[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





                MEDICARE ADVANTAGE HEARING ON PROMOTING 
                    INTEGRATED AND COORDINATED CARE 
                       FOR MEDICARE BENEFICIARIES 

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

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

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 7, 2017

                               __________

                          Serial No. 115-HL02

                               __________

         Printed for the use of the Committee on Ways and Means










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                     U.S. GOVERNMENT PUBLISHING OFFICE 
		 
33-429                    WASHINGTON : 2019                 


























                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California              SANDER M. LEVIN, Michigan
PATRICK J. TIBERI, Ohio              JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska               EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
ERIK PAULSEN, Minnesota              BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas                JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee               DANNY DAVIS, Illinois
TOM REED, New York                   LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania             BRIAN HIGGINS, New York
JIM RENACCI, Ohio                    TERRI SEWELL, Alabama
PAT MEEHAN, Pennsylvania             SUZAN DELBENE, Washington
KRISTI NOEM, South Dakota            JUDY CHU, California
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan

                     David Stewart, Staff Director

                 Brandon Casey, Minority Chief Counsel

                                 ______

                         SUBCOMMITTEE ON HEALTH

                   PATRICK J. TIBERI, Ohio, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            RON KIND, Wisconsin
VERN BUCHANAN, Florida               EARL BLUMENAUER, Oregon
ADRIAN SMITH, Nebraska               BRIAN HIGGINS, New York
LYNN JENKINS, Kansas                 TERRI SEWELL, Alabama
KENNY MARCHANT, Texas                JUDY CHU, California
DIANE BLACK, Tennessee
ERIK PAULSEN, Minnesota
TOM REED, New York



























                            C O N T E N T S

                               __________

                                                                   Page

Advisory of June 7, 2017, announcing the hearing.................     2

                               WITNESSES

Gretchen A. Jacobson, Ph.D., Associate Director, Kaiser Family 
  Foundation's Program on Medicare Policy........................     6
Cheryl Wilson, RN, MA, LNHA, Chief Executive Officer, St. Paul's 
  Senior Services................................................    17
David C. Grabowski, Ph.D., Professor of Health Care Policy, 
  Department of Health Care Policy at Harvard Medical School.....    27
A. Mark Fendrick, MD, Executive Director, University of Michigan 
  Center for Value-Based Insurance Design........................    33

                        QUESTIONS FOR THE RECORD

Questions submitted by the Minority Members of the Subcommittee 
  on Health of the Committee on Ways and Means to A. Mark 
  Fendrick, MD, Executive Director, University of Michigan Center 
  for Value-Based Insurance Design...............................    68
Questions submitted by the Minority Members of the Subcommittee 
  on Health of the Committee on Ways and Means to David C. 
  Grabowski, Ph.D., Professor of Health Care Policy, Department 
  of Health Care Policy at Harvard Medical School................    71
Questions submitted by the Members of the Subcommittee on Health 
  of the Committee on Ways and Means to Gretchen A. Jacobson, 
  Ph.D., Associate Director, Kaiser Family Foundation's Program 
  on Medicare Policy.............................................    73
Questions submitted by the Minority Members of the Subcommittee 
  on Health of the Committee on Ways and Means to Cheryl Wilson, 
  RN, MA, LNHA, Chief Executive Officer, St. Paul's Senior 
  Services.......................................................    79

                       SUBMISSIONS FOR THE RECORD

ACAP, Association for Community Affiliated Plans.................    84
ACHP, Alliance of Community Health Plans.........................    87
American Hospital Association (AHA)..............................    91
America's Health Insurance Plans (AHIP)..........................    95
Better Medicare Alliance (BMA)...................................   104
Commonwealth Care Alliance (CCA).................................   113
DRIVE Health Initiative..........................................   117
EmblemHealth.....................................................   122
Genesis Healthcare, Incorporated.................................   128
Healthcare Leadership Council (HLC)..............................   133
National MLTSS Health Plan Association...........................   136
National Association of ACOs (NAACOS)............................   141
National PACE Association........................................   142
National Center for Policy Analysis (NCPA).......................   145
SCAN Health Plan (SCAN)..........................................   153
Special Needs Plan (SNP) Alliance................................   155
Altarum Institute................................................   163

 
                     MEDICARE ADVANTAGE HEARING ON 
                        PROMOTING INTEGRATED AND 
                          COORDINATED CARE FOR 
                         MEDICARE BENEFICIARIES 

                              ----------                              


                        WEDNESDAY, JUNE 7, 2017

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

    The Subcommittee met, pursuant to call, at 1:59 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) 225-1721
FOR IMMEDIATE RELEASE
Wednesday, June 7, 2017
HL-02

                       Chairman Tiberi Announces

                Medicare Advantage Hearing on Promoting

                    Integrated and Coordinated Care

                       for Medicare Beneficiaries

    House Ways and Means Health Subcommittee Chairman Pat Tiberi (R-
OH), announced today that the Subcommittee will hold a hearing to 
review the current status of Medicare Advantage programs such as 
Special Needs Plans, other models like the Program for All-Inclusive 
Care, and emerging models that allow for increased flexibility and 
value-based insurance design that are designed to deliver integrated 
and coordinated care for our most vulnerable seniors and people living 
with disabilities. The hearing will take place on Wednesday, June 7, 
2017, 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 
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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, June 21, 2017. 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 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
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and any written comments in response to a request for written comments 
must conform to the guidelines listed below. Any submission not in 
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maintained in the Committee files for review and use by the Committee.
      
    All submissions and supplementary materials must be submitted in a 
single document via email, provided in Word format and must not exceed 
a total of 10 pages. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    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.

    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 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available at
    http://www.waysandmeans.house.gov/

                                 

    Chairman TIBERI. The Subcommittee will come to order a 
minute early, the record will show.
    Welcome to the Ways and Means Subcommittee on Health 
hearing on ``Promoting Integrated and Coordinated Care for 
Medicare Beneficiaries.'' It is my pleasure to welcome our four 
witnesses today as we continue our discussion on the Medicare 
program and the different integrated care delivery systems 
offered to our seniors, including those up for extension this 
year.
    The Committee continues to look at ways to reform Medicare 
and improve the delivery of care for our seniors and people 
living with disabilities. I think this is a good place to 
start. It is looking at some of the lessons learned from 
smaller programs that have offered targeted coordinated care to 
some of the most frail and sick beneficiaries in our Medicare 
program.
    Today is a great opportunity for us to hear about some of 
the impediments to providing value-driven care for the 
population and hear solutions that have not only benefited 
seniors, but taxpayers as well.
    PACE, or the Program for All Inclusive Care for the 
Elderly, is an integrated care program that provides hands-on 
long-term care and support to beneficiaries who need an 
institutional level of care but continue to live at home. 
Although this program offers seniors and their caregivers a 
great opportunity to stay in the community and receive the care 
they need, the criteria for entering a PACE organization 
remains very restrictive. Additionally, the regulatory and 
administrative burdens of operating a PACE facility can often 
make it difficult for PACE organizations to expand and grow to 
serve more beneficiaries.
    Another integrated care option for vulnerable seniors is 
the special needs plans, or often called SNPs. Congress must 
act by the end of this year to reauthorize SNPs in order for 
seniors to continue to have access. Yet, we continue to find 
challenges surrounding care coordination and delivery in 
certain types of SNPs.
    Due to the lack of integration of benefits and 
administrative burden of offering a SNP, CareSource, a managed 
care plan offered in my district, has delayed offering SNPs in 
their current form. While continuing to offer other insurance 
products that serve dual-eligible beneficiaries, CareSource 
finds the integrated model that they are using in northeastern 
Ohio to be better, more effective, and a more efficient model 
to serve dual-eligible beneficiaries, one that reduces provider 
burden and ensures that a patient receives the care and support 
needed to meet their total healthcare needs.
    Today, we will hear from our panel of experts on the 
benefits and challenges to PACE and SNP operations as well as 
its enrollees. We will also explore different bipartisan 
options for changes to these key programs and others within the 
Medicare Advantage space, such as value-based insurance design, 
that are needed to increase efficiencies, quality, beneficiary 
experience, and enrollment.
    As the Medicare population continues to grow, it is 
important that we continue to look at how we can move from 
volume to value based across all parts of our Medicare program.
    Today, we will hear about how we can allow more plan 
flexibility within the MA space through incentivizing the use 
of high- versus low-value care and have the potential to lead 
to lower costs for both taxpayers and beneficiaries while 
improving health and quality outcomes.
    I now yield to our distinguished Ranking Member, Mr. Levin, 
for the purposes of an opening statement.
    Mr. LEVIN. Thank you very much, Mr. Chairman, for holding 
this hearing.
    I would like also, as you did, to thank our witnesses for 
joining us today. We have an impressive panel that has prepared 
a number of thoughtful comments and recommendations. I am 
pleased to see that it includes a fellow Michigander.
    This hearing is about new models to coordinate and 
integrate care for Medicare beneficiaries, especially those who 
are dually eligible for Medicare and Medicaid. These 11 million 
Americans are among the most vulnerable members of our society. 
More than 40 percent are under 65 and live with disabilities 
and many have very complex healthcare needs. In the past, we 
have had a bipartisan commitment to providing high-quality care 
for this population, and hopefully this will continue.
    Unfortunately, the recent actions of my Republican 
colleagues suggest that this may no longer be the case. Last 
month, the House passed an ACA repeal bill that would slash 
Medicaid by more than $800 billion over the next decade, and 2 
weeks ago President Trump proposed a budget that would further 
cut Medicaid by $600 billion.
    These cuts would have a major impact on the people who are 
the subject of this hearing. Cutting Medicaid will hurt those 
11 million Medicare beneficiaries who are dually eligible for 
both programs and who depend on Medicaid to provide services 
and cover expenses that Medicare doesn't. For example, Medicaid 
reduces out-of-pocket costs for low-income beneficiaries and 
pays for important services that Medicare does not cover, 
including long-term care.
    Ending the ACA's Medicaid expansion and switching to per 
capita caps or block grants would shift health costs onto 
beneficiaries and leave many without Medicaid coverage at all. 
This will reduce access to care and put financial strain on 
low-income seniors and people with disabilities. I hope we 
spend time this afternoon discussing this important issue.
    We are also here to examine three specific models for 
delivering care to Medicare Advantage enrollees. Special needs 
plans are the most prominent of the models we will discuss 
today. Currently, nearly 2.3 million Americans receive coverage 
through these plans, which are tailored to the needs of 
specific populations of beneficiaries. Special needs plans are 
particularly important to those who are eligible for both 
Medicare and Medicaid.
    Authorization for the program, as you said, Mr. Chairman, 
expires next year, and I look forward to working in a 
bipartisan way on an extension that maintains quality while 
promoting better care and stronger protection for 
beneficiaries.
    We will also discuss PACE. This model has shown promising 
results by providing coordinated care to frail elderly 
populations. Although its footprint is small, PACE has allowed 
thousands of Americans to maintain their independence by 
providing nursing home-level care in community settings.
    As we consider the future of this model, our focus must be 
on ensuring that quality remains high and that we do not 
sacrifice our standards in the interest of expansion. This is 
particularly important now that for-profit enterprises are 
eligible to participate in PACE.
    Both of these models, special needs plans and PACE, help 
provide care for beneficiaries who are relying not only on 
Medicare but also on Medicaid.
    Finally, we will discuss value-based insurance design, or 
VBID, a proposal to reduce healthcare costs by promoting high-
value care. This model is in its infancy in Medicare, and we 
still need to learn more about its impacts on the program and 
on beneficiaries. To be a success, VBID must show meaningful 
improvements in efficiency without reducing access to necessary 
services. I hope to hear more from our witnesses, from all of 
you, about our options for this model moving forward.
    Once again, I thank the Chairman and the panel for joining 
us. And I look forward to very constructive back-and-forth.
    Thank you, Mr. Chairman.
    Chairman TIBERI. Thank you, Mr. Levin.
    Without objection, each of our Members' opening statements 
will be made part of the record.
    With that, I would like to introduce today's witnesses.
    First, we will hear from Ms. Gretchen Jacobson, Associate 
Director of the Program on Medicare Policy at the Kaiser Family 
Foundation.
    Thank you for joining us today.
    Next, we will hear from Ms. Cheryl Wilson, Chief Executive 
Officer at St. Paul's Senior Services.
    I appreciate you traveling all the way from California to 
be with us.
    After Cheryl, we will hear from Mr. David Grabowski, a 
professor at Harvard Medical School and recent MedPAC 
appointee.
    Congratulations, by the way, on that appointment. We look 
forward to working with you on other Medicare policies that 
come before this Committee in the future as well.
    And last but not least, from what we in Ohio call the State 
up north, from the school up north, Dr. Mark Fendrick from the 
University of Michigan.
    Is that your son behind you? Is he an Ohio State guy?
    Dr. FENDRICK. Michigan State.
    Chairman TIBERI. I like that. Very good. I like that.
    Mr. LEVIN. Say that again.
    Dr. FENDRICK. Michigan State.
    Chairman TIBERI. Michigan State. I like Michigan State.
    Dr. Fendrick is Director of the Center for Value-Based 
Insurance Design at the University of Michigan. He is also 
professor of internal medicine at the School of Medicine and 
professor of health management and policy at the School of 
Public Health at the University of Michigan. He received his BA 
from the University of Pennsylvania, however--that is good--and 
his MD at Harvard Medical School.
    So welcome all of you. As you can notice, I am in a little 
rush, because we have to go vote.
    I think what we will do now, if everyone agrees, we will go 
vote, we will come back, and then we will hear from Ms. 
Jacobson and the rest of you shortly. Sorry for the little 
break. But with this, we are going to break for a little bit, 
and we will be back.
    [Recess.]
    Chairman TIBERI. Our hearing will resume, and we will get 
right to our witnesses.
    First up, Ms. Jacobson, again from the Kaiser Family 
Foundation. You are recognized for 5 minutes.

