[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
 SGR: DATA, MEASURES, AND MODELS; BUILDING A FUTURE MEDICARE PHYSICIAN 
                             PAYMENT SYSTEM

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 14, 2013

                               __________

                            Serial No. 113-6


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


                  U.S. GOVERNMENT PRINTING OFFICE
79-793                    WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  

                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               LOIS CAPPS, California
MIKE ROGERS, Michigan                JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania             JIM MATHESON, Utah
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
PHIL GINGREY, Georgia                G.K. BUTTERFIELD, North Carolina
CATHY MCMORRIS RODGERS, Washington   JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
GUS M. BILIRAKIS, Florida            HENRY A. WAXMAN, California (ex 
RENEE L. ELLMERS, North Carolina         officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     4
    Prepared statement...........................................     5
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
    Prepared statement...........................................     8

                               Witnesses

Glenn M. Hackbarth, J.D., Chairman, Medicare Payment Advisory 
  Commission.....................................................     9
    Prepared statement...........................................    11
    Answers to submitted questions...............................   182
Harold D. Miller, Executive Director, Center for Healthcare 
  Quality and Payment Reform.....................................    71
    Prepared statement...........................................    74
    Answers to submitted questions...............................   188
Elizabeth Mitchell, CEO, Maine Health Management Coalition.......   100
    Prepared statement...........................................   102
Robert Berenson, M.D., Institute Fellow, Urban Institute.........   124
    Prepared statement...........................................   126
    Answers to submitted questions...............................   194
Cheryl L. Damberg, Ph.D., Senior Policy Researcher, Professor, 
  Pardee Rand Graduate School....................................   139
    Prepared statement...........................................   141

                           Submitted Material

Letter of February 13, 2013, from the National Partnership for 
  Women & Families to the Subcommittee, submitted by Mr. Pallone.   176
Statement of the American Medical Association, submitted by Mr. 
  Pitts..........................................................   178
Statement of the American College of Physicians, submitted by Mr. 
  Pitts..........................................................   181


 SGR: DATA, MEASURES AND MODELS; BUILDING A FUTURE MEDICARE PHYSICIAN 
                             PAYMENT SYSTEM

                              ----------                              


                      THURSDAY, FEBRUARY 14, 2013

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:18 a.m., in 
Room 2123 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Hall, 
Shimkus, Murphy, Gingrey, Lance, Cassidy, Guthrie, Griffith, 
Bilirakis, Ellmers, Upton (ex officio), Pallone, Dingell, 
Engel, Capps, Green, Barrow, Christensen, Castor, Sarbanes, and 
Waxman (ex officio).
    Staff present: Clay Alspach, Chief Counsel, Health; Matt 
Bravo, Professional Staff Member; Steve Ferrara, Health Fellow; 
Julie Goon, Health Policy Advisor; Debbee Hancock, Press 
Secretary; Robert Horne, Professional Staff Member, Health; 
Carly McWilliams, Legislative Clerk; John O'Shea, Senior Policy 
Advisor, Health; Andrew Powaleny, Deputy Press Secretary; Chris 
Sarley, Policy Coordinator, Environment and Economy; Heidi 
Stirrup, Health Policy Coordinator; Alli Corr, Democratic 
Policy Analyst; Amy Hall, Democratic Senior Professional Staff 
Member; Elizabeth Letter, Democratic Assistant Press Secretary; 
and Karen Nelson, Democratic Deputy Committee Staff Director 
for Health.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Pitts. The subcommittee will come to order. The chair 
recognizes himself for 5 minutes for an opening statement.
    The background and details of the topic of today's hearing 
are well known to physicians, to this subcommittee, and to most 
health policy analysts. The Sustainable Growth Rate, or SGR 
payment system, originated with the Balanced Budget Act of 
1997. At that time, the intent of the of SGR physician payment 
system, placing controls on Medicare spending through global 
spending targets and fee cuts if the targets were exceeded, 
seemed like a reasonable thing to do. However, within a short 
time, it became apparent that this policy was flawed.
    This subcommittee has had previous hearings that have 
addressed the shortcomings of SGR, including the repeated 
threats to patient access to care, and provider income, and the 
mounting costs of Congressional actions to override the 
scheduled fee cuts. Congress has acted to override these 
statutory cuts on at least 15 occasions, and the cost of these 
overrides has been staggering. The most recent 1-year extension 
override comes at a price of $25.2 billion.
    Furthermore, all the money spent on avoiding cuts to 
physician fees has not gotten us any closer to a payment policy 
that will reimburse physicians for the value rather than the 
volume of services, will pay physicians and other providers 
fairly, and ensure access to high quality health care for all 
Medicare beneficiaries.
    Today's hearing is an attempt to move us closer to that 
goal. This hearing will focus on three themes: data, measures 
and models. In thinking about the proper payment policy, there 
seems to be fairly widespread agreement that certain elements 
are needed to build that system.
    First of all, physicians, payers, and other stakeholders 
need access to reliable data that can be used to improve the 
value of health care. Appropriate measures also need to be 
developed on an ongoing basis to continually assess progress in 
improving the system. In addition, as new and better payment 
and care delivery models are developed, they should be 
incorporated into the Medicare program.
    The witnesses that are here today are well equipped to 
address these areas. I would like to express my thanks to 
today's witnesses who have taken time out of their busy 
schedules to share their expertise with the subcommittee on 
this difficult problem which has confronted the Medicare system 
for more than a decade.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The background and details of the topic of today's hearing 
are well-known to physicians, to this Subcommittee, and to most 
health policy analysts.
    The Sustainable Growth Rate, or SGR payment system, 
originated with the Balanced Budget Act of 1997. At the time, 
the intent of the of SGR physician payment system, placing 
controls on Medicare spending through global spending targets 
and fee cuts if the targets were exceeded, seemed like a 
reasonable thing to do. However, within a short time, it became 
apparent that this policy was flawed.
    This Subcommittee has had previous hearings that have 
addressed the shortcomings of SGR, including the repeated 
threats to patient access to care and provider income, and the 
mounting costs of Congressional actions to override the 
scheduled fee cuts.
    Congress has acted to override these statutory cuts on at 
least 15 occasions and the cost of these overrides has been 
staggering. The most recent one year override comes at a price 
of $25.2 billion.
    Furthermore, all the money spent on avoiding cuts to 
physicians fees has not gotten us any closer to a payment 
policy that will reimburse physicians for the value rather than 
the volume of services, will pay physicians and other providers 
fairly, and ensure access to high quality health care for all 
Medicare beneficiaries.
    Today's hearing is an attempt to move us closer to that 
goal.
    This hearing will focus on three themes: data, measures and 
models.
    In thinking about the proper payment policy, there seems to 
be fairly widespread agreement that certain elements are needed 
to build that system.
    First of all, physicians, payers and other stakeholders 
need access to reliable data that can be used to improve the 
value of health care.
    Appropriate measures also need to be developed on an 
ongoing basis to continually assess progress in improving the 
system.
    In addition, as new and better payment and care delivery 
models are developed, they should be incorporated into the 
Medicare program.
    The witnesses that are here today are well equipped to 
address these areas.
    I would like to express my thanks to today's witnesses who 
have taken time out of their busy schedules to share their 
expertise with the Subcommittee on this difficult problem which 
has confronted the Medicare system for more than a decade.

    Mr. Pitts. Now I would like to recognize the ranking member 
of the Subcommittee on Health, Mr. Pallone, for 5 minutes for 
an opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE JR, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Pitts. I want to commend 
you for holding today's hearing. As our first Health 
Subcommittee of the 113th Congress, I think it sends a strong 
message that fixing the Sustainable Growth Rate system is our 
top priority, and I know it is certainly my top priority.
    So let me just note that I was very encouraged by Chairman 
Upton's remarks yesterday, that it is his goal to put a bill on 
the House Floor before the August recess. I stand ready to work 
with you both to meet that goal, and it is my hope that this 
will be a bipartisan process. But I would be remiss if I didn't 
express my disappointment to see the release of a Republican 
framework by the committee and its Ways and Means counterpart. 
Truthfully, since I understand that there was a commitment to 
working with us on a bipartisan basis, putting out a 
Republican-only framework is somewhat perplexing. With little 
detail, I will refrain from commenting on its substance, so I 
just ask that moving forward, any future products will include 
the input of the Democratic members of the committee.
    Now, we are here again facing yet another year of 
uncertainty in Medicare for physicians and beneficiaries. 
Clearly, we can all agree that the SGR is fundamentally flawed 
and it is creating instability in the program. While the 
formula represented an attempt to minimize unnecessary growth 
in volume of services, it has not only failed to do that, but 
also fails to reward providers for improved quality and 
outcomes. As a result, Congress has spent more than a decade 
overriding arbitrary cuts to physician payments generated by 
this formula with little to show for that other than an ever-
growing budgetary hole. At a time when it is often difficult to 
find bipartisan consensus, this is one area where people on the 
left and the right of the political spectrum have come to 
agreement, and that is that the SGR formula must be repealed 
and replaced.
    But the question that has vexed those us in Congress is how 
best to accomplish that replacement. While no one proposal is 
likely to hold a perfect solution, I believe there are a number 
of elements we should seek to incorporate into a new payment 
model including building on the reforms that are already 
underway in Medicare through the Affordable Care Act.
    First, we have to reward quality. Providers who contribute 
to improved health care outcomes and better quality deserve 
recognition. Second, we must also reward efficiency, delivering 
the right care at the right time in the right setting. Third, 
we must reward collaboration and a patient-centered approach. 
Too often, Medicare is fragmented and a complete view of the 
patient is missing. We need to ensure providers have incentives 
to work together and share information.
    Now, today's hearing will delve into these issues by 
exploring how quality is measured, what data is needed and what 
models will deliver the best results. These components must be 
resolved in order to finally replace the SGR. And so I welcome 
our witnesses here to bring their perspectives to help our 
members evaluate these essential issues.
    I also wanted to say, Mr. Chairman, I don't know how many 
newer members we have today but I do think my feeling is that 
the newer members of the committee on both sides of the aisle 
have a lot to offer with regard to the SGR and looking towards 
the future, and so I hope that we will get a lot of our newer 
members involved in whatever final outcome we come up with, 
because I do think they have a lot to offer.
    I want to close with a fact that I think can't be ignored, 
and that is that SGR repeal is too expensive to pay for with 
Medicare cuts alone, especially when Medicare cuts are being 
considered to reduce the Nation's debt. I have said to my 
colleagues including you, Mr. Chairman, that I really worry 
that every time there need to be some changes, you know, to 
meet the SGR goal or to deal with other health care 
initiatives, it is also assumed that the cuts have to be within 
the health care system, and whether it is Medicare or Medicaid, 
we should not always look to provider cuts within the health 
care system to pay for other provider cuts that have been out 
there. I know we are all delighted to see that the cost of 
repealing the SGR is lower than it has been in years, but we 
are not fools. A hundred and eighty-three billion dollars is 
still a lot of money, and we simply can't find that amount of 
savings from Medicare alone, and that is why I have insisted 
from the beginning that we not only consider savings from 
within the health care system, I believe we can use another 
approach to write off the costs such as an unpaid baseline 
adjustment or the OCO funds. The OCO funds are something I have 
suggested in the past.
    But in any case, the SGR is unsustainable, unreliable and 
unfair, so the question remains, how do we fix it. I hope we 
can begin to truly answer that question after today's hearing 
so that we can provide security and reliability for our seniors 
and our doctors alike.
    I yield back. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman, and I join him 
in welcoming all the new members to the subcommittee including 
on our side Mr. Hall, Mr. Griffith, Ms. Ellmers and Mr. 
Bilirakis.
    At this time the Chair recognizes the chairman of the full 
committee, Mr. Upton, for 5 minutes for an opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman.
    You know, by now we are all too familiar with how the 
current SGR system has caused uncertainty among physicians and 
threatened access to care for our Nation's seniors. 
Unfortunately, this issue was ignored in the Affordable Care 
Act, but continuing to ignore it is no longer an option.
    Yesterday, I had the opportunity to address the AMA, and I 
emphasized our desire to work with physicians and the need for 
input from the medical profession in order to arrive at a 
physician payment policy that will in fact achieve real reform. 
Real reform will mean that doctors no longer have to wonder 
whether they will face substantial fee cuts and that our 
Nation's seniors will not have to wonder whether they will be 
able to see their docs.
    During the last Congress, the Energy and Commerce Committee 
began a bipartisan effort to address the problem that has 
plagued seniors and their physicians for more than a decade. In 
2011, the committee sent a bipartisan letter to more than 50 
physician organizations, soliciting input on how to reform the 
Medicare physician payment system. More than two dozen 
responded with a good number of valuable ideas.
    This subcommittee then held hearings to address the issue, 
and the committee has continued to engage with physicians and 
other stakeholders to formulate a payment policy to solve this 
difficult problem.
    Last week, Ways and Means Chairman Dave Camp and I, along 
with Subcommittee Chairmen Pitts and Brady, as well other 
committee members, announced the release of a proposal to 
finally achieve long-term reform of the current SGR Medicare 
physician payment system. This is a top priority. And as we 
move closer to the goal, I am confident that we can make it a 
bipartisan effort. Today's hearing is another step in that way, 
and I would yield the balance of my time to the vice chair and 
a very important player as we have formulated the draft and 
pursue this issue, Dr. Burgess from Texas.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    By now, we are all too familiar with how the current 
Sustainable Growth Rate system has caused uncertainty among 
physicians and threatened access to care for our nation's 
seniors.
    Unfortunately, this issue was ignored in the Affordable 
Care Act, but continuing to ignore it is no longer an option.
    Yesterday, I had the opportunity to address the American 
Medical Association. I emphasized our desire to work with 
physicians and the need for input from the medical profession 
in order to arrive at a physician payment policy that will 
achieve real reform.
    Real reform will mean that doctors no longer have to wonder 
whether they will face substantial fee cuts and that our 
nation's seniors will not have to wonder whether they will be 
able to see their doctors.
    During the 112th Congress, the Energy and Commerce 
Committee began a bipartisan effort to address this problem 
that has plagued seniors and their physicians for more than a 
decade.
    In 2011, the Committee sent a bipartisan letter to more 
than 50 physician organizations and others, soliciting input on 
how to reform the Medicare physician payment system. More than 
30 groups responded to our letter with a number of valuable 
ideas.
    The Health Subcommittee then held hearings to address this 
issue, and the committee has continued to engage with 
physicians and other stakeholders to formulate a payment policy 
to solve this difficult problem.
    Last week, Ways and Means Chairman Camp and I, along with 
Subcommittee Chairmen Pitts and Brady, as well other committee 
members, announced the release of a proposal to finally achieve 
long-term reform of the current SGR Medicare physician payment 
system. This is a top priority. As we move closer to this goal, 
I am confident that we can make this a bipartisan effort. 
Today's hearing is another step in that process.
    I would like to thank the witnesses for volunteering both 
their time and expertise today and for helping us as we move 
toward a solution to this problem.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Well, I thank the chairman for the 
recognition, and we all know that this Sustainable Growth Rate 
formula, it is an issue whose time has come and should have 
gone long ago. It is unrealistic assumptions of spending and 
efficiency. It has certainly plagued this committee, but 
really, the important thing is, it has been a problem for 
doctors and it has been a real problem for beneficiaries at a 
time when beneficiaries are growing at 10,000 a day.
    It has already been mentioned about the follow-up where our 
two committees share jurisdiction. The framework does build off 
the work done over the past year and a half by the chairman of 
the subcommittee and his staff and has involved collaboration 
from doctors and patient groups all over the country. It should 
be noted, it is not for discriminating between physicians and 
other providers. It does not seek to benefit one form of 
medical practice over another. The framework realizes, there 
are always going to be areas where providers choose or need to 
practice in a fee-for-service for model. It doesn't mean there 
are not better ways to revamp fee-for-service but it does mean 
the fee-for-service may continue to exist.
    Our goal cannot be flexibility in practice models if we do 
not have the ability to quickly evaluate innovative practice 
environments, and if appropriate, build them into future 
options. Innovation for the future is critical and every 
encouraging the reevaluation of adoption of models that adapt 
to changes in best practices and clinical guidelines and the 
technology.
    I will submit the balance of my remarks for the record and 
yield the time to Dr. Gingrey.
    Mr. Gingrey. I thank Mr. Burgess for yielding.
    Mr. Chairman, I am encouraged that Chairman Upton has 
signaled the SGR repeal and replacement will be a chief concern 
for the Energy and Commerce Committee this year. I am excited 
to be here today as it is hopefully the conclusion of a large 
fact-finding mission this subcommittee has undertaken over 
these few years. We began with hearings to address the need for 
action, then to understand past attempts to reform, and now we 
are finally here today to seek how to use data and other 
measures to modernize and improve the Medicare payment system 
as a last step before legislative action.
    As a doctor and as co-chairman of the GOP Doctors Caucus, I 
understand the necessity of these changes, and I look forward 
to seeing the job of reform completed this year, and certainly, 
Mr. Chairman, thank you for calling this hearing, and I yield 
the balance of this time to the gentleman from Louisiana, Dr. 
Cassidy.
    Mr. Cassidy. Thank you, Mr. Gingrey.
    The 113th Congress has a tremendous opportunity and 
obligation to finally eliminate the SGR payment regime, but I 
would say as we discuss and contemplate new and innovative 
payment models, we have to keep in mind that the typical 
Washington solution involves very large bureaucracies, either 
public or private. That said, as a practicing physician, I know 
many of my colleagues are reluctant to give up their smaller 
practice, and if we are going to achieve a quicker reform, we 
must keep that in mind if for no other reason than that is 
reportedly a major cause of physician burnout and early 
retirement. So my office is working on a proposal that would 
allow these physicians to continue to participate in their 
private practice but to have gain-sharing relationships, 
participate in those innovative reforms while retaining the 
independent nature of their current practice, and I would look 
forward to the Democratic side participating in this discussion 
as well because I do think that is a bipartisan concern.
    I look forward to the panel's testimony and discussion, and 
I yield back. Thank you.
    Mr. Pitts. The Chair thanks the gentleman. At this time the 
Chair recognizes the ranking member of the full committee, Mr. 
Waxman, for 5 minutes for an opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you, Mr. Chairman. I guess that is called 
good timing. I was present at another subcommittee hearing 
upstairs and I wanted to get down here as soon as I could. I 
want to thank you for holding this hearing.
    Today's discussion will focus on some of the critical 
questions we must address in redesigning Medicare's physician 
payment system. There is no question about it: Medicare is 
vital to the health of seniors in our country, and physicians 
are a vital part of Medicare, and a critical partner to helping 
us build a health care system that provides better health care 
and improved health for all patients. We know that the payment 
system can drive patient outcomes but, unfortunately, right now 
it is not driving it in the direction of better health and 
value.
    It is clear from this hearing that there is a broad 
consensus on the need to fix this problem, and even consensus 
on which direction we need to move. The question is how to get 
there. The Affordable Care Act provides the foundation for the 
right path forward. Through its support for new delivery and 
payment models like accountable care organizations, bundled 
payments, medical homes and initiatives that boost primary 
care, it moves us in the direction of improved quality, 
efficiency and value. Innovative delivery and payment system 
models are also being developed and implemented by physician 
groups, health systems, regional health improvement 
collaboratives, and private payers, in some cases as private-
public partnerships. We will hear more about these in today's 
hearing. We have the opportunity to leverage payment reform in 
Medicare to support these new delivery and payment models. We 
need to respect and encourage local innovation, but ensure 
accountability for improvement and prudent management.
    Our challenge is to judiciously balance the many competing 
interests in our health care system. I believe that we need to 
approach this discussion with physicians as our partners, but 
we also need to ensure that other health care stakeholders, 
including beneficiaries and non-physician providers, have input 
as well.
    It is no longer acceptable to accept the status quo. It is 
time for us to work together and permanently repeal SGR and put 
in place a truly sustainable system that aligns provider 
payments with quality and ensures that all Americans have 
access to the best care at lower cost.
    I am pleased the chairman is moving forward with this 
hearing early in this Congress, and I am hopeful that we can 
find common ground on a solution for a problem that has been 
calling out for one for a very long time. We shouldn't have 
this SGR threat hanging over us every year with the uncertainty 
it has meant to the physicians in this country, not knowing 
whether Medicare is going to be there for them, which has 
brought about many physicians leaving the Medicare program 
completely, which is a disservice to the beneficiaries of 
Medicare.
    I thank you for the time allotted to me. I will be happy to 
yield whatever period of time I have left to any other member 
that wants me to yield. If not, I will yield back the time.
    [The prepared statement of Mr. Waxman follows:]

               Prepared statement of Hon. Henry A. Waxman

    I would like to thank the Chairman for holding this 
hearing. Today's discussion will focus on some of the critical 
questions we must address in re-designing Medicare's physician 
payment system.
    There is no question about it, Medicare is vital to the 
health of seniors in our country. And physicians are a vital 
part of Medicare, and a critical partner to helping us build a 
health care system that provides better health care and 
improved health for all patients. We know that the payment 
system can drive patient outcomes but, unfortunately, right now 
it is not driving it in the direction of better health and 
value.
    It's clear from this hearing that there is broad consensus 
on the need to fix this problem, and even consensus on which 
direction we need to move. The question is how to get there. 
The Affordable Care Act provides the foundation for the right 
path forward. Through its support for new delivery and payment 
models like accountable care organizations, bundled payments, 
medical homes, and initiatives that boost primary care, it 
moves us in the direction of improved quality, efficiency, and 
value.
    Innovative delivery and payment system models are also 
being developed and implemented by physician groups, health 
systems, regional health improvement collaboratives, and 
private payers, in some cases as private-public partnerships. 
We will hear more about these in today's hearing. We have the 
opportunity to leverage payment reform in Medicare to support 
these new delivery and payment models. We need to respect and 
encourage local innovation, but ensure accountability for 
improvement and prudent management.
    Our challenge is to judiciously balance the many competing 
interests in our health care system. I believe that we need to 
approach this discussion with physicians as our partners, but 
we also need to ensure that other health care stakeholders, 
including beneficiaries and non-physician providers, have input 
as well.
    It is no longer acceptable to accept the status quo. It is 
time for us to work together and permanently repeal SGR and put 
in place a truly sustainable system that aligns provider 
payment with quality and ensures that all Americans have access 
to the best care at lower cost.
    I am glad to see the Chairman moving forward early in this 
Congress, and I am hopeful that we can find common ground on a 
solution.

