[Senate Hearing 118-295]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-295

                   REDUCING PAPERWORK, CUTTING COSTS:
                   ALLEVIATING ADMINISTRATIVE BURDENS
                             IN HEALTH CARE

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                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              May 8, 2024

                               __________

           Printed for the use of the Committee on the Budget
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]           


                            www.govinfo.gov
                            
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
55-699 PDF                WASHINGTON : 2024                    
          
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                        COMMITTEE ON THE BUDGET

               SHELDON WHITEHOUSE, Rhode Island, Chairman
PATTY MURRAY, Washington             CHARLES E. GRASSLEY, Iowa
RON WYDEN, Oregon                    MIKE CRAPO, Idaho
DEBBIE STABENOW, Michigan            LINDSEY O. GRAHAM, South Carolina
BERNARD SANDERS, Vermont             RON JOHNSON, Wisconsin
MARK R. WARNER, Virginia             MITT ROMNEY, Utah
JEFF MERKLEY, Oregon                 ROGER MARSHALL, Kansas
TIM KAINE, Virginia                  MIKE BRAUN, Indiana
CHRIS VAN HOLLEN, Maryland           JOHN KENNEDY, Louisiana
BEN RAY LUJAN, New Mexico            RICK SCOTT, Florida
ALEX PADILLA, California             MIKE LEE, Utah

                   Dan Dudis, Majority Staff Director
        Kolan Davis, Republican Staff Director and Chief Counsel
                   Mallory B. Nersesian, Chief Clerk 
                  Alexander C. Scioscia, Hearing Clerk
                            
                            
                            C O N T E N T S

                              ----------                              

                         WEDNESDAY, MAY 8, 2024
                OPENING STATEMENTS BY COMMITTEE MEMBERS

                                                                   Page
Senator Sheldon Whitehouse, Chairman.............................     1
    Prepared Statement...........................................    24
Senator Charles E. Grassley......................................     3
    Prepared Statement...........................................    26

                    STATEMENTS BY COMMITTEE MEMBERS

Senator Ron Wyden................................................    12
Senator Ron Johnson..............................................    16
Senator Tim Kaine................................................    18
Senator Roger Marshall...........................................    20

                               WITNESSES

Dr. David Cutler, Otto Eckstein Professor of Applied Economics, 
  Harvard University.............................................     6
    Prepared Statement...........................................    29
Mr. Noah Benedict, President & CEO, Rhode Island Primary Care 
  Physicians Corporation.........................................     7
    Prepared Statement...........................................    42
Dr. Anthony DiGiorgio, Assistant Professor, University of 
  California, San Francisco......................................    10
    Prepared Statement...........................................    49

                                APPENDIX

Responses to post-hearing questions for the Record
     Dr. Cutler..................................................    57
     Mr. Benedict................................................    60
     Dr. DiGiorgio...............................................    62
Statement submitted for the Record by the American Academy of 
  Family Physicians..............................................    68
Statement submitted for the Record by the American Academy of 
  Otolaryngology--Head and Neck Surgery..........................    78
Statement submitted for the Record by the American College of 
  Radiology......................................................    82
Statement submitted for the Record by the American Hospital 
  Association....................................................    84
Statement submitted for the Record by the Blue Cross Blue Shield 
  Association....................................................    88
Statement submitted for the Record by the Healthcare Leadership 
  Council........................................................    94
Statement submitted for the Record by the Medical Group 
  Management Association.........................................   101
Statement submitted for the Record by Premier Inc................   106
Statement submitted for the Record by the Regulatory Relief 
  Coalition......................................................   112

 
                   REDUCING PAPERWORK, CUTTING COSTS:
                   ALLEVIATING ADMINISTRATIVE BURDENS
                             IN HEALTH CARE

