U.S. GOVERNMENT PUBLISHING OFFICE

33–429 WASHINGTON : 2019

MEDICARE ADVANTAGE HEARING ON PROMOTING 

INTEGRATED AND COORDINATED CARE 

FOR MEDICARE BENEFICIARIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JUNE 7, 2017 

Serial No. 115–HL02 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

JUDY CHU, California 

DAVID STEWART, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

PATRICK J. TIBERI, Ohio, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

ERIK PAULSEN, Minnesota 

TOM REED, New York 

SANDER M. LEVIN, Michigan 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

JUDY CHU, California 

iii 

C O N T E N T S 

Page 

Advisory of June 7, 2017, announcing the hearing ............................................... 2 

WITNESSES 

Gretchen A. Jacobson, Ph.D., Associate Director, Kaiser Family Foundation’s 

Program on Medicare Policy ............................................................................... 6 

Cheryl Wilson, RN, MA, LNHA, Chief Executive Officer, St. Paul’s Senior 

Services ................................................................................................................. 17 

David C. Grabowski, Ph.D., Professor of Health Care Policy, Department 

of Health Care Policy at Harvard Medical School ............................................. 27 

A. Mark Fendrick, MD, Executive Director, University of Michigan Center 

for Value-Based Insurance Design ..................................................................... 33 

QUESTIONS FOR THE RECORD 

Questions submitted by the Minority Members of the Subcommittee on 

Health of the Committee on Ways and Means to A. Mark Fendrick, MD, 

Executive Director, University of Michigan Center for Value-Based Insurance Design ........................................................................................................... 68 

Questions submitted by the Minority Members of the Subcommittee on 

Health of the Committee on Ways and Means to David C. Grabowski, 

Ph.D., Professor of Health Care Policy, Department of Health Care Policy 

at Harvard Medical School .................................................................................. 71 

Questions submitted by the Members of the Subcommittee on Health of 

the Committee on Ways and Means to Gretchen A. Jacobson, Ph.D., Associate Director, Kaiser Family Foundation’s Program on Medicare Policy ....... 73 

Questions submitted by the Minority Members of the Subcommittee on 

Health of the Committee on Ways and Means to Cheryl Wilson, RN, MA, 

LNHA, Chief Executive Officer, St. Paul’s Senior Services .............................. 79 

SUBMISSIONS FOR THE RECORD 

ACAP, Association for Community Affiliated Plans ............................................. 84 

ACHP, Alliance of Community Health Plans ........................................................ 87 

American Hospital Association (AHA) ................................................................... 91 

America’s Health Insurance Plans (AHIP) ............................................................ 95 

Better Medicare Alliance (BMA) ............................................................................ 104 

Commonwealth Care Alliance (CCA) ..................................................................... 113 

DRIVE Health Initiative ......................................................................................... 117 

EmblemHealth ......................................................................................................... 122 

Genesis Healthcare, Incorporated .......................................................................... 128 

Healthcare Leadership Council (HLC) ................................................................... 133 

National MLTSS Health Plan Association ............................................................ 136 

National Association of ACOs (NAACOS) ............................................................. 141 

National PACE Association .................................................................................... 142 

National Center for Policy Analysis (NCPA) ......................................................... 145 

SCAN Health Plan (SCAN) ..................................................................................... 153 

Special Needs Plan (SNP) Alliance ........................................................................ 155 

Altarum Institute ..................................................................................................... 163 

(1) 

MEDICARE ADVANTAGE HEARING ON 

PROMOTING INTEGRATED AND 

COORDINATED CARE FOR 

MEDICARE BENEFICIARIES 

WEDNESDAY, JUNE 7, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:59 p.m., in Room 

1100, Longworth House Office Building, Hon. Pat Tiberi [Chairman 

of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

Wednesday, June 7, 2017 

HL–02 

Chairman Tiberi Announces 

Medicare Advantage Hearing on Promoting 

Integrated and Coordinated Care 

for Medicare Beneficiaries 

House Ways and Means Health Subcommittee Chairman Pat Tiberi (R–OH), announced today that the Subcommittee will hold a hearing to review the current status of Medicare Advantage programs such as Special Needs Plans, other models like 

the Program for All-Inclusive Care, and emerging models that allow for increased 

flexibility and value-based insurance design that are designed to deliver integrated 

and coordinated care for our most vulnerable seniors and people living with disabilities. The hearing will take place on Wednesday, June 7, 2017, in room 1100 

of the Longworth House Office Building, beginning at 2:00 p.m. 

In view of the limited time to hear witnesses, oral testimony at this hearing will 

be from invited witnesses only. However, any individual or organization may submit 

a written statement for consideration by the Committee and for inclusion in the 

printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Wednesday, June 21, 2017. For questions, or if you encounter technical problems, please call (202) 225–3943. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

All submissions must include a list of all clients, persons and/or organizations on whose behalf 

the witness appears. The name, company, address, telephone, and fax numbers of each witness 

must be included in the body of the email. Please exclude any personal identifiable information 

in the attached submission. 

3 

Failure to follow the formatting requirements may result in the exclusion of a submission. All 

submissions for the record are final. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at 

http://www.waysandmeans.house.gov

f 

/ 

Chairman TIBERI. The Subcommittee will come to order a 

minute early, the record will show. 

Welcome to the Ways and Means Subcommittee on Health hearing on ‘‘Promoting Integrated and Coordinated Care for Medicare 

Beneficiaries.’’ It is my pleasure to welcome our four witnesses 

today as we continue our discussion on the Medicare program and 

the different integrated care delivery systems offered to our seniors, including those up for extension this year. 

The Committee continues to look at ways to reform Medicare and 

improve the delivery of care for our seniors and people living with 

disabilities. I think this is a good place to start. It is looking at 

some of the lessons learned from smaller programs that have offered targeted coordinated care to some of the most frail and sick 

beneficiaries in our Medicare program. 

Today is a great opportunity for us to hear about some of the impediments to providing value-driven care for the population and 

hear solutions that have not only benefited seniors, but taxpayers 

as well. 

PACE, or the Program for All Inclusive Care for the Elderly, is 

an integrated care program that provides hands-on long-term care 

and support to beneficiaries who need an institutional level of care 

but continue to live at home. Although this program offers seniors 

and their caregivers a great opportunity to stay in the community 

and receive the care they need, the criteria for entering a PACE 

organization remains very restrictive. Additionally, the regulatory 

and administrative burdens of operating a PACE facility can often 

make it difficult for PACE organizations to expand and grow to 

serve more beneficiaries. 

Another integrated care option for vulnerable seniors is the special needs plans, or often called SNPs. Congress must act by the 

end of this year to reauthorize SNPs in order for seniors to continue to have access. Yet, we continue to find challenges surrounding care coordination and delivery in certain types of SNPs. 

Due to the lack of integration of benefits and administrative burden of offering a SNP, CareSource, a managed care plan offered in 

my district, has delayed offering SNPs in their current form. While 

continuing to offer other insurance products that serve dual-eligible 

beneficiaries, CareSource finds the integrated model that they are 

using in northeastern Ohio to be better, more effective, and a more 

efficient model to serve dual-eligible beneficiaries, one that reduces 

provider burden and ensures that a patient receives the care and 

support needed to meet their total healthcare needs. 

4 

Today, we will hear from our panel of experts on the benefits and 

challenges to PACE and SNP operations as well as its enrollees. 

We will also explore different bipartisan options for changes to 

these key programs and others within the Medicare Advantage 

space, such as value-based insurance design, that are needed to increase efficiencies, quality, beneficiary experience, and enrollment. 

As the Medicare population continues to grow, it is important 

that we continue to look at how we can move from volume to value 

based across all parts of our Medicare program. 

Today, we will hear about how we can allow more plan flexibility 

within the MA space through incentivizing the use of high- versus 

low-value care and have the potential to lead to lower costs for both 

taxpayers and beneficiaries while improving health and quality 

outcomes. 

I now yield to our distinguished Ranking Member, Mr. Levin, for 

the purposes of an opening statement. 

Mr. LEVIN. Thank you very much, Mr. Chairman, for holding 

this hearing. 

I would like also, as you did, to thank our witnesses for joining 

us today. We have an impressive panel that has prepared a number of thoughtful comments and recommendations. I am pleased to 

see that it includes a fellow Michigander. 

This hearing is about new models to coordinate and integrate 

care for Medicare beneficiaries, especially those who are dually eligible for Medicare and Medicaid. These 11 million Americans are 

among the most vulnerable members of our society. More than 40 

percent are under 65 and live with disabilities and many have very 

complex healthcare needs. In the past, we have had a bipartisan 

commitment to providing high-quality care for this population, and 

hopefully this will continue. 

Unfortunately, the recent actions of my Republican colleagues 

suggest that this may no longer be the case. Last month, the House 

passed an ACA repeal bill that would slash Medicaid by more than 

$800 billion over the next decade, and 2 weeks ago President 

Trump proposed a budget that would further cut Medicaid by $600 

billion. 

These cuts would have a major impact on the people who are the 

subject of this hearing. Cutting Medicaid will hurt those 11 million 

Medicare beneficiaries who are dually eligible for both programs 

and who depend on Medicaid to provide services and cover expenses that Medicare doesn’t. For example, Medicaid reduces outof-pocket costs for low-income beneficiaries and pays for important 

services that Medicare does not cover, including long-term care. 

Ending the ACA’s Medicaid expansion and switching to per capita caps or block grants would shift health costs onto beneficiaries 

and leave many without Medicaid coverage at all. This will reduce 

access to care and put financial strain on low-income seniors and 

people with disabilities. I hope we spend time this afternoon discussing this important issue. 

We are also here to examine three specific models for delivering 

care to Medicare Advantage enrollees. Special needs plans are the 

most prominent of the models we will discuss today. Currently, 

nearly 2.3 million Americans receive coverage through these plans, 

which are tailored to the needs of specific populations of beneVerDate Sep 11 2014 11:00 Feb 22, 2019 Jkt 033429 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33429.XXX 33429
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ficiaries. Special needs plans are particularly important to those 

who are eligible for both Medicare and Medicaid. 

Authorization for the program, as you said, Mr. Chairman, expires next year, and I look forward to working in a bipartisan way 

on an extension that maintains quality while promoting better care 

and stronger protection for beneficiaries. 

We will also discuss PACE. This model has shown promising results by providing coordinated care to frail elderly populations. Although its footprint is small, PACE has allowed thousands of 

Americans to maintain their independence by providing nursing 

home-level care in community settings. 

As we consider the future of this model, our focus must be on ensuring that quality remains high and that we do not sacrifice our 

standards in the interest of expansion. This is particularly important now that for-profit enterprises are eligible to participate in 

PACE. 

Both of these models, special needs plans and PACE, help provide care for beneficiaries who are relying not only on Medicare but 

also on Medicaid. 

Finally, we will discuss value-based insurance design, or VBID, 

a proposal to reduce healthcare costs by promoting high-value care. 

