[Senate Hearing 118-144]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-144

     EXAMINING HEALTH CARE DENIALS AND DELAYS IN MEDICARE ADVANTAGE

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

                                HEARING

                               BEFORE THE

                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                                 OF THE

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS


                             FIRST SESSION
                               __________

                              MAY 17, 2023
                               __________

        Available via the World Wide Web: http://www.govinfo.gov

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs
        
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-437  PDF               WASHINGTON : 2023           


        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada                  MITT ROMNEY, Utah
ALEX PADILLA, California             RICK SCOTT, Florida
JON OSSOFF, Georgia                  JOSH HAWLEY, Missouri
RICHARD BLUMENTHAL, Connecticut      ROGER MARSHALL, Kansas

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
           William E. Henderson III, Minority Staff Director
              Christina N. Salazar, Minority Chief Counsel
                     Laura W. Kilbride, Chief Clerk
                   Ashley A. Gonzalez, Hearing Clerk


                PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                      RICHARD BLUMENTHAL, Chairman
THOMAS R. CARPER, Delaware           RON JOHNSON, Wisconsin
MAGGIE HASSAN, New Hampshire         RICK SCOTT, Florida
ALEX PADILLA, California             JOSH HAWLEY, Missouri
JON OSSOFF, Georgia,                 ROGER MARSHALL, Kansas

                   Jennifer N. Gaspar, Staff Director
                 Brian Downey, Minority Staff Director
                      Kate Kielceski, Chief Clerk

                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Blumenthal...........................................     1
    Senator Johnson..............................................     3
    Senator Marshall.............................................    18
Prepared statements:
    Senator Blumenthal...........................................    33
    Senator Johnson..............................................    35

                               WITNESSES
                        Wednesday, May 17, 2023

Megan H. Tinker, Chief of Staff, Office of Inspector General, 
  U.S. Department of Health and Human Services...................     6
Jeannie Fuglesten Biniek, Ph.D., Associate Director, Program on 
  Medicare Policy, KFF...........................................     7
Christine Jensen Huberty, Lead Benefit Specialist Supervising 
  Attorney, Greater Wisconsin Agency on Aging Resources..........     9
Lisa M. Grabert, Visiting Research Professor, Marquette 
  University College of Nursing..................................    10
Gloria Bent, Widow of Gary Bent, Medicare Advantage Enrollee.....    12

                     Alphabetical List of Witnesses

Bent, Gloria:
    Testimony....................................................    12
    Prepared statement...........................................    99
Fuglesten Biniek, Jeannie Ph.D.:
    Testimony....................................................     7
    Prepared statement...........................................    45
Grabert, Lisa M.:
    Testimony....................................................    10
    Prepared statement...........................................    87
Huberty, Christine Jensen:
    Testimony....................................................     9
    Prepared statement...........................................    55
Tinker, Megan H.:
    Testimony....................................................     6
    Prepared statement...........................................    37

                                APPENDIX

Chair Blumenthal Exhibit--Patient denied poster..................   104
Chair Blumenthal Exhibit--Average 2021 Gross Margins per Enrollee 
  poster.........................................................   105
Chair Blumenthal Exhibit--2021 Medicare Advantage Price 
  Authorization Denials..........................................   106
Chair Blumenthal Exhibit--naviHealth Predict.....................    81
Ranking Member Johnson Exhibit--Health Care: Who Pays Chart......   107
Senator Marshall exhibits........................................   108
Statements submitted for the Record:
    American Academy of Dermatology Association..................   120
    Alliance of Specialty Medicine...............................   126
    American Hospital Association................................   131
    Bristol Health...............................................   138
    American Medical Rehabilitation Providers....................   145
    Medical Group Management Association.........................   165

 
     EXAMINING HEALTH CARE DENIALS AND DELAYS IN MEDICARE ADVANTAGE

                              ----------                              


                        WEDNNESDAY, MAY 17, 2023

                                   U.S. Senate,    
              Permanent Subcommittee on Investigations,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2 p.m., in 
room 562, Dirksen Senate Office Building, Hon. Richard 
Blumenthal, Chair of the Subcommittee, presiding.
    Present: Senators Blumenthal [presiding], Hassan, Ossoff, 
Johnson, Scott, Hawley, Marshall, and Lankford.

           OPENING STATEMENT OF SENATOR BLUMENTHAL\1\

    Senator Blumenthal. I would like to call to order the 
meeting of the Permanent Subcommittee on Investigations (PSI). 
Our first hearing of this session. I want to recognize the 
extraordinary and distinguished history of this panel in 
rooting out waste and fraud and abuse in government, and thank 
my Ranking Member, partner in this effort, Senator Johnson.
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    \1\ The prepared statement of Senator Blumenthal appears in the 
Appendix on page 33.
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    It has been a bipartisan effort in the history of this 
panel, and we are seeking to continue that tradition. When I 
was appointed earlier this year, I pledged to continue the work 
of this Committee in insisting on accountability.
    Our work is already underway, and we are meeting today to 
protect seniors who are enrolled in Medicare Advantage (MA) 
plans who face unacceptable barriers in accessing necessary 
care and treatment. Medicare is the safety net that ensures 
that all American seniors receive the health care they need.
    Medicare Advantage, run by insurance companies, is becoming 
an increasingly integral part of that program. As of 2023, more 
than 30 million Americans were enrolled in Medicare Advantage 
plans, representing more than half of Medicare eligible 
Americans. This number is only continuing to grow. I want to be 
clear, I support Medicare Advantage programs, the flexibility 
that they provide for seniors across the country.
    Many seniors are very happy with Medicare Advantage and 
want to continue with them. But the reason we are here today is 
that all too often the big insurance companies that run 
Medicare Advantage plans have been failing seniors when they 
need treatment and care.
    Medicare Advantage insurers are required to provide 
beneficiaries with the same minimum level of coverage as 
traditional Medicare. Yet we have seen evidence indicating that 
in many instances, they are failing to do so.
    In fact, failing entirely because they are denying or 
delaying care. Tragically we have heard from many families who 
faced denials in the middle of major medical crises, forcing 
them and their loved ones to fight even as they are fighting 
for their lives. The fight for insurance coverage is detracting 
from the fight for their health.
    Perhaps most troubling of all, there is growing evidence 
that insurance companies are relying on algorithms, rather than 
doctors or other clinicians, to make decisions to deny patient 
care.
    In a report released last year, the Inspector General (IG) 
of the Department of Health and Human Services (HHS) identified 
a large number of instances where Medicare Advantage companies 
refused to authorize treatment for care that clearly met 
Medicare coverage requirements. In one case,\1\ a cancer 
patient had a common scan, needed to determine if the disease 
had spread, delayed by their insurer for more than a month.
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    \1\ The poster referenced by Senator Blumenthal appears in the 
Appendix on page 104.
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    Another an insurer refused a walker to a 76 year old 
patient. The insurance company argued that this patient had 
been provided a cane within the past 5 years and therefore did 
not need a walker. In each of these cases, the insurer's 
decision overlooked the treating physician's assessment of what 
their patient needed.
    Our Subcommittee has been hearing from patients and 
providers alike who have stories of care being delayed or 
denied. Many of these stories involve patients who have been 
hospitalized for serious medical issues, and who need nursing 
home or rehabilitative care before they are ready to return 
home.
    These denials have become so routine that some patients can 
predict the day on which they will come. Advocates who have 
helped patients appeal denials of medically necessary care have 
uncovered documents showing that these decisions are not being 
made by doctors or other trained professionals at all. Instead, 
companies are using algorithms that have been programed to 
predict how much care a patient needs without ever meeting a 
patient or their doctor.
    Insurers may refer to these algorithms as tools used for 
guidance, but the denials they generate are too systematic to 
ignore. All too often, black box algorithms--artificial 
intelligence (AI) and algorithms have become a blanket 
mechanism for denial, and the insurance companies insist that 
those AI mechanisms are proprietary.
    But part of what needs to happen is to make them more 
transparent so that patients and providers know, along with the 
public, how they are being used. Major insurance companies who 
run Medicare Advantage plans are making record profits. Gross 
margins for Medicare Advantage\2\ enrollees are well over 
double those for individual market, group market, or Medicaid 
managed care enrollees.
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    \2\ The Gross Margin poster referenced by Senator Blumental appears 
in the Appendix on page 105.
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    The largest Medicare Advantage provider, even said in its 
most recent report, that a major reason for their increase in 
revenue between 2021 and 2022 was, in fact, the growth of 
Medicare Advantage. This chart speaks volumes about the 
burgeoning profits of Medicare Advantage plans, in part because 
of the denial or delay of care.
    Insurers are, in effect, denying Americans necessary care 
in order to fatten and pad their bottom lines, and that 
phenomenon is unacceptable. The information that this 
Subcommittee has uncovered so far, and that we will hear today, 
demonstrates the need for additional investigation into the 
practices of these powerful insurance companies.
    I want to put these companies on notice. If you deny 
lifesaving coverage to seniors, we are watching. We will expose 
you. We will demand better. We will pass legislation if 
necessary, but action will be forthcoming. Today, we sent 
bipartisan letters to the nation's largest Medicare Advantage 
insurers, UnitedHealth, Humana, and Consumer Value Store (CVS).
    They collectively cover more than 50 percent of Medicare 
Advantage beneficiaries. We are asking for internal documents 
that will show how decisions are made to grant or deny access 
to care, including how they are using AI. Our nation's seniors 
should not have to fight to receive medically necessary care. I 
look forward to hearing from today's witnesses.
    I want to thank each of you for being here, because each of 
you has an important aspect of this story to illuminate. Again, 
I want to thank the ranking member for his involvement and 
contribution and turn to him now for his comments.

