[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





             KEEPING THE PROMISE: SITE-OF-SERVICE 
                   MEDICARE PAYMENT REFORMS

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 21, 2014

                               __________

                           Serial No. 113-148

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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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

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. Mike Rogers, a Representative in Congress from the State of 
  Michigan, opening statement....................................    30
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................    30
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    32
Hon. David B. McKinley, a Representative in Congress from the 
  State of West Virginia, opening statement......................    32
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   198
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................   200

                               Witnesses

Mark E. Miller, Executive Director, Medicare Payment Advisory 
  Commission.....................................................    66
    Prepared statement...........................................    68
    Answers to submitted questions...............................   201
Barbara Gage, Fellow, Engelberg Center for Health Care Reform, 
  the Brookings Institution......................................   115
    Prepared statement...........................................   118
    Answers to submitted questions...............................   216
Barry D. Brooks, Chairman, Pharmacy and Therapeutics Committee, 
  the U.S. Oncology Network......................................   131
    Prepared statement...........................................   133
    Answers to submitted questions...............................   224
Reginald W. Coopwood, President and Chief Executive Officer, 
  Regional One Health, on Behalf of the American Hospital 
  Association....................................................   146
    Prepared statement...........................................   148
    Answers to submitted questions...............................   231
Steven Landers, President and Chief Executive Officer, Visiting 
  Nurse Association Health Group.................................   162
    Prepared statement...........................................   164
    Answers to submitted questions...............................   237
Peter W. Thomas, Principal, Powers, Pyles, Sutter & Verville, 
  P.C., on Behalf of the Coaltion to Preserve Rehabilitation.....   173
    Prepared statement...........................................   175
    Answers to submitted questions...............................   240

                           Submitted Material

H.R. 2869, the Medicare Patient Access to Cancer Treatment Act of 
  2013, submitted by Mr. Pitts...................................     4
H.R. 4673, the Bundling and Coordinating Post-Acute Care Act of 
  2014, submitted by Mr. Pitts...................................     9
Letter of May 19, 2014, from Dan Weber, President and Founder, 
  Association of Mature American Citizens, to Mr. Pitts and Mr. 
  Pallone, submitted by Mr. Pitts................................    34
Statement of the American Academy of Family Physicians, dated May 
  21, 2014, submitted by Mr. Pitts...............................    35
Statement of the American Orthotic and Prosthetic Association, 
  dated May 21, 2014, submitted by Mr. Pitts.....................    38
Statement of the National Association for Home Care & Hospice, 
  dated May 21, 2014, submitted by Mr. Pitts.....................    48
Statement of the American Society of Nuclear Cardiology, et al., 
  ``Site Neutrality: A Race to the Bottom for Patients with Heart 
  Disease,'' submitted by Mr. Pitts..............................    55
Statement of the Premier healthcare alliance, dated May 21, 2014, 
  submitted by Mr. Pitts.........................................    60
Study Highlights, ``Assessment of Patient Outcomes of 
  Rehabilitative Care Provided in Inpatient Rehabilitation 
  Facilities and After Discharge,'' by Joan E. DaVanzo, et al., 
  submitted by Mr. Pallone.......................................    64
Statement of Bruce M. Gans, Chair, American Medical 
  Rehabilitation Providers Association, dated May 21, 2014, 
  submitted by Mr. Green.........................................    98

 
     KEEPING THE PROMISE: SITE-OF-SERVICE MEDICARE PAYMENT REFORMS

                              ----------                              


                        WEDNESDAY, MAY 21, 2014

                  House of Representatives,
                             Subcommittee on Health
                           Committee on Energy and Commerce
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:16 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, 
Rogers, Murphy, Lance, Cassidy, Guthrie, Bilirakis, Ellmers, 
Pallone, Schakowsky, Green, and Barrow.
    Also attending: Representative McKinley.
    Staff present: Clay Alspach, Chief Counsel, Health; Gary 
Andres, Staff Director; Mike Bloomquist, General Counsel; Matt 
Bravo, Professional Staff Member; Leighton Brown, Press 
Assistant; Noelle Clemente, Press Secretary; Brad Grantz, 
Policy Coordinator, Oversight and Investigations; Sydne 
Harwick, Legislative Clerk; Sean Hayes, Deputy Chief Counsel, 
Oversight and Investigations; Robert Horne, Professional Staff 
Member, Health; Chris Pope, Fellow, Health; Heidi Stirrup, 
Policy Coordinator, Health; Josh Trent, Professional Staff 
Member, Health; Tom Wilbur, Digital Media Advisor; Ziky 
Ababiya, Democratic Staff Assistant; Eddie Garcia, Democratic 
Professional Staff Member; Kaycee Glavich, Democratic 
Government Accountability Office Detailee; and Amy Hall, 
Democratic Senior Professional Staff Member.
    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

    Today's hearing is designed to educate members on a topic 
that has come up repeatedly in recent years: site-neutral 
payments. In two recent reports, MedPAC has addressed the 
differences in Medicare payment rates across sites of care. 
MedPAC's March 2012 report recommended that payment rates for 
certain evaluation and management services be equal, whether 
these services are provided in a hospital outpatient department 
or in a freestanding physician office.
    Currently, hospitals are reimbursed for these services 
under the Hospital Outpatient Prospective Payment System 
(HOPPS), and physicians' offices are reimbursed under the less 
generous Physician Fee Schedule.
    In its June 2013 report, MedPAC discussed equalizing 
payment rates for certain services in a hospital outpatient 
setting to those of ambulatory surgery centers (ASCs) and 
reducing the gap in payment between other services. However, 
the Commission did not make a recommendation on payment 
changes. These discussions bring up a number of important 
issues as it relates to the role that Medicare plays in our 
health care system. MedPAC has estimated that seniors could 
save hundreds of millions of dollars a year if a site-neutral 
payment system were instituted.
    In addition, MedPAC cites an urgent need to address these 
issues because services have been migrating from physicians' 
offices to the usually higher-paid outpatient department 
setting as hospital employment of physicians has increased.
    While stating the benefits of site-neutral payments and 
post-acute care (PAC) reform, MedPAC has also expressed some 
concern that these policy changes could cut access to physician 
services for low-income patients, noting that a stop-loss 
policy could protect such patients by limiting hospitals' 
losses of Medicare revenue. These policies have arisen as 
potential pay-fors for SGR reform and other health care 
reforms. As the subcommittee with the largest health 
jurisdiction of any committee in the House, we are charged with 
safeguarding the Medicare program and preserving it for future 
generations.
    As such, I and Ranking Member Pallone felt it important for 
the members of this subcommittee to hear the pros and cons of 
potential policies in this space. Two pieces of legislation are 
also before us for consideration today. Representatives Mike 
Rogers and Doris Matsui introduced H.R. 2869, a proposal that 
would require Medicare to pay for cancer services at the same 
rate regardless of the site of service. In addition, 
Representative McKinley has authored H.R. 4673, a bill that 
would combine the various post-acute care payments into one 
reimbursement payment or bundle.
    I would like to thank all of our witnesses for being here 
today to educate Members on both sides of the issue.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    Today's hearing is designed to educate Members on a topic 
that has come up repeatedly in recent years, site-neutral 
payments.
    In two recent reports, MedPAC has addressed the differences 
in Medicare payment rates across sites of care.
    MedPAC's March 2012 report recommended that payment rates 
for certain evaluation and management (E&M) services be equal, 
whether these services are provided in a hospital outpatient 
department or in a free-standing physician office.
    Currently, hospitals are reimbursed for these services 
under the Hospital Outpatient Prospective Payment System 
(HOPPS), and physicians' offices are reimbursed under the less 
generous Physician Fee Schedule.
    In its June 2013 report, MedPAC discussed equalizing 
payment rates for certain services in a hospital outpatient 
setting to those of ambulatory surgery centers (ASCs) and 
reducing the gap in payment between other services. However, 
the Commission did not make a recommendation on payment 
changes.
    These discussions bring up a number of important issues as 
it relates to the role that Medicare plays in our health care 
system.
    MedPAC has estimated that seniors could save hundreds of 
millions of dollars a year if a site neutral payment system 
were instituted.
    In addition, MedPAC cites an urgent need to address these 
issues because services have been ``migrating from physicians' 
offices to the usually higher-paid outpatient department 
setting, as hospital employment of physicians has increased.''
    While stating the benefits of site neutral payments and 
Post-Acute Care (PAC) reform, MedPAC has also expressed some 
concern that these policy changes could cut access to physician 
services for low-income patients, noting that a ``stop-loss 
policy'' could protect such patients by limiting hospitals' 
losses of Medicare revenue.
    These policies have arisen as potential payfors for SGR 
reform and other health care reforms. As the subcommittee with 
the largest health jurisdiction of any committee in the House, 
we are charged with safeguarding the Medicare program and 
preserving it for future generations.
    As such, I and Ranking Member Pallone felt it important for 
the members of this subcommittee to hear the pros and cons of 
potential policies in this space.
    Two pieces of legislation are also before us for 
consideration today. Reps. Mike Rogers and Doris Matsui 
introduced H.R. 2869, a proposal that would require Medicare to 
pay for cancer services at the same rate regardless of the site 
of service. In addition, Rep. McKinley has authored H.R. 4673, 
a bill that would combine the various Post-Acute Care payments 
into one reimbursement payment or bundle.
    I would like to thank all of our witnesses for being here 
today to educate Members on both sides of the issue.

    [H.R. 2869 and the H.R. 4673 draft follow:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. I will yield the remainder of my time to the 
gentleman from Michigan, Mr. Rogers.

  OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Rogers. Thank you, Mr. Chairman, for holding this 
important hearing on H.R. 2869, the Medicare Cancer Patient 
Protection Act.
    The United States is home to the most effective and 
successful cancer care in the world, creating an environment 
that has resulted in the best cancer survival rates across the 
globe. However, in the last 5 years, a troubling change in the 
delivery of cancer care has begun to emerge, a change that has 
been directly affecting not just the continuing rise in the 
cost of Medicare but also the ability for cancer patients to 
access treatment.
    Since 2008, community oncology clinics have seen the shift 
from physician office setting to the hospital outpatient 
department as a result of the flawed Medicare payment policies 
that reimburse hospitals at higher rates than oncology clinics 
for the exact same service.
    Due to the significant changes in Medicare payment 
policies, physician practices are suffering from serious 
financial difficulties and struggling to keep their doors open. 
These changes have serious implications on patient access, 
especially in rural areas, where radiation therapy is not 
always available through local hospitals. Patients may be 
forced to travel long distances to receive care, posing a 
considerable barrier to care for beneficiaries who require 
radiation treatment therapy daily for months at a time, and by 
the way, we have examples of those very scenarios.
    Moreover, this shift in setting for cancer treatment poses 
a threat to the solvency of Medicare as hospital consolidation 
of physician practices is driving up costs for the Medicare 
program, and more importantly, driving up cost for cancer 
patients themselves. Reimbursement should be equal for the same 
service provided to a cancer patient regardless of whether the 
service is delivered in the hospital outpatient department or a 
physician's office.
    I look forward to working with my colleagues to ensure the 
future of community cancer care is preserved, and Mr. Chairman, 
I thank you, and I thank you again for taking up and having 
this discussion on this very important issue, and I would yield 
back my time.
    Mr. Pitts. The Chair thanks the gentleman and now recognize 
the ranking member of the 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 I am glad to 
see the committee taking interest in issues of post-acute care 
reform.
    For many years, there has been a lot of discussion about 
how we move our health care system into one of quality and 
efficiency. In fact, if we are going to ensure that Medicare is 
strong for our Nation's seniors well into the future, we must 
diligently evaluate how we pay doctors and how we incentivize 
care.
    MedPAC has been reminding Congress of these issues and the 
need for action in this area for some time. Their work and 
recommendations should be a useful guide for our efforts, and I 
thank Mr. Miller for being here today to review MedPAC's 
perspectives on such reforms.
    I also welcome the witnesses on the second panel, who have 
important perspectives to offer to these topics, and thank you 
all for being here today.
    As you know, the Affordable Care Act recognized the need 
for reform in the post-acute care (PAC) setting and put in 
motion a number of initiatives that will build towards PAC 
reform. Medicare is testing a number of payment system reforms 
such as bundled payments, value-based purchasing and 
accountable care organizations that will inform and help to 
improve care and outcomes in this area.
    We know there is a lot of variation in the quality outcomes 
and costs of PAC around the country. Medicare pays 
indiscriminately for care in the PAC setting. We don't know if 
one side of care is better than another for a patient with a 
particular condition. We don't know what combination of 
services produces better outcomes or even what level of 
services is optimal for a given condition.
    Medicare spends $62 billion on post-acute care in the fee-
for-service setting in 2012. That is a big price tag, so it is 
critical we get a handle on these issues quickly. We can't 
improve the accuracy and efficiency of care if we don't know 
what we are buying, and efforts to decrease waste in the system 
will fall short of our dual goals of care delivery and payment 
reforms.
    Before we can envision a wholesale redesign of the payment 
system, however, we need more data. We do not have any common 
and comparable data across providers like skilled nursing 
facilities, home health agencies and others to determine which 
patients fare best in which settings or even what appropriate 
levels of care are for patients of varying acuity.
    So Mr. Chairman, I commend the House Ways and Means and the 
Senate Finance Committees for putting out bipartisan draft 
legislation on that issue to get the discussion started, and I 
hope to engage with these colleagues as policy proposals are 
further considered and refined, and in fact, I think you would 
agree, the House Energy and Commerce Committee should play a 
part in that conversation as we move forward.
    We also know there are efficiencies and improvements to 
payment accuracy that must be done and can be done now such as 
ensuring the current payment system is providing the right 
incentives for quality care rather than encouraging care 
delivery that maximizes profits. Our committee clearly has a 
role to play in advancing positive beneficiary-focused reforms 
related to post-acute care for Medicare beneficiaries, and I 
hope that we can continue the bipartisan tone in this area and 
work to develop solutions in the near future.
    Thank you again, Mr. Chairman, and thanks, everyone, for 
joining us today, and I look forward to continuing to 
strengthen Medicare for the future.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the vice chairman of the committee, Dr. Burgess, 5 
minutes for opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman. Thank you for the 
recognition, and special acknowledgement to a physician from 
Texas, Dr. Barry Brooks, who has joined us in the committee 
before. It is at this point in the hearing where I usually 
offer the observation that one day it is my hope that we will 
have arrayed on the witness table five physicians, who will 
tell us how much economists ought to be paid, but until that 
day, we will go with what we have got. We do have doctors on 
the second panel, and for that, I an extremely grateful.
    So we are coming up on the 50th anniversary of the 
enactment of Medicare, in fact, 49 years ago this summer. The 
practice of medicine has changed a lot since 1965. I used to 
tease my dad back then that they had only had two drugs back 
then, penicillin and cortisone, and they were interchangeable. 
He didn't think that was very funny either.
    But the practice of medicine has changed, and so has the 
Medicare benefit, and that is a good thing. Now we are asking 
themselves if the payment structures must also be modernized so 
that the dollars are spent the way they are intended, that is, 
efficiently and effectively. Payments to doctors' offices and 
hospitals are sometimes misaligned with the true cost of care. 
Sometimes the same services are provided to patients at 
significantly different rates, depending upon location, with no 
real difference in the quality or the outcome. Payments for 
patient care in inappropriate or less optimal settings, of 
course, can lead to higher long-term costs.
    I think that one of the things on this committee we must be 
careful about is that we do not create a race to the bottom. It 
is not a question of deciding what is the LD-50 of what doctors 
can survive on. The lethal dose 50 is 50 percent of what 
doctors could live on. We are not trying to ascertain the 
figure. The lowest payment is not always the most appropriate 
payment, and we should not shy away from paying for better 
outcomes.
    I would agree with the ranking member of the subcommittee 
that it is important that this committee had an important role 
to play and the jurisdiction of this committee is the 
appropriate place for having these discussions. I know I have 
done significant work on the cost drivers of dual eligibles. It 
is important for us to guard this population by ensuring we are 
exercising the jurisdiction of this committee to improve care 
in all settings.
    I thank the chairman for the recognition, and I will yield 
time to the gentleman from West Virginia, Mr. McKinley.

