[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
KEEPING THE PROMISE: ALLOWING SENIORS TO
KEEP THEIR MEDICARE ADVANTAGE PLANS
IF THEY LIKE THEM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
MARCH 13, 2014
__________
Serial No. 113-127
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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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 FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado PETER WELCH, Vermont
MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia JOHN A. YARMUTH, Kentucky
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
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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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......................... 4
Hon. Gus M. Bilirakis, a Representative in Congress from the
State of Florida, opening statement............................ 5
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, prepared statement.............................. 107
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 111
Witnesses
Hon. Erik Paulsen, a Representative in Congress from the State of
Minnesota...................................................... 7
Prepared statement........................................... 9
Hon. Jeff Denham, a Representative in Congress from the State of
California..................................................... 11
Prepared statement........................................... 13
Hon. Dennis A. Ross, a Representative in Congress from the State
of Florida..................................................... 19
Prepared statement........................................... 21
Hon. Keith J. Rothfus, a Representative in Congress from the
State of Pennsylvania.......................................... 24
Prepared statement........................................... 26
Hon. Jackie Walorski, a Representative in Congress from the State
of Indiana..................................................... 30
Prepared statement........................................... 32
Frank Little, Medicare Beneficiary with a Medicare Advantage Plan 36
Prepared statement........................................... 38
Answers to submitted questions............................... 127
Mitchell Lew, M.D., CEO and Chief Medical Officer, Prospect
Medical System................................................. 41
Prepared statement........................................... 43
Answers to submitted questions............................... 130
Glenn Giese, Principal, Oliver Wyman Consulting Actuaries........ 58
Prepared statement........................................... 60
Answers to submitted questions............................... 133
Judith Stein, Executive Director, Center for Medicare Advocacy... 67
Prepared statement........................................... 69
Paul N. Van De Water, Senior Fellow, Center on Budget and Policy
Priorities..................................................... 81
Prepared statement........................................... 83
Submitted Material
Letter of March 10, 2014 from The 60 Plus Association to the
subcommittee, submitted by Jeff Denham......................... 17
Letter of February 28, 2014 from Majority Members of Congress to
Centers for Medicare & Medicaid Services....................... 113
Letter of February 28, 2014 from Minority Members of Congress to
Centers for Medicare & Medicaid Services....................... 116
Minority Memorandum dated March 13, 2014......................... 120
KEEPING THE PROMISE: ALLOWING SENIORS TO KEEP THEIR MEDICARE ADVANTAGE
PLANS IF THEY LIKE THEM
----------
THURSDAY, MARCH 13, 2014
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Joseph R.
Pitts (chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Burgess, Whitfield,
Shimkus, Murphy, Blackburn, Gingrey, Lance, Cassidy, Guthrie,
Griffith, Bilirakis, Ellmers, Pallone, Engel, Green, Barrow,
Christensen, and Waxman (ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Sean
Bonyun, Communications Director; Matt Bravo, Professional Staff
Member; Noelle Clemente, Press Secretary; Paul Edattel,
Professional Staff Member, Health; Sydne Harwick, Legislative
Clerk; Robert Horne, Professional Staff Member, Health; Chris
Sarley, Policy Coordinator, Environment & Economy; Heidi
Stirrup, Health Policy Coordinator; Josh Trent, Professional
Staff Member, Health; Tom Wilbur, Digital Media Advisor;
Jessica Wilkerson, Legislative Clerk; Ziky Ababiya, Staff
Assistant; Phil Barnett, Staff Director; Eddie Garcia,
Professional Staff Member; Kaycee Glavich, GAO Detailee; Amy
Hall, Senior Professional Staff Member; Karen Lightfoot,
Communications Director and Senior Policy Advisor; and Karen
Nelson, 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
will recognize himself for an opening statement.
Nearly 15 million seniors, or almost 30% of Medicare
beneficiaries, have chosen to enroll in a Medicare Advantage
plan, an alternative to fee-for-service or traditional
Medicare. Medicare Advantage or MA plans offer benefits not
provided under traditional Medicare, such as reduced cost-
sharing, vision and dental coverage, preventive care, and care
coordination services. Numerous studies show that MA enrollees
enjoy better health outcomes and receive higher quality care
than those in traditional Medicare.
So who are MA beneficiaries? Medicare Advantage covers a
disproportionate share of low-income and minority seniors when
compared to traditional fee-for-service Medicare. Four in ten
seniors with MA plans have incomes of $20,000 or less. Medicare
Advantage is fundamentally about offering seniors the choice of
better healthcare through traditional Medicare. Beneficiaries
choose the plans that best meet their individual health needs.
And, according to the latest CMS National Health Expenditures
data, more than half of new Medicare enrollees are choosing
Medicare Advantage plans.
We should be encouraging seniors to take control of their
healthcare and expanding this proven program. Instead, this
Administration's policies are harming seniors by reducing their
choices of high quality care through a series of cuts to the
Medicare program that began with the Affordable Care Act.
According to the Congressional Budget Office, ObamaCare cut
more than $700 billion from Medicare and spent the money on new
government programs not for seniors. CBO also has said more
than $300 billion of those cuts come from Medicare Advantage.
Last year, CMS imposed regulatory cuts of 4 to 6% on MA plans,
resulting in benefit reductions of $30 to $70 per senior per
month.
And on February 21, 2014, CMS released its 2015 Advance
Notice outlining changes to Medicare Advantage payment
policies, which an Oliver Wyman study estimates will result in
an additional cut of nearly 6%. This newest cut is projected to
cause seniors to lose an additional $35 to $75 per month in
benefits. According to experts, these cumulative cuts from the
Democrats' policies on seniors could result in ``plan exits,
reductions in service areas, reduced benefits, provider network
changes, and MA plan disenrollment.''
The week before last, this subcommittee held a hearing on
the Administration's assault on Medicare Part D prescription
drug plans. Now, we are learning about more crippling cuts to
Medicare Advantage. Why is the Administration dead set on
pushing policies that harm seniors and using their Medicare
program as a piggy bank to fund other healthcare programs?
Today, we will hear from a number of Members who have
authored legislation that would improve the Medicare Advantage
program for seniors. We also have witnesses who can speak to
the harm that this Administration's policies have done to them.
I would like to thank all of our witnesses for appearing
today. I will yield at this point the remainder of my time to
vice chair of the subcommittee, Dr. Burgess.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chair will recognize himself for an opening
statement.Nearly 15 million seniors, or almost 30% of Medicare
beneficiaries, have chosen to enroll in a Medicare Advantage
(MA) plan, an alternative to fee-for-service (FFS) or
traditional Medicare.
MA plans offer benefits not provided under traditional
Medicare, such as reduced cost-sharing, vision and dental
coverage, preventive care, and care coordination services.
Numerous studies show that MA enrollees enjoy better health
outcomes and receive higher quality care than those in
traditional Medicare.
So, who are MA beneficiaries? Medicare Advantage covers a
disproportionate share of low-income and minority seniors when
compared to traditional fee-for-service Medicare. Four in ten
seniors with MA plans have incomes of $20,000 or less.
Medicare Advantage is fundamentally about offering seniors
the choice of better health care than traditional Medicare.
Beneficiaries choose the plans that best meet their individual
health needs. And, according to the latest CMS National Health
Expenditures data, more than half of new Medicare enrollees are
choosing Medicare Advantage plans.
We should be encouraging seniors to take control of their
health care and expanding this proven program. Instead, the
Obama Administration policies are harming seniors by reducing
their choices of high quality care through a series of cuts to
the Medicare program that began with Obamacare.
According to the Congressional Budget Office, Obamacare cut
more than $700 billion from Medicare and spent the money on new
government programs not for seniors. CBO also has said more
than $300 billion of those cuts come from Medicare Advantage.
Last year, CMS imposed regulatory cuts of 4%-6% on MA
plans, resulting in benefit reductions of $30-$70 per senior
per month.
And, on February 21, 2014, CMS released its 2015 Advance
Notice outlining changes to Medicare Advantage payment
policies, which an Oliver Wyman study estimates will result in
an additional cut of nearly 6%.
This newest cut is projected to cause seniors to lose an
additional $35-$75 per month in benefits.
According to experts, these cumulative cuts from the
Democrats' policies on seniors could result in ``plan exits,
reductions in service areas, reduced benefits, provider network
changes, and MA plan disenrollment.''
The week before last, this Subcommittee held a hearing on
the Administration's assault on Medicare Part D prescription
drug plans. Now, we're hearing about more crippling cuts to
Medicare Advantage.
Why is the Administration dead set on pushing policies that
harm seniors and using their Medicare program as a piggy bank
to fund other health care programs?
Today, we will hear from a number of members who have
authored legislation that would improve the Medicare Advantage
program for seniors. We also have witnesses who can speak to
the harm that this Administration's policies have done to them.
I would like to thank all of our witnesses for appearing today.
Thank you, and I yield the remainder of my time to Rep. --
--------------------------------.
Mr. Burgess. I want to thank the chairman for yielding.
We do spend a lot of time in Congress talking about the
problems in healthcare. The problem is we are so busy triaging
the mistakes that we don't think about the things that are
actually working. And Medicare Advantage is one of those things
that is actually working.
What do we always talk about? We talk about disease
management, coordinated care. We have talked about that in this
committee in a bipartisan fashion for a long time, but guess
what? Medicare Advantage plans are delivering on that promise.
The President, however, decided to take money away from a
working program in order to fund one that is dysfunctional. The
President sold the Affordable Care Act on a foundation of false
promises. You can keep your plan: false. You can keep your
doctor: also not true.
President Obama told seniors he would use the money from
Medicare to fund the Affordable Care Act, and at the same time
improve Medicare for beneficiaries. In reality, these payment
cuts are not going back to Medicare but instead they are
funding other provisions of the Affordable Care Act. Along with
less money to Medicare Advantage plans, the Affordable Care Act
burdened plans with additional requirements.
The most recent proposed cuts to Medicare Advantage are
part of a historic strategy of provider cuts that have always
backfired. The sustainable growth rate is the leading example.
It limits access for seniors and doesn't reduce cost. It is
time for the Administration to shift gears and change
strategies. Don't fix what is not broken. It is time for the
Administration to start addressing the real problem, the
Affordable Care Act, and not look for problems that are
nonexistent.
I yield back to the chairman.
Mr. Pitts. The chair thanks the gentleman and now yields 5
minutes for an opening statement to the ranking member, Mr.
Pallone.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts. Unfortunately, I
have to begin today's hearing expressing my disappointment in
the tactics and process from your side of the aisle. This
hearing has morphed from the future of Medicare Advantage, or
MA, into what your side is now calling a legislative hearing,
and we clearly have different definitions of what a legislative
hearing should look like.
You have invited seven Republican Members to come and talk
about bills they have introduced or plan to introduce that will
affect Medicare in some way. When we were told of this
development, there were requests from staff on whether any
Democratic bills on Medicare could be included today and those
requests were ignored. In fact, I have a bill on Part D program
integrity that is very similar to one presented, but for some
reason, that bill was not given any consideration.
So, Mr. Chairman, one bill in particular is quite
egregious. It attempts to gut the coverage provisions of the
Affordable Care Act in order to provide billions of dollars to
private insurance companies. The others are not new ideas from
Republicans; they involve allowing individuals to switch to
high deductible health plans which do nothing but worsen the
risk pool for those in comprehensive MA plans.
Another bill would reinstate the second enrollment period
for seniors, an issue that has already been litigated and
determined to be confusing and unhelpful to beneficiaries.
And I can go on and on about my concerns here, but most
importantly, I wish we could hear from substantive witnesses
today on how these bills would weaken--or as the other side
claims, strengthen--the MA program, but unfortunately, we were
not given that opportunity. So I hope that if the chairman
intends to move forward on any of these bills, that the
Administration, stakeholders, and Democratic staff would have
an opportunity to weigh in. I don't have to remind you that
recent history has shown that nothing becomes law out of this
committee without bipartisanship.
While the majority of Medicare's 52 million beneficiaries
are in the traditional federally administered Medicare program,
MA offers beneficiaries an alternative option to receive their
Medicare benefits through private health plans. MA has become
fairly popular among seniors with more than \1/4\ of all
beneficiaries now enrolled in such plans across the country.
The ACA included quality improvements of MA plans by
rewarding plans that deliver high-quality care with bonus
payments. Incentivizing quality patient care over quantity of
services provided is key to improving health outcomes and
reducing the rising cost of healthcare. The bottom line is the
ACA reined in a program whose costs were excessive and put the
program on a more sustainable footing. Since passage of the
Affordable Care Act, MA enrollment has increased by nearly \1/
3\, premiums have dropped by nearly 10%, and over \1/3\ of MA
contracts will receive 4 or more stars, an increase from 28% in
2013.
Despite warning cries to the contrary, the program is
stronger than ever. Now, today, we will hear from some
witnesses about a study commissioned by the plans themselves.
They will claim that CMS' recent proposed cuts could devastate
the MA market, but I would like to point out that these are not
new cuts; these were expected cuts that bring MA plan payments
in line with fee-for-service payments as required by law. And
since by law MA plans are paid based on overall growth of
Medicare, it is no surprise that when healthcare spending in
Medicare slows, payments to MA plans will follow. And we should
all think that is a good thing, especially those who
continually take aim at the percentage of federal spending on
healthcare.
So not only were plans prepared for these reductions, Wall
Street doesn't seem to think the outlook is as dire. In fact,
some company stocks skyrocketed because the truth is, as more
and more baby boomers age into Medicare, and hopefully, unless
the Republicans mess it up, a permanent replacement for the SGR
is passed into law, the MA program will become even more robust
and will continue to be an area of growth for insurance
companies.
Regardless of the talking points from the other side and
industry, I continue to believe that removing plan overpayments
is the right policy for Medicare. To reverse course would raise
costs for taxpayers and all Part B beneficiaries, drain from
the solvency of the trust fund, and expand beneficiary
inequities that disadvantage the overwhelming majority of
Medicare beneficiaries who remain in fee-for-service.
So I look forward to hearing from our second panel today,
specifically from Ms. Stein and Mr. Van de Water, because a
debate about how much we pay private insurance companies is
overshadowing some important aspects of CMS' work in protecting
beneficiaries. We should all work together to strengthen and
improve the program and not weaken it.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Florida, Mr. Bilirakis, for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Bilirakis. Thank you very much. I appreciate it, Mr.
Chairman.
Thanks for holding this important hearing on how to protect
Medicare Advantage. My bill, H.R. 3392, the Medicare Part D
Patient Safety and Drug Abuse Prevention Act, will reduce fraud
and abuse without negatively impacting Medicare beneficiaries
by enacting cost-saving measures employed not only by TRICARE
and the State Medicaid programs but also by private industry.
H.R. 3392 creates a safe pharmacy access program to
establish a single point-of-sale pharmacy system for the
dispensing of controlled substances for high-risk
beneficiaries. This will directly address the issue of doctor
and pharmacy shopping where individuals go to multiple
locations to fill multiple prescriptions.
I would like to thank my cosponsor, Mr. Ben Lujan, and then
I also want to yield now the balance of my time to Dr. Cassidy.
Thank you, Mr. Chairman.
Mr. Cassidy. Thank you, Mr. Bilirakis. Thank you, Mr.
Chairman.
I submit for the record a letter to the CMS that Mr. Barrow
and I and over 200 of our congressional colleagues have signed.