 STATEMENT OF GRETCHEN A. JACOBSON, PH.D., ASSOCIATE DIRECTOR, 
    KAISER FAMILY FOUNDATION'S PROGRAM ON MEDICARE POLICY, 
                         WASHINGTON, DC

    Ms. JACOBSON. Mr. Chairman and Members of the Subcommittee, 
I am Dr. Gretchen Jacobson of the Kaiser Family Foundation. I 
am honored to be here this afternoon to testify on the topic of 
promoting integrated and coordinated care for Medicare 
beneficiaries.
    Over the years, the Medicare program has developed and 
continues to test new approaches for integrating and 
coordinating care for high-cost, high-need Medicare 
beneficiaries in both Medicare Advantage and traditional 
Medicare.
    My testimony today focuses on three of these approaches: 
Special Needs Plans, the Program of All-Inclusive Care for the 
Elderly, or PACE, and Value-Based Insurance Design within 
Medicare Advantage. Two of three of these approaches focus on 
people dually eligible for Medicare and Medicaid. The 11 
million people who are dually eligible for Medicare and 
Medicaid comprise about one in five people on Medicare, and 
these include many of the sickest and frailest people on 
Medicare.
    While most dually eligible beneficiaries are in traditional 
Medicare, about one-third are in Medicare Advantage plans. This 
is a similar share to enrollment among other people in 
Medicare. Among dually eligible beneficiaries in Medicare 
Advantage plans, about half are in regular Medicare Advantage 
plans, and the other half are in Special Needs Plans, or SNPs.
    SNP enrollment is limited to beneficiaries with specific 
health conditions or to beneficiaries dually eligible for 
Medicare and Medicaid. SNPs for dually eligible beneficiaries 
comprise the largest SNPs and include about 2 million 
beneficiaries in 2017.
    While SNPs have been part of the Medicare Advantage program 
for over a decade, we know little about what additional 
services or benefits enrollees receive, how well plans 
coordinate care for high-need enrollees, and the outcomes for 
high-need enrollees compared to other care options.
    Like SNPs, PACE programs also receive capitated payments 
from Medicare. PACE is a provider-based program that was 
established in the 1970s and is designed for people who need a 
nursing home level of care but want to continue living in their 
communities. The extensive literature on PACE suggests that it 
increases longevity, reduces nursing home care, and reduces 
hospitalizations and emergency room visits. The biggest 
challenge with PACE has been its scalability. Most PACE 
programs are relatively small.
    Value-based insurance design is another approach for 
improving the management of patient care in Medicare Advantage 
and traditional Medicare. Some have proposed using it to allow 
Medicare Advantage plans to enhance benefits for enrollees with 
specific health conditions. This would be a departure from 
current rules, which require Medicare Advantage plans to 
provide the same benefit package to all enrollees regardless of 
their health conditions.
    This year, CMS began permitting Medicare Advantage plans to 
test a value-based insurance design model for specific chronic 
conditions. My full testimony raises several questions about 
value-based insurance design, the largest of which is who 
should really decide which providers and services should be 
designated as high value?
    Overall it is critical to properly evaluate these programs 
not only because of the growing number of people in them, but 
also because many of the enrollees are some of the sickest and 
frailest people on Medicare. It is important to make sure 
delivery systems are supporting them rather than putting them 
at risk.
    Also, if the programs are shown to be effective, it is 
worth exploring how to broaden the programs to include other 
people in Medicare Advantage plans and traditional Medicare 
with high needs and high costs.
    Appropriately managing the care of high-cost high-need 
Medicare beneficiaries, many of whom are dually eligible for 
Medicare and Medicaid, could help ensure the fiscal 
sustainability of both Medicare and Medicaid in the years to 
come. At the same time, it remains important to ensure that 
adequate protections are in place to retain access to 
healthcare services, providers, and quality of care for the 
sickest and poorest on Medicare.
    Thank you, Mr. Chairman. I would be happy to answer any 
questions, and I look forward to working with all Members and 
staff of the Subcommittee on these issues in the future.
    [The prepared statement of Ms. Jacobson follows:]


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

        STATEMENT OF CHERYL WILSON, RN, MA, LNHA, CHIEF 
      EXECUTIVE OFFICER, ST. PAUL'S SENIOR SERVICES, SAN 
                           DIEGO, CA

    Ms. WILSON. Good afternoon. Thank you, Mr. Chairman Tiberi 
and Ranking Member Levin and other distinguished Members of the 
Subcommittee. I am Cheryl Wilson, Chief Executive Officer of 
St. Paul's Senior Services and St. Paul's PACE in beautiful 
sunny San Diego. I represent the National PACE Association here 
today and their 122 PACE organizations with 233 sites in 31 
States serving over 42,000 participants each day.
    So what is PACE? PACE is the gold standard for integrated 
care. PACE stands for the Program of All-Inclusive Care for the 
Elderly, a community-based health and social services provider 
which receives a capitated payment rate to serve a frail set of 
Medicare eligible frail seniors all of whom are at nursing home 
level of care but are still being cared for at home by the PACE 
team.
    We are an insurance company and a care provider. The 
average participant is 77 years old and lives with multiple 
chronic, very complex conditions limiting their activities of 
daily living. Fifty percent have some form of dementia, but 
through PACE 95 percent live at home. Even more challenging at 
St. Paul's PACE, 50 percent of those we serve live at home all 
alone.
    Along with our PACE, St. Paul's Senior Services is a full 
service, nonprofit organization established in 1960. We provide 
retirement homes, HUD housing, assisted living, memory care, 
day programs, skilled nursing, and now housing for homeless 
seniors.
    PACE keeps frail seniors in their homes and communities by 
providing timely, clinically appropriate treatments and social 
supports. PACE participants experience a high quality of life 
and optimal medical outcomes with lower costs.
    Two weeks ago I had lunch with a lady enrolled in our PACE 
program. She had all her belongings wrapped securely in a 
plastic bag. She told me her ``other stuff'' was outside all 
wrapped up because of ``bugs.'' She shared with me her multiple 
major medical conditions and her inability to get out to 
grocery stores or to her doctors for visits. Thus, she had a 
history of visiting the emergency room every 2 to 3 months, 
which she hated because of the long waits, ``all the hubbub,'' 
and the fact that no one ever spoke to her, rather only about 
her and over her.
    She said she was getting to like the PACE staff, but it was 
taking time to believe that they could be so nice and really 
mean it. In fact, this participant had spent the first 3 weeks 
in PACE sitting outside the building with care being delivered 
either to her at home or on the bench outside due to her 
paranoia and fear of exploitation.
    She finally agreed to have her home treated for bed bugs 
and other infestations, to receiving personal care, and to 
having her belongings wrapped up until she was willing to give 
them up for 3 days of freezing, which was needed to eliminate 
all the infestations.
    In the meantime this lady was provided with home care, home 
delivered meals, daily home medications, twice weekly personal 
care at the PACE center, weekly physician visits, social 
services, psychiatric interventions, and many other ancillary 
services. In the 4 months she has been with PACE, this lady has 
not experienced a single emergency room visit.
    In fact, a study we did showed that in the first year of 
PACE, patient hospital visits declined 73 percent. PACE serves 
many frail elders and individuals with disabilities today but 
we could serve many more. The decades old PACE regulations must 
be updated immediately. While CMS has issued a proposed rule, 
it is yet to issue the final rule.
    Similarly CMS could support PACE growth by implementing the 
congressionally granted pilot authority to serve new 
populations with similar needs and medical complexities. We ask 
CMS to move the pilots forward quickly.
    Other steps forward are some statutory improvements to 
enable PACE to better serve Medicare beneficiaries. PACE has 
incorporated many of the reforms promoted by Medicare, 
including coordinated care and integrated financing. PACE has 
proven to be a good value to taxpayers. If you haven't visited, 
please go to visit a PACE site in your State, and if you don't 
have a PACE site, ask why.
    In all my years in healthcare I know that PACE is the very 
best model of care as professed to me by Health and Human 
Services Secretary Tommy Thompson over 15 years ago.
    Thank you for listening to me, and I look forward to 
answering your questions.
    [The prepared statement of Ms. Wilson follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

