[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE NEED FOR MEDICAID REFORM: A STATE PERSPECTIVE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 12, 2013
__________
Serial No. 113-51
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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
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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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......................... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 6
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Witnesses
Seema Verma, MPH, Consultant, SVC, Inc........................... 9
Prepared statement........................................... 11
Answers to submitted questions............................... 82
Joseph W. Thompson, Surgeon General, State of Arkansas, and
Director, Arkansas Center for Health Improvement............... 17
Prepared statement........................................... 19
Answers to submitted questions............................... 101
Anthony E. Keck, Director, South Carolina Department of Health
and Human Services............................................. 25
Prepared statement........................................... 27
Answers to submitted questions............................... 110
Submitted Material
Statement of the Rand Corporation, submitted by Mr. Pallone...... 59
Report by the National Alliance on Mental Illness, submitted by
Mrs. Christensen............................................... 65
Article entitled ``The Oregon Experiment--Effects of Medicaid on
Clinical Outcomes,'' New England Journal of Medicine, May 2,
2013, submitted by Mr. Burgess................................. 80
THE NEED FOR MEDICAID REFORM: A STATE PERSPECTIVE
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WEDNESDAY, JUNE 12, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10 a.m., in room
2322 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Whitfield,
Shimkus, Murphy, Blackburn, Lance, Cassidy, Guthrie, Griffith,
Bilirakis, Ellmers, Upton (ex officio), Pallone, Dingell,
Capps, Schakowsky, Green, Barrow, Christensen, Castor,
Sarbanes, and Waxman (ex officio).
Staff present: Gary Andres, Staff Director; Sean Bonyun,
Communications Director; Matt Bravo, Professional Staff Member;
Julie Goon, Health Policy Advisor; Brad Grantz, Policy
Coordinator, Oversight and Investigations; Sydne Harwick,
Legislative Clerk; Monica Popp, Professional Staff Member,
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. This subcommittee will come to order. The chair
will recognize himself for an opening statement.
Medicaid was designed as a safety net for the most
vulnerable Americans, including pregnant women, dependent
children, the blind and the disabled. With more than 72 million
Americans, or nearly one in four, enrolled in Medicaid at some
point in fiscal year 2012, we need to closely examine the
quality of care the program provides, reduce the cost of the
program to both the federal government and the States, and
encourage bold, new state innovations to better serve this
population.
Those enrolled in Medicaid today face significant
difficulties in accessing care. According to a recent analysis,
while 83 percent of physicians are accepting Medicare patients,
only 70 percent of physicians are accepting those in the
Medicaid program. Other studies have shown that compared to
those with private insurance, Medicaid beneficiaries find it
more difficult to schedule follow-up visits after initially
seeing a doctor; are twice as likely to report difficulty in
accessing primary care services including prevention services;
and are twice as likely to visit the emergency room. Clearly,
we are failing those most in need of our help. And we are
spending enormous amounts of money for substandard care, and in
some cases, worse outcomes than those with no insurance at all.
On average, States are spending approximately 25 percent of
their budgets on Medicaid, and this percentage will only grow
as the Affordable Care Act's Medicaid expansion goes into
effect in many States in 2014. In my home State of
Pennsylvania, we are already spending nearly one-third of the
entire State budget on Medicaid alone. This crowds out
investments in transportation, education, public safety and
other vital areas. And over the next 10 years, the federal
share of Medicaid expenditures is estimated at $5 trillion,
with States spending nearly another $2.5 trillion over that
same time period.
Medicaid is in trouble. It has been on the Government
Accountability Office's high-risk list for nearly two decades,
and the Office of Management and Budget reported nearly $22
billion in improper Medicaid payments in 2011.
But we don't have to settle for subpar care or limited
access and exploding costs. Many States have embarked on
innovative Medicaid reforms to improve the quality of care and
modernize their programs, ranging from payment incentives, to
coordinated care, to consumer-driven options, to added services
for their beneficiaries and more. This has been possible, in
part, through the use of State demonstration waivers, but it
can take years for the Centers for Medicare and Medicaid
Services to approve these waivers. We need to provide States
with the flexibility to pursue these options, not lock them in
a one-size-fits-all model dictated by Washington.
Several reforms have been outlined by this committee in a
recent policy paper issued by Chairman Upton and Senator Hatch.
The Making Medicaid Work blueprint is a product of significant
input from the States that merits bipartisan consideration and
legislative action.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chair will recognize himself for an opening
statement.Medicaid was designed as a safety net for the most
vulnerable Americans, including pregnant women, dependent
children, the blind, and the disabled.
With more than 72 million Americans--or nearly 1 in 4--
enrolled in Medicaid at some point in fiscal year 2012, we need
to closely examine the quality of care the program provides;
reduce the cost of the program to both the federal government
and the states; and encourage bold, new state innovations to
better serve this population.
Those enrolled in Medicaid today face significant
difficulties in accessing care. According to a recent analysis,
while 83% of physicians are accepting Medicare patients, only
70% of physicians are accepting those in the Medicaid program.
Other studies have shown that, compared to those with
private insurance, Medicaid beneficiaries find it more
difficult to schedule follow-up visits after initially seeing a
doctor; are twice as likely to report difficulty in accessing
primary care services, including prevention services; and are
twice as likely to visit the emergency room.
Clearly, we are failing those most in need of our help. And
we are spending enormous amounts of money for substandard care
and, in some cases, worse outcomes than those with no insurance
at all.
On average, states are spending approximately 25% of their
budgets on Medicaid, and this percentage will only grow as the
Affordable Care Act's Medicaid expansion goes into effect in
many states in 2014.
In my home state of Pennsylvania, we are already spending
nearly one-third of the entire state budget on Medicaid alone.
This crowds out investments in transportation, education,
public safety, and other vital areas.
And, over the next 10 years, the federal share of Medicaid
expenditures is estimated at $5 trillion, with states spending
nearly another $2.5 trillion over that same time period.
Medicaid is in trouble.
It has been on the Government Accountability Office's high-
risk list for nearly two decades, and the Office of Management
and Budget reported nearly $22 billion in improper Medicaid
payments in 2011.
But we don't have to settle for sub-par care, limited
access, and exploding costs.
Many states have embarked on innovative Medicaid reforms to
improve the quality of care and modernize their programs,
ranging from payment incentives, to coordinated care, to
consumer-driven options, to added services for their
beneficiaries, and more.
This has been possible, in part, through the use of state
demonstration waivers, but it can take years for the Centers
for Medicare and Medicaid Services (CMS) to approve these
waivers
We need to provide states with the flexibility to pursue
these options, not lock them in a one-size-fits-all model
dictated by Washington.
Several reforms have been outlined by this Committee in a
recent policy paper issued by Chairman Upton and Senator Hatch.
The Making Medicaid Work blueprint is a product of significant
input from the states that merits bipartisan consideration and
legislative action.
I look forward to hearing from our witnesses today.
Thank you, and I yield the remainder of my time to Rep. --
--------------------------------.
Mr. Pitts. I look forward to hearing from our witnesses
today. Thank you, and I yield the remainder of my time to the
vice chair of the subcommittee, Dr. Burgess.
Mr. Burgess. I thank the chairman for yielding.
We are here today to discuss Medicaid, and of course,
Medicaid is a shared federal and State partnership but there
are wide differences amongst the States with the populations
served and this underscores the need for flexibility within the
program's administration. But as we ensure its flexibility, we
certainly can't ignore the problems that have perpetually
plagued the Medicaid system including insufficient access to
care for beneficiaries, lack of continuity of care, and rapid
growth in the program costs, and I would add to that as the
chairman rightfully mentioned, the difficulties with diversion
of funds for activities which might be deemed as inappropriate.
I applaud the way the States have implemented innovative
reforms but state flexibility will not solve all of the
problems that we face.
One of the biggest is Medicaid reimbursement. Medicaid
reimbursement rates are already embarrassingly low, forcing
many providers to refuse new Medicaid patients. In Texas, only
31 percent of physicians in Texas currently accept new Medicaid
patients. This trend only foreshadows the threat to access for
millions of new Medicaid beneficiaries beginning next year. To
sustain provider and plan buy-in, we must demand accountability
from both the federal and State partners. That is the purpose
of this hearing today. That is what we are investigating this
morning. I certainly look forward to the testimony of our
witnesses, and I will yield back to the chairman.
Mr. Pitts. The chair thanks the gentleman and now yields 5
minutes for an opening statement to the ranking member, Mr.
Pallone.
OPENING STATEMENT OF HON. FRANK PALLONE JR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
More than 70 million Americans depend on Medicaid services
every year, and recipients are often low-income families or
individuals with disabilities with long-term needs who would
otherwise not have access to insurance because it is
unaffordable, unavailable or inadequate. Providing affordable
health coverage is crucial not only to protect the vulnerable
population but also to keep health care costs down. By
providing affordable essential health benefits, emergency room
visits and hospitalizations, which are more expensive, can be
reduced.
I fought hard to make sure that the expansion of Medicaid
was included in the Affordable Care Act because it will not
only improve access to health care for individuals across the
country but it will improve States' economic health as well.
While we expect all States to participate in the Medicaid
expansion because it is an advantageous fiscal arrangement, I
am troubled and discouraged that there are many who still have
not decided to expand. I do believe, however, that eventually
all States will recognize the importance of this provision to
the health care system as a whole.
Nearly half of all States recognize that the Medicaid
expansion under the ACA is a good deal and have indicated that
they will expand, and I anticipate that our witness, Mr. Joe
Thompson from Arkansas, will share with us why his State opted
for expansion. And let me tell you that from New Jersey's
perspective, expanding Medicaid just makes sense and that is
why Governor Christie chose to expand. It will save New Jersey
billions of dollars while providing care to an estimated
300,000 new Medicaid beneficiaries. With all of New Jersey's
pressing needs right now, it is assuring that the billions in
savings will help us to devote more resources towards building
our economy and creating jobs.
Now, while Republicans will tell you that States need
greater Medicaid flexibility, I would argue that under the
current law, a great deal of flexibility exists while
simultaneously providing a baseline of protections for
beneficiaries. States have the ability to manage the design of
their Medicaid programs. Within federal guidelines, they can
alter benefits or change cost sharing and premiums. The concept
that States have significant flexibility in the management of
their programs is reflected by the fact that States when they
want to are taking on innovative approaches to improve their
Medicaid programs. For example, States are experimenting with
programs to reduce expensive and unnecessary hospital
readmissions, programs to improve health and promote prevention
and medical home models as well.
So let me talk for a moment about the Republicans'
proposal, which I believe has been presented under the guise to
provide greater flexibility. I am extremely concerned that
their proposal will simply lead to higher premiums and greater
financial burdens on low-income elderly or disabled Medicaid
beneficiaries. Their call for block grants or a per capita cap
on future Medicaid funding would reduce federal beneficiary
protections currently in Medicaid since States would be
permitted to eliminate benefits or restrict enrollment
eligibility. While examining costs and exploring the
relationship between the federal government and States is
clearly important, we must be sure that we do not strip away
protections from Medicaid recipients who depend on the program
for access to quality, affordable health care.
Thank you, Mr. Chairman. Before I yield, I would like to
ask unanimous consent to enter into the record an article or
testimony, I should say, from Carter C. Price from the RAND
Corporation on expanding Medicaid and the financial options for
States.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pallone. Thank you, Mr. Chairman. I yield back the
balance of my time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the chair of the full committee, Mr. Upton, 5
minutes for 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, it has been years since President Johnson signed
the 1965 Social Security Amendments into law, and as many
historians have noted, those high-profile negotiations centered
mostly on Medicare with Medicaid out of the spotlight. While
Medicaid covered approximately 4 million people in the first
year, there were more than 72 million individuals enrolled in
the program at some point in fiscal year 2012--nearly one in
four Americans.
Those enrollment figures on their own, and their potential
drain on the quality of care of the Nation's most vulnerable
folks is cause for alarm. But once the President's health care
law is fully implemented, another 26 million more Americans
could be added to this already strained safety net program.
Medicaid enrollees today already face extensive
difficulties finding a quality physician because, on average,
30 percent of the Nation's doctors won't see Medicaid patients,
and studies have shown that Medicaid enrollees are twice as
likely to spend their day or night in an emergency room than
their uninsured and insured counterparts.