    Mr. Pitts. All right. The Chair thanks the gentleman.
    We have two panels today. Our first panel will have just 
one witness, Mr. Glenn Hackbarth, chairman of the Medicare 
Payment Advisory Commission. We are happy to have you with us 
today, Mr. Hackbarth, and you are recognized for 5 minutes for 
an opening statement at this time.

   STATEMENT OF GLENN M. HACKBARTH, J.D., CHAIRMAN, MEDICARE 
                  PAYMENT ADVISORY COMMISSION

    Mr. Hackbarth. Chairman Upton, Ranking Member Waxman, 
Subcommittee Chairman Pitts and Ranking Member Pallone, I 
appreciate the opportunity to talk to you today about repeal of 
the Sustainable Growth Rate system for physicians.
    MedPAC, which I chair, first recommended repeal of SGR in 
2001. We recommended repeal at that point because we thought 
that the system would be ineffective in achieving the goal of 
encouraging efficient use of limited resources but also be 
inequitable to physicians inasmuch as any penalties apply 
equally to all physicians without regard to their individual 
performance.
    To those two original concerns, we have now added a third, 
and that is that continuation of SGR poses an increasing risk 
to access to care for Medicare beneficiaries. Although we have 
not yet seen a significant erosion in access at the national 
level, we have all heard about problems with access to care for 
Medicare beneficiaries in particular markets and especially for 
primary care services.
    MedPAC's fear is that those problems could spread rapidly 
if SGR is continued. We have a tight balance between supply and 
demand for services in many markets, again, in particular for 
primary care services, and growing physician frustration and 
anger about SGR means that even small numbers of physicians 
electing to reduce their participation in Medicare could have 
significant effects on access to care for Medicare 
beneficiaries. Now, to be clear, I am not predicting a national 
crisis at this point but we certainly cannot rule it out 
either.
    We have an especially good opportunity, I think, now to 
address the SGR issue. As you well know, CBO has recently 
significantly reduced the budget score attached to repeal of 
SGR. In effect, SGR appeal is now on sale but the sale may not 
last forever. If experience is any guide, projections of this 
sort vary over time. I have been doing this for quite a while 
now, and I have gone through multiple cycles where we had low 
periods of growth followed by acceleration and rapid periods of 
growth, then low periods and then rapid periods again. Right 
now, we are in a low period of growth in utilization of 
services and hence the low score for repeal. I think it is 
important to seize this opportunity.
    Repealing SGR alone is not enough, however. MedPAC 
recommends that the repeal legislation pursue two other goals. 
First is to balance payments within the physician payment 
system with particular focus on increasing payments for 
cognitive services relative to procedures and tests with a 
particular emphasis on improving payment for primary care 
services, and the second objective that we recommend is to 
encourage migration away from fee-for-service to new payment 
models for Medicare.
    The criticism of fee-for-service that one most often hears 
is that fee-for-service has the incentive to increase volume 
without regard to outcomes for patients. That is true. But from 
our perspective, equally important is that fee-for-service 
enables, if not encourages, a fragmentation of care delivery, 
and through its siloed nature actually impedes the free flow of 
resources to where clinicians think they can do the best for 
patients. We believe that a better approach is a payment system 
that decentralizes decisions about what is appropriate care in 
exchange for accountability by clinician and provider 
organizations for outcome and total cost.
    Last point: Moving to these new payment models will take 
time. These are complicated changes to make, both on the 
payment side and on the care delivery side. They should take 
time. For us, that is a reason to begin now and not to delay 
any further. If we delay longer, it means that we will be well 
into the bulge of Baby Boomers retiring in the Medicare program 
and the financial pressures will be heightened, and we believe 
as a result the risk to both physicians and patients will be 
greater.
    With that, Mr. Chairman, I am happy to take your questions.
    [The prepared statement of Mr. Hackbarth follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.001
    
