[Senate Hearing 112-840]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-840

  IMPROVING CARE FOR DUALLY-ELIGIBLE BENEFICIARIES: A PROGRESS UPDATE

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           DECEMBER 13, 2012

                               __________



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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 STATEMENTS

                                                                   Page
Baucus, Hon. Max, a U.S. Senator from Montana, chairman, 
  Committee on Finance...........................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                               WITNESSES

Bella, Melanie, Director, Medicare-Medicaid Coordination Office, 
  Centers for Medicare and Medicaid Services, Washington, DC.....     5
Betlach, Thomas J., Director, Arizona Health Care Cost 
  Containment System, Phoenix, AZ................................    28
Lindeblad, MaryAnne, Director, Washington State Health Care 
  Authority, Olympia, WA.........................................    29
McCarthy, John B., Director, Ohio Department of Job and Family 
  Services, Office of Health Plans, Columbus, OH.................    31

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    39
Bella, Melanie:
    Testimony....................................................     5
    Prepared statement...........................................    41
    Responses to questions from committee members................    54
Betlach, Thomas J.:
    Testimony....................................................    28
    Prepared statement...........................................    75
Hatch, Hon. Orrin G.:
    Opening statement............................................     3
    Prepared statement...........................................    78
Lindeblad, MaryAnne:
    Testimony....................................................    29
    Prepared statement...........................................    80
McCarthy, John B.:
    Testimony....................................................    31
    Prepared statement...........................................    83

                             Communications

American Health Care Association and National Center for Assisted 
  Living (AHCA/NCAL).............................................    87
National Committee to Preserve Social Security and Medicare and 
  National Senior Citizens Law Center............................    95
National Disability Rights Network...............................    96

                                 (iii)

 
  IMPROVING CARE FOR DUALLY-ELIGIBLE BENEFICIARIES: A PROGRESS UPDATE

                              ----------                              


                      THURSDAY, DECEMBER 13, 2012

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:12 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus (chairman of the committee) presiding.
    Present: Senators Rockefeller, Bingaman, Wyden, Cantwell, 
Nelson, Carper, Cardin, Hatch, Grassley, Thune, and Burr.

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

    The Chairman. The hearing will come to order. It seems we 
are going to have to go with the flow here and call audibles as 
we proceed. Some of the power is on, some of the power is not 
on. We have lights, but we do not have sound. We will proceed 
the best we can, and so just let's everybody work together. And 
if someone cannot hear, would that person--not the audience--
raise his or her hand? [Laughter.] That is, if any members of 
the panel cannot hear somebody's testimony and vice versa, just 
raise your hand or shout out, ``Would you repeat that?'' Okay.
    President Harry Truman once said, ``Difficulties are a 
challenge to men of determination.'' And I suppose that would 
also apply to ``women of determination'' these days.
    On July 30, 1965, President Lyndon Johnson signed 
monumental legislation creating both Medicare and Medicaid. At 
long last, the United States had met the challenge of 
guaranteeing health insurance to elderly and low-income 
Americans. The bill-signing ceremony took place in 
Independence, MO. The first Medicare card was given to the 
Nation's first beneficiary, the 81-year-old former President, 
Harry S. Truman.
    Nearly 50 years later, Medicare and Medicaid continue to 
provide vital health services to more than 100 million 
Americans. Nine million of these individuals are part of a 
subgroup enrolled in both Medicare and Medicaid. These dually-
eligible beneficiaries, sometimes called ``duals,'' present 
unique challenges that were hard to imagine back in 1965.
    These folks who are eligible for both Medicare and Medicaid 
are often thought of as one single group. They are not. People 
who become eligible for both Medicare and Medicaid do so for 
many different reasons. A low-income individual who just turned 
65 may qualify. A 26-year-old with a disability may be 
considered dually-eligible. An 80-year-old who needs long-term 
care also could qualify.
    All pose very unique, individual challenges. They are not 
the same. These challenges are often complicated because 
Medicare and Medicaid do not always work very well together. 
Some rules are written by the States, others by the Federal 
Government. Acute care is paid for by Medicare. Long-term care 
is paid for by Medicaid.
    Incentives become misaligned, with too much red tape across 
both programs. Vulnerable Americans are lost in the middle. As 
a result, some of these folks receive poor health care, and we 
have the data that proves this.
    Half have three or more chronic conditions. More than half 
have a mental impairment. As a consequence of their poorer 
health status, dually-eligible beneficiaries are more than 
twice as likely as other beneficiaries to die during any given 
year.
    The government also spends disproportionately high amounts 
on this population. While 18 percent of Medicare beneficiaries 
are 
dually-eligible, they account for 31 percent of Medicare 
spending. Fifteen percent of Medicaid beneficiaries are duals, 
but they account for 39 percent of total Medicaid spending. 
Last year, States and the Federal Government spent nearly $300 
billion on care for people who qualify for both Medicare and 
Medicaid.
    The nonpartisan Congressional Budget Office tells us that 
40 percent of the long-term growth in Federal health care 
programs is due to the growth in health care costs. But 60 
percent can be linked to the aging of our population. In fact, 
10,000 Americans will turn 65 each day over the next 2 decades.
    We cannot stop the aging of America, but we can work to 
lower health care costs. Streamlining Medicare and Medicaid so 
they work better together will pay dividends. It will improve 
the health of vulnerable Americans, and increasing efficiency 
will also save the Federal Government money.
    How are we going to increase efficiency? First, we need to 
rework our payment models so that providers, States, and the 
Federal Government have incentives to work toward the same 
goal. Let us remove incentives for providers to game the 
system; we need to put beneficiaries first. Everyone should be 
rewarded for lower costs as well as held accountable for poor 
or unnecessary care.
    Second, we need to coordinate care so that doctors, 
hospitals, and other providers are working together as a team. 
Dually-eligible folks often have multiple chronic diseases, 
requiring multiple doctors. If providers do not communicate, 
they can deliver unnecessary care. This leads to increased 
costs and can harm patients.
    Third, we need to get rid of conflicting rules and cut red 
tape in the areas where Medicare and Medicaid interact. For 
instance, when a dually-eligible person needs a wheelchair, 
Medicare and Medicaid have two very different rules. These 
rules are complicated and at times delay needed care.
    Accomplishing these goals will go a long way in improving 
care and saving money.
    Our witnesses are here today to discuss efforts to 
streamline these two programs. Last year, Melanie Bella, the 
Director of the office at CMS responsible for dually-eligible 
beneficiaries, testified before the Finance Committee. She 
outlined CMS's plans for a demonstration project where States 
would test new ways to provide health care to duals.
    Today, the committee is following up. We look forward to an 
update on these efforts from Director Bella and three States 
participating in the demonstration project: Washington, 
Arizona, and Ohio. As these demonstrations move forward, we 
need to keep in mind three key principles.
    One, the focus cannot be on cost-cutting alone. We must 
focus on streamlining Medicare and Medicaid in a smart way to 
improve how care is delivered.
    Two, we must maintain or strengthen the protections 
beneficiaries already enjoy today. Let me repeat that: we must 
maintain or strengthen the protections beneficiaries enjoy 
today.
    And three, we need to rigorously evaluate the projects to 
learn what worked and what did not.
    So let us focus on these principles, streamline the 
programs, and improve care for these vulnerable American 
citizens. And, as President Truman advised, if we act with 
determination, these difficulties will only be challenges to 
solve.
    [The prepared statement of Chairman Baucus appears in the 
appendix.]
    The Chairman. Senator Hatch?

           OPENING STATEMENT OF HON. ORRIN G. HATCH, 
                    A U.S. SENATOR FROM UTAH

    Senator Hatch. Well, thank you, Mr. Chairman, for holding 
this hearing. It will allow us to get a progress update on 
efforts to improve the care for beneficiaries who are eligible 
for Medicare and Medicaid. In an otherwise partisan atmosphere, 
today's topic is refreshing. It represents an area where we can 
achieve some real bipartisan agreement to lower health care 
costs and improve patient care.
    There are more than 9 million Americans--commonly known as 
``duals''--who are eligible for both the Medicare and Medicaid 
programs. These patients often suffer, as the distinguished 
chairman has said, from multiple chronic conditions and have 
complex medical needs. The $300 billion spent on this type of 
care every year is generally separated by complicated Medicare 
and Medicaid payment rules. Unfortunately, the system is not 
serving taxpayers well, and it is not serving patients well 
either.
    I would note that many promising efforts have been made to 
address these needs, such as various State-driven efforts, the 
Special Needs Plans in Medicare Advantage, and the Program of 
All-
Inclusive Care for the Elderly, which is known as ``PACE.'' 
While these approaches have made a huge difference, there is 
much more work to be done.
    I know that our first witness, Melanie Bella from CMS, has 
been working hard to solve these problems, and I have a very 
high opinion of Melanie Bella and the work that she is doing. 
We want to help you to the extent that we can, and you need to 
give us some help yourself by giving us instructions on what we 
can do to help you.
    Ms. Bella has led the Financial Alignment Initiative to 
encourage States to design solutions that integrate care 
delivery and funding streams for dually-eligible beneficiaries. 
She is actively working with 25 States to approve and implement 
these proposals. Today, we will hear from two States with 
approved proposals--Washington and Ohio--and another--Arizona--
whose proposal is under review.
    I am supportive of State-designed efforts generally, and I 
applaud Ms. Bella for her pragmatic and compassionate approach 
to a very, very difficult task. However, I do want to make sure 
that we get the details right. In order to ensure these 
demonstrations are successful, I and six other members of this 
committee sent a letter to CMS in June outlining three 
priorities.
    First, the demonstrations should be of a size and scope 
that gives Congress data upon which to base future 
policymaking. Second, these proposals should be consistent with 
good government principles so that contracts are competitively 
bid on cost and quality across a level playing field. And, 
finally, we need to be sure that these demonstrations protect 
the integrity of the Medicare Part D program.
    Again, Mr. Chairman, I want to thank you for scheduling 
this important and timely discussion, and I do, as always, look 
forward to working with you on these issues.
    Now, one final thing. Mr. Chairman, I am really concerned 
about this fiscal cliff. This is the committee of jurisdiction, 
and, frankly, I think we ought to haul the Secretary of the 
Treasury up here one more time just so that we can ask some 
very pertinent questions about what really is going to go on 
and what can we do and what does he really want to do, because 
I cannot imagine him wanting to come up and present the program 
that he did present, which I found pretty insulting. But it 
would be a great thing if we could do that, and I know that you 
and I have worked together on these things, and maybe that is 
the way of getting that done. Maybe you can push things 
forward. I do not know.
    The Chairman. Well, Senator, I appreciate your opening 
statement, and I also know you speak for all of us when you say 
you are concerned about the fiscal cliff. We are also concerned 
about making sure that it is resolved, and resolved as 
expeditiously as possible. We need certainty and predictability 
in our country, stable markets, et cetera, and our goal should 
be just that. I will be working to do what we possibly can to 
help us and not to be taking actions that might be disruptive, 
so we appreciate your concern in this.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. We are very honored to have you, Melanie. Oh, 
now they are working. At least our lights are working. That is 
the first step.
    Ms. Bella. I will just try to speak loudly.
    The Chairman. Try it again. Is there a light that goes on?
    Ms. Bella. A red light, not green.
    The Chairman. A red light? We want red.
    Ms. Bella. We have red. [Laughter.]
    Senator Hatch. We can hear you.
    The Chairman. We will raise our hands if we cannot hear 
you.

