[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                                ------                                DU
   AL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO 
                           IMPROVE THEIR CARE

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               ----------                              

                             JUNE 21, 2011

                               ----------                              

                           Serial No. 112-64


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

  DUAL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO 

                           IMPROVE THEIR CARE




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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts.
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky              Islands
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
PHIL GINGREY, Georgia                TAMMY BALDWIN, Wisconsin
ROBERT E. LATTA, Ohio                MIKE ROSS, Arkansas
CATHY McMORRIS RODGERS, Washington   ANTHONY D. WEINER, New York
LEONARD LANCE, New Jersey            HENRY A. WAXMAN, California (ex 
BILL CASSIDY, Louisiana                  officio)
BRETT GUTHRIE, Kentucky
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
Prepared statement...............................................     3
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     5
    Prepared statement...........................................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    11
    Prepared statement...........................................    12
Hon. Bill Cassidy, a Representative in Congress from the State of 
  Louisiana, opening statement...................................    14
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    14
    Prepared statement...........................................    17
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................   188
Hon. Leonard Lance, a Representative in Congress from the State 
  of New Jersey, prepared statement..............................   190
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................   191

                               Witnesses

Melanie Bella, Director, Federal Coordinated Health Care Office, 
  Centers for Medicare and Medicaid Services.....................    24
    Prepared statement...........................................    26
    Answers to submitted questions...............................   192
Robert Egge, Vice President of Public Policy, Alzheimer's 
  Association....................................................    74
    Prepared statement...........................................    76
    Answers to submitted questions...............................   196
Billy Millwee, Associate Commissioner for Medicaid/CHIP, Texas 
  Health and Human Services Commission...........................    92
    Prepared statement...........................................    93
Denise Levis Hewson, Director of Clinical Programs and Quality 
  Improvement, Community Care Center of North Carolina...........    99
    Prepared statement...........................................   101
    Answers to submitted questions...............................   199
Shawn Bloom, President and Chief Executive Officer, National PACE 
  Association....................................................   131
    Prepared statement...........................................   133
    Answers to submitted questions...............................   325

                           Submitted Material

``Better Medicaid coordination would cut costs, help the most 
  seriously ill,'' Washington Post article by Ezra Klein 
  published June 16, 2011, submitted by Mr. Burgess..............    53
Letter, dated March 1, 2011, from Kathleen Sebelius, Secretary, 
  Health and Human Services, to Hon. John Boehner, submitted by 
  Mr. Pallone....................................................    60
Statement, undated, of Mary Kay Henry, International President, 
  Service Employees International Union, submitted by Mr. Pallone    66


  DUAL ELIGIBLES: UNDERSTANDING THIS VULNERABLE POPULATION AND HOW TO 
                           IMPROVE THEIR CARE

                              ----------                              


                         TUESDAY, JUNE 21, 2011

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:04 p.m., in 
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Whitfield, 
Shimkus, Latta, Lance, Cassidy, Guthrie, Upton (ex officio), 
Pallone, Christensen, Markey, and Waxman (ex officio).
    Staff present: Howard Cohen, Chief Health Counsel; Andy 
Duberstein, Special Assistant to Chairman Upton; Paul Edattel, 
Professional Staff Member, Health; Julie Goon, Health Policy 
Advisor; Kirby Howard, Legislative Clerk; Debbee Keller, Press 
Secretary; Peter Kielty, Senior Legislative Analyst; Ryan Long, 
Chief Counsel, Health; Carly McWilliams, Legislative Clerk; 
Jeff Mortier, Professional Staff Member; Katie Novaria, 
Legislative Clerk; John O'Shea, Professional Staff Member, 
Health; Monica Popp, Professional Staff Member, Health; Andrew 
Powaleny, Press Assistant; Heidi Stirrup, Health Policy 
Coordinator; Lyn Walker, Coordinator, Admin/Human Resources; 
Tom Wilbur, Staff Assistant; Alli Corr, Democratic Policy 
Analyst; Tim Gronniger, Democratic Senior Professional Staff 
Member; Purvee Kempf, Democratic Senior Counsel; and Karen 
Nelson, Democratic Deputy Committee Staff Director for Health.
    Mr. Pitts. The subcommittee will come to order. The chair 
recognizes himself for 5 minutes for an opening statement.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Dual eligibles, those individuals who are eligible for both 
the Medicare and Medicaid programs, are one of our sickest, 
poorest, most costly and most vulnerable populations. If we are 
to simultaneously improve and lower the cost of their care, we 
must do a better job at integrating Medicare and Medicaid 
benefits and services.
    Dual eligibles are unique. While more than half of dual 
eligibles live below the poverty line, only 8 percent of 
Medicare-only beneficiaries have incomes below the poverty 
line. Nineteen percent of dual eligibles live in an 
institutional setting, while only 3 percent of Medicare-
eligible-only individuals live in such a setting. They are also 
more likely to be hospitalized, to go to emergency rooms, and 
to require long-term care than other Medicare beneficiaries.
    According to the Centers for Medicare and Medicaid 
Services, more than 9 million people fall into the dual-
eligible category. Forty-three percent of them have at least 
one mental or cognitive impairment, while 60 percent have 
multiple chronic conditions.
    According to the Kaiser Family Foundation, dual eligibles, 
who make up only 15 percent of Medicaid enrollment, consume 39 
percent of total Medicaid spending. Additionally, in 2005, the 
Medicare and Medicaid programs spent an average of $20,000 per 
dual eligible, almost five times greater than the average 
amount spent on other Medicare beneficiaries.
    These individuals, who have fewer resources and more 
complicated health care needs, face the added struggle of 
trying to navigate both Medicare and Medicaid. Medicare covers 
their basic acute health care services and prescription drugs, 
and Medicaid fills in the gaps. Medicaid generally pays the 
Medicare Part B premium and the cost sharing for Medicare 
services. For some, Medicaid also covers various benefits not 
covered by Medicare, including long-term care supports and 
services, dental care, eyeglasses, and other benefits.
    Each State determines its own eligibility standards and 
which benefits will be provided to Medicaid beneficiaries. So, 
we are able to watch various States experiment with different 
models and designs to better align the care of dual eligibles. 
Currently, 15 states have been selected to receive funding, 
data and technical assistance from CMS to develop a more 
coordinated model of care for dual eligibles.
    We can improve the quality of care that dual eligibles 
receive. We can make their care more efficient and easier for 
them to navigate. We can do all this while lowering costs to 
both the federal government and the beneficiary.
    I look forward to hearing from our witnesses today about 
which models are being tried in the States and what we have 
learned so far.
    [The prepared statement of Mr. Pitts follows:]


    [GRAPHIC] [TIFF OMITTED] 72402.001
    
    [GRAPHIC] [TIFF OMITTED] 72402.002
    
    Mr. Pitts. At this time I will yield the remaining time to 
the vice chairman, Dr. Burgess.

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

    Mr. Burgess. Thank you, Mr. Chairman.
    In no other area is the lack of coordination at the federal 
level more apparent than when we deal with people who are 
dually eligible for Medicare and Medicaid. Studies of the 
population make it clear that Medicaid is actually 56 separate 
programs administered by the States and territories in the 
context of duals. It sometimes becomes a game of hot potato.
    Data suggest that duals are sicker when they are 
hospitalized, that their costs are almost 10 percent greater, 
and they have more episodes of avoidable hospitalization. It is 
a symptom of no one being held accountable for their care. 
Certainly, better alignment of Medicare and Medicaid is needed.
    Now, unfortunately, ACOs, accountable care organizations, 
that may have provided a model and a good place to start, it 
seems that once again the bureaucracy has killed any such hope 
for that happening. The rule that was produced on ACOs was 
virtually unintelligible and most large groups that thought 
themselves to be ACOs have now moved away from this.
    You want to drive cost savings with better care. This is a 
problem that really we could solve. Fifteen percent of Medicaid 
enrollees are duals and they account for almost 40 percent of 
the program's spending. The old Willie Sutton law, you rob 
banks because that is where the money is, clearly it should 
apply here. And these patients are fully covered by Medicare 
and the entire Medicare benefits package and still they are 
five times costlier. These are patients that are defined. We 
know where they are. We know who they are. We know when they 
are accessing care and why they are accessing it, and yet for 
some reason we lack the fundamental amount of consistency for 
coordinating their benefits.
    I rarely find myself agreeing with Ezra Klein and the 
Washington Post, but I did last week when he talked about the 
fact that this was an idea whose time has come. What I don't 
understand is why it takes an entirely new federal agency when 
CMS has had broad waiver authority and demonstration authority 
for years to take care of this problem.
    I will yield back the balance of my time.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the ranking member of the subcommittee, Mr. Pallone, for 5 
minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman.
    I really welcome today's hearing on a critical issue: the 
coordinating and improving of health care of those dually 
eligible for Medicare and Medicaid programs, otherwise known as 
dual eligibles, and I appreciate my colleagues for working with 
us in preparing this hearing and look forward to our 
discussion. This is an area of our health care system that I 
think has potential for effective change.
    The reality is that dual eligibles are a vulnerable 
population. Their care is both costly and frequently 
uncoordinated, which is resulting in poor outcomes in many 
cases. In total, there are 9.2 million Americans who rely on 
both Medicare and Medicaid. Meanwhile, they are significantly 
poorer and tend to have extensive health care needs. Overall, 
they are also more likely to suffer from chronic conditions 
such as heart disease, pulmonary disease, diabetes and 
Alzheimer's disease, and as such, their care is complicated and 
too often they are not receiving the patient-centered care they 
need and that they deserve.
    In addition, dual eligibles represent less than 20 percent 
of the Medicare and Medicaid programs but bear the 
responsibility for a significant amount of the programs' 
expenses. In fact, in 2007, they comprised only 15 percent of 
enrollees but represented 39 percent of Medicaid spending and 
their medical costs were more than six times higher than non-
disabled adults in Medicaid. Meanwhile, in Medicare, they 
represent 16 percent of enrollees and 27 percent of 
expenditures. Compared to all other Medicare enrollees, the 
health costs are nearly five times as great.
    These are powerful numbers that demonstrate if we can 
improve care coordination and make life better for these 
individuals, there is also an opportunity for savings. That is 
why, in passing the Affordable Care Act, we created the Federal 
Coordinated Health Care Office at the Department of Health and 
Human Services, otherwise known as the Medicare-Medicaid 
Coordination Office. Its mission is to gain some much-needed 
efficiency within the system for this group of beneficiaries.
    I must admit, the timing of the coordinated office, as well 
as today's hearing, couldn't be better. Congress and this 
committee are increasingly concerned about the rising cost of 
Medicare health care coverage for the 45 million elderly and 
disabled Americans and Medicaid's 55 million poor patients. So 
what better place to explore, understand and address than the 
sickest and most expensive populations to cover. But we mustn't 
set a price tag on their care nor should we shape policy with 
the goal of only saving money.
    It is clear we have some real big challenges, yet some real 
big opportunities in providing care for dual eligibles. So I 
look forward to hearing from our expert panel today, and I 
would specifically like to welcome Ms. Melanie Bella, the head 
of the new coordinated office. I know that she has a long 
history of aiming to restructure the services of dual 
eligibles, so I look forward to hearing about her innovative 
work.
    I also look forward to hearing about the successful efforts 
represented here today by the different panelists. I hope we 
can hear some new ways Congress can be helpful in addressing 
what has been a longstanding problem facing our health care 
system.
    And I yield back, Mr. Chairman. Thank you.
    [The prepared statement of Mr. Pallone follows:]
    [GRAPHIC] [TIFF OMITTED] 72402.003
    
    [GRAPHIC] [TIFF OMITTED] 72402.004
    
    [GRAPHIC] [TIFF OMITTED] 72402.005
    
    [GRAPHIC] [TIFF OMITTED] 72402.006
    
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the full committee chairman, Mr. Upton, for 5 minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman.
    According to CMS, more than 9 million Americans qualify for 
both Medicare and Medicaid, including at least 257,000 in 
Michigan.
    I want to thank our two panels this afternoon for agreeing 
to share their expertise in serving this vulnerable population, 
often referred to as dual eligibles. We look forward to hearing 
your perspective on the health care needs and the barriers that 
currently prevent them from properly navigating the health care 
system.
    This hearing is important for two key reasons. First, we 
must better understand the distinctive behavioral and physical 
health care complexities associated with the dual-eligible 
population. And second, we need to better understand what is 
currently being done to help these individuals navigate the 
health care system. By the end of the hearing, we should be 
able to identify what initiatives exist to effectively 
integrate care for dual-eligible populations, what coordination 
models are working, what prevents these effective models from 
expanding, and building on the positive efforts already 
underway, we must also look for ways to modernize the current 
structure so these individuals are ensured access to quality 
health care with less red tape.
    Most Americans have uniform coverage that guides them 
through the complex health care system, but for the dual 
eligible, that process is more complicated because they have to 
navigate the waters of two different entitlement programs that 
offer different benefits and cover different services and 
providers. Because of that segmented structure, we have come to 
learn that dual eligibles have difficulty identifying where to 
access good, quality care. Not surprisingly, they frequently 
end up in the ER, which is harmful to both patients and 
taxpayers, who end up with the costly bill for preventable 
hospitalizations.
    Again, we welcome you, and I yield the balance of my time 
to Dr. Cassidy.
    [The prepared statement of Mr. Upton follows:]
    [GRAPHIC] [TIFF OMITTED] 72402.007
    