We are concerned about the proposed cuts to the MA program
and the negative impact it will have on seniors. Over 15
million seniors rely on Medicare Advantage, almost \1/3\ of
Medicare beneficiaries. These plans are popular because they
have been proven to contain costs and improve enrollee health
outcomes by focusing on prevention and disease management. CMS
is planning to cut MA plans for overall seniors by 5.9% in
2015. In Louisiana that averages out that the MA beneficiary
will have about a $55 to $65 cut per month, which of course is
$660 to $780 per year in higher premiums, higher cost-sharing,
and lower benefits for about 200,000 MA beneficiaries in my
State.
In response, Members of Congress are coming out of the
woodwork to say to CMS stop these cuts, protect Medicare
Advantage, protect seniors.
Now, if Mr. Bilirakis will allow me to, I will yield 1
minute to the gentleman from Georgia, Mr. Barrow.
Mr. Barrow. Thank you, Dr. Cassidy, for yielding time, and
thank you for your partnership on this issue.
Mr. Chairman, Georgia is home to hundreds of thousands of
Medicare Advantage beneficiaries who are worried about the
stability of the program. The proposed cuts to Medicare
Advantage would amount to a 5.9% cut. These cuts will reduce
benefits and increase premiums by $35 to $75 per month for our
Nation's 15 million seniors with Medicare Advantage. Further
cuts to Medicare Advantage would dramatically alter the
standard of care that folks have come to rely on. That is why,
as of today, 204 of our colleagues have joined Dr. Cassidy and
me to warn Administrator Tavenner against these proposed cuts.
Mr. Chairman, thank you for calling this hearing. I look
forward to learning much from the witnesses and working with
you to strengthen this vital program.
With that, I yield back the balance of my time to Dr.
Cassidy.
Mr. Cassidy. Would the gentleman yield for one second just
to welcome our panel and my roommate Mr. Paulsen?
Mr. Pitts. Thank you. And without objection, the letter
that Dr. Cassidy submitted will be entered into the record.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. We have two panels today. The first is a Member
panel and I will introduce them at this time and they will
speak in this order. First, Hon. Erik Paulsen, Member of
Congress from Minnesota; then Hon. Jeff Denham, Member of
Congress from California; Hon. Dennis Ross, Member from
Florida; Hon. Keith Rothfus, Member from Pennsylvania; and Hon.
Jackie Walorski, Member from Indiana.
Thank you very much for coming today. Your written
testimony will be made part of the record. You will be each
given 5 minutes for your opening statement, so the chair
recognizes Mr. Paulsen for 5 minutes.
STATEMENTS OF HON. ERIK PAULSEN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MINNESOTA; HON. JEFF DENHAM, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF CALIFORNIA; HON. DENNIS ROSS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA; HON.
KEITH ROTHFUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
PENNSYLVANIA; AND HON. JACKIE WALORSKI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF INDIANA
STATEMENT OF HON. ERIK PAULSEN
Mr. Paulsen. Thank you, Mr. Chairman. And, Chairman Pitts
and Ranking Member Pallone, I want to thank you for holding
this hearing today to ensure that our seniors and their
Medicare Advantage (MA) plans are protected from unnecessary
cuts.
I have received many calls and emails and letters from my
constituents, my seniors in my district, who are concerned
about cuts to the Medicare Advantage program and the impact
that it could have on their healthcare plans.
The Medicare Advantage program is a resounding success in
providing coordinated care for seniors with better quality,
more choices, and greater savings for millions of Americans.
Over 175,000 seniors in Minnesota are enrolled in an MA plan,
including more than 50,000 in my congressional district alone.
More than half of Medicare-eligible seniors in my district have
opted to enroll in MA plans rather than the traditional fee-
for-service system.
Nationwide, millions of Medicare beneficiaries have chosen
a Medicare Advantage plan because they value access to better
quality of care, innovative services, and additional benefits.
The MA program enjoys high patient satisfaction and will reduce
the cost of Medicare in the long run by providing evidence-
based, coordinated care for our seniors.
Unfortunately, the future viability of the MA program is at
risk. The MA program is facing ObamaCare-mandated payment cuts,
the health insurance tax, and the coding intensity cut in last
year's fiscal cliff deal. The latest threat is the 12% cut in
regulatory cuts that have been proposed the last 2 years,
including a 6% cut to plans this year. Seniors in my district
could pay as much as $900 more per year as a result of these
cuts. Many might lose benefits, and some could lose their plan
completely.
The Administration is also attacking Medicare Advantage's
innovative delivery system reforms, like in-home risk
assessments, that have been absent in fee-for-service. Home
risk assessments are clinical encounters in a beneficiary's
home designed to prevent, to detect, and to treat chronic
diseases to reduce hospital admissions, decrease readmissions,
and improve the overall quality of life for seniors.
And instead of increasing costs for seniors and hindering
plans' ability to utilize innovative models of care, Congress
should be providing more flexibility to plans and make it
easier for seniors to participate in MA-like plans.
That is why I have authoring legislation, Mr. Chairman,
H.R. 4177, to allow Medicare beneficiaries to contribute their
own money to their Medicare Savings Accounts, these MSAs.
Medical Savings Accounts are health savings accounts for
Medicare Advantage plans. They allow seniors to utilize money
in the accounts to pay for healthcare costs, including some
costs that aren't covered by Medicare.
Right now, seniors can't contribute their own money to
their MSA like they can to a healthcare savings account. But by
giving seniors more flexibility with these accounts, we will
empower them to take charge of their own healthcare decisions.
And this will strengthen the Medicare Advantage program and it
will reduce healthcare costs for seniors and the system in the
long-term. I encourage the committee to take a look at this
legislation and maybe bring it up for consideration.
Thankfully, Mr. Chairman, there is hope that we can avoid
these additional cuts to Medicare Advantage. Over 200 Members,
as was mentioned in earlier opening statements, of both
parties, including myself, sent a letter to the Administration
opposing these proposed cuts. We must protect our seniors and
their healthcare plans by opposing these cuts.
I sincerely appreciate the opportunity to testify and
commend the committee for their work to protect seniors in
Minnesota and around the country.
[The prepared statement of Mr. Paulsen follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Denham, 5 minutes for an opening statement.
STATEMENT OF HON. JEFF DENHAM
Mr. Denham. This is straightforward legislation. It will
serve to inform the more than 14 million seniors currently
enrolled in Medicare Advantage about how the Affordable Care
Act is affecting the healthcare plans that they rely on every
day.
For over 60,000 seniors who are enrolled in Medicare
Advantage in the counties I represent, the Medicare Advantage
program has been tremendously successful in improving health
outcomes when compared to traditional Medicare fee-for-service.
This is because the Medicare Advantage model emphasizes
preventive services and managed care to keep beneficiaries
healthy.
Medicare Advantage plans also limit out-of-pocket costs,
protecting vulnerable seniors from the threat of bankruptcy due
to the complicated medical conditions. Maybe this is why a
survey of Medicare Advantage beneficiaries found that 90% were
satisfied with their coverage, 92% were satisfied with their
choice of doctor, and 94% were satisfied with the quality of
care received under Medicare Advantage.
The 14 million seniors enrolled in Medicare Advantage plans
nationwide deserve to know that the massive government overhaul
of our healthcare system was paid for in part by the $300
billion in cuts to Medicare Advantage plans and a health
insurance tax that has just started this year.
The combined effects of these payment cuts and the new
health insurance tax are already being felt through cancelled
plans, reduced benefits and increased copays. During this year
alone, beneficiaries in over 2,000 counties will have fewer
plan options compared to 2013 and on average will see their
annual costs increased by nearly 10%. Unfortunately, the impact
will only grow with time.
As an example, in 2015, seniors in Stanislaus County in my
district can expect to pay an additional $90 per month, or
$1,080 per year for their Medicare Advantage plan. A large
percentage of the 33,000 enrollees in Stanislaus County are
low-income individuals earning under $20,000 per year. This
rate increase will force them out of participating in the
Medicare Advantage program altogether. Did the 111th Congress
really mean to cut Medicare Advantage in order to subsidize the
Affordable Care Act? Whether Congress meant to or not, seniors
have a right to know that these changes are coming so that they
can actually plan and budget for these increases that they are
going to see.
Mr. Chairman, as you are well aware, there have been at
least 37 major alterations to the Affordable Care Act since it
was enacted. Some of these were done in cooperation with the
Congress, yet on 20 separate occasions, after it became clear
that the implementation of the law was failing the American
people, the Administration moved unilaterally to change the
law. These delays and alterations are proof that the Affordable
Care Act is not working as intended. Unfortunately for our
seniors in our districts, while the promises of healthcare
remain unfulfilled, the cuts and taxes on Medicare Advantage
plans required to finance the law are moving forward as
scheduled.
Congress must act today to protect the future of Medicare
Advantage by repealing the cuts and taxes on the program. This
would prevent the immediate erosion of health security for
Medicare Advantage beneficiaries while we work to replace the
Affordable Care Act with a healthcare reform that puts patients
and seniors first.
Until we can enact such legislation, seniors have the right
to know why their Medicare Advantage plans are being impacted
and I urge this committee to support this bill.
I would also like to thank the 60 Plus Association and the
Association of Mature American Citizens for their support of
this legislation and would like to submit their letters for the
record.
[The prepared statement of Mr. Denham follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. Without objection, so ordered.
The chair thanks the gentleman and now recognizes the
gentleman from Florida, Mr. Ross, 5 minutes for an opening
statement.
STATEMENT OF HON. DENNIS A. ROSS
Mr. Ross. Thank you, Chairman Pitts and Ranking Member
Pallone, committee, for taking the time today to hold this
hearing to highlight the significant threat facing the Medicare
Advantage program.
In 2012, healthcare spending in the United States accounted
for 17.2% of our Nation's economic output, equal to $8,915 per
person. Mr. Chairman, these statistics tell me that for a
country with arguably the best healthcare in the world, we have
yet to properly align patient and provider incentives to enable
our healthcare system to be cost-efficient, highly accessible,
and ultimately to achieve self-sustaining cost-containment with
little need for government intervention.
More than 3.5 million Medicare beneficiaries reside in my
home State of Florida; 1.2 million of these beneficiaries have
chosen a Medicare Advantage plan over Medicare's traditional
and more costly fee-for-service structure. In fact, since 2008,
the State of Florida alone has seen a 30% increase in the
number of Medicare Advantage plan beneficiaries, while
currently, 30% of our Nation's Medicare population have opted
for a Medicare Advantage plan, serving as a clear testament to
the high level of patient satisfaction the program has
achieved.
Among the many satisfied Medicare Advantage plan
beneficiaries in the State of Florida are Michael and Sandra
Cox from my hometown of Lakeland, Florida. Michael and Sandra
did what so many Medicare Advantage plan beneficiaries have
done since January 1, 2014, writing to their Members of
Congress expressing a mix of anger, confusion, and panic at the
senseless cuts that have been made to this effective program.
Sandra and Michael wrote, ``Please explain the logic of the
ObamaCare cuts to Medicare Advantage. My husband and I have
never experienced such a high level of satisfaction with our
health coverage as we have with our Medicare Advantage plan,
and all with a much cheaper monthly Premium.''
Unfortunately, Michael and Sandra learned on January 1 that
the doctors that they had been seeing for more than 10 years
were no longer available under the Medicare Advantage plan as a
result of the continued cuts to the program. They would face
the full out-of-pocket cost should they choose to continue
seeing those providers they had come to know over the last 10
years and their health status they treated so well.
Mr. Chairman, was it not the Administration's goal to
ensure patients develop a relationship with their provider
resulting in better prevention and a more consistent continuum
of care?
Unfortunately, these cuts to Medicare Advantage, like so
many other healthcare-related actions by this Administration
are contradictory to the purported message. Even more baffling,
past cuts have already crippled innovative programs like home
health visits instituted by Medicare Advantage plan sponsors to
ensure our seniors are able to maximize the value of healthcare
services they receive. Going forward, additional cuts of this
magnitude will devastate medical innovation in areas like tele-
health that show great promise for increasing efficiency and
cost-containment in Medicare Advantage and the healthcare
system at large.
Overall healthcare spending and utilization habits are a
critical threat to America's declining fiscal health. If we are
to successfully curb healthcare costs, we must preserve and
enhance the Medicare Advantage program because of its proven
ability to achieve cost-efficiency while maximizing patient
access to high-quality health services and providers.
To be more specific, data collected between 2003 and 2009
showed service utilization rates in areas like emergency
department use and ambulatory surgery were 20 to 30% lower
among Medicare Advantage beneficiaries than traditional
Medicare.
Overutilization of healthcare services, however, is only
one facet of healthcare cost growth tempered by the Medicare
Advantage plan structure. Although this current Administration
has tried to discredit the power of market competition in
creating organic, self-sustaining incentives for patients,
providers, and insurers alike, the facts always prevail.
Artificial market controls put in place by the Federal
Government lead to more out-of-control health spending, as we
have seen time and time and again.
As far back as 1995, health economists have shown that
combining coverage like that offered by Medicare Advantage with
appropriate patient incentives leads to an avoidance of
excessive doctor visits and tests, as well as more engaged
patients seeking the best value for the healthcare service they
need.
In this same vein, I was proud to introduce H.R. 4180, the
Preserving Health Savings Accounts for Medicare Beneficiaries
Act, which would allow for this consistently proven economic
strategy for reducing healthcare costs across the spectrum. My
legislation would incentivize younger Americans to establish
Health Savings Accounts with the promise that upon being
Medicare-eligible, they are able toTransfer the HSA funds into
a Medicare savings account.
Simple enhancements like this one will help both Medicare
Advantage and the entire healthcare system achieve organic
alignment between insurers and patients and providers and
creating a powerful, self-sustaining cost-containment tool.
Patients have more control over their healthcare dollars,
increasing awareness of reasonable health service costs and
quality options, while also actively engaging providers to
offer the highest quality service at the lowest reasonable cost
in order to earn a patient's business.
Mr. Chairman, this is what value in healthcare looks like.
Unfortunately, through continued cuts to the Medicare Advantage
program, this Administration will eliminate any possibility we
currently have to build upon the Medicare Advantage program's
success in curbing healthcare cost.
And I yield back.
[The prepared statement of Mr. Ross follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman.
And now the chair is proud to introduce from the State of
Pennsylvania Mr. Rothfus and recognize him for 5 minutes for an
opening statement.
STATEMENT OF HON. KEITH J. ROTHFUS
Mr. Rothfus. Chairman Pitts, Ranking Member Pallone, and
members of the subcommittee, thank you for having me here today
to testify about H.R. 2453, the Medicare Beneficiary
Preservation of Choice Act. I am very pleased to discuss this
bipartisan legislation that Congressman Kurt Schrader and I
introduced in June of 2013.
Enacting H.R. 2453 is one small fix we can make to Medicare
Advantage that can have a big impact on the lives of the
seniors utilizing the program in our districts. It simply
restores the open enrollment period that existed prior to 2011.
This open enrollment period permitted seniors to change
Medicare Advantage plans once between January and March if
needed. It essentially let seniors test drive the Medicare
Advantage plan they would have just selected and change plans
if it turns out the plan is not working for them. H.R. 2453 is
about choice and fairness for seniors.It is about empowering
them to make decisions about their healthcare needs.
