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



 
                        THE INDEPENDENT PAYMENT

                             ADVISORY BOARD
=======================================================================


                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 6, 2012

                               __________

                          Serial No. 112-HL08

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

WALLY HERGER, California             SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas                   CHARLES B. RANGEL, New York
KEVIN BRADY, Texas                   FORTNEY PETE STARK, California
PAUL RYAN, Wisconsin                 JIM MCDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
GEOFF DAVIS, Kentucky                XAVIER BECERRA, California
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
CHARLES W. BOUSTANY, JR., Louisiana  MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            JOHN B. LARSON, Connecticut
JIM GERLACH, Pennsylvania            EARL BLUMENAUER, Oregon
TOM PRICE, Georgia                   RON KIND, Wisconsin
VERN BUCHANAN, Florida               BILL PASCRELL, JR., New Jersey
ADRIAN SMITH, Nebraska               SHELLEY BERKLEY, Nevada
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas
ERIK PAULSEN, Minnesota
KENNY MARCHANT, Texas
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

                   Jennifer Safavian, Staff Director

                  Janice Mays, Minority Chief Counsel

                                 ______

                         SUBCOMMITTEE ON HEALTH

                   WALLY HERGER, California, Chairman

SAM JOHNSON, Texas                   FORTNEY PETE STARK, California
PAUL RYAN, Wisconsin                 MIKE THOMPSON, California
DEVIN NUNES, California              RON KIND, Wisconsin
DAVID G. REICHERT, Washington        EARL BLUMENAUER, Oregon
PETER J. ROSKAM, Illinois            BILL PASCRELL, JR., New Jersey
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
VERN BUCHANAN, Florida

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                                                                   Page

Advisory of March 6, 2012 announcing the hearing.................     2

                               WITNESSES

Scott Gottlieb, M.D., Resident Fellow, American Enterprise 
  Institute for Public Policy Research...........................     5
Katherine Beh Neas, Senior Vice President, Government Relations, 
  Easter Seals, Office of Public Affairs.........................    14
David F. Penson, M.D., MPH, Vice Chair, Health Policy Council, 
  American Urological Association................................    19
Marilyn Moon, Ph.D., Senior Vice President and Director, Health 
  Program, American Institutes for Research......................    27

                       SUBMISSIONS FOR THE RECORD

ACOG, statement..................................................    57
American Academy of Physical Medicine and Rehabilitation, 
  statement......................................................    60
American Association of Orthopaedic Surgeons, statement..........    63
American Osteopathic Association, statement......................    67
American Physical Therapy Association Private Practice Section, 
  statement......................................................    70
American Society of Anesthesiologists, statement.................    74
Center for Fiscal Equity, statement..............................    76
Healthcare Leadership Council, statement.........................    79
National Right to Life Committee, statement......................    86
PTPN, statement..................................................    91
Retire Safe, statement...........................................    95


                        THE INDEPENDENT PAYMENT


                             ADVISORY BOARD

                              ----------                              


                         TUESDAY, MARCH 6, 2012

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:02 a.m., in 
Room 1100, Longworth House Office Building, Hon. Wally Herger 
[Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
Tuesday, March 6, 2012
HL-08

                 Chairman Herger Announces a Hearing on

                 the Independent Payment Advisory Board

    House Ways and Means Health Subcommittee Chairman Wally Herger (R-
CA) today announced that the Subcommittee on Health will hold a hearing 
to examine how the Independent Payment Advisory Board (IPAB) will 
impact the Medicare program, its beneficiaries, and health care 
providers. The hearing will take place on Tuesday, March 6, 2012 in 
1100 Longworth House Office Building, beginning at 10:00 a.m.
      
    In view of the limited time available to hear from witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of witnesses 
will follow.
      

BACKGROUND:

      
    The health care overhaul created IPAB to ``reduce the per capita 
growth rate in Medicare spending.'' This 15-member board, which will 
consist of unelected, Presidentially-appointed members, will make 
recommendations as early as January 15, 2014, to cut Medicare spending 
if the per capita Medicare spending rate is expected to exceed an 
economic growth rate over a 5-year period. IPAB's recommended Medicare 
cuts are ``fast tracked'' in Congress and will go into effect unless 
Congress amends IPAB's recommendations with legislation that produces 
the same level of savings.
      
    In announcing the hearing, Chairman Herger stated, ``One of 
Congress' most important responsibilities is to oversee the Medicare 
program and protect its beneficiaries. When Democrats created this 
panel, they chose to empower unelected bureaucrats at the expense of 
patients and their doctors. IPAB robs Medicare beneficiaries of their 
voice and stifles their Constitutionally-mandated representation. Our 
seniors and those with disabilities deserve more than nameless 
political appointees who will deny care if they decide it costs too 
much. This hearing will allow the Subcommittee to fully understand the 
impact this ill-conceived rationing board will have on Medicare 
beneficiaries and their health care providers.''
      

FOCUS OF THE HEARING:

      
    The hearing will examine the impact sections 3403 and 10320 of the 
``Patient Protection and Affordable Care Act'' (P.L. 111-148) will have 
on the Medicare program, its beneficiaries, and health care providers.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
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From the Committee homepage, http://waysandmeans.house.gov, select 
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for the record.'' Once you have followed the online instructions, 
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by the close of business on Tuesday, March 20, 2012. Finally, please 
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Police will refuse sealed-package deliveries to all House Office 
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please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
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    1. All submissions and supplementary materials must be provided in 
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    2. Copies of whole documents submitted as exhibit material will not 
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    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman HERGER. The Subcommittee will come to order. We 
are meeting today to hear from those who will be directly and 
adversely impacted by the Independent Payment Advisory Board, 
or IPAB. In an era where our two political parties are best 
known for their deep divisions, this is one area where there 
appears to be bipartisan concern.
    IPAB was created in the Democrat's health care overhaul, 
and is designed to reduce the per capita rate of growth in 
Medicare spending. That might sound benign, but when you peel 
back a couple of layers it is clear that IPAB is a real threat 
to Medicare beneficiaries' health. Those concerned about a 
government takeover of health care need look no further than 
IPAB.
    If implemented, the board will consist of 15 unelected and 
unaccountable Washington appointees. IPAB is given the 
authority to meet in secret, make its decisions in secret, and 
it does not need to consider the perspective of Medicare 
patients or their health care providers. To top it off, IPAB's 
rulings cannot be challenged in a court of law. My good friend 
from California, the Ranking Member, Mr. Stark, characterized 
IPAB as a ``mindless rate-cutting machine that sets up for 
unsustainable cuts that would endanger the health of American 
seniors and people with disabilities.''
    Yet, despite the growing bipartisan opposition to this 
unaccountable board, the President once again proposed further 
expanding its authority in his most recent budget.
    Why is IPAB so dangerous? I have heard numerous concerns 
from patients and doctors. But to me, nothing is more troubling 
than IPAB's ability to drive a wedge between Medicare 
beneficiaries and their doctors. There is nothing in the 
Democrat's health care law preventing IPAB from slashing 
Medicare reimbursements for services or procedures that IPAB 
members feel are unnecessary or ineffective to levels so low 
that physicians would be willing to provide such care. As long 
as IPAB is allowed to exist, access to care for seniors and 
those with disabilities will forever be in jeopardy.
    IPAB supporters argue that it cannot ration care. What they 
won't tell you is that the term ``ration'' is not defined 
anywhere in the Medicare statute. This means that what is and 
is not rationing will be left to 15 faceless, unaccountable and 
unelected appointees to decide.
    There is a better way. Rather than endangering Medicare 
beneficiaries, we should empower them. House Republicans have 
put forth such a plan. Our plan would let beneficiaries, not 
bureaucrats, decide the coverage they want and need. We have an 
excellent and diverse panel of witnesses here today who will 
share their thoughts and concerns about IPAB. We should all 
take note that when patients and providers are in agreement 
that access to care is in jeopardy, where those concerns exist 
it is our fiduciary responsibility to address them.
    Before I recognize Ranking Member Stark for the purpose of 
an opening statement, I ask unanimous consent that all Members' 
written statements be included in the record.
    [No response.]
    Without objection, so ordered. I now recognize Ranking 
Member Stark for 5 minutes for the purpose of his opening 
statement.
    Mr. STARK. Thank you, Mr. Chairman. I guess you saw how 
long this was so you slipped that 5 minutes in there on me. 
That is okay.
    I am proud of what we have done with the Affordable Care 
Act. We have provided more than 2\1/2\ million young adults 
with health coverage. We have reduced prescription drug costs 
for nearly 4 million seniors, provided free preventative care 
to 86 million people of all ages. And in 2014 it will go fully 
into effect, and expand coverage to over 30 million uninsured 
Americans, providing security, permanent security, for those 
who already have coverage.
    That said, the Affordable Care Act is a large bill with 
many provisions. And none of us probably agree with every 
single provision. To that point, the Independent Payment 
Advisory Board, or IPAB, is a provision I strongly oppose. 
Remember, the House included no similar provision in our health 
reform bill. It is a product of the other body and we really 
had no part in it.
    Let me be clear. I oppose IPAB for reasons different, 
perhaps, from my other colleagues. Congress has always stepped 
in to strengthen Medicare's finances when needed. I have always 
worked on this Subcommittee to protect and strengthen Medicare, 
and ensure that it works for its 50 million beneficiaries.
    One only has to look at the Accountable Care Act, which 
extended solvency, slowed spending growth, lowered beneficiary 
costs, improved benefits, modernized the delivery system, and 
created new fraud-fighting tools, to see that we have done a 
good job on this Committee.
    I see no reason why Congress should hand that authority 
over to the executive branch. That undermines the separation of 
powers. And I won't go into detail now, but I have other 
concerns about IPAB's process. I am sure we will hear more 
about that today.
    No one should interpret my opposition to IPAB as a knock 
against the ACA. I stand by my vote there. Nor should anyone 
interpret Republican support to repeal IPAB as an attempt to 
improve or preserve Medicare. I still believe that the other 
side of the aisle would like to end Medicare, provide it as a 
voucher, and that would underfund what is needed for 
individuals' disabilities.
    Despite my opposition to IPAB, I think it is far less 
dangerous than a voucher plan. It doesn't undermine Medicare's 
guaranteed benefits. And its ability to reduce Medicare 
spending has guardrails. It doesn't permit cuts to come from 
reduced Medicare benefits. It prohibits rationing and has 
annual limits on Medicare cuts. The Republican voucher plan 
does not have these protections.
    So, I believe that the witnesses may share my confusion or 
skepticism, but I look forward to discussing with them, if they 
believe there is a better plan on the other side of the aisle 
for Medicare's future. And I will see what the witnesses have 
to say.
    Thanks, Mr. Chairman.
    Chairman HERGER. Thank you, Mr. Stark. Today we are joined 
by four witnesses: Dr. Scott Gottlieb, resident fellow at the 
American Enterprise Institute; Katherine Beh Neas, vice 
president of government relations at Easter Seals; Dr. David 
Penson, a practicing urologist from Nashville, Tennessee, who 
is vice chair of the American Urological Association Health 
Policy Council; and Marilyn Moon, senior vice president and 
director of the health program at the American Institute for 
Research.
    You will each have 5 minutes to present your oral 
testimony. Your entire written statement will be made a part of 
the record.
    Dr. Gottlieb, you are now recognized for 5 minutes.

