[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING ON THE FUTURE OF MEDICARE
ADVANTAGE HEALTH PLANS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 24, 2014
__________
Serial No. 113-HL15
__________
Printed for the use of the Committee on Ways and Means
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U.S. GOVERNMENT PUBLISHING OFFICE
20-996 WASHINGTON : 2016
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HEALTH
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas JIM MCDERMOTT, Washington
PAUL RYAN, Wisconsin MIKE THOMPSON, California
DEVIN NUNES, California RON KIND, Wisconsin
PETER J. ROSKAM, Illinois EARL BLUMENAUER, Oregon
JIM GERLACH, Pennsylvania BILL PASCRELL, JR., New Jersey
TOM PRICE, Georgia
VERN BUCHANAN, Florida
ADRIAN SMITH, Nebraska
C O N T E N T S
__________
Page
Advisory of July 24, 2014 announcing the hearing................. 2
WITNESSES
Joe Baker, President, Medicare Rights Center..................... 42
Robert A. Book, Ph.D, Senior Research Director, Health Systems
Innovation Network, LLC Outside Healthcare and Economics
Expert, American Action Forum.................................. 35
Jeff Burnich, M.D., Senior Vice President & Executive Officer,
Sutter Medical Network, on behalf of CAPG...................... 22
Chris Wing, Chief Executive Officer, SCAN Health Plans........... 11
SUBMISSIONS FOR THE RECORD
Alliance of Community Health Plans, ACHP......................... 108
American Federation of State, County and Municipal Employees,
AFSCME......................................................... 113
Priority Health.................................................. 117
Senior Whole Health, SWH......................................... 122
FUTURE OF MEDICARE ADVANTAGE
HEALTH PLANS
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THURSDAY, JULY 24, 2014
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:00 a.m., in
Room 1100, Longworth House Office Building, the Honorable Kevin
Brady [Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
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Chairman BRADY. Good morning, everyone. The subcommittee
will come to order.
Today we will hear testimony regarding the Medicare
Advantage Program. We will hear about these private plans that
are chosen by an increasing number of seniors, and we will hear
about how these private plans can combine high quality and low
costs.
We will look to the future of the popular program and ask:
when scheduled cuts to Medicare Advantage Plans in the
Affordable Care Act take place, can these popular plans
continue to effectively serve seniors?
Will the policies of the Obama Administration narrow choice
and plan flexibility, further impacting our seniors?
Since seniors were first given the option to select a
private health plan to receive their Medicare benefits, they
have shown a strong preference for these plans. Over the past
decade, enrollment in Medicare Advantage has tripled. Of new
enrollees, more than half choose a Medicare Advantage Plan over
traditional fee-for-service. Today nearly 16 million seniors
are receiving their benefits through these private plans.
Medicare Advantage Plans are particularly popular with low
income and minority seniors since these insurance plans are
able to provide caps on out-of-pocket costs, coordination of
care for seniors, and more predictable costs. The seniors that
choose these plans are highly satisfied with the coverage and
the benefits they receive.
Unfortunately, many of our elderly could lose access to the
plans they have and like because of cuts that are just
beginning to hit that are part of the President's Affordable
Care Act.
Knowing just how unpopular these cuts were with the seniors
that select these plans, the White House, acting through a new
demonstration program and other regulatory actions, masked and
delayed the impact of initial stages of the $300 billion in
cuts through the November 2012 elections. Those political
delays are over. The difficult reality is 2015 is now upon us,
and millions of seniors who rely on the Medicare Advantage
Program may be in jeopardy of losing their plan, their doctor,
and the financial protection and benefits they have chosen.
The future for Medicare Advantage may look grim. The
questionable $8.3 billion quality bonus payment demonstration
program used to mask ACA cuts is now coming to an end. In
addition, the new payment methodology for Medicare Advantage
Plans that assume Congress will fix the way Medicare pays
physicians is only temporary. This leaves the looming threat to
Medicare Advantage Plan rates could again include the broken
physician reimbursement formula unless we finally and
permanently fix the way Medicare pays our physicians.
So instead of improving the situation, CMS' regulatory
actions are threatening plans through potential termination and
limiting their ability to innovate. For example, plans serving
largely low income populations find themselves struggling to
meet the demands of the Medicare Advantage Star Rating Program.
That could place them in jeopardy of being terminated in this
coming year, just weeks before open enrollment is to begin.
Ironically, high performing Medicare Advantage Plans are
also in the cross hairs. Plans that have consistently found
ways to be rated highly in the star system now find themselves
unsure of what supplemental benefits they must cut going
forward due to backwards incentives under the benchmark cap
created by the ACA.
As many of us predicted following the passage of the
controversial Affordable Care Act, seniors and Medicare
Advantage health plans have not yet experienced the full impact
of these cuts, and as the full impact of these cuts is felt in
the coming years, could millions of seniors be forced out of
plans they have and they like?
A report released Monday by the American Action Network has
mapped out likely benefit cuts per Medicare senior by
congressional district, which I would like to enter for the
record.
And without objection, so ordered.
[The information follows:]
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Chairman BRADY. The report points to one glaring
conclusion. Seniors in every district in America, Republican or
Democrat, now face damaging cuts to their health care and
pharmacy benefits they selected because it fits their needs.
The Medicare Advantage Program is popular among our Nation's
seniors because it provides seniors with choices to select a
plan that best fits their needs.
We need to ensure seniors continue to have this valuable
option. It is no surprise then that many Members of Congress,
even our colleagues in the Senate, have recognized the
challenges facing seniors and have come out in bipartisan
opposition to further cuts to Medicare Advantage.
Today you will hear from witnesses who will tell us the
current picture of Medicare Advantage, the good, the bad and,
yes, maybe even the ugly, and I am confident that as we look
forward and work together we can break down barriers and
improve Medicare Advantage for America's seniors who depend
upon these critical plans.
The ACA brings a new level of uncertainty to those who
depend on Medicare Advantage, and the time is now to consider
the feature of these Medicare programs and the importance
Medicare Advantage Plans play for a growing number of seniors.
This Subcommittee will hold the Administration accountable
to carefully examine the impact that any changes to Medicare
health plans will have on seniors, the Medicare Program itself,
and ultimately on taxpayers. We must work together to make sure
that our Nation's seniors continue to have choices in their
care and benefits.
I recognize the Ranking Member, Dr. McDermott, for the
purposes of an opening statement.
And I ask unanimous consent that all members' written
statements be included in the record.
Without objection, so ordered.
I now recognize the Ranking Member, Dr. McDermott, for five
minutes for the purposes of his opening statement. Doctor.
Mr. MCDERMOTT. Thank you, Mr. Chairman. I want to thank you
for holding this hearing.
There is a good story to tell about the Medicare Advantage
Program, and I am pleasantly surprised by my colleagues across
the aisle having provided a stag for us to do that. I kind of
wondered what it was about, but as I listened to the chairman,
I realized it was more of the skewer tactics of the past.
Before we get to the good news about the program, we have
to hear a lot of specious claims about the ACA's effect on
Medicare Advantage, but the truth is somewhat entirely
different. Thanks to the changes made by the ACA, both Medicare
Advantage and traditional Medicare are on a much stronger
footing, and we will hear that from the report from the Trustee
shortly.
Since the passage of ACA, the MA Program has seen record
high enrollment, with more than 15 million Medicare
beneficiaries enrolling in the MA plan. Thirty percent of all
Medicare beneficiaries are enrolled in Medicare Advantage at
this point.
Since the passage of the ACA, premiums have been reduced or
held steady. In total, Medicare Advantage premiums have fallen
14.3 percent. That means the average Medicare enrollee pays $31
per month. Underlying Medicare Advantage benefits have been
increased in both MA and in traditional Medicare, meaning that
the plans have more money to spend on these benefits. Those are
the facts.
Now, one of the key improvements of the ACA made to MA was
to cut down on overpayments that were threatening the solvency
of the program. Thanks to misguided provisions put in by the
Republicans' 2003 prescription drug legislation, the Federal
Government was paying plans an average of 114 percent of the
cost of traditional Medicare. That is 14 percent more than if
people had stayed in Medicare. They were breaking the program.
Independent analysis from the GAO, Medpac, and countless
others point out that the wasteful spending was putting
Medicare on an unsustainable course. To fix this, the ACA
improved how we calculate payment rates. These reforms have
brought payments to more in line with the costs of traditional
Medicare, while emphasizing efficiency and quality.
Even though we have reduced Medicare Advantage
overpayments, insurance companies are doing just fine. Which
insurance company has gone in the tank in the last five years?
Their stock prices have surged, and their profits continue to
grow.
Reducing Medicare overpayments has also improved the
Medicare Trust solvency and helped drive down Medicare
spending. It is a fact that overall per capita growth in
Medicare spending is at record lows, thanks to ACA. The
savings, most of which were recommended from nonpartisan
experts, including Medpac and others, come from changes to
payments for plans and providers.
Despite their rhetoric, my colleagues on the other side
must have thought they were well justified, too. In fact, every
Republican on this dais has voted multiple times in favor of
these very same cuts as part of the Reagan--Ryan budget.
Reagan, Ryan, it is all the same. They are Irish.
At other times my Republican colleagues have been known to
claim these savings have come at the expense of beneficiaries.
That is false. We have increased benefits both in Medicare
Advantage and traditional Medicare by expanding preventive
care, eliminating cost sharing for preventive care, and
improving coverage for prescription drugs.