Restoring the January to March open enrollment period also
makes sense in light of the 2014 Medicare Advantage cuts and
the new cuts just proposed by CMS. Last November, the Wall
Street Journal reported that one of the Nation's largest
Medicare Advantage providers had dropped thousands of doctors
from network due to ``significant changes and pressures in the
healthcare environment.''
This is significant because seniors may not have known
about the change in time to adjust their decisions during the
October to December enrollment period. So if they liked their
doctor, seniors may be finding out just now that they cannot
keep him or her because they are no longer included in the
plan. Passing H.R. 2453 and restoring the 90-day open
enrollment period during the first quarter of the year would
let seniors react to these types of plan changes, many of which
are driven by the harmful cuts to Medicare Advantage that we
see happening as the result of the Affordable Care Act.
H.R. 2453 is a patient-centered option for improving
Medicare Advantage. It will provide choice for seniors and it
will ensure that they have access to the doctors they know and
trust. That is why it is supported by America's Health
Insurance Plans, the Association of Mature American Citizens,
and the 60 Plus Association.
The subcommittee members and its chairman should be thanked
for their efforts to strengthen Medicare Advantage. Medicare
Advantage delivers quality healthcare and peace of mind with
consistently superlative satisfaction ratings from
participants. Preserving the program and preventing more cuts
to Medicare Advantage is a top priority for me and for the
seniors in Pennsylvania's 12th District. Incidentally, in my
district, utilization of Medicare Advantage is in excess of
60%, more than double the national rate.
Additional cuts to Medicare Advantage will lead to higher
out-of-pocket costs, reduced benefits, and fewer plan options.
Instead of limiting access to a successful program which 9 out
of 10 seniors are satisfied with, we should be empowering them
to make choices about what best suits them. We should make sure
seniors have access to the healthcare providers they know and
trust. Instead of cutting Medicare Advantage, we should be
finding solutions to lower costs for seniors and sustain the
program for the long run.
I had an incident this past Monday with a senior in my
district at a restaurant. She was the hostess and she expressed
to me a real concern about the cuts to Medicare Advantage
personally impacting her. I asked her to call my office and
give us more background because I wanted to tell that story
here in Washington. And she simply looked at me and said why?
So the politicians can accuse me of lying? That is what is
happening out there in the country. People are very concerned
about what is happening with Medicare Advantage.
I thank the chairman and I yield back.
[The prepared statement of Mr. Rothfus follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
introduces the gentlelady from Indiana, Ms. Walorski. I
recognize her for 5 minutes for an opening statement.
STATEMENT OF HON. JACKIE WALORSKI
Ms. Walorski. Thank you, Mr. Chairman. Chairman Pitts,
Ranking Member Pallone, members of the subcommittee, it is an
honor to be here today and I thank you for holding this hearing
to examine Medicare Advantage, a vital program that is critical
to the health and well-being of many of our nation's seniors.
Over 15 million Americans depend on Medicare Advantage.
Through this popular program, seniors and individuals with
disabilities are able to select a private health plan of their
choice that provides affordable, comprehensive coverage,
disease management, and care coordination.
The Affordable Care Act and other regulatory changes have
placed significant financial strain on this program, the brunt
of which will be borne by the seniors we have promised to
protect. Cuts to Medicare Advantage mean higher out-of-pocket
costs, a more limited choice of doctors, decreased management
of chronic conditions, and decreased coverage for dental and
vision services.
In my home State of Indiana, 22% of Medicare-eligible
Hoosiers have chosen to enroll in Medicare Advantage, and
enrollment in my district is even as high as 27%. This program
serves my constituents well, and I am deeply concerned about
how cuts will impact seniors in theHoosier State.
Marcia from Mishawaka told me she is very pleased with her
Medicare Advantage program. She loves the quality of the
services provided and the prescription drug program that is
included. She is worried about the looming cuts because she
wants to keep her current doctor. As a senior citizen living on
a fixed income, it is important that her premiums remain low
and she wonders who will take care of seniors if the cuts
continue.
Eighty-seven-year-old Phyllis and her 93-year-old husband
Owen like the peace of mind that comes with knowing they will
receive excellent care through their current healthcare plan.
Back in June, Phyllis fell and broke her hip. She was promptly
picked up by an ambulance, admitted to surgery, and received
excellent follow-up care in rehab. Her Medicare Advantage plan
took care of the costs. Owen had a pacemaker inserted last
year, which was also taken care of by his MA plan. Originally,
there was no premium for this plan. Now they pay $34 a month.
Although $34 a month may not seem like much, Phyllis told me if
their premiums become too high, they will have to cut back on
other necessities. Phyllis and Owen never imagined the
Affordable Care Act would negatively impact them, especially
when the President said that you can keep your healthcare plan
if you like it. But now their healthcare plan is in jeopardy,
too.
Medicare Advantage plans are particularly critical to low-
income and minority beneficiaries. According to a study by
America's Health Insurance Plans, 1 of 5 of those enrolled in
Medicare Advantage are minorities and 41% of enrollees have
annual incomes of less than $20,000. Cuts to the program have
the potential to disproportionately affect these most
vulnerable populations.
That is why I introduced H.R. 4211, the Advantage of
Medicare Advantage for Minorities and Low-Income Seniors Act of
2014. This legislation directs the Government Accountability
Office to study the number of minority and low-income seniors
enrolled in Medicare Advantage and to assess the impacts of
Medicare Advantage payment reductions resulting from the
Affordable Care Act and other administrative actions.
Studies show that enrollees in Medicare Advantage have
lower hospital readmissions, receive higher quality of care,
and enjoy better health outcomes as compared to their
counterparts in traditional fee-for-service Medicare. Medicare
Advantage serves as a vital source of coverage for low-income
and minority beneficiaries.
On behalf of my constituents in the 2nd District and all
Hoosiers, I look forward to working with both Congress and the
Administration to keep the promise to maintain the integrity of
Medicare Advantage. Thank you for the opportunity to appear
before you this morning.
[The prepared statement of Ms. Walorski follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentlelady and again thanks
the Members for the testimony on your initiatives. We will be
happy to work with you on those. Thank you for taking time out
of your busy schedules to appear before us today.
There will be no questions. I will excuse panel one at this
time and call the second panel to the table and introduce them
in the order that they will make presentations.
First, Mr. Frank Little, a Medicare beneficiary with a
Medicare Advantage plan; secondly, Dr. Mitchell Lew, CEO and
Chief Medical Officer of Prospect Medical Systems; thirdly, Mr.
Glenn Giese, Principal, Oliver Wyman Consulting Actuaries; and
then Ms. Judith Stein, Executive Director, Center for Medicare
Advocacy; and finally, Dr. Paul Van de Water, Senior Fellow,
Center on Budget and Policy Priorities.
Thank you all for coming today. Your written testimony will
be made part of the record, and we will give each of you 5
minutes to summarize your testimony.
Mr. Little, we will start with you. You are recognized for
5 minutes.
STATEMENTS OF FRANK LITTLE, MEDICARE BENEFICIARY WITH A
MEDICARE ADVANTAGE PLAN; MITCHELL LEW, M.D., CEO AND CHIEF
MEDICAL OFFICER, PROSPECT MEDICAL SYSTEM; GLENN GIESE,
PRINCIPAL, OLIVER WYMAN CONSULTING ACTUARIES; JUDITH STEIN,
EXECUTIVE DIRECTOR, CENTER FOR MEDICARE ADVOCACY; AND PAUL N.
VAN DE WATER, SENIOR FELLOW, CENTER ON BUDGET AND POLICY
PRIORITIES
STATEMENT OF FRANK LITTLE
Mr. Little. Chairman Pitts and members of the committee,
thank you for providing me this opportunity to testify about my
personal experience with the Medicare Advantage plan.
My name is Frank Little. I am a retired small business
owner from Virginia Beach. I am 70 years old. My wife and I
have been enrolled in three different Medicare Advantage plans
over the past 5 years. We have received high quality,
affordable coverage through our Medicare Advantage plans, but
we are concerned that our plan choices are shrinking due to the
deep funding cuts in this program.
When I first became eligible for Medicare, I had a choice
of four different Medicare Advantage plans that offered
prescription drug benefits with no additional premiums. Over
the years, uncertainty about the program funding has forced
several of these plans to either withdraw from my area or
increase premiums.
Today, I am enrolled in a Medicare Advantage plan offered
by Humana, which is still the only plan in my area offering a
plan that includes prescription drug coverage with no
additional premium. I am very satisfied with my Medicare
Advantage plan and feel fortunate to have this option.
To help the committee understand why my Medicare Advantage
plan is important to me, I want to explain my experience over
the last several years. I have had three major medical problems
since I retired. I have had open-heart surgery, colon cancer,
and a medical procedure on my lungs. I estimate that my medical
bills for these conditions have totaled approximately $750,000
over the last 5 years, and I am pleased to tell you that my
Medicare Advantage plans have covered almost all of these
expenses. I have paid only a few hundred dollars in out-of-
pocket costs. Without my Medicare Advantage plan, I would have
faced a high deductible and 20% copayments if I had not been
enrolled in the original Medicare program.
Like many seniors, I live on a fixed income and such high
costs would have had a devastating impact on my budget. I also
want to emphasize that my Medicare Advantage plan has allowed
me to receive high quality care from my personal physician,
from outstanding specialists, and from an excellent hospital in
my community.
Other seniors in my community have several stories to tell
about the quality coverage they receive through their Medicare
Advantage plan. We appreciate that our plan provides
prescription drug coverage as part of our medical coverage,
while also taking care of our expenses to ensure that our out-
of-pocket expenses are affordable.
My message to Congress is that I want you to make sure that
Medicare Advantage continues to be a strong and adequately
funded program. I am asking you to block any additional funding
cuts. I am counting on both Congress and the Obama
Administration to do the right thing and protect this program
from any further funding cuts.
In closing, I want to say that I love my Medicare Advantage
plan and I will be deeply disappointed if I lose my plan. Thank
you for considering my comments on this important issue.
[The prepared statement of Mr. Little follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The Chair thanks the gentleman. I now recognize
Dr. Lew 5 minutes for an opening statement.
STATEMENT OF MITCHELL LEW, M.D.
Dr. Lew. Thank you, Chairman Pitts, Ranking Member Pallone,
and members of this committee for the invitation to testify
today. My name is Dr. Mitchell Lew, and I am part of the CAPG
National Board and am pleased to testify on behalf of CAPG,
which is the largest association in the country of physician
organizations that practice capitated coordinated care.
CAPG members represent 160 medical groups in 20 states and
serve 1.2 million Medicare Advantage enrollees. I also address
you as a physician who practiced for 10 years before
transitioning to a physician executive role 15 years ago. I am
CEO of Prospect Medical Group, which is an IPA model with over
4,500 physicians in three States and serving 225,000 members.
This model allows us to contract with smaller physician
practices under the umbrella of one large organization.
For background, Prospect Medical began in 1985 and we have
evolved over the years and we now offer a full range of
coordinating care services and programs, and this has resulted
in better value to our seniors. It is better care, better
health with cost control. Prospect has grown and we now have
physicians and hospitals in California, Texas, and Rhode
Island.
I come to emphasize the merits of Medicare Advantage and
the coordinated care model and the need to preserve the
financial support for Medicare Advantage and to continue our
investment into the model. Medicare Advantage takes a
population-based payment approach, which reduces the high
utilization incentives of traditional Medicare. It is value
over volume. It is team-based. Physician organizations are
structured to provide the best care at the right time in the
most appropriate setting. Seniors are managed across an entire
continuum of care. They get preventive services, home visits,
high-intensity case management for the sickest members, chronic
disease management, palliative care. It allows for innovation.
Physicians are held to performance standards and they receive
quality incentive payments. Social and behavioral services are
also delivered in a coordinated manner.
The impact of Medicare Advantage is better care, lower
admissions, lower readmissions, lower lengths of stay, better
outcomes, higher member satisfaction, more benefits, and higher
interest among the new seniors. And that is particularly
important for the low-income seniors who like the enhanced
benefits and they need the enhanced benefits. Medicare
Advantage has grown by 30% over the last 3 years and now 50% of
new Medicare enrollees are choosing Medicare Advantage.
The proposed reductions and cumulative cuts pose very
serious threats. It will cause an erosion of the coordinated
care infrastructure, higher cost-sharing, which will have a
profound impact on the lower-income and minority seniors, fewer
benefits. These cuts will undermine all of the progress that we
have made in developing the healthcare delivery system.
Medicare Advantage should be the infrastructure that all of
the newer models in fee-for-service should use to build
coordinating care such as the ACOs and the medical homes. I
urge Congress and the Administration to find ways that will
strengthen, not cut Medicare Advantage, develop policies that
will promote population-based payments.
Medicare Advantage should be the foundation upon which the
entire healthcare delivery system builds coordinated care. As
you develop Medicare and fiscal policy, I ask that you consider
all that Medicare Advantage has to offer and know that
additional cuts will have very serious consequences on the
coordinated care model and the seniors that it serves. Without
Medicare Advantage, we have very little chance to transform our
healthcare delivery system.
Thank you very much, Mr. Chairman, and I look forward to
your questions.
[The prepared statement of Dr. Lew follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Mr. Giese 5 minutes for an opening statement.
STATEMENT OF GLENN GIESE
Mr. Giese. Chairman Pitts, Ranking Member Pallone, and
members of the subcommittee, thank you for the opportunity to
testify. I am Glenn Giese, a senior principal with Oliver Wyman
Actuarial Consulting. My testimony today will focus on the
findings of a recent analysis by Oliver Wyman commissioned by
America's Health Insurance Plans, which estimates the potential
impact of funding cuts that would be imposed by Medicare
Advantage program by proposed changes to the MA payment
methodology in 2015.
Our analysis focused on the combined impact of preliminary
payment policies and regulatory changes announced by CMS on
February 21, 2014, in its 45-day notice and draft call letter,
cuts included in the Affordable Care Act and other legislative
provisions addressing MA payments.
Specifically, we identified nine different factors that
would impact MA payments in 2015, most of which would reduce
payments. A detailed explanation of these factors is outlined
in the appendix to my testimony. We have calculated that the
projected overall impact of these policies would be to reduce
MA payments by an estimated 5.9% in 2015. We note that the
impact of these changes on individual plans will vary based on
a number of factors, including the geographic area in which the
MA organization participates.
We further estimate that the 5.9% funding cut translates
into a potential reduction of $35 to $75 per month or $420 to
$900 for the year in funding that will be available to support
the benefits of MA enrollees in 2015. These cuts, if
implemented, would represent a second consecutive year of deep
cuts in MA funding. Due to a combination of legislative and
regulatory policies implemented for 2014, MA payments already
have been cut by 4 to 6% this year, resulting in cost increases
and benefit cuts of $30 to $70 per month for beneficiaries. If
the new changes proposed by CMS are implemented, the program
would be hit by a double-digit cut over just a 2-year period,
causing cost increases and benefit reductions that could total
as much as $1,740 per enrollee over 2 years according to our
projections.
MA cuts proposed for 2015 could have far-reaching
implications for over 15 million seniors and individuals with
disabilities who are enrolled in MA plans. In our report we
explained that these cuts ``could result in a high degree of
disruption in the MA market,'' including the potential for plan
exits, reductions in service areas, reduced benefits, provider
networks changes, and disenrollment from MA plans.