Instead of allowing State and local officials the
flexibility to best administer Medicaid to fit the needs of
their own populations, improve care and reduce costs, the
federal government has created an extensive, one-size fits-all
maze of federal mandates and administrative requirements. With
the federal debt at an all-time high, closing in on $17
trillion, and States being hamstrung by their exploding
budgets, the Medicaid program will be increasingly scrutinized
over the next 10 years. Its future ability to provide coverage
for the neediest kids, seniors and disabled Americans will
depend on its ability to compete with State spending for other
priorities including education, transportation, public safety
and economic development.
Energy and Commerce Committee Republicans remain committed
to modernizing the Medicaid program so that it is protected for
our poorest and sickest citizens. We will continue to fight for
those citizens because they are currently subjected to a broken
system. The program does need true reform, and we can no longer
tinker around the edges with policies that add on to the
bureaucratic layers that decrease access, prohibit innovation
and fail to provide better health care for the poor.
In May, last month, Senator Hatch and I introduced Making
Medicaid Work, a blueprint and menu of options for Medicaid
reform that incorporated months of input from State partners
and policy experts from a wide range of ideological positions.
My hope is that this morning's hearing is the next step in
discussing the need for reform so that we can come together in
finalizing policies that improve care for our most vulnerable
citizens. Washington does not always know best. We have a lot
to learn from our States, and that is what this is all about,
and I yield the balance of my time to Dr. Cassidy.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
It has been nearly 50 years since President Johnson signed
the 1965 Social Security Amendments into law. As many
historians have noted, those high profile negotiations centered
mostly on Medicare--with Medicaid out of the spotlight.
Surprising to most, however, Medicaid today covers more
Americans than any other government-run health care program,
including Medicare.
While Medicaid covered approximately four million people in
its first year, there were more than 72 million individuals
enrolled in the program at some point in Fiscal Year 2012--
nearly 1 in 4 Americans.
Those enrollment figures on their own, and their potential
drain on the quality of care of the nation's most vulnerable
folks is cause for alarm. But once the president's health care
law is fully implemented, another 26 million more Americans
could be added to this already strained safety net program.
Medicaid enrollees today already face extensive
difficulties finding a quality physician because, on average,
30 percent of the nation's doctors won't see Medicaid patients.
Studies have shown that Medicaid enrollees are twice as likely
to spend their day or night in an emergency room than their
uninsured and insured counterparts.
Instead of allowing state and local officials the
flexibility to best administer Medicaid to fit the needs of
their own populations, improve care, and reduce costs, the
federal government has created an extensive, ``one-size fits-
all'' maze of federal mandates and administrative requirements.
With the federal debt at an all-time high, closing in on
$17 trillion and states being hamstrung by their exploding
budgets, the Medicaid program will be increasingly scrutinized
over the next 10 years.
Its future ability to provide coverage for the neediest
kids, seniors, and disabled Americans will depend on its
ability to compete with state spending for other priorities
including education, transportation, public safety, and
economic development.
Energy and Commerce Committee Republicans remain committed
to modernizing the Medicaid program so that it is protected for
our poorest and sickest citizens. We will continue to fight for
those citizens because they are currently subjected to a broken
system.
The program needs true reform, and we can no longer tinker
around the edges with policies that add on to the bureaucratic
layers that decrease access, prohibit innovation, and fail to
provide better health care for the poor.
In May, Senator Hatch and I introduced Making Medicaid
Work--a blueprint and menu of options for Medicaid reform that
incorporated months of input from state partners and policy
experts from a wide range of ideological positions. My hope is
that this morning's hearing is the next step in discussing the
need for reform so that we can come together in finalizing
policies that improve care for our most vulnerable citizens.
Washington does not always know best--we have a lot to learn
from our states.
Thank you, Mr. Chairman and I yield my remaining time to --
----------------.
Mr. Cassidy. Thank you, Mr. Chairman.
For 20 years, I have treated patients in a safety-net
hospital. For 20 years, I have seen politicians over-promise
and underfund, and as I do so, it is the patient that suffers.
Now, the federal government spends almost half of every
dollar on health care payments for Medicaid and Medicare. These
programs are breaking federal and State budgets and they are
unsustainable in current form. On behalf of my patients, I know
that we must change them so that they become sustainable.
Now, in Washington, Medicare reform has been greatly
considered but thoughtful solutions from Medicaid not so much.
Now that Obamacare has added 20 million Americans to the
Medicaid roles, it is imperative that Congress begin to address
the sustainability of this important safety-net program.
Now, I will say I think that States are the best innovators
for cost containment, far better equipped to offer thoughtful
solutions addressing unique patient needs. One size does not
work. The federal government should construct thoughtful
incentives encouraging States to take an active role in
restructuring Medicaid. I am pleased that the Energy and
Commerce Committee has started to shed light beginning with
this hearing. I look forward to hearing from the witnesses
today, and I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the ranking member of the full committee, Mr.
Waxman, 5 minutes for 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 want to thank you
for holding this hearing. I welcome and look forward to hearing
from all our witnesses today. I am particularly interested in
the testimony of Mr. Thompson of Arkansas on how his State has
been working to reform the delivery system and how the
Affordable Care Act will positively affect his State's
residents.
There are different paths we can take to ensure long-term
health and to promote innovation and efficiency within the
Medicaid program. States can and do innovative actions today,
and they do it without undermining critical protections for
patients.
On the other hand, what my Republican colleagues have
proposed in their two recently released reports is a cost shift
to States, patients and providers, and abdication of federal
responsibility. Block grants, per capita caps and increases in
beneficiary premiums and copays do not reduce health care
costs; they simply shift costs on to the beneficiaries, the
providers and the States, and they make it less likely that
people will be able to access care when they need it.
The Medicaid program operates with efficiency. Medicaid
costs are nearly four times lower than average private plans.
Over the next decade, annual Medicaid per capita costs are
expected to grow by only 3.2 percent compared to 6.9 percent in
the private market. Additionally, the Congressional Budget
Office's most recent estimates of projected Medicaid spending
have dropped by $200 billion through 2020. This refutes the
claim that burgeoning Medicaid spending is compromising the
program's mission and therefore necessitates funding redesign
and cost shifting to our Nation's most vulnerable.
Let us face the realities at hand and not myths. The issues
are that millions of Americans who were previously shut out of
having insurance, particularly the working poor, will now have
access to Medicaid coverage beginning in 2014.
Unfortunately, a number of States have not yet opted to
provide insurance coverage for their residents. A RAND study
estimates that these States will leave 3.6 million people
uninsured, and these people will continue to seek high-cost
services in the emergency department of a hospital and
experience increased hospitalizations from lack of primary and
preventive care. As a result, the study estimates that these
States should expect to spend $1 billion more annually on
uncompensated care. So much for the States that choose not to
cover their very poor people under Medicaid even with 100
percent federal financing for the first several years.
There are things we could do to improve the program.
Certainly, for example, we should extend the Medicaid primary
care payment increase that is helping bring Medicaid rates on
par with Medicare rates. Any member concerned about access to
doctors for Medicaid beneficiaries should surely embrace that.
Additionally, we can continue to improve care for the dual
eligibles who comprise 15 percent of the Medicaid population
but account for nearly 40 percent of its expenditures. We can
target prevention including obesity and smoking to keep people
healthy.
The alternative path that we began in 2010 with passage of
the Affordable Care Act is entitlement reform in a thoughtful
way through delivery system reform that improves both
efficiency and quality. The Affordable Care Act includes
incentives to reward physicians and other providers for better
coordinating care and improving health. It also includes
policies to cut waste and inefficient care. But above all, it
improves access to care, particularly preventive care, that
saves dollars and lives.
Reviewing the facts, we see that health reform is
entitlement reform. It is this kind of reform that builds a
better health care system for all Americans at the same time
that it lowers costs and helps support the long-term
sustainability of our public health care programs.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Pitts. The chair thanks the gentleman. That concludes
our opening statements. We have one panel with us today, three
witnesses. I will introduce them at this time.
On our panel today, we have Ms. Seema Verma, consultant
with the Strategic Health Policy Solutions. We have Dr. Joseph
Thompson, Surgeon General of the State of Arkansas, Director of
the Arkansas Center for Health Improvement, and we have Mr.
Tony Keck, Department of Health and Human Services from the
State of South Carolina.
Thank you each for coming. Your written testimony will be
made a part of the record. You will be given 5 minutes to
summarize your testimony. So at this time, the chair recognizes
Ms. Verma for 5 minutes for opening statement.
STATEMENTS OF SEEMA VERMA, MPH, CONSULTANT, SVC, INC.; DR.
JOSEPH W. THOMPSON, SURGEON GENERAL, STATE OF ARKANSAS, AND
DIRECTOR, ARKANSAS CENTER FOR HEALTH IMPROVEMENT; AND ANTHONY
E. KECK, DIRECTOR, SOUTH CAROLINA DEPARTMENT OF HEALTH AND
HUMAN SERVICES
STATEMENT OF SEEMA VERMA
Ms. Verma. Good morning, members of the committee. My name
is Seema Verma. I am the President of SVC, Inc., a policy
consulting company, and in this role have been advising
governors' offices, State Medicaid programs and State
departments of health and insurance. I have worked in a variety
of States including Indiana, South Carolina, Maine, Nebraska,
Iowa and Idaho. I am also the architect of former Indiana
Governor Mitch Daniels' Healthy Indiana Plan, the Nation's
first consumer-directed health plan for Medicaid beneficiaries.
Designed in 1965 for our most vulnerable populations, the
Medicaid program has not kept pace with the modern health care
market. Its rigid, complex rules designed to protect enrollees
have also created an intractable program that does not foster
efficiency, quality or personal responsibility. The impact of
these issues is more pronounced as States are entrenched in the
fierce debate around Medicaid expansion. Reluctance to expand
is not indifference to the plight of the uninsured, but
trepidation for the fiscal sustainability of the program and
knowledge that expanding without reform will have serious
consequences on Medicaid's core mission to serve the neediest
of Americans.
Medicaid comprises nearly 24 percent of State budgets, and
its costs are growing. This is due to growth, population
demographics and federal requirements. The aging baby boomer
population will soon require expensive long-term care. The
Affordable Care Act requires maintenance of effort and
implementation of hospital presumptive eligibility, modified
adjusted gross income that eliminates asset tests for the non-
disabled, and the ACA insurer tax will cost States an estimated
$13 to $14.9 billion. Additionally, there is the clawback
provision burden where States have an unprecedented requirement
to finance the Medicare program.
Despite growing outlays of public funds, a Medicaid card
does not guarantee access or quality of care. In a survey of
primary care providers, only 31 percent indicated willingness
to accept new Medicaid patients. In 2012, 45 states froze or
reduced provider reimbursement rates. Medicaid access issues
are tied to undercompensation of providers. On average,
Medicaid payments are 66 percent of Medicare rates and many
providers lose money seeing Medicaid patients. Medicaid
beneficiaries struggle to schedule appointments, face longer
wait times and have difficulty obtaining specialty care. These
access challenges will be more pronounced as Medicaid
recipients compete with the tens of millions of newly insured
under the ACA. Studies also show Medicaid coverage does not
generate significant improvements in health outcomes, decrease
emergency room visits or hospital admissions, and participants
have higher ER utilization rates than other insured
populations.
At Medicaid's core is a flawed structure. While jointly
funded, by the federal and state governments, it is not jointly
managed. States are burdened by federal policy and endure
lengthy permission processes to make routine changes.
Notwithstanding the cumbersome procedure, 1115 waivers provide
a pathway for State innovation. However, the approval route is
so daunting that States often abandon promising ideas if a
waiver is necessary. Absent are evaluation guidelines, required
timelines, and there is a capricious nature to the approvals,
as waivers do not transfer from one State to another. Even with
positive outcomes, a new Administration has the authority to
terminate a waiver. Despite intense federal oversight, results
vary substantially and there are no incentives for States to
achieve quality outcomes. For example, the average cost to
cover an aged Medicaid enrollee is roughly $5,200 in New Mexico
versus almost $25,000 in Connecticut, and annual growth rates
also very. Replacing oversight of day-to-day administrative
processes, the federal and State governments should collaborate
to identify program standards and incentives. States should be
provided with flexibility to achieve these goals, and
successful States should be rewarded with reduced oversight.