My colleagues across the aisle also talk about declining
choice and access in Medicare Advantage Plans, but the reality
is that beneficiaries have more access to Medicare Advantage
Plans. More than 99 percent of eligible beneficiaries have
access to an MA plan, and the average beneficiary has the
option to choose between 18 plans. That is not a loss of
choice.
Given these facts, it does not sound to me that the program
is having any real difficulty. So I am very interested to hear
the witnesses.
And thank you, Mr. Chairman.
Chairman BRADY. Thank you.
Today we are joined by four witnesses:
Chris Wing, Chief Executive Officer at SCAN Health Plans;
Dr. Jeff Burnich, the Senior Vice President and Executive
Officer at Sutter Medical Network, testifying on behalf of the
CAPG; Robert Book, Senior Research Director of the Health
Systems Innovation Network, and Healthcare and Economics Expert
at the American Action Forum;
And Joe Baker, President of the Medicare Rights Center.
Mr. Wing, you are now recognized for five minutes, and
welcome.
STATEMENT OF CHRIS WING, CEO OF SCAN HEALTH PLANS
Mr. WING. Thank you, Mr. Chairman.
My name is Chris Wing, and I am the CEO of SCAN Health
Plans. SCAN was founded in 1977 in Long Beach, California, by
senior citizen advocates. Their mission back there was very
elegant: help seniors stay healthy and independent.
I am happy to say that 37 years later we have the exact
same mission statement. With our focus on our mission statement
and the unique and disparate needs of seniors, since they are
not a homogenous group, we have now emerged as one of the
fastest growing MA plans in the Nation, and we are the fourth
largest not-for-profit MAPD plan in the Nation.
SCAN and our provider partners now care for 170,000
seniors, up from 120,000 just three years ago. We care for the
healthy, the poor, the chronically ill, the disabled, and those
in their last days of life.
We provide unique products, medical care, and services
tailored to meet the very unique and disparate needs of today's
seniors. In fact, 30,000 of our members have chosen to
participate with us through special need plans. We have C-SNPs
or chronic special need plans to care for members with
diabetes, heart disease, and end stage renal disease.
We have an institutional I-SNP specialty plan for members
who are nursing home certifiable, and we also have D-SNPs that
offer integration and care for members who are both eligible
for Medicare and dually eligible. These are some of the most
frail and underserved members in our Nation.
We think the diversity of these plan offerings is a major
reason why Medicare Advantage has become such a great public
policy. So whether you are healthy and yearn for a discounted
gym membership or you require an integrated care team to help
you deal with a chronic, complex illness, Medicare Advantage
has a plan for you.
As Congressman McDermott mentioned, now 30 percent of
seniors across the country are now enrolled in Medicare
Advantage. In my home State, that is 38 percent, and actually
based on an article from Health Affairs, now half of every
Medicare beneficiary becoming eligible for the program is now
selecting Medicare Advantage.
Perhaps the growth of Medicare Advantage is due to
affordability. For our members in 2014, 90 percent of them pay
no monthly premium. Perhaps it is because of low cost use for
going to primary care physicians. Eighty percent of our current
members have absolutely no copay for seeing a primary care
physician. This is extremely important for seniors who have
frail health or are on a fixed income. We do not want to create
any economic barriers to see their primary care physician.
Perhaps the growth of MA is due to quality. Virtually all
of the quality measurements now point to Medicare Advantage
being better than traditional Medicare, better on diabetes
testing, better on breast cancer screening, better on
antidepressant medication management, and better on reducing
hospital re-admit rates. No wonder people are voting with their
feet and choosing MA.
With that being said, there are significant clouds on the
horizon. Over the past few years the MA Program has sustained a
series of significant funding cuts. These include the $2.5
billion cut as part of the American Tax Relief Act; and two
percent sequestration cut that went into effect last year; and
the $200 billion worth of cuts coming from the Affordable Care
Act.
Some seniors have already begun, and I am talking about
SCAN seniors, to feel the impact of these cuts with higher out-
of-pocket costs, reduced benefits, and more limited provider
choice. However, many more seniors in the future will be
impacted as the vast majority of these cuts, almost 80 percent,
occur in future years.
Now plans of providers are adapting and evolving to these
cuts. We have no choice, and it is good that we are doing it.
Some of the larger plans are vertically integrating to create
synergies in costs and care savings. SCAN is pursuing a more
collaborative approach with the bigger systems in Arizona and
California.
We are a not-for-profit, mission driven company, and we
have enjoyed the trust of our provider groups for 37 years. So
we have started an initiative called Provider Integration where
we collaborate with the 14 best and biggest groups on the West
Coast, and the goal really is how can we work together to
improve the model.
The initial focus was on the CMS star program, and in just
one year we took our star's rating in California from 3.5 to
4.5. That is a big deal.
But our seamless quality bonus can offset only so much of
the cuts. So as Congress and CMS developed Medicare policy, we
would ask you to be vigilant regarding the stability of
Medicare Advantage. Reimbursement rates cannot continue their
recent steep decline. As plans, we will work to minimize and
mitigate as much of the impact as possible as we become more
efficient, but we ask the Congress and CMS to do their best to
keep payment rates as stable as possible.
CMS should also keep the five-star bonus program stable. As
I mentioned, the CMS quality bonus program is probably the
biggest sea change event that has changed the focus on quality
in my 30 years on managed care.
Chairman BRADY. Mr. Wing, I apologize. The time has expired
for the opening statement. So thank you very much.
[The prepared statement of Mr. Wing follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Dr. Burnich.
STATEMENT OF DR. JEFFREY BURNICH, SENIOR VICE PRESIDENT &
EXECUTIVE OFFICER, SUTTER MEDICAL NETWORK, ON BEHALF OF CAPG
Dr. BURNICH. Chairman Brady, Ranking Member McDermott, and
members of the Health Care Subcommittee, thank you for inviting
me to testify today.
I plan to talk about Medicare Advantage and the benefit
from a physician's standpoint, how it benefits our seniors. I
will describe a program we have developed at Sutter Health to
manage some of the sickest, frail patients in this population.
I am here as a representative of CAPG, the voice of
accountable physician groups that represent 160 medical groups
in 20 States and take care of 1.2 million Medicare Advantage
lives. I am a physician, an internist, and I serve as a Senior
Vice President and Executive Officer of the Sutter Medical
Network.
Sutter Health is a not-for-profit integrated delivery
system taking care of three million lives in 19 counties in
Northern California. We manage the risk of 49,000 Medicare
Advantage lives and have taken care of capitated lives for over
two decades.
We do this with our 5,000 aligned physicians who are
clinically integrating and managing care across our hospitals,
clinical practices, home care, urgent care, and surgery
centers.
So why is MA important to CAPG, Sutter Health and their
physicians? Well, for one, it is a predictable model for
population management. The physicians, the PCPs, the primary
care physicians, know who their patients are. They get lists.
We make sure that those patients get in to see their physicians
on an annual basis for an annual wellness exam, an annual
wellness visit. It is a benefit of the MA Program.
This helps us understand the risks of those patients,
review their medications, their conditions and do better
preventive planning.
Secondly, it is a predictable budget for managing a
population. You get a per member per month payment so that you
can budget each year to take care of these patients and budget
for programs and the expenses you incur for those.
We have data to understand the utilization of the patterns
of these patients so we can better manage the risk and the
referrals.
MA incentivizes caregivers to coordinate care, reduce cost,
and reinvest those savings in the care model like Sutter
Health's Advanced Illness Management Program, otherwise called
AIM. Fee-for-service does not do this.
So what is AIM and how does it align and support Medicare
Advantage beneficiaries? Well, actually MA is the foundation of
our AIM Program. In Sacramento, we have a large population of
capitated lives, and it allowed us years ago to put care
managers both in the hospital and in the practice to better
coordinate the handoffs from discharge of patient and admission
from office.
So who are these patients? They are very sick and they are
very frail. You may know some of them or have members in your
family. They average 17 days a year in the hospital, 12 days in
the intensive care unit. They take 18 to 30 prescriptions and
54 trips to nine different physicians. These are really sick
patients, hence the name AIM.
We target the patients with a care management model that
manages the patients with a multidisciplinary team. We use
common training and real time data, and we enroll these
patients in several settings, notably in the physicians'
offices of our network, 40 percent, both in the hospital and
home care.
We go to the home, and we set goals with these patients.
What is it that they want to accomplish? It can be as simple as
a grandmother wanting to see her granddaughter graduate high
school, and she is very ill and we need to manage her symptoms.
Symptom management is a key ingredient because it keeps
those people from picking up the phone, calling 911 and going
to the hospital as the usual routine.
And then we provide a wealth of services to evaluate
emotional and nutritional needs.
In 2009, we piloted the program in Sacramento, again,
because we had a large MA population. We also applied for an
Innovation Challenge Award from CMMI and received that in July
of 2012. Through that grant we have spread the program across
15 counties, taken care of 5,000 patients, with an average
daily census of 1,800. We have met the patients' needs by
maintaining them in their home environment where they want to
choose to be treated. We have decreased unwanted, avoidable
hospital emergency room/ICU stays and the costs associated with
them.
The savings are reinvested into the care model and the
training and event technology. We are adding video visits next
year so we can better monitor the patients in their homes more
frequently.
In conclusion, I believe Congress and the Administration
should develop policies that encourage population payments to
physician organizations in MA, as well as fee-for-service
Medicare. Such payments should encourage the organized practice
of medicine, strengthen and coordinate the care infrastructure,
and build incentives for team-based care.
Thank you for the opportunity to speak to you today as the
committee considers important Medicare and fiscal policies in
the future. I hope you will reconsider and consider all that
the MA Program has to offer our senior citizens.
Thank you.
