[Senate Hearing 115-849]
[From the U.S. Government Publishing Office]
S. Hrg. 115-849
HEALTH CARE IN RURAL AMERICA:
EXAMINING EXPERIENCES AND COSTS
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HEARING
BEFORE THE
SUBCOMMITTEE ON PRIMARY HEALTH AND RETIREMENT SECURITY
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING HEALTH CARE IN RURAL AMERICA, FOCUSING ON EXPERIENCES AND
COSTS
__________
SEPTEMBER 25, 2018
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
32-296 PDF WASHINGTON : 2020
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky MICHAEL F. BENNET, Colorado
SUSAN M. COLLINS, Maine TAMMY BALDWIN, Wisconsin
BILL CASSIDY, M.D., Louisiana CHRISTOPHER S. MURPHY, Connecticut
TODD YOUNG, Indiana ELIZABETH WARREN, Massachusetts
ORRIN G. HATCH, Utah TIM KAINE, Virginia
PAT ROBERTS, Kansas MAGGIE HASSAN, New Hampshire
LISA MURKOWSKI, Alaska TINA SMITH, Minnesota
TIM SCOTT, South Carolina DOUG JONES, Alabama
David P. Cleary, Republican Staff Director
Lindsey Ward Seidman, Republican Deputy Staff Director
Evan Schatz, Democrat Staff Director
John Righter, Democrat Deputy Staff Director
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SUBCOMMITTEE ON PRIMARY HEALTH AND RETIREMENT SECURITY
MICHAEL B. ENZI, Wyoming, Chairman
RICHARD BURR, North Carolina BERNARD SANDERS (I), Vermont
SUSAN M. COLLINS, Maine MICHAEL F. BENNET, Colorado
BILL CASSIDY, M.D., Louisiana TAMMY BALDWIN, Wisconsin
TODD YOUNG, Indiana CHRISTOPHER S. MURPHY, Connecticut
ORRIN G. HATCH, Utah ELIZABETH WARREN, Massachusetts
PAT ROBERTS, Kansas TIM KAINE, Virginia
TIM SCOTT, South Carolina MAGGIE HASSAN, New Hampshire
LISA MURKOWSKI, Alaska DOUG JONES, Alabama
LAMAR ALEXANDER, Tennessee (ex PATTY MURRAY, Washington (ex
officio) officio)
C O N T E N T S
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STATEMENTS
TUESDAY, SEPTEMBER 25, 2018
Page
Committee Members
Enzi, Hon. Mike, Chairman, Subcommittee on Primary Health, and
Retirement Security, Opening statement......................... 1
Sanders, Hon. Bernard, Ranking Member, a U.S. Senator from the
State of Vermont, Opening statement............................ 2
Witnesses
Glause, Tom, Commissioner, Wyoming Department of Insurance,
Cheyenne, WY................................................... 5
Prepared statement........................................... 6
Reed, Morgan, President, App Association, Executive Director,
Connected Health Initiative, Washington, DC.................... 9
Prepared statement........................................... 11
Levine, Alan, Executive Chairman, President, and Chief Executive
Officer, Ballad Health, Johnson City, TN....................... 31
Prepared statement........................................... 33
Richter, Deborah, MD, Family Physician and Addiction Medicine
Specialist, and Chair, Vermont Healthcare for All, Cambridge,
VT............................................................. 39
Prepared statement........................................... 41
HEALTH CARE IN RURAL AMERICA:
EXAMINING EXPERIENCES AND COSTS
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Tuesday, September 25, 2018
U.S. Senate,
Subcommittee on Primary Health and Retirement Security,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3:42 p.m., in
room SD-430, Dirksen Senate Office Building, Hon. Mike Enzi
presiding.
Present: Senators Enzi [presiding], Alexander, Young,
Roberts, Sanders, Bennet, Kaine, Hassan, and Jones.
OPENING STATEMENT OF SENATOR ENZI
Senator Enzi. I'm going to go ahead and open this
roundtable of the Subcommittee on Primary Health and Retirement
Security, and when Senator Sanders is here we'll give him an
opportunity to do an opening statement.
Today we're talking about healthcare in rural America,
examining experiences and costs and looking for solutions. One
of the things I always appreciate about my people in Wyoming is
when they complain to me, they usually have some idea for how
to solve it. Sometimes they don't work, but sometimes they're
an excellent idea, and sometimes they are in-between there
where there's a germ of an idea that just needs to be grown a
little bit to see if it will work.
I thank everybody for coming today for this roundtable. I
want to thank the Ranking Member, Senator Sanders, and his
staff for working to put together a conversation about rural
healthcare. I'd also like to thank all my colleagues that are
here today for being ready to engage in this important
discussion. I appreciate all of the participants for taking the
time and making the effort to come today to be part of the
discussion. I know several of you traveled great distances to
be here.
Chairman Alexander has held a series of important hearings
at the full Committee level to take a close look at healthcare
costs throughout the system. We hear too often that Americans
are struggling to afford and understand their medical bills,
particularly to understand their medical bills, so it's
important to examine what drives healthcare costs and how we
can create more value for patients particularly, and
specifically in rural areas.
Several years ago I formed a rural caucus, and I found that
almost every state wanted to be represented in that caucus,
plus the District of Columbia. I have a little trouble finding
rural in the District, but I'm sure it's there, and as long as
they join us in solutions, that's okay, because the purpose is
to unite and help rural areas.
I'm from Wyoming, which is the least populated state in the
Nation. Our biggest city is only 60,000 people. All of our
towns are at least 40 miles apart, and there are only 17 towns
where the population is greater than the elevation, and almost
every one of those towns are at least 100 miles apart. People
love Wyoming's close-knit communities, the wide-open spaces,
but Wyomingites also face some of the highest healthcare costs
in the country, in part due to the challenges that come with
delivering care in a cost-effective manner when our low
population is spread across those 97,000 square miles.
It struck me that as we explore the healthcare costs in
more depth, we need also to take a serious look at healthcare
in rural America to understand the unique challenges that rural
patients and providers face, how those challenges can affect
the cost of care, and learn more about how our current policies
are working and where they might be improved.
The purpose of a roundtable is to gather information. I
appreciate the witnesses being willing to testify. This works a
little different than a regular hearing. After the opening
statements and then your statements, we'll ask some questions.
But at any point, rather than it just being directed to one
person, anybody that wants to comment on that, just stand your
name tag up on end and we'll know you want to speak on it,
because we need as many ideas as we can possibly get.
A lot of people have told me that their insurance premiums
are unaffordable, and some of them said that they have to pay
more than their mortgage. But a lot of that's related, all of
it's related to healthcare costs: the provider, the amount of
choice that there is, how to recruit them, if you're able to
get specialties--probably isn't going to happen in rural areas.
So how do you get them the healthcare? Maybe price
transparency. Another area is more competition in the
individual market, and telemedicine, of course, is gaining some
support, and examples in rural states. Then, of course, a
little bit with the privacy issue. So those are all things I
hope we can get into a little bit today.
First I'll have Senator Sanders speak, and then I'll
introduce the panel and we'll get going.
OPENING STATEMENT OF SENATOR SANDERS
Senator Sanders. Thank you very much, Senator Enzi, for
calling this important hearing.
Senator Enzi and I have at least two things in common. One,
I like him. Number two, we both come from very rural states. We
don't have big cities like 60,000 in the State of Vermont. We
only have 40,000 as the largest city, so we kind of are more
rural than you are, maybe.
My views might be just a tad different than Senator Enzi's,
just a tad. The bottom line to me is it is an international
disgrace--and the day will come, and more and more people
understand it--that we are the only major country on earth not
to guarantee healthcare to every man, woman, and child in
Wyoming and Vermont as a right, not a privilege. That is the
basic issue. Do we believe healthcare is a right, or do we not?
And if you don't, and if we think that the function of
healthcare is for insurance companies and drug companies to
make billions in profits, fine, then you're over here.
But if you agree with what I believe the vast majority of
the American people believe--and I should tell you that the
latest poll that I saw from Reuters found that 70 percent of
the American people, including a majority of Republicans, now
believe in a Medicare-for-all, single-payer system--then you
hold a different view.
Second issue is we have got to ask ourselves--Senator Enzi
appropriately says the cost of healthcare is very, very high.
Of course it's high. We pay almost twice as much per capita for
healthcare as any other nation on earth, and we're going to
have to deal with that. I know my Republican friends don't want
to deal with it. In Canada, it's about half as much. Other
countries, less than half as much, and that healthcare outcomes
in terms of the outcomes in other countries is often better
than it is in ours in terms of life expectancy and infant
mortality and how we treat many of the diseases.
In terms of prescription drugs, I'm sure a major issue in
Wyoming, certainly a major issue in America, are we satisfied
that we pay, by far, the highest prices in the world for the
same damn drugs that are sold around the world for a fraction
of the price that is sold in the United States? Are we happy
that the five major drug companies in the world made $50
billion in profit last year, pay their CEOs exorbitant
compensation packages, and yet one out of five Americans cannot
afford the medicine that doctors prescribe? How insane is that?
You go to the doctor, they write a prescription, and you can't
afford to fill that prescription, and then you end up in the
emergency room or you end up in the hospital. Are we satisfied
that in rural America, parts of urban America, there are no
doctors?
I think Senator Roberts a couple of years ago--Senator,
correct me if I'm wrong, but you were telling me I think in
parts of Kansas there are counties where there are no doctors.
That's what you said a couple of years ago. Is that correct?
Yes. And I was in Mississippi. In large parts of Mississippi,
there are no doctors. And yet we have a system that says if you
are a doctor, you're going to graduate medical school $400,000
in debt, so you're going to become a dermatologist on Park
Avenue, New York, but you're not going to go to rural Vermont
or rural Wyoming. So we have to rethink healthcare in general.
But I'm glad that Senator Enzi has called this hearing,
because when we look at healthcare, it is a really, really
serious problem in rural America, part of many other problems
that rural America faces.
I was told recently by somebody who seemed to be
knowledgeable that two-thirds, Senator Enzi, two-thirds of
rural counties in America are depopulating, two-thirds. I know
in our most rural areas in Vermont, it's happening. In
Burlington, Vermont, doing very, very well economically, rural
American farms going out of business, et cetera, et cetera.
We have to do a lot of thinking. But I would hope that at
the end of the day, we understand that healthcare is a right,
not a privilege, that the function of healthcare is not to make
huge profits for insurance companies and drug companies, that
there's something obscenely wrong when we spend twice as much
per capita on healthcare as the people of other nations, who
often have better healthcare outcomes than we do.
But thank you again, Senator, for calling this meeting.
Senator Enzi. Thank you, Senator Sanders.
I'll now provide a brief introduction of our panel and then
invite each of you to give a 5-minute statement, and then we'll
do some questions.
First, I'd like to introduce the Wyoming Commissioner, Tom
Glause. He was appointed Commissioner of the Wyoming Department
of Insurance by Governor Mead on January 3, 2015, and he has a
deep understanding of the elements of what drives healthcare
costs in the State of Wyoming and is an active participant on
several committees and working groups at the National
Association of Insurance Commissioners. He is also a prime
source for me when I have a question about healthcare and comes
out regularly to appear.
Next I welcome Morgan Reed of App Association. Morgan Reed
is originally from Alaska, so he understands rural health
issues personally, and he's an expert on the ways that health
information technology can improve patient care.
Senator Alexander apologizes for not being able to be here
to introduce the next witness. Mr. Levine is Executive
Chairman, President, and Chief Executive Officer of Ballad
Health, which operates 21 hospitals in Virginia and Tennessee.
In April he had the pleasure of visiting Children's Hospital in
Johnson City, which is part of Ballad's system, where Senator
Alexander witnessed firsthand some of the great work Mr. Levine
and his team are doing on the front lines of opioids by helping
treat newborn children who suffer from neonatal abstinence
syndrome. Prior to Ballad Health, Mr. Levine was President and
CEO of the Mountain States Health Alliance. He has significant
experience in state government as Secretary of Louisiana's
Department of Health and Hospitals and as Secretary of
Florida's Agency for Healthcare administration under Governor
Bush. In those roles he helped oversee the response to 12
hurricanes and led the effort to improve Louisiana's child
immunization rates from 48th in the Nation to second. Tennessee
ranks second in the Nation with the highest number of rural
hospital closures, so Mr. Levine knows very well the challenge
facing rural providers today. I look forward to hearing his
thoughts.
Then, Senator Sanders, did you want to introduce the next
witness?
Senator Sanders. I'm very pleased to welcome Dr. Deborah
Richter to be with us. I've known Dr. Richter for many, many
years. She is an expert and a hard worker in dealing with
people with addiction issues. But more importantly, in Vermont,
she has probably been the leader in the fight to make sure that
all of our people have healthcare as a right, not a privilege.
In Vermont we're making some progress in that area, and the
progress we're making Dr. Richter has a lot to do with. So, Dr.
Richter, thanks so much for being with us.
Senator Enzi. Okay, we'll get started on the testimony.
Mr. Glause.
STATEMENT OF TOM GLAUSE, COMMISSIONER, WYOMING DEPARTMENT OF
INSURANCE, CHEYENNE, WY
Mr. Glause. Thank you, Chairman Enzi, Committee Members.
I'd like to invite you to pull on your cowboy boots and take a
walk through rural America with me as we discuss the issues
regarding healthcare delivery in rural areas. My son Seth is a
professional bull rider----
Senator Enzi. Is your mic on? There should be a little red
light that comes on.
Mr. Glause. I'll talk closer to it.
Senator Enzi. That works. Thank you.
Mr. Glause. My son Seth is a professional bull rider. In
2012, he was on the verge of winning a world championship. At
the fifth round of the national finals rodeo that year, he had
drawn a bull named Canadian Tuxedo. That bull came out of the
chute spinning hard to the right. Somehow, Seth managed to stay
on for the entire eight seconds. But as he was dismounting the
bull, his arm came over the back of the bull as the bull kicked
and hyperextended his shoulder. During the course of the next
two years, he had four major surgeries on his shoulder. None of
those surgeries occurred within the State of Wyoming, which
leads me to the first topic that I would like to address with
you, and that is a lack of providers in rural areas.
Wyoming only has 179 doctors per 100,000 people and, mind
you, our population is only 585,000 to start with. So to do the
simple math, that means we only have about 1,100 doctors
servicing over 97,000 square miles. That's only 50 doctors per
100,000, below the national average.
It's no secret that it's more expensive to deliver
healthcare in rural areas. Wyoming has the second-highest
insurance rates in the country. Contributing to those costs are
long distances between towns and fewer providers. Smaller
communities simply cannot afford the multi-million-dollar
equipment that is necessary to practice medicine in today's
world. Thermopolis, Wyoming, a town of 2,000 people in central
Wyoming, simply does not have the population base to amortize
the cost of an MRI machine over the more urban areas.
