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78–590 2013

THE INDEPENDENT PAYMENT 

ADVISORY BOARD 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 6, 2012 

Serial No. 112–HL08 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

WALLY HERGER, California 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

GEOFF DAVIS, Kentucky 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

RICK BERG, North Dakota 

DIANE BLACK, Tennessee 

TOM REED, New York 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

JENNIFER SAFAVIAN, Staff Director 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

WALLY HERGER, California, Chairman 

SAM JOHNSON, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

FORTNEY PETE STARK, California 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BILL PASCRELL, JR., New Jersey 

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

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

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

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

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

is further refined. 


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C O N T E N T S 

Page 

Advisory of March 6, 2012 announcing the hearing ............................................. 2 

WITNESSES 

Scott Gottlieb, M.D., Resident Fellow, American Enterprise Institute for Public Policy Research ............................................................................................... 5 

Katherine Beh Neas, Senior Vice President, Government Relations, Easter 

Seals, Office of Public Affairs .............................................................................. 14 

David F. Penson, M.D., MPH, Vice Chair, Health Policy Council, American 

Urological Association .......................................................................................... 19 

Marilyn Moon, Ph.D., Senior Vice President and Director, Health Program, 

American Institutes for Research ....................................................................... 27 

SUBMISSIONS FOR THE RECORD 

ACOG, statement ..................................................................................................... 57 

American Academy of Physical Medicine and Rehabilitation, statement ........... 60 

American Association of Orthopaedic Surgeons, statement ................................. 63 

American Osteopathic Association, statement ...................................................... 67 

American Physical Therapy Association Private Practice Section, statement ... 70 

American Society of Anesthesiologists, statement ................................................ 74 

Center for Fiscal Equity, statement ....................................................................... 76 

Healthcare Leadership Council, statement ........................................................... 79 

National Right to Life Committee, statement ....................................................... 86 

PTPN, statement ..................................................................................................... 91 

Retire Safe, statement ............................................................................................. 95 


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THE INDEPENDENT PAYMENT 

ADVISORY BOARD 

TUESDAY, MARCH 6, 2012 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m., in 

Room 1100, Longworth House Office Building, Hon. Wally Herger 

[Chairman of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

Tuesday, March 6, 2012 

HL–08 

Chairman Herger Announces a Hearing on 

the Independent Payment Advisory Board 

House Ways and Means Health Subcommittee Chairman Wally Herger (R–CA) 

today announced that the Subcommittee on Health will hold a hearing to examine 

how the Independent Payment Advisory Board (IPAB) will impact the Medicare program, its beneficiaries, and health care providers. The hearing will take place 

on Tuesday, March 6, 2012 in 1100 Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear from witnesses, oral testimony at 

this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for 

consideration by the Committee and for inclusion in the printed record of the hearing. A list of witnesses will follow. 

BACKGROUND: 

The health care overhaul created IPAB to ‘‘reduce the per capita growth rate in 

Medicare spending.’’ This 15-member board, which will consist of unelected, Presidentially-appointed members, will make recommendations as early as January 15, 

2014, to cut Medicare spending if the per capita Medicare spending rate is expected 

to exceed an economic growth rate over a 5-year period. IPAB’s recommended Medicare cuts are ‘‘fast tracked’’ in Congress and will go into effect unless Congress 

amends IPAB’s recommendations with legislation that produces the same level of 

savings. 

In announcing the hearing, Chairman Herger stated, ‘‘One of Congress’ most 

important responsibilities is to oversee the Medicare program and protect 

its beneficiaries. When Democrats created this panel, they chose to empower unelected bureaucrats at the expense of patients and their doctors. 

IPAB robs Medicare beneficiaries of their voice and stifles their Constitutionally-mandated representation. Our seniors and those with disabilities 

deserve more than nameless political appointees who will deny care if they 

decide it costs too much. This hearing will allow the Subcommittee to fully 

understand the impact this ill-conceived rationing board will have on 

Medicare beneficiaries and their health care providers.’’ 

FOCUS OF THE HEARING: 

The hearing will examine the impact sections 3403 and 10320 of the ‘‘Patient Protection and Affordable Care Act’’ (P.L. 111–148) will have on the Medicare program, 

its beneficiaries, and health care providers. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit 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 submit, and click on the link entitled, ‘‘Click here to provide a submisVerDate Mar 15 2010 07:07 Mar 05, 2013 Jkt 078590 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\78590.XXX 78590

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sion 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 Tuesday, March 20, 2012. Finally, please note that due to the change in House mail 

policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call 

(202) 225–1721 or (202) 225–3625. 

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 supplementary 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 

or supplementary item 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. 

1. All submissions and supplementary materials must be provided in Word format and MUST 

NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised 

that the Committee relies on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

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

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

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

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 on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

Chairman HERGER. The Subcommittee will come to order. We 

are meeting today to hear from those who will be directly and adversely impacted by the Independent Payment Advisory Board, or 

IPAB. In an era where our two political parties are best known for 

their deep divisions, this is one area where there appears to be bipartisan concern. 

IPAB was created in the Democrat’s health care overhaul, and is 

designed to reduce the per capita rate of growth in Medicare spending. That might sound benign, but when you peel back a couple of 

layers it is clear that IPAB is a real threat to Medicare beneficiaries’ health. Those concerned about a government takeover of 

health care need look no further than IPAB. 

If implemented, the board will consist of 15 unelected and unaccountable Washington appointees. IPAB is given the authority to 

meet in secret, make its decisions in secret, and it does not need 

to consider the perspective of Medicare patients or their health 

care providers. To top it off, IPAB’s rulings cannot be challenged 

in a court of law. My good friend from California, the Ranking 

Member, Mr. Stark, characterized IPAB as a ‘‘mindless rate-cutting 


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machine that sets up for unsustainable cuts that would endanger 

the health of American seniors and people with disabilities.’’ 

Yet, despite the growing bipartisan opposition to this unaccountable board, the President once again proposed further expanding 

its authority in his most recent budget. 

Why is IPAB so dangerous? I have heard numerous concerns 

from patients and doctors. But to me, nothing is more troubling 

than IPAB’s ability to drive a wedge between Medicare beneficiaries and their doctors. There is nothing in the Democrat’s 

health care law preventing IPAB from slashing Medicare reimbursements for services or procedures that IPAB members feel are 

unnecessary or ineffective to levels so low that physicians would be 

willing to provide such care. As long as IPAB is allowed to exist, 

access to care for seniors and those with disabilities will forever be 

in jeopardy. 

IPAB supporters argue that it cannot ration care. What they 

won’t tell you is that the term ‘‘ration’’ is not defined anywhere in 

the Medicare statute. This means that what is and is not rationing 

will be left to 15 faceless, unaccountable and unelected appointees 

to decide. 

There is a better way. Rather than endangering Medicare beneficiaries, we should empower them. House Republicans have put 

forth such a plan. Our plan would let beneficiaries, not bureaucrats, decide the coverage they want and need. We have an excellent and diverse panel of witnesses here today who will share their 

thoughts and concerns about IPAB. We should all take note that 

when patients and providers are in agreement that access to care 

is in jeopardy, where those concerns exist it is our fiduciary responsibility to address them. 

Before I recognize Ranking Member Stark for the purpose of an 

opening statement, I ask unanimous consent that all Members’ 

written statements be included in the record. 

[No response.] 

Without objection, so ordered. I now recognize Ranking Member 

Stark for 5 minutes for the purpose of his opening statement. 

Mr. STARK. Thank you, Mr. Chairman. I guess you saw how 

long this was so you slipped that 5 minutes in there on me. That 

is okay. 

I am proud of what we have done with the Affordable Care Act. 

We have provided more than 21⁄2 million young adults with health 

coverage. We have reduced prescription drug costs for nearly 4 million seniors, provided free preventative care to 86 million people of 

all ages. And in 2014 it will go fully into effect, and expand coverage to over 30 million uninsured Americans, providing security, 

permanent security, for those who already have coverage. 

That said, the Affordable Care Act is a large bill with many provisions. And none of us probably agree with every single provision. 

To that point, the Independent Payment Advisory Board, or IPAB, 

is a provision I strongly oppose. Remember, the House included no 

similar provision in our health reform bill. It is a product of the 

other body and we really had no part in it. 

Let me be clear. I oppose IPAB for reasons different, perhaps, 

from my other colleagues. Congress has always stepped in to 

strengthen Medicare’s finances when needed. I have always worked 


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on this Subcommittee to protect and strengthen Medicare, and ensure that it works for its 50 million beneficiaries. 

One only has to look at the Accountable Care Act, which extended solvency, slowed spending growth, lowered beneficiary costs, 

improved benefits, modernized the delivery system, and created 

new fraud-fighting tools, to see that we have done a good job on 

this Committee. 

I see no reason why Congress should hand that authority over 

to the executive branch. That undermines the separation of powers. 

And I won’t go into detail now, but I have other concerns about 

IPAB’s process. I am sure we will hear more about that today. 

No one should interpret my opposition to IPAB as a knock 

against the ACA. I stand by my vote there. Nor should anyone interpret Republican support to repeal IPAB as an attempt to improve or preserve Medicare. I still believe that the other side of the 

aisle would like to end Medicare, provide it as a voucher, and that 

would underfund what is needed for individuals’ disabilities. 

Despite my opposition to IPAB, I think it is far less dangerous 

than a voucher plan. It doesn’t undermine Medicare’s guaranteed 

benefits. And its ability to reduce Medicare spending has guardrails. It doesn’t permit cuts to come from reduced Medicare benefits. It prohibits rationing and has annual limits on Medicare cuts. 

The Republican voucher plan does not have these protections. 

So, I believe that the witnesses may share my confusion or skepticism, but I look forward to discussing with them, if they believe 

there is a better plan on the other side of the aisle for Medicare’s 

future. And I will see what the witnesses have to say. 