Chairman BRADY. Thank you, Doctor.
[The prepared statement of Dr. Burnich follows:]
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Chairman BRADY. Mr. Book, you are recognized for five
minutes.
STATEMENT OF ROBERT A. BOOK, PH.D., SENIOR RESEARCH DIRECTOR,
HEALTH SYSTEMS INNOVATION NETWORK, LLC, OUTSIDE HEALTHCARE AND
ECONOMICS EXPERT, AMERICAN ACTION FORUM
Dr. BOOK. Thank you, Chairman Brady and Ranking Member
McDermott and Members of the Subcommittee.
Chairman BRADY. Can you get your microphone and just see if
that is on?
Dr. BOOK. I am sorry.
Yes, thank you, Chairman Brady, Mr. McDermott and Members
of the Subcommittee. I thank you for the opportunity to share
my research on the Affordable Care Act and its impact on
seniors and disabled Americans enrolled in Medicare Advantage.
Fee-for-service Medicare has very high deductibles, high
copayments and no limit on out-of-pocket costs patients can
face. Nearly all Medicare beneficiaries seek alternative
coverage to reduce those out-of-pocket costs. Some retirees
have supplemental coverage from a former employer, and some
have income low enough to qualify for Medicaid. For the rest,
MA is now the most popular option.
The 30 percent of Medicare beneficiaries currently in MA
that Mr. McDermott mentioned includes 44 percent of those who
do not have access to retiree supplemental plans from a former
employer. Most of the remainder have a Medigap or some other
way of combatting those high out-of-pocket costs.
Medicare is more popular among beneficiaries who have lower
incomes but above the Medicare threshold, and it is more
popular among African Americans and Hispanics. Hispanics, in
particular, historically have been more than twice as likely as
the average Medicare beneficiary to enroll in MA.
CBO estimates that ACA cuts to Medicare Advantage will
total $308 billion by 2023, and which is approximately 43
percent of the ACA's total cuts to Medicare. MA payments are
tied to benchmark monthly payments individually for each
county, and the ACA makes changes to the way those benchmarks
are calculated with the result that every county in the country
will see a cut by 2017, and in fact, 97.9 percent of counties
will see a cut in 2015, for which rates have already been
published.
The bonus system based on the star rating system that Mr.
McDermott referenced, I think everyone agrees that paying more
for good performance is a good thing. However the star rating
system does not necessarily accomplish that because CMS chooses
the rating criteria after the period of performance. So, for
example, in the first cycle, they measured performance between
January 2010 and June 2011 and then October 2011 announced the
criteria on which plans would be rated.
So since the rules are not determined until after the game
is played, it is difficult for MA plans to tailor their
performance to the criteria that CMS will reward. That system
could, on the other hand, be used to reward favored plan
sponsors by choosing criteria to give high ratings to those who
are favored. Favored plans could then use the money to increase
their profits and their increasing market share by offering
benefits that other plans cannot afford to offer.
So instead of allowing plans to compete on a level playing
field, the rating system could be used to herd patients into
favored plans by manipulating their ability to offer benefits.
This is the reverse of the original goal of Medicare Advantage,
which was to increase patient choice.
Mr. McDermott mentioned that the dire predictions that many
of us made for Medicare Advantage have not yet come to pass,
and that is true because after the ACA was passed, CMS used its
regulatory authority in a new way to mask the first few years
of cuts. They created a new star rating bonus program different
from the program in the Affordable Care Act which gave bonuses
to almost all plans, with the result that most of those cuts
have not actually hit patients or plans yet.
So based on published rates for each county in 2015, now
that the bonus program has ended, the total cut will be about
$317 per month compared to the year before, but $1,530, or 13
percent, below the pre-ACA baseline. So this demonstrates the
extent to which the pilot program authority was used to offset
cuts that were mandated by the Affordable Care Act.
Now, the Affordable Care Act phases in and calls for the
rates to be phased in through 2017. So there are more cuts to
come. Assuming the Affordable Care Act cuts are implemented as
passed by Congress, by 2017 the cumulative cut relative to the
pre-Affordable Care Act baseline will be $3,700 per beneficiary
per year, which is nearly a 27 percent overall cut.
It is going to be extremely difficult, perhaps impossible
for plans to maintain their prior level of benefits in the face
of those drastic cuts.
Every beneficiary will see some combination of either
higher copayments, higher deductibles, a higher monthly premium
in excess of the Part B premium they already pay, or reduced
benefits or plan services or smaller provider networks.
Now, this impact is going to be different for each plan as
each plan deals with the cuts in its own way, but one way or
another, it will affect everybody. This will affect not only
seniors' financial stability, but also their access to health
care.
Chairman BRADY. Mr. Book, I am sorry. Your time has
expired. So thank you very much.
[The prepared statement of Mr. Book follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Mr. Baker, you are recognized.
STATEMENT OF JOE BAKER, PRESIDENT,
MEDICARE RIGHTS CENTER
Mr. BAKER. Thank you. Thank you, Chairman Brady, Ranking
Member McDermott, and distinguished Members of the Subcommittee
on Health. Thank you for the opportunity to testify today on
the future of Medicare Advantage.
Each year Medicare Rights Center counsels thousands of
people with Medicare about topics ranging from enrolling in a
plan to appealing a denied claim. For people with Medicare, we
find there is no one size fits all choice. Medicare Advantage
Plans are a good option for some, but for many, original
Medicare remains a better choice for them.
My testimony today makes two key points about the MA
program that I hope will inform your debate. First, the MA
Program has been made more attractive to beneficiaries through
benefits and protections contained in the Affordable Care Act.
Second, the MA Program continues to be stable and strong.
There is rising enrollment and widespread plan availability
with decreases in average plan premiums and no significant
changes in benefits and cost sharing.
There are four significant ways in which the ACA has
brought improvements to the MA Program. First, the ACA's
decreasing reimbursement overpayments to MA plans. According to
Medpac, on average MA Plans were paid 114 percent of cost, more
than original Medicare, or about 1,000 more per enrollee. These
overpayments drove up premiums for all Medicare beneficiaries,
including those who remained in the original Medicare. The
Affordable Care Act brings down these overpayments to level the
playing field between original Medicare and Medicare Advantage.
Second, the ACA enhanced coverage and reduced costs for
certain types of preventive care which are now available to
both people in Medicare Advantage and in original Medicare.
Third, the ACA prohibited MA Plans from charging higher
cost sharing for services used by sicker beneficiaries,
including renal dialysis, chemotherapy, and skilled nursing
care. Once again, these reforms leveled the playing field
between the MA Program and original Medicare, but also among
the MA plans themselves, lessening their ability to cherry-
pick, select healthier, not select not so healthy enrollees.
Four, and finally, the Act mandated a medical loss ratio,
requiring that Medicare Advantage Plans spend 85 percent of
premiums on care, not on administrative costs or profits.
With these changes under the ACA, the MA Program remains
stable and shows improvement by five different indicators.
First, Medicare itself is on a stronger financial footing.
Improved efficiency in the MA Program translates into tangible
savings for all people with Medicare. This year the Part B
premium paid by both people with original Medicare as well as
those with Medicare Advantage remains at 2013 levels, at
$104.90 per month.
Second, Medicare Advantage enrollment is at an all-time
high, with nearly 16 million enrollees, and CBO projects future
growth at a healthy clip.
Third, plan choice remains strong. In 2014, the average
beneficiary has a choice of among 18 Medicare Advantage Plans.
Fourth, the premiums have gone down. The average Medicare
Advantage premium was $44 a month in 2010 compared to $35 a
month in 2014.
Fifth, plan benefits and cost sharing remain unaffected.
Covered benefits and cost sharing remain stable from year to
year. There is no evidence of an overall trend towards less
generous benefits.
Even with this success, Congress can and should take steps
to further improve Medicare Advantage, while also preserving
and strengthening original Medicare, for example: By increasing
support for the SHIP Programs. These are the State health
insurance programs which provided free and unbiased counseling
in each State to support seniors and people with disabilities
in their decision making.
Transparency of Medicare Advantage Plan performance can be
enhanced through public release of plan reported data. This is
especially important to see how Medicare Advantage Plans are
managing claim denials or care denials and the appeals of those
denials.
And also by encouraging meaningful variation among plans,
and I stress that, meaningful variation. Congress should
explore further standardizing Medicare Advantage Plan benefits
to help consumers make apples-to-apples comparisons among
plans.
Efforts are also needed to further consolidate plan choices
for consumers so that they can make a meaningful choice to make
sure that they are accessing the right plan for them or they
are looking at Medicare Advantage in contrast to original
Medicare in the correct way.
Once again, thank you for this opportunity to testify
today.
Chairman BRADY. Thank you, Mr. Baker, and thank you for the
testimony from all four witnesses.
[The prepared statement of Mr. Baker follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. The reason we are holding this hearing is
that the Affordable Care Act cut, slashed more than $300
billion out of Medicare Advantage that so many of our seniors
rely upon. Now, the cuts were delayed through various actions.
That is what Mr. Baker's testimony is all about. It did not
happen. I agree. It did not happen because the cuts were
delayed.
Now they are becoming real, and there is no way it will not
have some impact on seniors. The hearing today is to figure out
what will that impact be.
Mr. Book, as you describe in your testimony, the cuts to
Medicare Advantage are becoming real for millions of seniors.
There is no magic bean here. These cuts will land on them. Some
suggest and your testimony said that you would be forced to
spend $3,700 less per senior as a result of these cuts. Some
suggest these simply eliminate inflated profits for Medicare
Advantage Plans or have made them more efficient.
