U.S. GOVERNMENT PUBLISHING OFFICE

49–417 PDF WASHINGTON : 2022

S. HRG. 114–862

CHALLENGING THE STATUS QUO:

SOLUTIONS TO THE HOSPITAL

OBSERVATION STAY CRISIS

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING

UNITED STATES SENATE

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

WASHINGTON, DC

MAY 20, 2015

Serial No. 114–06

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
(III)

C O N T E N T S

Page

Opening Statement of Senator Susan M. Collins, Chairman .............................. 1

Opening Statement of Senator Claire McCaskill, Ranking Member ................... 3

PANEL OF WITNESSES

PANEL I

Sean Cavanaugh, Deputy Administrator and Director, Center for Medicare,

Centers for Medicare and Medicaid Services, Baltimore, Maryland ............... 6

Mark E. Miller, Ph.D., Executive Director, Medicare Payment Advisory Commission, Washington, D.C. .................................................................................. 7

PANEL II

Jyotirmaya ‘‘Jeetu’’ Nanda, M.D., System Medical Director, Informatics and

Physician Compliance, Center for Clinical Excellence and Corporate Responsibility at St. Louis-SSM Health Care, St. Louis, Missouri ...................... 17

Spencer Young, Senior Vice President, Clinical Operations,

HealthDataInsights, Las Vegas, Nevada ........................................................... 19

Tori Gaetani, R.N., Director of Care Coordination, Population Health, EMHS

Beacon Health, Brewer, Maine ........................................................................... 21

APPENDIX

PREPARED WITNESS STATEMENTS

Sean Cavanaugh, Deputy Administrator and Director, Center for Medicare,

Centers for Medicare and Medicaid Services, Baltimore, Maryland ............... 35

Mark E. Miller, Ph.D., Executive Director, Medicare Payment Advisory Commission, Washington, D.C. .................................................................................. 46

Jyotirmaya ‘‘Jeetu’’ Nanda, M.D., System Medical Director, Informatics and

Physician Compliance, Center for Clinical Excellence and Corporate Responsibility at St. Louis-SSM Health Care, St. Louis, Missouri ...................... 62

Spencer Young, Senior Vice President, Clinical Operations,

HealthDataInsights, Las Vegas, Nevada ........................................................... 68

Tori Gaetani, R.N., Director of Care Coordination, Population Health, EMHS

Beacon Health, Brewer, Maine ........................................................................... 84

QUESTIONS FOR THE RECORD

Sean Cavanaugh, Deputy Administrator and Director, Center for Medicare,

Centers for Medicare and Medicaid Services, Baltimore, Maryland ............... 91

(1)

CHALLENGING THE STATUS QUO:

SOLUTIONS TO THE HOSPITAL

OBSERVATION STAY CRISIS

WEDNESDAY, MAY 20, 2015

U.S. SENATE,

SPECIAL COMMITTEE ON AGING,

Washington, DC.

The Committee met, pursuant to notice, at 2:17 p.m., Room 562,

Dirksen Senate Office Building, Hon. Susan M. Collins, Chairman

of the Committee, presiding.

Present: Senators Collins, Tillis, McCaskill, Whitehouse, Donnelly, and Warren.

OPENING STATEMENT OF SENATOR

SUSAN M. COLLINS, CHAIRMAN

The CHAIRMAN. The hearing will come to order. Good afternoon.

Today’s hearing will focus on the continuing use of hospital observation stays and the financial implications for Medicare beneficiaries and their families. This hearing is a follow-up to one that

the Aging Committee held last year, which found that the financial

consequences of these stays can be devastating for patients and

their families.

Medicare originally intended observation stays as a way to give

hospital physicians more time to run tests or to do lab work in

order to decide whether a patient should be admitted to the hospital or is stable enough to go home. These observation stays,

which Medicare considers to be outpatient care, usually lasted between 24 and 48 hours. Hospitals, however, have been increasing

their use of observation stays and they are also keeping Medicare

patients in observation status longer.

A 2012 Brown University study found a 34 percent increase in

the ratio of observation stays to inpatient admissions over a 3-year

period. This led researchers to conclude that outpatient observation

status was becoming a substitute for inpatient status. At the same

time, the study found that patients remained in observation status

longer, with an 88 percent increase in the number of patients staying at least 72 hours, well beyond the recommended 24 to 48 hours.

According to the HHS Inspector General, in 2012, Medicare beneficiaries had more than 600,000 observation stays that lasted three

nights or more. Many of these patients find themselves in a Medicare twilight zone, where they may be in a hospital bed for days

receiving care and treatment from doctors and nurses, but still not

have been officially admitted to the hospital as an inpatient.
2

The financial consequences of these stays matter. They can be severe. For example, seniors can be held responsible for outpatient

copayments and prescription drug costs that they otherwise would

not have been responsible for as an inpatient. There is also no outof-pocket cap on these costs.

More important, if a Medicare patient is not formally admitted,

Medicare will not pay for subsequent skilled nursing or rehabilitation care. A Medicare patient must spend three consecutive midnights in a hospital as an admitted patient in order to qualify for

coverage for care in a skilled nursing facility. As a consequence, if

a patient who has been on observation status needs follow-up nursing home care, they must pay the entire cost themselves, even if

they have spent the last three nights in a hospital bed being cared

for by that hospital’s doctors, nurses, and other personnel.

Many patients on observation stays may not even realize that

they have never been admitted as inpatients. They just know that

they are in the hospital. If they are admitted later to a skilled

nursing facility for follow-up care, they may be shocked to learn

that they will be liable for out-of-pocket costs totaling thousands of

dollars. Some Medicare beneficiaries may be foregoing skilled nursing or rehabilitation care altogether because they simply cannot afford to pay the out-of-pocket costs.

That is why I have joined with a number of my colleagues in introducing legislation to resolve this problem by deeming time spent

in hospital observation status as inpatient care for the purpose of

the Medicare three-day prior hospital stay requirement.

Our hearing will further examine the financial implications for

our seniors of spending long times—long periods of time in observation status without formally being admitted as patients. We will

also explore whether there is a relationship between the Medicare

Recovery Audit Contractor, or RAC audits, and the spike in hospital observation stays, as well as the effectiveness of efforts by

CMS, such as the ‘‘two midnight’’ rule, to clarify when Medicare patients should be admitted for an inpatient hospital stay. Finally, we

will discuss a proposal to resolve problems associated with this

issue that have been put forth by Members of Congress, advocates,

and stakeholders, as well as by the Medicare Payment Advisory

Commission known as MedPAC.

These issues are also a very high priority for the Ranking Member of our Committee, Senator McCaskill. She was the one who requested that the Committee hold this hearing. In keeping with the

long tradition of bipartisanship on this Committee and in recognition of Senator McCaskill’s leadership role, I am going to turn to

her to introduce our witnesses and also to take the lead on asking

questions, in recognition of her work.

Before turning to Senator McCaskill, however, I do want to take

this opportunity to welcome Tori Gaetani, who is the Director of

Care Coordination for Beacon Health, an affiliate of Eastern Maine

Health Care Systems based in Brewer. As a Pioneer Accountable

Care Organization, Beacon Health is participating in a pilot project

for CMS that exempts participating organizations from the threeday hospital stay requirement for patients to qualify for Medicare

skilled nursing. I look forward to hearing her testimony and how

it has affected costs and quality of care.
3

With that, let me now turn the hearing over to our Ranking

Member, Senator McCaskill.

OPENING STATEMENT OF SENATOR

CLAIRE MCCASKILL, RANKING MEMBER

Senator MCCASKILL. Thank you, Chairman Collins. I am happy

to continue the great bipartisan tradition of this Committee and I

am pleased that we are holding this hearing on such an important

issue. I also want to thank Senator Warren for being here today

and adding her important voice to this discussion.

I do just want to say, before we get started, that I want to thank

all the witnesses that are here, and I certainly want to thank Senator Collins for all of the years of work she has put into this issue,

and I know her knowledge and perspective are going to be invaluable as we struggle with public policy in this complicated and difficult area.

This April, I was fortunate to be able to have enough time in

Missouri that I was able to move around the State on a senior listening tour, and I stopped in big cities, like St. Louis and Kansas

City, and I stopped in very small communities, and as often happens when I do the most important part of my job, and that is slow

down, shut my mouth, and listen, I learned a lot about what seniors are afraid of in my State, what they are struggling with, and

what the challenges are that they face.

One issue I heard at almost every stop was confusion and anger

and a real questioning about this issue, you know, being taken by

surprise, not understanding. You know, I was in the hospital and

then I got this big bill and I do not understand. Very rarely does

an issue continue to come up like that, and this one did, and so,

that is when I realized—I came back to Washington and talked to

Senator Collins and said, let us take a look at this, because it is

complicated and hard.

There has been a rapid growth in the use of observation status

over the last several years. In fact, it is astounding. The trend is

so steep that there has to be a systemic explanation for what is

going on here. It is not a coincidence. We need to understand what

is causing it and we need to make sure that it makes sense, most

importantly, for the patients.

Patients are placed under observation if physicians cannot quickly diagnose them as needing inpatient or outpatient services. Those

under observation are considered technical outpatients. This outpatient classification can saddle beneficiaries with very large outof-pocket costs for hospital services and, importantly, for post-hospitalization stay at a skilled nursing facility, and the worst part

about it is many beneficiaries do not know what they are going to

have to pay, or the fact that they are even going to have to pay

until after they have been discharged, because the care they receive is virtually identical to the care that they would receive as

an inpatient. For many of them, it never occurred to them that this

care might not be billed like any other hospitalization.