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

  STATEMENT OF DAVID C. GRABOWSKI, PH.D., PROFESSOR OF HEALTH 
   CARE POLICY, DEPARTMENT OF HEALTH CARE POLICY AT HARVARD 
                   MEDICAL SCHOOL, BOSTON, MA

    Mr. GRABOWSKI. Great. Thank you. Good afternoon. My name is 
David Grabowski, and I am a professor in the Department of 
Health Care Policy at Harvard Medical School.
    I would like to thank Chairman Tiberi, Ranking Member 
Levin, and the distinguished Members of the Committee for 
giving me this opportunity to speak today.
    This testimony is derived in large part from the academic 
work I have done related to integrated and coordinated care for 
Medicare beneficiaries. Before I begin my substantive remarks, 
I would like to emphasize that my comments reflect solely my 
beliefs and do not reflect the opinions of any organization I 
am affiliated with, including MedPAC, which I was just 
appointed to last month.
    Mr. Chairman, we all share the policy goal of coordinated, 
high-value care for dual eligible and chronically ill Medicare 
beneficiaries. Under traditional Medicare fee-for-service dual 
eligible beneficiaries have three health insurance cards, 
Medicare Part D, and Medicaid, with three very different sets 
of benefits.
    Ultimately this fragmented model of coverage does little to 
encourage cost containment or high-quality care. Under an 
integrated model of care, enrollees ideally have a single set 
of comprehensive benefits covering a range of services. They 
have an individualized care plan with a coordinated team of 
health providers that encourages care in less restrictive, 
lower-cost settings.
    Medicare Advantage Special Needs Plans, or SNPs as they are 
called, are one potential way to achieve this type of financial 
and clinical integration. SNPs were authorized in 2003 with the 
idea of attracting a different type of beneficiary into 
Medicare Advantage. Today over 2 million individuals are 
enrolled in SNPs, which is greater than the number of Medicare 
beneficiaries in all other integrated care programs combined.
    SNPs enjoy some unique regulatory advantages. As such, it 
is vitally important that we understand whether there is 
anything truly special about Special Needs Plans to justify 
their unique status.
    Two areas where SNPs have the opportunity to provide 
benefits are through improved quality, and better integration. 
In terms of quality, the research is somewhat mixed when 
comparing SNPs with traditional Medicare Advantage plans. The 
findings depend on the type of SNP. Institutional SNPs, or I-
SNPs, perform better than other plans on the available quality 
measures. Dual eligible, or D-SNPs, perform better when they 
are strongly integrated with Medicaid but very similar to other 
plans when less well integrated.
    Finally, Chronic Conditions SNPs, or C-SNPs, generally 
perform no better, and often worse, when compared to other 
plans.
    In terms of integration, if the dual eligible SNPs are 
going to offer a truly integrated product, they need to both 
clinically and financially integrate with Medicaid.
    As a bit of history, the first generation of D-SNPs had 
little integration with Medicaid. Beginning in 2008, the D-SNPs 
were required to have a contract with Medicaid. In response, 
most D-SNPs simply established a contract for case management 
of Medicaid services. Today most D-SNPs are still not at risk 
for Medicaid spending or accountable for Medicaid outcomes. 
This is not true integration.
    Moving forward, Mr. Chairman, I want to highlight four 
areas of opportunity for Medicare policy.
    First, all D-SNPs should be both clinically and financially 
integrated with Medicaid, otherwise it is hard to make a case 
for this model over regular MA plans.
    Second, SNPs must show that they offer higher quality to 
beneficiaries. If certain models like C-SNPs do not generally 
perform better than regular Medicare Advantage plans, we need 
to reconsider whether this model is working for beneficiaries.
    Third, payments to SNPs for those full duals should be 
commensurate with the cost of covering these individuals. 
Historically risk adjustment has not properly accounted for the 
frailest beneficiaries. CMS recently adjusted payments upward 
for the full duals to address this issue. I would encourage 
continued oversight on the adequacy of payments and risk 
adjustment.
    Finally, relative to other models like PACE and the V-BID 
demonstration, SNPs have not been comprehensively studied by 
CMS in over a decade. If we are going to continue to put public 
dollars into this program we need a more rigorous and nuanced 
understanding of which SNP models work for which Medicare 
beneficiaries.
    In summary, the theory of integrated care underlying the 
SNPs is incredibly compelling. In practice, however, we have 
not achieved meaningful integration in a majority of SNPs to 
date. Reforms that encourage true integration will help ensure 
high-value care for our frailest Medicare beneficiaries.
    Thank you, Mr. Chairman. I look forward to your questions.
    [The prepared statement of Mr. Grabowski follows:]


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    Chairman TIBERI. Thank you. And last but not least, the 
gentleman from up north, as you would say in Ohio, Dr. 
Fendrick, you are recognized for 5 minutes.

    STATEMENT OF A. MARK FENDRICK, MD, EXECUTIVE DIRECTOR, 
UNIVERSITY OF MICHIGAN CENTER FOR VALUE-BASED INSURANCE DESIGN, 
                         ANN ARBOR, MI

    Dr. FENDRICK. Good afternoon, and thank you Chairman 
Tiberi, Ranking Member Levin, and Members of the Subcommittee. 
I am Mark Fendrick, a practicing primary care physician and a 
professor at the University of Michigan. Go Blue.
    Mr. Chairman, I applaud you for holding this hearing 
because access to quality healthcare and containing Medicare 
costs are among the most pressing issues for our national well-
being and economic security.
    Moving Medicare Advantage from volume driven to a value-
based program requires a change in both how we pay for care and 
how we engage consumers to seek care. Yet before today's 
hearing little attention has been directed to how we can alter 
beneficiary behavior to make MA more effective and efficient.
    Today I urge you to support the bipartisan effort to allow 
MA plans across the country to incorporate value-based 
insurance design to help members become better healthcare 
consumers.
    I could tell you with great confidence that my Medicare 
patients could care less how much the Federal Government spends 
on healthcare. But they do care deeply about the amount they 
have to pay out of pocket to get the care they need.
    With rare exception, MA plans implement cost sharing in a 
one-size-fits-all way and each beneficiary is charged the same 
amount for every doctor visit, every diagnostic test and 
prescription drug. People ask me all the time whether the 
amount of cost sharing faced by MA members is too high or too 
low.
    The answer, as every clinician knows, is it depends. But 
asking MA members to pay more for all services despite clear 
differences in clinical value results in decreases in the use 
of essential care, the care I beg my patients to do. And this 
cost-related nonadherence negatively impacts our most 
vulnerable patient populations. So I see this blunt one-size-
fits-all approach as penny wise and pound foolish.
    Does it make sense to you, Mr. Chairman, that my MA 
patients pay the same copayment to see a cardiologist after a 
heart attack as to see a dermatologist for mild acne or pay the 
same prescription drug copayment for a life-saving drug that 
treats diabetes, cancer, or depression as one that makes 
toenail fungus go away? Realizing that MA beneficiaries use too 
little high-value care and too much low-value care, I endorse a 
clinically nuanced cost-sharing approach as a potential 
solution.
    Clinically nuanced value-based insurance designs set 
consumer cost-sharing levels to encourage the use of high-value 
services and providers and discourage the use of low-value 
care.
    For the record, I support high cost-sharing levels but only 
for those services that do not make MA beneficiaries any 
healthier. Led by the private sector, V-BID is implemented by 
hundreds of public and private employers, several States, and 
will soon be incorporated into the TRICARE program. The 
integration of V-BID into MA has garnered broad multi-
stakeholder and rare bipartisan support.
    I would like to acknowledge Subcommittee Members Diane 
Black and Earl Blumenauer whose bipartisan leadership on this 
issue led to the 2015 announcement of the MA V-BID model test, 
a 5-year program that allows designated plans now in seven 
States to reduce cost sharing for specific services and 
providers, but only for those beneficiaries with specified 
chronic conditions.
    In January of this year, nine MA plans successfully 
launched disease-specific programs combined with enhanced 
benefits to help people manage their chronic diseases. 
Responding to interest from MA plans in other States, CMS added 
three more States to the demo starting next year. So due to the 
V-BID success in the private sector, the TRICARE pilot, and 
nationwide interest in the MA V-BID model test, bicameral, 
bipartisan legislation has recently been introduced to allow MA 
plans in all 50 States the flexibility to allow MA plans to set 
beneficiary cost-sharing levels on clinical value, not price of 
medical services.
    It is my hope that the Subcommittee supports the national 
expansion of V-BID and MA, which when coupled with other 
promising integrated models like the PACE program discussed 
today, could result in a healthier Medicare population, which 
motivates me as a physician, and more efficient Federal 
expenditures, thus serving the best interests of American 
taxpayers and future beneficiaries.
    So it is my great pleasure to support the Medicare program, 
and I am happy to work with the Subcommittee further and look 
forward to hearing your comments and answering your questions. 
Thank you.
    [The prepared statement of Dr. Fendrick follows:]