But as we all know, CMS requires MA Plans to bid on
Medicare's guaranteed benefits, A, B, D, as well as
administrative costs. So this is all part of the bid.
So the question to you is: what is the real impact on our
seniors as results from the cuts that really begin next year
for Medicare Advantage?
Dr. BOOK. That $3,700 per senior per month or per enrolled
member is going to have to be made up for by either reductions
in benefits, increased copays, increased premiums. That is
really all there is.
They can restrict provider networks so that there are fewer
physicians seniors can see. Those are about all of the options
they have.
You mentioned profit. The average health care company makes
a profit of about three to five percent on all of their
business, including their commercial and private sector
business, and these cuts are 27 percent. So there is no way
they can make up these cuts just by reducing their profit, even
if they were willing to run profit down to zero. There is
simply not enough room. They are going to have to make
significant, very significant cuts in the benefits they provide
to seniors or increase their prices that seniors pay above what
they can afford.
Chairman BRADY. They have to reduce the benefits.
Dr. BOOK. Right.
Chairman BRADY. Or you have to increase the costs to
seniors.
Dr. BOOK. Right. There is no other room. That is correct.
Chairman BRADY. You do not have a magic bean that you will
be using somehow----
Dr. BOOK. Perhaps one of the physicians here could mention
a magic bean, but I think if we had that we would have used
that already.
Chairman BRADY [continuing]. Yes, I would think so.
Mr. Wing, Dr. Burnich, let us talk about what we know has
already happened. I was around the last time Congress went
after Medicare private plans in the 1997 Balanced Budget Act.
According to the CBO estimates, at the time that law took $97
billion out of the plan. This is three times greater than that.
But I was there when almost two and a half million seniors
lost their plan, some of them in our communities. I remember
taking calls. I remember trying to figure out how we were going
to get them in other plans. I remember how upset they were.
They liked what they had, and there was an uproar.
So much so Congress intervened in 2003 and created new
incentives through Medicare Advantage Plans, resulting in the
successful program we have today. Now with the $300 billion in
cuts, it feels like, as Yogi Berra said, ``It's deja vu all
over again.''
Are we not likely to see similar levels of upset seniors
once they start to feel the pain of these cuts, Mr. Wing, Dr.
Burnich?
Mr. WING. I think the answer is yes. I cannot speak for the
industry, but we submitted our bid for 2015 in the first week
of June, and there will be withdrawals from markets. There will
be withdrawals of products from certain markets.
Chairman BRADY. Withdrawals from markets means there will
be fewer Medicare Advantage Plans offered to fewer seniors.
Mr. WING. I cannot speak for the total industry, but I know
that there is one geographic region where SCAN will be leaving
in 2015 entirely. There are probably four or five counties
where we are withdrawing some of our special need products, and
in virtually all of our markets, we will be increasing what we
ask seniors to pay, especially on the Part D, the Rx benefits.
Chairman BRADY. Sure.
Mr. WING. There will also be slight trimming of the
networks, both in Arizona and California.
Chairman BRADY. They will be able to see fewer doctors,
fewer hospitals, less choice.
Mr. WING. Yes.
Chairman BRADY. And that impact would not be occurring
without these Affordable Care Act cuts?
Mr. WING. You know, we are a not-for-profit, but we need to
have a margin, and right now in 2014 we have a negative margin.
So we love caring for seniors.
Chairman BRADY. Negative margin means your profits are so
large you are actually losing money?
Mr. WING. We are losing money.
Chairman BRADY. Yes. Dr. Burnich.
Dr. BURNICH. So about 1997, I lived through it. I practiced
it in Ohio. It was not pleasant. It was painful for those that
we cared for. It left a bad taste in the physician's mouth.
I think you have to have choice. Narrow networks take away
choice, but it also takes away quality physicians, and I am
here as a physician. I am not here as a health planner, and I
think it is important to offer choice and a broader network so
that there is a broad palate of services.
The programs like AIM would never get off the ground, and
when you look at the expenditures in Medicare, 28 percent of
all CMS dollars are spent in the last year of life, and half of
that is in the last month.
Chairman BRADY. So the plan that targets the most sick and
chronically ill seniors would not have gotten off the ground?
Dr. BURNICH. No, and it will not be sustainable either.
And then the last piece I would say is physicians have to
manage overhead, and at some point those cuts past down to them
through the health plans is they will just disengage, and even
the plans that do exist in counties, they will not be in them.
They will go back to fee-for-volume, and if you recall after
BBA 1997, if you looked at the rate of increase of
expenditures, they plateaued a little bit after 1997, and then
they went up much faster than they did in the previous ten
years.
I think the same thing could occur if you do that now.
Chairman BRADY. You think the impact on seniors will be the
same or greater than the cuts in the Balanced Budget Agreement?
Dr. BURNICH. I do not know, but I know that physicians will
figure out how to cover their overhead by doing more things.
Chairman BRADY. Doing more things, seeking revenue from
other sources?
Dr. BURNICH. They will do more testing. They will do more
invasive procedures. They will do what they did after 1997.
Chairman BRADY. Can I finish with this?
Dr. BURNICH. I hate to say that, but I think----
Chairman BRADY. No, I know. Look. No magic bean here.
Care coordination innovation within Medicare Advantage I
think has been hugely helpful long term for our seniors. What
is the impact of that when you are facing these cuts? Is that a
risk?
Mr. WING. Well, I think the care coordination is very, very
valuable for the population we serve, the dual-eligibles, the
seniors and our C-SNPs, our seniors and our I-SNPs. Every year
we have to do an up-front assessment, an HRA, if you will. We
have to develop a care management plan, a multidiscipline care
management plan, and we love to do the special need plans.
But they are underfunded. So they will be uniquely impacted
with these cuts as opposed to vanilla MAPD program.
Dr. BURNICH [continuing]. So in the 20th Century, a
physician could practice and manage 25 to 30 drugs and a dozen
tests, and now people are living longer. They are more complex.
There are more complex drugs. You need a village of people to
take care of people.
So team-based care is a 21st Century concept, and it is
evolving. Some people call it patient-centered medical home. I
call it team-based care. Those teams are comprised of
individuals such as care managers, nurse practitioners,
sometimes a pharmacist, social worker, behavioral therapist
because these people that are living longer are having much
more complex problems, and physicians by themselves, internists
like myself cannot do it alone, and if they do not have those
teams around them, the patients will go back to falling through
the cracks like they have in the past.
And so I think the members of those teams, those budget
cuts will take those people right out of the program.
Chairman BRADY. Yes. A final point, thank you for the
testimony, all of you. You know, around here if there is a $3
billion cut to Medicare the place goes crazy. We are ending
Medicare as you know it. A $300 billion cut to seniors today,
some say, ``Oh, it is not problem. Nothing is going to
happen.''
There is going to be real impact. It is coming at us soon.
I think seniors need to know what the impact is, and I think
Congress needs to find a way to try to avoid these serious cuts
on our seniors.
Dr. McDermott, you are recognized.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
I asked to have a couple of graphs put up on the monitors
because one of them shows the Medicare Advantage premiums, and
you see that line that starts up high there and goes down and
is flat. That blue line is the premiums of Medicare.
Now, we have had these harbingers of disaster come in here
and tell us that, ``Oh, my God, this is the end of Medicare.
What we have done with these cuts is going to just end Medicare
and it is going to price it out of people's ability.''
But the fact is the premiums have stayed down. Now, the
CBO, if you look at those three lines, the green line is what
CBO projected would happen to MA in terms of enrollment before
the enactment of the law. The red line is what they projected
after it passed, and the blue line, the one that goes up to
almost 15 million, is the fact of what has actually happened.
CBO has not projected correctly on what was going to happen
with MA. All the disaster folks who come out here like
Cassandra telling us it is the end of the world are clearly not
being able to project what is going on.
We have made the cuts. They have already been started in
2011. We have been gradually reducing the amount that Medicare
Advantage Programs are getting. What that does is force doctors
and programs to figure out how to do it more efficiently.
Now, what I am hearing from the three of you is give us
more money. Do you people understand that you came to the wrong
place? These guys are not going to give you more money. They
cannot raise taxes for highways, much less more money for
Medicare. So you are asking for more money. They are not
telling you you are going to get more money. They just want to
scare the old people, and your job is going to be how do you
deal with the money that you are going to get because they are
voting for these cuts.
The Ryan budget has had them in every single time.
Chairman BRADY. Just for the record, I would say no
Republican voted for the Medicare Advantage cuts in the
Affordable Care Act. No Republican voted for it, and this chart
does not recognize that the Administration delayed the cuts, 80
percent of them.
Mr. MCDERMOTT. Mr. Chairman, the Ryan budget uses the
savings from the Affordable Care Act, and you can parse it any
way you want, but you voted for it.
Chairman BRADY. The Ryan budget is not the law today. These
are people who are living under real cuts and real law.
Mr. MCDERMOTT. Right. Mr. Baker, you have listened to this.
Should seniors be worried as we go into this election about
these cuts?
Mr. BAKER. Given the experience that we have had thus far,
I do not think so. In our discussions with plan executives both
in New York State and in other areas of the country, we have
heard that certainly plans are concerned, but they are also
very concerned with keeping market share in their MA products
which they think are profitable and which they think are, you
know, very valuable to their product lines, particularly in an
environment now under the Affordable Care Act where they could
potentially cover someone, you know, cradle to grave, as it
were.
Mr. MCDERMOTT. Are they putting in bids?
I mean, we hear that somebody is pulling out of a market.
So I guess maybe some are, some are not?