Medicaid's uncompromising cost-sharing policies are
illustrative of a key failure. These regulations disempower
individuals from taking responsibility for their health, allow
utilization of services without regard for the public cost, and
foster dependency. While some policies may be appropriate for
certain populations, in an era of expansion to non-disabled
adults, they must be revisited. Revised cost-sharing policies
should consider value based benefit design and incent enrollees
to evaluate cost, quality and adopt positive health behaviors.
Indiana's Healthy Indiana Plan waiver applied principles of
consumerism with remarkable results, lowering inappropriate ER
use and increasing prevention.
Congress should reform Medicaid to assure long-term fiscal
sustainability and access to quality services that improve the
health of enrollees. A fundamental paradigm shift in management
is required and the program should be reengineered away from
compliance with bureaucratic policies that do not change
results to aligning incentives for States, providers and
recipients to improve outcomes. States are positioned to
develop policies that reflect the local values of the people
they serve and should be given the flexibility to do so. Thank
you.
[The prepared statement of Ms. Verma follows:]
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Mr. Pitts. The chair thanks the gentlelady and now
recognizes Dr. Thompson 5 minutes for an opening statement.
STATEMENT OF JOSEPH THOMPSON
Dr. Thompson. Thank you, Mr. Chairman, members of the
committee. I am Joe Thompson. I am a pediatrician and member of
the faculty of the University of Arkansas for Medical Sciences.
I direct the Arkansas Center for Health Improvement and have
served as the lead candidate level advisor of surgeon general,
first under Republican Governor Mike Huckabee and now under
Democratic Governor Mike Beebe. I had the opportunity to work
with two Administrations in the federal government.
Our entire health care system has changed dramatically over
the last five decades since the inception of Medicaid with
increased therapeutic and diagnostic opportunities, increased
treatments. The costs have grown, and with that have grown the
cost on both the public and the private sector. Our private-
sector costs in Arkansas have doubled over the last decade from
$6,000 to 12,000 for a family of four's premium. The costs have
also increased for Medicare and Medicaid. As you have
discussed, I want to commend this committee. The Medicaid
partnership in funding for States and federal government is
under intense duress and significant tension.
But I would like to back up. It is not just a Medicaid
problem. Our entire health care system is under a cost threat
that threatens our families, our communities, and indeed, the
economic vitality of our Nation. It is not a new issue, it has
been growing, but suddenly we are forced to face it, and if I
can, we started off with private insurance, largely through
employers, and Medicaid for the vulnerable, the poor and the
disabled. I will leave Medicare off because that is not the
topic of your discussion. Over time as we grew the therapeutic
and diagnostic opportunities, we grew the ability to do things
to and for people, and the costs grew and the valley of the
uninsured, people who could not afford care, grew also, so we
started having more and more uninsured individuals. Private
costs went up but the private employers or affluent families
could continue to afford those costs. The Medicaid program did
not keep pace with those costs, and neither federal government
nor State government budgets could afford it, and so we ended
up with a huge, large valley of the uninsured. We ended up with
expensive private insurance that some can afford, and we have
Medicare programs that cannot afford either on the federal or
State budget, so we end up with what is a problem of the iron
triangle: cost, access and quality. If we are not willing to
pay, we are going to have access problems. If we have access
problems, we suddenly have quality problems. This is not a
single issue about Medicaid. This is a systemic issue about our
failure to gain control of rapidly rising health care costs
that have outpaced federal and State budgets, that only a few
employers and families are able to continue to afford and that
have grown the valley of the uninsured.
So with that backdrop, let me share with you our experience
in the State over the last 10 years. As of last year, we were
operating nine different waiver programs designed by the State
and approved by the federal government to provide Arkansans
with better access, higher quality and more cost-effective
care. Under the past Administration, President Bush's Secretary
successfully supported our proposal to develop a waiver for
support of small businesses for businesses with fewer than 10
employees who virtually had no option for private employer-
based health insurance coverage. This small business was titled
the AR Health Networks Program. It was a low-cost, limited-
benefit program, largely successful at maximum uptake. It will
be absorbed into the Affordable Care Act now for small business
support going forward, but we started that in 2005, eight years
before the implementation of the Affordable Care Act will go
into place.
Four years ago, we started to tackle the issue of cost
containment. Our Governor, our private sector recognized that
the costs in the fee-for-service system were largely the cause
for outpacing the growth potential of our revenue streams. So
we understood a payment improvement initiative led by Medicaid
which changed from a fee-for-service service to an outcomes-
based incentives system with upside and downside risk for
providers based upon what the outcome of the patients were so
there would be engagement with patients. This required federal
government approval, which we got through a State plan
amendment within 2 months. It was an achievable goal because it
was a programmatic need.
More recently, our Republican legislature and the general
assembly with the Governor's support authorized use of the
Affordable Care Act Medicaid programmatic funds to offer a
totally new premium assistance program to buy health insurance
premiums through the health insurance exchange, not to expand
the Medicaid program in the traditional way, essentially to
fill that valley in with private insurance, not to expand a
State-run Medicaid program fraught with some of the issues that
Ms. Verma alluded to. We will need to get a streamlined waiver
from the Administration this summer. We have already started on
that, and we have not identified a barrier to being able to do
that at this point. So moving forward, we anticipate that of
our 25 percent of the uninsured, we may have as many as a
quarter million or almost 8 percent of our population not be in
the Medicaid program but be in the private health insurance
program.
In conclusion, our State is not alone, other States need
help, but it is a partnership based upon a long-term history
that must be brought into the 21st century, not abandoned
because we didn't bring it into the 21st century. Thank you.
[The prepared statement of Dr. Thompson follows:]
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Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Keck 5 minutes for an opening statement.
STATEMENT OF ANTHONY E. KECK
Mr. Keck. Good morning, Mr. Chairman and members of the
subcommittee. My name is Anthony Keck. I am the South Carolina
Director of Health and Human Services, the State Medicaid
agency. I appreciate the invitation to discuss my thoughts on
improving health through Medicaid.
While we don't run a $6 billion agency on anecdote, I would
like to share a simple story with you that sums up our common
challenge. I once ran a community clinic in a poor but vibrant
and politically active New Orleans neighborhood known as the
St. Thomas/Irish Channel. During that time, I took part in a
focus group of pregnant teenage girls enrolled in Medicaid who
were participants in a separate citywide program that matched
each girl with a doula--a birthing coach--to help her better
connect to the health care system and prepare for motherhood.
One conversation still stands out. Paraphrasing her almost 20
years later, one of the participants said with exasperation
near the end of our time together ``Look, I love my doula and
my doctor and I appreciate all the help they give me, but I've
slept on a different couch almost every night for the past 3
weeks, and that's why I'm having a really hard time.''
The limits of our programs, expressed in the statement of
that teenager, are clear. She needed stable housing; what we
had were doulas. She probably needed both. Her personal
struggle captures the truth that years of public health
research on social determinants of health has revealed: the
primary drivers of health and well-being are income, education,
community and family support, personal choices, environment,
race, and genetics, while health care services contribute to a
much lesser extent.
Yet our health system is built on the tenuous logic model
that health insurance leads to access to effective health care
services, which then leads to health. We are so beholden to
this common wisdom that even though the Institute of Medicine
estimates up to 30 percent of all health care spending is
excess cost, we now spend almost 18 percent of our paycheck,
payrolls and government budget on health care services while we
fall further and further behind on health status compared to
the rest of the world.
David Kindig, one of the country's leading public health
researchers, recently wrote that for all of our health
spending, mortality increased for women in 43 percent of U.S.
counties between 1992 and 2006 with no correlation to medical
care factors such as health insurance status or primary care
capacity. He calls for a robust strategy to address this
appalling trend, and I quote, ``Such a strategy would include
redirecting savings from reductions in health care inefficiency
and increasing the health-promoting impact of policies in other
sectors such as housing and education.'' He goes on to say that
``Each county, not each State, each county needs to examine its
outcomes and determinants of health to determine what cross-
sectoral policies would address its own situation most
effectively and quickly.''
Yet Medicaid today operates under the default position that
different populations and geographies face similar challenges
and equity in health insurance benefits is the goal of the
program rather than improvement in population health. Medicaid
currently treats States more like subcontractors operating at a
discount than partners contributing over 40 percent of the
bill. Deviations from the norm require State plan amendments
and special waivers. This may give the illusion of
accountability, but promotes neither quick or effective local
solutions nor cross-sectoral solutions, which consider public
health, education, housing, employment, food security, personal
responsibility and community action as important contributors
to achieving better health and well-being for individuals and
communities.
The truth is there are few, if any, long-term population
health goals currently negotiated between States and the
federal government so it is no wonder that we cannot agree on
Medicaid's value. In addition, for all the federal efforts to
manage expenditures through maintenance of effort requirements,
limiting state revenue maximizing strategies, and focusing on
fraud and abuse, the program continues to grow while access to
health services suffers.
I believe there is a developing bipartisan interest among
States for flexibility to manage programs locally in exchange
for more accountability for improved health and more
predictability in expenditures at the State and federal level.
I ask you to consider the proposals both before you and in
development that would accomplish this goal. Thank you.
[The prepared statement of Mr. Keck follows:]
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Mr. Pitts. The chair thanks the gentleman. I will begin the
questioning and recognize myself 5 minutes for that purpose.
First, if you listen to many, you would think that all it
took for our most vulnerable to be healthy was a Medicaid card.
Yet as Ms. Verma notes in her testimony, despite more spending,
a Medicaid card does not guarantee access or quality of care.
We know how difficult it is for States to customize care in a
way that makes sense for each enrollee not under a one-size-
fits-all approach, and I believe the best way to improve the
care of the 72 million Americans on Medicaid is through local
action on the ground in a way that empowers States to work with
stakeholders, providers and patients.
Ms. Verma, States often ask the federal government to cut
the useless red tape that strangles innovation. Would you be
specific? What specific bureaucrat hurdles are at the top of
your wish list that you would like to see removed for States in
an effort to improve care and reduce cost?
Ms. Verma. Thank you for the question. I think first of
all, there has got to be some sort of a triage process if there
are routine changes, changes in rates, changes in benefits, so
these are routine changes, that some changes shouldn't require
permission from the federal government, and I think we need to
understand or to define what requires permission and what
requires just informing the federal government that the State
is making a change. So that would be the first one. I think the
other piece in terms of especially around innovation and around
waivers is to have some very defined criteria about how these
waivers and State plan amendments are going to be evaluated,
what the timelines are. I think it is very important for a
State for planning purposes to be able to know if they submit a
waiver, you know, when they can expect to receive a response
from the federal government, and also how that is going to be
evaluated. I think reciprocity is also important, and I think
if a waiver has been granted to one State or a State plan
amendment in one State, that that should be applied to another
State and that would also reduce some of the timelines there.
Mr. Pitts. Mr. Keck, do you want to add to that list?
Specific bureaucrat hurdles.
Mr. Keck. Yes. First, I want to echo exactly what Seema
said, that reciprocity is important. We spent a lot of our time
trying to figure out what other States have negotiated with
their regional office or with the federal office, and many
times we know that our State has been denied. I think deadlines
are important. We run on a State fiscal year, and when I need
to respond to my legislature's budgeting process and their
requirements to implement policies I cannot do that very
effectively when we operate on such long timelines with the
federal government. I have a waiver issue that is being
resolved right now that has taken 5 years to work through the
system, and it involves $3 million worth of federal money but
it has taken years to negotiate and hundreds, if not thousands,
of hours of staff time.
And then finally, template changes. I believe there are a
series of routine changes related to rates, related to quality
measures and so on, that States are fully capable of making on
their own. It is actually rare that they get denied but we
spend many, many months and many, many man-hour responding to
questions and so on, and again, being on a State fiscal year
where we have to get changes implemented on a timely basis, it
adds significant problems in our operations.
Mr. Pitts. If you will continue, Mr. Keck, many private
employers and insurers have successfully lowered health care
costs and improved patient outcomes through value-based
insurance design--VBID. States have often asked for greater
flexibility to offer VBID plans to Medicaid enrollments. What
is South Carolina doing to ensure patients can achieve better
health outcomes?