Thanks, Mr. Chairman. 

Chairman HERGER. Thank you, Mr. Stark. Today we are joined 

by four witnesses: Dr. Scott Gottlieb, resident fellow at the American Enterprise Institute; Katherine Beh Neas, vice president of 

government relations at Easter Seals; Dr. David Penson, a practicing urologist from Nashville, Tennessee, who is vice chair of the 

American Urological Association Health Policy Council; and 

Marilyn Moon, senior vice president and director of the health program at the American Institute for Research. 

You will each have 5 minutes to present your oral testimony. 

Your entire written statement will be made a part of the record. 

Dr. Gottlieb, you are now recognized for 5 minutes. 

STATEMENT OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, 

AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY 

RESEARCH (WASHINGTON, DC) 

Dr. GOTTLIEB. Mr. Chairman, Mr. Ranking Member, thank you 

for the opportunity to testify before the Committee. 

IPAB was created based on the premise that decisions about the 

pricing of Medicare benefits are simply too contentious to be handled by a political system. But changes to the way Medicare pays 

for medical services affect too many people in significant ways to 

be made behind closed doors. How Medicare prices medical products and services has sweeping implications across the entire private market. They are some of the most important policy choices 

that we make in health care. 


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To these ends there are some considerable shortcomings with the 

way that IPAB is structured and how it will operate. Among these 

problems, IPAB has no obligation to engage in public notice and 

comment that is customary to regulatory agencies whose decisions 

have similarly broad implications. IPAB’s decisions are restricted 

from traditional review. In creating IPAB, Congress provided effective patients, providers, and product developers no mechanism for 

appealing the board’s pronouncements. IPAB’s recommendations 

will be fast-tracked through Congress in a way that provides only 

a veneer of congressional review and consent. 

And for practical purposes, IPAB has been given the authority to 

legislate. Moreover, there is a belief that if IPAB fails to fulfill its 

mandate, these decisions will default to Congress. Actually, under 

the law they default to the Secretary of Health and Human Services. 

But most significantly, IPAB is unlikely to take the steps to actually improve the quality of medical care and the delivery of services 

under Medicare. That is because IPAB does not have any practical 

alternative to simply squeezing prices in the Medicare program. 

The program we have in Medicare is a problem with the existing 

price controls that erode health care productivity in Medicare’s outdated fee-for-service payment system. This leads to inefficient medical care. There is too little support for better, more innovative 

ways of delivering health care. 

IPAB can pursue longer-term reforms to change incentives and 

behavior. These ideas—for example, aligning reimbursement with 

value and quality, or expanding cost sharing—don’t generate savings in the short run, since they are premised on long-term 

changes on how efficiently doctors and patients use medical services. These proposals will not produce the kind of immediate savings that IPAB needs to achieve a narrow budget window that will 

be its focus. Yet these are precisely the kinds of reforms that Congress has aimed to pursue on a bipartisan basis. 

By doubling down on the existing practice of simply whacking 

price schedules with no meaningful eye to how these changes impact long-term incentives, IPAB will put more systemic payment 

reform further out of reach. IPAB will be working at cross purposes 

to Congress’ broader reform goals. 

IPAB’s need to focus on short-run manipulation and price schedules and coding procedures is evidenced by the fact that longerterm payment reforms don’t score saving money by either the CBO 

or the Medicare actuary who has to sign off on IPAB’s recommendations. 

All of these ideas for broader payment reform also rely on 

changes in payment to providers, especially hospitals. IPAB can’t 

do these kinds of structural reforms if these constituencies remain 

off limits until 2019. 

Moreover, because IPAB has its purview narrowly targeted to 

specific slices of the industry to achieve its targeted savings, IPAB 

may be forced to implement unusually deep cuts to the limited terrain where it can operate. These deep cuts could forestall access all 

together to certain products and services. 

Medicare must continue to implement reforms to align its coverage and payment policies with a value delivered to beneficiaries. 


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Congress needs to focus on real ways to get longer-term savings, 

like premium support, modernizing benefits in the traditional 

Medicare program, and paying for better outcomes. IPAB makes it 

even harder to do all of these things. 

If Congress believes that the political process is incapable of 

making enduring decisions about the payment of medical benefits, 

then all of this is an argument for getting the government out of 

making these kinds of judgements in the first place. It is not, in 

my view, an argument for creating an insular panel that is removed from the usual scrutiny to take decisions that other Federal 

agencies have failed to discharge, precisely because those decisions 

couldn’t survive public examination. Thank you. 

[The prepared statement of Dr. Gottlieb follows:] 


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Chairman HERGER. Thank you. 

Ms. Neas, you are now recognized for 5 minutes. 

STATEMENT OF KATHERINE BEH NEAS, SENIOR VICE PRESIDENT, GOVERNMENT RELATIONS, EASTER SEALS, OFFICE 

OF PUBLIC AFFAIRS (WASHINGTON, DC) 

Ms. NEAS. Thank you, Mr. Chairman, for this opportunity to 

testify. I am Katy Neas, senior vice president for government relations at Easter Seals. For nearly 100 years, Easter Seals has provided exceptional services so that children and adults with disabilities in their families can live, learn, work, and play in the community. Last year, Easter Seals served 1.6 million individuals through 

a network of 75 affiliates across the country. 

Easter Seals’ experience over these many decades has solidified 

our belief that when people with disabilities, regardless of age, receive appropriate health care services, they live with greater independence. This experience was one of the main reasons Easter 

Seals supported and continues to support the Affordable Care Act. 

At the same time, we strongly concur that there must be cost containment within the health care system, and believe that more can 

and must be done to control costs within both public and private 

health care systems. 

To achieve true cost containment, Easter Seals believes that two 

important steps must be in place. First, the cost containment reforms established in the ACA must be given time to be implemented. Second, any new policies must be designed to ensure that 

people with disabilities can attain appropriate, medically necessary 

services in a timely fashion as to promote overall health and 

wellness. 

We too have concerns about the effectiveness of the IPAB that 

was included in the ACA. IPAB is not designed to be an instrument 

of delivery reform, or to improve the quality of care. The charge for 

this board is to reduce the per capita rate of growth in Medicare 

spending. For people with disabilities and chronic conditions, it is 

through better coordination and provision of quality care that real 

changes in health status can be achieved, and savings in the health 

care system can be realized. 

The language of the Affordable Care Act so limits where the 

IPAB can make changes, that all that is really left is reducing reimbursements to providers. The board cannot take any action that 

would deny access to care, increase revenue, restrict benefits, or 

change reimbursements to hospitals or hospices. If circumstances 

bring about a mandated cut in reimbursement to providers, it is 

likely that access to quality care will be reduced, and cost will be 

shifted to the patient. 

We are already experiencing a reduction in the number of health 

care providers who will participate in public insurance programs. 

The result is the same as if benefits were eliminated. 

A legislative correction such as the Medicare Decisions Accountability Act would ensure transparency and an opportunity for any 

beneficiary to talk with their Member of Congress about how the 

Medicare program can reduce cost and increase quality. It would 

also leave on the table more options for slowing the growth of 

Medicare expenditures, and the support of new delivery reform 


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models. This seems the brighter path for people with disabilities 

and chronic conditions, to assure the most impact from money 

spent through the Medicaid program. 

Again, thank you for this opportunity to speak with you today. 

[The prepared statement of Ms. Neas follows:] 


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Chairman HERGER. Thank you. 

Dr. Penson, you are now recognized for 5 minutes. 

STATEMENT OF DAVID F. PENSON, M.D., MPH, VICE CHAIR, 

HEALTH POLICY COUNCIL, AMERICAN UROLOGICAL ASSOCIATION (NASHVILLE, TN) 

Dr. PENSON. Chairman Herger, Ranking Member Stark, and 

other Members of the Subcommittee, I want to thank you for the 

opportunity to testify on the IPAB. My name is David Penson, and 

I am a practicing urologist from Nashville, Tennessee. I am speaking today on behalf of the American Urological Association, or the 

AUA, which has over 18,000 members, and has promoted the highest standards of urologic care in the United States and the world 

for the last 110 years. I serve as the vice chair of the AUA’s health 

policy council. My testimony today does not represent the opinion 

of my primary employer of Vanderbilt University. 

The AUA strongly opposes the IPAB, and calls on Congress to 

pass legislation that would repeal it. The AUA also participates in 

the IPAB Coalition and is a member of the Alliance of Specialty 

Medicine. Both groups support full repeal of the IPAB. We believe 

that the IPAB, if enacted, will result in reduced access to health 

care for Medicare beneficiaries. 

Why do we believe this? We know the Subcommittee is keenly 

aware of the ongoing issues with the SGR. Despite recent action to 

temporarily prevent the steep cuts to the SGR, physicians now face 

a 32 percent cut on January 1, 2013. Clearly, this affects physicians’ confidence in the Medicare program. To understand how 

much it affects confidence, and to determine if the cuts would impact access to health care, the Alliance of Specialty Medicine last 

year surveyed physicians and found that more than one-third 

planned to change their Medicare status to non-participating if reimbursement is significantly cut. Another third will opt out of 

Medicare for 2 years and privately contract with patients. 

The IPAB will only make matters worse. Hospitals and other 

Part A providers are exempt from IPAB until 2020. In addition, the 

IPAB is required to make recommendations that prioritize primary 

care. The result will be a disproportionate share of reductions on 

physicians with an emphasis on specialists, including urologists. 

Like the SGR, the IPAB, by its very nature, is flawed and will 

result in providers leaving Medicare. Specifically, the IPAB will 

consist of a board of unelected individuals that lacks accountability, 

clinical expertise, and transparency in its proceedings. In addition, 

the IPAB’s recommendations will be precluded from administrative 

or judicial review, and will be enacted unless Congress specifically 

acts to prevent this from occurring. 

