[Senate Hearing 112-579]
[From the U.S. Government Publishing Office]
S. Hrg. 112-579
EXAMINING MEDICARE AND MEDICAID COORDINATION FOR DUAL-ELIGIBLES
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
JULY 18, 2012
__________
Serial No. 112-20
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.fdsys.gov
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon BOB CORKER, Tennessee
BILL NELSON, Florida SUSAN COLLINS, Maine
BOB CASEY, Pennsylvania ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri MARK KIRK III, Illinois
SHELDON WHITEHOUSE, Rhode Island DEAN HELLER, Nevada
MARK UDALL, Colorado JERRY MORAN, Kansas
MICHAEL BENNET, Colorado RONALD H. JOHNSON, Wisconsin
KIRSTEN GILLIBRAND, New York RICHARD SHELBY, Alabama
JOE MANCHIN III, West Virginia LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut SAXBY CHAMBLISS, Georgia
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Chad Metzler, Majority Staff Director
Michael Bassett, Ranking Member Staff Director
CONTENTS
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Page
Opening Statement of Senator Herb Kohl........................... 1
Statement of Senator Bob Corker.................................. 2
PANEL OF WITNESSES
Melanie Bella, Director, Medicare-Medicaid Coordination Office,
Center for Medicare and Medicaid Services, U.S. Department of
Health and Human Services, Baltimore, MD....................... 3
Jason Helgerson, Medicaid Director and Deputy Commissioner,
Office of Health Insurance Programs, New York State Department
of Health, Albany, NY.......................................... 16
Robert Berenson, M.D., Institute Fellow, Urban Institute,
Washington, DC................................................. 18
Shawn Morris, President, Healthspring, Nashville, TN............. 19
Tom Betlach, Director, Arizona Health Care Cost Containment
System, Phoenix, AZ............................................ 21
Dory Funk, M.D., Medical Director, Senior Community Care, Eckert,
CO............................................................. 24
APPENDIX
Witness Statements for the Record
Melanie Bella, Director of the Medicare-Medicaid Coordination
Office, Center for Medicare and Medicaid Services, Baltimore,
MD............................................................. 38
Jason Helgerson, Medicaid Director and Deputy Commissioner of the
Office of Health Insurance Programs, New York State Department
of Health, Albany, NY.......................................... 55
Robert Berenson, Institute Fellow, Urban Institute, Washington,
DC............................................................. 57
Shawn Morris, President, HealthSpring, Nashville, TN............. 68
Tom Betlach, Director, Arizona Health Care Cost Containment
System, Phoenix, AZ............................................ 72
Dory Funk, Medical Director, Senior Community Care, Eckert, CO... 79
Responses to Additional Questions Submitted for the Record
Melanie Bella, Director of the Medicare-Medicaid Coordination
Office, Center for Medicare and Medicaid Services, Baltimore,
MD............................................................. 90
Shawn Morris, President, HealthSpring, Nashville, TN............. 92
Additional Statements Submitted for the Record
Aetna, Hartford, CT.............................................. 95
Federation of American Hospitals, Washington, DC................. 99
Medicaid Health Plans of America, Washington, DC................. 104
Medicare Rights Center, Washington, DC........................... 110
National Association of Nutrition and Aging Services Programs,
Washington, DC................................................. 114
National Committee to Preserve Social Security and Medicare and
National Senior Citizens Law Center, Washington, DC............ 116
EXAMINING MEDICARE AND MEDICAID COORDINATION FOR DUAL-ELIGIBLES
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WEDNESDAY, JULY 18, 2012
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The Committee met, pursuant to notice, at 2:05 p.m. in Room
SH-216, Hart Senate Office Building, Hon. Herb Kohl, chairman
of the committee, presiding.
Present: Senators Kohl [presiding], Wyden, Whitehouse,
Bennet, Blumenthal, Corker, and Johnson.
OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN
The Chairman. Good afternoon. We welcome our witnesses and
all of you who are here today.
I commend Senator Corker for putting together and chairing
this hearing on meeting the challenges of integrating care for
beneficiaries who qualify for both Medicare and Medicaid. These
so-called dual eligibles tend to have chronic conditions that
must be carefully managed, such as diabetes and heart disease.
They need high-quality, consistent Medicare services, and many
depend on Medicaid for long-term services and supports.
Historically, the coordination of care for dual-eligible
beneficiaries has been fragmented and resulted in higher costs
and poorer health outcomes. This is not acceptable. Not only
have these people earned benefits that should protect them when
they need it, but the high cost is not sustainable in the
current environment.
In our health care system today, dual eligibles are the
most vulnerable of the vulnerable. The challenge for all of us
is to figure out how to deliver care to them in a way that
meets their needs but does not cost our health care system a
fortune.
Today, at a cost of about $300 billion, these 9 million
dual eligibles account for a disproportionate amount of
spending. They represent 16 percent of Medicare beneficiaries
but consume 27 percent of the program's spending. In the
Medicaid program, dual eligibles make up 15 percent of
beneficiaries but account for 39 percent of total costs.
Fortunately, efforts are now underway to try to eliminate
costly duplication of services. The new Federal Coordinated
Health Care Office, or the Duals Office, at the Centers for
Medicare and Medicaid Services, is working with states to
implement sound strategies for testing expanded models of
coordinated care that we hope will lower costs.
While the national demonstration for dual eligibles is just
beginning, we hope that this hearing will shed light on what
gains we can expect to see as this national demonstration of
unprecedented size and scope prepares to launch.
Some states, such as Arizona and New York, show great
potential, and we look forward to hearing about the successes
of those models. We'll also hear from Medicare-based plans, a
national expert who understands the intricacies of the Medicare
program, and also from the PACE program, which has a long
history of participating in both Medicare and Medicaid.
As we go forward, it's important to consider whether there
is sufficient oversight in place for the national duals
demonstration which will include 26 states, including my own
State of Wisconsin. Concerns have been raised as to whether
beneficiaries will be able to choose the best form of care and
how, if they wish to make a change, they can switch from one
plan to another or return to traditional Medicare.
The issue of passive enrollment or enrolling Medicare
beneficiaries in a program without their consent is a
fundamental question of beneficiary choice which we cannot
simply sweep under the rug.
There are also important questions about what kind of data
we need and expect to see on an ongoing basis that will clearly
show what quality of services are being delivered and the
amount of actual cost savings that accrue from each and every
participating provider and state.
We look forward to hearing from Ms. Bella and all of our
witnesses.
I'd like to turn now to Senator Corker, who will chair this
hearing.
Senator Corker.
STATEMENT OF SENATOR BOB CORKER
Senator Corker [presiding]. Thank you, Mr. Chairman. I
certainly appreciate all of the testaments. I thank you for
allowing us to have this hearing, and I want to thank all who
are participating in this hearing to get an update on care for
seniors known as dual eligibles who receive both Medicare and
Medicaid benefits.
Seniors in this vulnerable population usually suffer from
poor health status and lack of financial resources to
supplement their treatment. As a result, their care can be very
complicated and costly, particularly because of Medicare and
Medicaid's competing rules which create inefficiencies for the
patients, providers, and payers.
There are about 9 million dual eligibles, and some recent
estimates place their annual cost of care to be about $300
billion by Federal and state governments. According to the
Centers for Medicare and Medicaid Services, dual eligibles
represent 20 percent of Medicare enrollment but 32 percent of
total Medicare spending. In Medicaid, they make up just 15
percent of enrollment but 35 percent of the program cost.
With the Medicare Trust Fund on track to be insolvent by
2024, and state and Federal budgets in dire financial
predicaments, we must make sure that Medicare and Medicaid are
working together to serve dual eligibles efficiently and cost
effectively.
There have been some innovative solutions to fully
integrate financial incentives and coordinate patient care.
Existing models like Programs for All-Inclusive Care for the
Elderly, known as PACE, and some Medicare Advantage special-
needs plans are successfully navigating complicated rules to
implement patient-centered care, but very few individuals are
enrolled in these programs. There is much more that we can do
so that dual eligibles get quality care at lower cost.
CMS is in the process of implementing state demonstration
projects with the goal of achieving financial alignment between
Medicare and Medicaid for the treatment of dual eligibles.
Twenty-six states, including Tennessee, have applied under this
demonstration program which allows states to have the
flexibility to be laboratories of innovation and could expand
integrated, coordinated care for dual eligibles from about
120,000 to as many as 3 million.
With any program of this size affecting the care of so many
patients, there must be appropriate congressional oversight.
Given a recent Congressional Budget Office report demonstrating
how previous coordinated care demonstrations have not achieved
sufficient savings, there is a lot riding on whether or not
coordination and financial alignment can work to truly improve
the quality and contain the cost of care for dual eligibles.
I look forward to hearing from our witnesses today on how
we can currently serve dual eligibles and what more we can do.
These issues are critical to protecting the retirement security
of current and future seniors. And again, thank you for
participating. Thank you for letting us have this hearing
today.
We have two panels today. In the first of our panels, we
look forward to hearing from Melanie Bella. Melanie is the
Director of the Medicare-Medicaid Coordination Office at the
Centers for MMS. According to CMS, Ms. Bella is the Senior Vice
President for Policy and Operations at the Center for Health
Care Strategies, focusing on integrating care for complex
populations.
So, Ms. Bella, we thank you very much for being here and
look forward to your testimony.
STATEMENT OF MELANIE BELLA, DIRECTOR, MEDICARE-MEDICAID
COORDINATION OFFICE, CENTER FOR MEDICARE AND MEDICAID SERVICES,
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, BALTIMORE, MD
Ms. Bella. Good afternoon, Chairman Kohl, Senator Corker.
Thank you for the opportunity to be here today. My name is
Melanie Bella. I'm the Director of the Medicare-Medicaid
Coordination Office at the Centers for Medicare & Medicaid
Services. We appreciate the opportunity to share our current
efforts to provide high-quality, well-coordinated care for
Medicare and Medicaid enrollees.
Today, there are over 9 million Medicare-Medicaid
enrollees, and these low-income persons, seniors and persons
with disabilities, receive care in a fragmented system that is
neither easy to navigate nor designed to provide the best care
possible.
For decades, there has been much discussion about providing
better care to this population, and thankfully, through the
Affordable Care Act, Congress has now given us tools to take
action, and that's what we want to talk to you about today.
Simply put, the status quo is not working. Medicare and
Medicaid enrollees are forced to navigate a myriad of rules and
requirements and manage multiple identification cards, benefits
and providers. These are real people stuck in broken systems.
Consider Jamie. Jamie is a 29-year-old with quadriplegia.
He is a new Medicare and Medicaid enrollee. Among his many
needs, he requires both a wheelchair and a shower chair. When
Jamie became eligible for the second program, there was
confusion about how to continue access to the medical benefits
that he needed. As a result, Jamie did not get the services
that he needed.
When things like this happen, and they happen every day,
beneficiaries suffer, and we end up with institutional
placements or admissions that could and should be prevented.
Now consider Ms. R. Ms. R. is an 80-year-old widow who
lives with her daughter. Her daughter has recently taken a
second job so that she can help provide care for her mother.