CMS has established a time-based definition of inpatient care

known as the ‘‘two midnight’’ rule. The rule was intended to provide clinicians with a benchmark to help make admissions decisions, although stakeholders have complained that this rule is con-
4

fusing and does not account for complex medical judgments involved in patient care. Additionally, Recovery Audit Contractors,

known not so affectionately among hospitals as RACs, have focused

most of their energy on auditing the appropriateness of short-term

stays.

We also know that there are some Medicare payment inequities

between reimbursements for inpatient care versus care under observation. All of this has led to a dramatic increase in observation

stays and a dramatic increase in the number of Medicare appeals,

with few answers.

Let me be clear. While this is complex, and with many stakeholders and each stakeholder’s voice should be heard, as a former

auditor, I know that the RACs serve an important function for the

solvency of the Medicare Trust Fund. In fact, their work has recovered over $10 billion for the Medicare Trust Fund and extended its

life by two years since the creation of the program.

Health care providers’ viewpoints are also essential to better understand how we can support their clinical decisionmaking. CMS’s

voice needs to be heard, because they set Medicare payment policy

and direct the actions of the RACs and other program integrity

functions, and last but certainly not least, we need to be most of

all mindful about how all of this affects the beneficiaries, because,

after all, they are the people that we are trying to take care of.

It seems to me that if we have this big spike in observation status use, it is negatively impacting patients and wasting a whole lot

of resources fighting the problem that there may be some misaligned incentives here. My fear is that these misaligned incentives

are causing stakeholders to make decisions based on financial motives rather than making the best clinical decision possible for the

patient. These incentives might be causing players in this system

to be acting in a way that was not intended and not helpful.

Today, I would like to talk honestly about some ways we might

be able to fix this system to get it working properly again and not

waste a single dollar in the process from the Medicare Trust Fund.

I am concerned that more than half of the RAC audits are for

inpatient hospital admissions when that appears to be out of sync

with both the proportion of inpatient claims to total Part A and B

claims, as well as out of sync with where CMS’s own contractors

say there are high or improper payment rates. What this means is

that while appearing to be recovering about one-third of the improper payments in the inpatient hospital setting, they are catching very few of the improper payments in other categories. I do not

view this as a RAC issue, but this is an area where CMS must take

responsibility, because they direct where the auditors go, broadly

speaking.

I am also very concerned that many hospitals appear to be placing far too many patients in observation status in order to avoid

oversight and loss of some payments. Some are also deliberately

gumming up the appeal system by instituting a policy of appealing

everything, regardless of merit. They do this because they know

the Administrative Law Judges are not required to follow Medicare

rules and regulations, they only have to give those rules substantial deference. The Chief Administrative Law Judge testified that

in 2015, five health systems were responsible for 51 percent of the
5

Office of Medicare hearings and appeals intake. Let me say that

again. In 2015, five health systems were responsible for more than

half of all the Office of Medicare hearings and appeals intake.

All of these issues are why I am excited to have these two panels

of witnesses here today. I look forward to hearing each one of their

viewpoints and suggestions to improve the situation.

On the first panel, we have Sean Cavanaugh, the Deputy Administrator at the Centers for Medicare and Medicaid Services, and Director of the Center for Medicare. Mr. Cavanaugh is responsible for

overseeing the regulation and payment of Medicare fee-for-service

providers at CMS. He will discuss CMS’s role in shaping policy

that impacts the use of observation status, such as the ‘‘two midnight’’ policy, and how these policies are actually working.

Joining him on the first panel is Dr. Mark Miller, the Executive

Director of the Medicare Payment Advisory Commission, or

MedPAC. MedPAC is a nonpartisan Federal agency that advises

Congress on Medicare payment, quality, and access issues. Dr. Miller will talk about MedPAC’s work regarding hospital short-stay

policy issues, the RAC Program, and the ‘‘two midnight’’ policy.

On our second panel, we have Dr. Jeetu Nanda, the System Medical Director for Informatics and Physician Compliance at SSM

Health in St. Louis. Dr. Nanda is representing the American Hospital Association. Dr. Nanda will discuss the impact the observation status crisis has had on hospitals and providers and how the

‘‘two midnight’’ policy has affected their practice. He has various

experiences in utilizing management, including providing secondlevel physician review of hospital admissions for a hospital contractor.

Spencer Young is the President of Health Data Insights, a health

care services company that specializes in the identification and

recoupment of claim overpayments to providers. Health Data Insights, a subsidiary of HMS, is the National Medicare Recovery

Audit Contractor for Region D, which consists of 17 states and

three territories. He also serves as Senior Vice President of Clinical

Operations for HMS. Mr. Young will discuss more specifically the

RAC’s experience related to short hospital stays and what the audit

moratorium has meant for Medicare improper payment rates, and

then, finally, as previously introduced by our Chairman, Tori

Gaetani, the Director of Care Coordination at Beacon Health, that

is going to talk about their experience with waivers under an Accountable Care Organization structure.

Thank you again, Chairman Collins, for your important leadership on this issue, and thank you to all of our witnesses for being

here.

Okay, so we will begin with the testimony of Mr. Cavanaugh.

Thank you.

STATEMENT OF SEAN CAVANAUGH, DEPUTY ADMINISTRATOR

AND DIRECTOR, CENTER FOR MEDICARE,

CENTERS FOR MEDICARE AND MEDICAID SERVICES,

BALTIMORE, MARYLAND

Mr. CAVANAUGH. Good afternoon, Chairman Collins, Ranking

Member McCaskill, and Senator Warren. Thank you for inviting

me to testify today on Medicare hospital payment issues.
6

When a patient arrives at a hospital needing care, one of the critical decisions that physicians or other qualified professionals must

make is whether to admit the patient for inpatient care. This decision is often a complex medical judgment, taking into account the

patient’s medical history, comorbidities, and other factors. However, because of statutory requirements, Medicare pays hospitals

different rates for inpatient and outpatient services. Therefore, the

decision whether to admit a patient for inpatient care also has implications for provider payment and beneficiary cost sharing.

Three years ago, hospitals and other stakeholders requested that

CMS provide additional clarity regarding the definition of inpatient. Hospitals were growing frustrated with the administrative

and financial burden incurred when recovery auditors denied a

claim for services after care had been provided. At the same time,

Medicare was hearing from its contractors that Medicare was paying hospitals for inpatient care that should have been provided in

a less expensive outpatient setting.

Some hospitals reacted to the scrutiny of auditors by treating

more patients on an outpatient basis, often in observation status.

Some observation stays lasted three, four, even more days. This

caused problems for beneficiaries, because the time spent in observation did not help them meet the three inpatient day prior hospitalization requirement for the skilled nursing facility benefit.

In 2012, we solicited feedback on possible criteria that could be

used to determine when an inpatient admission is reasonable and

necessary. We received a large number of responses, but there was

not a consensus around any one approach.

In 2013, CMS finalized the proposal that has become known as

the ‘‘two midnight’’ rule. The rule sets a physician expectation

based benchmark for when CMS and its contractors would consider

inpatient hospital admission and payment appropriate. CMS

sought to balance principles that I believe are shared by all stakeholders, including beneficiaries, hospitals, physicians, and Congress. These principles are centered around the need for criteria

that are clear to providers and respect a physician’s judgment, are

consistent with sound clinical practice, reflect a beneficiary’s medical needs, and are consistent with the efficient delivery of care to

protect the trust funds and reduce the Medicare payment error

rate.

In November 2013, CMS announced a probe and educate strategy around the new standard, in which Medicare Administrative

Contractors, or MACs, are conducting prepayment reviews on a

sample of short-stay inpatient claims from each hospital to determine compliance with the ‘‘two midnight’’ rule. Claims for inpatient

admissions that are determined not reasonable and necessary are

denied and the MACs provide further education regarding the rule.

As part of this strategy, we also prohibited the recovery auditors

from conducting any post-payment medical necessity status reviews

of claims with dates of admission between October 1, 2013, and

March 31, 2014. CMS used this opportunity to engage in a dialog

with stakeholders on the ‘‘two midnight’’ rule. As we began hearing

from stakeholders that more time was needed to understand the

policy, we extended the medical review, probe, and educate strategy through September 30, 2014. Congress further extended the
7

probe and educate strategy and the limitation on recovery auditors

through September 30, 2015.

We believe these extensions are allowing hospitals time to fully

understand the ‘‘two midnight’’ benchmark. In fact, preliminary information suggests, as a result of the ‘‘two midnight’’ rule, the proportion of long outpatient stays is beginning to decline.

However, despite CMS’s efforts to educate hospitals and other

stakeholders on the ‘‘two midnight’’ rule, stakeholders have provided feedback that the rule introduced confusion for providers.

Therefore, we solicited feedback through a Notice of Proposed Rulemaking in April 30, 2014, on an alternative payment methodology

that could reduce the difference between inpatient and outpatient

payment for short-stay cases.

In a recent Notice of Proposed Rulemaking published April 30,

2015, we noted that hospitals and physicians continue to voice

their concerns with parts of the ‘‘two midnight’’ rule and that we

are considering this feedback carefully, as well as recent MedPAC

recommendations, and expect to include a further discussion of the

broader set of issues related to short inpatient stays, long outpatient stays with observation services, and the related IPPS payment adjustment in the calendar year 2016 Hospital Outpatient

Prospective Payment System Proposed Rule that will be published

this summer.