 OPENING STATEMENT OF HON. DAVID B. MCKINLEY, A REPRESENTATIVE 
          IN CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mr. McKinley. Thank you, Mr. Chairman and Dr. Burgess, for 
holding this hearing on H.R. 4673.
    Alarmists scare seniors by suggesting that cuts to Medicare 
are coming. We hear it all the time, all during the campaigns, 
all through sessions. I am here to say they don't have to be.
    For the past 2 years, our staff has been working with 
various stakeholders to create a program that would make 
Medicare more efficient and improve health care for seniors 
without making cuts to provider payments.
    The bill before us would do just that. This bill develops a 
model for post-acute care services, which will increase 
efficiency, encourage more choice and personalize care for 
patients, and offer significant savings to the program in the 
process. Estimates by independent experts have determined that 
this bill could save as much as 85 to 100 billion dollars. We 
are not cutting funding for Medicare. We are encouraging 
efficiency in services and programs that are more patient-
centered.
    Similar models have already been developed for primary care 
that has saved 24 percent using efficiency models. By improving 
our efficiency, we will strengthen the Medicare program without 
cuts.
    Some here today have already suggested that we need to 
study this issue further. We have had plenty of studies. In my 
4 years in Congress this issue has been hanging for 4 years, 
and we keep talking about studying it. It is time we do 
something about it. It is time to paint or get off the ladder.
    Again, thank you, Mr. Chairman, for this opportunity, and I 
yield back my time.
    Mr. Pitts. The Chair thanks the gentleman, and that 
concludes the opening statements. All members' opening 
statements will be made part of the record.
    We have two panels. Before we do that, I would ask for 
unanimous consent to include the following statements for 
today's hearing record from the AMAC, that's the Association of 
Mature American Citizens; from the AAFP, the American Academy 
of Family Physicians; the AOPA, the American Orthotics and 
Prosthetics Association; from NAHC, the National Association 
for Home Care and Hospice; and a collective cardiology letter 
on behalf of the ASES, the American Society of 
Echocardiography; the ASNC, the American Society of Nuclear 
Cardiology; and the CAA, the Cardiology Advocacy Alliance; and 
the Premier Health Care Alliance. Without objection, so 
ordered.
    [The information follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Pitts. Did you have a UC request?
    Mr. Pallone. Mr. Chairman, I would ask unanimous consent to 
include this A. Dobson/DaVanzo study titled ``Assessment of 
Patient Outcomes.''
    Mr. Pitts. Without objection, so ordered.
    [The information follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. Dr. Burgess, do you have a UC request?
    Mr. Burgess. Yes, Mr. Chairman, I ask unanimous consent 
that joint testimony of the American Society for 
Echocardiology, the American Society of Nuclear Cardiology and 
the Cardiology Advocacy Alliance be submitted for the record.
    Mr. Pitts. Without objection, so ordered.
    We have two panels before us today. On our first panel, we 
have Mr. Mark Miller, Executive Director of the Medicare 
Payment Advisory Commission. Welcome. Thank you for coming. 
Your written testimony will be made part of the record, and you 
will be recognized for 5 minutes to summarize. So at this 
point, the Chair recognizes Mr. Miller for 5 minutes.