Among her many health conditions, Ms. R. has heart failure,
diabetes, dementia. She has advanced hip and knee
osteoarthritis. She sees multiple specialists and rarely sees
the same primary care provider twice. Her daughter, who is
feeling overwhelmed, is considering nursing home placement.
Instead, the family was made aware of an integrated care
program that was available for Ms. R. After six months in the
program she has had no hospitalizations, her medication costs
were cut in half, and she's had no ER visits. In addition, her
daughter has had fewer work absences.
Care like Ms. R. receives should be the rule and not the
exception. With that as our driving principle, the Medicare-
Medicaid Coordination Office is focused on three areas. The
first is program alignment, the second is data and analytics,
and the third is models and demonstrations. Collectively, these
areas form a platform for developing and advancing more
integrated, person-centered systems of care for people like
Jamie and the millions of beneficiaries across the country who
are eligible for both Medicare and Medicaid but find themselves
stuck in a broken system today.
Better coordination begins with program alignment. To
address program barriers and inefficiencies, we launched what's
called a program alignment initiative, which has served as our
guide for streamlining Medicare and Medicaid rules,
requirements and policies. The alignment initiative has
provided an important forum for the public to comment on our
work, and it's a guide to help us identify opportunities for
program alignment that we can either address directly or we can
address through current or future demonstrations.
Next is data. A critical aspect to everything we do is
having a thorough and comprehensive understanding of this
population. Last year, we initiated a new process to support
States in their efforts to provide safer, better, and more
cost-effective care through sharing data, Medicare Parts A, B
and D data with States for care coordination.
Earlier this year, we released State-specific profiles that
provide a snapshot of basic demographic information,
utilization profiles, cost patterns for the population that
we're talking about, by State. We hope these tools will help
serve ourselves and other policymakers better to address the
needs of this population.
Complementing these efforts are models and demonstrations
which further our work to better coordinate care. Through the
financial alignment initiative, we have fostered a Federal and
State partnership through demonstrations, one a managed fee-
for-service model and one a capitated model, intended to test
the alignment of service delivery and financing of the two
programs. The demonstrations are designed to leverage the
strengths of the State and Federal governments and to take the
best aspects of both programs and put them forward in a way
that meets the needs of beneficiaries, their caregivers and
providers.
In addition to the financial alignment initiative, we are
excited about a new initiative aimed at reducing avoidable
hospitalizations among nursing facility residents. We are
committed to openness and transparency and have made it an
integral part of this process. We take public feedback very
seriously and are continually working to address comments and
recommendations.
This testimony reflects just some of the ways we are
working to improve the overall beneficiary experience of care,
strengthen the partnership between the States and the Federal
Government, protect the integrity of the Medicare Trust Fund
and taxpayer dollars, and promote more integrated and
accountable systems of care.
While there may be differences in views on how we get
there, there can be no question that we can provide better care
for this population. Our job is not simply about numbers and
charts and dollars and savings. It's about people, and we will
continue to do our part and look forward to working with you
and your support to do better for this population. Thank you
very much.
Senator Corker. Mr. Chairman, why don't you go first with
questions?
The Chairman. Thank you. I will not be over long.
While state by state evaluations are required under the
national demonstration, what kind of nationwide evaluation of
the 26 states will CMS undertake? For example, have you
identified ways to measure quality of care for dual eligibles
that all states will be required to collect? And if so, will
the results from each state be part of a national evaluation?
Ms. Bella. I'm glad you asked that question. Evaluation is
critical to these demonstrations. We brought an external
evaluator, RTI, on board several months ago to begin working
with us, knowing that we were going to want to have a very
comprehensive evaluation. We will have, as you state, State-
specific evaluation designs, and also a national evaluation. We
will have core measures across all of the demonstrations, and
then we will have variations within each demonstration to
reflect, for example, the different models of care, the
different target populations.
But the answer to your question, the answer to all your
questions is yes. We will have a core set of measures, we will
have State-specific designs, and we will have a national design
that will look in aggregate across the demonstrations for both
the managed fee-for-service and the capitated model.
The Chairman. Good. The Medicare Payment Advisory
Commission, MedPAC, and others have expressed concerns that the
demonstration is too expansive. At the same time, not all
states are participating in a demonstration, and among the 26
that are, some are choosing to focus on a limited population.
Still, it's clear that some states involved have an interest in
quickly expanding their model.
What is CMS doing to balance the pressure to expand with
the need to make sure the new models actually work? And how
will the agency respond if some states do not do a good job and
beneficiaries fail to get high-quality care?
Ms. Bella. Well, a couple of points in response. The first
is I think it's important to make sure that everyone realizes
we have not approved any demonstrations yet, and we have not
made any claims that we will approve demonstrations unless they
meet the standards and conditions and the high bars that we've
set for the demonstrations.
So there certainly is a lot of interest in the proposals
that have all been publicly posted. The numbers are higher than
we intend to approve through these demonstrations, and we have
many checks and balances along the way where we can ensure that
the beneficiary protections are in place, the financial
safeguards are in place before we allow the demonstrations to
unfold.
So, we have a group of States that's interested in
implementing in 2013 and a group that's interested in 2014, and
within each of those groups, they all want to phase
differently. In order for us to continue with anything that we
approve, again, we will have milestones to make sure those are
met before we automatically allow enrollment of beneficiaries
into these programs.
But, I think the first and foremost thing to emphasize is
that nothing has been approved yet, and some things in State
proposals--this will not shock anyone--are outside the
boundaries of what CMS has indicated it would be willing to
accept. So, there's going to be a lot of give and take between
now and the time that we assess all the proposals.
The Chairman. Finally, the concept of passive enrollment
for dually eligible beneficiaries is one that has not been
tried in Medicare before, as you know. Is CMS concerned about
setting a precedent that could be difficult to un-do?
Ms. Bella. We look at these demonstrations as an
opportunity to test new enrollment methodologies and to test
new ways of communicating with beneficiaries to make sure they
understand their choices and their options. So, we will be
using enrollment brokers, choice counselors, leveraging ADRCs
and SHPs out in the community, and that's something we haven't
done in the past, quite honestly.
We had a limited run with passive enrollment when Part D
started, and I think we've learned from that experience, and
we're really trying to wrap around the beneficiary and make
sure there is a strong network of information in accessible
formats to help beneficiaries understand these choices, and we
see that this demonstration is an excellent opportunity to test
the passive enrollment model.
The Chairman. Thank you.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
As you can tell by the large number of people here, there's
been a lot of input as it relates to this demonstration
program, and I want to applaud you for trying to figure out a
better way of dealing with dual eligibles, I really do. I know
a lot of people here are interested in making sure that it
works in an appropriate way.
There's been a lot of discussion about the size of this
program. It's a pretty large demonstration program when you
have potentially 9 million folks overall and 3 million have
been projected to be a part of this program. I know that you
may have a sense of what you think the real uptake is going to
be in this program. I wonder if you might share with us how
many people you think really will be a part of this
demonstration project.
Ms. Bella. Sure. Certainly, size has generated a lot of
interest, as you know.
Senator Corker. A lot of enrollees, a lot of dollars.
Ms. Bella. We said last year when we announced the
demonstrations that we had a target of up to 2 million
beneficiaries. I think we feel that that is a reasonable target
both to balance not putting too many people in, but also to
allow us to test variation across the Nation in different
delivery systems, different States, with different beneficiary
populations.
So, we believe that is a size that's necessary for us to be
able to provide information to Congress and others about how to
better promote integrated care for these populations. We
believe we're doing it with strong evaluation and oversight
that will ensure that we're protecting the beneficiary interest
because we have milestones along the way to do this, and again
our target is 2 million. That doesn't mean that we will approve
up to 2 million, but----
Senator Corker. But your sense is there might be 2 million
in participation.
Ms. Bella. Certainly, there's been widespread interest from
the States, and I would say we have had a small test of this in
the past. We've seen other integrated programs, but they've
been very small. So this is, in part, a way for us to test
scale for a population that, I think in our view, is long
overdue.
Senator Corker. And how does the size of this compare to
other demonstration programs that we might have carried out in
Medicare in the past?
Ms. Bella. Certainly by Medicare's definition, it's very
large. But then there also have been, I think, observations
about Medicare demonstrations in the past that they haven't
been large enough for us to get an understanding of how we
would scale those demonstrations and/or that they haven't moved
quickly enough.
So again, we're trying to strike that balance. Certainly,
when we test things in the Medicaid world, they're on a larger
scale. So when we're trying to bring those two worlds together,
we're trying to strike that balance, and we feel that up to 2
million is a reasonable balance.
Senator Corker. So you think that's appropriate and feel
comfortable with that? Again, I'm sure you're going to have a
lot of input regarding that as it moves ahead.
I know that Senate Finance Republicans and MedPAC and
others have been a little bit concerned about the effect that
this is going to have on Medicare Part D and the competitive
program that exists there, and I wonder if you might give any
comments that you might have regarding keeping that competitive
process in place and any negative impacts that you think this
program could have on that.
Ms. Bella. Well, as you can imagine, we worked closely with
our Office of the Actuary as we structured this demonstration
to ensure that we were putting the pieces together in a way
that would not have a negative impact on Part D. We feel the
way we've structured Part D as part of this demonstration will
not have an impact on the Part D bids, and we will be closely
monitoring and evaluating that over the course of the
demonstration to ensure that, indeed, we're not having any
unintended result.
Senator Corker. And do you plan to allow states to
substitute their Medicaid formulary for Part D?
Ms. Bella. So we've been pretty strong in our policy that
Part D stays intact. We're pleased with Part D. We believe that
the beneficiary protections it affords and the protected
classes are things that need to remain the same in the
demonstration, and that's the policy that we've issued.
Senator Corker. So based on that statement, do you think
there will be much impact on the savings that we're seeing from
Medicare Part D now?
Ms. Bella. Again, based on our consultation with our Office
of the Actuary, we don't believe that it's going to have any
negative impact on the Part D program.
Senator Corker. And as you can imagine, advocates,
especially for people who have really complex situations, HIV,
mental health, those kinds of things, are concerned, end-stage
renal disease, all kinds of chronic issues. You feel certain
that you're going to be able to put in place robust networks to
care appropriately for individuals who have conditions like
this?
Ms. Bella. We certainly expect that the demonstration
proposals that the States have put forward, and we approve are
sensitive and reflective of the subpopulations through the
requirements that they have on the health plans, for the care
plans and the interdisciplinary teams and all of those things.
Through our network adequacy and readiness reviews, that will
be a strong component, we'll be looking to be sure that by
subpopulation, the plan has an adequate network in place to
provide care. We will be monitoring the care plans, the models
of care, all of those things, not in a one-size-fits-all
approach but sensitive to the different needs of the various
subpopulations that you mentioned.
Senator Corker. And you've talked a lot about the
complexity, and you gave two great examples on the front end,
and aligning incentives and all of that. You're projecting 26
states, I guess, participating in this. Tell me where you think
the savings is actually going to come from and how will the
savings be attributed between Medicaid and Medicare as you go
forward.
