[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
SGR: DATA, MEASURES, AND MODELS; BUILDING A FUTURE MEDICARE PHYSICIAN
PAYMENT SYSTEM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 14, 2013
__________
Serial No. 113-6
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois LOIS CAPPS, California
MIKE ROGERS, Michigan JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania JIM MATHESON, Utah
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
CATHY MCMORRIS RODGERS, Washington JOHN BARROW, Georgia
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN P. SARBANES, Maryland
GUS M. BILIRAKIS, Florida HENRY A. WAXMAN, California (ex
RENEE L. ELLMERS, North Carolina officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 3
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 4
Prepared statement........................................... 5
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 6
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Prepared statement........................................... 8
Witnesses
Glenn M. Hackbarth, J.D., Chairman, Medicare Payment Advisory
Commission..................................................... 9
Prepared statement........................................... 11
Answers to submitted questions............................... 182
Harold D. Miller, Executive Director, Center for Healthcare
Quality and Payment Reform..................................... 71
Prepared statement........................................... 74
Answers to submitted questions............................... 188
Elizabeth Mitchell, CEO, Maine Health Management Coalition....... 100
Prepared statement........................................... 102
Robert Berenson, M.D., Institute Fellow, Urban Institute......... 124
Prepared statement........................................... 126
Answers to submitted questions............................... 194
Cheryl L. Damberg, Ph.D., Senior Policy Researcher, Professor,
Pardee Rand Graduate School.................................... 139
Prepared statement........................................... 141
Submitted Material
Letter of February 13, 2013, from the National Partnership for
Women & Families to the Subcommittee, submitted by Mr. Pallone. 176
Statement of the American Medical Association, submitted by Mr.
Pitts.......................................................... 178
Statement of the American College of Physicians, submitted by Mr.
Pitts.......................................................... 181
SGR: DATA, MEASURES AND MODELS; BUILDING A FUTURE MEDICARE PHYSICIAN
PAYMENT SYSTEM
----------
THURSDAY, FEBRUARY 14, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:18 a.m., in
Room 2123 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Hall,
Shimkus, Murphy, Gingrey, Lance, Cassidy, Guthrie, Griffith,
Bilirakis, Ellmers, Upton (ex officio), Pallone, Dingell,
Engel, Capps, Green, Barrow, Christensen, Castor, Sarbanes, and
Waxman (ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Matt
Bravo, Professional Staff Member; Steve Ferrara, Health Fellow;
Julie Goon, Health Policy Advisor; Debbee Hancock, Press
Secretary; Robert Horne, Professional Staff Member, Health;
Carly McWilliams, Legislative Clerk; John O'Shea, Senior Policy
Advisor, Health; Andrew Powaleny, Deputy Press Secretary; Chris
Sarley, Policy Coordinator, Environment and Economy; Heidi
Stirrup, Health Policy Coordinator; Alli Corr, Democratic
Policy Analyst; Amy Hall, Democratic Senior Professional Staff
Member; Elizabeth Letter, Democratic Assistant Press Secretary;
and Karen Nelson, Democratic Deputy Committee Staff Director
for Health.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. The subcommittee will come to order. The chair
recognizes himself for 5 minutes for an opening statement.
The background and details of the topic of today's hearing
are well known to physicians, to this subcommittee, and to most
health policy analysts. The Sustainable Growth Rate, or SGR
payment system, originated with the Balanced Budget Act of
1997. At that time, the intent of the of SGR physician payment
system, placing controls on Medicare spending through global
spending targets and fee cuts if the targets were exceeded,
seemed like a reasonable thing to do. However, within a short
time, it became apparent that this policy was flawed.
This subcommittee has had previous hearings that have
addressed the shortcomings of SGR, including the repeated
threats to patient access to care, and provider income, and the
mounting costs of Congressional actions to override the
scheduled fee cuts. Congress has acted to override these
statutory cuts on at least 15 occasions, and the cost of these
overrides has been staggering. The most recent 1-year extension
override comes at a price of $25.2 billion.
Furthermore, all the money spent on avoiding cuts to
physician fees has not gotten us any closer to a payment policy
that will reimburse physicians for the value rather than the
volume of services, will pay physicians and other providers
fairly, and ensure access to high quality health care for all
Medicare beneficiaries.
Today's hearing is an attempt to move us closer to that
goal. This hearing will focus on three themes: data, measures
and models. In thinking about the proper payment policy, there
seems to be fairly widespread agreement that certain elements
are needed to build that system.
First of all, physicians, payers, and other stakeholders
need access to reliable data that can be used to improve the
value of health care. Appropriate measures also need to be
developed on an ongoing basis to continually assess progress in
improving the system. In addition, as new and better payment
and care delivery models are developed, they should be
incorporated into the Medicare program.
The witnesses that are here today are well equipped to
address these areas. I would like to express my thanks to
today's witnesses who have taken time out of their busy
schedules to share their expertise with the subcommittee on
this difficult problem which has confronted the Medicare system
for more than a decade.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The background and details of the topic of today's hearing
are well-known to physicians, to this Subcommittee, and to most
health policy analysts.
The Sustainable Growth Rate, or SGR payment system,
originated with the Balanced Budget Act of 1997. At the time,
the intent of the of SGR physician payment system, placing
controls on Medicare spending through global spending targets
and fee cuts if the targets were exceeded, seemed like a
reasonable thing to do. However, within a short time, it became
apparent that this policy was flawed.
This Subcommittee has had previous hearings that have
addressed the shortcomings of SGR, including the repeated
threats to patient access to care and provider income, and the
mounting costs of Congressional actions to override the
scheduled fee cuts.
Congress has acted to override these statutory cuts on at
least 15 occasions and the cost of these overrides has been
staggering. The most recent one year override comes at a price
of $25.2 billion.
Furthermore, all the money spent on avoiding cuts to
physicians fees has not gotten us any closer to a payment
policy that will reimburse physicians for the value rather than
the volume of services, will pay physicians and other providers
fairly, and ensure access to high quality health care for all
Medicare beneficiaries.
Today's hearing is an attempt to move us closer to that
goal.
This hearing will focus on three themes: data, measures and
models.
In thinking about the proper payment policy, there seems to
be fairly widespread agreement that certain elements are needed
to build that system.
First of all, physicians, payers and other stakeholders
need access to reliable data that can be used to improve the
value of health care.
Appropriate measures also need to be developed on an
ongoing basis to continually assess progress in improving the
system.
In addition, as new and better payment and care delivery
models are developed, they should be incorporated into the
Medicare program.
The witnesses that are here today are well equipped to
address these areas.
I would like to express my thanks to today's witnesses who
have taken time out of their busy schedules to share their
expertise with the Subcommittee on this difficult problem which
has confronted the Medicare system for more than a decade.
Mr. Pitts. Now I would like to recognize the ranking member
of the Subcommittee on Health, Mr. Pallone, for 5 minutes for
an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE JR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts. I want to commend
you for holding today's hearing. As our first Health
Subcommittee of the 113th Congress, I think it sends a strong
message that fixing the Sustainable Growth Rate system is our
top priority, and I know it is certainly my top priority.
So let me just note that I was very encouraged by Chairman
Upton's remarks yesterday, that it is his goal to put a bill on
the House Floor before the August recess. I stand ready to work
with you both to meet that goal, and it is my hope that this
will be a bipartisan process. But I would be remiss if I didn't
express my disappointment to see the release of a Republican
framework by the committee and its Ways and Means counterpart.
Truthfully, since I understand that there was a commitment to
working with us on a bipartisan basis, putting out a
Republican-only framework is somewhat perplexing. With little
detail, I will refrain from commenting on its substance, so I
just ask that moving forward, any future products will include
the input of the Democratic members of the committee.
Now, we are here again facing yet another year of
uncertainty in Medicare for physicians and beneficiaries.
Clearly, we can all agree that the SGR is fundamentally flawed
and it is creating instability in the program. While the
formula represented an attempt to minimize unnecessary growth
in volume of services, it has not only failed to do that, but
also fails to reward providers for improved quality and
outcomes. As a result, Congress has spent more than a decade
overriding arbitrary cuts to physician payments generated by
this formula with little to show for that other than an ever-
growing budgetary hole. At a time when it is often difficult to
find bipartisan consensus, this is one area where people on the
left and the right of the political spectrum have come to
agreement, and that is that the SGR formula must be repealed
and replaced.
But the question that has vexed those us in Congress is how
best to accomplish that replacement. While no one proposal is
likely to hold a perfect solution, I believe there are a number
of elements we should seek to incorporate into a new payment
model including building on the reforms that are already
underway in Medicare through the Affordable Care Act.
First, we have to reward quality. Providers who contribute
to improved health care outcomes and better quality deserve
recognition. Second, we must also reward efficiency, delivering
the right care at the right time in the right setting. Third,
we must reward collaboration and a patient-centered approach.
Too often, Medicare is fragmented and a complete view of the
patient is missing. We need to ensure providers have incentives
to work together and share information.
Now, today's hearing will delve into these issues by
exploring how quality is measured, what data is needed and what
models will deliver the best results. These components must be
resolved in order to finally replace the SGR. And so I welcome
our witnesses here to bring their perspectives to help our
members evaluate these essential issues.
I also wanted to say, Mr. Chairman, I don't know how many
newer members we have today but I do think my feeling is that
the newer members of the committee on both sides of the aisle
have a lot to offer with regard to the SGR and looking towards
the future, and so I hope that we will get a lot of our newer
members involved in whatever final outcome we come up with,
because I do think they have a lot to offer.
I want to close with a fact that I think can't be ignored,
and that is that SGR repeal is too expensive to pay for with
Medicare cuts alone, especially when Medicare cuts are being
considered to reduce the Nation's debt. I have said to my
colleagues including you, Mr. Chairman, that I really worry
that every time there need to be some changes, you know, to
meet the SGR goal or to deal with other health care
initiatives, it is also assumed that the cuts have to be within
the health care system, and whether it is Medicare or Medicaid,
we should not always look to provider cuts within the health
care system to pay for other provider cuts that have been out
there. I know we are all delighted to see that the cost of
repealing the SGR is lower than it has been in years, but we
are not fools. A hundred and eighty-three billion dollars is
still a lot of money, and we simply can't find that amount of
savings from Medicare alone, and that is why I have insisted
from the beginning that we not only consider savings from
within the health care system, I believe we can use another
approach to write off the costs such as an unpaid baseline
adjustment or the OCO funds. The OCO funds are something I have
suggested in the past.
But in any case, the SGR is unsustainable, unreliable and
unfair, so the question remains, how do we fix it. I hope we
can begin to truly answer that question after today's hearing
so that we can provide security and reliability for our seniors
and our doctors alike.
I yield back. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman, and I join him
in welcoming all the new members to the subcommittee including
on our side Mr. Hall, Mr. Griffith, Ms. Ellmers and Mr.
Bilirakis.
At this time the Chair recognizes the chairman of the full
committee, Mr. Upton, for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman.
You know, by now we are all too familiar with how the
current SGR system has caused uncertainty among physicians and
threatened access to care for our Nation's seniors.
Unfortunately, this issue was ignored in the Affordable Care
Act, but continuing to ignore it is no longer an option.
Yesterday, I had the opportunity to address the AMA, and I
emphasized our desire to work with physicians and the need for
input from the medical profession in order to arrive at a
physician payment policy that will in fact achieve real reform.
Real reform will mean that doctors no longer have to wonder
whether they will face substantial fee cuts and that our
Nation's seniors will not have to wonder whether they will be
able to see their docs.
During the last Congress, the Energy and Commerce Committee
began a bipartisan effort to address the problem that has
plagued seniors and their physicians for more than a decade. In
2011, the committee sent a bipartisan letter to more than 50
physician organizations, soliciting input on how to reform the
Medicare physician payment system. More than two dozen
responded with a good number of valuable ideas.
This subcommittee then held hearings to address the issue,
and the committee has continued to engage with physicians and
other stakeholders to formulate a payment policy to solve this
difficult problem.
Last week, Ways and Means Chairman Dave Camp and I, along
with Subcommittee Chairmen Pitts and Brady, as well other
committee members, announced the release of a proposal to
finally achieve long-term reform of the current SGR Medicare
physician payment system. This is a top priority. And as we
move closer to the goal, I am confident that we can make it a
bipartisan effort. Today's hearing is another step in that way,
and I would yield the balance of my time to the vice chair and
a very important player as we have formulated the draft and
pursue this issue, Dr. Burgess from Texas.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
By now, we are all too familiar with how the current
Sustainable Growth Rate system has caused uncertainty among
physicians and threatened access to care for our nation's
seniors.
Unfortunately, this issue was ignored in the Affordable
Care Act, but continuing to ignore it is no longer an option.
Yesterday, I had the opportunity to address the American
Medical Association. I emphasized our desire to work with
physicians and the need for input from the medical profession
in order to arrive at a physician payment policy that will
achieve real reform.
Real reform will mean that doctors no longer have to wonder
whether they will face substantial fee cuts and that our
nation's seniors will not have to wonder whether they will be
able to see their doctors.
During the 112th Congress, the Energy and Commerce
Committee began a bipartisan effort to address this problem
that has plagued seniors and their physicians for more than a
decade.
In 2011, the Committee sent a bipartisan letter to more
than 50 physician organizations and others, soliciting input on
how to reform the Medicare physician payment system. More than
30 groups responded to our letter with a number of valuable
ideas.
The Health Subcommittee then held hearings to address this
issue, and the committee has continued to engage with
physicians and other stakeholders to formulate a payment policy
to solve this difficult problem.
Last week, Ways and Means Chairman Camp and I, along with
Subcommittee Chairmen Pitts and Brady, as well other committee
members, announced the release of a proposal to finally achieve
long-term reform of the current SGR Medicare physician payment
system. This is a top priority. As we move closer to this goal,
I am confident that we can make this a bipartisan effort.
Today's hearing is another step in that process.
I would like to thank the witnesses for volunteering both
their time and expertise today and for helping us as we move
toward a solution to this problem.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Well, I thank the chairman for the
recognition, and we all know that this Sustainable Growth Rate
formula, it is an issue whose time has come and should have
gone long ago. It is unrealistic assumptions of spending and
efficiency. It has certainly plagued this committee, but
really, the important thing is, it has been a problem for
doctors and it has been a real problem for beneficiaries at a
time when beneficiaries are growing at 10,000 a day.
It has already been mentioned about the follow-up where our
two committees share jurisdiction. The framework does build off
the work done over the past year and a half by the chairman of
the subcommittee and his staff and has involved collaboration
from doctors and patient groups all over the country. It should
be noted, it is not for discriminating between physicians and
other providers. It does not seek to benefit one form of
medical practice over another. The framework realizes, there
are always going to be areas where providers choose or need to
practice in a fee-for-service for model. It doesn't mean there
are not better ways to revamp fee-for-service but it does mean
the fee-for-service may continue to exist.
Our goal cannot be flexibility in practice models if we do
not have the ability to quickly evaluate innovative practice
environments, and if appropriate, build them into future
options. Innovation for the future is critical and every
encouraging the reevaluation of adoption of models that adapt
to changes in best practices and clinical guidelines and the
technology.
I will submit the balance of my remarks for the record and
yield the time to Dr. Gingrey.
Mr. Gingrey. I thank Mr. Burgess for yielding.
Mr. Chairman, I am encouraged that Chairman Upton has
signaled the SGR repeal and replacement will be a chief concern
for the Energy and Commerce Committee this year. I am excited
to be here today as it is hopefully the conclusion of a large
fact-finding mission this subcommittee has undertaken over
these few years. We began with hearings to address the need for
action, then to understand past attempts to reform, and now we
are finally here today to seek how to use data and other
measures to modernize and improve the Medicare payment system
as a last step before legislative action.
As a doctor and as co-chairman of the GOP Doctors Caucus, I
understand the necessity of these changes, and I look forward
to seeing the job of reform completed this year, and certainly,
Mr. Chairman, thank you for calling this hearing, and I yield
the balance of this time to the gentleman from Louisiana, Dr.
Cassidy.
Mr. Cassidy. Thank you, Mr. Gingrey.
The 113th Congress has a tremendous opportunity and
obligation to finally eliminate the SGR payment regime, but I
would say as we discuss and contemplate new and innovative
payment models, we have to keep in mind that the typical
Washington solution involves very large bureaucracies, either
public or private. That said, as a practicing physician, I know
many of my colleagues are reluctant to give up their smaller
practice, and if we are going to achieve a quicker reform, we
must keep that in mind if for no other reason than that is
reportedly a major cause of physician burnout and early
retirement. So my office is working on a proposal that would
allow these physicians to continue to participate in their
private practice but to have gain-sharing relationships,
participate in those innovative reforms while retaining the
independent nature of their current practice, and I would look
forward to the Democratic side participating in this discussion
as well because I do think that is a bipartisan concern.
I look forward to the panel's testimony and discussion, and
I yield back. Thank you.
Mr. Pitts. The Chair thanks the gentleman. At this time the
Chair recognizes the ranking member of the full committee, Mr.
Waxman, for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman. I guess that is called
good timing. I was present at another subcommittee hearing
upstairs and I wanted to get down here as soon as I could. I
want to thank you for holding this hearing.
Today's discussion will focus on some of the critical
questions we must address in redesigning Medicare's physician
payment system. There is no question about it: Medicare is
vital to the health of seniors in our country, and physicians
are a vital part of Medicare, and a critical partner to helping
us build a health care system that provides better health care
and improved health for all patients. We know that the payment
system can drive patient outcomes but, unfortunately, right now
it is not driving it in the direction of better health and
value.
It is clear from this hearing that there is a broad
consensus on the need to fix this problem, and even consensus
on which direction we need to move. The question is how to get
there. The Affordable Care Act provides the foundation for the
right path forward. Through its support for new delivery and
payment models like accountable care organizations, bundled
payments, medical homes and initiatives that boost primary
care, it moves us in the direction of improved quality,
efficiency and value. Innovative delivery and payment system
models are also being developed and implemented by physician
groups, health systems, regional health improvement
collaboratives, and private payers, in some cases as private-
public partnerships. We will hear more about these in today's
hearing. We have the opportunity to leverage payment reform in
Medicare to support these new delivery and payment models. We
need to respect and encourage local innovation, but ensure
accountability for improvement and prudent management.
Our challenge is to judiciously balance the many competing
interests in our health care system. I believe that we need to
approach this discussion with physicians as our partners, but
we also need to ensure that other health care stakeholders,
including beneficiaries and non-physician providers, have input
as well.
It is no longer acceptable to accept the status quo. It is
time for us to work together and permanently repeal SGR and put
in place a truly sustainable system that aligns provider
payments with quality and ensures that all Americans have
access to the best care at lower cost.
