U.S. GOVERNMENT PUBLISHING OFFICE

48–877 PDF WASHINGTON : 2022

S. HRG. 114–860

CELEBRATING MEDICARE: STRENGTHENING

THE PROGRAM FOR THE NEXT 50 YEARS

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING

UNITED STATES SENATE

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

ST. LOUIS, MISSOURI

JULY 31, 2015

Serial No. 114–11

Printed for the use of the Special Committee on Aging

(

Available via the World Wide Web: http://www.govinfo.gov
(II)

SPECIAL COMMITTEE ON AGING

SUSAN M. COLLINS, Maine, Chairman

ORRIN G. HATCH, Utah

MARK KIRK, Illinois

JEFF FLAKE, Arizona

TIM SCOTT, South Carolina

BOB CORKER, Tennessee

DEAN HELLER, Nevada

TOM COTTON, Arkansas

DAVID PERDUE, Georgia

THOM TILLIS, North Carolina

BEN SASSE, Nebraska

CLAIRE MCCASKILL, Missouri

BILL NELSON, Florida

ROBERT P. CASEY, JR., Pennsylvania

SHELDON WHITEHOUSE, Rhode Island

KIRSTEN E. GILLIBRAND, New York

RICHARD BLUMENTHAL, Connecticut

JOE DONNELLY, Indiana

ELIZABETH WARREN, Massachusetts

TIM KAINE, Virginia

PRISCILLA HANLEY, Majority Staff Director

DERRON PARKS, Minority Staff Director
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C O N T E N T S

Page

Opening Statement of Senator Claire McCaskill, Ranking Member ................... 1

PANEL OF WITNESSES

Stuart Guterman, Senior Scholar in Residence, AcademyHealth, Washington,

D.C. ........................................................................................................................ 4

Brit Pim, General Manager of Federal Programs, Express Scripts, Inc., St.

Louis, Missouri ..................................................................................................... 7

Sandra Van Trease, Group President, BJC Healthcare, St. Louis, Missouri ..... 9

Max Richtman, President and Chief Executive Officer, National Committee

to Preserve Social Security and Medicare, Washington, D.C. .......................... 13

Ron Sergent, Former AARP Executive Council Member, and Medicare Issue

Volunteer Lead, AARP Missouri, Columbia, Missouri ...................................... 15

APPENDIX

PREPARED WITNESS STATEMENTS

Stuart Guterman, Senior Scholar in Residence, AcademyHealth, Washington,

D.C. ........................................................................................................................ 35

Brit Pim, General Manager of Federal Programs, Express Scripts, Inc., St.

Louis, Missouri ..................................................................................................... 58

Sandra Van Trease, Group President, BJC Healthcare, St. Louis, Missouri ..... 65

Max Richtman, President and Chief Executive Officer, National Committee

to Preserve Social Security and Medicare, Washington, D.C. .......................... 70

Ron Sergent, Former AARP Executive Council Member, and Medicare Issue

Volunteer Lead, AARP Missouri, Columbia, Missouri ...................................... 78

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CELEBRATING MEDICARE: STRENGTHENING

THE PROGRAM FOR THE NEXT 50 YEARS

FRIDAY, JULY 31, 2015

U.S. SENATE,

SPECIAL COMMITTEE ON AGING,

Washington, DC.

The Committee met, pursuant to notice, at 1 p.m., at the Five

Star Senior Center, 2832 Arsenal Street, St. Louis, Missouri, Hon.

Claire McCaskill, Ranking Member, presiding.

Present: Senator McCaskill.

OPENING STATEMENT OF SENATOR

CLAIRE MCCASKILL, RANKING MEMBER

Senator MCCASKILL. The Senate Committee on Aging will come

to order. This is a hearing of the United States Senate Special

Committee on Aging that we are having here in St. Louis today.

Yesterday was Medicare’s 50th birthday, and I think all of us can

celebrate that Medicare has given a sense of security and quality

health care to seniors in this country since its inception, and I

think now it is time for us to look at how we can strengthen the

program and make sure we preserve the program for the next 50

years, so that someone 50 years from now can be here saying Medicare just had its 100th birthday.

I want to begin by thanking all of you who have come out today

for this hearing. I am so proud to be able to bring another Senate

Aging Committee hearing to Missouri. I would like to especially

thank my friend and Chairman of this Committee, Susan Collins,

who unfortunately could not be here today, but was fully supportive of this hearing and having it in St. Louis. She is a Republican. I am a Democrat, but that does not stop us from working so

closely together on a whole lot of issues. I am particularly proud

of the bipartisan work that we do together on the Aging Committee.

Let me also thank the witnesses, who I will introduce shortly.

Saving the best for last, let me thank the excellent and gracious

staff of the Five Star Senior Center. Mike Howard, the Director,

and Laura Haney, the Assistant Director, have been amazing, and

I truly appreciate them sharing this wonderful facility with us

today.

It is clear that 1965 was one of the most successful years for

Congress in modern history. That summer saw the passage of the

Older Americans Act, the Voting Rights Act, Medicaid, and Medicare. Upon signing Medicare into law, President Lyndon Johnson
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handed the first Medicare card to President Harry Truman, and

that occurred right here in Missouri, in Independence.

Medicare really is about Missouri. Only seven months into his

Presidency, Harry S. Truman sent a Presidential message to the

U.S. Congress proposing a new national health care program. In

his message, Truman argued that the Federal Government should

play a role in health care, saying the health of American children,

like their education, should be recognized as a definite public responsibility.

One of the chief aims of President Truman’s plan was to ensure

that all communities, regardless of their size or income level, had

access to doctors and hospitals. He was particularly concerned with

the lack of health professionals and hospitals in many rural or otherwise lower-income areas of United States.

President Truman proposed a national health insurance program

that would be open to all Americans. However, when his proposal

went to Congress, it was attacked as socialized medicine. Sound familiar? Ultimately, President Truman was not successful in his

push for national health insurance, but on July 30, 1965, President

Lyndon B. Johnson signed the Medicare bill into law at the Harry

S. Truman Library and Museum. He said that it all really started

with the man from Independence.

The Medicare program has grown into a beloved part of the

American fabric. It is an essential commitment that we as a society

have made to Americans in their senior years. Through Medicare,

our government provides high-quality medical care to seniors at an

affordable cost as long as they need it.

That does not mean that it is without its challenges or threats.

There are various proposals being floated to change the Medicare

program. Some would make the program better and more efficient.

Others would add additional benefits, like dental and vision, but

some would completely change the nature of Medicare as we know

it, turning it from a guaranteed benefit into a voucher program. I

do not support that proposal and have fought hard against it during my time in the Senate.

Let me be clear. The fundamentals of the Medicare program are

strong. In 1965, only half of our Nation’s seniors were insured.

Today, over 98 percent are. Poverty among seniors has been cut by

two-thirds since the early 1960’s, in part because seniors now have

a reliable and secure method of paying for their medical bills, in

addition to their Social Security. Medicare helped desegregate hospitals and health facilities. It helps keep the doors of rural and

urban hospitals open to serve the needs of all citizens.

The Affordable Care Act, known as Obamacare, made the program even stronger by providing seniors with no-cost annual

physicals and preventative care, closing the dreaded prescription

drug doughnut hole, and giving us new tools to fight and prevent

fraud when criminals try to take advantage of the program, and by

the way, the life of the Medicare Trust Fund has been extended by

at least twelve years as a result of the Affordable Health Care Act,

so Obamacare actually strengthened Medicare. It did not weaken

it. That provides not just savings to you, the taxpayer, but also to

you, the beneficiary, through lower premiums and co-insurance.
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I look forward to hearing from our panel of witnesses as they describe ways to make the Medicare program stronger for the next

50 years.

First, we have Sandra Van Trease. Ms. Van Trease is the Group

President of BJC HealthCare here in St. Louis. She provides strategic leadership and direction to the BJC Collaborative LLC, an association of St. Luke’s Health System, Kansas City, Missouri; Cox

Health, Springfield, Missouri; and BJC HealthCare here in St.

Louis; and Memorial Health System in Springfield, Illinois. She is

also responsible for overall business and growth strategies for a select group of BJC’s community hospitals, including Boone Hospital

Center, Missouri Baptist Sullivan Hospital, and Parkland Health

Center in Missouri, and the BJC Medical Group, to ensure outstanding clinical quality, operating efficiencies, and financial stability.

In 2012, she was appointed President of BJC HealthCare’s Accountable Care Organization and leads BJC’s overall efforts in population health. She also serves as a member of the Senior Management Team at BJC HealthCare, one of the largest nonprofit health

care organizations in the United States.

She will discuss BJC’s experience with and commitment to the

ACO model to improve quality and reduce costs for Medicare beneficiaries and taxpayers.

Next is Brit Pim. He is Vice President and General Manager of

the Government Programs Division and CEO of the Express

Scripts Medicare Prescription Drug Plan. He manages and oversees

Express Scripts’ Medicare and Medicaid businesses, leadership of

the Express Scripts Medicare Prescription Drug Plan, and oversight of the development and implementation of Express Scripts

health care reform strategies.

Brit has nearly twenty years of industry, management, and consulting experience. He joined Express Scripts in 2004 and was responsible for leading the company’s preparations for the initiation

of the Medicare Part D benefit in 2006.

Mr. Pim will discuss how through Medicare Part D Express

Scripts is delivering a high-quality, affordable, and meaningful

benefit for millions of Americans while reducing costs for Medicare.