 STATEMENT OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, AMERICAN 
 ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH (WASHINGTON, 
                              DC)

    Dr. GOTTLIEB. Mr. Chairman, Mr. Ranking Member, thank you 
for the opportunity to testify before the Committee.
    IPAB was created based on the premise that decisions about 
the pricing of Medicare benefits are simply too contentious to 
be handled by a political system. 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 health care.
    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 traditional review. In creating 
IPAB, Congress provided effective patients, providers, and 
product developers no mechanism for appealing the board's 
pronouncements. IPAB's recommendations will be fast-tracked 
through Congress in a way that provides only a veneer of 
congressional review and consent.
    And for practical purposes, IPAB has been given the 
authority to legislate. Moreover, there is a belief that if 
IPAB fails to fulfill its mandate, these decisions will default 
to Congress. Actually, under the law they default to the 
Secretary of Health and Human Services.
    But most significantly, IPAB is unlikely to take the steps 
to 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 program we have in Medicare is a problem with the 
existing price controls that erode health care productivity in 
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 health care.
    IPAB can pursue longer-term reforms to change incentives 
and behavior. These ideas--for example, aligning reimbursement 
with value and quality, or expanding cost sharing--don't 
generate savings in the short run, since they are premised on 
long-term changes on how efficiently doctors and patients use 
medical services. These proposals will not produce the kind of 
immediate savings that IPAB needs to achieve a narrow budget 
window that will be its focus. Yet these are precisely the 
kinds of reforms that Congress has aimed to pursue on a 
bipartisan basis.
    By doubling down on the existing practice of simply 
whacking price schedules with no meaningful eye to how these 
changes impact long-term incentives, IPAB will put more 
systemic payment reform further out of reach. IPAB will be 
working at cross purposes to Congress' broader reform goals.
    IPAB's need to focus on short-run manipulation and price 
schedules and coding procedures is evidenced by the fact that 
longer-term payment reforms don't score saving money by either 
the CBO or the Medicare actuary who has to sign off on IPAB's 
recommendations.
    All of these ideas for broader payment reform also rely on 
changes in payment to providers, especially hospitals. IPAB 
can't do these kinds of structural reforms if these 
constituencies remain off limits until 2019.
    Moreover, because IPAB has its purview narrowly targeted to 
specific slices of the industry to achieve its targeted 
savings, IPAB may be forced to implement unusually deep cuts to 
the limited terrain where it can operate. These deep cuts could 
forestall access all together to certain products and services.
    Medicare must continue to implement reforms to align its 
coverage and payment policies with a value delivered to 
beneficiaries. Congress needs to focus on real ways to get 
longer-term savings, like premium support, modernizing benefits 
in the traditional Medicare program, and paying for better 
outcomes. IPAB makes it even harder to do all of these things.
    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 judgements in the 
first place. It is not, in my view, an argument for creating an 
insular panel that is removed from the usual scrutiny to take 
decisions that other Federal agencies have failed to discharge, 
precisely because those decisions couldn't survive public 
examination. Thank you.
    [The prepared statement of Dr. Gottlieb follows:]

    [GRAPHIC] [TIFF OMITTED] 78590A.001
    
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    [GRAPHIC] [TIFF OMITTED] 78590A.006
    

                                 
    Chairman HERGER. Thank you.
    Ms. Neas, you are now recognized for 5 minutes.

    STATEMENT OF KATHERINE BEH NEAS, SENIOR VICE PRESIDENT, 
 GOVERNMENT RELATIONS, EASTER SEALS, OFFICE OF PUBLIC AFFAIRS 
                        (WASHINGTON, DC)

    Ms. NEAS. Thank you, Mr. Chairman, for this opportunity to 
testify. I am Katy Neas, senior vice president for government 
relations at Easter Seals. For nearly 100 years, Easter Seals 
has provided exceptional services so that children and adults 
with disabilities in their families can live, learn, work, and 
play in the community. Last year, Easter Seals served 1.6 
million individuals through a network of 75 affiliates across 
the country.
    Easter Seals' experience over these many decades has 
solidified our belief that when people with disabilities, 
regardless of age, receive appropriate health care services, 
they live with greater independence. This experience was one of 
the main reasons Easter Seals supported and continues to 
support the Affordable Care Act. At the same time, we strongly 
concur that there must be cost containment within the health 
care system, and believe that more can and must be done to 
control costs within both public and private health care 
systems.
    To achieve true cost containment, Easter Seals believes 
that two important steps must be in place. First, the cost 
containment reforms established in the ACA must be given time 
to be implemented. Second, any new policies must be designed to 
ensure that people with disabilities can attain appropriate, 
medically necessary services in a timely fashion as to promote 
overall health and wellness.
    We too have concerns about the effectiveness of the IPAB 
that was included in the ACA. IPAB is not designed to be an 
instrument of delivery reform, or to improve the quality of 
care. The charge for this board is to reduce the per capita 
rate of growth in Medicare spending. For people with 
disabilities and chronic conditions, it is through better 
coordination and provision of quality care that real changes in 
health status can be achieved, and savings in the health care 
system can be realized.
    The language of the Affordable Care Act so limits where the 
IPAB can make changes, that all that is really left is reducing 
reimbursements to providers. The board cannot take any action 
that would deny access to care, increase revenue, restrict 
benefits, or change reimbursements to hospitals or hospices. If 
circumstances bring about a mandated cut in reimbursement to 
providers, it is likely that access to quality care will be 
reduced, and cost will be shifted to the patient.
    We are already experiencing a reduction in the number of 
health care providers who will participate in public insurance 
programs. The result is the same as if benefits were 
eliminated.
    A legislative correction such as the Medicare Decisions 
Accountability Act would ensure transparency and an opportunity 
for any beneficiary to talk with their Member of Congress about 
how the Medicare program can reduce cost and increase quality. 
It would also leave on the table more options for slowing the 
growth of Medicare expenditures, and the support of new 
delivery reform models. This seems the brighter path for people 
with disabilities and chronic conditions, to assure the most 
impact from money spent through the Medicaid program.
    Again, thank you for this opportunity to speak with you 
today.
    [The prepared statement of Ms. Neas follows:]
    [GRAPHIC] [TIFF OMITTED] 78590A.007
    
    [GRAPHIC] [TIFF OMITTED] 78590A.008
    
    [GRAPHIC] [TIFF OMITTED] 78590A.009
    

                                 
    Chairman HERGER. Thank you.
    Dr. Penson, you are now recognized for 5 minutes.

  STATEMENT OF DAVID F. PENSON, M.D., MPH, VICE CHAIR, HEALTH 
POLICY COUNCIL, AMERICAN UROLOGICAL ASSOCIATION (NASHVILLE, TN)