    [GRAPHIC] [TIFF OMITTED] 72402.008
    
  OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Cassidy. Thank you, Chairman Pitts.
    Medicare and Medicaid are important programs that are 
unfortunately unsustainable in their current form. Medicare, 
per the actuaries who run the program, is going bankrupt in 10 
years hastened by $500 billion extracted from it by Obamacare. 
Medicaid is bankrupting States, and this was before the 
Obamacare mandates that usurp States' rights.
    Now, as a doctor who teaches, who still teaches and treats 
the uninsured in a public hospital, though, my primary concern 
is patient welfare, and fortunately, there is an opportunity 
for improvement. As we know, dual eligibles oftentimes have 
poor outcomes. Now, Republican have proposed freeing States 
from the rigid Medicaid rules, which make it difficult to 
coordinate benefits between Medicaid and Medicare. We have also 
put forward a plan to save Medicare from bankruptcy, to 
preserve Medicare as it has been known for those who are on it, 
and to preserve it for those who will be on it. Now, saving 
Medicare from bankruptcy is important for all Americans, all 
senior citizens, but particularly for dual eligibles.
    Now, unfortunately, under the current situation, Medicare 
provides incentives to treat patients in one way and it 
provides Medicare incentives to treat patients in another way, 
and these dueling incentives oftentimes lead to poor patient 
outcomes. This is the problem of large bureaucracies trying to 
dictate what happens to a patient in the patients' exam room. 
We can do better.
    So despite the fact that Medicare and Medicaid spend 
disproportionate amounts upon dual-eligible patients, again, 
their outcomes are poor, and this is actually the most 
important issue. Now, we should note that we shouldn't take the 
policy of do nothing for short-term political gain and kick 
this issue of Medicare's fiscal solvency as an issue down the 
road. We have got to address it now.
    I am very interested in the perspectives presented here 
today. I have had the pleasure to speak with Ms. Bella. She is 
knowledgeable. I just look forward to it. Similarly, the 
perspective of the PACE providers and the States. I will say 
the Office of Dual Eligibles, I kind of like that. It is the 
one provision of Obamacare I applaud. As we say in the South, 
even a blind hog finds an acorn every now and then.
    I yield back.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the ranking member of the full committee, Mr. Waxman, for 5 
minutes for an opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman.
    As observers of this hearing will note that by and large 
whether you are a Democrat or a Republican, we care about this 
issue and this is a hearing where we have collaborated in 
providing panels that will give us the best information on how 
we can address the problems that are unique to the people who 
are dual eligibles, or both on Medicare and Medicaid.
    This has been a major issue facing both programs. By 
design, these individuals should have access to the best of 
these programs, the best that each one has to offer, but too 
often they struggle, fall between the cracks and cycle in and 
out of nursing homes, hospitals, specialty care without 
receiving the coordinated patient-focused care they deserve.
    Dual eligibles are not a homogenous group but they can be 
considered as several subgroups. Some, such as Medicare 
beneficiaries who are eligible for Medicare by virtue of their 
age and for Medicaid because they have low income, can be in 
their mid 60s and may not differ significantly from other 
Medicare beneficiaries in their need for care. Others, however, 
such as adults under 65 with developmental disabilities such as 
cerebral palsy or intellectual disabilities, require 
significantly more care and resources to live their lives. 
Older Medicare beneficiaries with cognitive impairments such as 
Alzheimer's are another significant and very frail subgroup, a 
group we are going to hear about today.
    Many of these individuals may require nursing home level of 
care or home-based support services allowing them to live 
outside of an institution. A disabled person under the age of 
65 costs Medicare and Medicaid between $23,000 and $84,000 in 
2005 depending on whether he or she needed nursing home stay. 
This is very expensive but not getting this care is worse, 
resulting in eroding health, trips to the emergency room, 
suffering for the patient and his or her family, and 
astronomical costs for the patient and the taxpayer. These 
costs present both a challenge and an opportunity to develop 
and implement reforms that over time will simultaneously 
improve care while reducing costs.
    There is a Medicare Payment Advisory Commission and the 
Medicaid and the child health program have their commissions as 
well, and all these commissions have described how a lack of 
coordination between Medicare and Medicaid can create harmful 
and wasteful outcomes and misaligned incentives. For example, a 
nursing facility may find it profitable to transfer a complex 
patient to a hospital even if the facility is capable of 
managing that patient because of different payment rates and 
benefit rules in each program.
    We have heard in this committee many times over the years 
about problems generated by pure fee-for-service medicine that 
provides no coordination of benefits. For dually eligible 
beneficiaries, those problems are multiplied because of their 
intensive care needs.
    We face a lot of challenges in improving care for dual 
eligibles and reducing costs to the taxpayer but it is 
important to recognize that we shouldn't rush into new programs 
for purely a budgetary focus. We should not assign a price tag 
to this population and then design the policy around it.
    As we will hear today, the best and most successful efforts 
to integrate care for the duals has been local and it has been 
focused on a small group of beneficiaries. These programs have 
been built around intensive interventions by nurses, 
physicians, social workers, therapists and others. But these 
interventions can be difficult to scale up to a large 
population, and I think we need to be wary about grand promises 
regarding this decades-old problem.
    I want to mention that one of the results of the Affordable 
Care Act, which some people call Obamacare, was to extend the 
Medicare trust fund, and in fact, it was extended over 12 
years. Another thing to recognize is that whatever cuts some of 
our colleagues objected to in the Affordable Care Act, they 
took all of those cuts and went way beyond it in their Medicare 
proposal, which they would transform into a whole different 
system.
    We have opportunities to save money we are spending on dual 
eligibles by examining the drug rebates in Part D where we pay 
a higher price for the dual eligibles than we used to pay in 
the past. Providing better coordinated care and saving money 
are not mutually exclusive goals and for the dual eligibles, 
this may be the key to improved quality of care.
    Thank you, Mr. Chairman, for calling this hearing.
    [The prepared statement of Mr. Waxman follows:]
    [GRAPHIC] [TIFF OMITTED] 72402.009
    
    [GRAPHIC] [TIFF OMITTED] 72402.010
    
    [GRAPHIC] [TIFF OMITTED] 72402.011
    
    [GRAPHIC] [TIFF OMITTED] 72402.012
    
    [GRAPHIC] [TIFF OMITTED] 72402.013
    
    [GRAPHIC] [TIFF OMITTED] 72402.014
    
    [GRAPHIC] [TIFF OMITTED] 72402.015
    
    Mr. Pitts. The chair thanks the gentleman.
    We have two panels today, and I would like to ask panel one 
to take her seat at the witness table. I want to thank all the 
witnesses for agreeing to appear before the committee. On panel 
one, we welcome Melanie Bella, who is the Director of the 
Medicare and Medicaid Coordination Office at the Centers for 
Medicare and Medicaid Services. Your written testimony will be 
made part of the record. We would ask that you please summarize 
your opening statement in 5 minutes and then we will go to 
questions and answers. Welcome.

   STATEMENT OF MELANIE BELLA, DIRECTOR, FEDERAL COORDINATED 
 HEALTH CARE OFFICE, CENTERS FOR MEDICARE AND MEDICAID SERVICES