Also contributing to the problem is 70 percent of the
population in Wyoming lives within 70 miles of a state border,
and we see a large out-migration of healthcare delivery to more
populated areas.
Another area of concern in Wyoming is the Medicare
reimbursement rate. The two largest hospitals in the state
report that Medicare reimburses them only 65 percent of their
actual cost and that Medicare patients account for 50 percent
of their book of business. This amounts to a large cost
shifting to the non-Medicare population. In short, that means
that they have to make up for the cost of that care by passing
it on to those with private insurance.
Please remember, healthcare costs drive insurance costs,
not the other way around.
In the short time I have here, I would like to ask you to
consider several suggestions for improvement.
We need to find a way to incentivize residents entering the
medical profession in rural areas. Simply stated, we need more
doctors in rural areas.
We need to increase programs to reduce smoking. Wyoming has
a higher than national average rate of smoking. I believe it's
19.6 percent. The image of the Marlboro Man riding down off the
mountains chasing the horses needs to disappear as we improve
our health status in Wyoming.
We also need to increase price transparency. People need to
know that they're getting low-cost medical care, but they need
to be assured that they are also getting quality care. Try
finding out how much it costs to get a procedure done at a
local hospital and it's nearly impossible.
We also need to increase the Medicare reimbursement rate so
we don't have that cost shifting. I would encourage you to
support suspending the health insurance tax after 2019.
Air ambulance also needs to be addressed to give states
greater flexibility in addressing air ambulance service in
rural communities.
The people in Wyoming and all of rural America deserve
quality, affordable, and accessible healthcare. Thank you.
[The prepared statement of Mr. Glause follows:]
prepared statement of tom glause
Good afternoon. My name is Tom Glause. I am the Insurance
Commissioner for the State of Wyoming. I would like to thank this
Committee and especially Wyoming Senator Mike Enzi for the opportunity
to address you today. In our short time together, I plan to discuss
several of the issues and concerns facing health care delivery and
health insurance in rural or frontier states like Wyoming and to
provide you some considerations for changes.
Numerous studies report that access to healthcare is important for
many reasons that effect the physical and mental well-being of our
citizens. \1\ However, in rural settings healthcare and health
insurance face additional access and affordability challenges.
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\1\ Health care effects include overall physical, social, and
mental health status, prevention of disease, detection and treatment of
illnesses, quality of life, preventable death and life expectancy as
identified in Healthy People 2020, https://www.healthypeople.gov/2020/
leading-health-indicators/2020-lhi-topics/Access-to-Health-Services.
Rural residents often experience barriers to health care that limit
their ability to obtain the care they need. Increased cost of health
care in turn increases health insurance costs. We must remember that
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health care costs drive insurance costs.
I would like to outline several areas in which rural residents face
challenges in health care and health insurance:
Access. Rural areas often have fewer medical providers and
transportation limitations to reach services that may be located at a
considerable distance. Further, rural residents have difficulties in
the ability to take paid time off of work to use such services.
Frankly, farmers and ranchers don't have ``days off'' from tending to
livestock. Further, 43.4 percent of uninsured rural residents report
that they do not have a ``usual source of care.'' \2\, \3\ Only 24
percent of rural residents can reach a top trauma center within an
hour. Rural areas suffer 60 percent of America's trauma deaths despite
having only 20 percent of the Nation's population. Necessary and
appropriate services must be available and obtainable in a timely
manner.
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\2\ June 2016 ASPE issue brief; https://aspe.hhs.gov/system/files/
pdf/204986/ACARuralbrief.pdf.
\3\ ``Usual source of care'' (USC) refers to the provider or place
a patient consults when sick or in need of medical advice.
Available and Affordable Health Insurance Coverage. Rural areas
tend to have fewer insurance companies offering plans. \4\ Wyoming has
just one carrier on the Marketplace and two carriers in the Small Group
market. Premium increases tend to be higher where there is less
competition among insurers. Although 2019 rates are flat, Wyoming saw
2018 plans average increases of 48.6 percent for individual plans and
30.7 percent for small group plans.
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\4\ Geographic Variation in Health Insurance Marketplaces: Rural
and Urban Trends in Enrollment, Firm Participation, Premiums, and Cost
Sharing in 2016, researchers from the RUPRI Center for Rural Health
Policy Analysis, August 2016.
Hospitals in Wyoming report that Medicare reimbursement is just 65
percent of the actual costs. This low reimbursement rate results in
cost shifting to the non-Medicare population. Rising costs of care
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result in rising insurance rates.
Rural residents often have limited financial resources to pay for
services, including available and affordable health insurance that is
accepted by their provider. Rural uninsured are more likely to delay or
forgo medical care because of the cost of care compared to those with
insurance. Nearly 30 percent of rural residents report delayed care or
report they did not receive care in the previous year due to the cost.
Workforce Shortages--Having an adequate health workforce is
necessary to providing that ``usual source of care.'' A shortage of
healthcare professionals in rural America can limit access to care. \5\
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\5\ In September 2018, rural areas made up 57.27 percent of the
primary care health professional shortage areas. See data.HRSA.gov
Preformatted Report, ``Shortage Areas, Health Professional Shortage
Area (HPSA)--Basic Primary Medical Care: Designated HPSA Statistics.''
Medical Service Delivery Challenges--It is more challenging to
deliver healthcare services in sparsely populated areas. Small
communities are unable to support full-time physicians for many medical
specialties, and the fixed costs of multi-million-dollar hospital
equipment cannot be spread across as many patients as in urban or
densely populated areas. Rural uninsured face greater difficulty
accessing care due to the limited supply of rural healthcare providers
who offer low-cost or charity healthcare. \6\ Advanced technologies and
expensive medical equipment are cost prohibitive to smaller facilities
and communities.
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\6\ Kaiser Family Foundation, 2014, 2016 issue briefs, https://
www.kff.org/uninsured/report/the-uninsured-a-primer-key-facts-about-
health-insurance-and-the-uninsured-under-the-affordable-care-act.
Privacy/confidentiality. Social stigma and privacy concerns are
more likely to act as barriers to healthcare access in rural areas.
Rural residents need confidence in their ability to use services
without compromising privacy. Residents may be concerned about seeking
care for issues related to mental health, substance abuse, sexual
health, pregnancy, or even common chronic illnesses due to privacy
concerns. This may be caused by personal relationships with their
healthcare provider or others that work within the health care
facility. In addition, concerns about other residents noticing them
utilizing services such as mental healthcare can be a concern.
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Integration of behavioral health services with primary care can help.
Impact on Wyoming. All of these rural population factors affect the
people of Wyoming. As a result, Wyoming's insurance rates are generally
regarded as the second highest in the Nation. \7\ Wyoming is truly the
land of wide open spaces, but that claim comes with a price. We are the
least populated state in the Nation in the tenth largest geographic
area of approximately 98,000 square miles. \8\ We know the impact of
long distances between towns and medical providers and we know the
effect on health insurance costs. Wyoming knows the impact of having
fewer medical providers and limited specialists. Wyoming has just 178
physicians per 100,000 population compared to the national average of
229. \9\
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\7\ Survey rankings vary depending upon criteria evaluated. Price
alone doesn't reflect access, availability, quality of care, and
effect. See e.g. ``Health Insurance Coverage of the Total population,''
Kaiser Family foundation, KFF, https://www.kff.org/other/state-
indicator/total-population/'currentTimeframe, ``Health Insurance Rates
by State,'' https://howmuch.net/articles/health-insurance-rates-by-
state; ``Best and Worst States for Health Care,'' https://
wallethub.com/edu/states-with-best-health-care/23457/.
\8\ Wyoming has a total population of 585,501 in a geographic area
of 97,814 sq. miles.
\9\ Skillnan SM, Dahal A. Wyoming's Physician Workforce in 2016.,
Seattle, WA:WWAMI, Center for Health Workforce Studies, University of
Washington, Feb 2017.
Additional factors that contribute to Wyoming's high insurance
rates are that many residents seek medical care from out-of-state
providers. Approximately 70 percent of Wyoming's population lives
within 70 miles of a state border and larger urban centers with medical
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care.
Lastly, according to the Centers for Disease Control and Prevention
(CDC) the prevalence of cigarette smoking among U.S. adults is highest
among those living in rural areas. \10\ Unfortunately, Wyoming has a
higher than average smoking rate. \11\
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\10\ https://www.cdc.gov/tobacco/disparities/geographic/index.htm.
\11\ https://truthinitiative.org/tobacco-use-wyoming.
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Possible Solutions or Areas for Development:
I don't believe in merely exposing a problem without offering areas
for development or change. I offer the following suggestions:
1. Allow a lower medical loss ratio (MLR) for insurance
carriers who cover rural areas because the administrative costs
per person are higher for rural areas. Allowing insurers to
have a somewhat higher allowance for higher administrative
expenses and profits would make it easier and more attractive
for them to operate in rural areas. If more insurers are
willing to operate in rural areas, their presence can increase
competition and bring premiums down even more than the amount
that the premium would increase because of the lower MLR. Also,
if there were an increase, subsidized consumers would be
protected by the structure of the premium tax credit, though of
course unsubsidized consumers are not.
2. Allow states more flexibility in setting rating areas or
rating rules to provide more affordable options in rural areas.
States could use rating areas to help spread the higher cost of
rural coverage across both rural and urban areas of a state.
3. Create a Federal grant program to help states work with
providers and carriers to provide lower-cost and higher-quality
care in rural areas. The funds could be used to assist rural
hospitals and clinics, promote telemedicine, and improve
transportation. By funding these kinds of services through
Federal grants, they don't have to be paid for by enrollee
premiums, leading to lower rates for all consumers.
4. Fund Association Health Plans for Farmers/Ranchers to
provide more options as proposed in the Farm Bill
reauthorization. Providing initial funding for associations of
farmers can help introduce needed competition to rural
insurance markets. While co-ops under the ACA did not prove to
be successful, agricultural associations--like the Western
Growers Association--have demonstrated a proven model for
independent businesses to band together to meet their health
care needs.
5. Increase the availability and proper use of telehealth.
Through telehealth, rural patients can see specialists in a
timely manner while staying in their home communities.
6. Increase transparency in cost of services. Studies have
documented wide differences in the cost of services, even when
accounting for differences in income, demography, and health
status within regions. Increase transparency on Medicare
reimbursements, cost shifting, and rate determinations.
7. Increase provider competition. Lack of provider competition
in some geographic areas gives available providers market power
to set rates for services. A study by the National Bureau of
Economic Research found that prices charged by hospitals in
monopoly markets was 12 percent higher than in markets with
four or more hospitals. \12\
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\12\ ``The Price Ain't Right, Hospital Prices and Health Spending
on the Privately Insured,'' Cooper, Craig, Gaynor, van Reenen, NBER
Working Paper No. 21815, May 2018.
8. Increase competition among health insurers. When there is
more competition insurers seek lower rates and gain greater
market share. More enrollees means insurers can spread risk
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across a greater population base and reduce premiums.
9. Increase programs to reduce smoking. The negative health
impact of smoking is widely known. Greater education and
programs to reduce smoking in rural areas may go a long way in
reducing health and insurance costs.
10. Support legislation to continue the suspension of the
Health Insurance Tax (HIT) beyond 2019 and to restrict balance
billing. The HIT tax is paid by insurers but the cost is passed
on to consumers. \13\ Consumers too often receive unexpected
bills from out-of-network providers, often for thousands of
dollars. This can occur even when consumers choose in-network
facilities. While some states have taken action to limit this
practice, congressional action is needed to address federally
regulated plans and to spur further state protections. Balance
billing has been particularly egregious with some air ambulance
companies.
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\13\ See e.g. ``Legislation to suspend the Health Insurance Tax
Will Help Make Premiums More Affordable,'' AHIP, https://www.ahip.org/
legislation-to-suspend-the-health-insurance-tax/.
In Wyoming, we depend on air ambulances and want to keep the
industry strong, but we do not want consumers caught in the
middle of billing disputes between insurers and service
providers. Wyoming and other states are prevented by Federal
law from addressing the excessive billing practices of some
companies. With the Federal Aviation Administration (FAA)
Reauthorization moving through Congress, there's an opportunity
to address this concern and give insurance commissioners the
authority they need to regulate effectively in their states.
Although FAA is not within the jurisdiction of this Committee,
but I hope all Senators will support the language in the House
version of the FAA bill to bring more transparency and consumer
---------------------------------------------------------------------------
protections to the air ambulance industry.
Thank you again for the opportunity to provide some input on the
health care and health insurance picture in rural America.
______
Senator Enzi. Thank you.
Mr. Reed.
STATEMENT OF MORGAN REED, PRESIDENT, APP ASSOCIATION, EXECUTIVE
DIRECTOR, CONNECTED HEALTH INITIATIVE, WASHINGTON, DC
Mr. Reed. Thank you, Mr. Chairman. My name is Morgan Reed.
I'm the President of the App Association and the Executive
Director of the Connected Health Initiative, a coalition of
doctors, research universities, patient advocacy groups, and
leading mobile health tech companies. Our organization focuses
on clarifying outdated health regulations and using digital
health tools to improve the lives of patients and their
doctors.
Constituents in rural America face serious challenges in
getting cost-effective, quality care. People are too far away
from healthcare services. The cost, frankly, is too much, and
it's likely to get worse. By 2030, more than 70 million
Americans will be over the age of 65. By 2025, we will have a
shortfall of more than 90,000 physicians. And while about 20
percent of Americans live in rural areas, only 10 percent of
physicians practice there. Finally, 44 percent of rural
hospitals are currently underwater and are at risk of closure.
Yet we live in a world where every person can pay their
mortgage, monitor their package delivery, review their child's
homework, all while sitting in the waiting room of their
doctor, who, by the way, can't use those same technologies for
digital health. What's going on that rural caregivers can't
better engage with patients using the tools that every single
one of you currently have in the palm of your hand or on your
wrist? Why is it that CMS reimburses $1 trillion a year but
can't reimburse telehealth and remote monitoring in rural areas
in a meaningful way? Why doesn't the system help doctors to
treat patients and not the keyboard?
This hearing takes place at a critical moment for
healthcare in rural America, and it is of personal importance
to me. I was born and raised in Alaska, and my father is from a
town of 500, and I have friends and family where there are no
roads and where there is not a single healthcare professional
within 500 miles. So I guess we're all kind of out-ruraling
each other. I've got the 500-mile range. And yet Federal
agencies can't even agree on what rural means.
There's a great chart in my written testimony which shows
four qualified rural health clinics in extremely remote
counties in Virginia that agencies like USDA and FCC rightfully
consider rural. Yet incomprehensibly, CMS does not consider
these objectively rural areas to be rural. The University of
Virginia Center for Telehealth finds itself unable to help the
very people for whom getting to a doctor quickly is an
insurmountable problem.
