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


                  OPPORTUNITIES TO IMPROVE HEALTH CARE

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 5, 2018

                               __________

                           Serial No. 115-161
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                           


      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana                 Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
                         Subcommittee on Health


                       MICHAEL C. BURGESS, Texas
                                 Chairman
BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    ELIOT L. ENGEL, New York
FRED UPTON, Michigan                 JANICE D. SCHAKOWSKY, Illinois
JOHN SHIMKUS, Illinois               G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee          DORIS O. MATSUI, California
ROBERT E. LATTA, Ohio                KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         KURT SCHRADER, Oregon
GUS M. BILIRAKIS, Florida            JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
SUSAN W. BROOKS, Indiana             ANNA G. ESHOO, California
MARKWAYNE MULLIN, Oklahoma           DIANA DeGETTE, Colorado
RICHARD HUDSON, North Carolina       FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
EARL L. ``BUDDY'' CARTER, Georgia
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     4
    Prepared statement...........................................     5
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     7
    Prepared statement...........................................     8

                               Witnesses

Hugh M. Chancy, RPH, Owner, Chancy Drugs, Hahira, Georgia, and 
  Member, Board of Directors, National Community Pharmacists 
  Association....................................................    10
    Prepared statement...........................................    13
    Answers to submitted questions...............................   208
Curtis Cunningham, Vice President, National Association of States 
  United for Aging and Disabilities (NASUAD), and Assistant 
  Administrator, Long-Term Care Benefits And Programs, Division 
  of Medicaid Services, Department of Health Services, State of 
  Wisconsin......................................................    18
    Prepared statement...........................................    21
Matt Salo, Executive Director, National Association of Medicaid 
  Directors......................................................    27
    Prepared statement...........................................    29
Rick Merrill, President and CEO, Cook Children's Health Care 
  System, Fort Worth, Texas......................................    37
    Prepared statement...........................................    40
Derek Schmidt, J.D., Attorney General, State of Kansas...........    49
    Prepared statement...........................................    51
    Answers to submitted questions...............................   211
David Yoder, Pharm.D., M.B.A., Executive Director of Member Care 
  and Benefits, Blue Cross Blue Shield Association's Federal 
  Employee Plan..................................................    73
    Prepared statement...........................................    75

                           Submitted Material

Documents submitted by Mr. Barton
    Statement of the Association of American Medical Colleges....    75
    Statement of various heart associations......................   122
    Statement of the American Academy of Pediatrics..............   124
    Statement of the American Board of Pediatrics................   125
    Statement of the American College of Cardiology..............   126
    Statement of the Association of Medical School Pediatric 
      Department Chairs..........................................   127
    Statement of the Autism Society of America...................   129
    Statement of Autism Speaks...................................   130
    Statement of the California Children's Hospital Association..   132
    Statement of ChildServe......................................   133
    Statement of the Foundation to Eradicate Duchenne............   135
    Statement of the International Pediatric Rehabilitation 
      Collaborative..............................................   137
    Statement of the March of Dimes..............................   139
    Statement of the National Association for Children's 
      Behavioral Health..........................................   140
    Statement of the National Association of Pediatric Nurse 
      Practitioners..............................................   141
    Statement of the National Down Syndrome Society..............   143
    Statement of the Tricare for Kids Coalition..................   145
    Statement of Vizient, Inc....................................   147
Documents submitted by Mr. Green
    Statement of the Medicare Payment Advisory Commission........   148
    Statement of the Medicaid and CHIP Payment and Access 
      Commission.................................................   151
Statement of St. Joseph's Children's Hospital, submitted by Ms. 
  Castor.........................................................   153
Documents submitted by Mr. Walberg
    Statement of the National Association of Attorneys Generals..   163
    Statement of Families USA....................................   168
    Statement of the Partnership for Medicaid Home Based Care....   169
Documents submitted by Mrs. Dingell
    Statement of the Area Agencies of Aging Association of 
      Michigan...................................................   171
    Statement of the National Association of Medicaid Directors, 
      the National Association of State Directors of 
      Developmental Disability Services, the National Association 
      of States United for Aging and Disabilities................   172
    Statement of dozens of health and aging organizations........   175
Documents submitted by Mr. Burgess
    Statement of PillPack, Inc...................................   197
    Statement of LeadingAge......................................   198
    Statement of Medicaid Health Plans of America................   200
    Statement of the American Association of Medical Colleges....   206

 
                  OPPORTUNITIES TO IMPROVE HEALTH CARE

                              ----------                              


                      WEDNESDAY, SEPTEMBER 5, 2018

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:04 a.m., in 
room 2123, Rayburn House Office Building, Hon. Michael Burgess, 
M.D. (chairman of the subcommittee) presiding.
    Present: Representatives Burgess, Guthrie, Barton, Shimkus, 
Latta, Lance, Griffith, Bilirakis, Long, Bucshon, Brooks, 
Mullin, Hudson, Carter, Walden (ex officio), Green, Engel, 
Schakowsky, Matsui, Castor, Sarbanes, Schrader, Kennedy, 
Cardenas, and Degette.
    Also Present: Representatives Walberg, Welch, and Dingell.
    Staff Present: Mike Bloomquist, Staff Director; Samantha 
Bopp, Staff Assistant; Adam Buckalew, Professional Staff 
Member, Health; Daniel Butler, Legislative Clerk, Health; Karen 
Christian, General Counsel; Jordan Davis, Senior Advisor; 
Melissa Froelich, Chief Counsel, DCCP; Adam Fromm, Director of 
Outreach and Coalitions; Ali Fulling, Legislative Clerk, O&I, 
DCCP; Theresa Gambo, Human Resources/Office Administrator; 
Caleb Graff, Professional Staff Member, Health; Jay Gulshen, 
Legislative Associate, Health; Ed Kim, Policy Coordinator, 
Health; Ryan Long, Deputy Staff Director; James Paluskiewicz, 
Professional Staff, Health; Kristen Shatynski, Professional 
Staff Member, Health; Jennifer Sherman, Press Secretary; Austin 
Stonebraker, Press Assistant; Josh Trent, Chief Health Counsel, 
Health; Jacquelyn Bolen, Minority Professional Staff; Tiffany 
Guarascio, Minority Deputy Staff Director and Chief Health 
Advisor; Una Lee, Minority Senior Health Counsel; Rachel Pryor, 
Minority Senior Health Policy Advisor; and Samantha Satchell, 
Minority Senior Policy Analyst.

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

    Mr. Burgess. I call the Subcommittee on Health to order. I 
am going to ask our guests to please take their seats. And, 
again, welcome to everyone for the first September hearing of 
the Health Subcommittee of the Energy and Commerce Committee, 
the most productive subcommittee in the United States House of 
Representatives.
    So today we are joined by a panel of witnesses. I will 
recognize myself for 5 minutes for an opening statement. We are 
joined by a panel of witnesses who are going to provide us 
testimony on a variety of topics and legislative ideas, ranging 
from initiatives to address drug pricing to reducing fraud at 
the Centers for Medicare and Medicaid Services to improving the 
care of children with complex medical conditions.
    These bills cover different topics within healthcare, but 
there is a common thread that connects all. All of the bills in 
discussion drafts before us today have the aim to improve the 
access and the quality of care for America's patients and their 
families.
    So, first, I would like to commend Representative Buddy 
Carter of Georgia for his hard work on legislation to prohibit 
gag clauses in Medicare and private health insurance plans. Gag 
clauses prohibit pharmacists from informing patients that 
paying in cash will result in lower out-of-pocket costs than 
the insurer's cost-sharing arrangement unless the patient 
directly requests such information. The draft bill being 
discussed today is essential in both lowering drug costs for 
individuals and freeing the pharmacists to do what many 
consider would be the right thing, in fact, freeing the 
pharmacist to simply do their job. It would ban an employer and 
individual health insurance plans, in addition to Medicare 
Advantage and Medicare part D plans, from using gag clauses.
    This bipartisan policy has been a shared priority for Mr. 
Carter and others on the committee for quite some time, and it 
was brought further to the forefront by the administration's 
drug pricing blueprint that many of us attended a Rose Garden 
ceremony in May. While the gag clauses are already prohibited 
in Medicare, it is important that we protect consumers by 
putting this in statute and sending this bill to the 
President's desk as soon as possible.
    Today, we are also considering several Medicaid bills and 
discussion drafts that will further prevent and investigate 
fraud and abuse in addition to increasing access for certain 
beneficiaries.
    H.R. 3891, introduced by Representatives Walberg and Welch, 
will improve the authority of the State Medicaid Fraud Units, 
which currently investigate provider fraud and patient abuse 
only in healthcare facilities and care facilities. According to 
the Health and Human Service Office of the Inspector General, 
Medicaid Fraud Control Units recovered almost $2 billion in 
fiscal year 2017. This legislation builds upon the success of 
these Fraud Control Units by broadening their authority to 
investigate and prosecute abuse and neglect of beneficiaries in 
noninstitutional or other settings. Another discussion draft 
before us today will codify the Health Fraud Prevention 
Partnership, which will further enable our public and private 
institutions to combat fraud within the healthcare system.
    Health Subcommittee Vice Chairman Guthrie and 
Representative Dingell have introduced the EMPOWER Care Act, 
which will extend the Money Follows the Person Demonstration 
for an additional 5 years. This Medicaid demonstration, which 
was established in 2005, has enabled eligible individuals in 
States across our Nation, including Texas, to receive long-term 
care services in their homes or other community settings rather 
than in institutions such as nursing homes. Not only does this 
increase the comfort and quality of life for many Medicaid 
beneficiaries, but it has reduced hospital readmissions and 
saved money within the Medicaid program.
    The final Medicaid discussion draft, the ACE Kids Act, is 
introduced by full committee Vice Chairman Barton and 
Representative Castor of Florida and has received substantial 
feedback from stakeholders and has been revised to reflect this 
increased input. The goal of this legislation is to improve 
comprehensive care for medically complex children through a 
State option to create a Medicaid health home specific for 
children. The bill will also increase data collection and add a 
requirement for the Department of Health and Human Services to 
issue guidance on best practices for providing care for this 
unique and complex pediatric population.
    I do want to thank the members whose legislation we are 
considering today. They have put in a lot of time and effort 
and certainly as has their staff. They put this into the 
development and fine-tuning of the language. I look forward to 
hearing from our witnesses and having a productive discussion 
on these important public health initiatives.
    And now I yield back my time, and I want to recognize the 
ranking member of the subcommittee, Mr. Green of Texas, 5 
minutes for an opening statement, please.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    Good morning, everyone. Today, we are joined by a panel of 
witnesses who are here to testify on a variety of topics and 
legislative ideas, ranging from initiatives to address drug 
pricing to reducing fraud at the Centers for Medicare and 
Medicaid Services, to improving the care of children with 
complex medical conditions.
    While these bills cover different topics within health 
care, there is one common thread that connects them. All of the 
bills and discussion drafts before us today aim to improve the 
access to and quality of health care for American patients and 
their families.
    First, I would like to commend Representative Buddy Carter 
of Georgia for his hard work on legislation to prohibit gag 
clauses in Medicare and private health insurance plans. Gag 
clauses prohibit pharmacists from informing patients that 
paying in cash will result in lower out of pocket costs than 
the insurer's cost-sharing arrangement, unless the patient 
directly asks. The draft bill being discussed today is 
essential in both lowering drug costs for individuals and in 
freeing pharmacists to do what many consider to be the right 
thing. It would ban employer and individual health insurance 
plans, in addition to Medicare Advantage and Medicare Part D 
Plans, from using gag clauses.
    This bipartisan policy has been a shared priority for Mr. 
Carter and others on the committee for quite some time and was 
brought further to the forefront by the Administration's drug 
pricing blueprint in May. While gag clauses are already 
prohibited in Medicare, it is important that we protect 
consumers by putting this in statute and sending this bill to 
the President's desk as soon as possible.
    Today we are also considering several Medicaid bills and 
discussion drafts that will further prevent and investigate 
fraud and abuse, in addition to increasing access to care for 
certain beneficiaries.
    H.R. 3891, introduced by Representatives Walberg and Welch 
will improve the authority of State Medicaid Fraud Control 
Units, which currently investigate provider fraud and patient 
abuse only in health care facilities and board and care 
facilities. According to the Health and Human Services Office 
of the Inspector General, Medicaid Fraud Control Units 
recovered $1.8 billion dollars in fiscal year 2017. This 
legislation builds upon the success of these fraud control 
units by broadening their authority to investigate and 
prosecute abuse and neglect of beneficiaries in non-
institutional or other setting. Another discussion draft before 
us today will codify the Healthcare Fraud Prevention 
Partnership, which will further enable our public and private 
institutions to combat fraud within our health care system.
    Health Subcommittee Vice Chairman Guthrie and 
Representative Dingell have introduced the EMPOWER Care Act, 
which will extend the Money Follows the Person Demonstration 
for five additional years. This Medicaid demonstration, which 
was established in 2005, has enabled eligible individuals in 
states across our nation, including Texas, to receive long-term 
care services in their homes or other community settings, 
rather than in institutions such as nursing homes. Not only 
does this increase the comfort and quality of life for many 
Medicaid beneficiaries, but it has reduced hospital 
readmissions, and saved money within the Medicaid program.
    The final Medicaid discussion draft, the ACE Kids Act, 
introduced by full committee Vice Chairman Barton and 
Representative Castor, has received substantial feedback from 
stakeholders and has been revised to reflect their input. The 
goal of this legislation is to improve comprehensive care for 
medically complex children through a state option to create a 
Medicaid health home specific to children. The bill will also 
increase data collection and add a requirement for the 
Department of Health and Human Services to issue guidance on 
best practices for providing care for this unique and complex 
pediatric population.
    I would like to thank the members whose legislation we are 
considering today for the time, effort, and thought that they 
have put into the development and fine-tuning of the language. 
I look forward to hearing from our witnesses and having a 
productive discussion on these important public health 
initiatives.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for holding today's 
hearing on these bipartisan drafts and legislation to improve 
the delivery cost of healthcare in our country. In particular, 
I am happy to see that our committee will be considering H.R. 
3325, the Advancing Care for Exceptional Kids, or ACE Kids Act. 
I am grateful to Representatives Barton and Castor for their 
commitment to the children with complex medical needs and their 
quest to improve the system of care provided to our nation's 
most vulnerable population.
    I am also proud to be a cosponsor of the ACE Kids Act. The 
ACE Kids Act aims to improve the delivery care for children 
with complex medical conditions served by Medicaid. It presents 
a great opportunity for us to implement better care delivery 
and payment models to support children and their families.
    The current discussion draft will establish a Medicaid 
health home State option, specifically targeting children with 
medically complex conditions, and require the Department of 
Health and Human Services to issue guidance regarding the best 
practices for using out-of-State providers for children with 
medically complex conditions. States who accept this new home 
health option for children with medically complex conditions 
will receive an enhancement 90 percent Federal medical 
assistance percentage, FMAP, for the first eight fiscal year 
quarters after the option is adopted.
    The discussion draft seeks to achieve three primary goals: 
improve the coordination of care for children; address the 
problems of fragmented access, especially when the necessary 
care is only available out of State; gather national data to 
help researchers improve services and treatments for children 
with complex medical conditions.
    I also want to thank our stakeholders in my area in 
Houston, Texas, Children's Hospital--I am glad to have Dr. Cook 
on the panel I think today, no, anyway--and my colleagues for 
moving this important legislation.
    Children with medically complex conditions require a lot of 
healthcare and generate significant cost. One study found that 
children with complex medical conditions who account for just 
over 5 percent of all children in Medicaid account for 34 
percent of all Medicaid spending for children.
    While the data is compelling, it is important not to reduce 
these children and their families to statistics. We must do a 
better job to ensure that all of these exceptional children get 
the care they need.
    Children with medically complex conditions often have 
multiple illnesses and disabilities and commonly need to see a 
number of physicians and specialists. The necessary care often 
requires these special children to travel across State lines to 
see one of the small number of pediatric specialists for their 
conditions.
    Under our current system, parents of kids with complex 
conditions struggle to coordinate the intricate multistate care 
of their children. We need this legislation to make sure that 
this care is more coordinated and seamless for families. The 
discussion draft is an important step forward.
    We must ensure that final legislation is robust and 
meaningful in accomplishing our shared goals of improving care 
and removing barriers for children with complex medical 
conditions. The ACE Kids Act now has 99 cosponsors, evidence 
that the health of our children is an issue above partisanship 
and brings us all together. I look forward to working with my 
colleagues to move the legislation forward and give our 
children the bright futures they deserve.
    I support the other four bills in discussion draft being 
considered today. Many of these bills, including H.R. 3891, 
will expand the authority of State Medicaid Fraud Control Units 
to investigate and prosecute Medicaid fraud and abuse at 
noninstitutional settings, and the discussion draft to codify 
the Health Fraud Prevention Partnership are comments and 
changes to current law and should receive wide bipartisan 
support.
    I also support the discussion draft to prohibit the use of 
the so-called gag clauses in Medicare and private health plans 
that prohibit pharmacists from informing consumers that their 
prescription can be purchased at a lower price. While I support 
the gag clause discussion draft, I hope the committee will 
consider a deeper examination for rising costs of prescription 
drugs and consider what Congress can do to help seniors 
struggling to afford their medication.
    And like you, Mr. Chairman, I want to thank our colleague 
from Georgia for bringing this up. This is a major issue with 
the seniors in my district in Houston and Harris County, Texas. 
I thank our witnesses for joining us today and look forward to 
hearing their testimony. Again, Mr. Chairman, thank you, and I 
yield back the remainder of my time.
    [The prepared statement of Mr. Green follows:]

                 Prepared statement of Hon. Gene Green

    Thank you, Mr. Chairman, for holding today's hearing on 
bipartisan legislation to improve the delivery and cost of 
health care in our country.
    In particular, I am happy to see that our committee will be 
considering H.R. 3325, the Advancing Care for Exception Kids or 
``ACE'' Kids Act.
    I am grateful to Representatives Barton and Castor for 
their commitment to children with complex medical needs and 
their quest to improve the system of care provided to our 
nation's most vulnerable population.
    I am a proud original co-sponsor of the ACE Kids Act.
    The ACE Kids Act aims to improve the delivery of care for 
children with complex medical conditions served by Medicaid.
    It presents a great opportunity for us to implement better 
care delivery and payment models to support children and their 
families.
    The current discussion draft would establish a Medicaid 
health home state option specifically targeted for children 
with medically complex conditions and require the Department of 
Health and Human Services to issue guidance regarding best 
practices for using out-of-state providers for children with 
medically complex conditions.
    States that accept this new home health option for children 
with medically complex conditions will receive an enhanced 90 
percent Federal Medical Assistance Percentage (FMAP) for the 
first eight fiscal year quarters after the option is adopted.
    The discussion draft seeks to achieve three primary goals:
     Improve the coordination of care for children;
     Address problems with fragmented access, 
especially when the necessary care is only available out-of-
state;
     Gather national data to help researchers improve 
services and treatments for children with complex medical 
conditions.
    I want to thank our stakeholders, Texas Children's Hospital 
in particular, and my colleagues for moving this important 
legislation forward.
    Children with medically complex conditions require a lot of 
health care and generate significant costs. One study found 
that children with complex medical conditions, who count for 
just over 5 percent of all children in Medicaid, account for 34 
percent of all Medicaid spending for children.
    While the data is compelling, it is important not to reduce 
these children and their families to statistics. We must do a 
better job to ensure that all of these exceptional kids get the 
care they need. Children with medically complex conditions 
often have multiple illness and disabilities, and commonly need 
to see a number of specialists and physicians. The necessary 
care often requires these special children to travel across 
state lines to see one of the small number of pediatric 
specialists for their conditions.
    Under the current system, parents of kids with complex 
conditions struggle to coordinate the intricate, multi-state 
care of their children.
    We need this legislation to make this care more coordinate 
and seamless for families.
    This discussion draft is an important step forward.
    We must ensure that the final legislation is robust and 
meaningful to accomplish our shared goals of improving care and 
removing barriers for children with complex medical conditions.
    The ACE Kids Act now has 99 cosponsors, evidence that the 
health of our children is an issue that is above partisanship 
and brings us all together.
    I look forward to working with my colleagues to move this 
legislation forward and give our children the bright futures 
they deserve.
    I support the other four bills and discussion drafts being 
considered today.
    Many of these bills, including H.R. 3891, which would 
expand the authority of state Medicaid Fraud Control Units to 
investigate and prosecute Medicaid fraud and abuse in non-
institutional settings, and the discussion draft to codify the 
Health Fraud Prevention Partnership (HFPP), are commonsense 
changes to current law and should receive wide bipartisan 
support.
    I also support the discussion draft to prohibit the use of 
so-called ``Gag Clauses'' in Medicare and private health 
insurance plans that prohibit pharmacists from informing 
consumers that their prescription can be purchased for a lower 
price out-of-pocket.
    While I support the ``gag clause'' discussion draft, I hope 
that the committee while consider a deeper examination on the 
rising costs of prescription drugs and consider what Congress 
can do to help seniors struggling to afford their medication.
    This is a major issue for seniors in my district in Houston 
and Harris County.
    I thank our witnesses for joining us today and look forward 
to hearing their testimony.
    Thank you again, Mr. Chairman, and I yield the remainder of 
my time.

