[Senate Hearing 113-272]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-272
 
  REFORMING THE DELIVERY SYSTEM: THE CENTER FOR MEDICARE AND MEDICAID 
                               INNOVATION 

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 20, 2013

                               __________

                                     
                                     

            Printed for the use of the Committee on Finance


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                          COMMITTEE ON FINANCE

                     MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
Virginia                             CHUCK GRASSLEY, Iowa
RON WYDEN, Oregon                    MIKE CRAPO, Idaho
CHARLES E. SCHUMER, New York         PAT ROBERTS, Kansas
DEBBIE STABENOW, Michigan            MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington           JOHN CORNYN, Texas
BILL NELSON, Florida                 JOHN THUNE, South Dakota
ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
THOMAS R. CARPER, Delaware           JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
MICHAEL F. BENNET, Colorado
ROBERT P. CASEY, Jr., Pennsylvania

                      Amber Cottle, Staff Director

               Chris Campbell, Republican Staff Director

                                  (ii)



                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Baucus, Hon. Max, a U.S. Senator from Montana, chairman, 
  Committee on Finance...........................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................    16

                                WITNESS

Gilfillan, Richard J., M.D., Director, Center for Medicare and 
  Medicaid Innovation, Centers for Medicare and Medicaid 
  Services, Baltimore, MD........................................     3

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    23
Gilfillan, Richard J., M.D.:
    Testimony....................................................     3
    Prepared statement...........................................    25
    Responses to questions from committee members................    38
Hatch, Hon. Orrin G.:
    Opening statement............................................    16
    Prepared statement...........................................    56

                             Communications

Roundtable on Critical Care Policy...............................    59
Wilson, Brandon G................................................    62



                     REFORMING THE DELIVERY SYSTEM:

                      THE CENTER FOR MEDICARE AND

                          MEDICAID INNOVATION

                              ----------                              


                       WEDNESDAY, MARCH 20, 2013

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 9:35 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Max Baucus 
(chairman of the committee) presiding.
    Present: Senators Carper, Casey, Hatch, Grassley, Crapo, 
Roberts, Thune, and Isakson.
    Also present: Democratic Staff: Mac Campbell, General 
Counsel; David Schwartz, Chief Health Counsel; Tony Clapsis, 
Professional Staff; and Karen Fisher, Professional Staff. 
Republican Staff: Kimberly Brandt, Chief Healthcare 
Investigative Counsel.

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

    The Chairman. The committee will come to order.
    The great American inventor Thomas Edison often liked to 
challenge his colleagues by saying, ``There is a way to do it 
better: find it.'' Edison always looked to inspire fresh ideas 
to overcome any challenge.
    Today we are in need of new and innovative ideas for 
America's health care system. We know there is a better way to 
deliver health care and to lower costs. We created the Center 
for Medicare and Medicaid Innovation to find it.
    Known simply as the Innovation Center, the Affordable Care 
Act established a national facility to inject government health 
care programs with some of the flexibility and creativity that 
the private sector enjoys.
    The Center comes with a simple mission: lower costs and 
improve quality. It does so by testing new payment incentives 
and employing creative methods of delivering care. If the 
Center develops a successful idea, Medicare and Medicaid work 
to quickly replicate it nationwide. If an idea is not 
successful, they go back to the drawing board and develop 
something different.
    In just a short time, the Innovation Center has produced 
results. According to the Congressional Budget Office, the 
investments in the Innovation Center are expected to generate a 
13-percent return through 2019, and, in the decade after, the 
Center is expected to save taxpayers tens of billions of 
dollars.
    The Innovation Center is already testing many promising 
ideas. These include Pioneer Accountable Care Organizations, 
groups of doctors across the United States who work together 
and coordinate their care to reduce costs.
    From Minneapolis to Maine, from Nevada to New York, these 
doctors are sharing lessons learned and best practices in an 
effort to provide better patient care. This is just one of the 
more than 30 new programs that the Innovation Center has 
already introduced, impacting the lives of 5 million 
beneficiaries across all 50 States.
    Health reform included specific ideas for the Innovation 
Center to test. We also knew that tapping into Americans' 
ingenuity and entrepreneurship could lead to ground-breaking 
ideas on how to improve the health care delivery system.
    So we told the Center to ask Americans for their ideas on 
how to improve the quality of care without increasing costs, 
and, as an incentive, the Center would provide grants to test 
the most promising models. One company that answered the call 
is the online clinic, Health Link Now.
    Recognizing the challenges that rural communities face in 
accessing mental health care, Health Link Now will partner with 
local hospitals and doctors in Montana and in Wyoming. They 
will provide mental health care through secure video-
conferencing and interactive technology.
    Patients in even the most rural areas, like Troy, MT, 
population 933, can now access quality care if needed. This 
initiative is expected to lower costs through reduced hospital 
admissions and emergency room visits while increasing access to 
care in rural communities. If proven successful, it will likely 
be replicated across rural America.
    This is just one example of the type of revolutionary ideas 
the Innovation Center is supporting. Some of the tested models 
will be successful, others will not, but we cannot be afraid of 
missteps. We must continue trying new ideas, learning from 
mistakes, building on our successes. That is how we find what 
works.
    We also need Medicare and Medicaid to develop programs 
faster than they have in the past. In 2003, Medicare partnered 
to create a demonstration project in which hospitals in 26 
States, including St. James Healthcare in Butte, St. Vincent 
Healthcare in Billings, and Holy Rosary Healthcare in Miles 
City, MT, would receive bonus payments based on the quality of 
care delivered. From 2003 to 2009, the demonstration project is 
estimated to have saved thousands of lives, including 8,500 
heart attack patients.
    Seeing the success of this demonstration project, Congress 
used it as a model to create a program where Medicare rewards 
all hospitals across the Nation for high-quality care. It also 
penalizes hospitals that produce poor outcomes. That program 
began this year.
    In many ways, the 2003 demonstration project set a new 
standard. It was developed in stages, with close public/private 
collaboration, but it took too long. We cannot wait a decade to 
develop a model and then implement it nationally. We need to 
cut through red tape much more quickly.
    We need to allow proven ideas to ramp up and spread rapidly 
without waiting for Congress to act. That is what the vision of 
the Center's task is. It can broadly deploy demonstration 
projects that are proven to reduce spending or increase 
quality.
    This will allow us to test, evaluate, and then integrate 
new ideas nationwide in only a few years instead of a decade. I 
look forward to examining the progress that the Center has 
made. We are here to ask questions. We want to hear about 
different models tested, we want to hear which projects are the 
most promising, and we want to know when we are going to see 
results.
    We are going to need a bold vision if we are going to get 
health care costs under control, so let us act boldly. Let us 
realize there is a way to do it better when it comes to health 
care costs, and, as Thomas Edison said, let us find it.
    [The prepared statement of Chairman Baucus appears in the 
appendix.]
    The Chairman. Senator Hatch is not here yet, so I will just 
introduce you, Dr. Gilfillan. Why don't you proceed? As most 
people know, you are the Director for the Center for Medicare 
and Medicaid Innovation. Doctor, your full statement will be in 
the record, and I would urge you to summarize and get to the 
point in about 5 minutes. We look forward to hearing from you.
    I might say, I think you are doing great work. I would just 
encourage you to keep at it.