It's not just a Virginia problem. Throughout America,
academic and other medical centers find CMS' system governing
telehealth is basically broken. Rather than attempt to get five
Federal agencies to agree on the definition of rural, we think
it's best for all of your constituents to have access to
telehealth and digital medicine, regardless of how close they
are to Main Street.
For patients, remote monitoring technologies are life-
saving tools. One of our steering committee members makes a
foot mat you stand on for 20 seconds when you're brushing your
teeth. It detects foot ulcers up to 5 weeks before they present
clinically. This tech is not only more efficient than other
methods, but it cuts down on hospital bills and ultimately
saves limbs. Doctors like it because the patient stays engaged,
but reimbursement under Medicare remains a question mark.
We're all familiar with the horror stories from doctors
about EHR adoption and the epic burnout we see as a result.
Doctors find EHRs can create extra work and ultimately prevent
entered data from being used predictably as part of machine
learning or augmented intelligence systems. For taxpayers, it's
about providing the right incentives for the right things at
the right time. And when it comes to preventive health, this
begins with expansion of the CBO scoring window, and I want to
thank Senator Bennett for his support for the Preventive Health
Savings Act. That's a good start. Preventive medicine can do
much more.
You mentioned Mississippi. The University of Mississippi
Medical Center's telehealth program would save the State of
Mississippi $189 million in Medicaid if just 20 percent of
Mississippi's diabetic population were enrolled. Just think of
the taxpayer savings for the whole country if CMS actually
supported what UMMC is doing today.
Here are a couple of actions that Congress can hit in order
to make the mark.
First, pass the Connect for Health Act. I want to thank
Senators Kaine, Bennet, and Murkowski for co-sponsoring. It
would clarify that Medicare covers tech-driven tools that
enhance efficiency and clinical advocacy, including the removal
of outdated restrictions on 1834(m).
Second, CMS should provide reimbursement and incentives for
collecting and using patient-generated health data.
Third, Congress should file down regulations like the anti-
kickback statute and Stark Law that allow providers to get
technology into the hands of patients.
Finally, Congress should support the use of unlicensed
spectrum, including television white space technology, to help
cover rural populations and give them the high-speed broadband
that can help make this a reality.
We are all part of the system, either as patients or
caregivers. The least we can ask is for a system that treats
us, whether we are in rural or urban areas, as real people, not
just boxes on a spreadsheet.
Thank you very much, and I look forward to your questions.
[The prepared statement of Mr. Reed follows:]
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Senator Enzi. Thank you.
Mr. Levine.
STATEMENT OF ALAN LEVINE, EXECUTIVE CHAIRMAN, PRESIDENT, AND
CHIEF EXECUTIVE OFFICER, BALLAD HEALTH, JOHNSON CITY, TN
Mr. Levine. Thank you, Mr. Chairman. My name is Alan
Levine. I'm the Executive Chairman of Ballad Health, a 21-
hospital integrated health delivery system serving 29 counties
in Southwest Virginia and Northeast Tennessee. I also formerly
served as the Secretary of Health for the State of Louisiana,
and in Florida.
I'm pleased to provide this oral testimony as a supplement
to the written testimony I've submitted, and I look forward to
answering your questions about it later.
Tennessee has made many contributions to America, and
yesterday I had the opportunity to visit one such gift, the St.
Jude Children's Research Hospital, a place in Memphis where
research and precision medicine are creating cures for
children's cancer. And as I toured the hospital, it occurred to
me that just more than an hour away in a small rural community
in Tennessee, a local hospital was closing that very day and
people were losing their jobs. This was the ninth such closing
in Tennessee since 2010.
What a vivid picture that was of the increasing distance
between our urban and rural communities. In one, Memphis, we
have research in progress, led by a world-renowned institution,
and in a rural community just more than an hour away, the
community lost its hospital.
Evidence is mounting that our policies are having
unintended consequences on our rural health safety net and our
non-urban hospitals. Almost 90 rural hospitals nationwide have
closed in the last 8 years, and 673 rural hospitals are
reported to be at risk of closure. Forty-four percent of them
have negative operating margins in 2018, up from 40 percent
just 12 months earlier.
The healthcare culture of any community revolves around its
hospital. As non-urban hospitals struggle and rural hospitals
close, the opportunity to improve the health of these
communities is diminished. Policies intended to transform the
government payment system from fee-for-volume to fee-for-value
are complex and frankly seem more appropriately targeted to
larger urban and suburban hospitals which have both the
critical mass of patients and the resources to test these
models; models, I would add, which are constantly changing and
which have led in part to increases in bad debt, uncollectible
revenue, increases in the number of physicians who give up
private practice and either seek employment or retire, and to
unpredictability of cash-flow for those hospitals. Smaller non-
urban and rural hospitals have neither the patient volume nor
the sophistication to deploy these new reimbursement models.
As the government payers move toward shifting more risk to
hospitals, smaller hospitals and those with debt simply do not
have the balance sheet strength to succeed and certainly will
struggle to invest in the infrastructure needed to improve the
management of chronic care and population health, which are
really the intended outcomes of all these policies to begin
with.
Consider that in non-urban and rural communities, which
make up almost 95 percent of our Nation's land area, they are
seeing population stagnation or decline, and due to the
policies intended to reduce inpatient utilization, policies I
think we all agree with, the combination of no population
growth with reducing inpatient utilization means the non-urban
and rural hospitals are stuck in a business model which is
destined to fail.
For example, as the inpatient utilization rates in
Nashville, Tennessee declined from 110 per thousand to less
than 100 per thousand, the population in Nashville grew. So the
hospitals have thrived there because the economy was expanding
and the population was growing. But in my region, where many of
the counties are seeing population declines as inpatient use
rates decline, there is no population growth to sustain the
hospital.
We are therefore seeing year-over-year declines in
inpatient services in these rural markets. In most cases, this
begins a death spiral. Reduced revenue means lack of capital to
invest in technology equipment and recruitment of doctors. Add
to this the complexity of payment changes imposed by state and
Federal Governments and the inability of rural hospitals to
deploy even the simplest of these payment changes and you end
up with a rural hospital failure.
I don't think the responsible answer is to either just pay
more or let rural hospitals close. I think the choice is
broader than that, but we need to focus on the real problem we
are trying to solve. We are not trying to save hospitals for
the sake of bricks and mortar. We actually have real problems
in these communities we need those hospitals to help solve.
Rural Americans have a higher rate of death from disease, a
higher rate of death from overdose, and the incidence of
complications and deaths for moms and babies is higher in rural
areas due to the same factors that lead to higher rates of
disease in rural communities. So rather than just throw money
at the problem, I think we can build a bridge to a rural safety
net that serves today's rural health needs better.
My written testimony highlights steps that I hope we can
talk about during the Q&A, and I look forward to discussing the
steps that can build this bridge to a sustainable rural model
and a sustainable business model. I do believe the area wage
index is a major problem for our country. Senator Alexander,
Senator Kaine, you guys have been champions in trying to help
deal with that issue. That would be one of the single most
important things you can do for rural hospitals and non-urban
hospitals.
I think our rural hospitals can be repurposed. I think
there are services like mental health, addiction, emergency
services, and maternal services for women and babies where
rural hospitals, we have a need for those services rather than
some of the high-end acute services that we might have needed
30 years ago. So repurposing of these hospitals is a real
opportunity.
I look forward to answering your questions and to the
dialog we're about to have. Thank you.
[The prepared statement of Mr. Levine follows:]
prepared statement of alan m. levine
Chairman Enzi, Chairman Alexander, Ranking Member Sanders, Ranking
Member Murray, and Members of the Committee, thank you for the
invitation and opportunity to appear before you this afternoon.
My name is Alan Levine, and I currently serve as the executive
chairman, president and chief executive officer of Ballad Health, a 21-
hospital, not-for-profit integrated healthcare delivery system uniquely
created through state action immunity upon the merger of two regional
health systems. We serve 29 counties in the Appalachian region of Upper
East Tennessee, Southwest Virginia, East Kentucky, and Western North
Carolina.
Thank you for inviting me to discuss the variety of healthcare
challenges facing Americans in rural areas, and the concerns those of
us responsible for delivering health care services have with respect to
ensuring access and improving health. As the evidence shows, rural
hospitals and clinics are facing unprecedented pressure. Researchers at
the University of North Carolina have identified almost 90 rural
hospital closures across the country in just the last 8 years, and
iVantage Health Analytics has reported that 673 other rural hospitals
are at risk of closure due to mounting financial pressures.
These hospitals are the epicenter of most of these communities, not
just for health care but for community-wide economic stability. In
addition, the dated reimbursement models and bricks-and-mortar approach
to health care of yesterday are undermining these assets. Payment
policies and well-intended policy reforms are overly sophisticated and
bureaucratic. While the jury is out on whether these policies, which
continue to quickly evolve, will work, it is highly likely most of the
thought behind the policies is aimed at urban and higher density
markets where much of the spending occurs. In my view, not enough
thought has gone into how these policies weigh on smaller, non-urban
and rural community assets. The fragmentation of payment and the weight
of these policies undermine efforts to transition these rural assets
into what is actually needed in these communities. One need look no
further than the closings of hospitals, and the financial performance
of the largest rural and non-urban hospital providers--both publicly
traded and not-for-profit--to validate this point. We have before us a
situation where it seems the only two options are: provide more funding
for rural hospitals through convoluted formulas and one-size-fits-all
rules, or let rural hospitals close.
I firmly believe there are options in between these two extremes
which can help sustain our rural and non-urban communities.
Let's face it. Rural economies are continuing to struggle, and are
not yet enjoying the full benefit of the recovery. According to the
National Rural Health Association, only 3 percent of the job growth
that has occurred since the Great Recession has happened in rural
areas, and between 2010 and 2014, more businesses closed than opened in
rural areas. Today across the Nation, rural and non-urban hospitals
find themselves in negative feedback loops, increasingly leading to
bankruptcy and closure. It starts with declining revenues caused by
declining inpatient utilization rates. Combining declining inpatient
use rates with stagnant or declining populations is a dangerous mix for
a rural hospital or health system. Add to this mix the multitude of
Federal and private insurer payment policies designed to contain or
even reduce per-unit reimbursement, which remains tied to the fee-for-
service system, and the hospitals lose the necessary revenue to service
fixed costs. These hospitals have also amassed debt they must service,
and the ongoing fixed costs of operating a hospital continue to grow.
If the variable margins decline, the financial model simply does not
work. Then, add to this scenario the highly complex changes being
imposed by Medicare and Medicaid, and the cost of compliance, and you
are left with hospitals that simply don't have a chance, particularly
if they are not part of a larger health system. But even if they are
part of a larger system, those same policies that undermine the
financial health of the larger regional non-urban hospitals is
beginning to lead to decisions to close or alter the relationships with
rural hospitals. This very instance is playing out today in West
Tennessee, where a regional not-for-profit system acquired a rural
hospital, and closed it. The process of failure is familiar to us all.
Inability to service fixed costs translates into reduced cash-flow,
which negatively impacts employee and physician recruitment and
retention, reduced investment into capital assets like newer equipment
and technology, and eventually the decline of the physical structure
itself.
As these investments deteriorate, patients with means (and
commercial insurance) travel to urban and suburban hospitals for
orthopedic, cardiovascular and other procedures, which our current
reimbursement system disproportionately rewards with higher margins.
These margins are used by hospitals to offset losses in most other
service lines of a hospital. Rural hospitals are thus left with a less-
favorable case mix and payor mix, leading to further declines in
revenue and margin.
This is the death spiral.
But, as I have stated, these hospitals don't have to close. There
is another option. Transitioning these hospitals to what is needed
today can be financially beneficial and can serve a major public health
policy purpose. Today's rural hospital does not need to be providing
high acuity intensive services or high acuity surgeries. Indeed, it may
be better for patients to go to larger regional facilities that sustain
the volume necessary to provide high quality intensive services. But,
since 80 percent of our Nation's land mass is rural, access to many
needed services is hampered by geography--this is geography that rural
hospitals can help serve where serious service gaps exist. By building
a bridge from yesterday's fee-for-service, bricks-and-mortar model
focused on payment for each inpatient encounter or surgery to one where
rural hospitals become the epicenter for the evolved needs of mental
health, addiction services, primary care, chronic care for certain
chronic conditions, obstetrics and neonatal care, emergency services,
rehabilitation, specialty access through technology solutions, and
other services, we can create new opportunities for revenue and job
growth, and ultimately, we can serve the critical needs of these rural
communities.
The area of Southern Appalachia served by Ballad Health serves as a
case study of sorts. As an example, just last month, I met with school
superintendents from throughout our region. Many of these
superintendents oversee rural school systems. These superintendents
shared their serious concerns for students who are increasingly showing
up for school in the fall with serious mental health issues, addiction,
depression and suicidal tendencies. Their teachers don't possess the
skills needed to manage the serious issues these students come to
school with, and the school systems in rural areas certainly lack the
resources to manage this problem on their own. Given the distant nature
of the hospitals throughout the region, and the location of the
schools, there is no easy solution, but there is a solution. The
combination of the use of technology for assessment of these kids by
qualified counselors who may not even live in those communities with
the resources of the rural hospital to offer competent crisis services
with a bridge to treatment makes perfect sense. But the payment system
doesn't lend itself to supporting these costs or this model for rural
communities.
This is where Ballad Health, and its unique model, can be a bridge
as the larger rural health policies evolve. The vast majority of the 29
counties Ballad Health serves have flat or negative population growth.
Our hospitals are also experiencing above-average declines in inpatient
utilization rates. Sixty-seven percent of our payor mix is Medicare or
Medicaid and another 6 percent is self pay. The fastest growing segment
of our patients who are not paying are those who have insurance but
cannot pay the higher deductibles. In addition, just as rural Americans
are older and sicker than their urban counterparts, they also suffer
higher rates of chronic disease such as heart disease, diabetes,
obesity, substance use disorder, and untreated mental illness. Given
the higher incidence of chronic conditions that make pregnancy more
challenging in rural areas, it follows that rates of complications and
maternal/infant deaths are higher, too. In 1985, 24 percent of rural
counties lacked obstetric services. Today, 54 percent of rural counties
lack hospital-based obstetric services. More than 200 rural maternity
programs closed between 2004 and 2014. All of these issues are faced by
Ballad Health and the rural communities we serve.
While rural populations account for only about 20 percent of our
Nation's population, they populate approximately 80 percent of our
Nation's land mass. In some regions, this land mass is complicated by
the significant geographic barriers and distance that make the
provision of services even more difficult.
These are some of the reasons our community leadership came
together to create a new model of healthcare delivery. Formed only
eight months ago by the merger of two competing health systems serving
the same region for many decades, Ballad Health represents a
transformation in the way we are approaching these challenges in our
part of the country.