   STATEMENT OF MARK E. MILLER, EXECUTIVE DIRECTOR, MEDICARE 
                  PAYMENT ADVISORY COMMISSION

    Mr. Miller. Chairman Pitts, Ranking Member Pallone, 
distinguished members of the committee, thank you for asking 
the Commission to testify today.
    As you know, Congress created MedPAC to advise it on 
Medicare issues, and today I have been asked to comment on 
site-neutral and other payment reforms for post-acute care in 
ambulatory settings.
    The Commission's work in all instances is guided by three 
principles: to assure that beneficiaries have access to high-
quality, coordinated care; to protect the taxpayers' dollars 
and to pay providers and plans in a way to accomplish these 
goals.
    First, some of the problems that we face. Fee-for-service 
encourages fragmented care because we pay on the basis of 
location or provider rather than the beneficiary's episodes of 
needs. Fee-for-service also encourages high volume of service. 
We know that Medicare payment rates send signals, and if they 
are set too high or constructed inconsistently across setting, 
they can result in patient selection or care patterns that 
focus on revenue rather than patient needs.
    Post-acute care has an additional issue. The clinical 
guidelines regarding when a service is needed are often poorly 
defined and it is hard to know when an episode should begin and 
when an episode should end.
    With respect to ambulatory care, the last few years of data 
shows that hospitals are aggressively purchasing physician 
practices, and the Commission is concerned that part of the 
motivation is that they can bill for the same service at a 
higher hospital payment rate resulting in more trust fund 
expenditures and higher out-of-pocket for the beneficiary but 
no change in the service provided.
    So what has the Commission's guidance been? In the short 
run, in focusing in some instances or in a lot of instances on 
fee-for-service, the Commission would set all fee-for-service 
payment rates to reflect the cost of the efficient provider. 
This protects the taxpayer and also protects beneficiaries' 
premiums that support the program. Of particularly urgent 
attention are the very high rates in home health and skilled 
nursing facility settings that have been set high for over a 
decade. The Commission would set fee-for-service payment rates 
to be the same or similar for similar patients and similar 
services. This protects the taxpayer, and again, if there is 
cost-sharing, it protects the beneficiaries' out-of-pocket.
    As part of a broader recommendation on hospitals that 
included an update, the Commission recommended setting payment 
rates for selected patients the same for long-term-care 
hospitals and acute-care hospitals and also recommended that 
payment rates for a selected set of outpatient services be set 
equal to or near the physician fee schedule.
    In order to protect the hospital's core mission, these 
services were chosen because they are frequently done in a 
physician's office, they are not part of the hospital's 
emergency standby services, and they are used by patients with 
comparable risk profiles.
    Just focusing on three services. If continued migration 
that we see in the data now, or if migration continues as we 
see in the data now, by 2021, the program will be paying $2 
billion more on an annual basis for just these three services, 
of which $500 million would be paid by the beneficiary.
    The Commission is also exploring policies to normalize 
payment rates between skilled nursing facilities and inpatient 
rehab facilities. That work as developmental and will be 
published in the June report, but I am happy to take questions 
on it.
    We have also been concerned that the payment systems are 
set to encourage patient selection. We have longstanding 
recommendations in skilled nursing facilities and home health 
settings to take down the incentives to see physical-rehab 
patient and avoid complex medical patients. We think this 
protects the beneficiary against patient selection and it 
protects providers that take the more complex patients.
    The Commission would also create policies to encourage 
coordination. We have recommended penalties for hospitals, 
skilled nursing facilities and home health agencies that have 
excessive readmission rates. This protects the beneficiary by 
encouraging care coordination and of course the taxpayer from 
paying for unnecessary care.
    In the longer run, the Commission has called on CMS to 
create pilot projects to develop various bundling payment 
strategies for acute and post-acute care and has called for the 
development and implementation of a common assessment for post-
acute care. This would allow us to consistently assess patient 
needs, to track their change in functional status and quality, 
and to move towards a unified payment system on the post-acute 
care side. Beyond fee-for-service, a well-functioning managed 
care program and initiatives like the accountable care 
organizations can also create incentives to avoid unnecessary 
volume and coordinate services for providers. The Commission 
has a broad range of guidance on each of these, and we are 
willing to take questions on that as well.
    In closing, the Commission has consistently tried to make 
policy recommendations that assure beneficiary access to 
coordinated care at a price that the taxpayer can afford.
    I appreciate your attention and I look forward to your 
questions.
    [The prepared statement of Mr. Miller follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. The Chair thanks the gentleman. I will begin the 
questioning, and recognize myself for 5 minutes for that 
purpose.
    Mr. Miller, some have proposed that post-acute care 
bundling reforms are premature and should not even be 
considered by Congress until such time as a standardized 
assessment tool is created and data collection is complete. 
Others have pointed to the fact that such perfecting of data 
collection could take a decade or more, and even then, such an 
assessment will need to be refined. Do you agree with the 
notion that Congressional consideration of bundling should only 
occur after an assessment tool has been created and sufficient 
data collected, or can both be done concurrently?
    Mr. Miller. OK. I think the Commission's view on this works 
as follows. I think there is a very strong consensus and a 
recommendation that we need a common assessment instrument. We 
think that that is a lynchpin to improving both our measurement 
and payment and organization and coordination over the long 
haul. So there is no question that should happen. We have made 
recommendations. We have given a timeline. We have talked about 
an instrument. And just for the record, we have been pushing 
for this for over a decade, so I have got to make sure that I 
say that.
    On bundling, I think the Commission believes that bundling 
is a viable option and is one that should be pursued, but there 
is a large set of technical issues that the Commission went 
back and forth on, and I can take you through some of that but 
we will see where you want to go here, and I think their view 
is that there should be experimentation, which is occurring 
now, and to see which of the models tend to jell and work best 
for both the beneficiary and the program. So I guess what I am 
saying to you is, we should be pursuing both.
    Mr. Pitts. All right. Medicare payments are a huge 
influence on the health care industry, often serving as a 
baseline for negotiations between hospitals and private 
insurance. Do private payers mimic Medicare site-of-service 
reimbursement disparities?
    Mr. Miller. OK. A couple things here. It is correct that 
you find the same phenomenon in the private sector as you find 
in Medicare where if you pay for a similar, or if you see a 
similar system or service in the hospital setting, it is 
usually paid higher by private insurance. I think there is more 
than--there is more to that than just the notion that Medicare 
does it, so too does the private sector.
    Over the last several years, the private sector and 
hospital systems have become much more consolidated and they 
are able to extract higher prices in their negotiations with 
insurers, and that certainly contributes to the higher prices 
that you see in the hospital setting versus other settings. So 
I don't think it is just simply mimicking Medicare but the same 
phenomenon is observed in the private sector.
    Mr. Pitts. Do private insurers obtain similar discounts for 
care that is provided through physician offices and ambulatory 
surgery centers?
    Mr. Miller. I am just going to use a slightly different 
word. I think what you will see in the private sector is that 
the payment rates in ambulatory centers and physician offices 
tend to be lower than the hospital. Whether those are extracted 
discounts is just sort of a terminology point. I think it is 
true that they have lower rates in ambulatory surgery centers 
and the physician's office for the same service relative to the 
hospital.
    Mr. Pitts. Have any private insurers adopted site-neutral 
payment policies similar to the recommendations that MedPAC has 
made to Congress?
    Mr. Miller. I don't have data, and, you know, really 
rigorous information on this point. What I can point you to, 
and I have certainly talked to the committee staffs about this, 
there is widespread newspaper reports where privately insured 
folks are showing up at the physician's office after a 
physician has transferred to a hospital ownership and seeing 
their cost-sharing go up, you know, significantly, and this has 
been reported on a widespread basis, and what we have heard in 
discussion, but there is not a lot of science behind this, is 
there have been some private insurers have refused to pay the 
additional facility fee for regular office visits in the 
hospital setting. So I don't want to overplay that but that is 
more anecdotal and what we are reading and hearing in 
discussion.
    Mr. Pitts. The respected journal, Health Affairs, this week 
released a study finding that hospital ownership of physician 
practices is associated with higher prices and spending. Can 
you comment on how Medicare's payment differentials might have 
spillover effects to the private sector and health system?
    Mr. Miller. Again there, I think part of what is going on, 
and I did look at that when it came along but I am sure I can 
dredge it right back up, but I think part of the explanation 
there is some of the consolidation and the ability of hospital 
systems on the private side to extract higher prices. I think 
what you are seeing both in the private and in the Medicare 
payments is this ability to arbitrage, to say if I can move a 
practice into the billing stream for the hospital side, both 
for private insurance and for Medicare, the hospital will get 
more revenue. So that certainly seems to be going on, and what 
we are concerned about is, while it is not the only reason that 
a hospital would purchase a physician practice, because there 
are other motivations for doing that, the fact that Medicare's 
payments are so much higher on the hospital side certainly 
encourages the migration, and we are seeing a fair amount of 
it.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the ranking member, Mr. Pallone, 5 minutes for 
questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    Mr. Miller, I am amazed by how much variation exists in the 
care provided in the post-acute setting. There is no uniform 
assessment of where a patient should go following a hospital 
stay. Does a patient with a hip replacement fare better in a 
skilled nursing facility or home health agency? We don't really 
know. And how much post-acute care does a typical hip 
replacement patient need? We don't really know. So given that 
the Medicare program spent $62 billion on post-acute care in 
2012, I am amazed we don't have better information about 
patient outcomes, service use or quality of care.
    So my question is, does MedPAC view this as a problem, and 
what do we do about that and how can we quickly move to a place 
where we have info to know what kind of care is being provided?
    Mr. Miller. OK. You are right. There is significant 
geographic variation, or significant variation, not even just 
geographic, even with the same marketplace and the amount of 
post-acute care. I think there is a couple issues there, the 
one that you referred to, which I will come right back, and the 
notion that it is hard to define in many instances, you know, 
the amount of post-acute care that a patient should get, when 
do you stop rehab, you know, for some----
    Mr. Pallone. I agree.
    Mr. Miller [continuing]. And where----
    Mr. Pallone. I am going to answer the question myself.
    Mr. Miller. So the Commission, as I said, a little bit in 
my opening comments, many years ago said we need a common 
assessment instrument. It took a long time, but the Congress 
then called on CMS to develop an instrument and to test it, 
which they did through the care demonstration, and that 
instrument now exists. We believe, and we have made a 
recommendation along these lines, you can take the elements 
from that instrument--doesn't have to be the whole, giant 
thing--put them into each of the current collection instruments 
that exist for SNF, home health, require one for long-term-care 
hospitals and then you will be able to sweep up that 
information across the settings and be able to start making 
judgments about does a patient have a better outcome in one 
setting versus another, what is the average resources, the very 
things you are saying, for hip replacement as the case may be. 
We laid out a 3-year process to get that information integrated 
into the collection instruments and then have a product. So 
yes, that is what we should be doing.
    Mr. Pallone. And, you know, I do think that is important to 
have but, I mean, it is always going to be individual case too, 
though, obviously.
    There have been a number of proposals to bundle payments 
for post-acute care, and the President's budget proposed to 
bundle 50 percent of PAC spending by 2019. Mr. McKinley is 
working on a bill that would bundle payments for care and pay a 
reduced rate. But how can we develop a bundled payment rate or 
develop the items that go into a bundle or develop appropriate 
risk adjustment? I mean, it is obvious if we don't have basic 
data, that is going to be difficult, so that is obviously why 
you think the data is important.
    Mr. Miller. And in some ways, this is this question that 
came up, is it an either-other type of thing, and I think the 
urgency in some of what you have laid out at the beginning 
really requires that we proceed on both tracks. So let us just 
say that there is a bundle--there is a lot of complexity in 
assembling a bundle but just for half a second let us pretend 
that we have some sense of what that is. One way that you can 
kind of mitigate against the fact that you don't have ideal 
information is, you could continue to use a fee-for-service 
model underneath a set platform, so you don't have a stinting 
incentive. In order to get paid, the person has to provide the 
services. You put a small portion of the payment, let us just 
for discussion call it 5 percent, and then you do have 
measures, and the Commission had worked with these and there 
are others out there on things like avoiding the emergency 
room, avoiding the hospital and community discharge and say OK, 
those are the three outcomes we are looking for, here is the 
block of dollars and then get providers who are willing to take 
that risk and manage the patient through that episode, and that 
is imperfect information but we are assuming that the provider 
will have tools to have more accurate information on the ground 
while the program is developing through this unified assessment 
instrument.
    Mr. Pallone. I know we are almost out of time, but could 
you just quickly----
    Mr. Miller. Sorry about that.
    Mr. Pallone [continuing]. Talk about the stinting or 
potential dangers in the bundled payment or capitated payment 
design?
    Mr. Miller. It is always an issue when you--I mean, you 
know, fee-for-service has the issues that I have raised, 
fragmentation and generation of volume. Any time you go to an 
episode, capitated, you know, whatever the case may be, you 
have the reverse problem where you create the incentive to 
under-provide. You have to either have a mechanism that 
encourages that like paying on a service basis underneath a cap 
or you have to have quality--and you have to have quality 
measures that say to the provider, you are not going to get 
paid or not get your withhold back or whatever the case may be 
unless these quality metrics are met. But it is decidedly an 
issue. It is not something to be brushed past.
    Mr. Pallone. All right. Thanks a lot.
    Thanks, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the vice chairman of the subcommittee, Dr. Burgess, 
5 minutes for questions.
    Mr. Burgess. Thank you, Mr. Chairman, and Mr. Miller, thank 
you for being here this morning.
    In the report from June of 2013, you discussed the increase 
hospital consolidation, particularly in the cardiology space. 
Has MedPAC seen this trend in other specialties?
    Mr. Miller. I am not sure I can break it down for you by 
specialty, but yes, we have seen it in other services, not just 
simply cardiology services. But yes, we have seen it in other 
services.
    Mr. Burgess. And those other services, examples of those 
would be?
    Mr. Miller. You know, certainly the E&M, you know, basic 
evaluation and management visits are shifting. I guess some of 
the ones that immediately come to mind are cardiology, 
echocardiograms. There are probably some other examples I can't 
dredge up at the moment.
    Mr. Burgess. What about clinical oncology?
    Mr. Miller. OK. So in that, you know, obviously 
understanding that there was going to be a hearing, we looked 
at it a little bit, and just before I answer, yes, there are a 
few oncology--when we went through our recommendations that 
were in the March 2014 report, and we have the set of services 
that we are saying should be set to the physician fee schedule 
rate, there are a few services in there, two, three services, 
that seem to be related to oncology but we didn't approach it 
as a specialty or a service line approach. We had a set of 
criteria and said if services meet this criteria--I won't drag 
you through it unless you want to hear it--then the service was 
put into the policy, but we didn't approach it as oncology, 
cardiology.
    Mr. Burgess. Could you perhaps that in writing? I will ask 
the question for a written response.
    Mr. Miller. Yes.
    Mr. Burgess. I actually would be interested in the thought 
process in going through that, but we don't need to go into 
that now.
    Have you looked at what happens to patient access and costs 
with hospital acquisitions around different specialties?
    Mr. Miller. Well, what we look at every year, both in the 
hospital setting and in the physician setting and in every 
other setting that we look at, we look at access and 
utilization. Now, if your point is--and it may be--well, what 
happens to access if we get this migration into the hospital 
for oncology services, we haven't looked at that recently. We 
looked at it several years ago. We haven't looked at that 
specific phenomenon. But we broadly look at access year and 
report to the Congress.
    Mr. Burgess. When you say several years ago, like how many 
years ago?
    Mr. Miller. Longer than I would report the results.
    Mr. Burgess. So----
    Mr. Miller. Eight.
    Mr. Burgess. So prior to the passage of the Affordable Care 
Act?
    Mr. Miller. One more time?
    Mr. Burgess. Prior to the passage of the Affordable Care 
Act?
    Mr. Miller. Yes.
    Mr. Burgess. So have done any kind of estimate on the 
return on investment to this trend? What are the costs/benefits 
as far as patients and their access to care, the cost-benefit 
analysis for this consolidation?
    Mr. Miller. So the migration from the physicians' offices 
to the hospital?
    Mr. Burgess. Correct.
    Mr. Miller. At least for the services that we looked at and 
met our criteria, which I realize we haven't had that 
conversation, for about 66 of them that met our criteria, and 
if you look at that, it is about a billion dollars of program 
spend and about let us call it $200 million in beneficiary out-
of-pocket that is being incurred because these are being 
migrated. We have not seen access issues but again, we haven't 
gone in by service line or specialty to see that, but we have 
not seen access issues.
    Mr. Burgess. But there is a dollar impact?
    Mr. Miller. Oh, yes, and I tried to point that out in my 5 
minutes.
    Mr. Burgess. And one of the reasons I am concerned about 
this, and I don't have the article in front of me but I think 
it was in August of 2011 in the Annals of Internal Medicine, if 
I recall correctly, Ezekiel Emmanuel wrote an article about the 
fact that doctors really shouldn't fight the concept of being 
employed by an entity, presumably a hospital or insurance 
company or even a governmental entity, that this would be a 
better way to deliver care. It frees the doctors from having to 
worry about the vagaries of running a business, but because of 
the Affordable Care Act, there is this pressure for 
consolidation, and I ask myself all the time, just from a 
professional standpoint, is this a good thing or a bad thing. I 
come from a long line of a medical family, and our contract was 
always with the patient. Our advocacy was always supposed to be 
for the patient. If I work for the hospital, then suddenly that 
dynamic changes and I am not certain--and I can't put a 
dollars-and-cents figure on that. I don't sense that that 
necessarily is an improvement in the practice of medicine. 
Obviously, a philosophical article but I am concerned about the 
effect of consolidation cost being used as a driver.
    I have got several other questions I would like to ask you, 
and I will submit those in writing, and the chairman will 
delineate how we get those responses.
    Mr. Miller. I see 37 seconds, so----
    Mr. Burgess. That means I am over, but proceed. That is a 
surrogate endpoint.
    Mr. Miller. OK. I mean, one thing I would say is, I don't 
think the Commission is--I am sure the Commission is not making 
