[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
IPAB: THE CONTROVERSIAL CONSEQUENCES FOR MEDICARE AND SENIORS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
----------
JULY 13, 2011
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Serial No. 112-73
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
IPAB: THE CONTROVERSIAL CONSEQUENCES FOR MEDICARE AND SENIORS
Printed for the use of the Committee on Energy and Commerce
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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 JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
_____
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 JIM MATHESON, Utah
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
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Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 4
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 6
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 7
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 8
Hon. Bill Cassidy, a Representative in Congress from the State of
Louisiana, opening statement................................... 8
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 9
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 305
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 307
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, prepared statement......................... 308
Hon. Leonard Lance, a Representative in Congress from the State
of New Jersey, prepared statement.............................. 309
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 311
Witnesses
Hon. George Miller, a Representative in Congress from the State
of California.................................................. 11
Prepared statement........................................... 14
Hon. John Cornyn, a United States Senator from the State of Texas 17
Prepared statement........................................... 20
Hon. David P. Roe, a Representative in Congress from the State of
Tennessee...................................................... 24
Prepared statement........................................... 27
Hon. Allyson Y. Schwartz, a Representative in Congress from the
Commonwealth of Pennsylvania................................... 30
Prepared statement........................................... 32
Kathleen Sebelius, Secretary, Department of Health and Human
Services....................................................... 35
Prepared statement........................................... 38
Answers to submitted questions............................... 312
Christopher M. Davis, Analyst on Congress and the Legislative
Process, Congressional Research Service, Library of Congress... 106
Prepared statement........................................... 109
David Newman, Specialist in Health Care Financing, Congressional
Research Service, Library of Congress \1\......................
Diane Cohen, Senior Attorney, Scharf-Norton Center for
Constitutional Litigation, Goldwater Institute................. 132
Prepared statement........................................... 133
Judith Feder, Senior Fellow, Center for American Progress........ 151
Prepared statement........................................... 153
Avik S. Roy, Healthcare Analyst, Monness, Cespi, Hardt & Co...... 158
Prepared statement........................................... 160
Stuart Guterman, Senior Program Director, Program on Medicare's
Future, The Commonwealth Fund.................................. 199
Prepared statement........................................... 202
Scott Gottlieb, Resident Fellow, American Enterprise Institute... 225
Prepared statement........................................... 227
Alex B. Valadka, The Alliance of Speciality Medicine............. 255
Prepared statement........................................... 258
Mary R. Grealy, President, Healthcare Leadership Council......... 267
Prepared statement........................................... 269
Jack Lewin, Chief Executive Officer, American College of
Cardiology..................................................... 274
Prepared statement........................................... 276
Teresa Morrow, Cofounder and President, Women Against Prostate
Cancer......................................................... 284
Prepared statement........................................... 286
Submitted Material
Written statement of June 14, 2011, from Burke Balch, Director,
Robert Powell Center for Medical Ethics at the National Right
to Life Committee, submitted by Mr. Pitts...................... 80
Letter, dated July 8, 2011, from Sandra Schneider, President,
American College of Emergency Physicians, to subcommittee
leadership..................................................... 85
Letter, undated, from Thair Phillips, President, RetireSafe, to
Mr. Pitts...................................................... 87
Letter, dated June 24, 2011, from healthcare organizations
opposing the Independent Payment Advisory Board to Members of
Congress, submitted by Mr. Pitts............................... 88
Written statement of July 13, 2011, from Karen Zinka, Men's
Health Network, submitted by Mr. Pitts......................... 98
Letter, dated March 11, 2011, from Richard N. Waldman, President,
American Congress of Obstetricians and Gynecologists, to Mr.
Roe, submitted by Mr. Pitts.................................... 101
Letter, dated July 12, 2011, from Tim Laing, Chair, Government
Affairs Committee, American College of Rheumatology, to
committee leadership, submitted by Mr. Pitts................... 102
Written statement of July 13, 2011, from the American College of
Radiology, submitted by Mr. Pitts.............................. 103
Letter, dated July 6, 2011, from Cecil B. Wilson, Immediate Past
President, American Medical Association, to Mr. Roe, submitted
by Mr. Pitts................................................... 104
Written statement of July 13, 2011, from Robert B. Blancato,
Executive Director, National Association of Nutrition and Aging
Services Programs, submitted by Mr. Pitts...................... 105
Letter, dated May 23, 2011, from Scott & White Healthcare to Mr.
Cornyn, submitted by Mr. Burgess............................... 254
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\1\ Mr. Newman did not present an opening statement.
IPAB: THE CONTROVERSIAL CONSEQUENCES FOR MEDICARE AND SENIORS
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WEDNESDAY, JULY 13, 2011
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:03 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Joseph
Pitts (chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Whitfield,
Shimkus, Myrick, Murphy, Blackburn, Gingrey, Latta, McMorris
Rodgers, Lance, Cassidy, Guthrie, Pallone, Dingell, Capps,
Christensen, Schakowsky, Gonzalez, Matheson, and Waxman (ex
officio).
Staff present: Gary Andres, Staff Director; Jim Barnette,
General Counsel; Mike Bloomquist, Deputy General Counsel; Anita
Bradley, Senior Policy Advisor to Chairman Emeritus; Howard
Cohen, Chief Health Counsel; Paul Edattel, Professional Staff
Member, Health; Debbee Keller, Press Secretary; Ryan Long,
Chief Counsel, Health; John O'Shea, Professional Staff Member,
Health; Andrew Powaleny, Press Assistant; Chris Sarley, Policy
Coordinator, Environment and Economy; Heidi Stirrup, Health
Policy Coordinator; Lyn Walker, Coordinator, Admin/Human
Resources; Tom Wilbur, Staff Assistant; Jean Woodrow, Director,
Information Technology; Alex Yergin, Legislative Clerk; Alli
Corr, Democratic Policy Analyst; Tim Gronninger, Democratic
Senior Professional Staff Member; Karen Lightfoot, Democratic
Communications Director and Senior Policy Advisor; and Karen
Nelson, Democratic Deputy Committee Staff Director for Health.
Mr. Pitts. Everyone, please take their seats. 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
Today's hearing on the Independent Payment Advisory Board
comes at a crucial time. It is a crucial time for health reform
in general. It has been almost 16 months since the passage of
President Obama's massive overhaul of the healthcare system.
And as the multitudes of provisions in the law go into effect,
we are beginning to get an idea of how our healthcare system
would look under PPACA. The fundamental concept underlying the
administration's approach to health reform is that the
government, or a group of government-appointed experts, knows
better than patients and their doctors which healthcare
services are valuable.
It is also a critical time for the Medicare program in
particular. A quick look at a few numbers will remind us of the
importance and timeliness of today's hearing. Ten thousand
seniors become eligible for Medicare every day, and according
to the program's own actuaries, the program faces costs not
covered by the Medicare tax of more than $30 trillion over the
next 75 years. This staggering amount of money is more than
double the current national debt.
One of the most worrisome provisions in PPACA and a
provision that highlights the administration's fundamental
approach to health reform is the creation of the Independent
Payment Advisory Board or IPAB. The IPAB embodies what is
objectionable in the President's healthcare system overhaul and
how the administration's approach to health reform is
fundamentally different from the Republican reform proposal.
President Obama's health reform legislation was pushed through
Congress without meaningful bipartisan debate. In like fashion,
the recommendations of IPAB will be pushed through Congress
with very little time for discussion or for the development of
realistic alternatives to these recommendations that will then
become law.
The IPAB is likely to profoundly influence the future of
Medicare and even the healthcare system in general. In fact,
the panel of 15 experts that will make up the board will
arguably have more influence over healthcare than any person,
group of people, organization, or government agency has ever
had--more than patients, physicians, professional
organizations, MedPAC, CMS, or even Congress.
However, we need be clear about one thing: this isn't about
``death panels.'' The intent of creating IPAB was not to kill
seniors. But Democrats do believe that the best way to cut
Medicare costs is to give an unaccountable board the power to
limit treatment options. We disagree. We believe the solution
to fighting costs is to give patients more power, more control,
and more choices. Why should anyone--especially a government-
appointed expert--second-guess patients and doctors?
It is encouraging that there is widespread opposition to
the IPAB. Physician groups, hospitals, consumer groups, patient
advocacy groups, and others have all voiced their concern over
the board. There is even bipartisan opposition in Congress.
This is not surprising, since the decisions of the board will
become law by a fast-track process that will bypass the usual
legislative procedures, in effect superseding the customary
jurisdiction of committees like this one. As Representative
Pete Stark was recently quoted as saying when asked about IPAB,
``Why have legislators?''
The time for substantial Medicare reform is now and the
decisions about how to achieve the necessary reform are crucial
and fundamental to the future of the program. The Democrats
would leave these decisions to 15 unelected, unaccountable
government appointees. We believe that current and future
Medicare beneficiaries know better.
I want to thank the witnesses for agreeing to participate
in this important hearing. I look forward to hearing their
testimony. And at this point, the chair recognizes the ranking
member of the subcommittee, Mr. Pallone, for 5 minutes for his
opening statement.
[The prepared statement of Mr. Pitts follows:]
[GRAPHIC] [TIFF OMITTED] 72772.001
[GRAPHIC] [TIFF OMITTED] 72772.002
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman. And thank you for
holding this very important hearing.
I am very strongly opposed to the Independent Payment
Advisory Board, or IPAB, created under the Affordable Care Act.
I have never supported it, and I would certainly be in favor of
abolishing it. However, I do not see IPAB as a significant
factor in the Affordable Care Act. As you know, I am one of the
strongest advocates for the Affordable Care Act for many
reasons. The Affordable Care Act has finally set our healthcare
system on a path to reform. It was the most significant
improvement to Medicare passed in years and will reduce costs
to Medicare through a number of broad efforts--most notably, by
reforming the way in which doctors deliver care, incentivizing
a focus on efficiency and value rather than just the number of
services performed.
Furthermore, it is important to note that the Affordable
Care Act reduced projected Medicare spending growth to
historically low levels. Over the past decade, Medicare cost
growth per beneficiary was 7.8 percent. The most recent
trustees' report projects that over the next 10 years, that
growth rate will be just less than 3 percent.
Now, it is becoming increasingly clear that the Republicans
will use IPAB as just another way to oppose and deface the
Affordable Care Act. But this issue, from my perspective,
should be the furthest thing from partisan. It is an issue that
I believe all legislators from all political backgrounds should
take concern. It is about the legislative and executive
branches. This is about congressional prerogatives being
limited. We should absolutely not, under any circumstances,
seed legislative power to the executive branch. This is simply
not what our founding fathers wanted or intended.
IPAB, like other independent commissions, encroaches upon
our legislative authority. Indeed, I am opposed to independent
commissions or outside groups playing a legislative role other
than on a recommendatory basis. It is not the job of an
independent commission to get involved in congressional
matters--in this instance, healthcare policy for Medicare
beneficiaries. We have had the counsel of MedPAC for a long
time. But MedPAC is just that; it is counsel. Nothing MedPAC
recommends is automatic. When Congress agrees, it enacts those
recommendations. When Congress disagrees, we ignore those
recommendations. This is how the process should work. This is
how the process should continue.
Unfortunately, the debate of IPAB reminds me of the Base
Realignment and Closure or BRAC process. IPAB is just another
BRAC, only the healthcare version. In fact, during discussion
over the Affordable Care Act, it was mentioned by the
administration and others that they were using BRAC as an
example. I strongly believe that BRAC is a monumental failure.
I voted against every BRAC in my 23 years in Congress. I have
seen them run up costs and waste money. And the worst part is
as an elected official who was sent to Congress by my
constituents to represent their best interests, then I become
powerless to stop things like BRAC. I certainly tried. I fought
the closure of Fort Monmouth, New Jersey, with everything that
I had in more ways than I can count, but it wasn't enough.
Because like IPAB, the BRAC took away all legislative authority
and prerogative, and to this day I fight to minimize its
effects on my constituents.
Mr. Chairman, as I said again, this is not about IPAB or
its relation to Medicare. It is about a growing imperialistic
presidency. I have been here for 23 years. Whether it was the
first George Bush or it was President Clinton or was the second
George Bush or now President Obama, the presidency continues to
try to take over the prerogatives of Congress. We have to stop
it. We have to reverse it. We can't be a part of an effort to
let that continue. Just because decisions are tough doesn't
mean Congress shouldn't make them. I believe this committee and
this Congress has the knowhow to make the tough choices that
are still needed to improve our healthcare system.
And frankly, I have told the President and everybody in the
executive branch I actually like dealing with MedPAC and its
recommendations. I like having hearings in this subcommittee
where we review the MedPAC recommendations. And most of the
time we adopt them. So the idea that somehow we don't want to
make the tough choices, we are not capable of making the tough
choices, that is simply not true. That is why we are elected.
That is why people continue to elect me in my opinion.
So instead, let us build on the Affordable Care Act's
reforms and expand efforts to contain the growth and future
healthcare costs. We can do it. We don't need IPAB.
I yield back, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. I now recognize
the vice chair of the subcommittee, Dr. Burgess, for 5 minutes
for opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. I thank the chairman for the recognition. I
want to welcome our Senator from Texas, Senator Cornyn, and my
fellow OB/GYN doctor, Dr. Roe, welcome them to committee and
being here today.
This healthcare law that was signed 15 months ago contains
countless policies that will essentially disrupt the practice
of medicine. Along with the many excesses and constrictions in
the law, the Independent Payment Advisory Board represents the
worst of both.
I am a doctor, a Member of Congress, I am also someone in
my 60s who is soon to be Medicare-age and I am distressed by
what I see happening with the Independent Payment Advisory
Board. It is not accountable to any constituency. It only
exists to cut provider payments to fit a mathematically-created
target. Given that private insurers use Medicare as a benchmark
for their own payment changes, the IPAB could have a far-
reaching implication beyond Medicare for our Nation's
providers.
The board exponentially and inappropriately expands the
power of the executive branch, giving an unaccountable panel of
15 individuals the authority to make changes to the Medicare
program. It takes the authority away from Congress. Congress
has no say in the board's reports, yet their recommendations
essentially hold the power of legislation.
And yes, this board is appointed with the consent of the
Senate but not necessarily because nine of these board members
could be recess appointments. Nine of these board members would
constitute a majority, therefore completely bypassing the
legislative branch.
Now, for patients, these bureaucrats may be able to cut
payments too low that it will block care to seniors. It does
change the fundamental nature of the relationship with the
Federal Government, and those people who are cared for by
insurance provided by the Federal Government now will be able
to tell you who gets care, where the care is given, when it is
given, but the fundamental change is now we will be able to
tell you when you have had enough.
The board is not a solution in search of a problem.
Medicare's unfunded liabilities are enormous. That is why
Republicans want to be able to keep Medicare for future
generations by lowering the cost to the Federal Government by
providing better choices.
Let me at this point yield to another doctor on the
committee, Dr. Phil Gingrey.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Mr. Chairman, thank you. And I thank the
gentleman for yielding.
I have got three posters I would like to share with my
committee members and with the witnesses. This first poster,
President Obama's chief medical officer, ``Most people who have
serious pain do not need advanced methods. They just need the
morphine and the counseling that have been available for
centuries.'' Again, President Obama's chief medical officer,
``The decision is not whether or not we will ration care. The
decision is whether we will ration with our eyes open.'' And
the last slide, again, from President Obama's chief Medicare
officer, ``I cannot believe that the individual healthcare
consumer can enforce through choice the proper configurations
of a system as massive and complex as healthcare. That is for
leaders to do.''
If anyone has any questions as to why Members of Congress
are opposed to what has been deemed a denial-of-care board, as
you just heard, I would simply suggest you read carefully the
words of the head of CMS, Dr. Donald Berwick. And it is no
surprise that he will remain interim head. You might even want
to refer to him as Don Corleone.
And I thank you for the time and I would now like to yield
to my physician colleague from Louisiana, Dr. Bill Cassidy.
OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Mr. Cassidy. Thank you for yielding.
I am a doctor who, for the last 20 years, has worked in a
hospital for the uninsured. And one of the reasons I ran for
office is that well-meaning politicians would have well-
sounding laws which would make the lines grow longer at my
hospital for the uninsured. I have to say, with Obamacare, it
is like deja vu all over again. Medicare is going bankrupt.
Anticipating this, Obamacare has a provision of 15 appointed
bureaucrats who have the ability to almost in an unfettered
fashion decrease payment. Now, we say--Republicans, some
Democrats--that this can decrease access. Defenders say oh, no,
decreasing payment is not rationing. I ask those defenders to
join me at my hospital for the uninsured and I will show you
the reality.
So although I look forward to Secretary Sebelius'
testimony, I feel like I have heard it before. A benign
bureaucracy paternalistically looking after the interest of the
individual while controlling global healthcare cost. It would
be amusing if it were not so frightening. There is a better
way, and the better way is to give the power to the patient and
not to the bureaucrat. This is not where Obamacare is, but it
is where I hope we arrive.
Thank you. I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the ranking member of the full committee, Mr.
Waxman, for 5 minutes for 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.
There was an attack on Dr. Berwick. He was invited once to
appear before our committee and was cancelled out by the
committee itself. Perhaps we ought to give him the opportunity
to respond to some of these statements that have been made
about his past writings.
I regret to observe that this hearing today is very
partisan and very hypocritical. It is partisan because this is
another battle in war waged since January by the Republicans to
tear down the Affordable Care Act. When the Republicans passed
their repeal bill through the House in January, we were
promised that a Republican replacement would be right behind
it. But we are now in July and we have seen absolutely no sign
of any Republican idea for addressing our Nation's problems in
healthcare--skyrocketing costs, 50 million Americans without
insurance, and the uneven quality of care.
This is an exercise in hypocrisy because of the utter
fallacy of the pious arguments made on the issue of Medicare
and costs. I have been around long enough to remember when
doctors said we didn't need any government program. We take
care of poor people because that is our obligation. And now we
are told we can't find a doctor because they are not paid
enough. They don't feel it is their obligation to take care of
the poor unless they are paid adequately. I understand that,
but let us skip the piety about it.
The main Republican attack on the Affordable Care Act is
that we cannot afford it. Too much coverage, not enough cost
reduction, they say. They ignore the CBO's estimates. They
ignore the testimony from hundreds of economists and doctors
and experts of all stripes. Republicans just assert it doesn't
control costs. And then they attack the new law for the
comprehensive approach it takes to controlling costs. And they
do it the old-fashioned way, through fear.
Dr. Burgess has called IPAB ``Armageddon.'' Dr. Gingrey
compared the Republican plan for Medicare unfavorably to
``throwing grandma off a cliff,'' and said that IPAB is worse
than that ``because grandma could possibly survive the fall
from a cliff but cannot survive IPAB.'' Well, I have some
concerns about some aspects of IPAB, but I don't agree with the
premise that we need IPAB to make Congress to do its job. No
one should think that a hyperbole of IPAB's Republican
critics--rationing, death panels, faceless bureaucrats, pulling
the plug on grandma--represents reality.
It is a fact that IPAB is prohibited from rationing. It is
also a fact that the savings CBO expects from IPAB over the
next 10 years amounts to just $2 billion, less than 10 percent
of what Republicans proposed to cut from Medicare even before
they would end the program in 2022 and replace it with their
voucher plan.
But the heart of the matter is Medicare and its future.
What is the Republican plan for controlling costs in Medicare?
Simple. End Medicare as we know it. The Republican plan shifts
all of the burden for healthcare costs onto seniors, people
with disabilities, onto the States. It would double costs for
new enrollees in 2022 by $6,000 per person according to CBO.
For people with disabilities, including people in nursing
homes, Medicare cuts come almost immediately in 2013, meaning
that people won't be able to pay for nursing home care or the
home-based care that will keep them out of a nursing home in
the first place.
Republicans are seeking to end Medicare's guaranteed
benefits, leaving seniors and people with disabilities on their
own in the insurance market. They want to cut the program by
$20 trillion over the next few decades. Fears about IPAB are
hypothetical at this point and always leave alternatives to the
Congress. The harm to Medicare from the Republican plan, if
enacted, would be a certainty.
With respect to IPAB, Mr. Chairman, Congress has the final
say over Medicare policy. And if Congress has the final say
over all IPAB recommendations, which will pass through this
committee, I hope one day to return to the chairmanship of this
committee, and if I do, I will certainly exercise this
committee's oversight duties over IPAB thoroughly. I am sure
that Mr. Upton will do the same.
So I think it is time we set aside efforts to repeal the
Affordable Care Act, focus on real problems for American
families in what they are facing today and stop this constant
attack on anything that tries to do something about the
problems that American families face, especially those who
cannot buy insurance, who cannot afford insurance, who cannot
pay their doctors adequately so they can be seen, and we just
forget about them. We already have over 50 million uninsured.
Let us don't add to the burden by taking away Medicare and
Medicaid from those for whom they rely on those programs.
I yield back.
Mr. Pitts. The chair thanks the gentleman. That concludes
the opening statements for the members.
I want to thank the witnesses for agreeing to appear before
the committee today. We have four panels today, and your
written testimony will be entered into the official record. We
ask that you summarize your opening statements in 5 minutes.
The first panel--and in order of presentation I will
introduce them--first, the Honorable George Miller, who
represents the 7th Congressional District of California;
second, the Honorable John Cornyn, Senator from the State of
Texas; the Honorable David Roe, who represents the 1st
Congressional District of Tennessee; and I believe we have the
Honorable Allyson Schwartz representing the 13th Congressional
District of Pennsylvania coming.
Congressman Miller, you may begin.
STATEMENTS OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA; HON. JOHN CORNYN, A UNITED STATES
SENATOR FROM THE STATE OF TEXAS; HON. DAVID P. ROE, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE; AND
HON. ALLYSON Y. SCHWARTZ, A REPRESENTATIVE IN CONGRESS FROM THE
COMMONWEALTH OF PENNSYLVANIA
STATEMENT OF HON. GEORGE MILLER
Mr. Miller. Thank you very much, Mr. Chairman and Ranking
Member Pallone, for the opportunity to testify before the
committee today.
I came to Congress in 1975, and since that time, I have
been involved in the debate over national health reform
proposals. Throughout these debates, lawmakers struggled with
how to control costs without harming care. Unfortunately,
Congress chose to kick the can down the road for a very long
time. Without action, healthcare costs have continued their
endless rise, well in excess of inflation. As everyone here
well knows, these costs have grown to unsustainable levels for
families, for businesses, and for taxpayers.
In the past decade, healthcare spending has increased an
average of 6.8 percent a year and is expected to rise from 18
percent of GDP to 34 percent of GDP in 2040. At the same time,
employer-provided insurance has fallen and out-of-pocket and
premiums have skyrocketed for employees. The opportunity for
reform finally changed with the Affordable Care Act. For the
first time, Congress put in place specific, identifiable
measures to make Medicare and our healthcare system more
efficient. We need to give these innovations an opportunity to
work.
These innovations include stronger tools to combat fraud
and abuse in Medicaid and Medicare--tools that have already
started to save billions of dollars; to better coordinate the
care through accountable care organizations; incentives to
reduce hospital readmissions, and reward the delivery of high
quality and efficient care; and improved patient safety through
the Partnership for Patients initiative. These reforms were
included based on what was worked on in the past and what was
likely to work in the future. These cost-savings ideas are
beginning to work.
We did not make these decisions lightly. The debate was
robust. But in the end, the majority agreed to give these ideas
a chance. Our goal was to make Medicare stronger for seniors
and sustainable for future generations so we wouldn't have to
go down the road of rationing or turning Medicare into a
voucher program. If Congress begins to roll back these reforms,
then we will not see the efficiencies, we will not see the
innovations that experts agree will stabilize our healthcare
system.
One of these ideas is the Independent Payment Advisory
Board. This board serves as a backstop to ensure that our
federal health programs operate efficiently and effectively for
both seniors and for the taxpayers. Before the Affordable Care
Act, Congress and other stakeholders had an unremarkable track
record of controlling costs. 535 Members of Congress cannot be
doctors, although it looks like an awful lot of them are. I
wondered where that doctor shortage was coming from. Five
hundred thirty-five Members are not capable of knowing the best
science and the best practices for every medical treatment and
535 Members of Congress are subject to unrelenting lobbying by
special interests that have a financial stake, and in many
cases, a financial conflict of interest in many of the
decisions that they make--but not necessarily the best health
of our seniors in mind.
With these reasons, many experts have recommended the
creation of an independent board of health experts to make the
system improvement recommendations. And, as you know, Congress
has often used independent boards to help with complex issues,
such as MedPAC or the BRAC, which BRAC--Frank, I love you--but
the fact is those bases would have never been closed and we
would have been lugging the cost around for generations.
The Independent Payment Advisory Board will not usurp the
Congress. It will not be unaccountable. It will not be
unfettered. It simply acts as a backstop in case government
spending exceeds the benchmarks. Both CBO and Medicare trustees
tell us that because of the Affordable Care Act reforms, they
don't expect the mandatory actions of the panel to be triggered
in the immediate future. The President will nominate the
doctors, health experts, and consumers to the board to examine
all of the data and evidence on best practices and
inefficiencies in healthcare spending. The Senate will consider
and approve each nominee. The IPAB will make all of the
recommendations to the Congress. The Congress can approve,
disapprove, or modify each recommendation. It sounds like a
heavy role for Congress.
In other words, Congress retains the role in healthcare but
in an improved and more efficient fashion. Ideally, IPAB
recommendations could also be a driver for innovation, not only
the public sector but for the private sector.
Under the law, the Independent Payment Advisory Board
guarantees the doctor-patient relationship. Doctors will retain
full authority to recommend the treatments that they think are
best for their patients. The law prohibits the recommendations
that would ration care, change premiums, or reduce Medicare
benefits.
In conclusion, I testify here today as someone who deeply
cares about the delivery of healthcare to the citizens of the
United States. Everyone agrees that our Nation's healthcare
costs must come under control. With 76 million baby boomers
just beginning to rely on Medicare, the time is now to push for
innovative reforms that can help us contain the cost of the
Medicare program.
The Independent Payment Advisory Board is about
strengthening the Medicare program. Without the innovation and
evidence-based decision-making, Medicare will be put in
jeopardy. And the forces calling to end Medicare will gain the
upper hand because of uncontrollable cost. The American people
have firmly rejected the Republican budget plan to end
Medicare, to voucherize Medicare. What they do support is
accessible and affordable healthcare, and the only way we can
guarantee that for future generations is by using the best
science, the best medicine, the best evidence, and the best
practices available for all of our citizens. We really have no
alternative.
Without these innovations, our current system is
unsustainable for the Nation's families, the Nation's
businesses, and the Nation's taxpayers, and I strongly support
IPAB and would oppose any effort by Congress to undermine it.
And thank you so very much for allowing me to testify.
[The prepared statement of Mr. Miller follows:]
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Mr. Pitts. The chair thanks the gentleman.
Senator Cornyn, you may begin your testimony.
STATEMENT OF HON. JOHN CORNYN
Mr. Cornyn. Chairman Pitts, Ranking Member Pallone, and
members of the committee, thanks for giving me the opportunity
to testify here today regarding the Independent Payment
Advisory Board created by the Patient Protection Affordable
Care Act. And unfortunately, this is a product that came from
the Senate and not from the House. I am sorry about that.
But, of course, the goal of IPAB is one we all share, as
Congressman Miller just articulated. We have to find some way
to control the cost in Medicare. Medicare trustees warned
Congress that the program will be insolvent in 2024, which is 5
years earlier than previously predicted. I noted that
Medicare's unfunded liabilities, the gap between Medicare's
future cost benefits and future taxes and premiums it expects
to collect, are more than $24 trillion and growing.
The Medicare trustees have now issued a Medicare warning
every year since 2006 in which they have alerted Congress that
more than 45 percent of Medicare's funding will come from
general revenues. The nonpartisan Congressional Budget Office
issued a warning of its own in June in its 2011 long-term
budget outlook. CBO projects that if current law remains in
place, spending on the major mandatory healthcare programs
alone will account for approximately 6 percent of our gross
domestic product today to 9 percent in 2035 and would continue
to increase thereafter.
So, as we all know, something has to be done about the
unsustainable growth and the cost of the Medicare program. We
all agree on that much. Like many Americans and many members of
this committee, though, I do not believe that IPAB is the right
answer. Everyone here knows how IPAB is supposed to function,
but here are my specific concerns:
First, I am concerned that the only tool in the IPAB
toolbox will be cutting payments to providers. And we are
already seeing how government price controls are restricting
access to care--on one hand saying you are covered by a
government program; on the other hand saying because of
restrictive payments to providers, good luck finding a doctor
who will see you at that price.
The American Medical Association estimates that one of
three primary care doctors limit the number of Medicare
patients they see. As Dr. Burgess will confirm, in our State of
Texas, 42 percent of physicians are considering opting out of
Medicare completely due to low reimbursement rates. Although
there is some concern recently about the rhetoric surrounding
IPAB, continuously cutting reimbursement to Medicare providers
will prevent access to care for Medicare beneficiaries.
Secondly, I am concerned that IPAB's enormous power will
grow at the expense of Congress and the people's elected
representatives. In fact--as you probably know and no doubt do
know--there is litigation challenging this delegation of
legislative authority to this unelected body currently pending.
Why Congress would voluntarily undermine its own authority in
this area is really beyond me. We are the ones who are elected,
we are the ones who are accountable to the votes, and we are
the ones who should be making those decisions.
Congress created the Medicare program in 1965, and it
should be Congress that is held accountable to the seniors who
use Medicare as their healthcare system. But, as you know, IPAB
has a different approach. Seniors subjected to IPAB
recommendations cannot challenge the recommendations in court
or remove members of the board. There is no accountability. The
only way a member of the board can be removed is by the
President for neglect of duty or malfeasance in office.
My concerns should be familiar to many of you because these
are the same concerns I am hearing from you and from my
constituents, which I suspect you are hearing from your
constituents as well. Scott & White Healthcare in Temple,
Texas, recently wrote me in support of the bill on the Senate
side that I am sponsoring for repealing IPAB. They write,
``Scott & White Healthcare is supportive of initiatives to
identify fraud and waste in the healthcare system and
incentivized high-value healthcare in this country. But we have
concerns and questions about the process that will be used by
IPAB to implement cost savings in Medicare.''