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    Chairman TIBERI. Thank you, Doc. Not bad for a Michigan 
guy.
    Dr. FENDRICK. Thank you.
    Chairman TIBERI. Ms. Wilson, just a thought on the PACE 
program.
    I think we all agree that most of us as we age and become 
elderly would prefer to remain in our homes. Ensuring that 
Medicare beneficiaries have the option to safely stay in their 
homes along with the right support system is obviously 
important, but it often requires a dedicated caregiver who can 
help with household needs or transportation or meals.
    Caring for that elderly family or friend can be awfully 
difficult at times and can take a toll both mentally and 
physically and sometimes actually financially.
    Can you expand on that, comment on that, and give us your 
thoughts?
    Ms. WILSON. One of the challenges is to keep the person, 
the participant, the patient at home because that is where they 
want to be, but it is challenging.
    Ninety-five percent of all PACE participants, however, do 
live at home, and that is across the country. The way that 
happens is because the interdisciplinary team meets on a daily 
basis and the needs of that person at home are just as 
important as the medical conditions that are treated once they 
come into the clinic. So taking care of things at home, such as 
meals, housecleaning, grab rails in the bathroom so people 
don't fall, all of those things, are very important.
    The social components of healthcare are just as important 
to save dollars on the healthcare side and to make keeping 
somebody at home efficient and effective is the key to PACE.
    Chairman TIBERI. Mr. Grabowski and Ms. Jacobson, if you can 
comment on this, you specifically spent quite a bit of time in 
your testimony on the dual eligibles.
    Dual eligibles are auto assigned Medicare prescription drug 
plans in several States, including my own State of Ohio, and 
they are allowed to auto enroll dual eligible beneficiaries 
with opt-out parameters in the D-SNPs specifically. Can auto 
assignment lead to higher beneficiary enrollment in your 
opinion and can auto assignment be used as an incentive maybe 
to fully integrate their benefits in the D-SNPs?
    Mr. GRABOWSKI. Yes, maybe I will start. There was actually 
some early experience with auto enrollment or passive 
enrollment in the SNPs.
    Several States actually had their beneficiaries, Texas, 
would be an example, Arizona, Minnesota, about 50,000 
beneficiaries were automatically or passively enrolled into the 
D-SNPs. So there was some early experience that it actually 
worked. I think it can increase enrollment numbers. I would be 
wary of saying it is going to get everyone enrolled, but it 
will get a broader selection of individuals in, so it gets 
around some of the risk selection issues that many of us have 
been so concerned about with plans cherry-picking or attracting 
certain types of beneficiaries.
    I would point, however, to the work we have done on the 
financial alignment initiative, the CMS demonstrations for the 
duals. We looked at eight States, and all of those eight States 
used passive enrollment or auto enrollment, and it turned out 
only about 25 percent of eligible duals stuck. So that means 
that 75 percent opted out. You will be happy to hear, Mr. 
Chairman, the State that did the best was Ohio actually.
    Chairman TIBERI. Wow.
    Mr. GRABOWSKI. Yes. About two-thirds of beneficiaries 
remained in the dual demo. Ohio did a very clever thing by 
first enrolling individuals passively into Medicaid in a first 
stage, and then doing Medicare in a second stage.
    On the other end of the spectrum, New York had the lowest 
enrollment at 5 percent. There, they coupled their enrollment 
process with counseling and required each new beneficiary to 
actually go through counseling. That turned out to be a mistake 
in that a lot of individuals didn't want to undertake the 
counseling, and hence, opted out of the program.
    Chairman TIBERI. Okay.
    Mr. GRABOWSKI. So I guess passive enrollment will work to 
bring enrollees in. It will bring in a more diverse group of 
enrollees. I think the challenge is that it won't get everyone, 
and I do think how you design the passive enrollment, the Ohio/
New York difference, really matters.
    Thank you.
    Chairman TIBERI. Ms. Jacobson.
    Ms. JACOBSON. I agree. The financial alignment models do 
provide a precedent for this. You do need to really consider, 
though, that more than half of dual eligibles have some sort of 
mental impairment or cognitive impairment. So it is really 
important to consider not only that they have a method of 
opting out, but also, that they know about it and that they are 
aware of it.
    And this is very difficult when you are talking about a 
population with schizophrenia, Alzheimer's disease and other 
mental illnesses to make sure that they really understand they 
have another option that they can go to.
    Chairman TIBERI. Great point. Doc, you mentioned the CMS V-
BID demonstration, and in your opinion, if you could expand on 
it, the demonstration is set up in a way that allows Medicare 
Advantage plans the necessary flexibility for them to reach the 
full benefit of the V-BIDs?
    Dr. FENDRICK. So that is a great question, and it is 
important to point out that, as mentioned in Dr. Jacobson's 
remarks, when Medicare was introduced in 1965 one of the 
foundations was this nondiscrimination clause that every 
American in Medicare have the same benefit design, and it, as 
all clinicians, and like Representative Black, know, medicine 
is unbelievably personalized and moving rapidly in that 
direction down to the level of the gene.
    So we have argued that people should be treated differently 
and given access to different care, most notably an eye exam, 
which should be more easily accessed by someone who has 
diabetes than someone who doesn't. And it was quite a task, and 
I thank this Subcommittee for the leadership to have this 
waiver be the first ever to allow a Medicare recipient with a 
specific condition to have a different benefit design than 
someone else, allowing precision medicine to be aligned with 
benefit design. So important step forward.
    Three of the States that are expanding to next year are 
represented on this Committee, and I think that there is 
movement afoot by CMMI to allow greater flexibility and uptake 
of these programs, most notably one is that the conditions are 
designated by CMMI. I think the plan should have a little bit 
more flexibility to decide which population should be available 
to have greater access to certain services and providers.
    I think that we should allow the plans to expand the 
services that they can reduce cost sharing for across the 
entire spectrum of care, and I think given that the fiscal 
responsibility that we must attend to with any changes in 
Medicare is to say we can't always spend more, we often have to 
cut back.
    And given that most of the blunt instruments get people to 
use less of all care, I think it is important now for Medicare 
to walk very slowly and carefully into the area of reducing the 
hundreds of billions of dollars of Medicare expenditures that 
don't make one beneficiary any healthier.
    There is a new initiative called the Choosing Wisely 
program, which has launched over 40 clinical specialty 
societies, naming specific services that maybe we are doing too 
often and spending too much money on. So broader spectrum of 
services, more flexibility on the specific conditions and to 
start to pay attention to the fact that while the best part of 
the demo is making high-value services more accessible, to be 
fiscally responsible we have to start thinking about clinically 
driven reduction of low-value care.
    Chairman TIBERI. Thank you. With that, Mr. Levin is 
recognized.
    Mr. LEVIN. Thank you, and, again, welcome. Just a word on 
integration. As I look about us, the four of us Democrats on 
the Committee at the time of ACA were in the vanguard of those 
who sought to have more integration, more bundling, all kinds 
of concepts. And some of that was built into ACA in part I 
think because of the efforts of some of us here on the 
Committee.
    Let me just say a word about the interaction between 
Medicare and Medicaid because when we have been debating 
healthcare reform there has been very little attention to that.
    So I would like us, I guess, Ms. Jacobson, you referred to 
it and others might comment, just how important it is and the 
potential impact of reduction of Medicaid on dual eligibles and 
others who are in like positions.
    If you could, it can be complicated, but I think it can 
also be stated rather clearly. Why don't you try? What is at 
stake when we talk about dramatic decreases in Medicaid as in 
the bill that passed here and then the President's proposal for 
an additional, what, $600 billion?
    Ms. JACOBSON. Okay. Like you said, this is a very 
complicated issue and could have a wide range of effects. One 
thing that a per capita cap like that would do is it does lock 
in historic spending.
    So, for example, while it would adjust for the changes in 
the number of people who may be on the program, it would not 
necessarily adjust for the services that a State may want to 
provide to the people in the program. So, for example, if it 
would like to shift more people into community-based services, 
which seniors prefer, it may not have the financial flexibility 
to do so without cutting back on other benefits. It would be 
more of a tradeoff financially for a lot of States because the 
mix of services they provide to some extent would be 
constrained.
    It would affect, most importantly to note, that one in five 
people on Medicare who also receive benefits from Medicaid most 
of whom received cost sharing and full Medicaid benefits, as 
well. So this would affect a significant share of people on 
Medicare.
    Mr. LEVIN. Does anybody else want to comment on that? Mr. 
Grabowski.
    Mr. GRABOWSKI. Sure. I assume we will talk a lot today on 
the adequacy of payments on the Medicare side of the SNPs. If 
we are not contributing enough on the Medicaid side, if there 
are shortfalls there, that is also going to lead to access 
problems, quality of care problems, and a lot of my research 
has suggested when you underfund Medicaid that causes 
spillovers to Medicare.
    So you underfund nursing home care or care in the home or 
the community, that leads to more Medicare-financed 
hospitalizations for dually eligible individuals. So to think 
about these programs as being in their own silos is a mistake.
    For the dually eligible individuals, how we finance and 
deliver Medicaid services matters for Medicare spending and 
outcomes, and the opposite obviously is true, as well. How we 
pay for and deliver Medicare services matter for Medicaid 
outcomes and spending. They are linked, and so you can't think 
about them separately. So any kind of cut in Medicaid will have 
impacts for the Medicare program as well as for the dually 
eligibles.
    Mr. LEVIN. Anybody else want to comment on that?
    Ms. WILSON. Medicaid pays about 65 percent of a PACE 
participant's capitated rate, and so Medicaid is a very 
important piece. I think each State will have to look deep into 
their souls and decide how those Medicare dollars are going to 
be expensed into which populations because there are many 
populations other than seniors who receive Medicaid funds.
    I think it is going to be a very difficult decision, and I 
think those of us who serve seniors will be faced with very 
difficult decisions. And I think we will have to be very 
creative because I don't see any of us wanting to cut back on 
any services for seniors going forward.
    Mr. LEVIN. Thank you.
    Chairman TIBERI. Thank you. Before I recognize Mr. Roskam I 
just want to remind Members that we do not have jurisdiction, 
though we would love to have jurisdiction in the Medicaid 
program, Mr. Walden and Dr. Burgess would not like that, so if 
we could kind of focus within our jurisdiction.
    With respect to that, Mr. Roskam is recognized for 5 
minutes.
    Mr. ROSKAM. Thank you, Mr. Chairman. Admonition received. 
June is Alzheimer's and brain awareness month, and it is no 
surprise to anybody on this panel the devastating nature of 
this disease. It is the sixth leading killer in the United 
States, 5 million Americans are suffering from it, and some 
folks suggest that it is the most expensive disease in the 
United States that people are suffering with.
    One of our colleagues, Representative Sanchez, and I have 
been working on legislation that would authorize a CMS 
demonstration in terms of a general approach on this. So that 
is all to say there is a lot of interest in how all these 
things have an interaction with Alzheimer's in particular.
    Dr. Jacobson, what is your insight or what is your 
perspective on how many Alzheimer's patients are enrolled in 
SNPs, and in your opinion what are the benefits that these 
plans have for Alzheimer's patients and their families based on 
your experience?
    Ms. JACOBSON. We actually don't have the data on how many 
Alzheimer's patients are enrolled in SNPs. That is possibly 
something that we could look into and I could get back to you 
or your staff after this hearing.
    Mr. ROSKAM. Okay. That would be helpful.
    Ms. JACOBSON. Yes. So we really don't know to what extent 
what additional services and benefits are being provided to all 
SNP enrollees, including people who have Alzheimer's. So it is 
really difficult to say what they are actually receiving that 
