[Senate Hearing 112-799]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-799
 
                        ROUNDTABLE DISCUSSION ON
                   MEDICARE PHYSICIAN PAYMENT POLICY:
                      PERSPECTIVES FROM PHYSICIANS
=======================================================================



                                HEARING

                               before the

                          COMMITTEE ON FINANCE

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 11, 2012

                               __________

                                     
                                     

            Printed for the use of the Committee on Finance




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                          COMMITTEE ON FINANCE

                     MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
Virginia                             CHUCK GRASSLEY, Iowa
KENT CONRAD, North Dakota            OLYMPIA J. SNOWE, Maine
JEFF BINGAMAN, New Mexico            JON KYL, Arizona
JOHN F. KERRY, Massachusetts         MIKE CRAPO, Idaho
RON WYDEN, Oregon                    PAT ROBERTS, Kansas
CHARLES E. SCHUMER, New York         MICHAEL B. ENZI, Wyoming
DEBBIE STABENOW, Michigan            JOHN CORNYN, Texas
MARIA CANTWELL, Washington           TOM COBURN, Oklahoma
BILL NELSON, Florida                 JOHN THUNE, South Dakota
ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
THOMAS R. CARPER, Delaware
BENJAMIN L. CARDIN, Maryland

                    Russell Sullivan, Staff Director

               Chris Campbell, Republican Staff Director

                                  (ii)


                            C O N T E N T S

                               __________

                           OPENING STATEMENT

                                                                   Page
Baucus, Hon. Max, a U.S. Senator from Montana, chairman, 
  Committee on Finance...........................................     1

                               WITNESSES

Hoven, Ardis Dee, M.D., president-elect, American Medical 
  Association, Lexington, KY.....................................     2
Stream, Glenn, M.D., president, American Academy of Family 
  Physicians, Spokane, WA........................................     3
Opelka, Frank, M.D., FACS, vice chancellor of clinical affairs 
  and professor of surgery, Louisiana State University Health 
  Science Center, New Orleans, LA................................     5
Weaver, W. Douglas, M.D., MACC, vice president and system medical 
  director of heart and vascular services, Henry Ford Health 
  System, Detroit, MI............................................     6
McAneny, Barbara, M.D., CEO, New Mexico Oncology Hematology 
  Consultants, Albuquerque, NM...................................     7

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    33
Hatch, Hon. Orrin G.:
    Prepared statement...........................................    34
Hoven, Ardis Dee, M.D.:
    Testimony....................................................     2
    Prepared statement...........................................    35
McAneny, Barbara, M.D.:
    Testimony....................................................     7
    Prepared statement...........................................    43
Opelka, Frank, M.D., FACS:
    Testimony....................................................     5
    Prepared statement with attachments..........................    51
Stream, Glenn, M.D.:
    Testimony....................................................     3
    Prepared statement with attachments..........................    75
Weaver, W. Douglas, M.D., MACC:
    Testimony....................................................     6
    Prepared statement...........................................    99

                             Communications

American Society of Anesthesiologists............................   105
American College of Physicians...................................   113

                                 (iii)


                        ROUNDTABLE DISCUSSION ON

                   MEDICARE PHYSICIAN PAYMENT POLICY:


                      PERSPECTIVES FROM PHYSICIANS

                              ----------                              


                        WEDNESDAY, JULY 11, 2012

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:09 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus (chairman of the committee) presiding.
    Present: Senators Bingaman, Wyden, Stabenow, Cantwell, 
Nelson, Carper, Cardin, Hatch, Kyl, and Thune.

   OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM 
            MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The hearing will come to order.
    Albert Einstein once said, ``A great thought begins by 
seeing something differently, with a shift of the mind's eye.''
    Today, we hold our third roundtable on Medicare Physician 
Payments. We have heard from former CMS administrators and from 
private payers. We are here now to see things through the eyes 
of those who receive the payments and provide the care; that 
is, our physicians.
    Every year, the flawed sustainable growth rate, or SGR, 
leads physicians to fear dramatic reductions in their Medicare 
payments. Next year, physicians will face a 27-percent cut if 
we do not act.
    While Congress has intervened to prevent these cuts each 
year, it is time we develop a permanent solution. We need to 
repeal SGR and end the annual ``doc fix'' ritual. The year-in 
and year-out uncertainty is not fair to physicians or the 
Medicare beneficiaries who need access to these doctors.
    When thinking about new ways for Medicare to pay 
physicians, we must clearly focus on controlling health care 
spending. Physicians can help us find the solutions. They are, 
after all, on the front lines of health care delivery.
    Ninety-seven percent of Medicare beneficiaries see a 
physician at least once a year, and beneficiaries with chronic 
conditions see their physicians at least monthly.
    By ordering tests, writing prescriptions, and admitting 
patients to hospitals, physicians are involved in up to 80 
percent of total health care spending. We need physicians to 
suggest changes to the Medicare physician payment system that 
will spur high-quality, high-value care.
    I look to today's panelists to offer solutions both in the 
short-term and the long-term. And I hope, like Einstein said, 
they can help us come up with a great thought by seeing 
something differently.
    We need solutions that will work for both primary care 
physicians and specialists, and they need to work for 
beneficiaries with chronic conditions. After all, these 
beneficiaries account for two-thirds of total Medicare 
spending.
    I look forward to candid and direct suggestions from our 
panelists as to how we can begin to better control our health 
care spending.
    [The prepared statement of Chairman Baucus appears in the 
appendix.]
    The Chairman. Senator Hatch will be here in a moment. He is 
currently on the floor. In the meantime, I would like to 
introduce the panelists.
    Beginning to my left, today we will hear from Dr. Ardis 
Hoven, president-elect of the American Medical Association. 
Next is Dr. Glenn Stream, president of the American Academy of 
Family Physicians. Third will be Frank Opelka, vice chancellor 
of clinical affairs and professor of surgery at Louisiana State 
University's Health Sciences Center. Fourth, Dr. Douglas 
Weaver. Dr. Weaver is vice president and systems medical 
director of heart and vascular services at the Henry Ford 
Health System. And finally, Dr. Barbara McAneny, chief 
executive officer of the New Mexico Oncology Hematology 
Consultants.
    As a reminder, your written statements will be included in 
the record. Please limit your statements to about 3 minutes. 
Since we have a few more Senators here today, I would like to 
limit your comments to about 3 minutes each.
    I would like this to be more in the nature of a roundtable, 
not a more formal hearing. That is, after each of you makes 
your statement, we will have a few questions, and I would like 
us to kind of interchange back and forth. If you want to say 
something, pipe up and say it. That goes for both our panelists 
as well as for Senators.
    So you start, Dr. Hoven. We are very happy to see you here 
and happy to have you here.

 STATEMENT OF ARDIS DEE HOVEN, M.D., PRESIDENT-ELECT, AMERICAN 
               MEDICAL ASSOCIATION, LEXINGTON, KY

    Dr. Hoven. Thank you, Chairman Baucus and members of the 
committee, for convening this important roundtable discussion. 
As you know, I am Ardis Hoven. I am president-elect of the 
American Medical Association, and an internal medicine and 
infectious disease specialist in Lexington, KY.
    We all know that the SGR has failed. It must be repealed 
and replaced with alternative payment and delivery models that 
support high-quality and high-value care.
    As we move forward, two factors are critical. First, 
physician practices widely vary, and the development and 
dissemination of innovative practice and delivery models are 
proceeding at different paces. A large multispecialty practice 
is currently better positioned to implement broad-scale 
innovations than is a small, rural practice. Flexibility and a 
menu of multiple solutions are needed on a rolling basis.
    And secondly, alternative models must cut across Medicare 
silos. When physician care achieves overall Medicare program 
savings, physicians and Medicare should share in those savings. 
Currently, additional physician services that prevent costly 
medical care drive steeper cuts under the SGR. This incentive 
structure has to change.
    Physicians have already begun transitioning into 
alternative payment and delivery models. This includes, for 
example, 154 Medicare accountable care organizations. And the 
Center for Medicare and Medicaid Innovation is testing many new 
models. Many innovations are also being conducted in the 
private sector, as the committee heard at its June roundtable.
    The AMA strongly supports these initiatives and is helping 
physicians with the transition. For example, our AMA-convened 
Physician Consortium for Performance Improvement has developed 
measures relating to outcomes and overuse of care, and is 
expanding its work in this area.
    Congress can take immediate steps to help in the 
transition. First, Congress should require CMS and the 
Innovation Center to offer opportunities for physicians to 
enroll in new models on a rolling basis. Practices can then 
plan for needed changes and join as they become ready. This 
will increase physician participation in new models and 
significantly aid the transition for small, solo, and rural 
practices.
    Second, Congress should require CMS to modernize its 
Medicare data systems. Due to CMS's antiquated systems, 
providing physicians with actionable real-time data to guide 
decision-making has been difficult. Physician access to such 
timely and relevant data was a key element behind the success 
of the private sector models discussed at the previous June 
roundtable.
    Third, Congress should provide Medicare funding to CMS for 
quality measure development, testing, and maintenance, and for 
measure review and endorsement. This is critical to ensure that 
meaningful and up-to-date measures are available for Federal 
quality programs.
    The AMA is eager to continue our work with the committee to 
transition to a new stable system that strengthens Medicare.
    Thank you.
    [The prepared statement of Dr. Hoven appears in the 
appendix.]
    The Chairman. Thank you, Dr. Hoven.
    Dr. Stream?