    Ms. Bella. Good afternoon, Chairman Pitts, Ranking Member 
Pallone, Chairman Upton, Ranking Member Waxman and members of 
the subcommittee. Thank you for the invitation to participate 
in this discussion today. My name is Melanie Bella, and I am 
the Director of the Federal Coordinated Health Care Office at 
the Centers for Medicare and Medicaid Services.
    This office, which we are referring to as the Medicare and 
Medicaid Coordination Office, to better explain our mission, 
was created by the Affordable Care Act and our single focus is 
the topic of the hearing today.
    Medicare and Medicaid enrollees, also referred to as dual 
eligibles, are a heterogeneous group. They include low-income 
seniors, individuals with disabilities as well as those with 
serious and persistent mental illness. Some individuals start 
on Medicaid and age into Medicare. Other individuals start on 
Medicare and have a functional or a financial decline that 
makes them Medicaid eligible. Either way, these individuals 
have very complex care needs. Three out of five have multiple 
chronic conditions and two out of five have at least one mental 
or cognitive impairment. Not surprisingly, given their higher-
than-average health care needs, the cost of providing care for 
these individuals is significant. Together, Medicare and 
Medicaid spend roughly $300 billion a year to provide care to 
this population.
    Our office is working across Medicare and Medicaid with 
States, providers and other stakeholders on a number of key 
initiatives to ensure better health, better care and lower 
costs through improvement for Medicare and Medicaid enrollees. 
Specifically, our efforts are focused in three main areas. The 
first is program alignment, the second is data and analytics, 
and the third is models and demonstrations. I will highlight a 
few of those efforts today starting with program alignment.
    Better coordination begins with program alignment. 
Currently, Medicare and Medicaid enrollees must navigate two 
completely separate systems, Medicare for coverage of basic 
acute-care services and drugs, and Medicaid for coverage of 
supplemental benefits such as long-care care supports and 
services. Medicaid also provides help with Medicare premiums 
and cost sharing. Although both programs provide important 
benefits, they operate as separate systems with different 
administrative procedures, statutory provisions and payment 
policies. One of the first objectives of our office was to 
catalog all of the places where Medicaid and Medicare literally 
bump up against each other. This creates barriers to effective 
care, and though internal and external consultation and 
outreach, we use that opportunity to identify places where we 
can improve alignment between the two programs. We have 
published a list of these alignment opportunities in the 
Federal Register, specifically to invite public comment. This 
alignment initiative will allow us both to identify barriers to 
high-quality cost-effective care as well as prioritize areas 
for improvement.
    Another key objective of this new office is to engage our 
State partners. Improving quality and cost of care for Medicare 
and Medicaid enrollees relies on effective partnership with 
States because we share the responsibility to provide care and 
to finance that care for this population. Our office has 
recently announced two key initiatives that support our State 
partners in improving care coordination for Medicare and 
Medicaid enrollees. One of these initiatives was the 
establishment of a new process for States to access Medicare 
data for care coordination purposes. Lack of timely Medicare 
data, particularly Part D data, has been a key barrier for 
States in expanding care management efforts for their dual 
population. These data provide States with a powerful new tool 
to support their efforts to improve care for some of their most 
complex and costly beneficiaries.
    The second initiative done in partnership with the Center 
for Medicaid and Medicare Innovation is the State 
demonstrations to integrate for dual-eligible individuals under 
which 15 States were competitively selected to design new 
approaches to better coordinate care for Medicare and Medicaid 
enrollees. Through these design contracts, CMS is providing 
funding to selected States to support their efforts to design 
person-centered approaches to coordinate care across primary, 
acute, behavioral health and long-term supports and services. 
The goal of this initiative is to identify and validate new 
care delivery and payment models that can be tested and then 
replicated in other States. Importantly, though, our office 
serves as a resource to all States and is available to provide 
technical assistance to any State interested in working to 
improve quality and reduce costs for its Medicare and Medicaid 
enrollees.
    In closing, a high priority for our office is to 
significantly increase the number of Medicare and Medicaid 
enrollees that have access to seamless, coordinated care. We 
will get there by eliminating barriers to integration, 
partnering with States, providers and other stakeholders and 
developing new delivery system and payment models. We expect 
that improved care coordination and quality outcomes for this 
complex population will result in better care at reduced cost 
for both the Federal Government and States. Thank you very 
much.
    [The prepared statement of Ms. Bella follows:]
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    Mr. Pitts. Thank you. I want to thank you for your opening 
statement. I will now begin the questioning and recognize 
myself for 5 minutes for that purpose.
    Director Bella, in a 2010 paper entitled ``Options for 
Integrating Care for Dual-Eligible Beneficiaries,'' you wrote: 
``The goals should be clear: to provide beneficiaries with the 
right care at the right time in the right places and to give 
States and other stakeholders the flexibility they need to 
design and test accountable models of integrated care.'' Is it 
fair to say that you still believe the current system does not 
provide States the sufficient flexibility or incentives 
necessary to integrate care for duals?
    Ms. Bella. As I mentioned in my testimony, States are 
critical partners for us and so we have to recognize the 
variation in the States and understand where the States are in 
being able to develop models to improve care for this 
population. When I think of flexibility for this population, I 
don't think of it in the context of being able to cut benefits 
or services. I think about it in terms of we have a population 
with very complex needs and we have to be able to adapt to 
those needs, and by adapting to those needs, it allows us to 
provide more cost-effective care than might otherwise be 
available in the traditional Medicare and Medicaid systems when 
they are fragmented and not integrated. And so we see potential 
for integrated and coordinated systems to be able to take a 
holistic look at an individual, understand what that individual 
needs and make sure that we are getting those needs met in the 
most cost-effective way.
    Mr. Pitts. What feedback have you received from States, in 
your current capacity, about their interest and willingness to 
further integrate care for duals?
    Ms. Bella. It is a great question. Everyone knows States 
are financially strapped right now, now more than ever before, 
and they recognize a tremendous opportunity to improve quality, 
and by improving quality, help control costs with this 
population. I have seen more motivation in States than ever 
before to really understand the needs of this population and to 
develop integrated and seamless systems of care. Again, that 
improved quality, and by improving quality will lead to reduced 
cost over time.
    Mr. Pitts. As you know, there are various opinions on how 
dual eligibles should be enrolled in integrated care models or 
in coordinated care programs. Do you believe that mandatory 
enrollment with an opt-out policy would increase enrollment?
    Ms. Bella. Certainly, enrollment is a significant issue, 
and first and foremost I should say that the commitment of our 
office is really to establish beneficiary protections so that 
the programs we are creating are ones that are better than what 
are available to beneficiaries today.
    In thinking about enrollment, enrollment is one of many 
issues where we have to be open to exploring options to 
understanding what is keeping people out of integrated systems 
today, and again, this is one of the issues on the list that we 
are committed to exploring with our State partners.
    Mr. Pitts. Your office recently announced the availability 
of Medicare data on duals for States to access on a project 
basis. Why do believe the availability of this data was so 
important for States, and what else can CMS do to improve the 
availability of real-time Medicare data for States and 
providers?
    Ms. Bella. Well, I have a personal interest in this. I am a 
former Medicaid director, and when Part D happened and Medicaid 
agencies lost access to pharmacy data, it was like tying their 
hand behind their back because a critical tool was taken away 
to understand how to provide better care to these 
beneficiaries. So by giving States these data, we support their 
efforts to identify high-risk individuals to provide the data 
to primary care providers and care managers who are developing 
care plans to understand opportunities to prevent 
hospitalizations, for example, or to reduce medication errors 
or medications that are going to have adverse effects with each 
other. We believe that putting the data out there for States 
that we have will get them exactly where they need to be. It is 
timely. It covers Medicare A, B and D, and it is done in a way 
that allows us to protect the important privacy and 
confidentiality safeguards yet still give this critical tool to 
States who are trying to design programs to improve quality.
    Mr. Pitts. I think I have time for one more question. 
Realizing the Medicaid expansions in PPACA do not directly 
apply to dual eligibles, do you believe implementation of the 
expansions could have a woodworking effect on the overall 
system that could increase the number of woodworking dual 
eligibles?
    Ms. Bella. We have not done--the Office of the Actuary has 
not done as detailed estimates on this as in other populations 
but our early examination of the issue does not lead us to 
believe that there will be a woodwork effect for dual eligibles 
under the expansion.
    Mr. Pitts. Thank you.
    The chair recognizes the ranking member, Mr. Pallone, for 5 
minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman. I was going to ask 
unanimous consent for Ms. Christensen to sit in on today's 
hearing, Mr. Chairman.
    Mr. Pitts. Without objection, so ordered.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to try to ask you three questions and try to get 
in three questions here, Ms. Bella. My first relates to 
budgetary concerns. As you heard in my opening statement, I am 
always concerned that decisions about dual eligibles are based 
on budget concerns. I am not suggesting that that is true for 
you but I always worry that that is a big factor or maybe 
disproportionate to what it actually should be. And as we said, 
you know, it is a very complicated group. There are patients 
like people with developmental disabilities who may be well 
under 65 but you also have duals who are people with cognitive 
impairments like Alzheimer's diseases at advanced stages, so 
because they are not the type of patients that insurance 
companies are rushing to sign up for, you know, that is another 
concern I have. It is a very expensive population. So I think 
we have to be creative and assertive in our attempts to improve 
care for duals but we also need to be realistic in our goals 
and understand that it may be costly and budgetary expedience 
should not drive our treatment of the sickest and the frailest 
of our citizens.
    So my question is, first question, can you tell us about 
how you and your office are thinking about the dual eligibles 
as groups? Are you looking at them by what kinds of diseases 
that they might have or by the basis for eligibility for the 
programs, and of course, you know, my concern is that it is not 
budgetary driven.
    Ms. Bella. You are exactly right. It is a very diverse 
group. There are a few different ways that you can think about 
slicing and dicing the population, and I think that is one of 
the advantages to having this office is we are really going to 
drill down and look at subset analysis of the population. One 
of the ways we are looking is at the highest level over and 
under 65 to understand the different care needs of those groups 
and, for example, when the under-65 population with 
disabilities, the presence or absence of mental illness, I like 
to call it a game changer. It significantly changes the 
utilization, the picture. On the corollary, the over 65s, the 
same thing can be said for Alzheimer's and dementia, and you 
will hear more about that today. So we are looking at those 
levels and we are teasing out the subsets.
    In addition, there is also ways of looking at the 
population, understanding if their needs are more acute-care 
driven so folks who have five, six, seven or eight physical 
comorbidities or if they are long-term care driven, so these 
are folks who have needs that are more supportive services and 
those types of needs and the long-term care, some of those 
individuals are in nursing homes and some of them are in the 
community, so that further distinguishes how we have to think 
about subsetting the population. Now, we tend not to think 
about it by conditions or by eligibility groups. We tend to 
look for care opportunities. So regardless of what the profile 
is in many ways what needs to happen for these patients is an 
assessment of their needs is the availability of a care team, 
supports to get them the most cost-effective services they need 
in whichever setting they need them.
    So coming back to your question, those are examples of ways 
we are looking at subsetting the population, and then using 
that information to drive our decisions about what types of 
care models, what types of care needs, what types of payment 
and measurement systems we would have in place.
    Mr. Pallone. Now I am going to try to get two more things 
in. You mentioned the nursing home population. More than half 
of all nursing facility residents are dual eligibles. In 2007, 
more than 70 percent of Medicaid expenditures for dual 
eligibles were for long-term care. What can be done to improve 
the care and quality for people in nursing homes and what are 
States proposing that would help these individuals? Obviously I 
would prefer that they not be in nursing homes. Are there ways 
to improve care in nursing homes or get them out of nursing 
homes altogether so they don't have to stay in the nursing 
homes?
    Ms. Bella. The answer to that is yes, there are ways to 
improve the care, and there are several States, many States 
that are looking at rebalancing efforts. I think you will hear 
about some initiatives in North Carolina in particular to 
target those folks in nursing homes, but a couple of examples. 
We can really focus on avoidable hospitalizations of nursing 
home residents, and I will give you some examples. Urinary 
tract infection, pressure ulcers, dehydration, fall prevention, 
those are all things that are avoidable and they are 
preventable, and by targeting interventions and clinical 
resources on site, we can improve the quality of care, reduce 
hospital transfers and presumably help toward the cost-
effectiveness change as well.
    Mr. Pallone. My third question is, I know that, you know, 
they worry about passing the buck, in other words, is the 
State--who is responsible for their care, the State, the plan, 
you know, their insurance plan, and a lot of times there is 
passing of the buck in terms of who takes care of them, who 
follows up, how to enforce their rights and fulfill their 
medical needs. Who is truly accountable at the end of the day 
for ensuring that the needs of duals are met and that quality 
care is provided? Is it the plan, the State, the Federal 
Government, and do you see it as part of your office's mission 
to clarify that to make the pathway easier? In other words, can 
you play a role in all this so that the buck doesn't get 
passed?
    I know I am out of time, Mr. Chairman. Maybe she can be 
quick in her answer.
    Ms. Bella. I will be quick. States and feds are 
accountable. We share responsibility. Our office is absolutely 
accountable, and I think the reason that was created was to 
streamline care and to help make sure that we do keep the 
systems together and improve accountability for the program 
overall.
    Mr. Pallone. So you try to coordinate between these?
    Ms. Bella. Yes.
    Mr. Pallone. Thank you.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the full committee chairman, Mr. Upton, for 5 minutes for 
questions.
    Mr. Upton. Thank you, Mr. Chairman.
    I appreciate your testimony. In your testimony, of course, 
you said the total annual spending for their care is estimated 
at $300 billion annually, and that the 9 million Medicare/
Medicaid enrollees accounted for approximately $120 billion in 
combined Medicaid, federal and State spending in 2007, almost 
twice as much as Medicaid spent on all 29 million children that 
it covered in that year. Now, in responding to Mr. Pallone, you 
talked about some savings you may see in terms of targeting 
certain innovations. What other ideas to eliminate barriers do 
you think we might be able to achieve to actually see some real 
savings in the program? What innovations should we think about 
here?
    Ms. Bella. Sure. I appreciate the question. Unfortunately, 
there is no silver bullet, and the savings tend to happen over 
time. However, if you think about--I think where we think holds 
the most promise is understanding how do we create systems that 
are accountable and coordinated for the 9 million dual 
eligibles. There are, by our count, around 100,000 people that 
are in fully integrated programs, and by fully integrated, I 
mean, there is an accountability for both Medicaid and 
Medicare. So the opportunity is large for the rest of the dual-
eligible population, and absent that coordination and 
integration, we are not as aligned and efficient and effective 
as we could be. And so great opportunity exists to look at 
delivery system and payment reform models that understand how 
to create a way to take care of the totality of a beneficiary's 
needs and how to ensure that the incentives are aligned for 
doing so.
    Mr. Upton. Well, can we actually come up with some nuts and 
bolts to see not only the innovations but then lead directly to 
some savings, and if so, what would the savings be either as a 
percentage or real dollars?
    Ms. Bella. So as was mentioned, one of the first things we 
did is to engage States in a partnership to work with us in an 
innovation center to design new fully integrated models. So we 
have 15 States. That is exactly what we are doing. We are 
working with them to design the nuts and bolts of what this 
would take. We are in the design phase so we don't have savings 
estimates for you at this point. Certainly we can expect that 
there are opportunities, as I mentioned, in some of the 
avoidable hospitalizations, but we also have seen in programs 
in the States that do have them oftentimes there is an increase 
before you see a decrease because there is a lot of pent-up 
demand, there is care management that is occurring, there is 
new services that are taking place in order to reduce other 
services now or down the road. So it needs to balance out, but 
what we will be working on getting some concrete estimates over 
time by working with our States on the models that they would 
like to do.
    Mr. Upton. So as you are looking at those 15 States, how 
long will it take for them to complete the work that they are 
doing and you can actually look at some accountability in terms 
of what they have done?
    Ms. Bella. The way we structured this demonstration 
initiative right now is that it is a 12-month design period. It 
doesn't mean that States that can't submit a proposal earlier.
    Mr. Upton. Which started when?
    Ms. Bella. April.
    Mr. Upton. April?
    Ms. Bella. It started in April. Several States are 
interested in putting something forward earlier, and as I 
mentioned, all States are able to put proposals together, we 
are just working with these 15 to receive funding, so States 
aren't--like I said, they can come in sooner with ideas. We 
designed this, because this isn't a typical CMS demonstration 
where we are prescriptive about what we want to see because 
that hasn't worked for us with the States so far, so we need to 
work with the States to design what is going to be most 
effective for each of them. However, this is a complex 
population and we have to do this in a way that makes sure that 
we are addressing significant issues around beneficiary 
safeguards, provider participation, financial incentives 
correctly, and that is why we have designed it in a design 
phase.
    Mr. Upton. Thank you. I yield back.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the ranking member of the full committee, Mr. Waxman, for 5 
minutes for questions.
    Mr. Waxman. Thank you, Mr. Chairman.
    There is an interaction between the issues we are talking 
about today and the Medicare Advantage program is a complicated 
one. Some Medicare Advantage special needs plans have been 
around for a long time and built deep roots in their 
communities. Others have less successful track records and of 
course the program has for a long time been supported by large 
subsidies provided by taxpayers and other beneficiaries. The 
Affordable Care Act pared back many of the extra payments to 
Medicare Advantage plans but not all of them and not 
immediately. I was surprised to find that some States are 
proposing to use Medicare Advantage benchmarks as the basis for 
their proposed payments in the duals integration demonstration. 
Ms. Bella, wouldn't the use of Medicare Advantage benchmarks 
increase costs to the federal taxpayer if they were adopted for 
duals integration demonstration?
    Ms. Bella. We certainly think that--as I mentioned, our 
goal is to get more beneficiaries served in integrated systems 
and so in integrated systems there is an opportunity to achieve 
savings. You are obviously pointing out what we all have seen 
in terms of the differential and the MA rates, and I would just 
come back to that the purpose of the innovation center is to 
develop and identify delivery system and payment reforms that 
improve quality and reduce cost, and so as we go forward with 
these demonstrations, that is going to be our overriding 