                  STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman. I want to welcome 
you to the Permanent Subcommittee on Investigations. This is a 
long bipartisan tradition of uncovering waste, fraud, abuse, 
and outright corruption.
    The Subcommittee's previous work provided much needed 
transparency to the public, and I look forward to continuing 
that tradition with you as the new chairman. What I would like 
to do is enter my prepared remarks in the record\1\ and speak 
extemporaneously here.
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    \1\ The prepared statement of Senator Johnson appears in the 
Appendix on page 35.
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    The hearing today is going to be focusing on what I would 
consider an issue caused by a third-party payer system. When I 
was in the private sector, I would be renewing my insurance 
coverage year after year. It was amazing how every year had to 
talk to the insurance agent, OK, what is been excluded this 
year. It never made any sense.
    But that is what insurance carriers are trying to do, they 
are trying to exclude things based on the actuarial tables to 
try and limit the cost of the insurance. We see the exact same 
phenomenon when insurance carriers, in this case Medicare 
Advantage carriers, are trying to limit the abuse potentially 
of some services. They get into this pre-certification process.
    But what I would argue is that we will probably addresses 
this through some kind of government bureaucratic action, which 
I would say probably is not going to work. Part of the problem 
here is a trend over time, where we have pretty well removed 
the benefit of free market competition from health care.
    I was trying to point out there are two areas of our 
economy that we are habitually dissatisfied with, health care 
and education. They are largely monopolies. We have driven the 
benefit of free market competition out of them. To reiterate 
what free market competition does, it generally guarantees--it 
is not perfect, but it generally guarantees the best possible 
price, the best level of customer service, the best quality of 
service.
    That is what a free market does. We are not getting that in 
Medicare Advantage necessarily. We are not getting it 
oftentimes in education. I do have the chart\1\ right here, 
shows you the trend over time.
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    \1\ The chart referenced by Senator Johnson appears in the Appendix 
on page 107.
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    As you go further back in time, this is even more stark, 
but these are numbers are pretty solid. Back in 1949, $0.68 for 
every dollar in health care was paid for by the patient, and 
$0.32 was paid by some third-party payer, primarily back then, 
some kind of insurance system. Now, only $0.11 of every health 
care dollar is paid for by a consumer and $0.89 is paid for 
largely by government or by third party payer insurance 
companies.
    When you have consumers not worried about the cost of 
things, the prices go out of control. If we had the same 
system, for example, operating in food, we would all be eating 
filet mignon every night, or in autos, we would all be driving 
Maseratis.
    We need to look at the root cause. The root cause of this 
problem, truthfully, is we have driven consumerism out, which 
has then driven insurance carriers to have these pre-
authorization programs, pre-certification, and they are always 
far from perfect. Yes, I am going to try and continue in this 
Subcommittee to focus on the root cause and actually fix these 
problems rather than always be looking at very expensive Band-
Aids.
    We have a lot of problems. I think the Coronavirus Disese 
2019 (COVID-19) pandemic exposed an awful lot of problems 
within our medical establishments and our Federal health 
agencies who have been captured by big pharma.
    Talking to the Chairman, I think there is an awful lot of 
agreement we have. I am highly concerned about the negative 
impact of pharma companies spending billions of dollars, 
capturing our media, as they have captured our health agencies 
as well.
    I fully support what we are doing here in this hearing. 
Taking a look at the abuses of the pre-certification process 
and denials, of unnecessary treatment in Medicare Advantage, 
but there is so much more we have to look at, and I really hope 
that we can work together in a nonpartisan fashion because 
these are problems we need to fix for the American public. 
Again, thank you. Look forward to your testimony.
    Senator Blumenthal. Thank you very much. Let me introduce 
the witnesses, and then as we customarily do, I am going to 
swear you in before your testimony. Welcome to Megan Tinker, 
Chief of Staff of the Department of Health and Human Services, 
Office of Inspector General (OIG). In that role, Ms. Tinker 
serves as the Deputy Inspector General for the IOG's immediate 
office, and oversees OIG Office of Congressional Affairs, 
Office of Communications, and Office of Operations.
    Dr. Jeannie Fuglesten Biniek is Associate Director of the 
Program on Medicare Policy at Kaiser Family Foundation (KFF). 
Dr. Fuglesten Biniek previously worked as an Economist on the 
Staff of the Senate Budget committee and has held positions 
with an economic consulting firm and numerous nonprofit policy 
organizations.
    Christine Jensen Huberty is the Lead Benefit Specialist 
Supervising Attorney for the Greater Wisconsin Agency on Aging 
Resources (GWAAR). Ms. Huberty provides free legal assistance 
to seniors in Northern Wisconsin on issues including Medicare, 
Medicaid, Social Security, Supplemental Nutrition Assistance 
Program (SNAP) benefits, housing law, and consumer law.
    She has represented numerous seniors who have faced denials 
of care in their Medicare Advantage plans.
    Lisa Grabert is a visiting Research Professor at Marquette 
University College of Nursing. Her research focuses on Medicare 
with an emphasis on post hospitalization. She has previously 
handled health care policy while on the staff of the House's 
Ways and Means committee.
    Gloria Bent is the widow of Gary Bent, a Medicare Advantage 
plan enrollee. Ms. Bent is a former registered nurse, a retired 
director of religious education, and the mother of four 
children. Ms. Bent was married to Gary Bent for 56 years until 
his death on March 3 of this year. During his life, Gary Bent 
served as an ordinance corps officer in the United States Army, 
high school physics teacher, and he spent 23 years as a 
professor in the physics department of the University of 
Connecticut.
    Ms. Bent spent much of her time during Mr. Bent's last year 
of life advocating for him to receive needed benefits under his 
Medicare Advantage plan, and we look forward to hearing more 
from her about that experience today.
    If you would, please rise, I will swear you in. Do you 
swear that the testimony that you are about to give will be the 
truth, the whole truth, and nothing but the truth so help you, 
God?
    Ms. Tinker. I do.
    Dr. Fuglesten Biniek. I do.
    Ms. Huberty. I do.
    Ms. Grabert. I do.
    Ms. Bent. I do.
    Senator Blumenthal. Thank you. Ms. Tinker, why don't you 
begin.

  TESTIMONY OF MEGAN H. TINKER,\1\ CHIEF OF STAFF, OFFICE OF 
INSPECTOR GENERAL, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Ms. Tinker. Good afternoon, Chairman Blumenthal, Ranking 
Member Johnson, and other distinguished Members of the 
Subcommittee. I am Megan Tinker, Chief of Staff for the HHS 
Office of Inspector General. I appreciate the invitation to 
discuss OIG's important Medicare Advantage work.
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    \1\ The prepared statement of Ms. Tinker appears in the Appendix on 
page 37.
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    Today, I will highlight a critical issue assessed by OIG 
reports, potential barriers seniors may face when accessing 
care under Medicare Advantage. Based on data released this 
month, 30 million individuals, or 50 percent of all Medicare 
enrollees are now in Medicare Advantage. That is a significant 
number of Americans who rely on plans to authorize and pay for 
the care they need.
    This expansion has been rapid. A decade ago, only 29 
percent of Medicare enrollees were in Medicare Advantage. Fast 
growth has increased vulnerabilities and the need for robust 
program integrity measures. OIG work has demonstrated that the 
risks of fraud, waste, and abuse in managed care are 
significant.
    Last month, Inspector General Christy Grim spoke to a group 
of managed care plan executives. She emphasized that Medicare 
Advantage plans need to step up their efforts and focus on 
preventing the types of issues OIG work continues to find. One 
area of concern highlighted by OIG work and raised by this 
Subcommittee, are plan practices that impede access to care. I 
would like to highlight some of OIG's work on this topic.
    In an evaluation published in April 2022, OIG found that 
Medicare Advantage plans sometimes delayed or denied enrollees' 
access to medical care, even though the care was needed and met 
Medicare coverage rules.
    In other words, these services likely would have been 
approved by original Medicare. For many of these denials in our 
review, Medicare Advantage plans used internal clinical 
criteria that are not required by Medicare. For example, a plan 
denied a request for a computerized tomography (CT) scan that 
was medically necessary to rule out a life-threatening 
aneurysm. The denial was because the beneficiary did not first 
have an X-ray.
    But Medicare has no such requirement. In another case, a 
plan denied a request for a walker for a 76-year-old patient 
with post-polio syndrome. Having a right knee that buckled, the 
patient was at risk for falls, and denying the claim went 
against Centers for Medicare & Medicaid Services (CMS's) policy 
to cover equipment that is medically necessary.
    Medicare Advantage plans' internal criteria are supposed to 
be no more restrictive than original Medicare. However, the 
capitated payment system in Medicare Advantage creates a 
potential incentive for insurers to deny access to services for 
enrollees. Plans are paid a fixed amount of money each month 
for each enrollee, regardless of the number or cost of services 
that are provided.
    To address these issues, OIG recommended that CMS issue new 
guidance on the appropriate use of clinical criteria and that 
CMS assess the use of these criteria in its audits of Medicare 
Advantage plans. OIG work has already had impact. Last month, 
CMS issued a final rule that puts in place new requirements to 
protect enrollees from an inappropriate use of prior 
authorization.
    The rule streamlines prior authorization requirements and 
strengthens protections against denials for medically necessary 
services. OIG appreciates and shares your interest in ensuring 
that Medicare Advantage enrollees get the medical care they 
need. However, with our limited resources, comprehensive 
oversight of HHS programs is challenging. We only have $0.02 to 
oversee every $100 HHS spends.
    We conduct efficient, consequential, high impact oversight 
work with our limited resources, but much more needs to be done 
to thwart fraud, identify misspent funds, and protect people 
from harm. To be candid, without more resources, we will be 
unable to keep pace with the threats to the department's 
programs.
    That is especially true for Medicare Advantage. OIG is 
turning down between 300 and 400 viable, criminal and civil 
health care fraud cases each year. These uninvestigated cases 
represent unchecked fraud and the potential for patients to be 
put in harm's way, including individuals enrolled in Medicare 
Advantage.
    Notwithstanding rigorous efforts by OIG, HHS, and Congress, 
serious fraud, waste, and abuse continue to grow and threaten 
HHS programs. If enacted, the President's Fiscal Year (FY) 2024 
requested resources for OIG would go a long way toward 
addressing shortfalls, particularly with respect to combating 
fraud and increasing our oversight of Medicare Advantage plans. 
Thank you, and I am happy to answer any of your questions.
    Senator Blumenthal. Thanks, Ms. Tinker. Ms. Fuglesten 
Biniek.

