[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





 THE OBAMA ADMINISTRATION'S MEDICARE DRUG EXPERIMENT: THE PATIENT AND 
                           DOCTOR PERSPECTIVE

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 17, 2016

                               __________

                           Serial No. 114-146



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                 Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California7
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas            G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILLY LONG, Missouri                 JOSEPH P. KENNEDY, III, 
RENEE L. ELLMERS, North Carolina         Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
SUSAN W. BROOKS, Indiana             FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
JOE BARTON, Texas
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...........................................     3
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     4
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7
    Prepared statement...........................................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   116

                               Witnesses

Debra Patt, M.D., Medical Director, U.S. Oncology Network........     9
    Prepared statement...........................................    12
Michael Schweitz, M.D., National Advocacy Chair, Coalition of 
  State Rheumatology Organizations...............................    28
    Prepared statement...........................................    30
Marcia Boyle, President and Founder, Immune Deficiency Foundation    43
    Prepared statement...........................................    45
    Answers to submitted questions...............................   269
Heather Block, Patient Advocate..................................    56
    Prepared statement...........................................    58
Joe Baker, President, Medicare Rights Center.....................    63
    Prepared statement...........................................    65

                           Submitted Material

H.R. 5122, A Bill to prohibit further action on the proposed rule 
  regarding testing of Medicare part B prescription drug models, 
  submitted by Mr. Pitts.........................................   118
Letter of May 2, 2016, from Hon. Tom Price, et al., to Andy 
  Slavitt, Acting Administrator, Centers for Medicare & Medicaid 
  Services, Department of Health and Human Services, submitted by 
  Mr. Green......................................................   120
Letter of April 29, 2016, from Chuck Grassley, a United States 
  Senator from the State of Iowa, to Sylvia Burwell, Secretary, 
  Department of Health and Human Services, submitted by Mrs. 
  Blackburn......................................................   141
Letter of May 2, 2016, from AARP, et al., to Sylvia Burwell, 
  Secretary, Department of Health and Human Services, and Andy 
  Slavitt, Acting Administrator, Centers for Medicare & Medicaid 
  Services, Department of Health and Human Services, submitted by 
  Ms. Schakowsky.................................................   145
Statement of Ariel A. Gonzalez, Director, Federal Health & 
  Family, AARP, May 17, 2016, submitted by Ms. Schakowsky........   149
Statement of American Federation of Labor and Congress of 
  Industrial Organizations, May 17, 2016, submitted by Ms. 
  Schakowsky.....................................................   151
Letter of May 16, 2016, from Robert Roach, Jr., President, 
  Alliance for Retired Americans, et al., to Mr. Upton and Mr. 
  Pallone, submitted by Ms. Schakowsky...........................   152
Letter of May 16, 2016, from Scott Frey, Director of Federal 
  Government Affairs, AFSCME, to Representatives in Congress, 
  submitted by Ms. Schakowsky....................................   154
Letter of May 16, 2016, from Judith Stein, Executive Director/
  Attorney, Center for Medicare Advocacy, to Mr. Upton and Mr. 
  Pallone, submitted by Ms. Schakowsky...........................   155
Statement of Doctors for America, submitted by Ms. Schakowsky....   157
Letter of May 17, 2016, from Lynn Quincy, Associate Director, 
  Health Policy, and Victoria Burack, Policy Analyst, Consumers 
  Union, to Mr. Pitts and Mr. Green, submitted by Ms. Schakowsky.   159
Statement of Justice in Aging, May 17, 2017, submitted by Ms. 
  Schakowsky.....................................................   161
Statement of Max Richtman, President and CEO, National Committee 
  to Preserve Social Security and Medicare, May 17, 2016, 
  submitted by Ms. Schakowsky....................................   163
Letter of May 16, 2016, from Holly R. Hart, Assistant to the 
  International President, Legislative Director, United 
  Steelworkers, to Ms. Schakowsky, submitted by Ms. Schakowsky...   166
Letter of May 6, 2016, from Gary Harbin, President, Public Sector 
  HealthCare Roundtable, to Sylvia Burwell, Secretary, Department 
  of Health and Human Services, and Andy Slavitt, Acting 
  Administrator, Centers for Medicare & Medicaid Services, 
  Department of Health and Human Services, submitted by Ms. 
  Schakowsky.....................................................   168
Statement of the International Union, United Automobile, 
  Aerospace and Agricultural Implement Workers of America, May 
  17, 2016, submitted by Ms. Schakowsky..........................   170
Statement of Wanda Filer, President, American Academy of Family 
  Physicians, March 10, 2016, submitted by Ms. Schakowsky........   171
Letter of May 9, 2016, from Ms. Schakowsky, et al., to Andy 
  Slavitt, Acting Administrator, Centers for Medicare & Medicaid 
  Services, Department of Health and Human Services, submitted by 
  Ms. Schakowsky.................................................   173
Letter of May 16, 2016, from Elizabeth Warren, a United States 
  Senator from the Commonwealth of Massachusetts, et al., to 
  Sylvia Burwell, Secretary, Department of Health and Human 
  Services, et al., submitted by Ms. Schakowsky..................   176
Letter of May 17, 2016, from Clyde Terry, Chairperson, National 
  Council on Disability, to Andy Slavitt, Acting Administrator, 
  Centers for Medicare & Medicaid Services, Department of Health 
  and Human Services, submitted by Mr. Pitts.....................   180
Letter of May 17, 2016, from Mary R. Grealy, President, 
  Healthcare Leadership Council, to Mr. Pitts and Mr. Green, 
  submitted by Mr. Pitts.........................................   183
Letter of May 16, 2016, from Susan A. Cantrell, Chief Executive 
  Officer, Academy of Managed Care Pharmacy, to Mr. Pitts and Mr. 
  Green, submitted by Mr. Pitts..................................   188
Letter of March 17, 2016, from 1 in 9: The Long Island Breast 
  Cancer Action Coalition, et al., to House and Senate 
  leadership, submitted by Mr. Pitts.............................   191
Letter from the Alliance for the Adoption of Innovations in 
  Medicine, et al., to House and Senate committee leadership, 
  submitted by Mr. Pitts.........................................   202
Letter of May 9, 2016, from Tony Coelho, Chairman, Partnership to 
  Improve Patient Care, et al., to Andy Slavitt, Acting 
  Administrator, Centers for Medicare & Medicaid Services, 
  submitted by Mr. Pitts.........................................   205
Letter of April 27, 2016, from Senate Finance Committee Democrats 
  to Andy Slavitt, Acting Administrator, Centers for Medicare & 
  Medicaid Services, submitted by Mr. Pitts......................   214
Letter of May 9, 2016, from Scott H. Peters, a Representative in 
  Congress from the State of California, to Andy Slavitt, Acting 
  Administrator, Centers for Medicare & Medicaid Services, 
  submitted by Mr. Pitts.........................................   217
Letter of May 13, 2016, from House Democrats to Andy Slavitt, 
  Acting Administrator, Centers for Medicare & Medicaid Services, 
  submitted by Mr. Pitts.........................................   218
Letter of April 28, 2016, from Senate Committee on Finance 
  Republicans to Andy Slavitt, Acting Administrator, Centers for 
  Medicare & Medicaid Services, submitted by Mr. Pitts...........   222
Letter of May 9, 2016, from Christopher W. Hansen, President, 
  American Cancer Society Cancer Action Network, to Sylvia 
  Burwell, Secretary, Department of Health and Human Services, 
  submitted by Mr. Cardenas......................................   225
Letter of May 9, 2016, from Sara Radcliffe, President and CEO, 
  California Life Sciences Association, to Andy Slavitt, Acting 
  Administrator, Centers for Medicare & Medicaid Services, 
  submitted by Mr. Cardenas......................................   253
Report by the Memorial Sloan Kettering Cancer Center, ``Examining 
  Congressional comments regarding Medicare's Part B pilot 
  proposal,'' May 16, 2016, submitted by Mr. Welch...............   255

 
 THE OBAMA ADMINISTRATION'S MEDICARE DRUG EXPERIMENT: THE PATIENT AND 
                           DOCTOR PERSPECTIVE

                              ----------                              


                         TUESDAY, MAY 17, 2016

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Joseph R. Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Guthrie, Shimkus, 
Murphy, Blackburn, Lance, Griffith, Bilirakis, Long, Ellmers, 
Bucshon, Brooks, Collins, Green, Engel, Capps, Schakowsky, 
Butterfield, Castor, Sarbanes, Schrader, Kennedy, Cardenas, and 
Pallone (ex officio).
    Also present: Representative Welch.
    Staff present: Mike Bloomquist, Deputy Staff Director; Sean 
Bonyun, Communications Director; Rebecca Card, Assistant Press 
Secretary; Karen Christian, General Counsel; Paul Edattel, 
Chief Counsel, Health; Tim Pataki, Member Services Director; 
James Paluskiewicz, Professional Staff Member, Health; Graham 
Pittman, Legislative Clerk; Chris Sarley, Policy Coordinator, 
Environment and the Economy; Jennifer Sherman, Press Secretary; 
Adrianna Simonelli, Legislative Associate, Health; Heidi 
Stirrup, Policy Coordinator, Health; John Stone, Counsel, 
Health; Sophie Trainor, Policy Advisor, Health; Jeff Carroll, 
Democratic Staff Director; Tiffany Guarascio, Democratic Deputy 
Staff Director and Chief Health Advisor; Jessica Martinez, 
Democratic Outreach and Member Services Coordinator; Samantha 
Satchell, Democratic Policy Analyst; Andrew Souvall, Democratic 
Director of Communications, Outreach, and Member Services; and 
Arielle Woronoff, Democratic Health Counsel.
    Mr. Pitts. I will ask all Members to take their seats. The 
time of 10:00 has arrived. 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 will take a closer look at a recent 
proposed rule from the Centers for Medicare and Medicaid 
Services, CMS, on a Part B drug payment model. This proposal 
represents the biggest change in Medicare drug reimbursement in 
years.
    There are several aspects that are concerning to many, 
including the mandatory nature of this so-called demonstration 
project, the breadth of the experiment essentially across the 
Nation in virtually all primary care service areas and the 
timing.
    These major changes would take place as early as July and 
on top of the current implementation of MACRA, the new payment 
structure for physicians that replace the SGR, the sustainable 
growth rate.
    But perhaps the most concerning aspect of this proposal is 
that it came from unelected bureaucrats in this administration 
who made the decision behind closed doors affecting our seniors 
and their health care.
    What happened to the transparency in regard to stakeholders 
that we expect when considering proposals of this magnitude? In 
fact, these concerns over provider reimbursement under the 
Medicare Part B program are so considerable that recently 242 
bipartisan Members of Congress wrote to the administration and 
asked that the rule be withdrawn.
    Several others letters from both the House and Senate have 
been sent detailing numerous and serious concerns. Moreover, 
our Health Subcommittee colleague, Dr. Larry Bucshon, recently 
introduced legislation that would stop this proposal from 
advancing.
    So today, we're going to hear from doctors and patient 
advocates about their views on this proposed rule. I want to 
make it clear at the outset that we are not opposed to 
demonstration programs and in fact have supported a number 
which tests certain models in limited areas to determine 
positive or negative outcomes and whether such demonstrations 
should be advanced in a larger context.
    However, the health and well-being of seniors is nothing to 
be experimented with. This particular rule could result in 
grave consequences for our seniors. CMS is proposing to reduce 
reimbursement for physician-administered drugs with half of the 
country's providers seeing dramatic cuts.
    The other half will retain current reimbursement levels, 
but half of those will be used to test out vague value-based 
purchasing arrangements, and after a very long 5 years CMS will 
see what happened.
    Keep in mind Medicare is the largest payer of provider-
administered drugs. The Part B program covers provider-
administered injectables and certain other drugs for physician 
offices and outpatient clinics the provider purchases and 
administers the product before submitting a claim to Medicare.
    After purchasing a drug from a wholesaler or a specialty 
distributor, the provider will store the product at its 
location.
    The provider then administers the drug to the patient and 
after the patient receives the drug and any other medical care, 
the provider then submits a claim for reimbursement, hence term 
buy and bill, because the medical claim is submitted after the 
provider has purchased and administered the drug.
    The Medicare Prescription Drug Improvement and 
Modernization Act of 2003--MMA-requires Medicare to use a 
drug's average sale price--ASP+6 percent for reimbursing 
provider-administered injectable drugs.
    ASP is based on the manufacturer's actual selling price 
minus all price concessions. CMS asserts this system somehow 
gives incentives for physicians to prescribe more expensive 
drugs and therefore has proposed this nationwide two-phase 
experiment which would allow half of the providers to continue 
to be reimbursed at ASP+6 percent while the other half would 
receive the lower ASP+2.5 percent rate plus a fixed $16.80 
payment.
    However, with the impact of sequestration calculated in the 
reimbursement falls to nearly ASP+0 percent. This proposal is 
so far reaching and has caused so much concern it is difficult 
to imagine any meaningful conclusions can be drawn because 
marketplace realities will undermine the integrity of this 
massive and unprecedented experiment on patients and providers.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The subcommittee will come to order.
    The chairman will recognize himself for an opening 
statement.
    Today's hearing will take a closer look at a recent 
proposed rule from the Centers for Medicare and Medicaid 
Services (CMS) on a Part B Drug Payment Model.
    This proposal represents the biggest change in Medicare 
drug reimbursement in years. There are several aspects that are 
concerning to many, including: the mandatory nature of this so-
called demonstration project; the breadth of the experiment--
essentially across the Nation in virtually all primary care 
service areas; and the timing--these major changes would take 
place as early as July and on top of the current implementation 
of MACRA--the new payment structure for physicians that 
replaced SGR (Sustained Growth Rate).
    But perhaps the most concerning aspect of this proposal is 
that it came from unelected bureaucrats in this administration 
who made decisions behind closed doors affecting our seniors 
and their health care. What happened to the transparency and 
regard for stakeholders that we expect when considering 
proposals of this magnitude?
    In fact, these concerns over provider reimbursement under 
the Medicare Part B program are so considerable, that recently 
242 bipartisan Members of Congress wrote to the administration 
and asked that the rule be withdrawn. Several other letters 
from both the House and Senate have been sent detailing 
numerous and serious concerns. Moreover, our Health 
Subcommittee colleague, Dr. Larry Bucshon, recently introduced 
legislation that would stop this proposal from advancing. So 
today we are going to hear from doctors and patient advocates 
about their views on this proposed rule.
    I want to make clear at the outset that we are not opposed 
to demonstration programs and in fact have supported a number 
which test certain models in limited areas to determine 
positive (or negative) outcomes and whether such demonstrations 
should be advanced in larger contexts. However, the health and 
well-being of seniors is nothing to be experimented with.
    This particular rule could result in grave consequences for 
our seniors. CMS is proposing to reduce reimbursement for 
physician administered drugs, with half of the country's 
providers seeing dramatic cuts. The other half will retain 
current reimbursement levels but half of those will be used to 
test out vague value-based purchasing arrangements. And after a 
very long 5 years, CMS will see what happened.
    Keep in mind, Medicare is the largest payer of provider-
administered drugs. The Part B program covers provider-
administered injectables and certain other drugs. For physician 
offices and outpatient clinics, the provider purchases and 
administers the product before submitting a claim to Medicare.
    After purchasing a drug from a wholesaler or specialty 
distributor, the provider will store the product at its 
location. The provider then administers the drug to the 
patient. After the patient receives the drug and any other 
medical care, the provider then submits a claim for 
reimbursement. Hence the term, buy-and-bill, because the 
medical claim is submitted after the provider has purchased and 
administered the drug.
    The Medicare Prescription Drug, Improvement and 
Modernization Act of 2003 (MMA) requires Medicare to use a 
drug's Average Sales Price (ASP) + 6% for reimbursing provider-
administered injectable drugs. ASP is based on the 
manufacturer's actual selling price, minus all price 
concessions.
    CMS asserts this system somehow gives incentives for 
physicians to prescribe more-expensive drugs and therefore has 
proposed this nationwide two-phase experiment which would allow 
half of the providers to continue to be reimbursed ASP + 6% 
while the other half would receive the lower ASP + 2.5% rate 
plus a fixed $16.80 payment. However, with the impact of 
sequestration calculated in, the reimbursement falls to nearly 
ASP + 0%.
    This proposal is so far-reaching and has caused so much 
concern it is difficult to imagine any meaningful conclusions 
can be drawn because marketplace realities will undermine the 
integrity of this massive and unprecedented experiment on 
patients and providers.