          STATEMENT OF GLENN STREAM, M.D., PRESIDENT, 
       AMERICAN ACADEMY OF FAMILY PHYSICIANS, SPOKANE, WA

    Dr. Stream. Chairman Baucus and Senators, thank you for 
inviting the American Academy of Family Physicians to state our 
views on physician payment policy.
    We believe health care in the United States is inefficient 
and delivers lower-quality care, largely because it undervalues 
primary care. The AAFP is convinced that no single alternative 
payment method will rebuild primary care. We need a combination 
of methods.
    AAFP promotes the Patient-Centered Medical Home, or PCMH, 
supported by a blended payment system that includes fee-for-
service, a care management fee, and a quality improvement 
payment.
    We advocate for this reinvigoration of primary care because 
we know it works to improve health care and restrain costs in 
the long run. The evidence for this is accumulating rapidly, 
and our statement provides several examples. Findings from PCMH 
programs across the Nation are compelling, demonstrating 
success in improving quality and restraining health care costs.
    Earlier this year, AAFP sent recommendations to the acting 
administrator of CMS. These were the result of an AAFP-
sponsored task force on primary care evaluation. The key 
recommendation is that, in order to build a system of care that 
will be consistently more efficient and produce better health, 
we need to pay primary care differently and better.
    We call to your attention the Medicare Physician Payment 
Innovation Act, H.R. 5707, introduced by Representatives 
Allyson Schwartz and Joe Heck. It makes a notable step towards 
recognizing this critical need to pay primary care differently.
    The CMS Innovation Center has several programs testing 
systems that support primary care. For example, the 
Comprehensive Primary Care Initiative includes several health 
plans in various markets that will offer a per-patient, per-
month care coordination fee for primary care physicians whose 
practices are effectively 
Patient-Centered Medical Homes.
    The Primary Care Extension Service program administered by 
the Agency for Health Care Research and Quality deserves your 
attention. Currently without funding, this program is designed 
to disseminate up-to-date information about evidence-based 
therapies and techniques to small practices. The AAFP strongly 
recommends that Congress fund the Primary Care Extension 
Service program.
    We ask for your continued support of the Primary Care 
Incentive Payment, PCIP, the 10-percent Medicare bonus payment 
to primary care physicians and providers for certain primary 
care services. The Commonwealth Fund recently published a study 
that the PCIP, if made permanent, would yield a more than 6-
fold annual return and lower Medicare costs. The net result, 
according to this study, would be a drop in Medicare costs of 
nearly 2 percent.
    Senators, we all want the same thing--better health care at 
less cost. There is a proven way to go a long way toward 
achieving that outcome: invest in primary care. We have ample 
evidence that doing so will not increase the overall cost of 
care per individual per year.
    Thank you for your commitment to the health of this Nation. 
And family physicians are eager to assist you in making the 
difference we need.
    [The prepared statement of Dr. Stream appears in the 
appendix.]
    The Chairman. Thank you, sir.
    Next, Dr. Opelka?

   STATEMENT OF FRANK OPELKA, M.D., FACS, VICE CHANCELLOR OF 
  CLINICAL AFFAIRS AND PROFESSOR OF SURGERY, LOUISIANA STATE 
       UNIVERSITY HEALTH SCIENCE CENTER, NEW ORLEANS, LA

    Dr. Opelka. Chairman Baucus and Senators, thank you very 
much for this opportunity, and good morning to you today.
    I come to you to speak on behalf of improving the care for 
the surgical patient and inspiring quality among surgeons. So, 
on behalf of the American College of Surgeons, there are a 
couple of key points I would like to make and share with you.
    And to be brief, we have several programs and initiatives 
that we have been working on to inspire quality and to improve 
the quality of care, and we believe that that actually helps 
reduce the costs in health care today by reducing things like 
surgical site infections, readmissions, and complications that 
patients suffer.
    There are two key programs that I would like to bring to 
your attention, one in the short term and one in the long term. 
The short-term approach is to look at the various clinical 
registries that we have developed over the years, and those go 
back 10-15 years' worth of work, where we have accumulated 
millions of data points on patients that drive quality 
improvement.
    These registries are the cancer registry, where we have 
over 11 million lives that we actually track the outcomes of to 
drive improvement in cancer care; the trauma registry; and, to 
perhaps focus more explicitly today on, the national surgery 
quality improvement registry. That is a registry that began in 
the VA some 15 years ago and now, today, is in over 500 
hospitals. It is driving quality improvement, reducing patient 
complications, and reducing costs related to those 
complications.
    We have worked with CMS, and it is time to improve that 
work with CMS to bring those registries to this next level of 
the value proposition that CMS is working on so we can 
strengthen surgical care and improve the quality of care across 
the entire country. We would like to expand from those 500 
hospitals to every hospital that has surgical care.
    The long-term view and the long-term point I would like to 
make is actually, how do we actually replace the SGR? We have 
been working on a proposal that ties together all these value 
initiatives that we have been working with CMS on, all the 
value programs, into a value-based update using targets of 
improvement--targets of improvement in cancer care, targets of 
improvement in trauma care, targets of improvement in 
cardiology, targets of improvement in chronic and preventive 
care, targets of improvement in rural care--focusing those as 
the targets for updates, bringing physicians and hospitals in 
alignment on a set of targets that actually replaces the SGR 
with something that we value: improving the quality of care and 
reducing the costs related to bad care, to overuse of care, to 
unsafe care, to poor quality of care.
    So we think that there is an opportunity to further explore 
this as a value-based update to replace the SGR within the 
context and the framework that we are currently using 
throughout all of our programs, both public and private, to 
stimulate a better health care system.
    Thank you very much for this opportunity, and I look 
forward to our dialogue.
    [The prepared statement of Dr. Opelka appears in the 
appendix.]
    The Chairman. Thank you, Doctor.
    Dr. Weaver?

STATEMENT OF W. DOUGLAS WEAVER, M.D., MACC, VICE PRESIDENT AND 
 SYSTEM MEDICAL DIRECTOR OF HEART AND VASCULAR SERVICES, HENRY 
                FORD HEALTH SYSTEM, DETROIT, MI

    Dr. Weaver. Chairman Baucus and Ranking Member Hatch, I am 
Dr. Doug Weaver, past president of the American College of 
Cardiology and system medical director for heart and vascular 
services for Henry Ford Health System in Detroit. Today I am 
pleased to speak to you on behalf of the American College of 
Cardiology.
    If the College could make one suggestion for Medicare 
payment policy, it would be: create stability in the system. It 
is badly needed right now. The current uncertainty around 
Medicare physician payments, around the ACA legislation and its 
initiatives, are seriously impeding progress by physicians and 
hospitals towards delivery and payment reforms.
    The College has had several decades of experience in 
developing and applying quality improvement tools, including 
producing clinical practice guidelines for diagnosis and 
treatment of common cardiac diseases; the appropriate use 
criteria, which allow physicians to better apply the right 
diagnostic testing and cardiac procedures; and then, our 
clinical registries, in which physicians and hospitals can 
submit their own data around cardiac procedures. They then get 
it back and are able to benchmark it against the whole Nation, 
as well as locally. We believe that broader use of these tools 
will improve quality, will produce better patient outcomes, and 
will lower costs.
    Let me tell you some of the lessons we have learned in 
these years. Number one, data is key. Efforts to improve 
quality and efficiency must be grounded in the use of the best 
scientific evidence available. The collection of robust 
clinical data, measurement, and feedback to doctors on 
performance--doctors are data-driven. They have competed 
throughout their entire training to be the best, and they 
respond to credible data, and particularly when that is 
produced by their specialty societies that have identified 
particular problems that they feel need to be improved.
    Number two, flexibility is necessary. New payment models 
must be crafted with collaboration of clinicians and payers. 
One size does not fit all. We applaud the beginning efforts to 
reward care coordination, but CMS needs to seek out additional 
local solutions that increase value and reduce costs.
    Third, incentives must be aligned throughout the entire 
delivery system, to include the payer, the primary care 
physician, the specialist, the hospital, and the skilled 
nursing facility. Currently, we are too often competing with 
each other instead of being aligned.
    Payers are trying to reduce costs, hospitals are trying to 
fill beds, and the physician is really uniquely positioned to 
ensure that patients get the highest quality care at the lowest 
cost if the current system is revised to incent this approach. 
Rewarding physicians for providing the right care and using an 
appropriate amount of resources is essential to solving the 
Medicare spending crisis.
    The College urges Congress to incentivize a greater 
expansion of and use of quality and utilization improvement 
tools such as ours.
    I look forward to our dialogue.
    [The prepared statement of Dr. Weaver appears in the 
appendix.]
    The Chairman. Thank you, sir.
    Dr. McAneny?