This model is in its infancy in Medicare, and we still need to learn 

more about its impacts on the program and on beneficiaries. To be 

a success, VBID must show meaningful improvements in efficiency 

without reducing access to necessary services. I hope to hear more 

from our witnesses, from all of you, about our options for this 

model moving forward. 

Once again, I thank the Chairman and the panel for joining us. 

And I look forward to very constructive back-and-forth. 

Thank you, Mr. Chairman. 

Chairman TIBERI. Thank you, Mr. Levin. 

Without objection, each of our Members’ opening statements will 

be made part of the record. 

With that, I would like to introduce today’s witnesses. 

First, we will hear from Ms. Gretchen Jacobson, Associate Director of the Program on Medicare Policy at the Kaiser Family Foundation. 

Thank you for joining us today. 

Next, we will hear from Ms. Cheryl Wilson, Chief Executive Officer at St. Paul’s Senior Services. 

I appreciate you traveling all the way from California to be with 

us. 

After Cheryl, we will hear from Mr. David Grabowski, a professor at Harvard Medical School and recent MedPAC appointee. 

Congratulations, by the way, on that appointment. We look forward to working with you on other Medicare policies that come before this Committee in the future as well. 

And last but not least, from what we in Ohio call the State up 

north, from the school up north, Dr. Mark Fendrick from the University of Michigan. 

Is that your son behind you? Is he an Ohio State guy? 

Dr. FENDRICK. Michigan State. 

Chairman TIBERI. I like that. Very good. I like that. 

Mr. LEVIN. Say that again. 

6 

Dr. FENDRICK. Michigan State. 

Chairman TIBERI. Michigan State. I like Michigan State. 

Dr. Fendrick is Director of the Center for Value-Based Insurance 

Design at the University of Michigan. He is also professor of internal medicine at the School of Medicine and professor of health 

management and policy at the School of Public Health at the University of Michigan. He received his BA from the University of 

Pennsylvania, however—that is good—and his MD at Harvard 

Medical School. 

So welcome all of you. As you can notice, I am in a little rush, 

because we have to go vote. 

I think what we will do now, if everyone agrees, we will go vote, 

we will come back, and then we will hear from Ms. Jacobson and 

the rest of you shortly. Sorry for the little break. But with this, we 

are going to break for a little bit, and we will be back. 

[Recess.] 

Chairman TIBERI. Our hearing will resume, and we will get 

right to our witnesses. 

First up, Ms. Jacobson, again from the Kaiser Family Foundation. You are recognized for 5 minutes. 

STATEMENT OF GRETCHEN A. JACOBSON, PH.D., ASSOCIATE 

DIRECTOR, KAISER FAMILY FOUNDATION’S PROGRAM ON 

MEDICARE POLICY, WASHINGTON, DC 

Ms. JACOBSON. Mr. Chairman and Members of the Subcommittee, I am Dr. Gretchen Jacobson of the Kaiser Family Foundation. I am honored to be here this afternoon to testify on the 

topic of promoting integrated and coordinated care for Medicare 

beneficiaries. 

Over the years, the Medicare program has developed and continues to test new approaches for integrating and coordinating care 

for high-cost, high-need Medicare beneficiaries in both Medicare 

Advantage and traditional Medicare. 

My testimony today focuses on three of these approaches: Special 

Needs Plans, the Program of All-Inclusive Care for the Elderly, or 

PACE, and Value-Based Insurance Design within Medicare Advantage. Two of three of these approaches focus on people dually eligible for Medicare and Medicaid. The 11 million people who are dually eligible for Medicare and Medicaid comprise about one in five 

people on Medicare, and these include many of the sickest and 

frailest people on Medicare. 

While most dually eligible beneficiaries are in traditional Medicare, about one-third are in Medicare Advantage plans. This is a 

similar share to enrollment among other people in Medicare. 

Among dually eligible beneficiaries in Medicare Advantage plans, 

about half are in regular Medicare Advantage plans, and the other 

half are in Special Needs Plans, or SNPs. 

SNP enrollment is limited to beneficiaries with specific health 

conditions or to beneficiaries dually eligible for Medicare and Medicaid. SNPs for dually eligible beneficiaries comprise the largest 

SNPs and include about 2 million beneficiaries in 2017. 

While SNPs have been part of the Medicare Advantage program 

for over a decade, we know little about what additional services or 

benefits enrollees receive, how well plans coordinate care for highVerDate Sep 11 2014 11:00 Feb 22, 2019 Jkt 033429 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33429.XXX 33429
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need enrollees, and the outcomes for high-need enrollees compared 

to other care options. 

Like SNPs, PACE programs also receive capitated payments 

from Medicare. PACE is a provider-based program that was established in the 1970s and is designed for people who need a nursing 

home level of care but want to continue living in their communities. The extensive literature on PACE suggests that it increases 

longevity, reduces nursing home care, and reduces hospitalizations 

and emergency room visits. The biggest challenge with PACE has 

been its scalability. Most PACE programs are relatively small. 

Value-based insurance design is another approach for improving 

the management of patient care in Medicare Advantage and traditional Medicare. Some have proposed using it to allow Medicare 

Advantage plans to enhance benefits for enrollees with specific 

health conditions. This would be a departure from current rules, 

which require Medicare Advantage plans to provide the same benefit package to all enrollees regardless of their health conditions. 

This year, CMS began permitting Medicare Advantage plans to 

test a value-based insurance design model for specific chronic conditions. My full testimony raises several questions about valuebased insurance design, the largest of which is who should really 

decide which providers and services should be designated as high 

value? 

Overall it is critical to properly evaluate these programs not only 

because of the growing number of people in them, but also because 

many of the enrollees are some of the sickest and frailest people 

on Medicare. It is important to make sure delivery systems are 

supporting them rather than putting them at risk. 

Also, if the programs are shown to be effective, it is worth exploring how to broaden the programs to include other people in Medicare Advantage plans and traditional Medicare with high needs 

and high costs. 

Appropriately managing the care of high-cost high-need Medicare 

beneficiaries, many of whom are dually eligible for Medicare and 

Medicaid, could help ensure the fiscal sustainability of both Medicare and Medicaid in the years to come. At the same time, it remains important to ensure that adequate protections are in place 

to retain access to healthcare services, providers, and quality of 

care for the sickest and poorest on Medicare. 

Thank you, Mr. Chairman. I would be happy to answer any questions, and I look forward to working with all Members and staff of 

the Subcommittee on these issues in the future. 

[The prepared statement of Ms. Jacobson follows:] 

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Chairman TIBERI. Thank you, Ms. Jacobson. 

Ms. Wilson, you are recognized for 5 minutes. 

STATEMENT OF CHERYL WILSON, RN, MA, LNHA, CHIEF 

EXECUTIVE OFFICER, ST. PAUL’S SENIOR SERVICES, SAN 

DIEGO, CA 

Ms. WILSON. Good afternoon. Thank you, Mr. Chairman Tiberi 

and Ranking Member Levin and other distinguished Members of 

the Subcommittee. I am Cheryl Wilson, Chief Executive Officer of 

St. Paul’s Senior Services and St. Paul’s PACE in beautiful sunny 

San Diego. I represent the National PACE Association here today 

and their 122 PACE organizations with 233 sites in 31 States serving over 42,000 participants each day. 

So what is PACE? PACE is the gold standard for integrated care. 

PACE stands for the Program of All-Inclusive Care for the Elderly, 

a community-based health and social services provider which receives a capitated payment rate to serve a frail set of Medicare eligible frail seniors all of whom are at nursing home level of care but 

are still being cared for at home by the PACE team. 

We are an insurance company and a care provider. The average 

participant is 77 years old and lives with multiple chronic, very 

complex conditions limiting their activities of daily living. Fifty percent have some form of dementia, but through PACE 95 percent 

live at home. Even more challenging at St. Paul’s PACE, 50 percent of those we serve live at home all alone. 

Along with our PACE, St. Paul’s Senior Services is a full service, 

nonprofit organization established in 1960. We provide retirement 

homes, HUD housing, assisted living, memory care, day programs, 

skilled nursing, and now housing for homeless seniors. 

PACE keeps frail seniors in their homes and communities by providing timely, clinically appropriate treatments and social supports. 

PACE participants experience a high quality of life and optimal 

medical outcomes with lower costs. 

Two weeks ago I had lunch with a lady enrolled in our PACE 

program. She had all her belongings wrapped securely in a plastic 

bag. She told me her ‘‘other stuff’’ was outside all wrapped up because of ‘‘bugs.’’ She shared with me her multiple major medical 

conditions and her inability to get out to grocery stores or to her 

doctors for visits. Thus, she had a history of visiting the emergency 

room every 2 to 3 months, which she hated because of the long 

waits, ‘‘all the hubbub,’’ and the fact that no one ever spoke to her, 

rather only about her and over her. 

She said she was getting to like the PACE staff, but it was taking time to believe that they could be so nice and really mean it. 

In fact, this participant had spent the first 3 weeks in PACE sitting outside the building with care being delivered either to her at 

home or on the bench outside due to her paranoia and fear of exploitation. 

She finally agreed to have her home treated for bed bugs and 

other infestations, to receiving personal care, and to having her belongings wrapped up until she was willing to give them up for 3 

days of freezing, which was needed to eliminate all the infestations. 

In the meantime this lady was provided with home care, home 

delivered meals, daily home medications, twice weekly personal 

18 

care at the PACE center, weekly physician visits, social services, 

psychiatric interventions, and many other ancillary services. In the 

4 months she has been with PACE, this lady has not experienced 

a single emergency room visit. 

In fact, a study we did showed that in the first year of PACE, 

patient hospital visits declined 73 percent. PACE serves many frail 

elders and individuals with disabilities today but we could serve 

many more. The decades old PACE regulations must be updated 

immediately. While CMS has issued a proposed rule, it is yet to 

issue the final rule. 

Similarly CMS could support PACE growth by implementing the 

congressionally granted pilot authority to serve new populations 

with similar needs and medical complexities. We ask CMS to move 

the pilots forward quickly. 

Other steps forward are some statutory improvements to enable 

PACE to better serve Medicare beneficiaries. PACE has incorporated many of the reforms promoted by Medicare, including coordinated care and integrated financing. PACE has proven to be a 

good value to taxpayers. If you haven’t visited, please go to visit 

a PACE site in your State, and if you don’t have a PACE site, ask 

why. 

In all my years in healthcare I know that PACE is the very best 

model of care as professed to me by Health and Human Services 

Secretary Tommy Thompson over 15 years ago. 

Thank you for listening to me, and I look forward to answering 

your questions. 

[The prepared statement of Ms. Wilson follows:] 

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Chairman TIBERI. Thank you. Mr. Grabowski, you are recognized for 5 minutes. 