I look forward to hearing the Aging Committee’s ideas regarding

the ‘‘two midnight’’ rule, and with that, I would be happy to take

any questions.

Senator MCCASKILL. Thank you very much.

Dr. Miller—oh, is it Miller? I am sorry. I had ‘‘Miler’’ in my written remarks. It is obviously Miller. Sorry.

STATEMENT OF MARK E. MILLER, PH.D., EXECUTIVE

DIRECTOR, MEDICARE PAYMENT ADVISORY

COMMISSION, WASHINGTON, D.C.

Dr. MILLER. That is quite all right. Just call me.

Chairman Collins, Ranking Member McCaskill, distinguished

Committee members, I am Mark Miller, Executive Director of the

Medicare Payment Advisory Commission. The Commission was created by the Congress to provide it with independent analysis and

advice on a range of Medicare issues. On behalf of the Commissioners, I would like to thank you for considering our recommendations today.

The Commission’s work in all instances is guided by three principles: to assure that beneficiaries have access to high-quality, coordinated care; to protect the taxpayer dollar; and to pay providers

and plans in a way to accomplish these goals.

For today’s hearing, there is a series of cascading issues. Simplistically, Medicare’s inpatient hospital payment system is based on

averages, and so a short stay is generally more profitable than a

long stay. Based on positive demonstration results, the Congress

authorized the Recovery Audit Contractor Program in 2006 to encourage recovery of overpayments using private contractors and a

contingency fee strategy.

The RACs focused on hospital short stays because the decision to

admit can be clinically complex, as I had mentioned, these stays

are profitable, and denying a short inpatient stay represents a
8

large recovery. Part of the rise in outpatient observation status is

a reaction of the hospitals to avoid RAC reviews of short inpatient

stays, and finally, putting a beneficiary in observation status rather than admitting them can affect their out-of-pocket liability, most

notably, Medicare does not cover the skilled nursing facility stay if

the beneficiary is referred with less than three inpatient days.

It is important to keep in mind that RACs provide critical oversight. They recovered $3.7 billion in improper payments in 2013,

and short-stay denials accounted for a substantial proportion of

these recoveries, but hospitals have to produce documentation and

often appeal these denials and this creates administrative costs for

the hospitals and a substantial backlog for CMS and the appeals

process.

In considering the actions to take here, the Commission analyzed

changes in payment policies, including a one-day DRG and a siteneutral payment for conditions common in both the inpatient and

outpatient setting. The Commission did not make recommendations

on the payments. These payment policies do have benefits, but they

come with their potential problems in their own rights, and so, to

date, they have not made recommendations on that, but the Commission did move forward on recommendations for the RAC process

and for beneficiary liability.

Regarding the RAC, the Commission would withdraw the ‘‘two

midnight’’ rule, target RAC attention to the hospitals that have aberrant patterns of one-day inpatient stays as opposed to all hospitals, reduce the contingency fee for RACs that have high overturn

rates in order to create a stronger incentive to deny claims only

when a convincing case can be made, and establish a RAC lookback period that is shorter than the hospital rebilling period for

short inpatient stays. Now, this is jargon, but the issue here is that

most of the short stays denied by RACs are two or more years after

the date of care, and, thus, beyond the period where the hospital

could rebill and recover at least the outpatient care provided.

Turning to recommendations on beneficiary liability, beneficiaries often do not realize that they are in observation status and

they have not been officially admitted to the inpatient setting. This

can influence their out-of-pocket liability. The Commission has recommended informing the beneficiary that they are in observation

status if that status exceeds 24 hours and they are likely to need

skilled nursing facility care.

In order to strike a balance between protecting the beneficiary’s

out-of-pocket liabilities and the potentially high cost to the taxpayer of a more open skilled nursing facility benefit, the Commission recommended retaining the three-day rule for skilled nursing

facility care in fee-for-service but allowing up to two of those days

to be observation days.

While on observation status, the beneficiary can be charged for

common self-administered drugs related to their diabetes and heart

conditions and the like. These charges are well in excess of the

costs that the hospital pays to acquire these drugs, and the Commission recommended that these self-administered drugs be folded

into the observation day payment on a budget neutral basis.

It is important to note that there are likely costs here. This is

because of the ability of the hospitals to rebill has been expanded.
9

This is because targeting RAC efforts is likely to reduce total recoveries, and because more beneficiaries will qualify for the skilled

nursing facility benefit.

The Commission has been thoughtful in arriving at these recommendations, and I would point out that as a result of our ongoing policy work, the Commission has many standing recommendations that achieve savings.

In closing, I would like to thank you for your attention and I look

forward to your questions.

Senator MCCASKILL. Thank you very much, and thank you, Senator Tillis, for joining us also.

I will begin with questions and then ask the other Senators to

make their questions.

I am curious. Some of the RAC improvement suggestions that

you outlined in your testimony and that I had a chance to review

in your full written testimony—why can we not do those immediately? I mean, do we have to wait for the next RAC contract to

be finalized before we would implement those suggestions?

Dr. MILLER. I would defer on the whole contracting process to

Sean. My understanding is most of these changes can be accomplished administratively. Exactly mechanically how it is done, I

would defer to him, and I would also say that I think they have

taken some steps in these directions.

Senator MCCASKILL. Could you address that, Mr. Cavanaugh?

Mr. CAVANAUGH. Certainly, Senator, and your question is right

and Mark is right that there are a number of things that we can

do today without waiting for the next contracts, and the things we

can do are often very much in line with what MedPAC has recommended.

For example, we have started in the existing contracts to get the

RACs to focus not just on hospitals, but on providers, generally,

that have high denial rates, so we are asking them when they are

doing RAC reviews and they are finding low denial rates on a specific provider to move on, that we want to focus where the denial

rates are the highest.

The RACs are currently not looking at these inpatient cases that

we are talking about, but we have announced that at such a time

when they are allowed to look at them again, that we are going to

propose—or require that for them to look at these cases, if the hospital files the claim on a timely basis, the RAC would only have

six months to look at it, and the purpose of that is exactly as Mark

indicated, which is if they are going to look at these cases, they

need to do it during the window when the hospital has an opportunity to rebill the case. We do not want them looking two or three

years back when the hospital is not in a position to rebill the case.

We do believe, as you mentioned in your remarks and as Mark

mentioned, that the beneficiary is entitled to know what their status is, so we have been working with hospitals. We have provided

educational materials. We have been strongly pushing the idea, if

you are putting patients in an observation status, they need to

know that.

Senator MCCASKILL. Up front.

Mr. CAVANAUGH. Up front.

Senator MCCASKILL. Because the hospital knows.
10

Mr. CAVANAUGH. Absolutely.

Senator MCCASKILL. Are you going to require that the hospitals

inform patients as they are put in rooms that you are here on observation and, therefore, you will have out-of-pocket expenses that

you would not have if you were being admitted?

Mr. CAVANAUGH. To date, our efforts have been not a requirement. It has been educational and urging them.

Senator MCCASKILL. Yes. I think a right to know is pretty important. I mean, it is their money, right? There is an assumption, if

they are being wheeled into a hospital bed and all the things are

happening to them that happen to you when you get admitted into

the hospital, I think it is pretty important they know.

What about the issue of allowing them to just focus on inpatient

versus outpatient as opposed to some of the other recoveries that

could be possible? It is almost like—you know, as an auditor, I understand risk-based auditing, and risk-based auditing sometimes is

a pain because the stuff that may be the highest risk is the hardest

to audit or more time intensive, so if you are on a contingency

basis, you want to go for low-hanging fruit where you can get the

best recovery on the time you spent, not necessarily go where you

are going to clean up practices that are hurting care in this country

and/or costing the trust fund more money than it should.

For example, DMEs, durable medical equipment, labs, they have

a larger, higher improper payment rate than the hospitals do in

this regard, but they spend no attention there because it is more

expensive for them to audit there and they are not going to make

as much money, so you really have not aligned the incentives in

a way that makes sense for the care of people in the Medicare system.

Mr. CAVANAUGH. We are in complete agreement, and one of the

actions we are taking now within the existing contracts and will

continue in the future contracts is requiring the RACs to diversify

the types of claims they look at for the very reasons you identified.

We have an unacceptably high payment error rate in home health,

in DME, several other areas. We need them to be focusing on that.

We all understand why, for the reasons you and Mark indicated,

why they are focusing on those claims, but that is not adequate for

our purposes. We need them helping us in all the areas where we

have a high payment error rate.

Senator MCCASKILL. Yes. You guys really need to get after this

in the next contract. I mean, if you look at the single audit that

states are required to do for the Federal Government, which you

are probably familiar with, I mean, there are different classifications that a State auditor has to look at, and the reason they are

classified is because the Federal Government is telling us, this is

where the highest risk is and you must do so many audits in this

area, so many audits in this area, and so many audits in this area,

and by the way, we do not care if some of those audits may be more

time intensive or more expensive, and if we have got to bake that

into the contingency rate, that is really going to produce much better results than allowing them just to go where they are going to

make the quickest return on their investment, so I hope that you

look at that.

Mr. CAVANAUGH. We will, Senator.
11

Senator MCCASKILL. Finally, CMS describes observation care as,

‘‘a well-defined set of specific clinically appropriate services.’’ I cannot find that well-defined set of clinically appropriate circumstances, and so if it is well defined, you know, I do not get that,

because it does not appear to me that it is well defined.