Mr. BAKER. Yes. I mean, I think that the experience, once
again, every particular plan is making a decision about whether
or not to increase market share in particular markets, pull in
or pull out, and that is what we have seen consistently over
the course of the history of the Medicare Plus Choice and the
Medicare Advantage Program.
These are private entities that make business decisions
based upon reimbursement and a number of other factors about
whether to enter a particular market or leave a particular
market, and certainly BBA, other reimbursement changes can
affect that behavior, but there is a whole host of other issues
that can be specific to particular plans that have nothing to
do with reimbursement overall.
Mr. MCDERMOTT. Let me ask you one quick question. Are those
plans open so that you can see what they are offering seniors
in their Medicare Advantage?
Mr. BAKER. Open how? I am sorry.
Mr. MCDERMOTT. Open to look at them and see if they are
cutting benefits.
Mr. BAKER. Yes. I mean, we studied plans in New York, and
we have looked at plans across the country, and we have not
seen any significant change in benefits year to year and no
trend in that regard.
Mr. MCDERMOTT. They are making a bid based on the law as it
presently is and the cuts that are being phased in over a
period of time, slowed down by the Administration; they are
making bids on that basis, and they say they can make it?
Mr. BAKER. Many of the plans that I talk to say they can
make it. Many, and I think in the testimony of some of the
witnesses today there are a variety of strategies like looking
for those four and five-star ratings that still bring
significant bonuses to, you know, weather this and also other
efficiencies to bring to bear.
Mr. MCDERMOTT. Thank you.
Chairman BRADY. Thank you.
Just for the record, Mr. Baker, the trends have not changed
because the cuts have not occurred. This hearing is about the
future and the impact on our seniors.
Mr. Johnson is recognized.
Mr. JOHNSON. Thank you, Mr. Chairman.
Mr. Wing, Dr. Burnich and Mr. Book, you know, my district
back home includes Collin County, Texas. That is Dallas and
Plano. My district is about 24 percent Medicare beneficiaries,
and they have opted out of traditional fee-for-service Medicare
and enrolled in Medicare Advantage because there are more
advantages, obviously.
Since Obamacare became law, Medicare Advantage enrollment
has doubled in our county, yet benefits are expected to be cut
over $2,600 per person, and the total number of plans has
already begun to decline.
I wonder if each of you can just explain what cuts mean for
Medicare beneficiaries in my county and in the Nation, and if
these beneficiaries lose access to their Medicare Advantage
Plan, what challenge will they face when they have to re-enroll
in a fee-for-service Medicare, and is that going to work?
Mr. Wing.
Mr. WING. If I may, I will just speak to the SCAN
experience, and SCAN is operational in Arizona, Northern
California, and Southern California.
I do not think the experience in Texas is going to be much
different than in California or Arizona for 2015, 2016, and
2017. We are trying to shoot for a small margin, but no margin,
no mission, and we are being forced to do things we do not want
to do.
We are a not-for-profit. Our whole mission is to improve
the health and independence of our members, but with the cuts
and the changes, we are going to have, as I mentioned, to
withdraw from one geographic market, withdraw products,
especially the special need products that are probably the most
important products of the MA Program because they deal with the
most frail seniors.
But we cannot sustain. They are hard for us to sustain in
good times. With these cuts, in some geographies we are going
to have to withdraw them, and for our core programs, we are
going to have to make some changes, more cost share
participation on the part of the beneficiaries. I think you
will see that in Texas. I think you will see that across the
land.
Mr. JOHNSON. Thank you.
Chairman BRADY. Dr. Burnich.
Dr. BURNICH. I think the biggest concern for me is access
to care for patients, particularly if they get disenrolled from
a Medicare Advantage Plan. Fee-for-service Medicare and primary
care, it is hard to run a practice off of that. You have to
really kind of manage a percentage, if you will, of the
patients. Those patients, if they get disenrolled from an MA
plan, might have trouble getting into a PCP, not to mention we
have a shortage of PCPs.
We have an aging population that is growing. So we are
really putting pressure on access to care.
Mr. JOHNSON. Yes, and do you not see some docs even getting
out of the business?
Dr. BURNICH. Absolutely.
Mr. JOHNSON. That is what I am seeing.
Dr. BURNICH. Yes. I do not think California and Texas are
different there.
Mr. JOHNSON. Yes. Mr. Book.
Dr. BOOK. I think the type of impact is going to be the
same throughout the country. The individual dollar amount of
the impact is going to vary from county to county and State to
State, and the reason for that is the benchmark rates are set
at the county level.
In the past they have been set by a somewhat arbitrary
formula, and now we are just transitioning to a different,
somewhat arbitrary formula. So the difference between the old
rates and the new rates is going to vary from place to place.
So the counties that are hit worst are in Louisiana. The
counties that are hit least are in Montana, on average, but the
types of impacts we are going to see are the same. Everybody is
going to see a reduction in benchmarks. Everybody is going to
see an increase in out-of-pocket spending and/or a reduction in
benefits. It is going to happen everywhere.
You put up that nice chart about what would have happened
if the Affordable Care Act has been implemented, but it was not
implemented. So, of course, the predictions did not come true.
That is kind of like if you say if you jump off a building, you
will hit the ground, but if you say, ``Well, I am not going to
jump off the building yet so I am still fine,'' that does not
really mean that it is okay to jump off a building.
Mr. JOHNSON. I hope we do not go jump off a building.
Mr. Chairman, I am ashamed that this Administration
decimates Medicare, especially Medicare Advantage, to pay for
Obamacare, and while they are playing political games and
covering up these cuts until after the election, Medicare
beneficiaries in my district and around the Nation are losing
benefits and access to their preferred Medicare Advantage
Plans.
So I just want to thank you for holding this hearing, and I
yield back the balance of my time.
Chairman BRADY. Thank you.
Mr. Gerlach, you are recognized.
Mr. GERLACH. Thank you, Mr. Chairman.
I want to start with the premise that Dr. Book made in his
testimony that the average reduction in benefits for 2017
relative to the pre-ACA baseline is going to be over $3,700 per
beneficiary per year, about 27 percent. So if you would, make
that an assumption for the purpose of my question for each of
you.
What do you think that kind of impact is going to have
particularly on the area of the dual-eligibles?
And of course, that varies. The affluence of counties, of
course, varies. The number of dual-eligibles per county varies.
The benchmarks therefore vary.
But in terms of the scope and breadth of your current
activity, recognizing that unique population of the Medicare
patients, the dual-eligibles who tend to be more disadvantaged,
who tend to have more severe health risks, what do you think
the impact of Dr. Book's prognostication would be particularly
with regard to that patient population?
And I would start with you, Mr. Wing.
Mr. WING. Well, thanks. It is a great question.
We have been dealing with the dual-eligibles in California
where they only integrate Medi-Cal and Medicare streams, 27
percent over the next three years. Just take what I said about
what we are doing for 2015 and magnify it by three or four. You
know, these frails, they need a lot more. They are the frailest
of the frail, and to reduce the network and especially when all
of the pilots are counting on past enrollment, but if they lose
the continuity of care with their trusted physician, they are
going to bounce back into Medicare fee-for-service, and that is
going to really cost the system because it is not just going to
be the Medicare dollars that are at risk.
Without a good care management program, they could very
well end up in custodial and long-term care, and when members
typically go into custodial care, typically they do not come
out. And that is not as far as the dignity, the cost of the
system.
So much narrower network which has a corresponding impact
as far as the passive enrollment will go way down. They will
opt back into Medicare fee-for-service, and without the care
management the doctor just talked about, they will probably end
up in institutions and then long-term care.
You talk about a shortsighted strategy. We need more care
management for the more frail populations, whether they are
dually eligible, ESRD, chronically ill. We need more care
management to keep them out of the ERs, to keep them out of the
acute settings, and most importantly for the duals, to keep
them out of custodial care.
Mr. GERLACH. Doctor.
Dr. BURNICH. The primary care physician for most dual-
eligibles in this country is the emergency room, and then they
clog up the emergency room for people who really need the care.
It is not that they do not need the care, but they can be
managed in a lower cost setting.
In those 1,800 patients that are in AIM a day right now, 11
percent of them are dual-eligible, and I can tell you that in a
poor county like Sonoma and Santa Rosa, the residents came to
me and said, ``This is the greatest program because now we do
not have to manage these people in the hospital, and they are
in the hospital for a long time and they take up a lot of
resources and then they get lost to follow-up because they have
no care coordination.''
So that is the concern I have.
Mr. GERLACH. Dr. Book.
Dr. BOOK. I would agree with that, and I would also add
that dual-eligibles get assistance from Medicaid in paying
their fee-for-service copays and, if they are enrolled in
Medicare Advantage, their Medicare Advantage premiums and
copays.
So in addition to getting access to coordinated care
through Medicare Advantage, they also end up saving the States
money because the amount Medicare has to pay to put someone
into a Medicare Advantage program is a lot less than the copays
they would pay if that same person were in fee-for-service.
So if we reduce the Medicare Advantage benchmarks and plans
end up exiting markets and there are fewer MA Plans and they
take fewer patients, we are going to have dual-eligibles who
are transitioning out of Medicare Advantage, losing their
coordinated care, losing the doctors and hospitals that know
them and that they know, and in addition, costing the Medicaid
Program more money.
So if we cut the program we do not actually save the money.
We just put it somewhere else.
Mr. GERLACH. Mr. Baker.