   TESTIMONY OF JEANNIE FUGLESTEN BINIEK, PHD,\1\ ASSOCIATE 
           DIRECTOR, PROGRAM ON MEDICARE POLICY, KFF

    Dr. Fuglesten Biniek. Good afternoon, Chairman Blumenthal, 
Ranking Member Johnson, and Members of the Subcommittee. Thank 
you for inviting me to testify today about Medicare Advantage, 
including the prior authorization, payment, and appeals 
process. I am Jeannie Fuglesten Biniek, an Associate Director 
in KFF's program on Medicare policy.
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    \1\ The prepared statement of Dr. Fuglesten Biniek appears in the 
Appendix on page 45.
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    KFF provides nonpartisan health policy analysis, polling, 
and journalism. We are not affiliated with Kaiser Permanente. 
My testimony will describe the Medicare Advantage market today, 
the use of prior authorization by Medicare Advantage insurers, 
and gaps in data that make our understanding of the impact of 
prior authorization on Medicare Advantage enrollees difficult.
    In recent years, as has already been mentioned a couple of 
times today, Medicare Advantage enrollment has grown rapidly, 
and as of January this year, over half of all eligible Medicare 
beneficiaries are enrolled in a private Medicare Advantage 
plan. As enrollment has grown, so has the number of plans 
available.
    This year, the average Medicare beneficiary has 43 Medicare 
Advantage plans to choose from offered by 9 different insurers. 
The increase in enrollment and the number of plans is due to 
several factors, but largely the attraction of extra benefits 
usually offered for no supplemental premium and the potential 
for lower cost sharing drives Medicare beneficiaries to these 
plans.
    Medicare Advantage insurers are able to offer plans with 
extra benefits and potential for lower out-of-pocket spending 
because they are supported by a generous payment system. 
According to Medicare Payment Advisory Commission (MedPAC), 
Medicare Advantage insurers receive $2,300 per person above 
their costs of covering Medicare covered services.
    They use this money to pay for extra benefits like vision, 
dental, and hearing, lower cost sharing, and reduced premiums, 
as well as add to their profits. Medicare Advantage plans are 
able to have lower costs than traditional Medicare for Medicare 
covered services, in part because they use tools that are 
rarely, if ever, employed in traditional Medicare to manage 
utilization. One example is prior authorization.
    Virtually all Medicare Advantage enrollees are in a plan 
that requires prior authorization for at least some services. 
Usually, high-cost services like chemotherapy or skilled 
nursing facility (SNF) stays, services that people use at some 
of the most medically fragile points in their lives.
    We used data reported to CMS to examine the use of prior 
authorization and Medicare Advantage. We found that in 2021, 
over 35 million prior authorization requests were submitted to 
Medicare Advantage insurers, of which 2 million were denied, or 
6 percent.
    Though a small share, 11 percent, were appealed. When 
Medicare Advantage insurers reconsidered their initial 
decision, they overturned that decision more than 80 percent of 
the time. The low rate of denied prior authorization requests 
may mean that the prior authorization process is not well 
targeted.
    Additionally, the high success of appeals suggests that 
maybe more of those initial decisions should have been 
favorable to the enrollee in the first place. The process is 
thus potentially leading to inefficiencies and the use of 
provider staff, resources, and time, unnecessary delays in 
patient care, and increased burden on Medicare Advantage 
enrollees during a point in their lives when they are 
potentially in very poor health.
    The publicly available data on prior authorization and 
Medicare Advantage has substantial gaps that limit transparency 
into how the program is performing. For example, there is no 
information about what services are denied, whether certain 
beneficiaries are denied prior authorization requests more 
often, or how long it takes the Medicare Advantage insurers to 
respond to a prior authorization request.
    As a result, policymakers do not have the information they 
need to conduct oversight. Importantly, Medicare beneficiaries 
are left without important information when making a decision 
between traditional Medicare and Medicare Advantage, or between 
Medicare Advantage plans.
    CMS finalized a rule recently to clarify coverage of prior 
authorization in Medicare Advantage, the coverage criteria, and 
the duration for which those authorizations have to be valid. 
However, it will be difficult to assess both the current impact 
of prior authorization policies, as well as changes on 
enrollees without better data.
    As enrollment in Medicare Advantage continues to grow, 
better information about prior authorization, as well as other 
tools to manage utilization and contain costs will be 
necessary. Thank you.
    Senator Blumenthal. Thank you very much. Ms. Huberty.

    TESTIMONY OF CHRISTINE JENSEN HUBERTY,\1\ LEAD BENEFIT 
 SPECIALIST SUPERVISING ATTORNEY, GREATER WISCONSIN AGENCY ON 
                        AGING RESOURCES

    Ms. Huberty. Thank you, Chairman Blumenthal, Ranking Member 
Johnson, and Members of the Subcommittee. My name is Christine 
Huberty, and I have served as an Attorney at the Greater 
Wisconsin Agency on Aging Resources since 2015.
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    \1\ The prepared statement of Ms. Huberty appears in the Appendix 
on page 55.
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    As an advocate for senior residents of Wisconsin, part of 
my job is to provide legal assistance to residents experiencing 
Medicare coverage denials. I am here today to share my 
experiences with Medicare Advantage plans routinely denying 
coverage of skilled nursing facility stays, which endangers the 
health and safety of beneficiaries, causes unnecessary stress 
and financial hardship, and many times shifts expenses to the 
State's Medicaid program.
    Skilled nursing facilities are intended to be a temporary 
rehabilitation or nursing care facility after a hospital stay. 
For example, if a person breaks a hip and needs surgery, their 
doctor generally recommends several weeks in a skilled nursing 
facility until they are ready to safely go home.
    If a senior has Original or Traditional Medicare, they can 
expect to receive up to 100 days of coverage for their stay 
with no hassle. If a senior has a Medicare Advantage plan, 
however, they can expect to receive a denial well before their 
doctors even say they are ready to go home. This is despite the 
requirement that has been discussed that Advantage plans must 
offer the same benefits and apply the same coverage criteria as 
Original Medicare.
    When a patient first receives a denial, they are thrown 
into a maze of red tape that is dizzying even to our 
experienced legal team. The initial denial is made not by the 
Advantage plan, but a third-party contractor using an 
algorithm. A computer determines what a patient's predicted 
length of stay (PLOS) should be based on millions of past 
beneficiary data points, not the patient's plan of care or the 
advice of their doctors.
    Then, at each additional level of appeal--if the patient 
actually chooses to fight it--the denials are upheld by quality 
improvement organizations with little to no explanation. If a 
patient is successful with an appeal while still in the 
facility, they can expect a new round of denials to start in a 
matter of days.
    Patients caught in this maze are forced to make a 
devastating decision: stay in the rehab facility and pay 
thousands of dollars out of pocket, or go home against medical 
advice. In Wisconsin, we have a unique legal services program 
with attorneys able to take these cases at no cost.
    When we represent clients at Federal hearings, more often 
than not, the denials are overturned. But this is after months 
of document gathering, preparation of summary briefs, rounding 
up witnesses, and a telephone hearing against a team of 
representatives brought by the Advantage plans, if they show up 
at all.
    Even if a patient is successful at hearing, it can still 
take well over a year to get reimbursed. This issue has even 
hit me personally. This past holiday season, a family member 
called me and explained that his 89-year-old mother had fallen, 
was hospitalized, and entered a skilled nursing facility for 
rehab.
    They received a denial after a week, and they did not know 
what to do because her doctor said she still was not ready to 
go home. My first question was, does she have an Advantage 
plan? When the answer was yes, my heart sank because I knew 
immediately what this family was going to be up against.
    After a total of three falls, two hospital stays, and 
repeated denials, she ultimately went home against medical 
advice and decided that the appeals process was too stressful 
to pursue. Fortunately, this family had enough money to pay for 
the denied charges and lived close enough to help locate safe 
housing options and home care.
    But what does this situation look like for an individual 
with no family or friends or legal representation? In 
Wisconsin, the average cost of just 1 day in a skilled nursing 
facility is over $300. The individuals who cannot afford to 
stay will likely be advised to spend down their assets, forcing 
poverty to qualify for the State's Medicaid program.
    Now, these are not uninsured individuals. These are 
individuals who have chosen and paid for a Medicare product 
that was heavily marketed and aggressively sold to them. They 
are not getting the coverage that they paid for, and they are 
met with hurdles at every turn.
    Nor are these patients abusing the system. No one truly 
wants to be in a skilled nursing facility. Patients are 
actively trying to get home. In the case examples that I have 
provided your investigative team, you will note that in nearly 
all situations the patients returned home on the timeline 
prescribed by their doctors and sometimes even earlier.
    Not the unrealistic--at times unconscionable timeline 
forced upon them by their Medicare Advantage plan. Our most 
vulnerable citizens are up against an impossible system, and I 
want to thank you for your time to investigate these practices. 
Thank you.
    Senator Blumenthal. Thanks so much. Lisa Grabert, please.

 TESTIMONY OF LISA M. GRABERT,\1\ VISITING RESEARCH PROFESSOR, 
            MARQUETTE UNIVERSITY COLLEGE OF NURSING

    Ms. Grabert. Chairman Blumenthal, Ranking Member Johnson, 
and Members of the Subcommittee, I am Lisa Grabert, a visiting 
Research Professor in the College of Nursing at Marquette 
University. I am a former congressional staffer for the U.S. 
House of Representatives Committee on Ways and Means, and I am 
honored to testify before the Subcommittee today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Grabert appears in the Appendix 
on page 87.
---------------------------------------------------------------------------
    Medicare Advantage is an important part of the Medicare 
program. Two weeks ago, MA enrollment surpassed fee for service 
(FFS) for the first time in the history of the program. 
Medicare beneficiaries are voting with their feet and are 
increasingly revealing their preference for MA, which now 
represents 50.2 percent of the market.
    Beneficiaries select MA for a variety of reasons, including 
improved financial protections, additional benefits, prior 
experience with managed care, and choice simplicity. As part of 
the tradeoff of receiving a comprehensive benefits package, MA 
beneficiaries accept a provider network and some utilization 
review requirements, such as prior authorization.
    It is important to remember the context of the deployment 
of utilization review. Our country spends a significant portion 
of its economic power, nearly one-fifth of our gross domestic 
product (GDP) on health care.
    The MA program was designed to shift financial risk from 
the government to private plans. In exchange for taking that 
financial risk, MA plans are also afforded tools such as prior 
authorization to assist in managing that risk. If those tools 
are altered, risk will shift back to the taxpayer in the form 
of higher costs.
    This is the economic dynamic in the Medicare program, and 
it is our expectation that a Medicare beneficiary has a basic 
understanding of this when they elect their choice of coverage. 
However, it may not be clear to beneficiaries what they are 
agreeing to when it comes to prior authorization.
    Further, it may not be clear to a variety of stakeholders 
what prior authorization exactly is. There is no statutory 
definition, and until a month ago there was no regulatory 
definition of prior authorization. On April 12, CMS finalized 
new regulatory changes for prior authorization, which will 
become effective for the first time on June the 5th of this 
year.
    Now that the rules of engagement on prior authorization 
have been clearly articulated, it is worthy to note, without a 
healthy push from Congress, CMS may not have been motivated to 
make these changes. In the 117th Congress, two companion bills, 
the Improving Seniors Timely Access to Care, were introduced.
    The Senate version was introduced by a Member of this 
Subcommittee, Senator Marshall. These bills focus on many of 
the same changes CMS recently finalized, as well as changes 
included in a separate proposal by CMS for an electronic 
system.
    Prior to advancing the bill in the House, the Congressional 
Budget Office (CBO), released a budgetary score for the bill of 
$16.2 billion over the 10-year budget window. CBO score 
represents a warning that tinkering with utilization review 
tools such as prior authorization can have significant 
financial downsides to the solvency of the Medicare program.
    H.R. 3713 alters the economic agreement between the MA 
plans and the Federal Government. To better understand the 
unintended consequences of this policy change, we need to 
examine some failures in the fee for service side of Medicare.
    The testimony provided by Megan today provides the 
necessary background on a service frequently targeted by prior 
authorization, inpatient rehab facilitation (IRFs) facilities. 
On an annual basis, CMS spends $60 billion on fee for service 
post-acute care.
    In the last decade, three of the four post-acute payment 
systems have been comprehensively reformed, including home 
health, nursing homes, and long-term care. IRFs have yet to be 
reformed. To receive the highest level of payments, IRFs must 
maintain a 60 percent of their annual census, treating patients 
across 13 complex medical conditions, including stroke, 
traumatic brain injuries, and spinal cord injuries.
    Yet policymakers have questioned the so-called 60 percent 
rule and have recommended it be increased to 75 percent. 
Policymakers have also questioned the profitability of IRFs. 
The fee for service IRF Medicare margin is 13.5 percent.
    Compare this margin to long term care hospitals (LTCHs), 
IRF's closest competitor, with a margin of just 2.9 percent. 
The difference between these two hospital types is that 
Congress has done the hard work to reform LTACHs, but not IRFs. 
Where fee for service has failed, Medicare Advantage has filled 
the gap with prior authorization.
    We do not know the median American Medical Association 
(AMA) compliance rate for these 13 conditions, and I strongly 
recommend the Subcommittee compels CMS to publicly release this 
information. If the median MA compliance rate is higher than 
the fee for service rate, Congress should consider altering the 
60 percent rule.
    Such a policy change would ensure parity between fee for 
service and MA and would obviate the need for additional prior 
authorization of IRF discharges. Thank you for the opportunity 
to share my perspective with the Subcommittee. I look forward 
to continuing to work with you on these important issues.
    Senator Blumenthal. Thank you very much, Ms. Grabert. Ms. 
Bent.