Ron Sergent is a former Missouri AARP Executive Council Member and the current Medicare Issue Volunteer Lead for AARP Missouri. He has been a dedicated volunteer, helping health cares understand Medicare and how it was positively impacted by the

changes in the Affordable Care Act, known as Obamacare.

Now over 65 himself, Ron is a Medicare beneficiary. He is retired

from the Columbia Public Schools, where he taught American government and history. He still lives in Columbia, Missouri.

He will discuss what Medicare means to health cares and how,

from a beneficiary’s perspective, the program can be improved and

strengthened.

Max Richtman is the President and CEO of the National Committee to Preserve Social Security and Medicare. The National

Committee is a grassroots advocacy and education organization

dedicated to preserving and strengthening safety net programs, including Social Security, Medicare, and Medicaid.
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He is very familiar with this Committee, as he is a former Staff

Director of this very Committee, the Senate Special Committee on

Aging.

He will discuss steps that have already been taken to improve

the program and ways to strengthen it in the future with additional benefits, such as hearing, dental, and vision services.

Stuart Guterman is a Senior Scholar in Residence at

AcademyHealth, an organization that works to improve health and

the performance of the health system by supporting the production

and use of evidence to inform policy and practice. Until June, he

was Vice President for Medicare and Cost Control at the Commonwealth Fund, leading the Fund’s special initiatives on advancing

Medicare, supporting the analysis of data and development of policies to improve Medicare as a source of coverage for the aged and

disabled Americans. He also analyzes the program as a platform

for implementation and testing of new approaches to payment and

health care delivery.

His testimony will discuss the opportunity to continue to improve

the program and its ability to serve its beneficiaries over the next

50 years.

Thank you all so much for joining us, and with that, why do we

not begin with Mr. Guterman.

STATEMENT OF STUART GUTERMAN, SENIOR SCHOLAR

IN RESIDENCE, ACADEMYHEALTH, WASHINGTON, D.C.

Mr. GUTERMAN. Thank you, Senator McCaskill, and also thanks

to Chairman Collins.

Senator MCCASKILL. Excuse me, can you all hear in the back?

You need to get it right——

Mr. GUTERMAN. Right up, okay.

Senator MCCASKILL. Get really close to your mouth, and then it

will work.

Mr. GUTERMAN. Okay. How is this? Is this better?

Senator MCCASKILL. Better? Thumbs up in the back? Thumbs up

in the back.

Mr. GUTERMAN. Okay. Thank you, Senator McCaskill, and also

thanks to Chairman Collins and the members of the Committee,

for this invitation to testify on the current State of Medicare and

the challenges it faces as it enters its next 50 years.

I am speaking today as an individual who has been working on

Medicare issues for a long time, as you mentioned, at the Commonwealth Fund from 2005 until recently, before that, for the last 30

years, actually, at the Centers for Medicare and Medicaid Services

and at the Medicare Payment Advisory Commission, among others.

I have seen and had the privilege of participating in many of the

innovative changes that the program has implemented over the

years and also been aware of the challenges faced by the program.

In addition, I have got a mother and stepfather who are both 93

years old and who have been helped tremendously by Medicare’s

coverage and the access to care it provides, but also hindered by

the program’s shortcomings and the fragmented nature of health

care provided in this country, so I have known Medicare since I

was a teenager, I guess, now as it celebrates its 50th birthday.
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The program, as you said, has been a tremendous success in accomplishing its main goal, which is assuring the health and economic security of the Nation’s elderly and disabled. It is very popular with its beneficiaries and has been influential in shaping the

U.S. health system, improving the quality of care, and contributing

to medical progress.

At the same time, it faces considerable challenges as it enters its

second 50 years. I will talk about some of those challenges and

maybe some ways to approach dealing with them as we move on

into the coming years.

One, of course, is spending growth. Medicare spending growth

per beneficiary has actually slowed dramatically over the last few

years, but an increasing number of beneficiaries, projected to increase from about 54 million in 2015 to about 82 million by 2030,

has been pushing total spending, and Medicare, although the Affordable Care Act changed the insolvency date for the Medicare

Hospital Insurance Trust Fund from 2016 to 2030, still, 2030 can

come upon us before we know it.

The question is, is this a problem and how do we deal with it?

It is a problem in the sense that the Trustees’ Report that came

out last week holds up a warning sign. It says, we have still got

to work on this program to be able to address its issues, particularly the cost and also the effectiveness with which Medicare

spends its money.

We do have to understand one thing, that all of this is coming

because we are living longer. That is not a bad thing. Having more

elderly people means that people—comes about because people are

living longer and that is something we want to see happen.

In addition, I would point out that most of Europe is older than

the U.S. is and they have been dealing with this issue for a number

of years, but they actually spend much less on health care than we

do, so there are things to learn from how others are doing—handling health care and how we spend money on it.

How do we address these issues? Well, the main thing is that we

need to make health care more efficient and more effective, and

there are policies in place, thanks to Congress and thanks to the

folks who work on the Medicare program, that are being tested and

developed and implemented, including the ACO program and many

other innovations that are being put in place, that are succeeding

in slowing health care costs and improving quality of care.

We also have to recognize that if we are going to have more seniors, that means we need to devote a higher proportion of our resources to seniors, and so we need to be able to live with that, as

well.

In addition, we need to align incentives better within the program and also throughout the health care system. There has been

a disconnect historically, not only between Medicare and the private sector, between Medicare and Medicaid, in fact, and we have

to present a set of incentives that the health care system can respond to consistently so that we do not drive doctors crazy and also

give a clear message as to what we want from our health care system.

The benefit design of the Medicare program, as you mentioned,

can be improved. We have very fragmented coverage. A typical
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Medicare beneficiary now gets hospital coverage from Part A, they

get doctor coverage from Part B, they get drug coverage from Part

D, and then most of them also have supplemental coverage, a

Medigap policy or an employer-sponsored policy, and that leads to

fragmented health care delivery and it also hinders the coordination of care across settings and between providers, and Medicare

beneficiaries would benefit from an improved coordination across

all of these programs, so one approach might be to develop a Medicare benefit package that is more coordinated rather than having

these differing coverages with different rules and different copays

and expenses.

Medicare also has a lack of stop loss protection. Unlike most employer-sponsored care, Medicare beneficiaries are not protected

once their out-of-pocket costs hit a certain level, and that is something that has been talked about. It clearly involves figuring out

where you want to spend your money, but it is something that

would align Medicare better with the private coverage that we all

have before we hit 65.

Now, some colleagues of mine and I, when I worked at the Commonwealth Fund, put out a proposal that called Medicare essential,

which would, in fact, combine Medicare into one program and also

incorporate positive incentives for Medicare beneficiaries who use

high-value providers to align the incentives that Medicare is trying

to develop for providers and bring that home to beneficiaries, too,

so that the two sets of incentives can be consistent and Medicare

beneficiaries can be rewarded for seeking care from providers who

are doing so in a coordinated way, in addition to having better outcomes.

We also are facing an increasing problem with beneficiaries with

complex conditions. Medicare beneficiaries—37 percent of Medicare

beneficiaries have four or more complex conditions, and those beneficiaries account for 74 percent of Medicare spending each year, so

how do we address that? Well, improving coordination of care helps

people get the appropriate care without bouncing around from one

setting to another, from one provider to another.

The provision of services that enhance—some of them non-medical—that enhance the Medicare beneficiary’s ability to manage his

or her conditions without having to go into the hospital or into the

doctor and do so on a day-to-day basis, some of this is happening

in the private sector, because the case in point, I guess, is taking

people with chronic asthma conditions, and people have realized

that if you buy them an air conditioner, that helps keep the air

quality in their house better and it keeps them from having to go

into the emergency room with an asthma attack.

There are many situations like that that Medicare beneficiaries

face that could be enhanced by a broader notion of what Medicare

can provide. One example of that is the Independence at Home

Demonstration that has shown some pretty positive results recently that the Centers for Medicare and Medicaid Services is testing right now, and there have been proposals by Senator Wyden

and his colleagues and others to enhance the at-home care that is

available to beneficiaries so they do not have to go into the hospital.
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A fourth issue that I will raise here is the desire or the need to

balance the traditional Medicare program with Medicare Advantage, through which Medicare beneficiaries can obtain their coverage through private plans. Right now, they are really two separate things. Medicare Advantage now has over 30 percent of Medicare beneficiaries, so it is a growing but still a minority of Medicare

beneficiaries, and the incentives provided to Medicare Advantage

plans versus the incentives provided under traditional Medicare

are really inconsistent.

The Congress has been working on that. There were provisions

in the Affordable Care Act to do that, to deal with that partially,

but we need to keep working on trying to make sure that both the

public traditional Medicare program and the private Medicare Advantage programs can bring out the best in what the program has

to offer its beneficiaries.

In conclusion, I will say again, Medicare has been very successful

in achieving its basic mission, but as the country’s largest purchaser of health services, it can do more to improve quality, promote more coordinated care, and control costs, both its own costs

and throughout the health care system, because of its unique position, it can be an important testing ground for costs and quality innovations, and policies have already been put in place that encourage such development, but including expanding the power of the

Secretary of Health and Human Services to put payment pilot programs on a fast track through the Center for Medicare and Medicaid Innovation created in the Affordable Care Act, and to work

with private payers and providers to establish multi-payer initiatives that address these issues.