STATEMENT OF DAVID C. GRABOWSKI, PH.D., PROFESSOR OF 

HEALTH CARE POLICY, DEPARTMENT OF HEALTH CARE 

POLICY AT HARVARD MEDICAL SCHOOL, BOSTON, MA 

Mr. GRABOWSKI. Great. Thank you. Good afternoon. My name 

is David Grabowski, and I am a professor in the Department of 

Health Care Policy at Harvard Medical School. 

I would like to thank Chairman Tiberi, Ranking Member Levin, 

and the distinguished Members of the Committee for giving me 

this opportunity to speak today. 

This testimony is derived in large part from the academic work 

I have done related to integrated and coordinated care for Medicare 

beneficiaries. Before I begin my substantive remarks, I would like 

to emphasize that my comments reflect solely my beliefs and do not 

reflect the opinions of any organization I am affiliated with, including MedPAC, which I was just appointed to last month. 

Mr. Chairman, we all share the policy goal of coordinated, highvalue care for dual eligible and chronically ill Medicare beneficiaries. Under traditional Medicare fee-for-service dual eligible 

beneficiaries have three health insurance cards, Medicare Part D, 

and Medicaid, with three very different sets of benefits. 

Ultimately this fragmented model of coverage does little to encourage cost containment or high-quality care. Under an integrated 

model of care, enrollees ideally have a single set of comprehensive 

benefits covering a range of services. They have an individualized 

care plan with a coordinated team of health providers that encourages care in less restrictive, lower-cost settings. 

Medicare Advantage Special Needs Plans, or SNPs as they are 

called, are one potential way to achieve this type of financial and 

clinical integration. SNPs were authorized in 2003 with the idea of 

attracting a different type of beneficiary into Medicare Advantage. 

Today over 2 million individuals are enrolled in SNPs, which is 

greater than the number of Medicare beneficiaries in all other integrated care programs combined. 

SNPs enjoy some unique regulatory advantages. As such, it is vitally important that we understand whether there is anything 

truly special about Special Needs Plans to justify their unique status. 

Two areas where SNPs have the opportunity to provide benefits 

are through improved quality, and better integration. In terms of 

quality, the research is somewhat mixed when comparing SNPs 

with traditional Medicare Advantage plans. The findings depend on 

the type of SNP. Institutional SNPs, or I–SNPs, perform better 

than other plans on the available quality measures. Dual eligible, 

or D–SNPs, perform better when they are strongly integrated with 

Medicaid but very similar to other plans when less well integrated. 

Finally, Chronic Conditions SNPs, or C–SNPs, generally perform 

no better, and often worse, when compared to other plans. 

In terms of integration, if the dual eligible SNPs are going to 

offer a truly integrated product, they need to both clinically and financially integrate with Medicaid. 

28 

As a bit of history, the first generation of D–SNPs had little integration with Medicaid. Beginning in 2008, the D–SNPs were required to have a contract with Medicaid. In response, most D– 

SNPs simply established a contract for case management of Medicaid services. Today most D–SNPs are still not at risk for Medicaid spending or accountable for Medicaid outcomes. This is not 

true integration. 

Moving forward, Mr. Chairman, I want to highlight four areas of 

opportunity for Medicare policy. 

First, all D–SNPs should be both clinically and financially integrated with Medicaid, otherwise it is hard to make a case for this 

model over regular MA plans. 

Second, SNPs must show that they offer higher quality to beneficiaries. If certain models like C–SNPs do not generally perform 

better than regular Medicare Advantage plans, we need to reconsider whether this model is working for beneficiaries. 

Third, payments to SNPs for those full duals should be commensurate with the cost of covering these individuals. Historically risk 

adjustment has not properly accounted for the frailest beneficiaries. 

CMS recently adjusted payments upward for the full duals to address this issue. I would encourage continued oversight on the adequacy of payments and risk adjustment. 

Finally, relative to other models like PACE and the V–BID demonstration, SNPs have not been comprehensively studied by CMS 

in over a decade. If we are going to continue to put public dollars 

into this program we need a more rigorous and nuanced understanding of which SNP models work for which Medicare beneficiaries. 

In summary, the theory of integrated care underlying the SNPs 

is incredibly compelling. In practice, however, we have not achieved 

meaningful integration in a majority of SNPs to date. Reforms that 

encourage true integration will help ensure high-value care for our 

frailest Medicare beneficiaries. 

Thank you, Mr. Chairman. I look forward to your questions. 

[The prepared statement of Mr. Grabowski follows:] 

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Chairman TIBERI. Thank you. And last but not least, the gentleman from up north, as you would say in Ohio, Dr. Fendrick, you 

are recognized for 5 minutes. 

STATEMENT OF A. MARK FENDRICK, MD, EXECUTIVE DIRECTOR, UNIVERSITY OF MICHIGAN CENTER FOR VALUE-BASED 

INSURANCE DESIGN, ANN ARBOR, MI 

Dr. FENDRICK. Good afternoon, and thank you Chairman 

Tiberi, Ranking Member Levin, and Members of the Subcommittee. 

I am Mark Fendrick, a practicing primary care physician and a 

professor at the University of Michigan. Go Blue. 

Mr. Chairman, I applaud you for holding this hearing because 

access to quality healthcare and containing Medicare costs are 

among the most pressing issues for our national well-being and 

economic security. 

Moving Medicare Advantage from volume driven to a value-based 

program requires a change in both how we pay for care and how 

we engage consumers to seek care. Yet before today’s hearing little 

attention has been directed to how we can alter beneficiary behavior to make MA more effective and efficient. 

Today I urge you to support the bipartisan effort to allow MA 

plans across the country to incorporate value-based insurance design to help members become better healthcare consumers. 

I could tell you with great confidence that my Medicare patients 

could care less how much the Federal Government spends on 

healthcare. But they do care deeply about the amount they have 

to pay out of pocket to get the care they need. 

With rare exception, MA plans implement cost sharing in a onesize-fits-all way and each beneficiary is charged the same amount 

for every doctor visit, every diagnostic test and prescription drug. 

People ask me all the time whether the amount of cost sharing 

faced by MA members is too high or too low. 

The answer, as every clinician knows, is it depends. But asking 

MA members to pay more for all services despite clear differences 

in clinical value results in decreases in the use of essential care, 

the care I beg my patients to do. And this cost-related nonadherence negatively impacts our most vulnerable patient populations. 

So I see this blunt one-size-fits-all approach as penny wise and 

pound foolish. 

Does it make sense to you, Mr. Chairman, that my MA patients 

pay the same copayment to see a cardiologist after a heart attack 

as to see a dermatologist for mild acne or pay the same prescription drug copayment for a life-saving drug that treats diabetes, 

cancer, or depression as one that makes toenail fungus go away? 

Realizing that MA beneficiaries use too little high-value care and 

too much low-value care, I endorse a clinically nuanced cost-sharing approach as a potential solution. 

Clinically nuanced value-based insurance designs set consumer 

cost-sharing levels to encourage the use of high-value services and 

providers and discourage the use of low-value care. 

For the record, I support high cost-sharing levels but only for 

those services that do not make MA beneficiaries any healthier. 

Led by the private sector, V–BID is implemented by hundreds of 

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corporated into the TRICARE program. The integration of V–BID 

into MA has garnered broad multi-stakeholder and rare bipartisan 

support. 

I would like to acknowledge Subcommittee Members Diane Black 

and Earl Blumenauer whose bipartisan leadership on this issue led 

to the 2015 announcement of the MA V–BID model test, a 5-year 

program that allows designated plans now in seven States to reduce cost sharing for specific services and providers, but only for 

those beneficiaries with specified chronic conditions. 

In January of this year, nine MA plans successfully launched disease-specific programs combined with enhanced benefits to help 

people manage their chronic diseases. Responding to interest from 

MA plans in other States, CMS added three more States to the 

demo starting next year. So due to the V–BID success in the private sector, the TRICARE pilot, and nationwide interest in the MA 

V–BID model test, bicameral, bipartisan legislation has recently 

been introduced to allow MA plans in all 50 States the flexibility 

to allow MA plans to set beneficiary cost-sharing levels on clinical 

value, not price of medical services. 

It is my hope that the Subcommittee supports the national expansion of V–BID and MA, which when coupled with other promising integrated models like the PACE program discussed today, 

could result in a healthier Medicare population, which motivates 

me as a physician, and more efficient Federal expenditures, thus 

serving the best interests of American taxpayers and future beneficiaries. 

So it is my great pleasure to support the Medicare program, and 

I am happy to work with the Subcommittee further and look forward to hearing your comments and answering your questions. 

Thank you. 

[The prepared statement of Dr. Fendrick follows:] 

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Chairman TIBERI. Thank you, Doc. Not bad for a Michigan guy. 

Dr. FENDRICK. Thank you. 

Chairman TIBERI. Ms. Wilson, just a thought on the PACE program. 

I think we all agree that most of us as we age and become elderly would prefer to remain in our homes. Ensuring that Medicare 

beneficiaries have the option to safely stay in their homes along 

with the right support system is obviously important, but it often 

requires a dedicated caregiver who can help with household needs 

or transportation or meals. 

Caring for that elderly family or friend can be awfully difficult 

at times and can take a toll both mentally and physically and 

sometimes actually financially. 

Can you expand on that, comment on that, and give us your 

thoughts? 

Ms. WILSON. One of the challenges is to keep the person, the 

participant, the patient at home because that is where they want 

to be, but it is challenging. 

Ninety-five percent of all PACE participants, however, do live at 

home, and that is across the country. The way that happens is because the interdisciplinary team meets on a daily basis and the 

needs of that person at home are just as important as the medical 

conditions that are treated once they come into the clinic. So taking 

care of things at home, such as meals, housecleaning, grab rails in 

the bathroom so people don’t fall, all of those things, are very important. 

The social components of healthcare are just as important to save 

dollars on the healthcare side and to make keeping somebody at 

home efficient and effective is the key to PACE. 

Chairman TIBERI. Mr. Grabowski and Ms. Jacobson, if you can 

comment on this, you specifically spent quite a bit of time in your 

testimony on the dual eligibles. 

Dual eligibles are auto assigned Medicare prescription drug 

plans in several States, including my own State of Ohio, and they 

are allowed to auto enroll dual eligible beneficiaries with opt-out 

parameters in the D–SNPs specifically. Can auto assignment lead 

to higher beneficiary enrollment in your opinion and can auto assignment be used as an incentive maybe to fully integrate their 

benefits in the D–SNPs? 

Mr. GRABOWSKI. Yes, maybe I will start. There was actually 

some early experience with auto enrollment or passive enrollment 

in the SNPs. 

Several States actually had their beneficiaries, Texas, would be 

an example, Arizona, Minnesota, about 50,000 beneficiaries were 

automatically or passively enrolled into the D–SNPs. So there was 

some early experience that it actually worked. I think it can increase enrollment numbers. I would be wary of saying it is going 

to get everyone enrolled, but it will get a broader selection of individuals in, so it gets around some of the risk selection issues that 

many of us have been so concerned about with plans cherry-picking 

or attracting certain types of beneficiaries. 