Both legacy systems came to recognize that our status quo was no
longer sustainable. While we separately invested millions of dollars in
services and technologies designed to compete with the system down the
road, our community was becoming less healthy, and our margins still
continued to decline. We each recognized obtaining synergies of
increased scale was imperative, yet selling our systems to larger
outside hospital companies or systems would have likely resulted in the
closure of some rural hospitals, the devastating loss of at least 1,000
back-office jobs in our region, and as studies have shown happens, the
larger systems would have likely increased pricing as they sought to
leverage their size in negotiations with insurers and government
payors.
Unfortunately, Federal anti-trust policy in health care is solely
focused on preserving competition, with little or no room to consider
the effects of market failure on health and economic conditions in
communities such as ours. Without this merger under state action
immunity laws in Tennessee and Virginia, the hit to our region's
economic stability would have been severe.
Instead, we have begun the process of reducing resources tied up in
destructive and costly duplication. We are redirecting at least $300
million of these savings to preserve essential services and to invest
in initiatives that reach further upstream of the emergency department
or the doctor's office to help address the social determinants that are
contributing to our region's poor health status.
Our efforts are an attempt to build a bridge to the future of rural
health care, but we will only succeed long-term if Federal and state
policies support what we are trying to do. While other rural hospitals
are closing, we have pledged to preserve our rural hospital facilities
and to repurpose many of them so that additional essential services can
be provided to our community.
Referencing the conversation I had with our school superintendents,
because Ballad Health retained its local governance and is a community-
based organization, we decided to become a solution to the problem.
Ballad Health intends to invest in counselors at our region's only
children's hospital to do assessments of children in our schools in
crisis. We plan to hire a counselor in each school district to serve
those children identified with serious crisis needs. Unfortunately, the
current payment system does not sufficiently support this model, but
our commitment to the community is more important than profits.
Eventually, the business model must support what we are investing in,
and that's why I'm here today. This is an example where a system
approach to genuinely improving healthcare services can benefit the
communities in the region we serve, and we hope to show this is a model
worth investing in. We would welcome a Federal investment into this
model of partnership between rural schools and hospitals as we
demonstrate how it can help solve many of our region's problems.
Of course, this model relies upon our ability to attract and retain
a high-quality and dedicated healthcare workforce. Seventy-seven
percent of counties in our country are considered Health Professional
Shortage Areas by the National Rural Health Association, and we are
impacted by this as well. Our children's hospital struggles to attract
and retain physician talent, and we are the only children's hospital
within a 2-hour drive of many residents in our region. Again, a payment
system that only rewards hospital admissions does not contribute to a
successful healthcare delivery system in a region where admissions are
declining. Instead, Federal and state policies should align to invest
in needed services for underserved areas with an eye toward evolving
existing facilities into centers of excellence for rural health care. I
imagine a day when our children's hospital can serve children who are
developmentally disabled or suffer from mental health or other
behavioral challenges, and can participate in the type of research that
will help solve future healthcare problems in rural areas. Our
children's hospital has seen a rate of neonatal abstinence syndrome
approximately four times greater than the national average, and we do
not fully know what the impact of this will be on these children as
they grow. Rural America is at the center of this problem. While urban
communities typically have the depth and breadth of specialties
necessary to address the issues in those communities and the research
strength to obtain the funding required to study these issues, rural
areas simply cannot sufficiently compete and participate.
Because of the new model we have created and are funding, our
region may receive a short reprieve, but many communities are unlikely
to be as fortunate. According to the Chartis Center for Rural Health,
40 percent of rural hospitals had negative operating margins in 2017,
and this same study found that 44 percent of rural hospitals will have
negative operating margins in 2018. Consistent with this trend, six of
Ballad Health's 14 rural hospitals had negative operating margins in
the fiscal year that just ended, in addition to two of our non-urban
hospitals. We continue to subsidize these losses as we build toward the
future. On top of this, Ballad Health provided more than $300 million
in uncompensated care last year, leading to a system-wide operating
margin of only 0.6 percent, or $12 million.
Given these realities, I applaud the Members of this Committee for
their continued leadership and efforts to facilitate passage of a
comprehensive rural health care package before the end of the 115th
Congress.
Simply put, rural hospitals and physicians need a Federal
regulatory and reimbursement environment that takes into consideration
the unique circumstances faced by the hospitals and physicians serving
the 20 percent of our population that lives in 80 percent of our
country's geography. As this Committee considers a number of weighty
issues related to health in rural areas, I would urge our policymakers
to fundamentally reframe the way we think about rural hospitals and
their role in their communities in two key ways.
First, we should stop thinking about rural health services in terms
of bricks-and-mortar facilities and start thinking in terms of the real
health problems that need to be solved in these communities. The
National Rural Health Association confirms that rural Americans suffer
disproportionately from serious health issues like diabetes and heart
disease, and they are disproportionately more likely to die from
curable cancers or drug overdose. These are not problems that can
easily be solved within a traditional bricks-and-mortar inpatient
hospital, nor can they easily be solved within our country's current
payment system.
If we want to make a real impact on improving the health of
Americans in rural areas, we need to identify the health services that
are needed in those areas and then incentivize hospitals and health
systems to come up with innovative solutions that fit their community's
individual needs. We need to utilize the data we have available to
identify the problems and then ask the rural hospitals to come to the
table with solutions. We need to identify the cost of implementing
these solutions and demonstrate the potential return on investment for
the payor community and the public. This can be done. While there is
significant up-front investment, the potential return on investment
will be undeniable.
These hospitals could benefit from renewable block funding tied to
estimable costs, as opposed to the fee-for-service model that relies
upon traditional service provision, to help create a bridge to what the
rural hospital of tomorrow should be. This cannot only help address the
real problems that exist in these communities, it can create new jobs
and help identify new purposes for old assets. At Ballad Health, we are
in the process of doing this with two of our rural hospitals in Greene
County, Tennessee. By consolidating inpatient acute care services at
one hospital, we will be able to use synergies gained through our
merger to repurpose the other hospital to provide the critical
outpatient services, behavioral health, rehabilitation, and drug
addiction treatment that are so badly needed in the community. Rather
than making the easy decision to close this rural hospital, thus
costing 600 jobs, we have found an alternative beneficial use for it.
Given the fact that these hospitals lost a combined $11 million in
2017, and $31 million in 2016, this alternative solution, which is
significantly better for the community, would only be possible within a
comprehensive health system that is truly focused on the needs of the
community it serves.
This brings to me the other point I would like to make about
reframing our thinking about rural hospitals. Providing the proper
financial incentives for rural hospitals in order to help solve
population health problems can help meet the health needs of our rural
communities, but this will only work if these rural hospitals are able
to remain open. As you consider factors that help sustain rural
hospitals, I would urge you to consider the role that many tertiary and
urban hospitals within a larger, diverse health system play in
sustaining the rural system of care. Many rural hospitals do not
operate on their own. They are often part of larger systems that rely
on the success of the regional hubs for financial viability. This is
true for Ballad Health. Fourteen of our 21 hospitals are in rural
areas, and six of those 14 hospitals had negative operating margins in
fiscal year 2018. Were it not for the margins of our tertiary
facilities, our entire rural system of care would collapse. As you
consider and construct the components of a rural health package, please
keep in mind that some of the non-urban hospitals with a predominantly
rural health system are often a lifeline for rural hospitals, and their
importance should not be overlooked.
One issue that can have a detrimental impact on both rural
hospitals and the tertiary hubs that support them is the Area Wage
Index. Our region of the country, like most others, suffers from a
shockingly low Area Wage Index within Medicare. While our AWI is
approximately 0.72, there are areas in the country with AWI in excess
of 1.9. This is a zero-sum system where, despite having done employee
wage increases every single year, our Medicare area wage index has
continued to deteriorate, as political and other considerations have
driven the wage index higher for some parts of the country. As other
areas have experienced significant annual increases, ours has
decreased. While the national average is supposed to be an AWI of 1.0,
only 10 percent of the counties in the United States have an AWI that
is greater than 1.0, while 2,600 counties have an AWI less than 1.0.
This distribution is not right, and it punishes non-urban hospitals
that in many cases are subsidizing the ongoing operation of rural
hospitals, just as it penalizes the rural hospitals themselves. I
mentioned that Ballad Health's operating margin last year was $12
million, or a 0.6 percent margin. If there were a national floor
established on the AWI of 0.874, as proposed by S. 397, it would
generate a $30 million annual impact for Ballad Health. In Tennessee,
healthcare providers in all 95 counties and all 12 core-based
statistical areas (CBSAs) are reimbursed based on AWI that are less
than 0.864, which is significantly less than the national average of
1.0. I applaud the work of Chairman Alexander (R-TN), Senator Isakson
(R-GA), Senator Warner (D-VA), Senator Brown (D-OH), Senator Shelby (R-
AL), Senator Kaine (D-VA), Senator Roberts (R-KS), Senator Cassidy (R-
LA), and Senator Jones (D-AL), many of whom are original co-sponsors of
a bipartisan bill that Ballad Health encouraged be filed to help solve
this problem. This bill, S. 397, the Fair Medicare Hospital Payments
Act of 2017, while not under the jurisdiction of this Committee, would
help save rural hospitals and would support the regional provision of
care in non-urban America. The bill is cost-neutral and would not
impact other legislative or regulatory adjustments, including the
``Frontier State Fix'' that established an AWI floor of 1.0 for North
Dakota, South Dakota, Montana, Wyoming and Nevada. This legislation has
been endorsed by the Tennessee Hospital Association, the National Rural
Health Association, the Kentucky Hospital Association, the Louisiana
Hospital Association, the Georgia Hospital Association, the Virginia
Hospital and Healthcare Association, and the Alabama Hospital
Association.
I also believe our rural hospitals could benefit from Federal
assistance in helping to build a bridge from the outdated fee-for-
service, bricks-and-mortar model to one that is responsive to our
Nation's current needs. Many rural hospitals either have debt
precluding them from additional capitalization, or simply do not have
sufficient resources to borrow the funds needed to build this bridge.
Modernization to right-size and reconfigure assets based on the
needs of the community often needs a capital investment in order to
make the transition. Community needs may include additional high-
quality diagnostics, emergency medical services, outpatient
rehabilitation services, mental health services, substance abuse
treatment services, dentistry services, and optical health services. I
would like to note that I am not advocating for simply giving away
money, as I do believe rural health systems have an obligation to
demonstrate the return on such investments, both financially and in
terms of public health benefits. These investments would be best made
in concert with effective and efficient payment reform that moves away
from pay-for-volume. A Medicaid program operating in South Carolina
that provides incentive payments to health systems that acquire,
improve, and operate rural facilities may be a good model for Congress
to consider.
I am concerned about possible policy proposals to repeal
Certificate of Need requirements, which have been advocated for by some
in Washington. Respectfully, I would argue that while many of us
support a market-based approach, we should also acknowledge that
picking and choosing the elements of the marketplace without addressing
all of the necessary elements does not create a properly functioning
market system. In a marketplace where more than 60 percent of care is
provided in a price-prescriptive government model, private insurers
reflexively copy government policies, and there is significant
intrusion by both Federal and state governments invoking certain
mandates onto providers, it is hard to imagine anyone suggesting that
the delivery of health care services exists within a free-market.
The suggestion that repealing Certificate of Need requirements in
order to bring ``market forces'' to bear, in my view, will do more harm
to our rural health system infrastructure than good. If we agree that
integration of health care and better coordination would lead to better
outcomes, then we must also agree that contributing to increased
fragmentation in rural and non-urban communities will do harm. For
instance, if Certificate of Need requirements were repealed, and a
physician-owned surgery center or diagnostic center were opened in a
rural community, based on current government rules and price setting,
not only is there no free market, but an unlevel field has been
established for competition.
Under Federal law, a comprehensive hospital is not permitted to
have physician ownership, and because of Stark Law regulations and
anti-kickback provisions, a comprehensive hospital has very limited
options for meaningfully integrating with physicians. While one
competitor in the market enjoys full financial integration with
physicians, including distribution of profits, which incentivizes
physicians to reduce costs and increase utilization of the physician-
owned facility, a comprehensive hospital is left without any such
relationship. In addition, the physician-owned facility is exempt from
Federal EMTALA and community-benefit requirements. When one competitor
has physician investment, and that competitor is not required to serve
the poor, nor does it have any other obligation to help address the
population health needs of the community, the local market is simply
not a level-competitive market. Pulling those limited resources away
from the hospital in order to provide profits to the competing
physician-owned, limited-service facility only undermines that
hospital's ability to influence the other aspects of health in that
community. If a rural or non-urban hospital loses its profitable
services to a facility that has no obligation to help solve the mental
health challenges in the region, then where will the resources come
from for the rural hospital to invest in addiction care, mental health,
or the other needed services? In this scenario, the hospital has been
further diminished, and its survival or ability to thrive is undermined
at the expense of profits for what is often an out-of-market company or
financier.
I believe there are strategies that can be deployed in rural
markets where the relationship between the hospitals and physicians can
be strengthened. In the old fee-for-service model, Stark Law
regulations and anti-kickback provisions were designed to keep
financial entanglements between doctors and hospitals from affecting
care. In a pay-for-value environment, those same laws inhibit the very
alignment needed between doctors and hospitals to reduce unnecessary
care and focus resources on prevention and chronic-care management. If
the payment system were to invest in rural hospitals that convert to
these models, and rural hospitals were permitted to create financial
alignment with physicians, then two things will happen. First, rural
communities will become more attractive to physicians who would be able
to diversify their income to include the upside benefits of the
hospital's financial performance. Second, the financial and public-
health success of the hospital, in alignment with the payment policies
that support such a transition, would virtually ensure alignment
between the physicians, hospital, and community as they seek to better
manage chronic conditions, rather than simply wait until a reimbursable
procedure is performed.
Please consider the following real-world example. In one community,
a rural hospital has general surgeons who perform a large number of
amputations, most of which are necessary due to complications from
diabetes. However, that community does not have an endocrinologist. The
reason many rural hospitals do not have endocrinologists is that
endocrinologists do not preform procedures at hospitals, and thus, they
do not generate revenue. In fact, the practice would likely lose money,
in addition to the very presence of the endocrinologist reducing the
need for hospitalizations, which is an outcome diametrically opposed to
the financial interest of the hospital. The general surgeons will see
the diabetic patients who go without management of the chronic
condition, and they will perform the amputations, which are services
for which the hospital and doctor get paid. In addition, the hospital
does an excellent job with rehabilitation services, which again, is a
service for which the hospital is paid.
However, there is an alternative: What if, noticing the high
incidence of diabetes and amputations, the hospital, in a jointly
established partnership with the physicians, chose to align and ask for
an entirely different payment model, one that paid the hospital and
physicians to invest in endocrinology services, reduce amputations, and
better manage the diabetes in the population? In that scenario, better
coordination occurs for the patient, the hospital and physicians may
invest in technology and other innovative solutions for the management
of the patients, and instead of only being paid when a procedure is
performed, the hospital and physicians are compensated based on what is
saved by the program.