        STATEMENT OF MELANIE BELLA, DIRECTOR, MEDICARE-
MEDICAID COORDINATION OFFICE, CENTERS FOR MEDICARE AND MEDICAID 
                    SERVICES, WASHINGTON, DC

    Ms. Bella. Thank you. Chairman Baucus, Ranking Member 
Hatch, and members of the committee, thank you for the 
invitation to continue our discussion about CMS's efforts to 
improve care for low-income seniors and people with 
disabilities who are enrolled in both the Medicare and Medicaid 
programs. My name is Melanie Bella, and I am the Director of 
the Medicare-Medicaid Coordination Office. I appreciate your 
ongoing interest in the work of the office, and thank you for 
the opportunity to be here today.
    For decades, there has been much discussion about better 
coordination for this population, and, through the Affordable 
Care Act and the leadership of this committee, Congress has 
given CMS the necessary tools to make things better.
    The Medicare-Medicaid Coordination Office continues to 
focus its work in three areas: program alignment, data 
analytics, and models and demonstrations. Together these areas 
provide a platform for developing integrated programs that help 
achieve our goal of increasing access to seamless, person-
centered care that is high quality for all Medicare-Medicaid 
enrollees. Today, I would like to update you on the progress we 
have made since I last testified before this committee.
    Although established at the same time, Medicare and 
Medicaid were designed with distinct purposes, with little 
forethought as to how the two would work together. As a result, 
the two programs often work at cross-purposes. We are actively 
working to address the areas where the programs bump up against 
each other, and I just want to share with you a few concrete 
examples.
    The number-one issue we get asked about from both 
beneficiaries and providers relates to billing. So, earlier 
this year, we issued guidance to make it clear that the 
providers may not balance-bill Medicare-Medicaid enrollees, and 
we plan to continue to work aggressively in this area.
    Another area of frustration we hear about frequently is 
appeals.
    The Chairman. By ``balance-bill,'' you mean charge the 
beneficiary.
    Ms. Bella. Charge the beneficiary the difference, yes.
    The Chairman. I want to make sure everybody understands 
that.
    Ms. Bella. Another area of frustration is the appeals. We 
are finalizing what is called a Combined Integrated Notice of 
Denial of Payment that is the first step in integrating the 
appeals process between the two programs for beneficiaries, 
providers, and payers who must navigate both.
    Lastly, there has always been widespread interest in 
expanding the Program of All-Inclusive Care for the Elderly, or 
the PACE program. We have convened a cross-agency work group to 
explore how to increase flexibilities in PACE using our sub-
regulatory or regulatory vehicles that the agency has at its 
discretion.
    There are many opportunities to improve the coordination of 
rules, requirements, and policies between the two programs. 
This critical work is ongoing for us and fundamental to 
creating a more seamless, high-quality, cost-effective system 
of care.
    As we have discussed in the past, a thorough understanding 
of the Medicare-Medicaid population and its subpopulations is 
critical to everything we do and drives our efforts, including 
new beneficiary outreach and engagement models, new quality 
measures, care models, and payment models, just to name a few.
    I am happy to report that CMS now has an integrated 
Medicare-Medicaid data set. This will allow States and 
policymakers and others to better understand the population and 
support opportunities for improved care coordination. This work 
takes our efforts in providing States access to Medicare data 
for care coordination purposes and expands it by allowing 
States to also now receive the integrated data that they can be 
using to support their care coordination efforts.
    Also exciting are enhancements to CMS's Chronic Condition 
Data Warehouse to include new diagnostic conditions flags for 
conditions prevalent among Medicare-Medicaid enrollees, such as 
schizophrenia. Given the widespread use of this research 
database to inform policy and program decisions, it is a huge 
step forward to be adding conditions that will further inform 
our understanding of this population.
    In June, as part of our mandate to serve as a resource to 
States, policymakers, researchers, Congress, and others, we 
released profiles on Medicare-Medicaid enrollees nationally and 
for each of the 50 States and the District of Columbia. The 
State-level profiles contain demographic characteristics, 
utilization and spending patterns, and will be updated 
annually.
    Supplementing this work, this month CMS launched the State 
Data Resource Center. This center is open to all States to help 
guide them in their use of Medicare data across CMS programs 
and in the development of their coordinated care initiatives.
    Moving on to our final area, models and demonstrations, CMS 
has approved financial alignment demonstrations in 
Massachusetts, Washington, and Ohio. These States will become 
our first partners to test the integration of services and 
financing, with the ultimate goal of improving the care 
experience for beneficiaries. The new programs will use a 
benefits-plus approach, meaning beneficiaries will receive all 
the current services and benefits they do today from Medicare 
and Medicaid with added protections, care coordination, and 
access to seamless enhanced services. Our work with States and 
stakeholders to better care for this population will continue 
with a strong commitment to transparency----
    The Chairman. Ms. Bella, ordinarily we give 5 minutes per 
witness, but I am going to give you 10, so go ahead.
    Ms. Bella. Oh, I am almost through. Thank you.
    The Chairman. Well, if you want to take more, you can take 
it.
    Ms. Bella. Okay. Thank you.
    The Chairman. Just say what you want to say.
    Ms. Bella. Okay. Thank you.
    Just to finish up on our demonstrations, it is important to 
reiterate that our work will continue with a strong commitment 
to transparency, beneficiary protections, and public input.
    We are also pleased to have launched our initiative to 
reduce avoidable hospitalizations among nursing home residents. 
In September, we announced the selection of organizations in 
seven States--those being Alabama, Indiana, Missouri, Nevada, 
Nebraska, New York, and Pennsylvania--to partner with States to 
reduce avoidable hospitalizations which are both harmful to 
people and costly to taxpayers. We are very excited that that 
initiative will begin touching beneficiaries early in 2013 
around the February time frame.
    In conclusion, this testimony represents just some of the 
ways we are working to strengthen the Medicare and Medicaid 
programs and improve the everyday lives of individuals who 
depend on them. We will continue to work to align the programs, 
to better understand the population, and to test new models to 
provide better care, better health, and lower costs through 
improvement.
    I want to thank the committee for its continued interest in 
improving care for Medicare-Medicaid enrollees. With your 
continued support, we will keep working with States and other 
partners to advance high-quality, coordinated care for these 
individuals who depend on us the most.
    Thank you very much.
    [The prepared statement of Ms. Bella appears in the 
appendix.]
    The Chairman. Well, thank you, Ms. Bella.
    How many States, realistically, are going to participate in 
demonstration projects? And have you lined them up so they are 
different, not the same, and that they have criteria which are 
going to make sure there is no reduction in coverage for 
beneficiaries while at the same time achieving efficiencies for 
the Federal Government?
    Ms. Bella. As you know, we had great interest in the 
demonstration models when we put them out, and we are working 
with 25 States that are interested either in the capitated 
model or the managed fee-for-service model. We have three 
States that are interested in an alternative approach, because 
it appears that one of the other two models is not going to be 
a good fit for them. So of the 25, 13 of them are interested in 
moving ahead in 2013, and 14 of them are interested in moving 
ahead in 2014. And you are probably asking why those numbers do 
not add up to 25. That is because two of the States are 
pursuing both of the models. So it is----
    The Chairman. Do you have a sense among the fee-for-service 
on the one hand or the managed care on the other--we do not 
want to prejudge it, but which might show more promise?
    Ms. Bella. Well, they both hold great promise because they 
will be tailored to fit the delivery systems of the States, and 
so we felt that that was very important to be able to work with 
the States in the types of programs they had today.
    The capitated model provides up-front savings in the way 
the financing is constructed for both the State and the Federal 
Government. The managed fee-for-service model looks at savings 
on a retrospective basis. Both of them require quality 
thresholds to be met, so we are ensuring that it is not just a 
cost-cutting effort.
    Just to go back to your earlier point, the standards that 
we have in place will not let any model go forward that takes 
away something from a beneficiary.
    The Chairman. How are the capitation levels set in these 
States? What is the dollar amount, and who determines that 
amount?
    Ms. Bella. We set a Medicaid and a Medicare component of 
the capitated rate. Part D stays, we use the national average 
bid for Part D. But the Medicaid and Medicare components are--
first, we derive a baseline for each of them, looking at what 
spending would have been in the absence of the demonstration. 
We also are doing an analysis, and then those amounts are risk-
adjusted to take into account the population. At the same time, 
we are looking at what we think the savings opportunity is 
through improved care coordination, through reduced duplication 
and inefficiencies, and through administrative simplification. 
And we look at the projected spending, and we look at the 
expected savings, and then a cap rate is developed, and the 
State and Federal Government each contribute their proportion 
to that rate that is then passed on to a health plan.
    We withhold a portion of that capitation rate to ensure 
that the plan meets certain quality standards, and that is how 
it is set. There is a lot more detailed information about that 
available on our website, and I am happy to provide any follow-
up or----
    The Chairman. But essentially it is negotiated between you, 
CMS, and the States primarily?
    Ms. Bella. So, on the CMS side----
    The Chairman. Or the plan has to be involved? So what is 
the negotiation here, or determination?
    Ms. Bella. We do not expect to have a negotiation with the 
plan. CMS, we work closely with our Office of the Actuary to 
determine the Medicare baseline and to validate the Medicaid 
baseline. We have external actuaries who are helping us as 
well, and then the State and its actuaries provide analysis on 
the Medicaid component.
    The Chairman. So who sets it?
    Ms. Bella. Ultimately, CMS sets the rate with, again, input 
on the Medicaid side from the State----
    The Chairman. Right, and so what is the difference between 
what CMS is setting in these capitation States, on the one 
hand, and what you expect the costs to be otherwise?
    Ms. Bella. Well, we set the rate assuming a savings amount 
to occur as a result of the integration through the 
demonstration.
    The Chairman. Do you have a percentage savings expectation? 
And how do you know how much you want to save?
    Ms. Bella. Well, as you know, Mr. Chairman, we have not set 
a national savings target because, for us, this is about 
improving quality and care coordination that should lead to 
reduced costs.
    What we have done is look for where we think there are 
savings opportunities, and, for example, on the Medicare side, 
we think there are tremendous opportunities for saving on 
hospital admissions, on readmissions, on better medication 
management. On the Medicaid side, the lion's share of savings 
comes from rebalancing and making sure we are providing more 
care in the community as opposed to institutions.
    The Chairman. What are you doing to help minimize 
providers' gaming the system? Because, you know, the patients 
are put here, or there, you know, just to make more money.
    Ms. Bella. Well, I think that----
    The Chairman. We are not, I guess, making more money, but 
we are--there is a lot of gaming going on, I suspect, which is 
part of the problem.
    Ms. Bella. It is part of the problem, and what we are 
trying to do is establish accountability for the dollars and 
expect to hold an entity accountable for providing all the 
services. So, today, they might be able to sort of play 
Medicaid and Medicare off each other in an area like home 
health or durable medical equipment because both programs cover 
them and have different rules. But when they are responsible, 
and they have one pot of money to manage that, you take away 
some of those incentives for gaming between the two payers.
    The Chairman. Okay. My time has expired. Thank you.
    Senator Hatch?
    Senator Hatch. Mr. Chairman, I am going to allow Senator 
Grassley to go ahead of me, since he has another commitment. So 
I will just take my turn later.
    The Chairman. Sure. Senator Grassley?
    Senator Grassley. Yes, thank you, Mr. Chairman, and thank 
you especially, Senator Hatch.
    I appreciate your being here, and I know you have a very 
tough job, particularly as we deal with dual-eligibles. They 
are a very expensive part of health care. They are about 10 
percent of all Medicare and Medicaid beneficiaries, but account 
for more spending than either people eligible for Medicare only 
or people eligible for Medicaid only. We must find better ways 
to coordinate care and lower the costs for dual-eligibles.
    That said, dual-eligibles are a complex population. I have 
a chart here that will explain this better. While 62 percent 
are eligible, 38 percent are under the age of 65. Sixty-two 
percent are elderly; 28 percent under 65. While some are 
expensive and need extensive long-term support and services, 
there are dual-eligibles who are relatively low-cost. More 
importantly, though, is, not all expensive Medicare 
beneficiaries are dual-eligibles.
    So take a look at the chart. These are the most expensive 
beneficiaries in Medicare. These are beneficiaries who have 
multiple chronic conditions and functional impairments. Fifty-
seven percent of them are eligible for Medicare only; 43 
percent of them are 
dually-eligible for Medicare and Medicaid.
    So the question I ask is, but do not answer yet: Why are we 
splitting up the two groups? These are two groups of similarly 
situated individuals. They all have a need for better 
coordinated care. They all have multiple conditions that are 
expensive. So I have four kind of rhetorical questions I would 
like to have you address. I will state all four of them.
    Why do we tell some people, you get Medicare solely because 
you have income, and then we tell some people, you should get 
Medicaid solely because you do not have enough income? And why 
is it a good idea to give States control over low-income 
beneficiaries? Why should low-income beneficiaries get one of 
50 different models, meaning 50 different State models, to 
coordinate their care, and people with incomes then get 
Medicare, which is only one approach and that is a national 
approach? Why are we pushing States to take a greater role with 
a complex, expensive population when they also are being asked 
to find resources to cover poor individuals in Medicaid and 
develop exchanges to cover people in the private market?
    I would like to listen to you at this point, and I am very 
concerned that splitting these individuals makes no sense.
    Ms. Bella. Thank you for those questions. I will do my best 
to respond.
    I think, first, we are fortunate that you all created this 
office to focus on people who get both Medicare and Medicaid, 
and we are actively working on solutions, new care models, to 
focus on people who have exactly the kind of care and cost 
profile that you represent today. And our hope is that what we 
are learning will be transferable, it will be transferable to 
the other 57 percent of those in Medicare. And similarly in 
Medicaid, the folks who are dual-
eligibles with disabilities look very similar to people with 
Medicaid only who have disabilities. And so, what we learn in 
those care models should be transferable as well.
    So I hope you see the investment in this office as a way to 
leverage those resources to be able to shed best practices that 
can be applied to all high-cost patients across both Medicaid 
and Medicare.
    And you raise important questions about States and the role 
of States. From my perspective, Senator, what we are trying to 
do is to create person-centered, high-quality, accountable 
systems of care. And this is not a one-size-fits-all approach. 
This is a very heterogeneous population, and we have to 
recognize that States are our partners in the delivery and 
financing of this care.
    So, we have focused on starting with States with a goal of, 
again, creating financial accountability and aligning 
incentives in the system, not so much with the goal of deciding 
whether Medicaid or Medicare should be the one driving that 
system.
    I think what is important and what gets to your point 
about, you know, why do people with higher incomes have 
Medicare and then they have variation if they also have 
Medicaid, the important thing to remember is that, in these 
demonstrations, we are not taking away anything that Medicare 
provides today to people who are 
dually-eligible for both programs. They are getting the best of 
both programs. We are taking both programs--each of them has 
their own strengths--looking at putting those strengths 
together, and then adding on to that.
    So, for example, in the Ohio and Massachusetts and 
Washington programs, beneficiaries are getting new services. 
They are getting protection from cost sharing that they do not 
have today. They are getting new resources.
    And I guess the last thing I would say is, you are exactly 