I would point, however, to the work we have done on the financial alignment initiative, the CMS demonstrations for the duals. 

We looked at eight States, and all of those eight States used pasVerDate Sep 11 2014 11:00 Feb 22, 2019 Jkt 033429 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33429.XXX 33429
47 

sive enrollment or auto enrollment, and it turned out only about 

25 percent of eligible duals stuck. So that means that 75 percent 

opted out. You will be happy to hear, Mr. Chairman, the State that 

did the best was Ohio actually. 

Chairman TIBERI. Wow. 

Mr. GRABOWSKI. Yes. About two-thirds of beneficiaries remained in the dual demo. Ohio did a very clever thing by first enrolling individuals passively into Medicaid in a first stage, and 

then doing Medicare in a second stage. 

On the other end of the spectrum, New York had the lowest enrollment at 5 percent. There, they coupled their enrollment process 

with counseling and required each new beneficiary to actually go 

through counseling. That turned out to be a mistake in that a lot 

of individuals didn’t want to undertake the counseling, and hence, 

opted out of the program. 

Chairman TIBERI. Okay. 

Mr. GRABOWSKI. So I guess passive enrollment will work to 

bring enrollees in. It will bring in a more diverse group of enrollees. I think the challenge is that it won’t get everyone, and I do 

think how you design the passive enrollment, the Ohio/New York 

difference, really matters. 

Thank you. 

Chairman TIBERI. Ms. Jacobson. 

Ms. JACOBSON. I agree. The financial alignment models do provide a precedent for this. You do need to really consider, though, 

that more than half of dual eligibles have some sort of mental impairment or cognitive impairment. So it is really important to consider not only that they have a method of opting out, but also, that 

they know about it and that they are aware of it. 

And this is very difficult when you are talking about a population with schizophrenia, Alzheimer’s disease and other mental illnesses to make sure that they really understand they have another 

option that they can go to. 

Chairman TIBERI. Great point. Doc, you mentioned the CMS V– 

BID demonstration, and in your opinion, if you could expand on it, 

the demonstration is set up in a way that allows Medicare Advantage plans the necessary flexibility for them to reach the full benefit of the V–BIDs? 

Dr. FENDRICK. So that is a great question, and it is important 

to point out that, as mentioned in Dr. Jacobson’s remarks, when 

Medicare was introduced in 1965 one of the foundations was this 

nondiscrimination clause that every American in Medicare have 

the same benefit design, and it, as all clinicians, and like Representative Black, know, medicine is unbelievably personalized and 

moving rapidly in that direction down to the level of the gene. 

So we have argued that people should be treated differently and 

given access to different care, most notably an eye exam, which 

should be more easily accessed by someone who has diabetes than 

someone who doesn’t. And it was quite a task, and I thank this 

Subcommittee for the leadership to have this waiver be the first 

ever to allow a Medicare recipient with a specific condition to have 

a different benefit design than someone else, allowing precision 

medicine to be aligned with benefit design. So important step forward. 

48 

Three of the States that are expanding to next year are represented on this Committee, and I think that there is movement 

afoot by CMMI to allow greater flexibility and uptake of these programs, most notably one is that the conditions are designated by 

CMMI. I think the plan should have a little bit more flexibility to 

decide which population should be available to have greater access 

to certain services and providers. 

I think that we should allow the plans to expand the services 

that they can reduce cost sharing for across the entire spectrum of 

care, and I think given that the fiscal responsibility that we must 

attend to with any changes in Medicare is to say we can’t always 

spend more, we often have to cut back. 

And given that most of the blunt instruments get people to use 

less of all care, I think it is important now for Medicare to walk 

very slowly and carefully into the area of reducing the hundreds of 

billions of dollars of Medicare expenditures that don’t make one 

beneficiary any healthier. 

There is a new initiative called the Choosing Wisely program, 

which has launched over 40 clinical specialty societies, naming specific services that maybe we are doing too often and spending too 

much money on. So broader spectrum of services, more flexibility 

on the specific conditions and to start to pay attention to the fact 

that while the best part of the demo is making high-value services 

more accessible, to be fiscally responsible we have to start thinking 

about clinically driven reduction of low-value care. 

Chairman TIBERI. Thank you. With that, Mr. Levin is recognized. 

Mr. LEVIN. Thank you, and, again, welcome. Just a word on integration. As I look about us, the four of us Democrats on the Committee at the time of ACA were in the vanguard of those who 

sought to have more integration, more bundling, all kinds of concepts. And some of that was built into ACA in part I think because 

of the efforts of some of us here on the Committee. 

Let me just say a word about the interaction between Medicare 

and Medicaid because when we have been debating healthcare reform there has been very little attention to that. 

So I would like us, I guess, Ms. Jacobson, you referred to it and 

others might comment, just how important it is and the potential 

impact of reduction of Medicaid on dual eligibles and others who 

are in like positions. 

If you could, it can be complicated, but I think it can also be 

stated rather clearly. Why don’t you try? What is at stake when we 

talk about dramatic decreases in Medicaid as in the bill that 

passed here and then the President’s proposal for an additional, 

what, $600 billion? 

Ms. JACOBSON. Okay. Like you said, this is a very complicated 

issue and could have a wide range of effects. One thing that a per 

capita cap like that would do is it does lock in historic spending. 

So, for example, while it would adjust for the changes in the 

number of people who may be on the program, it would not necessarily adjust for the services that a State may want to provide 

to the people in the program. So, for example, if it would like to 

shift more people into community-based services, which seniors 

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ting back on other benefits. It would be more of a tradeoff financially for a lot of States because the mix of services they provide 

to some extent would be constrained. 

It would affect, most importantly to note, that one in five people 

on Medicare who also receive benefits from Medicaid most of whom 

received cost sharing and full Medicaid benefits, as well. So this 

would affect a significant share of people on Medicare. 

Mr. LEVIN. Does anybody else want to comment on that? Mr. 

Grabowski. 

Mr. GRABOWSKI. Sure. I assume we will talk a lot today on the 

adequacy of payments on the Medicare side of the SNPs. If we are 

not contributing enough on the Medicaid side, if there are shortfalls there, that is also going to lead to access problems, quality of 

care problems, and a lot of my research has suggested when you 

underfund Medicaid that causes spillovers to Medicare. 

So you underfund nursing home care or care in the home or the 

community, that leads to more Medicare-financed hospitalizations 

for dually eligible individuals. So to think about these programs as 

being in their own silos is a mistake. 

For the dually eligible individuals, how we finance and deliver 

Medicaid services matters for Medicare spending and outcomes, 

and the opposite obviously is true, as well. How we pay for and deliver Medicare services matter for Medicaid outcomes and spending. They are linked, and so you can’t think about them separately. 

So any kind of cut in Medicaid will have impacts for the Medicare 

program as well as for the dually eligibles. 

Mr. LEVIN. Anybody else want to comment on that? 

Ms. WILSON. Medicaid pays about 65 percent of a PACE participant’s capitated rate, and so Medicaid is a very important piece. I 

think each State will have to look deep into their souls and decide 

how those Medicare dollars are going to be expensed into which 

populations because there are many populations other than seniors 

who receive Medicaid funds. 

I think it is going to be a very difficult decision, and I think those 

of us who serve seniors will be faced with very difficult decisions. 

And I think we will have to be very creative because I don’t see 

any of us wanting to cut back on any services for seniors going forward. 

Mr. LEVIN. Thank you. 

Chairman TIBERI. Thank you. Before I recognize Mr. Roskam I 

just want to remind Members that we do not have jurisdiction, 

though we would love to have jurisdiction in the Medicaid program, 

Mr. Walden and Dr. Burgess would not like that, so if we could 

kind of focus within our jurisdiction. 

With respect to that, Mr. Roskam is recognized for 5 minutes. 

Mr. ROSKAM. Thank you, Mr. Chairman. Admonition received. 

June is Alzheimer’s and brain awareness month, and it is no surprise to anybody on this panel the devastating nature of this disease. It is the sixth leading killer in the United States, 5 million 

Americans are suffering from it, and some folks suggest that it is 

the most expensive disease in the United States that people are 

suffering with. 

One of our colleagues, Representative Sa ́nchez, and I have been 

working on legislation that would authorize a CMS demonstration 

50 

in terms of a general approach on this. So that is all to say there 

is a lot of interest in how all these things have an interaction with 

Alzheimer’s in particular. 

Dr. Jacobson, what is your insight or what is your perspective on 

how many Alzheimer’s patients are enrolled in SNPs, and in your 

opinion what are the benefits that these plans have for Alzheimer’s 

patients and their families based on your experience? 

Ms. JACOBSON. We actually don’t have the data on how many 

Alzheimer’s patients are enrolled in SNPs. That is possibly something that we could look into and I could get back to you or your 

staff after this hearing. 

Mr. ROSKAM. Okay. That would be helpful. 

Ms. JACOBSON. Yes. So we really don’t know to what extent 

what additional services and benefits are being provided to all SNP 

enrollees, including people who have Alzheimer’s. So it is really difficult to say what they are actually receiving that is helping them 

in these SNPs. 

Mr. ROSKAM. Anybody else have a perspective on that? 

Ms. WILSON. In PACE, 50 percent of our population has some 

form of dementia or Alzheimer’s disease, and it is a challenge. It 

is truly a challenge. So moving forward we need to deal with this. 

We are dealing with it very well in the PACE program right now. 

We are able to still keep those people at home. And as I mentioned 

before, some of them are living alone at home, but it is something 

that we are seeing as a future problem as the population grows. 

Mr. ROSKAM. Okay. 

Mr. GRABOWSKI. Although we can’t give you the exact number, 

there are undoubtedly a number of individuals with dementia in 

the different SNP models. I can say there are very few chronic condition SNPs focused just on dementia. 

The majority of the C–SNPs are focused on diabetes. I think just 

given the prevalence here we actually need to do better across the 

board in dementia care. I don’t think a specialized model is really 

the way forward. I would prefer to see all Medicare Advantage 

plans get better at dementia care. Trying to build more specialized 

models I don’t think is the best path forward just given the numbers you already cited. 

Mr. ROSKAM. Okay. Dr. Fendrick. 

Dr. FENDRICK. Briefly, just for the reasons that you seek, Mr. 

Roskam, I was very pleased to see that not only were three States 

added to the V–BID demo for 2018, but two conditions were added, 

as well, which dementia was one. 

So we are very hopeful since many of the States represented on 

this Subcommittee are actually in those demo States, the seven 

original States, and Michigan, Alabama, and Texas all represented 

here would talk to their Medicare Advantage plans to encourage 

them to step away from diabetes, heart disease, COPD, the more 

common conditions now in the current demo and think outside the 

box and move to explore a V–BID MA dementia model that would, 

I think, lead to the increase in care that you are looking for. 

