[Senate Hearing 109-228]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-228
 
 SAVING DOLLARS, SAVING LIVES: THE IMPORTANCE OF PREVENTION IN CURING 
                                MEDICARE

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

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JUNE 30, 2005

                               __________

                           Serial No. 109-11

         Printed for the use of the Special Committee on Aging



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                       SPECIAL COMMITTEE ON AGING

                     GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama              HERB KOHL, Wisconsin
SUSAN COLLINS, Maine                 JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri            RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina       RON WYDEN, Oregon
MEL MARTINEZ, Florida                BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho                EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania          THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana                BILL NELSON, Florida
LAMAR ALEXANDER, Tennessee           HILLARY RODHAM CLINTON, New York
JIM DEMINT, South Carolina
                    Catherine Finley, Staff Director
               Julie Cohen, Ranking Member Staff Director

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Herb Kohl...........................     1
Opening Statement of Senator Gordon Smith........................     3
Opening Statement of Senator Ron Wyden...........................     4

                                Panel I

Douglas Holtz-Eakin, director, Congressional Budget Office, 
  Washington DC..................................................     5

                                Panel II

Dr. William Evans, director of Nutrition, Metabolism, and 
  Exercise Laboratory, Donald W. Reynolds Institute on Aging, 
  University of Arkansas for Medical Services, Little Rock, AR...    33
Bill Herman, vice president of Human Resources, Highsmith, Inc., 
  Fort Atkinson, WI..............................................    41
Stephen J. Brown, president and CEO, Health Hero Network, Inc., 
  Mountain View, CA..............................................    46
Steven H. Woolf, professor, Departments of Family Medicine, 
  Epidemiology and Community Health, Virginia Commonwealth 
  University, Fairfax, VA........................................    72

                                APPENDIX

Prepared Statement of Senator James Talent.......................    95
Questions from Senator Blanche Lincoln for Mr. Evans.............    95

                                 (iii)

  


 SAVING DOLLARS, SAVING LIVES: THE IMPORTANCE OF PREVENTION IN CURING 
                                MEDICARE

                              ----------                              --



                        THURSDAY, JUNE 30, 2005

                                       U.S. Senate,
                                Special Committee on Aging,
                                                     Washington, DC
    The committee met, pursuant to notice, at 10:03 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Herb Kohl, 
presiding.
    Present: Senators Smith, Talent, Kohl, Wyden, and Lincoln.

             OPENING STATEMENT OF SENATOR HERB KOHL

    Senator Kohl [presiding]. This hearing will come to order, 
and we welcome you all here today, where we will explore ways 
to contain growth in Medicare spending by helping seniors lead 
healthier lives.
    As always, we thank our Chairman, Senator Gordon Smith, for 
working with us in a bipartisan manner to examine issues 
affecting seniors. It is not secret that the Federal Government 
will face fiscal challenges as the Baby Boomers begin to retire 
and become eligible for Medicare.
    From the year 2000 to 2030, the number of people on 
Medicare will nearly double from 40 million to 78 million. In 
fact, in the next 25 years, Federal spending on Medicare, 
Medicaid, and Social Security will almost equal what we now 
spend on the entire Federal Government.
    So we know these costs are looming and yet our nation 
remains woefully unprepared. Net Federal spending on Medicare 
was more than $300 billion in 2004. But what many people don't 
know is that a small share of Medicare beneficiaries account 
for a very large share of total Medicare spending.
    Just 10 million of the 40 million Medicare beneficiaries 
account for 85 to 90 percent of the program's costs every year.
    As we will hear today, much of this spending is for 
patients suffering from multiple chronic diseases. Studies show 
that Medicare spends 2 out of every 3 dollars on people with 
five or more chronic conditions, such as diabetes, emphysema, 
heart disease, arthritis, or osteoporosis.
    These chronic conditions are largely preventable, 
treatable, and their onset can often be delayed through proper 
nutrition and exercise. At a time when our nation is growing 
older, it is clear that the successes we have in preventing 
chronic diseases will directly affect our ability to contain 
future growth in Medicare spending.
    We need to get the word out that prevention is not 
something that only children and younger adults can benefit 
from. Seniors need to understand that it is never too late to 
benefit from a healthier lifestyle.
    It is also important to note that this not just a challenge 
for the Federal Government. Rising health care costs will 
continue to be an issue for all American families and 
businesses, and so we need more prevention, nutrition, and 
exercise by younger generations also.
    Today, we will hear from Bill Herman from Highsmith, 
Incorporated, a company in Fort Atkinson, WI, on their award-
winning prevention programs to keep their employees healthy and 
their insurance costs low.
    This makes sense for businesses, but also for our country, 
for, after all, unless we find a way to prevent and treat 
chronic diseases early on, Medicare will inherit even more 
costly problems as more people join the program.
    I am pleased to have the director of the Congressional 
Budget Office here today to present CBO's recent report on 
Medicare High-Cost Beneficiaries.
    We also look forward to hearing from our second panel of 
witnesses who will discuss ways to successfully prevent and 
affordably treat chronic diseases.
    In particular, we need to find ways to educate seniors and 
boomers that it is never too late to change their lifestyle and 
improve their health and improve Medicare's finances at the 
same time.
    We need to make sure that seniors know about the preventive 
benefits that Medicare offers and why they are so important to 
take advantage of.
    We should look for ways to use technology to give seniors 
and health providers more tools to take control of their 
health.
    We know that many of the Senators on this committee share 
this concern for skyrocketing costs of health care, 
particularly Medicare. We know that we will all take away some 
good recommendations from today's hearing, and continue working 
together to stem this growing problem.
    So, again, we thank everyone for their participation here 
today, and now turn to our Chairman, Gordon Smith, for his 
opening remarks.

     OPENING STATEMENT OF SENATOR GORDON H. SMITH, CHAIRMAN

    The Chairman. Thank you, Senator Kohl, and thank you for 
arranging this hearing on such a vital topic. Today's hearing 
is, as he has stated very well on the importance of prevention 
in helping to slow the growth of Medicare spending. We have two 
excellent panels of witnesses today, and I will look forward to 
a productive discussion.
    Over 40 million elderly and disabled Americans rely on 
Medicare for their health care coverage. In 2004, total 
Medicare spending exceeded $300 billion and is expected to grow 
significantly in the coming decades as the Boomer Generation 
approaches retirement.
    With this impending challenge, we must find ways to control 
the growth of Medicare spending if we are to preserve this 
critically important part of our health care safety net for our 
seniors and the disabled.
    It is vital that we identify where spending is the greatest 
under Medicare and develop comprehensive strategies in which to 
lower expenditures in these areas. A May 2005 Congressional 
Budget Office report, which this hearing will examine, may have 
identified one such area. According to the report, a relatively 
small group of high-cost Medicare beneficiaries account for a 
large share of the program spending.
    According to CBO, only 10 million of the 40 million 
Medicare beneficiaries account for 90 percent of the program's 
cost.
    Further, three-quarters of these 10 million high-cost 
beneficiaries suffer from multiple chronic diseases, such as 
diabetes, emphysema, heart disease and stroke, arthritis, and 
osteoporosis.
    Such diseases require extensive care and often serve as the 
catalyst for many other conditions and ailments. Many of these 
chronic conditions are preventable through a regimen of proper 
nutrition and exercise.
    Additionally, the cost of treating these conditions can be 
significantly reduced by the implementation of chronic disease 
management programs.
    That is why this hearing will also examine some innovative 
technologies currently being used by institutional health care 
providers, such as the Veterans' Administration, to monitor and 
manage high cost patients more efficiently. Our ability to 
prevent and affordable treat chronic disease is key to our 
ability to contain the anticipated growth in Medicare spending.
    So I thank all of our witnesses for coming today to discuss 
this issue, and look forward to the testimonies. Thank you.
    Senator Kohl. Thank you very much. Senator Smith, we also 
have with us the other Senator from Oregon, Ron Wyden.

             OPENING STATEMENT OF SENATOR RON WYDEN

    Senator Wyden. Thank you very much. I want to commend both 
of you. I think this is an excellent topic, and I thank you, 
both, for your leadership.
    What I think is so striking about this is that for all 
practical purposes the Federal Government doesn't run health 
care programs. What the Federal Government does is run sick 
care programs, and probably nothing shows it more graphically 
than the topic that we are going to examine today under the 
leadership of my two friends and colleagues.
    The Federal Government is going to spend a boatload of 
money for what is essentially a chronic care program. That is 
what Medicare has become today, and that is what Mr. Holtz-
Eakin and his capable folks document, you know, once more.
    What is so striking is that if you look at the two parts of 
Medicare, Part A of Medicare will pay an astounding sum for 
essentially institutional care. What Senator Smith and I see in 
our state is essentially the insurance carrier that runs 
Medicare for our state will write out a check for $40,000, 
$50,000, some prodigious sum of money, for a seniors hospital 
coverage under Part A, and then there will be very little spent 
on prevention under the outpatient portion of Medicare Part B.
    Senator Kohl is absolutely right. There is a little bit of 
coverage. We got to do a better job of getting the word out 
about those preventive benefits under Part B. I really hope 
that as we work together on a bipartisan basis and have the 
very valuable assistance, Mr. Holtz-Eakin, that we can 
essentially revamp this program. Let us do a better job of 
targeting the resources where they are most needed, which is 
essentially what Senator Kohl and Senator Smith have said in 
terms of chronic care, and then let us do a better job of 
prevention so that we are not always playing catch-up ball 
under Part A when somebody is flat on their back in the 
hospital.
    I want my two colleagues to know that as part of the 
bipartisan legislation that Orrin Hatch and I have written, the 
Health Care that Works for All Americans Act, which, in effect, 
will kick in this October when the information about health 
care spending goes online, and we start walking the country 
through the choices, that I really want to see that law follow 
up on the good work that you have done, Senator Kohl and 
Senator Smith. It is an important hearing. Thank you, both, 
Senators. Mr. Holtz-Eakin has worked with my office on a 
variety of issues, and we appreciate all his cooperation as 
well, and I look forward to the testimony.
    Senator Kohl. Thank you very much, Senator Wyden.
    We are pleased to welcome our first witness, Dr. Douglas 
Holtz-Eakin, director of the Congressional Budget Office.
    Dr. Holtz-Eakin was appointed to a 4-year term in 2003; 
previously served for 18 months as chief economist for the 
President's Council on Economic Advisors, where he also served 
as the senior staff economist in 1989 and 1990.
    So we are very pleased that you are here, and we welcome 
your testimony.