It is a program that has been extremely successful, popular, and

important to its beneficiaries, but it can be improved in several

ways, and we have an imperative over the second 50 years of Medicare to continue to work on improving that program. Thanks.

Senator MCCASKILL. Thank you so much.

Mr. Pim.

STATEMENT OF BRIT PIM, GENERAL MANAGER

OF FEDERAL PROGRAMS, EXPRESS SCRIPTS, INC.,

ST. LOUIS, MISSOURI

Mr. PIM. Thank you.

Senator MCCASKILL. You are going to need to pull the microphone over and get close to it.

Mr. PIM. I am. Thank you.

Senator MCCASKILL. There you go.

Mr. PIM. Senator, thank you for the opportunity to share our perspective with you today. As the General Manager of the Government Programs Division for Express Scripts, I am responsible for

Medicare, Medicaid, public exchanges, Accountable Care Organizations, and the like.

When I joined the organization almost a little more than a decade ago, the Medicare Modernization Act had just been passed and

we were just beginning to prepare for Medicare Part D. Today, it

accounts for a growing third of our business. We are happy to serve

almost seven million Americans that participate in the Medicare

Part D program.
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We look at the program and we think it has been phenomenally

successful. Seniors have saved money on their prescription drugs,

almost $7 billion. Taxpayers have saved money. The program’s

costs are 45 percent below the original projections, and seniors are

happy, largely, with their prescription drug coverage. Ninety-four

percent of them report being satisfied, and 95 percent believe the

coverage meets their needs.

We believe, in part, the reason why the program has been so successful is because Congress, working with CMS, designed a program that allowed commercial insurance companies to implement

and take advantage of common business processes, and one example that I will share with you are preferred networks.

There are more than 60,000 pharmacies in the country. We are

able to leverage our size in the business that we represent and negotiate discounts with some of those pharmacies and to provide

Medicare beneficiaries with tens of thousands of pharmacies that

they can go get their prescriptions filled at, but we recognize tremendous value from that, so today, more than 80 percent of the

Medicare beneficiaries are enrolled in a Part D program that has

a preferred network.

We think it is innovations like these, practices that have ported

from the commercial business into Medicare Part D, that are really

one of the reasons why we think the program has been so successful, and for that reason, we think it is important that the non-interference clause that today is in the Medicare Modernization Act

be preserved.

I would like to take a couple of minutes and talk about just a

few things briefly where we think there are opportunities to improve the program, and I will start first with specialty drugs. To

be fair, these are drugs that are being developed to treat conditions

where otherwise they might be untreatable, and they are doing

some pretty remarkable things.

They are extraordinarily expensive. They can be from $10,000 to

$100,000 a year, and in the commercial business, we have the opportunity to control the utilization of those drugs and make sure

they are only being used when appropriate, but in Medicare, we do

not have the same ability to provide some of those—to enable or

implement some of those same controls, so I will give you a brief

example.

I mentioned that we support about seven million Medicare beneficiaries. In one of the programs that we support, we had a thousand Hepatitis patients, and for those thousand Hepatitis patients,

we spent more than $100 million last year on drugs to treat those

patients.

Senator MCCASKILL. For a thousand?

Mr. PIM. For a thousand.

Senator MCCASKILL. And you spent how much?

Mr. PIM. A hundred million dollars. It is fantastic that those patients now have a treatment to cure the disease, but it is not sustainable. I cannot afford to continue to pay those kind of prices and

preserve the benefit the way we know it today.

In particular, what I would tell you is that we are not able to

make mid-year drug coverage changes in Medicare Part D, so if I

am a manufacturer, I have a strong incentive for introducing a
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drug in the middle of a plan year, and it almost guarantees that

I have 18 months of coverage for that drug, because I am in the

middle of a plan year and I have likely already submitted my formulary for the next year and cannot make changes. We would like

to encourage CMS to create some flexibility where there are these

particularly high-cost drugs where we can make formulary changes

where we think it makes sense.

Another example is fraud, waste, and abuse. Prescription drug

abuse kills nearly 15,000 Americans and drives 1.2 million emergency room visits a year. In our commercial business, we have invested heavily to develop fraud, waste, and abuse programs. I

would like to give you an example of just one patient.

It is a 49-year-old patient who is taking 43 controlled substance

prescriptions, from 17 prescribers, from five pharmacies. In just

over a year, this person was able to obtain 825 days’ worth of

drugs. It is a commercial patient, so we were able to pair that person with a nurse case manager. We were able to have that patient

go through a rehabilitation program, and now, today, they are seeing one pain management physician. They are getting their prescriptions filled from one pharmacy. We have saved their plan

sponsor $40,000, and we believe we have likely saved that patient’s

life.

We would not be able to implement that program in Medicare

Part D and we would like to see CMS allow us to implement those

kind of controls in Medicare Part D. We think it would benefit the

beneficiaries and it would save the program money.

In closing, as we reflect on the success of Medicare, Express

Scripts is looking ahead to the next 50 years. We remain acutely

focused on the challenge of high-cost medications and an aging population and the need to continuously innovate. We are proud to be

part of an important American legacy and believe our contributions

to help keep medicine affordable will help ensure these programs

celebrate more milestone anniversaries and are here for our children and grandchildren. Thank you.

Senator MCCASKILL. Thank you very much.

Ms. Van Trease.

STATEMENT OF SANDRA VAN TREASE, GROUP

PRESIDENT, BJC HEALTHCARE, ST. LOUIS, MISSOURI

Ms. VAN TREASE. Thank you, Senator. I appreciate the opportunity that you and the Committee have provided me to be here

and to speak with you today on behalf of BJC HealthCare. We

are——

AUDIENCE MEMBER. You are going to have to talk into the microphone.

Ms. VAN TREASE. How is that? Does that sound better?

AUDIENCE MEMBER. Yes.

Ms. VAN TREASE. Okay.

Senator MCCASKILL. Thank you, sir.

Ms. VAN TREASE. Thank you so much. As I said, I am appreciative of the opportunities to be here before you today, and as you

mentioned, my role is as a—I serve as Group President for BJC

HealthCare. I also have the honor and distinction to serve as the

President of our Accountable Care Organization, which really will
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be the focus of my comments today, and we did submit, as requested, the written documentation or the testimony, but I am just

going to focus on a few key points in that testimony, if I may.

I would like to share with you, though, just a little bit of background about BJC’s Accountable Care Organization. Back in July

2012, BJC was the first health care provider in the St. Louis area,

and really one of only 89 across the country at that time, to actually form an Accountable Care Organization and enter into the contract with CMS for the Medicare Shared Savings Program, and our

Accountable Care Organization includes ten of the BJC hospitals.

It includes our Home Health Division. It includes the three longterm care facilities in BJC, the medical group in BJC, which employs over 260 physicians and over 75 advanced care practitioners,

and our ACO, importantly, also includes over 200 independent community physicians.

We serve nearly 40,000 beneficiaries. The majority of those beneficiaries actually are here. They reside in the St. Louis metro area,

but we have a substantial portion of these beneficiaries that also

reside in more rural communities—Sullivan, Farmington, and in

the Columbia, Missouri, area.

The ACO program has really provided us a platform that did not

exist before, and it has allowed us to do a couple of things that

both of the previous witnesses have mentioned, in part, in their remarks. It is allowing us to focus care in a much different way than

we have been able to in the past, and our focus has been around

clinical care management, specifically around identifying those patients that have these multiple comorbid conditions, which are very

significant.

It has also allowed us the opportunity to focus more directly on

what we call transitional care, and that is the care that needs to

happen when a patient leaves the hospital and goes to the next setting, be that in a skilled nursing facility or home or other places,

but interesting, the third component of our focus that we have

found that we have needed is actually—are in other types of support services, services like telehealth, services like medication adherence programs, services like transportation, that heretofore you

might not necessarily have encapsulated in the body and the term

providing health care.

We in the program, under the Shared Savings Program, we have

not yet met the targets established by CMS as it relates to being

able to share in the value creation that we have had inside the

ACO, but that said, we have successfully bent the total cost of care

curve for Medicare, and we have excelled in both the clinical quality and the patient satisfaction performance metrics, and we are

very, very proud of that, as well as the feedback we are getting directly from our beneficiaries.

For a moment, I would like to focus on some of our key lessons

learned, because we are living this and we are on the journey every

day. What we have found is that we must focus on identifying and

then reducing clinical care variation that is not necessary. That

means gaining efficiencies in workflow, in the physicians’ offices, in

all of our care settings. I wanted to give a couple of examples of

what we are talking about.
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As a result of this work we have done over the last couple of

years, we decided to establish what we are calling a patient access.

It is a centralized patient access center. This, among other things,

opens things like phone lines for patients and their families to really gain access when they are seeking appointments with a variety

of their caregivers, or, frankly, they just need someone to answer

some questions, and we believe by opening up this access center,

we are avoiding unnecessary emergency room visits and our beneficiaries are able to access their physicians or their primary care

health provider in a way and on a timely basis that had been a little bit more difficult for them in the past. We have extended physician office hours. We focused our physicians on blocking out enough

time annually, at least once a year, for our doctors to sit down with

the beneficiary and conduct a very comprehensive care plan on

their behalf.

Other things we have learned that we needed to do, clinical data

integration and aggregation has been extremely important so that

we can provide actionable information to our caregivers for their

patients, so reorganizing technology infrastructure and the data

sets that we do now get from our own electronic data sources as

well as what CMS provides us, we are now able to provide more

information in a seamless way in patient charts, for physician

notes.

