[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






                        THE EVOLUTION OF QUALITY
                           IN MEDICARE PART A

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 7, 2016

                               __________

                          Serial No. 114-HL10

                               __________

         Printed for the use of the Committee on Ways and Means



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]








                                 

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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                     David Stewart, Staff Director

                   Nick Gwyn, Minority Chief of Staff

                                 ______

                         SUBCOMMITTEE ON HEALTH

                   PATRICK J. TIBERI, Ohio, Chairman

SAM JOHNSON, Texas                   JIM MCDERMOTT, Washington
DEVIN NUNES, California              MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            RON KIND, Wisconsin
TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida               BILL PASCRELL, JR., New Jersey
ADRIAN SMITH, Nebraska               DANNY DAVIS, Illinois
LYNN JENKINS, Kansas                 JOHN LEWIS, Georgia
KENNY MARCHANT, Texas
DIANE BLACK, Tennessee
ERIK PAULSEN, Minnesota

























                            C O N T E N T S

                               __________

                                                                   Page

Advisory of September 7, 2016 announcing the hearing.............     2

                               WITNESSES

Barbara Gage, Ph.D., MPA, Associate Research Professor, George 
  Washington University, Center for Healthcare Innovation and 
  Policy Research, School of Medicine and Health Sciences, 
  Washington, D.C................................................     7
C. Steven Guenthner, President, Almost Family, Louisville, 
  Kentucky.......................................................    30
Gregory M. Worsowicz, M.D., M.B.A., President, American Academy 
  of Physical Medicine and Rehabilitation, Rosemont, Illinois....    41
Elisabeth Wynn, Senior Vice President, Health Economics and 
  Finance, Greater New York Hospital Association, New York, New 
  York...........................................................    19

                       SUBMISSIONS FOR THE RECORD

Almost Family....................................................    74
American Association of Orthopaedic Surgeons (AAOS)..............    77
American Health Care Association (AHCA)..........................    79
American Hospital Association (AHA)..............................    85
American Joint Replacement Registry (AJRR).......................    92
American Medical Rehabilitation Providers Association (AMRPA)....    94
American Occupational Therapy Association (AOTA).................   101
American Therapeutic Recreation Association (ATRA)...............   104
Brain Injury Association of America (BIAA).......................   106
Coalition to Preserve Rehabilitation (CPR).......................   108
Gundersen Health System..........................................   112
Healthcare Quality Coalition (HQC)...............................   117
LeadingAge.......................................................   122
Partnership for Quality Home Healthcare..........................   125
Physician Hospitals of America...................................   130
Texas Association for Home Care & Hospice (TAHC&H)...............   134

 
                        THE EVOLUTION OF QUALITY
                           IN MEDICARE PART A

                              ----------                              


                      WEDNESDAY, SEPTEMBER 7, 2016

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:04 p.m., in 
Room 1100, Longworth House Office Building, Hon. Pat Tiberi 
[Chairman of the Subcommittee] presiding.

    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
Wednesday, August 31, 2016
No. HL-10

                  Chairman Tiberi Announces Hearing on

                     Incentivizing Quality Outcomes

                           in Medicare Part A

    House Ways and Means Health Subcommittee Chairman Pat Tiberi (R-OH) 
announced today that the Subcommittee will hold a hearing entitled 
``The Evolution of Quality in Medicare Part A.'' The hearing will take 
place on Wednesday, September 7, 2016, in Room 1100 of the Longworth 
House Office Building, beginning at 2:00 p.m.

      
    In view of the limited time to hear witnesses, oral testimony at 
this hearing will be from invited witnesses only. However, any 
individual or organization may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.

      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
written comments for the hearing record must follow the appropriate 
link on the hearing page of the Committee website and complete the 
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waysandmeans.house.gov, select ``Hearings.'' Select the hearing for 
which you would like to make a submission, and click on the link 
entitled, ``Click here to provide a submission for the record.'' Once 
you have followed the online instructions, submit all requested 
information. ATTACH your submission as a Word document, in compliance 
with the formatting requirements listed below, by the close of business 
on Wednesday, September 21, 2016. For questions, or if you encounter 
technical problems, please call (202) 225-3943.

      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
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not alter the content of your submission, but we reserve the right to 
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    1. All submissions and supplementary materials must be submitted in 
a single document via email, provided in Word format and must not 
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the Committee relies on electronic submissions for printing the 
official hearing record.

      
    2. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. The name, 
company, address, telephone, and fax numbers of each witness must be 
included in the body of the email. Please exclude any personal 
identifiable information in the attached submission.

    3. Failure to follow the formatting requirements may result in the 
exclusion of a submission. All submissions for the record are final.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
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materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available 
online at: 
http://www.waysandmeans.house.gov/.

                                 

    Chairman TIBERI. The Subcommittee will come to order.
    Welcome to the Ways and Means Subcommittee on Health 
hearing on the evolution of quality in Medicare Part A.
    In mid-May, you may remember our Health Subcommittee held a 
hearing on the implementation of the Medicare and CHIP 
Reauthorization Act, or MACRA, of 2015. Today's hearing follows 
along the same theme used in that hearing.
    Once a major quality program has been operating for a few 
years in Medicare, we review the implementation and discuss 
lessons learned. During today's hearing, we will review the 
status of quality programs in place for Medicare Part A.
    The first item on our agenda is to review the many quality 
and pay-for-performance programs that are in place for 
hospitals. In addition to reporting quality measures, hospitals 
are also on the hook for readmission and hospital-acquired-
condition penalties as well as value-based purchasing programs. 
As you will hear from our witnesses today, a total of 8 percent 
is at risk for quality performance for hospitals.
    As we apply the lessons learned from hospital quality 
programs, we will explore how we should legislate within the 
post-acute care space. As we will hear from the witnesses 
today, post-acute care is lagging a bit behind where hospitals 
currently are. We will hear about the important changes that 
were made in the bipartisan, bicameral IMPACT Act of 2014, and 
we will hear directly from stakeholders on IMPACT's 
implementation.
    Part of IMPACT's story has already been told, as three of 
seven quality measures for IMPACT have already been 
implemented. Some of the IMPACT stories will be told over the 
next 2 years as CMS continues to implement the four remaining 
measures.
    But just because the IMPACT story is ongoing does not mean 
Congress should idly sit by and wait. Over the next few weeks, 
the Committee will debate and deliberate over the most 
effective ways to incentivize high-quality, low-cost care. 
Whether it is H.R. 3298, the PAC VBP bill introduced by 
Chairman Brady and Mr. Kind, or other ideas our Members have to 
offer, this Committee will explore these ideas further.
    The last thing we will address in today's hearing is how we 
can look to reduce the regulatory burden for hospital and PAC 
providers. Our witnesses will highlight the many regulatory 
challenges that providers face in the Medicare program. These 
regulatory challenges are real, and they distract from ultimate 
patient care. Therefore, we need to have a serious discussion 
about these challenges. Such discussions will likely result in 
real costs to the Medicare program, but it is our goal to 
provide relief and pay for that relief through consensus-based 
quality payment reforms.
    Again, we are all here for the same reasons today, as I 
have stated in the past: To explore ways to better improve the 
quality of care for our Medicare patients.
    I now would like to yield to our distinguished and retiring 
Ranking Member, Mr. McDermott, for an opening statement.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    I notice you mentioned my retirement. That means you are 
going to get rid of me, right? I am sure that isn't what you 
meant.
    This is the kind of hearing where there isn't much 
disagreement about the fact that we want to have quality. I 
mean, we are all here for that. And promoting quality is 
critical to the millions of beneficiaries that receive care in 
hospitals and nursing homes and hospices and other settings 
covered under Part A. And I am hopeful we can have a 
constructive discussion about this.
    We have made some substantive bipartisan progress recently. 
We need to build on our success. Last year, we came together 
with MACRA. That landmark reform repealed the SGR and already 
started the process of transforming how we try to pay 
physicians under Medicare.
    And in the Part A space, we have begun to lay the 
groundwork for payment reform by passing the IMPACT Act, which 
will give us the data we need to improve quality in post-acute 
care settings. 
These are significant bipartisan achievements that 
will help us con- tinue to move forward toward a value-based 
system that rewards efficient and high-quality care. It will 
make Medicare stronger and save billions of dollars, but 
improving quality is not just about reducing costs. It is also 
about improving outcomes in ways that have real consequences 
for patients.
    We face a crisis that this Committee rarely discusses. 
Every year, between 210,000 and 440,000 Americans die in the 
hospital setting due to preventable medical error, including 
180,000 Medicare beneficiaries in 2010 alone. If that was 
happening in the airline industry, we would have an uproar in 
this Congress, but in this setting somehow it doesn't get 
discussed. Preventable medical errors are now the third-leading 
cause of death in this country.
    Now, we must recognize that achieving value isn't all about 
cutting costs; it is also about helping patients and saving 
lives. Payment reforms that put patients first and incorporate 
sound quality improvement measures are an important part of how 
we can address this problem.
    Unfortunately, my colleagues are not always in agreement 
with us on this issue. The Hospital Readmissions Reduction 
Program, for example, cut the number of hospital readmissions 
by 565,000 between 2010 and 2015. Likewise, the Hospital-
Acquired Condition Reduction Program has saved Medicare $19.8 
billion and, more importantly, prevented the death of some 
87,000 people. Yet every Republican here today has called for 
the repeal of the Affordable Care Act, including these 
lifesaving initiatives that are already improving the quality 
of health care provided by the hospitals.
    Now, I take the Chairman's call here today as an 
acknowledgement that we are going to stop trying to repeal it 
and try to make it better. That is really what we all want to 
do.
    Similarly, the Center for Medicare and Medicaid Innovation 
is testing exciting new payment models that will provide us a 
path to move forward in the healthcare system. The data and 
evidence that the Innovation Center is gathering will be 
critical to informing our conversation about delivery system 
reform. Yet the Speaker, the former Chairman of the Ways and 
Means Committee, has proposed a Republican agenda that singles 
out this program for elimination. Why would you single out a 
program of innovation as a way forward in health care?
    If we are having a serious conversation about the evolution 
of quality in Medicare Part A and if we are serious about 
addressing these issues in a bipartisan way, my colleagues on 
the other side need to recognize what is happening right before 
their eyes. We have programs that are there because of the ACA 
that are, in fact, doing what we want: Providing better care.
    Quality in Part A is already evolving, and it is thanks to 
the Affordable Care Act. No one can put a social insurance 
program together and anticipate all of what is going to happen. 
None of us on our side who were involved in drawing it up 
thought for one minute that we had created the Ten Commandments 
off the mountain, which haven't been changed since Moses 
brought them down off the mountain. The Affordable Care Act 
needs some changes, needs some things added to it, and I think 
that is what this hearing really should be about.
    And I am glad you are having this hearing, Mr. Chairman.
    Chairman TIBERI. Thank you, Mr. McDermott.
    Mr. MCDERMOTT. I yield the rest of my time.
    Chairman TIBERI. Thank you. I think I will just say thank 
you. You almost got me to engage with you, but I think I will 
just refer now to our Chairman, the distinguished gentleman 
from Texas.
    Thank you for being here, sir.
    Chairman BRADY. Well, thank you, Chairman Tiberi, for your 
patience and for holding this important hearing.
    Thanks to all our witnesses for being here.
    I am really here to underscore the importance of Chairman 
Tiberi's bipartisan drive toward quality in Medicare. This 
hearing is a remarkable opportunity to examine how existing 
Medicare policies are incentivizing hospitals and post-hospital 
providers to deliver high-quality, cost-efficient care.
    This is a critically important issue for several reasons. 
First, it is key to our efforts to preserve Medicare for the 
long term. By incentivizing quality over quantity, we can 
improve care. We can reduce duplication and waste and bring 
down the costs to the program, which makes it solvent for the 
longer term.
    Second, perhaps more importantly, Medicare payment policy 
can significantly impact the ability of seniors and others in 
Medicare to access the high-quality care they need and they 
deserve.
    Last year, Congress passed landmark legislation, which has 
now become law, to reform and modernize the way Medicare pays 
physicians. The bill puts emphasis on quality rather than 
quantity, a policy shift that will make a real difference in 
the lives of Medicare beneficiaries.
    But physician payment policies are just one piece of the 
puzzle. To ensure the Medicare program is 
truly delivering the high-quality care seniors deserve, we also 
need to improve the way it pays post-acute or after-
hospitalization providers. And we need to take the same value-
based approach, rewarding providers for how well they serve 
Medicare patients, not how often they serve Medicare patients.
    Last July, I introduced bipartisan legislation with 
Congressman Kind on this Committee to help accomplish this 
important goal. Our bill, the Medicare Post-Acute Care Value-
Based Purchasing Act, takes meaningful steps to strengthen 
Medicare for the long term and improve access to high-quality 
care for current and future Medicare beneficiaries.
    By providing the right incentives, this legislation will 
bring increased competition and innovation to Medicare while 
lowering costs to the program. At the same time, the bill will 
raise the bar for patient care nationwide. It rewards providers 
who set themselves apart in delivering excellent care to 
Medicare patients.
    Today's hearing is a critical first step in advancing 
patient-focused solutions like this one, solutions that build 
on our past successes in payment reform to improve Medicare for 
all Medicare patients.
    Again, thank you to Chairman Tiberi for his leadership in 
this effort. Thank you to the Committee Members, who take 
progress and quality and innovation in Medicare seriously, 
diving into these issues and looking for bipartisan solutions 
to move forward.
    So, with that, I yield back to Chairman Tiberi and thank 
you again for your leadership.
    Chairman TIBERI. Thank you, Chairman Brady.
    Without objection, other Members' opening statements will 
be made part of the record.
    We are joined by four individuals today.
    First, we will hear from Barbara Gage, an Associate 
Research Professor from George Washington University.
    Next, Elisabeth Wynn, the Senior Vice President of Health 
Economics and Finance at the Greater New York Hospital 
Association. Thanks for being here.
    After Elisabeth, we will hear from Steven Guenthner, the 
President of Almost Family.
    And, finally, we will hear from Gregory Worsowicz, the 
President of the American Academy of Physical Medicine and 
Rehabilitation.
    Each of you will be recognized for 5 minutes. Your full 
testimony will be made part of the record.
    With that, Ms. Gage, you are recognized for 5 minutes. 
Thank you.

