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| <title> - THE PRESIDENT'S AND OTHER BIPARTISAN PROPOSALS TO REFORM MEDICARE</title> | |
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| [House Hearing, 113 Congress] | |
| [From the U.S. Government Publishing Office] | |
| THE PRESIDENT'S AND OTHER BIPARTISAN | |
| PROPOSALS TO REFORM MEDICARE | |
| ======================================================================= | |
| HEARING | |
| BEFORE THE | |
| SUBCOMMITTEE ON HEALTH | |
| OF THE | |
| COMMITTEE ON WAYS AND MEANS | |
| U.S. HOUSE OF REPRESENTATIVES | |
| ONE HUNDRED THIRTEENTH CONGRESS | |
| FIRST SESSION | |
| __________ | |
| MAY 21, 2013 | |
| __________ | |
| Serial No. 113-HL04 | |
| __________ | |
| Printed for the use of the Committee on Ways and Means | |
| [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] | |
| U.S. GOVERNMENT PUBLISHING OFFICE | |
| 21-107 WASHINGTON : 2016 | |
| ________________________________________________________________________________________ | |
| For sale by the Superintendent of Documents, U.S. Government Publishing Office, | |
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| COMMITTEE ON WAYS AND MEANS | |
| DAVE CAMP, Michigan, Chairman | |
| SAM JOHNSON, Texas SANDER M. LEVIN, Michigan | |
| KEVIN BRADY, Texas CHARLES B. RANGEL, New York | |
| PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington | |
| DEVIN NUNES, California JOHN LEWIS, Georgia | |
| PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts | |
| DAVID G. REICHERT, Washington XAVIER BECERRA, California | |
| CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas | |
| PETER J. ROSKAM, Illinois MIKE THOMPSON, California | |
| JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut | |
| TOM PRICE, Georgia EARL BLUMENAUER, Oregon | |
| VERN BUCHANAN, Florida RON KIND, Wisconsin | |
| ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey | |
| AARON SCHOCK, Illinois JOSEPH CROWLEY, New York | |
| LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania | |
| ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois | |
| KENNY MARCHANT, Texas LINDA SANCHEZ, California | |
| DIANE BLACK, Tennessee | |
| TOM REED, New York | |
| TODD YOUNG, Indiana | |
| MIKE KELLY, Pennsylvania | |
| TIM GRIFFIN, Arkansas | |
| JIM RENACCI, Ohio | |
| Jennifer M. Safavian, Staff Director and General Counsel | |
| Janice Mays, Minority Chief Counsel | |
| ______ | |
| SUBCOMMITTEE ON HEALTH | |
| KEVIN BRADY, Texas, Chairman | |
| SAM JOHNSON, Texas JIM MCDERMOTT, Washington | |
| PAUL RYAN, Wisconsin MIKE THOMPSON, California | |
| DEVIN NUNES, California RON KIND, Wisconsin | |
| PETER J. ROSKAM, Illinois EARL BLUMENAUER, Oregon | |
| JIM GERLACH, Pennsylvania BILL PASCRELL, JR., New Jersey | |
| TOM PRICE, Georgia | |
| VERN BUCHANAN, Florida | |
| ADRIAN SMITH, Nebraska | |
| C O N T E N T S | |
| __________ | |
| Page | |
| Advisory of May 21, 2013 announcing the hearing.................. 2 | |
| WITNESSES | |
| Joseph R. Antos, Ph.D., Wilson H.Taylor Scholar in Health Care | |
| and Retirement Policy, American Enterprise Institute........... 6 | |
| Joe Baker, President, Medicare Rights Center..................... 24 | |
| Alice M. Rivlin, Ph.D., Co-Leader, Bipartisan Policy Center | |
| Health Care Cost Containment Initiative, Senior Fellow, | |
| Economic Studies, Brookings Institution........................ 15 | |
| SUBMISSIONS FOR THE RECORD | |
| AARP, statement.................................................. 59 | |
| AFSCME, statement................................................ 63 | |
| Alliance for Retired Americans, statement........................ 66 | |
| American Association of Bioanalysts, statement................... 69 | |
| Center for Medicare Advocacy, statement.......................... 71 | |
| National Association for Home Care & Hospice, statement.......... 82 | |
| National Association of Chain Drug Stores, statement............. 93 | |
| National Committee to Preserve Social Security and Medicare, | |
| statement...................................................... 98 | |
| Pam Casper, statement............................................ 100 | |
| Partnership for Quality Home Healthcare, statement............... 102 | |
| Partnership for the Future of Medicare, statement................ 109 | |
| Robert N. Young, statement....................................... 112 | |
| Shannon Dwyer, statement......................................... 116 | |
| St. Joseph Health, statement..................................... 117 | |
| Texas Association for Home Care and Hospice, statement........... 119 | |
| Torchmark Corporation, statement................................. 121 | |
| United Auto Workers, statement................................... 124 | |
| United Steelworkers, statement................................... 127 | |
| Virginia Association for Home Care and Hospice, statement........ 131 | |
| Visiting Nurse Associations of America, statement................ 133 | |
| THE PRESIDENT'S AND OTHER BIPARTISAN | |
| PROPOSALS TO REFORM MEDICARE | |
| ---------- | |
| TUESDAY, MAY 21, 2013 | |
| U.S. House of Representatives, | |
| Committee on Ways and Means, | |
| Subcommittee on Health, | |
| Washington, DC. | |
| The Subcommittee met, pursuant to call, at 10:03 a.m., in | |
| Room 1100, Longworth House Office Building, Hon. Kevin Brady | |
| [Chairman of the Subcommittee] presiding. | |
| [The advisory announcing the hearing follows:] | |
| ADVISORY | |
| FROM THE COMMITTEE ON WAYS AND MEANS | |
| SUBCOMMITTEE ON HEALTH | |
| CONTACT: (202) 225-3943 | |
| FOR IMMEDIATE RELEASE | |
| Tuesday, May 14, 2013 | |
| No. HL-04 | |
| Chairman Brady Announces Hearing on | |
| the President's and Other Bipartisan | |
| Proposals to Reform Medicare | |
| House Committee on Ways and Means, Subcommittee on Health Chairman | |
| Kevin Brady (R-TX) today announced that the Subcommittee on Health will | |
| hold its first in a series of hearings to explore the bipartisan | |
| proposals, including those contained in President Obama's Fiscal Year | |
| 2014 Budget to reform Medicare. This hearing will focus on review of | |
| proposals to change cost-sharing for services received under the | |
| Medicare program. The hearing will take place on Tuesday, May 21, 2013, | |
| in 1100 Longworth House Office Building, beginning at 10:00 a.m. | |
| In view of the limited time available to hear from witnesses, oral | |
| testimony at this hearing will be from invited witnesses only. However, | |
| any individual or organization not scheduled for an oral appearance may | |
| submit a written statement for consideration by the Committee and for | |
| inclusion in the printed record of the hearing. A list of witnesses | |
| will follow. | |
| BACKGROUND: | |
| Created in 1965, the Medicare benefit was originally modeled on the | |
| Blue Cross Blue Shield plans that were prevalent throughout the Nation | |
| at that time. However, since its creation, Medicare's cost-sharing has | |
| been largely unchanged and has not kept up with changes in the growth | |
| of the Medicare population or how health care is delivered. The current | |
| Medicare spending trajectory is unsustainable and has led the Medicare | |
| trustees to estimate that the Part A trust fund will be bankrupt in | |
| 2023 and insolvent in 2024. The Medicare Health Insurance (HI) trust | |
| fund has not met the trustee's formal test of short-range financial | |
| adequacy since 2003. The Supplemental Medical Insurance (SMI) trust | |
| fund is considered adequately financed, however, this is a result of | |
| the SMI trust fund being reliant on general revenue transfers. By 2037, | |
| the Medicare trustees estimate general revenue transfers will account | |
| for 56 percent of Medicare outlays. | |
| To address these and other concerns, the Obama Administration has | |
| identified several key policies to modify cost-sharing within the | |
| Medicare program. In the President's FY14 budget, the Administration | |
| focused on three key cost-sharing policies: (1) increasing income- | |
| related premiums for Medicare Parts B and D; (2) increasing the annual | |
| Medicare Part B deductible; and (3) establishing a home health copay. | |
| The President's FY14 budget estimates that these three policies will | |
| save $54 billion over 10 years. In addition to the President's budget, | |
| several other bipartisan policy organizations, such as the Bipartisan | |
| Policy Center, The Moment of Truth project, and the Medicare Payment | |
| Advisory Commission, have collectively made recommendations to alter | |
| Medicare's cost-sharing policies as a means of extending the longevity | |
| of the program. | |
| In announcing the hearing, Chairman Brady stated, ``The current | |
| Medicare spending trajectory is unsustainable. There is bipartisan | |
| recognition that modifying seniors' cost-sharing is appropriate and can | |
| be done in a way that maintains access to critical healthcare services. | |
| Medicare is fast going broke and the time to act to save this program | |
| is now.'' | |
| FOCUS OF THE HEARING: | |
| The hearing will review policies that modify beneficiary cost- | |
| sharing within the Medicare program. | |
| DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: | |
| Please Note: Any person(s) and/or organization(s) wishing to submit | |
| for the hearing record must follow the appropriate link on the hearing | |
| page of the Committee website and complete the informational forms. | |
| From the Committee homepage, http://waysandmeans.house.gov, select | |
| ``Hearings.'' Select the hearing for which you would like to submit, | |
| and click on the link entitled, ``Click here to provide a submission | |
| for the record.'' Once you have followed the online instructions, | |
| submit all requested information. ATTACH your submission as a Word | |
| document, in compliance with the formatting requirements listed below, | |
| by the close of business on Tuesday, June 4, 2013. Finally, please note | |
| that due to the change in House mail policy, the U.S. Capitol Police | |
| will refuse sealed-package deliveries to all House Office Buildings. | |
| For questions, or if you encounter technical problems, please call | |
| (202) 225-1721 or (202) 225-3625. | |
| FORMATTING REQUIREMENTS: | |
| The Committee relies on electronic submissions for printing the | |
| official hearing record. As always, submissions will be included in the | |
| record according to the discretion of the Committee. The Committee will | |
| not alter the content of your submission, but we reserve the right to | |
| format it according to our guidelines. Any submission provided to the | |
| Committee by a witness, any supplementary materials submitted for the | |
| printed record, and any written comments in response to a request for | |
| written comments must conform to the guidelines listed below. Any | |
| submission or supplementary item not in compliance with these | |
| guidelines will not be printed, but will be maintained in the Committee | |
| files for review and use by the Committee. | |
| 1. All submissions and supplementary materials must be provided in | |
| Word format and MUST NOT exceed a total of 10 pages, including | |
| attachments. Witnesses and submitters are advised that the Committee | |
| relies on electronic submissions for printing the official hearing | |
| record. | |
| 2. Copies of whole documents submitted as exhibit material will not | |
| be accepted for printing. Instead, exhibit material should be | |
| referenced and quoted or paraphrased. All exhibit material not meeting | |
| these specifications will be maintained in the Committee files for | |
| review and use by the Committee. | |
| 3. All submissions must include a list of all clients, persons and/ | |
| or organizations on whose behalf the witness appears. A supplemental | |
| sheet must accompany each submission listing the name, company, | |
| address, telephone, and fax numbers of each witness. | |
| The Committee seeks to make its facilities accessible to persons | |
| with disabilities. If you are in need of special accommodations, please | |
| call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four | |
| business days notice is requested). Questions with regard to special | |
| accommodation needs in general (including availability of Committee | |
| materials in alternative formats) may be directed to the Committee as | |
| noted above. | |
| Note: All Committee advisories and news releases are available on | |
| the World Wide Web at http://www.waysandmeans.house.gov/. | |
| --------- | |
| Chairman BRADY. Subcommittee will come to order. I want to | |
| welcome everyone to today's hearing on the President's budget | |