 STATEMENT OF BARBARA McANENY, M.D., CEO, NEW MEXICO ONCOLOGY 
            HEMATOLOGY CONSULTANTS, ALBUQUERQUE, NM

    Dr. McAneny. Thank you, Chairman Baucus, Ranking Member 
Hatch, and members of the committee. Thank you for the 
opportunity to participate in this important roundtable 
discussion.
    My name is Barbara McAneny, and I am a medical oncologist 
practicing in New Mexico. I am here today on behalf of the 
American Society of Clinical Oncology, ASCO, which represents 
30,000 oncologists.
    ASCO supports your efforts to transform the Medicare 
payment system to encourage high-quality, high-value care for 
individuals with cancer. We hope that Congress will replace the 
SGR and soon. The SGR has created great instability in our 
practices and is eroding a very effective network of care.
    ASCO's vision is that of a fair and responsible system that 
rewards evidence-based care and recognizes that many cognitive 
services, including end-of-life counseling, are critical to 
treating patients with cancer. Any new payment system must 
preserve quality, enhance access to care, and, first, do no 
harm.
    Quality for cancer patients involves providing accurate 
diagnoses, appropriate evidence-based therapy delivered safely, 
and a strong support system for the human needs of the patients 
and their families.
    ASCO has already developed a quality program in which 
thousands of oncologists already participate voluntarily. We 
call it the Quality Oncology Practice Initiative, or QOPI. I 
participate in this program, and I know from experience the 
beneficial effect it has had on supporting meaningful quality 
in my own practice.
    It is frustrating, however, that I also have to report 
through Medicare's less practice-enhancing quality program. We 
believe that leveraging QOPI would be an immediate first step 
that Congress could take to promote quality and efficiency, 
while reducing the administrative burden on oncologists.
    Secondly, we urge you to rely on the expertise of 
oncologists as you move toward transformation of cancer care 
payment and delivery. Policies that have the effect of 
dismantling community cancer care could exaggerate the existing 
disparities for rural patients.
    Cancer care is generally delivered in the patient's home 
community, and cancer doctors have developed a sophisticated 
infrastructure that allows us to administer dangerous and toxic 
therapies safely, while allowing patients to remain at home 
with the people they love.
    Therefore, we would like to emphasize that new oncology 
models must be tested through pilot programs that reflect the 
diverse populations that we serve before they are generally 
implemented. Any change in the payment system has the potential 
for unintended consequences for a very vulnerable population.
    However, oncologists are already involved in many pilot 
projects to test new payment mechanisms which could help 
control costs. I am a recent recipient of the grant from the 
Medicare Innovation Center to test a model based on the medical 
home concept and bundled patients. My project involves seven 
private practices of oncology from Maine to New Mexico.
    We can save money for the system, while providing better 
health and better health care. I am happy to talk about that 
further, if you would like.
    ASCO stands ready to assist you as you move forward. I am 
happy to answer any questions.
    [The prepared statement of Dr. McAneny appears in the 
appendix.]
    The Chairman. Thank you. One question--I have several. One 
is, since physicians are so involved with such a large 
percentage of payments, health care payments, in our country, 
it seems to me that maybe there is a little bit of a--I do not 
like this word--``disconnect,'' but between SGR, which is for 
physicians only, and yet, physicians are so involved in health 
care payments that are made elsewhere in the system.
    Perhaps as we look at SGR, there might be some way where 
physicians are involved or reimbursed in a way that helps 
involve them in choosing the care given to patients more 
holistically.
    Currently, people say we are too stove-piped, and one stove 
pipe, to some degree, is SGR. But any thoughts you might have 
on how we sort of collapse some of these pipes and especially 
the role of physicians, because physicians are so heavily 
involved. I think the figure I have is about 80 percent of 
health care dollars are related to decisions made by 
physicians.
    Your thoughts on that, anyone who may want to pipe up?
    Dr. Hoven?
    Dr. Hoven. I will start. Thank you for that question, 
because I think that is something we all chat about on a 
regular basis. And I think, as we start looking for value 
within the system, it will be the physicians in those practices 
who are looking at the models of care that are being used, be 
they in primary care medical home models, be they in bundled 
payments.
    Wherever they are, we are going to be looking constantly at 
the value of each of those delivery reform issues going 
forward. We have to be accountable, as physicians, for making 
sure that we are getting the job done and for the outcomes and 
the quality of the work that is being done.
    And the new models that will be tested, are being tested, 
that are on the road right now being looked at, are going to 
give us that information, because up to now, we have not had 
that information.
    So it is very important going forward that we look at a 
variety of models, that we recognize the importance of the 
practice environment, be it a small practice, a large 
integrated group, or what have you. It is going to be very 
important that we look at all of those and take into 
consideration the practice.
    The Chairman. You are always talking about models. What 
models are you talking about?
    Dr. Hoven. Well, we are talking about the primary care 
medical home model, for example. Glenn could speak to that as 
well. That is one of the models we are talking about. Bundled 
payments, again, another model, and Frank could probably speak 
to that.
    So these are out there in play right now as we are talking.
    The Chairman. How long until we know whether and which of 
these models might bear fruit, which ones work?
    Dr. Stream. I would speak to the CPCI, the Comprehensive 
Primary Care Initiative, currently recruiting practices through 
the Innovation Center. And its goal is to align the payment 
methodology to support the Patient-Centered Medical Home so 
that payment for support is continued fee-for-service. The care 
coordination fee that I had mentioned that provides payment not 
in the fee-for-service system--that has to do with coordinating 
care.
    But the answer to your question, Senator, is that the 
shared savings component of that model breaks down those silos, 
and there is a potential for shared savings from reducing 
hospitalizations, reducing ER visits, reducing complications of 
chronic illness that result in expenses like the dialysis for 
diabetic patients.
    If you only look at the shared savings in the medical home 
based on the physician services, there is too little skin in 
the game for the physician. But if the shared savings model 
looks across the silos, then there is a win-win for the 
physicians making the effort that the medical home cannot----
    The Chairman. So you think there is potential----
    Dr. Stream. Absolutely. It is a game-changer.
    Senator Nelson. Mr. Chairman, accountable care 
organizations, are they not to address this? Isn't that why we 
put them in the health care bill?
    The Chairman. Partly, yes.
    Dr. Stream. Partly, but at a more global level. I mean, 
that is, systemwide--integrated delivery system, a large 
multispecialty clinic--that type of model. I am talking really 
down at the level
of supporting the primary care that is necessary for a high-
functioning system, whether it is in an ACO or separate.
    Senator Wyden. Mr. Chairman, I think what both of the 
doctors were talking about is the Independence at Home model 
that we got in the Affordable Care Act. You all and the 
oncologists are making the point that most of the Medicare bill 
today goes for the chronically ill. That is where most of the 
Medicare bill goes. And through approaches like Independence at 
Home--and we have seen these demonstration sites begin, and I 
was very pleased that it was in the AMA's testimony--we could 
take a much bigger population, number one; leave the patients 
in a position to be happier, as the oncologist noted; and start 
tiering the payment system to reward those kind of efforts.
    And I really appreciate what the AMA has said, and let me 
hear from the oncologists as well.
    Dr. McAneny. Thank you, Senators. I do have the opportunity 
to approve a model with this Innovation Center grant which 
allows physicians to control those things that we really can 
take control over. There are a lot of parts of health care, the 
cost of drugs, that we have no ability to manage.
    But we can manage the site of service, and we all know that 
it is a lot less expensive to treat people in our offices than 
it is in emergency departments in hospitals.
    And in this grant that we wrote, we used data--and I agree 
that data is key--from our own practice showing how much money 
we could save Medicare in one small practice in New Mexico by 
keeping people in the office, aggressively managing the disease 
and the side effects of treatment, so that we keep people out 
of the hospital, we keep them healthier, and we keep them out 
of emergency departments, and we can use less imaging.
    Those are the things that doctors can control. And so, with 
six other practices across the country, we are going to 
demonstrate that, if we create ourselves as an oncology medical 
home, that we are ready to accept a bundled payment. Give us a 
payment that will allow us to take care of these patients.
    It will cost more in the outpatient arena, but the costs 
are by far made up for in the inpatient setting when we keep 
people healthier. We think we can generate true savings in that 
manner and better care.
    Senator Stabenow. Mr. Chairman?
    Dr. Weaver, could you talk a little bit about--I know Henry 
Ford is part of one of the eight multi-payer primary care 
demonstration projects.
    Dr. Weaver. Yes. I want to give a couple of examples where 
we might have savings. And that is, one of the things that CMS 
is starting to do, which I must applaud--and Dr. Stream alludes 
to this--is paying for some care management. That means 
supporting the infrastructure, which may be nurses, medical 
assistants, part-time pharmacists, really not doctor stuff. 
This is stuff that keeps people on their right care plan, as 
well as keeps them out of the hospital.
    In Michigan, the Blues, along with CMS and all of the 
payers, have rewarded physicians in primary care an extra $7 to 
$9 per member per month to do care management. They must meet 
certain quality standards. They must meet certain utilization 
standards to qualify.
    The State itself this year, because of this project, thinks 
that the dual-eligible expenses to the State will drop $38 
million. So that up-front investment to allow more care 
management has helped.
    I will give another example. The Blues in Michigan fund 
cardiac procedure registries. And the only thing that they 
require is that you must submit all of your data and you must 
meet quarterly to discuss the data among all of the 
participating hospitals. It has led to huge reductions in 
procedure complications and improvements in quality.
    They did the same thing for bariatric surgery, and they got 
together, they made a database, doctors got the data back from 
the patients on whom they operated, and complications from 
bariatric surgery have dropped 30 percent, and readmissions for 
patients who had bariatric surgery have dropped 35 percent.
    So I point out that care management, as well as registry 
data--I will tell you, again, doctors are data-driven. If you 
give them the infrastructure so that they have clinical data 
that they believe is credible, they will respond in ways to 
improve the quality of their patients. They all want to provide 
the best quality care.
    Senator Stabenow. Just as a follow-up, though, Dr. Weaver, 
and maybe for anyone, we have this quality reporting initiative 
that we set up under Medicare, and we only have about a third 
of the physicians right now who are actually using it. And in 
2015, it goes from an incentive to a penalty.
    What are the barriers? Why aren't more physicians doing it, 
since we are talking about a data-driven system?
    Dr. Weaver. Well, let me respond to that, at least my 
feeling, and that is, CMS is currently promoting a lot more 
transparency with data. But the measures that are reported--
readmission rates, smoking cessation, and these things--they 
are very, very crude measures of quality, and they do not 
really accurately tell you whether you have a good doctor, a 
great doctor, or someone who is not so good.
    The Chairman. What should they report?
    Dr. Weaver. I think that they want--as others have 
suggested, they want to report the things that they think are 
important and that they have developed within their own 
specialty societies that they believe are the most important 
problems: here is how to measure them, give us the data back so 
we can benchmark against our peers, and they will improve.
    Dr. McAneny. If I might respond to that as well, oncology, 
for years before this came up, developed the Quality Oncology 