                              ----------                              


                         WEDNESDAY, MAY 8, 2024

                                           Committee on the Budget,
                                                       U.S. Senate,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:00 
a.m., in the Dirksen Senate Office Building, Room SD-608, Hon. 
Sheldon Whitehouse, Chairman of the Committee, presiding.
    Present: Senators Whitehouse, Wyden, Kaine, Grassley, 
Johnson, Marshall and R. Scott.
    Also present: Democratic Staff: Dan Dudis, Majority Staff 
Director; Anirudh Srirangam, Healthcare Policy Advisor.
    Republican Staff: Chris Conlin, Deputy Staff Director; 
Krisann Pearce, General Counsel; Nic Pottebaum, Professional 
Staff Member; Ryan Flynn, Budget Analyst.
    Witnesses:
    Dr. David Cutler, Otto Eckstein Professor of Applied 
Economics, Harvard University
    Mr. Noah Benedict, President & CEO, Rhode Island Primary 
Care Physicians Corporation
    Dr. Anthony DiGiorgio, Assistant Professor, University of 
California, San Francisco

          OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
---------------------------------------------------------------------------

    \1\ Prepared statement of Chairman Whitehouse appears in the 
appendix on page 24.
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    Chairman Whitehouse. Good morning, everyone. The hearing of 
the Budget Committee will come to order. I always appreciate 
working with my distinguished Ranking Member, Senator Grassley, 
but I want to also recognize the Chairman of the Finance 
Committee, Ron Wyden, who is here because the topic today of 
finding savings in our bloated and disorganized healthcare 
system is one on which he has dedicated a lot of attention and 
interest in the Finance Committee, and the Finance Committee 
has the legislative authority. I can have hearings, but he 
writes bills, so I'm particularly grateful that Chairman Wyden 
is here today.
    I welcome our witnesses. Our hearing today will examine 
administrative costs in healthcare, how that cost harms 
patients and providers, and how much that increases federal 
healthcare costs overall.
    There's a lot of nonclinical work incidental to the actual 
delivery of care and much of it relates to getting paid. Our 
hearing last October spotlighted a dizzying web of 
administrative functions costing over $0.5 trillion per year. 
And of course, this is not just a matter of dollars and cents, 
even in the trillions, actual lives are at stake.
    One of my constituents, Deb from Cumberland, faced cruel 
insurance hurdles in the wake of a brain tumor diagnosis. She 
said, ``if fighting this disease wasn't enough to deal with, I 
and others are constantly fighting with insurance companies who 
are trying to deny every treatment path. For some reason, they 
feel that they know what's better for us than the medical 
community.''
    For as long as I've served in the Senate, we've been 
discussing how to untangle this web of administrative cost 
burdens. As we worked on the Affordable Care Act (ACA), I 
highlighted how the broken economics of the healthcare system 
drove these administrative costs. The ACA made some strides in 
alleviating administrative burdens in the healthcare financial 
transaction ecosystem.
    Specifically, we set forth standard operating rules for 
electronic funds transfers and standardization of claims forms 
producing less friction in the exchange of information between 
providers and insurers and facilitating faster care delivery 
for patients, but there is much, much more to do. Billing and 
insurance related costs still total nearly $200 billion a year. 
The lack of standardization has been one major pain point. 
Different insurers apply different processes and rules to 
different providers, creating a web of confusion, driving up 
costs, and making doctors sometimes spend more time on 
administration than on providing actual care.