| and other bipartisan proposals to reform Medicare. This is the | |
| fourth hearing for our Subcommittee this Congress, and the | |
| second Ways and Means Committee hearing in a series focused on | |
| proposals to reform Medicare and Social Security. During our | |
| first hearing of Congress we focused on redesigning the | |
| Medicare benefit package to make it more rational, more | |
| responsive to seniors and Medicare patients. Today's discussion | |
| is an extension of that hearing discussing the details around | |
| these three specific policies: | |
| One, increasing income-related premiums for Medicare Parts | |
| B and D; two, increasing annual Medicare Part B deductibles, | |
| and three, establishing a home health copay. We focused on | |
| these three policies because they are included in the | |
| President's 2014 budget and supported by several bipartisan | |
| organizations. All too often recently, discussions surrounding | |
| finding Medicare savings have come under the context of a | |
| ``grand bargain'' or a ``super committee.'' As the committee of | |
| jurisdiction over these critical topics, we have an obligation | |
| to discuss them publicly and determine how best to craft policy | |
| in these areas. That is why we are holding this hearing today. | |
| The President's budget estimates that these three policies | |
| will save $54 billion over 10 years. These are real savings for | |
| a program that is facing bankruptcy in 10 short years. Asking | |
| seniors to pay more when they have the means to do so is not a | |
| new concept. In 2003, Republicans led the charge with income- | |
| related premiums for Medicare Part B in the Medicare | |
| Modernization Act, which ensured that seniors have access to | |
| accessible, affordable, high-quality medicines through free | |
| market competition for their business. | |
| In 2010, Democrats included income-related premiums in the | |
| Medicaid program, Health Exchanges, and increases for Medicare | |
| Part D in the Affordable Care Act, known as ObamaCare. | |
| Throughout Federal programs, there has been recognition that | |
| some seniors can contribute more and some seniors need | |
| additional assistance. The growth of the retiree population has | |
| been and will continue to be a tremendous source of stress on | |
| Medicare's finances. | |
| When Medicare was enacted in 1965, the average life | |
| expectancy was 70.2 years. It was anticipated that Medicare | |
| would cover an average person's health expenditures for the | |
| last 5.2 years of their life. In 2010, the average American | |
| lived to the age of 78.4, which means Medicare covered the last | |
| 13.5 years of life, a 158 percent increase. Yet, we have not | |
| made changes to the Medicare benefit structure to address this | |
| increase. | |
| Now, I know that some may want to reject these policies out | |
| of hand and may suggest that the overall Medicare spending for | |
| seniors has decreased. They may contend that this means there | |
| is less of a need to find Medicare savings. But I, too, am glad | |
| to see Medicare spending is down, but the program is headed | |
| toward bankruptcy in 10 short years. Burying our heads in the | |
| sand and waiting for the looming crisis to overwhelm us will | |
| only force future Congresses to take more drastic measures. | |
| Even the Medicare trustees recognize the growing challenges | |
| of Medicare's financial future as the baby boomers enter | |
| Medicare. Even if per-senior spending decreases, that will not | |
| help the sustainability of the trust fund when the number of | |
| new seniors coming into the program begins to dramatically | |
| increase. | |
| And simply cutting providers is not the answer. In fact, | |
| the Medicare trustees warn because of cuts already in law, 15 | |
| percent of our Part A providers will be unprofitable by the end | |
| of this decade. Roughly 40 percent would be unprofitable by | |
| 2050. The actuaries warn that these cuts will force providers | |
| to withdraw from providing services to our Medicare seniors and | |
| patients. | |
| Finally, instead of simply focusing on how much money a | |
| policy might save Medicare or how many more beneficiaries will | |
| pay more, I challenge this Committee and our witnesses today to | |
| think differently. The question we should be asking ourselves | |
| is, how can we act now, this year, to extend Medicare solvency? | |
| If not permanently, how about for an additional 10 years beyond | |
| 2023? Why not extend its life an additional 20 years? We owe it | |
| to current and future seniors to examine and pursue these | |
| critical goals. It will require hard decisions, yes. But making | |
| them now will ensure a vibrant Medicare for generations to | |
| come. | |
| Before I recognize Ranking Member McDermott for the | |
| purposes of an opening statement, I ask unanimous consent that | |
| all Members' written statements be included in the record. | |
| Without objection, so ordered. | |
| I now recognize Ranking Member McDermott for his opening | |
| statement. | |
| Mr. MCDERMOTT. Thank you, Mr. Chairman. | |
| There was a time in the Congress when the procedure was | |
| that the President proposed and the Congress disposed. And so I | |
| would just put a caveat on anything that has been proposed by | |
| the White House that that is not holy writ brought down from | |
| the mountain by Moses. That is to be looked at by the Congress | |
| and we will make a decision. | |
| The Majority keeps holding hearings on supposedly | |
| bipartisan reform ideas, but over and over it is the same song: | |
| Cut the benefits, shift the costs to the poor and the elderly. | |
| These reforms were offered by the President in a spirit of a | |
| grand, balanced bargain. That package has shared sacrifice and | |
| included some spending cuts and revenue increases, but when it | |
| is cherry picked, when you catch the low-hanging fruit, they | |
| are nothing more than partisan cuts. How many times and how | |
| many ways can we rehash the same old idea? We have been trying | |
| to get blood from a stone. | |
| Fifty percent of the Medicare beneficiaries in this country | |
| have annual incomes at or below $22,500. Our seniors, our | |
| parents, our grandparents, 50 percent of them are living barely | |
| above the poverty line. They should not be our go-to source for | |
| savings. | |
| We are long overdue on fixing the physician payment system | |
| and I sincerely hope we can work in a bipartisan way to do it. | |
| In particular, we need to address inequities in payment for | |
| primary care physicians, and we need to do it in a way that | |
| encourages the most efficient delivery of health care so we can | |
| be pushing more of the right kind of care, not just more care | |
| overall. | |
| Now let me be clear, and I am speaking as a physician here: | |
| It is the physicians who are driving the healthcare utilization | |
| in the system, not the beneficiaries. The notion that | |
| beneficiaries have to have more skin in the game to encourage | |
| smart healthcare shopping is ridiculous. When your doctor tells | |
| you you need an extra test, or to come back in 2 weeks, how | |
| many of you poll other doctors to see if they agree? Of course | |
| not. There is a major information asymmetry between doctors and | |
| patients and a necessity to trust the physician's judgment. Few | |
| beneficiaries can distinguish between necessary and unnecessary | |
| care, and in the face of more cost-sharing, they may forego | |
| both. | |
| I would like to submit for the record a recent letter from | |
| the National Association of Insurance Commissioners in which | |
| they state that they were unable to find evidence that cost- | |
| sharing encouraged appropriate use of healthcare services. In | |
| fact, they found that cost-sharing would result in delayed | |
| treatments that could increase costs and result in negative | |
| health outcomes. | |
| As it is, Medicare households pay nearly 15 percent of | |
| their income on health care as compared to non-Medicare | |
| households, which pay 5 percent. As one of our witnesses, Joe | |
| Antos, points out in his testimony, higher income Medicare | |
| beneficiaries already pay more into the system, both through | |
| higher premiums and because they have paid more payroll taxes | |
| over the course of their working lives. | |
| As for the notion of home healthcare deductible, these | |
| beneficiaries are some of the frailest individuals in Medicare. | |
| Why do Republicans insist on using this Committee to go after | |
| them rather than building on the ACA's tools to fight fraud in | |
| this section? | |
| It is fundamentally untrue that we have to cut Medicare in | |
| order to save it. If we are looking for offsets, we could focus | |
| on pharmaceutical companies' windfall from the Republicans' | |
| Part D drug benefit. Creating a drug rebate to capture that | |
| windfall would save $141 billion, the entire cost of the SGR | |
| fix. We could look to the providers with higher Medicare | |
| margins. MedPAC tells us that those margins mean payment rates | |
| are too high. Or we could look to the savings from winding down | |
| the wars in Afghanistan and Iraq. There are plenty of other | |
| savings to be found that don't involve jeopardizing the health | |
| and security of some of our most vulnerable Americans. | |
| I look forward to this hearing and the witnesses' | |
| testimony. I think that we are faced with a question that we | |
| are going to have to face at some point. That is, how do you | |
| control costs in the healthcare system? I yield back. | |
| Chairman BRADY. Thank you. | |
| And without objection, the document will be included in the | |
| record. | |
| Today we will hear from three witnesses, Joseph Antos, the | |
| William H. Taylor Scholar in Health Care and Retirement Policy | |
| at the American Enterprise Institute; Alice M. Rivlin, the | |
| Senior Fellow of Economic Studies at the Brookings Institution; | |
| and Joe Baker, President of the Medicare Rights Center. | |
| I want to thank you all on behalf of Mr. McDermott and | |
| myself, thank you all for being here today. I look forward to | |
| your testimony. You will all be recognized for 5 minutes for | |
| the purposes of providing your oral remarks. | |
| Mr. Antos, we will begin with you. | |
| STATEMENT OF JOSEPH R. ANTOS, PH.D., WILSON H. TAYLOR SCHOLAR | |
| IN HEALTH CARE AND RETIREMENT POLICY, AMERICAN ENTERPRISE | |
| INSTITUTE | |
| Mr. ANTOS. Thank you, Mr. Chairman. | |
| Medicare is on a fiscally unsustainable path. Seventy-six | |
| million members of the baby boom generation will turn 65 and | |
| enroll in Medicare over the next 2 decades. According to AARP, | |
| that is about 8,000 baby boomers every day. The resulting costs | |
| will place a heavy strain on the Federal budget, crowding out | |
| other spending priorities and burdening younger generations, | |
| and for that matter burdening older generations who will have | |
| to pay the rising costs of the Medicare program. | |
| Comprehensive reforms are needed to ensure that Medicare | |
| will be able to continue to meet the needs of its beneficiaries | |
| over the long term. Bipartisan commissions, including the | |
| Bowles-Simpson commission, the Bipartisan Policy Center, the | |
| Medicare Payment Advisory Commission, and the Engelberg | |
| Center's Bending the Curve project concur on several principles | |
| that should form the basis of Medicare reform. One of those | |
| principles is addressed today, and that is the need to reform | |
| cost-sharing responsibilities to promote cost awareness and | |
| improve equity in the program. | |
| Today's hearing focuses on three proposals advanced by the | |
| President: raising the Part B deductible, adding a copayment | |
| for some home health episodes, and increasing premiums for | |
| higher income beneficiaries. These proposals, as the Chairman | |
| said, these proposals yield $54 billion in budget savings over | |
| the next decade. That is less than 1 percent of the $7.9 | |
| trillion that Medicare will spend over the same period. | |
| These are modest changes, certainly financially, but they | |
| could lead to bipartisan discussions of broader reforms to | |
| protect Medicare for future generations. Medicare reform should | |
| create a benefit that is easy to understand and that protects | |
| seniors from catastrophic costs. That is a principle that I | |
| think is almost universally agreed, but the Medicare program is | |
| the way it is today for historical reasons. | |
| The bipartisan commissions support proposals to simplify | |