    Dr. PENSON. Chairman Herger, Ranking Member Stark, and 
other Members of the Subcommittee, I want to thank you for the 
opportunity to testify on the IPAB. My name is David Penson, 
and I am a practicing urologist from Nashville, Tennessee. I am 
speaking today on behalf of the American Urological 
Association, or the AUA, which has over 18,000 members, and has 
promoted the highest standards of urologic care in the United 
States and the world for the last 110 years. I serve as the 
vice chair of the AUA's health policy council. My testimony 
today does not represent the opinion of my primary employer of 
Vanderbilt University.
    The AUA strongly opposes the IPAB, and calls on Congress to 
pass legislation that would repeal it. The AUA also 
participates in the IPAB Coalition and is a member of the 
Alliance of Specialty Medicine. Both groups support full repeal 
of the IPAB. We believe that the IPAB, if enacted, will result 
in reduced access to health care for Medicare beneficiaries.
    Why do we believe this? We know the Subcommittee is keenly 
aware of the ongoing issues with the SGR. Despite recent action 
to temporarily prevent the steep cuts to the SGR, physicians 
now face a 32 percent cut on January 1, 2013. Clearly, this 
affects physicians' confidence in the Medicare program. To 
understand how much it affects confidence, and to determine if 
the cuts would impact access to health care, the Alliance of 
Specialty Medicine last year surveyed physicians and found that 
more than one-third planned to change their Medicare status to 
non-participating if reimbursement is significantly cut. 
Another third will opt out of Medicare for 2 years and 
privately contract with patients.
    The IPAB will only make matters worse. Hospitals and other 
Part A providers are exempt from IPAB until 2020. In addition, 
the IPAB is required to make recommendations that prioritize 
primary care. The result will be a disproportionate share of 
reductions on physicians with an emphasis on specialists, 
including urologists.
    Like the SGR, the IPAB, by its very nature, is flawed and 
will result in providers leaving Medicare. Specifically, the 
IPAB will consist of a board of unelected individuals that 
lacks accountability, clinical expertise, and transparency in 
its proceedings. In addition, the IPAB's recommendations will 
be precluded from administrative or judicial review, and will 
be enacted unless Congress specifically acts to prevent this 
from occurring.
    To understand the negative impact that IPAB would have on 
Americans, we can look to the current impact of a similar body, 
the United States Preventative Services Task Force. The task 
force is an independent panel composed exclusively of primary 
care providers, and charged with making recommendations on the 
value of preventative services. The task force is not required, 
nor does it consult with the specialty areas relevant to the 
specific recommendations, and only recently added a public 
comment period in response to criticism.
    The task force got our attention this fall when it released 
new draft recommendations to discourage PSA-based screening of 
prostate cancer, giving it a D rating, asserting that there is 
no net benefit, or that the harms outweigh the benefits. Based 
upon our review of the evidence, we strongly disagree with 
these draft recommendations. But the task force did not seek 
our opinion. In fact, the draft recommendations were developed 
without consultation of urologists, medical oncologists, or 
radiation oncologists, the very specialists who diagnose and 
treat prostate cancer every day.
    Prior to the Affordable Care Act, the task force 
recommendations were advisory and non-binding. Now, however, 
their recommendations are tied to patient cost sharing, 
intended to encourage or limit access to certain provider 
services, preventative services. In short, the recommendations 
of the task force will limit Medicare beneficiaries' right to 
decide if they can be screened for prostate cancer, and have 
reduced access to health care.
    You may recall a couple of years ago that the task force 
made similar recommendations discouraging mammograms for women 
in their forties. Like the task force, the IPAB is another 
board of unelected, unaccountable individuals that will have a 
similar impact on Medicare beneficiaries. However, its impact 
will be more severe, since the IPAB has much broader authority 
to alter the delivery of care. Appointed members cannot be 
individuals directly involved in the provision of Medicare 
services or have other employment. Thus, practicing clinicians, 
the very people who treat the patients impacted by the IPAB, 
are excluded from participation on the board.
    Although the IPAB is argued to bend the cost curve, it only 
serves to ratchet down costs without clinical expertise or 
consideration of medical evidence. Similar to the task force, 
it doesn't have the research capability or accountability to 
examine the effects of its recommendations and determine 
whether the recommendations will threaten access to care.
    While we are in agreement that Medicare spending growth is 
unsustainable and payment policies are challenging, it is your 
duty and responsibility as elected officials to address these 
issues. The care of our Nation's seniors and individuals with 
disabilities is far too important to leave in the hands of 
unelected board members.
    Thank you for the opportunity to testify. I look forward to 
your questions.
    [The prepared statement of Dr. Penson follows:]
    [GRAPHIC] [TIFF OMITTED] 78590A.010
    
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    Chairman HERGER. Thank you.
    Ms. Moon, you are now recognized for 5 minutes.

  STATEMENT OF MARILYN MOON, PH.D., SENIOR VICE PRESIDENT AND 
  DIRECTOR, HEALTH PROGRAM, AMERICAN INSTITUTES FOR RESEARCH 
                        (WASHINGTON, DC)

    Ms. MOON. Thank you. I appreciate the opportunity to be 
here. My name is Marilyn Moon, and I am a long-term researcher 
in the area of Medicare, with a particular emphasis on the 
issues that affect the consumers of the program, the 
beneficiaries. In this testimony I address both the context and 
rationale for the IPAB, and some practical issues and concerns 
that need to be addressed.
    While the IPAB raises a number of very legitimate concerns, 
it can be reasonable as a tool, if appropriately applied.
    In addition to the Independent Payment Advisory Board which 
is the subject of this testimony, substantial resources have 
been given under the ACA to the Centers for Medicare and 
Medicaid Services to identify, evaluate, and introduce 
innovations to the delivery and payment of care. This large 
infusion of funds to find ways to improve delivery and quality 
while holding down costs is at the heart of efforts to slow 
growth over time.
    It is only by identifying and implementing such changes 
that we can expect to see improvements over time, and that is 
the important aspect of reform that we should be focusing on. 
On the other hand, the IPAB can play a role here as a backstop. 
Until we understand better how to use our resources more 
effectively, and what organizations and treatments work well, 
it will be impossible to move forward to slow spending growth. 
So it is important to fully--it is fully appropriate for this 
to be done at the Federal level, which will ensure both a very 
broad look at innovations, and make the information available 
to all providers of care.
    Research conducted by private insurers or providers is 
likely to remain proprietary and to not be of the needed scope 
to achieve the tasks that loom before us. With these other 
activities, the IPAB makes considerably more sense than if it 
had been enacted as a stand-alone gatekeeper of spending.
    Moreover, it is important to contrast it with other 
alternatives that people talk about. For example, those who 
advocate decentralizing our Medicare program and turning 
decisionmaking over to beneficiaries place an enormous burden 
and risk on those beneficiaries. This is the hallmark of 
options that would require Medicare beneficiaries to buy 
insurance with a limited guarantee of subsidy from the Federal 
Government.
    Supporters of such an approach often talk about having 
beneficiaries put more skin in the game as a way of improving 
health care decisionmaking. Despite claims that this would 
create better consumers of care, they are asking the most 
vulnerable members of our society to make decisions for which 
they are likely to be poorly equipped. And I believe the 
evidence underscores that from the RAND experiment and other 
places.
    One positive aspect of IPAB that is often ignored, 
particularly when the idea is broadly challenged, is that it 
was explicitly set up to avoid cuts in benefits to 
beneficiaries and reductions in their coverage. And although 
the rationing aspect has some--I have some concerns about how 
well it is drafted, that is part of the idea, that you are not 
trying to harm beneficiaries. And treating this only as a 
backstop after other things have not worked and as a way of 
providing incentives to providers to be supportive of other 
kinds of changes I think is the way to view the IPAB over time.
    There are, nonetheless--though I have spoken somewhat 
positively about the IPAB--concerns I have that reflect the 
same kinds of concerns that you have already heard on the panel 
this morning.
    First, setting goals on limited time horizons and then 
having short periods to implement change will put enormous 
pressure on a system that needs to change in many ways, but is 
not yet set up to readily adopt reforms. Fortunately, we will 
probably have until 2020 or 2021 before that is an issue, 
because the changes that were made in the ACA are likely to 
slow the growth of Medicare sufficiently to avoid having the 
IPAB have to go into effect. It could use that period of time, 
for example, to focus on ways to incorporate more effectively 
these kinds of changes in the decisionmaking that it 
undertakes.
    Second, I have concerns about the tight conflict of 
interest requirements and the full-time paid status of board 
members that are similar to issues that other people have 
raised.
    Finally, I think the cumulative effect of very stringent 
controls over a long period of time needs to also be carefully 
examined. Tightening up on payments, requiring coordination of 
care, and improving the overall delivery of care are all 
desirable activities.
    But what happens if over a period of time these have 
happened and, as a society we want to see spending on health 
care decisions--on health care increase? The IPAB would be a 
penalty in that regard.
    So, I think that the IPAB should certainly be changed, but 
I think it can be viewed as an appropriate tool in a broader 
context.
    [The prepared statement of Ms. Moon follows:]
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    [GRAPHIC] [TIFF OMITTED] 78590A.020
    

