

While I respect their prerogative to be here, I don’t believe that we 

need to cut Medicare any further, especially on the backs of seniors. Robbing Peter to pay Paul is how I coin it, and I am deeply 

opposed to many proposals discussed here today. If we insist that 

we have to pay for the SGR fix bill, revenues and other offsets outside health programs should be on the table. And, unfortunately, 

64 

all too often around here, our health dollars are used to pay for 

nonrelated bills, tax bills in fact, and the reverse should be the 

case. 

So, Dr. Moon, if I could ask a question, my Republican colleagues 

have proposed keeping tax levels at about 18 percent of GDP, 

which is in line with the average level 60 years ago. What we have 

known about the aging of poor populations and the increasing need 

for healthcare coverage under Medicare, which I might point out is 

a demographic problem, not a cost control problem, is it realistic 

to keep revenues at that level? That is my first question. 

Ms. MOON. I don’t believe that it is realistic to keep revenues at 

that level if your goal is to have a healthy and viable Social Security, Medicare, and Medicaid program that serves this population. 

Interestingly, if you look at polling of citizens, they all say they 

are willing to pay additional taxes to make sure that these programs remain healthy. We also know that when Medicare was 

passed in 1965, people talked explicitly about the fact that there 

was going to be an aging of the population. The worker-to-retiree 

ratio was going to change. This was all known, and what was said 

at that point in time is that revenue increases would be necessary. 

Payroll tax rates would have to go up. Because they did not want 

to have them be so high in the beginning to be a drag on the economy, they thought this was better to be done in gradual increments 

over time. 

I believe that revenues need to be thought of as part of the package. I believe, even though I am a very strong supporter of beneficiaries and protecting the beneficiaries, that as a society, we think 

about what is the fairest way to ask people to pay for programs 

that we value as a society. And if that is partially from beneficiaries and partially from revenues, I am fine with that, but I 

think taking one side off the table and saying we are not even 

going to discuss it is very poor policy and not what the American 

public really wants to see happen. 

Mr. PALLONE. Well, thank you. 

Let me ask you another question. In Congress we have been 

passing these so-called doc fixes to the SGR for more than 10 years. 

We have been patching the SGR for so long that the Congressional 

Budget Office doesn’t even take seriously the possibility we won’t. 

Is it fair to say that the SGR has become a budget gimmick? Isn’t 

it more fiscally responsible to pass the repeal-replace legislation 

without paying for it than to not pass it at all? 

Ms. MOON. Well, in many ways, that becomes a political issue. 

When I look at what Part B is all about, it says that you are supposed to pay for Part B out of general revenues and premium increases from beneficiaries as the costs go up over time. That will 

happen naturally if you change the SGR. There is nothing in the 

law——people want to talk about the law and the trust funds and 

so forth——that require you to pay for it. 

If as a Congress the Congress decides it wants to pay for things 

going forward, I don’t have a problem with that. My problem is 

then to say that it can only come out of beneficiaries as a solution 

I think is way too narrow a reading of what is good public policy. 

Mr. PALLONE. Let me try to get this last one in. My Republican 

colleagues insist that we pay for the SGR repeal. However, they 

65 

had no problem voting to increase the deficit when it was politically convenient. For example, last week they passed another ACA, 

you know, the 30-to-40-hour rule that would cost $53 billion. And 

they didn’t pay for that. And more than 50 times, they repealed the 

Affordable Care Act. And that would have cost the country more 

than $100 billion each time. So these doc fix patches have cost the 

American people $169.5 billion more than the $144 billion cost of 

the bipartisan, bicameral repeal. If we don’t do our job and pass 

the SGR repeal, how much more money will be wasted that could 

have been used for the permanent fix? 

Ms. MOON. Kicking the can down the road, as people have said, 

and having only temporary fixes is a really poor way to do policy. 

It is the absolute worst of all possible options, I believe. On the 

other hand, you also don’t want to see the SGR go into effect and 

slash payments to physicians and have people defect from the 

Medicare program. A question, I think, that you raise is a very legitimate one in terms of what is most important and how to 

achieve change. Just as I am opposed to having beneficiaries pay, 

I also think good policy means you do need to look at what you are 

going to do instead of this because we do make these decisions that 

affect health care going forward, but I think that there are a lot 

of solutions that one could look at and a lot of changes that need 

to be looked at, not as a way to pay for another fix but as policy 

unto themselves. If we think that raising taxes, there is a good reason to do it for some purpose, if we think that cutting benefits has 

a good purpose, those should be done on their own merits and not 

just because you are using them as an excuse to get another desirable policy change. 

Mr. PALLONE. Thank you. 

Thank you, Mr. Chairman. 

Mr. PITTS. The chair thanks the gentleman. 

I now recognize the gentlelady from Indiana, Ms. Brooks, 5 minutes for questions. 

Mrs. BROOKS. Thank you, Mr. Chairman. 

I happen to be one of the members of this subcommittee that 

does believe we need to explore ways to pay for this, and I would 

like to start out with Dr. Rivlin, because based on the breadth of 

your experience and your time working as an honest, data-driven 

policy expert and studying bipartisan manners of doing things, 

what would you say is the best chance and the best package that 

we could put together in a bipartisan way to pay for the offset of 

the SGR? If you could be queen for the day and pick——and I know 

you have mentioned a few things already——but if you could put 

together the package that you would like to see us start with, what 

would be in that package, Dr. Rivlin? 

Ms. RIVLIN. Well, there would be quite a few items, and I would 

put in the increasing premiums at the high end. I would put in accelerating the transition to——accelerating the incentives to payment reform that I think is good in itself and would generate the 

savings. And I would put in rewarding the use of generic drugs 

more. I would put in more competition, competitive bidding, starting with lab tests, but you can use competitive bidding in quite a 

lot of things that Medicare providers buy. But I would put the biggest emphasis, I think, on the transition to alternative payment 

66 

models because that is not on the backs of beneficiaries. Beneficiaries will benefit if they have better coordinated care and care 

that is directed toward outcomes rather than just more services. 

Mrs. BROOKS. And I am glad that you emphasized that at the 

end because the proposals that you put forward would not be to the 

detriment of beneficiaries in your studies. Is that correct? 

Ms. RIVLIN. Yes. Except for the increase in premiums, I don’t 

think the things that we are suggesting are on the backs of beneficiaries, as you have said. 

Mrs. BROOKS. And, Senator Lieberman, knowing the congressional calendar the way that you do and based on your experience, 

and you have more experience——I am just starting my second 

term——negotiations on something as complex as this, binding the 

office offsets we believe necessary to pay for SGR——most of us believe——how important is it that we begin to work now on this, 

and what advice would you have for this subcommittee and how we 

should accomplish this task? 

Mr. LIEBERMAN. Thanks very much for the question. I mean, obviously, the sooner the better because the session moves on, but 

also you are facing the SGR deadline, which will be another crisis, 

and you will be into another time when people will be attaching all 

sorts of things to it and holding up action. And meantime doctors 

and beneficiaries will be very anxious about what is going to happen, so I would say the sooner the better. 

The second is to acknowledge as you begin to negotiate that you 

have achieved something quite significant and a bit unusual in the 

current mood in Congress, which is you have agreed on an SGR replacement and reform. I would say that to finance it, I personally 

have said that I think you have to offset it, and, frankly, beyond 

the philosophy or ideology of it, I don’t think it is going to pass if 

you don’t offset it so you have got to deal with that reality. And 

then it is a question of finding a balance of ways to do so. 

Incidentally, the proposal I have talked about, it doesn’t only, it 

doesn’t even primarily build on asking beneficiaries to do more. It 

asks people based on their income to do a lot more. I think one 

thing that is missed here, Mr. Chairman, Mr. Green, is that in the 

current situation, most people don’t realize——but I know the 

Members do——that most of Part B, doctors’ insurance, 75 percent 

is not funded by payroll taxes; it is funded by general revenue. And 

more than 80 percent of Part D, prescription drug, also funded by 

general revenue, tax revenue. That is fairly progressive, but it also 

hits a lot of middle-income people. Therefore, it is not as if, if you 

don’t do something here to ask a little more of beneficiaries and 

more of people of higher income, that the money is just going to 

come down from heaven. The general taxpayers are going to be 

paying more than their fair share. 

Look, you have been all through this. When the system works, 

people put the national interest ahead of everything else, and their 

constituents interest even though it is not short term, which this 

program is going to go belly up unless there is a compromise agreement to save it. 

Mrs. BROOKS. Thank you. Thank you for continuing to care and 

to share with us your advice. 

Thank you. I yield back. 

67 

Mr. LIEBERMAN. Thank you. 

Mr. PITTS. The chair thanks the gentlelady. 

I now recognize the gentleman from Massachusetts, Mr. Kennedy, 5 minutes for questions. 

Mr. KENNEDY. Thank you, Mr. Chairman. 

Thank you, Ranking Member. 

And, once again, thanks to the witnesses for your testimony. 

Thank you for your service and all the work that you have dedicated to these important issues. Thank you for sticking around so 

long this morning. 

It is a nice thing to do when you get all the way down to this 

end. So I appreciate it. 

Dr. Moon, there have been a number of comments today and we 

have heard from a number of folks, both elected officials and policymakers, that have suggested that the financial Outlook for Medicare is bleak, that it is potentially near bankruptcy, indicating that 

without urgent action, the program won’t be financially solvent in 

the near future. That has been at times used to justify some pretty 

significant cuts to the program. Can you help us understand the financial health of Medicare and what fiscal challenges and what 

kind of time frame we are looking at in terms of ability for current 

Medicare revenues and the Medicare Hospital Insurance Trust 

Fund to continue to cover the cost of the program? 

Ms. MOON. The Medicare program and the Social Security program are both very different than other parts of the Federal budget 

because we look 75 years ahead and try to figure out what is happening in these programs. Technically speaking, the spending on 

defense faces insolvency at the end of this fiscal year because you 

have to fund it. That is not the case for Medicare and Social Security, and in many ways, I believe the trust funds were established 

to try to be an early warning device and not as a bludgeon to say, 

you are going to have to cut the program, but rather to say, what 

does it look like it will take to continue forward with the program? 

Then it is totally legitimate to ask when that outlook becomes 

bleaker, what should we do? Should we raise taxes? Should we cut 

benefits? Should we find others ways to change the program to improve it. I don’t think anyone here would disagree that if you could 

find ways to make Medicare more efficient and more effective, we 

should do that in a heartbeat. The question is when you have done 

that as much as you can, then who do you hold accountable? Do 

you say, beneficiaries, you are the ones on the hook for this, or, as 

taxpayers, we are also on the hook for this, and I believe it has to 

be a shared responsibility. I believe, therefore, that it is convenient 

sometimes to talk about the trust fund as forcing us into action, 

and that can be used very effectively. It can also be used to justify 

poor policy as well in an emerging situation. 

It is also the case that the trust fund balance looks better and 

worse. I was a public trustee from 1995 to 2000, and my husband 

always likes to say I saved the program, that it went from 4 years 

before bankruptcy to 37 years. And it had almost nothing to do 

with me. It had to do with policy changes that were made, most 

of them in terms of improving the program over time and not penalizing beneficiaries. 

68 

Mr. KENNEDY. Just kind of bouncing off that for a second, Doctor, 

and some comments by the ranking member of the committee, Mr. 

Pallone, and actually Mr. Schrader as well, both of whom, and I 

am sure others have as well, mentioned the impact of the Affordable Care Act on the solvency. Could you discuss that a bit? And 

I understand that the trust fund is now in good standing for an additional 4 years out to 2030, given current estimates. But given the 

fact that there have been some savings realized, particularly over 

the past several years, forecasting that forward, what do you anticipate? 

Ms. MOON. Forecasting forward is always very difficult because 

there are a lot of things that can happen. No one expected Medicare to slow down as much as it did, although it was kind of a 

happy combination of several things——or an unhappy combination, I might say, in terms of the poor health of the economy certainly contributed as well as these reforms that we think are important. 

I believe we are on the cusp of making major changes in health 

care because we have to. Health care is expensive for everyone, not 

just for the Medicare program, but for all of us who use healthcare 

services. We need to get those costs under control. And I believe 

that we are now serious as a country about doing that. The ACA 

put in place a lot of reforms, not all of them aimed just at Medicare 

but aimed at changing the healthcare system overall that show 

promise and are supposed to be evidence-based in moving forward. 

There are going to be fits and starts. Some of them are going to 

work well. Some of them are not. We are not going to be able to 

put anything on automatic pilot. We are going to have to keep 

working at it. 

But I am reasonably optimistic that we are going to find ways 

to keep the costs of health care within bounds over time and that 

the health of the trust fund will look pretty good even if we don’t 

do a lot of other things except work on these reforms over time. 

Mr. KENNEDY. Thank you, Doctor. 

My time is up. I yield back. 

Mr. PITTS. The chair thanks the gentleman. 

I now recognize the gentleman from Texas, Dr. Burgess, 5 minutes for questions. 

Mr. BURGESS. Thank you, Mr. Chairman. 

Again, thanks for doing this hearing so early in the new term. 

Senator Lieberman and Dr. Rivlin, let me just ask you a question 

because I wasn’t here when Medicare started. I am not implying 

that either of you were. 

Mr. LIEBERMAN. I want to be clear that I wasn’t either. 

Mr. BURGESS. But my study of the situation, the Medicare Part 

B premium was originally 50 percent and was later reduced by 

Congress to 25 percent. Is that not correct? 

Mr. LIEBERMAN. That is correct. 

Mr. BURGESS. There has already been a major adjustment as to 

where those moneys actually come from. I do want to add just that 

it has been brought up by several other Members, but I think it 

is important that we pass this. It was important last year. I regret 

very much that the Senate did not attach as much importance to 

it as the House did. I think there was a real opportunity that was 

69 

missed last year, but it is up to us to make our own opportunity 

this year. We do have to get to 218 votes in the House. Last March, 

we got a vote on the repeal of the sustainable growth rate, the essential policy that I already referenced, and it attracted every Republican vote and two dozen Democrats. It was a significant vote. 

That path to 218, I believe includes a path that is offset. And the 

overseas contingency operation money, maybe, maybe not, but I 

think those contingencies overseas are actually happening even 

this morning so that money may, in fact, no longer be there. 

Senator Lieberman and Dr. Rivlin, you have both been there; Dr. 

Rivlin, in the administration, and Senator Lieberman in the Senate. You have been there when big deals were done, when hard 

things were done, hard legislation was passed, and people had to 

come to agreements and compromises. Do you think that with what 

you know of where we have been already with this, isn’t it now 

time to get that deal done and to get those compromises done? Can 

you foresee a path forward where this one can actually move? 

Ms. RIVLIN. I can. I am also an optimist about these things, but 

there are many examples, welfare reform, for example, wasn’t anything that either side exactly loved, but it did get done. And I think 

you are at that moment when you could have the advantages of fixing the SGR and also putting the whole health system on a better 

track. 

Using the overseas contingency fund seems to me to forego the 

opportunity that you have to pay for the SGR repeal with pay-fors 

that are actually good health policy. That is what you ought to be 

looking for, and I think there are quite a large number of them. 

Mr. LIEBERMAN. Thanks, Congressman. 

It seems to me that, again, I repeat, you have taken a big first 

step in the agreement on SGR replacement. Now, in a way, you are 

at the hard part, which is, how do you pay for it? But if you have 

got the will, you can do that. There are all sorts of ways to pay for 

it reasonably. 

Now, the reason I am proposing that, if I may cite again the philosopher of Chicago, Mr. Emanuel, ‘‘A crisis is a terrible thing to 

waste.’’ You have got a crisis here——— 

Mr. BURGESS. That actually didn’t work out for us so well. 

Mr. LIEBERMAN. Yes. No. I remember that. I was hoping your 

memory was short, but the reality is that——let me cite these 

numbers that really struck me when I was working with Senator 

Coburn. So our proposal was estimated by the various authoritative groups to save between $500 billion and $600 billion over 10 

years, but here was the stunner: $10 trillion reduction in the 75- 

year projection of unfunded liabilities of Medicare. 

So if you use this SGR crisis, if I can refer to it that way, and 

then fund your answer to the problem, your solution to the problem, with some Medicare reforms you can agree on, then you are 

going to have an——you are not only going to solve that problem, 

you are going to have an enormous long-term effect on the viability 

of the Medicare fund. 

And, look, the public is——it is sort of unconventional politics. 

Maybe I see this more from outside than I did inside. I think the 

public really wants Members to do things that aren’t conventionally political, and say no to some groups but say yes to the future 

70 

of Medicare, to the future of the country, in the sense that it is not 

going to be burdened by unbelievable debt. 

Mr. BURGESS. Dr. Rivlin, I just want to point out that along the 

lines of being an optimist, I have introduced an SGR repeal every 

term in Congress since 2003, even——— 

Ms. RIVLIN. Good. 

Mr. BURGESS. So we only had to push one stone up one hill. 

Ms. RIVLIN. Someday it will happen. Maybe this day. 

Mr. LIEBERMAN. You deserve a medal. 

Mr. PITTS. The gentleman yields back. 

The chair recognizes the gentlelady from Florida, Ms. Castor, 5 

minutes for questions. 

Ms. CASTOR. Well, thank you, Mr. Chairman. 

And, Mr. Chairman, and, to Ranking Member Green, thank you 

very much for making this one of our first hearings of the new session. 