right that States have a lot on their plate right now, but this 
is an option that we have put out there for States. And States 
that have decided this population is a priority, we find that 
they are really committed to trying to work with us to make 
this happen. And I think one of the reasons is because we are 
trying to make it tailored and flexible to their needs.
    Senator Grassley. If I could have 10 seconds just for a 
rhetorical comment. I appreciate what you said, but I just have 
to point out that CMS is working for Accountable Care 
Organizations, working on that, which presumably targets the 57 
percent of the high-cost beneficiaries while you encourage 
States to target the 43 percent of high-cost beneficiaries. So 
I have to ask a question that I do not expect an answer to at 
this point, but it is as much for my colleagues: Who is in 
charge of making sure that we find the best solutions for the 
100 percent of the population?
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Rockefeller?
    Senator Rockefeller. Thank you, Mr. Chairman, and good 
morning to you, Ms. Bella. I also respect what you are doing, 
and you are working on the most complex problem that health 
care has to offer, in my judgment, and it is yet unsettled.
    Let me just say I am not going to have time to ask the 
questions, a series of rapid-fire questions, so let me just say 
that my overall concern is that HHS is saying certain things 
that they are doing as a matter of policy, but, when it comes 
to the MOUs with the States, it is changing. There is slip-
back. And I will follow up with written questions to you on 
this.
    To me, Medicare-Medicaid managed care is a model that has 
not been shown to work for even small numbers of dual-eligibles 
because of the varying range of intensity of services required 
to meet their special care needs. Why aren't new and innovative 
models of care actually being developed? Why aren't, for 
example, you testing a Medicare-only option for duals?
    I am going to continue. We should be letting the policy--
providing high-quality, better coordinated care for duals--
determine what our approach is, not cost saving. Not cost 
saving. It is very clear.
    Why is CMS pushing for an arbitrary savings target for 
dual-
eligibles under the capitated model in each State and letting 
that drive the policy? Now, that expands in complexity when you 
say, for example, with the State of Arizona, where there is a 
demonstration project you are looking at, Arizona is enrolling 
nearly 82 percent of their folks, duals, and Washington is 
enrolling nearly 92 percent. And it just baffles me. Where is 
the robust evaluation plan for these State demonstrations? How 
can you do it? If you have that many people involved in a 
demonstration project, it is not a demonstration project. It is 
the inevitable formulation of policy. And I do not think that 
is what a demonstration effort is meant to bring out.
    So how can the demonstrations be effectively evaluated if 
the vast majority of a State's dual population is enrolled, as 
is the case in many examples? Ohio has taken theirs down from 
82 to 60 percent recently, but that brings up a new series of 
problems.
    So could you just sort of speak to those for a second?
    Ms. Bella. Sure, I can start with your last question first. 
We have an external evaluator, RTI. We plan to have a very 
rigorous evaluation of the demonstrations, both across the 
demonstrations and within each State. We have a commitment to 
having an ability to evaluate people in the demonstration with 
a comparison of people not in the demonstration.
    Senator Rockefeller. But what if most people are in the 
demonstration?
    Ms. Bella. We work closely with our evaluators to establish 
appropriate out-of-State comparison groups, looking at a 
variety of factors that enables us to feel like we have an 
ability to detect what was really the result of the 
demonstration.
    Senator Rockefeller. Ms. Bella, I respect your words and I 
respect you, but I am not comforted by your words, by your 
answer. We have to have a way of breaking it down. It is just 
an enormous mass of people, in fact, up to one-third of the 
entire 9.4 million dual population in the country. And I do not 
think you can tell me that you can take a huge demonstration 
project with hundreds of thousands of people in it, and then 
sort of break it down within that huge number. It does not make 
sense to me. But you can explain that to me either now or 
later.
    Ms. Bella. Sure. Your preference. I am happy to also come 
and talk to staff and sit down and share with you our 
evaluation plans. We have to have a rigorous evaluation. We 
have a rigorous evaluation. We have external folks helping us 
do that, and no State is going to get approved where we do not 
feel like we can rigorously evaluate it.
    And so that is a commitment that we have made, and we are 
happy to provide additional detail as to how that might play 
out.
    Senator Rockefeller. What about the cost-saving factor?
    Ms. Bella. These are not driven by cost savings. If this 
was a cost-savings initiative, we would have had a national 
savings target. We would have a savings target now. We do not. 
We have an obligation to learn what works for this population 
and to do it in a way that puts people first.
    And our other interest is in not continuing demonstrations 
in perpetuity, and the Innovation Center allows us to test and 
learn and modify and begin to take things to scale. But for 
those who go to scale, we have to see improvements in quality 
and cost. And so, cost is there. It is sort of that elephant in 
the room. It is always there. It is not driving our efforts. 
Never have we spoken of these as cost-containment vehicles. We 
see them as opportunities to improve coordination and quality, 
which should lead to cost efficiencies. But cost is not the 
driver here.
    Senator Rockefeller. My time is up. I will need to follow 
up with you on your answers so far.
    Ms. Bella. Certainly.
    Senator Rockefeller. And there is another round of 
questions.
    Ms. Bella. Thank you, Senator.
    The Chairman. Thank you, Senator.
    Senator Hatch?
    Senator Hatch. Thank you, Mr. Chairman.
    I want to start by applauding you and those who work with 
you for all the hard work you have done to improve care for 
those patients eligible for both Medicare and Medicaid. We all 
know we can do better than the status quo, but changing the 
status quo is always a tremendous challenge, and you are making 
your best efforts to do it. And I want to thank you for both 
the thoughtful solutions and the tremendous energy that you 
have invested in this important task. Now, I do not want to 
continue to praise you for fear it might hurt you. [Laughter.] 
But I think you get the point. I think you are great.
    While I am supportive of the goals of the demonstrations, 
in order for them to be truly successful, I want to make sure 
we get a few things right. While we are solving problems for 
the duals, I want to make sure that we are not creating 
problems elsewhere.
    Medicare Part D has been a huge success in offering 
beneficiaries a choice of plans to fit their needs as well as a 
competitive bidding structure to keep costs in check. Now, Ms. 
Bella, under the demonstrations, prescription drug benefits 
will be paid for with a risk-adjusted, predetermined rate which 
would be based on the national average Part D bid amount. I am 
concerned that moving millions of duals out of the competitive 
bidding system could undermine the integrity of the Part D 
program, and this is especially concerning because the 
opportunity to deliver benefits to the duals population is an 
incentive for drug plans to place competitive bids.
    Earlier this year, the Medicare Payment Advisory 
Commission, or MedPAC, sent a letter to CMS expressing concerns 
to this effect. Why did CMS decide not to require demonstration 
plans to submit competitive bids in the same way that other 
Part D plans do, including PACE and dual-eligible Special Needs 
Plans? Would CMS consider implementing a process for drug plans 
to begin submitting competitive bids by the second or third 
year of the demonstration?
    I just wonder if you could answer those questions for me.
    Ms. Bella. It is an important area for us to be watching, 
certainly: Part D. I mean, Part D is something that we have 
kept intact for these demonstrations in terms of all the 
beneficiary protections and in terms of how we integrate that 
financing stream into the rate.
    I would say your concern about, are we undermining the 
market, is one that we are watching. We believe there are still 
incentives for drug companies to bid competitively, because 
they still want to be under the benchmark to receive low-
income-subsidy individuals, or dual-eligibles who opt out, or 
any Medicare beneficiary who is not in those categories who 
still wants to look for lower premiums. So, we do think the 
competitive reason, the competitive incentive, is still there, 
but we are in close consultation with our Office of the Actuary 
and our colleagues in the Medicare components to ensure that 
the demonstrations are doing no harm to the financial 
competitiveness of that program. That is something that we are 
monitoring.
    If we do see that it is having an unintended effect other 
than what we had expected, then we will have to make 
modifications to ensure that it is effective for both the demos 
and for the rest of the Part D program outside of the 
demonstrations.
    Senator Hatch. Let me just ask you this question. CMS has 
now approved demonstration proposals from three States, with 
MOUs signed with Massachusetts, Washington, and Ohio. A big 
incentive for States to implement these demonstrations is the 
opportunity for States to share in the savings that come from 
better care management.
    Now, could you walk us through exactly how that financing 
of shared savings would work, and also how CMS plans to monitor 
the savings as the demonstrations are really implemented?
    Ms. Bella. Sure. Are you interested in both models? Okay. 
In the capitated model, what we do is, we look at where we 
think the savings are by integrating care and coordinating and 
reducing inefficiencies, and we develop a savings target. That 
savings target is applied to the amount that each payer would 
contribute, and so, while you might expect savings to accrue 
from Medicare maybe in the earlier years, you start to expect 
savings from Medicare in the later years of the demo.
    By putting the savings target available to both payers up 
front, you create a system where they work together in a way 
where the timing works together of when you expect to see 
savings in the program. And so there are no Medicare dollars 
going to States in this model. Simply, each payer is paying 
less toward the capitated rate than they would have otherwise.
    In the managed fee-for-service model, what we do is, we 
have a formula that looks at expected Medicare savings. We have 
a threshold for expected Medicare savings. We look to see if 
States met that threshold. We look to see what their Medicaid 
increases were, so we offset any Medicare savings with any 
increase in Federal Medicaid expenditures, so we make sure we 
are not creating opportunities to game the trust fund. And 
then, if quality thresholds are met, States can share in a 
portion of the savings that accrued to Medicare as a result of 
the investment the State made in Medicaid.
    Senator Hatch. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Hatch.
    Senator Bingaman?
    Senator Bingaman. Thank you very much, and thanks for being 
here to testify.
    Let me ask about this Initiative to Reduce Avoidable 
Hospitalizations that you have. I am trying to just understand: 
are there things about being a dual-eligible beneficiary that 
increase the likelihood that you will be hospitalized even 
though you do not need to be hospitalized?
    Ms. Bella. I think this is the poster child case for 
misaligned incentives in the program, when you have Medicare 
paying for the hospitalization and Medicaid paying for the 
nursing home stay, and when there is an incentive for someone 
to have a 3-day stay in a hospital to come back out and receive 
the higher Medicare rate when they go back into the nursing 
home. So we do feel that the way the two programs are 
misaligned does increase the likelihood or increase the 
incentive for unnecessary transfers between hospital and 
nursing home settings for Medicare-Medicaid enrollees.
    Senator Bingaman. Let me understand that a little better. 
You are saying that there is an incentive to move the patient 
from the nursing home to the hospital because of higher 
reimbursement, or the other way around? How does that work?
    Ms. Bella. I should say I am not such a cynic that I think 
that that is the all-driving force, but I think it is a pretty 
powerful force. Let us say that there are things in the nursing 
home that you would like to think would be taken care of in the 
nursing home, like pressure ulcers or dehydration or things 
like that. Oftentimes, people with those conditions are taken 
to a hospital instead of provided care at the nursing home. 
When they go into the hospital, if they are in the hospital for 
3 days and they come back out and they go back into that 
nursing home, they get the Medicare rate, which is higher than 
the Medicaid rate. And so, there is an incentive to see a bit 
of a churning going on. And what we are trying to do in this 
initiative is support the use of care management resources on 
site in the nursing facility that can take care of those 
problems so people are not going back and forth.
    Senator Bingaman. So there is an incentive for the people 
who are running the nursing home to have that patient moved out 
of the nursing home to the hospital for 3 days in order that, 
when they come back, they are under the Medicare rate? Is that 
what you are saying?
    Ms. Bella. Correct.
    Senator Bingaman. Okay. And what is needed to fix that 
problem? Is that something we have to study for 6 years before 
we can fix it? Or is this something that you can fix by saying, 
this cannot happen anymore?
    Ms. Bella. Let us hope we do not need 6 years. I think this 
is a start, by seeing how much of it is driven by the fact that 
we need more care resources on-site in the facilities, and then 
how much can we do--when can we make changes in payment 
policies that take away those incentives for this churning that 
we are seeing? And so, this initiative will offer us an 
opportunity to do both of those things.
    In addition, in our demonstrations, when we make one entity 
responsible for both sets of dollars, we take away that 
incentive for that shifting. And so, to the extent that people 
in nursing homes are participating in these demonstrations that 
we have been talking about, we should be able to address it 
that way as well.
    Senator Bingaman. The concern I have--I represent New 
Mexico; we are not in your group of States that are 
participating in the demonstration. So I guess 25 States are, 
25 States are not. States like my State that are not, are you 
still able to assist them in solving a problem like the one we 
just discussed or not?
    Ms. Bella. Absolutely. Our job is to be a resource for all 
States. So we have our office; we have something called an 
Integrated Care Resource Center, which is available to help 
States share best practices, get in touch with other States, 
those sorts of things; and we have this State Data Resource 
Center. All three of those sets of resources are available to 
all States.
    We actually have had conversations with Julie Weinberg, the 
Medicaid Director in your State, about, even though we are not 
working together in a demonstration, how can we work to support 
some of the efforts that New Mexico is trying to advance? So 
the short answer is ``yes,'' that is a job of this office, and 
when we learn things--for example, in the Nursing Facility 
Initiative, especially because this is rapid learning--we are 
not going to wait 3\1/2\ years to know what works or not, we 
will be pushing that information out, encouraging adoption in 
other States.
    Senator Bingaman. Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    Let me ask, when this hypothetical patient goes back to the 
nursing home and receives the higher Medicare payment, how many 
days does that patient receive the higher Medicare payment? And 
what is, on average, the differential in amount?
    Ms. Bella. The differential, I would have to get back to 
you.
    The Chairman. Rough guess?
    Ms. Bella. A third? Probably a third or more.
    The Chairman. And how many days is that----
    Ms. Bella. One hundred.
    The Chairman. One hundred days extra. A third more for 100 
days. That is a problem. Okay.
    Next is Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Chairman, I asked for a minute before my 5 minutes 
begins on Medicaid to discuss the plans of Senator Bingaman, 
because I think we all respect him so much, and we have been 
discussing his accomplishments over the last few days. But 
everybody wants to know what Senator Bingaman is going to do 
next. [Laughter.]
    I think we learned a lot last night because, for those of 
us who saw him on Colbert last night, this is a man with a 
future in comedy. [Laughter.]
    Because all over America, people are tweeting this morning 
about where they can get to see Senator Bingaman in action. And 
I just want to take a minute, because I know everybody is 
asking about his plans, but I urge you to go to YouTube. It was 
hilarious. It was truly hilarious. [Laughter.]
    So to begin my 5 minutes, if I may----
    The Chairman. I might say, Senator, if you ask Senator 
Conrad about Senator Bingaman's plans, Senator Conrad will tell 
you that Senator Bingaman has invited all of us out to his 
house in Santa Fe when he leaves, and we are all to visit him 
in Santa Fe.
    Senator Nelson. Can he put us all up?
    The Chairman. I think he can. [Laughter.]
    Thank you. Go ahead.
    Senator Wyden. Thank you very much, Mr. Chairman.
    Ms. Bella, first of all, we want you to know we appreciate 
your good work, in Oregon especially, because of the 
transformational waiver that we got where, in effect, we are 
going to be able to beef up quality at reduced cost. And, as 
you know, Oregon has really financially committed to that 
agenda.
    That is why I want to examine with you where we are with 