principle, so we will work with States to ensure that the 
proposals they are putting in place do both of those things, 
which would mean understanding how we would address the rate 
issue in a way that would support improving quality but not add 
cost to the system.
    Mr. Waxman. Well, we want to highlight that issue to look 
at carefully in your design of these proposals. There are 
numerous cost savings with regard to the Medicaid program that 
shift costs from the Federal Government to the State 
governments instead of lowering cost. The intent of this 
hearing and the mission of the Medicare and Medicaid 
Coordination Office is to improve care for dual-eligible 
individuals, thereby lowering health care costs in Medicaid and 
Medicare, a better way of saving money than shifting 
responsibility.
    I want to ask about some of these contracts you have been 
talking about in response to other questions. You recently 
awarded to 15 States to design coordination care models. One 
requirement you included was integrating care across primary, 
acute, behavioral health and long-term support services. Can 
you discuss the importance of integrating care across all these 
benefits, the barriers to integrating care across all these 
benefits and how prevalent such full integration is today?
    Ms. Bella. Sure. The importance is to get at exactly what 
you talked about, the opportunity to cost-shift, so we need to 
mitigate or eliminate those opportunities, for example, if we 
have acute care in one system and long-term care in another 
system. But more importantly, if we are going to put together 
systems of care that are better for real people that need them, 
we have to provide a seamless way of them interacting with the 
system rather than three different cards, three different 
doctor networks, three different grievances and appeals, and I 
say three because most of the duals are in separate Part D 
plans so they are navigating Medicaid, Medicare and pharmacy 
coverage. So that is the importance of putting everything 
together in a way that is seamless to them.
    The challenges are many. There are certainly always--
whenever you change a system, there are concerns. We have 
concerns with capacity, with provider capacity, particularly in 
the long-term supports and services side. We have carve-outs in 
some States, particularly around behavioral health, so all 
those issues that we need to address, but the opportunity is 
great, and one of the reasons these States were selected was 
because they are committed to providing full integration. As I 
mentioned earlier in response to another question, we think 
only about 100,000, maybe 120,000 folks have fully integrated 
models. You will hear about one of those today with the PACE 
program. But again, our goal is to create those types of 
systems for significantly larger numbers of Medicare and 
Medicaid enrollees.
    Mr. Waxman. As you move forward in developing these new 
systems for dual-eligible beneficiaries, I think it is critical 
that you hear from the individuals and their family caregivers 
and get their input into the process to ensure that any new 
approaches are simple enough for these individuals and their 
caregivers to navigate, protects the rights currently 
guaranteed to beneficiaries in Medicare and Medicaid while also 
meeting their health concerns. How will your office ensure that 
we get these voices heard from the patients and the caregivers?
    Ms. Bella. Well, first of all, we share your commitment and 
your interest in doing that. We are very vigilant with the 
States on the expectations in terms of stakeholder engagement. 
We have gotten wonderful input from different consumer advocacy 
organizations about how to ensure that is meaningful. We are 
doing focus groups of real dual-eligible beneficiaries around 
the country so hearing from the real people about what is 
working and what is not working, why did some choose integrated 
systems, why did others not, and so those types of 
conversations really will be informing and driving our efforts.
    Mr. Waxman. Thank you very much. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the subcommittee vice chairman, Dr. Burgess, for 5 minutes for 
questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    In the section of the Affordable Care Act that you 
referenced that creates your office, there is paragraph E says 
the Secretary shall as part of the budget submit to Congress an 
annual reporting containing recommendations for legislation 
that would improve care coordination and benefits for dual-
eligible individuals. When should we expect that report?
    Ms. Bella. So our office was officially created December 
30th through the Federal Register and so we missed really the 
typical budget cycle. In February the Secretary submitted a 
letter outlining the progress of the office to date, committing 
to our priorities over the coming year, and now that we are 
established we will get caught up on the regular cycle and 
provide you that annual report as part of the annual budget 
process as the mandate requires.
    Mr. Burgess. So when should we expect to receive that 
report?
    Ms. Bella. Next year.
    Mr. Burgess. Next year, January, next year----
    Ms. Bella. Next year, February of 2012.
    Mr. Burgess. It is just interesting, in the law that was 
signed your office was created not later than March 1, 2010. It 
is always interesting how something can be created 3 weeks 
before the bill got signed into law.
    Let me ask you a question. In January, Dr. Berwick was at 
the Commonwealth Fund symposium that they put on every year, 
and of course, he articulated this problem, and I think he was 
a little more dramatic. He said 20 percent of the beneficiaries 
are costing 80 percent of the money including blind and 
disabled in that group as well. But that was a pretty startling 
figure that he related. Now, another Member of Congress who was 
there, and I can't take credit for this, it was actually a 
Democrat who complained that American health care was so 
complicated that he had to go out and hire a concierge 
physician to manage his care between the two coasts on which he 
lived, and so I asked Don Berwick, why wouldn't you have a 
concierge doctor for a dual eligible. It seems like it would 
make a lot more sense to pay a physician to manage these 
conditions. I have got some figures from 2005 where it is 
$26,000 a year that we spend on a Medicare/Medicaid dual-
eligible patient unless they have five or more conditions in 
which case that cost doubles. It seems like there is some 
significant efficiencies that could be gained here through the 
integration of that care, whether you call it a retainer 
physician, whether you call it integrated primary care, but 
really putting the doctor and not the agency and not a home 
health aide, putting the doctor in charge of that patient and 
holding them accountable, of course, to perform its metrics 
that you outlined, the alignment, the data and the models and 
demonstrations. Why not do that?
    Ms. Bella. I don't think these things are mutually 
exclusive. I think there are opportunities depending on what is 
driving a beneficiary's needs. Some of them are less medical. 
They are non-medical and so in those cases it does make more 
sense to have a care manager, a behavioral health specialist or 
a home health aide.
    Mr. Burgess. But why not have a physician in charge of all 
of those facets of care?
    Ms. Bella. There are certainly models that do that, and you 
may hear a little bit about those on the second panel. There 
are a lot of medical-home initiatives underway right now which 
the primary purpose is to support the physician and provide 
infrastructure support so that the physician is managing the 
totality of the care and is accountable for the financing, so I 
think there is a lot of promise for many of those models and 
several States are exploring those very things.
    Mr. Burgess. Well, forgive me for seeming impatient. I 
think there is a lot more than a lot of promise. I think there 
is a deliverable that could be obtained really in a much 
shorter time frame than anything we have heard discussed here 
this afternoon, and we are talking about enormous amounts of 
money. We are talking about people's lives, people who are 
medically fragile, whose care is of utmost criticality to them 
and to their families, and I simply cannot understand why we 
wouldn't move with greater dispatch. We are going to have to 
wait another year for a report from your office. I mean, these 
are things that should have been in the works for some time.
    Ms. Bella. Certainly, developing new delivery system and 
payment models is first and foremost on what we are doing. We 
are happy to come over and do briefings at any time, and we 
have done that repeatedly with several staffs. And the only 
other thing I would say is, again, it is not that we are not 
advancing physician-directed medical-home-type models but we 
are also looking at different types of care models, some of 
which are less expensive and perhaps better tied to a 
beneficiary's needs, which again would I think advance what you 
are charging us to today, which is control cost.
    Mr. Burgess. Well, you do get what you pay for. You know, 
the experience with the accountable care organization rules and 
regs that came down is just so disappointing. So many people 
had placed so much emphasis on this and so much importance, and 
then to find the reg was absolutely unworkable, that clinics 
who actually considered themselves accountable care 
organizations said we can't do this, and I worry about the same 
thing happening in this population where it is so critical that 
we get it right.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the gentleman from Illinois, Mr. Shimkus, for 5 minutes for 
questions.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Welcome. We are glad to have you here. Realizing that the 
Medicaid expansions in the health care law do not in totality 
affect dual eligibles, do you believe that the expansion of 
Medicaid--and I know you mentioned this woodworking aspect--do 
you fear the woodworking aspect with the expansion of Medicaid 
under the health care law?
    Ms. Bella. We don't, no.
    Mr. Shimkus. The latest MedPAC report included a chapter on 
dual eligibles. In its report, the commission noted that a 
single program design is not likely to be adopted in every 
State. They added, there is no clear evidence about which 
programs are most effective for every type of dual-eligible 
beneficiary. Do you agree that a one-size-fits-all strategy for 
improving the coordination and integration of care for duals is 
a bad strategy?
    Ms. Bella. We think it is very important that we recognize 
that there are different delivery system designs in the States, 
and if we are going to be effective, we have to work with 
States to understand what systems are going to work best for a 
given State, and honestly, for a population within that State.
    Mr. Shimkus. And following up on that, do you believe that 
mandatory enrollment with an opt-out policy would increase 
enrollment?
    Ms. Bella. As we discussed a little bit ago, enrollment is 
obviously a significant issue. We don't have as many people in 
these types of systems as we would like to today so it is one 
that we are exploring to understand. It is one that we are 
learning from in the focus groups as well to understand what it 
is that is holding back enrollment, and that is one of the 
things that is part of this design process in our work with 
both States and stakeholders.
    Mr. Shimkus. And part of the problem in obviously the 
Medicaid, the dual eligibles, the Medicaid and Medicare, is 
that the 50/50 share of Medicare and the ownership that the 
State has versus Medicare, which is the federal program, and, 
you know, the contention is or the fear that some States may 
not be motivated to help solve this based upon depriving them 
of the 50/50 share if Medicare is assuming more of a role, or a 
role. Can you talk me through that and your experience in 
talking with States and whether this might lend itself to a 
sharing of Medicare as part of this debate of how you have 
inclusive care?
    Ms. Bella. Sure. Our work with States highlights that an 
area that creates challenges is the misalignment of incentives 
between the Federal Government and the States. The governors 
have said that. NGA has said that. MedPAC has said that. This 
Administration recognizes that. So that is part of our work 
with States is to understand if we are going to get this right, 
we have to look at how we align the incentives to create 
systems of care that are better than we have today.
    Mr. Shimkus. And I will just end on this, and again, I 
appreciate your time and look forward to the second panel. 
Illinois in particular is a struggling State, as many States 
are, but we have a $12 billion debt. A lot of it is due to the 
expansion of Medicaid without comparable increase in revenue by 
the State and so it just was borrowed money and the like. Under 
the health care law, which leads back to the first question, it 
actually increased enrollment for Medicaid versus over the very 
lucrative program the State has. That is why I would argue that 
there should be a concern about more people coming out into the 
arena based upon the expanded benefits, and I would hope that 
you all would take a closer look at that because I do think 
that is going to be additional liabilities for us that we are 
not calculating in costs today.
    Thank you, Mr. Chairman. I yield back.
    Mr. Burgess. Would the gentleman yield?
    Mr. Shimkus. I would yield to Dr. Burgess.
    Mr. Burgess. Can I go back to the integrated care question 
that I was talking about just a moment ago? So what is being 
done right now as far as making families aware of the 
availability of integrated type of care?
    Ms. Bella. It depends on a given State and a given health 
plan so there are opportunities to inform beneficiaries and 
their caregivers of integrated care options either through 
State efforts or through health plan efforts.
    Mr. Burgess. Is anything being done to enroll people in 
integrated care programs?
    Ms. Bella. Certainly, but there are two different 
enrollment processes, one for the Medicaid half of the person 
and one for the Medicare half of the person.
    Mr. Burgess. But the estimates I have are less than 2 
percent of all of the dual eligibles are in some type of 
integrated care program.
    Ms. Bella. Correct.
    Mr. Burgess. And yet the promise these types of programs 
hold is high. Maybe you can get back to me with some additional 
information on what is being done to foster that information.
    Ms. Bella. I would be happy to do so.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the gentleman from Ohio, Mr. Latta, for 5 minutes for 
questions.
    Mr. Latta. Well, thanks very much, Director, for being with 
us this afternoon. I appreciate your time.
    Just a little background because I didn't see, where were 
you director at?
    Ms. Bella. Indiana.
    Mr. Latta. And how long were you the director in Indiana?
    Ms. Bella. From 2001 through 2005.
    Mr. Latta. I always like to find out a little bit about a 
person's background because sometimes it is good to see things 
from the other side of the fence. I was in the State 
legislature in Ohio for 11 years, and during that time we had 
our go-arounds, especially with the cost of Medicaid going up, 
what it is costing the State budget today, and so I am glad you 
have that experience.
    And not that I wasn't fascinated with all of your testimony 
but something struck me on page 4. In the second paragraph when 
you are talking about coordination of the offices, the one 
thing that really caught my attention was the seamless care, 
and I know that years ago when was in the legislature, I had 
been a county commissioner for 6 years prior to that, we had an 
individual in the county that we had a lot of problems trying 
to get to the right service, to the right place, and I was very 
proud of my home county in that we worked things out, and how 
we termed it was ``seamless.'' And the reason I find that 
interesting is that how is it that it has taken this long for 
us to get to this point that after decades that we are finally 
starting to talk about seamless and then also in your testimony 
talking about the offices working to improve the collaboration 
and the communication out there. And again, I think that goes 
back that you have seen things from the other side of the fence 
that, you know, for decades States have been on the receiving 
end of things and the Federal Government is saying one thing 
and the State is saying, well, how are we going to get this 
done. So I will just ask you that.
    Ms. Bella. Well, a few thoughts. I mean, when these 
programs were created, I don't think it was ever envisioned 
there would be 9 million people eligible for both and so they 
work exactly as they were designed to work, which is completely 
separately, and we haven't had the resources to date committed 
and accountable for trying to put them together and create 
seamless systems, and you all fixed that by creating this 
office, and so I think it is a recognition. Oftentimes it seems 
to be the most difficult fiscal times that drive some good 
developments that could help real people and coordinate care, 
and that perhaps is what we are seeing today is one of the 
greatest advantages of having to realize where we need to focus 
is on this population and so we now have a group of people that 
is all we do, and so we are accountable for making that better 
and working with our State partners to do so.
    Mr. Latta. Let me ask this, if I may because, you know, I 
hate to say it this way, but we do have some established 
bureaucrats in this city that have been here for a while, and 
in listening to your testimony and answering the questions to 
other members with us today, you know, that you are talking 
about doing focus groups around the country, that you are going 
to be listening and that, you know, there is no one size that 
fits all because, again, like the State of Ohio is completely 
different than what is happening out in Idaho or you name it. 
But I think it is going to take the direction from you as 
someone that has seen it from the other side to really impose 
upon these individuals down here that there is something that 
occurs outside this beltway. I have folks back home ask me, I 
don't care what it is about, they say don't they understand 
what is going on back here, and it is very difficult to always 
have to tell them no. And so we are going to be looking for 
your guidance to make sure that these folks down here that have 
been here for a while understand that they do have to take that 
direction from you, that you are going to be listening, that 
you are going to have these focus groups to find out what works 
best.
    So with that, Mr. Chairman, I appreciate the time and I 
yield back.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the gentleman from Louisiana, Dr. Cassidy, for 5 minutes for 
questions.
    Mr. Cassidy. Thank you, Ms. Bella. I appreciated our phone 
conversation a little while ago and I appreciate your testimony 
today.
    Now, I have been trying to figure out, you mentioned the 
buckets of dual eligibles, and the partial duals versus the 
full duals, the full duals with the wraparound, and I gather 
the full duals may have custodial care paid for by Medicaid but 
medical services paid for by Medicare, and the partials will 
the deductible copay paid for by Medicaid. What percent of 
patients who are duals are in each bucket, and what percent of 
the expense of duals are in each bucket? Because clearly 
wherever--and then what are the medical outcomes of each 
bucket? Because clearly, if we have poor outcomes and higher 
expense for that more expense and poor outcomes in a bucket, 
that is where we should focus our attention, yet it seems as if 
it should take two different approaches.
    Ms. Bella. So the biggest bucket would be the full duals 
who are receiving all Medicaid services and Medicare services--
--
    Mr. Cassidy. Not to be rude, but just so I understand, so 
really, in the full duals, there is not that much that Medicaid 
is paying for for acute medical services, I gather; rather, 
they are paying for the custodial care. Is that correct?
    Ms. Bella. They are paying for largely the custodial care. 
They wrap around and provide some things like behavioral health 
services or home health, in cases where Medicare--it is 
wraparound acute. It is the wraparound for the cost share for 
the duals and then it is primarily the long-term care service 
and support.
    Mr. Cassidy. OK. So then if we can differentiate how much 
the Medicaid dollar is going for custodial versus those medical 
services which Medicare does not pay for, do you all have data 
on that? Because I am gathering that most of the expense is in 
custodial care which is relatively----
    Ms. Bella. I would broaden it to call it long-term care 
supports and services just because people tend to think of 
custodial as an institutional base. So 70 percent of costs are 
in the long-term care bucket, if you will, for those folks.
    Mr. Cassidy. For the full duals?
    Ms. Bella. Yes, but again, that is not just the custodial 
care.
    Mr. Cassidy. So then if you separate out--oK. Medicare and 
Medicaid together, the duals are a higher percent relative to a 
cohort, a non-disabled cohort?
    Ms. Bella. Yes.
    Mr. Cassidy. OK. So if you just look at the non-long-term-
care costs for those duals, how does that relate compared to a 
cohort? Do you follow what I am saying?
    Ms. Bella. So on primarily their Medicare expenditures?
    Mr. Cassidy. Yes.
    Ms. Bella. Yes, they are still higher across the board.
    Mr. Cassidy. And is it as dramatic?
    Ms. Bella. It is fairly dramatic. I mean, if you think 
about they are qualifying people for both Medicaid and Medicare 
so they have not just the medical needs but they have a lot of 
psychosocial complexity.
    Mr. Cassidy. Now, let me ask you, we are going to hear 
about a PACE program, and I am very impressed with the concept 
of PACE but it is clearly not going to scale. I would like your 
perspective on why a program such as that is unable to go to 
scale.
    Ms. Bella. Well, PACE is designed for a very frail 
population, so a couple of things: One is, PACE is for people 
who are 55 or older and you need a nursing facility level of 
care, so again, that is a very, very frail population.
    Mr. Cassidy. But that must be your highest expense 
population?
    Ms. Bella. It is a high expense, although--yes, it is a 
high expense.
    Mr. Cassidy. And there must be a heck of a lot more than 
20,000 people or 100,000 or whatever.
    Ms. Bella. There are opportunities that Shawn will discuss, 
