[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
MEDICARE ADVANTAGE: WHAT BENEFICIARIES SHOULD EXPECT UNDER THE
PRESIDENT'S HEALTHCARE PLAN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 4, 2013
__________
Serial No. 113-105
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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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 FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
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)
(ii)
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. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 3
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 8
Prepared statement........................................... 9
Hon. Bill Cassidy, a Representative in Congress from the State of
Louisiana, opening statement................................... 9
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 10
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, prepared statement.............................. 142
Witnesses
Douglas Holtz-Eakin, President, American Action Forum............ 11
Prepared statement........................................... 13
Joe Baker, President, Medicare Rights Center..................... 18
Prepared statement........................................... 20
Robert Margolis, Chief Executive Officer, HealthCare Partners
Holdings, LLC, and Co-Chairman, Davita HealthCare Partners,
Inc............................................................ 39
Prepared statement........................................... 41
Marsha R. Gold, Senior Fellow, Mathematica Policy Research....... 59
Prepared statement........................................... 61
Jon Kaplan, Senior Partner and Managing Director, The Boston
Consulting Group............................................... 76
Prepared statement........................................... 78
Submitted Material
Article, dated June 6, 2012, ``Burgess: Medicare-less,'' by Rep.
Michael C. Burgess, Washington Times, submitted by Mr. Burgess. 5
Letter of December 3, 2013, from James L. Martin, Chairman, The
60 Plus Association, to Mr. Pitts, et al., submitted by Mr.
Pitts.......................................................... 106
MEDICARE ADVANTAGE: WHAT BENEFICIARIES SHOULD EXPECT UNDER THE
PRESIDENT'S HEALTHCARE PLAN
----------
WEDNESDAY, DECEMBER 4, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Shimkus,
Murphy, Blackburn, Gingrey, Lance, Cassidy, Guthrie, Griffith,
Bilirakis, Ellmers, Barton, Upton (ex officio), Pallone,
Dingell, Engel, Schakowsky, Matheson, Green, Barrow,
Christensen, Castor, Sarbanes, and Waxman (ex officio).
Staff present: Sean Bonyun, Communications Director; Noelle
Clemente, Press Secretary; Sydne Harwick, Legislative Clerk;
Robert Horne, Professional Staff Member, Health; Katie Novaria,
Professional Staff Member, Health; Monica Popp, Professional
Staff Member, Health; Chris Sarley, Policy Coordinator,
Environment and the Economy; Heidi Stirrup, Policy Coordinator,
Health; Tom Wilbur, Digital Media Advisor; Ziky Ababiya,
Democratic Staff Assistant; Phil Barnett, Democratic Staff
Director; Amy Hall, Democratic Senior Professional Staff
Member; Elizabeth Letter, Democratic Assistant Press Secretary;
Karen Nelson, Democratic Deputy Staff Director, Health; and
Rachel Sher, Democratic Senior Counsel.
Mr. Pitts. The subcommittee will come to order. The Chair
will recognize himself for an opening statement.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
The Medicare Advantage--MA--program, an alternative to the
original Medicare fee-for-service--FFS--program, provides
healthcare coverage to Medicare beneficiaries through private
health plans offered by organizations under contract with the
Centers for Medicare and Medicaid Services--CMS. MA plans may
offer additional benefits not provided under Medicare FFS, such
as reduced cost sharing, or vision and dental coverage. They
also generally have a high rate of satisfaction, and
approximately 28 percent of Medicare beneficiaries have chosen
to participate in Medicare Advantage.
The Affordable Care Act--ACA--as noted in a July 24, 2012,
Congressional Budget Office--CBO--report, cut $716 billion from
Medicare, including $308 billion from Medicare Advantage alone.
In April of 2010, the Medicare Actuary projected that these
payment cuts would result in an enrollment decrease in the MA
program of as much as 50 percent.
The ACA also required CMS, effective January 1, 2012, to
provide quality bonus payments to MA plans that achieve four,
four and half, and five stars on a five-star quality rating
system developed by CMS. Rather than implement the bonus
structure laid out in the law, which would have led to these
cuts going into effect in 2012, CMS announced in November 2010
that it would conduct a nationwide demonstration--the MA
Quality Bonus Payment Demonstration--from 2012 through 2014 to
test an alternative method for calculating and awarding
bonuses.
The Government Accountability Office--the GAO--in response
to a request by Senator Orrin Hatch, noted that the
demonstration project's design made ``it unlikely that the
demonstration will produce meaningful results'' and recommended
that HHS cancel the demonstration. GAO also stated: ``We remain
concerned about the agency's legal authority to undertake the
demonstration.''
With a price tag of $8.35 billion over 10 years, the
Medicare Actuary noted that this demonstration would offset
more than one-third of the reduction in MA payments projected
to occur under ACA from 2012 to 2014, effectively masking the
first wave of ACA-mandated cuts until next year.
A recent report by the Kaiser Family Foundation warned that
more than half a million beneficiaries may have to switch to
another MA plan or return to fee-for-service Medicare in 2014
as a result of the ACA.
In addition to plan availability, questions are now being
raised about the possibility of rising costs and limited
provider networks in the future as more ACA-mandated cuts go
into effect.
I would like to thank our witnesses for being here today,
and I look forward to their testimony regarding how the ACA
will impact the Medicare Advantage program.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Medicare Advantage (MA) program, an alternative to the
original Medicare fee-for-service (FFS) program, provides
healthcare coverage to Medicare beneficiaries through private
health plans offered by organizations under contract with the
Centers for Medicare and Medicaid Services (CMS).
MA plans may offer additional benefits not provided under
Medicare FFS, such as reduced cost sharing or vision and dental
coverage.
They also generally have a high rate of satisfaction, and
approximately 28% of Medicare beneficiaries have chosen to
participate in Medicare Advantage.
The Affordable Care Act (ACA), as noted in a July 24, 2012
Congressional Budget Office (CBO) report, cut $716 billion from
Medicare, including $308 billion from Medicare Advantage alone.
In April 2010, the Medicare actuary projected that these
payment cuts would result in an enrollment decrease in the MA
program of as much as 50%.
The ACA also required CMS, effective January 1, 2012, to
provide quality bonus payments to MA plans that achieve 4, 4.5,
or 5 stars on a 5-star quality rating system developed by CMS.
Rather than implement the bonus structure laid out in the
law, which would have led to these cuts going into effect in
2012, CMS announced in November 2010 that it would conduct a
nationwide demonstration--the MA Quality Bonus Payment
Demonstration--from 2012 through 2014 to test an alternative
method for calculating and awarding bonuses.
The Government Accountability Office (GAO), in response to
a request by Senator Orrin Hatch, noted that the demonstration
project's design made ``it unlikely that the demonstration will
produce meaningful results'' and recommended that ``HHS cancel
the demonstration.''
GAO also stated: ``we remain concerned about the agency's
legal authority to undertake the demonstration.''
With a price tag of $8.35 billion over 10 years, the
Medicare actuary noted that this demonstration would offset
more than one-third of the reduction in MA payments projected
to occur under ACA from 2012 to 2014, effectively masking the
first wave of ACA-mandated cuts until next year.
A recent report by the Kaiser Family Foundation warned that
more than half a million beneficiaries may have to switch to
another MA plan or return to fee-forservice Medicare in 2014,
as a result of ACA.
In addition to plan availability, questions are now being
raised about the possibility of rising costs and limited
provider networks in the future as more ACA-mandated cuts go
into effect.
I would like to thank our witnesses for being here today,
and I look forward to their testimony regarding how the ACA
will impact the Medicare Advantage program.
Mr. Pitts. Thank you, and I yield the remainder of my time
to Representative Burgess.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. I thank the chairman for the recognition. I
always want to thank the chairman for calling the hearing this
morning.
You know, we see the headlines and we see everything that
is going wrong in health care, but sometimes we forget that
there are some things that actually are going OK and there are
things that this committee and previous Congresses have worked
on to fix, and that is one of the things we are going to be
discussing this morning, but sometimes we are so busy triaging,
we don't allow ourselves the luxury of examining those things
that are actually working as intended.
In my opinion, Medicare Advantage is working, and it is
important to hold hearings like this to learn from those
successes and see where we can build upon those successes and
where the potential threats that are undermining the benefits
and services that now over 25 percent of seniors are
experiencing and how those maybe threatened.
Medicare Advantage allows integrated care coordination that
this committee has sought to bring into fee-for-service
Medicare. Medicaid Advantage plans in Texas are lowering costs.
They are bringing greater disease management and care
coordination to patients' lives. They are encouraging wellness
activities and actually using physicians to the maximum ability
of their license rather than always referring to a specialist.
There are those conditions that can be satisfactorily managed
by a general internist or family practice physician, and we
ought to encourage that and not punish it. But as money is
taking out of the system and plans have been forced to restrain
networks and eliminate services that made them such a good deal
for seniors, we have to keep a watchful eye.
We are all hearing about people wanting to be able to keep
their doctors. Well, the cuts in the Affordable Care Act pose a
real danger to seniors keeping their doctors and the benefits
that they now have in Medicare Advantage. The harm of these
cuts is compounded when the money is not reinvested in the
Medicare program. We have heard that before. You can't doubly
count the money that you take out of Medicare and then count
that again as a savings when you are not reinvesting the money
in Part A or Part B.
One small change that has been bipartisan, Mr. Gonzalez,
who used to be part of this committee, when he was on the
committee offered a bill that would allow seniors to switch
plans between MA plans in the first three months of the year
right after the open enrollment period. That was a reasonable
suggestion of his at the time, and one that I think the
committee could support.
Mr. Chairman, I had some time to go through the archives,
and I encountered a very brilliant and insightful opinion piece
that was printed in the Washington Times June 16, 2012, and I
would like to offer it for the record.
Mr. Pitts. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The gentleman yields back, and now the Chair
recognizes the ranking member of the Health Subcommittee, Mr.
Pallone, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts, and thank you to
our witnesses for being here to share your expertise.
Today I am pleased we have the opportunity to talk about
Medicare and the positive reforms introduced by the Affordable
Care Act to Medicare Advantage. While the majority of
Medicare's 52 million beneficiaries are in the traditional
Federally administered Medicare program, Medicare Advantage, or
MA, offers beneficiaries an alternative option to receive their
Medicare benefits through private health plans. Fifteen million
people, or 29 percent of all Medicare beneficiaries, are
enrolled in MA plans as of September 2013, an increase of 30
percent since 2010.
The ACA included reforms to Medicare Advantage payment
policies and added a number of benefits and protections for
beneficiaries both through MA and traditional Medicare. For
example, Medicare must cover wellness visits and preventative
services with no copayments or coinsurance. The ACA also
ensures that MA plans beginning in 2014 spend at least 85 cents
of every dollar received in premiums on actual care.
Beneficiaries will also receive discounts through the ACA on
their medications when they reach the coverage gap, or donut
hole, in Medicare Part D, and these discounts will grow over
the next several years until the gap is closed.
In addition, the ACA aims to improve the quality of MA
plans by rewarding plans that deliver high-quality care with
bonus payments. Incentivizing quality patient care over
quantity of services provided is key to improving healthcare
outcomes and reducing waste and the rising cost of health care.
The ACA will also bring MA payments more in line with
traditional Medicare payments. On average, Medicare has been
paying more per enrollee to these private MA plans than the
cost of care for those on traditional Medicare. By reducing MA
payments over time, there will be greater parity between MA and
traditional Medicare payments, resulting in savings that will
benefit enrollees and help secure the solvency of the Medicare
Trust Fund for a longer period of time.
Now, critics of these payments reforms predicted that MA
costs to enrollees would rise, that the provider networks and
plan choices would decrease, and MA enrollment would drop.
Changes in provider participation, pricing and coverage occur
every year as an inherent part of insurers' business decision-
making including long before the passage of the ACA, and that
is why we have provided tools to CMS to ensure that seniors are
protected from potential changes that private plans may make.
In addition, seniors continue to have the choice that best
suits their individual health needs, and every year continue to
maintain the ability to pick a new plan or traditional
Medicare.
So I look forward to hearing more from our witnesses on
recent trends in Medicare Advantage. I think we can all agree
that our work as a committee needs to continue beyond the
improvements we made in the ACA. So your guidance today on ways
we can continue to strengthen the program for our seniors is
critical. We can't return to the ways before the Affordable
Care Act. We must move our healthcare system to one of quality
and efficiency in all of Medicare.
So thank you again, Mr. Chairman, and I yield back the
balance of my time.
Mr. Pitts. The Chair thanks the gentleman, and now
recognizes the chairman of the full committee, Mr. Upton, 5
minutes for an opening statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman.
You know, every day we are hearing from folks and families
across the country about how the President's healthcare bill
has wreaked havoc on their own healthcare coverage, with
millions receiving cancellation notices, millions more facing
premium rate shock, and others still left to wonder if their
applications on HealthCare.gov were even successful.
This morning, we are going to focus on how the health care
of our Nation's seniors and disabled could be affected by the
changes in the President's healthcare plan.
The President's healthcare law cut over $700 billion from
the already struggling Medicare program to help fund the flawed
new entitlement. Included in these cuts were over $300 billion
in direct and indirect reductions to the Medicare Advantage
program, and many of these cuts will start in 2014.
Medicare's managed care program, also known as Medicare
Advantage, currently provides coverage for more than 14 million
Americans, over a quarter of all Medicare beneficiaries, and
these patients choose Medicare Advantage plans over traditional
Medicare for a variety of reasons including improved cost
sharing, enhanced benefits, better care coordination, and in
fact, higher quality of care. For millions of Americans,
especially those with lower incomes, Medicare Advantage is a
better option for delivering their care, and frankly, their
choice.
While Medicare Advantage continues to grow, the cuts made
in the healthcare law threaten the future of the program and
could put coverage at risk for thousands of beneficiaries in
2014 and many more in the future.
According to a report by the Kaiser Family Foundation, more
than half a million beneficiaries may lose their existing
Medicare Advantage plan next year, which would then force those
seniors and disabled Americans to switch their current plan or
return to a traditional fee-for-service plan. More than 100,000
beneficiaries enrolled in a Medicare Advantage plan in 2013
will not be able to enroll in a Medicare Advantage plan at all
in 2014.
Likewise, for thousands of America's most vulnerable, ``if
you like your doctor, you will be able to keep your doctor'' is
sadly another broken promise. Reports confirm that many
Medicare Advantage enrollees will see a change in their
provider networks next year as a result of the new law. So
empty promises may be of little concern for some but they have
real consequences for the Americans who expect us to do no
harm. Americans deserve to know why their existing coverage is
changing when they were promised otherwise, and this morning's
hearing will be an important opportunity to get some answers
from a number of good experts, and we appreciate you being
here, and I yield to Dr. Cassidy.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Every day we hear from individuals and families across the
country about how Obamacare has wreaked havoc on their
healthcare coverage, with millions receiving cancellation
notices, millions more facing premium rate shock, and others
still left to wonder if their applications on HealthCare.gov
were even successful. This morning, we will focus on how the
health care of our Nation's seniors and disabled could be
affected by the changes in the president's healthcare plan.
The president's healthcare law cut over $700 billion from
the already struggling Medicare program to help fund the flawed
new entitlement. Included in these cuts were over $300 billion
in direct and indirect reductions to the Medicare Advantage
program. Many of these cuts will begin in 2014.