I am pleased the chairman is moving forward with this
hearing early in this Congress, and I am hopeful that we can
find common ground on a solution for a problem that has been
calling out for one for a very long time. We shouldn't have
this SGR threat hanging over us every year with the uncertainty
it has meant to the physicians in this country, not knowing
whether Medicare is going to be there for them, which has
brought about many physicians leaving the Medicare program
completely, which is a disservice to the beneficiaries of
Medicare.
I thank you for the time allotted to me. I will be happy to
yield whatever period of time I have left to any other member
that wants me to yield. If not, I will yield back the time.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
I would like to thank the Chairman for holding this
hearing. Today's discussion will focus on some of the critical
questions we must address in re-designing Medicare's physician
payment system.
There is no question about it, Medicare is vital to the
health of seniors in our country. And physicians are a vital
part of Medicare, and a critical partner to helping us build a
health care system that provides better health care and
improved health for all patients. We know that the payment
system can drive patient outcomes but, unfortunately, right now
it is not driving it in the direction of better health and
value.
It's clear from this hearing that there is broad consensus
on the need to fix this problem, and even consensus on which
direction we need to move. The question is how to get there.
The Affordable Care Act provides the foundation for the right
path forward. Through its support for new delivery and payment
models like accountable care organizations, bundled payments,
medical homes, and initiatives that boost primary care, it
moves us in the direction of improved quality, efficiency, and
value.
Innovative delivery and payment system models are also
being developed and implemented by physician groups, health
systems, regional health improvement collaboratives, and
private payers, in some cases as private-public partnerships.
We will hear more about these in today's hearing. We have the
opportunity to leverage payment reform in Medicare to support
these new delivery and payment models. We need to respect and
encourage local innovation, but ensure accountability for
improvement and prudent management.
Our challenge is to judiciously balance the many competing
interests in our health care system. I believe that we need to
approach this discussion with physicians as our partners, but
we also need to ensure that other health care stakeholders,
including beneficiaries and non-physician providers, have input
as well.
It is no longer acceptable to accept the status quo. It is
time for us to work together and permanently repeal SGR and put
in place a truly sustainable system that aligns provider
payment with quality and ensures that all Americans have access
to the best care at lower cost.
I am glad to see the Chairman moving forward early in this
Congress, and I am hopeful that we can find common ground on a
solution.
Mr. Pitts. All right. The Chair thanks the gentleman.
We have two panels today. Our first panel will have just
one witness, Mr. Glenn Hackbarth, chairman of the Medicare
Payment Advisory Commission. We are happy to have you with us
today, Mr. Hackbarth, and you are recognized for 5 minutes for
an opening statement at this time.
STATEMENT OF GLENN M. HACKBARTH, J.D., CHAIRMAN, MEDICARE
PAYMENT ADVISORY COMMISSION
Mr. Hackbarth. Chairman Upton, Ranking Member Waxman,
Subcommittee Chairman Pitts and Ranking Member Pallone, I
appreciate the opportunity to talk to you today about repeal of
the Sustainable Growth Rate system for physicians.
MedPAC, which I chair, first recommended repeal of SGR in
2001. We recommended repeal at that point because we thought
that the system would be ineffective in achieving the goal of
encouraging efficient use of limited resources but also be
inequitable to physicians inasmuch as any penalties apply
equally to all physicians without regard to their individual
performance.
To those two original concerns, we have now added a third,
and that is that continuation of SGR poses an increasing risk
to access to care for Medicare beneficiaries. Although we have
not yet seen a significant erosion in access at the national
level, we have all heard about problems with access to care for
Medicare beneficiaries in particular markets and especially for
primary care services.
MedPAC's fear is that those problems could spread rapidly
if SGR is continued. We have a tight balance between supply and
demand for services in many markets, again, in particular for
primary care services, and growing physician frustration and
anger about SGR means that even small numbers of physicians
electing to reduce their participation in Medicare could have
significant effects on access to care for Medicare
beneficiaries. Now, to be clear, I am not predicting a national
crisis at this point but we certainly cannot rule it out
either.
We have an especially good opportunity, I think, now to
address the SGR issue. As you well know, CBO has recently
significantly reduced the budget score attached to repeal of
SGR. In effect, SGR appeal is now on sale but the sale may not
last forever. If experience is any guide, projections of this
sort vary over time. I have been doing this for quite a while
now, and I have gone through multiple cycles where we had low
periods of growth followed by acceleration and rapid periods of
growth, then low periods and then rapid periods again. Right
now, we are in a low period of growth in utilization of
services and hence the low score for repeal. I think it is
important to seize this opportunity.
Repealing SGR alone is not enough, however. MedPAC
recommends that the repeal legislation pursue two other goals.
First is to balance payments within the physician payment
system with particular focus on increasing payments for
cognitive services relative to procedures and tests with a
particular emphasis on improving payment for primary care
services, and the second objective that we recommend is to
encourage migration away from fee-for-service to new payment
models for Medicare.
The criticism of fee-for-service that one most often hears
is that fee-for-service has the incentive to increase volume
without regard to outcomes for patients. That is true. But from
our perspective, equally important is that fee-for-service
enables, if not encourages, a fragmentation of care delivery,
and through its siloed nature actually impedes the free flow of
resources to where clinicians think they can do the best for
patients. We believe that a better approach is a payment system
that decentralizes decisions about what is appropriate care in
exchange for accountability by clinician and provider
organizations for outcome and total cost.
Last point: Moving to these new payment models will take
time. These are complicated changes to make, both on the
payment side and on the care delivery side. They should take
time. For us, that is a reason to begin now and not to delay
any further. If we delay longer, it means that we will be well
into the bulge of Baby Boomers retiring in the Medicare program
and the financial pressures will be heightened, and we believe
as a result the risk to both physicians and patients will be
greater.
With that, Mr. Chairman, I am happy to take your questions.
[The prepared statement of Mr. Hackbarth follows:]
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Mr. Pitts. Thank you for your opening statement. Your
entire written testimony will be made a part of the record. I
will begin the questioning and recognize myself for 5 minutes
for that purpose.
Mr. Hackbarth, in your testimony you state that the array
of new models for paying physicians and other health
professionals is unlikely to change dramatically in the next
few years. Yet you advocate rewarding physicians as they shift
their practices from open-ended fee-for-service to accountable
care organizations. Are you suggesting that ACOs are the only
models that physicians should shift to or should physicians be
able to choose how they practice from a wide variety of
options?
Mr. Hackbarth. A couple points, Mr. Chairman. First of all,
we focus on ACOs because they are the new model that is already
a part of the Medicare program. As you know, other models,
medical homes, bundling around admissions, are being piloted at
this point. ACOs, however, are the only models that are
actually operational in the Medicare program.
The second point I would make is that the ACO model is by
design a flexible model. It does not dictate a particular form
of medical practice or a particular way for money to be
distributed within the ACO among clinicians and other types of
providers. Let me draw an analogy here. In the Medicare
Advantage program, we have private insurers enrolling Medicare
beneficiaries, and they deal with physicians in a lot of
different practices, some in sole practice, others in small
groups, others in large multi-specialty groups, and they manage
to deal with physicians in different settings, often with
different payment models, depending on the particular location
and type of practice. ACOs can have the same sort of
flexibility, the principal difference being that ACOs by design
are provider-governed organizations as opposed to organizations
run by insurance companies. So we think that there is every
possibility for the ACO structure to be a flexible one that
does accommodate differences in practices and pay physicians in
different ways, depending on circumstances.
Mr. Pitts. Now, you suggest that the fee schedule should be
rebalanced to preserve access to primary care, and one way you
suggest doing this is by giving a primary care bonus similar to
the provision in PPACA. However, according to the Association
of American Medical College's Center for Workforce Studies,
there will be 45,000 too few primary care physicians but also a
shortage of 46,000 surgeons and medical specialists in the next
decade. If the goal is to increase the primary care workforce
by making primary care more attractive to medical school
graduates, do you think that a few years of modest payment
increases will do this, and how does this address the projected
shortage of specialists?
Mr. Hackbarth. So let me talk about the steps related to
primary care first and then come back to other specialties. We
actually think that there is a series of things that should be
done to improve payment for primary care and increase the
likelihood that more young physicians in training choose
primary care as a career and also that older physicians who are
nearing retirement continue to practice primary care as opposed
to elect early retirement. One step is to change how the
relative value units are calculated in the physician fee
schedule, and I would be happy to go into detail on any of
these, if you wish. Second is to add new codes to the physician
fee schedule to pay explicitly for activities that are not now
covered like care coordination and management of transitions in
care. A third is a bonus of the sort that you referred to in
your question, Mr. Chairman. A fourth is moving to new payment
models as we are piloting with medical home where part of the
payment is on a lump-sum-per-patient basis in addition to the
fee-for-service payment. And then the last thing is graduate
medical education. There is a lot of talk about shortage of
physicians and particularly a shortage of primary care
physicians and the need to increase the number of Medicare-
funded GME slots. If Congress takes up that issue of expanding
GME funding, we would urge it to look in particular at how
those physicians are distributed across specialties and ensure
that an adequate number are devoted to primary care.
Now, on the issue of other specialties, we are not saying
that primary care is the only specialty--or the only--certainly
it is not the only specialty that matters to Medicare patients.
All of the specialties play an important role in high-quality
care. We focus on primary care, however, because the evidence
that we see that a robust system of primary care is especially
important to a high-performing health care system and so in a
time of limited resources, we think that that focus on primary
care is justified based on system performance.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the ranking member of the subcommittee, Mr. Pallone,
for 5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman. I want to follow up
on what you were discussing there with primary care.
Mr. Hackbarth, tell me what is the problem in primary care.
In other words, what kinds of problems are we facing and why
are we facing this crisis? Just give me a little idea about
what we face and what is causing it.
Mr. Hackbarth. Well, I think that there are several
factors, Mr. Pallone. One is the overall level of compensation.
As you well know, it is significantly lower than many of the
subspecialties. In fact, if you look at it on an hourly basis
under the physician fee schedule, the amount we pay for various
specialty services is often two or three or more times what we
pay for primary care services on an hourly basis. So there is a
significant payment differential there.
In talking to primary care physicians, though, I often hear
that that is only a piece of the problem. Another problem is
that fee-for-service as a method of payment is not really well
suited to primary care because the fee schedule doesn't
recognize all of the activities that make primary care
important for the care delivery system--education of payments
and ongoing contact with patients, coordination of care and the
like. And often these days where we have got a relative
shortage of primary care physicians, the practices are frankly
overwhelmed with the work they need to do and the number of
patients they need to see. It is important, therefore, to help
primary care practices build some of the infrastructure that
would allow them to better manage larger volumes of patients,
and that is where the lump-sum payment and the medical home is
particularly important. It allows practices to hire additional
staff to work with patients and some of the educational
activities allow them to build necessary systems and the like.
So we need to make the job more doable as well as to increase
the average compensation level.
Mr. Pallone. All right. Thanks. I wanted to ask about
physicians who don't fit in delivery models. As you know, there
is a great deal of diversity in the health care system and
various specialties and practice patterns, different kinds of
markets, some dominated by hospitals, some more dominated by
plurality of provider groups or individual practitioners. How
do you design a reformed Medicare payment system that works for
all physicians? In other words, how do we address the
measurement challenges for a myriad of physicians? Are we
always going to have some doctors that don't fit into a
delivery model? Are we always going to have doctors for whom
the quality measurement system just doesn't work? How should we
deal with this, essentially?
Mr. Hackbarth. We may at the end have some physicians that
are in unique circumstances, for example, very isolated areas
that we will have to treat as a special case. But as I
indicated in my response to Chairman Pitts, ideas like the
accountable care organization, I don't see as rigid models that
dictate a particular form of physician practice. ACOs as
defined in the statute and in the regulations are able to
accommodate different styles of medical practice--solo
practice, group practice and the like. And in fact, if we look
around the country in terms of how practices deal with managed
care organizations. Again, private insurance plans, you see a
lot of variety. So take a State like California where you have
got a lot of managed care activity and have for years. Some of
the physician practices there are large, multi-specialty
groups, but there are also independent practice associations
where much smaller practices are hooked together with one
another for purposes of contracting, sharing resources and the
like and sharing financial responsibility. So I think that
there are opportunities for many different styles of practice.
It is not a one-style-fits-all model in the ACO.
Mr. Pallone. Can I just ask--my time is limited now, but I
think Medicare needs to make more data available for
development of models and care improvement. What is MedPAC's
view of CMS's current data policies, and is there some way that
the agency and Congress can encourage more data availability.
Mr. Hackbarth. Well, I don't consider myself expert, Mr.
Pallone, on the CMS data systems. Traditionally, it has been a
struggle for CMS to provide timely data, for example, to
physicians and in the pilots in the prepaid group practice
demonstration project. In part, at least, that is a function of
resources. The agency in our judgment has been chronically
underfunded. The tasks that it has to carry out are
increasingly complicated including on the data front and they
don't get the resources they need to do those jobs well. And I
think we are paying a price. It reduces the appropriation side
of the budget but the lack of robust data means that we are
going to spend more on the entitlement side of the budget.
Mr. Pallone. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and recognizes
the vice chairman of the subcommittee, Dr. Burgess, for 5
minutes for questions.
Mr. Burgess. I thank the chairman for the recognition.
Mr. Hackbarth, it is good to have you back at the
committee. You know, the downside of solving the SGR is we
won't get to have these visits every couple of years, but I
will actually look forward to that as well. Maybe we will both
find something better to do with our time.
You were just talking to Mr. Pallone about models. Could
you speak for just a minute about what you have learned from
the study of Medicare Advantage programs? Some, I understand,
have worked well, even with the constraints of the SGR, others
maybe not so well. So are there positives that we can take away
from the Medicare Advantage experience?
Mr. Hackbarth. There are positives. In fact, some Medicare
Advantage plans, as you know, perform extremely well on both
quality of care measures and cost, and among the plans that
perform well, there are a variety of different models. Some of
them are the prepaid group practice model like Kaiser
Permanente but there are other plans that contract with
independent practices and don't rest entirely on large multi-
specialty groups.
Mr. Burgess. I would just offer an observation, that it is
not just the satisfaction of the agencies and the people who
measure those things but it is also satisfaction of patients
and satisfaction of physicians, and certainly my experience
with a group like Scott and Mike down in Temple, Texas, is that
this has worked reasonably well and it may be something that we
certainly want to be careful that we don't damage whatever we
do going forward.
Can you speak to--everyone this morning is kind of focused
on the fact that the CBO put SGR on sale so let us buy this
week while it is low. Can you talk just a little bit about why
it is low and is there a dark side to it being low right now?
Mr. Hackbarth. Yes. There are a number of reasons, and
understanding all of the magic of the CBO estimation process is
not one of my strengths and so----
Mr. Burgess. Me neither.
Mr. Hackbarth [continuing]. Any detailed accounting you
ought to get directly from CBO, but the most important factor
is that the rate of growth in Medicare expenditures, in
particular physicians, has slowed significantly in the last
several years.
Mr. Burgess. Let us stay on that for just a minute. Why is
that? Is that because of the recession? Is that because of
physician ownership of some facilities? Can you drill down on
that a little bit?
Mr. Hackbarth. Well, the short answer is, I don't think any
of us really knows. As you well know, there has been some
speculation about the effect of the recession, although
logically, you would think that that would be less of a factor
for the Medicare population which by definition had continuous
coverage through the recession. There has been some sort of
public health factors. A relatively small flu season in recent
years has held down utilization. We have seen significant
slowing of the rate of increase in imaging. That could be due
in part to changes in payment but also due in part to growing
concerns about radiation exposure. And finally, it could be
that some physicians believe the world is changing and are
preparing for a new world where total cost of care is more
important.
Mr. Burgess. Yes. Have the new methods of payment been
around long enough for them to stake any legitimate claim in
these savings?
Mr. Hackbarth. You know, I think the jury is out on that.
Mr. Burgess. So the answer is no, the short answer?
Mr. Hackbarth. Yes.
Mr. Burgess. OK. I will accept that. Let me just ask you
this. I mean, you talked a little bit about decentralization,
and I must admit, we have had these discussions before, you hit
a nerve with me. It is not decentralization, it is
recentralization. I mean, you take the authority from me as a
practicing physician and then you are giving it to someone
else. It is not that it has gone away and magically just been
dissipated out into the ether. So it is not decentralization,
it is recentralization, and, you know, I think a lot of
physician groups and certainly patient groups fear that that
recentralization will occur somewhere, whether it is in an
insurance company, whether it is in a hospital, whether it is
in the government itself where their interests may not be
served. I mean, let us remember, an accountable care
organization begs the question, accountable to whom, and if the
doctor is employed by the hospital, if the doctor is employed
by the government or an insurance company, then they are
probably accountable to their employer, are they not?
Mr. Hackbarth. Well, I know there is widespread, although
not universal concern, among physicians about having to work
for the hospital in an ACO, but in fact, 50 percent of the ACOs
that have been approved and signed contracts with CMS have been
physician-sponsored organizations which, as a former CEO of a
physician group, I consider to be a very positive sign. I
happen to believe that physician-sponsored organizations are
the way to go. And so I don't think the ACO model is synonymous
with hospital control.
My fear about fee-for-service is that continuation of fee-
for-service combined with the inevitable increase in fiscal
pressure from the retirement and Baby Boom generation
inevitably leads to ratcheting down on the rules around fee-
for-service payment, more intrusion from central locations like
Washington and Baltimore into clinical decision-making, more
detailed rules about what you have to do to qualify for this
type of payment and what you are not allowed to do if you
quality for that kind of payment.
Mr. Burgess. So we must be concerned about recentralization
then.
Mr. Hackbarth. Yes, but I believe that the ACO model can
push those decisions out where they belong: in the hands of
clinicians. Now, the quid pro quo is that the clinician
organizations assume accountability for overall quality of care
and costs for the defined population. I think that is a good
trade for clinicians.
Mr. Burgess. Thank you, Mr. Chairman. We could go on about
this for quite some time, but I appreciate the chairman's
indulgence.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Michigan, Mr. Dingell, for 5
minutes for questions.
Mr. Dingell. Mr. Chairman, you are most courteous. I
commend you and the committee for this hearing. This is
something which very much needs to be addressed, and I would
like to welcome our witness.
The point of this question is, how do we balance quality
measure development to ensure physicians have a voice in the
fixing of fees and so forth but also see to it that we have
broad enough participation by the public at large in these
matters. Now, physicians are, as we all know, essential
partners in improving quality and accountability. At the same
time, there are challenging questions that need to be answered
regarding their appropriate role. So when it comes to
performance measurement, especially as it will be used to drive
new payment systems, don't we have to have a broad
participation by physicians, by patients, by hospitals and by
the other people in the provider chain? Is that right or wrong?
Mr. Hackbarth. I think, Mr. Dingell----
Mr. Dingell. Just yes or no.
Mr. Hackbarth. Yes or no. I think it deserves a more robust
response.