    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes the gentleman from Oregon, the 
chairman of the full committee, Mr. Walden, 5 minutes for an 
opening statement, please.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Well, thank you, Mr. Chairman, and thanks for 
all your great work in this subcommittee, that and the members. 
Again, today we are taking up bipartisan issues that really 
matter for people's health and the cost of healthcare. So I 
think it is a real another step forward.
    So I traveled across Oregon over the last 5 weeks, covering 
2,000 miles, 39 meetings, and 12 counties. These issues come 
up, especially about healthcare, the cost, the quality. 
Accessing affordable healthcare is a real important issue, and 
it is one we consistently try to tackle in this committee.
    Today, we hope to build on the bipartisan achievements of 
the committee under the leadership of Chairman Burgess and 
Ranking Member Green and review yet another slate of bills that 
can help improve our overall healthcare system.
    Now, among those we will examine is the one we have heard 
about already pertaining to gag clauses, which have been front 
and center in the national debate on drug prices. Many patients 
who are struggling to afford costly prescription drug prices 
may not know that actually paying for their medications with 
cash is sometimes cheaper than using their health insurance. 
And with the high deductibles right now, you ought to be 
informed as a consumer. What is worse is some contracts 
prohibit pharmacists from telling their customers when this is 
the case.
    So banning these so-called ``gag clauses'' has gained 
tremendous bipartisan support, rightly so, with these bills in 
both the Senate Finance and Senate Health Committees advancing 
without objection. We will review the draft legislation banning 
group health plans offered by employers and individual health 
plans as well as Medicare Advantage and Medicare part D plans 
from limiting a pharmacist's ability to inform a consumer about 
the lower cost out-of-pocket price for their prescription.
    Now, another practical bill will give the administration 
additional authority to better detect and stop fraud and abuse 
in the healthcare system. This has been an area of interest for 
both the Obama and Trump administrations, and it is supported 
by the committee's ranking member, Mr. Pallone, as well as 
myself. I look forward to our continued bipartisan work in this 
space.
    We will also consider three bills in the Medicaid space 
that will help ensure the beneficiaries who are receiving the 
support and care they deserve in the setting that works best 
for them. Mr. Guthrie and Ms. Dingell's bill, H.R. 5306, for 
example, extend funding for the Money Follows the Person 
Demonstration Program, that is MFP Demonstration, in Medicaid. 
The MFP Demonstration provides additional resources for State 
Medicaid programs to help ensure Medicaid patients needing 
long-term care are served in their communities or in their 
homes instead of at institutions. By many measures, the MFP 
Demonstration has been successful.
    We will also consider a bill offered by Mr. Walberg and Mr. 
Welch, H.R. 3891, that will help improve the authority of State 
Medicaid Fraud Control Units, or MFCUs. Currently, MFCUs are 
only allowed to investigate cases of provider fraud and patient 
abuse in healthcare facilities or board and care facilities. 
This legislation would broaden that authority so that these 
units could investigate and prosecute abuse and neglect of 
Medicaid beneficiaries in noninstitutional or other settings. 
Practically speaking, this bill will improve the ability of 
MFCUs to help protect vulnerable Medicaid patients from harm, 
while reducing the program's resources diverted by fraud.
    And, finally, we will consider an amendment in the nature 
of a substitute to a familiar bill authored by our full 
committee vice chair, Mr. Barton, and Representative Castor. 
That is H.R. 3325. Under current law, a health home State plan 
amendment cannot target by age or be limited to individuals in 
a specific age range. The Centers for Medicare and Medicaid 
Services has reported that States have identified this 
inability to target health home services as an operational 
challenge. This bipartisan bill seeks to address that challenge 
by giving States a new option through the existing health home 
model to coordinate care for children with medically complex 
conditions.
    So further discussion of this report and bill, I would 
yield the balance of my time to full committee vice chair, Mr. 
Barton, and thank our witnesses for joining us today.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Today's hearing is another step forward to improve patient 
health care. As I traveled across Oregon over the last 5 weeks, 
I continued to hear from constituents about health care, 
particularly regarding the cost and quality of care. Today we 
hope to build on the bipartisan achievements of this 
subcommittee, under the leadership of Chairman Burgess and 
Ranking Member Green, and review yet another slate of bills 
that can help improve our health care system.
    Among the bills we will examine today is one pertaining to 
gag clauses, which have been front and center in the national 
debate on drug prices. Many patients who are struggling to 
afford costly prescription drug prices may not know that paying 
for their medications with cash can sometimes be cheaper than 
using their health insurance. What's worse is some contracts 
prohibit pharmacists from telling their customers when this is 
the case.
    Banning these so-called ``gag clauses'' has gained 
tremendous bipartisan support, with bills in both the Senate 
Finance and Senate HELP committees advancing without objection. 
We'll review draft legislation banning group health plans 
offered by employers and individual health insurance plans--as 
well as Medicare Advantage and Medicare Part D plans--from 
limiting a pharmacist's ability to inform a customer about the 
lower cost, out-of-pocket price of their prescription.
    Another practical bill will give the administration 
additional authority to better detect and stop fraud and abuse 
in the health care system. This has been an area of interest 
for both the Obama and Trump administrations, and it's 
supported by the committee's Ranking Member, Mr. Pallone, as 
well as myself. I look forward to our continued bipartisan work 
in this space.
    We will also consider three bills in the Medicaid space 
that will help ensure that beneficiaries are receiving the 
support and care they deserve in the setting that works best 
for them. Mr. Guthrie and Ms. Dingell's bill, H.R. 5306 for 
example, will extend funding for the Money Follows the Person 
Demonstration Program (MFP demonstration) in Medicaid. The MFP 
demonstration provides additional resources for state Medicaid 
programs to help ensure Medicaid patients needing long-term 
care are served in their communities or in their homes, instead 
of at institutions. By many measures, the MFP demonstration has 
been successful.
    We will also consider a bill authored by Mr. Walberg and 
Mr. Welch, H.R 3891, that will improve the authority of state 
Medicaid Fraud Control Units--or MFCUs. Currently, MFCUs are 
only allowed to investigate cases of provider fraud and patient 
abuse in health care facilities or board and care facilities. 
This legislation would broaden the authority of these units to 
investigate and prosecute abuse and neglect of Medicaid 
beneficiaries in non-institutional or other settings. 
Practically speaking, this bill will improve the ability of 
MFCUs to help protect vulnerable Medicaid patients from harm, 
while reducing the program resources diverted by fraud.
    Finally, we will consider an Amendment in the Nature of a 
Substitute to a familiar bill authored by our full committee 
Vice Chairman Barton and Rep. Castor bill, H.R. 3325. Under 
current law, a Health Home state plan amendment cannot target 
by age or be limited to individuals in specific age range. The 
Centers for Medicare and Medicaid Services (CMS) has reported 
that states have identified this inability to target Health 
Home services as an operational challenge. This bipartisan bill 
seeks to address that challenge by giving states a new option 
through the existing Health Home model to coordinate care for 
children with medically complex conditions.
    To further discuss this important bill, I would like to 
yield the remainder of my time to the Vice Chairman of the Full 
Committee, Mr. Barton, and thank our witnesses for joining us 
here today.

    Mr. Barton. Well, thank you, Mr. Chairman. Every now and 
then, we have a day when it reminds us why we ran for Congress. 
Today is one of those days. As Mr. Green in his opening 
statement just itemized, the ACE Kids Act, all the good things 
that it will do. So I don't need to go through that.
    But we are going to have a hearing on that bill today among 
the other four bills, and hopefully, on Friday, we are going to 
mark it up. ACE Kids is a bill that has been in some shape or 
form before this subcommittee for about 6 years. The bill, the 
draft discussion today, is one of those rare things. It is 
totally bipartisan. Half of the cosponsors are Republican; half 
are Democrat. On this subcommittee, Mr. Latta, Mr. Lance, Mr. 
Guthrie, Mr. Bilirakis, Mr. Long, and Mr. Carter are Republican 
cosponsors. Mr. Green, Ms. Eshoo, Mrs. Dingell, Ms. DeGette, 
Ms. Castor, Mr. Kennedy, and Mr. Cardenas are Democratic 
cosponsors. We have half the subcommittee cosponsor this bill. 
It doesn't expand coverage; it doesn't increase spending. It 
makes it better, Mr. Chairman. It allows families to choose. It 
allows the care providers to coordinate, and you can go across 
State lines.
    This is a really, really good bill. I hope we have a great 
hearing. I want to thank Rick Merrill from Fort Worth, Texas, 
for testifying in its favor, and I look forward to the 
discussion and the questions.
    With that, I yield back, Mr. Chairman.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The ranking member of the full committee has not yet 
arrived, so we will delay his opening statement until his 
arrival.
    But I do want to welcome and thank our witnesses for being 
here and taking time to testify before the subcommittee on 
these pending pieces of legislation. Each witness will have the 
opportunity to give an opening statement, and this will be 
followed by questions from members.
    So, today, in order, we are going to hear from Mr. Hugh 
Chancy, Owner, Chancy Drugs, and Member of the Board of 
Directors of the National Community Pharmacists Association; 
and Mr. Curtis Cunningham, Vice President, National Association 
of States United for Aging and Disabilities, and Assistant 
Administrator, Long-Term Care Benefits and Programs, Division 
of Medicaid Services, Department of Health Services from the 
State of Wisconsin; Mr. Matt Salo, the Executive Director of 
the National Association of Medicaid Directors; Mr. Rick 
Merrill--always have to have a Texan on the panel, so welcome 
and thank you for joining us today--Mr. Rick Merrill, who is 
the President and CEO of Cook Children's Health Care System in 
beautiful downtown Fort Worth, Texas; Mr. Derek Schmidt, the 
Attorney General for the State of Kansas; and Dr. David Yoder, 
Executive Director of Member Care and Benefits, Blue Cross Blue 
Shield Association's Federal Employee Plan.
    Again, thanks to all of you. We appreciate you giving of 
your time today to testify. Mr. Chancy, you are now recognized 
5 minutes to summarize your opening statement, please.

STATEMENTS OF HUGH M. CHANCY, RPH, OWNER, CHANCY DRUGS, HAHIRA, 
  GEORGIA, AND MEMBER, BOARD OF DIRECTORS, NATIONAL COMMUNITY 
  PHARMACISTS ASSOCIATION; CURTIS CUNNINGHAM, VICE PRESIDENT, 
      NATIONAL ASSOCIATION OF STATES UNITED FOR AGING AND 
 DISABILITIES (NASUAD), AND ASSISTANT ADMINISTRATOR, LONG-TERM 
  CARE BENEFITS AND PROGRAMS, DIVISION OF MEDICAID SERVICES, 
 DEPARTMENT OF HEALTH SERVICES, STATE OF WISCONSIN; MATT SALO, 
EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF MEDICAID DIRECTORS; 
 RICK MERRILL, PRESIDENT AND CEO, COOK CHILDREN'S HEALTH CARE 
   SYSTEM, FORT WORTH, TEXAS; DEREK SCHMIDT, J.D., ATTORNEY 
 GENERAL, STATE OF KANSAS; AND DAVID YODER, PHARM.D., M.B.A., 
EXECUTIVE DIRECTOR OF MEMBER CARE AND BENEFITS, BLUE CROSS BLUE 
           SHIELD ASSOCIATION'S FEDERAL EMPLOYEE PLAN

                STATEMENT OF HUGH M. CHANCY, RPH

    Mr. Chancy. Chairman Burgess, Ranking Member Green, members 
of the subcommittee, thank you for conducting this hearing. My 
name is Hugh Chancy. I have been practicing community pharmacy 
since 1988. I am currently an owner of five community 
pharmacies in the southern part of Georgia, and I am here on 
behalf of the National Community Pharmacy Association. I 
currently serve as NCPA board of directors. NCPA represents 
America's community pharmacists, including owners of more than 
22,000 independent community pharmacies. I am here today as a 
healthcare provider and a small business owner to present my 
experience with restrictive contractual language, often called 
gag clauses, that may result in patients being charged inflated 
prices for their medications.
    My first experience with so-called gag clauses occurred in 
2015, when one of my pharmacies served several patients on the 
city's employment-sponsored insurance, including the city 
mayor. The city had just changed insurance providers, and many 
of my patients experienced a rise in their prescription copays. 
Specifically, the mayor's copay of his medication went from 
roughly $7 to $26.
    When I noticed this difference, I informed the mayor that 
it would be cheaper if he paid cash for his prescription or off 
of his insurance. The mayor was fortunate to have the political 
wherewithal to contact the right people in charge of the city's 
insurance plan and to complain about the changes and the 
oddities of paying more for the prescription on insurance than 
off. It goes without saying that many of the patients do not 
have similar avenues to voice their concerns about prescription 
drug coverage.
    After the mayor contacted the plan, the plan consulted with 
their PBM, who issued us a verbal warning to my pharmacy for 
talking to the patient about the drug cost. The PBM stated that 
we are in violation of our contract for disparaging the plan 
when we discuss the cost of the drug off insurance. We were 
told that if our pharmacy were to do so again, there would be 
consequences and possibly exclusion from the PBM's network.
    The common denominator in all community pharmacies' 
experiences with gag clauses is a strained relationship with 
PBMs. When a patient comes to the pharmacy and presents 
insurance, the pharmacy is bound by the terms of the patient's 
insurance and the PBM's rules. Put simply, pharmacists do not 
play a role in determining the patient's financial 
responsibility for prescription medications that they access 
through any prescription drug coverage.
    If a patient does not present insurance or if a patient 
inquires directly, however, pharmacies can tell the patient 
alternative means to purchase a drug. When a PBM is involved, 
however, communication with the patient becomes murky, because 
pharmacies are contractually required to charge the patient 
what the PBMs say when the prescription is processed.
    I am often asked what gag clauses look like in contracts, 
but the answer to that question is not as simple as it may 
seem. The expression ``gag clauses'' is a misnomer, because 
what is most often being referred to are multiple contract 
provisions or requirements embedded in lengthy PBM provider 
manuals that include overly broad confidentiality requirements 
and nondisparagement clauses. Some PBMs have even included 
provisions that can be interpreted as prohibiting communication 
with news media, policymakers, and even elected officials.
    Ultimately, these provisions have the effect of chilling a 
range of pharmacist communications with patients for fear of 
retaliation by the PBM. For this reason, the gag clause issue 
goes well beyond drug price disclosures. Further, community 
pharmacies like mine have very little negotiating power to 
strip these provisions out of their contracts.
    As a solution to this problem, community pharmacies need a 
place to point into law that will allow for the free flow of 
information between them and the patients. NCPA supports the 
discussion draft that is the focus of this hearing. The draft 
is legislation to prohibit gag clauses in Medicare and private 
insurance by banning health plans from restricting a pharmacy's 
ability to inform customers about the lower cost, the out-of-
pocket price for their prescription.
    Additionally, NCPA appreciates the work that Congressmen 
Buddy Carter and Peter Welch have done in introducing 
legislation that would also meaningfully address contract 
provisions that prohibit or penalize a pharmacist from 
communicating different cost options to their patients.
    Also, I was pleased to hear that CMS recently sent a letter 
to plan sponsors and Medicare explaining that any form of gag 
clauses in contracts is unacceptable. In addition, 25 States 
have passed legislation prohibiting gag clauses. These actions 
give pharmacists the ability to point to laws and rules that 
prevent PBMs from restricting free flow of information.
    In conclusion, as Congress demands increased transparency 
in the prescription drug marketplace, this committee can 
provide a much needed stake in the ground to allow pharmacists 
to freely discuss drug costs with their patients. Providing the 
free flow of this kind of information is a step in the right 
direction to meaningfully addressing drug costs for Americans. 
Thank you.
    [The prepared statement of Mr. Chancy follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Thank you, Mr. Chancy. Thanks for sharing your 
testimony with us.
    Mr. Cunningham, you are recognized for 5 minutes to 
summarize your opening statement, please.