We are using data experts to actually help us identify patients

that our clinicians would deem at high risk, and importantly, also

those patients that are deemed to be rising risk, and we have to

do that systematically, because if we do not do that on a systematic

basis, we cannot scale our efforts and make sure that we get interventional care delivered on the most timely basis to prevent something negative happening to one of our beneficiaries.

Care manager dedication, so clinical care managers has also been

something we have had to invest in, to focus and help our physicians and their offices focus on these high and rising risks, so we

are embedding care managers in local physician offices or in their

geographies to actually provide additional support, not only to the

doctors and the office staff, but also to the patients and their families as they are working on access issues, getting appointments,

medication adherence, and, again, even basic things like transportation.

I wanted to give an anecdote to you as an example of impact in

the real world, the life of one of our beneficiaries. In April of this

year, one of our patients—I am going to call her Mrs. Green, that

is not her real name—Mrs. Green was admitted to the hospital for

a very serious GI issue, and she then had a multitude of other

issues that quickly manifested, including renal failure, and for the

next three months, so April and May and a good part of—well, it

actually started in March, April and May—she spent a total of 38

days in the hospital and ten in rehab.

This team of ours worked with her and her physician, and we

learned things that were exacerbating Mrs. Green’s situation and

was putting her at very high risk for readmission into the hospital.

Something very basic as the fact that her physician’s office was a

fair distance away from her home. Mrs. Green had virtually no reli-
12

able means of transportation, and she had virtually no family support.

Between the care manager and our staff social worker, we

worked with her and her physician to educate Mrs. Green about

early warning signs if something in her health started to deteriorate, and most importantly, what to do about that in her home and

how she should take care of it and what she should do.

By virtue of spending that kind of quality time with Mrs. Green,

I am very happy to let you know she is doing quite well at home.

She has not had an ED visit. She has not been back in the hospital, and what we learned here is that this delivery of health care

is now encompassing a body of work that before we did not really

have the programmatic infrastructure to execute on.

We have had a lot of successes, and there are many to name, but

I wanted to share with you, notwithstanding that progress, I wanted to share a few challenges, as well.

Some of my colleagues and I actually had an opportunity to visit

with some of the CMS leadership earlier this year, and we shared

with them some of the challenges and some of the observations

that we had in order to help make the program better under the—

the ACO program better. I thought I would share a few of those

with you today.

One is around something called the homebound status. Now, currently, Medicare requires patients to qualify for this homebound

status in order for the clinicians to receive reimbursement for their

services, and that is when the home health nurse goes out to visit,

and there are criteria that must be established, but the way the

regulations are currently written, it creates a bit of an arduous

process for the physician and, frankly, for the patient, because the

assessment has to be done only by the physician and it has to be

done face to face, and given many of our seniors are dealing with

things like this transportation issue, we would and have requested

that CMS take another look at those regulations to see if we cannot

streamline them to make sure that we are getting the right care

at the right time by the right person available in this particular

situation and help streamline that care coordination.

Another area of focus that we have shared with CMS revolves

around the very real and increasing opportunities provided by telehealth. Telehealth offers a lot of benefits, a lot of potential benefits

to our seniors. That includes increasing the access to specialists.

Again, this is a transportation issue, but because of the way the

rules are written today, there is minimal reimbursement for telehealth services, and when you are dealing with a lot of folks in

rural communities, that can be particularly difficult.

Again, we would ask that CMS consider taking a look at providing waivers to certain restrictions that allow us to recognize and

then benefit from the developing opportunities in telehealth.

Last, I do want to applaud CMS for actually approving a waiver

related to a rule that is called the 3-day inpatient rule. This allows

us to coordinate directly with skilled nursing facilities in a way,

again, we had not been able to do that before. The regulations

came out. We are going to be able to get the waiver. Unfortunately,

we do not get the waiver until January 2017, so we will have a little bit of a time lag, about a year and a half or so, before we are
13

able to take benefit of that, but really, to summarize, you know, in

participating with this ACO over the last three and a half, three

years, soon to be three and a half years, when we are successful,

what we believe, when we are successful in this ACO, our patients

will, in fact, experience better health. Our communities will have

better health care, and we will provide even better value, and that

is about achieving the triple aim.

I wanted to thank you and the Committee for the opportunity to

be here today. On behalf of BJC HealthCare, we are very privileged

and proud to be able to participate in this event today commemorating the 50th anniversary of Medicare, and for the next 50 years,

we will strive to be a leading partner with Medicare as we continue

to evolve new innovative programs to serve our seniors.

Thank you very much.

Senator MCCASKILL. Thank you.

Mr. Richtman.

STATEMENT OF MAX RICHTMAN, PRESIDENT

AND CHIEF EXECUTIVE OFFICER, NATIONAL

COMMITTEE TO PRESERVE SOCIAL SECURITY

AND MEDICARE, WASHINGTON, D.C.

Mr. RICHTMAN. Thank you, Senator McCaskill, for inviting me to

testify here today. As a former Staff Director of the Senate Special

Committee on Aging, I am very proud to have been part of that

Committee’s long history of highlighting the needs of the aging

community, and I commend you, Senator, for continuing that tradition in your service on the Committee and as the Ranking Member.

Also, thank you, Senator, for co-hosting the party last night at

the Kennedy Caucus Room celebrating the 50th anniversary. We

had a beautiful cake. I am Chairman—besides being the head of

the National Committee to Preserve Social Security and Medicare,

I chair the Leadership Council of Aging Organizations, 72 groups

that work together regularly, and they were all there, and they all

want to thank you for the terrific food and beverages. Thank you

very much.

I am testifying today to share the National Committee’s views on

how to strengthen and improve Medicare for the next 50 years. Before Medicare, as you said in your opening statement, half of seniors did not have health insurance, and 35 percent lived in poverty,

and today, more than 55 million Americans receive guaranteed

health care benefits through Medicare, regardless of preexisting

conditions, regardless of income.

Together with Social Security and Medicaid, Medicare forms the

bedrock of economic health security for seniors and people with disabilities. As I mentioned last night, these are great programs,

Medicare, Medicaid, and Social Security, but they are beyond programs at this point. They are really values, American values, part

of our fabric of America.

While Medicare has been a blessing, the current and future

needs of seniors demand that the program’s coverage become more

comprehensive. Today, in addition to premiums, deductibles, co-insurance, many seniors have to pay out of pocket for gaps in Medicare coverage.

The financial burden of these coverage gaps will only grow over

time as retirement savings and income continue to shrink. We have
14

seen that happen for quite a few years now. Seniors have less income in retirement because employers have scaled back or eliminated defined benefit pensions. The loss of retirement benefits is

even worse, as you know, for communities of color, because those

folks have the highest poverty rates and have the least amount of

wealth.

In addition, stagnant wages are grinding away at the middle

class’s ability to save for retirement. In other words, you cannot

save what you do not earn. What little disposable income middleclass Americans have is often used to take care of children, grandchildren, aging parents, and so forth, and that is why millions of

Americans reach retirement age without enough private savings to

live on.

That is why 40 percent of Social Security beneficiaries depend on

Social Security for 90 percent of their income in retirement, and

that is why Medicare households, even with Medicare, spend three

times more than the average household on out-of-pocket health

care costs, and as a result, any future for Medicare must, we feel,

must fill these coverage gaps that will become increasingly

unaffordable.

Making Medicare coverage more comprehensive is not without

precedent. It is a dynamic program. All of these programs are dynamic and have changed over time, for the most part, in better

ways.

In 1972, Medicare added coverage for individuals with disabilities and end-stage renal disease. In 1982, Medicare added coverage for hospice care, and as we all know, a prescription drug benefit was added in 2003, and mental health benefits were significantly improved in 2008.

As you pointed out, the Affordable Care Act, despite all of those

awful ads that we saw in many election cycles about Medicare cutting, cutting, cutting—or, the Affordable Care Act cutting Medicare

by $767 billion—I know this is polite company here, but those were

lies. Medicare—there were savings of $716 billion in the Medicare

program. Most of those savings went to improve the program. For

the first time ever, Medicare under the Affordable Care Act provides a lot of preventative care—colonoscopies, mammograms, diabetes screening, that awful doughnut hole that you talked about is

going to be eliminated completely. It is being reduced and will be

eliminated completely in a couple more years.

Again, as you noted, the solvency of the Medicare program, the

Affordable Care Act added 13 years to the solvency of the program,

and the Trustees just told us a few weeks ago it is now solvent

until the year 2030.

The National Committee strongly believes Congress should equip

Medicare for the economic and health challenges facing seniors in

the 21st century. I am talking about creating a catastrophic outof-pocket limit, which we advocate. We talked about the hospital

observation status. I do not think we can wait until 2017. There

is legislation in the Congress that would count those three days toward the availability of skilled nursing care. A lot of people leave

the hospital and all of a sudden face enormous bills, and that is

not right, and vision, dental, hearing. You know how important

those are to everybody, but particularly to seniors.
15

Last week, I participated in a press conference in the U.S. Capitol to promote your colleague, Congressman Debbie Dingell’s bill

to expand Medicare to include hearing testing and hearing aids,

and that legislation, I hope, will get some momentum this year. It

recognizes that hearing loss goes untreated because many older

Americans cannot afford to pay for hearing aids, and if seniors cannot hear, they get confused, embarrassed, frustrated, withdraw

from normal activities.