Mr. Dingell. Well, we need broad participation, don't we? I
have limited time and I need your cooperation.
Mr. Hackbarth. I do in general favor broader participation
but I really would like the opportunity to----
Mr. Dingell. So everybody ought to have a say, right?
Mr. Hackbarth. Pardon me. I am sorry?
Mr. Dingell. Everybody ought to have a say. The doctors
ought to have a say. Their say is going to be very important.
Hospitals, patients, insurers, the whole works, they ought to
have a say. We ought not rig this device so it favors one
particular participant over others.
Mr. Hackbarth. I think we want a system that does three
things. It brings scientific evidence to bear on----
Mr. Dingell. Well, one of the problems I have is, I get
witnesses down there and they just feel they have to make a
speech, and all I am really asking for is a yes or no. How many
folks do we want in this? Do we want enough that we get a clear
picture and we get an honest answer or do we want to have just
one group doing it and skewing the result?
Mr. Hackbarth. I think that we need----
Mr. Dingell. Help me, quickly.
Mr. Hackbarth [continuing]. A range of participants. I
think we need a range of participants, but the objective----
Mr. Dingell. Thank you. Now, what is the appropriate role
then of physicians in developing performance measurement
systems, and how do we ensure an appropriate multi-stakeholder
process including, again, consumers, purchasers and providers
that avoids conflict in interest and gets us the best possible
picture?
Mr. Hackbarth. The role of physicians is to help bring
scientific evidence to bear on establishment of standards but
that is not the only step in the process. To have appropriate
standards----
Mr. Dingell. Am I being somewhat unclear? I am just trying
to get you to tell me how we set this process up so we get the
answers that are best suited to saving us money and full
service, seeing to it that everybody participate. How do we do
this?
Mr. Hackbarth. And that is what I am trying to answer, Mr.
Dingell. If it were easy and clear, it would have already been
done, sir.
Mr. Dingell. Now, let us go to the next question and hope
we have the time to do it. Where are the opportunities to
reduce unnecessary care, saved wasted dollars and improve the
value in the current FFS while we are transitioning to new
payment models? You have 1 minute and 20 seconds.
Mr. Hackbarth. There are a number of areas where----
Mr. Dingell. Plead your case. You have a minute and 10
seconds.
Mr. Hackbarth. There are a number of areas where we can
reduce waste and excess utilization. It is a long list not
suited to a minute and 10 seconds.
Mr. Dingell. Would you like to tell us what they are and
relieve us of the need to speculate?
Mr. Hackbarth. One would be, for example, excess
readmissions, avoidable readmissions to the hospital. Another
would be----
Mr. Dingell. What are some of the others?
Mr. Hackbarth. Every time I try to answer, I am
interrupted. Another would be----
Mr. Dingell. You have 22 seconds.
Mr. Hackbarth. Another would be excess imaging that not
only is costly but poses a risk for patients due to radiation
exposure. So those would be two examples. I am trying to stay
within your limit, sir.
Mr. Dingell. My time is exhausted, Mr. Chairman. I thank
you for your courtesy.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman, Mr. Hall, for 5 minutes for
questions.
Mr. Hall. I thank you, Mr. Chairman. I am a little
confused. This is the same John Dingell I learned to ask
questions and extract answers from. He hasn't let up at all.
Age hasn't bothered him nor lessened his pursuit.
Mr. Dingell. I thank my old friend.
Mr. Hall. And I am a little concerned because I was on this
committee for, I think, almost 30 years. Two years ago I took a
leave of absence, and I find the problem exactly the same
almost as it was when I left.
And Mr. Hackbarth, you were right when you said we are at a
critical juncture for SGR reform, and you pointed out that
recently the CBO lowered the cost of repeal by over $100
billion. That ought to help some. And you added a dimension to
the problem that every time the pay cut is delayed, the size of
the cuts the following year is bigger so it is 2 years bigger
from the time I left to this day when I am back.
Let me ask you a question that affects my part of the
country some. The current SGR formula based part of its
reimbursement on the time it takes to perform a task. Do you
believe that this has created the right incentives for
beneficiary care or do you believe a shift away from time and
more toward paying for quality would be more appropriate for
the delivery of beneficiary care?
Mr. Hackbarth. We do believe that we need over time to
shift away from a fee-for-service system to other payment
models that focus on quality and value for patients. However,
the fee-for-service system is likely to be with us for still
some time, and one of the problems that we see in the existing
physician fee schedule is that these time estimates that you
referred to we think are often off by a significant amount and
that affects the distribution of payments within the fee
schedule.
Mr. Hall. We are not lacking for suggestions, and even the
Heritage pitched in saying we ought to allow price flexibility
among specialties, remove the cap on how much a doctor can
change and enforce price transparency, allow private
contracting, on and on, but we are here today, and I guess
there a number of physician reporting requirements currently in
statute. As part of the reform, do you think some sort of
streamlining of such reporting similar to what Mr. Dingell was
questioning about is absolutely necessary to develop the kind
of performance measures that you touched on in your testimony?
Mr. Hackbarth. Yes, we do think that measures of
performance, in particular, measures of quality, are an
indispensable part of both the existing fee-for-service system
and any new payment models, and I do have some ideas about what
such a system should look at to formulate those measures. As I
started to say in response to Mr. Dingell, I think it should
include scientific input. Specialty societies have a major role
to play there. But our measures also ought to be carefully
chosen to increase value for Medicare beneficiaries. But
anything that is good to do should be rewarded with a bonus
payment.
Mr. Hall. I am impressed by the quality of this committee,
those that you have selected, Mr. Chairman, and I will yield
back my time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from California, Ms. Capps, for 5
minutes for questions.
Mrs. Capps. I want to thank all of our witnesses, both
panels, for being here today, and thank you, Chairman Pitts and
Ranking Member Pallone, for holding this very important
hearing.
I have long been a supporter of fixing the SGR. It harms
providers and consumers alike, and it keeps us from true
innovation in the health care sector. But the conversation
often stops at the crisis point--how to make it to the next
paycheck--and rarely moves to one where we can discuss our
vision for a health care system in the future and how to get
there. That is why I am so pleased that we are having this
forward-looking hearing today.
There has been a lot of talk about the role of doctors in
the health care system, but as I have said before and in some
respects I am following on to our distinguished former
chairman, I truly believe that if we are going to really move
to a more comprehensive prevention-focused system of care, we
need to look at the full picture of our health care system.
Mr. Hackbarth, most of the new delivery models like
patient-centered medical homes and accountable care
organizations emphasize team-based care, and they recognize the
critical role and value of non-physician providers. As such, I
think it is important to acknowledge the role of other health
care providers such as nurses, nurse practitioners, physician
assistants in this conversation as well. While physicians and
physician payment has always received a lot of attention, and
rightly so, it is important that non-physician providers are
also actively engaged in both the development and the
implementation of these new systems for health care delivery
and payment. So I have a couple questions on this topic for
you. First, why do you think there is such a discrepancy,
disparity, gap between the importance of non-physician
providers and the level of attention they are receiving in the
SGR debate?
Mr. Hackbarth. Well, I am not sure why there is that
disparity in attention.
Mrs. Capps. I mean, do you acknowledge that it does exist?
Mr. Hackbarth. I agree, it does exist, and I also agree
with your statement that we are not going to get where we want
to go in terms of improved health care delivery without an
expanded role for other health professionals including advanced
practice nurses and physician assistants.
Mrs. Capps. Great. So there is no reason, it is just lack
of attention?
Mr. Hackbarth. I think it is lack of attention and, you
know, sort of history in terms of how our health care system
has evolved. When I look at the growing problems that we have
in primary care, I just don't see how that is going to be
solved without expanded use of other health professionals.
Mrs. Capps. Well, and you are representing MedPAC, which is
a group of people. Has this not come up in your discussions?
What is your view on the role of non-physician providers in a
new value-based delivery and payment system that is focused on
outcomes rather than fee-for-service?
Mr. Hackbarth. It comes up often, I assure you, and I think
I speak for the commission as a whole in saying that we think
that an expanded role for nurses and other health professionals
is essential both to deal with short-term problems like access
to primary care but also for long-term improved system
performance.
Mrs. Capps. Just in your own structure, because you are a
spokesperson for MedPAC, do you see yourself expanding the
commission members, or how is your discussion?
Mr. Hackbarth. In fact, over the years, almost always we
have had one or more nurses. Currently, Mary Naylor from the
University of Pennsylvania School of Nursing is a member of
MedPAC and has been very helpful in talking about the role of
nurses, for example, in transition care after a hospital
admission.
Mrs. Capps. That is just one of the many roles that they
can play.
Mr. Hackbarth. Exactly.
Mrs. Capps. One could say that this is a little bit like a
token representative. Do you have any discussion of ways to
expand it to be more inclusive?
Mr. Hackbarth. Well, we actually don't choose our own
members. Under the statute that governs MedPAC, GAO actually
appoints the membership of the commission.
Mrs. Capps. Do you listen to other organizations,
accountable care kind of organizations? Maybe this is just a
vacuum that needs now to be addressed.
Mr. Hackbarth. We do. For example, another member of our
commission is Scott Armstrong, the CEO of Group Health of Puget
Sound in Seattle, an organization which for many years has made
a very extensive use of advanced practice nurses and other non-
physician health professionals and team care. So that
perspective comes into our discussions not just through people
who have RN after their name but also from other commissioners
that deal with these systems, that lead these systems.
Mrs. Capps. My time is up, but I do want to tell you that
as a nurse myself, I guess I am a little bit more sensitive to
the fact that nurse organizations, and I am sure physicians
assistants would be the same, are eager. They have been doing a
great deal of discussion among themselves and ascertaining of
patterns that they would like to see in an expanded role for
how to reach the goals of--we are really talking about how to
reach the goals of the Affordable Care Act, and reimbursement,
the fee schedule, is one of those--of course, it is clearly a
very important aspect of how that is functioning. So I would
urge you to reach out, and we will try to establish some more
communications so that this can be a more serious part of your
agenda.
Mr. Hackbarth. I would welcome that.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from Illinois, Mr. Shimkus, for 5
minutes for questions.
Mr. Shimkus. Thank you, Mr. Chairman, and welcome, Mr.
Hackbarth. I have been interested in the intensity of this
first line of questioning. I appreciate the work you do. It is
very difficult, so thank you.
I am trying to pull up the Web site and the like. I
understand that on March 7th through 8th you have an open
public meeting at the Ronald Reagan Building and International
Trade Center. I imagine that where is you take comments from
anyone who may be involved so all these groups, all these
individuals that are involved with that. Isn't that kind of why
you do that?
Mr. Hackbarth. Yes. We have open meetings, but we don't
stop there. We reach out to groups that we think have
expertise, information to bring to bear on the topics before
us. So we don't want for them to come to us. We look for them.
Mr. Shimkus. Thank you. To help Mr. Dingell, I can think of
one way to address costs, and that is litigation reform,
medical liability issues. I am from the State of Illinois. If
you are from Illinois, you know the medical liability crisis
that we continue to have with high costs. So there is enough, I
would consider that low-hanging fruit, to help address the cost
of bringing down the cost of care so we could go through--as
you said, there is numerous and it would take longer than a 5-
minute round of questions.
But there is also the comment that Mr. Dingell mentioned
that we do want to make sure a lot of folks are inclusive in
these discussions. That is why I focused to the open-meetings
aspect. But sometimes there is a feeling that the beneficiary
is kind of left out in some of these dollars-and-cents care,
procedures and debate. So a couple of questions that I am going
to direct kind of focus on the beneficiary. So do you believe
that is important for the overall success of reform efforts to
find ways to incentivize the individual beneficiary along the
way?
Mr. Hackbarth. Yes, we do believe that this is a part of
what needs to be done.
Mr. Shimkus. So if we have new models of care that were
developed that involve sharing savings between beneficiaries
and government, should the beneficiary share in those savings
as well?
Mr. Hackbarth. In our comment letters on the development of
the ACO program, we recommended that in fact beneficiaries had
the opportunity to share in any savings. It seems to us odd
that all of the focus should be on how the government and
providers are going to share and the beneficiary is left out of
it.
Mr. Shimkus. Yes, it is just--I have been on the committee
a long time also, and it is great to have Mr. Hall back because
maybe we will get this solved now since he has been gone for a
while and now he is back, and maybe we will get this solved
with his expertise.
But I am still a capitalist, competitive model folk. I do
think people shop around based upon dollars and cents and based
upon their return on dollars, they will make decisions. I also
believe the public will buy a premium quality if they are given
the opportunity to. My frustration with the health care
delivery system is, they are kind of left out. I mean, really.
They are not incentivized. They are directed. There is no
variability in choices, so I am happy to see that.
On the other hand, I believe there are some negative
incentives within the Medicare program that might hurt
beneficiaries and endanger reform like a catastrophic cap
within Medicare, copays that are based upon percentages instead
of fixed costs so beneficiaries know what they are liable for,
and first-dollar coverage that incentivizes beneficiaries to
use more services when the new models encourage providers to be
more efficient with the care provided. How important is it for
the success of reform that Congress address these issues?
Mr. Hackbarth. Well, about a year ago, Mr. Shimkus, we made
a series of recommendations related to reforming the Medicare
benefit package, and you touched on some of the critical
elements. We think that the current structure is antiquated and
very difficult for Medicare beneficiaries to understand, and so
we recommended that it be simplified, use fixed dollar copays
as opposed to percentage coinsurance, which is unpredictable,
include catastrophic coverage. We also recommended that the
Secretary be given broader authority to introduce principles of
value-based insurance design by which we mean the Secretary
should be able to say the evidence is really strong that if
patients have access to this service, it not only improves
their health but it lowers long-run costs. And so they want to
totally eliminate cost sharing for those really high-value
services. On the other hand, there are services that are of
lower value based on scientific evidence and we may wish to
impose more cost sharing on those. This is an idea that is
being used increasingly by private insurers, and we think it
makes sense for Medicare as well.
Mr. Shimkus. Thank you very much. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Texas, Mr. Green, for 5 minutes
for questions.
Mr. Green. Thank you, Mr. Chairman, and again, Mr.
Hackbarth, welcome. I appreciate your work over the years.
The Sustainable Growth Rate formula is broken and must be
repealed and replaced with a system that pays doctors fairly
for their services and ensures that the quality of coverage for
seniors and reduces the financial burden on taxpayers. One of
the ways I want to and I understand a lot of folks do want to
achieve cost savings is through quality improvements. There is
a bipartisan agreement on this issue broadly but there are
disagreements on specifics. I want to work toward a bipartisan
agreement on measuring quality to increase efficiency and
quality of care while decreasing the costs. We owe it to our
seniors today and the future generation of seniors to make good
on that promise we made for affordable, quality health care
through Medicare.
I am going to try to go through a number of questions
quickly. What is the most effective quality improvement measure
with respect to improving health outcomes?
Mr. Hackbarth. Well, I would say the single most important
thing is to move to new form of payment and care delivery where
clinicians accept ultimate accountability for outcomes that
matter to patients but also the associated financial
responsibility. As I have said in response to Dr. Burgess, we
think decentralizing decisions to clinicians and provider
organizations with increased accountability is the most
important thing to do.
Mr. Green. What criteria must be met to realize savings
from the quality improvement initiatives?
Mr. Hackbarth. What criteria must be met? Could you just
say a little bit more?
Mr. Green. What criteria must be met to realize savings
from these quality improvement initiatives?
Mr. Hackbarth. Well, the most important criteria is that of
course we want to protect beneficiary access to care and
quality of care, and that is why having affordability for
outcomes is really an important part of the system. But while
doing that, as I said earlier, what we want to do is not make
decisions here in Washington but have clinicians who know the
patient, who know local circumstances, have increased decision-
making authority.
Mr. Green. Is a voluntary adoption of these quality
improvements sufficient to yield systemwide savings or does
this need to be a required practice? And I know your answers
earlier were that there are some private insurers who are
already doing some of these.
Mr. Hackbarth. We think that a wise course for Medicare
would be to apply increasing pressure on the fee-for-service
system, which for the reasons I described at the outset we fear
is not consistent with quality for Medicare beneficiaries,
apply pressure on fee-for-service and create incentives and
opportunities for people to move into new care delivery models
that can deliver higher value.
Mr. Green. And what is the best way to address quality
improvement when programs serve such a wide variety of people
with various health needs, for example, seniors who have
disabilities? And as we know, as we get senior, we are going to
take a lot more health care than someone who is not but also
low-income earners.
Mr. Hackbarth. Yes. Well, having a robust system of
adjusting payments to reflect the underlying health risk of the
patients is really important. We don't want a system where
providers avoid those complicated patients because they are not
paid appropriately for them. If a provider assumes
responsibility for complicated patients, they ought to get the
associated resources to do the job well, so what we refer to as
risk adjustment is a really important feature.
Mr. Green. In developing quality measures, there has quite
correctly been a lot of focus on including physicians and
physician groups in the discussion, perhaps even having them
develop the measures for their own specialties, and I would
hope that would be, you know, the input from our specialty
societies. What other entities should be at the table?
Specifically, shouldn't the beneficiary somehow be represented
in some capacity?
Mr. Hackbarth. Yes. As I said in response to Mr. Dingell,
we think that the physician specialty societies can provide
critical input but input from others is important as well
including from patient organizations.
Mr. Green. My last question in 35 seconds is, I know my
seniors are worried about changing the SGR and could result in
their care being diminished, and this is a scary prospect, but
I also want, and I think a lot of us share in a bipartisan way,
you want to make sure the system is around for my children and
my grandkids. What is the best way to ensure that if SGR is
repealed and replaced that the beneficiaries will have a seat
at the table and the changes that are made are a positive
experience for them?
Mr. Hackbarth. So the question is, how do we assure that
this is a positive experience for Medicare beneficiaries?
Mr. Green. So they know that, you know, they are going to
be able to have the Medicare that they traditionally feel
comfortable with.
Mr. Hackbarth. Well, we need to take the necessary steps on
payment to ensure the system is fiscally stable but we also
need to offer choices to Medicare beneficiaries. As I said in
response to Mr. Shimkus, having patient choices but also
choices that reflect the cost of different options is
important.
Mr. Green. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Louisiana, Dr. Cassidy, for 5
minutes for questions.
Mr. Cassidy. Mr. Hackbarth, I will be more polite than Mr.
Dingell, but if you could keep your answers concise, I would
appreciate it.
Mr. Hackbarth. I will try.
Mr. Cassidy. I understand that, and I think you are doing a
fantastic job.
Listen, I think there is evidence that consolidation is
actually driving up costs if you look at how hospitals are
buying physician services. Is this a premonition of what is to
come?
Mr. Hackbarth. We do worry about a hospital-dominated
system. As I said to Dr. Burgess, this is one of the reasons
why I think having physician-sponsored organizations is very
important.