 STATEMENT OF MR. DOUGLAS HOLTZ-EAKIN, DIRECTOR, CONGRESSIONAL 
                 BUDGET OFFICE, WASHINGTON, DC

    Mr. Holtz-Eakin. Well, thank you, Senator Kohl. Thank you, 
Chairman Smith, Senator Wyden.
    I am pleased that the CBO could be here to talk about our 
report, and this important issue. The starting point, as has 
already been mentioned by both the Chairman and Senator Kohl is 
the concentration of Medicare spending among a very few 
beneficiaries.
    In 2001, the data in the report show that 25 percent of the 
beneficiaries accounted for 85 percent of Medicare spending. It 
is useful to note that this is not unique to Medicare. National 
health spending has the same character, actually a bit more 
concentrated. This is the kind of pattern one would expect in 
an insurance program, where a relatively small number of 
claimants in any year would account for the bulk of the 
spending.
    But it does raise some questions and possibilities. First, 
of course, is, ``Can we save some Medicare costs in examining 
this?'' Is it possible that these are always the same people? I 
mean, we use 2001, but could it be the same people every year; 
and if so, is there a way to address their health so that they 
are either less expensive to begin with or are less expensive 
to Medicare in the future in some way.
    The report tries to take a look at this. The second figure 
that we look at examines the question of whether these are, in 
fact, the same people put differently, is there some 
persistence in these expenditures from year to year?
    What we do is try to track the high cost Medicare 
beneficiaries, those in the top 25 percent, over time. The 
graph that we have in front of you and is on the screens shows 
the high-cost folks in 1997, and then looks back a few years to 
what they were costing before that, and then follows them for 
years after 1997 up to 2001 to see what the expenditure looks 
like.
    The dark bar represents this group, and what you can see is 
that it ramps up prior to 1997. They were high cost in 1997, 
but they were accelerating in their costs prior to that, and 
then ramping down past 1997. This is consistent with a pattern 
that you would expect--one in which there are some acute care 
expenses. Someone breaks a leg and has an episode of high 
costs, but it goes away. Another part of the mixture is 
chronic, ongoing expenditures for the kinds of chronic care 
they might require. It is also important to note a key feature 
of the post-97 experience, which is the large fraction of these 
beneficiaries who are close to death, and indeed die in the 
years thereafter. That pattern is consistent with about 25 
percent of the spending each year that goes to those in the 
last year of life.
    Now, where are these costs coming from? If we go to the 
third figure, they are coming from the fact that, while these 
high-cost beneficiaries do the same things that other people 
do--they go to the doctor, for example--they are much more 
likely to do other things--go to the emergency room, have a 
hospital admission, or be in a skilled nursing facility. 
Regardless of which of those things they are involved in, they 
tend to use more services at the same time. So they have a 
greater propensity to have all those events than in the 
population as a whole.
    This raises the question, could we identify these 
individuals and prevent in some way, either their entry into 
these expensive episodes or lower the utilization given that 
you might have an entry.
    One issue we addressed in our report--and I won't go into 
it--is sort of whether you could just look at them on the basis 
of their demography and say these are likely to be the high 
cost folks. The answer is pretty much no. Although they are a 
bit older, they don't stand out in any other particular way.
    If you look at their health, however, a key feature is the 
presence of chronic conditions, particularly multiple chronic 
conditions, where compared to the typical population, 75 
percent have one or more chronic conditions versus about 40 
percent in the rest of the population. About half of them have 
two or more for sure.
    So that does stand out. So that becomes one of a series of 
illustrative strategies that we used in the report to see if we 
could identify high-cost Medicare beneficiaries. That is the 
final slide, where we took three that we thought of as stylized 
strategies that one might undertake to pick out who is going to 
be expensive in the future. Take a person who has multiple 
chronic conditions and then see how they turn out. Look at 
someone who has had a hospital admission and then track them. 
Or look at someone who is simply very expensive in the 
beginning year and see if they continue to be expensive in the 
years thereafter.
    What the slide shows is a comparison of those groups versus 
a random sample of Medicare beneficiaries. We look at them in 
initial year, 1997; identify them using one of these 
strategies; and then see if we could predict that they would be 
more costly in the years to come on the basis of that 
identification.
    Indeed, to some extent, this appears to be the case. It is 
suggestive that this kind of strategy might be successful in 
identifying high-cost beneficiaries.
    Compared to the control group, each has greater spending 
certainly in the base year, but also in subsequent years. For 
those who get admitted to the hospital or who are expensive, 
you see a bigger drop off. For those who have the chronic 
conditions, their spending drops off less. It tends to stay 
elevated in the years thereafter.
    Now, the final question, of course, is whether this would 
allow the Medicare program to somehow control their costs in 
the future, and there it raises the hope that something like a 
disease management program might be successful in reducing 
overall costs. We can come back to this in the discussion 
later, but I think that the things that I would note at this 
point are that disease management means different things to 
different people. There is a variety of different elements of 
either education or patient monitoring and, thus, practice, or 
care coordination, or case management. So exactly what goes 
into disease management is not always the same. It is worth 
investigating that.
    Asking whether it works is really a question of first 
comprehensively measuring costs over the entire future of a 
patient's experience and comparing that to a comparable patient 
without the disease management. That is a high scientific 
standard. None of the work that we have examined to date meets 
exactly that standard and at each point stepping down the 
standards, you have to ask whether we have got the evidence we 
need.
    Then finally, even if this strategy works, the important 
issue for this committee is a tradeoff in costs. It may be the 
case that some sort of preventive disease management program 
will work for Medicare beneficiaries--in the sense that it will 
lower costs other than what they would have been--but it will 
be costly to identify the people who enter into such a program 
out of large population of seniors. The question is whether it 
is cost effective in both senses. You may spend so much finding 
the folks that will ultimately benefit from disease management 
that you overwhelm any cost saving you would get from putting 
them in the program.
    Those are the two elements of the decision, and that is the 
difficult design issue that would face someone trying to put 
this into place in the Medicare population as a whole.
    So we are pleased to be here. That is the high speed 
overview of the report. I will be happy to answer your 
questions and pursue it any way you like. Thank you.
    Senator Kohl. Well, thank you. I am curious with respect to 
your opinion on the following thought: are there people who 
have some chronic conditions who use the system--and we are 
talking about them now--and to a great extent those are the 
ones who--the 25 percent who cost us 85 to 90 percent of 
Medicare, but others who are seniors who have similar 
conditions who just do not check in that often, use the system 
that much, manage to deal with these problems in a way that 
doesn't require them to be so involved with Medicare?
    Mr. Holtz-Eakin. There are certainly those who would have 
one of our list of seven chronic conditions. Diabetes stands 
out. Among the high cost beneficiaries are those with diabetes. 
However, if you look in the low-cost population, there are lots 
of folks with diabetes as well, three times as many, in fact. 
So it is not the case that if you are diabetic, you are 
automatically high cost, and it is not the case that if you 
have one of our chronic conditions, you always--you 
inevitably--end up there. They are in both populations. This 
goes to the last point I made, which is that you have to be 
able to find the diabetic who will benefit from some sort of 
intervention to lower costs.
    Senator Kohl. But is it true that there may be two similar 
people who are seniors who have conditions that are not 
entirely dissimilar?
    Mr. Holtz-Eakin. Oh, yes.
    Senator Kohl. One will access the system an awful lot and 
prove costly in a dollar and sense way. The other one will 
access the system an awful lot less and be less costly, just 
because they are a different kind of individuals.
    Mr. Holtz-Eakin. Certainly, and we could probably go into 
the data that we used for this report and find people with 
chronic conditions and show you the averages on both sides of 
that observation.
    Senator Kohl. All right. Thank you. Senator Smith.
    The Chairman. Doug, I am interested in whether or not you 
all have factored in the impact of Part D, and what it might do 
to Part A expenditures?
    Mr. Holtz-Eakin. It is not the first time this has come up, 
which is not surprising. We certainly have tried to look very 
closely at the degree to which additional therapies in the form 
of pharmaceuticals might lower costs elsewhere. But it is hard 
to get that out of the data for a variety of reasons.
    No. 1, the Part D really covered the costs of 
pharmaceuticals. People were taking the drugs they needed 
anyway in many cases, so you haven't really changed their 
therapy in any deep way. So you wouldn't expect a change in the 
costs. So that is sort of the major reason.
    The Chairman. OK. I understood in your testimony that where 
there is simply private coverage and Medicare is not involved, 
these same populations are still using those kind of resources?
    Mr. Holtz-Eakin. Yes.
    The Chairman. So probably not the savings we might hope 
for?
    Mr. Holtz-Eakin. No.
    The Chairman. OK. Do you believe there is any benefit to 
comparing data from Medicare managed care plans that employ 
chronic disease management programs with the data you have 
compiled for the fee-for-service programs? Are the Mr. Holtz-
Eakin. It is hard to imagine that it wouldn't be valuable to 
compare them as long as you were careful about the comparisons. 
You know the key issue is what constitutes the same kind of 
group going in, and given that the people who chose to go into 
the managed care versus the fee-for-service do so voluntarily, 
they are, by definition, not identical. They have chosen 
differently, and so you have to somehow get a handle on that 
before you start doing comparisons across the groups.
    Senator Kohl. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman, and I want to thank 
Dr. Holtz-Eakin for excellent testimony.
    I am curious what CBO has in terms of numbers as it relates 
to spending on health care in the last 6 months of an 
individual's life. You know there are constantly studies, you 
know, thrown around on this point, and I am wondering, you 
know, what, if anything, CBO uses as statistical documentation 
on that point?
    Mr. Holtz-Eakin. We rely on the Medicare claims data, so it 
would be among those folks. For the numbers I have for this 
hearing, we can try to see if there is more detail in the last 
6 months or for the last year. Twenty-five percent of Medicare 
spending is in the last year of life ballpark. So it is a 
fairly substantial sum.
    It is, of course, one of those backward looking 
computations in that you don't know when the last year of life 
will be necessarily. But looking back, those are the facts.
    Senator Wyden. That will be an area I want to follow up 
with you on as well for the Citizens' Health Care Working Group 
because those issues, of course, were tough before the Terry 
Schiavo case. They are now infinitely harder and my hope is 
that we can find some common ground. Senator Smith and I have 
introduced bipartisan legislation, the Conquering Pain Act, to 
try to create some options for folks, but we will be anxious to 
work with you on that.
    I wanted to also explore with you a topic you and I have 
talked about. Senator Sununu and I have been concerned about 
the fact that public programs, programs like Medicaid, the 
Public Health Service, the VA, are paying for prescription 
costs, you know, advertising. In effect, those programs end up 
getting shellacked, you know, twice. There are tax breaks for 
the pharmaceutical folks to advertise on TV. Nobody is 
quarreling with that, trying to take it away. But after that 
expenditure is made with taxpayer money, then more money gets 
spent for in effect like Medicaid to pay for all those purple 
pills, you know, dancing across everybody's television set. So 
we are trying to address this issue and obviously advertising 
increases utilization of prescription drugs and, of course, the 
program.
    Let me ask it this way: The official sources on drug 
advertising seems to be that the country spends between $3 
billion and $5 billion a year on prescription drug advertising. 
According to the bipartisan experts, after the Medicare drug 
benefit kicks in, Medicaid is expected to be about 10 percent 
of the prescription drug market. That seems to be a kind of 
consensus recommendation.
    So Senator Sununu and I are interested and working on the 
language of this and would very much like your counsel so as to 
focus on utilization and focus on market share. It is our sense 
that if we do that, the government could save about $300 
million to $500 million a year on Medicaid, in effect over a 
billion dollars over a 5-year period.
    Do you feel that that is essentially a reasonable kind of 
analysis?
    Mr. Holtz-Eakin. Yes, given that the language was tight 
enough, that it could find a way to actually recoup the costs, 
and that we can, you know, get a sense that the numbers are on 
the mark. They certainly seem reasonable. Yes.
    Senator Wyden. Well, I appreciate that, and I would like to 
work with you on the language because I know that the way it is 
framed so as to focus on utilization and market share is 
really, really key, and if we could follow up with your 
technical folks. They have been very helpful to us already. 
This is a bipartisan bill, and I just point it out because we 
have Chairman Smith here, and he has done excellent work on the 
Medicaid program. He is trying to get $10 billion worth of 
savings without hurting people on Medicaid, and I would just 
like to make it clear for the record that Dr. Holtz-Eakin has 
said we could get more than a 10 percent of the savings in the 
target that Chairman Smith is looking at by the advertising 
provisions along the lines of what Senator Sununu and I have 
been talking about. So we will be anxious to follow up with 
you, and we got to figure out how to save $10 billion on 
Medicaid, and we all want to do it without hurting people. We 
just on the record a way to in the ballpark to get 10 percent 
of the money. That is what we ought to be trying to do is 
sharpen our pencils.
    Chairman Kohl, I thank you for this, and Dr. Holtz-Eakin 
for all his analysis.
    Mr. Holtz-Eakin. Thank you.
    Senator Kohl. Thank you, Senator Wyden. We also have with 
us this morning Senator Blanche Lincoln from Arkansas. Senator 
Lincoln.
    Senator Lincoln. Thank you. A special thanks to Senator 
Smith and Senator Kohl. They have been tremendous leaders in 
the Aging Committee, helping us focus on the important issues 
that face this country, both financially as well as for all us 
emotionally because one of these days we are all going to be 
old. We are all aging, and we are grateful to both of you.
    Mr. Holtz-Eakin, we should have you as an honorary member 
of the committee. We have heard from you a great deal, and we 
certainly appreciate all the work that you at CBO have done in 
helping us realize that we can do a better job in administering 
these programs, particularly for these high-cost beneficiaries.
    I would urge you to take a look at legislation I have been 
working on as well, S. 40, and would appreciate getting any 
help with scoring it. I would love to work with CBO on a way to 
ensure that a new Medicare benefit for geriatric assessment and 
chronic care management of individuals with multiple chronic 
conditions would save money to the program. I know in my own 
personal experience with my father who went through a long 
period with Alzheimer's, Disease with other diagnoses, I saw 
how important it was to have coordination of all the medical 
professionals, in treating his multiple chronic diseases. 
Fortunately for us in Arkansas, we have the Don Reynolds Center 
on Aging, which focuses on patients with multiple chronic 
conditions and management of chronic illnesses, which makes all 
the difference in the world. My constituents see a difference 
when they go from visiting six or seven different health care 
providers to a care team that manages all of these chronic 
diseases together.
    You said in your report that reducing spending among the 
high-cost beneficiaries would ultimately rest on the ability to 
devise and implement effective intervention strategies, 
clinical or otherwise, to change beneficiary use of medical 
services. I think that by giving an individual a geriatric 
assessment, which assesses a person's medical condition, 
functional and cognitive capacity, primary caregiver needs, and 
environmental and psycho-social needs would go really a long 
way toward reducing some of the unnecessary and expensive 
medical services.
    I just wanted to see what you thought about that in terms 
of the research that you have done. Would that assessment be 
beneficial and could it be helpful to us in saving financial 
resources?
    Mr. Holtz-Eakin. It is on the list of appealing strategies 
that comes up all the time, and in that regard it always falls 
to me to throw a little cold water on some of the hopes. The 
first is that in many cases you could not see lower costs, but 
it would still be worth it. You know, you are paying more and 
people have better health for longer periods and function 
better in their lives. That is not a cost saving issue, but it 
is still a good step.
    Then the second caveat I am compelled to offer is that 
there isn't any systematic evidence to date that we can, in any 
broad way, get a lot of savings out of the Medicare population 
from this. That doesn't mean that it isn't true. It means that, 
to the extent that researchers have gone and looked at to the 
best of their ability groups with and without these kinds of 
checkups or other services, you can't find a compelling 
scientific case that the costs are lower for the group where 
you have undertaken the new treatments. There are lots of 
reasons why that might be the case, and I would be happy to 
work with you on that.
    But it is largely the difficulty in setting a high 
scientific bar in a very difficult area. Most of the studies 
just really aren't conclusive enough to feel confident that I 
could say to you, ``Yes, this is a great idea and you will save 
a lot of money.''
    Senator Lincoln. Mm hmm. Well, I am not necessarily saying 
that we have got to save all the money in that category, but if 
we can do something that actually does help us in terms of 
better use of our resources and providing better care, it seems 
to me it is a no brainer that it is something we should 
certainly be looking at.
    So you are saying that there is no conclusive studies that 
show that not only assessments but also the new medical 
physical in the Medicare program, are cost effective. Is that 
what you are saying?
    Mr. Holtz-Eakin. Yes.
    Senator Lincoln. You don't feel like those produce some 
cost benefit?
    Mr. Holtz-Eakin. There are two levels to it, and I will 
give you a longer answer than you deserve for that reason.
    The first is just at the level of the economics. Does it 
save money? That is the kind of question where the research is 
inconclusive at this point because it is difficult to actually 
do the experiment you would like, which is give some people the 
checkup, exactly identical people don't get the checkup, and 
then track their health care costs from that point forward to 
the end of their lives. Then just compare the two. That is just 
not doable.
    So there are a whole series of halfway houses in which the 
scientists live that are short of that. They try to extrapolate 
from their experience to that experiment that we can't do, and 
that is just simply hard to do.
    So the research, which we tried to survey pretty carefully 
in a letter we wrote to then Senator Don Nickles, was really 
about how difficult this is--to conclusively decide whether it 
will save money. So that is No. 1.
    No. 2 is, Will it show up on the Federal budget? If this is 
really a good thing and it is saving money, it could be that 
people are doing it already. If you then put it into the 
Medicare Modernization Act, all you do is then cover the cost 
of it. You put the cost on the Federal books, but you don't get 
any of the savings because they were doing it anyway. So the 
answer is a mixture of those two things. One, would it really 
lower total economic costs in the health system? Two, would 
those costs show up in lower Federal outlays?
    That is why it is difficult to give really definitive 
answers in this area for things that are otherwise very 
appealing ideas.
    Senator Lincoln. Thank you, Mr. Chairman.
    Senator Kohl. Thank you, Senator Lincoln. Dr. Holtz-Eakin, 
before we let you go, you are the director of CBO, so would you 
place this into context versus Social Security, the costs for 
which we do not have any sources of revenue over the next 50 
years, one versus the other. It is our understanding that there 
is no comparison in terms of Medicare versus Social Security. 
Would you put that into context?
    Mr. Holtz-Eakin. Certainly. There is no comparison, and I 
have told many people that it is my job to say apocalyptic 
things about our fiscal outlook in public, and this is really 
how it sizes up. Right now we spend about four cents on a 
national dollar on Social Security, a bit above. We spend about 
four cents on our national dollar on Medicare and the Federal 
share of Medicaid. So they are about even right now. If we 
repeat the experience of the past 3 decades, over the next 50 
years, and we layer in the demographics, Social Security will 
rise from 4 to about 6\1/2\ cents. Medicare and Medicaid will 
rise from 4 to 20 cents or the current size of the Federal 
Government. It is not even close. The great spending pressures 
are in the health programs.
    Senator Kohl. So of all the problems fiscally that we are 
facing in terms of Medicare, Medicaid, Social Security, this 
Medicare-Medicaid is clearly the big elephant, the 800-pound 
gorilla?
    Mr. Holtz-Eakin. They are certainly the big Federal dollars 
and they reflect the underlying growth of health care costs in 
the United States. It is not just the programs. It is the 
underlying health care system as a whole.
    Senator Kohl. That is dramatic. Well, we thank you so much 
for being here. You have been really important to this 
Committee, and your experience and knowledge is invaluable, and 
we look forward to continue to work with you.
    The Chairman. Mr. Chairman?
    Senator Kohl. Yes.
    The Chairman. May I ask one other question. In light of 
that and as we try to wrestle with how we get additional 
revenues or how we find a way to meet this obligation, the 
population that is using so much of the resources currently are 
any of these chronic conditions the result of personal choices 
that lead them to this, that would warrant that they bear some 
greater portion of their own co-pay or something like that? I 
mean
    Mr. Holtz-Eakin. The seven we looked at, I will just run 
down.
    The Chairman. OK.
    Mr. Holtz-Eakin. You know, they are asthma, obstructive 
pulmonary disease, renal failure, congestive heart failure, 
coronary artery disease, diabetes, and senility.
    The Chairman. I am thinking of smoking. I am thinking of 
you know some people would say alcoholism is not a choice. It 
is a disease in itself. But a lot of these conditions, not all 
of them, are taken on by people's individual choices and that 
is not fair to everyone else who is making the right kind of 
health choices.
    Mr. Holtz-Eakin. Certainly, lifestyle figures in many of 
these chronic conditions. I think that is clear. It is not the 
sole determinant. But it certainly figures in that, and the 
degree to which those lifestyles are altered as a matter of 
choice would alter these outcomes.
    The Chairman. Well, it seems to me people do respond to 
incentives, and if there is an additional incentive to 
lifestyle choices that like smoking, I would just I find it 
repulsive to say to everyone else who is making the right 
choices, you have got to pay for everybody making the wrong 
choices, and I don't know. I am just thinking out loud.
    Senator Lincoln. Can I add something to that?
    The Chairman. Yeah.
    Senator Lincoln. That is why I think the screening is so 
important, because if it is something like alcoholism, the 
earlier the screening and the earlier the diagnoses, the 
treatment is less costly. So it would seem that the screening 
and the other things that I think are so important, you are 
saying that there is not a scientific ability to be able to 
figure out what the cost savings would be for that, but I mean 
just commonsense tells you that if you can treat an ailment 
earlier, you can diagnose and treat it earlier, then the long-
term costs are not going to be as much.
    But I understand your side. I am married to a research 
physician, so I know there are scientific things that you have 
to use, but, still, I think commonsense plays a little bit in 
what we decide.
    Mr. Holtz-Eakin. I am economist by training. I left 
commonsense behind. I am an incentives guy.
    Senator Kohl. Again, just to put this thing it its context, 
would you agree that looking ahead at our fiscal condition, as 
the director of CBO, perhaps the single most important 
challenge we face is Medicare and trying to contain its 
projected cost?
    Mr. Holtz-Eakin. Yes. I think that the rising cost of 
health care is the single most important domestic challenge the 
United States has today. It is very simple.
    Senator Kohl. Thank you very much.
    Mr. Holtz-Eakin. Thank you.
    [The report follows:]