Ms. Bella. Sure.
Senator Corker. And will that differ, by the way, per each
state?
Ms. Bella. So the first question is where do we think the
savings will come from. Generally in three areas: one, improved
coordination of care because we actually have now a coordinated
system with an accountable entity. The second is reduction of
duplicative or unnecessary care, which we know is happening
today. And third is administrative efficiencies, by having
entities that don't have to navigate both programs and do two
sets of reporting requirements and two of everything
essentially. So we believe that that will provide savings.
We anticipate that--we have not released a national savings
target for the very reason that the savings opportunities will
be different in each State. It will depend on what the
intervention is, what the target population is, what the
State's current mix of institutional and community-based
placement is. All of those things, among others, will influence
what the savings opportunity is in each State. So we do expect
that it will vary, yes.
Senator Corker. And how will you attribute those savings
again? I'm not sure----
Ms. Bella. Oh, I'm sorry, that was the third part of your
question. The way this is designed, and it's designed to bring
the two payers together in a way that aligns incentives, we
would expect that the savings would be applied proportional to
the contribution of each payer to the rate that gets paid for
an individual. So Medicaid will not be grabbing all the
Medicare money, and vice-versa. It will be a reflection of the
way the payers contribute today to the care.
Senator Corker. Some of the states have found some unmet
needs for home and community-based services when they looked at
newly enrolled beneficiaries. I'm just wondering how this is
being factored into your projections.
Ms. Bella. Particularly, it's something that we expect to
see in some States, particularly those that are less
rebalanced, if you will. The way the model is designed to work,
and this is in the capitated model I assume we're talking
about, we expect to see shorter-term savings in the Medicare
arena, in the hospitalizations and readmissions and better
pharmacy management. Those shorter-term savings can help offset
some cost increases in the community-based services side.
When the shorter-term savings run out, that's when we
expect to see some of the savings from Medicaid start to
materialize. So the beauty of this model is when you put them
together, one comes in sooner, the other comes in later, but by
blending the two, they both share across the life of the
demonstration. And so we believe some of the unmet need will be
able to be funded through some of the opportunities that come
through reduced hospitalizations and better pharmacy
management.
Senator Corker. I think, again, when you look at the
interest that we've had in this hearing, the people that are
here, you find this anytime there are changes in the Federal
Government, people that have been serving a population in a
certain way become concerned. So there have been a lot of
process questions. Can you describe for the audience here today
and those who care about this, obviously us here, what kind of
process are you going to work through to refine these proposals
with state governments, and what kind of transparency and input
are you going to be receiving all along the way?
Ms. Bella. The transparency and stakeholder engagement has
been a core part of this process from day one. All of the
States in the development of their proposals, one of our major
requirements was that they have a very robust and meaningful
stakeholder engagement process all along the way while they
were developing their proposal. Before they submitted their
proposal to us, we required that they posted it publicly for
comment for a 30-day period. Then we required that they
incorporated those comments or that they showed us what they
did and did not incorporate into their proposal.
Upon that part of the process, they were able to submit a
proposal to CMS. We then posted that proposal for public
comment for 30 days and gathered public comment directly to
CMS. We are actively going through all of those comments. Some
States have more than others, as you can imagine. But then that
also guides our interaction with the States to go back and
understand why they are or are not changing certain things that
may have come in during the public comment period.
What that's all leading up to is the development of a
memorandum of understanding. The memorandum of understanding is
what memorializes the demonstration between CMS and a
particular State. But there is no guarantee that the point of
proposal will result in a memorandum of understanding because
there's much that has to be worked out along the way.
CMS issued guidance in both January and March that laid out
standards for these demonstrations, a heavier focus on the
Medicare side, but clearly said these are the parameters and
these are our standards for things like grievances and appeals
and marketing and provider credentialing and licensure
insolvency, all those types of things. So that's been out in
the public domain. It's been very public.
In addition, I mentioned the memorandum of understanding.
The template for the MOU was made public last year when we
announced these demonstration opportunities, so we've tried to
get information out in the public to make people aware of the
types of things that would be part of these demonstrations.
We've made a commitment that all those memoranda of
understanding will be made public. So we really do want to
encourage--not encourage, but live up to transparency along the
way in the process. We meet with stakeholder groups frequently
and oftentimes without the State, just upon request. So we are
trying to make this, again, a very open process.
Senator Corker. Thank you. I know we have two other
senators that have just come in. I'll ask one more question,
then have a few more for the record, if that's okay.
What do you see as a future of special needs plans, managed
long-term care, PACE programs, outside of this demonstration?
And are you thinking that there needs to be more than one
model, if you will, as you go forward? I'm just wondering what
you think the impact on these other programs will be as you
move ahead.
Ms. Bella. The ultimate goal for us is to have seamless
coordinated systems of care for beneficiaries. So there is not
a one-size-fits-all approach. There's a very important place
for the PACE program, and we are trying to work with our
demonstration States to ensure that there continues to be a
viable option for PACE. Special needs plans are important in
that they focus on this population. We'd like to see those be
more integrated.
But in answer to your question, there is not a one-size-
fits-all approach, and we have variations of the two models
that we have out there today, and we expect that we will learn
from those things and we'll make adaptations. Again, the goal
is not to have one prescribed model, but the goal is to have
people in seamless, accountable systems of care.
Senator Corker. Well, thank you very much. And with that--
--
The Chairman. I have one question.
Senator Corker. Okay. Go ahead.
The Chairman. Ms. Bella, many of the state proposals for
national demonstrations project that, over time, savings will
come as a result of reduced hospitalization rates, emergency
room visits, and long-stay nursing home admissions. From CMS'
vantage point, what kinds of changes will be needed to produce
significant savings in these areas, and realistically how
quickly can they be realized?
Ms. Bella. Well, unfortunately, there's no silver bullet,
and nothing happens quickly. I mean, these things take time to
show results. So I think we all have to have that expectation
in mind.
Having said that; there are certainly opportunities in the
areas that you mentioned. But one of the fundamental things
that we have to overcome is this financial misalignment between
the two programs, because right now the incentives are not
aligned for many of the outcomes that you speak of. So part of
what we're trying to do, where we have a lever at CMS is in
these demonstrations and trying to change payment policy, and
trying to change the benefit structure in a way to put
accountability in the system that rewards improved quality and
outcomes and aligns incentives to allow us to see the types of
improved health outcomes that you speak of.
The Chairman. Thank you.
Senator Corker. Thank you, Mr. Chairman.
Senator Johnson.
Senator Johnson. Thank you, Senator Corker. Sorry I was
late. So if I ask some questions that have been covered, I
apologize.
Just in reading the briefing materials here, one of the
problems it seems like in the demonstration projects is states
are moving way more individuals into these projects than was
anticipated. Isn't there a relatively easy fix to that? Does
that require some legislation, or am I overstating the problem?
Ms. Bella. Certainly there's been a lot of attention on the
numbers, and the numbers that are floating around in the public
are higher. They're inflated based on what CMS intends to move
forward with, and we believe that the number that we--we
control whether we approve these or not. So I think you're
right, it's not a complicated issue. There are differences in
opinion on how large the size should be. We feel comfortable
moving forward with the target that we set, and we do have
mechanisms in place to ensure that we will only move forward
with State proposals that are appropriate and have the
necessary beneficiary protections.
Senator Johnson. In terms of trying to limit the increase
in costs, and I think that's about all you can really do in
health care, unfortunately. It's very difficult to actually
reduce cost. But in terms of limiting the increase of cost,
certainly from my standpoint, introducing free market
principles into health care would be one of those things. Is
there anything in this demonstration project that would start
moving us in the direction of bringing some free market
disciplines? In other words, putting patients more in charge of
some of the payments?
Ms. Bella. At this stage, we're not injecting any type of
beneficiary payments for this population. We certainly are
trying to encourage beneficiaries to be in more efficient
systems of care, those that can give them additional benefits
than they are receiving today in the sort of fragmented fee-
for-service world. So I think that's the first step toward
getting folks more engaged in their care.
Senator Johnson. So would you say the cost savings you
expect really come more from that coordination of care versus
just a capitated type of payment system? Is there any
capitation involved in this at all?
Ms. Bella. Yes. There are two demonstration models. One is
a capitated model and one is a managed fee-for-service model,
more like an accountable care organization model. But we think
there are cost savings from improved care coordination, from
reduction of duplicative and unnecessary spending, which
happens quite a bit in this population, and from administrative
efficiencies, by not having to deal with two sets of program
rules and requirements that are completely different.
Senator Johnson. Are you running those two experiments side
by side to determine which is best?
Ms. Bella. We're not--each State has indicated which model
it's interested in testing. We have two States actually that
are interested in testing both models, but they will be in
different areas of the State. So we will have common measures
across both models that will help inform the strengths, I
guess, and the impact on quality of cost of one model over the
other.
Senator Johnson. If you were to guess, which model do you
think would be superior?
Ms. Bella. We have more stability and predictability in the
capitated model, and more accountability, because one entity is
receiving both funding sources to arrange for the care. I
think, though, that's a more tested model, and the managed fee-
for-service model offers us a great opportunity to learn
through aligning incentives in a different delivery system
setup. So I think that both have tremendous promise, and
honestly a lot of it just depends on the State and what the
state's current delivery system environment is. So I think that
they both hold great promise.
Senator Johnson. In an earlier response to a question, you
were talking about the financial incentives just weren't
aligned properly between the two systems. Can you just dwell on
that a little bit more, try to get me to understand exactly
what you're talking about there?
Ms. Bella. Sure. A couple of examples: One is Medicaid
programs typically have care management programs for high-risk,
high-cost folks, and those care management programs are
intended to reduce hospitalizations or readmissions or improve
medication management and those things.
For a dual eligible, if Medicaid pays a care management
fee--say it's me, and they pay a care management fee for me but
I'm a dual eligible, so if I have reduced hospitalizations or
better drug costs, Medicare gets that money. So Medicaid
doesn't want to make an investment if it has no ability to
share in any returns on that investment. So that's one example.
Is that helpful? Today the Medicaid programs are excluding
the dual eligibles for these programs, by and large, because of
this financial disincentive. So neither program benefits, nor
does the beneficiary.
Another example is between hospitals and nursing homes. So
Medicare pays for hospitals, Medicaid pays for custodial
nursing home stays. You see this incredible churn between the
two payers largely driven by the misaligned financial
incentives, and what happens is the beneficiary gets in the
middle and we have all these unnecessary placements between the
two settings, again in large part because each is paid for by a
different payer.
Senator Johnson. How much does the different reimbursement
rates enter into that equation in terms of misalignment of the
financial incentives? I mean, are providers pushing more
Medicare versus Medicaid because of reimbursement
differentials?
Ms. Bella. It happens for some services. Most of the
services, it's pretty clear who is the primary payer, and so
there's not as much of that. But certainly Medicare is a better
payer than Medicaid, and particularly when it comes to skilled
nursing care, nursing facility care. I think there is a greater
interest in having Medicare be the payer than Medicaid in those
settings.