    Mr. Pitts. My time has expired, so I yield back the balance 
of my time and now recognize the ranking member of the 
subcommittee, Mr. Green, 5 minutes for his opening statement.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman. Good morning. I thank 
our panels for being here today.
    As we know, CMS, through the Centers for Medicare and 
Medicaid Innovation, recently proposed to test value-driven 
payment models for prescription drugs under Medicare Part B.
    This proposal has garnered significant reaction and 
response from the provider, patient, and the pharmaceutical 
communities.
    I appreciate the Chair for having this hearing today and 
hope this committee will take the opportunity to examine the 
proposals, merits and drawbacks.
    While the loudest voices have been oppose to the model 
outright, it is important to thoroughly evaluate the issues CMS 
is attempting to address and look at the proposal with calm and 
reason, and I appreciate CMS' consistent goal of strengthening 
the Medicare program. However, I have some concerns about the 
size and scope of the proposed demonstration and its potential 
impact on Medicare beneficiaries' access to physician-
administered drugs now and in the future.
    I also question how the demonstration may affect 
physicians' participation in existing and upcoming delivery and 
payment reform models.
    Currently, Medicare Part B pays physicians and hospital 
outpatient departments the average sales price, or ASP, of a 
drug plus the 6 percent add-on on payment commonly referred to 
as ASP+6.
    Medicare pays ASP+6 for drugs regardless of the price paid 
to acquire the drug. MedPAC and others have raised concern that 
the 6 percent add-on may create incentives to use higher priced 
drugs when lower priced alternatives are available and 
appropriate for the patient.
    It's difficult to know the extent in which a percentage 
add-on to ASP influences drug-prescribing patterns because few 
studies have looked into this issue.
    Prescription drug spending in the United States was about 
$457 billion in 2015 and roughly 17 percent of the overall 
health spending. In 2015, Medicare Part B spent $20 billion on 
outpatient drugs administered by physicians and hospital 
outpatient departments, which has doubled the amount spent in 
2007.
    Beneficiary cost sharing under fee for service Medicare 
Part B is 20 percent with no out of pocket limit. According to 
the GAO, some seniors and people with disabilities have faced 
catastrophic expenses amounting to as much as $100,000. The 
median annual income for Medicare beneficiaries is less than 
$25,000 a year, and one in four have less than $12,000 in 
savings.
    There's a national conversation occurring about the cost of 
prescription drugs. I appreciate CMS for attempting to address 
this issue in part by proposing to test tools that reward value 
in Medicare Part B similar to the efforts in the private 
sector.
    Congress should not ask seniors to pay 20 percent of 
increasingly expensive therapies without due consideration of 
whether their money is being well spent. Healthcare delivery 
systems are rightfully changing and Medicare should not be left 
behind.
    I'm confident that providers will fulfill their calling and 
practice medicine, delivering the best care for their patients 
rather than pad their bottom lines.
    Yet, on behalf of seniors and the sustainability of the 
healthcare system at large we cannot put our heads in the sand 
and ignore trends. This proposed model is far from perfect and 
I have serious concerns about the aspects of it.
    Recently, I joined members of this committee in sending a 
letter to CMS outlining our concerns with the demonstration and 
urging the agency to address them.
    I ask for unanimous consent, Mr. Chairman, to submit this 
letter for the record.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Green. I look forward to hearing from our witnesses 
about their perspective of the model and concerns we've 
outlined to the agency.
    Taking a step back, I'm going to bring up a related issue 
that has become part of the conversation around the 
demonstration which is that of prompt pay.
    I have long had an interest in preserving seniors' access 
to quality care by ensuring Medicare pays at a rate that will 
retain a robust network of providers.
    H.R. 696, also know and the Prompt Pay bill, is a piece of 
legislation I've introduced with my colleague on our committee, 
Mr. Whitfield, for several Congresses.
    The bill excludes the prompt payment discounts offered by 
manufacturers to wholesalers from the average sales price for 
drugs and biologics covered under Medicare Part B.
    This became an issue when the Medicare Modernization Act 
was enacted in 2003. It reduces the amount doctors are 
reimbursed for administrative treatments and as a result 
patients are pushed to more expensive settings for their care.
    Reducing the number of options for patients, diminishing 
the access drives up the costs in both short and long term and 
is bad policy. The Prompt Pay discount has negatively affected 
patients for many years before sequestration and whether we 
adopt legislation repealing, replacing or otherwise authoring 
the sequester without adopting H.R. 696 the underlying issue 
will still exist.
    Thank you, Mr. Chairman, and our witnesses here today and I 
look forward to a robust discussion about the proposed 
demonstration and I yield back my time.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the vice chair of the full committee, Mrs. 
Blackburn, 5 minutes for her opening statement.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman, and I do want to 
say welcome to our witnesses. I think that you can tell from 
the chairman's statement and you'll find out from the questions 
that you hear we are all very concerned about a couple of 
things that are happening with the demonstration project.
    Number one, rural areas--they're already challenged, and I 
have 19 counties in my district in Tennessee and some of the 
more rural counties are quite concerned about this and 
healthcare providers are very concerned about this and fear 
that this may be the type component that pushes some of these 
providers to the brink and out of the business in service 
areas.
    So we are very concerned about that, especially when it 
comes to things like cancer and getting the appropriate 
treatments. And Mr. Chairman, I would like to include for the 
record a letter that is dated April 29th from Senator Grassley 
to Secretary Burwell.
    Senator Grassley has made specific inquiries of the 
secretary if CMS--if this model is in fact a clinical trial but 
without the typical patient safeguards.
    And I understand that clinical trials are important. In my 
district we have a lot of physicians and researchers who 
participate in this when it comes to oncology treatment.
    I have had the opportunity to visit with some of them, and 
they are quite concerned about the way this is moving. So I ask 
permission to submit the letter.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mrs. Blackburn. Thank you, Mr. Chairman, and to each of you 
again, we're going to look forward to digging a little deeper 
on this. Access to the right type care at the right time is 
essential for positive outcomes and so we will be seeking your 
guidance and with that I will yield to any other member of the 
committee seeking time or will yield back.
    Mr. Pitts. All right.
    Mrs. Blackburn. Yield back.
    Mr. Pitts. Without objection the lady yields back, and now 
the Chair recognizes the ranking member of the full committee, 
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, Mr. Chairman, and thanks to the 
witnesses who will be testifying today. I think we would all 
agree that it is critical we continue to transform our 
healthcare system into one that incentivizes value over volume.
    That is the theme we heard time and again when we worked 
together to repeal the SGR and replace it with a payment system 
that rewards doctors for the quality of care they give to 
seniors and we were all in agreement that more care must be 
replaced with better care. The status quo, we said, was 
unsustainable.
    The success of this kind of delivery system reform, 
however, is not possible if we do not give Medicare the tools 
to stay in business.
    Medicare must be able to innovate just like the private 
sector is doing and that's why I support the innovation center 
that was authorized in the Affordable Care Act because it 
allows Medicare to test new models that improve care and save 
money.
    Now, we've all heard loud and clear that there are concerns 
with the center's most recent proposal to change the way we 
reimburse doctors for drugs administered in their offices under 
Part B. I look forward to hearing more from our witnesses today 
about the rule. I don't think anyone here would claim this 
proposal is perfect.
    I'm particularly interested in hearing about how to ensure 
that seniors have access to necessary drugs. I'm also 
interested in better understanding how we can assure that the 
evaluation of this proposed model is robust and thorough before 
it's expanded.
    To date, there has been widespread engagement ranging from 
comments from stakeholders to letters from Members of Congress.
    This feedback is an important part of the process, and I 
believe the administration will take into account these 
concerns and make changes to address them in the final rule.
    So I'd like to now yield the remainder of my time to 
Congresswoman Schakowsky.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you Mr. Chairman. And thank you to the witnesses for 
testifying today. I think we would all agree that it is 
critical we continue to transform our healthcare system into 
one that incentivizes value over volume. That is a theme we 
heard time and again when we worked together to repeal the SGR 
and replaced it with a payment system that rewards doctors for 
the quality of care they give to seniors. We were all in 
agreement that more care must be replaced with better care. The 
status quo, we said, was unsustainable.
    The success of this kind of delivery system reform, 
however, is not possible if we do not give Medicare the tools 
to stay in business. Medicare must be able to innovate, just 
like the private sector is doing. That is why I support the 
Innovation Center that was authorized in the Affordable Care 
Act because it allows Medicare to test new models that improve 
care and save money.
    Now we have all heard loud and clear that there are 
concerns with the Center's most recent proposal to change the 
way we reimburse doctors for drugs administered in their 
offices under Part B. I look forward to hearing more from our 
witnesses today about the rule. I don't think anyone here would 
claim this proposal is perfect. I am particularly interested in 
hearing about how to ensure that seniors have access to 
necessary drugs. I'm also interested in better understanding 
how we can ensure that the evaluation of this proposed model is 
robust and thorough before it is expanded.
    To date, there has been widespread engagement, ranging from 
comments from stakeholders to letters from Members of Congress. 
This feedback is an important part of the process, and I 
believe the administration will take into account these 
concerns and make changes to address them in the final rule.
    I'd like to yield the remainder of my time to Congresswoman 
Schakowsky.

    Ms. Schakowsky. I thank the gentleman for yielding. I 
strongly believe that lowering drug prices is imperative to the 
sustainability of our healthcare system, especially our public 
insurance programs like Medicare, and I support CMS' proposal 
to create a demonstration project for drugs paid under Part B.
    Luckily, I'm not alone. Many organizations that represent 
beneficiaries, insurance companies and consumer organizations, 
including AARP, Aetna, the AFL-CIO, the Alliance for Retired 
Americans, AFSCME, the American Federation of Teachers, Center 
for American Progress, Center for Medicare Advocacy, Doctors 
for America, Consumers Union, Families USA, Justice in Aging, 
Kaiser Permanente, Medicare Rights Center, National Committee 
to Preserve Social Security and Medicare, the National 
Education Association, the National Partnership for Women & 
Families and the Boilermakers, among others, support this 
proposal, and I'd like, Mr. Chairman, to enter their letters of 
support for the Part B demonstration project into the record.
    Mr. Pitts. Without objection, so ordered.
    Ms. Schakowsky. I'd also like to enter into the record 
several additional statements of support from many of those 
same groups as well as the United Steelworkers, the Public 
Sector HealthCare Roundtable, United Auto Workers, and the 
Academy of Family Physicians supporting CMS' proposal.
    Mr. Pitts. Without objection, so ordered.
    Ms. Schakowsky. And I--thank you--and I'd also like enter 
into the record a letter signed by 20 Members of the House and 
a letter signed by 11 Senators supporting CMS' proposal.
     Mr. Pitts. Without objection, so ordered.
    [The information submitted by Ms. Schakowsky appears at the 
conclusion of the hearing.]
    Ms. Schakowsky. Yet, every time we attempt to do anything 
to rein in drug costs we are met with fierce opposition. We are 
actively reforming every other aspect of our healthcare system 
to pay for value except pharmaceuticals.
    In fact, drug manufacturers are the only one entity that 
can charge Medicare anything they want for their products. We 
would never accept that from any other entity in our healthcare 
system and we should no longer accept it from pharma.
    The proposal from CMS is not final. They have committed 
themselves to working with stakeholders to address their 
concerns. In fact, CMS has indicated that they would be open to 
changes including the scope of the proposal and exceptions for 
small and rural providers.
    But all we hear today is no. With no alternative ideas on 
how to realign incentives and reduce drug costs for 
beneficiaries and that is not good for anyone anymore.
    We cannot continue on this unsustainable path where drug 
costs rise faster than overall health costs and patients are 
bankrupted in order to pay for the lifesaving drugs that they 
need.
    You know, in some ways I would rather find out that there 
is no cure for a certain disease that I have than know that 
that cure is right there in front of me, but I simply cannot 
afford it. Because I don't have the dollars to pay for it, I 
can't get that cure. This is unconscionable. I think it's also 
un-American, and I yield back.
    Mr. Pitts. The gentleman's time has expired. As usual, all 
opening statements of the Members will be made a part of the 
record.
    I have a UC request. as well. I'd like to submit the 
following documents for the record: statements from the 
National Council on Disability, Healthcare Leadership Council, 
American College of Rheumatology, Academy of Managed Care 
Pharmacy, letters from the ASP Coalition, two dozen members of 
the patient community, Partnership to Improve Patient Care, the 
American Association of People with Disabilities and over 80 
other patient advocacy organizations, Senate Finance Democrats, 
Representative Scott Peters, 25 Democratic Members, Senate 
Finance Republicans and we also completed a review of 218 
comments from State and national groups as well as over 800 
individuals. The vast majority of comments express concern and 
urge withdrawal.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. So at this point, I'll introduce the witnesses 
in the order that you will present testimony. First of all, we 
have Dr. Debra Patt, MD, MPH, MBA, Vice President, Texas 
Oncology Medical Director, the U.S. Oncology Network Chair, 
Clinical Practice Committee of the American Society of Clinical 
Oncology, Editor-in-Chief, Journal of Clinical Oncology, 
Clinical Cancer Informatics and Board Member of Community on 
Oncology Alliance. Welcome.
    Then Dr. Michael Schweitz, MD, FACP, MACR, National 
Advocacy Chair, Coalition of State Rheumatology Organizations, 
CSRO; Ms. Marcia Boyle, President and Founder, Immune 
Deficiency Foundation; Ms. Heather Block, a patient advocate 
and Mr. Joe Baker, President, Medicare Rights Center.
    Thank you for coming today. Your written testimony will be 
made a part of the record. We ask that you summarize. We'll 
give you each 5 minutes for your summary. So at this point the 
Chair recognizes Dr. Patt, 5 minutes for your opening 
statement.

STATEMENTS OF DEBRA PATT, M.D., MEDICAL DIRECTOR, U.S. ONCOLOGY 
   NETWORK; MICHAEL SCHWEITZ, M.D., NATIONAL ADVOCACY CHAIR, 
 COALITION OF STATE RHEUMATOLOGY ORGANIZATIONS; MARCIA BOYLE, 
 PRESIDENT AND FOUNDER, IMMUNE DEFICIENCY FOUNDATION; HEATHER 
BLOCK, PATIENT ADVOCATE; JOE BAKER, PRESIDENT, MEDICARE RIGHTS 
                             CENTER

                    STATEMENT OF DEBRA PATT

    Dr. Patt. Chairman Pitts and Ranking Member Green, thank 
you for the opportunity to testify today on behalf of Texas 
Oncology, the U.S. Oncology Network, the Community Oncology 
Alliance and the American Society of Clinical Oncology 
regarding the oncology community's grave concerns with the 
proposed Medicare Part B drug payment model.
    My written statement provides numerous arguments against 
the CMS-proposed model but with the limited time I have today 
as a physician I will tell you why this is bad medicine for 
patients.
    I am Dr. Deborah Patt and for 13 years I have been 
providing care to cancer patients in Texas. As a physician, 
quality care and value are the standards by which I practice 
every day.
    My patients often face life-and-death situations, and my 
responsibility is to help them choose and then deliver the 
personalized treatment for their disease. Increasingly, the 
time I have to spend with patients is consumed with overcoming 
a complex maze of administrative obstacles to provide 
treatment.
    But the CMS-proposed model is not just another hurdle. It's 
an experiment that is simply unworkable in cancer care. Let me 
explain.
    CMS has proposed an experiment that randomizes physicians 
by ZIP Codes into test and control groups. The study hypothesis 
is that financial disincentives for use of newer more expensive 
drugs will cause physicians to choose less expensive treatment 
alternatives.
    In my world, this is clinical research. Unlike the CMS 
experiment, however, my patients have to volunteer their 
participation in a clinical trial. But there is no opting out 
of this mandatory national experiment.
    There is no informed consent for patients, no monitoring 
for adverse events, and no ability to evaluate impact on 
quality and outcomes. These are central requirements of any 
ethical research.
    In this experiment, Medicare beneficiaries in certain ZIP 
Codes won't have access to treatments that have a known 
survival advantage. This is simply unacceptable.
    More fundamentally, the underlying hypothesis for this 
experiment that these incentives will result in reduced 
Medicare spending is simply unfounded. I will let my written 
testimony explain how UnitedHealthcare Project has already 
disproved the CMS hypothesis.
    Today, I'd like to focus on how few opportunities there are 
to select therapeutic alternatives based solely on drug price. 
Ten years ago when I met my patient Karen, who has metastatic 
breast cancer, she couldn't walk. She couldn't stand without 
pain. Her bones were riddled with disease and she was told 
there was no hope. Within a year of meeting Karen she developed 
metastatic breast cancer to her brain. Ten years ago, we knew 
that patients with metastatic breast cancer to their brain 
lived an average of a few weeks. Karen had an option of a 
different treatment because the disease amplified a receptor 
called HER2, and she was given a novel and targeted therapy 
that we know would change her course dramatically.
    In the last 10 years, Karen has had some disease 
progression in her brain. But she's lived to see her son get 
married and she danced at his wedding. She's lived to see her 
first grandchild be born and grown into school age and she 
continues to receive targeted treatment today and enjoys a good 
quality of life.
    These targeted therapies are expensive but the alternative 
treatment to these expensive medications would lead to an early 
death. Premature death is not a treatment alternative.
    When I started my fellowship at the MD Anderson Cancer 
Center in 2003, myeloma patients lived an average of 3 years. 
Usually they were 3 years of toxic therapy.
    Today, an average myeloma patient lives greater than 7 
years due to new novel therapies and they live better because 
myeloma has become a chronic disease where many patients have 
remission for many years.
    The treatment is expensive, but the lower cost alternative 
would shave years off their life and diminish their quality of 
life as well. I remind the committee that Medicare covers 60 
percent of cancer patients, and the number of Medicare 
beneficiaries are growing every day.
    The CMS experiment has the potential to affect treatment 
options and outcomes for the most significant and vulnerable 
segment of the population fighting cancer. Interfering with the 
physician's ability to act in the patient's best interest is 
counter to our core values and certainly inconsistent with the 
good work Congress has done to advance high quality, high value 
care to every American.
    It is not who we are. Like everyone here today, I am very 
concerned about the increase in cost of treating cancer, 
especially rising drug prices.
    However, as I outlined in my written testimony, the CMS 
proposal will not only fail to reduce drug prices, but in fact 
it will likely increase costs.
    In closing, I want to thank the members of the committee 
for their extraordinary support of community-based cancer care. 
Many on this panel and even more on the full committee have 
introduced legislation, authored amendments, and wrote letters 
to improve cancer care and access for our patients.
    Most recently, thank you to Congressman Bucshon for 
introducing H.R. 5122. On behalf of oncologists nationwide, 
thank you for holding this hearing to highlight the serious 
concerns around the CMS proposal.
    I know we share the common goal of providing high-quality 
medical care to Medicare beneficiaries and thank you for your 
work on their behalf. When it's appropriate I'm happy to answer 
any questions.
    [The statement of Dr. Patt follows:]
    
    
    
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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Dr. Schweitz, 5 minutes for your opening statement.

                 STATEMENT OF MICHAEL SCHWEITZ

    Dr. Schweitz. Thank you, Chairman Pitts and Ranking Member 
Green, for inviting me to testify today on behalf of the 
Alliance of Specialty Medicine and the Coalition of State 
Rheumatology Organization.
    The alliance is a coalition of national medical societies 
representing specialty physicians in the United States. The 
CSRO is a group of State and regional rheumatology societies 
primarily made up of community practitioners formed to ensure 
access to the highest quality care for rheumatologic disease.
    I am a practicing physician and I spend the vast majority 
of my time taking care of patients. I am here today to discuss 
our concerns regarding the Part B demonstration project and to 
support Dr. Bucshon's bill, H.R. 5122.
    I note for the committee that our concerns track those 
expressed in the letter CSRO signed together with more than 300 
stakeholders urging withdrawal of the demo.
    We have expressed our procedural concerns in my written 
testimony. But today I will focus on our substantive concerns 
including prescriber behavior, patient access and 
sustainability.
    First, clinical decision making is not influenced by the 
add-on cost. We take issue with the underlying premise of the 
rule which is the belief by CMS that clinical decision making 
is driven by the opportunity to maximize revenue.
    Data supporting this premise is not existent. In fact, in a 
recent report by Magellan it looked at utilization of 
rheumatoid arthritis medications and found that physicians are 
not routinely prescribing the most expensive product.
    In fact, in 2014 in the physician's office the most 
expensive product was one of the least prescribed. Second, many 
rheumatology practices will be unable to absorb this reduction. 
The current 6 percent add-on already results in practices 
without volume purchasing power, being underwater on several 
products.
    A reduction from 6 to 2.5 percent plus a nominal flat fee 
will result in unsustainable cuts, especially considering that 
CMS did not incorporate the impact of sequestration in its 
calculations.
    Specifically, the current reimbursement level is actually 
ASP+4.4 percent. Accounting for sequestration, the new rate 
will be ASP+0.86 percent with a flat fee.
    Rheumatology is a specialty of small practices. For 
example, in my State there are only a few practices with seven 
or more doctors. Many practices with one or two rheumatologists 
do not have the purchasing power to buy at ASP.
    Third, and most importantly, is the impact on our patients. 
As a result of these unsustainable cuts, if the demo moves 
forward patients will lose access to office-based infusions.
    CSRO surveyed its members to ascertain the behavioral 
response to the CMS proposal and 73.08 percent of respondents 
said that infusible Part B biologic options would no longer be 
available for Medicare patients in their offices--44.87 percent 
of respondents noted that they would refer to hospitals or 
external infusion centers to continue therapy.
    Hospital referrals will create challenges for patients with 
rheumatoid arthritis including the distance to an outpatient 
center and increased personal cost to beneficiaries, especially 
those in rural areas.
    It also runs counter to the goals of the model as costs of 
the Medicare program will be higher when patients must receive 
therapy in the outpatient department instead of the physician's 
office.
    Fourth, value-based purchasing cannot be one size fits all 
and will require significant stakeholder input through pre-
rulemaking engagement. One of the concepts in Phase II are 
interesting to explore while we believe they are not developed 
enough yet to even be in a proposed rule since they do not 
contain enough detail for comment meaningfully.
    In addition, in rheumatology we don't have comparative 
affecting this data to compare treatments. There are very few 
studies that do that. On average, it takes two or more drugs in 
sequence before finding the one that the patient responds to.
    And finally, the cost of these drugs are closely grouped so 
there is little reason to apply tools such as reference 
pricing.
    In conclusion, the alliance and CSRO appreciates CMS' 
concern about high drug prices and would like to work with the 
Congress and the administration to find solutions.
    However, we must oppose the Part B drug payment model as it 
suffers from serious procedural and substantial flaws that we 
believe render it unworkable and it does nothing to actually 
address the issue of drug costs.
    As such, we have requested that CMS withdraw the model and 
we urge the committee to do the same. The alliance and CSRO 
thank the committee for its attention to this critical topic 
and for the opportunity to provide the views of practicing 
rheumatologists on the Part B model.
    [The statement of Dr. Schweitz follows:]



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    Mr. Pitts. Chair thanks the gentleman and now recognizes 
Ms. Boyle, 5 minutes for her opening statement.