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    Senator Kohl. We will now call our second panel. The first 
witness on the second panel is from Arkansas, and so we would 
like to recognize Senator Lincoln to introduce her constituent.
    Senator Lincoln. Well, thank you, Mr. Chairman, and as our 
panelists are taking their seats, I have a real pleasure today 
to introduce Dr. William J. Evans, who is director of the 
Nutrition, Metabolism, and Exercise Laboratory in the Donald W. 
Reynolds Institute on Aging at the University of Arkansas for 
Medical Sciences, UAMS, where he is also a professor of 
geriatric medicine, physiology, and nutrition.
    Dr. Evans, I just have to say I routinely bring up the Don 
Reynolds Institute on Aging and UAMS in this Committee and in 
the Finance Committee, so I am so pleased that I now have a 
representative from there who can speak to the tremendous work 
that's going on in terms of the dealings with multiple disease 
diagnosis and coordination of care.
    Dr. Evans is also a research scientist in the Geriatric 
Research, Education, and Clinical Center in the Central 
Arkansas Veterans' Health Care System. He is author or co-
author of more than 190 publications and scientific journals. 
His research has examined the powerful interaction between diet 
and exercise in elderly people. Along with Dr. Erwin Rosenberg, 
Evans is the author of Biomarkers: The Ten Determinants of 
Aging That You Can Control, and the author of Astrofit.
    His work has been featured in numerous newspapers, 
including the New York Times, the Boston Globe, the Chicago 
Tribune, as well as the CBS Evening News, CBS Morning Show, 20/
20, CNN, and the PBS Series, the Infinite Voyage.
    His landmark studies have demonstrated the ability of older 
men and women to improve strength, fitness, and health through 
exercise, which we all want information for, even into the 10th 
decade of life. I am not sure that he has met my husband's 
grandmother, who is 108 this year, living out in Parkway 
Village, Dr. Evans, so she is a great one to consult.
    Dr. Evans receives grant support from the National 
Institute of Health, the Veterans Administration, NASA, private 
industry, and other sources. He is a fellow of the American 
College of Sports Medicine, and the American College of 
Nutrition, and an honorary member of the American Dietetic 
Association.
    I am enormously proud to be here to introduce you to Dr. 
Evans and to share your wealth of knowledge with this Committee 
and I thank the Chairman and the two Senators here, Chairman 
Smith and Chairman Kohl.
    Dr. Evans. Thank you Senator Lincoln. It is a real honor 
and pleasure Senator Kohl. Thank you, and we will just go 
through it, and then we will get to your testimony.
    Senator Lincoln. Oh, good.
    Senator Kohl. Our next will be Bill Herman who is vice 
president of Human Resources at High Smith in Fort Atkins in 
Wisconsin.
    Highsmith has been nationally recognized for its innovative 
employee wellness programs, and so we are pleased that Mr. 
Herman is here today to share the keys to the success of his 
company. Thank you so much for being here.
    Senator Smith, would you like to welcome your guest?
    The Chairman. Thank you, Mr. Chairman. It is my privilege 
to welcome our next witness as well, Mr. Stephen J. Brown, 
president and CEO of Health Hero Network, founded in 1988. His 
company is a recognized leader in the development and 
implementation of innovative technologies used to monitor or 
manage traditionally high-cost patients.
    Their technology is currently being used by a number of 
institutional health care providers, including the Veterans' 
Administration, to more efficiently manage patients with heart 
failure, pulmonary cardiovascular disease, diabetes, asthma, 
post acute care, mental health, and many other chronic 
conditions.
    Additionally, Health Hero Network and Bend Memorial Clinic 
in Bend, OR, are partnering to see how this technology can be 
used to coach and monitor Medicare patients with severe chronic 
illness and prevent them from going to the hospital and 
developing further complications.
    So we thank you, Stephen for being here, and I look forward 
to hearing more about your technologies.
    Senator Kohl. Our final witness on this panel will be Dr. 
Steven Woolf, professor of the Departments of Family Medicine, 
Epidemiology, and Community Health at Virginia Commonwealth 
University.
    Dr. Woolf's career has focused on preventive medicine, and 
he is a senior advisor to the Partnership for Prevention.
    We welcome you all, and Mr. Evans we will start with your 
testimony.