a statement about better or worse ways to organize practice. 
What the Commission is saying is, it shouldn't be driven by 
distorted prices. Those decisions should be made by a physician 
saying I want to practice this way or I want to practice that 
way or what the best episode and arrangement is for the 
beneficiary, and it shouldn't be just this price-driven 
phenomenon.
    Mr. Burgess. And I agree with you completely.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentlelady from Illinois, Ms. Schakowsky, 5 
minutes for questions.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I want to talk to you about observation status and then 
what it means for post-acute care. This has been a huge issue 
for constituents in my district who when they get to the 
hospital and they are put into a room think I am admitted to 
the hospital, and my understanding is that it is open-ended how 
long observation status can actually occur, and then if they 
end up going to a skilled nursing facility, then they find out 
that Medicare doesn't pay anything. They thought they were 
admitted to the hospital, for good reason. We find frail, 
elderly people sometimes with certain mental deficiencies, and 
if they are in the hospital and they are in the hospital a few 
days to assume that they are admitted to the hospital seems 
logical.
    So we have had large numbers and dealt with CMS a lot on 
this question of observation status. So I wonder if you could 
just clarify this for me and how it impacts then the post-acute 
care status in terms of payment?
    Mr. Miller. OK. I am not as deep for this hearing as maybe 
on some other things.
    So I think the issue that you are getting at--you tell me 
to redirect if we are not on the same wavelength--is that if 
somebody enters the hospital and ends up, let us just say for 
the sake of discussion, in three days of observation care, 
although lots of observation stays last much less than that, 
then while they by all appearances to the beneficiary and their 
family, they have been in the hospital, they won't have 
qualified for the 3 days of hospitalization needed to qualify 
for skilled nursing care.
    Ms. Schakowsky. That is correct.
    Mr. Miller. I think that is the point that you are driving 
at.
    Ms. Schakowsky. That is correct.
    Mr. Miller. And I think, you know, the dilemma for the 
Congress is that, you know, when a beneficiary feels, and for 
almost all intends and purposes has been in the hospital, the 
concern is that they should qualify. Of course, the issue that 
has to be dealt with--and them I am going to get you to a 
happier place in just a second--the issue that has to be dealt 
with is, if you simply remove that 3-day requirement, the 
estimators, the Congressional Budget Office and folks like 
that, believe that the skilled nursing facilities will start to 
get community admits and then the costs will go up 
significantly. So there is an issue that gets kind of enjoined 
there.
    But the happier place perhaps----
    Ms. Schakowsky. I don't understand what you just said, that 
they will get community admissions.
    Mr. Miller. So if you say to--if you were today--and this 
is something you should check--this is what I understand, and I 
am a little bit off base, but this is what I understand. If you 
said today there is no 3-day requirement to stay in the 
hospital to go into----
    Ms. Schakowsky. No, no, I am not saying that.
    Mr. Miller. Well, I am just saying if you did, you would 
run into a cost.
    Ms. Schakowsky. Yes, OK.
    Mr. Miller. So there are other avenues to potentially 
explore here. One is--and the two discussions that--and I have 
some work going in the background although I haven't brought it 
forward yet because it is not far enough along, is looking at 
the inpatient hospital payment system and creating a short-stay 
payment so that they don't have to have this choice between 
observation care and short-stay inpatient stay, and then the 
person would come in in the inpatient and it would be 
classified as an inpatient stay. So there is both an 
observation versus inpatient issue there and it has bearing on 
your skilled nursing facility question.
    Ms. Schakowsky. Correct.
    Mr. Miller. We are not far enough to have a nice, concrete 
conversation about the specifics but we are working on that.
    Ms. Schakowsky. OK. I think it is really important. I can't 
tell you how many elderly individuals and couples have just 
been astonished at being--they are not really admitted to the 
hospital. It just doesn't make sense.
    Mr. Miller. I hope you are hearing that we are taking this 
seriously because nothing I have said should have given you 
anything other than that.
    Ms. Schakowsky. And is there any timeline built into this?
    Mr. Miller. You know, we are working with data, we are 
talking to hospitals. These are kind of messy issues. There is 
a RAC auditor issue kind of mixed in there as well. We are 
working on it, is the best I can tell you at this point.
    Ms. Schakowsky. Let me just submit for the record, there is 
a question I want submitted that deals with post-acute 
providers' high profit margins that I want to get to you as 
well. Thank you.
    Mr. Miller. I would be happy to talk about that.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentleman, Mr. Rogers, 5 minutes for questions.
    Mr. Rogers. Thank you very much.
    Thank you, Director, for being here. Over the last 5 years, 
47 community practices have started referring all of their 
patients elsewhere for treatment. Two hundred and forty-one 
oncology office locations have closed and 392 oncology groups 
have entered into an employment or professional services 
agreement with a hospital. That is a fairly staggering shift in 
5 years. What would you attribute that significant shift toward 
a hospital setting?
    Mr. Miller. You know, with respect to oncology, I am a 
little bit of a deficit here to give you the specifics related 
to that. The broader trend that we are seeing we think are the 
trends that I have been speaking to up to this point. There is 
a lot of consolidation out there. I think the hospital's 
motivations come in a couple of varieties. There is this notion 
of building systems and coordinating care, which may be a good 
motivation. There is capturing referrals, and, to the extent to 
that the Medicare and the private sector pays more when you 
make that jump, then there is that motivation.
    On the physician side, and this goes to some of what Mr. 
Burgess is saying, I hear both kinds of conversations, ones 
that are ``I am very upset by this trend and I don't want it to 
happen,'' and other physicians who say this actually frees me 
up to kind of focus on care, and I am not saying that is the 
oncology argument but I have heard that from other practices. I 
think this is kind of a complex set of currents running in both 
directions.
    Mr. Rogers. Although in a market economy, if the hospitals 
pay more for exactly the same services, it is pretty hard to 
argue that that isn't a significant factor.
    Mr. Miller. And you do hear us saying that is what we----
    Mr. Rogers. I just wanted to clarify that number because I 
was staggered by it. A $1 billion increase, if I heard you 
correctly, from that migration to the hospital setting of which 
$200 million is borne by the hospital--or excuse me--by the 
patient. Did I understand that correctly?
    Mr. Miller. Yes, and just to clarify, for the 66 services 
that we have identified which may or may not encumber the ones 
that you are referring to, we think on an annual basis we are 
talking about a billion dollars, and just for round numbers, 
let us say the beneficiary carrying 200.
    Mr. Rogers. That is a significant cost increase for the 
patient, is it not?
    Mr. Miller. Yes, and----
    Mr. Rogers. It is a 20 percent increase.
    Mr. Miller. Yes. There are examples of these differences. 
For example, for cataract surgery, if you get it in a 
physician's office, the copayment is $195. If you go into the 
hospital, it is $490. That is the beneficiary's----
    Mr. Rogers. And 20 percent of that increase, according to 
your numbers, would be borne by the patient?
    Mr. Miller. No, that is the beneficiary's increase.
    Mr. Rogers. That is just the beneficiary's increase?
    Mr. Miller. The program increase goes from about $1,000 to 
about $1,800 on the program side.
    Mr. Rogers. That is a significant out-of-pocket increase 
for those patients, is it not? So if you look at something 
like--let us talk about some kind of radiation treatment, 
somewhere between 6 and 8 weeks. So we have had this major 
displacement of at least places that are convenient for 
treatment, a daily transportation for the 6 to 8 weeks for 
these treatments and a roughly 20 percent increase. Someone has 
to tell me why that is good for the patient.
    Mr. Miller. Again, I can't speak to your very specific 
oncology examples. Our concern is motivated both by the program 
dollar and beneficiaries out-of-pocket.
    Mr. Rogers. And I would hope that you would consider travel 
times. When you are getting radiation treatment, obviously I am 
specific to oncology here, but you are already tested to the 
limit, and increased commute times and pay more money doesn't 
seem like a good idea for care to me.
    I mean, have you done anything that shows a benefit to the 
patient from moving to hospitals? Is there any white paper I 
can look at? Is there anything that tells me that this is a 
good idea for people like cancer patients, or in your case, 
cataract patients?
    Mr. Miller. I want to answer this carefully. We have not 
done anything, which doesn't mean it doesn't exist. It is just 
that we haven't done anything. So I am unable to point you to 
something but it is not because I know that is the answer. It 
is just because we haven't done anything.
    Mr. Rogers. I thank you, and my time is running out, but 
Mr. Chairman, thanks for having this hearing. I think just the 
fact that we pointed out the significant cost to patients, 
number one, not only in just dollars but the anxiety that comes 
with getting in that car and driving a greater distance just to 
have access to care means that we ought to do something about 
this yesterday. We already have lost 392 plus the 241 just 
oncology, just oncology centers are gone, and wrapped up in 
this system. Two hundred and forty-one just closed completely. 
The longer this goes, the more we will lose, the more patients 
that will be impacted by out-of-pocket costs, and again, all of 
the anxiety and trouble that is caused by greater distances is 
very, very troubling.
    I appreciate you having this hearing. I think this has 
highlighted a very important issue that needs immediate 
attention. I yield back my time.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Dr. Murphy from Pennsylvania 5 minutes for 
questions.
    Mr. Murphy. Thank you, Mr. Chairman. I want to follow up on 
some of the issues presented by my friend Mr. Rogers of 
Michigan.
    So when we are looking at the out-of-pocket costs a 
Medicare patient may pay, they will pay a copay for some 
chemotherapy and other treatments, and is that a percentage 
basis or is it a flat dollar?
    Mr. Miller. It is usually 20 percent just because nothing 
is simple. It varies a bit in the outpatient department on a 
percentage basis due to some very old historical issues that 
are being changed over time. But for purposes of conversation, 
think 20 percent.
    Mr. Murphy. OK. And rather than look at the aggregate 
amounts totally, so if somebody was getting some treatment at a 
clinic--well, those clinics that haven't closed yet--versus at 
a hospital, any sense of what the comparative price would be 
for individual treatments in one place for another?
    Mr. Miller. For a clinic?
    Mr. Murphy. A clinic or a physician's office or a hospital. 
You know, we are talking about the differences in disparity 
here.
    Mr. Miller. If I understand your question, some of the data 
that we have put out suggests that evaluation and management 
issue or a visit is paid about 80 percent more in the hospital 
setting. An echocardiogram is paid about 130 percent more in 
the hospital setting.
    Mr. Murphy. So if they are paying 130 percent more in the 
hospital setting, that means the patient is paying more in the 
hospital setting too if they are paying 20 percent, but do you 
have any idea what that dollar value might be. I know it 
probably varies by region.
    Mr. Miller. Well, you know, there is some adjustment for 
wage index and things like that but I think this is correct if 
you don't--I have some scribbled notes that I was writing down 
last night. I think, for example, on the echocardiogram, the 
beneficiary's copayment goes from about $40 to $90. The program 
payment goes from about $150 to $360.
    Mr. Murphy. Which is pretty significant, especially if 
someone is on fixed income.
    Mr. Miller. I am sorry?
    Mr. Murphy. If someone is on a fixed income, well, under 
any circumstances, and of course, if a person is chronically 
ill and receiving a lot of medical care, that can amount to 
thousands of dollars in a year.
    And so let me ask you another issue too. Now, some centers 
have a 340B program and so they are able to obtain drugs as 
long as, I understand, if they are a nonprofit patient they can 
quality to purchase drugs on a 340B program. Am I correct?
    Mr. Miller. There may be some more requirements than that 
but I will stay with you for the moment.
    Mr. Murphy. Well, let us say a private physician's office 
or a for-profit clinic or something would not be able to 
purchase drugs on those discounts. Am I correct?
    Mr. Miller. I am pretty sure that is correct.
    Mr. Murphy. One of the concerns that I frequently hear 
about the 340B program, first of all, it is a great program. I 
support it strongly in many instances. But we also hear that 
some are claiming that there are some abuses of that program 
where some centers will purchase drugs at discount but then 
they will sell them at the markup again and get this money. 
Now, is that something that some of these other private clinics 
or physicians' offices, are they able to purchase drugs from 
the 340B program?
    Mr. Miller. Again, I am not deep on this, given the subject 
of the hearing. I didn't study down on this one. But my sense 
is no, that is not available to them.
    Mr. Murphy. So this adds another issue here. I mean, what I 
hear frequently across the board, hospitals and physicians 
saying that the reimbursement rates for mc doesn't really cover 
their costs sufficiently. They complain about the low 
reimbursement rates. But what you are telling me is that if we 
focus also on--if some of them also are making money on the 
340B program, and maybe this is out of your wheelhouse, but 
that is another area of disparity if there are differences 
between people who generally qualify versus those who may not 
qualify but the hospital is still getting some 340B money out 
of this.
    Mr. Miller. To the extent that the fact set that you and I 
are talking about here without me doing the homework on it, 
yes, that would be true, and I would say to you similar to what 
I said to the Congresswoman over here, this is an issue that we 
have not come forward on because there is still a fair amount 
of staff work to be done, but we have started to try and look 
at it.
    Mr. Murphy. We hope that is information you will provide 
this committee.
    Let me ask one last thing then. So we have heard concerns 
before of people with non-insurance or Medicaid versus private 
insurance. The survival rates are very different for people 
with cancer. But that is also according to the Cancer Medicine 
Journal, it is due to a complex set of demographic and clinical 
factors of which insurance status I just a part.
    But let me look at this in terms of Medicare in terms of 
where a person actually gets their care, a hospital base versus 
a physician's office. Are there differences there in survival 
rates that you are aware of?
    Mr. Miller. I have not looked at that, which doesn't mean--
I don't know the answer to that question.
    Mr. Murphy. That would be something that would be valuable 
for us to get to.
    I thank you very much, and I yield back, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Texas, Mr. Green, 5 minutes for 
questions.
    Mr. Green. Thank you, Mr. Chairman, and I would like to ask 
unanimous consent to place in the record a written statement by 
Dr. Bruce Ganz, Chair of the American Medical Rehabilitation 
Providers Association, regarding the post-acute care reforms 
being discussed today.
    Mr. Pitts. Without objection, so ordered.
    [The information follows:]
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Green. Thank you and the ranking member for holding 
this hearing. I want to thank Dr. Miller for your testimony.
    Our district in Houston is home to world-class hospitals 
and community oncology centers. We know that Medicare payment 
rates often vary for the same service provided to similar 
patients in different settings such as physicians' offices, 
hospital outpatient departments or for specific services across 
any of the post-acute care settings. While at the first glance 
it seems unclear why Medicare would pay different rates for the 
same service, we have heard justifications from both sides of 
the debate on whether to maintain these differential payments 
or to move to site-neutral payments. For example, 
Representative Rogers has a bill that would equalize 
reimbursements for oncology services received by patients in a 
hospital outpatient department with those by patients in 
freestanding oncology clinics. The hospital outpatient 
departments tell us that their higher rates are necessary 
because their additional payments help pay for the hospital 
standby capacity, access to care for low-income patients, 
efforts to improve care coordination and community outreach. 
The freestanding clinics have said the payment system is 
inadequate, causing them to close their doors, limiting access 
to care for critically ill patients and increasing total costs 
as hospitals are buying them up.
    Mr. Miller, as you represented a nonpartisan research-
driven policy body, I am interested to hear your perspective on 
the matter. I understand that MedPAC has given a considerable 
amount of thought to the subject of site neutrality and 
establish criteria for when it is appropriate to equalize 
payments across settings including considering beneficiary 
access and cost-sharing. Could you further describe the 
Commission's thinking on the topic?
    Mr. Miller. Yes, and I actually appreciate the question, 
and this is in some ways what Mr. Burgess and I were almost up 
to.
    So the way the Commission has approached this in the 
ambulatory setting, the principal is, assuming and assuring 
actually that the beneficiary has access and quality, Medicare 
should seek the most efficient setting, and so that is the 
motivation, and the other motivation is, we have seen a 
tremendous amount of data that suggests that it is heading out 
of the lower payment setting.
    But by the same token, and while there are people in the 
hospital industry who probably are suspect, we want to be sure 
that the hospital's core mission, particularly for emergency 
room and standby services, are not undercut, and so the 
criteria that we worked through was, is the service provided in 
a physician's office frequently so it is safe to do outside of 
the hospital, is the risk profile of the patients the same, is 
the unit of payment the same, and is it not associated with 
emergency services, and so then using that criteria, we said 
what services fit this criteria. So we are not just sort of 
sweeping through and saying pay it all, you know, the same, we 
are saying you need to be careful to protect the core mission 
of the hospital but also undercut this incentive that is 
pulling things out of the physician setting and approaches the 
practice. So that kind of high level, that was the criteria 
that we were using.
    And again, you know, I have gotten some other questions of 
what about oncology, what about cardiology. We didn't approach 
it as a specialty or service line. We stepped back and said 
what meets these criteria and then let things hit the criteria 
and said OK, these are the ones that qualify.
    Mr. Green. Has MedPAC given thought to aligning payment 
rates between hospital outpatient departments and physicians' 
offices for other types of ambulatory management, cardiac 
surgery? I think you answered that.
    What further analysis or information would you need before 
being able to comment on the appropriateness of equalizing 
these payment rates between OPDs and the physician offices for 
oncology services? Are there any concerns you can share with us 
now?
    Mr. Miller. I mean, what I do want to point out before I 
switch right back to your question is, we looked at this also 
for equalizing rates between ambulatory surgery centers and 
hospital rates for a set of surgeries that also met these 
criteria that I went through. On the oncology side, I am 
willing, as a matter of questions for the record, to try to 
give you a more detailed answer of what oncology services came 
in under our criteria and the kinds of things one might want to 
think about if they were to look further into it, but I am not 
really tooled up to do that right this second.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Kentucky, Mr. Guthrie, 5 minutes 
for questions.
    Mr. Guthrie. Thank you, Mr. Chairman. I appreciate it. And 
I guess you almost got to one of the things I was thinking. You 
have to make sure the same person walking into an outpatient 
isn't the same person walking into a hospital because if you 
are going to do the same procedure----
    Mr. Miller. Absolutely.
    Mr. Guthrie. What if the person is diabetic? Therefore, 
they say we need to do this in the hospital so you do have 
paying for capacity for some availability there, so that is 
just something that I was thinking that you kind of addressed 
that before.
    Mr. Miller. And the Commission does take that seriously, 
and there was statistical work done by a couple of people 
behind me who said do these patient profiles look statistically 
different than each other, and if they did, they weren't 
included in the basket of services that we would focus on.
    Mr. Guthrie. And do you think some of it could be cost 