    The inconsistent paperwork required by different insurance 
companies makes it impossible to fully automate claims 
processing, resulting in thousands of lost hours filling out 
forms, raising costs, and sometimes delaying care. In some 
cases, the cost of chasing payment for services rendered 
exceeds the payment for those services. Yes, it sometimes makes 
more financial sense to just give up and provide the care 
without seeking payment.
    There are several layers to the billing costs problem, but 
they mostly all relate back to an antiquated and defective fee-
for-service payment model. That's why my recent bipartisan 
primary care discussion draft establishes value-based payments 
at least for primary care, reducing reliance on fee-for-service 
payments and eliminating billing and associated administrative 
costs altogether for certain services.
    One particular scourge for patients is prior authorization: 
confusing, cumbersome, and inconsistent insurance rules that 
stop care while providers have to spend valuable time 
documenting and justifying the clinical need for a medicine or 
a service. In a value-based system, where doctors make their 
money by reducing costs and keeping patients healthier, there 
is no logic to prior authorization. So, I propose that 
companies and Medicare get prior authorization from the Centers 
for Medicare and Medicaid Services (CMS) before they're allowed 
to impose prior authorization on doctors practicing in 
successful Accountable Care Organizations (ACOs).
    A 2022 Surgeon General Advisory Report links administrative 
burdens with healthcare burnout, with less clinician time with 
patients, and even with harm to patients. The Surgeon General 
specifically called on insurers to, and I'm quoting him here, 
``reduce requirements for prior authorizations, streamline 
paperwork requirements, and develop simplified common billing 
forms.'' When the Surgeon General is focusing on 
administration, you know it's long pass time.
    My reform legislation will require the Centers for Medicare 
and Medicaid Services, first, to identify the worst prior 
authorization practices in Medicare Advantage. Second, it 
requires CMS to set common standards for common prior 
authorization requirements across insurance plans. Third, it 
will lift the prior authorization burden completely off 
providers and Accountable Care Organizations with a proven 
track record of efficient patient care. No prior authorizations 
without prior authorization.
    I doubt insurers will be able to justify prior 
authorization for value-based providers whose incentives align 
with theirs. Providers may well have an incentive to run up 
their charges in a fee-for-service model, but running up 
charges is self-defeating for ACOs.
    In today's hearing, we'll discuss these and other 
solutions. We'll hear from health economist David Cutler how 
administrative costs in the U.S. are far higher than in other 
countries and where savings can be found in the healthcare 
financial transaction ecosystems.
    We'll hear from Rhode Island's Noah Benedict, who leads one 
of our state's highest preforming primary care practices, the 
Integra ACO, which, by the way, is a national as well as a 
Rhode Island leader, on how administrative burdens hurt his ACO 
patients.
    As I have said many times during hearings of this 
Committee, my focus is clear. Let's work on serious proposals 
that reduce healthcare spending with no, none, zero, benefit 
cuts. Such proposals are good for patients, good for doctors, 
and good for the budget.
    As I turn to my Ranking Member, I'd like to thank Senator 
Grassley and his team for showing up at my healthcare savings 
office hours with several very helpful and promising ideas and 
suggestions. Senator Grassley, I look forward to working with 
you. The floor is yours.
    Senator Grassley. We had a pretty quiet meeting that day, 
didn't we?
    Chairman Whitehouse. Well, it was just us kids, but it was 
a good meeting.