    [GRAPHIC] [TIFF OMITTED] T9793.002
    
    [GRAPHIC] [TIFF OMITTED] T9793.003
    
    [GRAPHIC] [TIFF OMITTED] T9793.004
    
    [GRAPHIC] [TIFF OMITTED] T9793.005
    
    [GRAPHIC] [TIFF OMITTED] T9793.006
    
    [GRAPHIC] [TIFF OMITTED] T9793.007
    
    [GRAPHIC] [TIFF OMITTED] T9793.008
    
    [GRAPHIC] [TIFF OMITTED] T9793.009
    
    [GRAPHIC] [TIFF OMITTED] T9793.010
    
    [GRAPHIC] [TIFF OMITTED] T9793.011
    
    [GRAPHIC] [TIFF OMITTED] T9793.012
    
    [GRAPHIC] [TIFF OMITTED] T9793.013
    
    [GRAPHIC] [TIFF OMITTED] T9793.014
    
    [GRAPHIC] [TIFF OMITTED] T9793.015
    
    [GRAPHIC] [TIFF OMITTED] T9793.016
    
    [GRAPHIC] [TIFF OMITTED] T9793.017
    
    [GRAPHIC] [TIFF OMITTED] T9793.018
    
    [GRAPHIC] [TIFF OMITTED] T9793.019
    
    [GRAPHIC] [TIFF OMITTED] T9793.020
    
    [GRAPHIC] [TIFF OMITTED] T9793.021
    
    [GRAPHIC] [TIFF OMITTED] T9793.022
    
    [GRAPHIC] [TIFF OMITTED] T9793.023
    
    [GRAPHIC] [TIFF OMITTED] T9793.024
    
    [GRAPHIC] [TIFF OMITTED] T9793.025
    
    [GRAPHIC] [TIFF OMITTED] T9793.026
    
    [GRAPHIC] [TIFF OMITTED] T9793.027
    
    [GRAPHIC] [TIFF OMITTED] T9793.028
    
    [GRAPHIC] [TIFF OMITTED] T9793.029
    
    [GRAPHIC] [TIFF OMITTED] T9793.030
    
    [GRAPHIC] [TIFF OMITTED] T9793.031
    
    [GRAPHIC] [TIFF OMITTED] T9793.032
    
    [GRAPHIC] [TIFF OMITTED] T9793.033
    
    [GRAPHIC] [TIFF OMITTED] T9793.034
    
    [GRAPHIC] [TIFF OMITTED] T9793.035
    
    Mr. Pitts. Thank you for your opening statement. Your 
entire written testimony will be made a part of the record. I 
will begin the questioning and recognize myself for 5 minutes 
for that purpose.
    Mr. Hackbarth, in your testimony you state that the array 
of new models for paying physicians and other health 
professionals is unlikely to change dramatically in the next 
few years. Yet you advocate rewarding physicians as they shift 
their practices from open-ended fee-for-service to accountable 
care organizations. Are you suggesting that ACOs are the only 
models that physicians should shift to or should physicians be 
able to choose how they practice from a wide variety of 
options?
    Mr. Hackbarth. A couple points, Mr. Chairman. First of all, 
we focus on ACOs because they are the new model that is already 
a part of the Medicare program. As you know, other models, 
medical homes, bundling around admissions, are being piloted at 
this point. ACOs, however, are the only models that are 
actually operational in the Medicare program.
    The second point I would make is that the ACO model is by 
design a flexible model. It does not dictate a particular form 
of medical practice or a particular way for money to be 
distributed within the ACO among clinicians and other types of 
providers. Let me draw an analogy here. In the Medicare 
Advantage program, we have private insurers enrolling Medicare 
beneficiaries, and they deal with physicians in a lot of 
different practices, some in sole practice, others in small 
groups, others in large multi-specialty groups, and they manage 
to deal with physicians in different settings, often with 
different payment models, depending on the particular location 
and type of practice. ACOs can have the same sort of 
flexibility, the principal difference being that ACOs by design 
are provider-governed organizations as opposed to organizations 
run by insurance companies. So we think that there is every 
possibility for the ACO structure to be a flexible one that 
does accommodate differences in practices and pay physicians in 
different ways, depending on circumstances.
    Mr. Pitts. Now, you suggest that the fee schedule should be 
rebalanced to preserve access to primary care, and one way you 
suggest doing this is by giving a primary care bonus similar to 
the provision in PPACA. However, according to the Association 
of American Medical College's Center for Workforce Studies, 
there will be 45,000 too few primary care physicians but also a 
shortage of 46,000 surgeons and medical specialists in the next 
decade. If the goal is to increase the primary care workforce 
by making primary care more attractive to medical school 
graduates, do you think that a few years of modest payment 
increases will do this, and how does this address the projected 
shortage of specialists?
    Mr. Hackbarth. So let me talk about the steps related to 
primary care first and then come back to other specialties. We 
actually think that there is a series of things that should be 
done to improve payment for primary care and increase the 
likelihood that more young physicians in training choose 
primary care as a career and also that older physicians who are 
nearing retirement continue to practice primary care as opposed 
to elect early retirement. One step is to change how the 
relative value units are calculated in the physician fee 
schedule, and I would be happy to go into detail on any of 
these, if you wish. Second is to add new codes to the physician 
fee schedule to pay explicitly for activities that are not now 
covered like care coordination and management of transitions in 
care. A third is a bonus of the sort that you referred to in 
your question, Mr. Chairman. A fourth is moving to new payment 
models as we are piloting with medical home where part of the 
payment is on a lump-sum-per-patient basis in addition to the 
fee-for-service payment. And then the last thing is graduate 
medical education. There is a lot of talk about shortage of 
physicians and particularly a shortage of primary care 
physicians and the need to increase the number of Medicare-
funded GME slots. If Congress takes up that issue of expanding 
GME funding, we would urge it to look in particular at how 
those physicians are distributed across specialties and ensure 
that an adequate number are devoted to primary care.
    Now, on the issue of other specialties, we are not saying 
that primary care is the only specialty--or the only--certainly 
it is not the only specialty that matters to Medicare patients. 
All of the specialties play an important role in high-quality 
care. We focus on primary care, however, because the evidence 
that we see that a robust system of primary care is especially 
important to a high-performing health care system and so in a 
time of limited resources, we think that that focus on primary 
care is justified based on system performance.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the ranking member of the subcommittee, Mr. Pallone, 
for 5 minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman. I want to follow up 
on what you were discussing there with primary care.
    Mr. Hackbarth, tell me what is the problem in primary care. 
In other words, what kinds of problems are we facing and why 
are we facing this crisis? Just give me a little idea about 
what we face and what is causing it.
    Mr. Hackbarth. Well, I think that there are several 
factors, Mr. Pallone. One is the overall level of compensation. 
As you well know, it is significantly lower than many of the 
subspecialties. In fact, if you look at it on an hourly basis 
under the physician fee schedule, the amount we pay for various 
specialty services is often two or three or more times what we 
pay for primary care services on an hourly basis. So there is a 
significant payment differential there.
    In talking to primary care physicians, though, I often hear 
that that is only a piece of the problem. Another problem is 
that fee-for-service as a method of payment is not really well 
suited to primary care because the fee schedule doesn't 
recognize all of the activities that make primary care 
important for the care delivery system--education of payments 
and ongoing contact with patients, coordination of care and the 
like. And often these days where we have got a relative 
shortage of primary care physicians, the practices are frankly 
overwhelmed with the work they need to do and the number of 
patients they need to see. It is important, therefore, to help 
primary care practices build some of the infrastructure that 
would allow them to better manage larger volumes of patients, 
and that is where the lump-sum payment and the medical home is 
particularly important. It allows practices to hire additional 
staff to work with patients and some of the educational 
activities allow them to build necessary systems and the like. 
So we need to make the job more doable as well as to increase 
the average compensation level.
    Mr. Pallone. All right. Thanks. I wanted to ask about 
physicians who don't fit in delivery models. As you know, there 
is a great deal of diversity in the health care system and 
various specialties and practice patterns, different kinds of 
markets, some dominated by hospitals, some more dominated by 
plurality of provider groups or individual practitioners. How 
do you design a reformed Medicare payment system that works for 
all physicians? In other words, how do we address the 
measurement challenges for a myriad of physicians? Are we 
always going to have some doctors that don't fit into a 
delivery model? Are we always going to have doctors for whom 
the quality measurement system just doesn't work? How should we 
deal with this, essentially?
    Mr. Hackbarth. We may at the end have some physicians that 
are in unique circumstances, for example, very isolated areas 
that we will have to treat as a special case. But as I 
indicated in my response to Chairman Pitts, ideas like the 
accountable care organization, I don't see as rigid models that 
dictate a particular form of physician practice. ACOs as 
defined in the statute and in the regulations are able to 
accommodate different styles of medical practice--solo 
practice, group practice and the like. And in fact, if we look 
around the country in terms of how practices deal with managed 
care organizations. Again, private insurance plans, you see a 
lot of variety. So take a State like California where you have 
got a lot of managed care activity and have for years. Some of 
the physician practices there are large, multi-specialty 
groups, but there are also independent practice associations 
where much smaller practices are hooked together with one 
another for purposes of contracting, sharing resources and the 
like and sharing financial responsibility. So I think that 
there are opportunities for many different styles of practice. 
It is not a one-style-fits-all model in the ACO.
    Mr. Pallone. Can I just ask--my time is limited now, but I 
think Medicare needs to make more data available for 
development of models and care improvement. What is MedPAC's 
view of CMS's current data policies, and is there some way that 
the agency and Congress can encourage more data availability.
    Mr. Hackbarth. Well, I don't consider myself expert, Mr. 
Pallone, on the CMS data systems. Traditionally, it has been a 
struggle for CMS to provide timely data, for example, to 
physicians and in the pilots in the prepaid group practice 
demonstration project. In part, at least, that is a function of 
resources. The agency in our judgment has been chronically 
underfunded. The tasks that it has to carry out are 
increasingly complicated including on the data front and they 
don't get the resources they need to do those jobs well. And I 
think we are paying a price. It reduces the appropriation side 
of the budget but the lack of robust data means that we are 
going to spend more on the entitlement side of the budget.
    Mr. Pallone. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the vice chairman of the subcommittee, Dr. Burgess, for 5 
minutes for questions.
    Mr. Burgess. I thank the chairman for the recognition.
    Mr. Hackbarth, it is good to have you back at the 
committee. You know, the downside of solving the SGR is we 
won't get to have these visits every couple of years, but I 
will actually look forward to that as well. Maybe we will both 
find something better to do with our time.
    You were just talking to Mr. Pallone about models. Could 
you speak for just a minute about what you have learned from 
the study of Medicare Advantage programs? Some, I understand, 
have worked well, even with the constraints of the SGR, others 
maybe not so well. So are there positives that we can take away 
from the Medicare Advantage experience?
    Mr. Hackbarth. There are positives. In fact, some Medicare 
Advantage plans, as you know, perform extremely well on both 
quality of care measures and cost, and among the plans that 
perform well, there are a variety of different models. Some of 
them are the prepaid group practice model like Kaiser 
Permanente but there are other plans that contract with 
independent practices and don't rest entirely on large multi-
specialty groups.
    Mr. Burgess. I would just offer an observation, that it is 
not just the satisfaction of the agencies and the people who 
measure those things but it is also satisfaction of patients 
and satisfaction of physicians, and certainly my experience 
with a group like Scott and Mike down in Temple, Texas, is that 
this has worked reasonably well and it may be something that we 
certainly want to be careful that we don't damage whatever we 
do going forward.
    Can you speak to--everyone this morning is kind of focused 
on the fact that the CBO put SGR on sale so let us buy this 
week while it is low. Can you talk just a little bit about why 
it is low and is there a dark side to it being low right now?
    Mr. Hackbarth. Yes. There are a number of reasons, and 
understanding all of the magic of the CBO estimation process is 
not one of my strengths and so----
    Mr. Burgess. Me neither.
    Mr. Hackbarth [continuing]. Any detailed accounting you 
ought to get directly from CBO, but the most important factor 
is that the rate of growth in Medicare expenditures, in 
particular physicians, has slowed significantly in the last 
several years.
    Mr. Burgess. Let us stay on that for just a minute. Why is 
that? Is that because of the recession? Is that because of 
physician ownership of some facilities? Can you drill down on 
that a little bit?
    Mr. Hackbarth. Well, the short answer is, I don't think any 
of us really knows. As you well know, there has been some 
speculation about the effect of the recession, although 
logically, you would think that that would be less of a factor 
for the Medicare population which by definition had continuous 
coverage through the recession. There has been some sort of 
public health factors. A relatively small flu season in recent 
years has held down utilization. We have seen significant 
slowing of the rate of increase in imaging. That could be due 
in part to changes in payment but also due in part to growing 
concerns about radiation exposure. And finally, it could be 
that some physicians believe the world is changing and are 
preparing for a new world where total cost of care is more 
important.
    Mr. Burgess. Yes. Have the new methods of payment been 
around long enough for them to stake any legitimate claim in 
these savings?
    Mr. Hackbarth. You know, I think the jury is out on that.
    Mr. Burgess. So the answer is no, the short answer?
    Mr. Hackbarth. Yes.
    Mr. Burgess. OK. I will accept that. Let me just ask you 
this. I mean, you talked a little bit about decentralization, 
and I must admit, we have had these discussions before, you hit 
a nerve with me. It is not decentralization, it is 
recentralization. I mean, you take the authority from me as a 
practicing physician and then you are giving it to someone 
else. It is not that it has gone away and magically just been 
dissipated out into the ether. So it is not decentralization, 
it is recentralization, and, you know, I think a lot of 
physician groups and certainly patient groups fear that that 
recentralization will occur somewhere, whether it is in an 
insurance company, whether it is in a hospital, whether it is 
in the government itself where their interests may not be 
served. I mean, let us remember, an accountable care 
organization begs the question, accountable to whom, and if the 
doctor is employed by the hospital, if the doctor is employed 
by the government or an insurance company, then they are 
probably accountable to their employer, are they not?
    Mr. Hackbarth. Well, I know there is widespread, although 
not universal concern, among physicians about having to work 
for the hospital in an ACO, but in fact, 50 percent of the ACOs 
that have been approved and signed contracts with CMS have been 
physician-sponsored organizations which, as a former CEO of a 
physician group, I consider to be a very positive sign. I 
happen to believe that physician-sponsored organizations are 
the way to go. And so I don't think the ACO model is synonymous 
with hospital control.
    My fear about fee-for-service is that continuation of fee-
for-service combined with the inevitable increase in fiscal 
pressure from the retirement and Baby Boom generation 
inevitably leads to ratcheting down on the rules around fee-
for-service payment, more intrusion from central locations like 
Washington and Baltimore into clinical decision-making, more 
detailed rules about what you have to do to qualify for this 
type of payment and what you are not allowed to do if you 
quality for that kind of payment.
    Mr. Burgess. So we must be concerned about recentralization 
then.
    Mr. Hackbarth. Yes, but I believe that the ACO model can 
push those decisions out where they belong: in the hands of 
clinicians. Now, the quid pro quo is that the clinician 
organizations assume accountability for overall quality of care 
and costs for the defined population. I think that is a good 
trade for clinicians.
    Mr. Burgess. Thank you, Mr. Chairman. We could go on about 
this for quite some time, but I appreciate the chairman's 
indulgence.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Michigan, Mr. Dingell, for 5 
minutes for questions.
    Mr. Dingell. Mr. Chairman, you are most courteous. I 
commend you and the committee for this hearing. This is 
something which very much needs to be addressed, and I would 
like to welcome our witness.
    The point of this question is, how do we balance quality 
measure development to ensure physicians have a voice in the 
fixing of fees and so forth but also see to it that we have 
broad enough participation by the public at large in these 
matters. Now, physicians are, as we all know, essential 
partners in improving quality and accountability. At the same 
time, there are challenging questions that need to be answered 
regarding their appropriate role. So when it comes to 
performance measurement, especially as it will be used to drive 
new payment systems, don't we have to have a broad 
participation by physicians, by patients, by hospitals and by 
the other people in the provider chain? Is that right or wrong?
    Mr. Hackbarth. I think, Mr. Dingell----
    Mr. Dingell. Just yes or no.
    Mr. Hackbarth. Yes or no. I think it deserves a more robust 
response.
    Mr. Dingell. Well, we need broad participation, don't we? I 
have limited time and I need your cooperation.
    Mr. Hackbarth. I do in general favor broader participation 
but I really would like the opportunity to----
    Mr. Dingell. So everybody ought to have a say, right?
    Mr. Hackbarth. Pardon me. I am sorry?
    Mr. Dingell. Everybody ought to have a say. The doctors 
ought to have a say. Their say is going to be very important. 
Hospitals, patients, insurers, the whole works, they ought to 
have a say. We ought not rig this device so it favors one 
particular participant over others.
    Mr. Hackbarth. I think we want a system that does three 
things. It brings scientific evidence to bear on----
    Mr. Dingell. Well, one of the problems I have is, I get 
witnesses down there and they just feel they have to make a 
speech, and all I am really asking for is a yes or no. How many 
folks do we want in this? Do we want enough that we get a clear 
picture and we get an honest answer or do we want to have just 
one group doing it and skewing the result?
    Mr. Hackbarth. I think that we need----
    Mr. Dingell. Help me, quickly.
    Mr. Hackbarth [continuing]. A range of participants. I 
think we need a range of participants, but the objective----
    Mr. Dingell. Thank you. Now, what is the appropriate role 
then of physicians in developing performance measurement 
systems, and how do we ensure an appropriate multi-stakeholder 
process including, again, consumers, purchasers and providers 
that avoids conflict in interest and gets us the best possible 
picture?
    Mr. Hackbarth. The role of physicians is to help bring 
scientific evidence to bear on establishment of standards but 
that is not the only step in the process. To have appropriate 
standards----
    Mr. Dingell. Am I being somewhat unclear? I am just trying 
to get you to tell me how we set this process up so we get the 
answers that are best suited to saving us money and full 
service, seeing to it that everybody participate. How do we do 
this?
    Mr. Hackbarth. And that is what I am trying to answer, Mr. 
Dingell. If it were easy and clear, it would have already been 
done, sir.
    Mr. Dingell. Now, let us go to the next question and hope 
we have the time to do it. Where are the opportunities to 
reduce unnecessary care, saved wasted dollars and improve the 
value in the current FFS while we are transitioning to new 
payment models? You have 1 minute and 20 seconds.
    Mr. Hackbarth. There are a number of areas where----
    Mr. Dingell. Plead your case. You have a minute and 10 
seconds.
    Mr. Hackbarth. There are a number of areas where we can 
reduce waste and excess utilization. It is a long list not 
suited to a minute and 10 seconds.
    Mr. Dingell. Would you like to tell us what they are and 
relieve us of the need to speculate?
    Mr. Hackbarth. One would be, for example, excess 
readmissions, avoidable readmissions to the hospital. Another 
would be----
    Mr. Dingell. What are some of the others?
    Mr. Hackbarth. Every time I try to answer, I am 
interrupted. Another would be----
    Mr. Dingell. You have 22 seconds.
    Mr. Hackbarth. Another would be excess imaging that not 
only is costly but poses a risk for patients due to radiation 
exposure. So those would be two examples. I am trying to stay 
within your limit, sir.
    Mr. Dingell. My time is exhausted, Mr. Chairman. I thank 
you for your courtesy.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman, Mr. Hall, for 5 minutes for 
questions.
    Mr. Hall. I thank you, Mr. Chairman. I am a little 
confused. This is the same John Dingell I learned to ask 
questions and extract answers from. He hasn't let up at all. 
Age hasn't bothered him nor lessened his pursuit.
    Mr. Dingell. I thank my old friend.
    Mr. Hall. And I am a little concerned because I was on this 
committee for, I think, almost 30 years. Two years ago I took a 
leave of absence, and I find the problem exactly the same 
almost as it was when I left.
    And Mr. Hackbarth, you were right when you said we are at a 
critical juncture for SGR reform, and you pointed out that 
recently the CBO lowered the cost of repeal by over $100 
billion. That ought to help some. And you added a dimension to 
the problem that every time the pay cut is delayed, the size of 
the cuts the following year is bigger so it is 2 years bigger 
from the time I left to this day when I am back.
    Let me ask you a question that affects my part of the 
country some. The current SGR formula based part of its 
reimbursement on the time it takes to perform a task. Do you 
believe that this has created the right incentives for 
beneficiary care or do you believe a shift away from time and 
more toward paying for quality would be more appropriate for 
the delivery of beneficiary care?
    Mr. Hackbarth. We do believe that we need over time to 
shift away from a fee-for-service system to other payment 
models that focus on quality and value for patients. However, 
the fee-for-service system is likely to be with us for still 
some time, and one of the problems that we see in the existing 
physician fee schedule is that these time estimates that you 
referred to we think are often off by a significant amount and 
that affects the distribution of payments within the fee 
schedule.
    Mr. Hall. We are not lacking for suggestions, and even the 
Heritage pitched in saying we ought to allow price flexibility 
among specialties, remove the cap on how much a doctor can 
change and enforce price transparency, allow private 
contracting, on and on, but we are here today, and I guess 
there a number of physician reporting requirements currently in 
statute. As part of the reform, do you think some sort of 
streamlining of such reporting similar to what Mr. Dingell was 
questioning about is absolutely necessary to develop the kind 
of performance measures that you touched on in your testimony?
    Mr. Hackbarth. Yes, we do think that measures of 
performance, in particular, measures of quality, are an 
indispensable part of both the existing fee-for-service system 
and any new payment models, and I do have some ideas about what 
such a system should look at to formulate those measures. As I 
started to say in response to Mr. Dingell, I think it should 
include scientific input. Specialty societies have a major role 
to play there. But our measures also ought to be carefully 
chosen to increase value for Medicare beneficiaries. But 
anything that is good to do should be rewarded with a bonus 
payment.
    Mr. Hall. I am impressed by the quality of this committee, 
those that you have selected, Mr. Chairman, and I will yield 
back my time.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentlelady from California, Ms. Capps, for 5 
minutes for questions.
    Mrs. Capps. I want to thank all of our witnesses, both 
panels, for being here today, and thank you, Chairman Pitts and 
Ranking Member Pallone, for holding this very important 
hearing.
    I have long been a supporter of fixing the SGR. It harms 
providers and consumers alike, and it keeps us from true 
innovation in the health care sector. But the conversation 
often stops at the crisis point--how to make it to the next 
paycheck--and rarely moves to one where we can discuss our 
vision for a health care system in the future and how to get 
there. That is why I am so pleased that we are having this 
forward-looking hearing today.
    There has been a lot of talk about the role of doctors in 
the health care system, but as I have said before and in some 
respects I am following on to our distinguished former 
chairman, I truly believe that if we are going to really move 
to a more comprehensive prevention-focused system of care, we 
need to look at the full picture of our health care system.
    Mr. Hackbarth, most of the new delivery models like 
patient-centered medical homes and accountable care 
organizations emphasize team-based care, and they recognize the 
critical role and value of non-physician providers. As such, I 
think it is important to acknowledge the role of other health 
care providers such as nurses, nurse practitioners, physician 
assistants in this conversation as well. While physicians and 
physician payment has always received a lot of attention, and 
rightly so, it is important that non-physician providers are 
also actively engaged in both the development and the 
implementation of these new systems for health care delivery 
and payment. So I have a couple questions on this topic for 
you. First, why do you think there is such a discrepancy, 
disparity, gap between the importance of non-physician 
providers and the level of attention they are receiving in the 
SGR debate?
    Mr. Hackbarth. Well, I am not sure why there is that 
disparity in attention.
    Mrs. Capps. I mean, do you acknowledge that it does exist?
    Mr. Hackbarth. I agree, it does exist, and I also agree 
with your statement that we are not going to get where we want 
to go in terms of improved health care delivery without an 
expanded role for other health professionals including advanced 
practice nurses and physician assistants.
    Mrs. Capps. Great. So there is no reason, it is just lack 
of attention?
    Mr. Hackbarth. I think it is lack of attention and, you 
know, sort of history in terms of how our health care system 
has evolved. When I look at the growing problems that we have 
in primary care, I just don't see how that is going to be 
solved without expanded use of other health professionals.
    Mrs. Capps. Well, and you are representing MedPAC, which is 
a group of people. Has this not come up in your discussions? 
What is your view on the role of non-physician providers in a 
new value-based delivery and payment system that is focused on 
outcomes rather than fee-for-service?
    Mr. Hackbarth. It comes up often, I assure you, and I think 
I speak for the commission as a whole in saying that we think 
that an expanded role for nurses and other health professionals 
is essential both to deal with short-term problems like access 
to primary care but also for long-term improved system 
performance.
    Mrs. Capps. Just in your own structure, because you are a 
spokesperson for MedPAC, do you see yourself expanding the 
commission members, or how is your discussion?
    Mr. Hackbarth. In fact, over the years, almost always we 
have had one or more nurses. Currently, Mary Naylor from the 
University of Pennsylvania School of Nursing is a member of 
MedPAC and has been very helpful in talking about the role of 
nurses, for example, in transition care after a hospital 
admission.
    Mrs. Capps. That is just one of the many roles that they 
can play.
    Mr. Hackbarth. Exactly.
    Mrs. Capps. One could say that this is a little bit like a 
token representative. Do you have any discussion of ways to 
expand it to be more inclusive?
    Mr. Hackbarth. Well, we actually don't choose our own 
members. Under the statute that governs MedPAC, GAO actually 
appoints the membership of the commission.
    Mrs. Capps. Do you listen to other organizations, 
accountable care kind of organizations? Maybe this is just a 
vacuum that needs now to be addressed.
    Mr. Hackbarth. We do. For example, another member of our 
commission is Scott Armstrong, the CEO of Group Health of Puget 
Sound in Seattle, an organization which for many years has made 
a very extensive use of advanced practice nurses and other non-
physician health professionals and team care. So that 
perspective comes into our discussions not just through people 
who have RN after their name but also from other commissioners 
that deal with these systems, that lead these systems.
    Mrs. Capps. My time is up, but I do want to tell you that 
as a nurse myself, I guess I am a little bit more sensitive to 
the fact that nurse organizations, and I am sure physicians 
assistants would be the same, are eager. They have been doing a 
great deal of discussion among themselves and ascertaining of 
patterns that they would like to see in an expanded role for 
how to reach the goals of--we are really talking about how to 
reach the goals of the Affordable Care Act, and reimbursement, 
the fee schedule, is one of those--of course, it is clearly a 
very important aspect of how that is functioning. So I would 
urge you to reach out, and we will try to establish some more 
communications so that this can be a more serious part of your 
agenda.
    Mr. Hackbarth. I would welcome that.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentleman from Illinois, Mr. Shimkus, for 5 
minutes for questions.
    Mr. Shimkus. Thank you, Mr. Chairman, and welcome, Mr. 
Hackbarth. I have been interested in the intensity of this 
first line of questioning. I appreciate the work you do. It is 
very difficult, so thank you.
    I am trying to pull up the Web site and the like. I 
understand that on March 7th through 8th you have an open 
public meeting at the Ronald Reagan Building and International 
Trade Center. I imagine that where is you take comments from 
anyone who may be involved so all these groups, all these 
individuals that are involved with that. Isn't that kind of why 
you do that?
    Mr. Hackbarth. Yes. We have open meetings, but we don't 
stop there. We reach out to groups that we think have 
expertise, information to bring to bear on the topics before 
us. So we don't want for them to come to us. We look for them.
    Mr. Shimkus. Thank you. To help Mr. Dingell, I can think of 
one way to address costs, and that is litigation reform, 
medical liability issues. I am from the State of Illinois. If 
you are from Illinois, you know the medical liability crisis 
that we continue to have with high costs. So there is enough, I 
would consider that low-hanging fruit, to help address the cost 
of bringing down the cost of care so we could go through--as 
you said, there is numerous and it would take longer than a 5-
minute round of questions.
    But there is also the comment that Mr. Dingell mentioned 
that we do want to make sure a lot of folks are inclusive in 
these discussions. That is why I focused to the open-meetings 
aspect. But sometimes there is a feeling that the beneficiary 
is kind of left out in some of these dollars-and-cents care, 
procedures and debate. So a couple of questions that I am going 
to direct kind of focus on the beneficiary. So do you believe 
that is important for the overall success of reform efforts to 
find ways to incentivize the individual beneficiary along the 
way?
    Mr. Hackbarth. Yes, we do believe that this is a part of 
what needs to be done.
    Mr. Shimkus. So if we have new models of care that were 
developed that involve sharing savings between beneficiaries 
and government, should the beneficiary share in those savings 
as well?
    Mr. Hackbarth. In our comment letters on the development of 
the ACO program, we recommended that in fact beneficiaries had 
the opportunity to share in any savings. It seems to us odd 
that all of the focus should be on how the government and 
providers are going to share and the beneficiary is left out of 
it.
    Mr. Shimkus. Yes, it is just--I have been on the committee 
a long time also, and it is great to have Mr. Hall back because 
maybe we will get this solved now since he has been gone for a 
while and now he is back, and maybe we will get this solved 
with his expertise.
    But I am still a capitalist, competitive model folk. I do 
think people shop around based upon dollars and cents and based 
upon their return on dollars, they will make decisions. I also 
believe the public will buy a premium quality if they are given 
the opportunity to. My frustration with the health care 
delivery system is, they are kind of left out. I mean, really. 
They are not incentivized. They are directed. There is no 
variability in choices, so I am happy to see that.
    On the other hand, I believe there are some negative 
incentives within the Medicare program that might hurt 
beneficiaries and endanger reform like a catastrophic cap 
within Medicare, copays that are based upon percentages instead 
of fixed costs so beneficiaries know what they are liable for, 
and first-dollar coverage that incentivizes beneficiaries to 
use more services when the new models encourage providers to be 
more efficient with the care provided. How important is it for 
the success of reform that Congress address these issues?
    Mr. Hackbarth. Well, about a year ago, Mr. Shimkus, we made 
a series of recommendations related to reforming the Medicare 
benefit package, and you touched on some of the critical 
elements. We think that the current structure is antiquated and 
very difficult for Medicare beneficiaries to understand, and so 
we recommended that it be simplified, use fixed dollar copays 
as opposed to percentage coinsurance, which is unpredictable, 
include catastrophic coverage. We also recommended that the 
Secretary be given broader authority to introduce principles of 
value-based insurance design by which we mean the Secretary 
should be able to say the evidence is really strong that if 
patients have access to this service, it not only improves 
their health but it lowers long-run costs. And so they want to 
totally eliminate cost sharing for those really high-value 
services. On the other hand, there are services that are of 
lower value based on scientific evidence and we may wish to 
impose more cost sharing on those. This is an idea that is 
being used increasingly by private insurers, and we think it 
makes sense for Medicare as well.
    Mr. Shimkus. Thank you very much. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Texas, Mr. Green, for 5 minutes 
for questions.
    Mr. Green. Thank you, Mr. Chairman, and again, Mr. 
Hackbarth, welcome. I appreciate your work over the years.
    The Sustainable Growth Rate formula is broken and must be 
repealed and replaced with a system that pays doctors fairly 
for their services and ensures that the quality of coverage for 
seniors and reduces the financial burden on taxpayers. One of 
the ways I want to and I understand a lot of folks do want to 
achieve cost savings is through quality improvements. There is 
a bipartisan agreement on this issue broadly but there are 
disagreements on specifics. I want to work toward a bipartisan 
agreement on measuring quality to increase efficiency and 
quality of care while decreasing the costs. We owe it to our 
seniors today and the future generation of seniors to make good 
on that promise we made for affordable, quality health care 
through Medicare.
    I am going to try to go through a number of questions 
quickly. What is the most effective quality improvement measure 
with respect to improving health outcomes?
    Mr. Hackbarth. Well, I would say the single most important 
thing is to move to new form of payment and care delivery where 
clinicians accept ultimate accountability for outcomes that 
matter to patients but also the associated financial 
responsibility. As I have said in response to Dr. Burgess, we 
think decentralizing decisions to clinicians and provider 
organizations with increased accountability is the most 
important thing to do.
    Mr. Green. What criteria must be met to realize savings 
from the quality improvement initiatives?
    Mr. Hackbarth. What criteria must be met? Could you just 
say a little bit more?
    Mr. Green. What criteria must be met to realize savings 
from these quality improvement initiatives?
    Mr. Hackbarth. Well, the most important criteria is that of 
course we want to protect beneficiary access to care and 
quality of care, and that is why having affordability for 
outcomes is really an important part of the system. But while 
doing that, as I said earlier, what we want to do is not make 
decisions here in Washington but have clinicians who know the 
patient, who know local circumstances, have increased decision-
making authority.
    Mr. Green. Is a voluntary adoption of these quality 
improvements sufficient to yield systemwide savings or does 
this need to be a required practice? And I know your answers 
earlier were that there are some private insurers who are 
already doing some of these.
    Mr. Hackbarth. We think that a wise course for Medicare 
would be to apply increasing pressure on the fee-for-service 
system, which for the reasons I described at the outset we fear 
is not consistent with quality for Medicare beneficiaries, 
apply pressure on fee-for-service and create incentives and 
opportunities for people to move into new care delivery models 
that can deliver higher value.
    Mr. Green. And what is the best way to address quality 
improvement when programs serve such a wide variety of people 
with various health needs, for example, seniors who have 
disabilities? And as we know, as we get senior, we are going to 
take a lot more health care than someone who is not but also 
low-income earners.
    Mr. Hackbarth. Yes. Well, having a robust system of 
adjusting payments to reflect the underlying health risk of the 
patients is really important. We don't want a system where 
providers avoid those complicated patients because they are not 
paid appropriately for them. If a provider assumes 
responsibility for complicated patients, they ought to get the 
associated resources to do the job well, so what we refer to as 
risk adjustment is a really important feature.
    Mr. Green. In developing quality measures, there has quite 
correctly been a lot of focus on including physicians and 