                   STATEMENT OF MARCIA BOYLE

    Ms. Boyle. Well, thank you, Chairman Pitts, Ranking Member 
Green and all members of the subcommittee for inviting me to 
testify today on behalf of the Immune Deficiency Foundation, or 
IDF.
    IDF is the national patient organization founded in 1980 
dedicated to improving the diagnosis, treatment and quality of 
life of people with primary immunodeficiency diseases through 
advocacy, education and research.
    Primary immunodeficiency, or PI, represents a group of more 
than 250 rare chronic genetic diseases in which part of the 
body's immune system is missing or functions improperly, 
resulting in decreased ability to fight infection.
    Approximately 250,000 people are diagnosed with PI in the 
United States. Many require lifelong lifesaving treatment with 
immunoglobulin replacement therapy, or IG therapy, to replace 
antibodies needed to fight infection.
    When patients cannot access IG, their lives are threatened 
and they experience more doctor visits, hospitalizations and 
time away from work and school.
    I'm here today representing IDF and patients of PI, 
including my own son, who was diagnosed as an infant. We have 
serious issues with the Part B model and have asked CMS to 
withdraw it.
    In addition, we signed a letter expressing these concerns 
led by the Arthritis Foundation and 24 groups representing 
millions across the country with wide ranging conditions such 
as lupus, mental illness, cancer and the healthcare needs our 
veterans face.
    Our concerns are rooted in our experience with the previous 
Medicare reimbursement change that resulted in many of our 
Medicare patients losing access to their lifesaving treatment.
    Starting in 2005, there was significant reductions in 
reimbursement for IG products as a result of the Medicare 
Modernization Act, which changed Part B drug reimbursement from 
the average wholesale price to ASP+6 percent.
    In 2007, two studies by HHS reported on the difficulties 
physicians and specialty pharmacies had obtaining IG at the 
Medicare reimbursed price and the impact on patients' ability 
to obtain their infusions.
    One noted the 61 percent of responding physicians that they 
had sent patients to hospitals for IVIG treatment because of 
their inability to acquire adequate amounts of IVIG or problems 
with Medicare payment.
    But the problems were even bigger than that. Many patients 
lost access to IG not only in the physician's office but in the 
home as well. Thankfully, Congress responded by passing the 
Medicare IVIG Access Act with overwhelming support including 
support from every member of this subcommittee who was in 
Congress at that time.
    This demonstration is currently underway and IDF 
anticipates it will lead to a permanent fix in the current 
Medicare home infusion benefit for IVIG.
    We are not crying wolf. Patients with PI have personally 
experienced the unintended consequences of major payment 
changes, which is why we wish CMS had engaged in more pre-
rulemaking dialogue with stakeholders before issuing such a 
sweeping proposal that will dramatically impact beneficiaries.
    In addition, our fear is that the proposed Part B model 
which explicitly includes the ongoing Medicare IVIG access 
demonstration will undercut this demo. Some specialty 
pharmacies report that they are already close to underwater 
with ASP+6 and low payment for their items and services.
    With regard to the so-called value-based purchasing tools 
contemplated by CMS for Phase II of the model there is 
insufficient detail on the concepts proposed to comment one way 
or the other and this is particularly troubling because we have 
never seen any definition around what value actually means 
particularly to patients.
    Our patients have extensive experience with private 
insurers using the word value as a guise for implementing cost 
cutting tools that deny or delay access to needed treatments.
    This experiment needs significant stakeholder input and 
requires true dialogue with those who will be affected, 
especially patients. We also have procedural concerns with the 
model. The innovation center is authorized to test innovative 
delivery models to reduce program expenditures while preserving 
or enhancing the quality of care furnished to beneficiaries.
    However, the model is not a test. It contains a Medicare 
program change. In addition, we are concerned that this policy 
change does not preserve or enhance the quality of care for 
beneficiaries. In fact, we are convinced it will reduce quality 
and access for our patients.
    In conclusion, IDF has urged CMS to withdraw the Part B 
drug payment model and request the Congress do everything in 
its power to stop this harmful experiment from moving forward. 
It jeopardizes beneficiary access to needed medications, is the 
result of an opaque and poorly thought out process and may 
actually increase costs to the Medicare program.
    I thank the committee for its attempt to create 
accountability in the CMS process and for the opportunity to 
present the potential implications of the model for patients 
with PI.
    [The statement of Ms. Boyle follows:]
    
    
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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Ms. Block, 5 minutes for your opening statement.

                   STATEMENT OF HEATHER BLOCK

    Ms. Block. Good morning. Thank you, Chairman Pitts, Ranking 
Member Green, and distinguished members of the Subcommittee on 
Health for inviting me to testify today.
    I rarely share my cancer story as I find every cancer story 
is unique to the person and often frightening or boring to 
everyone else. But due to the importance of this hearing, I'd 
like to share my story.
    I found a lump in my own breast while managing aid projects 
for the State Department and the U.N. in Afghanistan. I was 
mystified as no one in my family had ever had cancer before.
    I returned to the U.S. for a diagnostic mammograms, and it 
was negative, so I returned to Afghanistan. My doctor suggested 
it might be a mastitis infection due to an injury. There was a 
chance I had bruised myself when I fled an attack that May. 
Running and jumping into a police truck will leave some 
bruises.
    I ignored worsening symptoms as the mammogram had been 
conclusively negative. Within three months, I returned again to 
the U.S. for a second mammogram, and it was invasive breast 
cancer.
    I continued to work through a mastectomy and six months of 
chemo, by then managing the monitoring and evaluation of aid 
projects in Iraq.
    A year after my oncologist said I was cured, I learned that 
the cancer had returned. It was now in my liver. There was a 
chance to surgically remove the cancer from my liver but cancer 
cropped up in my lungs within days of a pretty brutal liver 
resection.
    Stage IV, no cure--I was reeling with the news and my 
oncologist told me that 50 percent of women survived 2 years 
and only 20 percent approximately survive 5 years and that I 
would remain in treatment for the rest of my life.
    At 4 \1/2\ years, I'm living beyond most projections.
    But this isn't a feel-good story. My personal catch-22 is 
that while drugs are keeping me alive, I'm also going through 
my savings at an alarming rate.
    I spend a ridiculous amount of time and energy trying to 
cut costs and drafting budgets based on living longer with less 
money and rising drug costs and trying to figure out how to 
move closer to my cancer center--I do live in a rural area--
when I cannot sell my house.
    It is the only asset that cannot be taken from me if I end 
up declaring medical bankruptcy.
    I was so relieved when I found out that I qualified for 
Medicare, even though I'm well under 65. For those unaware, one 
can qualify for Medicare after 29 months on Social Security 
disability income if you're unable to work.
    My drugs are billed through Part B, as most cancer 
treatment drugs are, but my relief was short-lived when I 
realized that the drugs are exceedingly expensive, and I am 
always on the hook for the 20 percent co-pay.
    Medicare right now pays about $2,000 a month for my monthly 
treatment. There's no out-of-pocket maximum for Medicare Part 
B. This means I'm responsible for paying 20 percent of ever 
cancer drug that I receive forever more.
    This is why I was pleased to hear about the demo. The CMS 
demo proposes to address rising drug prices in a 5-year 
evaluation, not an overhaul of Medicare Part B. It's a way for 
the Government to begin to shift pricing incrementally based on 
what they learn.
    By evaluating payment models over a 5-year period CMS can 
determine best practices without forcing me to change doctors, 
hospitals or affecting my drug coverage.
    How else can Medicare continue to ask me to pay for 20 
percent of increasingly costly prescription drugs without any 
evaluation of whether my money is being well spent.
    I want to know that the drugs that are being used to treat 
my cancer are the ones that will do the best job and not just 
make my doctor the most money.
    Every patient deserves that. In all of the uproar over this 
proposal I have yet to hear anyone say that the current system 
is working. Where did the payment formula of +6 even come from 
and why would anyone push to keep a system where prescribing 
choices could be motivated by money?
    It seems common sense to remove any possibility of 
financial incentive and instead create an appropriate handling 
or storage fee.
    I also think it's worth mentioning that my 20 percent co-
pay is based on whatever Medicare pays. My provider may receive 
rebates or discounts. I'm still paying full freight.
    I'm betting also that most patients don't know that one 
component to be studies reduces or even waives the 20 percent 
co-pay and I'm hoping that my ZIP Code is selected for that 
part of the demo.
    These proposals simply put new options on the table to 
evaluate tools that are already being used in the private 
sector.
    As a taxpayer and a patient, this is exactly what I want 
our Government to be doing--getting the best value for our 
money. Frankly, we need to start somewhere. The price of drugs 
is not sustainable.
    CMS needs to test ways to hold down prescription drug 
spending. Patients like me should not have to choose between 
getting lifesaving drugs or paying our mortgage. No one should 
have to fear bankruptcy as much as cancer.
    Finally, I'd like to share America's dirty little secret. 
We already have drug rationing. It's called affordability. Drug 
innovation is meaningless without affordability.
    Thank you for the opportunity to address the subcommittee, 
and I look forward to answering any questions that you might 
have.
    [The statement of Ms. Block follows:]
    
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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Mr. Baker, 5 minutes for your opening statement.

                     STATEMENT OF JOE BAKER

    Mr. Baker. Thank you. Chairman Pitts, Ranking Member Green 
and distinguished members of the Subcommittee on Health, thank 
you for the opportunity to testify on the Part B drug payment 
model.
    As president of the Medicare Rights Center, I lead a 
national nonprofit organization that works to ensure access to 
affordable health care for older adults and people with 
disabilities through counselling and advocacy, educational 
programs and public policy initiatives.
    The Medicare Rights Center supports the proposed model. The 
model seeks to realign perverse payment incentives while 
ensuring that healthcare providers can continue to prescribe 
the medications best suited to the individual needs of 
patients.
    The model also brings innovative value-based payment 
strategies being used in the private market to the Medicare 
program. Transitioning Medicare to a system that reimburses on 
the basis of value is an aim supported by diverse voices 
including patients and consumers, physicians, hospitals, health 
insurers and others.
    This objective will not be realized if pursued only in 
silos, meaning the prescription drugs including Part B 
medications, must be part of these reforms.
    Beyond improving the quality of care delivered to 
beneficiaries, the proposed model may help the Medicare program 
by promoting more efficient use of program funds. Last year, 
Medicare spent $22 billion on prescription drugs, double the 
amount spent in 2007.
    The Medicare Rights Center answers nearly 17,000 questions 
on its national help line and provides educational resources to 
over 2 million individuals each year through 
medicareinteractive.org and other means.
    Challenges affording needed health care are a common theme 
heard on our help line. Sky-high cost sharing for Part B drugs 
is a notable concern most often for cancer and immuno-
suppressant medications.
    Many of these cases involve beneficiaries with original 
Medicare who lack adequate supplemental coverage. Estimates 
suggest that between 10 to 14 of beneficiaries only have 
original Medicare, making them responsible for a 20 percent 
coinsurance on all Part B services with no out of pocket 
maximum. These beneficiaries can be exposed to catastrophic 
costs which can reach as high as over $100,000.
    Calls to withdraw the Part B payment model fail to 
acknowledge the very real and unrelenting beneficiary access 
challenges that exist under the current payment system, not 
merely hypothetical ones.
    We commend the Centers for Medicare and Medicaid Services 
for proposing to test solutions that have the potential to 
alleviate calamitous cost burdens which cause too many older 
adults and people with disabilities to forego care, and we urge 
Members of Congress to support and strengthen the proposal.
    The Medicare Rights Center engage in this very process. Our 
comments on the model focus on the need for enhanced monitoring 
and oversight.
    Among the topics we addressed were concerns raised about 
how the model might shift how care is provided such as from 
community practices to hospital settings. Though we note that 
such shifts are already occurring and that shifts predicted in 
the past were not as draconian or dramatic as projected.
    We identified practical solutions that we believe can 
address this and similar concerns. Such is the creation of a 
dedicated ombudsman for this payment model.
    We encourage CMS to carefully weigh comments submitted by 
diverse stakeholders and we urge Members of Congress to ensure 
that the proposal moves forward with refinements that reflect 
concerns identified through the comment process.
    Prohibiting the payment model from moving forward would 
perpetuate a system that allows patients with less to go 
without needed care and halt progress in how--in transforming 
how Medicare pays for care and saddle taxpayers and saddle 
taxpayers with the unrestrained costs of prescription drugs. 
People with Medicare and taxpayers deserve a Medicare program 
that pays for high value innovative health care.
    We believe the Part B drug payment drug model presents an 
important opportunity to ensure that Medicare meets this high 
bar.
    Thank you.
    [The statement of Mr. Baker follows:]
    