Mr. Cassidy. I accept that. I can also see, though, the
physician-sponsored Pioneer ACO being purchased by a large
hospital, and so it almost seems like if you are really good at
it, you may get bought.
Let me ask you, some of this diminution and/or decrease in
the amount of care being delivered through Medicare Part B, I
have been unable to figure out how much of that is attributable
to hospitals purchasing, say, cardiology practices now billing
through Part A as opposed to Part B.
Mr. Hackbarth. Some of it is.
Mr. Cassidy. When you say ``some'', is that 1 percent or is
that 30 percent?
Mr. Hackbarth. Well, let us focus on one area where it is a
fairly significant factor, the rate of growth in expenditures
on imaging services.
Mr. Cassidy. Did those previously go through B or through
A?
Mr. Hackbarth. When they were provided in independent
practices, cardiology imaging in particular, was in Part B.
When it moves over to the hospital practice----
Mr. Cassidy. It's part A. So really, we may not see--this
may not be something on sale. It may be part of a larger trend
where consolidation is shifting costs to A.
Mr. Hackbarth. There could be some of that, yes.
Mr. Cassidy. But then that in turn will further stress the
Medicare trust fund.
Mr. Hackbarth. Although if we look at total Medicare
expenditures, the growth there has slowed as well. It is not
just on Part B.
Mr. Cassidy. I think statistics show about 25 percent of
Medicare beneficiaries don't have a primary place they go, and
the ACO relies upon some sort of retrospective kind of
statistical analysis--you belong there even though you got your
liver transplant here. Now, Mr. Miller will give testimony
suggesting that prospective assignment would be a much more
efficient way, better way to approach this as opposed to the
retrospective assignment that occurs with the ACO model under
statute.
Mr. Hackbarth. And we favor prospective.
Mr. Cassidy. Now, that leads us to MA. It really seems as
if MA kind of solves this even though there is a prejudice in
the Administration against MA.
Mr. Hackbarth. Well, as I said earlier, there are some
similarities between the two but a critical difference is that
by definition, the accountable care organizations are
controlled by providers as opposed to by insurance companies.
Mr. Cassidy. Now, we both know of models, you know of
models, there is the WellMed model down in Texas in which they
go a two-sided risk with the Medicare Advantage program but
effectively being a two-sided risk they are now managing. Would
you favor such models?
Mr. Hackbarth. So you are referring to a model where there
is a partnership between an insurer and----
Mr. Cassidy. I think they now they purchased them, but at
some point the physician primary care group would contract with
whichever MA plan they contracted with, that 85 percent of what
the MA plan was getting from CMS, and they in turn would be a
two-sided risk relative to the MA plan.
Mr. Hackbarth. Yes. There are a lot of different varieties
that can work, and as I tried to emphasize, we think that is a
good thing because the circumstances really differ in places
around the country. There are different preferences.
Mr. Cassidy. Now, let me ask, because again, my concern, as
I said in my testimony, is that our bias is towards big, and
the ACO has to have a minimum of 5,000 patients. That means
inherently it is big. So to what extent can that solo
practitioner, how can she survive without being absorbed?
Mr. Hackbarth. Well, 5,000 patients isn't all that large.
That is, several internal medicine practices have 5,000
patients. Well, actually if it is 5,000 Medicare patients, it
would have to be a somewhat larger number. But they don't all
have to be under one roof and common ownership.
Mr. Cassidy. But there would be----
Mr. Hackbarth. You can----
Mr. Cassidy. But to get the economy of scale in terms of
marketing, in terms of billing, in terms of data integration,
that suggests that you are going to have a certain bigness,
correct?
Mr. Hackbarth. Well, there is no doubt some scale required,
but again, those costs can be shared and spread over a larger
number of practices.
Mr. Cassidy. Now, what do you think about an IPA model that
would contract with an MA-type entity, whether it be
prospective assignment, and yet you get the advantage of the MA
data analysis, et cetera, but nonetheless allow these folks to
maintain their autonomy.
Mr. Hackbarth. It is an entirely legitimate approach that
has worked in a lot of areas, but you could also have an ACO
that contracts with an MA plan just to provide support
services, and to buy reinsurance and spread risk.
Mr. Cassidy. My concern about that is, that when you start
doing statistical analysis, a small practice won't really know
whether that outlier, that 25 percent of patients who are going
elsewhere, are they getting a square deal from the top dogs or
are they not.
Mr. Hackbarth. Well, in fact, that is the problem when you
have small practices and small numbers. As you well know, there
is a lot of statistical variation, random variation in the
numbers, and that makes assessment more difficult and that is
one of the reasons that linking practices together and getting
larger populations makes sense.
Mr. Cassidy. You have given great answers. Again, I thank
you for your courtesy, and I yield back.
Mr. Pitts. The Chair thanks the gentleman, excellent line
of questioning. The Chair now recognizes the gentlelady from
Florida, Ms. Castor, for 5 minutes for questions.
Ms. Castor. Well, thank you, Mr. Chairman. Thank you for
calling this hearing. Mr. Hackbarth, welcome.
Since coming to Congress, I have to say one of the most
nonsensical policies that we deal with is how we patch SGR and
treat Medicare physicians and the patching and discussions that
go on every year. It is remarkable. It is not reasonable, and
colleagues, we have got to do something about it finally. And
it should not be lost on us what this recent CBO score is. You
said it is like it is on sale now. The CBO score has dropped
$107 billion from $243 to $138 billion. Now is the time to act
to solve it, to repeal it, to replace it with something that
makes better sense for the modern health system, especially
with the Affordable Care Act. I concur with Ranking Member
Pallone that it is too important for us to just haphazardly
steal from other Medicare providers to patch over here, and
because of this renewed score that is over $100 billion lower,
we have the ability now to really take a hard look and solve
this now, and time is of the essence.
I also supported going to the OCO. I thought that was quite
reasonable, and now I don't even think this would take up what
is left in OCO savings, so we have an opportunity here in the
coming months and we should not let it pass.
But we have larger issues as well, and I think that moving
forward, solutions on replacing the SGR with different payment
models, I think in Dr. Berenson's testimony, he laid out, you
know, you are never going to get away entirely from fee-for-
service. There will be some medical services that that is how
they will have to be compensated, and the difficulty will be
carving those out as we move to different integrated models.
So Mr. Hackbarth, I think by this time everyone agrees that
we need to move the delivery system away from fee-for-service
or something blended toward integrated delivery systems, that
is, systems where physicians work together and share
responsibility for their patients. While the Centers for
Medicare and Medicaid Services has already embarked on a
significant testing of these models, how do we incentivize more
physicians to join these models?
Mr. Hackbarth. We think it needs to be a combination of two
things: some steadily increasing pressure on fee-for-service
that frankly makes staying in fee-for-service increasingly
uncomfortable over time while we open the door to new payment
models and provide an incentive for physicians to participate
in those models. So it is a little bit of push and a little bit
of pull.
Ms. Castor. And I understand that the popular view is that
models like accountable care organizations and medical homes
and bundled payments have the potential to save Medicare money
and improve patient outcomes but first do we really know yet
whether they will be successful or what forms of these models
will work best? And second, in the absence of ironclad answers
and evidence, how do you recommend we proceed encouraging
physicians to embrace new models?
Mr. Hackbarth. Well, ACOs are now an operational piece of
the Medicare program whereas the bundling around hospital
admissions and medical homes are still in the pilot phase. We
are still collecting information. The reason that ACOs are put
into the operational mainstream Medicare program at this point
is that in fact we had done a demonstration, a group practice
demonstration, testing basically the ACO-type model, and to
make a long story short, that demonstration showed some promise
for this model to improve quality while somewhat reducing costs
in some cases. The results were not overwhelmingly robust but
they were generally positive. In making a policy judgment about
this, we need to always say well, what is the alternative. It
is our judgment that the results of an ACO were sufficiently
strong that when compared to continuing fee-for-service, we
thought moving towards ACOs made sense. We know the record of
fee-for-service. We have done a 35-, 40-year experiment with
that: high cost, uneven quality. And so that is a pretty low
standard to beat and we think ACOs can comfortably do that.
Ms. Castor. Thank you very much. I yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes
for questions.
Mr. Griffith. Thank you, Mr. Chairman. I do appreciate
that.
Mr. Hackbarth, you encourage physicians to switch from
open-ended fee-for-service to accountable care organizations.
Do you envision a continued rule for FFS in certain geographic
locales? I know you have already talked about certain practice
types, but coming from a district that it takes a long time to
get from one end to the other and has lots of small, rural
communities, do you anticipate that fee-for-service would still
be the way to do it there or do you think that they can do an
ACO with such a small number of folks?
Mr. Hackbarth. Well, we are still early in the development
of the ACO model but I would note that about 20 percent of the
ACOs that have been approved to this point include community
health centers, rural health clinics or critical access
hospitals so there is at least some development in rural areas
of ACOs. We will have to see over time, you know, how well that
works and how many more develop. So I wouldn't completely write
off the possibility right now that the ACO model, which is a
very flexible one, can work in rural areas. There may at the
end of, you know, some period of time be some really isolated
geographic areas with very long distances where that model
simply will not work and we will need to take special steps in
those areas.
Mr. Griffith. Where mountains are in the way, because that
happens a lot of times. It happens in my district from time to
time.
I heard you in one of the other questions, and I apologize,
that the ACO would need 5,000 patients?
Mr. Hackbarth. Yes, that is the minimum, and the reason for
that is, again, to have numbers that are statistical meaningful
and not full of just random variation.
Mr. Griffith. And I also would ask, even with the
progressive payment models such as the bundled payments, what
is there that would prevent a delivery system from exploiting a
volume-based approach with bundled payments? I mean, can't they
still do unnecessary things and run their costs up and
overcharge?
Mr. Hackbarth. Yes, and that is one of the fears, that if
we bundle payment around an episode, a hospital admission, for
example, one of the fears is well, now that you have aligned
physicians, hospitals and other actors, they will say well, let
us increase the number of episodes, let us increase the number
of admissions, and so that is something to monitor and be
careful about. That is less of an issue in ACOs where there is
accountability for total costs, not just episode costs.
Mr. Griffith. I thank you very much and yield back my time,
Mr. Chair.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Maryland, Mr. Sarbanes, 5 minutes
for questions.
Mr. Sarbanes. Thank you, Mr. Chairman. Thank you, Mr.
Hackbarth.
So as I understand the SGR formula, basically a number of
years ago there was kind of projected percentage increasing
payments that we were prepared to pay, and in the early years,
we just went ahead and paid it even if it exceeded what that
trajectory was supposed to be but the tradeoff was that at some
point we had to come back and recover it, and that started to
kick in in the out years and that is the fire drill that we
have every year.
Mr. Hackbarth. Right.
Mr. Sarbanes. So fixing SGR is really getting rid of SGR. I
mean, SGR is a design for trying to keep the costs in a sense
after the fact in line with this original trajectory that was
established, right?
Mr. Hackbarth. That is correct.
Mr. Sarbanes. So all of these other issues about, you know,
rebalancing payments and looking at the methodology and, you
know, whether we adjust the relative value units or add codes
that better address the needs of primary care and so forth,
that discussion can kind of happen alongside of the decision
that is being made to get rid of this design.
Mr. Hackbarth. Correct. Even if we get rid of SGR, we need
to have that conversation, yes.
Mr. Sarbanes. So just anticipating the kind of legislation
that we would need to pass here, it could be pretty simple,
right? I mean, could it basically be a one-page bill saying the
SGR system is hereby repealed and then these other discussions,
which frankly have been initiated through the Affordable Care
Act, in large measure, can proceed or do you feel that sort of
the--you don't want to lose the moment of casting aside SGR to
also embed statutorily some of these new goals that you want to
see?
Mr. Hackbarth. Yes. We think it is important to seize the
moment of SGR repeal to do three things: one, get rid of SGR,
two, to advance progress in rebalancing the payment, as I said
in my opening statement, and third is to create incentives for
physicians to move towards new payment models. And if the
legislation simply repealed SGR, we think that would be a lost
opportunity. Frankly, these other two steps of rebalancing
payments and encouraging movement to new payment systems, there
will be some people who will oppose those.
Mr. Sarbanes. So that is kind of my question is, if we are
starting to tied in knots over doing these other things, such
that that begins to impede the opportunity to just get rid of
the design, where would you come down then?
Mr. Hackbarth. Yes. Well, you know, our expertise is not
on, you know, legislative processes and tactics. We believe
that there ought to be this quid pro quo. Physicians want to
get rid of SGR.
Mr. Sarbanes. OK, so that is fair. So you are saying SGR
was designed as a kind of cost containment measure, so we are
going to get rid of one cost containment measure, let us
replace it with other things that we think are going to help us
achieve the same goals.
Mr. Hackbarth. Yes.
Mr. Sarbanes. OK. I understand that. That makes a lot of
sense.
I will just saying in closing, and then I will yield back,
I am not a physician but I spent 18 years representing
hospitals and physician groups, and for some period of time in
which I was practicing I managed this fire drill on behalf of
clients that was happening at the end of every year. In a
sense, we have been fixing SGR every year, right? Or every 30
days or every 90 days or whatever it is. So it is not like not
fixing it means we are not going to incur the costs because we
are probably come back, do a fire drill, patch it, incur the
costs, and we talk about taking advantage of this sale. I mean,
it is versus running around on the back end and trying to do
it. It is really the equivalent in the health care area, and
with respect to physician payment, it is like a sequester
thing. It is an arbitrary formula.
Mr. Hackbarth. You are absolutely right that what we have
done is fix it a year at a time or, unfortunately, in some
cases, a few months at a time. The price we pay for that is
that we are undermining the confidence of both physicians and
patients in the Medicare system. We are destabilizing the
system. And our fear is that the cumulative effect of these
last-minute dramas is now really taking a toll on confidence in
Medicare and increasing the risk that Medicare beneficiaries
will lose access to needed care. It is time to do away with it.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Georgia, Dr. Gingrey, for 5
minutes for questions.
Mr. Gingrey. Mr. Chairman, thank you.
Mr. Hackbarth, you just mentioned in responding to Mr.
Sarbanes' line of questioning that three things are important:
one, repeal SGR, rebalancing payments I think was the second,
and then developing new payment models, and indeed, that is
what the hearing is all about, and of course, we will have a
second panel. We appreciate your testimony and response to our
questions. But I think there is a fourth thing here that you
might put in the category, the 800-pound gorilla in the room,
and that is IPAB, which is the IPAB creation under the
Affordable Care Act. Now, you, as I understand it, have been
head of the Independent Payment Advisory Commission ever since
its existence, and on a yearly basis or twice a year advise,
and we have the ability under this system to mitigate
recommended cuts, and we have done that, and that is where we
are just today, just as Mr. Sarbanes was saying, and I think
that if we do these three things, if we repeal SGR, if we
rebalance payments and if we develop new payment models that
physicians have the ability to choose from and slowly but
surely, hopefully they would do that, but if the Independent
payment Advisory Board is still there in the law, what good is
all this going to do unless we get rid of that, I am going to
say monster, because it seems like to me it really is a monster
because it is not advisory. It is instructional. So would you
touch on that a little bit and tell us----
Mr. Hackbarth. Well, as you indicated, Dr. Gingrey, you
know, our model, the one that I have participated in, is
advisory and the ultimate decisions are up to you and your
colleagues in the Congress, and we hope that works well for
you. We work very hard to do our best to advise you on those
issues. With regard to IPAB specifically, you know, we haven't
taken a position one way or another on IPAB. You know, it is
sort of a rival approach to dealing with this, and we thought
that was more a matter for the Congress to decide and not
really a matter of Medicare policy where we consider ourselves
to have some expertise. So right from the outset, we have not
taken a position either for or against IPAB.
Mr. Gingrey. Well, let me just interrupt you just for a
second and say that this member of the committee, this
physician member of the Energy and Commerce Health
Subcommittee, feels that it would be better to continue your
commission in an advisory capacity and all that institutional
knowledge that you have gained over the last 10 years and get
rid of the monster that gives us no ability, and indeed, I
think it is really unconstitutional to say that Congress
doesn't have the ability to mitigate as we do under the good
advice that you give us.
Mr. Chairman, the power of the IPAB, we all know, is
substantial. Even if the President continues to delay naming
members to the board, I don't guess there are any members'
names so far. Fifteen is what is called for. The Secretary,
this Secretary, the next Secretary, of HHS would have the power
to establish these cuts. And as we were saying, you read that
real carefully, that IPAB section of the Affordable Care Act,
up until 2020 hospitals would be excluded from any cuts. So the
proposed cuts made by IPAB would fall particularly on providers
during the next 10 years almost, and to me, this seems akin to
the cuts that SGR has tried to impose on doctors. These types
of cuts haven't worked in SGR and they surely won't work with
IPAB. I am encouraged that the committee's proposed framework
states that IPAB repeal would be an integral part of SGR
reform. So, you know, I think that needs to be an important
part of the discussion with you, Mr. Hackbarth, and also with
the second panel.
My time is expired and I yield back, and I thank you for
your response.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady, Dr. Christensen, for 5 minutes for
questions.
Mrs. Christensen. Thank you, Mr. Chairman, and I thank you
and the ranking member for this hearing, and welcome again, Mr.
Hackbarth, because I hope that this year we can finally fix
something that all of us agree needs to be fixed and want to
fix. As we know, the SGR has been the wrong methodology for
setting physician reimbursement because it doesn't reflect the
market basket value of physician services today, and as you
said, the uncertainty that we create every year just transfers
that uncertainty to the Medicare beneficiaries who wonder
whether they are ever going to get the services that they need.
In addition to creating new ways of reimbursement, I think
it is important, as one of the AMA reports says, to establish
an accurate definition of health care value, rebuild the
technological infrastructure to determine episode length
payment attribution, improve data and other parameters, and as
a physician who practiced in a fee-for-service model, just for
the record, I really don't believe that fee-for-service in and
of itself was the problem. It is the way we were incentivized,
and I can't say that I was but to utilize certain modalities
that were expensive and we weren't paid for other things that
you are talking about paying for now, and I believe if we pay
for that kind of management and now with CER and other
provisions of the ACA, fee-for-service can possibly have a
place.
But lastly, as Dr. Patel said last year in her testimony,
whatever you do, the path needs to be toward clinician-driven,
which you have agreed and said many times here this morning,
evidence-based medicine that prescribes the autonomy of the
physician-patient relationship, even as we move towards more
accountability.
You can imagine what my questions are going to veer
towards. My colleague, Mr. Green, sort of asked it because we
talked about poor, minority communities and patients who are
affected by many of the social determinants of health and lack
of access to quality health care and some services are not even
available in their area, and so they suffer poor outcomes. So
you did say that we have to take that into account and set the
baseline and look at--include that in the way we measure
performance. I was wondering if the minority health profession
schools, the minority health professional organizations,
patient advocacy organizations, are they involved in providing
input as we move forward? Do you know?