Mr. ROSKAM. Okay. Thank you, all. Mr. Chairman, I yield back. 

Chairman TIBERI. Ms. Sewell, you are recognized for 5 minutes. 

Ms. SEWELL. Thank you, Mr. Chairman. Today we are talking 

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gram. The reality is that we are not going to save costs in the long 

run if we don’t improve outcomes. 

For our most vulnerable Medicare beneficiaries, especially our 

dual eligible, transportation barriers are often linked to poor outcomes. 

My office gets calls from seniors in my district who face both 

transportation and financial barriers to accessing basic healthcare 

services. Whether you are an urban or rural resident, if you are 

disabled and elderly with limited income and no access to a car or 

public transportation, even a few blocks can be the difference between you going to the doctor or not. 

My constituent Eva is 81 years old. She is dual eligible. In 

Selma, my hometown, Selma, Alabama. She is a diabetic, and when 

she has to go to the doctor, having no transportation, she really depends upon the neighborhood boys to drive her there. 

When Miss Eva’s Social Security check doesn’t make ends meet, 

she can’t afford to pay the neighborhood boys to take her to the 

doctor, so she misses many appointments. In addition to diabetes, 

Miss Eva has a disease that doesn’t allow her to cut her own toenails, a more advanced stage of diabetes. And so, often many times 

she has to continue to have this very painful procedure done. She 

can’t get it done at home because they are so afraid that something 

would go wrong with her diabetes, and so she can’t walk oftentimes. 

For diabetes, foot care cannot be ignored like that of Miss Eva. 

She often ends up at the emergency room having no transportation. 

Mr. Chairman, stories like Miss Eva’s are more common than 

they are rare. This is not sustainable for patients or for the system 

as a whole. As I have said before, we aren’t going to reduce costs 

until we improve outcomes. 

Had Miss Eva been enrolled in a plan that provided transportation services or had been educated on the resources available to 

her through non-emergency medical transportation, her emergency 

room visits would have been prevented. 

As you mentioned, Ms. Wilson, PACE organizations provide care 

in the home and transportation services to providers in the community. PACE organizations expand and improve on other services 

available which are often inaccessible for frail and elderly populations like Miss Eva. 

The PACE program, however, is a very small program in my 

home State of Alabama, and, in fact, only services 200 Alabamians 

and is not available in Selma, Alabama, so Miss Eva cannot take 

part in it. 

My question is to you, Ms. Wilson: In your testimony you talked 

about a story about a lady enrolled in your PACE program that 

made me think of Miss Eva, and I know that in California you 

have access to a broader range of transportation than we do in Alabama. 

And my question is, do you believe that there are areas around 

the country where the PACE program would not work or where the 

program has not been successful? Likewise, what are the greatest 

barriers to expansion of the PACE program or Special Needs Plans 

in rural communities like Selma? 

52 

Ms. WILSON. Thank you for that example. That is very touching. 

Transportation is very definitely one of the greatest needs for our 

seniors because it isolates them. They can’t get to the grocery store, 

they can’t get to the laundromat, they can’t get to the doctor. And 

emergency room visits are the response to that. So you are absolutely right. Transportation can be provided by PACE. Can PACE 

be provided in Selma? PACE can be provided anywhere. 

Ms. SEWELL. So rural communities are not being managed, 

even though when you look at where your programs are, where the 

PACE programs are they are mostly in urban areas and not in 

rural communities. 

Ms. WILSON. There are quite a few in rural communities. It 

started as a pilot project under CMS, and they have been very successful. 

And most of those services are provided in the home with professionals going to the home because travel distances are a little bit 

longer than in urban areas, but still the services needed to be provided, and they are provided more often by community service providers rather than PACE employees doing it in the center itself. 

So I would encourage you to encourage your State. Part of the 

problem with the difficulty in starting new programs is the cost 

and the timeframes to start new programs, and if we could all work 

with our State Representatives and also with the CMS representatives to help speed up the process, there would be many more 

PACE programs across the country. 

Ms. SEWELL. Thank you very much. I yield back. 

Chairman TIBERI. Thank you. Mr. Smith is recognized for 5 

minutes. 

Mr. SMITH. Thank you. Thank you to our witnesses here today, 

and certainly I appreciate the perspective. 

My colleague just raised some concerns about rural areas and 

perhaps the flexibility. I know that flexibility in general has afforded a lot of Americans within Medicare Advantage some options, 

and I think that is helpful, but it certainly hasn’t really provided 

as many options for what I would say are rural residents and then 

residents of very remote areas, and sometimes those services just 

are hard to come by, and whether it is Selma or whether it is range 

country in rural Nebraska, that there are some vast areas there 

that I hear, you know, from various seniors their concerns. 

But I am just wondering if you would like to elaborate at all on 

what was already asked or what other innovative ideas you might 

have, Mr. Grabowski, or Dr. I guess it is, if you would care to 

elaborate? 

Mr. GRABOWSKI. Yes. So I will start by saying Special Needs 

Plans are national models, especially the institutional SNPs, and 

the dual eligible SNPs are definitely in all markets. The chronic 

condition SNPs are largely concentrated in the south, but the point 

you raised is a good one. They are much more prevalent in urban 

relative to rural areas. 

I think there are two sets of explanations here. There are supply 

side explanations and demand side ones. There are a lot of stories 

like Miss Eva where I think there is a lot of demand for these models, and so I think I find that explanation less compelling. I think 

53 

it is more of a supply side story, whether it is payment issues, regulatory, or just the economics of trying to have a plan that is more 

diffuse in a rural area. 

So I do think this is an area, assuming the models meet the 

other criteria we have been talking about today like full integration 

with Medicaid and all these other conditions, that we definitely 

need to address. 

Mr. SMITH. Sure. 

Dr. FENDRICK. I think your question brings up this point about 

extending healthcare coverage to a broader segment of healthcare 

services. As you can see in my testimony, the V–BID MA demo 

model focuses on high-value services, high-value providers, but we 

worked very, very hard to include expansion of supplemental benefits. So I see patients like Miss Eva every week. And if for some 

reason we figure out a way to get her her medications or get her 

specialty visits, but she has no way to have transportation to them, 

the whole thing falls apart. 

So one of the more interesting aspects as we hope the MA demo 

goes nationally, that instead of maybe saying that you should go 

to this hospital or use this medication, that maybe the demos will 

focus on these supplemental benefits like transportation and other 

types of services that may not be considered in the sweet spot of 

the realm of typical insurance designs. 

Mr. SMITH. Thank you. Because I think there are a lot of great 

stories to tell about overall access and affordability within the fiscally responsible way. It is just that there are still some gaps out 

there. So does anyone else care to comment? 

Ms. JACOBSON. Yes. I will also comment that, I mean, Medicare Advantage plans as a whole, the penetration rate in places 

like Nebraska is fairly low, and it is generally lower in more rural 

areas. So this really raises the question of, well, Medicare Advantage plans in certain models like SNPs have been pretty successful 

and proliferating in urban areas, but like you said, they really don’t 

exist as much in rural areas. 

So it deserves some consideration of how to develop these models 

more broadly and make them more available perhaps to people on 

traditional Medicare as we learn more and more about what actual 

benefits help people. 

Mr. SMITH. Very well. Thank you. I yield back. 

Chairman TIBERI. Ms. Chu, you are recognized for 5 minutes. 

Ms. CHU. Ms. Wilson, I have visited my local PACE in Southern 

California, and I was so impressed by the level of care that was 

there. They have 2,300 participants. This is the program called 

AltaMed, and they have 2,300 participants through eight centers in 

the greater Los Angeles area, 73 percent of which are dually eligible for Medicare and Medicaid. And I could see that these are some 

of the most vulnerable patients. 

The average enrollee has nine separate medical diagnoses and 

has impairments in four activities of daily living, such as eating, 

bathing, walking, and dressing. And nearly 30 percent of AltaMed’s 

enrollees have Alzheimer’s or related dementia. Eighty-nine percent are from racial and ethnic minority groups, and 75 percent are 

monolingual. 

54 

AltaMed succeeds because it is dedicated to serving the entire 

patient, rather than focusing on one symptom at a time, and as a 

result their enrollees have higher immunization rates, lower emergency room and hospital admission rates and shorter hospital stays 

than their peer groups. And 97 percent of AltaMed’s participants 

are able to remain in their homes with the assistance of care from 

PACE providers. 

Now, Ms. Wilson, in your testimony you noted the importance of 

the interdisciplinary team in the PACE model. Can you discuss 

how patients with co-morbidities like the majority of patients 

served by AltaMed are served by this interdisciplinary team? 

Ms. WILSON. Yes. The interdisciplinary team is the heart of 

PACE. It is a group of 11 professionals, most with advanced degrees, who sit around the table and discuss each and every patient 

and each and every condition or situation that may come up with 

that particular patient. And everybody there is a part of the team, 

an equal partner, including the driver, including the nurse attendant, including the physician, the physical therapist, the dietician, 

the master’s level social worker, the recreational therapist. 

All of those people sit around the table and more as is needed, 

and they make decisions about the person in the best interests of 

the person, not in the best interests of the finances of the organization, not in the best interests of staff. Sometimes the family’s best 

interests also weigh heavily, how will the family deal with the situation that is under consideration? And so the interdisciplinary 

team is the heart of the program. 

When I first started becoming involved with PACE, having been 

in healthcare for many, many, many years, I thought oh, my gosh, 

think of all the dollars that are sitting around that table every 

morning, and I didn’t really think that was going to be a good use 

of many professionals’ time. 

Over the 10 years that we have been providing PACE, I have absolutely changed my mind. It is the heart of the program. It is the 

reason that PACE is so effective, and it is the reason that it is cost 

effective because the care is given at the level that is needed before 

there is a major crisis which necessitates a hospitalization or other 

very high-cost care in services. 

Ms. CHU. Thank you. Thank you so much. 

Dr. Jacobson, I want to address the issue of mental health disorders and the senior center enrolled in Medicare Advantage. 

CareMore Center, a Medicare Advantage provider in my district, 

developed the Brain Health Pilot Program in Southern California 

that sought to treat individuals with dementia-related problems, 

and this pilot used teams of practitioners, including a neuropsychologist, a neurologist, pharmacists, and dieticians to educate 

patients and caregivers about the risk of neurological disorders and 

how to address them. 

So the pilot found that their wraparound services had a profound 

effect, and there was a 57 percent increase in reported falls and a 

38 percent decrease in emergency room visits, but as a former clinical psychologist, I am particularly interested in the ability of Special Needs Plans to provide coverage and care for individuals with 

mental and behavioral health issues. 

55 

You noted in your testimony that about 1 percent of C–SNP patients are enrolled in plans to specifically treat their mental illnesses. What information do we have, if any, about the beneficiaries enrolled in C–SNPs and D–SNPs for mental illness? 