There is nothing more nonsensical than the SGR patch from year 

to year by the Congress. It is absurd. And we need to act now to 

permanently repeal it. And time is of the essence, because the current patch runs out at the end of March. And I am heartened, because we did have a bipartisan bill last term. We came very close. 

And we need to work together to get that bill on the floor and fix 

this once and for all. 

That bill is important, because it repeals the SGR and it establishes a new framework for reform, what Dr. Rivlin has said, more 

efficiencies, and Dr. Moon says, a greater coordination of care. It 

simply now begins to transition Medicare from a volume-based system to one on value, coordinating care, the new medical homes. We 

are smarter now. We have learned the lessons of the past, and we 

need to put them to work. 

I would encourage my Republican colleagues, as they move towards the budget season, that they dispense with the very simplistic balance sheet policy that says Medicare should be a voucher 

system or premium support, because it simply shifts the cost to the 

beneficiaries; it does not solve the overarching issues of what we 

have learned over time. And it is an important——in reform, the 

much more difficult piece is going to be reform. And it is not one 

size fits all. It is pharmaceutical costs. It is working to weed out 

fraud and abuse. It is a lot of the ideas that have been floated 

today, but one idea that was floated that I think we need to set 

the record straight on right now is that asking beneficiaries to put 

more skin in the game, whether it is the Medigap or others, is 

going to save us money, because I know a lot of economists believe 

beneficiaries need to have more skin in the game, but the National 

Association of Insurance Commissioners reviewed the literature 

just recently and put together an expert analysis. They were unable to find any evidence that cost sharing encouraged appropriate 

use of healthcare services. In fact, they found that cost sharing 

would result in delayed treatments that could increase cost and result in adverse health outcomes. 

Dr. Moon, are you aware of this analysis? And do you 

agree——— 

Ms. MOON. I am aware of this analysis and analyses that go back 

many, many years to where what you find in many cases is the 

71 

way that cost sharing works is it pushes costs onto someone else. 

And if they can’t afford to pay, then they don’t get the care. 

It very seldom discourages use of unnecessary services. It, like 

the SGR, is a really broad-based penalty, where you are trying to 

discourage behavior that is a much more subtle behavior. You don’t 

want people not to go to doctors. You want people not to get unnecessary care. And to have an across-the-board requirement that people pay X percent or put certain amount of skin in the game just 

doesn’t get you there. 

And, in particular, remember that most healthcare spending is 

for people once they are well in the grips of the healthcare system, 

and they are not asking any questions about use of services. Those 

are the very sick. Those of us who are healthy account for such a 

trivial part, that having us be a little bit savvier consumers just 

doesn’t really work out. 

Cost sharing just is a pretty unsubtle mechanism to use. There 

may be times when you use it, and we certainly use it because we 

are asking people to share in the costs of healthcare, but let’s not 

assume that it is this subtle mechanism. It is simply saying, we are 

going to ask you to pay more instead of us. 

Ms. CASTOR. Thank you very much. 

And I would like to ask unanimous consent, Mr. Chairman, to 

submit into the record the analysis and letter from the National 

Association of Insurance Commissioners on the topic. And America’s Essential Hospitals also have submitted a letter for the record. 

Mr. PITTS. Without objection, so ordered. 

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

Ms. CASTOR. And I will just make one final point before I close, 

and that is to really encourage my colleagues on the Republican 

side. We were so close last year, and the SGR repeal was combined 

at one point with one of the——how many, 50——in the series of 

repeal of the ACA, wholesale repeals. This is too serious to do that 

again. We are ready——we are so close. And the longer we put it 

off, the more expensive it will be, so I will encourage us to get to 

work and really shoot for resolution by the March 31st deadline. 

Thank you, and I yield back. 

Mr. PITTS. The chair thanks the lady, and now recognizes the 

gentleman from Illinois, Mr. Shimkus, 5 minutes for questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

And I also want to thank you for staying a longer period of time. 

I am a fairly senior Member, but I didn’t get here on time, so I got 

pushed down to the bottom. 

In fact, Senator Lieberman, I was here in 1997 when we attempted to balance the budget, and the SGR arrived. 

Mr. LIEBERMAN. Right. 

Mr. SHIMKUS. And we have been fighting the battle ever since, 

so I am part of the problem of where we are at today. 

Mr. LIEBERMAN. Both of us are. 

Mr. SHIMKUS. And so I thought——Tom Coburn served in this 

committee when he was a House Member, and we know him well. 

And, Dr. Rivlin, I was one of the 16 Republicans who supported 

the Simpson-Bowles——— 

Ms. RIVLIN. Good. 

72 

Mr. SHIMKUS [continuing]. Vote that we had on the floor. There 

was only 38 Democrats who supported that, and 54. Just shows 

you the challenges we have. 

Mr. LIEBERMAN. Right. 

Mr. SHIMKUS. I always put a chart up on the screen. It is a budget chart; I think it is 2013. And it just highlights what you all 

know and the message that we have got to continue. I think former 

chairman of the Joint Chiefs of Staff said the debt is a threat. Now 

we are at $18 trillion. So when we have these government shutdowns and battles, it is only on the blue portion. The red is running uncontrolled. It is an entitlement system, mandatory spending; it is things that we don’t get control over. 

So I just think it is wonderful that you are here, because the proposal is, if I understand, listening to a lot of great questions, is that 

we have an opportunity to use the SGR debate and tweak the mandatory spending, or the entitlement side, which has to be done. We 

just can’t no longer continue to go down this path. And I do think 

there are people willing to, but I was talking to Dr. Burgess, and 

I asked him, do you really think we could tie these two together? 

And you hear some of my colleagues, no, don’t touch it. Let’s fix 

SGR. We will live to fight on the mandatory spending another day. 

So insurance companies would do actuary tables. They would 

look at the amount of money they would have available to meet 

their obligations. So the question is tweaking that. And the benefits are really long term. 

I think, Senator Lieberman, on your opening testimony you 

said——well, you mentioned $10 trillion down. 

Mr. LIEBERMAN. Yes. 

Mr. SHIMKUS. That is not chump change. That is real money here 

in Washington these days. So one of the simple questions is——and 

again, and, Senator Lieberman, in your testimony, you mentioned 

the Social Security Administration. There are a lot of seniors whose 

annual income is over $1 million, so can’t we ask them to pay a 

little bit more into the Medicare beneficiary that they are receiving 

if they are taking that? I don’t think that is out of line. In fact, 

these entitlement programs are for the most needed. There is always this debate. Well, they paid in it, they are entitled to it, so 

they get it, regardless of how many have been blessed by this country and the largesse of their ability to accrue wealth, and I think 

we better have it for the poor. 

Senator Lieberman? 

Mr. LIEBERMAN. Look, we should ask the wealthy to pay more. 

And in the proposal that Senator Coburn and I put forward, we did 

ask the wealthy to pay more. Frankly, it is still——Medicare is still 

a better deal than they could generally get in the private sector. 

And, again, I would say that because Part D and Part B are 

mostly paid for by general tax revenue, and I will——a disproportionate share of the general tax revenue comes from the wealthy. 

They are paying for a lot of the program. But I do want to come 

back to what I said: It is not as if the current system is fair to everybody. The middle class is also paying a lot of taxes, and those 

taxes are paying for most of Part B doctors and Part D prescription 

drugs. 

73 

So sure, I mean, it is consistent with our whole system. We 

should arrange to fix this in the fairest and, dare I use the word, 

most progressive way we can. 

Mr. SHIMKUS. And, Dr. Rivlin, you talked about how raising 

taxes might be counterproductive in your testimony. Did I read 

that correctly? 

Ms. RIVLIN. I don’t remember saying that, but I am in favor of 

more revenues, actually, in general, but in a balanced way, in the 

way that we did in Simpson-Bowles and the Domenici-Rivlin plan, 

which involves major tax reform, getting rid of many of the loopholes that benefit upper-income people. If you do that right, you 

can actually lower the rates. 

Mr. SHIMKUS. Right. Right. Well, again, these are debates that 

I have been yearning for, for my now 19th year of being here in 

Washington. We just can’t hide underneath the rock. And I am 

glad you have come, and I look forward to working with you. 

Thank you very much. 

Mr. LIEBERMAN. Thanks, Mr. Shimkus. Seize the moment. 

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

the gentleman from New York, Mr. Engel, 5 minutes for questioning. 

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

for holding this hearing. 

And congratulations to Mr. Green for being in his position. And 

I want to thank all the panelists for really good testimony. 

My good, dear friend Joe Lieberman and Dr. Rivlin, Dr. Moon, 

thank you so much. 

What strikes me——because the questions I had to ask have long 

since been asked and answered——what strikes me in listening to 

the panel is you are all saying different things, but you are also 

really saying the same things. And I really agree with much of 

what each of you has really said. 

Dr. Rivlin, you just finished the last question with something I 

was going to ask. You know, yesterday President Obama spoke at 

the State of the Union and talked about a middle class tax cut and 

he talked about funding colleges, community colleges, with free tuition. And I agree with both of those proposals. And he said that 

in doing that, he would get the money by asking the very wealthiest to pay just a little bit more. 

You, Dr. Rivlin, just spoke about general tax revenues. 

You know, it seems to me there is a lot here that we all agree 

on both sides of the aisle. We recognize that the SGR needs to be 

repealed and reformed, that it needs to be fixed permanently, and 

that this is a very good opportunity to fix Medicare. Joe Lieberman, 

I think, laid out a compelling case about if we just do nothing, we 

are really going to be in trouble. 

And if we are going to be honest with each other, my colleagues, 

there is plenty of blame to go all around. On this side of the aisle, 

we won’t even look at some of the things that people say we need 

to have if it is going to be balanced. And on the other side of the 

aisle, you won’t even consider any kind of tax increases whatsoever. And the truth of the matter is we have to take our blinders 

off and kind of look and see. 

74 

I agree that the beneficiaries should not bear the major cost of 

it, but I wonder if you could, Dr. Rivlin, just elaborate a little bit 

on what you started to say in answer to the last question about 

general tax revenue, about changing some of that to get more 

money into the Medicare program. 

Ms. RIVLIN. Well, I favor, as I said, comprehensive tax reform, 

and I think you can do that in a way that raises more revenues 

and is more progressive. That is an OK term. But I would caution 

this committee against getting too far afield. You have already 

done a really constructive piece of work in this tri-committee bill. 

Strengthen it; and pay for it; and pay for it in a way that accelerates the payment reform in Medicare and makes Medicare a more 

efficient program. And you can find various ways of doing that, but 

I wouldn’t take on the burden of reforming the whole tax system 

in this context, because you have got a big opportunity to do something very important right here in this committee. 

Mr. ENGEL. Well, I do think that if we are really going to hopefully down the road have a much greater fix, that we are going to 

have to talk and be honest about general tax revenues. 

Senator Lieberman, I am wondering if you could elaborate a little 

bit more on, in your proposal, general tax revenues were not a part 

of this. Is there a reason why? And do you think we could combine 

the two——— 

Mr. LIEBERMAN. Right. 

Mr. ENGEL [continuing]. And perhaps come up with a——— 

Mr. LIEBERMAN. Well, it is a good question. Thanks, Congressman. 

We were working really as best we could within the system, so 

we added some progressive elements to it. I mean, we asked the 

people, based on income, to pay more for Part B and Part D. We 

set a limit of out-of-pocket expenses for people at $7,500, which 

was something I appreciated very much that Dr. Coburn was willing to support, but we raised that up to $22,500 for individuals 

who make more money. So we tried to be comprehensive about it, 

but I think the other thing that has to be recognized——I repeat 

myself, and I apologize——is that it is general revenues that are 

paying for most of Part B doctors and Part D prescription drugs 

now. 

The system is a fairly progressive system now, not just the Medicare financing but our tax system overall. I am not against tax reform that in some ways makes it more progressive. But that has 

to result from a give and take in which both sides feel that they 

are getting something that they believe in. 

Mr. ENGEL. And, just in conclusion, the truth of the matter is, 

I believe there are a lot of people on both sides of the aisle that 

have political courage to do the right thing, but you want to have 

the political courage and do the right thing if you know it is real. 

Mr. LIEBERMAN. You know it is real. 

Mr. ENGEL. It is real. 

Mr. LIEBERMAN. I agree. 

Mr. ENGEL. If you have political courage, but it is not real, it is 

really a lose-lose situation. 

Mr. LIEBERMAN. Yes. 

75 

Mr. ENGEL. And I think, I hope that we can make this real, because we do know that this can’t continue, and we don’t want to 

hurt the beneficiaries. Thank you. 

Mr. LIEBERMAN. I agree. It is great to see Mr. Kennedy here. 

There are some familiar names: Sarbanes, Matsui, Kennedy. 

But Teddy used to always say that, with his members of his committee particularly in the last period of his life——Mike Enzi, pretty conservative Republican——if we agree on 60 percent or 70 percent or 80 percent on this given issue, let’s do it. Let’s forget about 

the other 40, 30, 20 percent. And President Reagan said that too. 

He would much rather get 50 percent of what he wanted rather 

than sort of hold his flag high while he was going over the edge 

of a cliff. That makes a lot of sense. 

Mr. GUTHRIE. Thank you. 

The gentleman’s time has expired. 

I recognize Mr. Griffith from Virginia. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate it. This is 

a marvelous panel. I appreciate listening to your testimony here 

today. I am proud of the work that we have done over the last 2 

years, and hopefully we can finish it up this year. 

One of the champions in that cause in leading the way has been 

Dr. Burgess of Texas, and I accordingly now yield my time to the 

good doctor. 

Mr. BURGESS. Well, I thank the gentleman for yielding. 

I just have a couple of follow-up things that I wanted to cover. 

And it is really too bad that Mr. Shimkus has left, because I wanted to give him some comfort that this actually——— 

Mr. SHIMKUS. I am watching you. I have got your back. 

Mr. BURGESS [continuing]. That some of the changes that led to 

the SGR were actually implemented in Congress in 1988, and that 

led to the update adjustment factor that got us into some of this 

mess where we are. So I wanted to alleviate that burden from my 

friend from Illinois because I know he carries it around, and it is 

a very heavy burden. 

I also want to address the issue of, we talk about how Medicare 

spending has been reduced. And, in many ways, it was a pleasant 

surprise in January of 2013 when the CBO came out and said, 

Hey, we put SGR repeal on sale. After the 2012 election, I had put 

a lot of hope in the fact that Governor Romney was going to win 

the election; Paul Ryan would be the vice president; we would have 

a full-throated implementation of premium support; and, over time, 

the SGR argument would simply go away, because premium support would replace it, there would no longer be a need for the SGR. 

Well, that didn’t happen. But then the Congressional Budget Office 

came to the rescue of SGR reform and put it on sale. 

But, yes, the recession may have caused part of that. The SGR 

itself may be responsible for some of the reduction. The Affordable 

Care Act, yes, it hadn’t really been implemented for all that long. 

But, 10 years ago, Part D happened, and a lot of us argued prior 

to the passage of Part D that, hey, if we pay for the Lipitor, there 

may be fewer episodes of congestive heart failure requiring hospitalization. And it is, in fact, and I have not seen any study now 

of the 10-year effect. Here is an interesting point. We are almost 

at the 10-year point of the implementation of Part D. Has anybody 

76 

gone back and looked at what were the actual savings? We were 

all told what it was going to cost. It didn’t cost that much. 

But there were actually some benefits, because when Medicare 

originally passed, it paid for the doctor visit, it paid for the hospitalization, it didn’t cover prescription drugs. My dad was a general surgeon. I used to tease him; I said, Well, back then, you only 

had two drugs, penicillin and cortisone, and they were interchangeable. I know. He didn’t think it was funny either. But the prescription drug part of Medicare was an important change that needed 

to occur, and now we may be reaping the benefit from that. 

But it would also be a shame to let this moment——I appreciate 

so much your forbearance and your indulgence today——to let this 

moment pass without fixing this. The gentlelady from Florida said, 

Well, last time you put a pay-for on it, it was untenable. Might I 

remind everybody, it passed the House with that offset. And we can 

do that again. There are actually more of us now than there were 

last March, and we can pass it in a partisan vote, if necessary, but 

how much better would it be if we all sat down and did that very, 

very difficult, very troublesome, very nettlesome work of providing 

the offset and made this a meaningful and lasting solution to a 

very nettlesome problem? 

I will accept your observations. 

Mr. LIEBERMAN. Well, I say, Amen, really. The other thing I 

would say, you make a really important point——and, obviously, 

not every prescription that everybody gets reimbursed through Part 

D is exactly necessary——but overall, to me, it just seems——and 

we don’t really say this enough and appreciate it enough——axiomatic, really self-evident that the part of why, generally speaking, 

we are living longer is because of the positive impact of prescription drugs on the health of the American people, and Part D made 

those drugs much more accessible to many, many more people, millions more people. 

Ms. RIVLIN. Yes. Well, I would add my amen too, and the hope, 

as I have said before, that you seize this opportunity to move ahead 

and make Medicare——put it on a track to becoming a more costeffective program than it is because the pay-fors that have been 

suggested are not just beneficiary cuts. They really would move in 

the direction of making Medicare a more efficient program. 

Mr. BURGESS. I thank my friend from Virginia. 

I will yield back. 

Mr. GRIFFITH. I yield back. 

Mr. GUTHRIE [presiding]. Thank you, gentleman. 

Time has expired. 

Mr. Collins from New York is recognized. 

Mr. COLLINS. Thank you, Mr. Chairman. 