On June the 24th, 2011, over 270 different organizations
from the Pennsylvania Medical Society to the New Jersey Academy
of Ophthalmology wrote Members of Congress regarding their
concerns saying that ``not only will IPAB severely limit
Medicare beneficiaries' access to care, but also increase
healthcare costs that are shifted onto the private sector.''
And we are all very familiar with the cost-shifting that goes
on when government reimburses at a lower rate and those with
private insurance or private pay have to pick up the slack.
They also cited concerns about IPAB's lack of accountability
and inability to improve the quality of care in the Medicare
program.
I want to thank the chairman and the ranking member and
this committee for being skeptical of the IPAB from the
beginning and for supporting repeal now. Of course, this is not
a partisan issue. This is not part of an effort to repeal the
healthcare bill. This is a narrowly targeted piece of
legislation designed to deal with this particular provision,
which I think deserves and does have bipartisan support.
In January 2010, 72 House Democrats joined Republicans
asking then-Speaker Pelosi to take IPAB out of the healthcare
bill. On Monday, Congressman Pallone was quoted as he was here
today saying he didn't support IPAB and certainly would be in
favor of abolishing it. Congressman Roe's bill enjoys
bipartisan support for the legislation in this House, and I
hope some of my Democratic colleagues in the Senate will join
me in our effort to repeal this particular provision in the
healthcare bill.
As we repeal the IPAB, we have got to look at a better way
to achieve our bipartisan goal of controlling healthcare costs
in the Medicare program. One model I believe that has worked
pretty darn well is the Medicare Prescription Drug program,
which has come in under budget by about 40 percent by providing
transparency, competition, more quality and service, which has
used market forces to discipline costs. The Prescription Drug
Program has achieved these results, as I say, by injecting
competition and choice into the system. Many other programs at
the state level and the private sector have also cut costs
without sacrificing quality or access to care, goals that we
all share. And Congress should continue to take a look at those
as well.
In conclusion, Mr. Chairman, let me just say that Medicare
beneficiaries have paid their hard-earned money into Medicare
for years and it should be these same beneficiaries, their
families and providers who determine the healthcare that is
right for them.
Thanks for allowing me to testify here today, and I am
happy to respond to any questions you might have.
[The prepared statement of Mr. Cornyn follows:]
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Mr. Pitts. The chair thanks the gentleman and now----
Mr. Burgess. Mr. Chairman, can I ask unanimous consent that
the letters that Senator Cornyn referenced from Scott & White
Clinic and New Jersey Medical Association be made part of the
record here today?
Mr. Pitts. OK. Could we see those and then we will act on
that if you have copies.
Mr. Cornyn. Absolutely.
Mr. Pitts. Thank you.
Congressman Roe, you are recognized for 5 minutes.
STATEMENT OF HON. DAVID P. ROE
Mr. Roe. I thank Chairman Pitts and Ranking Member Pallone
and members of the subcommittee. Thank you for inviting me here
to testify today. And I applaud this subcommittee's effort to
shine a light on the danger posed to seniors by the Independent
Payment Advisory Board, better known as IPAB.
I have practiced medicine for the past 31 years, not been
in Congress. This is only my second term, and I am an OB/GYN
doctor, and I found out delivering your own voters worked out
pretty well for me. But I firmly in my core believe that
healthcare decisions should be made between physicians, the
patients, and their families, not by a board appointed by the
President or anybody else, Republican or Democrat.
Created as part of the Affordable Care Act that went into
effect last year, the IPAB is charged with developing proposals
to reduce the per-capita rate of growth in Medicare spending.
Certainly, something has got to be done to ensure that this
important program remains available not only for current
retirees but for the next generation as well. The Medicare
trustees recently projected that the Medicare Trust Fund will
go bankrupt in 2024, and it has been stated that the
Congressional Budget Office says that the fund will exhaust
even sooner, in 2020. We already know what President Obama's
plan to save Medicare is, is the $500 billion in cuts to the
program and the IPAB. The cuts speak for themselves, but the
American people deserve to hear the truth about the IPAB as
little more than a roadmap to potentially rationing care.
Now, some say that the Affordable Care Act expressly
prohibits rationing, raising revenues or beneficiary premiums,
increasing cost-sharing or other restrictions on benefits. This
is highly misleading because nothing in law prohibits cutting
payments to physicians. Already Medicare pays physicians
between 85 and 90 cents on the actual cost of the care, which
has made it more difficult for beneficiaries to access the
needed care. If reimbursements continue to fall even further,
it could very well become economically impossible for
physicians to see Medicare patients. With millions of baby
boomers becoming eligible for Medicare, IPAB cuts couldn't come
at a worse time.
The IPAB could adversely impact the quality of patient
care. For example, look no further than Britain's National
Institute for Health and Clinical Excellence, or NICE.
Decisions are based on cost, not quality or outcomes for an
individual patient. Decisions regarding patient care shouldn't
be made by a panel of 15 unelected bureaucrats who haven't
examined the specifics of an individual's unique case. Medicine
is not a one-size-fits-all discipline. What is effective for
treating one patient may be harmful for another. By
centralizing medical care decision-making, the IPAB would put a
Washington bureaucrat squarely between patients and the care
recommended by their doctor.
In addition to degrading access to and quality of care,
IPAB has two significant structural problems: It is both
unaccountable and unworkable. The board is empowered to make
recommendations regarding Medicare without any input from
Congress. Don't just take my word for it. The former OMB
Director, Peter Orszag, called the IPAB the single biggest
yielding of power to an independent entity since the creation
of the Federal Reserve.
Even after the IPAB makes its recommendations, the hands of
the Congress are still somewhat tied. The proposal would be
considered under fast-track procedures and without 3/5 vote of
the Senate, Congress can only modify the types of cuts, not the
size. And if Congress fails to act on the board's
recommendations, they automatically go into effect. This isn't
government by the people. It is instead government by the
bureaucrats.
Questions have also been raised regarding IPAB's ability to
function as it is designed. In reference to IPAB, the CMS Chief
Actuary, Richard Foster, wrote in the April 2010 memo that
``limiting the cost growth for a beneficiary to a level below
medical price inflation alone would represent an exceedingly
difficult challenge.'' The CBO, on the other hand, projects no
savings resulting from IPAB over the next 10 years. In both
cases, these expert analyses suggest that IPAB will not yield
the results promised by its proponents.
Further, the legislators who created the IPAB made it clear
that they want this board to impact more than just Medicare.
The Affordable Care Act requires the IPAB to make
recommendations about how to restrain private-sector healthcare
costs growth as well. While these recommendations do not
automatically go into effect, they will no doubt serve to
encourage private insurance companies to cut provider payments.
Ultimately, cuts to provider insurance payments will result in
even less access for Medicare beneficiaries because most
providers shift cost onto private insurance to make up for
Medicare losses. So everyone loses under this scenario.
While it seems that there is little that our two parties
can agree on in the current environment, both sides have
acknowledged that the IPAB is a terrible idea. That is why my
bill to repeal IPAB--the Medical Care Decisions Accountability
Act--has more than 160-plus bipartisan cosponsors, and all but
one physician in U.S. Congress has signed on. The American
Medical Association has endorsed my legislation, as did a broad
coalition of more than 270 healthcare organizations. Even
former Democratic leader Dick Gephardt called for the IPAB's
repeal.
Mr. Chairman, it is time that we begin the fact-based
conversation about reforming Medicare without the demagoguery
that has marked recent months. I can't think of a better place
to start than a bipartisan effort to repeal IPAB.
Let me finish with a couple of things. Ask yourself two
things or two problems. Does this bill increase access and
quality of care for seniors? And number two, how much oversight
and power has Congress given up? And let me just give you a
brief example. If you are a family practitioner and you are
seeing Medicare patients and you want to continue to do that
and let us say your practice grosses $300,000 this year, which
is probably what a family practice would do. About $150,000 of
that--50 percent if you run a very efficient practice--is
overhead. If you cut the current--SGR growth cuts are
recommended to be about 30 percent the end of this year, that
family practitioner is making a very comfortable living at
$150,000. His or her costs stay at $150,000, but their income
will be cut to 50. And how does that increase access? If IPAB
basically can do that, how does that help our seniors?
I very much appreciate the bipartisan support for this, and
I thank you for having me here today.
[The prepared statement of Mr. Roe follows:]
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Mr. Pitts. The chair thanks the gentleman and now
recognizes Congresswoman Schwartz for 5 minutes for her opening
statement.
STATEMENT OF HON. ALLYSON Y. SCHWARTZ
Ms. Schwartz. Thank you, Chairman Pitts and Ranking Member
Pallone, Mr. Waxman, and members of the committee, for the
opportunity to testify this morning.
First of all, let me say I have and continue to be a very
strong supporter of the Affordable Care Act because it will
extend access to affordable, meaningful health coverage to all
Americans, strengthen Medicare, and contain costs for American
families, businesses, and government. The potential for savings
is significant. The Centers for Medicare and Medicaid Services
(CMS) Office of the Actuary estimates that over the course of
the first 10 years the Affordable Care Act will save Medicare
more than $400 billion by attacking fraud and abuse, reducing
overpayments to insurance companies, reducing medical errors
and unnecessary duplication of services, increasing access to
cost-effective primary care services, and improving care
coordination across healthcare settings and transitioning to
payment systems that reward value.
CBO estimates that the law will reduce the deficit by more
than $1 trillion over the next 20 years. And that is just the
beginning. Healthcare reform has the potential to fundamentally
transform the healthcare delivery and payment systems by
creating a variety of models for improved delivery of care by
incentivizing high quality, greater efficiency, and better
outcomes. Successful implementation will ensure that seniors
get the right care at the right time at a lower cost to
taxpayers.
My decision to support repeal of the Independent Payment
Advisory Board reflects my confidence in the many cost-
containment measures in the law. Despite Republican claims,
IPAB is not a ``death panel'' nor is it a ``rationing board.''
That is merely scare tactics. IPAB is simply the wrong approach
to achieving the right goal.
We all agree that the rate of growth in Medicare spending
must be contained and that current Medicare payment systems are
flawed and need to be reformed. But we cannot conceal
fundamental flaws in our healthcare system by simply cutting
reimbursements to hospitals and physicians or, even worse,
ending Medicare as we know it, as the Republicans have
proposed. The Republican plan to convert Medicare into a
voucher program means that seniors will no longer have access
to a guaranteed set of health benefits and, according to the
CBO, the resulting premiums and co-insurance will increase out-
of-pocket costs more than $6,000 per senior per year and
increase as healthcare costs rise. This is neither better
quality care nor genuine cost savings. It is merely shifting
the burden of increased cost to seniors.
Congress must accept its responsibility for legislating
sound health policy for Medicare beneficiaries, including
reforms to the payment systems. Turning over this
responsibility, whether to insurance companies as proposed by
the Republicans, or to an unaccountable board, undermines our
ability to represent the needs of seniors and the disabled and
to ensure access to care.
Repealing IPAB--while preserving the essential health
reforms in the Affordable Care Act--enables providers to focus
on innovations that will achieve cost savings by incentivizing
efficient, high-quality healthcare. If we do not, IPAB is
structured in such a way that the board may be forced to impose
cuts on a narrow sector of the healthcare system, ignoring the
need for broader changes. Arbitrary cuts on spending, absent
fundamental reforms to underlying cost drivers, simply shift
the cost burden. Thus, IPAB has the potential to stifle
implementation of the promising innovations that would address
these cost drivers just as they are beginning to take shape.
The Obama Administration is already implementing healthcare
reforms to reduce the rate of growth in healthcare spending by
holding providers accountable for reducing costs through more
coordinated care, the adoption of health information
technology, improved quality, and better outcomes. Accountable
Care Organizations, which create incentives for healthcare
providers to work together to lower costs while meeting quality
standards and putting patients first, could save up to $750
billion over the next 10 years.
The Center for Medicare and Medicaid Innovation,
established under the healthcare reform law, is advancing
innovations such as the Patient-Centered Medical Home,
Healthcare Innovation Zones and other innovative delivery
models with the potential to achieve even more significant
additional savings. The Center's recently launched Partnership
for Patients initiative will save costs by bringing together
hospitals, physicians, and patients to dramatically reduce
hospital-acquired conditions and hospitals readmissions. This
program alone is expected to generate savings of up to $35
billion.
These are reforms that we should build on to achieve
greater cost efficiencies without risking access or quality. It
is our job to identify the cost-efficient, cost-saving
innovations and ensure that they are implemented broadly and
successfully across the country.
There are tough choices ahead as we work to contain the
rate of growth in costs in healthcare. We should eliminate
IPAB, reject the Republicans' efforts to dismantle Medicare,
and focus on reshaping payment and delivery systems to reward
coordination, efficiency, and value to achieve these cost
savings. And in so doing, we will meet our obligation both to
seniors and to taxpayers.
And I thank you for the opportunity.
[The prepared statement of Ms. Schwartz follows:]
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Mr. Pitts. The chair thanks the gentlelady. The chair
thanks the witnesses of our first panel--very informative. I
appreciate the bipartisan nature of it. And we will dismiss the
first panel at this time and call the----
Mr. Burgess. Mr. Chairman, did we rule on my unanimous
consent request?
Mr. Pitts. If the Senator can give us the documents, then
we will rule on it. Can you make sure we get that? Not yet? We
will act on it later.
The second panel consists of a single witness. The
Honorable Kathleen Sebelius is the United States Secretary of
Health and Human Services. We welcome the Secretary to the
hearing.
Madam Secretary, your written testimony will be made part
of the official record. Welcome. And we ask that you summarize
your statement in 5 minutes and then be available after 5
minutes for questions. Could you hear me? I am sorry. We have
had some problems with our mikes. Your written testimony will
be made part of the official record. We ask that you summarize
your opening statement in 5 minutes. So welcome, Madam
Secretary. You may begin your testimony.
STATEMENT OF KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH
AND HUMAN SERVICES
Ms. Sebelius. Well, thank you, Chairman Pitts and Ranking
Member Pallone and members of the committee. I appreciate the
opportunity to come today to discuss how the Affordable Care
Act is strengthening Medicare for seniors today and tomorrow.
My written testimony does provide more detail, but I want
to highlight some of the steps we are taking as part of the
healthcare law to fill the gaps in Medicare coverage, to
improve care, and make the program more sustainable for the
future while preserving the guarantees for seniors and those
with disabilities.
When Medicare became law in 1965, it served as a national
promise that seniors wouldn't go broke because of a hospital
bill. In 2006, Medicare added coverage for prescription drugs,
which make up a growing share of beneficiaries' healthcare
costs. But we know that too many seniors still struggle to
afford their medications, and that is why the Affordable Care
Act moved to assist the seniors falling into the donut hole
with a one-time $250 check in 2010 and this year starts a 50
percent discount for the approximately 4 million beneficiaries
who now will get some assistance with the purchase of brand-
name drugs. By 2020, that gap will be closed completely.
We also know that too many seniors were going without the
preventive care that can help prevent an illness before they
occur, in some cases, because of expensive co-pays. And that
shouldn't happen. So beginning this year, the law allows
Medicare beneficiaries to receive recommended preventive
services like screenings for colon or breast cancer, as well as
an annual wellness visit without paying a co-pay or deductible.
It is the right thing to do and it is the smart thing to do
because it helps physicians catch small health problems before
they turn into big ones.
The law is also helping to improve the quality and safety
of care for people with Medicare. We know that there are model
hospitals across the country that have adopted best practices
to dramatically increase the quality of care. In fact, for
almost every major common medical error, we have examples of
health systems that have significantly reduced or even
eliminated them altogether. There is no reason why all Medicare
beneficiaries shouldn't enjoy that same high quality of care
wherever they receive it. And that is why the Affordable Care
Act provides unprecedented support to help those best practices
spread.
In March, we launched the Partnership for Patients, an
historic partnership with employers, unions, hospital leaders,
physicians, nurses, pharmacists, and patient advocates to
reduce harm and error in our Nation's hospitals. Last week, we
announced that more than 2,000 hospitals have already signed up
and are taking critical steps to improve care. They are aimed
at two goals: reducing preventable readmissions and reducing
hospital-acquired conditions.
Under the law, we have also established the first of its
kind, Medicare/Medicaid Coordination Office, working with
States to improve care for those beneficiaries who are enrolled
both in Medicare and Medicaid and often receive fragmented or
duplicative care as a result.
Through the new Medicare and Medicaid Innovation Center
created by the law, we are testing a wide range of additional
models for increasing the quality of care from strategies of
helping seniors manage their chronic conditions to new models
in which hospitals and doctors who keep their patients healthy
and out of the hospital can share in the cost savings they
create.
Together, these reforms are beginning to dramatically
strengthen Medicare today for seniors and Americans with
disabilities. We also have the responsibility to preserve the
promise of Medicare for future generations, and we can't do
that if costs continue to rise unchecked. Because doing care
the right way often costs less than doing it the wrong way,
many of the laws reforms to improve care also reduce Medicare
costs. For example, the Partnership for Patients alone is
estimated to save Medicare as much as $50 billion over the next
10 years by reducing errors and unnecessary care.
But the law doesn't stop there. It contains important new
tools to stamp out waste, fraud, and abuse. And in fiscal year
2010, as we are beginning to build this new system, our anti-
fraud efforts returned a record $4 billion to taxpayers. And
the new tools will help us build on that progress. The Medicare
trustees estimate that these reforms in the Affordable Care Act
have already extended the solvency of the trust fund until
2024. Without the reforms, the trust fund would have been
insolvent 5 years from now.
But when it comes to Medicare's future, we can't take any
chances, and that is why the law also creates the Independent
Payment Advisory Board, or IPAB, a backstop, a failsafe to
ensure Medicare remains solvent for years to come. IPAB is
comprised of 15 health experts, including doctors, other
healthcare professionals, employers, economists, and consumer
representatives. The Affordable Care Act provides for
consultation between the President and congressional leadership
on appointing members of the board, and appointments are
subject to the advice and consent of the Senate.
Each year, the board recommends improvements to Medicare.
The recommendations must improve care and help controls costs.
For example, the board can recommend additional ways for
Medicare to reduce medical errors and crack down on waste and
fraud. And contrary to what some have said, IPAB by law is not
allowed to ration care or shift costs to beneficiaries. In
fact, it is specifically forbidden from making any
recommendations that would ration care, reduce benefits, raise
premiums or cost-sharing, or alter eligibility for Medicare. It
leaves all final decisions in the hands of Congress.
If Medicare spending begins to threaten the program's
future, IPAB is charged with making recommendations to Congress
to create necessary savings without shifting the cost of care
to seniors and those with disabilities. But then it is up to
Congress to decide whether to accept those recommendations or
come up with recommendations of its own to put Medicare on a
stable, sustainable path. In other words, IPAB's
recommendations are only implemented when excessive spending
growth is not addressed and no actions are being taken to put
spending in line.
The nonpartisan Congressional Budget Office and the
independent Medicare Actuary both predict that IPAB is
unnecessary anytime soon--indeed in the next decade--thanks to
the work that we are already doing to slow rising costs. But we
don't know about the future, which why experts across the
country, including independent economists and the CBO believe
that IPAB is needed as a safeguard. And we agree. We believe
the best way to strengthen Medicare for today and tomorrow is
to fill the gaps in coverage, crack down on waste and fraud,
and bring down costs by improving care, changing the underlying
delivery system. And that is what we are working to do under
the healthcare law.
Over the last 16 months, our department has focused on
working with Congress and our partners across the country to
implement the law quickly and effectively, and in the coming
months, I look forward to working with all of you to continue
those efforts.
Thank you again, Mr. Chairman, and I would be pleased to
take your questions.
[The prepared statement of Ms. Sebelius follows:]
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Mr. Pitts. The chair thanks the Secretary for your opening
statements. I will now begin the questioning and recognize
myself for 5 minutes for that purpose.
And I have a couple of questions. I would like to ask you
to respond yes or no. I am very concerned about IPAB. And
assuming the cap is reached, suppose we reach a situation where
IPAB then kicks in, I would like to walk through a couple of
potential scenarios.
Is it possible for IPAB to cut provider payments for
dialysis, yes or no, if we reach that situation?
Ms. Sebelius. Mr. Chairman, I have had this directed by law
to take into account any cut in provider services before they
make recommendations.
Mr. Pitts. But the answer is yes, they may cut provider
payments for dialysis?
Ms. Sebelius. They don't make any cuts whatsoever. They
make recommendations to Congress.
Mr. Pitts. For cuts in dialysis. So if they make a
recommendation for cuts for payments for dialysis, if those
occurred, would at least some providers no longer be able to
provide dialysis services? Yes or no?
Ms. Sebelius. Mr. Chairman, I have no idea what the
scenario is, what the recommendations are, and what Congress
would do with those recommendations, but I assume that we would
have that information if we had a real example.
Mr. Pitts. If the recommendations took place, would some--
--
Ms. Sebelius. What are the recommendations, sir, and what
is the payment cut and what is the rate at which providers
would be repaid and what scenario and over what kind of period
of time? I have no idea.
Mr. Pitts. Is it possible that some providers could be cut?
Ms. Sebelius. By?
Mr. Pitts. If those recommendations took place.
Ms. Sebelius. If Congress accepted the recommendations and
made a decision that cuts in dialysis were appropriate, I
assume that there could be some providers who would decide that
that would not be a service they would any longer delivery, the
same way they do with insurance coverage each and every day
that providers make determinations whether it be part of the
network.
Mr. Pitts. If that occurred, would fewer providers, as you
have suggested could occur, mean that some seniors would have
to wait longer for dialysis? Yes or no?
Ms. Sebelius. Mr. Chairman, as you know, any cut in
services, certainly cost-shifting to beneficiaries could mean
huge reductions in care that seniors would have the opportunity
to receive. What we have right now is guaranteed benefits. What
I think the House Republican plan would do is shift that to a
guaranteed contribution, which would dramatically change the
ability of seniors to access care.
Mr. Pitts. In this case we are talking about the law, not a
proposal in the Republican budget. IPAB is commanded to save
money by cutting reimbursements. They will have to make the
decisions about which services are more or less critical, what
patients can wait longer. Is that not rationing?
Ms. Sebelius. Mr. Chairman, IPAB is not directed to make
recommendations based on cuts in reimbursements. It is directed
to make recommendations based on ways to reduce costs overall
if, indeed, the Medicare spending targets per capital exceed
what the actuary hits as a target goal. I think that there are
a variety of areas, and one is the work we are currently doing
in the Partnership for Patients where you actually go after
costs that are unnecessary and being paid right now in the
system, $50 billion worth of costs for care that should have
never been realized in the first place. Those are the kinds of
recommendations I think that are significant and could make a
huge impact.
Mr. Pitts. Let me ask you about, again, the statute. Where
in the statute is there prohibition on IPAB making
recommendations that could reduce access to breast cancer
treatment, say, mammograms?
Ms. Sebelius. Well, IPAB is forbidden by law to make
recommendations that would ration care and I would say any kind
of prohibition on accessing treatment would be rationing care.
Mr. Pitts. Are there any provisions in the law that
explicitly state IPAB cannot reduce access to the treatments
like that?
Ms. Sebelius. They may not by law ration care. And I think
anyone would suggest that a reduction or an elimination of a
treatment is rationing care. That is forbidden by law.
Mr. Pitts. Suppose someone believes that IPAB has, in fact,
rationed care. What redress does that person have to challenge
the board's decisions?
Ms. Sebelius. A court challenge.
Mr. Pitts. Are the board's recommendations exempt from
judicial or administrative review?
Ms. Sebelius. The judicial oversight that is limited is
really, I think, regarding my or any future Secretary of HHS
implementation of recommendations when they have followed the
law. I don't think anyone--certainly our general counsel feels
very strongly that nothing in that language is consistent with
language that is currently in the Medicare statutes as they
move forward. Nothing would certainly give either the IPAB
board or a future Secretary of HHS or the current Secretary of
HHS any ability to violate the law, and that would always be
subject to judicial review.
Mr. Pitts. The chair thanks the gentlelady and recognizes
the ranking member, Mr. Pallone, for 5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman.
Madam Secretary, while today's hearing is on IPAB and its
consequences to seniors, we have yet to hold a hearing in this
subcommittee on the Republican plan for Medicare, even though I
have asked for that many times. And as you recall, the
Republican budget ends the Medicare program. IPAB's effects do
not compare to the consequences for seniors of the Republican
budget. Over the next 10 years, the Republican budget proposes
to cut Medicare by $32 billion. CBO believes that IPAB will
save about $2 billion over that same time period. So the
Republican budget would cut 13 times as much in the next
decade, and that is even before they begin their plan to end
Medicare starting in 2022.
I hear the Republicans accuse the Affordable Care Act of
rationing care. First, it was the death panels, then the
government takeover, and now it is IPAB. But the Republican
plan for Medicare is so destructive it would actually end
Medicare's guaranteed hospital benefit. It would actually end
Medicare's coverage for surgical care and for chemotherapy, and
coverage for all those services would be entirely dependent on
whether you could first convince the plan to cover you and then
on whether the plan includes hospital services or chemotherapy
in its benefit package. And as you know, these kinds of
problems are endemic in the individual insurance market, and
that is why we have so many uninsured today and that is why we
passed the Affordable Care Act to guarantee a good benefit
package and eliminate a lot of the discrimination.
I just wanted to ask you what do you think the Republican
budget plan would mean for beneficiaries who would no longer
have their Medicare benefits?
Ms. Sebelius. Well, Congressman, I don't know and I don't
know that anyone knows all the details of what the Republican
plan is. What we do know is what is there in terms of numbers,
that the current plan of giving a senior or someone with a
disability an $8,000 voucher beginning in 2022 and having that
voucher purchase whatever coverage is available in the private
market would shift costs to beneficiaries. So beneficiaries
would be paying for about 61 percent of their cost of care.
Currently, they pay under 30 percent. Within 8 years they would
pay closer to 70 percent of the cost of care. In fact, an
average senior who is relying on Social Security would be
paying about 60 percent of that Social Security check in 2022
for healthcare. Right now, it is about a quarter of the Social
Security check. So there would be a huge cost shift.
It is unclear what the benefits actually would be available
and who makes that determination. I gather that the Office of
Personnel Management would negotiate some kind of package, but
what kind of a benefit package would be mandated or not
mandated is a little unclear at this point. What we know is
that without controlling the underlying costs and continuing
down this path, what the Republican plan does is shift costs
onto seniors, and frankly, insurance companies are pretty adept
at making decisions about what care is granted and what care
isn't granted, eliminating benefit packages. And that is done
in a day-in and day-out basis, as well as determining what
providers get paid, for what services, over what kind of period
of time.
Mr. Pallone. Well, you know, the point I am trying to make
is the Republican cuts to Medicare in the future far outstrip
anything proposed in the Affordable Care Act, including IPAB,
and we have to remember that Republicans objected to all of the
savings in the Affordable Care Act, not just the IPAB. And
despite that, their budget, amazingly enough, proposed to
incorporate 96 percent of the Affordable Care Act savings, all
of them essentially except for the IPAB.
I just wanted to ask you, as I mentioned before, you know,
we are talking a Republican budget that proposes to cut
Medicare by 32 billion. CBO says that IPAB will save about 2
billion over that same time period. So the Republican budget
cut is 13 times as much. I just wanted you to comment on that
or confirm that if you will.
Ms. Sebelius. Well, again, Mr. Chairman, I think there is
no question that the Republican budget does contemplate an end
to Medicare as know it, an end to the commitment that seniors
will have benefits guaranteed once they turn 65, be able to
choose their own doctor, be able to choose the health system
that they find best treats their situation, and reliably
understand that they won't go bankrupt because of care
delivery. So that period would come to an end and it would be a
voucher system and a private insurance market, which is a very
different kind of care delivery and a very different kind of
commitment.
Mr. Pallone. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and recognizes
the vice chairman of the subcommittee, Dr. Burgess, for 5
minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman.
Let me just continue on that for just a moment. You said
that the Ryan plan would define the end of Medicare as we know
it. Why does the IPAB not provide a similar definition?
Ms. Sebelius. Well, I think, Congressman, the Independent
Payment Advisory Board makes recommendations to Congress. It is
forbidden by law to do exactly what the Republican budget plans
do.
Mr. Burgess. Let me ask you a question.
Ms. Sebelius. They may not shift cost to seniors. They may
not change benefits----
Mr. Burgess. Yes, as we----
Ms. Sebelius [continuing]. They may not----
Mr. Burgess [continuing]. Know from reading the law, it is
very, very difficult for people to appeal those decisions, and
in fact we won't even know because no one currently has
standing until there is actually implementation of the board,
which has not happened yet and care is denied and they take it
through the courts. But I think we are going to find it is
very, very difficult to overturn a decision of this board.
Can you tell us the difference between a voucher and
premium support?
Ms. Sebelius. The difference between a voucher and premium
support?
Mr. Burgess. Mr. Ryan's articulated aspirational document
in the Republican budget talked about premium support, a
concept actually introduced during the Clinton Administration
with the Commission to Save Medicare, the Bill Frist
Commission. On the other side, the talking point is that he is
going to give a voucher.
Ms. Sebelius. A voucher is basically in, I think, insurance
terms a guaranteed contribution as opposed to a guaranteed
benefit.
Mr. Burgess. OK.
Ms. Sebelius. Those are very different concepts. On one
hand, in the current Medicare program, seniors and those with
disabilities have guaranteed benefits. That would switch if it
becomes a voucher in the----
Mr. Burgess. And then what would premium support look like
in that world?
Ms. Sebelius. Pardon me?
Mr. Burgess. What would premium support look like in that
world?
Ms. Sebelius. I am not as familiar with that term. I know
what guaranteed contribution is. I know what a voucher is. I
don't----
Mr. Burgess. So it is incorrect to use the terms
interchangeably as so often happens in this committee? Premium
support is a different phenomenon than a voucher? Premium
support would be a request for proposals going out to insurance
companies to provide the coverage, must as in Medicare Part D,
so you should have some familiarity with it.