The margins for this model would be better because the resources
would be more efficiently used. This is the essence of the bundled-
payments model, but I believe integration in these communities should
be able to go further than the basic concept of bundled payments.
Infusing flexibility into the financial relationships between
physicians and hospitals can have a very positive impact on both
outcomes and cost in a pay-for-value environment. It is understandable
that, in a fee-for-service environment, these relationships would be
problematic. However, they have been freely permitted in many areas,
such as diagnostics, outpatient surgery, and others. I believe
integrated models that align hospitals and physicians would open the
door to many exciting opportunities to reduce cost, eliminate variation
that leads to waste and poor outcomes, and create more flexible models
of tackling the management of chronic illness.
These opportunities may exist, but physician alignment with
hospitals must happen, and yesterday's Stark Law regulations and anti-
kickback regulations must be modernized to create these opportunities
for alignment. Holding onto fee-for-service reimbursement models and
preventing hospitals from more closely aligning with doctors will only
preserve the outdated models that are harming rural hospitals and the
health of the communities they serve.
Finally, I would like to address the need preservations of the 340B
Drug Discount Program, which is a program of vital importance to the
financial stability of our health system and our ability to serve
vulnerable and low-income patients. While no program is free from the
need for thoughtful reform, I would ask for your support in preserving
340B program eligibility for rural and non-urban hospitals as well as
children's hospitals.
We rely on these drug-acquisition savings to enable us to support
the provision of care in struggling rural areas. The estimated value of
the 340B program to Ballad Health in fiscal year 2019 is approximately
$53 million. Again, considering the fact that our total operating
margin of 0.6 percent led to only $12 million in operating surplus last
year, losing access to the savings produced by participation in the
340B Drug Discount Program would be devastating for our health system
and the patients and communities we serve.
Even with our participation in the 340B Drug Discount Program,
Ballad Health's annual drug spend continues to increase by over 8
percent annually. Without 340B participation, our drug costs would be
completely unsustainable. Reforming the 340B Drug Discount Program
should not come at the cost of bankrupting vitally important hospitals
and health systems. We stand with you in attempting to properly and
thoughtfully reform the 340B Drug Discount Program, but we must ensure
that programmatic reform does not inadvertently devastate rural
hospitals and children's hospitals across our Nation.
Much of what I have presented represents a major departure from 60
years of evolution in our health system. However, I believe such major
shifts in policy are important, and effective reform cannot be achieved
on the margins. This is why the very creation of Ballad Health
happened, and it is why our region's major employers and every
municipal government and chamber of commerce in our region encouraged
and supported the merger that created Ballad Health under the doctrine
of State Action Immunity from Federal anti-trust law, even against the
strenuous opposition by staff of the Federal Trade Commission. It is
why the legislatures of the states in which we operate unanimously
approved the structure of the merger under exemption from Federal anti-
trust law, and it is why two Governors--a Democrat and a Republican--
signed the legislation and authorized the merger under the advice and
guidance of each state's attorney general.
In short, there is a pent-up demand for trying something different.
Ballad Health took the risk and the important step of suggesting that
we want to be part of the solution rather than simply complaining about
the problem. We stand ready to be a laboratory for our Federal partners
to help solve problems, and we stand ready to test new ways of changing
the landscape of health care. Hopefully, this is just the beginning of
the dialog.
Again, I greatly appreciate the invitation and opportunity to
participate in today's hearing, and I look forward to your questions.
______
Senator Enzi. Thank you.
Dr. Richter.
STATEMENT OF DEBORAH RICHTER, M.D., FAMILY PHYSICIAN AND
ADDICTION MEDICINE SPECIALIST, AND CHAIR, VERMONT HEALTHCARE
FOR ALL, CAMBRIDGE, VT
Dr. Richter. Good afternoon, Chairman Enzi and Members of
the Committee. My name is Deborah Richter----
Senator Enzi. Hold the mic closer.
Dr. Richter. I can probably turn it on.
My name is Deborah Richter. I'm a practicing family
physician in rural Vermont, and I also have an addiction
medicine practice in Burlington. I want to thank you for asking
me to participate in this roundtable.
I'm particularly interested in examining experiences
because I see the inadequacies of our healthcare system every
day in my practice. Regarding the subject of cost, however, I
wonder whose costs we're referring to, because when I think of
cost, it is mostly in reference to system costs; that is, how
much the U.S. spends on healthcare in total. This year it is
projected we will spend $3.5 trillion on healthcare. And as
you've heard many times from Senator Sanders, we spend on
average twice per capita what other countries spend, all of
whom cover everyone while enjoying a longer life expectancy and
better health outcomes.
In every other industrialized country, healthcare is
considered a public good. There are many reasons we spend more
per capita on healthcare, not the least of which is our
enormously complex financing system which consumes 31 percent
of total healthcare costs. Much of these costs are necessary
under a multiple-payer system where each payer has different
rules, regulations, and levels of reimbursement. But under a
one-payer, publicly funded, universal system such as the one
embodied in Senator Sanders' Medicare for All Bill simplified
billing and administration could be reduced by $500 billion by
some estimates.
There have been multiple studies showing that the current
spending is more than enough to cover all Americans with
comprehensive coverage without spending in total one penny
more. So if we then focus on payer cost, this would include the
taxpayer for two-thirds of financing of healthcare, because if
you include Medicare, Medicaid, the VA, public employee health
insurance, and the tax subsidy for private employers to pay for
health insurance for their employees, that equals two-thirds of
how we're paying for healthcare. The remainder comes from out-
of-pocket payments from the public employers paying for private
health insurance.
But we must acknowledge that ultimately every penny comes
from Americans' pockets, Americans' households. Taxes, out-of-
pocket payments, higher prices for goods and lower wages--if
our employer pays for health insurance, it all comes from us.
But there are other costs to the lack of a healthcare
system. Those are the ones I witness every day. I will give you
a few examples from my practice alone in the past year. I am
one physician among thousands, and I can give you dozens of
examples. If you do the math, it's not hard to see how 37,000
patients die from lack of insurance every year. I'll give you
three examples.
An uninsured 60-year-old delayed seeking care despite being
unable to swallow solid food and losing 100 pounds. And then 18
months later, after he couldn't stand it any longer, he finally
sought care and was diagnosed with Stage IV esophageal cancer.
It was not treatable, and he has since died.
An uninsured 40-year-old woman several weeks ago, actually
several months ago, with a large mass in her breast, delayed
seeking care for a year until the mass started to bleed. She
has an aggressive form of breast cancer. She is now undergoing
treatment. Mind you, she was uninsured. She was working. She
now has Medicaid. A very aggressive form of cancer, though,
which she delayed for a year.
Then there was a 52-year-old I saw about a year ago who was
suffering from severe shortness of breath. This went on for 4
days. She thought it was her asthma and she delayed seeking
care, and it turns out it was an acute myocardial infarct, a
heart attack. She spent 3 days in the ICU. She had insurance
but had a deductible.
The uninsured and underinsured are more likely to die from
preventable illnesses than their insured counterparts, and many
of them who delay care, like the ones I mentioned, incur much
higher costs than they would had they sought care earlier. I
need not mention the human cost of these tragic cases.
We can't ignore the economic cost of the way we finance
healthcare in our country, however. The patient with the breast
mass was saving to build a house with her fiance. She couldn't
afford to do that and pay for health insurance. Millions of
people make these economic decisions every day. When they do,
the economy suffers. We are a consumer-driven economy, so the
economic multiplier effect to this regressive way we finance
healthcare is affecting us all.
I have only 48 seconds. I'd like to also mention that the
problems with our current healthcare system are magnified in
rural America, as we've heard already, because we are older,
sicker, and poorer. That is particularly true of the impact of
the opioid epidemic, as we've heard. The majority of these
programs are funded through taxes, mainly Medicaid programs,
but the problem is straining rural health systems' ability to
respond.
When we're looking at ways to reduce healthcare costs, I
would urge us to look at the primary care shortage. That's
something we all seem to have agreed on, and we can discuss
that. I'd be happy to talk about that. But I do think unless we
look at the system as a whole and look at it as a public good
where we include everyone, and look at the solution to include
everyone, we will not solve these problems.
Thank you.
[The prepared statement of Dr. Richter follows:]
prepared statement of deborah richter
Good Afternoon Chairman Enzi and Members of the Subcommittee on
Primary Health and Retirement Security. My name is Deborah Richter. I
am a practicing family physician in rural Vermont and I also have an
addiction medicine practice in Burlington VT. I want to thank you for
asking me to participate in the roundtable discussion of ``Health Care
in Rural America: Examining Experiences and Costs.''
I am particularly interested in the topic examining experiences
because I see the inadequacies of our health care system every day.
Regarding the subject of costs however, I wonder whose costs we are
referring to?
When I think of costs mostly it is in reference to system costs, that
is, how much the U.S. spends on health care in total. This year it is
projected we will spend $3.5 trillion on health care. \1\ As you've
heard many times, we spend on average twice per capita what other
countries spend. \2\ All of whom cover everyone while enjoying a longer
life expectancy and \3\ better health outcomes. \4\ In every other
industrialized country health care is a public good.
---------------------------------------------------------------------------
\1\ Centers for Medicare and Medicaid Services, 2018.
\2\ Organization of Economic Cooperation and Development (OECD),
2018.
\3\ OECD, 2018.
\4\ OECD 2018.
There are many reasons we spend more per capita on health care not
the least of which is our enormously complex financing system which
consumes 31 percent of total health care costs. \5\ Much of these costs
are necessary under a multiple payer system where each payer has
different rules, regulations and levels of reimbursement. But under a
one payer publicly funded universal system such as the one embodied in
Senator Sanders' Medicare for All bill, simplified billing and
administration could be reduced by $500 billion. \6\ There have been
multiple studies showing that we are spending more than enough money to
cover all Americans with comprehensive coverage. \7\
---------------------------------------------------------------------------
\5\ Woolhandler, S., Campbell, T., Himmelstein, D., ``Costs of
Health Care Administration in the United States and Canada'' NEJM, Aug,
2003.
\6\ Woolhandler, S., Himmelstein, D., ``Single-Payer Reform: The
Only Way to Fulfill the President's Pledge of More Coverage, Better
Benefits, and Lower Costs'', Annals of Int. Med., April, 2017.
\7\ How Much Would Single Payer Cost; A Summary of Studies
Compiled by Ida Hellander, http://www.pnhp.org/facts/single-payer-
system-cost.
If we then focus on payer costs this would include the tax payer
for 2/3 of the financing of health care, \8\ Medicare, Medicaid, the
VA, public employees' health insurance and the tax subsidy for private
employers to pay for health insurance for their employees. The
remainder comes from out of pocket payments from the public and
employers paying for private health insurance. But we must acknowledge
that every penny ultimately comes from Americans' pockets. Taxes, out
of pocket payments, higher prices for goods and lower wages if our
employer pays for health insurance all come from us.
---------------------------------------------------------------------------
\8\ Woolhandler, S., Himmelstein, D., ``Paying for National Health
Insurance and Not Getting It'', Health Affairs, Vol 21. No. 4, 2002.
But there are other costs to the lack of a health care system.
Those are the ones I witness every day. I will give you a few examples
from my practice alone in the past year. I am one physician among
thousands and I can give you dozens of examples. If we do the math it
is not hard to see how 37,000 patients died from lack of insurance. \9\
---------------------------------------------------------------------------
\9\ Woolhandler, S., Himmelstein, D., ``The Relationship of Health
Insurance and Mortality: Is Lack of Insurance Deadly?'', Annals of Int
Med, Sept, 2017.
---------------------------------------------------------------------------
Three examples:
(1) An uninsured 60-year-old delayed seeking care despite being
unable to swallow solid food and losing 100 pounds. Eighteen
months later he was diagnosed with Stage 4 esophageal cancer.
He has since died.
(2) An uninsured 40-year-old woman with a large mass in her
breast delayed seeking care for a year until the mass started
to bleed. She has an aggressive form of breast cancer.
(3) A 52-year-old woman suffering from severe shortness of
breath delayed seeking care due to mounting health care bills
from another family member. She was working full-time. They
have a $5000 deductible.
The un- and underinsured are more likely to die from preventable
illnesses than their well insured counterparts. And many of them who
delay care like the patients mentioned above, incur much higher costs
than they would have had they sought care earlier. I need not mention
the human cost of these tragic cases.
We also can't ignore the economic cost of the way we finance health
care in our country. The patient with the breast mass was saving to
build a house with her fiance. She couldn't afford to do that and pay
for health insurance. Millions of people make these sorts of economic
decisions every day. When they do, the economy suffers. We are a
consumer driven economy so there is an economic multiplier effect to
the regressive way we finance health care.
I would like to also mention that all of the above problems with
our current health care system are magnified in rural America as they
are older sicker and poorer. \10\ This is particularly true of the
impact of the opioid epidemic which started in rural America. \11\ The
Centers for Disease Control and Prevention (CDC), find that the rate of
death from opioid-related overdoses is 45 percent higher in rural vs
urban areas.
---------------------------------------------------------------------------
\10\ Wagnerman, K. ``Health Care in Rural and Urban America''.
Georgetown University Health Policy Institute, Oct., 2017.
\11\ Toliver, Z, ``The Opioid Epidemic: Testing the Limits of
Rural Healthcare'', Rural Health Information Hub, May 2016.
The majority of treatment programs are funded through taxes--mainly
Medicaid programs. But this problem is straining rural health systems
ability to respond. Many patients wait months to get treatment for
substance abuse, some give up trying. There are also indirect costs to
opioid use disorder. The foster care system is bursting at the seems.
\12\
---------------------------------------------------------------------------
\12\ Stein, P., Bever, L., ``The Opioid Crisis is Straining the
Nation's Foster Care System'', Washington Post, July 2017.
Other costs include corrections costs which again are greater on a
per capita basis in rural vs urban America. \13\
---------------------------------------------------------------------------
\13\ Sullivan, R., ``The Fiscal Impact of the Opioid Epidemic in
the New England States'', New England Public Policy Center, May 2018.
When we are looking to reduce health care costs now and in the
future we must first address the primary care shortage. Primary care
represents most of the medical office visits in any one year. \14\ In a
nutshell primary care is most of the care to most of the people most of
the time. Yet we represent less than 8 percent of total costs. \15\ We
know that when a population has free access to primary care, people
live longer and they cost the system less. \16\ As you must know there
is a severe shortage in primary care particularly in rural and poor
communities. \17\ Much of this is due to an aging workforce with 1/4
over the age of 60 in 2017. \18\ With fewer medical students choosing
primary care we will see this shortage worsen by 2025. \19\ In addition
demand has increased due to an aging population and with the expansion
of the ACA. Added to that, the burnout rate in primary care is causing
physicians to retire earlier than they might have. \20\
---------------------------------------------------------------------------
\14\ Center for Disease Control, National Center for Health
Statistics, 2015.