    STATEMENT OF DR. WILLIAM EVANS, DIRECTOR OF NUTRITION, 
    METABOLISM, AND EXERCISE LABORATORY, DONALD W. REYNOLDS 
    INSTITUTE ON AGING, UNIVERSITY OF ARKANSAS FOR MEDICAL 
                   SERVICES, LITTLE ROCK, AR

    Dr. Evans. Thank you very much. It is a real honor to be 
here.
    I am in only the second department of geriatrics in the 
United States, which is an indication of the relative lack of 
attention toward geriatrics in this country, and it is only now 
changing, and so we are very fortunate to be in this wonderful 
new center.
    As we know, attitudes toward aging have been around a very 
long time. As Shakespeare describes the ages of man, he says 
the second childishness and mere oblivion, sans teeth, sans 
eyes, sans tastes, sans everything.
    This attitude toward aging I think is now beginning to 
change. I think we are at the beginning of a revolution in how 
we think about aging, because for the first time, we can 
actually separate what is biological aging from how we go about 
living our lives, as we have just talked about.
    One of the features of aging we know is a loss of muscle. 
We think that that is critical. These are data from the 
Baltimore Longitudinal Study on Aging. The yellow line happens 
to be loss of muscle. This is a lifelong process. We have 
coined a term for it. We call it sarcopenia, and that simply 
means the age-related loss of skeletal muscle mass.
    We think that this is an enormous problem. It leads to 
reduced protein reserves, the decreased ability of elderly 
people to respond to stress, decrease strength and functional 
capacity, leading to frailty and falls, reduced aerobic 
capacity, and reduced needs for calories.
    Recently, health care costs directly attributed to 
sarcopenia have been estimated. There is enormous prevalence of 
this problem: greater than 20 percent of people over the age of 
65 suffer from sarcopenia. In the year 2000, sarcopenia could 
be attributed to more than $18.5 billion, which is 15 percent 
of total health care expenditures. That translates to an excess 
of $860 for each sarcopenic man and $933 for each sarcopenic 
woman.
    A 10 percent reduction in sarcopenia prevalence would save 
$1.1 billion (dollars adjusted to 2000 rates) per year in U.S. 
healthcare costs.
    This is what sacropenia looks like. These are the cross 
sections of the thighs of two women, a 21-year-old woman and 
63-year-old woman. You can see the astonishing and remarkable 
change in body composition, with an impressive decrease in 
muscle and an equally as impressive increase in fatness.
    Do elderly people respond to exercise? This is a study we 
did some time ago where we asked the question. We trained young 
and old people with bike exercise. Our older subjects gained 
more than 20 percent of their aerobic capacity in 12 weeks. 
They had regained in 12 weeks what they had lost in 15 years. 
But the biggest problem we think in older people is weakness. 
These are data from the Framingham Study showing that for women 
between 75 and 85, 65 percent report that they cannot lift 10 
pounds, and 35 percent of men. That translates directly into 
reduced independence, decreased dependence on social services 
and other issues.
    So can we get older people stronger? The answer to the 
question is yes. The first study we did was in older men, doing 
just weightlifting 12 weeks. We were able to triple their 
muscle strength in just 12 weeks so that many of these men who 
were in their mid-60's were not only stronger than most men of 
their age, they were stronger than they had ever been in their 
lives.
    We were able to show the size of their muscle increased 
dramatically, at 15 percent. We next looked at the ability of 
older women to respond to this type of exercise. We know that 
one in two women and one in eight men aged 50 and over will 
have an osteoporotic-related fracture in their lifetime. The 
costs of osteoporosis are tremendous and rising.
    We did a simple study, again funded by the National 
Institutes of Health. We took post-menopausal women. We 
randomized them to an exercise group two days a week of weight 
lifting exercise versus a control group. This is what their 
bone density looked like. So the exercising women showed no 
age-related loss in bone in that year; in fact, an increase in 
bone density. The control group lost bone. If you look at the 
evidence of the new generation of anti-osteoporosis drugs that 
are so expensive, none of them have an effect like this. They 
don't affect other factors related to falls related to 
fracture. So this one simple intervention increased strength, 
increased muscle, improved balance, and increased their levels 
of physical activity. In totality, this simple exercise program 
has far greater effects of reducing risk of above fracture than 
any medication.
    Then the final studies I wanted to show you was the ability 
of very, very old people to respond to exercise. The first 
study that we did we reported in JAMA and we got a lot of 
press. This is a cartoon that appeared in Sports Illustrated of 
all places when they did a report on our study.
    We did that. In another study we published in the New 
England Journal of Medicine that I am going to highlight. In 
this study, our subjects range in age between 72 and 98; 69 
percent were over the age of 85. This is a population with 
multiple chronic disease. These were nursing home patients.
    At least half of them were somewhat demented. Half of them 
had arthritis. Forty-four percent had pulmonary disease. Forty-
four percent had a previous osteporotic fracture. Thirty-five 
percent were hypertensive. Twenty-four percent had a diagnosis 
of cancer. Sixteen percent were diabetic, and 13 percent had a 
myocardial infarction. They were all allowed into the study. We 
showed that we could triple their strength. We improved their 
balance, decreased the risk of falling. Their walking speed 
improved. Their ability to climb stairs improved. They were 
able to get up and move around a lot more. They told us that 
they didn't need to ring for a nurse in the middle of the night 
anymore to use the toilet. They told us that they could get up 
and move around and get their meals. So not only can we improve 
their independence, but we can improve the quality and dignity 
of their life.
    Importantly, there was a significant decrease in depression 
in the group that exercised.
    So it is possible. They are quite responsive. We have a 
number of different very, very positive effects of this type of 
exercise that is enormously important and powerful. I just 
wanted to show a couple of statewide exercise programs that I 
designed. One was in Massachusetts, where I was a faculty 
member at Tufts University for 15 years. I designed a program 
for the state called Keep Moving, and every year we had an 
event called the Governor's Cup for Seniors, and this was the 
line for two of the races; lots of grey hair in there. They 
love these programs. We also designed a program at--when I was 
at Penn State, called PEPPI, Peer Exercise Program Promotes 
Independence, which we are now implementing in Arkansas. It 
says we trained community-based peer leaders using the Triple 
A's in Pennsylvania--very inexpensive, very effective. This is 
one of the groups in Altoona, PA. This is a newspaper that 
somebody sent me with all of the PEPPI programs that are in 
their community. Currently, there are 250 groups, with a total 
participation of more than 5,000.
    A recent survey of this program showed that 82 percent say 
they can walk better. Ninety-five percent are better able just 
to get up from a seated position. Seventy-eight percent say 
they can climb stairs more easily. Many of them have improved 
balance.
    Even more importantly, 99 percent of the participants state 
that their health has improved and 87 percent say they are more 
independent.
    So we hope that this will be the future of nursing homes. 
Finally, I was privileged to be at a joint press conference 
with Senator Glenn after his space flight to talk about 
similarities between space flight and aging and found a 
wonderful quotation that described the Senator perfectly well 
and also revealed that Shakespeare was probably a geriatrician. 
We know that these things can prevent debility and though I 
look old, yet I am strong and lusty, for in my youth, I never 
did apply hot and rebellious liquors in my blood, nor did not 
with unbashful forehead woo the means of weakness and debility. 
Therefore, my age is as a lusty winter, frosty, but kindly. Let 
me go with you. I'll do the service of a younger man in all 
your business and necessities.
    So Senator Glen certainly is the epitome of successful 
aging. Thank you very much.
    [The prepared statement of Dr. Evans follows:]

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    Senator Kohl. Thank you, Mr. Evans. Mr. Herman, tell us 
about your company.