We further cautioned that the proposed funding cuts would
disproportionately affect beneficiaries with low incomes,
including the 41% of MA enrollees who have annual incomes below
$20,000. For these beneficiaries, the potential increase in
out-of-pocket costs resulting from cuts would constitute a
significant burden.
Another serious concern we highlight is that individuals
who utilize healthcare services the most would adversely be
affected if they lose their MA plans and are forced to move
back through the Medicare fee-for-service program with its
higher cost-sharing and lack of coordinated care. This is a
particular concern for enrollees in Special Needs Plans that
serve beneficiaries who have severe or disabling chronic
conditions or who reside in institutions.
For example, Chronic Care SNPs offer services that are
tailored to meet the specific medical needs of patients with
diabetes, cardiovascular disease, and other conditions. The
loss of these specialized services would be a serious blow to
beneficiaries whose medical conditions require customized
treatments and care.
Thank you again for the opportunity to testify and I
encourage the subcommittee and Congress to consider the
findings of our analysis as you communicate with CMS about its
proposed payment policies and regulatory changes to the MA
program for 2015.
[The prepared statement of Mr. Giese follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Ms. Stein 5 minutes for an opening statement.
STATEMENT OF JUDITH STEIN
Ms. Stein. Mr. Chairman Pitts, Ranking Member Pallone, and
distinguished members of the subcommittee, thank you for
inviting me to testify. I am Judith Stein, founder and
Executive Director of the Center for Medicare Advocacy. I have
dedicated my legal career to representing Medicare
beneficiaries exclusively since 1977. The Center is a private,
nonprofit organization based in Connecticut and Washington,
D.C., with offices throughout the country. We responded to over
7,000 calls and emails from Medicare beneficiaries and their
families each year.
Medicare beneficiaries have had the option to enroll in
private health plans since the '70s. The Medicare private plan
option, now called Medicare Advantage, prior Medicare Plus
Choice, was supposed to provide equal or better coverage for
beneficiaries at a lower cost than traditional Medicare.
Unfortunately, that has not been the case. As you know, in fact
on average, private MA plans, Medicare Advantage, are paid
significantly more than it would cost to provide similar
coverage in traditional Medicare.
Now, we recognize that MA plans can be a viable option for
some enrollees, but I must remind the committee that the vast
majority, 36 million or more older and disabled people, are
enrolled in traditional Medicare, which is no longer a fee-for-
service program, and 50% of all Medicare beneficiaries have
incomes under $23,500 a year.
At the Center, we regularly hear from families and
individuals who have had problems with their MA plans. One of
the most frequent issues we encounter concerning MA coverage
relates to post-acute care. For example, over the last year the
Center has received complaints from across the country about MA
plans that have denied coverage for skilled nursing facility
care despite the fact that the individuals at issue were
receiving nutrition through feeding tubes, which under federal
regulations and common sense is a skilled service. We have
heard this from Ohio, Pennsylvania, Minnesota, and of course
Connecticut.
In fact, one of the beneficiaries who called us, or the
family did, was granted coverage on appeal but the MA plan
actually appealed that case to federal court. And we, a
nonprofit that is not paid by our clients, had to go to federal
court to make sure that that individual and the others like him
in that MA plan would get coverage and care.
These issues are not new and occurred even at the height of
MA overpayments when plans were paid at an average of 114% of
the amount traditional Medicare would spend on a similar
individual. In 2009, for example, the Center had to take
another case to federal court in order to obtain coverage for
an individual receiving tube feeding. But the MA plan was so
determined to deny coverage it continued that case into federal
court in Minnesota.
One of the most important health considerations for
individuals is the ability to choose one's doctors and
healthcare providers. This is the choice that people really
care about. By design, as you know, MA plans contract with a
limited network of providers to care for enrollees. Some
coordinate care, but that is far from the normal course we have
found with their beneficiaries over the 30 plus years I have
done this work.
For example, a Connecticut resident was referred to us by
his Congressman because he had almost $100,000 in outstanding
medical bills for his recently deceased wife that would have
been covered had he been in traditional Medicare. That is
because he traveled to Florida to be with his daughter where
his wife fell. And while her fractured hip was taken care of
and paid for by the plan, it turned out she had a brain tumor,
and all the services related to the brain tumor were not
covered by the MA plan.
Sometimes Medicare Advantage enrollees face barriers close
to home. When MA plans change their provider networks, as they
often do annually, enrollees often have to make sure that their
doctors will be in the plan in the coming year. As you may
know, the largest plan in our State of Connecticut and in New
York, Ohio, and Florida cut many, many providers, 2,250 doctors
and healthcare facilities in Connecticut alone, including Yale
New Haven Hospital where my mother, who is on traditional
Medicare, recently had urgently needed neurosurgery, which she
would not be able to have if she was in a Medicare Advantage
plan. Neither physicians nor Medicare patients in that plan,
the largest in Connecticut--and in Ohio, Florida, New York--
were given adequate notice regarding these extraordinary
provider cuts.
In addition to the concerns raised for Medicare
beneficiaries by MA networks, too many plans fail to provide
adequate coverage and access to care when enrollees are
seriously ill. While I am grateful for the care that my co-
presenter has received from his MA plan, too often we find that
when people become truly ill or injured, they are less
satisfied with their MA plan. That has been the case with my
uncle just this year, my mother's brother, who is 92 and has
been in an MA plan all these years despite my protestations. He
is not receiving coordinated care or the care he needs.
Mr. Pitts. Can you wrap up, please?
Ms. Stein. Instead of focusing on how much Medicare
payments are being cut, which is not really a cut, Congress
should focus on making sure they provide what we are paying
for. It is simply unfair to ask beneficiaries and taxpayers to
shoulder extra payments to private plans that truly don't
provide uniformly better value. Enrollees in poor health often
receive less coverage and all have less options of providers.
Thank you.
[The prepared statement of Ms. Stein follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentlelady and now
recognizes Dr. Van de Water 5 minutes for an opening statement.
STATEMENT OF PAUL N. VAN DE WATER
Mr. Van de Water. Mr. Chairman, Ranking Member Pallone, and
members of the subcommittee, I appreciate the opportunity to be
with you this morning. My statement reviews the role of private
health plans in Medicare, identifies the factors that will hold
down payments to Medicare Advantage plans in 2015, and explains
why the Administration and Congress should reject demands from
some quarters to freeze Medicare Advantage payment rates in
2015 at their 2014 levels.
For 40 years, Medicare beneficiaries have been able to
receive their benefits through private health plans. And as you
have heard, in 2014, 29% of beneficiaries are enrolled in a
private health plan through Medicare Advantage and virtually
all beneficiaries have access to such a private plan. The
remaining 70% or so of Medicare beneficiaries are in
traditional Medicare.
Congress' advisory body, the Medicare Payment Advisory
Commission, has long recommended that Medicare's payment system
be neutral, favoring neither Medicare Advantage plans nor
traditional Medicare. But in recent years, the system has been
substantially tilted in favor of private plans, the result of a
large increase in MA payments enacted in the 2003 Medicare
prescription drug law.
In 2009, Medicare paid MA plans 14% more per enrollee than
what it would have cost traditional Medicare to cover
comparable enrollees. The Affordable Care Act is gradually
reducing MA payment rates to bring them more in line with
payments in traditional Medicare. This year in 2014, Medicare
Advantage payments average only 6% higher than the levels in
traditional Medicare. These overpayments, I must add, drive up
premiums for beneficiaries and weaken Medicare's finances.
The Centers for Medicare and Medicaid Services has recently
announced preliminary 2015 payment policies for Medicare
Advantage plans. Although the health insurance industry's trade
association AHIP says that the CMS announcement includes ``new
proposed cuts,'' the agency CMS is simply applying current law.
The announced payment policies reflect four factors that
will hold down MA payments in 2015. First, CMS continues to
phase in the payment reductions that health reform requires,
which curb some, but as I said, not all, of the excessive
payments to MA plans.
Second, since MA payments are tied in part to the cost per
enrollee in traditional Medicare, the continuous slowdown in
fee-for-service spending lowers MA payment rates.
Third, CMS is implementing more accurate risk adjustment
procedures as health reform requires. It will modestly reduce
MA payments to address the problem of up-coding. Also, CMS will
no longer include diagnoses identified during a home assessment
visit rather than a clinical encounter in determining an
enrollee's health status since these tend to make enrollees
appear sicker than comparable enrollees in traditional
Medicare.
And fourth, ending a demonstration project that pays
higher-quality bonuses to some plans will effectively lower
payments in those plans in 2015 compared to 2014.
Now, AHIP and other interest groups charge that the
preliminary 2015 payment policies will substantially increase
costs to MA participants and will reduce the choice of plans.
They ask that MA payment rates be frozen in 2015 at their 2014
levels, but I would argue that the Administration and Congress
should reject those demands.
The predictions of doom and gloom are greatly exaggerated.
AHIP issued these same warnings about the MA payment cuts that
were made in 2014, but MA enrollment, as you have noted, has
nonetheless reached record levels. And the Congressional Budget
Office projects that MA plans will continue to thrive despite
further payment cuts. Nationwide, the number of plans available
dropped by only 3% in 2014, a small change that reflects both
the offsetting effects of newly entering plans and those
departing the market.
Plans also responded to the payment reductions by becoming
more efficient. The unweighted average monthly premiums for MA
plans with prescription drug coverage actually fell from 2013
to 2014 and is lower today than in 2011 or 2012. And again,
this is also despite the payment reductions.
Wall Street certainly isn't pessimistic about Medicare
Advantage. In the wake of the CMS announcement, shares of
Humana, the second largest insurer in the MA market, recorded
their biggest single-day increase in 4 years and reached their
highest level in more than 30 years. Standard & Poor's overall
index for managed healthcare plans also climbed.
Finally, preventing overpayments to Medicare Advantage
plans is sound policy. Along with the other cost-saving
provisions in the Affordable Care Act, eliminating overpayments
reduces premiums for all beneficiaries, including the large
majority who are not enrolled in MA plans and extends the
solvency of Medicare's Hospital Insurance trust fund.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Van de Water follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Pitts. The chair thanks the gentleman. That concludes
the opening statements. We will begin questioning. I will
recognize myself for 5 minutes for that purpose.
Mr. Little, I will go first to you. What would have
happened to you if you had had a health episode and were not on
an MA plan? How did your MA plan compare to what service you
might have received under traditional Medicare if you could
explain?
Mr. Little. If I would have had traditional Medicare with
my problems that I had, instead of being approximately $400
out-of-pocket cost because I stayed 2 extra days at the
hospital when I had the open heart, if I had had traditional
Medicare, it would have cost me $150,000 and that is a
financial burden.
Mr. Pitts. Now, what would happen to you if you would lose
your MA plan that you have today?
Mr. Little. Well, if I had looked at the closest Medigap
and it would add about $700 to $800 a year to my cost, which,
because I am retired, something would have to be taken out of
the budget to pay for the plan.
Mr. Pitts. All right. Well, according to the Congressional
Budget Office, the Affordable Care Act cut more than $300
million from the Medicare Advantage program to spend on new
government programs, new entitlement not for seniors. What is
your reaction to that?
Mr. Little. Well, I have seen the cuts. When I turned 65 5
years ago, we had four plans to choose from and Medicare
Advantage plans and I had always been with Blue Cross Blue
Shield so I signed up with them. I was informed the following
year that they were dropping that plan so I went to Optima.
They had the next-best plan. The following May I got my letter
that they were dropping me, and the third year I went to Humana
because they were basically the only one left. And in my area
that I live in, Virginia Beach, Humana offers the only Medicare
Advantage plan available. The others said they had to drop it
because of the higher cost and cuts.
Mr. Pitts. Can you describe what your plan has done for you
that you think may have prevented a hospitalization or from
returning to the hospital?
Mr. Little. Yes, sir. Every January and June part of the
plan is to go into your GP and have a thorough checkup. And of
course I have to go to my cardiologist and have a thorough
checkup. But even the co-pay for those preventive is zero for a
GP and of course my specialist is $35, which is easily
affordable. So they keep me running.
Mr. Pitts. If you could do a ballpark, how much do you
think your health plan has saved you in costs out-of-pocket,
you know, costs for the services you need so far?
Mr. Little. Well, I know in the last 5 years it has saved
me $140, $150,000.
Mr. Pitts. Now, due to cuts in Medicare Advantage under the
Affordable Care Act, some seniors may get to keep their plan at
least this year but might still lose their doctor or lose
affordable premiums or lose needed benefits. Have you lost your
doctor or plan before?
Mr. Little. No, sir.
Mr. Pitts. Have you or your friends with Medicare Advantage
plans experienced fewer choices and higher cost?
Mr. Little. We have experienced fewer choices but the low
cost is still there. And in fact, with all respect to Ms.
Stein, I don't know which Medicare Advantage plan they have,
but they need to switch.
Mr. Pitts. All right. Let me go to Mr. Giese. What are the
tools that CMS has at its disposal to legally reduce the impact
of the cuts and the advance notice through administrative or
regulatory means?
Mr. Giese. Some of the cuts are statutory and some of the
cuts are discretionary, so if Congress were to act, things like
the ACA reductions, the demonstration plan, and the risk score
stuff could be changed. But the other stuff that is
discretionary is decided by CMS, so the rate book change, which
are the trends in Medicare Advantage, we are not quite sure how
CMS develops the trends. They are not really released to the
public. So that could change. That is partially discretionary
and I would say that is the biggest one.
Mr. Pitts. My time has expired, unfortunately. The chair
recognizes the ranking member 5 minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask questions initially of Mr. Van de Water. I
have heard different views on whether the quality of care that
Medicare beneficiaries receive from an MA plan is any different
than fee-for-service Medicare. What is your take on the
relative quality of care provided in fee-for-service versus MA
plans?
Mr. Van de Water. Mr. Pallone, I think the short answer is
that we don't really have clear data. I like to rely on the
Medicare Payment Advisory Commission. They are a good impartial
source. And in their report from last March on Medicare payment
policies, they said that according to them we have little
information on which to base a comparison of MA quality
indicators with those in private fee-for-service.
That having been said, the evidence is mixed. There are
some studies which some of the Members have referred to that
suggest that at least in some particular MA plans, quality may
be better. There is other data, for example, that MedPAC sites
that suggests that the quality is about the same on average in
Medicare Advantage plans and traditional Medicare. So I think
the right answer is that the record is probably mixed that in
some cases the quality is probably better but we can't make
that conclusion across the board.
Mr. Pallone. Well, I think we should strive to improve the
quality provided to all Medicare beneficiaries both in the fee-
for-service system and the Medicare Advantage program. Now,
fee-for-service has undertaken new payment models such as
accountable care organizations, medical homes, and other
initiatives, and Congress, including our committee, has made
great bipartisan progress towards tying physician Medicare
payments more closely to the quality of care provided. And now
that MA plan payments are linked to quality performance, the
plans are also working to improve quality. So what is your
recommendation for steps we can take to continue to improve
quality for all Medicare beneficiaries?
Mr. Van de Water. Well, I think you are exactly right to
focus on the whole system. You know, we are developing--this is
referred to a mix of payment models. We have not only
traditional Medicare on the one hand and Medicare Advantage
plans, but we are developing intermediate models such as
accountable care organizations. I think that what Congress has
done to encourage these different payment models is exactly the
right thing. In your proposed SGR legislation you have
additional steps to develop models of that sort. The quality
bonuses in MA plans, that makes sense. So I think in general
you are on the right track.