physician groups in the discussion, perhaps even having them 
develop the measures for their own specialties, and I would 
hope that would be, you know, the input from our specialty 
societies. What other entities should be at the table? 
Specifically, shouldn't the beneficiary somehow be represented 
in some capacity?
    Mr. Hackbarth. Yes. As I said in response to Mr. Dingell, 
we think that the physician specialty societies can provide 
critical input but input from others is important as well 
including from patient organizations.
    Mr. Green. My last question in 35 seconds is, I know my 
seniors are worried about changing the SGR and could result in 
their care being diminished, and this is a scary prospect, but 
I also want, and I think a lot of us share in a bipartisan way, 
you want to make sure the system is around for my children and 
my grandkids. What is the best way to ensure that if SGR is 
repealed and replaced that the beneficiaries will have a seat 
at the table and the changes that are made are a positive 
experience for them?
    Mr. Hackbarth. So the question is, how do we assure that 
this is a positive experience for Medicare beneficiaries?
    Mr. Green. So they know that, you know, they are going to 
be able to have the Medicare that they traditionally feel 
comfortable with.
    Mr. Hackbarth. Well, we need to take the necessary steps on 
payment to ensure the system is fiscally stable but we also 
need to offer choices to Medicare beneficiaries. As I said in 
response to Mr. Shimkus, having patient choices but also 
choices that reflect the cost of different options is 
important.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Louisiana, Dr. Cassidy, for 5 
minutes for questions.
    Mr. Cassidy. Mr. Hackbarth, I will be more polite than Mr. 
Dingell, but if you could keep your answers concise, I would 
appreciate it.
    Mr. Hackbarth. I will try.
    Mr. Cassidy. I understand that, and I think you are doing a 
fantastic job.
    Listen, I think there is evidence that consolidation is 
actually driving up costs if you look at how hospitals are 
buying physician services. Is this a premonition of what is to 
come?
    Mr. Hackbarth. We do worry about a hospital-dominated 
system. As I said to Dr. Burgess, this is one of the reasons 
why I think having physician-sponsored organizations is very 
important.
    Mr. Cassidy. I accept that. I can also see, though, the 
physician-sponsored Pioneer ACO being purchased by a large 
hospital, and so it almost seems like if you are really good at 
it, you may get bought.
    Let me ask you, some of this diminution and/or decrease in 
the amount of care being delivered through Medicare Part B, I 
have been unable to figure out how much of that is attributable 
to hospitals purchasing, say, cardiology practices now billing 
through Part A as opposed to Part B.
    Mr. Hackbarth. Some of it is.
    Mr. Cassidy. When you say ``some'', is that 1 percent or is 
that 30 percent?
    Mr. Hackbarth. Well, let us focus on one area where it is a 
fairly significant factor, the rate of growth in expenditures 
on imaging services.
    Mr. Cassidy. Did those previously go through B or through 
A?
    Mr. Hackbarth. When they were provided in independent 
practices, cardiology imaging in particular, was in Part B. 
When it moves over to the hospital practice----
    Mr. Cassidy. It's part A. So really, we may not see--this 
may not be something on sale. It may be part of a larger trend 
where consolidation is shifting costs to A.
    Mr. Hackbarth. There could be some of that, yes.
    Mr. Cassidy. But then that in turn will further stress the 
Medicare trust fund.
    Mr. Hackbarth. Although if we look at total Medicare 
expenditures, the growth there has slowed as well. It is not 
just on Part B.
    Mr. Cassidy. I think statistics show about 25 percent of 
Medicare beneficiaries don't have a primary place they go, and 
the ACO relies upon some sort of retrospective kind of 
statistical analysis--you belong there even though you got your 
liver transplant here. Now, Mr. Miller will give testimony 
suggesting that prospective assignment would be a much more 
efficient way, better way to approach this as opposed to the 
retrospective assignment that occurs with the ACO model under 
statute.
    Mr. Hackbarth. And we favor prospective.
    Mr. Cassidy. Now, that leads us to MA. It really seems as 
if MA kind of solves this even though there is a prejudice in 
the Administration against MA.
    Mr. Hackbarth. Well, as I said earlier, there are some 
similarities between the two but a critical difference is that 
by definition, the accountable care organizations are 
controlled by providers as opposed to by insurance companies.
    Mr. Cassidy. Now, we both know of models, you know of 
models, there is the WellMed model down in Texas in which they 
go a two-sided risk with the Medicare Advantage program but 
effectively being a two-sided risk they are now managing. Would 
you favor such models?
    Mr. Hackbarth. So you are referring to a model where there 
is a partnership between an insurer and----
    Mr. Cassidy. I think they now they purchased them, but at 
some point the physician primary care group would contract with 
whichever MA plan they contracted with, that 85 percent of what 
the MA plan was getting from CMS, and they in turn would be a 
two-sided risk relative to the MA plan.
    Mr. Hackbarth. Yes. There are a lot of different varieties 
that can work, and as I tried to emphasize, we think that is a 
good thing because the circumstances really differ in places 
around the country. There are different preferences.
    Mr. Cassidy. Now, let me ask, because again, my concern, as 
I said in my testimony, is that our bias is towards big, and 
the ACO has to have a minimum of 5,000 patients. That means 
inherently it is big. So to what extent can that solo 
practitioner, how can she survive without being absorbed?
    Mr. Hackbarth. Well, 5,000 patients isn't all that large. 
That is, several internal medicine practices have 5,000 
patients. Well, actually if it is 5,000 Medicare patients, it 
would have to be a somewhat larger number. But they don't all 
have to be under one roof and common ownership.
    Mr. Cassidy. But there would be----
    Mr. Hackbarth. You can----
    Mr. Cassidy. But to get the economy of scale in terms of 
marketing, in terms of billing, in terms of data integration, 
that suggests that you are going to have a certain bigness, 
correct?
    Mr. Hackbarth. Well, there is no doubt some scale required, 
but again, those costs can be shared and spread over a larger 
number of practices.
    Mr. Cassidy. Now, what do you think about an IPA model that 
would contract with an MA-type entity, whether it be 
prospective assignment, and yet you get the advantage of the MA 
data analysis, et cetera, but nonetheless allow these folks to 
maintain their autonomy.
    Mr. Hackbarth. It is an entirely legitimate approach that 
has worked in a lot of areas, but you could also have an ACO 
that contracts with an MA plan just to provide support 
services, and to buy reinsurance and spread risk.
    Mr. Cassidy. My concern about that is, that when you start 
doing statistical analysis, a small practice won't really know 
whether that outlier, that 25 percent of patients who are going 
elsewhere, are they getting a square deal from the top dogs or 
are they not.
    Mr. Hackbarth. Well, in fact, that is the problem when you 
have small practices and small numbers. As you well know, there 
is a lot of statistical variation, random variation in the 
numbers, and that makes assessment more difficult and that is 
one of the reasons that linking practices together and getting 
larger populations makes sense.
    Mr. Cassidy. You have given great answers. Again, I thank 
you for your courtesy, and I yield back.
    Mr. Pitts. The Chair thanks the gentleman, excellent line 
of questioning. The Chair now recognizes the gentlelady from 
Florida, Ms. Castor, for 5 minutes for questions.
    Ms. Castor. Well, thank you, Mr. Chairman. Thank you for 
calling this hearing. Mr. Hackbarth, welcome.
    Since coming to Congress, I have to say one of the most 
nonsensical policies that we deal with is how we patch SGR and 
treat Medicare physicians and the patching and discussions that 
go on every year. It is remarkable. It is not reasonable, and 
colleagues, we have got to do something about it finally. And 
it should not be lost on us what this recent CBO score is. You 
said it is like it is on sale now. The CBO score has dropped 
$107 billion from $243 to $138 billion. Now is the time to act 
to solve it, to repeal it, to replace it with something that 
makes better sense for the modern health system, especially 
with the Affordable Care Act. I concur with Ranking Member 
Pallone that it is too important for us to just haphazardly 
steal from other Medicare providers to patch over here, and 
because of this renewed score that is over $100 billion lower, 
we have the ability now to really take a hard look and solve 
this now, and time is of the essence.
    I also supported going to the OCO. I thought that was quite 
reasonable, and now I don't even think this would take up what 
is left in OCO savings, so we have an opportunity here in the 
coming months and we should not let it pass.
    But we have larger issues as well, and I think that moving 
forward, solutions on replacing the SGR with different payment 
models, I think in Dr. Berenson's testimony, he laid out, you 
know, you are never going to get away entirely from fee-for-
service. There will be some medical services that that is how 
they will have to be compensated, and the difficulty will be 
carving those out as we move to different integrated models.
    So Mr. Hackbarth, I think by this time everyone agrees that 
we need to move the delivery system away from fee-for-service 
or something blended toward integrated delivery systems, that 
is, systems where physicians work together and share 
responsibility for their patients. While the Centers for 
Medicare and Medicaid Services has already embarked on a 
significant testing of these models, how do we incentivize more 
physicians to join these models?
    Mr. Hackbarth. We think it needs to be a combination of two 
things: some steadily increasing pressure on fee-for-service 
that frankly makes staying in fee-for-service increasingly 
uncomfortable over time while we open the door to new payment 
models and provide an incentive for physicians to participate 
in those models. So it is a little bit of push and a little bit 
of pull.
    Ms. Castor. And I understand that the popular view is that 
models like accountable care organizations and medical homes 
and bundled payments have the potential to save Medicare money 
and improve patient outcomes but first do we really know yet 
whether they will be successful or what forms of these models 
will work best? And second, in the absence of ironclad answers 
and evidence, how do you recommend we proceed encouraging 
physicians to embrace new models?
    Mr. Hackbarth. Well, ACOs are now an operational piece of 
the Medicare program whereas the bundling around hospital 
admissions and medical homes are still in the pilot phase. We 
are still collecting information. The reason that ACOs are put 
into the operational mainstream Medicare program at this point 
is that in fact we had done a demonstration, a group practice 
demonstration, testing basically the ACO-type model, and to 
make a long story short, that demonstration showed some promise 
for this model to improve quality while somewhat reducing costs 
in some cases. The results were not overwhelmingly robust but 
they were generally positive. In making a policy judgment about 
this, we need to always say well, what is the alternative. It 
is our judgment that the results of an ACO were sufficiently 
strong that when compared to continuing fee-for-service, we 
thought moving towards ACOs made sense. We know the record of 
fee-for-service. We have done a 35-, 40-year experiment with 
that: high cost, uneven quality. And so that is a pretty low 
standard to beat and we think ACOs can comfortably do that.
    Ms. Castor. Thank you very much. I yield back.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes 
for questions.
    Mr. Griffith. Thank you, Mr. Chairman. I do appreciate 
that.
    Mr. Hackbarth, you encourage physicians to switch from 
open-ended fee-for-service to accountable care organizations. 
Do you envision a continued rule for FFS in certain geographic 
locales? I know you have already talked about certain practice 
types, but coming from a district that it takes a long time to 
get from one end to the other and has lots of small, rural 
communities, do you anticipate that fee-for-service would still 
be the way to do it there or do you think that they can do an 
ACO with such a small number of folks?
    Mr. Hackbarth. Well, we are still early in the development 
of the ACO model but I would note that about 20 percent of the 
ACOs that have been approved to this point include community 
health centers, rural health clinics or critical access 
hospitals so there is at least some development in rural areas 
of ACOs. We will have to see over time, you know, how well that 
works and how many more develop. So I wouldn't completely write 
off the possibility right now that the ACO model, which is a 
very flexible one, can work in rural areas. There may at the 
end of, you know, some period of time be some really isolated 
geographic areas with very long distances where that model 
simply will not work and we will need to take special steps in 
those areas.
    Mr. Griffith. Where mountains are in the way, because that 
happens a lot of times. It happens in my district from time to 
time.
    I heard you in one of the other questions, and I apologize, 
that the ACO would need 5,000 patients?
    Mr. Hackbarth. Yes, that is the minimum, and the reason for 
that is, again, to have numbers that are statistical meaningful 
and not full of just random variation.
    Mr. Griffith. And I also would ask, even with the 
progressive payment models such as the bundled payments, what 
is there that would prevent a delivery system from exploiting a 
volume-based approach with bundled payments? I mean, can't they 
still do unnecessary things and run their costs up and 
overcharge?
    Mr. Hackbarth. Yes, and that is one of the fears, that if 
we bundle payment around an episode, a hospital admission, for 
example, one of the fears is well, now that you have aligned 
physicians, hospitals and other actors, they will say well, let 
us increase the number of episodes, let us increase the number 
of admissions, and so that is something to monitor and be 
careful about. That is less of an issue in ACOs where there is 
accountability for total costs, not just episode costs.
    Mr. Griffith. I thank you very much and yield back my time, 
Mr. Chair.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the gentleman from Maryland, Mr. Sarbanes, 5 minutes 
for questions.
    Mr. Sarbanes. Thank you, Mr. Chairman. Thank you, Mr. 
Hackbarth.
    So as I understand the SGR formula, basically a number of 
years ago there was kind of projected percentage increasing 
payments that we were prepared to pay, and in the early years, 
we just went ahead and paid it even if it exceeded what that 
trajectory was supposed to be but the tradeoff was that at some 
point we had to come back and recover it, and that started to 
kick in in the out years and that is the fire drill that we 
have every year.
    Mr. Hackbarth. Right.
    Mr. Sarbanes. So fixing SGR is really getting rid of SGR. I 
mean, SGR is a design for trying to keep the costs in a sense 
after the fact in line with this original trajectory that was 
established, right?
    Mr. Hackbarth. That is correct.
    Mr. Sarbanes. So all of these other issues about, you know, 
rebalancing payments and looking at the methodology and, you 
know, whether we adjust the relative value units or add codes 
that better address the needs of primary care and so forth, 
that discussion can kind of happen alongside of the decision 
that is being made to get rid of this design.
    Mr. Hackbarth. Correct. Even if we get rid of SGR, we need 
to have that conversation, yes.
    Mr. Sarbanes. So just anticipating the kind of legislation 
that we would need to pass here, it could be pretty simple, 
right? I mean, could it basically be a one-page bill saying the 
SGR system is hereby repealed and then these other discussions, 
which frankly have been initiated through the Affordable Care 
Act, in large measure, can proceed or do you feel that sort of 
the--you don't want to lose the moment of casting aside SGR to 
also embed statutorily some of these new goals that you want to 
see?
    Mr. Hackbarth. Yes. We think it is important to seize the 
moment of SGR repeal to do three things: one, get rid of SGR, 
two, to advance progress in rebalancing the payment, as I said 
in my opening statement, and third is to create incentives for 
physicians to move towards new payment models. And if the 
legislation simply repealed SGR, we think that would be a lost 
opportunity. Frankly, these other two steps of rebalancing 
payments and encouraging movement to new payment systems, there 
will be some people who will oppose those.
    Mr. Sarbanes. So that is kind of my question is, if we are 
starting to tied in knots over doing these other things, such 
that that begins to impede the opportunity to just get rid of 
the design, where would you come down then?
    Mr. Hackbarth. Yes. Well, you know, our expertise is not 
on, you know, legislative processes and tactics. We believe 
that there ought to be this quid pro quo. Physicians want to 
get rid of SGR.
    Mr. Sarbanes. OK, so that is fair. So you are saying SGR 
was designed as a kind of cost containment measure, so we are 
going to get rid of one cost containment measure, let us 
replace it with other things that we think are going to help us 
achieve the same goals.
    Mr. Hackbarth. Yes.
    Mr. Sarbanes. OK. I understand that. That makes a lot of 
sense.
    I will just saying in closing, and then I will yield back, 
I am not a physician but I spent 18 years representing 
hospitals and physician groups, and for some period of time in 
which I was practicing I managed this fire drill on behalf of 
clients that was happening at the end of every year. In a 
sense, we have been fixing SGR every year, right? Or every 30 
days or every 90 days or whatever it is. So it is not like not 
fixing it means we are not going to incur the costs because we 
are probably come back, do a fire drill, patch it, incur the 
costs, and we talk about taking advantage of this sale. I mean, 
it is versus running around on the back end and trying to do 
it. It is really the equivalent in the health care area, and 
with respect to physician payment, it is like a sequester 
thing. It is an arbitrary formula.
    Mr. Hackbarth. You are absolutely right that what we have 
done is fix it a year at a time or, unfortunately, in some 
cases, a few months at a time. The price we pay for that is 
that we are undermining the confidence of both physicians and 
patients in the Medicare system. We are destabilizing the 
system. And our fear is that the cumulative effect of these 
last-minute dramas is now really taking a toll on confidence in 
Medicare and increasing the risk that Medicare beneficiaries 
will lose access to needed care. It is time to do away with it.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Georgia, Dr. Gingrey, for 5 
minutes for questions.
    Mr. Gingrey. Mr. Chairman, thank you.
    Mr. Hackbarth, you just mentioned in responding to Mr. 
Sarbanes' line of questioning that three things are important: 
one, repeal SGR, rebalancing payments I think was the second, 
and then developing new payment models, and indeed, that is 
what the hearing is all about, and of course, we will have a 
second panel. We appreciate your testimony and response to our 
questions. But I think there is a fourth thing here that you 
might put in the category, the 800-pound gorilla in the room, 
and that is IPAB, which is the IPAB creation under the 
Affordable Care Act. Now, you, as I understand it, have been 
head of the Independent Payment Advisory Commission ever since 
its existence, and on a yearly basis or twice a year advise, 
and we have the ability under this system to mitigate 
recommended cuts, and we have done that, and that is where we 
are just today, just as Mr. Sarbanes was saying, and I think 
that if we do these three things, if we repeal SGR, if we 
rebalance payments and if we develop new payment models that 
physicians have the ability to choose from and slowly but 
surely, hopefully they would do that, but if the Independent 
payment Advisory Board is still there in the law, what good is 
all this going to do unless we get rid of that, I am going to 
say monster, because it seems like to me it really is a monster 
because it is not advisory. It is instructional. So would you 
touch on that a little bit and tell us----
    Mr. Hackbarth. Well, as you indicated, Dr. Gingrey, you 
know, our model, the one that I have participated in, is 
advisory and the ultimate decisions are up to you and your 
colleagues in the Congress, and we hope that works well for 
you. We work very hard to do our best to advise you on those 
issues. With regard to IPAB specifically, you know, we haven't 
taken a position one way or another on IPAB. You know, it is 
sort of a rival approach to dealing with this, and we thought 
that was more a matter for the Congress to decide and not 
really a matter of Medicare policy where we consider ourselves 
to have some expertise. So right from the outset, we have not 
taken a position either for or against IPAB.
    Mr. Gingrey. Well, let me just interrupt you just for a 
second and say that this member of the committee, this 
physician member of the Energy and Commerce Health 
Subcommittee, feels that it would be better to continue your 
commission in an advisory capacity and all that institutional 
knowledge that you have gained over the last 10 years and get 
rid of the monster that gives us no ability, and indeed, I 
think it is really unconstitutional to say that Congress 
doesn't have the ability to mitigate as we do under the good 
advice that you give us.
    Mr. Chairman, the power of the IPAB, we all know, is 
substantial. Even if the President continues to delay naming 
members to the board, I don't guess there are any members' 
names so far. Fifteen is what is called for. The Secretary, 
this Secretary, the next Secretary, of HHS would have the power 
to establish these cuts. And as we were saying, you read that 
real carefully, that IPAB section of the Affordable Care Act, 
up until 2020 hospitals would be excluded from any cuts. So the 
proposed cuts made by IPAB would fall particularly on providers 
during the next 10 years almost, and to me, this seems akin to 
the cuts that SGR has tried to impose on doctors. These types 
of cuts haven't worked in SGR and they surely won't work with 
IPAB. I am encouraged that the committee's proposed framework 
states that IPAB repeal would be an integral part of SGR 
reform. So, you know, I think that needs to be an important 
part of the discussion with you, Mr. Hackbarth, and also with 
the second panel.
    My time is expired and I yield back, and I thank you for 
your response.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentlelady, Dr. Christensen, for 5 minutes for 
questions.
    Mrs. Christensen. Thank you, Mr. Chairman, and I thank you 
and the ranking member for this hearing, and welcome again, Mr. 
Hackbarth, because I hope that this year we can finally fix 
something that all of us agree needs to be fixed and want to 
fix. As we know, the SGR has been the wrong methodology for 
setting physician reimbursement because it doesn't reflect the 
market basket value of physician services today, and as you 
said, the uncertainty that we create every year just transfers 
that uncertainty to the Medicare beneficiaries who wonder 
whether they are ever going to get the services that they need.
    In addition to creating new ways of reimbursement, I think 
it is important, as one of the AMA reports says, to establish 
an accurate definition of health care value, rebuild the 
technological infrastructure to determine episode length 
payment attribution, improve data and other parameters, and as 
a physician who practiced in a fee-for-service model, just for 
the record, I really don't believe that fee-for-service in and 
of itself was the problem. It is the way we were incentivized, 
and I can't say that I was but to utilize certain modalities 
that were expensive and we weren't paid for other things that 
you are talking about paying for now, and I believe if we pay 
for that kind of management and now with CER and other 
provisions of the ACA, fee-for-service can possibly have a 
place.
    But lastly, as Dr. Patel said last year in her testimony, 
whatever you do, the path needs to be toward clinician-driven, 
which you have agreed and said many times here this morning, 
evidence-based medicine that prescribes the autonomy of the 
physician-patient relationship, even as we move towards more 
accountability.
    You can imagine what my questions are going to veer 
towards. My colleague, Mr. Green, sort of asked it because we 
talked about poor, minority communities and patients who are 
affected by many of the social determinants of health and lack 
of access to quality health care and some services are not even 
available in their area, and so they suffer poor outcomes. So 
you did say that we have to take that into account and set the 
baseline and look at--include that in the way we measure 
performance. I was wondering if the minority health profession 
schools, the minority health professional organizations, 
patient advocacy organizations, are they involved in providing 
input as we move forward? Do you know?
    Mr. Hackbarth. Yes. Well, we work with all of the 
associations, both within the physician world and beyond. I 
spend a lot of time with representatives of safety-net 
institutions which are, you well know, critically important for 
this population and so absolutely, our door is open. We think 
paying particular attention to those patients, and many of them 
are Medicare dual eligibles, eligible for Medicaid as well as 
Medicare, they are some of the most vulnerable patients in the 
system, and so we need to take particular care when we develop 
new models that they are not inadvertently harmed.
    Mrs. Christensen. And you did mention in responding to Mr. 
Green also the issue of adverse selection and cherry-picking. 
Do you see the possibility of setting some kind of incentive 
payments for taking care of patients that may be sicker and 
coming from areas with high health disparities?
    Mr. Hackbarth. Absolutely. So we think that the payment to 
the organization ought to be commensurate with the 
responsibility that they are taking on, and if you are taking 
on very high-risk, complicated patients, you ought to be 
appropriately compensated for that. You know, this is an issue, 
and the still developing demonstrations run dual eligibles, 
again, one of our most vulnerable populations, and so it is one 
we are fixated on. There will be all sorts of bad consequences 
if we don't pay a lot of attention to that.
    Mrs. Christensen. I am glad that they are really looking at 
social determinants and looking at health disparities and that 
we were able to include in a lot of the research and provisions 
of the Affordable Care Act that health equity and eliminating 
health disparities had to be one of the goals.
    Thank you, Mr. Chairman. I yield back.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentlelady from North Carolina, Mrs. Ellmers, 
for 5 minutes for questions.
    Mrs. Ellmers. Thank you, Mr. Chairman, and thank you, Mr. 
Hackbarth, for being with us today.
    I have been a nurse for over 20 years, and obviously very 
concerned about the SGR system and understand fully that it is 
broken. You know, physician practices, you know, hang on to 
those determinations of when we are going to get paid and when 
we are not, and obviously the breakdown is quality of care for 
the patients and the accessibility moving forward. So keeping 
those thoughts in mind, I am a little concerned. I know Mr. 
Dingell and my colleague, Dr. Christensen, was just talking 
about some of the patient advocacy groups and patient input. Of 
course, we want health care to be patient-centered. But when we 
are talking about standard of practice, clinical practices and 
standard of care, where do you weight patient satisfaction, so 
to speak? I know this is going to be part of this system, but 
are we weighting the satisfaction level, you know, and 
determining quality of care that way?
    Mr. Hackbarth. Yes. Within the ACO system, patient 
satisfaction is one of the criteria used in evaluating 
performance, and we think that that plays a role. Frankly, we 
don't think it should be given the same weight as outcomes of 
care that patients really care about.
    Mrs. Ellmers. So on a percentage basis, what would you say, 
how much are you going to be taking that into consideration?
    Mr. Hackbarth. I am not sure that off the top of my head I 
could tell you exactly what percentage ought to be given to 
patient satisfaction but ultimately patients go to their 
physicians and nurses because they have a medical problem they 
want fixed, and so the bulk of the focus should be on, are 
those problems fixed, and if the patient in addition to that 
has a good experience, that is important as well. Probably the 
element of patient satisfaction that I would say is most 
important is effective communication because that also has 
implications for things like adherence to drug regimens and 
adherence to follow-up care after hospital admissions and the 
like. I am less interested in putting a lot of weight on, you 
know, sort of the hotel experience, you know, what was the 
check-in and the like. I am not saying those are totally 
unimportant but less important to me than effective 
communication and outcomes.
    Mrs. Ellmers. I also, and this is a little bit off of the 
focus here with this particular question, but I am a little 
concerned too when we are talking about reimbursement and, you 
know, the more emphasis on different practices and 
improvements, and you mentioned the cutbacks in imaging 
services. Can you give me two reasons why we would consider 
that, to actually be cutting back on reimbursement to imaging?
    Mr. Hackbarth. Well, one of the things that we do is look 
at how accurate the level of payment is for individual services 
and fee schedule, and as we have looked at that work and done 
that work, what we have concluded is that in many instances, we 
are overpaying for imaging services.
    Mrs. Ellmers. Is it overpaying or are you concerned that 
imaging is being overused?
    Mr. Hackbarth. Well, it is some of each, and two are 
linked. So we believe that for some imaging services, not 
necessarily all of them but some imaging services, the payment 
for each service is too high, and it is therefore a very 
profitable service. That prompts people to go out and buy 
expensive imaging equipment, that once the imaging equipment is 
in place it is used because it is inexpensive at that point, 
and that results in overutilization of services.
    Mrs. Ellmers. Well, one thing I would like, there again, 
based on my experience, one of those areas too that I think 
needs to be considered is not so much that the imaging is being 
overused but maybe ordered more frequently by non-physician 
practitioners. You know, in our local area, of course, JCAHO, 
who has just come through and basically one of their 
determinations where there was too many testing ordered, and 
unfortunately, that is by your non-physician practitioner, and 
I think that is an issue that needs to be looked at much more 
effectively because, you know, we want the best care for our 
patients ultimately but at the same time if it is just a matter 
of overutilization, then I think that needs to be looked at 
much more closely.
    Mr. Hackbarth. I think that may well be an issue. You know, 
we look at the rates of imaging, and there is huge variation, 
and so if you look geographically, you see big differences in 
both rates of imaging and the frequency of reimaging of the 
same patient, and so it is data like that that we look at that 
suggests to us that there is a problem there.
    Mrs. Ellmers. Thank you. And again, I think efficiency is 
one of the areas that we really need to be looking at, so thank 
you.
    I yield back the remainder of my time.
    Mr. Pitts. The chair thanks the gentlelady and now 
recognizes the gentleman from New York, Mr. Engel, 5 minutes 
for questions.
    Mr. Engel. Thank you very much, Mr. Chairman.
    There is no question that the Sustainable Growth Rate 
formula is seriously flawed and needs to be permanently 
replaced. I very strongly believe that physicians deserve to be 
fairly and appropriately compensated for the important work 
they do and the current SGR formula is failing our physicians 
and it is failing our Medicare beneficiaries.
    I am pleased that the new CBO score estimates that it will 
cost dramatically less to repeal the scheduled SGR cuts and 
freeze payment rates for the next 10 years. I know the cost of 
$138 billion will be difficult to overcome but now is the time 
to permanently fix the way we reimburse physicians for the care 
they provide to our Medicare beneficiaries. The cost of doing 
so will probably never be lower, so as a Congress, I really 
believe we must seize the opportunity.
    Let me ask you a couple of questions. In MedPAC's October 
2011 letter to the chairmen and ranking members of committee 
with jurisdiction over health care, it was stated, and I quote, 
``The greatest threat to health care access over the next 
decade is concentrated in primary care services.'' Recognizing 
primary care access is critical, as part of the Affordable Care 
Act Medicare started paying primary care physicians a 10 
percent incentive payment in 2011. It is my understanding that 
more than 156,000 primary care providers have benefited from 
these incentive programs. So my question is, does MedPAC intend 
to analyze the impact of this 10 percent incentive payment on 
beneficiary access to primary care? If so, when do you think it 
will be possible to gauge this particular incentive's impact on 
Medicare beneficiary access to primary care services?
    Mr. Hackbarth. I am not sure if that is on our near-term 
analytic agenda. I think it might be a pretty difficult piece 
of analysis to do. What I would ask, Mr. Engel, is let me talk 
to my colleagues about it and get back to you on that.
    Mr. Engel. OK. Thank you. MedPAC's reports and 
recommendations have consistently recommended moving toward 
payment models that shift providers away from fee-for-service 
and its incentives driving greater volume and intensity of 
services to delivery models that reward quality and efficiency. 
The Affordable Care Act has a number of provisions supporting 
new models of care including accountable care organizations, or 
ACOs, and value-based purchasing. How do we know if these new 
models are moving or delivering payment in the right direction? 
I believe they are, but how do we really know?
    Mr. Hackbarth. Well, in the case of ACOs, as I said 
earlier, that was put into the Medicare program without further 
demonstration or pilots because there had been a demonstration 
done known as the group practice demo. The short version of 
that is that there were some positive but not really robust, 
strong improvements in that demo but the results were deemed 
good enough that it made sense to move forward with ACOs. My 
own belief is that over time with more experience, ACOs will be 
able to improve performance even more than happened in the 
group practice demo.
    Value-based purchasing has also been evaluated, and there 
too, the results were not really robust. There was a 
demonstration done involving hospital value-based purchasing 
known as the premiere demo, and the short version of the story 
is that there may have been some positive results but the 
effects were not very strong, and some of the effects were 
accomplished by just feeding back information on quality 
without a payment attached to it.
    Mr. Engel. All right. Thank you. Let me ask you this. 
Several of our witnesses in written testimony mention the 
imperative for more data if Medicaid is going to successfully 
move from a fee-for-service reimbursement system to more 
quality-driven models. So what are some of the steps you would 
recommend CMS and HHS take to ensure our health information 
technology infrastructure is capturing the right data to 
provide adequate reimbursement for quality health care 
services?
    Mr. Hackbarth. Well, I am not at all expert, Mr. Engel, on 
health IT so I can't answer in any detailed way, but I do 
believe that as more and more health care organizations adopt 
computerized medical records, that that can greatly expand our 
capacity for assessing performance because we will have ready 
access to clinical information, not just claims-based 
information but clinical information about how well patients 
are faring in different organizations. So this is a very 
important investment the country is making. I am optimistic 
that it will pay off in the long run, but as I think you know, 
getting to that point is an arduous journey.
    Mr. Engel. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman. The gentleman 
from New Jersey, Mr. Lance, is recognized for 5 minutes for 
questions.
    Mr. Lance. Thank you, Mr. Chairman, and I will not take the 
full 5 minutes. I apologize for not being here. I was in the 
Commerce Subcommittee all morning.
    One question. One of the common responses to the letter 
that our committee sent out to physician groups was that they 
need a period of stable payments, and I don't think anybody 
disagrees with that. However, if we simply stabilize payments, 
we may not get movement to the kind of payment system we need. 
In your view, how might we incentivize physicians to move away 
from what they are currently doing and toward the payment 
system based on value and not just the volume of their 
services?
    Mr. Hackbarth. We take a bit different view on this. It has 
not been a pretty process with lots of sort of last-minute 
rescue efforts but, you know, there has been considerable 
stability in payments in recent years.
    Mr. Lance. With great angst.
    Mr. Hackbarth. Great angst, and the angst has caused 
problems, which I emphasized before you came in, Mr. Lance, and 
so I am not advocating what has happened, far from it. We think 
that if we are going to really accelerate movement to new 
payment systems, there needs to be some pressure on fee-for-
service. Now, exactly how much, how quickly is in part a 
function of how much money there is in the system after you 
figure out the pay-fors for SGR repeal. So there is not a right 
answer to how to structure that, but we do think we need a 
combination of pressure on fee-for-service and then new 
opportunities and new payment models.
    Mr. Lance. Thank you very much, Mr. Chairman. I yield back 
the balance of my time.
    Mr. Pitts. The chair thanks the gentleman. That concludes 
the first panel. Excellent testimony, very thoughtful answers. 
Thank you, Mr. Hackbarth. We will excuse panel one and call 
panel two to the witness stand, and I will introduce the second 
panel as they come.
    First of all, I want to thank all of you for agreeing to 
testify before the subcommittee today and quickly introduce our 
second expert panel. First, Mr. Howard Miller, Executive 
Director of the Center for Healthcare Quality and Payment 
Reform. Secondly, Ms. Elizabeth Mitchell, CEO of Maine Health 
Management Coalition. Thirdly, Dr. Robert Berenson, Institute 
Fellow at the Urban Institute. And finally, Dr. Cheryl Damberg, 
Senior Policy Researcher and Professor at the Pardee RAND 
Graduate School.
    Again, thank you all for coming. We have your prepared 
statements, which will be entered into the record. And Mr. 
Miller, we will begin with you. You are recognized for 5 
minutes to summarize your testimony.