| traditional Medicare's confusing benefit structure. If patients | |
| know what a health service will cost them, they will be more | |
| informed about their alternatives and will be better able to | |
| decide, with their physicians, about the best course of action. | |
| Replacing the multiple deductibles and complicated copayment | |
| structure in traditional Medicare with a simpler design typical | |
| of private insurance is one step in this reform. Limiting what | |
| Medigap plans cover so that beneficiaries pay some of the | |
| upfront costs themselves is another part of this reform. | |
| The President's budget proposals are much narrower. The | |
| Part B deductible would be increased 75 years over 3 years. The | |
| new copayment would be levied on certain home health episodes | |
| that were not preceded by an inpatient stay. Both proposals | |
| would apply only to new Medicare enrollees as of 2017. Those | |
| proposals have been criticized as imposing a burden on | |
| beneficiaries. But in fact 90 percent of beneficiaries have | |
| supplementary coverage through Medigap, retiree plans, or | |
| Medicaid. Consequently, most beneficiaries have nearly complete | |
| coverage against out-of-pocket costs. | |
| That fosters inefficiency in Medicare and adds to the costs | |
| of the program, which are borne by beneficiaries and taxpayers. | |
| I might add that for those who buy Medigap policies, they are | |
| simply paying it through another mechanism. They are still | |
| paying the cost. | |
| So a more equitable phase-in than the President proposes | |
| would provide further protection for beneficiaries who do not | |
| already have supplementary coverage. The cost-sharing provision | |
| should be applied to all beneficiaries, not only to new | |
| enrollees, but exceptions could be made based on a | |
| beneficiary's ability to pay or health status, rather than the | |
| year of their enrollment. | |
| The third proposal increases income-related premiums under | |
| Part B and Part D. This extends the principle that those with | |
| greater means should provide more support for the program, a | |
| principle embraced by Republicans and Democrats alike. This | |
| principle was embodied in Medicare at its beginning in 1965. | |
| High earners pay more in payroll taxes, as Mr. McDermott | |
| pointed out, and income taxes throughout their work lives. That | |
| started in 1966, and we still have this principle today. | |
| How much they should pay is an ethical judgment, but if the | |
| budget resources are not available to maintain an adequate | |
| level of Medicare benefits for every senior, then we should | |
| care first for those who cannot afford to cover the costs | |
| themselves. | |
| Increasing premiums reduces the fiscal pressure faced by | |
| Medicare, but it does not address the fundamental defects that | |
| drive up program costs. Higher premiums do not change the | |
| financial incentives of fee-for-service Medicare. They do not | |
| change the way beneficiaries use services, or the way services | |
| are delivered. More fundamental reforms that address Medicare's | |
| cost drivers are needed. | |
| Any significant Medicare reform will take time to develop | |
| and implement. It is better to start that process now rather | |
| than delay until the fiscal crisis is upon us. Abrupt actions | |
| forced by crisis harm seniors and risk the long-term stability | |
| of the program. Proposals advanced by the President, as well as | |
| proposals from the independent commissions, potentially provide | |
| a basis for bipartisan agreement and the start of a process | |
| that can preserve and improve Medicare for future generations. | |
| Thank you. | |
| [The prepared statement of Mr. Antos follows:] | |
| [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] | |
| -------- | |
| Chairman BRADY. Thank you, Mr. Antos. | |
| Ms. Rivlin. | |
| STATEMENT OF ALICE M. RIVLIN, PH.D., CO-LEADER, BIPARTISAN | |
| POLICY CENTER HEALTH CARE COST CONTAINMENT INITIATIVE, SENIOR | |
| FELLOW, ECONOMIC STUDIES, BROOKINGS INSTITUTION | |
| Ms. RIVLIN. Thank you, Chairman Brady and Ranking Member | |
| McDermott. | |
| Let me start with a basic question: Why reform Medicare? | |
| The main reason for reforming Medicare is not that the program | |
| is the principal driver of future Federal spending increases, | |
| although it is. The main reason is not that Medicare | |
| beneficiaries could be receiving much better coordinated and | |
| more effective care, although they could. The most important | |
| reason is that Medicare is big enough to move the whole | |
| American health delivery system away from fee-for-service | |
| reimbursement, which rewards the volume of services, and toward | |
| new delivery structures which reward quality and value. | |
| Medicare can lead a revolution in healthcare delivery that will | |
| give all Americans better health care at sustainable cost. | |
| This Committee knows very well that health care in the | |
| United States is expensive and getting more so. Moreover, | |
| quality is uneven, and much care is duplicative, wasteful, and | |
| uncoordinated. For decades, however, reformers have focused | |
| less on cost containment and quality improvement than on | |
| closing the gaps by widening healthcare insurance coverage. But | |
| now that the near universal coverage has been ensured by the | |
| Affordable Care Act, attention should shift to improving | |
| quality and value of healthcare delivery for all and containing | |
| cost growth. | |
| I recently had the privilege of co-leading with former | |
| Senators Daschle, Domenici and Frist the Bipartisan Policy | |
| Center's report on the future--on cost containment in health | |
| care. We reached a consensus on a comprehensive package of | |
| reforms that span the entire healthcare system with a | |
| particular focus on Medicare and Federal health-related tax | |
| policy. We believe that if enacted together, and that is | |
| important, these reforms will improve healthcare quality for | |
| patients and families and lower overall spending throughout the | |
| healthcare system. | |
| Budget savings were not our primary objective, but we | |
| believe that these reforms would achieve approximately $300 | |
| billion in net savings over the next 10 years and about a | |
| trillion in the following 10 years. These saving estimates are | |
| net of the cost of fixing the dysfunctional sustainable growth | |
| rate physician payment formula. | |
| Now, as has been noted, our bipartisan foursome were not | |
| mavericks working in isolation. The Simpson-Bowles commission, | |
| the Bending the Curve project at Brookings, and indeed the | |
| President's budget have endorsed many of the same proposals. It | |
| seems that a bipartisan consensus is emerging on using Medicare | |
| and tax reform to lead the transition of the health system away | |
| from fee-for-service and toward quality and value-based care. | |
| Briefly, our recommendations included preserving the | |
| guaranteed health coverage promised in traditional Medicare; | |
| modernizing the benefit package for Medicare to create a cap on | |
| beneficiary cost-sharing, a catastrophic cap which we don't now | |
| have; combining the Part A and B deductibles; and exempting | |
| physician visits from the deductible and preventive care from | |
| all cost-sharing. We would limit Medicare supplemental | |
| coverage, and we would protect low-income beneficiaries by | |
| helping them with cost-sharing up to 150 percent of the poverty | |
| line. We would raise Part B premiums for higher-income | |
| beneficiaries in a slightly different way than the President | |
| does. | |
| Most importantly, we would create Medicare networks, an | |
| improved version of the affordable care organization | |
| demonstrations in the Affordable Care Act. Medicare networks | |
| would be provider-led and enrollment-based, and would better | |
| provide coordinated care. Beneficiaries and providers would | |
| have incentives to join them, and reimbursement would be | |
| increasingly reflective of measures of quality and value. | |
| We would replace the SGR with a better structure, and we | |
| would increase competition among health plans in Medicare | |
| Advantage by implementing a new competitive bidding structure | |
| that would result in lower payments and helping beneficiaries | |
| navigate plan choice on a user-friendly website. | |
| We would also limit the tax-favored treatment of expensive | |
| health insurance products by capping the exclusion of employer- | |
| paid benefits. And we would have a cumulative limit on the | |
| increase in Medicare spending for each of the three categories | |
| that we propose. | |
| This would not be an easy set of reforms to enact or | |
| implement, Mr. Chairman, but we believe it would improve the | |
| care delivery under Medicare and save money at the same time. | |
| [The prepared statement of Ms. Rivlin follows:] | |
| [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] | |
| ------- | |
| Chairman BRADY. Thank you, Ms. Rivlin. | |
| Mr. Baker. | |
| STATEMENT OF JOE BAKER, | |
| PRESIDENT, MEDICARE RIGHTS CENTER | |
| Mr. BAKER. Thank you, Chairman Brady, Ranking Member | |
| McDermott, and distinguished Members of the Subcommittee on | |
| Health, for the opportunity to testify this morning about | |
| proposals to modify Medicare cost-sharing. Medicare Rights | |
| Center is a national nonprofit organization dedicated to making | |
| sure that people with Medicare get access to affordable health | |
| care. We counsel about 15,000 people a year and their families | |
| and through our education initiatives help about 700,000 | |
| others. | |
| Proposals to increase the Medicare Part B deductible, | |
| introduce a home health copayment, and further income-relate | |
| Medicare premiums share a common pernicious theme: Each plan | |
| achieves savings by shifting cost to the very people Medicare | |
| was designed to protect. | |
| Cost shifting to Medicare beneficiaries doesn't solve the | |
| underlying problem with our healthcare system: the long-term | |
| challenge of systemic healthcare inflation and costs, which | |
| threatens both the public and the private spheres. We believe | |
| that Congress should focus its attention on reforms that | |
| diminish wasteful Medicare spending and encourage the | |
| transformation of our healthcare system from one that rewards | |
| high-volume care to one that rewards high-value care. | |
| To this extent, we support the proposals that would shift | |
| no costs, like advancing some of the delivery system reforms in | |
| the Affordable Care Act, restoring Medicare drug rebates, | |
| equalizing reimbursements to Medicare Advantage plans, and | |
| other proposals. | |
| Today, as Ranking Member McDermott said, half of all people | |
| with Medicare, 25 million older adults and people with | |
| disabilities, are living on annual incomes of $22,500 or less | |
| and spending about 15 percent of their household income on | |
| healthcare costs as opposed to 5 percent for those under age 65 | |
| who are not on Medicare. These people with Medicare cannot | |
| afford to pay more for health care. Indeed, the most common | |
| call to our help line comes from a Medicare beneficiary having | |
| difficulty affording a treatment or a medicine. Further, | |
| forcing so-called wealthy beneficiaries to pay more for | |
| Medicare translates into a premium hike on middle-class | |
| retirees and people with disabilities while also fracturing one | |
| of our Nation's most successful social insurance programs. | |
| Added cost-sharing leaves many beneficiaries with no choice | |
| but to self-ration care. Faced with higher upfront costs, | |
| beneficiaries living on fixed incomes are likely to forego | |
| doctor's visits, a decision made on affordability, not on | |
| healthcare needs. Almost 40 years of data consistently | |
| demonstrates that while higher out-of-pocket costs certainly | |
| deter healthcare utilization, it deters utilization of needed | |
| care as well as unneeded care indiscriminately. The equation is | |
| simple: Higher out-of-pocket costs will require many Medicare | |
| beneficiaries to go without, either going without heating or | |
| rent payments, or going without needed medical care. And in the | |
| long run, reduction in the use of medically necessary care can | |
| increase healthcare spending through the increased likelihood | |
| of emergency room visits, ambulance rides, and hospital stays. | |
| Increasing the Medicare Part B deductible, either alone or | |