                                 
    Chairman HERGER. Thank you for your testimony.
    Dr. Gottlieb, some have suggested that IPAB could rely on 
information garnered from the experiments of another Democratic 
health care tool, the Center for Medicare and Medicaid 
Innovation, to develop cost-saving policies. However, many 
Members, including myself, have serious concerns that CMMI was 
given a blank check with no accountability to beneficiaries or 
to Congress.
    Are you concerned that the interactions between IPAB and 
CMMI could lead to a perfect storm such as--these government 
bodies will have unchecked powers to change Medicare in ways 
that neither beneficiaries, providers, nor Congress can appeal?
    Dr. GOTTLIEB. I think the interplay between IPAB and CMMI 
certainly--it could be significantly problematic. You know, 
IPAB could effectively authorize new authorities onto CMS, and 
then CMMI could provide the funding for it. So you basically 
completely sidestep Congress.
    I think one can imagine IPAB skirting prohibitions on 
changes in cost sharing of benefit by authorizing or 
instructing the Innovation Center to use a more restrictive 
standard for what Medicare will cover, and then providing--CMMI 
would provide the funding to implement that. I think it is 
almost a foregone conclusion that, if IPAB is constituted, it 
will pursue some kind of reference pricing scheme like LCA 
authority, conferring LCA authority explicitly onto Part B 
drugs, something CMS has already sought and lost a number of 
Federal court cases in seeking that authority. And CMMI could 
effectively create the infrastructure to execute that. And so 
you would have the two entities working together to effectively 
accomplish what traditionally has been done by Congress, 
granting authority and then providing funding for it.
    Chairman HERGER. Thank you. Ms. Neas, you are not alone in 
expressing unease about IPAB. In fact, I have heard from a 
number of patient groups that have shared similar concerns that 
IPAB need not count a single patient representative among its 
15 members.
    Can you discuss why you think it is important for 
beneficiaries to have a strong voice while this unelected board 
is making decisions to cut Medicare?
    Ms. NEAS. Absolutely. In the disability rights movement we 
have a phrase, ``Nothing about us without us.'' Patients and 
beneficiaries are essential in this decisionmaking process. 
People know what their bodies need, they know what they need. 
And simply having the dollars of what you pay a provider be the 
only factor in the decisionmaking process to us is simply 
missing the point. We really need people to be invested in 
their own health, and to make that opinion be part of this 
decisionmaking process.
    Chairman HERGER. Thank you. Dr. Penson, the President and 
key officials in his Administration claim that IPAB will 
strengthen Medicare. The President and these officials are also 
quick to claim that IPAB supposedly cannot ration care, 
increase beneficiary cost sharing, or reduce benefits. To me, 
this means that the only thing that IPAB can do to cut Medicare 
spending is to slash payments to providers.
    Do you believe that simply cutting provider payments 
strengthen the Medicare program? Or do you think it will weaken 
the program by reducing beneficiary access to care?
    Dr. PENSON. I absolutely am--agree with you that I think it 
will weaken the program. The fact of the matter is that if you 
reduce reimbursements to physicians--there are many physicians 
out there in the community now who are struggling, particularly 
primary care providers. But specialists, as well. And what I 
think will happen is, if you reduce reimbursements, you will 
have providers leaving the system, leaving the program, and 
then that will reduce access for beneficiaries.
    Chairman HERGER. Thank you. Mr. Stark is now recognized for 
5 minutes.
    Mr. STARK. Thank you, Mr. Chairman. We--one of the reasons 
that I was happy to see ACA pass is that it was successful in 
constraining health care spending, and extended the solvency of 
the Medicare trust fund, slowed the cost growth in Medicare, 
and growth in overall national health spending, all while 
lowering beneficiary cost sharing. In fact, CBO estimates that 
Medicare spending growth is so low, given the Accountable Care 
Act, that IPAB won't be triggered until after 2021, I think, as 
Ms. Moon indicated.
    Could you tell us, Ms. Moon, how ACA is lowering the 
Medicare spending, and how you suspect it may continue to do 
that in the future? It is my understanding that the cost 
containment from ACA means that, as you said, IPAB won't be 
triggered for years. Can you elaborate on that a bit?
    Ms. MOON. Certainly. A number of the changes that were made 
in the Medicare program will reduce the level of spending over 
time. There are a number of them. One of them that I think was 
particularly important, for example, was to try to set on an 
equal footing with the traditional Medicare program, the 
Medicare Advantage aspects of the program in which now those 
private plans will be paid on a level comparable to what 
Medicare beneficiaries and traditional Medicare will get. I 
think that was a very positive move forward, for example, and a 
substantial piece of this.
    I think other areas in which the projections of lower 
spending are important are going to come from the innovation 
center of the--of this new activity by the Centers for Medicare 
and Medicaid Services. And unlike those who fear what it will 
do, I think that finally we are putting resources into looking 
at, very systematically and carefully, what things work to 
improve the delivery of care in the United States, recognizing 
that a lot of changes are going to have to be made.
    Some of these are not going to be easy, and they are going 
to be tough changes, but I think they will get the kind of 
scrutiny that they need when they are put out there as the CMMI 
does, the Center for Medicare and Medicaid Innovations, and 
that is by doing research and analysis and then talking about 
the findings and how they can change over time. That is much 
more transparent than will happen, for example, if these 
changes are made by private insurance companies in their own 
efforts to hold down costs.
    Mr. STARK. I am sure you are aware of--well, not only 
Canada, but I think almost all nations except Somalia and 
someplace else have basically an effectiveness study which 
would help patients and physicians, without regard to cost, but 
through a study of how effective various procedures or various 
pharmaceuticals are--is aspirin better than Tylenol? Somebody 
will do a study on that and suggest to Dr. Penson that for this 
particular issue or that particular issue the statistics would 
show that this is more effective.
    Should that, over time, provide better service to our--to 
all Americans, but in particular to the Medicare beneficiaries, 
if the physicians chose--it is a voluntary issue--to follow its 
recommendations?
    Ms. MOON. I think----
    Mr. STARK. I will ask Dr. Penson if that would be useful--
would be helpful in his practice.
    Dr. PENSON. Well, I am--as I also wear a second hat as a 
health services researcher who focuses on comparative 
effectiveness, so evidence-based medicine is very important. 
The AUA supports it. I support it. I will add, though, that 
sometimes we do a study and it clouds this issue even more so. 
But evidence is very important for the practice of medicine, 
absolutely.
    Mr. STARK. Ms. Moon.
    Ms. MOON. I think that that is key to the future, because 
we really have to understand how to use our resources wisely. 
And, as you indicated, this should be advisory to physicians 
and other providers of care. It is difficult to ask physicians 
in this very fast-changing world to be on top of everything. 
And good and reliable information about what works and what 
doesn't is going to be an essential piece of that.
    Mr. STARK. Thank you. I want to thank the entire panel for 
their contribution. Mr. Chairman, thank you.
    Chairman HERGER. Thank you. Mr. Johnson is recognized for 5 
minutes.
    Mr. JOHNSON. Thank you, Mr. Chairman. I am appalled by the 
government control of everything, and I think we need to get 
the government out of it. You know, unelected and unaccountable 
board trying to tell you docs what you can and cannot do is 
ridiculous.
    Are you still doing Medicare?
    Dr. PENSON. I am, personally. I work for a large academic 
medical center, so I suspect my medical center will always be 
in Medicare. I can tell you many of my colleagues are 
considering not participating, particularly if the SGR cuts go 
through.
    Mr. JOHNSON. Yes, I know. I am aware of a couple of docs 
that are thinking about going to the military and getting out 
of private medicine. That is ridiculous.
    Dr. Gottlieb, Secretary Sebelius testified before the 
Committee just last week and claimed IPAB is prohibited from 
rationing care-altering benefits. It is difficult to imagine 
that with this Administration and its Washington-knows-best 
mentality, that they could decide services and procedures 
aren't warranted. As a result, they might recommend slashing 
Medicare reimbursements for those services and procedures.
    Do you see this as a possibility, and could you comment on 
it?
    Dr. GOTTLIEB. Well, I think they are going to be forced to 
manipulate payment schedules and coding because they need to 
achieve budget savings in the near term, and in the near term 
that is all you can really do, given the other constraints.
    And what they are likely to do is import price schedules 
that exist in one aspect of the market into new aspects of the 
market so you can envision things like maybe VA pricing for the 
specialty, tier drugs in the Part D benefit, they are likely to 
just burn down existing payment rates, just drive them lower. 
And they are likely to try to do things to the coding process 
to try to change how certain products are reimbursed, maybe 
giving CMS authority to engage in forms of reference pricing.
    I think that the way that IPAB is likely to ration, if you 
will, is by just conferring new authorities onto CMS, 
authorities that CMS has long wanted to be able to engage in, 
you know, aspects of what really amounts to reference pricing, 
where you would categorize products along a judgement made by 
CMS that products are clinically interchangeable.
    So, for example, consolidating drugs with separate Orange 
Book listings under the same payment code, even if those drugs 
are paid separately, CMS could theoretically say that they 
think that they are clinically interchangeable. And just 
applying least cost, saying that within a category of 
approaches to a given medical problem CMS doesn't recognize the 
clinical difference between different approaches and is 
therefore going to pay for the lowest rate. I think that is 
what we are likely to see.
    As far as rationing, I am not sure--there is no definition 