   STATEMENT OF BARBARA GAGE, PH.D., MPA, ASSOCIATE RESEARCH 
PROFESSOR, GEORGE WASHINGTON UNIVERSITY, CENTER FOR HEALTHCARE 
 INNOVATION AND POLICY RESEARCH, SCHOOL OF MEDICINE AND HEALTH 
                   SCIENCES, WASHINGTON, D.C.

    Ms. GAGE. Thank you very much for the invitation to speak 
today and good afternoon, Chairman Tiberi and Ranking Member 
McDermott and the other esteemed Members of the Subcommittee. 
Thank you for the opportunity to testify on incentivizing 
quality outcomes in Medicare Part A.
    As mentioned, I am a health services researcher, and I have 
been working in these areas for many years. I have led a lot of 
the Federal national studies for the Centers for Medicare and 
Medicaid Services, looking at post-acute care payments and 
quality reform over the last 20 years, and I would like to 
leave you with four important points today.
    One is that one in five beneficiaries are hospitalized each 
year, and, out of them, about 40 percent go on to use post-
acute care. So when somebody is hospitalized in the Medicare 
program, they are using a lot of services. And there is 
actually an exhibit at the back of your testimony that shows 
some of the ping-ponging patterns that go on.
    Two, passage of the IMPACT Act a couple years ago was one 
of the most important pieces of legislation. As patients go in 
and out of these skilled nursing facilities, rehab hospitals, 
long-term care hospitals, and home health agencies, they are 
each getting medical services and rehab services to some lesser 
or greater degree, but we didn't have a consistent way to 
measure how complex they were, and the IMPACT Act has given us 
the tools to do that.
    Although, one group that was omitted when we think about 
beneficiary episodes of care were the hospitals, which is where 
the episode of care begins and where the communication about 
that patient's trajectory really ought to begin.
    The third key point that I would make is that in the 
subsequent legislation that has tied quality to payment you 
have really seen some changes occurring.
    So, with that said, I am going to turn to my written 
testimony. The first part I will skip over, just to make the 
point that 40 percent of those people who are hospitalized were 
discharged to one of several additional providers for 
continuing medical or physical rehabilitation treatments during 
their episode of care. That was in 2008. More recent numbers by 
MedPAC have it at 45 percent. So, as our population ages, they 
are getting more complex. And it underscores the importance of 
the episode of care and not the silo of care in which they are 
treated.
    One of the most important directives that started a lot of 
this was the DRA of 2005. The Deficit Reduction Act called for 
standardized assessment so we could really see to what extent 
that stroke patient was being discharged from the hospital to a 
skilled nursing facility versus the hospital to the rehab 
hospital. If the patients were very different, then that called 
for different resources, and we might expect different 
outcomes, but we didn't know that without having standard ways 
of measuring them. So the DRA led the science to develop those 
elements based on the consensus and the input of the various 
clinical communities, the real experts in treating patients.
    In 2014, when you passed the IMPACT Act, it gave CMS the 
impetus to move the standardized elements into the existing 
assessment tools that are used in each of the four settings and 
laid the foundation for the quality reporting programs to be 
more comparable. But we still have four quality reporting 
programs, and we don't know how complex the patient was at 
discharge.
    Just for a little background about these post-acute care 
providers: Long-term care hospitals, while they are admitting 2 
percent of those post-acute users, most patients have been in 
an ICU at least 3 days prior to the admission. The rehab 
hospital, they are cases that have high needs for physical 
medicine and rehab, and I think Dr. Worsowicz will speak to 
that. SNFs are important for that medical care but not that 
high-level acute care. And home health is one of the backbones 
of our delivery system.
    So I am currently co-directing a contract with the RAND 
Corporation to implement the rest of the IMPACT Act, and this 
work is very important. It is one of multiple contracts that 
CMS has underway to be measuring, to be designing consistent 
quality metrics. Those metrics are key to setting up value-
based purchasing programs or accountable care organizations. 
Whatever framework you want to put that value into the payment 
system, you need to understand the impact on the outcome, and 
the IMPACT Act gave us the foundation to allow that to occur.
    So I guess my big take-home point is that tying payments to 
minimum quality thresholds to ensure that services are 
appropriate and cost-effective is key to effectively 
redesigning the Medicare program in a way that ensures 
beneficiaries have access to the appropriate services they 
need.
    The various quality reporting programs and value-based 
purchasing programs have moved the dial forward, but you are 
still operating in silos. And moving forward so that you are 
looking at a patient's episode of care and not the setting to 
which they admitted will be even more impactful when tying 
outcomes to patients.
    These are complex issues, and I am happy to take any 
questions that you may have.
    [The prepared statement of Ms. Gage follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 

    Chairman TIBERI. Thank you.
    Ms. Wynn, you are recognized for 5 minutes.

  STATEMENT OF ELISABETH WYNN, SENIOR VICE PRESIDENT, HEALTH 
 ECONOMICS AND FINANCE, GREATER NEW YORK HOSPITAL ASSOCIATION, 
                       NEW YORK, NEW YORK

    Ms. WYNN. Great. Thank you.
    Good afternoon, Subcommittee Chairman Tiberi, Ranking 
Member McDermott, and other distinguished Members of the 
Committee. I am Elisabeth Wynn with the Greater New York 
Hospital Association. We represent about 150 hospitals across 
New York, New Jersey, Connecticut, and Rhode Island. Most are 
teaching and/or safety net hospitals, meaning that they serve a 
high proportion of low-income patients.
    Greater New York greatly appreciates the opportunity to 
testify regarding Medicare's pay-for-performance programs, 
colloquially known as P4P. As providers work collaboratively to 
implement alternative payment models, such as bundled payments, 
it is imperative that the financial incentives to improve 
quality and efficiency are aligned across the provider sectors.
    Successful adoption of these alternative pay models may be 
the only viable option for hospitals with a high Medicare and 
Medicaid patient population to keep their doors open, because 
of the underpayments from these programs. Therefore, we applaud 
the Committee for taking up these very important topics.
    The Medicare P4P programs have appreciably advanced 
hospitals' focus on patient safety initiatives and outcomes. 
Every hospital now has a dedicated effort to prevent 
infections, reduce readmissions, and improve patient 
satisfaction scores. Greater New York supports these efforts 
through our innovative quality collaboratives, such as reducing 
readmissions between member hospitals and local nursing homes. 
We are very proud of the quality improvements that our members 
have made through these efforts, although we all recognize that 
there is still a lot of work to be done.
    This afternoon, I want to touch on the financial impact of 
the P4P programs on our hospitals, our concerns with some of 
the technical aspects of the programs, and opportunities for 
Congress to improve upon the current framework.
    Hospitals are currently evaluated in five different P4P 
programs, which evaluate hospitals on quality reporting and 
performance on measures such as 30-day mortality rates for 
heart failure, 30-day readmissions for knee replacements, or 
complication rates from infections such as sepsis or pressure 
ulcers.
    Combined, these programs result in an aggregate savings to 
the Medicare program of nearly $1 billion or 1.1 percent of 
hospital payments. Nearly 60 percent of these savings, or over 
$500 million, is generated from the readmissions program, and 
40 percent, or nearly $400 million, is generated from the 
complications program, known as HAC. Value-based purchasing, or 
VBP, is budget-neutral to the Medicare program, although it is 
redistributive among hospitals.
    At the hospital level, the penalties top out at roughly 6 
percent of payments, but the impact varies by type of hospital. 
For example, major teaching hospitals incur the largest 
penalties, at about 1.7 percent of their Medicare payments, 
followed by high safety net hospitals treating low-income 
populations, at about 1.2 percent. The higher impact for these 
groups is due to the disproportionate losses that they suffer 
from the readmissions and HAC programs.
    The key finding from our analytical work on these issues is 
that some of the P4P programs unfairly penalize hospitals for 
factors beyond their control.
    First, as recognized by this Committee in the Helping 
Hospitals Improve Patient Care Act, the readmissions rates are 
not risk-adjusted for patients' socioeconomic status or patient 
risk factors that are beyond the control of the hospital. We 
applaud the Committee for this work on this issue and call on 
the Senate to adopt similar legislation.
    Also, the readmission program penalizes hospitals for their 
30-day readmission rates, a timeframe that really is more a 
reflection of what occurs in the community post-discharge as 
opposed to the care that is occurring within the hospital.
    In the VBP program, 25 percent of the hospital's 
performance score is based on their patient satisfaction score. 
Hospitals treating higher percentages of low-income patients 
are more likely to perform poorly on these measures because 
they don't have the financial resources to invest in building 
amenities, like single-patient rooms or modifications to reduce 
noise.
    Another key design problem is that the readmission and HAC 
programs fail to recognize hospital improvements, so hospitals 
can continue to incur significant financial penalties even as 
the rates of these events decline. A full 25 percent of 
hospitals are always penalized by the HAC program.
    Having five different P4P programs also provides an 
unnecessary level of complexity that is difficult for the 
average hospital to understand. We strongly encourage you to 
adopt reforms that consolidate the hospital P4P programs, 
similar to the approach adopted for physicians, to streamline 
the programs, balance the incentives, and improve the fairness.
    Thank you for the opportunity to testify, and I look 
forward to your questions.
    [The prepared statement of Ms. Wynn follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
 