Ms. Sebelius. Well, if you are assuming, Congressman, let
me just ask if you are assuming that $8,000 provides the total
benefit----
Mr. Burgess. No, I am asking the questions, Madam
Secretary. This is my brief time to be able to ask you
questions, so I have got to insist upon that.
Now, the budget for the Independent Payment Advisory Board
begins October 1, correct, $15 million?
Ms. Sebelius. It is available, yes, sir.
Mr. Burgess. Now, who has been nominated to that board and
is awaiting confirmation?
Ms. Sebelius. No one.
Mr. Burgess. And why is that?
Ms. Sebelius. Well, I think, Congressman, the board is not
activated until 2014 and I know that the President is in
discussion with a number of potential nominees and I know he
has consulted with various Members of Congress, but it will be
appointed and up and running at the time----
Mr. Burgess. So should we keep that $15 million that is due
October 1 because you apparently don't need it to set up the
board because----
Ms. Sebelius. We have no intention of using money before
there is a board up and running.
Mr. Burgess. Well, who does the check go to?
Ms. Sebelius. I don't think there is a check. I think there
is money available that we draw down.
Mr. Burgess. Who cashes the check? Can we have that money
back? We are in a debt crisis. You may have heard.
Ms. Sebelius. I understand. I can assure you there will be
no drawdown on the treasury of $15 million until there is a
board and a functioning operation.
Mr. Burgess. Now, on this board, are they available to be a
recess appointment by the President so that they would not be
subject to Senate confirmation like your head of CMS is?
Ms. Sebelius. I am not a lawyer. I can't answer that
question.
Mr. Burgess. Well, the CRS report that is available on this
indicates that there would be the availability of a recess
appointment. I count nine that wouldn't require input from
either the Speaker of the House or the minority leader on the
Senate's side. So nine would be a majority but in fact you
don't even need a numbers majority. You just need a majority of
those who have been appointed, is that correct?
Ms. Sebelius. That is correct.
Mr. Burgess. Let me ask you this. It looks like in statute
that you could not have a majority of the board made up as
physicians. Is that correct?
Ms. Sebelius. My understanding is that the prohibition is
yes, that a majority could not be practicing physicians.
Mr. Burgess. Well, who can make up the majority? I mean the
definition of who can be the members is actually a little bit
vague. It is with people with national recognition for their
expertise in health finance. That is an odd pool, but they can
actually make up the majority?
Ms. Sebelius. Well, I think, Congressman, the
characteristics----
Mr. Burgess. So think tanks can be the majority of this
board.
Ms. Sebelius. The characteristics of the board members are
modeled after the characteristics that were defined for the
MedPAC board members, which have very similar kinds of
backgrounds and abilities but very significant differences that
there is a very strong conflict of interest barrier for the
IPAB where they could not be receiving payment from the system
and making recommendations at the same time.
Mr. Burgess. The man who would have been your predecessor
but he actually didn't get confirmed, Tom Daschle, wrote a book
called Critical. I don't recommend anyone buy it, but he talks
about this board. This board was something that he extolled in
this book to a great degree, but it was actually patterned more
after the Federal Employee Health Benefits program, which is,
in fact, employer-sponsored insurance. Is it your vision that
one day this board can be spread to further than just the
Medicare world but could actually control the private health
insurance world, much as the Center for Consumer Information
Insurance Oversight now envisions controlling the private
insurance market as well?
Ms. Sebelius. Again, Congressman, the board doesn't control
anything. They make recommendations to Congress in the event
that Congress has not acted to keep Medicare solvent. That is a
recommendation board. They don't control the Medicare program.
Congress is in the driver seat. They make recommendations and I
think that could be very helpful as look for ways to preserve
beneficiaries' right to health insurance and look for a program
to be solvent on into the future.
Mr. Pitts. The chair thanks the gentleman and recognizes
the ranking member of the full committee, Mr. Waxman, for 5
minutes.
Mr. Waxman. Thank you, Mr. Chairman. Madam Secretary, I am
pleased to see you even if you don't see me. Now you do.
You have been pressed on whether this is a premium support
or a voucher. It is hard to distinguish it, but as I
understand, premium support would keep increasing the amount of
money that would be available for people to buy insurance, like
Part D Medicare so that the amount of money would keep up with
the costs. A voucher, as I understand being proposed by the
Republicans--although we haven't seen detail--is a defined
contribution with no increase no matter what the cost increases
may be in medical care.
But I want to explore with you a different issue. We are
hearing a lot today about all the things that IPAB is allegedly
going to do to the Medicare program. I have also heard you
describe all the things IPAB can't do like denying benefits and
increasing costs for beneficiaries. I would like to know how
the Republican plan for Medicare stacks up against all of the
things that IPAB can and cannot do. For example, the Republican
plan would end Medicare's guaranteed benefits, the things like
hospital stays and doctor visits. They would replace it with a
cash voucher. Can IPAB do that?
Ms. Sebelius. No, they cannot.
Mr. Waxman. The Republican plan would increase cost-sharing
for Medicare beneficiaries, more than doubling their out-of-
pocket costs for new enrollees. Can IPAB do that?
Ms. Sebelius. Well, no, the IPAB board cannot make
recommendations that would do that kind of cost-shifting.
Mr. Waxman. The Republican plan proposes to increase
premiums and force people to negotiate their care with private
plans on their own. Can IPAB do that?
Ms. Sebelius. There is no ability in the law, I think, to
make those kinds of recommendations that would change the
beneficiaries' benefits. No.
Mr. Waxman. In fact, IPAB is prohibited from making all of
these changes that would be harmful to beneficiaries, but the
Republican plan enacts them all. Are you aware of any proposals
in the Republican plan that would save money by reducing costs
and not by shifting them to the beneficiaries?
Ms. Sebelius. I have no seen any details of delivery system
changes or cost reductions, no, sir.
Mr. Waxman. Well, I think the right way to reform Medicare
is to make care more efficient the way we have started to do
under the Affordable Care Act. The wrong way is to wash our
hands of the problem putting all of the costs onto the Medicare
beneficiaries.
Secretary Sebelius, at yesterday's hearing before the House
Budget Committee, there was a major topic of conversation about
the ability of Medicare patients to see their doctors when they
need to, and that is an important issue for all of us to
monitor. But the premise of many Republican questions seems to
be that Medicare patients are unable to see their doctors
today. This is similar to their bizarre claim that it is better
to be uninsured than to have Medicaid. Are you aware of any
information on whether Medicare patients are more or less able
than private patients to see doctors of their choice?
Ms. Sebelius. No, sir. In fact, about 98 percent of the
physicians in this country are enrolled in Medicare. I know
that there are pockets in communities where doctors are just
overbooked, but that would apply to private pay and Medicare
patients.
Mr. Waxman. Surveys from the Medicare Payment Advisory
Commission and numerous other independent surveys all confirm
Medicare patients have access to care, at least as good as the
access private insurance patients enjoy, if not better. That is
for primary care and for specialists. Now, certainly, we need
to address the SGR if we are really going to guarantee access
in Medicare for the future, but that problem exists whether we
repeal IPAB or not.
There is another problem with the Republican claims about
access problems under the Affordable Care Act Medicare Savings.
Republicans adopted all of those savings provisions in their
own plan. Until they end the program in 2022, the Affordable
Care Act is the Republican plan for Medicare excluding IPAB. Do
you know, Madam Secretary, how much of the act's Medicare
savings was from the IPAB? Well, I will tell you because you
may not know. It was 4 percent.
Ms. Sebelius. Yes.
Mr. Waxman. Four percent. So the Republicans embraced 96
percent of the act's cost savings in Medicare. They pile on
trillions in cuts over the next several decades when they end
the Medicare program, and they suggested Affordable Care Act
will cause access problems but that their voucher plan won't.
It doesn't add up and it doesn't make sense.
I want to ask you one last thing about--well, tell you
what, I would go over my time and I would like to give other
members their opportunity to ask questions. Thank you for being
here. Thanks for responding to the questions.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Georgia, Dr. Gingrey, for 5 minutes for
questions.
Mr. Gingrey. Mr. Chairman, thank you. Madam Secretary,
thank you for appearing.
You know, we are here to talk about IPAB, Independent
Payment Advisory Board, not today at least to express our
outrage over Obamacare in general, but it seems like the
discussion has expanded a bit, maybe on both sides of the
aisle. I must say I am a little bit surprised of the
questioning in regard to the difference in a voucher and
premium support. You seemed to struggle just a tad over that. A
voucher, as I understand it, is sending someone a check on a
monthly basis to spend on healthcare at their own volition.
They could basically, I guess, sign up for holistic medicine.
They could have an acifidity bag around their neck.
They could essentially do anything they wanted to with that
voucher whereas premium support in the plan for prosperity, the
Republican plan to reform and save Medicare for our current
seniors and our future generations is talking about premium
support where the Center for Medicare and Medicaid Services
basically where the senior designates, they want to purchase
their health insurance, a plan that best fits their needs, that
premium is advanced to an insurance company as payment for
those services. It doesn't go directly to the patient. So that
is a big difference in a voucher versus premium support. And I
think we should describe it accurately.
IPAB, in its report to Congress, is charged under Obamacare
with including ``recommendations that target reductions in
Medicare program spending to sources of excess cost growth.''
Madam Secretary, can you tell us where in Obamacare the term
``excess cost growth'' is defined?
Ms. Sebelius. Sir, I don't know if there is a statutory
definition. I do want to respond briefly to your premium
support issue because----
Mr. Gingrey. We are beyond that and my time is limited and
I am just going to help you on this second question. It is not
defined. ``Excessive cost growth'' in Obamacare is not defined.
Peter Orszag, in fact, President Obama's former OMB director
has defined the ``excessive cost growth'' in Medicare as
principally the result of new medical technologies and services
and their widespread use by the U.S. heath system. That is what
Peter Orszag thinks in regard to excessive cost.
Let me ask you this question. The head of CMS, Dr. Donald
Berwick, interim head of CMS and it is likely that he will
remain interim, has been quoted as saying ``most people who
have serious pain do not need advanced methods. They just need
the morphine and counseling that have been available for
centuries.'' Madam Secretary, do you believe that limiting
advanced methods to sick seniors in favor of morphine and
counseling is an appropriate way to reduce Medicare costs? Yes
or no?
Ms. Sebelius. Congressman, I believe that seniors have a
right to make choices with their doctors, which is what they do
now under the Guaranteed Benefit program under the Medicare
system. Under an insurance plan, that would no longer exist and
I would also suggest that premium support typically means that
there is an enhanced benefit and as a result----
Mr. Gingrey. Well, Madam Secretary, I agree with the first
part of your response. It should be between the doctor and the
patient and you don't get that with IPAB.
Madam Secretary, I am aware that the statute states that
IPAB cannot propose plans that ration care. Can you tell me
where the word rationing is defined in the Obamacare statute?
Ms. Sebelius. It is not defined, sir.
Mr. Gingrey. Well, you are absolutely correct on that. It
is not defined.
During questioning before the House Budget Committee
yesterday, you referred to IPAB as merely a safeguard and a
stopgap noting that it will only come into play if Congress
failed to reduce Medicare spending, in fact, wouldn't be
recommending any cuts until the 10 years. Yet on Wednesday,
April 13, President Obama in laying out his plan to reduce
healthcare spending to the American people stated that IPAB was
a major plank in his plan to make additional savings in
Medicare. Madam Secretary, if President Obama had stated
publicly that IPAB is a major plank of his plan to save
Medicare and you are saying that IPAB, it is just a backstop to
Congress coming up with a plan, should the American people
infer from that that Obamacare is the President's grand plan to
save Medicare? Give me a yes or no or if you want to expand a
little bit and the chairman will allow, I would like to hear
your opinion on that.
Ms. Sebelius. I don't think there is any disagreement
between the President and my statement. The way that the
Independent Payment Advisory Board is structured is that
recommendations are made on a yearly basis and recommendations
are only impactful if, indeed, Congress has not taken the
advice of the independent actuary that per capita spending has
exceeded a targeted goal. If, indeed, the IPAB recommendations
are not ones that Congress chooses to accept, they change the
recommendations or move in a different direction and the
recommendations never have any impact if, indeed, cost trends
are below the independent actuary's targeted goal.
It is a backstop. It is a backstop for Congress taking the
responsibility to keep Medicare solvent into the future. If,
indeed, they don't act, there is a mechanism where these
recommendations become law absent Congress rejecting the
recommendation.
Mr. Gingrey. Well, I have gone way over my time and I will
just close out by saying I agree with Mr. Pallone and Ms.
Schwartz that we ought to repeal IPAB. It is wrongheaded. It is
boneheaded. And I yield back.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentlelady from California, Mrs. Capps, for 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman. And thank you, Madam
Secretary, for being here today.
You know, I have been listening to this discussion. I have
met with advocates in the past few months on both sides of the
IPAB issue. The one thing they share is a concern for the
unknown. One common concern is that due to protections for
hospitals and other groups from IPAB changes before 2020, the
only thing left would be to cut provider rates. Others note
that this is not true. We have heard the same kind of
discussion today. Can you please address this issue? What could
IPAB recommend other than provider payment cuts?
Ms. Sebelius. Well, I can give you a few quick examples of
things that are on the table as we speak. For years there was a
recommendation out of MedPAC, who can only, you know, make
recommendations that we look at the overpayment to Medicare
Advantage plans. That was never accepted by the United States
Congress and yet when the Affordable Care Act was put together,
Congress decided that that was an appropriate area to look at.
Medicare Advantage, the private market strategy for
Medicare which was supposed to introduce competition and choice
and drive down costs, now runs at about 113 percent of the fee-
for-service plan with no health benefits. So Congress
implemented the changes recommended by MedPAC for years, and
over the course of the next 10 years, the Congressional Budget
Office says about $140 billion will be saved. That is an
example of the kind of strategy that has been on the table. If
it had been implemented years ago, $140 billion less would have
been paid out over the last decade.
But an overpayment, no health benefits, seniors will still
have choices. We have a very robust program. We have begun to
decrease the overpayment to Medicare Advantage plans. But I
think that is a strategy that is in the Affordable Care Act. It
is exactly the kind of strategy that I think is anticipated by
this independent board.
Mrs. Capps. Thank you. Conversely, the Republican majority
has voted unanimously to essentially end the current Medicare
program. The not hypothetical but known result would be a
doubling in out-of-pocket costs for beneficiaries who would get
a limited-amount voucher to cover a fraction of the cost of
private insurance. It would leave our seniors and persons with
disabilities on their own to haggle with insurance companies
without any guarantee that there would be any policies
available to them, let alone that they would be affordable.
Madam Secretary, some talk about the Republican plan as a
way to cut cost, but all I see is a huge cost shift placing the
financial burden on seniors with limited incomes without any
meaningful reforms in the plan to actually address the overall
costs of healthcare. As you have analyzed the Ryan budget plan,
are there any cost-containment strategies in it to privatize
Medicare? Does that privatizing include any cost containment
that you notice?
Ms. Sebelius. Congresswoman, we have not been able to
identify cost-containment strategies. And as I say, the case in
point, Medicare Advantage, which has been in existence for
years which was specifically put on the table to introduce cost
and competition, was anticipated to drive down costs has done
just the opposite. It is running at about 113 percent and every
Medicare beneficiary, all 49 million beneficiaries pay an extra
$3.66 per member per month to pay for the additional supports
for Medicare Advantage program that will, again, be gradually
over time decreased. And I think thanks to the Affordable Care
Act, that excess payment will cease to exist.
Mrs. Capps. I think all of us in Congress understand the
need to reign in healthcare spending. In fact, that is what so
many innovations in the Affordable Care Act are set up to do,
just that. I just have a few seconds. You have a few seconds.
If you could talk about some of those aspects of the law. You
mentioned Medicare Advantage. What are some of the other parts
of the Affordable Care Act, particularly as it relates to
Medicare, that are opportunities for cost containment?
Ms. Sebelius. Well, I think, Congresswoman, certainly
through the Innovation Center, we are already seeing some very
exciting delivery system reform, which is really the underlying
healthcare delivery system. So the Partnership for Patients
goals, which I think are very on point, and not only impact
Medicare but impact everyone that goes in and out of the
hospital, reducing hospital-acquired infections, which kill
100,000 people in America every year, cause hundreds of
thousands of people to stay in the hospital longer and put them
in worse physical condition, but cost billions of dollars, and
reduce unnecessary readmissions where one out of five Medicare
patients cycles back to the hospital within 30 days. Many of
them have never seen a healthcare provider.
Those two initiatives, which already 2,000 hospitals and
countless other partners have signed up to participate in will
reduce Medicare spending by $50 billion. Better healthcare,
lower cost.
Mrs. Capps. Thank you very much. I yield back.
Mr. Pitts. The chair thanks the gentlelady, recognizes the
gentleman from Ohio, Mr. Latta, for 5 minutes for questions.
Mr. Latta. Well, thank you very much, Mr. Chairman. And
Secretary, thank you very much for being with us today. If I
can just go back on the line of questioning that Dr. Burgess
had. Is there anything in the law that says how many members
have to be appointed before the board starts functioning?
Ms. Sebelius. Not to my knowledge, sir, but I can----
Mr. Latta. Well, the reason I ask that with 15 members
could 3 members actually be appointed and start functioning as
a board? Because just looking at what the law says here----
Ms. Sebelius. I am sorry. I am really having a very hard
time hearing you.
Mr. Latta. I can probably talk louder than this microphone
is picking this up.
Ms. Sebelius. I can put my ear to the microphone but that
really doesn't help.
Mr. Latta. That might help. This is the Energy and--you
know, this is the technology here, too.
Ms. Sebelius. Sorry.
Mr. Latta. But it says under the act, it says, ``Quorum: a
majority of the appointed members of the board shall constitute
a quorum for the transaction of business, but a lesser number
of members may hold hearings.'' But again, I guess the question
is if you have got only three members appointed, can they start
functioning as the board? And then actually you could have
fewer members of that three actually start holding hearings. Is
that possible?
Ms. Sebelius. Well, I certainly think fewer than a quorum
could start holding hearings and I would think that that
outreach function is critically important for any board who is
going to make recommendations. I would be happy to get you the
answer in writing.
Mr. Latta. I appreciate that.
Ms. Sebelius. I don't want to speak outside of the----
Mr. Latta. Yes, I would appreciate that if you could.
And if I can just go to your testimony on page 12, you said
that the ``IPAB cannot make recommendations that ration care,
raise beneficiary premiums or cost-sharing, reduce benefits, or
change eligibility for Medicare. The IPAB cannot eliminate
benefits or decide what care Medicare beneficiaries can
receive. Given a long list of additional considerations the
statute imposes on the board, we expect the board will focus on
ways to find efficiencies in the payment systems and align
provider incentives to drive down those costs without affecting
our seniors' access to care and treatment.'' OK. So what we are
saying is, then, they are going to have pretty much the power
of the purse. Would you say that would be the recommendations
that they would have in this case and that they would have that
power of the purse to say if they are not making the
recommendations as to what care that a person would be
receiving but they are going to be able to say how much money
is going to be expended? Would that be a correct statement?
Ms. Sebelius. I think, Congressman, again, they are
recommendations that come to Congress. They are triggered at a
point where the independent actuary sets a per capita spending
target. Actions have not reached that spending target so they
will make recommendations about appropriate ways to reach that
within the bounds of the law.
Mr. Latta. OK. So going along those same lines, though,
again, if someone has the recommendations of the power of the
purse and they are saying well, we are going to have to reduce
that--you already mentioned a little earlier in some other
questions--how are we going to make up for those doctors and
hospitals if their payments are going down? Wouldn't they,
then, have to cut back on the patients they see and the care
that they provide?
Ms. Sebelius. Well, again, I think, Congressman, I tried to
give with Congresswoman Capps an example of the kind of
strategy that can yield enormous cost savings without
jeopardizing care or jeopardizing the kind of relationship
between doctors and their patients. And that is really what is
envisioned. I think a fundamental tenet of the current Medicare
commitment to seniors and those with disabilities is the
ability to choose one's own doctor, the ability to choose one's
own care system, and the knowledge that you have benefits that
are available to you. That ceases to exist under the plan
supported by the House Republicans, and I think that IPAB
serves as an ongoing yearly group of experts who are not being
paid by the system to make recommendations to Congress who can
act on those recommendations or not.
Mr. Latta. Because, again, I represent a rather large area
in the State of Ohio, a lot of rural areas that have a lot of
community hospitals. You know, they are all very, very
concerned about reimbursement. I have got a lot of my doctors
that are very concerned about reimbursement and so, you know,
as we are looking at this, they are reading this, too, and, you
know, as they read the testimony about, you know, driving down
costs and trying to, you know, for payment systems align
provider incentives, they are nervous about their other
payment.
And Mr. Chairman, I see that my time has expired and I
yield back. Thank you.
Mr. Pitts. The chair thanks the gentleman and yields 5
minutes to the ranking member emeritus, the gentleman from
Michigan, Mr. Dingell.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
Welcome back to the committee, Madam Secretary.
Ms. Sebelius. Thank you, sir.
Mr. Dingell. Your father served here with distinction. It
is particular pleasure to see you here this morning.
Madam Secretary, do you believe that the emphasis on annual
recommendations will limit the board's focus to short-term
fixes rather than lowering our Nation's healthcare spending in
long term? Yes or no?
Ms. Sebelius. No.
Mr. Dingell. Madam Secretary, under the Republican plan,
nothing will prevent private insurance companies from rationing
care. Is that right?
Ms. Sebelius. I am sorry. Nothing----
Mr. Dingell. Under the Republican plan, nothing would
prevent private insurance companies from rationing care, yes or
no?
Ms. Sebelius. That is correct. There is no prohibition.
Mr. Dingell. All right. Now, IPAB is legally prohibited in
the legislation from making recommendations that would ration
healthcare, is that right?
Ms. Sebelius. Yes, sir. There is a prohibition for
rationing care, shifting costs to beneficiaries, eliminating
benefits.
Mr. Dingell. Now, Madam Secretary, who is in charge? Under
the Republican plan, the insurance companies, is that right?
Ms. Sebelius. If I understand it correctly, yes, the
voucher would be paid to an insurance company.
Mr. Dingell. All right. The Republican plan also ends
Medicare as we know it and repeals the Affordable Care Act
giving free reign to the insurance companies to decide what
care you could get and when with no clear limits to protect
consumers or prevent insurance companies from taking in
exorbitant profits, is that right?
Ms. Sebelius. Well, the various features, including the
medical loss ratio and consumer protections and rate review
would all be eliminated with the Affordable Care Act and
companies would then be in charge of seniors----
Mr. Dingell. And under the Affordable Care Act the
individual and that individual's doctor would be in control of
matters and the President's plan maintains Medicare as we know
it. Is that right?
Ms. Sebelius. Well, it is a--yes, a plan that maintains the
Medicare benefit package understanding we need to look serious
at outgoing costs.
Mr. Dingell. And the plan remains a defined benefit plan.
Is that right?
Ms. Sebelius. That is correct.
Mr. Dingell. Which, under the Republican plan, it is not?
It is a defined payment plan, is that right?
Ms. Sebelius. Yes, sir.
Mr. Dingell. All right. Now, the Republican plan would
eliminate Medicare's guaranteed benefits and limits on cost-
sharings and premiums, is that right, yes or no?
Ms. Sebelius. Yes.
Mr. Dingell. Instead, insurance companies could determine
which benefits seniors on Medicare would receive and how much
they would pay, is that right?
Ms. Sebelius. I assume so, sir. I don't think there is any
written language about what the benefits would look like.
Mr. Dingell. OK. IPAB is, under the President's plan, the
President--or rather IPAB is legally prohibited from cutting
premiums or increasing premiums and copayments. Is that right?
Ms. Sebelius. Yes. There cannot be cost-shifting onto
beneficiaries.
Mr. Dingell. Now, under the Republican plan, healthcare
costs would rise which turns Medicare over to private insurance
that have higher administrative costs and profits, is that
right?
Ms. Sebelius. Yes, sir. Currently, the Medicare program
runs at under 2 percent administrative costs and I think the
most efficient private insurers are at about 12 to 15 percent.
Mr. Dingell. Now, IPAB will make decisions based on what is
best for seniors and Medicare and not who spends the most money
in Washington, is that right?
Ms. Sebelius. By law they are directed to protect the
beneficiaries as they make recommendations.
Mr. Dingell. All right. Now, Madam Secretary, how will you
and the board insure that consumers' and patients' views will
be taken into consideration as the board drafts its
recommendations?
Ms. Sebelius. Well, Congressman, I think that there is no
question that the President will look for members of this board
who are eager to not only participate in the long-term solvency
of Medicare but also pay close attention to the protection of
the beneficiary, which is part of the fundamental direction----
Mr. Dingell. We also hold public hearings on these matters,
right?
Ms. Sebelius. Public hearings, I think the appointment of
people who don't have a conflict----
Mr. Dingell. Well, Madam Secretary, is it your belief that
the board would benefit from soliciting public comment prior to
issuing its recommendations----
Ms. Sebelius. Absolutely.
Mr. Dingell [continuing]. In a manner similar to that
specified in the Administrative Procedures Act?
Ms. Sebelius. Yes, sir.
Mr. Dingell. I guess we could say that is a commitment on
the part of the department, is that right?
Ms. Sebelius. Yes, very much so.
Mr. Dingell. Madam Secretary, it is always a privilege to
see you.
Thank you, Mr. Chairman, for your courtesy.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Louisiana, Dr. Cassidy, for 5 minutes.
Mr. Cassidy. Thank you for being here, Secretary Sebelius.
And if every now and then I cut you off, I am not being rude,
but it is so valuable to have you here I am just trying to stay
focused and I apologize at the outset.
I will also say to my Democratic colleagues, Republicans do
retain the savings, yes, 96 percent of them but we put them
back into Medicare as opposed to spending them on another
entitlement, and I think that is the difference between the two
of us.
Secretary, I am a doctor who works in a hospital for the
uninsured but 20 to 50 percent of my patients have Medicaid. So
I think it is fair to stipulate that when public insurance
programs pay physicians below cost, then they really don't have
access. It may be access on paper but it is not access in
power. Now, that said, Richard Foster currently estimates that
under current law in 9 years, Medicare will pay physicians
below what they receive on average from Medicaid. Now, is it
fair to accept with the given stipulation that that will hurt
access of Medicare patients to their physician?
Ms. Sebelius. Well, I don't think there is any question,
Congressman, that underpayment of any kind of provider
certainly jeopardizes an adequate network, whether it is a
private insurer or a public payer.
Mr. Cassidy. Now, if MedPAC already knowing that under
current law--under current law physician reimbursement is cut
by 21 percent in the near future, I am sure you will agree that
that would have disastrous effects upon a patient's access.
Ms. Sebelius. You mean failing to fix the SGR.
Mr. Cassidy. And of course part of the savings of SGR is
into the trillion dollars of savings that the other side of the
aisle claims for Obamacare. So I will tell you as a patient
that sees Medicaid patients at a hospital for the uninsured,
when I read that this board has the limited ability to cut but
where they can cut is reimbursement to providers, I actually
see that what we are really doing is effectively denying
access. Now, I will also say that I have learned that rarely do
government institutions admit that they are rationing. Rather,
the queue gets longer. Would you disagree with that or do you
think I am wrong?
Ms. Sebelius. Well, Congressman, I think that there is no
question that, again, I think the Republican budget plan on
Medicaid----
Mr. Cassidy. Well, I am speaking about current law. I am
really----
Ms. Sebelius [continuing]. Since you raised Medicaid in
hospitals----
Mr. Cassidy [continuing]. I see that you are pivoting
here----
Ms. Sebelius [continuing]. Cutting $770 billion----
Mr. Cassidy [continuing]. Again, when we speak of a board
which has limited ability to save money except by cutting
payments to providers----
Ms. Sebelius. Well, that is not accurate, sir.
Mr. Cassidy. OK. So it can also do Medicare Part A and it
can also do pharmacy coverage for dual eligibles. But clearly,
a significant portion of it is cutting payments to providers.
Now, again, under current law Medicare will be paying providers
less than Medicaid per Richard Foster as well documented
Medicaid patients have trouble gaining access. So where do we
part in our analysis?
Ms. Sebelius. Well, again, I think that there are lots of
opportunities in the delivery system where we are paying or
overpaying for care that probably should never have been----
Mr. Cassidy. So if I may summarize, you are saying that
there will be savings that will keep this mechanism from
being--I gather--keep this mechanism, this IPAB, this denial-
of-care board from having to act. I will say parenthetically
that the New England Journal of Medicine article which I am
sure you are aware of shows that Accountable Care Organizations
have not saved money under the more favorable rules in which
the pilot studies have been done.
But going back to my point----
Ms. Sebelius. Some of them did, some didn't.
Mr. Cassidy. Three out of ten did, seven didn't. So coming
back to the current law----
Ms. Sebelius. So we learn from them and go on.
Mr. Cassidy. Coming back to current law because we really
can't say oh, don't worry. If this works out, this would never
happen. Let us just assume that it does happen. Again, if we
decrease payment to providers and we know from experience that
that will decrease access, does that not trouble you?
Ms. Sebelius. It does, which is why I think Congress
carefully wrote also into the parameters for the Independent
Payment Advisory Board that at every step along the way,
provider access had to be part of their overall
recommendations.
Mr. Cassidy. It has to be part of the overall----
Ms. Sebelius. They make recommendations to Congress.
Mr. Cassidy. Clearly, Medicaid by law has to provide access
for pregnant women and pediatrics. By law they are supposed to
pay adequately to give that access. And yet there is a recent
New England Journal of Medicine study that shows that those
with Medicaid or CHIP actually are more likely to be denied
access to an appointment. In fact, 2/3 of the time they are
denied such access. Doesn't that give us pause that despite
that law that they are guaranteed access, for the privately
insured it is only 11 percent that you can't get an
appointment? For the publicly insured it is 2/3. I mean do you
not see a danger that this would be the case with this IPAB
board?