and they have been thinking about to get something that is 
available to more people in more States. It tends to be 
resource-intensive to get some of the programs started but it 
has very fundamental concepts that we want to replicate.
    Mr. Cassidy. Well, I accept that, it has got great 
concepts, and say this not to diss but rather to say--that is 
disrespect--but rather just haven't gone to scale.
    Ms. Bella. Yes. He is going to get into a lot more, but I 
would be happy to have another conversation with you offline.
    Mr. Cassidy. The ACO rules which are just, I mean, place 
great faith in supercomputers to contact, to follow different 
patient interactions, physician interactions I almost see as 
counterproductive. Have you read the ACO rules and thought 
about how they are going to apply to dual eligibles?
    Ms. Bella. I have to be honest, I haven't read every single 
page. I have read a majority and have been thinking about how 
do you take that model for folks that have long-term care, not 
just acute-care needs, and that have different funding streams, 
both Medicare and Medicaid, and make sure that we are creating 
a system that again doesn't provide opportunities----
    Mr. Cassidy. I understand that is what your approach is but 
what I have just gathered from you, most of the Medicaid 
expense is actually on the long-term care aspect of it and the 
ACO is going to be principally on the acute medical services. 
In that way, the ACO still doesn't dictate or assign or 
anything else, it just follows. I think you answered the 
question. The following, it still seems like that is what we 
have now. You are just merely following and paying a lot of 
money for this coordinated care.
    Ms. Bella. We are excited about the opportunity to work 
with our States. Again, we are thinking about how do you adapt 
more of a managed fee-for-service approach that has an 
accountability like an ACO that brings in the long-term care 
side for this population.
    Mr. Cassidy. Thank you. I yield back.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the gentleman from Kentucky, Mr. Whitfield, 5 minutes for 
questions.
    Mr. Whitfield. Thank you, Mr. Chairman, and Ms. Bella, 
thanks for being with us today.
    When the Affordable Care Act was passed, the method used in 
passing it created a lot of animosity, much of which is still 
out there, and I am assuming that you were not even working at 
CMS when it passed, but the method used, for example, when it 
was on the House Floor, this bill was 2,500 pages, whatever it 
was, we were not allowed to even offer one amendment. So I 
contrast that sort of process to deal with a complicated health 
care delivery system that has a lot of problems with what you 
are doing in your coordination office in which you are giving 
$1 million to 15 different States for the purpose of allowing 
them to explore, be innovative and see if they can come up with 
a system that works so it could be replicated in other States, 
which I think is commendable. But that same suggestion has been 
made for Medicaid regarding the grants to the States. A lot of 
controversy in the Republican budget was, we will have a 
capitated system for Medicaid.
    My question would be, don't you think that there would be 
some merit in working out a system so that individual States on 
Medicaid could explore, be innovative? I know we are not 
talking about dual eligibles per se but the Medicaid program. 
Do you see any benefit by setting up a system that would work 
like that?
    Ms. Bella. We are really kind of singularly focused on 
setting up coordinated and accountable system for dual 
eligibles and making sure that there are beneficiary 
protections, access to care and funds sufficient to provide 
care in such a way that eventually helps with the cost 
conundrum.
    Mr. Whitfield. But at least you all are doing that with 15 
States, so I think that is a good idea.
    I would like to yield the balance of my time to Dr. 
Burgess.
    Mr. Burgess. Thank you, Mr. Whitfield.
    If I could, let us just go back the fact that the spending 
per dual eligible in 2005, $26,000, unless they had five or 
more conditions in which case it doubled to $50,000. Obviously 
more medical conditions are going to cost more but it seems 
like that amount is greater in the dual-eligible realm than it 
is for the comparable Medicare patient with five or more 
chronic conditions. Is that a fair statement?
    Ms. Bella. Across the board, dual eligibles rate higher 
than Medicare-only beneficiaries, yes.
    Mr. Burgess. So is that increasing cost only because of the 
cost of long-term care or is there something else that is 
entering into that? What accounts for that cost differential?
    Ms. Bella. Well, this is a much more complex population and 
so the needs that they have and the way those needs translate 
into utilization of services is what drives cost. I mean, 
across the board, again, this population is poorer, sicker, 
more impaired than any other population.
    Mr. Burgess. Correct, which is why my anxiety about not 
having a knowledgeable medical person in charge of 
orchestrating all aspects of that care, if you don't have that, 
then you are going to get what you have got, and the last thing 
we want is more of what you have got because we haven't got any 
more to give to pay for what you have got. Do you follow me? I 
mean, this is so critical that we have the knowledgeable 
medical person in charge and responsible for that patient's 
care. The elderly patient in the nursing home doesn't just get 
a urinary tract infection, they get urosepsis, and they come 
into the hospital and they die after five days of intensive 
therapy. The outcome is just absolutely dreadful and it costs a 
lot of money. Someone to be able to anticipate that and prevent 
that is literally worth their weight in gold in that situation. 
Is that not correct?
    Ms. Bella. We are trying to create systems where there is 
an accountable care team and an entity that is----
    Mr. Burgess. You don't need a team, you need a person. You 
need one person to be accountable. I am sorry, I am old school. 
I am a doctor. In the old days, there was one person in charge 
and accountable.
    Mr. Chairman, against my better judgment, I am going to ask 
that this Ezra Klein article from the Washington Post from June 
16th be entered into the record. Only about half of it is 
accurate but the part that is, is so accurate that I think it 
is worth sharing with our colleagues and the general public.
    Mr. Pitts. Without objection, so ordered.
    Mr. Burgess. Thank you.
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    Mr. Pitts. The chair thanks the gentleman and recognizes 
the gentlelady from the Virgin Islands, Dr. Christensen, for 5 
minutes for questions.
    Mrs. Christensen. Thank you, Mr. Chairman, and I thank you 
and the ranking member for allowing me to sit in on this 
important hearing, and I am particularly interested in being 
here because in the dual-eligible population, somewhere around 
40 percent of that population are minorities, and so I hope, 
Director, that you are also working with the new Office of 
Minority Health to look at that subpopulation as you plan this 
coordination.
    So the dual-eligible population disproportionately suffers 
from racial, ethnic as well as geographic disparities, and 
these are particularly pronounced in the end-stage renal 
disease population. There has been a successful, I think, 
completion of a 5-year coordinated care demonstration for end-
stage renal disease patients, and what are your thoughts about 
expanding this demonstration to the dual-eligible population? 
Is this something that your office can work with others to 
implement?
    Ms. Bella. Well, we are certainly interested in looking at 
all demonstration opportunities that could be tailored to the 
dual-eligible population for different subsets of the 
population so it is certainly something that we can go back and 
discuss further with our colleagues.
    Mrs. Christensen. I think it might prove helpful, 
especially since end-stage renal disease, I am sure, accounts 
for a lot of the cost that Medicare puts out.
    Also as a provider, like Dr. Burgess, and having worked 
with AmeriHealth Mercy family of companies, which is one of our 
country's largest Medicaid managed care plans to help 
understand some of the challenges, I understand that under 
current regulations, services provided to Medicaid health plan 
enrollees by institutions are not counted in determining 
payments to providers and this results in fragmented care 
because states often choose not to enroll these populations 
into Medicaid health plans or they carve out provider services 
from the plan's benefit coverage. Are you familiar with this 
problem and barrier to enrollment or expanding enrollment and 
are there any plans to address this?
    Ms. Bella. It is certainly something that we have heard 
from some States and some plans, and again, kind of taking that 
list of everything we have to begin to understand and figure 
out how we are going to address greater opportunities to 
promote alignment. That would be part of what we have on that 
list.
    Mrs. Christensen. Just one more question. Ms. Hewson from 
Community Care of North Carolina in her testimony, one of the 
things she notes is that programs targeting at-risk pre-duals 
may, you know, be something to really start looking at, not 
only for the care of those patients, better care of those 
patients, but also for the larger budget impact. Is this 
something that the office is working on?
    Ms. Bella. Absolutely. There is a huge opportunity with the 
pre-duals, particularly preventing their decline or their 
spend-down of resources and being smart about how we can make 
an investment on the front end and prevent migration into dual 
status. So yes, it is something that we are looking at.
    Mrs. Christensen. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentlelady.
    Mr. Pallone. Mr. Chairman, could I ask unanimous consent 
that Mr. Markey be allowed to participate in the subcommittee 
today?
    Mr. Pitts. Without objection, so ordered. Do you want to 
ask questions of this panel?
    Mr. Markey. If you don't mind, Mr. Chairman.
    Mr. Pitts. All right. The chair recognizes the gentleman 
for 5 minutes for questions.
    Mr. Markey. I thank you, Chairman Pitts and Ranking Member 
Pallone, for holding this hearing, and I would like to thank 
Melanie Bella for helping to lead the charge at CMS to improve 
care for 9 million patients who by definition are the sickest, 
poorest, costliest individuals covered by either Medicaid or 
Medicare. The landmark health care law included language that I 
authored to create a pilot program called Independence at Home 
to address the unique needs of Medicare patients who have 
multiple conditions including Alzheimer's, Parkinson's, et 
cetera. Caring for these patients is disproportionately 
expensive yet this population often receives substandard and 
uncoordinated care that products conflicting diagnoses and 
confusing courses of treatment. Further, many of these 
individuals wish to remain at home rather than nursing homes or 
hospitals and they could do so if they were given some help. 
The Independence at Home program gets at the root of the 
problem by creating teams of health care providers who will 
work together to coordinate care for these patients and provide 
primary care services at the patient's own home. If they 
succeed in lowering costs beyond 5 percent, the providers will 
share in the additional savings, so there is a stake in 
lowering costs to the system.
    It seems to me that Independence at Home could also help us 
improve care for the patients who are eligible for both 
Medicare and Medicaid by integrating health care services 
provided by Medicare with long-term supports and services 
provided by Medicaid. For years we have seen the success of 
Independence at Home-style programs at more than 250 VA 
locations and elsewhere throughout the country. The VA programs 
have reduced nursing home care by 88 percent and reduced 
overall costs by 24 percent on the highest cost, chronically 
ill patients all while achieving record-high patient 
satisfaction rates. ElderPAC, which has been operating this 
style of program for the dual population, shows savings to the 
Medicaid program of 23 percent over the past decade.
    So let me as you this, Ms. Bella. In light of the fact that 
the Independence at Home model has proven successful in 
lowering costs and improving outcomes among some of the most 
challenging Medicare patients. Don't you agree that your office 
should look at expanding this model of patients that are 
eligible for both Medicare and Medicaid?
    Ms. Bella. Well, first of all, we thank you for your 
leadership and support on this issue. We are very committed to 
models that allow dual-eligible beneficiaries to stay at home 
with supports. We are in discussion with our colleagues about 
the Independence at Home demonstration. As you know, it is 
still in development. It will be available the first of 2012 
and we are looking for opportunities to make sure that it is in 
the mix of models that could be considered for dual eligibles.
    Mr. Markey. Is there in your experience a reason to believe 
that this is a good way of looking at how we keep these 
Alzheimer's and other patients at home longer and save the 
system money because they don't have to go to nursing homes?
    Ms. Bella. Certainly we are very interested in models that 
allow individuals to stay in care preferences of their choice 
and that are also cost-effective and so we do believe a model 
like this holds promise. Again, we look forward to 
understanding how we can adapt that in our work with States and 
others as we develop new delivery system models.
    Mr. Markey. And do you think that it makes some sense to 
incentivize the health care providers that they make money if 
they can figure out ways of saving money by keeping patients at 
home? Do you think that that will incentivize them to think 
anew about how to take care of these patients?
    Ms. Bella. Well, we always want to make sure that there is 
appropriate beneficiary safeguards in place and that people are 
getting the services that they need, but opportunities where we 
know that there are opportunities to align incentives, it 
certainly is a direction that the agency has been heading in 
terms of being able to do some performance-based outcomes 
payments.
    Mr. Markey. You know, I did that bill in conjunction with 
the Alzheimer's Association. As you know, there are 5 million 
Americans right now with Alzheimer's and 15 million baby 
boomers are going to have Alzheimer's, so it is obviously 
important that there be a plan that coordinates with families, 
you know, who are the principal caregivers so that they can 
have the maximum amount of help at home, because once they go 
to a nursing home, it is $60,000, $70,000 a year on Medicaid, 
you know, for those families, so this is just a program that 
obviously meant to help keep them at home, save the system 
money, make the families happier and the patient as well in a 
setting where they would feel more comfortable, so we thank 
you, and I would like to continue to work with you on 
developing that program.
    Ms. Bella. I would be happy to do so.
    Mr. Pitts. The chair thanks the gentleman. That completes 
round one of questions. We have one follow-up. Dr. Cassidy.
    Mr. Cassidy. Ms. Bella, I should know this and I don't, and 
I apologize, but you mentioned a couple times that mental 
health issues are going to--you know, it is an independent 
variable, it sounds like. You do a retrogression analysis and 
it comes out mental health is a big issue. So a couple 
questions. Is this related to addictive disorders or is it 
related to, if you will, classical mental health issues, number 
one, you know, paranoid schizophrenia, for example. Is the 
issue that they are noncompliant with medical services and are 
going in and out with poorly controlled comorbidities or is the 
issue that they are going in and out with mental health 
admissions? And clearly, it seems as if that would be something 
that a wraparound managed care organization could theoretically 
improve outcomes and strengthen stability of the programs' 
finances. What is the track record of such programs?
    Ms. Bella. Let me try to take your questions in order. So 
the first, I mean, when we think about the folks that have 
behavioral health issues, it is mental illness, it is also 
substance use. There tends, as you know from treating patients, 
there is a higher prevalence of substance use in folks who----
    Mr. Cassidy. So that is a third category, if you will, 
combined?
    Ms. Bella. But you have the serious mental illness, 
schizophrenia, bipolar, and then you have folks that have 
depression and other symptoms. Clearly the utilization is 
different for those populations. What drives part of the 
trouble is there tends to be a disconnect in the physical and 
behavioral health systems, as you know, and a real lack of 
information sharing so that one half doesn't know what the 
other half is doing with regard to this patient, and again, as 
a practicing physician, you can understand why that would be so 
detrimental because the effects of----
    Mr. Cassidy. And again, that is why it just seems like 
managed care would be custom made, that this is where it would 
integrate and bring things together.
    Ms. Bella. Certainly. I mean, there's been different--
States have tried different approaches. Some have given 
responsibility for everything to a health plan. Some have 
carved out behavioral health services to a health plan while 
physical health services have stayed in fee-for-service or 
sometimes physical health services have gone to yet another 
health plan. So there tends to be different mechanisms States 
have tried. There also have been a couple of really great 
pilots, one in Pennsylvania, that it was within a fee-for-
service system but what they focused on was sharing information 
and aligning incentives between the physical health and the 
behavioral health world, and that made a huge difference.
    Mr. Cassidy. That was not managed care, that was just--
there must have been some integration between the practice 
groups.
    Ms. Bella. There was management on the behavioral health 
side and it was fee-for-service with PMPM overlay on the 
physical health side but no structural or organizational 
integration, if you will, and it all got down to really 
understanding, making sure all people involved in that care had 
a clear picture of what the beneficiary was getting on both 
sides.
    Mr. Cassidy. Now, they couldn't have been doing that with 
Medicaid rates. They must have been paying Medicare rates to 
providers, correct? Because that would be time-intensive to 
transfer that.
    Ms. Bella. It was time-intensive. They had some outside 
support during the pilot phase but also they got smarter about 
how they delivered care. They used other types of 
practitioners. They did a lot with peer support specialists, 
and the cost dynamic is different when you----
    Mr. Cassidy. Do you have an analysis of that you could 
share with us? Because I think it is very intriguing.
    Ms. Bella. I am not sure that any final sort of journal-
ready analysis has been published but I would be happy to share 
with you what has been done to date and certainly some 
descriptive analysis and the metrics that they are using.
    Mr. Cassidy. Sounds great. And my second question, which 
was, since we went to the third, is the increased expense due 
to multiple admissions for mental illnesses, for the paranoid 
schizophrenic, for example, or is it noncompliance with medical 
illnesses so it is bouncing in and out because their diabetes 
is poorly controlled, for example?
    Ms. Bella. It is hard to generalize. I mean, both, but 
clearly two things that both could be improved with integrated, 
coordinated and accountable systems.
    Mr. Cassidy. Do you have any idea of the--that will be a 
follow-up question at a later time, but I would be interested, 
again, I trying to understand which of this is compressible, 
long-term care is not as compressible, whereas perhaps this 
would be. What percent of the increased expense is related to 
this subgroup of populations, those with mental health and 
physical health issues simultaneously?
    Ms. Bella. We will call that our bucket analysis and we 
will work on getting you some analysis in those different 
categories across the board for the committee's consideration.
    Mr. Cassidy. Thank you.
    Mr. Pitts. The chair thanks the gentleman. We have a 
follow-up questions from Dr. Christensen.
    Mrs. Christensen. Just a very brief question. As you know, 
the territories with Medicaid cap and not all of the help for 
Medicare either really have struggled to provide services for 
our dual eligibles so I just wanted to know if this process of 
coordination, if your office also looks at this issue in the 
U.S. territories.
    Ms. Bella. Our office is intended to be a resource for the 
States and the territories who are interested in improving 
care, so yes, we are available to work with the territories, 
absolutely.
    Mr. Pitts. The chair thanks the gentlelady. That concludes 
panel one. The chair thanks the Director for her excellent 
testimony and yields to the ranking member for a unanimous 
consent request.
    Mr. Pallone. Thank you, Mr. Chairman. I would ask for 
unanimous consent to submit for the record the first report 
that Ms. Bella's office submitted to Congress as required by 
the ACA that one member, I think Dr. Burgess, was asking about.
    Mr. Pitts. Without objection, so ordered.
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    Mr. Pallone. And then I would ask unanimous consent to 
enter the statement of Mary Kay Henry, who is the president of 
SEIU, and I think you have both of these.
    Mr. Pitts. Without objection, so ordered.
    Mr. Pallone. Thank you.
    [The information follows:]
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    Mr. Pitts. Thank you.
    At this time I will ask the second panel to come forward, 
and I will introduce them in the order of testimony. Robert 
Egge is the Alzheimer's Association's Vice President of Public 
Policy and Advocacy. Billy Millwee is the Associate 
Commissioner for Medicaid and Children's Health Insurance 
Program at the Texas Health and Human Services Commission. 
Denise Levis Hewson is the Director of Clinical Programs and 
Quality Improvement at Community Care of North Carolina. And 
Shawn Bloom is the President and CEO of the National PACE 
Association. Your written statements will be made part of the 
record and we ask you to summarize each of your opening 
statements in 5 minutes before the question-and-answer period.
    At this point the chair recognizes Robert Egge.