Mr. CAVANAUGH. Well, we can provide you more information, but

I think the important point is, and you mentioned in your opening

statement, the purpose of the observation status is not to be a substitute for inpatient care and to avoid auditors. The purpose is to

determine whether the patient, in fact, needs inpatient care, and

it was because we saw these longer and longer observation stays

that we promulgated the ‘‘two midnight’’ rule. We wanted to protect

the beneficiary from that, make sure they knew their status and

make sure that they qualified for the skilled nursing facility after

they had been in a hospital for that period of time.

Senator MCCASKILL. I get the point you are making, but with

every action that we take, there is a reaction, and sometimes the

reaction is not what we intended, and I get that the method—I

mean, the reason the ‘‘two midnight’’ rule came about makes sense,

but the application has had unintended consequences that I think

we have to get after now.

Thank you. Senator Collins.

The CHAIRMAN. Thank you.

Mr. Cavanaugh, I want to follow-up on an issue that Senator

McCaskill raised, and that is whether or not beneficiaries are informed about their status and whether it is observation or inpatient, because for most of them, it is going to be indistinguishable.

Legislation has passed the House to require hospitals to notify

Medicare beneficiaries receiving observation services for more than

24 hours that they are in that category, and that would include an

explanation of the potential financial implications of not being admitted as an inpatient, and we have heard that MedPAC has made

a similar recommendation.

I want to follow-up on the question that Senator McCaskill asked

you. Is there any bar to your administratively requiring hospitals

to notify their patients?

Mr. CAVANAUGH. I would have to get back and consult with the

General Counsel, but as I said, we are in complete agreement with

the notion that the patient should certainly know their status and

know it as early as possible, because as Senator McCaskill indicated and you reiterated, the hospital certainly knows their status,

and we have been pushing very hard through educational channels,

even providing sample materials that hospitals could use to educate their beneficiaries on what status they have, so we agree with

the spirit of the legislation. I would have to check on whether we

have the authority under—administratively.

The CHAIRMAN. Given that it can take a long time for legislation

to make its way through the process and become law here, I would

urge you to implement it administratively if you possibly can, and

I think you would find, given the House passage of the bill, that

there would be widespread support for that.

We have talked a bit this afternoon about improper payments,

and while improper payments have declined in many Federal programs, they have actually gone up in the Medicare program, in-
12

creasing from 8.5 percent in Fiscal Year 2012 to 12.7 percent in

Fiscal Year 2014, and we put out a report last year from this Committee noting that the improper payments have increased at a time

when CMS has been hiring more and more contractors to review

claims and to conduct audits.

I have long believed that Medicare must shift from a pay-andchase strategy to combat fraud and abuse to one that prevents that

harm from ever occurring in the first place, whether it is inadvertent or outright fraud, and one of my major concerns about the

Recovery Audit Contractors program is that their strategy to reduce improper payments is based on that old pay-and-chase model

rather than trying to prevent the improper payments from happening in the first place, and in fact, I was shocked to learn that

the RAC’s statement of work actually prohibits the RAC auditors

from educating providers about Medicare payment policies.

Now, I recognize that it generally falls to the MACs, the Medicare Audit Contractors, not to be confused with the RACs—we have

a lot of acronyms here—to educate providers, but if a recovery

auditor identifies a hospital that has a lot of improper payments,

is that information conveyed to the Medicare Audit Contractors so

that they can start educating the provider and putting them on the

right path?

Mr. CAVANAUGH. Yes, exactly. We use the RACs not just to recover, but to identify providers that need further education. It goes

not just to the MACs, but to the agency itself so that we know

which providers need work—we need to work with, and I think, the

role that education can play is best exemplified by the current

probe and educate period that the MACs are conducting, but we do

use the RACs to identify providers that need that type of education.

The CHAIRMAN. Finally, I have long thought that we could do a

better job of targeting our compliance efforts toward the outliers,

some of whom were mentioned by Senator McCaskill in her opening comments, rather than applying the compliance efforts across

the board. That, again, was another of MedPAC’s recommendations. My question for you is, will CMS implement that recommendation to focus your efforts on the outliers?

Mr. CAVANAUGH. Yes. We have already begun with the current

RAC contracts to require them to focus on providers where they

find a high denial rate and to move on from providers who are consistently failing in accordance with our rules.

The CHAIRMAN. Thank you.

Senator MCCASKILL. Senator Warren.

Senator WARREN. Thank you.

The care that a patient receives when the stay in the hospital is

the same whether they are classified as inpatient or outpatient

under observation. The coding difference, of course, is huge when

the bill comes due, and patients will owe a maximum of their Part

A deductible of $1,260, while outpatients under Part B will owe 20

percent of the cost of each and every service that has been provided

to them. Now Part B might sometimes be cheaper for short outpatient stays, but we know that it can run into the thousands of

dollars for longer hospital stays. Inpatient versus outpatient coding
13

also determines whether Medicare will cover a subsequent stay in

a skilled nursing facility.

Mr. Cavanaugh, you talked about protecting the beneficiaries as

a key part of what you are trying to do here, and I just wanted

to ask, has CMS evaluated how the changes in admission patterns

caused by the ‘‘two midnight’’ rule have affected out-of-pocket costs

for beneficiaries?

Mr. CAVANAUGH. We have looked at whether, in fact-—you know,

one of our goals in promulgating the ‘‘two midnight’’ rule was to decrease the use of long observation stays, and the preliminary data

from the Office of the Actuary—I just checked with them yesterday—are that those stays are, as a proportion of all stays, are coming down.

Senator WARREN. I am sorry, Mr. Cavanaugh. That is not actually my question. My question is whether or not, since the rule has

been changed, have you done a study on what the financial impact

is on the people who were previously admitted to the hospital, now

are under outpatient. Do you have anything on that, any data on

that?

Mr. CAVANAUGH. No, I do not.

Senator WARREN. Okay. I think, knowing the impact on beneficiaries’ costs is critical information for CMS to look at when we

are trying to evaluate the impact of the ‘‘two midnight’’ policy.

Dr. Miller, can I ask you if there are any potential negative impacts from the ‘‘two midnight’’ rule on beneficiaries.

Dr. MILLER. Well, I mean, I think Sean is right, and we would

have anticipated that there would be some decline in the long observation stays. I also think I would say, just before I get into it,

things are a bit on hold, so exactly how these patterns are going

to play out if the ‘‘two midnight’’ rule were fully in play, I am not

sure anybody has got a good handle on.

You could anticipate—you know, somebody said just recently,

there is action and reaction. For example, with the ‘‘two midnight’’

rule, hospitals may decide to hold a patient who is in the inpatient

setting who might be, and let us just say for a minute, a one-day

stay patient, for two days, because then they know that that person

would not be audited, and I do not know whether that is a bad or

a good outcome for an individual patient, but there is that kind of

change.

I think hospitals are also concerned about the two-day, or midnight rule as saying, well, there is going to be much more focus on

one-day inpatient stays. That could drive more into the observation

status, but it is not necessarily the long observation status which

you were talking about just a second ago, so there is some back and

forth that I think that can occur here.

Senator WARREN. Let me focus on one part of this. That is very

helpful. The current three-day inpatient stay required for skilled

nursing facility care to be covered by Part A is certainly a problem,

but we have good data to suggest that there are better ways to do

this. The Partners ACO in Massachusetts has a skilled nursing facility three-day rule waiver which allows doctors to directly admit

patients without any time in the hospital, and the initial data suggests that direct admissions save Medicare about $4,000 per patient due to decreased hospitalizations and better managed care.
14

Let me ask, Dr. Miller, how can risk sharing payment models

like Accountable Care Organizations help reduce the need for

things like the three-day or ‘‘two midnight’’ rule policies and improve care for beneficiaries?

Dr. MILLER. Right. I did not talk about it in my opening comments because of the focus of the hearing, but we have also made

recommendations in the ACO environment, a number of recommendations. Among them, we recommended that if the ACO is

willing to accept two-sided risk, upside and downside risk, then

there is a very different dynamic between the program and the provider in that instance and we said it made sense to waive a lot of

these fee-for-service rules that are really put in place to try and

stop providers who abuse the system, and so, we are on board with

that.

It is just really important—I think you have locked onto it—it

could play out very different if you had it in an open—okay.

Senator WARREN. Okay, good, but thank you very much. You

know, we are all looking for payment policies that will allow Medicare recipients to receive higher quality care at lower costs, and in

the meantime, we need to address this observation status problem.

Seniors need to be notified of their admission status, as Senator

Collins and Senator McCaskill have both said. I agree with them

on this, and CMS needs to implement an auditing system that is

less disruptive, more effective, and I think, as Senator McCaskill

says, far more targeted.

I am willing to work with my colleagues on this Committee and

on the Finance Committee to encourage changes in law, but I also

ask that CMS step up here and use its regulatory authority to

make the changes that MedPAC discussed today and to make them

as quickly as possible. Thank you.

Senator MCCASKILL. Thank you, Senator Warren.

Senator Tillis.

Senator TILLIS. Thank you, Senator McCaskill.

First, I would like to associate myself with your comments on the

RAC Program and trying to get a broader base of audits out of it

versus the cherry picking that would go on today. It makes sense,

based on the rules as they exist today, but that really needs to be

looked at.