Mr. Keck. We are strong believers in the VBID concept, and
actually we are the first State to work with the University of
Michigan Value Based Insurance Design Institute on implementing
a VBID program in Medicaid. When we first met the folks that
run this program, it was a Mill Bank conference and they were
talking about the possibilities for VBID to work in State
employee benefit programs. And along with one of my State
senators, I raised my hand and said well, what about Medicaid
because Medicaid is one of the most important payers in the
country, if not the most important, and they said well, we
don't do anything with Medicaid because the restrictions are so
strong and Medicaid folks don't contribute to their premiums
and they generally don't' have copays that are enforceable so
we just ignored it, and we pushed them during that 2 days and
said you can't just ignore it, we have to be able to build
these concepts into Medicaid. The problem is, they are
generally one-sided. When you talk to VBID folks, it is a set
of carrots and sticks, and they have different effectiveness in
different situations but unfortunately, generally in Medicaid,
it is all carrots, and sometimes you need sticks, but right now
we are generally stymied. There has been some recent
flexibility that has been granted by the federal government
related to copays but we are still convinced we need to go much
further, and so in the next several months we will be
approaching CMS with some of our ideas out of the VBID
concepts.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the ranking member 5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman. I wanted to ask some
questions of Dr. Thompson.
You and I both have a number of concerns about some of the
proposals to convert Medicaid to a block grant program or a
system of per capita caps while a block grant or per capita cap
would save federal dollars by cutting payments to States caring
for vulnerable families. Those dollars would be saved on the
backs of the most vulnerable members of our communities. In
addition to the very real risk of beneficiaries being subjected
to reduced health care coverage and increasing personal health
care costs, you also commented in your testimony that both of
these proposals are likely to curb innovation. So could you
explain what you mean when you say that these proposals will
curb innovation and also share your thoughts more broadly about
the potential impact of these proposals?
Dr. Thompson. Thank you, Mr. Co-Chair. Our health care
system is incredibly complex, and I think what we see in short-
term fixes are essentially what has been around for a long
time. It is an easy fix, which rarely works in a complex
situation. We have found that when we bring to the
Administration, and it has not mattered which Administration,
an approach that is inclusive of the needs of the low-income
and vulnerable population that is part of the long-term State
strategy and that moves the system forward, we have been able
to work through the regulatory challenges that are there. It is
not always with the speed, and I think there are some comments
by Ms. Verma and Mr. Keck that could be incorporated, are being
incorporated by this Administration on streamlined waivers. But
I think if we don't take the root problem that our payment
system is causing us to have a growth in health care that does
not equal value or outcomes, then we are not going to have a
quick fix that increased flexibility. We will squeeze the
balloon in one place and it will open up in another place,
probably on State budgets or at the expense of the vulnerable
and poorest of our citizens.
Mr. Pallone. Now, in the end, won't capping federal support
for the program merely shift costs elsewhere on private
businesses, patients and providers as well as State
governments? I mean, you sort of suggested that but if you
could just answer.
Dr. Thompson. This is what led our Republican leadership in
part to take advantage of the Affordable Care Act. We have 25
percent of our Arkansas 19- to 64-year-olds that are uninsured.
We have 40 percent, approaching 40 percent in some counties.
Those individuals are not well. Fifty percent of our population
has a chronic condition. They are seeking care. They are using
the emergency room in an inefficient way. And so by taking
advantage of the Affordable Care Act but, importantly, tying it
to our payment reforms and putting it in the private sector
with the new cost sharing and copayments, which we intend to
push on and expand, we hope that we can actually design a new
and sustainable health care system inclusive of Medicaid and
one that rewards providers for the care that they give and
achieves equal high-quality care for all regardless of income.
Mr. Pallone. Thank you. Can I ask you, what was your
experience as far as the flexibility, responsiveness,
timeliness of CMS, you know, the Centers for Medicare and
Medicaid Services, when you applied for the State plan
amendment for this?
Dr. Thompson. Our State plan amendment went through in
roughly less than 2 months, and this was from our inception to
our successful achievement. It was like Mr. Keck mentioned,
important to be timely because we were concurrently running
rules and regulations in our general assembly, so we had to get
both general assembly through rule and regulation and federal
government support, and I think it is important for the feds
and for the local general assemblies to recognize those are
often in concert, not totally separate issues. But we
successfully got approval to have upside and downside risk on
our providers within 2 weeks of request from the Centers for
Medicare and Medicaid Services.
Mr. Pallone. All right. Thank you very much. I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the vice chair of the committee, Dr. Burgess, 5
minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman. I will try to make
good use of Mr. Pallone's time that he yielded to me.
Mr. Keck, I have got to ask you, for the good of the
committee and our general knowledge, spend just 2 seconds and
tell the committee what a doula is.
Mr. Keck. A doula is essentially a birthing coach that is
of the committee that generally she but sometimes he works in
to help----
Mr. Burgess. Not a medical person?
Mr. Keck. Not a medical person.
Mr. Burgess. So not a midwife?
Mr. Keck. That is right.
Mr. Burgess. Basically someone who daubs a forehead and
says it will be all right. Is that correct?
Mr. Keck. Well, and also helps a woman connect with the
health care system that is sometimes very difficult.
Mr. Burgess. So is it correct to think of a doula as sort
of a navigator or a precursor to a navigator?
Mr. Keck. I would consider them a community health worker
but to help navigate the health system because it is so
complex.
Mr. Burgess. And no disagreement there. And in fact, so
good to have all of you all at this hearing. I cannot tell you
the number of times we had hearings in 2007 and 2008 where you
wondered where Mitch Daniels was when we were having all the
discussions how to provide more for less, and you correctly
identified Governor Daniels as being a leader in this issue,
and he found that something magic happens when people spend
their own money for health care, even if it wasn't their own
money in the first place. Would that be a correct observation
of the Healthy Indiana program?
Ms. Verma. Yes, that is correct. I mean, within the Healthy
Indiana Plan, participants are required to make contributions
into an account. The State also funds that account, and then
they use those dollars to cover their first $1,100 of health
care services, and if they complete their preventive health
care, then at the end of the year whatever money is left in
that account rolls over and it decreases the amount that the
person would have to pay in the subsequent years. And so we
have had great results, lower emergency room, higher generic
use.
Mr. Burgess. And this is the Medicaid population, not the
State employee population that also was written about in the
Wall Street Journal. Is that correct?
Ms. Verma. That is correct.
Mr. Burgess. And what kind of savings did you achieve in
the Medicaid program with Healthy Indiana?
Ms. Verma. I think what we have seen in the Healthy Indiana
program in terms of savings is a real shift in patient
behavior. We have seen patients----
Mr. Burgess. May I interrupt you there for a moment because
that is the important point, and the Commonwealth Fund, I don't
generally agree with everything they talk about, but a few
months ago they talked about the concept of an activated
patient being one where health care expenditures were reduced,
and essentially that is what you found, isn't it?
Ms. Verma. That is correct. I mean, I think that so many of
the policy changes or regulations are aimed at providers, they
are aimed at insurance companies, pharmaceutical companies, but
we sort of miss the point that the individual has a very
significant role to play in controlling health care costs, and
that is not just for commercial populations but even the low-
income population. They are perhaps the best consumers of a
dollar. They have had experience stretching a dollar, and I
think when you empower them that they start to make decisions
about where to seek their health care, how to seek care in more
appropriate ways and seeking more preventive care.
Mr. Burgess. Yes, I liked everything about your testimony
except that you were way too nice, and you need to be a little
harsher in your assessments than saying there is trepidation
about the future fiscal sustainability. Governors are scared to
death, and I could use another word there, but I will be nice,
they are scared to death about what is going to happen by
taking on this obligation. The federal government has proven
itself to be an absolutely unreliable fiscal partner when it
comes to health care. Ask any doctor out there who takes
Medicare what has happened to their reimbursement.
Let me just for a moment, you have identified something
that is, I think, to Healthy Indiana, and that is the
participation in the preventive programs. Is that a correct
observation?
Ms. Verma. That is correct.
Mr. Burgess. And the reason that that is so important, of
course, is, we will all talk about it here in glowing terms
that an ounce of prevention is worth a pound of cure, and so we
are basically paying for that ounce of prevention but we want
to see the pound of cure. It is important because I am told by
my staff that the total federal spending over the next 10
years, combined federal and State spending over the next 10
years for Medicaid is $7.5 trillion, $750 billion a month. I
mean, that a phenomenal amount of money. If we could even bend
the cost curve just a little bit with preventive care, that
ounce of prevention, that is a hell of a pound of cure.
Let me just ask you this. What is Indiana doing as far as
Medicaid expansion is concerned?
Ms. Verma. Well, I would defer to the State of Indiana to
answer that officially but I think in the comments that I have
read, I think that Governor Pence has indicated that he wants
to understand what the future of the HIP program is before he
can make a determination about what his position will be on the
Medicaid expansion.
Mr. Burgess. Thank you. Mr. Chairman, I just have to
observe that I was there on the second day of the Supreme Court
oral arguments, and the discussion from the Solicitor General
was repeatedly, it is the cost of these free riders that are
driving up our health care. No. We reimburse so poorly in
Medicaid that the patients can only do what they have always
done, which is go to the emergency room, the highest point of
contact. If we expand the program, we are going to expand the
problem. I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the distinguished ranking member of the full
committee, the Ranking Member Emeritus, Mr. Dingell, 5 minutes
for questions.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy
and I thank you for holding this hearing.
Medicaid is an important and timely topic, especially as we
are about to greatly expand eligibility of the program as a
part of the Affordable Care Act. Some of our colleagues here
continue to ask for flexibility for the States to experiment
with new and innovative methods of care. However, much
flexibility already exists in the program, and many States are
making significant changes using this. These questions are for
Dr. Thompson, Surgeon General of the State of Arkansas.
Doctor, I want to commend you for your helpful testimony.
Doctor, did Arkansas recently implement the Arkansas Payment
Improvement Initiative after receiving approval from the
federal government? Yes or no.
Dr. Thompson. Yes, sir.
Mr. Dingell. Doctor, how long did it take for Arkansas to
get that approval?
Dr. Thompson. We worked 3 years on the development within
the State but the approval itself was relatively rapidly
received in 2 months.
Mr. Dingell. What does that mean? How relatively rapid?
Dr. Thompson. Two months after our request.
Mr. Dingell. OK. Doctor, did this new initiative begin to
transition away from the fee-for-service models towards a more
value-based payment model? Yes or no.
Dr. Thompson. Yes, sir.
Mr. Dingell. And I happen to think, and will you confirm or
deny this, that that is the direction we are going to have to
go because one of the things about our system is it is broken
because we are paying for work done and not for results
achieved?
Dr. Thompson. I believe we must align the financial
incentives for the outcomes that we want, not for the services
that are provided, and I think that is one of the fundamental
issues that has yet to be resolved in our health care system.
Mr. Dingell. Thank you. Doctor, have the reforms
implemented in Arkansas resulted in cost savings which can be
quantified? Yes or no.
Dr. Thompson. Through the first three quarters of the year
since we implemented this, we have seen a dramatic reduction in
growth in the Medicaid program. It is lower than it has been in
the last 25 years.
Mr. Dingell. Would you submit this for the record? I gather
the answer to that is yes.
Dr. Thompson. Yes.
Mr. Dingell. And would you please submit that for the
record? Because I have got a lot of questions and very little
time.
Dr. Thompson. Yes, sir.
Mr. Dingell. Doctor, could you now please submit for the
record a detailed explanation of the initial results following
the implementation of this new Arkansas plan, please?
Dr. Thompson. I would be glad to.
Mr. Dingell. Doctor, in your testimony you mentioned that
nearly every State has a Medicaid waiver and that there are
current 381 active waivers. Is that correct?
Dr. Thompson. To the best of my knowledge, yes, sir.
Mr. Dingell. It seems to me that the States currently have
a viable existing pathway to get some flexibility under
Medicaid. Do you agree with that statement?
Dr. Thompson. I agree that they have that flexibility.