Mr. Hackbarth. Yes. Well, we work with all of the
associations, both within the physician world and beyond. I
spend a lot of time with representatives of safety-net
institutions which are, you well know, critically important for
this population and so absolutely, our door is open. We think
paying particular attention to those patients, and many of them
are Medicare dual eligibles, eligible for Medicaid as well as
Medicare, they are some of the most vulnerable patients in the
system, and so we need to take particular care when we develop
new models that they are not inadvertently harmed.
Mrs. Christensen. And you did mention in responding to Mr.
Green also the issue of adverse selection and cherry-picking.
Do you see the possibility of setting some kind of incentive
payments for taking care of patients that may be sicker and
coming from areas with high health disparities?
Mr. Hackbarth. Absolutely. So we think that the payment to
the organization ought to be commensurate with the
responsibility that they are taking on, and if you are taking
on very high-risk, complicated patients, you ought to be
appropriately compensated for that. You know, this is an issue,
and the still developing demonstrations run dual eligibles,
again, one of our most vulnerable populations, and so it is one
we are fixated on. There will be all sorts of bad consequences
if we don't pay a lot of attention to that.
Mrs. Christensen. I am glad that they are really looking at
social determinants and looking at health disparities and that
we were able to include in a lot of the research and provisions
of the Affordable Care Act that health equity and eliminating
health disparities had to be one of the goals.
Thank you, Mr. Chairman. I yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentlelady from North Carolina, Mrs. Ellmers,
for 5 minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you, Mr.
Hackbarth, for being with us today.
I have been a nurse for over 20 years, and obviously very
concerned about the SGR system and understand fully that it is
broken. You know, physician practices, you know, hang on to
those determinations of when we are going to get paid and when
we are not, and obviously the breakdown is quality of care for
the patients and the accessibility moving forward. So keeping
those thoughts in mind, I am a little concerned. I know Mr.
Dingell and my colleague, Dr. Christensen, was just talking
about some of the patient advocacy groups and patient input. Of
course, we want health care to be patient-centered. But when we
are talking about standard of practice, clinical practices and
standard of care, where do you weight patient satisfaction, so
to speak? I know this is going to be part of this system, but
are we weighting the satisfaction level, you know, and
determining quality of care that way?
Mr. Hackbarth. Yes. Within the ACO system, patient
satisfaction is one of the criteria used in evaluating
performance, and we think that that plays a role. Frankly, we
don't think it should be given the same weight as outcomes of
care that patients really care about.
Mrs. Ellmers. So on a percentage basis, what would you say,
how much are you going to be taking that into consideration?
Mr. Hackbarth. I am not sure that off the top of my head I
could tell you exactly what percentage ought to be given to
patient satisfaction but ultimately patients go to their
physicians and nurses because they have a medical problem they
want fixed, and so the bulk of the focus should be on, are
those problems fixed, and if the patient in addition to that
has a good experience, that is important as well. Probably the
element of patient satisfaction that I would say is most
important is effective communication because that also has
implications for things like adherence to drug regimens and
adherence to follow-up care after hospital admissions and the
like. I am less interested in putting a lot of weight on, you
know, sort of the hotel experience, you know, what was the
check-in and the like. I am not saying those are totally
unimportant but less important to me than effective
communication and outcomes.
Mrs. Ellmers. I also, and this is a little bit off of the
focus here with this particular question, but I am a little
concerned too when we are talking about reimbursement and, you
know, the more emphasis on different practices and
improvements, and you mentioned the cutbacks in imaging
services. Can you give me two reasons why we would consider
that, to actually be cutting back on reimbursement to imaging?
Mr. Hackbarth. Well, one of the things that we do is look
at how accurate the level of payment is for individual services
and fee schedule, and as we have looked at that work and done
that work, what we have concluded is that in many instances, we
are overpaying for imaging services.
Mrs. Ellmers. Is it overpaying or are you concerned that
imaging is being overused?
Mr. Hackbarth. Well, it is some of each, and two are
linked. So we believe that for some imaging services, not
necessarily all of them but some imaging services, the payment
for each service is too high, and it is therefore a very
profitable service. That prompts people to go out and buy
expensive imaging equipment, that once the imaging equipment is
in place it is used because it is inexpensive at that point,
and that results in overutilization of services.
Mrs. Ellmers. Well, one thing I would like, there again,
based on my experience, one of those areas too that I think
needs to be considered is not so much that the imaging is being
overused but maybe ordered more frequently by non-physician
practitioners. You know, in our local area, of course, JCAHO,
who has just come through and basically one of their
determinations where there was too many testing ordered, and
unfortunately, that is by your non-physician practitioner, and
I think that is an issue that needs to be looked at much more
effectively because, you know, we want the best care for our
patients ultimately but at the same time if it is just a matter
of overutilization, then I think that needs to be looked at
much more closely.
Mr. Hackbarth. I think that may well be an issue. You know,
we look at the rates of imaging, and there is huge variation,
and so if you look geographically, you see big differences in
both rates of imaging and the frequency of reimaging of the
same patient, and so it is data like that that we look at that
suggests to us that there is a problem there.
Mrs. Ellmers. Thank you. And again, I think efficiency is
one of the areas that we really need to be looking at, so thank
you.
I yield back the remainder of my time.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from New York, Mr. Engel, 5 minutes
for questions.
Mr. Engel. Thank you very much, Mr. Chairman.
There is no question that the Sustainable Growth Rate
formula is seriously flawed and needs to be permanently
replaced. I very strongly believe that physicians deserve to be
fairly and appropriately compensated for the important work
they do and the current SGR formula is failing our physicians
and it is failing our Medicare beneficiaries.
I am pleased that the new CBO score estimates that it will
cost dramatically less to repeal the scheduled SGR cuts and
freeze payment rates for the next 10 years. I know the cost of
$138 billion will be difficult to overcome but now is the time
to permanently fix the way we reimburse physicians for the care
they provide to our Medicare beneficiaries. The cost of doing
so will probably never be lower, so as a Congress, I really
believe we must seize the opportunity.
Let me ask you a couple of questions. In MedPAC's October
2011 letter to the chairmen and ranking members of committee
with jurisdiction over health care, it was stated, and I quote,
``The greatest threat to health care access over the next
decade is concentrated in primary care services.'' Recognizing
primary care access is critical, as part of the Affordable Care
Act Medicare started paying primary care physicians a 10
percent incentive payment in 2011. It is my understanding that
more than 156,000 primary care providers have benefited from
these incentive programs. So my question is, does MedPAC intend
to analyze the impact of this 10 percent incentive payment on
beneficiary access to primary care? If so, when do you think it
will be possible to gauge this particular incentive's impact on
Medicare beneficiary access to primary care services?
Mr. Hackbarth. I am not sure if that is on our near-term
analytic agenda. I think it might be a pretty difficult piece
of analysis to do. What I would ask, Mr. Engel, is let me talk
to my colleagues about it and get back to you on that.
Mr. Engel. OK. Thank you. MedPAC's reports and
recommendations have consistently recommended moving toward
payment models that shift providers away from fee-for-service
and its incentives driving greater volume and intensity of
services to delivery models that reward quality and efficiency.
The Affordable Care Act has a number of provisions supporting
new models of care including accountable care organizations, or
ACOs, and value-based purchasing. How do we know if these new
models are moving or delivering payment in the right direction?
I believe they are, but how do we really know?
Mr. Hackbarth. Well, in the case of ACOs, as I said
earlier, that was put into the Medicare program without further
demonstration or pilots because there had been a demonstration
done known as the group practice demo. The short version of
that is that there were some positive but not really robust,
strong improvements in that demo but the results were deemed
good enough that it made sense to move forward with ACOs. My
own belief is that over time with more experience, ACOs will be
able to improve performance even more than happened in the
group practice demo.
Value-based purchasing has also been evaluated, and there
too, the results were not really robust. There was a
demonstration done involving hospital value-based purchasing
known as the premiere demo, and the short version of the story
is that there may have been some positive results but the
effects were not very strong, and some of the effects were
accomplished by just feeding back information on quality
without a payment attached to it.
Mr. Engel. All right. Thank you. Let me ask you this.
Several of our witnesses in written testimony mention the
imperative for more data if Medicaid is going to successfully
move from a fee-for-service reimbursement system to more
quality-driven models. So what are some of the steps you would
recommend CMS and HHS take to ensure our health information
technology infrastructure is capturing the right data to
provide adequate reimbursement for quality health care
services?
Mr. Hackbarth. Well, I am not at all expert, Mr. Engel, on
health IT so I can't answer in any detailed way, but I do
believe that as more and more health care organizations adopt
computerized medical records, that that can greatly expand our
capacity for assessing performance because we will have ready
access to clinical information, not just claims-based
information but clinical information about how well patients
are faring in different organizations. So this is a very
important investment the country is making. I am optimistic
that it will pay off in the long run, but as I think you know,
getting to that point is an arduous journey.
Mr. Engel. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. The gentleman
from New Jersey, Mr. Lance, is recognized for 5 minutes for
questions.
Mr. Lance. Thank you, Mr. Chairman, and I will not take the
full 5 minutes. I apologize for not being here. I was in the
Commerce Subcommittee all morning.
One question. One of the common responses to the letter
that our committee sent out to physician groups was that they
need a period of stable payments, and I don't think anybody
disagrees with that. However, if we simply stabilize payments,
we may not get movement to the kind of payment system we need.
In your view, how might we incentivize physicians to move away
from what they are currently doing and toward the payment
system based on value and not just the volume of their
services?
Mr. Hackbarth. We take a bit different view on this. It has
not been a pretty process with lots of sort of last-minute
rescue efforts but, you know, there has been considerable
stability in payments in recent years.
Mr. Lance. With great angst.
Mr. Hackbarth. Great angst, and the angst has caused
problems, which I emphasized before you came in, Mr. Lance, and
so I am not advocating what has happened, far from it. We think
that if we are going to really accelerate movement to new
payment systems, there needs to be some pressure on fee-for-
service. Now, exactly how much, how quickly is in part a
function of how much money there is in the system after you
figure out the pay-fors for SGR repeal. So there is not a right
answer to how to structure that, but we do think we need a
combination of pressure on fee-for-service and then new
opportunities and new payment models.
Mr. Lance. Thank you very much, Mr. Chairman. I yield back
the balance of my time.
Mr. Pitts. The chair thanks the gentleman. That concludes
the first panel. Excellent testimony, very thoughtful answers.
Thank you, Mr. Hackbarth. We will excuse panel one and call
panel two to the witness stand, and I will introduce the second
panel as they come.
First of all, I want to thank all of you for agreeing to
testify before the subcommittee today and quickly introduce our
second expert panel. First, Mr. Howard Miller, Executive
Director of the Center for Healthcare Quality and Payment
Reform. Secondly, Ms. Elizabeth Mitchell, CEO of Maine Health
Management Coalition. Thirdly, Dr. Robert Berenson, Institute
Fellow at the Urban Institute. And finally, Dr. Cheryl Damberg,
Senior Policy Researcher and Professor at the Pardee RAND
Graduate School.
Again, thank you all for coming. We have your prepared
statements, which will be entered into the record. And Mr.
Miller, we will begin with you. You are recognized for 5
minutes to summarize your testimony.
STATEMENTS OF HAROLD D. MILLER, EXECUTIVE DIRECTOR, CENTER FOR
HEALTHCARE QUALITY AND PAYMENT REFORM; ELIZABETH MITCHELL, CEO,
MAINE HEALTH MANAGEMENT COALITION; ROBERT BERENSON, M.D.,
INSTITUTE FELLOW, URBAN INSTITUTE; AND CHERYL L. DAMBERG,
PH.D., SENIOR POLICY RESEARCHER, PROFESSOR, PARDEE RAND
GRADUATE SCHOOL
STATEMENT OF HAROLD D. MILLER
Mr. Miller. Thank you, Mr. Chairman. It is a pleasure to be
here today.
You have what may seem like an impossible task, to repeal
the SGR program and save money for the Medicare program and do
that without harming patients or physicians, but I believe that
you can do that because of four key facts.
The first fact is that there are tremendous opportunities
to save tens of billions of dollars in the Medicare program by
helping to prevent avoidable admissions to the hospital,
readmissions and to reduce the incredible rate of infections,
complications and other kinds of problems that occur to
patients, medical errors that exist today, and there is no need
to deny beneficiary services or to cut fees in order to reduce
spending.
The second fact is that the current fee-for-service system
actually makes it difficult for physicians to help Medicare
take advantage of those savings opportunities. In fact, under
fee-for-service, the most desirable outcome of all, which is
keeping you healthy, doesn't get paid for at all.
The third fact is that you can't fix fee-for-service simply
by adding more pay-for-performance bonuses or penalties or
created shared savings programs. Many current payment reform
efforts, I think, will have limited success because they leave
the current broken fee-for-service system in place, and
particularly they force physicians to lose money when they help
Medicare reduce spending.
The fourth fact is that there are better ways of paying
physicians that give them the flexibility to both improve
patient care and reduce Medicare spending without having to
take financial losses themselves. I have outlined these in my
testimony, and there are reports available on our Web site that
describe these in significant detail.
What I wanted to focus on is how to actually get these
accountable payment models in place. I believe that more is
needed than the traditional top-down approach where CMS
develops all new payment models. Because the specific
opportunities and barriers differ from community to community
and because different physicians will have different levels of
willingness and ability to participate, many different
solutions will be needed.
Most payment models today are focused on primary care
hospitals and large ACOs but we need to also give every
physician specialty the opportunity to improve care and reduce
costs within its own sphere of influence. To do this, I
recommend that Congress also establish a bottom-up approach
whereby physicians, provider organizations, medical specialty
societies and regional multi-stakeholder collaboratives are
invited to develop payment models that will work well for
individual physician specialties and the realities of their own
communities. If any of these groups bring CMS a payment model
that is specifically designed to improve patient care and save
Medicare money, CMS should not only have the power but the
obligation to approve it. CMS should then also make that same
payment model available to any physician who wants to
participate and has the capabilities to do so. Moreover, if a
physician is participating in such a model, they shouldn't be
subject to threats of SGR-type payment reductions. This kind of
bottom-up approach is not as radical as it might seem. The CMS
Innovation Center has been doing something just like this for
the past 2 years through programs such as the Innovation Awards
and the Bundled Payments for Care Improvement Initiative.
But I think there are five policies that Congress needs to
establish if you are going to have a truly successful process
for developing and implementing new payment models as quickly
as possible.
The first policy is that new payment models should be able
to be proposed to CMS at any time and there should be no limit
on how many different proposals can be improved as long as they
improve care and save Medicare money. Proposals also need to be
reviewed quickly, and as I mentioned, CMS should have the
obligation to approve a proposal if it improves patient care
and saves Medicare money.
The second policy is that there should be frequent
opportunities for physicians to apply to participate in the
already approved payment models. Every physician should be
permitted to participate in an approved accountable payment
model whenever they are ready to do so.
The third policy: Physicians need to be given access to
Medicare claims data so that they can actually determine where
the opportunities for savings are, how care will need to be
redesigned to achieve those savings, and how payment will need
to change to support better care at a lower cost. I can't even
begin to describe to you what a barrier it is moving forward on
this because of the lack of information that physicians have
available to them.
Fourth policy: Once a physician is participating in an
accountable payment model, they should have the ability to
continue participating as long as they wish to do so if the
data shows the quality of care is high and Medicare spending is
being controlled. Most innovative payment models today are
explicitly time limited, and no physician or other health care
provider is going to make significant changes in the way care
is delivered if they might be forced to revert to the
traditional fee-for-service system within a few years. We need
to stop doing demonstration projects and start implementing
broad-based payment reforms.
Fifth policy: Funding should be made available to medical
specialty societies and multi-stakeholder regional health
improvement collaboratives so that they can provide technical
assistance to physicians. Most physicians don't have either the
time or the training to determine whether and how a new payment
model will work for them. If organizations that they trust,
though, can help them analyze data and redesign the way they
deliver care, I think physicians are far more likely to both
embrace new payment models and to be successful in implementing
them.
Finally, I must note that I think that payment reforms will
be much easier to implement and far more successful if you also
take steps to proactively involve the patients, the
beneficiaries. Many of the existing payment models are forced
to use complicated statistical attribution methodology to
determine which physicians are accountable for which patients.
It would make far more sense to simply ask the beneficiaries to
designate which physicians they want to be in charge of each of
their conditions.
I would be happy to answer questions that you may have.
[The prepared statement of Mr. Miller follows:]
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Mr. Pitts. Thank you, Mr. Miller.
Ms. Mitchell, you are recognized for 5 minutes for your
opening statement.
STATEMENT OF ELIZABETH MITCHELL
Ms. Mitchell. Thank you, Mr. Chairman and members of the
committee. My name is Elizabeth Mitchell. I am the CEO of the
Maine Health Management Coalition, and I want to start by
thanking you for taking on this issue. As I am sure you well
know, employers and State governments can no longer afford cost
increases, our employees can't go further years without wage
increases, and our providers are increasingly burdened in a
system that does not reward high performance and creates daily
barriers to improving care for patients, largely due to current
payment systems and a lack of data.
Thank you for also hearing from a regional health
improvement collaborative. We are an employer-led multi-
stakeholder collaborative based in Maine. We have been around
for 20 years and we include employers from the State employees
to L.L. Bean to the Medicaid program, large multi-specialty
groups, academic medical centers and primary care physicians.
We work together in a partnership to improve quality and reduce
cost.
Maine has been very successful in addressing quality. We
have some of the best health care quality in the country. We
know that our efforts in data sharing measurement and public
reporting have been key to achieving those gains. However,
despite these achievements, quality and safety failings
continue, and more discouraging is that the quality
improvements have not reduced the costs of care for purchasers
and patients.
Costs and quality vary by region as do opportunities for
improvement. Maine is the birthplace of the Dartmouth Atlas,
where Dr. John Wennberg first observed vast differences in
maternity care within Maine with no correlation to
demographics, patient acuity or patient preference. He also
noted that his kids would have received vastly different
treatment for their tonsillitis if they lived one county away.
Variation in cost is even more pronounced.
Just as there is no single problem facing health care,
there is no single one-size-fits-all national solution. I
believe with adequate data and support, regions are well
positioned to not only identify but help solve their own
problems. Data is necessary to identify regional improvement
opportunities and to engage stakeholders in improvement. The
Dartmouth Atlas would never have been possible without good
data. But data is necessary but insufficient. Once
opportunities are identified, stakeholders, particularly
physicians, must be actively engaged to change current
practice. We must now be equally effective using data to engage
physicians, purchasers and patients in care improvement. Data
is essential for many, many reasons: identifying priority costs
and quality improvement opportunities, enabling performance
measurement and public reporting, establishing cost and quality
performance targets, informing choice by consumers, engaging
physicians and managing population health. The premise of
medical homes and ACOs is better management of population
health but it is both unreasonable and unfair to ask physicians
to assume risk without adequate, timely data.