I had a question that related to the American Hospital Association. I know they are not a real fan of the ‘‘two midnight’’ policy,

or RACs, in general, and I know that a variety of associations

brought lawsuits last year against the Department. What is your

reaction to their fundamental argument that the clinicians feel like

you are really preventing them from making the best medical decision on the ground for these cases, that they are somehow—they

are subjected to arbitrary limits that are potentially influencing

clinical outcomes?

Mr. CAVANAUGH. We certainly heard that, as you have, Senator.

We take it to heart. It was never our intent to do something that

was contrary to a clinician’s best judgment, and as we indicated in

our inpatient proposed rule this year, we are taking that under advisement and we expect to have more to say on that in our outpatient rule, which will be out in the next couple of weeks.
15

Dr. MILLER. The only thing I would add is the clinicians on the

Commission discussed this and there was decidedly this notion that

we should return to the situation where it is the clinician’s judgment that drives the decision and, generally, with a 24-hour timeframe in deciding whether a patient goes inpatient and outpatient.

I also think the hospitals are concerned about other things, as

well. I mean, they have complained about the documentation that

is associated with the ‘‘two midnight’’ rule, and I also think that

they are concerned that the one-day stays will be less available to

them, because if the two-day stays qualify, they are concerned that

the 1-day stays will be targeted by the RACs, so I do not think that

their objections to the ‘‘two midnight’’ rule are entirely about the

clinician’s judgment.

Senator TILLIS. Thank you.

I had a question on the appeals. It was 474,000, almost a halfa-million, appeals filed, I believe, in 2014. I know in 2015 half of

those came from five appellants, so that probably gives you an idea

of some of the areas where you need to be looking.

What is the success rate of—of the nearly 500,000 that went

through in 2014—I know your processing backlog—how many of

those appeals were successful as a matter of percentage?

Mr. CAVANAUGH. We do—for the RAC Program, specifically, we

do an annual report to Congress, and the most recent report was

for calendar year 2013, and what we found is if you look at the

total universe of cases that RACs had recovered payment for, only

about nine percent of them were ultimately overturned upon appeal.

Senator TILLIS. Okay. That is a very successful—actually, that is

a very successful rate. We were at a Veterans Committee earlier

today and the appeals were in the 50’s and 60 percent range, so

it raised the question about whether or not we were getting it

right.

Mr. CAVANAUGH. Well, just to be transparent, you will hear other

numbers, and what you hear is the subset of all the cases that the

RACs denied, only a subset of those get appealed, so many of them

never go into the appeals process, and if you just look at the subset

that go into appeals, the success rate is somewhat higher. I think

it is around 18 percent, but I will get you the exact number.

The reason you hear different numbers is it depends what universe you start with. The agency thinks the relevant universe is all

the cases that the RAC denied.

Senator TILLIS. Thank you.

Thank you, Madam Chair.

Senator MCCASKILL. Thank you.

Senator Donnelly.

Senator DONNELLY. Thank you, Madam Chair.

Mr. Cavanaugh, I want to learn more about how we can avoid

confusion for beneficiaries. It is pretty difficult to know the distinctions for them between inpatient/outpatient observation statuses,

but there are financial implications, especially if a patient later

needs to go to a skilled nursing facility, so how are patients notified if they are in observation status?

Mr. CAVANAUGH. It varies by hospital. We have worked very

hard with hospitals to encourage them to tell patients early and
16

often and clearly what their status is and what the implications of

that status are, including we have provided sample materials that

hospitals can use to distribute to their patients.

Senator DONNELLY. How does CMS educate beneficiaries on this

issue?

Mr. CAVANAUGH. We have a number of methods to work with

beneficiaries, including the annual ‘‘Medicare and You’’ handbook

we give out. It is difficult for us to work directly with beneficiaries,

but we try to educate them. We have 1–800 where they can call

and ask questions. I think it is more important, though, as several

of your colleagues have raised, that they be educated at the time

when it is most relevant, which is when they are in the hospital.

Senator DONNELLY. Thank you.

Thank you, Madam Chair.

Senator MCCASKILL. Thank you.

This may be better addressed by the next panel, but I do just

have one question. From your perspective, Mr. Cavanaugh, has

CMS looked at the difference between admission status as it relates to observation versus admit for non-Medicare patients in the

same hospitals where Medicare patients are subjected to the ‘‘two

midnight’’ rule?

Mr. CAVANAUGH. No, not to my knowledge.

The CHAIRMAN. It would be fascinating to know that, to see if the

practice is different with patients where there is not a ‘‘two midnight’’ rule, and it would seem to me that would be data that would

be fairly easy to compile. If you are not under the pressure of—is

this going to be audited or not based on one or two days or how

many midnights and it is just a pure clinician decision, are you seeing longer observation stays? Are you seeing shorter observation

stays? Are you seeing observation stays at all in terms of what hospitals are characterizing their admissions? That is a preview for

the next panel of a question I am going to have, so you have time

to think about your answer.

Dr. MILLER. We did not look deeply at this, so I cannot answer

your question in a lot of detail, but when we started off looking at

this, we saw some ramp-up on the private side, as well, so it is not

like the two trends are going in completely opposite directions.

Senator MCCASKILL. Ramp-up in terms of more use of——

Dr. MILLER. More observation.

Senator MCCASKILL. More observations, as opposed to admittances?

Dr. MILLER. Right, but I cannot give you any detail on length,

because you were asking about how long those were for.

Senator MCCASKILL. Right. Okay. Great.

Any other questions for this panel?

The CHAIRMAN. Yes, thank you. If I could just ask one quick

question of both witnesses, and that is I have mentioned that I

think we should be informing beneficiaries of their status so that

they do not get this unexpected bill later. The House has passed

legislation. I have pressed CMS to do it by rule.

One qualm I have is I am wondering if we tell a patient that

they are in observation status whether they are going to get up and

leave prematurely because they are going to be very worried about

the financial implications of staying, and I wonder if either of you
17

has looked at that. Knowing my State as I do, I know there are

seniors who would be so concerned about the potential bill that

they would either ask to be admitted as an inpatient or they would

ask to be discharged immediately, if it would not warrant it.

Dr. MILLER. I do not want to get in your way, but there is a third

outcome, which is that working with the family, the clinicians, the

case managers, you can also plan a different post-acute care discharge strategy, so whether home health or whether somebody goes

to a different institutional setting is also an outcome when somebody is informed that it might affect their skilled nursing facility

eligibility, but I cannot give you any evidence on a given patient,

but that is the other outcome that can occur.

Mr. CAVANAUGH. I think it is a good caution, which is, as several

members of the panel have mentioned, that any action we take

could have unintended consequences. I do have—I have heard

anecdotally, though, through our team that does some of the education, that the more typical response is the patient gets aggressive

in advocating on their own behalf, and that would, I think, be a

beneficial outcome.

The CHAIRMAN. I think so too, and just so my question is not

misinterpreted, I am not suggesting that that information be withheld from patients. I think patients do need to be informed, but I

am concerned that it could lead some patients to not get the care

that they need or not get the diagnosis that they need because they

are worried about the financial implications—or the follow-up care,

for that matter. Thank you.

Senator MCCASKILL. Thank you both for being here. We appreciate it very much.

I would call up the next panel, please, for their testimony.

As I said earlier in my opening remarks, I have introduced all

three of the witnesses. We have Dr. Jeetu Nanda, who is a System

Medical Director for SSM Health in St. Louis, home of the always

perennial competitive St. Louis Cardinals; Spencer Young, who is

President of Health Data Insights in Las Vegas, Nevada; and Tori

Gaetani, who is Director of Care Coordination at Beacon Health in

Brewer, Maine.

Welcome to you all, and we will begin with your testimony, Dr.

Nanda.

STATEMENT OF JYOTIRMAYA ‘‘JEETU’’ NANDA, M.D.,

SYSTEM MEDICAL DIRECTOR, INFORMATICS AND

PHYSICIAN COMPLIANCE, CENTER FOR CLINICAL

EXCELLENCE AND CORPORATE RESPONSIBILITY AT

ST. LOUIS-SSM HEALTH CARE, ST. LOUIS, MISSOURI

Dr. NANDA. Chairman Collins, Senator McCaskill, Senator Tillis,

Senator Whitehouse, and Senator Donnelly, on behalf of the American Hospital Association’s nearly 5,000 member hospitals, health

systems, and other health care organizations, I thank you for the

opportunity to testify today.

I am Dr. Jyotirmaya Nanda, System Medical Director for

Informatics and Physician Compliance at the Center for Clinical

Excellence and Corporate Responsibility at St. Louis-based SSM

Health, which is a Catholic not-for-profit system that is one of the

largest integrated delivery systems in the Nation.
18

Hospitals seek to deliver the right care at the right time in the

right setting. While a complex issue, observation services ultimately reflect the high standard of care and quality regulations to

which hospitals adhere.

The use of observation services has expanded due to many factors, including evolution of medical practice patterns, changes in

Medicare payment policy, activities of Medicare Audit Contractors,

and other Medicare auditors. It is important to note that the distinction between inpatient and observation services is a payment

distinction set forth by CMS. It is not a clinical distinction.

Today, most inpatient admissions are based on a CMS timestamp payment policy and dependent on whether or not the patient

will stay two midnights in the hospital, regardless of what time the

patient presented.

Despite this payment distinction, Medicare beneficiaries who receive observation services commonly receive care in the same hospital rooms as inpatient, and the care delivered is often indistinguishable from inpatient care. As a result, observation status can

be confusing for patients who are physically in the hospital, many

times overnight, and receive tests, procedures, medications, and

nursing care that could never happen in the outpatient clinical setting.