Since I am last, I will be as brief as I can, but as the junior 

Member here, in listening to this testimony, it has been an eyeopening discussion where we all agree that we need sustainability 

and we can’t keep kicking the can, as we have done with the SGR 

doc-fix that, Senator, you called broken and needs to be done away 

with. 

So here is my real question. I think what we are talking about 

is access. The difficulty of Medicaid is access. The doctors aren’t 

paid much. Therefore, doctors don’t see Medicaid patients. The fear 

77 

of the SGR implementation would be if a 21-percent cut took place, 

access would be problematic for our seniors. So that is——the overarching piece is access, and now we are into the details of pay-fors. 

And I certainly agree with Mr. Shimkus: Let’s make sure this is 

real, and it doesn’t add to the deficit and debt that our children are 

inheriting from us. 

So my question really, Dr. Rivlin, would be, when I look at our 

new program, a half of 1 percent increase for 3 or 4 years, then 

freezing that for the next 5 years, I am seeing a lot of long-term 

projections here that are talking about increases; we will fix it now, 

but then the increases the docs will see half of 1 percent a year, 

maybe 1 percent a year. 

Now, if we are in the inflationary environment we are today, 

which is all but no inflation, that is one thing, but I am curious, 

because you have spoken about access before all the way back to 

2002 when we first were facing a potential 2 percent cut, what do 

you think about the new payment plan and the fact that the increases are very small for the next 10-plus years, and could we be 

back having this discussion if inflation were to take off in any way? 

So just curious of your take on that. 

Ms. RIVLIN. You could be. I don’t see inflation as an imminent 

threat. And long before inflation generally comes back, I think you 

could get the whole health system on a better track such that almost everybody, and I don’t mean just Medicare beneficiaries, was 

in some kind of integrated health plan that was coordinating their 

care and giving them as good care as they could get but not wasteful and excessive care. 

Mr. COLLINS. Yes. 

Ms. RIVLIN. But I think you can move in that direction and that 

you have a way to do that starting with this bill that you have. 

Mr. COLLINS. Thank you. 

Senator, do you have any thoughts on that? 

Mr. LIEBERMAN. Well, I agree that this is the moment. 

Mr. COLLINS. No. My question was, are we at all at risk, do you 

think, fixing it now and we would be done with it——— 

Mr. LIEBERMAN. Right. 

Mr. COLLINS [continuing]. But then the payment schedule set 

going forth has such small increases——— 

Mr. LIEBERMAN. Oh, you mean in the current SGR replacement? 

Mr. COLLINS. Yes. Are we opening the door to a problem down 

the road? 

Mr. LIEBERMAN. It is possible, but I tell you, you have done 

something so significant that so improves on the status quo, and 

the repeated crises that called for the doc-fixes and the contortions 

that that invited here in both Houses of Congress by Members of 

both parties who took advantage of it and created a mess, really, 

in the public view, on balance, I don’t have any hesitation to say 

that I think what you have done is worth supporting. 

It is not perfect, but when was the last time any of us did anything perfect? It is an improvement, and it is a bipartisan, bicameral improvement. And Lord knows, it might just start a cycle 

of virtue here in accomplishment in Congress that would go on to 

other areas as well. 

78 

The people really need to be given a basis for hope, honestly, and 

you can begin it right in this subcommittee. 

Mr. COLLINS. Well, I agree. 

Your testimony has all been great today, and I personally want 

to thank you for staying over an extra half-hour, 45 minutes while 

we did this. 

And thank you, Chairman. I yield back. 

Mr. GUTHRIE. Thank you. 

The gentleman yields. 

We really do appreciate the panel, it was outstanding, outstanding testimony and very informative, and we do have a lot of 

work ahead of us. 

All members have been recognized. I want to remind the members they have 10 business days to submit questions for the record. 

And I ask the witnesses to respond to the questions promptly. 

And members should submit their questions by the close of business on February the 4th, 2015. 

And, without objection, the subcommittee will stand in recess 

until 10:15 tomorrow morning. 

Without objection, so ordered. 

[Whereupon, at 12:46 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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(97) 

A PERMANENT SOLUTION TO THE SGR: THE 

TIME IS NOW, DAY 2 

THURSDAY, JANUARY 22, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:15 a.m., in room 

2322, Rayburn House Office Building, Hon. Joseph R. Pitts (chairman of the subcommittee) presiding. 

Present: Representatives Pitts, Guthrie, Barton, Murphy, Burgess, McMorris Rodgers, Lance, Griffith, Bilirakis, Long, Ellmers, 

Bucshon, Brooks, Collins, Green, Schakowsky, Butterfield, Sarbanes, Matsui, Schrader, Kennedy, Cardenas, and Pallone (ex officio). 

Staff Present: Clay Alspach, Chief Counsel, Health; Leighton 

Brown, Press Assistant; Noelle Clemente, Press Secretary; Robert 

Horne, Professional Staff Member, Health; Tim Pataki, Professional Staff Member; Michelle Rosenberg, GAO Detailee, Health; 

Krista Rosenthall, Counsel to Chairman Emeritus; Adrianna 

Simonelli, Legislative Clerk; Heidi Stirrup, Health Policy Coordinator; Josh Trent, Professional Staff Member, Health; Greg Watson, Staff Assistant; Ziky Ababiya, Minority Policy Analyst; Tiffany 

Guarascio, Minority Deputy Staff Director and Chief Health Advisor; Ashley Jones, Minority Director, Outreach and Member Services; and Arielle Woronoff, Minority Health Counsel. 

Mr. PITTS. Ladies and gentlemen, we have floor votes coming up, 

so we are going to get started. The subcommittee will now come to 

order. 

Today is the second day of our 2-day hearing on the permanent 

solution to the SGR. Yesterday we heard from a distinguished 

panel of experts on SGR financing issues. Today we have a panel 

of interested stakeholders. 

Before I do that, we have a UC request, and I ask for unanimous 

consent to include the following statements for today’s hearing 

record from the American Academy of Family Physicians and the 

American Ambulance Association. Without an objection, so ordered. 

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

Mr. PITTS. We have on our second panel today six witnesses. Mr. 

Richard Umbdenstock, president and chief executive officer of the 

American Hospital Association. Dr. Geraldine O’Shea, first vice 

president of the American Osteopathic Association Board of Trustees. Dr. Alan Speir, the medical director of Cardiac Surgical Services for Inova Health System and the chair of the Workforce on the 

98 

Health Policy, Reform, and Advocacy for the Society of Thoracic 

Surgeons. Dr. Ken Miller, board president of the American Association of Nurse Practitioners. Dr. Barbara McAneny, chair of the 

American Medical Association’s Board of Trustees and CEO of the 

New Mexico Oncology Hematology Consultants; and Mr. Eric 

Schneidewind, president-elect of AARP. 

Hope I didn’t butcher your names too much. But thank you for 

coming today. Thank you for testifying. Your written statements 

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

to summarize your testimony, and your entire written statement 

will be made a part of the hearing record. 

So we will begin with you, Mr. Umbdenstock. You are recognized 

for 5 minutes for your summary. 

STATEMENTS OF RICHARD UMBDENSTOCK, PRESIDENT AND 

CEO, AMERICAN HOSPITAL ASSOCIATION; DR. GERALDINE 

O’SHEA, FIRST VICE PRESIDENT, AOA BOARD OF TRUSTEES, 

AND MEDICAL DIRECTOR, FOOTHILLS WOMEN’S MEDICAL 

CENTER IN CALIFORNIA; DR. ALAN SPEIR, MEDICAL DIRECTOR OF CARDIAC SURGICAL SERVICES FOR INOVA HEALTH 

SYSTEM, AND CHAIR, WORKFORCE ON HEALTH POLICY, REFORM, AND ADVOCACY, THE SOCIETY OF THORACIC SURGEONS; DR. KEN MILLER, BOARD PRESIDENT, AMERICAN ASSOCIATION OF NURSE PRACTITIONERS; DR. BARBARA 

MCANENY, CHAIR, AMA BOARD OF TRUSTEES, CEO, NEW 

MEXICO ONCOLOGY HEMATOLOGY CONSULTANTS LTD.; AND 

MR. ERIC SCHNEIDEWIND, PRESIDENT-ELECT, AARP 

STATEMENT OF RICHARD UMBDENSTOCK 

Mr. UMBDENSTOCK. Thank you very much. Chairman Pitts, 

Ranking Member Green, and distinguished members of the subcommittee, on behalf of the Nation’s hospitals, thank you very 

much for having me here today. 

Ensuring that physicians receive adequate reimbursement is important for patients and hospitals, and we support permanently replacing the Medicare sustainable growth rate, or SGR. We commend the Members of the House and Senate committees of jurisdiction, which last year unveiled legislation to fix the recurring physician payment problem by repealing the SGR formula. 

The bill, however, did not include suggestions on how to cover 

the costs of these proposals. The AHA cannot support any proposal 

to fix the physician payment problem at the expense of funding for 

services provided by other caregivers. Offsets should not come from 

other providers, including hospitals, who are themselves working to 

provide high quality, innovative, and efficient care to beneficiaries, 

but are already being paid less than the cost of providing these 

services. Congress needs to move away from this practice. 

Market forces and significant reforms in both the public and private sectors are actively reshaping America’s healthcare delivery 

system. In 2013, hospitals employed about a third of the Nation’s 

physicians, and this number is growing rapidly. To reduce hospital 

payments to prevent physician cuts is therefore counterproductive 

and would adversely impact the very physicians Congress is trying 

to help. 

99 

Hospitals’ ability to maintain the access to care their patients 

and communities expect is further threatened by repeated 

ratcheting down of payments for Medicare and Medicaid hospital 

services to pay for other priorities. 

Recognizing that the AHA cannot simply oppose hospital payment cuts without supporting other solutions, we would like to 

highlight policy changes where Congress could both positively impact Medicare’s finances and pay for a permanent SGR fix. Specifically, we recommend taking steps to promote and reward accountability and to use limited healthcare dollars wisely. 

Our recommendations are drawn from an AHA report entitled 

‘‘Ensuring a Healthier Tomorrow: Actions to Strengthen Our 

Healthcare System and Our Nation’s Finances,’’ which is appended 

to my written statement. Our recommendations are similar to ideas 

that have received bipartisan support from a number of commissions, lawmakers, and the administration, and would not only generate savings, but also put the Medicare program on firmer financial footing for years to come. 

First, modernize Medicare by combining Parts A and B with a 

unified deductible and coinsurance. Enrollees have conflicting incentives to weigh relative costs when choosing among options for 

treatment. Moreover, if Medicare patients incur extremely high 

medical costs, they can face a significant amount of cost sharing, 

because the program does not cap these expenses. This proposal 

would replace the current complicated mix of cost-sharing provisions with a single combined annual deductible covering all services in Parts A and B; a uniform coinsurance rate for amounts 

above that deductible, including the inpatient expenses; and an annual cap on each enrollee’s total cost-sharing liabilities. 

The administration also has proposed increased beneficiary cost 

sharing, such as increased Part B deductibles for new Medicare 

beneficiaries. The AHA agrees with the administration’s position 

that Medicare cost sharing, quote, ‘‘helps to share responsibility for 

payment of Medicare services between Medicare beneficiaries,’’ and 

that increased cost sharing will serve to, quote, ‘‘strengthen program financing and encourage beneficiaries to seek high-value 

healthcare services.’’ 

Second, make modifications to first-dollar Medigap coverage. 

Some Medigap plans cover all or almost all copayments, including 

even modest copayments for routine care that most beneficiaries 

can afford. This practice gives beneficiaries less incentive to consider the cost of services, leading to higher Medicare utilization, 

costs, and Part B premiums. There are various proposals for improving incentives under Medigap. Specifics on the structure of 

first-dollar Medigap changes can be discussed and determined by 

the Congress, and the AHA is open to the administration’s and 

CBO’s proposals. 

Third, increase income-related premiums under Medicare. The 

administration in its 2014 budget proposed doing this based on 

Medicare beneficiary income, and this is another approach the 

AHA believes Congress should explore. 

And, fourth, reform the medical liability system. Hospitals and 

physicians continue to face skyrocketing costs for professional liability insurance. 

100 

In conclusion, there are many actions providers need to pursue, 

and we are working on those in areas of our control. For example, 

seeking to eliminate preventable infections and complications, as 

well as eliminating nonvalue-added treatments. And we are making real progress. Study after study confirms that hospitals are improving the quality and equity of care they deliver. Just last week 

the CDC announced that hospitals reduced central line associated 

bloodstream infections and surgical site infections by 46 percent 

and 19 percent, respectively, between 2008 and 2013. 

The AHA’s Health Research and Educational Trust directed a 

national project to reduce central line infections and is currently 

administering a program and fellowship to prevent catheter-associated urinary tract infections, as well as directing the Nation’s largest hospital engagement network. 

All of this shows that real improvements in health and health 

care, not arbitrary cuts to provider payments, have the ability to 

put our country on a more sustainable fiscal path, and they have 

received bipartisan support. 

We look forward to working with the committee to solve the 

Medicare SGR problem. Thank you very much. 

Mr. PITTS. The chair thanks the gentleman for that very constructive testimony. 

[The prepared statement of Mr. Umbdenstock follows:] 

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[The attachment to Mr. Umbdenstock’s statement has been retained in committee files and can be found at: http:// 

docs.house.gov/meetings/if/if14/20150122/102827/hhrg-114-if14- 

wstate-umbdenstockr-20150122.pdf.] 

Mr. PITTS. Dr. O’Shea, you are recognized for 5 minutes. 

STATEMENT OF GERALDINE O’SHEA 

Dr. O’SHEA. Chairman Pitts and Ranking Member Green, members of the subcommittee, on behalf of the American Osteopathic 

Association, thank you for the opportunity to testify today on the 

importance of permanently reforming the Medicare physician payment system. 

My name is Geraldine O’Shea. I am a DO, I am a board certified 

osteopathic internist from Jackson, California. I have been practicing osteopathic medicine for 22 years. Osteopathic physicians, 

like MDs, are fully licensed to prescribe medicine and practice in 

all specialty areas, including surgery. DOs are trained to consider 

the health of the whole person and use their hands to help diagnose and treat their patients. DOs take care of people, not problems, and utilize a mind, body and spirit, patient-centered approach to healing itself. DOs use this approach in addition to all 

other modalities of modern medicine. 

Over 60 percent of practicing DOs specialize in primary care 

fields. The profession also has a longstanding history of training 

physicians who practice in rural and other underserved areas. I am 

currently the medical director of Foothills Women’s Medical Center 

in Jackson, California. My practice is comprised of women’s health 

and primary care and also hospital care, and I deliver it each day, 

and I have the opportunity to see and treat my patients. I also 

serve on the Board of Trustees for the American Osteopathic Association, which represents 110,000 osteopathic physicians and osteopathic medical students, who are training in 30 colleges of osteopathic medicine in 42 locations across our Nation. 

Today I will share with you my personal experience of the detrimental impact the current Medicare physician payment system has 

on all physicians and how it is a barrier to high-quality care for 

our Nation’s seniors. My charge here is not only to represent osteopathic physicians and medical students and our medical M.D. Colleagues, but really to advocate for the patients that we serve. 

Payment reform should no longer be an if, but must be a when, 

and the time is now. The current system is stifling innovation and 

preventing a move to a system focused on quality of care instead 

of volume. It is also stifling a move to delivery models focused on 

care coordination and a systems approach. 

As a DO, this fragmentation does not align with my training and 

the philosophy behind osteopathic medicine. It is time we looked 

past short-term solutions. We must instead consider the Medicare 

system as a whole, physicians and other providers, and most importantly our seniors. The impact of inaction today or continuation 

of only treating the short-term problem will have negative repercussions for the health of Medicare, and we must keep this in mind 

throughout today’s discussions. 

The osteopathic profession continues to fully support the bicameral, bipartisan policy framework that was developed last year 

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by all three committees of relevant jurisdiction in Congress, and we 

thank you all here too. We greatly appreciated that the committees 

incorporated input from the physician communities at every step of 

the way and gained overwhelming support of the house of medicine, and that is not an easy task. 

Quality of care will ultimately improve when payment incentives 

increase and are aligned with healthcare quality. The proposal 

would stabilize physician payments while transitioning into a system that promotes the delivery of high-quality patient care. The 

new system includes strong recognition of the importance of primary care as supported by the patient-centered medical home. The 

AOA was one of the four organizations which developed the principles of the medical home. 

The proposal also works to align the current disjointed quality 

reporting programs to ease the administrative burdens placed upon 

physicians. This means we can spend less time with paperwork and 

more time with our patients, where we are needed most. 

There have been various proposals advanced and discussed over 

the years by lawmakers and advocates on how to specifically pay 

for or even not pay for a permanent fix to the SGR. However, we 

need to consider the whole system, just as the osteopathic physician considers the whole person in determining how an illness or 

issue might be impacting a patient. 

Recent congressional discussions on other healthcare priorities 

have included strong consideration of unpaid legislative solutions, 

and these considerations should also be extended to payment reform. We must recognize there cannot be significant legislative action on other important healthcare priorities until the physician 

payment issue is permanently resolved. It is not for us as physicians to be prescriptive in which specific approach Congress should 

take in offsetting a permanent solution to a reformed Medicare 

physician payment system. 

Whether targeted, unpaid, OCO, or a combination of these offset 

approaches, we urge Congress to consider the potential impact to 

the entire healthcare system, particularly on our patients. Jeopardizing patient access to care within the Medicare program cannot be 

an option. The AOA advocates for the patients we serve, including 

enhancing their access to care, to protecting the patient-physician 

relationship, because we believe this is vital to the delivery of quality health care. 