                                 
 
 Chairman TIBERI. Thank you.
    Mr. Guenthner, you are recognized for 5 minutes.

               STATEMENT OF C. STEVEN GUENTHNER, 
         PRESIDENT, ALMOST FAMILY, LOUISVILLE, KENTUCKY

    Mr. GUENTHNER. Thank you, and good afternoon, Chairman 
Tiberi, Ranking Member McDermott and Members of the Committee. 
On behalf of Almost Family, I am absolutely thrilled to be here 
today as a participant in the evolution of quality in Medicare.
    Almost Family's experiences navigating changes in Medicare 
span four decades. I have been a member of its executive team 
for 25 years and its President since 2012. Our cornerstone 
belief is that the needs of patients must always come first. It 
is how we operate our business at Almost Family, and it is how 
we approach the evolution of quality in Medicare.
    Value-based purchasing is the natural next step in the 
evolution of patient-centric Medicare policy, especially when 
it rewards providers for patient-focused outcomes balanced 
against the cost incurred to achieve those outcomes. The ideal 
VBP would redistribute payments to providers not only within a 
payment silo but also across payment silos, with the goal of 
getting patients to the best-value care setting for their 
needs. We need to change the policy question from how should we 
pay providers to how we should care for patients. This is 
especially important in the context of quality discussions.
    VBP must address first the measures to be used and, second, 
how much financial risk providers should bear. In a post-acute 
VBP, the following simple measures are best: One, 
hospitalization; two, emergent care without hospitalization; 
three, restoring the patient's previous level of 
functionality--now, this is the measure that is the most 
important to patients; and, four, the cost incurred to achieve 
those outcomes.
    On financial risk, too little could be ignored by 
providers, and too much could drive unanticipated outcomes. We 
believe the sweet spot to balance these concerns is somewhere 
in the 2 to 5 percent range of provider payments. We would not 
support more than 5 percent at risk.
    Now, I know I am here as a representative of post-acute 
providers, but I have to object to the unnatural grouping of 
dissimilar providers currently included in most post-acute 
discussions. This group runs the gamut from LTACs, which are 
actually hospitals, all the way to home health care. Home 
health could be considered the ultimate post-acute care, 
getting patients back home, but home health also plays a vital 
role in avoiding acute care, especially for the chronically ill 
patients.
    Some thoughts on chronic care: As your own Committee 
pointed out in your 2015 stakeholder request, chronic illnesses 
such as heart disease, diabetes, and cancer now account for 
over 90 percent of spending. We simply cannot solve the 
Nation's post-acute care 
delivery and spending problems unless we address chronic illness
es.
    We have proposed a number of reforms designed to help keep 
chronically ill out of institutions and in their own homes, 
managing their conditions under the supervision of their 
primary care physicians. To address chronic care needs, we 
propose closing the biggest single gap in Medicare today, and 
that is the absence of effective care management and care 
coordination processes.
    Managing chronically ill patients at home helps avoid both 
acute and post-acute care costs. We think one of the best ways 
to do that is to bifurcate or split the home care benefit into 
two pieces, one post-acute and one chronic care, to separately 
address the needs of those patients at their different stages 
in their healthcare journeys.
    A note on regulatory relief: Sometimes well-intended 
policies can go awry and require regulatory relief, such as the 
requirement for a physician face-to-face encounter with a 
patient in certifying the need for home health services. The 
statute was fine; unfortunately, it was not well-implemented in 
regulation.
    CMS has fixed some of the problems, but we are left with an 
over-reported error rate in home health payments. This now has 
CMS implementing a pre-claim review process that we expect 
to add significant burden and create unanticipated 
consequences, 
not to actually reduce improper payments or improve quality 
but, rather, to fix documentation issues that were brought 
about by subjective regulations. CMS expects to spend about 
$300 million to address this.
    We ask you, please consider legislative fixes to the home 
health face-to-face and pre-claim review process, and also 
please address the appeal backlog that--in a similar fashion, 
this was done with the hospital appeal backlog some years ago.
    I have one final topic, which is on payment safeguards. 
Since 2011, Almost Family has proposed to drive cost savings 
through a home health payment safeguard patterned after the 
proven outlier limit, which has saved the Medicare program $1 
billion a year. We estimate this equally practical safeguard 
will save another $600 million a year. And, sadly, while we 
have been advocating this, $5 billion has gone out of the 
Federal Treasury, in our view, unnecessarily. We ask, please do 
not miss this opportunity to capture these savings in your 
legislation.
    Thank you so much for letting me be here today and allowing 
Almost Family to be a part of this process, and we look forward 
to your questions.
    [The prepared statement of Mr. Guenthner follows:]
    
    
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   Chairman TIBERI. Thank you.
    Dr. Worsowicz.

  STATEMENT OF GREGORY M. WORSOWICZ, M.D., M.B.A., PRESIDENT, 
   AMERICAN ACADEMY OF PHYSICAL MEDICINE AND REHABILITATION, 
                       ROSEMONT, ILLINOIS

    Dr. WORSOWICZ. Thank you, Subcommittee Chair Tiberi and 
Ranking Member McDermott and Members of the Subcommittee.
    While I thank you for this opportunity, I hope we are on 
what I hope will be a continuous evolution of quality 
improvement under Part A Medicare. We need to treat the best 
way we can the patients you serve and that I serve together.
    I will focus my remarks on improving quality and value-
based purchasing in post-acute.
    For background, currently I am a physiatrist, which is a 
physician that works in physical medicine and rehab. I am 
currently the President of the American Academy of Physical 
Medicine and Rehabilitation, which is a group of 9,000 
physicians trained in my specialty working with people with 
impairments to be at their most independent and fulfilling 
function with the right medical and functional rehabilitative 
components.
    Like many physiatrists, I work in many, many settings. 
Currently, I am the Chair of the Physical Medicine and 
Rehabilitation Department at the University of Missouri. I am 
also Medical Director of Rusk Rehabilitation Center, which is a 
joint venture between our university and HealthSouth, and 
Medical Director of our post-acute care initiative at the 
university.
    Physiatrists are well-suited to help direct patients to the 
right level of care. I have worked in all four settings: In-
patient rehabilitation, skilled nursing facilities, acute care 
hospitals, and long-term acute care centers. I have also served 
on the board of a home health organization.
    If you are depending on the patient, you have to understand 
these patients are fluid that we serve. Take a patient with a 
stroke. We have evidence-based guidelines that stroke care 
needs to be coordinated, needs to be comprehensive, and needs 
to involve the family and other team members. I can take the 
same stroke patient and, based on their evaluation, the in-
patient rehab facility is the best. Another patient with other 
factors, including their medical, functional, social--I 
appreciate the socioeconomic factor--the geographic area where 
they live and the patient choice, and treat them in a skilled 
nursing facility. Other patients might be treated directly at 
home with home health. I encourage you to take these factors 
into consideration as we move forward with legislation.
    In fact, I appreciate what Ms. Gage said. Post-acute care 
starts in the acute care hospital. If we don't place the 
patient and make that evaluation in the acute hospital, our 
post-acute programs are bound to fail.
    While I appreciate that our academy does strongly support 
value-based purchasing, I can always say quality had been a 
focus, but not until there was a financial incentive have I 
seen that laser-beam focus on readmissions, on hiring people to 
focus on these issues. So I applaud you on that. I think that 
is a critical component, and I can attest to that personally.
    I will ask, though, that, as we build this focus, realize 
we have a lot of different programs. I am just a mere clinician 
out in the field treating patients. I have MACRA, I have MIPS, 
I have alternative payment models, all these things, and, 
believe it or not, I actually have to keep up on medicine to 
care for patients. I would ask you, whatever programs we put in 
place, we coordinate them; we don't sub-optimize what we are 
doing and restrict, as with so many regulatory issues I am 
hamstrung on what I can do or I am chasing incentives that may 
not align with others.
    Withholds I appreciate. Coming from a small, rural area, I 
will ask, carefully consider what are the withholds and how you 
put them into play. I would be concerned that if our small-
margin centers, if they take too much of a withhold initially, 
is that an access issue if they go out of business? I am for 
quality, but I am also for having the access for my patients 
and giving time to make adjustments.
    When dealing with Medicare spending per beneficiary--once 
again, I can go back to the cost and quality. We have already 
seen what it has done. I am in favor of this as one metric but 
not as a standalone metric. I think we do need to have risk-
adjusted metrics, looking at function, looking at activity 
levels for patients, so we purchase wisely the services that we 
are purchasing for our beneficiaries.
    I was asked to talk about some regulatory relief for 
physicians. Some of that can be just straight administrative 
paperwork issues. Also, as well, having timing of when things 
are signed may allow some regulatory relief; and the 
utilization of non-physician providers, care extenders, or 
physician extenders to do some of the work that we need to get 
done.
    Last is to work on those deadlines. I would be remiss if I 
didn't say this. I know 2015 was the year of physician reform. 
And 2016 is now looking at facility reform. I would ask, in 
2017, for some GME reform. If we don't train providers in these 
settings, how can I or any provider in the future work within 
these settings effectively?
    With that, I thank you. I appreciate the fact that this is 
a true team of legislative, physician, researchers, and 
administrators working together to make the best for the 
patients we serve. Thank you.
    [The prepared statement of Dr. Worsowicz follows:]
    