           OPENING STATEMENT OF SENATOR GRASSLEY \2\
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    \2\ Prepared statement of Senator Grassley appears in the appendix 
on page 26.
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    Senator Grassley. I want to thank you for following through 
on this hearing today, and reducing administrative burdens in 
healthcare is a very important and top priority issue. Our 
country spends more than $4.5 trillion annually on healthcare. 
Our spending has more than tripled as a percentage of gross 
domestic product (GDP) since 1960.
    Growing healthcare costs don't just strain American's 
pocketbooks. These healthcare costs also are a major driver of 
widening budget deficits in the Federal Government's 
unsustainable fiscal outlook and we're not getting our money's 
worth for all of our spending. Major healthcare program 
spending eats up 32 percent of the federal revenue today and it 
will be 44 percent by mid-Century.
    Our healthcare system has plenty of waste and inefficiency 
and these ought to be fixed. As I've stated in our previous 
healthcare-related hearings, we should begin by increasing 
transparency, competition, fighting fraud, and cutting red 
tape. Federal regulations are often too burdensome for 
physicians and healthcare providers. We should promote 
innovation and competition under Medicare and lessen the focus 
on central planning.
    Since 2021, federal agencies have imposed over 90 
regulations on the healthcare industries, costing taxpayers and 
providers over $100 billion. These regulations create 10 
million hours of paperwork, hours that could be better spent 
providing care to patients. This is the opposite of reducing 
the administrative burden.
    I'm glad that the Centers for Medicare and Medicaid 
Services recently took action to improve the timeliness of 
prior authorizations for seniors that are on Medicare 
Advantage. I hope this lessens the burdens on providers and 
improves access for patients. I support putting more sunshine 
on prior authorizations. CMS should be aggressively auditing 
Medicaid Advantage prior authorization activities so that we 
have a clearer understanding how the patient, providers, and 
taxpayers are impacted.
    Some administrative functions serve an important purpose in 
preventing unnecessary healthcare spending. The Government 
Accountability Office (GAO) and CMS across multiple 
presidential administrations have created and agreed that 
transparency and efficient prior authorization plays an 
important role in combating waste, fraud, and abuse. Cutting 
down on $103 billion of improper payments for major healthcare 
programs would be an effective way to lower healthcare spending 
as well.
    I'm the author of major and more recent updates to the 
Federal Government's most powerful tool in fighting fraud and 
that tool is the False Claims Act. Since the enactment of these 
reforms, the Federal Government has recovered more than $75 
billion lost in fraud and actually saved billions more by 
deterring would be fraudsters.
    In 2023, there was more than $2.7 billion in false claim 
settlements and judgments with $1.8 billion of that $2.7 
billion involving healthcare industry.
    Now, we all know that whistleblowers are very responsible 
for helping recovery nearly all of this money that's been 
recovered. The Justice Department and CMS needs to be more 
aggressively going after healthcare fraud, waste, and abuse. We 
can reduce administrative burdens in healthcare for providers 
and patients without compromising access to high-quality care.
    We can get there by reducing regulations while maintaining 
guardrails to protect patients, centers, safety, and quality 
through greater competition and transparency in our healthcare 
systems will help to bring down costs and lessen administrative 