Medicare's managed care program, also known as Medicare
Advantage, currently provides coverage for more than 14 million
Americans, over a quarter of all Medicare beneficiaries. These
patients choose Medicare Advantage plans over traditional
Medicare for a variety of reasons including improved cost-
sharing, enhanced benefits, better care coordination, and
higher quality of care. For millions of Americans, especially
those with lower-incomes, Medicare Advantage is a better option
for delivering their care.
While Medicare Advantage continues to grow, the cuts made
in the healthcare law threaten the future of the program and
could put coverage at risk for thousands of beneficiaries in
2014 and many more in the future.
According to a report by the Kaiser Family Foundation, more
than half a million beneficiaries may lose their existing
Medicare Advantage plan next year, which would force these
seniors and disabled Americans to switch their current plan or
return to a traditional fee-for-service plan. More than 105,000
beneficiaries enrolled in a Medicare Advantage plan in 2013
will not be able to enroll in a Medicare Advantage plan at all
in 2014.
Likewise, for thousands of America's most vulnerable, ``if
you like your doctor, you will be able to keep your doctor'' is
sadly another broken promise. Reports confirm that many
Medicare Advantage enrollees will see a change in their
provider networks next year as a result of the new law.
Empty promises may be of little concern to this
administration, but they have real consequences for the
Americans who expect Washington to do no harm. Americans
deserve to know why their existing coverage is changing when
they were promised otherwise, and this morning's hearing will
be an important opportunity to get some answers from a panel of
expert witnesses.
OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Cassidy. Thank you, Mr. Chairman.
Over 37,000 of my constituents in Louisiana are enrolled in
Medicare Advantage programs. MA plans offer higher quality care
and additional benefits, more so than offered in traditional
Medicare, and yet despite MA's popularity, MA has challenges.
The President's healthcare law cuts Medicare Advantage by
over $200 billion. Now, I am a doc. When I see that the people
who would come to me are having this many cuts in the programs
that cover them, intuitively, common sense tells you that they
will have increased problems finding a doctor, they will have
higher premiums, higher copays, fewer benefits and plan
choices. Even now with only 20 percent of these cuts
implemented, there are reports of these problems already.
I along with Congressman Barrow and 60 other Members of
Congress have signed a letter opposing other cuts to the MA
program. I urge my colleagues on the committee to make the same
commitment to their constituents who have come to rely upon
Medicare Advantage.
With that, I yield----
Mr. Shimkus. Dr. Cassidy, will you yield me back the
balance?
Mr. Cassidy. I yield my time back to the chairman.
Mr. Upton. Yield to Mr. Shimkus.
Mr. Gingrey. Mr. Chairman, did you yield to me?
I thank the chairman for yielding.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Look, Medicare Advantage has been around since, what, the
late 1980s? It was Medicare Plus Choice, then it was Medicare
Advantage, but the word ``advantage'' just means exactly what
it says. It is an advantage.
You know, it is kind of interesting that the Democrats in
creating this Affordable Care Act demanded that policies have
minimum coverage requirements, and that this why the cost of so
many of those policies has gone up and people have been
notified that they are not going to be able to keep those
policies January 1, 2014, because they are demanded to include
so many additional things. Well, why would Medicare Advantage
not cost more because they are more things in it, more
provisions, preventive care, annual physical examinations, a
nurse checking up, making sure that the patient got the
medications filled, that they return for their appointment and
timely follow up? So to gut that program--and that is what this
is all about.
I am really looking forward to what the witnesses have to
say about it but it made no sense to cut $300 billion out of a
program that 29 percent of Medicare beneficiaries had chosen,
and it has gone up over the years each and every year, and I
yield back.
Mr. Pitts. The gentleman's time has expired. The Chair now
recognize the ranking member emeritus, Mr. Dingell, 5 minutes
for opening statement.
Mr. Dingell. I don't have an opening statement. I am going
to have some fun with my questions. Thank you, Mr. Chairman.
Mr. Pitts. The opening statements have been made by the
members. I will now introduce our panel of five witnesses.
The first is Mr. Douglas Holtz-Eakin, President, the
American Action Forum; Mr. Joe Baker, President, Medicare
Rights Center; Dr. Bob Margolis, CEO, HealthCare Partners, and
Co-Chairman of DaVita HealthCare Partners; Ms. Marsha Gold,
Senior Fellow, Mathematica Policy Research; and Mr. Jon Kaplan,
Senior Partner and Managing Director of the Boston Consulting
Group.
Your written testimony will be made part of the record. You
will have 5 minutes to summarize your testimony, and at this
time, the Chair recognizes Mr. Holtz-Eakin for 5 minutes for
opening statement.
STATEMENTS OF DOUGLAS HOLTZ--EAKIN, PRESIDENT, AMERICAN ACTION
FORUM; JOE BAKER, PRESIDENT, MEDICARE RIGHTS CENTER; ROBERT
MARGOLIS, CHIEF EXECUTIVE OFFICER, HEALTHCARE PARTNERS
HOLDINGS, LLC, AND CO-CHAIRMAN, DAVITA HEALTHCARE PARTNERS,
INC.; MARSHA R. GOLD, SENIOR FELLOW, MATHEMATICA POLICY
RESEARCH; AND JON KAPLAN, SENIOR PARTNER AND MANAGING DIRECTOR,
THE BOSTON CONSULTING GROUP
STATEMENT OF DOUGLAS HOLTZ--EAKIN
Mr. Holtz-Eakin. Thank you, Chairman Pitts, Ranking Member
Pallone and members of the committee for the privilege of
appearing today.
Let me take this opportunity to emphasize a few points that
I made in my written statement.
The first, as has been pointed out by the chairman and
others in their opening statements, is that Medicare Advantage
is a valuable and popular part of Medicare with nearly 30
percent of beneficiaries voluntarily enrolled in it, increasing
enrollments each year, and it does provide extra services and
innovative approaches to health care in the Medicare program.
It disproportionately serves lower-income beneficiaries and
minorities, and has been the program of choice for them, but
most importantly, Medicare Advantage is not fee-for-service
medicine and thus it represents an important opportunity to
move away from the practice of medicine that has proven costly
and that rewards volume over quality in the American healthcare
system.
Unfortunately, Medicare Advantage is under a four-fold
funding reduction due to provisions in the Affordable Care Act
and then others more recently. The first stems from reductions
in fee-for-service spending per se; the second, the
modification of the Medicare Advantage bench marks relative to
fee-for-service spending in each county; the third, the
implications of a health insurance tax that will come online in
2014, which will affect many MA plans and further act as a
pressure on the ability to provide benefits; and the fourth,
the recent requirement that CMS provide changes in the coding
intensity for Medicare Advantage plans.
The results of these changes are inevitable. The first will
be fewer plans. Estimates range from 60 to 140 fewer plans in
2014. There are reports of 10,000 cancellation notices in Ohio,
50,000 in the State of New Jersey, and these all represent
further violations of the pledge that if you like your health
insurance, you can keep it under the Affordable Care Act.
In addition, there will be fewer enrollees. Projections are
that there will be up to 5 million fewer enrollments by 2019
when the ACA cuts are fully implemented, and these reductions
are disproportionately borne by lower-income Americans. Our
estimates are that about 75 percent of the impacts hit those
making less than $34,200.
The next step for those plans that do survive is to pass
along these reductions in the form of either higher cost
sharing or reduced benefits or more limited networks that
provide beneficiaries with fewer choices. These are not the
voluntary decisions of insurers; these are the natural
consequences of the law which limits their ability to provide
options to beneficiaries.
Going forward, I would emphasize that it is very important
to preserve this steppingstone to coordinated care and the
better practice of medicine in Medicare and that it would be
extremely undesirable for Congress to repeat the practice of
using Medicare Advantage as a funding source for further
expansions of other program initiatives. This is a valuable
program that has proven on the ground to provide high-quality
care, innovative approaches to medicine, and is the popular
choice of many of the least well-off beneficiaries. Further
reductions in its availability are an undesirable policy step.
I thank you, and I look forward to answering your
questions.
[The prepared statement of Mr. Holtz-Eakin follows:]
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Mr. Pitts. The Chair thanks the gentleman and now
recognizes Mr. Baker 5 minutes for summary of his opening
statement.
STATEMENT OF JOE BAKER
Mr. Baker. Thank you, Chairman Pitts and Ranking Member
Pallone and distinguished members of the subcommittee.
Medicare Rights is a national nonprofit organization that
works to ensure access to affordable care for older adults and
people with disabilities, and we thank you for this opportunity
to testify on the Medicare Advantage program.
Each year we counsel thousands of people with Medicare
Advantage about topics ranging from enrolling in a plan to
appealing a denied claim. We find that Medicare Advantage plans
are a good option for some but not all people with Medicare.
Many of our callers are satisfied with their plan and their
inquiries are easily resolved. Others find navigating a
Medicare Advantage plan challenging. These callers may struggle
to resolve billing issues, cope with coverage denials, compare
plan details and other issues.
In particular, we observe that people find choosing among
Medicare Advantage plans sometimes a dizzying experience. We
urge people every year to revisit their plan's coverage as
annual changes to plan benefits, cost sharing, provider
networks and other coverage rules are commonplace each year.
Yet research suggests that inertia is widespread. Put simply,
there are too many plans, too many variables to compare and too
few meaningful choices among plans.
The Affordable Care Act offers a blueprint for constructing
a high-value healthcare system where insurance plans,
physicians, hospitals and other providers are paid according to
the quality of care that they provide. Medicare is the
incubator for many of these reforms. As such, the ACA includes
a set of policies designed to make the Medicare Advantage
system more efficient and to enhance plan quality. Alongside
physicians, hospitals and other healthcare providers, Medicare
Advantage plans have been and should be playing an important
role in this transformation.
Medicare Advantage provisions included in the ACA are
ultimately intended to secure higher-volume care; in other
words, better quality at a lower price. Recent changes to MA by
the ACA have strengthened the program. In addition to improving
Medicare's overall financial outlook, the ACA enhanced Medicare
Advantage through added benefits, fairer cost sharing and
improved plan quality. For instance, the ACA expands coverage
for preventive services, prohibits Medicare Advantage plans
from charging higher cost sharing than original Medicare for
renal dialysis, chemotherapy and skilled nursing facility stays
and requires that plans spend 85 percent of beneficiary
premiums and Federal payments on patient care. These and other
changes that the ACA has brought to Medicare Advantage should
be preserved.
It is important to note that ACA savings secured largely
from Medicare Advantage payment adjustments are producing
positive returns for the Medicare program benefiting both
current and future beneficiaries. Improving cost efficiency in
Medicare translates into real progress for older adults and
people with Medicare and people with disability. For example,
in 2014, the Part B premium remains at its 2013 level,
amounting to $104.90 per month.
While many predicted that ACA changes to Medicare Advantage
would lead to widespread disruption of the plan landscape, we
have not seen that among our clients that we serve generally.
The premiums, benefit levels and availability of plans remain
relatively stable. In fact, the Medicare Advantage market is
now better and more robust for consumers, and enrollment
continues to be on the rise in this year.
While there appears to be an increased incidence of
slimming of Medicare Advantage provider networks this year, we
must stress that we see this every year. Changing provider
networks are an inherent risk of any managed care system. Our
advice to Medicare beneficiaries remains the same: people can
switch to another Medicare Advantage plan or back to original
Medicare or traditional Medicare during the fall open
enrollment period, which is occurring right now, in any
situation where a current Medicare Advantage plan does not meet
their needs.
In closing, we believe that Congress should do more to
simplify plan selection and coverage rules for people with
Medicare Advantage. We recommend improving beneficiary notice
regarding annual plan changes including changes in plan
networks and further streamlining and standardizing plans,
improving the appeals system, and adequately funding
independent counseling resources like the SHIP program. We also
urge Congress to expand the range of supplemental coverage
options available to people with original Medicare for those
cases where a Medicare Advantage plan is not the best fit for
beneficiaries' needs and also to allow people to go back and
forth between the Medicare Advantage plan and the original
Medicare program with more facility.
We really thank you for the opportunity to testify today.
[The prepared statement of Mr. Baker follows:]
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Mr. Pitts. The Chair thanks the gentleman and now
recognizes Dr. Margolis 5 minutes for summary of his opening
statement.
STATEMENT OF ROBERT MARGOLIS
Mr. Margolis. Thank you, Chairman Pitts and Ranking Member
Pallone and esteemed committee members for the invitation to
address you today. I come to address the merits of Medicare
Advantage, having had many years of experience in the program,
and can tell you without any hesitation, it is the most
effective Federal program moving seniors to higher-quality care
through coordination and measurement of quality and outcomes.
I come wearing multiple hats as my 40 years in health care
and healthcare policy has taken me in many directions: the
California Association of Physician Groups, which I chaired and
which represents over 90 percent of all coordinated care
patients in California, my board representation and
chairmanship at NCQA, which has proven through extensive
measurement and transparency that the quality and measurement
that occurs in Medicare Advantage is superior to the fee-for-
service original alternative; as you mentioned, my role as CEO
of HCP, HealthCare Partners, but mostly as a doctor at a
practice for over 20 years in an urban inner-city hospital in
Los Angeles serving primarily seniors and other disadvantaged
patients where I saw that without equivocation, the fee-for-
service mentality of the original Medicare, or as we like to
refer to it, fee for volume, is not coordinating care for
seniors.
Seniors who have multiple chronic diseases, who are
vulnerable and especially those that are poor and with less
than fewer resources, need an ideal system, a system that helps
with great information and a physician advisor to help them
navigate through a very difficult and complex healthcare system
and manage them longitudinally across time. As a physician, I
can tell you that every physician I know manages his or her
patients with great desire to do the best outcome but does not
have the infrastructure, the coordination and the resources to
follow that patient longitudinally through their healthcare
needs, and that is the one major advantage of coordinated care,
population health, managed care, however you choose to name it.
Population health, for those that perhaps are unfamiliar with
that term, really is having patients select a doctor through a
network, through a health plan, and then having that physician
organization take responsibility through a per-member per-month
or capitation for the total are of that patient. It totally
changes the incentives, and incentives drive behaviors. The
behaviors within a coordinated care program are one of health
promotion, defer and delay chronic disease through much more
intervention, disease management, pharmacy management, making
sure that patients get to their specialist, get to their
visits, have home care programs.
So let me explain a little bit about how that works within
our organization, which is relatively large. We care for now
over 250,000 Medicare Advantage patients through our 11,000
affiliated and employed physicians in five different States,
and the way that works is through great information technology,
which is a big investment but an important investment that
allows us now to segment the patient population into areas of
need and design programs specifically to those areas of need.
So for instance, there are home care programs for those most
vulnerable that have trouble getting into the doctor's office
and avoids 911 calls and trips to the emergency room. There are
comprehensive care clinics for those folks that have very
complex diseases where there is individual care plans monitored
by a team, and I have to say without equivocation, health care
best delivered is a team sport. It is great to have a physician
in the center of that team, but having care managers, having
disease management, having social workers, having dieticians,
having home care capabilities is a key component of making it
an effective system, so I ask you without any equivocation,
please continue to support MA, strengthen it, help it grow,
support special needs program, support moving the duals into
Medicare Advantage in a coordinated way with the States. It is
a very vulnerable population that could use Congress's support
with CMS to make that effective.