Senator Johnson. Okay. Well, thank you. I'm out of time.
Senator Corker. Senator Wyden.
Senator Wyden. Thank you very much, Mr. Chairman. I want to
commend you and Senator Kohl because I think this is an
extremely important topic. I wish I had a nickel for every time
I heard about how health care was going to be better
coordinated, because I think we would all be in very solid
financial shape if that was the case.
Ms. Bella, I want to touch on some of the issues that you
and I have talked about in the past, and start with the
proposition that coordination of dollars is not the same thing
as coordination of care. My sense is that this room is probably
filled today because most folks are interested in the former.
They want to know where the dollars are going to go, and that's
understandable, and I just want to make sure that the dollars
actually go for the programs that do coordinated care for these
very vulnerable people and deliver the highest possible
quality.
Now, my view is--and we've talked about this in the past,
and I'd just like to get this on the record--that the
Independence at Home model is just about the best way to make
sure that you coordinate care for these very vulnerable people.
Would you largely share that view?
Ms. Bella. I think Independence at Home is a great program
for a segment of this population, yes.
Senator Wyden. Well, I appreciate that because, as you
know, I pushed very hard to get that into the Affordable Care
Act. We were able to get that in. We've been able to make a
modest start. We have this demonstration program underway. We
saw in Portland that House Call Providers was chosen as one of
the 16 groups to participate. I very much appreciate that. It's
our desire to build on the extraordinary accomplishments of the
VA program that has taken a population that's even sicker, with
more of what you professionals would call co-morbidities, and
produced astounding results. At the VA, the costs have been
reduced by 24 percent, hospital days have been reduced by 62
percent, nursing home days by 88 percent. So the VA is
coordinating care and saving money.
The question I had for you is we've been reviewing all the
materials that you all have been getting out to the states, and
you've told me again today that you think Independence at Home
is a very good model. But as far as I can tell in terms of the
information going out to the states, Independence at Home
doesn't seem to get much attention at all, if any, as a
delivery model for the states.
So can you tell me what is going on with respect to your
efforts to make sure that states are aware of this? Perhaps we
just haven't seen all the material that you all have sent out.
But if you could tell me what the situation is in terms of your
relationship with the states, that would be very helpful.
Ms. Bella. Certainly, and the Independence at Home program,
as you know, is led through our Center for Innovation. So I can
go back and consult with our colleagues there to find out more
about what outreach is going on to the States.
For our particular interaction with States on Independence
at Home, we're particularly keying to States where there is an
Independence at Home demonstration and who want to do one of
our demonstrations to make sure that we are coordinating
appropriately and make sure that there is the best situation
for the beneficiaries. So most of our interaction around that
program is specific to states where there might be potential
overlap.
Senator Wyden. Why don't you get back to me, if you would,
on that point? Because I think it's been a concern in our
office and among a number of the States. CMS has said that
Independence at Home is a good model, it makes sense for the
dual eligibles, but it has not gotten much mention, if any, in
terms of what you all are doing to communicate with the States.
The second question touches on what's going on with the
dual eligibles, but particularly in states like mine that have
high Medicare Advantage penetration. As you know, Oregon has
the highest percentage of seniors participating in Medicare
Advantage in the country. It's about 42 percent. In fact, in
the metropolitan Portland area, it's well over half of the
seniors in Multnomah, Washington and Clackamas Counties are
participating in Medicare Advantage programs. As you know, you
see this all the way through the Pacific Northwest where Group
Health is extraordinarily popular up in the Seattle area.
Now, Oregon would like to move forward with this kind of
coordination for dual eligibles, but we're concerned about
being disadvantaged because of how CMS proposes setting care
reimbursement rates for this population. We're already getting
hammered under today's reimbursement rates. We're very
appreciative of the work that you all have been doing with our
governor's office, by the way, on this point. But it just seems
to me that if we don't get this resolved, we could actually be
moving backwards, particularly in states like mine that have
high Medicare Advantage participation.
So on behalf of the governor and our state folks, we would
like to have a commitment that you all will work to ensure that
Medicare Advantage plans are not disadvantaged by integrating
care for the dual eligibles. Is that something that you can
offer up here today that I can take back to our State folks?
Ms. Bella. We work very closely with your State folks and
appreciate all of their dedication to this project. The goal of
these demonstrations is not to hurt anyone. I think there is
obviously a legitimate concern on the rate setting for States
like Oregon, and other States as well, and our commitment is to
work with the States to ensure that we can create a rate that
is appropriate to allow plans to provide the services that
beneficiaries need.
Senator Wyden. Well, that's appreciated, and Oregonians do
find ourselves working with you all a lot, and we appreciate
that. We're trailblazers in many respects, and certainly on
health care kinds of issues. As I've told you before, and I
think Chairman Kohl and I have talked a little bit about this,
I want to make sure that 10 years from now, 15 years from now,
we have dramatically increased the number of folks,
particularly the dual eligibles, that are treated at home.
Very often I come to hearings now on this committee and on
the Finance Committee and I walk out saying the discussion
isn't very different than the kind of discussion I participated
in when I was co-director of the Oregon Gray Panthers years
ago, and I point out to my staff I had a full head of hair and
rugged good looks. We were talking then about demonstration
projects, then, and here we are 30 years later still, day in
and day out, seeing vulnerable seniors, dual eligibles, those
who have chronic diseases, heart, stroke, cancer, diabetes,
going off to hospital emergency rooms in the middle of the
night, going to institutional services, when I know we can get
more of those seniors care where they want to be, which is at
home, at less cost to taxpayers.
We've talked about this before. I know this conversation
will be continued. We appreciate what you're trying to do with
Oregon, where we have the special concern because we're already
discriminated against with respect to reimbursement rates, and
then if you could follow up on the first point to make sure
that the states fully understand the value of the Independence
at Home model for treating dual eligibles, that would be most
appreciated, and I look forward to talking to you in the future
about these topics and working with you.
Chairman Corker, Chairman Kohl, thank you very much.
Senator Corker. So, thank you very much. I want to say that
I know a lot of folks are here and a lot of folks are
interested for a lot of reasons, and certainly there's a lot of
finance at stake with all of this. But I am very pleasantly
surprised that the Administration is taking this on in the way
that it is. You seem to be very knowledgeable and on top of
this. I know you're going to be getting a lot of input from
this panel coming after this, and I hope you will at least
understand when it's over what they have said and pay attention
to that.
But I want to thank you for taking on a really tough issue
that our country has been wrestling with for many, many years.
I think with input from stakeholders who care deeply about the
lives of these dual eligibles, and with oversight from
Congress, I think we can have a very good outcome, and I thank
you for taking those steps towards that end. So thank you for
being here.
We'll have the next panel up, if that's okay.
So I'll go ahead and be introducing the panel as you're
getting seated. Panel 2 consists of Jason Helgerson, Medicaid
Director and Deputy Commissioner of the Office of Health
Insurance Programs from New York State Department of Health in
Albany; Dr. Bob Berenson, Institute Fellow, Urban Institute,
Washington, DC; Shawn Morris, President of HealthSpring, a
Nashville-based entity, Nashville, Tennessee, I might say; Tom
Betlach, Director of the Arizona Health Care Cost Containment
System, from Phoenix; and Dr. Dory Funk, Medical Director,
Senior Community Care, Eckert, Colorado.
We thank all of you for being here and look forward to your
input. I know there's a lot of interest in this, and we
certainly, I know, will learn a lot from your testimony. If you
can go ahead and give your opening comments in 5 minutes or so,
we'd appreciate it, and we'll have some questions.
STATEMENT OF JASON HELGERSON, MEDICAID DIRECTOR AND DEPUTY
COMMISSIONER, OFFICE OF HEALTH INSURANCE PROGRAMS, NEW YORK
STATE DEPARTMENT OF HEALTH, ALBANY, NY
Mr. Helgerson. Thank you, Senator, and thank you very much
for the opportunity to be here today to testify before this
committee on this very important topic. On behalf of Governor
Andrew Cuomo, it's a tremendous honor to be here testifying and
talking about New York's efforts to redesign its Medicaid
program, and in particular the state's efforts to transform the
health care delivery system for New Yorkers who are enrolled in
both Medicaid and Medicare.
Currently, New York State spends more than twice the
national average on Medicaid on a per capita basis, and yet at
the same time New York ranks 31st in overall health system
quality, and it ranks last for avoidable hospital utilization.
Upon taking office, Governor Cuomo issued an executive
order which established the Medicaid Redesign Team. The MRT
brought together stakeholders in a unique way from across the
state to work together to reform the system, reduce costs and
improve quality.
This team worked in two phases. The first phase was asked
to identify $4 billion in immediate Medicaid savings. To do
this, the MRT held hearings, established an interactive
website, harnessed the social media, and collected feedback
from citizens and stakeholders alike. In less than two months,
these efforts generated over 4,000 ideas.
On February 24th, 2011, the MRT submitted its first report
with 79 recommendations to the governor. This package achieved
the governor's Medicaid savings target, and subsequently the
governor accepted those recommendations and forwarded them to
the legislature. In somewhat unheard of standards in New York
State government, the legislature actually adopted virtually
all of these recommendations.
The MRT Phase 1 package introduced structural reforms that
have significantly bent the Medicaid cost curve and improved
outcomes for Medicaid members. Importantly, the savings were
achieved without any cuts in eligibility, nor did the plan
eliminate any optional benefits. New York State implemented all
Phase 1 initiatives on time and within savings targets. These
efforts generated not only substantial savings for New York
taxpayers but for the Nation as a whole. Over the next five
years, the MRT initiatives will reduce Federal Medicaid
spending by $17.1 billion.
In Phase 2, the MRT broke up into 10 workgroups and focused
on developing a multi-year action plan to really fundamentally
reform the state's Medicaid program. The MRT completed its work
earlier this year and the state now has a 5-year plan for
transforming Medicaid. The major elements of that reform plan
include the enactment of the first of its kind in the Nation
Medicaid global spending cap that brings much needed fiscal
discipline and transparency to the program. Also, care
management for all, a proposal to over several years phase out
the fee-for-service Medicaid program and replace it with a
system of high-quality care management that rewards quality
over volume.
1.8 million New Yorkers now have access to patient-centered
medical homes that are nationally certified. And also, funding
was provided to create Health Homes all across the state, an
innovative new model which promises to provide high-quality
care management and care coordination for Medicaid's highest
needs patients.
And lastly, the plan included a major new partnership
between the state and the Federal Government to integrate care
between Medicare and Medicaid for the dually eligible
individuals. New York is well positioned to partner with the
Federal Government around duals integration. Duals are among
the most fragile people living in New York, and the fact that
Medicare and Medicaid have not worked together well has meant
poor outcomes and high cost.
New York's approach to dual integration is multifaceted.
First, the state will utilize Health Homes to provide care
management for duals who do not require long-term care
services. This initiative will be deployed in January of 2013
and will benefit 126,000 Medicaid members.