States and communities face different challenges and
physicians need local, timely data to direct their work. To
direct physicians to focus improvement efforts on non-priority
areas is a sure way to frustrate them when they are not even
paid for this improvement work. But they know where care can be
improved if you ask. Significant savings are also possible
through readmission reduction, through improved C-section
rates. There are opportunities around the country if you have
the right data to target them.
You rightly recognize the central role of measurement in
both improvement and accountability. A key barrier to
addressing cost in ways that were equally successful to
addressing quality is the lack of nationally endorsed cost
measures. Without measures endorsed by the National Quality
Forum, we found it impossible to reach consensus on relevant
metrics. Regardless of the payment system, appropriate and
transparent measurement is required to understand how patients
fare in new models. Good outcome and patient experience
measures will also support more flexible payment models. New
models and incentives to reduce costs must be balanced by
ongoing measurement.
You referenced physician-endorsed measures but we would
urge you to consider multi-stakeholder-endorsed measures as
those who pay for and receive care, purchaser and patient
voice, are crucial to identifying the right performance
indicators together with physicians. Whether measurement or
population health management, none of this work is possible
without data.
Unfortunately, multi-payer data is very hard to obtain.
Many health plans consider it proprietary. Many provider-run
data organizations are reluctant to share it publicly, but as
Dr. David Howes, the president of Martin's Point Health Care
summed up our challenge, ``The age of competing for market
share by controlling access to data is over. Transparent all-
payer data should be made widely available and competition
should be based solely on performance.''
Medicare's Qualified Entity program is an important step
toward giving communities and providers the information they
need to improve care. The Qualified Entity program is a strong
signal of partnership and support for local innovation and
endorsement for use of integrated data. CMS should not only
continue to enable qualified groups to share data but they
should accelerate it with financial support and greater
flexibility.
Regional health improvement collaboratives are stewards of
multi-payer data and experienced leaders using the data for
improvement. We may be your innovation infrastructure and
partners for implementation on the ground.
[The prepared statement of Ms. Mitchell follows:]
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Mr. Pitts. Thank you, Ms. Mitchell.
Dr. Berenson, you are recognized for 5 minutes to summarize
your testimony.
STATEMENT OF ROBERT BERENSON
Dr. Berenson. Thank you, Chairman Pitts, Mr. Pallone and
members of the committee. I very much appreciate the
opportunity to provide testimony as the committee attempts to
identify how to achieve higher value of physician services for
Medicare beneficiaries and taxpayers. It is a subject that I
have been deeply involved with through most of my professional
career as a practicing general internist, practicing just a few
blocks from here for over a decade, a medical director of
managed care plans, a senior official at CMS, and Vice Chair of
MedPAC until this past May. As an Institute Fellow at the Urban
Institute, I am currently involved in a project to improve how
services and the Medicare fee schedule are valued for payment.
While there is broad agreement on the need to move from
volume-based to value-based payment, the current emphasis
assumes that measuring a few quality measures and somehow
attributing costs generated by many providers to an individual
physician can produce accurate estimates of a physician's
value. Measurement is more difficult than some policymakers
assume while the evidence on pay-for-performance for hospitals
frankly is not encouraging.
For physicians, behavioral economics suggest that pay-for-
performance can crowd out professionals' intrinsic motivation
to help their patients and can actually worsen performance.
What has been lost in equating value-based payment with pay-
for-performance is the recognition that value can be fostered
not only by improving how well particular services are
performed but also by improving the kind and mix of services
beneficiaries receive. The Medicare fee schedule for physicians
and other health professionals produces too many technically
oriented services including imaging tests and procedures and
not enough patient-clinician interaction to diagnose
accurately, to develop treatment approaches consistent with the
patient's values and preferences and continuing engagement to
assure implementation of a mutually agreed-upon treatment plan,
nor does the fee schedule emphasize care coordination and other
patient-centered activities that would actually improve patient
outcomes.
However, the price distortions that plague the current fee
schedule are not inevitable. Even in fee-for-service, Medicare
can buy a better mix of services by altering the prices paid
for services, balancing considerations of beneficiary access to
care with reducing overuse of services caused at least in part
by inordinately high payment for some services. We can improve
the fee schedule over the short term even if the ultimate goal
is to reduce its importance or eliminate it altogether. In
fact, in my view, it is necessary to improve the fee schedule
to be able to successfully implement new payment models.
First, the migration to new payment approaches will take
years. Even then, fee-for-service may be part of new payment
approaches and also may need to be retained for certain regions
and particular specialties. Second, fee schedules are the
building blocks for virtually all the new payment models, most
notably, bundled episodes. Errors in fee schedules would
therefore be carried over into errors in the calculations of
the new payments. Third, many prototypical ACOs, which I agree
with Chairman Hackbarth is the most promising new delivery
model, use relative value units from the Medicare fee schedule
as the basis for determining productivity for their member
physicians. Again, because fee schedule prices are distorted in
relation to resource costs, their assessments can be
inaccurate, leading specialists to be valued by the ACOs as
more productive than primary care physicians or one kind of
specialist more productive than another kind of specialist
simply because of errors in relative value units.
As we think about moving to new payment models through the
kind of activities that are going on with the Innovation Center
at CMS, I would recommend the following immediate agenda for
improving Medicare payment to physicians. I would suggest
repealing the Sustainable Growth Rate for the reasons that have
come up already, especially now that the score is only $138
billion over 10 years. I would not implement a new volume
control formula at this time, especially given that volume and
intensity of services is remarkably low, at least at this
moment, but rather permit CMS to more affirmatively modify
prices to try to influence volume and intensity of services. I
would consider narrowing or eliminating the in-office ancillary
services exception to the Stark self-referral regulations if
the volume of particular services grows unabated. I would
revise the definitions of evaluation and management service
codes to better describe the work physicians perform,
especially for patients with chronic conditions and functional
limitations, and also to decrease the current epidemic of up-
coding that is taking place. And finally, I would reduce or
eliminate the site-of-service differential, which pays
hospitals much more for physician services than are paid to
independent practices, separately recognizing the costs of
unique hospital obligations and services hospitals uniquely
provide.
Thank you very much.
[The prepared statement of Dr. Berenson follows:]
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Mr. Pitts. The chair thanks the gentleman, and Dr. Damberg,
you are recognized for 5 minutes to summarize your testimony.
STATEMENT OF CHERYL L. DAMBERG
Ms. Damberg. Thank you. I want to thank the committee for
inviting me here today. I am a Senior Researcher at the RAND
Corporation, and the focus of my work over the past decade has
been looking to evaluate pay-for-performance or performance-
based payment models.
My remarks today address issues related to measuring the
performance of physicians under these new payment models that
will incentivize or tie payment to performance, and there are a
number of issues or measurement issues that I want to call to
your attention.
Issue number one: Existing performance measures are not
suitable for newer models that emphasize the delivery of
efficient, high-quality care across a continuum of time and
health care settings. Current measurement focuses on discrete
events in single settings of care or silos rather than looking
longitudinally across an entire episode of care. The portfolio
of measures that exist today were not developed or envisioned
to be used in the types of accountability and payment
applications that are emerging nor is the portfolio necessarily
focused on the right measures. Measurement needs to migrate
away from a siloed approach which further perpetuates a lack of
coordination to quality assessment that encompasses all care
delivered to patients across an entire episode.
Issue number two: When we ask health care providers to
devote resources to measurement, it is critical that we focus
on the important aspects of care that matter most to patients
and which providers can most readily influence. Patients care
most about outcomes such as whether a chronic illness like type
2 diabetes was prevented or for a patient with diabetes whether
the physician and his or her care team helped the patient
manage the condition to prevent complications and premature
death. Patients also care about whether they can access care
when they need it, whether their care is coordinated. They also
want to know about how well they are treated in the system and
whether their preferences are considered in treatment
decisions. And lastly, patients care about the cost of
treatment. Regardless of the payment model used, the true north
and holy grail of performance-based accountability and payment
is measurement of outcomes.
Issue number three: Outcome measures are currently lacking
in many instances or in a nascent state of development. For
example, there are a small number of measures of cost or
efficiency and many are poorly constructed and have not been
fully tested for their validity or reliability. Measures that
assess change over time and important intermediate outcomes
such as blood pressure control and that influence long-term
outcomes such as heart attack and stroke do not yet exist. The
United States could learn from efforts in Great Britain. Since
2009, the United Kingdom's national health system has invited
all patients who are having a variety of surgeries to fill in
patient-reported outcome questionnaires and has generated
comparative statistics to incentivize improvements and help
patients understand performance differences across different
sites of care.
Issue number four: As we transition to a performance
dashboard with more emphasis on outcomes, there is work that
can be done immediately to strengthen the types of measures
that are currently used. For example, we can shift away from
focusing on discrete clinical services toward longitudinally
measuring the management of a patient. In addition, the HIT
infrastructure may enable the creation of new, novel measures.
For example, EHRs and health information exchange audit trails
could be used to construct indirect measures of quality. A
specific example is medication reconciliation and hospital
discharge. In lieu of a checkbox in the HER, the audit trail
could provide an indirect measure to determine whether the
physician accessed the patient medication list and made any
modifications prior to discharge.
Issue number six: We must focus efforts on strengthening
data systems to facilitate delivery of high-quality care by
physicians and the construction of performance measures. We
cannot expect physicians to coordinate care, avoid duplicative
use of services and manage total cost of care when they are
flying blind. I commend to you a paper that was written by a
colleague of mine, Eric Schneider. It was actually written in
1999 but is still highly relevant, and this paper lays out a
roadmap for an integrated health information framework and
identifies seven features the framework should possess. I won't
go into those. They are in my written testimony.
Issue number seven: We have to enlist physicians as true
partners in the process of defining measures for which they
will be held accountable as individuals and more broadly as
care teams and systems of care. They have a vitally important
role to play in the selection of measures and choosing concepts
that will be measured weighing the scientific evidence,
specifying the measures and assessing the feasibility and
practice and then ultimately endorsing the measures that will
be used once developed. Lastly, because much of the current
measure development is occurring using federal tax dollars,
there is a clear need to coordinate these efforts to better
deploy scarce resources and minimize burden on providers.
In conclusion, I would like to summarize the actions that
could be taken. I think there is more federal leadership that
could happen to develop a robust measurement strategy and shift
the focus and resources towards a greater emphasis on defining
and measuring outcomes. Secondly, support the development of
the robust health information framework that is integrated and
will allow data sharing across providers and payers. Third,
continue efforts to coordinate measurement development within
and outside the federal government. Fourth, use a rigorous and
transparent and inclusive process to develop measures. And I
would just leave you with the thought that in addition to
paying providers differentially, it is important to note that
public transparency or public reporting can be a powerful
incentive.
Thank you very much.
[The prepared statement of Ms. Damberg follows:]
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Mr. Pitts. The chair thanks the gentlewoman, and that
completes the opening statements of the second panel. I will
now begin questioning and recognize myself for 5 minutes for
that purpose.
Dr. Damberg, we will start with you. You state that the
single most important factor in facilitating or impeding the
use of measures was the availability of data to construct
performance measures. Can you describe a strategy for bridging
this data gap? Is the current HIT legislative and regulatory
climate facilitating or impeding this effort? If the latter,
what changes do you suggest to remedy the current shortcomings?
Ms. Damberg. While there have been significant investments
in the health information structure, I don't think that what is
occurring currently is going to help us ultimately with
performance measurements, and that is in part because we have
not identified the specific data elements, come up with
standardized data definitions for those, and I think we are
still a significant ways off from data sharing among the
different partners, in part because of issues around security,
privacy issues and confidentiality of the data. So I think
those are several areas where attention needs to be focused.
Mr. Pitts. Thank you.
Ms. Mitchell, can physicians in smaller practices be
adequately measured for quality and efficiency? I understand
that one problem in terms of measuring smaller-sized practices
is the limitations of small sample sizes. Is there a way to
aggregate data from a number of smaller practices to overcome
this barrier?
Ms. Mitchell. I think it is incredibly important that we
ensure that all measures are reliable and valid, and there will
be sample-size challenges to that. We could also look to
patient-reported outcomes, however, functional status measures,
patient experience measures. There are measures that can be
used for smaller practices that are very relevant to other
consumers but it will be critical that all measures, especially
if they are publicly reported or used for payment, are valid
and reliable.
Mr. Pitts. Mr. Miller, there are a number of new payment
reform models being developed, and as policymakers, we
obviously can't incorporate all current possible future models
into one piece of legislation. Yet one lesson from the ACO
experience is that if you make the model too prescriptive, it
may preclude many providers from participating. Have you given
thought as to how you might develop a policy to approve new
payment reform models that has the proper balance of detail and
flexibility?
Mr. Miller. As I outlined in my testimony, I think that if
we have both a top-down and a bottom-up approach, we will be
able to get a much richer set of models that are workable much
more quickly than we do today. The problem that you saw with
the ACO regulations was, it was designed to be a one-size-fits-
all approach, and so naturally there were a lot of concerns
about how well it was going to work in all circumstances but
basically in the end it was one approach. And I think that what
you need to distinguish is that it was one approach to payment
called the Shared Savings program. There are many different
ways that you could create an accountable care organization,
which I think is a very important model to think about, but you
don't necessarily--the best model is not to do it through a
Shared Savings program.
So for example, there are many physician groups and IPAs
around the country that did not want to participate in that
particular program because they felt they were still being paid
by fee-for-service with simply a Shared Savings add-on but they
did want to participate in the Pioneer ACO model because they
had the capability to actually accept a risk-adjusted global
payment and be able to significantly change care that way. So I
think that is an example where if you actually let the
providers come forward and define what they are willing and
able to do, you will be able to get a set of models, not in
theory that you would say we have to create a dozen models that
maybe nobody wants but you would actually have people coming
forward saying I know that I can improve care for beneficiaries
and I can save money if you change the payment model in the
following way.
Mr. Pitts. Thank you.
Dr. Berenson, given the fact that fee-for-service will be
around and may even play a prominent role in future payment
systems, at least for the foreseeable future, how do we deal
with spending in the fee-for-service segment of the system? In
other words, how do we control for increases in the volume and
intensity of services? Will we still need a system of spending
targets and possible cuts, and if so, how should the targets be
structured.
Dr. Berenson. Yes, that is a very interesting question. I
would point to the results of what happened when the Congress
in the Deficit Reduction Act of 2005 correctly, in my opinion,
reduced dramatically the spending for advanced imaging services
like MRIs and CTs and PET scans. For reasons I don't quite
understand, we were actually paying physician practices more
than we were paying outpatient departments for those services.
As part of the doc fix for that year, those payments were
reduced, and what happened in addition to the savings from the
prices coming down significantly, volume of those services over
the subsequent years has actually moderated, and what I hear
anecdotally is a lot of midsized practices that really had no
business purchasing their own MRI machines and were doing so
because of its profitably suddenly decided this was no longer a
profitable thing to do.
So what I have suggested in my testimony is that the
Secretary should have somewhat greater authority to affect
prices where they also affect volume of services. I mean,
physicians do respond. There is this notion that physicians
simply respond to price reductions by increasing volume. That
is too simplistic a notion. It varies by the service. I think
we need to be much more sophisticated about seeing the
relationship between price and volume.
Mr. Pitts. The chair thanks the gentleman and now yields to
the ranking member 5 minutes for questions. Mr. Pallone.
Mr. Pallone. Thank you, Mr. Chairman.
My question is to Dr. Berenson. While there is a consensus
regarding the need to move to more value-based payment systems,
no one seems to have a clear idea how far or, you know, how we
got from our current fee-for-service system or how we go from
our current fee-for-service system to some of the new payment
reform models like the accountable care organizations, and as
you point out in your written testimony, fee-for-service is
actually the foundation for many of these new payment models.
So I wanted to ask, if we want to improve the way we pay for
fee-for-service at the same time we are creating incentives for
providers to move into new delivery and payment models, what
would this transitional period look like?
Dr. Berenson. Well, I pretty much think we are in the
transitional period now, even if we can't recognize it, because
of all of the experimentation that is now going on. As Mr.
Miller pointed out, we have both shared savings ACOs and risk-
bearing ACOs that are being tested. We have got various models
for bundled episodes being tested, the Independence at Home,
which I think is a very important aspect, which would emphasize
home care for frail, elderly, medical homes, et cetera. I think
what I said in my testimony is that it is going to take us a
number of years to sort it out. I think we should be doing
robust experimentation now. I support Harold's notion of having
some bottom-up approaches that we would test. I also would
endorse Chairman Hackbarth's notion that as we go through this
transition, we need to make it very--we need to put pressure on
the fee-for-service reimbursements, and part of what I
suggested is in shifting more reimbursement to primary care or
away from tests and procedures, we would be putting that
pressure. Ultimately, we want to be in a place where physicians
find it is in their own interest to want to move into a new
organizational structure or accept new payments rather than
stay in fee-for-service.
I think most docs know that sort of unfettered fee-for-
service with no incentives for collaboration and coordination
probably is not the right payment model. So I think we are in
the transition now and happily the volume and intensity of
services and therefore CBO's estimates of future spending in
Medicare has moderated significantly, so I think we can take
the time to really do what is necessary to understand where we
want to go at some point. I don't know if that is 5 years from
now, 7 years from now. We would have to at least on a regional
basis, possibly on a national basis, say we now have enough
confidence in an alternative payment model that we are really
going to expect doctors to move to that with the fee-for-
service as sort of a legacy system for those who can't make the
adjustment.
Mr. Pallone. All right. Thanks. I am going to try to get
one more question in here for you and also for Ms. Mitchell,
and Mr. Chairman, for this purpose I wanted to ask unanimous
consent to introduce into the record this letter from the
National Partnership for Women and Families, which I think you
have.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pallone. Thank you, Mr. Chairman.
There has been a significant movement over the past decade
towards the establishment of multi-stakeholder consensus
processes for health care quality and performance measurement,
and Mr. Chairman, this letter references the SGR proposal being
circulated by the Republican Ways and Means as well as Energy
and Commerce staff, and in that letter, the National
Partnership raises a number of concerns about the role medical
specialty societies are being given to develop and select
quality and performance measures that would be the basis of
their payment and the apparent exclusion of other stakeholders
including consumers. They are concerned that this appears to
reverse the positive trend over a number of years towards
including a broader group of stakeholders in the process.
So Dr. Berenson and Ms. Mitchell, over recent years there
has been a lot of work developing consensus processes for
development of quality and performance measures. What are your
views regarding the appropriate roles for physicians, and how
important is it to have consumers and other stakeholders
involved in this process? And you have got 28 seconds.