\15\ Koller, C., ``Getting More Primary Care-Oriented: Measuring
Primary Care Spending'', Milbank Memorial Fund, July 2017.
\16\ Friedberg, M., et al,''Primary Care: A Critical Review of the
Evidence On Quality And Costs of Health Care'', Health Affairs, Vol 29,
No. 5, May 2010.
\17\ Petterson, S., et al, ``Unequal Distribution of the U.S.
Primary Care Workforce ``, American Family Physician, June, 2013.
\18\ Petterson S, McNellis R, Klink K, Meyers D, Bazemore A. The
State of Primary Care in the United States: A Chartbook of Facts and
Statistics. January 2018.
\19\ Petterson, S., et al, ``Projecting US Primary Care Physician
Workforce Needs 2010-2025'', Annals of Family Medicine, 2012.
\20\ Pechham, C., Medscape National Physician Burnout & Depression
Report 2018, Jan., 2018.
As a practicing family physician I can see why physicians are
burning out. The administrative burden placed on us when dealing with
multiple payers with different rules, regulations and reimbursements
would drive anyone mad. Doctors report that for every hour of patient
care they spend an hour with administrative tasks. If we have any hope
of rescuing this dying profession we had better address the
---------------------------------------------------------------------------
administrative burden facing our primary care practitioners.
In sum, as a physician who has practiced in the US health care
system for the past 30 years I would say that in my experience, unless
we address the system as a whole we will not solve any of the pressing
problems in health care. We need to regard health care as a public good
and make it accessible to all. We have wonderful health professionals
and hospitals in this country. We are spending enough money.
We need a program of expanded Medicare for All Americans.
______
Senator Enzi. Thank you.
I want to thank the whole panel not only for what you said,
but also for what testimony has been submitted. A lot of good
ideas in there. We'll have to probe some of those a little bit
more. Some we may have to grow a little bit more. But as a
roundtable we'll ask some specific questions, and then I'm
going to--since I'll be here for the whole thing, I'm going to
defer until the end and give Senator Alexander an opportunity
to ask questions in my place to start the discussion. Again, if
there's a question asked and you want to add to it, stand your
name tag on end there. This is a roundtable. It's to gather
information, not to hound on a point.
The Chairman. Thank you. Thanks, Mr. Chairman. Thank you
for your leadership in calling this hearing on healthcare in
rural areas.
Mr. Levine, welcome, glad to have you here, appreciate what
you do in the Upper East Tennessee area. As you indicated, it
affects both Tennessee and Virginia.
You mentioned a couple of things I'd like to go back to.
Tennessee is second in the country in terms of rural hospital
closings. The first thing I'd like to ask you about is the area
wage index. Fifty-five hundred hospitals in the country
received payments from Medicare based upon a formula called the
area wage index. I met with a group of hospitals yesterday
morning in the Knoxville area who were talking about how low it
was, how unfair it is to certain parts of the region.
How big a problem is it for you in Tennessee and Virginia,
the area wage index, and do you have any suggestions for fixing
it?
Mr. Levine. Senator, it is one of the biggest problems we
have. All 95 counties in Tennessee and all the counties in
Southwest Virginia fall among the lowest on the spectrum for
the area wage index, which ranges anywhere from a low of .68
all the way up to 1.9. And if you think about the distribution,
only 10 percent of the counties in the country have an area
wage index. The average is supposed to be 1. Only 10 percent of
countries have an area wage index above 1. Eighty percent are
below 1.
The distribution--the intent of the area wage index was to
recognize initially that costs were higher in rural areas, and
therefore you'd have to pay more to get people there, and
somewhere along the way it got turned on its head. And once you
fall behind----
The Chairman. I've got limited time. It's hard to change
formulas in the U.S. Congress. Do you have any shrewd
suggestion for how we might do that?
Mr. Levine. Pass Senate Bill 397, the Fair Medicare
Hospital Payments Act, which is initially sponsored by Senator
Isakson, Senator----
The Chairman. I'm a co-sponsor of that.
Mr. Levine. Yes, you are, and Senator Kaine is, and others
here are as well, Senator Roberts. It's a bipartisan bill that
would be the single biggest thing near-term you could do to
help rural hospitals.
The Chairman. If I could switch to another thing you
mentioned, I visited Lewis County in Tennessee, and they had a
big argument about closing their hospital and eventually did it
and created instead a community health center. It's a big
success. It's owned by a nearby hospital, and the theory is you
don't need to do heart transplants in every small rural county.
What are your suggestions for alternative models for
delivering healthcare services in rural counties? If I were
trying to put a plan to Lewis County in Tennessee where that
community health center is, I would be very impressed because
you can walk in between 7:00 in the morning and 8:00 at night,
there's always a couple of doctors there, it's clean, and if
you have a real problem, they can get you pretty quickly
somewhere else. But 90 percent of the problems that people walk
in with they can deal with. What about alternative models?
Mr. Levine. That's exactly the same thing we're doing in
Upper East Tennessee and Southwest Virginia. There's
opportunities to repurpose rural hospitals. Again, instead of
being full-service acute care hospitals which provide every
service like they used to, look at what the service needs are
in those communities now: mental health, addiction, emergency
medicine, high-quality diagnostics, maternal care. The payment
system doesn't right now really support those things, and I
think if we were to build a bridge, it would be to transform
the payment system so rural hospitals can afford to repurpose,
and then you can sustain those services through an alternative
payment system to support them.
The Chairman. Mr. Chairman, I'll give my time back to you
or to other Senators so we can have more of a conversation.
Senator Enzi. Mr. Glause, you wanted to speak on that as
well? Turn your mic on, please.
Mr. Glause. Thank you. I would encourage us to be mindful
of unintended consequences as we look at repurposing rural
hospitals. The cost of air ambulance transport has skyrocketed.
Most of our air ambulance transports in Wyoming are between
facilities, and the states have no ability to regulate those
rates or routes of their air ambulance company. So I would
encourage you to also look at that issue when the
reauthorization of the Federal Aviation administration comes
up.
Senator Sanders. Mr. Chairman.
Senator Enzi. You're next.
Senator Sanders. I think there is general agreement that we
have a shortage of physicians in the country and in rural
America in particular. Under the much-maligned Affordable Care
Act, we doubled funding for federally qualified community
health centers, as well as a significant increase in funding
for the National Health Service Corps, which is, as you know, a
program that provides debt forgiveness for those doctors and
dentists who practice in underserved areas.
Would each of you be supportive of a significant expansion
of the community health center program and the National Health
Service Corps? Mr. Glause.
Mr. Glause. Thank you, Senator Sanders. Generally, the
answer is yes. We see a significant lack of providers in
Wyoming, and we need to address that issue, especially in rural
America. The doctors and----
Senator Sanders. I apologize and ask you to be brief.
Mr. Reed.
Mr. Reed. I'd echo what Mr. Glause said, which is in
principle, yes. I want to make sure that we don't have any
provisions in there that limit or restrict the use of digital
medicine and the ability for remote patient monitoring.
Senator Sanders. Mr. Levine.
Mr. Levine. Yes. Plus, I would look at funding additional
residency slots that are based in rural communities.
Senator Sanders. Good.
Dr. Richter. I would absolutely favor that.
Senator Sanders. Okay. I don't go to a lot of these
hearings because there's something disingenuous that takes
place. Everybody here and every Senator and panelist is
concerned about, in this case, rural health care, but many of
my colleagues voted to cut $1 trillion in funding over a 10-
year period to Medicaid, and $500 billion to Medicare.
Mr. Glause, just out of curiosity, if the President's
budget or the Republican budget were approved, which cut $1
trillion in funding for Medicaid over a 10-year period, what do
you think that would do to--what impact would that have on
rural Wyoming? A hundred billion a year for 10 years.
Mr. Glause. We have to consider the difference between
Medicare and Medicaid.
Senator Sanders. I'm talking about Medicaid funding, a
trillion dollars over 10 years in the Republican budget cut.
Mr. Glause. We have not expanded Medicaid in Wyoming, as
you all know. I don't think that we would see the substantial
impact with a cut to Medicaid as we would other programs.
Senator Sanders. Okay. I apologize again.
Mr. Reed. A trillion-dollar cut over 10 years; would it
help rural America?
Mr. Reed. Frankly, I'm really focused on whether or not any
cut or any improvement in the budget actually allows doctors to
use the tools that will improve their ability to provide care
to folks.
Senator Sanders. You have no comment? You don't think a
trillion-dollar cut would have any impact on rural America?
Okay.
Mr. Levine, a trillion-dollar cut?
Mr. Levine. I do think a cut to Medicaid would have an
impact on rural healthcare. But Tennessee has a very unique
problem because its disproportionate share funding is capped in
Federal statute. So Tennessee's got a very unique problem where
the state, the hospitals are willing to come up with the money
to bring the Federal money down.
Senator Sanders. Doctor, a trillion-dollar cut in Medicaid
to rural America?
Dr. Richter. We're already suffering under underpayment as
it is, and particularly in primary care, and even worse so in
mental health. A trillion-dollar cut would be devastating to
us, and I think we would see even more physicians and nurse
practitioners exiting rural areas. I think it would be tragic.
Senator Sanders. Somebody, I think it was Mr. Glause,
mentioned that Medicare reimbursement rates are about 65
percent, of course, which I understand to be true. My
understanding also is that private insurance reimbursement
rates are actually lower. Comment on that. I was just speaking
to some doctors actually in the Burlington Community Health
Center there. They were telling me that Medicare was the
highest that they got, not good but better than Medicaid,
better than Blue Cross Blue Shield, which are much lower.
Thoughts on that? Mr. Levine, is that accurate?
Mr. Levine. No, and in our market in Upper East Tennessee
and Southwest Virginia, generally for the hospitals, commercial
insurance reimburses higher than Medicare. If they didn't, we
would be in a lot of trouble.
Senator Sanders. Okay, that's interesting. I don't think
that's the case in Vermont.
Dr. Richter.
Dr. Richter. Well, in terms of Medicare and in terms of my
addiction practice, Medicare is on par with Medicaid. It is
actually private insurance that is actually the lower payers in
the addiction world.
Senator Sanders. That's true. That's in Vermont. I don't
know if that's true nationally.
Mr. Reed, what's the story there?
Mr. Reed. That's a little bit outside my scope. But I would
notice that with Senator Kaine here, we have the Center for
Telemedicine out of UVA, and one of the things you're looking
at is how do you actually take the reimbursement that goes on
for the communities they serve in rural Virginia? The problem
they're finding is they are actually able to deliver the same
quality of care. For example, getting medication in the case of
a stroke just as timely as you would if you were next door to a
healthcare facility. But the reimbursement doesn't put money
back in their pocket.
Senator Sanders. Right, that's a valid point.
Mr. Glause, what about you mentioned Medicare providing
reimbursement rates only 65 percent of the cost. In Vermont,
actually, private insurance reimbursement rates are lower.
What's the case in Wyoming? Is that the case there or not?
Mr. Glause. No, that's not the case, Senator Sanders. We
see a lot of cost shifting to the private market.
Senator Sanders. Private insurance reimbursement rates are
higher than Medicare in your state?
Mr. Glause. Absolutely.
Senator Sanders. That's interesting. Okay, Okay.
Thank you, Mr. Chairman.
Senator Enzi. Thank you.
I guess Senator Roberts left.
Senator Bennet.
Senator Bennet. Thank you.
Just a follow-up to one of Senator Sanders' questions on
the Medicaid cuts. In many of my rural districts, 50 percent or
more of the kids are on Medicaid. What would happen to them if
there was the kind of cut that he described to Medicaid, Mr.
Glause? These are counties that don't have other insurers, many
of them.
Mr. Glause. Thank you, Senator Bennet. First of all, I will
have to make a disclaimer. I am not an expert on Medicare and
Medicaid. We don't deal with those issues routinely in the
insurance department, but there is some overlapping of the
issues.
As far as the children suffering effects if the money was
reduced for Medicaid, I think that we do have other programs in
Wyoming for the children as far as the ability to obtain care
through insurance for them.
Senator Bennet. Thank you, Mr. Glause.
Mr. Levine.
Mr. Levine. Yes, sir. I think one of the things that's a
problem here is the differentiation. There used to be a great
differentiation between Medicaid and insurance. But in the last
five or 6 years, we've seen a major shift with even private
insurance where even if a child or an adult has private health
insurance, because of all of the high deductibles, many of them
are not able to pay. And what's happening to us is our biggest
increase in bad debt and uncollectible revenue isn't the
uninsured. It's people who have insurance----
Senator Bennet. That's very common, right.
Mr. Levine. It's one of the biggest single problems we
have.
Senator Bennet. I hear about that a lot. I was in a county
right next door to my neighbor's state the other day in
Northern Colorado that's the size of Delaware geographically,
but 1,300 people live there, as opposed to a million people in
Delaware. And as we had this conversation it became clear in
the room that of everybody in the room, there were only three
people that had insurance. One was the school principal, who
got it through the district. One was the county commissioner,
who said that he didn't have it until he got elected county
commissioner, and now he has health insurance. And then there
was one person who had managed to get it for herself, although
her husband and her child--and these were all working people. I
mean, they were people running the restaurant in town, 50 hours
a week he was working, and his wife was working 50 hours a
week, and literally they can't buy health insurance in America.
This is one of the reasons Senator Kaine and I have offered
the bill--I don't know if any of you have seen it, this
Medicare X bill that suggested maybe what we need is a real
public option that would be administered by Medicare. It starts
in rural counties in our country that have one or fewer
insurers.
By the way, in Medicare Part D, a public option was
included as part of that. It never was actually triggered. But
it would allow people all across the country to pool and buy
this insurance through a premium that they would pay. CBO says
it would actually save the government money. And then over two
or 3 years, I guess over 3 years, we'd make it available to
everybody in America.
Does that sound like a terrible idea to you guys, or do we
need some option like that? Because no private insurer is going
to sell insurance that's worth anything to the people in this
county. There's just not enough lives here to do it. Even if
you aggregated the number of people in my state, they wouldn't
do it, except, Mr. Levine, in the way that you described, with
impossibly high deductibles and other kinds of things that make
the insurance, as people in these counties say to me, worthless
to them.
Do you have any reaction to the idea of a public option
like that as a way of solving this? Anybody?
Dr. Richter. I have a reaction to the idea of us giving
first-dollar coverage to all Americans for primary care. We do
know that it's less than 8 percent of total. It's the best
bargain in medicine. And we also know that it's the only sector
of healthcare to improve population health when it's freely
accessible to a population. It's been shown to reduce
mortality, to lower infant mortality, maternal mortality,
increase life expectancy, all of those things.