 STATEMENT OF RICHARD J. GILFILLAN, M.D., DIRECTOR, CENTER FOR 
  MEDICARE AND MEDICAID INNOVATION, CENTERS FOR MEDICARE AND 
                MEDICAID SERVICES, BALTIMORE, MD

    Dr. Gilfillan. Chairman Baucus, Ranking Member Hatch, 
committee members, thank you for the opportunity to discuss the 
Innovation Center's progress. I am a family physician by 
background, and I practiced in rural Massachusetts and urban 
New Jersey. Before joining CMS, I was an executive at the 
Geisinger Health System in Pennsylvania. While there, I worked 
with colleagues to develop new primary care and episode-based 
payment models and tools for ACO development.
    During that experience, I saw how innovative approaches to 
delivering high-quality care at a lower cost can make a real 
difference for patients and their families. Marie, a high-risk 
patient in a medical home program there, had previously been 
hospitalized frequently. Through that model, Marie gained 
access to a case manager who helped her better manage her 
medical conditions and avoid frequent trips to the ER.
    Marie described the program simply by saying, ``The idea of 
the program is to keep me healthy, keep me out of the hospital, 
and keep costs down. I don't think I would still be here 
without this program. It has been my lifeline.''
    Care like this is the promise of delivery system reform and 
the potential answer to the challenging problems we face in our 
health care system. In all of our work at the Center, we are 
focused on creating care models that improve outcomes, as this 
one did for Marie, because that is the way to make care more 
affordable and accessible for all Americans.
    We must find new care and payment models that reward and 
support providers in delivering high-quality, coordinated, and 
efficient care, not simply for providing more services. Today, 
I am pleased to report on our progress at the Center for 
Medicare and Medicaid Innovation.
    Our job is to test new models of care delivery and payment 
that reduce costs and improve quality by changing the incentive 
structure of our payment systems to emphasize care 
coordination, improved quality outcomes, and reduced total cost 
of care.
    In short, to accelerate our movement to a health care 
system with better outcomes and lower costs, we must accelerate 
the movement of CMS, and indirectly other payers, from being 
fee-for-service payers to becoming value-based purchasers of 
health care through the new models we are testing.
    The resources provided in the Affordable Care Act have 
allowed us to build on the excellent existing CMS capabilities 
to test more models on a larger scale to get more rapid 
results. Right now we are working on three dozen models that 
support 50,000 health care providers who are serving more than 
1 million Medicare, Medicaid, and CHIP beneficiaries, as well 
as many private patients. We believe these models will result 
in better coordinated care, improved quality outcomes, and 
reduced total costs of care.
    Examples of these new service and payment models that 
reward providers for delivering high-quality, coordinated care 
and improved outcomes include our Comprehensive Primary Care 
Initiative, a multi-payer test of care management expenses to 
primary care physicians; our Pioneer Accountable Care 
Organization model, a multi-payer test also testing advanced 
Shared Savings incentives for larger, experienced groups of 
providers; and our Bundled Payments for Care Improvement 
Initiative, which is a model to test payment of a global 
episode fee instead of fee-for-service payments for specific 
procedures and conditions. Each of these models is directly 
supporting the re-designing and the re-engineering of care to 
deliver these outcomes.
    From our work on these and other models, we have already 
learned that providers and other stakeholders are eager to re-
design care and participate in models that reward quality and 
coordination and decrease costs. States and private payers are 
committed to working with us as well.
    We also know that there is no one simple solution. We must 
test a broad range of models. Of course we are all eager to see 
the results of these models, but we need to be realistic. This 
change is difficult. Some models will work, and some will not. 
It will take time to see the improvements we are after.
    We will see signs of change in some metrics early on, but 
measures of broader impacts, such as the total cost of care, 
will take longer. To get accurate information, we must give 
each project sufficient time for claims to come in and quality 
outcomes to emerge.
    We are currently analyzing the first year of data from two 
primary care projects, the Multi-Payer Advanced Primary Care 
Practice and the Federally Qualified Health Center Advanced 
Primary Care Practice Demonstration. We will also see first-
tier results from the Pioneer ACO model this summer. We will be 
able to start sharing interim results with Congress within the 
year and start giving recommendations for payment or care 
changes within the next 2 years.
    The good news is that providers are responding positively 
to the many portions of the Affordable Care Act that support 
these efforts to improve care, such as value-based purchasing. 
Delivery system transformation to a more sustainable, higher-
quality system is clearly under way across the Nation, and it 
is coming from grassroots providers in their communities who 
understand the need, the imperative, to improve our system.
    More than 250 ACOs, including the 32 ACOs in models 
developed by the Innovation Center, are now operating in the 
Medicare fee-for-service program, serving more than 4 million 
Medicare beneficiaries. Early national data is starting to show 
the effects of this focus on improving care coordination, 
improved quality of care, and the total cost of care.
    After more than 5 years of holding steady, the rate of all-
cause hospital readmissions is starting to trend downwards. In 
addition, the rate of growth in per capita Medicare spending 
has been at historic lows for 3 years in a row. We look forward 
to seeing which models and demonstrations will provide the 
results our health care system and the people we serve need. I 
am happy to answer your questions.
    The Chairman. Thank you, Doctor.
    [The prepared statement of Dr. Gilfillan appears in the 
appendix.]
    The Chairman. The bottom line is, I think most of us--at 
least I am--are concerned about making sure we are getting 
value for our buck in terms of the Act, that is, that the 
Center actually does produce results. You mentioned that it 
takes time. That is true, it does take time.
    But at the same time, people, at least in Congress, are 
going to be a little bit impatient. They are going to want 
results that are quantifiable, demonstrable, that you can 
identify, put your finger on, and see, not just grand goals and 
platitudes. So what can you tell us? You mentioned you would 
have some results in a year, other results in a couple of 
years.
    What can you tell us here that kind of makes us more 
comfortable that we are actually going to get demonstrable 
results so this whole effort is worthwhile? It sounded good 
when we put it together in the Act, but now we are trying to 
find out whether in practice it makes sense. So give us some 
numbers that make us a little more comfortable that you can 
actually get the work done where these proposals will produce 
results.
    Dr. Gilfillan. Certainly, Chairman Baucus. We are, as I 
said, now looking at some of the first-year results from some 
of our early programs in primary care. It takes time for all of 
these programs to--number one, programs have to start putting 
new care models in place, then they need to start measuring 
results. We need to see results over time so that the 
information we receive and analyze is complete.
    Typically, for models like this, it will take us 12 months 
of experience with the new model operating, and then 3 months 
after that 12-month period to get the claims in-house into the 
system so we can analyze them. That is what we are doing right 
now with the two models that I mentioned for primary care. We 
are starting to see some signs, and I can share with you a 
couple of data points.
    We want to make sure though that, as we do this analysis, 
it produces complete and accurate, dependable information. We 