| by combining the Part A and Part B deductible, is one of | |
| several proposals that adhere to the faulty logic that added | |
| cost-sharing is an appropriate tool to limit healthcare service | |
| use. Most alarming about this proposal is that these added | |
| costs would impose greater hardship on beneficiaries with low | |
| fixed income. And with regard to the point about supplemental | |
| insurance covering this, many who would also increase the | |
| deductible would also decrease the level of coverage in Medigap | |
| or other Medicare supplemental plans. | |
| Similarly, introducing a home health copayment would be | |
| most damaging to the most vulnerable--the poorest, the oldest | |
| and the sickest. The typical home health user is an older, | |
| lower-income woman with one or more common or chronic | |
| conditions. Beneficiaries who need ongoing care to remain in | |
| their homes and not be institutionalized in nursing homes or | |
| other types of care are most at risk of skipping needed care if | |
| forced to pay this copayment. | |
| Many policymakers suggest that wealthier beneficiaries can | |
| contribute more in Medicare costs, specifically through higher | |
| premiums. Yet higher-income beneficiaries already pay higher | |
| premiums, as we have heard. Achieving savings of any scope | |
| under these proposals requires reaching down the income | |
| spectrum. Recent analysis shows that individuals making $47,000 | |
| per year would pay more under current proposals. And that is a | |
| slippery slope. It could get lower and lower as this is looked | |
| at. | |
| So we implore you to reject proposals that fail to build a | |
| better healthcare system, instead only achieve ephemeral | |
| savings by shifting costs to people with Medicare. Thank you | |
| for this opportunity to testify. | |
| [The prepared statement of Mr. Baker follows:] | |
| [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] | |
| ------- | |
| Chairman BRADY. Thank you, Mr. Baker. | |
| First to Mr. Antos, Ms. Rivlin. Medicare is so important. | |
| It is in deep trouble. Lawmakers like to bury their heads in | |
| the sand on these tough issues. How important is it that we act | |
| this year to either save Medicare for the long-term or to take | |
| meaningful steps to extending its life, for example, another 20 | |
| years or more? Mr. Antos. Ms. Rivlin. | |
| Mr. ANTOS. Well---- | |
| Chairman BRADY. Act now. | |
| Mr. ANTOS. Acting now is a critical matter. Congress has | |
| had plenty of opportunity to take appropriate actions over | |
| many, many years. But in fact we still face the fiscal problems | |
| and the risk to the Medicare program. | |
| Chairman BRADY. I have a couple more questions for you, so | |
| your point is act now? | |
| Mr. ANTOS. Act now, but act responsibly. | |
| Chairman BRADY. Got it. | |
| Ms. Rivlin. | |
| Ms. RIVLIN. I would say act now, but for the principal | |
| reason that you can use Medicare to reform the whole system. | |
| Chairman BRADY. Yeah. Yeah. Do you see, as you look at | |
| these issues and the President's policies in his budget, | |
| income-related premiums for Medicare Parts B and D, the Part D | |
| deductible establishing a home health copay? The President has | |
| suggested this begin 4 years from now, 2017. Ms. Rivlin, do you | |
| see any reason we should wait that long? | |
| Ms. RIVLIN. I don't think you need to wait until 2017. You | |
| need a little time to get them in place and---- | |
| Chairman BRADY. Yeah. Set them up. | |
| Ms. RIVLIN. Set them up. So it can't be 2014. I think we | |
| suggested 2016 as a reasonable year. But again, I wouldn't do | |
| these in isolation. Do them as a package. | |
| Chairman BRADY. Got it, makes sense. | |
| Mr. Antos, you emphasized broad reforms of combining | |
| Medicare Parts A and B. This important topic, the Subcommittee | |
| has been looking at and will continue to explore. Would you | |
| consider the policies we are discussing today to be smaller | |
| reforms on the pathway to perhaps bigger ones? | |
| Mr. ANTOS. Well, they could be on the pathway to a | |
| discussion about combining A and B and more sensible reforms of | |
| Medicare. But these specific proposals I don't think take us in | |
| that direction. They are simply budget cuts. | |
| Chairman BRADY. Got it. | |
| Ms. Rivlin, you--and Mr. Antos, you both recommended | |
| establishing a home health copay so that patients determine the | |
| value of those services that are being provided to them. Some | |
| critics have warned it would deter many vulnerable Medicare | |
| beneficiaries from accessing needed care, maybe increase | |
| returning to hospitals. Can you respond to those criticisms? | |
| Mr. ANTOS. Well, certainly, the President's proposal | |
| follows the Medicare Payment Advisory Commission's precaution | |
| and restricts this to episodes that have at least five visits | |
| and are not preceded by an inpatient stay. | |
| Chairman BRADY. So you are not coming from the hospital. | |
| Mr. ANTOS. You are not coming from the hospital. | |
| Nonetheless, this is a serious matter. And the problem with a | |
| lot of Medicare policy is that it is very heavy-handed. We need | |
| to have a more subtle policy or we need to have a better | |
| management of patient care. | |
| Chairman BRADY. Should we adjust it to the income of the | |
| Medicare senior? | |
| Mr. ANTOS. We certainly should recognize the extra burden | |
| that this is going to cause on the minority of patients who | |
| don't have the money. | |
| Chairman BRADY. Ms. Rivlin, your thoughts? | |
| Ms. RIVLIN. Home health care is liable to abuse, and I | |
| think that some cost-sharing is appropriate. In our plan, we | |
| actually help the lower-income beneficiaries cope with total | |
| cost-sharing, including any new cost-sharing, so it wouldn't be | |
| subject to that criticism. | |
| Chairman BRADY. Yeah. And your belief is we are looking at | |
| value over volume. Is Washington the best one to determine what | |
| that value of service is, or are patients actually using them, | |
| you know, who have some role in some cost-sharing, small or | |
| large, according to ability to pay? Is that where we see value | |
| more likely to be determined? | |
| Ms. RIVLIN. Well, when we talk about value and quality, we | |
| envision a set of measures that will eventually govern the | |
| reimbursement as we get more experience with them. I don't | |
| think you entirely rely on patients, as Dr. McDermott has | |
| suggested, to sort out what is quality. The point of cost- | |
| sharing is to give patients some reason to stop and think, | |
| unless they are very low income, about whether they need to go. | |
| Chairman BRADY. That makes sense. | |
| Mr. Baker, I just want to understand: You absolutely reject | |
| the President's proposals to begin some of these reforms in | |
| Medicare? | |
| Mr. BAKER. Yes, we think that the cost-sharing as set is a | |
| blunt instrument and one that would visit some harm on | |
| beneficiaries. | |
| Chairman BRADY. Okay. Thank you. | |
| Mr. McDermott. | |
| Mr. MCDERMOTT. Thank you, Mr. Chairman. | |
| I didn't take economics and so I am always pleased with the | |
| chance to learn from economists how they think. You take the | |
| average person is 78 years old, and he or she is living on | |
| $22,000 and spending about $3,000 on average, 15 percent, on | |
| their medical expenses, okay. So they are already spending a | |
| big chunk out of it. | |
| Now, we are going to impose a tax on them. We are going to | |
| tax them--we are going to call it a premium increase, but it is | |
| a tax. It is a tax on the seniors that we are putting on here. | |
| And I want to understand from the economist's point of view how | |
| imposing that tax on a 78-year-old senior who is living on | |
| $22,000 and spending $3,000 already on health care, how is that | |
| going to change the delivery of the healthcare system to | |
| deliver quality instead of quantity? | |
| I mean, I am trying to think of Mr. Johnson sitting there | |
| and saying, well, the doctor said I should come back and have | |
| my blood pressure checked, and it is going to cost me X number | |
| of dollars and so forth, and so I am not going to go. Or I am | |
| going to go because the doctor told me to. How does this change | |
| the cost of overall Medicare by putting a tax on seniors of | |
| another 50 bucks a month? | |
| Ms. RIVLIN. That proposal is not what I--tax on seniors of | |
| 50 bucks a month is not what I am advocating. | |
| Mr. MCDERMOTT. You are not talking about the melding of the | |
| Part A and Part B? | |
| Ms. RIVLIN. We are. | |
| Mr. MCDERMOTT. You are. So that means that the money that | |
| they pay will be more per month, right? | |
| Ms. RIVLIN. Let me finish. We do not propose a net increase | |
| in beneficiary cost-sharing. The package that we would have, | |
| and it is a package, would reduce the cost-sharing for low- | |
| income beneficiaries, increase it at the top. It would also | |
| make some very important changes in the benefit package that | |
| would say no deductible for going to the doctor ever, and no | |
| cost-sharing at all for preventive care, and a cap on out-of- | |
| pocket spending. All of that is helpful to your average and | |
| below beneficiary. | |
| Mr. MCDERMOTT. So then you are going to put it all on the | |
| richer people, that is the idea. Since it is not going to cost | |
| the poor people more, it has to cost the richer people more, is | |
| that it? So you are putting the tax on the people above---- | |
| Ms. RIVLIN. Well, we are increasing the Part B premium, | |
| yes, for higher-income people. There is already an income | |
| relation, and we would lower the thresholds for that, but not | |
| to levels where people are in need. | |
| Mr. MCDERMOTT. When does it tip over into being a welfare | |
| system? If you are poor you get it for free; if you are rich, | |
| you have to pay for it. I mean, that is what we have now in the | |
| healthcare system in this country. If you are poor, you go to | |
| Medicaid, right? Or you just walk into the emergency room and | |
| get taken care of. The rest of us pay for it, and we are paying | |
| 1,000 bucks a year for the cost of the uncompensated care, | |
| presently. What you are doing is just shifting it to the top, | |
| is that what you are saying? | |
| Ms. RIVLIN. That is part of what I am saying, but remember, | |
| we don't pay for Part B. Right now the premiums cover only 25 | |
| percent of the cost of Part B. We would like the premiums to | |
| cover a somewhat higher share, and we would do that by raising | |
| the premiums for people like me. I am a beneficiary of Medicare | |
| who can afford to pay it. | |
| Mr. MCDERMOTT. Mr. Baker, your view of this whole process? | |
| Mr. BAKER. Well, I think whenever you are talking about | |
| shifting the benefit, especially in the context of deficit | |
| reduction or for paying for other things, you are looking for | |
| savings. And in that context, even if you are protecting lower- | |
| income people---- | |
| Mr. MCDERMOTT. You are looking for savings or you are | |
| looking for more revenue? | |
| Mr. BAKER. Well, you are looking for revenue for the | |
| Federal budget, of course. | |
| Mr. MCDERMOTT. So it is basically a tax. | |
| Mr. BAKER. It is a tax. | |
| Mr. MCDERMOTT. You are taxing somebody to get more revenue | |
| into the system. | |
| Mr. BAKER. It gets more revenue into the system, and I | |
| think that the problem is, it doesn't solve the underlying | |
| problem, as I said, which is the healthcare costs themselves | |
| and inflation in that market, and it is kind of a slippery | |
| slope. So once you start charging, say, people at $60,000 or | |
| $85,000 a year or more, and you can argue whether that is a | |
| wealthy individual when you look at our Tax Code, not | |
| necessarily as wealthy, of course, as someone at 450 or a | |
| million dollars where tax rates start to go up. But even for | |
| folks that are in that middle-income range, they do not qualify | |
| for low-income protection. They are strapped. | |
| So, you know, you are looking at folks that are the most | |
| vulnerable, that have the least control over their utilization | |
| of health care, because as you had mentioned, once they get to | |
| the doctor and they are in the healthcare system, they are | |
| moving through that system. They are following doctor's orders. | |
| And I think that is where the incentives need to be placed on | |
| controlling care, through accountable care organizations, some | |
| other mechanisms I think we all see as appropriate. | |