shifting such as an outpatient clinic wouldn't have--they 
obviously don't have emergency room, and I hear, I think 
somebody mentioned it earlier that people come in with Medicaid 
and Medicare particularly don't pay the cost of--it may pay the 
cost of service for a cardiogram more than if you got it 
outpatient but it is also keeping the emergency room open. I am 
not saying that is the right way to do it.
    Mr. Miller. I think I understand your question, and if not, 
immediately redirect because I want to use your time carefully. 
We also took that into consideration. We said if a service is 
provided in an emergency room setting on, you know, any 
significant basis, then again, it was out of the mix, and our 
point was, we don't want to undermine the core mission of the 
hospital to have emergency standby services. The Medicare 
payment rates, since those services are very--or those costs 
are very direct--staff, equipment, that type of thing--those 
are built into higher rates that go to the hospitals for those 
services. We share that concern. We tried very hard to work 
around that and make sure we weren't undercutting that.
    Mr. Guthrie. OK. Thanks. And a couple of questions I wanted 
to ask about the--going from a lot of people in private 
practice settings into hospital settings. There was a Merritt 
Hawkins survey that asked the students in the final year of 
medical school. In 2001, 3 percent said they would rather work 
for a hospital than private practice. Now it is 32 percent. I 
know there are other factors but what extent do you think the 
Medicare practice expense payment disparities are responsible 
for the decline in attractiveness?
    Mr. Miller. OK. I think this question is much more complex, 
but before I blow past it, I do want to say, and I think there 
were some other comments along these lines, it is very hard to 
ignore that if a hospital is approaching a practice and saying 
I have, you know, revenue that I can buy out your practice and 
make it very lucrative to you, that is going to be important. 
But to the extent that we have talked to physicians, talked to 
hospitals, talked to folks like that, we hear a very, you know, 
kind of mixed story on the part of the physicians. There does 
seem to be a generation of physicians who are saying care has 
become very complex, and I don't mean that in a negative way. 
It means, you know, we all have to think about the patient much 
further and broader than my own sets of services that I am 
providing. It takes more coordination, it takes more 
understanding of the patient's medical record, and some 
physicians will say a larger organization that will take that 
overhead off of my hands and allow me just to focus on the care 
is where I want to be, and by the way, I would like some 
predictable hours and that type of thing. And then you run into 
physicians who are saying this is the wrong direction to go, I 
want to run my own practice. So I think these currents are more 
complex than any one factor, but I don't think we should 
dismiss the notion that either in the private sector or 
Medicare if the revenues are there, then it is going to be hard 
to say no to them.
    Mr. Guthrie. That is a good question, it leads into my next 
one, because you said whether Medicare or private sector. Does 
the private sector, private payers mimic the Medicare site-of-
service disparity of payments?
    Mr. Miller. I wouldn't use the word ``mimic'' but the 
outcome is the same. It is generally true that the private 
sector pays more in those settings than in the physician 
setting.
    Mr. Guthrie. So they get similar discounts between 
hospitals and ambulatory areas?
    Mr. Miller. There are similar price differences between 
physician office and hospital settings--lower, higher.
    Mr. Guthrie. Well, I appreciate that, and I yield back.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentlelady from North Carolina, Mrs. Ellmers, 5 
minutes for questions.
    Mrs. Ellmers. Hi, Mr. Miller. Thank you for being with us 
today.
    I know some of my colleagues have asked about the 340B 
program, and I believe you said that at this point it is being 
looked at. Is that correct, that you are not ready to kind of 
weigh in on it?
    Mr. Miller. I haven't even taken the Commission through it 
because the research is really still very much at the formative 
and staff level.
    Mrs. Ellmers. OK.
    Mr. Miller. But we are not oblivious to the issue. That is 
the point I would like the committee to know.
    Mrs. Ellmers. Great. Well, I will tell you, it is a concern 
of mine because I do believe that there is--just as you are 
looking into the issue, I think there is a lot of gray area 
there, and I think that this is one of those issues where we 
are looking at health care savings and dollars that are being 
saved, and of course, first and foremost, patient access to 
care, especially those who are in an economic disadvantaged 
situation. These programs are very worthwhile and we need to 
make sure that they are sustainable. Unfortunately, I am not at 
this point sure that we really know where those dollars are 
going, and I think that is something that we need to get to the 
bottom of and, with that, I will just follow up by saying that 
about a year ago, last year, Commander Pedley, the head of 
HRSA, had stated that she was not sure where the dollar 
savings, where the money was going, and I think that that is a 
significant statement because if the Government doesn't know--I 
mean, shouldn't the Government know where these dollars are 
going and how they are being utilized?
    Mr. Miller. I think so.
    Mrs. Ellmers. And there again, I will just get back to the 
issue of----
    Mr. Miller. But I want to assure you that we wouldn't look 
at that issue strictly as a savings issue. We would look at it 
as a program integrity issue, assurance for beneficiary access, 
assurance that we are paying fairly and then, you know, if that 
turns out that we are letting dollars go out the door that 
shouldn't go out the door, then that will be the outcome.
    Mrs. Ellmers. I think, you know, from my perspective, it is 
an issue of, are those dollars going to the care that those 
patients who require charity care. You know, if the hospital is 
a 340B hospital, are those dollars truly going where they are 
supposed to go, and certainly not ever thinking that a hospital 
would be playing games, but I think if there is a wide and a 
very gray area there, I think that the hospital would utilize 
them as they need to, and I think that might be something that 
we need to work on into the future.
    And I will go back too to the cancer care in the hospital 
setting versus the outpatient or ambulatory care setting. This 
is something that I am very, very concerned about. I am very 
concerned about the cost issue with chemotherapy drugs, 
especially since the sequester went into effect. We have seen a 
number of cancer clinics that are in our communities basically 
closing their doors or being bought out by hospitals and many 
of them will cite that it has to do with the Affordable Care 
Act, which is an issue, but then on top of it, the sequester 
has created a very difficult situation for them to continue in 
private practice, and in fact, I will add to that by saying 
that just in my hometown of Dunn, North Carolina, oncology 
practice was just purchased by a hospital, and now hospital 
care will be given at that clinic. The good news is, they will 
be there in Dunn. The bad news is, now the care is going to be 
much more costly.
    So there again, it gets back to the issue of how do we 
justify that if that the patient receives the care in the 
hospital, which is wonderful care, great care being provided by 
health care professionals, but then if they go to a more 
convenient area that they have come to appreciate and know and 
feel comfortable receiving their treatment, now that cost is 
going to go up simply because the hospital now owns that 
practice.
    Mr. Miller. You have defined the problem extremely well. 
This is the way the Commission is thinking about it, and the 
only other thing I will say with respect to your comments is, 
the Commission has been on record as saying that, you know, the 
sequester is not a good policy and what we try to offer the 
committees of jurisdiction on a daily basis in every one of our 
reports are more thoughtful policies to get you where you need 
to be without having to do the across-the-board type of stuff.
    Mrs. Ellmers. Well, thank you, Mr. Miller. I truly 
appreciate it, and thank you, Mr. Chairman. I yield back.
    Mr. Pitts. The Chair thanks the gentlelady.
    All right. We will begin a second round. Dr. Burgess, do 
you have questions?
    Mr. Burgess. Thank you, Mr. Chairman. So Mr. Miller, we 
have been talking today about payment disparities across 
different sites of service, the inpatient hospital, outpatient 
department, ambulatory surgery centers and physician offices. 
Outpatient departments and ambulatory surgery centers have 
similar requirements to participate in the Medicare program and 
to be licensed at the State level, and both arguably provide 
high-quality care. Can you discuss the cost benefit of 
increasing payment rates in certain outpatient settings?
    Mr. Miller. I am really sorry. There was some distraction 
over there, and I apologize.
    Mr. Burgess. That is all right. Let us wait until it calms 
down.
    All right. So we have various settings where can be 
administered. Ambulatory surgery centers, physician offices, 
outpatient departments, they all have similar requirements to 
participate in the Medicare program and to be licensed at the 
State level. All provide high-quality care. Can you discuss the 
cost and benefit of increasing payment rates in certain 
outpatient settings?
    Mr. Miller. Increasing payment rates in certain outpatient 
settings?
    Mr. Burgess. Hospital outpatient department versus an 
ambulatory surgery center.
    Mr. Miller. And the question is, should there be 
differences in the rate or----
    Mr. Burgess. No. Are there differences in the rate, and 
then, what is the benefit that occurs because of the 
differences in the rate?
    Mr. Miller. OK. I am sorry. There are differences in the 
rate. I think a figure to carry around in your head is, there 
is about an 80 percent difference between the rate in an OPD 
and an ASC, just to focus on that for a second, and I think 
what the Commission explored, we made recommendations with 
respect to some services between a physician office and the OPD 
but over here on the ASC side, we also did some research where 
again we used some criteria, which I will take you through, but 
I understand your time is limited, where we tried to identify 
similar patients, you know, services that could safely be done 
in both settings and then said that there is the opportunity to 
lower the payment rate on the OPD side to the ASC rate. There 
were 12 services and in total it is in the neighborhood of $500 
to $600 million annually.
    Mr. Burgess. And in this movement from a hospital to an 
outpatient setting, does that potentially free up the hospital 
time and space for use for other patients who have a greater 
degree of acuity who wouldn't be satisfactory to be serviced at 
an ambulatory surgery center?
    Mr. Miller. Yes, I think that is our--in constructing the 
criteria, that is what we are trying to assure.
    Mr. Burgess. Let me ask you this. In January of this year, 
the committee voted on recommendations around site neutrality 
for 66 ambulatory payment classifications. Is the Commission 
looking at other classifications or codes?
    Mr. Miller. At least for the near term, the blocks that we 
have looked at are evaluation and management codes. The 66 APCs 
that you just mentioned, we have done analysis on that, and we 
have done analysis on 12 APC/OPD codes, and that is the 
exchange we just had one second or so ago. At the moment, this 
is kind of where we are. I am not 100 percent sure how much 
more we will do but the Commission sort of has to figure out 
what its cycle is going to be for the upcoming cycle. And so at 
the moment, this is what we have and this is where we are. It 
would be hard for me to point to specific things that we are 
going to do beyond this.
    Mr. Burgess. Mr. Chairman, thank you for the consideration. 
I will yield back to you.
    Mr. Pitts. The Chair recognizes Mr. Green, 5 minutes for 
questions.
    Mr. Green. Mr. Miller, I am concerned when we are 
discussing payment that we make sure to appropriately account 
for complexities and differences among patients. I believe if 
we move forward to reform the post-acute care setting, we 
should also be looking to make sure that we are appropriately 
adjusting provider payments to reflect those beneficiary risk 
scores. Can you discuss the issue: Do you believe risk 
adjustment is an appropriate issue to focus on?
    Mr. Miller. Yes, and in all of our work, when we talk about 
bundling and we talk about differences, you know, creating 
either bundled payments or when we talk about moving towards a 
more unified post-acute care payment system or if we talk about 
assuming risk at more of population level, say an accountable 
care organization, we spend a lot of time talking about the 
need to measure differences in risk, and I will say something a 
little more specific about that, and then also to make sure 
that we construct quality measures so you sort of backstop the 
patient in a couple of ways. You make sure that the payments 
that go out the door are adjusted in a way that they reflect 
the relative risk of I took this patient, you took that 
patient, and then we have quality metrics to sort of make sure 
that the patient is getting the kind of care that they need.
    I think in the post-acute care setting, there are lots of 
discussions beyond things like diagnosis and the kinds of 
comorbidities, things like functional status, cognitive status, 
physical status, that thing of thing, which probably need to 
come into the mix in order to make the measurement more 
accurate, and we have got some discussion and focus on that in 
our work.
    Mr. Green. You may have already answered that a little bit 
just now, but what steps do you take, for example, in 
developing a bundled payment would appropriately account for 
the differences? I think you just answered that one.
    Mr. Miller. And again, I think it is this two-prong thing: 
try and get the risk adjustment as best as you can get it and 
then have a set of quality metrics to stand by the beneficiary 
to make sure that they are getting the necessary care that they 
need.
    Mr. Green. OK. Thank you, Mr. Chairman. I yield back.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes 
for questions.
    Mr. Cassidy. Hi, Mr. Miller. I am sorry for running in and 
out.
    Mr. Miller. No problem.
    Mr. Cassidy. So reading your testimony and listening to it, 
how much is--obviously is we are building through a hospital-
based practice, I assume that is all Part A.
    Mr. Miller. And we are talking about outpatient here, and 
so this is B.
    Mr. Cassidy. So the facility fee would be Part A, wouldn't 
it, and the procedures oriented, so if they order an EKG and it 
is a hospital, it is still Part A, correct?
    Mr. Miller. No, it is still B. I am sorry.
    Mr. Cassidy. Oh, really?
    Mr. Miller. Yes.
    Mr. Cassidy. OK. Well, that helps me.
    Now, it also seems, though, in some of the testimony from 
others suggest that as we migrate towards these hospital-based 
practices, we are increasing costs for both Medicare and for 
the beneficiary.
    Mr. Miller. That is right.
    Mr. Cassidy. Now, if you have an accountable care 
organization, it obviously would increase the cost basis of 
their care if you have hospital-based services. Fair statement?
    Mr. Miller. That is correct.
    Mr. Cassidy. It almost seems that this is driving up the 
cost of health care, frankly. I mean, so if you will, it almost 
seems as if the more we emphasize or induce hospital-based 
accountable care organizations to acquire practices, i.e., it 
increases their profitability and increases their cost basis, 
we are inducing increase and expense both to beneficiaries and 
to the Medicare program.
    Mr. Miller. That is correct.
    Mr. Cassidy. So we actually have a set of policies which 
are working in the exact wrong direction if our goal is to 
decrease cost to beneficiaries and to Medicare.
    Mr. Miller. Yes, that is correct, and the only modification 
or addendum that I would say to that is, to the extent that you 
have prices for the same service on the outpatient side that 
look like this relative to the physician's office, you are 
creating an economic incentive to move in that direction. End 
of sentence. Next sentence. But of course, there are core 
hospital services----
    Mr. Cassidy. Core, yes, I get that totally.
    Mr. Miller. OK.
    Mr. Cassidy. I am a physician by the way.
    Mr. Miller. We are saying the same thing.
    Mr. Cassidy. Yes, absolutely, but that is, I think, lost in 
this debate, that we have created a law which is going to drive 
up cost. Just the behavioral economics of it is such that we 
are going to create these.
    Let me ask you something else.
    Mr. Miller. Yes, we are trying to make sure that it is not 
lost in the debate.
    Mr. Cassidy. And I appreciate that. Thank you.
    Now, also I am very interested in the 340B program, and you 
may decide that you may or may not wish to comment on this, but 
to what degree--I will read this, because it was prepared for 
me but I asked it to be. In the last few weeks, a report by the 
IMS on global oncology trends as well as other things shows 
that there is a different cost for Herceptin in different sites 
of service, that if you have a 340B hospital oncology-based 
program, that the delta between what they are, you know, 
charging and paying is such that it creates a competitive 
advantage relative to community oncologic services. Any comment 
upon this?
    Mr. Miller. And I really apologize. I am not deep on that. 
There were a couple other questions on this. The only thing I 
can offer you is the Commission is aware of this issue and I 
have some work going on but it is very developmental at this 
stage. I haven't even taken it out in front of the Commission. 
So the only comfort I can give you is, we are not tone deaf. We 
understand that that is going on. We will start looking. We are 
looking at it.
    Mr. Cassidy. Now, let me ask you then, with my minute and 
30 left, if I go to the behavioral economics, there is a sense 
in which if you put something at two-sided risk, you may 
mitigate the incentives to increase cost but let me ask, if you 
put somebody at two-sided risk, they get the upside but also 
swallow the downside, and they start off with a higher cost 
basis because they have acquired physicians' practices, 
particularly, say, orthopedics and hearts. I don't know this. I 
am asking. Going forward, if they begin to discharge those 
practices, those procedures to the outpatient setting, do they 
continue to get the profitability? Did you follow that?
    Mr. Miller. I think I followed it. So I think you probably 
have a couple of questions in there, and just for purposes of 
discussion, let us frame it in the context of an accountable 
care organization. So if an accountable care organization is 
hospital-based and they have engaged in a lot of this, then 
arguably--and they get attributed patients in a way for 
purposes of this conversation occurs, then yes, arguably, they 
would have a higher base. And so that raises questions which 
are bigger than a minute 30 but the Commission has been talking 
about over time how the Medicare program should be looking at 
that phenomenon.
    Mr. Cassidy. But going forward, if they then take this 
hospital-based practice and they sell it and it now becomes an 
outpatient and they begin to now that which was originally 
conceived at a higher cost basis they are now putting at a 
lower cost, do they consider--do they continue to get that 
delta or will the payments ratchet down?
    Mr. Miller. It is theoretically possible that by moving 
people back, as you used in your example, to a lower cost 
setting, they could show a better performance. In other words--
--
    Mr. Cassidy. So that would be an artificially conceived 
better performance? It would be merely arbitraging the 
regulations and the site of service?
    Mr. Miller. That is right, but remember, we are talking 
about a very hypothetical situation.
    Mr. Cassidy. Oh, man, it is not going to be hypothetical, 
Mr. Miller. I can promise you that.
    Mr. Miller. And I didn't mean to imply that. There is two 
different, you know, ASC ACO programs, and exactly how the 
baselines are set get a little bit technical. But what I do 
want to leave you with is, the Commission is thinking about 
these phenomena and how to think about setting those basements 
over time so these kinds of phenomena don't get away from the 
program. Theoretically, what you have set up there, yes, I see 
your point.
    Mr. Cassidy. I yield back, and I thank you very much.
    Mr. Pitts. The Chair thanks the gentleman. That concludes 
the second round. Members will have follow-up questions. We 
will submit those to you in writing. We would ask you to please 
respond promptly.
    Mr. Miller. OK.
    Mr. Pitts. Thank you very much, Mr. Miller. That includes 
the first panel. We will take a 2-minute break as the staff 
sets up for the second panel.
    [Recess.]
    Mr. Pitts. We will reconvene. Everyone can take their 
seats. Our second panel, I will introduce in the order which 
they will speak. First, we have Ms. Barbara Gage, Managing 
Director and Economics Study Fellow, Engelberg Center for 
Health Care Reform, the Brookings Institute. We have Dr. Barry 
Brooks, Partner, Texas Oncology, and Chairman, Pharmacy and 
Therapeutics Committee, the U.S. Oncology Network. We have work 
Dr. Reginald Coopwood, President and CEO of Regional Medical 
Center at Memphis; Dr. Steven Landers, President and CEO of 
Visiting Nurse Association Health Group; and finally, Mr. Peter 
Thomas, Coordinator, Coalition to Preserve Rehabilitation, and 
Principal at Powers, Pyles, Sutter and Verville.
    Thank you all for coming. You will each have 5 minutes to 
summarize. Your written testimony will be made part of the 
record.
    Ms. Gage, we will start with you. You are recognized for 5 
minutes for your opening statement.