Practice Initiative, which was a bunch of oncologists sitting 
around asking, what can we do, what could we measure so that we 
can improve what we do?
    This costs money for our practices to participate in, but 
thousands of oncologists have already participated, willingly 
spending that money to do a better job. And we can craft 
measures that really are pertinent to what we do every day, and 
when we complete one measure, then we can say, ``Okay, 
everybody has that. Let's move on to the next thing. Let's do 
the next step.'' And each of the specialties can do that to 
create their own quality system instead of having a broad-
brush, generic measure.
    Dr. Weaver. As well as, it will be more flexible. I think 
about--and I am sure all of you have heard about the time-to-
treatment in people with heart attack. Well, the College of 
Cardiology put together a program many years ago, and hospitals 
moved from hitting the goal 50 percent of the time to 
essentially 100 percent everywhere.
    Doctors want to move on to the next issue after that. You 
have that one done. And you cannot regulate this iterative 
process. You have to allow the specialty to see where are the 
voids right now and incent physicians to participate and make 
sure there is infrastructure in order to collect this kind of 
credible clinical data, and you will have a much more reactive 
and fast turnaround in improving quality.
    The Chairman. Senator?
    Senator Bingaman. One of the things we tried to put in the 
Affordable Care Act was a focus on reporting about outcomes, 
because it seems to me that a sort of underlying or overarching 
dataset that should sort of span all of the various specialties 
would be, how do we get accurate reporting on outcomes for 
patients?
    Is that realistic? Is there a way for someone, for CMS or 
the government or anybody else, to say, ``Okay, here is what we 
want reported on that relates to how well people are doing 
after they get this treatment''?
    Dr. Opelka?
    Dr. Opelka. If I could. Thank you very much for that 
question. The College of Surgeons' registry programs are risk-
adjusted outcomes reporting, and it is very effective.
    So, for example, in the field of general surgery and 
vascular surgery in over 500 hospitals, we collect roughly 100 
to 130 data elements over 30 days on a patient's care. That 
data then churns out into a risk-adjusted expected outcome, and 
we measure the actual outcome against the expected.
    That is very meaningful to the delivery system. And these 
are team-based care systems. It is not just the surgeon. It is 
the nurses, it is pharmacy, it is everybody there, it is 
primary care, it is linking to my colleague here.
    I do not have good surgical outcomes unless I have a good 
patient to work with to begin with. So I can now measure and 
see what are the drivers for better care.
    We have actually been working with CMS, and really I 
applaud their efforts in performance measurement. We had to 
start somewhere, and we started with measures that were less 
than perfect, but it has moved us all.
    Data is a drug, and we are addicted to it. We cannot get 
enough data, and we want meaningful, actionable data. So we 
partnered with CMS and started to show them how the current 
datasets they have do not get them the answer they want, and we 
are showing them more meaningful datasets. And where we need 
help is, how do we actually expand this infrastructure beyond 
500 hospitals into 4,000 hospitals, and how do we link this 
beyond surgery into surgery and primary care, across a patient 
continuum?
    So it is not about how well I took someone's colon cancer 
out, but it is more about how well the 18 months of critical 
cancer care drove the best outcome for that quality. And we are 
closer today than we ever were, but there are a lot of things 
that we need to do, some infrastructure components we need to 
build upon and build into the business models, so everyone is 
aligned and we all have shared incentives.
    We are really very excited about going forward, and we 
actually are looking forward to taking that next step.
    The Chairman. Dr. Stream?
    Dr. Stream. Just as I do not think there is a single 
payment solution across all specialties--because there are 
unique differences in the question about quality--the issue for 
primary care is often about treatment of chronic illness, and 
the payback time to have good outcomes might be 5, 10, 15 
years.
    My good diabetic management of my patient today is to avoid 
them being on dialysis 10 years from now. So instead, these 
quality measures use proxy short-term measures: what is your 
blood sugar control, have you had your feet checked, have you 
had your diabetic eye examination?
    So we end up using these proxy measures that are not truly 
outcome measures, because the timeline is too long. And then 
you get into a debate about, are the proxy measures the right 
measures?
    And to Dr. Hoven's point about developing good measures, we 
want to make sure that those are valid measures that reflect 
reality, that they are the things we should be measuring and 
should be working to improve to get those eventual outcomes.
    The Chairman. Go ahead, Jon.
    Senator Kyl. That is all right. Maria had her hand up.
    The Chairman. Maria? Senator Cantwell?
    Senator Cantwell. I want to follow up, Mr. Chairman, on 
quality and outcomes.
    You were talking about, obviously, quality and outcomes, 
and one of the things in the Affordable Care Act is moving to 
this value-based modifier system. And so, when you look at what 
some of the estimates are on Medicare waste--$120 billion per 
year due to unnecessary tests and procedures.
    So, have we not proven that we can deliver better care at 
lower cost, and now it is just about figuring out how to 
implement that system so that people are, as you were saying, 
incentivized to do the right thing as opposed to the----
    Dr. Hoven. I can jump in on this, if I might. This is a 
good first step. I think, clearly, the concepts are in there. 
What we have to now do is look at the methodology, be sure that 
the methodology is appropriate for what we want to get 
accomplished, and that it gets us to a good place.
    But I do think it is a good first step. We are in the 
process of reviewing all that. It just came out in the new 
rule. So I think we will be getting back to you all on that. 
But I do believe it is a good first step.
    Dr. Weaver. Let me make a couple of comments, Senator 
Cantwell, about this, and they are about value-based 
reimbursement. I personally am very worried about the way it is 
structured.
    It plans to use Physician Quality Reporting System 
measures, some prevention measures, and as well, look at cost 
that is regional. And I have to tell you that what people have 
said today is, you need meaningful, credible data in order to 
do any adjustment for what the outcome or what the cost should 
be.
    I lived in Seattle. When I moved to Detroit and I looked at 
patients who had heart failure, I had never seen a population 
like this before. They would never get adjusted for adequately 
with administrative data.
    You have a population in which 25 percent of the people 
graduated from high school. They are working just to stay 
alive. You have people who have burned out their kidneys with 
longstanding hypertension when they are 35 years old. I never 
saw that in Seattle.
    These patients in Seattle and Detroit both have heart 
failure, but they are very different people, very different 
kinds of people. And so, taking crude measures to try to adjust 
severity and adjust payments would be a huge mistake, in my 
mind.
    And so the value, if you will, of some of these specialty 
initiatives is that people literally spend many, many, many 
hours trying to figure out what is going to be legitimate here 
when you do risk adjustment and what is not, and they are the 
experts. They understand the disease, and that you have to be 
very careful.
    The other thing that the cardiologists have been using is 
Appropriate Use Criteria, and what these are are, a panel gets 
together, including a panel of payers and the physicians and 
other experts, and they look at a lot of conditions for which 
we really do not have solid guidelines. It is just the science 
is not there. And they say, ``This seems to be reasonable, 
knowing what we know, and this is not so reasonable.''
    A year ago, we started providing feedback to the hospitals 
on the use of stenting, and there were a proportion of cases in 
which they were considered to be unnecessary or inappropriate. 
Now, we never expect that number to be zero because there are 
individual differences and so on, but you ought to be pretty 
close to what the national benchmarks are for these numbers. 
And so we have seen, since we have started producing this, a 
decline in that number. And, in fact, if you look, there has 
been a decline in stenting procedures the last year or 2 years 
in the U.S., and it is predicted to go down further.
    So providing credible data, giving it back to those docs, 
will change the way in which they behave.
    Senator Cantwell. I certainly believe in credible data. And 
I do not know, Dr. Stream, if you want to weigh in on this.
    When I think of Spokane, I think it is a great place, and I 
certainly think that the city title of ``near nature, near 
perfect'' is a good symbolism, but I do not know that we are 
talking about healthier populations here or we are talking 
about healthier practices. And I certainly think we have 
healthier practices in the Northwest, rewarding things that 
have driven down cost and produced better outcomes.
    And frankly, people in our region are very frustrated that 
we deliver care that way and get less reimbursement, and less 
people want to go practice there, because somebody can go 
practice somewhere else where they can run up the bill to the 
America taxpayer. And my constituents, they will be happy with 
good data, but just to assume that they are healthier and that 
someplace else is sicker and we should just pay more, is not 
going to work.
    And so I am glad we are moving down this track, and I guess 
we are just going to have to focus on what good data is.
    So, if you have any comment on that, Dr. Stream, and also 
on what we need to do to encourage graduate medical education. 
If we are looking at the numbers that we are looking at to get 
medical homes in primary care, we have a big gap right now 
encouraging primary care physicians. And what do we need to do 
for graduate medical education to really get that workforce 
plugged in?
    Dr. Stream. So, several questions in there. Certainly, we 
need good data about all of these things, care practices, but 
populations do differ somewhat. Inner city populations with 
more poverty, less education--those social determinants of 
health have a huge impact on the health of our public.
    So we need good data about both so that, if we are making 
risk adjustments, they are true and accurate.
    I can speak to value-based purchasing as not necessarily a 
program, but as a concept that applies to primary care, and we 
absolutely have to build a stronger primary care foundation if 
we are going to have any success improving the quality and 
cost-effectiveness of our health care system.
    And that really is this blended payment model that supports 
the Patient-Centered Medical Home model, decreasing over time 
the importance of fee-for-service, having a meaningful care 
management fee that does this care coordination, prevention, 
and wellness.
    And then the piece that gets to your question is that 
shared savings piece or, if it is pay for performance, it could 
include both quality measures and appropriate use efficiency 
sort of criteria. But that would be that third leg of the stool 
about payment to support primary care.
    But you are also right, and I appreciate you teeing it up, 
about the workforce issue. And I would emphasize that decisions 
made that influence specialty payment have a huge influence on 
specialty selection of our medical students and currently have 
a strong disincentive for people to choose primary care. And we 
have to narrow that income gap between primary care physicians 
and median sub-
specialty income to have the impact we want.
    Senator Cantwell. And just for what everybody has been 
talking about, do we have the workforce now to implement the 
strategy that we are talking about?
    Dr. Stream. Absolutely not.
    Senator Cantwell. All right. Thank you.
    Dr. Hoven. If I could follow up on that, Senator. The whole 
issue of medical school education, graduate medical education: 
we at the AMA have been looking at this very critically. And 
this is a problem which preceded current issues surrounding 
payment and delivery. This is not new.
    Looking at spots for graduate medical education, changing 
the curriculum in medical schools, making sure that primary 
care is being taught and rendered in places not necessarily 
traditional for primary care education, that we are opening and 
expanding the venues in which we can do the education, is 
really important.
    So all of these things are on the table as we talk about 
it. It takes 7 to 10 years to grow a doctor, and we have to get 
those slots filled out. We have to have more funding towards 
that as well, and it is one of the priorities that is part of 
this whole discussion.
    Senator Cantwell. Thank you.
    Senator Kyl. Mr. Chairman?
    The Chairman. Senator Kyl?