can see now, as we look at data from the State of Vermont, that 
it appears that the trend, the rate of increase in cost for the 
total cost of care, looks like it is below what was expected. 
So it does appear that there is some early evidence of bending 
the cost trend from the medical home program that we have 
there.
    In the State of North Carolina, we are seeing some 
improvement in the rates of hospitalization, that is, the 
frequency with which Medicare beneficiaries are being admitted 
to the hospital and the frequency with which they are visiting 
the emergency room.
    These are two types of data that we are looking at very 
closely in all of our models: high-level data looking at the 
total cost of care and looking at quality measures and 
outcomes, and then more granular, more detailed measures of the 
actual experience, such as how often people go to the emergency 
room of the hospital.
    We are working hard. In each of our models, we have 
established a rapid-cycle evaluation group, Senator, that 
allows us to watch these results on a quarterly basis. As they 
become complete, as we get that data to a point where we feel 
it is accurate and complete, then we will share those results 
with you.
    The Chairman. I appreciate that. I have another question 
that I am curious about. The premise behind the ACA was to move 
away from volume-based services, fee-for-service, and push 
toward reimbursement based more on quality.
    One question is, do you think that, based upon your work, 
that premise, that assumption, is still valid, and should we 
still work in that direction? The second is, as you, I am sure, 
know, Time magazine published an article that is getting a lot 
of currency. I read it last weekend.
    I am just curious of the degree to which some of these 
delivery system reforms and some of your work at the Center can 
get at some of the problems pointed out in that article, namely 
how charges are based on this Charge Master in hospitals, and 
how, at least according to the author, many people are over-
paying because the Charge Master sets rates much higher than 
the actual costs of the devices, the Durable Medical Equipment, 
or whatnot. So the question is the degree to which your work 
will get at some of those problems mentioned in that article.
    Dr. Gilfillan. Thank you for that question, Chairman 
Baucus. It was quite an interesting and revealing article that 
talked about many of the issues those of us who have been in 
health care for a long time have been concerned about.
    To your first question, we believe that the underlying 
ideas in the Affordable Care Act regarding the need to 
transition from fee-for-service-based payment approaches to 
more value-based payment approaches is still correct, and I 
think it has gained greater acceptance throughout the country. 
I think what we are seeing is a real commitment from providers 
to engage with CMS and with their private payers to pursue 
these alternative approaches to reimbursement.
    The article in Time spoke largely about the effect of 
charges on either commercial payers and rates of premium that 
people end up paying through private payers or, even more 
unfortunately, the impact that they have on individuals who may 
not have coverage.
    I think we are seeing in our models, where we are working 
closely with other payers, that there is a real opportunity to 
change the way private payers are paying providers as well, and 
some engagement from providers and being willing to engage with 
them on that.
    So, I would be hopeful that, with the increased coverage 
that we are likely to see in 2014, the ability for more people 
to access negotiated rates that are paid by commercial payers, 
or the rates paid by government payers, we will see less impact 
from charges and we will see the gradual move on the private 
sector side from payments based on charges, such as were 
referred to in the article, to payments based on value 
produced, as you have stated.
    The Chairman. Thank you. My time has expired.
    Senator Carper. Mr. Chairman? Mr. Chairman? I need to go 
chair a hearing on Sandy recovery in Homeland Security and 
Governmental Affairs. Could I have just 30 seconds to say 
something very briefly?
    The Chairman. Absolutely.
    Senator Carper. Would my colleagues indulge me?
    The Chairman. I am sure they will for 30 seconds.
    Senator Carper. Dr. Gilfillan, thank you so much for 
assuming these responsibilities for our country. The work that 
you are doing, the work at the Innovation Center, is just so 
important. It is exciting, it is essential. We are going to be 
debating in the next 36 to 48 hours how to get better health 
care results for less money, especially with respect to 
Medicare and Medicaid, and what you and other folks are working 
on across the country is just critical.
    Our neighbor to the north is Pennsylvania. You ran 
Geisinger up there. I have been up to visit your facility and 
was just really impressed with what you are doing there and 
some of the lessons that we can learn, so thank you for doing 
this work.
    The chairman is trying to impart a sense of urgency, and 
that is a sense of urgency that I think we all share. Thank 
you.
    Dr. Gilfillan. Thank you, Senator. I think I can say for 
all of our team, it is a real honor and a privilege to be 
involved in the work here at CMS and throughout the 
administration and the health care system to build on the work 
that was done in the Affordable Care Act.
    The Chairman. Thank you.
    Senator Crapo?
    Senator Crapo. Thank you, Mr. Chairman.
    Dr. Gilfillan, I appreciate your work and appreciate you 
being here. I also appreciate hearing that CMS is taking an 
innovative approach to dealing with our Medicare issues. As the 
chairman referenced, we regularly are told from many different 
sources that we have to get away from focusing on volume and on 
to focusing on quality. The problem is, how do we do that? You 
are here to give us those answers.
    Physicians should be able to manage the care of their 
beneficiaries in a way that rewards them for quality, which is 
why I supported things like--well, various programs that 
promote flexibility and quality rewards for health care 
experts, like the Accountable Care Organizations.
    I was also pleased to see that the dialysis community also 
accessed this integrated care program with the new End-Stage 
Renal Disease Care Initiative formation. I am told that, under 
this model, the dialysis clinics and nephrologists can access 
more expensive patients, those with multiple diseases and co-
morbidities, and the care in the Medicare program.
    My question is, can you explain to me how these two models, 
the Accountable Care Organization on the one hand and the new 
ESRD Care Initiative, will work together and how new patients 
are attributed to each?
    Dr. Gilfillan. Senator, thank you for that question. Yes, 
that is a great question. One of the things that we are working 
on at CMS in pursuit of all these models is to build the 
operational infrastructure that is needed to operate in this 
new way, needed to operate in a value-based world.
    This goes right to the heart of that question, and we have 
built the operational capacity and ability to distinguish 
patients who were aligned with one ACO or one program versus 
another. It has been something we have worked hard on over the 
past 2 years. There are rules that we will use to decide who 
the most likely provider of care to a particular patient is 
and, as were laid out actually in the Shared Savings 
regulations, we look at the experience of that patient to see 
who has provided the most care.
    In this case, while some patients were aligned with Pioneer 
ACOs or Shared Savings ACOs, the vast majority of ESRD 
patients, End-Stage Renal Disease patients, were not aligned 
with those ACOs. We expect that we will be able to use our 
computer systems that we have built to actually identify a 
distinct set of patients for the ACOs and a distinct set of 
patients who will be obtaining most of their care from their 
dialysis provider or their nephrologist and actually align them 
appropriately with the provider of their care.
    Senator Crapo. Thank you. Will the beneficiaries with ESRD 
be assigned first to the new ESRD-specific program and then to 
the primary care ACOs?
    Dr. Gilfillan. Senator, they will not be. They will not be 