Mr. Dingell. Now, this leads me to questions of how many of
the reforms proposed in a recent report issued by my good
friend, Chairman Upton, and my other good friend, Senator
Hatch, titled ``Making Medicaid Work.'' This report proposes to
eliminate the medical loss ratio provision in the Affordable
Care Act, which gave the consumers over $1 billion in rebates
in 2011. The report also suggests that we repeal the
maintenance-of-efforts provision in ACA, which would allow the
States to restrict eligibility for the program and would reduce
access to care. Finally, instead of turning Medicaid into a
block grant, as has been proposed in years past, this year the
proposals are a per capita cap on Medicaid spending. Now,
Doctor, would this new proposal still result in the loss of
coverage and benefits for beneficiaries? Yes or no.
Dr. Thompson. Well, sir, I think the report that you allude
to has several recommendations that I would concur with. The
three that you identified, I would agree have potential
problems for the States. A per capita block grant to the States
in the face of escalating health care costs that are not
contained is a cost transfer to the State for future rate
increases on health care.
Mr. Dingell. It should scare the hell of the States,
shouldn't it?
Dr. Thompson. My advice to any governor for a block grant
is watch out because you are getting a transfer of
responsibility without control of future rate increases. We
have to control the cost increases on health care before we can
actually transfer fiscal responsibility or block off fiscal
responsibility in the Medicaid partnership.
Mr. Dingell. Now, Doctor, do you believe that the per
capita would actually cause innovation by the States or would
it cause a disruptive nature which would place consumer
protection of our most vulnerable citizens at risk? I gather
you agree with that statement, yes?
Dr. Thompson. I have concerns, and I think I share those
with others, that caps of any kind without a long-term strategy
to assure quality while maintaining cost is a risk to the
beneficiary and it is a transfer of financial and
responsibility risk to whoever is being capped.
Mr. Dingell. I am going to make a quick statement and ask
this. I have the impression that our system is broken because
we are paying for work done and not for accomplishments and for
completion of assuring health for the people and that we are
trying to figure a way to transfer from the current system to a
system which recognizes the need to get results as opposed to
just paying for work.
Now, Dr. Verma and Dr. Thompson and Mr. Keck, do you agree
with that statement? Yes or no.
Mr. Keck. Yes.
Mr. Dingell. Yes?
Ms. Verma. Yes.
Mr. Dingell. The reporter doesn't have a nod key so you
have to say yes or no.
Ms. Verma. Yes, I do.
Mr. Dingell. Have you all agreed with that?
Dr. Thompson. I will be the third to agree, yes.
Mr. Dingell. Thank you. Mr. Chairman, I thank you for your
courtesy to me.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Illinois, Mr. Shimkus, 5 minutes
for questions.
Mr. Shimkus. Thank you, Mr. Chairman.
Dr. Thompson, I want to follow up on Mr. Dingell's, your
little discussion there. You said how many waivers you asked
for? Three hundred and eighty?
Dr. Thompson. No, that is the total number that are active
across the United States from the most recent information we
had from the Centers for Medicare and Medicaid Services.
Mr. Shimkus. And so you all have submitted----
Dr. Thompson. We have 12.
Mr. Shimkus. You have 12. And were those 12 active waivers
all adjudicated or decided in that 2-month window of approval?
Dr. Thompson. No, some of those waivers took much longer.
Some of the waivers, as Mr. Keck alluded to, in the past have
taken years to get conclusion on.
Mr. Shimkus. Go back through your timeline. Developing your
program by the State of Arkansas took how long?
Dr. Thompson. So specific to the payment improvement
program, which is the most current experience that we have--
our Medicaid expansion will be this summer's experience--we
started off with advice that Mr. Dingell alluded to. My advice
to the Governor was that our fee-for-service system was broken
3 years ago. So we spent 2 or 3 years working with both the
public and private sector. We have Medicaid, we have Blue
Cross, we have Qual Choice of Arkansas. We have had Walmart as
a self-insured company join because of their interest in
changing the way the health care system works. Last October, we
had Medicare join in our patient-centered medical home effort.
So we have been developing this over the last 3 years. This
summer because we were changing the way that we were going to
incentivize providers to engage with patients to increase the
individual accountability of patients and also the outcomes
availability of the providers, we needed to get a State plan
amendment from the Centers for Medicare and Medicaid Services.
We applied in, I can't remember if it was June or July but
within two months had approval from CMS to implement those
changes, and we started aligning different incentives on
providers in October.
Mr. Shimkus. So if nationwide there is 380, on average
seven-plus waivers applications per State in the process, my
interest is, obviously I am from the State of Illinois. In my
personal opinion, we have done a very poor job, and what the
State did last year, $1.6 billion of cuts to Medicaid program
and established a moratorium on expansion for 2015, even though
then we increased enrollment by 15 percent, and by the
beginning of 2013 the State had a funding gap of $3 billion.
Just last week, the State received yet another credit rating
downgrade. It is our second. This is all the cost of a burden
of States of pension and Medicaid benefits. These are real life
stories so Illinois has now another credit downgrade, which
means the cost of borrowing goes up.
So if you were in the position of the State of Illinois,
because we are going to expand its Medicaid under ObamaCare,
bringing on new applicants to a system that is already spending
$5 billion more, is already expanding our roles, what would you
suggest the State of Illinois do? Let us go left to right,
rapidly, because my time is----
Ms. Verma. OK. I mean, I think you need to take a look at
managing care, putting in more managed care. I think looking at
expansion without addressing the core issues and where they are
spending their money. I think they need to explore different
innovations, value-based purchasing that we have talked about,
you know, some sort of a reform on how providers--but I think
it is also very critical to include the individual in that.
Mr. Shimkus. The individual has to be in the process of----
Ms. Verma. The individual has to be part of the equation.
Mr. Shimkus. Dr. Thompson?
Dr. Thompson. My quick advice to any governor, including my
own, was, expansion without efforts to contain costs is a
budgetary as well as a State failure.
Mr. Shimkus. I will take that. Mr. Keck?
Mr. Keck. I hesitate to make a suggestion for Illinois
but----
Mr. Shimkus. Please. We need any help we can get.
Mr. Keck. We want to meet our commitments, and I think we
are not meeting our current commitments, and what we have told
our legislature is, we have to pay for our current commitments
before we expand.
Mr. Shimkus. And just to finish with Dr. Thompson on this.
So the way Arkansas has approached this, since ObamaCare has
really--we are buying off expansion with a promise of federal
dollars which we will then walk away from the new expansions
after that. So your bet is, you are going to have a reformed
system within your State that is able to carry the increased
Medicaid individuals past a time frame when ObamaCare and the
additional dollars are gone?
Dr. Thompson. We undertook payment improvement 3 years ago,
so it predates our expansion that will go into effect this
year. Your premise is correct. It is not just for the Medicaid
program, however. It is that we think our private sector, that
our business sector, that our economic attractiveness will
outpace with all due respect our sister States around us
because we are going to both expand and get coverage in place
at the same time we are reforming the payment system to make
sure that it is sustainable.
Mr. Shimkus. I appreciate that. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from California, Ms. Capps, 5 minutes
for questions.
Mrs. Capps. Thank you, Mr. Chairman, and thank you all for
being here today and for your testimonies.
As we know, Medicaid is a critical program. It serves over
70 million families, seniors and individuals with disabilities.
I think it is important to keep in mind that it is a safety net
for these people who are otherwise shut out of private
insurance, either because it is unaffordable, unavailable to
them or doesn't cover the benefits that they need. So we know
that individuals with Medicaid are more likely to receive
preventive health care and less likely to have medical debt
than their uninsured counterparts. Medicaid, like private
insurance and Medicare, is trying to confront the same
challenges of improving quality and cost. So a dialog today
about improving the system to provide cost-effective, high-
quality health care to many of these individuals who need it is
really a valuable discussion to have.
But I think we must be mindful about exactly who will be
impacted by the decisions that we make or that Congress makes,
and if we are truly improving care or just passing the buck to
States, persons with disabilities, seniors, and struggling
families, in other words, the vulnerable. We have a
responsibility, I believe, to make our best-faith effort to
improve the system on behalf of these individuals while
protecting their access to affordable care. With the
flexibility provided by Medicaid, a number of States have
initiated quality improvement activities to improve access to
preventive services, increased chronic-disease management and
prevention, and addressed population health.
So Dr. Thompson, you are here because the Arkansas Medicaid
program has had great success in collaborating with health care
providers and the Arkansas Foundation for Medical Care to
improve quality of care and health outcomes. What are the
quality issues? I know you have talked about this, but if you
don't mind restating them, the quality improvement initiatives
and how do you rank your success to date?
Dr. Thompson. Well, our State is burdened with a heavy risk
burden in our population. Fifty percent of our citizens have a
chronic disease. Our QIO, the Arkansas Foundation for Medical
Care, has worked closely with our providers, both physicians
and hospitals, particularly on the hospital side, reductions in
readmissions, improvements in outcomes after delivery, more
recently, efforts to reduce premature delivery that then result
in negative neonatal outcomes. So there are real interests and
opportunities with providers if the engagement is right, if the
incentives are aligned correctly to move the system forward in
a positive way.
Mrs. Capps. So that is exactly what I was hoping we could
get at. Could you speak to the success of this program and the
ways that you have seen care coordination improve across the
Medicaid providers, and do you believe this program, some of
the models that you are using, could be enhanced and expanded
so that other States could take advantage of it?
Dr. Thompson. What we have done is, we have taken what was
a quality improvement effort, which is what I have just
described, and we have now tied the payment mechanism for
providers to reinforce quality outcomes. We have actually
taken, for example, our hip and knee surgeries and we have said
there is a responsibility of the surgeon from 30 days before to
90 days after for the outcome, and now their payment is tied to
what the outcome for that patient is. It increases engagement
with the patient, it increases the decision process of the
team, and we think it will reduce the cost and inefficiencies
in the system over time.
Mrs. Capps. Wow. And you have seen some indications that it
is working?
Dr. Thompson. We are starting to see provider behavior
change, both within the OB episodes, within the hip and knee
episodes, within the hospitalization episodes, and as we talk
to providers, almost every association says there is 20 to 30
percent waste in the system but nobody has ever aligned the
financial payment mechanisms to have providers lead in
eliminating that waste.
Mrs. Capps. That is a good thing to discuss, ways to do
that without making it seem punitive and punishing. Well,
anyway, I wanted to get one last question on the table. The
initiatives that you have undertaken, have they all been done
within the current statutory and regulatory framework of the
Medicaid statute? In other words, what kind of waivers have you
used, how much of this have you been able to do
straightforward?
Dr. Thompson. Well, I hope they are all within the
regulatory and statutory framework of the current Medicaid
program, or somebody is in trouble. No, we have been able to do
it. I think it is not an easy path. I think the current
Administration is streamlining that path, and our recent
experience has been much better than our past experience.
Again, that is not with any prejudicial interest on prior State
or federal Administrations.
I do think that when a State has a desire to come with a
plan that safeguards the beneficiaries and their needs, that
fits into a long-term State plan and that moves the Medicaid
system as a whole forward, is a prerequisite for successful
negotiations between the federal and State government.
Mrs. Capps. Thank you, Mr. Chairman. This was good to hear.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes
for questions.
Mr. Cassidy. Thank you, Mr. Chairman.
Dr. Thompson, I notice you are wearing Arkansas colors in
your tie, so I will just say, I am an LSU guy, I couldn't help
but notice that.
Listen, I was very intrigued by your testimony. You say
that the State of Arkansas is contracting on a per-beneficiary
payment to managed care companies. They are at upside and
downside risk, correct?
Dr. Thompson. We do not use a managed care mechanism so it
is the State itself that is at risk for cost increases or cost
savings.
Mr. Cassidy. But there is a per-beneficiary amount, because
you mentioned there is an upside and a downside.
Dr. Thompson. The upside and downside risk that I mentioned
was actually what we have now shifted to our episodes of
payment to providers. Providers now have the responsibility,
upside and downside, for the outcomes of the episodes as I
mentioned.
Mr. Cassidy. And I am sure they protested, but on the other
hand, as you point out, they have been able to achieve cost
savings and increased efficiency.
Dr. Thompson. Actually, our providers are relatively, I
will say with some caveat, supportive of our effort. They knew
the system had to change. They did not want another bureaucrat
layer put on top, and they said we will take responsibility for
that clinical----
Mr. Cassidy. I don't mean to interrupt. So, if you will,
you are capping the amount of money that goes per episode, and
I guess the point I am trying to make is that whenever my
colleagues on the other side tend to suggest that any sort of
cap whatsoever is going to be deleterious, in reality, you all
have caps and you have actually seen success?