And with that, I will yield the last 6 seconds back to you.
[The prepared statement of Mr. Margolis follows:]
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Mr. Pitts. The Chair thanks the gentleman, and now
recognizes Ms. Gold 5 minutes for summary of her opening
statement.
STATEMENT OF MARSHA R. GOLD
Ms. Gold. Hello. Thank you, Chairman Pitts, Ranking Member
Pallone and members of the subcommittee to talk to you about
Medicare Advantage.
As a Senior Fellow at Mathematica for the past 20-plus
years, I have been examining Medicare Advantage for a long
time, analyzing trends and plan participation, enrollment and
benefits, looking at market dynamics and studying the
implications for beneficiaries, working with the Kaiser Family
Foundation and others.
My testimony today makes three points that I hope will
inform the Congressional debate on the Medicare Advantage
program today. My independent findings, I should say, in
general are closely aligned with the positions and opinions
expressed by MedPAC.
First and foremost, and we have heard this in a few other
places here today, the MA program is strong with rising
enrollment and widespread plan availability that is expected to
continue through 2014, despite the concerns that the cutbacks
in payment would discourage plan participation or make plans
less attractive. There is 15 million people in the program, 29
percent of all benefits an all-time high, although it varies a
lot across the country, and I think it is important to
recognize that health care is local and the circumstances are
different. The kind of care Dr. Margolis mentions happens in
some places and not others.
Second, despite concerns over plan terminations in 2014,
there are almost as many new plans entering in 2014 as
terminating, and since the ACA was enacted, average in premiums
to enrollees have declined, and they will still be lower in
2014 than they were in 2010. Exit and entry are essential
characteristics of a competitive market. Medicare beneficiaries
today have an average of 18 Medicare Advantage choices as well
as the option to stay in the traditional Medicare program and
with or without a supplement. Medicare beneficiaries can keep
their plan. It is called Medicare, whether you are in Medicare
Advantage or Medicare traditional.
It is difficult to see the rationale on a national basis
for paying private plans more than Medicare currently spends on
the traditional program, particularly when there is so much
concern with the deficit and debt. Medicare has historically
aimed to set payments to MA plans below or equal to what
Medicare would expect to pay in the traditional program for
beneficiaries who enroll in the plans. This changed in 2003,
and by 2009, payments were considerably higher than Medicare
would have paid for the same beneficiaries if they were in the
traditional program. This costs every beneficiary more in added
Part B premiums and it provides little incentive for MA plans
to become more efficient. When I examined the 2009 plan bid
data, I found wide variation in MA plans' costs relative to
traditional Medicare spending, even controlling for plan types
and payment levels. That suggests there was room for a lot more
efficiency in the program variable across plans, and the policy
changes that were in the ACA reflect recommendations that
Congress's own Medicare Payment Advisory Commission has
advocated for years.
Third, many of the concerns raised about 2014 offerings
from what I have looked at are not consistent with evidence or
inherent part of the way competitive markets work, and they are
already addressed by protections in place in the program. Only
5 percent of enrollees in 2013 will have to shift plans. Most
will be able to stay in the same type of plan. The average
premium was down 21 percent from between 2010 and 2013 for a
beneficiary, and premiums were stable in 2014. Some
beneficiaries will see their premiums rise in 2014 but they
will still be paying less than 2010, and if historical patterns
hold, some of the beneficiaries will switch around so that they
can get a better deal.
Clearly, payment reductions can discourage plans from
participating in Medicare Advantage but this doesn't yet appear
to be an issue, and Medicare has a number of protections for
this such as network adequacy and quality standards, required
notice of change in plans and provider networks and other
means. Because MA choice is voluntary, there is also the option
to return to traditional Medicare.
In its March 2013 report to Congress, MedPAC concluded that
the payment changes under the Affordable Care Act have improved
the efficiency of the program and may have encouraged plans to
respond by enhancing quality, all the while continuing to
increase MA enrollment through plans and benefit packages that
beneficiaries find attractive. I believe my analysis and
testimony is consistent with MedPAC's conclusion.
Thank you for your time, and I look forward to any
questions.
[The prepared statement of Ms. Gold follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now
recognizes Mr. Kaplan 5 minutes for summary of his opening
statement.
STATEMENT OF JON KAPLAN
Mr. Kaplan. Chairman Pitts, Ranking Member Pallone and
members of the subcommittee, thank you for the opportunity to
testify today.
My name is Jon Kaplan, and I am a Senior Partner of the
Boston Consulting Group. I have a healthcare background that is
over 25 years, working closely with both nonprofit and for-
profit healthcare entities throughout the entire healthcare
industry.
Earlier this year, I led a BCG team that analyzed the
differences in health outcomes between patients enrolled in
traditional Medicare and those enrolled in private Medicare
Advantage health plans. We found that patients enrolled in the
Medicare Advantage plans had better health outcomes than those
participating in traditional Medicare.
There are three key findings from our research. First, the
MA patients in our sample received higher levels of recommended
preventive care and had fewer disease-specific complications.
Second, during acute episodes requiring hospitalization, the
patients in the MA plans spent almost 20 percent less time in
the hospital than those in traditional Medicare. In addition,
they had less readmissions into the hospital. Finally, the
percentage of people who died in the year we studied was
substantially higher in the traditional Medicare sample than
those in the Medicare Advantage sample. This is a striking
finding and one that we hope to explore further in a
longitudinal, multiyear study.
Our study did not directly address the causes of these
differences. In my experience, however, the key factor is MA
itself and how the plans are organized and managed. First,
these plans align financial incentives with clinical best
practice. Second, they recruit the most effective providers and
include only those who practice high-quality medicine. Third,
they put a strong emphasis on active care management and invest
resources in prevention to keep patients healthy, stable and
out of the hospital.
There are many indications in our study that these three
mechanisms are responsible for the better health outcomes of
the MA patients. Take the example of diabetes. Two clinical
standards for diabetes care are frequent HbA1c testing and
regular screenings for kidney disease. Our data show that the
MA sample had substantially higher number on both tests than in
the traditional Medicare sample. This stronger focus on
prevention helps keep patients healthy and avoids the need for
highly disruptive and expensive acute care interventions. For
example, we found that diabetic patients in MA had dramatically
fewer foot ulcers and amputations than those patients in
traditional Medicare.
Aligned incentives and active care management also helps
explain lower utilization rates. Take the example of emergency
room visits. In our traditional Medicare matched sample, about
four out of ten of the patients visited the emergency room at
least once per year. For many portions of Medicare Advantage,
however, this figure drops to around two out of ten.
One last finding to share: Among the three types of MA
plans that we studied, the very best health outcomes were for
those patients in the capitated MA plan. The findings suggest
that capitation is extremely effective at supporting provider
investment and preventive medicine and active care
coordination.
Let me conclude by suggesting some implications of our
study for health policy. In my opinion, Medicare Advantage
plans are an example of a successful public-private
partnership. These plans represent an integrated care delivery
model that uses effective provider incentives, real-time
clinical information and care coordination capabilities to
improve quality and lower cost. In my opinion, Federal policy
should be supporting and not discouraging more Medicare
patients to enroll in MA. Their health outcomes and the entire
U.S. healthcare system are likely to be better as a result.
Thank you for inviting me to speak, and I look forward to
answering your questions.
[The prepared statement of Mr. Kaplan follows:]
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Mr. Pitts. The Chair thanks the gentleman. That concludes
the summaries.
Before we go to questioning, I'd like to seek unanimous
consent to submit for the record a letter from the 60 Plus
organization. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. I will now begin the questioning and recognize
myself for 5 minutes for that purpose.
Mr. Holtz-Eakin, since passage of the President's
healthcare plan, millions of Americans and their families have
received insurance cancellation notices. Do you think Medicare
Advantage may be Obamacare's next victim, and if so, what might
beneficiaries in Pennsylvania expect over the coming years in
terms of plan choices, cost, foregone benefit offerings and
provider networks?
Mr. Holtz-Eakin. Thank you, Mr. Chairman. Indeed, I am
concerned about the future of Medicare Advantage, as I said in
my opening statement. The work we have done on the implications
of ACA cuts, for example, in Pennsylvania, would suggest that
in 2014, there would be an average loss of benefits per
beneficiary of about $2,200, that this is about a 19 percent
reduction in those benefits, and that we would see a decline in
the activity of Medicare Advantage to about 113,000
Pennsylvanians, and those numbers for 2014 are of concern but I
am more troubled by the trajectory over the succeeding 5 years
and the full cuts under the Affordable Care Act as to whether
Medicare Advantage will remain a viable option within the
Medicare program and deliver the comprehensive benefits.
And I just want to echo the statements that we heard in
many of the opening remarks. The Medicare population is so
different than when Medicare was originated. It is now a
population that has multiple chronic conditions and
comorbidities. It requires a coordinated approach to care. That
is the route to both better health and financial future for
Medicare as a whole. Medicare Advantage, I think, is an
important steppingstone to that future.
Mr. Pitts. Thank you.
Dr. Margolis, as you know, this committee has been
committed in a bipartisan form to address access concerns in
part by improving the flawed physician patient formula for
participating Medicare doctors. However, I believe Medicare
Advantage plays a key role in ensuring the physician-patient
relationship for seniors and the disabled. What impact, in your
opinion, will the permanent solution to the flawed SGR formula
have on the viability of the Medicare Advantage program?
Mr. Margolis. Thank you, Mr. Pitts. There is no question
that the cuts that are proposed are coming down on Medicare
Advantage, and I would specifically stress the rescaling of the
risk adjustment factor, which really was a key component in
what I believe is making it a positive incentive to care for
the sick and fragile patient was to be paid based on the acuity
of the patient, and so the potential of reducing significantly
the payments relative to the most expensive patients starts to
flip back to that possibility that the people will not be able
to gain care if they are really sick, and that is a potential
serious problem.
And I would also like to just say that Medicare Advantage
should not, in our opinion, be the pay-for for an SGR fix. I
think that as you have heard from all these other witnesses
that it is extremely important for the seniors of our country,
10,000 more of which are entering Medicare every day, to be
able to access good coordinated care and especially for that 5
percent of patients that are eating up 52 percent of all
healthcare dollars, those sickest and most fragile patients, to
be able to access the doctors of their choice and get the care
they need.
Mr. Pitts. Thank you. Here is a question for the panel.
Medicare Advantage has a proven record of success and is
popular with seniors because it provides better services, a
higher quality of care and increased care coordination. To
ensure the program's viability, I believe there are several
existing reform proposals for Medicare Advantage that merit
further discussion and feedback, concepts like overlaying a
value-based insurance design over the existing Medicare
Advantage program to address a substantial variation in value
across healthcare services and providers, bipartisan policies
such as those introduced by Representative Keith Rothfus of
Pennsylvania that would restore choices for Medicare Advantage
beneficiaries and not limit their options to traditional FFS or
their existing plans, improvement to the program's special
needs plans and improvements to the program's risk adjustment
framework that would improve accuracy of payments and account
for chronic conditions.
What, if any, short-term reforms could we consider that
would ensure the viability of the program in promoting maximum
value and high-quality coordinated care for Medicare
beneficiaries? We will start with you, Mr. Kaplan.
Mr. Kaplan. First of all, thank you, Mr. Chairman. The best
way I would answer that question is, is that there are a lot of
successes that are already in place in Medicare Advantage. I
think everybody on the panel today has said that Medicare
Advantage is a program to look at with some very positive
reactions.
What I think happens fundamentally in the Medicare
Advantage program is that it allows for more of a freedom of
choice among the different competitors in there being the
insurance companies that are offering those programs and allows
for the members who choose to go into those programs to
navigate themselves around to different programs, to make a
choice and to find what best meets their needs. That sort of
freedom of choice has allowed for the programs to prosper based
on what they offer to the members who sign up for their
programs as opposed to mandating things in different ways.
So the competitive model amongst the different insurance
companies who are offering different programs in different
States, I think that strong model has allowed for the growth of
the program to be so successful and effective at practicing the
medical care that we all are talking about that we want to do
for the senior population.
Mr. Pitts. Thank you. My time is expired. I will give you
this question and I will submit it in writing and you can
respond for the record.
The Chair now recognizes the ranking member, Mr. Pallone, 5
minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman.
I am going to ask my questions of Mr. Baker because you
seem to be able to clear up a lot of the myths that I am
hearing from the Republican side.
As you heard, opponents of the ACA say that the Medicare
Advantage program will be obsolete because of cuts in the
Affordable Care Act. The Republicans basically think the
Affordable Care Act is the end of the world. I mean, you
understand all that.
Mr. Baker, do you feel that the Medicare Advantage program
is stronger now and more secure for beneficiaries than before
the Affordable Care Act? If you could just answer that?
Mr. Baker. Sure. I think there are a couple components to
that. One is that this equalization of payments between the
Medicare Advantage program and the traditional or original
Medicare program, I think once again there is an equity there
that has been established as well as the fact that Part B
premiums have come down or stabilized for everyone in the
Medicare program. I think the other piece is that consumers are
better protected in Medicare Advantage. Some plans had
increased cost sharing for services like chemotherapy, higher
cost sharing than is allowed in the traditional Medicare
program. The Affordable Care Act has equalized once again cost
sharing so that sicker beneficiaries aren't discriminated
against--the 85 percent Medical Loss Ratio that is required in
Medicare Advantage now, making sure that 85 percent of those
premium dollars, both from consumers as well as from the
government, are going towards medical costs, not other
administrative costs. The star ratings--we now have a rating
program where plans have one to five stars based upon their
quality and plan performance. This has been an important tool
for consumers to choose between plans and also that quality
information has been getting out to consumers and I think more
can be done in that regard but I think is very good.
The other thing is the out-of-pocket maximums that were
introduced over the course of the last few years and have
provided important protections for consumers so that these
Medicare Advantage protections not only make the program more
equal, if you will, between the traditional or original
Medicare program but also ensure that consumers are better
protected with consumer rights and consumer protections once
they are in the plan.
Mr. Pallone. So obviously you feel that Medicare Advantage
is stronger now and more secure because of the ACA?
Mr. Baker. Yes, I do, and I think consumers are better
protected within the Medicare Advantage program because of the
ACA.
Mr. Pallone. Do you think that the changes pursuant to the
ACA give beneficiaries more confidence in the program, might
even make them more comfortable in choosing a Medicare
Advantage plan?
Mr. Baker. I think it does. I think the ACA with the star
ratings program, with other quality initiatives in the Medicare
Advantage plan have made consumers more confident. We find that
folks are looking at these star ratings or looking at these
other quality metrics that are now available under the ACA. I
think they also are--many of the consumers that we talk to
appreciate that they have a choice between Medicare Advantage
and original Medicare. So I think it is also important that the
original Medicare program, which is the base of all of this, be
kept strong and be kept as a very viable option for folks that
Medicare Advantage either hasn't worked for or it won't work
for in the future.
Mr. Pallone. All right. And can you tell me how robust the
choices are for seniors in the MA program? How many choices do
they have?