assigned to two of the programs; they will only be assigned to 
one. Those who are assigned already to the Pioneer or Shared 
Savings ACOs will remain with those. Those who will be aligned 
through our analysis with the dialysis provider will be 
assigned there and will not be eligible for assignment into 
ACOs.
    Senator Crapo. All right. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Isakson?
    Senator Isakson. Thank you, Mr. Chairman.
    Thank you for your work, Dr. Gilfillan. I appreciate it 
very much. I have a question that actually popped into my head 
while you were talking. I am one who talks about fee-for-
service all the time, and I commend the movement away from that 
and the movement towards reimbursement based on quality. But it 
seems to me, in the debate on the Accountable Care 
Organizations and in some decisions that have been made by CMS, 
there has been a total move away from home health care to drive 
people more to hospitals than home health care services.
    I represent a State that has a major metropolitan area, 
Atlanta, but we also have a huge rural area where there is not 
a physician in the county, much less a hospital. Home health 
care, particularly for the elderly, but in long-term recovery, 
is a better environment and a less expensive environment for a 
patient to be healed in than a hospital is. Have you all done 
any analysis of some of the decisions that have been made to 
drive the reimbursement rates on fee-for-service for home 
health care way down to move people into hospitals, which are 
far more expensive?
    Dr. Gilfillan. Senator Isakson, thank you for that 
question. We could not agree more with you that it is always 
better for a patient to obtain care in the least restrictive, 
least clinical, intense setting as possible. So, whenever care 
can be provided in a home, we think that is a good thing to do, 
assuming it can be done safely and effectively.
    We have established some models that emphasize more, we 
think, home care, certainly our ACO programs, our Comprehensive 
Primary Care Initiatives. All of our primary care initiatives 
are very much oriented to using home care services as much as 
possible, avoiding unnecessary hospital services, so there is 
great incentive to do that.
    We also, in our Bundled Payments for Care Improvement 
Initiative, through the use of episode-based payments, have 
created conditions in which hospitals, other providers working 
closely with home care providers, and other post-acute 
providers, can design care in a way that is most effective and 
delivers the best outcomes. So we think, more and more, we will 
see services provided in the home as a result of the models 
that we are testing.
    Senator Isakson. Well, I am glad to hear you say that, 
because I have had a personal experience with one of my 
children many years ago where they were recovering over an 
extensive period of time, and the home health care, from the 
standpoint of the mental health of the patient, is far superior 
to long-term hospitalization in many recoveries.
    I think there are some people--some people; I am not 
speaking about you--who are driving people away from home 
health care and into hospitalization, which is less good for 
the patient's mental health and much more expensive in terms of 
reimbursement. So, thank you for that answer.
    The second question. Ten billion dollars is a lot of money. 
That is your authorization over a decade. Last November, GAO 
reported that several programs funded through CMMI were 
potentially duplicative or overlapping with other initiatives 
that CMS is currently undertaking. What specific steps are you 
taking to ensure that work is coordinated and that duplication 
does not take place?
    Dr. Gilfillan. Thank you, Senator. The GAO report did speak 
to, I think, three areas where there may have been duplication, 
or they thought that it was possible. They identified the 
specific activities that we had put in place to ensure that 
there was coordination, and they ranged from daily interactions 
with the Innovation Center team, with the Centers for Medicare 
and Medicaid Services, and with the Center for Clinical Quality 
Standards. So we are working throughout CMS to ensure that we 
coordinate well. The other area that was identified in the GAO 
report was the potential overlap with activities of the Quality 
Improvement Organizations, the QIO program. We have reviewed 
all of the potential overlap situations between our QIOs and 
the hospital engagement networks from our Partnership for 
Patients Program.
    We have created plans for any hospital where both 
organizations could potentially overlap so that they are 
coordinating and ensuring that there is no duplication of 
services or payments. So it is something we pay attention to 
regularly. We meet at the highest levels of CMS to review 
potential duplication and avoid that and ensure that the 
programs are synergistic and complementary.
    Senator Isakson. Well, that is very important. Quite 
frankly, Congress is guilty of the same type thing. We have far 
too many duplicative appropriations in different departments 
where we could find a lot of savings if we would take time to 
look, so I am glad you paid attention to that report and are 
taking a look at it. Thank you for your service.
    Dr. Gilfillan. Thank you, Senator.
    Senator Isakson. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Grassley, you are next.
    Senator Grassley. Thank you very much.
    I am sorry I did not hear your testimony. I had to be at 
another place.
    I have a question about the GAO's November report raising 
questions about CMMI activity overlapping with the CMS offices. 
Specifically, the GAO identified three key examples of overlap 
between the 17 Innovation Center models and the efforts of 
other CMS offices. CMS's response to this overlap was calling 
the work complementary to each other. At the same time, CMMI 
has a designated funding stream of $10 billion between 2010 and 
2019.
    So, as everyone is acutely aware, we are in the middle of 
sequestration. Agencies have been told to scale back and be 
smarter with the dollars. So my first question to you is, do 
you think it is appropriate for CMMI to be operating models 
that clearly overlap with existing programs at CMS, and was 
there a good policy reason for choosing models that overlapped 
so closely with existing CMS initiatives?
    Dr. Gilfillan. Thank you, Senator Grassley. The GAO report 
identified those three areas to include ACO activity, possible 
overlaps with Medicaid activities, and possible overlap between 
the Quality Improvement Organizations and the Partnership for 
Patients' Hospital Engagement Networks.
    As they pointed out in the report, we have established 
mechanisms to ensure that there is not duplication in each of 
those programs. We did improve the coordination and address the 
specifics of overlap in the QIO and Partnership for Patients 
programs, and completed the work that they suggested in 
December.
    One of the things we have learned, Senator--and we have 
heard loud and clear from stakeholders around the country--is 
that not one model works for everyone, that there are provider 
organizations that are experienced in delivering more 
coordinated care, having done it for years in Medicare 
Advantage programs, and they were interested in having a more 
advanced program. The Pioneer program was the result of that.
    We had people from around the country come to us in the 
earliest days of the Innovation Center, asking for a more 
advanced, higher opportunity program for ACOs. So we developed 
that program specifically for that segment of the delivery 
system that was more advanced and was requesting it.
    Similarly, we had heard input from other physicians in 
rural communities about their concerns about being able to 
participate in the Shared Savings Accountable Care Organization 
program, because they were concerned they did not have 
sufficient capital to make the investments.
    So we established the Advanced Payment ACO program, which 
supports small physician Accountable Care Organizations and 
Accountable Care Organizations from rural communities. As a 
result of those activities, we ended up with 40 Advanced 
Payment ACOs, seven of which are actually from rural 
communities and 33 that are physician-based Accountable Care 
Organizations.