    
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    Chairman TIBERI. Thank you.
    All four of you provided some really good testimony. We 
really appreciate it.
    If each of you could put yourself in our shoes, what three 
principles would you name as we try to legislate pay-for-
performance? Think about three principles that we could use in 
legislating that issue.
    Ms. Gage.
    Ms. GAGE. Three principles. Well, one principle that has 
underlined a lot of the past work--you know, I work in the 
post-acute care payment arena and quality measures development, 
and having equitable payment rates is critical to having a 
cost-effective use of the Trust Fund. That said, equitable 
payment rates are only equitable if the patients are 
equivalent. So understanding the outcomes is key to any payment 
modification.
    A second principle is actually tying the quality 
initiatives to payments. Because, as we have seen and as Dr. 
Worsowicz mentioned, until readmissions were tied to financial 
penalties--and we have seen those in each of the programs--
there have been QRPs, but they haven't really moved the dial.
    And the third principle I think is keeping the patient in 
mind. Since the ACA passed, we have had a lot of talk about 
patient-centered care and about the patient's preferences and 
needs. And all of these patients, at least those that are 
discharged from the hospital to post-acute care, have a range 
of complications--medical issues, functional issues, cognitive 
factors complicating it. So really designing systems that allow 
for adjustment, given that mix of factors, will ensure access 
to appropriate services.
    Chairman TIBERI. Thank you.
    Ms. Wynn.
    Ms. WYNN. So the three that I would put forward for your 
consideration is, one, a program that is streamlined in some 
way so that providers don't suffer from measure fatigue. In the 
hospital sector, we are reporting on over 90 different measures 
now, and we are spending all of our time chasing the measures, 
and that really detracts from time that could be spent on 
quality improvement efforts themselves.
    A second principle would be to ensure appropriate risk 
adjustment that really will ensure buy-in from the provider 
community that the measures are fair.
    And then the third, I would say, is to focus on issues that 
are within the control of the provider so that it really is 
focused on provider quality as opposed to other issues in the 
community.
    Chairman TIBERI. Thank you.
    Mr. GUENTHNER. So I think, from our perspective, first, 
patients matter more than providers. We always have to keep 
that. There we go.
    Chairman TIBERI. Thank you.
    Mr. GUENTHNER. My first item is patients matter more than 
providers. We have to design processes and systems that address 
the needs of patients. And we really need to be talking much 
more about how we do that than about how we pay individual 
provider categories.
    Number two, with all deference, hospitals are incredibly 
important; health care does not begin when you get admitted to 
a hospital. Health care begins in the patient's home, and it 
ends in the patient's home. And I know we have some statutory 
things going on around that, about what a spell of illness is 
and how it only begins when an in-patient admission begins. We 
take huge exception to that and would love to see this much 
more focused around where the patient needs to be.
    Number three is around value. And value is not an item; 
value is a relationship. Value is the relationship between the 
quality and the cost to produce that quality.
    Chairman TIBERI. Thank you.
    Dr. WORSOWICZ. I agree, care is not a building, it is not 
bricks and mortar, it is a process. No matter where this 
process happens, the key is to get what the patient needs 
servicewise to them. And we have built these silos. Think about 
process.
    Second is quality and function. Function is part of 
quality. Remember that. We have to have that.
    Third is payment. When you look at payment, think, what is 
the long-term ROI? Is the patient at home, not in a facility? 
Is the patient able to return to work, now a taxpayer? Is the 
patient able to do enough that their loved one isn't out of 
work caring for them?
    So when we talk about pay and money, what is the long term 
on it? We have bundled payments. Is it 30 days? Is it 60 days? 
Is it 90 days? Is it 2 years? The issue is, what is it? I don't 
know.
    Chairman TIBERI. So one more question for all of you, kind 
of along the theme that you all have been discussing. We all 
share this idea of the best quality at the lowest possible cost 
to Medicare and its patients.
    CMS gathers all this information from all of you. We have 
access to it, you have access to it, CMS has access to it. Some 
of my family members who are on Medicare, they don't have 
access to it. So if someone has a stroke and needs to go to a 
rehab facility, how do they measure quality? How do they 
measure cost? How do we get them engaged and their family, me, 
to understand, as a loved one, what is best for them and their 
needs? How do we make that connection?
    Ms. Gage.
    Ms. GAGE. Having worn those shoes, despite being a 
researcher, those are very difficult questions.
    The easy answer is one could go to the CMS website and look 
at the hospital compare and the SNF compare, et cetera, to see 
whether the organizations in your community have decent quality 
ratings based on the composites of the measures that are there.
    Alternatively, speaking with your physician and the people 
that you know and trust is another major source of information. 
But often we don't really know what to look at. We don't know 
that nursing ratios are actually quite important, we don't know 
that if someone isn't turned they could end up stroking in the 
hospital. So it is a very complicated issue.
    I think CMS has done a lot over the last 5 years to engage 
stakeholders, to bring them to the table. Some of the work that 
I am doing with them is trying to identify stakeholder 
preferences. What would they like to see incorporated in 
exchangeable information? What would they like to know when 
their loved one goes home from the hospital? What is important? 
And some of those factors have nothing to do with insurance 
coverage. Some of them are having food in the fridge so you 
don't end up back in the hospital dehydrated.
    So it is a tough area.
    Chairman TIBERI. Thank you.
    Ms. Wynn.
    Ms. WYNN. I would agree with Dr. Gage. And I would just add 
that I think we are really at almost kind of a nascent stage in 
being able to pull together the information on quality, on 
cost, on other factors that policymakers may be interested in, 
but getting at the heart of what the patient is interested in 
and patient preference. Working with the physician to identify 
what is the appropriate care setting for them to be discharged 
into, is that a SNF or is that home care, based on their own, 
you know, circumstances and the home supports that may be 
available to them.
    And I think the other area in which a lot of work is going 
on right now is on improving the communication channels between 
the different silos within the provider sectors. So as the 
patient transitions from whether it is a hospital to a rehab 
facility or rehab to SNF, ensuring that the hospitals, the 
nursing homes, the home health agencies, and the rehab 
providers understand what the capacity is at that next level of 
care to care for the patient, so that we make sure that 
patients are really discharged to that appropriate care 
setting.
    Chairman TIBERI. Thanks.
    Mr. GUENTHNER. Not to oversimplify this, but I think the 
best way to find out what is important to beneficiaries is to 
ask them. And I am really confident that the average Medicare 
beneficiary, when they have an exacerbation or acute care 
episode, is exceptionally interested in restoring their level 
of functionality and getting home.
    Chairman TIBERI. Can I interrupt you, though?
    Mr. GUENTHNER. Yes, sir.
    Chairman TIBERI. Here's what I mean. So my mother-in-law 
has a stroke. She is in a hospital. She is going to be 
discharged from the hospital. The doctor says she has to go to 
a rehab facility. How do you choose the rehab facility?
    Mr. GUENTHNER. I think, in our view, in that situation, the 
key to this is to get in front of that disease state. I think 
when the patient, particularly a Medicare patient, who is aged, 
is in an unhappy place because their illness has progressed, 
they have waited too late to begin to think about engagement in 
their own care. We have to get in front of these disease 
states.
    We have to get in front of every chronic disease state that 
we can and engage the beneficiary in advance of that stroke, in 
advance of that acute care episode. Because, at that point, 
with the clinical illness, the cognitive implications, frankly 
the depression, which is a major factor in illnesses in the 
elderly, that goes along with it--if you think about this in 
the context of your mother or your grandmother, what do they 
want? They want their life back.
    Now, they may not get it back because their disease state 
may not let them get it back. But if they can't get their life 
back, then they are going to want the best quality of life that 
they can get to deal with their disease state.
    And we shouldn't rely on my testimony to answer that 
question. We should find that answer. And we should have some 
process to engage beneficiaries, the patients themselves, 
before their disease state advances, so that we can make sure 
we have a good measure of that.
    Dr. WORSOWICZ. I am happy to talk with you afterward about 
your mother-in-law to help guide you. First of all, I hope she 
has a physiatrist that is seeing her to help with it.
    But you are right on. This is what I do every day. I see 
people in the acute care hospitals, and they say, I want to go 
to the best place, I want to get the best there is, and, of 
course, they listen to me because they trust me. I am that 
good--no. Actually, you are exactly right. That is what 
perplexes us everywhere.
    First, I think the area of care coordination needs to be 
driven home. Because you may go to a skilled nursing facility 
at that point in time and it is the best for you because you 
can't take the physiologic stress of 3 hours of therapy and I 
could cause harm to you by sending you to the IRF at that 
point. It is the same as if you go to the IRF, do the skilled 
nursing. We are still siloed on coordinated care. You need to 
incentivize to coordinate that post-acute care for your mother-
in-law. And if she doesn't go to the right place the first 
time, we are incentivized to do the right thing by her.
    Second, you are taking a big leap of faith if you think the 
providers in an acute care hospital know the quality of where 
they are sending people. That is a big factor. I can tell you 
they don't. That is why you have 8 million different liaisons 
in hospitals saying, we are the best, we are the best, we are 
the best. We need to develop risk-adjusted metrics and 
scorecards so I can grade you to know that, hey, we are sending 
her to the best.
    Third, your mother-in-law just had a stroke; you are not 
going to hear one-tenth of anything I tell you. So remember 
that.
    We have to work on those systems. Coordinate the care 
first, build that in. Second, let's develop scorecards or a way 
to meaningfully measure the care you get. And I would also not 
think that every IRF is the same. Every SNF is not the same. 
You have a wide variety of services. So I could send you to one 
versus another and get totally different doses of therapy, 
doses of medical coverage, doses of social care.
    If we had 3 hours--I will talk to you later, but----
    Chairman TIBERI. Yeah, we have an opening on our staff for 
a doctor. We would love to have you apply.
    Dr. WORSOWICZ. Yeah, there you go.
    Chairman TIBERI. Thank you all.
    Dr. McDermott.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    I would like to change the focus here just a little bit.
    Ms. Gage, do you have an advance directive?
    Ms. GAGE. Do I have to admit this publicly?
    Mr. MCDERMOTT. You don't.
    Ms. GAGE. I have no children, though.
    Mr. MCDERMOTT. Ms. Wynn, do you have an advance directive?
    Ms. WYNN. I do not.
    Mr. MCDERMOTT. Mr. Guenthner.
    Mr. GUENTHNER. No, sir.
    Mr. MCDERMOTT. So all four of you----
    Dr. WORSOWICZ. I do. Yes, sir.
    Mr. MCDERMOTT. You do?
    Dr. WORSOWICZ. Yes. And my wife has a pillow too.
    Mr. MCDERMOTT. All right.
    Now, the reason I raise this issue is that we all know that 
about 70 percent of healthcare costs occur in the last 6 months 
of life. You can argue about the figures exactly, but that is 
sort of roughly what we have been able to put together.
    And Mr. Guenthner talks about listening to the patient and 
what does the patient want and so forth. And what I have 
trouble putting together in my mind is, how much do you think 