As leaders of Congress, we do implore you to take action now, before March 31, to fix the physician payment system permanently, 

protect seniors, and strengthen the Medicare program. 

I thank you for your time today. I am hopeful on behalf of my 

physician colleagues and patients that this Congress will get this 

issue resolved permanently. And I thank you very much. 

Mr. PITTS. We hope so. Thank you very much, Dr. O’Shea. 

[The prepared statement of Dr. O’Shea follows:] 

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Mr. PITTS. Dr. Speir, you are recognized for 5 minutes for your 

opening statement. 

STATEMENT OF ALAN SPEIR 

Dr. SPEIR. Thank you. Good morning. Chairman Pitts, Ranking 

Member Green, and distinguished members of the committee, 

thank you for the opportunity to present testimony today on behalf 

of the Society of Thoracic Surgeons. My name is Alan Speir, and 

I am a practicing cardiothoracic surgeon and medical director of 

Cardiac Surgical Services just across the river in the Inova Health 

System. I am also chair of the Workforce on Health Policy, Reform, 

and Advocacy for the Society of Thoracic Surgeons, and chair of the 

Board of Directors for the Virginia Cardiac Surgery Quality Initiative. 

Founded in 1964, the STS is an international not-for-profit organization representing more than 6,800 surgeons, researchers, and 

allied healthcare professionals in 90 countries who are dedicated to 

ensuring the best possible outcomes for surgeries of the heart, lung, 

and esophagus, and other surgical procedures within the chest. 

On behalf of the Society, I would like to applaud this committee 

for holding a hearing on Medicare physician payment reform just 

11 days into this new Congress. We are grateful for your sense of 

urgency and are eager to work with you to ensure that permanent 

SGR repeal and Medicare payment reform are enacted this year. 

I would also like to thank you for introducing the SGR Repeal 

and Medicare Provider Payment Modernization Act in the last Congress. I would implore you not to leave this major policy achievement to languish beyond the current March expiration of the current SGR patch. 

I hope that my testimony today helps to demonstrate that the 

cost of continuing nothing will be far more devastating to Medicare 

patients and providers than the expense of implementing a meaningful payment reform policy. 

In my written comments, I provide additional information on the 

STS National Cardiac Database and the Virginia Cardiac Surgery 

Quality Initiative, both of which provide a foundation for our remarks here today. Established in 1989, the fundamental principle 

underlying the STS National Database has been that surgeon engagement in the process of collecting information on every case, 

combined with robust risk adjustment based on pooled national 

data and feedback of such data to the individual practice and institution, will provide the most powerful mechanism to change and it 

will improve the practice of surgery for the benefit of our patients. 

For example, published results of patients undergoing coronary artery bypass surgery between 2000 and 2009 in institutions participating in the database realized a 24 percent reduction in mortality 

and a 26 percent reduction in perioperative stroke. 

The VCSQI is a regional collaborative that is voluntary within 

the Commonwealth of Virginia, comprised of 14 cardiac surgical 

practices and 18 hospitals, founded in 1994 to improve the results 

of cardiac surgical care and to reduce cost. By creating evidencebased protocols using patients’ clinical information, matched with 

administrative and cost data, the VCSQI demonstrated improving 

quality will reduce costs. For example, the VCSQI generated more 

127 

than $43 million in savings to all payers through blood product 

conservation efforts, and more than $20 million in savings by identifying the best treatment for cardiac surgical patients with a 

perioperative arrhythmia called atrial fibrillation. 

The STS has long advocated that claims information is critical to 

the effort to provide patient outcomes and care efficiencies. We are 

particularly grateful that the proposed SGR legislation would have 

allowed qualified clinical data registries to access Medicare administrative claims data. This legislation would also have provided a 

pathway for the development of specially driven alternative payment models that will allow payments and providers alike to benefit from quality and efficiency improvements. 

Essential to that transition is a period of predictable payment for 

physicians without the threat of SGR-related cuts. It is this last 

point, the opportunity to develop alternative payment models during a so-called period of stability, where I would like to focus my 

remaining comments. 

Inspired by this in innovative proposal, the STS convened our 

thought leaders and policy and registry experts to examine the procedures most frequently performed by the STS. Together, we 

worked to craft team-based alternative payment models for the 

Heart Team and Lung Cancer Care Team in hopes that these models will provide a blueprint for other care team models in our specialty. We are confident that we can use the STS cardiac database, 

combined with administrative claims data and quality information 

from others in the care team, to promote patient-centered, teambased care that improves clinical outcomes and patient satisfaction, 

lowers healthcare costs, and rewards all providers by putting the 

patient first. 

While our APM concepts are not yet finalized, I wanted to demonstrate to this committee that the physician community is ready 

and eager for this opportunity. Unfortunately, as we wait for payment reform to become a reality, the Centers for Medicare and 

Medicaid Services is implementing policy that will decimate the 

proposed period of stability, stifle innovation, and limit our ability 

to transition to new alternative payment models. Specifically, CMS 

proposes to convert more than 4,000 10- and 90-day global surgical 

CPT codes to a zero-day global by 2017 and 2018 respectively. 

Currently, the cardiothoracic surgeons receive a single bundled 

payment from Medicare for the surgeries they perform. This payment includes preoperative consultation, the operative procedure 

itself, perioperative and post-operative care, and coordination of 

medical specialty consultations and outpatient visits. 

Mr. PITTS. If you can summarize, please. 

Dr. SPEIR. Thank you. 

It is clear that the Medicare payment reform is fatally flawed. 

Furthermore, with the uncertainty of the SGR paradigm, compounded by CMS global payments issues, innovation and meaningful physician-led reform is nearly impossible. 

Mr. PITTS. Thank you very much, Dr. Speir. 

[The prepared statement of Dr. Speir follows:] 

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Mr. PITTS. We are presently voting on the floor. We are still 

going to try to get a couple more of you in. So the chair recognizes 

Dr. Miller for 5 minutes. 

STATEMENT OF KEN MILLER 

Mr. MILLER. Thank you, Chairman Pitts, Ranking Member 

Green, and members of the committee. I appreciate the opportunity 

to speak with you today on behalf of the American Association of 

Nurse Practitioners, the largest full-service professional membership organization for nurse practitioners of all specialties. With 

over 56,000 individual members and over 200 organization members, we represent the more than 205,000 nurse practitioners 

across the Nation. 

My name is Ken Miller, and I currently serve as the president 

of the American Association of Nurse Practitioners. I am a family 

nurse practitioner, and previously served as the associate dean for 

academic administration at the Catholic University of America 

here in the District. 

I am here to confirm our support of efforts to repeal the Medicare 

SGR, particularly SGR Repeal and Medicare Provider Payment 

Modernization Act of 2014 proposed in the last Congress. 

As you know, nurse practitioners have been providing primary, 

acute, and specialty care for half a century and are rapidly becoming the healthcare provider of choice for millions of Americans. According to our most recent survey data, more than 900 million visits were made to NPs in 2012, a number we anticipate will grow 

in the coming years. AANP strongly believes this serves as a testament to the trust that patients have in our workforce. 

We commend the committee for their bipartisan legislative proposal, which recognizes all Part B providers, including nurse practitioners. Throughout the development of this legislation, the committee gave all stakeholders the opportunity to provide comments. 

This open process led to a strong bipartisan product, and this process should serve as a model as we move forward. 

The legislation seeks to include all Medicare Part B providers by 

utilizing provider-neutral language. In addition, it includes a number of proposals that reflect the full partnership of nurse practitioners in the Medicare program, specifically the inclusion of nurse 

practitioners in the first year of the Merit-Based Incentive Payment System and ensuring that nurse practitioner-led Patient Centered Medical Homes are eligible to receive incentive payments for 

the management of patients with chronic disease. 

Every day, increasing numbers of baby boomers become eligible 

for Medicare. Projections show that the number of beneficiaries are 

expected to increase by 20 million over the next 10 years, resulting 

in approximately 72 million patients being treated. Nurse practitioners are ready to do their part to ensure these patients receive 

timely, high-quality care. 

According to the American Association of Colleges of Nursing, 

there are currently 63,000 students enrolled in nurse practitioner 

programs in the United States, with over 16,000 students graduating in 2014. Nurse practitioners provide care in nearly every 

healthcare setting, including clinics, hospitals, emergency rooms, 

urgent care sites, private physician or NP practices, both managed 

141 

and owned by NPs, nursing homes, schools, colleges, retail clinics, 

public health departments, nurse-managed clinics, and homeless 

clinics. It is important to remember that in many of these settings, 

nurse practitioners are the lead provider. 

Nurse practitioners have continuously played a key role in treating Medicare beneficiaries, and since 1998 NPs have received direct 

reimbursement for providing Medicare Part B services in all settings. Nearly 85 percent of the current workforce are treating 

Medicare beneficiaries. Additionally, Medicare data shows that almost 17 percent of the beneficiaries in traditional fee-for-service 

coverage receive one or more services every year from NPs that bill 

Medicare directly. 

The vast majority of NPs are primary care providers. Eightyeight percent are educationally prepared to be primary care providers, and over 75 percent currently practice in primary care settings. NPs bring a comprehensive perspective to health care by 

blending clinical experience in diagnosing and treating acute and 

chronic illnesses with an added emphasis on health promotion and 

disease preventions. 

This comprehensive perspective is deeply rooted in nurse practitioner education. All NPs must complete a master’s or doctoral program and have advanced clinical training beyond their initial professional registered nurse preparation. Didactic and clinical courses 

prepare them with specialized knowledge and clinical competency 

to practice in a variety of settings. 

Daily practice includes assessment, ordering, performing, supervising, and interpreting diagnostic and laboratory tests, making diagnoses, initiating and managing treatment, including prescribing 

medication, as well as nonpharmacologic treatments, coordination 

of care, counseling, educating patients, their families, and communities. 

In closing, the American Association of Nurse Practitioners 

would like to reiterate its support for the SGR Repeal and Medicare Provider Payment Modernization Act of 2014 proposed in the 

last Congress. AANP is ready to provide support throughout the 

legislative process in the 114th Congress and looks forward to 

working with the committee and this Congress on the passage of 

this bill in 2015. Thank you. 

Mr. PITTS. The chair thanks the gentleman. 

[The prepared statement of Mr. Miller follows:] 

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Mr. PITTS. Dr. McAneny, you are recognized for 5 minutes. 

STATEMENT OF BARBARA MCANENY 

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

Green, members of the committee. My name is Barbara McAneny, 

and I am an oncologist from Albuquerque, New Mexico, and I am 

chair of the American Medical Association Board of Trustees. 

The AMA believes that the Medicare sustainable growth rate formula, the SGR, presents one of the most important yet difficult 

challenges our healthcare system faces today. We commend this 

committee for its extensive work in the last Congress and for taking this first step in the 114th Congress to resolve this issue. 

The time is ripe for Congress to finish the task of repealing the 

SGR and replace it with payment reforms that enhance and support patient care. Congress should act quickly to enact the SGR Repeal and Medicare Provider Payment Modernization Act reported 

by this committee in the 113th Congress by a vote of 51 to 0 as 

part of a thoughtful, bipartisan, and bicameral process. 

This legislation represents an end to the fundamentally flawed 

SGR formula, which is a major barrier to the development and 

adoption of healthcare payment and delivery reforms that can improve the care for our Nation’s seniors and the disabled while reducing overall spending. Also, TRICARE is tied to Medicare payments, so our Nation’s military and their families will also benefit 

from its passage. 

The reforms included in this legislation enjoy the strong support 

of an array of stakeholders, including over 600 State, specialty and 

national medical associations, as well as organizations representing 

the interest of patients. 

Under this proposal, physicians who join new payment models 

would be supported in their transition into new models of care delivery that would improve the quality and deliver more coordinated 

care while saving the Medicare system money. There are now 424 

accountable care organizations serving over 7.8 million Medicare 

beneficiaries, and this has saved Medicare $417 million. The committee proposal would expand our ability as physicians to develop 

and participate in even more innovative ideas. 

Right now physicians are facing a tsunami of penalties from the 

various Medicare quality reporting programs: PQRS, Meaningful 

Use, and the Value-Based Payment Modifier. Under the committee 

proposal, we would report under one streamlined program known 

as the Merit-Based Incentive Payment System, or MIPS. We would 

no longer be forced to divert our attention and our resources towards complying with overlapping and often conflicting programs. 

Instead, we could focus those resources on making meaningful 

changes in our practices that benefit our patients. 

We need the flexibility that the MIPS program provides so that 

we would be free to demonstrate our quality of care according to 

the standards that match our specialty and our type of practice. 

Therefore, the committee proposal does far more than merely replacing the SGR, it is an important step forward to help physicians 

to successfully restructure our practices to provide better care at a 

lower cost. 

161 

Please take this opportunity to build upon the progress that your 

committee has already made by continuing to work in a bipartisan 

manner to resolve the remaining barriers to these significant policy 

reforms. 

Everyone agrees that we need to contain Medicare spending, but 

the SGR was never the solution and it simply has not worked. The 

17 SGR patches enacted since 2003 have cost the Federal Government over $169 billion, which is far more than the CBO’s estimate 

of this committee’s proposal. So the time to replace the SGR is now. 

We understand that the pathway forward must have the necessary bipartisan support to pass both chambers and to be signed 

into law by the President. Almost 10 months have passed since 

Congress set the latest deadline to enact the legislation, and time 

is running short. We urge this committee to commence negotiations 

to resolve these remaining questions. Only Congress can find the 

common ground to resolve the outstanding budgetary issues. 

We are very appreciative of the committee’s leadership on Medicare physician payment reform, and the AMA stands ready to be 

a constructive partner. We thank you very much for the opportunity to share our views. 

Mr. PITTS. Thank you very much. 

[The prepared statement of Dr. McAneny follows:] 

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Mr. PITTS. We have got 1 minute left in the vote. We still have 

260 people not voting. We will try the last one. So, Dr. 

Schneidewind, you are recognized for 5 minutes. 

STATEMENT OF ERIC SCHNEIDEWIND 

Mr. SCHNEIDEWIND. Chairman Pitts, Ranking Member Green, 

and members of the committee, thank you for holding this hearing 

on reforming Medicare physician reimbursement and for inviting 

AARP to speak from the Medicare beneficiary’s perspective. 

My name is Eric Schneidewind and I am the AARP presidentelect. AARP is a nonpartisan organization of over 38 million members ages 50-plus, many of whom are Medicare beneficiaries. During the previous Congress, AARP was pleased to work with committee staff from both chambers and both parties in developing 

what became H.R. 4015. 

Permanently repealing the sustainable growth rate formula will 

bring stability and predictability to healthcare providers and Medicare beneficiaries. The reimbursement reforms in the bicameral bill 

are a significant step toward improving quality and value. We applaud the move toward more coordinated care, the streamlined 

quality measurement and reporting system, and greater data 

transparency. Thanks to the tireless work of many of the legislators and staff here today, we are closer than we have ever been to 

finally replacing this broken reimbursement system. 

However, the final bill introduced last Congress did not include 

important health extenders, which are usually included with the 

annual doc fix legislation. Three provisions in particular are crucial 

and should be made permanent along with permanent SGR repeal 

legislation. 

First, the Qualifying Individual, QI, Program pays Part B premiums for beneficiaries with incomes between 120 percent and 135 

percent of the federal poverty line. Most Medicare beneficiaries pay 

a monthly Part B premium of $104.90 and out-of-pocket costs that 

low-income QI recipients cannot afford. 

Second, the Medicare therapy caps exception process allows access to needed care for people with long-term chronic conditions, 

most notably for those who require long-term therapy services. 

Third, funding for critical community-based resources is also expiring. This includes outreach and enrollment assistance to low-income Medicare beneficiaries, as well as funding aging and disability resource centers. AARP will not consider SGR repeal legislation complete unless those beneficiary protections are included. 

However, a question still remains on the need for budget offsets. 

In light of current and future savings in the Medicare program, 

Congress would be justified in not fully offsetting the costs of a permanent repeal at this time. 

As the committee considers legislation, it is important to remember that half of all Medicare beneficiaries live on an income of less 

than $23,500 per year and spend 17 percent of their income on 

health care. Additionally, standard beneficiary premiums are established to cover 25 percent of Part B spending. Given this, one-quarter of any increase in Medicare Part B spending over current law 

will automatically be borne by beneficiaries in the form of higher 

173 

premiums. The typical Medicare beneficiary cannot afford to pay 

more out of pocket. 

AARP has long advocated for responsible solutions for slowing 

Medicare spending growth and improving the program. Other system reforms recommended by AARP to help reduce Medicare 

spending, not part of H.R. 4015, include expanding competitive bidding for durable medical equipment, equalizing payments based on 

physician site of service, recouping overpayments to Medicare Advantage plans, increasing support for transitional care and chronic 

care management, and ensuring full and effective use of all highly 

skilled clinicians. 

In addition, while lawmakers have considered shifting cost to 

beneficiaries, there has been little talk of reforming one of the most 

expensive areas of health care, prescription drugs. AARP believes 

that any discussion of budget offsets for Medicare reimbursement 

reform should include savings from prescription drugs. 