We had—you will find this interesting, I think. We had at the

press conference a highly regarded doctor at Johns Hopkins, a researcher named Franklin Lynn and he has developed some

groundbreaking research that draws a connection between hearing

loss and dementia, not just the isolation part, but changes in the

brain that have an impact on dementia and Alzheimer’s, so we are

going to be pushing hard to try to get Congressman Dingell’s bill

passed into law, and I think it is important that we get out that

information about the link to dementia.

In closing, again, thank you for inviting me. Seniors understand

Medicare is vital to living in dignity throughout their retirement

years. They understand Medicare, as I said, is not just a Federal

program, it is an American value, and the dream, the American

dream of livable retirement is being threatened by the economic realities the middle class faces. We have had enough of proposals to

cut benefits, raise the age, privatize the program, and we are going

to spend the next couple of years trying to improve the program,

and this 50th anniversary, I think, is a good point to begin working

to expand those coverages and make them more comprehensive.

Finally, I do not want to embarrass you, but we have a scorecard,

like other groups have, and I want to thank you for your consistent

votes on behalf of seniors. We have 47,191—I checked this morning—members and supporters in the State of Missouri, and they

ought to know that in the last Congress, you had—you can have

a score of zero, you can have a score of 100. You had 100. In the

Congress before that, you had 100 percent, so as far as we are concerned, you are voting the right way day in and day out, and I

thank you for that.

Senator MCCASKILL. Thank you very much, Mr. Richtman. I

wish I had 100 on everything.

Mr. RICHTMAN. So do I.

Senator MCCASKILL. Mr. Sergent. We need to move the microphone. Thank you.

STATEMENT OF RON SERGENT, FORMER AARP EXECUTIVE

COUNCIL MEMBER, AND MEDICARE ISSUE VOLUNTEER

LEAD, AARP MISSOURI, COLUMBIA, MISSOURI

Mr. SERGENT. Thank you, Senator McCaskill, for including AARP

and myself in this hearing. We consider it a real privilege, and I

am happy to represent the approximately 750,000 members of

AARP from Missouri. About 45 percent of those are Medicare eligible, I being but one of those, so——

Senator MCCASKILL. You need to get right up on the microphone.

They are having trouble hearing you. It almost feels like it is too

close if you are close enough.

Mr. SERGENT. As I was saying, I am happy to represent the almost 750,000 members of AARP in Missouri. About 40 to 45 per-
16

cent of those are Medicare-eligible, and, of course, those under 65

will at some point become eligible.

I am a volunteer. I have great respect for the professionals to my

right. I hope to talk to you just a bit as a beneficiary on behalf of

the beneficiaries.

As we commemorate Medicare’s 50th anniversary, it is essential

that we not only celebrate what it has meant to so many people,

but we must also be honest about what Medicare means today,

what it covers and what it does not cover, as we have heard. We

must recommit ourselves to keep this vital lifeline strong for current and future generations.

From the beginning, AARP’s founder, Dr. Ethel Percy Andrus,

supported the creation of a Federal health insurance program for

all older Americans tied to Social Security. The essence later became, as we know, Medicare.

As we have already heard, back in 1965, three out of four Americans under the age of 65 had adequate private hospital insurance,

but according to AARP’s research, only one in four—not half, but

only one in four over age 65 were as fortunate. If you were an older

person, getting sick meant you risked not only losing your health,

but your financial independence.

Today, 50 years later, Medicare provides guaranteed affordable

coverage for roughly 45 million Americans 65 and older and about

nine million people with disabilities. Medicare is largely responsible for the poverty rate among older Americans dropping to less

than one of every ten.

Just anecdotally, I would like to share with you, after friends

learned that I was going to be here to testify, one of them mentioned that last year, she and her husband had $27,000 out-ofpocket expenses, and without Medicare, they would have been

bankrupt.

The program has transformed the lives of millions by helping

them to pay for many vital health care services, including hospitalizations and physician visits and prescription drugs, and, has

been mentioned more than once, most recently, essential preventative services have been added to Medicare by the Affordable Care

Act, and as a volunteer in charge of educating seniors about the Affordable Care Act, I have found that that is a very glaring omission

in information that seniors have. I think we really need to do a better job of educating them about what is available to them under

the Act.

I would also like to point out to my friend that too many seniors

look at the Affordable Care Act in a negative fashion. It is hard for

me to understand, but I try my best to educate them. I think most

of it has to do with lack of knowledge.

While Medicare offers important benefits, Medicare is not a free

ride. It is not a Cadillac plan, more like maybe a reliable Chevy.

There are premiums, deductibles, copays which people have to pay,

and there is a lot that Medicare simply does not cover. I speak to

you now as a beneficiary. It does not cover the cost of dental, vision, or hearing problems. Myself, I have a hearing loss and I have

spent over $15,000 on hearing aids over the last 12 years. The need

for eyeglasses and hearing aids is particularly common among
17

older people. Moreover, Medicare does not cover long-term nursing

care and home care.

It is important to remember that half of all Medicare beneficiaries live on incomes of less than $23,500 a year. The average

out-of-pocket cost for beneficiaries and for cost sharing of services

is about $4,500. For the typical beneficiary, this represents over 17

percent of their income. Some of those numbers may not seem so

great to those of us who are still earning a reasonable income, but

when you consider 17 percent of your income goes to out-of-pocket

expenses, that is a significant amount.

Medicare’s golden anniversary is a time to think ahead about

how we can ensure that the program continues to fulfill its essential role. Medicare today faces a number of challenges, including

the rising cost of health care and a growing aging population. Some

say the answer to these challenges is simply to cut benefits or force

seniors to pay more.

AARP believes that there is a better way than that. We think

there are responsible solutions that can and will stabilize the system, and we have heard some of them today. We can start to put

Medicare on a stable ground by clamping down on drug companies’

high prices, improving coordination of care, using technology to

make care more accessible and efficient.

Looking forward, we must recognize that the way people receive

care is changing. For instance, more people are receiving care from

non-physician providers and are using telemedicine to access care

more conveniently.

Additionally, I do not know that we have had this addressed

yet—we find that almost nine in ten seniors say they want to remain in their home as they age. We should do everything we can

to let that happen. Aging in place helps maintain a better quality

of life and is less costly than institutional settings. This means

funding community-based services, such as Meals on Wheels, which

help older Americans live independently. It also means supporting

family caregivers through better tax policies and workplace programs which recognize the economic contribution made by individuals who take care of loved ones.

AARP stands ready to help keep Medicare strong for the next 50

years, and I thank you very much for the invitation.

Senator MCCASKILL. Thank you so much.

Let me start with the Accountable Care Organizations with Ms.

Van Trease, and let me just explain, so everyone understands. The

idea here—we use the letters ACO. The idea is a simple idea. The

idea is that—let me use my mother as an example.

Near the end of her life, she was an insulin-dependent diabetic.

She had serious arthritis. She had a heart condition and a pacemaker, so she had a number of chronic problems, and this—she is

not an unusual American near the end of their lives. She was seeing a different doctor for each one, and I could not get her to say

to the doctor, ‘‘I am not going to draw a blood sample for you because I drew one for the doctor yesterday. Use his.’’ Each one of

those doctors was replicating some of the work that the other doctors needed and there was no sharing.

As a result, the costs to Medicare were much more expensive

and, frankly, I was the one that was trying to ride roughshod over
18

the list of prescriptions because the doctors were not doing a good

job—so, this brings you in, Mr. Pim, too—because the doctors were

not doing a good job of really checking to make sure that all of her

prescriptions made sense together.

The idea behind an Accountable Care Organization was that

there would be a primary doctor that would be like a gatekeeper

or the sheriff that would be paying attention to what everyone else

is doing, and with that, a team of providers that would be giving

the level of care that was needed, but not more.

Instead of my mom going to the emergency room, what she really

needed, perhaps, was to have her blood sugar checked by telemedicine, or maybe she needed a home visit, and that is what the ACO

is about, so with that in mind on the ACO, I am curious if we are

incentivizing enough on Accountable Care Organizations, and by

that I mean when my mom had a nurse—we hired a nurse to come

to the house and see her. We were blessed that we could afford

that, and this nurse knew that we were looking to keep Mom out

of the hospital. Mom did not want to go to the hospital. Mom was

not happy in the hospital. Mom did not get better in the hospital,

so we wanted to keep her home. This nurse knew her goal was to

keep Mom at home and she worked really hard at it, because she

knew if she did, she was going to get compensated more—not that

she did not want to anyway, because she cared. She was a good

nurse, but are we experimenting enough with incentivizing that? I

think the fear about home health care is runaway costs. Could we

not combine home health care with, you are not going to get paid

a lot of money unless you are successful at what your goal is, which

is, overall, bringing down the number of incidents that require

emergency room or hospitalization?

Ms. VAN TREASE. Yes. A lot of components to that question, Senator. Yes. I think that one of the things that we are doing and others are doing is, in fact, within the structure of the Accountable

Care Organization, because we have certain waiver protections.

We, from BJC’s standpoint as a primarily acute-based organization

with our medical group and our affiliated physicians, we can now

work together in ways that, legally, we could not work together before.