    So, Senator, we think there is good reason for developing 
programs that sound initially like they might be overlapping or 
duplicative but really represent the attempt to mix or match 
the richness, the diversity of the delivery system, and the 
requests we have had from stakeholders to create paths to this 
new care model for all different types of providers.
    Senator Grassley. All right. Well, put me down for being a 
little cynical about it. I think that you have answered in good 
faith, so I do not question your intent. But, in 3 to 5 years, 
when you might be called back here to testify during an 
evaluation phase, are you comfortable that you will be able to 
justify that those $10 billion were spent in truly separable 
projects, because that is going to be a lot of taxpayers' money 
that we are wagering?
    Dr. Gilfillan. Senator, we take financial accountability 
very seriously. I spent a career in the private sector, where I 
learned how important it is to be accountable for, and 
responsible in, the handling of financial resources.
    We appreciate the resources we have. We know there is a 
great deal of work to be done. We think every day about what 
the ultimate return on the investments will be, and we are 
confident that we will come back to you at some future time and 
be able to demonstrate that to you.
    Senator Grassley. All right. Thank you.
    Senator Roberts, you are next. The chairman just handed me 
the gavel, and I am going to give it to you, because I have to 
go to the Judiciary.
    Senator Roberts. That is a very dangerous proposition. 
[Laughter.]
    Senator Grassley. Yes. Do not abuse the privilege.
    Senator Roberts. I could ask unanimous consent and then say 
``without objection.'' [Laughter.]
    I hate to tell you this, but you may not have a job, just 
repeal and--never mind. [Laughter.]
    We will go on from there. You will note that they really 
did not hand me the gavel.
    Thank you very much for coming and taking time out of your 
schedule to come up. I do not think it comes as any surprise to 
anybody on the committee, and perhaps you, that I have some 
strong concerns with many of the provisions of the Affordable 
Health Care Act, what some call AHA or PPACA, or whatever way 
you want to describe it, most especially, those provisions that 
I believe gave the Department, and more especially CMS, 
authority--as I have determined in talking to many of my 
providers out in the rural health care delivery system, both in 
Kansas and all across the country--to ration care. Now, those 
are their words, not mine, but I think they are mine as well 
after listening to many of their concerns.
    You stated in your testimony that Congress provided the 
Secretary with the authority to expand the scope and duration 
of a model being tested through rulemaking, including--and this 
is very important--the option of expanding on a nationwide 
basis.
    I do not think I would have ever been comfortable with 
this, and we did not get an opportunity at the time, although 
we had many hearings in the HELP Committee and here in this 
committee, but the final product, we did not have much access 
to, so I could not offer an amendment.
    But I have talked about this a lot on the floor of the 
Senate and every chance that I get, but I do not think I would 
have been very comfortable with allowing officials who are not 
elected the ability to bypass the Congress to implement 
policies that could impact Americans in every State, every 
region of the United States. But I can tell you that I have 
become even more alarmed watching the implementation.
    Right off the bat, the Department and CMS began 
implementing the major portions through IFRs, interim final 
rules. I have a big problem with this in regards to--I remember 
the days when CMS actually went out and asked people if in fact 
a regulation made sense, if in fact it could be tweaked, 
changed, or many different kinds of suggestions. If enough 
people really complained about it during a 90-day period, 60-
day period, there would be an additional 60 days. Well, you 
gave 30 days.
    Basically, the stakeholders do not really have an 
opportunity to weigh in. We have seen regulations, even 
economically significant regulations--and that is a term that 
is hard to really define--implemented with, I think, little or 
no quantitative cost/benefit analysis, despite the fact that it 
is required by the President's executive order.
    Then--and this is the one that has really got me riled most 
recently--regulations are being implemented with what we call 
sub-regulatory guidances. This was a problem for me in that I 
had a heck of a time trying to remember that sub-regulatory 
guidance is just the name of it to begin with, but we are 
talking about such things as FAQs--FAQs is Frequently Asked 
Questions--and then bulletins, then postings to the website, 
then guidances.
    Now, aside from the fact that stakeholders can barely keep 
up with all the regulations now coming out of CMS, we cannot 
even guarantee that these folks know about sub-regulatory 
guidances, because no one ever let them know. I am talking 
about everybody within the provider system who is involved with 
Medicare payments.
    Then, when actually implementing the regulations through 
notice and comment, the Department is giving stakeholders a 
minimum amount of time, 30 days, to review hundreds of pages of 
regulations, sometimes with multiple regulations being issued 
in the same day.
    Throw in the holidays, and you have a perfect recipe to 
assure stakeholders will not be able to engage constructively, 
if at all. I do not know how many hospital administrators--or 
for that matter doctors, nurses, whatever--are overwhelmed with 
the regulatory situation. They just do not have time to pay 
attention to sub-
regulatory guidance. They do not even know it is there to begin 
with.
    Then you are going to have to have somebody whom they 
hire--I think it is a new growth industry: regulatory overkill 
101, 102, 103--but our universities and others in the private 
sector just cannot really have people available to do that. 
There are not that many people to help out. Do not tell me to 
call a 1-800 number that does not answer or where somebody does 
not have the answer.
    Some representatives from the administration have come 
before this committee, and I thank them for this. They have 
suggested that 60 days is a more appropriate time frame in 
regards to sub-regulatory guidance, again, if they even have 
the ability to know what that is.
    I would tell my distinguished friend and colleague and the 
ranking member that I am over my time 10 seconds, but I am on a 
roll, so I am going to keep going, if you do not mind.
    Senator Hatch [presiding]. Keep rolling if you want to.
    Senator Roberts. All right. Thank you.
    I ask unanimous consent to proceed for another 5 minutes, 
if I might.
    Senator Hatch. Without objection.
    Senator Roberts. And I know that I want to give the good 
doctor an opportunity to respond.
    I think this attempt to circumvent the traditional 
regulatory process--again, what CMS used to do, not what they 
do now because there is an agenda out there with all the 
regulations--I know that there is a time frame here that the 
administration wants to follow, but you cannot just leave the 
entire health care delivery system behind in a fog of 
regulations.
    At any rate, this becomes especially alarming when coupled 
with new authorities to allow CMS to expand the policies 
nationwide without accountability through any congressional 
review, which is what we are having today. I think there is a 
big storm coming. I am concerned, because whatever chance we 
have for this to really succeed, I think, is being endangered 
by a storm of regulatory overkill. I call it a Katrina of 
regulations; perhaps that is an overstatement.
    The traditional regulatory process, as described in both 
statute and executive order, calls for notice, it calls for 
comment, it calls for review, and it calls for consideration of 
comments, and the issuing then of a final rule.
    Again, I do not think I will ever be comfortable with the 
way this was done, but here is my question, finally, after this 
speech, or rant, or whatever you want to call it. Can you 
assure me today that any policies CMMI expands, especially 
those that go nationwide, will be done through the traditional 