Ms. JACOBSON. To answer your question directly, we don’t have 

that data. It is possibly something we could look into, and I am 

happy to talk further with your staff about that after the hearing. 

There are a few things to sort of emphasize on this, though. For 

example, the C–SNP that you mentioned is the one C–SNP that focuses on mental illnesses. It is only available in Southern California. That again emphasizes that these plans are not offered 

across the country. It really depends upon where you live in terms 

of whether you have access to this. 

We don’t know, at least offhand, how many people with mental 

illnesses are in SNPs overall. One thing to emphasize, though, is 

we have noticed that people who are under the age of 65 who are 

on Medicare, many of whom have mental illnesses, are underrepresented in Medicare Advantage plans, and we really don’t understand why they are not enrolling in Medicare Advantage plans at 

the same rate as other Medicare beneficiaries. 

Similarly, people who are over the age of 85 are also underrepresented in Medicare Advantage plans, many of whom have Alzheimer’s. So it really raises questions about what is actually going 

on in the Medicare Advantage plans, and we really need more information as to how they are actually treating mental illnesses and 

what they are offering the beneficiaries. 

Chairman TIBERI. The gentlelady’s time is expired. Ms. Jenkins 

is recognized for 5 minutes. 

Ms. JENKINS. Thank you, Mr. Chair, and I thank the panel for 

being here. 

Ms. Wilson, thanks for your testimony regarding the PACE program. In Kansas, just down the street from my Topeka office, is 

Midland Care Connection. It operates a very successful and growing PACE program. 

In September of last year they expanded their PACE program 

into Wyandotte County, which is in the Kansas City metropolitan 

area, and they created a new grieving adult support group, and I 

am very pleased that they were able to do that. I really admire 

their work and compassion for their patients and hope that they 

will be able to continue growing and offering services to more Kansans. 

I have a question about the expansion of PACE and your 

thoughts on that topic. As you can tell from the questions on Committee today, many of us represent rural communities and Midland 

Care PACE program there in Topeka serves rural counties in the 

second congressional district in Kansas. It is a wonderful program 

that is a real lifeline for many vulnerable seniors and people living 

with disabilities. 

I understand that CMS issued a PACE regulation almost a year 

ago that is still pending. Were there any flexibilities including in 

that regulation that would encourage PACE programs to expand to 

rural areas? 

Ms. WILSON. Yes. That is one of the priorities for the National 

PACE Association is to have that PACE regulation approved, and 

56 

the proposed rule we need to get is out, but we need to have the 

final rule. It should be ready to go. 

All the comments are back to CMS, and there are flexibilities especially for rural areas, and that is being able to use community 

physicians, to be able to change the interdisciplinary team that I 

mentioned earlier on so that you don’t have to have 11 professionals around the table, that you can have the select few that 

need to be there in relation to that particular resident or that particular participant and their particular issue. The CMS guidelines 

that would come out will be very, very helpful to expanding PACE 

and doing it a lot more quickly. 

Additionally, the pilot programs that were approved by Congress 

and are still waiting to be implemented by CMS, will allow us to 

reach out and do many more programs and reach many more populations that we currently are not allowed to do. 

So we are waiting for CMS to pull the trigger and would be 

happy to have NPA work with you, Ms. Jenkins, on anything that 

you might need in order to help your State move forward on some 

of those issues. 

Ms. JENKINS. Excellent. We will look forward to helping you do 

that. 

As a followup, in your role at leading age in the National PACE 

Association, what would have been some of the concerns that you 

heard from your local PACE program operators and staff regarding 

the burden of Federal regulations or the confusion that a lack of 

regulation causes on them, and what can we all do to help ease 

those concerns? 

Ms. WILSON. Well, I don’t think there is a lack of regulation 

ever at CMS. But the changes in regulations—let me just put it 

this way, PACE started as a pilot project with On Lok in San Francisco 45 years ago, and because it was a pilot project there were 

many, many regulations and requirements imposed upon it to see 

whether or not it would be reasonable to continue the program. 

It obviously was reasonable, and 20 years ago the first regulations came out, and they have been in place now, the same regulations, and it is time to take a look at those regulations and to make 

the changes. 

National PACE Association has made recommendations. We have 

worked with CMS to look at those regulations and to make improvements and changes to help PACE to be able to grow to simplify the regulations so that PACE programs that might serve Miss 

Eva as mentioned before might be able to flourish, and we need 

CMS to, as I said, pull the trigger. 

And if you can make a few phone calls to whomever you may 

know in that department, then that might help them to understand 

the importance of their work related to the PACE Innovation Act 

and also the proposed rules. 

Ms. JENKINS. Thank you. Mr. Chairman, I yield back. 

Chairman TIBERI. Thank you. The gentleman from California is 

recognized for 5 minutes. 

Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for 

holding this hearing, and thanks to all the witnesses for being 

here. 

57 

I think this is one of those rare occasions where we found something that everybody on the Committee, irrespective of which side 

of the dais you sit on, agrees, and I think there are plenty of examples of us working across the aisle to try and facilitate ways to ensure that folks can get healthcare at home. 

And you see it in some of the telehealth legislation that Ms. 

Black and I wrote, and there are just a number of examples of that, 

and the PACE program is right up that alley. 

So I want to thank you all for what you are doing and for the 

testimony that you are bringing forward. 

I don’t have a PACE program in my district, but I know my constituents would like to be able to expand their access to healthcare 

while being in the comfort of their home. 

And maybe starting with Ms. Wilson, can you talk about some 

of the hurdles that organizations may face in creating a PACE program and what Congress and/or the Administration could do to 

support the launch process? 

Ms. WILSON. Well, first of all, help us to pass those regulations, 

encourage CMS to pass them. 

Second of all, the process to start a new PACE program is long 

and arduous. It takes about 2 years. And to develop a PACE site 

takes between $7 and $9 million. That includes the upfront costs 

to purchase the program, purchase the land, build the building, 

outfit the building. And then have the money on hand because it 

takes 11⁄2 to 2 years in order to break even with the current payment methodology. Those upfront costs are never reimbursed. 

Those are costs that not-for-profits fundraise for traditionally. 

The other concern is in starting a new PACE program. CMS 

came out 11⁄2 years ago saying that they had a new way for applications to be submitted and then approved. The new way is once 

a quarter there is 1 day, 24 hours, when you may submit electronically your application, and if you miss that timeframe by 1 minute 

then you must wait another 3 months. 

The timeframes that are lost because some consultant didn’t get 

their report in by 2:00 p.m. in California so that you can submit 

it by close of business to CMS 5:00 p.m. back here on the east coast 

is a real challenge. And we are starting to try to open another site 

in our area in San Diego, and that is the biggest concern of all of 

our staff. 

In fact, the greatest fear is they will miss that 1 day when they 

‘‘push the button,’’ and if they miss that push the button that is 

another 3 months’ delay, that is costs that we will be incurring for 

another 3 months for which we will receive no reimbursement, and 

we will not be able to open our program, and it will delay the entire program by at least 6 months. That is for a program that is 

already up and running, and we were just asking for an expansion. 

Now, if you look at somebody that wants to come to your area 

and start a PACE program, they are starting the 2-year journey, 

if they forget to press that button or miss that date because of a 

consultant report, then they are going to be delayed, and that is 

time and money. That is why people don’t want to do PACE programs. 

It is not that they don’t want to do them, it is just so onerous 

to start a new program that it is almost self-defeating. CMS puts 

58 

up so many barriers to beginning a program that it is incredibly, 

incredibly hard. 

Mr. THOMPSON. Anyone else like to add anything? Everybody 

concur? 

How about qualified personnel, qualified practitioners, is there 

difficulty in finding folks? 

Ms. WILSON. At a PACE center? 

Mr. THOMPSON. Yes, for a PACE center. 

Ms. WILSON. We hire on average at our centers in California 70 

professional, that is graduate-level-degreed people, and on average 

between 25 to 35 entry level positions. That will be food service 

workers, care attendants, other positions, day centers, CNAs, et 

cetera, that perform that level of work. But on average, 70 professional clinical personnel who serve these people on a daily basis. 

Mr. THOMPSON. Thank you. 

I yield back. 

Chairman TIBERI. Thank you. 

The gentleman from Texas is recognized for 5 minutes. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

I just have a few questions about the Medicare Advantage Plan 

and its growth that is taking place. I have a district around the 

Dallas-Fort Worth area, suburban Texas, but I have a 30 percent 

participation rate. Of my Medicare eligible, there is 30 percent of 

that population in Medicare Advantage, and that number seems to 

be growing. 

I think, Ms. Jacobson, you did a report. I am working off of some 

of your work from last year. 

My question is, is there any correlation? Yet Mr. Smith over in 

his district has like 5 percent of people who participate in Medicare 

Advantage, only 5 percent that are eligible to do it. 

When you look down through everybody’s district, is there any 

correlation in the participation in these special programs that we 

are talking about today, is there a correlation between the participation in Medicare Advantage in those districts? Mr. Curbello has 

60 percent of his Medicaid-eligible people take Medicare Advantage. Is there any correlation between any of those figures as it relates to those special programs? 

Ms. JACOBSON. Yes, there is a correlation, to give a very 

straightforward answer, because part of why Medicare Advantage 

penetration and enrollment rate really differs across the country, 

one of the reasons is due to firm experiences in those parts of the 

country and just history of managed care in those parts of the 

country, which really differs across the country. 

And another reason is payment rates. And both of those reasons 

would apply to both regular Medicare Advantage plans as well as 

special needs plans. And it makes sense that the more plans that 

are offered, the higher enrollment likely is going to be in those 

areas. So we do see that the more plans that are available in an 

area tend to be areas where enrollment is higher. 

So in that sense, yes, you do see more SNPs in areas where you 

see more regular Medicare Advantage plans. And we have looked 

at the growth in Medicare Advantage enrollment nationally as well 

as in different counties. And in many counties where Medicare Advantage enrollment used to be relatively low, it has been growing 

59 

pretty quickly. But in other counties, you still see pretty low Medicare Advantage enrollment and relatively few plans. So there is 

quite a difference across the country. 

Mr. MARCHANT. Any other comments? 

Mr. GRABOWSKI. I completely agree with that. I just wanted to 

piggyback, that just because an area has a strong Medicare Advantage penetration and that leads to greater growth in the special 

needs plans doesn’t mean that Medicaid is able and willing to play 

ball alongside it. 

And I think that is a really important point, that in order for 

these models to really work, you need a robust SNP market, special 

needs plan market, but you also need that State Medicaid plan to 

be willing to play with them. 

And I think that has been one of the real challenges with this 

model, SNPs have sort of followed Medicare Advantage plans in 

some States, like Minnesota, and there really is a robust kind of 

Medicaid side to this market, but that is not everywhere. 

Mr. MARCHANT. And I know we don’t have any jurisdiction 

over Medicaid. Is there a correlation between the States that expand it and the participation in these programs? 