Mr. Baker. Right. I think on average, consumers continue to
have about 18 plan choices, and I think Ms. Gold went through
some of those metrics in her testimony. We find for the most
part, and this is both true in the Medicare Advantage program
as well as in the Part D prescription drug program, that
consumers are really--the biggest question we have from
consumers is, they have too many choices and they are too
confused by the variety of plans. So over the last few years,
the Centers for Medicare and Medicaid Services has made some
headway in tamping down the number of choices that aren't
meaningful. By that, I mean there might be one little tweak to
a plan to make it somewhat different than another plan that a
company is offering and, you know, folks get confused by those
tweaks that don't have a real substantive component to them.
And so narrowing choices in that way has helped people actually
make better choices.
Mr. Pallone. And you don't feel that--I mean, again, you
don't buy the naysayers who say that the ACA is going to narrow
choices for seniors in the MA program?
Mr. Baker. It has not at this point, not substantively. We
see plenty of plan choices out there in the markets where we
are seeing clients. Once again, our problem in counseling most
of our consumers, really all of our consumers, isn't that they
don't have a choice, it is that they have too many choices of
Medicare Advantage plans before passage of the ACA and after
passage of the ACA.
Mr. Pallone. Thank you very much.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the vice chairman of the full committee, Ms.
Blackburn, 5 minutes for questions.
Mrs. Blackburn. Thank you, Mr. Chairman, and thank you all
for being here.
Dr. Margolis, I want to come to you. You talked a bit about
the fragile and vulnerable populations, and I want to go back
to that--end-stage renal disease. I recently found out that
those Medicare Advantage enrollees that have end-stage renal
disease have access to a coordination of care that is not
available to others. It is not an option for those that are in
standard Medicare. So why should Medicare Advantage not be an
option for all Medicare enrollees?
Mr. Margolis. Thank you, Mrs. Blackburn. I support that. I
believe that coordination of care is ideal for sick and fragile
patients especially. ESRD, I know they are pilots now at CMS to
try to incorporate population health for ESRD. I would
encourage them to be strengthened. I think it is an artifact of
the way the law was originally written that ESRD patients were
not allowed to enroll in Medicare Advantage. That could and
should be changed, in my view. The way that works is that if a
patient has chronic renal disease and enrolls in Medicare
Advantage and becomes an end-stage patient, they can stay in
Medicare Advantage, but if they have already been diagnosed as
end-stage renal disease, they are not allowed to enroll in
Medicare Advantage.
Mrs. Blackburn. It would be an element of fairness into the
system that would allow----
Mr. Margolis. I believe that would be an improvement, yes,
ma'am.
Mrs. Blackburn. All right.
Mr. Kaplan, I want to come to you for a minute. I loved
listening to your testimony today. I have to tell you, in my
district, seniors love their Medicare Advantage. We have got a
program called Silver Sneakers in our district, and people come
to town hall meetings, they talk to me about Silver Sneakers
and how they are doing, and I have looked at some of the work
that they have done and the surveys, better outcomes for
physical and emotional health, more activity. It has just been
a great program.
So as I have listened to you all today, talk to me for a
minute. We talk about stabilizing Medicare, giving seniors more
choices, giving them more options. Should Medicare Advantage
not be the platform for Medicare reforms and give seniors more
choice and options, not less?
Mr. Kaplan. Well, first of all, thank you for the nice
comments.
I am a huge fan of Medicare Advantage for exactly the
reasons you say. It aligns the incentives so that the providers
and the payers work together to try to figure out what is the
best way to take care of their members and their patients, and
when they align the incentives, they start to work on things,
and they say one of the most important things is to coordinate
care, as Dr. Margolis talked about, which is, let us coordinate
the care for especially these complex members and so forth, let
us find things that can help them to prevent having the
diseases either progress or even begin. All these things are
aligned. All these things are the idea of aligning incentives,
coordinating care, and it is all for the benefit of the member.
And so therefore I do believe, as you said, that Medicare
Advantage is a wonderful pilot for us as a society, because
what it does is, it shows that we can find a way to curb the
growth of healthcare costs, we can find a way to improve----
Mrs. Blackburn. So curb the cost, give greater access and
provide better outcomes?
Mr. Kaplan. Correct.
Mrs. Blackburn. Mr. Holtz-Eakin, do you want to weigh in?
Mr. Holtz-Eakin. I would just echo the fairness issue,
which I think is important, and we know that Medicare as a
whole is facing a very, very problematic financial future. If
we can find ways to control those costs and provide better
care, we should, and this is a route to that.
Mrs. Blackburn. Let me ask you this. When you look at the
implementation of the ACA and the cuts that are being made, who
is most impacted by the MA cuts that are there? Is it seniors?
Is it physicians? Is it the support system for seniors? What in
your research do you see? Yes, sir?
Mr. Holtz-Eakin. This is impact directly to the seniors
whose choices will be restricted, whose benefits will be
reduced, and I am deeply concerned about the long implications.
I understand the testimony of Mr. Baker about consumer
protections and confidence in the program but that is at odds
with the fact that the CBO, for example, projects that there
will be 5 million fewer enrollees in Medicare Advantage in
2019, if they felt more confident, we got 10,000 new seniors
every day, you would expect the number to rise, not fall, and I
think that is stark testimony to the financial underpinnings
being not strong enough and then that will limit the benefits
and the choices of seniors.
Mrs. Blackburn. Yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the ranking member emeritus, Mr. Dingell, 5 minutes
for questions.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy
and for your kindness.
This is an important moment, and the American people are
counting on us. I am concerned that the committee might be
holding another hearing to try to scare people about the
Affordable Care Act and its impact on Medicare Advantage when
the facts do not support those claims. The questions I have
today will focus on how ACA impacts Medicare Advantage as well
as traditional Medicare. I would point out that when we adopted
the idea of Medicare Advantage, we were told that they were
going to give us a lot more insurance and a lot less cost to
senior citizens, and I have heard constant whining ever since
that we have not done that.
In any event, we have a problem here because that program
is costing taxpayers significantly more than traditional
Medicare while providing only similar services.
So Mr. Baker, yes or no, is it correct that in 2009 before
passage of ACA, CMS paid Medicare Advantage plans $14 billion
more than if the same care had been provided under traditional
Medicare? Yes or no.
Mr. Baker. Yes.
Mr. Dingell. And this averages out to about $1,000 per
beneficiary? Yes or no.
Mr. Baker. Yes.
Mr. Dingell. Now, additionally, Ms. Gold, a 2009 MedPAC
report found that Medicare Advantage payment benchmark was 118
percent of what Medicare would spend. Is that correct?
Ms. Gold. Yes.
Mr. Dingell. Now, Mr. Baker and Ms. Gold, is it fair to say
that the reforms made by ACA were intended to align Medicare
Advantage payments with traditional Medicare payments? Yes or
no.
Ms. Gold. Yes.
Mr. Baker. Yes.
Mr. Dingell. Now, despite claims made by some of my
colleagues, these reforms have not ruined Medicare Advantage.
In fact, the program is strong and growing. Earnings are doing
fine. Salaries, dividends, bonuses and all those other good
things to the companies and their officers who are
participating are growing.
Now, Mr. Baker, how many people are enrolled in Medicare
Advantage today? I believe the number is 15 million. Is that
right?
Mr. Baker. Correct. Yes.
Mr. Dingell. Now, Mr. Baker, is it correct that Medicare
Advantage enrollment has increased 30 percent from 2010 to
2013? Yes or no.
Mr. Baker. Yes, it is.
Mr. Dingell. It seems like they are doing pretty well,
doesn't it?
Mr. Baker. Yes, it does.
Mr. Dingell. Now, Mr. Baker, is it correct that the average
Medicare beneficiary will have a choice between 18 plans
available to them in 2014? Yes or no.
Mr. Baker. Yes, it is.
Mr. Dingell. So Mr. Baker and Ms. Gold, the Affordable Care
Act has not resulted in a drastic decrease in the number of
plans available to seniors who choose to participate in
Medicare Advantage nor has it decreased the number of people
participating in the program? Is that correct? Yes or no.
Ms. Gold. Yes.
Mr. Baker. Yes.
Mr. Dingell. Thank you. Now, in fact, I note that ACA has
provided many benefits to this population and will continue to
do so. Most importantly, the ACA has improved the solvency of
the entire Medicare program, something which is not properly
addressed by people who are critical of ACA.
Now, Mr. Baker, is it correct that Medicare hospital
insurance trust fund is now solvent through 2026? That is 10
years longer than prior to the passage of ACA. Yes or no.
Mr. Baker. Yes.
Mr. Dingell. That tends to show that this was quite helpful
to the Medicare trust fund, right?
Mr. Baker. Yes, it does.
Mr. Dingell. Now, in 2012, 34.1 million Medicare
beneficiaries were able to access preventive services such as
mammograms and colonoscopies with limited cost sharing. Is that
correct? Yes or no.
Mr. Baker. Yes.
Mr. Dingell. Now, some 7.9 million seniors have saved over
$8.9 billion since the passage of ACA, and that is thanks to
the donut hole being closed. Is that right?
Mr. Baker. Yes.
Mr. Dingell. And the donut hole is going to be closed
completely by sometime around 2020. Is that right?
Mr. Baker. That is correct, yes.
Mr. Dingell. So thank you, gentlemen and ladies. This
committee has a great tradition of working together to solve
the pressing issues of the day. I hope we can resume this
tradition with vigor and focus on the facts rather than
continuing to try to scare people about the Affordable Care
Act. Let us give it a chance. Let us work together. Let us see
that it has a chance to provide the benefits to the society and
the practice of medicine and to the sick, ill and ailing in
this country that we want to have.
Mr. Chairman, I thank you for your courtesy.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the vice chair of the subcommittee, Dr. Burgess, 5
minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman.
Dr. Holtz-Eakin, you were kind of left out of that last
exchange. Do you have quick thoughts on the $14 billion excess
cost for Medicare Advantage that Chairman Dingell referenced?
Mr. Holtz-Eakin. The reimbursements should be aligned with
quality, and I think the most important issue is the quality of
care that seniors receive under Medicare Advantage as opposed
to fee-for-service medicine.
Mr. Burgess. Let me switch gears a little bit. You know,
the Affordable Care Act, and I was here through the entirety of
how it came through the committee and how it came through
Congress, and it becoming pretty obvious today that there were
some assumptions and some promises that were made in the
Affordable Care Act that have now turned out to not be true,
and I would submit that those weren't just errors in
projections, those were actually active and purposeful
deceptions. If the administration had been honest with
Americans about this bill, it very likely never would have
passed.
So the Affordable Care Act does take $716 billion out of
the Medicare program. Is that correct?
Mr. Holtz-Eakin. That is correct.
Mr. Burgess. And the portion that is taken from Medicare
Advantage is about $150 billion. Is that correct/
Mr. Holtz-Eakin. Yes.
Mr. Burgess. So that is taken away from our seniors, the
Medicare Advantage plans. I mean, I can remember distinctly
speeches given, particularly during the Democratic Convention
in 2012, that these are merely overpayments to doctors and
hospitals; this is not a real cut. It is just taking away money
that shouldn't have been paid in the first place. Do you recall
those speeches?
Mr. Holtz-Eakin. Not specifically but I remember the
claims.
Mr. Burgess. So do you agree with the administration, with
the American Association of Retired Persons, Congressional
Democrats that these cuts were merely ridding the plans of
inefficient payments?
Mr. Holtz-Eakin. I don't agree with that. They are part of
an historic strategy of provider cuts that has always
backfired. The SGR is the leading example. It limits access to
seniors in the end. It doesn't take out excess costs. And a
continued reliance on this strategy is going to damage Medicare
and not save its financial future. We need to change
strategies.
Mr. Burgess. I agree with you.
You know, there was an article in the paper recently that
United Health Care was forced to limit access to some doctors
because of reductions in Medicare Advantage. There was an
article in USA Today that talks about a story about a patient
named Dorothy Sanay that her doctor had some bad news after her
last checkup but it wasn't about her diagnosis. Her Medicare
Advantage plan from United was terminating her doctor's
contract after February 1st, and she also found out she was
losing her oncologist at the prestigious Yale Medical Group.
She is 71 years old and on Medicare.
So it kind of seems like this is a direct consequence of
cutting the Medicare Advantage plans by $150 billion. Would I
be correct in characterizing that as such?
Mr. Holtz-Eakin. The insurers will be increasingly caught
in the middle. They have obligations to limit cost sharing.
They have obligations to provide benefits. There will be less
money coming to them. Their only recourse will be to restrict
whatever access to benefits they already had and limit the
network so as to control costs.
Mr. Burgess. So this is a story we are likely to hear
repeated over time?
Mr. Holtz-Eakin. Yes. I think what we have heard so far is
just the leading edge of what will be a bigger problem.
Mr. Burgess. So the American Association of Retired Persons
has on its Web site myths about Medicare Advantage cuts, and
one of the myths is that Medicare Advantage cuts would hurt
seniors' ability to see their doctor. To quote the Web site:
``If your current plan allows you to see a physician in the
plan, nothing will change.'' Well, in light of this
information, do you think that that is an accurate statement?
Mr. Holtz-Eakin. No, I don't, and I think it will be
increasingly inaccurate over time. To judge it by 2013 or 2014
is a mistake. It is the trajectory over the foreseeable future
that concerns me the most.
Mr. Burgess. So, you know, again, I just can't escape the
notion that the entirety of the Affordable Care Act was sold to
the American people on deception. The consequences of that
deception are not becoming more evident every day. As a
physician, I am particularly sensitive to the fact that
patients are going to be excluded from their doctors. I wish
the administration had been more honest about this, and again,
I can't help but feel it was an active and purposeful
deception.
Let me just ask you a question following up on some of the
stuff that Chairman Dingell was asking. The cuts in Medicare
Advantage, those cuts were taken out of Part A and Part B but
not reinvested in Part A and Part B. Is that correct?
Mr. Holtz-Eakin. No, those cuts will be used to pay for
Medicaid expansions and insurance subsidies in the exchanges,
and those monies will be gone at the moment they are spent.
They will not be there for Medicare.
Mr. Burgess. So I am not an economist. I am just a simple
country doctor. But you are an economist, so how do you
reconcile the fact that they are claiming that that is a
savings that is increasing the solvency and longevity of Part A
and Part B when the money was taken and then spent for some
other activity?
Mr. Holtz-Eakin. As the current CBO Director, Doug
Elmendorf, has testified, and as any CBO Director would
testify, that is an accounting fiction. There are no real
resources in those trust funds to pay real bills from real
providers for real patients.
Mr. Burgess. I thank the Chair. I will yield back my time.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
for questions.
Ms. Castor. Well, good morning, and welcome to the panel,
and I would like to thank the chairman and ranking member for
holding this hearing on how the Affordable Care Act is
improving and strengthening Medicare and Medicare Advantage.
According to a study that was done a couple of months ago,
in my area of Florida, where we have a large percentage of our
grandparents and parents who rely on Medicare, a number of
statistics jumped out on the improved benefits in Medicare. One
was what Mr. Dingell mentioned, the closing of the donut hole
and the new discounts for prescription drugs. In the greater
Tampa Bay area, over 77,000 of my neighbors now have major
savings in their drug costs under Medicare Part D due to the
drug discounts. They have been worth over $100 million to the
Medicare beneficiaries in the greater Tampa Bay area. That is
very substantial, and that is due to the Affordable Care Act.