| Mr. MCDERMOTT. Thank you. | |
| Chairman BRADY. Thank you. | |
| Mr. Roskam is recognized for 5 minutes. | |
| Mr. ROSKAM. Thank you, Mr. Chairman. | |
| You know, it is interesting to take a step back and look at | |
| the trend and the history of this discussion. So the trend | |
| would suggest that income-related premiums and the discussion | |
| around them are here to stay. If you look at 2003, the decision | |
| by House GOP at that point to move forward on Part D and Part | |
| B; the decision by the Democrat majority in 2010 to move | |
| forward with similar themes as it relates to Medicaid and | |
| health exchanges in Part D; the decision of the Obama | |
| Administration, even if it is de minimis, they are | |
| acknowledging in their budget that it is here to stay. | |
| So, Mr. Baker, I think that you are making yesterday's | |
| argument. Yesterday's arguments, they are nostalgic, but I | |
| think that the entire question, these numbers are so big, they | |
| have really eclipsed. Mr. McDermott raised this question about | |
| the economics of this, and that is sort of the wonder of it | |
| all, isn't it? That if you give patients choices, and not | |
| cutting out the legs from underneath the vulnerable that he is | |
| defending today, as well he should, but you look at the success | |
| of Part D, for example, a lot of the themes that we have heard | |
| in terms of criticisms of income-related premiums, we have | |
| heard those echoes in the past, and that was the claim that | |
| Part B was going to sort of lead to a very difficult situation, | |
| when as we all know, the data suggests just the opposite. | |
| Incredibly high satisfaction rate among seniors, you know, | |
| savings that have come in well under, you know, by 45 percent | |
| under the expectations. So that is part of the power of giving | |
| people choices and the ability to move forward. | |
| Mr. McDermott mentioned a minute ago the idea of a senior | |
| being told, well, chase this down, you know what I mean, and | |
| come back and double-check with your physician. Part of the | |
| other story, though, to complete the picture is, many times if | |
| you are told by a physician to get an MRI, or whatever it | |
| happens to be, right now the system doesn't create an | |
| environment where you have much interest in trying to figure | |
| out who is doing the most efficient MRI. Where is the best, | |
| cheapest, and easiest, as opposed to the one that you just end | |
| up in? | |
| Dr. Rivlin, can I ask you a question? With that sort of | |
| predicate, you made an interesting statement, and you said that | |
| the driving opportunity right now take the debt--and it is a | |
| pretty provocative thing. You said the debt is a big question; | |
| set it aside. A more effective healthcare system is | |
| interesting; sort of set it aside. But you are telling this | |
| Committee and this Congress that you have such a big | |
| opportunity right now that you can have a transformational | |
| moment as it relates to Medicare. What did you mean by that? | |
| Ms. RIVLIN. The rising costs are not just in Medicare. They | |
| are in the whole system. And one of the culprits is the fee- | |
| for-service reimbursement system, which does, not surprisingly, | |
| reward more services, more volume, rather than coordinating | |
| care and rewarding value and quality. | |
| We think that the accountable care organizations, we all | |
| think that accountable care organizations should be | |
| strengthened, provider-led networks that will take care of the | |
| whole patient, coordinates the care, and we think do it on a | |
| better, a higher quality basis, and at a lower cost. | |
| Now, time will tell whether that is right, but there is a | |
| strong feeling among health policy analysts that it is time to | |
| use Medicare to move the whole system off of fee-for-service. | |
| Mr. ROSKAM. Thank you. I yield back. | |
| Chairman BRADY. Thank you. | |
| Mr. Pascrell is recognized for 5 minutes. | |
| Mr. PASCRELL. Thank you, Mr. Chairman. | |
| Ms. Rivlin, I think you have hit the nail on the head when | |
| you talk about Medicare and the whole system. Because I think | |
| one of the major problems we had in putting the ObamaCare | |
| together, in writing out the law, and it is voluminous pages, | |
| we have all heard, was that we often lose track that the person | |
| who is over 65 years of age many times has the same kinds of | |
| problems that a couple of 45 years of age have. And we have | |
| missed the point on this thing. When you shift costs, when you | |
| are shifting costs, as you laid out, you are not changing the | |
| cost, you are not lowering the cost. It is like the person who | |
| doesn't look at his hospital bill because it is covered, | |
| because I have insurance. | |
| This moves the cost higher as well. I mean, many medical | |
| people don't want us to be knowledgeable of what is in the | |
| bill. And let's face it and let's say it like it is. I | |
| understand my colleagues on the other side continue to say that | |
| these proposed additional costs to beneficiaries are bipartisan | |
| proposals, I will have you know. But we must remember that the | |
| President offered the proposal in the context of a broad, large | |
| deficit-reduction package that requires both spending cuts and | |
| increased revenues. | |
| We also need to remember that reform to the Medicare | |
| program is already underway. Why we will not admit to that, | |
| some on my side, and some on the other side, is beyond me. When | |
| we put the Affordable Care Act together, the purpose of that | |
| was to look at, one of the specifics was Medicare and to reduce | |
| the cost. | |
| And already, already, what we have done is the following: | |
| We have had entitlement change. We won't admit it. If you have | |
| Medicare, you qualify for an annual wellness visit, mammograms, | |
| other screenings for cancer and diabetes, important preventive | |
| care. Medicare Advantage plans that give better quality care | |
| receive additional bonus payments. Plans must use some of the | |
| bonus money to offer you added health benefits. Medicare | |
| Advantage plans cannot change--or charge people more than the | |
| original Medicare pays for certain services. These services | |
| include chemotherapy administration, renal dialysis, and | |
| skilled nursing care. The law cracks down on waste, on fraud | |
| and abuse, a major part of that ObamaCare. Nobody refers to | |
| this. We have selective memory about what we want to think | |
| about or talk about in this legislation. And we guard against | |
| medical identity theft, et cetera, et cetera. It improves long- | |
| term care services. | |
| Why not target when you say that we have to move away from | |
| fee-for-service, not just for seniors, for everybody? For | |
| everybody? Can we say it enough times, Ms. Rivlin, for | |
| everybody? Because the costs are too high. And if we don't | |
| change those costs and find a way to do it without cost | |
| controls, then we are not going to have any system at all, not | |
| just we will reduce the propensity of Medicare and the strength | |
| of Medicare. | |
| Overall health spending has been constrained. Per capita | |
| Medicare spending was 0.4 percent of GDP in 2012, last year. | |
| And CBO projects Medicare cost growth will remain low | |
| throughout the decade. There is a reason for this. Are there | |
| less people going into Medicare? Heck no. And overall health | |
| inflation has been at historic lows for 3 years in a row. | |
| There is a report that came out this morning, I don't know | |
| if you saw it. Senior poverty is much worse than you think due | |
| in part to such burdens. The new Kaiser Family Foundation | |
| report finds that the SPM poverty rate for seniors is actually | |
| higher than the official rate, 15 percent versus 9 percent. And | |
| here we are talking about shifting costs, even if it is to the | |
| higher income. We better be darn careful about this, because if | |
| we don't understand the situation that seniors are in, we are | |
| in big trouble. | |
| Mr. Baker, if I can get a quick question in. I think we are | |
| trying to go in a new direction here. I agree we should always | |
| be open to new ideas. I think my colleagues need to take a look | |
| at the work happening today that is moving Medicare; more | |
| important the quality than the quantity. Can you discuss the | |
| ways in which affordable health care has helped the solvency of | |
| the Medicare program directly? Can you answer the question? | |
| Chairman BRADY. If I may, because time has expired, Mr. | |
| Baker, could you perhaps answer in another question or provide | |
| Mr. Pascrell an answer in writing. Thank you. | |
| Mr. PASCRELL. Thank you for your consideration. | |
| Chairman BRADY. Thank you, Mr. Pascrell. | |
| Mr. Gerlach is recognized for 5 minutes. | |
| Mr. GERLACH. Thank you, Mr. Chairman. Thank you for having | |
| this hearing today. | |
| Today's hearing is focused on the reform of Medicare's | |
| benefit structure, so your suggestions are very welcome and | |
| very helpful. Thank you very much. But in addition to the | |
| benefit structure itself, success and cost-effectiveness of the | |
| program is also based on how it is administered every single | |
| day. Currently, the Medicare program has a pay-and-catch system | |
| for improper payments. A few years ago, the GAO put out a | |
| report that concluded that there is about $50 billion a year in | |
| improper payments made in the Medicare program, both | |
| unintentional payments, erroneous, mistaken, or intentional | |
| fraudulent-based payments due to stealing the identification | |
| numbers of physicians and other fraudulent activities. | |
| So based on the fact that that $50 billion a year in | |
| improper payments in the Medicare program over 10 years would | |
| be half a trillion dollars, and based on the fact that that is | |
| about 10 percent of the total expenditure in the program each | |
| year, what do you each believe would be the single-most | |
| important step that Congress could take now to reduce and | |
| ultimately eliminate $50 billion a year in improper payments in | |
| the program in addition to all of the other suggestions you | |
| have given us about benefits restructuring? But specifically | |
| what could be done today to reduce and eliminate $50 billion in | |
| improper payments just because of the way the program is | |
| administered on a daily basis? | |
| Start with Mr. Antos. | |
| Mr. ANTOS. Well, certainly, the idea about Medicare | |
| verifying who the providers are would be the first step. Don't | |
| pay unless the provider is a legitimate provider. Don't pay | |
| unless the provider is providing appropriate services. The idea | |
| of having information about the quality of care should extend | |
| also to traditional Medicare. It doesn't exist there right now. | |
| Mr. GERLACH. Thank you. Is there a specific kind of | |
| technology or system, programming that could be utilized to | |
| make that happen? | |
| Mr. ANTOS. Well, so in terms of measuring quality, there | |
| are literally scores of different measures that measure very | |
| specific results or very specific activities in health care. | |
| They don't necessarily represent quality. They represent things | |
| we can measure. And so I think the first step is to do a better | |
| job of developing the kinds of measures that really reflect not | |
| what goes into the patient, but what comes out. In other words, | |
| patient outcomes. | |
| Mr. GERLACH. Ms. Rivlin. | |
| Ms. RIVLIN. I agree with that, and I think more money for | |
| more vigorous prosecution of fraud would actually help. That is | |
| happening, but probably not enough. And better information for | |
| the patient to enable a patient to say, wait a minute, I never | |
| saw that doctor. It is hard now for a patient to monitor that | |
| kind of thing. | |
| Mr. GERLACH. Mr. Baker. | |
| Mr. BAKER. I would agree with all that has been said. We | |
| get a lot of complaints on our help line saying I didn't see | |
| this particular doctor, and we do refer them to the fraud tip | |
| lines, et cetera, but sometimes it is the pathologist in the | |
| hospital that no one ever sees. That kind of education is | |
| important. | |
| I think one of the things that we do have to guard against | |
| is one of the justifications for home health copayments is, oh, | |
| it will help combat fraud efforts. And I think putting | |
| financial cost-sharing on consumers to have them help identify | |
| fraud is not necessarily the best way to go, but rather, some | |