Dr. Berenson. Twenty-eight seconds? I will be very quick. I
am a believer in multi-stakeholder participation but ultimately
I think Dr. Damberg would agree that the measures that we come
up with need to be valid and reliable and need to pass sort of
scientific muster from an organization like the National
Quality Forum. So I would have consumers at the table and I
wouldn't simply defer to what the specialty societies would
prefer in terms of how they would be measured.
Mr. Pallone. Ms. Mitchell, quickly.
Ms. Mitchell. Well, having run a multi-stakeholder process
for over a decade in Maine to include physicians, unions,
employers and consumers at the table to select measures, I can
tell you it is possible, and it is very important. We have
measurements now available that would not be if it were just
for one stakeholder group. So it is challenging but it is
extremely important, and I think it absolutely can be done and
I think the National Quality Forum and their multi-stakeholder
approach is very important.
Mr. Pallone. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the vice chairman, Dr. Burgess, for 5 minutes for
questions.
Mr. Burgess. Thank you, Mr. Chairman. I want to thank our
panelists for sticking with us through what has been a long but
important hearing.
Dr. Berenson, I was hoping you could help me with a couple
of the points that you made, specifically point three and point
five, point three being the in-office ancillary services where
you said you would target those. I presume that means reduce
those, and you would target those for fee reductions.
Dr. Berenson. I would want to see whether the reason that a
lot of--there is abuse in the in-office ancillary exception. We
now have physicians like dermatologists and gastroenterologists
who used to send their specimens out to an independent
pathology lab that are now doing those in-house under this
exception, but at least some articles have described instead of
doing the specimen to confirm that the biopsy is not malignant,
they are now doing multiple slices, getting multiple payments,
clearly abusing the opportunity to do those services
themselves. Imaging has been a major concern about the in-
office exception with practices that are buying machines and
then supplying them. So what we learned with the imaging
example if we reduce the overgenerous payment, we reduce the
incentive to do some of these services. So that is what I had
in mind.
Mr. Burgess. I appreciate you paying attention when we were
doing the Deficit Reduction Act in 2005 because that was the
work of this committee that led to that. But then point five,
the counterproductive nature of the correction of misvalued
services, and this one based on the site-of-service
differential, which really has led to almost the destruction of
office-based cardiology in favor of hospital-based cardiology,
and we literally watched that happen over the last 3 or 4
years, and I really think it is to the detriment of patient
service. But nobody is getting a better deal because those
services are now performed in the hospital. In fact, it was
probably a better deal for the patient regardless of the
pricing structure. It was a better deal for the patient to be
seen in the cardiologist's office, have the tests done, have it
read and treatment rendered and judgment rendered at that point
rather than multiple trips back and forth to the hospital to
have the procedure done and then the consultation with the
cardiologist. Can you speak to that?
Dr. Berenson. Yes. There may be reasons for hospitals to
employ physicians if they have a commitment to become an
integrated delivery system and potentially an ACO but a good
reason is not to take advantage of the provider-based payments
that provide, I would call windfall revenues for the hospital.
It raises the cost to Medicare, raises the cost-sharing
obligations to beneficiaries, does, as you point out, sometimes
lead to greater inconvenience. The hospitals say that they do
have obligations that practices don't have--stand-by capacity,
24/7 stand-by capacity, running emergency departments, seeing
uninsured. I want to recognize those costs but I want to
recognize those costs and services, inpatient services or ED
services, not in an outpatient service that can be done just as
well at roughly the same cost in a doctor's office.
So I agree with you. I think it is unfortunate that we have
had a huge migration of cardiologists out of office to become
hospital employees, not to be providing higher quality or
efficiency but to take advantage of this site-of-service
payment anomaly.
Mr. Burgess. Well, we have come to an unfortunate place in
our country where it is prohibited for a doctor to own a
hospital but hospitals can own doctors, and that to me has put
entirely the wrong incentives out there.
Dr. Berenson. Well, we do have some multi-specialty group
practices that own the hospital so----
Mr. Burgess. But under the Affordable Care Act, as far as
generating and developing a new facility, that can't happen,
which really seems unfortunate because of the fact that you and
I hold a professional degree, we are precluded from entering a
business practice.
Dr. Berenson. The issues there relate to whether the
physician-owned hospitals were in a position to cherry-pick the
patients and, you know, MedPAC and others provided reports. It
is a difficult issue.
Mr. Burgess. It is not as clear-cut as that. I read a very
clear article on that written in Health Affairs in March of
2008 by me which said the most valuable thing I have is my
time, and if I have got an uninsured patient and I can take
care of them at an outpatient surgery site and my time is
valued by that outpatient surgery site, I am actually ahead
even though I didn't make any money that day and the facility
didn't make any money. It didn't cost me the vast investment of
time that it would cost me to wait in line behind a hospital
surgery schedule. A separate point. I didn't mean to bring that
up but you forced me.
Dr. Damberg, let me ask you a quick question. You just
referenced that patients care about the cost of care. Did I
hear you right when you said that?
Ms. Damberg. That is correct.
Mr. Burgess. Well, now, the Commonwealth folks came out
just earlier this month and said that activated patients cared
about the cost of their care, and while I don't really want to
get into the nuances of what an activated patient is, certainly
that patient who has a financial interest, a health savings
account owner, for example, in my estimation would be an
activated patient. So that would be a patient who cared about
the cost of care. In my experience as a physician, when someone
came in and I recommended a test or procedure, the next
question was, doctor, is it really necessary; doctor, is it
safe. The next question was, doctor, does my insurance cover
it. If the answer to that question was yes, there was very
little other curiosity about anything else. So am I wrong in
thinking that way?
Ms. Damberg. So let me give you a little story from
California from where I hail. So----
Mr. Burgess. Let us do real life, not California.
Ms. Damberg. Well, I think the example holds the rest of
the country. So someone that I know needed to have cataract
surgery, and he looked within a particular zip code and found
variation in terms of the amount of money it would cost to do
this procedure ranging from $3,500 to $11,000, and given that
he is financially at risk for a portion of that payment----
Mr. Burgess. Correct.
Ms. Damberg [continuing]. That starts to have significant
implications.
Mr. Burgess. And it is the activated-patient concept.
Ms. Damberg. Right, and I think what you see on the private
sector side now is movement toward what is called referenced-
based pricing, and so what health plans are doing on behalf of
employers is going out and doing that work to try to understand
these pricing differentials, make that available to consumers--
--
Mr. Burgess. And it is probably better if the patient is
involved in that, not the employer, and perhaps I will generate
a written question for the record that I will ask you on that.
Thank you.
Mr. Cassidy [presiding]. The chair recognizes Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman.
Dr. Berenson, when do you think we realized, had this
epiphany or it has been a slow process of gaining realization
that we needed to start moving from this fee-for-service system
to something different? I mean, how long have been kind of
trapped in this old system even though we have been able to see
that we have to move in a different direction?
Dr. Berenson. Well, what is interesting is in fact two
decades ago, it didn't have the label value-based payment but
the system, when I was practicing medicine in the 1980s and
into the 1990s, we had global payments as a common payment
method. The U.S. health care model that HMOs were paying
doctors on the East Coast basically had pay-for-performance but
with shared savings. Twenty-five percent of my capitation was
withheld and I got it back only if the costs of my patients,
all of their costs, were below a certain amount. So in fact, we
have been doing these new payment models. I think it came a
cropper because of the managed-care backlash and some problems.
We then reverted back, I think, to the early part of the last
decade to sort of traditional fee-for-service, traditional
freedom of choice, and then once we got over that backlash and
began to look again and said costs are really going up, there
were a couple of seminal articles suggesting that quality
wasn't terrific, I think we came back to those models.
Mr. Sarbanes. I mean, one difference now is that the better
management that you are trying to incentivize is going into the
hands of the providers, or at least that is the hope and
expectation here.
Dr. Berenson. Well, I think that is right, although I would
point to the California delegated capitation model has been
alive and reasonably well--it had problems in the 1990s--for
over two decades where providers, doctors, mostly, in control.
That is what we are now trying to do in Medicare with ACOs, and
I think that is a good idea. What is new, I think, in the last
couple of decades is, we have much better data systems now to
track performance and we actually do have the beginnings of
quality measurement and beginning to focus on outcomes, which
we did not have. One of the reasons for the managed-care
backlash was the perception that at-risk medical groups had an
incentive to stint on care and patients, members of health
plans were concerned that they would get shortchanged. We now
have some ability to monitor that that is not going on. So I
think we are in a better position to do what was tried a couple
of decades ago.
Mr. Sarbanes. Let me ask you this question. Obviously this
transition is going to be a heavy lift and there is going to
have to be a lot of research behind it in terms of changing
these RVUs and coming up with new codes and everything, but if
we could snap our fingers and know tomorrow what that new
methodology would be based on all the research and everything,
so you said we know what it is, now we have to deploy it, how
long do you think it is going to take for that phase just to
kind of--as a practical matter implement something if you
already knew what it was today?
Dr. Berenson. I see. I guess one of the decisions--there
are a couple of sort of core decisions that would have to be
made. One is, do we put in a payment system nationally that
everybody is going to participate in or can we roll this out by
region as different regions demonstrate an ability to move. If
we have the flexibility to do the latter, I think then it is
much easier to do. Some States and areas within States are
really ready, I would argue, for really new payment models and
new delivery. Other places are not. So that is one issue.
Another is the threshold question of whether we are
providing options for physicians to opt into or whether we are
going to make it mandatory. I think the different payment
models probably call for a different answer to that one and
maybe--in fact, I don't think ACOs should be required to have
every physician in the community. They would have credentialing
criteria as to who really meets the expectations of the ACO.
Maybe some docs would not be in. Other payment models like a
bundled episode, I have trouble imagining that that would be
sort of voluntary. I think if we find that it works, we are
going to implement it. I don't know, 3 to 5 years would be my
guess. If we knew today that this is where we wanted to go, I
would say something like 3 to 5 years to put it in with--I
would much prefer to do it on a regional rollout basis than on
a national all at once.
Mr. Sarbanes. That is helpful. Thank you. I yield back.
Mr. Cassidy. Thank you, Mr. Sarbanes. The chair yields to
Mr. Hall.
Mr. Hall. Mr. Chairman, thank you. I have been in another
meeting and I don't know what questions have been asked, but I
understand you usually allow us to write questions to them and
ask them to answer them at a reasonable time.
Mr. Cassidy. Yes, sir.
Mr. Hall. Two or three weeks?
Mr. Cassidy. Correct.
Mr. Hall. Thank you, Mr. Chairman.
Mr. Cassidy. The chair yields to Dr. Gingrey.
Mr. Gingrey. Mr. Chairman, thank you. I also have had to
step out, and I apologize for that, but in the last panel with
Mr. Hackbarth, I asked him about burdens to real reform,
specifically IPAB, and I look to engage this panel on the same
question. What administrative and legislative burdens are in
place today, IPAB obviously a legislative burden as I see it,
hinder the development of lasting reform and how can we
proactively work to remove these barriers to achieve better
patient outcomes at a lower cost? Let me start from right to
left. Dr. Damberg, would you start? And then each one of you
can respond to that in regard to specifically IPAB. I want you
to address that.
Ms. Damberg. I am not sure I am qualified to talk about
IPAB but in terms of other areas where I think federal
regulations are getting in the way, I do think going back to
the health information infrastructure, issues around privacy
security, data sharing, having standardized data elements
including a patient identifier are really handicapping our
ability to measure patient care across providers longitudinally
in the system.
Mr. Gingrey. Yes?
Dr. Berenson. Well, I have--I am not quite sure I agree
with you on IPAB. I agree to the extent that I don't think we
need 15----
Mr. Gingrey. You heard my conversation with Mr. Hackbarth
on the first panel?
Dr. Berenson. Right. I don't think we need 15 experts from
the outside who bring some special wisdom, but the concept of
having the Secretary have the authority to--it is essentially
putting Medicare on a budget and giving somebody the authority
to recommend how to--where to cut mostly payment rates to
accommodate those limits for some action, and I think more
discrete action than just across-the-board arbitrary cuts,
which will occur if a sequester goes in or which would have
occurred under an SGR implementation, just we are going to
whack all prices equally. Part of my testimony was to make the
point that I believe there are areas in the physician fee
schedule to take that specific example where the prices far
exceed the resource costs of production. I think there is an
opportunity to do that. I think as a matter of normal business,
CMS should be doing that, but if in fact we had to live within
a budget limitation, I think it is not unreasonable that the
Secretary would have the authority to----
Mr. Gingrey. Thank you. I didn't mean to cut you off, but
Ms. Miller, did you have a response on that? Ms. Mitchell. I am
sorry. Ms. Mitchell.
Ms. Mitchell. I am also not prepared to comment on IPAB but
I will tell you that what we----
Mr. Gingrey. Pull your mike a little closer, if you don't
mind.
Ms. Mitchell. Well, what we need most, I think, on the
ground are resources, resources to actually support a data and
measurement infrastructure and to support multi-stakeholder
work, and the easy ability to integrate multi-payer, all-payer
claims data with clinical data to give that feedback to
physicians and to share that information with----
Mr. Gingrey. Well, I think you kind of avoided my question
in regard to IPAB. I will let Mr. Miller have a shot at it.
Mr. Miller. Well, I will not avoid your question, Dr.
Gingrey. I think the fundamental fact that you have to keep in
mind is that only 17 percent of Medicare spending actually goes
to physicians. You can cut physician spending by 27 percent as
was proposed to do in the SGR and you would only save a few
percent for Medicare. But if you can actually have the
physicians helping you save the rest of the other 83 percent,
you can save an extraordinary amount of money in Medicare, and
that is where I talked about at the beginning is all of those
preventable hospitalizations, unnecessary procedures and tests
can be saved. And I think the problem is, we continue to try to
fix a broken system by trying to either we have--Congress has
two choices. If spending is controlled by utilization times
price, then you say, oK, we can either take things away from
beneficiaries--we don't want to do that--or somehow we are
going to cut the amount we pay to providers. Neither of those
is a desirable approach, but if you can actually change the way
that you pay physicians and ask them to come forward and say
where can we save money without hurting patients, I think you
can find tremendous opportunities.
When I go around and talk around the country, I give talks
to physicians, and when I ask them, I say can you tell me where
you can save money in Medicare, and I brought along examples.
They all give me examples. I have pages and pages of examples
from Maine, from Virginia, from Seattle telling me, and I can
give you examples from other States where physicians tell me
all the places where there are opportunities to be able to save
money, and then I say and why aren't we taking advantage of
those now, and they describe the barriers in the current
payment system. So there are physicians I have found all over
the country who would actually come forward and be able to
significantly reduce Medicare spending if we give them the
opportunity to do that. We are not going to achieve that by
cutting their payment rates. If you thought that a price of an
airline ticket was too high, would you solve that by cutting
the salary for the pilot? I don't think so.
Mr. Gingrey. Thank you, and thank you, Mr. Chairman, for
your patience.
Mr. Cassidy. The chair recognizes Mr. Griffith.
Mr. Griffith. Thank you, Mr. Chairman. I like that point,
Mr. Miller, that you made about bringing forward the physicians
because oftentimes the people in the system can tell you how to
solve those problems, and so I forward to working on that as
one of the solutions.
I am going to switch to you, Ms. Mitchell. You described
geographic disparities in quality and cost of care within your
own State of Maine with vast potential for qualitative gains
and cost savings if best practices are widely adopted, and I
guess I am curious, how do you describe or how would you
suggest that we achieve this geographic parity, and keeping in
mind that I am also looking not just at specialties but the
fact that I have a large rural district with lots of small
communities. Some of my counties, you know, have less than the
5,000 people necessary to do one of those new bundling formats
that we were talking about with the previous speaker.
Ms. Mitchell. Well, I think the good news is that you don't
need a lot of people to do this. Maine is equally rural, as I
am sure you know, and what we were able to do was bring
physicians, employers, patients together to look at the data
and really look at the variation. We found opportunities to
reduce, for instance, cardiac spending by $35 million just by
getting to current best-practice levels within the State. This
is not unattainable. It is actually being done. So when you
facilitate not only that information being shared but then
bringing those best practices to the other areas, there is a
lot of learning. You need technical support. You need
information. You need feedback loops. All of those can be done
at the local level. We also found massive variation in early
induction, and just by sharing that data statewide, we saw up
to a 20 percent reduction in those rates because they
understood that that needed to change and that what best-
practice targets were. So sharing information in and of itself
is a very powerful practice. It does not require an ACO to do
that. It requires engagement and data with the physicians.
Mr. Griffith. Which would be an amplification of what Mr.
Miller was saying.
Ms. Mitchell. Absolutely.
Mr. Griffith. OK. And Mr. Miller, how do you encourage the
physician buy-in, particularly in rural areas where you may not
have sufficient numbers of docs to begin with?
Mr. Miller. Well, I think there is two ways. First of all,
you have to spend the time to help physicians understand the
model and to be able to get the data that they need to
understand how this will work for them. I found when I have
done programs--and I did a program last fall for the Medical
Society of Virginia. We had physicians from all over the State
that came in and spent a day actually working through the
payment models, episode payments, comprehensive care payments
for chronic disease, and after they had a chance to work
through them, we took a little straw poll at the end and said
so which model would you rather be in, the current model or
this model, and almost unanimously they said the new model.
But then the question is, how will that work for me because
it does come down to what is the price, and nobody actually
knows today. They don't have the data to be able to do that. So
if we can get them the data--and it is not just the data, it is
actually turning it in to information. So simply handing a
physician, you know, seven multimillion claim record files from
Medicare is not the answer. They are going to need help and
they need to get that help from some trusted local entity. The
kind of thing that Elizabeth Mitchell runs in Maine is a place
where physicians have a seat at the table and have the access
to technical assistance that they trust, and then some
assistance in being able to transform the way they deliver
care.
And I think that if you then go to a rural area and you
say, well, how will this work here and what tweaks do we need
to be able to make in that model to make sure that it does work
here, given that patients may have longer travel time, etc.,
but the flexibility of the model means that you can actually
design a different system in a different place. You may say in
a rural area we need to be able to do more telemedicine to be
able to bring resources into unpopulated areas, then we can do
something different in urban areas. So I think that is the real
advantage of these flexible payment models is, they would
actually give physicians the flexibility to design different
care delivery systems that work in different communities.
Mr. Griffith. Well, I appreciate that, and I would have to
tell you that I am not surprised that if you went to talk with
the Medical Society of Virginia that you got some interesting
ideas. I served in the State legislature for 17 years and
worked with them on a regular basis on a number of issues, and
it is a good group of people who are out to solve problems, not
just--they are looking out for their territory but they are
also out to solve problems and they have always been that way.
I appreciate it very much, and I yield back, Mr. Chairman.
Mr. Cassidy. Thank you, Mr. Griffith, and the chair
recognizes Ms. Capps.
Mrs. Capps. Thank you, Mr. Chairman.