respect to these demonstrations for the duals, because Oregon 
has come to the conclusion that it is not financially viable 
for them to be part of the demonstration, and they note--and 
they say this specifically--that your technical advisory group 
that you had for the duals, not one person thought, as part of 
that technical advisory group, that the system could work for a 
low-cost State, a State with low fee-for-service reimbursement 
rates and high Medicare Advantage rates.
    So we now have the situation where there is no flexibility 
for a State like ours where spending is less than the States 
that are here today, and, in effect, we are going to be put at 
a disadvantage when calculating the baseline for these 
demonstrations, the very States that are the future, the States 
that are most innovative and most creative, as you see with the 
application for our Medicare waiver.
    My sense is that you very much want to help States like 
ours, but that there is essentially almost a bias at OMB 
against these kind of innovative efforts.
    What is your thought about how we are going to get around 
this? Because, if we are in a situation where your own 
technical advisory group says that the baseline support is not 
going to work for a low-cost State, and you all to your credit 
are recognizing that we are in the vanguard, how do we get out 
of this vise?
    Ms. Bella. We knew when we were developing these models 
that they would not work for all States, and I think we have 
discovered that the financing for a low Medicare fee-for-
service State such as Oregon is a challenge. And the health 
plans there look at what they receive today through Medicare 
Advantage, which is considerably higher than fee-for-service or 
what they would receive through these demonstrations, and so we 
understand that.
    I think what we need to do--Minnesota finds itself in a 
similar position. We have been working with Minnesota on some 
administrative and regulatory efficiencies that do not address 
the payment issue at this point. Senator Wyden, we are early in 
learning, I think, and doing this analysis and validating the 
hypothesis as far as some of the challenges for a State like 
Oregon. And what I can commit to you is to continue working 
with the State to make sure that they have opportunities, and 
certainly opportunities that recognize the potential for 
quality and cost in that State.
    Senator Wyden. I look forward to that, and I hope we can 
get this cleared out, because it almost undermines the initial 
thinking behind the transformational waiver. In other words, 
Oregon got that waiver, Oregon wanted to build the next step, 
and to face this kind of discrimination literally for doing a 
good job and doing a better job, in effect, than the States 
that got the green light, just does not make any sense.
    You referenced a negative impact with respect to policy for 
the duals when you were here before: the multiple cards for 
Medicare and Medicaid. Last year, Senator Kirk of Illinois and 
I introduced the Medicare Common Access Card Act. It is 
legislation that has been supported by senior groups, by the 
tech sector. It would upgrade the Medicare card seniors use by 
employing smart card technology, pretty much like the one that 
is used by the Department of Defense personnel.
    Would you have an opinion on generally the proposition of 
trying to move in this kind of direction and the fact that this 
could particularly be of benefit to the duals population, given 
what you said before?
    Ms. Bella. Certainly, we are interested in ways to use 
technology to streamline and make systems easier for 
beneficiaries. I would be happy to go back and learn more about 
your legislation and then make a comment for the record.
    Senator Wyden. Great. One last question, if I might. You 
also talked about State access to Medicare data, and I am very 
much in favor of that. The States are having to jump through 
hoops to gain access to it. Senator Grassley and I have 
introduced legislation that would open up the Medicare database 
so that the public, free of charge, could have that 
information, and obviously that would be another way to get it 
to the States. Wouldn't that be, again, consistent with your 
philosophy of trying to empower States to use this data?
    Ms. Bella. We certainly are trying to do everything we can 
to put data and tools into States' hands, making sure we 
protect the privacy of the beneficiaries.
    Senator Wyden. Very good.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Burr?
    Senator Burr. Thank you, Mr. Chairman.
    Ms. Bella, welcome. I think you are very familiar with 
North Carolina's Community Care Program, and for my colleagues, 
Community Care is a demonstration or a waiver under the 
Medicaid program now serving 1.3 million North Carolinians in a 
patient-centered approach that has achieved significant savings 
over the life of it. And it extends a proven medical home model 
to dual-
eligibles that we are currently in the process of trying to get 
the approvals for from CMS.
    Let me ask you, Ms. Bella, what would disqualify a State 
from participating in the demonstration program? Is there 
something out there that is an automatic disqualifier?
    Ms. Bella. There is no automatic disqualifier. I think one 
of the fundamental things we need to see in these programs is 
total integration of services. So we need to see that the 
medical, the behavioral health, the long-term care, the 
substance use, all of those things, are together. That is a 
challenge in some States.
    Senator Burr. If there is not a disqualifier, is it 
possible for a State not to be disqualified for a demonstration 
project but not be approved for a project that they have 
proposed?
    Ms. Bella. It is certainly possible that all of these 25 
States will not be approved. I mean, there are things that--
there are reasons why the financing does not work, for example. 
There are some States that, quite frankly, are not doing the 
appropriate job engaging stakeholders, and so they do not have 
any buy-in into what they are doing, and that weighs a lot with 
us. There are some States that are not fully integrating the 
set of services. So there are reasons why States would not move 
forward, but there are no automatic disqualifiers. At least in 
the States that, where they are today, if they were going to 
automatically be disqualified, they would have already been 
disqualified. But we do have something called a set of 
standards and conditions that we expect all States to meet.
    Senator Burr. And North Carolina submitted their plan in 
May, and I commend CMS. They continue to discuss with North 
Carolina, negotiate about a way to move forward.
    I think I heard you say earlier to my colleague Chuck 
Grassley that we need to translate what is working, because the 
needs of a dual-eligible with a disability are similar to the 
needs of a Medicare beneficiary under the age of 65 with a 
disability.
    Ms. Bella. I said a Medicaid individual under 65, a 
Medicaid-only.
    Senator Burr. So if North Carolina currently covers the 
under-65 with a disability under the Community Care, what would 
be so troublesome on the part of approving a plan that now 
covers the same population that is over 65?
    Ms. Bella. So the challenge with these State proposals is 
they take time. This is complex. You know, in North Carolina's 
case, there are lots of other issues we are working on with 
North Carolina, and North Carolina was involved with CMS on a 
646 demonstration that involved duals, and there had to be 
discussions about, does that demonstration continue or how does 
it work with our demonstration?
    In North Carolina's case, the biggest difference in taking 
what they are doing for Medicaid-only today is understanding 
how the networks and Community Care of North Carolina are going 
to bring in the Medicare piece, because that has been a 
difference.
    Senator Burr. So let me ask you this. It seems like there 
is a way for a State like North Carolina--I will not comment on 
Oregon; I do not know it. You discussed this process that CMS 
goes through to determine, here is what we would have spent, 
here is what we think you are going to spend, and, if the 
differential is great enough, we are willing to try this. There 
are other conditions, I realize, but strictly from a cost 
standpoint, why would you not say to a State like North 
Carolina, ``Here is what we are willing to spend for this 
population. Go ahead and implement your plan. And, if you go 
over our amount, then you are stuck with the tab. If you save 
money, we split the savings.''
    Ms. Bella. Well, North Carolina has not indicated to us 
that it wants to go at risk in that way. North Carolina has 
asked, could it participate in Medicare savings, and so we are 
going through this process with North Carolina to make sure 
that the protections to the trust fund, when we are going to 
make a payment to a State, and the quality mechanisms, are in 
place.
    Senator Burr. Well, I am trying to suggest to you possibly 
a new line of thought to break through with some of the States 
that are out there. They have not been disqualified. They have 
legitimate plans. They have not been approved. You are hearing, 
from members on both sides of the aisle, the frustration over 
the cost. And in North Carolina's case, I can only say this--
and I think those at CMS would agree: the success of Community 
Care has not only saved significant amounts of money, it has 
changed the health outcome of the individuals who are under the 
plan. It has brought what every member says is the future of 
health care, and that is a medical home model, to 1.3 million 
people, and we would like now to expand it to dual-eligibles.
    So I would encourage you to maybe throw some new things on 
the table. Maybe North Carolina will accept a risk-based 
proposal to do it. If they feel strongly enough in implementing 
the plan, it is worth a try, but to sit and not do either 
continues to eat up more money, continues not to achieve the 
health outcomes that we want, does not implement the medical 
home model. And I think you hear, in a bipartisan way, we want 
to move this thing forward. We do not want to do anything that 
jeopardizes the system. But where we are is not a comfortable 
place.
    Thank you.
    Ms. Bella. Thank you.
    The Chairman. Thank you, Senator.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    Ms. Bella, you mentioned the rebalancing in your testimony, 
and one of the things I am interested in--well first, you know, 
about this discussion in general, I like to say this is 
Washington, and people like to regulate. But in Washington, my 
Washington, we like to innovate. And the innovation that we are 
doing in health care is not just about savings for us. I mean, 
we have had to do it over decades, and we have proven that 
innovation does drive better outcomes and lower costs.
    So what we want is, we do not want to be held back because 
we have had to do it to guarantee care. So I just want my 
colleagues to know, as challenging as these things might seem 
to us, it is an ethos now. It is beyond an ethos. We have 
proven success. We want to move forward, and we hope the rest 
of the country will do the same, because we are tired of paying 
for more expensive health care for the rest of the Nation as 
well and having our system jeopardized by the fact that we get 
paid less and so people do not want to practice there. But we 
have still innovated.
    Anyway, my point is, the rebalancing that you mentioned to 
community-based care and the provisions of the Affordable Care 
Act, we have already shown savings in rebalancing from nursing 
home care to community-based care. How do you think that 
rebalancing fits with this concept of the dual-eligibles? How 
would you integrate those two?
    Ms. Bella. Well, the rebalancing is a critical part of what 
we are doing here. The point is, the system has an 
institutional bias, and so what we are trying to do is make 
sure we kind of take that head-on and promote models that are 
able to have financial accountability, but also flexibility to 
provide services to people in settings that are least 
restrictive and most appropriate and in line with their 
choices.
    Senator Cantwell. So this would be like you would 
coordinate with the rebalancing?
    Ms. Bella. Well, if you are talking about the formal 
programs----
    Senator Cantwell. Yes, the formal programs.
    Ms. Bella [continuing]. And rebalancing incentives and all 
of the other programs coming out of Medicaid, yes. In any given 
State, we want to make sure that this is all coordinated and 
that we are looking at the same types of measures to look at 
indicators of success and understand that we are measuring 
dollars the same way as far as what is flowing to the community 
and what is flowing to institutions. So we are aligned with our 
colleagues back at CMS who are implementing the other more 
formal rebalancing programs. It is a goal of these 
demonstrations, though, and it is a measure that we look at as 
an outcome measure, to understand how these demonstrations made 
an impact in terms of home- and 
community-based services.
    Senator Cantwell. And so, for some place like Washington 
State that did rebalancing 20 years ago or something like that, 
we would be able to better integrate immediately a program on 
dual eligibility because the rebalancing is already so built 
into our system.
    Ms. Bella. Correct. And this goes into looking at the 
State-
specific approaches. When we work with MaryAnne and others back 
in Washington, the opportunity for savings from rebalancing is 
different in a State like Washington that has been doing it 
longer than in other States. And so we have to take all of that 
into account when we develop these models so we understand how 
we are improving both quality in the rebalancing and the cost 
perspective.
    Senator Cantwell. Okay. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    Ms. Bella, thank you very much for your work. I want to 
follow up on the comments that have been made about incentives 
that lead to more expensive care. The point that you raised 
about the incentive to use hospital care over nursing home care 
because of the reimbursement structure is certainly 
troublesome. Over half of the cost of dual-eligibles is in 
long-term care, so I want to talk a little bit about long-term 
care.
    The incentives for a dual-eligible beneficiary tend to 
steer them toward nursing home care, when less intensive care 
may be appropriate and acceptable. Because of the reimbursement 
structure and their financial capacity, many beneficiaries have 
no option besides a nursing home. I know of other Medicare-
eligible beneficiaries with alternative resources; they will 
use assisted living or even home care, which is less costly, 
because they have the ability to do that.
    So what can we do within the Medicare and Medicaid systems 
to provide greater incentives for less intensive services for 
dual-
eligibles? Every time we try to deal with this as a separate 
issue, CBO scores it as providing more services to the 
financially challenged, and, therefore, it is scored as a cost 
rather than a savings. How does this issue fit into your game 
plan?
    Ms. Bella. That is a great question, and it goes back to 
what we were talking about with the rebalancing. States have 
made great strides in terms of providing home- and community-
based services--supportive services, assisted living, home 
care, personal care, respite care--so that more and more people 
are able to be served in the community. And that is what 
Medicaid brings to this: the ability to fund those services in 
a way that Medicare does not. And so you see in the States, 
over time, the spending for the less costly services in the 
home and community increasing, while the institutional costs 
are decreasing because we are transitioning or keeping people 
out of those facilities.
    The incentives are still misaligned, though, in terms of, 
oftentimes those are not automatic in Medicaid, and you have a 
certain number of waiver slots which translates into the number 
of people that can be served, whereas the nursing home is a 
mandatory benefit. And so we still have some work to do in that 
regard.
    How it factors into these programs is just that it is a 
fundamental underpinning and expectation that these 
demonstrations are going to make a dent in the spending between 
institutional and home- and community-based care, and we are 
measuring that, we are monitoring that, and we expect States to 
commit to certain outcomes where we are going to make those 
changes in that spending curve.
    Senator Cardin. I would just say you also have a 
fundamental problem if you start to move toward assisted 
living, which is how you deal with the directed costs of health 
care and housing, whereas, in nursing home care, that is not an 
issue. So it does require a creative approach.
    Ms. Bella. Yes.
    Senator Cardin. Let me raise a related problem. We have a 
program in Maryland called HouseCalls, which is run by 
XLHealth. It is not part of a demonstration project. HouseCalls 
sends nurses to the homes of patients with chronic conditions 
soon after their discharge from a hospital or nursing facility, 
so that they can ensure compliance with discharge instructions 
and identify any issues that might lead to readmission. 
HouseCalls has been able to successfully reduce the readmission 
rate for their patients. In the under-65 private health plans, 
insurers are providing a similar benefit, because they know 
they can reduce hospital readmissions by giving better services 
to those who are vulnerable after being discharged.
    The difficulty again here is scoring. If these services are 
not part of a capitated plan or a demonstration project, how 
can we offer incentives to provide that level of care, which we 
know will reduce the number of readmissions, but which the 
Congressional Budget Office will not score as savings when we 
try to do it? Do you have any suggestions as to how we can 
implement that type of policy other than as part of a specific 
demonstration project?
    Ms. Bella. That is a very good question. I think we are 
increasingly finding opportunities to do things like that, that 
do not score in non-capitated environments, through some of the 
Accountable Care Organizations, through the bundled payments, 
and through other mechanisms.
    An array of the Center for Medicare and Medicaid Innovation 