We urge you to give strong consideration to the following prescription drug proposals that could save at least $150 billion: provide the Medicare program rebates for drugs for those who are dually eligible; enable the Secretary of HHS to negotiate for lower 

prescription drug prices; reduce the exclusivity period for biologic 

drugs; prohibit pay-for-delay agreements; and stop risk evaluation 

and mitigation strategies from being used to block generic drug and 

biosimilar product development. 

Again, thank you for holding this hearing and for making SGR 

and Medicare reimbursement a priority at the start of the 114th 

Congress. AARP welcomes the progress that has already been 

made and looks forward to working with you to get physician payment reform across the finish line. 

I would be happy to answer any questions. 

Mr. PITTS. Thank you for your testimony. 

[The prepared statement of Mr. Schneidewind follows:] 

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Mr. PITTS. Time has expired on the vote. We have two votes on 

the floor, so members should go directly to the floor. Please come 

back immediately. 

Thank you for your patience. The committee stands in recess. 

[Recess.] 

Mr. GUTHRIE [presiding]. Thank you. We will bring the committee back to order. Thanks for your patience during our voting 

time. I guess we will have until 12:30 until the next set of votes, 

so hopefully we can get through the questions. And I will recognize 

myself for questioning. 

Yesterday we had a first panel in the subcommittee, and we 

heard from members of both sides of the aisle who said that SGR 

reform must be paid for. Former Senator Joe Lieberman warned 

that stakeholders who are pushing for unpaid SGR reform bill 

could actually sink the chances of getting a permanent fix adopted 

by Congress. We also heard from policy experts that there are bipartisan improvements to Medicare which can help pay for SGR reform. 

So I want to ask the panel, everybody, to answer to this question. 

So I would be curious in hearing very briefly from each of our witnesses the answer to this question: Would you rather see a permanent SGR fix pass in March with bipartisan pay-fors or see Congress be forced to do another patch? So pay-for or patch? The option really isn’t a question to say, well, an unpaid-for fix. It is a 

paid-for fix or a patch. And let’s go briefly down the line of witnesses. 

Dr. UMBDENSTOCK. Well, at the AHA, we would pick door number one. We think it needs to be fixed, frankly, should have been 

fixed a long time ago when the costs were lower, the problem was 

smaller. We put it off. At the moment, the rate of increase is so 

low that the projections are much lower as to the costs going forward. We think it should be taken care of, but I have to understand score again, not at the expense of payments to other providers. 

Mr. GUTHRIE. OK. Thanks. 

Dr. UMBDENSTOCK. We have got to find other solutions. 

Mr. GUTHRIE. I am going to try to get down the list. 

Dr. O’Shea. 

Dr. O’SHEA. As I said before, we know that it is not just for physicians to say, but we do know that offsetting needs to be done for 

a permanent solution. So we are actually for a permanent solution 

and not for a patch. A physician is never going to want a patch. 

Mr. GUTHRIE. Thanks. 

Dr. Speir. 

Dr. SPEIR. Permanent fix. 

Mr. GUTHRIE. Permanent fix. 

Dr. Miller. 

Mr. MILLER. Permanent fix. We go with door one because the 

patch hasn’t worked for so many years. We need to fix it. 

Mr. GUTHRIE. OK. Thanks. 

Dr. McAneny. 

Dr. MCANENY. We also want a permanent fix to this. We are so 

close. You have developed great policy. If we can get the SGR out 

of the way, then we can move forward towards the more important 

185 

work of trying to restructure how we actually deliver care to our 

patients. 

Mr. GUTHRIE. Thank you. 

Mr. Schneidewind. 

Mr. SCHNEIDEWIND. AARP would support a permanent fix, and 

we have proposed means to pay for it. 

Mr. GUTHRIE. OK. Thank you. Thank you very much. 

For Mr. Umbdenstock from AHA, in your testimony you wrote 

down four different ideas you said for cutting funding. You expressed opposition to cutting funding for services provided by other 

caregivers, which you just reinforced, and I understand, and you 

suggested there is a tipping point of the repeated ratcheting down 

of payments for Medicare and Medicaid hospital services past 

which patients on these programs will face harder times or they 

will have longer wait times if we continue to go down. 

Could you just describe for the committee the scope of the cuts 

the hospitals have seen since 2010 and what type of cuts in the 

way of market basket adjustments are on the horizon? The situation the hospitals have been in since 2010. 

Dr. UMBDENSTOCK. Be happy to. Thank you. 

Since 2010, hospitals have experienced $121 billion in the 10 

years after each of those cuts, $121 billion cumulative in cuts 

through the Medicare program, whether it was through sequestration cuts or cuts through coding offsets or reductions in bad debt 

payments under Medicare. A variety of different cuts have occurred 

totaling $121 billion. 

In addition, there are payment reductions in the ACA that were 

agreed to, to help pay for coverage under the ACA. Those cuts are 

now starting to kick in as well. They were not in the first couple 

of years. They started essentially just before coverage started and 

now will roll out in the later years. So market basket adjustments, 

reductions in DSH payments, disproportionate share payments, 

and so on are almost looming. So additional cuts on top of that 

would be untenable. 

Mr. GUTHRIE. You had several policy proposals when you did 

your testimony. Which ones that you brought forth would you suggest should be paired with SGR reform? 

Dr. UMBDENSTOCK. Well, those are four that we wanted to highlight, in particular the combining of Parts A and B and the restructuring of that outdated method under Medicare; modifying the 

first-dollar coverage in Medigap policies to make more prudent 

buyers within the Medicare program; and increase income-related 

premiums, med mal reform; and I didn’t mention, but always on 

our list is administrative simplification and regulatory relief. 

So we think that those have all been scored. They have all received bipartisan support and should be considered as pay-fors. 

Mr. GUTHRIE. Thank you. 

And I will yield back 5 seconds because we are going to try to 

get everybody in before the next round of votes, if we can stick to 

the 5-minutes rule as close as we can. 

Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

And I talked to some of you beforehand. All of us want to repeal 

the SGR. It is the issue of paying for it and how do we pay for it. 

186 

I don’t want to put it on the backs of the Medicare patients. And 

some of you know the kind of district I represent. It is a very urban 

area. We have a great medical center in Houston. Although I have 

a very urban area, and the physicians who practice in my area are 

the ones 45 percent or 55 percent of their practice is senior citizens 

with Medicare. If we don’t fix the SGR, they can’t be in business. 

Now, my suburban physicians can because they have a lot of 

third-party coverage, whereas if with you have a load of seniors on 

Medicare, you can’t. So that is why I want to fix it, because I want 

those doctors to still be in my district so people don’t have to go 

to the suburbs to see a physician. But that is the problem with 

paying for it. 

Dr. McAneny, I understand the cost of a permanent repeal of SGR is $118.9 billion. I think that is the cheapest number I have 

seen since we have had it. It would cost $32 billion just to fix it 

for 2 years. And one of our concerns is, and I have heard all your 

and read all your testimony, is that how do we do it without impacting the patients who are part of Medicare, because, as we 

know, seniors on Medicare pay a huge percentage higher for health 

care, even though they have Medicare, than seniors under 65. 

And so that is our concern. Are there any suggestions? I know 

there are some reforms we can do, and the reforms may be good 

in idea, but if they save money, then we can use that as a pay-for. 

Dr. MCANENY. The AMA has a large body of Medicare reform 

policy which we have carefully thought of over many years and 

would love to have the opportunity to go over. With any pay-for, 

the question really will be in the detail. We feel that any solution 

is going to have to be bipartisan. It is going to have to be something that is bicameral and can be signed by the President. And 

we really look a lot to the leadership of this committee and Congress to lay the guidelines, and then we would be happy to work 

with you any way we can to try to look over the ideas that are presented. 

We do believe that by getting the SGR out of the way and letting 

physicians restructure their practices, that we can do a lot to save 

money going forward. In my own practice, we have an Innovation 

Center grant that has created an oncology medical home. We have 

cut hospitalizations for cancer patients by almost half. That saves 

money and it takes better care of our patients. So we think there 

are a lot of things out there that can really provide better care with 

lower costs and that that should be considered as part of the equation. 

Mr. GREEN. Thank you. 

Dr. Schneidewind, I know representing AARP, and your constituents are actually the Medicare recipients. Do you know if any of 

the health reforms that you have seen or heard today that would 

actually save enough money we could use it for a pay-for, but 

would also have more efficient delivery to your constituents, AARP 

members? 

Mr. SCHNEIDEWIND. Well, I think embedded in the legislation 

itself, of course, are reimbursement reforms which are going to 

produce that result. And I think what we look to is reforms that 

impact, for instance, competitive bidding for durable medical equipment. In one 5-year period there were $70 billion of overpayments 

187 

to Medicare Advantage plans, we believe for upcoding and that sort 

of thing. So that would offer $140 billion over a 10-year period. 

Transitional care, we could support that better, and that obviously 

reduces readmission rates. 

But really the place to look for the savings, we think, are the 

drug costs, and steps like extending the rebates from just Medicaid 

to dual eligibles, you are talking about $140 billion over a 10-year 

period from that one alone. So we really respectfully suggest that 

this committee look hard at prescription drug costs as a place to 

save money, to leave these providers in a good position, and to 

make this Medicare program solvent and sound for the future. 

Mr. GREEN. And I appreciate that because, again, in a district 

like I have, we have a lot of dual eligibles already. But that is the 

issue. 

And, Mr. Chairman, I will yield back my 17 seconds. 

Mr. GUTHRIE. Thank you. Being efficient. Trying to get the votes. 

The next is also from Texas, Dr. Burgess. 

Mr. BURGESS. Thank you, Mr. Vice Chair. I appreciate you not 

referring to me as the old vice chair. 

In the interest of time, I would like to actually pose a multipart 

question, or two questions, and then I would like to go down the 

line, starting with Rich and ending up at the AARP. And the two 

questions would be, as you understand the policy language of the 

4015 in the previous Congress, are you supportive of that policy? 

And the second part to that question, would you support the committee making this a priority for this Congress? And not to lead the 

witnesses, but the correct answers are yes and yes. 

Dr. UMBDENSTOCK. Thank you for that clarification. Yes and yes. 

Dr. O’SHEA. Dr. Burgess, number one, we really want to thank 

you for all the work that you have done, we appreciate it, as the 

physician leader that you are. 

Yes and yes. 

Dr. SPEIR. Thank you, Dr. Burgess. Yes and yes. 

Mr. MILLER. Thank you, Dr. Burgess. Yes and yes. 

Dr. MCANENY. To be redundant, thank you, Dr. Burgess. Yes and 

yes. 

Mr. SCHNEIDEWIND. Yes and yes. Thank you, Dr. Burgess. 

Mr. BURGESS. Great. I am glad we all got that on the record. 

Dr. McAneny, I need to ask you a question. I may have to move 

to get to a right microphone. 

We have talked about the SGR for a long time. I have had a bill 

every term I have been in Congress. But a lot of people don’t really 

understand what happens if we blow through a deadline, which we 

did at the end of 2005 when Republicans were in charge and we 

did three times in 2010 when the Democrats were in charge. Can 

you kind of trace out for us what the effect is on a physician’s practice and a patient’s access to their physician when we blow through 

those deadlines and why it is so critical that we not face those 

deadlines year in and year out? 

Dr. MCANENY. Thank you, Dr. Burgess, for that question. 

I do manage my practice in Albuquerque and in little towns in 

New Mexico where we serve a lot of underserved people. What happens when we blow through one of those deadlines is that we suddenly cannot submit a bill. Our cash flow drops very quickly beVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00193 Fmt 6601 Sfmt 6601 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
188 

cause not only do I have to make pay payroll every 2 weeks because my employees live on that, they have to pay their mortgages 

and buy food, but I cannot buy the supplies that I need to treat 

my patients. I cannot afford to purchase the chemotherapy to give 

to the patients who are in need of it. 

Then we incur double damage in that when we submit a bill and 

then there is a patch or a change that occurs later, then we have 

to resubmit the bill. The accounting nightmares are terrible to try 

to figure out what has actually been paid, what still is owed. I 

often have had to take out bank loans or lines of credit, which 

means that we lose the interest on that. And I am a small business, we have 200 employees, and a lot of people depend on us for 

their livelihoods. So this really is a devastating idea. 

And as we are trying to restructure what we do to provide better 

health care, the uncertainty of not knowing whether or not my 

major payer, Medicare, is going to be there, is going to cut my fees 

by 21 percent, or whether they are going to reinstitute a zero percent, which is actually a 3 percent loss because the expense goes 

up about 3 percent per year, I haven’t been able to give my nurses 

and my staff a raise for the last 2 years. 

So it is devastating to us as small businesses. It is devastating 

to us as physicians because we can’t do what we were trained to 

do, which is to take care of the people who depend on us. 

Mr. BURGESS. Well, and the reason I asked that question, of 

course, we have until March 31 for something to happen, which is 

get the President to sign the SGR fix or come up with a doc fix for 

whatever period of time, and I am concerned that if we spend too 

much time reinventing the wheel now we will burn through that 

daylight that is available to us and push up against the deadline. 

But let me just ask you as a practical matter, and perhaps, Dr. 

O’Shea, you as well, are you talking with your constituencies, your 

doctors who are part of your association, about the possibility that 

the full SGR cut might happen, that if Congress couldn’t get its 

work done, that you might face this funding cliff that is set out in 

the statute? 

Dr. MCANENY. Dr. Burgess, I think every physician, particularly 

those who manage a practice, considers that at about 3 in the 

morning, on a lot of mornings, of how am I going to keep the practice going if this happens. Yes, I think most physicians are aware 

that this would be devastating, and I think that more and more patients are becoming aware of what it would do to us if they couldn’t 

get in to see their doctor at the time when they need their doctor. 

Mr. BURGESS. Thank you. 

Dr. O’SHEA. And I might say just, Dr. Burgess, say the same 

thing. 

Mr. GUTHRIE. Well, the time has expired. We are trying to get 

everybody’s questions before the next vote. So I appreciate that. 

Ms. Matsui from California is recognized. 

Ms. MATSUI. Thank you so much, Mr. Chairman. 

First of all, thank you very much for being here. Appreciate your 

testimony. It is a very important issue. And I know how much SGR 

repeal and replace means to each of your organizations. 

I have a huge healthcare sector in my district, four major hospital systems. I think Dr. O’Shea knows because you are a member 

189 

of one of them essentially. But I think that we have to do this. The 

thing is, the pay-for is so difficult. Where we stand now is seeing 

how to figure that out, and what I am hearing a lot about today 

is we want to do this but we don’t want to do it here or here or 

here. And I am not singling anyone out, but that is the way it is 

here. But what I am looking at is let’s do this but not at the expense of the seniors. Now, I think each of us feel that way too and 

are trying to balance that out. 

So what I am looking at now is, let’s be very specific, so some 

of these are questions I am hearing, currently Medicare beneficiaries have separate cost-sharing structures, when they see doctors versus when they go to the hospitals. There may be ways to 

simplify this and modernize Medicare benefits to look more like 

health insurance products we see today. But current proposals to 

redesign Medicare benefits such as combining Part A and B 

deductibles would redistribute the burden of healthcare costs to the 

most vulnerable in the program. 

So, Mr. Schneidewind, can you talk about the potential impact on 

beneficiaries of a combined Part A and B deductible? 

Mr. SCHNEIDEWIND. Yes, Representative. The Part A deductible 

is significantly higher than the Part B deductible, and so if those 

two are combined into one average number, it is pretty clear that 

a senior going for medical services as opposed to hospital would 

end up paying a higher deductible than they had prior to the 

change. 

And what concerns us is that in that situation somebody who is 

using medical services a lot and hospital very little would effectively, number one, be penalized financially and have a disincentive to seek care from physicians. And I hope people will recognize 

that the average person who is receiving Medicare has an income 

of $23,500, half have less than that, they pay $4,000 out of that 

$23,500 for medical care already. So increasing that, in addition to 

the regular Part B increases that occur, is unaffordable. 

Ms. MATSUI. OK. Thank you. 

Now, these new payment delivery models incentivize and the 

SGR repeal and replace policy can make Medicare services more effective and maybe more efficient. This will save money while improving care. However, these savings are often difficult to demonstrate and quantify, as they occur in long-term time windows, we 

know how difficult it is to even score those things, and involve savings to the overall health system, not to mention the improvement 

in quality care that can be an invaluable effect on a patient’s life. 

You can measure and estimate the reduced hospitalization costs 

caused by better management of a senior’s chronic conditions, but 

you can’t put a price on how that impacts seniors and their caregivers’ lives. So I believe a more holistic approach to patient care, 

including strong preventive care, saves costs and lives. 

So, Dr. O’Shea, please discuss the benefits of the holistic approach to care, and include any comments you may have about savings that can be achieved and how this fits into what we are trying 

to do today, because I think we have to apply a holistic approach 

to this SGR replace-and-repeal policy too. 

Dr. O’SHEA. I appreciate the question. 

190 

Taking a holistic approach is what I think we have been gearing 

up for, for many, many years here. So what I would be speaking 

of is implementations the greater part of physicians around the 

country have done is with an her. The her and the patient-centered 

medical home are just ready to do these things, taking the whole 

patient into consideration. I actually lead the diabetic program at 

Sutter Amador Hospital. 

Mr. COLLINS. Could you speak into the microphone? 

Dr. O’SHEA. As doing that, and as working with the chronic care 

model, when you have more implementation of preventative services early on in the chronic care model, you are going to get larger 

savings, you are stopping the fast creep of a chronic and a highcost patient into a much more controlled, extending the care in an 

ambulatory setting and not having to use the hospital setting. 