Ms. Sebelius. Well, again, IPAB has no authority to cut
anything. They make recommendations and----
Mr. Cassidy. And 4/5 of Congress will return.
Ms. Sebelius [continuing]. Secondly, as you know, sir, that
governors of various States set provider rates in their
Medicaid programs. They are vastly different in Louisiana than
they are in----
Mr. Cassidy. This is on average and I think New York Times
has well documented that in States as desperate as Louisiana
and Michigan that is the case. It is disingenuous to think
otherwise.
But that is OK. I am out of time and I yield back.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for
questions.
Ms. Schakowsky. I think this discussion is just really
ironic, this attack on IPAB given the fact that the Republican
plan would instead turn over the Medicare program to private
insurance who would have no constraints whatsoever in raising
their rates and doubling of out-of-pocket costs for
beneficiaries. And this semantic debate whether it is vouchers
or premium supports, the only difference is where the check is
sent to, where the inadequate check is sent to. And if we want
to have a semantic debate, we ought to change the--because what
they are proposing is not Medicare. We could call it Sortacare
or Maybecare or Idon'tcare. But it is not Medicare anymore
according to what my understanding of Medicare, which, as you
pointed out, Madam Secretary, is a guaranteed benefit plan.
That is the essence of Medicare.
The other thing is I don't know for sure if you know the
answer to this, but my understanding is that the Republican
budget includes all of the Medicare savings provisions that you
so wisely helped to navigate and talked about from the
Affordable Care Act with the exception of IPAB. Isn't that
true?
Ms. Sebelius. That is my understanding.
Ms. Schakowsky. And those include those kinds of changes
that have been made that they accuse the Democrats of, you
know, cutting Medicare and, you know, these are reasonable
savings. Is it also true that there was a May 26, 2011, letter
to Representative Waxman from the CBO projecting the Medicare
will not exceed the specified targets during the 2012 to 2021
period, and therefore, that IPAB will not be triggered during
that period? I know you said that. I would like for you to
restate that expectation.
Ms. Sebelius. Well, I think thanks to the impact already of
some of the strategies in the Affordable Care Act and some
really unprecedented new tools not only in fraud and abuse but
in delivery system ability to align payments with high-quality,
lower-cost care, we are already seeing a cost trend that is
diminishing. And the actuary has projected that at no time--
there is a slight possibility that in 2018 there would be a
brief recommendation period, but he basically says that for
that 10-year period, it is very unlikely that IPAB ever have--
they will be meeting and making recommendations but in terms of
having to meet a spending target will not occur.
Ms. Schakowsky. Once again, I frankly was really a bit
surprised and happy to see that there is this new study that
says that 93 percent of physicians are taking new Medicare
patients but only 88 percent of physicians are taking new
private patient plans, new private plans. The issue of access I
think, you know, is on everyone's mind, and clearly we do not
want to see doctors refusing to take Medicare patients. So let
me ask you to--again, I think it is once again, but address
this issue of access to care with IPAB.
Ms. Sebelius. Well, again, I think that the goal is to make
sure that Medicare is solvent not only for the next number of
years--and as you know, the Affordable Care Act has already
extended the solvency projections--but on into the future. And
so the strategies really are aimed at trying to make sure that
we not only have patients' ability to choose his or her own
doctor, a fundamental tenet of the current Medicare plan, very
different than if you are in a private insurance plan where
that physician, that hospital system, that pharmacy, that set
of benefits is pre-chosen for you. So access to your own
doctor, having, you know, patient-driven strategies and making
sure that as recommendations are made about any kind of cost
reduction on into the future that we pay close attention to
patient access to providers. That is part of the framework of
the Independent Payment Advisory Board, and it is one that I
think the board would follow very seriously. Certainly, we
would at the Department of Health and Human Services pay very
careful attention to anything that jeopardized care delivery
and certainly having access to a physician jeopardizes care
delivery.
Ms. Schakowsky. Thank you. And let me just say that I want
to thank you so much for your leadership in making sure that we
can finally reach a time when all Americans have access to
quality healthcare. Thank you.
Mr. Pitts. The chair thanks the gentlelady and recognizes
the gentleman from New Jersey, Mr. Lance for 5 minutes.
Mr. Lance. Thank you very much, Mr. Chairman. And good
morning to you, Madam Secretary.
Ms. Sebelius. Good morning.
Mr. Lance. I am interested in the process regarding the
IPAB because in my judgment oftentimes process relates
fundamentally to policy. And you have indicated, Madam
Secretary, that the President has not yet chosen to appoint any
members of IPAB. Might you give the committee a time frame when
in your opinion the President might begin to appoint members to
the board?
Ms. Sebelius. Sir, I don't know about a specific timetable.
I know it is absolutely the President's intention that by the
time the IPAB provision would begin to operate there will be
members of the board. As you know, the independent actuary
doesn't make a target recommendation until 2013----
Mr. Lance. 2013.
Ms. Sebelius [continuing]. Comes to Congress in 2014.
Mr. Lance. But it is your best judgment that President
Obama intends to make appointments in his term of office, the
term of office ending in the end of 2012.
Ms. Sebelius. I think President Obama intends to make
appointments so that the IPAB can be operational at the time
that it is operational.
Mr. Lance. Thank you. The law suggests that he makes
several of the appointments in consultation with the leaders,
Speaker Boehner, Leader Pelosi, Leader Reid, and Leader
McConnell. Is that accurate?
Ms. Sebelius. Yes, sir.
Mr. Lance. And is he required to appoint those whom the
leaders have suggested or is it merely consultative?
Ms. Sebelius. It is consultative.
Mr. Lance. So, for example, he would not be required to
follow through on the suggestions of any of the four leaders?
Ms. Sebelius. That is correct, although the Senate has a
confirmation ability and I would feel that their consultation
might be fundamental in getting folks confirmed.
Mr. Lance. Perhaps that is so. That is obviously for the
other House of Congress. Now, regarding how we in the
legislative branch can discontinue the automatic implementation
process for recommendations of IPAB--and this is down the road,
for example, in 2017--as I understand it, a joint resolution
discontinuing the process must meet several conditions,
including the fact that it would require approval by a super
majority of 3/5 of the Members of the Senate. Is that accurate?
Ms. Sebelius. No, sir. The recommendations to be changed by
Congress operate in the normal rules of the congressional
structure. Now, the Senate seems to do everything by a vote of
60, but there is certainly no requirement that IPAB be rejected
and substitute recommendations be made by a super majority. I
think it is only to repeal IPAB itself, to get rid of the
board. It is my understanding that that is a super majority
written into the law, but not to accept or reject the
recommendations.
Mr. Lance. So to follow through on your expertise and you
are obviously expert on this. To get rid of IPAB, the
underlying PPACA law requires a super majority in the Senate?
Ms. Sebelius. Well, in the repeal of the Affordable Care
Act----
Mr. Lance. Yes.
Ms. Sebelius [continuing]. The House has taken action to
repeal the Independent Payment Advisory Board----
Mr. Lance. Yes.
Ms. Sebelius [continuing]. And again, I apologize. I don't
want to misspeak. It is my understanding that if that were done
independently, that that would require some kind of super
majority. Just in 2017. I am sorry.
Mr. Lance. Yes, in 2017.
Ms. Sebelius. Just that 1 year----
Mr. Lance. Yes.
Ms. Sebelius [continuing]. It would require super majority.
Mr. Lance. Well, in my judgment that is unconstitutional
and I am wondering whether the lawyers at your department
opined on whether that provision is constitution or
unconstitutional, recognizing that we all rely on the advice of
those who serve us in legal capacities?
Ms. Sebelius. I have been advised, Congressman, that our
lawyers feel that the structure and the operation as described
by law of IPAB is constitutional. I would be happy to go back
and get a very specific answer for that question.
Mr. Lance. Thank you. My time is up. It is my judgment that
that provision at the very least is unconstitutional and not in
accordance with the current provisions of the American
Constitution.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Texas, Mr. Gonzalez, for 5 minutes for
questions.
Mr. Gonzalez. Thank you very much, Mr. Chairman. Welcome,
Madam Secretary.
This is a quote and since this is a discussion now about
the benefits and such of competing plans, the Affordable Care
Act has already been repealed in the House of Representatives.
This is the quote. ``First, I fear that as health inflation
rises, the cost of private plans will outgrow the government
premium support. The elderly will be forced to pay even higher
deductibles and co-pays. Protecting those who have been
counting on the current system their entire lives should be the
key principle of reform.'' Would you agree with that statement?
Ms. Sebelius. From what I could hear of it, I do agree.
Mr. Gonzalez. Well, you just agreed with a Republican
Senator Scott Brown. I just thought I would throw out a
Republican out there that agrees with the position that we have
been taking as to the competing plans. And so to give some
things some context as I lead to my second question would be
that 1/2 of Medicare beneficiaries have incomes of less than
$21,000, 1/2 have less than $2,095 in retirement assets, 1/2
have less than 30,000 in financial assets, 1 in every 4
Medicare Part D beneficiaries reaches the donut hole. So we
have had the Affordable Care Act, and something that I believe
has gone unnoticed--and you may have covered it in your
statement and I apologize, I got here late--what went into
effect this year that will result and has already resulted I
believe in about $260 million in savings to Part D
beneficiaries when it comes to name-brand pharmaceuticals and
generics?
Ms. Sebelius. A 50 percent discount did begin in 2010 for
those 4 million approximately beneficiaries who will see a 50
percent decrease in the brand-name drugs that they purchase
once they hit the donut hole gap.
Mr. Gonzalez. That is already in place?
Ms. Sebelius. It is.
Mr. Gonzalez. Can you contrast what we presently have in
the way of Medicare Part D and within the Affordable Care Act
but what we have had in place as opposed to what is being
proposed by the Republicans and of course what we refer to as
the Ryan budget, the Ryan plan, RyanCare, whatever you want to
call it? Is there a significant difference in the very nature
of the benefit that is being provided?
Ms. Sebelius. Well, I certainly think that the repeal of
the Affordable Care Act would eliminate the donut hole closing,
the gap coverage that now anticipates being closed. But beyond
that, it is my understanding, Congressman, that there would be
a significant change in the poorest seniors who now qualify for
both Medicare and Medicaid benefits. With the Republican budget
as it deals with Medicaid, as you know right now, there is help
and support for another approximately 4 million seniors who
actually are income-eligible. They don't ever hit the so-called
donut hole and pay out-of-pocket costs because their costs are
supported by the Federal Government.
And there would be a major shift in the kinds of support
for the poorest seniors. It would shift from, again, price
supports for everything from nursing home care to prescription
drug care and shift to a fixed income, a fixed amount of money
in a medical savings account that those seniors could try to
use to navigate what are often very substantial healthcare
costs. So I think in terms of the drug plan, there are about 4
million seniors right now who are actually supported with
wraparound care. And that would cease to exist also.
Mr. Gonzalez. The way it has been explained to me--and I am
surely not the expert in the area--and I am just going to go
ahead and read basically. ``Part D is a defined benefit, so
services are specified in law and covered by plans. The
Republican plan would leave benefits up to the beneficiaries'
negotiation with the insurers. Part D's federal contribution
keeps pace with drug costs, so beneficiaries and the government
split the growth in health cost, and the Republican budget
beneficiaries would bear all of the burden.'' Is that an
accurate description of the situation and the contrast between
what we have, what the Democrats have been proposing and
supporting, and then the latest proposal from the Republicans?
Ms. Sebelius. I think so, sir.
Mr. Gonzalez. Thank you very much. I yield back.
Mr. Pitts. The chair thanks the gentleman. Before I yield
to Mr. Guthrie, you mentioned there would be a judicial review
for the implementation of IPAB recommendations. Before I yield
to Mr. Guthrie, I would like the record to show on page 420 of
the act, Section 3403(e)(5) states there should be ``no
administrative or judicial review under Sections 1869, Section
1978, or otherwise of the implementation by the Secretary.''
That means there is no judicial review of IPAB's
recommendations.
Ms. Sebelius. Mr. Chairman, the question that was posited
to me was a question that assumed that IPAB operated outside
the scope of their authority, outside the scope of the law. In
that case, our general counsel feels very strongly that there
absolutely is a judicial review right. So in the implementation
that falls within the scope of the law, that is the case that
you----
Mr. Pitts. The chair thanks the gentlelady and recognizes
Mr. Guthrie for 5 minutes.
Mr. Guthrie. Thanks, Madam Secretary, for coming. I
appreciate you being here. The question first you seem well
versed in the Republican budget. How many people that are 65
years old today and older are affected by that budget? How many
people will be affected that are elderly on Medicare today?
Ms. Sebelius. Well, I think the Republican budget would
dramatically affect the poorest seniors in its impact on----
Mr. Guthrie. What will Medicare----
Ms. Sebelius [continuing]. The dual eligible seniors who
are over 65 today will immediately see a cut in their benefits
and in their payments going forward.
Mr. Guthrie. People would see the Medicare they wouldn't be
affected----
Ms. Sebelius. Well, those seniors are on Medicare today.
The poorest seniors in this country would be immediately
affected by the Republican budget.
Mr. Guthrie. But on that the President today is talking
about raising taxes on people making 200,000, $250,000 or more
and supports that. The administration supports that. If
somebody is 54 years old today, when they are 65 if their
income is $250,000 or more, why should they not pay more for
their healthcare? We want them to pay more taxes or the
administration does; why shouldn't they be more responsible for
their healthcare? Why should they be treated the same as the
dual eligibles? Why should they have the same payment as that?
Ms. Sebelius. Well, I think the President's concept of
shared sacrifice is that people contribute a fair share.
Mr. Guthrie. But not in healthcare? Not in terms of their
Medicare?
Ms. Sebelius. In terms of Medicaid, no one qualifies for
Medicaid who is making $250,000 a year.
Mr. Guthrie. But if somebody is 65 years old they qualify
for Medicare regardless of income. If somebody is 65 years
old----
Ms. Sebelius. Everyone who reaches the age of 65 in America
qualifies for Medicare, correct.
Mr. Guthrie. So my question is why shouldn't somebody that
is 54 today, 11 years from now when our budget would go into
effect not be required to pay more for their healthcare if you
talk about shared sacrifice?
Ms. Sebelius. Well, the current Medicare structure has
income-related premiums in a variety of the programs. That is
part of the program right now.
Mr. Guthrie. But right now currently there is a study out
of the Urban Institute. I think you have seen it. It is about 1
to 3 what people pay into Medicare, what they take out. The
average of the Urban Institute said I think it is $109,000 the
average couple pays into Medicare and takes out or will expend
$343,000 in healthcare costs over the course of their lifetime.
And I don't think it should be 1 for 1, $1 you get in, $1 you
get out. But given that the baby boomers are retiring, 1946
they turn 65 this year. I am 1964, the end of it. Just
demographically, these kinds of costs just can't be withstood
in this system. And the system as it is, if you are saying we
are going to leave the system as it is and try to make it up in
efficiencies or provider reimbursements, I don't see when we
get to 2024, which is the point where it--how it becomes
sustainable without reforming and changing the program, not
just trying to make it on pure efficiencies. I don't see where
you can make that kind of difference.
Ms. Sebelius. Well, I would agree that I think we certainly
understand that Medicare as it is right now as a fee-for-
service, pay-for-volume program is unsustainable and certainly
unsustainable at the point as you suggest that we have a
looming influx of baby boomers.
Mr. Guthrie. Um-hum.
Ms. Sebelius. I think there is a very dramatic difference
of approaches between the Republican plan, which shifts those
costs onto seniors. It doesn't really lower costs. It just says
you will pay 61 percent of your own healthcare up to 70
percent. A direct opposition----
Mr. Guthrie. Well, I would argue that implementing the
system would lower costs and kind of--the proof in the pudding
that was Medicare Part D. It is one of the programs I think it
is 40 percent under estimates performing because of competition
within health plans for people's business. So I would argue it
does lower cost. But go ahead.
Ms. Sebelius. Well, I just wanted to say that is one vision
of the system that you shift those costs to private insurers
and somehow achieve something along the way.
Mr. Guthrie. The differences are so great. Matter of fact,
in 30 years, the entire federal budget is going to be Medicare,
Medicaid, and Social Security.
Ms. Sebelius. If nothing changes.
Mr. Guthrie. So the differences are so great and so just
saying we are going to cut back our reimbursements or create
efficiencies, I don't see where you make that difference. That
is my question.
Ms. Sebelius. Well, I think that again----
Mr. Guthrie. Without completely reforming the system.
Ms. Sebelius. I think we do need a complete reform of the
system, and I think the Republican budget chooses to do that
with beneficiaries and just shift costs of who pays what----
Mr. Guthrie. Instead of shifting it to my 17-year-old----
Ms. Sebelius [continuing]. And the Affordable Care Act
says----
Mr. Guthrie [continuing]. To pay it for the rest of their
life.
Ms. Sebelius [continuing]. We need to look at the
underlying healthcare costs not just for Medicare but if
affects every private employer, it affects everybody who goes
to the hospital, it affects every doctor, and the kinds of
underlying healthcare shifts--and let me give you another
example, Congressman, if I may. We have finally started down
the road of competitive bidding, a market strategy, for durable
medical equipment. It was started in 2003, pulled back in 2008,
restarted this year in the test market where it is implemented.
There is a 34 percent decrease in durable medical equipment
without any jeopardizing of benefits.
Mr. Guthrie. I lost my time but with that level of savings
required to make it work unsustainable can just come from
efficiencies alone.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentlelady from Tennessee, Ms. Blackburn, for 5 minutes.
Mrs. Blackburn. Thank you, Madam Secretary, for your
patience. And three of us are going to try to share the balance
of your time and get our questions in.
I would remind my colleagues, one of my colleagues from
Illinois was making comments about what Medicare would be
called going forward. I would remind my colleagues it was
Obamacare or PPACA, whatever we want to call it, that cut $575
billion out of Medicare. It was a conscious decision to make
those cuts. I would also remind my colleagues that Medicare is
a trust fund, and the Federal Government has had first right of
refusal on the paychecks of the workers of this country. And so
therefore, making that kind of cut I think is a breach of what
has been promised to those enrollees.
Madam Secretary, I looked at some of your comments from the
budget committee yesterday and I feel like we are kind of doing
a session of kick the can. And you know as well as I do that as
we have been with you time and again on these hearings, we have
looked at access to affordable care and have tried to get some
definitions from you, and IPAB is one of those that we are very
concerned about how it is going to restrict or affect access to
healthcare and what IPAB is going to end up doing. We know that
supposedly some of the 15 experts coming to IPAB are supposed
to be pharmaca, economics, health economists, insurers, and
actuaries. We know that the President, he has an initiative to
achieve savings. So if they are not there to achieve savings,
what are they there for?
Ms. Sebelius. They are there, Congresswoman, to recommend
to Congress ways that Medicare can be solvent on into the
future.
Mrs. Blackburn. So you see it strictly as a solvency issue?
Ms. Sebelius. That is their direction, yes.
Mrs. Blackburn. That is their direction. OK.
Ms. Sebelius. They are only triggered when the independent
actuary----
Mrs. Blackburn. Let me ask you another question, then,
because we know the GAO is supposed to do a study by January 1,
2015, on access, affordability, and quality. This is of IPAB.
And then Kaiser Foundation recently noted that, ``IPAB would be
required to continue to make annual recommendations to further
constrain payments if the CMS actuary determine that Medicare
spending exceeded targets, even if evidence of access or
quality concerns surface.'' And I am quoting Kaiser Foundation.
So how do you reconcile the statements made by the
administration that IPAB will not impact access, affordability,
and quality with the statements made by the Kaiser Family
Foundation that IPAB is required to continue cutting even if
evidence of quality-of-access problems arise?
Ms. Sebelius. Congresswoman, I am not familiar with that
Kaiser quote, but as you know----
Mrs. Blackburn. Well, in the interest of time, then, if you
are not familiar with it, would you----
Ms. Sebelius. I am not familiar with what Kaiser said. I am
familiar with the law and I am familiar with the way it works
and I am familiar with the fact that what they are directed to
do is when the independent actuary, on a yearly basis--which he
does year in and year out--recommends a target goal for
spending, assuming that Congress ignores that, doesn't act,
they are directed to recommend ways to meet that spending
target to Congress. Again, if Congress does not act, chooses to
ignore, chooses not to change it, then those cuts go into----
Mrs. Blackburn. OK. Well, let me reclaim my time so that I
can yield to Mr. Shimkus, but I would also like to highlight
that I am still waiting for a response from you on addressing
waste, fraud, and abuse from the last hearing. And with that, I
yield to Mr. Shimkus.
Mr. Shimkus. Thank you. Thank you, Madam Secretary.
Welcome. And we are going to try to get you out of here. This
is our last couple of questions. We are not going to match our
greatest hits of the last time so I am not intent to do that.
But our 2024 time frame for the expansion of the solvency
of Medicare, is that based upon the----
Ms. Sebelius. 2024----
Mr. Shimkus. The 2024 expansion of the Medicare Trust Fund
is based upon the----
Ms. Sebelius. Expansion or----
Mr. Shimkus. The solvency.
Ms. Sebelius. The solvency, yes.
Mr. Shimkus. The solvency is based upon the $575 billion
cut in Medicare, is that correct, for the most part?
Ms. Sebelius. It is based on projecting what the trends are
right now on into----
Mr. Shimkus. And based upon the double counting that we
talked about last time. And I would just ask your individual
health insurance policy, do you have under the Federal
Employees' Health Benefit plan?
Ms. Sebelius. I do.
Mr. Shimkus. And in the D.C. area there is probably around
42 difference choices for health insurance policies? I mean in
St. Louis area is 21. I think D.C. is almost double that
amount. It is operated by OPM. They negotiate it. We have a
premium support plan that you are participant of and that I am
a participant of.
Ms. Sebelius. And the Federal Government pays about 70
percent of the cost----
Mr. Shimkus. All that premium support is a----
Ms. Sebelius. And it rises----
Mr. Shimkus [continuing]. Negotiated contractual
relationship with private insurance to provide insurance just
like you receive and just like we receive. So it is the same
plan so any----
Ms. Sebelius. Well, it is----
Mr. Shimkus. The voucher debate is not correct.
Ms. Sebelius. Well----
Mr. Shimkus. It is the same plan that you have. And I yield
my time to Dr. Murphy.
Mr. Murphy. Thank you. I am just trying to find out some
answers here. And if you don't have the information, could you
please get back to me.
What is an estimate of how much you think working on fraud
issues will save Medicare overall, again, 1 or 5 or 10 years?
Two, is you are working on a number of issues about quality
improvement. You did mention the issue about infections. There
has been bills we have moved through this committee, a bill
that I wrote to ask for transparency on infection reporting. I
understand from speaking with the head of Center for Disease
Management that it has been about 27,000 lives have been saved
by having the transparency. And I appreciate everybody who
worked on that. If you could get us some accurate numbers of
how much money that will save, too, over time, I would
appreciate that, too.
So yes, fraud, improvement of quality, and there is a
number of issues there. Another option, too, to reduce Medicare
costs is the ongoing issue we have of reducing payments, which
is the SGR, et cetera, and also means testing has been kicked
around, too. But I do want to ask this and tie in with some
other issues. Medicare Part D, the actual part that is a donut
hole--and, again, I don't expect you to know these numbers--but
there is a percentage of seniors that never got to that level
because they never needed that much prescriptions. Do you have
information on what percentage of seniors that was or how many
that was who, you know, spending for prescription drugs never
got there?
Ms. Sebelius. I know that about 8 million hit it. I don't
know how many enrollees we have.
Mr. Murphy. Um-hum.
Ms. Sebelius. I don't know how many are enrolled but I can
get you that number.
Mr. Murphy. Let me lay out because I don't want to play
games and I am sure you don't like them either. I am just
trying to find this out. In terms of the number of seniors who
actually had a donut hole problem, some never purchased a plan
but never hit that level. Some did purchase a donut hole
coverage plan and helped them through that next level. And some
did not have coverage and those are the ones we all share a
concern about. So what I am trying to find out as we are
looking at honest numbers on this is what was the difference in
impact upon cost and quality of care? You are probably familiar
with the study that came out that said about 50 to 75 percent
of people who were prescribed medication do not take it
correctly. Either they never fill the prescription, they don't
take it, they mix it with other drugs, and that leads to
returns to physicians' offices, re-hospitalizations, extended
hospital visits, and emergency room visits.
In the context of this, as we really try and look at honest
quality--and I get real tired of this Republican-Democrat
battle. I just want to talk about patients here. The issue is
if we get down to the concrete levels of this, what does it
really save if we focus on how we can do such things as disease
management and care management, because you know right now that
is not paid for. And that is a big frustration for me that
someone who may have a chronic illness such as diabetes or
cancer or heart disease, if they are not helped through this
and physicians aren't paid for this, so we don't pay a nurse to
make the call and monitor this, it is a serious cost problem.
And I hope that is something as we get through this you can
help us with some real numbers. I don't know if the IPAB board
is authorized to work on these things. I tend to not think so
but correct me if I am wrong. I would deeply appreciate further
discussions with you on this outside of this artificial setting
here and to work further on this.
Ms. Sebelius. Well, I would very much appreciate that. We
can get you some numbers. I am not sure--since Medigap plans
are sold at the state level and some cover additional
prescription drugs but a lot don't--how accurate I can--but we
will get you the donut hole numbers as much as we can. And we
would love to work with you on coordinated care strategies,
particularly for the chronically ill. I think that is an
enormous opportunity for better care delivery at significantly
lower costs.
Mr. Murphy. Thank you. And I might add my closing part here
is that I know that a lot of private plans end up paying these
out of pocket now where they will cover heart disease and
diabetes, and I want to make sure we don't leave this hearing
saying that everything the government does is bad and
everything private insurance does is bad. I think there is a
lot mistakes on both, but I would hope we would not get into
that finger-pointing and blame game but instead say let us look
at how we can use disease management. And I want to hear how
this is going to be done better. Thank you. I yield back.
Ms. Sebelius. Thank you.
Mr. Pitts. The chair thanks the gentleman. Madam Secretary,
we will submit questions for the record and ask that you please
respond promptly to those. You have been very generous with
your time. Thank you for your testimony. We will take a 5-
minute break as we set up the third panel.
[Recess.]
Mr. Pitts. The subcommittee will come to order. I will ask
our guests to please take their seats. The chairman has a
unanimous consent request that the following documents be
entered into the record: statement of Burke Balch, Director of
the Robert Powell Center for Medical Ethics of the National
Right to Life Committee; second, a letter from Sandra
Schneider, President of American College of Emergency
Physicians to Chairman Pitts and Ranking Member Pallone;
thirdly, statement of Thair Phillips, President of RetireSafe;
fourth, a letter from 283 healthcare organizations opposing the
Independent Payment Advisory Board; fifth, statement of Karen
Zinka, Health Educator for Men's Health Network; sixth, a
statement of Richard Waldman, President of American College of
Obstetricians and Gynecologists; seventh, a letter from Tim
Laing, Chair of the Government Affairs Committee, American
College of Rheumatology; eighth, statement of the American
College of Radiology; ninth, a letter from Cecil Wilson, past
president of the American Medical Association; tenth, testimony
from Bob Blancato, National Association of Nutrition and Aging
Services Programs. I think you have all copies of these.
Without objection, so ordered.
[The information follows:]
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Mr. Pitts. I will introduce our third panel at this time.
Testifying in our third panel are Christopher Davis, who is an
analyst on Congress and the legislative process for the
Congressional Research Service; David Newman is a specialist in
healthcare financing at the Congressional Research Service;
Avik Roy is a healthcare analyst with the firm Monness, Crespi,
Hardt, and Company in New York City; Stuart Guterman is vice
president for Payment and System Reform, executive director for
the Commission on High Performance Health System at the
Commonwealth Fund; Judy Feder is professor public policy at
Georgetown University; and Dr. Scott Gottlieb is a practicing
physician and is currently a resident fellow in health policy
at the American Enterprise Institute.
Mr. Davis, you may begin your testimony.
STATEMENTS OF CHRISTOPHER M. DAVIS, ANALYST ON CONGRESS AND THE
LEGISLATIVE PROCESS, CONGRESSIONAL RESEARCH SERVICE,
ACCOMPANIED BY DAVID NEWMAN, SPECIALIST IN HEALTH CARE
FINANCING, CONGRESSIONAL RESEARCH SERVICE; DIANE COHEN, SENIOR
ATTORNEY, SCHARF-NORTON CENTER FOR CONSTITUTIONAL LITIGATION,
GOLDWATER INSTITUTE; JUDITH FEDER, PROFESSOR AND FORMER DEAN,
GEORGETOWN PUBLIC POLICY INSTITUTE; AVIK S. ROY, HEALTHCARE
ANALYST, MONNESS, CRESPI, HARDT AND CO.; STUART GUTERMAN,
SENIOR PROGRAM DIRECTOR, PROGRAM ON MEDICARE'S FUTURE, THE
COMMONWEALTH FUND; AND SCOTT GOTTLIEB, RESIDENT FELLOW,
AMERICAN ENTERPRISE INSTITUTE
STATEMENT OF CHRISTOPHER M. DAVIS
Mr. Davis. Thank you, Mr. Chairman. Chairman Pitts, Ranking
Member Pallone, and members of the subcommittee, on behalf of
the Congressional Research Service I appreciate the opportunity
to testify about the ``fast-track'' parliamentary procedures
relating to the Independent Payment Advisory Board.
I am accompanied today by my CRS colleague, David Newman,
who is a specialist in healthcare financing. While I will limit
my testimony to the parliamentary aspects of the IPAB, at the
request of the subcommittee, David is available to answer
questions if desired on the healthcare policy aspects of the
board.
Expedited or ``fast-track'' procedures are special
parliamentary procedures Congress sometimes adopts to promote
timely action on legislation. As the name implies, fast-track
procedures differ from the usual procedures of the House and
Senate because they generally allow the legislation in question
to be considered more quickly and to avoid some of the
parliamentary hurdles which face most bills.