  STATEMENTS OF ROBERT EGGE, VICE PRESIDENT OF PUBLIC POLICY, 
ALZHEIMER'S ASSOCIATION; BILLY MILLWEE, ASSOCIATE COMMISSIONER 
FOR MEDICAID/CHIP, TEXAS HEALTH AND HUMAN SERVICES COMMISSION; 
DENISE LEVIS HEWSON, DIRECTOR OF CLINICAL PROGRAMS AND QUALITY 
IMPROVEMENT, COMMUNITY CARE OF NORTH CAROLINA; AND SHAWN BLOOM, 
     PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL PACE 
                          ASSOCIATION

                    STATEMENT OF ROBERT EGGE

    Mr. Egge. Good afternoon, Chairman Pitts, Ranking Member 
Pallone and distinguished members of the subcommittee. I am 
Robert Egge, Vice President of Public Policy of the Alzheimer's 
Association, and I thank you for the opportunity to appear here 
today.
    I want to begin by telling you about John and his wife 
Emma. John and Emma are an elderly, low-income couple who 
depend on both Medicare and Medicaid. John has Alzheimer's 
disease and diabetes. John's physician has been consistently 
attentive to his diabetes but not to his Alzheimer's. He has 
given John good diabetes treatment plan, but because of John's 
impairments due to his Alzheimer's, John has been increasingly 
unable to comprehend or follow those instructions. So despite 
his physician's efforts, John's diabetes and his overall health 
has steadily deteriorated. For her part, Emma has been ill-
equipped to help John manage the demands of his dementia and 
his diabetes because of her own health and the lack of 
caregiver training and support that has been offered to her. 
Because of all of this, John and Emma began taking frequent 
trips to the hospital ER where John was regarded as a 
noncompliant, difficult diabetic.
    Most of the hospital staff did not seem to recognize John's 
dementia and that his noncompliance with diabetes treatments 
wasn't about John being obstinate or unmotivated but was due to 
his inability to self-manage his care. Those that did recognize 
the presence and the implications of his dementia were at a 
loss for what to do about it. So John continued to show up at 
the emergency room for diabetes-related conditions at ever more 
frequent intervals. Each time he was sent home with discharge 
orders often explained to him without Emma even present that he 
had no hope of following. These ER episodes were disconnected 
from his physician's care. John's hospitalizations increased, 
his health deteriorated, claims to Medicare and Medicaid 
mounted. Reluctantly, John and Emma decided he could no longer 
live in his home but had to enter a Medicaid-funded nursing 
home much sooner than either of them had hoped or expected.
    As reported in the Alzheimer's Association's 2011 
Alzheimer's disease facts and figures, there are an estimated 
5.4 million Americans like John with Alzheimer's, currently a 
terminal disease with no known means to prevent, stop or slow 
its progression, and there are almost 15 million unpaid 
caregivers, many like Emma, who help care for them. Those 
millions of Americans with Alzheimer's form a disproportionate 
share of the dual-eligible population. Sixty-one percent of 
dual-eligible individuals are cognitively or mentally impaired. 
Nearly one in every six dual eligibles has Alzheimer's disease 
or other dementia. Alzheimer's and other dementias are also 
extremely prevalent among dual eligibles in nursing homes where 
59 percent of residents live with these conditions. Similarly, 
at any point in time, about one-quarter of all hospital 
patients age 65 and older have Alzheimer's or other dementias.
    So this population of duals with Alzheimer's is large in 
scale and it is also very large in cost. Medicare payments for 
beneficiaries with Alzheimer's and other dementias are three 
times greater than for comparable beneficiaries without these 
conditions, and Medicaid payments are nine times higher. These 
facts lead to the first of two points I want to conclude with 
today.
    Individuals with Alzheimer's that depend on Medicare and 
Medicaid make up such a large, vulnerable and cost-intensive 
share of the dual-eligible population that policymakers should 
focus on these beneficiaries in pilots, demonstrations and 
broader system reform efforts. Recognizing this group is 
offering a leading opportunity to improve care while 
controlling cost.
    The other major point I wanted to close with is that 
focusing on improving care for dual-eligible individuals with 
Alzheimer's won't only deliver benefits for these millions of 
Americans but will also have health benefits more generally. 
Over the years, our growing awareness of the significance of 
manageable chronic conditions like diabetes has led to an 
important emphasis on prevention, self-management and patient-
centered care. Today, in a similar way, our growing awareness 
of the widespread impact of cognitive impairments due to 
Alzheimer's and other causes should draw much-needed attention 
to themes such as reducing program complexity, the detection, 
diagnosis and documentation of medical conditions like 
Alzheimer's, and to putting in place care plans that recognize 
not only an individual's cognitive abilities but fully 
recognize and support the critical role of the unpaid family 
caregiver.
    The foundation of effective care is in diagnosis, care 
planning and medical record documentation, principles contained 
in Mr. Markey's bill, the Hope for Alzheimer's Act, which the 
association strongly supports. Moreover, the insights 
underpinning this bill apply across the dual-eligible and 
Medicare populations.
    So again, thank you. The Alzheimer's Association greatly 
appreciates the opportunity to address these issues, and we 
look forward to our continuing work with the subcommittee.
    [The prepared statement of Mr. Egge follows:]
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    Mr. Pitts. The chair thanks the gentleman and recognizes 
Mr. Millwee for 5 minutes.

                   STATEMENT OF BILLY MILLWEE

    Mr. Millwee. Thank you, Mr. Chairman, members of the 
committee. I would like to spend a few minutes speaking to you 
about the STAR+PLUS program. The STAR+PLUS program is a 
capitated managed care model that integrates acute and 
community-based care services for the aged, blind and disabled 
population in Texas. This includes the dual-eligible members.
    A little bit about the Texas Medicaid population. There are 
about 3.2 million people on Medicaid in Texas today. Of that 
number, about 700,000 are classified as aged, blind and 
disabled, and of that number, about 400,000 are duals. ABDs 
represent about 25 percent of the Medicaid population but 
approximately 58 percent of the total Medicaid cost.
    Where does STAR+PLUS originate? STAR+PLUS originated in 
1998 as a pilot in Harris County in Houston. It was created 
largely to address concerns about cost, quality and access to 
services for the aged, blind and disabled population, also the 
subset we refer to as duals, and to address how we could better 
integrate acute and long-term care for that population. The 
program was started with about 58,000 people in 1998. Today, 
STAR+PLUS now serves 42 Texas counties and 257,000 people. By 
March 2012, the program will be expanded to serve another 
370,000 people in Texas in 80 counties.
    And here is how the program works at a very high level. It 
is an integrated care delivery model in a capitated managed 
care environment so we take acute care services and long-term 
care services and bundle those together, deliver them to the 
HMO. Central to that model is a primary care provider and a 
service coordinator who really work with that patient to get 
them the services that they need, whether those services are 
acute care or long-term care. The service coordinator is 
responsible for assessing that person's need and ensuring that 
the needs are met, and by doing that, it provides that early 
intervention so we keep people out of the hospital, out of the 
emergency room and out of the nursing institutions.
    Several studies to date by our external quality review 
organization have shown the model is effective. We have 
decreased inpatient services, hospitalizations about 22 
percent, reduced ED visits by 15 percent, and, more 
importantly, people who are involved in the program report a 
high degree of satisfaction with the program. We are excited 
about the opportunity now to work with CMS on how we can better 
coordinate care and I look forward to working with Melanie 
Bella in her program that she just started.
    [The prepared statement of Mr. Millwee follows:]
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    Mr. Pitts. The chair thanks the gentleman and recognizes 
Ms. Hewson for 5 minutes.

                STATEMENT OF DENISE LEVIS HEWSON

    Ms. Hewson. Good afternoon, Chairman Pitts and Ranking 
Member Pallone and the other distinguished members of the 
subcommittee. I am Denise Levis Hewson. I direct the clinical 
and quality programs for Community Care of North Carolina, and 
I appreciate the opportunity to tell you about our program. It 
is a collaborative organization of regional networks of health 
care providers, physicians, hospitals, health departments, 
social service agencies and other community organizations. Each 
network is a nonprofit organization and I work for the central 
office that helps coordinate and provides supports to all of 
the 14 networks.
    We create medical homes matching each patient with a 
primary care provider who leads an interdisciplinary team, 
professionals who coordinate seamless medical services aimed at 
producing better outcomes. Our challenge is not only to improve 
the quality of care but to cut costs without changing benefits 
and fees. As you start looking at changing the benefit package 
and fee structures, oftentimes you are pushing the patient into 
other delivery areas like the emergency room. You need engaged 
providers to do this program and engaged patients to be 
successful.
    Sustainable savings come only from learning to deliver care 
in a smarter and more coordinated way. We have been doing this 
for 10 years. We started as a pilot in 1998 and we have been 
adapting and refining this model, most recently really 
targeting the highest costs and highest risk.
    What is different about program is that it is led by 
physicians who are charged with changing the face of health 
care at the local community level. It is a bottom-up 
governance. It is key to getting buy-in at the practice level. 
We have begun to make some significant changes in local 
delivery systems. It is built on a model where each patient has 
a medical home. We have 1,400 medical homes across North 
Carolina in our 14 networks that provide the infrastructure to 
provide wraparound support to the medical homes. We have about 
600 care managers. We have 30 medical directors, 14 network 
directors, 18 clinical pharmacists and 10 local psychiatrists. 
These are local people managing local patients and driving 
improvements in their systems. The physicians are engaged 
because they are part of the solution. They lead the local 
teams. They decide how to collaborate best to get the best 
results.
    Efforts to improve care and save money are owned by those 
who directly provide that care. Our care managers know their 
patients. They know the community and the resources and that 
varies greatly in some of our rural communities. Care managers 
are the boots on the ground. They connect the dots between the 
patient, the physician, the specialist, the hospital, home 
health and other community resources. We believe that all 
health care is local and that community support for individuals 
with multiple chronic conditions can significantly improve 
health outcomes.
    One of the challenges in this program is defining the 
impactable population. You have to have the information and 
data to go after those patients and manage them and provide the 
right support so that they can have better outcomes.
    We serve over a million Medicaid recipients. We started as 
a Medicaid program. Now we have about 80,000 duals that are 
enrolled with our program. In addition, about 180,000 of those 
are aged, blind, disabled so those represent fairly large, 
significant high-cost patients. We get hospital data. Hospitals 
and community providers are partners in this organization. To 
manage these individuals, you have to follow them across 
different providers and delivery systems.
    We hope that this committee will look hard at better 
aligning Medicare and Medicaid services at the patient and 
community level, allow for shared savings in per-member, per-
month management fees that provide patient management without 
capitation or risk models. We are a fee-for-service system. The 
delivery system must be patient centered. The important thing 
to remember is that patients need changes over time so a system 
must follow their needs across settings and providers. Our 
community-based medical home and network infrastructure focuses 
on population management strategies, and we aim to achieve the 
triple aims that we hear a lot in the literature, which is not 
only about improving quality, access and reliability but 
reducing the cost of that care. We have learned some key 
lessons in North Carolina with the dual population, and you 
have heard it by several of the other testimonies today that 
they have multiple comorbidities. They use the system more than 
a lot of other populations. They take a lot of medicines. And 
so they truly do benefit from a wraparound support at the 
community level. Our total annual budget for Community Care is 
about 1 percent of the total Medicaid costs in North Carolina.
    Our commitment to quality doesn't just mean better care, it 
also leads to significant program savings. We asked the 
analytics company, Trio Solutions, to help us estimate savings, 
and they have done that and you have got more information of 
that in some of the handouts. Our trend data is fairly 
significant in terms of costs and savings.
    Mr. Chairman, I would like to thank you and the members of 
your subcommittee for the opportunity to be here today and 
discuss these issues, and we hope we can be a resource to you 
as you move ahead.
    [The prepared statement of Ms. Hewson follows:]
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    Mr. Pitts. The chair thanks the gentlelady and recognizes 
Mr. Bloom for 5 minutes.