Hospitals are doing their best both to comply with Medicare payment policies and address the confusing and difficult issue of patient status with patients and their families.

SSM has hired dedicated Patient Access Nurses and Case Managers to comb through all the hospital admissions, identify Medicare and Medicaid beneficiaries, and give them printed material

and explanation of what an observation stay is. We have dedicated

physician advisors in each of our hospitals. Eighty percent of their

time is spent determining whether the patient meets the requirements for inpatient admission.

Medicare Contract Auditors and government prosecutors have

made it clear that they believe observation status can serve as a

substitute for inpatient admission in many cases. They continuously second-guess physician judgment, sometimes years after the

patient was seen, and often with additional retrospective information on the patient’s condition, undermining the physician’s medical judgment at the time of admission.

As a result, hospitals are left in an untenable position. On the

one hand, they risk loss of reimbursement, monetary damages, and

penalties from auditors and prosecutors when they admit patients

for short medically necessary inpatient stays. On the other hand,

they face criticism over the perceived use of observation services instead of inpatient admission.

Hospitals must comply with the rules and regulations set forth

by the government and their contractors. Perhaps the largest driver of the increase in observation stays has been the RACs. RACs

are paid on a contingency fee basis, receiving a commission of nine

to 12 percent of the value of claims they deny. The more claims

they deny, the more they profit. Furthermore, RACs are not financially penalized for inappropriate denials that are later overturned

in Medicare appeals system.
19

The Medicare Audit Improvement Act of 2015, introduced by

Representatives Graves and Schiff, would make much needed fundamental changes, including eliminating the contingency fee structure and instead paying RACs a flat fee like every other Medicare

contractor; reducing payments to RACs that are consistently inaccurate and have high appeal overturn rates; fixing CMS’s unfair rebilling rules by allowing hospitals to rebill claims, when appropriate.

In conclusion, the AHA stands ready to work with the Committee

to help develop clear Federal policy on observation status, reform

the RAC Program, and address payment regulations that inhibit

reform efforts. Thank you.

Senator MCCASKILL. Thank you very much.

Mr. Young.

STATEMENT OF SPENCER YOUNG, SENIOR VICE

PRESIDENT, CLINICAL OPERATIONS, HEALTHDATAINSIGHTS,

LAS VEGAS, NEVADA

Mr. YOUNG. Chairman Collins, Ranking Member McCaskill, and

Senator Whitehouse, thank you for the opportunity to testify today

about the work of my company, HealthDataInsights, and the positive impact of recovery auditors on the resources dedicated for the

care of American seniors.

My name is Spencer Young and I serve as the Senior Vice President of Clinical Operations for HealthDataInsights, also referred to

as HDI. HDI is the CMS recovery auditor for Region D, which is

comprised of seventeen western states and three U.S. territories.

As you know, the Recovery Audit Program takes a private sector

approach to recovering improperly paid Medicare claims. Unlike

other contracts in the Medicare integrity field, our work is not focused on fraudulent payments, but instead to ensure compliance

with Medicare billing policies and guidelines.

At the direction of CMS, we focus on some of the most prevalent

types of improper payments. Our role is not to determine CMS or

Medicare policy, but to ensure billing compliance in accordance

with current guidance and regulations.

The funds we recoup from improperly paid claims are returned

directly back to the Medicare Trust Fund, which is critical at a

time when the Medicare fee-for-service program is awash in billing

errors.

According to the GAO, more than $46 billion was lost to waste

and billing errors in 2014 alone, a new all-time high for a program

that has experienced steady increases in improper payment rates

for the past three years. Against this rising tide, the Recovery

Audit Program has recovered nearly $10 billion for Medicare since

2006.

While the recovery auditing has been a great success, recent constraints have decreased the number of reviews and recoveries.

First, under the ‘‘two midnight’’ rule, a moratorium was placed on

claim audits of short inpatient hospital stays from October 2013

until October 2015, creating a two-year period in which the billing

category with the very highest level of improper payments will not

be audited.
20

The cost will be high. Based on historical data, it is estimated

that the short-stay audit moratorium will result in a loss of more

than $8 billion to the Medicare Trust Fund. Congress and taxpayers should be concerned that Medicare providers will be shielded from comprehensive reviews of these claims for an extended period of time.

Another challenge has been the delay in finalizing the new recovery audit contracts, a process that stretches back to February 2013.

It is currently unknown when the contract awards will occur. In

June 2014, CMS suspended the RAC Program pending the award

of new contracts. In August 2014, the program was granted a limited restart. Previously, recovery auditors reviewed more than 800

claim issues. Today, under the limited restart, auditors can review

only a small percentage of those claim issues.

As you know, in addition to identifying improperly overpaid

claims, recovery auditors also identify underpayments. In fact, recovery auditors have returned more than $800 million in underpayments to providers since 2006. We are currently not able to conduct

automated reviews for underpayments, a limitation that has a direct impact on providers.

Audit restrictions have significantly weakened the Recovery

Audit Program. The result is that billions of dollars of improper

payments are not being recovered and restored to the Medicare

Trust Fund. We understand that some of these limitations are a response to provider concerns, but recovery auditors work within a

well defined set of guidelines that ensure a low burden for providers while maximizing the return for taxpayers.

For example, under CMS rules, recovery auditors review no more

than two percent of any provider’s claims and can only examine

specific types of claims determined by CMS. As shown in the chart,

recovery auditors are among the most highly regulated contractors

serving Medicare. According to GAO, recovery auditors are, ‘‘subject to more rules and regulations than any other post-payment

auditor contractor.’’

Even with these limitations, recovery auditors have demonstrated average accuracy rate of more than 95 percent and have

maintained this rate since the program began. Overall, we remain

committed to auditing in a way that is sensitive to the concerns of

all Medicare stakeholders, including providers.

In closing, the ongoing work of recovery auditors is vital if we are

to continue to safeguard public resources for the care of American

seniors.

Thank you again for the opportunity to appear before you today,

and I would be pleased to answer your questions. Thank you.

Senator MCCASKILL. Thank you, Mr. Young.

Ms. Gaetani, please.

STATEMENT OF TORI GAETANI, R.N., DIRECTOR OF

CARE COORDINATION, POPULATION HEALTH, EMHS

BEACON HEALTH, BREWER, MAINE

Ms. GAETANI. Chairman Collins, Ranking Member McCaskill,

and members of the Senate Special Committee on Aging, my name

is Tori Gaetani and I am here today as Director of Care Coordination on behalf of EMHS Beacon Health, our statewide CMS Pioneer
21

Accountable Care Organization. I want to thank Senator Collins for

the opportunity to speak with you today regarding our experience

with the Pioneer ACO waiver of the requirement that Medicare

beneficiaries spend three overnights in an acute care hospital in

order to access the skilled nursing facility benefit.

Beacon Health is now in our fourth year of the five-year pilot

program, caring for nearly 29,000 Medicare beneficiaries, and we

accept both upside and downside risk for ACO Medicare services.

We are proud of our ACO performance, consistently ranking among

the highest quality ACO networks in the country.

In 2014, we were approved by CMMI to participate in the Pioneer ACO waiver program for skilled nursing facility admissions.

The waiver eliminates the three hospital overnight requirement for

beneficiaries and allows us to admit qualified beneficiaries directly

to a skilled nursing facility, or SNF. Thus far, 183 Pioneer patients

and 14 qualified skilled nursing facilities, including swing beds at

four Critical Access Hospitals, participate in our SNF waiver program.

Our participating SNF partners were required to have a quality

rating of three or more stars under the CMS five-star quality rating system as reported on the Nursing Home Compare website, but

have committed to quality of care measures beyond the Nursing

Home Compare reports.

Beacon Health established a care coordinated process for approval of patients to qualify for the SNF waiver admission. We

have nurse care coordinators embedded in all our primary care

practices, as well as transition of care nurses embedded in our hospitals and emergency departments. Pioneer patients can be referred directly from home, a primary care practice, emergency department, or after one or two days’ stay in a hospital, but patients

do have to be medically stable with a confirmed diagnosis, meaning

medical conditions do not require further testing for proper diagnosis. Also, patients must not require inpatient hospital evaluation

or treatment. Patients need to have an identified skilled nursing or

rehabilitation need that cannot be provided as an outpatient or

with home health services.

After medical stability and skilled need is determined, the patient’s primary care provider is contacted for approval of the plan

to transition a patient to a skilled nursing facility. Patients and

families are given a choice of which facility they want to go to. We

offer them a list of fourteen, which encompasses our State.

The coordination of care process does not stop when a patient is

admitted to a SNF facility. Our nurse care coordinators continue

their relationship with SNFs throughout the patient’s length of

stay and then beyond. Since May 2014, 399 Pioneer patients have

been referred to the SNF waiver program. Of those patients, 183

have benefited from the three-day waiver and were admitted to a

SNF. The majority of the patients did not meet the qualifications

were not properly aligned to Beacon Health Pioneer program, however, many were not medically stable, without a skilled need, or appropriate for home care services outpatient services.

If you consider from a financial point of view, we are providing

a significant cost savings for Medicare. According to the AHRQ, an

average hospital stay costs $2,300 a day, and according to
22

MedPAC, the average SNF cost per day is between $450 and $500.

One patient who avoided three nights in the hospital could save

Medicare costs of approximately $5,500.