(Innovation Center) initiatives--Independence at Home, 
Comprehensive Primary Care, Multi-Payer Advanced Primary Care, 
and many others--will help us build the evidence base to 
determine whether such models are effective at lowering costs 
and improving care. The Innovation Center commitment to rapid-
cycle evaluation is unprecedented and provides CMS a new 
opportunity to share results with Congress and others, allowing 
them to make evidence-informed decisions about the health and 
long-term care changes that are critical to improving outcomes 
while lowering costs. As evidence from these models becomes 
available, CMS is happy to work with you and your staff on your 
policy proposals.
    Senator Cardin. I know there is interest in Maryland in 
moving forward on that. We have a good track record with the 
under-65 population showing that savings can be achieved. And I 
would appreciate further discussion on this to figure out 
creative ways that we can advance these ideas.
    Thank you.
    Ms. Bella. Thank you.
    The Chairman. Thank you, Senator.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman.
    Welcome, Ms. Bella. It is great to see you. Thank you for 
your service and thanks for being here with us today.
    Senator Hatch, earlier in the hearing you mentioned to the 
chairman your interest in maybe bringing the Secretary of the 
Treasury to talk with us a little bit about the fiscal cliff.
    Senator Hatch. It would be great if we could.
    Senator Carper. I think one of the things that most of us 
know in this room is that whatever agreement is struck by the 
President and the Speaker--my hope is that they will reach an 
agreement--it is going to involve trying to find ways to get 
better health care results for less money or better health care 
results for the same amount of money. And the other half of the 
bargain is going to be to figure out how to raise some revenues 
and at the same time do it in a way that fosters economic 
growth.
    This hearing--and this program--is really a poster child 
for better health care results for less money and answering the 
question, can we actually get better health care results for 
less money or the same amount of money? I think the answer is 
``yes.'' And to the extent that we can do it in this particular 
program, we help the States. As an old Governor, I can tell you 
the States are getting killed on Medicaid costs. It is just 
sucking away money from K-12. It is sucking away money from 
post-secondary education, and we have to find ways to stem that 
loss.
    We operate under two imperatives--well, more than two, but 
at least two that I want to focus on. One of those is a moral 
imperative, and the moral imperative is to look out for the 
least of these. And the relevant description, in the Book of 
Matthew, the least of these it refers to is, you know, ``When I 
was hungry, when I was sick, when I was thirsty, when I was 
naked, or imprisoned, did you visit me?'' Well, the Bible does 
not say anything about duals, the dual-eligibles being the 
least of these, but they are, and we have a moral imperative to 
look out for them.
    At the same time, even if the President and the Speaker 
strike a deal and we are able to come in with legislation to 
back it up next year, we are still going to have huge budget 
deficits. Huge budget deficits. And everything that we do in 
the Federal Government, whether it is health care, whether it 
is transportation, it is defense, it is education, it is 
housing, virtually everything we do, we are going to have to 
look at it through that prism. How do we get better results for 
less money or the same amount of money?
    As I put on my old hat--and former Governor Rockefeller 
wore this hat at one time--we know that the States are the 
laboratories of democracy. You have 50 States, and I used to 
say to my own cabinet when I was Governor, some State 
somewhere, whatever problem we are wrestling with, some State 
somewhere has figured out how to solve this problem. And the 
challenge for us in Delaware was to find out who solved it, and 
to find out how they solved it, and is that solution 
transferable, replicable, exportable back to my State and to 
other States?
    We actually created within the National Governors 
Association a mechanism called the Center for Best Practices. 
It is a clearinghouse for good ideas. And if, say, Utah has an 
idea on this or some other subject that actually works for you, 
well, we could find out about it. We could find out who to 
contact in Utah, learning about it, is it replicable, is it 
exportable, and so forth.
    That is a great incentive for States. States compete with 
one another in a very fruitful way. But one of the ways we 
compete is for jobs, and we want to grow jobs and economic 
opportunities in my State. One of the key factors for job 
growth, and companies wanting to be located in States, is 
health care costs. It is other things. It is regulations, it is 
taxes, it is all kinds of things. But it is inclusive. Quality 
health care outcomes for less money. So there is a great 
competition for States. As States are trying to balance their 
budgets, compete for jobs, and so forth, there are all kinds of 
market forces that are really encouraging States to look for 
better results and to be our partner.
    Here is my first question. That was a long preamble. My 
first question is, what are we doing or what are we not doing 
that can help us actually foster more participation, more 
successful participation, in these programs? How can we be a 
better partner in the legislative branch? Please start with 
that.
    Ms. Bella. Well for us, you have done the greatest service 
by creating this office and by giving us the opportunity to try 
to dabble in many different areas--program alignment, data and 
analytics, and models and demonstrations--and to just give us 
this opportunity to continue to inform you along the way as the 
work progresses and as we learn things that we think might be 
worthy of permanent change.
    Senator Carper. We had a hearing in the Homeland Security 
and Governmental Affairs Committee about a year ago. We had the 
Medicaid Directors from several States in, and one of the 
questions we asked of them was: In Medicare, we are doing a 
pretty good job, a better job every year, of going out in 
recovery audit contracting, and monies that are mis-paid, 
mistaken payments and so forth in Medicare, we are going out 
and recovering them and returning that money to the Medicare 
program. We are doing almost nothing in Medicaid. And we asked 
a question of the Medicaid Directors: Why is that? The guy from 
New York who runs the Medicaid program there came back and 
said, ``Well, you only gave us like 60 days to go out and 
recover the money, and that is really not enough time. We need 
more time.'' I said, ``How much? Six months? What do you 
need?'' He said, ``A year.'' So that is what we did. Guess 
what? They are starting to recover money for the Medicaid 
programs. Half of it comes back to the Federal Government, half 
of it comes back to the State governments. That is the kind of 
thing I am looking for. That is the kind of thing that I am 
looking for, and whether you have ideas here or not, that is 
what we need.
    The other thing I wanted to say is, where is the nexus 
between what we are doing here with the PACE program and what 
we are doing here with the duals? What is the nexus with the 
federally qualified community health programs? How do they 
intersect? And how are we making sure that we are maximizing 
utility from both, the contribution from both?
    Ms. Bella. Well certainly, the Federally Qualified Health 
Centers are important parts of the safety net system and the 
delivery system in States. Some States rely more heavily on 
them than others, and so, as we develop these models and these 
demonstrations with States, the FQHCs will have a different 
role to play in each of them, but we expect that they are a 
vital part of the delivery system for States in putting 
together these demonstrations.
    Senator Carper. I would urge you to think about that some 
more beyond this, and my hope is your staff here will be 
thinking about that.
    The other thing is, in Delaware, federally qualified 
community health centers are all using electronic health 
records. They have the ability to go back and forth with our 
acute-care hospitals for the most part, and to better 
coordinate the delivery of health care. I just want to make 
sure that we are taking every advantage of those kinds of 
opportunities.
    And lastly, Albert Einstein, Mr. Chairman, used to say, 
``In adversity lies opportunity.'' There is a huge amount of 
adversity here, a lot of churning here, trying to figure out 
how do we work with this new law, how do we work with the 
States and coordinate with the providers and so forth, but 
there is great opportunity here. There is great opportunity. We 
have to seize the day, which we say in Latin, ``Carpe diem,'' 
but which we say in Delaware, ``Carper diem.'' [Laughter.]
    The Chairman. Every day is ``Carper diem'' in Delaware, as 
well as in this committee and in the Senate.
    I think Senator Rockefeller would like to ask a couple more 
questions.
    Senator Rockefeller. Thank you, Mr. Chairman.
    Ms. Bella, I think what, sort of generally, I am worried 
about is that MedPAC, for example, wrote a letter in July, 
stating, ``Even if the Commission agrees with CMS's stated 
guidelines, there is no assurance that the final structure of 
the demonstration within any given State will be fully 
consistent with CMS's guidelines.''
    I care a lot about CMS's guidelines. I want to make sure 
that they are enforced, and that gets into the question, you 
know, in North Carolina and other States we can save a lot of 
money if we do this or if we do that. That is not the primary 
role at the beginning as demonstration projects are evaluated.
    Then you have sort of transparency here, you know. CMS has 
to be the model that sets the standards that every State or 
parts of States or demonstration variations reach.
    Now, you have large numbers of people enrolled in certain 
States, and then you said, well, we have this third-party group 
that comes in and sort of evaluates what they are doing. But 
that does not tell me that CMS is putting out or laying down 
what the standards have to be before States start doing these 
experimentations and demonstration projects. I mean, I really 
think that is important. And then MedPAC does, too, and I have 
a lot of respect for them.
    Let me just give you an example. Maria is going to be 
furious at me. Lock-ins, consumer protections--fifty-eight 
percent of duals have cognitive impairments. Now, this is the 
question of people making the decision whether they are going 
to be a part of it or not. Numerous duals face language 
barriers, do not understand. They have low literacy rates, or 
they are blind. And yet only nine States plan to provide access 
to independent advocates to make decisions, help people make 
decisions and navigate changes.
    Now, again, everything comes back to CMS guidelines, 
meeting that standard. That is what, you know, the Secretary 
says, and that is what the deal is.
    In Texas, people are writing all kinds of responses, which 
are being totally ignored by Texas, and I think by CMS, because 
Texas is kind of staying away from all of that.
    One of the things that is going on in Washington, as I 
understand it--and with all due respect to one of the great, 
great States of America--is a lock-in plan. Not true? Okay. 
Well then, can you further take me to the fact that there will 
not be, either at the beginning of the process or at the end of 
the process, a lock-in plan involved in this whole process?
    Ms. Bella. There is no lock-in in these demonstrations. 
States may propose them. CMS has said, and will continue to 
say, there will be no lock-in to this demonstration. People can 
opt out of the demonstration, or change a plan in the 
demonstration, monthly. Just like dual-eligibles have that 
opportunity to do so today.
    And to your point on--I just want to assure you CMS has 
guidelines, and we have put those guidelines out. We have 
further memorialized them in the MOU. They cover Medicare----
    Senator Rockefeller. How do you do that?
    Ms. Bella. The MOU is pretty clear on what our guidelines 
are. What we have not been able to talk about today is, we have 
a readiness review process that is very rigorous. I would be 
happy to share it with you. It is 73 pages of things that plans 
have to do to prove to us they are ready. That gets into 
network adequacy and provider accessibility. It gets into call 
centers to make sure that they can address all the folks you 
were just talking about. In addition, the readiness review 
happens before plans can accept enrollment. But we do not stop 
there. We have implementation monitoring. So there are 
milestones that have to be met before the next round of 
beneficiaries goes into demonstration plans. This is not like 
Part D where everybody goes in one day and the whole population 
is in. We phase it in because we want to be careful and 
deliberate about it. We want to make sure these milestones are 
hit.
    Then we have ongoing implementation monitoring, where the 
State and CMS share this role, but it is a very rigorous 
process. The combined demonstration that we have here is much 
more rigorous than what we have independently today for these 
dual-
eligibles where no one is helping coordinate or navigate their 
care. And to the extent that this provides you any comfort, I 
mean, States are expected to provide new resources. Those come 
in the forms of independent enrollment brokers--independent 
choice counselors. We are supporting, CMS is supporting, 
funding for State Children's Health Insurance Programs and 
Aging and Disability Resource Centers to help beneficiaries. 
States are expected to use ombudsman. As you see in Ohio, it is 
very specific about the role of an ombudsman for this program 
and then all of the other resources that exist. But these 
programs will not succeed if we are not effective at reaching 
beneficiaries, and so I can assure you CMS has standards, and 
we have expectations, and I am not sure what number of States 
you were referencing there, but expect to see all of these 
demonstrations contain those important provisions.
    Senator Rockefeller. Okay. Well, my time is up. I will 
follow up with a series of questions with you, and we can talk 
and all the rest of it. You know, 9.4 million dual-eligibles, 
the most complicated subject in health care, and then the 
assumption that States are just going to kind of do the great 
job they have, or have all kinds of creative ideas, you know--
Medicaid has worked pretty well, but this is an example where 
the Federal Government has to lay down standards. And you are 
doing that, but I just worry, with this enormous proliferation 
of populations and then breakdowns of demonstrations within 
populations, that these standards will not be met. And it is 
not, how much will they cost? What will have to be done to this 
program will be much more expensive than what goes on today. 
But that is okay to know that at the beginning, because then we 
have to make adjustments to that. But guidelines, quality 
guidelines, have to be the commanding principle. That is all I 
am saying.
    [The questions appear in the appendix.]
    The Chairman. Thank you, Senator.
    I just found this interesting. We had an earlier discussion 
about the differential between Medicare reimbursement and 
Medicaid reimbursement for patients in nursing homes. The data 
I have is from MedPAC. On a per day basis, Medicare pays 
between $427 and $395 a day to nursing home patients. Medicaid 
pays--the national average is $160. So it is about 2\1/2\ times 
difference between the two.
    Okay. Now I will call the second panel. Thank you, Ms. 
Bella, very, very much. I really appreciate that.
    Senator Rockefeller. And you did not answer my ``all 
Medicare'' question--that was my first question.
    The Chairman. She will for the record. Thank you.
    [The information appears in the appendix on p. 63.]
    The Chairman. Okay. I would like to call up the next panel, 
and I would like to introduce them as they come up to the 
table, asking each to restrict his or her statement to 3 
minutes to enable us to ask questions--for the panelists to 
speak, for members of the committee to ask questions--because I 
think there is a vote scheduled at 12 o'clock.
    The second panel includes: Tom Betlach, the Director of the 
Arizona Health Care Cost Containment System; MaryAnne 
Lindeblad, Director of the Washington State Health Care 
Authority; and John McCarthy, Director of the Ohio Department 
of Job and Family Services, Office of Health Plans.
    Senator Cantwell, I believe you want to make an 
introduction.
    Senator Cantwell. I will go quickly, Mr. Chairman, because 
I know we want to get to those questions. I just want to 
introduce and thank Ms. MaryAnne Lindeblad for being here today 
from Washington State. As many of you know, this dual-eligible 
issue and innovation I think go hand in hand, and Washington is 
a State with Microsoft and Boeing, and we always think a lot 
about innovation, but we also have Group Health and the Everett 
Clinic. And Ms. Lindeblad, who is Director of the Washington 
State Health Care Authority, has many years of experience and a 
master's in public health from the University of Washington, 
and she has had time in her career at DSHS in our State, and, 
in her current role, she has served as Assistant Secretary for 
the Aging and Disability Administration in the Department of 
Social and Health Services.
    So I am just thrilled that she is here today to add to this 
discussion with her many years of experience. I thank her for 
her chairmanship of the current Medicaid Managed Care Technical 
Advisory Group and the Executive Committee for the National 
Academy of State Health Policy and Long-Term Care. And I would 
just add 98118 is the most diverse zip code in all of the 
United States, and that is Washington State. So when it comes 
to this issue of language and it comes to the communication 
issue, I guarantee you, we are on top of it. We have to be.
    Thank you. Thank you, Mr. Chairman. And again, thank you, 
Ms. Lindeblad, for traveling here to testify.
    The Chairman. Yes, thank you, Senator, very much.
    Okay. Mr. Betlach, you are first.