    
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    Mr. Pitts. The Chair thanks the gentleman, thanks each of 
the witnesses for sharing your expertise with us. The Chair 
would like to note the presence of a former member of this 
subcommittee, a very valued member.
    Dr. Phil Gingrey of Georgia is with us, sat for many years 
here with us on the dais. So welcome, Phil.
    I'll begin the questioning and recognize myself for 5 
minutes for that purpose. There may be a misperception by some 
that the drugs we're talking about being impacted in this 
proposal amounts to an issue of simple generic substitution--
that patients can be easily switched to lower cost treatments 
without consequences.
    However, I know that many of these drugs do not have 
alternatives that are clinically interchangeable--that even 
treatments that may appear similar can have different effects 
on individual patients. Many other patients only have one 
effective treatment option.
    So, Dr. Patt, we'll start with you and go to Dr. Schweitz. 
What have you seen in your own practical experience? What are 
some of the adverse effects that could occur if patients aren't 
able to access their most appropriate prescribed treatment?
    Dr. Patt. Thank you. I think there are many intended 
consequences of this policy. When Avalere did an analysis of 
the proposed Part B payment model, they demonstrated that for 
drugs that cost more than $480 that many practices would be 
underwater. We know that even in the ASP+6, which is not really 
ASP+6 model today, that 25 commonly used oncology drugs are in 
fact underwater.
    So high cost drugs would commonly be underwater and this is 
a disproportionate burden on oncology practices because we have 
a higher percentage of more expensive drugs.
    Unfortunately, many of the new innovative products that we 
have that are very effect don't have generic treatment 
alternatives--don't have interchangeable options that are a 
lower cost. And so by not allowing practices to use or not 
having practices be able to purchase drugs and give them to 
their patients it diminishes the Medicare beneficiary's access 
to care.
    An example of that is pembrolizumab, which is an 
immunotherapy in melanoma. So we all probably know about Jimmy 
Carter's story with melanoma-that in August he was diagnosed 
with a metastatic melanoma to his brain.
    Because of the advent of targeted therapy this 
immunotherapy pembrolizumab he informed his Bible school class 
in December that he was in remission. He would not have access 
to this treatment in Medicare under this new model.
    Mr. Pitts. Dr. Schweitz?
    Dr. Schweitz. In rheumatology we have a limited number of 
agents, some with different mechanisms of action. 
Unfortunately, we have no way to predict response. It's pretty 
much trial and error.
    The average patient goes through at least two drugs before 
we find one that is effective for that patient and one of the 
tenets we like to follow is you don't change a patient who's 
doing well.
    We have concerns about the Phase II that may dictate that 
we change medications into, quote, ``higher value meds'' and we 
don't have a definition of that in rheumatology.
    In the private world--in the commercial world--there are, 
quote, ``value programs'' which are really only directed at 
cost and don't take into account the patient's individual 
responses.
    So it's a difficult problem to try to change medications to 
a, quote, ``more effective'' or a, quote, ``more value-based 
medicine'' when it doesn't exist.
    Mr. Pitts. Ms. Boyle, did you want to add anything?
    Ms. Boyle. Well, I agree with the sentiments because I've 
seen my own son, for instance, be on a 5 percent immunoglobulin 
product change to a 10 percent and collapse on the floor twice 
when they were trying to get used to it.
    He is now in his late 30s and has been on a wonderful 
immunoglobulin product for years and he's all of a sudden 
having reactions. He's having high blood pressure and trying to 
control the reactions, and thankfully there's a subcutaneous 
option out there that he's able to take--a higher percent 
solution.
    I have seen, again, private payers say well, we're just 
going to use the least expensive. Their value is expense. It's 
not patient reactions. If my son or other patients have to 
change to that least expensive option du jour they will have 
reactions. Their well-being will be compromised and it's 
unconscionable.
    Mr. Pitts. One more question. There's a lot of speculation 
about what drives a doctor's treatment of diseases using 
injectables. It appears that there's speculation that decisions 
are made based of the ASP.
    So Dr. Patt or Dr. Schweitz, would you please tell us 
what's more important to you? Is it your patients' need or 
preferences, your clinical evidence? Do you decide based on 
which drugs have a better reimbursement?
    Dr. Patt. Obviously, as a physician I provide the care and 
prescribe the care for my patients that is a mutual shared 
decision in their best interest and that is solely what drives 
our decisions about patient care.
    Mr. Pitts. Dr. Schweitz?
    Dr. Schweitz. I concur 100 percent. The appropriate choice 
of medication is based on what's best for the patient. I can 
tell you in our practice of seven rheumatologists if you ask 
any one of the doctors what the drugs actually cost or what the 
reimbursement is they will not know.
    Mr. Pitts. Thank you. My time is expired.
    The Chair recognizes the gentleman, Mr. Green, 5 minutes 
for questions.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Baker, the Medicare Rights Center is a trusted and 
respected organization that advocates on behalf of American 
seniors. The Medicare Rights Center has come out in support of 
the proposed demonstration.
    Can you explain to the committee how your organization came 
to this conclusion?
    Mr. Baker. Well, I think, once again, as I said in my 
spoken and my written testimony, we see in a daily way the 
consequences of these high drug prices, which Ms. Block 
detailed I think so clearly as well in her own experience where 
folks just cannot afford the rising prices of these drugs.
    The 20 percent co-insurance, if they don't have 
supplemental coverage--even those that do have supplemental 
coverage that might cover all or part of that 20 percent they 
are facing rising premiums for that supplemental coverage.
    And then, of course, all people with Medicare see increases 
in the Part B premium based upon the rising cost of Part B 
medications as well as other services under Part B. And so we 
see the proposal as an attempt to, one, restrain those prices 
and provide relief to those individuals that are--cannot afford 
these drugs and cannot get access to them all at all.
    You know, these are patients in effect that are under 
water, if you will, and cannot afford the care that they need. 
Secondly, we think it will help the program overall, once again 
get at high and rising----
    Mr. Green. Let me ask another question.
    Mr. Baker. Of course. Of course.
    Mr. Green. In both your comments of CMS in testimony before 
the committee the Medical Rights Center identified ways the 
organization believes the model could be improved to ensure 
access is maintained and care is not disrupted. Can you 
elaborate on these and did CMS adopt any of your suggestions on 
the model?
    Mr. Baker. Well, as you know, the comments were just 
recently submitted and now CMS has an opportunity to review all 
of the comments that they received. So we don't know yet 
whether they've adopted them.
    But what they have done is said up front that there will be 
claims monitoring in real time so if there are dislocations 
they can be fixed, hopefully in real time. That's what they 
said they want to do.
    We also have said that we think there should be an 
ombudsman as part of this program. So an ombudsman has been 
used in the DME purchasing project.
    It has been very helpful in identifying problems quickly, 
helping individuals with those problems, also helping suppliers 
and others with those problems and also bringing systemic 
problems to the attention of not only CMS but to you all here 
in Congress.
    I think the other thing that we're really looking for CMS 
to do is engage multiple stakeholders ongoingly and be very 
transparent with that monitoring that they're doing of claims 
with all stakeholders including Congress, not only transparent 
with that monitoring and what they're finding but also with any 
corrective action or corrective steps that we're taking.
    So we really think that this has to be done transparently. 
It needs to be shown that there's clinical effectiveness here. 
I mean, if there aren't clinically equivalent drugs they won't 
move into this value-based purchasing kind of system that CMS 
wants to set up in Phase II of the program.
    We think that certainly physicians and other providers with 
clinical knowledge, pharmaceutical manufacturers with clinical 
studies, need to come to the table, need to work with CMS to 
show that there is clinical equivalence.
    If there is not there's nothing in this proposal that would 
prevent coverage for a prescription drug for someone that needs 
it regardless of price. This is----
    Mr. Green. The proposed demonstration project--I only have 
5 minutes, and if you talk for 4 of them I can't answer.
    Mr. Baker. I'm sorry about that.
    Mr. Green. The proposed demonstration result in changes in 
Medicare payments is going to be all Part B medications over a 
5-year period and require 75 percent of the providers to 
participate in either one or both of two phases.
    Patients, providers and other stakeholders raised concern 
about the scope and size of this demonstration, recognizing the 
demonstration would affect care for our sickest seniors that's 
being treated for serious illness I have concern--I have 
concerns and urge CMS to reexamine the size of the proposed 
model. Is that one that they share? Because this is a pretty 
large model----
    Mr. Baker. Right.
    Mr. Green [continuing]. To do and I know that we need to 
have enough to get good information.
    Mr. Baker. Right.
    Mr. Green. But it seems like they're actually--the model is 
impacting the whole system.
    Mr. Baker. Well, we share that concern and many of the 
consumer organizations that we work with do share the concern 
and have questioned CMS about that.
    I know that there is concern about rural providers has been 
mentioned and something that I think CMS needs to take a close 
look at as well as providers that are represented here at this 
table and the switch between facility type of--the types of 
facilities that are providing this care.
    So I do agree that that size and scope needs to be examined 
and needs to be questioned. I also agree that the scope needs 
to be large enough to really test these models for payment.
    Mr. Green. Thank you. My time is expired.
    Mr. Baker. Thank you.
    Mr. Pitts. Chair thanks the gentleman. I now recognize the 
vice chair of the full committee, Mrs. Blackburn, 5 minutes for 
questions.
     Mrs. Blackburn. Thank you, Mr. Chairman, and Dr. Patt and 
Dr. Schweitz, I want to come to you first. And I mentioned 
Senator Grassley's letter to HHS and concerns with the--with 
this demonstration project and the fact that in the rule you 
have two different terms used, and I'll just read from Senator 
Grassley's letter. It's more succinct. ``I'm concerned that 
throughout this proposed rule two terms are repeatedly used--
study and test. These terms seem to indicate there is a 
component of research going on in this proposal.''
    So what I want to ask you--each of you to weigh in on 
because you've got oncology, rheumatology. When you have read 
this rule do you see this as being clinical research or do you 
just see it as being a test that they have thrown out there? 
And Dr. Patt, I'll come to you first.
    Dr. Patt. Representative Blackburn, thank you. I do see 
this as an experiment but we conduct clinical research in our 
cancer center and patients have informed consent. They have to 
electively consent to clinical trials. They can opt out if 
necessary and we follow adverse events and outcomes of those 
patients.
    In addition, clinical trials are to investigate potential 
enhancements. We know that this experiment would decrease the 
availability of some treatments that have a survival advantage.
    So this is an experiment that would never pass an 
institutional review board. You know, as you mentioned your 
concerns about rural clinics, as you know, average sales price 
is an average. Some large groups like hospital systems and 
large practices are able----
    Mrs. Blackburn. OK. Dr. Patt, let me just interrupt you 
there for the sake of time. So you say it wouldn't pass an IRB. 
So should they be forced to go in and get an IRB before they 
embark on this?
    Dr. Patt. I think that's not a bad idea.
    Mrs. Blackburn. OK. All right. Dr. Schweitz?
    Dr. Schweitz. You know, when you look at the goals of this 
plan, initially it appeared that it was to direct a way to save 
costs. But in meeting with CMMI, we were advised that this is 
budget neutral and if you look at the rule it's budget neutral.
    So the goal of the program then is to collect information, 
which makes it a study--a test. So if the goal is to collect 
information and the patients are part of that process they 
should be signing informed consent. They should be notified 
this is going to impact their treatment. There may be changes 
in their treatment directed by Phase II, and they should be 
part of the process of consent.
    Mrs. Blackburn. OK. Thank you for that.
    Dr. Patt, I want to come back to you. As I mentioned in my 
opening, we are very concerned about access and the impact that 
this demo is going to have on access in the rural areas.
    And I have talked with so many of my healthcare providers 
and I want you just to lay out what you see as being the impact 
on rural Medicare access for oncology services.
    Dr. Patt. Thank you for that opportunity. I think that this 
will be a burden disproportionately hitting small practices in 
rural areas and the reason for that is because average sales 
price is by its very nature an average.
    Some people will pay higher amounts for procurement than 
that average and some people will pay lower amounts. Larger 
hospital systems and larger practices have the ability to have 
contracting arrangements where they purchase at a lower price. 
What this means is that smaller practices disproportionately 
pay a higher amount.
    You can imagine if in the new model, which is ASP+.86 
percent, given Prompt Pay discounts, sequestration and the six-
month delay in increasing prices that if you have a 1 percent 
difference in smaller practices they will lose money on all the 
drugs that they buy.
    And so, you know, it will be impossible for smaller 
practices in rural areas to be open. What I think that you'll 
see is a natural unintended consequence of this policy is that 
you'll have a shift inside of service to hospital outpatient 
departments and you'll have decreased access where patients in 
rural areas will have to travel further distances to receive 
care.
    I think that that's not in our best interest as we already 
have deficiencies in service in rural areas today.
    Mrs. Blackburn. I thank you for that and I agree with you.
    I think what we're going to see this type of disruption in 
the healthcare marketplace is going to lead some people to feel 
that they have to abandon a certain protocol or therapy or 
course of care and go to something that maybe is not as fitted 
to them.
    So I yield back my time. Thank you, Mr. Chairman.
    Mr. Pitts. Chair thanks the gentlelady. Now recognizes the 
ranking member of the full committee, Mr. Pallone, 5 minutes 
for questions.
    Mr. Pallone. Thank you, Mr. Chairman. My questions are of 
Mr. Baker. The Medicare Rights Center's mission is to advocate 
for access to health care for Medicare beneficiaries.
    In addition to public policy initiatives, Medicare Rights 
Center helps beneficiaries on the ground through educational 
programs and counselling including a national help line that 
provides direct assistance to Medicare beneficiaries and their 
friends, family and caregivers, and with beneficiary access as 
Medicare Rights Center's sole focus, we in Congress should take 
seriously your recommendations to ensure the patient access is 
not disrupted by the proposed Part B drug payment demonstration 
project.
    In your testimony you mentioned some monitoring and 
oversight ideas for the proposed demonstration that CMS should 
adopt in its final rule.
    Could you just please discuss these proposals a little 
further and how they can help ensure that patients are getting 
the care they need and when have similar provisions worked or 
have they worked in other programs in Medicare?
    Mr. Baker. Of course. Thank you.
    First of all, you know, in the proposal as written there is 
claims monitoring, and CMS is saying that they can fix problems 
that arise in real time with that claims monitoring.
    The thing that we're asking CMS to add to that protection 
for both providers and for patient is an ombudsman and an 
ombudsman, an ombudsman office was--should be created for this 
program, we believe.
    The idea actually comes from one that Congress enacted with 
bipartisan support with the durable medical equipment 
competitive bidding program.
    The ombudsman would serve both beneficiaries and providers, 
as I said, by tracking complaints, troubleshooting appeals, 
monitoring beneficiary and provider experiences and reporting 
to CMS and Congress on a regular basis.
    We also, as I said earlier, think that CMS should regularly 
engage multiple stakeholders as part of the demonstration both 
in Phase I and then, of course, in Phase II they need to do 
that in order to find these clinically effective drugs and 
alternatives.
    So that monitoring of claims about how care is received, 
where it is received and then publicly release the monitoring 
that they are doing and the corrective action that they may 
have taken or they will be taking.
    So that can be, once again, commented on by all the 
stakeholders and, of course, by you in Congress.
    Mr. Pallone. Now, I was going to ask, unless you think 
you've already answered this, what should CMS do to evaluate 
the results of the demonstration projects to ensure that if 
they move forward and expand it that Part B drug payment policy 
best suits the needs of Medicare beneficiaries?
    Mr. Baker. Yes, I think the claims data monitoring is 
something that is already in there that will help evaluate it. 
We also think there should be additions to that.
    So we think that there should be patient experience surveys 
and focus groups of patients and providers as part of the 
evaluation to track the beneficiary experience with differing 
payment models.
    I think they've also suggested that they might develop 
patient-reported outcome measures, particularly in Phase II of 
the model. And so we strongly support that and we actually 
think that should be part of the Phase II model.
    And I think there should be multiple metrics that CMS uses. 
We don't have a patent on what those metrics are. It may be an 
iterative process as it moves forward.
    But it should definitely be metrics that focus on patient 
access, access to particular sites as well as care quality and 
the access to particular medications.
    Mr. Pallone. All right. Thank you, Mr. Baker.
    You did mention in your testimony I noticed a concern that 
has been expressed to me by some of the physicians in my 
district about shifting from community practices to hospital 
settings.
    Did you want to talk a little bit more about why that might 
happen and whether that's a good or bad thing?
    Mr. Baker. Sure. First of all, I would say, you know, we 
certainly want to see Medicare beneficiaries have access to 
care in whatever setting is appropriate for them and the most 
convenient setting to them so, you know, that is important to 
us and I think that's why we urge CMS to monitor any unintended 
consequences vis-a-vis settings.
    I think what we saw when we moved from AWP to ASP was a lot 
of concern about settings and moving to different settings and 
some of those concerns were proved not to be that significant.
    That movement from physicians' offices to hospital 
outpatient is happening regardless of this model and so it is 
something that we need to be concerned about and that has a 
larger causation from a consolidation that's happening across 
the healthcare market.
    Mr. Pallone. Thank you very much. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman. I now recognize 
the vice chair of the Health Subcommittee, Mr. Guthrie, 5 
minutes for questions.
    Mr. Guthrie. Thank you. Thank you all for being here to 
testify and thank you for your service overseas. I often talk 
about the experience I had in Yemen when I--not as a service 
person but in my role here and talk about the men and women in 
uniform over there serving and then I always point out--I said 
there are a lot of people in civilian clothes that are serving 
too from the Department of State and putting themselves in 
harm's way as well. So thanks for what you do in serving.
    But I do have a couple of questions for the physicians 
here. I know a couple of you said you view this as a test. Some 
of us believe this is a way--the rule actually amends what we 
think is a statutorial set formula, which is the price plus 6 
percent and subject to sequestration, so it's really quite 
less--4.2 percent, I believe. But and so the concern is they're 
using this process to amend the statute.
    So wherever you are on what the policy should be I think 
all of us on this dais up here, both sides, should be concerned 
that our essential authority--our legislative authority is 
being, I think, infringed upon.
    But one thing that we did all agree on was MACRA last year. 
We all wanted to put MACRA in place because we all realized 
that people are in situations like Ms. Block and we need to 
come up with a system that takes care of patients, that's 
sustainable, that works.
    And I've often said when I'm talking about MACRA if we 
don't have everybody together--patients, providers--if it just 
comes from Washington it's not going to--and goes out into 
the--where I think Mr. Baker was talking about, unintended 
consequences that could come needs to be monitored--you know 
the way that you eliminate those the most is that you have 
everybody involved going forward and because I don't know what 
happens in rheumatology practice.
    I mean, people who practice it tell me but I think if we 
all sit down--fortunately, I haven't had--been through an 
oncology practice as well.
    But so I just want to look at the way this rule came about 
and we were troubled that unlike other CMMI initiatives it was 
negotiated behind closed doors, mysteriously placed on a Web 
site and then taken down, as far as I can tell without any 
input from providers, patients or other affected stakeholders 
and can the physicians here--can you speak to CMMI's engagement 
with stakeholders prior to issuing this rule?
    Dr. Patt. Thank you, Representative Guthrie.
    So I'll say that this proposal, unfortunately, did not have 
stakeholder input prior to it being air dropped and, to your 
point, was put out without stakeholder input during a time of 
tremendous system change.