That allows us to explore different ways to create incentives as

we do things, not only within the construct of something known as

the patient-centered medical home, which we are, and that puts

that primary care physician, whoever he or she might be, fully in

charge of the team and really leveraging their expertise across care

managers, social workers, pharmacists, other health coaches, dietary, behavioral health. We create a team and that team has its

own set of goals and objectives to work together in a way that,

again, they had not been able to do that before.

As we focus on this, there continues to be a clear need to continue alignment, economic alignment as well as just people who are

good professionals who want to take the best possible care of patients.

Having these constructs like the ACO, having constructs that are

coming out of CMMI, the innovation division of CMS, bundled payment concepts, these are all experiments that try to tie all of this

together so that we get out of our silos from a health care perspec-
19

tive and look at the totality of the entire person across his or her

multiple conditions, not individual conditions. I think you are exactly right that there are some continuing opportunities in that

area.

Senator MCCASKILL. How close are you from—you said that you

are bending the cost curve——

Ms. VAN TREASE. Yes.

Senator MCCASKILL [continuing]. but at a certain point, the idea

is you do this so well, you get compensated more for it——

Ms. VAN TREASE. That——

Senator MCCASKILL [continuing]. kind of like my nurse example.

Ms. VAN TREASE. That would be—yes——

Senator MCCASKILL. How close are you to actually getting more

compensation for having succeeded in bringing down costs?

Ms. VAN TREASE. In our first contract year, the first contract

year that it was in existence, we were, as a participant in the

Medicare Shared Savings Program, Medicare sets a corridor around

some of the economics, and so what we have seen over the quarters

that we have been doing this-—and we have been in it for three

years now—we have seen a nice steady decline in the trend line,

the health care cost trend line. We are bending it downward.

That is really great news as a taxpayer and as Medicare, because

that means we have lowered the total cost of care——

Senator MCCASKILL. Right.

Ms. VAN TREASE.—and, simultaneously, actually improved our

quality scores and our patient satisfaction scores, but we have not

gotten outside what Medicare has set as the savings corridor, so

right now, all of this is on BJC P&L, so we really have not received

any of that compensation.

Senator MCCASKILL. Do you think you are going to get there?

Ms. VAN TREASE. We are working aggressively to get there. It is

our intention, and to do that, then, when we are successful, allows

us the flexibility to share in some of that with our physicians and

our other caregiver partners, and that is an objective we have, as

well.

Senator MCCASKILL. How quickly are the lessons that you have

learned being adopted systemwide?

Ms. VAN TREASE. Yes——

Senator MCCASKILL. What I worry about is we have done these

wonderful little oasis of sanity in terms of how we are delivering

health care, which I think is what the ACOs represent——

Ms. VAN TREASE. Right.

Senator MCCASKILL [continuing]. but it is still the exception and

not the rule. What steps do you think are being taken to make sure

that what you are learning about Mrs. Green and what you are

learning about the other patients in terms of this system—how is

CMS doing? What do I need to do to crack the whip at CMS about

adopting these lessons systemwide?

Ms. VAN TREASE. Mm-hmm. Well, I think from a CMS perspective, the great news, I do think, is that they are listening to these

concerns and they are inviting organizations like ours, large Accountable Care Organizations that take care of significant population, to explore ways to make things better. Some of this is about

dealing with waivers and regulations and the restrictions that are
20

in the testimony. That is probably the fastest thing that they can

do.

There is a lot of behavioral change across our systems. We have

trained our patients well to go to the ED as opposed to go to their

primary care physician. We have trained them well that perhaps

they do not need a primary care physician, so there is a lot of behavioral change——

Senator MCCASKILL. Yes.

Ms. VAN TREASE.—that has to happen on the part of beneficiaries. It has to happen on the part of physicians, because we are

asking them perhaps to practice in ways that they did not train for

and to develop skill sets in other ways, so part of this is going to

be progression, evidence of success, celebrating success, communicating what works and what does not, alignment of the economics, and then providing health care organizations like ours with the

capability legally to do the things that we are now after, with the

right kind of protections, obviously, around things that we do not

want to run amok, clearly.

Senator MCCASKILL. I learned something today, Mr. Pim,

about—I have learned a lot from all of you, but one of the things

that struck me with your testimony, speaking of regulations, was

the notion that when you see 825 days’ worth of pain medication

in one year to one patient, you have the ability outside of Medicare

to take steps, as somebody who is filling these prescriptions, but

you cannot do that with Medicare.

Mr. PIM. That is true. I think it is an unintended consequence

of the regulation, to be fair, but it——

Senator MCCASKILL. That is what I specialize in fixing——

Mr. PIM. Yes——

Senator MCCASKILL [continuing]. is stupid regulations.

Mr. PIM. And that is——

Senator MCCASKILL. That is my job, is to fix a stupid regulation.

Mr. PIM. That is where we would like help, the details of which

we put in our written testimony.

Senator MCCASKILL. Right now, if you see—and, by the way, just

so everyone understands, one of the biggest health threats in the

Midwest right now is heroin, and that is a direct consequence of

opioids being prescribed. When I was growing up, you did not get

Vicodin when you went to the dentist. You certainly did not get 30

of them, and there is so much pain medicine being prescribed that

kids are getting a hold of it, they are getting addicted, and then

heroin is cheaper and not regulated, so they are taking amounts

that are deadly.

Mr. PIM. Absolutely.

Senator MCCASKILL. We are now losing more young people to

heroin addiction than we are to car crashes, and that is a serious

problem, not just in Missouri, but throughout the country, and by

the way, a lot of that medicine starts sometimes by grandmother

having the medication, or aunt having the medication, not that it

was prescribed for the young person, but in my own household, I

saw opioids stolen from my mother by family members who were

up to no good.
21

Is the regulation because they do not want pharmacies to see

what—what is the rationale behind the regulation that you cannot

reach out and stop this kind of abuse in the Medicare population?

Mr. PIM. The regulation prevents us from restricting who can

write a prescription for that patient and restricts our ability from

putting some constraints around what pharmacies that patient can

go to.

We are not trying—in the commercial setting, what we say is,

similar to the ACOs, we want a provider, a single provider, to coordinate your care and make sure that you are not taking competing therapies or more than you should, and that is done best if

one person is responsible for your care, and it is done best if you

are getting that care from one setting, ideally. The Medicare requirements today do not allow us to put those kinds of restrictions

around a beneficiary.

Senator MCCASKILL. Are there conversations ongoing with CMS

now——

Mr. PIM. We have been trying——

Senator MCCASKILL [continuing]. about those restrictions?

Mr. PIM. We have been talking to CMS about it, but we would

like to see more progress more quickly.

Senator MCCASKILL. This is for any of you to speak up, and

maybe, Mr. Sergent, you could talk about this. I think one of the

things that was most—there were a lot of things that were upsetting about the Affordable Care Act, and one of them is what you

said, Mr. Sergent. There is a lot of misunderstanding about what

it did and what it did not do.

One of the things that I was so depressed about was the whole

death panel controversy, and maybe one of you have the number.

What percentage of the Medicare payments go out for the last 30

days of someone’s life? Does anybody know off the top of their

head?

Mr. SERGENT. Well, I will defer to the experts. I have a number

that has been repeated to me, that something like 40 percent of the

total cost of Medicare is in the last five years.

Senator MCCASKILL. Forty percent of all the costs of Medicare

come in the last six months of someone’s life, and so what we—

what was an amendment to the health care bill in the Committee

by Republican Chuck Grassley from Iowa was the idea that we

would reimburse Medicare doctors for the time they took to talk to

their patients about end-of-life nutrition and hydration.

I know—once again, I will call on my mother. She is in heaven,

watching, smiling. She is so glad all of you are here, by the way.

She thinks you should all come out and see your elected officials.

My mother was adamant with us about what she wanted at the

end of her life. It was very clear to us. She had it in writing. She

would yell at us about it at least once a month. Now, this is what

I want at the end of my life, so when the time came, we knew when

it was time to take Mom out of the hospital and bring her home,

get hospice, and my mother died in my living room with all of us

around her, laughing, smiling, and that is what she wanted. She

did not want more at the hospital. She wanted less when that time

came.
22

It was easy for us, because we had clear instructions, but most

families do not have that, and so at the end of life, they do not

know what mom or dad really wants, and if they do not know what

mom or dad really wants, they are in the most emotional and conflicted place they will ever be in their life, because your emotion

is, I want to hold on to mom. I want to hold on to dad.

I had an ICU doctor at your hospital tell me that someone was

kept on a machine, was brain dead, had no valuable life left, because the family wanted to wait until the son graduated from college in a month to come say goodbye. That is an incredibly expensive month. I understand you want to hold on for a month, but that

is one of many examples that ICU doctors can talk about in terms

of end of life.

Let me ask you, Mr. Sergent, what can we do about getting

Medicare beneficiaries to understand about directives for their endof-life, and I believe there has now been a rule—am I correct about

this—that doctors can begin to be reimbursed for this?

PANEL MEMBER. Yes. Yes.

PANEL MEMBER. This just happened a couple of weeks ago.

Mr. SERGENT. I do not know exactly where to start with that answer. I am so frustrated by that complication. I talk to a lot of seniors in the role that I serve, and there has been so much noise, so

much false news about that particular conversation, that one of the

things that I have discovered is that when seniors have made up

their mind about death panel discussions, you cannot get them to

see—it is almost like a cognitive dissonance.

You cannot get them to understand that that is, number one, not

true, never was true, could not possibly be true, in my opinion; and

number two, the opposite is true, that you get a good conversation

designed to inform you and your primary care physician what your

hopes and intentions would be.