   TESTIMONY OF GLORIA BENT,\1\ WIDOW OF GARY BENT, MEDICARE 
                       ADVANTAGE ENROLLEE

    Ms. Bent. Thank you, Chairman Blumenthal, Ranking Member 
Johnson, and Members of the Subcommittee for the opportunity to 
come here today and speak on behalf of my late husband. You ask 
in your invitation if seniors enrolled in Medicare Advantage 
plans face barriers accessing necessary care and treatment.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Bent appears in the Appendix on 
page 99.
---------------------------------------------------------------------------
    My answer based on our experience of getting and 
maintaining rehabilitation and skilled nursing care for my 
husband is yes, yes, they do. The barrier we encountered was a 
third-party company hired by our Medicare Advantage plan to 
authorize or deny care and treatments.
    My husband had been treated with immunotherapy for 2 years 
for melanoma. A year passed without treatment and no sign of 
melanomas returned. We thought we were in a major remission, 
and we celebrated.
    Then last Memorial Day, when he could not remember how to 
tie his shoes, my husband asked to be taken to the emergency 
room. In the emergency room, we learned that there was a lesion 
in his brain, and it was bleeding.
    The lesion and the hematoma were removed surgically on June 
1st, and pathology confirmed what we all feared. It was 
melanoma. Gary came out of surgery with significant cognitive 
and mobility deficits. He had upper body weakness. He could not 
walk. He had left neglect. That means that his brain no longer 
registered that he had a left side to his body. He was 
heartbreakingly confused and disoriented.
    His neurosurgeon wanted him transferred to an acute 
rehabilitation and skilled nursing hospital for intense 
physical, occupational, and speech therapy. Acute 
rehabilitation services were denied. The third-party 
authorization party determined that my husband could not 
withstand intense therapy, even though his neurosurgeon felt it 
was appropriate.
    A transfer to short term rehab and skilled nursing was 
approved and he was transferred there on the 14th of June. But 
before the staff of the facility could even evaluate my husband 
or develop a plan of care, I was contacted by someone who 
identified themselves as my naviHealth care coordinator and 
told that my husband would be discharged on July 4th.
    My job, she told me, was to find the safest possible 
location for him to be brought home to on that discharge date. 
She strongly suggested that we consider he would be permanently 
wheelchair bound, and therefore highly recommended a skilled 
nursing facility, self-pay.
    If I lived in a home that was not handicapped accessible, 
which ours was not, then I needed to move. I shared my concern 
about the July 4th discharge date with the Seabury staff, and I 
was told that I had entered a battlefield that I was going to 
be on in an attempt to keep my husband at that facility as long 
as he needed to be there.
    They told me that I could expect regular reviews of his 
health notes, that I could expect a series of notices of denial 
of Medicare payment accompanied by a discharge date--that would 
be 2 days after I got that notice, and they told me that I 
could appeal.
    But if we won a couple of appeals, then we could expect 
that the frequency with which these denials were going to come 
would increase. In the 7 weeks that Gary was at the Seabury 
Health Services Center, we received three of those notices of 
pending Medicare nonpayment.
    The last two came 4 days apart. We won two of the appeals. 
We lost the third. My husband was discharged on August 7th. He 
came home by ambulance and was accompanied by an emergency 
medical technicians (EMT) who told us he seemed to have a low-
grade fever and had complained about headaches and neck pain 
with every bump in the road.
    He was disconnected, disoriented. He was experiencing great 
difficulty in making the transfers from chair to walker to bed 
that he had mastered at Seabury. The next morning, we had to 
call emergency services because my husband did not know who he 
was, where he was, or who we were.
    He was taken to the University of Connecticut Health 
Center, where he was admitted and where he stayed for 3 weeks 
because he was discharged with bacterial meningitis. The 
reappearance of melanoma in 2022 pulled a rug out from under my 
husband and my family. Then came the added trauma, which piled 
on steadily, of having to fight to keep him receiving the care 
he needed.
    This should not be happening to families and patients. It 
is cruel. Our family continues to struggle with the question 
that I hear you asking today, why are people who are looking at 
patients only on paper or through the lens of an algorithm 
making decisions that deny the services judged necessary by 
health care providers who know their patients and are 
interacting with them personally, and in some cases, have been 
working them for months or even years. Thank you for your time.
    Senator Blumenthal. Thank you, Ms. Bent. I am going to 
begin with questions. We are going to have 7-minute question 
rounds. We are in the middle of votes right now, as you may 
have gathered.
    You will see Members come and go, including myself and 
Ranking Member Johnson. If we need to take a brief recess, we 
will. But this is a really important panel on a critically 
significant topic.
    Thank you for being here and thank you for bearing with us. 
Ms. Bent, I particularly appreciate your powerful story of the 
real-world consequences, as you have put it so well, of this 
broken system.
    It is a system that is failing people like yourself, your 
husband, and your entire family. Because as you have put it so 
well, the trauma hit not just your husband, but your entire 
family----
    Ms. Bent. Yes.
    Senator Blumenthal. You were on a battlefield, as you have 
called it. A battlefield that involved not only your husband's 
fight for his recovery, but your fight for the resources 
necessary to provide care.
    One of my questions is whether you were ever given an 
explanation by this naviHealthcare coordinator for the reasons 
that he was discharged against the advice of your surgeon.
    Ms. Bent. The denial of the acute rehabilitation services, 
I did get a letter after he was in Seabury telling me why that 
service had been denied. It was that he could not withstand the 
intense therapy.
    The other denials, I would appeal through Kepro, and the 
response I got was from them, which was a reiteration of what 
the paperwork from naviHealth, I guess, had said about my 
husband, and then whether the reviewer agreed or disagreed.
    Senator Blumenthal. I do not know whether you know, but 
naviHealth actually relies on algorithms, not on a clinician's 
review, not on a physician or a surgeon examining the medical 
records of your husband, but on an algorithm.
    Ms. Bent. Right.
    Senator Blumenthal. In fact, a lot of money has been made 
as a result of selling naviHealth and its system from one 
company to another. Now UnitedHealthcare, where it is a 
subsidiary. You mentioned the possibility of an appeal.
    I want to show you a poster\1\ which sets forth the numbers 
given by Ms. Fuglesten Biniek. They may have been noticed less 
than they should have been when you mentioned them in your 
testimony, but I think they are probably the most important 
numbers that we will consider today, at least for me as a juror 
here, sitting in judgment of this system.
---------------------------------------------------------------------------
    \1\ The poster referenced by Senator Blumental appears in the 
Appendix on page 106.
---------------------------------------------------------------------------
    Thirty five million requests for care, 2 million were 
denied completely. Only 11 percent of those denials were 
appealed. But, of the number appealed, 80 percent were granted. 
In other words, the vast majority of appeals were found 
meritorious, but only a small percentage had the wherewithal, 
the patience, the time, the resources, or the simple fortitude 
in the face of this battlefield, as Ms. Bent has described it, 
to actually take it to an appeal. What do those numbers tell 
you?
    Dr. Fuglesten Biniek. The relatively small share of 
appeals, I think can point to several things. People may not 
know how to appeal. They may not believe they have a case to 
appeal. People are often very ill when they are doing this, and 
if they do not have a caregiver or somebody else to assist 
them, or access to legal services, going through that process 
can be difficult.
    It is a strikingly low number once you see how many are 
granted upon appeal. Of course, if all of them were appealed, 
80 percent may not be favorably determined. We do not know what 
would happen in the cases for those that were not appealed.
    But it is striking that such a large number--we looked 
across insurers and this was consistent across nearly every 
insurance firm that offers Medicare Advantage plans. They 
overturned the vast majority of their initial decisions upon 
appeal.
    Senator Blumenthal. Striking is the right word. Actually, I 
think it is shocking and stunning. Ms. Huberty, with your 
practical experience, what do these numbers tell you?
    Ms. Huberty. They confirm everything that we see on a daily 
basis, absolutely. We are usually involved in that bottom 80 
percent. When clients are able to come to us, we can explain 
the appeal process and we can walk with them through it.
    If they have an advocate who has been able to access our 
services and speak for them, and help again while they are 
injured or ill, we can be that support system. But that is 
absolutely what we see in our practice.