of rationing in the statute, so I am not sure how that is 
likely to be interpreted. And since you can't sue IPAB for 
implementations of its recommendations, I am not sure how you 
can challenge that.
    Mr. JOHNSON. Thank you. I appreciate that. Do you think 
Medicare can be saved with arbitrary reimbursement cuts, or do 
we need more fundamental reform?
    Dr. GOTTLIEB. Well, I agree with you, Congressman. I think 
we need more fundamental reform. I think that this endless 
series of just burning down payment schedules and trying to 
lump different treatments under the same payment code to bring 
sort of bureaucratic efficiency to the management of the 
program just makes more fundamental--far more difficult.
    So, as we go through successive cycles of these arbitrary 
cuts, I think it makes it harder and harder to achieve 
something fundamental.
    Mr. JOHNSON. Yes. I am seeing some docs just getting out of 
it, they are not accepting it any more. Do you still? You said 
you did.
    Dr. PENSON. I do, because I am an employee of a medical 
center. But I will repeat what I said before, which is I know 
many of my colleagues have either left Medicare or are 
considering leaving Medicare because they are worried, frankly, 
about keeping the lights on.
    Mr. JOHNSON. Yes, yes. It is a serious problem. Thank you, 
Mr. Chairman. I yield back.
    Chairman HERGER. Thank you. Mr. Reichert is recognized.
    Mr. REICHERT. Thank you, Mr. Chairman. Thank you all for 
being here. As you can see, there is some agreement on this 
panel this morning. And you have, I think, answered most 
questions through your testimony, so some of these might be 
repetitive. But I think that some of the topics bear a 
highlighting during the questioning.
    And I have only been on this Committee--this is going on my 
fourth year. I know some Members have been here much longer 
than that, and they have been struggling with health care and 
health care reform and lowering costs and increasing 
accessibility and quality versus quantity for a lot longer than 
I have. But it has become obvious to me in my short tenure on 
this Committee that there are some serious problems with this 
so-called Affordable Health Care Act.
    We have already removed language regarding the 1099 form. 
We have also--the Class Act is one part of the program removed 
from the health care law. It is not affordable. The--there are 
other issues, as you know, regarding mandates. So now we have 
lawsuits filed as a result of this law being passed. And now we 
have also discovered that, if you like your health care plan, 
you can't keep it.
    And then, so today we are here to talk about another 
problem that there is agreement on with this panel, at least in 
the beginning of this discussion, and that is this advisory 
board. And most of you, you have touched on this already.
    But again, I want to highlight the--what Dr. Penson 
especially said in his testimony. The advisory board only 
serves to worsen the problem of physicians leaving Medicare. 
And Mr. Johnson just spoke briefly to this, too. Can you 
explain how the advisory board can restrict access to care for 
our Nation's seniors? You have explained, at least in one case, 
prostate cancer, for example. The screening has been rated now 
as a D rating, which is going to restrict some coverage there 
and some access. Patient cost sharing is designed to limit 
access. Can you give some other examples of how access will be 
limited, and why?
    Dr. PENSON. Well, I think specifically with the IPAB, it is 
primarily going to be cutting reimbursements to physicians, and 
not just specific tests like the task force did with prostate 
cancer.
    With that being said, if we continue to cut reimbursement 
to physicians, we are going to have a crisis, because 
physicians are going to leave the Medicare program. And it is 
going to happen not just with primary care providers, but 
specialists. These days doctors, particularly community 
physicians, are working on a very tight margin. And if you 
continue to cut their reimbursements, they are going to close 
their doors, or they are going to stop seeing Medicare 
patients. And effectively, you are going to have American 
seniors saying, ``Well, maybe I need to pay out of pocket to 
see my doctor I have been seeing for 10 years, because he no 
longer will accept Medicare.'' I see that as a huge problem. 
And it effectively is rationing, depending on how you define 
it.
    Mr. REICHERT. And just to follow up on this idea, Ms. Neas, 
your--I liked your ``no discussions about us without us.'' And 
if you could, just elaborate a little more on that just to help 
us understand how Medicare changes and reforms are impacting 
beneficiaries, and especially if they are not there to 
represent their own views, thoughts, and ideas, and us as 
representatives have no place at the table to represent those 
individuals most in need that your organization particularly 
represents. Can you go into some detail on that?
    Ms. NEAS. Sure. And I think, if I could be so bold, I think 
Dr. Penson might agree with us. One of the ways that we are 
healthy is when we have good relationships with our health care 
providers. It is a two-way street. Your doctor tells you what 
to do, and then you are supposed to do it. And that doesn't 
always happen, but there needs to be direct communication with 
the patient and their health care provider. And when that 
happens in a positive way, people have better health. It is not 
very complicated.
    If you take that patient-doctor relationship out of the 
delivery of health care so that it is harder to stay with your 
doctor, you are going to somebody new every time, it can be 
very, very difficult. I think you----
    Mr. REICHERT. Would you say the board is sort of doing 
this, then?
    Ms. NEAS. If you make it so doctors can't stay in the 
Medicare program--and we are seeing this--and I know it is not 
the jurisdiction of this Committee, but we are seeing this 
every day in the Medicaid program, where health care providers 
simply are no longer taking children with disabilities who are 
on Medicaid because they cannot afford to pay their light bill 
and do this. It is not that they are being inappropriate in any 
way. They cannot stay open if they continue to serve these 
patients. We fear the same thing may be true with Medicaid--
with Medicare, if it is constantly--if there are fewer people.
    I can give you one very quick example. I have a very dear 
friend who has spina bifida. She is in her mid-fifties. She has 
been on Medicare for times when she--and she has had over 50 
surgical procedures. When she goes to a new doctor, they want a 
full medical history. She is 50 years old. She has had 50 
surgeries. They don't want--they don't need to know if she has 
something wrong with her stomach when her legs were amputated. 
It is--but--and that is an inefficiency in the system, that if 
you make it harder for the people who know their patients to 
stay in Medicare, you are going to have less good health 
outcomes for patients.
    Mr. REICHERT. Thank you.
    Chairman HERGER. The gentleman's time has expired. Mr. 
Pascrell is recognized.
    Mr. PASCRELL. Thank you, Mr. Chairman. It has been pointed 
out many times in this room, Mr. Chairman, how critical it was 
that health care reform included the cutting-edge delivery and 
payment reforms that it did. I will refer back to this in a 
moment.
    But I have never believed that the Independent Payment 
Advisory Board, as it stands now, would--will effectively 
fulfill its stated mission to--in terms of cost containment. I 
never really accepted that. I have concerns with how IPAB will 
operate, and that it gives us important congressional authority 
over pricing. That is why I am cosponsor of the bill, and I 
intend to support it in committee and on the floor.
    But let's be clear, that the IPAB was originally designed 
to protect beneficiaries. That was its purpose. Despite what my 
friends on the other side would have you believe, it is their 
voucher plan that they endorsed, the majority endorsed, that 
would end Medicare as we know it. That is what would end 
Medicare as we know it.
    So, while we may be talking about repealing IPAB today, we 
should not lose the big picture, and that is the Affordable 
Care Act was entitlement reform. Nobody wants to say that on 
the other side. I don't know why. One-third of the Act was 
entitlement reform, as far as I am concerned, concerning 
Medicare. Very specific. Unlike their plan, it will actually 
contain Medicare costs while improving benefits, not ending the 
Medicare guarantee.
    And I had a question for Dr. Moon, but I have--want a quick 
question, if you would, Ms. Neas. You know, the vouchers are 
not going to work for individuals with disabilities. Let's set 
the record straight here.
    Ms. NEAS. That is absolutely right. Our experience, whether 
it has been in health care or in education, what people with 
disabilities need is what they need.
    Mr. PASCRELL. So what the voucher program does is turn 
people with disabilities and senior citizens over to the 
private health insurance industry. It turns it over to them to 
determine what care and how much care they are going to 
receive. Can you just briefly talk about converting Medicare to 
a voucher and what it would do to the very people you are 
focused on?
    Ms. NEAS. Over time, the Medicare program and others have 
been altered to include specific services and supports. Those 
were because people needed them, and we needed to spell out in 
very specific ways that there was a range of services that 
needed to be reimbursed by the Medicare program. People need 
those services.
    And because it is a big pool, not everyone is going to need 
the same amount. But they need to be able to have medically 
necessary service available to them, as decided by their health 
care provider, and not say, ``If you cost more than $15,000 a 
year, too bad for you.'' If you have a stroke and you need 
ongoing physical therapy to regain the strength in one side----
    Mr. PASCRELL. Right.
    Ms. NEAS [continuing]. You need that. And it is not--and 
you may need, depending on you as an individual, you might need 
physical therapy for 2 months, or you might need it for a year.
    Mr. PASCRELL. Thank you. Dr. Moon, we know of the various 
and very specific cost containment under the Affordable Care 
Act--just to name a few, efforts to reduce preventable hospital 
re-admissions, improving payment accuracy--has an effect on 
what we are talking about. Promoting value-based purchasing, et 
cetera, encouraging innovation through the new Center for 
Medicare and Medicaid, establishing--and funds research on 
effectiveness of different clinical interventions with the 
Patient Centered Outcomes Research Institute. These are among 
many.
    Now, do you think it is likely that IPAB will focus on 
improving quality through delivery system reforms, considering 
how hard CBO showed it is to create any savings in such a small 
timeframe?