Mr. Pallone. All right. Let me ask you a question about the
mechanics of how Medicare Advantage plans are paid. CMS
reported that the proposed reductions will result in a 2.4
decrease to MA plan benchmarks in 2015 while the witness from
Oliver Wyman testified on their recent report and that is a
report that I remind everyone that the insurance industry paid
for, which claims that the plans' rates will be cut by 5.9%.
And the plans are saying these reductions are going to either
put them out of business, force them to hike premiums, reduce
benefits, or take other drastic measures. On the other hand,
they said this last year, too, and yet nothing really happened.
But I know this is a very complex issue and I would like to get
to the bottom of it.
So let's just talk about the facts. Can you please explain
the mechanics of how Medicare Advantage plans are paid, like
what a benchmark is, what a bid is, and how plans' payments are
determined?
Mr. Van de Water. I will try to give a simple answer which
will necessarily be a bit oversimplified, but, as you say, the
key factors in determining what a plan gets paid are, one, the
plan's bid, which represents how much the plan estimates that
it will cost to provide Part A and Part B services to a
representative group of people, that is people of sort of an
average----
Mr. Pallone. What I am trying to get at is whether the
reductions that CMS has proposed to the plan, you know, whether
the reductions are to the payments or the benchmarks? And given
the reductions in benchmarks, will the plans on average end up
getting less money than fee-for-service? But, you know, go
ahead.
Mr. Van de Water. OK. The answer is that the reductions
that are being discussed are the reduction to the so-called
benchmarks. What the plans actually get relates both to the
benchmarks and to what they bid and to other factors, so there
is a lot of intervening steps, and reductions in the benchmarks
don't translate one-for-one into reductions in the plan
payments.
Mr. Pallone. So can we say that the proposed reductions and
benchmarks will on the average end up that the plans get less
money than fee-for-service Medicare?
Mr. Van de Water. Other things being equal, they will tend
to reduce what the Medicare Advantage plans get paid, but on
average, in 2015 MA plans are still going to get paid, somewhat
more than what it would cost to cover their enrollees under
traditional Medicare.
Mr. Pallone. All right. Thank you.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the vice chairman of the subcommittee, Dr. Burgess,
5 minutes for questions.
Mr. Burgess. Thank you, Mr. Chairman. I would like to
address this to Dr. Lew and Mr. Giese. I mean you heard the
ranking member's question to Dr. Van de Water about the issue
of quality between Medicare Advantage and traditional Medicare.
Can you offer us your perspectives on that? Is there a
difference in your estimation on the difference between the
quality of care provided the enrollee in traditional Medicare
versus Medicare Advantage? Dr. Lew, let's start with you.
Dr. Lew. Yes. Thank you for that question. Absolutely I can
attest to that, that the quality of care delivered in a
coordinated care model is far superior to a fragmented fee-for-
service system because you have got the whole continuum of
care. Again, as I mentioned, the home visits coordinated with
inpatient, outpatient visits, palliative care and disease
management. It is a team approach where you have got providers,
nurses, pharmacists, social workers taking care of patients
across the continuum.
There was a mention about home care. Home care absolutely
is an essential piece of this. You take out home care; that
leaves a gap in our system. You know, it is not an up-coding
situation. It is a situation where we do actually recognize
what could be admission drivers. We look for areas where a
patient, perhaps he would be at a fall risk. So there is a lot
of information gathered at a home visit. But absolutely,
quality measures, there is no question. We can reduce bed days,
we reduce lengths of stay, we reduce costs, we get better
outcomes and obviously patient satisfaction, and that is why
members are wanting to migrate to Medicare Advantage.
Mr. Burgess. Thank you.
Mr. Giese?
Mr. Giese. Thank you. There are studies out there that show
that the quality in fee-for-service is lower than in MA on
average, in fact, a number of studies. But going beyond that,
think about your parents and if they are sick. They want to be
taken care of. These people who sign up for Medicare Advantage
plans are so happy that they are taken care of. They are called
by the plan to say, did you take your prescription? Did you get
a checkup? And the people love this. It is so important to
these people who signed up for these plans.
Mr. Burgess. Have there been any efforts to identify--you
know, we talk on this committee a lot about readmission rates
for patients with certain diagnoses. Is there any evidence to
point to, say, the readmission rate for someone who is
hospitalized with congestive heart failure that is partly
controlled, that is hospitalized, gets toned up, gets sent
home? Do they do better or worse on Medicare Advantage?
Mr. Giese. Readmission rates are lower in Medicare
Advantage. There have been some studies that show that.
Mr. Burgess. Well, let me ask you a question and then
because part of this is we overpay Medicare Advantage. But you
have just identified one of the larger cost drivers and you say
that is less with Medicare Advantage. So how can it be? A
program that costs more is actually costing less? It is
paradoxical, isn't it?
Mr. Giese. Well, all of the----
Mr. Burgess. It is a trick question, Mr. Giese. I am sorry.
I couldn't help myself. Dealing with the Congressional Budget
Office all the time----
Mr. Giese. All of the so-called overpayments to Medicare go
directly to beneficiaries. The rules for bids and the way the
bids work, everything goes back to the beneficiary.
Mr. Burgess. And I thank you for that. I did just want to
point out we deal with the tyranny of the Congressional Budget
Office all the time and it is bipartisan. Both sides of the
dais feel the tyranny of the Congressional Budget Office.
Mr. Little, I just have to ask you a question.
Mr. Little. Yes, sir.
Mr. Burgess. Your written testimony you have provided you
said you were a small business owner?
Mr. Little. Yes, sir.
Mr. Burgess. So were you self-employed?
Mr. Little. Yes, sir.
Mr. Burgess. So being self-employed, you know of course you
paid your taxes, your payroll taxes?
Mr. Little. Yes, sir.
Mr. Burgess. And for Medicare Part A, what was the payroll
tax that you paid during most of your years?
Mr. Little. Well, nobody in my organization was that old at
that time.
Mr. Burgess. Well, but I mean as you worked, in your
working years you pay Social Security and Medicare----
Mr. Little. Oh, yes.
Mr. Burgess [continuing]. Every paycheck, right?
Mr. Little. Oh, yes, sir.
Mr. Burgess. Do you remember what the percentage was that
you paid for Medicare?
Mr. Little. The FICA was 6.2. The Medicare was--I don't
know.
Mr. Burgess. 1.3, I have it on good authority. It is said
it is 1.3 so let's stipulate that that is correct. But you were
a small business owner so for yourself you paid both the
employer and the employee contribution, is that correct?
Mr. Little. Yes, sir.
Mr. Burgess. So you paid 2.6% of your earnings throughout
your lifetime. So let me just ask you. Do you feel that what
you are receiving now and Medicare is an entitlement or is that
something for which you have paid?
Mr. Little. Oh, I think it is something I have earned.
Mr. Burgess. Yes, exactly. Exactly so. And I just wanted to
make that point. It is then incumbent upon us to make sure you
get the very best of what is available, and in your case, it
sounds like that would be Medicare Advantage.
I have gone over time. I will yield back.
Mr. Pitts. All right. The chair thanks the gentleman. I now
recognize the gentleman, Mr. Green, 5 minutes for questions.
Mr. Green. Thank you, Mr. Chairman.
CMS proposed to disallow the use of the home assessment
diagnoses unless the beneficiary received appropriate follow-up
care as a good policy. Mr. Van de Water, I understand that
plans were allowed to use beneficiary diagnosis information
obtained during home assessment visits to increase their risk
adjustment payment. Basically what happened is that the plans
were providing assessments for beneficiaries finding that there
were certain diagnoses and using that information for increased
payment.
But this is important in that plans were not following up
and providing the services the patient required as a result of
that diagnosis. So the plans get more money and the patient
doesn't receive anything. This seems like it is a scam on tax
dollars. Just so we are clear, can you please explain exactly
what CMS has proposed?
Mr. Van de Water. Yes, sir. I think you actually provided a
very good summary yourself. All I would add is that what CMS is
proposing to do is not an anyway suggesting that these home
assessment visits cannot be helpful or useful, but as you say,
it is important that if a home assessment visit takes place and
a condition is found, that the appropriate follow-up is
provided. CMS is not saying that diagnoses identified during
home visits are never going to be considered but simply they do
have to be recognized by the subsequent encounter with a doctor
or health professional to make sure that the appropriate
follow-up is indeed taking place.
Mr. Green. It seems like if they are getting paid for that
assessment of that illness, they should be actually treating
that patient----
Mr. Van de Water. Exactly.
Mr. Green [continuing]. Instead of just building up their
payment.
What is your take on this policy? Is it reasonable to
require a plan if they wish to receive higher payments with
identifying a diagnosis to require they provide that patient
with those services?
Mr. Van de Water. I am not sure we need to make the
requirement but we certainly shouldn't allow plans to get the
higher payments for the diagnoses if they are not followed up
on.
Mr. Green. In other words, that is a cost savings we could
do. But we hear about in Medicare is overpayment if they are
not receiving the services that they are actually being paid
for.
Mr. Van de Water. Yes. That is precisely what CMS has tried
to do in the proposed policy.
Mr. Green. Medicare Advantage overpayment often hurt
beneficiaries and Medicare in the long run. Ms. Stein, I know
that you have been a strong advocate for strengthening Medicare
and ensuring it remains secure in the long run. That is why I
have concerns about continuing to overpay Medicare Advantage.
First, Medicare Part B premiums are based on program spending,
so the extent Medicare is paying too much, it drives the
beneficiary premiums up, isn't that right?
Ms. Stein. That is exactly correct. The overpayments to the
Medicare Advantage program are a problem not only for Medicare
Advantage enrollees but for all Medicare beneficiaries because
their Part B premiums increase and of course taxpayers pay more
for Medicare as a whole.
Mr. Green. We know that most beneficiaries have modest
incomes, fixed incomes. They don't have a lot of disposable
income to pay extra to manage care. How are beneficiaries
affected by unjustified overpayments to private insurance
companies while the minority who are enrolled in plans might
see some additional benefits but how the vast majority of
Medicare beneficiaries are affected? It seems like if you are
raising premiums for--and I will take a number out of the air--
70% of the folks in my district, last numbers I saw, received
regular Medicare, about 30% do Medicare Advantage. So you raise
the premiums for 70% to provide some additional benefit to the
30%.
Ms. Stein. That is correct. And I have to even question the
additional benefits. I mean what were mentioned were vision,
which is usually some help with some eyeglasses, not very much,
and preventive services, which are now zero based in Medicare
as a result of the Affordable Care Act. And I have not seen a
great deal of actual coordination. When there is true
coordination, I applaud it, but very often, we have as much
siloing of care in Medicare Advantage as we have in traditional
Medicare. It is costing everybody more, even the vast majority
who don't choose Medicare Advantage but stay in traditional
Medicare.
Mr. Green. Well, I only have a few seconds left and I have
heard some folks argue that we can't take away access payments
to plans and put them on parity with fee-for-service because
some beneficiaries are low-income, rely on these plans for
additional benefits. And they do. I know Medicare Advantage
offers other things, but the problem is plans can change their
benefits and cost-sharing from year to year. Just because a
low-income person has a plan that would reduce cost-sharing
today, that plan doesn't necessarily have to offer that extra
benefit over that year.
Ms. Stein. That is right. The plans can change the benefits
from year to year so long as they are actuarially equivalent to
traditional Medicare.
And I just want to say CMS did do a study in 2012 that
showed about low-income people, people with high-risk needs and
health issues disproportionately disenroll from Medicare as
they are dealing with those issues across the country.
I have no skin in this game. My entire career is just
representing mostly low- and moderate-income Medicare
beneficiaries and protecting Medicare. That is all I care about
here and getting access to care. And I think the Medicare
Advantage plan is providing way too much money for way too
little uniform value and it is hurting the Medicare program and
most Medicare beneficiaries. I say that as an advocate, as a
cancer survivor, and as the daughter of a woman who is just
going through an extraordinary neurosurgery that was available
to her because she was in traditional Medicare.
I can't understand why it would cost Mr. Little $100,000
and I hope he will call my office if we can ever help him. We
don't charge for our services.
Mr. Green. OK. Thank you, Mr. Chairman. I know I am over my
time but I thank all of our witnesses for being here.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from North Carolina, Mrs. Ellmers, 5
minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our
panel for being here today.
I just want to start off by associating myself with some of
the comments, Dr. Lew, you said our seniors enjoy their
Medicare Advantage plans, and it is so important that we work
in Congress to protect them from these large cuts that will
negatively affect 476,000 North Carolina seniors that I have
the incredible honor to represent.
I am very concerned about this issue because I do believe
it is a choice that our seniors are able to make. I think that
our seniors are in jeopardy when they cannot make choices for
themselves. Mr. Little has made a choice of what it is that he
would like to see for his coverage, and I don't understand why
we would consider jeopardizing that ability. When something
works for someone, they should keep it. Isn't that what our
President said? If you like your healthcare plan, you should be
able to keep it. Yet, now we are saying no, as a matter of
fact, you can't.
And, Dr. Lew, thank you for your comments about patients in
the home-health setting. You know, our seniors want to take
care of themselves. Our seniors want to be able to be
independent, and if they are going to do a better job
recovering from surgery or sickness, illness at home, I think
that is where they need to be. I think these are all the things
that are jeopardizing our system.
And to the point that Dr. Burgess was making earlier about
savings in one part of Medicare only to spend more money in
another, if we are helping to keep seniors out of the hospital
or the inpatient setting, that is a dramatic savings within
Medicare. So it only makes sense to me that we would continue
to advocate another program, or Medicare Advantage would help
seniors be able to do that. You know, keeping people out of the
hospital is the best way we can keep people healthy and safe in
this country.
Dr. Lew, as a physician, do you believe seniors in rural
areas--I have a large rural area in my district. How do you
feel about seniors in the rural setting? How do you feel that
they respond to the higher premiums or potentially no Medicare
Advantage offered? I mean, how will that affect them?
Dr. Lew. Well, if Medicare Advantage plans pull out of
certain markets, that will certainly leave seniors very
vulnerable. You know, there are some parts of certain States
that we do business in where there are very few Medicare
Advantage plans. In fact, recently, one plan pulled out of one
of these States where we do business and that left one dominant
player, which is very vulnerable, because after that one player
pulls out, the seniors are going to be left without physicians
and without a network. But hopefully that won't happen.
And, to your point about seniors liking choice and having
choice, and having the better outcomes on the back end, that is
all a result of what we have built, this coordinated-care model
and what I consider an investment, not an overpayment, but an
investment into this model that we have shown has worked that
we are threatening now to jeopardize by cuts. That is what I am
concerned about because that is going to impact the physicians
and the seniors.
Mrs. Ellmers. Absolutely. And, there again, to me it is a
matter of common sense. I struggled with the idea that the
Obama Administration and that CMS would choose to hit something
that is working so well as Medicare Advantage when we have
numerous programs that don't work at the federal level. As a
fiscally responsible individual representing my constituents,
this is simply not the place that we should go for savings.
There are many others.
And again, Mr. Little, I just want to thank you on behalf
of my constituents, my seniors for coming forward and sharing
your stories and your experience with the healthcare issues
that you had to deal with, with heart disease and cancer,
because that is just so important. Your recovery and your
ability to recover on your own terms probably had a lot to do
with the Medicare Advantage plan that you chose.