STATEMENTS OF HAROLD D. MILLER, EXECUTIVE DIRECTOR, CENTER FOR 
HEALTHCARE QUALITY AND PAYMENT REFORM; ELIZABETH MITCHELL, CEO, 
   MAINE HEALTH MANAGEMENT COALITION; ROBERT BERENSON, M.D., 
   INSTITUTE FELLOW, URBAN INSTITUTE; AND CHERYL L. DAMBERG, 
    PH.D., SENIOR POLICY RESEARCHER, PROFESSOR, PARDEE RAND 
                        GRADUATE SCHOOL

                 STATEMENT OF HAROLD D. MILLER

    Mr. Miller. Thank you, Mr. Chairman. It is a pleasure to be 
here today.
    You have what may seem like an impossible task, to repeal 
the SGR program and save money for the Medicare program and do 
that without harming patients or physicians, but I believe that 
you can do that because of four key facts.
    The first fact is that there are tremendous opportunities 
to save tens of billions of dollars in the Medicare program by 
helping to prevent avoidable admissions to the hospital, 
readmissions and to reduce the incredible rate of infections, 
complications and other kinds of problems that occur to 
patients, medical errors that exist today, and there is no need 
to deny beneficiary services or to cut fees in order to reduce 
spending.
    The second fact is that the current fee-for-service system 
actually makes it difficult for physicians to help Medicare 
take advantage of those savings opportunities. In fact, under 
fee-for-service, the most desirable outcome of all, which is 
keeping you healthy, doesn't get paid for at all.
    The third fact is that you can't fix fee-for-service simply 
by adding more pay-for-performance bonuses or penalties or 
created shared savings programs. Many current payment reform 
efforts, I think, will have limited success because they leave 
the current broken fee-for-service system in place, and 
particularly they force physicians to lose money when they help 
Medicare reduce spending.
    The fourth fact is that there are better ways of paying 
physicians that give them the flexibility to both improve 
patient care and reduce Medicare spending without having to 
take financial losses themselves. I have outlined these in my 
testimony, and there are reports available on our Web site that 
describe these in significant detail.
    What I wanted to focus on is how to actually get these 
accountable payment models in place. I believe that more is 
needed than the traditional top-down approach where CMS 
develops all new payment models. Because the specific 
opportunities and barriers differ from community to community 
and because different physicians will have different levels of 
willingness and ability to participate, many different 
solutions will be needed.
    Most payment models today are focused on primary care 
hospitals and large ACOs but we need to also give every 
physician specialty the opportunity to improve care and reduce 
costs within its own sphere of influence. To do this, I 
recommend that Congress also establish a bottom-up approach 
whereby physicians, provider organizations, medical specialty 
societies and regional multi-stakeholder collaboratives are 
invited to develop payment models that will work well for 
individual physician specialties and the realities of their own 
communities. If any of these groups bring CMS a payment model 
that is specifically designed to improve patient care and save 
Medicare money, CMS should not only have the power but the 
obligation to approve it. CMS should then also make that same 
payment model available to any physician who wants to 
participate and has the capabilities to do so. Moreover, if a 
physician is participating in such a model, they shouldn't be 
subject to threats of SGR-type payment reductions. This kind of 
bottom-up approach is not as radical as it might seem. The CMS 
Innovation Center has been doing something just like this for 
the past 2 years through programs such as the Innovation Awards 
and the Bundled Payments for Care Improvement Initiative.
    But I think there are five policies that Congress needs to 
establish if you are going to have a truly successful process 
for developing and implementing new payment models as quickly 
as possible.
    The first policy is that new payment models should be able 
to be proposed to CMS at any time and there should be no limit 
on how many different proposals can be improved as long as they 
improve care and save Medicare money. Proposals also need to be 
reviewed quickly, and as I mentioned, CMS should have the 
obligation to approve a proposal if it improves patient care 
and saves Medicare money.
    The second policy is that there should be frequent 
opportunities for physicians to apply to participate in the 
already approved payment models. Every physician should be 
permitted to participate in an approved accountable payment 
model whenever they are ready to do so.
    The third policy: Physicians need to be given access to 
Medicare claims data so that they can actually determine where 
the opportunities for savings are, how care will need to be 
redesigned to achieve those savings, and how payment will need 
to change to support better care at a lower cost. I can't even 
begin to describe to you what a barrier it is moving forward on 
this because of the lack of information that physicians have 
available to them.
    Fourth policy: Once a physician is participating in an 
accountable payment model, they should have the ability to 
continue participating as long as they wish to do so if the 
data shows the quality of care is high and Medicare spending is 
being controlled. Most innovative payment models today are 
explicitly time limited, and no physician or other health care 
provider is going to make significant changes in the way care 
is delivered if they might be forced to revert to the 
traditional fee-for-service system within a few years. We need 
to stop doing demonstration projects and start implementing 
broad-based payment reforms.
    Fifth policy: Funding should be made available to medical 
specialty societies and multi-stakeholder regional health 
improvement collaboratives so that they can provide technical 
assistance to physicians. Most physicians don't have either the 
time or the training to determine whether and how a new payment 
model will work for them. If organizations that they trust, 
though, can help them analyze data and redesign the way they 
deliver care, I think physicians are far more likely to both 
embrace new payment models and to be successful in implementing 
them.
    Finally, I must note that I think that payment reforms will 
be much easier to implement and far more successful if you also 
take steps to proactively involve the patients, the 
beneficiaries. Many of the existing payment models are forced 
to use complicated statistical attribution methodology to 
determine which physicians are accountable for which patients. 
It would make far more sense to simply ask the beneficiaries to 
designate which physicians they want to be in charge of each of 
their conditions.
    I would be happy to answer questions that you may have.
    [The prepared statement of Mr. Miller follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.036
    
    [GRAPHIC] [TIFF OMITTED] T9793.037
    
    [GRAPHIC] [TIFF OMITTED] T9793.038
    
    [GRAPHIC] [TIFF OMITTED] T9793.039
    
    [GRAPHIC] [TIFF OMITTED] T9793.040
    
    [GRAPHIC] [TIFF OMITTED] T9793.041
    
    [GRAPHIC] [TIFF OMITTED] T9793.042
    
    [GRAPHIC] [TIFF OMITTED] T9793.043
    
    [GRAPHIC] [TIFF OMITTED] T9793.044
    
    [GRAPHIC] [TIFF OMITTED] T9793.045
    
    [GRAPHIC] [TIFF OMITTED] T9793.046
    
    [GRAPHIC] [TIFF OMITTED] T9793.047
    
    [GRAPHIC] [TIFF OMITTED] T9793.048
    
    [GRAPHIC] [TIFF OMITTED] T9793.049
    
    [GRAPHIC] [TIFF OMITTED] T9793.050
    
    [GRAPHIC] [TIFF OMITTED] T9793.051
    
    [GRAPHIC] [TIFF OMITTED] T9793.052
    
    [GRAPHIC] [TIFF OMITTED] T9793.053
    
    [GRAPHIC] [TIFF OMITTED] T9793.054
    
    [GRAPHIC] [TIFF OMITTED] T9793.055
    
    [GRAPHIC] [TIFF OMITTED] T9793.056
    
    [GRAPHIC] [TIFF OMITTED] T9793.057
    
    [GRAPHIC] [TIFF OMITTED] T9793.058
    
    [GRAPHIC] [TIFF OMITTED] T9793.059
    
    [GRAPHIC] [TIFF OMITTED] T9793.060
    
    [GRAPHIC] [TIFF OMITTED] T9793.061
    
    Mr. Pitts. Thank you, Mr. Miller.
    Ms. Mitchell, you are recognized for 5 minutes for your 
opening statement.

                STATEMENT OF ELIZABETH MITCHELL

    Ms. Mitchell. Thank you, Mr. Chairman and members of the 
committee. My name is Elizabeth Mitchell. I am the CEO of the 
Maine Health Management Coalition, and I want to start by 
thanking you for taking on this issue. As I am sure you well 
know, employers and State governments can no longer afford cost 
increases, our employees can't go further years without wage 
increases, and our providers are increasingly burdened in a 
system that does not reward high performance and creates daily 
barriers to improving care for patients, largely due to current 
payment systems and a lack of data.
    Thank you for also hearing from a regional health 
improvement collaborative. We are an employer-led multi-
stakeholder collaborative based in Maine. We have been around 
for 20 years and we include employers from the State employees 
to L.L. Bean to the Medicaid program, large multi-specialty 
groups, academic medical centers and primary care physicians. 
We work together in a partnership to improve quality and reduce 
cost.
    Maine has been very successful in addressing quality. We 
have some of the best health care quality in the country. We 
know that our efforts in data sharing measurement and public 
reporting have been key to achieving those gains. However, 
despite these achievements, quality and safety failings 
continue, and more discouraging is that the quality 
improvements have not reduced the costs of care for purchasers 
and patients.
    Costs and quality vary by region as do opportunities for 
improvement. Maine is the birthplace of the Dartmouth Atlas, 
where Dr. John Wennberg first observed vast differences in 
maternity care within Maine with no correlation to 
demographics, patient acuity or patient preference. He also 
noted that his kids would have received vastly different 
treatment for their tonsillitis if they lived one county away. 
Variation in cost is even more pronounced.
    Just as there is no single problem facing health care, 
there is no single one-size-fits-all national solution. I 
believe with adequate data and support, regions are well 
positioned to not only identify but help solve their own 
problems. Data is necessary to identify regional improvement 
opportunities and to engage stakeholders in improvement. The 
Dartmouth Atlas would never have been possible without good 
data. But data is necessary but insufficient. Once 
opportunities are identified, stakeholders, particularly 
physicians, must be actively engaged to change current 
practice. We must now be equally effective using data to engage 
physicians, purchasers and patients in care improvement. Data 
is essential for many, many reasons: identifying priority costs 
and quality improvement opportunities, enabling performance 
measurement and public reporting, establishing cost and quality 
performance targets, informing choice by consumers, engaging 
physicians and managing population health. The premise of 
medical homes and ACOs is better management of population 
health but it is both unreasonable and unfair to ask physicians 
to assume risk without adequate, timely data.
    States and communities face different challenges and 
physicians need local, timely data to direct their work. To 
direct physicians to focus improvement efforts on non-priority 
areas is a sure way to frustrate them when they are not even 
paid for this improvement work. But they know where care can be 
improved if you ask. Significant savings are also possible 
through readmission reduction, through improved C-section 
rates. There are opportunities around the country if you have 
the right data to target them.
    You rightly recognize the central role of measurement in 
both improvement and accountability. A key barrier to 
addressing cost in ways that were equally successful to 
addressing quality is the lack of nationally endorsed cost 
measures. Without measures endorsed by the National Quality 
Forum, we found it impossible to reach consensus on relevant 
metrics. Regardless of the payment system, appropriate and 
transparent measurement is required to understand how patients 
fare in new models. Good outcome and patient experience 
measures will also support more flexible payment models. New 
models and incentives to reduce costs must be balanced by 
ongoing measurement.
    You referenced physician-endorsed measures but we would 
urge you to consider multi-stakeholder-endorsed measures as 
those who pay for and receive care, purchaser and patient 
voice, are crucial to identifying the right performance 
indicators together with physicians. Whether measurement or 
population health management, none of this work is possible 
without data.
    Unfortunately, multi-payer data is very hard to obtain. 
Many health plans consider it proprietary. Many provider-run 
data organizations are reluctant to share it publicly, but as 
Dr. David Howes, the president of Martin's Point Health Care 
summed up our challenge, ``The age of competing for market 
share by controlling access to data is over. Transparent all-
payer data should be made widely available and competition 
should be based solely on performance.''
    Medicare's Qualified Entity program is an important step 
toward giving communities and providers the information they 
need to improve care. The Qualified Entity program is a strong 
signal of partnership and support for local innovation and 
endorsement for use of integrated data. CMS should not only 
continue to enable qualified groups to share data but they 
should accelerate it with financial support and greater 
flexibility.
    Regional health improvement collaboratives are stewards of 
multi-payer data and experienced leaders using the data for 
improvement. We may be your innovation infrastructure and 
partners for implementation on the ground.
    [The prepared statement of Ms. Mitchell follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.062
    
    [GRAPHIC] [TIFF OMITTED] T9793.063
    
    [GRAPHIC] [TIFF OMITTED] T9793.064
    
    [GRAPHIC] [TIFF OMITTED] T9793.065
    
    [GRAPHIC] [TIFF OMITTED] T9793.066
    
    [GRAPHIC] [TIFF OMITTED] T9793.067
    
    [GRAPHIC] [TIFF OMITTED] T9793.068
    
    [GRAPHIC] [TIFF OMITTED] T9793.069
    
    [GRAPHIC] [TIFF OMITTED] T9793.070
    
    [GRAPHIC] [TIFF OMITTED] T9793.071
    
    [GRAPHIC] [TIFF OMITTED] T9793.072
    
    [GRAPHIC] [TIFF OMITTED] T9793.073
    
    [GRAPHIC] [TIFF OMITTED] T9793.074
    
    [GRAPHIC] [TIFF OMITTED] T9793.075
    
    [GRAPHIC] [TIFF OMITTED] T9793.076
    
    [GRAPHIC] [TIFF OMITTED] T9793.077
    
    [GRAPHIC] [TIFF OMITTED] T9793.078
    
    [GRAPHIC] [TIFF OMITTED] T9793.079
    
    [GRAPHIC] [TIFF OMITTED] T9793.080
    
    [GRAPHIC] [TIFF OMITTED] T9793.081
    
    [GRAPHIC] [TIFF OMITTED] T9793.082
    
    [GRAPHIC] [TIFF OMITTED] T9793.083
    
    Mr. Pitts. Thank you, Ms. Mitchell.
    Dr. Berenson, you are recognized for 5 minutes to summarize 
your testimony.