I am going to pose my first question to Ms. Mitchell. Maybe
there is time to have others weigh in on it because this topic
has come up today with the previous person on the panel.
Delivering high-value patient- or person-centered health care
seems to be moving away from the traditional physician-based
model to one involving a health care team including both
physicians and non-physician providers. Arguably, too much of
our discussion tends to be focused on doctors and SGR topics
and not enough on the other professionals, and we know how
critical they are to achieving high-value care. As we debate
what comes next after SGR--I think we are all in agreement that
we need to focus on what will come after it--their voices, the
voices of these other providers I believe are critical to
ensuring an efficient and effective model of care or models of
care that take care of the whole person with that being our
focus.
So my question is--and I can see others nodding so if you
could go quickly and each make a short response to this, I
would like to have you all be on the record on this topic if
possible. So the question is, how do we ensure that non-
physician providers are appropriately engaged and appropriately
valued as we move forward with new delivery and payment
systems? I will start with you, Ms. Mitchell, because I had
directed it to you, and then Mr. Miller, Dr. Berenson and Dr.
Damberg if you would like to comment too.
Ms. Mitchell. I think one of the most promising
developments in any of these new models is the patient-centered
medical home, as I am sure you know.
Mrs. Capps. Yes, I am a big champion of it.
Ms. Mitchell. That is absolutely about team-based care.
Mrs. Capps. In fact, some have said it should not be a
medical home, it should be a health home because it is
positive.
Ms. Mitchell. I like that. And I will say that one of the
most effective members of that team is the care manager based
in the practice, not a physician, usually a nurse but another
key team member who actually makes sure care is coordinated and
managed. We are also----
Mrs. Capps. Over time, you mean?
Ms. Mitchell. Over time, absolutely, and in the community.
We are also implementing community care teams for high-needs
patients. We work with Dr. Brenner on hot-spotting. Who are
these people? What supports do they need? Early, early
anecdotal evidence, well, actually data-driven evidence is
showing 40 percent reductions in some of their spend if they
get the right care at the right time. These are not physicians.
These are community-based multi----
Mrs. Capps. I can only imagine there might be some
resistance from some, so let me hear a quick comment from Mr.
Miller.
Mr. Miller. Congresswoman, I ran a project in Pittsburgh to
try to reduce readmissions for chronic-disease patients, and we
made a variety of changes in the hospital and physician
practices but the most critical change by far was, we hired a
nurse who could actually follow the patients and go and make
home visits to them, and we had a 44 percent reduction in
chronic-disease readmissions to the hospital.
Mrs. Capps. I am so glad we are getting this on the record.
Mr. Miller. But the only way we were able to actually hire
those nurses is, we got a grant from a local foundation to pay
for them, and at the end of the project we had to lay off one
of the nurses because no health plan would pay for it. Medicare
does not pay for it. We were fortunate enough that in one case,
the hospital was willing to pick up that nurse to be able to
continue to work with the PCPs and the patients. That is the
issue, flexibility of the models. I think when I talk to
physicians all over the country, they would love to be able to
hire a nurse to be able to do this work. They are not
reimbursed for it.
Mrs. Capps. Mr. Chairman, in response to this, I surely
hope this is a topic that we can continue to engage in. I don't
pretend to have the answers, and just because I am a nurse and
certainly do appreciate your comment, Mr. Miller, it isn't just
about nurses, and you being a doctor, I know you can understand
that it is really about who we are focusing on in this kind of
model.
Mr. Miller. I would also just add quickly, the nurse worked
with the physician.
Mrs. Capps. Of course.
Mr. Miller. The nurse did not work for a health plan, was
not working on some disconnected basis. They were working as
part of a team with the physician so they added that critical
element that the physicians could not do on their own.
Mrs. Capps. And reduce the cost that much. Wow. Dr.
Berenson?
Dr. Berenson. Three quick points. One is that fee-for-
service is really a problem because if somebody has to make a
rule as to a nurse practitioner working incident to or
independently and they are arbitrary and they don't work.
Mrs. Capps. There is a lot to work out. That is why this is
going to take even from us, and there are other people who will
want to weigh in, a lot of discussion, many hearings hopefully
on this topic.
Dr. Berenson. Secondly, I have just completed doing a
number of interviews around advanced primary care. Some people
prefer that term to either health home or medical home. There
was a focus group that said--a woman said let's see, medical
home, funeral home, is that what you are talking about? Nursing
home, funeral home. So there is a labeling issue I don't think
we have to get into, but the docs all said the real advantage
that they have gotten as part of the multi-payer advance
primary care was being able to hire a care manager/nurse to
work with the really frail seniors and keep them out of the
hospital. And the final thing, very simply is if we have a
global payment to an organization, they can decide who the
personnel should be, and I think nurses and other non-
physicians will do very well in that calculation. It is not
somebody in Baltimore or Washington telling them what their mix
of staffing would be.
Ms. Capps. And I might even say maybe that person is the
right one to decide it but there might be somebody else too,
but certainly local rather than some other place.
And I know I am out of time but because I think I might be
the last person to ask questions, would you mind? I would just
love to get the fourth viewpoint on this. Thank you.
Ms. Damberg. I would echo Mr. Miller's comments. One of the
things that I have seen in California, there is the Center for
Medicare and Medicaid Services Innovation Grants going on.
Mrs. Capps. Yes.
Ms. Damberg. Some of those involve the use of nurse case
managers and other personnel, and one of the things--those
models are supposed to be kind of self-sustaining over time.
Mrs. Capps. That is the challenge.
Ms. Damberg. I think the focus right now in those projects
is, you know, is Medicare going to change its payment policy
such that we can continue to hire these personnel beyond the
life of this project.
Mrs. Capps. That might be the very next subject for a
hearing, not that it would be my decision but it might be a
suggestion that is coming apparently from this team, so I yield
back my time. Thank you.
Mr. Cassidy. Dr. Gingrey has a quick question or comment.
Mr. Gingrey. Mr. Chairman, a unanimous consent request to
briefly ask of Mr. Miller. At the end of my line of
questioning, you had indicated there were some barriers to
these multitude of ideas that you have showed us in your legal
papers in regard to physicians not being able to share that
information that you have gleaned. If you would submit to the
committee maybe a list of some of those impediments to them
being able to share that information because I think it would
be very, very helpful to us as we go forward?
Mr. Miller. Well, the barriers are for them to actually
implement the changes that would be necessary but I would be
happy to share those. I think you would find it very insightful
to see the range of different opportunities for savings the
physicians identify, but it all comes back in many cases to the
payment system that does not actually allow that to happen. It
is not an issue of incentives, it is the fact that there are
genuine barriers and restrictions like the fact that a nurse
does not get paid for today. That is a barrier.
Mr. Gingrey. Yes, and so within a week or two if you could
do that, I would appreciate it.
Mr. Chairman, thank you very much.
Mr. Cassidy. Thank you. The chair recognizes Mr. Bilirakis.
Mr. Bilirakis. Mr. Chairman, I appreciate it very much, and
I want to thank Chairman Pitts and Chairman Upton for giving me
the opportunity to serve on this very important committee.
I have a couple questions. The first one would be for Mr.
Miller. I know you touched on this somewhat, but discuss the
importance of defining special, specific outcome-based quality
measures. What strategies do you propose to determine these
measures?
Mr. Miller. You are directing that to me?
Mr. Bilirakis. Yes.
Mr. Miller. So I think that as the committee has
recommended, I think that physicians are in the first, best
position to be able to identify what some of those outcome
measures should be. I think then there should be a multi-
stakeholder process for looking at that and saying are those
the right things to ask consumers whether that deals with the
kind of things that they are looking at. I do think that what
we have to do is to start moving more to outcome measures and
particularly to patient-reported outcome measures. Dr. Damberg
talked about that in her testimony. But in order to be able to
do that, you have to have some infrastructure in a local
community to be able to actually survey the consumers and ask
them, and that is where is having a trusted entity, a multi-
stakeholder collaborative in the community that can actually do
that work, to be able to do the surveying of the patients, to
be able to do it reliably and then be able to report that in an
accurate and objective fashion I think is critical to being
able to assure everybody that in fact the care is improving and
that you are getting the value for what you are paying for.
Mr. Bilirakis. Thank you very much.
Next question for Ms. Mitchell. Can you discuss the
opportunities for better care and financial savings through use
of the community care teams and the hot-spotting that you
mentioned in your testimony? Is this a strategy that you
foresee being scalable to different community demographics such
as rural, urban and suburban, et cetera?
Ms. Mitchell. Certainly, I think it is imminently scalable
and it is probably not even that expensive because these are
teams of nurses or even laypeople at some times. But what we
are finding is that the key drivers for the heavy, heavy
utilization are often mental health issues and substance abuse
issues and other social determinants of health. So to be in the
community and understand what the barriers are to these people
actually getting better and not having to return to the
hospital over and over again, it is not high tech, it is really
working with the individuals, and I think it is not only
scalable but really urgent to do exactly that.
Mr. Bilirakis. Very good. Thank you.
Thank you, Mr. Chairman, I yield back the balance of my
time.
Mr. Cassidy. The chair recognizes Mr. Green.
Mr. Green. Thank you, Mr. Chairman. Again, I want to thank
the entire panel for being here today, and some of you may have
heard my questions earlier of our first panel, and I would like
to hear both from Ms. Mitchell and Dr. Berenson if there would
be anything different. How do we measure the quality accurately
in a way that avoids a one-size-fits-all approach and put the
patients first and avoids the endless complexity that could
develop if we build too much flexibility into a system?
Ms. Mitchell. Thank you. I think you have heard repeatedly,
and I certainly concur that outcome measures are the holy
grail, but also we really need to think about functional status
measures: is someone healthy, can they participate in their
daily life effectively. So functional status measurement
absolutely needs to be further developed and disseminated.
Patients really care about patient experience, and that is
somewhat different than patient satisfaction. It is really, did
they get the care they needed, did they understand their role
in continuing to manage their own health. So patient experience
is equally important. I really have to say, though, that cost
and resource use are equally important. We need to understand,
are resources being used effectively for patients and for
communities. So I think it is a combination of all of those
different types of measures that really get a view at an
accountable system.
Mr. Green. Dr. Berenson?
Dr. Berenson. I would make a different point, which was in
my testimony. I was emphasizing that there are some major gaps
in what we measure and what I would argue that we can
potentially measure in terms of at the individual physician
level of what we want to measure. So, for example, for a
surgeon, I think what we really care about is technical skill
and judgment in deciding when a patient needs to go to the OR
and what procedure they might need. I mean, we don't have
measures of that so what we do measure is relatively small
stuff--did the hospital give antibiotic prophylaxis before
surgery. I think we have to recognize that there are some very
important things we can't measure. We will get a much better
job if we move towards outcomes rather than just relying on
these kinds of processes.
And the other point I would make, I think in agreement with
everybody here, is the one thing that is ubiquitous in all
physician or hospital experiences is the patient's experience
with care, and I think we can be--I think while we have these
large gaps in what we can measure and while we are working on
an outcomes agenda, I think patient-reported outcomes and
patient experience is really the one thing that applies across
the whole system, and that is where I would be putting my
emphasis at this point.
Mr. Green. It seems like, you know, I know we have
discussed this for a number of years and we have some almost
laboratories in certain areas, whether it be in Pennsylvania
where the chair of the subcommittee is from and Geisinger and
Kaiser Permanente in California, are we actually learning now
from their experiences on moving to that outcome-based in some
of those? I know there are other ones in the country. Those are
the two that come to mind. Seeing some of those indicators that
we would need to do, what Congress needs to do, you know, to
put into law so we could do it with that experience we are
hearing, is that positive or negative or----
Mr. Miller. Well, I would just say, you mentioned
Geisinger, for example. There is a perfect example of a
provider organization that agreed to take accountability for
outcomes and said that we will have a single price for all the
costs of care associated with a particular procedure or
condition including maternity care. What they did was, they
developed themselves a whole series of quality measures
internally to look at, but they controlled them because they
were accountable for the outcome. It wasn't some external
entity saying here is what you should do to make the cardiac
bypass surgery work well, and because they were in control of
them, they could manage them, they could decide which of them
did not work and did work and adapt them.
The problem that we have and one of my great fears is that
when we start to create more and more and more quality
measures, particularly process measures that are imposed by
payers or by Medicare or whatever as part of pay-for-
performance, we are locking in the old style of practice, and
in fact what we want to do is to be able to unleash the
creativity and the judgment of physicians to be able to say if
it isn't working, what do we need to change to be able to make
it better. People talk about evidence-based medicine but where
did the evidence come from in the first place but some
physician who actually figured out how to be able to make it
work, and we shouldn't then say that whatever they discovered
10 years ago is as best as it is ever going to be. We should
say if you can continue to improve, and I think that is what
these different kind of payment models will allow is the
flexibility to actually continue to improve rather than being
locked into the old way of doing things.
Mr. Green. Thank you, Mr. Chairman.
Mr. Cassidy. Thank you, and the chair now recognizes
himself.
I have incredibly enjoyed this testimony. Mr. Miller, we
are intellectual brothers from a different mother, and so I
just want to tell you----
Mr. Miller. I am delighted to hear that.
Mr. Cassidy [continuing]. Each of you have a standing
invitation to call me for dinner and I will treat because I
would just love to pick your brain.
Let me go a little bit. I couldn't find it in your
testimony but I think I recall you saying that these models
that we should allow to bubble up should also include specialty
societies. Frankly, the paradigm most speak of is primary care.
It is a little bit threatening, though, to the neurosurgeon
that thinks that she may be doing a great job but maybe iced
out because of whatever reason. How in your thinking could a
specialty society evolve into one of these models?
Mr. Miller. Well, I did not say that the primary care
should be threatening. I think that the issue is that we are in
fact putting excessive burden on primary care physicians to
somehow fix everything about the cost and quality of health
care when we do these models. I have talked to specialty
physicians all over the country in a variety of different
specialties and these examples that I cited have examples from
every specialty--gastroenterology, infectious disease----
Mr. Cassidy. Let me ask you, if there is going to be a
global payment for population, then that almost implies that
there has got to be somebody----
Mr. Miller. I think you are jumping too quickly to saying
it is only global payment. My point is in fact that I think
that there should be different payment models that are
specialty specific so if a gastroenterologist says I can do a
better job of managing inflammatory bowel disease, they should
be able to do that if they can improve quality and reduce
costs.
Mr. Cassidy. And they would in turn contract with either
the primary care or with someone----
Mr. Miller. With whoever would be appropriate. I mean, in
many cases I think gastroenterologists, to take the
inflammatory bowel disease example, would be ones they would
actually serve as the medical home for those patients because
that is such a dominant condition.
Mr. Cassidy. Yes, I understand that.
Mr. Miller. Then what you can do is, you can----
Mr. Cassidy. Let me pause you for a second because I get
that, and you may know I am a gastroenterologist, so you just
hit my sweet spot.
So next, now, Dr. Damberg, you mentioned that there is
difficulty coming up with meaningful measures, and both you and
Mr. Miller comment on how we are currently measuring processes,
but it really seems to me that if you give somebody a global
payment, as an example, and they know that in order to improve
outcomes and increase profit, they should reduce
hospitalizations, as long as you have the kind of quality
measures Dr. Berenson spoke of which keeps them from skimping
on care almost by judging them on that outcome, you are going
to get a better product. Does that make sense? Will it take
care of itself if we go to the correct payment model?
Ms. Damberg. So my remarks, if you look at my longer
testimony, really focus on getting to a set of defined outcome
measures, that that should be the focus to the extent that you
are going to devise a new system of payment for providers that
holds some portion of it at risk for performance on a set of
indicators. Outcome measures are going to be more stable over
time but it is going to be critical to get physicians at the
table to define what those outcome measures are.
Mr. Cassidy. I accept that, but on the other hand, if you
know that the hemodialysis patient who doesn't crash into
dialysis but glides past down, who gets their thrombosis
removed as an outpatient as opposed to an inpatient--we could
go through other examples--is actually going to have better
care and is going to be lower-cost care, as long as we know
that they are actually getting dialyzed, they are not skimping
and we have some audit--Dr. Berenson, you had mentioned this--
it seems as if by judging that outcome, you almost take care of
the processes.
Ms. Damberg. I think that that is right because what you
are letting the system do is self-correct. So one of the things
that I have observed under the Medicare Advantage program
because they are getting ready for 2015, the quality bonus
payments that are kicking in, that will only reward health
plans that have four or five stars, there is a huge amount of
what I am calling anticipatory behavior going on where the
health plans and the physician groups are working very
proactively to ensure----
Mr. Cassidy. To get their stars up.
Ms. Damberg. Exactly. And so----
Mr. Cassidy. I get that. Can I move on?
Ms. Damberg. It is to that north star. They will work
toward it.
Mr. Cassidy. Now, let me ask Miller or Mitchell, if you
will, you mentioned this regional coordinating thing, which
really seems really good but it is going to take--you all took
a lot of effort to put that together. I keep on thinking that
you have this MA set of systems and the MA plans actually have
all this data--they know how to market, they know how to bill,
they know how to coordinate care, and they know from what
bundle of care somebody is going to give you a certain quality
and cost. It almost seems like you could allow that small group
to contract with them to provide those services, not in a
traditional MA plan but rather mainly as, you know, a
management program, if you will, a data management program and
perhaps a provider of reinsurance. Any thoughts on that?
Mr. Miller. I think what you will see increasingly in the
future is a complete flip. You will not have doctors being
subcontractors to health plans but health plans being
subcontractors to physicians to provide the services that they
need. In fact, if you look around the country, there is only 11
Medicare Advantage plans in the country that are five stars, 10
of them are provider owned, and most of the 4.5- star plans are
also provider owner. So I think there is that opportunity to do
that, and I would say that the Louisiana Health Care Quality
Forum is a multi-stakeholder collaborative in Louisiana that is
working on trying to do this. What all the collaboratives have
is the problem of getting any recognition from the federal
government that they exist and to be able to give them the
support to be able to work with physicians.
Mr. Cassidy. Now, if you do the subcontracting with the MA
plan, it almost seems as if you supplant the need for a public
entity but rather you have a private entity that can then take
that role.
Mr. Miller. You could conceivably have a situation in the
future where you have provider-driven plans selling policies to
patients and you would not have a traditional Medicare fee-for-
service at all anymore.
Mr. Cassidy. OK. You all have been very helpful. Let me dig
out and say what I am supposed to say at the very end.
Thank you all. At this time I would like to ask unanimous
consent to have a statement from the American Medical
Association and the American College of Physicians included in
the record. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Cassidy. I remind members that they have 10 business
days to submit questions for the record, and I ask the
witnesses to respond to the questions promptly. Members should
submit their questions by the close of business on Thursday,
February 28.
Without objection, the subcommittee hearing is adjourned.
Thank you again.
[Whereupon, at 1:32 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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