To understand the negative impact that IPAB would have on 

Americans, we can look to the current impact of a similar body, the 

United States Preventative Services Task Force. The task force is 

an independent panel composed exclusively of primary care providers, and charged with making recommendations on the value of 

preventative services. The task force is not required, nor does it 

consult with the specialty areas relevant to the specific recommendations, and only recently added a public comment period in 

response to criticism. 


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The task force got our attention this fall when it released new 

draft recommendations to discourage PSA-based screening of prostate cancer, giving it a D rating, asserting that there is no net benefit, or that the harms outweigh the benefits. Based upon our review of the evidence, we strongly disagree with these draft recommendations. But the task force did not seek our opinion. In fact, 

the draft recommendations were developed without consultation of 

urologists, medical oncologists, or radiation oncologists, the very 

specialists who diagnose and treat prostate cancer every day. 

Prior to the Affordable Care Act, the task force recommendations 

were advisory and non-binding. Now, however, their recommendations are tied to patient cost sharing, intended to encourage or 

limit access to certain provider services, preventative services. In 

short, the recommendations of the task force will limit Medicare 

beneficiaries’ right to decide if they can be screened for prostate 

cancer, and have reduced access to health care. 

You may recall a couple of years ago that the task force made 

similar recommendations discouraging mammograms for women in 

their forties. Like the task force, the IPAB is another board of 

unelected, unaccountable individuals that will have a similar impact on Medicare beneficiaries. However, its impact will be more 

severe, since the IPAB has much broader authority to alter the delivery of care. Appointed members cannot be individuals directly involved in the provision of Medicare services or have other employment. Thus, practicing clinicians, the very people who treat the patients impacted by the IPAB, are excluded from participation on 

the board. 

Although the IPAB is argued to bend the cost curve, it only 

serves to ratchet down costs without clinical expertise or consideration of medical evidence. Similar to the task force, it doesn’t have 

the research capability or accountability to examine the effects of 

its recommendations and determine whether the recommendations 

will threaten access to care. 

While we are in agreement that Medicare spending growth is 

unsustainable and payment policies are challenging, it is your duty 

and responsibility as elected officials to address these issues. The 

care of our Nation’s seniors and individuals with disabilities is far 

too important to leave in the hands of unelected board members. 

Thank you for the opportunity to testify. I look forward to your 

questions. 

[The prepared statement of Dr. Penson follows:] 


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Chairman HERGER. Thank you. 

Ms. Moon, you are now recognized for 5 minutes. 

STATEMENT OF MARILYN MOON, PH.D., SENIOR VICE PRESIDENT AND DIRECTOR, HEALTH PROGRAM, AMERICAN INSTITUTES FOR RESEARCH (WASHINGTON, DC) 

Ms. MOON. Thank you. I appreciate the opportunity to be here. 

My name is Marilyn Moon, and I am a long-term researcher in the 

area of Medicare, with a particular emphasis on the issues that affect the consumers of the program, the beneficiaries. In this testimony I address both the context and rationale for the IPAB, and 

some practical issues and concerns that need to be addressed. 

While the IPAB raises a number of very legitimate concerns, it 

can be reasonable as a tool, if appropriately applied. 

In addition to the Independent Payment Advisory Board which 

is the subject of this testimony, substantial resources have been 

given under the ACA to the Centers for Medicare and Medicaid 

Services to identify, evaluate, and introduce innovations to the delivery and payment of care. This large infusion of funds to find 

ways to improve delivery and quality while holding down costs is 

at the heart of efforts to slow growth over time. 

It is only by identifying and implementing such changes that we 

can expect to see improvements over time, and that is the important aspect of reform that we should be focusing on. On the other 

hand, the IPAB can play a role here as a backstop. Until we understand better how to use our resources more effectively, and what 

organizations and treatments work well, it will be impossible to 

move forward to slow spending growth. So it is important to fully— 

it is fully appropriate for this to be done at the Federal level, which 

will ensure both a very broad look at innovations, and make the 

information available to all providers of care. 

Research conducted by private insurers or providers is likely to 

remain proprietary and to not be of the needed scope to achieve the 

tasks that loom before us. With these other activities, the IPAB 

makes considerably more sense than if it had been enacted as a 

stand-alone gatekeeper of spending. 

Moreover, it is important to contrast it with other alternatives 

that people talk about. For example, those who advocate decentralizing our Medicare program and turning decisionmaking over to 

beneficiaries place an enormous burden and risk on those beneficiaries. This is the hallmark of options that would require Medicare beneficiaries to buy insurance with a limited guarantee of subsidy from the Federal Government. 

Supporters of such an approach often talk about having beneficiaries put more skin in the game as a way of improving health 

care decisionmaking. Despite claims that this would create better 

consumers of care, they are asking the most vulnerable members 

of our society to make decisions for which they are likely to be 

poorly equipped. And I believe the evidence underscores that from 

the RAND experiment and other places. 

One positive aspect of IPAB that is often ignored, particularly 

when the idea is broadly challenged, is that it was explicitly set up 

to avoid cuts in benefits to beneficiaries and reductions in their 

coverage. And although the rationing aspect has some—I have 


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some concerns about how well it is drafted, that is part of the idea, 

that you are not trying to harm beneficiaries. And treating this 

only as a backstop after other things have not worked and as a way 

of providing incentives to providers to be supportive of other kinds 

of changes I think is the way to view the IPAB over time. 

There are, nonetheless—though I have spoken somewhat positively about the IPAB—concerns I have that reflect the same kinds 

of concerns that you have already heard on the panel this morning. 

First, setting goals on limited time horizons and then having 

short periods to implement change will put enormous pressure on 

a system that needs to change in many ways, but is not yet set up 

to readily adopt reforms. Fortunately, we will probably have until 

2020 or 2021 before that is an issue, because the changes that were 

made in the ACA are likely to slow the growth of Medicare sufficiently to avoid having the IPAB have to go into effect. It could use 

that period of time, for example, to focus on ways to incorporate 

more effectively these kinds of changes in the decisionmaking that 

it undertakes. 

Second, I have concerns about the tight conflict of interest requirements and the full-time paid status of board members that 

are similar to issues that other people have raised. 

Finally, I think the cumulative effect of very stringent controls 

over a long period of time needs to also be carefully examined. 

Tightening up on payments, requiring coordination of care, and improving the overall delivery of care are all desirable activities. 

But what happens if over a period of time these have happened 

and, as a society we want to see spending on health care decisions—on health care increase? The IPAB would be a penalty in 

that regard. 

So, I think that the IPAB should certainly be changed, but I 

think it can be viewed as an appropriate tool in a broader context. 

[The prepared statement of Ms. Moon follows:] 


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Chairman HERGER. Thank you for your testimony. 

Dr. Gottlieb, some have suggested that IPAB could rely on information garnered from the experiments of another Democratic 

health care tool, the Center for Medicare and Medicaid Innovation, 

to develop cost-saving policies. However, many Members, including 

myself, have serious concerns that CMMI was given a blank check 

with no accountability to beneficiaries or to Congress. 

Are you concerned that the interactions between IPAB and 

CMMI could lead to a perfect storm such as—these government 

bodies will have unchecked powers to change Medicare in ways 

that neither beneficiaries, providers, nor Congress can appeal? 

Dr. GOTTLIEB. I think the interplay between IPAB and CMMI 

certainly—it could be significantly problematic. You know, IPAB 

could effectively authorize new authorities onto CMS, and then 

CMMI could provide the funding for it. So you basically completely 

sidestep Congress. 

I think one can imagine IPAB skirting prohibitions on changes 

in cost sharing of benefit by authorizing or instructing the Innovation Center to use a more restrictive standard for what Medicare 

will cover, and then providing—CMMI would provide the funding 

to implement that. I think it is almost a foregone conclusion that, 

if IPAB is constituted, it will pursue some kind of reference pricing 

scheme like LCA authority, conferring LCA authority explicitly 

onto Part B drugs, something CMS has already sought and lost a 

number of Federal court cases in seeking that authority. And 

CMMI could effectively create the infrastructure to execute that. 

And so you would have the two entities working together to effectively accomplish what traditionally has been done by Congress, 

granting authority and then providing funding for it. 

Chairman HERGER. Thank you. Ms. Neas, you are not alone in 

expressing unease about IPAB. In fact, I have heard from a number of patient groups that have shared similar concerns that IPAB 

need not count a single patient representative among its 15 members. 

Can you discuss why you think it is important for beneficiaries 

to have a strong voice while this unelected board is making decisions to cut Medicare? 

Ms. NEAS. Absolutely. In the disability rights movement we 

have a phrase, ‘‘Nothing about us without us.’’ Patients and beneficiaries are essential in this decisionmaking process. People know 

what their bodies need, they know what they need. And simply 

having the dollars of what you pay a provider be the only factor 

in the decisionmaking process to us is simply missing the point. We 

really need people to be invested in their own health, and to make 

that opinion be part of this decisionmaking process. 

Chairman HERGER. Thank you. Dr. Penson, the President and 

key officials in his Administration claim that IPAB will strengthen 

Medicare. The President and these officials are also quick to claim 

that IPAB supposedly cannot ration care, increase beneficiary cost 

sharing, or reduce benefits. To me, this means that the only thing 

that IPAB can do to cut Medicare spending is to slash payments 

to providers. 


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Do you believe that simply cutting provider payments strengthen 

the Medicare program? Or do you think it will weaken the program 

by reducing beneficiary access to care? 

Dr. PENSON. I absolutely am—agree with you that I think it 

will weaken the program. The fact of the matter is that if you reduce reimbursements to physicians—there are many physicians out 

there in the community now who are struggling, particularly primary care providers. But specialists, as well. And what I think will 

happen is, if you reduce reimbursements, you will have providers 

leaving the system, leaving the program, and then that will reduce 

access for beneficiaries. 