burdens. Healthcare spending can be made more efficient without 
compromising the quality of care or reducing access, especially 
in rural America. I look forward to hearing from our witnesses 
today on ways that we can reduce administrative burden in 
healthcare for patients and providers while lowering taxpayers' 
costs.
    Finally, I want to comment on a recent Medicare Trustees 
Report. Medicare is part of America's social fabric and for 
decades it has provided seniors with disabilities access to 
routine and lifesaving care at their local hospitals, doctor's 
office, and pharmacy. For the eighth year in a row, the 
Trustees have issued a funding warning because Medicare outlays 
are expected to exceed its dedicated revenue by 45 percent.
    Republicans want to preserve and strengthen this program 
for future generations. The only way to make these critical 
programs sustainable is to follow the Ronald Regan, Tip O'Neil 
model of 1983. That means that Congress and the President 
working in a bipartisan fashion is what it takes to get the job 
done. I'm proud to have led the effort in 2003 to modernize 
Medicare by establishing the prescription drug benefit Part D.
    In the first decade of Medicare Part D, the Federal 
Government spent 36 percent less than projected, while 
improving access to prescription drugs for millions of seniors. 
That effort required bipartisan cooperation from both chambers 
and presidential leadership and is a prime example of what we 
need to do to address Medicare's fiscal challenge. Thank you, 
Mr. Chairman.
    Chairman Whitehouse. Thank you very much. We'll turn to the 
witnesses now. We'll first hear from Professor David Cutler, 
the Otto Eckstein Professor of Applied Economics at the Harvard 
Department of Economics with secondary appointments to the 
Kennedy School and the School of Public Health. He's also a 
member of the National Academy of Medicine. He's researched and 
written about the costs of medical care, including 
administrative costs and advises businesses, governments, and 
healthcare providers.
    We'll hear then from Noah Benedict. Mr. Bendict is the 
President and Chief Executive Officer (CEO) of Rhode Island 
Primary Care Physicians Corporation, the largest multispecialty 
Independent Practice Association in Rhode Island, representing 
168 primary care providers and over 300 specialty providers. 
Rhode Island Primary Care manages care for over 200,000 lives 
and stands at the forefront of healthcare delivery in our 
region.
    Mr. Benedict is also one of the principal architects of and 
serves as Vice Chair on the Board of Integra, one of Rhode 
Island's highest performing ACOs. We've heard regularly from 
them in various committees. His rival at Coastal Medical, Al 
Kuros, has been a frequent witness and the competition between 
Integra and Coastal has been for national preeminence, not just 
local preeminence.
    Mr. Benedict also serves on the boards of the Care 
Transformation Collaborative of Rhode Island, the Kodak 
Behavioral Healthcare Groups of South County Health, The Rhode 
Island Quality Institute, and Horizon Healthcare Partners.
    Our final witness will be Dr. Anthony DiGiorgio. Dr. 
DiGiorgio is an Assistant Professor in the Department of 
Neurological Surgery at the University of California, San 
Francisco (UCSF). He cares for patients with traumatic brain 
and spinal cord injuries. He's also Director of Spinal Neuron 
at the Zuckerberg San Francisco General Hospital and Trauma 
Center, a county-run safety net hospital.
    Gentlemen, each of your full statements will be made a part 
of the record without objection. You have 5 minutes and I'll 
give notice at the conclusion of our testimony. I'm swapping my 
spot to ask questions with Chairman Wyden. He has other 
business to get to, so the order will be Wyden, Grassley, 
Whitehouse, not Whitehouse, Grassley, Wyden. Please proceed, 
Dr. Cutler.