                  STATEMENT OF ROBERT BERENSON

    Dr. Berenson. Thank you, Chairman Pitts, Mr. Pallone and 
members of the committee. I very much appreciate the 
opportunity to provide testimony as the committee attempts to 
identify how to achieve higher value of physician services for 
Medicare beneficiaries and taxpayers. It is a subject that I 
have been deeply involved with through most of my professional 
career as a practicing general internist, practicing just a few 
blocks from here for over a decade, a medical director of 
managed care plans, a senior official at CMS, and Vice Chair of 
MedPAC until this past May. As an Institute Fellow at the Urban 
Institute, I am currently involved in a project to improve how 
services and the Medicare fee schedule are valued for payment.
    While there is broad agreement on the need to move from 
volume-based to value-based payment, the current emphasis 
assumes that measuring a few quality measures and somehow 
attributing costs generated by many providers to an individual 
physician can produce accurate estimates of a physician's 
value. Measurement is more difficult than some policymakers 
assume while the evidence on pay-for-performance for hospitals 
frankly is not encouraging.
    For physicians, behavioral economics suggest that pay-for-
performance can crowd out professionals' intrinsic motivation 
to help their patients and can actually worsen performance. 
What has been lost in equating value-based payment with pay-
for-performance is the recognition that value can be fostered 
not only by improving how well particular services are 
performed but also by improving the kind and mix of services 
beneficiaries receive. The Medicare fee schedule for physicians 
and other health professionals produces too many technically 
oriented services including imaging tests and procedures and 
not enough patient-clinician interaction to diagnose 
accurately, to develop treatment approaches consistent with the 
patient's values and preferences and continuing engagement to 
assure implementation of a mutually agreed-upon treatment plan, 
nor does the fee schedule emphasize care coordination and other 
patient-centered activities that would actually improve patient 
outcomes.
    However, the price distortions that plague the current fee 
schedule are not inevitable. Even in fee-for-service, Medicare 
can buy a better mix of services by altering the prices paid 
for services, balancing considerations of beneficiary access to 
care with reducing overuse of services caused at least in part 
by inordinately high payment for some services. We can improve 
the fee schedule over the short term even if the ultimate goal 
is to reduce its importance or eliminate it altogether. In 
fact, in my view, it is necessary to improve the fee schedule 
to be able to successfully implement new payment models.
    First, the migration to new payment approaches will take 
years. Even then, fee-for-service may be part of new payment 
approaches and also may need to be retained for certain regions 
and particular specialties. Second, fee schedules are the 
building blocks for virtually all the new payment models, most 
notably, bundled episodes. Errors in fee schedules would 
therefore be carried over into errors in the calculations of 
the new payments. Third, many prototypical ACOs, which I agree 
with Chairman Hackbarth is the most promising new delivery 
model, use relative value units from the Medicare fee schedule 
as the basis for determining productivity for their member 
physicians. Again, because fee schedule prices are distorted in 
relation to resource costs, their assessments can be 
inaccurate, leading specialists to be valued by the ACOs as 
more productive than primary care physicians or one kind of 
specialist more productive than another kind of specialist 
simply because of errors in relative value units.
    As we think about moving to new payment models through the 
kind of activities that are going on with the Innovation Center 
at CMS, I would recommend the following immediate agenda for 
improving Medicare payment to physicians. I would suggest 
repealing the Sustainable Growth Rate for the reasons that have 
come up already, especially now that the score is only $138 
billion over 10 years. I would not implement a new volume 
control formula at this time, especially given that volume and 
intensity of services is remarkably low, at least at this 
moment, but rather permit CMS to more affirmatively modify 
prices to try to influence volume and intensity of services. I 
would consider narrowing or eliminating the in-office ancillary 
services exception to the Stark self-referral regulations if 
the volume of particular services grows unabated. I would 
revise the definitions of evaluation and management service 
codes to better describe the work physicians perform, 
especially for patients with chronic conditions and functional 
limitations, and also to decrease the current epidemic of up-
coding that is taking place. And finally, I would reduce or 
eliminate the site-of-service differential, which pays 
hospitals much more for physician services than are paid to 
independent practices, separately recognizing the costs of 
unique hospital obligations and services hospitals uniquely 
provide.
    Thank you very much.
    [The prepared statement of Dr. Berenson follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.084
    
    [GRAPHIC] [TIFF OMITTED] T9793.085
    
    [GRAPHIC] [TIFF OMITTED] T9793.086
    
    [GRAPHIC] [TIFF OMITTED] T9793.087
    
    [GRAPHIC] [TIFF OMITTED] T9793.088
    
    [GRAPHIC] [TIFF OMITTED] T9793.089
    
    [GRAPHIC] [TIFF OMITTED] T9793.090
    
    [GRAPHIC] [TIFF OMITTED] T9793.091
    
    [GRAPHIC] [TIFF OMITTED] T9793.092
    
    [GRAPHIC] [TIFF OMITTED] T9793.093
    
    [GRAPHIC] [TIFF OMITTED] T9793.094
    
    [GRAPHIC] [TIFF OMITTED] T9793.095
    
    [GRAPHIC] [TIFF OMITTED] T9793.096
    
    Mr. Pitts. The chair thanks the gentleman, and Dr. Damberg, 
you are recognized for 5 minutes to summarize your testimony.

                 STATEMENT OF CHERYL L. DAMBERG

    Ms. Damberg. Thank you. I want to thank the committee for 
inviting me here today. I am a Senior Researcher at the RAND 
Corporation, and the focus of my work over the past decade has 
been looking to evaluate pay-for-performance or performance-
based payment models.
    My remarks today address issues related to measuring the 
performance of physicians under these new payment models that 
will incentivize or tie payment to performance, and there are a 
number of issues or measurement issues that I want to call to 
your attention.
    Issue number one: Existing performance measures are not 
suitable for newer models that emphasize the delivery of 
efficient, high-quality care across a continuum of time and 
health care settings. Current measurement focuses on discrete 
events in single settings of care or silos rather than looking 
longitudinally across an entire episode of care. The portfolio 
of measures that exist today were not developed or envisioned 
to be used in the types of accountability and payment 
applications that are emerging nor is the portfolio necessarily 
focused on the right measures. Measurement needs to migrate 
away from a siloed approach which further perpetuates a lack of 
coordination to quality assessment that encompasses all care 
delivered to patients across an entire episode.
    Issue number two: When we ask health care providers to 
devote resources to measurement, it is critical that we focus 
on the important aspects of care that matter most to patients 
and which providers can most readily influence. Patients care 
most about outcomes such as whether a chronic illness like type 
2 diabetes was prevented or for a patient with diabetes whether 
the physician and his or her care team helped the patient 
manage the condition to prevent complications and premature 
death. Patients also care about whether they can access care 
when they need it, whether their care is coordinated. They also 
want to know about how well they are treated in the system and 
whether their preferences are considered in treatment 
decisions. And lastly, patients care about the cost of 
treatment. Regardless of the payment model used, the true north 
and holy grail of performance-based accountability and payment 
is measurement of outcomes.
    Issue number three: Outcome measures are currently lacking 
in many instances or in a nascent state of development. For 
example, there are a small number of measures of cost or 
efficiency and many are poorly constructed and have not been 
fully tested for their validity or reliability. Measures that 
assess change over time and important intermediate outcomes 
such as blood pressure control and that influence long-term 
outcomes such as heart attack and stroke do not yet exist. The 
United States could learn from efforts in Great Britain. Since 
2009, the United Kingdom's national health system has invited 
all patients who are having a variety of surgeries to fill in 
patient-reported outcome questionnaires and has generated 
comparative statistics to incentivize improvements and help 
patients understand performance differences across different 
sites of care.
    Issue number four: As we transition to a performance 
dashboard with more emphasis on outcomes, there is work that 
can be done immediately to strengthen the types of measures 
that are currently used. For example, we can shift away from 
focusing on discrete clinical services toward longitudinally 
measuring the management of a patient. In addition, the HIT 
infrastructure may enable the creation of new, novel measures. 
For example, EHRs and health information exchange audit trails 
could be used to construct indirect measures of quality. A 
specific example is medication reconciliation and hospital 
discharge. In lieu of a checkbox in the HER, the audit trail 
could provide an indirect measure to determine whether the 
physician accessed the patient medication list and made any 
modifications prior to discharge.
    Issue number six: We must focus efforts on strengthening 
data systems to facilitate delivery of high-quality care by 
physicians and the construction of performance measures. We 
cannot expect physicians to coordinate care, avoid duplicative 
use of services and manage total cost of care when they are 
flying blind. I commend to you a paper that was written by a 
colleague of mine, Eric Schneider. It was actually written in 
1999 but is still highly relevant, and this paper lays out a 
roadmap for an integrated health information framework and 
identifies seven features the framework should possess. I won't 
go into those. They are in my written testimony.
    Issue number seven: We have to enlist physicians as true 
partners in the process of defining measures for which they 
will be held accountable as individuals and more broadly as 
care teams and systems of care. They have a vitally important 
role to play in the selection of measures and choosing concepts 
that will be measured weighing the scientific evidence, 
specifying the measures and assessing the feasibility and 
practice and then ultimately endorsing the measures that will 
be used once developed. Lastly, because much of the current 
measure development is occurring using federal tax dollars, 
there is a clear need to coordinate these efforts to better 
deploy scarce resources and minimize burden on providers.
    In conclusion, I would like to summarize the actions that 
could be taken. I think there is more federal leadership that 
could happen to develop a robust measurement strategy and shift 
the focus and resources towards a greater emphasis on defining 
and measuring outcomes. Secondly, support the development of 
the robust health information framework that is integrated and 
will allow data sharing across providers and payers. Third, 
continue efforts to coordinate measurement development within 
and outside the federal government. Fourth, use a rigorous and 
transparent and inclusive process to develop measures. And I 
would just leave you with the thought that in addition to 
paying providers differentially, it is important to note that 
public transparency or public reporting can be a powerful 
incentive.
    Thank you very much.
    [The prepared statement of Ms. Damberg follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.097
    