Chairman HERGER. Thank you. Mr. Stark is now recognized for 

5 minutes. 

Mr. STARK. Thank you, Mr. Chairman. We—one of the reasons 

that I was happy to see ACA pass is that it was successful in constraining health care spending, and extended the solvency of the 

Medicare trust fund, slowed the cost growth in Medicare, and 

growth in overall national health spending, all while lowering beneficiary cost sharing. In fact, CBO estimates that Medicare spending growth is so low, given the Accountable Care Act, that IPAB 

won’t be triggered until after 2021, I think, as Ms. Moon indicated. 

Could you tell us, Ms. Moon, how ACA is lowering the Medicare 

spending, and how you suspect it may continue to do that in the 

future? It is my understanding that the cost containment from 

ACA means that, as you said, IPAB won’t be triggered for years. 

Can you elaborate on that a bit? 

Ms. MOON. Certainly. A number of the changes that were made 

in the Medicare program will reduce the level of spending over 

time. There are a number of them. One of them that I think was 

particularly important, for example, was to try to set on an equal 

footing with the traditional Medicare program, the Medicare Advantage aspects of the program in which now those private plans 

will be paid on a level comparable to what Medicare beneficiaries 

and traditional Medicare will get. I think that was a very positive 

move forward, for example, and a substantial piece of this. 

I think other areas in which the projections of lower spending are 

important are going to come from the innovation center of the—of 

this new activity by the Centers for Medicare and Medicaid Services. And unlike those who fear what it will do, I think that finally 

we are putting resources into looking at, very systematically and 

carefully, what things work to improve the delivery of care in the 

United States, recognizing that a lot of changes are going to have 

to be made. 

Some of these are not going to be easy, and they are going to be 

tough changes, but I think they will get the kind of scrutiny that 

they need when they are put out there as the CMMI does, the Center for Medicare and Medicaid Innovations, and that is by doing research and analysis and then talking about the findings and how 

they can change over time. That is much more transparent than 

will happen, for example, if these changes are made by private insurance companies in their own efforts to hold down costs. 

Mr. STARK. I am sure you are aware of—well, not only Canada, 

but I think almost all nations except Somalia and someplace else 

have basically an effectiveness study which would help patients 


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and physicians, without regard to cost, but through a study of how 

effective various procedures or various pharmaceuticals are—is aspirin better than Tylenol? Somebody will do a study on that and 

suggest to Dr. Penson that for this particular issue or that particular issue the statistics would show that this is more effective. 

Should that, over time, provide better service to our—to all 

Americans, but in particular to the Medicare beneficiaries, if the 

physicians chose—it is a voluntary issue—to follow its recommendations? 

Ms. MOON. I think—— 

Mr. STARK. I will ask Dr. Penson if that would be useful—would 

be helpful in his practice. 

Dr. PENSON. Well, I am—as I also wear a second hat as a 

health services researcher who focuses on comparative effectiveness, so evidence-based medicine is very important. The AUA supports it. I support it. I will add, though, that sometimes we do a 

study and it clouds this issue even more so. But evidence is very 

important for the practice of medicine, absolutely. 

Mr. STARK. Ms. Moon. 

Ms. MOON. I think that that is key to the future, because we 

really have to understand how to use our resources wisely. And, as 

you indicated, this should be advisory to physicians and other providers of care. It is difficult to ask physicians in this very fastchanging world to be on top of everything. And good and reliable 

information about what works and what doesn’t is going to be an 

essential piece of that. 

Mr. STARK. Thank you. I want to thank the entire panel for 

their contribution. Mr. Chairman, thank you. 

Chairman HERGER. Thank you. Mr. Johnson is recognized for 

5 minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. I am appalled by the 

government control of everything, and I think we need to get the 

government out of it. You know, unelected and unaccountable 

board trying to tell you docs what you can and cannot do is ridiculous. 

Are you still doing Medicare? 

Dr. PENSON. I am, personally. I work for a large academic medical center, so I suspect my medical center will always be in Medicare. I can tell you many of my colleagues are considering not participating, particularly if the SGR cuts go through. 

Mr. JOHNSON. Yes, I know. I am aware of a couple of docs that 

are thinking about going to the military and getting out of private 

medicine. That is ridiculous. 

Dr. Gottlieb, Secretary Sebelius testified before the Committee 

just last week and claimed IPAB is prohibited from rationing carealtering benefits. It is difficult to imagine that with this Administration and its Washington-knows-best mentality, that they could 

decide services and procedures aren’t warranted. As a result, they 

might recommend slashing Medicare reimbursements for those 

services and procedures. 

Do you see this as a possibility, and could you comment on it? 

Dr. GOTTLIEB. Well, I think they are going to be forced to manipulate payment schedules and coding because they need to 


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achieve budget savings in the near term, and in the near term that 

is all you can really do, given the other constraints. 

And what they are likely to do is import price schedules that 

exist in one aspect of the market into new aspects of the market 

so you can envision things like maybe VA pricing for the specialty, 

tier drugs in the Part D benefit, they are likely to just burn down 

existing payment rates, just drive them lower. And they are likely 

to try to do things to the coding process to try to change how certain products are reimbursed, maybe giving CMS authority to engage in forms of reference pricing. 

I think that the way that IPAB is likely to ration, if you will, is 

by just conferring new authorities onto CMS, authorities that CMS 

has long wanted to be able to engage in, you know, aspects of what 

really amounts to reference pricing, where you would categorize 

products along a judgement made by CMS that products are clinically interchangeable. 

So, for example, consolidating drugs with separate Orange Book 

listings under the same payment code, even if those drugs are paid 

separately, CMS could theoretically say that they think that they 

are clinically interchangeable. And just applying least cost, saying 

that within a category of approaches to a given medical problem 

CMS doesn’t recognize the clinical difference between different approaches and is therefore going to pay for the lowest rate. I think 

that is what we are likely to see. 

As far as rationing, I am not sure—there is no definition of rationing in the statute, so I am not sure how that is likely to be interpreted. And since you can’t sue IPAB for implementations of its 

recommendations, I am not sure how you can challenge that. 

Mr. JOHNSON. Thank you. I appreciate that. Do you think 

Medicare can be saved with arbitrary reimbursement cuts, or do we 

need more fundamental reform? 

Dr. GOTTLIEB. Well, I agree with you, Congressman. I think we 

need more fundamental reform. I think that this endless series of 

just burning down payment schedules and trying to lump different 

treatments under the same payment code to bring sort of bureaucratic efficiency to the management of the program just makes 

more fundamental—far more difficult. 

So, as we go through successive cycles of these arbitrary cuts, I 

think it makes it harder and harder to achieve something fundamental. 

Mr. JOHNSON. Yes. I am seeing some docs just getting out of 

it, they are not accepting it any more. Do you still? You said you 

did. 

Dr. PENSON. I do, because I am an employee of a medical center. But I will repeat what I said before, which is I know many of 

my colleagues have either left Medicare or are considering leaving 

Medicare because they are worried, frankly, about keeping the 

lights on. 

Mr. JOHNSON. Yes, yes. It is a serious problem. Thank you, Mr. 

Chairman. I yield back. 

Chairman HERGER. Thank you. Mr. Reichert is recognized. 

Mr. REICHERT. Thank you, Mr. Chairman. Thank you all for 

being here. As you can see, there is some agreement on this panel 

this morning. And you have, I think, answered most questions 


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through your testimony, so some of these might be repetitive. But 

I think that some of the topics bear a highlighting during the questioning. 

And I have only been on this Committee—this is going on my 

fourth year. I know some Members have been here much longer 

than that, and they have been struggling with health care and 

health care reform and lowering costs and increasing accessibility 

and quality versus quantity for a lot longer than I have. But it has 

become obvious to me in my short tenure on this Committee that 

there are some serious problems with this so-called Affordable 

Health Care Act. 

We have already removed language regarding the 1099 form. We 

have also—the Class Act is one part of the program removed from 

the health care law. It is not affordable. The—there are other 

issues, as you know, regarding mandates. So now we have lawsuits 

filed as a result of this law being passed. And now we have also 

discovered that, if you like your health care plan, you can’t keep 

it. 

And then, so today we are here to talk about another problem 

that there is agreement on with this panel, at least in the beginning of this discussion, and that is this advisory board. And most 

of you, you have touched on this already. 

But again, I want to highlight the—what Dr. Penson especially 

said in his testimony. The advisory board only serves to worsen the 

problem of physicians leaving Medicare. And Mr. Johnson just 

spoke briefly to this, too. Can you explain how the advisory board 

can restrict access to care for our Nation’s seniors? You have explained, at least in one case, prostate cancer, for example. The 

screening has been rated now as a D rating, which is going to restrict some coverage there and some access. Patient cost sharing is 

designed to limit access. Can you give some other examples of how 

access will be limited, and why? 

Dr. PENSON. Well, I think specifically with the IPAB, it is primarily going to be cutting reimbursements to physicians, and not 

just specific tests like the task force did with prostate cancer. 

With that being said, if we continue to cut reimbursement to 

physicians, we are going to have a crisis, because physicians are 

going to leave the Medicare program. And it is going to happen not 

just with primary care providers, but specialists. These days doctors, particularly community physicians, are working on a very 

tight margin. And if you continue to cut their reimbursements, 

they are going to close their doors, or they are going to stop seeing 

Medicare patients. And effectively, you are going to have American 

seniors saying, ‘‘Well, maybe I need to pay out of pocket to see my 

doctor I have been seeing for 10 years, because he no longer will 

accept Medicare.’’ I see that as a huge problem. And it effectively 

is rationing, depending on how you define it. 

Mr. REICHERT. And just to follow up on this idea, Ms. Neas, 

your—I liked your ‘‘no discussions about us without us.’’ And if you 

could, just elaborate a little more on that just to help us understand how Medicare changes and reforms are impacting beneficiaries, and especially if they are not there to represent their own 

views, thoughts, and ideas, and us as representatives have no place 

at the table to represent those individuals most in need that your 


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organization particularly represents. Can you go into some detail 

on that? 