Also due to the Affordable Care Act, just in the greater
Tampa Bay area, over 1 million seniors now have Medicare
coverage that includes preventive services. They can go get the
mammograms, the colonoscopies without copays or deductibles.
That is a very important improvement to Medicare.
And Mr. Baker, I think you testified that these
improvements apply in traditional Medicare and in Medicare
Advantage. Is that correct?
Mr. Baker. Yes, that is true. Yes, some Medicare Advantage
plans did offer those preventive benefits, others did not. So
what the ACA did--and of course traditional Medicare did not.
So what the ACA did was make sure that those preventive
benefits applied across the board in both traditional Medicare
and in all Medicare Advantage plans as well.
Ms. Castor. Well, and I would like to take a page of how
Mr. Dingell asks questions sometimes because my time is limited
and I would like to get a yes or no answer.
Earlier this year, Republicans here in the House adopted a
budget that proposed drastic changes to Medicare. The budget
that was adopted would end traditional Medicare and Medicare
Advantage and put in place a new system beginning in 2024. So
if you are 55 or younger, this would really impact your future
in Medicare. Rather than enroll in traditional Medicare or
Medicare Advantage under the Republican budget, instead
beneficiaries would receive a voucher. It would privatize
Medicare. You would get a voucher, a coupon, and most analysts
raised grave concerns that this would in essence very shift
costs to our parents and grandparents that rely on Medicare. It
really appears to break the promise that you will be able to
live your retirement years in dignity and be safe from a
catastrophic diagnosis.
I would like to know just yes or no from each of you, do
you support that kind of drastic change to Medicare and
Medicare Advantage? Yes or no.
Mr. Holtz-Eakin. I do support that change, and the reason I
do is, the CBO's report that came out this summer indicated it
would save costs for beneficiaries and for the government,
indicating it had broken the increase in cost.
Ms. Castor. So, yes, you support turning Medicare into a
voucher?
Mr. Holtz-Eakin. It bent the cost curve, and that is
important.
Ms. Castor. And Mr. Baker?
Mr. Baker. I do not support that proposal, and our
organization does not support the proposal for the reasons that
you indicated, that it would not, the value of that voucher
would not keep up with healthcare costs and so more would come
out of pocket of seniors and they would lose the health
security that they currently have.
Ms. Castor. OK. Doctor?
Mr. Margolis. I believe it is important for Congress to
assure health security for seniors. My apolitical answer, which
is very hard to do here in Washington, I am sure, is to say
this is about patients and patient care and that you should----
Ms. Castor. So yes or no? Turn Medicare into a voucher
under the Republican budget?
Mr. Margolis [continuing]. Support integrated care and
coordinated care system development whether it is though that
program or not.
Ms. Castor. Did you review the Republican budget proposal
that privatizes----
Mr. Margolis. No, ma'am, I did not review it.
Ms. Castor. OK. Ms. Gold?
Ms. Gold. We don't generally take positions on legislation.
We let you guys do that. But there are a number of technical
questions and issues that have been raised about those plans,
about the cost shifting that would happen to Medicare
beneficiaries that are important questions to answer before any
change to a very popular program were made.
Ms. Castor. OK. Mr. Kaplan, yes or no?
Mr. Kaplan. I believe that the idea of using a voucher-type
system, which is very akin to what is being done in the
Medicare Advantage space already, is a good idea.
Ms. Castor. OK. That Republican Paul Ryan budget also
included provisions to repeal the Affordable Care Act including
the important reforms to Medicare--the closing of Medicare Part
D coverage gap, known as the donut hole, the preventive
services that we talked about earlier that are such a great
benefit to many of my neighbors, those annual wellness exams,
and important Medicare fraud prevention provisions.
Do you support the repeal of those provisions that have
improved Medicare? We will start on this side. Mr. Kaplan, yes
or no, because my time has run out.
Mr. Kaplan. I can't give a wholesale answer.
Ms. Castor. Just yes or no real quick, because my time has
run out.
Mr. Kaplan. Yes or no. The answer----
Ms. Castor. You support repeal of those important reforms
in Medicare that are included in the Republican budget, or not?
Mr. Kaplan. I believe that are parts of ACA that should be
repealed.
Ms. Castor. Ms. Gold?
Ms. Gold. I think beneficiaries would be pretty upset if
they were repealed.
Ms. Castor. Doctor?
Mr. Margolis. I think protections for seniors are
important.
Ms. Castor. Mr. Baker?
Mr. Baker. Those protections need to be continued and be in
place.
Mr. Holtz-Eakin. I would answer differently, depending on
the provision.
Ms. Castor. Thank you all very much.
Mr. Pitts. The Chair thanks the gentlelady. The Chair
recognizes the gentleman, the chair emeritus from Texas, Mr.
Barton, for 5 minutes for questions.
Mr. Barton. Mr. Chairman, I arrived late and didn't get to
hear their testimony, so I don't have questions. I appreciate
the opportunity, though.
Mr. Pitts. The Chair now recognizes the gentlelady form
Illinois, Ms. Schakowsky, 5 minutes for questions.
Ms. Schakowsky. I just wanted to make the point that I
think Representative Castor was getting at too, just to remind
my colleagues who are now complaining about cuts to Medicare in
the Affordable Care Act, these were the same cuts that were
included in the Ryan budget, but instead of strengthening
Medicare, the Republicans wanted to give tax breaks to
millionaires.
A couple of questions. The implication by my colleague, Dr.
Burgess, was that changes that would eliminate and narrow
networks are caused by the Affordable Care Act, and I am just
wondering, Mr. Baker or Ms. Gold, in your research, I know with
Part D it is important to check every year to make sure that
the formulary is the same. With Medicare Advantage, aren't
changes likely in the network or something prior to the
Affordable Care Act as well?
Mr. Baker. Yes. I think there is a lot of volatility in
this private marketplace, in this private Medicare Advantage
marketplace, as well as in the Part D marketplace. So every
year we are very clear with beneficiaries that if they are in
the Medicare Advantage plan, if they have a Part D plan, they
need to check that coverage because the formularies, which are
the list of covered drugs, change every year and provider
networks change every year, and it is not just the plan that
drives changes in provider networks; providers also decide to
leave the network or to no longer be involved----
Ms. Schakowsky. So this is not new to----
Mr. Baker. No, this is an inherent part of the Medicare
Advantage plan that has been around since the Medicare Plus
Choice program in the mid-1980s and even before. So this is an
ongoing issue. This kind of instability, if you will, is
inherent and it is a part of the risks of the Medicare
Advantage plan that go along with some of the benefits that we
have talked about as well.
Ms. Schakowsky. Thank you.
Also, Ms. Gold, Mr. Holtz-Eakin said something about sort
of the precarious future of Medicare and funding problems. I
wonder if you could talk about the effect on solvency that the
Affordable Care Act has had on Medicare. Do you have that?
Ms. Gold. I can try.
Ms. Schakowsky. OK. Or maybe Mr. Baker would have more----
Ms. Gold. Yes, maybe. Go ahead.
Mr. Baker. I think we noted earlier that two effects have
occurred. One is that, as I was responding to Mr. Dingell's
comment, that there is a longer period of solvency of the Part
A trust fund, and to the extent that that has been looked at
through the years as a bellwether for the health of the
Medicare program, we are in one of the best places we have ever
been. And secondly, something that has inured to the benefit of
all people with Medicare is a stable Part B premium. Medicare
costs are at historically low growth rates right now.
Ms. Schakowsky. And that is what you had said too, Ms.
Gold, right, that rates are down?
Mr. Baker. Right, and so everyone, all of the people with
Medicare are seeing the benefits of that cost containment in
the ACA and other cost containment efforts that have occurred
both in private plans as well as in the government-run Medicare
program.
Ms. Schakowsky. I also wanted to talk about low-income
seniors. Medicare provides cost-sharing protections for low-
income seniors through the Medicare Savings Program, or the
MSP. I am wondering, if we are truly concerned about
protections for low-income beneficiaries rather than paying
more than Medicare to the Medicare Advantage plans, wouldn't it
be better to invest additional resources in the Medicare
Savings Program, improving outreach, enrollment and coverage,
etc.?
Mr. Baker. The short answer to that is yes. I mean, we are
very concerned. Our biggest problem on our help line is folks
that can't afford their coverage, whether they are in the
original Medicare program or in the Medicare Advantage program,
and Medicare savings programs, as you say, are programs that
help lower income above Medicaid income levels but lower-income
folks. Fifty percent of people with Medicare have incomes under
$22,500 a year, and many of them are struggling to afford
coverage as well as dental work and other things that aren't
covered by Medicare. So it is strengthening those Medicare
savings programs or subsidy programs, particularly if we are
looking at the SGR and doing that simultaneously.
Ms. Schakowsky. Well, that I wanted to ask you about. We
are certainly looking at the SGR. We would like to permanently
repeal it, etc. But the qualified individual program which pays
beneficiary Part B premiums is set to expire at the end of the
year. So don't you think at the same time as we deal with the
SGR, we ought to deal with that?
Mr. Baker. I think it is imperative that that program be
continued and it be continued to be dealt with with the SGR and
continued and reauthorized, yes.
Ms. Schakowsky. Thank you very much. I yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from Illinois, Mr. Shimkus, 5 minutes
for questions.
Mr. Shimkus. Thank you, Mr. Chairman.
Thanks for being here. Sorry I had to excuse myself during
your testimony.
A couple points. One is, I, like myself, another member, a
handful of staffers went down to make sure we were enrolled in
our new healthcare plan because we couldn't get confirmation.
Fortunately, I got confirmation but I am finding out like
everybody else is, I have less coverage at higher cost, and the
real concern is, and exhibited by my constituents on Medicare
Advantage, we are going to see the same thing occur in Medicare
Advantage. And so I think this is really a timely hearing
because it is just like everything else in this new movement of
health care is, everybody is going to get less coverage and
higher costs no matter who you are or where you are in this
country because of these reforms.
I was here in committee when Secretary Sebelius I guess 2
years ago affirmed the fact that they double-counted the $500
billion. You can just check the transcript. You can check her
testimony. It took me 5 minutes to get it out of her. But in
the end, she said we have double-counted because we have this
$500 billion of savings out of Medicare is going to go to
Obamacare and of course, we are also strengthening Medicare by
$500 billion. Having that as part of the record, how can we say
Medicare is strengthened? Doug, can we make this argument that
Medicare is now stronger than it ever has been?
Mr. Holtz-Eakin. I don't believe that the Part A trust fund
reveals anything about the futures solvency of Medicare. The
plain facts on the ground are that in recent years, the gap
between premiums and payroll taxes going in and spending going
out for the Medicare program as a whole is $300 billion. That
is a gaping cash flow deficit. We get 10,000 new beneficiaries
every day. In the absence of genuine reforms that allow people
to continue to get the care they need and deserve and do it at
a slower cost growth, this program will fall under its own
financial weight.
Mr. Shimkus. You know, my point is, numbers really matter,
and again, for the Secretary to affirm $500 billion that is
really not chump change in the big picture of healthcare costs,
I am getting comments from constituents in my district who
Medicare Advantage folks now their benefits are being reduced,
they are losing access to their preferred physicians. This is
under the current system right now. Again, back to Doug, my
question is, how much worse can this get for my seniors who opt
for Medicare Advantage?
Mr. Holtz-Eakin. Again, if the strategy for controlling
costs is this traditional one of just cutting provider
reimbursements, whether it is doctors, hospitals, MA plans, it
will backfire. We have seen again and again that that approach
without reforms, without an approach that gives you the
prevention, the coordination and the better care, Congress ends
up having to put the money back in because you haven't solved
the problem, and to not put the money back in is to deny
seniors care. That is your choice.
Mr. Shimkus. And Bob, a lot of my seniors through Medicare
Advantage have access to dialysis and the like, and I know you
have a special focus in that arena. As networks shrink,
especially in rural America, what happens to our options? What
could happen to our options?
Mr. Margolis. Well, I think you have heard that the cuts
are not advisable in the future. I must say with all due
respect to the committee, I think that the parity adjustment to
get Medicare Advantage back to fee-for-service, which was
enacted, is not the issue that should be focused on. What
should be focused on, in my view, is that we are potentially
reducing the payment for acuity of the sickest patients, which
will incent insurers and others to avoid managing sick
patients. Those are the ones that need coordination, that need
population health, that need the access to good care, and that
that is the issue that I would hope the committee will take a
serious look at, because without that, while we may or may not
have shrinking networks, and I think we will because even today
we see news reports of United and others canceling thousands of
doctors from the MA program, the real issue in my view as a
physician and as someone who cares about seniors is that the
sickest and most fragile patients that eat up all of the costs
in health care are the ones that ought to be protected, and
they ought to be protected by having appropriate acuity-
adjusted payments to insurers or directly to the physician
groups that are managing them in a way that supports better
outcomes, transparency, performance measurement, all of the
star measures are positive. Let us support quality, performance
and outcomes, and pay accordingly based on managing our sickest
seniors.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Texas, Mr. Green, 5 minutes for
questions.
Mr. Green. Thank you, Chairman Pitts and Ranking Member
Pallone for having this today, and our witnesses for taking the
time to testify.
Medicare is critical to the well-being of our Nation's
seniors and people with disabilities, many of whom have low to
moderate incomes and complex healthcare needs.
My first question is, the Affordable Care Act did extend
the life of Medicare by putting more money into Medicare, and I
would like a yes or no answer to that. Did it actually extend
the life of Medicare? And we will start with Mr. Holtz-Eakin.
Mr. Holtz-Eakin. No.
Mr. Green. It didn't?
Mr. Holtz-Eakin. No.
Mr. Baker. Yes.
Mr. Margolis. I have no knowledge of the facts.
Mr. Green. Thank you.
Ms. Gold. I don't study the trust fund.
Mr. Green. OK.
Mr. Kaplan. Same for me. I have not studied the trust fund.
Mr. Green. OK. Well, I think that we have many a difference
of opinion but I think that is acknowledged, that it did extend
the life of Medicare with the Affordable Care Act.
Mr. Baker, in your testimony you discussed changes to
Medicare Advantage under the Affordable Care Act. The ACA
included policies designed to make the Medicare Advantage
system more efficient, reduce overpayments to bring plans more
in line with traditional Medicare and enhance plan quality. Can
you elaborate on some of these improvements in managed care
under the Affordable Care Act?
Mr. Baker. Well, as I said earlier, one of the improvements
was making sure across the board that Medicare Advantage plans
are covering preventive services as well as original Medicare.
Another is the 85 percent Medical Loss Ratio so ensuring that
85 percent of every dollar, whether it is a consumer dollar or
a government dollar, to these plans is going towards medical
costs. Once again, the star ratings program and the out-of-
pocket maximum, which I think have provided important financial
protection to folks within the Medicare Advantage program, and
the star ratings have made it easier, I think, for consumers to
choose among plans. They do have, as I said, many choices in
most markets, and the problem we frequently see is folks not
being able to choose among plans so the star ratings have
helped that a bit.
Mr. Green. Well, and I know from my area, we have a really
great Medicare Advantage plan with Casey Seabolt in Houston
that actually quit taking general Medicare because they wanted
all their patients to go in. Of course, they are a great
facility.