    Ms. MOON. I think that is a very legitimate concern about 
IPAB, and I think that if there were to be changes in the 
program that kept it, it should allow it to have a longer 
timeframe than the 1 year. I think that is a dangerous aspect 
of the IPAB program.
    Mr. PASCRELL. What do you think would be the result of 
that?
    Ms. MOON. I think that does bias you in favor of some of 
the cuts in payments, and that is something that I think you 
want to avoid.
    Again, I see IPAB mostly as a backstop, if absolutely 
necessary, and I would hope it would be viewed that way, and 
not as a first line.
    Mr. PASCRELL. Thank you. Mr.----
    Chairman HERGER. The gentleman's time has expired. Thank 
you.
    Mr. PASCRELL. Mr. Chairman, if I may?
    Chairman HERGER. Yes.
    Mr. PASCRELL. Mr. Chairman, I think the witnesses that we 
have heard over many, many weeks and many hearings are an 
indication. They are an indication of the concerns, legitimate 
concerns, of folks who are involved day in and day out with 
health care.
    I think all sides should just back off an inch or two at 
least, and take a look at what we are learning might not be the 
causes of the major problems we are facing in health care, and 
that we could all take a deep breath, Mr. Chairman, all take a 
deep breath, and understand that we are combined in intellect 
here, that we need to look at reducing----
    Chairman HERGER. The gentleman's time has expired. Thank 
you very much.
    Mr. PASCRELL [continuing]. Reducing one thing and not 
throwing away the entire essence of the bill.
    Chairman HERGER. Mr. Roskam is recognized.
    Mr. ROSKAM. Thank you, Mr. Chairman. You know, in that 
spirit of taking a deep breath, the Democratic leader of the 
House, when she was the speaker, sort of famously now 
prophesied that we had to pass the bill in order to see what 
was in it. And she did, and we do. Now we are walking through 
this IPAB adventure.
    And I think what is interesting, to the gentleman from New 
Jersey's point--and I accept the premise of what he is saying--
and that is there is nobody here--it is interesting--no voice 
on this panel is defending IPAB. Nobody. We have heard, well, 
it didn't start in this chamber. We have heard it is not--you 
know, this wasn't the real purpose. But it is fascinating that, 
at least to date, an hour into this hearing, there has been no 
voice that has defended on this panel the status quo of IPAB. 
So let's talk about why.
    Dr. Gottlieb, can I turn to you? And let me ask you this. 
Under IPAB, will health care providers' ability to provide care 
to patients be affected by reimbursements being cut for 
particular services?
    Dr. GOTTLIEB. I think it absolutely will. I--you know, as 
we have been saying, I think IPAB's scope is so narrow and 
constrained, in terms of what it can do, and how far out it can 
look--getting to Ms. Moon's point--that it is going to just 
have to burn down payment rates. And we have seen time and time 
again, when payment rates get driven too low, certain services 
just become unavailable.
    If you look even under the DRG system, when DRGs get driven 
down too low, certain technologies will fall out and just won't 
be available in a hospitalized setting. I think the same thing 
is likely to happen on the Part B side in the outpatient 
setting, is IPAB has to just burn down payment rates and 
manipulate coding schedules.
    Mr. ROSKAM. So the downward pressure--in a nutshell, the 
downward pressure is so fierce that it will have an impact.
    Let me ask you this. The debate around the word 
``rationing'' has created a high level of anxiety. You know, 
and so the proponents of the Affordable Care Act say, ``Well, 
IPAB can't ration.'' Rationing, as you know, is not defined in 
the statute. Let me ask you this. Can you have, per se, 
rationing, based on what the Independent Payment Advisory Board 
makes decisions to reimburse?
    Dr. GOTTLIEB. Sure. You are going to have payment driven so 
low in some settings that certain services just won't be 
available. Physicians won't be available to take patients. I 
think entrepreneurship is going to suffer, because you are 
going to have less investment in certain sectors in 
anticipation of the inability to get reimbursement for certain 
things. And I think the third leg of this is the fact that IPAB 
could confer authorities--give CMS new authority so CMS can 
engage in the rationing.
    I don't see--I am not an attorney, I am a physician, but 
you know, I have spoken to attorneys in town. There is mixed 
opinion about this issue. But most people seem to agree that 
IPAB can confer authorities onto CMS that CMS would then use in 
ways to explicitly change benefit design and coverage rules.
    Mr. ROSKAM. Ms. Neas, on behalf of Easter Seals, I am 
interested. I have a world class Easter Seals facility----
    Ms. NEAS. Yes, you do.
    Mr. ROSKAM [continuing]. In Villa Park, Illinois, which is 
doing remarkable work. And I have had the privilege of 
visiting, and really commend you and the vision and the mission 
that you have.
    Can you comment on what you are hearing from, let's say, 
parents of children whom you are serving, and their level of 
concern about what patients--or what physicians might be 
prescribing based on an IPAB decision? In other words, if IPAB 
makes a decision, is the smorgasbord of options, the treatment 
options, possibly cut down as a result of the bureaucratic 
decisionmaking process?
    Ms. NEAS. Yes, thank you for that. Yes, you do have one of 
our superstars in your district, which serves predominantly 
children, and children with very significant physical 
disabilities.
    Our biggest concern is when you make it impossible for 
providers to stay in business and serve this population, they 
have no place else to go. And so the practical realities, 
particularly in smaller communities, where you may not have the 
same degree--breadth and scope of providers, if they cannot 
keep their doors open because reimbursement is the only thing 
that is keeping them afloat and that just gets cut, then, 
practically speaking, people are just afraid that those 
services, regardless of what is in the benefit package, if 
there is nobody to provide them, then they cannot access those 
services.
    Mr. ROSKAM. Thank you. Dr. Penson, quickly. Can--there is a 
lot of discussion in this town about income inequality. You 
mentioned this a minute ago, but can you give us a little bit 
of a highlight? What happens, for example, if a person of means 
goes in and a physician--well, my time has expired. I will----
    Chairman HERGER. Maybe he will answer it in writing. You 
want to finish the question?
    Mr. ROSKAM. That is okay. I will follow up with you. Thank 
you.
    Chairman HERGER. Mr. Kind is recognized.
    Mr. KIND. Thank you, Mr. Chairman. Thanks for holding this 
important hearing. And I appreciate the witnesses' testimony 
here today.
    I would be the first to admit that IPAB requires a leap of 
faith. But I supported it. I think it makes sense. I think it 
is a fail-safe backstop effort to constrain the largest and 
fastest growing area of spending in the Federal budget and 
State budgets and local budgets and business budgets and family 
budgets, which is health care costs. And if people have a 
better idea of how we can bend the cost curve out in the 
future, I am all for that as well.
    But I think the key to reforming a health care system that 
was in desperate need of reform was through delivery system 
reform and through payment reform. It had to change the way 
health care is delivered, so it is more integrated and 
coordinated and patient-focused. And we have a lot of models 
throughout the country that have shown us ways to do that.
    And then, ultimately, we have to change the way we pay for 
health care, so that we are paying for the value or the quality 
or the outcome of care that is given, and no longer the volume 
of care. And that has been the nemesis of the so-called fee-
for-service system for years. And everyone on this panel, I 
think, recognizes the challenge that we are facing. Fee-for-
service is not producing the type of outcomes or the bang for 
the buck that we need with our health care dollars. IPAB is 
merely--from my perspective--is a fail-safe mechanism that, if 
certain reforms don't lead to spending reductions and better 
outcomes, there is a way to address that.
    And one of the big problems out there is the over-
utilization of health care: more tests, more procedures, more 
things being done, but without the desired results. But we have 
competing ideas on which way to go. The other side, from what I 
can tell, would just as soon shift the cost on the backs of 
people who can least afford it.
    Ms. Moon, let me start with you. For example, under the so-
called Ryan budget plan that virtually all of them had 
supported last year, the Republican plan would end Medicare's 
guaranteed benefits for things like hospital stays and doctor 
visits. They would replace it with a cash voucher. Can IPAB do 
that?
    Ms. MOON. No, it cannot.
    Mr. KIND. Also the Republican plan would increase the cost 
for Medicare beneficiaries, according to the CBO analysis of 
it, by more than doubling out-of-pocket costs for new enrollees 
up to $6,000 a year when it is fully implemented. Can IPAB 
accomplish that?
    Ms. MOON. No. Fortunately, it would not.
    Mr. KIND. And finally, the latest version apparently that 
they are toying with and might include in their next budget 
resolution, is the so-called Ryan-Wyden Plan that embraces this 
concept of a target growth rate, that if certain spending 
reductions don't occur, automatic spending reductions occur 
under this target growth rate. Does IPAB mirror any of that?
    Ms. MOON. No.
    Mr. KIND. You know, so there is really a choice here of 
what we can do, moving forward. We can allow time to transpire 
for delivery of system and payment reform to take place, or 
there is the ACO models or medical homes for the better 
coordinated care, the Center for Innovation coming up with 
ideas on how we can get better value for the dollar, and have 
IPAB as a backstop for that, ultimately. Or, we can go down 
another route, which merely privatizes Medicare, turns it into 
a private voucher plan, shifts the cost on the backs of 
seniors, an additional $6,000.
    And when I look at my congressional district, 80 percent of 
the seniors in western Wisconsin rely on Social Security as 
their sole source of retirement income, 80 percent. They can't 
take a $6,000 hit in Medicare. So what I think we need to be 
working on is what we can do together to try to reform a 
delivery system so we do get better value out of the dollar.
    So am I wrong here, Ms. Moon? Am I missing something of 
what needs to be accomplished in the health care system?
    Ms. MOON. No, I think that is exactly right. I think that 
this is a very tough problem, and the Federal Government has a 
role to play, along with consumers and providers, and everybody 