The Patient Protection and Affordable Care Act established
two fast-track procedures related to the IPAB. The first
governs consideration of a bill implementing the
recommendations of the IPAB related to future rates of Medicare
spending. The second procedure governs consideration of a joint
resolution discontinuing the automatic implementation of the
IPAB's recommendations. I will briefly describe both
procedures.
As others have testified, under PPACA the IPAB will, under
certain circumstances, propose an implementing bill containing
recommendations designed to reduce the rate of Medicare
spending growth. The Secretary is to automatically implement
these recommendations on August 15 unless legislation is
enacted before then which supersedes the IPAB proposals.
The procedures established by PPACA permit Congress to
amend the IPAB-implementing legislation but only in a manner
that achieves at least the same level of targeted reductions in
spending growth as the IPAB plan. The act bars Congress from
changing the IPAB fiscal targets in any other legislation it
considers as well and creates a super majority vote in the
Senate to wave this requirement.
PPACA establishes special fast-track procedures governing
House and Senate committee consideration and Senate Floor
consideration of an IPAB-implementing bill. Under these
procedures, the bill is automatically introduced and referred
to the House Committees on Energy and Commerce and Ways and
Means and to the Senate Committee on Finance. Not later than
April 1, each committee may report the bill with committee
amendments related to the Medicare program. If a committee has
not reported by April 1, it is discharged.
PPACA does not establish special procedures for Floor
consideration of an IPAB-implementing bill in the House. It
does for the Senate. PPACA creates an environment for Senate
Floor consideration of an IPAB-implementing bill which is
similar to that which exists after the Senate has invoked
cloture. There is a maximum of 30 hours of consideration and
all amendments must be germane. A final vote on the bill is
assured.
PPACA establishes a second fast-track procedure governing
consideration of a joint resolution discontinuing the automatic
implementation process of the IPAB recommendations. Such a
joint resolution is in order only in the year 2017 and its
consideration is also expedited in committee and on the Senate
Floor. Passage of a joint resolution discontinuing the
automatic IPAB process requires a 3/5 vote of Members of both
the House and the Senate. Both the IPAB-implementing bill and
the joint resolution I have described must be signed by the
President to become law. should either measure be vetoed,
overriding the veto would require a 2/3 vote in both chambers.
The arguable effect of these provisions is to favor the
continuation of the IPAB and its recommendations possibly even
in the face of congressional majority supporting a different
policy approach.
While the fast-track parliamentary procedures governing
consideration of an IPAB-implementing bill are expedited, they
do not in themselves guarantee that Congress will agree on a
bill and present it to the President. Because it is not
possible to force the House and Senate to agree on the same
bill text, whether Congress can pass an implementing bill which
will supersede the recommendations of the IPAB is subject to
the deliberative process.
Finally, as I detail in my written testimony, questions
about certain mechanics of these two fast-track procedures,
such as how certain points of order under the act will be
enforced will likely require clarification by the House and
Senate in close consultation with each chamber's
parliamentarian.
The Congressional Research Service appreciates the
opportunity to assist the subcommittee as it examines these
matters. My colleague and I are happy to answer any questions
you may have.
[The prepared statement of Mr. Davis follows:]
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Mr. Pitts. The chair thanks the gentleman.
Mr. Newman, you are recognized for 5 minutes for an opening
statement.
Mr. Newman. I have no independent testimony.
Mr. Pitts. Ms. Cohen, I apologize to you. I failed to
introduce you in the introduction. Diane Cohen, Senior Attorney
for Goldwater Institute. You are recognized for 5 minutes.
STATEMENT OF DIANE COHEN
Ms. Cohen. Thank you, Chairman, and thank you, Ranking
Member Pallone. I really appreciate the opportunity to come
here all the way from Arizona and to discuss with you the
unprecedented constitutional issues raised by Congress'
establishment of the Independent Payment Advisory Board and the
real-world consequences that this unprecedented independent
agency will have on the lives of citizens and especially
seniors.
The Goldwater Institute's legal challenge to the Patient
Protection and Affordable Care Act is unique among the lawsuits
challenging the act because ours is the only one that
challenges the constitutionality of IPAB. We believe the
creation of IPAB represents the most sweeping delegation of
Congressional authority in history, a delegation that is
anathema to our constitutional system of separation of powers
and to responsible, accountable, and democratic lawmaking. IPAB
is insulated from congressional, presidential, and judicial
accountability to a degree never before seen. It is the
totality of these factors that insulate IPAB from our Nation's
system of checks and balances that renders it constitutionally
objectionable.
Specifically, IPAB is an unelected board of bureaucrats
whose proposals can become law without the approval of
Congress, without the approval of the President, and they are
insulated from rulemaking, administrative and judicial review,
and any meaningful congressional oversight. Far from
representing Medicare reform, IPAB is an abdication of what has
been historically a congressional responsibility. Indeed, it is
an unconstitutional delegation of Congress' legislative duties
and is unaccountable to the electorate and immune from checks
and balances.
And I just want to follow up on what the Secretary
testified about earlier this morning. Let us be clear, Section
(e)(5), the act specifically prohibits judicial review. And
what that means is that the act prohibits judicial review. If
the Secretary acts outside the law, there is no judicial
review. There is no accountability for her actions. Secondly,
these are not mere proposals or recommendations. These are
legislative proposals that can become law.
We also heard talk about while one provision says there is
no judicial review but we are not supposed to believe that,
another provision says a joint resolution is required to
dissolve the board, but we are not supposed to believe that,
and then another provision prohibits rationing, but we are
supposed to believe that.
IPAB is independent in the worst sense of the word. It is
independent of Congress, independent of the President,
independent of the judiciary, and independent of the will of
the American people. Thank you, Mr. Chairman.
[The prepared statement of Ms. Cohen follows:]
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Mr. Pitts. The chair thanks the gentlelady and recognizes
Dr. Feder for 5 minutes.
STATEMENT OF JUDITH FEDER
Ms. Feder. Thank you, Chairman Pitts, Ranking Member
Pallone, members of the committee.
Mr. Pitts. Pull your mike--or push it on. Yes.
Ms. Feder. OK?
Mr. Pitts. That is better.
Ms. Feder. I will start again. Chairman Pitts, Ranking
Member Pallone, members of the committee, I am glad to be with
you this morning as you consider the role of the Independent
Payment Advisory Board established by the Affordable Care Act.
I would like to start in thinking about how to approach
that by calling your attention to the fact that Medicare is an
enormously successful program, more successful than private
health insurance in pooling risk and controlling costs.
Medicare has historically achieved slower spending growth than
private insurance, and the ACA extends its relative advantage.
Action taken in the Affordable Care Act achieves an average
annual growth rate of 2.8 percent per Medicare beneficiary for
2010 to 2021, 3 percentage points slower than per capital
national health spending. National health spending is projected
to grow faster than GDP growth per capital by close to 2
percentage points, but Medicare's projected per beneficiary
spending growth will be a full percentage point below growth in
per capital GDP.
Growing slower than the private sector is good but not good
enough since both public and private insurers pay too much for
too many services and fail to assure sufficiently delivered
quality care. That is why the Affordable Care Act goes beyond
tightening fee-for-service payments to pursue a strategy of
payment and delivery reform and creates the IPAB to assure
effective results. The strategy includes payment reductions for
overpriced or undesirable behavior and bonuses or rewards for
good behavior, most especially for payment arrangements that
reward providers for coordinated integrated care efficiently
delivered.
These reforms have the potential to transform both Medicare
and, by partnership and example, the Nation's healthcare
delivery system to provide better quality care at lower cost.
But their achievement in implementation cannot be assumed. That
is why the IPAB exists, to recommend ways to achieve specified
reductions in Medicare spending by changing payments to
healthcare providers. In essence, IPAB serves to inform and
assure congressional action to keep Medicare spending under
control.
Some legislators have proposed to repeal the IPAB, but
along with about 100 health policy experts who recently wrote
congressional leaders in support of IPAB, I see that effort as
sorely misguided. As we wrote, the IPAB enables Congress to
mobilize the expertise of professionals to assemble evidence
and assure that the Medicare program acts on the lessons of the
payments and delivery innovations the Affordable Care Act seeks
to promote.
I contrast the ACA strategy to strengthen Medicare with the
inclusion of IPAB with the alternative strategy not only to
repeal IPAB but also to eliminate Medicare for future
beneficiaries, replacing it with vouchers for the purchase of
private insurers, vouchers that take advantage of all Medicare
payment reductions included in the Affordable Care Act. The
Congressional Budget Office analysis shows that such action
would not slow healthcare cost growth. Rather, it would
increase insurance costs and shift responsibility for paying
most of them onto seniors, doubling out-of-pocket costs for the
typical 65-year-old from about 6 to $12,000 in 2022 with out-
of-pocket spending for beneficiaries growing even further in
the future as the gap between Medicare--slower cost growth--and
private insurance--more faster cost growth--would increase.
Given Medicare's track record relative to private insurance
in delivering benefits and controlling costs, morphing Medicare
into a private insurance market simply makes no sense. Medicare
is clearly doing its part to control spending and to bring the
rate of spending growth under control. But healthcare spending
growth is not fundamentally a Medicare problem. It is a health
system problem. Medicare can only go so far on its own to
promote efficiencies without partnership with the private
sector. Effective payment and delivery reform requires an all-
payer partnership to assure that providers actually change
their behavior rather than looking to favor some patients over
others or to pit one pair against another.
Rather than moving to abandon IPAB which supports
Medicare's continued and improved efficiency, Congress should
therefore modify IPAB's current spending target to apply not
just to Medicare but to private insurance, indeed, to all
healthcare spending and extend its authorities to trigger
recommendations for all payer payment reform if the target is
breached. Only payment efficiencies that apply to all payers
can assure Medicare and all Americans the affordable quality
care we deserve.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Feder follows:]
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Mr. Pitts. The chair thanks the gentlelady and recognizes
the gentleman, Mr. Roy, for 5 minutes.
STATEMENT OF AVIK S. ROY
Mr. Roy. Chairman Pitts, Ranking Member Pallone, and
members of the Health Subcommittee----
Mr. Pitts. Is your mike on?
Mr. Roy. Chairman Pitts--there we go--Ranking Member
Pallone, members of the Health Subcommittee, thanks for
inviting me to speak with you today about IPAB.
My name is Avik Roy and I am a healthcare analyst at
Monness, Crespi, Hardt, and Company, a securities firm in New
York. In that capacity, I recommend healthcare investments to
our clients who represent the largest investment firms in the
world. In addition, I am a senior fellow in healthcare at the
Heartland Institute in which capacity I conduct research on
health policy with an emphasis on entitlement reform.
In my remarks today I will focus on four questions: first,
why is Medicare so expensive? Second, what is the best way to
adjust the growth of Medicare spending while preserving high-
quality care for seniors? Third, is IPAB likely to aid these
goals? Fourth, is IPAB perfect as it is? Is it possible to
reform or improve IPAB or should Congress scratch the whole
thing and try something else?
Why has Medicare spending gone through the roof? Many trees
have been killed in search of answers to the questions. Well,
while there are many plausible drivers of Medicare spending
growth, the single-biggest problem is this: it is easy to waste
other people's money. It is like the difference between a cash
bar and an open bar. At a cash bar, I might order a beer or a
house wine, but at the open bar, I would probably ask for a
fine Kentucky bourbon, especially if Congressman Guthrie and
Whitfield come back. Price becomes no object in such a system.
And Medicare is more like that open bar. As a result, seniors
tend to be entirely unaware of how expensive their treatments
are and have no incentive to avoid unnecessary or overpriced
care. Studies show that spending has increased most rapidly in
those areas of healthcare where individuals bear the least
responsibility for their own expenses.
So what should Congress do? There are three ways to deal
with the Medicare cost problem. The first, which is what we do
now, is to avoid hard choices by promising that we will cover
nearly every treatment but underpay doctors and hospitals in
compensation. The second approach, which we call rationing, is
for Medicare to determine either by congressional order or an
expert panel that certain treatments aren't cost-effective and
deny them to seniors who seek them out. The third option would
be to let seniors decide by granting them more control over
their own health dollars either by increased cost-sharing and/
or by allowing them to choose between different insurance plans
with different benefit packages.
Our current approach, underpaying doctors and hospitals, is
leading more and more doctors to drop out of Medicare. We
already see this problem in Medicaid where internists are
almost nine times as likely to reject all Medicaid patients for
new appointments than those with private insurance. According
to Medicare Actuary Richard Foster, Medicare reimbursement
rates will become worse than those of Medicaid within the next
9 years. And studies show that health outcomes for many
Medicaid patients are worse than those who have no insurance at
all.
As you know, after objections at rationing care through
IPAB would resemble a death panel, Congress severely
constrained IPAB's authority preventing the board from
including any recommendation to ration care, raise premiums,
increase cost-sharing, restrict benefits, or alter eligibility
requirements. I know that you are all very familiar with the
endless tussle over the Medicare sustainable growth rate, or
SGR, which has caused significant fiscal headaches because
Congress routinely overrides the SGR's requirements for reduced
payments to doctors and hospitals. But IPAB, as it is currently
designed, is similar to SGR in that its primary approach to
cost control involves reducing payments to physicians. These
global reimbursement cuts haven't worked in the past and they
won't work in the future. Hence, we should be seriously
concerned that IPAB as it is currently designed will reduce
seniors' access to doctors and healthcare services, thereby
worsening the quality and outcome of their care.
So the question we must then ponder is can IPAB be fixed or
should Congress wholly repeal it? It is conceivable that a
differently designed IPAB could help Medicare spending more
efficient. For example, an IPAB that was empowered to make
changes to Medicare premiums, cost-sharing provisions, and
eligibility requirements could assist Congress in enacted much-
needed reforms to the program.
I know that both IPAB's proponents and its opponents see
the board as a foot in the door for government rationing. But
let us remember that for 45 years we have misled the public
into thinking that we could provide seniors with unlimited
taxpayer-funded healthcare with no constraints. IPAB, to its
credit, is an attempt at intellectual honesty because
government rationing is a logical and necessary consequence of
single-payer systems like Medicare.
Between IPAB and the 2012 House budget, Congress can now
have an honest debate. Should we move to a more British-style
system of rationing under single-payer healthcare or should we
move to a more Swiss-style system of individual choice and
diverse options? In the diversity-and-choice approach, if you
don't like how your health plan restraints costs, you can
switch to another plan or spend your own money on a more
generous plan. In the government-driven approach, you have to
accept what the government tells you to accept or pay onerous
economic penalties.
It is certainly my view that diversity and choice is more
appealing and also more likely to work.
Thanks again for having me. As an addendum to my written
testimony, I am including an article from the latest issue of
National Affairs in which I further expand on these issues. I
look forward to your questions.
[The prepared statement of Mr. Roy follows:]
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Mr. Pitts. The chair thanks the gentleman and recognizes
Dr. Guterman for 5 minutes.
STATEMENT OF STUART GUTERMAN
Mr. Guterman. Thank you, Chairman Pitts, Vice Chairman
Burgess, Ranking Member Pallone, and members of the
subcommittee, for this invitation to testify on the Independent
Payment Advisory Board.
I am Stuart Guterman, Vice President for Payment and System
Reform with the Commonwealth Fund, which is a private
foundation that aims to promote a high-performance health
system that achieves better access, improved quality, and
greater efficiency, particularly for society's most vulnerable
members, including those with low incomes, the uninsured, young
children, and elderly adults. I am particularly glad to be able
to speak to you on this topic because I have been working on
Medicare issues, particularly payment policy, for a long time
at CMS, MedPAC and CBO.
I have seen the problems faced by the program persist over
time despite continuous efforts to address and remediate them.
I believe we have an unprecedented opportunity and an historic
imperative now to address these problems in a comprehensive
way, which is the only way they can be solved. The Congress
faces a challenging dilemma in addressing the growth of
Medicare spending. Achieving an appropriate balance between
controlling costs and continuing to achieve the objectives of
the program is a difficult task but one that is of the utmost
importance.
An important factor to considering policies to control
Medicare and other federal health spending is the fact that it
is largely driven by factors that apply across the healthcare
system, putting pressure not only on the public sector,
including both the Federal Government and state and local
governments but the private sector as well, including both
large and small businesses, workers and their families, and
others who need or may need healthcare. Treating healthcare
cost growth only as a Medicare issue can lead to inappropriate
policies that fail to address the underlying cause of the
problem and lead to increasing pressure not only on Medicare
and its beneficiaries but on the rest of the health system and
the people it serves. In other words, I guess I would say that
the open bar extends not only to Medicare beneficiaries but to
all patients who make choices about how much healthcare to
use--and their providers.
The IPAB, if used appropriately, can serve as a helpful
tool in attempting to address these issues. It should be viewed
as an opportunity to focus the attention of policymakers both
in the executive branch and the legislative branch and in fact
if stakeholders and state and local governments in the private
sector as well, an action that in the end needs to be taken to
avoid an alternative that everybody should agree will be
unpalatable.
I have described some of these actions in my written
testimony, which I won't go into detail here, but suffice it to
say, this will require a broader view of the role of IPAB and
all other available mechanisms as well. It is not a question of
whether Congress or the IPAB should be trusted to solve this
problem but the issue that it will take, collaboration among
Congress, the administration, and all parties involved in the
healthcare system to solve it.
While the board is currently charged with identifying areas
of overpayment in Medicare, its scope of authority also
includes issuing recommendations for Medicaid and private
insurer payment policies. And the combined leverage of multiple
payers could in fact yield prices closer to competitive market
prices, as well as greatly reduce administrative burdens on
physician practices and hospitals, all while stimulating
delivery system improvement and innovation. To be sure, how
much we pay for healthcare is very important, but how we pay
and what we pay for is even more important. The IPAB should be
looked at as a tool to be used to improve health system
performance in this way.
An array of payment approaches can be designed to encourage
providers to become more accountable for the quality and cost
of care beneficiaries receive and reward them rather than
punishing them as the current system often does for providing
that type of care. In this regard, the IPAB can and should work
closely with the new CMS Innovation Center. These innovations
should be developed both from the top down with the Federal
Government leading the way, as well as from the bottom up with
Federal Government joining in initiatives developed and
implemented by local stakeholders.
The Affordable Care Act provides for testing innovative
payment strategies, including broad authority for the
Innovation Center to pilot test a broad array of payment and
delivery system reforms. The IPAB should have the flexibility
to work with the Innovation Center to quickly adopt and spread
successful innovations throughout the Medicare and Medicaid
programs and work to encourage their spread and align
improvement efforts throughout the healthcare system.
Finally, and perhaps most importantly, the scope of the
IPAB should include working with private sector payers on ways
to foster collaboration between the public and private
initiatives to improve organization and delivery of healthcare
and slow cost growth. Given the CBO's finding of 55 percent of
projected increase in federal health spending over the next 25
years can be attributed to excess growth in healthcare costs
throughout the healthcare sector. This problem plagues
businesses, households, federal, state, and local government
alike. And it seems clear the only way to reduce growth in
federal health spending is to address the growth of total
health spending.
Summing up, the emphasis of IPAB as part of a broader
process should be on total healthcare costs rather than only
federal spending, enhancing access and quality, being sensitive
to distributional impact, including protecting the most
vulnerable, emphasizing the need the improve performance,
encouraging coherence and alignment of incentives across the
entire healthcare system. Again, the IPAB can be useful as a
vehicle for focusing attention on these most critical issues if
all the public and private sector stakeholders can work
together to make it so.
Thanks for inviting me to participate in this hearing, and
I am honored to be here before the subcommittee and with these
distinguished panels and look forward to the rest of the
discussion.
[The prepared statement of Mr. Guterman follows:]
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Mr. Pitts. The chair thanks the gentleman and recognizes
Dr. Gottlieb for 5 minutes.
STATEMENT OF SCOTT GOTTLIEB
Mr. Gottlieb. Mr. Chairman, Ranking Member, thank you for
the opportunity to testify before the committee.
IPAB was created based on a premise that decisions about
the pricing of Medicare's benefits are simply too contentious
to be handled by a political process. But changes to the way
Medicare pays for medical services affect too many people in
significant ways to be made behind closed doors. How Medicare
prices medical products and services has sweeping implications
across the entire private market. They are some of the most
important policy choices that we make in healthcare. To these
ends, there are some considerable shortcomings with the way
that IPAB is structured and how it will operate.
Among these problems, IPAB has no obligation to engage in
public notice and comment that is customary to regulatory
agencies whose decisions have similarly broad implications.
IPAB's decisions are restricted from judicial review. In
creating IPAB, Congress provided affected patients, providers,
and product developers with no mechanism for appealing the
board's decisions. IPAB's recommendations will be fast-tracked
through Congress in way that provides for only a veneer of
congressional review and consent. The cumulative effect of the
rules for appointing members to IPAB will almost guarantee that
most of its outside members hail from the insular ranks of
academia. But most significantly, IPAB is unlikely to take
steps that actually improve the quality of medical care and the
delivery of services under Medicare. That is because IPAB does
not have any practical alternative to simply squeezing prices
in the Medicare program.
The problem we have in Medicare is a problem with the
existing price controls that erode healthcare productivity and
Medicare's outdated fee-for-service payment system. This leads
to inefficient medical care. There is too little support for
better, more innovative ways of delivering healthcare.
So what is IPAB likely to do besides simply squeeze prices?
They will also try to confer CMS with new authorities to enable
the agency to make more granular decisions about what products
and services CMS chooses to cover. IPAB could well confer CMS
with constructs such as Least Costly Alternative authority or
the authority to consolidate drugs, devices, equipment, or
services under the same payment code. The combined effect of
these new powers would effectively give CMS the ability to
engage in tacit forms of reference pricing.
The problem is that CMS has no tradition of making these
kinds of decisions. As a consequence, it has little capacity to
make the required clinical judgments. I believe many in
Congress realize this and I know many stakeholders recognize
it. This isn't just a question of expertise. It is also a
question of whether these kinds of personal medical choices
should be made in the first place by a remote agency that is
far removed from the circumstances that influence clinical
decision-making. This will have implications for patients and
providers. It will also have implications for those developing
new medical technologies making that process more uncertain,
more costly, and less attractive to new investment.
Medicare must continue to implement reforms to align its
coverage and payment policies with the value delivered to
beneficiaries. Congress needs to focus on real ways to get
longer-term savings like premium support, modernizing benefits
in tradition Medicare, and paying for better outcomes. IPAB
makes it even harder to do all these things.
In closing, if Congress believes that the political process
is incapable of making enduring decisions about the payment of
medical benefits, then all of this is an argument for getting
the government out of making these kinds of judgments in the
first place. It is not an argument for creating an insular
panel that is removed from the usual scrutiny to take decisions
that other federal entities have failed to adequately discharge
precisely because those decisions could not survive public
examination.
Thank you.
[The prepared statement of Mr. Gottlieb follows:]
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Mr. Pitts. The chair thanks the gentleman. I will now begin
the questioning and recognize myself for 5 minutes for that
purpose.
Mr. Roy, changes that reduce cost by improving the
healthcare delivery system and health outcomes often require
several years before savings may occur and the board may have
to find immediate savings. Therefore, isn't there a real
concern that board proposals may skew towards changes in
payments, which are likely to result in de facto rationing of
care and ignore the more important aspects of long-term reform?
Mr. Roy. In fact, it appears that that is almost certain to
be the likely consequence of IPAB's decisions.
Mr. Pitts. Thank you.
Ms. Cohen, can you expand on how difficult it would be for
Congress to stop or override the decisions made by the 15
experts on this board once the process is put into motion?
Ms. Cohen. Certainly. Well, first of all, it is not a
matter of Congress being able to come up with an alternative.
The alternative would actually have to be exactly what IPAB
would have already done. They have to make the same cuts or an
alternative couldn't even be viable pursuant to the statute.
There can be no amendments to IPAB's proposal, again, unless it
meets the very strict requirements of IPAB's statute. So
basically, Congress can do nothing but do more than what IPAB
has done. It certainly couldn't do less.
But more than that, we have talked about the spending
targets, but IPAB's power is much broader than that. IPAB also
has powers that could affect the private market, and it is very
unclear about if a proposal came by that came from IPAB that
included recommendations for the private market--or legislative
proposals, as they are called in the act--whether Congress
could actually override that. And then, of course, there is the
super majority voting requirement in the Senate. And that, of
course, is a very difficult hurdle.
Mr. Pitts. Thank you. Anyone can respond to this question.
Savings attributable to the IPAB have varied considerably. The
CBO's scoring for the IPAB has changed several times.
Initially, the CBO estimated that savings attributable to the
board would be $15.5 billion over the 5-year period from 2015
to 2019. In March 2011, realizing that under current law the
IPAB mechanism will not affect Medicare spending during the
2011-2021 period, CBO scored repeal of the IPAB at zero. In
April, using an obscure statistical methodology called the one-
sided bet, the CBO revised this estimate again and now says
that full repeal of the IPAB would cost $2.4 billion. Can
anyone explain why this has been so difficult to score? Mr.
Davis, do you want to try?
Mr. Davis. Mr. Chairman, I would like to, if I can, defer
to my colleague, Mr. Newman.
Mr. Pitts. All right. Mr. Newman?
Mr. Newman. I think basically we have got a varying set of
assumptions going forward in that these estimates are likely to
change in future years, too. If Congress fixes the SGR, the
baseline estimate with respect to what program expenditures are
going to be will change, and once that changes, the targets
will change and the potential savings resulting from board
recommendations will change, too. I think what you are doing is
looking at snapshots at these estimates over time.
Mr. Pitts. All right. Thank you.
Dr. Guterman, regarding the IPAB, the CBO stated that the
board is likely to focus its recommendations on changes to
payment rates or methodologies for services in the fee-for-
service sector by nonexempt providers. And the Kaiser Family
Foundation recently stated in an issue brief that the 1-year
scorable savings mandate may discourage the type of longer-term
policy change that could be most important for Medicare, and
the underlying growth in healthcare cost, including delivery
system reforms that MedPAC and others have recommended, which
are included in the ACA and which generally require several
years to achieve savings. Would you agree with this assessment
from both the CBO and the Kaiser Foundation?
Mr. Guterman. I would suggest that the IPAB, since it
doesn't exist yet, what it focuses on will depend a lot on the
environment in which it operates. And I would envision IPAB as
working closely with the Innovation Center to incorporate some
of the best policies that were enacted in the Affordable Care
Act and other policy ideas as well. So I would hope that IPAB
wouldn't be an either-or proposition, that you would either
take IPAB or the Congress or some other party but that it would
be people working together to try to find the best policies
available to accomplish the goals that IPAB was established
for, which is to slow Medicare spending and more broadly to
slow healthcare spending.
Mr. Pitts. The chair thanks the gentleman. My time has
expired. The chair recognizes Ms. Schakowsky for 5 minutes for
questions.
Ms. Schakowsky. I thank you, Mr. Chairman and Mr. Pallone,
for letting me go out of order.
Mr. Roy, I have to say that I am deeply offended by your
open-bar analogy. It is like saying oh, honey, now that we are
65, I can get breast cancer and you can have that heart attack.
And we are now able to get--I can now get a PET scan and an MRI
and a CAT scan as if older Americans are making those kinds of
decisions or--as I think Dr. Guterman pointed out--as if they
are making those decisions differently from people who have
insurance who also, you know, go about their business knowing
that they are insured and get the healthcare. I mean, really.
And also that Medicare has exploded. It has not, in fact,
exploded more than healthcare costs in the private sector. Is
that true, Dr. Feder?
Ms. Feder. That is true, Congresswoman, that Medicare
spending per capita grows more slowly than in the private
sector.
Ms. Schakowsky. More slowly. The other thing is you must
not have seen the recent Medicaid study, a scientific study
done out of Oregon that absolutely showed--the first actual
scientific study that was able to take 10,000 people who got
Medicaid, 10,000 who did not and had profound improvements in
the healthcare of people--you ought to check it out. It is a
very important study.
So I think it is insulting to older Americans to say that
now they are just spending their days just having a great time
at the doctor. You know, mostly I think people are trying to
figure out, you know, perhaps have a little vacation or
something or pay for their medications is more likely.
So Dr. Feder, what you are saying in your testimony is that
because the problem is system-wide that this will--and you
mentioned how consumers should have choices and mentioned
Switzerland, you know, Switzerland says in the basic package,
insurance companies can't make any profit. Did you know that?
Mr. Roy. Yes, they are nonprofit companies.
Ms. Schakowsky. They are nonprofit companies. That makes a
rather big difference between the U.S. system that anyone has
proposed and the Swiss system, which I think was sort of
glossed over in your saying that, you know, we should have
more--I think it is--I would like that. That would be just
fine.
But Dr. Feder, I want to get back to you and say so how
exactly would that work if we were to bring everyone under this
system?
Ms. Feder. Ms. Schakowsky, as you know, the Independent
Payment Advisory Board is now authorized to make
recommendations for the private sector but they are not
binding. There is not an overall target. There is a target on
Medicare alone. And since, as you say and I agree, the problem
is system-wide. We could modify that is a target that
authorization to apply to all of healthcare spending because
Medicare and private spending are driven by the same factors
and can be most effective if their payment mechanisms are
aligned. And a way to do that is as the IPAB examines the
evidence, as Dr. Guterman said, works with the Innovation
Center and looks for ways to improve payments in both the
public and private sector, adoption of those improved payment
mechanisms could be applied, recommended to the Congress for
application not only to Medicare but as conditions we could say
for favorable tax preferences under current law. So we have the
capacity to apply these mechanisms across the board.
Ms. Schakowsky. And there could be some carrots you put
out, as well as sticks.
Ms. Feder. I beg your pardon? There could be?
Ms. Schakowsky. The carrots as well as sticks.
Ms. Feder. Absolutely. I think the goal is to actually
change the way in which we pay consistent with--I believe it
was Mr. Murphy was asking the Secretary about coordinating
care. The goal is to move away from rewarding providers for
delivering ever more and expensive service and more expensive
services toward delivering good care, efficient higher-quality
care, coordinated and efficiently delivered and rewarding
providers accordingly.