                 STATEMENT OF CURTIS CUNNINGHAM

    Mr. Cunningham. Thank you. Chairman Burgess, Ranking Member 
Green, and members of the subcommittee, thank you for the 
opportunity to discuss Money Follows the Person Program.
    In addition to serving as Assistant Administrator for Long-
Term Care Benefits and Programs in Wisconsin, I am also the 
Vice President of the National Association of States United for 
Aging and Disabilities, known as NASUAD, which is a nonpartisan 
association that represents administrators of aging, 
disability, and long-term supports and services in all 50 
States, District of Columbia, and territories.
    I am also designated as the Wisconsin disability director 
and serve on the National Policy Work Group for the National 
Association of State Directors of Developmental Disability 
Services.
    I am honored to be here today to represent NASUAD and speak 
about Money Follows the Person and its impact on individuals 
that require long-term supports and services.
    The MFP program, as it is frequently called, was first 
created by the Deficit Reduction Act of 2005 as a way to 
provide States with increased resources and flexibilities that 
assist in the transition of individuals from institutional 
long-term care settings to home and community-based services.
    The creation of MFP gave States crucial tools to increase 
choices or options for individuals who receive long-term 
services and supports in accordance with the landmark Olmstead 
decision that mandates that States ensure that participants 
receive services in the most integrated setting based on their 
needs and their preferences. States began operating MFP in 
2007, and between 2007 and 2017, 43 States transitioned over 
75,000 individuals into the community.
    MFP also results in significant cost savings. According to 
the national MFP evaluation, the average annual person's 
spending during the first year following the transition into 
the community declined by over $20,000 for older adults and 
people with disabilities and by over $48,000 for individuals 
with intellectual and developmental disabilities. All told, 
this has resulted in $1 billion in savings during the first 
year of transition alone for these individuals.
    The evaluation also estimated that 17 States evaluated, 
roughly one-quarter of the older adults and one-half of the 
individuals with intellectual and developmental disabilities 
would not have transitioned without the support of MFP.
    One of the reasons MFP provides an opportunity for 
deinstitutionalization for individuals who would not otherwise 
move into the community is due to the flexible services that 
this program provides.
    MFP allows for supplemental services that are not covered 
through the standard Medicaid long-term services and supports, 
and provides opportunities for innovation to address some of 
the common barriers to community transitions. Some examples 
include, in Wisconsin, we funded community living specialists 
who review nursing home diagnostic data to identify people who 
indicate they would like to move into the community, and these 
community specialists assist them in that movement.
    Nearly every State has identified lack of accessible 
affordable housing as a significant challenge that can prevent 
community placements. In Tennessee, MFP funded a housing 
counseling and a pilot program to support bridge subsidies for 
individuals leaving institutions. Many States also use MFP 
funding to support programs that help beneficiaries gain and 
maintain employment, provide behavioral supports, provide 
outreach consultation with nursing facilities, and then also 
provide grants to Tribal entities to develop their own 
community relocation initiatives.
    Critically, in Wisconsin, many other States use MFP funds 
to address waiting lists through diversion initiatives and 
expand available slots for their community-based waivers. 
States also use MFP to support Aging and Disability Resource 
Centers, which provide comprehensive information and referral 
services to keep people in the community. Finally, MFP also 
serves several States in their person-centered thinking and 
organizational thinking.
    Finally, it is important to remember that, behind each of 
these statistics, there are real people. I would like to share 
one of those stories. In Delaware, MFP changed the life of a 
young mother of three who was a victim of a violent crime. She 
found herself in a nursing home due to her injuries, which left 
her paralyzed from the waist down. Prior to the crime, she was 
working, supporting her family; and while in the facility, she 
had no income. Being in the nursing facility was difficult for 
her and her children. While they could visit her in the 
facility, she was not at home to be part of their daily lives 
or put them to bed at night.
    MFP was able to transition her home with her children and 
her mother as their caretaker after spending 8 months in the 
facility away from her children. After the transition, she 
continued to improve the quality of life. She is learning how 
to drive an adapted vehicle. Her intention is now to attend 
vocational rehab so that she can return to work to support 
herself and her children.
    As you can see, these unique programs provide benefits to a 
wide range of people. Not only is it valuable to States. It is 
fiscally responsible and results in savings for the Federal 
Medicaid program. Lastly and most importantly, it improves the 
lives for the individuals we serve.
    Although significant progress and success has been made in 
rebalancing HCBS, there is still a lot of work that can be 
done. Almost 60 percent of all Medicaid expenditures for long-
term services and supports are delivered to older adults and 
people with physical disabilities or for institutional care.
    On behalf of NASUAD, I therefore encourage Congress to 
continue this important program. Our members across the country 
have seen great value in the program, and the interventions 
have become more effective as the States experimented with and 
learned from innovative ways to provide these supports.
    We encourage Congress to continue to work with NASUAD, our 
membership, and the broader aging and disability community to 
demonstrate the financial and human benefits of a program in 
order to secure the extension of MFP. Thank you for the 
opportunity to comment, and I would be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Cunningham follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Thank you, Mr. Cunningham.
    The chair now recognizes Mr. Matt Salo for 5 minutes to 
summarize your opening statement, please.

                     STATEMENT OF MATT SALO

    Mr. Salo. Thank you so much, Chairman Burgess, Ranking 
Member Green, members of the subcommittee. My name is Matt 
Salo, and I represent the National Association of Medicaid 
Directors. These are the folks in each of the 56 States and 
U.S. territories who run the Medicaid program.
    I want to briefly just frame Medicaid and what my members 
do before touching briefly on three of the bills that you are 
currently considering. I think it is important to recognize 
just how big, complex, and important Medicaid is. Medicaid 
covers more than 70 million Americans. We spent more than $550 
billion last year, and it is roughly 30 percent of the average 
State budget and 3 percent of the Nation's GDP.
    Medicaid is the backbone of the U.S. healthcare system, and 
in many ways and for many of the populations that we are 
talking about today, it is the backbone of America. And I think 
that it is important, despite the complexity of all the things 
we are talking about--we are talking about some very, very 
different components of Medicaid today--it is important to keep 
in mind the importance and the breadth of the things that we 
try to achieve. And arguably, I think Medicaid is clearly the 
largest and most important healthcare program, not only in this 
country but arguably in the world.
    One way that I think it is important to also frame it is, 
similar to the parable of the six blind men trying to describe 
an elephant and sort of only looking at what they can see and 
touch, if you look at any of the pieces today, you might think, 
oh, well, Medicaid's a program for medically complex kids or 
Medicaid's a program for frail seniors or adults with 
disabilities. It is all of those things and many, many more.
    My members, the State Medicaid directors, their job, no 
matter what State they are in, is to try to improve the 
healthcare system to deliver a better healthcare experience to 
the people that we serve while being responsible stewards of 
both State and Federal taxpayer dollars, and to do so in ways 
that are meaningful and relevant in the State and in the 
cultural community that they reside.
    My members are driving significant complicated healthcare 
reforms to the delivery system of Medicaid and the broader U.S. 
healthcare system. We are driving sustainable payment reforms 
to try to bring Medicaid from a fee-for-service system into a 
value-based system. This is complicated. This is multisector. 
This is multiyear. This is difficult work, but it is critically 
important.
    Three of the bills I want to touch on real briefly. We have 
talked a lot about the ACE Kids Act. This has been a very 
complex, a very fluid piece of legislation. As Chairman Barton 
has referenced, it has been around for at least 6 years now. I 
would hope that the message that we give is that if we want 
something like this to be successful, look to the example of 
CHIP.
    CHIP was a program created in 1997 that sought to improve 
coverage and care for kids in this country. And the way that it 
evolved and the way that it was created and the way that it 
ultimately has become one of the most bipartisan and most 
successful programs that this committee has worked on is that 
it embraced two concepts, one of which is that if we want 
States to make significant progress in areas like this, it has 
got to embody two principles: one, enhanced Federal support; 
and, two, increased State flexibility. Because no matter what 
we are looking at, the ways that States, from New York to Texas 
to California and everything in between, their healthcare 
cultures, their healthcare systems are different, and it has to 
be cognizant and respectful of those differences as we are 
trying to provide the best possible healthcare, not to just to 
those kids but to everybody else that we serve. So, if we want 
this to be successful, we have to ensure that it is flexible, 
ensure that there is strong sustained Federal support, and I 
believe that we can get there.
    Second, very, very briefly, Money Follows the Person. I can 
be very brief on this, because there is no question that this 
works. There is no question this is highly successful. There is 
no question this is incredibly important to continue not just 
for the short-term but for the long-term. I think we should be 
talking about how long can we reauthorize this for. Can we make 
this permanent? And that is one of the things that we always 
talk about is, if we find something that works, let's make it 
permanent. And I think clearly this works, and clearly this is 
an important part of our conversation.
    The final piece on the Medicaid Fraud Control Units. Very 
important conversation, especially in light of increased 
movement from institutional to noninstitutional. But I would 
urge you also to think more broadly about how we are 
approaching program integrity. Program integrity is not just 
fraud or abuse or safety. It is those things, but it is more.
    The Fraud Control Units exist within the Attorney General's 
Office, not within Medicaid. We have to make sure that if we 
are going to invest in targeted areas like this, which we 
should, we have to make sure that we are coordinating the 
efforts across the system. And I have got a couple of other 
ideas, in terms of things that we could do to improve this.
    And then, just finally, I will say I would be happy to also 
talk about some of the other possible reforms in Medicaid that 
my members would love to see to help them in their efforts to 
improve the Medicaid program for taxpayers, for beneficiaries, 
for providers, and for all of us. So I would be happy to answer 
questions at the end, and thank you for having me.
    [The prepared statement of Mr. Salo follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Thank you, Mr. Salo. Thanks. Just a historical 
note since two of you now have brought up the Deficit Reduction 
Act of 2005. It was late in December of 2005 when this 
committee passed the Deficit Reduction Act. Mr. Barton was 
chairman at the time. And now all these many years later to 
hear about an enduring part of that that actually did perform 
as indicated, it is gratifying. It was a big bill with a lot of 
moving parts, but I am grateful that that one did deliver.
    Mr. Merrill, we are grateful to have your presence on the 
subcommittee dais today. You are recognized for 5 minutes to 
summarize your opening statement.

                   STATEMENT OF RICK MERRILL

    Mr. Merrill. Thank you very much. I thank Congressman 
Barton, Chairman Barton, Chairman Burgess, and Ranking Member 
Green. You guys did such a great job describing ACE Kids and 
the importance of it and the benefits of it. I am not sure I 
could top that, but I will do my best to equal this today.
    Chairman Burgess, Ranking Member Green, and members of the 
subcommittee, I am Rick Merrill, the President and CEO of Cook 
Children's Health Care System in Fort Worth, Texas, and I am 
Chair of the Children's Hospital Association Board of Trustees. 
On behalf of my hospital system, our CHA member institutions 
and the patients and families we serve, thank you for the 
opportunity to speak in strong support of H.R. 3325, the 
Advancing Care for Exceptional Kids Act of 2017, or ACE Kids, 
as we refer to it.
    We are extremely grateful to Representatives Barton and 
Castor for their leadership on behalf of children, as the 
original cosponsors of this bipartisan legislation, and to the 
nearly 100 additional House Members who have joined them as 
cosponsors. We also wish to thank the leadership of the Energy 
and Commerce Committee and the Health Subcommittee for devoting 
considerable time and resources to working toward solutions in 
this important area.
    In addition, we want to recognize Chairman Burgess and 
Ranking Member Green for their longstanding leadership and 
support of the Children's Health Insurance Program and the 
recent reauthorization of the Children's Hospital Graduate 
Medical Education Program, which was passed by the Senate last 
evening. Thank you for that.
    Last year, Cook Children's treated children from more than 
35 States, recorded nearly half a million child visits in our 
60 pediatric specialty clinics, 240 visits in our Mercy 
Department and Urgent Care Center, and registered over 11,000 
inpatient admissions. With over 1.5 million patient encounters 
a year, Cook Children's provides comprehensive and coordinated 
care across our fully integrated system, including home health 
services and a health plan which enrolls over 100,000 Medicaid 
children, many of whom have serious disabilities.
    For many years now, we have taken care of some very sick 
kids, and I think we have done a good job in our part of Texas, 
but I am here today to tell you that we could and should do 
better. Medicaid covers over 37 million children. A small 
percentage of these kids have complex medical conditions 
requiring ongoing and specialized care. These children have 
diagnoses that are multiple and varied, from cerebral palsy to 
cystic fibrosis to congenital heart disease and even childhood 
cancers. They typically are under the continuous care of 
multiple pediatric specialists and require access to 
specialized care and additional services, often from outside 
their home State. Additionally, their care accounts for a 
drastically disproportionate percentage of Medicaid spending on 
children.
    Behind each of these data points is a real child and 
family, families like the Beckwiths. Alex and Maddy Beckwith of 
Keller, Texas, are some of the most remarkable, kindest 14- and 
4-year-olds that you could hope to meet, but they both also 
suffer from mitochondrial disease, along with other health 
issues. Mitochondrial disease is a serious condition without a 
cure. It requires lifelong medication and therapy.
    Due to their conditions, Alex and Maddy, their care is 
complex and ongoing. And so they actually have become like 
family members to the staff at Cook Children's. They see 15 
specialists between them and require major interventions to 
remain medically stable. The ACE Kids Act is about improving 
care for children like Alex and Maddy by expanding access to 
patient-centered pediatric-focused coordinated care tailored to 
their unique needs. The ACE Kids Act would modify Medicaid's 
existing health home option to give States the ability to 
implement health home specifically targeting children with 
complex medical conditions.
    These new pediatric health homes would follow national 
guidelines in implementing a care plan for the medically 
complex child, coordinating care from providers, such as 
physicians, children's hospitals, specialized hospitals, 
nonphysician professionals, and home health and behavioral 
health providers. These homes will help families manage the 
challenges associated with their child's care while improving 
quality of care for the children enrolled.
    Participation will be completely voluntary for these 
children. Families, healthcare providers, and the pediatric 
health homes will work within the existing State's Medicaid 
program, including those States with Medicaid managed care. The 
focus of ACE Kids is creating opportunities for providers, 
plans, and States to collaborate to provide the best quality of 
care for these children.
    The ACE Kids Act is also about using existing Medicaid 
resources more efficiently. A large and growing body of 
research shows that coordinating care for people with chronic 
conditions can, indeed, reduce spending. The potential cost 
savings the ACE Kids model could produce have been demonstrated 
through projects supported by the Center for Medicare and 
Medicaid Innovation. The CMMI Coordinating All Resources 
Effectively Award, that is the CARE Award, implemented care 
coordination programs serving 8,000 children with medical 
complexity. Collectively, the 10 hospitals participating in the 
CARE Award, including Cook Children's, reduced emergency 
department visits by 26 percent, reduced inpatient stays by 32 
percent, and in just the full year of operation coordinating 
care for these children, care ultimately reduced overall 
Medicaid costs for these children 2.6 percent. Additionally, 
prior independent analysis of the ACE Kids Act conducted shows 
substantial potential long-term savings in the Medicaid 
program.
    The ACE Kids Act will create a data and quality framework 
to drive improvement in care and further reduce cost. The bill 
outlines a definition of children with medically complex 
conditions who will be eligible to participate in the program 
and includes standardized data reporting requirements related 
to their care. This information and sharing does not exist in 
Medicaid today. There is currently no national data available 
to inform our policies for children with medical complexity.
    Since its original introduction in the 113th Congress, the 
ACE Kids concept has continued to evolve, based on extensive 
stakeholder feedback. This bill reflects the results of this 
collaborative process and has received support from many 
organizations dedicated to children's health.
    In closing, the ACE Kids Act will have an opportunity to 
help children and their families who face some of the most 
significant health challenges. On behalf of children's 
hospitals nationwide and the thousands of children and families 
that we care for at Cook Children's, we look forward to working 
with Congress to pass ACE Kids this year and advance solutions 
that improve care for all kids. Thank you.
    [The prepared statement of Mr. Merrill follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Thank you, Mr. Merrill.
    Mr. Schmidt, you are recognized for 5 minutes to summarize 
your opening statement, please.

                STATEMENT OF DEREK SCHMIDT, J.D.

    Mr. Schmidt. Thank you, Mr. Chairman, Ranking Member Green, 
thank you all very much for conducting this hearing today. I 
want to particularly thank Representative Walberg and 
Representative Welch for their leadership in bringing forward 
H.R. 3891.
    It is a bipartisan bill not only on your side but on ours, 
and I testify today wearing two hats: first, as the immediate 
past president of the National Association of Attorneys 
General, the nationwide organization of all 56 State, 
territory, and District of Columbia attorneys general, a 
nonpartisan organization. To the extent my testimony conveys 
information that is in the two National Association letters 
submitted with my testimony, it is testimony on behalf of the 
organization. To the extent I may testify on other matters, for 
example, illustrate points with experiences from Kansas, it is 
my testimony as the State of Kansas attorney general.
    I would slip into the jargon, Mr. Chairman, the MFCUs, the 
Fraud Control Units, but we tend to call them MFCUs. Title 19 
of the Social Security Act, of course, requires every State to 
have one or obtain a waiver. Forty-nine States, North Dakota 
being the exception, have a MFCU, as does the District of 
Columbia. None of the territories does.
    So there are 50 of them nationwide. Of those 50, 44 are 
housed within the Office of the Attorney General. The other six 
are housed at another location in State government, but, of 
course, none can be housed, by law, within the Medicaid program 
itself. The whole point in Congress' enactment is to have an 
outside entity watching, the fraud fighters, the abuse fighters 
outside connected with, coordinated with, communicating with, 
but separate from the program itself.
    Kansas is one of those States where the MFCU is housed in 
the Attorney General's Office. These are valuable programs from 
a State perspective because, like the Medicaid program itself, 
the cost is shared. The ratios are slightly different. It is a 
75-percent Federal/25-percent State mix on the cost. That is a 
tremendous value-added proposition from the standpoint of being 
able to detect, investigate, and prosecute Medicaid fraud or 
the abuse of Medicaid beneficiaries. And so they are very 
attractive and, therefore, robustly used among the States, 
including in Kansas.
    HHS OIG data shows that in fiscal 2017, the total 
recoveries nationwide from the MFCUs were about $1.8 billion, a 
little under $2 billion, and the total number of criminal 
convictions were about 1,500, give or take. Of that number, 
about 370 of those 1,500 criminal convictions were patient 
abuse convictions as opposed to fraud against the program 
convictions. And it is that distinction between fraud and abuse 
investigations, prosecutions, and efforts to detect that is the 
subject of H.R. 3891.
    The distinction is important. I don't know the historical 
reasons for it. I suspect staff does. But for whatever reason, 
when Congress enacted the provisions in title 19, it drew a 
jurisdictional distinction between the ability of a Medicaid 
fraud control unit to address fraud, an effort to steal public 
money from the Medicaid program, and the authority of a MFCU to 
address the abuse of patients, whether it is physical or 
financial or sexual or whatever sort of abuse it might be.
    And to boil it all down, the net is cast wider statutorily 
in terms of our ability to go after fraud than it is in terms 
of our ability to go after patient abuse. In a phrase, we can 
essentially go after fraud wherever we find it, but with 
respect to patient abuse, we can only go after it when we find 
it in what the statute calls a healthcare facility or in some 
States, at a statutory option, a board and care facility, in 
other words, in an institutional setting.
    We cannot use those MFCU assets to detect, investigate, 
prosecute patient abuse cases in a noninstitutional setting. 
And obviously, when you lay that alongside the tremendous 
growth in HCBS services, home healthcare delivery services 
outside of an institution, that disconnect, the problem with 
that becomes obvious.
    So consider, for example, our folks, for example, in Kansas 
investigating a home healthcare fraud, a PCA fraud sort of 
circumstance, and we are at a nonresidential or 
noninstitutional, in a residential setting for the purpose of 
figuring out where the money went, and we discover evidence of 
abuse or neglect of the patient. We can no longer use those 
MFCU assets to pursue the investigation and prosecution of the 
patient abuse or neglect, even though we can continue to pursue 
the investigation and prosecution of the financial fraud. We 
don't think that makes any sense. And that is precisely what 
H.R. 3891 is designed to collapse, to allow us the broader 
scope with respect to both.
    This is not just an academic point. In my written 
testimony, I highlight some cases from Kansas, where we have 
prosecuted serious physical or other abuse against patients in 
an institutional setting. We have cases where we have not been 
able to proceed because we are in a noninstitutional setting. 
We functionally, in Kansas at least, we go beg, borrow, and 
plead for a local police department to please take up the 
cause, or a local prosecutor. And we just don't think that 
makes any sense from a policy standpoint in today's healthcare 
delivery method.
    So we would encourage the enactment of H.R. 3891, both as 
our association and as myself. I would be delighted to answer 
any questions. And I would just end where I started. From our 
vantage point, like you, most of our members, not all of our 
members but most of our members are elected officials. We are 
Republicans, Democrats, and sometimes other, and there is no 
daylight on this issue among our members.
    The first of the two letters that reflect NAAG policy had 
38 signers. It was led by Attorney General Jepsen from 
Connecticut and myself, a Democrat and a Republican. The second 
had 49 of our 56 members. And remember, there are only 50 
MFCUs. Forty-nine signed on, and it was led by Attorney General 
Jepsen and myself, Attorney General Donovan from Vermont, a 
Democrat from Vermont, and Attorney General Hunter, a 
Republican from Oklahoma. So we are all behind this, and we are 
grateful for your time.
    [The prepared statement of Mr. Schmidt follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Great. Thank you, Mr. Schmidt.
    Dr. Yoder, you are recognized for 5 minutes to summarize 
your opening statement, please.