    Senator Blumenthal. The denials, those 2 million, that are 
then successful in being overturned when they are appealed, are 
often the result of algorithms. Could you talk about how you 
have seen in your practical experience, the real-world effects 
of these algorithms?
    Ms. Huberty. Right. You mentioned the naviHealth system and 
their use of algorithms. The only reason I know about the 
document and that use of algorithms is because of taking these 
cases to the Federal hearing stage, the Administrative Law 
Judge (ALJs) hearings.
    It is only then when I have requested the hearing file, the 
case file that would have been provided by the advantage plan, 
that I have seen that document. But now that I have seen it, 
and I know what it looks like and how it is referenced, I see 
it referenced often when the Advantage plans do work with a 
medical reviewer or a medical director, they will often 
reference that predicted length of stay.
    You will see the acronym PLOS, and you will also notice it 
too, it is decimal points. A predicted length of stay of 16.6 
days, and they will receive the denial on the 17th day. We see 
that repeated.
    Senator Blumenthal. In fact, I am going to hold up a 
document that I am going to ask to be included in the 
record,\1\ without objection.
---------------------------------------------------------------------------
    \1\ The information referred to by Senator Blumental appears in the 
Appendix on page 81.
---------------------------------------------------------------------------
    It refers to an anticipated stay in length of days of 16.6, 
and that is the date, in fact, on the 17th day when in one case 
you were handling a discharge resulted. Does this reflect your 
experience?
    Ms. Huberty. Yes. Yes it does.
    Senator Blumenthal. Ms. Bent, you were never shown a 
document like this, and you were never given an explanation 
about how the algorithm was the basis for a decision regarding 
your husband?
    Ms. Bent. No.
    Senator Blumenthal. My time has expired on this first 
round. I am going to turn to the ranking member.
    Senator Johnson. Thank you, Mr. Chairman. First of all, let 
me describe this as a real problem. My definition of real 
problem is something that does not have an easy solution. First 
of all, Ms. Bent, my sincere condolences on the passing of your 
husband.
    It seems to me, and I have years of experience buying 
private health care, watching these exclusions being added to 
the policies, trying to bring the cost down--I have all kinds 
of questions, and I am trying to figure out how to zero in.
    My overall question is, how does this kind of prior 
authorization compare with private insurance, and truthfully, 
what people try to do with normal Medicare as well? I had in-
laws that were being booted out of hospitals way before they 
were supposed to be on Medicare.
    I do not think that is Medicare Advantage. Can somebody 
speak to how this compares to private insurance and how it 
compares to Medicare.
    Dr. Fuglesten Biniek. I can start. I have colleagues that 
have looked at similar questions in the health insurance 
marketplaces, but what we have found is that the data are not 
comparable.
    You cannot actually figure out how things compare. They 
have other data that would be nice to have in Medicare 
Advantage, such as the reason for the denial of payments, but 
the data for your first question simply is not available.
    Senator Johnson. Let me ask about the services being 
denied. It seems like an awful lot of what we are talking about 
here is long term rehabilitation care. Is that most of the 35 
million requests, or what else is being pre-authorized and 
being denied?
    Dr. Fuglesten Biniek. So that data does not tell us the 
particular services. I think other people on the panel can 
speak from other data they have looked at, or their experience, 
what they have seen with that data. One of the big gaps is it 
doesn't tell us the services.
    Senator Johnson. We are always missing information. Ms. 
Tinker, what can you add?
    Ms. Tinker. When we looked at this data, we took a month in 
June 2019, and we really looked very closely at those prior 
authorization denials, and what we found is they fell into sort 
of three main buckets.
    One was post-acute care, which you were just mentioning, 
transfers from hospitals to either skilled nursing facilities 
or inpatient rehabilitation facilities. Another bucket that we 
found was significant or imaging services, specifically things 
like computed axial tomography (CAT) scans and magnetic 
resonance imaging (MRIs).
    Then the last was injections generally for issues dealing 
with pain along the spine. In addition, when we looked at our 
work and tried to make that comparison against original 
Medicare, what we found was with those prior authorization 
denials, 13 percent of them actually met original Medicare 
requirements.
    One of the Medicare Advantage requirements is that it 
provide the same level of service that original Medicare does.
    Senator Johnson. Again, I am trying to get to why are these 
services chosen for prior authorization? I would think with 
long term rehabilitative care, that is a big dollar amount, 
correct, in Medicare Advantage?
    The other two buckets you mentioned do not necessarily fit 
in that category, or some of these services are generally 
abused or used when they are not needed?
    Ms. Tinker. We have other evidence that shows that there 
are issues around fraud in the injection space, and so that may 
be one reason that prior authorization is there. That is not 
something we looked at explicitly in that particular study. But 
yes, it is not as expensive as issues around post-acute care.
    Senator Johnson. Are you seeing similar types of problems 
in primary Medicare?
    Ms. Tinker. We do not have any work that looks specifically 
at primary Medicare on those particular issues, and prior 
authorization is not used as prevalent.
    Senator Johnson. Right. But denial of service or being 
booted out of a hospital early. Those are probably issues of 
Medicare as well, correct?
    Ms. Tinker. Specifically in the report that we did in the 
study from April 2022, what we did, though, is looked at 
Medicare Advantage prior authorization denials and how they 
compared to the rules in original Medicare.
    The findings that 13 percent of the time, original Medicare 
would have paid, raised significant concerns.
    Senator Johnson. Is that 13 percent in appeals, or is at 13 
percent across the board in terms of the denials?
    Ms. Tinker. That was across the board in terms of denials.
    Senator Johnson. OK. Ms. Grabert, I think you were putting 
your finger on why this is occurring. People trying to control 
costs. Do you have any idea in terms of what the total dollar 
amount that is at stake? I know you mentioned one figure. If 
you can kind of restate that.
    Ms. Grabert. Sure. If you take one of the examples that 
Megan just illustrated in post-acute care, we do not know the 
full amount on the Medicare Advantage side, but on the fee for 
service side, that is about $60 billion in annual spending.
    If it is a 50/50 kind of figure, that is the same 
equivalent on the Medicare Advantage side. You are probably 
looking at a total of roughly $120 billion in annual spending 
just in post-acute care.
    Senator Johnson. The chairman pointed out how much money 
Medicare Advantage is making per patient. If you wiped out 
those profits, kind of what would happen to Medicare Advantage, 
where would they try and make things up?
    Ms. Grabert. They might try to make it up on the fee for 
service side.
    Senator Johnson. Describe that a little bit more.
    Ms. Grabert. On the fee for service side, and in my 
testimony, I referenced some of the margins that providers 
enjoy from the fee for service rates. There is certainly a 
discrepancy there as well.
    I think the Medicare Advantage plans are paying attention 
to that on the fee for service side, and they are using tools 
like prior authorization to get at making changes and to bring 
some of those margins down.
    That is their ability to do that, on the Medicare Advantage 
side. Whereas on the fee for service side, we cannot really get 
at those costs and inefficiencies in the Medicare program 
unless Congress authorizes it.
    Senator Johnson. Are they also using the savings to the 
prior authorization and then denial? Either justify denial or 
unjustified. They are using that to fund the other benefits 
like dental and vision, that type of thing.
    Ms. Grabert. Yes, they are reinvesting the money that they 
get from the Medicare program in a variety of different things. 
Supplemental benefits such as vision, dental, and hearing, and 
a whole host of other things that are offered to beneficiary on 
the Medicare Advantage side that they are not able to get on 
the fee for service side.
    Senator Johnson. A solution to this problem would be, first 
of all, we are not going to let Medicare Advantage plans do 
prior authorizations. We are not going to allow them to deny 
coverage based on prior authorizations.
    What would end up happening is what probably one or two 
things. Either the cost to the taxpayer could go up pretty 
dramatically or Medicare Advantage plans would have to pare 
back in terms of what they cover. I would think those are the 
two most likely scenarios, correct?
    Ms. Grabert. Yes, I would say that both of those things 
would happen.
    Senator Johnson. OK. I have no further questions. Thank 
you.
    Senator Blumenthal. We will turn to Senator Marshall. I am 
going to go vote. Hopefully, I will be back before he finishes. 
Senator Johnson is going to stay and preside while I run or 
walk to vote.