Ms. Schakowsky. OK. Would anybody want to comment on the
issue of access to care? Is it really a concern that we--and I
will leave that to--that if Medicare reimbursements are too low
as a result of a decision by IPAB that doctors simply won't
take Medicare patients.
Mr. Roy. That is already happening. So if you look at
consistent surveys, the rate of the difficulty for Medicare
beneficiaries gaining access to care is higher than it is for
people in private insurance.
Ms. Schakowsky. Actually, I saw an opposite study. Maybe
you haven't seen a more recent study that has 93 percent of
Medicare patients were able to access care as opposed to 88
percent of people who had private insurance.
Mr. Roy. The consistent consensus of all the data is access
to care for Medicare beneficiaries is worse, and I recommend
that you talk to the physicians in your district and I think
they will agree.
Ms. Feder. Actually, I have to take issue with that. It is
not consistent. The MedPAC finds through the surveys that they
do that the access that Medicare beneficiaries have access in
the vast majority of communities around the country. There are
variations and that in many respects if not most or if not all
it is that the access is superior to those for private
insurers.
Ms. Schakowsky. Thank you. My time has actually run out. I
don't know, Mr. Chairman, if Dr. Guterman----
Mr. Guterman. If I can add one more comment. Any issues
there are with current or future access problems for Medicare
beneficiaries is probably attributable to the sustainable
growth rate mechanism, which is kind of a separate issue from
the IPAB. And I would also point out that CBO's estimate of the
impact of the whole Affordable Care Act on Medicare spending
was that the projected increase pre the ACA of 94 percent over
the next 10 years would be reduced to an increase of 71 percent
over the next 10 years in Medicare spending. I think that could
hardly be described as rationing care or starving providers.
Mr. Pitts. OK.
Ms. Schakowsky. Thank you.
Mr. Pitts. The chair thanks the gentlelady and recognizes
Dr. Burgess for 5 minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman.
Let me just say on the issue of access to care, Mr. Roy, I
have talked to the doctors in Ms. Schakowsky's district and
they tell me to a man and a woman that they are in deep trouble
because they cannot afford the cost of delivering their care.
Now, true enough MedPAC came to this panel, I think it was the
last Congress, testified to us that there were not access
issues that they had identified and then Glenn Hackbarth has
visited with me since then saying he is becoming concerned
about people, particularly seniors who move, and when does that
happen? I want to be closer to the grandkids, so they move to a
new city or location and there they find the door is closed.
And if this Congress continues to bury its head in the sand
about that, we are going to find that the world becomes very,
very hostile.
Now, Mr. Roy, let me just tell you I was not offended by
your open-bar analogy.
Mr. Roy. Thank you.
Mr. Burgess. I do not drink myself but I thought it was
apropos. And, you know, the President of the United States,
when he had the Republicans down 3 or 4 or 5 weeks ago to the
White House, big reception in the East Room, and he wanted to
drive a point home with us. And I think the point he wanted to
make was that drugs cost too much.
But the point he made was that during the--and it is not a
HIPAA violation because he told us in an open forum--in the
election he developed a rash on his back and he was concerned
about it. So he went to a doctor who prescribed some goop to
put on it. And he put the goop--he didn't use the word goop; I
made that up--but he put this cream on it for the prescribed
time and it might have helped a little bit but not so much so
he had it refilled. He had a little prescription card and it
cost him 5 bucks to get it refilled. So he went down and had it
refilled.
And then he was on the campaign trail and he ran out. So
what to do? He went to a pharmacist, explained to the
pharmacist his dilemma, got the prescription transferred via
the miracle of electronic records and the pharmacist bagged it
up for him and said that will be $400. And the President looked
at the pharmacist and said, you know, this rash is not that
bad. And at that point, the President became an informed
consumer and was spending his healthcare dollars wisely. Now,
people do argue that well, wait a minute. You go into that sort
of system and people will not get healthcare when they need it.
He also pointed out to us, and I did not know this, but
apparently one of his daughters was gravely ill when she was
very young and he went to the emergency room with her and the
doctor explained the diagnoses and what would have to be done
and what he proposed and the President--then not the
President--he said do whatever it takes. And of course he did.
He behaved in a rational fashion that you would expect a father
to do when their child is gravely ill. He did not question
cost.
So I guess the point I am trying to make is the President
actually articulated a strategy for consumer-directed
healthcare that I thought was phenomenal for him to admit. Now,
we had some hearings leading up to the Affordable Care Act. We
didn't have hearings that I thought really would have gotten to
the issue of the cost of delivering care. If we were serious
about that, we should have invited Mitch Daniels in here and
said how did you do it with your Healthy Indiana plan? Now, Dr.
Feder is saying that the cost of Medicare grows more slowly
than other areas. I don't think that is accurate and I would
like to hear Dr. Gottlieb, perhaps Ms. Cohen weigh in on that,
and you, too, Mr. Roy, but we never heard from someone who is
actually making it happen on the ground. Healthy Indiana
program costs went down by 11 percent over 2 years. So even if
we accept the figures that I believe are wrong that Dr. Feder
is talking about, why wouldn't we do something that is even
better than that, which was look into consumer-directed
healthcare? Because as the President so correctly articulated,
something magic happens when people spend their own money.
Now, we are left with this Independent Payment Advisory
Board that is going to tell us how to magically spend less
money, and it just takes me back to a speech that Ronald Reagan
gave in 1964, and he talked then about some of the issues that
were ahead and whether or not this country still believes in
this capacity for self-government or whether we abandon the
American Revolution and confess that it is a little
intellectual elite in a far-distant Capitol that can plan our
lives for us better than we can plan them ourselves. Ronald
Reagan was describing the Independent Payment Advisory Board.
I have gone on too long, but Dr. Gottlieb, do you have an
impression as to whether or not the cost of delivering care is
rising more slowly in Medicare than in other areas?
Mr. Gottlieb. I would defer to Mr. Roy on an analysis of
numbers. I haven't seen any apples-to-apples comparisons on
senior care because everyone is in Medicare.
Mr. Roy. That is correct so you can't really analyze the
numbers directly because seniors, of course, are almost all on
Medicare. Not all of them but--and they are also over 65 so
they have higher medical expenditures.
Mr. Burgess. Well, let me ask you a question. Regardless of
whether you are for-profit or not-for-profit insurance company,
you need to have access to capital, so the cost of that capital
is the cost of what the cost of the capital is on the open
market, but does Medicare have a cost of capital that they have
to put on their balance sheet?
Mr. Roy. No, in fact there are a number----
Mr. Burgess. Do they have a cost for advertising they need
to put on their balance sheet?
Mr. Roy. There are a number of different aspects of
Medicare administrative costs that are off the HHS or
Medicare----
Mr. Burgess. And on that general administrative side to the
balance sheet, what about all the administration that goes on
in the Department of Health and Human Services that is
appropriated through a discretionary appropriation, which is
the largest appropriation that occurs every year that the
Congress deigns to do appropriations bills?
Mr. Gottlieb. I would just add, you know, the most
significant cost to Medicare is the cost of compliance with the
Medicare program, which is a cost that isn't estimated. If you
look at what goes on in medical practice, a good percentage of
the expenditures in any medical practice or in the hospital is
on trying to comply with the Medicare program because of the
threat of, you know, a Justice Department audit or a Medicare
audit. Hospitals, medical practices overspend on that. That
doesn't get calculated in the cost of the overall program, if
you will. Private healthcare plans have to actually hire staff
to do that kind of work. Medicare can just foist rules on the
private sector and back it up with the threat of litigation or
criminal penalty, and those costs don't get estimated in the
cost of the program.
Mr. Burgess. Very well. Thank you.
Mr. Roy. Roughly speaking, the administrative costs are
double when you count all the off-budget expenditures of
Medicare, and that doesn't also include the cost of fraud,
which is very significant in the Medicare program relative to
that for private insurers. If you add all that up, the
administrative cost per beneficiary for Medicare between fraud
and the actual administrative costs is arguably double to three
times that of private insurers. If you leave fraud out, it is
about 20 percent higher.
Mr. Burgess. Thank you. Thank you all for being on the
panel today.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman, Mr. Pallone, for 5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman. I am going to try to
divide my time between asking Dr. Guterman about the Affordable
Care Act and asking Mr. Davis about IPAB. So just bear that in
mind if I cut you off.
You heard me in the beginning that I am against IPAB. I
think it is a usurpation of, you know, congressional authority
and, you know, I have never been in favor. I spent a lot of
time trying to make sure it wasn't in the House bill, which it
wasn't. But a lot of my concern is that it is very much like
the BRAC, which I think is a disaster. And the concern about
the BRAC is that it is totally stacked against Congress. I mean
I don't like the idea to begin with because it takes away
congressional authority and gives it to the executive or
independent commission, but I also think it is stacked. There
is no way we are ever going to overturn a BRAC decision. We
have had three BRACs since I have been here. Every time we try
to overturn it we fail, and that is it. There is no
congressional input.
What I wanted to ask Mr. Davis quickly is to what extent is
IPAB the same? In other words, we have been operating with
MedPAC, they make recommendations, we usually adopt them. I
think we have been very effective. I don't see any need to
change MedPAC. With BRAC, you know, it is one deal. You either
vote it up or down. You need a super majority, which we never
get. Is the process similar and stacked in a way that it is
going to be virtually impossible as it is with the BRAC to
overturn?
Mr. Davis. Thank you, Mr. Pallone.
Mr. Pallone. And I am asking him as opposed to the D or R
witnesses because I am trying to be--not that you are biased
but I am trying to get an unbiased opinion. Go ahead.
Mr. Davis. Yes, Mr. Pallone. As you said in your opening
comments, there are very many similarities between the IPAB
model and the base-closure commission. Principally is, as you
indicated, that this is a commission that makes recommendations
that go into force unless Congress stops them. That is also, of
course, the case with IPAB. And whether under this procedure
there are certain super majorities that are required to
overturn IPAB and some of them, frankly, are de facto super
majorities as they are with BRAC, the idea that if Congress
were to put forward something different it would be vetoed and
require a 2/3 override in both chambers. So in that way it is
similar to the base closure process.
There are two differences I would highlight, though. The
first is is that Congress, unlike under BRAC, can change the
procedures--or rather change the recommendations of IPAB as
long as they fit within the same fiscal targets. That, as you
know, is not the case with BRAC where it is simply an up-or-
down vote. Others have pointed out another difference, frankly,
with BRAC in simply that it is related only to facilities
while, of course, very important, can be thought of as very
different to a sweeping policy area such as Medicare or
healthcare reform. So I think in sum there is similarities and
differences.
Mr. Pallone. All right. Thank you. I appreciate that.
Now, let me ask Dr. Guterman, I don't know if I was going
to ask Judy Feder to jump in, too, but I don't know if we have
time. I believe very strongly--I am opposed to IPAB, but one of
the reasons I also was opposed to it was because I thought that
in the Affordable Care Act that we did a very good job about
keeping costs down and that we put together under Medicare,
under the Affordable Care Act a sustainable trajectory if you
will for the next generation with all the things that we did
and we don't need IPAB, not necessary.
So what I wanted to ask you is if you could outline how the
Affordable Care Act's approach to reducing health costs is
affective. You know, don't get into IPAB. I mean to what extent
did we set up a sustainable Medicare program here and get
towards the cost without IPAB, with the other things. In 1
minute or so.
Mr. Davis. The Affordable Care Act laid out a number of
tools that one could use to build a better healthcare system,
and that is really the answer. It is not a matter of how much
we pay so much as how we pay and what we pay for in healthcare
and how healthcare is organized and delivered that needs to be
addressed. And the Affordable Care Act, through the Innovation
Center, through the Medicare/Medicaid Coordination Office.
Those are two big steps because the Innovation Center is
supposed to develop in collaboration with outside parties
innovations that help improve the delivery of care and save
money in Medicare and Medicaid and across the healthcare
sector.
And they have already begun to initiate projects that
involve States in broader initiatives. They are working with
private payers. The ACO model that they are working on is one
that has been picked up by the private sector, and in fact
there are a number of private sector initiatives that are
ongoing to try to achieve the Accountable Care Organization
model that has been put forward in the ACA.
And also having Medicare and Medicaid work together for a
change, there are 9 million beneficiaries who are eligible for
both programs, and right now the two programs just aren't well
aligned to serve those beneficiaries' needs or to make sure
that the money that is spent is well spent for those
beneficiaries.
Mr. Pallone. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Georgia, Dr. Gingrey, for 5 minutes for
questions.
Mr. Gingrey. Mr. Chairman, thank you very much and I thank
the panel. I am sorry I had to step out to give a little quick
speech and I missed all of your testimony but I certainly
intend to read it all because what I heard was extremely
interesting, a little bit diverse, which is to be expected.
Before I go into questions, I want to raise one very
important point today. In the press, Secretary Sebelius has
often chided opponents of IPAB for suggesting that it has the
power to restrict access to physicians' services or life-saving
drugs and treatments, otherwise known as rationing. And yet
under oath here today she has admitted that IPAB is charged
with reducing excessive growth areas of Medicare spending when
President Obama's own OMB director states that excessive growth
in Medicare spending is due to the availability and adoption of
new, high-cost drugs and treatments.
Finally, nowhere in Obamacare are the words rationing or
excessive growth areas defined in statute, which means it is up
to the Secretary and the IPAB board to ultimately decide what
is rationing and what cutting excessive growth areas means. It
is up to them. And if the American public disagrees with how
the Secretary or IPAB define rationing, they are, as I got from
her testimony, prohibited from suing in court to stop it.
So my concern here is simple. What one person considers
rationing, another might refer to as reducing excessive growth
areas of Medicare, known here as new treatments or drugs. And I
believe the Secretary of Health and Human Services owes this
committee and owes the American people a lot more clarity on
this issue.
Now, let me in the remaining time get to my questions and I
will go to Dr. Gottlieb, yes, and Mr. Roy. I am interested in
your thoughts on the lack of clarity in the law with regards
to, one, rationing and reductions in excessive growth areas,
along with the lack of judicial review, as I mentioned, for
patients who feel the board is in fact denying them the
benefits that they need to survive.
Mr. Gottlieb. Well, I think the issue of rationing versus
squeezing payments is a distinction without a difference
because we have seen it already that when you squeeze payments,
it effectively closes off access to care, and there is some
debate about what is happening in the Medicare program, and I
would submit there has been some recent studies, one out of
Massachusetts that shows that Medicare beneficiaries are having
a hard time getting access to providers up there. There is
certainly no debate around Medicaid and whether or not patients
under the Medicaid program have a difficult time getting access
to medical care because of how low rates have been squeezed in
that program. So, so long as IPAB is going to squeeze down
payments, it is going to ration care, and I think, you know,
the distinction is just semantics.
What was the second question, Congressman? I am sorry.
Mr. Gingrey. Well, let me do this, Dr. Gottlieb. Thank you.
And I would like to get Mr. Roy's opinion on that same thing if
he can.
Mr. Roy. I think that I would echo Dr. Gottlieb's comments.
I think that the importance of access to a physician cannot be
understated. It is the most important thing. If you have a
problem and you can't see a doctor for that problem and that
problem festers, you could have a much more serious medical
condition. Children die of toothaches on Medicaid because they
can't see a dentist and have their abscesses removed. There are
serious, serious medical problems of healthcare that if you
can't have access to a physician, you can't do anything. So the
fact that the IPAB is explicitly restricted from changing the
mix of benefits really doesn't matter if somebody can't
actually see a doctor in the first place.
Mr. Gingrey. Right. Right. Well, I thank you both for that
answer to that question. And I have got one more, Mr. Chairman.
Secretary Sebelius in her statements today said that the
administration has begun outreach efforts to fill these 15
seats on the Independent Payment Advisory Board. I would just
be curious to know among this distinguished panel whether or
not any of you have been contacted, and I very specifically ask
Ms. Cohen. Has anyone from the administration contacted you
about serving on our IPAB?
Ms. Cohen. No, probably because I am suing them.
Mr. Gingrey. Ms. Feder, Judy Feder, has anyone from the
administration asked you--contacted you about this?
Ms. Feder. I have actually had lots of discussions about
various aspects of the Affordable Care Act with the
administration and indicated that I would be proud to serve on
the Independent Payment Advisory Board.
Mr. Gingrey. So the answer is yes? That sounds like a yes
to me.
Ms. Feder. Asked would be grossly overstating.
Mr. Gingrey. Yes. I take that as a yes. Mr. Roy, how about
yourself? Have you been asked?
Mr. Roy. I am afraid not. I like my current job, so I am
OK.
Mr. Gingrey. Dr. Gottlieb?
Mr. Gottlieb. I have been asked by some Senate staff and I
indicated that I would be interested in being nominated but I
wouldn't want to serve. My only reason for being nominated is I
want to write an op ed. outlining why the President shouldn't
pick me to serve on the board.
Mr. Gingrey. So the response, Mr. Chairman, is that two of
our panelists have been at least approached and one is
enthusiastic about the possibility of serving and the other one
is not. I thank you all very much for your response and I yield
back my time.
Ms. Feder. If I might just clarify, the approach was mine I
just want to say.
Mr. Gingrey. Mr. Chairman, would you yield me another 15
seconds?
Mr. Pitts. Go ahead.
Mr. Gingrey. Did I not ask Dr. Guterman?
Mr. Guterman. No, you didn't.
Mr. Gingrey. I apologize, Dr. Guterman. Have you been
approached?
Mr. Guterman. You don't need 15 seconds. No, I have not.
Mr. Gingrey. You have not. OK. Thank you. And I yield back.
Mr. Pitts. All right. The chair thanks the gentleman and
recognizes the gentlelady from California, Mrs. Capps, for 5
minutes for questioning.
Mrs. Capps. Thank you, Mr. Chairman.
Well, welcome to all of you and thank you. This is a big
panel and thank you to each of you for your testimony. I am in
and out today but my computer and my television set are all
locked in so I could watch and listen.
Dr. Feder, the Republican plan for Medicare is to end it in
2022 and replace it with a limited voucher, whatever it needs
to be called, with which to purchase coverage on their own.
Each senior, then, would have this opportunity or
responsibility. It would solve the Federal Government's
healthcare cost problems by asking seniors and those with
disabilities to make sure that all the costs were covered and
using their voucher or subsidy or premium support to help them
do this. The Congressional Budget Office estimates that the
Republican budget would double annual costs. Despite this cost-
saving or cost-shifting in the Ryan budget plan, the Republican
budget would actually double the annual cost for Medicare by
2022 and nearly triple them by 2030. But this isn't just a
problem for the future. Costs that large cannot be covered by
our future seniors overnight.
The Center for Economic and Policy Research looked into
what these changes would mean for the retirement planning of
people who are 54 or under today, which will be the first
cohort of people who will live under--should the Ryan plan
become actualized. They found that this plan would require that
each senior would have to save about $182,000 for retirement
over whatever they would be currently planning to save. Does
this lead you to question the claim that the Republican budget
doesn't hurt people today, only in the future?
Ms. Feder. It does, indeed, Ms. Capps, and I appreciate
your drawing attention to the fact that it is not just about
the future. It is about the current period. And I would add to
it the concern that you have raised about people becoming
uncertain as to what they would have to pay for insurance. And
at the time when they are struggling to put aside pensions for
the future, as well as take care of their kids, get them
started and educated, that they would have to be putting money
away to deal with future insurance costs seems to me an
outrage.
In addition to that, those who were talking about the
repeal of the IPAB are also talking about the repeal of the
Affordable Care Act. And so the protections that have been
added for prescription drug costs, for preventive benefits, and
other advantages that are available to current seniors, current
beneficiaries would also disappear.
In addition, there would be an enormous--as this proposal
has set up--there would be a huge cliff that occurs at that
year when that goes into effect. And that seems an enormous
burden to put on people into the future.
Mrs. Capps. I would like to shift to a topic of Medicaid in
just a minute, but I want you to respond briefly to many
concerns that current seniors--today's Medicare recipients are
the ones who are voicing their concerns about this change in
plan, even though they have been reassured that nothing will
happen to them. There is a concern, and I haven't been able to
address it--I wondered if you could--about what is to stop, you
know, the majority from pushing forward this time. I mean if it
is going to be that kind of cost shift to start, you know, for
those who are 54 now, what is there sacred about this contract
that the current seniors now have with their government?
Ms. Feder. The people that would be affected in 2022 are
paying into Medicare for Medicare benefits as we speak and they
are expecting them. If the Congress changes that contract,
there is nothing to say that they couldn't change the contract
for those currently on Medicare.
Mrs. Capps. Now, similarly, the Republican plan for
Medicaid would also slash payments to States starting in just 2
years. It would be sort of a block-grant approach to Medicaid--
the match that is now guaranteed, the federal portion of it
would no longer be in the same way. I am from California, and
boy, there is tremendous concern about this because our State
has terrific economic challenges. We have lots of people
receiving Medicaid benefits, and to have this double whammy to
the State of having to pick up more of the piece, which is
apparently what is intended. Maybe you will explain what the
cuts to Medicaid would have any effect on Medicare
beneficiaries, some of them being dually eligible.
Ms. Feder. The Republican budget calls for a cut in federal
funding to the States for Medicaid of about 3/4 of a trillion
dollars. It is a huge cut in the resources going to States to
support a population which, as we all know and are discussing
with respect to Medicare is aging and then becoming
increasingly in need of care. About a third of Medicaid
spending is for long-term care services, long-term services and
support, some in nursing homes, some outside nursing homes. The
elderly along with younger people with disabilities but the
elderly are primary beneficiaries. They are also beneficiaries
of Medicare.
We have improved services in recent years to try to get
people who need long-term care services at home and in the
community where they want to stay and not go into nursing
homes, those as well as a host of other services who are dual
eligibles. Medicare beneficiaries who are also dependent on
Medicaid would be tremendously at risk as we know from what
States are already considering as cuts in benefits.
Mrs. Capps. Thank you, Dr. Feder.
Mr. Pitts. The chair thanks the gentlelady and recognizes
the gentleman from Kentucky, Mr. Guthrie, for 5 minutes.
Mr. Guthrie. Thank you, Mr. Chairman. Thank you for coming.
I talked with the Secretary earlier today and here is my
concern. And people have paid into Medicare and it is not a
dollar in, you get a dollar out. I understand that. But we have
a study from the Urban Institute says people average about
100,000 or a little more into Medicare and take out about
300,000. And people might say that is not a correct study or
not. I know. And I have seen other studies about three to one
what you pay and what you receive. And I am 1964 into the baby
boomer. Beginning of the baby boomer is 1946. We are all
retiring starts now. It starts now. We know in 2024 I think the
President even said Medicare is unsustainable. Now, they say
during the Obama healthcare plan, President Obama's healthcare
plan they preserve Medicare, but he even said yesterday that it
is unsustainable the path that it is on. And what we are trying
to do is offer a solution, a reform that preserves it for those
who have it and to have it for people that are--I am 47. I am
affected by it--to move forward. And to say that we paid into
Medicare and it is not going to be there. That is just
incorrect. That is absolutely incorrect because it is a
government-sponsored program that we are offering that uses
Medicare dollars to move forward.
So my question is--and Dr. Feder, with the vast of baby
boomers moving--taking out $3 for every $1 we put in, how do
you keep the system as it is for people in the future? You
can't just--you know, they talked about DME medical equipment.
If you stopped people from buying the scooters--the free
advertising, I will get you a scooter on television--you can't
save enough money to make up for the demographic move, the wave
that is coming of baby boomers. And it starts today. It has
started today.
Ms. Feder. Mr. Guthrie, I am an earlier baby boomer. I will
be 65 next year, so I am at the point of the pressure here. And
there is no question that it is growth in population that is
what is driving Medicare spending, total spending much more
than any other period in the history of the program as the
enrollment grows because the per capital spending growth,
remember, for Medicare is much slower than private sector
growth, but what is now come to drive along with that spending
growth, cost per beneficiary, is the number of beneficiaries.
Mr. Guthrie. Right.
Ms. Feder. And it is true for all of us that we don't want
1965 healthcare or in 1985 or in 2020. We want the healthcare
that is available today.
Mr. Guthrie. Right. So how do you have the fee-for-services
as it exists today with the vast baby boomers retiring and
not--talk about cost-shifting. I have a 17-year-old daughter
who in 30 years will be 47 years old, which is my age. And in
40 years, according to the CBO, 100 percent--if you have 18
percent of revenue GDP--coming to the Federal Government will
be for Medicare, Medicaid, and Social Security. So the greatest
generation who provided the interstate highways, fought World
War II, did everything to give my generation the opportunities,
my generation, if we don't address it--I know everybody is here
criticizing everything we are doing--but if we do not address
it, my child will go to work when she is my age for me to be
retired, solely for me to be retired.
Ms. Feder. Well, I understand your concern and I share it.
I have 4-year-old twin granddaughters, and I am doing my best
to guarantee affordable healthcare for them well into the
future when they are my age and older. And what we are all
concerned about here is how to do that. And the way to do that
is to change the overall healthcare system. The Affordable Care
Act gave Medicare the lead in changing the way we pay for
healthcare and making the whole system more efficient. And that
is what we need to do because an alternative is simply to deny
care to those who don't have the resources to pay a cost that
is going up.
Mr. Guthrie. The Republican plan doesn't deny care. And
just like Medicare Part D, it is 40 percent under estimate
because health plans have to compete. Anybody can answer what I
just--I am just not asking the one question----
Ms. Feder. Well, if I may stay with you, I don't think
Medicare Part D offers you the answer there, sir, and the cost
of prescription drugs are rising as well. We need to make the
system more efficient----
Mr. Guthrie. Well, let me ask--Mr. Roy, I am about out of
time. I am sorry to cut you off but I only have 40 seconds
left.
Mr. Roy. No, I think that one of the things that we see
with the CBO projections is the CBO consistently underestimates
the importance of cost-shifting in medical expenditures, so
Medicare Part D has a significant cost-sharing component, which
is the so-called donut hole, which is now going away. But that
donut hole is a big part of the reason, along with the choice
and plans, that Medicare Part D is coming 40 percent under
budget, whereas with the conventional, traditional parts of the
program, expenditures have skyrocketed out of control because
there has been minimal cost-sharing.
Mr. Guthrie. And the administration wants people making
$250,000 or more to pay more taxes but they don't want them to
pay more for their healthcare. And what our plan does is if you
are at the lower end, you still get covered, and at the higher
end you would pay more. And so instead of a $250,000-a-year
person at 65 years old paying more for their healthcare, they
are going to send the bill to my 17-year-old daughter and my
16-year-old son and my 13-year-old daughter.
Mr. Roy. I would make a point about that which is that
because medical expenditures grow at faster than the rate of
GDP, you can never raise taxes fast enough to compensate for
the rise in healthcare spending. So it is always much more
efficient if you want a means test to means test on a spending
side rather than on the taxation side.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Texas, Mr. Gonzalez, for 5 minutes.
Mr. Gonzalez. Well, thank you very much, Mr. Chairman. And
I really appreciate the testimony of all the witnesses. I may
not agree with a few of you but I do think that IPAB is
actually one of the best approaches as trying to get a handle
on what are exploding healthcare costs. And I think we all
acknowledge that healthcare costs consume too much of our GDP,
that employers are no longer providing it to the degree that
they used to provide it to their employees, that individuals in
this country very likely cannot afford healthcare. It is that
simple. That 50 cents out of every dollar spent on healthcare
comes from some entity of government.
And I do--I share some of the real concerns of my
colleagues on the other side of the aisle about where we are
going to be and such. A generation that may have provided great
opportunity for us, the interstate highway system, but I remind
everybody that what Eisenhower and others did in the '50s to
give us that interstate highway system was to, in essence,
raise the gasoline tax what would be the equivalent of 96 cents
a gallon today. There is not one of my colleagues--and I hate
to say it--I don't think I would vote on that myself today. So
there is a difference that is going on out there as to what
people are willing to pay for in this country and still expect
to receive the benefit.
I am concerned about something you said, Mr. Roy, and
because in the United States either the government is
subsidizing the payment for healthcare or the private sector
is. But the individual consumer--and there is no other product
or service that has that kind of status in this country that I
am aware of. But I am somewhat disturbed by the fact that it
must be all of the patient's fault.
And I am concerned about some aspects of IPAB. I share the
concerns of my physicians in my district that are saying where
will our input--how are we guaranteed that we have something to
say as far as the information that is going to be considered by
the members of this board? I am really worried about that. But
where does the responsibility lie? I will tell you right now,
if I go into my doctors--and I have been going to them for a
number of years--and if they tell me I need a certain procedure
or certain test, I really don't question it.
Now, let us just say I didn't have Blue Cross/Blue Shield
because it is employer-sponsored. I am a Member of Congress.
But I was going to pay that out of my own pocket. I am still
not real sure--your premise is that I am going to shop around
and I am going to go around and say well, I am not sure that I
really need that test. I think I will go and see another doctor
and get another opinion, which is going to cost me money and
such. So where does the responsibility lie? Do you believe that
maybe the physicians have a responsibility only to provide that
service which is absolutely necessary? I am not going to get
into the argument of unnecessary testing and everything else
because I have got the gold standard in the State of Texas, and
it has not brought down the cost of healthcare in the State of
Texas. It has brought down the cost of insurance policies for
certain specialties. So where is this shared responsibility?
How do we get a handle on this? And isn't IPAB maybe a method
of achieving that goal?
Mr. Roy. If one looks at a number of studies around the
behavior of patients and physicians with high deductible health
plans and health savings accounts where there is more
consumerism, where there is more ability to shop for procedures
and tests and office visits, you see a lot more intelligent
consumption.