Ms. NEAS. Sure. And I think, if I could be so bold, I think Dr. 

Penson might agree with us. One of the ways that we are healthy 

is when we have good relationships with our health care providers. 

It is a two-way street. Your doctor tells you what to do, and then 

you are supposed to do it. And that doesn’t always happen, but 

there needs to be direct communication with the patient and their 

health care provider. And when that happens in a positive way, 

people have better health. It is not very complicated. 

If you take that patient-doctor relationship out of the delivery of 

health care so that it is harder to stay with your doctor, you are 

going to somebody new every time, it can be very, very difficult. I 

think you—— 

Mr. REICHERT. Would you say the board is sort of doing this, 

then? 

Ms. NEAS. If you make it so doctors can’t stay in the Medicare 

program—and we are seeing this—and I know it is not the jurisdiction of this Committee, but we are seeing this every day in the 

Medicaid program, where health care providers simply are no 

longer taking children with disabilities who are on Medicaid because they cannot afford to pay their light bill and do this. It is 

not that they are being inappropriate in any way. They cannot stay 

open if they continue to serve these patients. We fear the same 

thing may be true with Medicaid—with Medicare, if it is constantly—if there are fewer people. 

I can give you one very quick example. I have a very dear friend 

who has spina bifida. She is in her mid-fifties. She has been on 

Medicare for times when she—and she has had over 50 surgical 

procedures. When she goes to a new doctor, they want a full medical history. She is 50 years old. She has had 50 surgeries. They 

don’t want—they don’t need to know if she has something wrong 

with her stomach when her legs were amputated. It is—but—and 

that is an inefficiency in the system, that if you make it harder for 

the people who know their patients to stay in Medicare, you are 

going to have less good health outcomes for patients. 

Mr. REICHERT. Thank you. 

Chairman HERGER. The gentleman’s time has expired. Mr. 

Pascrell is recognized. 

Mr. PASCRELL. Thank you, Mr. Chairman. It has been pointed 

out many times in this room, Mr. Chairman, how critical it was 

that health care reform included the cutting-edge delivery and payment reforms that it did. I will refer back to this in a moment. 

But I have never believed that the Independent Payment Advisory Board, as it stands now, would—will effectively fulfill its stated mission to—in terms of cost containment. I never really accepted 

that. I have concerns with how IPAB will operate, and that it gives 

us important congressional authority over pricing. That is why I 

am cosponsor of the bill, and I intend to support it in committee 

and on the floor. 

But let’s be clear, that the IPAB was originally designed to protect beneficiaries. That was its purpose. Despite what my friends 

on the other side would have you believe, it is their voucher plan 

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care as we know it. That is what would end Medicare as we know 

it. 

So, while we may be talking about repealing IPAB today, we 

should not lose the big picture, and that is the Affordable Care Act 

was entitlement reform. Nobody wants to say that on the other 

side. I don’t know why. One-third of the Act was entitlement reform, as far as I am concerned, concerning Medicare. Very specific. 

Unlike their plan, it will actually contain Medicare costs while improving benefits, not ending the Medicare guarantee. 

And I had a question for Dr. Moon, but I have—want a quick 

question, if you would, Ms. Neas. You know, the vouchers are not 

going to work for individuals with disabilities. Let’s set the record 

straight here. 

Ms. NEAS. That is absolutely right. Our experience, whether it 

has been in health care or in education, what people with disabilities need is what they need. 

Mr. PASCRELL. So what the voucher program does is turn people with disabilities and senior citizens over to the private health 

insurance industry. It turns it over to them to determine what care 

and how much care they are going to receive. Can you just briefly 

talk about converting Medicare to a voucher and what it would do 

to the very people you are focused on? 

Ms. NEAS. Over time, the Medicare program and others have 

been altered to include specific services and supports. Those were 

because people needed them, and we needed to spell out in very 

specific ways that there was a range of services that needed to be 

reimbursed by the Medicare program. People need those services. 

And because it is a big pool, not everyone is going to need the 

same amount. But they need to be able to have medically necessary 

service available to them, as decided by their health care provider, 

and not say, ‘‘If you cost more than $15,000 a year, too bad for 

you.’’ If you have a stroke and you need ongoing physical therapy 

to regain the strength in one side—— 

Mr. PASCRELL. Right. 

Ms. NEAS [continuing]. You need that. And it is not—and you 

may need, depending on you as an individual, you might need 

physical therapy for 2 months, or you might need it for a year. 

Mr. PASCRELL. Thank you. Dr. Moon, we know of the various 

and very specific cost containment under the Affordable Care Act— 

just to name a few, efforts to reduce preventable hospital re-admissions, improving payment accuracy—has an effect on what we are 

talking about. Promoting value-based purchasing, et cetera, encouraging innovation through the new Center for Medicare and Medicaid, establishing—and funds research on effectiveness of different 

clinical interventions with the Patient Centered Outcomes Research Institute. These are among many. 

Now, do you think it is likely that IPAB will focus on improving 

quality through delivery system reforms, considering how hard 

CBO showed it is to create any savings in such a small timeframe? 

Ms. MOON. I think that is a very legitimate concern about IPAB, 

and I think that if there were to be changes in the program that 

kept it, it should allow it to have a longer timeframe than the 1 

year. I think that is a dangerous aspect of the IPAB program. 

Mr. PASCRELL. What do you think would be the result of that? 


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Ms. MOON. I think that does bias you in favor of some of the 

cuts in payments, and that is something that I think you want to 

avoid. 

Again, I see IPAB mostly as a backstop, if absolutely necessary, 

and I would hope it would be viewed that way, and not as a first 

line. 

Mr. PASCRELL. Thank you. Mr.—— 

Chairman HERGER. The gentleman’s time has expired. Thank 

you. 

Mr. PASCRELL. Mr. Chairman, if I may? 

Chairman HERGER. Yes. 

Mr. PASCRELL. Mr. Chairman, I think the witnesses that we 

have heard over many, many weeks and many hearings are an indication. They are an indication of the concerns, legitimate concerns, of folks who are involved day in and day out with health 

care. 

I think all sides should just back off an inch or two at least, and 

take a look at what we are learning might not be the causes of the 

major problems we are facing in health care, and that we could all 

take a deep breath, Mr. Chairman, all take a deep breath, and understand that we are combined in intellect here, that we need to 

look at reducing—— 

Chairman HERGER. The gentleman’s time has expired. Thank 

you very much. 

Mr. PASCRELL [continuing]. Reducing one thing and not throwing away the entire essence of the bill. 

Chairman HERGER. Mr. Roskam is recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. You know, in that 

spirit of taking a deep breath, the Democratic leader of the House, 

when she was the speaker, sort of famously now prophesied that 

we had to pass the bill in order to see what was in it. And she did, 

and we do. Now we are walking through this IPAB adventure. 

And I think what is interesting, to the gentleman from New Jersey’s point—and I accept the premise of what he is saying—and 

that is there is nobody here—it is interesting—no voice on this 

panel is defending IPAB. Nobody. We have heard, well, it didn’t 

start in this chamber. We have heard it is not—you know, this 

wasn’t the real purpose. But it is fascinating that, at least to date, 

an hour into this hearing, there has been no voice that has defended on this panel the status quo of IPAB. So let’s talk about 

why. 

Dr. Gottlieb, can I turn to you? And let me ask you this. Under 

IPAB, will health care providers’ ability to provide care to patients 

be affected by reimbursements being cut for particular services? 

Dr. GOTTLIEB. I think it absolutely will. I—you know, as we 

have been saying, I think IPAB’s scope is so narrow and constrained, in terms of what it can do, and how far out it can look— 

getting to Ms. Moon’s point—that it is going to just have to burn 

down payment rates. And we have seen time and time again, when 

payment rates get driven too low, certain services just become unavailable. 

If you look even under the DRG system, when DRGs get driven 

down too low, certain technologies will fall out and just won’t be 

available in a hospitalized setting. I think the same thing is likely 


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to happen on the Part B side in the outpatient setting, is IPAB has 

to just burn down payment rates and manipulate coding schedules. 

Mr. ROSKAM. So the downward pressure—in a nutshell, the 

downward pressure is so fierce that it will have an impact. 

Let me ask you this. The debate around the word ‘‘rationing’’ has 

created a high level of anxiety. You know, and so the proponents 

of the Affordable Care Act say, ‘‘Well, IPAB can’t ration.’’ Rationing, as you know, is not defined in the statute. Let me ask you this. 

Can you have, per se, rationing, based on what the Independent 

Payment Advisory Board makes decisions to reimburse? 

Dr. GOTTLIEB. Sure. You are going to have payment driven so 

low in some settings that certain services just won’t be available. 

Physicians won’t be available to take patients. I think entrepreneurship is going to suffer, because you are going to have less investment in certain sectors in anticipation of the inability to get reimbursement for certain things. And I think the third leg of this 

is the fact that IPAB could confer authorities—give CMS new authority so CMS can engage in the rationing. 

I don’t see—I am not an attorney, I am a physician, but you 

know, I have spoken to attorneys in town. There is mixed opinion 

about this issue. But most people seem to agree that IPAB can confer authorities onto CMS that CMS would then use in ways to explicitly change benefit design and coverage rules. 

Mr. ROSKAM. Ms. Neas, on behalf of Easter Seals, I am interested. I have a world class Easter Seals facility—— 

Ms. NEAS. Yes, you do. 

Mr. ROSKAM [continuing]. In Villa Park, Illinois, which is doing 

remarkable work. And I have had the privilege of visiting, and 

really commend you and the vision and the mission that you have. 