Next, the state will expand on its highly successful
managed long-term care program, which manages the long-term
care needs of roughly 50,000 duals today. This program, which
has been around for over a decade, is now moving into mandatory
status and will grow to more than 120,000 people by January of
2014. In that same year, the state will add Medicare services
in coordination with the Federal Government to the existing
plan benefit package so as to convert in place these duals into
a fully integrated managed care product.
New York will also be working to expand its successful
model to 10,000 duals with developmental disabilities.
Duals will have the option, of course, to opt out of
Medicare managed care. However, we are confident that they will
actually stay in the fully integrated option since they are
already enrolled in and familiar with their plan. It's
important to note that PACE will also be an option, and New
York operates some of the largest PACE programs in the country.
Thanks to Governor Cuomo's leadership and the hard work of
the MRT, New York is now in a position and is excited that we
have a plan to fundamentally redesign the Medicaid program.
Thanks to this effort and the efforts of our friends at the
Duals Office, we now are on the path for a new partnership
between the state and the Federal Government when it comes to
integrating care for some of our most fragile New Yorkers.
Thank you very much for the opportunity to testify.
Senator Corker. Thank you very much.
Dr. Berenson.
STATEMENT OF ROBERT BERENSON, MD, INSTITUTE FELLOW, URBAN
INSTITUTE, WASHINGTON, DC
Dr. Berenson. Thank you, Senator Corker, Senator Johnson. I
appreciate the opportunity to testify on the CMS initiative for
dual eligible beneficiaries. My orientation is to Medicare
based on my experience as a practicing internist for 20 years,
a senior official in the Clinton Administration responsible for
Medicare payment policy and managed care contracting, and as
vice chair of MedPAC until this past May. There is broad
agreement on the need to do a better job on care for the duals.
I long have supported a move from fee-for-service, which is
proving increasingly dysfunctional, to capitation, so I endorse
testing the general approach in the dominant integrated payment
model in the CMS financial alignment initiative.
Because of the challenges of scaling and generalizing from
impressive local initiatives, reports of successful Medicaid
managed care programs and innovative Medicare Advantage special
needs plans should lead to real demonstrations, accompanied by
strong evaluations to produce the needed evidence on which to
base policy. There are many examples of initiatives that
proponents knew ``worked'' that proved not to work when scaled
and subjected to evaluation.
CMS has indicated it wants to include 2 million or more in
these state-initiated programs. Instead, my view is that CMS
should scale down this demonstration to one that might involve
as many as 500,000 dual eligibles in perhaps 8 to 10 states.
Such a demonstration program would still constitute one of the
largest demonstrations Medicare has ever mounted.
Reasons for this shift include, one, experience with mostly
healthy adults and children does not qualify a managed care
organization to serve duals who may have severe mental illness,
developmental and other physical disabilities, HIV/AIDS, end-
stage renal disease, dementia, multiple chronic conditions.
Medicaid managed care plans currently serve only about 120,000
duals nationally.
SNPs do target duals care and serve about 10 times that
many. Yet even with SNPs, there is little evidence that permits
policymakers to presume, for example, that passive enrollment
is in the beneficiary's best interest, a central premise in
this initiative.
Two, Medicaid managed care plans lack capacity to
accommodate the kinds of numbers that have been proposed by the
states.
Three, the financial alignment initiative should require
proof of concept before broad application. In fact, prior
demonstrations and experience with SNPs do not demonstrate that
these integrated programs actually produce savings. Further, a
central purpose of demonstrations is to work out a myriad of
operational issues before broad adoption.
Four, proper evaluation is essential to fulfilling the ACA
requirement that the CMS chief actuary certify that a
demonstration has reduced spending with no reduction in
quality, improved quality with no greater spending, or both.
The current size and scope of the demonstrations would make
such evaluations problematic.
Most states have proposed including all duals or entire
subpopulations in their programs. Given all the effort that
would go into producing an acceptable program, it is unlikely
that if the evaluation proved negative, a future CMS
administrator would be able to tell a state to shut down the
demo and return to the status quo ante. In the current
parlance, they are too big to fail.
CMS has proposed a financing model that assumes up-front
savings for Medicare, unlike the approach used in other
important initiatives such as shared savings program for ACOs.
The immediate response of financially pressured managed care
plans could be to limit rather than expand long-term services
and supports, and to cut provider payment levels from Medicare
levels, threatening access to care. The initiative has been
silent on the extent to which health plans can achieve savings
through reduced payment rates to providers.
Of the $320 billion Medicare and Medicaid dollars estimated
as spent on duals in 2011, 80 percent represent Federal
dollars, more than two-thirds of which flowed through Medicare.
Potential savings in this demonstration would come primarily
from better management of Medicare-financed, acute care
services. In recent years, there has been a marked ramp-up of
Medicare programs and demonstrations for beneficiaries with
serious, chronic health conditions, many of whom are duals.
They include ACOs, the Independence at Home demonstration that
Senator Wyden talked about, bundled payment, hospital
readmission penalties, and increased Medicare Advantage
enrollment.
As Senator Rockefeller suggested in his recent letter to
the Secretary, instead of relying solely on a model that relies
on multiple state efforts, CMS should also test models that
bring care for duals under the Federal umbrella.
Thank you very much.
Senator Corker. Thank you.
Mr. Morris, welcome.
STATEMENT OF SHAWN MORRIS, PRESIDENT, HEALTHSPRING, NASHVILLE,
TN
Mr. Morris. Thank you. Senator Corker, I want to thank you
and Chairman Kohl for the opportunity to appear today before
the U.S. Senate Special Committee on Aging to discuss improving
care for dual eligibles.
My name is Shawn Morris, and I'm the President of
Development and Innovation at HealthSpring, a Cigna Company.
HealthSpring is one of the largest Medicare Advantage
coordinated care plans in the United States, with over 400,000
Medicare Advantage and 1.2 million Prescription Drug Plan
members. More than 122,000 of these Medicare Advantage members
are dual-eligible beneficiaries.
Cigna and HealthSpring have been serving Medicare
beneficiaries for 20 years, and our concentration on the big
picture of improving beneficiaries' overall health and quality
of life has allowed us to develop a unique approach to health
care coverage. This approach is particularly beneficial to the
vulnerable dual-eligible beneficiaries with complex health care
needs.
At HealthSpring, we developed a partnership that provides
what our members want, more access to higher quality preventive
care, while giving physicians the tools and incentives they
need to deliver that care. Specifically, HealthSpring develops:
focused, data-driven networks; pays physicians for quality over
quantity, and provides our physicians the resources they need
so they can devote more time and attention to their patients.
The result of this approach is engaged physicians and healthier
members with lower medical costs. It's a common-sense model,
but an uncommon practice.
Through long-term initiatives like our Living Well Health
Centers and Partnership for Quality program, we are able to
focus on our members' overall health by improving their
experience of care and quality of life. HealthSpring's Living
Well Health Centers provide an additional clinical support by
adding health plan coordinators, nurse practitioners,
pharmacists and behavioral health specialists at the point of
care. This interdisciplinary care team increases patient
satisfaction and improves adherence to evidence-based treatment
plans.
Our Partnership for Quality program is also a clear win-
win-win. Beneficiaries receive better care and stay healthier;
empowered, engaged physicians earn more through quality
bonuses; and HealthSpring spends less overall on delivering
care. For example, members enrolled over a four-year period
with Partnership for Quality physicians saw an 8 percent
reduction in hospital admissions, and significant increases in
preventive health services, such as a 73 percent increase in
breast cancer screenings and 83 percent increase in colorectal
screenings. Partnership for Quality turns the inefficient,
volume-driven model of health care on its head, and everyone
benefits.
The HealthSpring members that often benefit the most from
our dedication to comprehensive care coordination and higher
quality are our 122,000 dual-eligible members. That is why we
strongly support CMS' recent efforts to improve care for this
vulnerable population. The new Capitated Financial Alignment
Model demonstration program offers a real opportunity to
improve the quality of care for these long underserved
beneficiaries and as a fortunate by-product, generates
considerable budgetary savings.
We believe that in order for these demonstrations to
succeed in identifying the best, long-term solutions for these
patients, great care needs to be taken when selecting the
participating plans. As MedPAC noted in its June 2012 report,
``plan participation standards should be transparent and should
at least consider quality rankings, provider network adequacy,
plan capacity, and experience with Medicare and Medicaid
services for dual-eligible enrollees.''
We completely agree. We believe all plans that meet CMS
designated quality and access standards, including Medicaid
managed care plans as well as Medicare Advantage plans, ought
to be eligible to participate in these demos. Frail, dual-
eligible beneficiaries deserve nothing less.
That said, it's also important to recognize that when
Congress created Medicare and Medicaid nearly a half-century
ago, it established Medicare as the primary source of financing
of medical care for seniors regardless of their eligibility for
Medicaid. Indigent seniors should have the same Medicare
coverage and the same broad access to physicians as more
affluent ones.
In carrying out the Capitated Financial Alignment Model, we
should not overturn this structure by preventing Medicare
Advantage plans from participating or by requiring
beneficiaries to relinquish the current coverage that they have
actively chosen. Requiring dual eligibles to abandon their
chosen plan and trusted physicians, that have experience in
coordinating their care and forcing these beneficiaries into a
plan with a less specialized care coordination model could
undermine the intent of the demonstrations.
Lastly, by maintaining Medicare as the primary source of
care for vulnerable dual eligibles, we'll ensure that they're
able to benefit from the variety of new delivery system reforms
that the dual-eligible population so desperately needs. Dual-
eligible beneficiaries have the greatest need and the best
opportunity for improving quality and lowering cost.
We strongly support these goals and look forward to working
with this committee and other Federal policymakers to achieve
these results. Thank you again for this opportunity to testify,
and I welcome any questions you may have.
Senator Corker. Thank you.
Mr. Betlach.
STATEMENT OF TOM BETLACH, DIRECTOR, ARIZONA HEALTH CARE COST
CONTAINMENT SYSTEM, PHOENIX, AZ
Mr. Betlach. Thank you for the invitation to discuss
Arizona's use of managed care to improve the lives of
individuals enrolled in both the Medicare and Medicaid
programs. Arizona has maintained a system of managed care for
its entire membership, including dual-eligible members, since
the state joined Medicaid in 1982. Arizona built its Medicaid
program on the principles of member protection, competition,
choice, and accountability. Arizona also offers the unique
perspective of a state that has one-third of our dual-eligible
members in the same health plan for both Medicare and Medicaid.
The vision underlying Arizona's program is to place
accountability for management, oversight, and care delivery
with one entity, the health plan. Arizona's model works through
private health plans that engage in a competitive bidding
process and are financially at risk to coordinate care for
their members. Members have their choice of health plan and
doctor. Health plans establish their own provider networks,
which we monitor to ensure access to care.
Thirty years of experience have shown it is precisely our
frailest members who are most in need of the care coordination
managed care offers. Recently we have seen a great deal of
confusion and misinformation surrounding the use of Medicaid
managed care for dual eligibles. My message to the committee
today is simple: Medicaid managed care for dual-eligible
members is not an experiment but instead, has proven to be a
success in Arizona.