    Senator Kyl. Thank you very much. When I first started law 
school, one of the things that was impressed upon me was the 
difference between a profession and a business, and it was all 
about the individual client. You had to give your absolute 
commitment to that client, whether the client could pay or not 
and regardless of their idiosyncrasies and so on.
    And I began to practice insurance defense work and found 
that it was true in spades of the medical profession. Data is 
collected to provide information about averages, but every 
patient is an individual. And I know that all of you are 
committed to treating every one of your patients as an 
individual.
    The rub comes when you are treating patients who are paid 
for by the U.S. Government under a set formula of one kind or 
another. And my question to you is, in devising--and we 
recognize that the formulas, the pay scales, however they are 
going to become embedded in a replacement for SGR, will need to 
be developed by the professions themselves to take into account 
individualized circumstances, including regional circumstances 
in the country, as Senator Cantwell was just pointing out.
    But my question is, is sufficient attention being given to 
the requirement that the care really be patient-centered? When 
the patient walks in the door, I have one obligation and one 
obligation only: to take care of that patient to the best of my 
professional ability. But at the end of the day, I have to get 
paid, but not to have the payment drive the care.
    And then a second sort of related question is, when we deal 
with this, because of our unique budget requirements here in 
the Congress, we have to set a 10-year plan out. And it is very 
hard for us to know whether the 8th and 9th and 10th year are 
going to work with what you are recommending for us in year 1, 
2, and 3, and so on.
    And just for our own purposes, I wonder if you have any 
suggestions for us. And if you want to think about this and get 
the information to the chairman later, how would we devise 
something that we think is going to work over a shorter period 
of time, even though we really do not know over the longer 
period of time? That was one of the problems with SGR to begin 
with.
    Thank you.
    The Chairman. Dr. Opelka?
    Dr. Opelka. Mr. Chairman, thank you. And, Senator Kyl, 
thank you for the question.
    Two responses to this, in my mind. Where we begin with 
performance measurement and valuing services is still in the 
silos of care. It is in the various different performance 
programs, and it is not as patient-centric as it could be.
    And, as we start to spread performance measurement across 
bundles and ACOs and we look at population-based performance, 
how well we are taking care in a continuum, and we start 
sharing the attribution, it becomes more patient-centric.
    So where we were 3 or 4 years ago when we started really 
pushing hard on physician performance measurement was just at 
the beginning: how do we begin to measure individual physicians 
and reward them, the hospitals, and reward them?
    We have grown over the last couple of years to start to 
understand some of the points made by my colleagues at this 
table and from input from all stakeholders, from the purchaser 
groups, from the private payers, from patients, who are helping 
us look at this and say, ``Well, this is a better measure 
because it really is more meaningful to the patient.''
    And as we move to that, it does not necessarily fit within 
the payment structures or silos of payment. So we have to look 
at alternative payments, which is my second point, and that is 
where we have proposed replacing the SGR with a value-based 
update which says, let us pick a target. We want to improve 
cardiac care this way, and it is not just the cardiologists, it 
is primary care, the cardiologists, it is the cardiac surgeons, 
it is anesthesia, it is pulmonary, everyone who touches that 
patient will be involved in incentives; that is the target we 
want to get to, and let us strive to get to that target.
    So I think we are becoming more patient-centered. We are 
not quite there yet, but we think replacing the SGR with 
something that actually is patient-driven targets--does it get 
to 8 to 10 years? I hope so, but it may take us 8 to 10 years 
to even get to that point.
    Will it be something else, 12 years from now? We are always 
evolving this. So I am not going to say this is forever.
    The Chairman. That is a fascinating question. Does anybody 
want to respond to that? Yes, Dr. Stream?
    Dr. Stream. I would like to respond to the patient-centered 
part. And I agree completely. When a physician is in an 
examination room with a patient, the patient's best interests 
should be the highest priority, making sure that that patient 
gets the treatment that they need that will improve their 
health, improve their quality of life.
    But what we are finding is--and it goes to Senator 
Cantwell's comment--we know that our system currently provides 
care that people do not benefit from. And my responsibility as 
someone's physician is to make sure they get the care that they 
need but do not get care that does not enhance their health. 
And that is where I think--and it does not give an easy 
solution to the SGR problem, but it is a potential for cost 
savings, to eliminate care that does not contribute to people's 
health.
    And that is an area where Dr. Weaver was mentioning 
stenting data, and the power of that information--physicians 
want to get A-plus in their scores, and so, when they are 
comparing themselves to one another, that is another aspect of 
professionalism, excellence in your profession. So we need that 
going forward.
    The Chairman. Thank you. Dr. McAneny?
    Dr. McAneny. Thank you, Senator.
    Senator Kyl, I think one of the answers to your question 
about, why is the care not as patient-centric as it could be, 
is in the silos of payment, that we pay by area of the country. 
So that areas such as our area in the west, New Mexico and 
Arizona, have lower payment rates for the same service.
    There are differentials in the site of service; the same 
service in a different setting, a hospital, a physician office, 
is paid for differently.
    If we had the payment follow the patient more, that would 
do a lot to go patient-centric in terms of how we focus on that 
care. And I think breaking down some of those silos so that the 
money can follow where the patient is best treated will allow 
us to move patients from more expensive sites of service to 
less expensive sites of service and make that a very valuable 
part for health care.
    I am also very concerned about the whole workforce issue. 
ASCO, American Society of Clinical Oncology, did a study some 
years ago looking at the number of oncologists that we are 
currently producing versus the number that we are going to need 
in the next decade, and about a third of cancer patients may 
never be able to see an oncologist because there simply are not 
enough of us.
    So we are working hard on trying to create new teamwork 
methods of care so that we can get the expertise we need out to 
those patients, put them in the right side of service. I think 
the most expensive drug we give someone is one that does not 
work. We are hoping that with personalized medicine and with 
very good techniques of figuring out what will work on a given 
patient's cancer, we will be able to avoid a lot of those 
unnecessary processes that you are talking about.
    Doctors are really interested in doing that. It does not 
benefit us at all to go to a patient and say, ``I'm sorry, this 
didn't help.''
    The Chairman. Senator Hatch?
    Senator Hatch. In my earlier life, I was a medical 
liability defense lawyer, defending doctors, hospitals, nurses, 
health care organizations. And we used to tell doctors, ``You 
need to overdo everything. You need to make sure that that 
history of that patient shows that you went way beyond the 
standard of practice in the community,'' so that if you ever 
did get sued, you could at least say, ``We went way beyond what 
really the average doctor would have done.''
    In the process, I became convinced that unnecessary 
defensive medicine--we all want necessary defensive medicine, 
but unnecessary defensive medicine is extremely costly.
    If I was a doctor today, I would be doing exactly what my 
advice was 37 years ago, and really doing everything I possibly 
could. I do not expect you to opine on what it is costing the 
health care profession just for unnecessary defensive medicine, 
but it is a whopping amount of money, a lot more than the CBO 
says.
    I remember the CBO Director said $10 billion a year. I 
chatted with him, and he finally came up with around $50 
billion a year. But I think it is approaching $200 billion or 
$300 billion a year when you consider how health care is so 
important in our lives today. And a lot of that is because we 
just cannot seem in the Congress to resolve this issue so that 
doctors can handle it.
    Now, I would like each of you to give some thought--I have 
really enjoyed your comments here today. But I would like each 
of you to give some thought and maybe even send in writing to 
us what we might do.
    You have Democrats who do not want to offend their personal 
injury lawyers. You have Republicans who do not think there has 
ever been any reason to sue for medical liability, not many, 
but there are some. But you have the two extremes, in other 
words.
    And it would be wonderful for us to get, especially from 
the American Medical Association, but from each of your groups, 
just what you think this is really unnecessarily costing our 
society because of medical liability concerns.
    I would like to have you take the time and send that to me, 
if you would, but certainly to the committee.
    Let me just ask one other question, because, interestingly, 
we hear about the death of the private practice today. Indeed, 
many experts who track the health sector have raised concerns 
about the uptick in hospital acquisitions of private practices. 
And this is for any of you who care to answer it. Do you 
believe hospital acquisitions are occurring at a greater rate, 
and, if so, what is causing the trend and is it likely to 
continue, and what are the implications for the cost of care in 
the Medicare programs?
    Yes, ma'am?
    Dr. McAneny. Senator Hatch, I think you have hit the nail 
right on the head. I know that in 2010, about a quarter of 
oncology practices were sold to the hospitals, and I think the 
statistics were closer to 50 percent of cardiology practices.
    Part of that, again, is the economics. Under the physician 
fee schedule, we are paid about two-thirds of what the same 
service is paid for under the hospital outpatient Prospective 
Payment System.
    So a hospital outpatient department can be paid 
significantly more for the same service. And I think that we 
will discover--in our workforce study, we also looked at the 
volume of patient care given by a hospital-employed physician 
versus a small business private practice physician, and there 
was about a 60-percent difference.
    At a time when we have a shortage, I am not sure we can 
afford that. I am not sure we can afford to pay more for the 
same service in this time of escalating health care costs.
    I think we really need to look at very efficient mechanisms 
to rearrange how we deliver that care and go for the most cost-
effective site of service.
    Dr. Hoven. If I could jump in on that as well, I think we 
have to be careful, though, because hospitals, along with 
physicians, if they are collaborating together to do improved 
outcomes, cut the cost. If what they have in place is working, 
we have to look at that side of the coin as well.
    So I think this must be a balanced discussion going 
forward. We have great concerns about this. And I would agree 
with Dr. McAneny, but we must look at the balance of this, 
because I think there are some systems out there that are 
working to make it better for physicians and the hospitals and 
patients, most importantly, to get the job done.
    Dr. Weaver. I would just add to what my colleague said 
here, that there has been a major change in cardiology. It is 
not everywhere. But in Indiana, 95 percent of the cardiologists 
work for some health system or hospital, and there has been a 
great move.
    And as best we can measure, a lot of it is due to just the 
uncertainty right now in finances. It is like, if you have a 
practice, and these are small businesses, what are you going to 
do at the end of the year if there is a huge change in 
physician payments?
    I saw people in the Detroit area, some physician practices, 
for instance, when we had a delay in kicking SGR down the road 
and there was nothing coming from Medicare, it was either--it 
was like they were worried about paying their staff. They did 
not want to lay their staff off, whose husbands may already not 
have a job and that sort of thing, and they went bare for 
weeks. And that uncertainty says, maybe I should do something 
with a little more security to it and be part of a larger 
health care system.
    So, if you want to integrate us all, that is a good way to 
do it: just create a lot of uncertainty. On the other hand, as 
Dr. Hoven points out, when you have doctors and hospitals 
working closely together--because now you have solved the 
alignment problem--they will align and try to create better 
value.
    The Chairman. We have an SGR problem facing us, and it is 