| of the ideas that we have been talking about here, and really | |
| providing administrative resources to not only our law | |
| enforcement personnel, but also to the Center for Medicare and | |
| Medicaid Services to really oversee this program. We always | |
| brag about Medicare having a low administrative cost, but maybe | |
| it should have a little bit of a higher level of administrative | |
| cost so that it can pursue some of these initiatives against | |
| fraud. | |
| Mr. GERLACH. Do either of you have a debit card on you | |
| today? | |
| Mr. BAKER. Yeah. | |
| Mr. GERLACH. And you pull that card out, is there an | |
| identification number on that? | |
| Mr. BAKER. Yes, there is. | |
| Mr. GERLACH. And if you took it downstairs to the credit | |
| union and you want to get money, you would type in a few | |
| numbers, would you not, that are unique to you and unique to | |
| that identification number, is that correct? | |
| Mr. BAKER. Yes. | |
| Mr. GERLACH. And so why don't we have that system in | |
| Medicare right now? Why don't we have a smart card technology | |
| in our system that identifies that provider and that patient at | |
| the same time before the service is undertaken? Has anybody | |
| considered that as part of your review of the program? | |
| Ms. RIVLIN. Sounds like a good idea. | |
| Mr. GERLACH. Okay. | |
| Mr. BAKER. We certainly could consider that. | |
| Mr. GERLACH. I know when to end my questioning. Thank you, | |
| Mr. Chairman. I yield back. | |
| Chairman BRADY. Stop when you get the answer you want. | |
| Mr. Price is recognized for 5 minutes. | |
| Mr. PRICE. Sounds like a bill is coming, Mr. Chairman. | |
| Thank you. Thank you so much. And I want to thank the panel | |
| members. | |
| This is a remarkably important topic, but it is also just | |
| part of a hugely complex system. And I am struck most often | |
| when we have the topic of health care come up in this | |
| Committee, and appropriately so, we are talking about money, | |
| not about patients. And when you talk just about money and not | |
| about patients, then I think that we miss really the focus of | |
| where we ought to be. We ought to be talking about patients. | |
| And as a physician taking care of patients for over 20 | |
| years, I know that the patients of this country, especially the | |
| Medicare patients of this country, are extremely frustrated | |
| with the current system. Access is being diminished to care. I | |
| have said this before, if you are a new Medicare patient, you | |
| turn 65, your physician that has been taking care of you isn't | |
| seeing Medicare patients, which is more and more frequent. | |
| Even in large metropolitan areas, the opportunity or the | |
| ability that you have to find a doctor who is taking new | |
| Medicare patients is minimal. One in three physicians in this | |
| country has limited the number of Medicare patients that they | |
| are seeing. One in eight physicians who would normally see | |
| patients of Medicare age is not seeing any Medicare patients. | |
| And that is only getting worse. And the ACA is making that | |
| worse, not Dr. Price's, Tom Price's opinion. That is the | |
| opinion of the Medicare trustees, that access to care will be | |
| diminished because of the laws that we have already passed. | |
| Mr. Antos, you talked about Medicare oftentimes instituting | |
| policies in a heavy-handed way, and it is that heavy-handedness | |
| that I believe harms patients. | |
| So there is huge pressure within the system, and I want to | |
| touch on a couple specific areas. And I know that the fee-for- | |
| service system has been bashed, and, you know, it isn't worth a | |
| doggone thing, according to some folks. But one of the | |
| antiquated notions of the fee-for-service system is that a | |
| patient can choose a physician that he or she desires to take | |
| care of them and that that care can be delivered. | |
| So I would ask you, Mr. Antos and Ms. Rivlin, do you | |
| believe that whatever system we come up with, should patients | |
| and doctors be able to practice outside of that system? Should | |
| they be free to take--the doctor take care of a patient outside | |
| of that system if voluntarily the patient and the doctor desire | |
| to do so? | |
| Mr. ANTOS. Well, under the Medicare program right now | |
| physicians are allowed to opt out, in essence. There are | |
| potentially substantial financial losses associated with that. | |
| Mr. PRICE. How about for an incident of care right now? | |
| Mr. ANTOS. For an incident of care, that is not possible. | |
| You are either in---- | |
| Mr. PRICE. Should it be? | |
| Mr. ANTOS. It runs certain risk. I believe that this---- | |
| Mr. PRICE. The freedom runs the risk. | |
| Mr. ANTOS. Freedom runs the risk. That is right. The | |
| question is, will the physician have the patient's best | |
| interest at heart or will the physician---- | |
| Mr. PRICE. Have you ever read the Hippocratic Oath? | |
| Mr. ANTOS. I have read it, but there are plenty of ways to | |
| interpret it. And the question is---- | |
| Mr. PRICE. Can one interpret the Hippocratic Oath to not be | |
| in the interest of the patient? | |
| Mr. ANTOS. It needs to be in the interest of the patient, | |
| but the financial system that the physician is under in | |
| Medicare works across purposes oftentimes to the patient's---- | |
| Mr. PRICE. But coercion to the physician is not to provide | |
| the best care to the patient. | |
| Mr. ANTOS. The financial system promotes oftentimes | |
| services that are not useful or not very useful to the patient. | |
| Mr. PRICE. That is not the physician's design, that is the | |
| system's design. | |
| Mr. ANTOS. That is the system's design, and so we need to | |
| reform the system in order to make that relationship between | |
| the doctor and patient much more productive. | |
| Mr. PRICE. And maybe a little freer. | |
| This is going in an interesting direction. So my time is | |
| about to run out and I want to get to this other issue. We seem | |
| to be having contradictory themes. We say that the government | |
| control will produce value, push value--that is what we want, | |
| we want value--yet some of the things like home health care | |
| that provide some of the highest value for patients or care in | |
| ambulatory surgery centers that provides some of the highest | |
| value for patients, this proposal and others dis-incentivizes | |
| the use of those. So you have to ask the question, whose value? | |
| Is it the patient's value or the government's value? | |
| Ms. Rivlin, whose value should we be talking about here, is | |
| it the government's value or the patient's value? | |
| Ms. RIVLIN. We should be trying to measure the value to the | |
| patient and rewarding that. It is not easy. And the question of | |
| home health care I think is a good example. Clearly it is | |
| valuable to many, many patients and you don't want to | |
| discourage it, but you don't want abuse either, and you have to | |
| weigh the advantages and disadvantages of a copay. | |
| Mr. PRICE. Complex issue, Mr. Chairman. Thank you. | |
| Chairman BRADY. Thank you. | |
| Mr. Buchanan is recognized for 5 minutes. | |
| Mr. BUCHANAN. Thank you, Mr. Chairman. I want to also thank | |
| our panelists today for taking your time to be with us. | |
| I represent a community in Florida, Sarasota, but it is | |
| pretty much the demographics of Florida when you look across | |
| it, 700,000 people we all represent, 300,000 55 and older. But | |
| I went to, probably a month back, went to an assisted-living | |
| facility in our area, these were seniors, very capable, active | |
| and engaged, and I usually go there once a year to talk to this | |
| group, 300 residents. So on the way in they mentioned to me, | |
| Vern, I would like to have you come meet a few of the | |
| residents, and very coherent. But I would say of the four I | |
| met, one was 108, there were three or four others in the | |
| assisted-living facility over 100. Another assisted-living | |
| facility in Venice, Florida, the average age, the guy had been | |
| there 40 years, it is a Lutheran organization that runs that | |
| out of Wisconsin, I think Wisconsin or Minnesota. He said the | |
| average age there today is 90, and he said 20 years ago it was | |
| 72. | |
| So maybe it is just the sunshine in the State of Florida, I | |
| don't know, but I can tell you I am very concerned just looking | |
| forward from the viability as people are living longer. I think | |
| the statistics, the numbers used to be, people lived, when they | |
| put the program in place, I think it was 5 years. Today they | |
| claim 13.4 years. Have we looked down the road the next 10 | |
| years or so at what the age is that people are expected to live | |
| to or how many more years that is and are we factoring in the | |
| idea that the program, Medicare, is going to go broke in 10 | |
| years, Mr. Antos? | |
| Mr. ANTOS. Well, certainly, the Medicare actuaries take | |
| longevity into account. But longevity isn't the principal issue | |
| here, I don't think, it is the rising cost of health care, it | |
| is the rising use of services. | |
| Mr. BUCHANAN. Well, you mentioned this, just real quick, | |
| how many people did you say come a day, are coming into the | |
| program at 65? | |
| Mr. ANTOS. According to AARP it is about 8,000 a day. | |
| Mr. BUCHANAN. Yeah, I have heard 8,000, 10,000, 12,000, | |
| somewhere in that range, every day for the next 30 years. | |
| Mr. ANTOS. Well, for the next 20 anyway. | |
| Mr. BUCHANAN. Yeah, for the next 20. But go ahead, | |
| continue, what were you going to say? | |
| Mr. ANTOS. They are youngsters. When you turn 65 you are | |
| basically a healthy person. It is at the other end of life | |
| where the money is being spent. And I think the issue here is | |
| not so much, we are not going to have people stop turning 65 | |
| and joining the Medicare program. The issue is how do we get | |
| unnecessary spending under control? How do we get better | |
| treatment for these patients? | |
| Mr. BUCHANAN. Ms. Rivlin, did you have any comments on | |
| those about longevity? | |
| Ms. RIVLIN. No, I agree with that. It is certainly | |
| increasing. But as Mr. Antos said, it is the rising cost per | |
| patient combined with the longevity, but the rising cost per | |
| patient is really the driving force. | |
| Mr. BUCHANAN. The other thing I think that a lot of seniors | |
| are concerned about is the fact that we are not doing much | |
| about it. There is a 10-year window ideally. What is your | |
| opinion of waiting and not dealing with this in a real way? I | |
| mean, we are talking about some adjustments and things that we | |
| might be able to do today, but in the scheme of things long | |
| term it doesn't seem like it is going to have a huge impact in | |
| terms of the overall dollars. By waiting, what happens from | |
| that standpoint? How long can we wait and not deal with it in a | |
| big way? Ms. Rivlin. | |
| Ms. RIVLIN. Every year you wait makes it more difficult. We | |
| have waited too long already on many of these things and I | |
| would include Social Security. We need to put all of these | |
| programs on a firmer basis. | |
| But with respect to the healthcare programs it is a | |
| question of moving to better, more effective, more cost- | |
| effective delivery systems that is the most important. And the | |
| faster we can do that the better, although it is going to take | |
| time to transition. | |
| Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back. | |
| Chairman BRADY. Thank you. | |
| Mr. Smith, you are recognized for 5 minutes. | |
| Mr. SMITH. Thank you, Mr. Chairman. And thanks to our | |
| witnesses for sharing your time today. I appreciate the | |
| testimony and your insight. And I think the urgency cannot be | |
| overstated. And yet we want to build on what we know works, and | |
| we want to do what we can to eliminate that which we know does | |
| not work. | |
| I get a little concerned when the term ``fraud'' that we | |
| should all be concerned about is often used to describe what | |
| might have been an innocent mistake amidst a bureaucracy in | |
| piles and piles of paperwork, and we don't want the heavy hand | |
| of government to overreact. But I am curious to know what you | |
| might have to suggest about States coming up with innovative | |
| solutions. One thing we do know is that with our 50 States they | |
| are different among themselves. I know that, representing rural | |
| Nebraska, the definition of rural has a different application | |
| in different parts of the country. And so if you might, any of | |