     STATEMENT OF MR. BILL HERMAN, VICE PRESIDENT OF HUMAN 
         RESOURCES, HIGHSMITH, INC., FORT ATKINSON, WI

    Mr. Herman. I am happy to, Senator. Good morning.
    It is a pleasure to be here.
    Like most businesses in our country, Highsmith is a small 
business. We are a family owned distribution company located in 
rural Wisconsin, halfway between Milwaukee and Madison.
    We have approximately 220 employees. Our customers are 
libraries and schools.
    Over the last 10 years, we have received a remarkable 
number of awards and a flood of national publicity for our 
wellness and employee development initiatives. We earned that 
recognition by managing our health care costs; at the same 
time, we improved the quality and productivity of our 
workforce. In fact, those two things are closely linked. But we 
really set out to accomplish much more.
    We set out to ensure the long-term vitality and viability 
of a growing business.
    Our response to the crisis in health care costs and health 
risk management has always served that goal. In fact, my point 
today is that wellness and employee development have been 
successful at Highsmith because we have made them a part of our 
business plan.
    We have learned the value of a well thought out strategic 
approach to implementing and sustaining health and wellness 
concepts within our organization, concepts that continue to 
influence and effect the lives of employees after they retire. 
Our culture is supportive of health lifestyle choices and 
encourages good nutrition and lifestyle activity.
    At Highsmith, wellness is not viewed as just a program, but 
rather as a strategic initiative to nurture the human capital 
necessary to meet corporate goals and objectives.
    Over time, we found that traditional definitions of 
wellness and health promotion often fell short of encouraging 
personal responsibility for health and wellbeing.
    Highsmith undertook a fundamental transformation in our 
view of wellness. We think the terms wellness and employee 
development are interchangeable. Engaging employees in their 
jobs, emphasizing learning and development, providing tools to 
balance work life responsibilities, along with health and 
wellness have all been integrated at Highsmith.
    This initiative encompasses a carefully managed blend of 
seven components: job-career development, work life enrichment, 
personal wellbeing, self-care, physical wellbeing, monetary 
incentives as applied to health insurance premiums, and a 
comprehensive array of benefits.
    A key piece is the monetary incentives. If an employee and 
spouse qualify for the incentive, Highsmith pays 75 percent of 
their single or family health insurance premium. If one doesn't 
participate, we pay only 60 percent. The voluntary eligibility 
requirements to qualify for the incentive are enrollment in our 
health insurance plan, to be a non-user of all tobacco 
products, participation in our annual health screening, plus 
age and gender specific physical exams.
    Eighty-three percent of our employees on our health plan do 
participate.
    The annual health screening for employees and spouses 
measures height and weight, blood pressure, a carbon monoxide 
screen to determine if one smokes, a full blood lipid panel, 
glucose, and a treadmill fitness test.
    Participants also complete a coronary risk profile. The 
most critical part of the health screening is delivering 
immediate feedback and helping people understand it.
    There are four distinct feedback stations as part of the 
health screening. One of the stations is a focus on emotional 
wellbeing. Some of the results that we have been able to 
measure in the period 2000 through 2004 are we have had a 53 
percent decrease in total participants with high-risk 
cholesterol levels. We have had a 52 percent decrease in total 
participants with high blood pressure; a 72 percent decrease in 
total participants whose VO2 submax was high risk--how healthy 
your heart is. We have normal blood glucose levels in 84 
percent of all participants.
    We have experienced an average increase in health insurance 
premiums of only 5.4 percent over the last 4 years. Employee 
turnover is single digit, and our average tenure is 14 years.
    Utilization of our employee assistance program was 22.8 
percent for 2004. The national average hovers between 4 and 6 
percent.
    So in conclusion, I would like to reiterate that wellness 
and health promotion is not a program at Highsmith. It is not a 
stand alone. It is really a strategy initiative to have the 
human capital necessary to meet our corporate goals and 
objectives. Thank you.
    [The prepared statement of Mr. Herman follows:]

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    Senator Kohl. Thank you very much, Mr. Herman.
    Mr. Brown.

 STATEMENT OF MR. STEPHEN J. BROWN, PRESIDENT AND CEO, HEALTH 
             HERO NETWORK, INC., MOUNTAIN VIEW, CA

    Mr. Brown. Mr. Chairman and Committee members, I am Steve 
Brown, and I am the CEO of Health Hero Network, a technology 
company in Mountain View, CA.
    We serve people struggling with chronic illness. Our 
technologies are designed to enable caregivers to coach and 
monitor patients at home. I am going to talk about some of the 
commonsense things that Senator Lincoln talked about, and I am 
also going to talk about some of the programs we are involved 
with, which hopefully will make the CBO happy about the results 
as well.
    My view is that health care does not start when we are 
wheeled into the emergency room, and it does not start at the 
doctor's office.
    Health care starts at home, with our own behavior and with 
prevention.
    Most people in Medicare have a chronic illness. For them, 
prevention means reducing the complications of chronic illness 
and living independently longer. From our work with the 
Veterans' Administration, we have seen that when caregivers and 
patients work together on daily management and prevention, they 
can improve the quality of life and reduce costs.
    To illustrate this point, I am going to introduce Wally 
Browning from Huntington, WV, who recently was interviewed in 
his local paper. I included this in the written testimony.
    Wally Browning is a Vietnam veteran. He served our country 
in Vietnam, and now he is being served by the VA and by Health 
Hero Network.
    Wally has congestive heart failure, one of those high-cost, 
high-risk conditions that require very close attention and 
management. It is also one of the leading causes of hospital 
admissions for Medicare.
    Every day a nurse at the VA checks in on how well Wally is 
doing, remotely, by sending message to a device installed in 
Wally's home, called Health Buddy, and I brought that for you 
to see too.
    With simple push buttons, Wally is able to answer questions 
that appear on the screen and tell his nurse how he is doing; 
tell his nurse about new symptoms transmit data about his blood 
pressure and his weight and also get feedback and coaching from 
his nurse about his condition and about his health program and 
about healthy choices that he needs to make.
    A VA nurse uses a computer with a secure Internet 
application to analyze Wally's data every day and flag 
potential problems before they become worse. The result has 
been fewer emergencies, fewer stays in the hospital, greater 
piece of mind, and cost savings for the VA. As Wally puts it, 
after he checks in with his Health Buddy, he feels like he is 
good for another day.
    Wally is like 20 million Americans with complex chronic 
illnesses who are at risk of going to the hospital any day. 
Many of these hospital admissions can be prevented if we coach 
and monitor patients at home.
    The reason our health care system is in trouble, even 
though we spend nearly $2 trillion a year on it, is that we are 
not paying for the right model of chronic care. For 40 years, 
Medicare payment has been based on episodic, face-to-face 
encounters with a doctor, usually in reaction to a crisis.
    But chronic illness is not episodic. It is long-term, and 
it needs to be managed every day.
    If we want to prevent hospitalizations, we need to coach 
and monitor patients at home before a crisis occurs.
    We know it is possible because we are doing this every day 
across America for thousands of veterans. According to the VA, 
hospital admissions for patients in the program were 63 percent 
lower than for a comparison group with similar high-risk 
conditions.
    Last year, we worked with the Information Technology 
Association of America to look at the question. What if 
Medicare could achieve similar results to the VA with similar 
patients? The answer published by the ITAA--and that report is 
also in the written testimony--is that we would save over $30 
billion a year.
    As a result of your leadership and that of your colleagues, 
the Medicare Modernization Act starts to recognize that people 
with complex chronic illness need continuity of care and 
prevention rather than more episodic crisis management. That is 
a major step forward for Medicare, and now the challenge is 
execution. We are participating in two large-scale chronic care 
improvement pilots authorized by the Medicare Modernization 
Act. We are also working with the American Medical Group 
Association and its physician groups, like the one in Bend, OR, 
to create a chronic care model based on coaching and monitoring 
patients at home, under the supervision of their primary 
physician.
    Part of the wisdom of the recent Medicare initiatives is in 
recognizing how technology can play a vital role in 
transforming the model of care for chronic illness.
    Information technologies can extend care into the home and 
coach patients to improve their own lives and change their own 
behavior. Caregivers can detect early and deliver the right 
care at the right time before there is a crisis.
    Health care and prevention starts at home, and the right 
technology can help people struggling with chronic illness and 
connect them to better care. I thank you for inviting me to 
testify today.
    [The prepared statement of Mr. Brown follows:]

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    Senator Kohl. Thank you for being here, Mr. Brown. Mr. 
Woolf?