else. And to shift it off on to beneficiaries and make them 
responsible, I think----
    Mr. KIND. Well, the way I see IPAB ultimately is a panel. 
Again, a backstop if cost constraints don't occur, but they 
would kick in, their relevancy would kick in. But their whole 
task is to find out what is working and what isn't, and then 
stop creating incentives for doing things that don't work.
    I mean, in its simplicity, that is what IPAB is really all 
about. And I support it, because I have been around here long 
enough to see how reckless Congress is, trying to act on these 
reimbursement issues ourselves. I know there is great cause for 
representative democracy, but you just look back at SGR, and 
what an abysmal failure SGR has been throughout the years. It 
was a budget savings mechanism inserted in 1997 that has always 
been restored. And that is the problem we always have with 
these reimbursement issues.
    Congress doesn't have the backbone or the guts to stand up 
and try to make these decisions ourselves, because we are not 
experts. And yet IPAB is supposed to be staffed with people 
with greater knowledge and greater expertise in order to make 
some of these difficult decisions. Congress can still 
intervene. There is still that mechanism. But I would feel more 
confident going down the IPAB road than not, given what we face 
today. Thank you, Mr. Chairman.
    Chairman HERGER. Thank you. Dr. Price is recognized.
    Mr. PRICE. Thank you, Mr. Chairman. There is so much 
misinformation in the last 5 minutes, I don't know quite where 
to start. But maybe I will start by saying that the SGR, which 
all of us agree is a disaster, in terms of its compensation of 
physician--reimbursements for physician services for seniors, 
everybody understands that. The IPAB has been called the SGR on 
steroids. So if you liked the SGR, you will love the IPAB.
    Our whole goal here is the highest quality of care. We 
disagree drastically about how to get to that highest quality 
of care. Our side believes that patients and families and 
doctors ought to be making medical decisions. The other side 
believes that Washington ought to be influencing those medical 
decisions in very intimate ways, which is why I think it is 
important to point out, Mr. Chairman, that a list of medical 
entities, physician entities, folks taking care of patients, 
nearly 500 of them--500 of them--support repeal of the 
Independent Payment Advisory Board.
    So, it is important to remember that we are talking about 
patients, and the people that are taking care of the patients 
are saying that this will be a disaster, a disaster.
    We have heard a couple of things from our friends on the 
other side who say, ``Oh, don't worry about it, it is 2020, 
2021, not going to happen.'' I draw their attention to appendix 
A in their packet. The first date where something regarding 
IPAB must occur by law, April 30, 2013--2013. That is when the 
chief actuary has to begin to state whether or not these costs 
are going up at rates that are unacceptable, not according to 
patients, not according to any market at all, but according to 
Washington.
    We have heard that the--words tossed around like 
``voluntary'' and ``advisory,'' as it relates to IPAB. There is 
nothing voluntary or advisory about the Independent Payment 
Advisory Board. It is a denial of care board. And its sole 
purpose is not quality of care, as my colleague just talked 
about. Its sole charge is to ``decrease''--``recommend cuts in 
areas of excess cost growth.'' Decrease costs--excess cost 
growth, which--then you have to look at why the cost of health 
care is rising. And it is rising higher than the gross domestic 
product. Why? For two main reasons.
    We heard this last week from the chief actuary for CMS as 
well as the OMB director. The 2.5 percent is due to 
``utilization and innovation,'' utilization and innovation. So 
if you are going to decrease the cost, what do you have to do? 
You have to decrease innovation--that is quality of care--and 
utilization--that is access to care, which brings me to my 
questions to, first, Dr. Penson.
    There is some notion that if you decrease payment to 
physicians, that doesn't decrease the access to care for 
patients. Can you put--can you help us understand that, that 
mechanism, a little bit?
    Dr. PENSON. Well, it is going to affect--you decrease 
reimbursement to physicians, it is going to affect things in 
two ways. First is the example I have thrown out there already, 
which is at a certain point physicians are going to close their 
doors and turn off the lights, simply because they can't make 
ends meet. And so, for many physicians, they will just opt out 
of Medicare. And we have already seen this in Medicaid.
    The other thing that physicians will do is that they get 
paid--if the reimbursement gets paid less, if they try and keep 
their doors open and keep things open for Medicare, they will 
just try to see more patients.
    Now, you say, ``Okay, well, that is good. We want our 
doctors to see as many patients as possible.'' But Ms. Neas 
will back me up on this. There is a big difference between when 
you get--and you know this, as a physician--you get a good, 
long visit with your doc, where you get to talk with him or 
her, or you are sort of in and out really quickly, because that 
is what he or she has to do, just to keep the office open.
    Mr. PRICE. Dr. Gottlieb, I want to talk about some real-
world consequences for the physicians out there trying to care 
for their patients, in spite of the rules that we toss upon 
them.
    My understanding is that if a physician is continuing to 
try to see Medicare patients, and if a payment for a service in 
Medicare is not of a rate that would allow the physician to 
continue to keep his or her doors open, that physician can't 
see that Medicare patient and provide that service if they 
agree upon another price that the patient would want to pay to 
that physician to see him or her. Is that right?
    Dr. GOTTLIEB. That is right. Under the law you can't 
balance bill the patient. You have to accept the customary rate 
under Medicare if you opt into the Medicare program.
    I think the other caveat here, and what I am seeing in my 
clinical practice--I practice hospital-based medicine, but I 
will refer the patients to primary care providers as they are 
discharged from the hospital, and what I see more and more is 
just physicians capping how many Medicare patients----
    Mr. PRICE. Exactly.
    Dr. GOTTLIEB [continuing]. They will allow into their 
practice, and they will say, ``I am closed to new Medicare 
patients.'' We have seen this in Medicaid for years now. It is 
very hard to get specialty care for Medicaid patients that I am 
discharging from the hospital, and it is quite unfortunate.
    Mr. PRICE. And, therefore, huge decrease in access to care. 
In fact, last week, when the Secretary was here, she said 98.4 
percent of physicians see Medicare patients. And I asked her 
specifically how many physicians are decreasing the number of 
Medicare patients that they are seeing, and the Secretary could 
not answer that. And it is a huge, huge number. Access to care 
is being compromised. IPAB damages access to care, and it is 
time to repeal it.
    Thank you, Mr. Chairman.
    Chairman HERGER. Thank you. Mr. Buchanan is recognized.
    Mr. BUCHANAN. Thank you, Mr. Chairman. And I also want to 
thank the witnesses for being here today, taking your time.
    I represent 170,000 seniors in southwest Florida, Sarasota 
and Manatee Counties. And many of the seniors that I talk to 
are very concerned about what this unelected board of 
bureaucrats will mean to Medicare, as it decides what 
constitutes necessary care for our seniors.
    Dr. Penson, you represent doctors who are concerned about 
this board. How do doctors feel about President Obama's call to 
expand the reach, in terms of this board?
    Dr. PENSON. I think, in general, the doctors who I 
represent in the American Urological Association are strongly 
opposed to this board, and they certainly wouldn't favor any 
expansion of it.
    Mr. BUCHANAN. Dr. Gottlieb, I had a quick question. You 
mentioned in your testimony that the decision of this unelected 
board of bureaucrats is exempt from judicial review. I find 
this very concerning. Please explain to us what the full 
consequences of this exemption are.
    Dr. GOTTLIEB. Well, my understanding, by talking to 
attorneys in town, is that the implementation of the board's 
provisions is exempt from judicial review. So, effectively, if 
you are a sponsor, if you are a company manufacturing a product 
or even a provider group affected by a decision of the board, 
you wouldn't have legal standing to challenge a decision in 
court. You also don't have any ability to appeal; there is no 
appeals mechanism.
    I had my research assistant--and I don't have her with me 
here today--do a survey--we are going to be publishing it 
soon--of all the mechanisms in place on private health care 
plans, what they have in terms of adjudication. And, you know, 
I don't think Congress would ever allow a private plan to 
operate the way IPAB is going to operate, in terms of not 
allowing any mechanism for appeal, or any open process, in 
terms of how these decisions get made. And the private sector 
obviously does a much better job because--frankly, because they 
have to, under the law.
    Mr. BUCHANAN. And let me--just a follow-on question that 
was brought up the other day, that if the Congress doesn't like 
what gets done at IPAB, what kind of reach--or what is their 
ability to try to overturn a decision, as you understand it? 
Because I have heard different comments on that.
    Dr. GOTTLIEB. Well, there is sort of a veneer of 
congressional consent built in, right, where the proposals of 
IPAB go to Congress for a very limited time, and that Congress 
would have to come up with proposals that cut Medicare by the 
same magnitude, if they didn't like the proposals that IPAB put 
forward. I think it is unlikely Congress is going to be able to 
come up with competing proposals in the timeframe that they are 
allowed under the law.
    So, it is effectively a way to fast-track the IPAB 
proposals into law and provide a veneer of congressional 
consent, I assume, because there were separation of powers 
issues if it didn't go before Congress.
    Now, Congress can always pass a law later to repeal the 
IPAB provisions. But I think the whole idea here is that the 
idea was to make it very politically hard to do anything to 
stop the implementation of IPAB's proposals.
    Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back.
    Chairman HERGER. Thank you. Mr. McDermott.
    Mr. MCDERMOTT. Thank you, Mr. Chairman. I would ask 
unanimous consent to enter into the record an article from the 
New York Times called ``Knotty Challenges in Health Care 
Costs.''
    Chairman HERGER. Without objection.
    [The submission of Hon. Jim McDermott follows:]
    [GRAPHIC] [TIFF OMITTED] 78590A.021
    