Mr. Little. Yes, it did. And one thing I would like to
interject that I didn't before, I have noticed it because I
have been with the Medicare Advantage plan for 5 years. The
costs are kept down mainly because of what they pay the
hospitals, the physicians.
Mrs. Ellmers. Yes.
Mr. Little. I have noticed my checkup this year was $300.
My doctor----
Mrs. Ellmers. Yes.
Mr. Little [continuing]. Got $74. There it is.
Mrs. Ellmers. Yes.
Mr. Little. There is your savings. It is not costing the
government any extra money. They are negotiating, but of course
that is why----
Mrs. Ellmers. That is right.
Mr. Little [continuing]. Several of the Medicare Advantage
plans dropped out because they couldn't get down----
Mrs. Ellmers. Yes.
Mr. Little [continuing]. To that price.
Mrs. Ellmers. Yes.
Mr. Little. And also with every claim that I do, and they
send me what I did, they also send a letter if you see any
fraud or anything that was done that wasn't really done, please
let us know immediately. So they self-govern themselves and I
think that is how they are keeping the cost down.
Mrs. Ellmers. Well, thank you again for being such a great
advocate on this issue. We truly appreciate it and my
constituents thank you.
Mr. Little. You are welcome.
Mrs. Ellmers. Mr. Chairman, I would like to submit to the
record a letter that we sent to Ms. Tavenner from the Doctors
Caucus. Members of the Doctors Caucus put it together; I would
like to submit it for the record.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mrs. Ellmers. Thank you, sir, and I yield back the
remainder of my time.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentlelady from Virgin Islands, Dr. Christensen,
5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman.
Ms. Stein, we have heard a lot today about Medicare
Advantage plan choices and how seniors need to have a lot of
choices of different plans, but like you, I believe that the
most important choice that a senior can have is a choice of a
doctor, the ability to access your physician or even a hospital
where you are familiar with the services and you know you will
get good care.
You spoke about Connecticut where you are headquartered and
where there was a serious problem when Medicare Advantage plans
abruptly dropped providers from the network leaving
beneficiaries, who had selected a plan based on being able to
continue to see their doctors, in the lurch. To me, this
highlights a very serious problem with Medicare Advantage.
Plans make these choices to contract with a provider and that
is a result of really business decisions. This is part of the
downside of having private insurance companies whose main goal
it is to make a profit serving vulnerable seniors. What
recommendations might you have for how Congress and CMS could
better protect seniors that Medicare Advantage plans from such
disruption?
Ms. Stein. Thank you. I appreciate this opportunity.
I think that the choice that people want of whatever age is
the choice of who is going to take care of them and where they
are going to be taken care of. And traditional Medicare is
pretty much an open network. You can go around the country. So,
for example, my mother has just come from western Connecticut
to eastern Connecticut to be in a nursing home near me. If she
was in a Medicare Advantage plan in our State, that wouldn't be
possible.
So you can go near family, you can choose pretty much all
the doctors that are providing care, not all but most, and
also, as I said, Yale New Haven Hospital is no longer in the
largest Medicare Advantage plan in our State and that is
certainly not because of quality of care and that is because
before these further level playing field of Medicare Advantage
to the costs of traditional Medicare.
One of the things I think is that we should relook at the
definition of an adequate network in Medicare Advantage plans
and make sure that the definition is truly going to meet the
needs of the people who enroll. We should look to providing
enrollees whose plans terminate contracts with their doctors,
that they must be given notice regardless of what the plan
thinks of the adequacy of the network after that doctor and
their hospital is terminated. If the physician or local
hospitals that this person is known to use have been terminated
from that plan, they should be given notice of that before it
is effective.
We should ensure clear, meaningful differences between the
different Medicare Advantage plans that a given sponsor is
offering because it is very hard for people to know what they
are choosing very often. We should standardize benefits within
plans, as Congress intelligently did with Medicare supplement,
Medigap, plans many years ago. You can really tell apples to
apples and know what you are getting.
I would say finally, perhaps most importantly, we should
make sure that there is a true even, level playing field in
benefits and payments to traditional Medicare and Medicare
Advantage. If we want people to truly have choice, besides of
their doctors, between Medicare Advantage and traditional
Medicare, we should make sure that the benefits are available
in both. Now, because of the Affordable Care Act, we have
mostly zero cost preventive services in traditional Medicare.
We should have the same reimbursement structure for those who
provide care in traditional Medicare as in Medicare Advantage.
We should offer prescription drug coverage in traditional
Medicare because people often go to Medicare Advantage now
because it is the only one-stop shopping. It is the place where
it is simpler. You go there, you get your prescriptions usually
and your other services. So they feel they don't have that
choice.
Also, it is called Medicare Advantage. People think they
have some advantage. They think they are getting something on
top of Medicare. There should be a level playing field between
the two operating choices, the two models.
Mrs. Christensen. Well, thank you. And I think some of
those, especially the adequate network, could be applicable.
There is a very troubling situation happening in Tennessee,
Florida, and Texas in dental Medicaid managed care where
providers are being dropped, and I hope that maybe at some
point we can have a hearing on Medicaid managed care as well.
Thank you for your time.
Ms. Stein. It has been a huge issue in our State and we
lost almost all our Medicare Plus Choice plans. And now, before
these reductions and overpayments are in effect, United
Healthcare dropped 2,250 physicians and hospitals and other
care providers in Connecticut. That was a provider for 1 for
every 200 Medicare beneficiaries in our State. It has been
stunning. And I fear this is going to be used as an argument
for even higher payments to Medicare Advantage when, if we
could put that money into traditional Medicare, all 50 million
Medicare beneficiaries would benefit and taxpayers would pay
less.
Mr. Pitts. The chair thanks the gentlelady, recognizes the
gentleman from New Jersey, Mr. Lance, 5 minutes for questions.
Mr. Lance. Thank you very much, Mr. Chairman.
I recently had a constituent contact me to inform me that
her Medicare Advantage plan had been canceled and her new plan
requires her to pay $600 per month, which is $50 more than her
previous plan, with no indication that she will maintain her
current plan benefits or the doctor she likes. It is my
experience that this woman, my constituent, is not alone.
According to Oliver Wyman actuaries, New Jersey, the State I
represent, will be one of the States hardest hit by these
proposed cuts. Approximately 217,000 New Jerseyans are enrolled
in Medicare Advantage and they may see a reduction in benefits.
And, Mr. Little, thank you for being here with us today,
and I am hoping you can tell us a little more about your
experience with Medicare Advantage and I imagine it is similar
to the experience of those in the district I serve who have
reached out to me. Would you please explain, sir, to the
committee why you chose a Medicare Advantage plan over
traditional Medicare?
Mr. Little. Well, I go to the gym.
Mr. Lance. Yes. My wife tells me I should go more often.
Mr. Little. Well, you will find it is really a convention
of old people talking. We shoot the bull more than we exercise
to be exact. But when I first became of age, 65----
Mr. Lance. Yes, sir.
Mr. Little [continuing]. All the men that were in the gym
and stuff say, well, make sure you look at the advantage plan;
that is what you want to go with.
Mr. Lance. Yes, sir.
Mr. Little. And so I Googled it and, of course, came up
with four plans that were available. All of them were great. I
took Blue Cross Blue Shield because I had been with them all my
life when I was in business in a regular plan. Of course, they
dropped it the following year due to financial things. Then, I
shifted to Optima and then they dropped it the following year.
So then I only had Humana left. That is the only one left in my
place. And they had been great. Whatever my GP says, when he
found the mitral valve going bad in my heart, he immediately
sent me next door to the cardiologist, and at 6:00 a.m. the
next morning they had my heart laying on the table fixing it.
And of course Norfolk Heart is one of the top 10 in the Nation.
There is never, ever in the last 5 years, between my
pulmonary and my other physicians, anything about not being
able to have the best service there is and the one of my
choice. And of course for the last 12 years since I retired I
have kept my same doctor.
Mr. Lance. When you had your open-heart surgery, your
primary care doctor worked with your specialist to ensure that
you received the care you needed. Is that your testimony?
Mr. Little. Yes, sir. He called right then. He said you
need to go right now because he heard something. And I went to
the cardiologist, which happened to have his office next door,
and he picked up the phone and he said be at Sentara Heart
tomorrow morning at 6:00 a.m. So it was fairly quick.
Mr. Lance. Thank you. Under traditional Medicare without a
supplemental policy I think that some senior citizens could
face financial difficulty and perhaps even worse than financial
difficulty due to the unpredictable cost-sharing from
unexpected illnesses or hospitalization, and that is certainly
one of my concerns.
Dr. Lew, in your testimony you described how Medicare
Advantage incentivizes value and coordinating care whereas that
is not always the case with the fee-for-service Medicare
program. Would you please elaborate on the importance of
coordinated care and what this means for our Nation's senior
citizens?
Dr. Lew. Right. Coordinated care, essentially, is it is a
team----
Mr. Lance. Yes.
Dr. Lew [continuing]. Not just physicians, the whole, you
know, team of pharmacists and social workers and case managers
working along a continuum of care. So it is not just when a
patient comes into a hospital. It is home, hospital, office. It
is throughout no matter what type of problem that they have.
You know, and the other thing I wanted to note is we are
not a health plan. We are a physician group.
Mr. Lance. Yes, sir.
Dr. Lew. And so we get 85 cents on the dollar that is
passed to us. So what might look like a level playing field is
not when it gets down to the physician level, and that is what
we are dealing with when we are trying to deliver these extra
services and provide the great care to the seniors.
Mr. Lance. Thank you. I think the testimony has been
compelling and certainly I hope that Medicare Advantage can
continue. That is a certainly my perspective based on my
representation of New Jersey.
Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. OK. I guess Mr.
Guthrie is here. The chair recognizes Mr. Guthrie 5 minutes for
questions.
Mr. Guthrie. Thank you, Mr. Chairman. Let me move over to
the microphone so it will be picked up. Thank you, Mr.
Chairman. I have a question for Dr. Lew.
Some people have suggested that insurance companies are
being overpaid for Medicare Advantage and rates should be cut
to fee-for-service levels for equity. What do you think the
impact would be for patients if it was cut to fee-for-service
levels?
Dr. Lew. Well, I think that the investment that was made
has been made over the years to build this model, which I think
now we are seeing the results of and the seniors like it and
that is why they are migrating over. I think that was a smart
investment.
Now that we are facing cuts, which are really starting to
roll in right now--just January of this year I see it happening
with our company--you know, it is going to impact physician
payments. It will impact programs and services that we are able
to provide to seniors. And as these cuts continue throughout
'14 and '15, I think that is just going to get worse.
Mr. Guthrie. And how long have you cared for seniors with
Medicare Advantage plans and what do you think they like the
most about being in Medicare----
Dr. Lew. I am sorry. I didn't hear that first question.
Mr. Guthrie. How long have you cared for seniors in
Medicare Advantage plans and what do you think they like the
most about being in Medicare Advantage?
Dr. Lew. Our company has been taken care of Medicare
Advantage patients for 20 years and, you know, what I think the
seniors like is, again, the coordinating care that it is not
just the primary care and the specialist and the case manager
or the touches with member services. They like that
comprehensive treatment. And obviously we had given more
benefits, too. I mean we provide transportation and a lot of
other extra services.
Mr. Guthrie. OK. Thanks.
Mr. Giese, can you explain what types of choices plans face
with the projected cuts under the ACA, what kind of choices
will the plans have under these projected cuts?
Mr. Giese. Plans have a bunch of levers that they have at
their disposal to try to ward off these cuts. Those changes or
these adjustments include increases in benefits, increases in
premiums but of course CMS limits the amount of premiums and
benefits they can change in a given year.
They also can try to incorporate more care management
programs, but that sometimes is a leap of faith because in
their pricing, if they assume a certain level of care
management and don't achieve it, it could lead to not
successful results.
Plans could exit, they could change their service area,
they could limit their network, making it a stronger network
with better physicians, more quality care that would help lower
their costs as well.
Mr. Guthrie. But less choice for the patient?
Mr. Giese. But less choice for their patients.
Mr. Guthrie. So if you like your doctor, you might not be
able to keep that?
Mr. Giese. Correct.
Mr. Guthrie. Well, thank you, Mr. Chairman, and I will
yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Illinois, Mr. Shimkus, 5 minutes
for questions.
Mr. Shimkus. Thank you, Mr. Chairman.
I really appreciate your attendance. It is a great debate.
I know there is some diversity of views.
[Slide]
Mr. Shimkus. When we talk about budgeting, that is the 2012
fiscal budget. The red is mandatory spending. You will see
Medicare is in there. The blue is discretionary budget, which
is what we fight and shut down government about. Mandatory
spending is spending that we can't control. Medicare is part of
that, Medicare, Medicaid, Social Security, interest payments on
the debt.
I do this all the time because if you have a national debt,
it is based upon mandatory spending and Medicare is part of
that actuary problem that we have for future generations.
Do you know why we are having this debate on Medicare
Advantage? The President, through ObamaCare, cut $716 billion
from Medicare. And that is not disputed. Secretary Sibelius was
right there. She admitted in testimony to me in front of this
committee that she double counted Medicare cuts.
So now we have got to find the money. Now we are going
after seniors and programs that--we should have both. We should
have traditional fee-for-service for those who want it and we
should have the Medicare Advantage plans that we promised them.
This is the same debate we had last week on Medicare D. We were
able to stop the Administration from hurting seniors and
cutting Medicare D program. And so that is why these hearings
are very, very important.
And I know it is tough but, you know, facts and numbers are
hard to dispute. That is why we are here, because of the attack
on seniors from ObamaCare and the cutting of $716 billion.
Dr. Lew, only 20% of this cut has been actualized right
now. My guess is there is still 300 billion more projected to
go in the future. What do you think for this big portion of
seniors, if that is the true number, what is the future of
Medicare Advantage and Mr. Little and the plan and healthcare
that he enjoys writing out?
Dr. Lew. Thank you for the question. As I said, we just are
starting to feel the pain of the cuts, 20% or less, and as
these cuts roll out, it is going to be very difficult and very
unlikely that we can continue at the same level of programs and
payments to physicians.
Mr. Shimkus. So you are saying 300 billion more in cuts,
Medicare Advantage might not even be----
Dr. Lew. We are looking at double digit cuts----
Mr. Shimkus [continuing]. Available as a program----
Dr. Lew [continuing]. In 2014 plus 2015. I don't see how
what we can do can be sustainable.
Mr. Shimkus. All right. Let me go quickly because time runs
fast. And talk to me about the better healthcare aspects of
Medicare Advantage and the diversity of population that you see
in Medicare Advantage plans.
Dr. Lew. Better healthcare, you know, we can reduce
hospitalizations, readmissions, we get better outcomes, shorter
lengths of stay.
Mr. Shimkus. Saving dollars?
Dr. Lew. Absolutely saving. I mean investment with a great
return. In terms of diversity in the markets that we are in, it
is all demographics.
Mr. Shimkus. Explain that. I mean it is a senior population
so you are----
Dr. Lew. Ethnicities, socioeconomic levels.
Mr. Shimkus. Rich, poor, different ethnic backgrounds.
Dr. Lew. Different ethnic backgrounds.
Mr. Shimkus. Doesn't discriminate?
Dr. Lew. No. No. It is all comers and it is not one
particular demographic.