not very far off when we have to extend. Do we just extend it 
again another year? If we do not, what changes do you suggest?
    These are all great ideas. It is fascinating. It is very 
stimulating, this discussion. But we have a practical question 
looming, and that is, what do we do about all this in the short 
term, as well as long-term?
    To me, I mean--Senator Kyl asked the question about more 
individualized treatment. I guess the question of personalized 
medicine, all this fancy stuff you read about in the papers, 
the genome sequencing and DNA sequencing, and especially in 
oncology----
    There was a very interesting article a few days ago about a 
lady who got a very fancy treatment, a specialized cancer 
treatment, a unique cancer, and it actually cured her, but then 
she died 2 weeks later.
    Then there is stem cell research developments that are 
going to occur over time. Things are just changing so quickly.
    So how in the world--what should we do in the short term 
and what should we do long-term? What should the Congress do in 
the short term and the long term as we deal with this practical 
problem of extending the SGR?
    Dr. Opelka. Mr. Chairman, we have included in our 
testimony, the first bit, the foundational elements of our 
thoughts from the American College of Surgeons about replacing 
the SGR. Now, in terms of how to pay for it, I cannot go there.
    The Chairman. Unfortunately, we have to go there.
    Dr. Opelka. Yes, sir. But that is a higher authority than I 
have. So, when I look at this though, what do we replace this 
with? Within this entire context of this discussion we are 
having today, we are all moving from the volume world to the 
value world, and we think that is the replacement. And we think 
it is a patient-centered approach that should be taken.
    We think you set the updates by setting targets based on 
value. Did we achieve this value? And it is a patient-centered 
target. What do we need to do in the 10, 15, 20, 100 measures 
that we have in surgical care? What do we need to focus on for 
those patients as targets that then drive an update? And those 
have to have a down-side and an up-side.
    What do we do in chronic and preventive care to drive 
improvement with my colleagues in primary care? What are those 
targets? What do we do across all of cardiac care? We need to 
set targets.
    We have hundreds of measures today. If you look at the 
National Quality Forum's measure library, there are over 800 
measures in there. Which ones are critical? Which ones are 
going to be meaningful and actionable and are meaningful enough 
to you as targets, that this is better quality care, safer 
care, and more affordable care? Let us set those out as targets 
and then award the SGR target, replacing it with a value-based 
target, and make it a patient-
centric target.
    That is our proposal, in short. And what do we need to do 
in the short run with that? Some initial pilot modeling and how 
we actually begin it. We are building the alliances across the 
specialties of medicine to do this. And then, how do we roll it 
out and phase it in? And we have a 4- to 5-year phase-in plan 
that we think can be implemented with, yet, some roll-your-
sleeves-up work.
    The Chairman. Now, is this for surgeons, or is this for 
other specialties as well?
    Dr. Opelka. It is for the patients. It is across all 
patients.
    The Chairman. All patients and all care.
    Dr. Opelka. It includes rural programs, it includes chronic 
care prevention programs, it includes--instead of being 
surgery-related, it is patient-centered. What is a digestive 
disease program that we need to improve, which would be 
gastroenterologists, primary care, and surgeons? What are 
cancer programs, which is not just oncology? It is radiation 
therapy, surgeons, and primary care.
    You cannot get away from primary care. They are tied to 
every one of us. How do we set targets that actually--we can go 
out to the community at large and say, ``We have a problem in 
this area in this country, and we are going to set a target to 
improve it.''
    The Chairman. Dr. Weaver?
    Dr. Weaver. Just a couple of comments. I think what you 
have heard from all of us this morning is, unfortunately, these 
improvements are going to be iterative. They are going to take 
time. They are not going to be there on January 1st.
    I will give you an example, though, of something that did 
happen on January 1st of this year in southeast Michigan, and 
that is, the larger employers changed patient deductibles from 
very modest numbers to $3,000 and $4,000 per person. I can tell 
you that the amount of health care these people are getting 
dropped dramatically.
    People's co-pays went up. They do not come to see the 
doctor. They decide when they are going to see the doctor. And 
unfortunately, I mean, it reduces costs a lot, it reduces 
utilization a lot, but patients do not have the ability to know 
what is valued and what is not valued in their care.
    And so they put off prevention, they put off things that 
ultimately are going to cost us all a lot more. But increasing 
co-pays, increasing deductibles, will change the amount of 
health care dollars that are spent immediately.
    The Chairman. Dr. Stream?
    Dr. Stream. You mentioned personalized medicine, and we 
have this fascination in America with high tech genomics and 
things. One of the most important features of people's health 
and wellness is having a personal physician, a usual source of 
care. They get their prevention and wellness, they get their 
acute care needs taken care of, their chronic illness care.
    And the way that we are going to save money in the long run 
is in investing in primary care in this Patient-Centered 
Medical Home, and we need to align our payment system to do 
that. As Senator Cantwell mentioned, we do not have enough 
primary care physicians. And so we need to invest in our 
workforce, in reforming our graduate medical education system.
    We are seeing this play out in the private sector with 
private health plans. The Patient-Centered Primary Care 
Collaborative is a national organization that is employers and 
payers and patient stakeholder groups that are really already 
documenting tremendous success in this direction.
    Senator Kyl. Mr. Chairman, you asked a key question that we 
asked these people to come here and advise us on. Are you ready 
to present to us, as the experts, a process, a methodology for 
payment that we could institute on January 1st with some 
assurance that the costs would be within a certain range to the 
Federal Government and meet the objectives that I think we all 
agree on here; or, if you are not going to be ready to do that 
then, what would you recommend we do?
    Would you recommend we do an update, a positive update, of 
1 percent or 2 percent, with some reporting requirements and 
phased-in pilot programs and so on during that year, so that 
January 1st a year later, we could make decisions about 
specific payment methodologies that would go across the board?
    In other words, respond to the chairman's question here. We 
are going to have to make a decision in 6 months. What do we 
do?
    The Chairman. Dr. McAneny?
    Dr. McAneny. Thank you. Again, a very important question. I 
do not think any of us are prepared to answer that very 
quickly. This is a huge--it is a 7th of the economy in health 
care. We are not going to be able to fix it by January 1, 2013.
    I think a 30-percent cut will put many practices and many 
hospitals out of business, and that will cut the amount of 
health care that is delivered. But I do not think that is the 
intention of any of us.
    So I think that, again, we are going to need another 
positive update. AMA data has shown that, for the physician fee 
schedule, we are currently being paid at 2004 levels. The light 
bill is not at 2004 levels in my practice.
    I think we need some time and some stability where we can 
do some pilot projects, because what works--even in my practice 
in New Mexico, the things that work in my Gallup clinic in the 
heart of the Navajo Nation are not going to work in my 
Albuquerque clinic or in my hospital-based Silver City clinic. 
There are different mechanisms that will be there.
    The Innovation Center got thousands of people, thousands of 
doctors, wanting to give ideas about how we knew we could save 
money in giving care. So we would like very much to know that 
we had some degree of a period of stability, where we know we 
could count on Medicare to not pull the rug out from under our 
practices and from under our patients, so that we could then 
work with various pilot projects that can be area-specific, 
part-of-the-country-
specific, specialty-specific, or integrated across multiple 
specialties, to be able to do that.
    I am hoping my Innovation Center grant will prove to you 
that we can take a bundle of payments, take care of patients 
through a continuum of care, and be able to save money. But it 
is going to take us some time to be able to rearrange this 
system.
    The Chairman. Dr. Hoven?
    Dr. Hoven. Thank you. A very, very important question. 
Updates and stabilization, you have heard several now speak to 
that. I think the question of stabilization for practices is a 
huge and key issue going forward.
    There is a huge amount of work out there already underway, 
Senator Kyl, on the models, the way we deliver care and how 
care will be paid for. They are going to be multiple in type, 
not one size fitting all. These practices cannot endure that 
because they are different, based on the practice, the 
location, the patients served.
    So we have to be willing to say there is probably going to 
be more than one delivery system. There may be more than one 
payment system to follow that delivery system as well. But we 
will not know until we do that.
    One of the things which you all could do now would be to 
allow physician practices to roll into a model of whatever they 
choose to do when they are ready to do it so that there is not 
a limited window of time. Right now, the window opens and then 
it closes, and nobody can get in there and get the work done to 
get ready for the infrastructure changes to happen.
    In rural and primary care practices in parts of this 
country, getting the funding out there to help them get the 
infrastructure is a key issue. It has to take place in order 
for them to be participants. But we cannot expect them to 
change overnight.
    But we can get them enrolled in these programs if we 
provide them the wherewithal to do it and the timing allotment 
that will do it.
    The other thing we have to do fairly quickly is the 
Medicare data system. And you have heard repeatedly now today, 
we have to have the data that we need in order to do the 
quality work.
    Physicians want to participate in the quality programs and, 
in fact, in some of the earlier discussions, the relevance of 
the measures, et cetera, being used, the whole issue of the 
mechanics of the way these programs work--they do not work 
particularly well for physicians.
    And then, again, another opportunity here is what we refer 
to as the deeming opportunity, which was in our written 
statement, which allows physicians who are already 
participating, like Dr. McAneny's program, in a very high 
quality program with improvement outcomes, let that count 
towards this entire issue of physician participation.
    So those are some fairly straightforward things that could 
be done in the short term as we get to the final payment and 
delivery models that we are going to end up needing to use in 
this country.
    The Chairman. What is the Medicare data problem that many 
of you are referring to? What is the problem?
    Dr. McAneny?
    Dr. McAneny. I have an example that I can use from my own 
practice.
    The Chairman. Sure.
    Dr. McAneny. We participated in the PQRS, since it was 
PQRI, from the beginning. I am a fully electronic practice. We 
have been paperless since 2002. So I know I have data on my 
practice of what is done.
    Yet, last year, we filled in all the PQRS updates, and I 
can prove that I have the documents for each one of those. Yet, 
when I turned it in to Medicare, we did not get any of those 
updates. They said, ``Your data was incomplete.''
    I said, ``I have my data.'' They said, ``No. Ours says you 
didn't do it.'' And that is just one small example of some of 
the flaws in the Medicare system in terms of rapid turnaround 
for data.
    If we are going to manage a population of patients in the 
medical home, we have to have real-time, very good data where 
our patients are, what care they are accessing, what site of 
service they are doing it in, what are their complications, 
what are their co-morbidities, who are their other doctors.
    We have to have that data practically real-time if we are 
going to be able to save the system money. But if you get data 
from Medicare, you get it a year, a year and a half later, when 
it is history. We need it now.
    So we really need Medicare, CMS, as a partner to work with 
the physicians to be able to----
    The Chairman. So what does CMS say? ``We don't have the 
money to update our systems.'' What is their response?
    Dr. Hoven. They are working with us.
    The Chairman. Is there a legitimate reason?
    Dr. Opelka. There is a current structure, Mr. Chairman, 
that the way the data is pulled in and then analyzed, it is, 
for example, 2012, we are looking at 2010 data.
    And so, how does that become actionable and meaningful? 