I think in Washington we have an excessively pessimistic
view of the ability of individuals to make intelligent
decisions about their own care. Especially in the days of the
internet, people do a lot of research; people have a lot of
knowledge. If we had a system where consistently across the
system for everyone there were more and more people who could
shop for care, who bought insurance for themselves instead of
having it provided by someone else, you have more of the
ability to start thinking in the way that people need to think
about well, do I really need that test? And if a doctor says,
yes, I really do think you need that test even though it costs
$2,000, the patient might say yes. But maybe the doctor will
say you know what? That test is $2,000. I think it might
benefit you a little bit but maybe it is not worth paying for
for you right now because it is $2,000 and you are very
unlikely to benefit from it.
Mr. Gonzalez. Don't you think the determining factor,
though, really in most tests--and I know this is going to be
controversial--is whether it is covered or not?
Mr. Roy. Could you repeat the question?
Mr. Gonzalez. What I am saying is whether you have access
to a number of tests or not is whether that test is going to be
paid for through some subsidy, either through private insurance
or government. Isn't that the truth?
Mr. Roy. Not necessarily because, again, if you have co-
pays, deductibles, health savings accounts, and other
mechanisms by where the patient shares in the expenditure, the
patient has more of an incentive to monitor those expenditures
and make sure they are being executed intelligently.
Mr. Gonzalez. And Mr. Chairman, I am going to ask your
indulgence just to give Dr. Guterman a couple of minutes to
respond to some of the comments.
Mr. Pitts. Dr. Guterman?
Mr. Guterman. I promise this will be brief. I wanted to
point out that in my written testimony, I point out that 58
percent of total Medicare spending is accounting for by 10
percent of Medicare beneficiaries, who account for an average
of $48,000 in Medicare costs. These are people who are very
sick. It is not that they are incurring those costs because
they are bad shoppers. The other thing I would point out is
that there was a large-scale experiment on the impact of out-
of-pocket costs on the utilization of healthcare and what it
found was that, indeed, higher out-of-pocket costs reduced the
utilization of healthcare both desirable and undesirable
healthcare. So putting the onus on the back of Medicare
beneficiaries, especially ones who are sick who are the ones
who are spending the money is kind of a difficult way to make
sure that the system runs efficiently.
Mr. Pitts. The chair thanks the gentleman. That completes
this round of questioning. We will have one follow-up for each
side. Dr. Burgess?
Mr. Burgess. Thank you, Mr. Chairman.
Dr. Guterman, I recognize one size fits all doesn't work
and that is one of the reasons I have got some concerns about
what we have done, what Congress has done with the Affordable
Care Act. But I am a big believer and letting people spend
their own money for healthcare, but I also recognize that there
are populations out there where this would not be the wisest
course of action.
Now, when I practice medicine, I kind of considered myself
to be--well, what I have learned now--we call it a medical
home--but I mean I was always the one that arranged things for
my patient. I always went the extra mile to do things that were
not necessarily reimbursed but were required as part of giving
good care. And I don't remember if you were there at the
Commonwealth meeting in January but it came up during the
course of that meeting that one of the Members of Congress who
was there said that healthcare is so complicated I have to use
a concierge doctor to sort of sort things out for me. And this
was not a Republican Member who said it. So it was kind of a
shock to hear this come from a Member of Congress. And I asked
Don Berwick. Dr. Berwick was there and he was on that panel,
and I said, so Don, you just complained about 20 percent of
your patients consuming 80 percent of your resources. Why don't
you buy these folks a concierge doctor? Or why don't you
directly contract with a physician to be responsible for a pool
or panel of patients in the dual eligible world. And we all
know who those patients are. They are readily identifiable.
They don't move around a lot. They stay in one place. So
wouldn't that be a population that would be amenable to a
different type of practice model? You talk about wanting to
change the payment structure for everyone and maybe that is not
necessary.
Maybe we could look at this defined population and say we
want to do a better job for these patients. And we know that
they are not served by having to go from doctor to doctor to
doctor to doctor. Why don't we put one person in charge? We
used to have a saying when I was in practice too many doctors
means no doctor and that is exactly true. So if you had one
person who was directly accountable to that arguably very
complicated and very ill and multiple-medical-conditions
patient, if you have one doctor, don't you think you would get
a better return on investment for that money that you spend?
Mr. Guterman. Dr. Burgess, I agree with everything you
said, and I think that is the underlying philosophy of the
medical home model. I think it is the underlying philosophy of
the Accountable Care Organization. And I think, you know, what
this represents is that I think we all agree that the
healthcare system needs to work better to provide care,
especially for those with multiple chronic illnesses and the
people who are sickest. And I think whatever approach you take,
whether it is a----
Mr. Burgess. But, sir, that is not new information. You
said you have been working on this for 30 years. Where is the
beef?
Mr. Guterman. The medical home model has been one that has
been talked about and tried in limited, you know, scale, but--
--
Mr. Burgess. And yet, I am the kind of doctor who was
providing that type of care and you basically ran me out of
business----
Mr. Guterman. Right.
Mr. Burgess [continuing]. By not paying the freight, by not
paying for these activities.
Mr. Guterman. The problem is that in our current fee-for-
service system, people get punished for doing the kind of care
that you would like to provide. And, you know, we hear people
from various systems around the country, you know, that can
enumerate the way they get punished for doing good things for
their patients, but under the current payment system, those
good things are rewarded with lower payment, so in a sense they
are punished for doing what they would like to do for their
patients. So I think we can agree--and maybe this is a platform
for kind of collaboration, you know, across the aisle that we
agree, I think, on the kind of care we would like to see and we
agree that getting to that kind of care is what we really need
to solve the problems that we are all concerned with.
Mr. Burgess. And I would just submit the obstacle so far
has been CMS. They haven't been a facilitator; they have been
an obstacle. But I welcome the opportunity to work with you on
this. Obviously, I have got some discussions going on with
other people and I would welcome the Commonwealth Fund being
part of that discussion as well.
Thank you, Mr. Chairman. I will yield back.
Mr. Pitts. The chair thanks the gentleman. Mr. Pallone for
a follow-up?
Mr. Pallone. Thank you, Mr. Chairman. I am going to ask Dr.
Guterman. You know, before I was asking you questions about how
the Affordable Care Act would save money even without IPAB, and
I believe very strongly that it saves money, particularly for
not only the government but also for beneficiaries as opposed
to the Republican budget, which I think is going to cost, you
know, Medicare beneficiaries a lot more. So I just want to ask
you to compare and contrast the Affordable Care Act's approach
to saving money and that of the Republican budget, particularly
as beneficiaries are affected if you would.
Mr. Guterman. Let me start by adding something I omitted in
my answer to your previous question and that is the Patient-
Centered Outcomes Research Institute, which is a public-private
organization that is charged with producing evidence to help
make better clinical decisions in the healthcare sector, which
I think can only help. It is not like those decisions aren't
being made every day millions of times. It is just they are
being made with too little information. But I guess rather than
contrast the two approaches, I would say that under both
approaches the problem is not solved unless we change the way
healthcare is delivered and paid for because in the end you
need to control the cost of healthcare and you need to control
the way healthcare is delivered and the way it is targeted at
the people who need it most and providing the services that
benefit people most.
And if you provide people with premium support, if the cost
of healthcare isn't controlled, they are going to find
themselves more and more left out of the market for health
insurance. If you just rely on cutting payments alone, you are
going to make access more difficult for Medicare beneficiaries.
If you address broader issues either through the IPAB or other
mechanisms that are already in place with the Affordable Care
Act, then I think you achieve what you want to achieve and
then, you know, even perhaps make the Independent Payment
Advisory Board unnecessary because you have controlled costs
already and met their targets.
Mr. Pallone. Thank you.
Mr. Pitts. Dr. Cassidy, you came in and missed the first
round. Do you have questions?
Mr. Cassidy. Yes.
Mr. Pitts. You are recognized for 5 minutes.
Mr. Cassidy. I apologize for having to leave.
Dr. Guterman, I kind of had a schizophrenic approach to
your testimony. Part of it I liked and part of it I am thinking
what is the guy thinking? So the part that I liked is where you
mention that we have to take a global view. History clearly
shows that Medicare and Medicaid will do a downward pressure
upon their cost and shift that to the private sector. I mean
there is no mystery about that. I could almost stipulate that.
There is a good article by one of the--maybe McKinsey, maybe
somebody else about the hydraulic effect. The more Medicare,
the more Medicaid you have in your book of business, the
greater the upward impact upon costs for small businesses and
the private health insurance market.
So what gives you kind of encouragement that IPAB--which is
really just looking after the Medicare book of business--will
not succumb to that same temptation that Medicare always has
and Medicaid specifically really has to shift cost to the
private sector?
Mr. Guterman. Let me first--the term cost-shifting is often
misunderstood partly because it assumes that the cost of
healthcare is somehow immutable and can't be reduced by better
examination of what is appropriate to----
Mr. Cassidy. I will give you that we can do a better job
with what we have, but if Medicaid pays 60 percent of cost,
then clearly there has to be a makeup someplace.
Mr. Guterman. Well, but that depends on whether you think
costs are right. But beyond that, what I think is important to
think of IPAB in the context of is the broader set of tools
that are available to us, that I think there is more really
unprecedented push to use to address the problems that we are
facing now. And I think, you know, looking at IPAB alone--IPAB
alone is not going to solve the problem. But IPAB is in the
context of a broad array of policies that are on the table that
may in fact be able to solve the problem. And it is also part
of a process that I think the Congress has to be involved in.
You know, sometimes----
Mr. Cassidy. Let me pause you there because I have limited
time.
Mr. Roy, what would you--I think we know where Dr. Guterman
is going. What would be your thoughts?
Mr. Roy. Yes, so I think you actually, Dr. Cassidy, bring
up the most important point around this faulty idea that
somehow Medicare expenditures are growing more slowly than
private sector because what happened is Medicare shifts costs
to private insurers, so if I have two Chevys that I paid
$10,000 each for and the government comes to me and says I am
buying that one Chevy from you for $5,000 and I lose 5,000 on
that, maybe I charge the other guy 15,000 to make it up. And
that is effectively what cost sharing is. It is more
complicated than that in reality, but that is basically what
Medicare does. Medicare cheats by underpaying for care and
restricting access. And these are the problems that,
unfortunately, have a significant--what IPAB is all about.
Mr. Cassidy. Dr. Gottlieb, your thoughts, please?
Mr. Gottlieb. I think IPAB has no alternative but to try to
squeeze payments in the short term because anything it could do
to try to fundamentally reform payment systems or the way care
is delivered isn't going to score well at CBO. They are going
to have to achieve immediate savings.
I think one of the larger problems here is that a lot of
the reforms in the Accountable Care Act and a lot of things we
are talking about here today are predicated on changing the
delivery model, getting better coordination of care. Those
require investments in innovation and how care is delivered,
and the only that providers, hospitals, doctors are going to
invest money to better coordinate care is if they can earn an
above-market rate of return for a sustainable period of time on
their invested capital. And the problem is that the
administration's legislation, the regulations don't allow for
that. And that is why is you are seeing the adverse reaction to
the regulations on the Accountable Care Organizations.
I could tell you I have seen a lot of business plans
floated with venture capitalists on creating new Accountable
Care Organizations or services that would provide services to
the Accountable Care Organizations. I haven't seen a single one
yet funded for that precise reason that the presumption out
there is that you are not going to be able to earn a return on
capital. If you do earn an above-market rate of return on
capital for any length of time, it is going to be regulated. If
you continue to earn an above-market rate of return, it is
going to be taxed. And if you continue to earn it after it is
taxed, you are going to be criminalized.
Mr. Cassidy. But on the other hand, if you don't, you will
be subsidized.
Mr. Gottlieb. And when it is gone, you subsidize it.
Mr. Cassidy. And that is without saying that, again, as I
mentioned earlier, the New England Journal of Medicine article
that reflected upon the 10 Accountable Care Organization pilot
studies, places specifically chosen so that they would be more
likely to succeed did not.
Now, Dr. Guterman, you must have some thoughts about that.
Mr. Guterman. In fact, as I was saying when we started up
those demonstrations, and in fact I would describe that
demonstration as a rousing success for several reasons. One is
that half of those 10 sites were able to achieve measurable
savings according to the rules of the demonstration and
received bonus payments for saving Medicare millions of dollars
compared to the targets that they were working under.
Mr. Cassidy. Now, in fairness, it was a 3-year
demonstration project and I think 3 did and it was not every
year and several did not.
Mr. Guterman. But in the last 3 years there were 5 of them.
And all of the sites achieved noticeable increases in the
quality of care, which perhaps was even more important,
certainly without spending more money. And there were some--as
there will be--and I think something that the IPAB or any other
mechanism is going to have to deal with is compared to what?
And how you deal with getting either CBO scoring or the Office
of the Actuary in CMS to agree that a particular project is
going to save money. But that is going to have to be dealt
with. That is a methodological issue that I think needs to be
dealt with.
Mr. Cassidy. I am out of time. I yield back. Thank you all.
Mr. Pitts. The chair thanks the gentleman. Did you----
Mr. Burgess. But Mr. Chairman?
Mr. Pitts. Go ahead.
Mr. Burgess. Did you rule on my unanimous consent request
for Senator Cornyn's letters from Scott & White?
Mr. Pitts. Without objection, so ordered.
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Mr. Burgess. Thank you.
Mr. Pitts. Thank you and thank you to the panel. Very
informative. I appreciate your patience.
We will now change panels to a fourth panel, and I will
introduce the fourth panel as they come to the table.
Joining us on our fourth panel is Dr. Alex Valadka, a
neurosurgeon. He is the chief executive officer at the Seton
Brain and Spine Institute, Austin, Texas. He represents the
Alliance for Specialty Medicine. Secondly, we have Mary Grealy,
who is the president of the Healthcare Leadership Council in
Washington, D.C. Then we have Dr. Jack Lewin, Chief Executive
Officer of the American College of Cardiology. And fourthly, we
have Teresa Morrow, who is the cofounder and president of Women
Against Prostate Cancer.
Your written testimony will be entered into the record. We
ask that you summarize your opening statements in 5 minutes
each.
Dr. Valadka, you may begin your opening statement.
STATEMENTS OF ALEX B. VALADKA, REPRESENTING THE ALLIANCE OF
SPECIALTY MEDICINE; MARY R. GREALY, PRESIDENT, HEALTHCARE
LEADERSHIP COUNCIL; JACK LEWIN, CHIEF EXECUTIVE OFFICER,
AMERICAN COLLEGE OF CARDIOLOGY; AND TERESA MORROW, COFOUNDER
AND PRESIDENT, WOMEN AGAINST PROSTATE CANCER
STATEMENT OF ALEX B. VALADKA
Mr. Valadka. Thank you, Chairman Pitts, Ranking Member
Pallone, members of the subcommittee, for allowing me to
testify about the Independent Payment Advisory Board. My name
is Alex Valadka. I am a practicing neurosurgeon from Austin,
Texas, and as far as I can tell, I am the only practicing
physician who has the privilege of testifying before you here
today.
I am pleased to be here today on behalf of the Alliance of
Specialty Medicine which was founded in 2001 with the mission
to develop sound federal healthcare policy that fosters patient
access to the highest quality specialty care and improves
timely access to high-quality medical care for all Americans.
As advocates for patients and physicians, the alliance and its
members welcome the opportunity to contribute to the ongoing
debate regarding IPAB, or as we think about it, the Impacts
Patients Adversely Board.
We are deeply concerned about the unintended consequences
that will result from the establishment of IPAB. We oppose its
creation and we are now urging Congress to immediately act to
repeal IPAB. Now, I realize that by this time in our IPAB-athon
here today, you have had an earful and I don't to be overly
repetitive, but I do want to make you aware that America's
specialty physicians have numerous concerns at both the concept
of IPAB and its structure.
First and foremost, the alliance believes that under the
IPAB, access to specialty care will be severely limited due in
part to the additional payment cuts that it will impose on
physicians. Medicare physician payments are already well below
market rates, as you heard earlier today, and they continue to
be subject to deep cuts as a result of the flawed SGR formula.
Cuts to physician reimbursement under IPAB will only exacerbate
those already imposed on physicians as a result of SGR cuts and
other cuts that are going to occur each year as part of the
Medicare physician fee schedule for things like problems with
the electronic health record, value of base quality modifiers,
meaningful use requirements, and things of that type.
Our physician survey data demonstrates that these cuts,
including those imposed by IPAB, may ultimately force
specialists out of the Medicare program severely threatening
Medicare access to its beneficiaries to innovative therapies
and quality of care. And to echo something that was said
earlier today, participation in Medicare is not on or off. Many
physicians still continue to participate but they have to limit
the number of Medicare patients they can see in their offices
or otherwise provide access to.
Our second concern is that IPAB lacks accountability and
sets a dangerous precedent for overriding the normal
legislative process. As drafted, the IPAB has little if any
accountability to the Medicare beneficiaries whose healthcare
will be affected by its decisions. And yet its recommendations
will have the force of law if Congress fails or chooses not to
act. The alliance maintains that Congress should be the entity
to legislate healthcare policy, not an independent board.
An additional concern is that the limited transparency of
IPAB proceedings severely limits congressional oversight of the
Medicare program and replaces the transparency of hearings like
this one with the less transparent process overseen by the
executive branch, not the legislative branch.
The IPAB statute also provides fast-track procedures for
IPAB proposals, which will automatically become law unless
Congress can act very quickly to amend the proposal. Congress
already faces significant challenges in moving legislation
through the regular legislative process and we seriously doubt
its ability to jump through all the procedural hoops within the
required 7 months to override IPAB recommendations.
Although its proponents argue that the IPAB is critical to
holding down the growth in healthcare spending, providers
representing nearly 40 percent of Medicare expenditures,
including hospitals and nursing homes, are exempt from the
reach of IPAB for several years. We agree with the CBO that
this would place greater pressures to achieve saving on
physicians which, as I previously noted, will ultimately
curtail seniors' timely access to specialty care.
Finally--and again as discussed earlier today--the process
for making appointments to the IPAB isn't balanced because
appointments are made solely by the President. This structure
also ensures that the board will have inadequate expertise
since it fails to include practicing clinicians like me who can
draw from firsthand experience when considering how proposed
recommendations could impact the delivery of healthcare for
both the patient and provider perspective.
Although the alliance recognizes the need to hold down the
growth of Medicare costs, the IPAB is simply the wrong way to
go. But the more than 100,000 physicians represented by the
alliance reiterate our pledge to work with Congress to identify
more appropriate ways to achieve this goal. I ask that you make
the same commitment and work with the medical community to meet
the challenges facing our healthcare system and not leave these
very important decisions to a group of 15 unelected and largely
unaccountable individuals.
Mr. Chairman, thank you again for allowing the alliance to
testify, and I would be happy to answer any questions.
[The prepared statement of Mr. Valadka follows:]
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Mr. Pitts. The chair thanks the gentleman and recognizes
Ms. Grealy for 5 minutes for an opening statement.
STATEMENT OF MARY R. GREALY
Ms. Grealy. Chairman Pitts, Ranking Member Pallone, members
of the subcommittee, on behalf of the members of the Healthcare
Leadership Council, I want to thank you for the opportunity to
testify on the ramifications of the Independent Payment
Advisory Board, or IPAB, for patients and the U.S. healthcare
system.
Now, already today you have heard a number of perspectives
on IPAB. While I request to submit my full testimony for the
record, I would like to briefly share the point of view of HLC
members who are chief executives of the Nation's leading
healthcare companies and organizations. The views I express
today reflect the conclusions of hospitals, academic health
centers, insurers, pharmaceutical and medical device
innovators, distributors, pharmacies, and other sectors within
our healthcare system.
Mr. Chairman, we fully agree that it is imperative to make
Medicare a more cost-efficient program, that its current
spending growth rates are unsustainable. The question is how to
address this challenge in a way that strengthens and does not
undermine the accessibility, the affordability, and quality of
healthcare for Medicare beneficiaries and for all Americans.
Now, there are different approaches available to Congress
in pursuing this objective. On one hand, you have the direction
embodied in IPAB to simply slash expenditures whenever spending
exceeds a certain arbitrary level. Now, we can talk all we want
about the expertise of those who conceivably would be serving
on IPAB, but those credentials are largely irrelevant. IPAB
isn't designed to develop meaningful long-term reforms to
strengthen the value of the Medicare program. Rather, its
mandate is to achieve immediate scorable savings.
Now, according to analysis from the Congressional Budget
Office and the Kaiser Family Foundation, this imperative to
make immediate reductions means that IPAB's course of action
will likely focus on reducing payments to providers. The impact
of this action is easy to predict. Today, as we have heard, an
increasing number of physicians are restricting the number of
Medicare patients that they see in their practice because of
low payment rates. According to a survey of the American
Medical Association's members, that number includes one of
every three primary care physicians.
Now, if IPAB is expected to cut the payment rates to even
lower levels, then we will almost certainly see more physicians
unable to treat Medicare beneficiaries and access will become a
more critical issue. With those 80 million baby boomers
entering the Medicare program at an average of 9,000 per day
and the projected physician shortages already on the horizon,
we could find ourselves on the verge of a healthcare access
perfect storm that will hit seniors the hardest.
These payment cuts also will likely result in greater cost-
shifting to private payers and their beneficiaries. It should
also be noted that IPAB will function much as that deadly robot
in the ``Terminator'' movies. It will have a single-minded,
relentless focus on achieving its cost-cutting function. There
is no statutory latitude to take into consideration unforeseen
public health concerns that may, in the short term, necessitate
more, not less, healthcare spending. It does not take into
consideration the potential of new medicines and devices that
may have high upfront cost but that will reduce Medicare
spending in the long run.
Now, there is no question that Congress has more
flexibility than the IPAB in being responsive to healthcare's
circumstances, capabilities, and needs and will certainly be
more responsive to public concerns than an unelected board ever
will be. There are far more preferable approaches to making
Medicare more cost-efficient. There are multiple provisions,
for example, as we have heard today, within the Patient
Protection and Affordable Care Act that are focused on moving
away from the fee-for-service model and aligning incentives to
reward providers for high-quality cost-effective care. We
should give these reforms an opportunity to work before we
think of turning to an approach as extreme as the IPAB.
Also, throughout the country, private-sector healthcare
providers are demonstrating innovative ways to generate better
health outcomes with less cost. We have documented many of
these successes in our HLC value compendium, which we provided
to CMS and I would like to submit for the record.
Mr. Chairman, thank you again for this opportunity to
present our views.
In summary, the members of the Healthcare Leadership
Council believe that the IPAB mandate and inherent
inflexibility will inevitably result in reduced healthcare
access for seniors. We need, instead, to turn to payment and
delivery reforms that will actually improve care while reducing
costs.
Thank you, and I will be happy to answer any questions.
[The prepared statement of Ms. Grealy follows:]
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Mr. Pitts. The chair thanks the gentlelady and recognizes
Dr. Lewin for 5 minutes.
STATEMENT OF JACK LEWIN
Mr. Lewin. Thank you very much, Chairman Pitts, Ranking
Member Pallone, and Vice Chair Dr. Burgess. It is a pleasure to
be here today representing the American College of Cardiology,
all of America's cardiologists, and the many cardiovascular
nurses and researchers.
Cardiovascular medicine represents 43 percent of Medicare
costs today, still, unfortunately the number one killer in
America, yet we have made some real progress. In the last
decade, morbidity and mortality for cardiovascular disease has
gone down by 30 percent in the United States, and that is
because of new imaging techniques, new procedures, new
therapeutics, new approaches to prevention, but also because
for the last decade we have been able to take electronic tools,
guidelines, performance measures, appropriate-use criteria and
apply them closer and closer to the point of care to measure
best evidence and get the best results reducing unnecessary
spending and activities.
The Door-to-Balloon Campaign is one approach where we have
been able to speed the treatment of heart attacks in hospitals
through system improvement using the data we collect in the
registries we have in 2,500 U.S. hospitals. We have reduced the
variation for heart attack treatment by a factor of 3, the
length of stay from 5 to 3 days, the costs by 30 percent across
the United States just in the last 3 to 4 years. Unbelievable.
But here is the thing. We got no reward for that, no
incentives for that. It happened because we believe in it. The
IPAB, as proposed, is going to fail. Its price controls won't
work. It is a mechanism that represents the past, not the
future. And we are very concerned about that. In fact, you
know, we probably ought to get rid of the existing flawed
price-control mechanism, the SGR that you have on the books
right now. It hasn't worked very well, has it? We get rid of
that one before we launch the next one, please.
We need an immediate and different approach or a very
different IPAB to bend the cost curve. In the last 40 years,
amazingly enough, the healthcare costs have gone up, you know,
multiples of the GDP 40 years in a row. This is really amazing.
If we got the GDP--if healthcare costs were GDP plus 1 percent,
the U.S. national deficit would go away in 20 years. So, you
know, it is a patriotic kind of thing calling for me at least
for the profession of medicine, physicians, hospitals, and
others to get on this. We really have to bend the cost curve.
And can we do it? Yes, we can. If we get the unnecessary
spending out of the system, we can get this done.
Now, I think to do that we have got to go back to using
those tools at the point of care, the guidelines, the
appropriate-use criteria. These measure not only quality but
for appropriate use, effectiveness in terms of efficiency and
spending, getting the right test the first time, getting the
right procedure the first time, et cetera. We can now measure
comparative outcomes. We couldn't do that 10 years ago. We
didn't have the electronic means to do that. We couldn't tell
doctors and hospitals how they are doing as to whether they are
spending the money efficiently, providing patients with the
best care. Now, we can.
So let us provide the incentives for consistent best
evidence at the point of care, let us systematically reduce
variation, get rid of the unnecessary tests and procedures,
unnecessary admissions and costs. Let us use that kind of a
price-control approach. That is not the IPAB, folks. If we want
to IPAB to work, it is going to have to be so radically
modified to do the following: it has got to develop incentives
for doctors and hospitals to reward quality and not volume.
Setting price controls on volume is not going to solve our
problem. We already know that. It needs to apply to healthcare
sectors, not just the doctors, and wait a few years and add the
hospitals later. It needs to be flexible to attract people who
really understand the healthcare system and are in it and see
it from various perspectives. And it is currently designed so
that it can't do that in terms of the 15 members it is going to
attract to be full-time parties as it is designed now.
So, you know, we are committed to the cause of the IPAB. We
think its purpose is absolutely right on. We believe in that
purpose. We see it as, in fact, a national kind of patriotism.
Let us compete in a global economy and get healthcare costs
down without destroying innovation in healthcare and without
destroying patient care itself.
So let us rethink the IPAB or amend it so that it can
achieve the kinds of targets that will provide viable
Medicare--well, the targets for Medicare spending that will
keep the healthcare system viable but that won't stifle
innovation and won't harm patient care.
Thank you very much.
[The prepared statement of Mr. Lewin follows:]
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Mr. Pitts. The chair thanks the gentleman and recognizes
Ms. Morrow for 5 minutes.
STATEMENT OF TERESA MORROW
Ms. Morrow. Thank you. I would like to thank Chairman Pitts
and Ranking Member Pallone and the committee for holding this
important hearing today and I appreciate the opportunity to
submit my testimony on a topic that will definitely have
significant implications on the lives of thousands of men,
women, and families.
My name is Teresa Morrow, and I am cofounder and president
of Women Against Prostate Cancer. Our mission is to unite the
voices and provide support for the millions of women affected
by prostate cancer. As healthcare leaders of the household, the
role that women play in all phases of prostate cancer from
preventative screenings to treatment and follow-up care is
critical.
As you know, prostate cancer, as with any cancer, impacts
the entire family. Our own cofounder, Betty Gallo, experienced
the impact of this firsthand when her husband and your former
colleague, Representative Dean Gallo, was diagnosed with
prostate cancer in 1992 and subsequently died from the disease
in 1994. Since his passing, many advancements in treatment and
access to screenings and quality healthcare have saved the
lives of thousands of men diagnosed with prostate cancer and
fewer families have to suffer the loss of their loved ones as
the Gallo family did.
We are here today because we are concerned about the effect
that implementation of the Independent Payment Advisory Board
will have on Medicare patients and families, including the
large number of seniors that are diagnosed with prostate cancer
each year. We share your concerns for more sustainable
healthcare costs but do not believe that IPAB is the best way
to achieve this goal.
We believe that IPAB will have a negative impact on patient
access to quality care. IPAB's power to dramatically cut
payments to healthcare providers and physicians who provide
services to beneficiaries will likely result in fewer providers
being willing to accept new Medicare patients and limiting
senior's access to quality providers. We are concerned that
IPAB could ultimately limit access to certain treatments or
medications. While IPAB may be specifically prohibited from
rationing care, reduced payments for certain medical services
and providers could lead to the unintended consequence that
beneficiaries should have access to certain treatments and
therapies but not to others.
As a prostate cancer organization, we are particularly
concerned that patients may not have access to new and
innovative therapies to treat cancer that can ultimately
improve and save lives. Treatment decisions should be made
between a healthcare provider and a patient and his or her
family and not be limited by an unelected board.
I recently spoke with a prostate cancer patient named Doug
Magill from Northeast Ohio, and when he was diagnosed with
prostate cancer, he began his quest to determine which
treatment to pursue. He did all the things an informed patient
would do--got a second opinion, spoke with other patients,
family and friends, and he did a lot of research. Ultimately,
he chose to travel across the country to Loma Linda University
Medical Center to receive proton radiation therapy. He chose
proton therapy because of his fear of the side effects such as
impotence and incontinence that other treatments may cause.
Doug expressed his concern to me that an entity like IPAB
may have restricted his right to choose his treatment. By
limiting his access to certain providers, he may have been
forced to choose surgery instead of proton therapy and possibly
left incontinent and impotent for the rest of his life.
Like Doug, each prostate cancer patient is unique and that
should come into play when determining a treatment path.
Patients and providers should have the right to choose what is
best for them.
Another negative impact to seniors will be IPAB's
requirement to achieve savings in 1-year periods. This means
that the focus will largely be on cutting payments and other
short-term savings rather than on long-term savings and reforms
that could save money or help patients avoid unnecessary care
in the future.
More emphasis should be placed on prevention. Catching
health problems in their early stages while they are still
treatable and preventable is the best way to ensure that
seniors stay healthy and incur less expense to Medicare in the
long run. More emphasis should be placed on participation in
benefits like the Welcome to Medicare physical. Currently, less
than 10 percent of those eligible to participate in this
screening do so even though it can serve to provide guidance
for seniors' health maintenance as they age.