   STATEMENT OF DR. DAVID CUTLER, OTTO ECKSTEIN PROFESSOR OF 
           APPLIED ECONOMICS, HARVARD UNIVERSITY \3\
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    \3\ Prepared statement of Dr. Cutler appears in the appendix on 
page 29.
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    Dr. Cutler. Chairman Whitehouse, Ranking Member Grassley, 
and members of the Senate Budget Committee, thank you for 
holding this hearing today and inviting me to testify. It's an 
honor for me to do so.
    My name is David Cutler. I'm Professor of Economics at 
Harvard University, where I've been engaged in research and 
teaching about health economics for over 30 years. A good part 
of my research involves understanding the administrative costs 
of healthcare. In my testimony today, I wish to make four 
points.
    First, administrative costs contribute significantly to 
overall healthcare spending. In my research, I estimate that 
administrative costs are nearly $1 trillion annually or roughly 
one quarter of medical spending. That's far higher than other 
countries and dwarfs the amount that the U.S. spends on caring 
for people with cardiovascular disease or cancer.
    Second, federal spending on healthcare would fall 
significantly if we could reduce administrative costs. Broadly 
speaking, administrative costs affect the federal budget in 
three ways: through higher Medicare and Medicaid spending, 
through greater costs of subsidy programs such as the tax 
exclusion of employer provided health insurance and premiums in 
the ACA's exchanges, and through higher spending on healthcare 
for federal employees, both civilian and military.
    I've estimated the cost savings to the U.S. Treasury of 
reducing administrative costs using known technologies. I 
estimate that application of known technologies to healthcare 
could reduce administrative costs by 7 percent. If these 
savings were to be realized in all three of these areas, as I 
believe they could, the results would be as shown in Exhibit 2 
of my testimony. Which is that savings would be $130 billion in 
2023 alone. This amounts to 2 percent of the total federal 
spending in that year and a 0.5 percent of GDP.
    Third, there are range of ways in which the federal 
government can help to reduce administrative costs. The most 
important area is what the Chairman mentioned, which is in the 
financial transaction's ecosystem, which is basically the cost 
of billing approvals, prior authorization, and similar 
activities. The issues here involve standardization and 
computerization.
    Just to take an example, when we go to a grocery store 
every product has a Universal Product Code (UPC). That's the 
bar that gets scanned. And the code is the same at all stores 
so that firms only need to produce one set of packaging, 
regardless of where they sell their goods. That reduces the 
cost of selling and buying goods enormously. The price of good 
can vary across stores. The service of the good can vary, but 
the bar code does not.
    The healthcare industry is the equivalent of every store 
having its own bar code. It's incredibly inefficient. It 
requires enormous expenditures on all sides of things. The 
reason this persists is because no large organization has 
indicated that standardization is essential and laid out the 
foundations for doing so. There are several steps that are 
needed. Examples include standardization of information 
transition, removing prior authorization for good actors, which 
the Chairman mentioned in his opening statement, and doing a 
spring cleaning of sorts to get rid of requirements that once 
might have been appropriate, but no longer are.
    In retail, that is with the UPC codes, the standardization 
was done by supermarkets. In banking, where we transfer upwards 
of $50 trillion a year at very low expense, the standardization 
was done by the Federal Reserve. Nobody has done it yet in 
healthcare. I believe the Federal Government is the only 
organization that will be able to do this.
    This brings me to my fourth point, which is that now is the 
ideal time for the Federal Government to get involved. Recent 
advances in Artificial Intelligence (AI) and federal rules 
about not blocking information transfers provide a way to carry 
out administrative simplification. Insurers are already looking 
to invest in AI to do this. Most of them have some AI programs 
ongoing, but they're using it for internal purposes only. That 
is, for thinking internally about how they go about doing 
things. They're not thinking about the ecosystem involving the 
providers and the payers and everyone involved.
    Providers would like to do the same. They would like to use 
AI technology, but they don't know how. Providing guidance and 
leadership now could help the Federal Government save 
tremendous amounts of funds, and as both the Chairman and 
Ranking Member said, improve the quality of healthcare at the 
same time.
    Thank you for your consideration of these points and I look 
forward to any questions you might have.
    Chairman Whitehouse. Thanks, Dr. Cutler. Mr. Benedict.