                    STATEMENT OF SHAWN BLOOM

    Mr. Bloom. Thank you very much, Chairman Pitts, Ranking 
Member Pallone and distinguished members of the subcommittee. I 
am Shawn Bloom, CEO of the National PACE Association. On behalf 
of NPA and its members, I am honored to testify today, and I 
appreciate the time that you have allotted us.
    I would like to kind of focus on three things, very briefly 
describe PACE to you and then offer some suggestions regarding 
ideas with respect to overcoming barriers that we have 
identified in expanding PACE, and three, identify some 
voluntary demonstration programs that we have generated in 
which we could expand the availability of PACE to additional 
eligible categories of dually eligible.
    First and foremost, PACE is a fully integrated model of 
care that exclusively serves the frailest, oldest and sickest 
subset of the duals, that is, the nursing home-eligible 
seniors. We do so in a manner that is really focused in the 
community in the sense that we are community based. Our goal in 
PACE is to allow individuals to remain living in their homes in 
the community. We do that through reducing nursing home use, 
reducing hospitalization, and we do that in a comprehensive 
fashion through integrated use of Medicare and Medicaid bundled 
payment, and the heartbeat within PACE is the interdisciplinary 
team, or the concierge team, if you want to call it that, in 
the sense that they are a fully employed staff that on a daily 
basis are involved in the care, delivery and management of the 
care of the individuals that we serve. And the third key 
feature of PACE is, we are accountable. We are accountable in 
the sense that we are accountable to government for the payment 
provided to PACE, 90 percent of which comes from Medicare and 
Medicaid, and we are accountable to the families and the frail 
that we serve. And I think those three things taken together 
have very effectively aligned incentives for PACE. We are fully 
accountable for the cost and quality of care that we directly 
provide. So to the extent that we do a good job, those that we 
serve are able to stay out of the hospital, in their homes and 
achieve good health care.
    I think recognizing the effectiveness of PACE, a recent 
June 15th MedPAC report states: ``Fully integrated managed care 
plans and PACE providers offer the best opportunity to improve 
care coordination for dual-eligible beneficiaries across 
Medicare and Medicaid services.'' Authorized by the Balanced 
Budget Act of 1997, we have been around for 20 years. We are a 
tested model of care, and we are very interested in finding 
ways to kind of growth.
    I think as has been mentioned earlier, and I think Melanie 
mentioned it, there have been significant obstacles to PACE 
growth, and we would like to kind of talk just a minute about 
those now. One, some of the regulatory requirements certainly 
focus on the required process of care rather than the outcomes 
of care, and those particular regulatory requirements have so 
far hindered growth, innovation and efficiency and how we 
deliver care. Two, fairly significant capital startup costs and 
long lead times for programs that accept full financial risk 
for a population that on average is about 300 people, that is a 
significant undertaking, and our eligibility for PACE is very 
narrow. We serve, as I mentioned earlier, a very small subset 
of the duals 55 years of age or older, and you have to be 
nursing home eligible. We believe there are opportunities to 
expand the availability of PACE.
    So to overcome these barriers, we recommend the following 
modifications to the PACE statute and regulation, and this is 
based on a decade of operational experience under the current 
regulation. One, allow us to more appropriately use contract 
community-based physicians rather than full employed 
physicians; two, take full advantage of the State license 
capability of nurse practitioners and physician assistants to 
practice up to their level of standards within the State 
practice acts; and then without compromising PACE participants' 
receipt of comprehensive care and assessment, allow more 
flexibility to personalize and individualize the use of 
interdisciplinary teams based on the individuals' needs, not 
using a one-size-fits-all approach. And lastly, allow States, 
and this is something of great interest to PACE providers right 
now, really begin to look at States and encourage them to see 
PACE as a means by which to pull people out of nursing homes. 
Some of our PACE programs throughout the States without great 
State support have had the ability to do that.
    With respect to voluntary demonstrations, we have five 
ideas with the goal of kind of expanding PACE and finding 
additional regulatory modifications. One, we would like to 
expand the availability of PACE to individuals under the age of 
55 that are nursing home eligible. These are typically the 
physically disabled individuals that we believe would benefit 
from PACE. Two, allow at-risk or what we call high-need, high-
risk, high-cost beneficiaries to have access to PACE, many of 
which are not currently nursing home eligible but we believe 
would benefit from PACE services. Three, reduce PACE 
organizations' reliance on the PACE center, which is really the 
focal point for the organization of services but not 
necessarily the need to kind of do it all there. Fourth, the 
ability to kind of implement alternative approaches to 
providing Part D drugs. Right now, we have to implement Part D 
in the context of a very small program whose benefit was 
designed for large health plans. And lastly, a demonstration 
with the objective of increasing Medicare-only beneficiaries' 
enrollment in PACE. Currently, about 90 percent of all 
beneficiaries in PACE are duals but we believe it is a model of 
care that should be applicable to others.
    If I had more time, I could give you a great story about 
the actual benefits of PACE to a consumer but unfortunately I 
have run out of time, but we appreciate the opportunity to 
testify before the care, and as mentioned before, PACE is a 
tangible, proven model of care and we look forward to working 
with the committee to find ways to expand its reach. Thank you 
very much.
    [The prepared statement of Mr. Bloom follows:]
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    Mr. Pitts. The chair thanks the gentleman and thanks the 
panel for your opening statements, and we will now do a round 
of questioning and the chair recognizes himself for 5 minutes 
for that purpose.
    Mr. Millwee, as you know, States are generally not informed 
about hospitalizations or prescription drug information for 
dual eligibles. How important is Medicare data to States in 
coordinating care and reducing costs associated with dual 
eligibles?
    Mr. Millwee. Well, you are certainly correct. Without that 
data, we can't know the health condition of the dual-eligible 
member, and I think it is going to be critical as the Centers 
for Medicare and Medicaid coordination forms to provide States 
with that data so that we can implement the disease management 
programs that can be more cost effective if we were to have 
that data.
    Mr. Pitts. How does Texas share in the savings generated 
through the STAR+PLUS program with the Federal Government? How 
important is it for States to be able to share in the savings 
generated by integrated care programs for duals?
    Mr. Millwee. Well, today we don't share in that savings. 
The program was put in place to serve the population absent the 
need to share in that savings, and it has been recent that CMS 
was open again to discussions with the State about potential 
gain-sharing arrangements. So as we get that Medicare data, we 
believe that we can take to CMS a proposal that will 
demonstrate that STAR+PLUS has created savings not only for the 
State on the Medicaid side but also for the Federal Government 
on the Medicare side, so we will be developing a proposal to 
take to CMS.
    Mr. Pitts. Thank you.
    Mr. Bloom, you wanted to talk about the benefits of PACE to 
consumers. Please explain in more detail your idea to modernize 
the PACE program to include alternative settings of care. And 
why is the facility requirement a burden on the program today?
    Mr. Bloom. Yes, you know, I think historically the PACE 
program, if you drive by PACE program you will see what appears 
to be a very large day center within which there is space for a 
medical clinic, rehab, social services, personal care and 
possibly a kitchen. It has been a very convenient kind of focal 
point of care organization and deliver but what we have 
discovered over time is that the ability of PACE to grow is 
somewhat geographically constrained by the center. To the 
extent that we can begin contracting out, for example, for day 
center services using existing infrastructure down the street 
by an existing daycare provider would allow us to grow the 
program without undertaking significant capital costs and 
setting up a new center every time we want to expand our 
geographic market. That is but one example, and I could 
certainly offer you more.
    Mr. Pitts. Thank you.
    Ms. Hewson, you note in your testimony that the CCNC could 
have saved the State of North Carolina approximately $1.5 
billion between 2007 and 2009, and that 100 percent of all 
Medicaid savings remain in the State. How are those savings 
shared with your organization?
    Ms. Hewson. At this point they are not shared. It goes back 
into the Medicaid budget. But we have been able to maintain 
provider fees at 95 percent of Medicare. So in a way, that is a 
way to provide the infrastructure building and sustainability, 
but the money goes back into keeping the Medicaid program and 
dealing with the State budget issues.
    Mr. Pitts. Do you have more information on what portion of 
those savings are associated with the 80,000 dual eligibles you 
serve?
    Ms. Hewson. I don't have it on hand but we could certainly 
get that information for you. We are missing some of the 
Medicare data to be able to tell a complete story on the duals 
at this point.
    Mr. Pitts. How are the duals enrolled in your program? Is 
that mandatory enrollment?
    Ms. Hewson. It is voluntary. They typically choose--they 
are going to a provider that is participating with us, and 
oftentimes it is the provider that encourages them to enroll 
because they can then provide the wraparound support service of 
the care coordinators.
    Mr. Pitts. Are the other 220,000 duals in North Carolina 
mostly served through fee-for-service or are there other 
coordinated care programs in the State to serve those duals?
    Ms. Hewson. We have, I think, two PACE programs and several 
in application and then there is the Medicare Advantage 
program, a few of those, but primarily the rest are in fee-for-
service.
    Mr. Pitts. Thank you.
    Mr. Egge, in your testimony you note several beneficiary 
examples where the complexity and fragmentation of the system 
prevent frail duals from gaining access to available services. 
You note that fully integrated system could alleviate 
administrative barriers. Do you believe such a system is a one-
size-fits-all or do you believe there could be a variation of 
models that could be used to help improve beneficiary access to 
care?
    Mr. Egge. First of all, there is great variety in the 
experience of people with Alzheimer's and other dementias. Our 
suspicion is that there could be very some important common 
elements that we can use and design any kind of system, but at 
this point, innovation and looking at different kinds of 
approaches and how they work is very appropriate as we learn 
what is going to work best.
    Mr. Pitts. The chair thanks the gentleman and recognizes 
the ranking member, Mr. Pallone, for 5 minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman. I wanted to ask 
initial questions of Ms. Hewson and also Mr. Bloom. In 
Medicare, we have always maintained the principle that 
enrollment in managed care plans is voluntary for all Medicare 
beneficiaries. So let me start with Ms. Hewson.
    As I understand it, your program of coordinated care, 
although not a managed care plan, is voluntary for Medicare 
beneficiaries. Is that correct, and how does that impact the 
program, that it is voluntary?
    Ms. Hewson. Well, it is correct. I think by being 
voluntary, there is probably less enrollment than if it was an 
opt-out program, but typically they are enrolling because they 
want to have assured access to a primary care physician that 
they go to, and that physician is encouraging them so that they 
can use the resources of the network that supports the 
physician in leading their care.
    Mr. Pallone. And then similarly, Mr. Bloom, I know that the 
PACE association has long believed that it is important to have 
beneficiaries buy in through voluntary enrollment rather than 
requiring dual eligibles into PACE. Do you want to comment on 
that too?
    Mr. Bloom. Yes. Dually eligible beneficiaries have the 
opportunity to opt in and out of PACE, and that has been the 
longstanding track record within the PACE program since its 
inception. Having said that, we have very, very low levels of 
disenrollment which I think certainly aligns the incentives for 
us to keep our eye on the quality and the satisfaction to the 
beneficiary.
    Mr. Pallone. And I note that in MedPAC's chapter on dual 
eligibles released last week, they said that many of the groups 
they interviewed raised concerns about access to care for 
beneficiaries, particularly individuals with disabilities who 
have established relationships with doctors already, and I just 
want you to know, I support efforts to get duals into better 
care relationships but we need to be careful not to take away 
Medicare protections for the lowest income Medicare 
beneficiaries because they are trying to access help though 
Medicaid as well.
    Let me go back to Mr. Bloom. We recognize that PACE is a 
specialized program focused on the very medically needy and the 
fragile population so it not intended to nor would it be 
appropriate to serve all 9 million dual eligibles but currently 
PACE organizations have an enrollment of about 22,000 people 
nationwide, and while we don't know exactly how many people 
could theoretically be eligible, we know it is not 9 million 
but it is obvious that there are a lot more people that you 
could serve. You described the desire of PACE organizations to 
expand enrollment, can you just tell me a little bit about what 
Congress could do to help PACE grow and the cautions you have 
about growing too fast. You know that PACE has long been 
supported by bipartisan members of the committee but we want to 
make expansions that would work and help improve care for 
people and not create problems.
    Mr. Bloom. Very good question, very good question. First 
off, I think as Melanie testified earlier, it is very important 
to note that the duals are a very diverse population. This 
ranges from the young disabled to the elderly that are simply 
low income to the elderly that are frail to older individuals 
with intellectual disabilities. It is a very diverse 
population. And I think based on our experience and experience 
working with other integrated-type providers, there are 
different approaches for different populations that we need to 
look at. In the context of PACE, PACE is very well designed for 
a very high-need, very frail, very functionally impaired 
population. The examples I gave earlier with respect to 
barriers to growth were really focused on the federal side.
    I would argue that there are an equal number, if not a 
greater number, of barriers that exist on the State side, one 
of which, and I will just throw it out, in this era that we 
live in today, you can get into a nursing home within a day 
typically. It often takes you 4 to 6 weeks to get into a 
community-based service program like PACE. That is because of 
the eligibility determination process in most States as well as 
some other administrative and other obstacles that exist. That 
is a significant barrier for growth in addition to some other 
kind of State-specific examples.
    Mr. Pallone. What is your sense of how many additional 
people could be helped, you know, could go into PACE if we made 
the improvements, you know, if we managed to do things that you 
are suggesting to make it more accessible?
    Mr. Bloom. Good question as well. You know, it is probably 
to note, we are not a health plan. At the heart of PACE is the 
provider. We fully employ all--I mean, I think 90 percent of 
all care is provided directly by PACE employees, physicians, 
nurses and the like, so we are not going to be able scale each 
individual program on par with the United Health Plan or other 
large commercial health plans. Having said that, we do have 
programs that are as large as 2,600 people. We have programs in 
Appalachia as small as 40. So this is a program that can move 
large and small, so I do think each individual program is 
capable of serving several thousand people but I think you need 
multiple programs on the ground.
    Mr. Pallone. So theoretically, if you had a lot of them you 
could handle a lot more people?
    Mr. Bloom. Correct.
    Mr. Pallone. But they are going to have to be relatively 
small?
    Mr. Bloom. The solution to PACE growth is not to scale upon 
76 that are on the ground today but to replicate the 
availability of the model throughout the country. The other 
witness testified, the State of North Carolina has two on the 
ground. They are filling the entire State with PACE. They will 
have 10 in development within 2 years. The State of 
Pennsylvania is another State where almost the entire State is 
full. The State of New Jersey within 2 years will probably have 
PACE available to every senior in the State. It takes a lot of 
leadership on the State. It takes a long-term vision, and I 
think it takes a strategic kind of approach to budgeting for 
Medicaid long-term care costs, which looks beyond the next 6 to 
9 months, and that is difficult in this current era, 
admittedly. But I think it is possible and you are seeing 
examples of that across the States today.
    Mr. Pallone. All right. Thank you.
    Mr. Burgess [presiding]. The gentleman's time is expired.
    Let me just ask each of you, what we have heard from this 
panel in various forms is the fact that an integrated-type 
model is possible and it does work seemingly every time it is 
tried. Is that something that I understand? Although the 
programs may be different that we have heard about, they all 
basically involved an integrated model of care with someone 
being responsible for the patient. I will start with Mr. 
Millwee from Texas.
    Mr. Millwee. Well, I think you are right. There are 
integrated care models out there, and what strikes me is none 
of these are mutually exclusive. There is no best answer. We 
have the STAR+PLUS program because it works for us. We also 
have PACE. STAR+PLUS and PACE can coexist, or they work well 
together. I am familiar with the North Carolina model and it 
could work very well for Texas in a rural area where we have 
STAR+PLUS in urban areas. So I think the answers are out there. 
I think States have done a lot of work, a lot of innovative 
work on this very important issue for us because of the 
Medicaid expenditure and also Medicare is going to benefit from 
that too. So the models are out there.
    Mr. Burgess. Yes, Mr. Bloom.
    Mr. Bloom. Yes, I think that is exactly the answer. I 
couldn't agree more. The only thing I would add is that if you 
look at commercial health plans which typically are the 
approach to integrating care for the duals, they do receive 
integrating financing. They attempt through their contract 
network to integrate care but do they do a wonderful job I 
think at improving the coordination of care for the most part 
but they often will carve-out long-term care risk from their 
payment and that is the population we serve so I think as Mr. 
Millwee mentioned, these are programs that work very 
complementary, albeit for very distinct populations and 
segments of the duals. So if done right, I think Texas is a 
good example, they have a very good vision for how they want 
this to roll out. It provides great hope, great opportunity and 
also provides the rights to service product for the right 
population based on their unique needs at a particular point in 
time. But I do think this is the direction to go.
    Mr. Burgess. Mr. Egge, obviously the Independence at Home 
is a little bit difference but still it is care coordination. 
Is that not correct?
    Mr. Egge. That is right. With Independence at Home and 
other models, our aim is not to create a certain silo just for 
those with Alzheimer's and dementia but to make sure that every 
system like Independence at Home is fully dementia capable. 
Many people with Alzheimer's, for example, have greatly 
appreciated PACE programs and their enrollment there, so we 
just want to make sure that whatever systems are there, we 
fully recognize the importance of dealing with cognitive 
impairment and the caregiver.
    Mr. Burgess. I just have to say, your story about the 
gentleman with Alzheimer's who also had diabetes who accessed 
care the best that he could, that is a tough thing to listen to 
as a physician, that someone could be exposed to that many gaps 
in their care in seemingly a caring and competent environment 
of a major hospital emergency room. That is just tough to hear.
    Ms. Hewson?
    Ms. Hewson. I agree with the other panelists, other than I 
don't think just having integrated care assures that you are 
doing the right thing. I think you have to have a delivery 
system that does the right thing, and integrated care just is a 
way to align the incentives and the reimbursement strategies, 
and in North Carolina, we are not yet aligned in the 
reimbursement strategy although we are one of the 15 States 
that will be working with the coordinated office to develop a 
plan along that line, but we also have a very strong bias 
towards the medical home and keeping folks in the community, 
you know, delivered primarily through primary care providers is 
probably a model that has worked really well for us.
    Mr. Burgess. But primarily you do have to have--someone has 
to be responsible for that patient's care, and in my limited 
view of the world, that is obviously a physician, a single 
physician, but nevertheless, somebody has to be accountable for 
that patient's care on an ongoing basis.
    Well, what do you make of the fact that the MedPAC report 