  STATEMENT OF MR. STEVEN H. WOOLF, PROFESSOR, DEPARTMENTS OF 
 FAMILY MEDICINE, EPIDEMIOLOGY AND COMMUNITY HEALTH, VIRGINIA 
              COMMONWEALTH UNIVERSITY, FAIRFAX, VA


    Dr. Woolf. Thank you, Senator Kohl, Senator Smith, other 
members of the Committee.
    My name is Steven Woolf. I am a family physician and a 
specialist in preventive medicine and public health. I serve as 
professor of Family Medicine, Epidemiology and Community Health 
at Virginia Commonwealth University.
    I am pleased to talk with you this morning about prevention 
and seniors.
    The prevention of disease is the cornerstone of healthy 
aging. The underlying logic is obvious. The major diseases that 
claim the lives of seniors and account for the rising cost of 
health care are caused largely by our health habits, such as 
smoking, lack of exercise, and poor diet. These behaviors 
account for one out of three deaths in the United States.
    We spend great sums on treating the complications of 
disease, and far too little on helping the public avoid getting 
sick in the first place. As Arkansas Governor Mike Huckabee has 
said, rather than building a fence at the top of a cliff, our 
health care system keeps sending ambulances to the bottom. 
Paying for prevention is a smarter use of scarce resources.
    Many seniors wrongly believe they are too old to benefit 
from a change in health habits, but the facts are that seniors 
live longer and live healthier if they abandon unhealthy 
behaviors, obtain recommended vaccines and receive certain 
screening tests that catch diseases early. Prevention can 
improve function and postpone disabilities, as we have just 
heard.
    Healthy again ought to begin early in life when it is more 
effective, but reducing risks for disease pays off at any age.
    Prevention has always been important, but is taking on 
greater urgency now when more Americans are growing older and 
the costs of health care loom large.
    At a time when we worry about how Medicare will afford 
these costs, it is a mistake to ignore the business case for 
prevention.
    In the face of these benefits, it is concerning that so 
many older adults in our country engage in health habits that 
increase their risk. In an average group of 100 Americans who 
are age 65 and older, 25 of the 100 are obese; 25 get no 
exercise; and 10 smoke cigarettes.
    Altogether, five million seniors in this country smoke 
cigarettes. Obesity rates are climbing, and the averages I am 
quoting for America's seniors obscure higher rates of risk 
factors among subgroups, such as African Americans, Hispanics, 
and Native Americans.
    Millions of seniors have not received recommended vaccines. 
For example, one out of three have not received the 
pneumococcal vaccine, which helps prevent deaths from 
pneumonia. Congress has worked for many years now to expand 
coverage for preventive services under Medicare, thereby, 
removing a major barrier to access. The Medicare Modernization 
Act in 2003 introduced the Welcome to Medicare visit and 
expanded coverage for cardiovascular and diabetes screening. 
Yet, we see that Medicare coverage by itself does not make it 
happen.
    The GAO found that only 10 percent of beneficiaries had 
received five cancer tests and immunizations that are covered 
under Medicare.
    The problem is worse among beneficiaries who are poor or 
among minorities. For example, whereas the proportion of 
Medicare beneficiaries who have received a recent flu shot is 
67 percent for Whites, it is 53 percent for Hispanics, and 43 
percent for African Americans. This is among Medicare 
beneficiaries.
    This Committee already knows that life expectancy is lower 
among minorities, but the scope of the problem is less well 
known.
    People aged 65 to 74 are almost 50 percent more likely to 
die in the next year if they are African American than if they 
are white.
    We spend billions of dollars in this country to make better 
drugs and medical devices, thinking this will save lives, and 
indeed it does. But far more lives could be saved by correcting 
health disparities. For every life saved by medical advances, 
five would be saved if African Americans had the same death 
rate as Whites.
    Congress has enacted legislation to address disparities, 
but that investment is actually a small fraction of the 
billions we spend on research. Most of those billions are in 
the pursuit of medical advances, a worthy aim, but if 
correcting disparities saves more lives than medical advances, 
do we have our proportions right?
    Certainly, we must continue to invest heavily in new drugs 
and technology, but perhaps we should tip the scales a bit and 
make more substantive investment in removing barriers to 
receiving those treatments.
    Enabling all Americans to enjoy aging is not only ethical, 
it will save more lives and will go further to control the 
costs of medical care.
    With that background, let me devote my remaining minutes to 
some policy options for promoting prevention among seniors.
    I offer seven examples, but I urge the Committee to gather 
broader input from other experts, assemble a longer list of 
policy options, and choose from the best.
    We owe it to America's seniors to pursue the most 
innovative and effective strategies to promote healthy aging. 
My written testimony elaborates on the following seven 
suggestions.
    No. 1, Congress should use its visibility with the public 
and the media to launch a public education campaign aimed at 
America's seniors to emphasize prevention. Getting the message 
out that prevention is important to the health of seniors is 
the first step toward changing public attitudes and creating a 
new culture for healthy aging.
    No. 2, Congress should encourage the Centers for Medicare 
and Medicaid Services, CMS, to become more proactive in 
encouraging Medicare beneficiaries to adopt healthy lifestyles. 
My written testimony explains that existing CMS initiatives 
concentrate on making beneficiaries aware of expanded coverage 
benefits, but they tread lightly on giving health advice. 
Congress should encourage CMS to adopt a new role in which 
health advice is disseminated by CMS to serve beneficiaries, to 
lower disease burden, and to save money through prevention. CMS 
need not develop this health advice from scratch. Prevention 
guidelines for seniors and health education messages have 
already been developed by other HHS agencies, but are less 
familiar to CMS due to stovepiping.
    No. 3, looking ahead to the future, the Committee should 
consider how to redesign communities to support lifestyle 
change. It does little good to advise a senior to do light 
gardening or take a daily walk when he or she is surrounded by 
highways or has no safe place to walk.
    Seniors living in poor urban neighborhoods are often miles 
from a supermarket that offers healthy food choices. Fast food 
chains predominate, as do billboards that promote cigarettes 
and alcohol.
    Congress should work with the food industry and retailers 
to explore ways to promote profits and healthy customers.
    Ultimately, creating a community that fosters healthy aging 
requires a partnership across community sectors involving 
churches, restaurants, park authorities, senior centers, and 
urban planners.
    No. 4, cigarette smoking remains the leading cause of death 
and cannot be overlooked in any serious discussion of healthy 
aging. The Committee should look again at the 10 
recommendations issued in 2003 by the Department of Health and 
Human Services' Interagency Committee on Smoking and Health. 
Setting aside the recommendation on excise taxes, which 
received a cool reception, the plan includes nine other 
excellent recommendations that would substantially reduce the 
death toll from smoking-related illness among seniors.
    One example is telephone quit line programs, which give 
seniors access to high quality assistance in quitting smoking.
    No. 5, the failure of so many seniors to receive 
recommended preventive services is a symptom of a larger 
problem with the nation's health care delivery system. Experts 
have warned for years that the quality of health care in 
America is in jeopardy unless bold system redesigns are 
undertaken. Mapping the human genome, robotic surgery, and 
other sensational breakthroughs make the evening news, but 
Congress could save more lives by directing its attention 
elsewhere.
    Take reminder systems, for example, which alert people when 
screening tests or vaccinations are due. Such systems are not 
glamorous, but are among the most effective ways to close the 
gaps in the delivery of health care. Yet, they are rare in our 
health care system. You are more likely to get a notice from 
your car dealership that it is time to change your oil than you 
are to be notified by your doctor that your mammogram is 
overdue.
    Our research team has shown that making such systems 
routine would save far more lives than the advances in drug 
therapies on which billions of dollars are now spent.
    I urge Congress to confront the political challenges and to 
press for modernizing the health care system to deliver 
consistent high-quality care.
    No. 6, information technology is an important tool for 
healthy aging. Congress is already promoting electronic health 
records to improve record keeping and reduce medical errors, 
but information technology and web sites for seniors can do far 
more by empowering consumers with information to make healthy 
lifestyle choices, learn more about the tests they need, and 
obtain e-mail reminders when they are due.
    Congress should steer the health IT movement beyond its 
basic role, serving providers as a tool for patient care, to a 
broader role in helping the public maintain good health.
    Finally, No. 7, given the urgency of the problems I have 
discussed, Congress should increase the funding for AHRQ, the 
Agency for Healthcare Research and Quality, which receives one 
penny for every dollar given to NIH. Yet, it is AHRQ that has 
lead responsibility for all that we have discussed--prevention 
guidelines, improving the quality of health care, tracking 
racial disparities, developing information technology, and so 
on.
    Solving these problems is not a luxury on the margins of 
NIH. Without the answers, the cutting edge advances made at NIH 
cannot reach Americans.
    Doubling the budget of AHRQ sounds extravagant at this time 
of belt tightening. But the extra penny taken from the NIH 
dollar could go much farther in saving lives. The threat to the 
nation's health and economy posed by the struggling health care 
system makes it risky public policy to not invest generously in 
tackling these problems. Thank you.
    [The prepared statement of Dr. Woolf follows:]