             OPENING STATEMENT OF SENATOR MARSHALL

    Senator Marshall. Thank you, Mr. Chairman. Let me start by 
thanking you for co-sponsoring our legislation on prior 
authorization that would help solve some of the problems here. 
Thank you for your leadership, and many other folks from this 
Committee as well. Ms. Bent, thank you for sharing your 
harrowing story.
    I cannot imagine in your worst days, what it would be like 
to have a 600-pound, 2,000-pound gorilla that you were fighting 
with as well. Standing beside your husband, as your vows said 
that you would do.
    I just cannot imagine what that was like. I want you to 
know that you have some fighters up here that are fighting for 
this issue. It was probably 10, 12 years ago, I was leaving the 
office and my nurse told me, hey, by the way, your surgery for 
tomorrow was canceled. Your 7:30 case.
    I said, oh, really? How come? Is the patient sick? They 
said, no, her insurance company canceled it. I said, why? They 
said, it is canceled, and you have to make an appointment to 
talk to a person to see if they will approve it. What was the 
name of the doctor that disapproved?
    It was not a doctor. It was some type of a clerical person 
that had canceled the case. I want to submit for the record a 
couple of documents.\1\ One is from a doctor, Ronald Chen, who 
was one of the most respected radiation oncologists in the 
Nation. He is a regular caller of our office, needing help with 
this issue.
---------------------------------------------------------------------------
    \1\ The documents submitted for the Record by Senator Marshall 
appears in the Appendix on page 108.
---------------------------------------------------------------------------
    All cases--an 85-year-old man with bladder cancer who had 
completed radiation and chemotherapy but needed a CAT scan. 
Again, this is a doctor who follows the guidelines. Radiation 
oncology.
    There are specific guidelines to standard of care to get a 
CAT scan, 6 months after that therapy that was denied. Another 
69-year-old man with metastatic prostate cancer, the wanted 
proton therapy it was denied. A 74-year-old person with 
aggressive prostate cancer was denied proton therapy. Another 
79-year-old with prostate cancer that needed a follow up 
position emission tomography (PET) scan that were all denied. 
Here are some other ones.
    Patient with cancer denied bloodwork. Patient with heart 
disease denied an electrocardiography (EKG). Heart disease, 
EKG, imagine that. Patient recovering from a stroke, denied 
physical therapy. A patient with multiple sclerosis (MS) and a 
tibia fracture denied a wheelchair. A patient with glaucoma, 
denied eye exam and treatment.
    A patient with breast cancer denied reconstructive surgery. 
I could not imagine. I remember 1 month I had to tell three 
women in there, one was 29, two were 32, that they had 
metastatic breast cancer.
    I could not imagine having to argue why these women wanted 
reconstructive surgery done at the same time as their 
treatment. Someone who never went to medical school, someone 
who has never touched a patient making decisions.
    That is why we have been fighting for this issue now, up 
here for, I believe, 4 years. In our legislation, Improving 
Seniors Timely Access to Care Act, is bipartisan, it is 
bicameral. I believe it is the most co-sponsored bill and 
endorsements of any legislation up here. But unfortunately, it 
got a CBO score of $10 billion, and we will maybe have time to 
talk about that later.
    Ms. Tinker, I want to thank you for your professionalism, 
your understanding and an in-depth knowledge of this has helped 
us to take what we thought was good legislation and make it 
better. That is the way the process up here is supposed to 
work, and we appreciate your help as well.
    As you know, our bill requires--and this is for you Ms. 
Tinker. As you know, our bill requires you to MA plans to 
report on detailed metrics related to prior authorization 
delays. By the way, that is how prior authorization is being 
used now. It is being used to delay care and deny care.
    That is what it has become a tool to be, is to delay care, 
hoping the patient dies so they do not have to give anymore 
care, I guess. Our bill requires MA plans to report on detailed 
metrics related to prior authorization delays, denials, and 
appeals, in the aggregate, at the individual service. The 
proposed rules, however, merely require aggregate data.
    In light of your work, do you think reporting by current 
procedural terminology (CPT) code and, or individual service 
level would help the Office of Inspector General better assess 
and ensure that MA plans are complying with Medicare coverage 
rules? That is a complex question. Sorry.
    Ms. Tinker. That is a very complex question. Thank you very 
much. I would say anytime we can have more data and more 
information that is timely, complete, and accurate, it will 
help us to do a better job.
    Very recently, we issued a report that specifically noted 
that denial of data is not included in Medicare Advantage 
encounter data, and that that hampers the ability of both OIG 
and other law enforcement agencies to do their jobs and to 
truly look at the data and find areas where fraud, waste, and 
abuse is occurring.
    Senator Marshall. I think the misconception is the 
physicians office are very willing to do some type of pre-
approval process, but most of this is streamlined. Ninety 
percent of my procedures are the same procedure. The same 
prerequisites. When should you replace someone's knee? When 
should you replace someone's hip? That we could do this all 
electronically. My next question, Dr. Fuglesten Biniek, help me 
out. I want to get it right.
    Simple question for you, in your statement, you noted that 
the Kaiser Family Foundation analysis on prior authorization in 
MA demonstrated a significant difference in the denial rates 
reported by the MA plans.
    Do you agree that more detailed individual service level 
reporting on delays and denials would help seniors better 
navigate which plans will meet their personal health care 
needs?
    Dr. Fuglesten Biniek. Yes.
    Senator Marshall. You want to extrapolate?
    Dr. Fuglesten Biniek. Yes. Right now, Medicare 
beneficiaries can choose from 43 plans. That is a lot, and the 
information that is available right now, you have to dig very 
deep to get any information on whether a prior authorization 
may or may not be required. It is certainly not at the service 
level.
    Now, with 43 plans, it might still be pretty difficult to 
compare across plans, but it would be a step in a direction 
that would help for people who were or interested, who knew 
they needed certain services, had particular conditions to at 
least be able to start on that endeavor.
    Senator Marshall. Thank you. Ms. Grabert, are you aware of 
the Support Act?
    Ms. Grabert. I am not.
    Senator Marshall. OK. Anyway, it requires CMS to establish 
electronic prior authorization in Medicare Part D. CBO said it 
would be negligible. Further, CMS estimated that implementing 
the regulations would produce savings for plans and providers. 
Faxes have to be more expensive, and the appeals process even 
more expensive.
    Just want to make sure that to be clear, that our bill does 
not limit prior authorization, it streamlines it. Do you 
believe that making the system more efficient is better and 
cost effective for patients, providers, and health plans?
    Ms. Grabert. Yes, I do. Also, I believe in the regulation 
that CMS just finalized in April, they were prohibiting the use 
of prior authorization for prescription drugs.
    Senator Marshall. OK. Thank you. Ms. Grabert, I will stay 
with you. Senators Thune, Brown, Sinema, and I are circulating 
a letter to CMS urging them to finalize the prior authorities, 
modeled after our bill.
    As a former congressional staffer, congratulations. I do 
appreciate it. It is a tough life up here. I appreciate you 
going on and taking that skill set to what you are doing now. 
You understand the CBO scoring, which I do not. The proposed 
rules reduce the score to $10 billion. When finalized, and if 
they do adopt a real time decisions and transparency 
requirements, we think it will be $0.
    Here is our question, how do you consider this a warning 
sign for Medicare if the regulations, which produce savings, 
change the baseline so the score would drop down to something 
negligible? Good luck.
    Ms. Grabert. I was going to say first, I think what you 
told me may not be publicly available because I did not know 
about the reduction in score to $10 billion. Also, I have not 
been privy to those conversations with CBO, so I do not know 
that the score would go down to $0. The only thing that I had 
available to me was a publicly available $16 billion score from 
the bill that was scored last Congress.
    Senator Marshall. Do you understand their logic and how 
they came up with those types of numbers?
    Ms. Grabert. I certainly do. Usually, CBO will discount the 
scores that they issue when CMS has an active proposed rule in 
place, which they do right now for the electronic system, which 
is my assumption as to how they got from $16 billion down to 
$10 billion.
    If CBO were to finalize it, it may drop further. We do not 
know what their assumptions are to get in there. If CMS was not 
to finalize that verification rule, I would assume that the 
score would go back up to $16 billion over time again.
    Senator Marshall. In my mind, I cannot figure out where the 
CBO would think that this would cost the government money. It 
is a more efficient process. How did they come up with, you 
think, with the $16 billion? Where is the cost coming from?
    Ms. Grabert. They assumed that the restrictions and the 
reporting requirements may encourage plans to change their 
behavior, so they will be doing less prior authorization. Less 
prior authorization will result in more costly services and 
services being billed.
    It might change, actually, the bid rates that Medicare 
Advantage plans submit on an annual basis, all of which is 
greater cost to the taxpayer. Those are the assumptions that 
CBO built into their score.
    Senator Marshall. OK. Thank you. Let me review my notes. I 
will be yielding back about right now, but I think I am about 
ready to wrap things up. I am going to move to recess, then it 
sounds like. We will see if anyone else is coming back. Thank 
you so much, everybody. We will see if anybody else is coming 
back from voting. The staff will let you know soon.
    [Recess.]
    Senator Johnson. This gives me a good opportunity here. 
What I would like to do with the witnesses is go through the 
basic problem-solving process. I come from a manufacturing 
background, do this all the time. We have taken the first step. 
We have admitted we have a problem here.
    I think the next step is find the problem. If we have time, 
what is the root cause of that, and then what are the 
solutions? Again, if the first of you gets the definition 
right, you don't have to redefine it, but I guess I would like 
to start with you, Ms. Tinker. How would you define the 
problem?
    Ms. Tinker. What our work showed is that prior 
authorization was being used at times when original Medicare 
would have paid for the service.
    Senator Johnson. Do you think prior authorization itself is 
the problem, or just not administered properly, people are not 
following the guidelines?
    Ms. Tinker. Our work looked at and showed that while prior 
authorization is useful as a tool in Medicare Advantage, it is 
that 13 percent of the time when original Medicare would have 
in fact paid for those services that created the problem.
    Our recommendations are really key toward how do you make 
prior authorization work better, and how do you eliminate those 
times when original Medicare would have paid.
    Senator Johnson. Ms. Fuglesten Biniek, would you agree with 
that definition? Would you change it slightly?
    Dr. Fuglesten Biniek. I agree with most of what Ms. Tinker 
just said.
    I would also add that from the perspective of policymakers 
conducting oversight, I think there is a lack of information to 
really then narrow in on what types of policies you might 
propose or other types of oversight you might do, because we do 
not know the specific services unless you go and get the very 
detailed data and conduct a very labor intensive audit who is 
being affected, how often they are being affected, are things 
being denied because they are deemed not medically necessary, 
or providers are not providing sufficient documentation?
    Those lead to very different solutions, and without that 
information, it is hard to know how to solve the problem.
    Senator Johnson. You have a sub-problem here. You do not 
have enough information to really define the problem properly 
and then find a solution. Again, we are honing in on it. 
Actually, Ms. Huberty, you missed this. Ms. Grabert, we are 
going through the problem-solving process, trying to figure out 
what is the definition of this problem. Ms. Grabert.
    Ms. Grabert. Yes, I think there are certainly problems on 
the fee for service side that need to be addressed because MA 
plans are using prior authorization to actually get at some of 
those things. I do not think the problem is necessarily prior 
authorization. I think there is some fee for service things.
    Senator Johnson. Now, when you say fee for service, is that 
you are going into the private sector, or just fee for 
service--and I mean, describe what you are talking about there.
    Ms. Grabert. Fee for service is the option in Medicare that 
beneficiaries elect, that allow them to get services directly 
without having a plan put together----
    Senator Johnson. That is traditional Medicare is what you 
are talking about then.
    Ms. Grabert. Yes.
    Senator Johnson. OK.
    Ms. Grabert. But I would also maybe challenge the 13 
percent number that Megan offered. Thirteen percent does not 