| you, elaborate on perhaps how we could maybe rely on the States | |
| for innovation and incentives to increase the effectiveness of | |
| care and access. Not all at once, but go ahead. | |
| Mr. ANTOS. States obviously have a very strong fiscal | |
| interest in this question because of course they are | |
| responsible for about 42 percent of the cost of the Medicaid | |
| program. The Medicaid program, many Medicaid people are | |
| essentially young, relatively healthy people. But the older | |
| Medicaid beneficiaries are among the sickest and among the most | |
| expensive patients that we have. Many of them are dual | |
| eligibles in Medicare. | |
| So States are very concerned about improving delivery of | |
| health care. I think in terms of rural America the idea of | |
| being able to bring modern electronics out there where you if | |
| can't get a doctor, let's get somebody who is trained at the | |
| local level and have communications back with a medical center. | |
| In addition, States, I don't think States are rushing to do | |
| this, but increasingly we are going to need to look at the | |
| personnel who provide healthcare services. We are going to have | |
| a doctor shortage, there is no question about that. We are | |
| going to have a lot more people who will be demanding care, we | |
| are not going to be producing that many more physicians, | |
| because it takes so long to produce a physician, a good | |
| physician. So we are going to have to look at expanding the | |
| scope of practice for nurse practitioners, for example, | |
| physician's assistants. States control that, they need to take | |
| a look at that issue. | |
| Mr. SMITH. Okay. | |
| Ms. Rivlin. | |
| Ms. RIVLIN. I would agree with that. It is the Medicaid | |
| program which you ought to look to for giving States the most | |
| flexibility. And the potential is there. The situation now with | |
| waivers is much too complex, and it would be important, I | |
| think, to provide a more uniform system where States can take | |
| the measures that they think are most cost effective and are | |
| rewarded for that, but don't have to go through a very | |
| complicated waiver process. | |
| Mr. SMITH. Mr. Baker. | |
| Mr. BAKER. I would agree. I think some of the | |
| experimentation that is happening under the ACA but also | |
| outside of it with regard to dual eligibles, people that are | |
| eligible for both Medicare and Medicaid, and there the States | |
| really are pushing the envelope in many instances in combining | |
| those funding streams and coming up with creative ways to | |
| manage their care. The typical statistic is these are the 20 | |
| percent of people that generate 80 percent of the costs. If we | |
| can control those costs better, much of it through better | |
| coordinated care, managing that care better, breaking down | |
| those silos. And States have been doing that. And I think we | |
| need to continue to encourage that. | |
| It is less possible in true rural areas that are sparsely | |
| populated, but some of the other ideas around allied | |
| professionals getting involved with physicians and others to | |
| kind of bring that care to the areas. Many times folks don't | |
| need that intensive medical care, they need kind of social | |
| supports or other supports, kind of to live in their | |
| communities and stay healthy. And I think those are important | |
| initiatives that States are engaged in right now. | |
| Mr. SMITH. And, Mr. Baker, I think you touched briefly on | |
| perhaps cost-sharing with emergency room or other areas. Could | |
| you elaborate on that? | |
| Mr. BAKER. Well, my point there was that if we increase | |
| cost-sharing up front, many times people don't access the kind | |
| of primary care or preventative care that they need. In many of | |
| the proposals preventive care would be covered first dollar up | |
| front, but other primary care would still need a copayment or a | |
| deductible to get through. So what happens is people put off | |
| care, end up in emergency rooms, or higher, more expensive care | |
| settings. | |
| Mr. SMITH. Okay. Thank you, Mr. Chairman. | |
| Chairman BRADY. Thank you. | |
| Mr. Kind is recognized for 5 minutes. | |
| Mr. KIND. Thank you, Mr. Chairman. I want to thank our | |
| panelists for your testimony today. Mr. Chairman, I hope this | |
| is the first of many more hearings that we can do to explore | |
| avenues of bipartisan cooperation on reforming a healthcare | |
| system that is in desperate need of reform. And I guess one of | |
| the frustrating things sitting here and listening even to | |
| today's conversation, is that there are so many of those tools | |
| that are currently a part of the Affordable Care Act right now. | |
| Ms. Rivlin, delivery system reform, getting to a more | |
| integrated, coordinated, patient-centered healthcare delivery | |
| system. There are tools in the Affordable Care Act right now to | |
| drive the system in that direction, including payment reform. | |
| Demanding value-based payments, quality reimbursements, as | |
| opposed to volume is already in the Affordable Care Act right | |
| now and vast experimentation taking place. Would you agree with | |
| that assessment? | |
| Ms. RIVLIN. I agree with that, and I said that actually. | |
| And we want to strengthen and build on what is already going on | |
| and accelerate it. | |
| Mr. KIND. And I applaud the work the Bipartisan Policy | |
| Center has come up with additional recommendations on reform. | |
| In fact, the New Democrat Coalition just had Bill Hoagland and | |
| Chris Jennings before us to walk us through a lot of the | |
| recommendations, and many of which we embrace. | |
| If there is one concern or one criticism I might have about | |
| the Bipartisan Center is you do maintain fee-for-service in a | |
| hybrid type of form, but nevertheless it is still there out in | |
| future years. And I happen to believe that we are going to have | |
| to kill this thing, we are going to have to have a date certain | |
| on fee-for-service so there will be institutional pressure from | |
| all over to maintain a fee-for-service or volume-based payment | |
| system that we are never going to be able to slay and get rid | |
| of. | |
| Ms. RIVLIN. I think we kill it with incentives to move away | |
| from it, but we do preserve a choice so that no one can say we | |
| are destroying Medicare as we know it. | |
| Mr. KIND. Well, and again on the whole topic of Medicare | |
| fraud, and I look forward to working with my good friend from | |
| Pennsylvania because I think he has some good ideas to bring to | |
| the table how we can do a better job. But, Mr. Antos, I don't | |
| know if you are sure, if you looked at the Affordable Care Act, | |
| but pay-and-catch is no longer the law of the land, it is a | |
| system of verification. And regional offices now have stepped | |
| up enforcement and funding to crack down or Medicare fraud. In | |
| the first 2 years we were able to recapture over $15 billion in | |
| fraudulent payments made in the Medicare system because of what | |
| is in the Affordable Care Act already. And that is moving | |
| forward. And maybe we need more personnel on the ground and | |
| more resources to do it, but again, as part of the Affordable | |
| Care Act, there has been a stepped-up measure to crack down on | |
| Medicare fraud. And I don't know, your testimony made me | |
| believe that you weren't aware that pay-and-catch is no longer | |
| allowed under Medicare. | |
| Mr. ANTOS. Oh, I didn't address it in my written statement. | |
| It is not allowed but it still happens. It is great that CMS | |
| has been able to take actions, but obviously the problem isn't | |
| solved. The problem will never be solved. | |
| Mr. KIND. Well, again, I think we can continue working in a | |
| bipartisan fashion on what stepped-up enforcement are needed. | |
| There would be wide bipartisan support because no one is going | |
| to be here defending fraudulent practices, especially in the | |
| Medicare program. | |
| But, Mr. Baker, I also notice that you have been one of the | |
| panelists on the second Institute of Medicine panel trying to | |
| change volume to value-based payments. My only encouragement to | |
| you and the panel, I know it is hard with peer review with IOM, | |
| you have high standards, but you have to go bold and you have | |
| to go courageous. And if you guys can't come up with a path to | |
| get to a fee-for-value-based reimbursement system it is going | |
| to be very hard for this institution to embrace something as | |
| well. So I don't know if you want to give us a quick update | |
| where IOM 2 is going right now, but soon you are going to be | |
| reporting out. | |
| Mr. BAKER. Well, we are in the peer review process so I | |
| can't really talk specifically about it. But I think that, as | |
| you saw from our interim report, we are very concerned about | |
| the present system. And I think you will be seeing some ideas | |
| about moving forward some of the value-based reforms that are | |
| already in the ACA. I think we are all agreed that those kinds | |
| of things and the kind of delivery system reform that we have | |
| all been talking about is key. | |
| I would point out that, and I do believe that we need to | |
| move away from fee-for-service, as we have been talking about, | |
| but we also have to recognize that within some of these hybrid | |
| or some of these even in classic managed care fee-for-service | |
| is still used and still might be appropriate to encourage the | |
| provision of some services. So I think it is a hybrid system | |
| and one that definitely needs to move away---- | |
| Mr. KIND. I will need to be educated on the value of doing | |
| that, but I also agree with Mr. McDermott, if at the end of the | |
| day all we are doing is talking about cost shifting, that is | |
| not the path forward because that is not the reform that we | |
| need to create the right incentives to get better value at a | |
| better price within the healthcare system. I think we are all | |
| in agreement on that. And my concern is with SGR fix and | |
| everything else that this cost--and time is of the essence. The | |
| Ryan bill does nothing to reform Medicare for 10 years because | |
| they exempt the first 10 years of entrants into the program. So | |
| if time is of the essence, I don't know why we are repealing | |
| the Affordable Care Act 37 times and then trying to move | |
| forward on a plan that does nothing for the next 10 years when | |
| 10,000 seniors are joining Medicare every single day in this | |
| country. | |
| My time has expired, Mr. Chairman, thanks for your | |
| indulgence. | |
| Chairman BRADY. Thank you. | |
| Mr. Thompson is recognized for 5 minutes. | |
| Mr. THOMPSON. Thank you, Mr. Chairman. I want to thank all | |
| the witnesses for being here today and for your longstanding | |
| commitment to making health care work in this country. | |
| I want to pick up where Mr. Kind left off, where Mr. | |
| McDermott started, and that is with the whole issue of cost | |
| shifting. And one provision I would like to explore a little | |
| bit is found in the President's budget as it relates to a copay | |
| for home health care. And I, too, am worried about the idea | |
| that we would be cost shifting. And while the President's | |
| program saves close to $800 million--I don't know if it does | |
| save that, but it is scored at saving $800 million--and I just | |
| want to be very, very careful that we do the scoring correctly, | |
| because my concern is if this copay discourages folks from | |
| doing what they should be doing in regard to health care, it | |
| could end up costing us a lot more. | |
| Specifically, if people don't get the care and they become | |
| more ill or they become injured and have to go into the | |
| hospital, that is a direct cost to Medicare and the Federal | |
| Government, or it could even turn out to be a cost shift to the | |
| specific States. | |
| And on that note I would like to ask unanimous consent that | |
| we put in the record two letters from two different States who | |
| share the same concern, one from Governor O'Malley, a Democrat | |
| from Maryland, and the other from Governor Deal, a Republican | |
| and former colleague of ours from Georgia. | |
| Mr. Chairman. | |
| Chairman BRADY. Without objection. | |
| Mr. THOMPSON. And I think that is important to note that, | |
| and I would like to know what your thoughts are on that, and we | |
| can start with whomever. Mr. Baker. | |
| Mr. BAKER. Okay. Yes, I think that is a potential. I mean, | |