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    Senator Kohl. Thank you, Mr. Woolf.
    Dr. Evans, in your testimony you describe some of the 
benefits that seniors receive through fitness and strength 
training, which includes a decreased likelihood of depression 
and also the ability to do things without the assistance of a 
health aid.
    Through your research were you also able to see a reduction 
in the need for prescription drugs or costly medical and 
surgical procedures?
    Dr. Evans. Senator, in our studies now we see, for example, 
one of the great epidemics of aging is chronic renal failure. 
We have just completed a study, funded by the Veterans' 
Administration, that demonstrates that we can, for example, 
delay or postpone or completely eliminate the need for dialysis 
through a good exercise and diet program.
    So while my studies are relatively small in nature, the 
preponderance of the evidence now, through epidemiologic 
studies, show a tremendous decrease in disability with 
exercise, cutting across the barriers.
    We know, for example, that obese older people who exercise 
regularly don't have the same complications of even leaner 
older people who don't do any physical activity. So it is a 
tremendous effect.
    Senator Kohl. There is a decreased use of prescription 
drugs?
    Dr. Evans. Decreased use of prescription drugs. For 
example, many of our subjects come into the study diabetic, and 
over the course of an 18-month study that we have done, many of 
them don't need insulin anymore; don't need the anti-
hyperglycemic agents, and that is, for example, the evidence of 
our Governor, who was diagnosed with Type II Diabetes, and this 
past year ran the Little Rock Marathon.
    So it is quite possible, and I think the important point--
and maybe the most important point to say--is that we stand to 
gain the most from intervening in older people right now. If we 
want to save the most money, clearly, prevention programs in 
children and young people is absolutely important. But the real 
central message is that any older person, no matter how many 
chronic diseases they have, can benefit tremendously and reduce 
their need for both drugs and for social services.
    Senator Kohl. Mr. Herman, we certainly want to commend you 
for the great job that your company, Highsmith, has done----
    Mr. Herman. Thank you.
    Senator Kohl [continuing]. In keeping health care costs 
down. It is dramatic that Highsmith's ability to keep health 
care cost premiums to only 5.4 percent increase, when premiums 
have typically been increasing in the double digits year after 
year for most other business, your 5.4 percent is certainly 
outstanding.
    How was your company able to get your employees excited 
about changing their nutrition and physical activity? How long 
did it take before you started to see real results after the 
program began?
    Mr. Herman. Well, thank you for the question, Senator. It 
doesn't happen overnight. It takes years, and it starts in 
developing a culture and environment that is conducive to 
healthy lifestyle choices--the little touches, from eliminating 
donuts and cookies at meetings, and instead serving fruit and 
fruit juices.
    We put into place something we call a Twinkie Tax, where we 
increase the cost of high fat food items in the vending 
machines, and use the incremental amount to subsidize the cost 
of the lower fat items.
    So just spending time and time encouraging and nudging 
healthy lifestyle choices and creating a culture that is 
supportive of that.
    Senator Kohl. Why are you self-insured?
    Mr. Herman. Why are we or are we not?
    Senator Kohl. You are self-insured?
    Mr. Herman. No we are not self-insured. We are in managed 
care environment, but we have a self-insured variation with our 
HMO.
    Senator Kohl. I am still not fully aware of how you are 
able to keep your increases down to 5.4 percent. It must 
require tremendous involvement and participation from your 
employees.
    Mr. Herman. Very much.
    Senator Kohl. Say a little bit more about what you do to 
get that result?
    Mr. Herman. I certainly will.
    Our premise, if you will, is if you feel good about 
yourself, if you feel good about what you do, we believe you 
are going to be healthier and more productive. You are going to 
be safer in the work environment, and you are going to stay.
    So there is a lot of influencers that come into play as to 
whether one feels good about one's self, and there is a lot of 
influencers that come into play as to whether one feels good 
about what you do.
    So we try to provide resources, tools, and an environment 
to assist employees in feeling good about themselves. We work 
very hard in engaging employees in their jobs to get them a 
part of what they are doing.
    So we think that all comes together in promoting and 
helping employees have less health care utilization. So we have 
a full array of programming at Highsmith. We focus in from job 
career development, personal wellbeing, self-care, work life 
enrichment, and physical wellbeing. Over the years, we have 
just been able to make such significant strides that it has 
finally paid off for us.
    Senator Kohl. How did this program originate?
    Mr. Herman. Well, it originated because we had a 53 percent 
increase in our health insurance premiums in about 1990. So 
that certainly got our attention. It became one of our fastest 
rising costs of doing business. So we began some wellness 
initiatives. We started introducing monetary incentives and 
just over time it started evolving and developing.
    Senator Kohl. Did it evolve at the very top of your 
company?
    Mr. Herman. That is where it started, at the top of our 
company. Really it is the leadership by example that makes the 
difference I think in any environment. It takes that role 
modeling to effect change.
    Senator Kohl. Is there any reason why what you have 
accomplished cannot be duplicated throughout our economy?
    Mr. Herman. Oh, I think what we are doing can very easily 
be replicated. I don't think necessarily the same types of 
initiatives, but variations. Yes, Senator, I do.
    Senator Kohl. Thank you.
    Mr. Herman. You are welcome.
    Senator Kohl. Mr. Brown, Mr. Woolf, prevention is the most 
cost effective way to stem the tide of chronic disease for the 
future as we all know. But we already have 10 million Medicare 
beneficiaries who are suffering from one or more chronic 
diseases.
    What more can we be doing within Medicare and other 
government programs to stem the skyrocketing costs associated 
with providing treatment for people with chronic conditions?
    Mr. Brown. I think you need to look at those high-cost 
beneficiaries--as the first place where you have an immediate 
impact. One way to look at it is to imagine standing at the 
door of your hospital and watching people coming in being 
admitted to the hospital and saying how many of these hospital 
admissions could have been prevented if we had just known about 
these problems a little bit sooner and maybe changed behavior. 
I think you will find that probably a majority of hospital 
admissions certainly for chronic illness could have been 
prevented if they were managed and problems had been caught 
earlier.
    If you then go to the Health Care Utilization Project of 
AHRQ, which keeps a database of every hospital admission in 
this country, and you look through the data base sort it by 
disease and say who is admitted for what, and if you say who is 
admitted for a complication of a chronic condition, like heart 
failure, or a complication of diabetes or of emphysema or 
asthma, and you say who is actually paying the bills for those 
admissions, you will find that half of the hospital admissions 
for chronic illness are in Medicare. You find another 20 
percent of the hospital admissions are Medicaid. You find a few 
uninsured in some other programs and then a scattering of 
health plans and other programs. You see that 50 percent is 
actually paid for by Medicare.
    So what Medicare does is critical in solving this problem. 
Medicare has traditionally not paid for anything long term. The 
statutes and the way that Medicare has been implemented, it has 
been based on paying for face-to-face encounters and episodic, 
not long term care. If you don't pay for anything long term, 
how can you truly manage chronic illness? Because chronic 
illness is not episodic. It is long term.
    If you only pay for a face-to-face encounter at the 
hospital or a doctor's office, then you are not going to be 
able to prevent crisis because you need to get to people at 
home before you get to the doctor's office. So you have to find 
a way to pay for care that is remote, if you are going to 
prevent hospital admissions, and you have to find a way to pay 
for care that is long term and continuous, not episodic, if you 
want to manage chronic illness.
    Senator Kohl. Mr. Woolf.
    Dr. Woolf. Thank you, Senator. I think I can use the same 
answer to respond to your question and the one you asked 
earlier to the gentleman from CBO about whether there is a 
difference between two seniors with the same disease and why 
one ends up in the pool of costing so much and the other 
doesn't. As a physician, I think I have a different perspective 
than he might as an economist.
    We talk about primary prevention, secondary prevention, and 
tertiary prevention. I think all three represent strategies for 
reducing the burden of those 10 million beneficiaries.
    No. 1, primary prevention is cutting off the number of 
people who enter that chronic disease pool, so encouraging 
Americans to live healthy lifestyles, as we have discussed, 
reduces the incidence of chronic disease. It prevents the 
diseases from occurring in the first place.
    Secondary prevention is detecting the disease at an early 
stage, when its outcomes can be treated more effectively and 
complications can be prevented. So many of the examples that 
have been given--cancer screening tests and many other 
modalities--are very important and explain part of the reason 
why some diabetics end up in that pool of 10 million and some 
diabetics don't. In other words, studies show that people with 
diabetes who have good glycemic control and their conditions 
are detected early have lower complications from diabetes than 
their counterparts.
    Then the third, which I think is very important is tertiary 
prevention. As Dr. Evans pointed out, people with existing 
diseases can have better outcomes and lower complications 
through pursuing healthy behaviors and good management of their 
diseases. For example, again, using diabetes as an 
illustration, complications or the progression of diabetes is 
cut by 50 percent through regular physical activity. The No. 1 
killer in the United States is coronary artery disease. People 
who have had heart attacks can markedly reduce their risk of a 
recurrence or second heart attack through the use of certain 
medications, but also through healthy behaviors such as smoking 
cessation and physical activity.
    So through all three arms--primary, secondary, and tertiary 
prevention--we can make the difference.
    Senator Kohl. Thank you. Senator Lincoln? She is not here. 
Senator Talent?
    Senator Talent. Thank you, Mr. Chairman. I really 
appreciate your putting this hearing together. You are touching 
on what to me is the essential issue regarding Medicare and I 
would say health care as a whole, both from the standpoint of 
relieving human suffering, which is No. 1, but also for 
disability. I think all the witnesses have touched on that.
    Let me ask them to address this issue, and I will have a 
statement for the record, Mr. Chairman.
    I think we see where you all are going and the techniques, 
tactics that each of you have used in your own settings, and I 
can certainly see why they have been effective or would be 
effective.
    Now, the question always for me is how do we get from here 
in the Congress to on the ground replicating in so many 
different settings the kind of successes or maybe, Mr. Herman, 
that you have had in an employee-employer setting, or Mr. 
Brown, that you have had in a VA setting or Dr. Woolf, in your 
arena.
    How do we get from here to there? I want to just suggest 
that kind of a tactic that I am more and more excited about and 
get your view on it.
    I agree about removing barriers and the rest of it. Then 
the question is, OK, the barrier is removed. How do you still 
get people to access the care? I am a big believer in the 
clinic model of community health centers, which are empowering, 
mediating-type of institutions that work with people face to 
face. You have done that as the employer. In other words, you 
have initiated this and so it has worked.
    Do you have any suggestions along those lines? How might we 
accomplish that as we change Medicare policy, not just saying 
this is where we want to go and this is the funding we are 
providing or the barriers we are removing, but how do we still 
ensure that somebody is getting in contact with these patients 
and doing these things? Can we rely on hospitals, who are 
organized also along the traditional medical model, for 
example, to do that? Do we need to do more than just change 
reimbursement incentives for them? Do any of you have any ideas 
along these lines?
    Dr. Evans. I just might say that in most states there 
already is a well developed infrastructure for dealing with 
seniors. I am really talking about Medicare beneficiaries and 
those are typically senior centers and Triple A's. Triple A's 
are often the line that supplies nutrition services to older 
people, but often not many other services.
    We have attempted to deliver exercise programs through 
Triple A's, and what we do is we go in and we train peer 
leaders, and they can be--just people from the community or 
Triple A employees--and in every place that we have done that 
the Triple A's say well not too many people are interested in 
this. They get five or six times more older people joining 
these programs than they ever anticipated. So I think that 
there is a great desire of older people to improve their 
health. They know what is looming. You know, they don't want to 
access health care dollars as much as we don't want them to. 
They want to improve their health. They just don't have access 
to it.
    So I think that there is an already developed 
infrastructure that we can develop delivery these programs 
through at a relatively low cost, but we need some I think 
political will to be able to deliver these types of programs.
    Senator Talent. So you are suggesting working through Older 
American Act institutions, which would seem to be a commonsense 
first step.
    Dr. Evans. I believe so. The infrastructure is already 
there. They have access to millions of elderly people right 
now. They are trusted and then working through the state 
agencies. Most state agencies, like Arkansas, has a Department 
of Health that now is interested in senior health. They have a 
Department of Aging that usually interacts more with the Triple 
A's. So I think that instead of creating a new infrastructure, 
there is one already available.
    Senator Talent. Anybody else have comments?
    Dr. Woolf. I agree, although I----
    Senator Talent. If you disagree with my premise, by all 
means, say so.
    Dr. Woolf. I don't disagree, Senator. In fact, I think you 
are heading in the right direction. I think that we definitely 
need to provide those social support systems in order to help 
seniors navigate the system. The problem is that there is 
tremendous fragmentation in our system currently. Although Area 
Agencies on aging and other senior centers that exist in most 
communities are there for that purpose, as a primary care 
physician, I can tell you that there is a big divide and wall 
sometimes in between their world and the medical care delivery 
system, not that either one doesn't want to reach out to the 
other, but the infrastructure for those connections is not well 
developed.
    What we really need is an infrastructure that integrates 
the different components of the community that need to support 
the senior in promoting healthy behaviors and in getting health 
care services. All the pieces are there, it is tying them 
together that is necessary. My practical suggestion: there is 
already work that CDC is doing through the STEPS Program that 
was initiated in recent years, where communities and regions 
around the country are testing these models for integration. 
Continuing to support that kind of innovation and creativity in 
communities and then extrapolating and generalizing those 
models out more broadly I think has real promise to tap the 
resources that are available in the community.
    Senator Talent. Yes. We have been supporting through grants 
the naturally occurring retirement community program that our 
local Jewish community has been doing within its community. I 
think it is largely what you are talking about, an attempt to 
integrate services and service providers in these institutions 
that deal with seniors or with whom seniors interact, so that 
we can collect what is out there and send consistent and 
healthy messages to seniors that way. It is just so difficult 
to get it from our minds here into legislation that will then 
produce the right results.
    I think we are going to have to figure out some way to get 
the traditional medical providers on board and enthusiastic 
about this, and then it may naturally happen. I don't know 
whether it is reimbursement changes or pilots as with the 
Medicare Modernization Act but I think it is the key to getting 
this idea in the community. Mr. Brown, it is your turn.
    Mr. Brown. The market forces for the traditional health 
care provider world are not in the direction of prevention and 
reducing hospital admissions. They are really in the opposite 
direction, and that is one of the problems. If we go to a 
hospital administrator and say we have a program that can help 
you reduce hospital admissions by 50 percent, most hospital 
administrators look at that and say I am not sure that is a 
good idea for my business.
    We actually have worked with hospitals linked to community 
health centers and have worked with case management programs 
where nurses and case managers and social workers tried to 
coach and monitor patients at home to prevent hospital 
admissions, and those programs were at least for uninsured 
patients and were seen as cost effective for the hospital.
    But when you get to the sort of bread and butter business 
of a hospital, the business model is around the existing DRGs 
and codes and how they get paid. This isn't in there. 
Prevention is not in there. In fact, there are a lot of 
disincentives for it from an economic perspective.
    If you look at the DRG and now they have designed so, you 
know, if you are readmitted within 30 days, the hospital pays 
the bill still. If you have got somebody who gets admitted to 
the hospital three times in a year, that is 3 months out of the 
year that the hospital worries about that patient from an 
economic perspective, and 9 months out of the year where the 
hospital has really no interest economically in that patient.
    That is a lot of discontinuity, and that gap needs to be 
bridged. There may be ways to do this through reimbursement 
mechanisms or through tweaks of the existing way things are 
coded. But somehow that gap has to be filled.
    Senator Talent. People have talked about paying for 
performance type, which, if you could define the outcomes that 
you wanted in the proper way so it didn't have negative side 
effects, has potential because it creates an impetus within the 
system to produce a healthier result for seniors. But defining 
that, I think, would be difficult so that you don't get a 
negative.
    Well, Mr. Chairman, I am not--I have probably trespassed on 
my time already. Thank you for calling the hearing.
    Senator Kohl. Thank you, Senator Talent.
    Senator Talent. Thank you all for your work.
    Senator Kohl. Gentlemen, we thank you very much for your 
participation here today and thank you very much for your 
expertise.
    We appreciate very much what you have said as we continue 
to look forward to find ways to contain the growth in Medicare, 
primarily by helping seniors and people throughout our society 
lead healthier lifestyles.
    Thank you so much, and this hearing is adjourned.
    [Whereupon, at 11:35 a.m., the committee was adjourned].