is helping them in these SNPs.
    Mr. ROSKAM. Anybody else have a perspective on that?
    Ms. WILSON. In PACE, 50 percent of our population has some 
form of dementia or Alzheimer's disease, and it is a challenge. 
It is truly a challenge. So moving forward we need to deal with 
this. We are dealing with it very well in the PACE program 
right now. We are able to still keep those people at home. And 
as I mentioned before, some of them are living alone at home, 
but it is something that we are seeing as a future problem as 
the population grows.
    Mr. ROSKAM. Okay.
    Mr. GRABOWSKI. Although we can't give you the exact number, 
there are undoubtedly a number of individuals with dementia in 
the different SNP models. I can say there are very few chronic 
condition SNPs focused just on dementia.
    The majority of the C-SNPs are focused on diabetes. I think 
just given the prevalence here we actually need to do better 
across the board in dementia care. I don't think a specialized 
model is really the way forward. I would prefer to see all 
Medicare Advantage plans get better at dementia care. Trying to 
build more specialized models I don't think is the best path 
forward just given the numbers you already cited.
    Mr. ROSKAM. Okay. Dr. Fendrick.
    Dr. FENDRICK. Briefly, just for the reasons that you seek, 
Mr. Roskam, I was very pleased to see that not only were three 
States added to the V-BID demo for 2018, but two conditions 
were added, as well, which dementia was one.
    So we are very hopeful since many of the States represented 
on this Subcommittee are actually in those demo States, the 
seven original States, and Michigan, Alabama, and Texas all 
represented here would talk to their Medicare Advantage plans 
to encourage them to step away from diabetes, heart disease, 
COPD, the more common conditions now in the current demo and 
think outside the box and move to explore a V-BID MA dementia 
model that would, I think, lead to the increase in care that 
you are looking for.
    Mr. ROSKAM. Okay. Thank you, all. Mr. Chairman, I yield 
back.
    Chairman TIBERI. Ms. Sewell, you are recognized for 5 
minutes.
    Ms. SEWELL. Thank you, Mr. Chairman. Today we are talking a 
lot about saving costs and increasing value in the Medicare 
program. The reality is that we are not going to save costs in 
the long run if we don't improve outcomes.
    For our most vulnerable Medicare beneficiaries, especially 
our dual eligible, transportation barriers are often linked to 
poor outcomes.
    My office gets calls from seniors in my district who face 
both transportation and financial barriers to accessing basic 
healthcare services. Whether you are an urban or rural 
resident, if you are disabled and elderly with limited income 
and no access to a car or public transportation, even a few 
blocks can be the difference between you going to the doctor or 
not.
    My constituent Eva is 81 years old. She is dual eligible. 
In Selma, my hometown, Selma, Alabama. She is a diabetic, and 
when she has to go to the doctor, having no transportation, she 
really depends upon the neighborhood boys to drive her there.
    When Miss Eva's Social Security check doesn't make ends 
meet, she can't afford to pay the neighborhood boys to take her 
to the doctor, so she misses many appointments. In addition to 
diabetes, Miss Eva has a disease that doesn't allow her to cut 
her own toenails, a more advanced stage of diabetes. And so, 
often many times she has to continue to have this very painful 
procedure done. She can't get it done at home because they are 
so afraid that something would go wrong with her diabetes, and 
so she can't walk oftentimes.
    For diabetes, foot care cannot be ignored like that of Miss 
Eva. She often ends up at the emergency room having no 
transportation.
    Mr. Chairman, stories like Miss Eva's are more common than 
they are rare. This is not sustainable for patients or for the 
system as a whole. As I have said before, we aren't going to 
reduce costs until we improve outcomes.
    Had Miss Eva been enrolled in a plan that provided 
transportation services or had been educated on the resources 
available to her through non-emergency medical transportation, 
her emergency room visits would have been prevented.
    As you mentioned, Ms. Wilson, PACE organizations provide 
care in the home and transportation services to providers in 
the community. PACE organizations expand and improve on other 
services available which are often inaccessible for frail and 
elderly populations like Miss Eva.
    The PACE program, however, is a very small program in my 
home State of Alabama, and, in fact, only services 200 
Alabamians and is not available in Selma, Alabama, so Miss Eva 
cannot take part in it.
    My question is to you, Ms. Wilson: In your testimony you 
talked about a story about a lady enrolled in your PACE program 
that made me think of Miss Eva, and I know that in California 
you have access to a broader range of transportation than we do 
in Alabama.
    And my question is, do you believe that there are areas 
around the country where the PACE program would not work or 
where the program has not been successful? Likewise, what are 
the greatest barriers to expansion of the PACE program or 
Special Needs Plans in rural communities like Selma?
    Ms. WILSON. Thank you for that example. That is very 
touching.
    Transportation is very definitely one of the greatest needs 
for our seniors because it isolates them. They can't get to the 
grocery store, they can't get to the laundromat, they can't get 
to the doctor. And emergency room visits are the response to 
that. So you are absolutely right. Transportation can be 
provided by PACE. Can PACE be provided in Selma? PACE can be 
provided anywhere.
    Ms. SEWELL. So rural communities are not being managed, 
even though when you look at where your programs are, where the 
PACE programs are they are mostly in urban areas and not in 
rural communities.
    Ms. WILSON. There are quite a few in rural communities. It 
started as a pilot project under CMS, and they have been very 
successful.
    And most of those services are provided in the home with 
professionals going to the home because travel distances are a 
little bit longer than in urban areas, but still the services 
needed to be provided, and they are provided more often by 
community service providers rather than PACE employees doing it 
in the center itself.
    So I would encourage you to encourage your State. Part of 
the problem with the difficulty in starting new programs is the 
cost and the timeframes to start new programs, and if we could 
all work with our State Representatives and also with the CMS 
representatives to help speed up the process, there would be 
many more PACE programs across the country.
    Ms. SEWELL. Thank you very much. I yield back.
    Chairman TIBERI. Thank you. Mr. Smith is recognized for 5 
minutes.
    Mr. SMITH. Thank you. Thank you to our witnesses here 
today, and certainly I appreciate the perspective.
    My colleague just raised some concerns about rural areas 
and perhaps the flexibility. I know that flexibility in general 
has afforded a lot of Americans within Medicare Advantage some 
options, and I think that is helpful, but it certainly hasn't 
really provided as many options for what I would say are rural 
residents and then residents of very remote areas, and 
sometimes those services just are hard to come by, and whether 
it is Selma or whether it is range country in rural Nebraska, 
that there are some vast areas there that I hear, you know, 
from various seniors their concerns.
    But I am just wondering if you would like to elaborate at 
all on what was already asked or what other innovative ideas 
you might have, Mr. Grabowski, or Dr. I guess it is, if you 
would care to elaborate?
    Mr. GRABOWSKI. Yes. So I will start by saying Special Needs 
Plans are national models, especially the institutional SNPs, 
and the dual eligible SNPs are definitely in all markets. The 
chronic condition SNPs are largely concentrated in the south, 
but the point you raised is a good one. They are much more 
prevalent in urban relative to rural areas.
    I think there are two sets of explanations here. There are 
supply side explanations and demand side ones. There are a lot 
of stories like Miss Eva where I think there is a lot of demand 
for these models, and so I think I find that explanation less 
compelling. I think it is more of a supply side story, whether 
it is payment issues, regulatory, or just the economics of 
trying to have a plan that is more diffuse in a rural area.
    So I do think this is an area, assuming the models meet the 
other criteria we have been talking about today like full 
integration with Medicaid and all these other conditions, that 
we definitely need to address.
    Mr. SMITH. Sure.
    Dr. FENDRICK. I think your question brings up this point 
about extending healthcare coverage to a broader segment of 
healthcare services. As you can see in my testimony, the V-BID 
MA demo model focuses on high-value services, high-value 
providers, but we worked very, very hard to include expansion 
of supplemental benefits. So I see patients like Miss Eva every 
week. And if for some reason we figure out a way to get her her 
medications or get her specialty visits, but she has no way to 
have transportation to them, the whole thing falls apart.
    So one of the more interesting aspects as we hope the MA 
demo goes nationally, that instead of maybe saying that you 
should go to this hospital or use this medication, that maybe 
the demos will focus on these supplemental benefits like 
transportation and other types of services that may not be 
considered in the sweet spot of the realm of typical insurance 
designs.
    Mr. SMITH. Thank you. Because I think there are a lot of 
great stories to tell about overall access and affordability 
within the fiscally responsible way. It is just that there are 
still some gaps out there. So does anyone else care to comment?
    Ms. JACOBSON. Yes. I will also comment that, I mean, 
Medicare Advantage plans as a whole, the penetration rate in 
places like Nebraska is fairly low, and it is generally lower 
in more rural areas. So this really raises the question of, 
well, Medicare Advantage plans in certain models like SNPs have 
been pretty successful and proliferating in urban areas, but 
like you said, they really don't exist as much in rural areas.
    So it deserves some consideration of how to develop these 
models more broadly and make them more available perhaps to 
people on traditional Medicare as we learn more and more about 
what actual benefits help people.
    Mr. SMITH. Very well. Thank you. I yield back.
    Chairman TIBERI. Ms. Chu, you are recognized for 5 minutes.
    Ms. CHU. Ms. Wilson, I have visited my local PACE in 
Southern California, and I was so impressed by the level of 
care that was there. They have 2,300 participants. This is the 
program called AltaMed, and they have 2,300 participants 
through eight centers in the greater Los Angeles area, 73 
percent of which are dually eligible for Medicare and Medicaid. 
And I could see that these are some of the most vulnerable 
patients.
    The average enrollee has nine separate medical diagnoses 
and has impairments in four activities of daily living, such as 
eating, bathing, walking, and dressing. And nearly 30 percent 
of AltaMed's enrollees have Alzheimer's or related dementia. 
Eighty-nine percent are from racial and ethnic minority groups, 
and 75 percent are monolingual.
    AltaMed succeeds because it is dedicated to serving the 
entire patient, rather than focusing on one symptom at a time, 
and as a result their enrollees have higher immunization rates, 
lower emergency room and hospital admission rates and shorter 
hospital stays than their peer groups. And 97 percent of 
AltaMed's participants are able to remain in their homes with 
the assistance of care from PACE providers.
    Now, Ms. Wilson, in your testimony you noted the importance 
of the interdisciplinary team in the PACE model. Can you 
discuss how patients with co-morbidities like the majority of 
patients served by AltaMed are served by this interdisciplinary 
team?
    Ms. WILSON. Yes. The interdisciplinary team is the heart of 
PACE. It is a group of 11 professionals, most with advanced 
degrees, who sit around the table and discuss each and every 
patient and each and every condition or situation that may come 
up with that particular patient. And everybody there is a part 
of the team, an equal partner, including the driver, including 
the nurse attendant, including the physician, the physical 
therapist, the dietician, the master's level social worker, the 
recreational therapist.
    All of those people sit around the table and more as is 
needed, and they make decisions about the person in the best 
interests of the person, not in the best interests of the 
finances of the organization, not in the best interests of 
staff. Sometimes the family's best interests also weigh 
heavily, how will the family deal with the situation that is 
under consideration? And so the interdisciplinary team is the 
heart of the program.
    When I first started becoming involved with PACE, having 
been in healthcare for many, many, many years, I thought oh, my 
gosh, think of all the dollars that are sitting around that 
table every morning, and I didn't really think that was going 
to be a good use of many professionals' time.
    Over the 10 years that we have been providing PACE, I have 
absolutely changed my mind. It is the heart of the program. It 