               STATEMENT OF DAVID YODER, PHARM.D.

    Dr. Yoder. All right. Thank you, Mr. Chairman. First, I 
would like to thank both Chairman Burgess and the Ranking 
Member Green for their leadership in holding today's hearing 
and providing an opportunity to discuss key ways to improve 
healthcare.
    My name is David Yoder. I am the Executive Director, Member 
Care and Benefits at the Blue Cross Blue Shield's Federal 
Employee Program. BCBSA is a national federation of 36 
independent community-based and locally operated Blue Cross and 
Blue Shield companies that collectively provide healthcare 
coverage for one in three Americans.
    Blue Cross and Blue Shield companies offer quality 
healthcare coverage in all markets across America and 
participate in all Federal insurance programs. BCBSA, through 
the FEP, administers health insurance to approximately 5.4 
million Federal employees, retirees, and their families. We are 
committed to high-quality affordable coverage for all, 
regardless of preexisting conditions.
    Today I am going to address a couple areas. One is how 
BCBSA and its member companies are working to reduce fraud and 
abuse and the need to eliminate gag clauses related to 
prescription drugs. Fraud and abuse is an essential step to 
ensure the affordability of healthcare and addressing, 
reducing, and, to the extent possible, preventing the 
opportunity for fraud and abuse.
    BCBS companies are diligent in working to stay ahead of 
fraud and abuse. The BCBSA National Antifraud Department is 
dedicated to the support and promotion of BCBSA's antifraud 
efforts nationwide, including for the FEHBP program. This 
effort includes direct investigative support of local Blue 
Cross Blue Shield special investigative units, coordination of 
multiplan investigations, working with Federal and State law 
enforcement, and providing subject-matter experts to BCBSA's 
Office of Policy and Representation, the media, and the 
government entities.
    Among various governmental efforts, the Federal Government 
established the Healthcare Fraud Prevention Partnership, HFPP, 
to improve the detection and prevention of healthcare fraud. 
BCBSA and several of our member companies are active 
participants in the HFPP. We support the HFPP and Congress' 
desire to establish explicit authority for HFPP and its 
activities. As Congress takes steps to codify the HFPP charter, 
we recommend improvements to help the partnership fulfill its 
objectives, which were in my submitted written testimony.
    Turning to gag clauses, BCBSA does not support the use of 
gag clauses and is unaware of any Blue Cross and Blue Shield 
company or contracted pharmacy benefit managers to have gag 
clauses in place with pharmacies. We commend CMS for taking a 
tougher position on gag clauses and support legislation to ban 
gag clauses and any prohibitions on allowing pharmacists to 
make information and cost savings known to the member at the 
point of sale.
    To the extent that some of the industry includes such 
clauses in their contracts, consumers may be deprived of 
information that will help them make prudent decisions when 
paying for prescription drugs. With this in mind, we would also 
encourage pharmacists to advise patients on generic 
substitution and alternative medications, so long as this is 
done in direct communication with the dispensing physician.
    Full transparency is critical for consumers to have the 
necessary information to make choices that work best for them. 
It is also important that pharmacists advise consumers to 
consider the impact of not using insurance coverage to pay for 
their prescriptions. While certain beneficiaries might pay 
lower out-of-pocket costs on a given prescription, drugs 
purchased outside the insurance benefit in most cases will not 
count toward the beneficiary's deductible or maximum out-of-
pocket limits, which may reduce the value of their insurance 
coverage.
    That is why we support elimination of gag clauses. We 
believe that pharmacists should also inform consumers about the 
potential risks of not using their drug coverage so they can 
make more informed decisions.
    In closing, BCBSA applauds the committee for taking on 
these important issues as it is critical that all stakeholders 
work together to ensure the affordability of healthcare for all 
Americans. We support these efforts to drive the healthcare 
system to higher quality, lower costs, and improve access to 
care for everyone.
    In line with these goals, we urge Congress to continue its 
efforts to ensure that people have timely access to safe, 
effective, and affordable cutting-edge prescription medications 
when they need them. Achieving this important goal will require 
the public and private sectors to collaborate to develop 
solutions that benefit patients and the entire healthcare 
system. Thank you for the opportunity to testify today and your 
leadership in seeking opportunities to improve healthcare. And 
I look forward to taking any questions. Thank you.
    [The prepared statement of Dr. Yoder follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Burgess. Thank you.
    Thank you, Dr. Yoder, and thanks to all of our witnesses 
for your testimony. So we will move into the question-and-
answer portion of the hearing. And I would actually like to 
defer my questions until later in the hearing and recognize the 
vice chair of the full committee, Mr. Barton of Texas, 5 
minutes for questions, please.
    Mr. Barton. Thank you, Mr. Chairman, I am very honored and 
flattered to take your question time at this time. I sincerely 
mean that.
    First, I want to ask unanimous consent, Mr. Chairman, to 
place into the record statements of support for the ACE Kids 
Act. We have almost two dozen national groups that are 
supporting the draft bill in its current form, and I would like 
to put that in the official record.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. Merrill, I want to thank you for coming up from Fort 
Worth for your testimony. I want to thank you for all the years 
you and your national group that you are the president of this 
year have supported us and helped us to refine the bill. Can 
you tell the subcommittee--and I don't think you said this in 
your opening statement--what percent of Medicaid-eligible 
children meet the eligibility requirements of the ACE Kids Act?
    Mr. Merrill. I would have to probably get that specific 
number for you or percentage for you. It is definitely a small 
percent.
    Mr. Barton. I am told it is around 1 or 2 percent.
    Mr. Merrill. That is close to the number. I just wanted to 
make sure I stated an accurate number.
    Mr. Barton. All right. This is a friendly hearing. We don't 
require total specificity.
    Mr. Merrill. Just want to answer it as best I can and 
correctly.
    Mr. Barton. All right. Now, to the best of your knowledge, 
this small percentage of Medicaid-eligible children that would 
qualify for ACE Kids, what is a seat-of-the-pants estimate 
about the cost to Medicaid by that 1 or 2 percent?
    Mr. Merrill. Yes, again, I would have to get the number for 
you. I don't have the number off----
    Mr. Barton. If I were to throw out 30 percent, would you 
strongly disagree with that?
    Mr. Merrill. Percentagewise, I think it is up close to 40 
percent.
    Mr. Barton. Forty percent.
    Mr. Merrill. In terms of an actual dollar amount, I would 
have to get that number.
    Mr. Barton. So here we have a situation where, thankfully, 
of the 37 million eligible Medicaid children, there are not 
very many that have these complex medical conditions. But for 
those that do, they take a hugely disproportionate share of the 
cost.
    Mr. Merrill. That is correct.
    Mr. Barton. So, if we can do something that provides better 
care, more comprehensive care, and actually saves money, that 
is a win-win. Would you agree with that?
    Mr. Merrill. I would absolutely agree with that. I think 
everyone does win. I would say all in, all win, frankly, on ACE 
Kids. I think that will matter greatly for these families, 
these children. It will matter to the State programs in saving 
Medicaid dollars and improving care and outcomes for these 
kids, and, as I said, all in, all win.
    Mr. Barton. Are you aware of any provider organization that 
actually provides services, whether it be doctors, therapists, 
hospitals, anybody in this country, that opposes the ACE Kids 
Act?
    Mr. Merrill. I am sorry?
    Mr. Barton. Are you aware of anyone that is actually 
providing services to these eligible children that opposes this 
bill?
    Mr. Merrill. I think that any time a new bill or approach 
to care is introduced, organizations will have concern: What 
does it mean for me?
    And based upon the original draft of 3 years ago and all of 
the work that has gone to try and address some of those 
concerns, the current bill, as it is reflected, I do believe, 
addresses most, if not all, of those concerns from those who 
might not originally have been fully in support of.
    Mr. Barton. You can tell that you have been president of a 
national organization. I am throwing you softballs, and you are 
being very ecumenical. The answer is no, there is no national 
organization that provides care--now, there are some opponents 
but not of the people that are providing the care. To my 
knowledge, there are none.
    Mr. Merrill. Fair enough.
    Mr. Barton. Now, I want to ask Mr. Salo, you have mentioned 
two principles that legislation that actually works should 
have. You mentioned flexibility. Does ACE Kids have 
flexibility?
    Mr. Merrill. It absolutely does.
    Mr. Barton. I am asking the Medicaid director.
    Mr. Salo. I got this one. I want to be careful about not 
spending too much time speaking to the actual structure of the 
current version because, as we have said, this legislation has 
evolved significantly over time. But our reading of the current 
version does seem to allow for greater flexibility. I think 
previous versions seem to say that States that were heavily 
invested in managed care as a delivery mechanism would actually 
get carved out, wouldn't be able to take advantage of this.
    Mr. Barton. It is voluntary on a State basis----
    Mr. Salo. If it is driven by the State, if it allows a 
State either that is heavy managed care or managed fee-for-
service, like in a Connecticut, or something in the middle like 
Massachusetts with ACOs, as long as it allows the State to be 
able to design that in a way that meets not only the delivery 
system in their State but also meets the needs of the patients 
in that State.
    And I think one of the other key issues is trying to get a 
handle on exactly how you define the population that is 
affected. As Mr. Merrill said, there is no Federal definition 
of this, and so the question is, are you talking about 2 
million kids? Are you talking about 50,000 kids? You had 
research that talked about 8,000 kids and how that was 
effective. It is going to be important to allow this to be 
flexible enough for the State to figure out, how can we make 
this work? Because if it creates silos within what a State is 
trying to do, that is going to create conflict, and that is not 
sustainable.
    Mr. Barton. Mr. Chairman, my time has expired. Next time I 
would ask unanimous consent if I could ask the question and 
then answer it myself so that I could make sure I get the right 
answer I want.
    Mr. Burgess. You usually do.
    Mr. Barton. With that, I yield back, Mr. Chairman.
    Mr. Burgess. Thank you. Thanks to the vice chairman. The 
chair now recognizes the ranking member of the subcommittee, 
Mr. Green. I would ask just 5 minutes for your questions, 
please
    Mr. Green. Thank you, Mr. Chairman.
    And I am following my friend Joe Barton that we would all 
like to be able to answer our own questions.
    So, thank you, thank the whole panel for being here today.
    Mr. Chairman, I would like to ask unanimous consent request 
on behalf of Ranking Member Pallone entered into the record 
letters from the Medicare Payment Advisory Commission, MedPAC, 
and Medicaid and CHIP Payment Access Commission, MACPAC, 
concerning their request for legislation to ensure both 
commissions can access drug rebate data for their respective 
analysis. Ask unanimous consent.
    Mr. Latta [presiding]. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Merrill, thank you for being here today and sharing 
your expertise as a leading children's hospital, and, of 
course, you know where I am from. I have been involved with 
Texas Children's Hospital since I was a young State legislator 
in the seventies, but Cook Children's Hospital, I am glad my 
family hadn't had to take advantage of the Cook Hospital to 
treat out-of-State patients. In fact, in your testimony, you 
know that Cook Children's treated children from more than 35 
States last year.
    As you know the State-by-State nature of Medicaid program 
has made it difficult to coordinate care across State lines. 
The same State innovation and flexibility that makes Medicare/
Medicaid able to respond to unique needs of the State's 
population can be the characteristics. I am hopeful that ACE 
Kids Act will help provide Cook Children's overcome this issue 
and ease some of the burden families are facing today when they 
are trying to coordinate your child's care. Would you please 
discuss difficulties that may arise when you are providing care 
for a medically complex child from out of State?
    Mr. Merrill. Yes, there are, as most of you know, some 
States that do not have children's hospitals or some of the 
high-level care that is offered in some of the other States. 
And so, as a result, we do get referrals, as I mentioned, from 
a number of States. That is true for Texas Children's. That is 
true for a number of children's hospitals.
    I would give you probably two examples. We had one 
particular patient that was referred to us from a neighboring 
State that did not have the high-level children services for 
bone marrow transplant services, and it becomes a negotiation 
and a long drawn-out discussion with the Medicaid program in 
those States. Those discussions can last anywhere from 2 weeks 
to 3 months. And in this particular case, it took well over 2 
months for us to get this patient approved for the bone marrow 
transplant that they needed.
    There is another example of a patient from up in the 
Midwest area who was referred to Cook Children's for some 
services that we offer that only a couple of other children's 
hospitals offer. It is a medically complex child, and it took 
us 3 months to negotiate a single case agreement. And in the 
end, we were never able to reach an agreement, and we do not 
know what happened to that patient.
    So it puts at risk the health of these patients. The 
frustration, the anger from these parents, who really want to 
care for their kid, and certainly us on the receiving end, who 
want to deliver that care, all of us become very frustrated. 
And it is very difficult; it is time-consuming. And I believe 
that ACE Kids will allow us to streamline a lot of that effort 
so that we can get these kids quicker, sooner, to the right 
kind of care that they need.
    Mr. Green. Thank you.
    Mr. Salo, how can we disseminate, encourage more widespread 
adoption of best practices and care for children with medical 
complexity more effectively across State lines?
    Mr. Salo. So I think that is a key function that our 
organization can provide, working in close tandem with CMCS, 
with Center for Medicaid and CHIP Services. I think we have 
acknowledged that in the case of, when you are talking about 
patients who are crossing State lines and dealing with 
jurisdictional issues like that, there is clearly a need for 
additional best practices, additional guidance, additional 
tools to make that work well. And I think we have been open in 
conversations with my colleagues here, as well as our friends 
at HHS, about how can we do that, how can we figure out what 
works, both in terms of--well, it is mostly, I think, finding 
that balance between, how do you make the process as easy as 
possible for the family while also making sure that the cross-
jurisdictional issues are respected and that we are not 
obligating an individual State to another State's decision or 
to individual providers who are setting up a silo that perhaps 
is not in the best interest of the population as a whole?
    I think we can get there. I think there is a lot of 
potential for best practices in this, absolutely.
    Mr. Green. Mr. Chairman, I know I am out of time, but I 
want to thank our witnesses. And this is a piece of 
legislation--I think it is important that we move on this. 
Thank you.
    Mr. Latta. Well, thank you very much. The gentleman's time 
has expired and yields back.
    And the chair now recognizes himself for 5 minutes.
    Mr. Cunningham, if I could start with you. While preparing 
for today's hearing, I heard from a local, independent-living 
organization in northwest Ohio asking for my support of the 
EMPOWER Care Act. The center connects people with disabilities 
to programs and services that are necessary to achieve and 
maintain independence in the community.
    Without the Money Follows the Person, the MFP, Program, 
this center would not be able to hire staff to serve as 
transition coordinators and help individuals maintain 
independence outside of nursing facilities. Since 2008, this 
local program has achieved 524 total transitions, and 77 
percent of those transitions have reached 365 days of 
independence.
    Furthermore, in the State of Ohio in 2017, the average 
annual Medicaid savings for individuals utilizing MFP was over 
$39,000 per person. How have the cost savings associated with 
the program been utilized for the benefit of your State 
Medicare population?
    Mr. Cunningham. Sure. So, Wisconsin is fortunate to have a 
very robust home and community-based services program, and the 
way we have gotten there is through utilizing MFP and other 
resources to create some innovative practices. And we look at 
that and some of the practices, like housing counseling and 
other things that we developed through MFP, we have now 
included in our HCBS package of benefits because they have been 
shown to be proven effective in making sure people relocate.
    And we see a reduction in cost. The average nursing home 
cost in fee-for-service is about $5,256 per month. Our family 
care and HCBS programs have a PMPM of $3,200. So it is in our 
interest.
    MFP has also allowed us to, as we have expanded our HCBS 
services, to move people off the waitlist, and we are on the 
cusp of eliminating the waitlist for all of the people that 
need HCBS services.
    Mr. Latta. Let me follow up. Are there any challenges the 
States face during the transitions that could be better 
addressed in reauthorization?
    Mr. Cunningham. I think the flexibility, again, is very 
important. I think housing continues to be a challenge. The 
housing counseling that is done, we developed a database of 
available 811 housing vouchers through MFP. So I think just 
continuing the funding, I think the certainty of having MFP is 
also important because some of these programs that we have 
going, take 2, 3 years to test out, to see if they are cost-
effective in moving forward. So I think that is what I would 
ask for now is to make sure this there is certainty there so we 
can keep some of these innovative practices going.
    Mr. Latta. Well, thank you.
    Mr. Salo--am I pronouncing that right, is it Salo?
    Mr. Salo. Salo.
    Mr. Latta. Salo?
    Mr. Salo. Yes, rhymes with ``halo.''
    Mr. Latta. Let me follow up, because in addition to the 
letter of support I received for the MFP Program, I also heard 
from an Ohio mother who has great concerns with the program. 
She cited that MFP forces individuals with severe and profound 
intellectual and developmental disabilities into a one-size-
fits-all care model rather than allowing the patients and 
families to choose a care setting that best fits their own 
medical needs.
    Do you believe there are gaps in the program that should 
better account for individuals with complex medical and 
behavioral needs?
    Mr. Salo. I know that there are differences in philosophy 
about the nature of the spectrum of institutional versus non-
institutional care and some who come down along the lines of 
the least restrictive, as Olmstead is always better, but I 
think that, from the State perspective, it is really critical 
to be mindful and respectful of the individual or the family 
decision to figure out what is the setting that is best for 
them.
    In most cases, that will be in their home or in their 
community. But we certainly know there have been lots of 
conversations over the years with--so, for example, parents of 
adult children with severe developmental or intellectual 
disabilities, whose kids have been in settings for a long time 
and are very fearful about having that changed. I think we need 
to be very, very mindful about not abruptly changing settings 
for people who are not ready for that.
    But I think for most populations that we serve in the long-
term care arena, the clear and undeniable trend is to move away 
from institutional and toward home and community-based 
settings.
    Mr. Latta. Thank you very much. My time is expired. And the 
gentle lady from California is recognized for 5 minutes.
    Ms. Matsui. Thank you very much, Mr. Chairman.
    And I want to thank all the witnesses today for being here. 
I am pleased that we are hosting this hearing to discuss 
important opportunities in Medicaid and potential ways to 
improve transparency in our healthcare system.
    I want to follow up on the EMPOWER Act. It is really a 
strong example of the importance of supporting Medicaid. The 
Money Follows the Person, MFP, is particularly important to 
seniors in institutional settings, such as nursing homes, who 
may be seeking care or services while still being surrounded by 
familiar faces and places.
    And I think we all understand how important it is to look 
at this somewhat individually too, that there is not a one size 
fits all here as we move forward. And I really believe that 
each of us understand the concept of how important it is. And I 