We can do that, and I would speak also for combining Part A and 

B, if that can be achieved, but doing that and making sure that the 

primary care home that is specific for the patient, because it has 

to meet patient needs, is implemented, and in doing that in an aggregated affront to these costs, making the patient, but also the 

physician, accountable and knowing with all the information that 

we now can look at ourselves and look at your own cost savings, 

making those numbers known to physicians, to physician societies, 

to different state societies. You know, looking and then comparing 

to one another. I think as physicians we are used to being compared in services and things like that. You will actually find that 

we can tolerate that, can get geared toward that a lot faster than 

just always rotating patients. 

Ms. MATSUI. OK. Well, thank you very much. 

Mr. GUTHRIE. Thank you. The gentlelady’s time has expired. 

The chair is going to recognize for unanimous consent a standard 

of care statement that has been offered by the Cooperative of 

American Physicians, NORCAL Mutual Insurance Company, PIAA, 

Texas Medical Liability Trust, The Doctors Company. Without objection, so ordered. 

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

Mr. GUTHRIE. The chair now recognizes Chairman Barton. 

Mr. BARTON. Thank you, Mr. Chairman. It is good to see you in 

the chair. It is good to see Mr. Green as the ranking member of 

the Health Subcommittee. That is quite an honor. It is good to 

have you there. 

I haven’t watched this on TV, nor have I read your testimony. 

So I am a total innocent. But I will make a bet right now that we 

have agreement that we need to fix the SGR, everybody has said 

that, but I bet not one of the panelists has offered a way to pay 

for it. Am I right or wrong? 

What? We had somebody offer a pay-for? 

Dr. UMBDENSTOCK. I think the American Hospital Association 

put forward suggestions, as did—— 

Mr. SCHNEIDEWIND. As did AARP. 

Mr. BARTON. Well, I would have lost that bet. You all should 

have taken me up on it. I would have bought everybody a free Dr. 

Pepper down in my office. 

191 

Well, good for you. I was going to offer a proposed solution that 

the people that didn’t testify had to pay for it, since you all weren’t 

willing to pay for it. 

So do we have an agreement that there should be a pay-for? Is 

there anybody that opposes that? 

Mr. SCHNEIDEWIND. We have raised the possibility that, given 

the reforms, there may not need to be, but out of respect for your 

desire for some information, we have proposed pay-fors. 

Mr. BARTON. Then the second part of is there a pay-for, I am 

going to ask the chairman if as a committee do we have a position 

that the pay-for should come out of the medical system or are we 

looking at pay-fors outside the medical system? 

Mr. GUTHRIE. From what I understand, we are still looking at 

pay-fors. There has been no overall—— 

Mr. BARTON. Within the medical—— 

Mr. GUTHRIE. I think we are looking at all pay-fors, all opportunities for pay-fors. 

Mr. BARTON. OK. Because if we were willing to look outside the 

system we could do some oil and gas revenue royalties from the 

OCS or Alaska or federal lands. I have an Internet poker bill that 

would probably generate $50 billion over 10 years. 

Mr. GREEN. If the gentleman would yield. 

Mr. BARTON. I would be happy to. 

Mr. GREEN. Our side, we don’t mind looking outside health care, 

but I have to admit, I can’t sign on to your Internet poker bill. 

Mr. BARTON. That would be theeasiest pay-for because the poker 

players of America would willingly pay that surcharge to be able 

to play poker on the Internet. And that was seriously looked at in 

the last Congress, actually. I mean, it is enough money that it is 

real. 

Well, I want to commend Dr. Burgess for the work that he has 

done over the last several years. He has been absolutely committed 

to fixing the problem. And as you all know, this last Congress we 

actually passed an SGR fix but we didn’t have a pay-for and it 

foundered. 

I think Chairman Upton and Subcommittee Chairman Pitts are 

committed to going all the way this session with a real pay-for that 

solves the problem, and I will be a part of it, of the system at that 

point in time. 

With that, Mr. Chairman, I will yield to any other member who 

wishes my time. 

Dr. Burgess. 

Mr. BURGESS. If the gentleman will yield for clarification. The 

bill that passed the floor of the House the middle of March of 2014 

was paid for, was offset. The offset came from the Affordable Care 

Act. And for people who disagree with that strategy, I would simply 

offer that if you were going to reform health care in this country 

from soup to nuts, you ought to start by fixing the SGR. So that 

was a logical place to go. I am sorry people didn’t agree with that 

over on the Senate side. I am willing to look at other pay-fors. But 

our bill was offset when it passed the floor of the House last 

March. And I yield back to the gentleman. 

Mr. BARTON. I guess I will ask one more question. Does the panel 

think there are enough savings in Medicaid if we gave more flexiVerDate Nov 24 2008 12:22 Jun 09, 2016 Jkt 037690 PO 00000 Frm 00197 Fmt 6601 Sfmt 6601 F:\MY DOCS\HEARINGS 114\114-2A CHRIS
192 

bility to the States? All the State Governors and Medicaid directors 

are always asking us to give them more flexibility. Is that a potential pay-for that you all might be willing to work with us on? 

Dr. UMBDENSTOCK. Well, from the hospital point of view, we find 

Medicaid to be a very stressed program already and are very concerned about further cuts to that program. 

Mr. BARTON. So that is a no. 

Dr. UMBDENSTOCK. For the record, if you decided to solve this 

problem without a pay-for, we would not object. Just for the record. 

Mr. BARTON. Put me down as not surprised with that answer. 

With that, Mr. Chairman, I yield back. 

Mr. GUTHRIE. Thank you. The gentleman yields back. 

Recognize Mr. Schrader from Oregon. 

Mr. SCHRADER. Thank you, Mr. Chairman, appreciate it. 

I appreciate the panel. I appreciate the panel for the most part 

coming up with ideas for us to pay for the SGR reforms, since it 

has such broad support to get this done and get the Sword of Damocles off the physician and hospital community’s backs, and, frankly, the seniors, seniors’ backs. They have been up against. I think 

every one of us has had horror stories of seniors not being able to 

find physicians or nurse practitioners to take care of them because 

of what we are doing or not doing here. 

With that, just several questions. Dr. McAneny, maybe you could 

elaborate a little bit more on how the fee-for-service system is actually hurting or prohibiting——not prohibiting, but I think impairing physicians’ and nurse practitioners’ ability to provide the quality care that they think they can do. You alluded to that a little 

bit. 

Dr. MCANENY. Thank you, Representative, for that question. 

The fee-for-service system worked well before there was much 

that we could do in the outpatient arena. There were limited things 

we could. It was easy to enact fees for those. Currently, now, if we 

want to manage patients in a different way, if we want to have 

nurses or other staff members on the phone talking to patients, intervening early, helping people manage problems at home, we are 

not paid for that. And physician practices find that they have to 

generate enough of the billable codes to pay the infrastructure that 

it diverts our attention away from some of the changes that we 

could make to better deliver that care. 

In addition, now with all the regulatory requirements that are 

there that are not paid for with trying to comply with Meaningful 

Use, PQRS, the value-based purchasing, et cetera, we are spending 

more and more time away from patients, away from anything that 

even generates a fee, and away from things that actually help us 

manage a patient. That is why we are so excited about this committee’s proposed bill where you get rid of all that, consolidate it 

into one streamlined system so that we can take some of those resources, have the opportunity to try out systems that may include 

some fee-for-service but may include a lot of other options as well, 

and see if we can’t design systems that will work in our individual 

practices to be able to deliver better patient care at a lower cost. 

So thank you. 

Mr. SCHRADER. Very good. 

193 

Dr. Speir, maybe describe a little bit how comparative effectiveness research can improve care and provide, hopefully, physicians, 

particularly in the specialities, almost a safe haven in terms of liability and lawsuit issues. 

Dr. SPEIR. Thank you, sir. I think that we have shown in our region that by looking at the STS database outcomes linked to the 

clinical cost with evidence-based guidelines, which is actually door 

number C that was not alluded to before, that we can dramatically 

decrease the cost and improve the outcomes. 

And the pay-fors, as we discussed, while the focus has been off 

the top payments, we can continue to deliver such care which is reflective of what you had said, Congresswoman, and show the improvement in care while decreasing such cost. And I think that this 

is, to dovetail on your previous question regarding fee-for-service, 

that is a totally outcome-exclusive proposition that is only focused 

on volumes of patients, procedures performed or tests that are 

done. 

Mr. SCHRADER. Right. Completely the wrong incentive. 

Dr. SPEIR. That is correct. 

Mr. SCHRADER. I come from Oregon and very much into outcome 

based, and a nice way to marry up to primary care with the specialty care, and I think the way you guys are doing it is just really 

exciting and going to happen regardless of what we do, I think, 

here in Congress, and I am just really pleased with that. 

Last question, if I may, with Mr. Schneidewind. The biggest concern I think a lot of us have is foisting too much of the cost, if you 

will, on the beneficiaries, and we struggle with this. I have been 

involved in different work groups trying to figure out how can we 

minimize that impact. I don’t think my seniors are afraid to pay 

a little bit more as long as everyone is paying something, but they 

want to make sure they get the quality care that they get at the 

end of the day. 

Some of the proposals with the means testing or the combining 

premiums, you talked a little bit about the deductible issues that 

seniors face, what if there were exclusions or work with your group 

and others to make sure that the low-income folks below——pick 

a number, 200 percent of poverty level or whatever it might be—— 

are excluded from some of these beneficiary cost-sharing ideas, 

would AARP be willing to work with us on something like that? 

Mr. SCHNEIDEWIND. Well, one of the concerns that we have, and 

we have seen this in the proposals to income relate, for instance, 

premiums, that right now somebody at the top range is paying 

three times the premium as somebody at the bottom. And we worry 

that the more those premiums go up, for instance, the more incentive these people have to simply go off Part B and seek their insurance elsewhere, because right now those premiums are very high. 

And some of the proposals we see, for instance, really start kicking 

in at $85,000 of income, whereas the IRS considers a wealth person 

$400,000. 

You are really starting to reach down and increase the cost of 

care for a lot of people. Right now, as I have said also, the people, 

let’s say half of the people are at $23,000 of income, and they are 

already paying $4,000 of that in medical care, and they are paying 

premium increases as they occur, and they have incurred steadily. 

194 

So we think with the very promising savings that are available 

in the prescription drug arena, through some other reforms, looking 

at the payments, for instance, to, you know, upcoding on Medicare 

Advantage—— 

Mr. SCHRADER. OK. Very good. My time has expired. I will take 

that as a no, but thank you very much. 

Mr. GUTHRIE. Thank you, Dr. Schrader. 

Dr. Schrader’s time has expired. 

Mr. Lance of New Jersey is recognized. 

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

I would have been surprised if anybody on the panel had not favored a permanent solution. And I have read the testimony, including the suggestions that have been made. In my own view, it will 

be very difficult to achieve this by March 31. And, for me, the question is, is there a method to pay for a permanent solution that can 

pass both houses of Congress, be signed into law by the President 

of the United States? I think that is an extremely difficult question 

to answer. 

And I am also concerned by the fact that the deadline approaches 

and we have other fundamental issues regarding healthcare policy 

that we may have to address in this session, particularly if the Supreme Court rules, as it may very well rule, that there can be no 

subsidies to the Federal exchange. 

Is there anybody on the panel who might be willing to address 

that potential as it relates to SGR? 

Don’t all volunteer at once. Anybody on the panel? 

My point, obviously, is that these are great issues with moving 

parts, and they are not simply an issue that relates to SGR, although SGR is an important component of it. 

Mr. Umbdenstock, some say that SGR reform is Medicare reform 

rather than simply a physician payment bill, and in your report, 

‘‘Ensuring a Healthier Tomorrow,’’ there have been a number of 

suggestions made. What was the catalyst for the report, and why 

do you think that Medicare reform is important, particularly in the 

context of SGR? 

Dr. UMBDENSTOCK. Thank you very much, sir. 

First of all, the catalyst for the report was an update of our view 

of what additional changes need to happen, and that was done 2 

years after the passage of the Affordable Care Act. 

Mr. LANCE. Yes. 

Dr. UMBDENSTOCK. So we updated our reform principles and 

framework. And in there we stressed not only the various issues 

that we think need to be addressed, but this notion of shared responsibility, that providers and consumers and suppliers and government and private sector, we are all going to have to make 

changes in order to get this done. 

Secondly, SGR is important. It is critical. It has been kicked 

down the road for too long. The uncertainty that comes with it for 

physicians and therefore for patients and access, we have just got 

to solve it. But it is not the sum total of Medicare reform. So we 

have to think about solving this problem in the context of how the 

solutions may also help us in the long-term reform of the program, 

and that is why we proposed some of the things that we did for 

your consideration. 

195 

Mr. LANCE. Thank you. 

And to Dr. Speir, the Society of Thoracic Surgeons has a national 

database, and you have discussed that in your written testimony, 

and you have discussed the fact that it might be applied to the 

Medicare program at large. And if you would discuss with the committee your views on that and the positive outcomes that you have 

experienced in your field from an innovative use of data and implementation of this program. 

Dr. SPEIR. Thank you. We feel very strongly that the registries 

are really applicable not only to procedurally based practitioners, 

but really to all physicians, and that the time is now for us to not 

only be accountable and begin to participate with such registries 

regardless of our specialization, but then use that data in the turnaround to improve our care and therefore reduce the cost. 

It is not only for the Medicare patients, but anyone that undergoes cardiac surgery or any procedures, or pulmonary resections for 

esophageal resections or anything to do within our specialty. These 

registries and the concept of that have also been expanded in other 

fields, whether it is vascular surgery, neurosurgery, and more and 

more are getting on board with that. But that is our future, all of 

us. 

Mr. LANCE. Thank you. 

In conclusion, let me say I want to associate myself with the fine 

work of Dr. Burgess and also with the comments of Chairman 

Emeritus Barton. And I do think that we should look sincerely at 

Chairman Barton’s suggestion regarding funding, perhaps to some 

extent from Internet poker. And the reason that this issue has not 

been resolved institutionally in Congress is that it is a very difficult issue, and we have panels come before us all the time saying 

a permanent solution is necessary. It is much more difficult to determine how to pay for it. 

Thank you, Mr. Chairman. 

Mr. GUTHRIE. The gentleman yields back. 

Recognize Mr. Butterfield of North Carolina. 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman, and let 

me apologize for being late. I have been multitasking all morning 

long, as all of my colleagues do every day. 

But thank you for coming, thank you to the six witnesses. 

And thank you, Mr. Chairman, for convening this hearing. 

I am encouraged by the hearing so that we can talk about the 

long-term concerns that are facing the Medicare program. My goal 

as just one single member of this subcommittee is to provide greater certainty for providers and beneficiaries, and I am happy, very 

happy, that there is a bipartisan agreement, as it appears, that is 

pursuing a permanent fix to the SGR as the most prudent way to 

go forward. 

Since 2003, Congress has patched the formula, as we all know, 

17 times at least, each time causing trepidation among providers 

and beneficiaries. Seniors in my district, including more low-income 

individuals and many African-American citizens, do not know if 

they will be able to see the same doctor next year. My providers 

do not know if they will be able to serve the same patients next 

year. 

196 

So we can, Mr. Chairman, and we must come together and find 

a long-term solution to this problem, and this bill is a step in the 

right direction. Mr. Chairman, we can fix this thing. The pay-for 

is obviously the problem, but I believe that if reasonable minds can 

come together and forget the partisanship, and I think if we sit together, we can figure this thing out and get a permanent fix to this 

problem. I will make the observation that it cost $144 billion to fix it over 

a 10-year period, and that is, indeed, a lot of money, but we have 

to talk about budgeting in relative terms. We spent $10 billion per 

month in Iraq, and that is 14 months of conflict in Iraq versus a 

permanent fix for the SGR. Mr. Chairman, we can do this thing. 

Let me ask my question to the president-elect of AARP. I cannot 

pronounce your name. I am from the rural South, and I dare not 

even try it. But, sir, we have heard a number of proposals that 

would reduce the Medicare benefit for those currently on the program or those even eligible for Medicare. For example, we have 

heard proposals from others on the other side of the aisle that 

would gradually raise the Medicare eligibility from 65 to 67. You 

know all about that. 

This proposal is very concerning to me because I think that it is 

a little bit shortsighted. Its consequences are far-reaching. These 

people will still need coverage, and certainly they will get sick. I 

also believe this change would be breaking a longstanding 

intergenerational promise that we made to the American people. 

Very quickly, can you speak to the effects of raising the Medicare 

eligibility age, at least on the members that you represent? 

Mr. SCHNEIDEWIND. Well, our feeling is that it represents really 

a cost shift, not a cost savings, and let me describe that. By raising 

the eligibility rate, you end up having people on their Affordable 

Care Act insurance, if they have it, for a longer period of time or 

their private insurance. That means that the pools there have to 

pay for an older population because the age to transfer to Medicare 

is extended. So the costs go up, and those costs are borne by businesses, by governments, and by those who provide insurance to 

their employees. So it hurts the economy. 

On the other hand, for Medicare, it ends up making the population in the pool older on average, because coverage starts at an 

older age, and that increases Medicare costs. So you have increased 

costs for Medicare, you have increased costs for private and ACA 

insurance, you have increased costs for employers who hire people, 

and, because those effects now are being looked at, my information 

is that the estimates of savings from this measure have been drastically reduced by the Government Accounting Office, because they 

have fully understood now what this would really do. 