Mr. Shimkus. All right. Let me ask you one more question
and no one has raised this, but because of the funding problem,
waste, fraud, and abuse is a big aspect on Medicare spending,
right? And I have always argued because of fee-for-service,
what do we do? We chase costs. We don't manage the illicit
theft of the Medicare fund at the point of entry. We have to
wait until there is 5, 10 years of data before we go after the
provider.
You may not know this but I would like for all of the panel
to look at what is a better plan to address the waste, fraud,
and abuse that we currently know in Medicare today, especially
fee-for-service, and does Medicare Advantage provide a more
timely response to fraud? And I think, Mr. Little, you kind of
mentioned that, did you not?
Mr. Little. Yes, sir. I get a monthly statement from Humana
showing everything I spent and they caution you on the bottom
if you have anything that you didn't have done, please call us
immediately.
Mr. Shimkus. Dr. Lew, do you want to jump in?
Dr. Lew. Yes. I think that is the value of a population-
based payment. It is a fixed payment that forces us to manage
the care quality, and so we contract with good providers that
won't commit fraud, whereas you have got a fragmented fee-for-
service that incentivizes volume, a lot of potential for fraud.
Mr. Shimkus. I appreciate it. Thank you, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Louisiana, Dr. Cassidy, 5 minutes
for questions.
Mr. Cassidy. Thank you, Mr. Chairman.
I like Medicare Advantage because I think it aligns
incentives. Ms. Stein, I am sure we can find horror stories
with fee-for-service Medicare. I am a practicing doctor so I
know some of those horror stories. But the nice thing I like is
effectively it is a capitated payment which physicians are at
risk. If they do what I think Dr. Lew's organizations do, they
go two-sided risk with someone like Humana. So you align
incentives and frankly you make money by keeping people out of
the hospital and improving outcomes. If you don't, you lose
them.
Now, I am struck, Dr. Lew. I am so frustrated I can't open
up my email account, but a physician practicing from southern
California sent me a document about the dual-eligible project
that is happening in southern California. And in this dual-
eligible project, so far, there is not a company which is
certified. They all have the poor rating for quality and
outcomes than the better rating. Now, that is not your
organizations. This is something specifically set up for the
dual-eligibles.
And speaking to some folks like WellMed out of Austin,
Texas, I gather that they selectively go after the dual-
eligibles, that they improve outcomes, that they are focusing
resources knowing that if not, it breaks the bank. They are a
two-sided risk and so with prospective assignment of patients
and so that is where they earn the money, keeping that patient
out of the hospital and in better health. Would you like to
comment on that, please?
Dr. Lew. Yes. Thank you, Mr. Cassidy. That is absolutely
correct. In our model we don't make money unless we keep the
population healthy. It is very simple.
Mr. Cassidy. And the patient can change at the end of the
year and you have quality indicators, so it is not like if you
stiff them, you lose them, and if you stiff them, you get
dinged.
Dr. Lew. Right. There is transparency in quality metrics
and so members can choose to opt out or switch to another plan.
Mr. Cassidy. So what percent can you give me of a typical
plan that you might represent would be dual-eligibles?
Dr. Lew. Health Net. Is that what you mean? An actual plan?
Mr. Cassidy. Medicare/Medicaid. Pick a typical plan that if
dual-eligibles, would they be 10% of an enrollee group or 15%?
Dr. Lew. OK. I would say out of the senior population it is
probably 20%.
Mr. Cassidy. OK. Now, a lot of these would be in the
special needs plans as well?
Dr. Lew. Special needs plan.
Mr. Cassidy. Now, there has been specific cuts targeted to
the special needs plans. I assume that that could in particular
negatively impact folks who are most vulnerable. Is that a
correct intuition?
Dr. Lew. Definitely. I mean these patients, you know, by
definition have more medical problems, chronic illness, chronic
disease, and require a lot more intensive management. And so
without an infrastructure to take care of them, those are the
ones that are really going to be hurt.
Mr. Cassidy. Well, and my concerns I think in some of the
cuts they kind of make the home visit a second-class visit.
Again, I treat lot of cirrhotics, and cirrhotics would
typically be in a special needs plan. You want to go home and
you want to look at their diet and you want to look at their
cabinet. You want to see where their salt is coming from.
Cirrhotics are very sensitive to salt overload. I kind of like
that special needs visit, that home visit which looks at that.
Again, any comments on the impact of decreasing the
emphasis upon that?
Dr. Lew. Yes. Well, that is again at a point--home visits
for the special needs patient that are bed-bound or home-bound
don't have transportation. It is essential that we get to the
home and take care of them to look at, you know, cirrhotics
that may have fluid overload and you have got to see what they
are eating and what their diet is. It is important. You can
assess a lot more from a patient in the house than you ever can
in the clinic.
Mr. Cassidy. I once visited a patient of mine and I saw he
had a jar of salsa by his bed. I pointed out that salsa has a
lot of salt and so, oh, really?
Dr. Lew. Yes.
Mr. Cassidy. I figure most men are pretty ignorant when it
comes to their food and he was a man.
OK. Now, Ms. Stein, you probably disagree with what I have
been saying. What are your thoughts?
Ms. Stein. My experience tells me, as does the research in
report by CMS, that people with high medical needs and low
income are disproportionately disenrolling from Medicare
Advantage plans.
And I don't think I am here to talk about horror stories.
As I said earlier, I have no skin in this game. My job is
solely to represent low-income----
Mr. Cassidy. But in fairness, you are mentioning the person
who went to Florida and his brain tumor wasn't covered.
Ms. Stein. One of your colleagues referred to my office
and, yes, there are problems in both models. But the point is
that we are paying as taxpayers and your colleague earlier put
up the pie chart which showed all the cost to Medicare. And the
CBO says that we are spending as taxpayers $150 billion more
than we would if these individuals were paid for in traditional
Medicare.
Mr. Cassidy. We can argue about that. I will point out--and
I will finish with this, Mr. Chairman--that when Medicaid and
Medicare pay differently, it disaggregates payment. When you
disaggregate payment, you disaggregate care. So the dual-
eligibles are a particular interest of mine. That is why I have
been looking at the demonstration projects in southern
California. I am very disappointed that the companies that are
running this are being rated so poorly, and I do contrast that
with some of the folks who are doing kind of subcontracting for
Humana and others and just seeing that they are getting
superior outcomes. I think that kind of shows you the benefit
of the special needs plans in Medicare Advantage.
Ms. Stein. Actually, I suspect that my organization
represents more dually eligible home health and nursing home
organizations that anyone in the country. We have about 11,000
open cases right now. I just completed a training seminar with
all the home health agencies in Connecticut and one of the
questions was do the rules with regard to coverage for home
health--these are home health agencies--for people in
traditional Medicare also apply for people in Medicare
Advantage plans? And I said of course, yes. And there was
general agreement in the group of home health agency providers
that they have a much greater difficulty getting access to
coverage admission, particularly from the community for people
in Medicare Advantage plans----
Mr. Cassidy. We are out of time----
Ms. Stein [continuing]. And earlier----
Mr. Cassidy [continuing]. But let me just say the nice
thing about it is that if the beneficiary doesn't like the MA
plan, they can change the next year. And that is the wonderful
thing about markets. We have to yield back. I am sorry.
Mr. Pitts. The chair thanks the gentleman.
Ms. Stein. That is only helpful if the person can survive
the year and that often doesn't happen.
Mr. Pitts. The gentleman's time is expired.
The chair recognizes the gentleman from New York, Mr.
Engel, 5 minutes for questions.
Mr. Engel. Thank you very much, Mr. Chairman and Mr.
Pallone. Thank you for holding today's hearing.
Let me try to put some things in perspective here. In 2009,
prior to the passage of the Affordable Care Act, the rates paid
to Medicare Advantage plans exceeded that of traditional
Medicare by approximately 18%. The Affordable Care Act required
changes to Medicare Advantage payment rates to better align
them with the costs associated with traditional Medicare. These
changes were estimated by the Congressional Budget Office to
save over $135 billion over 10 years, something that I think my
Republican friends would love. The ACA did not make any cuts to
the benefits guaranteed to all Americans over the age of 65,
whether or not they are in traditional Medicare or Medicare
Advantage.
So I think it is worth noting that while Republicans are
aghast at this Administration that is moving forward and
implementing the provider payment cuts included in the
Affordable Care Act, my Republican friends included and voted
in support of these very same provider payment cuts and their
budget proposals for the last several years. So to act
horrified about the changes that are being made to Medicare
Advantage now after voting to support them for years strikes me
as being disingenuous.
I know in the past there have been concerns about Medicare
Advantage plans cherry picking and sticking to enroll the
healthiest of seniors leaving sicker beneficiaries enrolled in
traditional Medicare. Ms. Stein, in your written testimony you
mentioned a 2012 report from CMS that found disenrollment by
individuals from Medicare Advantage plans back to traditional
Medicare--and I am going to quote what you wrote--``continues
to occur disproportionately among high-cost beneficiaries,
raising concerns about care experiences among sicker enrollees
and increased costs to Medicare.''
So let me ask you, given your organization often assists
patients when they have issues with the Medicare program, can
you elaborate on some of the challenges sicker beneficiaries
sometimes have with their Medicare Advantage plans?
Ms. Stein. Yes, sir. Thank you very much.
As Dr. Van de Water said a little earlier, there isn't a
lot of data about actual healthcare outcomes, but we do know
about disenrollment patterns, and you just expressed one of
them, which is that people at risk, low-income and people who
are ill, tend to disenroll from Medicare Advantage plans. And
that is because they have much more difficulty in accessing a
variety of specialists, different hospitals where they might
get the treatment they want, being able to move around the
country to be near their families because there are network
limitations, and a variety of other problems.
And we very, very often get calls from people who think
that because the program itself is called Medicare Advantage,
that they have got something on top of their Medicare. And when
they find that they are ill and they need to go see a
specialist and the doctor isn't in their network, they are
terribly confused and didn't understand that when they enrolled
initially.
And while I don't think that Medicare Advantage plans are
purposely closing their doors to people with particular
conditions, we do know that of the 2,250 doctors and hospitals
that were terminated in Connecticut alone, a very small State,
this year by an MA plan, a lot of specialists who provide care
for long-term illnesses, for instance, nephrologists were on
the termination list and particularly in areas of low-income in
Bridgeport and other areas in our State leading to significant
problems for people who are ill with chronic conditions in MA
plans.
Mr. Engel. Well, thank you. My home State of New York,
which is of course right next to Connecticut, we have countless
doctors, hospitals, and health insurance plans that have always
made it their mission to provide quality care to all New
Yorkers regardless of whether or not their patients have
private insurance, Medicaid, Medicare, or pay for their
healthcare costs out of their own pockets.
And we also have several Medicare Advantage plans which
focus on providing Medicare coverage for the dual-eligible and
low-income population in particular, often with more than half
of their plan participants eligible for Medicare and Medicaid
or receiving a low-income subsidy. Yet an overwhelming number
of these plans have found it challenging to achieve the four
stars needed to earn a bonus in 2015 despite having scored high
on improvement measures.
The let me again ask you, Ms. Stein or Mr. Van de Water,
how can we better incentivize Medicare Advantage plans to take
on more challenging beneficiaries so that these patients enjoy
the same access to high-quality plans and choices available to
healthier, more well-off beneficiaries?
Mr. Van de Water. Well, I think the improved risk
adjustment, which we have talked about this morning, is
actually one of those ways. What we want to do is make sure
that health plans are encouraged to attract customers through
providing better quality service and not to make money through
attracting healthier beneficiaries. So while this has been, you
know, criticized on the one hand, actually I think it is a very
positive step.
Mr. Engel. Thank you. Thank you, Mr. Chairman.
Ms. Stein. I also suggest that----
Mr. Pitts. The chair thanks the gentleman.
Ms. Stein [continuing]. I think it was a MedPAC study in
March of 2013 that showed that about 20% of dual-eligible
special MA plans did score well on the star model rating, and I
think that we should look at what they are doing and encourage
the other plans to do that because apparently it is possible to
score well on that rating.
Mr. Pitts. The gentleman's time is expired.
Mr. Engel. Thank you.
Mr. Pitts. The chair recognizes the gentleman from
Virginia, Mr. Griffith, 5 minutes for questions.
Mr. Griffith. Thank you, Mr. Chairman, I would say to you
all, and appreciate you all being here. I would say that my 83-
year-old mother likes her Medicare Advantage plan. She has had
to pay a little bit more for it than she had in some of the
previous years. And even though we had Secretary Sebelius here
April of last year saying that the plans were costing less
nationwide, that hasn't been my mother's experience.
I surveyed, and it was a very small group of constituents
in my district that responded, but they responded that theirs
were either staying the same or going up. So it does appear
that there are some increases. Has that been your experience as
well, Mr. Little?
Mr. Little. They didn't increase the base but I have
noticed this year that I am a paying 25% more for my
prescriptions.
Mr. Griffith. OK. I understand that. Mr. Giese, you have
been kind enough. I am just wondering if there is something we
haven't touched on? I have got some questions for Dr. Lew; I
don't have any questions for you, but I thought maybe there was
something that you have been sitting here that you wanted to
say that you haven't had an opportunity to get out and I am
going to give you that opportunity.
Mr. Giese. No, not really.
Mr. Griffith. All right. I appreciate that. You know, we
sometimes have folks here and you have a lot of very good
witnesses and then somebody, because of the way the flow of the
discussion is going, they get left out and I always hate to see
that because I know that your time is just as valuable as
everybody else's. So I do appreciate that.
Mr. Giese. A lot of people have read the report, I can
tell, and have quoted it and so----
Mr. Griffith. Very good.
Dr. Lew, according to the CBO, the ACA cut more than $300
billion from Medicare Advantage programs to spend on new
government programs that weren't necessarily for seniors. What
types of important health benefits do you think that the MA
plans help provide the seniors that would have to be cut if the
proposed cuts occur?
Dr. Lew. Well, we have to look at what the investment from
prior years did into building up the model----
Mr. Griffith. Yes.
Dr. Lew [continuing]. The coordinator care model and all
the additional benefits that the seniors get. And we would have
to look at how can we even sustain that with the 10% cuts over
the next 2 years? So you are looking at jeopardizing programs,
reduced payments to our physicians, and subsequently, it could
impact care to the seniors.
Mr. Griffith. Now, I don't know anything about the
Connecticut situation, but with those 2,200 some healthcare
providers that were eliminated from an MA plan there, is it at
least reasonable to assume that maybe they couldn't afford to
pay those doctors the rates that they previously were paying
and that maybe one of the reasons--I know it has got to be more
complicated than that--but could that be one of the reasons
why?
Dr. Lew. That is likely one of the reasons, sure.
Mr. Griffith. Yes. In a recent letter, more than 140
physician groups called on Medicare officials to hold MA rates
flat. In the letter they said, ``cutting Medicare Advantage
year after year will result in deterioration of the care
coordination infrastructure and seniors will see a
deterioration of benefits, and we are worried we will
ultimately move back into fragmented fee-for-service care
delivery models. This would be a bad outcome for seniors and a
step backward on the healthcare delivery system.'' You have
been saying the same thing----
Dr. Lew. Saying exactly that same thing, yes.
Mr. Griffith. And can you elaborate on that some?
Dr. Lew. Yes. Well, I think that rather than going
backwards is we need to use the platform that we have built to
build more, to build more coordinated care. And even some of
the newer models within fee-for-service such as ACOs, medical
homes, you know, how can we take all that we have learned from
the Medicare Advantage coordinated care model, how can we use
that to build the newer models that we are trying to do in fee-
for-service?