Can you comment on what you are hearing from, let’s say, parents of children whom you are serving, and their level of concern 

about what patients—or what physicians might be prescribing 

based on an IPAB decision? In other words, if IPAB makes a decision, is the smorgasbord of options, the treatment options, possibly 

cut down as a result of the bureaucratic decisionmaking process? 

Ms. NEAS. Yes, thank you for that. Yes, you do have one of our 

superstars in your district, which serves predominantly children, 

and children with very significant physical disabilities. 

Our biggest concern is when you make it impossible for providers 

to stay in business and serve this population, they have no place 

else to go. And so the practical realities, particularly in smaller 

communities, where you may not have the same degree—breadth 

and scope of providers, if they cannot keep their doors open because reimbursement is the only thing that is keeping them afloat 

and that just gets cut, then, practically speaking, people are just 

afraid that those services, regardless of what is in the benefit package, if there is nobody to provide them, then they cannot access 

those services. 

Mr. ROSKAM. Thank you. Dr. Penson, quickly. Can—there is a 

lot of discussion in this town about income inequality. You mentioned this a minute ago, but can you give us a little bit of a highlight? What happens, for example, if a person of means goes in and 

a physician—well, my time has expired. I will—— 


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Chairman HERGER. Maybe he will answer it in writing. You 

want to finish the question? 

Mr. ROSKAM. That is okay. I will follow up with you. Thank 

you. 

Chairman HERGER. Mr. Kind is recognized. 

Mr. KIND. Thank you, Mr. Chairman. Thanks for holding this 

important hearing. And I appreciate the witnesses’ testimony here 

today. 

I would be the first to admit that IPAB requires a leap of faith. 

But I supported it. I think it makes sense. I think it is a fail-safe 

backstop effort to constrain the largest and fastest growing area of 

spending in the Federal budget and State budgets and local budgets and business budgets and family budgets, which is health care 

costs. And if people have a better idea of how we can bend the cost 

curve out in the future, I am all for that as well. 

But I think the key to reforming a health care system that was 

in desperate need of reform was through delivery system reform 

and through payment reform. It had to change the way health care 

is delivered, so it is more integrated and coordinated and patientfocused. And we have a lot of models throughout the country that 

have shown us ways to do that. 

And then, ultimately, we have to change the way we pay for 

health care, so that we are paying for the value or the quality or 

the outcome of care that is given, and no longer the volume of care. 

And that has been the nemesis of the so-called fee-for-service system for years. And everyone on this panel, I think, recognizes the 

challenge that we are facing. Fee-for-service is not producing the 

type of outcomes or the bang for the buck that we need with our 

health care dollars. IPAB is merely—from my perspective—is a 

fail-safe mechanism that, if certain reforms don’t lead to spending 

reductions and better outcomes, there is a way to address that. 

And one of the big problems out there is the over-utilization of 

health care: more tests, more procedures, more things being done, 

but without the desired results. But we have competing ideas on 

which way to go. The other side, from what I can tell, would just 

as soon shift the cost on the backs of people who can least afford 

it. 

Ms. Moon, let me start with you. For example, under the socalled Ryan budget plan that virtually all of them had supported 

last year, the Republican plan would end Medicare’s guaranteed 

benefits for things like hospital stays and doctor visits. They would 

replace it with a cash voucher. Can IPAB do that? 

Ms. MOON. No, it cannot. 

Mr. KIND. Also the Republican plan would increase the cost for 

Medicare beneficiaries, according to the CBO analysis of it, by more 

than doubling out-of-pocket costs for new enrollees up to $6,000 a 

year when it is fully implemented. Can IPAB accomplish that? 

Ms. MOON. No. Fortunately, it would not. 

Mr. KIND. And finally, the latest version apparently that they 

are toying with and might include in their next budget resolution, 

is the so-called Ryan-Wyden Plan that embraces this concept of a 

target growth rate, that if certain spending reductions don’t occur, 

automatic spending reductions occur under this target growth rate. 

Does IPAB mirror any of that? 


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Ms. MOON. No. 

Mr. KIND. You know, so there is really a choice here of what we 

can do, moving forward. We can allow time to transpire for delivery 

of system and payment reform to take place, or there is the ACO 

models or medical homes for the better coordinated care, the Center for Innovation coming up with ideas on how we can get better 

value for the dollar, and have IPAB as a backstop for that, ultimately. Or, we can go down another route, which merely privatizes 

Medicare, turns it into a private voucher plan, shifts the cost on 

the backs of seniors, an additional $6,000. 

And when I look at my congressional district, 80 percent of the 

seniors in western Wisconsin rely on Social Security as their sole 

source of retirement income, 80 percent. They can’t take a $6,000 

hit in Medicare. So what I think we need to be working on is what 

we can do together to try to reform a delivery system so we do get 

better value out of the dollar. 

So am I wrong here, Ms. Moon? Am I missing something of what 

needs to be accomplished in the health care system? 

Ms. MOON. No, I think that is exactly right. I think that this 

is a very tough problem, and the Federal Government has a role 

to play, along with consumers and providers, and everybody else. 

And to shift it off on to beneficiaries and make them responsible, 

I think—— 

Mr. KIND. Well, the way I see IPAB ultimately is a panel. 

Again, a backstop if cost constraints don’t occur, but they would 

kick in, their relevancy would kick in. But their whole task is to 

find out what is working and what isn’t, and then stop creating incentives for doing things that don’t work. 

I mean, in its simplicity, that is what IPAB is really all about. 

And I support it, because I have been around here long enough to 

see how reckless Congress is, trying to act on these reimbursement 

issues ourselves. I know there is great cause for representative democracy, but you just look back at SGR, and what an abysmal failure SGR has been throughout the years. It was a budget savings 

mechanism inserted in 1997 that has always been restored. And 

that is the problem we always have with these reimbursement 

issues. 

Congress doesn’t have the backbone or the guts to stand up and 

try to make these decisions ourselves, because we are not experts. 

And yet IPAB is supposed to be staffed with people with greater 

knowledge and greater expertise in order to make some of these 

difficult decisions. Congress can still intervene. There is still that 

mechanism. But I would feel more confident going down the IPAB 

road than not, given what we face today. Thank you, Mr. Chairman. 

Chairman HERGER. Thank you. Dr. Price is recognized. 

Mr. PRICE. Thank you, Mr. Chairman. There is so much misinformation in the last 5 minutes, I don’t know quite where to start. 

But maybe I will start by saying that the SGR, which all of us 

agree is a disaster, in terms of its compensation of physician—reimbursements for physician services for seniors, everybody understands that. The IPAB has been called the SGR on steroids. So if 

you liked the SGR, you will love the IPAB. 


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Our whole goal here is the highest quality of care. We disagree 

drastically about how to get to that highest quality of care. Our 

side believes that patients and families and doctors ought to be 

making medical decisions. The other side believes that Washington 

ought to be influencing those medical decisions in very intimate 

ways, which is why I think it is important to point out, Mr. Chairman, that a list of medical entities, physician entities, folks taking 

care of patients, nearly 500 of them—500 of them—support repeal 

of the Independent Payment Advisory Board. 

So, it is important to remember that we are talking about patients, and the people that are taking care of the patients are saying that this will be a disaster, a disaster. 

We have heard a couple of things from our friends on the other 

side who say, ‘‘Oh, don’t worry about it, it is 2020, 2021, not going 

to happen.’’ I draw their attention to appendix A in their packet. 

The first date where something regarding IPAB must occur by law, 

April 30, 2013—2013. That is when the chief actuary has to begin 

to state whether or not these costs are going up at rates that are 

unacceptable, not according to patients, not according to any market at all, but according to Washington. 

We have heard that the—words tossed around like ‘‘voluntary’’ 

and ‘‘advisory,’’ as it relates to IPAB. There is nothing voluntary 

or advisory about the Independent Payment Advisory Board. It is 

a denial of care board. And its sole purpose is not quality of care, 

as my colleague just talked about. Its sole charge is to ‘‘decrease’’— 

‘‘recommend cuts in areas of excess cost growth.’’ Decrease costs— 

excess cost growth, which—then you have to look at why the cost 

of health care is rising. And it is rising higher than the gross domestic product. Why? For two main reasons. 

We heard this last week from the chief actuary for CMS as well 

as the OMB director. The 2.5 percent is due to ‘‘utilization and innovation,’’ utilization and innovation. So if you are going to decrease the cost, what do you have to do? You have to decrease innovation—that is quality of care—and utilization—that is access to 

care, which brings me to my questions to, first, Dr. Penson. 

There is some notion that if you decrease payment to physicians, 

that doesn’t decrease the access to care for patients. Can you put— 

can you help us understand that, that mechanism, a little bit? 

Dr. PENSON. Well, it is going to affect—you decrease reimbursement to physicians, it is going to affect things in two ways. First 

is the example I have thrown out there already, which is at a certain point physicians are going to close their doors and turn off the 

lights, simply because they can’t make ends meet. And so, for many 

physicians, they will just opt out of Medicare. And we have already 

seen this in Medicaid. 

The other thing that physicians will do is that they get paid— 

if the reimbursement gets paid less, if they try and keep their 

doors open and keep things open for Medicare, they will just try 

to see more patients. 

Now, you say, ‘‘Okay, well, that is good. We want our doctors to 

see as many patients as possible.’’ But Ms. Neas will back me up 

on this. There is a big difference between when you get—and you 

know this, as a physician—you get a good, long visit with your doc, 

where you get to talk with him or her, or you are sort of in and 


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out really quickly, because that is what he or she has to do, just 

to keep the office open. 

Mr. PRICE. Dr. Gottlieb, I want to talk about some real-world 

consequences for the physicians out there trying to care for their 

patients, in spite of the rules that we toss upon them. 

My understanding is that if a physician is continuing to try to 

see Medicare patients, and if a payment for a service in Medicare 

is not of a rate that would allow the physician to continue to keep 

his or her doors open, that physician can’t see that Medicare patient and provide that service if they agree upon another price that 

the patient would want to pay to that physician to see him or her. 