from this year, the current one, says less than 2 percent of 
all duals are enrolled in some type of integrated care program? 
Are they just not counting accurately because they are missing 
all of you out there or is that truly that we are only 
capturing a very, very small percentage of the dual eligibles?
    Ms. Hewson. I think MedPAC is counting when Medicaid and 
Medicare are putting funding together as an integrated approach 
which the PACE model is an example where both Medicare and 
Medicaid are funding the care of that individual. Our program, 
which serves over one million, is still a fee-for-service 
system so none of our individuals are counted in the MedPAC 
report. So the delivery system is integrated; the financing is 
not.
    Mr. Burgess. And what are the barriers to, or is there a 
problem with it being a fee-for-service system? Does that work 
well for you?
    Ms. Hewson. Well, I think you have to align the incentives. 
There are still silos and there is cost shifting that occurs so 
I think aligning the financial strategies and having, you know, 
Medicare and Medicaid sharing in those responsibilities, taking 
care of, in this instance, the duals is really important. So I 
think that is why we wanted to be one of those 15 States to 
develop that integrated model which aligns the integration with 
financing in addition to delivery.
    Mr. Burgess. Well, do you think more federal control is 
necessary? I mean, could you do your job better with a bigger 
and more powerful----
    Ms. Hewson. Well, I think you have heard ours is very 
local.
    Mr. Burgess. Yes, I think so too.
    OK. My time is expired. I will recognize Dr. Cassidy for 5 
minutes.
    Mr. Cassidy. The STAR+PLUS program, now, I am just trying 
to understand it. Ms. Bella said that 70 percent of the costs 
of dual eligibles in Medicaid is related to the long-term care 
aspect of it and most of the Medicaid acute medical expense, is 
the wraparound for that which Medicare does not cover. It seems 
like your savings are quite substantial if the--and I am not 
challenging, I am just trying to learn--that the provider or 
the Medicare managed care organization with which you are 
contracting, the only place they can lower cost is in the 
Medicaid component of the acute care. Is that correct?
    Mr. Millwee. That is not the only place that have to manage 
cost and achieve effectively better utilization. I think it is 
through a number of mechanisms on the acute and long-term care 
support side. Remember, we are talking in STAR+PLUS about the 
entire aged, blind and disabled population. It is not just a 
model for dual eligibles. So about 40, 50 percent are dual 
eligibles.
    Mr. Cassidy. I see.
    Mr. Millwee. So you have an acute care model of care that 
is integrated with the long-term care and what the HMO will 
likely do, particularly for the Medicaid that is aged, blind 
and disabled, is leverage those less expensive community-based 
services to keep them out of the more expensive acute care 
services, which is what we both want to do. We want to keep 
people out of nursing facilities and out of hospitals and 
sometimes a personal attendant will do that for you relatively 
inexpensively.
    Mr. Cassidy. So just for a specific example, if you can use 
your Medicare dollar to get a personal attendant for a patient 
who is pre-nursing home, if you will, then that can save money 
on the Medicaid side, which would be a much greater expense, by 
using the Medicare dollar to pay for a service that would not 
be available under Medicaid. Is that a good example?
    Mr. Millwee. That is correct. In fact, you might use a 
Medicaid cost to save Medicare money on the acute care side, 
and that is what we need to work through with CMS to talk about 
how we can leverage that to talk about some gain-sharing 
opportunities.
    Mr. Cassidy. Now, Mr. Bloom, although you said that you are 
not a health plan, you really do appear to be a staff model 
HMO. I mean, you are at risk, and you are using your own 
people. If you will, you are the Kaiser Permanente of the frail 
and fragile. Is that a fair statement?
    Mr. Bloom. That is an absolutely fair statement, 
absolutely, and I think we feel that burden every day in some 
of the requirements that we have to shoulder with respect----
    Mr. Cassidy. Let me ask you, I mean, because I only have a 
couple minutes, I don't mean to be rude. So when you speak of 
going beyond the duals into the Medicare only, again, 
effectively, you are becoming a staff model HMO for Medicare 
patients?
    Mr. Bloom. Correct. I would argue, however, that what we 
are suggesting is not all Medicare patients but those that we 
believe are high need, high risk and need kind of a medical 
home.
    Mr. Cassidy. Now, next, I have been fascinated since Dr. 
Nelson came from Baton Rouge to speak to her, and of course, we 
know each other personally and I have read about your program, 
but I have spoken to folks who criticize it and saying that 
really the cost savings are not there. In your testimony, you 
gave an anecdote which spoke of an individual but that when you 
actually kind of run the numbers with a big spreadsheet, that 
PACE has not been shown to save money. Is that a fair or unfair 
criticism?
    Mr. Bloom. I think it is an unfair criticism. There have 
been definitive government studies, two of which actually that 
looked at the Medicare cost in PACE and found that at worst we 
were budget neutral. On the Medicaid side, there has never been 
a definitive longitudinal study of PACE cost. Having said that, 
we continue to see States added to the list of PACE states. I 
think that what we have told States from day one is to the 
extent you set your rates appropriately, all of which are 
significantly below nursing home costs, then you in the 
longitudinal measurement will save money.
    Mr. Cassidy. Now, but again, maybe the criticism was that 
by keeping people out of the nursing home but still getting 
nursing home per diems, that again there are Medicaid savings 
that are not realized. Now, again, I am channeling right now.
    Mr. Bloom. I think what you are suggesting yes, our PACE 
rate includes a component of costs that reflect the full risk 
that we are assuming for long-term placement, and there are, 
you know, roughly on any given day 7 to 8 percent of the people 
we serve are permanently placed in a nursing home at cost to 
us, not to the State. So again, the true benefits of the----
    Mr. Cassidy. So it is a cohort savings, if you will?
    Mr. Bloom. It is a cohort savings, so the State is 
literally in many ways similar to----
    Mr. Cassidy. I am about of time. Sorry. Can you send those 
two articles that you have?
    Mr. Bloom. Yes.
    Mr. Cassidy. Now, Ms. Hewson, the savings that you have, 
you actually have your pediatric population in your CCN and you 
have your duals in the CCN. You savings you describe are 
global. What percentage of those are attributable to the dual 
eligibles? And that is my last question.
    Ms. Hewson. Well, I would say a greater percentage are due 
to the aged, blind and disabled, which include the dual 
eligibles, so we have over 100,000 straight Medicaid aged, 
blind, disabled so when we look at savings we are looking 
primarily at the aged, blind and disabled that are straight 
Medicaid because we don't have all the data on the Medicare so 
we are missing some of the hospital data in Part D and Part B 
data.
    Mr. Cassidy. You have done a good job of analyzing your 
data. Could you forward the more complete report on that?
    Ms. Hewson. Yes.
    Mr. Cassidy. Thank you. I yield back.
    Mr. Burgess. The gentleman's time is expired. The chair 
recognizes the gentlelady from the Virgin Islands, Dr. 
Christensen, 5 minutes for the purposes of questions.
    Mrs. Christensen. Thank you, Mr. Chairman.
    I guess I have a pretty broad question that anyone can 
answer. I probably would address is mainly to Mr. Millwee and 
Mr. Bloom and Ms. Hewson. I know that minorities figure very 
disproportionately in Alzheimer's cases as well, but some of 
the sickest individuals in Medicare and Medicaid of course are 
racial and ethnic minorities, so can each of you tell me what 
percentage of your population are people of color of those that 
you serve? Are the referrals proportional to the need? Is more 
outreach needed and are you experiencing the same positive 
outcomes and cost savings in the racial and ethnic minority 
population compared to the others?
    Mr. Millwee. I don't have those numbers with me today. I do 
know that there is an equal benefit but I just don't have those 
numbers with me today but we would be glad to get those for 
you.
    Mr. Bloom. Yes, I can't cite specific statistics but I am 
fairly confident that the majority of people served by PACE are 
minorities. I anecdotally note many programs where it is 
literally nearly 100 percent minority based on the neighborhood 
within which they exist and the like, but I would be happy to 
get you the specific figures. But yes, it is a program that is 
focused on that segment of the population.
    Ms. Hewson. We serve all the minority Medicaid population 
in the State. We have all the safety-net providers 
participating in our program, and in the medical home models 
when you actually look at some of the quality performance 
metrics have been able to really show improvement in 
disparities because if you are providing best care for 
diabetes, you are doing it across the board for all your 
patients and so that has been a very rewarding quality metric 
that we have been tracking. I will be glad to send you more 
information if you would like.
    Mrs. Christensen. Thanks. I know that they are there. We 
just weren't hearing about them, and I would expect that the 
models that you are talking about would be improving the care 
across the board.
    Mr. Bloom, have you had occasion to look at or been asked 
to look at the PACE model in any of the territories, and if you 
know, do you foresee any barriers that would prevent you from 
setting up one of the PACE programs in one of the offshore 
areas?
    Mr. Bloom. We did have some initial and very preliminary 
discussions with Puerto Rico a number of years ago. They didn't 
progress on anything constructive after that, however. Having 
said that, we are always open, and I am not aware of any 
barriers to expanding PACE into any of the territories and 
actually would argue what little I know about the Medicaid 
program for the territories that I think it would be very 
mutually beneficial, so I would be happy to talk to you about 
that.
    Mrs. Christensen. Everybody has talked about, you know, the 
need for your programs and the fact that your programs are 
really community based. One of the amendments that I was 
involved in in the Affordable Care Act had to do with grants 
for community health workers, and I was just curious as to 
whether you utilize them in your programs. Mr. Egge, do you 
think that the community health worker would be a program that 
would be of assistance in care giving, even as the alternate 
caregiver in the Alzheimer's situation?
    Mr. Egge. Yes, we certainly found that is the case, that 
services that are provided in the community by social workers 
and by others can be tremendously important, especially at the 
early stages of Alzheimer's and other dementias while people 
are still able to live quite successfully in the community if 
they have that kind of support. We have found that is extremely 
important to well being for both the individual, and if they 
are living with somebody else, for their caregivers as well.
    Mrs. Christensen. Everybody uses community health workers?
    Ms. Hewson. In North Carolina----
    Mrs. Christensen. Promotores?
    Ms. Hewson. Promotores, and with the self-management of 
chronic disease, we engage lay community health advisors that 
actually live in the community that they are doing the chronic 
self-management programs so they have been very, very 
beneficial.
    Mrs. Christensen. Thank you. I am always concerned that the 
issue of quality of health care is often pitted against whether 
health care costs--if you are bundling and trying to bring 
these programs together, do you see any problems in moving 
forward to ensure that the dual-eligible health care quality 
and access in the health outcomes are not pitted against or 
held hostage to the health care cost containment issues?
    Mr. Millwee. Well, in STAR+PLUS, we believe that critical 
to that is the external quality review organization where we 
aren't dependent upon just the State's data, we aren't 
dependent upon the HMO data but have an independent source to 
verify and look at the data that can measure, sure, the program 
is cost-effective but is it providing high-quality service or 
access to services where they should be. So we believe that is 
critical, and as we learn more about quality and its importance 
on the program to change the program to respond to those 
concerns.
    Mrs. Christensen. Anyone else?
    Mr. Bloom. I would simply say that in PACE, we are, as I 
mentioned, we operate at full financial risk for all Medicare, 
Medicaid and medically necessary services with no carve-out, no 
copay, no deductible, no benefit limitations. We are immensely 
motivated and incentivized to provide good health outcomes. As 
the provider of care and the bearer of risk at the end of the 
day we are accountable, and it is truly in our best interest to 
get out in front of individuals' care needs and so that is what 
perfectly aligns the incentives within PACE.
    Mr. Burgess. The gentlelady's time is expired. The chair 
now recognizes the gentleman from New Jersey, Mr. Lance, for 5 
minutes for the purposes of questions, please.
    Mr. Lance. Thank you, Mr. Chairman, and I yield my time to 
you, Mr. Chairman.
    Mr. Burgess. That is very kind of you.
    Let me just ask you, Mr. Millwee, since we have a little 
additional time, you have talked in your testimony about the 
service coordinators, but some people look at that and say 
well, you are adding personnel so you are going to be adding 
cost. How does that work? How do you justify that?
    Mr. Millwee. Well, some might speculate that would increase 
cost but actually that service coordinator, remember, that 
service coordinator is a clinical person who is working with 
that client so that clinical service coordinator is actually a 
dollar saver in many ways because they are identifying what 
that patient needs and how to get that for them so that we can 
have those early interventions so we don't have the 
hospitalizations or the nursing facility admits or the 
emergency department visits. So they literally pay for 
themselves time and again by having that intervention to make 
sure that the people who need those services, whether they are 
Medicaid or Medicare, that they are getting those things.
    Mr. Burgess. So you have demonstrable savings that you can 
point to in your program in Texas?
    Mr. Millwee. Absolutely.
    Mr. Burgess. And do you think that works in Texas, do you 
think it would transition or translate to work on a national 
scale?
    Mr. Millwee. Well, I think it could work in other States. I 
think the model is transferable. I don't think that people who 
are sick in Texas are any different that much really than 
people in Washington or California but I think that they 
could--the model is completely transferable to other States.
    Mr. Burgess. Do you have, can you share data with the 
committee, not necessarily right now, but is there data that 
you can share with us as to the actual dollar figures that have 
been saved?
    Mr. Millwee. We certainly can. We can provide the committee 
with that information.
    Mr. Burgess. And how do you get around HIPAA?
    Mr. Millwee. Well, we wouldn't provide you with client-
specific data. We would provide you with deidentified aggregate 
information that would----
    Mr. Burgess. But more generally, how do the service 
coordinators themselves, how do they navigate the system under 
the constraints of HIPAA?
    Mr. Millwee. Well, they are working with the client as an 
agent of the client, so they can----
    Mr. Burgess. So they are fully integrated into it?
    Mr. Millwee. They are fully integrated into it, so they are 
not really burdened by HIPAA.
    Mr. Burgess. Generally, how do they monitor the day-to-day 
health of a patient? Is it telephonic, or how do they do that?
    Mr. Millwee. It is not high tech, it is high touch. It is 
people talking to people, picking up the phone and talking to 
that person, finding out how they are doing. We do use 
electronic health records. A lot of the HMOs are moving to 
that. But it really comes down to relationships and somebody 
caring about another person, picking up the phone and calling 
them and seeing what they need.
    Mr. Burgess. That is what is so crucial, somebody caring 
about someone else. And Mr. Egge's story that still haunts me, 
you know, somebody caring about someone else, that wouldn't be 
happening.
    Mr. Millwee. Right.
    Mr. Burgess. I am going to yield back the balance of my 
time and recognize the gentleman from Massachusetts for 5 
minutes for the purpose of questions.
    Mr. Markey. Thank you, Chairman Burgess, very much.
    Mr. Egge, you did a good job in highlighting the important 
place for Alzheimer's patients in this discussion. More than 22 
percent of seniors with Alzheimer's disease qualify for both 
Medicare and Medicaid coverage. Often these seniors rely on 
Medicaid to pay for expensive nursing home services. Since 
Alzheimer's patients can require constant attention, nursing 
home care for patients and Alzheimer's can ultimately wind up 
being three times as expensive as nursing home care for those 
without it. As a result of those costly nursing home stays, in 
2004 the average Medicaid payment for a Medicare beneficiary 
over 65 with Alzheimer's was nine times larger than the average 
Medicaid payment for other beneficiaries in the same group. As 
such, seniors with Alzheimer's represent an extremely 
vulnerable portion of the dually eligible population.
    I also have a particular interest in Alzheimer's since my 
mother passed away from it, which is why I created the 
Alzheimer's Caucus with Congressman Smith from New Jersey 13 
years ago. I have seen it firsthand and I know the incredible 
commitment that our family had to make to keep my mother at 
home during that entire period of time.
    One ongoing problem is the disconnect between those in the 
medical office seeing patients and those in the home caring for 
them. In your testimony, Mr. Egge, you mentioned the bill that 
Dr. Burgess and I have introduced, the Hope for Alzheimer's 
Act, which would encourage doctors to diagnose Alzheimer's 
patients earlier. After an Alzheimer's diagnosis is made, the 
bill that allows caregivers to be included in a conversation 
between doctors and patients to help plan for the disease and 
treatments. That conversation would give caregivers and doctors 
a reason to be working together because it will be the 
caregiver who will help the patient remember their diabetes 
medication and avoid ending up in a hospital.
    In your testimony, you talked about John, who suffered from 
diabetes but because of his Alzheimer's disease found it 
difficult to follow his doctor's instructions. As a result, he 
ended up in the emergency room, and the doctors there were 
unaware of the Alzheimer's disease which created a struggle to 
provide further care. Can you, Mr. Egge, explain how a formal 
and documented diagnosis of Alzheimer's will help to improve 
care amongst different providers and settings?
    Mr. Egge. Yes, we found from our experience that the 
documentation of Alzheimer's or other forms of dementia is 
critical care and it is critical to coordinated care. So the 
reason it matters is because you cannot provide appropriate 
care if you don't know dementia exists, and we talked about how 
that pertains of course to how you handle instructions for 
compliance, for instance, whether that can be directed to the 
individual or provided to a caregiver if available or perhaps 
to a surrogate when not, so in that sense it is fundamental. It 
is also fundamental when we think about documentation of the 
condition, the medical record, follows that person with a well-
functioning system from setting to setting. We know that care 
transitions are one of the most risky moments for those with 
Alzheimer's and other dementias because of all the problems 
that can happen, especially in a hospital setting and others as 
they transition in and out. So it is critical to this committee 
that there is that documentation, diagnosis and then 
documentation.
    Mr. Markey. So this is an amazing number, but just one 
disease, Alzheimer's, last year cost the Federal Government 
$130 billion out of Medicare and Medicaid. It is just an 
astounding number. You know, it is about a quarter of the 
entire defense budget, and that is just one disease, 
Alzheimer's. How with the Hope Act support caregivers and help 
provide them access to the resources they need to care for 
their loved ones, to keep them at home and as a results keep 
down the costs to the program?
    Mr. Egge. That is a great question, and one element of the 
Hope Act in particular is groundbreaking in that it provides 
for the first time for the health care provider to have 
consultations with the caregiver, whether or not the individual 
with Alzheimer's or other dementia is present, which is 
extremely important because sometimes it is most appropriate 
for the conversation to happen in number of different ways, so 
we applaud that and it is built on the recognition of how 
important a caregiver is for these individuals.
    Mr. Markey. Thank you, Mr. Egge. You know, it is $130 
billion now. By the time all the baby boomers have it, 15 
billion, the bill for Alzheimer's will equal the defense 
budget. It will be about $500 billion or $600 billion a year. 
So I think it is also calling upon us to increase the NIH 
research budget so that we can find a cure because ultimately 
we can't balance the budget if we have a problem like this that 
is on the horizon.
    Thank you, Mr. Chairman, so much.
    Mr. Burgess. The gentleman's time is expired, and actually 
that concludes today's hearing. I remind members they have 10 
business days to submit questions for the record, and I ask 
that the witnesses all agreed to respond promptly to these 
questions.
    The committee is now adjourned.
    [Whereupon, at 4:27 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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