In Arizona, 82 percent of our elderly and physically
disabled population that is at risk of institutionalization is
dually eligible. The model of care for this population in many
states is nursing home placement. Over the past decade AHCCS,
through the work of our health plans has progressed from 40
percent of its elderly and physically disabled members in home
and community to 72 percent, saving $300 million this past
year. For members at risk of institutionalization with a
developmental disability, 98 percent live at home or in the
community, contributing to Arizona's number 1 ranking by United
Cerebral Palsy.
More importantly, keeping people out of institutions
increases member satisfaction and offers higher quality of
life. Providing the right kinds of care coordination to keep
people at home is a Medicaid skill set.
These care management successes also extend to prescription
drugs. Arizona's drug costs for dual eligibles were $166 per
member per month, compared to a national average of $266 when
Part D was created. A study conducted by the Lewin Group showed
AHCCCS health plans were not withholding care but rather
effectively using generic and lower cost drugs. Without this
effort, Arizona would have spent $90 million more per year on
dual-eligible drug coverage.
Avalere Health recently completed an analysis of the health
outcomes for dual-eligible members enrolled in Mercy Care Plan,
an access contractor that is also a Medicare Advantage special
needs plan, or D-SNP. Avalere compared 16,000 integrated dual
members enrolled in Mercy Care Plan to national Medicare fee-
for-service dual-eligible data. To ensure a fair comparison,
Avalere created a risk-adjusted model. The results showed Mercy
Care Plan performed considerably better than fee-for-service.
Mercy Care Plan members exhibited a 31 percent lower rate of
hospitalization, 43 percent lower rate of days spent in a
hospital, nine percent lower emergency department use, and 21
percent lower readmission rates.
Arizona also has proven that passive enrollment works. When
Medicare Part D was created, Arizona actively encouraged
existing Medicaid plans to become D-SNPs. On January 1st, 2006,
approximately 39,000 members were passively enrolled with their
Medicaid plan for Medicare in order to provide better
continuity of care for Part D implementation. Arizona's strong
transition planning and protocols ensured member protections
and minimal disruption during this enrollment process.
Overall, Arizona's Medicaid members are satisfied with
their health plans. In fact, only three percent of more than
1.2 million total AHCCCS members change their health plan each
year. I've been fortunate to be associated with the AHCCCS
system for 20 years. For the past 10 years, I have served as
the Deputy Director and now Director. Prior to that, I served
in the governor's office for 10 years. I know the AHCCCS
program is not an experiment. It is a proven model with
documented success. So, for me, it is frustrating to hear
others dismiss Medicaid managed care as an option for duals and
suggest that states are either ill-intentioned or incapable of
achieving success for this population.
This is not about achieving a budget target. States like
Arizona want to move the system forward, improve care for our
citizens, and be responsible with the taxpayers' dollars. To
think, as I have seen some suggest, that Medicare can be the
sole answer for dual members is simply wrong. Medicare has very
limited knowledge and experience in home and community-based
services, community supports, or behavioral health. States have
managed these issues for duals, and it is the states that
understand their local communities the best.
Equally disconcerting is this notion that states are moving
too fast and the demonstrations are too big. We've had 45 years
of fragmentation. We have decades of comparison data that show
the shortcomings of the existing system. We don't need control
groups in these dual demonstrations. We know what is not
working for the people we serve and the taxpayers who are
footing the bill. The current system is indefensible and
unsustainable. We should not wait any longer to build upon a
proven model.
We hope Arizona's example will dispel the myths around
managed care and assuage the anxiety some feel about using this
model for dual eligibles.
Thank you again for the opportunity to briefly share our
experiences in Arizona with the committee.
Senator Corker. Dr. Funk, your summary.
Senator Bennet has arrived.
Senator Bennet. I thank the Ranking Member for your
leadership, and for you and the Chairman for holding this
hearing, and I am looking forward to reading everybody's
testimony. I apologize because I have another engagement, but I
wanted to come and welcome Dr. Funk here.
Thank you very much for what you do in Colorado, and thanks
for coming all this way to share your views.
In the end, we've got some hard decisions to make here, but
I think if we approach this in the spirit of goodwill that
Senator Corker, among others, have shown, we're going to be
able to get this done with a view toward how it's actually
going to affect the people that live in our states rather than
the battle that's going on back here. So, thank you.
Senator Corker. And thank you for your great service.
Senator Bennet. Thank you.
STATEMENT OF DORY FUNK, M.D., MEDICAL DIRECTOR, SENIOR
COMMUNITY CARE, ECKERT, CO
Dr. Funk. Thank you, Senators, for inviting me out for my
first trip to Washington. My name is Dr. Dory Funk.
Senator Corker. We have found that it has a negative effect
on folks.
Dr. Funk. Is that right?
[Laughter.]
Senator Corker. I would not stay long.
[Laughter.]
Go ahead. Sorry to disconcert you.
Dr. Funk. That's fine. I'm a medical director for a PACE
program in rural Western Colorado run by Volunteers of America.
It's a successful PACE program, and I'm here to tell you about
three particular operational flexibilities that we've been
granted by the State of Colorado by waiver that I think
directly attributes to some of our success. The National PACE
Association, or NPA, wants to see those applied more broadly to
PACE organizations across the country.
PACE stands for Program for All-Inclusive Care of the
Elderly. It's designed around an interdisciplinary team to meet
the needs of frail, elderly, low-income people with chronic
care and long-term needs in order to keep them in their homes
and out of nursing homes. Participants in the PACE program must
meet state-determined criteria for level of nursing home care.
There are 86 programs in 29 states that currently cover 25,000
participants, 90 percent of which are dual-eligible Medicare
and Medicaid beneficiaries.
Ours is a little bit different. In a traditional PACE
program, one or two physicians are hired to care for all the
participants. Therefore, upon enrollment, a participant has to
leave their own physician, who they may have had for a decade
or two. Under the traditional model, nurse practitioners have a
role limited to acute care only, and the majority of the care
provided to participants in the traditional model is delivered
in a full-service PACE day center.
The contrasts in our program are as follows. At Senior
Community we have a waiver to contract with community-based
physicians so the participants get to keep their own physician.
We then train the physician and incentivize him to provide care
and medical practice within our PACE philosophies of care.
In Colorado, nurse practitioners have unrestricted license
to provide primary care given the rural nature of our state.
The waiver we obtained allows a broadening of the scope of care
of our nurse practitioners. They can now provide basically
attending care they do, require periodic assessments,
participate more fully in care planning, and play a larger role
in supporting the community physicians.
Finally, we also have a waiver to develop an alternative
delivery site in a tiny community 30 miles from the nearest
PACE delivery site where we have 25 participants. As you can
imagine, if you're frail, elderly, multiple medical issues, 30
miles in a van can be a long ride, especially in the winter.
Owing in part to these operational flexibilities and the
innovative leadership provided by Volunteers of America, we've
achieved success in several quality measures.
First of all, we have a remarkable market penetration.
Twenty-three percent of the PACE-eligible population in our
area is enrolled in Senior CommUnity care. Typically, PACE
programs achieve a market penetration of approximately 6 to 8
percent.
Secondly, our clinical costs are in line or meet NPA
benchmarks. We spend $711 per member per month on doctors, lab
tests, diagnostic studies and hospitals, while the NPA
benchmark is $940 per member per month.
Thirdly, our total hospital days and our 30-day hospital
readmission rates are outstanding. In fact, we have the lowest
30-day hospital readmission rate of all 86 PACE programs. It's
6.8 percent. Nationally, for the dual-eligible population, it's
21.7 percent. Our hospital days per 1,000 members is 2,900. For
duals enrolled in nursing facilities, it's 5,000. For duals
receiving home and community-based services in the community,
it's 6,400 days per thousand.
So we also talked about in our hearing so far outlined
incentives. As with any good idea where multiple parties are
involved, our program has incentives aligned among community
physicians, community hospitals, community ERs, and the PACE
participant, all within a blended Medicare and Medicaid
capitated payment system. Our physicians see their patients do
well, they get to practice with guidelines of care that make
clinical sense, and they get rewarded financially. Hospitals
are seeing lower lengths of stays and lower readmission rates.
Our emergency rooms get disposition help with our difficult
patients that wind up in the ER. Finally, the patients get to
stay in their homes, and the families get the support to do so.
PACE has been a proven leader in providing care to the
particularly frail and elderly part of the dual-eligible
population for 25 years. NPA would like to extend these
operational flexibilities to other PACE programs across the
country, as well as expanding PACE eligibility to include
individuals under the age of 55 who meet their state's criteria
for nursing home level of care, and to high-need, high-cost
beneficiaries who may not yet meet nursing home criteria for
care but currently are not well served.
NPA will be hoping for your support in their pursuit of
legislative and regulatory solutions in order to achieve those
goals.
Senator Corker. Thank you for your pleasant testimony.
Just so no one is caught off guard, I'll call on Senator
Johnson, and then Senator Blumenthal, and then Senator
Whitehouse, and then I'll go last. I just want to make sure you
all will be ready. I'll give you time to settle in here for
just one moment. We welcome you.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
Mr. Morris, can you just tell me, why did HealthSpring
pursue this initiative, which I guess I would kind of consider
is capitated coordinated care. Would that be an accurate
description?
Mr. Morris. That would be correct. The initiative from the
demonstration project? Just to clarify.
Yes. HealthSpring is a Medicare Advantage plan. We accept
payments from Medicare A and B, and D. So we approach all of
what we do in coordinating for any member, Medicare or dual
eligible, in a capitated way.
So in that approach, the first thing we're going to do is
align incentives for the providers downstream. We want to be
innovative. We want to create programs such as the Partnership
for Quality I spoke of in my testimony as well as the Living
Well Health Centers, and so forth.
We are very interested in these demonstration projects, and
we feel it aligns the incentives from a payer perspective, be
that Medicare or Medicaid. But at the same time, we think that
the people and the payers that can qualify, such as the
different payers that have been represented here today,
Medicaid, PACE and Medicare Advantage, not be, put at a non-
competitive advantage to demonstrate what they can do in an
innovative way.
Senator Johnson. This was something done on your own
company's initiative, or is this something that was part of
this particular government program?
Mr. Morris. This decision to participate in the
demonstration project is on our own company's initiative.
Senator Johnson. Okay. The private sector did it. Okay.
Dr. Berenson, are you familiar with your Urban Institute
study that compares the long-term contribution of retiring
couples into Medicare versus what the expected benefit is? I
don't want to be springing that on you if you're not familiar
with it.
Dr. Berenson. Well, that was done by a different branch.
Gene Steuerle's work?
Senator Johnson. Right.
Dr. Berenson. Yes, I'm aware of it. I don't know a lot of
the details, but I am aware of it.
Senator Johnson. Roughly, I think he found, for a couple
retiring today, basically a two average earner couple, that
they would have paid in roughly about $116,000 into Medicare,
with an expected benefit--and all these things are time-value-
adjusted--of about $350,000, which kind of shows the mismatch
of the funding mechanism.