                            A P P E N D I X

                              ----------                              


               Prepared Statement of Senator James Talent

    Thank you, Mr. Chairman, for convening this important 
hearing to examine the role of prevention in the Medicare 
program.
    I cannot over emphasize the importance of disease 
management services to help seniors live longer, more 
productive lives with the additional benefit of saving Medicare 
dollars. I have traveled all around my home state of Missouri 
visiting with seniors on Medicare, and discussing the 
beneficial disease management provisions in the Medicare 
Modernization Act, which I supported.
    Nearly half of all Americans live with chronic illnesses 
such as hypertension, asthma, diabetes, and heart disease. 
Approximately 78 percent of Medicare beneficiaries have at 
least one chronic disease, while 32 percent have four or more 
chronic conditions. Individuals with multiple chronic 
conditions are more likely to be hospitalized, fill more 
prescriptions, and have more physician and home health visits. 
Nearly two-thirds of all Medicare spending is for beneficiaries 
with five or more chronic conditions.
    We know that approximately five percent of the costliest 
Medicare beneficiaries consume about half of total Medicare 
spending. That is why I advocated for Senate provisions in the 
Medicare Modernization Act to create demonstration projects to 
examine disease management and care coordination for our 
nation's seniors and the disabled. I continue to support this 
legislation, and look forward to next year when the full 
Medicare benefit goes into effect as I believe it will help 
millions of seniors in Missouri and across our country lead 
healthier lives.
                                ------                                


          Questions from Senator Blanche Lincoln for Mr. Evans

    Question. Do adequate performance measures exist that cross 
multiple aspects of disease, such as function?
    Answer. Yes, functional capacity in elderly people is a 
very powerful predictor of mortality, morbidity, and risk of 
admission to a nursing home. Dr. Jack Guralnik at the National 
Institute on Aging has developed what he terms the short 
physical performance battery (SPPB) (3) that is easy to 
perform, even in a doctors office and should be used by 
physicians in examining their geriatric patients. The test 
consists of a 6-meter walk time, chair stand time (how long it 
takes to stand up from a seated position) and a balance test. 
Guralnik and his co-workers (2) have demonstrated that among 
nondisabled older people living in the community, objective 
measures of lower-extremity function were highly predictive of 
subsequent disability. Disability among elderly people is 
associated with increased hospitalization and a greatly 
increased cost to Medicare. These studies reveal that early 
identification of functional problems and treatment has the 
potential of preventing disability. The SPPB should be a 
standard component of a geriatric assessment.
    Question. How would one identify those who might benefit 
most from nutrition and exercise interventions in terms of 
health and cost-savings, such as certain frail elderly persons? 
And should we target these interventions to those with multiple 
chronic illnesses (including diabetes and chronic Heart 
Failure) to obtain the ``biggest Bang for the buck'' in our 
``high cost'' Medicare beneficiaries? This secondary prevention 
approach might be easier and cheaper to implement in a smaller 
group of chronically ill seniors. If so, do you think 
legislation allowing for a new Medicare care coordination 
benefit, such as the Geriatric and Chronic Care Management Act 
I have introduced, achieves this goal?
    Answer. It is clear that there are a number of geriatric 
problems that may be identified before they develop into 
serious of life-threatening issues. There is only one way of 
identifying the potential problems in a comprehensive way and 
that with a geriatric assessment. In this way correctible 
nutritional problems, functional limitations, infections, over 
prescription of medication, and other problems may be 
identified and treated. For example, one of the untreated 
diseases that occurs in elderly people in epidemic levels is 
chronic renal failure that, if left untreated, will progress to 
kidney death and dialysis. Use of certain medications and 
nutritional interventions can prevent kidney death and the 
extremely high cost and decreased quality of life of dialysis. 
Early identification and treatment of loss of appetite, eating 
or swallowing problems, or involuntary weight loss can have a 
powerful effect on improving life expectancy and quality of 
life. However, left untreated, these issues can have a 
devastating effect on the lives of elderly people. Muscle 
weakness and poor balance must be identified and treated before 
it leads to a devastating fall or loss of independence. All of 
these issues (and many more) would be considered secondary 
treatment. This treatment, even in those with multiple chronic 
diseases, can have a powerful effect on decreasing the cost of 
treatment and improving quality of life. The Geriatric and 
Chronic Care Management Act will go a long way towards 
implementing a comprehensive geriatric assessment that will be 
critical in the identification of treatable problems and the 
prevention of late-life disability. Ferucci et al (1) found 
that in the year when they become severely disabled, a large 
proportion of older persons are hospitalized for a small group 
of diseases. They concluded that hospital-based interventions 
aimed at reducing the severity and functional consequences of 
these diseases could have a large impact on reduction on severe 
disability. Thus the potential for large savings in Medicare 
expenses may be seen in the most ``at risk'' population of 
older people.
    Question. On symptom or consequence of sarcopenia is 
osteoporosis and increased falls, especially in women. Recent 
clinical trials have shown improved quality and decreased costs 
from greater falls assessment and treatment in frail elderly 
populations, including increase in activities as you have 
highlighted in your testimony. However, Medicare coverage of 
falls assessment and treatment is minimal. Perhaps changes to 
Medicare, such as the enactment of my legislation the Geriatric 
and Chronic Care Management Act, a Medicare care coordination 
benefit, could allow for better coverage of services such as 
these. What do you think?
    Answer. Clearly the early identification of those at 
greatest risk of falling and of developing osteoporosis is 
critical in preventing a devastating bone fracture. Part of a 
comprehensive geriatric assessment should be measure of 
functional status and bone density. These two simple and 
inexpensive assessment tools can be used to begin a treatment 
plan that is appropriate for the elderly person. For those ``at 
risk'' individuals, change in diet to emphasize increased 
calcium and vitamin D intake as well as a structured exercise 
program can mitigate this risk. For those identified with 
osteoporosis, a more aggressive treatment including a new 
generation of drugs to treat low bone density along with diet 
and exercise can prevent a bone fracture. We know that one of 
the most important nutritional factors that increases muscle 
weakness and accelerates loss of bone is vitamin D deficiency, 
a problem that is found in far to many elderly people (5) due 
to inadequate time in the sun (sunlight is used to make vitamin 
D by the skin) nor do they drink much milk (fortified with 
vitamin D). Balance training, including participation in Tai 
Chi exercises can prevent falls in elderly people Coordination 
of all these interventions begins with a geriatric assessment 
described in the Geriatric and Chronic Care Management Act.
    Question. This week, the Senate Finance Committee is 
working on ``pay for performance'' legislation which would 
allow for the development and implementation of reporting and 
quality based measures for greater accountability and reliance 
on quality-based health care for providers. Do adequate 
measures exist in the area of falls? Would a frail elderly/
geriatric population with multiple chronic conditions benefit 
from some unique measures, such as a falls measure, when 
compared to the ``regular'' elderly population who may be 
evaluated under more general measures having to do with one 
chronic disease, i.e. diabetes or heart disease?
    Answer. Adequate measures do exist in the area of falls. 
The short physical performance battery (described, above) is 
easily performed and identifies those at greatest risk of 
falling and suffering a bone fracture. This use of this simple 
tool in a geriatric assessment can be the first step in a 
treatment plan to prevent a devastating fall. This plan might 
include identification of medications that may cause balance 
problems, nutritional deficiencies, muscle weakness due to low 
muscle mass, obesity, and other potential causes. In fact lower 
extremity physical performance (gait speed and chair stand 
time) has been shown to be highly predictive of hospitalization 
for a number of geriatric conditions (such as dementia, 
decubitus ulcer, hip fractures, other fractures, pneumonia, 
dehydration, and acute infections even among people who are not 
currently disabled (4).
    References used:
    1. Ferrucci, L, JM Guralnik, M Pahor, MC Corti, and RJ 
Havlik. Hospital diagnoses, Medicare charges, and nursing home 
admissions in the year when older persons become severely 
disabled. JAMA;277.728-34.,1997.
    2. Guralnik, JM, L Ferrucci, EM Simonsick, ME Salive, and 
RB Wallace. Lower-extremity function in persons over the age of 
70 years as a predictor of subsequent disability. N Engel J 
Med;332:556-61.,1995.
    3. Guralnik, JM EM Simonsick, L Ferrucci, RJ Glynn, L F 
Berkman, D G Blazer, P A Scherr, and RB Wallace. A short 
physical performance battery assessing lower extremity 
function: association with self-reported disability and 
prediction of mortality and nursing home admission. J. 
Gerontol.: Med. Sci.;49:M85-M94,1994.
    4. Penninx, BW, L Ferrucci, SG Leveille, T Rantanen, M 
Pahor, and JM Guralnik. Lower extremity performance in 
nondisabled older persons as a predictor of subsequent 
hospitalization. J Gerontol A Biol Sci Med Sci;55:M691-7.,2000.
    5. Semba, RD, E Garrett, BA Johnson, JM Guralnik, and LP 
Fried. Vitamin D deficiency among older women with and without 
disability. Am J Clin Nutr; 72:1529-34.,2000.

                                 
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