  STATEMENT OF NOAH BENEDICT, PRESIDENT AND CEO, RHODE ISLAND 
            PRIMARY CARE PHYSICIANS CORPORATION \4\
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    \4\ Prepared statement of Mr. Benedict appears in the appendix on 
page 42.
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    Mr. Benedict. Chairman Whitehouse, Ranking Member Grassley, 
and members of the Senate Budget Committee, thank you for this 
opportunity to testify before you today. My name is Noah 
Benedict. I am the President/CEO of Rhode Island Primary Care 
Physicians Corporation, an independent practice association 
that represents 168 primary care providers and manages the care 
for over 200,000 Rhode Islanders.
    I'm here to testify about a matter of utmost importance: 
the impact of administrative burdens on providers and patient 
care. If left unaddressed, this issue will continue to 
challenge our healthcare system, adversely impacting the costs, 
and more importantly, quality of the care we deliver. Our 
providers eagerly anticipated my visit to Washington, hoping 
that this would shed light on the significant challenges posed 
by the administrative burdens implemented by the payers.
    Unfortunately, preapproval or prior authorization by 
insurers often postpone or interrupt medical services and 
decisions. These delays can be associated with poor patient 
outcomes. While the intent of prior authorization is to reduce 
the amount of ineffective care provided, they add 
administrative burden in unreimbursed costs to physician 
offices and also appear to be increasing over time, which is a 
troubling trend.
    Any activities that distract providers from focusing on 
patient care risks adverse outcomes. I included the results of 
the American Medical Association Provider Survey on prior 
authorizations in my written testimony, but I thought it would 
be more powerful to share the survey results from our Rhode 
Island primary care provider group.
    Seventy-three percent of providers reported an average wait 
time for a prior authorization to be at least 2 days. Of the 73 
percent, 78 percent of providers reported an average wait time 
for a prior authorization to be at least 3 to 5 days. Thirty-
one percent of providers report that for patients whose 
treatment requires prior authorization, the process often leads 
to patients abandoning their recommended course of treatment.
    Fifty-one percent of providers report prior authorizations 
often delay access to necessary care. Of those 51 percent, 27 
percent of providers report prior authorizations always delay 
access to necessary care. Sixty-two percent of providers report 
that prior authorizations have a significant negative impact on 
those patients whose treatment requires prior authorizations, 
potentially leading to compromised health outcomes, and 97 
percent of our providers describe the burden associated with 
prior authorizations as high or extremely high, indicating that 
this is a pressing issue that requires attention.
    And lastly, 91 percent of providers report that in the past 
5 years prior authorizations have increased significantly. The 
chorus from the provider community is firmly aligned on the 
heavy burdens related to prior authorizations. Given the data, 
there's no mistaking the impact this has on the effectiveness 
of our care delivery system in its role in heightening provider 
frustration, which invariably leads to burnout. This is 
especially alarming, given the fragility of post-pandemic 
provider workforce.
    COVID-19 had a profound effect on our healthcare system. It 
presented a stress test for the service delivery and fast-track 
to provider burnout. The American Medical Association (AMA) 
reports that nearly 63 percent of physicians are reporting 
signs of burnout. The factors driving this exhaustion are 
system inefficiencies, increased regulations, technology 
requirements, and administrative burdens.
    Three of the aforementioned factors, namely, system 
inefficiencies, increased regulation, and administrative 
burdens can be associated with prior authorizations and there 
are cost considerations as well. A review of relevant studies 
indicates that at least half of the total administrative 
spending is likely ineffective and wasteful, ranging between 
7.5 and 15 percent of national heath spending or 285 to 570 
billion in 2019 alone.
    And with primary care, on average, each provider requires 
0.2 FTE support daily. That's 8 hours a week to manage prior 
authorizations. That equates to over $12,000 per year per 
provider and roughly $2.1 million to support the administrative 
lift for 168 primary care providers. Most importantly, there 
are adverse outcomes associated with administrative burdens.
    Inhaled corticosteroids, known as ICS, are vital to 
managing asthma, but become problematic when subjected to prior 
authorization mandates, leading to asthma exacerbations and 
hospitalizations. Providers estimates that two to three 
exacerbations monthly stems from lapses in ICS use often due to 
formulary changes or prior authorization delays. Patients 
unaware of the delayed authorization's impact may initially 
feel well only to experience exacerbations and subsequent 
hospitalizations once the medication has fully left their 
system.
    This cycle emblematic of broader patient safety concerns 
underscores the urgency for intervention. At Rhode Island 
Primary Care, this issue illustrates the diversion of clinical 
services, notably for pharmacists in this example, a way for 
essential patient care tasks. Daily prior authorizations and 
medication denials detract from medication titration 
responsibilities, provider education support, and cost-
effective therapeutic exploration.
    The associated pharmacist's costs reach $23,000 annually 
per provider and a whopping $3.8 million for all 168 primary 
care providers, representing a substantial diversion from 
potential clinical investment traditionally yielding a 3.5 to 1 
return on that investment.
    While there isn't a single solution to address this 
intricate problem, one approach is to consider a greater 
proliferation of value-based payment models. Opportunities 
exists for policymakers and payers to continue introducing new 
provider payment models to facilitate administrative 
simplification. Value-based care correlates the amount of 
healthcare providers earn for their services to the outcomes 
they deliver for their patients as compared to fee-for-service 
which rewards volume.
    Value-based care principles----
    Chairman Whitehouse. Mr. Benedict, you're over your 5 
minutes, if you could wrap up quickly. Thank you.
    Mr. Benedict: The adoption of globally capitated payment 
models and the global capitation payment it's relatively 
simpler transaction involving less administrative burden for 
both payers and providers as compared to fee-for-service 
payment. With the appropriate quality and compliance guardrails 
in place, payers can simplify the transactional costs that 
accompany the care provided by their medical providers with the 
introduction of new payment models over time payers can reward 
high-quality, cost-efficient providers with a streamlined, less 
costly administrative burden.
    I appreciate the opportunity to speak to this impactful 
issue and would be available for any questions the senators 
have.
    Chairman Whitehouse. Thank you. Dr. DiGiorgio.