also believe there are challenges here too.
    I am interested also to hear more about the changes being 
made to the institutional residency period requirement. I 
understand that it will be decreased from 90 days to 60 days. 
How do you think changing the requirement will impact 
beneficiaries of the MFP? Mr. Cunningham?
    Mr. Cunningham. Changing from 90 days to 30 days for the--
--
    Ms. Matsui. Ninety days to 60 days. That period 
requirement.
    Mr. Cunningham. I am sorry. Could you repeat that?
    Ms. Matsui. OK. There are changes being made to the 
institutional residency period requirement. It will be 
decreased from 90 days to 60 days. I understand that that will 
give a lot more flexibility and allow other patients to be able 
to be involved in this. Is that correct?
    Mr. Cunningham. Yes. Yes, that is correct.
    Ms. Matsui. OK. Now, there have been multiple studies 
showing the MFP program can result in significant cost savings 
to States. And I think it is really important that Mr. Salo 
noted that the program expired in 2016, which forced States to 
scale back the program. And I am really concerned that this may 
have had unfortunate consequences for States and patients. Can 
you give me some examples here, with the challenges that might 
have occurred here?
    Mr. Cunningham. Yes, so, as I mentioned, as many of the 
programs that are ongoing, like our nursing home community 
specialists, as many States are running out of grant funding, 
they are having to wind down those programs. And that is 
impacting their ability to have those innovative processes to 
relocate people.
    So I think a number of States have actually already 
expended their full grant amount, and I think in 2020 is when 
the full expenditures have to be completed. So, without an 
extension, even at the State level, you start to look at these 
programs and how do you maintain the staff to support these 
programs in the future once your grant funding goes away?
    Ms. Matsui. Certainly, thank you.
    And I want to talk a little bit about gag clauses. It is 
encouraging that this committee is taking steps to begin 
tackling the issue of transparency in our healthcare system. My 
understanding is that gag clauses impact the pharmacies, as 
well as the patients.
    Mr. Chancy, would you like to comment on the impact gag 
clauses have on both patients and pharmacies, especially in 
relation to pharmacy benefit managers?
    Mr. Chancy. Yes, I would love to. The gag clauses, 
actually, they do have an impact on both. The patient, our 
relationship is based on trust, and they depend on us to bring 
and help them maneuver through the intricacies of their 
healthcare, specifically with their prescription benefits. When 
we are not able to give them options, then it kind of puts us 
in a situation where we aren't able to give them information 
that we feel like they need.
    If we do, then we are running the risk of being in 
violation of contracts that sometimes we didn't even know that 
we were in violation of.
    Ms. Matsui. Right.
    Well, Dr. Yoder and Mr. Chancy, how well informed do you 
think the public is about gag clauses? Do you think the 
patients know to ask about prices at the counter?
    Mr. Chancy. They are not very informed, and I think that 
because of the way the contracts have been written, not many 
people have talked about them. I think they are seeing more in 
the news now, and there is a little bit more interest, but it 
is nowhere near where it needs to be.
    Ms. Matsui. OK. If this legislation, Mr. Chancy, in front 
of us is passed, will pharmacists start telling patients about 
their alternatives? Or do you think there will be a need to 
have some sort of awareness or education campaign?
    Mr. Chancy. I think pharmacies will, and I think a lot of 
pharmacists currently are doing that, but I think an awareness 
campaign would be fantastic.
    Ms. Matsui. OK. Thank you, and I yield back.
    Mr. Burgess [presiding]. The chair thanks the gentlelady. 
The gentlelady yields back.
    The chair recognizes the gentleman from Kentucky, Mr. 
Guthrie, the vice chairman of the Health Subcommittee, 5 
minutes for questions.
    Mr. Guthrie. Thank you, Mr. Chairman, and for the Ranking 
Member, for holding a hearing on the EMPOWER Act, H.R. 5306, 
which would reauthorize the Money Follows the Person Program. I 
was very pleased to introduce this bill with my colleague as 
bipartisan with Debbie Dingell.
    First Mr. Salo and Mr. Cunningham, as you know, H.R. 5306, 
as currently drafted, would extend the Money Follows the Person 
for 5 years. While this is ideal, would a 1-year extension be 
helpful?
    Mr. Salo. A 1-year extension, I would argue, is better than 
letting it die. If those are the options?
    Mr. Guthrie. Those are the options. Well, I don't know if 
those are the options, but if that is the option, then you 
would rather have a 1-year----
    Mr. Salo. A 1-year extension is better than letting it die. 
A 1-year extension is not ideal. That is not enough time. If 
you understand how State government works, you know that when 
programs are dependent on Federal funding, or any source of 
funding, if you don't have long-term certainty about where the 
money is coming from, how much is coming, and the direction and 
speed which it flows, you have uncertainty. When you have 
uncertainty, you clamp down, you tighten up, and you stop 
spending. You go really, really conservative.
    And, if you get a year and you don't know what is going to 
happen that following year, you are probably not going to spend 
that money because you are going to be very, very cautious, and 
that is extremely disruptive to the people who need this. So 
the longer the extension, the better. I would argue making it 
permanent if you can, but 5 years is better than 1. One year is 
better than just letting it die.
    Mr. Guthrie. Point well taken.
    Mr. Cunningham?
    Mr. Cunningham. Yes, I reiterate what he said. I think the 
other thing to consider is that, when States see only a 1-year 
extension, you start to look at one-time type of things that 
are not as effective as really driving the long-term change 
that we want to use this funding for, so, yes.
    Mr. Guthrie. Thank you. I said for both. The point is well 
taken.
    Mr. Cunningham, through the Money Follows the Person 
Program, over 88,000 individuals have transitioned from nursing 
homes and other institutions back to their own homes? I know 
there seems like a lot of support in the room for this, and I 
am very supportive of that as well.
    What have we learned through the MFP program and about how 
the quality of life improves for individuals when they 
transition back to their homes and communities?
    Mr. Cunningham. Sure, the MFP program does require a 
quality-of-life survey, and, at least in Wisconsin, when we ask 
if they are satisfied where they live, that satisfaction went 
from 68 percent to 72 percent. And then when we asked people 
that have transitioned to MFP if they like where they currently 
live, it went from 62 percent in the institution to 91 percent 
in the community.
    Mr. Guthrie. People like to be home. And it is even more 
convenient and more helpful for the family members, too, to 
spend time with them and see them, more than in an 
institutional setting.
    Mr. Cunningham. It allows them to become a participating 
member of----
    Mr. Guthrie. Well, there certainly is an appropriate role 
for institutions, but that is absolutely right.
    OK. Again, Mr. Cunningham, of the 44 States that have 
recently participated in the Money Follows the Person, at least 
10 States have exhausted their funds and stopped transitioning 
new participants to the community. By the end of the year, all 
remaining States will stop transitioning new participants 
through the program. Without an extension of this program, will 
we lose progress?
    Mr. Cunningham. Yes.
    Mr. Guthrie. It is a given, huh?
    Will more seniors and people with disabilities be forced 
into costly institutional placements?
    Mr. Cunningham. Yes.
    Mr. Guthrie. And then has the recent uncertainty hurt 
transition efforts?
    Mr. Cunningham. Yes.
    Mr. Guthrie. You are going through that.
    And then one extra one. You have spoken about the 
importance of supporting people with disabilities to transition 
from institutional settings to the community. What has 
Wisconsin done to promote these transitions, both using MFP 
dollars and making use of Medicaid as a whole, and how are 
individuals counseled in the transition?
    Mr. Cunningham. So one of the big things we do is a 
community living specialist. And through the diagnostic service 
information on--through the MDS at nursing homes, there is a 
section Q that clearly asks the recipient, do you want to 
relocate into the community? And so we review and have set up a 
system where this information flows to our community living 
specialists in the ADRCs. And then they reach out to these 
people to discuss community options. So this is a cycling 
process. And so people that want to move out in the community 
are contacted and then worked to develop those community 
resources to move them in the community.
    Mr. Guthrie. OK. Thank you so much.
    Thank you for your effort, Mr. Chairman. I really 
appreciate your effort in bringing this today, and I will yield 
back my time. Thank you.
    Mr. Burgess. The chair thanks the gentleman. The chair 
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes 
for questions, please.
    Ms. Castor. Well, good morning, and thank you, Mr. 
Chairman, for calling this hearing.
    Today I am thinking a lot about the children with complex 
medical conditions and their families. On behalf of the 
families across America who are faced with a complex condition 
that their child has, I want to thank everyone on this 
committee for moving the ACE Kids Act forward. It hasn't been 
easy. This has been a multiyear proposition. I have been 
working on this bill since the 113th Congress with Congressman 
Joe Barton, who has been the stalwart cosponsor and sponsor 
here, along with our partners: Jamie Herrera Beutler, Gene 
Green, Anna Eshoo, and Dave Reichert.
    But the ACE Kids Act in this Congress has over 100 
cosponsors, bipartisan, including a number of my Energy and 
Commerce colleagues, and I want to thank them, specifically 
Representatives Cardenas, Clarke, DeGette, Engel, Kennedy, 
Peters, Rush, Bilirakis, Costello, Guthrie, Harper, Lance, 
Long, and Olson. And I encourage our other colleagues to sign 
on to the bill as well. And thank you for your steadfast 
commitment to care for these children.
    We also have a number of patient and stakeholder groups 
supporting the ACE Kids Act that range from the Children's 
Hospital Association to the March of Dimes to the American 
Academy of Pediatrics, and many more. Thank you all for 
consistently standing up for children with complex medical 
conditions.
    And I want to also take a moment to thank the committee 
professional staff for their dedication to families and the 
hours they have spent working on this bill in a bipartisan 
fashion, especially Rachel Pryor and Samantha Satchell on the 
Democratic side, and Josh Trent and Caleb Graff on the 
Republican side.
    Additionally, this bill would not be where it is today 
without the stellar work of my legislative director, Elizabeth 
Brown, and Representative Barton's staffers: Krista Rosenthall, 
Gable Brady, and Jeannie Bender.
    But it is really the families who are the heroes here. It 
is the families of these kids that have explained to Members of 
Congress on both sides of the aisle how important it is to have 
coordinated care. I became an advocate for the children and 
families that this bill will help after spending significant 
time back home in Tampa at the St. Joseph's Children's Hospital 
Chronic Complex Clinic that was started 16 years ago by a 
wonderful pediatric critical care doctor named Dr. Daniel 
Plasencia.
    The ACE Kids Act is somewhat modeled after the St. Joseph's 
Children's Hospital Chronic Complex Clinic and the 700 kids and 
families that they serve. But, Mr. Merrill, you know this is 
the idea of home health, a medical home for these kids, is not 
unique. It is being done, and we need to take it to the 
national level.
    The families I met with over the years have shared with me 
what they have gone through to get the proper care for their 
kids. The care that they were receiving was often fragmented 
and uncoordinated. But, most importantly, we have got to focus 
on making sure the kids have a better quality of life. And we 
think through this bill, we will be able to do that.
    Mr. Merrill, you might remember Tish West testified a 
couple of years ago, and she said--I met her daughter Caroline, 
who has been treated at St. Joe's--she said: In the beginning 
of Caroline's life, I used to carry around these gigantic 
notebooks full of medical records and everything else so that 
we went from doctor to doctor, she would have to explain what 
was going on and what her illnesses were. But at this clinic, 
at this medical home now, they have the medical records; they 
are all electronic; everyone knows Caroline; they know what is 
going on with her.
    Tish said: It is just a real collaborative effort, and she 
is much healthier as a result of that.
    Do you think we are going to be able to make progress for 
more families if we pass the ACE Kids Act?
    Mr. Merrill. I absolutely do. And our own experience in 
Texas with our STAR Program, which is somewhat equivalent of 
ACE Kids, we actually have care coordination clinics and 
medically complex clinics that would mimic a lot of structure 
that we are contemplating in ACE Kids.
    I would give you one example of, just recently--as we have 
9,000 children that are signed up in our STAR kids; these are 
medically complex kids--and the Cook Children's Health Plan. 
And so we took the most complex children of those 9,000, and 
our care coordinators, for the first 2 weeks, spent numerous 
times on the phone with these families and made home visits to 
these families to look at not only what their healthcare needs 
were but their social needs.
    There was one particular example where a child and family 
had been for months and months carrying their child up the 
steps because they had no wheelchair ramp for the child in the 
wheelchair. We put a wheelchair ramp in for these families.
    And so this care coordination and this care plan is, it is 
tailored for these specific families. And when it is tailored, 
we are able to anticipate needs, not just their medical needs 
but other social needs, and make it so much more easier for 
these families to navigate what can be a complicated system and 
help these children remain healthy.
    I will just give you one quick example. This was actually a 
couple of weeks ago. We had a mother of one of these medically 
complex children call her case manager--and by the way, these 
case managers, as you well know, have these incredible close 
relationships with these families. There is respect. There is 
great communication going on.
    And this parent was distraught that she was getting close 
to the weekend and she wasn't able, through a series of events, 
to get a prescription filled for her child that was much needed 
for that weekend, called up our case manager. Our case manager 
calmed the mom down, because of that relationship, took care of 
the prescription order from the physician, went to the 
pharmacy, picked up the drug, and delivered it to the home for 
this family, avoiding, by the way, an ER visit, guaranteed, and 
probably an in-patient admission. So that is the kind of 
activity that we anticipate under ACE Kids, the kind of work 
that will make life easier but keep these kids healthier, keep 
them out of the hospital, keep them closer to home, and I think 
that is a very positive thing for these families and their 
children.
    Ms. Castor. Thank you very much.
    And, Mr. Chairman, I would like to ask unanimous consent to 
submit for the record a letter from St. Joseph's Children's 
Hospital's CEO in favor of the bill.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    The gentlelady's time has expired.
    The chair now recognizes the gentleman from Virginia, Mr. 
Griffith, 5 minutes for questions, please.
    Mr. Griffith. Thank you very much, Mr. Chairman.
    Mr. Chancy, I am going to ask you a couple questions. You 
mentioned that community pharmacists have little negotiating 
power when it comes to contract provisions set by the pharmacy 
benefit manager, and we have seen that in PBMs; we have seen 
that before.
    Can you explain how smaller and rural community pharmacies 
are disproportionately affected by this inability to 
effectively negotiate and how that can, in turn, negatively 
impact patients?
    Mr. Chancy. Yes. And most of our pharmacies are in rural 
Georgia, and like, for example, one of our pharmacies, 25 
percent of our business is through one PBM. And if they change 
their reimbursement model or whatever, it impacts us in a great 
way.
    And so the lack of getting on that contract or not getting 
on that contract depends on whether we, as a business, survive. 
One of the concerns in Georgia is we have four counties now 
that have no community pharmacies because of some of this, that 
they are dealing with.
    Mr. Griffith. And not just that, but can't it affect the 
patients as well? So I know the committee is tired of hearing 
about Clintwood and Haysi, but if you look at them on a map, 
they look like they are only about 5 or 10 miles, maybe 12 
miles apart. But there is a big mountain in between them, and 
the mayor of Haysi told me one time it takes him an hour; he 
always plans on an hour to get to any of the meetings he has to 
have in the county seat of Clintwood.
    So, if you are the community pharmacy in Haysi and the PBM 
takes you off, that patient is now going to have to drive to 
Clintwood to get their drugs and rely on somebody that--because 
most of us rely on our pharmacist, our community pharmacist. Is 
that not also a problem?
    Mr. Chancy. It is. And CVS Caremark, Caremark being the 
PBM, many times they require their patients to go to one of 
their pharmacies. And in rural Georgia, there is not a CVS in 
every community or county, and so it compromises them with 
access.
    Mr. Griffith. Yes, sir, I understand that.
    Beyond drug-pricing disclosures, what are some of the other 
impacts that gag clauses have on the pharmacist-patient 
relationship? Can you think of any? Because I can think of one. 
A constituent came to me, and we were just talking about this 
whole gag issue, and she had stumbled across, and at first, she 
had questions about her pharmacist, because originally it 
wasn't considered a part of the formulary. So she had to pay 
cash for it. It cost her $17.
    And as Chairman Walden said in his opening statement, then 
they notified her it was in her formulary, and she called in 
her prescription, and they told her she would have to pay the 
copay of $50. So she called her pharmacist all upset, thinking 
that he was doing something goofy. Doesn't that damage that 
relationship? And he explained to her that he wasn't allowed to 
tell her that, but since she had found out about it, she could 
pay with cash if she wanted to.
    Mr. Chancy. Oh, definitely. And there are some times where 
the patient is required to get the brand instead of the 
generic, which is a cheaper copay, and I think it is just the 
rebates or some sort of agreements that they have worked out. 
And so that impacts them as well.
    Mr. Griffith. Attorney General Schmidt, I have some 
theories. I like listening to the testimony and listening to 
folks, and you did a great job, and you got some great people 
signed on to these letters. But one of the concerns that I 
might have if we have--and there is an answer to it, but it is 
going to take money and effort.
    If you have got somebody who is skilled at determining 
financial fraud, they might go into the home--let's say the 
fictional characters from ``Seinfeld,'' George Costanza's 
parents, who were always fighting with one another--now, if one 
of them was the patient, somebody who is a financial 
investigator might automatically assume that there is some kind 
of abuse going on there, and they have been having that 
relationship that way, as the fictional characters, 50 years or 
so.
    And so aren't you going to have to train folks to be able 
to distinguish between--financial fraud is different than 
physical or mental abuse, and there is a concern, and it gets 
complicated. Because I actually had a case one time where they 
thought the parents were doing something to an infant. I know 
this is a little bit different, but the infant was failing to 
thrive whenever it was in the parents' home. We ultimately 
discovered the infant was allergic to dogs, and they had a dog 
in the house. So, every time they would put it in the aunt's 
house, the child would do better. They put it back in the 
parents' house, and the child would fail to thrive.
    So there are a lot of complications with it, and I think 
that your financial investigators are going to have to be 
trained, if we give them this authority, and somebody is going 
to have to pay for that training, or else we will have people 
bringing cases that maybe they ought not.
    And one of my concerns there is that when you bring a case, 
particularly against a family member, you are yanking that 
family apart, and you are pulling that person out, and you 
really have to walk with care. What do you say about that?
    Mr. Schmidt. Right. Representative, certainly speaking for 
myself, I would be very sensitive to that concern. We see those 
types of dynamics, not just in the context of our Medicaid 
fraud work, but in the context of our broader criminal work for 
the State.
    So we are accustomed to dealing with those sorts of 
distinctions. And we are human, and sometimes we get it right, 
and sometimes we don't. But I believe we do in most cases.
    I would say one thing: I can't speak for every State. 
Perhaps the larger States with larger Medicaid Fraud Control 