Ms. JACOBSON. That is not something that we have looked at, 

although I would emphasize that for Medicare Advantage and for 

SNPs it really is a county-by-county issue. It is not a State issue. 

So parts of Texas even have relatively low Medicare Advantage enrollment. But, obviously, other parts of Texas have relatively high 

Medicare Advantage enrollment, and you see that in many States. 

Mr. MARCHANT. Thank you. 

Thank you, Mr. Chairman. 

Chairman TIBERI. The gentleman from Oregon is recognized for 

5 minutes. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. I appreciate our 

having this conversation. 

Dr. Fendrick, I appreciate having you back. I continue to be quite 

enthusiastic about the simple logic that you described. Some of the 

work that is underway, I appreciate you giving us some specifics 

that you think might make a difference to accelerate the progress. 

And, Mr. Chairman, I would hope that this would be an area on 

which we could spend a little more time. As you know, Congresswoman Black and I have had legislation in the last couple sessions. 

We are fans. We think that this can be advanced outside of the 

scope of some of the things that get us tripped up around here. And 

I think there is some really powerful evidence that we can help 

provide better care and bend the cost curve. 

But there is just one area, Doctor, that I would seek your advice 

and counsel, because there are questions about the applicability for 

VBID in very low-income populations who aren’t involved with a 

copayment, can’t afford more, some of them have no cost sharing. 

Do you think there are ways that this can be applied in valuebased design to be able to get around this, to be able to provide 

the power of the concept for people who don’t have that type of copayment or capacity to pay more? 

Dr. FENDRICK. So, first off, thank you for the kind words. I am 

happy to be back, and it is a great pleasure to be talking about one 

of the rare bipartisan healthcare reform ideas. And I appreciate 

60 

your work and Representative Black’s and others on the Committee 

to make this happen. 

So we have studied the impact of increases in cost sharing, because that is what has largely happened in this country. And it 

comes as no surprise, and you don’t need advanced degrees like my 

fellow panelists to know that if you make people pay more for 

something, they will buy less of it. And poor people are impacted 

by higher prices more than rich people are. 

So we have focused very, very much on those people with multiple chronic conditions and those who are economically vulnerable 

and have basically tried to implore public and private payers, if you 

can’t extend VBID principles to everyone, you should probably extend VBID principles and lower cost sharing to the people who 

would benefit the most, and those are the sickest individuals and 

those who do not have economic resources. 

The good news, as we heard, such as the PACE program, there 

has already been integration of VBID principles to make sure that 

those who cannot afford essential services can. That doesn’t mean 

it is happening all over the Nation. 

I think it is particularly germane regarding prescription drugs in 

this program, and we have focused a lot of our attention on trying 

to extend this clinically nuanced cost-sharing issue to the issue of 

Part D drugs. We know that there are a lot of low-income Medicare 

beneficiaries who are either cutting their pills or taking them every 

other day or not taking them as their doctor or nurse practitioner 

prescribed that they do that. And there have been external influences, like patient assistance programs and charity programs, to 

help bridge that gap. 

It is our hope that if value-based insurance designs are put in 

place, whether it be for middle income or low income, that those 

services that are deemed to be highest value would have zero cost 

sharing, regardless of income, which is the case for many preventive services in Medicare now, much to the credit of this Committee. 

And we are hopeful that as VBID ideas are extended, particularly for those extraordinarily well-established, high-value services, 

to Dr. Gretchen Jacobson’s point, I don’t want to get into the areas 

where there is controversy when there is 20 years of evidence of 

quality metrics in the Medicare program. Let’s start with those 

low-lying fruits. And if we can’t extend them because of fiscal 

issues to every Medicare beneficiary, then obviously the best place 

to get a return on investment would be to focus those on the populations who are most likely to achieve benefit, and those are the 

low-income folks. 

Mr. BLUMENAUER. Well, I am hopeful that we won’t ignore the 

areas of controversy, but I subscribe wholeheartedly to the notion 

let’s start where we can, establish the principles, spread the benefit. But having a sense of how we can develop the nuance for the 

lower income where there might be some way of having a more 

powerful incentive or some of the nuance through the program administration, if you could lend some thought to that. 

Dr. FENDRICK. I will just quickly say that, not being a legislator or a lawyer, not understanding all the regulations, in the 

commercial sector, where the VBID experience is much better studVerDate Sep 11 2014 11:00 Feb 22, 2019 Jkt 033429 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33429.XXX 33429
61 

ied and has wider implementation, there are public and private 

employers that are extending greater subsidies to employees who 

are, say, hourly compared to salary. 

Mr. BLUMENAUER. I understand. I just would like your reflection at some point about where there is no cost sharing, very low 

income, how we can refine, perhaps, that incentive. 

Mr. Chairman, thank you. I appreciate the conversation, and I 

hope that we can dig a little deeper here. This is very helpful. 

Chairman TIBERI. Thank you. Me too. 

The gentleman from Wisconsin, Mr. Kind, is recognized for 5 

minutes. 

Mr. KIND. Thank you, Mr. Chairman. 

I want to thank our panelists for your testimony here today. 

I represent a very large rural western Wisconsin district. And we 

are kind of proud in Wisconsin for some of the unique pilot SNP 

programs that we have, especially with the dual eligibles back 

home. We have about 20 percent penetration with MA plans. Those 

numbers have been going up even in the large rural area. And I 

am a big believer in trying to move the system to a more value, 

more quality, more outcome-based incentive system, whether it is 

through delivery system reform or payment reform. 

Dr. Fendrick, with the value-based insurance plans out there, 

just how much more can we be pushing? How quickly? And when 

can we start bringing this, really, to capacity so that we start seeing better results at a better price? 

Dr. FENDRICK. I appreciate that comment. I think a lot of people were talking about alignment in a different context earlier in 

the panel. 

I want to talk about alignment to you as I know you have been 

pushing for value in caring more about health than costs even 

though we have to be fiscally responsible and clinically nuanced at 

the same time. 

Most of the major reforms going on in American healthcare, and 

particularly Medicare, are the supply side or provider-facing initiatives trying to get clinicians like myself to behave different and better. And I think we have made marginal success in this regard 

moving in that direction. 

We have not done the same for the patient-focused side. We have 

continued into this kind of one-size-fits-all design. And I think for 

me the end-all is to find a situation where clinicians, hospitals, 

SNPs, ACOs, whatever, are aligned completely with the patient. 

Imagine now, Mr. Kind, I am paid a bonus to get my patients with 

diabetes to the eye doctor and my patients are in a plan for which 

they can’t afford the deductible to go to the eye doctor for that 

exam. 

So my view about alignment is not more of these granular issues. 

Imagine a situation, which we are moving slowly in a bipartisan 

way toward, where both the providers and the patients are aligned 

over health, understanding that we have to be fiscally responsible 

in this regard. 

Mr. KIND. Well, we have numerous alternative payment methods out there, different pilots. I think one of the best things we created in the Affordable Care Act was the Center on Innovation so 

we can start experimenting in these areas. But is there more, is 

62 

there another pilot or something that you envision that the Center 

on Innovation ought to be setting up and working with in order to 

move down this path? 

Dr. FENDRICK. Well, I will stay with the Chairman’s theme of 

integration. I think that one is not so much creating new pilots but 

getting pilots to think about one another. 

And since many of you are from rural areas, one of my favorite 

demos is the Pennsylvania Rural Health Model, which has been 

taken in a bipartisan way in that State—again, many, many rural 

districts there—to try to preserve and protect access to care for 

many of those individuals who live in those areas, but being fiscally 

responsible in that way. 

And this is largely at this early stage a way to deal with hospitals and clinicians there. And they are only just now thinking 

about how to better engage patients to get care locally when it is 

best for them, and when it is best for them in that rare instance 

where they have to go to a center of excellence to go elsewhere. 

Again, many of these conversations are driven by dollars, and I 

love your theme of the fact that we have to think about health as 

well as dollars in moving these ideas. 

Mr. KIND. Mr. Grabowski, you have already mentioned about 

the importance of greater clinical financial integration leading to 

better results, and that I think is particularly pertinent with the 

dual SNPs as well, the Medicaid, Medicare overlapping in that. 

What more can we be doing in order to encourage that type of integration of services? 

Mr. GRABOWSKI. Yes, I touched on this earlier in my remarks, 

but I really think pushing on Medicaid, once again, getting beyond 

simply having these contracts that consist of case management. I 

really want true alignment where the Medicaid program is actually 

working closely with the plan, and the dual-eligible SNP actually 

has some control over the finances, a truly integrated financial 

product. 

Another model that can often work is where the same managed 

care company has the dual-eligible SNP and a Medicaid plan and 

there is the opportunity to kind of align there. But if they are not 

kind of at risk for Medicaid finances, you are not going to get that 

meaningful financial alignment up top, and that is not going to 

work at the delivery level. 

Mr. KIND. How are we doing overall as far as the collection of 

data when it comes to quality measurements? Are we getting better? 

Mr. GRABOWSKI. I think we are getting better, but I think in 

regards to this population, we have a long way to go. We have sort 

of had a one-size-fits-all model, as Mark just said. That is really 

challenging, because this is a really unique population with really 

unique outcomes. And the thought that a 70-year-old Medicare beneficiary who is healthy will have the same kind of quality outcomes 

as an 80-year-old diabetic or an individual with dementia just isn’t 

the case. 

Mr. KIND. Yes. Thank you, Mr. Chairman. 

Chairman TIBERI. Thank you. 

Mr. Higgins, you are recognized for 5 minutes. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

63 

You have all studied the Medicare Advantage program pretty extensively. And about 31 percent of the Medicaid—Medicare population is enrolled in Medicare Advantage programs. Pretty accurate? 

Ms. JACOBSON. Did you say 1—it is about one-third now. 

Mr. HIGGINS. It is about one-third. Okay. 

A little less than 2 million are enrolled in special needs programs. That is about 12 percent of the Medicare Advantage population. As this population is frail and chronically ill, I presume that 

consumes a disproportionate amount of the Medicare Advantage 

dollar. 

Do you have any estimates as to what was spent on the Medicare 

Advantage special needs program last year or in 2015? 

Ms. JACOBSON. We don’t have specific figures of how much, 

that is not publicly available data, of how much plans, specific 

plans receive. 

Mr. HIGGINS. Well, why wouldn’t that—I mean, it is a public 

program. Why wouldn’t that be—if we are looking at designs for 

greater efficiency in the delivery of services and lowering costs, it 

would seem to me that the amount of money that we spend each 

year would be readily available, because that would be an important number to either conclude that we are doing well with it or 

we need to do better. 

Ms. JACOBSON. So in the past, CMS has released some data on 

the bids Medicare Advantage plans would get, which would help to 

get at how much they are paid. 

The issue is that it is not—the data that has been released is not 

granular enough for us to look at what—how much SNPs in particular have been paid. 

Mr. HIGGINS. Could we safely assume, then, that it is—it has 

to be a very high number as compared to the rest of the Medicare 

Advantage population, right? 