 STATEMENT OF THOMAS J. BETLACH, DIRECTOR, ARIZONA HEALTH CARE 
              COST CONTAINMENT SYSTEM, PHOENIX, AZ

    Mr. Betlach. Thank you, Mr. Chairman, members of the 
committee. Thank you for the invitation to discuss Arizona's 
use of managed care to improve the lives of individuals 
enrolled in both the Medicare and Medicaid programs. Arizona 
has maintained a system of managed care for its entire 
membership, including dual-eligible members, since joining 
Medicaid in 1982. Arizona also offers the unique perspective of 
a State that has one-third, or 40,000, of its dual-eligibles in 
their Medicaid health plan for both Medicare and Medicaid.
    Thirty years of experience have shown it is precisely our 
frailest members who are most in need of the care coordination 
managed care offers. Medicare managed care for dual-eligible 
members is not an experiment but, rather, a documented success. 
In Arizona, 82 percent of our elderly and physically disabled 
population that is at the risk of institutionalization is 
dually-eligible. The model of care for this population in many 
States is nursing home placement. Over the past decade, Access 
and its health plans have progressed from 40 percent of its 
members in the home or community to 73 percent, saving $300 
million this past year. For members at risk of 
institutionalization with a developmental disability, 98 
percent live at home or in the community, contributing to 
Arizona's 
number-one ranking by United Cerebral Palsy.
    More importantly, keeping people out of institutions 
increases member satisfaction and offers a higher quality of 
life, providing the right kinds of care coordination to keep 
people at home as a Medicaid skill set.
    Recently, Avalere Health compared national data for duals 
enrolled in traditional Medicare fee-for-service to dual-
eligibles served by Access Health Plan for both Medicare and 
Medicaid. Aligned Access duals exhibited a 31-percent lower 
rate of hospitalization, a 43-percent lower rate of days spent 
in a hospital, 9-percent lower emergency room use, and 21-
percent lower readmission rates.
    Alignment works. Equally important, Arizona has proven 
passive enrollment works. When Medicare Part D was created, 
Arizona encouraged its Medicaid plans to become Medicare 
Advantage Special Needs Plans. In 2006, approximately 39,000 
members were passively enrolled in their Medicaid plan to 
provide better continuity of care for Part D implementation. 
Arizona's strong transition planning and protocols successfully 
ensured member protections with minimal disruption during this 
process.
    Given our documented success in improving the delivery 
system for dual-eligibles, Arizona enthusiastically 
participated in the dual demonstration initiative. After 
extensive stakeholder engagement, Arizona submitted a proposal 
that sought to increase dual alignment from 40,000 to 100,000 
beneficiaries on January 1, 2014. I applaud the passionate and 
consistent leadership Melanie Bella has provided to bring about 
change. Despite her efforts, the process has moved slowly.
    The current system is indefensible and unsustainable. We 
should not wait any longer to build upon a proven model. One of 
the significant concerns we have is what happens when we are 
successful 3 years from now. Forty-seven years ago, Congress 
designed a system of care that required low-income elderly and 
disabled Americans to receive their health care from two 
distinct massive and complicated systems. The result is what 
one would expect: a fragmented, complicated, bureaucratic 
delivery system with higher costs, poorer outcomes, and no 
single point of accountability.
    As we rapidly approach the golden anniversary for Medicaid 
and Medicare, it is time for Congress to act in partnership 
with the States to develop a new system that will eliminate 
fragmentation and confusion while better meeting the needs of 
dual-eligible members and their families.
    Thank you again for the opportunity to share briefly our 
experiences in Arizona.
    [The prepared statement of Mr. Betlach appears in the 
appendix.]
    Senator Rockefeller [presiding]. Please, go ahead.