It seems to me we should start where the basics are, and we
should make sure that no one does not go to the doctor because
they have a co-pay or a deductible. People like this women, 4
days short of breath, ended up with a massive heart attack.
This I see all the time, or these co-pays and deductibles. And
particularly when we're dealing with young children and their
parents avoiding bringing them to the doctor. They end up with
long-term disabilities as a result.
That, to me, seems to be where we should start. It's a very
small price tag for a big payout.
Senator Bennet. I have 2 seconds left, I think.
Mr. Reed. Sorry. It was fascinating to listen to you talk
about how do you get this to work in a community of 1,300
people, right? So there's not a professional there. How do you
actually get the physician to engage with them? And as the
doctor just noted, if you don't have that person engaged early
in the process, then they get really sick and they cost a
fortune. Then you're talking about amputations in the case of
diabetes.
University of Mississippi Medical Center is such an
interesting story because they had to serve communities in the
Delta and other areas where there is, like you, no health care
professionals at all, a culture where there hasn't been the
attention paid to diabetes that's necessary. And what they're
finding to reduce cost to get to where you need to go is, hey,
you need to get people educated about don't have that next
slice of pecan pie, with all apologies to Tennessee.
How do you engage with them? How do you monitor what their
glucose level was in advance of them getting terribly, terribly
sick? So if you want to treat the 1,300 people, you need to
figure out how do you treat the 1,200 people that need to stay
healthy so that you can use the primary dollars for the 100
that are already sick and that you need to take care of. I
think the doctor hinted about it, in preventive medicine. So
let's look at a way to open up that CBO scoring window so we're
not stuck with serving only the sickest people when they're the
most expensive.
Mr. Levine. May I, Mr. Chairman?
Senator Enzi. Please.
Mr. Levine. You know, I think the challenge here is when
there's a discussion about a larger single-payer model, the
thing that concerns me is payment policy matters to the
marketplace. When you have, in our case, 70 percent of our
reimbursement dictated to us by a central planner somewhere in
Washington that doesn't know our economy, doesn't know our
local markets, what ends up happening is that the payment
system isn't reactive to what the market demands are for the
physician. So physicians leave, and they go where they can get
paid more. It's simple economics.
There have been a lot of ideas historically thrown around
about catastrophic coverage, which then would create more
certainty and a more robust insurance market underneath
catastrophic coverage. I think there are market-driven ways
that you can create options for insurance with wraparounds for
primary care and prevention, and then catastrophic on top of
it. But I just worry about anything where you have centralized
price setting that doesn't respect the differences in the
markets and allow a negotiation in the marketplace to occur.
Otherwise, you just keep losing doctors, because payment policy
does affect the marketplace.
Senator Bennet. I'm out of time, but I guess what I would
say about that, I think all of these are great ideas. I'm very
happy the Chairman had this Committee hearing. That doesn't
solve Dr. Richter's issue about how do you get people the
primary care they need so that we're not driving the prices, to
say nothing of their own health care.
The good news in all this, Mr. Chairman, is we're spending
more than a third more money on a health care system that
doesn't work for most Americans than all of our competitors are
spending. So if we could agree on how to take that money and
use it in ways that could elevate health outcomes, I think we'd
be heading in the right direction and there would be a lot to
cheer about in rural America, and urban America.
Senator Enzi. Thank you. That's what we're searching for.
Senator Hassan.
Senator Hassan. Thank you, Senator Enzi.
I never knew that Manchester, New Hampshire being 150,000
people would sound so large.
[Laughter.]
Senator Hassan. I listened to you and Senator Sanders, and
all of a sudden we're a metropolis.
But I am also very grateful to all four of you for being
here.
To echo a little bit of what some of my colleagues have
said, I believe health care is a right. It's also just an
essential. We can't function without it. Our workforce can't be
healthy without it. Our employers can't have a workforce
without it. Our economy won't work without it. So I think it's
really important that we continue to drill down on how we make
sure everybody has health care in the United States of America.
I had two questions particular to health care in our most
rural areas, and the first is really about maternal health
care. In New Hampshire, it's one of the things we struggle
with, especially up in our North Country, which is about the
top two-thirds of our geography, with about 50,000 people in
that very large space.
According to the American College of Obstetricians and
Gynecologists, rural women have poorer health outcomes and less
access to care than urban women do, especially when it comes to
women's health providers. This can be, obviously, a tremendous
problem, and it's really just not feasible for many women to
drive hours and hours on end for all of the frequent yet
critical prenatal visits they really need. We all know how
important that is, but if you have to drive hours and hours
once a week and you're trying to work and raise a family, you
just can't do that. And then you also have to think about how
to access this care when it's actually time to give birth.
I'm interested to hear from each one of you how we can help
address this issue to ensure that pregnant women can access the
care they need. And I'll start with you, Dr. Richter.
Dr. Richter. Well, first of all, we should provide
transportation. That is key. What I find is a challenge is I
have a large population, I take care of people with addiction,
particularly opioid addiction.
Senator Hassan. I wanted to follow-up with you on that,
too.
Dr. Richter. Right, very dysfunctional lives. We also have
a program called Blueprint for Health where we actually have
people that help manage in terms of getting people to
appointments and those sorts of things. But they also need the
transportation. Now, many of them, especially in rural areas,
can't afford cars. If they do, they can't afford the gas and
the insurance. So I would say providing transportation, and
also some advocacy so that it makes it easier for them.
Senator Hassan. Okay, that's great.
Anybody else? Mr. Levine.
Mr. Levine. Yes, absolutely. This is a problem we struggle
with throughout our whole region, and there are two issues in
particular. One, I think the idea of repurposing rural
hospitals and providing them the resources to invest in
recruiting and retaining physicians and mid-level providers is
helpful. We suffer from a unique problem where we have a lot of
drug-addicted women who are pregnant, and all the different
flows of money that come from Washington and the states are all
fragmented. So as a health system with 21 hospitals serving a
geographic region, we'd like a situation where we can provide
prenatal housing, prenatal treatment, food, prenatal care
delivery through Medicaid, post-acute housing, post-acute food,
and post-acute transition back into society. But those funding
streams are all fragmented.
We can solve this problem, or at least provide an effort to
mitigate it, if you can figure out how to braid all these
different flows of dollars from all these different Federal
agencies.
Senator Hassan. Okay. Mr. Reed.
Mr. Reed. Senator Hassan, I remember sitting in your office
and getting a lesson on the three, possibly four different
regions in New Hampshire, and I remember realizing that I
didn't really understand your state quite as well when it comes
to those differing areas and how complex New Hampshire ends up
being.
But here's the interesting thing. Many of the women you're
talking about, in fact nearly the majority of those women have
a smart phone. They have a super-computer in their pocket that
allows them to reach their doctor. It allows them to, if they
have a wearable band----
Senator Hassan. Except in our rural areas, the connectivity
is terrible for broadband.
Mr. Reed. That's correct, so you're going to hear me pitch
a little bit about TV white spaces there as a possibility to
expand beyond that. But here's the specific. When you are
looking at reaching out to prenatal care, a lot of it is
physicians answering questions. How do we make it possible for
the physician to get appropriately reimbursed for their
connection with a patient? How do you do population health? How
do you do that engagement?
On the other side, don't forget that once that birth
happens, there's another huge cost. So Mississippi now uses a
NICU sock that's connected to a smart phone, because it costs
them $40,000 a day, in some cases, for NICU treatment. How do
we actually allow this baby to go home with their mom healthy
in a way that actually gets connected care?
I like what you're talking about. How do we get it on the
front end? Let's figure out how we use the technology that
already exists to make this possible and get physicians
appropriately reimbursed for using it so those questions get
answered, people stay healthier longer throughout their
prenatal care.
When it comes to opioid addiction and the issues around
that, again, the number-one issue around that often is societal
and mental health. So let's figure out how we can use what
they're doing today to better engage with them for their
prenatal health.
Senator Hassan. Mr. Glause.
Mr. Glause. Thank you, Senator. I agree with the good
doctor, the transportation is an issue, but Wyoming is unique
in that we have very small communities that are 40 or 50 miles
from a small town of 2,000, 2,500 people. And to try to solve
that issue with public transportation just is not going to work
if we send public transportation into a remote mountainous area
to bring somebody to a hospital or a doctor appointment.
I think one of the keys I keep coming back to is
incentivize providers to come into small communities, the use
of digital medicine through telemedicine. But even if one
doctor is servicing several smaller communities on a weekly
basis, it still gets the women and children the care they need.
We have a low birth rate in Wyoming, which is the first sign
that women are not getting the maternal care that they need.
Senator Hassan. I appreciate that. I am almost out of time.
I'm going to have to go to another meeting, but I will follow-
up with all of you on the issue of medication-assisted
treatment as we combat this opioid epidemic. I know all of our
states are dealing with this, and I would ask my colleagues
also to consider that Senator Gardner and I have the airwaves
full just really trying to get at this connectivity issue in
rural America, and one of the issues we're trying to crack here
is using telemedicine and the devices we need in rural America
so much. So I'd ask folks to look at that bill. We'd love to
move it forward, and I'll follow-up with all of you on your
ideas about medication-assisted treatment and the opioid
epidemic as well. Thank you.
Senator Enzi. Senator Kaine.
Senator Kaine. Thank you, Mr. Chairman.
To the witnesses, excellent testimony.
Just really three observations, and I think there's some
really good follow-up from your testimony and the dialog.
First, a question that Senator Sanders was asking about
what Medicaid cuts would mean. It's not a hard answer, and I
get that some of you, that's not your particular focus. But
just to give you an example, Medicaid and children, much less
adults, in Virginia, more than 50 percent of the births of
children in Virginia are paid for by Medicaid, and that was
before we just did Medicaid expansion. So now it's going to be
more. If your child gets a wheelchair in Virginia, it is likely
that Medicaid is paying for that wheelchair. If your child is
in elementary school or secondary school and is on an IEP, it's
pretty likely that Medicaid is reimbursing your school district
for some component of that IEP.
I'm not talking about adults, those with disabilities. Just
with kids, Medicaid cut effects are dramatic.
I hope to bring you back an example early next year. The
statistics that Mr. Levine laid out--and we're so glad to have
him in Virginia--hospitals, 90 rural hospital closures in just
the last 8 years, another 670 hospitals at risk. We are within
a few months, I believe, of being the first example of
reopening a hospital that has been closed for a long time in
rural America that I'm aware of. A hospital in Lee County,
Virginia, in the coal fields of Appalachia that was closed a
number of years back is opening by year end. AmeriCorps is
reopening the hospital.
Mr. Levine talks about repurposing hospitals. It won't open
exactly the way it was configured when it was closed, but we've
been working with these folks in Lee County for a long time,
and they've had to go through a million hoops and hurdles and
figure out how to get it done, and it might be--if there are
670 that are in jeopardy of closing, it might be interesting to
bring one back after they're up and running so they can offer
their ideas about here's how we did it and, boy, we wish we had
done these other things. I hope we might do that. The reopening
is scheduled in December.
I just want to comment, Mr. Reed, you used UVA as an
example on the telemedicine side. The opioid bill that we just
passed and sent to the--I guess it's in conference, and
hopefully the President will sign it soon--included a directive
I guess that came out of the Finance Committee to clarify--for
CMS to clarify that Medicaid reimbursement could be received
for telemedicine provision of addiction recovery services.
There is a bill pending now in the Senate called the Connect
Act which would do the same thing with respect to Medicare
reimbursements. I think, as we're talking about rural
communities or underserved communities generally, the idea of
telemedicine as the solution--there's no one solution, but as a
solution to some people's challenges, it's really going to be a
good solution.
But if we don't have a reimbursement model that
accommodates it, then we're going to grapple with the public
transportation issue, or the challenges of folks' work
schedules and things like that. Telemedicine isn't the answer
for everybody, but when there are telemedicine applications, we
shouldn't be standing in the way because we have outdated
reimbursement models for the way health care providers provide
services, and I think that offers some promise to rural
America.
I appreciate all of you for coming, and we'll look forward
to taking these ideas as part of it. We've had a lot of
hearings about diagnoses, and I'm really interested in getting
to some prescriptions here soon.
But thank you, Mr. Chairman, for doing this, and thank all
of you.
Mr. Reed. I would be remiss if I didn't mention the fact,
with Senator Hassan asking about prenatal care, UVA has a fetal
heart rate monitor system through Locus Health called Imprint,
and I know, Senator Kaine, you've worked with Dr. Karen Revan
on some of these exact issues. So earlier we talked about the
importance of the Connect for Health Act as something that my
organization and over 190 organizations, companies, patient
groups and others support. So, thank you, and we'd like all the
Senators to join together to get that bill passed.
Senator Enzi. Thank you.
Dr. Richter.
Dr. Richter. Yes, I just want to respond to the couple of
comments that were made about the fragmented financing. I was
actually happy to hear that Mr. Levine actually sounds like
he's endorsing a single payer. Is that true, Mr. Levine?
Mr. Levine. No.
[Laughter.]
Dr. Richter. Because he's talking about the fact that when
you have all these different payments, there's also an
administrative cost at the provider end. The hospitals, they
have to erect these bureaucracies to collect the money to keep
their doors open. The same thing in the doctor's office. And
again, that's another advantage to having a one-payer system,
that at least it's one set of rules, regulations, and
reimbursements that you have to deal with. You definitely still
have to have administration, but not this amount. And for all
that money that we're spending on administration and creating
at the provider and payer end, we could be spending on these
great ideas that we have. But I think we first have to figure
out how to streamline that administration. And again, this is a
plug for single payer, and I thank Mr. Levine for advocating
for it.
[Laughter.]
Senator Enzi. I didn't hear that the same way, either. But
one of the things that's hindering any kind of single payer is
the difficulties with the VA. That's a government-run program
that we thought was operating perfectly, and most of the people
who were in it thought it was running perfectly, and then a
bunch of people died in Arizona. And then we found out that the
workers were fiddling with the figures and postponing
appointments, and we found that was pretty extensive. I even
did some checking on our two hospitals in Wyoming and found out
there was a problem with that, and we've had a bunch of changes
since then.
Dr. Richter. Could I respond to that?
Senator Sanders. No, let me respond to that, as somebody
who is a member of the Committee, the Veterans Committee. The
VA is the largest integrated health care system in the country.
It has problems. The last that I heard, so does the private
health care system. We have a system in which, as Dr. Richter
was talking about, tens of thousands of people die each year
because they either don't have any health insurance or they
have high deductibles and co-payments, or they can't afford
their prescription drugs.
Nobody denies that a system with 137 medical centers, which
is what the VA has, has its problems. But on the other hand,
Mr. Chairman, I would suggest you speak to the American Legion
and the DAV and the VFW and you ask them whether they want to
privatize the VA, and unanimously they will tell you no, they
want to strengthen the VA.