rulemaking process, including the notice, 60-day comment 
period, review and consideration of comments, clear and 
quantitative cost/benefit analysis, and issuance then of a 
final rule? I suppose you could say ``yes'' and that would be 
the end of it, but would you please comment?
    Dr. Gilfillan. Senator, as you point out, the Affordable 
Care Act, section 3021, does speak to the potential for the 
Secretary expanding the scope or duration of a particular model 
even to a national level, assuming that we can demonstrate to 
the satisfaction of the actuaries at CMS that there are cost 
savings, or at least the same costs and quality getting better 
and quality always being better--the same, or better. So there 
is that provision, and it is stated through regulations.
    We have not gotten to that point at this time. We have not 
issued any regulations. I understand and hear your concerns 
about regulations. We have not confronted that, but our 
expectation is that we would follow the usual regulatory 
pathways and all of their levels, but we have not gotten to 
that point with any of our models at this point.
    I would say that----
    Senator Roberts. But you intend to do that, of course?
    Dr. Gilfillan. We certainly are expecting to find models 
that are successful that we would like to expand the duration 
and the scope of, and ideally some of them nationally, as we 
demonstrate the results of these different models. I would say 
that we have not been involved in regulation other than in the 
regulations for the Medicare Shared Savings Program for 
Accountable Care Organizations. That was, I think, a remarkable 
example of how we put an initial----
    Senator Roberts. All right. Now, I am going to do something 
I do not like to do, and I do not want to interrupt you, but 
you mentioned it, and that gets to my next question. And I am 
still over time. Again, I will ask for another 5 minutes if I 
have to.
    But the Advanced Payment ACOs, that is what you are talking 
about, the Accountable Care Organizations. One question is, 
what percentage of these are rural? My answer to that is, I 
have heard back from many rural providers that, due to the 
structural limitations of the ACOs, it is difficult, if not 
impossible, for a rural community or provider to initiate an 
ACO.
    We just do not have the doctors, we do not have the 
professionals. Many times you have to drive 60 miles, 120 
miles, whatever, to see a doctor or a nurse clinician, and 
maybe there is only one doctor. That doctor may circulate 
around in many different hospitals. We do have regional centers 
that provide very good care.
    But can you speak to how many rural providers have 
initiated ACOs versus any participation in an ACO initiated by 
a health system for a more urban community? I think there is a 
tremendous bias here to have ACOs succeed in urban settings, 
but the criteria for the rural providers I think are such that 
it just does not match up.
    Dr. Gilfillan. Certainly, Senator, that is an excellent 
question, confronting the real challenges that we know 
providers in rural communities face. That is why, for our 
Pioneer ACO model, we created a specific set of criteria for 
rural entities to participate, and it resulted in us having a 
rural ACO in Ft. Dodge, IA, at Trinity Health.
    In our Advanced Payment program, we put additional funding 
in place for rural providers for small physician organizations 
or for hospitals in rural areas who lacked capital to become 
Accountable Care Organizations. We have seven of our 40 
Advanced Payment Accountable Care Organizations that are from 
rural areas. One of them includes a hospital, but the others 
are physician-based.
    We have also worked hard across our other activities to 
ensure that we get good representation and good opportunities 
for rural providers, Senator. About 16 percent of our health 
care innovation awards are specifically for providers, rural 
providers, and are getting at some of those difficulties you 
have mentioned.
    Senator Roberts. All right. I am out of time, and I am 
taking way too much time, and I apologize to my colleagues. I 
am going to ask one more question if I might, and I apologize 
to Senator Casey and to the ranking member.
    You addressed efforts to reduce inappropriate hospital 
admissions. Now, I do not know of anybody on the committee or 
anybody anywhere who is supportive of continuing to allow for 
inappropriate hospital readmissions, and I know that you have 
done a lot of work for CMS, HHS, and have certainly done a lot 
of work to cut down on hospital readmissions. It comes under 
the heading of cost savings and even fraud and abuse 
prevention.
    However, can you speak to me about what work is being done 
to look into the unintended consequences of these policies? 
Specifically, I am referring to anecdotal examples I am being 
given that make this a real problem in rural areas with 
patients who need to be readmitted but are not because of this 
policy.
    In rural areas, there is no other place to go. I know of a 
particular case of a very good friend of mine--and I am not 
going to mention the hospital or the area--but whose mother was 
in her 90s and had a sprained ankle. She went in to see the 
doctor and went out to the parking lot and had apparently, 
later, as we have determined, a stroke, but she could not get 
readmitted back in the hospital except to the emergency room.
    The person there who gave the treatment indicated she was 
fine and went home. It was obvious that her son knew something 
was terribly wrong but could not get her readmitted back into 
the hospital. Now, I am not going to go into the details of 
what happened later, but unfortunately she died.
    Now, that is just one anecdotal example that I am 
personally aware of and was involved with, and I could not 
believe it. In talking to the hospital administrator, he said, 
well, this is what we are operating under. Now, that is a 
problem. I hope--I hope--that that is not a common theme, but I 
think you have to really take a look at the rural areas and 
hospital admissions. Have you done that on the other side of 
it? You always wonder what lurks under the banner of reform and 
what you are trying to do, and the real world out there is 
something entirely different if we are not careful.
    Dr. Gilfillan. Thank you, Senator. We would be happy to 
work with your folks and with CMS to look into any specific 
concerns you have, certainly, but we know we have to 
ultimately--every hospital, every doctor makes decisions about 
the right way to care for a patient, and there is nothing in 
the Affordable Care Act that says that people cannot do things, 
it just asks them to exercise judgment about whether the 
patients need to be in the hospital or can be cared for at home 
or in other settings.
    So we will monitor patient satisfaction rates, patient 
concerns, hospital complications. The whole intent of value-
based purchasing, of course, is to look at the combination of 
quality of care outcomes, whether they be for admissions to the 
hospital or readmissions to the hospital.
    Senator Roberts. So you are going to take a look at the 
readmission policy and look at the law of unintended 
consequences and what really happens out in a rural health care 
delivery system, and that that hospital administrator who tells 
me that, well, it says right here under subsection C, paragraph 
2, I am sorry, I cannot do this. Something is wrong here 
somewhere. There is a disconnect.
    Dr. Gilfillan. Senator, we would be happy to follow up on 
that directly.
    Senator Roberts. I do not mean to target anybody 
individually. The last thing they want is for me to call them 
and say, guess what, I am going to have CMS or you folks give 
them a call and figure out what is wrong. They do not want to 
do that. I mean, nobody wants to get into that kind of 
situation.
    To my distinguished ranking member and Senator Casey, I 
apologize for taking so much time, but these are concerns that 
are very real, and I appreciate the doctor answering to the 
best of his ability. Thank you, sir.
    Senator Hatch. Well, thank you, Senator.
    Senator Casey, I have not made my opening statement. I will 
make that and I will hold my questions, and then I will turn to 
you. Is that all right?
    Senator Casey. Yes.
    Senator Hatch. All right.