When you get your report, it is really just tied to an update 
in finances and not to clinical care. And we want it tied to 
clinical care so we can make actionable statements about 
patients.
    So that is the problem, using claims data that then has to 
be aggregated and analyzed when that year is closed out. And by 
the time it is analyzed and presented, another year has passed. 
That is why we are looking at other data systems that will get 
to the target you are asking us to get to.
    And, if we had access to these other data systems, they are 
real-time, they allow us to say, that happened last month, that 
cannot happen this month; we need to put an action plan in 
place to correct that. But that is part of the big disconnect, 
and it is not for lack of trying. It is just the wrong dataset 
to drive the goal that we are trying to reach.
    Dr. Weaver. The other place you can help us is the private 
insurance. Their data is much more rapid, but they are not very 
transparent with their data.
    The Chairman. True.
    Dr. Weaver. And for us to manage ideally, we should have 
everybody's data on those patients whom we are trying to manage 
in order to do it best. It allows us to look at claims data and 
clinical data at the same time. We are prepared to do that, but 
it is almost like it is proprietary to some of these payers.
    They do not want to share it with you, and yet, they are 
spending millions and millions of dollars collecting it.
    The Chairman. I know that is true. I met with insurance 
companies not long ago and they showed me all this ``gee whiz'' 
technology they have on claims data.
    Dr. Weaver. Yes.
    The Chairman. They know everything about everything. You 
pull back the screen, you would think that you were down in 
command central somewhere. I asked them, ``What about 
outcomes?'' And they were a little hesitant at that. I said, 
``Well, do you share that with your hospitals and with your 
practices?'' The answer was, ``Well, if they'll pay for it.''
    Dr. Stream. And the challenge for the practice is, you 
might have 10 percent of your population in each of six 
different programs, and then you have your Medicare data and 
your Medicaid data, and it is not collated in any single place.
    They use the claims data because it is what they have.
    The Chairman. Exactly.
    Dr. Stream. But they really need, as we make the 
transition--to change more broadly in our practices, we need to 
move to providing more clinical data.
    The Chairman. I would like to press you a little more, if I 
could, though. It is a question I asked and that Senator Kyl 
asked. What do we do short-term, long-term? We have to be 
consistent, but flexible in different parts of the country. And 
I think we have some understanding of all that. But we do need 
some ideas on what to do.
    Dr. Stream. I mentioned in my opening remarks H.R. 5707. It 
is a bipartisan House bill. I would encourage your 
consideration of its provisions.
    You have heard from all of us the importance of providing 
some predictable stability in physician payment, particularly 
for primary care. It operates on a much thinner margin, 
particularly in our small practices.
    The recurring annual, or sometimes multiple times per year, 
potential cliff in payment is a huge stifling factor in 
investing in practice transformation for this future that we 
know we need.
    So this bill has a repeal, it has a positive update, and 
then it has declines in fee-for-service payments in the later 
years once we have these new models tested to take the place of 
pure fee-for-service.
    Dr. Opelka. To the specifics of Senator Kyl's question, can 
we have something ready for January, it would be a really big 
push for us to push our model to that point. We are just now 
trying to sort through, how do we actually score this and show 
you the ability that this has to reduce cost and improve 
quality at the same time?
    So, in short, I think we are going to need a bridge, but 
also, we could use help from the Innovation Center as to how we 
are looking at data and how we actually get that data at a 
meaningful point so that we get adequate scoring in the value-
based update model that we are proposing.
    So there is an opportunity for us to work more closely with 
the Centers for Medicare and Medicaid to actually do the work 
we need to get the scoring of the modeling so that we can, by 
that subsequent year, give you a more complete package. And we 
think it is in alignment with our entire conversation about 
value and about patient-centeredness.
    So we do believe we can do it, and we are ready to roll our 
sleeves up on it, but we could use some help in getting access 
to and partnering with the knowledgeable side of the Innovation 
Center and what they could do to add to this.
    Dr. Hoven. One of the other things I would throw in on 
this--and I agree with what Dr. Opelka has said--is the whole 
issue around care coordination and transition of care.
    The new codes need to be in place. Payment for this--I 
mean, there are going to be some up-front expenditures, but 
care coordination is extremely important. You have heard that 
earlier in our discussions today. It will result in long-term 
savings, but we have to get the ball rolling and make it 
meaningful.
    We could talk for hours about how folks fall through the 
cracks. That is not patient-centered, necessarily, although we 
try like heck to make it so. But we do need help in that 
particular area as well.
    The Chairman. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman. Thank you all for 
your insights.
    I know most of you represent more populated areas of the 
country or work in those areas, but I wanted to just raise an 
example of some of the challenges that we are facing in rural 
parts of the country when we talk about SGR reform and 
financial stability for our health care providers.
    In South Dakota, it should not be any surprise that most of 
our providers are highly dependent upon government payer 
sources, and here is an example of one of the towns in my 
State. This is Chamberlain, SD. It has a population of 2,300 
people. It has a payer mix of about 40 percent Medicare, 20 
percent Medicaid, 20 percent IHS, and 20 percent private 
insurance.
    So you have 80 percent of the revenue tied to what tend to 
be unstable Federal payment systems, and they are struggling to 
keep up with reinvesting in critical facility upgrades and 
nursing recruitment and all those sorts of things.
    And the other point I wanted to make about that is, it is 
very hard to recruit and retain providers, physicians, in some 
of these rural areas. And I am curious to know--I am going to 
give you another example. In South Dakota, we have an estimate 
that 27 percent of the population resides in areas that lack 
sufficient family practice, internal medicine, or OB/GYN, which 
is 48th in the Nation. And so, recruiting and retaining quality 
physicians has traditionally been a challenge for hospitals in 
rural communities.
    I am wondering what your thoughts are about the lack of an 
ability in rural settings to cost-shift. Most people in more 
urban settings cost-shift to your private payers. And because 
the margins are so thin with regard to government 
reimbursements to physicians, and particularly in the primary 
care area, that is impacting the ability of rural areas to 
recruit and retain physicians.
    You have this high amount of the payer mix that is 
government sources. The cost-shifting that many areas can do is 
not available, at least not on the same level, in some of these 
rural areas. But it strikes me that that is really impacting 
our ability in the rural parts of the country to be able to get 
people to come out and practice.
    Again, it comes back to the whole point of payment reform 
and what we can do to incentivize physicians to work in these 
areas.
    I am just curious if any of you have observations about 
that.
    Dr. Stream. I currently practice in a small metro area, but 
my first practice was in a community of 2,700 in central 
Washington, 12 miles from the nearest hospital. I understand 
the problem that you are referring to.
    And it is largely primary care physicians who are out in 
those rural areas. In most practices, even in primary care, 
only 20 or 25 percent of their practice is Medicare with a 
small Medicaid portion. And so it is the measures you describe, 
but upside down.
    I think what we have to do is, again, realign payment so 
that it supports primary care and use the innovations that we 
have seen in the commercial market, which is, unfortunately, 
for many of your folks, a smaller piece of their business.
    But the medical home pilots conducted around the country 
and coordinated with employers and insurers through the 
Patient-
Centered Primary Care Collaborative and others, show huge 
improvements in health care quality measures, but also, cost 
efficiencies. And it is the reason that we need the Federal 
payers to be involved in that.
    It is why the Comprehensive Primary Care Initiative is such 
a unique, potentially game-changing program for primary care, 
including in rural areas, because it is a collaboration between 
CMS and private payers in the local market to pay this blended 
payment model, to support that necessary practice 
transformation.
    And we know, not only are those practices more efficient 
and provide better care, but the people who work there are 
happier, and that is an important factor in recruiting to a 
rural area.
    Dr. McAneny. Thank you, Senator Thune, for that question. I 
come from New Mexico. We are rural and frontier. So I can 
relate.
    In the small towns where I provide oncology services--one 
is in the heart of the Navajo Nation, another is in the 
southern part of the State--the primary care doctors ask us to 
please provide those services, because patients were electing 
to stay home and die rather than drive for hours to get cancer 
care, which is just too sad in this country.
    One of the things that I find is that it actually costs 
more to recruit doctors, nurses, physical therapists, radiology 
technicians, et cetera, to a rural area than it does to an 
urban area. In an urban area, a doctor who shows up with a 
spouse, both can generally find a job. In a rural area, often, 
one cannot. And we have to work harder and pay more in rural 
areas.
    Yet, the Medicare system is set up with the geographic 
price-cost indicators, which penalize those of us who have been 
in rural areas, who have kept costs down. So that, when we try 
to recruit people, we are paid less for someone who costs us 
more. And one thing that Congress could do is to take a very 
strong look at the geographic price-cost indicators that adjust 
all of our payments for these rural areas and look at whether 
or not they truly still reflect the cost of providing care.
    I am an oncologist. If I have to have oncology nurses, I am 
recruiting through a national market. I advertise nationally 
for people to come to Gallup, NM. It is not easy, and we 
struggle with that.
    We have set up our own training programs inside the 
practice to train nurses, to pay them more to become oncology-
certified. But these are things that we are taking on.
    Your description of the payer mix is exactly my payer mix 
in Gallup, maybe not quite as good as what you described, and 
that practice is losing money, and I am struggling in a private 
practice to keep it alive.
    If the payments were higher for rural and under-served 
areas and populations with severe health disparities to reflect 
the increased work it takes to take care of people who are 
socially disadvantaged, then you would be able to move some of 
the doctors and nurses and others from the more urban areas 
into these rural areas, and we desperately need your help with 
that.
    The Chairman. Would the rest of you agree with Dr. McAneny: 
pay more for those who practice in rural areas?
    Dr. Weaver. I would not say it is just in rural areas. I 
would say, many inner cities have the same problem.
    Dr. Hoven. Equal pay for equal work.
    Dr. McAneny. Right.
    The Chairman. What about loan forgiveness?
    Dr. Weaver. I think that is effective.
    Dr. Hoven. Yes. We do it in Kentucky.
    Dr. Stream. There are good State and Federal programs for 
that that are very successful.
    Dr. Hoven. The other point to this question, as well, is 
empowering those practices not just with payments, but 
empowering them to be engaged in the whole delivery reform 
process, and that is going to be a challenge.
    The advanced payment program, so they can get their IT-
health information technology up to speed, is a very important 
one. The other thing is working on mechanisms for them to be 
able to connect to specialists, other folks not just in their 
primary care role, but the specialists they need to help them 
manage their patients. And I think we could do a better job in 
working out systems to allow that to happen so that they get 
the support and they do not feel like they are hung out to dry, 
like in eastern Kentucky where I am from, and that they can 
provide the care they really want and are able to do.
    Senator Thune. How much EMR interoperability is there with 
facilities?
    Dr. Hoven. That is a huge issue, a huge, painful issue. 
There is no interoperability.
    Senator Thune. It has always been that that was one of the 
things that we were addressing and getting better at. We have 
people come in, experts, and testify that that is not 
happening.