Units do have distinct, financial-crimes investigators versus 
patient-abuse investigators. For Kansas and I think for most of 
the small and midsize States, we do not. We do have dedicated 
fiscal analysts who are the number crunchers that don't go on 
and do field investigations. So they are purely financial.
    But with respect to our investigators in our MFCU, we have 
six sworn law enforcement officers. They are all cross-trained. 
They handle physical abuse, sexual abuse, financial abuse, as 
well as fraud. And the reason for that, under current law, is 
that they are doing those abuse cases when they occur in a 
healthcare facility. So they already have the skills; they just 
can't apply them in the non-institutional setting.
    Mr. Griffith. All right, I appreciate that, and I yield 
back.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes the gentlelady from Colorado, Ms. 
DeGette, 5 minutes for questions, please.
    Ms. DeGette. Thank you so much, Mr. Chairman.
    I note that we have a number of representatives of ADAPT 
here in the hearing room listening to this, and I want to 
welcome all of you. ADAPT was founded in Denver, my district, 
and I have worked with them and also the Atlantis community for 
many, many years. The Atlantis community is one of the oldest, 
independent-living centers in the country for individuals with 
disabilities, and they have really done courageous work over 
the years in educating all of us about why it is so important 
that we pass legislation that supports their independence and 
their ability to live in their homes and their ability to 
really lead the kind of productive American lives that 
everybody in this country should be able to do. So thank you 
all for coming out today.
    There are a number of pieces of legislation that they 
support, but one of them specifically is H.R. 5306, the 
Ensuring Medicaid Provides Opportunities for Widespread Equity 
Resources and CARE Act. And then I want to thank Congresswoman 
Dingell and Congressman Guthrie for sponsoring that.
    In Colorado, funding for the Money Follows the Person 
Program is aimed at facilitating the transition of Medicaid 
beneficiaries from nursing and other long-term care facilities 
to community-based services. And since we implemented this in 
Colorado in 2013, we have already transitioned 214 folks with 
physical, intellectual, or developmental disabilities, mental 
illnesses, and other impediments to really being able to live 
in these community-based situations.
    Mr. Cunningham, I wanted to ask you: Not only is this the 
right thing to do, but what I have heard is this actually saves 
money. Can you talk about the cost savings of programs like 
this?
    Mr. Cunningham. Sure. So, yes, it does. Community-based 
care is cheaper than institutional care. We see, mentioned in 
our nursing home fee-for-service, it is about $5,256 per 
member, per month there. And in our home and community-based 
services programs, or community-based programs, the PMPM on 
average is about $3,233. So that is a savings of about $2,022 
per member that you are moving out.
    Given that they are numbers, there is always acuity and all 
this other stuff, but that is just a broad stroke of the 
estimate.
    Ms. DeGette. And what are some of the other benefits to 
moving folks out of nursing homes and into community-based?
    Mr. Cunningham. Well, there is a lot. We operate from the 
view of person-centered planning and informed choice. So, once 
out in the community through person-centered planning, an 
individual can really think about how they want to self-
actualize their own life and look at, employment, look at 
engagement with loved ones, with family and community, and, 
quite frankly, engage in a life and fulfill the hopes that we 
all have in our individual lives.
    Ms. DeGette. Thank you.
    I want to talk briefly about this other bill--what is the 
number--it is a draft, the PBM gag clause prohibition, what an 
important bill that is. And I just want to talk for a minute to 
you, Mr. Chancy, about this. I have been, for about the last 
year, Congressman Tom Reed from New York and I have been--we 
are the co-chairs of the diabetes caucus, and we have been 
leading sort of an independent insulin inquiry.
    And we sent letters of inquiry to the three brand name 
insulin makers about patient assistance programs and drug 
discount cards. And for a lot of these patients, these programs 
are a lifeline. Now, in your testimony, you stated that 
pharmacists can counsel patients about alternative purchasing 
options in some cases, such as when patients don't present a 
form of insurance.
    If a patient asks about ways to lower their insulin cost at 
your pharmacies, do you counsel them about patient-assistant 
programs and drug discount cards?
    Mr. Chancy. Yes, we do.
    Ms. DeGette. OK. And as part of this consult, do you tell 
the patients and clients that these financial assistance 
programs may not count towards their out-of-pocket expenses 
such as deductibles and copayments?
    Mr. Chancy. Yes, we do.
    Ms. DeGette. Good, that is great.
    Mr. Chairman, I am hoping, not just the PBMs, but the 
entire system of drug pricing is something we should be having 
hearings on, and we should be doing it before the end of this 
year. Because the PBMs, I mean, it is ridiculous that they tell 
pharmacies that they have these nondisclosure agreements. But 
really it is throughout the system. And I think we could still 
do it. I don't know about all the rest of my colleagues here, 
but I was home in Denver for most of the August recess; that is 
all people wanted to talk to me about, was the cost of 
healthcare and the ridiculous cost of prescription drugs. 
Thanks and I yield back.
    Mr. Burgess. Thank you. The chair thanks the gentlelady.
    The chair would remind members, we do have another hearing 
following this that is scheduled to begin at 1 p.m., and, 
generally, I am fairly generous with the time, but I am going 
to ask members to really confine themselves to the 5 minutes 
for questions.
    With that, Mr. Bilirakis, you are recognized 5 minutes for 
questions.
    Mr. Bilirakis. Thank you, Mr. Chairman, and I really----
    Mr. Burgess. Oh, wait, would the gentleman suspend?
    Mr. Bilirakis. Yes.
    Mr. Burgess. I did not see Mr. Lance had ascended to the 
dais.
    Mr. Lance, you are recognized for 5 minutes.
    Mr. Lance. Thank you, Mr. Chairman.
    I am not sure I have ascended to the dais, but I am 
certainly pleased to be here.
    Mr. Merrill, in your testimony, you talk at length about 
your involvement in the Center for Medicare and Medicaid's 
innovations demonstration: Coordinating All Resources 
Effectively Award Demo. You wrote, collectively, these programs 
reduced emergency department visits by 26 percent and reduced 
in-patient days by 32 percent.
    The first full year of operations coordinating care for 
these children, CARE ultimately reduced overall Medicaid costs 
by 2.6 percent while improving patient experience for 8,000 
children.
    Mr. Merrill, can you walk us through how CARE coordination 
works in practice? I certainly think it would be helpful for 
the committee to hear how this process works on a day-to-day 
basis in this demonstration and how the savings and patient 
satisfaction are being achieved.
    Mr. Merrill. Thank you for that question. I think CARE 
Coordination and Health Homes, as I mentioned earlier, tailor 
the care needs around that child, and by doing so, we are able 
to create efficiencies, improve care, and alleviate the burden 
that these families oftentimes experience in navigating what 
can be a very complex healthcare environment. I think that is 
where the patient experience improvement comes from.
    If you look at the CARES grant, one of the things that we 
did through this, with the 10 hospitals, Cook being one of 
those that participated, is we did use a common definition. And 
I believe, again, a common definition is really important if we 
are going to make improvements in not just the care, but the 
outcomes and the patient experience. Peter Drucker said: If you 
can't measure it, you can't improve it.
    And while we were able to take 10 hospitals across 8 States 
and use a common definition, that was just really the first 
year of savings. I think there is a whole lot more on the 
table, but if we can scale that to more than just 8 States, 
take it to 50 States, then I think we have a real opportunity 
to drive best practices and ultimately improve the kind of care 
we are looking for, for these children.
    But the CARE coordination from the health home is really 
where the rubber meets the road with these families, where you 
are working to tailor that very specific care model for that 
child.
    Mr. Lance. Thank you very much.
    Attorney General Schmidt, thank you for your work on the 
important issue of expanding the authority of the Medicaid 
Fraud Control Units, to detect, investigate, and prosecute 
Medicaid patient abuse in noninstitutional settings. In your 
testimony, you detail some certainly very unfortunate stories 
that have been uncovered and stopped. I encourage all of my 
colleagues to read the testimony carefully.
    What has me all the more concerned is that, even as 
noninstitutionalized care and Medicaid has expanded--and I 
support the expansion of Medicaid, and New Jersey has expanded 
it--the ability to protect these patients from the types of 
abuse has not. My question to you, Attorney General, without 
this important change to law, what tools do States have to 
protect these patients?
    Mr. Schmidt. Representative, the answer would vary State by 
State, but as a general matter, and certainly in Kansas, it 
would be the general tools we have for any criminal 
investigation on any criminal subject. And the reason that 
matters and is less optimal, in my view at least, than having 
the specified authority under the Fraud Control Units, is that 
these are specialized individuals in units focused on patient 
abuse, as well as financial matters, within the confines of the 
Medicaid program. They are focused.
    We have 400-plus law enforcement agencies in Kansas. They 
are terrific people. They do a great job, and they are 
stretched far, far too thin and often are unable to be focused 
in a way that a specialized entity can. So I think you just go 
from the small pool to the big ocean if you don't have this 
sort of specialized capacity to deal with abuse in the 
noninstitutionalized setting.
    Mr. Lance. Thank you very much, Attorney General, and my 
thanks to the panel.
    And I also want to thank those in the audience who are here 
advocating on behalf of this wonderful cause. And I have been 
honored to meet with some of those who are in the audience 
today, and we certainly welcome them for their advocacy here in 
Washington.
    Mr. Chairman, I yield back 16 seconds.
    Mr. Burgess. The chair thanks the gentleman.
    The chair recognizes the gentlelady from Illinois, Miss 
Schakowsky, 5 minutes for questions, please.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Recently I met with a 9-year-old named Naomi Bytnar who has 
a complex medical condition and is being treated at Advocacy 
Children's Hospital in my district. And I am just so proud to 
cosponsor H.R. 3325, the bipartisan ACE Kids Act, which will 
help many children just like Naomi get the care they need. I 
thank all of you who are supporting that.
    I would also like to thank Representatives Dingell and 
Guthrie for introducing the bipartisan H.R. 5306, the EMPOWER 
Care Act, to reauthorize the Money Follows the Person, MFP, 
Program, which I am proud to cosponsor. The MFP Program has 
given over 88,000 individuals the opportunity to transition 
from institutional care, something I have been working on for 
decades now from my time in the legislature in Illinois.
    Mr. Salo, without an extension of MFP, what will it mean 
for seniors and people with disabilities?
    Mr. Salo. Without extension of Money Follows the Person, 
what you are going to have is a definite subset of people who 
are in an institution, in a nursing home, who don't want to be 
there, who don't need to be there, and are going to have 
enormous difficulty making the transition out, so, yes.
    Ms. Schakowsky. Mr. Cunningham, what challenges do States 
face in supporting transition from institutions to the 
community, and how does MFP address those challenges?
    Mr. Cunningham. So I think obviously housing is a big issue 
of finding a resident, especially if you no longer have the 
housing since you have been in the institution. So, through 
housing counseling funded through MFP, through projects like 
developing databases of available section 811 housing vouchers, 
that also provides assistance.
    I also think another area that has been funded is the Aging 
and Disability Resource Centers. And I would say that this 
entity is critical in a comprehensive, long-term care system, 
because they can not only advise about the resources that 
Medicaid has but also about Medicare, about other resources 
within the community, to create natural supports and lower the 
cost of care and the Medicaid program bears but also other 
systems bear. So we have used that MFP to fund those ADRCs 
also.
    Ms. Schakowsky. Thank you for that.
    Turning to the gag clause, I want to emphasize that this 
committee can be doing much more to lower prescription drug 
prices, for example, basic transparency and price spikes 
requiring that the price in direct-to-consumer prescription 
drug ads and Medicare prescription drug negotiations. So there 
are things that we could do, but we must get rid of gag clauses 
because providing patients with information about pricing is 
critical.
    Dr. Yoder, though, I want to ask you--where are you? I am 
sorry. There you are. OK. You raise a really interesting point 
in your testimony that paying out of pocket impacts 
deductibles, maximum out-of-pocket costs and for seniors, the 
doughnut hole. Senior groups have told me that this information 
would be useful at the pharmacy.
    So what is the effect on the beneficiary's deductible, 
maximum out-of-pocket limits when paying out of pocket? How 
does this affect seniors in the doughnut hole?
    Dr. Yoder. So, generally, when the medication is paid for 
out of pocket, those prescriptions don't get adjudicated to the 
PBM system. So there is no way for those accumulators to be 
added to that would reflect what the member's out-of-pocket is. 
So essentially that prescription is opaque to the health plan 
as well as the PBM. No one knows it was actually dispensed, 
other than the pharmacist who dispensed that. So it doesn't go 
toward any of those accumulators at all.
    Ms. Schakowsky. So, when we talk about eliminating the gag 
rule, would it be useful, do you think, to share that 
information as well, so people really understand the 
consequences of paying out of pocket? In other words, someone 
might be told that if you pay the $50, you now will climb out 
of the doughnut hole, rather than the $10 if you pay out of 
pocket?
    Dr. Yoder. Absolutely. We support making sure that the 
members and the enrollees do know what the consequences would 
be for doing that. In addition to not just the accumulators, in 
most cases those prescriptions don't go against any of the 
checks for medication duplication, drug interactions, things 
like that, because they are not going into the PBM system to 
see what all the other medications that member may be taking. 
So we absolutely do support that transparency so members do 
understand what the consequences would be for paying out of 
pocket versus using their copay cards.
    Ms. Schakowsky. What you just said is a safety issue that 
it seems to me, why couldn't this be recorded?
    Dr. Yoder. Because the way the prescription adjudication 
system works, the PBMs don't see those prescriptions. They 
never go into the systems at all because they are just at the 
local pharmacy. The local pharmacy can do checking on the 
prescriptions they have for that member, but if the member goes 
to different pharmacies, if the member uses mail order, things 
like that, those prescriptions never even enter into the 
system.
    Ms. Schakowsky. That is a concern we ought to deal with. 
Let me just say, as somebody who has--I am over time. I am 
going to respect what you said, Mr. Chairman, and yield back.
    Mr. Burgess. Thank you. The chair recognizes Chairman 
Walden, 5 minutes for questions, please.
    Mr. Walden. Thank you very much, Mr. Chairman.
    Really good hearing, appreciate all your testimony.
    Mr. Yoder, your testimony contemplates the possible 
downsides of cash purchases for medications which you were just 
talking about, such as mechanisms to catch potentially harmful 
drug interactions or medication nonadherence.
    So I am kind of interested to hear how Mr. Chancy would 
respond to those concerns.
    Mr. Chancy, in your experience, when discussing cash 
prices, do pharmacists have the necessary information before 
them to identify harmful drug interactions?
    Mr. Chancy. Yes. Whether it is cash or whether it is 
insurance, our computer system will run the analysis on any 
drug interactions.
    Mr. Walden. All right. And are there ways that we can 
improve this legislation to avoid any unintended consequences 
concerning potentially harmful drug interactions or medication 
nonadherence, things we could do to improve this legislation to 
prevent the kind of problems that are being discussed right 
now?
    Mr. Chancy. Yes.
    Mr. Walden. What would those look like?
    Mr. Chancy. Pertaining to adherence?
    Mr. Walden. Yes, to medication nonadherence and to harmful 
drug interactions.
    Mr. Chancy. Well, I think if we are actually running it 
through the insurance, and I was not familiar with the 
insurance doing the drug-drug interactions on the back side, 
but I think if we were to know about those interactions, that 
would be helpful for us to help with the patients upfront, to 
make sure if there are any issues they are having, we can 
actually work with their physician to change medications or 
change drug regimens.
    Mr. Walden. All right. Thank you.
    Dr. Yoder, I am going to change gears here to the other 
bill. So I appreciate your providing ways we can improve the 
Healthcare Fraud and Prevention Partnership, and so I would 
like to focus on two of those. First, you mentioned that Blue 
Cross Blue Shield recommends creating improved mechanisms for 
the exchange of findings so that all participants are best 
informed of lessons gained from the experience.
    What are some of the existing limitations on information 
sharing that we should be aware of?
    Dr. Yoder. A couple things come to mind. So one would be 
some of the HIPAA requirements that are out there. So right now 
the way the data sharing goes through a third party which 
deidentifies the data, which is great for analysis. But if 
there are actual particular instances of fraud, that 
information doesn't necessarily flow through because of HIPAA 
and because people are not real comfortable about having those 
conversations.
    Mr. Walden. All right. Are there things Congress could do 
to improve that information sharing?
    Dr. Yoder. I think we would support any way that we could 
strengthen the committee charter or the charter for the 
organization to make it clear that you can share information 
within the confines that would not be HIPAA violations.
    Mr. Walden. A violation of HIPAA, OK.
    And, second, you note the partnership appears to be 
prohibited in its charter from advising Medicare and Medicaid 
of the schemes it identifies. I know that our staffs have asked 
HHS for a better explanation of why the charter is not allowed 
to provide advice to the Federal Government, a Federal 
official, or a Federal agency.
    Are you familiar with the background of why the charter 
includes this firewall?
    Dr. Yoder. No, unfortunately, we are not familiar with why 
that would be in there.
    Mr. Walden. OK. And the draft bill includes report language 
that Congress recommended by Ranking Member Pallone. Do you 
believe that having the partnership report to Congress would 
amplify opportunities to prevent fraud and abuse across all 
payers?
    Dr. Yoder. We actually don't have a position on that. It is 
hard to tell whether that would be impactful or not.
    Mr. Walden. All right. Frank and I think it probably would 
be, so you might want to have an opinion on that later that is 
good, positive. Just kidding.
    I think that is all I have for now. I appreciate your 
testimony on all these bills. We have got a lot of work to do, 
and we do it well on this subcommittee, and I appreciate the 
leadership of Dr. Burgess and yield back.
    Mr. Burgess. The chair thanks the gentleman.
    The chair recognizes the gentleman from Maryland, Mr. 
Sarbanes, 5 minutes for questions.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    I want to thank the panel for your testimony. Very 
important pieces of legislation that we are discussing today. 
All have earned bipartisan support for obvious reasons, given 
what you have been telling us and, I think, given the 
statements of our colleagues here on both sides of the aisle.
    I wanted to focus on the EMPOWER Care Act again because a 
lot of people have spoken to it, but I think it is really 
critical. Obviously, we are at this stage where the 
authorization has expired. States have been sort of living on 
the reserves associated with it for some time, but that is 
going to be running out quickly. And the State of Maryland 
faces that challenge as well. So it is important for us to get 
this done, and that is what the purpose of the legislation is.
    The reason this is called the EMPOWER Act is because it is 
about empowerment. It is about giving the opportunity for 
independence, to make sure that seniors, people with 
disabilities, others have the opportunity to live and thrive in 
a more independent setting and redesigning the Medicaid program 
so it can help to support that.
    So, Mr. Salo, I am going to direct this to you. And you 
have addressed it to some degree already. But I am interested 
again in just the perspective on what this does to promote 