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

    Senator Hatch. I want to thank Senator Baucus for convening 
this timely and much-needed hearing this morning. It is no 
secret that for many reasons--and we want to welcome you, Dr. 
Gilfillan, and appreciate you being here--I did not support the 
President's health reform bill.
    Despite my long-term interest in reforming our Nation's 
health care delivery system to reduce costs and of course 
improve quality, I was concerned with the creation of a new 
bureaucracy known as the Center for Medicare and Medicaid 
Innovation, CMMI, and giving them $10 billion in taxpayer funds 
with no strings attached.
    We have now held two hearings in the committee where we 
have heard from the public and private sectors about 
interesting ways they are working to improve the delivery of 
care. I for one wholly support the private sector, working 
among payers, providers, and patients, to come up with 
solutions that best fit their communities in order to achieve 
more efficient and higher quality results.
    I have heard repeatedly from my Democratic colleagues that 
CMMI is tasked with letting ``a thousand flowers bloom.'' What 
I really wonder is if this is simply a euphemism for ``barely 
controlled chaos.'' Dr. Gilfillan, I do not envy you your job. 
The administration expects you and your staff to overhaul the 
way health care is delivered in this country and to do it 
quickly so that people begin to believe their claims that 
Obamacare will save money.
    I will make a prediction: come the first part of next year, 
this is going to be utter chaos, and people are going to 
realize what a tragic mess we are in because of Obamacare. 
However, despite the claims that Obamacare will save money, I 
am quite confident that Obamacare will only increase the costs 
of health care in this country.
    I believe the evidence overwhelmingly supports my position, 
and we will all find out at the beginning of next year when all 
of these things trigger, including 20,000 pages of regulations.
    With that said, I do think there is merit to trying to 
change the delivery of care and to focus on greater 
coordination of care, reducing hospital admissions, and 
providing better outcomes to patients. I am concerned, though, 
that there is confusion and a clear lack of focus at CMMI.
    The Government Accountability Office, GAO, reported in 
November of last year that, while you have taken steps to 
coordinate with other offices at CMS, more work needs to be 
done to make coordination more systemic. It seems to me that 
CMMI would function best if it would pick a few initiatives, 
such as Accountable Care Organizations or Bundled Payments and 
really devote the time to those initiatives to make sure they 
actually work and have the intended consequences of lowering 
costs and increasing quality and efficiency.
    Instead, I hate to say this, but I fear that you are trying 
to do too much at one time. Coordination among initiatives that 
have similar goals is something the GAO has highlighted as a 
concern. For example, the Innovation Center's Partnership for 
Patients model and CMS's Quality Improvement Program have a 
similar goal: to reduce the rate of preventable hospital-
acquired conditions and 30-day hospital readmissions. Both 
models contract with organizations to disseminate interventions 
to hospitals and perform virtually identical functions. That 
sounds like something that could be consolidated.
    I hope that CMMI takes the time to really study the impact 
of initiatives, both while they are going on and at the end of 
demonstrations, so we know if they work and how well they work 
before the initiatives are offered to more providers and 
patients.
    Since the GAO report indicated that, in most cases, it 
would be 3 to 5 years before CMMI and the taxpayers know if 
these initiatives achieved their anticipated savings, it is 
critical that they be reviewed to determine whether they meet 
their stated goals. As you know, in the past, the Congressional 
Budget Office has shown us that most demonstrations do not 
actually save the taxpayers any money.
    Finally, I wanted to raise concerns about the number of 
high-
salary staff who are employed by CMMI. In addition to spending 
billions on the CMMI projects, GAO noted that nearly half of 
the 184-plus members of the CMMI staff are paid at the highest 
levels of the Federal pay scale, which stands in stark contrast 
to other areas within CMS. I have also heard that CMMI staffers 
have state-of-the-art workspaces, including very expensive 
treadmill desks.
    In a post-sequester world where White House tours are being 
canceled and Easter egg hunts are being threatened, you can 
imagine why the American people would take a very cynical view 
about Federal employees being furnished with $1,000 treadmill 
desks.
    The Federal Government absolutely cannot afford to pour 
money into things that do not work. Our priority must be very 
clear. We need to make government as efficient as possible, and 
we do not need bloated bureaucracies, we do not need 
duplication of efforts, and we do not need an increased morass 
of regulations and platitudes.
    We do not need taxpayer dollars being spent so that staff 
can work at treadmill desks. What we do need is a clear 
strategic plan to improve quality and reduce costs. We need 
specific goals with specific direction to achieve those goals. 
We need the right people with expertise in these areas to 
develop targeted approaches that can be tried quickly, studied, 
and assessed for measures of success.
    Now, Dr. Gilfillan, you know that last year I sent you a 
letter asking for an accounting of what your office has been 
working on, how much money has been spent and, more 
importantly, how that money was spent. It took you more than 6 
months to reply to my request. Now, let me repeat that again: 6 
months. That is, to me, entirely unacceptable. I hope I will 
have your commitment today that that type of behavior will not 
be repeated, and all members of this committee will be given 
timely and complete responses. I would hope that you would do 
that. Can I get a commitment on that?
    Dr. Gilfillan. Senator, we deeply regret the length of time 
it took to respond to your letter. It was the first such letter 
we received. It took us time to develop what we felt was an 
adequately comprehensive report addressing your questions. It 
certainly is our intent to be much more----
    Senator Hatch. Then call me and say, ``Look, we need a 
little more time here; we will be happy to give you a step-by-
step approach in accordance with what we have worked on.'' But 
do not let us sit there for 6 months without having a response. 
We are getting too much of that in this administration, where 
they just ignore what people up here ask them to give. It is 
too pervasive in this administration, and we have to stop that 
or there is going to be just unholy war up here.
    Well, as you can see, I have a number of concerns that I do 
not have time enough to go into right now, but I do want to 
thank the chairman for convening this hearing.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    Senator Hatch. Let me turn to Senator Casey at this point.
    Senator Casey. I want to thank the ranking member. Doctor, 
I appreciate you being here, for your testimony and for your 
service. I know you have fond memories of Pennsylvania, and we 
appreciate your work that you did in our State.
    Doctor, I want to ask you one question that relates to the 
work that has been done to date--with regard to the work of the 
Innovation Center. I know a lot of the focus, attention, and 
work has been on payment or delivery system reforms as it 
relates to Medicare and Medicaid, and appropriately so. We need 
to find more and better ways to deliver good care, good quality 
care, and also save money.
    My concern, though, is, I am not sure we are doing enough 
in terms of using those same approaches or strategies as it 
relates to children. I guess the basic question I would have 
is, can we, or how can we, and how does CMMI plan to invest in 
strategies for children that we can prove over time will result 
in better outcomes, and especially with regard to children that 
have the kind of complex medical needs.
    You have heard the child advocates often say that, when it 
comes to children's health insurance--and you know this better 
than I do as a medical doctor and a practitioner--children are 
not small adults, and you cannot just impose health care 
strategies or approaches on them that you would on an adult. 
So, can you talk a little bit about that and whether or not 
there might be more opportunities to focus those same reforms 
on children?
    Dr. Gilfillan. Certainly, Senator. Thank you for that 
question. We are working closely with our colleagues at the 
Centers for Medicaid and CHIP Services on a variety of programs 
intended to improve care for all Medicaid and CHIP 
beneficiaries, and of course most particularly focusing on 
issues that affect children.
    One of those programs, of course, is the Strong Start 
initiative, where we are working hard with the private sector, 
the March of Dimes, the American Congress of Obstetricians and 
Gynecologists, to find new ways to deliver prenatal care to 
give kids the best start, to get them off on the right foot by 
decreasing the incidences of prematurity. So, from a program 
standpoint, that program is certainly well-focused on children 
at the very beginning.
    In our health care innovation awards, we have a number of 
projects focused directly on the needs of children, 
specifically the children with complex needs. We have, I 
believe, four different models actually looking at systems of 
care intended to address the needs of those patients. We have a 
program in Cleveland, a program in Akron, a program in Texas, 
and a program in North Carolina focused directly on that 
population and investigating new systems.
    Now, these are innovation awards, small programs. We are 
learning a lot. We have the option as we learn to expand them, 
make them broader model tests, and we have met with the 