The reason I raise that issue is when I take a look at the
health care law, it was supposedly funded for 10 years by about
half a trillion dollars in taxes, fees and penalties, and about
a half a trillion dollars, $500 billion, in reductions to
Medicare and Medicaid, Medicare Advantage. Is that roughly
correct?
Dr. Berenson. Medicare, Medicare Advantage, and provider
payments, not Medicaid as far as I know. Largely Medicare cuts,
yes.
Senator Johnson. To my knowledge, we really haven't even
enacted the SGR doc fix, which is about $280 billion. I'm not
quite sure. Are you aware that we're actually initiating those
savings from Medicare over this 10-year period?
Dr. Berenson. I believe the actuary has two estimates, one
which is current law which assumes the SGR occurs, and then
sort of a real-world picture in which it assumes that Congress
does what it's done for the last 10 years and does not allow
those cuts to go into place.
Senator Johnson. Here's my question and my concern. And
again, I appreciate the fact that we're looking for
efficiencies within the system, but I'm afraid the system is
going to be horribly broken because if we roll the budgetary
window forward to when the health care law actually gets fully
kicked in, about 2016 with full spending, the total cost of the
health care law will be about $2.5 trillion over 10 years. The
taxes, fees and penalties, currently about $500 billion, maybe
those will grow, maybe they won't. That leaves about a $2
trillion deficit gap or money that's going to have to come from
I guess Medicare or Medicaid, or something else.
Does that concern any of you in terms of what you're trying
to do, working with either Medicare or Medicaid? And are you
aware of that type of funding gap with the health care law?
I'll go to Dr. Berenson.
Dr. Berenson. We could go in any number of directions on
this. I also would, I guess, cite data that suggests that both
CBO and the actuaries have projected that per-capita spending
in Medicare for the next 10 years is projected to increase at
about 1 percent above inflation or at about GDP. It's the best
it's been since the founding of the program. Whether that's
sustainable or not is up for debate. But it's clear that, at
least in the 25-year projections, that the real pressure on
Medicare funding, and it's significant, is from a near doubling
of the beneficiary population who will be in Medicare. So we
clearly have a serious problem. The question is whether per-
capita spending reductions of the kind I think that these
programs would lead to by itself can solve the problem.
Senator Johnson. So I guess my point being is we have a
huge problem with Medicare. As it is, the health care law
starting in 2016 adds about a $2 trillion problem to that
figure.
So, thank you, Mr. Chairman.
Senator Corker. Thank you.
Senator Blumenthal.
Senator Blumenthal. Thank you, Mr. Chairman. Thank you for
holding this hearing on this critically important topic.
The additional costs to the Medicare program that you were
describing result from the increase in the number of
beneficiaries, does it not?
Dr. Berenson. The data that I'm aware of suggest that about
half of the increase over 25 years is from the increase in the
population, and about half is from per-capita spending
increases. But at this point in time, it's largely just
inflation. It's the cost of doing business, plus a slight bit
more.
Senator Blumenthal. And let me ask you and Mr. Morris, if I
may, because, Mr. Morris, you mentioned the preventive care
element and the opportunities there for not only improving
quality but reducing costs, and you say that Medicare should
remain the primary source of care for the dual eligibles. What
specific opportunities do you think there are in emphasizing
preventive care for this population that will account for such
a huge increase in costs?
Mr. Morris. We began the program I spoke of, Partnership
for Quality, in 2006 with a local physician group in Gallatin,
Tennessee; it was designed with the physicians. And at that
time, when we looked at their adherence to the standards that
that group came up with; along with us, and these are typical
quality standards such as women over the age of 40 getting
mammographies, and individuals over 50 years of age getting
colonoscopies, just general things, their adherence to the
agreed up quality standards was around 37, 38 percent.
Since then, that particular group today is up over 90
percent adherence to the standards. We have grown the
Partnership for Quality program over a six-year period to
include physicians that take care of 120,000 members or so, and
the average of that is in the high 70s. This particular group,
not being an outlier, is representative of what most physicians
are when we audit adherence to those same standards.
I think the answer to your question ``Can you do this'', I
think we can. I think you have to have consistent quality
standards that you need to compare these demos to, I also think
there needs to be benchmarks and there needs to be
participation from the groups that you are going to be holding
accountable; we've had a lot of success doing that.
Senator Blumenthal. And I read about the Partnership for
Patients program, and I've been very impressed by its potential
and its accomplishments so far. But when you say in your
testimony that physicians are empowered to devote themselves to
their patients and our members receive better care and stay
healthier, for the non-health care professional, what does that
mean in practice?
Mr. Morris. In this program, I'll compare it to fee-for-
service Medicare. For a physician in fee-for-service Medicare
to invest the capital from a primary care physician's
standpoint, to provide this level of service, they would not be
reimbursed for such within the fee-for-service system. We all
know the primary care physicians are busy. They're seeing 40 to
50 people a day, on average. So you can do that math. That's
just a few minutes a day per patient.
To the average physician in the community, we embed in
their practice an employee of HealthSpring, a clinical person
to run a Web-based tool to extract data on their entire
population of who are not meeting these established quality
guidelines. It's not the people who come into the office where
you see the majority of gaps. Most physicians do a pretty good
job with these patients. It's the population of patients that
do not come into the office and having processes in place to
get those patients in, is where you can make more significant
improvement.
Senator Blumenthal. And I think that's a critical point.
How do you get that population into the office, and how do you
not just get them into the office physically but get them there
a second and third time for the follow-up that's necessary to
provide preventive care?
Mr. Morris. Well, by having a HealthSpring employee in that
physician's or that group's office that is embedded there. So
the patient feels that that employee is a part of that
practice, and it's a different model than an insurance company
calling from an insurance office to get that patient in. They
react because they've met that employee, they've seen them at
their doctor's office.
Is it easy? It's not easy. It takes a lot of work,
especially in the population we're speaking to, in dual
eligibles. These people tend to move around, they have multiple
caregivers, and it takes creative, innovative processes of
getting multiple cell phone numbers and multiple siblings' home
numbers to reach them and get them in.
Senator Blumenthal. Thank you.
Mr. Chairman, my time has expired. I want to thank you
again, and I will be submitting for the record a statement, an
opening statement, but I won't take the committee's time with
it.
Senator Corker. Well, thanks for being here. I will say,
I've visited the operation that Mr. Morris has. It's phenomenal
to see what happens there, and it really is a model of how
health care can and should work in our country. So I do hope
you'll spend a little more time with it because it's an
incredible thing to witness and to see patients coming in, and
to see the way they're treated, and to see the familiarity they
have with the caregivers.
So thank you for your question.
Senator Blumenthal. Thank you. I'd be interested in
learning more about that.
Mr. Morris. Oh, we'd welcome any of you there. Love to have
you.
Senator Blumenthal. Thank you.
Senator Corker. Thank you.
Senator.
Senator Whitehouse. Thank you, Chairman.
I thank all the witnesses for being here.
I'd like to sort of give what appears to be a general
perspective and see if you all agree with it, and then ask a
very specific question.
The general perspective is that we have an enormously
expensive health care system for the results that it produces.
We burn 18 percent of our gross domestic product every year on
health care, and I think the most inefficient other
industrialized country in the world is at 12 percent. So we're
50 percent more inefficient than the least efficient of our
industrialized competitors, which isn't a great place to be,
and you can draw some conclusions about what savings are
possible by simply becoming more efficient, by delivering
health care better.
Some pretty responsible people have actually done that. The
President's Council on Economic Advisors I think has pegged the
number at about $700 billion every single year. The Health Care
Institute I think puts it at about $850 billion every single
year. The Institutes of Medicine just came out with a report
that put it at $760 billion every single year. The Lewin Group
and President Bush's Treasury Secretary O'Neill, who knows a
lot about this from the Pittsburgh Regional Health Initiative,
those two have pegged it at $1 trillion a year.
So I start from the proposition that there are enormous
efficiency gains to be achieved in the health care system
without compromising the quality of care, and that when you're
in a discussion of let's leave the system in place and just cut
people's benefits, you're in a horrible discussion and a wrong
discussion. If you're in a ``let's try to protect those
benefits at all costs but let's see how we can deliver that
benefit of health care more efficiently,'' you're in the right
place.
I see a lot of heads nodding. So the second piece of that
is that we're actually beginning to kind of sort out what the
mechanism is for achieving that goal, and it's a combination of
quality improvements so you don't have hospital-acquired
infections and errors all over the place. It's payment reforms
so that people are getting paid to deliver better health care
and better health outcomes rather than just more procedures.
It's an emphasis on prevention and on primary care in places
where those things can be demonstrated to actually save money
by addressing problems early or preventing them in the first
place.
The whole thing has to be supported by a health information
infrastructure that is more robust and helpful, and we can do
something about the kind of grotesque administrative costs that
are associated with a lot of health care.
So I view this as a real time of opportunity, and from what
I understand, I mean, there are folks like the Vanderbilt
Medical Center in Tennessee just won an innovation grant.
They're going down this path. Gundersen Lutheran, Senator
Johnson, I've talked about before. They're one of the five or
six real national leaders in improving this delivery.
Have I kind of correctly described the sweet spot that you
all are aiming for with the Medicaid and Medicare delivery
system reforms? I'll start with Mr. Helgerson, who is nodding
most vigorously.
Mr. Helgerson. Yes.
Senator Whitehouse. He and Mr. Morris are tied for nodding
among the five nodding heads.
Mr. Helgerson. Yes, Senator, I agree 100 percent. I think
it's a tremendous opportunity. In New York two years ago there
was a study done by the Lewin Group that specifically looked at
dual eligibles in New York State. There are 700,000 of those
individuals, roughly about 48 percent of total Medicaid
expenditures on that population, about 41 percent of total
Medicare expenditures. They found in their analysis that if we
moved to fully integrated managed care and that managed care
was effective, as we would all hope, we could save up to $1
billion a year in Medicare and Medicaid savings. So there are
absolutely substantial opportunities. There are a lot of
inefficiencies in the system.
And in addition to that, I think also what we're excited
about is that not only are there inefficiencies, but there are
also just really poor patient outcomes, and the lack of the
ability of the programs to work together and really have
patient-centered care, as it's been described, that really
leads to individuals who are clearly worse off.
We believe that one of the reasons why New York ranks 50th
in the Nation in inappropriate hospitalizations is because for
duals, the system has simply not worked, and these new duals
initiatives really are an opportunity to get the system working
for those individuals.
Senator Whitehouse. How many of your duals tend to be in
nursing homes?
Mr. Helgerson. We have roughly--and it's an interesting
comparison between Arizona and New York--roughly about 50
percent of our spent in long-term care is in nursing homes
institutional level of care. Traditionally, that's been a spent
that's been fee-for-service. It's now being moved into
capitation. In Arizona, I think it's like 80/20, meaning
roughly 80 percent is in the community. So I think that shows
you, in a state that was entirely managed care from its
beginning, that I think not only can it mean better outcomes,
but I think we'll get closer to the Olmstead decision, which is
trying to keep people in the community as long as possible, and
I think if we align the incentives more effectively, we can do
that.