    [GRAPHIC] [TIFF OMITTED] T9793.098
    
    [GRAPHIC] [TIFF OMITTED] T9793.099
    
    [GRAPHIC] [TIFF OMITTED] T9793.100
    
    [GRAPHIC] [TIFF OMITTED] T9793.101
    
    [GRAPHIC] [TIFF OMITTED] T9793.102
    
    [GRAPHIC] [TIFF OMITTED] T9793.103
    
    [GRAPHIC] [TIFF OMITTED] T9793.104
    
    [GRAPHIC] [TIFF OMITTED] T9793.105
    
    [GRAPHIC] [TIFF OMITTED] T9793.106
    
    [GRAPHIC] [TIFF OMITTED] T9793.107
    
    [GRAPHIC] [TIFF OMITTED] T9793.108
    
    [GRAPHIC] [TIFF OMITTED] T9793.109
    
    [GRAPHIC] [TIFF OMITTED] T9793.110
    
    [GRAPHIC] [TIFF OMITTED] T9793.111
    
    [GRAPHIC] [TIFF OMITTED] T9793.112
    
    Mr. Pitts. The chair thanks the gentlewoman, and that 
completes the opening statements of the second panel. I will 
now begin questioning and recognize myself for 5 minutes for 
that purpose.
    Dr. Damberg, we will start with you. You state that the 
single most important factor in facilitating or impeding the 
use of measures was the availability of data to construct 
performance measures. Can you describe a strategy for bridging 
this data gap? Is the current HIT legislative and regulatory 
climate facilitating or impeding this effort? If the latter, 
what changes do you suggest to remedy the current shortcomings?
    Ms. Damberg. While there have been significant investments 
in the health information structure, I don't think that what is 
occurring currently is going to help us ultimately with 
performance measurements, and that is in part because we have 
not identified the specific data elements, come up with 
standardized data definitions for those, and I think we are 
still a significant ways off from data sharing among the 
different partners, in part because of issues around security, 
privacy issues and confidentiality of the data. So I think 
those are several areas where attention needs to be focused.
    Mr. Pitts. Thank you.
    Ms. Mitchell, can physicians in smaller practices be 
adequately measured for quality and efficiency? I understand 
that one problem in terms of measuring smaller-sized practices 
is the limitations of small sample sizes. Is there a way to 
aggregate data from a number of smaller practices to overcome 
this barrier?
    Ms. Mitchell. I think it is incredibly important that we 
ensure that all measures are reliable and valid, and there will 
be sample-size challenges to that. We could also look to 
patient-reported outcomes, however, functional status measures, 
patient experience measures. There are measures that can be 
used for smaller practices that are very relevant to other 
consumers but it will be critical that all measures, especially 
if they are publicly reported or used for payment, are valid 
and reliable.
    Mr. Pitts. Mr. Miller, there are a number of new payment 
reform models being developed, and as policymakers, we 
obviously can't incorporate all current possible future models 
into one piece of legislation. Yet one lesson from the ACO 
experience is that if you make the model too prescriptive, it 
may preclude many providers from participating. Have you given 
thought as to how you might develop a policy to approve new 
payment reform models that has the proper balance of detail and 
flexibility?
    Mr. Miller. As I outlined in my testimony, I think that if 
we have both a top-down and a bottom-up approach, we will be 
able to get a much richer set of models that are workable much 
more quickly than we do today. The problem that you saw with 
the ACO regulations was, it was designed to be a one-size-fits-
all approach, and so naturally there were a lot of concerns 
about how well it was going to work in all circumstances but 
basically in the end it was one approach. And I think that what 
you need to distinguish is that it was one approach to payment 
called the Shared Savings program. There are many different 
ways that you could create an accountable care organization, 
which I think is a very important model to think about, but you 
don't necessarily--the best model is not to do it through a 
Shared Savings program.
    So for example, there are many physician groups and IPAs 
around the country that did not want to participate in that 
particular program because they felt they were still being paid 
by fee-for-service with simply a Shared Savings add-on but they 
did want to participate in the Pioneer ACO model because they 
had the capability to actually accept a risk-adjusted global 
payment and be able to significantly change care that way. So I 
think that is an example where if you actually let the 
providers come forward and define what they are willing and 
able to do, you will be able to get a set of models, not in 
theory that you would say we have to create a dozen models that 
maybe nobody wants but you would actually have people coming 
forward saying I know that I can improve care for beneficiaries 
and I can save money if you change the payment model in the 
following way.
    Mr. Pitts. Thank you.
    Dr. Berenson, given the fact that fee-for-service will be 
around and may even play a prominent role in future payment 
systems, at least for the foreseeable future, how do we deal 
with spending in the fee-for-service segment of the system? In 
other words, how do we control for increases in the volume and 
intensity of services? Will we still need a system of spending 
targets and possible cuts, and if so, how should the targets be 
structured.
    Dr. Berenson. Yes, that is a very interesting question. I 
would point to the results of what happened when the Congress 
in the Deficit Reduction Act of 2005 correctly, in my opinion, 
reduced dramatically the spending for advanced imaging services 
like MRIs and CTs and PET scans. For reasons I don't quite 
understand, we were actually paying physician practices more 
than we were paying outpatient departments for those services. 
As part of the doc fix for that year, those payments were 
reduced, and what happened in addition to the savings from the 
prices coming down significantly, volume of those services over 
the subsequent years has actually moderated, and what I hear 
anecdotally is a lot of midsized practices that really had no 
business purchasing their own MRI machines and were doing so 
because of its profitably suddenly decided this was no longer a 
profitable thing to do.
    So what I have suggested in my testimony is that the 
Secretary should have somewhat greater authority to affect 
prices where they also affect volume of services. I mean, 
physicians do respond. There is this notion that physicians 
simply respond to price reductions by increasing volume. That 
is too simplistic a notion. It varies by the service. I think 
we need to be much more sophisticated about seeing the 
relationship between price and volume.
    Mr. Pitts. The chair thanks the gentleman and now yields to 
the ranking member 5 minutes for questions. Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman.
    My question is to Dr. Berenson. While there is a consensus 
regarding the need to move to more value-based payment systems, 
no one seems to have a clear idea how far or, you know, how we 
got from our current fee-for-service system or how we go from 
our current fee-for-service system to some of the new payment 
reform models like the accountable care organizations, and as 
you point out in your written testimony, fee-for-service is 
actually the foundation for many of these new payment models. 
So I wanted to ask, if we want to improve the way we pay for 
fee-for-service at the same time we are creating incentives for 
providers to move into new delivery and payment models, what 
would this transitional period look like?
    Dr. Berenson. Well, I pretty much think we are in the 
transitional period now, even if we can't recognize it, because 
of all of the experimentation that is now going on. As Mr. 
Miller pointed out, we have both shared savings ACOs and risk-
bearing ACOs that are being tested. We have got various models 
for bundled episodes being tested, the Independence at Home, 
which I think is a very important aspect, which would emphasize 
home care for frail, elderly, medical homes, et cetera. I think 
what I said in my testimony is that it is going to take us a 
number of years to sort it out. I think we should be doing 
robust experimentation now. I support Harold's notion of having 
some bottom-up approaches that we would test. I also would 
endorse Chairman Hackbarth's notion that as we go through this 
transition, we need to make it very--we need to put pressure on 
the fee-for-service reimbursements, and part of what I 
suggested is in shifting more reimbursement to primary care or 
away from tests and procedures, we would be putting that 
pressure. Ultimately, we want to be in a place where physicians 
find it is in their own interest to want to move into a new 
organizational structure or accept new payments rather than 
stay in fee-for-service.
    I think most docs know that sort of unfettered fee-for-
service with no incentives for collaboration and coordination 
probably is not the right payment model. So I think we are in 
the transition now and happily the volume and intensity of 
services and therefore CBO's estimates of future spending in 
Medicare has moderated significantly, so I think we can take 
the time to really do what is necessary to understand where we 
want to go at some point. I don't know if that is 5 years from 
now, 7 years from now. We would have to at least on a regional 
basis, possibly on a national basis, say we now have enough 
confidence in an alternative payment model that we are really 
going to expect doctors to move to that with the fee-for-
service as sort of a legacy system for those who can't make the 
adjustment.
    Mr. Pallone. All right. Thanks. I am going to try to get 
one more question in here for you and also for Ms. Mitchell, 
and Mr. Chairman, for this purpose I wanted to ask unanimous 
consent to introduce into the record this letter from the 
National Partnership for Women and Families, which I think you 
have.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pallone. Thank you, Mr. Chairman.
    There has been a significant movement over the past decade 
towards the establishment of multi-stakeholder consensus 
processes for health care quality and performance measurement, 
and Mr. Chairman, this letter references the SGR proposal being 
circulated by the Republican Ways and Means as well as Energy 
and Commerce staff, and in that letter, the National 
Partnership raises a number of concerns about the role medical 
specialty societies are being given to develop and select 
quality and performance measures that would be the basis of 
their payment and the apparent exclusion of other stakeholders 
including consumers. They are concerned that this appears to 
reverse the positive trend over a number of years towards 
including a broader group of stakeholders in the process.
    So Dr. Berenson and Ms. Mitchell, over recent years there 
has been a lot of work developing consensus processes for 
development of quality and performance measures. What are your 
views regarding the appropriate roles for physicians, and how 
important is it to have consumers and other stakeholders 
involved in this process? And you have got 28 seconds.
    Dr. Berenson. Twenty-eight seconds? I will be very quick. I 
am a believer in multi-stakeholder participation but ultimately 
I think Dr. Damberg would agree that the measures that we come 
up with need to be valid and reliable and need to pass sort of 
scientific muster from an organization like the National 
Quality Forum. So I would have consumers at the table and I 
wouldn't simply defer to what the specialty societies would 
prefer in terms of how they would be measured.
    Mr. Pallone. Ms. Mitchell, quickly.
    Ms. Mitchell. Well, having run a multi-stakeholder process 
for over a decade in Maine to include physicians, unions, 
employers and consumers at the table to select measures, I can 
tell you it is possible, and it is very important. We have 
measurements now available that would not be if it were just 
for one stakeholder group. So it is challenging but it is 
extremely important, and I think it absolutely can be done and 
I think the National Quality Forum and their multi-stakeholder 
approach is very important.
    Mr. Pallone. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the vice chairman, Dr. Burgess, for 5 minutes for 
questions.
    Mr. Burgess. Thank you, Mr. Chairman. I want to thank our 
panelists for sticking with us through what has been a long but 
important hearing.
    Dr. Berenson, I was hoping you could help me with a couple 
of the points that you made, specifically point three and point 
five, point three being the in-office ancillary services where 
you said you would target those. I presume that means reduce 
those, and you would target those for fee reductions.
    Dr. Berenson. I would want to see whether the reason that a 
lot of--there is abuse in the in-office ancillary exception. We 
now have physicians like dermatologists and gastroenterologists 
who used to send their specimens out to an independent 
pathology lab that are now doing those in-house under this 
exception, but at least some articles have described instead of 
doing the specimen to confirm that the biopsy is not malignant, 
they are now doing multiple slices, getting multiple payments, 
clearly abusing the opportunity to do those services 
themselves. Imaging has been a major concern about the in-
office exception with practices that are buying machines and 
then supplying them. So what we learned with the imaging 
example if we reduce the overgenerous payment, we reduce the 
incentive to do some of these services. So that is what I had 
in mind.
    Mr. Burgess. I appreciate you paying attention when we were 
doing the Deficit Reduction Act in 2005 because that was the 
work of this committee that led to that. But then point five, 
the counterproductive nature of the correction of misvalued 
services, and this one based on the site-of-service 
differential, which really has led to almost the destruction of 
office-based cardiology in favor of hospital-based cardiology, 
and we literally watched that happen over the last 3 or 4 
years, and I really think it is to the detriment of patient 
service. But nobody is getting a better deal because those 
services are now performed in the hospital. In fact, it was 
probably a better deal for the patient regardless of the 
pricing structure. It was a better deal for the patient to be 
seen in the cardiologist's office, have the tests done, have it 
read and treatment rendered and judgment rendered at that point 
rather than multiple trips back and forth to the hospital to 
have the procedure done and then the consultation with the 
cardiologist. Can you speak to that?
    Dr. Berenson. Yes. There may be reasons for hospitals to 
employ physicians if they have a commitment to become an 
integrated delivery system and potentially an ACO but a good 
reason is not to take advantage of the provider-based payments 
that provide, I would call windfall revenues for the hospital. 
It raises the cost to Medicare, raises the cost-sharing 
obligations to beneficiaries, does, as you point out, sometimes 
lead to greater inconvenience. The hospitals say that they do 
have obligations that practices don't have--stand-by capacity, 
24/7 stand-by capacity, running emergency departments, seeing 
uninsured. I want to recognize those costs but I want to 
recognize those costs and services, inpatient services or ED 
services, not in an outpatient service that can be done just as 
well at roughly the same cost in a doctor's office.
    So I agree with you. I think it is unfortunate that we have 
had a huge migration of cardiologists out of office to become 
hospital employees, not to be providing higher quality or 
efficiency but to take advantage of this site-of-service 
payment anomaly.
    Mr. Burgess. Well, we have come to an unfortunate place in 
our country where it is prohibited for a doctor to own a 
hospital but hospitals can own doctors, and that to me has put 
entirely the wrong incentives out there.
    Dr. Berenson. Well, we do have some multi-specialty group 
practices that own the hospital so----
    Mr. Burgess. But under the Affordable Care Act, as far as 
generating and developing a new facility, that can't happen, 
which really seems unfortunate because of the fact that you and 
I hold a professional degree, we are precluded from entering a 
business practice.
    Dr. Berenson. The issues there relate to whether the 
physician-owned hospitals were in a position to cherry-pick the 
patients and, you know, MedPAC and others provided reports. It 
is a difficult issue.
    Mr. Burgess. It is not as clear-cut as that. I read a very 
clear article on that written in Health Affairs in March of 
2008 by me which said the most valuable thing I have is my 
time, and if I have got an uninsured patient and I can take 
care of them at an outpatient surgery site and my time is 
valued by that outpatient surgery site, I am actually ahead 
even though I didn't make any money that day and the facility 
didn't make any money. It didn't cost me the vast investment of 
time that it would cost me to wait in line behind a hospital 
surgery schedule. A separate point. I didn't mean to bring that 
up but you forced me.
    Dr. Damberg, let me ask you a quick question. You just 
referenced that patients care about the cost of care. Did I 
hear you right when you said that?
    Ms. Damberg. That is correct.
    Mr. Burgess. Well, now, the Commonwealth folks came out 
just earlier this month and said that activated patients cared 
about the cost of their care, and while I don't really want to 
get into the nuances of what an activated patient is, certainly 
that patient who has a financial interest, a health savings 
account owner, for example, in my estimation would be an 
activated patient. So that would be a patient who cared about 
the cost of care. In my experience as a physician, when someone 
came in and I recommended a test or procedure, the next 
question was, doctor, is it really necessary; doctor, is it 
safe. The next question was, doctor, does my insurance cover 
it. If the answer to that question was yes, there was very 
little other curiosity about anything else. So am I wrong in 
thinking that way?
    Ms. Damberg. So let me give you a little story from 
California from where I hail. So----
    Mr. Burgess. Let us do real life, not California.
    Ms. Damberg. Well, I think the example holds the rest of 
the country. So someone that I know needed to have cataract 
surgery, and he looked within a particular zip code and found 
variation in terms of the amount of money it would cost to do 
this procedure ranging from $3,500 to $11,000, and given that 
he is financially at risk for a portion of that payment----
    Mr. Burgess. Correct.
    Ms. Damberg [continuing]. That starts to have significant 
implications.
    Mr. Burgess. And it is the activated-patient concept.
    Ms. Damberg. Right, and I think what you see on the private 
sector side now is movement toward what is called referenced-
based pricing, and so what health plans are doing on behalf of 
employers is going out and doing that work to try to understand 
these pricing differentials, make that available to consumers--
--
    Mr. Burgess. And it is probably better if the patient is 
involved in that, not the employer, and perhaps I will generate 
a written question for the record that I will ask you on that. 
Thank you.
    Mr. Cassidy [presiding]. The chair recognizes Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    Dr. Berenson, when do you think we realized, had this 
epiphany or it has been a slow process of gaining realization 
that we needed to start moving from this fee-for-service system 
to something different? I mean, how long have been kind of 
trapped in this old system even though we have been able to see 
that we have to move in a different direction?
    Dr. Berenson. Well, what is interesting is in fact two 
decades ago, it didn't have the label value-based payment but 
the system, when I was practicing medicine in the 1980s and 
into the 1990s, we had global payments as a common payment 
method. The U.S. health care model that HMOs were paying 
doctors on the East Coast basically had pay-for-performance but 
with shared savings. Twenty-five percent of my capitation was 
withheld and I got it back only if the costs of my patients, 
all of their costs, were below a certain amount. So in fact, we 
have been doing these new payment models. I think it came a 
cropper because of the managed-care backlash and some problems. 
We then reverted back, I think, to the early part of the last 
decade to sort of traditional fee-for-service, traditional 
freedom of choice, and then once we got over that backlash and 
began to look again and said costs are really going up, there 
were a couple of seminal articles suggesting that quality 
wasn't terrific, I think we came back to those models.
    Mr. Sarbanes. I mean, one difference now is that the better 
management that you are trying to incentivize is going into the 
hands of the providers, or at least that is the hope and 
expectation here.
    Dr. Berenson. Well, I think that is right, although I would 
point to the California delegated capitation model has been 
alive and reasonably well--it had problems in the 1990s--for 
over two decades where providers, doctors, mostly, in control. 
That is what we are now trying to do in Medicare with ACOs, and 
I think that is a good idea. What is new, I think, in the last 
couple of decades is, we have much better data systems now to 
track performance and we actually do have the beginnings of 
quality measurement and beginning to focus on outcomes, which 
we did not have. One of the reasons for the managed-care 
backlash was the perception that at-risk medical groups had an 
incentive to stint on care and patients, members of health 
plans were concerned that they would get shortchanged. We now 
have some ability to monitor that that is not going on. So I 
think we are in a better position to do what was tried a couple 
of decades ago.
    Mr. Sarbanes. Let me ask you this question. Obviously this 
transition is going to be a heavy lift and there is going to 
have to be a lot of research behind it in terms of changing 
these RVUs and coming up with new codes and everything, but if 
we could snap our fingers and know tomorrow what that new 
methodology would be based on all the research and everything, 
so you said we know what it is, now we have to deploy it, how 
long do you think it is going to take for that phase just to 
kind of--as a practical matter implement something if you 
already knew what it was today?
    Dr. Berenson. I see. I guess one of the decisions--there 
are a couple of sort of core decisions that would have to be 
made. One is, do we put in a payment system nationally that 
everybody is going to participate in or can we roll this out by 
region as different regions demonstrate an ability to move. If 
we have the flexibility to do the latter, I think then it is 
much easier to do. Some States and areas within States are 
really ready, I would argue, for really new payment models and 
new delivery. Other places are not. So that is one issue.
    Another is the threshold question of whether we are 
providing options for physicians to opt into or whether we are 
going to make it mandatory. I think the different payment 
models probably call for a different answer to that one and 
maybe--in fact, I don't think ACOs should be required to have 
every physician in the community. They would have credentialing 
criteria as to who really meets the expectations of the ACO. 
Maybe some docs would not be in. Other payment models like a 
bundled episode, I have trouble imagining that that would be 
sort of voluntary. I think if we find that it works, we are 
going to implement it. I don't know, 3 to 5 years would be my 
guess. If we knew today that this is where we wanted to go, I 
would say something like 3 to 5 years to put it in with--I 
would much prefer to do it on a regional rollout basis than on 
a national all at once.
    Mr. Sarbanes. That is helpful. Thank you. I yield back.
    Mr. Cassidy. Thank you, Mr. Sarbanes. The chair yields to 
Mr. Hall.
    Mr. Hall. Mr. Chairman, thank you. I have been in another 
meeting and I don't know what questions have been asked, but I 
understand you usually allow us to write questions to them and 
ask them to answer them at a reasonable time.
    Mr. Cassidy. Yes, sir.
    Mr. Hall. Two or three weeks?
    Mr. Cassidy. Correct.
    Mr. Hall. Thank you, Mr. Chairman.
    Mr. Cassidy. The chair yields to Dr. Gingrey.
    Mr. Gingrey. Mr. Chairman, thank you. I also have had to 
step out, and I apologize for that, but in the last panel with 
Mr. Hackbarth, I asked him about burdens to real reform, 
specifically IPAB, and I look to engage this panel on the same 
question. What administrative and legislative burdens are in 
place today, IPAB obviously a legislative burden as I see it, 
hinder the development of lasting reform and how can we 
proactively work to remove these barriers to achieve better 
patient outcomes at a lower cost? Let me start from right to 
left. Dr. Damberg, would you start? And then each one of you 
can respond to that in regard to specifically IPAB. I want you 
to address that.
    Ms. Damberg. I am not sure I am qualified to talk about 
IPAB but in terms of other areas where I think federal 
regulations are getting in the way, I do think going back to 
the health information infrastructure, issues around privacy 
security, data sharing, having standardized data elements 
including a patient identifier are really handicapping our 
ability to measure patient care across providers longitudinally 
in the system.
    Mr. Gingrey. Yes?
    Dr. Berenson. Well, I have--I am not quite sure I agree 
with you on IPAB. I agree to the extent that I don't think we 
need 15----
    Mr. Gingrey. You heard my conversation with Mr. Hackbarth 
on the first panel?
    Dr. Berenson. Right. I don't think we need 15 experts from 
the outside who bring some special wisdom, but the concept of 
having the Secretary have the authority to--it is essentially 
putting Medicare on a budget and giving somebody the authority 
to recommend how to--where to cut mostly payment rates to 
accommodate those limits for some action, and I think more 
discrete action than just across-the-board arbitrary cuts, 
which will occur if a sequester goes in or which would have 
occurred under an SGR implementation, just we are going to 
whack all prices equally. Part of my testimony was to make the 
point that I believe there are areas in the physician fee 
schedule to take that specific example where the prices far 
exceed the resource costs of production. I think there is an 
opportunity to do that. I think as a matter of normal business, 
CMS should be doing that, but if in fact we had to live within 
a budget limitation, I think it is not unreasonable that the 
Secretary would have the authority to----
    Mr. Gingrey. Thank you. I didn't mean to cut you off, but 
Ms. Miller, did you have a response on that? Ms. Mitchell. I am 
sorry. Ms. Mitchell.
    Ms. Mitchell. I am also not prepared to comment on IPAB but 
I will tell you that what we----
    Mr. Gingrey. Pull your mike a little closer, if you don't 
mind.
    Ms. Mitchell. Well, what we need most, I think, on the 
ground are resources, resources to actually support a data and 
measurement infrastructure and to support multi-stakeholder 
work, and the easy ability to integrate multi-payer, all-payer 
claims data with clinical data to give that feedback to 
physicians and to share that information with----
    Mr. Gingrey. Well, I think you kind of avoided my question 
in regard to IPAB. I will let Mr. Miller have a shot at it.
    Mr. Miller. Well, I will not avoid your question, Dr. 
Gingrey. I think the fundamental fact that you have to keep in 
mind is that only 17 percent of Medicare spending actually goes 
to physicians. You can cut physician spending by 27 percent as 
was proposed to do in the SGR and you would only save a few 
percent for Medicare. But if you can actually have the 
physicians helping you save the rest of the other 83 percent, 
you can save an extraordinary amount of money in Medicare, and 
that is where I talked about at the beginning is all of those 
preventable hospitalizations, unnecessary procedures and tests 
can be saved. And I think the problem is, we continue to try to 
fix a broken system by trying to either we have--Congress has 
two choices. If spending is controlled by utilization times 
price, then you say, oK, we can either take things away from 
beneficiaries--we don't want to do that--or somehow we are 
going to cut the amount we pay to providers. Neither of those 
is a desirable approach, but if you can actually change the way 
that you pay physicians and ask them to come forward and say 
where can we save money without hurting patients, I think you 
can find tremendous opportunities.
    When I go around and talk around the country, I give talks 
to physicians, and when I ask them, I say can you tell me where 
you can save money in Medicare, and I brought along examples. 
They all give me examples. I have pages and pages of examples 
from Maine, from Virginia, from Seattle telling me, and I can 
give you examples from other States where physicians tell me 
all the places where there are opportunities to be able to save 
money, and then I say and why aren't we taking advantage of 
those now, and they describe the barriers in the current 
payment system. So there are physicians I have found all over 
the country who would actually come forward and be able to 
significantly reduce Medicare spending if we give them the 
opportunity to do that. We are not going to achieve that by 
cutting their payment rates. If you thought that a price of an 
airline ticket was too high, would you solve that by cutting 
the salary for the pilot? I don't think so.
    Mr. Gingrey. Thank you, and thank you, Mr. Chairman, for 
your patience.
    Mr. Cassidy. The chair recognizes Mr. Griffith.
    Mr. Griffith. Thank you, Mr. Chairman. I like that point, 
Mr. Miller, that you made about bringing forward the physicians 
because oftentimes the people in the system can tell you how to 
solve those problems, and so I forward to working on that as 
one of the solutions.
    I am going to switch to you, Ms. Mitchell. You described 
geographic disparities in quality and cost of care within your 
own State of Maine with vast potential for qualitative gains 
and cost savings if best practices are widely adopted, and I 
guess I am curious, how do you describe or how would you 
suggest that we achieve this geographic parity, and keeping in 
mind that I am also looking not just at specialties but the 
fact that I have a large rural district with lots of small 
communities. Some of my counties, you know, have less than the 
5,000 people necessary to do one of those new bundling formats 
that we were talking about with the previous speaker.
    Ms. Mitchell. Well, I think the good news is that you don't 
need a lot of people to do this. Maine is equally rural, as I 
am sure you know, and what we were able to do was bring 
physicians, employers, patients together to look at the data 
and really look at the variation. We found opportunities to 
reduce, for instance, cardiac spending by $35 million just by 
getting to current best-practice levels within the State. This 
is not unattainable. It is actually being done. So when you 
facilitate not only that information being shared but then 
bringing those best practices to the other areas, there is a 
lot of learning. You need technical support. You need 
information. You need feedback loops. All of those can be done 
at the local level. We also found massive variation in early 
induction, and just by sharing that data statewide, we saw up 
to a 20 percent reduction in those rates because they 
understood that that needed to change and that what best-
practice targets were. So sharing information in and of itself 
is a very powerful practice. It does not require an ACO to do 
that. It requires engagement and data with the physicians.
    Mr. Griffith. Which would be an amplification of what Mr. 
Miller was saying.
    Ms. Mitchell. Absolutely.
    Mr. Griffith. OK. And Mr. Miller, how do you encourage the 
physician buy-in, particularly in rural areas where you may not 
have sufficient numbers of docs to begin with?
    Mr. Miller. Well, I think there is two ways. First of all, 
you have to spend the time to help physicians understand the 
model and to be able to get the data that they need to 
understand how this will work for them. I found when I have 
done programs--and I did a program last fall for the Medical 
Society of Virginia. We had physicians from all over the State 
that came in and spent a day actually working through the 
payment models, episode payments, comprehensive care payments 
for chronic disease, and after they had a chance to work 
through them, we took a little straw poll at the end and said 
so which model would you rather be in, the current model or 
this model, and almost unanimously they said the new model.
    But then the question is, how will that work for me because 
it does come down to what is the price, and nobody actually 
knows today. They don't have the data to be able to do that. So 
if we can get them the data--and it is not just the data, it is 
actually turning it in to information. So simply handing a 
physician, you know, seven multimillion claim record files from 
Medicare is not the answer. They are going to need help and 
they need to get that help from some trusted local entity. The 
kind of thing that Elizabeth Mitchell runs in Maine is a place 
where physicians have a seat at the table and have the access 
to technical assistance that they trust, and then some 
assistance in being able to transform the way they deliver 
care.
    And I think that if you then go to a rural area and you 
say, well, how will this work here and what tweaks do we need 
to be able to make in that model to make sure that it does work 
here, given that patients may have longer travel time, etc., 
but the flexibility of the model means that you can actually 
design a different system in a different place. You may say in 
a rural area we need to be able to do more telemedicine to be 
able to bring resources into unpopulated areas, then we can do 
something different in urban areas. So I think that is the real 
advantage of these flexible payment models is, they would 
actually give physicians the flexibility to design different 
care delivery systems that work in different communities.
    Mr. Griffith. Well, I appreciate that, and I would have to 
tell you that I am not surprised that if you went to talk with 
the Medical Society of Virginia that you got some interesting 
ideas. I served in the State legislature for 17 years and 
worked with them on a regular basis on a number of issues, and 
it is a good group of people who are out to solve problems, not 
just--they are looking out for their territory but they are 
also out to solve problems and they have always been that way. 
I appreciate it very much, and I yield back, Mr. Chairman.
    Mr. Cassidy. Thank you, Mr. Griffith, and the chair 
recognizes Ms. Capps.
    Mrs. Capps. Thank you, Mr. Chairman.
    I am going to pose my first question to Ms. Mitchell. Maybe 
there is time to have others weigh in on it because this topic 
has come up today with the previous person on the panel. 
Delivering high-value patient- or person-centered health care 
seems to be moving away from the traditional physician-based 
model to one involving a health care team including both 
physicians and non-physician providers. Arguably, too much of 
our discussion tends to be focused on doctors and SGR topics 
and not enough on the other professionals, and we know how 
critical they are to achieving high-value care. As we debate 
what comes next after SGR--I think we are all in agreement that 
we need to focus on what will come after it--their voices, the 
voices of these other providers I believe are critical to 
ensuring an efficient and effective model of care or models of 
care that take care of the whole person with that being our 
focus.
    So my question is--and I can see others nodding so if you 
could go quickly and each make a short response to this, I 
would like to have you all be on the record on this topic if 
possible. So the question is, how do we ensure that non-
physician providers are appropriately engaged and appropriately 
valued as we move forward with new delivery and payment 
systems? I will start with you, Ms. Mitchell, because I had 
directed it to you, and then Mr. Miller, Dr. Berenson and Dr. 
Damberg if you would like to comment too.
    Ms. Mitchell. I think one of the most promising 
developments in any of these new models is the patient-centered 
medical home, as I am sure you know.
    Mrs. Capps. Yes, I am a big champion of it.
    Ms. Mitchell. That is absolutely about team-based care.
    Mrs. Capps. In fact, some have said it should not be a 
medical home, it should be a health home because it is 
positive.
    Ms. Mitchell. I like that. And I will say that one of the 
most effective members of that team is the care manager based 
in the practice, not a physician, usually a nurse but another 
key team member who actually makes sure care is coordinated and 
managed. We are also----
    Mrs. Capps. Over time, you mean?
    Ms. Mitchell. Over time, absolutely, and in the community. 
We are also implementing community care teams for high-needs 
patients. We work with Dr. Brenner on hot-spotting. Who are 
these people? What supports do they need? Early, early 
anecdotal evidence, well, actually data-driven evidence is 
showing 40 percent reductions in some of their spend if they 
get the right care at the right time. These are not physicians. 
These are community-based multi----
    Mrs. Capps. I can only imagine there might be some 
resistance from some, so let me hear a quick comment from Mr. 
Miller.
    Mr. Miller. Congresswoman, I ran a project in Pittsburgh to 
try to reduce readmissions for chronic-disease patients, and we 
made a variety of changes in the hospital and physician 
practices but the most critical change by far was, we hired a 
nurse who could actually follow the patients and go and make 
home visits to them, and we had a 44 percent reduction in 
chronic-disease readmissions to the hospital.
    Mrs. Capps. I am so glad we are getting this on the record.
    Mr. Miller. But the only way we were able to actually hire 
those nurses is, we got a grant from a local foundation to pay 
for them, and at the end of the project we had to lay off one 
of the nurses because no health plan would pay for it. Medicare 
does not pay for it. We were fortunate enough that in one case, 
the hospital was willing to pick up that nurse to be able to 
continue to work with the PCPs and the patients. That is the 
issue, flexibility of the models. I think when I talk to 
physicians all over the country, they would love to be able to 
hire a nurse to be able to do this work. They are not 
reimbursed for it.
    Mrs. Capps. Mr. Chairman, in response to this, I surely 
hope this is a topic that we can continue to engage in. I don't 
pretend to have the answers, and just because I am a nurse and 
certainly do appreciate your comment, Mr. Miller, it isn't just 
about nurses, and you being a doctor, I know you can understand 
that it is really about who we are focusing on in this kind of 
model.
    Mr. Miller. I would also just add quickly, the nurse worked 
with the physician.
    Mrs. Capps. Of course.
    Mr. Miller. The nurse did not work for a health plan, was 
not working on some disconnected basis. They were working as 
part of a team with the physician so they added that critical 
element that the physicians could not do on their own.
    Mrs. Capps. And reduce the cost that much. Wow. Dr. 
Berenson?
    Dr. Berenson. Three quick points. One is that fee-for-
service is really a problem because if somebody has to make a 
rule as to a nurse practitioner working incident to or 
independently and they are arbitrary and they don't work.
    Mrs. Capps. There is a lot to work out. That is why this is 
going to take even from us, and there are other people who will 
want to weigh in, a lot of discussion, many hearings hopefully 
on this topic.
    Dr. Berenson. Secondly, I have just completed doing a 
number of interviews around advanced primary care. Some people 
prefer that term to either health home or medical home. There 
was a focus group that said--a woman said let's see, medical 
home, funeral home, is that what you are talking about? Nursing 
home, funeral home. So there is a labeling issue I don't think 
we have to get into, but the docs all said the real advantage 
that they have gotten as part of the multi-payer advance 
primary care was being able to hire a care manager/nurse to 
work with the really frail seniors and keep them out of the 
hospital. And the final thing, very simply is if we have a 
global payment to an organization, they can decide who the 
personnel should be, and I think nurses and other non-
physicians will do very well in that calculation. It is not 
somebody in Baltimore or Washington telling them what their mix 
of staffing would be.
    Ms. Capps. And I might even say maybe that person is the 
right one to decide it but there might be somebody else too, 
but certainly local rather than some other place.
    And I know I am out of time but because I think I might be 
the last person to ask questions, would you mind? I would just 
love to get the fourth viewpoint on this. Thank you.
    Ms. Damberg. I would echo Mr. Miller's comments. One of the 
things that I have seen in California, there is the Center for 
Medicare and Medicaid Services Innovation Grants going on.
    Mrs. Capps. Yes.
    Ms. Damberg. Some of those involve the use of nurse case 
managers and other personnel, and one of the things--those 
models are supposed to be kind of self-sustaining over time.
    Mrs. Capps. That is the challenge.
    Ms. Damberg. I think the focus right now in those projects 
is, you know, is Medicare going to change its payment policy 
such that we can continue to hire these personnel beyond the 
life of this project.
    Mrs. Capps. That might be the very next subject for a 
hearing, not that it would be my decision but it might be a 
suggestion that is coming apparently from this team, so I yield 
back my time. Thank you.
    Mr. Cassidy. Dr. Gingrey has a quick question or comment.
    Mr. Gingrey. Mr. Chairman, a unanimous consent request to 
briefly ask of Mr. Miller. At the end of my line of 
questioning, you had indicated there were some barriers to 
these multitude of ideas that you have showed us in your legal 
papers in regard to physicians not being able to share that 
information that you have gleaned. If you would submit to the 
committee maybe a list of some of those impediments to them 
being able to share that information because I think it would 
be very, very helpful to us as we go forward?
    Mr. Miller. Well, the barriers are for them to actually 
implement the changes that would be necessary but I would be 
happy to share those. I think you would find it very insightful 
to see the range of different opportunities for savings the 
physicians identify, but it all comes back in many cases to the 
payment system that does not actually allow that to happen. It 
is not an issue of incentives, it is the fact that there are 
genuine barriers and restrictions like the fact that a nurse 
does not get paid for today. That is a barrier.
    Mr. Gingrey. Yes, and so within a week or two if you could 
do that, I would appreciate it.
    Mr. Chairman, thank you very much.
    Mr. Cassidy. Thank you. The chair recognizes Mr. Bilirakis.
    Mr. Bilirakis. Mr. Chairman, I appreciate it very much, and 
I want to thank Chairman Pitts and Chairman Upton for giving me 
the opportunity to serve on this very important committee.
    I have a couple questions. The first one would be for Mr. 
Miller. I know you touched on this somewhat, but discuss the 
importance of defining special, specific outcome-based quality 
measures. What strategies do you propose to determine these 
measures?
    Mr. Miller. You are directing that to me?
    Mr. Bilirakis. Yes.
    Mr. Miller. So I think that as the committee has 
recommended, I think that physicians are in the first, best 
position to be able to identify what some of those outcome 
measures should be. I think then there should be a multi-
stakeholder process for looking at that and saying are those 
the right things to ask consumers whether that deals with the 
kind of things that they are looking at. I do think that what 
we have to do is to start moving more to outcome measures and 
particularly to patient-reported outcome measures. Dr. Damberg 
talked about that in her testimony. But in order to be able to 
do that, you have to have some infrastructure in a local 
community to be able to actually survey the consumers and ask 
them, and that is where is having a trusted entity, a multi-
stakeholder collaborative in the community that can actually do 
that work, to be able to do the surveying of the patients, to 
be able to do it reliably and then be able to report that in an 
accurate and objective fashion I think is critical to being 
able to assure everybody that in fact the care is improving and 
that you are getting the value for what you are paying for.
    Mr. Bilirakis. Thank you very much.
    Next question for Ms. Mitchell. Can you discuss the 
opportunities for better care and financial savings through use 
of the community care teams and the hot-spotting that you 
mentioned in your testimony? Is this a strategy that you 
foresee being scalable to different community demographics such 
as rural, urban and suburban, et cetera?
    Ms. Mitchell. Certainly, I think it is imminently scalable 
and it is probably not even that expensive because these are 
teams of nurses or even laypeople at some times. But what we 
are finding is that the key drivers for the heavy, heavy 
utilization are often mental health issues and substance abuse 
issues and other social determinants of health. So to be in the 
community and understand what the barriers are to these people 
actually getting better and not having to return to the 
hospital over and over again, it is not high tech, it is really 
working with the individuals, and I think it is not only 
scalable but really urgent to do exactly that.
    Mr. Bilirakis. Very good. Thank you.
    Thank you, Mr. Chairman, I yield back the balance of my 
time.
    Mr. Cassidy. The chair recognizes Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. Again, I want to thank 
the entire panel for being here today, and some of you may have 
heard my questions earlier of our first panel, and I would like 
to hear both from Ms. Mitchell and Dr. Berenson if there would 
be anything different. How do we measure the quality accurately 
in a way that avoids a one-size-fits-all approach and put the 
patients first and avoids the endless complexity that could 
develop if we build too much flexibility into a system?
    Ms. Mitchell. Thank you. I think you have heard repeatedly, 
and I certainly concur that outcome measures are the holy 
grail, but also we really need to think about functional status 
measures: is someone healthy, can they participate in their 
daily life effectively. So functional status measurement 
absolutely needs to be further developed and disseminated. 
Patients really care about patient experience, and that is 
somewhat different than patient satisfaction. It is really, did 
they get the care they needed, did they understand their role 
in continuing to manage their own health. So patient experience 
is equally important. I really have to say, though, that cost 
and resource use are equally important. We need to understand, 
are resources being used effectively for patients and for 
communities. So I think it is a combination of all of those 
different types of measures that really get a view at an 
accountable system.
    Mr. Green. Dr. Berenson?
    Dr. Berenson. I would make a different point, which was in 
my testimony. I was emphasizing that there are some major gaps 
in what we measure and what I would argue that we can 
potentially measure in terms of at the individual physician 
level of what we want to measure. So, for example, for a 
surgeon, I think what we really care about is technical skill 
and judgment in deciding when a patient needs to go to the OR 
and what procedure they might need. I mean, we don't have 
measures of that so what we do measure is relatively small 
stuff--did the hospital give antibiotic prophylaxis before 
surgery. I think we have to recognize that there are some very 
important things we can't measure. We will get a much better 
job if we move towards outcomes rather than just relying on 
these kinds of processes.
    And the other point I would make, I think in agreement with 
everybody here, is the one thing that is ubiquitous in all 
physician or hospital experiences is the patient's experience 
with care, and I think we can be--I think while we have these 
large gaps in what we can measure and while we are working on 
an outcomes agenda, I think patient-reported outcomes and 
patient experience is really the one thing that applies across 
the whole system, and that is where I would be putting my 
emphasis at this point.
    Mr. Green. It seems like, you know, I know we have 
discussed this for a number of years and we have some almost 
laboratories in certain areas, whether it be in Pennsylvania 
where the chair of the subcommittee is from and Geisinger and 
Kaiser Permanente in California, are we actually learning now 
from their experiences on moving to that outcome-based in some 
of those? I know there are other ones in the country. Those are 
the two that come to mind. Seeing some of those indicators that 
we would need to do, what Congress needs to do, you know, to 
put into law so we could do it with that experience we are 
hearing, is that positive or negative or----
    Mr. Miller. Well, I would just say, you mentioned 
Geisinger, for example. There is a perfect example of a 
provider organization that agreed to take accountability for 
outcomes and said that we will have a single price for all the 
costs of care associated with a particular procedure or 
condition including maternity care. What they did was, they 
developed themselves a whole series of quality measures 
internally to look at, but they controlled them because they 
were accountable for the outcome. It wasn't some external 
entity saying here is what you should do to make the cardiac 
bypass surgery work well, and because they were in control of 
them, they could manage them, they could decide which of them 
did not work and did work and adapt them.
    The problem that we have and one of my great fears is that 
when we start to create more and more and more quality 
measures, particularly process measures that are imposed by 
payers or by Medicare or whatever as part of pay-for-
performance, we are locking in the old style of practice, and 
in fact what we want to do is to be able to unleash the 
creativity and the judgment of physicians to be able to say if 
it isn't working, what do we need to change to be able to make 
it better. People talk about evidence-based medicine but where 
did the evidence come from in the first place but some 
physician who actually figured out how to be able to make it 
work, and we shouldn't then say that whatever they discovered 
10 years ago is as best as it is ever going to be. We should 
say if you can continue to improve, and I think that is what 
these different kind of payment models will allow is the 
flexibility to actually continue to improve rather than being 
locked into the old way of doing things.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Cassidy. Thank you, and the chair now recognizes 
himself.
    I have incredibly enjoyed this testimony. Mr. Miller, we 
are intellectual brothers from a different mother, and so I 
just want to tell you----
    Mr. Miller. I am delighted to hear that.
    Mr. Cassidy [continuing]. Each of you have a standing 
invitation to call me for dinner and I will treat because I 
would just love to pick your brain.
    Let me go a little bit. I couldn't find it in your 
testimony but I think I recall you saying that these models 
that we should allow to bubble up should also include specialty 
societies. Frankly, the paradigm most speak of is primary care. 
It is a little bit threatening, though, to the neurosurgeon 
that thinks that she may be doing a great job but maybe iced 
out because of whatever reason. How in your thinking could a 
specialty society evolve into one of these models?
    Mr. Miller. Well, I did not say that the primary care 
should be threatening. I think that the issue is that we are in 
fact putting excessive burden on primary care physicians to 
somehow fix everything about the cost and quality of health 
care when we do these models. I have talked to specialty 
physicians all over the country in a variety of different 
specialties and these examples that I cited have examples from 
every specialty--gastroenterology, infectious disease----
    Mr. Cassidy. Let me ask you, if there is going to be a 
global payment for population, then that almost implies that 
there has got to be somebody----
    Mr. Miller. I think you are jumping too quickly to saying 
it is only global payment. My point is in fact that I think 
that there should be different payment models that are 
specialty specific so if a gastroenterologist says I can do a 
better job of managing inflammatory bowel disease, they should 
be able to do that if they can improve quality and reduce 
costs.
    Mr. Cassidy. And they would in turn contract with either 
the primary care or with someone----
    Mr. Miller. With whoever would be appropriate. I mean, in 
many cases I think gastroenterologists, to take the 
inflammatory bowel disease example, would be ones they would 
actually serve as the medical home for those patients because 
that is such a dominant condition.
    Mr. Cassidy. Yes, I understand that.
    Mr. Miller. Then what you can do is, you can----
    Mr. Cassidy. Let me pause you for a second because I get 
that, and you may know I am a gastroenterologist, so you just 
hit my sweet spot.
    So next, now, Dr. Damberg, you mentioned that there is 
difficulty coming up with meaningful measures, and both you and 
Mr. Miller comment on how we are currently measuring processes, 
but it really seems to me that if you give somebody a global 
payment, as an example, and they know that in order to improve 
outcomes and increase profit, they should reduce 
hospitalizations, as long as you have the kind of quality 
measures Dr. Berenson spoke of which keeps them from skimping 
on care almost by judging them on that outcome, you are going 
to get a better product. Does that make sense? Will it take 
care of itself if we go to the correct payment model?
    Ms. Damberg. So my remarks, if you look at my longer 
testimony, really focus on getting to a set of defined outcome 
measures, that that should be the focus to the extent that you 
are going to devise a new system of payment for providers that 
holds some portion of it at risk for performance on a set of 
indicators. Outcome measures are going to be more stable over 
time but it is going to be critical to get physicians at the 
table to define what those outcome measures are.
    Mr. Cassidy. I accept that, but on the other hand, if you 
know that the hemodialysis patient who doesn't crash into 
dialysis but glides past down, who gets their thrombosis 
removed as an outpatient as opposed to an inpatient--we could 
go through other examples--is actually going to have better 
care and is going to be lower-cost care, as long as we know 
that they are actually getting dialyzed, they are not skimping 
and we have some audit--Dr. Berenson, you had mentioned this--
it seems as if by judging that outcome, you almost take care of 
the processes.
    Ms. Damberg. I think that that is right because what you 
are letting the system do is self-correct. So one of the things 
that I have observed under the Medicare Advantage program 
because they are getting ready for 2015, the quality bonus 
payments that are kicking in, that will only reward health 
plans that have four or five stars, there is a huge amount of 
what I am calling anticipatory behavior going on where the 
health plans and the physician groups are working very 
proactively to ensure----
    Mr. Cassidy. To get their stars up.
    Ms. Damberg. Exactly. And so----
    Mr. Cassidy. I get that. Can I move on?
    Ms. Damberg. It is to that north star. They will work 
toward it.
    Mr. Cassidy. Now, let me ask Miller or Mitchell, if you 
will, you mentioned this regional coordinating thing, which 
really seems really good but it is going to take--you all took 
a lot of effort to put that together. I keep on thinking that 
you have this MA set of systems and the MA plans actually have 
all this data--they know how to market, they know how to bill, 
they know how to coordinate care, and they know from what 
bundle of care somebody is going to give you a certain quality 
and cost. It almost seems like you could allow that small group 
to contract with them to provide those services, not in a 
traditional MA plan but rather mainly as, you know, a 
management program, if you will, a data management program and 
perhaps a provider of reinsurance. Any thoughts on that?
    Mr. Miller. I think what you will see increasingly in the 
future is a complete flip. You will not have doctors being 
subcontractors to health plans but health plans being 
subcontractors to physicians to provide the services that they 
need. In fact, if you look around the country, there is only 11 
Medicare Advantage plans in the country that are five stars, 10 
of them are provider owned, and most of the 4.5- star plans are 
also provider owner. So I think there is that opportunity to do 
that, and I would say that the Louisiana Health Care Quality 
Forum is a multi-stakeholder collaborative in Louisiana that is 
working on trying to do this. What all the collaboratives have 
is the problem of getting any recognition from the federal 
government that they exist and to be able to give them the 
support to be able to work with physicians.
    Mr. Cassidy. Now, if you do the subcontracting with the MA 
plan, it almost seems as if you supplant the need for a public 
entity but rather you have a private entity that can then take 
that role.
    Mr. Miller. You could conceivably have a situation in the 
future where you have provider-driven plans selling policies to 
patients and you would not have a traditional Medicare fee-for-
service at all anymore.
    Mr. Cassidy. OK. You all have been very helpful. Let me dig 
out and say what I am supposed to say at the very end.
    Thank you all. At this time I would like to ask unanimous 
consent to have a statement from the American Medical 
Association and the American College of Physicians included in 
the record. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Cassidy. I remind members that they have 10 business 
days to submit questions for the record, and I ask the 
witnesses to respond to the questions promptly. Members should 
submit their questions by the close of business on Thursday, 
February 28.
    Without objection, the subcommittee hearing is adjourned. 
Thank you again.
    [Whereupon, at 1:32 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