stakeholders from the Pediatric Hospital Association several 
times to talk about that. We are also focused on what is 
probably the most significant health problem, chronic health 
problem, for children in the treatment of asthma.
    We have a number of initiatives that we are working on, 
again, in the health care innovation award space, to look at 
new ways of treating children with asthma to decrease 
exacerbations or complications and limit or decrease the 
frequency that they have to go to the emergency room.
    Then we are working with States through our State 
Innovation Model, where we are asking them to work with us, 
work with the Centers for Medicaid and CHIP Services, work with 
the Innovation Center, to design programs that will improve 
care for all of their populations, and these will include the 
pediatric populations as well.
    So it is an important area. We are committed to working 
through it, to learning from the initial models, and looking 
for broader opportunities, Senator, to test in a more broad-
based way new care systems for children across the country.
    Senator Casey. And I appreciate that. I am glad you 
mentioned Strong Start, because I was noting in your testimony 
at page 7 the description, and quoting the second sentence of 
that section in your testimony, ``The first is a public/private 
partnership, an awareness campaign to reduce the rate of early 
elective delivery prior to 39 weeks for all populations.'' You 
then go on and talk about, ``It is a persistent problem.'' You 
highlight the Strong Start awards, 27 of them most recently, 
and two of them, by the way, in Pennsylvania. We are happy 
whenever that occurs.
    But what are you seeing with regard to the larger challenge 
of making sure that we are learning through these programs to 
deliver care better? I know it is early, but have any 
conclusions as to that been yielded from Strong Start?
    Dr. Gilfillan. Well, yes, Senator. The Strong Start 
strategy is one we have been working on for almost a year now. 
This is an initiative to work across the delivery system with 
private sector colleagues, the March of Dimes, the American 
Congress of OB-GYNs, and other private sector interested 
parties, to help support the enactment of policies across 
hospitals that are consistent with what the American Congress 
of Obstetricians and Gynecologists has advocated for 20 years. 
That is, that there should not be elective deliveries performed 
prior to 39 weeks gestation.
    Now what that means, elective deliveries mean, is there is 
no medical reason for doing it, so it may be done for the 
convenience of the practice, the physician. At times people 
have said patients are interested, moms are interested in 
having early elective deliveries.
    What we have learned is that, while people think the baby 
may be at-term, the reality is there is a great deal of 
development that goes on between 37 and 39 weeks, so it is 
important. About 8 percent of the time, babies who are 
delivered at that time actually end up being admitted to the 
NICU, the Neonatal Intensive Care Unit, for complications.
    Senator Casey. Before 39 weeks?
    Dr. Gilfillan. Before 39 weeks, even though people think it 
is at-term. So the experts have long supported avoiding doing 
that and not delivering babies early like that. So, through the 
Partnership for Patients, we have engaged their hospital 
network to talk with hospitals about putting policies in place 
that prevent that from happening, and we have seen remarkable 
improvement in the hospitals that are doing that.
    Some hospitals had already started doing that themselves, 
but many--the vast majority of hospitals around the country--
had not put a policy like that in place. Through our private/
public partnership with the March of Dimes, the American 
Congress of Obstetricians and Gynecologists, hospital 
associations, and through the relationships we have in our 
Partnership for Patients, we have been really, I think, able to 
raise the consciousness, the awareness of this problem 
nationally, and we are seeing major changes across health 
systems, across State hospital associations, in hospitals 
putting that in place.
    What happens very dramatically is, we see early elective 
deliveries going from a rate that could be as high as 15, and 
in some cases over 20 percent, going down to 2, 3, or 4 percent 
with better outcomes, because babies are not being admitted to 
the Neonatal Intensive Care Unit. We think, but we do not have 
definite evidence of this, we are beginning to see a decreased 
frequency in use of Neonatal Intensive Care Units as a result 
of this. More to come on that as that information and data 
become more complete and mature.
    Senator Casey. Thanks very much. I now owe the ranking 
member 3 minutes and 47 seconds.
    Senator Hatch. Well, I was happy to give that to you, 
especially after giving the distinguished Senator from Kansas 
10 minutes. And, we were interested in your questions besides.
    Senator Thune, you will be our last questioner.
    Senator Thune. Thank you, Mr. Chairman.
    Dr. Gilfillan, thank you for being here today. On page 31 
of the November 2012 GAO report on the early implementation 
efforts of the CMS Center for Innovation, GAO talked about how 
a centralization database would hep the Innovation Center make 
coordination of the new models more systematic.
    One of the biggest goals of such a database would be to 
prevent duplicative payments to providers that participate in 
CMS efforts involving incentive payments for meeting quality 
and cost measures. At the time, CMS officials said that such a 
database would ensure that beneficiaries are not counted twice 
for the purposes of calculating incentive payments and that the 
database would be fully functional in September of 2012. Is 
that database operational?
    Dr. Gilfillan. Yes, Senator, it is operational.
    Senator Thune. And can you explain what happens when the 
database discovers a beneficiary is being counted twice?
    Dr. Gilfillan. Certainly, Senator. That is a great 
question. It goes to how we have had to build new operating 
capabilities within CMS to track patients in the different 
initiatives that we have, not just within the Innovation 
Center, but across CMS and the Shared Savings Program as well.
    So we had to build the capability for our information 
systems to only align a patient once with any of these 
programs, and that is exactly what the system does. We have a 
series of dates where different programs present their 
physicians to the IS folks. They run the data through this 
database.
    They look at all the visits a patient has had to a 
particular provider, and, as a result of that, they align a 
patient with only one set of providers so that we do not have 
any duplication. So that system has been operating now since 
last year. It is refined and continually upgraded, and it 
becomes faster to operate, frankly, as they refine it. But it 
is operating and producing the result that we were after: 
namely, avoiding duplicated payments for patients.
    Senator Thune. Thank you.
    My understanding is that, in mid-2012, CMMI had started to 
work on 17 new models designed to test different approaches to 
health care delivery and payment in Medicare and Medicaid, and 
it has assumed responsibility for another 20 demonstration 
programs that were already in progress when the Center was 
created. GAO's report, again, from November of 2012, provided 
some valuable insight into how those 17 new models were 
functioning. Since the GAO report, has CMMI initiated any new 
models?
    Dr. Gilfillan. Since the final report, we have announced 
awardees for our Strong Start program, and we have announced 
our upcoming comprehensive End-Stage Renal Disease program that 
we are just in the solicitation phase for right now.
    We also have announced awardees for our State Innovation 
Model program and have identified six States that are testing 
their innovation plan, and another 19 States that are testing 
or have received grants, awards, to do design work. I think 
those are the major additions we have had since then.
    Senator Thune. What was the review process for those 
models?
    Dr. Gilfillan. Sure. Well, we follow the standard CMS 
review processes for consideration of applications, and we 
convene typically panels of reviewers to look at applications 
to rate them according to the criteria that we have. Then we go 
through a standard review and approval process that is 
consistent with the overall grant and corporate agreement-
making policy of CMS.
    Senator Thune. And is that process that you just described 
any different from the process that was noted in the GAO 
report?
    Dr. Gilfillan. No, I do not believe it is, Senator. We 
followed the standard grant-making and corporate agreement-
making processes that other Federal agencies follow. So I would 
have to go back and look at the exact language, but I do not 
think it is different.
    Senator Thune. If it is not, if the review process has not 
changed from what was noted in their report, how then can you 
be sure that you do not end up repeating the same mistakes that 
were noted in their report, in the GAO report?
    Dr. Gilfillan. Well, Senator, we have continually improved 
our approach. We are exquisitely conscious of potential 
duplication in all of our models. We are working carefully to 
coordinate across CMS and across the Innovation Center with 
different models. I think we have been very conscious of the 
importance of avoiding overlap where there is no added 
advantage to starting another program.
    Senator Thune. All right. My time is up, Mr. Chairman. 
Thank you.
    Senator Hatch. Well, thank you.
    Dr. Gilfillan. Thank you, sir.
    Senator Hatch. Dr. Gilfillan, we appreciate you taking the 
time to be with us, and we look forward to working with you in 
the future. Hopefully, we can get some of these conflicts 
resolved. But thank you for being here.
    With that, we will recess until further notice.
    Dr. Gilfillan. Thank you very much, Senator Hatch.
    [Whereupon, at 10:49 a.m., the hearing was concluded.]



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