independence and the benefits of it. I was thinking earlier 
that we often or increasingly we have been talking about how 
social determinants are having an impact on the way we deliver 
healthcare. But in a sense, what is offered by the EMPOWER Act 
and the Money Follows the Person approach is kind of a reverse 
of that.
    If you think of it, it is using our healthcare system and 
the way we reimburse and organize the delivery of care to, in a 
sense, create social dividends. And so maybe you could speak 
again to that idea of how this program is creating social 
dividends, independence, employment opportunities that might 
not have been possible under the old construct, empowering 
individuals to be contributing members of their own community 
in ways that previously they might not have been able to be 
and, therefore, strengthening the broader community that 
benefits our country.
    So talk about the social dividends. I have sort of just 
grabbed that phrasing for the purposes of this question, but I 
would be interested in, again, your perspective on what that 
independence opportunity offers to people.
    Mr. Salo. Sure. I think I would be somewhat remiss--and 
acknowledging it is outside of the purview of this conversation 
today, but I would be somewhat remiss in not reminding everyone 
that this country doesn't have a long-term care system. We have 
Medicaid. Medicaid is it. Medicaid is by far the dominant 
player in long-term care, whether it is institutional or 
noninstitutional, for everyone in this country.
    And because Medicaid is a means-tested program, that means 
that when Americans need long-term care services and supports, 
they have to go on Medicaid, and they have to impoverish 
themselves. Those are the rules. We didn't design it that way, 
but that is how we have fallen into it. That is how the system 
works. And I would argue, as a macro construct, that is not 
terribly empowering to begin with.
    So I would just encourage as we look to the future to say, 
are there other ways we can think about providing the necessary 
long-term services and supports to Americans through other 
means? But having said that, within the construct of Medicaid, 
clearly what we are seeing is if we can embrace--and we have, 
but as we embrace the trend for self-determination--whether 
that is where do I want to live, do I want to work, how can I 
work, who do I want to associate with--MFP and many other 
efforts that have been underway in Medicaid for the past three 
decades have all been about empowering people and about 
providing freedom.
    That I think is an incredibly important dividend. And I 
think what you see as a result of MFP, specifically getting 
people out of an institution who don't want to be there or who 
shouldn't be there, or whether it is any of the other efforts 
to try to provide upfront alternatives to prevent people from 
going into that institution in the first place, it is all 
about, how can we empower the individual and give them the 
self-determination that they need to make those meaningful 
choices for themselves? And I would argue that that makes their 
lives better, their family lives better, and their community 
lives better.
    Mr. Sarbanes. I appreciate that. Just to close, I would say 
that, within that larger construct, it can be frustrating 
sometimes. I think what you are saying is the MFP approach is 
an innovation, and we should pursue more innovations like that 
that can be empowering to people because it is better for our 
entire community when we do that.
    Thank you, and I yield back.
    Mr. Burgess. The chair thanks the gentleman.
    The gentleman from Florida is recognized for 5 minutes for 
questions, please.
    Mr. Bilirakis. Thank, Mr. Chairman.
    I appreciate it. And I appreciate you agenda-ing the ACE 
Kids Act today. It is great legislation. I have been a strong 
supporter, a longtime supporter of that legislation. Bipartisan 
bill.
    In the Tampa area, St. Joseph Children's Hospital has been 
running a Chronic-Complex Clinic for children, and I have 
toured that particular hospital and that clinic, and I tell you 
it is a wonderful thing. It is a great concept.
    I have had the opportunity again to tour it over the past 
few years and see how integrated care model can benefit the 
children with complex medical issues. Again, the children, we 
have seen examples time and time again where the children come 
up here and show us how well they are doing and how it benefits 
them and their families.
    Mr. Merrill, you mentioned that children with medically 
complex conditions account for a large share of the Medicaid 
costs for children. Can you talk about how a medical home, such 
as the one at St. Joseph's, can bring savings to Medicaid? Do 
you have research showing these savings?
    Mr. Merrill. Yes, thank you. Great question. There have 
been some studies, independent studies, done that have shown 
that the potential savings for ACE Kids for the Medicaid 
children could be anywhere from up to $5 billion to $13 billion 
over a 10-year period. And, as I said, under the CAREs grant, 
even though 2.6 percent sounds fairly small, I think that is 
just the beginning of some opportunity for us to really, if we 
can scale this across all 50 States instead of just one-offs at 
different organizations--and I know the hospital you mentioned, 
they do incredible work there, but they are by themselves. They 
are siloed. And if we can create a national database in which 
we are sharing data, working together, driving best practices, 
then, in the end, I think we truly can create the savings that 
everyone is looking for but also improve the patient experience 
through these coordinated care health homes.
    Mr. Bilirakis. And that is the priority, to improve the 
patient's experience and the quality of care for the child. 
And, again, it is convenient for the parents. So I would like 
to see a hospital in every region of the country that has the 
ACE Kids model.
    Again, is quality measure data currently collected in 
Medicaid or Medicare?
    Mr. Merrill. Yes, I think it is by State, and you will see 
different States starting to implement quality measures with a 
pay-for-play component to it. We are unaware of any quality 
measures that are specific to this medically complex 
population. I think that this bill contemplates that, as it 
should.
    One of the very most important first things that I believe 
we should look at as a quality indicator is patient and family 
satisfaction. That is really what this bill is all about, 
making life much more convenient for these families, allowing 
them to navigate the healthcare system easier and have the 
better outcomes.
    We could implement outcome measures, reduced readmissions, 
for example, for this population, because this population tends 
to bounce back into the hospital. But if we are successful at 
creating the medical home, then we believe that we can keep 
these children out of the hospital more often, closer to home, 
and deliver better care and better outcomes as a result of 
that.
    Mr. Bilirakis. It is so very efficient too, because the 
doctors, they have multiple appointments during the day, they 
can see----
    Mr. Merrill. That is correct.
    Mr. Bilirakis [continuing]. The doctors. And, again, it is 
great for the child and the family. So I appreciate it. It is a 
no-brainer, as far as I am concerned, but sometimes no-brainers 
don't get passed up here. And I really appreciate the chairman 
agenda-ing this bill. It has got to get done.
    Mr. Salo, you mentioned that it is important to avoid one 
size fits all and to allow for a flexible benefit design. And I 
agree. We have one Medicare program, but we have 50 Medicaid 
programs, each designed to serve the unique needs of their 
States.
    Mr. Salo and Mr. Merrill, do you think that the latest 
discussion draft for ACE Kids promotes a flexible benefit 
design for States? Maybe, Mr. Salo, you want to go first. I 
know we don't have a lot of time.
    Mr. Salo. Sure. I think we made a lot of progress, and I 
think as long as it continues to allow Florida to acknowledge 
its current delivery system, Florida has a separate managed 
care organization completely focused on kids in the foster care 
system.
    New York has a system in place that holds pediatricians 
accountable for making sure that kids arrive at school at 
kindergarten ready to learn. There are efforts like this 
underway in lots of places. We want to make sure that this is a 
complement and improvement to those efforts as opposed to just 
running into them in a conflicting way.
    Mr. Bilirakis. Mr. Merrill.
    Mr. Merrill. This bill actually allows each State to 
implement the program that works for them. In Texas, with our 
STAR Kids, we have Medicaid managed care, and it works pretty 
well. I think it can work equally well in a fee-for-service 
environment. And so I think that is the flexibility that is 
built into this, so that the States can, number one, opt in or 
out; and if they opt in, they can use their delivery system 
that they have in place today.
    Mr. Bilirakis. It makes sense to me. And I want to thank 
the lead sponsors of this bill, of course, former Chairman 
Barton and also Representative Castor, and all the cosponsors. 
I am one of them as well.
    Thank you very much. And I yield back, Mr. Chairman.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. The chair recognizes the gentleman from 
Oklahoma, Mr. Mullin, 5 minutes for questions.
    Mr. Mullin. Thank you, Mr. Chairman. And thank you to our 
witnesses for being here. I am going to jump right into it.
    Mr. Salo, first of all, can you talk about how, in addition 
to the obvious benefit to States of enhanced funding, the 
ability to incorporate medically complex children into a health 
home is a critical improvement compared to the current law?
    Mr. Salo. Sure. I think if you look at any State in the 
country, what Medicaid directors are trying to accomplish is a 
move away from a historical healthcare system in this country, 
not just Medicaid but Medicare and commercial, that has been 
fee-for-service. And we are moving toward a world where care is 
coordinated. It is managed. It is holistic, and it is patient-
centered.
    That will look different in different States. It might be 
managed care. It might be ACOs. It might be patient-centered 
medical homes. It might be health homes. Each of those is going 
to work in the political and geographic and cultural realms in 
which those States reside.
    If we acknowledge those, then I will channel my good friend 
Dennis Smith, who once talked about the historical healthcare 
system for people with disabilities, for kids with medically 
complex needs, for frail seniors. The fee-for-service system, 
FFS, he said, it should stand for fend for self because that is 
what we require; that is what we are requiring of them.
    And what Medicaid is trying to do is to create a system 
that is going to make it so that people don't have to spend 
their lives navigating multiple different silos and that the 
care itself is coordinated and managed in a better way. That is 
what Medicaid is trying to do.
    Mr. Mullin. Thank you.
    Mr. Schmidt, what protections do patients currently have 
when Medicaid Fraud Control Units detect abuse in a 
noninstitutional setting?
    Mr. Schmidt. With respect to protections from the Medicaid 
Fraud Control Unit, I think the historic answer is none, or 
realistically, if we detect it, we are going to call some other 
law enforcement agency and say: Please take a look, we can't.
    Mr. Mullin. How often do they actually pick it up?
    Mr. Schmidt. It depends on the jurisdiction. We have had 
cases in Kansas that, for example, in some of our more robustly 
staffed jurisdictions, that they will take it. We have had 
others where we haven't felt good about having to hand the case 
off.
    Mr. Mullin. They simply don't have the manpower or the 
knowledge to do it?
    Mr. Schmidt. That is correct.
    Mr. Mullin. Are there any other settings that Medicaid 
Fraud Control Units are prohibited from addressing patient 
abuse?
    Mr. Schmidt. I believe the answer to that is no, but I 
would sure want to double-check that with the folks that--there 
is nothing else on my radar screen. Nothing else on my radar 
screen.
    Mr. Mullin. Can Medicaid Fraud Control Units detect, 
investigate, and prosecute fraud inside the Indian Health 
Service facilities?
    Mr. Schmidt. I don't know the answer to that. Sir, we don't 
have that issue having arisen in Kansas and I just don't know. 
I can certainly check with folks that would, if that would be 
helpful, and have them follow up.
    Mr. Mullin. Can Medicaid Fraud Control Units pursue cases 
of patient abuse in his facilities?
    Mr. Schmidt. I would have to do the same.
    Mr. Mullin. Do the same?
    Mr. Schmidt. Do the same.
    Mr. Mullin. My point that I am trying to get at, obviously, 
Medicaid is a tool which can be utilized for the benefit of 
those in need and those in most critical need. It can also be 
utilized to help strengthen systems like his. But if we are 
going to be in the business of trying to investigate fraud, 
then we also need to have the ability to go into where it is 
being used, not limited access.
    And I am sure you can appreciate that. We want to make sure 
that, one, the dollars that was invested in Medicaid is being 
used properly by those that are receiving the funds.
    And what I am trying to get at is, if there is a way for us 
to be able to help, we do want to help because, as you 
mentioned, our attorney general, Mike Hunter, is associated in 
helping on an important bill. We are also in desperate need of 
wanting to find out how we can help strengthen our his system. 
We don't know if there is abuse going on, because it hasn't 
been investigated. We don't believe there is, because we 
believe our Tribes are extremely good stewards of what they are 
using their assets for. You can go and you can look at the his 
facilities and the health clinics and the Indian hospitals 
throughout my district, and it is amazing what is happening, 
but can it be utilized further?
    So my whole point on asking those questions--and I didn't 
expect you to know, because currently I don't think there is--I 
am here wanting to say I want to help. If we believe there is a 
reason for us to do it, I want to help. I want to make sure 
that those dollars are being used properly so we are not going 
after everybody, but we are only going to focus on the bad 
actors.
    With that, Mr. Chairman, I yield back.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    I think all members of the Health Subcommittee have been 
recognized, and we will now turn to members off the 
subcommittee.
    And, Mr. Welch, you are recognized for 5 minutes for 
questions, please.
    Well, let me clarify that statement. All members of the 
subcommittee with the exception of your subcommittee chairman, 
who deferred his questions. So you may go ahead of me. Mr. 
Welch, you are recognized for 5 minutes.
    Mr. Welch. Mr. Burgess, you are always doing a generous 
thing. Thank you very much.
    I want to speak to Mr. Chancy about the gag rule. That is 
astonishing. Mr. Carter and I have a bill in to get rid of it. 
But can you just give some description of what it feels like to 
be a pharmacist. And in my experience, the pharmacists have 
very close customer-pharmacist connections, and they are 
guiding their customer in the use of that medication, and it is 
a place the customer can go to because they trust the 
pharmacist.
    So what is it like for a pharmacist to have this gag order 
when if he or she didn't have it and was free to speak, they 
could save that customer, who they value, an awful lot of 
money?
    Mr. Chancy. It puts us in a very compromising situation 
because, like we had mentioned earlier, our relationship with 
our patients are based on trust. And they depend on us to 
maneuver--this stuff is complicated. We have to stay on our 
toes to keep up with it, and our patients really depend on us. 
And when we can't be fully forthright with them, then that just 
puts us in a compromising situation.
    Mr. Welch. It kind of makes you feel dirty, right? It is 
awful, because they trust you. They are putting their medical 
situation in your hands. They are asking you intimate questions 
about, you know, this was my reaction, what do you think I 
should do? And they are assuming, since they trust you, that 
among other things, if you could save them a hundred bucks, you 
would, because it is not money going in your pocket.
    Mr. Chancy. Oh, no, definitely not.
    Mr. Welch. Do you have any idea why it is legal to put 
handcuffs on your ability to act?
    Mr. Chancy. It has always been a bad rope for us.
    Mr. Welch. Mr. Chairman, just bipartisan, I hope we can get 
rid of this. The idea that a pharmacist can't give relevant 
information on how to save money for their customer really is 
inexcusable. So I appreciate the hearing that you are having.
    Thank you. And I want to talk to the attorney general a bit 
about your work. Our Medicaid Fraud Unit in Vermont does a 
tremendous job, and it is both recovering money and, I think, 
also a deterrent against would-be malefactors. And, of course, 
when this legislation was initially passed, most of the 
Medicaid services were provided. They were provided in 
institutional settings.
    So I would just ask you to elaborate about your reasons for 
supporting this legislation, and I have a bill in in order to 
accomplish your goals. But thank you.
    Mr. Schmidt. Thank you, Representative. And, again, thanks 
to you and Representative Walden for your leadership in making 
this real. And as I mentioned earlier, I worked very close with 
my friend, your attorney general, General Donovan, on this. And 
he and I have talked many times--I certainly don't purport to 
speak for him--but both coming from lightly populated States 
with substantial rural areas, how important this expansion is 
to allow us to have the capacity of skilled investigators and 
prosecutors who are expert in patient abuse matters to be 
available and deployable in areas that simply don't have them 
with respect to local resources.
    So I think it is vitally important, and it doesn't make any 
sense to have this arbitrary restriction that I can see.
    Mr. Welch. Right. And my understanding, in the Vermont 
Medicaid Fraud Unit, we return a lot more money than it costs 
to run it. I think it is like six to one. I don't know what it 
is in your State.
    But is there any reason to be apprehensive that if we 
expanded your authority to recover and deter bad conduct 
outside of the current law, that it would be a financial drain?
    Mr. Schmidt. No, I don't think so. And I guess I would 
offer just a couple of thoughts on that point. Number one, 
obviously, the financial recoveries of a MFCU come principally 
from the fraud side, not the abuse side. And so I do understand 
at least those who articulate, well, it is different. But, 
having said that, most of the Medicaid Fraud Control Units, 
including ours in Kansas, are self-funding, and they are 
returning money to the taxpayers. And so I have no concern 
along those lines.
    Mr. Welch. In Kansas, sort of like Vermont, you are kind of 
tight with a dollar, right?
    Mr. Schmidt. I think that is true, and we wear that as a 
badge of honor.
    Mr. Welch. Well, I think Mr. Walberg is too, so it has been 
great working with him. And I thank you for your work and your 
testimony on that.
    Mr. Schmidt. Thank you, Representative.
    Mr. Welch. Thank you. And I yield back.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes the gentleman from Michigan, Mr. 
Walberg, 5 minutes for your questions, please.
    Mr. Walberg. Well, my good friend and colleague from 
Vermont, I am not tight; I am efficient.
    Mr. Chairman, thank you for holding this hearing, and thank 
you for including our legislation as part of the bill packages 
here. I would like to ask, Mr. Chairman, unanimous consent to 
submit for the record letters from the National Association of 
Attorneys Generals, Families USA, and Partnership for Medicaid 
Home Based Care, and express support for H.R. 3891.
    Mr. Burgess. The ranking member is concerned about the 
letter from Families USA, but I think I will go ahead and 
accept them. We will.
    [The information appears at the conclusion of the hearing.]
    Mr. Walberg. Thank you.
    Attorney General Schmidt, thank you for being here today 
and for your efforts in highlighting the need for legislative 
reforms offered by myself and my colleague, Representative 
Welch.
    Medicaid Fraud Control Units play a vital role in bringing 
those who commit Medicaid provider fraud, patient abuse and 
neglect to justice. In my home State of Michigan, Medicaid 
Fraud Control Units, or MFCUs, recovered over $7 million in 
taxpayer dollars in 2017 and contributed to 24 convictions. 
Nationally, MFCUs are responsible for about $1.8 billion in 
recovered funds and 2,500 convictions.
    I commend the work of these State Fraud Control Units and 
the attorneys general for protecting the most vulnerable of our 
population from harm as well as ensuring taxpayer resources are 
being used appropriately. So thank you.
    Attorney General Schmidt, as you know, currently MFCUs may 
only investigate cases of patient abuse that occur in 
institutional facilities, et cetera. Let me move to what this 
bill could possibly do. If our legislation were to become law 
and MFCUs were permitted to widen the scope of their 
investigations, do you have any sense of how many Medicaid 
beneficiaries could be protected from abuse or the amount of 
taxpayer funds that could be recovered?
    Mr. Schmidt. Representative, I don't have hard data, and I 
am not aware that it exists. If it does, I don't have it. I can 
give you anecdotal information from Kansas with numbers.
    Mr. Walden. That would be helpful.
    Mr. Schmidt. And you can draw from that what you will. In 
State fiscal year 2018--we are on a July through June fiscal 
year in Kansas. In State fiscal year 2018, our MFCU received 16 
referrals of suspected patient abuse. Of that number, we found 