That does not mean that you have to be on the verge or edge of

death. This should be a conversation—I have already had this conversation with my physician, who I think is a remarkable man. We

also have it in writing, but my point is, you do not have to have

that at the end-of-life conversation.

I wish I could tell you that there was something that I could suggest, that if you could support, we could get it done. All I can tell

you is that I wish proponents of what is so good in the Act were

more willing to speak out, because as you very well know in your

position, sometimes when you speak out against this noise or false

news, if you know where I am going with that, it can result in a

vicious counterattack.

Senator MCCASKILL. Yes. Mr. Guterman.

Mr. GUTERMAN. Senator, I wanted to add that the whole issue

of palliative care and the kinds of services that can help people at

the end of life is not just an end-of-life issue and is not just the

cost issue. I mean, the fact is that a lot of costs in Medicare are

concentrated at the end of life because many of these people are

sick. It is not surprising that people are very sick——

Senator MCCASKILL. Of course.

Mr. GUTERMAN [continuing]. right, in the last year of life.

Senator MCCASKILL. Of course.
23

Mr. GUTERMAN. What is more important is not the decision about

when to pull the plug but providing services that help people live

a reasonable life at the end of their life, to help provide them with

services to make them comfortable and not plug them into machines and pump them full of drugs to try to, you know, squeeze

every last moment out of that duration of life.

The quality of life is really important, and it is really, if we look

at it as a quality of care issue, you know, rather than just a cost

issue or a pulling the plug issue, I think people would be able to

really reconcile themselves to this thought, that, you know, you are

not going to live forever. Grandpa Joe is not going to live forever,

and plugging them into machines actually ends their life prematurely because it sours the end of that whole lifelong experience.

Senator MCCASKILL. I think you are exactly right. I mean, what

you are saying is what we ought to be focused on is a quality of

life, and how can we form the Medicare program so that you get

the most quality out of life for the longest period of time, but then,

hopefully, have decisions made at the end.

Ms. VAN TREASE. Senator, I might just—might build on that

thought, because the data also tell us that, appropriately used, palliative care in pre-hospice actually extends a person’s life, and I

think palliative care and hospice care are significantly——

Senator MCCASKILL. Why do you not define palliative care for everyone.

Ms. VAN TREASE. Palliative care is really—think of it as comfort.

You are making someone comfortable. It is not intended for curative. It is unlikely the person will recover, and it is comfort in nature, so that the quality of a person’s life is at the highest level is

possibly can be. They are not in pain and they are not confused

about what is happening, and we under-utilize both that and hospice care.

Unfortunately, many people—hospice care is actually the transition between life and death care, but many people are not able to

take advantage, perhaps because they are not having these crucial

conversations with their physicians and their families, and hospice

care, oftentimes, people are only in hospice for a few days. That is

probably under-utilizing hospice. They are staying in the ICU,

which is probably not where most people would like to spend——

Senator MCCASKILL. Right.

Ms. VAN TREASE.—most of their last days.

Senator MCCASKILL. Right.

Ms. VAN TREASE. I do think those kinds of things that continue

to educate and appropriately compensate the physicians to have

these very significant conversations with the patients are going to

be beneficial in the long run.

Senator MCCASKILL. Which is more expensive, a R.N. going to

someone’s home or someone coming to the ER?

Ms. VAN TREASE. The ER.

Senator MCCASKILL. I am trying to figure out—we have done all

of this regulation around whether or not you can get home care,

but we have no regulation about whether or not you can come to

the ER, right?

Ms. VAN TREASE. That is correct.

Senator MCCASKILL. So, you know——
24

Ms. VAN TREASE. In fact, we do have regulation, which says anyone must be seen.

Senator MCCASKILL. Right. What we are saying is we have got

to make sure that you really deserve a nurse at home, but we do

not need to make sure you can walk in any ER in America, insured, not insured, under-insured, and we are required to give you

medical care. That seems backward to me, I mean, not that we

want to ever have anybody have to qualify for the emergency

room——

Ms. VAN TREASE. Right.

Senator MCCASKILL. The point I am trying to make is it seems

backwards that we are doing so much regulation around the ability

to get home care. Where did that come from?

Ms. VAN TREASE. Well, again, I think most regulations come with

good intentions, and sometimes they just have negative consequences, particularly as we think about the new models of care

that we need in order to protect the solvency and increase highquality care.

I do not know—I could not answer exactly where the origins are.

I think, though, the point is we are recognizing that there are these

barriers. There is going to continue to be a challenge in providing

enough doctors in order for the growing number, the 10,000 Medicare beneficiaries coming on a day are going to need more and

more care, not less, as we all age, and let us keep in mind that we

have a whole lot of doctors that are falling into the retirement age,

as well.

We need different types of models that allow nurses to work at

the top of their license. That can be home care nurses, it can be

care managers who facilitate the physicians’ office work, but our

regulations are set up for the old way and we need to identify

which ones specifically. Either get waivers quickly and then rewrite

the regulations to facilitate.

Senator MCCASKILL. Do we not have a critical shortage of gerontologists?

Ms. VAN TREASE. We do, indeed.

Senator MCCASKILL. Is that because they are not making as

much money as other kinds of doctors?

Ms. VAN TREASE. Well, you know, I think economics play into a

physician’s decision as to what to do with his or her skill set. The

fact of the matter also is, though, again, we are aging faster than

we are producing doctors with, frankly, any of the specialized

skills, so this is just going to be a fundamental challenge for us,

which is, again, why we are advocating with our physicians learning better ways to do team-based care so that certain things that

a doctor might have historically done which could be done through

licensing of pharmacists, advanced care practitioners, paramedics,

nurse practitioners, we need to distribute the care model.

Senator MCCASKILL. Yes, Mr. Guterman.

Mr. GUTERMAN. Also, I would add—let me point out that the solution to this is not more regulation, but actually less regulation

and more—I mean, the restriction on home health comes from the

fact that Medicare was originally designed as an acute care program and it was designed under a fee-for-service system, so people

get paid more for doing more, and in a system like that, if you open
25

up more services and if you do not regulate them, you are going

to end up with people abusing the use of those extra services.

If you align payment, instead of rewarding people more for doing

more and doing more complex things, to rewarding people for getting better outcomes and providing better care to their patients and

providing better patient satisfaction, better patient experiences

from that care, then you can expand the services that you can

allow people to do, because then they are doing those things from

a broader perspective.

That is true for drug coverage, too. I mean, rather than, you

know, giving the drug plans the power to restrict what individual

beneficiaries can use, there is a medication therapy management

provision in the Part D law, and if you plug—and it is an artifact

of—this disconnect is an artifact between—of different Part A, Part

B, Part D coverage, and so people do not have any opportunity and

certainly no incentive to talk to each other to help manage the patient more broadly, and then a lot of these problems can be eliminated.

Senator MCCASKILL. That goes to your point you made in your

testimony, that if we kind of blurred the lines between A, B, and

D and had this be a more holistic program as opposed to the silos

of A, B, and D, it would make a lot more sense, which—and that

brings into play the 3-day observation, because it is the separation

of those three that end up having these anomalies in classification,

whether it is observation or treatment, because it has direct impact

on whether you get reimbursed, because if you are not admitted

into the hospital, you do not get A and it goes to B, right?

Ms. VAN TREASE. Right.

Mr. GUTERMAN. Absolutely.

Senator MCCASKILL. I am getting my alphabet right, am I not?

PANEL MEMBER. It is not just that you do not get reimbursed,

you may not even get the care. You may not be able to get the care

in a skilled nursing facility——

Senator MCCASKILL. Then you cannot go to a nursing home.

PANEL MEMBER. That is right.

Senator MCCASKILL. Because you have not been admitted.

PANEL MEMBER. Yes.

Senator MCCASKILL. Because under the rules, you cannot go to

a nursing home if you have not been admitted to a hospital, so——

PANEL MEMBER. For three days.

Senator MCCASKILL. For three days. If you are in for observation,

which sometimes—which is, you know, I mean, we have put all

these artificial regulations in that have these unintended consequences.

What I am going to do after this hearing—I have got, like, four

or five already that we need to, like, really focus on getting these

regulations so that they are more holistic in the way they are being

applied, with keeping an eye on costs.

Yes, Mr. Pim.

Mr. PIM. I would like to add two more, if I could, and you

touched on this, as well, but first of all, we would like to see drugs

included in the ACO. Right now, they are not, and they are going

to become an increasingly bigger part of driving costs for the program——
26

Senator MCCASKILL. Drugs are not part of the Accountable Care

Organizations?

Mr. PIM. No.

Senator MCCASKILL. Wow.

Mr. PIM. Then the other thing is——

Senator MCCASKILL. How did we miss that? Is that pharma?

Mr. PIM. I do not know what to say.

Senator MCCASKILL. Is it pharma? They did not want it?

PANEL MEMBER. It is because it is a separate program, and because they did not have the wherewithal to combine the data at the

time to be able to track. I mean, data is really key to the operation

of an ACO, and the drug data are on a separate track and it is

hard to combine all the data together to get the total cost.

The incentives are terrible, because if you have got—you know,

for a Part D plan, they want to try to maximize the efficiency of

your use of drugs, but if the use of drugs to manage a chronic condition can save money on visits to the doctor and hospital admissions, then you end up with Medicare saving money on Part A and

B, but the Part D plan losing money because they have to spend

more on the prescription drugs.