Is that right? 

Dr. GOTTLIEB. That is right. Under the law you can’t balance 

bill the patient. You have to accept the customary rate under Medicare if you opt into the Medicare program. 

I think the other caveat here, and what I am seeing in my clinical practice—I practice hospital-based medicine, but I will refer 

the patients to primary care providers as they are discharged from 

the hospital, and what I see more and more is just physicians capping how many Medicare patients—— 

Mr. PRICE. Exactly. 

Dr. GOTTLIEB [continuing]. They will allow into their practice, 

and they will say, ‘‘I am closed to new Medicare patients.’’ We have 

seen this in Medicaid for years now. It is very hard to get specialty 

care for Medicaid patients that I am discharging from the hospital, 

and it is quite unfortunate. 

Mr. PRICE. And, therefore, huge decrease in access to care. In 

fact, last week, when the Secretary was here, she said 98.4 percent 

of physicians see Medicare patients. And I asked her specifically 

how many physicians are decreasing the number of Medicare patients that they are seeing, and the Secretary could not answer 

that. And it is a huge, huge number. Access to care is being compromised. IPAB damages access to care, and it is time to repeal it. 

Thank you, Mr. Chairman. 

Chairman HERGER. Thank you. Mr. Buchanan is recognized. 

Mr. BUCHANAN. Thank you, Mr. Chairman. And I also want to 

thank the witnesses for being here today, taking your time. 

I represent 170,000 seniors in southwest Florida, Sarasota and 

Manatee Counties. And many of the seniors that I talk to are very 

concerned about what this unelected board of bureaucrats will 

mean to Medicare, as it decides what constitutes necessary care for 

our seniors. 

Dr. Penson, you represent doctors who are concerned about this 

board. How do doctors feel about President Obama’s call to expand 

the reach, in terms of this board? 

Dr. PENSON. I think, in general, the doctors who I represent in 

the American Urological Association are strongly opposed to this 

board, and they certainly wouldn’t favor any expansion of it. 

Mr. BUCHANAN. Dr. Gottlieb, I had a quick question. You mentioned in your testimony that the decision of this unelected board 

of bureaucrats is exempt from judicial review. I find this very concerning. Please explain to us what the full consequences of this exemption are. 


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Dr. GOTTLIEB. Well, my understanding, by talking to attorneys 

in town, is that the implementation of the board’s provisions is exempt from judicial review. So, effectively, if you are a sponsor, if 

you are a company manufacturing a product or even a provider 

group affected by a decision of the board, you wouldn’t have legal 

standing to challenge a decision in court. You also don’t have any 

ability to appeal; there is no appeals mechanism. 

I had my research assistant—and I don’t have her with me here 

today—do a survey—we are going to be publishing it soon—of all 

the mechanisms in place on private health care plans, what they 

have in terms of adjudication. And, you know, I don’t think Congress would ever allow a private plan to operate the way IPAB is 

going to operate, in terms of not allowing any mechanism for appeal, or any open process, in terms of how these decisions get 

made. And the private sector obviously does a much better job because—frankly, because they have to, under the law. 

Mr. BUCHANAN. And let me—just a follow-on question that was 

brought up the other day, that if the Congress doesn’t like what 

gets done at IPAB, what kind of reach—or what is their ability to 

try to overturn a decision, as you understand it? Because I have 

heard different comments on that. 

Dr. GOTTLIEB. Well, there is sort of a veneer of congressional 

consent built in, right, where the proposals of IPAB go to Congress 

for a very limited time, and that Congress would have to come up 

with proposals that cut Medicare by the same magnitude, if they 

didn’t like the proposals that IPAB put forward. I think it is unlikely Congress is going to be able to come up with competing proposals in the timeframe that they are allowed under the law. 

So, it is effectively a way to fast-track the IPAB proposals into 

law and provide a veneer of congressional consent, I assume, because there were separation of powers issues if it didn’t go before 

Congress. 

Now, Congress can always pass a law later to repeal the IPAB 

provisions. But I think the whole idea here is that the idea was to 

make it very politically hard to do anything to stop the implementation of IPAB’s proposals. 

Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back. 

Chairman HERGER. Thank you. Mr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. I would ask 

unanimous consent to enter into the record an article from the New 

York Times called ‘‘Knotty Challenges in Health Care Costs.’’ 

Chairman HERGER. Without objection. 

[The submission of Hon. Jim McDermott follows:] 


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Mr. MCDERMOTT. This points out that the average cost of 

health care per capita in the United States is $8,000, which is 

twice what it is in every European country. So we all know there 

is a cost problem. I don’t think anybody up here disagrees. 

And the question is—I guess Bill Friske said it pretty well, in my 

view. He said, ‘‘Don’t repeal it, fix it.’’ So I am sitting here, trying 

to figure out—people don’t like the IPAB. I think it is as good a 

mechanism as we have, and we will fix it on the way, maybe we 

will figure out better ways. But the question is, how do you fix— 

let’s just take one area, doctor’s fees? 

Now, when we started Medicare, we said to the doctors, ‘‘You can 

submit your usual and customary fees.’’ That was the deal. Doctors 

weren’t coming in unless they got their usual and customary fees. 

Okay. So now, Dr. Penson, you sit out there at Vanderbilt University. Do you decide your fees? 

Dr. PENSON. No, I do not. 

[Laughter.] 

Mr. MCDERMOTT. Well, who does? 

Dr. PENSON. Well, I—— 

Mr. MCDERMOTT. An accountant? 

Dr. PENSON. I believe the physicians and the leadership at Vanderbilt University, and I understand—— 

Mr. MCDERMOTT. No, wait a minute. You mean you don’t set 

them? They are set by the university? 

Dr. PENSON. And by the payers in the region. 

Mr. MCDERMOTT. The payers of the regions? 

Dr. PENSON. The payers in the region, the insurers. 

Mr. MCDERMOTT. Ah, so United Health sits down with Vanderbilt and says, ‘‘Here is what we will pay. Send me a bill for that 

amount.’’ Is that the idea? 

Dr. PENSON. I don’t know the exact mechanism, honestly. 

Mr. MCDERMOTT. Isn’t that interesting? Now, here we have a 

doctor who doesn’t know how his pay comes. And what we have 

written into law right now is doctors can submit any pay—any fee 

they want, and then the government is supposed to write a check 

and pay them exactly what they ask for. Well, then somebody has 

to make a decision on how much doctors should be paid, right? 

Now the question. Here is what I would like Ms. Moon and Dr. 

Penson and Mr. Gottlieb—Dr. Gottlieb to talk about. How should 

it be done? Should it be Members of Congress up on this dais decide? Or should it be by the doctors, the doctors should decide how 

much they are paid? Because doctors will always say, ‘‘I was not 

paid my fees.’’ Of course you weren’t paid your fees, they were too 

high. And Aetna or United Health or somebody said, ‘‘No, no, no, 

no. We are only paying this much.’’ Or should it be done by a board 

that sits and talks about it? 

What is the answer to this question of setting fees? How should 

it be done? 

Dr. GOTTLIEB. Thank you, Congressman. I would just say up 

front we don’t have a cost problem in medicine. I think we have 

a value problem in medicine. And the question is are we getting 

what we paid for? And I think most of us would agree we are not. 

Mr. MCDERMOTT. Well, who decides the value? 


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Dr. GOTTLIEB. I know how my fees are established, and they 

are established, frankly, by Medicare. I mean I am paid—most of 

the patients I see are Medicare patients or Medicaid patients. And 

where I do have private-pay patients—— 

Mr. MCDERMOTT. What do you get—you submit—— 

Dr. GOTTLIEB [continuing]. I am paid off of a Medicare rate. 

Mr. MCDERMOTT. You submit $100, what do you get back, $70? 

Dr. GOTTLIEB. I—when I see patients in the hospital, I will fill 

out a sheet at the end of a day, and I will submit billing codes. 

They are Medicare billing codes, regardless of whether it is a Medicare patient or a private patient. The private plans use the same 

billing codes. And there is a fee schedule assigned to the billing 

codes. And that fee schedule is established by Medicare. And the 

private plans will pay a percentage off of that schedule. 

Mr. MCDERMOTT. And—— 

Dr. GOTTLIEB. Medicare rates vary across the country, because 

doctors—because costs vary across the country. So Medicare varies 

the rates, based on surveys that it does of the actual cost of providing care. But that is how all physicians are paid, unless they are 

taking cash. 

Mr. MCDERMOTT. Well, how would you fix that? You don’t like 

that system. And it is costing us too much. We are paying twice 

what the French and the British and the Germans—everybody else 

is paying for health care, and our health statistics aren’t better. So 

how do you fix this payment thing? 

Dr. GOTTLIEB. Well, it—— 

Mr. MCDERMOTT. Because paying whatever we are paying isn’t 

buying it. 

Dr. GOTTLIEB. This gets to the question of, you know, do we 

have—do we tweak things, or do we go for a fundamental reform? 

I mean, first of all, the whole coding process for how physicians 

are paid is done behind closed doors. AMA effectively has a monopoly on establishing the codes. And I—— 

Mr. MCDERMOTT. So you would be willing to look at the RUC 

committee. 

Dr. GOTTLIEB. I think you have to open up the RUC. I think 

it should be a competitive process. And I think ideally you want to 

move as many services and products as you can into places where 

they can be bid in competitive markets. We have seen that bidding 

products in a competitive market works in Part D. Prices have 

been driven down. I would move other aspects of Medicare into 

competitive schemes where those services and products get bid in 

competitive markets. 

Mr. MCDERMOTT. Dr. Penson. 

Dr. PENSON. Well, Dr. Gottlieb is clearly smarter than I am. I 

am just a dumb urologist. But I will tell you, having practiced in 

Los Angeles before I was in Tennessee, it is a similar experience, 

in as far as what I get paid is set by the payer, whether it is Medicare or the private payer. And the institution I work for obviously 

negotiates that charge. 