Dr. Thompson. In actuality, sir, we have not capped
anything. The providers----
Mr. Cassidy. So when there is a bundle-of-care payment,
that is not really a capped amount but rather it can be----
Dr. Thompson. It is not a cap.
Mr. Cassidy. So there is not a true upside and downside?
Dr. Thompson. There is a target that the lead quarterback
for the team will have financial impact, but every member of
the team is still paid.
Mr. Cassidy. I understand they are still paid, but if they
exceed that target, do they lose money?
Dr. Thompson. Not the members of the team but the
quarterback does.
Mr. Cassidy. The quarterback does. Yes, so for that
particular quarterback, there is a cap.
Dr. Thompson. There is a target.
Mr. Cassidy. I think we must be using terminology because
if there is a downside for them, then effectively there is a
cap.
Dr. Thompson. Again, sir, I would be glad to share, but we
have not capped any provider's payment. We have set goals that
they share in the gains----
Mr. Cassidy. Then somebody I don't understand how your
downside works, but let me ask, Mr. Keck speaks about how
really on a county-by-county basis for somebody, there should
be variability. I have to imagine our States are similar, that
in the Delta there is a different patient population and
different structure of health care as opposed to Fayetteville.
Dr. Thompson. And without question, different health care
needs.
Mr. Cassidy. With that said, who is better equipped to make
that determination? The county or the State official or rather
somebody in Washington, D.C.?
Dr. Thompson. Well, I would say it would be a local
provider, local community.
Mr. Cassidy. That seems right. So I think when Mr. Keck
speaks about the flexibility, I think that is something we can
all agree on.
Next I would ask, on the other side there is a lot of
defense of the status quo in terms of Medicaid, but Dr.
Thompson, would you agree, I mean, are you aware that some
States really manipulate the Medicaid system in order to
maximize federal payments to their State? For example, New
York, which has half the population of California, gets 33
percent more federal payments than California.
Dr. Thompson. I am aware of different strategies that
States have employed that don't necessarily tie directly to
patients.
Mr. Cassidy. Yes, some people call it gaming, and that
seems to be the legal way to describe it. I am struck that even
the Democratic witness would agree that there is some problems
with the status quo, which it seems as if the other side
doesn't want to admit. In fact, I noticed that you were nodding
your head yes when Ms. Verma stated that when Medicaid
empowered patients to consider cost savings, there was actually
good results that result from that. Could you accept what Ms.
Verma was saying?
Dr. Thompson. Well, I think our approach through our
Medicaid expansion will have cost sharing on individual
patients.
Mr. Cassidy. So I was struck that Mr. Waxman suggested if
any of that occurs, it is going to be terrible for the patient,
but in reality, I think I am hearing from the witnesses that
there is actually some positive things that happen both for the
patient as well as for cost savings.
Dr. Thompson. But it is with safeguards on the patient.
Mr. Cassidy. Of course. Everybody accepts safeguards, but
on the other hand, status quo is status quo, and right now if
we can do something different, we may improve. I think even our
Democratic witness is not agreeing with Mr. Waxman on that one.
Mr. Keck, you seem to suggest that the States could accept
some limitations on payments as long as they had flexibility
and net they would come out better. Would you agree with that?
Mr. Keck. And that is how we pay our managed care plans. We
capitate them and give them a lot more flexibility and
negotiate rates, to change benefit structures. They take
significant risk. We are able to put high accountability on
them in terms of performance measures.
Mr. Cassidy. So when Mr. Waxman suggests that any cap
whatsoever is unworkable and any flexibility given to the
States to manage is going to be terrible for patients, you are
saying that wouldn't necessarily be the case?
Mr. Keck. I don't believe that would be the case at all.
Mr. Cassidy. You have experience in two States with high
poverty levels, both Louisiana and South Carolina, so you
really are where the rubber meets the road, not an ivory tower
in Washington, D.C., but really where you have to see those
patients in New Orleans get care. Is that a fair statement?
Mr. Keck. The rubber meets the road in both South Carolina
and Louisiana.
Mr. Cassidy. OK. I am out of time, and I yield back. Thank
you.
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.
I know our committee started out with concerns about the
reimbursement rates. I assume reimbursement rates in Indiana,
South Carolina and Arkansas are the same as in Texas.
Reimbursement rates for Medicaid are set by the State, correct?
Ms. Verma. That is correct.
Mr. Green. And I know the pecking order. You know, you have
private insurance here, you have Medicare here, you have
Medicaid here, and I found out when we started mobilizing our
reserves in Houston 10 years ago how low TriCare reimbursed our
physicians and hospitals. But that is set by the State.
The other issue was, I don't think that in 3 years the
federal government is going to walk away from--now at 3 years
it is 100 percent and after that is 90 percent reimbursement.
Is that correct?
Ms. Verma. Yes.
Mr. Green. I wouldn't quite call that walking away from the
Medicaid responsibility. But anyway, just so we know that.
I have a district in Texas, a very urban district, and one
of the highest uninsured rates in the country. I am
disappointed our legislature did not do something with
expanding Medicaid similar to what Arkansas has worked on, and
every once in a while I am jealous of Arkansas's football
program too when they beat a Texas school. But I would hope we
would see that change.
One of my concerns is the churning rate, and in Texas we
make folks come in for Medicaid every 6 months and even for the
SCHIP program. Do any of your States have a longer term for
enrollment than 6 months? Does Indiana have 6 months or a year?
Arkansas?
Mr. Keck. We make people redetermine every 12 months, but
if they have a change in status----
Mr. Green. Oh, sure, if they have a change in status, but
you don't make them show up and redo it every 6 months?
Mr. Keck. No, and we do redeterminations through express-
lane eligibility, which we found to be very effective.
Mr. Green. What about Arkansas?
Dr. Thompson. Ours is 12 months. I think important to your
churning question, our expansion effort, which will use private
plans, we believe will largely eliminate the churn process
entirely. People will stay in the plan. The plan will re-enroll
them. They will not have to touch the Medicaid program.
Mr. Green. Ms. Verma, what about Indiana?
Ms. Verma. Yes, in Indiana they have continuous
eligibility. If there a change, it has to be reported.
Mr. Green. Sure. That seems reasonable. If there is a
change, you have the opportunity to go in and check it and do
that.
Congressman Barton and I both identified that as one of the
concerns we have because as a former State legislator, I also
know we can quantify if we do it every 6 months and 1 year as
compared to a year how much money we can save over that period
of time making Medicaid recipients come back and sign up, and I
have seen the lines out in front of the offices. So hopefully
we will look at that piece of legislation to have that, unless
it is changed circumstances. That is the issue.
Let me talk about Arkansas a little bit. Again,
congratulations, Dr. Thompson, on some of the considerations.
What do you think the consequence of not expanding Medicaid
would have been for Arkansas?
Dr. Thompson. I believe our health care system was at a
tipping point. I mentioned earlier we had 25 percent uninsured
statewide. We had some counties that were approaching 40
percent of the 19- to 64-year-olds. These people were consuming
care but not able to pay for it. Our providers were not able to
stay in business to provide it. I think we were at a tipping
point that the opportunity under the Affordable Care Act, which
I won't speak for or against, but as an implementer of the
Affordable Care Act, I think it led a safe line, particularly
for our rural health care providers where the uninsurance rates
were much higher.
Mr. Green. Well, and again, I am concerned because our
percentages are the same as Arkansas but with a lot more folks
that are losing that kind of opportunity to have it.
Mr. Keck, South Carolina has both a lower rate than Texas
for churn because you do it on a year. Mr. Keck, in addition to
the CHIP law, Congress enacted provisions that provide bonus
money for States to go out and exceed expectations on enrolling
low-income Medicaid children. I understand South Carolina
received CHIP bonuses in 2011 and 2012. Would you agree that
the bonus program is good and positive incentive for States to
find and enroll lower-income children?
Mr. Keck. Yes.
Mr. Green. Do you know how much money the South Carolina
program received? Because all that money goes back into
Medicaid, I assume.
Mr. Keck. We don't have our latest bonus calculated but we
are committed to--when our legislature sets an eligibility
limit, we are committed to getting everybody enrolled under
that eligibility limit.
Mr. Green. And again, I know private-sector employees
offered health care benefits with continuous coverage for their
employees as long as they remain there, and again, Mr.
Chairman, I would hope we would look at considering that bill
that Congressman Barton and I have, and I yield back my time.
Thank you for being here.
Mr. Pitts. The chair thanks the gentleman. The chair
recognizes the gentleman from Pennsylvania, Dr. Murphy, 5
minutes for questions.
Mr. Murphy. Thank you, Mr. Chairman. I welcome the panel,
particularly Dr. Thompson. I come from a long list of Murphys
in Pennsylvania who are physicians: Garland Murphy, Dodie
Murphy of Springdale, and I don't know if you know any of those
but if you do, please extend my greetings to them.
I wanted to ask you first, Dr. Thompson, some questions
about where Arkansas stands. Your state has recently agreed to
this Medicaid expansion proposal that carries with it the
assumption that HHS will let you have approval. Now, my
understanding is, HHS and CMS have consistently noted publicly
that nothing is approved for your State. In fact, Administrator
Tavenner recently said before the Senate Finance Committee:
``We haven't approved anything.'' So could you outline for this
committee what Secretary Sebelius in coordination with OMB has
explicitly agreed to allow Arkansas to do in 2014 as it relates
to individuals not currently enrolled in your Medicaid program
under 138 percent of federal poverty level?
Dr. Thompson. First, let me deal with the approval issue.
Approval for a State-federal waiver is actually a financial
contract. So until it is signed by both parties at the end of
the process, there is no approval. Where we are in our process,
what we call the private option on Medicaid expansion, which is
to take Medicaid dollars and use them essentially for premium
assistance on the private health insurance exchange is an
accepted concept. Premium assistance has been used before by
Medicaid programs in limited way to buy private employer-based
coverage when it was more efficient, effective and cost
beneficial to the Medicaid program. We are extending that in
concept to be premium assistance for all newly eligibles on the
newly established insurance exchange. We think that by
harmonizing both the cost sharing on individuals above and
below the Medicaid eligibility line, that we will educate our
Medicaid eligibles on how to use the health care system as they
then go up into the health insurance system. They will be
better informed and prepared to use the health care system in a
more appropriate way. We will eliminate churn, as we talked
about before, because people will be in a health plan and
probably stay in a health plan year after year. The health plan
will want them to.
So where we are now is, we have a conceptual agreement of
where we are going. We are working through the specifics of
what will end up being a streamlined waiver to get to the
essentially contractual agreement between the State and the
federal government on guarantees of coverage and the financial
aspects of the agreement.
Mr. Murphy. Let me add one other thing that you can provide
for us as a follow-up, that is, to provide us with updated
projected State and federal 10-year costs if Arkansas did not
expand and thus the individuals above 100 percent of federal
poverty level acquired private coverage, and two, expanded and
every individual would be under traditional Medicaid below 130
percent of federal poverty level, and three, to move forward
under the legislature per your proposal. That is information I
would like you to get for us in the future.
Dr. Thompson. Sure.
Mr. Murphy. Mr. Keck, I think in your testimony you said
that 30 percent of health care is waste?
Mr. Keck. According to the Institute of Medicine and many
other sources. That is the latest estimate.
Mr. Murphy. Let me ask you this. When Medicaid dollars come
through in the federal government, the State level and other
things, what percent of that is spent on a wide range of
administrative costs that never get to actual patient care? Do
you have some estimates of that? Under the current way things
are spent, do you have any idea?
Mr. Keck. Well, if you just look at the Medicaid expenses
in terms of administering the program on the fee-for-service
side, it is about 3-1/2 percent. On the managed care side it is
about 9-1/2 percent with a percent of that at risk, but that
additional expenditure is because they are managing the care
better.
Mr. Murphy. So when that is being, rather than that being
seen as three times the cost and they manage the care better,
there is an actual difference in improved health care outcomes
when they specifically coordinate that care of that patient?