Ms. JACOBSON. Yes. 

Mr. HIGGINS. Okay. 

Medicare Advantage is administered by private insurance companies. How big a player is UnitedHealthcare in the Medicare Advantage special needs plans? 

Ms. JACOBSON. UnitedHealthcare is the dominant insurer firm 

offering the institutional SNPs. They also offer many chronic care 

SNPs. 

Mr. HIGGINS. Is 20 to 25 percent of the special needs population 

on the Medicare Advantage program, are they covered by UnitedHealthcare? 

Ms. JACOBSON. A fairly significant portion, yes, are covered by 

United. 

Mr. HIGGINS. Do you know what is going on with UnitedHealthcare right now? The United States Department of Justice 

has just joined a lawsuit against UnitedHealthcare for allegedly defrauding the Medicare Advantage program out of hundreds of millions and potentially billions of dollars in each of the last 10 years. 

When we look at designing a program to discover value-based insurance designs by using financial incentives to promote cost-efficient high-value rather than low-value healthcare services, it would 

seem to me that is a major issue. As students of the Medicare AdVerDate Sep 11 2014 11:00 Feb 22, 2019 Jkt 033429 PO 00000 Frm 00067 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33429.XXX 33429
64 

vantage program, are you familiar with the details of that investigation and its implications relative to funding that program? 

I am not picking on you. 

Ms. JACOBSON. I am well aware that the investigation is ongoing. 

Mr. HIGGINS. Are the other private insurance companies that 

are involved in the Medicare Advantage program for special needs, 

are they also being looked at for also defrauding, overcharging the 

American taxpayers in Medicare Advantage under the special 

needs program? 

Ms. JACOBSON. I do not know what other companies are currently being looked at that have not been announced. 

What I would emphasize is the Medicare Payment Advisory 

Commission, as you may know, has done a lot of work looking at 

coding intensity. 

Mr. HIGGINS. I understand. This is fraud. This is stealing 

money from the American people in the Medicare Advantage program. It is a different issue altogether. 

I yield back. 

Chairman TIBERI. The gentleman’s time has expired. 

Mr. Meehan is recognized for 5 minutes. 

Mr. MEEHAN. Thank you, Mr. Chairman. I want to thank you, 

frankly, for holding this hearing, which I think is really focused on 

something which is so important, which is this effort to assure that 

we continue to look for innovative ways to deliver quality care 

while at the same time looking for ways to hold down costs. And 

I am moved by a couple of realities. 

One, the recognition that when we get to the Medicare Advantage population, we have about 50 percent that consume about 3 

percent of the costs, and then a very small percentage, 10 percent, 

that account for about the other two-thirds. So we know we are 

dealing with a very targeted population to begin with. 

And what I have found actually sort of heartwarming, and it is 

sort of counterintuitive, you would think that Medicare Advantage 

falls disproportionately, that the wealthier you are, the more likely 

you are to purchase the plans. And yet, to the extent that I have 

been able to look at it in my own district, the people who have 

taken the time to invest in getting these plans are not always people with the highest means. So there is an effort on the part of 

those who want to be consumers of it. 

But, Dr. Fendrick, I want to focus on what your testimony was 

earlier, about this being directed toward the patients, not just specifically the payer. One of the things that we are looking at is legislation that would create more flexibility, to prevent chronic illness 

or improve care coordination, those kinds of things. 

Would you speak to that issue of flexibility that you would like 

to be able to see so we can deliver to this chronic group and really 

not just cost savings, but it is quality, it is these people are better 

off. 

Dr. FENDRICK. Right. So excellent point. 

So, first off, healthcare is very complicated. Who knew, right? So 

it has been a longstanding fact that a significantly small portion 

of populations in Medicare and commercial expend a very, very 

large part of the healthcare pie. Most of the fabulous innovation 

65 

that is going on that allows me to better treat these patients—and 

I congratulate Congress for the bipartisan passage of the 21st Century Cures Act, which allows even a greater influx of innovative 

funds to help me take care of my patients better. 

So that is all well and good for those of us who are trained to 

improve the quality and length of life. Almost all of these innovations, with very few exceptions, come at a significant expense, 

which requires that tension that I prefer you to have rather than 

I, which is we want to do the best for our patients, but we also 

have to be fiscally responsible, which you mentioned very clearly 

in the call of this hearing. 

So as the practice of medicine moves forward at a rapid pace, 

Star Wars, we have precision medicine. We have genetic medicine. 

The delivery system, in my opinion, is like the Flintstones, right? 

So the delivery system has not been able to catch up to the incredible science that we have had. 

So we have one of two choices. One is that we slow down the innovation in the Star Wars medicine, which I would not advise, or 

we continue to have conversations like we are having today and 

have experts like I have to my right to think about ideas that allow 

us to have the delivery system catch up to the precise example that 

you raised. 

And, again, going back to 1965, there was this important issue 

to make sure that every Medicare beneficiary had the same benefit 

design. I would argue, 2017 and beyond, given that we can’t give 

all things to all patients, that instead of blunt instruments, a much 

better approach would be one that is individualized, similar to the 

situation that we heard of in the PACE programs. 

Mr. MEEHAN. Actually, part of the legislation is to create supplemental benefits for those that are chronically ill sort of to address that. Do you think that would go toward the objective that 

you are articulating? 

Dr. FENDRICK. Absolutely. And, again, it is baby steps. But the 

initial VBID MA demo, not just that includes services and providers, CMMI, was very, very careful to follow advice from this 

Committee to allow the demo plans to extend supplemental benefits as part of the demonstration package, a broader view. 

Mr. MEEHAN. Thank you for your testimony. 

Mr. Chairman, I yield back in light of time. 

Chairman TIBERI. Thank you. 

Mr. Reed. 

Mr. REED. Thank you, Mr. Chairman. 

I was just going to listen today, but, Dr. Fendrick, you touched 

on something and I want to follow up on my colleague from Pennsylvania on it, looking at it from a beneficiary patient perspective. 

One of the things I firmly believe is that people react to their 

own fiscal condition. If they see money in their pocket, it seems to 

generate more behavioral change, in my opinion, than other items 

in this arena. 

And so, are you aware of any studies that talk about human behavior and the impact that having a carrot approach to this may 

have a beneficial income on a reimbursement model? You are talking about in some of your testimony, for example, the diabetics and 

having foot and eye exams with no copays, that type of thing, yes, 

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that is a bottom line financial impact to an individual, but do they 

really see it? 

And what I mean by that, I will tell you a story. When I was a 

kid, I was raised by a single mom, youngest of 12, and every time 

we went to the bank to pay the bills each month she would cash 

her checks to hold the cash and then give it back. 

Is there any type of creative, innovative ways that we could talk 

about in regards to reimbursing patients for seeing a doctor and 

getting followup care, medication adherence? I have even had talks 

with CEOs of different carriers about even giving them a gift certificate for doing that. And they told me that regulations in New 

York prevented them from doing that, or maybe they are Federal 

regulations. 

Does that carry any weight, that kind of nominal impact on 

human behavior? Do you think that could change the curve? 

Dr. FENDRICK. So I should bestow a degree of behavioral economics for that. I mean, David and others are experts here on that. 

Mr. REED. Well, let’s go to David, too, after you. But, please, 

from your patient perspective. 

Dr. FENDRICK. So first off, the Kaiser Family Foundation has 

all this information, a lot of good information in the testimony and 

elsewhere, to answer these types of points. 

I do believe strongly that, particularly in the low-income folks 

that we talked about earlier, something as low as a dollar matters. 

So I have seen Medicare Advantage patients who are faced with $4 

copays for drugs that everyone in the exam room knows will be 

meaningful changes, but you never want to be in the situation to 

either pay rent, buy food, or fill your prescription, which is why we 

argue for these types of things. 

But I want to make sure, it is not all things for everyone. I would 

like to start with those conditions and those services for which 

there is no doubt that they should be prescribed and used in those 

situations, which is where the nuance comes in. 

In some commercial settings, we have gone beyond free and we 

have actually paid people to do certain things like quit smoking or 

take their prenatal vitamins or other types of things. 

Mr. REED. And we have seen a positive change. 

Dr. FENDRICK. We do. But we also have what I call the frozen 

carrot, that if people are given an advantage and lower cost sharing to do certain things and they don’t, they should also be accountable for that. 

Mr. REED. They get the stick. 

Dr. FENDRICK. I call it a frozen carrot. I would rather call it 

that. 

Mr. REED. A frozen carrot. Very good. 

David, could you offer on that? 

Mr. GRABOWSKI. Absolutely. I come to Congress and a behavioral economics lecture breaks out here. This is great. 

As Mark described, I really like these programs. There have been 

a lot of positive studies. I am thinking of the work of Kevin Volpp 

at the University of Pennsylvania where he has paid patients to 

take particularly high-value drugs, and it is VBID on steroids basically and it has shown to be very effective in those applications. 

67 

So I think you raise a really good point, Mark, that accountability is key in these kinds of programs as well. But I do think 

if there is going to be huge costs to the healthcare system of drug 

non-adherence here, we want to make certain that we are potentially incentivizing individuals to adhere to their drug regimen. 

Mr. REED. And would you agree, David, that even a dollar 

would matter to a lot of those individuals, change their behavior 

to adhere to their medications? 

Mr. GRABOWSKI. It absolutely does. 

Mr. REED. You know it does. 

Dr. FENDRICK. I want to say one thing that you may find very 

interesting, as the argument breaks out here. In a large commercial experiment we offered Americans in really good insurance 

plans who had heart attacks their drugs to prevent their second 

heart attack at no cost to them. They only took them 50 percent 

of the time. 

So we need to go beyond financial incentives, particularly the 

carrot, as you described, communication, literacy, transportation, 

not just drug reductions in copays, to make this work. They took 

it more often than when they had to pay for it, but still we have 

a long way to go. 

Mr. REED. I appreciate that. And being new to the Subcommittee, I appreciate the opportunity to continue to learn on 

this, and I appreciate the opportunity to participate. 

Thank you, Chairman. 

Chairman TIBERI. Well, thank you, Mr. Reed. We have about a 

minute left to go vote, so perfect timing on your part. 

Dr. Fendrick, Dr. Grabowski, Ms. Wilson, Dr. Jacobson, you guys 

were outstanding. And Mr. Levin and I both were chatting here, 

and you have really helped bring along the debate as we move to 

making Medicare more efficient both for taxpayers and for the patients that you see, Dr. Fendrick. So we appreciate your testimony 

today. Your answers were very good. We look forward to working 

with you in the future. 

With that, please be advised that Members will have 2 weeks to 

submit written questions to be answered later in writing. Those 

questions and answers will be made part of the formal hearing 

record. 

With that, the Subcommittee stands adjourned. Thank you all. 

[Whereupon, at 4:28 p.m., the Subcommittee was adjourned.] 

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