    So with the advent of MACRA we've had to infuse tremendous 
resources in infrastructure and systems changes. For me as an 
oncologist to do things like providing a standard treatment 
plan, standards survivorship counselling, patient navigation, 
ways to collect patient reported outcomes, ways in which to 
collect data for the merit-based incentive payment system, it's 
been a tremendous infrastructure investment.
    Not only has that been a tremendous infrastructure 
investment but my practice, which treats half of Texans, will 
participate in the oncology care model and that has been a 
tremendous infrastructure investment.
    Mr. Guthrie. OK. I have a question. Now I'm going to get 
Dr. Schweitz next. But so my next question to you was how is 
the way this proposal has come forward different than the way 
that you worked on the oncology care model--how that came 
forth?
    Dr. Patt. We worked in collaboration with 3 years. They got 
oncologists' input. We were collaborating on how that model was 
formulated and many individuals from the U.S. oncology network 
and Texas oncology participated. This CMS-proposed drug 
proposal had not input. It was put out there without any 
stakeholder input whatsoever.
    Mr. Guthrie. The oncology care model was a collaborative 
effort to try to----
    Dr. Patt. Yes.
    Mr. Guthrie [continuing]. Look at costs to people in 
oncology care and try to lower the costs for people in oncology 
care.
    Dr. Patt. Right. And for us in Texas oncology it brings in 
parts of that value because within the U.S. oncology network we 
have a system of value pathways where we take into account 
efficacy, toxicity and cost, looking at the incremental cost 
effectiveness in comparison to the next nearest comparator.
    So when you have interchangeable drug opportunities we will 
always pick the lower cost alternative. And so that's 
incorporated in this value-based system that we collaborated 
with CMS on.
    Mr. Guthrie. There was a big effort legislatively to put 
forth last year.
    Dr. Schweitz, I only have a minute left. I'd like for you 
to comment on.
    Dr. Schweitz. We did have extensive involvement with MACRA 
pre-rule, pre-law. So we were not involved in the development 
of this policy.
    In fact, I believe that there was guidance to the MACs even 
before the rule was released. So this was being developed 
without any knowledge or input of the stakeholders.
    Mr. Guthrie. And I think that's a frustration from our side 
who are involved along with all of you and patients and MACRA 
is that, you know, we put a lot of--that took a lot of time. 
The SGR finally went away.
    We got MACRA in place and we're looking at accountable care 
organizations value based. How do we have sustainable systems 
where people get caught in situations like Ms. Block and how do 
we avoid that and then all of a sudden this rule comes out when 
we're in the middle of that process and that negotiation that 
we've all worked so hard on and it came from nowhere and we--or 
came from above without any input and we really appreciate your 
testimony. My time has expired.
    Mr. Shimkus [presiding]. Gentleman's time has expired.
    The Chair now recognizes the gentleman from New York, Mr. 
Engel, for 5 minutes.
    Mr. Engel. Thank you very much, Mr. Chairman.
    I want to give a shout out to our colleague, Phil Gingrey, 
who served on this committee for many years. Good to see you, 
Phil.
    Let me say to Ms. Block I was quite moved by your testimony 
and I would like to ask you to talk a bit more about why your 
personal experiences led you to support this demo even in the 
midst of so many voices saying that the demo that would be 
harmful to patients.
    Ms. Block. Thank you.
    I think, first of all, that we need to all remember why 
this demo was even put out. With all the talk about drugs being 
under water and doctors being under water, patients are already 
under water.
    We're already there, and I talk to patients all the time 
because that's what I do. I end up sitting in chemo rooms 
talking to other cancer patients and everyone is struggling. 
We're struggling to stay alive.
    We're struggling to pay for our drugs. We're struggling to 
pay for our mortgage and take care of our kids and do 
everything else. We have to start somewhere.
    You know, as many things as I'm hearing all of you say that 
you don't like about this demo, I say, OK, then let's work 
together and get a better finished product.
    But you don't throw the baby out with the bathwater, as my 
mother would have said. We need to start somewhere, and this is 
a start.
    I have read the regs through and through and I don't see 
any issue with access to drugs--my getting access to the drugs. 
So what I see is an attempt to figure out how to support 
patients. That's what I'm seeing. So thank you very much.
    Mr. Engel. Well, thank you. I think your testimony was 
very, very----
    Mr. Shimkus. Eliot, would you get a little bit closer to 
that mike so----
    Mr. Engel. Yes. Sure.
    Mr. Shimkus. We want to make sure we hear you.
    Mr. Engel. Bring two microphones then. OK. Again, thank 
you, Ms. Block. You know, I also want to thank Ms. Boyle for 
talking a little bit about her son, and they're all so very 
courageous when we're asking people to come up and tell 
personal stories. It's really helpful to us and very, very 
courageous for the witnesses.
    I have been a great supporter of infusion therapy and I'd 
like to talk about how the model that we've been discussing 
would impact patients who rely on such therapy.
    Administering infusion therapies is very much more involved 
than administering oral medications.
    Infusion therapy necessitates specialized equipment, 
supplies and professional services including sterile drug 
compounding, care coordination and patient education and 
monitoring.
    And currently Medicare fully covers infusion therapy when 
it's administered in a hospital, a doctor's office or a nursing 
home. Medicare's coverage of infusion therapy in the home 
though is fractured and does not adequately cover the services 
needed to provide home infusions. That's the patient's home.
    Not only does this coverage gap force patients into 
expensive institutional settings but it also puts patients at 
risk of developing additional infections in these environments 
and on top of that this coverage gap prevents patients from 
receiving the treatment they need in the most comfortable 
setting possible--their homes.
    In 2003, Congress opted to exclude infusion drugs from the 
average sales price, or ASP pricing methodology, put in place 
for other Part B drugs, and as I mentioned Medicare does not 
reimburse for the services needed for home infusions and ASP 
pricing is insufficient to cover those necessary services. It 
just doesn't make sense. I want to highlight it because I think 
it's important.
    Unfortunately, we still have not corrected this coverage 
gap and that's why Congressman Pat Tibiri and I have introduced 
H.R. 605, the Medicare Home Infusion Site of Care Act, which 
would expressly provide coverage for infusion-related services, 
equipment and supplies.
    Given that this coverage is still not in place though I 
think we need to be cautious when considering changes to the 
reimbursement structure for infusion drugs.
    While CMS has excluded DME infusion drugs from the Phase I 
of the Part B drug payment model, these drugs have not been 
excluded from Phase II.
    So let me ask Mr. Baker, would you agree that more work is 
needed to ensure that Medicare beneficiaries can get the 
infusion therapy they need in the comfort of their homes?
    Mr. Baker. Yes. I think that certainly Medicare doesn't 
provide, as you said, adequate coverage right now for home 
infusion services and we would agree that this problem could be 
resolved outside of the demonstration.
    It's not necessarily affected one way or another by the 
demonstration, and certainly in part two this could be part of 
the resolution where there could be additional legislation that 
would bolster this benefit for beneficiaries and make it more 
available to them.
    Mr. Engel. This is something that, obviously, is better for 
the patient but ultimately would involve a savings of money, it 
would seem to me. So it seems like a win-win.
    Mr. Baker. If the setting is as safe as you're saying and 
it's at least a less expensive setting and more convenient to 
the patient and that would certainly be a win-win.
    Mr. Engel. OK. Thank you. Thank you, Mr. Chairman.
    Mr. Shimkus. Gentleman yields back his time.
    The Chair now recognizes myself for 5 minutes for 
questions.
    And first of all, before we start, I ask unanimous consent 
that the letter on May 2nd signed by 241 Republicans and one 
Democrat in opposition to this rule be placed into the record. 
Without objection, so ordered.
    Mr. Shimkus. I want to go on, first, to Mr. Baker. Are you 
at all concerned that this proposal will force large numbers of 
Medicare beneficiaries into a mandatory test?
    It was kind of talked about that this is not voluntarily. 
No one is signing consent forms. It's a mandatory--so does that 
have some--are you concerned about that? I mean, that's not 
really how tests are operated.
    Mr. Baker. Well, we have a number of demonstrations that 
are going on throughout the country and, for example, ACOs----
    Mr. Shimkus. Yes. But I mean we're talking about size too. 
I mean, this is really not a test. This is in actions a rule, 
you know, promulgated because it dwarfs--the test dwarfs the 
remaining control group.
    Mr. Baker. Right.
    Mr. Shimkus. Significantly.
    Mr. Baker. And we've done these kinds of, if you want to 
call them tests or----
    Mr. Shimkus. Of this size, percentage wise?
    Mr. Baker. We've changed reimbursement before. We were 
talking about a change in reimbursement. And so what I would 
posit is that we need to evaluate and monitor that change in 
reimbursement very carefully because whenever we do that there 
can be unintended consequences.
    Mr. Shimkus. OK. Let me ask another question. What's a 
larger expense to the individual patient? Twenty percent of a 
doctor office oncology service rendered or 20 percent of an 
oncology services rendered in a hospital setting?
    Mr. Baker. Typically, the hospital settings can be more 
expensive than physicians.
    Mr. Shimkus. Typically, like, if you find one that's not 
please let us know. I just don't think that's possible, which 
is part of this debate, because especially in rural districts 
you're changing really, in essence, a lifestyle in care of 
patients. We have great concerns.
    I also, Ms. Block, want to--thank you for your service to 
the country. Brats--Army buy, I'm an Army guy so we've both 
done the deal.
    But I don't--so you got Medicare based upon disability. 
When you entered Medicare were you given a choice of 
supplemental or a Medicare Advantage?
    Ms. Block. Thank you for the question. I was not given the 
choice of a supplemental. Supplemental coverage for under 65 is 
a whole another issue. So I welcome a hearing on that.
    Mr. Shimkus. Well, no. But were--so you could have?
    Ms. Block. I could not at that time, no.
    Mr. Shimkus. And why?
    Ms. Block. They didn't offer policies in my State. That's a 
State-by-State issue on whether insurers have to offer policies 
for those under 65 that are disabled. Now, you could enter an 
Advantage plan but, unfortunately, I live in a rural area and 
the Advantage plan doesn't cover any providers.
    Mr. Shimkus. Right. OK. Thank you. I wanted to clear that 
up. Appreciate it.
    Dr. Schweitz and Dr. Patt, CMS continues to reiterate that, 
and I quote, nothing in this proposal will prevent doctors or 
other clinicians from prescribing the treatment that a patient 
needs.
    Do you believe this proposal will impact your ability to 
prescribe and administer the most appropriate treatments for 
your patients in your office? Dr. Patt first.
    Dr. Patt. Thank you.
    Mr. Shimkus. And pull that mike close.
    Dr. Patt. So I don't believe that this will change my 
opportunity to prescribe the appropriate therapy. It will alter 
my ability to deliver the appropriate therapy to my patients.
    So I think that, you know, there are two alternatives. One, 
is that you either financially have a hazard for a practice 
that's likely to have them closed by having them take money out 
of the practice to try to purchase a drug that they cannot 
afford or they'll shift the patient's care to a different site 
of service like the hospitals.
    When we've seen the shift occur in the last decade, we know 
that the hospital outpatient department increased 30 percent of 
the chemotherapy infusions that they have in the last decade 
and the reason for the shift are the financial changes.
    We know that during that time period of that 30 percent 
shift that the hospital cost is a higher site of service care--
30 percent higher--and the patient outpatient cost is higher in 
the hospital outpatient department as well.
    Mr. Shimkus. Because the co-pay will have to pay that 30 
percent additional cost?
    Dr. Patt. In fact, we recently conducted a study with the 
Community Oncology Alliance and the Millman Group that looked 
at the 10-year shift from 2004 to 2014, and if you take the 
drug--if you take the costs in 2014 and attribute the cost only 
to site of service shift alone, it's $2 billion in that 1 year.
    Mr. Shimkus. Dr. Schweitz?
    Dr. Schweitz. I agree with Dr. Patt. It won't impact our 
ability to prescribe but our ability to deliver. If, as a 
business entity, we are unable to make ends meet we will not be 
able to provide the service.
    That's the central issue, and if we cannot provide the 
service in our office we're going to have to move the patient 
to a different site of service, i.e. the hospital.
    Mr. Shimkus. And I'll just end on this. My time has 
expired. It doesn't make sense to move people out of doctor-
center oncology services and move them into a hospital setting 
where they--you have the chance of other infectious diseases 
that could occur and we all know of the risks that's involved 
in that.
    So with that, yield back my time and recognize the nurse, 
Ms. Capps, for 5 minutes.
    Ms. Capps. Thank you, Mr. Chairman, and thank you all for 
being here today. I appreciate that this topic is brought up 
today and your expertise on it.
    I believe we can all agree that the current system is not 
working. Providers have long noted that the ASP+6 drug 
reimbursement formula is inaccurate and some patients have 
struggled to come up with their 20 percent share of the cost of 
their share in these settings.
    While the Part B program was intended to relieve our most 
vulnerable from catastrophic costs by providing access to 
important medications, for some--many individuals, I would say, 
it has fallen short.
    While the problems with the current system are well known, 
how to move forward to address it is more controversial--
complicated.
    Through this--though this demonstration project is an 
opportunity to explore strategies that could help transition 
Medicare into a more value-based system, I remain concerned 
about some elements of the project.
    Last week, my colleagues and I wrote a letter to CMS with 
concerns about certain components of the demonstration, 
particularly the nationwide scope of the project, the possible 
impact of it on small medical practices in under served areas 
and the potential shifting of patients of provider offices to 
expensive hospital settings.
    As co-chair of the Cancer and Heart and Stroke Caucuses and 
as a nurse, my biggest concern is that CMS needs to find ways 
to address problems before they strike and have them place a 
strong mechanism or strong mechanisms to identify barriers to 
care that arise during the demonstration.
    But and the very real fact that patients depend on drug 
therapies to extend and improve the quality of their lives is 
critical to this. But they and the system need to be able to 
afford it. In light of this, we must proceed thoughtfully and 
in the best interest of patients who will be most affected by 
this demonstration.
    Ms. Block, you mentioned in your testimony the difficulties 
of paying the 20 percent co-insurance for vital drugs as a 
Medicare beneficiary.
    And Mr. Baker, is Ms. Block's experience common for 
Medicare beneficiaries? Should Medicare have an out of pocket 
maximum like the one in the Affordable Care Act to address 
this?
    Mr. Baker. There's about 10 to 14 percent of people with 
Medicare that do not have supplemental coverage, as Ms. Block 
does not, and they pay the full freight for that 20 percent.
    As you note, there's no out of pocket maximum in the 
Medicare program so that means that, you know, you're paying 
that 20 percent up to infinity.
    There's never a place where Medicare takes over that 
coverage and provides you with 100 percent of coverage 
regardless of how much you're spending out of pocket.
    As you say, plans under the Affordable Care Act as well as 
plans available to employed individuals usually have some limit 
on out of pocket spending.
    Ms. Capps. OK. As we look at the plans for this 
demonstration program, my primary concern is for the patients 
and the tools they will have to address any barriers to care on 
the front end rather than afterward.
    I know some of my colleagues have touched on this but it is 
a great concern to me. So Mr. Baker, as someone who works to 
ensure access to affordable health care for Medicare 
beneficiaries, are there aspects of the demo that will help 
protect patients from disruptions in care?
    Are there any other protections that you would like to see? 
This is demonstration. This is the time----
    Mr. Baker. That's right.
    Ms. Capps [continuing]. To look at it. Any other 
protections you would like to see to ensure that patient care 
is not disrupted?
    Mr. Baker. Once again, I think that the ombudsman program 
that was used so successfully and the Congress mandated for the 
durable medical equipment program is an important protection, 
would be--would serve to protect consumers as well as this idea 
of getting shared decision-making tools out there for consumers 
and physicians to be able to work together and talk through 
clinical effectiveness as we move into Phase II.
    But I think the ombudsman is why I haven't mentioned the 
pre-appeals process that would be used in the Phase II and that 
would basically allow providers and/or consumers to do an 
appeal and to get relief if they feel that something is 
unavailable to them or not reimbursed at the right rate in the 
value-based phase of the program.
    Ms. Capps. Thank you.
    You know, just in concluding, in our efforts to improve the 
Part B program we have to keep our eyes on the goal of ensuring 
that patients have timely and affordable access to medications 
they need. That's got to be the bottom line.
    As we move forward, I urge CMS to pay special attention to 
the impact the demonstration project will have on our Nation's 
most vulnerable and to continue to work with affected 
stakeholders to address issues and unintended consequences 
before any changes are implemented. This is the time to do 
that. So I yield back.
    Mr. Shimkus. The gentlelady yields back the time.
    The Chair now recognizes the gentleman from Pennsylvania, 
Dr. Murphy, for 5 minutes.
    Mr. Murphy. Thank you, Mr. Chairman, and I thank the panel 
for being here.
    Before I start, Mr. Chairman, I just want to say I have a 
letter from the National Alliance on Mental Illness I'd like to 
submit for the record.
    Mr. Shimkus. Without objection, so ordered.
    I'd also like to correct the record. There were four 
Democrats on my letter, not one. So----
    Mr. Murphy. Thank you. That is recognized too.
    Now, starting--Dr. Patt and Dr. Schweitz, you both deal 
with chronic illnesses of cancer and rheumatoid disorders. I 
want to just point a couple of things.
    In the area of mental illness you may be aware that 75 
percent of people with severe mental illness have at least one 
chronic illness. Among them are ones within the areas you 
practice.
    Fifty percent of people with severe mental illness have at 
least two and a third have at least--have three or more other 
chronic illness and it is important we deal with those.
    As a matter of act, Medicaid reports that they--about 5 
percent of Medicaid recipients are responsible for about 55 
percent of Medicaid spending and nearly all of them have a 
mental illness.
    So in the context of this, I want to ask a couple questions 
here. Both of you discussed in detail some of the concerns 
about the proposed demonstration, the negative impact on 
patient access to treat cancer and arthritis.
    Hopefully, you're aware that similar concerns are there 
also in the area of mental illness drugs, particularly long-
acting injectables, anti-psychotic medications that treat 
schizophrenia and other psychotic disorders.
    And, of course, when a person is more stable they are 
adhering to their other treatments for the diseases that you 
treat. When you're not stable they're not following through on 
this.
    So with regard to this, I see that CMS' proposal is based 
on this idea that we should be paying for services based on the 
average patient under this Phase II CMS proposal to provide, 
quote, ``equal payments for therapeutically similar drug 
products'', unquote, and assuming the most clinically effective 
drug in a group can be identified.
    But in practice--and I need you to answer this both in 
about 15 seconds--what impact will these one-size-fits-all 
value assessments have on patient access to individualized and 
personal medicine?
    Can't have a dissertation. Real quick.
     Dr. Patt. I think that they will have decreased access to 
higher cost appropriate therapies.
    Mr. Murphy. Thank you. Dr. Schweitz, would you so agree?
    Dr. Schweitz. I agree.
    Mr. Murphy. And so would you say with part of this is that, 
I mean, certainly you would agree that different people respond 
differently to the same medication with regard to effect and 
side effects. Would you both agree with that?
    Dr. Schweitz. Right.
    Mr. Murphy. And also that you need to adjust your 
prescriptions in order to decrease side effects and increase 
effectiveness and therefore increase adherence. Is that correct 
too?
    And now, the FDA said that medications not taken as 
prescribed occurs about 50 percent of the time and the Center 
for Disease Control tells that nonadherence causes 30 to 50 
percent of chronic diseases treatment failures and about 
125,000 deaths per year.
    So I look at this then that--an important safeguard in 
current law that says CMS cannot use cost effectiveness as a 
threshold to set Medicare average payments or payment policy.
    However, in Phase II of the proposal CMS intends to use 
cost effectiveness in its analysis to inform value-based 
pricing.
    Now, would it concern you if CMS said that in order to 
implement this proposal they would ignore or waive this 
safeguard? Dr. Patt.
    Dr. Patt. It would concern me.
    Mr. Murphy. Dr. Schweitz.
    Dr. Schweitz. Greatly. Greatly.
    Mr. Murphy. And with regard to this, it also seems to me 
that, you know, obviously people more likely to take a 
medication that they--that deal with the side effects--some may 
actually take a certain medication because they find the side 
effects less objectionable and another one will say I'll deal 