    Dr. Hoven. It is not happening.
    Dr. Opelka. What they are saying and what we are seeing is 
just completely opposed, even within the same vendor, where 
there is a vendor who is version 1.1, and then this institution 
over here is version 2.2. They do not talk even within the same 
vendor. So there is a major barrier there.
    The Chairman. So how do we incent getting them to work 
better together? I do not think much is going to change until 
they get proper incentives, the vendors.
    Dr. Opelka. I think there is a lot going on from the Office 
of the National Coordinator in this effort to try to set data 
standards and try to move more consistent data across all these 
areas.
    Again, the initial move of getting the EHRs out there was, 
let us get everybody digital, and now we have to get digital 
communication. We have to get the movement of data, and then we 
have to get the meaningful movement of data.
    So ONC is now at the point of data-to-data movement, and 
their next step is, how do we get to meaningful data? We are 
the
content-context experts who can give you meaningful data. We 
need to have the ONC standards go out there and say, we will 
get you movement of data, and then we can front-end load that 
with content and context. That will give us actionable data.
    Dr. Weaver. The other area you can help us with is--I 
mentioned this before--criteria for, like, appropriate use of 
testing and that sort of thing, which could increase 
utilization. That is done on the side right now. It needs to be 
in workflow. It needs to be in the EMRs. And the EMR vendors 
are not stepping up to incorporate these kind of decision 
support tools.
    And that is where we will see changes occur, when we do not 
have to pay extra to collect the data and distribute it versus 
having it part of the EMR.
    The Chairman. Maybe we should have the vendors here.
    Dr. Weaver. Maybe.
    Dr. Hoven. It might help.
    The Chairman. We can talk to them about this with you here, 
as well.
    Dr. Opelka. We actually had a meeting with them 2 days ago 
over at the Institute of Medicine, and it is the very first 
step in how do we get there. And again, any direction you can 
help give ONC to get us there would move us that much faster.
    Dr. Stream. One of the issues is the intermediary that 
exchanges that information, the health information exchanges, 
and there are a number of successful and some not so successful 
ones around the country. And a lot of the issue is, what is the 
business model or payment model that supports them, and they 
often look to the physicians to subscribe to a service that 
then is going to exchange information.
    But it is the system, particularly the private health 
payers, that benefits from that exchange of information. I 
think we need to promote a payment model for those health 
information exchanges that is not asking small practices to 
contribute in order to get information exchanged.
    The Chairman. Go ahead.
    Dr. Opelka. I was just going to comment very quickly on 
Senator Thune's comments about the rural issue. And we do not 
have a solution in surgery, but we are very concerned. And 
there is decreasing access to surgical care, and, when that 
happens, you have problems with trauma, you have problems with 
acute surgical needs and transporting patients.
    I really want to support what Dr. Hoven had said about 
creating partnerships and new ways of delivering care into the 
rural environments. Partnerships from these delivery systems 
that are forming create some new connectivity, like 
telemedicine out to the specialty areas, so that there is early 
intervention and prevention of avoidable, preventable adverse 
patient events.
    It is deeply troubling in surgical care what we are seeing 
in the absence of surgeons in rural America, and it is 
something we are tracking, but I do not know that we have a 
solution for it.
    The Chairman. If we were to have a solution, what might it 
tend to be?
    Dr. Opelka. Well, I think finding out what the barriers are 
to creating the kind of partnerships we need, getting the right 
surgeon to the right environment for the right time, matching 
the surgical needs. There could be a sense of, how do we 
actually create regionalization of key parts of surgery, and 
then, how do we get rural surgeons out into those rural 
environments?
    Some of that may be loan forgiveness. Some of that is going 
to be recruiting from the medical schools themselves. As a 
person in Louisiana, a rural State, with medical education, we 
find when we pull in students from the rural areas, there is a 
good chance that they will go back to the rural areas.
    So we are looking for best-in-breed opportunities to come 
in from the rural areas, and we are giving them incentives to 
come into medical school. So it begins very early in the 
career, but there are other steps, too, Mr. Chairman, that you 
have mentioned, and we endorse those.
    Senator Thune. How much is occurring with patient or 
surgical consults via tele-technology, telemedicine-type 
approaches that might--I mean, that, to me, is one of the 
partnerships that we have seen be at least moderately 
successful in South Dakota, and I think other rural States are 
doing that too. But there are some, I think, limitations to 
that.
    And I guess to the chairman's question, are there barriers 
that we could knock out of the way that would enable better use 
of the technology to deliver care to these--obviously, you have 
to have a surgeon there at some point if you have to have that 
kind of intervention, but it seems like there are a lot of 
things that could be done on the preventive side and in advance 
of that that could be accomplished through other means.
    Dr. Opelka. Senator, in short, I would have to do more 
homework on that and get back to you. I do not have a sense of 
what kind of penetration there is. There is more than just a 
case report of this being out there. It is emerging. But I do 
not know that we have clear data to answer your question.
    Dr. Hoven. I am not going to speak to the surgical issue, 
but I know in medicine, internal medicine, and in the 
specialties of medicine, particularly in neurology, critical 
care, pulmonary medicine, infectious disease, which I do, a 
great deal of outreach is now being done into rural parts of 
Kentucky via telemedicine programs and other communication 
tools.
    The technology needs to be improved. The standardization 
needs to be improved. But it does work. And recently, in one of 
our communities, actually, every day, a member of the critical 
care ICU team met video-wise with TeleMed, with a team in a 
little, small community hospital taking care of critical-type 
patients, and actually arranged transfer, determined what 
diagnostic studies would be helpful, and began to move that 
train before it became a catastrophe, before someone was 
seriously hurt because they were not able to get to care.
    So the movement is out there. I think we need the tools, 
the technology, and the standards to get this to a place that 
makes it what it should be.
    The Chairman. Senator Carper?
    Senator Carper. Let me jump in here, if I can. I apologize 
for missing your comments. I have a simultaneous hearing in the 
Committee on Homeland Security and Governmental Affairs, and it 
is the 10th anniversary of the creation of the Department on 
the heels of 9/11. And it was an opportunity for us to look 
back and look forward at the threats that we are facing around 
the country, around the world. So I apologize for missing much 
of what you said.
    My colleagues would probably tell you that my focus on 
health care reform has been not just, how do we extend coverage 
to people who do not have it, but how do we realize better 
health care outcomes for less money or for the same amount of 
money, because, if we do not do that, we are not going to be 
able to extend coverage long to people who do not otherwise 
have it.
    Among the focuses that I have had and, actually, a focus 
shared by Senator Baucus and Senator Enzi, as well as by others 
of our colleagues, is, is it possible to reduce the incidence 
of medical malpractice litigation? Is it possible to also 
reduce the incidence of defensive medicine? And is it possible, 
in doing both of those, to get better health care outcomes?
    And one of the things we put in the health care reform bill 
was a $50-million authorization to incentivize States to 
experiment boldly on different approaches. It could be health 
courts, it could be safe harbors, it could be panels of merits, 
or it could be the kind of thing we did up in Michigan; we saw 
that it works. And like what the University of Illinois has 
done, they have taken the Michigan idea, saw that it works, and 
they put it on steroids to see if it is possible to reduce the 
incidence of medical malpractice, reduce the incidence of 
defensive medicine, and get better results.
    And the answer, in about the last 2 years of good work that 
they have done, is yes, yes, and yes. I would just throw that 
at your feet and ask you to comment, please.
    Dr. Opelka. Senator, if I could. And Senator Hatch raised 
this issue moments ago. We really did not dig into it at the 
time. But there is a disconnect from the conversation we are 
having about improving the value and how we purchase health 
care and this whole aspect of defensive medicine.
    And there is no way that we can actually fully achieve the 
value we wish unless we actually have evidence-based clinical 
care matched with evidence-based tort. If we do not have 
evidence-based tort reform, then physicians and hospitals are 
going to continue to have to defend their profession with 
defensive medicine. And that is the missed opportunity.
    If we are setting standards for better performance, if we 
are using them for public reporting and payment, then why are 
we not using those as the evidence basis for the decisions we 
make?
    I do not want to say that malpractice does not occur. I 
wish it never, ever occurred to anyone in any specialty 
anywhere. But it does. We are all human. And when it does 
occur, people deserve to be compensated.
    But if the best evidence was followed and everything was 
proper, then we just understand that is part of our own human 
frailties.
    We desperately need to look at everything you proposed, 
whether it is health courts, whether it is safe harbors, 
whether it is evidence-based tort reform, as a necessary 
adjunct to this value proposition. If we do not, we are going 
to be forever struggling with trying to contain that cost, and 
it is a significant cost. I do not know if it is $50 billion or 
more, but it is not chump change.
    Senator Carper. I spent quite a few years of my life as a 
naval flight officer back during the Vietnam War and then 
subsequent to that and during the Cold War. I am struck by how 
we have taken an idea that we used all the time in airplanes--
checklists--and are actually applying it to the delivery of 
health care, and with regular good effect.
    And the other thing we did in naval aviation, and I am sure 
we do it in the other branches of the military as well, is, if 
we had a problem in a Navy P-3 airplane with one of the 
systems, crew, air, or whatever, we did not hide it. We just 
broadcast it throughout the Navy and said, this happened on 
this flight, on this mission, these are the conditions, the 
circumstances, this is what was done well, this is what was 
done badly, and, frankly, that is a smart thing to do with 
respect to these issues--defensive medicine and medical 
malpractice mistakes that are made.
    And one of the beauties about what they are doing in 
Illinois is putting a spotlight on it. They are not hiding this 
stuff--immediate disclosure, folks who are hurt, harmed in some 
way, financially or their health, apologies, and it is really a 
smart approach, I think. I am very encouraged with the work 
that is going on.
    Do you have any comments on this?
    Dr. Stream. Well, you bring up a good point, Senator. It 
really is about a system of care and not necessarily just 
individual performance. And the checklist comment that you made 
is exactly on point.
    But we need to look at those incidents, near misses, as the 
FAA looks at accidents for aircraft. How can we learn from 
mistakes rather than try to hide them because of concern about 
litigation, and how can we use them as learning opportunities 
to continuously improve the quality of care that we give?
    And we need to nurture that environment, and, 
unfortunately, we, for the most part, do not do that.
    The Chairman. This has been a good hearing. I would like, 
though, for each of you, the best you can, to submit to us your 
written suggestions on what we do about SGR; that is, short-
term, mid-term, long-term, knowing that we have to act one way 
or another. And there are many ways to skin a cat, there are 
gray areas here and there are bridges and there are all kinds 
of solutions that you can come up with, but we do need some 
help.
    I just tend to think, the more you give us some suggestions 
and solutions, the more likely it is that you will like them. 
So, please, let us know what you think. And we deeply--I mean 
that, we really need your help.
    Thanks very much. The hearing is adjourned. A very good 
hearing. Thank you.
    [Whereupon, at 11:51 a.m., the hearing was concluded.]
                            A P P E N D I X

              Additional Material Submitted for the Record

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