Mr. BAKER. I think it is important to note that the
Affordable Care Act has made significant investments in dual-
eligibles through demonstration projects, and those are getting
underway now. I think certainly we all agree that there needs
to be better care coordination for this population which is
very vulnerable, and that needs to occur across the board, both
in MA but also in the fee-for-service program through either
these demonstration projects or through things like accountable
care organizations or other efforts that the ACA has put
forward so that really they are available to all people with
Medicare, not just people on Medicare Advantage.
Mr. GERLACH. Thank you all for your testimony.
Chairman.
Chairman BRADY. Thank you.
Mr. Blumenauer is recognized.
Mr. BLUMENAUER. Thank you very much, Mr. Chairman, and I
appreciate being able to have a little deeper dive on some of
the impacts of Medicare Advantage.
I think my community has the highest penetration of
Medicare Advantage in the country, or close to it, and so I
have been following this closely.
Part of the issue is that there is an opportunity to coax
more value. There are some extraordinarily high cost areas
around the country. We kind of think we are a little
discriminated against in our community. We have pretty high
value outputs, low costs, and we see these things scattered
around the country. So I think there is nationally an
opportunity to extract more value, and we ought to do it
carefully, and I appreciate the admonition from some of our
witnesses.
One of the areas, however, in terms of coaxing more value
out of managed care, I think, is an opportunity to deal with
value-based insurance design, and rather than quack on, my
friend and colleague, Congresswoman Black, I am looking forward
to working with her co-sponsoring legislation, but since she is
the lead co-sponsor, I would like to yield if I could to her
because she is a little further down the line and may need more
time, if you would care to comment or ask questions.
Mrs. BLACK. Well, thank you, Mr. Blumenauer.
I am so delighted that we are working together on this
concept because this is one that I believe down the road is
going to show us real benefit. Having been a nurse for 40
years, I know specifically in nursing if we can get someone,
particularly those who have chronic conditions like diabetes
and cardiovascular disease, if we can get them to stay on their
regimen, they are going to be a lot more healthy. They are
going to save costs in the long run and quality of care for
them is certainly going to be better.
So this bill that we have together, and we have just filed
it, is H.R. 5183, and it would incentivize the insurance
companies. It would set up a demonstration project to
incentivize the insurance companies to use those kinds of
mechanisms that would give incentives to the patients for them
to make sure that they are using what we know will make them
healthy.
For instance, if you are diabetic, there would either be
low copays or no copays on things such as insulin. Maybe there
would be no cost to go and see your primary care doctor for
things like foot mapping and so on that we know already proven
to keep people healthy.
So I am delighted that we are able to have this bill
together, and I hope that it will pass so we can get this
demonstration project, show that it does work, and then roll it
out all across this country.
So, Mr. Blumenauer, I will yield back to you so that you
can ask whatever questions of the witnesses.
Mr. BLUMENAUER. I think it is important for us to be able
to push. One of the things that I like about the Affordable
Care Act is that there were a number of pilot projects. There
are tests because we are going to be in the middle of health
care reform for the next decade, but I think this is an
opportunity to provide the right sort of incentives for
patients, doing it on a couple of pilot projects, a couple of
plans, to be able to see what works and what does not.
I know there are some people who have some concerns. They
want to make sure that it is done appropriately, and I think we
can do that.
So I am looking forward to the rollout of the bill. I hope
that this might be on the list that I have talked to the
chairman about, but I think there are a variety of areas that
we ought to be able to agree that have nothing to do with
Obamacare. These are things that we can move forward on.
Mr. Gerlach has a proposal that I think has great merit. I
have been working with Dr. Poe on the end of life care, with
some 50 bipartisan co-sponsors.
I would hope, Mr. Chairman, that there would be an
opportunity for us to have hearings on things that we are not
necessarily going to be hearing about on the Sunday talk shows,
but could make a difference, and I think this is an example. I
look forward to working with my colleague, and I hope we can
bring it back before the committee for further discussion.
Thank you, and I yield back.
Chairman BRADY. Thank you, Mr. Blumenauer.
Dr. Price is recognized.
Mr. PRICE. Thank you, Mr. Chairman, and I want to thank you
for holding this hearing, and thank the witnesses.
I think it is incredibly important that we focus on what is
going to happen. We know what has happened to date, and many of
us differ on what the effect of that has been regarding the
Obamacare/ACA.
I do want to touch on something that Dr. McDermott said
though because it is important for the witnesses to know. It is
important for the folks in this room to know. It is important
for the people across this country to know that no Republican
voted for these cuts to MA, not one, not one in the House, not
one in the Senate. And my friend from Washington State talks
about them being included in the budget. The budget is required
when we pass a budget; we are required to assume current law.
That is where we start. And so what we do is take the money
that has been stolen and raided from Medicare and put it back
into Medicare. That is how we secure, save, and strengthen
Medicare. So it is important that we set the record straight on
that.
Dr. Book, I want to touch on this star rating program and
dive a little deeper on it. This is a program that as I
understand was put in place by CMS to allow beneficiaries to be
able to tell different things about plans and compare the
plans. Yet it has now morphed into a program where Medicare,
where CMS uses it to provide payments.
Dr. BOOK. Right. That is correct.
Mr. PRICE. Does that make any sense at all?
Dr. BOOK. Well, not as the program is currently
constituted, no. Originally the idea was that CMS would help
Medicare beneficiaries to choose an MA plan by giving ratings
based on their criteria, and if a beneficiary wanted to use
those criteria to choose their plan, they could, and if they
wanted to go and investigate on their own and call up a plan
and see what doctors do you cover and what services do you
cover, they could ignore the star ratings if they wanted to and
make their own decision.
That makes sense. I think that is fine.
Mr. PRICE. That makes some sense.
Dr. BOOK. But once you take that system and use it to make
payments, you are adjusting the benefits that eh plans can
offer, and you are saying to a senior whose criteria are
different from that of the bureaucrats in CMS----
Mr. PRICE. Right.
Dr. BOOK [continuing]. ``If you like a different plan, you
are going to have to pay more and accept lower benefits if your
criteria are different from the bureaucrats' criteria.''
I think that undermines the goal of patient choice, which
was one of the goals of having Medicare Advantage in the first
place.
Mr. PRICE. Right. We would agree. This is another
Washington knows best.
Dr. BOOK. Yes, exactly.
Mr. PRICE. We know what is best for you as a patient.
Dr. BOOK. And from what I understand, CMS instituted the
star rating program on its own just as a way of helping
seniors, and then later it was incorporated by the Affordable
Care Act, assuming it would continue to exist and saying,
``Okay. Now, pay people that way.''
Mr. PRICE. That is my understanding as well.
Dr. BOOK. Yes.
Mr. PRICE. Now, in your testimony you talk about some
perverse incentives, some disincentives in the star rating
program for having docs care for the sickest patients out
there, the ones with the highest comorbidities, the ones with
the greatest health challenges.
Can you expand on that?
Dr. BOOK. So some of the criteria give negative ratings to
plan if certain things happen, and a plan could game the system
by treating, you know, a healthier mix of patients, and we
really do not want that. Really the people who need the
treatment are the sickest patients.
If you set up a criteria that says, you know, how many
people achieved some certain benchmark without adjusting for
how healthy or unhealthy they were when they came to see you,
then, you know, we are not really being fair to the doctors. We
are saying we are going to penalize you if you take care of the
hardest cases, and I think that is the opposite of what we
ought to be incentivizing.
Mr. PRICE. One of the huge challenges that we have is to
try to incentivize physicians to continue in practice. Mr.
Johnson mentioned docs fleeing practice. As a former practicing
physician I hear from my former colleagues all the time. Many
of them are just looking for the exit doors because of these
kinds of rules and regulatory oppression that they are working
under right now.
Dr. BOOK. This exists also in the fee-for-service system.
There is this notion of pay for performance where you pay
doctors for doing, you know, what they call evidence-based
care. What it really is is they have a list of things that you
are supposed to do for a patient with a particular diagnosis,
and if you check all of these boxes, you get more money.
So, for example, you are supposed to tell everyone who has
had a heart attack to take aspirin. Well, that is great for
most patients, but what if the guy is allergic to aspirin?
Mr. PRICE. Yes.
Dr. BOOK. If you get patients who are allergic to aspirin,
are they going to pay you less?
Mr. PRICE. Yes. It is again Washington knows best.
I want to touch very quickly on this $3,700, Mr. Wing,
because you mentioned your margin was two to three percent, as
I recall.
Mr. WING. I have no margin. I will lose money in 2014.
Mr. PRICE. So if what Mr. Book says is correct and that is
that payments are going to go down from the Federal Government
per patient $3,700 a year, what happens to your model?
Mr. WING. Well, we have levers, and first I have to become
more efficient. We spent $40 million on a new IT system that
should be implemented----
Mr. PRICE. Can you absorb $3,700 per patient?
Mr. WING [continuing]. No, not without extraneous changes.
Mr. PRICE. Thank you.
Mr. WING. Thank you.
Chairman BRADY. Mr. Smith is recognized for five minutes.
Mr. SMITH. Thank you, Mr. Chairman.
And thank you to our witnesses as well.
The chart that we saw earlier is very interesting, and
certainly it is enlightening in terms of the trends they
indicate. I am sure you saw the chart as well. Mr. Book, now
the cuts would take place in 2015; is that correct?
Dr. BOOK. We already have published rates for 2015 that
incorporate those cuts, yes. The specific rates are published
one year at a time. So we have seen the first year of cuts
already.
Mr. SMITH. So are we going to see some different trends
from the lines in this graph?
Dr. BOOK. I believe so, yea. In fact, as my colleague
mentioned, they are already withdrawing from one geographic
area, and that is one plan sponsor withdrawing from one area. I
think we are going to see more withdrawals and more increases
in premiums.