I don’t have the fix. But the fix isn’t just simply cutting physician 

fees. It is—you need fundamental reform. I don’t have the answer. 

I don’t think anyone does, that is why we are here. 


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Chairman HERGER. The gentleman’s time has expired. Mr. Gerlach is recognized. 

Mr. GERLACH. Thank you, Mr. Chairman. Maybe that is a good 

segue into a line of questioning particularly to Dr. Moon. 

Thank you for testifying today, by the way, all of you on the 

panel. 

Dr. Moon, in your written testimony, you indicate that you support the reasonableness of the goals of IPAB, but there are some 

‘‘serious challenges’’ that ought to be addressed. And specifically, 

you say that setting goals on limited time horizons and then having 

short periods to implement change will put enormous pressure on 

the system. Instant savings should not be expected nor used to 

measure success. This may create a bias in favor of less complicated changes, such as payment limits, which is what the doctors have described and others have described, as well, that there 

needs to be perhaps a more nuanced approach encouraging delivery 

system reforms. 

That leads to this whole issue of how are we finally going to attack the fraud that is in the system, in particular? We had Secretary Sebelius here last week, and she indicated in her testimony 

that they have undertaken health care fraud reforms that will generate $3 billion over 10 years of savings. Well, that sounds like a 

pretty good step in the right direction, except for the fact there is 

widespread agreement there is $50 billion in fraud every year in 

Medicare. That is $500 billion over 10 years. So, a $3 billion savings through these efforts, and a $500 billion problem over 10 years 

seems minuscule. 

So, isn’t that the area that everybody ought to start focusing in 

on to try to get a handle on the growth of the Medicare program— 

growth and spending in the Medicare program, issues like phantom 

billing, stolen identification of seniors’ patient information, stolen 

unique physician identification numbers that lead to, again, fraudulent and criminal activity? Shouldn’t that be the focus of this 

panel? Shouldn’t that have been the focus of the Affordable Care 

Act, to really get to the real fundamental problems in the system, 

rather than keep setting up situations where doctors are going to 

get dinged for another 1 or 2 percent every year? Should that not 

be the focus of this panel, and everybody in the health care delivery system? 

Ms. MOON. I believe that going after fraud is a very important 

aspect of trying to improve the health care system over time. But 

I also believe that a lot of the numbers that get thrown around are 

into the broader category of fraud, waste, and abuse. And once you 

get beyond fraudulent billing and some of the things that you can 

easily throw someone into an orange jumpsuit in a Federal penitentiary, you have more difficulty in terms of the subtleties of what 

is waste or abuse. You have the difficulties of patients and physicians, in some cases, wanting to do things for the right reasons but 

then overdoing things, doing things inappropriately. And how accountable we hold them is a difficult thing. That puts you also 

down the road to a lot of very tough controls that people have been 

reluctant to do. 

In the fraud area, though, I would say some of the improvements 

that people are seeking in terms of the ability to track what hapVerDate Mar 15 2010 07:07 Mar 05, 2013 Jkt 078590 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\78590.XXX 78590

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pens, what the bills are, how large they are before the fact, before 

you actually pay, and going after them is a worthy thing to do. It 

is just going to be a little more difficult to get the big numbers, I 

think, because there is a sort of happy conspiracy out there that 

people—what may be viewed as waste by some people is viewed as 

someone else’s very important—— 

Mr. GERLACH. Well, the Government Accountability Office put 

out a report that in 2010 there was $48 billion of improper payments. That is not just fraudulent activity, that is also just erroneous, unintentional administrative errors, but nonetheless is a 

waste of dollars that otherwise could be used to make sure there 

is quality and affordable care for the beneficiaries of the program. 

So, we seem to get these reports periodically that there is massive amounts of waste, fraud, and abuse, and yet the best we can 

hear from the current Secretary of HHS is we are going to come 

up with $3 billion in savings over 10 years, and somehow, wow, we 

have done our job in all of this? 

Don’t you—has your institute—have you done any studies on 

how to deal with waste, fraud, and abuse, so that we tackle these 

very large numbers which, in turn—a portion of which could be 

making sure that physicians are getting a fair level of compensation for the patients they take care of? 

Ms. MOON. We haven’t looked at the fraud issue, but we have 

been focusing a lot on comparative effectiveness, and some of the 

kinds of things of trying to talk about getting value for your dollar. 

I don’t know about the recent GAO study, but an earlier one that 

they did that focused on fraud, waste, and abuse found that many 

of the—much of the amount was where the physician had not 

signed appropriately. And you don’t know whether that is really 

fraud, or whether it is simply administrative error. So I think we 

have to be a little careful of being optimistic we can get all our dollars from there. I wish it were true, because that would keep 

us—— 

Mr. GERLACH. Okay. Well, you would agree we can hopefully 

get more than $3 billion over 10 years—— 

Ms. MOON. Yes, I hope we could do more than that. 

Mr. GERLACH [continuing]. In savings than what the Secretary 

described? 

Ms. MOON. I would like to see us get more than—— 

Chairman HERGER. The gentleman’s time has expired. 

Mr. GERLACH. Thank you. I appreciate it. 

Chairman HERGER. Mr. Blumenauer is recognized. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. Thanks again 

for an opportunity to have this discussion, think through some of 

the issues. 

I was struck by Dr. Penson saying he didn’t have the answers, 

he has some concerns about application, and I appreciate that. But 

I do think that the Affordable Care Act actually incorporates most 

of what the answers are. Unlike Dr. Gottlieb, you know, we are not 

going to unwind Medicare. In fact, the Federal Government now 

pays about half the health care bill in this country. 

And we are sort of—this is part of the system. That is not going 

to go away. Hearken our Tea Party friends saying, ‘‘Keep GovernVerDate Mar 15 2010 07:07 Mar 05, 2013 Jkt 078590 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\78590.XXX 78590

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ment’s hands off our Medicare.’’ It is ingrained in the system. What 

we need to do is make it work better. 

And I couldn’t agree more about the SGR. I thought it was bogus 

when I was here, I voted against it. I think an artificial formula 

that we can just kind of put it on autopilot and turn our back is 

wrong, and it is destructive. 

It is interesting to note, despite sort of some of the payment limitations, expenses continue to skyrocket up because—and I think 

you, several of you, mentioned we need to change the system that 

rewards value in outcomes, not just procedures. 

I agree with my friend from Pennsylvania. I don’t know whether—how big the fraud piece is, but I have joined him in legislation 

for secure card, whether it is $10 billion, $20 billion, $40 billion, 

there is a chunk of money that will enable us to be able not just 

to prevent loss of resources, but also have better control and protection for patients, and have better data. 

I don’t think there is a silver bullet. I don’t think there is one 

thing that is going to solve the problem. I know SGR isn’t. And if 

I had my way, I would get rid of it entirely. I would, in fact, be 

willing to have some of the permanent tax cuts—you know, we battle over that—I would have some of the tax cuts go away, buy out 

the SGR, get rid of it. It is a goofy thing, and we are always going 

to try to stop it, except when we stub our toe. And the uncertainty, 

I think, does cloud the practice of medicine for patients and doctors. 

But for me, the Affordable Care Act had all the elements that 

used to be bipartisan. You know, a mandate—the dreaded mandate—was the creation of conservative think tanks as an alternative to Hillary Care. This was touted by some of our Republican 

friends. It was what Governor Romney, in a bipartisan way, established in Massachusetts. 

We have, you know, end of life care that came out of this Committee without dissent, strongly supported, somehow morphed into 

death panels and weirdness. I am hopeful that we can take this 

conversation about the IPAB and use it to kind of unwind some of 

these things. 

I don’t want that to be the default mechanism. I think—and I appreciate suggestions people have to try to make it better. But it is 

there because Congress has consistently failed. It won’t take recommendations. You know, everybody wants to go to heaven, nobody 

wants to die. So we talk about restraint and care, but then we 

blink on some things that aren’t particularly controversial. And 

even now, we have had people on the Committee talking about government problems with the health care reform, and then looking at 

ways to spend more money. 

I am hopeful that we can work with you to find out ways that 

there might be some modest adjustment. But I hope it doesn’t get 

to that point. It was specifically set up to give Congress a chance. 

And it isn’t something that will happen unless Congress fails 

again. 

We have the better part of a decade. Start moving. We have 

seen—and, Ms. Moon, I appreciate you referencing it—there is 

some areas where we are seeing some progress made. Health care 

costs have not exploded of late. There has actually been a little reVerDate Mar 15 2010 07:07 Mar 05, 2013 Jkt 078590 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\78590.XXX 78590

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straint, while we have been able to give some better service. I have 

people thank me that the kids are still on the parents’ insurance 

policy, where kids are not going to be—have a problem with the 

pre-existing condition. 

But we need to—Congress needs a tool like this, because otherwise we will do something really stupid, like SGR. And I hope the 

framework of health care reform, good suggestions from people like 

you, and Congress realizing that we can’t continue to blink, will result in this never having to be put in effect, and we will do our job. 

Thank you. Thank you, Mr. Chairman. I didn’t get to my question, I am sorry. 

[Laughter.] 

But I feel so much better. I feel so much better. 

[Laughter.] 

Chairman HERGER. Good. The gentleman’s time has expired. 

I want to thank our witnesses for your testimony today. It is my 

sincere hope that, given the bipartisan concerns that were raised 

here today, this hearing will provide the foundation for this Committee to move forward in addressing the dangers posed by this illconceived board. 

As a reminder, any Member wishing to submit a question for the 

record will have 14 days to do so. If any questions are submitted, 

I ask that the witnesses respond in a timely manner. 

With that, the Subcommittee stands adjourned. 

[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.] 

[Submissions for the Record follow:] 


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