STATEMENTS OF BARBARA GAGE, FELLOW, ENGELBERG CENTER FOR HEALTH 
   CARE REFORM, THE BROOKINGS INSTITUTION; BARRY D. BROOKS, 
    CHAIRMAN, PHARMACY AND THERAPEUTICS COMMITTEE, THE U.S. 
  ONCOLOGY NETWORK; REGINALD W. COOPWOOD, PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, REGIONAL ONE HEALTH, ON BEHALF OF THE 
 AMERICAN HOSPITAL ASSOCIATION; STEVEN LANDERS, PRESIDENT AND 
  CHIEF EXECUTIVE OFFICER, VISITING NURSE ASSOCIATION HEALTH 
GROUP; AND PETER W. THOMAS, PRINCIPAL, POWERS, PYLES, SUTTER & 
    VERVILLE, P.C., ON BEHALF OF THE COALITION TO PRESERVE 
                        REHABILITATION,

                   STATEMENT OF BARBARA GAGE

    Ms. Gage. Thank you, Chairman Pitts and distinguished 
members of the committee. I appreciate the opportunity to 
testify today on payment reforms for Medicare post-acute care. 
I have been studying these issues for a very long time and have 
led much of the research that underlies this work.
    Post-acute care is a very important issue for the Medicare 
program. Almost 40 percent of all hospital discharges go on to 
post-acute care, so that is a key point that I want to drive 
home. We heard a bit about the expenses associated with it.
    Second, the patients who are in the acute care hospital for 
similar conditions we know are often discharged to different 
settings, and the information that we have leaves us a little 
unclear as to whether they are actually different in terms of 
their medical complexity or their functional complexity or 
cognitive, although some of our results suggest that is the 
case.
    Third, the standardized assessments developed as part of 
the post-acute care payment reform demonstration showed that 
these patients could be measured consistently and reliably 
across post-acute and acute care settings, and once done, that 
would allow us to answer several questions, many of which came 
up today, with the same type of hospital patient discharged to 
alternative settings. We know that some of that varies by 
geographic area and the availability of beds but some of it may 
also vary by medical functional and cognitive status. Secondly, 
did the patient outcomes differ depending upon the site of 
care.
    So why should patients be measured in a standard way? That 
is a basic issue to answering these questions. As noted in your 
figures, you can see that almost one in five beneficiaries who 
are admitted to the hospital each year and about 40 percent are 
discharged from there into the post-acute care setting. Figure 
1 is a little messy but it shows what a Medicare patient--their 
trajectory of care, and it underscores how these answers are 
not simple. People have different issues and attend different 
sites. So the sites include long-term care hospitals, inpatient 
rehab hospitals, skilled nursing facilities and home health 
agencies, all of which provide nursing and therapy services in 
their sites. Among the 37 percent of the PAC users who are 
discharged from the hospital to home health, 39 percent of them 
continued on to additional services, so an episode of care is 
not just one discharge, it is a continuation. The SNF 
admissions also tended to use multiple PAC services. Of the 42 
percent who were discharged first to a NSF, 77 percent 
continued on to additional services, and about 23 percent of 
these cases return to the hospital while another 32 percent 
were discharged from the SNF to home health for additional 
services.
    The probability and the type of post-acute care service 
used at hospital discharge can be partially explained by the 
reason for hospitalization, but as shown in figure 2, the types 
of cases that were most likely to use post-acute care were 
patients who had had joint replacements among the top five 
reasons for an admission to the hospital in Medicare, or stroke 
populations. However, the factors distinguishing what type of 
PAC setting would be used were less clear, and as you see on 
figure 2, the shares of these patients who were discharged to a 
SNF, 37 percent were home health with 36 percent with another 
19 percent discharged to inpatient rehab, so it is not that 
there is a little bit of variation going on. Conversely, 
medical cases such as pneumonia and congestive heart failure 
were less likely to continue to post-acute care. Only about 33 
percent of these cases go from the hospital to post-acute care, 
but when they went, they were most likely to go to SNF or home 
health, which have very different costs.
    The probability of being readmitted to the hospital also 
varies by the reason for hospitalization, and as shown in 
figure 3, joint replacements may have a very small share who 
are re-hospitalized in that 30-day window because we know 
technically they are healthier if they were strong enough for 
that surgery. But over 30 percent of the stroke, the pneumonia 
and the heart failure cases are readmitted during that window, 
and again, claims provide very little information to explain 
these differences. Additional information about health status 
is available from patient assessment data. In the Medicare 
program, assessment data is submitted in the inpatient rehab 
hospitals, through the MVS and the SNFs, through Oasis and the 
home health, and more recently, through the LTEC care in the 
long-term care hospital, and each of these assessment tools 
contain the same types of information including measures of 
their medical status, their functional status and their 
cognitive status as well as social support information 
collected by discharge planners. The same type of information 
is collected in the hospital as patients are admitted and 
managed through the stay. Despite these similarities in 
practices, few of the tools use the same items to measure the 
patient complexity. All are measuring primary and comorbid 
conditions, pressure ulcer staging, cognitive impairment, 
mobility and self-care limitations, many of the things we have 
been talking about this morning, as well as documenting whether 
the patient will need assistance at discharge, whether they 
live alone, and the types of medications they are on but 
without using a common language to measure these 
characteristics, a patient's progression cannot be measured 
across the episode of care.
    So findings from the post-acute care payment reform 
demonstration, this came up this morning, this was a major 
initiative mandated by Congress in the Deficit Reduction Act of 
2005, which required CMS to develop standardized assessment 
items for use at hospital discharge and at admission and 
discharge to the post-acute care settings. The standardized 
assessment items were critical to allowing comparisons of the 
patient acuity, the differences in the complexity across 
settings, and more importantly, to answer these questions about 
whether outcomes differ across the setting. First you need to 
be able to know that you are looking at the same patient in 
terms of complexity.
    Mr. Pitts. Could you begin to wrap up, please?
    Ms. Gage. Yes. The care items were based on the science. 
They had the input of over 25 associations and each of the 
clinical communities working with the post-acute care 
populations and were highly reliable in each of the different 
settings.
    But what do these results tell us about payment policy? 
That one set of uniform assessment items can be used across 
acute and post-acute care settings. They were reliable in all 
the settings. They allowed the differences in patient severity 
to be documented.
    A question about whether a standardized payment system can 
go into effect now based on the post-acute care payment reform 
data. We collected assessments on over 25,000 cases over 55,000 
assessments in the data set, and while they were adequate for 
identifying key differences, key drivers of patients associated 
with one setting or another, there are small numbers of certain 
types of populations. So collecting the standardized data 
nationally for 2 years prior to actually finalizing payment 
systems will increase that sample size and allow you to have 
stronger numbers.
    Why use standardized items across the acute and post-acute 
settings? Condition severity is independent of setting. Using 
standard language to measure it in each of the three areas of 
health status will improve communication and allow data 
exchange across different IT systems. There is work underway 
right now by CMS and ONC working with the health IT communities 
to develop interoperable standards for the care assessment 
items, which will allow exchangeability even if one system is 
using a Mac and another an IBM product. CMS also provides the 
item specifications and the e-specifications, the training, the 
training materials to all providers who are required to submit 
assessment data, and the e-specifications are downloaded.
    So why should the standardized assessments be collected at 
the hospitals? The hospitals already collect this type of 
information but they use different items to do so. A recent 
review by the American Hospital Association showed that the 
hospitals under the bundled payments and under the accountable 
care organizations were trying to predict readmissions but you 
couldn't compare differences across hospitals because they were 
all using their own systems. If you standardized the assessment 
items and include them, you can actually compare outcomes.
    [The prepared statement of Ms. Gage follows:]
    
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    Mr. Pitts. Thank you. The gentlelady's time is expired.
    For the witnesses, we have a little series of lights on the 
table. It will start green. You will have 5 minutes. When it 
gets to red, that is 5 minutes, so if you can just keep that in 
mind and begin to wrap up at the red light.
    Dr. Brooks, you are recognized for 5 minutes.

                  STATEMENT OF BARRY D. BROOKS

    Mr. Brooks. Chairman Pitts, Ranking Member Pallone, thank 
you for the opportunity to testify on behalf of U.S. Oncology 
and Community Oncology regarding site-of-payment reforms.
    I am Barry Brooks, and for 32 years I have had the 
privilege of taking care of cancer patients in the community 
setting. Being an oncology is challenging but deeply rewarding, 
and I love it.
    Americans enjoy the best cancer survival rates in the 
world. One reason we have the best cancer care is because the 
network of community clinics that provides state-of-the-art 
cancer care close to home. Yet in recent years, we have had a 
sharp decline in community-based cancer care, leaving patients 
with fewer options and more expensive medical bills. Thanks for 
recognizing one of the main drivers in the shift of care.
    To be blunt, cancer care costs more in hospital outpatient 
departments and hospital-based care is growing by leaps and 
bounds. Congressional action is needed to stem the shift of 
care and the resulting costs incurred to Medicare, taxpayers 
and patients.
    I was pleased to hear Mark Miller's testimony today, and I 
am glad that MedPAC is weighing in on this important issue. 
Hospitals play a critical role in cancer care delivery, and I 
am not going to try to diminish that today, but instead 
highlight access and cost consequences of an environment that 
favors hospital-based outpatient care. This unlevel playing 
field should be fixed by any support of patient choice and 
access to affordable, quality cancer care.
    In the current environment, hospital-based care enjoys 
numerous advantages over community clinics including up to 50 
percent discounts on drugs for the 340B program, tax 
exemptions, Medicare reimbursement for uncollectable patient 
responsibilities, Government payments for uncompensated care, 
tax-deductible private contributions, and the focus of today, 
higher payments for the same services.
    In less than a decade, a third of outpatient cancer care 
has moved from the community to the hospital. Hundreds and 
hundreds of clinics have closed and hospitals are aggressively 
buying up private practice oncology. Many times when this 
happens, patients see the same physicians, nurses and 
caregivers in the same offices. The only thing that changes, 
like mentioned by Representative Ellmers, is the name on the 
door and the amount charged to Medicare and the patients. In 
other cases, outlying clinics are consolidated to be closer to 
the main hospital campus, as mentioned by Representative 
Rogers. This results in increased travel and hassle for 
patients undergoing cancer treatment. Either way, patients 
fighting cancer are burdened by new barriers to access, either 
financial alone or both financial and geographic. A Milliman 
study finds that this costs Medicare $6,500 more per 
beneficiary each year, $623 million total each year, $650 more 
out of pocket for each senior cancer patient.
    Why should we accept a system that requires the Nation's 
most vulnerable to pay more for the exact same service in a 
less convenient setting? Not only do hospitals charge more for 
the same services, their utilization and overall spending are 
higher too. An analysis of Medicare data by the Rand Company 
indicates hospitals spend 25 to 47 percent more on chemotherapy 
and 42 to 68 patient more on chemotherapy administration. The 
latest CMS payment rules worsen our problem. The 2014 payment 
rate for the most common chemotherapy infusion is now 125 
percent higher in the hospital than in the community. A recent 
IMS study calculated prices for 10 common chemotherapy 
treatments and found hospital charges for those treatments 189 
percent more on average than an independent doctor's office. 
Sadly, they also show that patients who experience these higher 
out-of-pocket costs are more likely to discontinue treatment 
altogether.
    We know the committee has supported policies to equalize 
E&M payments across care settings. We strongly support the 
efforts of Representatives Rogers and Matsui to take an urgent 
approach for oncology services. There is no reason for 
different payments for the same outpatient services to depend 
on whose name is on the door. As proven over the last decade, 
Government-imposed market advantages will predictably lead to 
expansion and higher cost centers and corresponding reductions 
in patient access and increases in patient costs. Members of 
this committee have introduced and supported legislation that 
enhances cancer patient access like H.R. 2869 that we are 
discussing today from Rogers and Matsui, H.R. 800, Whitfield, 
Representative Green and DeGette, and H.R. 1416 from 
Representative Ellmers and others. Over 30 members of this 
committee, 124 in all, have signed a letter to CMS questioning 
how the administration handled sequestration cuts on our 
Medicare Part B drugs administered in our office. Given the 
current reality facing our community oncology offices, if these 
solutions are not enacted, by this time next year there will be 
fewer community oncology clinics and more patients will have to 
travel farther and pay more for the same services.
    The world's best cancer care delivery system is struggling. 
We need your help.
    Thank you for letting me testify today. I would be happy to 
answer questions when it is appropriate.
    [The prepared statement of Mr. Brooks follows:]
    
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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Dr. Coopwood, 5 minutes for opening statement.

               STATEMENT OF REGINALD W. COOPWOOD

    Mr. Coopwood. Good morning, Chairman Pitts, Mr. Green, 
and----
    Mr. Pitts. Can you poke the little button on there? Yes. 
Thank you.
    Mr. Coopwood. Good morning. Chairman Pitts, Mr. Green, and 
distinguished members of the subcommittee, I am Dr. Reginald 
Coopwood, President and CEO of Regional One Health in Memphis, 
Tennessee. I am here today on behalf of the American Hospital 
Association's 5,000 member hospitals, and I appreciate this 
opportunity to share with you and your colleagues the hospital 
field's perspective on site-neutral payment proposals.
    Regional One Health, which serves a three-State area, 
includes a nationally acclaimed level I trauma center, a level 
III neonatal intensive care unit, the only American Burn 
Center-certified burn center in our region, and a high-risk 
obstetrical referral center. Annually, there are more than 
100,000 outpatient visits to our health system. We have four 
community primary care sites and more than 32 subspecialty 
services are provided in our outpatient facilities. Nearly one 
in four people in Memphis live in poverty, and the city has a 
very low health ranking.
    Americans rely heavily on hospitals to provide 24/7 access 
to emergency care for all patients and to respond to every 
conceivable type of disaster. These roles are not specifically 
funded. Instead, they are built into a hospital's overall cost 
structure and supported by revenues received from providing 
direct patient care across various settings including hospital 
outpatient departments. Even though this is the case, some 
policymakers have endorsed proposals that would make payments 
for service provided in a hospital the same as when a service 
is provided in a physician's office or ambulatory surgery 
center. These proposals have a number of problems and would 
have devastating consequences for Medicare patients in the 
communities you represent.
    First, it is important to know that hospitals are already 
losing money providing outpatient services to Medicare 
beneficiaries. The Medicare Payment Advisory Commission data 
says that hospitals' outpatient Medicare margins are a negative 
11.2 percent. To make matters worse, if site-neutral payment 
proposals under consideration by some policymakers were 
enacted, it would result in outpatient payment department 
Medicare margins of nearly negative 20 percent. This could 
force hospitals to curtail these vital outpatient services and 
threaten seniors' access to care.
    Second, hospitals have additional financial burdens as 
compared to a physician's office. As was previously mentioned, 
this is due to the need to provide the community with 24/7 
emergency capacity. Hospitals are also subject to more 
comprehensive licensing, accreditation and regulatory 
requirements. For example, hospitals must comply with EMTALA, a 
State hospital licensure requirement, the voluminous Medicare 
conditions of participation and Medicare cost reporting 
requirements, among others.
    Finally, when compared to patients treated in physicians' 
offices, hospitals serve more medically complex patients as 
well as higher percentages of patients who are eligible for 
both Medicare and the Medicaid program and a higher percentage 
of disabled patients.
    At Regional Medical Center, our hospital-based outpatient 
departments play an integral role in the health system's 
ability to fulfill our mission: to improve the health and well-
being of the people we serve and to ensure that vulnerable 
patients have access to effective health care services which 
provide patients access to acute care services, a retail 
pharmacy that offers a sliding fee scale, medical 
interpretation services, surgical facilities, nutrition and 
diabetic care, as well as rehabilitation services. Providing 
these services has helped us reduce costly emergency department 
utilization, reduce hospital readmissions and improve care 
continuity for vulnerable patients and their health outcomes. 
The AHA has estimated that the proposed changes to hospital 
outpatient payments would reduce Medicare payments to my 
hospital, Regional One Health, by approximately $8 million over 
the next 10 years. Our ability to continue to improve the 
health status of our communities by ensuring that individuals 
have access to the right level of care at the right time in the 
right setting would diminish if those cuts were made. We also 
would have to evaluate our existing services as well as any 
plans to expand our service capacity. This would 
disproportionately impact the most vulnerable and elderly 
patients that we serve.
    Again, I appreciate your invitation to share the hospital's 
perspective on site-neutral payment policies with the 
committee. I urge you to exercise caution and not to propose 
any recommendations to Congress that would dramatically reduce 
payments to hospitals until a complete analysis and debate has 
occurred. Ensuring adequate payment for all services will allow 
hospitals to continue to provide access to care for all 
patients. Thank you.
    [The prepared statement of Mr. Coopwood follows:]
    
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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Dr. Landers, 5 minutes for opening statement.