with the side effects but I've got to have the treatment for 
this too.
    But these are all tradeoffs. But it seems to me that the 
way this proposal is coming through that it would limit the 
patient choice--your choice--and when a patient is not adhering 
to those drugs we saw from those statistics from FDA and CDC it 
may actually complicate the diseases tremendously and increase 
the cost. Now, can you elaborate on that, Dr. Patt and Dr. 
Schweitz?
    Dr. Patt. So as I said before, I think that we would 
continue to prescribe the drugs we think that are appropriate. 
But this proposal would impact the patient's ability to receive 
those drugs.
    Mr. Murphy. And with that, isn't it--it's best that--I 
understand adherence works best if you actually have a 
conversation with a patient with regard to the drugs.
    Dr. Patt. Absolutely.
    Mr. Murphy. But if that--and I know you're saying you would 
prescribe it anyways--but if there's a difference in 
reimbursement or----
    Dr. Patt. Well, I'm saying that I would prescribe the drug 
anyway. But you can imagine a scenario if someone was in a 
rural clinic and a drug is prescribed for them that they cannot 
receive in that rural clinic and they have to travel a distance 
to a hospital that may be two or 3 hours away to be able to 
receive that therapy. That would likely diminish compliance 
with a therapeutic regimen.
    Mr. Murphy. Dr. Schweitz?
    Dr. Schweitz. I would add to that. I'm in a relatively 
urban area, and there is no nearby hospital that I can send the 
patient to for an infusion.
    Most of the hospitals are not treating our patients unless 
they're 340Bs. So there is decreased access in that way as well 
and our fear is that our patients are going to drop out--that 
compliance will drop and they won't get treated.
    Mr. Murphy. And my fear is they're going to drop dead, 
according to statistics that CDC gives us and that's pretty 
frightening. And so we may save a little money in the front end 
by not prescribing the drug but the complications of the 
overall cost increases need to be taken in account. I thank you 
for your insights, and I yield back.
    Mr. Shimkus. Gentleman yields back.
    At this time the Chair now recognizes my colleague from the 
great State of Illinois, Ms. Schakowsky, for 5 minutes.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I want to make a couple of comments and then I want to get 
to Ms. Block and Mr. Baker with some questions.
    But, you know, I just feel like if you are offended at all 
at the suggestions that physicians would prescribe higher cost 
drugs because you want to make more money then it seems to me 
that the suggestion of CMS, which is that there be a percentage 
plus, a lower percentage, plus a flat rate would be something 
that would not be objectionable.
    Also, I wanted to mention that I found it very curious in 
testimony of Dr. Patt as well that there's over two pages 
within your testimony that are exactly the same language--
exactly the same language. Even the highlighted important parts 
are highlighted in the same--in the same way. I thought that 
odd.
    But I also wanted to mention that there was a difference. 
Dr. Patt and Dr. Schweitz touched--both touched on something in 
their testimony.
    Dr. Patt, you claimed that drug prices are not truly 
increasing faster than the rate of overall health costs. Yet, 
Dr. Schweitz, in your testimony you stated that you are keenly 
aware of unsustainable rise in drug costs and the effects of 
those costs on our patients' ability to adhere to treatment 
regimens. That's your quote.
    And I have to say, Dr. Schweitz, that I agree with you that 
spending on prescription drugs has risen significantly in 
recent years, driven by high and rising drug prices and recent 
IMS health report found that list prices for brand name drugs 
increased by more than 12 percent in 2015, representing the 
second year of double-digit increases and on and on.
    But I want to get to Ms. Block. Thank you so much for 
coming here today and telling your story. I know that there 
isn't a family including my own that hasn't gone through the 
issue of--related to cancer and treatments that are required 
and the issue of affording those treatments.
    So you testified that your cancer treatment has been 
incredibly expensive. Can you detail some of the costs and how 
they've impacted your personal finances?
    Ms. Block. I guess I can begin--thank you, first of all--I 
think I can begin to say that when you enter cancer world it's 
a different world and no one talks about cost at first.
    So it's very interesting when costs--when you start to ask 
questions and you have difficulty getting answers. I've had 
probably--I think I've had six surgeries by now, including one 
with a long stay in the hospital.
    I've been through full ranges of chemo. This is the third 
type of drug that I'm on now. Having metastatic cancer, what 
that means is you're constantly changing drugs to keep up with 
the cancer, so it's always changing. And the future is stacking 
drugs, which means more than one drug at a time. So my expenses 
will only go up.
    I make up budgets all the time. I think they're probably 
meaningless because we don't know how long I'm going to live. 
But you do the best you can to try and stay on top of it, and 
that's what life is like living with cancer in a country like 
ours where the drug prices just continue to rise.
    I've actually done my own studies on what my drug costs in 
other countries as opposed to the U.S. I did it on social 
media. It's an amateur study.
    But I was able to find out that I'm paying much more than 
every other country that I found, including Dubai, U.K., 
Denmark, you know, Norway, Sweden, on and on. Every other 
country that I have friends that were able to come back and 
tell me the monthly cost of their drug.
    Again, it's an informal amateur study, but I keep looking 
at am I going to have to move eventually--is that what my 
recourse is as the drug prices continue to rise and my savings 
dwindle?
    Ms. Schakowsky. Thank you. I want to wish you the best, 
too.
    Mr. Baker, why is it important that we work to reduce or 
eliminate cost sharing for beneficiaries? What impact would 
this have on one's ability to access care?
    Mr. Baker. I think, once again, certainly for the folks 
that go bare, as it were, on the 20 percent it will increase 
their ability to access these treatments.
    They're disproportionately folks with lower incomes, 
anywhere from $10,000 to $25,000 a year, disproportionately 
African American.
    Ms. Schakowsky. I want to tell you, I have talked to--at my 
pharmacy. I said, ``What happens when people are told it's 
$1,000?'' He says that often, not most, but often they just 
walk away.
    Mr. Baker. They walk away. Right. Or they find a way to pay 
for it with family friends mortgaging their home and other 
situations like that.
    So they are, as we were saying, underwater and unable to 
access the care.
    Mr. Shimkus. Gentlelady yields back her time.
    Chair now recognizes the gentleman from Missouri, Mr. Long, 
for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman.
    We are in the 114th Congress which each Congress, of 
course, runs for a 2-year period. During the 113th Congress, I 
did not miss a single vote in that 2-year period, which there 
was about a half dozen of us that had that type of a voting 
record, and it's tough when you catch flights, you miss 
flights, there's connections, everything.
    There's 2-minute votes. You have to be paying attention. 
And so voting is very important to me. In this Congress, the 
114th Congress, I missed two solid weeks of votes.
    Didn't go to the floor for two weeks because our 25-year-
old daughter, youngest daughter, was diagnosed with non-
Hodgkins lymphoma and so I kind of realized what it's like to 
go through that process. Thankfully, she's doing great, had her 
12 rounds of chemotherapy, lost all her hair, got all her hair 
back, curls and all.
    So we've been very, very fortunate with the--what's 
happened in oncology over this last 20-some years because I 
think that if it would have been 20 years ago we might not have 
had the same outcome.
    So with that as a little background on my personal story 
with our daughter's battle, Dr. Patt, supporters say this 
proposal will remove incentives to use higher-priced 
medications that are no more effective than alternative 
therapies. Can you talk about therapeutic alternatives in 
oncology?
    Dr. Patt. Yes, sir. First of all, I wish your daughter the 
very best.
    Mr. Long. She's doing great.
    Dr. Patt. I think most of us have a personal experience 
that we've been touched by at least someone with cancer. And so 
being able to deliver high-quality care close to one's home is 
critical to maintain quality cancer care for Americans.
    With regards to therapeutic alternatives, I'll say that, 
you know, this proposal what it does is it disincentivizes 
utilization of high-cost options for treatment.
    And so if there is a high cost alternative and a low cost 
alternative that's equivalent in terms of efficacy and toxicity 
obviously----
    Mr. Long. And they were closing the door. I didn't hear--in 
terms of what?
    Dr. Patt. In terms of efficacy and toxicity. Then, you 
know, we would want to facilitate utilization of the lower cost 
alternative.
    In fact, the U.S. Oncology Network--my network, which 
treats over 12 percent of Americans with cancer--we use a 
pathway system in the network which brings in drugs if there 
are alternatives that we only have the option of using the 
lower cost alternative. The problem is is there are actually 
few instances where a therapeutic alternative that is 
equivalent actually exists.
    And so, like, my patient in my testimony who receives 
Recepten, or a monoclonal antibody, against HER2 there is not a 
therapeutic equivalent for that drug and it's changed her 
survival from weeks to over a decade.
    And so, you know, the therapeutic alternative would be to 
give no treatment because there's not a low cost alternative to 
that drug.
    So it's either our sum scenarios--you know, I think that 
the stage two--stage IV second-line treatment colon cancer 
drugs are a commonly discussed alternative where there are 
drugs that are of equal efficacy and similar toxicity profile 
that have a difference in costs. Non-small cell lung cancer is 
also another area that's frequently talked about.
    But the truth is oncology is a collection of many different 
diseases and many of them don't have equivalent therapeutic 
alternatives.
    And so a decision to provide a lower-cost drug may convey a 
diminished survival benefit for patients and that's not an 
alternative. We want patients to live better.
    We want patients to live, you know, on chronic therapy--to 
have even advanced cancer be a chronic disease where they can 
live a good quality of life and live a longer life.
    Mr. Long. You sound like Michael Milken. That's what he 
told me. He said he wanted to make cancer a chronic disease and 
they've done a lot of good work in that area.
    Also, Dr. Patt, what impact will this proposal have on 
consolidation in the oncology space and the continued shift of 
care from the physician office to the hospital?
    Dr. Patt. That's a great question.
    So as you know, in the last 11 years we've seen an over 30 
percent shift from community clinics to the hospital outpatient 
department.
    We recently conducted a study with Millman that 
demonstrated that community clinics gave about 84 percent of 
therapy in 2004 and only 54 percent in 2014.
    We know that that site of service shift would be augmented 
with other financial pressures on community oncology practices 
and that the natural consequence of that action would be higher 
cost for payers and patients.
    Mr. Long. OK. Thank you, and I'll yield back my four 
seconds, Mr. Chairman.
    Mr. Shimkus. We appreciate that. Thank you very much.
    Chair now recognizes our veterinarian from Oregon, Dr. 
Schrader, for 5 minutes.
    Mr. Schrader. Thank you very much, Mr. Chairman. Appreciate 
it.
    I, like many others, have submitted a letter to CMS 
regarding the scope of this demonstration project and also 
sympathy particularly for the special need groups and the types 
of medications you administer.
    You just can't go to a generic. I mean, oftentimes even in 
my little world of veterinary medicine there were brand names 
drugs that would work and only be the drug that would work for 
certain patients of mine.
    So I'm hoping and based on past track record that CMS will 
be responsive to a lot of the concerns you're talking about as 
we go forward and the trick is, as everyone I think has alluded 
here tonight or today, is get it right. You know, make sure we 
get it right.
    I don't think the appropriate way though is to just stop 
the rule altogether. I think we're losing a little bit of focus 
and this is a proposed rule. CMS hopefully will be listening to 
this testimony and come back with something that is better than 
what we have seen so far.
    I'd be probably not smart to legislate before I actually 
see the proposed rule. And the goal is to get to a value-based, 
you know, outcome and value-based purchasing is part of that.
    I think there's some alternatives that are being discussed. 
The second phase I think is pretty interesting. But aside just 
dealing with this individual drug or that individual drug, 
different incentives are probably very, very appropriate and I 
guess I'm hoping that as we talk through this that this--we 
can--it continues to be very constructive as we go along.
    Shifting gear a little bit, I guess, Dr. Baker, you talk a 
little bit about Phase II. We focused here pretty much on Phase 
I, but Phase II offers some options and I'd be curious your 
take on that.
    Mr. Baker. There are many physicians on the panel, but I'm 
not one of them so----
    Mr. Schrader. Mr. Baker, I do apologize.
    Mr. Baker. So, first off, I think there are a number of 
value-based initiatives in phase two of this project, reference 
pricing, indication-based pricing, outcomes-based risk sharing 
agreements and others and, you know, for example, Express 
Scripts is looking at implementing a system--is implementing a 
system of indication specific pricing with some of its clients 
including with cancer drugs, several pharmaceutical companies 
and ensures health plans are partnering on outcomes risk--
outcomes-based risk sharing Novartis with Anthem and Cigna on 
Entresto for treating heart failure, others with other drugs 
around moving cholesterol range, United Health with Gilead on 
Harvoni for hepatitis C.
    CALPERS, the large California insurer for public sector 
employees and Safeway are using reference pricing.
    First Safeway used it for colonoscopies because of the 
differences in prices in the markets across the country that 
they were seeing and within markets where they were--they had 
stores and now they're expanding that to other aspects of 
health care.
    So we see this in use in the private sector, these models 
being used--being heavily evaluated and monitored once again in 
the private sector and we do believe Medicare in phase two of 
this project can take advantage of that experience but also 
needs to be very transparent, needs to be very engaged with 
stakeholders because as we've heard there are instances where 
there are not clinically equivalent pharmaceutical products. 
And so we went to make sure that there is access to all of the 
products and that an individual determination will still be 
able to be made with a patient in a doctor.
    That's why the pre-appeals program is important that CMS 
has put in there with balance building protection to consumers 
which is very important as well to keep their access to all of 
the drugs that might be useful for their condition.
    Mr. Schrader. Yes, and I do appreciate the tone of your 
response because the goal here is to treat the patient. I mean, 
we've heard everyone testify that is our goal and, you know, 
certainly, the--historically we've seen that through the prism 
of our own particular specialty or practice mode and I think 
one of the goals of healthcare treatment going forward, whether 
or not we like the ACA or not, is to treat the whole patient.
    And that usually involves, frankly, getting together as 
groups of doctors and hospitals and organizations, not 
necessarily giving up their private practice but working with 
your colleagues and having a relationship so that Ms. Block or 
whoever can get the right referral.
    You come in for one issue and you discover another one 
maybe much more serious--you want to make sure that that group 
takes care of you and I think the focus of this hearing has 
been on just a fee for service piece and the real goal, I 
think, is to get to bundle payments where different doctors 
with their patients get to make that particular choice of what 
type of treatment, what medication to get, if a medication is 
better than perhaps psychological behavioral treatment.
    There's a lot of what we're talking about here focussing 
only on a fee for service and I think that's an old way of 
treating things. We need to be moving forward and value-based 
bundle payments would, I think, a lot of the concerns that have 
been expressed here.
    And I yield back. Thank you, Mr. Chairman.
    Mr. Pitts [presiding]. Chair thanks the gentleman.
    Now I recognize the gentleman from Virginia, Mr. Griffith, 
5 minutes for questions.
    Mr. Griffith. Thank you, Mr. Chairman.
    I've heard from ophthalmologists about the proposed 
demonstration's potential impact on access to sight-saving 
treatments for numerous blinding conditions including age-
related macular degeneration--AMD--which is the leading cause 
of blindness in the United States.
    Currently, there are three treatment options for AMD and 
other ocular conditions. Two are name brand drugs approved for 
ocular use and one is a cancer drug, Avastin, that is 
repackaged for off-label use by ophthalmologists for the eye.
    The demonstration seems to assume that lower cost 
alternatives are always available. However, many 
ophthalmologists are experiencing increasing difficulties 
accessing the lower cost drug, in this case Avastin, due to new 
Federal and State regulations on the compounding and 
repackaging of drugs.
    Also, notwithstanding the fact this committee worked very 
hard to allay fears--the fears related to compounding drugs as 
a result of the New England Compounding Center scandal and 
tragedy has made many patients reluctant to receive a drug that 
is compounded and repackaged.
    Both of these factors are leading to increased use of the 
more expensive brand drugs. Further, I am told that the 
continued access to Avastin for the treatment of AMD and other 
ocular decisions will effectively end if the FDA finalizes its 
pending February 2/15 draft guidance that calls for a maximum 
five day beyond use date for compounded or repackaged 
biologics.
    So I know that it's not directly on point with what you all 
have been testifying to this morning and you may not wish to 
comment on this.
    But I'm just curious if you all would think that perhaps 
CMS ought to go back and take a look and instead of including 
all Part B drugs if the agency ought to give consideration to 
excluding certain classes and, obviously, the one that I just 
talked about are classes of drugs that include compounded 
repackaged drugs or drugs that are used off label for 
demonstration.
    So do you think that--and I guess I'll ask you, Dr. Patt, 
although I understand it's a little off your subject area.
    Dr. Patt. Thank you, Mr. Griffith. So I'm not an 
ophthalmologist. But I will say that there have been 
discussions of carving out the oncology care model, of carving 
out certain segments.
    In my opinion, there's not a right way to do the wrong 
thing. We need stakeholder engagement from the beginning to 
engage with CMS and value-based ways in which we can move 
forward like we did with the oncology care model. We want to 
participate.
    In our oncology practices we have many value-based programs 
and have demonstrated pilots that have saved tens of millions 
of dollars. And so want to work with CMS on that kind of work. 
I don't think that there's a way to exclude certain segments 
from this pilot and make it make it better.
    I think that we need to go back to the drawing board and 
look to projects like the oncology care model that are 
collaborative and value-based and have a better path forward. 
We would like very much in the oncology community to 
participate in that.
    Mr. Griffith. Anyone else have a comment on that?
    OK. Sticking with you, Dr. Patt, I noticed on Page 11 of 
your written testimony--I didn't hear it in your oral testimony 
but in your written testimony you did talk about the era of 
hospital acquisitions and consolidation in the oncology space 
where doctors' practices are being taken over by the hospital 
and you think this experiment by CMS will push more of that and 
then that makes it even harder for rural districts like my own 
and earlier one of the folks said they had a rural district--
they had 19 counties. I have 29 geopolitical subdivisions, most 
of whom are rural counties.
    Dr. Patt. Yes, sir. So as we mentioned, the current model 
which is not really ASP+6, because you have to take out Prompt 
Pay sequestration and the six-month lag, has to take into 
account not only acquisition but also inventory storing of 
drugs, specialized handling of drugs and then--and then 
disposal of drugs. So there's a lot that has to go in there.
    If you bring it down to ASP+.86 percent you have to know 
that average sales prices by its very nature an average. There 
are people that pay more than that average and people that pay 
less than that average.
    Hospital systems in large practices are going to get 
preferential contracting to pay less than average on average 
and smaller practices are going to have less bargaining ability 
because of less volume-based purchasing and have to pay more.
    So you can imagine if you're at ASP+6 percent it has to pay 
for all of these other functions and you're paying 1 percent 
higher. How will you be able to keep your doors open?
    And so what we've seen with these financial pressures over 
the last decade is the natural consequence of the shift from 
community practices to the hospital outpatient department and 
we know that that's a 30 percent shift in the last 11 years.
    We also know that that conveys on average a higher cost of 
over 30 percent and a higher co-pay for patients. And again, if 
we look at the cost of that shift in 1 year for cancer 
spending, just attributed to the distribution of site of 
service alone it's about $2 billion.
    Mr. Griffith. I do appreciate it. Thank you very much and I 
appreciate all of you being here today. Yield back.
    Mr. Pitts. Chair thanks the gentleman and yields 5 minutes 
to the gentlelady, Ms. Castor, for questions.
    Ms. Castor. Thank you, Mr. Chairman. Thank you to all of 
our witnesses for participating today.
    Ms. Block, you've heard the testimony from the doctors on 
the panel that find the proposed model very problematic. They 
say that this will actually harm patient care, that oftentimes 
the doctors do not know the cost of drugs. They are focussed on 
what is best for the patient. How does this--what's your 
response to that?
    Ms. Block. I guess I would start by saying in all of the 