  STATEMENT OF MARYANNE LINDEBLAD, DIRECTOR, WASHINGTON STATE 
               HEALTH CARE AUTHORITY, OLYMPIA, WA

    Ms. Lindeblad. Thank you. Chairman Baucus, committee 
members, and distinguished guests, it is my great pleasure and 
distinct honor to report on Washington State's 
HealthPathWashington, which is a forward-looking Medicare-
Medicaid initiative aimed at integrating primary and acute 
care, behavioral health, and long-term care services and 
supports. It is a more cost-effective structure that will save 
Medicaid dollars, but its real purpose is to improve care and 
the overall health status of our clients.
    The initial strategy will begin in April next year with 
newly developed and community-based health homes for up to 
30,000 of the State's highest-need dual-eligibles. While the 
dual-eligibles only account for 13 percent of our State's 
Medicaid caseload, they account for 30 percent of our costs, so 
this is a priority project on several levels, including the 
need to provide more effective care for this population. Many, 
if not most, experience significant challenges caused by 
disability, mental illness and/or chemical dependence, which 
complicate delivery and payment mechanisms.
    Today, Washington is already moving forward to implement 
HealthPathWashington's multi-pronged approach to improve 
beneficiary experience in accessing care, promote person-
centered health action planning, promote independence in the 
community, improve quality of care, assist beneficiaries in 
getting the right care at the right time and place, reduce 
health disparities, improve transition among care settings, and 
achieve cost savings for the State and Federal Government 
through improvements in health and functional outcomes.
    By using two financial models, our first strategy will 
focus on incorporating high-risk dual-eligibles into health 
homes as part of a managed fee-for-service financial 
demonstration.
    The second strategy, which is still being negotiated with 
CMS and with counties that are going to take a leadership role, 
will offer dual-eligibles a fully capitated combined Medicare-
Medicaid managed care benefit. Both strategies will rely on a 
predictive modeling system called PRISM. It stands for 
Predictive Risk Intelligence System. PRISM is a system 
developed by our State to sift health care data and assign risk 
scores that identify those clients in need of chronic care 
management and timely interventions that will provide more 
effective care.
    Stakeholders have been invited to participate in our 
program through a number of methods. We have included them in a 
variety of ways--interviews, forums, presentations, focus 
groups, webinars--and have asked them to submit written comment 
on our draft design plan and to continue to comment.
    Of particular importance to all was the preservation of 
consumer choice and development of adequate consumer 
protections. For example, while both of the State's strategies 
rely on passive enrollment, they also support optional 
disenrollment at any time. We will continue to work with 
stakeholders and other interested and impacted parties as the 
work on the project now moves from the design phase to the 
implementation and planning phase. Materials for outreach, 
education, and training will be developed and shared with our 
HealthPathWashington advisory team, a group of 35 members 
representing advocates, providers, health plans, and 
beneficiaries that continues to meet regularly to assist with 
the implementation of this financial demonstration.
    Concern about duals is not new. Since Governor Gregoire 
chaired the National Governors Association, the NGA has 
included, as part of its standing health policy, language in 
support of State-Federal coordination with respect to duals. As 
recently as this month, members of the NGA Executive Committee 
met with President Obama and Vice President Biden at the White 
House and raised the importance of working together on dual-
eligibles.
    In a nutshell, the problem that duals face traces back to 
the fact that almost all care and payment for Medicare and 
Medicaid beneficiaries are handled through separate systems and 
financial models. Services are fragmented, care is not well-
coordinated, and there exists a lack of accountability to make 
sure that healthy outcomes are measured or achieved and that 
individuals receive the right care at the right time and place.
    HealthPathWashington targets these concerns and provides 
realistic solutions--a better-planned, better-coordinated, 
cost-effective system that will provide a healthier dual-
eligible population, significant cost savings, and an improved 
care structure.
    Thank you.
    [The prepared statement of Ms. Lindeblad appears in the 
appendix.]
    Senator Rockefeller. I thank you.
    Mr. McCarthy?

STATEMENT OF JOHN B. McCARTHY, DIRECTOR, OHIO DEPARTMENT OF JOB 
   AND FAMILY SERVICES, OFFICE OF HEALTH PLANS, COLUMBUS, OH