What recommendations would you have to further improve
Medicare Advantage?
Mr. Baker. Well, I think that once again we are very
supportive of some of the good things that have come out of
Medicare Advantage. We want to make sure that there are
meaningful choices amongst plans, so really kind of
standardizing plans to the extent that that is appropriate and
possible. We would love to have more data on appeals within
plans to see where there might be problems with a particular
plan. We would like to make sure that there are better notices,
so this issue that we have been talking about with regard to
the slimming down of some of these networks, we do think that
there could be more pinpointed notices sent to consumers in the
fall. Many consumers find out about this from their doctor. It
would be nice if they found out about it from their plan in
September when they get their annual notice of change so that
they can be ready in the open enrollment period, which begins
on October 15th.
And finally, I think we need to make sure that the original
Medicare program continues to be a strong program and kind of a
base program for folks, and by that, we could help by
increasing the availability of Medi-gap policies and open
enrolled Medi-gap policies so people can switch back and forth
between the programs as necessary.
Mr. Green. We have heard that Medicare Advantage would lead
to wide changes in ACA and Medicare Advantage would lead to
widespread of the Medicare Advantage market. From your
perspective, has this been the case?
Mr. Baker. We do not see widespread disruption at this
point. We have seen some of these provider issues with
providers leaving networks. Two things there: most of the
consumers that have counseled have either chosen other plans
that continue to have those providers in their network or have
reverted to the original Medicare program where those providers
are available to them.
Mr. Green. Ms. Gold, you have researched and written
extensively about Medicare and scientific studies must meet
certain established standards for the findings to be accepted
including transparency of data methods, peer review and
confidence levels to establish the validity of the findings. As
a professional researcher, I am interested to hear your
thoughts on Mr. Kaplan's study which lacked, in my opinion, the
standards. I believe there are many questions that we need to
have answered before we can definitely say that his results
have great meaning.
Ms. Gold, would you agree that these are some of the
questions that one would want to have answered before accepting
the validity of the conclusions and the results of Mr. Kaplan's
study?
Ms. Gold. I do think, you know, usually when you have a
study, they under peer review, the methods are laid out and you
can look at it. I didn't have time to do a thorough review of
the study but both I and a colleague looked at it quickly, and
some of those details that you would want to see and which
would ordinarily be there in a peer review paper were not
there.
I think the most major part of the study that wasn't really
talked about in the testimony was the sort of finding that over
1 year, so many people live longer if they were in MA, and I
don't think anyone really, whether they are pro or con MA or
anything else, expects that that is a plausible finding. So I
think there is some real questions about the risk adjustment
and the selection of facts that are in that study. So, you
know, I think there are some questions.
Mr. Green. I know I am out of time. Thank you, Mr.
Chairman.
Mr. Pitts. Mr. Kaplan, do you want to take a moment to make
a comment?
Mr. Kaplan. Yes. So I appreciate the comments, and thank
you for the question. We did have our studies reviewed. We
actually were surprised by the findings, and that really caused
us to pause because we were so shocked by some of the data that
the data showed. We didn't have an agenda walking into this. We
wanted to figure out what it would show.
So we did have it reviewed by a number of organizations,
leading academic medical centers, because we wanted to
challenge what we were saying. I understand that Ms. Gold did
not review it or didn't have the time, and I respect that she
didn't have the time to review it to be thorough, but we went
through substantial reviews. What we said in this is that that
one finding about mortality was the one that had greatest
concern. That is why we wanted to go forward and do a
longitudinal prospective study as opposed to just looking at it
retrospectively.
But I would not throw out all the findings here. Again, we
recognize that mortality was the one that is most concerning
and no one wants to publish the fact that if you sign up for
Medicare Advantage, you have a higher probability of living
than if you sign up for Medicare fee-for-service. We did not
want to publish that, but it was a finding we found.
Ms. Gold. It wouldn't have been accepted in a journal
because your detail wasn't there. I mean, I am not saying there
may not be questions, but the detail was not in the report to
know whether in fact that was legitimate or not, and it
wouldn't have gotten through peer review.
Mr. Kaplan. As I said, we did have it reviewed. We had it
reviewed by leading academic medical centers. We did not submit
it for peer review because we wanted to get it out to the
market as quickly as possible.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes Dr. Gingrey 5 minutes for questions.
Mr. Gingrey. Mr. Chairman, thank you very much.
I will have to say that Mathematica Policy Research might
sound a little more highbrow than Boston Consulting Group, but
if any of you know anything about Boston Consulting Group, you
know it is one of the most outstanding companies in this
country, and I do know a little bit about that.
Ms. Gold, in your testimony, you suggested--I am
paraphrasing a little bit, but you suggested that the President
fulfilled his promise to our seniors when he said if you like
your healthcare plan, you can keep it, if you like your doctor,
you can keep her. And you said it is called Medicare,
suggesting, implying that if you got a notice from a Medicare
Advantage plan that you had selected that you were no longer
going to able to remain on the plan or they are going to have
to get out of the business because of the $14 billion cut, 14
percent cut per year over 10 years, something like $300
billion, it was OK because you still had Medicare. You just
diverted back into Medicare fee-for-service. I would suggest to
you that that is pretty disingenuous to say if you like your
plan, you can keep it, because you get kicked out of Medicare
Advantage and you can go to Medicare fee-for-service if you can
find a doctor.
It is clear that the Medicare Advantage program is under
attack and that these beneficiaries are beginning to feel the
effects of the over $300 billion in direct and indirect cuts
included in Obamacare, and with plan cancellation notices
already sent to, what, tens of thousands of our country's
seniors, some of the most vulnerable citizens are faced with
this uncertainty that I just talked about. Individuals are
losing coverage that they are happy with and the doctors with
which they are comfortable, and this is a tragedy. It is a
tragedy of the law, a bill that was rushed through Congress
without any serious debate, strictly partisan vote, is now
directly impacting people's lives and their personal healthcare
decisions.
Mr. Holtz-Eakin, let me ask you, would you please explain
to the committee the reality for those potentially millions of
people, seniors who lose coverage over the next few years,
especially when it comes to a reduction in financial security
and benefits?
Mr. Holtz-Eakin. I think this is a very real possibility
and something I am deeply concerned about, as you know. It is
one thing to mandate that a Medicare Advantage plan cover
certain benefits and offer those to seniors. It is another
thing for that plan to be in existence so they can take
advantage of it. And in the absence of a financial foundation,
money trumps mandates. They won't have those choices, they
won't have that care, and indeed, those who already have it,
who made that choice, will see their plans taken away from them
in violation of the promise.
Mr. Gingrey. Well, you know, the distinguished chairman
emeritus Mr. Dingell--he is not still here, had to leave--but,
you know, he made that statement in talking with Mr. Baker
about the $14 billion that was saved out of the Medicare
Advantage program, but of course, that $14 billion was not kept
in Medicare, and really, he was only presenting one side of the
balance sheet. Yes, $14 billion may have been spent on Medicare
Advantage. Whether that was a little too much is open to
question. But the savings that occurred to Medicare and we the
taxpayer because of this Medicare Advantage program that has
preventive care and all these features that traditional
Medicare fee-for-service does not have, certainly not care
coordination.
This benefit is used by seniors from all walks of life. It
is especially prevalent for the seniors, and I think you said
this earlier, Mr. Holtz-Eakin, with lower incomes. These cuts
to benefits and coverage will affect lower-income seniors more
directly than others. Is that correct?
Mr. Holtz-Eakin. Yes, about 75 percent will be experienced
by those making less than $32,000, ballpark.
Mr. Gingrey. And what will the loss of predictable annual
cost mean to these populations?
Mr. Holtz-Eakin. These are the most vulnerable of the
seniors, and this has been a program that has given them not
just the services in traditional fee-for-service but additional
services and done it in a fashion of coordinated care and high-
quality outcomes. It is a loss of their personal choice but it
is a loss from the perspective of having a viable Medicare
program for the future.
Mr. Gingrey. Thank you, Mr. Holtz-Eakin. I appreciate your
leadership on this issue.
Seniors are just now learning that the upheaval of our
health care is not limited to the individual insurance market.
That is the purpose of this hearing today. They now know that
it will affect them as well, and seniors may lose benefits. We
have heard testimony from Mr. Holtz-Eakin, from Dr. Margolis,
from Mr. Kaplan, seniors may lose benefits, they may lose
access to doctors, and be forced to pay more for their
coverage, plain and simple. And I yield back, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from Virgin Islands, Dr. Christensen,
5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman, and welcome to
our panelists this morning.
From what I have read overall, Medicare beneficiaries
should expect, in response to the question that we are
answering today, and are already experiencing improvements from
the Affordable Care Act, which have been enumerated by Chairman
Dingell, my colleague, Ms. Castor, and others, and in part,
those improvements, I think, have been made possible by the
savings that came from equalizing the reimbursements of
Medicare Advantage to those of traditional Medicare, and as a
family physician and an old fee-for-service doc, I especially
think that with the ACA reforms that the outcomes from both can
be equally beneficial to the beneficiaries.
But I represent a territory, the U.S. Virgin Islands, and
sometimes we have unique circumstances and suffer unintended
consequences. So I want to ask a question on behalf of my
colleague from Puerto Rico, and the question is to Bob
Margolis. With the revised methodology under the ACA for paying
Medicare Advantage plans using benchmarks based on fee-for-
service data, should CMS coordinate the timing of the Medicare
Advantage and fee-for-service processes? For example, in August
of this year, CMS put out the 2014 fee-for-service inpatient
rates that changed the Medicare disproportionate share payments
to hospitals, but this was after the Medicare Advantage process
for 2014 had closed in June, preventing the Medicare Advantage
plans in Puerto Rico from recovering the substantially
increased DSH payments they must now make to hospitals.
Shouldn't CMS address this lack of internal coordination for
2014 and its harm to Puerto Rico's Medicare Advantage plans and
their beneficiaries?
Mr. Margolis. Thank you, Dr. Christensen. Clearly, I am not
an expert on the rate setting but I would say that my
understanding is that Medicare Advantage base rates are set
based on the fee-for-service equivalency and that it makes very
logical sense to me that we should have all of the built-in
fee-for-service costs in the base rate when the Medicare
Advantage rates are set. So I believe that would answer or
direct an answer, and I think it is well known that CMS has for
years not calculated the fact that SGR would probably be pushed
out further so that they have not given credit to the SGR fix
each year in setting the base rates for Medicare Advantage. So
there are a variety of administrative issues I think related to
how Medicare base rates are set.
Mrs. Christensen. Thank you. I hope that answers Mr.
Pierluisi's question.
Ms. Gold, I want to ask a question. We have heard a lot
about the ACA causing spikes in premiums. While some plans have
increased costs on beneficiaries, isn't it true that overall
average premiums paid by enrollees have declined since the
Affordable Care Act was enacted? And could you elaborate a
little more on the premium changes? Premiums are not the same
across all plans. So what factors contribute to differences in
premiums among plans?
So let me just add another part of this question because of
time. Isn't it true that the more than 70 percent of
beneficiaries who are in traditional Medicare are the ones
subsidizing lower premiums for the people in Medicare
Administrative?
Ms. Gold. Taking your second question first, yes, it is
true that all beneficiaries subsidize it, plus the taxpayers, I
might add, because that covers it too.
In terms of premiums, there is a lot of reasons. Costs vary
a lot across the country, and some areas of the country are
more efficient than others and some providers are more
efficient than others. Premiums have often differed because
fee-for-service payments are different. In some areas of the
country, providers are stronger and they are able to negotiate
higher rates. So there is less money available for extra
benefits. In some areas of the country, some plans decide to
give it back in less cost sharing at point of service rather
than lower the premiums. So there is a lot of reasons things
differ.
And I should add, you know, this fight between doctors and
health plans has a long history that goes back years, and it is
attention. You are trying to get the most you can out of the
system, and the best thing the policymakers can do, I think,
and Congress is to set good standards and say we want to buy
quality, we want to buy value, and to reinforce that. I think
the stars do start to do that, and getting those rights and
figuring out across both programs, both Medicare Advantage and
Fred Fox, how to make care better for beneficiaries because I
don't think that care is as good as it could be for Medicare
beneficiaries no matter what you are in, and there is a lot of
variation across plans in what they are doing, which is not
even all their fault. A lot of it has to do with the providers
in different areas and how willing they are to get together and
how fragmented they are, and especially for beneficiaries who
have chronic illness, they need providers who talk to each
other, and that is hard to change, and the plans are dealing
with that and we are dealing with that because otherwise the
beneficiary gets caught with the bill and the costs go up.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes
for questioning.
Mr. Cassidy. Yes. Thank you. I thought I was a ways after.
Ms. Gold, you sound like an advocate for MA plans because
you are the one who is saying that there should be greater
coordination of care.
And I am going to go to you, Dr. Margolis, because as a doc
speaking to a doc, I thought your testimony was most kind of
about what the patient's experience is as opposed to what the
economists might say.
But Ms. Gold, just to point out, when you say that premiums
will be lower in 2014 relative to 2010, that is because the
market is actually offering lower-cost premiums with higher
deductibles or allowing people to take their choice and
therefore they are choosing a lower cost. It is not a function
of the--that is what it is a function of.
Ms. Gold. No, I don't believe so. Partly, we don't have
good data on the other kinds of cost sharing but I don't
believe that there is evidence yet that that is why that has
happened.
Mr. Cassidy. Common sense would suggest that. I will just
say that. Because when people are voting with their pocketbook,
they typically vote for a lower-cost plan.
Ms. Gold. Well----
Mr. Cassidy. And I am sorry, I have limited time.
Dr. Margolis, we have a controversy here. We have a
controversy between Mr. Kaplan and Ms. Gold that says that they
are not sure that there is improved quality data with MA plans.
Your testimony is excellent. My gosh, when you show that graph
of MA plans versus fee-for-service and the readmission rate is
so much lower, number of hospital days, etc., that is just
proof of what you are describing as an increased model of
coordinated care. Fair statement?
Mr. Margolis. Well, thank you for that compliment, sir. I
think that there are within the written testimony things that
are very evident. First of all, I am a high promoter of
transparency of quality results and payment related to quality,
so I recognize the star program as a very good step forward.
I wish there was a similar program in fee-for-service
Medicare so we would have some evidence of whether Medicare
fee-for-service is creating----
Mr. Cassidy. So let me emphasize, though, because I am a
liver doctor, I take care of special needs patients like
cirrhotics. You mentioned end-stage renal disease. That is
where coordinated care is most important, and yet you describe
the cuts that go to the special needs program, correct?
Mr. Margolis. Yes, I think I have said several times, I
think the greatest threat at the moment is if we cut through
this risk adjustment rescaling the benefit of adjusting payment
based on acuity, we unfortunately then start to incentivize
what used to be called cherry picking, which is avoiding high-
cost patients. That is a disaster for seniors, and as you can
see in the written testimony, if you really manage the high-
cost seniors with comprehensive care, with palliative care,
with end-of-life care with all those kinds of integrated
programs, you can make a dramatic reduction in utilization.