is the reason that PACE is so effective, and it is the reason 
that it is cost effective because the care is given at the 
level that is needed before there is a major crisis which 
necessitates a hospitalization or other very high-cost care in 
services.
    Ms. CHU. Thank you. Thank you so much.
    Dr. Jacobson, I want to address the issue of mental health 
disorders and the senior center enrolled in Medicare Advantage.
    CareMore Center, a Medicare Advantage provider in my 
district, developed the Brain Health Pilot Program in Southern 
California that sought to treat individuals with dementia-
related problems, and this pilot used teams of practitioners, 
including a neuropsychologist, a neurologist, pharmacists, and 
dieticians to educate patients and caregivers about the risk of 
neurological disorders and how to address them.
    So the pilot found that their wraparound services had a 
profound effect, and there was a 57 percent increase in 
reported falls and a 38 percent decrease in emergency room 
visits, but as a former clinical psychologist, I am 
particularly interested in the ability of Special Needs Plans 
to provide coverage and care for individuals with mental and 
behavioral health issues.
    You noted in your testimony that about 1 percent of C-SNP 
patients are enrolled in plans to specifically treat their 
mental illnesses. What information do we have, if any, about 
the beneficiaries enrolled in C-SNPs and D-SNPs for mental 
illness?
    Ms. JACOBSON. To answer your question directly, we don't 
have that data. It is possibly something we could look into, 
and I am happy to talk further with your staff about that after 
the hearing.
    There are a few things to sort of emphasize on this, 
though. For example, the C-SNP that you mentioned is the one C-
SNP that focuses on mental illnesses. It is only available in 
Southern California. That again emphasizes that these plans are 
not offered across the country. It really depends upon where 
you live in terms of whether you have access to this.
    We don't know, at least offhand, how many people with 
mental illnesses are in SNPs overall. One thing to emphasize, 
though, is we have noticed that people who are under the age of 
65 who are on Medicare, many of whom have mental illnesses, are 
underrepresented in Medicare Advantage plans, and we really 
don't understand why they are not enrolling in Medicare 
Advantage plans at the same rate as other Medicare 
beneficiaries.
    Similarly, people who are over the age of 85 are also 
underrepresented in Medicare Advantage plans, many of whom have 
Alzheimer's. So it really raises questions about what is 
actually going on in the Medicare Advantage plans, and we 
really need more information as to how they are actually 
treating mental illnesses and what they are offering the 
beneficiaries.
    Chairman TIBERI. The gentlelady's time is expired. Ms. 
Jenkins is recognized for 5 minutes.
    Ms. JENKINS. Thank you, Mr. Chair, and I thank the panel 
for being here.
    Ms. Wilson, thanks for your testimony regarding the PACE 
program. In Kansas, just down the street from my Topeka office, 
is Midland Care Connection. It operates a very successful and 
growing PACE program.
    In September of last year they expanded their PACE program 
into Wyandotte County, which is in the Kansas City metropolitan 
area, and they created a new grieving adult support group, and 
I am very pleased that they were able to do that. I really 
admire their work and compassion for their patients and hope 
that they will be able to continue growing and offering 
services to more Kansans.
    I have a question about the expansion of PACE and your 
thoughts on that topic. As you can tell from the questions on 
Committee today, many of us represent rural communities and 
Midland Care PACE program there in Topeka serves rural counties 
in the second congressional district in Kansas. It is a 
wonderful program that is a real lifeline for many vulnerable 
seniors and people living with disabilities.
    I understand that CMS issued a PACE regulation almost a 
year ago that is still pending. Were there any flexibilities 
including in that regulation that would encourage PACE programs 
to expand to rural areas?
    Ms. WILSON. Yes. That is one of the priorities for the 
National PACE Association is to have that PACE regulation 
approved, and the proposed rule we need to get is out, but we 
need to have the final rule. It should be ready to go.
    All the comments are back to CMS, and there are 
flexibilities especially for rural areas, and that is being 
able to use community physicians, to be able to change the 
interdisciplinary team that I mentioned earlier on so that you 
don't have to have 11 professionals around the table, that you 
can have the select few that need to be there in relation to 
that particular resident or that particular participant and 
their particular issue. The CMS guidelines that would come out 
will be very, very helpful to expanding PACE and doing it a lot 
more quickly.
    Additionally, the pilot programs that were approved by 
Congress and are still waiting to be implemented by CMS, will 
allow us to reach out and do many more programs and reach many 
more populations that we currently are not allowed to do.
    So we are waiting for CMS to pull the trigger and would be 
happy to have NPA work with you, Ms. Jenkins, on anything that 
you might need in order to help your State move forward on some 
of those issues.
    Ms. JENKINS. Excellent. We will look forward to helping you 
do that.
    As a followup, in your role at leading age in the National 
PACE Association, what would have been some of the concerns 
that you heard from your local PACE program operators and staff 
regarding the burden of Federal regulations or the confusion 
that a lack of regulation causes on them, and what can we all 
do to help ease those concerns?
    Ms. WILSON. Well, I don't think there is a lack of 
regulation ever at CMS. But the changes in regulations--let me 
just put it this way, PACE started as a pilot project with On 
Lok in San Francisco 45 years ago, and because it was a pilot 
project there were many, many regulations and requirements 
imposed upon it to see whether or not it would be reasonable to 
continue the program.
    It obviously was reasonable, and 20 years ago the first 
regulations came out, and they have been in place now, the same 
regulations, and it is time to take a look at those regulations 
and to make the changes.
    National PACE Association has made recommendations. We have 
worked with CMS to look at those regulations and to make 
improvements and changes to help PACE to be able to grow to 
simplify the regulations so that PACE programs that might serve 
Miss Eva as mentioned before might be able to flourish, and we 
need CMS to, as I said, pull the trigger.
    And if you can make a few phone calls to whomever you may 
know in that department, then that might help them to 
understand the importance of their work related to the PACE 
Innovation Act and also the proposed rules.
    Ms. JENKINS. Thank you. Mr. Chairman, I yield back.
    Chairman TIBERI. Thank you. The gentleman from California 
is recognized for 5 minutes.
    Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for 
holding this hearing, and thanks to all the witnesses for being 
here.
    I think this is one of those rare occasions where we found 
something that everybody on the Committee, irrespective of 
which side of the dais you sit on, agrees, and I think there 
are plenty of examples of us working across the aisle to try 
and facilitate ways to ensure that folks can get healthcare at 
home.
    And you see it in some of the telehealth legislation that 
Ms. Black and I wrote, and there are just a number of examples 
of that, and the PACE program is right up that alley.
    So I want to thank you all for what you are doing and for 
the testimony that you are bringing forward.
    I don't have a PACE program in my district, but I know my 
constituents would like to be able to expand their access to 
healthcare while being in the comfort of their home.
    And maybe starting with Ms. Wilson, can you talk about some 
of the hurdles that organizations may face in creating a PACE 
program and what Congress and/or the Administration could do to 
support the launch process?
    Ms. WILSON. Well, first of all, help us to pass those 
regulations, encourage CMS to pass them.
    Second of all, the process to start a new PACE program is 
long and arduous. It takes about 2 years. And to develop a PACE 
site takes between $7 and $9 million. That includes the upfront 
costs to purchase the program, purchase the land, build the 
building, outfit the building. And then have the money on hand 
because it takes 1\1/2\ to 2 years in order to break even with 
the current payment methodology. Those upfront costs are never 
reimbursed. Those are costs that not-for-profits fundraise for 
traditionally.
    The other concern is in starting a new PACE program. CMS 
came out 1\1/2\ years ago saying that they had a new way for 
applications to be submitted and then approved. The new way is 
once a quarter there is 1 day, 24 hours, when you may submit 
electronically your application, and if you miss that timeframe 
by 1 minute then you must wait another 3 months.
    The timeframes that are lost because some consultant didn't 
get their report in by 2:00 p.m. in California so that you can 
submit it by close of business to CMS 5:00 p.m. back here on 
the east coast is a real challenge. And we are starting to try 
to open another site in our area in San Diego, and that is the 
biggest concern of all of our staff.
    In fact, the greatest fear is they will miss that 1 day 
when they ``push the button,'' and if they miss that push the 
button that is another 3 months' delay, that is costs that we 
will be incurring for another 3 months for which we will 
receive no reimbursement, and we will not be able to open our 
program, and it will delay the entire program by at least 6 
months. That is for a program that is already up and running, 
and we were just asking for an expansion.
    Now, if you look at somebody that wants to come to your 
area and start a PACE program, they are starting the 2-year 
journey, if they forget to press that button or miss that date 
because of a consultant report, then they are going to be 
delayed, and that is time and money. That is why people don't 
want to do PACE programs.
    It is not that they don't want to do them, it is just so 
onerous to start a new program that it is almost self-
defeating. CMS puts up so many barriers to beginning a program 
that it is incredibly, incredibly hard.
    Mr. THOMPSON. Anyone else like to add anything? Everybody 
concur?
    How about qualified personnel, qualified practitioners, is 
there difficulty in finding folks?
    Ms. WILSON. At a PACE center?
    Mr. THOMPSON. Yes, for a PACE center.
    Ms. WILSON. We hire on average at our centers in California 
70 professional, that is graduate-level-degreed people, and on 
average between 25 to 35 entry level positions. That will be 
food service workers, care attendants, other positions, day 
centers, CNAs, et cetera, that perform that level of work. But 
on average, 70 professional clinical personnel who serve these 
people on a daily basis.
    Mr. THOMPSON. Thank you.
    I yield back.
    Chairman TIBERI. Thank you.
    The gentleman from Texas is recognized for 5 minutes.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    I just have a few questions about the Medicare Advantage 
Plan and its growth that is taking place. I have a district 
around the Dallas-Fort Worth area, suburban Texas, but I have a 
30 percent participation rate. Of my Medicare eligible, there 
is 30 percent of that population in Medicare Advantage, and 
that number seems to be growing.
    I think, Ms. Jacobson, you did a report. I am working off 
of some of your work from last year.
    My question is, is there any correlation? Yet Mr. Smith 
over in his district has like 5 percent of people who 
participate in Medicare Advantage, only 5 percent that are 
eligible to do it.
    When you look down through everybody's district, is there 
any correlation in the participation in these special programs 
that we are talking about today, is there a correlation between 
the participation in Medicare Advantage in those districts? Mr. 
Curbello has 60 percent of his Medicaid-eligible people take 
Medicare Advantage. Is there any correlation between any of 
those figures as it relates to those special programs?
    Ms. JACOBSON. Yes, there is a correlation, to give a very 
straightforward answer, because part of why Medicare Advantage 
penetration and enrollment rate really differs across the 
country, one of the reasons is due to firm experiences in those 
parts of the country and just history of managed care in those 
parts of the country, which really differs across the country.
    And another reason is payment rates. And both of those 
reasons would apply to both regular Medicare Advantage plans as 
well as special needs plans. And it makes sense that the more 
plans that are offered, the higher enrollment likely is going 
to be in those areas. So we do see that the more plans that are 
available in an area tend to be areas where enrollment is 
higher.
    So in that sense, yes, you do see more SNPs in areas where 
you see more regular Medicare Advantage plans. And we have 
looked at the growth in Medicare Advantage enrollment 
nationally as well as in different counties. And in many 