    [GRAPHIC] [TIFF OMITTED] 78590A.022
    
    [GRAPHIC] [TIFF OMITTED] 78590A.023
    

                                 
    Mr. MCDERMOTT. This points out that the average cost of 
health care per capita in the United States is $8,000, which is 
twice what it is in every European country. So we all know 
there is a cost problem. I don't think anybody up here 
disagrees.
    And the question is--I guess Bill Friske said it pretty 
well, in my view. He said, ``Don't repeal it, fix it.'' So I am 
sitting here, trying to figure out--people don't like the IPAB. 
I think it is as good a mechanism as we have, and we will fix 
it on the way, maybe we will figure out better ways. But the 
question is, how do you fix--let's just take one area, doctor's 
fees?
    Now, when we started Medicare, we said to the doctors, 
``You can submit your usual and customary fees.'' That was the 
deal. Doctors weren't coming in unless they got their usual and 
customary fees. Okay. So now, Dr. Penson, you sit out there at 
Vanderbilt University. Do you decide your fees?
    Dr. PENSON. No, I do not.
    [Laughter.]
    Mr. MCDERMOTT. Well, who does?
    Dr. PENSON. Well, I----
    Mr. MCDERMOTT. An accountant?
    Dr. PENSON. I believe the physicians and the leadership at 
Vanderbilt University, and I understand----
    Mr. MCDERMOTT. No, wait a minute. You mean you don't set 
them? They are set by the university?
    Dr. PENSON. And by the payers in the region.
    Mr. MCDERMOTT. The payers of the regions?
    Dr. PENSON. The payers in the region, the insurers.
    Mr. MCDERMOTT. Ah, so United Health sits down with 
Vanderbilt and says, ``Here is what we will pay. Send me a bill 
for that amount.'' Is that the idea?
    Dr. PENSON. I don't know the exact mechanism, honestly.
    Mr. MCDERMOTT. Isn't that interesting? Now, here we have a 
doctor who doesn't know how his pay comes. And what we have 
written into law right now is doctors can submit any pay--any 
fee they want, and then the government is supposed to write a 
check and pay them exactly what they ask for. Well, then 
somebody has to make a decision on how much doctors should be 
paid, right?
    Now the question. Here is what I would like Ms. Moon and 
Dr. Penson and Mr. Gottlieb--Dr. Gottlieb to talk about. How 
should it be done? Should it be Members of Congress up on this 
dais decide? Or should it be by the doctors, the doctors should 
decide how much they are paid? Because doctors will always say, 
``I was not paid my fees.'' Of course you weren't paid your 
fees, they were too high. And Aetna or United Health or 
somebody said, ``No, no, no, no. We are only paying this 
much.'' Or should it be done by a board that sits and talks 
about it?
    What is the answer to this question of setting fees? How 
should it be done?
    Dr. GOTTLIEB. Thank you, Congressman. I would just say up 
front we don't have a cost problem in medicine. I think we have 
a value problem in medicine. And the question is are we getting 
what we paid for? And I think most of us would agree we are 
not.
    Mr. MCDERMOTT. Well, who decides the value?
    Dr. GOTTLIEB. I know how my fees are established, and they 
are established, frankly, by Medicare. I mean I am paid--most 
of the patients I see are Medicare patients or Medicaid 
patients. And where I do have private-pay patients----
    Mr. MCDERMOTT. What do you get--you submit----
    Dr. GOTTLIEB [continuing]. I am paid off of a Medicare 
rate.
    Mr. MCDERMOTT. You submit $100, what do you get back, $70?
    Dr. GOTTLIEB. I--when I see patients in the hospital, I 
will fill out a sheet at the end of a day, and I will submit 
billing codes. They are Medicare billing codes, regardless of 
whether it is a Medicare patient or a private patient. The 
private plans use the same billing codes. And there is a fee 
schedule assigned to the billing codes. And that fee schedule 
is established by Medicare. And the private plans will pay a 
percentage off of that schedule.
    Mr. MCDERMOTT. And----
    Dr. GOTTLIEB. Medicare rates vary across the country, 
because doctors--because costs vary across the country. So 
Medicare varies the rates, based on surveys that it does of the 
actual cost of providing care. But that is how all physicians 
are paid, unless they are taking cash.
    Mr. MCDERMOTT. Well, how would you fix that? You don't like 
that system. And it is costing us too much. We are paying twice 
what the French and the British and the Germans--everybody else 
is paying for health care, and our health statistics aren't 
better. So how do you fix this payment thing?
    Dr. GOTTLIEB. Well, it----
    Mr. MCDERMOTT. Because paying whatever we are paying isn't 
buying it.
    Dr. GOTTLIEB. This gets to the question of, you know, do we 
have--do we tweak things, or do we go for a fundamental reform?
    I mean, first of all, the whole coding process for how 
physicians are paid is done behind closed doors. AMA 
effectively has a monopoly on establishing the codes. And I----
    Mr. MCDERMOTT. So you would be willing to look at the RUC 
committee.
    Dr. GOTTLIEB. I think you have to open up the RUC. I think 
it should be a competitive process. And I think ideally you 
want to move as many services and products as you can into 
places where they can be bid in competitive markets. We have 
seen that bidding products in a competitive market works in 
Part D. Prices have been driven down. I would move other 
aspects of Medicare into competitive schemes where those 
services and products get bid in competitive markets.
    Mr. MCDERMOTT. Dr. Penson.
    Dr. PENSON. Well, Dr. Gottlieb is clearly smarter than I 
am. I am just a dumb urologist. But I will tell you, having 
practiced in Los Angeles before I was in Tennessee, it is a 
similar experience, in as far as what I get paid is set by the 
payer, whether it is Medicare or the private payer. And the 
institution I work for obviously negotiates that charge.
    I don't have the fix. But the fix isn't just simply cutting 
physician fees. It is--you need fundamental reform. I don't 
have the answer. I don't think anyone does, that is why we are 
here.
    Chairman HERGER. The gentleman's time has expired. Mr. 
Gerlach is recognized.
    Mr. GERLACH. Thank you, Mr. Chairman. Maybe that is a good 
segue into a line of questioning particularly to Dr. Moon.
    Thank you for testifying today, by the way, all of you on 
the panel.
    Dr. Moon, in your written testimony, you indicate that you 
support the reasonableness of the goals of IPAB, but there are 
some ``serious challenges'' that ought to be addressed. And 
specifically, you say that setting goals on limited time 
horizons and then having short periods to implement change will 
put enormous pressure on the system. Instant savings should not 
be expected nor used to measure success. This may create a bias 
in favor of less complicated changes, such as payment limits, 
which is what the doctors have described and others have 
described, as well, that there needs to be perhaps a more 
nuanced approach encouraging delivery system reforms.
    That leads to this whole issue of how are we finally going 
to attack the fraud that is in the system, in particular? We 
had Secretary Sebelius here last week, and she indicated in her 
testimony that they have undertaken health care fraud reforms 
that will generate $3 billion over 10 years of savings. Well, 
that sounds like a pretty good step in the right direction, 
except for the fact there is widespread agreement there is $50 
billion in fraud every year in Medicare. That is $500 billion 
over 10 years. So, a $3 billion savings through these efforts, 
and a $500 billion problem over 10 years seems minuscule.
    So, isn't that the area that everybody ought to start 
focusing in on to try to get a handle on the growth of the 
Medicare program--growth and spending in the Medicare program, 
issues like phantom billing, stolen identification of seniors' 
patient information, stolen unique physician identification 
numbers that lead to, again, fraudulent and criminal activity? 
Shouldn't that be the focus of this panel? Shouldn't that have 
been the focus of the Affordable Care Act, to really get to the 
real fundamental problems in the system, rather than keep 
setting up situations where doctors are going to get dinged for 
another 1 or 2 percent every year? Should that not be the focus 
of this panel, and everybody in the health care delivery 
system?
    Ms. MOON. I believe that going after fraud is a very 
important aspect of trying to improve the health care system 
over time. But I also believe that a lot of the numbers that 
get thrown around are into the broader category of fraud, 
waste, and abuse. And once you get beyond fraudulent billing 
and some of the things that you can easily throw someone into 
an orange jumpsuit in a Federal penitentiary, you have more 
difficulty in terms of the subtleties of what is waste or 
abuse. You have the difficulties of patients and physicians, in 
some cases, wanting to do things for the right reasons but then 
overdoing things, doing things inappropriately. And how 
accountable we hold them is a difficult thing. That puts you 
also down the road to a lot of very tough controls that people 
have been reluctant to do.
    In the fraud area, though, I would say some of the 
improvements that people are seeking in terms of the ability to 
track what happens, what the bills are, how large they are 
before the fact, before you actually pay, and going after them 
is a worthy thing to do. It is just going to be a little more 
difficult to get the big numbers, I think, because there is a 
sort of happy conspiracy out there that people--what may be 
viewed as waste by some people is viewed as someone else's very 
important----
    Mr. GERLACH. Well, the Government Accountability Office put 
out a report that in 2010 there was $48 billion of improper 
payments. That is not just fraudulent activity, that is also 
just erroneous, unintentional administrative errors, but 
nonetheless is a waste of dollars that otherwise could be used 
to make sure there is quality and affordable care for the 
beneficiaries of the program.
    So, we seem to get these reports periodically that there is 
massive amounts of waste, fraud, and abuse, and yet the best we 
can hear from the current Secretary of HHS is we are going to 
come up with $3 billion in savings over 10 years, and somehow, 
wow, we have done our job in all of this?
    Don't you--has your institute--have you done any studies on 
how to deal with waste, fraud, and abuse, so that we tackle 
these very large numbers which, in turn--a portion of which 
could be making sure that physicians are getting a fair level 
of compensation for the patients they take care of?
    Ms. MOON. We haven't looked at the fraud issue, but we have 
been focusing a lot on comparative effectiveness, and some of 
the kinds of things of trying to talk about getting value for 
your dollar.
    I don't know about the recent GAO study, but an earlier one 
that they did that focused on fraud, waste, and abuse found 
that many of the--much of the amount was where the physician 
had not signed appropriately. And you don't know whether that 
is really fraud, or whether it is simply administrative error. 
So I think we have to be a little careful of being optimistic 
we can get all our dollars from there. I wish it were true, 
because that would keep us----
    Mr. GERLACH. Okay. Well, you would agree we can hopefully 
get more than $3 billion over 10 years----
    Ms. MOON. Yes, I hope we could do more than that.
    Mr. GERLACH [continuing]. In savings than what the 
Secretary described?
    Ms. MOON. I would like to see us get more than----
    Chairman HERGER. The gentleman's time has expired.
    Mr. GERLACH. Thank you. I appreciate it.
    Chairman HERGER. Mr. Blumenauer is recognized.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. Thanks again for 
an opportunity to have this discussion, think through some of 
the issues.
    I was struck by Dr. Penson saying he didn't have the 
answers, he has some concerns about application, and I 
appreciate that. But I do think that the Affordable Care Act 
actually incorporates most of what the answers are. Unlike Dr. 
Gottlieb, you know, we are not going to unwind Medicare. In 
fact, the Federal Government now pays about half the health 
care bill in this country.
    And we are sort of--this is part of the system. That is not 
going to go away. Hearken our Tea Party friends saying, ``Keep 
Government's hands off our Medicare.'' It is ingrained in the 
system. What we need to do is make it work better.
    And I couldn't agree more about the SGR. I thought it was 
bogus when I was here, I voted against it. I think an 
artificial formula that we can just kind of put it on autopilot 
and turn our back is wrong, and it is destructive.
    It is interesting to note, despite sort of some of the 
payment limitations, expenses continue to skyrocket up 
because--and I think you, several of you, mentioned we need to 
change the system that rewards value in outcomes, not just 
procedures.
    I agree with my friend from Pennsylvania. I don't know 
whether--how big the fraud piece is, but I have joined him in 
legislation for secure card, whether it is $10 billion, $20 
billion, $40 billion, there is a chunk of money that will 
enable us to be able not just to prevent loss of resources, but 
also have better control and protection for patients, and have 
better data.
    I don't think there is a silver bullet. I don't think there 
is one thing that is going to solve the problem. I know SGR 
isn't. And if I had my way, I would get rid of it entirely. I 
would, in fact, be willing to have some of the permanent tax 
cuts--you know, we battle over that--I would have some of the 
tax cuts go away, buy out the SGR, get rid of it. It is a goofy 
thing, and we are always going to try to stop it, except when 
we stub our toe. And the uncertainty, I think, does cloud the 
practice of medicine for patients and doctors.
    But for me, the Affordable Care Act had all the elements 
that used to be bipartisan. You know, a mandate--the dreaded 
mandate--was the creation of conservative think tanks as an 
alternative to Hillary Care. This was touted by some of our 
Republican friends. It was what Governor Romney, in a 
bipartisan way, established in Massachusetts.
    We have, you know, end of life care that came out of this 
Committee without dissent, strongly supported, somehow morphed 
into death panels and weirdness. I am hopeful that we can take 
this conversation about the IPAB and use it to kind of unwind 
some of these things.
    I don't want that to be the default mechanism. I think--and 
I appreciate suggestions people have to try to make it better. 
But it is there because Congress has consistently failed. It 
won't take recommendations. You know, everybody wants to go to 
heaven, nobody wants to die. So we talk about restraint and 
care, but then we blink on some things that aren't particularly 
controversial. And even now, we have had people on the 
Committee talking about government problems with the health 
care reform, and then looking at ways to spend more money.
    I am hopeful that we can work with you to find out ways 
that there might be some modest adjustment. But I hope it 
doesn't get to that point. It was specifically set up to give 
Congress a chance. And it isn't something that will happen 
unless Congress fails again.
    We have the better part of a decade. Start moving. We have 
seen--and, Ms. Moon, I appreciate you referencing it--there is 
some areas where we are seeing some progress made. Health care 
costs have not exploded of late. There has actually been a 
little restraint, while we have been able to give some better 
service. I have people thank me that the kids are still on the 
parents' insurance policy, where kids are not going to be--have 
a problem with the pre-existing condition.
    But we need to--Congress needs a tool like this, because 
otherwise we will do something really stupid, like SGR. And I 
hope the framework of health care reform, good suggestions from 
people like you, and Congress realizing that we can't continue 
to blink, will result in this never having to be put in effect, 
and we will do our job.
    Thank you. Thank you, Mr. Chairman. I didn't get to my 
question, I am sorry.
    [Laughter.]
    But I feel so much better. I feel so much better.
    [Laughter.]
    Chairman HERGER. Good. The gentleman's time has expired.
    I want to thank our witnesses for your testimony today. It 
is my sincere hope that, given the bipartisan concerns that 
were raised here today, this hearing will provide the 
foundation for this Committee to move forward in addressing the 
dangers posed by this ill-conceived board.
    As a reminder, any Member wishing to submit a question for 
the record will have 14 days to do so. If any questions are 
submitted, I ask that the witnesses respond in a timely manner.
    With that, the Subcommittee stands adjourned.
    [Whereupon, at 11:29 a.m., the Subcommittee was adjourned.]
    [Submissions for the Record follow:]
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