                  STATEMENT OF STEVEN LANDERS

    Mr. Landers. Chairman Pitts, Mr. Green, thank you so much 
for inviting me to testify today. My name is Steve Landers. I 
am a family doctor and geriatrician. My background is in home 
visitation for frail elders and people with disabilities and 
also in home health agency medical direction. I did my medical 
training at Case Western Reserve University in Cleveland, Ohio, 
and my geriatric training at Cleveland Clinic. I later went on 
to run Cleveland Clinic's home care and post-acute care 
programs, but the true honor, really the greatest honor of my 
career has been 2 years ago being able to leave my post at 
Cleveland Clinic and become a visiting nurse, and I am now the 
President and CEO of the Visiting Nurse Association Health 
Group in New Jersey. It is the Nation's second largest 
independent nonprofit home health organization in the country 
and the largest in New Jersey. We have been serving our 
communities for over 100 years.
    I have, through my role as a physician, as a medical 
director, as an administrator, come to admire, frankly, if not 
revere the work done by home and community health 
professionals, particularly nurses, aides, therapists, social 
workers. These individuals help people at the most desperate 
times in their lives. We know that those receiving Medicare 
home health services are sicker, older, more likely to be 
impoverished, more disabled, have higher disease burden than 
the general Medicare population. Home health services support 
these patients and families when they are really struggling, 
living in the shadows with things like Alzheimer's disease, 
multiple sclerosis, Parkinson's disease. They bring help to 
help people transition home from the hospital after a stroke, 
help patients learn to walk again, learn to eat again, support 
family caregivers in their often taxing job, sometimes 24/7 
job, of helping their loved ones at home.
    Home health care, it is essential to these families and 
these individuals, but as importantly, it is also essential for 
the future of our country. We have 70 million aging baby 
boomers that want to remain independent at home. This is our 
country's Sputnik moment for home care and elder care. We need 
to develop and improve our home care delivery system in order 
to help these individuals meet their needs and also so that the 
programs, the Medicare program, Medicaid programs, don't suffer 
unnecessary financial burdens. Helping people stay home in a 
win-win where both the patients and families benefit and also 
the program sees savings.
    The current Medicare home care program, it could be so much 
more. We can do so much more. The current model is limited by 
overly complex paperwork requirements. We have nurses and 
physicians spending an inordinate amount of time checking off 
boxes and filling out forms. The program has struggled with 
some integrity issues and fraud issues, particularly in 
aberrant geographies, and that needs to be fixed. There is 
confusing and unnecessarily limiting homebound requirements 
that make it difficult for certain people to get home care 
services. It doesn't make much clinical sense to me as a 
physician, and also there are opportunities around technology 
and care coordination that we are just not achieving yet.
    And so that is why I am here to just share my enthusiasm 
and support for the work being done by Mr. McKinley and your 
committee on the bundling and coordinating post-acute care 
initiative because this is a true innovation in how we look at 
post-acute care, and the flexibility and the removal of 
barriers to home care and the respect of patient choice that 
has been engendered in this proposal I think are worthy of 
commendation, and I am thankful to have the chance to be here 
to testify in relation to that initiative.
    My former boss at Cleveland Clinic says that the future 
belongs to those who seize the opportunities created by 
innovation, and I believe that today that we are talking about 
a proposal that is an innovation in the Medicare program that 
can help us help more older Americans stay healthy at home in a 
sustainable way.
    Thank you so much for the chance to come today.
    [The prepared statement of Mr. Landers follows:]
    
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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Mr. Thomas, 5 minutes for an opening statement.

                  STATEMENT OF PETER W. THOMAS

    Mr. Thomas. Thank you, Chairman Pitts, Congressman Green, 
and members of the subcommittee. Today I speak on behalf of the 
consumer-led coalition called the Coalition to Preserve 
Rehabilitation, or the CPR Coalition. It is about 30 
rehabilitation and disability organizations, and it is run by a 
steering committee of the Center for Medicare Advocacy, the 
Brain Injury Association of America, the United Spinal 
Association, the National Multiple Sclerosis Association and 
the Christopher and Dana Reeve Foundation.
    My testimony today focuses on post-acute care and the 
importance of preserving access to rehabilitation, timely, 
intensive and coordinated rehabilitation care, in the context 
of site-neutral payment proposals and bundling proposals.
    First, I am worried about the importance of rehabilitation. 
The Coalition believes that rehabilitation is truly the 
lynchpin to improving health, function and independence of 
Medicare beneficiaries after an illness or an injury, a 
disability or a chronic condition. But these settings are not 
all the same, and in fact, the outcomes in these different 
settings are quite different, and I am happy to say that we are 
beginning to get new data that actually demonstrates this 
rather than just the intuitive sense that that is the case.
    Just a quick personal word. Like many Americans, I have 
personal experience with rehabilitation. When I was 10 years 
old, I spent about 2 \1/2\ months in a rehabilitation hospital, 
Craig Rehab Hospital in Denver, Colorado, following a car 
accident where I lost my legs below the knees, and proceeded to 
have a goal of walking into my fifth-grade class, which I did, 
and since then have used 13 different sets of artificial limbs 
over the past 40 years and have had a real front-row seat in 
what a good rehabilitation program and what good prosthetic 
care really means. All Medicare beneficiaries should have the 
same access that I did to that care.
    Under Medicare PAC reform proposals, both site neutrality 
and bundling, all Medicare patients should have access to the 
right level of intensity coordination of rehabilitation in the 
right setting and at the right time and on a timely basis, and 
of course, that is easier said than done. We believe that any 
legislative changes to the post-acute care environment on these 
issues should not have the effect of restricting access to 
rehabilitation care and should avoid proposals that will lead 
to a reduction in Medicare rehab benefits or that erect policy 
barriers that will affect beneficiaries by essentially 
channeling them into settings of care that are less than what 
they need in terms of their individual or medical rehab 
benefits.
    In terms of the SNF/INF site-neutral payment proposal that 
has been proposed in the last few budgets from the President as 
well as MedPAC, the Coalition opposes this proposal. We believe 
this is little more than an outright financial disincentive for 
inpatient rehab hospitals and unit to accept certain 
beneficiaries based solely on the patient's diagnosis and not 
based on their individual needs and rehabilitation and 
functional requirements.
    And so while that is the case, we do not necessarily oppose 
bundling. In fact, recognize the different silos of care that 
often lead to inefficient care in the post-acute care 
environment and we favor well-developed bundling proposals that 
are based on sound evidence and are linked to quality measures 
and to risk-adjusted payments so that those savings are not 
achieved by essentially stinting on patient care. And with due 
respect to some of the things that I have heard this morning, 
we do believe that further study is needed in this area. This 
is a very complex area and it impacts very vulnerable Medicare 
beneficiaries.
    In terms of the Bundling and Coordination Post-Acute Care 
Act of 2014, we believe that this is a model--bundling is a 
model again that we do not oppose--but we think that especially 
to protect vulnerable beneficiaries, there needs to be some 
improvements, and we will just quickly tick off a few of those. 
Number one, we have great concerns about the bundle being held 
by an acute care hospital or an insurance company. We believe 
that PAC providers, people that are in the post-acute setting 
who understand rehabilitation and know what the patients' needs 
and what they will need in terms of services should be the 
bundle holder in those instances. There is a concept known as 
the continuing care hospital pilot, which is mandated by law 
that CMS implemented and inexplicably CMS has not yet moved 
forward with that pilot. We encourage them to do so. A 
rehabilitation physician should be directing the care in a 
bundled payment system.
    Device exemptions should apply. You should not have 
prosthetics or orthotics, durable medical equipment that are of 
a customized nature included in the bundle because we have got 
evidence based on the SNF PPS many years ago that those kinds 
of devices are simply not provided to beneficiaries under a 
bundled payment system. They are either delayed or they are 
denied completely. And there are certain vulnerable patient 
populations such as traumatic brain injury, spinal cord injury 
and other conditions that we do not recommend bundling, at 
least in the initial phases of implementation.
    Risk adjustment and quality measures are obviously the most 
important to make sure that people are not underserved under 
bundled systems, and the rest of the detail on that is in my 
testimony. Thank you.
    [The prepared statement of Mr. Thomas follows:]
    