Mr. BUTTERFIELD. So the cost of raising it by 2 years is insignificant in the scheme of things? 

Mr. SCHNEIDEWIND. Well, it has turned out to be a lot. The savings have turned out to be almost nonexistent when you look at 

Medicare, the private insurance market now, the ACA, and the fact 

that rather than eliminating costs, you are simply shifting the cost 

to different forms of insurance. So our information is that, yes, indeed, the estimates of the overall savings have shrunk drastically. 

Mr. BUTTERFIELD. And that is the position of AARP? 

197 

Mr. SCHNEIDEWIND. Yes, that we oppose the raising of the Medicare eligibility rate, because it would make Medicare on average 

more expensive, because the risk pool is now older. It would shift 

costs to the current employers, government, businesses, and others, 

make their plight worse. And because of that, we don’t see net savings, we just see shifting in cost. 

Mr. BUTTERFIELD. Thank you. Sir. 

I yield back, Mr. Chairman. 

Mr. GUTHRIE. Thank you. Gentleman yields back. 

Recognizes Ms. Brooks from Indiana. 

Mrs. BROOKS. Thank you, Mr. Chairman. 

This is to Mr. Umbdenstock. Did I get your name right? 

Dr. UMBDENSTOCK. Yes. Thank you. 

Mrs. BROOKS. Each year, and in my district of northern Indianapolis into the north, I hear from hospitals all the time, they dedicate so many resources and so many dollars to avoid the unintentional technical violations of the Stark Act. And it seems to me that 

these paperwork-type of violations, which often come from often 

minor violations, result in the hospital paying millions of dollars in 

Stark Law penalties. 

And I was a cosponsor in the last Congress of the Boustany-Kind, 

the Stark Simplification Act, that would limit the penalty a hospital can pay, can suffer for committing a technical violation, create 

an expedited process with CMS. But I think, more importantly, industry officials have produced reports showing they could generate 

a billion dollars in new revenue if this type of law were to be 

passed. Not a savings, but in fact revenue. 

Can you please comment on whether or not you agree with this? 

Does the AHA support the Stark Administrative Simplification Act 

in the last Congress, and do you believe that it will actually generate new revenue? 

Dr. UMBDENSTOCK. Thank you very much for the question. And 

absolutely we are supportive and we appreciate your support of 

that bill. You are exactly right that hospitals are being tied up endlessly for situations that were unintentional, technical in nature, 

and had no adverse impact on the program or the beneficiaries. So 

we really want to see that type of relief instituted. 

I have to say that I am not familiar, I am sorry, with studies 

that would show how this would increase revenue to the government. Maybe you could help me. 

Mrs. BROOKS. If this bill were to be reintroduced, is AHA going 

to be supportive of Stark simplification? 

Dr. UMBDENSTOCK. Indeed. Indeed. Yes. Thank you. 

Mrs. BROOKS. And do you think it at least could be and maybe 

should be part of the discussion about a pay-for for SGR repeal? 

And how could they be connected? 

Dr. UMBDENSTOCK. Certainly, if it would produce savings and 

simplify the work experience, the overhead costs, the unnecessary 

costs of compliance to the hospital field, we would definitely see 

that as a plus. 

Mrs. BROOKS. To Dr. McAneny, I have appreciated the way in 

which you have given us some very concrete examples of how your 

patients are impacted, and I again want to also commend Dr. Burgess for his leadership on this issue. 

198 

Can you share with us a few more examples of how this bill 

would have the potential to help increase the quality and the services, delivery of care, to seniors and the disabled? How can we do 

a better job articulating to the general public how fixing the SGR 

will actually improve quality and delivery of care? You mentioned 

things of uncertainty in physicians’ practices, but can we talk a little bit more specifically with respect to quality of care for patients? 

Dr. MCANENY. Certainly, and I very much appreciate that question. 

Right now there is a limited amount of money in any physician 

practice that we can spend on improving what we do, and all of 

that money is currently getting diverted now into trying to comply 

with Meaningful Use, trying to comply with PQRS, filling out all 

of the various insurance company requirements for quality measures, often quality measures that are not applicable to our specific 

specialty. And this bill, I think, is a good vehicle to do that, to consolidate that. We could then take that amount of money and start 

to look at alternative payment programs. 

So to get very specific, in our practice and in the six other practices across the United States that are participating with us in creating the oncology medical home, what we have done is spend a lot 

more of those resources on teaching patients how to use the system, how to get help from us when they need it, what do they need, 

having pharmacy techs who can call up and re-explain what is 

going on with their medications, having nurses on the phone answering questions, having same-day visits and same-day appointments so that patients seek care at a lower cost side of service by 

physicians who know them rather than going to the emergency department who is set up to deal with car accidents and heart attacks and not really cancer patients. 

So the point is that many physicians in various specialties have 

the ability to really designate things that will make a difference in 

their individual practice if we weren’t busy trying to use all our 

time, money, and resources on complying with these other entities. 

Mrs. BROOKS. Thank you. 

And thank you all for saving lives. Appreciate it. 

Mr. GUTHRIE. Gentlelady’s time has expired. 

We recognize Mr. Cardenas of California. 

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

I have a question for Mr. Schneidewind. Some proposals suggest 

one option for raising more money for Medicare is additional income relating to the Medicare Part B premium. Aren’t Medicare 

premiums already income related? 

Mr. SCHNEIDEWIND. Well, yes, they are. In fact, they span, they 

are multiplied almost three times from the basic level if you are 

at the upper-income level of about $213,000. So that the truth of 

the matter is they are heavily income related, and we fear that if 

they are increased too much more people who are paying that may 

find other forms of insurance attractive and leave the Medicare 

pool. And that is a problem because studies have found that the 

upper-income group tends to be more healthy, and, frankly, they 

are making a contribution to Medicare economics, and if they leave 

the plan will be disadvantaged. 

199 

I guess the other thing is that proposals in terms of income relating are reaching down into levels of income that are hardly 

wealthy. I mean, IRS thinks that $400,000 of income is wealthy, 

and yet some of these proposals would reach down to people making $50,000, $40,000, and that is not wealthy. 

Mr. CARDENAS. No, I would say it is not. It doesn’t matter what 

part of the country you are in. 

Part of your response referred to the income averaging of a program. In other words, how revenue comes in and where do you get 

that revenue, et cetera. And if certain components are actually 

pushed out of the system or are encouraged to leave the system, 

then that would cause some kind of imbalance to the entire system, 

correct? 

Mr. SCHNEIDEWIND. Right. If you push out of the system people, 

number one, who are paying the most, by a factor of 3 right now, 

number two, tend to be healthier than average so they impose less 

cost on the system, what you have done is deal a blow to both the 

revenue and the cost adversely. You are raising costs and you are 

decreasing revenue. So we think that really at this point the income-relating features have gone about far enough, and if they go 

further, they will produce those undesirable effects. 

Mr. CARDENAS. Now, on one side you referred to plan premium. 

In other words, how much somebodyis paying to have that plan in 

effect for them and/or their family. Yet at the same time, when 

somebodyis looking at a premium it doesn’t necessarily mean that 

they are comparing apples to apples when it comes to what benefits 

they are getting for that other plan, correct? 

Mr. SCHNEIDEWIND. Well, you mean—— 

Mr. CARDENAS. I mean, it is not inherent. For example, if somebody is paying X amount premium for coverage with Plan A, and 

then all of a sudden they are just looking at the premium mainly 

and they say, well, this premium is $10 less a month, I am going 

to go that, it doesn’t necessarily mean that the person is getting 

equal coverage for less money. It could be that they are actually 

going to something that they don’t realize until later, maybe after 

being it for a year or two or what have you and saying, wait a 

minute, I am talking to my friend Edna who lives next door, she 

stayed on Medicare, I went to this other plan, and she, as it plays 

out, I might be saving a few bucks a month, but at the same time 

the overall plan, she is actually getting more benefit. 

Mr. SCHNEIDEWIND. That is correct. And I think AARP very 

strongly believes that it pays to be a smart shopper, that what we 

have seen is that there is a rapid annual shift in premiums, even 

the same plan. So we advise our members and try to help them 

seek out the most advantageous plans and compare apples to apples, as you have said. 

Mr. CARDENAS. Well, I think it is important for us to understand 

that, especially the lower-income Americans, what have you, although they might be very smart or what have you, but might be 

making decisions without being very well informed. Yet at the 

same time when it comes to the plan layout as it is today, there 

was a lot of thought and calculus going into that already, correct? 

At least on the end of putting these plans out there. 

200 

Mr. SCHNEIDEWIND. Well, sticking just to Medicare, of course, 

you know, that is a uniform benefit, although there are chances to 

go to Medicare Advantage. You have that choice. If you go to a traditional Medicare there are certainly a lot of supplements out 

there. Customers have proven very capable of choosing among 

those. And as I said, AARP certainly has tried to make and help 

our members be wise purchasers. 

Mr. CARDENAS. Yeah. I would like to commend AARP, because 

when they showed me how involved they were in this new paradigm shift, that they were actually one of the best Web sites I had 

seen out there, and they were doing it on their own volition. And 

I think it not only educated seniors, but it educated family members beyond that. I know that when my parents were around, us 

kids always got involved in these decision processes. So it was a 

learning experience not only for them every time we did that, but 

it was something we took with us. And now that I have my own 

family, I am glad that that opportunity took place. 

Thank you very much, Mr. Chairman. I yield back my time. 

Mr. GUTHRIE. Thank you. The gentleman’s time has expired. 

The chair recognizes Mr. Collins from New York. 

Mr. COLLINS. Thank you, Mr. Chairman. If we could ask the witnesses to kind of speak right into the microphone to hear you. I 

mean, it is almost impossible. 

First of all, my question is going to be directed at Dr. McAneny 

and Mr. Umbdenstock. But first I want to thank Mr. Schneidewind 

for your comment on the age 67 cost shifting. It is a very poignant 

point. 

Mr. GUTHRIE. Mr. Collins, is your microphone on? I request that 

you speak into the microphone. 

Mr. COLLINS. I am speaking into it, but it wasn’t on. I guess Ms. 

Brooks turned it off. 

But I also have a request. Can you take my wife’s name off your 

mailing list? She doesn’t want to be reminded she is 50 years old. 

So if you could do that, I would appreciate it. 

Mr. SCHNEIDEWIND. I will do my best. 

Mr. COLLINS. My comment really is on the defensive medicine 

side and the need for medical insurance liability reform, which the 

CBO says could pay for half of this SGR fix, but also save a lot of 

money in other areas beyond Medicare. 

If I could ask, Dr. McAneny, maybe spend 2 minutes on that or 

a little less, and then shift it over to Mr. Umbdenstock, how the 

defensive medicine piece plays in. And I have heard numbers it can 

be as much as 20 percent of our medical costs, running tests and 

the like that really aren’t necessary. But defensive medicine 

against lawsuits. 

Dr. O’SHEA. Dr. O’Shea will answer your question. 

I come from California. In California we have MICRA. MICRA is 

a gift. MICRA is a gift to physicians. MICRA contains our medical 

malpractice insurance. I always tell my patients I am glad that I 

have medical malpractice, I am human, if I make a mistake, I really want you to be able to garner the best benefits for it. But that 

doesn’t mean outrageous fees for the pain and suffering that mostly 

don’t go to the patient either. 

201 

When you have contained costs this way, it lowers the overhead. 

And private practitioners will tell you we live on a margin. I know 

some of my OB-GYN colleagues, including my husband who is an 

OB-GYN, can work 4 to 5 months out of the year just to pay for 

their medical malpractice. Where does that leave a private practice 

to do any kind of innovation, to do any other kind of cost savings 

in their medical home, develop other systems to try and innovate 

for their patients, when you are your own practice? Medical malpractice is a big issue that is not going to go away. We do want 

to have it, but we want to have it where it actually benefits the 

patient and maybe not someone else. 

Dr. UMBDENSTOCK. Thank you, sir, for the question, and I would 

agree with the sentiments just expressed. Yes, it is a big issue. Our 

costs in that area continue to rise. But as you point out, it does encourage defensive medicine. That only exposes patients to more 

interventions, for more potential for things to go sideways or not 

well. The estimates I have heard are similar to what you say, about 

20 percent, one in five decisions some physicians tell me. 

I think we need to think about a more expeditious approach, to 

Dr. O’Shea’s last comment, that really does help the aggrieved patient quicker, more simply, more respectfully, something that encourages the practitioner and provider organization to come forward and acknowledge if something has gone wrong, an open apology to the family, work together, but look for more of an administrative approach, and the AHA can provide ideas on how to do that. 

Mr. COLLINS. Thank you. 

One last word, then, from Mr. McAneny. 

Dr. MCANENY. Yes. Thank you very much. 

TheAMA has extensive policy on the effects of professional liability on the ability to deliver care. It is at best a diversion from the 

things that we want to be able to do. 

If we were able to, again, redirect all of the efforts that are made 

towards triple checking and quadruple checking ourselves by getting more and more testing in order to be able to cover ourselves 

I think we would be able to divert a lot of that money into things 

that would be better care for patients. So the AMA is happy to 

work with the committee on trying to look at what the effects of 

professional liability reform would be. 

Mr. COLLINS. Real quickly, we have 30 seconds, could I just ask 

each of you, do you agree that the need for medical malpractice reform is right at the top of the list? 

Dr. UMBDENSTOCK. Yes. 

Dr. MCANENY. Yes. 

Mr. MILLER. Absolutely. 

Dr. SPEIR. Yes. 

Mr. SCHNEIDEWIND. I am not sure that that would be at the top 

of our list. 

Mr. COLLINS. But it is important. 

Mr. SCHNEIDEWIND. It may be important. I haven’t prepared a 

detailed answer on that, but we will look at it. 

Mr. COLLINS. Yeah. Very good. Thank you all very much for your 

participation. 

Yield back, Mr. Chairman, 5 seconds. 

202 

Mr. GUTHRIE. Thank you. I appreciate the gentleman for yielding 

back. 

The ranking member of the full committee is recognized for 5 

minutes. 

Mr. PALLONE. I am sorry, Mr. Chairman, I didn’t realize who you 

were talking about. But that is okay. I guess it takes a while. 

I wanted to ask Mr. Schneidewind, hope I am pronouncing it 

properly, I am concerned that some would tie the SGR to other poison pills that would cut access to care or increase costs on beneficiaries. And seniors already bear significant out-of-pocket costs in 

Medicare, and most are living on very modest incomes. In fact, half 

of all Medicare beneficiaries have incomes below $23,500. You have 

heard that figure. 

Can you talk a little about a typical income of Medicare beneficiaries and the out-of-pocket costs, you know, premiums, 

deductibles, other cost-sharing burdens that beneficiaries already 

bear as a share of their income. 

Mr. SCHNEIDEWIND. First of all, the $23,500 income and 17 percent of that income is spent on medical care, that is $4,000 out of 

$23,500. I mean, that is huge already. It represents about 25 percent of the average Social Security benefit that these people get. 

Once again, huge amounts. 

Now, these people already pay a Part B premium of about $105 

roughly per month, and then on top of that they pay their 

deductibles and copays, and some of them may end up buying, if 

they have standard or traditional Medicare, may end up buying 

supplemental coverage as well. 

So you can see that not only in percentage of income, but they 

have seen increases. They fully participate, for instance, every time 

Medicare Part B premiums go up, as they do and as they have, the 

people who buy that coverage are participating in paying for those 

increases. 

So we believe that the burden on, particularly, lower-income people, but all people, is very significant, and AARP really believes 

that, if there are savings to be made, if there are offsets to be 

made, that we need to look at economies and prescription drugs in 

terms of payment reforms, such as are contained in this legislation, 

and other things, such as competitive bidding for durable medical 

equipment and things like that. 

Mr. PALLONE. And then, I mean——yeah. I am kind of putting 

words into your mouth. 

But when costs are too high, I assume a lot of beneficiaries in 

some cases just forego care. And do you want to just talk about the 

consequences of that briefly. 

Mr. SCHNEIDEWIND. Yes. You know, that is a particular concern 

of ours when discussion is had about increasing co-pays or 

deductibles. 

The downside of that is that people then are reluctant to go in 

and see their healthcare provider, whether it is a hospital or a doctor, and they may not get the care they need. 

And then, of course, down the road, it may be that they have a 

condition that worsens drastically for lack of a modest amount of 

care and then becomes a burden on the entire system. 

203 

So we really believe that many of the proposals to increase 

deductibles and co-pays will produce higher costs for the system 

and have adverse consequences. We don’t believe it is good for providers, the public, or the recipient. 

Mr. PALLONE. OK. Thank you. 

Dr. O’Shea, I believe that ensuring appropriate access to primary 

care is critical to improving our healthcare system, and one of the 

goals behind the ACA was moving our system to one of prevention 

so that we are not always treating sickness because of the cost, in 

part. 

And, as you know, one of the provisions in the ACA was increasing payments for Medicaid primary care doctors to Medicare rates. 

Obviously, I think that is a good thing. 

And I guess——let me just skip some of this and ask you the two 

questions because we are running out of time. 

One, does the AOA support extending the primary care increase 

in Medicaid? And can you talk about what effect this bump has had 

across the country. And do you believe it is an effective way to address access? 

Dr. O’SHEA. Can I say yes? 

Mr. PALLONE. OK. 

Dr. O’SHEA. No. Sir, the access to primary care is so necessary 

when you are actually talking about this mostly chronically ill. 

Why are——in California, we call it Medi-Cal. 