work that I did in many countries around the world we were told 
that you could never even have the appearance of impropriety. 
So that we couldn't take a cup of coffee from someone because 
there could never even be an appearance of impropriety.
    So I guess what I would say is that if there's a chance 
that there's financial incentives involved here then we remove 
them and come up with an appropriate storage and handling fee.
    But as long as there is an appearance of financial 
impropriety I'm going to question that, number one. And the 
second thing is I am just still not reading where there's going 
to be a specific issue with access to any of the drugs.
    I know my doctor is limited to what drugs I can get at this 
point too. But when I asked him he said he didn't see any issue 
with access after reading this demonstration project.
    So I understand that maybe in some areas there's some drugs 
they're saying that maybe they can't afford to get. But is the 
6 percent really making the difference?
    So as a patient I really question some of this and just 
want to keep bringing the focus back to the patients are 
already under water. We already, you know, don't have enough 
money to pay for this.
    So when everyone's talking about all these issues and 
obstacles in the way how do we get back to how to make the 
system work better for the patients.
    Ms. Castor. And Dr. Schweitz, I mean, the cost of drugs now 
is astronomical for many families. You know, it just--it does 
oftentimes push care out of reach for them and then when we 
have anecdotes about how costs are so much lower in other 
countries a lot of my neighbours at home say why, why in 
America are drugs--why do they cost so much more.
    So what advice can you provide about how we better control 
drug prices and Medicare spending?
    Dr. Schweitz. That's a very good question. Unfortunately, I 
don't have a clear answer. I do know that access to medications 
across all medications including generics is becoming 
problematic for our patients.
    But it's not an easy problem. There is no easy answer. I 
think we all have to sit down at the table--patients, 
providers, payers and manufacturers--to see how we're going to 
work out that problem so that our patients have better access.
    Ms. Castor. Dr. Patt, do you have any advice on how we 
address the high cost of drugs?
    Dr. Patt. Ms. Castor, as you know, I'm very concerned and 
oncologists are very concerned about the increase in drug 
prices. I know you've heard from Dr. Diaz in your district with 
Florida cancer specialists and from others that this is a great 
problem.
    Unfortunately, doctors don't set the prices for cancer 
drugs, and when we look historically at what's happened as a 
natural consequence of CMS decreasing reimbursement like the 
Prompt Pay discount and sequester, we see that during that time 
interval that costs went up tremendously.
    And so what we see is that that's not effective at 
controlling drug prices. What I'd like to see--what I think 
doctors can do and what we can partner with CMS to do within 
our realm is to change our system of care delivery to value-
based systems and, again, like I've said before, we would like 
to be partners with CMS in that endeavor like we have been with 
the oncology care model and like we have done in our practice, 
the U.S. Oncology Network, that treats 12 percent of Americans 
with value-based pathways for a decade.
    Ms. Castor. So Mr. Baker, you've heard what they've said. 
It's--gosh, it's very difficult, they don't have all the 
answers on drug costs. Dr. Patt says we can look at value-based 
and indeed the second phase of the model proposed to examine 
the impact of certain value-based and you've mentioned that.
    What I haven't heard is how we link this to outcomes as 
well. When you're talking about value is there no--is there no 
ling currently under Part B prescribing to outcomes? Do we not 
have the data and are you confident that this model is actually 
gathering that data?
    Mr. Baker. I think that right now we don't have a lot of 
that data. I think we're starting to get this data in part of 
the private sector value-based experiments that I talked about 
earlier.
    I think those models can lead to further outcomes-based 
information that we can use in this space to this model. But I 
do think part of the challenge of getting to a good place on 
this Phase II is making sure we have the right metrics, that we 
have the right feedback loop on outcomes.
    And so we recommended that that definitely be a part of 
Phase II.
    Ms. Castor. Yield back.
    Mr. Pitts. Gentlelady yields back. The Chair recognizes the 
gentleman, Mr. Bilirakis, 5 minutes for questions.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it. I 
thank the panel for their testimony today as well.
    Many conditions, especially within the rare disease 
community, lack treatment and those that have a treatment do 
not have multiple therapies to choose from.
    Ms. Boyle and Dr. Patt, under the proposed rule it seems 
like it would encourage physicians to prescribe cheaper or 
generic alternatives to benefit from a flat fee in the 
reimbursement payment. Do many of the Part B drugs have 
interchangeable alternatives?
    Ms. Boyle. Well, representing the Immunodeficiency 
Foundation we have a number of conditions that only have drug. 
There is not an alternative.
    Whether it's a generic or nongeneric, there's only one drug 
and, again, if this experiment reduces the ability of the 
physician to provide that drug, when you're talking rare 
diseases there are very few physicians or hospitals around that 
have the ability to treat the patients.
    We experience this with intravenous immunoglobulin back in 
2005, '06 and '07 with the change in the MMA and our patients 
were shifted from the physician office. Those that could find 
hospitals, and that was not always an easy thing to do to 
infuse immunoglobulin and where there are no generics but there 
are a number of products, we're lucky to find a site of care.
    Very often they had to change their product and there were 
many who could not find a site of care and had to go without. 
There were--the OIG and the ASPE reports did report on adverse 
events for these patients--sickness, hospitalizations--and 
there just aren't alternatives for the rare disease community. 
It's not just our patients, it's many other patients with rare 
disorders. So this is very frightening.
    Mr. Bilirakis. Thank you. Dr. Patt.
    Dr. Patt. So I'll say in the oncology community there are a 
few examples of treatment alternatives with equal efficacy and 
toxicity that have differences in cost. And in those scenarios, 
you know, we think that utilization of the lower cost 
alternative would absolutely be appropriate.
    The problem is is that these instances are few and far 
between. But in order to optimize the ability to give value-
based prescribing, as I mentioned the U.S. Oncology Network had 
pioneered value pathways.
    ASCO, the American Society of Clinical Oncology, has come 
out with a pathways policy statement. There are other pathway 
systems which utilize this and the community oncology alliance 
has come out with a patient-centered oncology medical home also 
trying to utilize a pathway system really to facilitate 
appropriate utilization because most of the time there are not 
alternatives that are equally efficacious and toxic that are of 
different costs where a lower cost alternative is truly 
therapeutically interchangeable.
    Mr. Bilirakis. Thank you. The second part of the question--
Ms. Boyle again and Dr. Patt-under the proposed rule one value-
based tool is the use of reference pricing. This requires 
setting a standard payment rate for an entire group of drugs, 
usually using the most clinically effective drug in a group for 
therapeutically similar drugs.
    Can you do reference pricing when there are no alternative 
drugs available?
    Ms. Boyle. Well, for instance, in the immunoglobulin 
products there are 13 of them. There have never been any 
trials--head on trials comparing them. They all are approved by 
the FDA but they're all very different.
    Some have high sugar content. Some have high salt content 
that would be bad for patients with heart conditions or 
diabetes. They all have different formulations and patients 
react differently.
    Some are appropriate for subcutaneous infusion, which some 
patients need because they have poor venous access or they have 
other adverse events to IV.
    Some patients cannot do subcutaneous. They are really not 
appropriate. So I don't know how you would put these together. 
Patients react differently and when you look at the 
administration and talking precision medicine and let's take 
best product for the individual patient this proposal runs 
counter to that.
    Mr. Bilirakis. Dr. Patt, briefly, because I want to ask 
another question.
    Dr. Patt. And I'll say that we don't today have a way to do 
reference and value-based pricing in oncology. But we would 
love to partner with CMS to do that instead of having a policy 
just drop down to us.
    Mr. Bilirakis. Thank you very much. Mr. Chairman, I know I 
have seven seconds so more than likely I'll yield back if 
you'll give me a couple more. Can I have a few more seconds to 
ask another question? Yes? OK. Thank you.
    Ms. Boyle and Dr. Patt again, under the proposed rule one 
of the value-based tools would have CMS pay more for effective 
treatments. Does CMS actually define what an effective 
treatment is?
    In the world of oncology or IG where treatment is more 
personalized, as you said, is it wise to have an unelected 
bureaucrat declare what is effective for all seniors, and I'll 
start with Ms. Boyle.
    Ms. Boyle. No, it's not. Essentially, we want our trained 
immunologists who are specialists in treating our patients to 
make these decisions. Again, this is important for any 
condition.
    Let's not take the decision away from the physician that 
works with the patient in what is the best treatment and the 
best outcome for that patient.
    Mr. Bilirakis. Thank you very much. Dr. Patt?
    Dr. Patt. I completely agree. I think that think that this 
is not something that we want outside of our specialty's 
hands--outside of a physician's hands and we would love to ask 
in partnership with CMS to think about a better path forward to 
try to institute value-based mechanisms for implementation of 
cancer care.
    Mr. Bilirakis. Makes sense to me. Thank you very much. Mr. 
Chairman, I yield back.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Mr. Cardenas, 5 minutes for questions.
    Mr. Cardenas. Thank you very much, Mr. Chairman, and I 
appreciate all the panellists for sharing your expertise with 
us.
    I'm not going to have enough time to ask all the questions 
that I'd like to ask. But at this time, Mr. Chairman, I request 
that I can submit two letters for the record. Request unanimous 
consent to submit the----
    Mr. Pitts. Without objection, so ordered.
    Mr. Cardenas. One is by the American Cancer Society, Cancer 
Action Network, and the second is the California Life Sciences 
Association to the CMS on the proposed demonstration. Thank 
you, Mr. Chairman.
    [The information appears at the conclusion of the hearing.]
    OK. With that, my first question is the proposed 
demonstration would be made so that three out of four Medicare 
Part B providers across the country would have to participate 
once we entered Phase II of the demonstration.
    I have concerns about the nationwide scope of this 
demonstration. Mr. Baker, do you think it's possible for CMS to 
modify and narrow the scope of the model and yield efficiently 
reliable results to evaluate with respect to the goal of the 
model?
    Mr. Baker. Our understanding is that the breadth of the 
model is in order to, you know, test the model and make the 
results generalizable or scalable. That said, I believe that 
they have been--they have said that they're open to suggestions 
about the scope and breadth of the model.
    So I know folks have commented on that in this comment 
period and I hope and expect that CMS would take those comments 
into consideration in the comment period.
    Mr. Cardenas. Dr. Patt, what do you think?
    Dr. Patt. I think that, again, as I mentioned we need to do 
the right thing. There's not a right way to do the wrong thing.
    I think this proposal needs to be pulled back completely. I 
think that we would really look forward to the opportunity to 
work with CMS on better value models. I sat with four of the 
leaders of CMS a month ago and gave them information on value 
pathways and how to work towards pathway systems or other 
alternative systems to reduce cost. I'll meet with CMS again 
tomorrow.
    The oncology community would really look forward to the 
opportunity to focus on value in a collaborative way and not 
have a proposal that's bad medicine put down for patients that 
would decrease their access to care.
    Mr. Cardenas. OK. Thank you.
    This next question is to Mr. Baker and Dr. Patt and also 
Ms. Boyle. I'm going to give you a scenario. If I am a senior 
who is seeing my doctor for a medicine that's administered in 
his or her office and I disagree with the coverage or payment 
decision made by Medicare, it can seem daunting to file an 
appeal and many patients aren't aware that there is even an 
appeal process.
    CMS is proposing that a new pre-appeals process would be 
most applicable to Phase II of this demonstration. 
Beneficiaries and/or providers can request a review of a claim 
before it's submitted for payment, giving the provider the 
opportunity to discuss why a particular drug or treatment would 
be best for a particular beneficiary.
    Currently, appeals are handled by the Department of Health 
and Human Services Office of Medicine, Hearings and Appeals, 
otherwise known as OMHA. OMHA has a significant backlog in the 
processing cases.
    Although beneficiary appeals generally can be expedited and 
the demonstration will establish a separate appeals process, 
apparently.
    Mr. Baker, what's your experiences been with the Medicare 
appeals process and do you think that there should be an 
expedited appeals process for patients established in the 
demonstration?
    Mr. Baker. I definitely think there should be an expedited 
appeals process for the demonstration not only in the pre-
appeals process but we've also recommended to CMS, as I've said 
before, that there be an ombudsman both in Phase I and Phase 
II. And I might add that in Phase II a lot of the consultation 
that some of the other panel members are talking about will 
occur with regard to, you know, value-based payments.
    So I do believe that consultation will ultimately occur 
before Phase II value-based ideas are implemented.
    Mr. Cardenas. Ms. Boyle or Dr. Patt, do you have any 
comments on that?
    Dr. Patt. I would be concerned about an appeals processing 
causing inappropriate delays in patients receiving treatment.
    Ms. Boyle. I would agree on that sentiment because our 
experience with appeals through the years have been people 
making the decisions on the side of the insurers are not 
specialists, particularly when it comes to rare diseases, and 
we've just seen patients go through delays getting their 
lifesaving infusions.
    Mr. Cardenas. Thank you all very much. I yield back.
    Mr. Pitts. The Chair thanks the gentleman. Now recognize 
the gentlelady from North Carolina, Ms. Ellmers, 5 minutes for 
questions.
    Ms. Ellmers. Thank you, Mr. Chairman, and thank you to the 
panel. This is a very important subcommittee hearing and I 
appreciate all of the testimony I am hearing, especially from 
the personal side, and I want to take my congressional hat off 
for a moment and put my nursing hat on, and I do want to ask 
Ms. Block--you have such a compelling story with your cancer 
treatments.
    You know, I understand whether we're talking about 
oncology, whether we're talking about rheumatology or 
immunology, I know that the care that is provided is a multi-
disciplinary education-based treatment where physicians and 
nurses, other healthcare providers are working with the 
patients and families to give the best care possible.
    So I am--I am very concerned about some of the issues that 
you have brought as patient, especially in your unique 
situation with Medicare and the inability to have basically a 
secondary or Medicare Advantage availability.
    So my question is where are you getting your care? Are you 
getting your care at a hospital or are you getting your care at 
a community-based oncology clinic or independent physician?
    Ms. Block. Sure. Thank you very much for the question.
    First of all, for the record, I now have a supplemental 
plan only because I drafted a bill and passed it in my own 
State legislature.
    Ms. Ellmers. Wonderful.
    Ms. Block. The only way that I could get it.
    Ms. Ellmers. Congratulations. That's great.
    Ms. Block. There's more problems coming in the weeds since 
Congress last year did away with some of the--selling some of 
the plans in the future. So I'm not going to be able to switch. 
But that's, again, it's trying to stay ahead of these bills.
    Ms. Ellmers. That's what we--unfortunately, what we do so 
many times is try to keep putting out those fires.
    Ms. Block. Right. So I've got problems that are going to be 
coming as my premiums rise to the point that I can no longer 
afford to pay them. I do--I get my treatment now at a hospital 
outpatient location.
    Ms. Ellmers. OK. So but it is a hospital-based facility?
    Ms. Block. Yes, and the irony is we don't have any private 
oncology practices in the State so that I had great difficulty 
at one point because my co-pays would have been so much less 
expensive to go to a private practice but there wasn't one.
    Ms. Ellmers. Right. Great. OK. Well, I do--I do think that 
it's very important that we clarify that point because that 
gets back to the issue of cost based on site. The difference 
between the availability of having--being a patient at a 
primary care or a private practice versus a hospital-based, I 
mean, because we're talking about kind of two different beasts 
there when we're talking about Medicare. So that is a very 
important point to make. But thank you for that because that 
was part of my concern.
    I guess the next issue I would--this last question for you 
as a patient have you had that conversation with your 
oncologist? Have you--have you actually asked is there a less 
expensive treatment because of this issue that I'm faced with 
financially? Is there something else that I could be receiving?
    Ms. Block. My oncologist is a rare bird and, when I was 
diagnosed with metastatic disease, he sat me down and talked to 
me about my finances and I found when----
    Ms. Ellmers. Wonderful.
    Ms. Block [continuing]. When I talked to other patients 
that that was unusual because he said, you know, things are 
going to be changing dramatically for you.
    Ms. Ellmers. It's an issue. Yes. Definitely.
    Ms. Block. But that said, I ask--every single time that I 
go for treatment I ask the nurses giving me the treatment, I 
ask the doctors I talk to, do you know how much this costs.
    Ms. Ellmers. Uh-huh. And they don't, do they? I mean, the 
answer is usually no, right?
    Ms. Block. For the most part. Especially the people the 
administering it.
    Ms. Ellmers. Yes.
    Ms. Block. No one, and they're all amazed when I tell them.
    Ms. Ellmers. Yes. No, and that is typical because, you 
know, the healthcare provider is so concerned with providing 
for you the best possible care that you can receive that the 
issue of cost is not their focus.
    It's really the focus of us and for you and we want to do 
everything we can to make sure that you are getting that really 
good care and I just--there again, I've only got 50 seconds 
left.
    Thank you, Ms. Block, for your testimony today, and I just 
want to thank the physicians who are here--Ms. Boyle and Mr. 
Baker as well.
    I think we're all in agreement here. Even though this is a 
possibility of moving forward, I think we really do need to put 
the brakes on this because there are other ways that we can 
achieve decreasing costs and I'm kind of a little amazed at 
some of my Democrat colleagues--not all, because I think we all 
care about patients--but I'm a little concerned because they 
seem to have a little bit of amnesia.
    And there again, I'll ask Ms. Block--are you aware of our 
21st Century Cures Initiative that we passed here in the House?
    Ms. Block. No.
    Ms. Ellmers. This is actually an effort that we are putting 
forward. The Senate is working on their version right now and 
basically we are looking at all these issues and we have--we 
have gone globally.
    We have, you know, worked with other countries--how are you 
providing care that's less expensive. We've worked with our 
universities, our patient advocacy groups, our hospitals, our 
high-end universities, NIH, CMS, FDA, so that we can get drugs 
through the process in a more efficient less expensive manner 
that takes care of our patients.
    So I think we need to stay on that front and move forward 
and give the best possible care we can and keep those drugs 
costs down as well. So thank you all again. I apologize, Mr. 
Chairman. I went over.
    Mr. Pitts. The Chair thanks the gentleman.
    The Chair now recognizes Dr. Bucshon, 5 minutes for 
questions.
    Mr. Bucshon. Thank you very much and thank you to all the 
panellists for coming and, you know, I'm reading the 
legislation to restart this discussion and let me tell you why.
    First of all, one thing I want to--I was a practising 
cardiovascular and thoracic surgeon for 15 years and to me 
discussing the and putting forth the premise of physicians out 
there basing therapy, whether it's heart disease like I did or 
cancer therapy, based on how much they're going to get 
reimbursed from Medicare is just--it's almost an insult to the 
medical profession, from my perspective, because are there bad 
actors?
    There are in all fields. But I can tell you the doctors 
that I know and myself never consider that--that we can make 
more money if we prescribe something else.
    Now, that said, you also can't have something like this 
that could force independent practitioners to lose so much 
money on these medications that it limits access and puts them 
out of business. So I think we have to address that. You know, 
but cutting provider reimbursement without addressing the ASP--
the actual costs of the drug in the first place is just the 
wrong approach.
    And, you know, for the last 30 years CMS has tried to 
control healthcare costs by cutting provider reimbursement 
almost exclusively and look where we are today. It hasn't 
solved the problem.
    This is a big problem. I empathize with everyone including 
myself and my own family. I've got--my father's had all kinds 
of--have had four different cancers. My mother has had 
problems, and it is very expensive and costs are a real issue--
no doubt about that.
    But it seems CMS proposed this without any substantial 
stakeholder input other than MEDPac and threw mud at the wall, 
and they're now trying to figure out what's going to stick and 
what isn't, and that's just the wrong approach. This should be 
scrapped, and we should start from scratch.
    We do need to address costs, no doubt about it, but we 
should get stakeholder input, and let's all work together--
patients, patient advocates, physicians, and CMS and Congress 