| in 1972 Congress actually took out copayment amount for the | |
| home health benefit after finding that it had led to increased | |
| hospital usage and institutionalization in other kind of more | |
| expensive and restrictive care settings. And I do believe that | |
| most of the savings that are scored there in the President's | |
| proposal don't come from collecting the actual copayments, but | |
| come in from analysis about the utilization being tamped down | |
| and folks just not accessing the benefit at all. | |
| And particularly the way this copayment is structured, as | |
| has been mentioned, is for people that have not had a | |
| hospitalization that need extended or longer-term care, even | |
| though Medicare doesn't cover long-term care per se. Some folks | |
| can get ongoing home health care needed in order to stay in | |
| their homes through the Medicare benefit. And those are the | |
| folks that are at risk of either hospitalization or of | |
| deterioration of their condition either leading to | |
| hospitalization or nursing home care. | |
| So I think it is misguided, I think it is penny wise and | |
| pound foolish, as they say, and certainly to the extent it has | |
| the potential to lead to higher health costs, that was | |
| recognized in the early 1970s and I think that lesson should be | |
| relearned. | |
| Mr. THOMPSON. Anyone else? | |
| Ms. RIVLIN. I think it is a difficult balancing act to the | |
| extent that there are people using home health care that don't | |
| really need it because there is no copay and you might as well. | |
| We need to discourage that and be careful that it doesn't hurt | |
| people who have very low income or who really need the care. | |
| Mr. THOMPSON. Ms. Rivlin, I am glad that you raised that | |
| issue, because I suspect a lot of that savings is directed at | |
| detecting fraud abuse and getting away from that. But MedPAC | |
| has noted that there are patterns of abuse in home health care, | |
| primarily found in 25 different counties in Texas and Florida. | |
| So it seems to be a pretty focused issue or for the most part | |
| focused, and a pretty wide, sweeping way to deal with it. Is | |
| there a better way? | |
| And I am glad that Mr. Gerlach raised the issue of going | |
| after the fraud because I am one who believes that we can | |
| accomplish a lot in fixing the system if we are able to nail | |
| the fraud stuff. Is there a better way to go after the fraud | |
| than the copay? | |
| Ms. RIVLIN. Well, there may be, but I think the copay would | |
| probably help. | |
| Chairman BRADY. Thank you, Mr. Thompson. | |
| Mr. Blumenauer is recognized for 5 minutes. | |
| Mr. BLUMENAUER. Thank you, Mr. Chairman. And I do | |
| appreciate an opportunity for a conversation like this, zeroing | |
| in on what actually can happen. And I want to follow up on | |
| comments from both my colleagues Mr. Thompson and Mr. Kind | |
| because I think we have embedded in the Affordable Care Act | |
| some opportunity to change the delivery mechanism. We are doing | |
| some experimentation in Oregon, and we are optimistic globally | |
| that it can have some significant effects. What Mr. Thompson | |
| said about being able to identify outliers, counties in a | |
| couple of States that are clearly having a pattern that screams | |
| abuse, the same way that we have had some pill mills where | |
| there are a handful of pharmacies that are responsible for | |
| certain narcotic drugs that find their way into the system. And | |
| I am a proud cosponsor of Mr. Gerlach's legislation for the | |
| secure card, which I think could help us get at that. | |
| I am open to other systematic adjustments, some of which | |
| have been proposed, Mr. Chairman, by some of your colleagues, | |
| some from the Administration. But I am hopeful that we are able | |
| to focus on the big picture, things that we can do now that | |
| clearly attack problems of abuse and mismanagement that should | |
| share broad bipartisan support. And I am hopeful, Mr. Chairman, | |
| that our Subcommittee could zero in on a few of these proposals | |
| that have bipartisan support on the Committee, that aren't | |
| going to solve everything overnight, but will make a | |
| significant difference improving the system. | |
| I am of the opinion that the more we can do on some of | |
| these smaller things that will make a difference, that are | |
| bipartisan, that are not particularly controversial except for | |
| some people who are taking advantage of the system, will help | |
| us establish a foundation for what we are going to have to do | |
| for the next half dozen years as the nature of healthcare | |
| changes in this country. | |
| And I will wrap up, we have things to do. I don't want to | |
| debate particularly some of these modest points, although I | |
| would put on the table one other bipartisan proposal that will | |
| give people better health care, what they want, and will | |
| actually save money. And that deals with letting people know | |
| what they face at the end of life, that Medicare will pay | |
| untold billions to give hip replacements to 92-year-old people | |
| in the last months of life, it will hook them up to machines, | |
| it will do anything, but it won't pay to have a conversation | |
| with the medical professional of their choice about what they | |
| face. | |
| There is a reason why doctors actually consume less health | |
| care in their final months of life, because they know what they | |
| are facing, they know what works, they know what doesn't, and | |
| they have a way of making those decisions and making sure | |
| whatever the decisions are that they are respected. | |
| And I would hope that there would be an opportunity for us | |
| to deal with legislation like that, that is bipartisan, that | |
| will make a difference, that surveys tell us over 90 percent of | |
| the American public wants, that will not just save money but | |
| will give people a better quality of care. | |
| I appreciate your commitment to make the Subcommittee zero | |
| in on some of the big picture, some controversial, some not. | |
| But I hope that we can circle around to some of the stuff that | |
| doesn't have to be controversial which will save money and | |
| bring the Committee together while, above our pay grade, | |
| certain things are battled out. Thank you, Mr. Chairman. | |
| Chairman BRADY. Thank you, Mr. Blumenauer. | |
| Ms. Black for the final question. | |
| Mrs. BLACK. Thank you, Mr. Chairman. And I appreciate being | |
| able to sit here on the Committee and for being given an | |
| opportunity to ask a question. | |
| My question is going to go to two pieces here. One is the | |
| solvency and the other is the quality. And being a healthcare | |
| provider, as Dr. Price talked about, the quality is very | |
| important to me as well, but making sure that we have a system | |
| at the end of the day that is solvent, that we can actually | |
| have a system. | |
| So the current Medicare spending trajectory is | |
| unsustainable and we know that. It has actually led the | |
| Medicare trustees to estimate the Part A trust fund will go | |
| bankrupt in 2023 and insolvent in 2024. So that has already | |
| been established. But recent data has showed that Medicare | |
| spending is actually lower and some have suggested that this | |
| means that we don't need to make any changes to the program. | |
| And so I ask the panelists, and starting with you particularly, | |
| Mr. Antos, and then working down the line, wouldn't you agree | |
| that this is the wrong way to look at this? | |
| And then, second to that, instead of waiting should we be | |
| acting now to extend the solvency of this program? And if we | |
| make those changes now would you agree that the changes would | |
| be smaller now rather than waiting? And then the end piece of | |
| that, can you discuss how you think a well-designed Medicare | |
| program would benefit the outcomes for our beneficiaries? So, | |
| Mr. Antos, can you go to that? | |
| Mr. ANTOS. Thank you. What is lower now is not Medicare | |
| spending, what is lower is the last 2 or 3 years of growth per | |
| beneficiary. But of course the number of beneficiaries is | |
| growing every year. So in fact Medicare spending is continuing | |
| to grow, just at a somewhat slower rate than in the past. But | |
| we only have evidence for the last 3 years of slower Medicare | |
| spending. So I think it is way premature to announce victory | |
| and to hang up our hats. | |
| Clearly, the sooner we take responsible actions to shore up | |
| Medicare financing and to improve the program so that it | |
| actually does a good job for patients, the easier the | |
| transition will be to whatever the new Medicare program will | |
| be. I tend to agree with many of the suggestions of the | |
| Bipartisan Policy Center and the other groups, certainly in | |
| general terms, and they all imply changes in the way patients | |
| act, physicians act, health plans act, and the traditional | |
| Medicare program acts. That is a lot of change, and that takes | |
| a lot of time. The sooner we start on that the more successful | |
| we will be without having what could be a disastrous experience | |
| for vulnerable people. | |
| Mrs. BLACK. Thank you. | |
| Ms. Rivlin. | |
| Ms. RIVLIN. I agree with all of that. I don't think it is | |
| the bankruptcy of the Part A trust fund that should drive this | |
| primarily. You can always put more general revenues in the | |
| trust fund and you are doing that already in Part B. But the | |
| opportunity that you have now to change the way Medicare | |
| reimburses organizations and to incent more cost-effective | |
| delivery systems seems to me just major, and you ought to take | |
| it right away and push on that continuously. | |
| There is no one thing you can do to fix the whole thing, we | |
| will all be back here again. But there is a big opportunity now | |
| to accelerate the reforms, many of which are already in the | |
| Affordable Care Act, to improve the delivery system for | |
| Medicare and the rest of the health system. | |
| Mrs. BLACK. And might I add to that, because I think I | |
| heard you say earlier that one of the things you think is a | |
| benefit of this is that the quality of care is actually going | |
| to increase. | |
| Ms. RIVLIN. Yes, absolutely. | |
| Mrs. BLACK. Mr. Baker, in my little bit of time I have | |
| left. | |
| Mr. BAKER. Of course. I think I agree with a lot of what | |
| has been said. I think the crisis isn't as acute a crisis as it | |
| has been because of the slowdown in growth in Medicare costs. | |
| And if you are looking 10 years ahead we do have this window | |
| now where, if this projection keeps up--and projections are | |
| projections, right--but we feel that there is some breathing | |
| room. That doesn't mean we should be complacent. Definitely, as | |
| we have all discussed, not only in our Medicare program, but | |
| also in our private health insurance and private coverage | |
| schemes we need to be looking at how to save money and, as you | |
| are saying, increase the level of quality of care and get | |
| higher value. | |
| And so we think once again that some of the reforms in the | |
| Affordable Care Act, some of the things that are happening in | |
| the private sector that mirror that, and I agree with Ms. | |
| Rivlin that those things coming together and Medicare working | |
| shoulder to shoulder can drive a lot of good change. I mean, | |
| Medicare has had that role in the past and can have it now. I | |
| think my concern is that some of the cost-sharing that we see | |
| here isn't driving in that direction. | |
| Mrs. BLACK. Thank you, Mr. Baker. | |
| Yield back. | |
| Chairman BRADY. Thank you. On behalf of Mr. McDermott and | |
| myself, I would like to thank all three of our witnesses for | |
| their testimony today on the President's budget proposals. Your | |
| experience and ideas on how to reform Medicare to keep it | |
| solvent for our Nation's seniors are constructive, and your | |
| continued thoughts and feedback will be very helpful as we move | |
| forward with these efforts in the coming months. | |
| As a reminder, any Member wishing to submit a question for | |
| the record will have 14 days to do so. If any questions are | |
| submitted, I ask the witnesses respond in a timely manner, as I | |
| know you will. | |
| With that, the Subcommittee is adjourned. | |
| [Whereupon, at 11:35 a.m., the Subcommittee was adjourned.] | |
| [Submissions for the Record follow:] | |
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