    [GRAPHIC] [TIFF OMITTED] T9793.113
    
    [GRAPHIC] [TIFF OMITTED] T9793.114
    
    [GRAPHIC] [TIFF OMITTED] T9793.115
    
    [GRAPHIC] [TIFF OMITTED] T9793.116
    
    [GRAPHIC] [TIFF OMITTED] T9793.117
    
    [GRAPHIC] [TIFF OMITTED] T9793.118
    
    [GRAPHIC] [TIFF OMITTED] T9793.119
    
    [GRAPHIC] [TIFF OMITTED] T9793.120
    
    [GRAPHIC] [TIFF OMITTED] T9793.121
    
    [GRAPHIC] [TIFF OMITTED] T9793.122
    
    [GRAPHIC] [TIFF OMITTED] T9793.123
    
    [GRAPHIC] [TIFF OMITTED] T9793.124
    
    [GRAPHIC] [TIFF OMITTED] T9793.125
    
    [GRAPHIC] [TIFF OMITTED] T9793.126
    
    [GRAPHIC] [TIFF OMITTED] T9793.127
    
    [GRAPHIC] [TIFF OMITTED] T9793.128
    
    [GRAPHIC] [TIFF OMITTED] T9793.129
    
    [GRAPHIC] [TIFF OMITTED] T9793.130
    
    [GRAPHIC] [TIFF OMITTED] T9793.131
    
    [GRAPHIC] [TIFF OMITTED] T9793.132
    
    [GRAPHIC] [TIFF OMITTED] T9793.133
    
    [GRAPHIC] [TIFF OMITTED] T9793.134
    
    [GRAPHIC] [TIFF OMITTED] T9793.135
    

                                 