But this impacts all of the healthcare delivery system. It
is not just Medicare Advantage. It is care for everybody in the
country. And so, you know, if we want to really transform the
delivery system, we don't want to touch Medicare Advantage and
all that we have built.
Mr. Griffith. All right. I appreciate that very much.
Thank you all again, and, Mr. Chairman, I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the ranking member of the full committee, Mr.
Waxman, 5 minutes for questions.
Mr. Waxman. Thank you very much, Mr. Chairman.
I want to point out that there are a lot of things going on
at the same time, additional subcommittee and another committee
that I am involved with, so I haven't been here the full time.
But, Mr. Chairman, I would like to ask unanimous consent to
insert my opening statement in the record.
Mr. Pitts. Without objection, so ordered.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
The topic of today's hearing started out as a look at
Medicare Advantage. But now we are also considering a hodge
podge of GOP bills that do not improve the Medicare Advantage
program. I will return to those bills, but first I want to
focus on the state of the Medicare Advantage program itself.
In the five years since the enactment of the Affordable
Care Act, the Obama Administration has accomplished what the
Republicans couldn't accomplish in the 12 preceding years--even
with tens of billions of overpayments that drained the Medicare
Trust Fund.
As a result of the ACA, the Medicare Advantage program is
stronger than ever. Enrollment is at an all-time high and
growing, premiums have declined, and benefits have improved
along with the health of the Medicare Trust fund--while we have
reduced overpayments and improved efficiency.
Chicken Little, the sky is NOT falling.
Mr. Chairman, I want to put a Democratic Staff memo into
the record that details this history of exaggerated claims by
some in the industry and critics of the ACA.
Since the ACA was enacted, premiums are down by 10% and
enrollment is up by 30%. Since CMS released its 2015 payment
notice, independent analysts and the financial markets have
expressed an optimistic view of Medicare Advantage plans.
Insurance company stocks have risen rapidly and Medicare
Advantage is poised for growth, even as we gradually reduce the
overpayments they have received for years.
Why did the ACA address Medicare Advantage over-payments?
At the time, Medicare was paying on average $800 more per year
for beneficiaries enrolled in private plans. Those excess
payments drained the Trust Fund and drove up costs for all of
Medicare.
Even today, the overpayments are not yet completely phased
out, and this year alone Medicare is paying on average 106%
more than for care in Medicare Advantage. And as a result, ALL
beneficiaries pay higher Part B premium costs.
Seniors also didn't have a lot of confidence in the
Medicare Advantage program before the ACA. Too many plan
choices made picking one confusing. Differences among plans--on
quality or value--were too difficult to discern. Consumer
confidence was not strong as patients had no guarantee plans
were even spending a minimum amount of their premiums on
medical care.
The ACA and the Obama Administration addressed that
situation too.
We need Medicare to be solvent for beneficiaries today and
in the future. That's what the ACA did, and the Administration
should be staying the course to improve quality and value.
Some of the bills considered today turn back the clock on
Medicare Advantage.
The two tax bills would encourage healthier and wealthier
people to switch to high-deductible health plans for tax
sheltering purposes.
Another bill would bar CMS from disapproving private
insurance company marketing material--no matter how misleading,
incomplete, or biased. A fourth bill would reinstate the second
open enrollment period for Medicare Advantage--which was
eliminated because it caused confusion for beneficiaries. And
finally one of the bills eliminates the ACA's cost sharing
reductions, which provide critical protections for lower income
Americans, with the vague goal of giving those funds to
Medicare Advantage plans.
All of these bills have significant problems and I cannot
support them as drafted.
I hope today's hearing takes an honest look at the healthy
state of the Medicare Advantage program. Demonizing the
Affordable Care Act and falsely claiming that the sky is
falling is not a productive use of our time.
Mr. Waxman. And there is an awful lot of fear-mongering
going on about Medicare Advantage program and it is not based
on the facts. The Democratic staff released a memo this
morning. The first one is that independent analysts and the
financial markets do not agree with the industry's dire claims
about the future of Medicare Advantage. And then the second
point is that this scare campaign is not the first time the
industry has cried wolf about commonsense reforms being flat
wrong. The memo looks at the facts, not anecdotes or claims by
industry-backed groups.
And here are the facts we point out: Since the ACA was
enacted, Medicare Advantage premiums are down almost 10% and
enrollment is up 30%. After CMS released its payment notice and
the industry claimed the sky was falling, independent experts
examine the issue and found that the industry was wrong. They
predict the future is bright for Medicare Advantage, and as a
result, insurer stock rises have risen, not fallen, since the
CMS announcement.
And this is not the first time the industry has cried wolf
on Medicare Advantage or other commonsense reforms. They said
that the ACA would destroy Medicare Advantage but it is
stronger than ever. They said the requirement that they pay
back rebates if they spend more than 20% of premiums on profits
and overhead would put patients at risk and it did not.
Instead, it has resulted in more than $1.5 billion in rebates
and $5 billion in lower premiums.
Mr. Chairman, I would like to ask unanimous consent to
insert the memo I referred to in the record.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Waxman. And the next thing I want to ask in the time I
have is, Mr. Van de Water, we have heard a lot today about the
Medicare Advantage changes in the Affordable Care Act. These
changes strengthen the program in my view and help to improve
the solvency of the Medicare trust fund as well preserving
Medicare's health for a number of years. If you listen to my
colleagues on the other side of the aisle, you would think
these cuts were killing the program, but in fact, this has not
been the case. Could you comment on what has happened in
Medicare Advantage enrollment and premiums since the Affordable
Care Act was enacted?
Mr. Van de Water. Yes, Mr. Waxman, I would be happy to. In
fact, in my prepared statement I cite some of the same figures
that you have just reiterated about how enrollment has indeed
grown over the past several years and how premiums have
actually gone down. And you are absolutely right that the
efficiencies in Medicare payments that were enacted as part of
the Affordable Care Act had indeed made an important
contribution to strengthening Medicare's Hospital Insurance
trust fund. My recollection is that the CBO estimate is that
the Affordable Care Act extended the life of the Hospital
Insurance trust fund by roughly 8 years.
Mr. Waxman. Well, if the health insurance companies like
getting more money and the 30% of beneficiaries who are in
these plans are generally happy, why not keep overpaying them?
Mr. Van de Water. Well, one of your colleagues on the other
side of the aisle showed a chart a few minutes ago showing
that, you know, Medicare, as we all know, is a substantial part
of the federal budget and we are concerned about reducing
projected large deficits. So we----
Mr. Waxman. Well, that gives us ideas about how we should
make the elderly pay more for their healthcare costs but they
don't want to reduce the cuts of overpayments to these Medicare
Advantage plans.
We have heard a great deal about ObamaCare cuts to Medicare
Advantage, but didn't the Republican budget led by
Representative Paul Ryan include the very same so-called cuts
that were in the Affordable Care Act?
Mr. Van de Water. Yes, it did.
Mr. Waxman. I have been in Congress for 40 years. That is
why I am retiring, among other reasons. And I remember when we
first made Medicare managed plans available for Medicare
reimbursement if the beneficiary chose to go with such plans.
And we had it less than what the fee-for-service would be
because they selected out some of the lowest risk people and
the fee-for-service were covering the highest risk. We went
from a little less than what fee-for-service was to way more
than the fee-for-service without doubt in my opinion as I look
at this program.
Medicare Advantage is important. It serves a very useful
purpose to beneficiaries free to choose it and many of them are
very happy, but that is just not a reason to overpay them.
Thank you, Mr. Chairman. I yield back my time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes
for questions.
Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it
very much. And I have been going back and forth as well from
CMT, but this is a very important hearing.
Mr. Giese, 40 to 45% of my seniors in my district--and I
have over 100,000 seniors in the Tampa area; I represent an
area, the 12th Congressional District of Florida--on Medicare
Advantage, 40 to 45%. That is higher than the national average.
So, they really love their plans, and they love the fact that
they have all these choices.
I am concerned with some of the changes that CMS is doing
to their risk model. It seems to me that CMS is ignoring or not
factoring in certain chronic conditions when determining their
risk model. When considering the risk adjustments, CMS seems to
ignore or not count patients with certain chronic conditions.
What is the impact of the 2014 changes to the risk model on
sick and frail Medicare beneficiaries and particularly to those
on the Special Needs Plans area?
Mr. Giese. Well, changes to the risk model result in
reductions in payments to plans, which means the plans have to
react by increasing benefits to everyone, but in particular to
the poor and actually sicker people who pay the cost-sharing.
So these people have to pay more as a result of changes to the
risk adjustment model.
Mr. Bilirakis. Thank you. The next question is for Dr. Lew.
In the 2015 Advance Notice, CMS eliminated the home health
assistance assessments as part of the risk model. As I
understand their change, CMS would only count the diagnosis
identified in a home visit if and when it was confirmed in a
later in-office doctor's visit. Can you explain the dangers of
the payment change related to the home-based health
assessments, especially for the elderly?
Dr. Lew. Yes, thank you. As I had mentioned, home visits
are part of the continuum of care and you take out home care
and the benefits, it leaves a gap. If you are only going to
count a visit or a diagnosis obtained at a visit if the patient
is followed up in the office, a lot of these patients go to the
hospital because, you know, that is the value of going to the
home, early detection, catching something as opposed to a 911
phone call and something a lot more serious. The patient can be
sent to the hospital for care.
So, you know, to only count a diagnosis where the patient
has a follow-up visit in the doctor's office, that is very
narrow in scope and it really discounts the advantage and the
benefits of a home visit.
Mr. Bilirakis. Thank you very much.
Mr. Giese, this question is for you. For all these cuts to
Medicare Advantage, these plans are dependent on the Star
Ratings to survive. However, it seems to me that Special Needs
Plans may be disadvantaged because of their unique population.
Can you describe some of the challenges that Special Needs
Plans face in the Star Rating program?
Mr. Giese. Sure. First of all, a lot of the star ratings
are based on survey data and sometimes it is hard to get to
these people. Some of them are homeless, some of them, they
don't know where they live. So it is hard to find them in these
surveys. So special needs plans tend to have lower star ratings
because we can't find the people and they don't respond well to
the survey as well.
Mr. Bilirakis. OK. Now, for Dr. Lew and Mr. Giese again, if
the proposed cuts occur, what kind of benefits would no longer
be provided to seniors in your opinion, an example of some of
the benefits that they might lose if the cuts take place?
Dr. Lew. Well, from our delivery side, you know, I think
you are going to jeopardize all of the extra home visits
perhaps. I mean that would be one example. I mean we have a lot
of programs built around, again, the continuum of care, visits
from pharmacists and social workers, which have sufficient
costs. And, you know, if we are on a budget and our revenue is
reduced, that is obviously going to jeopardize a lot of our
programs.
Mr. Giese. Remember that cuts and benefits are not just
additional benefits over Part A and B; they are also changes in
cost-sharing. So if the plan has to increase their cost-
sharing, that is a reduction in benefits.
Mr. Bilirakis. OK. Very good. Thank you very much. I
appreciate it.
I yield back, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman. That concludes
the questions from the Members who are present. There are
several committee meetings going on so other Members will have
questions. We may have follow-up questions. We will submit
those to you in writing. We ask that you promptly respond.
And I recognize the ranking member for a UC request.
Mr. Pallone. Mr. Chairman, I would just ask unanimous
consent to submit for the record some Democratic comments in a
letter to CMS.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pallone. Thank you.
Mr. Pitts. Thank you very much for your testimony. This is
a very important issue and we appreciate you coming today.
And I remind Members that they have 10 business days to
submit questions for the record. Members should submit their
questions by the close of business on Thursday, March 27.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:18 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
Today we examine the future of the popular Medicare
Advantage program under the president's health care law. Before
this law passed, the president repeatedly promised, ``If you
like your health care plan, you will be able to keep your
health care plan, period. Nobody is going to take it away from
you, no matter what.'' Unfortunately, many seniors who like the
Medicare Advantage plan they have, are joining the millions of
Americans who have learned the hard way that this is a promise
the president cannot keep.
The president's health care law raided more than $700
billion from Medicare to spend on new government programs that
do not improve health care for seniors. More than $300 billion
of this came from the Medicare Advantage program. These cuts
threaten the high quality, affordable health coverage that
seniors enjoy. As numerous media outlets have already reported,
Medicare Advantage plans have been forced to reduce seniors'
benefits, increase their premiums, and reduce plan offerings in
light of these cuts. Sadly, the situation is only going to get
worse as only about 20% of the health law's cuts to Medicare
Advantage have already been realized, with significant cuts in
the hundreds of millions of dollars still on the horizon.
According to Medicare data, in 2014 Medicare Advantage
enrollment will total approximately 15 million enrollees--
roughly 29% of seniors in Medicare. The MA program also enjoys
high popularity among seniors, evidenced by CMS' figures that
MA enrollment as a percentage of total Medicare enrollment has
increased by 173% over the past 10 years.
Medicare Advantage provides millions of seniors better
health care than traditional Medicare. MA plans provide seniors
a cap against unlimited cost-sharing in the case of
catastrophic medical event or hospitalization. The plans
provide seniors coordinated care with medical teams working
together, provide disease management programs, hotlines to
access medical advice, and tools to help better manage chronic
disease. All of these are benefits that traditional Medicare
does not offer its patients. As a result, it is no surprise
that studies and clinical research shows that seniors with MA
plans have lower rates of hospitalization and emergency
department utilization.
Surveys also confirm that seniors are happy with their high
quality, affordable Medicare Advantage options. Seniors who
have MA plans they like should be able to keep them--just as
the president promised so many times. Today, we will hear from
witnesses on this important issue, including several of my
colleagues who have brought forth ideas to improve the MA
program and keep the promise to seniors. I appreciate their
work.
I want to thank Rep. Dennis Ross for his bill, H.R. 4180,
which would permit rollovers from health savings accounts to
Medicare Advantage savings accounts.
I want to thank Rep. Erik Paulsen for his bill, H.R. 4177,
which would allow Medicare beneficiaries participating in a
Medicare Advantage savings account to contribute their own
money to such an account.
I want to thank Rep. Keith Rothfus for his bill, H.R. 3392,
which would restore the Medicare Advantage open enrollment
period that existed prior to the health law. This will once
again allow seniors to try out their newly selected plan from
January to March and make one switch if they discover the
selected plan is not meeting their needs.
I want to thank committee member Rep. Gus Bilirakis for his
bill, H.R. 3392, which would establish a patient-assignment
program in MA and Part D drug plans to protect patients who
have demonstrated drug-abuse behavior and would help prevent
drug diversion.
I want to thank Rep. Jackie Walorski for her bill, The
Advantage of Medicare Advantage for Minorities and Low-Income
Seniors Act, which would require the Government Accountability
Office to use data reported to the government to produce a
study showing how the Medicare Advantage program is
particularly beneficial to participants of lower-income and
ethnic or racial minority status.
I want to thank Rep. Bill Johnson for his bill, H.R. 4196,
which would eliminate Obamacare's cost-sharing subsidies and
reinvest the savings from that policy in the Medicare Advantage
program.
I want to thank Rep. Jeff Denham for his bill, H.R. 4201,
which would enable Medicare Advantage plans to inform potential
enrollees of how Obamacare's cuts to the program may impact
their choices of plans.
I commend all of these members for their contributions in
the effort to keep the promise to America's seniors.
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