Why a lot of times are they actually at this level? It is not just 

income. They have already had acute and then chronically ill patients that can’t work, can’t, you know, economically have their 

own ways to have higher care. 

Yes. The bump has helped, especially in California, because there 

was a 10 percent cut not too many years ago where, you know, if 

you are not in a larger system, it is hard for smaller primary cares 

to actually accept those lower-paid patients. You know, they will 

pay us at something like 20 to 22 cents on the dollar for what other 

insurance will. 

So, yes, you have the most needy population that then would cost 

the most for the hospital systems because that is where they are 

headed if they don’t get the primary intervention earlier. That 

small boost has been made. 

So primary care that has an efficient system can actually help 

those patients and it has been able to access more of those patients 

and provide care for them. 

Mr. PALLONE. Thank you. 

Thank you, Mr. Chairman. 

Mr. GUTHRIE [presiding]. Thank you. 

The ranking member Mr. Pallone from New Jersey’s time has expired. 

And I will recognize Mr. Long from Missouri. 

Mr. LONG. Thank you, Mr. Chairman. 

And thank you all for being here today. 

Yesterday the subcommittee heard from policy experts with experience in building bipartisan consensus on Medicare reforms. 

And when they were asked about whether further study of various options was needed, their view was that Congress has enough 

information already, we are kind of talking the thing to death, and 

204 

now is the time for Members to sit down and agree to a package 

of offsets to make SGR history. 

So I want to start with Mr. Umbdenstock. Is that it? 

Mr. UMBDENSTOCK. Yes, it is. 

Mr. LONG. Something like that. 

Mr. UMBDENSTOCK. Thank you. 

Mr. LONG. I knew I would call you ‘‘Byalistock’’ or something. 

But just a yes or no. I will start right there and go right down 

the line. Just a simple yes or no answer will suffice. And I want 

to hear briefly from each of you. 

Do you believe now is the time for Members to sit down on a bipartisan basis and agree to bipartisan offsets on SGR reform? Yes 

or no. 

Mr. UMBDENSTOCK. Yes, sir. And we have put some suggestions 

in our testimony. So we would be happy to talk to you about those. 

Dr. O’SHEA. Emphatically yes, sir. 

Dr. SPEIR. Yes. And, in part, your second question, if not now, 

when? 

Mr. MILLER. Yes, sir. 

Dr. MCANENY. Yes. We very much would appreciate you doing 

that. We have got such good policy that has come out of this committee. If we can push it over the line, we can get on with other 

changes we need to make. So, yes, please. 

Mr. SCHNEIDEWIND. Yes, Congressman. We have a list of offsets 

that we have offered to help that process. 

Mr. LONG. Unanimous. I like that. 

Because like I——in Washington, sometimes we can get in the 

habit of talking things to death. And everyone wants to do something in a bipartisan fashion and the public wants to see that. Our 

constituents are always asking, ‘‘Why can’t you do something in a 

bipartisan fashion?’’ And I think the time is now. 

Mr. Umbdenstock, I realize that forging consensus within an industry trade association such as yours on changes to Medicare can 

be very challenging. However, the Hospital Association, as you 

know, has endorsed roughly $2 trillion in potential offsets for Congress to consider. 

Given your success in getting your members around these offsets, 

do you have any insights you can offer in working to build cooperation and consensus with others in the provider community and the 

Members of Congress? 

Mr. UMBDENSTOCK. Just a couple of quick comments, sir. 

One would be that every thought we have about this has to be 

put up against the prospect of a 21 percent cut to physicians, with 

physicians probably backing——many of them backing out of the 

program and causing huge access problems for Medicare beneficiaries. Everything has to be seen in that light. 

Number two, hospitals have already consumed——absorbed $121 

billion in cuts, and we don’t believe that we should be asked yet 

again to make sacrifice in that sense. 

We need to see shared responsibility here. All of us need to contribute to the solution to this problem, and that is behind the paper 

that is appended to our testimony that went through about 500 different members in our group to put that together. 

205 

Mr. LONG. Do you think that we might suffer from a physician 

shortage if these cuts continue? 

Mr. UMBDENSTOCK. Well, I think we already do. And we are supportive of lifting the caps on graduate medical education positions. 

That is going to be a long-term solution. We need other solutions 

in the meantime. But certainly it is going to encourage some physicians to think second and third about continuing the program or 

even retiring. 

Mr. LONG. That is exactly what I faced with my personal doctor. 

And a lot of people I know, doctors have retired. Most doctors I 

talked to are looking for a way out. And with my daughter just 

about to graduate medical school, I know that this doctor shortage 

is coming. 

So, anyway, thank you all once again for your testimony. 

With that, I yield back 60 seconds. 

Mr. GUTHRIE. I appreciate the gentleman for yielding back. 

The chair recognizes Mr. Bilirakis of Florida. 

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

much. 

First question is for Mr. Richard Umbdenstock. I hope I pronounced it all right. 

Mr. UMBDENSTOCK. Yes, sir. 

Mr. BILIRAKIS. In your testimony, you noted that traditional 

Medicare does not have an annual out-of-pocket maximum payment cap to protect seniors from financial hardship or bankruptcy 

in the event of a major illness. 

Yesterday, as part of my questioning, Senator Lieberman talked 

about how important a maximum out-of-pocket protection——how 

important that is and how this is the reason most Americans buy 

health insurance. Makes sense. Unfortunately, traditional Medicare 

does not offer seniors this peace of mind. 

Can you talk more about how this reform could lower Medicare 

spending and help seniors at the same time. 

Mr. UMBDENSTOCK. Yes. Thank you very much. 

One overall comment: I think we need to think about the fact 

that structural changes are one thing and where you set the dollar 

limits of responsibility are another thing. 

If we just talk about dollar limits and impact without talking 

about structure and opportunities for change, I think we miss a lot 

of the important part of the conversation. 

As you point out, we may focus heavily on premiums, but if we 

don’t focus on total costs and total financial responsibility, we miss 

the bigger picture. 

So, yes, we would be in favor, as we talk about the A and B construction or other structural changes, of seeing how we can maybe 

up the financial responsibility on some people——proper protections for those at low-income level, phase it in over time——do it 

right, but at the same time think about things that currently don’t 

exist in the program, such as a cap. And that would be——in a catastrophic sense, that would be really important to do. 

Mr. BILIRAKIS. Thank you so much. 

Again, for you, sir, according to the CBO, Medicare spending will continue to climb over the coming decade, totaling more than $1 

trillion in 2024. 

206 

One of my worries is that, as Medicare costs grow and consume 

more general revenue dollars, it will crowd out other domestic discretionary priorities, such as NIH research and, of course, the VA 

health care, which I care about deeply. 

What Medicare reforms do you think could be adopted with the 

SGR that would help curb Medicare spending the most? 

Mr. UMBDENSTOCK. Well, as was pointed out by the gentleman 

just a minute ago, we have put forth several suggestions in our testimony. 

We have also looked across all of the items that have been scored 

by CBO in the healthcare space and have offered that up on our 

Web site as a longer list of possibilities. 

I think we would have to talk about what changes and in combination with what other changes rather than any one major bullet, so to speak. May be a bad choice of term. Pardon me. But the 

ones that we put forth in our testimony are ones that we think 

hold great promise and should be examined. 

Mr. BILIRAKIS. OK. I would like to maybe mention one again for 

you, Mr. Umbdenstock. 

According to the Social Security Administration data, there are 

thousands of seniors with annual incomes of more than a million 

dollars. 

In your testimony, you address the issue of premiums and mention the Government subsidizes the premiums for everyone, including millionaires. You also mention that the American Hospital Association supports increasing income-related premiums. 

Can you talk about why you think it is reasonable to charge 

them more. 

Mr. UMBDENSTOCK. Well, I think each of us has to share in this 

responsibility individually as well as organizationally. So that is 

the first principle. 

Secondly, we do want to see protections continue for those of low 

income and low means for sure. It doesn’t help us at all to charge 

something to somebody that they can’t afford. 

That just increases administrat——it certainly increases the negative experience for the patient. It increases our administrative 

costs. It increases our bad debt. 

We have had debates with Congress over the level of our bad 

debt reimbursement. So it doesn’t solve any problem for us. 

But where somebody can afford it and where we can do it more 

efficiently with the right protections for those who can’t, I think we 

should. 

Mr. BILIRAKIS. Very good. 

Thank you, Mr. Chairman. I will yield back my 29 seconds. 

Thank you. 

Mr. GUTHRIE. Thank you. 

The gentleman yields back his time. 

Mr. Bucshon of Indiana is recognized for 5 minutes. 

Mr. BUCSHON. Thank you, Mr. Chairman. 

And many of you know I was a practicing cardiovascular and 

thoracic surgeon for 15 years prior to coming here. And this is one 

of the issues that got me to come here because I have a big concern, as we all do, basically, at the end of day, about our patient. 

207 

And that is what this is all about. Everything we discuss today 

needs to be framed in the context of how we can better take care 

of patients, and I think that is what I try to do. 

I have supported outside pay-fors——pay-fors outside of the 

healthcare sector to try to address the SGR historically. And, by 

the way, I did submit all of my cases to the STS database. 

And I think the STS database is really on the forefront of quality 

analysis and it does definitely, I can tell you from personal experience, direct where you practice your——how you practice your medicine. 

I always compared myself to my peers and saw how things were 

going and tried to do everything I could to improve the quality of 

the care that I offered. 

The other thing is, briefly, when you also——in addition to the 

SGR, we clearly need to address overall healthcare costs. One of 

the ways to help Medicare, of course, is to have the cost of 

healthcare come down. 

And we need more, I think, as the STS database attests, quality 

information as well as price transparency for the consumer, which 

is a huge problem, in my estimation, as well as tort reform, which 

has been discussed. And there is a laundry list of other things that 

can help us get the overall cost of healthcare down. 

Dr. McAneny, I am going to ask you about——the AARP, as well 

as the AHA, have submitted ideas on the pay-fors for SGR. And, 

historically, the AMA has supported repealing the SGR without 

pay-fors. We could use your——we can really use your help—— 

your organization’s help in offering pay-fors. 

Can the AMA offer some substantial possible pay-fors for us to 

look at to help us repeal the SGR? 

Dr. MCANENY. Thank you very much for that question. 

It is a very difficult one because, within the healthcare sector, so 

many people are struggling now just to keep their doors open to 

their patients that for us from within the healthcare sector to really come up with a specific pay-for may not be as useful until there 

are some guidelines set up by Congress on what are the rules of 

this particular budgetary process, how do we fit those things within 

that. 

I think the AMA stands ready to assist and help by weighing in 

on any given suggestions, but I think we are very uneasy and feel 

that we don’t really have the ability to give you specific pay-fors. 

The devil in this is all very much in the details. So—— 

Mr. BUCSHON. The reason I say that is because——I think it is 

important that you really seriously consider offering some options. 

And the reason I say that is because, in the public’s mind—— 

okay?——the support of the AMA on an issue, for better or for 

worse, is often used as an up-or-down on something related to 

healthcare. And you know this as well as I do. 

Dr. MCANENY. Right. 

Mr. BUCSHON. Because, if the AMA, for example, offered payfors, you know, around the country when this discussion comes up, 

it will list in there, ‘‘And the AMA supported this.’’ 

If the AMA is not there and the AMA doesn’t comment, then it 

is going to say, ‘‘Well, we asked the AMA and they didn’t respond 

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to our request’’ and so it appears that the AMA may not be supporting. 

You understand what I am saying? 

Dr. MCANENY. [Nonverbal response.] 

Mr. BUCSHON. And what it is used for is it is used politically. It 

is political. It is a political way to——if something is not tenable 

to certain groups, to use the AMA’s up-or-down support on an issue 

as the reason for why it is not happening. 

And so I would just implore you to really reconsider that——you 

know, the AMA reconsider and maybe help us rather than waiting, 

you know, for other options and then coming out and saying, ‘‘Well, 

up or down, we disagree’’ or ‘‘we agree.’’ 

I mean, I think, in all of our lives——right?——if you are going 

to offer an opinion at the end, then you should be part of the—— 

offering solutions on the front side. 

Because, in fairness, I think, you know, whether it is within your 

own family or whether it is to solve this problem, if you are just 

going to wait and be a critic and not offer solutions yourself, to me, 

that is not very helpful. 

So with the remaining 18 seconds, just please reconsider and try 

to really help us. You can help us with this problem with offering 

solutions. 

Mr. Chairman, I yield back. 

Mr. GUTHRIE. Thank you. 

The gentleman yields back. 

Mr. Griffith of Virginia is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate it. 

Let me touch on tort reform, medical malpractice, just briefly. 

I heard the testimony about California’s plan. Works great for 

California. But we have had some bills in the past that wanted to 

take the California model and apply it nationally. 

One of the problems I have with that, coming from Virginia, is 

that California has a comparative negligence model in their entire——all of their torts, not just medical malpractice. 

Virginia is not a comparative negligence state. It is a contributory negligence state. So if you adopt the California model——it is 

one of the things we have to be careful for in Congress. If we adopt 

the California model and apply it statewide, we completely reverse 

400 years of Virginia law. 

There are ways to have tort reform without making it one-sizefits-all from Washington, and I think that is probably what most 

people would want us to do. So we just have to be careful. 

So if occasionally you see people talking about tort reform and 

then something happens on the way from here to the floor, you understand why that might occur. 

But you would agree that tort reform——and I will ask the 

gentlelady the question from California. 

You would agree that tort reform is something that would be 

helpful in this process as long as we make sure we are not trampling over the general laws of the State? 

Dr. O’SHEA. I totally agree. And I can say, being a practicing 

physician in California, our Practice Act had been opened. And so 

it might be analogous to that, that you always have to——that the 

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Pandora can jump in and many Pandoras jump back in again, out 

and in. 

But if it is an access to patient care, if it is not abling especially 

specialists or even primary care——if they want to treat indigents, 

if they want to treat others, you are lowering their ability to have 

their own funds that they need, that they have to generate some 

way. So there is another way. Is it coming from or is it going out 

of? 

So I would totally agree that we have to be sensitive to each 

State, but limiting malpractice is something that needs to be done. 

Mr. GRIFFITH. And I would hope that the other respective States 

would do what California has done, what Virginia has done, what 

Texas has done now. And each State has their own model. 

In Virginia, they have done a great job. And I can’t take any 

credit for it, although I served there. But the doctors and the trial 

lawyers got together and came up with caps. 

And sometimes they argue about it, but they come to the legislature generally with a plan of what we want to do, does the cap 

need to be raised, does this need to be changed, et cetera. 

And they have worked together as opposed to getting into pitched 

wars, which makes it a lot easier on legislators to figure out, ‘‘OK. 

If they are in agreement and they can both live with it, then it is 

probably makes pretty good sense.’’ And I would encourage the 

other States to do that as well. 

Let me ask Mr. Schneidewind this. Last May the Office of the 

Actuary at CMS said that Medicare’s hospital insurance trust fund 

could be insolvent as soon as 2021 or as late as 2030. Under current law, there is no ability for the program then to pay claims on 

behalf of seniors. 

Given these empirical facts, do you acknowledge that, if left 

unaddressed, Medicare’s coming insolvency could present an access 

problem for seniors on Medicare? It is an easy answer. 

Mr. SCHNEIDEWIND. Well, if it doesn’t have the funds to pay 

claims, it would certainly have an impact on seniors. 

Mr. GRIFFITH. Absolutely. 

On another policy issue both for you and the AMA, the President’s 2015 budget to Congress includes a proposal that would 

apply——or included a proposal that would apply a $25 increase to 

the Part B deductible in 2018, 2020 and 2022, respectively for new 

beneficiaries. Beginning in 2018, current beneficiaries or near-retirees would not be subject to the revised deductible. 

Has your organization taken a position on this policy? And, if so, 

what is it? 

Mr. SCHNEIDEWIND. Yes. We have taken a position in opposition 

to that proposal. 

And we have said before the burden of medical costs on our 

members is significant. Half of them have an income of less than 

$23,500 a year and they pay——on average, that group pays $4,000 

for medical costs. Also, as Medicare premiums, Part B, are raised, 

they pay those increases. 

So imposing yet another deductible increase or expense on this 

group is really, we think, unaffordable, and we think there are far 

better ways to restrain costs in healthcare, in general, and in the 

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Medicare program, in particular, than raising premiums or 

deductibles. 

Mr. GRIFFITH. And Dr. McAneny. 

Dr. MCANENY. Thank you for the question. 

We don’t have any immediate policy on the President’s budget 

proposal that we just heard on the State of the Union very, very 

recently, but we do have policy that we want to help consumers 

pay our patients to spend wisely and make wise choices. 

Many of our specialty societies have adopted programs that we 

work with on choosing wisely to use those procedures that are helpful and not use the ones that are not needed or could be avoided. 

There is literature that deductibles and co-pays can both decrease access to useful care as well as unuseful care. So we think 

that this is going to be a more complicated issue. We will be happy 

to get back to you on that and work our way through that. 

Mr. GRIFFITH. I appreciate that very much. Appreciate your testimony. 

And I yield back. 

Mr. GUTHRIE. Thank you. The gentleman’s time has expired. 

All Members seeking recognition have been recognized. And I 

want to remind Members that they have 10 business days to submit questions for the record. 

And I ask the witnesses to respond to the questions promptly. 

Members should submit their questions by the close of business 

on Thursday, February the 5th. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 12:34 p.m., the subcommittee was adjourned.] 

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