having an advance directive or lack of an advance directive 
plays into the kind of care that a physician or whatever 
provider puts forward?
    I mean, how often does somebody look at those advance 
directives and say, this is what they want, and we are trying 
to get them over to here, but they are never going to get 
there, they are probably going to get over here. And maybe they 
don't want us to try to get them over to there, which is 100 
percent or 70 percent. As you say, you can put them into a care 
situation and give them 5 hours of therapy a day and wind up 
with a patient who says, God, leave me alone, I feel rotten.
    So how does the advance directive play into that? Mr. 
Blumenauer put through a bill, Mr. Levin and I put a bill in 25 
years ago, that everybody in Medicare ought to file an advance 
directive, but we have never gotten above 20 percent of the 
population. And we are about there today, with three out of 
four not having one. That is sort of reflective of America, 
where we don't get people to write wills either. But advance 
directives are even lower than writing wills.
    So how can you develop care--the physicians, how can they 
deliver care when they don't know what the patients want?
    Ms. GAGE. I am not a physician, but I have worked on some 
of the issues. The Joint Commission for Hospitals had directed 
the inclusion of the identification of whether somebody had 
information in their chart on their wishes or their surrogate 
wishes, and CMS has worked that data element into some of the 
assessment tools.
    That said, as a daughter-in-law, I have seen that we have 
our wishes, sometimes we left them at home in the living room, 
sometimes they are in the chart. You come into the emergency 
room; the doctor does all that is possible regardless of what 
is in the chart.
    So advance care directives appear to be a sensible 
approach, but I am not sure they are the most effective way of 
communicating patient wishes.
    Mr. MCDERMOTT. So you are really suggesting that doctors 
should be the final deciders of everything. They have the 
power. You are there, you put yourselves in their hands. I 
mean, having been a physician, I realize people come in, say, 
here, take care of me. And that is what you are saying.
    Ms. GAGE. I am not saying that that is a measure of quality 
or an ideal situation. I think that is the experience that 
happens quite frequently.
    Mr. MCDERMOTT. It is not what happens in Mr. Kind's 
district, where about 80 percent of the people have advance 
directives, because there was a concentrated effort by the 
medical community to do that.
    Doctor.
    Dr. WORSOWICZ. Yes. Actually, with the type of work I do, 
the advance directive only comes into play with severely brain-
injured patients and severe stroke patients. Otherwise, it is 
what does the patient want and what is the goal.
    Part of my goal is to describe to them what the physiologic 
capacity is to meet that functional goal and the impairment 
that they have and how they would attain that goal. I don't 
disagree with you at all. We tend to spend a ton of money at 
the end of life. I want to spend a ton of money to preserve 
quality of life, is what I am working on.
    So, in my practice, advance directives come into play only 
in those severe cases and when they don't maybe have a health 
surrogate.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    Chairman TIBERI. Thank you, Mr. McDermott.
    Mr. Roskam is recognized for 5 minutes.
    Mr. ROSKAM. Thank you, Mr. Chairman.
    I just have two quick questions.
    Dr. Worsowicz, could you give me a sense of how the IMPACT 
Act interacts with any subsequent proposals to make changes in 
this area?
    Let me give you the backstory on my question. I had a 
meeting with folks in my constituency, and they are concerned 
and they say, look at the IMPACT Act. The data has yet to be 
determined or yet to be collected or whatever, there is some 
that has not yet happened, and now something new is being 
contemplated. And, you know, they didn't say it this way, but 
what they are telling me is, hey, cut us some slack here, you 
know?
    And I don't know enough off the top of my head about how 
these things interact. Are they over-characterizing that? Are 
they characterizing that accurately? Is there a legitimate 
beef? What is your perspective?
    Dr. WORSOWICZ. I imagine you get both ends of the spectrum 
that walk into your office, yes/no, yes/no. Some of the 
scientific data from the IMPACT Act--I will ask my panelists--
is yet to be fully developed to say what has been--have we 
moved the needle to where we want to move the needle.
    Mr. ROSKAM. So is the data already being collected on the 
IMPACT Act, just so I am clear?
    And anybody else from the panel, can you just educate me on 
that?
    Dr. WORSOWICZ. I will let the experts.
    Ms. GAGE. Some of the concepts that were in the IMPACT Act 
are being collected currently. They were moved right into the 
assessment tools in each of the different settings.
    Mr. ROSKAM. So folks who were in talking to me, what were 
they referring to that is going to happen next month? Do you 
know off the top of your head?
    Ms. GAGE. There is ongoing work to continue development of 
additional items.
    Mr. ROSKAM. Okay.
    Ms. GAGE. And that work is--well, there are different 
timelines going on depending upon whether they were talking to 
somebody about quality measures or data element development. 
But, this month, the first pilot test went live with some of 
the additional measures in the IMPACT Act. But CMS had already 
moved forward some of the directives from the original set.
    There are about four or six different conceptual domains. 
And so moving items in right away--for example, function is now 
in a standard way collected in the rehab hospitals, the SNFs, 
the home health, the LTACs. But the other metrics that you 
might want to use that might also be in the area of function 
are still possibly under development. Certainly, in the area of 
cognition, there is additional work being done.
    Mr. ROSKAM. Okay. That is helpful. Thank you both.
    Ms. Wynn, do you have a sense, you know, being active with 
the Hospital Association and so forth, are there some 
regulatory tradeoffs that CMS or Congress could offer that are 
reasonable, that make sense, that don't jeopardize patient 
safety, you know, et cetera, et cetera, et cetera, that are 
just good commonsense things that your members would say, look, 
we can live with this change in reimbursement if you cut us 
some slack over here? Do you follow my question?
    Ms. WYNN. Yes, sure. So there are several different areas. 
One I would offer, especially as we move toward value-based 
payments where the providers are taking the risk, is on medical 
necessity review, so chart reviews. They are very 
administratively burdensome on the hospitals to provide the 
paperwork to the reviewers, and we commonly have disagreements 
with the reviewers----
    Mr. ROSKAM. I get it. So the argument is, look, we are 
assuming the risk here; what is this whole review process?
    Ms. WYNN. Right. So if we are taking the risk for the total 
cost of care of a Medicare beneficiary, then it is up to us to 
decide whether or not there should be an in-patient admission 
or whether or not they should be treated in an ambulatory care 
setting. Let us decide the best place for the patient.
    Mr. ROSKAM. That makes perfect sense to me right now.
    Has that largely been socialized? Are more people talking 
about this than I realize? Is this one of those things 
everybody is talking about and I just don't know it?
    Ms. WYNN. Certainly within the hospital community we are.
    Mr. ROSKAM. Okay. That is helpful.
    Okay. Thank you.
    Thanks, Mr. Chairman. I yield back.
    Chairman TIBERI. Thank you.
    Mr. Thompson is recognized.
    Mr. THOMPSON. Thank you, Mr. Chairman.
    I was interested in the discussion as it went along 
regarding patients in the mix. And somebody said that there 
should be a financial penalty for readmissions. Mr. Guenthner, 
I would like to hear from you on what responsibility does the 
patient have in this.
    One thing I hear from my providers is they do everything 
they need to do on their end, they send them home, and then 
they don't do what they are supposed to do, they come back, and 
the hospital gets dinged.
    Mr. GUENTHNER. Okay. I might have finally figured out the 
microphone.
    So, you know, I think that patient compliance is always an 
issue in medicine. We see it in home care. We go into the 
patient's home, we make the assessment, we give the advice, and 
patients don't follow it. And this is America; patients don't 
have to follow it. And sometimes they can, and sometimes they 
don't.
    We think that--again, I sound a little bit like a broken 
record, but the trick is to get in front of the high-risk 
patient's chronic conditions and to engage before the acute 
care episode happens to see if we can get closer.
    Mr. THOMPSON. That may work well in some communities, in 
some populations, but in others it doesn't. How do you crack 
that nut?
    Mr. GUENTHNER. If you could expand just a little on those 
that you are concerned about where it doesn't work.
    Mr. THOMPSON. If you have a community that is maybe not as 
inclined to follow healthy procedures or a community that 
doesn't have access to quality food, for example.
    Mr. GUENTHNER. Okay. So one of the places we see this in 
our practice is, in particular, with the dual-eligible 
population, where income levels tend to be lower, education 
levels tend to be lower, and there are more socioeconomic 
issues going on in that community.
    And one of the things that we have talked about in some of 
our previous submissions to the Committee is the need to really 
get at that coordination of benefits with the dual-eligibles 
and to bring some of these socioeconomic factors into play. We 
can't always----
    Mr. THOMPSON. I don't know if we are going to figure it out 
today, but I think that is something that needs to be in the 
mix, because I don't think you can put the whole load on the 
provider. We need to figure out how to either get every 
population to do what they are supposed to do----
    Mr. GUENTHNER. Right.
    Mr. THOMPSON [continuing]. Or figure out how to mitigate 
that financial penalty.
    One area that I think is interesting--and this whole VBP is 
based on delivery of appropriate care faster and more 
efficiently. And with the advances in diagnostic testing, I 
think we have an ability to be able to bring diagnostics into 
the mix to help speed that up.
    And I guess, Ms. Gage, I would like to know, what do you 
think we should do to make sure that hospitals and other 
providers are using the types of advanced technology that will 
really drive all the outcomes?
    Ms. GAGE. Hospitals are receiving some incentives at this 
time with the movement toward ACOs and bundled payments and 
value-based purchasing programs where the market is now giving 
them the incentive to have the best technology available. Some 
of the hospitals are starting to move into telemedicine, even 
though it is an unfunded Medicare benefit. And I think we are 
seeing some changes in the market in response to achieving the 
best outcomes. Competition is starting to drive what is 
delivered on an outcome basis.
    Mr. THOMPSON. And you hit on the other thing I was going to 
ask about, and that is telemedicine. I have been involved in 
that for a long time. And it hasn't been necessarily beneficial 
in the fee-for-service landscape, but I think it fits well into 
value-based purchasing.
    And, Ms. Wynn, do you see a potential for growth in 
telemedicine under the VBP model? And is there anything we 
should be doing to enhance that?
    Ms. WYNN. Sure. Thank you for the question.
    We are seeing, you know, telemedicine I think historically 
has been thought of as more of a presence in the rural areas, 
and we are starting to see more and more of our members in 
inner city urban areas using telemedicine to provide specialist 
care and ensuring access to those higher acuity services for 
patients. So I think payment policies that can continue to 
enhance those services would be one thing, and then that is 
another area for regulatory review as well.
    Mr. THOMPSON. Well, I would submit that not only does it 
work well in underserved areas, you know, rural or urban 
underserved, but I think there is potential benefit if we were 
able to grow this delivery of medicine and use it more and 
figure out how to make it work to provide you guys the 
opportunity.
    Thank you, Mr. Chairman.
    Chairman TIBERI. Thank you.
    Mr. Smith is recognized.
    Mr. SMITH. Thank you, Mr. Chairman.
    Thank you to our panel today. I appreciate your dedication 
to these issues that are certainly important that we ensure 
dollars are well spent on quality care, and I appreciate your 
expertise.
    Ms. Wynn, providers often site Medicare's conditions of 
participation as being outdated and burdensome. Which of these 