    Mr. McCarthy. Chairman Baucus and members of the committee, 
thank you for the invitation to discuss Ohio's ongoing effort 
to create and implement an Integrated Care Delivery System for 
Medicare and Medicaid enrollees.
    My name is John McCarthy, and I oversee the Office of 
Medical Assistance as Medicaid Director for the State of Ohio. 
An office within the Ohio Department of Job and Family 
Services, OMA is currently in the process of becoming our 
State's first cabinet-level Medicaid agency--a move aimed at 
bringing comprehensive reform and quality improvement to Ohio's 
health care landscape. Better care planning and coordination 
for Medicaid's dual-eligible population is central to this 
work.
    Approximately 182,000 Ohioans are covered by both Medicare 
and Medicaid. However, the absence of any significant degree of 
coordination in the delivery of benefits between the two 
programs has contributed to a diminished quality of care. 
Frankly, the current system is confusing and difficult to 
navigate, and no single entity is accountable for the whole 
person. Additionally, despite substantial investments, Ohio's 
long-term care services and supports remain in the third 
quartile of States, and such spending will prove unsustainable 
with the rapid aging of Ohio's population. This has led to the 
fact that individuals enrolled in both programs make up 14 
percent of Ohio's Medicaid enrollment, but they account for 34 
percent of all expenditures. Clearly a ``hot spot'' in the 
discussion involving care quality and cost containment, the 
time has come to improve coverage for individuals enrolled in 
both Medicare and Medicaid.
    In its efforts, Ohio is hoping to achieve the following: 
one central point of contact for enrollees, person-centered 
care that is maintained seamlessly across services and settings 
of care, and a system that is easy to navigate for both 
enrollees and providers.
    Of course, in order for any initiative of this kind to 
prove effective, it must place the individual first. That is 
why we have made every effort to emphasize the need for real 
person-centered care that moves seamlessly across services and 
care settings alike.
    A series of enrollee protections have also been included to 
ensure that high standards for care are maintained on a 
consistent basis. With at least two plans in all regions, 
beneficiaries will have the power to choose what avenue of care 
best fits their needs. Eligible individuals also reserve the 
ability to opt out of the Medicare portion of the initiative if 
they so choose. ICDS plan member advisory groups will also be 
established and a unified grievance and appeal process will be 
implemented in order to further assure individuals that their 
needs and concerns are being heard. Finally, strong safeguards 
will be put into action to ensure quality management and proper 
oversight over all aspects of this initiative.
    However, the number-one protection for individuals in the 
program is that they are guaranteed continuity of care for 1 
year with all providers, except for assisted living and nursing 
facility providers, where they are guaranteed 3 years. 
Providers have also been protected from rate reductions from 
the Medicaid rates for those same periods.
    The power of choice for beneficiaries is a common theme 
throughout the proposal, and that is no different in the 
enrollment stage. Individuals will have opportunities to make 
choices during the process, such as consulting over the phone 
with an enrollment contractor, during regional education and 
enrollment forums, or through one-on-one in-person enrollment 
counseling.
    It is important to note that Ohio has engaged with 
stakeholders and advocates throughout the design and 
development phases of this demonstration project. In order to 
ensure success and maintain a truly collaborative process, we 
will continue to reach out to providers, advocates, and 
individuals throughout the implementation and operational 
phases of this project.
    Thank you again.
    [The prepared statement of Mr. McCarthy appears in the 
appendix.]
    Senator Rockefeller. Thank you very much, all of you, for 
being here and for the work that you do on the real front 
lines, called ``the rest of America.''
    I am not going to deviate from my previous line of 
questioning because I am not satisfied with the responses that 
I got, so I am going to try it out on you all. And it is this 
business of lock-in. People can get locked in without having it 
a rule because they passively become a part of it simply 
because they qualify or they meet certain criteria. But they do 
not know because--you know, I mentioned they do not speak 
English or they are blind or have different impairments. They 
do not really know what this is all about, even dual-eligibles. 
I probably could give a rather short statement about what it 
actually means to them. And I brought up Senator Cantwell's 
Washington, and I said there are lock-ins in there, and I was 
pushed back strongly on that.
    But I am not sure that I am wrong, because, if people are 
passively included simply because they meet certain criteria, 
that does not mean that they are there because they want to be 
there or that they have the chance to opt out either at the 
beginning of the program, which would be less likely for those 
who have some of the disabilities that I referred to, or as the 
demonstration developed more in its work with CMS.
    Can you talk with me about how you work as States with CMS 
on the question of guidelines and on questions like lock-in/
lock-out passive enrollment? How do you do that? Anybody?
    Ms. Lindeblad. I would be happy to answer what Washington 
is doing, and I think it is unique in its own right. So, one of 
the things that we have done with the program that we are 
starting in April next year is that, while individuals are 
passively enrolled--and we use that term--there has to be a 
face-to-face interaction with that individual before they are 
really officially enrolled. So, when we talk about these health 
homes, a health home coordinator needs to meet with the 
individual, develop their health action plan. So that first 
step, that is a cooperative development between the individual 
and the care coordinator. They set their individual health care 
goals during that assessment. And at that point, that 
assessment is billed for, and that is when the person is truly 
enrolled.
    So, until they have that face-to-face, until they have a 
better understanding of the program--and if someone has limited 
English speaking, there will be interpreters there. We will 
help them through that. But they will have that face-to-face 
with an individual whom we are hoping will have had some 
connection with the client, even in the past.
    So, when we do this passive enrollment and assign a person 
to a care-coordinating entity, that care-coordinating entity 
will have history on that individual, will know which community 
of resources that individual is already accessing, and try to 
link them with a care coordinator who is part of that. So for 
us, it is really important that the member is engaged in that 
decision about whether they want to be in the program or not.
    Senator Rockefeller. But you do have interpreters 
available?
    Ms. Lindeblad. Absolutely. We have a very strong----
    Senator Rockefeller. And you do have people, maybe they do 
not need interpreters, but they are confused about the program, 
and you have people available.
    Ms. Lindeblad. People to help them.
    Senator Rockefeller. That is my point, you see? And Senator 
Cantwell--and we tease about this, but Washington is a superior 
State. You always have been.
    Ms. Lindeblad. We think so.
    Senator Rockefeller. You are. [Laughter.]
    I mean, you have services, you are innovative, you are 
ahead. Oregon is the same way. In many ways, Minnesota and 
Wisconsin are very advanced in their thinking, et cetera. But 
most States are not. All States are going to face huge budget 
cuts, because we are facing them here, and that will be passed 
on down to you, and maybe some of those interpreters will 
disappear--not because you want them to, but because you do not 
have the money to pay them. And that is where we are doing 
demonstrations and trying to pick out what works best.
    And then I further asked, if you have a big population in 
one demonstration, how is it that, within that population, you 
pick out a variety of approaches and then treat each of those 
as something that you can hold up to CMS standards but then 
hold back to CMS for approval?
    Ms. Lindeblad. And just let me clarify that too. We do not 
think that we will have more than 50 percent of our duals 
population actually enrolled in one of the programs. So, with 
this first initiative that we are starting in April of 2013, we 
hope up to 30,000 individuals will enroll in that out of 
115,000; and then with the second, probably, again, at most 
maybe 20,000 additional. So we are not looking at even more 
than half the population of the dual-eligibles being enrolled. 
We are going to be taking a very targeted approach.
    Senator Rockefeller. Okay. In my final few seconds, could 
you help me understand how you pick out an approach for this 
group and a different approach for that group in a 
demonstration as a way of finding how to make the dual-eligible 
coordination work best? How do you do that? I mean, 20,000 is a 
lot of people; 600,000 is a lot of people.
    Ms. Lindeblad. Well, again, in Washington, what we are 
doing is looking at two different models, as I mentioned, and 
so looking at one that is----
    Senator Rockefeller. Models that you have come up with 
yourself?
    Ms. Lindeblad. That we have developed, right. One is more 
of a fee-for-service health home model; the other model will be 
through fully integrated managed care. So we have something to 
compare and look to.
    Mr. Betlach. In Arizona, we are also developing different 
models based upon the population, so we will have a different 
model for individuals who are at risk of institutionalization 
who require home- and community-based services and long-term 
care support services. We will have a different approach in 
terms of the model of how we want to deal with members who have 
serious mental illness in terms of how we want to approach that 
population. So we are obviously looking at the fact that this 
is not a homogeneous group of individuals, and we need to 
target the development of our delivery system based upon the 
needs of that population.
    Senator Rockefeller. And my final interruption. How are you 
made aware of and how do you use, if they have been sent to 
you, the standards that CMS insists on?
    Mr. Betlach. Well, in terms of Arizona, we have not gotten 
to the level of specificity for the memorandum of understanding 
to see how that fits within our overall structure. But in terms 
of having some preliminary conversations, they understand the 
model and approach that we want to use with the different 
populations that we are serving.
    Senator Rockefeller. So a verbal back-and-forth.
    Mr. Betlach. So far. We just had the initial conversations 
around the MOU. I mean, we are a 2014 State. We are not as far 
along as Washington and Ohio.
    Mr. McCarthy. In Ohio, we have been working with them on 
all of the measurements going back and forth, and they proposed 
some measurements. We actually proposed more than they had 
given to us. And we have been working very collaboratively 
between the two to set up what is it we are going to be 
measuring along the way for health outcomes, nursing home 
diversion, and other areas. Right now it is over 40 measures 
that we are going to be measuring as we move through the 
program.
    Senator Rockefeller. Okay. My time is way more than up. 
Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for your line of questioning. I know you really are trying to 
be a guardian for the less fortunate here, and I think one of 
my most memorable Senate moments will be, you know, your 3 a.m. 
speech before the health care committee on the passing of that 
legislation about exactly how these policies do affect 
individuals. So I take your line of questioning as welcoming, 
because I think we certainly understand the challenge. And 
there are challenges. I mean, Washington would be the first to 
admit it.
    Ms. Lindeblad, when we talk about communication to this 
population, we get that it is a challenge, right?
    Ms. Lindeblad. It is.
    Senator Cantwell. I mean, are we talking about 72 different 
languages in our State? Or is it more than 72?
    Ms. Lindeblad. It is something like that, and what we do 
is, we will be targeting the top 10 or 12 where most of the 
population is and then bring in interpreters as needed for 
other languages, but making sure that all materials are 
translated into the top languages, and then assisting folks if 
it is a very unusual or rare language, absolutely.
    Senator Cantwell. But when we say communication, we get 
that this is--it is huge for us.
    Ms. Lindeblad. It is.
    Senator Cantwell. It is. As I said, we are the most diverse 
zip code in the entire country, and some of these school 
districts have already struggled with it when it comes to the 
delivery system. But isn't the point here that right now, for 
the Medicaid population, they are not being managed in the 
sense of you basically get, as you were saying, a medical home 
or a caregiver to take a Medicaid enrollee who could be a youth 
who is, you know, on SSI and not doing a very good job of 
managing their own care? I guarantee you they are probably not. 
And all of a sudden, now they have an advocate. Is that----
    Ms. Lindeblad. That is absolutely true. And, when you think 
about the diversity of the population, not just in language but 
in a variety of other ways in terms of what their health care 
needs are in the system, you are right, now they will have an 
advocate, someone who can help them navigate through often a 
very complicated, difficult system.
    Senator Cantwell. So I would say that, currently, they are 
being bumbled around. They do not have anybody. They are 
knocking their heads against the wall many times on this.
    Mr. Betlach, you mentioned that Arizona saved $300 million 
in your switch to community-based care, going from 40 percent 
of your community-based care to 73 percent.
    Mr. Betlach. For the elderly and physically disabled, that 
is correct, Senator.
    Senator Cantwell. Which is great. You know, we wish all 
States would move toward that rebalancing. But you were 
mentioning that to think that Medicare alone could be the sole 
answer for these dual-eligibles, you basically think that is 
wrong, because there is no way, dealing with this Medicaid 
population, particularly as it relates to community-based 
care----
    Mr. Betlach. It is not a Medicare skill set in terms of, it 
is something that the States have developed through their 
Medicaid programs for home- and community-based placement and 
support. Behavioral health is similar, where especially members 
with serious mental illness, that is more a Medicaid skill set 
in terms of knowing what is needed for community supports, and 
also providing an array of other services for individuals.
    Senator Cantwell. Thank you.
    So I think, Mr. Chairman, that these questions are the 
right questions. You are right: some States are further ahead, 
but I think we should ask them about how to guarantee those 
safeguards. But I think this is one of our biggest challenges, 
but also biggest opportunities to deliver better care and to be 
more cost-
effective in how we deliver it. So I hope that we will build in 
whatever safeguards we need to build in, and I think you are 
right: build them in. But even in our rebalancing proposal that 
was part of the health care law, I think now, what are we, up 
to like 8 or 9 States that have now said, okay, we want to try 
to do rebalancing, and some of them I never would have 
predicted. So the good news is that we have models that we can 
follow, and we can keep pushing the envelope in various stages 
here. So I thank the chair.
    The Chairman. Thank you, Senator.
    Senator Carper, I understand you have another question.
    Senator Carper. I do. And has the vote started? I think the 
vote may have started.
    The Chairman. It has started.
    Senator Carper. Okay. First of all, Mr. McCarthy, where do 
you live?
    Mr. McCarthy. I live in Dublin, OH.
    Senator Carper. Okay. Are there any Ohio State fans around 
there?
    Mr. McCarthy. I am surrounded by them. [Laughter.]
    Senator Carper. Do they have any idea you are from Indiana 
undergraduate and graduate school?
    Mr. McCarthy. Yes, they know that, and I have had numerous 
discussions with the Governor about that. [Laughter.] The State 
of Indiana has three number-one college teams as of today.
    Senator Carper. That is great. All right. I will not get 
into why Montana--we are 1-AA in Delaware, and we lose to teams 
like Eastern Washington University, which I never heard of 
until 2 years ago. And I am not sure--this is a team that plays 
on a red football field, and they managed to win a national 
championship. I do not get it. They beat Montana; they beat us. 
It is not fair.
    Okay. Let me talk about greater--first of all, thanks a lot 
for being here, and thank you for being some of the 
laboratories for democracy. As an old Buckeye myself, we are 
delighted that you are here.
    Greater care coordination and care managers, or at least 
patient navigators, are important folks, as we know, in the 
patient-
centered medical homes and Accountable Care Organizations. And 
let me just ask how you are working in your own States to 
integrate your innovative programs for duals with medical homes 
and with the Accountable Care Organizations. Can you all take a 
shot at that?
    Mr. McCarthy. Sure. In Ohio, we took the path of going down 
the road of patient-centered medical homes for individuals with 
severe and persistent mental illness first because, actually, 
what we were concerned about as we were bringing up medical 
homes for people with chronic conditions, what we saw was 
individuals' practices were looking at how to get the 
behavioral health providers into the acute-care providers' 
offices to provide services. But, as we know, looking through 
our data, that is not where a person with behavioral health 
issues goes for services, because, when you look at it, if a 
person has serious and persistent mental illness and a chronic 
condition, they are not getting the services.
    So what we did in Ohio is, we brought up behavioral health 
health homes first, where the behavioral health providers are 
actually out front and they are bringing the acute-care 
providers into their offices. We have incorporated that model 
into our proposal that we have put forward, because we know 
many of the individuals whom we are going to be serving--I know 
we have talked about the elderly, but many of them have 
behavioral health issues. And so that is an integral part of 
our project.
    Senator Carper. Okay, good. Please?
    Ms. Lindeblad. And certainly for Washington, our first 
model is absolutely predicated on the use of health homes, 
medical homes, and we have experience in some pilots that we 
have done over the last few years, both on the behavioral 
health side and on disabled, under-65 disabled, where we have 
had great successes using a health home model in terms of not 
only bending the cost curve, but I think, interestingly enough, 
finding statistically significant differences in the mortality 
of the individuals whom we served in those programs.
    Mr. Betlach. It is a must in Arizona as well. You know, 
we----
    Senator Carper. Sorry. State that again?
    Mr. Betlach. It is a must in Arizona as well. We mandate it 
from our health plans in terms of the structure to work with, 
not only a primary care physician, but also to be a critical 
tool in terms of providing information back to those providers. 
So the managed care system is really doing the most in terms of 
leveraging care coordination and care management, particularly 
for the populations like the high-cost behavioral health 
population as well as specifically the long-term care 
population. So it is a must in terms of our structure and our 
delivery system.
    Senator Carper. Okay. Thanks.
    How do you all plan to ensure that your demonstration 
programs will include the most high-risk and high-cost duals in 
your States? That is my first question.
    The second half of that would be: would it be beneficial to 
your respective programs to have the option of including 
coordinated care models such as the PACE programs for your 
duals?
    Mr. Betlach. Well, in Arizona, we leverage managed care, so 
we do not have the PACE model in Arizona. And just to give a 
comparison, I think the PACE numbers nationally are about 
25,000 members. In Arizona, we have 40,000 alone who are 
aligned in terms of getting both their Medicare and their 
Medicaid from the Medicaid plan. So, just to give you some idea 
of the scope of that. And, obviously, by having that alignment, 
the plans have all the data on who their high-cost members are. 
Because you have that information, you can see who is using the 
emergency department too much; you can see who has. And it was 
in my data in terms of where you can stem the readmissions in 
the hospital.
    So we all talked about fragmentation, and clearly, by 
having that single point of accountability, you really then can 
leverage the managed care organization to drive better outcomes 
for the member.
    Senator Carper. All right.
    Ms. Lindeblad. And I think in Washington, when I talked 
about the PRISM system, that is a predictive----
    Senator Carper. About the prison system?
    Ms. Lindeblad. PRISM system.
    Senator Carper. Okay.
    Ms. Lindeblad. Not prison. PRISM. [Laughter.]
    The PRISM system. That is actually a tool, a predictive 
modeling tool, that we have developed in Washington that will 
help us focus--and we actually will be managing those highest-
cost individuals or those individuals whom we are predicting 
will be 50-percent higher cost using this model. And we have 
used this model for a number of years in various settings, and 
the care management strategy is predicated on identifying 
individuals, so absolutely, they will be the highest-cost, 
highest-need individuals to be served in our program.
    Senator Carper. Okay. Last word, Mr. McCarthy?
    Mr. McCarthy. And in Ohio, we actually left the PACE 
program outside of our proposal because, as Senator Rockefeller 
was talking about, it gives a person--you can opt out of our 
duals proposal into the PACE program, and so it is another way 
to do an evaluation of what is going on. We have two PACE 
programs in Ohio currently, one in the Cleveland area and one 
in the Cincinnati area.
    Senator Carper. Okay, thanks.
    Mr. Chairman, this was great. Thanks.
    The Chairman. It was a very good hearing, and I thank all 
of you so much. You traveled distances and suffered 
inconvenience to get here, even temporarily no lights, but 
thank you very much for your participation. And I thank the 
Senators too. There are about 4 minutes left on the vote.
    The hearing is adjourned. Thank you.
    [Whereupon, at 12:12 p.m., the committee was adjourned.]

                            A P P E N D I X

              Additional Material Submitted for the Record

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