Again, this year the change from last year is only three
percent, but that is because the Affordable Care Act's cuts for
last year were offset by regulatory action. So the transition
from 2014 to 2015 is going to be less than it would have been
before.
Once you start moving forward, we are going to see
substantial changes unless there is some other action that
causes the Affordable Care Act not to be implemented.
Mr. SMITH. Mr. Baker, do you believe that these trends can
continue with the impending changes?
Mr. BAKER. Well, certainly recent projections by the CBO
continue to indicate that there will be rising enrollment in
Medicare Advantage and that the initial projections and the CBO
took into account these changes in reimbursement methodology,
that there will continue to be different projections, better
projections about ongoing enrollment in Medicare Advantage.
So it does look like plans will be able to absorb these
cuts. They will be able to innovate around and----
Mr. SMITH. Well, how long do you think they can absorb and
just kind of continue amidst many of these conditions?
My concern is overall that health care professionals are
frustrated. They do not like the view of the future. It
concerns me greatly, especially as a representative of a part
of rural America, that health care providers, when I hear from
them, they are just discouraging young people, especially
family members, from going into health care, and this is
because of the Federal Government making such a bureaucracy of
health care.
And I am very concerned about such a reduction in
providers. It is already difficult to find providers in rural
America, and it stands to get much worse, and lack of providers
means less competition in urban areas and less mere access in
rural areas.
We see that there will likely be disproportionate impact to
Medicare Advantage choices in rural America. Mr. Book, can you
elaborate on that perhaps?
Is it correct that there would be a disproportionate
reduction of choices in rural America?
Dr. BOOK. I have not looked specifically at the rural-urban
distinction, but if you want, I can get back to you on that
later.
In general, some of the rural counties had upward
adjustments in their benchmarks prior to the ACA. That
indicates they might be hit harder, but I would have to check
the numbers to be sure.
Mr. SMITH. Okay. I would appreciate any further information
on that.
Dr. BOOK. I can do that, yes.
Mr. SMITH. I am very concerned about the frustration that
this is causing across health care, and that this would
actually lead to----
Dr. BOOK. There is an extra bonus in the Affordable Care
Act for certain types of urban areas. There is a set of
demographic criteria for what counts as a qualifying county. It
does not include every urban area, but it does include any
rural area. Again, I would have to look at numbers to be sure,
but I would not be surprised if it turns out that rural areas
are harder hit.
Mr. SMITH [continuing]. Okay. Thank you, Mr. Chairman. I
yield back.
Chairman BRADY. Thank you.
Mr. Thompson, you are recognized.
Mr. THOMPSON. Thank you, Mr. Chairman.
Thank you to all of the witnesses for being here.
Mr. Wing, I want to circle back on what the gentleman from
Georgia questioned about, and that is the star program. You are
a four and a half star program.
Mr. WING. Yes, sir.
Mr. THOMPSON. I am interested to know if the quality has
improved because of the star program and to get your input on
this, give you a chance to respond to the issue of star.
Mr. WING. Thank you.
For five years prior to my being at SCAN, I was the Chief
Operating Officer for HealthCare Partners, which has big
operations in California and Nevada and Florida. There was a
sea change event with the stars. When you start having
incentives for quality and there are benchmarks where we can
compare plans versus plans, providers versus providers, you can
start having really robust conversations about how do you
improve best practices, and that is what we are doing with our
provider integration.
We bring these 14 groups together, and we do not hide the
data. They have an economic incentive to group quality. They
know who is best at each one of those 50 metrics, and then we
have the physicians from those 14 groups share how do they get
this best practice.
I think we may debate this, but for my 30 years of being in
health care, we now have a standard, and it has caused a sea
change event amongst the providers that I deal with in Arizona
and California to really focus on quality. And I would say
there is some debate as far as are the metrics all the right
metrics, but it does deal with patient satisfaction. It does
deal with medication adherence, which does reduce cost long
term.
It is not perfect, but I applaud the stars program.
Mr. THOMPSON. Dr. Burnich, do you support the ACA's effort
to create payment parity between the MA plans and fee-for-
service?
Dr. BURNICH. Based on the demographics of the current
patients that are in MA, no, because they are a sicker
population that choose MA at least at this point. It is not
apples and apples. The sicker patients pick MA, and you need
more resources, which means you need more revenue to manage
them.
Mr. THOMPSON. Mr. Baker, same question.
Mr. BAKER [continuing]. I think, you know, the solution
there is increasing and better risk adjustment for those folks
rather than across the board subsidies or overpayments to
Medicare Advantage Plans.
Once again, we look to the dual eligible special
demonstration projects and others where risk adjustment
certainly is a challenge, but you know, we cannot make the
perfect the enemy of the good and need to keep on that
continuum.
I think also the same holds true with the special needs
plans. Rather than across the board and saying to plan, you
know, ``Here is a pot of money. Allocate it as you will or
cross-subsidize your product lines,'' but rather in those
product lines making sure that Medicare is paying the right
reimbursement for the right payments, given their risk of
incurring cost, and of course, those that are more vulnerable
and sicker are going to have a higher risk and so there should
be higher reimbursement for those folks and less reimbursement,
in turn, for those that are healthier or, as was said earlier,
going to the gym through the gym membership.
So that balance is always difficult to strike, and many
plans are striking it on their own, and I think they have a
partner now in CMS and trying to strike it, although, you know,
there are going to be bumps along the way.
Mr. THOMPSON. Mr. Baker, to continue, if you could list
three or four top ways that we could improve the MA program,
what would be on your list?
Mr. BAKER. Well, I think, you know, better risk adjustment
would be one of those, and continuing to enhance the star
rating program and making sure that, you know, it is reflective
of what consumers need to know. I think continuing to simplify
and standardize plan products.
You know there has been a lot of talk about choice here,
but we find that consumers are paralyzed even by, say, ten or
15 plan choices. So you know, with the average consumer now
having 18 plans we just find that they are not able to kind of
make an intelligent choice because they are not having apples
to apples comparisons. So further work there on simplification.
And then finally, some work on midyear provider changes.
There have been some midyear provider changes that have really
bumped people out of providers, and they are stuck in an MA
plan where their provider no longer is contracting with. So
that is another issue that we would like to work on.
Mr. THOMPSON. Thank you.
Chairman BRADY. Thank you.
Mr. Roskam.
Mr. ROSKAM. Thank you, Mr. Chairman.
You know, one of the interesting things about sitting up
here and watching you as you are watching us is watching your
faces as each one is giving different testimony, and I think it
would be a very interesting thing to do color commentary of
congressional hearings because when Mr. Baker made the
assertion that there is no evidence of trend toward less
generous benefits and then sort of following that on with the
inquiry from Dr. Price about the ability to absorb $3,700 and
so forth, I just was looking at Mr. Wing. The expression that I
saw, and these are my words and not your words, ``Absorb
what?'' You know, like how much more capacity can you absorb?
So, Mr. Wing, my question is not to weigh in on my color
commentary of congressional testimony, but that is to give some
more insight. What I have heard today described are various
levers, various tools that are pretty uniform across the
witnesses. That is here is how this works. You can do higher
costs. You can reduce benefits. You can shrink choices. You
said we can vertically integrate and drive savings and so
forth, but you also said something that I found interesting,
and I did not quite pick it up.
Did you say that people with special needs are going to be
uniquely impacted? Was it special needs or another word?
Mr. WING. It is special needs, frail populations, seniors
with multiple chronic conditions, the duals. You know, when I
take a look at our data, 14 percent of our members with five or
more chronic conditions consume more than half of our in-
patient confinements, and so accelerating the risk adjustment
for the chronically ill as Medpac says, the risk adjustment for
chronically ill members is not where it needs to be.
So economic incentives, we love taking care of the frail
and the chronically ill, but the rest of the industry may not,
and they have an economic incentive not to, and that is where
we need to focus our efforts. The Medicare chart book says 62
percent of seniors with multiple chronic conditions were 92
percent of the total Medicare spent.
We have to be very careful about what we do, especially the
impact to those seniors who have got four, five or six or more
chronic conditions, and of those, if I may, 50 percent or more
of them have got heart disease, which is probably not a
surprise. Fifty percent or more have diabetes, which is not a
surprise, but 50 percent of them or more are depressed, and
they are probably depressed because they are so sick and they
are not getting everything they need.
Mr. ROSKAM. So this trend, to pick up on one of the
examples that Dr. Burnich used, you talked about trying to deal
with the grandmother who is probably like Mr. Wing is
describing. The grandmother who wants to go to her
granddaughter's graduation, that type of patient with this
cumulative nature of a lot of difficulties or special needs is
going to be uniquely impacted, uniquely negatively impacted or
hurt by this. Is that fair enough?
Dr. BURNICH. Yes.
Mr. WING. Yes.
Mr. ROSKAM. I yield back.
Chairman BRADY. Thank you.
Mr. Buchanan is recognized.
Mr. BUCHANAN. Thank you, Mr. Chairman.
I want to thank all of our witnesses for taking the time
today.
I am personally very concerned. In my district in Florida,
my congressional district, we have over 54,000 on Medicare
Advantage. In Florida alone, it is 1.4 million, over that, in
Medicare Advantage. The State is growing back now at three,
400,000 people a year. I talked to a lot of medical providers,
a lot of our doctors. Everybody is disillusioned with where we
are at, and when you think about 10,000 a day turning 65 for
the next 30 years, 400,000, a lot of them are coming to
Florida. So I am very, very concerned about these cuts and the
impact it will have on our seniors, especially when you look
out over quite a few years.