a way to investigate or cause to be investigated 11. That 
leaves a difference of five. Out of those five, I didn't go 
back and personally review the files before this hearing, but 
if normal patterns hold, I suspect probably half of those there 
simply wasn't evidence of a crime, and so there was no further 
action to be taken, which leaves one or two that, had we had 
the ability to proceed in the noninstitutional setting, we 
could have investigated and, assuming there was evidence, 
prosecuted.
    To put that in context for Kansas, we also prosecuted to 
conviction 16 criminal cases last year in our MFCU. It is 
coincidental that is the same number as the referrals. They 
aren't connected. So had we added one from a noninstitutional 
setting because of your bill, that would be a 6-percent 
increase in the number of convictions. If it were both, it 
would be a 12-percent increase.
    Mr. Walberg. Could you give us an example of one of those 
where you had to turn a blind eye because of the inability?
    Mr. Schmidt. Absolutely. The one that comes to mind that 
troubles me the most, it was a case in a very small county, 
very rural county, lightly resourced, both on the police law 
enforcement side and on the prosecutor side.
    The matter came to our attention technically on a fraud 
claim, but it was obviously more than that. It was a case where 
an individual was being paid by the Medicaid program to provide 
personal care services in home for a beneficiary. The 
beneficiary was either nonambulatory or had substantial 
mobility restrictions, and so the PCA was supposed to be there 
all night long sitting with this person, providing the 
appropriate care. They didn't, and they billed for it, which is 
how it came to our attention as a fraud matter.
    The reason it was particularly distressing is that, on one 
of those evenings before this was all uncovered, the 
beneficiary, who was a smoker, was home alone when the PCA was 
supposed to have been there. The person was smoking, it 
appears, in bed. The cigarette dropped. It caught the house on 
fire, and the individual died. Now, there was Medicaid fraud in 
a small amount of dollars, but obviously the much greater harm 
there was the question of whether there was a criminal 
homicide, whether there was a negligent manslaughter or 
reckless manslaughter or some other form of prosecutable 
homicide, and we did not have the ability to use our MFCU 
assets to investigate that.
    So we had to go back to the local police and the county 
attorney who called us in the first place and say: We are sure 
glad to help out of other assets, but we can't take this. We 
can prosecute him for two or three thousand bucks' worth of 
fraud, but that is not what this is really about.
    Mr. Walberg. Thank you. Thank you, and I yield back.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back.
    The chair recognizes the gentlelady from Michigan, 5 
minutes for questions, please.
    Mrs. Dingell. Thank you, Mr. Chairman and Ranking Member 
Green, for allowing me to participate today in holding this 
hearing.
    There are several bills being considered today. I am going 
to mostly confine myself to the EMPOWER Care Act before my 
colleague Mr. Carter speaks. And when his bill gets introduced, 
I am going to tell you of a story last week of picking up a 
prescription that was $1,300, and after you peeled me off the 
ceiling and I called the doctor and screamed and talked to the 
pharmacist, got an equivalent for $40. I am much more 
aggressive than many in asking questions, but, Mr. Carter, I am 
on your bill when you get it in.
    But now I will confine my remarks to--and that is a very 
true story--H.R. 5306, the EMPOWER Care Act, which I am proud 
to author with my friend and colleague, Congressman Brett 
Guthrie.
    Improving long-term care has been one of my top priorities 
since coming to Congress. And as I have listened to all of you 
talk today, our long-term care system is broken. It doesn't 
work. Most people think Medicare covers it, as Mr. Salo 
previously noted, and are shocked to learn that if you are 
going to get sick, better do it only 90 days, 90 first, you are 
out, and that Medicaid is actually the single largest payer of 
long-term care in this country. And the private market is 
totally broken as well.
    As we have heard in the testimony this morning, one program 
that is working well in terms of enhancing opportunities for 
independent living and supporting aging with dignity and has 
bipartisan support is the Money Follows the Person Program. We 
have discussed what it is this morning. It provides grants to 
States to cover transitional services for individuals who want 
to leave a nursing home or another institution and transition 
to the community care setting.
    I have been working with my colleague Brett Guthrie from 
Kentucky to reauthorize this successful program that is proven 
to save taxpayers money and has successfully transitioned 
thousands of people from institutions to a community setting 
where they can be with their loved ones. We need to expand the 
program before it expires. I agree with you that 1 year isn't 
enough, but I will take 1 year if that is all we can get, 
because time is running short.
    So I am going to ask Mr. Cunningham these questions. Mr. 
Salo, if you want to chime in.
    Money Follows the Person was created through bipartisan 
efforts. The program has been operating for more than a decade, 
and the legislation we are considering would have reauthorized 
the program for another 5 years. We will take the 1. Why is 
this such a priority? How does this kind of long-term 
reauthorization support institutional transition efforts?
    Mr. Cunningham. So I think one of the big things for MFP is 
that every State kind of has their own home and community-based 
waiver programs. And so depending on each State, MFP can be 
that flexible tool that can be used to move people out of 
institutions into the community. And so that flexibility is 
critical.
    Mrs. Dingell. What challenges do States face in supporting 
transition from institutions to the community? How does MFP 
help address these challenges?
    Mr. Cunningham. So, for many States, a lot of the services, 
such as housing counseling and other referrals, counseling, 
detection of people that want to relocate, these may or may not 
be covered as part of the Medicaid program.
    So MFP can step in to provide those services. And then they 
can relocate into the community where some States may have 
available personal care assistants and other home and 
community-based services that can support them. So it bridges 
that gap.
    Mrs. Dingell. Thank you. We know that hundreds of thousands 
of people with disabilities continue to wait on waiting lists 
for home and community-based services. How does MFP help 
address the problem for the population of people in 
institutional settings, and what would happen if we don't renew 
this?
    Mr. Cunningham. So, in Wisconsin, what we have done with 
the enhanced Federal match is that we have reinvested that into 
our long-term care program to reduce and eliminate waiting 
lists. And within 36 months, we are going to be an entitlement 
for all individuals that need Medicaid home and community-based 
services.
    And so MFP has been a vital part, and that reinvestment of 
those dollars into the long-term care system continue to 
support providing community-based services.
    Mrs. Dingell. I want to thank all of you for everything 
that you are doing. Five minutes isn't enough time. But before 
I yield back, I would ask the chairman for unanimous consent to 
include for the record letters of support for H.R. 5306 from 
the Area Agencies of Aging Association of Michigan, the 
National Association of State Directors of Developmental 
Disability Services, the National Association of States United 
for Aging and Disabilities, and a group letter signed by dozens 
of health and aging organizations.
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mrs. Dingell. Thank you. And I am over my time.
    Mr. Burgess. The chair thanks the gentlelady.
    The chair now recognizes the gentleman from Georgia, 5 
minutes for your questions, please.
    Mr. Carter. Thank you, Mr. Chairman. And thank all of you 
for being here.
    Mr. Chairman, I want to thank you for holding this hearing 
today and for including the discussion on the gag clause 
legislation. It is something that is very important and 
something that I have stressed since I have been in Congress 
and something that is important to patients. I think that is 
the point that I would like to get across most is that this is 
something that is really hurting patients more than it is 
hurting anyone.
    Mr. Chancy, I want to thank you for being here. I 
appreciate it very much. I know you have traveled a long way, 
as a lot of you have, but I wanted to ask you, Mr. Chancy, 
examples of gag clauses. Now, I think everybody by this point 
understands what we are talking about when we are talking about 
gag clauses, but have you actually seen a contract that had the 
language in there that--and perhaps it wasn't written the way 
that you would understand it, but have you ever seen a contract 
like that?
    Mr. Chancy. First of all, it is very difficult for us to 
even get our hands on these contracts, and they change 
frequently. So I have not seen anything that even stated that 
it was a gag clause.
    Mr. Carter. Right. But just because it is not stated, there 
are other ways that the pharmacy benefit managers can get at 
this. You mentioned earlier about CVS/Caremark. CVS, of course, 
is a competitor, a national chain, I believe the largest drug 
chain in America. And yet Caremark, one of the top three PBMs 
in America, is the same company. You can make the argument that 
the Caremark owns CVS or CVS owns Caremark. It doesn't matter; 
they are the same thing. But there are other ways. Do you ever 
get audited by any of these groups?
    Mr. Chancy. Yes, we do. Actually, one of our stores is next 
door to a CVS, and they do audit us.
    Mr. Carter. So, actually, you have got a contract with a 
PBM that has a drugstore right next to you, and you are getting 
audited by that PBM that owns that drugstore right next to you. 
Do you find that somewhat intimidating, if you will?
    Mr. Chancy. Yes, and it is challenging at times.
    Mr. Carter. I can imagine. I wanted to ask you, in your 
written testimony, you gave some examples of where you had 
actually told some patients about this. And I believe there was 
one example with a mayor of one of the municipalities around. 
Can you share that very quickly?
    Mr. Chancy. Yes, that is correct. He came in, and his 
prescription came to be $26. And they had just changed 
insurance plans. And we told him that if you paid cash for 
this, it would be cheaper. And he said: I don't understand; I 
want to use my insurance.
    And I said: Well, our cash price is $8, but if we use your 
insurance we have to charge you $26--because the PBM was 
actually taking $24 back from us.
    Anyway, the point was out of pocket was $8 for him. Using 
his insurance, he had to pay $26.
    Mr. Carter. So this point was brought up. I believe, Dr. 
Yoder, you may have brought it up. And it is a valid point, 
that, if you don't use your insurance, it is not going to go 
toward your deductible.
    Mr. Chancy, do you have an opportunity to know how close a 
patient is to their deductible? Is that any kind of information 
that you are privy to as a pharmacist?
    Mr. Chancy. No, we don't. The only way we find that out is 
if we bill it through their insurance and we find out that they 
have met their deductible or they haven't. So we fill 
prescriptions or process prescriptions until we get to that 
point.
    Mr. Carter. But if we were realistic about this, the 
example that Representative Dingell just gave, now, that would 
have been $1,300 going toward a deductible. She made the choice 
to pay the $40, which obviously I think most of us would have. 
But the other example that you gave where it was $7 as compared 
to $26, that is not really going to impact the deductible that 
much, is it?
    Mr. Chancy. Oh, no, not at all.
    Mr. Carter. I don't think it is going to help them get 
there. So, with all due respect, Dr. Yoder, that is the point 
we are trying to make here. Generally, that is an extreme case. 
And that is exactly what we are talking about. That is nothing 
short of ridiculous, and we all understand that.
    One other point that was made by Dr. Yoder was the fact 
that if you don't get it filled through the insurance company, 
that you may not see a drug interaction. But is it true, Mr. 
Chancy, that most pharmacies now have programs where--drug 
interactions are--before you fill a prescription, you are going 
through the patient's profile and looking at all the drugs that 
are on there anyway?
    Mr. Chancy. That is correct.
    Mr. Carter. OK. So it really should not be that much of a 
problem, unless they are getting it somewhere else, which could 
happen. But, for the most part, you find your patients to be 
getting their medications at one drugstore.
    Mr. Chancy. That is correct.
    Mr. Carter. OK. Boy, 5 minutes flies when you have been 
waiting around all day to ask questions. I do want to thank all 
of you for being here, and this is something that is very 
important. Again, Mr. Chairman, I want to thank you for this 
discussion and this hearing today. Very important. I could not 
agree with you more that this is the most important 
subcommittee in Congress. So thank you, and I yield back.
    Mr. Burgess. And the most productive.
    I recognize myself for 5 minutes.
    Mr. Chancy, I just have to ask you, when you sign a 
contract, it is voluntary, so no one is forcing you to sign the 
contract. Do you have the option of not signing the contract 
and saying, ``Hey, come back to me with a contract that doesn't 
have these nondisparagement riders in it''?
    Mr. Chancy. We do have the option of opting out, but we 
don't always know what is in the contract.
    Mr. Burgess. I guess that bothers me a little bit. But I 
can remember early in the days of managed care, as a physician, 
I had complained about a contract, and the lawyer advising the 
practice said, ``Well, you signed a stupid contract.''
    I said, ``Well, how do you tell it is a stupid contract?''
    He said, ``That is the first one they give you, and you 
signed it.''
    The only reason I am bringing this up is because, as a 
profession, it may be incumbent on us as part of our profession 
to be ever-vigilant on behalf of our patients, especially as we 
get into more and more situations where ownership is not in the 
hands of the community pharmacist, not in the hands of the 
practicing physician, but in the hands of an insurance company, 
the government, or someone else. And, again, that is the only 
reason I bring that up is the charge for all of us has got to 
be not--transparency will only go so far. You have got to be 
vigilant on top of that.
    Mr. Cunningham, let me just ask you, because you mentioned 
some of the supplemental services that are covered, and you 
mentioned housing specifically. Is transportation ever covered?
    Mr. Cunningham. I know the ability to develop plans to 
assist with transportation, in Wisconsin that is a covered 
benefit in our community. So what the ADRC would do is assist 
in developing a plan to ensure the individual has proper 
transportation in the community to both medical and also for 
social events.
    Mr. Burgess. Because Wisconsin is one thing, but Texas, the 
distances are large. But it seems with ride-sharing abilities 
now, that actually could be quite cost-effective. You are not 
sending a taxicab company out to pick someone up, but with the 
ride-sharing apps that people are so accustomed to using now, 
again, it seems like that could be an option for increasing 
participation or increasing compliance on the part of the 
patient. That is why I was wondering if that had been one of 
the things that you had studied in your efforts.
    Mr. Cunningham. Yes, it is a covered benefit in our waiver 
program. But to the extent they don't have transportation, I 
think that would be either MFP would be able to--used to 
identify an affordable transportation. I am not totally sure of 
the exact reimbursement to the transportation provider.
    Mr. Burgess. I may follow up. I will do some followup on 
that myself. But you intrigued me with your comments, General 
Schmidt. We have spent a lot of time in this subcommittee and 
the full committee dealing with the problems from opiate abuse 
and the recovery therefrom. And so some of your comments about 
the prosecutorial side, it is one thing to find that there has 
been diversion, but if a patient is actually harmed in the 
process.
    We study sober homes to some extent here, and we had a 
panel of family members that came and talked to us. And three 
of those five panel members, family members, all talked about 
the danger and the damages from sober homes in not providing 
the type of care that they were supposed to provide, and people 
actually suffered as a consequence. Has that been any part of 
your experience as well?
    Mr. Schmidt. I don't know about the sober homes in 
particular, Mr. Chairman. But yes, I think I mentioned in my 
written testimony, we have criminal charges currently pending 
against an individual, of course, not yet adjudicated, so she 
is innocent unless and until proven guilty, but who was 
delivering--she was a nurse in a variety of facilities, sort of 
rode a circuit and was supposed to be delivering medications to 
beneficiaries and instead was diverting those medications to 
illicit uses and obviously causing some fairly substantial harm 
to the beneficiaries, either in terms of pain management didn't 
happen or some of the medications' other purposes. So, yes, we 
have seen that.
    And then the flip side of that, with respect to perhaps the 
intersection between H.R. 3891 and opioid enforcement, we are 
looking at cases currently. We haven't filed any of these yet, 
so they may or may not pan out, either under current law or 
under expanded authority. But potential diversion cases, I will 
call them pill mill-type cases in a colloquial, where the 
diversion occurs outside of a healthcare facility or outside of 
a board and care facility. So they are outside the scope of the 
MFCU now.
    And one of the things that we just sit around and sort of 
scratch our heads on is, well, what is our legal theory if we 
were able to prove this? And right now our legal theory if I 
want to use the MFCU assets is the fraud to the program for 
diverting those pills. I can prosecute for a few bucks a pill 
the financial loss.
    But if that diversion results in serious bodily injury or 
death to somebody who is misusing those pills, which would be a 
separate crime under Kansas and Federal law, I can't use the 
MFCU assets to prosecute that much greater ill, and that just 
doesn't make sense to me.
    Mr. Burgess. You are right. And this subcommittee, we are 
all about making sense.
    Mr. Merrill and Mr. Salo, I apologize.
    Mr. Merrill, I just have to ask you, because we talked 
about this a little bit offline when we visited about this. You 
mentioned the STAR programs in Texas, and, of course, some of 
the headlines recently from one of the big managed care 
companies was not providing quite the services or their ability 
to reduce cost was essentially reducing benefits. And you had 
some thoughts about it is important to pay attention to the 
payer in some of these instances.
    So could you kind of reprise those comments for this 
subcommittee?
    Mr. Merrill. Well, I guess in its basic level, care is 
really never and should never be coordinated at the payer side 
of the equation. It should be coordinated at the provider side 
of the equation.
    All of these caregivers play a role in this, but I can 
speak specifically about our own experience at Cook Children's. 
Since we are a provider-based HMO, we don't have premium 
expense or dollars or profits that have to go to Wall Street. 
It is a model that has been out there for quite some time. But 
the dollars that would normally go to Wall Street we actually 
reinvest in our community, and that allows us to do more care 
for these kids.
    So I think you have a difference in philosophy on these two 
different approaches. I do believe personally that provider-
based health plans do better work, because their premium 
expense is all focused on taking better care of these kids. And 
I know there has been some controversy over that in the STAR 
Kids program. If you read those articles, you will see that the 
complaints or concerns that were expressed were on that side of 
the equation and not on the provider side of the equation. I am 
telling you as straightforward as I know how, but that is I 
think the reality of the situation.
    Mr. Burgess. I thank you for sharing that, because when you 
told me that the other day, I thought that was an important 
concept that needs to be out there.
    Mr. Green, do you have any concluding thoughts?
    Mr. Green. Nothing further, Mr. Chairman. Can I ask for 3 
minutes at some future hearing?
    Mr. Burgess. I was just aggregating all of the extra time I 
gave members on your side and capitalizing upon it. It is like 
access to capital, right?
    So seeing that there are no further members wishing to ask 
questions, I once again want to thank our witnesses for being 
here today.
    Additionally, in addition to all the other documents that 
we have accepted for the record, I want to submit documents 
from PillPack, Incorporated; LeadingAge; Medicaid Health Plans 
of America; and the American Association of Medical Colleges.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I remind members 
that they have 10 business days to submit additional questions 
for the record, and I ask that witnesses submit their responses 
to those questions within 10 business days upon receipt of the 
questions.
    Without objection, the panel is again thanked and the 
subcommittee is adjourned.
    [Whereupon, at 12:54 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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