actually seem all that high to me in the way that she is using 
it. For example, for inpatient rehab facilities, 19 percent of 
what they are billing is actually on the fee for service side 
is an error every year.
    A lot of the services in the 13 percent number that Megan 
used come from an audit for at least four of those services 
were for inpatient rehab facility. If you are looking at the 19 
percent that I mentioned on the fee for service side versus 13 
percent on the MA side, I feel a little bit more comfortable 
with that 13 percent because it is less error than what we are 
actually observing for some of those same services on the fee 
for service side.
    Senator Johnson. Ms. Bent, having gone through this, how 
would you define this problem?
    Ms. Bent. I would say that for my family, when this first 
came up, I went to the Medicare website and looked at what I 
might expect for my husband, and I saw the figure of 100 days. 
I think you can imagine how surprised I was when I was told 
after a considerably smaller number of days he was going to be 
discharged. For me, the problem becomes an issue of trust.
    Senator Johnson. Even 100 days is the limit. What would 
happen after 100 days? Do you get discharged to a long-term 
care facility where there is no hope for rehab? What is the 
next step then?
    Ms. Bent. These ladies could all correct me if I am wrong, 
but what I read was after 100 days, we would have had the 
option of leaving him there and there would have been a co-pay 
that came into place.
    Senator Johnson. OK.
    Ms. Bent. I would have had the option of saying, yes, I can 
cover this percentage of this fee and he can stay there.
    Senator Johnson. Ms. Huberty, do you want to take a crack 
at how you define the problem we are dealing with here today?
    Ms. Huberty. I think the main issue is that the Advantage 
plans are deferring the decisionmaking to a lot of third 
parties. None of those third parties are the doctors that are 
meeting with the patients or their treating therapists. They 
are rarely even looking at their medical records.
    Often it is that algorithm that starts the process, and 
there is very little oversight. They are rubber stamped denial 
as they go through the process.
    Senator Johnson. I think you are kind of making the point I 
was making earlier in terms of our entire health care financing 
system is, we are deferring all these decisions to a third 
party. What we are saying is, we want it all, we want the best, 
and we do not care what it costs. That is a problem.
    I will throw out kind of a guideline or an outline of a 
solution first. Try and reintroduce consumerism into health 
care as best as possible. For my examples, that would be the 
low end. The things you can really make a choice on, and say, I 
know I had an MRI last week and I would like another one this 
week, but it is not worth it, OK.
    Then have high deductible insurance plans that are actually 
insurance plans, healthy exclusions, without pre-authorization 
plans that are being violated and denied. That is kind of the 
thought process that goes through my head.
    But, do you all acknowledge that this really is a problem? 
We are spending so much, and in the end, people do not care 
what it is costing because either the government is paying for 
it up to a point or the insurance. We are best at causing costs 
to run higher than really any other country in the world. That 
is a real problem, a real issue here.
    I threw out my outline of a solution. What are your overall 
solutions? I will start with you, Ms. Bent. By the way, I have 
all the sympathy in the world because we have had, my in-laws--
my parents, fortunately did not have--my mother passed within 
24 hours, a massive stroke.
    But my mother-in-law and father-in-law just went through 
hospitalization after hospitalization, and getting booted out 
before they certainly felt they were ready to go home. It is a 
horrible process. You have my deepest sympathy. But what do you 
think?
    Ms. Bent. I would like to see the people who are actually 
giving the care and know the patient, not being overridden in 
their decisions by a third party that is perhaps using software 
to make their decisions.
    Anecdotally, I will tell you that when it was time to stop, 
my husband's primary care was very clear with him and us about 
that. He knew when it was time to stop treating and stop 
pursuing an elongation of something that was not going to 
change. I think they are trustworthy. I would go with them.
    Senator Johnson. The pushback would be that there are going 
to be some people that are going to game the system. They might 
have some financial gain by having people there. But I would 
agree with you.
    I think you are making that point is, we ought to put trust 
in the doctors and nurses who are going to abide by the 
Hippocratic Oath, have the primary responsibility to the 
patient, not to Medicare, not to Medicare Advantage plan, but 
let them make the call. I think that is what most Americans 
would agree with.
    Then we have to address the cost at a different level. Then 
we have to figure out, that is where I keep going down to the, 
high deductible plans that are true insurance, and you really 
let the care providers do that. Then try and bring consumers 
into the process for the little stuff, where you do have time--
you can make a decision.
    You say, OK, I will take the generic drug, or I will do 
this. This is going to work, but it is a lot cheaper than that. 
Does that make sense to you? Ms. Grabert, what do you think?
    Ms. Grabert. I am going to stick to my theme on looking at 
fee for service Medicare again, because that is the part of the 
program that has very little consumerism.
    Right now, beneficiaries who are in fee for service 
typically elect a Medicare plan for supplemental coverage as a 
wraparound service for them.
    There is absolutely no consumerism built into that model 
because they are shielded from almost all of the costs and out-
of-pocket that you are looking at within that model.
    Medicare Advantage really is well above fee for service in 
that respect. If you really want to put consumerism in, I would 
say target Medigap plans on the fee for service side.
    Senator Johnson. What is the cost per enrollee--again, I do 
not have this on top of my head. I always heard that Medicare 
Advantage is really popular because it offers better benefits, 
but it costs in general the government more because it has 
that. Is that true?
    Dr. Fuglesten Biniek. Yes. MedPAC estimates this year it is 
about 106 percent of what traditional Medicare were spend on 
similar beneficiaries. It is about $27 billion in one year.
    Senator Johnson. OK. I would have thought maybe it is 
higher than 6 percent, but, OK.
    Dr. Fuglesten Biniek. To be fair--enrollees get something 
for that. They get lower cost sharing. They get extra benefits. 
But plans also benefit from that. The key question is how much 
of the savings they generate, should they get to keep? Should 
enrollees benefit and should the government get back? Right 
now, the government gets none of it.
    Senator Johnson. Again, what you are saying Ms. Grabert is, 
rather than trying pinch pennies and resolving the kind of 
abuses that Ms. Bent had to put up with, you would rather focus 
on traditional Medicare and try and bring some kind of 
consumerism, some kind of cost saving measures there. Now, you 
do not want to apply the same thing. You want to figure out a 
better way of controlling costs. Ms. Huberty, what do you say?
    Ms. Huberty. I think we have touched a lot on the 
differences between what fee for service or original Medicare 
is paying versus Advantage plans. The biggest issue that we are 
seeing and that has been highlighted too, is that the standards 
are being applied so drastically differently.
    If you have an original Medicare plan and you had the 
situation that she had or a supplement, her husband would not 
have gone through that. There has to be some sort of oversight 
or we have to be able to know why they are applying these 
standards differently and why someone with original Medicare is 
getting a better benefit that Advantage plan with this 
particular service.
    Senator Johnson. What standards because there is no prior 
authorization with fee for service. There are standards or is 
this simply whether Medicare is going to reimburse, regardless 
of whether it is preapproved. This is just whether you get 
reimbursed as a provider. Is that what you are talking about, 
in terms of the standards?
    Ms. Huberty. You might be able to speak better to the 
provider reimbursement, but in terms of standards for a skilled 
nursing facility stay, it is very basic where if a person needs 
5 days a week of physical therapy or any types of therapy, they 
get coverage under original Medicare. If they have an Advantage 
plan, they might get a denial and that no one is even looking 
at the records. No one is even counting the days.
    Senator Johnson. A different question. As a consumer, when 
you get to be an old guy like me, what are you going to choose?
    If it was the same plan today, would you take traditional 
Medicare or would you take Medicare Advantage?
    Ms. Huberty. Choosing a health insurance plan is a highly 
individualized process. I do not know enough about your medical 
history.
    However, what I will say, though, is if, and this would be 
to anyone with an Advantage plan, I would say that can be 
great, and they are important, and they do offer those 
supplemental benefits at times.
    But if you ever need skilled rehab the way that Ms. Bent's 
husband did, do expect this to happen. Do absolutely expect it.
    Senator Johnson. Is that the main problem in rehab? I mean 
in terms of definition of a problem here today, is that the 
main problem?
    Ms. Huberty. I am here today to speak on that because our 
agency has become overwhelmed with these cases to the point 
that we have started turning them away. For me here personally, 
yes, this is a huge problem for beneficiaries.
    Senator Johnson. We are seeing the baby boom generation. 
You look like you wanted to say something, Ms. Grabert.
    Ms. Grabert. I was going to say I would choose Medicare 
Advantage today, and I put both of my parents in Medicare 
Advantage.
    Senator Johnson. OK. Anybody else have a different opinion 
to that? Would you also take Medicare Advantage? I don't think 
it could be held to the standard of giving advice to consumers. 
I am stalling for time here. No, I really was not.
    Mr. Chairman, I was going through the problem-solving 
process here, OK. Asking them to define it, to find the 
problem. I think, we pretty well came to the conclusion that it 
really is this prior authorization not necessarily following 
the rules, seems mainly with rehabilitative cares is the main 
issue.
    We were starting to talk through some solutions. Again, I 
appreciate your absence. Gave us some opportunity.
    Senator Blumenthal. I apologize for my absence. I got 
stalled on a train that stopped and then we had a second vote. 
I have now voted twice. Senator Johnson will have to leave at 
some point, but maybe I can pick up a little bit where we left 
the conversation on the new CMS rules.
    I have looked at those rules. I have a hard time making 
sense of them. Maybe somebody can explain to me what those 
rules actually do, because I will read you the summary.
    The new rules include the following requirements. Prior 
authorization may only be used for one or more of the following 
purposes, to confirm the presence of diagnoses or other medical 
criteria that are the basis for coverage determinations for the 
specific item or service, or for basic benefits, to ensure an 
item or service is medically necessary based on standards 
specified in Section 422.101[c][1], or for supplemental 
benefits, to ensure that the furnishing of a service or benefit 
is clinically appropriate.
    I do not see how those rules guarantee that everything 
covered under Medicare will be covered under Medicare Advantage 
without the rigmarole and the runaround that people have been 
experiencing. Ms. Tinker, maybe you can enlighten me.
    Ms. Tinker. In response, in part to our report from April 
2022, CMS issued a rule in April of this year. That rule 
confirms that Medicare Advantage Organizations (MAOs) must 
comply with original Medicare criteria. In addition, some of 
the recommendations we made in our report were that those same 
issues be incorporated into the audits that CMS does of 
Medicare Advantage plans. Checking to make sure, in fact, those 
things are occurring.
    Senator Blumenthal. But there is nowhere in this rule that 
says you have to get everything under Medicare Advantage that 
you would under Medicare. In fact, as we have heard, because I 
think, looking at my notes, Dr. Fuglesten Biniek said it, we do 
not have enough data to know at this point. Is that right?
    Dr. Fuglesten Biniek. Yes, I think it is challenging to 
assess.
    Senator Blumenthal. Challenging to assess, is absolutely 
right. For people in Ms. Bent's position, that is going to have 
real world consequences in terms of uncertainty, unknowability, 
unenforceability, and potentially more appeals, more red tape. 
Correct?
    Dr. Fuglesten Biniek. Yes, potentially.
    Senator Blumenthal. Ms. Huberty, could you give me your 
assessment of whether these rules are going to clarify and 
solve all these problems?
    Ms. Huberty. I do not know enough about the proposed rules 
or the enacted rules to speak on that, but I do not know that 
it needs to clarify, because it is already a rule that Medicare 
Advantage plans must provide at least the same benefits as the 
original Medicare.
    Senator Blumenthal. That is exactly my point. That it is 
not a problem with rules, it is a problem with compliance and 
enforcement. In other words, the Medicare Advantage plans 
basically have been flouting their obligations under existing 
law without a new rule. Correct?