counties where Medicare Advantage enrollment used to be 
relatively low, it has been growing pretty quickly. But in 
other counties, you still see pretty low Medicare Advantage 
enrollment and relatively few plans. So there is quite a 
difference across the country.
    Mr. MARCHANT. Any other comments?
    Mr. GRABOWSKI. I completely agree with that. I just wanted 
to piggyback, that just because an area has a strong Medicare 
Advantage penetration and that leads to greater growth in the 
special needs plans doesn't mean that Medicaid is able and 
willing to play ball alongside it.
    And I think that is a really important point, that in order 
for these models to really work, you need a robust SNP market, 
special needs plan market, but you also need that State 
Medicaid plan to be willing to play with them.
    And I think that has been one of the real challenges with 
this model, SNPs have sort of followed Medicare Advantage plans 
in some States, like Minnesota, and there really is a robust 
kind of Medicaid side to this market, but that is not 
everywhere.
    Mr. MARCHANT. And I know we don't have any jurisdiction 
over Medicaid. Is there a correlation between the States that 
expand it and the participation in these programs?
    Ms. JACOBSON. That is not something that we have looked at, 
although I would emphasize that for Medicare Advantage and for 
SNPs it really is a county-by-county issue. It is not a State 
issue. So parts of Texas even have relatively low Medicare 
Advantage enrollment. But, obviously, other parts of Texas have 
relatively high Medicare Advantage enrollment, and you see that 
in many States.
    Mr. MARCHANT. Thank you.
    Thank you, Mr. Chairman.
    Chairman TIBERI. The gentleman from Oregon is recognized 
for 5 minutes.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. I appreciate our 
having this conversation.
    Dr. Fendrick, I appreciate having you back. I continue to 
be quite enthusiastic about the simple logic that you 
described. Some of the work that is underway, I appreciate you 
giving us some specifics that you think might make a difference 
to accelerate the progress.
    And, Mr. Chairman, I would hope that this would be an area 
on which we could spend a little more time. As you know, 
Congresswoman Black and I have had legislation in the last 
couple sessions. We are fans. We think that this can be 
advanced outside of the scope of some of the things that get us 
tripped up around here. And I think there is some really 
powerful evidence that we can help provide better care and bend 
the cost curve.
    But there is just one area, Doctor, that I would seek your 
advice and counsel, because there are questions about the 
applicability for VBID in very low-income populations who 
aren't involved with a copayment, can't afford more, some of 
them have no cost sharing.
    Do you think there are ways that this can be applied in 
value-based design to be able to get around this, to be able to 
provide the power of the concept for people who don't have that 
type of copayment or capacity to pay more?
    Dr. FENDRICK. So, first off, thank you for the kind words. 
I am happy to be back, and it is a great pleasure to be talking 
about one of the rare bipartisan healthcare reform ideas. And I 
appreciate your work and Representative Black's and others on 
the Committee to make this happen.
    So we have studied the impact of increases in cost sharing, 
because that is what has largely happened in this country. And 
it comes as no surprise, and you don't need advanced degrees 
like my fellow panelists to know that if you make people pay 
more for something, they will buy less of it. And poor people 
are impacted by higher prices more than rich people are.
    So we have focused very, very much on those people with 
multiple chronic conditions and those who are economically 
vulnerable and have basically tried to implore public and 
private payers, if you can't extend VBID principles to 
everyone, you should probably extend VBID principles and lower 
cost sharing to the people who would benefit the most, and 
those are the sickest individuals and those who do not have 
economic resources.
    The good news, as we heard, such as the PACE program, there 
has already been integration of VBID principles to make sure 
that those who cannot afford essential services can. That 
doesn't mean it is happening all over the Nation.
    I think it is particularly germane regarding prescription 
drugs in this program, and we have focused a lot of our 
attention on trying to extend this clinically nuanced cost-
sharing issue to the issue of Part D drugs. We know that there 
are a lot of low-income Medicare beneficiaries who are either 
cutting their pills or taking them every other day or not 
taking them as their doctor or nurse practitioner prescribed 
that they do that. And there have been external influences, 
like patient assistance programs and charity programs, to help 
bridge that gap.
    It is our hope that if value-based insurance designs are 
put in place, whether it be for middle income or low income, 
that those services that are deemed to be highest value would 
have zero cost sharing, regardless of income, which is the case 
for many preventive services in Medicare now, much to the 
credit of this Committee.
    And we are hopeful that as VBID ideas are extended, 
particularly for those extraordinarily well-established, high-
value services, to Dr. Gretchen Jacobson's point, I don't want 
to get into the areas where there is controversy when there is 
20 years of evidence of quality metrics in the Medicare 
program. Let's start with those low-lying fruits. And if we 
can't extend them because of fiscal issues to every Medicare 
beneficiary, then obviously the best place to get a return on 
investment would be to focus those on the populations who are 
most likely to achieve benefit, and those are the low-income 
folks.
    Mr. BLUMENAUER. Well, I am hopeful that we won't ignore the 
areas of controversy, but I subscribe wholeheartedly to the 
notion let's start where we can, establish the principles, 
spread the benefit. But having a sense of how we can develop 
the nuance for the lower income where there might be some way 
of having a more powerful incentive or some of the nuance 
through the program administration, if you could lend some 
thought to that.
    Dr. FENDRICK. I will just quickly say that, not being a 
legislator or a lawyer, not understanding all the regulations, 
in the commercial sector, where the VBID experience is much 
better studied and has wider implementation, there are public 
and private employers that are extending greater subsidies to 
employees who are, say, hourly compared to salary.
    Mr. BLUMENAUER. I understand. I just would like your 
reflection at some point about where there is no cost sharing, 
very low income, how we can refine, perhaps, that incentive.
    Mr. Chairman, thank you. I appreciate the conversation, and 
I hope that we can dig a little deeper here. This is very 
helpful.
    Chairman TIBERI. Thank you. Me too.
    The gentleman from Wisconsin, Mr. Kind, is recognized for 5 
minutes.
    Mr. KIND. Thank you, Mr. Chairman.
    I want to thank our panelists for your testimony here 
today.
    I represent a very large rural western Wisconsin district. 
And we are kind of proud in Wisconsin for some of the unique 
pilot SNP programs that we have, especially with the dual 
eligibles back home. We have about 20 percent penetration with 
MA plans. Those numbers have been going up even in the large 
rural area. And I am a big believer in trying to move the 
system to a more value, more quality, more outcome-based 
incentive system, whether it is through delivery system reform 
or payment reform.
    Dr. Fendrick, with the value-based insurance plans out 
there, just how much more can we be pushing? How quickly? And 
when can we start bringing this, really, to capacity so that we 
start seeing better results at a better price?
    Dr. FENDRICK. I appreciate that comment. I think a lot of 
people were talking about alignment in a different context 
earlier in the panel.
    I want to talk about alignment to you as I know you have 
been pushing for value in caring more about health than costs 
even though we have to be fiscally responsible and clinically 
nuanced at the same time.
    Most of the major reforms going on in American healthcare, 
and particularly Medicare, are the supply side or provider-
facing initiatives trying to get clinicians like myself to 
behave different and better. And I think we have made marginal 
success in this regard moving in that direction.
    We have not done the same for the patient-focused side. We 
have continued into this kind of one-size-fits-all design. And 
I think for me the end-all is to find a situation where 
clinicians, hospitals, SNPs, ACOs, whatever, are aligned 
completely with the patient. Imagine now, Mr. Kind, I am paid a 
bonus to get my patients with diabetes to the eye doctor and my 
patients are in a plan for which they can't afford the 
deductible to go to the eye doctor for that exam.
    So my view about alignment is not more of these granular 
issues. Imagine a situation, which we are moving slowly in a 
bipartisan way toward, where both the providers and the 
patients are aligned over health, understanding that we have to 
be fiscally responsible in this regard.
    Mr. KIND. Well, we have numerous alternative payment 
methods out there, different pilots. I think one of the best 
things we created in the Affordable Care Act was the Center on 
Innovation so we can start experimenting in these areas. But is 
there more, is there another pilot or something that you 
envision that the Center on Innovation ought to be setting up 
and working with in order to move down this path?
    Dr. FENDRICK. Well, I will stay with the Chairman's theme 
of integration. I think that one is not so much creating new 
pilots but getting pilots to think about one another.
    And since many of you are from rural areas, one of my 
favorite demos is the Pennsylvania Rural Health Model, which 
has been taken in a bipartisan way in that State--again, many, 
many rural districts there--to try to preserve and protect 
access to care for many of those individuals who live in those 
areas, but being fiscally responsible in that way.
    And this is largely at this early stage a way to deal with 
hospitals and clinicians there. And they are only just now 
thinking about how to better engage patients to get care 
locally when it is best for them, and when it is best for them 
in that rare instance where they have to go to a center of 
excellence to go elsewhere.
    Again, many of these conversations are driven by dollars, 
and I love your theme of the fact that we have to think about 
health as well as dollars in moving these ideas.
    Mr. KIND. Mr. Grabowski, you have already mentioned about 
the importance of greater clinical financial integration 
leading to better results, and that I think is particularly 
pertinent with the dual SNPs as well, the Medicaid, Medicare 
overlapping in that. What more can we be doing in order to 
encourage that type of integration of services?
    Mr. GRABOWSKI. Yes, I touched on this earlier in my 
remarks, but I really think pushing on Medicaid, once again, 
getting beyond simply having these contracts that consist of 
case management. I really want true alignment where the 
Medicaid program is actually working closely with the plan, and 
the dual-eligible SNP actually has some control over the 
finances, a truly integrated financial product.
    Another model that can often work is where the same managed 
care company has the dual-eligible SNP and a Medicaid plan and 
there is the opportunity to kind of align there. But if they 
are not kind of at risk for Medicaid finances, you are not 
going to get that meaningful financial alignment up top, and 
that is not going to work at the delivery level.
    Mr. KIND. How are we doing overall as far as the collection 
of data when it comes to quality measurements? Are we getting 
better?
    Mr. GRABOWSKI. I think we are getting better, but I think 
in regards to this population, we have a long way to go. We 
have sort of had a one-size-fits-all model, as Mark just said. 
That is really challenging, because this is a really unique 
population with really unique outcomes. And the thought that a 
70-year-old Medicare beneficiary who is healthy will have the 
same kind of quality outcomes as an 80-year-old diabetic or an 
individual with dementia just isn't the case.
    Mr. KIND. Yes. Thank you, Mr. Chairman.
    Chairman TIBERI. Thank you.
    Mr. Higgins, you are recognized for 5 minutes.
    Mr. HIGGINS. Thank you, Mr. Chairman.
    You have all studied the Medicare Advantage program pretty 
extensively. And about 31 percent of the Medicaid--Medicare 
population is enrolled in Medicare Advantage programs. Pretty 
accurate?
    Ms. JACOBSON. Did you say 1--it is about one-third now.
    Mr. HIGGINS. It is about one-third. Okay.
    A little less than 2 million are enrolled in special needs 
programs. That is about 12 percent of the Medicare Advantage 
population. As this population is frail and chronically ill, I 
presume that consumes a disproportionate amount of the Medicare 
Advantage dollar.
    Do you have any estimates as to what was spent on the 
Medicare Advantage special needs program last year or in 2015?
    Ms. JACOBSON. We don't have specific figures of how much, 
that is not publicly available data, of how much plans, 
specific plans receive.
    Mr. HIGGINS. Well, why wouldn't that--I mean, it is a 