Mr. Cassidy. Dr. Margolis, I am going to cut you off a
second because you have made your point, and I believe it. I
have been struck that Ms. Gold and Mr. Baker continue to say
they have not yet seen the problems that we are predicting and
yet this wonderful graph in your testimony shows that we are
just on the leading edge of these cuts and that there is
compounding cuts that go through what you have in 2019 where
there are dramatic cuts ultimately to MA plans will receive. Do
I characterize your graph correctly?
Mr. Margolis. Yes, sir. It is why I have said that
unfortunately----
Mr. Cassidy. Now, I am sorry, I just got a minute 30 left.
Now, you have been describing the dire things that could
happen to these important programs like special needs plans
based upon 2015, but if we just extrapolate that out, if we
have Mr. Baker and Ms. Gold come back in 2019, at that point is
it fair to say that more likely than not they will be able to
say at this point we have seen a negative impact of the
cumulative effect of these cuts upon patient care?
Mr. Margolis. I believe that is an accurate statement.
Mr. Cassidy. Yes, so do I. Just as a doc who is going to go
home and talk to a woman who is losing her MA plan and she is a
diabetic, and she has had this wraparound service that has been
able to help her so tremendously.
Mr. Holtz-Eakin, can you just lay to rest this myth that
the ACA actually prolonged the life of the Medicare trust fund?
Mr. Holtz-Eakin. As I said, there are no real resources in
that trust fund. There is no way to pay a Medicare doctor's
bill out of that trust fund. All the money that flows into it
flows right out. The Treasury has spent every dime of it, and
it is gone.
Mr. Cassidy. And so when Mr. Dingell or Mr. Green suggest
that we have actually prolonged the life through the ACA and
you flatly say no, with your credentials, you just totally
dispute that?
Mr. Holtz-Eakin. I have testified numerous times as CBO
Director and in the years since about the fiction of government
trust funds actually being able to pay any bills, and it is
just a fiction.
Mr. Cassidy. I yield back. Thank you.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman, Mr. Sarbanes, for 5 minutes for
questions.
Mr. Sarbanes. Thank you, Mr. Chairman. I appreciate the
testimony of the panel.
Congressman Gingrey said something earlier, which I wanted
to respond to. He said that seniors are now learning that the
ACA is going to cause them harm. I don't think seniors are
learning that. I think seniors are being told that by fear-
mongering members of the other party who don't like the ACA,
and I think that if seniors look carefully at their experience
over the last couple of years, a period in which the positive
impact of the ACA has begun to be felt, they will conclude that
in fact the ACA is benefiting them. You look at the closing of
the donut hole, you look at the new coverage of certain kinds
of preventive care services, screening and other care services,
annual wellness visits where copayments have been eliminated,
you look at the incentive structures that have been put in
place to help improve management of care and chronic conditions
in a more sensible way within the traditional Medicare fee-for-
service context as well as obviously within the MA context,
there is just item after item of improvements which are there
because of the Affordable Care Act, which are making the
Medicare plan and Medicare coverage more robust for our
seniors. So it is just wrong to suggest that this is going to
be harmful to the senior population.
In a sense, this hearing is titled ``What beneficiaries
should expect under the President's healthcare plan, Medicare
Advantage,'' and I think they can expect good things. Everybody
here generally is saying good things about the Medicare
Advantage program. That is not the dispute we have. It is
whether the Affordable Care Act is having a negative impact on
what 29 percent of Medicare beneficiaries have access to or a
positive impact. So when Mr. Baker and Ms. Gold say good things
about the Medicare Advantage program, which they have, that is
not somehow a contradiction on the other statements and
testimony they are offering here. I think it is very
consistent. It is just that you believe, in contrast to the
other witnesses here, that the Affordable Care Act is actually
strengthening and improving Medicare Advantage.
My understanding, Mr. Baker, is that the premium that was
offered initially to Medicare Advantage plans, which is, I
think, 114 percent against what the fee-for-service rate is,
was done because the government wanted to incentivize the
market and the private health insurance industry to come in and
innovate and was successful in doing that. If you have 29
percent of beneficiaries that are now in those plans, it shows
that that has happened. But along the way, because of good,
rigorous analysis, we discovered that that premium was no
longer justified, and in fact was going to some things that
really ended up being a waste from the standpoint of the
Medicare program. Can you just speak--I have used up most of my
time here--but can you just talk again about two or three of
the things that you think the Affordable Care Act has done to
improve the Medicare Advantage program, which I think all of us
want to see remain strong?
Mr. Baker. I think, you know, three main things. One is the
Medical Loss Ratio making sure most of the money that goes to--
85 percent goes to medical care. I think, two, closure of the
donut hole and the addition of preventive care services. I
would also add, and I haven't talked about this before, but the
Affordable Care Act does set up a program to enhance
coordinated care in the fee-for-service traditional Medicare
program through accountable care organizations and through
other mechanisms as well as, I think, strengthen Medicare
Advantage-like programs in many States that are partnering with
the Federal Government with regard to coordinated care for dual
eligibles, people eligible for both Medicaid and Medicare, and
that is an ACA-generated program that does have some promise.
It needs to be monitored but it looks like it has some promise.
Mr. Sarbanes. Thank you.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes
for questions.
Mr. Griffith. Thank you very much, Mr. Chairman.
I want to highlight a real-life example. My 83-year-old
mother reports that her rates have risen for Medicare Advantage
plan. In order for her to keep the policy that she has and
likes, she is now paying higher rates. When Secretary Sebelius
was here in April, she claimed Medicare Advantage rates were
decreasing nationwide. So I did a survey in my district, and we
found that more had rates going up, not a huge amount. As Mr.
Baker testified, the biggest group, or a bigger group, was
those who stayed about the same. There were a couple of folks
who reported that their rates had gone down.
I am just wondering, Mr. Holtz-Eakin, is this the case from
your perspective nationwide that the Medicare Advantage rates
are going down, as Secretary Sebelius testified earlier this
year?
Mr. Holtz-Eakin. We can get back to you with the data but I
don't think those are the facts, but I would emphasize that
there are big differences across counties, regions, States in
the United States.
Mr. Griffith. And let me go to that point because I had
some curiosity as to whether that was one of the reasons was
that I represent a very rural district where it takes hours
sometimes to get to the nearest hospital, depending on where
you are located, particularly since as a result of Obamacare
and the cuts to Medicare we lost a hospital in one of my most
rural counties a few months back. That was two of their top
three reasons for why they were closing the hospital. Do you
find that that is more likely to be a problem in rural areas
where the rates are going up as opposed to more urban areas?
Mr. Holtz-Eakin. Well, it is much harder to, you know,
narrow networks, which is one of the ways to control costs in a
rural setting because you don't have many choices, so they
don't have the option to do that.
Mr. Griffith. Yes, and in that particular county, they had
one choice and now they have to drive a fairly--depending on
what part of the county you live in, a fairly good distance to
get to the next choice where they also only have one choice
depending on what direction they go in. I do appreciate that.
Dr. Margolis, I ask you a rural question to in that you
were talking about the health care and Dr. Cassidy, who I
respect very much, showed the chart from your testimony and how
the cuts are coming, and you indicated earlier in your
testimony that is going to limit access for some folks. Is that
going to be far more worse in the rural districts like mine?
Mr. Margolis. I think that it is predictable that cuts will
affect rural areas where there are fewer choices rather than
the urban areas where there is more competition but I can't say
that I have evidence to support that.
Mr. Griffith. But common sense would lead us to that
conclusion, would it not?
Mr. Margolis. Yes.
Mr. Griffith. Ms. Gold, do you want to disagree?
Ms. Gold. Yes, because the ACA has the lowest payment
counties actually benefiting. In some of the rural counties,
they are going to continue to have 115 percent of fee-for-
service. So I don't think it is payment in rural areas. I
agree, there is a lot of problems in rural areas with managed
care and getting it set up but I don't think it is the payment
changes per se that are causing the problem.
Mr. Griffith. So you would disagree with the folks who just
had to close the hospital in Lee County, Virginia, and you
would tell them that were mistaken in looking at their numbers?
Ms. Gold. No, I can say that they have a real problem but
it is not the ACA.
Mr. Griffith. Well, unfortunately, those were two of the
three things that they listed as the problem. The other one was
the war on coal, in essence, the downgrading of the economy in
our region also responsible to this administration.
But the other two things they listed were the ACA and the
cuts to Medicare, so two out of the top three have hurt my
people, and obviously I am very concerned about it and now I
think it is going to affect perhaps the elderly also
disproportionately represented in the rural areas of my
district.
Mr. Holtz-Eakin, in that regard, you indicated that we
shouldn't be looking at these Medicare Advantage rates based on
2013 but we should be looking to the future. Can you explain
that more fully?
Mr. Holtz-Eakin. Well, I am concerned that the current
experience has been amassed, as the Chair mentioned at the
outset, by the demonstration program, the Medicare stars
demonstration program, which I will just take this opportunity
to say not all MA plans are uniformly wonderful. It is a good
idea to have a stars program to rate them. The demonstration
program is not a good program. It does not reward good
performance, and it needs to be reformed so that it actually
does. But they plowed $8 billion in and disguised the genuine
financial future of Medicare Advantage for the near term.
Mr. Griffith. And I appreciate that.
And Mr. Chairman, with that, I yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from New York, Mr. Engel, 5 minutes
for questions.
Mr. Engel. Thank you, Mr. Chairman, and thank you, Mr.
Pallone, for having this hearing today.
You know, I have been listening to my Republican colleagues
lamenting the fact that healthcare costs, they say, are going
up. They claim that the ACA is causing this to happen, although
it is not true, and yet when we identify savings and cost, then
they conversely say how terrible it. Well, you really just
can't have it both ways.
In 2009, prior to the passage of the ACA, the rates paid to
Medicare Advantage plans exceeded that of traditional Medicare
by about 18 percent and the ACA required changes to Medicare
Advantage payment rates to better align them with the costs
associated with traditional Medicare, and these changes were
estimated by the Congressional Budget office to save over $135
billion over 10 years. So you just really can't have it both
ways. Every time we identify a way to save money, my colleagues
on the other side of the aisle say look, this is so terrible,
this is being cut, that is being cut, and then they claim that
the ACA is causing costs to rise. I mean, you just can't have
it both ways.
According to the 2010 Medicare Payment Advisory Commission
report to Congress that in 2009 Medicare spent about $14
billion more to beneficiaries enrolled in the Medicare
Advantage plans than it would have spent if they had stayed in
traditional Medicare. So I want to go along the lines of the
questions that Mr. Sarbanes did, and ask Ms. Gold, how did we
get to the point where we were paying so much for private
insurers through Medicare Advantage to provide Medicare
benefits and isn't it accurate that reforms in the ACA will
help correct the overpayment problem with Medicare Advantage
plans and play a role in extending Medicare solvency for all
beneficiaries?
Ms. Gold. Yes, I think it will have that effect.
Mr. Engel. I think it is also worth noting that all of the
cuts to Medicare that were included in the ACA were also
included in each of the Republican budget proposals for the
last 3 years. So under Republican proposals, these cuts to
Medicare Advantage will continue too.
On trust fund solvency, I want to mention the way we
measure this solvency is by the Medicare trustees' report, and
the trustees' report shows post-ACA solvency of Medicare is
extended, and I think that is important to state as well.
Mr. Baker, I know that in the past there have been concerns
about Medicare Advantage plans cherry picking and seeking to
enroll the healthiest of seniors, leaving sicker beneficiaries
enrolled in traditional Medicare. Have you seen evidence of
this practice continuing, or what steps did the ACA take to try
to stop this practice?
Mr. Baker. Well, once again, I think the provisions in the
ACA that require Medicare Advantage plans to have similar cost
sharing for benefits that are typically used by sicker
beneficiaries, and by that I mean renal dialysis, skilled
nursing facility care and chemotherapy is one of the ways that
those plans have become more attractive to those sicker
beneficiaries and are something the plans can't use to kind of
cherry-pick healthier beneficiaries over sicker beneficiaries.
I think what we see anecdotally, and it is borne out by
some of the research, is that folks typically do join Medicare
Advantage at a relatively younger and healthier age. As they
age and become more chronically or severely ill, some do
disenroll and enroll in traditional Medicare thinking that
certain treatments, certain providers are more available in the
original Medicare program. And so we do see that pattern emerge
anecdotally in our work.
Mr. Engel. Thank you, Mr. Baker. Let me ask you this
question on a different subject. In New York, we have about
2,100 physicians eliminated from United Health's Medicare
Advantage provider network and is expected to impact about
8,000 of New York seniors. This was a business decision made by
a private company and CMS is prohibited by law--I think it is
important to say that--from interfering in the payment
arrangements between private health insurance plans and
healthcare providers. But I do hope that CMS will use the
authority it has to ensure adequate provider networks are in
place for all Medicare Advantage plans to help ensure
beneficiaries have access to healthcare services.
So let me ask you, for seniors whose physicians are no
longer a part of a specific Medicare Advantage network, what
suggestions would you offer them? My understanding is that more
than 90 percent of physicians in America are willing to accept
new patients under the traditional Medicare program so is
moving to traditional Medicare an option for them right now?
Mr. Baker. Moving back to the original Medicare is an
option for them right now or moving to another Medicare
Advantage plan. It is our understanding that most of those
physicians and most of the hospitals or other providers that
have been dropped from United or other Medicare Advantage
networks are in other Medicare Advantage networks or are, as
you said, in the original Medicare program. So this happens
every year to some extent and so our advice is consistently the
same this year: look for another plan that has your provider in
it or return to the original Medicare program if that is a
better program for you overall and your provider is also
involved in that program.
Mr. Engel. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes
for questions.
Mr. Bilirakis. Thank you, Mr. Chairman, and thank you for
holding this very important hearing. I thank the panel for your
testimony as well.
Mr. Kaplan, I was reviewing your report about how Medicare
Advantage provides better outcomes and greater savings than
traditional Medicare. Why does capitated MA produce such
dramatically better results?
Mr. Kaplan. I think there are probably two or maybe three
things to take away that I think drive that, so one is the
alignment of incentives, so in a capitated world, I think we
all understand that the incentives are aligned between those
who pay for the health care and those who provide the health
care. So with that alignment, things tend to be more productive
in how they perform.
The second point is that because of that alignment, what
happens is that there is a huge investment in preventive care,
so when they have the same goals and they are working towards
the same, they are going to try to avoid these acute
interventions to fix something that has gone dramatically wrong
so they work with the member or the patient to try to manage
them through it.
And the third point I really want to emphasize, which is
what Dr. Margolis said, which is the issue around many of these
members become very sick with time, age as well as where they
are socioeconomically, and when they are, of the sickest
portion or the 5 percent that drives 52 percent of the costs
that require even greater intervention and greater coordination
and so when these ideas of coordinating care and aligning
incentives are very important, in all aspects of health care,
it is extremely important towards the more chronically sick
individuals.
Mr. Bilirakis. Thank you very much.
Mr. Holtz-Eakin, in the last Congress, about 40 percent of
the seniors in my district had Medicare Advantage plans. So
they love their plans, and it is very popular in my area. Of
course, again, they like their plans. Back in 2010, CMS's Chief
Actuary did a report on the impact of Obamacare to Medicare
Advantage. He wrote, and I quote, ``We estimate that in
2017''--I know you touched on this, but elaborate, please--``We
estimate that in 2017 when the MA provisions will be fully
phased in, enrollment in Medicare Advantage plans will be lower
by about 50 percent.'' Does this track with your own analysis
of these cuts?