What does this mean for beneficiaries? For Mr. Smith, an 86-

year-old gentleman who was living with his wife at home, it meant

a better quality of life. Mr. Smith had found himself in a local

emergency department for weakness and falls at home. The emergency department assessed him, sent Mr. Smith back home with

home care services for physical and occupational therapy.

However, Mr. Smith continued to fall at home. The primary care

practice made outreach to Mr. Smith, asked him to come in for a

visit. Mr. Smith and his family came in for his appointment. When

his provider saw that general overall physical decline was present

with increased weakness which was leading to the frequent falls,

Mr. Smith, his family, and the provider agreed for the patient to

spend some time in a nursing skilled facility for more intensive rehabilitation.

The family took Mr. Smith to the SNF of his choice, where he

stayed and participated in therapy for thirteen days. Mr. Smith returned home to his wife with outpatient services. Since Mr. Smith’s

discharge from SNF in March, he has had no falls, met his therapy

goals, and remains living independently at home with his wife. Mr.

Smith was never admitted to the hospital. He got the appropriate

level of care directly after a visit with his primary care provider.

The health care world calls it achieving the triple aim. Beacon

Health sees it more as doing what is right for our patients.

In conclusion, we strongly urge the Senate Special Committee on

Aging to recommend to Congress to eliminate the three hospital

overnight requirement as antiquated and an artificial barrier for

Medicare beneficiaries to access the skilled level of care needs.

Trust us to know what is best for our patients and allow us to provide them with the level of care they need to go back to living their

lives. Thank you.

Senator MCCASKILL. Thank you very much. We appreciate all of

you.

Let me start with Dr. Nanda, so you indicated in your testimony

very clearly the distinction between inpatient and observation services, the payment distinction set forth by CMS, not a clinical distinction, and I think when you all visited my office a few weeks

ago, one of the physicians explained to me that it is a case or utilization manager who is often making the decision about whether or

not a patient is admitted or not. Is that true with all patients, Dr.

Nanda, or just Medicare patients?

Dr. NANDA. It is Medicare patients, because the managed care

Medicare as well as commercial, it is a contract issue, so that is

driven by contacts and not by CMS regulations.

Senator MCCASKILL. Explain that. That was not clear to me.

Dr. NANDA. Okay.

Senator MCCASKILL. Or maybe I do not understand the terminology, so let us say I come in.

Dr. NANDA. Sure.

Senator MCCASKILL. I have got a private insurance policy. For all

the haters out there, I pay for it myself.
23

I have to go to the emergency room for something. Who makes

the decision whether or not my status is observation or whether I

am admitted?

Dr. NANDA. If you have commercial insurance, it does not matter,

because——

Senator MCCASKILL. It does not matter?

Dr. NANDA. It does not matter, because there is a contracted rate

with your commercial insurance.

Senator MCCASKILL. For every day I am there, regardless of

whether you are observing or whether you are admitting.

Dr. NANDA. Absolutely. Absolutely.

Senator MCCASKILL. Okay, but for Medicare, it matters.

Dr. NANDA. Yes.

Senator MCCASKILL. For Medicare, if I am on Medicare, a utilization manager is going to make that decision.

Dr. NANDA. Utilization manager in collaboration with the physician advisor and the attending physician.

Senator MCCASKILL. It says that the distinction is just a payment distinction, so what difference does it make? Why would a

doctor even be involved?

Dr. NANDA. The CMS regulations say that the doctor’s order has

to be there, right, so the doctor has to be involved because it is a

complex medical decision that is to be made by a physician, the inpatient decision, so the doctor’s order has to be there. The only way

that you can overturn or go above the physician is if two utilization

management physicians agree to make it observation or inpatient.

Now, when it is changed——

Senator MCCASKILL. I am confused.

Dr. NANDA. Okay.

Senator MCCASKILL. Is the doctor making this decision or is a

utilization manager making this decision?

Dr. NANDA. The doctor has to agree to the decision.

Senator MCCASKILL. Okay.

Dr. NANDA. The utilization managers can recommend.

Senator MCCASKILL. Okay. As clear as mud, I think.

Dr. NANDA. Precisely.

Senator MCCASKILL. If there is no difference in the treatment

and there is no difference in what happens, then why do we need

time constraints at all?

Why did observation stays get so long? Were they more profitable

under Medicare?

Dr. NANDA. Length of observation—so, in the previous testimony,

it is a time-base thing, but also, there is medical necessity, quoteunquote. That medical necessity is the problem.

I will give you an example. Last weekend, I worked in the hospital, got a patient who has advanced Parkinson’s, falls all the

time. He is 89 years old, but we patched up his lacerations and

gave him his home medications. There was not a whole lot for us

to do. That patient was admitted as observation. If I changed that

patient to inpatient and keep him three days so that he can go to

a nursing home, if that admission gets denied, the whole nursing

home part also gets denied and the patient is stuck with that bill,

so I keep the patient observation. Does not qualify for SNF. I send

the patient home to come back after a greater injury.
24

Senator MCCASKILL. Okay. The Medicare only applies in the

SNF for 100 days, right?

Dr. NANDA. Yes.

Senator MCCASKILL. Medicare does not pay for long-term skilled

nursing.

Dr. NANDA. Right. Right.

Senator MCCASKILL. What we are really talking about is whether

or not—we are going through all these machinations when we are

really just talking about 100 days, right?

Dr. NANDA. The 100 days may be all the patient needs to get

rehabbed, medication adjusted in a different setting than in the

acute hospital setting.

Senator MCCASKILL. Right. Okay.

Mr. Young, why can we not do this on a—proper site care be

done on a prepayment basis?

Mr. YOUNG. It is just a matter of whether or not they want it

to be done on a prepayment basis. The technology is there and the

commercial——

Senator MCCASKILL. And ‘‘they,’’ you are referring to CMS?

Mr. YOUNG. That is correct. In the commercial space where we

perform these services, we do perform them on a prepayment basis.

Senator MCCASKILL. Okay, and then, my last question, before my

colleagues have an opportunity, you know, I am on the Armed

Services Committee, so I am fairly used to now all of the acronym

thing, but we have got RACs, we have got ZPICs, we have got

QWIKs, we have got CERTs, on and on and on, and by the way,

this is all in the same space. Should we not, like, make this a little

simpler? I mean, is there really a rational basis for all of these different categories, and all of them have different sets of rules and

guidelines. It is almost like somebody over there decided, I am in

charge of making this as complex and as confusing as possible.

Mr. YOUNG. I think everybody is just looking at different things

and that is why they have the different types of contractors, and

everybody is focused on something different. For example, a ZPIC

is really focused on fraud and abuse, whereas a RAC is really only

focused on is it billed in accordance to Medicare guidelines, so you

do not have one contractor that is doing the whole spectrum.

Senator MCCASKILL. Would it not be more efficient if we crosstrained everybody and said, we are going to put you on a contingency basis, but we are also going to ding you if it turns out you

are wrong, and just let them loose?

Mr. YOUNG. It could be.

Senator MCCASKILL. Yes. I think it would be.

Mr. YOUNG. It is very possible.

Senator MCCASKILL. I think it would be. Okay.

Senator Whitehouse.

The CHAIRMAN. No, I have——

Senator MCCASKILL. Oh, I am sorry.

Oh, yes, the Chairman. I keep forgetting about you.

The CHAIRMAN. Just because I turned the gavel over——

Senator MCCASKILL. I know.

The CHAIRMAN. [continuing]. for one hearing——

Senator MCCASKILL. Can you tell how much I like this?

The CHAIRMAN. I can.
25

Senator MCCASKILL. Senator Collins, I am so sorry.

Senator WHITEHOUSE. You have just got to be very careful.

The CHAIRMAN. No good deed goes unpunished, right?

Senator MCCASKILL. That is exactly right.

The CHAIRMAN. Exactly.

Ms. Gaetani, first of all, let me thank you for coming down from

Bangor to share with us—or from Brewer, I guess I should say—

to share with us the experience of Beacon Health in exercising this

waiver that means that your patients do not have to have three

days in the hospital before being admitted to a skilled nursing facility, and from what you have told me, it seems that your experience, which is four years now, I believe you said, is that correct?

Ms. GAETANI. In the Pioneer pilot. We have had since March

2014 with experience with the SNF waiver.

The CHAIRMAN. Okay.

Ms. GAETANI. One year.

The CHAIRMAN. One year, sorry. In the past year, you have already shown better outcomes for your patients as well as reduced

cost savings, is that an accurate summary?

Ms. GAETANI. That is a very accurate summary.

The CHAIRMAN. Does your experience lead you to believe that we

could eliminate the three-day rule without there being a huge increase in Medicare costs?

Ms. GAETANI. It is my assumption and belief that there would

not be a huge tidal wave of volume of patients that are seeking

SNF level of care because there still is the eligibility requirements,

which are clinically based, based on a skilled nursing need or rehabilitation need. I do anticipate there would be increased utilization,

not a tidal wave of influx. However, by reducing the barrier of the

three-night requirement, patients are allowed then to receive the

appropriate level of care that they need.

The CHAIRMAN. As in the case of Mr. Smith, whom you described,

he was able to return home fairly quickly because you were able

to get him the skilled nursing care that he needed in a facility, is

that accurate?

Ms. GAETANI. Yes, it is.

The CHAIRMAN. If you combine the fact that hospital care is very

expensive with the fact that you are able to get your patient the

appropriate level of care sooner without going through artificial

barriers, it seems to me that you not only improve the quality of

care, but that in the end, you are likely to lower the cost, as well.