public program. Why wouldn't that be--if we are looking at 
designs for greater efficiency in the delivery of services and 
lowering costs, it would seem to me that the amount of money 
that we spend each year would be readily available, because 
that would be an important number to either conclude that we 
are doing well with it or we need to do better.
    Ms. JACOBSON. So in the past, CMS has released some data on 
the bids Medicare Advantage plans would get, which would help 
to get at how much they are paid.
    The issue is that it is not--the data that has been 
released is not granular enough for us to look at what--how 
much SNPs in particular have been paid.
    Mr. HIGGINS. Could we safely assume, then, that it is--it 
has to be a very high number as compared to the rest of the 
Medicare Advantage population, right?
    Ms. JACOBSON. Yes.
    Mr. HIGGINS. Okay.
    Medicare Advantage is administered by private insurance 
companies. How big a player is UnitedHealthcare in the Medicare 
Advantage special needs plans?
    Ms. JACOBSON. UnitedHealthcare is the dominant insurer firm 
offering the institutional SNPs. They also offer many chronic 
care SNPs.
    Mr. HIGGINS. Is 20 to 25 percent of the special needs 
population on the Medicare Advantage program, are they covered 
by UnitedHealthcare?
    Ms. JACOBSON. A fairly significant portion, yes, are 
covered by United.
    Mr. HIGGINS. Do you know what is going on with 
UnitedHealthcare right now? The United States Department of 
Justice has just joined a lawsuit against UnitedHealthcare for 
allegedly defrauding the Medicare Advantage program out of 
hundreds of millions and potentially billions of dollars in 
each of the last 10 years.
    When we look at designing a program to discover value-based 
insurance designs by using financial incentives to promote 
cost-efficient high-value rather than low-value healthcare 
services, it would seem to me that is a major issue. As 
students of the Medicare Advantage program, are you familiar 
with the details of that investigation and its implications 
relative to funding that program?
    I am not picking on you.
    Ms. JACOBSON. I am well aware that the investigation is 
ongoing.
    Mr. HIGGINS. Are the other private insurance companies that 
are involved in the Medicare Advantage program for special 
needs, are they also being looked at for also defrauding, 
overcharging the American taxpayers in Medicare Advantage under 
the special needs program?
    Ms. JACOBSON. I do not know what other companies are 
currently being looked at that have not been announced.
    What I would emphasize is the Medicare Payment Advisory 
Commission, as you may know, has done a lot of work looking at 
coding intensity.
    Mr. HIGGINS. I understand. This is fraud. This is stealing 
money from the American people in the Medicare Advantage 
program. It is a different issue altogether.
    I yield back.
    Chairman TIBERI. The gentleman's time has expired.
    Mr. Meehan is recognized for 5 minutes.
    Mr. MEEHAN. Thank you, Mr. Chairman. I want to thank you, 
frankly, for holding this hearing, which I think is really 
focused on something which is so important, which is this 
effort to assure that we continue to look for innovative ways 
to deliver quality care while at the same time looking for ways 
to hold down costs. And I am moved by a couple of realities.
    One, the recognition that when we get to the Medicare 
Advantage population, we have about 50 percent that consume 
about 3 percent of the costs, and then a very small percentage, 
10 percent, that account for about the other two-thirds. So we 
know we are dealing with a very targeted population to begin 
with.
    And what I have found actually sort of heartwarming, and it 
is sort of counterintuitive, you would think that Medicare 
Advantage falls disproportionately, that the wealthier you are, 
the more likely you are to purchase the plans. And yet, to the 
extent that I have been able to look at it in my own district, 
the people who have taken the time to invest in getting these 
plans are not always people with the highest means. So there is 
an effort on the part of those who want to be consumers of it.
    But, Dr. Fendrick, I want to focus on what your testimony 
was earlier, about this being directed toward the patients, not 
just specifically the payer. One of the things that we are 
looking at is legislation that would create more flexibility, 
to prevent chronic illness or improve care coordination, those 
kinds of things.
    Would you speak to that issue of flexibility that you would 
like to be able to see so we can deliver to this chronic group 
and really not just cost savings, but it is quality, it is 
these people are better off.
    Dr. FENDRICK. Right. So excellent point.
    So, first off, healthcare is very complicated. Who knew, 
right? So it has been a longstanding fact that a significantly 
small portion of populations in Medicare and commercial expend 
a very, very large part of the healthcare pie. Most of the 
fabulous innovation that is going on that allows me to better 
treat these patients--and I congratulate Congress for the 
bipartisan passage of the 21st Century Cures Act, which allows 
even a greater influx of innovative funds to help me take care 
of my patients better.
    So that is all well and good for those of us who are 
trained to improve the quality and length of life. Almost all 
of these innovations, with very few exceptions, come at a 
significant expense, which requires that tension that I prefer 
you to have rather than I, which is we want to do the best for 
our patients, but we also have to be fiscally responsible, 
which you mentioned very clearly in the call of this hearing.
    So as the practice of medicine moves forward at a rapid 
pace, Star Wars, we have precision medicine. We have genetic 
medicine. The delivery system, in my opinion, is like the 
Flintstones, right? So the delivery system has not been able to 
catch up to the incredible science that we have had.
    So we have one of two choices. One is that we slow down the 
innovation in the Star Wars medicine, which I would not advise, 
or we continue to have conversations like we are having today 
and have experts like I have to my right to think about ideas 
that allow us to have the delivery system catch up to the 
precise example that you raised.
    And, again, going back to 1965, there was this important 
issue to make sure that every Medicare beneficiary had the same 
benefit design. I would argue, 2017 and beyond, given that we 
can't give all things to all patients, that instead of blunt 
instruments, a much better approach would be one that is 
individualized, similar to the situation that we heard of in 
the PACE programs.
    Mr. MEEHAN. Actually, part of the legislation is to create 
supplemental benefits for those that are chronically ill sort 
of to address that. Do you think that would go toward the 
objective that you are articulating?
    Dr. FENDRICK. Absolutely. And, again, it is baby steps. But 
the initial VBID MA demo, not just that includes services and 
providers, CMMI, was very, very careful to follow advice from 
this Committee to allow the demo plans to extend supplemental 
benefits as part of the demonstration package, a broader view.
    Mr. MEEHAN. Thank you for your testimony.
    Mr. Chairman, I yield back in light of time.
    Chairman TIBERI. Thank you.
    Mr. Reed.
    Mr. REED. Thank you, Mr. Chairman.
    I was just going to listen today, but, Dr. Fendrick, you 
touched on something and I want to follow up on my colleague 
from Pennsylvania on it, looking at it from a beneficiary 
patient perspective.
    One of the things I firmly believe is that people react to 
their own fiscal condition. If they see money in their pocket, 
it seems to generate more behavioral change, in my opinion, 
than other items in this arena.
    And so, are you aware of any studies that talk about human 
behavior and the impact that having a carrot approach to this 
may have a beneficial income on a reimbursement model? You are 
talking about in some of your testimony, for example, the 
diabetics and having foot and eye exams with no copays, that 
type of thing, yes, that is a bottom line financial impact to 
an individual, but do they really see it?
    And what I mean by that, I will tell you a story. When I 
was a kid, I was raised by a single mom, youngest of 12, and 
every time we went to the bank to pay the bills each month she 
would cash her checks to hold the cash and then give it back.
    Is there any type of creative, innovative ways that we 
could talk about in regards to reimbursing patients for seeing 
a doctor and getting followup care, medication adherence? I 
have even had talks with CEOs of different carriers about even 
giving them a gift certificate for doing that. And they told me 
that regulations in New York prevented them from doing that, or 
maybe they are Federal regulations.
    Does that carry any weight, that kind of nominal impact on 
human behavior? Do you think that could change the curve?
    Dr. FENDRICK. So I should bestow a degree of behavioral 
economics for that. I mean, David and others are experts here 
on that.
    Mr. REED. Well, let's go to David, too, after you. But, 
please, from your patient perspective.
    Dr. FENDRICK. So first off, the Kaiser Family Foundation 
has all this information, a lot of good information in the 
testimony and elsewhere, to answer these types of points.
    I do believe strongly that, particularly in the low-income 
folks that we talked about earlier, something as low as a 
dollar matters. So I have seen Medicare Advantage patients who 
are faced with $4 copays for drugs that everyone in the exam 
room knows will be meaningful changes, but you never want to be 
in the situation to either pay rent, buy food, or fill your 
prescription, which is why we argue for these types of things.
    But I want to make sure, it is not all things for everyone. 
I would like to start with those conditions and those services 
for which there is no doubt that they should be prescribed and 
used in those situations, which is where the nuance comes in.
    In some commercial settings, we have gone beyond free and 
we have actually paid people to do certain things like quit 
smoking or take their prenatal vitamins or other types of 
things.
    Mr. REED. And we have seen a positive change.
    Dr. FENDRICK. We do. But we also have what I call the 
frozen carrot, that if people are given an advantage and lower 
cost sharing to do certain things and they don't, they should 
also be accountable for that.
    Mr. REED. They get the stick.
    Dr. FENDRICK. I call it a frozen carrot. I would rather 
call it that.
    Mr. REED. A frozen carrot. Very good.
    David, could you offer on that?
    Mr. GRABOWSKI. Absolutely. I come to Congress and a 
behavioral economics lecture breaks out here. This is great.
    As Mark described, I really like these programs. There have 
been a lot of positive studies. I am thinking of the work of 
Kevin Volpp at the University of Pennsylvania where he has paid 
patients to take particularly high-value drugs, and it is VBID 
on steroids basically and it has shown to be very effective in 
those applications.
    So I think you raise a really good point, Mark, that 
accountability is key in these kinds of programs as well. But I 
do think if there is going to be huge costs to the healthcare 
system of drug non-adherence here, we want to make certain that 
we are potentially incentivizing individuals to adhere to their 
drug regimen.
    Mr. REED. And would you agree, David, that even a dollar 
would matter to a lot of those individuals, change their 
behavior to adhere to their medications?
    Mr. GRABOWSKI. It absolutely does.
    Mr. REED. You know it does.
    Dr. FENDRICK. I want to say one thing that you may find 
very interesting, as the argument breaks out here. In a large 
commercial experiment we offered Americans in really good 
insurance plans who had heart attacks their drugs to prevent 
their second heart attack at no cost to them. They only took 
them 50 percent of the time.
    So we need to go beyond financial incentives, particularly 
the carrot, as you described, communication, literacy, 
transportation, not just drug reductions in copays, to make 
this work. They took it more often than when they had to pay 
for it, but still we have a long way to go.
    Mr. REED. I appreciate that. And being new to the 
Subcommittee, I appreciate the opportunity to continue to learn 
on this, and I appreciate the opportunity to participate.
    Thank you, Chairman.
    Chairman TIBERI. Well, thank you, Mr. Reed. We have about a 
minute left to go vote, so perfect timing on your part.
    Dr. Fendrick, Dr. Grabowski, Ms. Wilson, Dr. Jacobson, you 
guys were outstanding. And Mr. Levin and I both were chatting 
here, and you have really helped bring along the debate as we 
move to making Medicare more efficient both for taxpayers and 
for the patients that you see, Dr. Fendrick. So we appreciate 
your testimony today. Your answers were very good. We look 
forward to working with you in the future.
    With that, please be advised that Members will have 2 weeks 
to submit written questions to be answered later in writing. 
Those questions and answers will be made part of the formal 
hearing record.
    With that, the Subcommittee stands adjourned. Thank you 
all.
    [Whereupon, at 4:28 p.m., the Subcommittee was adjourned.]
    [Questions for the Record follow:]


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