Senator MCCASKILL. Which goes again to the, let us take the

lines away. That makes sense.

Yes.

PANEL MEMBER. On that, though, I would say we have been talking actively with CMS around some pilots where we would try to

do some innovative programs in Part D and measure the impact

that we saw in A and B costs, so movement in the right direction,

but, again, we would like to see more, and then the other thing I

just wanted to touch on quickly, and you had mentioned this in

your testimony, but telemedicine, I believe, would help, as well, in

terms of trying to balance the supply and demand of providers.

Senator MCCASKILL. In terms of the availability and the reimbursable——

PANEL MEMBER. Specifically, the reimbursement of it.

Senator MCCASKILL. Yes. Yes. I am trying to look and see if

there is anything I have missed.

I was struck by your testimony, Mr. Pim, about the thousand

Hepatitis patients costing $10 million.

Mr. PIM. A hundred million.

Senator MCCASKILL. A hundred million, I mean.

Mr. PIM. Sorry.

Senator MCCASKILL. A hundred grand a piece.

Mr. PIM. Yes.

Senator MCCASKILL. Who paid for that?

Mr. PIM. Medicare did. Taxpayers.

Senator MCCASKILL. And why is it so expensive?

Mr. PIM. Uh——

Senator MCCASKILL. I mean, that is just the medicine?

Mr. PIM. That is the medicine. It was an extraordinarily expensive drug——

Senator MCCASKILL. Why is it extraordinarily expensive?

Mr. PIM. We can follow-up with some information. We can provide more information to your office. It is a point that we have

been trying to make for some time now. The drug does treat a con-
27

dition that beforehand really did not have an effective treatment,

but we just believe that the price was exorbitant and unsustainable

from a program perspective.

Senator MCCASKILL. Is it just certain kinds of Hepatitis that

need this drug, or——

Mr. PIM. Hepatitis C.

Senator MCCASKILL. Hepatitis C. Are there a lot more people

that have this drug? I mean, you said you treated a thousand. Is

that because very few people have Hepatitis C, or just these are

the only ones that——

Mr. PIM. The drug came on the market last year, and so we were

limited in our ability to put some controls in place, and so, thus,

a thousand patients consumed approximately $100,000 worth of

drugs each.

Senator MCCASKILL. That is how much per dose? I mean, that

is ten grand a month, almost.

Mr. PIM. Well, it is, depending on the genotype, it is an eightor a twelve-week course of treatment, so it is actually even more

expensive than that on a monthly basis.

Senator MCCASKILL. I see. I see.

PANEL MEMBER. Yes, Senator. I may have this wrong, but I think

I remember hearing a CMS official announce that they had spent

$4.6 billion on Hepatitis C drugs last year, and it is a good question how much it costs, but again, one of the ramifications of separating the program into different parts is, for all we know, that

hundred thousand dollars apiece in drugs, since it appears to be

very effective in addressing Hepatitis C, may be saving more

money than that, but that savings does not accrue to the Part D

plan. It accrues to A and B, and in any case, I think we need more

study as to what the appropriate, you know, what the tradeoff is

between the spending and the savings overall.

Senator MCCASKILL. Well, we are going to——

PANEL MEMBER. I would argue that it is going to be hard to save

a hundred million dollars on those patients. I believe my colleague

was mentioning to you right before we started that this drug was

going to be approximately $30,000 for each patient, and then

through a transaction, the price ultimately went up to almost

$100,000.

Senator MCCASKILL. Yes, and that is one thing we are going to

do an investigation on, both in the Aging Committee and the Permanent Subcommittee on Investigations, looking at mergers and

acquisitions in the pharmaceutical area and what that has done to

the price of escalating drugs, because we see the same drugs, and

when one company gets acquired by the other, all of a sudden, it

doubles. Then it gets acquired by another, and all of a sudden it

quadruples, and all they have done is change the label. Something

is up there, and I want to try to track that and get to the bottom

of it and expose it, because I have a feeling the taxpayers are the

ones paying those bills.

Why is your waiver so far away on—why 2017? If they have

agreed to give you a waiver, why do you have to wait so long to

get it?

Ms. VAN TREASE. As we understand it, there is an implementation challenge as it applies to getting that waiver fully vetted
28

through the process. We are very happy to have the waiver,

and——

Senator MCCASKILL. You do not want me to complain, because

you are afraid they will take your waiver away.

Ms. VAN TREASE. I am very happy to have the waiver.

Senator MCCASKILL. By the way—too late.

Ms. VAN TREASE. I would love to have the waiver sooner——

Senator MCCASKILL. I will complain, and if they try to take your

waiver away then, then I will really complain.

Ms. VAN TREASE. There you go. There you go.

Senator MCCASKILL. That does not make sense to me. If they

have made the determination that this is appropriate, then it

sounds to me that that is gobbledygook that would delay it for a

year and a half before you would actually get it.

Ms. VAN TREASE. Right. The waiver would be effective, as I said,

January 2017. The contract period, the contract year to which I am

referring actually begins January 2016, so perhaps one could

argue, since the new contract period does not start, that is why the

waiver would not start.

Senator MCCASKILL. Dumb.

Ms. VAN TREASE. However, I would more than welcome an early

application.

Senator MCCASKILL. Yes. I will look into that. We are getting—

believe me, we are taking notes today, so I have got a list of things

to do.

I know some of you have obligations that you have to go, so

many of the questions I had, you covered in your testimony. Is

there anything else that we have not talked about that you believe

needs to be brought up as we look at the next 50 years of Medicare

and how people see Medicare?

I do think that we still have a lot to do in terms of educating

people about what their benefits are that sometimes things that

feel free are not free, and sometimes benefits that are badly needed

are not available, and if we could get those two things reconciled

and stop the over-utilization of some things that are not necessary

versus adding dental, or adding certainly hearing.

I think that discoveries that have been made—and I might also

bring out that there is going to be a National Geographic program.

We have got to keep investing in NIH. It is important in St. Louis

for Washington University, but it is important in the whole country. I had CEOs of multinational corporations talking about how

important NIH is to America’s security, because the strength of our

country, the attractiveness of our country has to do with our innovation and our commitment to higher education and research.

I was part of a program, because of my role on the Aging Committee, where some scientists have figured out that there is an

available drug right now, and they just got an approval for the

NIH testing, that you could take, and it does not prolong your life,

but it delays the onset of some of the chronic illnesses that occur

near the end of life. Incredibly exciting, and this is not a drug that

has to be developed, this is a drug that is currently available, prescribed, obviously, for another purpose.

It is going to—I was just in a room talking to them. I think they

just wanted somebody that did not know all their jargon to ask
29

them common sense questions, because when you leave these three

doctors to talk to themselves, it is sometimes like, you guys—I am

not sure that everybody knows what ACO or palliative care is, so

I try to make sure everybody understands. It will be on the National Geographic channel, and this is—believe me, I am not any

expert, I am just there kind of as a prop.

These scientists are very impressive and it is very exciting, but

it brings about the other issue that we talked about, and that is

if, you know, the longer we live, the more expensive Medicare is,

and so we have got to make sure that we continue to make sure

we keep it strong and financially viable.

Is there anything else any of you would like to add? Yes, Mr.

Richtman.

Mr. RICHTMAN. You know, I want to just make a comment about

the death panels. I think a lot of good Members of Congress lost

their seats because of the scare tactic of death panels. You know,

I do not know how it should have been addressed, but someone

needed to confront Sarah Palin, because she really went to town on

that, and I think it hurt the effort to improve these programs,

health care programs, even more. I think you should be riding

roughshod, to use your term, on those kinds of scare tactics, because you can counter that.

Senator MCCASKILL. It is frustrating, because I spent a lot of

time trying to correct information that was out in the public domain about what was and was not in the Affordable Care Act, and

believe me, it is not perfect, and I am the first one that is anxious

to get to the table and make some fixes that I think would be important. I have had a lot of talks with some of you about readmission, other things, the size of businesses, you know, the 50 versus

100, the 30-hour week versus the 40-hour week.

Unfortunately, we have not had any partners willing to make it

better, because it has been a political two-by-four and it has been

used very effectively, so they have had a tendency to focus on it

being bad, not let us try to fix it and make it better.

I joked one day that they have been saying, ‘‘repeal and replace’’

for five years. I am going to get some bloodhounds and I am going

to go through the halls of Congress looking for replace, because I

have never seen it. I do not know what it looks like. I would not

know it if it walked up and shook my hand. ‘‘Replace’’ is the most

often mentioned thing in Washington that has never, ever surfaced.

There is not a replace, and so, what we ought to do is focus on fix,

and in the process, maybe we could adopt some of the things we

talked about today.

The record for this hearing will remain open for another two

weeks, which means there might be questions for the record for all

of you, particularly from some of my colleagues that are not here

today but are on the Committee. They were all very interested in

this hearing.

I once again want to thank my colleague, Susan Collins, who is

the Chairman of the Committee. She and I work very closely together, as I said in the opening statement, and she was very enthusiastic about this hearing occurring.

There will be questions for the record. If there is anything else

you would like to put in the record, we welcome that, and I will
30

make sure that all the members of the Committee have access to

it.

Thank you all very much for being here.

[Whereupon, at 2:36 p.m., the Committee was adjourned.]
APPENDIX

Prepared Witness Statements

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