Mr. Keck. Absolutely. I mean, on an annual basis, our
legislature requires that we compare the cost of our managed
care programs on a per-member per-month basis to that of the
fee-for-service program, and even with the additional costs,
managed care is cheaper than fee-for-service and it produces
better outcomes.
Mr. Murphy. One of the things I look upon, when the managed
care movement hit in the 1990s, I didn't care much for it
because much of that was managed money and not managed care.
That is why I like it at more as coordinated care where
physicians and nurses are in charge of decisions.
Let me ask another way this can be coordinated. The
Federally Qualified Community Health Centers, can you tell me
how your State may work with them with Medicaid to make sure,
because I am concerned, a lot of people on Medicaid don't
really have a primary person they keep going to as their home.
Too often their lives are disrupted. They go from person to
person to person. Can you give me as an example if that is
something you work with in your State to help coordinate that?
Mr. Keck. Absolutely. I mean, in a broad sense, we are
working with all primary care providers. We are now making
patient-centered medical home incentive payments. If you become
certified, you get a per-member, per-month bump to encourage
people to become certified and eventually we will convert that
into broader care management payments to these folks. But
specific to the Federally Qualified Health Centers, I think
when we talk about the rates of uninsurance, we forget that in
most States we have very robust networks of Federally Qualified
Health Centers that were chartered to serve these folks, and we
spend a lot of money on them and are a great resource, and this
year in South Carolina we are actually putting quite a bit of
additional investigation, probably the largest single
investment that has been made by the State in the history of
the Federally Qualified Health Centers to expand the presence
of those and their ability to work with patients.
Mr. Murphy. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Virgin Islands, Dr. Christensen,
for 5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman.
Just for informational purposes, I noted from a Kaiser
report that in 2001, there were 36.6 million people enrolled in
Medicaid, and by 2009, there was as many as 62.9 million. That
was the year that President Obama took office. Just for
informational offices.
Dr. Thompson, as a person who worked with some of my
colleagues when we were drafting the Affordable Care Act who
advocated for everyone to participate in the exchange including
those who were previously on Medicaid, I was really pleased to
read and hear from you that you are transitioning to premium
assistance, and so you are really demonstrating flexibility and
the support over the last 3 years of CMS and the Department. So
I want to applaud Arkansas's creativity and I want to say that
I enjoyed being in Little Rock last year when the University of
Arkansas and the Clinton Foundation joined several of us in
having the conference on health disparities in Little Rock last
year. So thank you for that.
Are you using navigators of any kind as you plan that
transition? Because many of the Medicaid beneficiaries would
not have much experience in going to a private insurance
market.
Dr. Thompson. Since the action of our general assembly, we
have actually increased the number of navigators our health
insurance department planned to hire on a short-term basis to
reach the lower-income community, communities of color, those
that are Medicaid eligible in a more successful way. We are
also looking at information we now have inside the Department
of Human Services, for example, parents of children that are on
the Our Kids program so that we may have already determined who
is likely to be eligible for the private option, if you will,
through the exchange that we have already done an income
eligibility assessment.
Mrs. Christensen. And when we were talking about this back
4 years ago or so, there was concern about wraparound services
in Medicaid that might be lost. Are you seeing that your
Medicaid patients would lose anything by going to the exchange?
Dr. Thompson. This is one of the issues that we are in
negotiations with CMS about. All of the Medicaid eligibles are
eligible for wraparound services. However, a majority don't use
those. They are able-bodied, working individuals that are just
low income, and so it is those individuals that we anticipate
putting into the private market, letting them have a private
experience, not be, if you will, managed by the State, but for
those whom the private market is not going to be best
mechanism, we will retain them in the State Medicaid program,
assure them of the wraparound services and make sure that they
get the guaranteed benefit as required under federal law.
Mrs. Christensen. Thank you. And in the wake of the Newtown
shooting, again to Dr. Thompson, last fall, and the recent
shootings in Santa Monica, our Nation remains concerned with
access to mental health services to people with mental illness.
Congress passed mental health parity legislation in 2008 and
additional provisions were included ensuring parity for mental
health services in the Affordable Care Act. A significant
barrier to access is, of course, not having health insurance,
so how do you anticipate the Medicaid expansion will help
Arkansas to address the issue of access to mental health
services and what challenges do you see in the State for
improving that access?
Dr. Thompson. Yes, I believe the requirements under the
essential benefit plan of the Affordable Care Act and our
actions on the Medicaid program to buy into that essential
benefit plan will singularly help both the mental health and
the substance abuse community because it brings to true parity
finally the financing mechanism for those services. It will
have an effect on our workforce. We are going to have to look
at the organization of our mental health workforce to make sure
they are in the right place because rural Arkansas does not
have as deep a bench when it comes to that workforce but I
think financial barriers have been the number one reason we
haven't had the right providers and the right place at the
right time, and through we are trying to solve that first
barrier.
Mrs. Christensen. Thank you, and I am sure you have seen
this report by NAMI, the National Alliance for Mental Health,
titled ``Medical Expansion and Mental Health Care.'' They quote
an analysis by SAMHSA that shows that if all States proceed
with expanding Medicaid, as many as 2.7 million people with
mental illness who are currently uninsured could get coverage
that includes almost 1.3 million with serious mental illness,
and Mr. Chairman, I would like to submit this report for the
record.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mrs. Christensen. Thanks. I also want to agree with your
statement, Dr. Thompson, that caps of any kind are a risk to
the beneficiary, and I would like to add my own point of view
that not setting the FMAP according to the jurisdiction's
average income also presents a risk, and I want to thank the
committee for, one, increasing our cap in the territories
although we did not remove it entirely but I am still asking
the committee to help me in passing my bill to change the match
to give the territories State-like treatment. It costs nothing
to the federal government but it saves lives and decreases the
risk for our beneficiaries.
Thank you. I yield back the balance of my time.
Mr. Pitts. The chair thanks the gentlelady and now
recognize the gentlelady from North Carolina, Mrs. Ellmers, for
5 minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our
panelists today for this important subcommittee hearing.
I am a representative of North Carolina. North Carolina has
chosen not to opt in to the Medicaid expansion, and I applaud
that decision that Governor McCrory and the State legislature
made. Just to quote Governor McCrory, ``The federal government
must allow North Carolina to come up with its own solutions.''
It is a $13 billion program and he refers to it routinely as
``broken'', and because of that does not want to expand a
system that is in much need of fixing.
So with that, and again, I appreciate your testimony today
on this issue, I have a question for Ms. Verma and Dr. Thompson
in relation to what Director Keck has basically said in his
testimony, notes that he sees an opportunity for bipartisan
agreement that States need more flexibility to manage programs
locally in exchange for more accountability to improve health
and reduce costs. Ms. Verma and Dr. Thompson, do you agree that
Washington's approach, you know, this far with Medicaid is
outdated, and do you also believe that States have the ability
that they can with outcome measures and greater flexibility
improve care and reduce costs?
Ms. Verma. Yes, I do.
Mrs. Ellmers. Thank you.
Dr. Thompson. I think the whole health care system is going
through a great transition and that States are bringing
innovative ideas. I think this Administration and the new
Center for Innovation has 41 different models for States to
choose from, and I think the partnership between the federal
and State government should be maintained because that is how
we are going to get the whole U.S. health care system to a
different place.
Mrs. Ellmers. I also have a question, Mr. Keck, for you. In
South Carolina, I know that South Carolina is working with CMS
right now on integrating physical and long-term care services
for 65,000 enrollees. Can you speak to the status of those
negotiations and maybe give a little bit of a timeline where we
may go with that in implementation?
Mr. Keck. Well, we are very supportive of the dual
integration to manage Medicaid and Medicare patients together
under a cap, I might add, per member. We have a good working
relationship with the Office of Dual Eligibles and are working
hard on that, but to be honest, it is a very, very slow
process. I think that is the experience that most States have
encountered, and it is primarily because of working with the
particular restrictions that Medicare has on the program, but
we hope to get to a memorandum of understanding by the end of
this month or the end of July and go live by the middle of
2014, which is about 6 months behind schedule, but we think it
is a good effort, and it is a needed effort. The dual eligibles
are a very large portion of our expenditures, and for both
Medicare and Medicaid, we have been doing great disservice to
the taxpayers and to the individuals to not manage these folks
together.
Mrs. Ellmers. I agree. Thank you so much.
And my last question, I have about a minute left. Ms.
Verma, can you elaborate a little more on some of the
innovations that your State is making right now to improve upon
the Medicaid system?
Ms. Verma. I work with a lot of different States, so it is
kind of hard specifically, but I will take the Indiana example
because I think that is the one that I have worked extensively,
and I think other States are looking at Indiana because of some
of the innovations it has done. I think what they have really
done, as we discussed earlier, is trying to empower the
individual and have the individual as part of the equation. I
think some of the cost sharing policies are where Indiana and
other States are seeking waivers, and it is not--you know, the
cost-sharing policy is not to burden the individual or to, you
know, try to ration care or limit them from getting care. I
think it is to incentivize them and to empower them to be a
part of the equation. And so I think that that is where a lot
of States are very interested in those types of programs that
really do put that individual in the position of focusing on
prevention, focusing on outcomes, and I think a lot of the
programs, you know, that are based on the physicians--we have
talked a lot today about outcomes and physician outcomes. Well,
the individual has to be a part of that. The physician is not
going to be able to achieve those without it, and I think
outcomes are also not just for the physicians but even for
States, and we need to hold states accountable for outcomes as
well, and so we need to align the providers, the individuals
and States together in the same direction.
Mrs. Ellmers. Thank you so much for your testimony, and I
see my time is expired. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
for questions.
Ms. Castor. Well, thank you, Mr. Chairman, and thank you
very much to the panel today.
Over the past decades, the federal-State partnership that
is Medicaid has evolved and it has changed into more of a
managed care system. More States have adopted managed care. CMS
has been granted great flexibility for States to tailor managed
care Medicaid services.
I am concerned, though, that we lose some control to the
managed care companies, some accountability. Could you all give
me your opinion and identify the most effective waiver
conditions, oversight initiatives in the states to ensure that
our tax dollars actually go to medical care and health services
and not to excessive administrative costs or to excessive
profits for insurance companies and HMOs?
Ms. Verma. I think there are a lot of strategies that
States can take in their managed care contracting, and it all
has to do with how that contract is set up. I think they can
put in medical loss ratio requirements that would limit the
amount of dollars that are spent on administration and on
profit. There are outcomes measures, and I think that is one of
the main differences between State government and contracting
out with a managed care company is that you can require
outcomes of managed care companies. You can have standards for
access, standards for maternal and child health outcomes in
terms of low-birth-weight babies. You know, whatever a State
wants to attach to the contract, they can in terms of outcomes,
and that is something that you don't have with, say, government
with its regular fee-for-service within the Medicaid program
there is no accountability for the outcomes they achieve.
Dr. Thompson. I would concur with Ms. Verma. I would add, I
think it is important to start with what the beneficiaries'
needs are and make sure that the outcome indicators, the
expectations of the managed care plan, a managed care plan that
covers both an urban and a very rural area, network adequacy is
an important issue so that access issues become important, and
I think in the 30, 35 States that have large rural areas, an
important aspect is, how are we going to actually manage care
in a decentralized, relatively fragmented health care system.
Mr. Keck. I would agree with both those statements. We have
had much better luck actually assuring network adequacy in our
State working with our managed care companies because they are
able to negotiate individual rates and so if they are having a
hard time getting a doctor in a particular area, they can pay
more. We can't do that through our fee-for-service program. So
we are very specific and spent a lot of time understanding our
network through geo coding and so on. And we also put our plans
at financial risk now for outcomes, and they have both
incentives and they have withholds.
Ms. Castor. So if they drop the ball, they are not
providing the services. Are there penalties built into the
waiver conditions or the contracts, and are you aware of States
really holding their feet to the fire and providing proper
oversight?
Mr. Keck. We don't operate our managed care under a waiver
but through the contracts, we do hold their feet to the fire,
and the amount of potential penalty that we have this year on
our managed care plans could potentially be their entire profit
margin, and so we are moving forward very aggressively with
that. Some States are even more aggressive. But again, we
clearly measure our outcomes and our cost per member per month,
and we know that managed care, coordinated care is making a
difference. We think there is a long way to go in terms of
better managing care on the ground but this is the tool to do
it.