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    Mr. Pitts. The Chair thanks the gentleman. Thanks to all 
the witnesses for their opening statements. I will begin 
questioning and recognize myself 5 minutes for that purpose.
    Dr. Coopwood, in your written testimony, you suggest that 
the facility fees disparity between physician offices and 
hospital outpatient settings for cancer treatment is justified 
by the need to maintain ``standby capacity that allow hospitals 
to respond to emergencies ranging from multivehicle car chases 
to hurricanes and terrorist attacks.'' I would respectfully ask 
how this is relevant to the way Medicare pays for chemotherapy.
    Mr. Coopwood. Thank you. The way the hospital system's cost 
structure is built into the payment, we have to--there are many 
things that we have to do that private physician offices do not 
have to do. I am a former surgeon and ran a three-member group, 
and we had a very lean office in order to be able to 
economically make that system work, but in operating a hospital 
and a hospital system, the costs associated with 24-hour 
emergency care, the costs associated with the accreditation 
bodies, just to have a hospital-based clinic in order to 
qualify for Medicare patients, we have to be certified by Joint 
Commission. That puts a significant amount of burden and cost 
into the system that a private physician does not have to have.
    So all of those things that you mentioned built into the 
actual cost to operate a hospital-based clinic, they are not 
directly tied to the chemotherapeutic administration but it is 
part of the infrastructure costs that this facility must bear 
in order to deliver that high level of care.
    Mr. Pitts. Well, would you respond to this question? Is it 
fair that cancer patients face higher out-of-pocket costs for 
the same care when physician offices are bought by hospitals?
    Mr. Coopwood. And I guess ``fair'' is the key word in your 
question. When hospitals acquire physician practices, and there 
are many drivers as to why that happens--it is not just to get 
a higher payment--there are physicians in oncology practices 
that are coming to hospitals to acquire them because of the 
economics of trying to run private practice, the economics of 
trying to get an electric medical record, the difficulties in 
having continuity of care and wanting to be part of a system. 
So there are many drivers as to why these practices are coming 
into the hospital under the hospital's continuum. Because of 
that transition from a less expensive-run entity into a more 
expensive or higher-cost entity, there is where the increase in 
reimbursement comes in to help pay for that higher 
infrastructure.
    Mr. Pitts. Well, are there any payment reforms or site-of-
service reforms that you would support that might reduce 
payments to hospitals?
    Mr. Coopwood. I think there are--in my testimony, we, we 
being American Hospital Association, want to be a part of the 
conversation as we look at these payment proposals. I think 
that we don't want to do in such a way that it jeopardizes the 
hospitals and puts hospitals at risk because if we do drastic 
measures in a way, it will put risk to those emergency services 
and all that because, as I described in my testimony, just 
changing it from a facility-based payment to a private office 
payment adds $8 million to my hospital on a $300 million cost. 
I mean, that is significant.
    Mr. Pitts. Dr. Landers, in your written testimony you 
observe that care is much cheaper to deliver in home-based than 
institutional settings. In long-term care, some worry that a 
shift to home-based care ends up being more expensive due to 
more claimants coming out of the woodwork. Is this also the 
case for post-acute care?
    Mr. Landers. Thanks for your question, Chairman. As you 
correctly point out, care at home tends to be less expensive 
than facility-based care. For example, a month of post-acute 
care at home for a Medicare beneficiary is costing the program 
roughly $1,200 to $1,500 for that month versus in a subacute 
facility $12,000 to $15,000 for that same month of care, and we 
know from the variation that has been referenced earlier in 
this committee and from some of the research that has been 
submitted that there are many instances when the home is a 
clinically appropriate setting and we can get people home as an 
alternative to institutional care. So one of the opportunities 
in the bundled payment initiatives is to appropriately use home 
care, which is lower cost, often desired more as a substitute 
for unnecessary facility care, and not just clinically 
unnecessary. Patients and families don't want to be 
unnecessarily pushed into facility-based care, so I see this as 
an opportunity to save money, not to spend more.
    Mr. Pitts. The Chair thanks the gentleman. My time is 
expired. The Chair recognizes the gentleman from Texas, Mr. 
Green, 5 minutes for questions.
    Mr. Green. Thank you, Mr. Chairman.
    Dr. Brooks, for the past few Congresses, I have teamed up 
with our Kentucky colleague, Congressman Ed Whitfield, in 
introducing legislation to fix a flaw in the Medicare 
reimbursement formula without impacting providers. This 
legislation is called the Prompt Pay Bill, H.R. 800, as you 
mentioned in your testimony, and would ensure that CMS no 
longer includes the prompt pay discount when reimbursing 
providers.
    Dr. Brooks, as we talked today about factors that are 
causing patients to be shifted out of the community settings to 
more expensive settings, what impact do you think passage of 
this bill would have on helping prevent this shift in care?
    Mr. Brooks. Well, the prompt pay--thank you, 
Representative. I appreciate your bringing it up. It would help 
us a great deal. It would true up the legislative intent of the 
original legislation and right now we are not given that almost 
2 percent on the Medicare service fee for managing chemotherapy 
drugs, and it would, in my opinion, metaphorically say take a 
lot of community practices off of life support, and if we were 
to pair it with the Rogers-Matsui bill and the Ellmers bill, we 
could restore vitality to community oncology, but prompt pay 
would go a long way standing on its own.
    Mr. Green. Do you think addressing that formula flaw would 
benefit both patients and ultimately the taxpayers on the 
amount that is being reimbursed?
    Mr. Brooks. Absolutely. As I mentioned in my testimony, the 
most recent data suggests that the costs in the hospital 
outpatient department are almost triple what they are in our 
facilities, 189 percent in the IMS study. Certainly patients 
would benefit, because the copays would be so much less in that 
setting, and our practices tend to be located closer to a 
patient's home so that the travel is less and the patient's 
out-of-pocket costs are much less. Medicare gets no value from 
hospital-based outpatient cancer care. The patients get no 
value from hospital-based outpatient care.
    Mr. Green. And have there been studies that show 
differences between hospital-based and outpatient facilities on 
the quality of the care or the results?
    Mr. Brooks. The care was assessed primarily for equality of 
the type of patient. There are no quality measures within those 
studies but there is no reason to think that the type of 
patients between the two facilities is any different 
whatsoever, and it is mostly just a cost and reimbursement 
setting issue. It benefits the patients to be in our clinics.
    Mr. Green. Thank you.
    Ms. Gage, under the current Medicare payment system, 
hospitals are not provided any financial incentives to refer 
patients to the most efficient or effective setting so that 
patients receive the most optimal care at the lowest cost. 
Whether a patient goes to a home health agency or skilled 
nursing facility, for example, depends more on the availability 
of the post-acute care setting in the local market, patient and 
family preferences or financial relationships between 
providers.
    Ms. Gage, since patients access post-acute care after a 
stay in the hospital, how can we best encourage hospitals to 
help ensure patients receive care at the right setting after a 
hospital stay?
    Ms. Gage. Thank you for the question. Many of the--one way 
to address it is to keep the hospitals accountable for the 
post-discharge time period as is currently done with the 
readmissions policy in the fee-for-service program. Giving the 
hospitals accountability for the continuing care and the 
coordination with the subsequent providers is critical to 
forming the team that is needed to address the patient needs.
    Mr. Green. I know we are doing some of that now because of 
the Affordable Care Act, so do you see any recent evidence that 
that is occurring?
    Ms. Gage. I do, as another hat that I wear is evaluating 
the bundled payment initiatives, and there is much more 
discussion in the hospitals that are participating in bundles 
to be communicating with the post-acute care setting and 
following the patient through that 90-day period and actually 
giving information around the entire caregiving team. It has 
led to reduced readmissions but there are two types of 
patients. There are the medical patients and the rehab 
patients, and in the rehab patients, you have fewer measures of 
outcomes than you have with the medical community except for 
functional change for those who have acute needs.
    Mr. Green. That brings up my next question.
    Mr. Thomas, there is resounding consensus that as part of 
any payment reform, robust, meaningful quality measures must be 
available. What challenges are there in measuring these quality 
outcomes of Medicare beneficiaries who receive these post-acute 
care services again in various settings?
    Mr. Thomas. Thank you very much for the question. Well, I 
would say first that the quality metrics across the different 
settings, the primary areas of post-acute care are not uniform 
and so it is very difficult to measure quality across different 
settings with different systems. I think that there is a lack 
of functional measures but in particular quality-of-life 
measures, and it is very important that after a post-acute care 
stay, it is not necessarily the range of motion that a person 
is able to achieve in their rehabilitation through their 
rehabilitation stay, it is whether that person can dress 
themselves again or whether they can play golf or whether they 
can go back to work if that is appropriate. It is returning to 
life roles, and that is--those kinds of measures, there are 
data sets that measure those kinds of things but that is where 
the consumer groups or disability groups would like to see much 
more emphasis on measuring those kinds of things of returning 
back to community life and living as independently as possible, 
and if you can't do that as a result of a particular post-acute 
care stay because you weren't set to the proper or the more 
intense setting of care with that set of services that you 
really need to meet your individual and unique needs, then you 
are really not getting all you can out of the Medicare program, 
and that would be a real shame.
    Mr. Green. Thank you, Mr. Chairman, and we will probably 
have some other follow-up questions of the panel. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentlelady from North Carolina, Ms. Ellmers, 5 
minutes for questions.
    Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our 
panel for being here today. These are issues that are very, 
very important to me, having been a nurse for over 20 years 
prior to coming to Congress, and again, also, my husband being 
a general surgeon and actually having had his own solo practice 
and now has joined a practice owned by a hospital, and I would 
say to that point, there are significant economic factors that 
play into that, especially now with the Affordable Care Act, 
and many of the costs that our physicians in private practice 
are faced with, and we understand the hospitals are also faced 
with many of those same situations, and I think it is important 
to point out and recognize that individual patient offices, 
small businesses are faced with many, many issues of overhead, 
Dr. Coopwood, you mentioned electronic medical records being 
one of them, great cost to individuals and practitioners, and 
those are definitely hurdles.
    But on that, I do want to talk--Dr. Brooks, you had 
mentioned, and I would like to talk a little bit about my bill, 
H.R. 1416, addressing the sequester cuts to Medicare Part B 
drugs as a result, as we know, of the sequester cut. 
Unfortunately, now, it has been over a year since I introduced 
that bill, and we do have a number of cosponsors. However, it 
is one of those things where information has to be gathered as 
we move along, and unfortunately, the results are playing out. 
There are many community cancer settings that are closing their 
doors or are being bought up by hospital practices. In fact, I 
had mentioned this in the previous panel with Mr. Miller, that 
a practice in my hometown that has been a 30-year oncology 
practice, private practice, has now been purchased by one of 
the hospitals. Now those same patients, although they will be 
able to receive the care in that same clinic, will be paying 
more money, and I do think that this is significant and 
something that we must draw attention to.
    So I guess my question to you very simply and very plainly 
is, if we were to pass H.R. 1416--and again, when I talk about 
Medicare Part B drugs, it is not just chemotherapy drugs. We 
are talking about other drugs that any physician would have to 
be responsible for administering in the outpatient setting. 
Would there be a cost savings to that patient and would there 
be a cost savings to Medicare overall?
    Mr. Brooks. If we were to pass 1416, and right now, for 
those of you who are not familiar with the perverse 
interpretation of CMS on our Part B payments, they decreased 
our service fee for managing chemotherapy and oncology offices 
not by 2 percent as we anticipated but by 28 percent when one 
does all the calculations because they included the entire cost 
of the drug. And so our service fee was decreased by 28 
percent. This has caused great hardship in the oncology 
communities, and even with my own U.S. Oncology Network, we 
have practices now in peril, and prior to sequestration, really 
those practices were fine. So this additional blow on top of 
the lack of prompt pay relief and the lack of site neutrality 
payments--I mean, CMS decreased our reimbursement for 
chemotherapy infusion again this year--those triple burdens are 
causing practices even in our very robust, efficient network to 
be financially imperiled, and if we got 1416 passed, we got 
relief from that, that would put us back just like 
Representative Green's question, it would take us off of life 
support. Right now, we are impoverished and barely paying the 
light bills.
    Mrs. Ellmers. Thank you, Dr. Brooks.
    And Dr. Landers, I do have a question for you. I am a huge 
proponent of home care services. I think we are helping our 
patients, especially our Medicare patients, our most 
vulnerable, to stay out of the hospital setting where they can 
be at home receiving care. One of the other issues, as we know, 
and I am sure you are aware as well, and I just want to get 
your verification on this. We are talking about a patient 
population of Medicare patients who are largely women and we 
are also talking about an employee population that is by and 
large women as well. You know, we are faced with this question 
here in Washington all the time: how can we empower women and 
what is the true war on women. How do you feel about that 
situation?
    Mr. Landers. Congresswoman, thank you for the question. In 
my experience, one of the best things about my work has been 
with many nurses and patients and family caregivers, quite 
frankly in home care most of them have been women, and if you 
look at the Affordable Care Act re-basing cuts that are sort of 
just across-the-board, non-risk adjusted, non-outcomes-based 
cuts, they are hurting women disproportionately because that is 
where--that is who is involved with home care by and large, our 
employees, our nurses, our therapists, our social workers, our 
aides are disproportionately women. The patients tend to be 
women and also we can't forget family caregivers. Although some 
of us men chip in every once in a while, the women nationally 
are bearing the brunt of the family caregiving responsibilities 
and home care is their support and their lifeline. So I am glad 
that you brought that up, and I think it is important that we 
are focused on payment reform and innovation based on value 
rather than these across-the-board disproportionate cuts on 
things that hurt a lot of people including a lot of women.
    Mrs. Ellmers. Thank you, Dr. Landers, and thank you, Mr. 
Chairman, for indulging me and letting me go over a little bit.
    Mr. Pitts. That is all right. Thank you. The Chair thanks 
the gentlelady.
    We are voting. We have got 12 minutes left in the vote. We 
will go to Mr. Rogers, 5 minutes for questions.
    Mr. Rogers. Thank you very much, Mr. Chairman.
    Mr. Brooks, can you tell me in your experience as a 
community oncologist what this shift that we talked about 
earlier of the closure of so many, 241, I think, practices 
around the country, what impact does that have on a patient 
that is in one of those 241 closed facilities?
    Mr. Brooks. Thank you for the question. I have had the 
opportunity to talk to some of my friends who have been 
acquired by the hospital, and I have been curious about some of 
the hospital assertions that licensing requirements and other 
things are more onerous under that situation. I have not been 
able to discern any additional licensing requirements that were 
required for these offices that were taken over, but one of my 
friends in another State, I talked to him recently, and when he 
transitioned his patients who were on chemotherapy from his 
bills to the hospital bills, he had several patients come in 
with their bills and say what is this, because the bills were 
over 100 percent more than what he had charged them from his 
own thing, and the door had changed names but the nurse was the 
same, the doctor was the same, the office was the same, and the 
patients were confronting him and he had substantial angst, but 
in his defense, their practice was in peril financially. They 
were not doing well, and they could have hung on a while longer 
but they were on an intolerable course based on, in his case, 
mostly sequestration.
    So there have been serious displacements among my 
colleagues and they are not happy to go to the hospital. They 
would prefer to be independent but in many cases want to 
continue to take care of their cancer patients and that was 
their only option.
    Mr. Rogers. And what about those that have been closed? I 
mean, we talked a lot of numbers. I could talk to you all day 
long about the cost disparities or not, the payment disparities 
or not, but a patient is in that mix and in that number 
somewhere. So my center closes. What happens? If you are an 
average patient there, you are in the middle of some radiation 
treatment that is not an easy process to go through, talk about 
the patient, Doctor, if you would.
    Mr. Brooks. Oh, the patients are at the center of our 
concern here, and if our centers in rural Texas close, we are 
the only providers. Hospitals are always talking about being 
the only provider but we are the only provider for cancer care 
in most of rural Texas, and if our center, say, in Paris, 
Texas, where we are 70 percent Government pay, if that center 
were to be deemed by our organization to be no longer 
financially viable and we had to close that, those patients 
would have to drive more than 100 miles each way for a 
radiation center.
    Mr. Rogers. And what does that mean? If I am a patient 
undergoing treatment, what does that 100 miles mean to me?
    Mr. Brooks. Well, Representative Rogers, if you are frail 
enough, you can't do it. You can't continue 100-mile commute 
every day for five weeks, and it is an issue that comes up for 
us all the time. Frail, elderly patients cannot make long 
commutes. They are not able to. And they choose to discontinue 
treatment and not get adequate care.
    Mr. Rogers. And I have heard examples and I am sure you 
have heard examples of people who are choosing not to continue 
care or treatment because of the distance to travel.
    Mr. Brooks. Yes, sir.
    Mr. Rogers. Well, that is one way to save money, I guess.
    Mr. Brooks. Yes, sir, it is a perverse way to save money, 
but it is true that patients discontinue therapy because of 
travel burdens, particularly in States that are spread out like 
Texas.
    Mr. Rogers. My frustration with this is exactly what you 
said, so one day the shade goes down and it is whatever the 
rate is, the next day it opens up under this new contract 
because a hospital-affiliated center now and the price goes up, 
and I think the number we heard was roughly 20 percent on 
average across all of the specialties. What is the difference 
in care that that person gets from the day that the shade goes 
down until the day the shade goes up? What is the difference in 
care?
    Mr. Brooks. There is no measurable added value for those 
patients, and there is no measurable added benefit to Medicare 
for transferring the care.
    Mr. Rogers. Are there more regulations they have to follow?
    Mr. Brooks. I have actually--the hospitals assert that. I 
have looked into that, and I have asked my friends who have 
been acquired by the hospital and have not been able to find 
any additional licensure requirements or other regulatory 
burdens that they had to bear after hospital acquisition. I 
sought that information and was not able to find any.
    Mr. Rogers. Again, Mr. Chairman, I think we would all be 
remiss in our duties if we stand by and allow one more cancer 
patient not to be able to make travel, select not to get 
treatment or their costs go up so prohibitively they can't 
continue treatment. Shame on all of us if we can't pull this 
together pretty soon so that we don't lose any more of these 
centers. I think it is awful important we deal with this issue 
soon. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman. There is 6 
minutes left to vote on the floor. Dr. Burgess, you are 
recognized for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman, and again, I want to 
thank our panel. I appreciate you being with us today and your 
forbearance through what has been a long morning.
    Dr. Brooks, as you were answering Mr. Rogers' question, I 
think he asked specifically about someone who was receiving 
radiation therapy, but a chemotherapy patient then has that 
100-, 120-mile drive home, I can't quite do the calculation on 
how many sublingual Zofran may have to be consumed on that 
drive but you are adding a significant burden to the clinical 
course of that patient, are you not?
    Mr. Brooks. Yes. Travel is a burden when you are ill. I 
mean, any of us who have just had the flu and tried to drive to 
your local doctor's office understand how crummy you feel in a 
reasonable commute. But in very long commutes for people that 
are chronically and acutely ill, it is intolerable, and people 
do select to discontinue care for that reason.
    Mr. Burgess. I am old enough to remember when your partners 
came to our community hospital, and we were grateful for that, 
to have the services for our patients, but I also remember not 
being able to electively hospitalize a patient on a Tuesday 
because that is the day your partners filled the hospital up 
with their chemotherapy patients, so it was also a great day 
when they opened their own center and now the chemotherapy was 
administered as an outpatient. So are we in fact driving back 
the other way? Is hospital bed availability going to become an 
issue because of the occupancy of those beds with chemotherapy 
patients?
    Mr. Brooks. Well, it is a little different these days. We 
don't actually put people in inpatient beds like we did--I 
actually didn't know you were that old. But in my youth as an 
oncologist, we did in fact hospitalize patients, put them in 
hospital beds. Nowadays, most hospitals have outpatient 
treatment departments that look quite similar to our physician 
offices, and they do not occupy inpatient beds in most cases. 
So that is not a concern per se.
    But the migration, like Mark Miller said earlier, from the 
lower cost, more efficient to the higher cost, less efficient 
because of the economic incentive, and that is what we are 
looking at here.
    Mr. Burgess. Yes, and I actually tried to encourage him to 
be a little bit more vocal about that, and I wasn't able to 
draw it out of him, so I appreciate your articulating that 
concept because I think it is important.
    I used to be a student of medical irony but now I have kind 
of branched out. I just cannot tell you the frustration of 
dealing with the Centers for Medicare and Medicare Services 
trying to get them to calculate a correct arithmetic equation 
of the 2 percent reduction in the sequester of ASP Plus 6, and 
this was the subject of a letter. We had a lot of people that 
signed on. To their credit, they wrote me back but they wrote 
me back to me indicating that they didn't understand how to do 
simple arithmetic. ASP Plus 6, for people who don't understand 
what that is, that means you take the average sales price of, 
in this case, a drug, and you add 6 percent, which arguably 
should cover the cost of storage, administration, your staff's 
time, the IV tubing, all of the things that are connected with 
administering that drug. I recognize that the plus 6 doesn't 
really cover that, but still, in theory, the plus 6 should 
cover that.
    But it makes no sense if you are going to apply an across-
the-board reduction with the sequester of 2 percent. You would 
never begin with the ASP part of that equation. The ASP part of 
that equation is a fixed cost. That is a direct cost. That is 
like saying well, we are going to reduce--someone is going to 
come in and reduce your light bill by 2 percent because 
Medicare is cutting you 2 percent. They are not going to do 
that. Your electricity charge for keeping the drug 
refrigerated, your carrying charge is all the same. It has not 
been impacted. No one has cut you a break because Medicare is 
reducing your reimbursement.
    So I continue to be frustrated with that. I continue to try 
to educate our good friends over at the agency. So far, I have 
not been successful, but like you, I fear that the consequence 
of this error in calculation is going to be a big driver. 
Again, you so well articulated what the actual reduction means 
to your clinic and your office and how hard it will be to keep 
your doors open.
    Let me just ask one last thing before we finish up and I 
have to go vote. The issue of EMTALA came up, and Dr. Coopwood, 
I think you referenced that, that this is of course something 
that the hospital bears, but doctors bear it too. I mean, 
EMTALA applies to both providers that are both physicians and 
hospitals. So the question on the EMTALA mandate actually 
affects both physicians and hospitals. Is that not correct?
    Mr. Coopwood. I am really just aware of the responsibility 
of a hospital's role in EMTALA. Someone shows up on their 
perimeter property, they have a responsibility to treat them 
and at the minimum stabilize them. I am not sure if that 
extension goes into the physician's office practice because 
they are not obligated to see everyone who presents to them as 
a hospital is obligated to see everyone in emergency 
situations.
    Mr. Burgess. Let me elaborate on that just a little bit, 
because as a member of the hospital staff of your hospital, if 
your emergency room doctor calls me because of a woman in 
labor, for example, I got to show up. I have got to show up 
within 30 minutes or a $50,000 fine comes my way. So I would 
just argue that it does affect the doctors as well as the 
hospitals. It might not affect the bottom line in our office 
practice, but as far as the taking of our professional 
services, it still occurs under EMTALA as it does for you.
    Mr. Coopwood. Absolutely.
    Mr. Burgess. Mr. Chairman, I know we have a vote on.
    I want to thank our panel again. It has been very 
informative. I have got some questions I am going to submit for 
the record. Thank you for being here, and I will yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    There is no time left on the clock for voting, so I urge 
members to get over to vote. We still have some 250 people who 
haven't voted.
    Thank you for your responses, for the questions. Some 
additional questions we will send 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, and I 
ask the witnesses to please respond promptly. Members should 
submit their questions by the close of business on Wednesday, 
June 4th.
    A very good hearing. Thank you so much for sharing your 
expertise with us. Without objection, the subcommittee hearing 
is adjourned.
    [Whereupon, at 12:48 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
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