Second of all, in terms of how the American people feel
about government health insurance, the most popular health
program in America is Medicare. The second most popular program
is the VA. So in all instances, we need to improve those
programs. But veterans feel pretty good about the VA, elderly
people feel very good about Medicare, and the American people
in poll after poll want us to move to a Medicare-for-all,
single-payer program.
Senator Enzi. I didn't intend to turn my part of the
questions over to----
Senator Sanders. Okay. I just wanted to comment.
Senator Enzi. I appreciate your comments, and all of that
is helpful.
I want to go back to Mr. Levine because I know that you had
21 hospitals, and more than half of them are rural, and I want
to know how you recruit physicians for that. How do you get
providers for these rural hospitals? How do you do searches?
How do you compensate them? Is there this incentivizing that
we're talking about in Wyoming?
Mr. Levine. Well, good question, Mr. Chairman, and I would
say two things. First, somebody earlier mentioned looking at
Stark and the anti-kickback statutes. That's a big problem. In
the fee-for-service system, the Stark and anti-kickback statute
served an important role in preventing fraud. In a system where
we're going toward value-based purchasing, they have actually
become an impediment to integration with physicians.
The reality is in rural communities we have to pay a lot
more, and we always bump up against these issues of fair market
value, and my biggest fights are sometimes with my legal
department where we want to recruit and employ a doctor and we
find that we have to pay them in excess of what the 90th
percentile of some XYZ company says we're allowed to pay him.
So I think the anti-kickback and Stark laws need to be looked
at, particularly as it relates to non-urban and rural
communities.
But the bottom line is cost-based reimbursement helps us
where we have hospitals that are critical access, where we have
rural health clinics, being able to compensate them more, and
getting the cost reimbursement through Medicare and Medicaid is
very helpful. I think more of that would be helpful. I know
there's a movement to actually go in the other direction and
get rid of the provider-based, the hospital-based clinics, but
they serve a valuable purpose.
In each of our practices, we lose--for a specialist, we
lose anywhere from $150,000 to $200,000 a year for a doctor
that we employ. So it's a huge burden. Our system generally has
negative operating margins of more than $100 million a year
sustaining physicians in our rural communities that we
shoulder, that we don't get paid for.
Senator Enzi. Thank you.
I need to shift direction a little bit here again. I need
to go back to Mr. Reed because you were talking about not being
able to be billed on digital health. Can you give a little more
detail on that?
Mr. Reed. Two basic problems exist in the digital health
space. One is reimbursement that's appropriate for the care
that's provided. Let's look at something like population
health. You're a physician in care, and you have 25 patients
that are in various conditions. Let's use the obvious example,
because men are bad about taking their medicine and women are
good at taking their medicine.
If you're monitoring those patients through a remote
patient monitoring tool, right now if Mr. Jones doesn't take
his medicine and you call him in for an appointment, you get
reimbursed for that appointment to see Mr. Jones because he
didn't take his medicine. But Mrs. Jones, who is doing her
time, she's undergoing her PT, she's taking her medicine on
time, even though the physician is spending the same amount of
time to monitor and set that up, the physician doesn't get
reimbursed for it.
The incentives are only aligned for you to wait until Mr.
Jones gets sick and then you bring him in, and that's not what
the doctor wants to do. The doctor wants healthy people that
stay healthy.
Part of it comes from the fact that the codes--I'm going to
do something unusual. I'm going to say good things about a
government agency. CMS this year unbundled Code 90991. That was
a really important first step that allowed for the
reimbursement of remote patient monitoring in a way that has
never been allowed before, and we're hopeful. They predict
about 250,000 uses of that code. We're hopeful that will
actually unlock some of this digital medicine.
The second aspect that we get into on some of these coding
questions is if the code only reimburses at a level that
doesn't match what the physician actually has to spend because
they say, well, it's remote, but that physician still has to
have the bricks and mortar, he still has to have the assistant,
he still has to have the same facility with the lights on even
though he's providing that care remotely. So the reimbursement
for telemedicine and remote patient monitoring needs to be
appropriate to the fact that what you're getting is a highly
qualified doctor to answer your questions when you need it.
Some things have gone well with CMS, some things not so
good.
Then finally, I would be remiss if I didn't hit on the
other aspect, which is we are hopeful that ONC will get their
anti-blocking report out. My understanding is it's moved over
to OMB, but we need to see what the numbers look like. We need
to see the data of what's working and what's not. Right now,
physicians, organizations like Mr. Levine's, don't have access
to the data that they need to make the good decisions that they
want.
If you're looking at how do we get reimbursed for this,
first give us the codes; second, make sure that it's
appropriate to the use; and third, give us the data to know
what works.
Senator Enzi. Anybody have any other comments on problems
with going to telemedicine in rural areas?
[No response.]
Senator Enzi. Okay.
Mr. Glause, you mentioned that 70 percent of the people in
Wyoming live within 70 miles of the border, and so they're
taking a lot of their health care to other places like Salt
Lake City or Billings or Rapid City or Fort Collins. Can you
talk about how that type of pattern affects the cost of health
care and the ability to recruit physicians, and any solutions
you might have?
Mr. Glause. Thank you, Senator. You are correct with that
statistic that 70 percent of our population lives within 70
miles of a border. In Southwest Wyoming we have out-migration
to Salt Lake City. In Northwest Wyoming we have out-migration
to the Billings area. In Northeast Wyoming the migration is to
Rapid City, South Dakota. And in Southeast Wyoming, in the
Cheyenne and Laramie areas, the migration is to Fort Collins
and Denver.
We're already a small population, and when you look at over
70 percent of the people are seeking their health care out of
the state, it only reduces that population that the doctors are
able to draw from. There are no economies of scale left. The
ability to amortize the cost of equipment over a larger
population dissipates. The ability to attract doctors to areas
is further strained because the limited population we have to
start with is going out of state. So that migration out of
state really drives the cost up within the state to deliver
those services.
Senator Enzi. Thank you. And do you know of any ways to get
more competition in that individual market?
Mr. Glause. I wish I had a good answer for you. It gets
very complicated. To get competition both at the provider level
and at the insurer level has been one of my main focuses for
the insurance department. Insurance companies are not
interested in coming into the small markets. They have to build
a market share. They have to come in and try to create a
provider network where there are limited providers. And to
compete with the carrier that is there, they have to do this on
a price point. And with the lack of population, it is very,
very hard to make this sound like a very attractive business
opportunity.
Senator Enzi. Anybody else want to comment?
Dr. Richter. Well, I would say that competition, it depends
on what you mean by competition. Competition amongst insurance
companies really means marketing to the healthier population,
which is about 80 percent of the population that's relatively
healthy. Twenty percent are sick and use 80 percent of the
care. So that's not going to reduce costs by increasing that
sort of risk selection.
I would say in terms of the provider end, it's really that
you can't have two rural hospitals competing against each other
because of what Mr. Levine said, most of the costs are fixed. A
majority of hospital costs, at least 75 percent, are fixed. So
the idea that you would have to have all the bells and whistles
in those competing hospitals, it's not feasible.
Senator Enzi. Right.
Mr. Levine. Thank you. Dr. Richter, you just made the case
for the reason our health system exists. Ballad Health was
formed through the merger of two health systems that were
competitors. What was going on in our market, we were spending
tens of millions of dollars creating redundant, duplicative
services, and the problem is that we had a declining
population, and this race of spending capital, we couldn't
afford it anymore.
The markets where we had the highest costs, the markets
where our hospitals are actually losing the most money were the
ones that were actually the most competitive because there was
so much duplication of effort and duplication of cost, but
you'd have two hospitals using only 20 percent of their
capacity each. So the fixed costs were just unsustainable.
That's why we ended up merging under what's called the
State Action Immunity Doctrine of anti-trust law. The FTC staff
were not happy with our merger and did not like it, but both a
Republican Governor of Tennessee and a Democratic Governor of
Virginia signed laws that were passed unanimously by both
legislatures to permit our merger to occur for the purpose of
reducing about $300 million in cost, and then reinvesting those
dollars in repurposing these rural hospitals. That's why we're
going to have things like maternal care, emergency care, mental
health and addiction services that were not previously able to
be provided. We're actually going to fund those.
As to insurance, I'm not an expert on insurance, but I
think the bottom line is--I've always been struck, Mr.
Chairman, by the fact that we've taken, for instance, children,
we created the SCHIP program. Children are by far the
healthiest risk. We've carved the healthiest risk out of the
insurance market and put them in a government program where
those healthy lives can no longer be part of the risk pool. So
when you pull healthy lives out of a risk pool, all you're left
with are older people who are unhealthier, and then the cost of
insurance goes up.
The idea fundamentally needs to be to create healthier risk
pools. The more we carve up healthy populations and put them
into various government programs, the more we pull them out of
the risk pools. And I'm not suggesting that--like I said, I'm
not an expert on this, but I do think that's part of what has
led to higher spikes in cost of coverage prior to the
Affordable Care Act. I think there are other factors that led
to cost increases once the Affordable Care Act went into place.
Senator Enzi. Rather than get into a debate on that, I need
to change topics slightly here. Part of this is going back to
telemedicine, which is something we have to have in Wyoming in
order to reach the rural population. One of the problems that
we're having is that some of the providers could be across
state lines, on a telephone, to serve our people, but the
licensing for doctors is state by state. So before they can
call a guy on the telephone, he has to become researched and
licensed in our state. I think that's one impediment we have,
even for visiting doctors to come. Is that a problem anywhere
else?
Mr. Levine. Yes. Yes, sir.
Senator Enzi. Okay.
Dr. Richter. Yes.
Senator Enzi. Okay. I want to go back to--since Senator
Bennet mentioned Medicare Part D and the fact that we haven't
pulled the trigger yet on part of that, I put that trigger in
there. I was really worried. Wyoming only had two people that
were providing any medical, any prescription insurance, and I
was afraid that when we went to this Part D, that we might lose
both of those. So I thought there ought to be some alternative
to go in there.
Now, my mom was one of the people that was eligible for it,
so I asked her if she was going to need any help on figuring
out her prescription D or not, and she said that she could use
a little bit of help. I don't know if you remember the books
that came out that were about that thick, with really thin
pages, for these seniors to look through to see if they could
qualify. So I tried out every mechanism that there was for
making the selection so that maybe I could also try these
systems to find out how they work. The reason that book is so
thick is because we've got competition. It was kind of virtual
pricing that was done on that. Anyone who put their
prescriptions in could see what each of the different companies
would provide on that.
My question is, are there some other things that
transparency could help solve some of the rural problems?
Mr. Glause. One of the issues that I think has been
successfully addressed is the SHIP program, the Senior Health
Initiative Plan. Sometimes we're charged with doing the
Medicare supplement guide that is also part of that Federal
grant, but the navigators that we have in Wyoming, many of them
are volunteers, and the money that we get from that grant is
used to train those people to help seniors navigate those
waters.
I often refer people to those navigators to help them, and
they report back to me that they are very, very informative and
educational and helpful to them. So the SHIP money I think is
well spent.
Mr. Reed. I want to be specific. Cost transparency is
always a really interesting issue. Mostly, my members tend to
look at it from an access to data standpoint. They want to see
the data so that they can help build tools and others that give
insights into what things actually cost. The difficulty that we
face on it is, and having met with health systems, sometimes
health transparency is something that begins on day one that
you think you'll solve in a 5-minute meeting, and it ends up
being a 5-month seminar in exactly where that cost is that you
thought was in the emergency room but ends up over there.
I want to be respectful of the people who work in hospital
systems and health systems who understand that cost
transparency is difficult. But I will say that with effective
cost transparency, it gives us the ability to give people more
insight into where their money is going, and hopefully, back to
your point about competition, provide some competition that
comes from the digital space.
We have several members who already build products that
allow you to choose your doctor, look at what services they
provide, look at their average cost, make a decision. This is
terrible if you're in an emergency room, but if you've got a
plethora of doctors, not in Wyoming, that kind of transparency
can actually lead you to the ability to say I want to see Dr.
Bob. He fits my cost structure, I like the things that he's
done, let's give him a call.
More transparency can lead to good use of data and more
competition, but I want to be respectful of the people who run
health systems that understand that it's not that easy.
Mr. Levine. Senator, I was proud that I was Secretary of
Health in Florida when we were the first state in the country
to publish hospital pricing and prescription drug pricing on
the Internet. This was back in 2005. And it was interesting to
see how quickly prices, particularly for prescription drugs,
got affected by that. When pharmacies right across the street
from each other found out what the other was charging, the
pricing came down pretty quick. That was the easy stuff.
The hard thing, we actually tried to give patients an
estimate of what it's going to cost. The problem is that
oftentimes you don't know all the different comorbidities that
a patient has when they go into the hospital. I hate to sit
here and say, gee, it's really hard. It is really hard. It's
something we have to continue to work toward.
I think as more and more health systems modernize their
data systems--and I know we may have a disagreement on some of
that, but the good news about all these data systems that are
now being deployed is now the data is becoming more unified,
and I think with that data we can use predictive modeling and
predictive analytics to determine with more precision what
those costs are going to be. And let me just tell you, there's
nothing more frustrating to a CEO of a health system than to
not be able to tell somebody this is what it's going to cost
you.
Now, the problem we have, as I mentioned, even with the
insured population, the biggest part of their cost they can't
even pay for anyway, whether it was $100 or $10,000. They just
can't come up with the money, and unfortunately we're having to
eat that.
Senator Enzi. Did you want to make a closing comment?
Dr. Richter. Well, I guess what I would say too, though, is
you had asked about the drug costs, and the real problem I have
as a clinician is not knowing what the drugs cost because they
change. I prescribed mebendazole, which is a drug for
intestinal parasites, to a patient thinking, Okay, no big deal,
ten bucks, and it turns out Medicaid refused to pay it, and I
couldn't figure out why. So I sent in a prior authorization and
then looked it up. It's because it went to $455 per pill from
$7.
That's part of our problem too, that these drug costs are
inflating just ridiculous amounts, and we don't really always
know what they are. So I think the transparency is not so easy
for those reasons.
Senator Enzi. That's an area in the whole Committee that
we've had some hearings on too, on how we get some drug
transparency pricing, pricing transparency, and finding out
some of the complexities of that. There isn't anything in the
health care field that's easy, I don't think.
Dr. Richter. Who knew?
[Laughter.]
Senator Enzi. I want to thank all of you for participating.
The hearing record will remain open for 10 days so you can
submit additional information if you want to. I also allow
Members to submit questions. You need to turn those in by
tomorrow night, I guess. It's a little too late for tonight by
5 o'clock. And if you would provide answers to those, we'd
really appreciate it. Your testimony and your answers will be a
part of the record.
Thank you for being here today.
The Committee stands adjourned.
Dr. Richter. Thank you, Chairman Enzi.
[Whereupon, at 5:11 p.m., the hearing was adjourned.]
[all]