requirements would you say are most problematic for hospitals?
    Ms. WYNN. I think I would follow up with your staff on 
those issues.
    Mr. SMITH. Okay. I appreciate that. I know there are a lot 
of issues here, and I know certainly observing the various 
situations over the last several years, my own grandmother, for 
example, I am glad there are some great providers out there and 
facilities that they will look to to offer great services.
    Thank you, Mr. Chairman. I yield back.
    Chairman TIBERI. Thank you.
    Mr. Davis, you are recognized for 5 minutes.
    Mr. DAVIS. Thank you. Thank you very much, Mr. Chairman.
    I certainly appreciate this hearing, and I thank all of the 
witnesses for being here.
    We have talked a bit about safety net institutions and 
population groups that might frequent them. And as we move 
toward standardizing treatment, as we attempt to standardize 
payments, let me ask you, Ms. Wynn, how do we make sure or try 
to make sure that we are treating the safety net institutions 
fairly?
    And I know that fairness is like beauty, in the eye of the 
beholder, but how do we try to do that?
    Ms. WYNN. I think the most important thing is making sure, 
especially in payment penalty programs, that the measures are 
risk-adjusted to recognize the socioeconomic issues and 
sociodemographic issues that are facing the patients so that 
those hospitals aren't unfairly held accountable for some of 
the patient factors.
    The second thing is making sure that the supplemental 
payments, or DSH payments, are paid to the providers. They are 
critically important, whether they are Medicare payments or 
Medicaid payments, to really the financial viability of the 
financial institutions. The ACA included some very significant 
cuts in funding in those programs, and, you know, as a 
representative of many of those institutions, that is an area 
that we are very concerned about as we look forward over the 
next few years, is maintaining those funds so that our 
hospitals can maintain their operations and access to services 
for the communities you are discussing.
    Mr. DAVIS. Let me just ask if other members of the panel 
would like to comment on that question?
    Dr. WORSOWICZ. I think the risk adjustment is critical. I 
think some of the DSH payments, I am not as positive. Make sure 
the post-acute care providers that care for these individuals 
have the risk adjustment. The key is to have the payment follow 
the patient in these areas.
    We brought up the other issues of being big on the use of 
technology, of using telehealth. Make sure that people are able 
to be provided their medicine as they go home and that they get 
instruction in the home place.
    I would argue, if you have a family member, an elderly 
family member, ask them for their med list. There is no way 
they can understand their med list, even if I were to spend an 
hour and a half going over it. So we need to put in some safety 
net procedures to assist them once they leave the hospital into 
either the hospital setting, the skilled nursing setting, or 
the rehab setting to make sure that is following them.
    Mr. GUENTHNER. I think my answer to that, Congressman, 
really gets back to the need to coordinate benefits between 
title 18 and title 19 of the Social Security Act. Patients, if 
they, in fact, are safety net patients, don't understand the 
difference between Medicare and Medicaid and don't care about 
the difference between Medicare and Medicaid. They believe that 
their government, the promise made by all of us to care for 
these patient populations, is going to handle it and there is 
going to be folks looking out for them.
    And it really does come down to the need to coordinate 
care. A lot of providers have to spend a lot of time trying to 
figure out for a given patient, now, is this a Medicare 
benefit? Is this a Medicaid benefit? How do I think about that, 
and how do I coordinate those? And this may be way outside the 
scope of this Committee's deliberation, but ultimately bringing 
those benefits together we think is absolutely critical for the 
future of the healthcare system.
    Mr. DAVIS. Ms. Gage.
    Ms. GAGE. I think you approach it in terms of the payment 
design. Typically, the lower income populations have more 
healthcare complications for whatever reason--the food, the 
genetics, whatever is behind those differences. And so, as Dr. 
Worsowicz said, risk-adjusting the outcomes and risk-adjusting 
the payments, that is one way of correcting for the higher 
needs of those more severely ill populations.
    But, secondly, you raised the issue of the public hospitals 
and the provider serving the underserved areas. So when you 
think about a payment system, there are two types of factors at 
play. There are the case mix factors, where you adjust for the 
patient differences, but there are also often setting-specific 
factors that recognize the fixed costs of different types of 
providers. And those fixed costs are important, because 
different types of patients need different types of resources. 
So addressing both of those in a payment design can help.
    Mr. DAVIS. Thank you very much, Mr. Chairman. I yield back.
    Chairman TIBERI. Thank you.
    Ms. Jenkins is recognized.
    Ms. JENKINS. Thank you, Mr. Chairman.
    And thank all of you on the panel today. Countless studies 
from universities, health insurers, and MedPAC state that the 
geographic in costs for Medicare is in the post-acute care 
setting and that those costs vary a great deal. In my district 
in Kansas, most of the post-acute care providers are rural, and 
they are typically low-cost options compared to the national 
average for care in the post-acute care setting.
    There is a section in the Medicare Post-Acute Care Value-
Based Purchase Act, 3298, that measures cost at a geographic 
level.
    Given the fact that Kansas is a relatively low-cost rural 
State, I have just a couple of questions maybe for Mr. 
Guenthner and Dr. Gage. How will this geographic measure 
benefit Kansas providers, and how will this bill either 
negatively or positively impact rural PAC providers?
    Ms. GAGE. I hesitate to answer, because I haven't looked at 
the specific legislation that you are referring to.
    Ms. JENKINS. Okay.
    Ms. GAGE. But, typically, often there are rural adjustments 
to recognize the differences in the cost factors in the larger 
rural areas. They are typically setting-specific. And I am not 
sure what went into that bill, so----
    Mr. GUENTHNER. Well, first, I want to really thank you for 
this question, because this is a topic of great interest to us. 
We talked about it in our program integrity proposals, and we 
see it significantly in our ACOs. We manage 15 Medicare ACOs 
through our Imperium subsidiary, and there is, in fact, great 
variation in healthcare spending across the Nation. It is not 
limited to post-acute care. It is more prominent in post-acute 
care.
    In home care in particular, we see very dramatic 
differences, really around the supply of providers relative to 
patient populations. And so when I talked in my oral testimony 
about the program safeguard idea, that idea is about looking at 
the relationship of utilization to a patient population. If I 
was a taxpayer in Kansas, like I am in Kentucky, it disturbs me 
to see, for example, 3\1/2\ times the home care use in one 
State that I see in another State. And then when I go look at 
what is causing that and I see the supply providers relative to 
patient populations--I want to tell you a fact, and you can 
decide if this makes any sense to you. In Chicago, the metro 
area, there are 664 home care providers. In New York, the metro 
area, there are 61. Not surprisingly, home health utilization 
in Chicago is a lot higher than it is in New York. And this is 
at the core of how we control variations in utilization 
pattern. We believe strongly that differences in the supply of 
providers create different normative standards in a community. 
Because there are so many providers competing for a number of 
patients, the definition of medical necessity moves. And what 
is medically necessary in New York and what is medically 
necessary in Chicago become different measures, and that is 
really not how this Medicare benefit should be administered. 
And thank you for that question.
    Ms. JENKINS. Sure.
    Is there any other feedback from the panel?
    Ms. GAGE. And that is why outcomes measurement is so 
important. We do see a lot of variation associated with supply, 
but understanding whether the patient is getting more services 
because they are more medically complex or more functionally 
impaired identifies the inappropriate variation.
    Ms. JENKINS. Okay. That is very helpful.
    Yes.
    Dr. WORSOWICZ. They hit on the term ``medical necessity.'' 
Be very careful when you use that term. As we have seen it 
based on number of providers, it can also mean things for 
different places. I have seen patients in the ICU where the 
note says ``medically stable.'' That is medically stable for 
the ICU or whatever. We often in the post-acute arena get 
denied in different settings because they are medically stable. 
Why do they need to be there? That is in any of the four 
settings I have seen; there is a functional issue that goes 
along with that. So I would measure that. And, again, it 
doesn't answer your question, but someone brought up ``medical 
necessity,'' which is a huge term.
    Ms. JENKINS. Right.
    Thank you, Mr. Chairman. I yield back.
    Chairman TIBERI. Thank you.
    Mr. Pascrell is recognized for 5 minutes.
    Mr. PASCRELL. Thank you, Mr. Chairman.
    Dr. Gage, given your involvement, extensive as it is, and 
the development and analysis of a number of different value-
based payment models, one of the things we are looking at very 
carefully, how do we best find what you and I could consider 
the appropriate balance of the number of measures to ensure 
that they are truly reflective of quality and patient 
experience but also not overly burdensome? How do we get to 
that point, or do we?
    Ms. GAGE. I think we can. And I think the fields, the 
science of quality measurement, have evolved to the point 
where, instead of developing measures that could be used to 
make sure someone was receiving adequate care, which is how a 
lot of the quality measurement programs grew up, we can be 
looking at those factors that we start with, the never events. 
And the hospital QRP incorporated some of those. But there are 
also other events that are preventable: Decline in medical 
issues like the growth in pressure ulcers----
    Mr. PASCRELL. I am sorry? I didn't hear that. A what?
    Ms. GAGE. I am sorry?
    Mr. PASCRELL. I didn't hear the last phrase you used.
    Ms. GAGE. Oh. A decline in medical conditions, such as 
growth in pressure ulcers, that could have been avoided.
    Mr. PASCRELL. Right.
    Ms. GAGE. In the area of function, the expected improvement 
or, for a frailer population, the maintenance of one's mobility 
and self-care. So thinking about those key metrics that a 
patient is really going into the hospital to have cured, have 
treated, is one way of reducing--we see all sorts of measures 
in the ACO program and all sorts of measure options in the 
PQRS, et cetera, but we really need to start a discussion about 
which ones are really the sentinel medical outcomes, the 
sentinel functional outcomes and the cognitive factors.
    Mr. PASCRELL. All right. Okay.
    There's been some disagreement, as you know, as we all 
know, between Democrats and Republicans on the issue. It is 
likely there will be more in the future. I believe that the 
shift we have seen in our healthcare system away from fee-for-
service toward a value-based system, quality-driven healthcare 
system, is a truly bipartisan idea--not a Democratic idea--a 
bipartisan idea. So the Affordable Care Act laid the foundation 
for building a healthcare system that rewards quality. We have 
a long way to go to that end. There are no two ways about it. 
It rewards quality. It rewards the outcomes and smart spending 
rather than the volume of services provided. This is what we 
started out to do, and we have a long way to go. There are no 
two ways about it.
    So the Center for Medicare and Medicaid Innovation--we were 
talking about this this morning, ironically, in the Budget 
Committee--is testing a number of payment models that improve 
quality and lower the cost for the patient in the system.
    Medicare has made, I think, great strides in rewarding 
quality. And earlier this year, HHS met the goal of tying 50 
percent of Medicare payments to value by 2018. So we are moving 
in the right direction if the system is whole.
    HHS is working toward the more ambitious goals of tying 85 
percent--85 percent--of fee-for-service payments to the quality 
by the end of 2016. That is us, right? And 90 percent by the 
end of 2018.
    This shift represents, I think, a fundamental change to the 
way our healthcare system operates now. So it is to be expected 