    Ms. Huberty. Absolutely correct. Yes.
    Senator Blumenthal. A new rule is only as good as their 
being willing to change their real-world practices and CMS 
enforcing those obligations, which it has been failing to do. 
Correct?
    Ms. Huberty. Correct. Yes.
    Senator Blumenthal. Ms. Grabert, Senator Johnson asked you 
a question about--let me hold up the profits poster.\1\ He 
asked you in effect whether Medicare Advantage might be taking 
some of their additional revenue and putting it into dental and 
vision and other services that come with Medicare Advantage but 
not with Medicare. Correct?
---------------------------------------------------------------------------
    \1\ The poster referenced by Senator Blumenthal appears in the 
Appendix on page 105.
---------------------------------------------------------------------------
    You remember your testimony and you said that was true. But 
the additional profits from going to Medicare Advantage are 
after those expenses, are they not?
    Ms. Grabert. Yes, they are.
    Senator Blumenthal. OK. They have already made the 
investment, and they are in fact, let me put it in layman's 
terms, they are making a ton more money than those other 
categories of insurance, even after the benefits that they 
provide.
    Ms. Grabert. I guess I would need clarification on your 
response because I do not really understand the methodology. I 
do not know what the actuarial value is for dental, vision, and 
hearing. I do not know that those things could have been taken 
into consideration and removed from those numbers.
    Senator Blumenthal. If I tell you that the profits, and I 
think this point is largely un-contradicted, that profits for 
Medicare Advantage exceed those in other types of plans, 
despite having invested in those additional services.
    It leaves me to conclude that they could maybe reduce some 
of their profits and provide some additional services, for 
example, to Ms. Bent's husband, and still make pretty good 
profit, but just not as large as they would otherwise. Does 
that make sense?
    Ms. Grabert. Yes, certainly. I think there are a number of 
different policies that Congress can take on. For example, the 
quality bonus payments that are made to Medicare Advantage 
plans that were instituted in the Affordable Care Act (ACA) 
really led to a lot of those numbers.
    Congress could address some of those policies to reduce 
some of those profit margins if they so choose to.
    Senator Blumenthal. We could reduce the profits for 
Medicare Advantage? Would you recommend that?
    Ms. Grabert. I think there is a lot of people that would 
encourage Congress to specifically look at those quality bonus 
payments that were included in the Affordable Care Act, yes.
    Senator Blumenthal. But as an alternative, maybe Medicare 
Advantage plans could include care for Ms. Bent's husband, 
which is what they promised to do. Correct?
    Ms. Grabert. Certainly.
    Senator Blumenthal. OK. Let me ask you, in your report, Ms. 
Tinker, a central concern that you expressed was about payment 
models like the one used for Medicare Advantage, as you know, 
and the, as you call it, potential incentive for insurers to 
deny access to services, or for payments in an attempt to 
increase their profits, which we have been discussing.
    KFF has analyzed how much insurers make for each Medicare 
Advantage enrollee as compared to enrollees in other kinds of 
insurance, as we have demonstrated here. Can you tell us why 
insurers have that incentive?
    Ms. Tinker. Yes. In original Medicare, providers are paid 
based on the specific services they provide. However, in 
Medicare Advantage, Medicare Advantage plans are paid a 
capitated rate, so a single amount per member per month, to 
provide services regardless of the cost or the number of the 
services. As a result, unlike in original Medicare, plans make 
more money by providing fewer services.
    Senator Blumenthal. I am going to interrupt my questions to 
let Senator Johnson----
    Senator Johnson. I am sorry, I apologize. I have to go 
vote, then Speaker Paul Ryan is getting his portrait unveiled, 
so I have to go to that ceremony. But real quick, going back to 
the profit per enrollee, it sounds like there is a reasonably 
robust competitive market, though.
    You have 9 companies, 33 different plans. Are they 
colluding to drive up profits or do we need to encourage more 
competition as opposed to trying to lower costs by some 
government edict? I mean, generally competition works pretty 
well.
    Dr. Fuglesten Biniek. I will say this market has exploded 
in the last several years. The 43 plans this year is twice as 
many as was available in 2018. In some markets, the same 
insurer offers a dozen or more different plans. I do not think 
more plans is probably the answer.
    Some places have 80 plans. It is really helping the 
beneficiary figure out what the meaningful differences are 
between those plans and what would best suit their needs and 
preferences.
    Senator Johnson. It is not one company having 10 plans. It 
is nine different companies----
    Dr. Fuglesten Biniek. Having 7 to 10 plans.
    Senator Johnson. If it is only one company in a region, 
that is not competition. Is that what is happening?
    Dr. Fuglesten Biniek. No, most markets, over 50 percent of 
markets have at least nine different firms participating and 
offering plans.
    Senator Johnson. I am scratching my head. Then what does it 
look like if there is better competition in this thing? But 
anyway, appreciate the indulgence. Again, thanks for holding 
this hearing, and thank all the witnesses. Take care.
    Senator Blumenthal. I will follow up on that question. The 
insurers make more than double for each Medicare Advantage 
enrollee, than for other insured individuals, like people in 
employer sponsored plans. All of these so-called competitors 
know they can make more money with Medicare Advantage plans. Is 
that right?
    Dr. Fuglesten Biniek. Yes.
    Senator Blumenthal. OK. If their goal is to make money, 
they are all going to, in effect, benefit from the products 
while their beneficiaries are put at a disadvantage by the 
prior authorization.
    Dr. Fuglesten Biniek. I will also add that they compete for 
their enrollees by offering these extra benefits. The way they 
are able to offer the extra benefits is by lowering the bid for 
Medicare covered services. To the extent they can use prior 
authorization or networks, referrals, other types of 
utilization and cost management tools, they will be able to get 
a larger rebate from CMS and be able to offer more extra 
benefits.
    Senator Blumenthal. It is a kind of bait and switch plan. 
They bait people to come in with the promise of providing more. 
But in fact, many of the beneficiaries receive less. Correct?
    Dr. Fuglesten Biniek. I certainly would not put it that 
way.
    Senator Blumenthal. I am going to put it in the way that 
one of your clients, Ms. Huberty, put it, which is, after the 
denial, I read in one of the articles about the work that you 
do that--I think it was one of your clients, said it works 
until you need the big stuff. Maybe you can explain what that 
means.
    Ms. Huberty. Yes, absolutely. To the point of the 
supplemental benefits, enticing people into taking them, that 
is the short term. We all have short term goals. It is easy to 
save money at the beginning and to say, I am going to get these 
extra things that original Medicare does not cover.
    That is really enticing for me to take this plan. There 
might be a low premium as well, but most of us do not think 
about the larger problems when they are actually going to need 
help. Like in Ms. Bent's case, they looked, and they saw 100 
days of coverage.
    That is what they expected to need when the time came. 
Absolutely, I would say it is a bait and switch because you get 
to that point when you do actually need those bigger things and 
you are denied.
    Senator Blumenthal. It looks like a good plan as long as 
all you need is dental or vision. Everybody needs dental or 
vision. Nobody plans on melanoma.
    Ms. Huberty. Correct, yes.
    Senator Blumenthal. Or on other kinds of acute, 
rehabilitative, or long-term rehabilitative care.
    Ms. Huberty. Yes, that is correct.
    Senator Blumenthal. Ms. Bent, when you signed up for 
Medicare Advantage, obviously you had no idea that this tragedy 
was going to befall your family.
    Ms. Bent. Actually, Gary was a retired State employee, and 
his benefits are determined by the Office of the State 
Comptroller. Looking at the website for State retirees, it 
appears to me that if you are of an age that makes you eligible 
for Medicare, you are on a managed Medicare plan.
    Senator Blumenthal. That was almost automatically as a 
result of your being on the state--
    Ms. Bent. Correct. Someone else made the decision for us 
that we would be on a Medicare Advantage plan. Periodically, 
someone else makes the decision for us that that plan will be 
administered by a different company.
    Senator Blumenthal. Your husband taught physics at the 
University of Connecticut when he retired?
    Ms. Bent. Yes, he was at the University of Connecticut for 
23 years.
    Senator Blumenthal. By the way, I am a retiree from 
University of Connecticut as well.
    Ms. Bent. Yes. You have some of the same issues.
    Senator Blumenthal. I want to go back to the appeal 
questions, Ms. Huberty, because I think we began talking about 
them, and I am not sure that you had the opportunity to explain 
what the barriers and the hurdles are to overcoming a denial. 
Maybe explain a little bit why only 11 percent of people 
actually appeal when the results are seemingly so positive.
    Ms. Huberty. In the cases of skilled nursing facility 
denials, you are getting the denials and the appeal 
instructions in real time.
    In Ms. Bent's case, they are getting them as they are 
trying to recover from the illness. It is not like you get an 
x-ray, and then 3 months later you get the bill, and then you 
try to deny it at that time or try to appeal that denial at 
that time.
    You have people who are very vulnerable, who are very sick, 
very ill, trying to recover, trying to get back home, getting 
appeals thrown at them, not knowing usually what they are 
signing or what is being asked of them. They will do whatever 
is thrown at them. Usually, it is appealing by phone.
    Once you get to those first two levels of phone appeals, 
generally, because those are handled immediately, the next step 
is requesting a Federal administrative law judge hearing. I 
would say most people assume that they need an attorney to do 
that, or if they do not realize that, they just think that 
process sounds far too daunting to continue.
    Again, they are trying to recover. They are trying to get 
better. Ms. Bent and I were speaking before the hearing, and it 
sounded like my experience is exactly what she experienced, 
too. Even if you are successful in an appeal while you are 
still in the facility, you can expect another denial in a 
matter of days, and that review will continue about every 3 
days.
    Senator Blumenthal. Even if you are successful in appealing 
on a first round, you can be stuck on later rounds with the 
same algorithm driven denial.
    Ms. Huberty. Generally, the algorithm is first applied when 
the person is first admitted in the skilled nursing facility. I 
have not seen it come up since then.
    But what happens is it is almost once you have been flagged 
as someone who might need to leave now or does not meet these 
care coverage criteria anymore, you are kind of in the system 
for those denials and they are having these reviews.
    I believe it is between naviHealth and the provider as 
well, are going through reviews every 3 days.
    Senator Blumenthal. As far as the potential for competition 
is concerned. My understanding is that there are a small number 
of companies that dominate this market. Is that correct?
    Ms. Huberty. In terms of the third-party contractors?
    Senator Blumenthal. Exactly.
    Ms. Huberty. Yes. I know of two.
    Senator Blumenthal. We are going to have to leave it now, 
but you have given us a lot of really good information. This 
investigation will continue. There is a lot here that needs to 
be known. We are going to investigate within the goal of not 
only making Congress know it, but also the public, and people 
like Ms. Bent and everyday Americans who have a real stake, 
real world stake, in what the outcomes are.
    We have been talking a lot here at a 30,000-foot level, but 
many of you, Ms. Huberty, Ms. Bent, have seen it up close and 
how it impoverishes and deeply impacts people, impoverishes 
them financially, but also spiritually when they have to be on 
the battlefield, when at the same time their loved ones are 
fighting for their lives. The battlefield simply should not be 
there.
    They should not have to fight an insurer at the same time 
as their loved one is fighting for his life. We want to know 
how these algorithms work, how these profits are so high, why 
people are potentially deceived into thinking that Medicare 
Advantage will be there for them, because the fact of the 
matter is, it works until you need it. It works fine, so long 
as you do not need it for the big stuff like melanoma, like 
long term care, like certain kinds of injections and other 
kinds of needs that everyday Americans have.
    We are going to adjourn this hearing. The record will 
remain open for 15 days for any additional comments or 
questions by any Subcommittee Member. I would invite any of 
you, if you have additional thoughts or responses to questions 
that have been asked here that maybe you feel you did not get 
an opportunity to answer fully, I encourage you to submit 
written response as well.
    Thank you all very much. The hearing of this subcommittee 
is adjourned.
    [Whereupon, at 3:49 p.m., the hearing was adjourned.]

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