Mr. Holtz-Eakin. Absolutely. As you have heard today,
Medicare Advantage is a high-quality program. It is very
popular. In your district, it is even more popular than
nationwide. The senior population is rising, 10,000 new
beneficiaries every day. One would expect that if nothing else
changed, you would see more enrollment, a lot more enrollment;
we are going to see less. What has changed is the financial
foundation. The cuts under MA are going to make it impossible
for plans to survive, and those that survive will have to
change their networks and their benefits and their cost sharing
in ways that seniors will find undesirable. The net result is
going to be less availability of Medicare Advantage.
Mr. Bilirakis. Thank you. Next question for you, sir. Some
Democrats have been pushing the Accountable Care
Organizations--ACOs--as a model for better care coordination
and better cost savings. Doesn't Medicare Advantage promote the
same concept with a proven track record of better outcomes and
cost containment?
Mr. Holtz-Eakin. MA has a track record, and it is by and
large a high-quality track record, as I said earlier. Not every
MA plan is created equal but it has a track record. ACOs are a
concept at this point and unproven, and there is one big
difference: seniors choose their MA plan, seniors are assigned
to their ACO, and they have no choice, and that is the
significant difference in the two concepts.
Mr. Bilirakis. Thank you very much. I yield back, Mr.
Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from North Carolina, Mrs. Ellmers, 5
minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our
panel for being here on this issue.
Surveying the 2nd District of North Carolina, I have been
hearing since the rollout of Obamacare that my constituents who
are losing their Medicare Advantage are very, very concerned
about this issue, as you can imagine, and it is showing in
North Carolina that the cuts to benefits for seniors in
Medicare Advantage are over $2,000 per beneficiary. Now that we
are seeing this play out, the things that I am hearing from my
constituents are that they are losing their access to care to
their physicians, the cost is going up, and again, as you can
imagine, they are very, very concerned about this issue.
To Mr. Holtz-Eakin, who is going to be most affected by
these Medicare Advantage cuts? Which sector of population of
our seniors? Because I keep hearing over and over again that it
is helping our chronically ill patients who have this coverage
and this is a better plan for them. Is that not who we are
harming?
Mr. Holtz-Eakin. This is a better plan for those with
multiple chronic diseases in particular that need carefully
coordinated care. They are typically lower income. There are
typically more minority participants in MA. That is the
population that will be affected, no question about it.
Mrs. Ellmers. Now, can you identify some of the actual
tangible benefits? I know you talked about coordination of care
and items like that. Are there any more specifics that we can
hear so that we all have a better understanding of what we are
actually losing?
Mr. Holtz-Eakin. I will cede to the greater wisdom of Mr.
Margolis and let him go first.
Mrs. Ellmers. Dr. Margolis, would you--and I actually have
another question for you, Dr. Margolis, on that issue. You
know, you had identified quite correctly that we really need to
be talking about taking care of those patients who are at the
end of life, the ones who--we know those are where the dollars
are really being spent. How do you feel about the IPAP,
Independent Payment Advisory Board? That is going to come into
play there, don't you believe?
Mr. Margolis. Yes, ma'am, I certainly do not think that
organizations like that should make decisions about individual
patient care, on the one hand. And let me just say relative to
that very sensitive topic: almost nobody wants to die in a
hospital----
Mrs. Ellmers. Thank you.
Mr. Margolis [continuing]. If they have support at home,
and with coordinated care, integrated programs, spiritual
counseling, palliative care, pain management and 24-hour access
to caregivers, you can avoid almost everybody having that
unfortunate event in their family. That is a big opportunity,
and let us support special needs programs, the dually eligible,
and move towards Medicare Advantage much more aggressively.
Mrs. Ellmers. I appreciate those comments, and that is
exactly why I am as concerned about this issue as you are.
And Ms. Gold, I just have to ask you, yes or no, isn't that
what you identified a few moments ago when you said that you
thought coordination of care could be better served under
another plan and under Affordable Care Act that that actually
happens?
Ms. Gold. I think there is a lot of problems with getting
coordinated care.
Mrs. Ellmers. But doesn't Medicare Advantage actually do
that?
Ms. Gold. No, only some plans do it. It has the potential--
--
Mrs. Ellmers. No, I didn't----
Ms. Gold [continuing]. But it doesn't have the reality----
Mrs. Ellmers. Clarification here. I did not say that every
Medicare Advantage plan, but I did say that Medicare Advantage
plans offer these benefits. Is that yes or no?
Ms. Gold. Yes.
Mrs. Ellmers. Thank you. And just to finish out, we have
got about a minute, and this question is actually to Mr. Holtz-
Eakin and to Mr. Kaplan.
We have heard the bipartisan concerns here, and we want to
make sure that we take care of our seniors, but we can see over
and over again the Affordable Care Act is so negatively
affecting our seniors with their Medicare Advantage plans. Just
coming from a completely bipartisan perspective, what can we do
now moving forward? What would you like to see in Medicare
Advantage that we can move to that we can actually make a
difference? Because we are going to have to make changes in
Medicare, yes, and I would like to know from both of you what
your thoughts are on what we need to do in Medicare so that we
can make it better for our seniors.
Mr. Holtz-Eakin. Well, I think it is very important that we
have a sustainable social safety net for our seniors. Medicare
needs to be a different program in the future both financially
and because the care that seniors need is different than when
Medicare was founded. Medicare Advantage is a great
steppingstone to that future. It is not the end but it is a
great steppingstone. It needs to be preserved, not wither on
the vine in the next 5 years.
Mrs. Ellmers. But we need that financial backing.
Mr. Holtz-Eakin. And the near-term thing would be this risk
adjustment issue that Dr. Margolis has mentioned. That is a
very serious concern in terms of the funding.
Mrs. Ellmers. Wonderful. And Mr. Kaplan, very quickly, if
you can add to that.
Mr. Kaplan. My simple answer is that this public-private
partnership has been very successful and therefore, in my mind,
we should invest in that and make that better as opposed to
cutting it back.
Mrs. Ellmers. Thank you so much. Thank you to all of you,
and thank you to the chairman. I went over my time, so thank
you for allowing me to do so.
Mr. Pitts. The Chair thanks the gentlelady. That concludes
our first round of questions. We will go to one follow-up per
side, and Dr. Burgess will begin with 5 minutes of follow-up.
Mr. Burgess. Dr. Holtz-Eakin, I just want to follow up on
some stuff we were talking about earlier in the first round. It
appears in Washington today there is a crisis in confidence.
The President has sold the Affordable Care Act on just a raft
of false promises. You can keep your plan--false. You can keep
your doctor--false. These are broken promises and these in fact
are the opportunity costs that Americans are paying for the
Affordable Care Act.
There was a promise made to seniors as well. The promise
was that we are going to use your Medicare dollars as a piggy
bank to fund the Affordable Care Act, and in doing that, we
will improve Medicare and allow seniors to keep their doctors
if they liked. So do you have an opinion as to whether or not
this is yet another broken promise?
Mr. Holtz-Eakin. It is.
Mr. Burgess. And is it fixable?
Mr. Holtz-Eakin. It is fixable in Medicare Advantage. I
don't believe fee-for-service Medicare is fixable, it is the
problem, so the focus should be on fixing Medicare Advantage in
the ways that we described earlier, and----
Mr. Burgess. But----
Mr. Holtz-Eakin [continuing]. Promises are just that: they
are promises. They are, you know, if you like your individual
policy, you can keep it, but the regulations and the funding
are at odds with the promise. The promise can't be held true.
Mr. Burgess. So fixing it would involve alteration in the
funding?
Mr. Holtz-Eakin. Absolutely.
Mr. Burgess. And at present, do you see any way or any
mechanism by which that could happen? Is there anything to give
you optimism that that funding in fact could be restored?
Mr. Holtz-Eakin. Under current law, it won't happen. We
need to change.
Mr. Burgess. Let me ask you this. I wasn't here in 1988 and
1989. I don't know if you were involved.
Mr. Holtz-Eakin. I am old, yes.
Mr. Burgess. But there was a--Dan Rostenkowski, the
Democrat chairman of the Ways and Mean Committee, put forward a
catastrophic care program. He was very proud of it. It passed
the Congress, a bipartisan vote, as I recall. They went home
all very satisfied with what they had done. And then something
odd happened. People rejected the law that was passed, and they
rejected it largely because in a similar way, it sort of moving
funding around in a way that seniors thought would be
deleterious to their well-being. So then do you remember what
happened the spring after that?
Mr. Holtz-Eakin. After they got the bill and after they
chased him with the umbrellas, they repealed the law.
Mr. Burgess. So there is a mechanism by which this problem
could be fixed also if we follow the 1989 repeal as precedent?
Mr. Holtz-Eakin. There is no question this is fixable. It
requires the Congress to act and the President to sign.
Mr. Burgess. And it may require the people with umbrellas
chasing the chairman of the Ways and Means Committee down the
street.
Mr. Holtz-Eakin. No comment.
Mr. Burgess. No comment.
You know, I do have to just address the issue or ask, I
mean, here we have all these experts in front of us. We get
reports that the cost in Medicare has come down. In fact, we
are going to get by the end of this week, I think the
Congressional Budget Office is going to give us a projection on
the proposed cut in the Sustainable Growth Rate formula, which
is likely to be less than what everyone was anticipating. So
that is good news. It may improve the score for repealing it.
A lot of opinions out there as to why this cost reduction
is occurring. Of course, the administration in USA Today 2
weeks ago wanted to take credit for it and say it is all the
Affordable Care Act. I don't know that is has really had time.
Certainly the recession is playing a role but I don't know if
that is the entirety of it. We are here just literally just 10
years passed the signing of the Medicare Modernization Act with
the provision of Medicare Advantage and the Medicare
prescription drug benefit, and if we really do believe that it
is better to a stitch in time saves nine and it is better to
treat early before a disease gets well established, perhaps we
are seeing some benefit from passing the Medicare Modernization
Act. Do any of you have an opinion as to whether or not that
may be playing a role in these lowered costs? Yes, sir.
Mr. Holtz-Eakin. I don't know how much of the current
slowdown in health spending growth we can attribute to
prescription drug therapies but we know the CBO and others have
found that the Part D program has reduced costs elsewhere in
Medicare, and that has been an important part of the change in
the cost structure of Medicare. It has also been an important
part of the structure of the entitlement. The Part D program
which will have its 10th anniversary on Sunday is probably our
most successful entitlement, and we should try to model every
reform we can as closely to that as possible.
Mr. Burgess. And that was actually constructed to be more
like insurance and less like entitlement, if I recall those
discussions back in the midst of time 10 years ago.
I thank everyone on the panel. It has been very
informative. I know it has been a long morning, and Mr.
Chairman, I will yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the ranking member, Mr. Pallone, 5 minutes for
follow-up.
Mr. Pallone. Thank you, Mr. Chairman.
I just wanted to say--I am going to ask my question of Mr.
Baker but I just wanted to say with regard to Mr. Holtz-Eakin's
testimony with regard to ACOs, I just disagree. You know, with
ACOs and traditional Medicare, seniors have the ultimate
choice. I mean, they can see any provider they want. They are
not locked in for a year like they are with an MA plan. That is
just my opinion. When I heard you talk about ACOs, I just
wanted to express my view, which is that they are not locked
in. They can choose whoever they want with ACOs in a
traditional Medicare plan.
Mr. Baker, I just wanted to ask you about how Medicare
Advantage can be improved. I think all of us here today agree
that the Medicare Advantage program is a crucial alternative to
traditional Medicare, especially for individuals with complex
healthcare needs. But in your opinion, based on your
organization's work over the years in assisting Medicare
beneficiaries, what recommendations do you have for how the
Medicare Advantage program could be improved for beneficiaries?
Mr. Baker. Of course. I mean, I think the promise of
managed care when it was initially put forward in the 1980s and
then mid-1990s, a big push was that it would actually save the
Federal Government money and provide coordinated care and
additional benefits to people with Medicare. I think we have
talked a lot about the advantages of Medicare Advantage but
some of that promise hasn't been met. As we have talked, some
of the plans are better than others but overall the level of
coordinated care does vary widely amongst plans. And so we
think, you know, better monitoring and oversight by the Centers
for Medicare and Medicaid Services to make sure that those
promises are kept, once again, better information about appeals
within those programs. We oversample for the complainers in my
organization. People call us when they have problems, and
consistently what we see in the Medicare Advantage plans are
problems with access to care, with utilization management or
other barriers put to a variety of care, and we work with
physicians and the plans to ease those barriers for people with
Medicare and Medicare Advantage.
So having that information publicly available about which
plans and how they are really kind of setting up maybe
unnecessary barriers to care would be helpful and enable people
to not only compare benefits but also to compare how those
benefits are administered by particular plans and making sure
that people are choosing those plans that actually are
fulfilling the promise that a lot of us have talked about with
regard to coordinated care, and I think, you know, once again,
this idea of custom tailoring stars, if you will, the stars
program, while it is good, needs to be better and that people
really want to know when you are looking at your two cars in
Consumer Reports, there is not only stars on the cars overall
but also on engine performance and on brake performance and
other kinds of performance measures. So we will get to a place
where I think we can customize those stars even more, and that
will also help folks choose between the programs.
I want to reiterate that I think the original Medicare
program or the traditional Medicare, which we have had since
1965, is the bedrock. It is something that people continually
know is there and go back to, and it has, you know, regardless
of a lot of what we have said, if you look at over the last 30
years, Medicare, the traditional Medicare program, and private
insurance have done about the same job curtailing costs, good
or bad. And so I think there is a lot of improvement that can
be made in the original Medicare but there is also a lot of
improvement that could be made in Medicare Advantage as well.
Mr. Pallone. I only have a minute left, but some people
including you have suggested we should consider establishing a
so-called Medicare Part E, which would supplement original
Medicare without beneficiaries having to pay for the overhead
and profits of private insurance plans, and it intrigues me.
Could you just elaborate a little on how you would envision
that would be structured or how it would be an improvement to
the current Medicare structure? You have a minute.
Mr. Baker. In a whole minute? I think the Commonwealth Fund
and others have put together a more comprehensive proposal on
what is called Part E Medicare, and basically what it would do
is combine Part A, Part B, Part D, prescription drug and Medi-
gap, Medicare supplemental, in a government-run program, and
this would go toe to toe with Medicare Advantage and with the
original Medicare program as it exists now. Once again, it is
an alternative. It is something that would exist alongside, and
it would allow more choice for consumers and could have a lot
of these coordinated benefits and coordinated coverage that we
have been talking about today.
So I think that it is something that I think would put
together in one place government-run program that has all of
these components that people with Medicare value and need and
could save money.
Mr. Pallone. Thank you so much. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman. The Chair thanks
all the witnesses for your testimony. This has been an
excellent hearing, very informational.
The members may have follow-up questions. We will submit
those to you in writing. We ask that you please respond
promptly. I remind members that they have 10 business days to
submit questions for the record, so they should submit their
questions by the close of business on Wednesday, December 18.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:26 p.m., the subcommittee was adjourned.]
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