that there will be some growing pains and that some of the 
models we test will not turn out the way we hope. And maybe 
give us some examples, anybody.
    What we started out to do, it didn't wind up so pretty at 
the end. But this is what we went through with Social Security. 
This is what we went through with Medicare. This is what we 
went through in Medicaid. And when you have both sides working 
together, it would seem to me, Dr. Gage, that we would have a 
better shot of making some changes that we all could live with, 
Mr. Chairman.
    So what do you think, Dr. Gage? That is a toughie, but 
let's try it anyway.
    Ms. GAGE. I think that is out of my expertise, and you 
showed with the IMPACT Act, the important work that can be done 
in pulling together a bipartisan bill, so I am sure that you 
have the wherewithal to do so.
    Chairman TIBERI. Thank you. The gentleman's time has 
expired.
    You are challenging me today, you and Mr. McDermott, really 
engaged in the Affordable Care Act. But I have been nice, very 
nice.
    Mr. PASCRELL. It is our human way.
    Chairman TIBERI. Mr. Paulsen, you are recognized for 5 
minutes.
    Mr. PAULSEN. Thank you, Mr. Chairman.
    I thank all of you for being here today.
    Ms. Wynn, I just want to follow up on some of your 
testimony that you just had regarding the pros and cons of the 
current pay-for-performance programs for hospitals. I recently 
held a roundtable as well of hospitals in Minnesota. And like 
you, they have some of the same concerns about the duplicative 
and burdensome design of the programs. And one concern that 
they raised is the readmissions in hospital-acquired conditions 
programs are solely focused on payment penalties, and they 
don't give hospitals the opportunity to improve.
    So is this a concern to hospitals in New York as well, and 
do you think hospitals should have the opportunity for a 
payment bonus that could be provided for good performance, for 
instance, in avoiding complications and readmissions?
    Ms. WYNN. Yes. Thank you for that question. This is an 
issue that is foremost on the minds of our members as well. And 
maybe, if it is helpful, you know, one thing to think about is 
the way the penalty programs work for both readmissions and the 
complications is that there is no credit that is given to the 
industry if they do improve. And so, in order for a hospital to 
work its way out of the bottom quartile or the penalty phase 
within the HAC program, for example, they would have to 
improve--not only just improve, but improve faster than every 
other hospital across the country, right, because the bottom 
quartile is always penalized.
    Mr. PAULSEN. Right.
    Ms. WYNN. So I think the fear on the provider side is often 
that these programs are really just ways of, you know, cloaking 
payment cuts as opposed to really incentivizing high-quality 
care.
    Mr. PAULSEN. Okay. And I have also heard from hospitals 
back home that the readmissions in hospital-acquired conditions 
programs make significant payment adjustments based on a very 
narrow number of conditions. So, therefore, small changes in 
performance in these limited categories have a disproportionate 
negative impact on payment.
    Is this, again, a concern for hospitals in New York too? 
And should the payment impact on a hospital with higher rates 
of complications be required to be proportional to the actual 
financial impact of the complications?
    Ms. WYNN. Yes. So, within the readmissions program, one of 
the major issues or design flaws that we see with the program 
today is that the savings to the Medicare program from the 
readmissions themselves is a fraction of the penalty that is 
being imposed on the hospitals through the penalties.
    So, for example, on hip and knee replacement readmissions, 
the penalties that are being placed on hospitals are 20 times 
the size of the payments that the Medicare program is making to 
the hospitals for those actual readmissions. It feels like a 
very punitive penalty.
    Mr. PAULSEN. Right. And for those same number of limited 
complications and readmissions, I mean, they don't reflect the 
vast types of patients' conditions that your hospital treats, 
which you alluded to before. In your opinion, does this limited 
approach also restrict a true evaluation of what a hospital's 
performance is, then, essentially?
    Ms. WYNN. Yes. And one of the issues, and I appreciate you 
raising it, especially within the hospital-acquired conditions 
world is that these are rare events, and we would expect them 
to be rare events, but they can also randomly occur, 
essentially. And so when you are trying to get a precise 
measure of random variation, you can end up conferring very 
significant payment penalties for providers who really don't 
have a statistically significant difference in the quality of 
care provided at hospital A versus hospital B.
    Mr. PAULSEN. Is there a program in New York that uses a 
more comprehensive definition of those types of complications 
and readmissions for payment adjustments?
    Ms. WYNN. There is not, actually.
    Mr. PAULSEN. Okay.
    Ms. WYNN. In New York State, there had been a program 
through the Medicaid program, but that was eliminated 2 years 
ago.
    Mr. PAULSEN. Okay.
    Well, Mr. Chairman, just to follow up, it seems like the 
work that is going on in New York or in Minnesota, from what I 
am hearing from my hospitals, shows that there are providers 
and health plans in States out there that are trying to find 
ways to make the healthcare system more efficient and effective 
certainly and not trying to tie the healthcare system up in 
knots, but they are focusing on the outcomes that are high 
impact, that there are clinically credible outcomes that we can 
focus providers around to, essentially to achieve very 
substantial and sustainable improvements for patients.
    I know that Representative Marchant is not here. I think we 
can learn a lot from these local initiatives. And we are going 
to be introducing legislation that will streamline the 
readmissions in hospital-acquired conditions programs into one 
easier to manage program so it will include providing both 
penalties and bonuses, computing penalties and bonuses that are 
proportional to the financial impact of the readmissions and 
complications, and then focusing on readmissions and 
complications that are actually avoidable, rather than just 
punishing our hospitals for things that are essentially outside 
of their control, and doing that in a budget-neutral manner at 
the same time containing a very clinical and credible method of 
risk adjustment.
    So I disagree with some of your comments. And maybe we can 
continue to follow up on that and proceed from there.
    Ms. WYNN. We would be very interested in speaking with you 
about that.
    Mr. PAULSEN. Thank you, Mr. Chairman.
    I look forward to working with you on that as well.
    Chairman TIBERI. Thank you, Mr. Paulsen.
    I would like to recognize a leader in the value-based 
purchasing area. And, by the way, congratulations on those 
Badgers beating the SEC on Saturday. Just saying, Mr. Kind.
    Mr. KIND. We will take it, especially early in the season. 
So thank you, Mr. Chairman, for that recognition.
    First of all, I want to commend the panel today. I think 
your testimony has been very helpful and very good.
    Mr. Chairman, thanks for teeing up this hearing.
    I think this is the critical budgetary issue that is really 
facing this Congress and future Congresses for a long time. It 
is healthcare reform. It is healthcare cost, which is really 
driving a lot of the budget decisions around here: The fact 
that 70 million Americans, the baby boomers, are now retiring 
and entering Medicare and the challenges that we are facing and 
how we best address that.
    And I think there is consensus, as you probably heard on 
the dais here today, that there is a lot of alignment of 
interests of how we can align the healthcare delivery system so 
we get better outcomes at a better price. It is as simply put 
as that. And you guys are operating in this field right now. We 
are going to have to rely on your feedback and testimony like 
today in order to steer us in the right direction. And it is 
going to be a challenge.
    And that is why I was happy, as Chairman Brady pointed out, 
to introduce with him, and working with Chairman Tiberi as 
well, the Post-Acute Care Value-Based Purchasing Act, because, 
as you mentioned in your testimony, Ms. Gage, when 40 percent 
of Medicare and hospital-based patients are going to enter the 
post-acute care setting, this is a huge area that also is going 
to require our attention on how we can incent the development 
of quality measures and then align the payment incentives the 
right way so we are getting better outcomes in the post-acute 
care center for our patients that is also fair to the 
providers.
    Mr. Guenthner, I don't know if you or Almost Family have 
had an opportunity to take a look at the legislation we have 
introduced yet, but if you have, do you have any 
recommendations right now, any glaring things that stand out 
for you right now that you would bring to the Committee's 
attention on what we ought to be more focused on or try to 
avoid some unintended consequences of what we are trying to 
accomplish?
    Mr. GUENTHNER. Well, thank you for the question. I think 
that we would suggest that the Committee take a hard look at 
the ACO experiences. The ACO model, it may well be the ultimate 
value-based purchasing model. This model connects physicians--
it hits a lot of the goals that we talked about in our 
testimony. It connects the physician, fully informed with a 
full set of claims data, to the patient, and thinking about 
that patient broadly, outside the walls of the office, outside 
the 15-minute office visit, outside the writing of the 
prescription, but thinking about that patient much more 
broadly. We do like the idea of providers, whether they are 
acute-care hospitals or home care agencies or anywhere in 
between, having a responsibility to a degree, to the degree 
that it is controllable, for what happens to that patient once 
they are discharged.
    And we believe that our experiences in the ACO world, where 
our successful ACOs have increased their use of home health--
they have increased their use of hospice. They have driven down 
the total spend by using these kinds of care. And they have 
significantly increased the number of primary care 
interventions that are happening at that patient level. And so 
we would encourage the Committee and staff to really take a 
hard look at those opportunities.
    Mr. KIND. I couldn't agree with you more. I obviously hail 
from an area of the country, western Wisconsin, where I have 
gone to school on our providers there, whether it is the Mayo, 
or the Gundersen models, or Marshfield, or the ThedaCare, that 
have been really establishing models of care so that it is more 
integrated and more coordinated, the patient center that you 
have been advocating as well. And we have been looking at some 
very good outcomes.
    But in the post-acute care world now, you have different 
providers with different charges. How do we get all of them on 
the same page so that they are more accepting of a more 
integrated patient-centered delivery model that others have 
shown?
    Mr. GUENTHNER. Well, this is one of the reasons that, as 
you know, we are in favor of the Committee's work here and the 
need for the program to say to provider types, ``This is what 
we want you to do,'' and then for providers to be held 
accountable to do those things.
    And so, while there are imperfections in almost anything 
that we do, the need to move forward so outweighs the need to 
hold still, the need to do nothing. And so we have to continue 
to move forward to make progress, to try some new things, see 
if they work. And if they don't work, then we need to fix them. 
But we absolutely have to move forward.
    Mr. KIND. I think moving forward with clear guidelines on 
what quality measures are the goal here, is going to be 
important too. I know there's been some kind things said about 
the IMPACT Act and the establishment of quality measures, of 
data collection. I know some of that is years down the road, 
which, being the impatient guy that I am, frustrates me that we 
have to wait a few years before a lot of this starts coming in, 
but making sure that the quality measurements are clear, that 
the goals are clear, and then we start aligning the financial 
incentives in order to encourage providers to hit that is going 
to be one of the goals we have with the legislation that we 
have introduced that hopefully we can achieve again with all of 
your help. So thank you, again, for your testimony here today.
    I yield back, Mr. Chairman.
    Chairman TIBERI. Mrs. Black is recognized for 5 minutes.
    Mrs. BLACK. Thank you, Mr. Chairman.
    And I want to follow up on Mr. Kind's questioning.
    I am hearing from some of the providers in my district that 