Senator Whitehouse. Let me make one last point. I know my
time has run out here. I'd love to work with any and all of you
on trying to expand the definition of ``meaningful use'' for
health information technology purposes, at least on a pilot
basis to include nursing homes, at least for the dual-eligible
population, because it really makes very little sense when you
have patients who are cycling back and forth between a nursing
home and a hospital very often, and creating an enormous amount
of cost as they cycle, to have our system support the
development of health information technology in the hospital
but not in the nursing home. I think if you kicked it all the
way open, it's too big of a bite and there's too much. But on a
pilot basis, and particularly for these dual eligibles, we
really ought to be able to try to find a way to push that
aperture a little wider.
There's a similar problem with respect to behavioral
health, somebody who has a behavioral health issue. Their
behavioral health provider is likely to be their medical home
because that's the one place where their doctor really
understands not only their health problem but their limitations
in grappling with the rest of the health care system, and yet
we carve out behavioral health providers.
So if you're interested in that, hunt me down and come to
my office, call my office. I think this is a simple correction
that I hope the Administration could actually make on its own
within the existing definitions of ``meaningful use,'' and I'm
putting pressure on them in every way I can to try to do that,
again, at least on a pilot basis.
I'll close out. I was introduced by George Halvorson, who
is the CEO of Kaiser Permanente. He's a pretty serious guy in
health care in this country. In the course of introducing me he
said, ``There are people right now who want to cut benefits and
ration care and have that be the avenue to cost reduction in
this country, and that's wrong,'' he said. ``It's so wrong,
it's almost criminal,'' he said. ``It's an inept way of
thinking about health care.''
So I applaud all of you for thinking in a non-inept way
about health care and really trying to get after the
improvements we can do in the delivery system. I know, Mr.
Morris, you in particular have a great private-sector example.
But in Arizona, New York and elsewhere, thank you very much for
this. There's a road we must travel, and it's a road with
immense rewards.
I thank the chairman for holding this hearing.
Senator Corker. Thank you. Thanks for being here.
So, first of all, Dr. Berenson, when I said that being in
Washington sometimes can have a negative effect, I wasn't
referring to your testimony. I realize you're from Washington.
[Laughter.]
As I listened to sort of the summation of the first four
witnesses' testimony, Mr. Helgerson, you all are in New York
State, and you all are just robustly pursuing managed care,
which is also sort of a pleasant surprise from that state, and
it sounds like you're pretty robust, pretty excited about the
changes that that will have for the people that you serve.
Dr. Berenson, if I summarize your testimony, it's that you
think the demonstration project is too large and you worry
about people being reimbursed at rates that are lower than
Medicare. Those are two of the concerns that you seem to
express most during your testimony.
Mr. Morris, it seemed to me your concern was that if people
have the ability to be a part of the Medicare program now, you
don't want to see that change so that they end up being
administered through Medicaid.
Mr. Betlach, you have exactly the opposite view and think
we ought to robustly pursue the states' ability through
Medicaid to manage these dual eligibles.
But do you think there's any way, as we move ahead with
this demonstration program, do you think there's a way to--
especially, I guess, Dr. Berenson, Mr. Morris and Mr. Betlach--
to reconcile the concerns that the three of you all have, which
are very different in nature?
Mr. Morris. I think there should be flexibility. I think it
goes back to consistency of the plan's ranking and which plans
are going to participate in the demos, then making sure those
health plans will engage quality standards and network adequate
standards. We're a Medicare Advantage plan. We're used to
working with Medicare, and we have years of experience in what
an adequate network should be. They're stringent. There's give
and take in what that looks like at the end of the day when
you're expanding a network.
So Medicare Advantage is used to such a process. I don't
know that it's a state versus Federal issue. It's really, for
us, why would you preclude in a demonstration, innovative
companies that have proven their ability to take care of dual
eligibles for such a long period of time, and do that in a way
that the beneficiaries have chosen you in an open market? So
why would CMS and the State on the front end preclude
innovative companies, no matter if they're Medicaid or
Medicare? So have that open and allow plans that meet the
standards over a three-year period. Make sure we have
consistency in order to demonstrate that the demonstration
projects are successful.
Senator Corker. And at present, you think you will be
precluded as it's taking off?
Mr. Morris. Some states have an open RFP process, and some
states are moving members to Medicaid. There's a variety of
things out there. As Ms. Bella said, they've made no decisions,
but we think just in general, if it's a demonstration by
nature, you want organizations that can qualify, be they for-
profit, not-for-profit, whatever, in order to improve the
ability for the demonstration at the end of the period to be
successful.
Senator Corker. Do you think your dialogue with CMS and
others throughout the process will reconcile that in a way that
will be acceptable based on things as they're moving ahead
right now?
Mr. Morris. We are hopeful of that.
Senator Corker. Okay, good.
Dr. Berenson.
Dr. Berenson. Yes, I'd make a couple of comments, one on
that point. One of my concerns is that, as I understand it, the
sort of priority for beneficiaries will be their passive
enrollment into a managed care plan. There are some very
important programs now that have started in Medicare. The most
important in my view is accountable care organizations. CMS
recently announced 2.4 million beneficiaries will be in the
combination of the shared savings ACOs and the pioneer ACOs.
And yet, as I understand it, people will be placed in a
separate organization under the state proposal and then have to
opt out.
I've talked to clinicians at Ann Arbor, at the University
of Michigan, which has one of these that says, ``yes, we're all
worried about this because we're now going to have to work with
all of our enrollees to get them to opt out.'' Well, in ACOs
they are not enrollees. They're assigned. But actually, they
are in a program which is dedicated to trying to improve
efficiency in what hopefully will be a capitated way in the
future. So I think the demo causes some dislocation there.
CMS is trying to work on a lack of overlap and duplication
of demos. I think this is one area where they should do that.
I did want to make one or two comments about Mr. Betlach's
presentation. I don't think Arizona is typical of many of the
states. Really, they have a lot of experience in this area.
Some of the other states don't, and the numbers that I've never
seen contested is that nationally there are about 100,000 or
slightly more dual beneficiaries who are in integrated managed
care programs. So some of the other states are doing this sort
of ``on the come''. Arizona has the experience. If we actually
had an attitude that, ``we're proving the concept--that this
works'', then I would assume CMS would select Arizona as one of
the models that they would want to have in the program.
I would still have a problem with the idea that all of the
duals or all of the disabled duals would be in it. I do think
we want to have a control group, not a randomized group but a
control group, and then prove the concept, not just to Avalere
but to CMS' evaluators, and that establishes a much better
basis for going forward.
Senator Corker. And it sounds like the concern that you
have fundamentally really probably won't get addressed. Is that
correct? I mean the size of the program as announced is the
size of the program, and so the concept you just put out there
at the end is probably not going to happen.
Dr. Berenson. Well, I guess. I don't know what CMS will do.
My concern is less, frankly, with 2 million than it is with the
idea that states would enroll all of their duals or all of
their disabled under 65, as Massachusetts is proposing. That,
in my view, means you can't go back. I mean, I don't think you
enroll--in California we're talking about 800,000 to 1 million
dual eligibles. That's in their proposal. I don't think, as I
said, in three years the administrator calls the governor and
says, ``You failed, undo all of that.'' I think you want to be
able to do a demonstration that is not a fait accompli, that
you've basically done a Medicaid waiver. I think we want to
keep these as demonstrations.
Senator Corker. Thank you.
Mr. Betlach.
Mr. Betlach. Thank you.
Senator Corker. He's highly complimentary of you.
Mr. Betlach. Thank you. In Arizona, we welcome all plans in
terms of the competition. I mentioned that in terms of one of
our principles. If a Medicare Advantage plan is interested in
participating in the program, it can come and compete with
other plans. That's been one of our guiding principles all
along.
Arizona has had a lot of experience with this population,
particularly since 2006, in terms of the passive enrollment
that was done to support integration. We've shared a lot of our
experiences with other states, with CMS, with others in terms
of the type of oversight that we've done on plans, trying to
build the strength within the entire system and not just
relying on what Arizona has learned by going through this over
a number of years.
Again, to summarize our testimony, it's simply to show the
types of impact this integration can have and that the model
can work. Therefore, we should be looking at moving that
forward because we've had this fragmentation for so long, and
we've talked a lot about the challenges and the outcomes. I
think that when you look at the types of accomplishments we've
been able to achieve, you will want to move forward in this
endeavor.
Senator Corker. Would everybody here, just on that note,
would all the witnesses agree that we do, whether it's a 2
million or a 3 million person program or some other program, we
do need to work towards alleviating the fragmentation that
exists in dual eligibles? Is that a fair statement that
everybody would agree with?
Mr. Helgerson. Yes.
Dr. Berenson. Yes.
Mr. Morris. Yes.
Mr. Betlach. Yes.
Senator Corker. And before we close out the hearing--and we
thank you all for your testimony--are there any things you want
to say in closing that might be, you think, a misimpression
that might have been left here with any of the questions or
something that one of the other witnesses might have said that
you'd like to clarify?
[No response.]
Senator Johnson.
Senator Johnson. I'll just try to wrap up what I was trying
to achieve with my questioning, first starting out with the
question about the private sector, where you've actually come
in the private sector and worked toward these solutions. This
may be an unfortunate metaphor, but I think we're really
whistling past the graveyard here, and that's the other point I
was trying to make.
Again, I commend all of you in terms of your efforts in
trying to, as Senator Whitehouse was talking about, trying to
achieve those types of savings. But, Dr. Berenson, you alluded
to this, under-reimbursing providers. My concern with what
we've just passed here, what the Supreme Court just basically
ratified, is we have a whole new entitlement now, and to
encapsulate what it's going to do, it's going to increase the
demand for health care while it decreases the supply, and it
supposedly is going to be paid for by reductions in
reimbursements to providers, reductions to programs that are
also simply unsustainable.
I mean, this is great trying to figure out some way, shape
or form through government to try to reform these programs, but
I haven't seen government do it. I think we need to look to the
private sector, and we need to be very concerned about what's
going to happen from the standpoint of debt, deficit, and those
types of pressures on our medical system. I just don't think
government is the solution to it. That was really what I was
trying to get through with my questioning.
Senator Corker. Thank you.
To each of you, I think we're at an interesting time, and
Medicare reform is certainly--not necessarily the dual-eligible
component but probably that, too--is going to be a topic that I
think we may actually take up over the next six months to a
year-and-a-half as part of fiscal reforms, and I think people
like you that have had such a deep experience and broad
experience in it, people like you are very helpful.
I will just tell you that I would welcome input in our
office regarding this program as it develops and other concepts
that you see that might improve the delivery of care there.
We thank you all for being here. We thank you for the roles
you play in your respective states and here in Washington, and
I hope if there's any additional input after this, you'll give
it.
I do have a number of questions that I don't want to keep
everybody here asking that we will ask in written form, if
that's okay, and other members may have the same. If you could
try to respond in the next week or so with those, I'd greatly
appreciate it.
But thanks for your participation. Thank you.
[Whereupon, at 3:53 p.m., the hearing was adjourned.]
APPENDIX
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