Mr. Book, I wanted to ask you as it relates to the next
year, what are the cuts and benefits anticipated that you
mentioned earlier?
Dr. BOOK. Each Medicare Advantage Plan has a number of
levers they can pull. They can increase premiums to patients.
They can reduce copays or they can reduce benefits or they can
narrow their networks.
Mr. BUCHANAN. Is there a percentage or a number?
Dr. BOOK. I do not have that.
Mr. BUCHANAN. Have you heard that number?
Dr. BOOK. I do not have specific numbers on what plans are
actually doing. We can look that up and get back to you on that
I am sure.
Mr. BUCHANAN. The bigger issue, looking down the road,
because a lot of seniors might be 67, we have a lot of people
staying active to 90.
Dr. BOOK. Right.
Mr. BUCHANAN. One of the things I am concerned at is
looking over ten years, the Congressional Budget Office is
saying over 300 billion in cuts. What is the impact to the
providers and to our seniors, you know, all over the country,
but especially in Florida with $300 billion in cuts?
Dr. BOOK. So that is cumulative cuts over ten years.
Starting in 2017, that is going to be about $3,700 per patient
on average. It is going to vary from place to place. You know,
we have specific numbers for each country that I can share with
you. The money has to come from somewhere. The only place it
can come from is cutting benefits or making seniors pay more.
Those are the only two choices. If you cut benefits, you know,
they are not allowed to cut, you know, the most basic health
care benefits, but they can cut everything else that they add
on top of that.
So, for example, if you cut coordinated care or if you cut
preventive care that is not affected by the preventive care
mandate, you might end up increasing people's need for health
care down the road. You might end up cutting one particular
category but making you worse off.
Mr. BUCHANAN. Let me just move on.
Dr. Burnich, do you want to comment on that, the $300
billion in cuts over the next ten years, the impact? Let us say
the medical community, the providers, I can just tell you a lot
of people in our area are very disillusioned. A lot of doctors
with practices for 30 years are being consolidated by
hospitals. I am very concerned with the need going forward,
with the anticipated cuts, but I would like to get it from your
perspective.
Dr. BURNICH. It will diminish, as I said before, access.
There will not be physicians to see unless they do concierge
medicine where you pay an annual fee out of your own pocket.
But this cohort of patients does not have that kind of money.
So I do not see that it is sustainable.
The only place other than cutting benefits or increasing
premiums to accessing real dollars is in the last six months of
life, and it is in the very last month of life is where we
spend all the money.
In our AIM Program, there is probably 30 percent that are
Hospice eligible, but they choose not to go into Hospice for
various reasons, emotional. They are not ready there yet, but
when we get them to go into this program, and I cannot talk to
you about the dollars yet because I am bound by CMMI not to do
so, but they are significant, and I think they are significant
enough at least in this populations, not all the MA lives, to
provide some real savings to minimize those cuts.
Mr. BUCHANAN. One other question. My time is running out.
Mr. Book, can you comment? We are seeing terminations in
Medicare Advantage in our region. Is that because of the ACA or
do you know?
Dr. BOOK. It is quite likely that it is. When payments are
reduced, if a health plan does not think that they can attract
patients and serve them well with the level of payment they are
going to get, then they might just withdraw from the market
instead of having a bunch of unsatisfied patients they cannot
take proper care of.
Mr. BUCHANAN. That is what I am hearing.
Thank you, and I yield back.
Chairman BRADY. Thank you.
Mrs. Black, thank you for joining us today. You are
recognized.
Mrs. BLACK. Thank you, Mr. Chairman, and thank you again
for allowing me to sit in as a non-member. I am so interested
in these issues, and I really appreciate your allowing me to be
here.
I want to go back to the idea that Congressman Blumenauer
talked about in the bill that we have to have a demonstration
project, and I am just convinced that we need to look at this
and make sure that it is what we have seen in our work, but to
actually have the study to show that it does work.
So probably, Dr. Burnich, I would like to have you talk a
little bit about what your thoughts are on such programs since
you have had an innovation grant, which I understand was
initiated under MA. So if you could talk a little bit about
whether you think this is something that is important.
Dr. BURNICH. I think any time we can focus on value and
setting value, i.e., decreasing cost and improving quality by
whatever method is the right directional approach, and I think
that is what I gleaned from wherever you were headed.
Then it becomes so what costs are we talking about. That is
where, you know, you get into the nitty-gritty, and that was
the only piece I did not understand about what you were saying
with your bill.
Mrs. BLACK. Well, the idea of this is to show that if we
are able to incentivize people to use the kinds of care that
the physician recommends, that they are going to have a better
outcome, therefore less admissions to the hospital especially
for our diabetic patients and our cardiac, as you have already
talked about. If we can keep them on a regime, we know that
they are going to use less services and the quality of life is
going to be better.
Mr. Wing, would you like to weigh in on that as well since
you are a care provider.
Mr. WING. You know, I think anything we can do with the
system, with the providers, with the members to be more
compliant with proven prevention that is going to reduce system
cost and reduce and improve quality, like medication adherence
for hypertensives, for diabetes, I applaud.
Mrs. BLACK. Mr. Book, do you have a thought on it as well?
Dr. BOOK. I admit I have not seen the bill yet, but it
sounds like a good idea. One thing I would add is we talk about
value based medicine. The fees in the fee-for-service system
are not set based on value to the patient. In fact, they are
based on a rather crude estimate of cost, and they specifically
exclude any consideration of value to the patient.
So by definition they pay more for a high cost, low value
service than a low cost, high value service, and I think that
is one thing that drives up cost in the fee-for-service system
and also drives patients and physicians away from low cost,
high value services. It might be better for everybody if they
did not have these perverse incentives caused by the fee-for-
service pricing system.
Mrs. BLACK. I think you are making the point for my concept
here.
I want to go back to the risk adjustment model. I know we
have talked a lot about that, but I would like to know, and
especially from you, Mr. Wing, and probably you, Dr. Burnich,
as well, what you seek. Obviously we do have to take a look at
these frail patients and make sure that we are reimbursing for
the true care and the nature of taking care of that patient,
but can you give me an idea about long term, what you think we
should do about proper payment to be sure that we are taking
care of these patients adequately and also making sure that we
are reimbursing the care providers for the services that are
provided?
Mr. Wing.
Mr. WING. Sure. Well, I think that one of our first
recommendations, and it is from Medpac. Mark Miller
consistently talks about the slowness of the HCC model to
correctly and accurately address members with chronic
illnesses, and if we take a look at what is ailing America, it
is seniors with multiple chronic conditions.
So I did a survey about the large national plans to just
take a look at why are they not investing or are they investing
in C-SNPs like SCAN, and they are all fine companies, but if
you take a look at United or the Humanas, the WellPoints, the
Signas, there is only one that has close to five percent of
their membership, and this is as of March of this year, that
are in chronic special needs plans, and that is United who
bought XLHealth a couple of years ago.
I believe most of these plans are publicly traded. They are
really smart people, but the economic incentives, because of
the slowness of the agency model for chronically ill members is
this is not good business.
We need an agency model to encourage all of us to go after
those seniors with two, three, four, five, six or more chronic
illnesses. That is where the 92 percent of the spending is.
Mrs. BLACK. Doctor?
Dr. BURNICH. I would agree with those statements.
The other thing, aside from risk is really understanding
outcomes. You know, what is the output of the decisions and
procedures and testing that are done by physicians with
patients?
And our industry as a whole is very poor at longitudinal
outcomes. We track more process metrics than anything. So when
somebody gets coronary artery bypass grafting, do we know that
it really gave them a better quality of life for the next X
number of years or did they really live longer?
You know, one thing that I think has gotten abused, and
there is literate to support it, was all of the stenting of
patients. I actually got called down to the OR one day by my
old chief resident who was the Chief of Surgery. He had the
patient's chest open, and he said, ``Jeff, take a look.''
And I thought, you know, he was asking me one of these
trick questions. He said what do I see, and I could not
distinguish the coronary anatomy because there were 27 metal
stents in this patient. So you know, that kind of overuse and
abuse, we are not tracking that, and we have really got to get
transparent with the output of what physicians do.
Mrs. BLACK. Absolutely. Transparency is a big part of this.
Thank you again, Mr. Chairman.
Chairman BRADY. Thank you.
I want to thank all of our witnesses for expert testimony
today and for the detailed discussion of the current status and
future of private health plans and Medicare.
Clearly significant cuts are on the horizon for the
Medicare Advantage Program in 2015 and beyond, as Mr. Book
analyzed, $3,700 per senior by 2017. Seniors have a right to be
concerned about what will happen to the health care plan they
depend upon?
I just remind any member wishing to submit a question for
the record will have 14 days to do so, and if any questions are
submitted to the witnesses, I ask that you respond in a timely
manner.
With that, this Subcommittee--yes, sir.
Mr. MCDERMOTT. May I ask unanimous consent to enter in the
record a GAO study entitled ``Medicare Advantage Specialty
Needs Plans Are More Profitable on Average Than Plans Available
to All Beneficiaries,'' an article from the paper which says,
``Despite cuts, Medicare Advantage enrollment ensures stocks
still surging,'' and three articles that say ``Paul Ryan budget
keeps Obama Medicare cuts Full Stop'' from the Washington Post.
Thank you, Mr. Chairman.
Chairman BRADY. Since none of them relate to the issue,
they will be inserted as submitted.
[The information follows:]
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Chairman BRADY. With that, the hearing is adjourned.
[Whereupon, at 11:35 a.m., the Subcommittee was adjourned.]
[Submissions for the Record follow:]
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