Ms. GAETANI. I think you are spot on with that statement. It is

also—you receive a short-term savings of the immediate costs of

not having that three-night experience, but there are long-term effects to that, as well. By providing patients the appropriate level

of care, they are able to live their lives in the healthiest way possible. A majority of them want to live safely in their homes.

The CHAIRMAN. Absolutely. That is always the preference, is for

people to be safely in the privacy, security, and comfort of their

own homes, and it seems to me that your program shows that

there are reforms that are possible to produce that better outcome,

and I really appreciate the experience and your sharing it with us

today.

Ms. GAETANI. Thank you.
26

The CHAIRMAN. Dr. Nanda, I want to follow-up on an intriguing

question that occurred to me when you were having your exchange

with the temporary Chairman of this Committee, that is, it seems

to me that an individual—if you took two individuals who were

equally sick, that there could be different decisions made on whether or not to admit them as inpatients based on the source of payment for their care. Is that a fair conclusion on my part?

Dr. NANDA. Yes and no. Yes, because it is possible to get different classifications, but no, because if the patient has commercial

insurance, the beneficiary does not get stuck with a higher copay

or, you know, there is no financial implication to a person who has

commercial insurance, whereas—and that is contract, basically. If

they have a deductible, it is their deductible. For a Medicare beneficiary, there is, and as Senator McCaskill said, it can be thousands

of dollars because there is no limit on that 20 percent in observation. Inpatient is limited, so yes, I mean, there can be a huge difference.

The CHAIRMAN. If they—and if the hospital is going to get dinged

through a recovery audit that finds that the person should not have

been admitted, and yet if the person has private insurance that is

not going to occur, it seems difficult to conclude other than that

that could influence the decision of the utilization manager and the

physician in a close case.

Dr. NANDA. For a physician, usually, we have no clue what their

insurance is. When a patient comes in——

The CHAIRMAN. You have no clue as to—I am sorry——

Dr. NANDA. As the patient’s insurance, what insurance the patient carries, because we are looking at the clinical aspect. We are

treating them medically. It is the case managers that look and inform us later on that it is Medicare or it is commercial.

The CHAIRMAN. You testified that it is the utilization manager

that makes the recommendation——

Dr. NANDA. Right.

The CHAIRMAN. That has to be concurred in by the provider, by

the physician, and, thus, the person who is making the recommendation does know the source of the insurance——

Dr. NANDA. Yes——

The CHAIRMAN. [continuing]. and whether it is Medicare or private, correct?

Dr. NANDA. Agreed. It is the attending physician that does not

know.

The CHAIRMAN. Thank you.

Senator MCCASKILL. Now, Senator Whitehouse.

Senator WHITEHOUSE. Thank you. This is a great hearing.

As I understand it, the distinction between the observation and

inpatient admission has very significant ramifications for the patient’s payment, both in-hospital and in post-acute care afterwards,

and I think it is everybody’s sense, at least on this panel, that

those effects on payment do not necessarily make a lot of sense.

Dr. Nanda, do you also believe that it can have an effect—this

follows a little bit on Senator Collins’ question—that that distinction can have an effect on care? Would care change at all in hospitals if the distinction were eliminated?
27

Dr. NANDA. No. I do not believe care is really affected by the status of the patient. The observation patient gets just as much care.

They are in the same hallway, same room, same nurses taking care

of observation or inpatient.

Senator WHITEHOUSE. Let me ask it a different way. Are doctors

aware enough of this predicament in the funding law that when

they have a patient who might qualify for post-acute care if they

were in for three days, that they will give them the extra day to

make sure that they qualify rather than force a discharge? Are doctors sensitive at that decision point that if they give them, it could

even be just a few extra hours, it could have a huge difference in

their lives as to the post-acute part of their care?

Dr. NANDA. I will answer this with tongue in cheek. Yes, because

we live in the same community that our patients live. The patient

that I may deny one day may be the grandparent of my daughter’s

classmate. We live in the same—so, do we do a couple of hours?

I am sure it happens.

Senator WHITEHOUSE. I do not fault you for that. I think it would

be——

Dr. NANDA. Yes. No, I am sure it happens.

Senator WHITEHOUSE [continuing]. cruel not to in some cases,

particularly given the uncertainties about exactly when the right

moment of discharge is.

Dr. NANDA. Absolutely, because—so, if a patient comes in at

11:55 at night——

Senator WHITEHOUSE. Versus 12:05——

Dr. NANDA [continuing]. versus if he comes in at 12:05, there is

a difference. That is one midnight, which is——

Senator WHITEHOUSE. Crazy.

Dr. NANDA [continuing]. kind of ridiculous.

Senator WHITEHOUSE. Yes. Ms. Gaetani, first of all, congratulations to you and to your organization on having undertaken and

persisted at and succeeded at the Pioneer ACO effort. I know that

not every participant made it through, and for those that did, it

has been a real success. It has been the first broad adoption

through the Innovation Center, and what people did across the

country in the Pioneer ACOs to make that work and to make those

changes was really impressive, so as a general proposition, congratulations and well done and thank you.

Ms. GAETANI. Thank you.

Senator WHITEHOUSE. On this, it really seems like there was a

wall between you and Nanda and Dr. Young, in which they were

living in a world of artifice and nonsense and arbitrary distinctions,

not from their own fault, just that is the world that they are in,

but when you had the waiver, everything you said was about the

well-being of the patient, and the ability to make sure that each

patient in his or her own way got the right care was really quite

impressive, so I hope that more and more people will take advantage of these waivers. If somebody somewhere else is looking at trying to follow your path, do you have any encouragement, or do you

have any particular warnings of bumps in the road that they

should be alert to, because it seems like the right way to go.

Ms. GAETANI. I have nothing but encouragement, as, just as you

have said, that I believe that is the right thing to do, because of
28

the fact what we did have to put in place was really create a structure around the process. There needs to be, with all transitions of

care, whether it be to a SNF level of care or to home care services,

there needs to be a coordinated care effort involved in transitions

of care that includes the provider, includes the health care team,

and there has to be along with that a level of accountability, and

quality needs to be a big piece of that process, as well. I would encourage anyone to——

Senator WHITEHOUSE. It is an up-front effort and an up-front investment to put that system in, but once you have done it, it is

worth it.

Ms. GAETANI. Absolutely.

Senator WHITEHOUSE. Thank you.

Senator MCCASKILL. Thank you, Senator Whitehouse.

Committee members have until Friday, June 5th, to submit questions for the record, and the one question I would submit to Dr.

Nanda and to my friends at all of the hospitals in Missouri that

I talk to frequently—I am very proud, by the way, of the hospitals

in Missouri. I think you all do a great job, but I really want you

to look at reforms that we could make in the RAC program that

would not go as far as some of the legislation that you have suggested.

I think if we went to no contingency and just a flat fee, you take

away the incentive for them to ferret out people who are abusing

the system, and we know they are out there. We know we have lots

of medical providers in this country that are taking advantage of

a very bureaucratic system and they have figured out a way—I

mean, I do not need to tell you. You all follow the stories in the

press. We have had a lot of cases in Missouri of Medicare fraud and

abuse and waste.

Things that maybe are a little short of going that far. I mean,

I get it that maybe dinging them—and I would like to have more

information on the appeal process.

Dr. NANDA. Sure.

Senator MCCASKILL. I know you all are appealing everything,

and maybe we could figure out a way to streamline the appeal

process, move these decisions much more close in time to the point

in time that the decisions were actually made. I think that is a

very valid concern.

I think there are a lot of things that need to get fixed here, and

I especially would like the input of the hospitals about the recommendations that have been made by MedPAC to change the

RAC system in ways that sound like, to me, a lot of them make

a lot of sense. It sounds like, to me, they are well thought out, and

if you have got any big problems, Mr. Young, with the recommendations MedPAC is making, that you think are going to be

unworkable, I think it would be helpful for this Committee to hear

from you in that regard, also.

Mr. YOUNG. Okay.

Senator MCCASKILL. You keep doing what you are doing, and

hopefully, if these ACOs keep going as well as they are going

across the country, I think that will be a model where we are lining

up incentives in the right place, and I do think, going forward, that

these ACOs are really our best hope to handling our generation
29

and the costs that will be associated with our generation as we all

move into the Medicare system.

Yes, Dr. Nanda.

Dr. NANDA. May I make just—I just wanted to clarify that the

physician actually does make that decision in consultation with utilization management, number one.

Number two, you had brought a concern in the previous panel.

We at SSM make sure that any observation patient does have all

the information about the observation status, and that is documented in the chart. When we do not find that documentation in

the chart, we do not bill that.

Senator MCCASKILL. Okay. Great. Well, I know that, sometimes,

people are not told, because my husband was not in a hospital in

Missouri, but rather in the hospital here in the D.C. area, and I

could not figure out why they were releasing him, because it did

not seem like, to me, he was ready to go, and they did, and they

did not have to worry about a readmittance because he ended up

being admitted in St. Louis when we got home and was in the hospital for ten days, and I think that is a great example of how this

turns out in practice.

Thank you all for being here very much, and thank you, Senator

Collins, for giving me the opportunity to remember how it was in

the good old days.

The Committee is adjourned.

[Whereupon, at 3:50 p.m., the Committee was adjourned.]

APPENDIX

Prepared Witness Statements

35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
Questions for the Record

91
92
93
94
95
96Æ