Ms. Castor. Dr. Thompson?
Dr. Thompson. I think we are taking a little bit different,
maybe a next-generation approach with our payment improvement
initiative. We are asking the lead provider to manage the
clinical risk and to have financial incentives, upside and
downside, while we are retaining the actuarial risk, kind of
the chance that somebody who has a hip replacement also has a
heart attack back with the insurance company or with the State.
So I think both are actually trying to put alignment of
financial incentives with the outcomes that the State, the
Medicaid program, the federal government desire, and I think we
need to probably accentuate the sharpness of our knife that we
start looking.
Ms. Castor. In Arkansas, do you all have managed care or
waiver for the elderly population, skilled nursing and services
that keep folks out of--because Florida is about to embark on
privatization of managed care for that population. That is news
to us. All of the providers are scared to death. They don't
want to go through a gatekeeper. What has your experience been?
Dr. Thompson. We have not used a third party, a managed
care entity, to exercise that option. We do have a waiver, our
home- and community-based service waiver, that allows the
family to use the allocated resources that would have been
spent inpatient in a nursing home for skilled or family-
assisted living to help them stay at home. So we have a waiver
in place. It is actually high sought after by our families to
keep their loved one at home. It does not use a third-party
manager in a manager care type of arrangement.
Ms. Castor. Thank you very much.
Mr. Pitts. The chair thanks the gentlelady. I recognize the
gentleman from Virginia, Mr. Griffith, 5 minutes for questions.
Mr. Griffith. Thank you, Mr. Chairman. I appreciate that.
According to the CBO, Medicaid will cost the federal
government $5 trillion over the next 10 years with as much as
$638 billion of that directly linked to the expansion of
Medicaid from PPACA. Recently, the Governor of my State,
Governor Bob O'Donnell, laid out the need for vast reform to
make Virginia's Medicaid program more cost-effective before the
Commonwealth can consider an expansion. The State legislature
set up a system where they can consider expansion if these
reforms are met, and there were five tenets that he laid out
for Medicaid reform: one, service delivery through efficient
market-based system including more managed and coordinated
care; two, reducing financial burdens to the State by getting
assurance from the federal government that expansion will not
increase the national debt; three, maximize the waivers that
currently exist to achieve administrative efficiency through
streamlining of payment and service delivery; four, obtain buy-
in from health care stakeholders in the State for statewide
reform; and five, achieve greater flexibility by changes to
federal law including value-based purchasing, cost sharing,
mandatory engagement in wellness and preventive care, the
development of high-quality provider networks and flexibility
around essential health benefits. That is a mouthful. The
bottom line is, these reforms that Virginia is now discussing
are on part with the plan laid out by Chairman Upton and
Senator Hatch to provide States with more flexibility to
implement their Medicaid programs in a way that makes sense for
them while better controlling costs.
Ms. Verma, how do you feel about these Medicaid reforms
that Virginia is currently exploring? What can we do to help
the States better service the vulnerable populations that need
Medicaid while giving the States the flexibility that improves
the quality of their program, promotes access and gets costs
under control?
Ms. Verma. I think that Virginia has all the right elements
there. I think they have covered the span of identifying
incentives for providers and individuals but I think the key
part there is that they are going to need flexibility from the
federal government to implement those pieces, so that will be a
critical component. But I think they have the required elements
of a reform package.
Mr. Griffith. So you think that that is a good first step?
Ms. Verma. I think it is a good approach. I am, you know,
glad to hear that they have also included the individual in
that piece. I think that is important. They have got the
providers. They are looking at the benefits. And I think they
also recognize the important role that the federal government
plays in this to making that happen.
Mr. Griffith. Now, as a part of that flexibility for the
States, how do you feel about the situation where, you know,
yes, we want to reward folks for doing the right things but
what if they consistently do the wrong things? Do you think
there ought to be some kind of a stick that can also be applied
in that flexibility if somebody continually goes to the most
expensive health care provider because they just don't seem to
care that they are running up the cost?
Ms. Verma. Absolutely, but you have to use those sticks
appropriately. You have to be mindful of the population. I
think that the carrots and sticks work differently, the
different populations. I think a disabled population, those are
a little bit harder to apply. However, as we are talking about
Medicaid expansion and able-bodied individuals, I think those
are probably more appropriate populations that those could be
effective.
Mr. Griffith. And that does make sense.
For everyone, there is always a lot of debate around when
States can and cannot implement cost sharing. From your
perspectives, when does cost sharing work and what can be done
to really allow the customization of cost sharing at a local
level?
Ms. Verma. I think cost sharing needs the most work. I know
CMS did put some proposed rules out that increased the cost-
sharing levels. I think it is a very rigid structure. It only
requires copays. There is no opportunity to enforce premiums
for people below 100 percent of poverty. There is no
flexibility to do value-based where you would be able to vary
the copays depending on the types of services. And I think the
enforcement piece of critical. I mean, what happens with copays
and the way that they have it structured is that it ends up
being a decrease in the provider reimbursement because
providers can't collect it.
Mr. Griffith. And let me go to the others. I only have
about 45 seconds left.
Mr. Keck. I will add to that. My hospitals would be remiss
if to that particular question about cost sharing, I didn't
mention that we need to do some reforms to EMTALA because
EMTALA has turned into sort of a blanket reason to be able to
use the emergency room without regard for appropriate use.
Mr. Griffith. Sure. Dr. Thompson?
Dr. Thompson. I think we are on a path to change the
Administration's proposed rule, which we have incorporated into
our private option. It is on the right path. I think it is a
complex system, and at some point, cost sharing, if you are
only making $6,000 a year, does become a barrier to access. The
other piece that we have had to work with on our providers and
our workforce strategy, if you are working an hourly job and
the doc is only open 8 to 5, you are going to end up going to
the emergency room. So we need our docs have an after-hours
clinic and weekend clinics where people are going to do exactly
what you would expect them to do. They are not going to lose an
hour's wage to go to the doctor in the middle of the day when
they can go to the emergency room at night. So this is part of
a total system change. It involves workforce, it involves
access, and most importantly, it does involve finance.
Mr. Griffith. I thank you all for being here. Mr. Chairman,
I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
for questions.
Mr. Lance. Thank you, Mr. Chairman. I yield my 5 minutes to
Dr. Burgess.
Mr. Burgess. I thank the gentleman for yielding.
Dr. Thompson and Mr. Keck, really to both of you, there
seems to be a good deal of antipathy toward the fee-for-service
system, and yet the fee-for-service system is what many doctors
have grown up with, what we rely upon. I would submit--and I
realize that the Medicaid system is not directly analogous to
the food stamp system but I suspect that if you tried to do a
food stamp system that was not fee-for-service based, taking
the basket to the marketplace and not paying a fee for every
service that you loaded into the cart would be problematic. Is
that an unfair observation?
Mr. Keck. Well, I think fee-for-service is not universally
the cause of all our problems, and there is actually within the
system places where you want to use fee-for-service to
encourage volume and productivity, and there are other areas
where you want to use bundled payments and capitation and so on
to encourage parsimony in the use of services.
Mr. Burgess. Dr. Thompson, do you have an observation on
that?
Dr. Thompson. Yes. I would just offer, our payment
improvement still pays claims in the same way that we did under
a fee-for-service system, so we are still paying providers for
the care at the point of delivery when they have care. What we
have done is, we have put a quarterback on the team that now
has the responsibility for the outcome.
Mr. Burgess. Let me ask you a question about that. Is the
quarterback always a physician? You referenced prenatal care.
Is the quarterback always the OB doctor in that instance?
Dr. Thompson. The quarterback has been decided by our
multi-payer effort to date consistently. It is the provider who
has the most influence on the system, the most ability to make
change and the most financial interest. It is usually the
physician. With respect to congestive heart failure readmission
rates, it is the index hospital because they know when they are
discharging the patient and----
Mr. Burgess. But they own all the doctors now so there is
no--it has to be the hospital. There is no other entity to be
identified.
Well, you know, when I think about the food stamp system
and the Medicaid system, when I go to my market at home and I
am behind someone in line who has the Lone Star code, which in
Texas is the food stamp, the way that is utilized, there
oftentimes will be a brief discussion between the cashier and
the individual buying the products, and, you know, they have
identified out of a large bill, here is a certain number of
dollars of things you have picked up that are not covered and
you will have to pay cash for those, and there is no effort to
embarrass the person. It is just simply they pay the dollars
that are required. Why would it be hard to construct a system
like that within the Medicaid system? That is, the patient
comes and in fact some of the bill could be borne by the
patient. You referenced the harshness of copayments or people
who would have to pay some of their own money, but it seems
like there has got to be a happy medium there where some
additional money can be brought to the system by the person who
is ultimately utilizing the system.
Dr. Thompson. Well, let me use your food stamp example. Our
payment improvement effort is like sending a nutritionist
through the aisle with the patient, with the individual, so we
are actually putting a nutritionist with that food stamp
recipient as they buy their food. To your issue on sharing,
that is exactly what the Affordable Care Act does through the
exchange. We set an essential benefit plan. There is a tiered
level of coinsurance, co-risk that decreases the lower a
family's income is. What we have done in our State is, we have
layered one more layer underneath that that says for the
poorest of the poor, we will put some cost sharing in place but
we are going to offer some protections.
Mr. Burgess. And let me ask you a question about the
concept of premium support because, I mean, to some degree that
has gotten a bad rap here in Congress. It is called a voucher,
and it is talked about in a derogatory term, but it sounds like
you are using that to your advantage. Premium support is part
of your so-called private option. Is that not correct?
Dr. Thompson. We believe, our Republican leadership and our
Democratic Governor believes using the private sector with
competition for provider rates and with competition for
patients essentially is the best way to consider expanding
Medicare because it is not a traditional State Medicaid
expansion. It does not have the cliff of people then wanting to
stay on Medicaid and not moving to private insurance.
Mr. Burgess. Let me ask you this, because Dr. Murphy asked
a question about the Federally Qualified Health Centers. The
liability coverage is handled differently in a Federally
Qualified Health Center. Texas several years ago experimented
with providing the first $100,000 of liability coverage to a
provider who was doing a certain percentage of Medicaid in
their practice. Have you looked at that in Arkansas as a
possibility? You need to bring providers into the system. Most
of us recognize that it is that first $100,000 of liability
that is where the real vulnerability exists. Medicaid patients
do sometimes carry higher liability risk. Have you looked at
that in Arkansas?
Dr. Thompson. We have not looked at that as a way of
recruiting providers. We have a relatively high provider
participation rate because we use electronic payment within 72
hours of service delivery. So our discounted prices we have
combated with increased cash slow and responsiveness to
treatment, but that has been our tool. I think your suggestion
would be very open to our medical society and probably our
Medicaid program.
Mr. Burgess. Is that something you are willing to look at?
Dr. Thompson. I would be glad to.
Mr. Burgess. Thank you.
Mr. Chairman, I have a series of questions on Medicaid as
the payer of last resort. I guess the appropriate think would
be to submit that for the record because I would like each of
you to respond to that. The Government Accountability Office
did a study back in 2006 and looked at the States that were
collecting from--that were covered under Medicaid but also had
simultaneous coverage under either an individual plan or a
group plan. For each of your States, it is about a 10 percent
rate of people who are covered, have dual coverage, and I would
just be interested in your thoughts as you expand managed care,
are we going to make that problem worse, and how can we get
at--I mean, when you talk of $750 billion a year, 10 percent of
that is a lot so we really ought to attempt to--we can't just
leave that money on the table. If it is owed by private
insurers, it should be paid by private insurers. But I will
submit that in writing. I would each of your responses to that.
And finally, Mr. Chairman, I would like to ask unanimous
consent to put into the record an article from the New England
Journal of Medicine titled The Oregon Experiment: Effects of
Medicaid on Clinical Outcomes.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. That concludes the questions from the members.
The members will have additional questions that we will ask
them to submit in writing. We will ask the witnesses to please
respond promptly.
Thank you very much for your testimony today, and let me
remind members, they have 10 business days to submit questions
for the record, and members should submit their questions by
the close of business on Wednesday, June 26.
It has been a very informative hearing. Thank you very
much. Without objection, the subcommittee is adjourned.
[Whereupon, at 11:50 a.m., the subcommittee was adjourned.]
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