have concerns about the timing, the timing of when the IMPACT 
Act measures are coming online and when those measures can be 
ready for use in pay-for-performance programs.
    My understanding is that some of the IMPACT measures are 
ready now, such as the Medicare spending per beneficiary 
measure, but some of the IMPACT measures are not yet finalized, 
such as the functional status. My question is, do we need to 
wait until all of the measures are ready to begin the pay-for-
performance program, or do you think that we can start a 
program with the measures that are ready now and then 
transition other measures in a later timeframe? I wanted to 
ensure that any future developments in this space work hand in 
hand with the objectives that can be achieved with the IMPACT 
Act.
    So, Ms. Gage, if I could start with you and have you give 
me your thoughts on that.
    Ms. GAGE. Certainly. And just to broaden your thinking a 
little bit, in terms of timelines and readiness, the function 
measures have actually been endorsed by the National Quality 
Forum, and the standardized elements have been added to all of 
the assessments. And so those are actually quite ready.
    And function is one of the greatest predictors of 
rehospitalization and other complicating factors. So it is a 
very important metric. Similarly, the medical complexity is 
another important factor, and much of that is standardized. 
Some of the work on cognition, which is an important risk 
adjuster for some smaller portion of the population, is still 
being finalized, although there are some available elements. 
And the work that the MedPAC did this past year, based on my 
team's former work with the post-acute care payment reform 
demonstration, showed that the items that are important in 
terms of predicting resource intensity or predicting 
readmissions or predicting functional change are among those 
that have been tested, are reliable, and are being considered 
in the different assessment tools.
    So I think you are ready to move forward. You don't have as 
much specificity in your model, perhaps, as once the rest of 
the measures are also ready, but you have some key critical 
factors. And when you put transition times around payment model 
implementations, it softens some of those first-end 
complications.
    Mrs. BLACK. Ms. Wynn, do you have a thought on that?
    Ms. WYNN. I am not as familiar with the measures or the 
status of the measures in the post-acute world.
    Mrs. BLACK. Mr. Guenthner.
    Mr. GUENTHNER. Yes. Thank you.
    We think the functional measures are incredibly important 
to patients. And I am thrilled to hear Dr. Gage tell us that 
those are ready. I think that, as I said in response to Mr. 
Kind's question, if the choice is to hold still or move 
forward, we are a big fan of moving forward. Now, one of the 
ways to mitigate some of the exposure around potential missteps 
is to moderate the amount of financial risk for providers so 
that we don't--if we miss, we don't--excuse me--overstate a 
miss by having too much at risk.
    Mrs. BLACK. Doctor.
    Dr. WORSOWICZ. I would agree with my colleague. If we are 
going to move forward, we need to make sure that we have some 
flexibility on the risk models. And with all these programs, it 
is an evolution that we are going to evolve in time, move 
things forward, have flexibility within the program.
    Mrs. BLACK. Thank you.
    I yield back.
    Chairman TIBERI. Thank you.
    Mr. Lewis is recognized.
    Mr. LEWIS. Thank you very much, Mr. Chairman, and thank you 
for holding this hearing today.
    And I want to thank every member of the panel for being 
here, for your great and good testimony.
    Ms. Wynn, in your testimony, you explain how some types of 
hospitals are doing better in performance-based programs. You 
stated that hospitals servicing low-income patients and those 
that focus on teaching do not do as well. Can you explain more 
about the trend that you are seeing, the weaknesses?
    Ms. WYNN. Sure. I would point back to the conversation 
around the readmissions penalty program and our concerns there 
that the rates of readmission are not risk-adjusted for the 
patient's socioeconomic condition. So, in terms of safety net 
hospitals, that definitely confers or imposes additional 
penalties on them relative to other hospitals.
    And then, for teaching hospitals, they also tend to treat 
large socioeconomically disadvantaged populations, so they have 
the same issues on the readmissions side, but they are also 
disproportionately hit by the hospital-acquired conditions or 
complications penalty. Because these are rare events, what CMS 
does is they essentially put smaller hospitals that have very 
few of these events, they put them at the national average. And 
they say: These events are too rare for us to really calculate 
what your penalty should be, so we are going to assign you the 
national average.
    In the complications penalty, it is only the bottom 
quartile of hospitals, so the bottom 25 percent, that is 
penalized, so that means that smaller hospitals that are 
assigned the national average will essentially never be 
penalized, right, because they can't work their way into the 
bottom quartile, and that leads to really the larger teaching 
hospitals and urban hospitals in the penalty bucket.
    Mr. LEWIS. Thank you very much for your response.
    Thank you. I yield back.
    Chairman TIBERI. Dr. Price is recognized for 5 minutes.
    Mr. PRICE. Thanks so much, and I appreciate the Chair's 
forbearance on schedule.
    And I want to thank everybody for their testimony.
    I want to highlight a couple of items. I was here earlier, 
as all of you were providing your testimony, and I was struck 
by, Dr. Worsowicz, your apt description that patients are 
unique and that one--it may have been you, Mr. Guenthner--one 
patient with a diagnosis of a stroke is not like another 
patient with a diagnosis of a stroke. Same diagnosis, different 
treatment in that the quality decisions that are made ought to 
be made by patients and families and doctors who are providing 
the care as opposed to somewhere else.
    Mr. Guenthner, I want to talk about hopefully three 
specific, very clear items under the home health arena. First, 
is the reclaim review that has been proposed. On May 25th of 
this year, 116 bipartisan Members of the House sent a letter to 
CMS urging that CMS rescind the proposal for the five-State 
demonstration project. At one point, a Medicare official 
recommended that home health agencies fax in documents, as the 
electronic system was not working. Home health providers are 
experiencing submission issues that require more than 45 
minutes for each and every preclaim review request. Preclaims 
rejection rate is between 70 and 80 percent. So physicians and 
others have complained to home health agencies and CMS 
regarding the intensive paperwork burden and confusion--on and 
on and on.
    The question is, would we be aided by a delay in this 
demonstration so that CMS can get their act together, and we 
can help assist them to refine this program?
    Mr. GUENTHNER. Yes, sir, I believe we would. As I commented 
in my testimony, this PCR, or preclaim review, topic is a 
direct result of the physician face-to-face requirement that 
included a subjective narrative that the home care industry, 
Almost Family included, commented to CMS was likely to result 
in very high audit error rates, because the auditor, 18 months 
or 2 years after the fact, would subjectively review the 
narrative written by the physician solely on the basis of the 
face-to-face document, not on the basis of the entire medical 
record.
    Mr. PRICE. What could we do to remedy the face-to-face 
regulation?
    Mr. GUENTHNER. I think that CMS has rolled some of this 
back. CMS has changed some of the requirements. We would like 
to see it much more prescriptive. We would like to see it much 
easier for physicians to execute. And what we have here is a 
trust problem. When the physician certifies the need for home 
care, they have certified that they have seen the patient, the 
only reason to have them have to write a narrative that could 
be challenged later is because we don't trust the physician's 
certification.
    Mr. PRICE. Just checking the box?
    Mr. GUENTHNER. Yes, sir.
    Mr. PRICE. I want to jump to the Medicare appeals backlog 
in home health providers. In Georgia, there is a home health 
provider with $92,000 denial on over 29 claims, in five 
locations. These claims have slowed to a crawl. Many of them 
have been going on for 4, 5 years in spite of a 90-day 
requirement under the statute. So it seems that this backlog is 
only growing, and I wonder if you would agree with me that a 
global appeal settlement similar to the ones used for hospitals 
would provide some relief to the ALJ hearing backlog?
    Mr. GUENTHNER. Yes, sir, emphatically so.
    Mr. PRICE. Thank you.
    And I just want to highlight one other item, and that is 
the value-based purchasing model and the withhold that was set 
up for hospitals. And the percent withhold for hospitals was 1 
percent, growing to 2 percent over a 5- to 6-year period of 
time, as I recall. The proposal in the post-acute care space, 
as you know, is a 3-percent to an 8-percent withhold. When I 
speak to the folks trying to help patients back home and 
providing the care in the home health arena, they tell me that 
in many cases their margin isn't 8 percent. And so I wonder if 
it would--do you believe that it would be more appropriate, if 
they are going to go down this road, to have a withhold that is 
equivalent or the same as what the hospital community went 
through?
    Mr. GUENTHNER. Yes, sir. We do think that parity is 
important across provider groupings and that the amount at risk 
should not get out in front of the infrastructure and the 
information available necessary for providers to execute.
    If we get too much at risk, we have too high a risk of an 
adverse outcome or unanticipated event.
    Mr. PRICE. Dr. Worsowicz, would you agree with that?
    Dr. WORSOWICZ. Yes. I agree whatever you put at risk, we 
have to make sure we don't have an adverse outcome providing 
access to the patient.
    Mr. PRICE. Thank you.
    Chairman TIBERI. The gentleman's time has expired.
    Mr. Crowley is recognized.
    Mr. CROWLEY. I appreciate the Chairman. Thank you very much 
for giving me the opportunity to be a part of the panel today. 
I want to make sure you make the vote, as well as Dr. Price, 
and that I make it as well.
    I did want to stay particularly to congratulate you for the 
bipartisan approach in terms of the panel today and the 
discussion that has gone on here as well. I think it is 
unusually a rational and coherent hearing today.
    Particularly, I want to welcome Ms. Wynn to the panel. As a 
New Yorker, how incredibly proud I am of the work of New York 
hospitals working under tremendously difficult situations at 
times, given the complex challenges, complexity of the cases 
that New York sees and treating a very challenging population 
in many respects but at the same time still training one out of 
every six doctors in the United States. I think it needs to be 
said and applauded as well.
    I think you made reference to particular challenges that 
teaching hospitals have in this environs and especially those 
in low-income and safety net communities. I think the word we 
are looking for is flexibility, having that flexibility of 
recognizing those challenges and not penalizing for those 
challenges, but recognizing and understanding them and meeting 
those needs so that the needs of the patients are met, 
certainly the quality. We all want the best outcome. The 
problem is, though, when patients come to the hospital not in 
stage I or stage II, but stage III and IV, because they don't 
have insurance and can't have insurance, it cost more to treat, 
and the outcome will just not be as good as patients who get 
there at stage I and stage II, where it costs less to treat and 
the outcome tends to be better. So I think that is an important 
point to recognize from the mere perspective, I think, for 
large cities as well.
    I don't have any particular--I have some questions. We will 
get them to the Committee, maybe have all of you answer them.
    I just want to thank the Chairman for this time.
    Chairman TIBERI. Thank you, Mr. Crowley.
    We have 2 minutes left to vote, so, unfortunately, we have 
to go.
    I would like to thank the witnesses. You guys were awesome. 
I very much appreciate it. These are very important issues and 
I look forward to engaging with you in the future.
    Please be advised that Members will have 2 weeks to submit 
written questions to be answered later in writing. Those 
questions and your answers will be made part of the public 
record. Thank you.
    With that, we are adjourned.
    Ms. WYNN. Thank you.
    [Whereupon, at 1:30 p.m., the Subcommittee was adjourned.]
    [Submissions for the Record follow:]
    
    
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