Finally, we are concerned about the lack of oversight of
IPAB. The board has the power to change laws previously enacted
by Congress without actually needing congressional approval.
Furthermore, the Secretary's implementation of IPAB's
recommendations is exempt from judicial and administrative
review.
We are also troubled that there is no patient
representation on the board and that IPAB is not required to
hold public meetings where the voices of patients, caregivers,
and families can be heard. Important healthcare decisions that
can dramatically impact patients will be made by an unelected
board without accountability to the public.
In conclusion, I would like to thank the committee and just
reiterate that while we agree that healthcare costs do need to
be reigned in, we do not believe that IPAB is the right way to
do so. Thank you.
[The prepared statement of Ms. Morrow follows:]
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Mr. Pitts. The chair thanks the gentlelady and thanks the
panel for your testimony. We will now begin questioning and I
will recognize myself for 5 minutes for that purpose.
Dr. Valadka, you state that the IPAB as it has been
described in statute will simply ratchet down costs in the
absence of adequate clinical expertise or the research capacity
to examine the national and regional effects of proposed
recommendations to ensure patients are not unduly impacted. Are
you concerned that the IPAB's mandate to cut spending in the
short-term will undermine longer-term improvements to Medicare
and the healthcare system in general? Would you elaborate?
Mr. Valadka. Yes, thank you for the question.
One aspect of this which has not been addressed much this
morning is the fact that Medicare not only funds a lot of
practitioners in the private sector but also is a huge
contributor to medical schools and other places that do
research. And that margin is getting thinner and thinner. As
someone who spent over 12 years as a medical school faculty
member, I can attest to that firsthand.
So if Medicare reimbursements to all the physicians
participating in medical schools are going down, that leaves
very little excess room for research to develop new treatments,
as well as for education of medical students and residents who
are going to be the next generation of practitioners. And those
are the most fertile source for new innovations, ideas coming
forward for the several decades following their training.
And moving to people who are already in practice, there is
a lot of very clever people practicing out there who come up
with better ways to do a procedure or treat a patient or to
treat a disease. But again, if there is less excess capital
flowing into their practices, they are not going to have the
luxury of that time to develop new and better treatments.
Mr. Pitts. Thank you.
Ms. Grealy, many if not most healthcare analysts think that
meaningful health reform will occur over a number of years. Are
the short-term scorable proposals that the board is likely to
have to make consistent with meaningful health reform in your
opinion?
Ms. Grealy. Well, actually, I think it could be a barrier
to that long-term meaningful reform. I think as you have heard
among this panel that things that could save Medicare money in
the long run may require a capital investment up front. We look
at the current development of Accountable Care Organizations.
It requires investment. As Dr. Lewin has pointed out, we need
to have health information technology as an important tool.
Again, these are things that in the short-term could increase
spending, and this idea of having a year-by-year, 1-year budget
reduction requirement I think really could impede some of those
longer-term savings that would improve quality as well as
reduce the cost of care.
Mr. Pitts. Thank you.
Dr. Lewin, in your testimony you state that ``until the SGR
is replaced, you cannot support implementation of the IPAB.''
Does that mean that if the SGR is replaced, you would then
support the IPAB?
Mr. Lewin. Thank you for the question, Mr. Chairman.
No, I think the SGR needs to be replaced and that is going
to be exceedingly difficult as you well know because of the
accumulated debt that it has accrued.
I think that we need something different from the IPAB and
the SGR, something that is not a price-control approach. In
fact, let us move away from the past and really innovate in
health system reform to a new future where we start rewarding
for better quality, more efficient care rather than the volume
of care. And so, you know, we need to get on this now. We may
not get the SGR fixed for years as far as I know. So we need to
develop a new mechanism.
And sir, the IPAB, while the goal is right, the method is
wrong. And so we will work with you to develop something that
really will bend the cost curve, really will achieve those
spending targets but to do so in a fashion that could actually
work.
Mr. Pitts. Thank you.
Ms. Morrow, how could the IPAB affect the development of
newer treatment modalities for prostate cancer as they are
developed in the future? Does the IPAB have the potential to
limit care for future patients as well as current patients in
your opinion?
Ms. Morrow. Yes, we do believe that, you know, IPAB is
charged to reduce excessive growth rates and Medicare spending
and, you know, that could be defined as reducing payments for
new, high-priced drugs and yes, we are very concerned about
that taking prostate cancer.
Mr. Pitts. Thank you. The chair yields to Mr. Pallone for 5
minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask Dr. Lewin one of the many ideas put into
place by the Affordable Care Act was the Center for Medicare
and Medicaid Innovation. It is a new effort by CMS to research
and develop ideas to save money and improve quality in Medicare
and Medicaid more quickly than before. Last week, the
Innovations Center announced projects to improve the
coordination of care for dual eligibles--for instance, in
cooperation with the States. Do you believe that the
Innovations Center is a good idea? Would you just comment on it
and why you might think that it is a good idea?
Mr. Lewin. We heartily applaud the Innovation Center idea.
We think that this is exactly what we need, a part of the CMS
agency that really starts rewarding and funding innovation and
new idea. I mean, we want to continue to have the best
healthcare for all people in this country, including those who
don't have access right now, and we want to continue
innovating. But we are going to have to cut spending.
Fortunately, you know, we can do this because there is so much
waste in the current healthcare system.
The Innovation Center moving toward the triple aim--things
that improve health, improve healthcare, and lower costs at the
same time are possible. The Door-to-Balloon, the speeding up of
heart attack treatment is an example. And I could give you
numerous more that we are working on in cardiology. So if we
could start funding models and show people out there what best
practices are and then diffuse those across the healthcare
system with a new kind of payment incentive process, I think we
can solve this problem, have the best healthcare system in the
world, and do it at GDP plus 1 percent.
Mr. Pallone. Thank you.
Did you want to comment, Ms. Grealy, on the Innovation
Center as well?
Ms. Grealy. Yes, I think this is a real opportunity for a
public-private partnership. I think Jack has given some great
models of what is being done in the private sector now against
the financial incentives in the current Medicare program. They
are doing the right thing despite not really getting rewarded
for it. The value compendium that we have submitted will show
you other examples of that. So I think it is an opportunity for
the Medicare and Medicaid programs to learn from the private
sector and to test pilot these things as opposed to this board
of 15 people coming up with a number, making some
recommendations that perhaps haven't even been test piloted.
And I think that is the real advantage of having the Center for
Innovation.
Mr. Pallone. Thank you. I was going to ask you also, Ms.
Grealy, this is a quote from the CBO analysis of the Republican
plan for Medicare and Medicaid in their budget. It says,
``Under the Republican budget proposal, the gradually
increasing number of Medicare beneficiaries participating in
the new premium-support program would bear a much larger share
of their healthcare costs than they would under the traditional
program, and that greater burden would require them to reduce
their use of healthcare services, spend less on other goods and
services, or save more in advance of retirement than they would
under current law.''
Now, in your testimony, you said that ``IPAB has the
potential to cause serious harm to Medicare beneficiaries''
but, you know, I would like to know what your views would be of
the Republican budget plan and its effect on beneficiaries. Do
you agree with the CBO's characterization of the Republican
plan?
Ms. Grealy. The Healthcare Leadership Council for over a
decade has supported the concept of moving to a premium-support
model for the Medicare program to give seniors more choice, to
have those private plans competing, much as they do in the
Medicare Part D program. I think what we need to do is to look
at the premium-support model. There are many components to it.
We probably would recommend using a different inflation factor.
Much like Alice Rivlin, we would probably recommend maintaining
for a period of time the traditional Medicare program. So I
think there is a lot of merit to the concept. I think there are
some modifications that we would make to the proposal that was
put forward.
Mr. Pallone. Thank you.
Let me ask--I guess I have another 50 seconds here. I
wanted to ask Ms. Morrow, you know, again you made your
concerns about IPAB clear but as you know, this was developed
as a backstop mechanism to address to growing costs of
healthcare. In the Republican approach in the budget is very
different. They would simply slash existing programs. They
would end Medicare as we know it, and they would slash medical
research. And I am concerned about the impact on medical
research of the Republican budget. The NIH budget was actually
cut under the continuing resolution for this year, and for 2012
it doesn't look any better. If you would just comment on it. I
mean I am just concerned where are we going with research with
what happened with the CR and what is in the Republican budget
for the future?
Ms. Morrow. Yes, continuing research in cancer is extremely
important to us and we do advocate for increased funding for
research. And I am not familiar with everything that is in the
Republican plan but, I mean, we will continue to support more
increased funding for research.
Mr. Pallone. OK. Thank you very much. Thank you, Mr.
Chairman.
Mr. Pitts. The chair thanks the gentleman and recognizes
the vice chairman of the subcommittee, Dr. Burgess, for 5
minutes.
Mr. Burgess. Well, thank you, Mr. Chairman. And I thank you
all for being here. This has been an interesting--although, Dr.
Valadka, you are correct that this was--what did you call it?
The IPAB-alooza of--IPAB-ulous?
Mr. Valadka. IPAB-athon, but IPAB-alooza applies as well.
Mr. Burgess. I do so welcome the comments of all of you. I
think they have been very helpful.
Ms. Grealy, I hope that you will take some time and take
the Secretary of Health and Human Services perhaps to lunch and
explain to her what premium support actually is. You might even
want to include Ranking Member Waxman in that discussion
because he seems to have some difficulty and even the President
of the United States required a little remedial education of
the difference between a voucher and a premium-support system.
Dr. Valadka, let me just ask you, we hear a lot about the
IPAB. We have heard a lot about it today, but I get the general
impression that doctors and patients and patient-advocacy
groups do not support the IPAB. Is that a fair assessment, and
if that is fair, why do you suppose that is?
Mr. Valadka. To borrow a line from a high-ranking member of
this body, when the healthcare debate was going on a couple of
years ago, you have to pass the bill to find out what is in it.
Mr. Burgess. Now, we know.
Mr. Valadka. I have had that same conversation with many of
my colleagues in the operating room and the ICU in the hallways
where they don't really quite know what IPAB is. And the more
you talk to them and educate them, I don't think anyone thinks
it is a good idea. And I think it has been gratifying to see
this started as a very obscure issue that only policy wonks
knew about, and now I understand they get discussed in the New
York Times, Wall Street Journal, CNN, mainstream media outlets
like that. So I do think that the more people learn about it,
the less they are going to support it.
Mr. Burgess. And I think that is in general true.
Now, Dr. Lewin, you talked about repeal the SGR before you
do the IPAB. I got to believe that really you are the
membership of the American College of Cardiology would not
support either of those control mechanisms. Is that correct?
Now, the AMA did--you know, unlike Mr. Pallone, who voted for
that bill, I voted against it. I thought the AMA was wrong to
support it. What does your membership say?
Mr. Lewin. Well, we certainly don't have any affinity for
the SGR. It clearly doesn't work and it is too bad we didn't
deal with it 10 years ago, right? We all wish we had. But that
said, I think the IPAB as it is currently designed we don't
believe will be effective in any way, shape, or form. It is
going to be another price-control mechanism. So we would like
to get on with the challenge that we have as a Nation of, you
know, creating the healthcare system of the future that
provides access to everybody, that continues to reward
innovation and improve quality. And we think we need a
different approach than the IPAB.
Mr. Burgess. Well, let me tell you the problem, though,
because you reference the SGR and your pessimism of the SGR
that anything meaningful will happen, and I actually--this here
I am more optimistic that something can happen to the SGR than
any time previous in my 9 years here.
But here is the deal. You are exactly right. What if in
1998 someone had had the courage to say oh, this SGR thing is
going to be a disaster in 10 years' time and I want to fix it.
We have that opportunity with the IPAB now. Once the IPAB
begins that cumulative effect of, you know, this specious thing
of a dollar saved, then there is going to be a CBO-directed
cost associated with its repeal. And it won't be too terribly
long before that cost becomes a mountain too tall to climb just
as the SGR is today.
So yes, we got to kill one that is mature, which is the
SGR, but the other one, we do need to get a handle on it before
it ever gets out of the box. And I would say the time is now to
repeal the Independent Payment Advisory Board, and I would
encourage Mr. Pallone to join with us on that because once this
thing gets away from you, it is Katy bar the door. It would be
impossible to undo it.
And I think honestly that is what the administration is
banking on. They want to get this thing up and running and it
is another method--but let us be honest, this thing was not
about healthcare, never was. It is a tax bill, but bottom line,
it is about control. They want to control you. They want to
control Dr. Valadka. They want to control what you do. They
want you to do only what they tell you you can do and they want
to be able to tell you when to stop, don't do anymore. That
patient has had enough. That is where this thing is going.
Ms. Morrow, let me just thank you for being here. I don't
have a question for you as relates to the IPAB on prostate
cancer, but I do remember in the discussion of healthcare
reform as it was going through, I read somewhere where some
healthcare thinker said we will be able to tell if Congress was
serious about reforming healthcare as to what they do with
prostate cancer because the implication was we over-treat
prostate cancer in the United States of America. However,
recent studies comparing survival rates for prostate cancer in
the United States versus Europe, it is like 99 versus 77
percent. I would rather be here with all our faults than
anywhere else in the world. Do you have any comments on that?
Ms. Morrow. I have seen those same statistics and, you
know, as far overtreatment, we strongly disagree with that
term. You know, it is up to the patient. The doctor and the
patient can have an informed discussion about the person's
prostate cancer and whether it is going to grow and affect them
in their lifetime, but the decision should be between the
patient and the provider.
Mr. Burgess. And not the IPAB and the provider.
Ms. Morrow. Exactly.
Mr. Burgess. Thank you.
Mr. Pitts. The chair thanks the gentleman and recognizes
Dr. Cassidy for 5 minutes.
Mr. Cassidy. Dr. Valadka, a friend emailed me and said how
come you don't have a practicing physician on the panels, one
passionate about our practices? And so I will have to email her
back and say although I didn't pick it, we have one.
My question for you is that when you look at the CBO score
that Mr. Pallone referenced, it says the reason that
traditional Medicare scores less than a private insurance plan
is that traditional Medicare pays physicians less. Indeed, the
way CBO scored it is although they don't assume the SGR cuts go
through, they also have no inflation adjustment. Now, that has
been the case since 2002, and effectively, Medicare is paying
physicians significantly less now than they were in 2002, so
much so that Richard Foster says that within 9 years Medicare
will pay less on average than Medicaid. You are a practicing
physician. Secretary Sebelius avoided answering this question
every which way. But if Medicare is now paying less than Texas
Medicaid, what will that do for access to services for those
who have Medicare?
Mr. Valadka. In one word, cost-shifting. As we discussed
here earlier today----
Mr. Cassidy. Now, let me say this. You are saying that as a
specialist who sees people coming through the ER and almost
have no choice but to see the patient. So speak first as a
specialist and then imagine what it would do for access to
primary care.
Mr. Valadka. Well, as you well know, when patients come
through the emergency room, we take care of them first and
oftentimes we don't even know their name. You know, they are in
the computer as unknown, number something, we operate and take
care of them and then later figure out who they are, who the
family is, you know, if they have any resources. That is a
hospital administration issue. But that is time that takes away
from your practice. And as you know, time is a very precious
thing. So you are going to have to make up the gap in other
ways because you are going to have pay your secretary, your
nurses, your----
Mr. Cassidy. You have a fixed overhead?
Mr. Valadka. Absolutely.
Mr. Cassidy. Now, I know you are not primary care, but if
you are primary care and you are spending 50 percent of your
receipts on fixed overhead and you got a choice of which
patients that you can afford to take--New York Times documented
this very well with an oncologist in Michigan getting paid
below cost by Michigan Medicaid at some point could no longer
afford to take more Michigan Medicaid patients, would you
accept that it is going to hurt access to primary care?
Mr. Valadka. Well, I think you used the word choice as to
what patients are going to have to take, and I would quibble
with you a little bit. You don't have a choice. You have to
take more patients with commercial insurance just to subsidize
all of the activity you are spending taking care of the
patients with no insurance or Medicaid.
Mr. Cassidy. Or limit what you--now, in this case, if
Medicare is paying less than Medicaid, you would now put the
Medicare patient in the same boat if you will as that Michigan
Medicaid cancer patient who could not find a provider?
Mr. Valadka. That is exactly right.
Mr. Cassidy. Yes. And again, in 9 years under the provision
that CBO describes is saving money for traditional fee-for-
service Medicare, we and Medicare as we know it because seniors
will not be able to access care, that is a little--and you
raised something, just kind of--I thought about it but the way
you phrase it kind of ticked my mind a little bit. So IPAB can
only cut among providers, physicians.
Mr. Valadka. Yes.
Mr. Cassidy. So really we could have a hole in the bucket
for hospitals. There could be a hole in the bucket for
hospitals with just an inordinate amount of cost going there,
but physicians would have to make up the difference, correct?
Mr. Valadka. As it is now, yes, because hospitals have I
think until 2018 or 2019. Yes. They are out of the loop. They
kind of negotiated themselves out. I just can't stress it
enough--it is like a broken record--we have to do something
different than this. We need to deal with the rising costs of
Medicare. We can but we need help from Congress to do that with
a different approach than this design. This isn't going to work
and if this is health reform, then let us start off and do
something the right way and reward incentives for quality and
efficiency and improved care. That we can do. We now have the
tools to do that. We couldn't have done that in the '90s when
health reform was proposed. We can do that now. And physicians
want to do this. We still want--clinical judgments are still
going to be important and we want to protect the patient-
physician relationship in this process.
Mr. Cassidy. I like the way you emphasize the practicing
physician's role in controlling healthcare costs. I note in
IPAB I don't think you are allowed to continue to practice and
still serve on the board, which gives me kind of pause. Wait a
second. If the person who is in the mix, if she is the one who
knows best how to do it but she is the one who, by statute, is
not allowed to serve, it seems kind of odd.
Mr. Valadka. Certainly. And especially a full-time
occupation to be on the board. We are going to attract people
that are going to be retired people. So this is not the design
for a system that is really going to innovatively improve
Medicare.
Mr. Cassidy. There is a system designed by staffers, not by
people involved in healthcare.
I am out of time. I yield back. I thank you all.
Mr. Valadka. Thank you.
Mr. Pitts. The chair thanks the gentleman. That completes
the first round. We will have one follow-up on each side. Dr.
Burgess?
Mr. Burgess. Dr. Lewin, you referenced that setting price
controls on volume doesn't work, and I think we have seen that
with the SGR rather eloquently. You reduce the amount you pay
and you drive up volume because, as Dr. Cassidy pointed out,
overhead costs are fixed so you have got to do more if you are
going to keep those overhead costs met and continue to earn a
salary if you are at an individual or a small-group practice,
which I was.
Now, fee-for-service medicine gets a bad rap in all of this
and we are told by all the great thinkers in healthcare that
the fee-for-service system is the culprit. But really the
culprit is the administrative pricing brought to us by the
Center for Medicare and Medicaid Services and your specialty in
particular. I mean, I have had deans of medical schools who are
cardiologists come to me and say the big problem is the
overutilization of our specialty, you know, Door-to-Balloon
time studies that you have done, that is great and a great
metric, but if these guys are accurate and more balloons are
being done than are necessary, then it doesn't matter that you
do them quickly. It is still going to be a cost driver. And yet
because of administrative pricing, we have favored that type of
activity in the Medicare system.
You know, you would ask yourself the big problem that
everyone talks about is childhood obesity. You have got the
First Lady working on that is her main cause. You would think
that with childhood obesity under the raft of childhood
diabetes that will follow that we will be churning up pediatric
endocrinologists right, left, and center. And yet we turn them
out a handful a year. And cardiologists know we turn out a lot.
So as the leader of your professional organization, how are you
proposing to deal with this? Forget SGR and IPAB for a moment.
You guys have a responsibility here.
Mr. Lewin. Yes, you know, just as a quick aside with the
tsunami of obesity and diabetes, you know, we won't have enough
cardiologists to deal with what is coming up in the future.
But, you know, we really have the tools now to make sure that
people who have chronic stable angina who are approaching the
system for care don't get a stent when it really wasn't needed
or don't get bypass surgery where a stent would have been
better or get to optimal medical therapy when the data shows
the results will be better and they will have no risk of
complications in the meantime. We have these tools, we have the
science, but there are no incentives to apply them in hospitals
across the country.
We have incentives to reduce the use of implantable
defibrillators for people for whom the science says shouldn't
have gotten them. We published it. We published our data. We
have 100 percent--thanks to--Medicare requires the use of our
registry. We have 100 percent of the implantable defibrillator
data in the United States. We pointed out 23 percent of them
apparently were placed without the best guideline evidence
being present. And we want to go around and educate everybody,
but the incentives are not there to say to the hospitals and
the doctors we are going to reward those who start to reduce
that variation, not pay for the volume.
Mr. Burgess. Well, how will IPAB reduce that variation?
Mr. Lewin. It won't. It will not. IPAB just has no way to
do that. We need a different mechanism and that is payment
incentives for improved quality and outcomes and efficiency.
And you have to measure to manage. So you have got to have
systems out there to give doctors and hospitals feedback,
dashboards of feedback on how they are doing as compared to all
their peers. When they have that information, they will change.
Mr. Burgess. And Dr. Valadka, let me just ask you to, you
know, you are the only practicing physician we have heard from
all day. What about how does medical liability reform factor
into what Dr. Lewin was just talking about?
Mr. Valadka. I think liability reform is a huge way to try
to bring down costs in the healthcare system. Now, that is not
part of IPAB. Of course, we would beginning far afield. But you
are a Texan. You have heard about the Texas miracle following
tort reform there in 2003. It did everything that its
proponents said it would. It lowered the cost of professional
liability insurance. It brought more PLI carriers into the
State, and most importantly, it brought a lot more physicians
into the State. And those guys are going to the rural and
underserved areas just as much as going to the major
metropolitan centers. The only downside has been the flood of
applications to the Texas Medical Board because----
Mr. Burgess. Yes, the Texas Medical Board is in trouble.
But Dr. Lewin referenced, you know, the fact that sometimes a
stent might do instead of a bypass or maybe maximum medical
therapy. But it could be tough if you are the doctor on the
frontline who is worried about the appearance of did I do
everything possible if this patient walks out of the office and
crashes and burns in my parking lot, did I do everything
possible to prevent that from happening? And that is a burden
with which we live as practicing physicians every day, is it
not?
Mr. Valadka. Well, that is absolutely true. And again, to
put that in perspective, that is going to happen a certain
percentage of the time even if you do everything right. So now
you are thinking, OK, did I do everything right? Someone is
going to be looking over my shoulder in 6 months or 12 months
if there is a bad outcome. And again, you know, Abraham Lincoln
said even if you did everything right and events prove you
wrong, a thousand angels swearing you were right won't make a
difference. So that is a huge concern for all practicing
physicians.
Mr. Burgess. Thank you for being here today, all of you.
Thank you.
Mr. Pitts. The chair thanks the gentleman and recognizes
the gentleman from Michigan, the ranking member emeritus, Mr.
Dingell, for 5 minutes of questions.
Mr. Dingell. Mr. Chairman, you are most courteous. Thank
you.
Dr. Lewin, welcome to today's hearing. I would like to
begin to discuss your recommended improvements to IPAB. You
mentioned in your testimony that flexibility should be provided
to help recruit high-quality board candidates. Do you believe,
then, that under the current statute the board will be unable
or will be able to recruit high candidates?
Mr. Lewin. Congressman Dingell, thank you for the question.
I don't believe the way it is currently constructed the IPAB
will recruit the kind of people that we want. First of all, the
IPAB membership is a full-time, if you will, occupation. It
means that we can't bring in the best and the brightest from
throughout the health sector with various perspectives to help
guide this process. We are almost destined with that approach
to bring in retired people.
Mr. Dingell. My next question, you have gotten a bit ahead,
but one, what will be the barriers to recruiting candidates;
and two, what should we do to eliminate those barriers to
enable us to recruit the strongest candidates?
Mr. Lewin. My guess is that the importance of this process
is that some excellent candidates may come to serve just with
their expenses covered, but I think this shouldn't have to be a
full-time commitment on the part of those individuals. We need
people who are the best and the brightest in the healthcare
sector who understand the economics as well as the clinical
realities of this and the patient perspective part of this to
be sitting around this table. So I think that the way that it
is designed in terms of the pay and the requirement that it be
a full-time occupation will make it very untenable.
Mr. Dingell. OK. Now, Doctor, IPAB establishes a Consumer
Advisory Council to advise the board on how payment policies
impact consumers. However, this is an advisory capacity only
and does not include patient representation. Now, as a
physician, how would you recommend addressing this problem and
encouraging patients' participation to help in decision-making
necessary for the board to issue the best recommendations?
Mr. Lewin. Well, I think the IPAB ought to have patient
representation sitting right there on the board itself if it
was to exist. Patient representation should have been part of
the process of the IPAB. But I would say, Congressman Dingell,
that I think we have to reconstruct what we consider this IPAB
model if we want it to actually achieve cost containment over
time by systematic improving quality of care. I think the way
it is designed isn't going to work so I am not so concerned
about how we get the members on it right now. I would like to
see a design of a system that might actually reduce costs and
improve quality.
Mr. Dingell. I notice you, Dr. Valadka, were nodding yes?
Mr. Valadka. Yes, I agree completely. It seems like we have
gotten a little bit ahead of the conversation when we are
talking about how to structure IPAB and how it should be set up
in advisory committees, but I think a more fundamental question
is really will it achieve the aims it sets out to do without
creating too many adverse events like limiting access to care
for our seniors.
Mr. Dingell. Thank you.
Now, again, coming back to our first witness here. Your
testimony suggests the use of data registries as one way to
ensure high-quality care while identifying areas to reduce
spending. In particular, Doctor, you mentioned the ACC's
Pinnacle outpatient registry. I happen to believe that the
technology advances like electronic health records and
registries can create savings but also know that there could be
a resistance to implementing such technologies. How many
providers participate in this registry currently, Dr. Lewin?
Mr. Lewin. Thank you for that question, Congressman
Dingell. Nearly all the major hospitals in the United States
participate in the registries and they pay us for the data, and
that allows us to actually keep this very expensive operation
going. In the physician outpatient setting, it is really hard
to ask the doctors to pay us for collection of data at this
time, but a thousand practices have signed up. We have two
million patient records already with this relatively new
system. And we can see measured improvement in quality across
the entire Pinnacle network. I might add that 100 percent of
the Pinnacle participants received the full PQRS reward and the
e-prescribing reward, and we were able to file for them. So
there is some small reward. But if we were to use payment
reform to provide real incentives for improved outcomes and
quality, this would go rapidly across the entire environment.
It needs to reach to internal medicine and family practice and
others who share in the care of cardiology patients with us in
the outpatient setting.
Mr. Dingell. My time is up, Doctor, but with the patience
of the chair, I am going to ask you can you give me an example
of how a member of ACC has used the registry to bring down the
costs of their practice?
Mr. Lewin. Absolutely. The one thing I can give you is that
they got an average of 8 to $10,000 back from the rather
pitifully small reward program called PQRS that Medicare uses
today by just by participating in the registry. They got the
rewards from Bridges to Excellence and from other employer-
based private insurance approaches. And some of them are now
going to receive a bypass of having to go through, you know,
call a nurse to get permission for a procedure because they can
demonstrate to the insurance company that they are making the
right decisions using the clinical decision support tools
embedded in the registry. So it is a hassle factor improvement
for the doctor, and time is worth money. So even though the
payment incentives aren't really aligned yet to improve
quality, even now, this Pinnacle registry is offering some
benefits to people in the current environment.
Mr. Dingell. Thank you, Doctor.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. We are voting on
the floor. We have 11 minutes to go. We have time for follow-up
from Mr. Pallone.
Mr. Pallone. I will be quick. I know that both Dr. Burgess
and you, Dr. Lewin, brought up the SGR and I do think that
certainly when I hear from the doctors, you know, they see the
SGR and, again, the cliff we faced in January as the biggest
threat to Medicare, more so than IPAB. And you know, I am
opposed to IPAB but I just wanted you to comment on that. I
mean, isn't this SGR a major threat, more so than IPAB and what
are the doctors telling you about it?
Mr. Lewin. We would have to think that it is a major
threat. It is certainly a threat to access. If more doctors
can't afford to accept Medicare patients, clearly it is going
to pose a nightmare for our healthcare system, for emergency
rooms and for the entire system. So we are very, very worried
about it and particularly because it is a big, big price tag to
try to fix it.
Mr. Pallone. The cut.
Mr. Lewin. And I honestly don't know how it is going to
happen given the conversation on, you know, the debt ceiling
and the deficit. So, you know, I assume we might end up kicking
that can down the road again, and I am very, very worried about
that, much more worried than I am about the IPAB.
Mr. Pallone. Well, I just wanted to say I know that Dr.
Burgess mentioned that, you know, he hopes that we can get to
it and do a long-term fix this year. And I am very much
supportive of that. I always kid him because he was I think the
only Republican who voted for the Democrat long-term fix that
we passed a couple years ago. So I have to commend him for that
although maybe he doesn't like to be commended for that.
But I would just ask, Mr. Chairman, that I know that we
have already had a hearing on it, but I would urge that we do
try to address it and not wait until the last minute and kick
the can down the road.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and for the
information of the panel. We are going to deal with the SGR
this year. We intend to do a long-term fix. We are in the
process. We have collected information from all the doctor
groups. We have had meetings, many meetings, and we are in the
process of developing a vehicle, but it will probably be after
the break in the fall before we get to it. But we intend to
deal with it on a permanent basis before the end of the year.
This has been an excellent panel. Thank you for the
information you have shared.
That concludes today's hearing. I remind members that they
have 10 business days to submit questions for the record, and I
ask the witnesses to please agree to respond promptly to these
questions. With that, this subcommittee is adjourned.
[Whereupon, at 2:06 p.m., the subcommittee was adjourned.]
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