to address this issue.
    You know, I'm going to ask a question of the physicians. 
First, say, for example, there are two practices within the 
proximity--in the same geographic area, and for whatever reason 
their ZIP Code isn't picked.
    How is that going to affect the local or regional care, 
potentially, of patients? Dr. Patt, do you want to--I mean, 
that could potentially happen, right? You have an urban area--
half this town has this, half doesn't and half the patients are 
at one place, half at the other. How is that--how might that 
affect this?
    Dr. Patt. I think that if I was in a ZIP Code that was 
randomized to the experiment, having decreased reimbursement, 
that I would recommend my patient get the appropriate care not 
at my center.
    Mr. Bucshon. So you can see--you have the Federal 
Government in Washington, DC, affecting the local marketplace 
and health care and picking winners and losers.
    Dr. Schweitz. In rheumatology it's a little more 
problematic. There aren't many of us and there is usually a 
significant backlog to get in to see a rheumatologist.
    So if I'm going to refer my patient to the ZIP Code across 
the county there's going to be a delay in that patient being 
seen and a delay in that patient getting medication--his 
treatment.
    Mr. Bucshon. You know, and this is Washington, DC, so I'll 
say there very well could be politics involved in ZIP Code 
selection, believe it or not. I just want to put that out 
there, and for anyone to think that there won't be is just--
doesn't know Washington, DC.
    And people that have substantial political pull in this 
town will not be selected to have their reimbursement cut. I'm 
just here to tell you. That's what's going to happen, and it's 
going to substantially affect practitioners' ability in 
different communities to continue to treat their patients.
    I mean, again, the other thing is as it relates to 
alternative payment models, Dr. Patt and Schweitz, do you see 
this affecting the development and resources going into 
implementing APMs, for example? Do you see this as an issue?
    Dr. Patt. It does. I can say that as a network, the U.S. 
Oncology Network will put 10 percent of Medicare beneficiaries 
with cancer on the oncology care model and it's been a 
tremendous infrastructure investment.
    How do you then account for having to not have patients 
receive care in your practice because all of a sudden they're 
in this experimental arm of this experiment as well? I can't 
imagine a foreseeable situation where that will work.
    And I'll just say that, you know, we, as a large practice, 
have bought into a lot of infrastructure investment in 
procuring for these alternative payment models. I cannot 
imagine how a smaller practice will buffer that change.
    Mr. Bucshon. Yes. My time has expired but I just want to 
say this at the end is that I would urge CMS to scrap this 
proposal and come to the table with stakeholders and look at 
other ways that we can address patient medication costs.
    They are--it is an issue. We all know it. But cutting 
provider reimbursement, as I said in my opening, is not the 
solution to a very, very complicated problem that we all, I 
think, agree needs to be addressed.
    I yield back.
    Mr. Pitts. Chair thanks the gentleman. Now recognizes the 
gentleman from Massachusetts, Mr. Kennedy, 5 minutes for 
questions.
    Mr. Kennedy. Thank you, Mr. Chairman.
    In recent years, the cost of prescription medication has 
risen sharply, raising concerns for patients and their families 
about how to access and pay for needed drugs.
    The Boston Globe has reported that prescription drugs 
represent the fastest-growing component of health care, and 
spending on prescription drugs increased 13 percent from 2014 
to 2015.
    Given that, in 2016 alone Medicare is expected to cover 
about 57 million people. This hearing on Part B could not be 
timelier, especially as the entire healthcare system of the 
United States moves toward quality and value-based systems.
    Delivery system reform are a key part to the future of 
medicine and finding ways to reduce costs and ensure patients 
have access to affordable effective medications while spurring 
innovation is absolutely critical.
    Ms. Block, thank you for sharing your deeply personal story 
in your testimony earlier this morning. As we know, Medicare 
Part B beneficiaries pay 20 percent co-pays with no out of 
pocket money. Can you tell us more about how your doctor 
decides what course of treatment is right for you?
    Ms. Block. Thank you, sir.
    Right now, I have limited options because I've already been 
through a range of drugs. So there are limits on what my doctor 
can offer me, though he is very cognizant of the co-pay and we 
spend a lot of time talking about the co-pay and what I can do 
to afford it and how to make that work in my life.
    Mr. Kennedy. Have you ever had to forego, Ms. Block, 
treatment because of those costs and if you have an idea of how 
this demo might affect you and patients like you?
    Ms. Block. OK. I have never foregone treatment under Part 
B. I still have a prescription under Part D sitting in CVS 
right now waiting for me to pick up since I can't afford to get 
it. But under Part B I have not foregone treatment.
    I believe this demo will enhance my life. I think that it's 
going to reduce my co-pays. Number one, just off the bat, if 
they reduce that +6 percent after the--you know, with ASP 
that's a reduction in my co-pay right there. So that's number 
one.
    Phase II, if I'm lucky enough to be in an area that reduces 
or waives the co-pays then again I get a win-win. So I see this 
as a very positive move.
    Mr. Kennedy. I appreciate that, Ms. Block.
    Mr. Baker, in your testimony you highlight that Medicare 
paid $22 billion for prescription drugs last year, more than 
double the amount that was spent in 2007.
    And as we all know, co-pays for beneficiaries aren't 
decreasing either, which means that they already face access 
problems. As CMS moves forward with the demo, how can they 
ensure that the demo doesn't hinder access?
    Mr. Baker. I think some of the key pieces are that real-
time claims monitoring that I've been talking about. The other 
piece is the ombudsman program that we recommended and that was 
used in the durable medical equipment area I think to such 
great effect.
    And once we're moving into Phase II and the value based 
models that could be used in various specialities and with 
various drugs the pre-appeals process would be a way of, once 
again, getting access where access is needed and ensuring that 
it occurs.
    And then finally, those kinds of outcomes measures that we 
were talking about earlier would be a way not only of 
protecting patients but also of gathering research and data. 
And finally, we believe focus group testing, patient engagement 
surveys as well as provider engagement surveys to make sure 
that CMS has a full range of information about the effect of 
the model.
    Mr. Kennedy. And so I wanted you to clarify as well, sir, 
and I think you touched on it a little bit from your testimony 
earlier.
    But can you clarify if this proposal would require to pick 
one drug over another or will doctors retain the ability to 
pick the most appropriate treatment for their patients?
    Mr. Baker. The proposal--the model as written would allow 
doctors to prescribe, you know, whatever drug. This isn't a 
formulary, a list of approved drugs or a limited group of 
drugs.
    Doctors would be allowed to prescribe any drug that they 
felt was necessary for their particular patient and if there 
were some value-based program that indicated that maybe that 
drug wasn't the most clinically effective drug, once again, 
that doctor or that patient could use the pre-appeals process 
to or an ombudsman program, we would hope, to make the case 
that no, this is the most clinically effective drug for this 
particular individual because of their particular health 
profile or clinical needs.
    Mr. Kennedy. I appreciate that, and just before I run out 
of time I also want to echo some of the concerns raised by my 
colleagues that noted the similarities between testimonies 
today. I think that raises some important questions as well. I 
yield back.
    Mr. Pitts. Chair thanks the gentleman.
    Now, I recognize the gentleman from New York, Mr. Collins, 
5 minutes for questions.
    Mr. Collins. Thank you, Mr. Chairman. I want to thank all 
the witnesses. This has been very enlightening. And just to 
bring a couple of things up and Ms. Block, I know you said that 
you thought your co-pays would go down with this. Well, it 
doesn't work that way.
    I don't want to be too contradictory but a $100 drug with a 
20 percent co-pay is $20 whether it's +6 or +2.5 because it's--
the ASP doesn't change. So your co-pay doesn't go down.
    But Dr. Patt, in the big picture what I've heard is doctors 
don't even know what the drugs cost, by and large. Maybe their 
office manager does.
    They're prescribing to treat their patients, as Dr. Bucshon 
indicated. So I kind of reject CMS' whole premise that nuancing 
the +6, which we know is really 4.3, or the 2.5 which is really 
.86, that would only make an impact in prescribing drugs if 
these doctors, before they treated a patient, would be bringing 
out the spreadsheet to figure that out, which I don't see 
happening.
    Now, let me go through the math as well. Let's say you've 
got a drug that's $1,000 and you go to the 2.5 percent but 
under sequester it's .86 and you're one of the randomized, 
you're going to get $8.60 as your markup. Then you get $16.80 
flat fee. So you get $25.40 for that $1,000 drug.
    Now, if there was a $500 version you get $4.30 instead of 
$8.60. You get the same $16.80. So now you have $21.10. So if 
somebody said that switching it from six to--you know, changing 
that would drive a physician to prescribe the lower cost, I 
guess I kind of reject that because under the higher cost 
you're getting $25.40.
    Under the lower one you're getting $21.10. I don't think 
either one is adequate. But I think a physician would rather 
have $25 than $21.
    So the whole idea of driving someone to a lower cost drug 
you reject it categorically because the practice is still going 
to get more money with a higher priced drug.
    The co-pay to the patient may switch with a lower cost. I 
don't know that doctors are facing that. So I guess--I just 
don't see in the big picture that any of this is going to 
impact the cost of drugs.
    And I guess I'll throw out there, because I've become the 
subject matter expert on 340B pricing, if there's a problem in 
the cost of drugs and cancer drugs, it's all the private 
oncology practices being purchased by hospital systems--DSH 
hospitals who then get a 50 percent break from the 
pharmaceutical companies on these expensive drugs and you're 
seeing oncology practices bought up every single day so that 
the hospitals can cheat and get their 50 percent discount, 
which goes to their bottom line, which comes out of the hide of 
the pharmaceutical companies.
    And at the end of the day, you want to talk about why 
prescription--why prices may be high? Every time one of these 
drugs is now getting a 50 percent discount, what do you think 
the pharmaceutical companies have to do?
    I think the bigger savings is to stop the cheating on 340B 
pricing where fully covered patients the DSH hospitals are 
getting a 50 percent discount and yet the hospital is getting 
fully reimbursed by Blue Cross/Blue Shield. I'm just venting a 
little.
    But, you know, Dr. Patt, as I'm sure you've seen these 
oncology practices bought out and I'm sure you've seen them go 
to DSH hospitals where under 340B now there's this huge 
discount which has to impact you. Would you care----
    Dr. Patt. Yes, sir, and also imagine a scenario that's 
different than the one that you gave. Imagine that you're in a 
rural clinic where you purchased 1 percent above ASP, because 
again, ASP is an average.
    Mr. Collins. Well, that's the other thing. People think ASP 
is the price. It's not. Some smaller practices pay more than 
ASP.
    Dr. Patt. Right. So imagine you're in a scenario where you 
purchased a drug for 1 percent more and let's say it's a high 
cost drug. Let's say it costs $10,000 per month to administer.
    You can imagine that that would be a substantial loss to 
the practice--that if you transition that patient to the 
hospital outpatient department--let's say it's an hour away--
where they may have the 340B preferred vendor program and the 
ability to purchase drugs at a 30 to 50 percent reduction in 
cost then you would, you know, transition that patient's care. 
And I think that that trend is a trend we've seen over the last 
11 years and we would see it continue to be propagated.
    Mr. Collins. Well, and that's--you know, I'm concerned 
about--I have a very rural area--access and it's exactly what 
we're seeing, that the private practices are being bought up 
for one sole purpose and that's so the DSH hospitals can cheat.
    Get the 30 to 50 percent discount on the most expensive 
drugs--the $10,000 drugs--driving that to their bottom line and 
disadvantaging healthcare systems in total, pharmaceutical 
companies and ultimately patients.
    I yield back.
    Mr. Pitts. Chair thanks the gentleman. Without objection, 
we have a Member who's not on the subcommittee present who 
would like to ask questions.
    The Chair now recognizes Mr. Welch, 5 minutes for 
questions.
    Mr. Welch. Thank you very much, Mr. Chair, and I thank my 
colleagues for allowing me to sit in.
    I have some sympathy with the point that Dr. Bucshon made 
and Mr. Collins made about the cost and the complexities that 
are involved. But this is not a case of cutting provider 
reimbursement as much as it is about linking physician 
reimbursement to the cost of drugs they prescribe.
    I share the concern about cutting to the bone the providers 
but there is no transparency whatsoever in what medical care 
costs are.
    Nobody knows, and it's really true with respect to 
prescription drugs. And I have to say--I've been in and out but 
I am very alarmed at the lack of sense of urgency about 
something that is absolutely intolerable--prescription drug 
prices.
    First of all, prescription drugs save lives. They alleviate 
pain. But the market is broken and the cost that the 
pharmaceutical companies are charging is starting to kill 
patients they're trying to save, and no one's in charge. The 
doctor, Mr. Collins says, doesn't know how much the drug is. I 
think they should, like Ms. Boyle said.
    That's relevant to the everyday lives of people. And what 
I've heard Dr. Patt, from you, and Ms. Boyle is sort of the 
situation normal. It's all complicated. We want to collaborate.
    We have value pathways. But I don't know what that means if 
I'm a patient. I literally don't know what it means. What it 
sounds like to me is that let's keep rolling.
    The problem I have with the prescription drugs is that it's 
not a value proposition. It's a broken market. So the price is 
set by the pharmaceutical companies and it's whatever the 
traffic will bear, and they're protected by patent protection 
and they're entitled to that because it's intellectual 
property.
    But should they be charging $1,000 a day to a patient or to 
the taxpayers that have no recourse whatsoever but have a 
desperate need for the medication? And where you have--what 
we're talking about here is not the global mess of pricing and 
health care.
    We're talking about this system where the prescriber makes 
more money when he or she prescribes a more expensive drug. Dr. 
Patt, is that true or not?
    Dr. Patt. So I'll say that in my practice that is not true 
because our physician compensation model is not in any way 
dependent upon the drugs that I write.
    Mr. Welch. All right. But the----
    Dr. Patt. But there is variability between practices. But 
I'll say in my practice.
    Mr. Welch. Right. So just--if I am--work at a car store--
you've rented a car and you've seen how much people try to 
upsell what it is you're trying to rent, and there's an 
incentive for that salesperson, right? Now, if a doctor's going 
to prescribe something, let's say a regular--anybody who's 
got--and they've got their challenges, like Dr. Bucshon said.
    They've got to pay their assistants and they want to do the 
right thing. But the model by which they're paid is affected by 
whether they prescribe the $50,000 drug or a $3,000 drug.
    So just isn't that an incentive that would make one 
question whether that affected their decision?
    Dr. Patt. Mr. Welch, I think you make some very good 
points. But I'll say again that my personal income from my 
practice that treats half of Texans is not dependent upon the 
drugs that I write.
    Mr. Welch. You know, that's great, and I'm talking just 
about the pricing model here.
    Dr. Patt. Right. So I think there are limitations because 
when we talk about value pathways and when you have 
opportunities to exchange therapeutic alternatives, to use 
those opportunities for better value choices, that that's 
really important.
    But the issue of drug pricing----
    Mr. Welch. But I mean, I don't have much time so let me 
interrupt. But thank you.
    In this proposal the medical provider is going to be in 
control of the final decision about what's the most efficacious 
drug. That is agreed, because the patient's entitled to that.
    Mr. Bucshon. Will the gentleman yield real quickly? That 
depends, I would say, Peter, on whether or not the pricing 
results in a massive loss to the practice, and then they may 
not be able to absorb that without closing their practice.
    Mr. Welch. Thank you. Reclaiming my time.
    Then that gets us to the heart of another problem. If we 
create this Rube Goldberg situation where you've got to do all 
of these maneuvers to try to get your practice to be solvent 
instead of paying fair value for the procedure you do but then 
not linking your bottom line to whether the prescriptions are 
the most expensive drugs then we're going to get a chance to 
deal with this.
    But I just want to say this is--this is a disaster looming. 
The taxpayer can't afford it, employers can't afford it and 
patients like--my first wife had cancer 9 years. We had a 
fantastic oncologist.
    Drugs extended her life. They alleviated her pain. They 
made our family much stronger. But you know what? That's out of 
reach for more and more Americans and this economy can't 
support it.
    I really was upset about the lack of urgency on the part of 
some of the witnesses here to what I think is a very urgent 
problem.
    Thank you, Mr. Chairman.
    Mr. Pitts. Chair thanks the gentleman and recognizes Dr. 
Bucshon for UC request.
    Mr. Bucshon. Yes, I just want to ask unanimous consent to 
introduce an article from the New York Times from an oncologist 
from New York describing how this type of thing may limit their 
ability to properly treat cancer patients.
    Mr. Pitts. Without objection, so ordered.
    Mr. Welch.
    Mr. Welch. I'd like to introduce into the record an article 
examining congressional comments regarding Medicare's Part B 
pilot proposal.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. That concludes the questions of the Members 
present. We will have some follow-up questions. We'll send 
those to you in writing. We ask that you please respond.
    Thank you very much. This is a very important hearing, very 
timely, lots of good information. Members have 10 business days 
to submit questions for the record. So they should submit their 
questions by the close of business on Tuesday, May 31st.
    Without objection, this hearing is adjourned.
    [Whereupon, at 12:42 p.m., the committee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Today's hearing is an important exercise in Congressional 
oversight on a recently proposed rule from the Centers of 
Medicare and Medicaid Services (CMS) on Part B drugs. There is 
bipartisan concern that this proposed Medicare drug experiment 
will threaten the care of our most vulnerable seniors in 
Michigan and throughout the country, and reduce access and 
availability of lifesaving drugs.
    There are several characteristics that make this proposal 
unique when taken together. The new model is mandatory. CMS 
proposes to waive entire sections of statute and carefully 
negotiated Medicare reimbursement policy, effectively 
rerewriting at least seven payment provisions established by 
Congress over the years.
    Currently, Medicare pays for Part B drugs by reimbursing 
providers the Average Sales Price (ASP) plus 6 percent. In the 
first phase of the new model, providers in half the country 
would be reimbursed ASP plus 2.5 percent and an additional flat 
fee of $16.80 per drug per day. Application of sequestration 
would effectively bring this payment to 0 percent. Translation: 
reimbursement will fall short in covering the costs of 
acquisition, storage, and administration of many drugs that 
seniors with serious medical conditions need--quite a dangerous 
policy change.
    CMS has also suggested value based purchasing arrangements 
be applied in half of the country under Phase II, including 
reference pricing and Indication Based Pricing. CMS would set 
payment rates for drugs they believe are therapeutically 
similar, despite which drug a patient needs and vary payments 
for drugs based on what the Federal Government determined is 
their clinical effectiveness. These tools are dramatic 
departures from how we approach prescription drugs access in 
this Nation and give the Federal Government far too much 
control over decisions that should be left between a doctor and 
their patient. Another dangerous policy change.
    I do support efforts to test models that seek to improve 
quality of care, lower cost, and increase access. These themes 
are the backbone of our SGR reform legislation, MACRA. In the 
past, patient rights and access to care have always been given 
serious attention and weight but they are disturbingly lacking 
in this proposal. There was no input from patients or 
providers. In fact, this proposal threatens to disrupt many 
important Medicare models from Accountable Care Organizations 
to the CMMI sponsored Oncology Care demonstration. This is 
unnecessary and disruptive as providers prepare for MACRA.
    Fundamentally though, there is a serious separation of 
powers issue that cannot be overlooked. This model represents a 
dangerous precedent where future administrations could change 
the statutory reimbursement for any provider or service, 
anywhere or everywhere in the country, under the guise of a 
demonstration, without any input from patients, providers, or 
Congress.
    Each reason by itself should cause us pause. Taken 
together, there is no question that the policy must be 
withdrawn. And today, we will examine thoughtful legislation by 
Dr. Bucshon to do that and protect seniors.
    The potential for harm from the administration's alarming 
proposal for seniors in Michigan and across the country is 
real. Doctors, patient advocates, and patients are standing up 
and vocally declaring the threat this model could have on their 
care. We are talking about our moms and dads, grandparents, 
friends, neighbors, and our Greatest Generation--and the 
Government wants to experiment with their care. Seniors deserve 
our respect. They deserve to be treated with nothing but 
dignity.


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