   STATEMENT OF DR. ANTHONY DIGIORGIO, ASSISTANT PROFESSOR, 
          UNIVERSITY OF CALIFORNIA, SAN FRANCISCO \5\
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    \5\ Prepared statement of Dr. DiGiorgio appears in the appendix on 
page 49.
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    Dr. DiGiorgio. Thank you. Chairman Whitehouse, Ranking 
Member Grassley, and members of the Committee, I'm Anthony 
DiGiorgio, Assistant Professor of Neurological Surgery and 
Affiliated Faculty at the Institute for Health Policy Studies 
at the University of California, San Francisco. I'm honored to 
testify today before the Committee on administrative burdens on 
healthcare, a topic about which I'm very passionate and I 
applaud the Committee for addressing this important issue.
    Today I'm here in my personal capacity and the views 
expressed are my own and do not necessarily reflect those of 
UCSF, its Department of Neurological Surgery, or Institute for 
Health Policy Studies, or the Mercatus Center.
    In my testimony today, I'll focus on the increasing 
administrative burdens on clinicians and the role of CMS 
regulations and electronic health record mandates. As a 
frontline physician surgeon in a safety net hospital, I feel 
the crushing weight of administrative burdens daily. While 
there are some burdens from the commercial plans admittedly, I 
want to focus on those that are largely driven by access 
federal regulation that neither enhances the delivery or 
quality of care nor patient safety.
    In the past two decades, there have been no gains in 
efficiency for U.S. healthcare, demonstrated by the lack of 
labor productivity growth according to the U.S. Bureau of Labor 
and Statistics. Furthermore, growth in a number of a 
administrators has outpaced physician growth by over 20 to 1. 
These administrators haven't improved healthcare delivery, 
rather they're employed to navigate increasingly intricate 
government regulations which create unnecessary complexity in 
care delivery.
    The bureaucratic burdens from these poorly designed systems 
and ineffective regulatory policies are inevitably placed on 
frontline clinicians like me, eroding the time I and my 
colleagues can devote to clinical care and ultimately leading 
to an exit from the practice of medicine due to burnout, which 
is an existential threat to the healthcare workforce. While 
every industry faces burnout, nearly two-thirds of doctors show 
symptoms, a substantially higher rate than their peers in non-
healthcare industries.
    Even medical students see the regulatory burdens devalue 
patient care. A recent survey shows that 61 percent of U.S. med 
students don't plan on practicing clinical medicine. Central 
planning is exemplified in Medicare's rules regulating quality 
metrics and billing trade outsized documentation burdens. This, 
coupled with cumbersome electronic medical records explain why 
healthcare labor productivity has been stagnant since the dawn 
of the information age.
    The current quality metrics regime has added to this 
burden. CMS has over 2,000 metrics in its inventory and 
independent physician practices spend $15 billion a year on 
metric reporting while hospital employ armies of coders to 
report metrics and massage the numbers. Quality metrics don't 
just increase costs, they can harm patients. For example, the 
hospital readmission reduction program is associated with 
decreased readmissions, as expected, but also with increased 
mortality. Quality metrics also disproportionately penalize 
safety net hospitals, such as my own, because of inadequate 
risk adjustment for socioeconomic status.
    There's a greater return on investment and simply gaming 
the numbers than on improving quality. Having patients seem 
sicker at baseline increases hospital revenues, both by 
capturing more complexity for increased diagnosis-related group 
(DRG) payment and by improving relative quality metrics. The 
burden of documenting this falls on the frontline clinicians 
who are hounded by administrators to make patients seem as sick 
as possibly according to specific criteria, again, which are 
set by CMS.
    One study shows a greater than 40 percent increase in 
average margin by simply having billing staff round with 
physicians, directing them on what to put into our clinical 
notes. Clinicians are beholden to documentation requirements 
that satisfy Medicare billing regulations. There are over 
11,000 billing codes. CMS is currently responsible for 
regulatory minutia on these codes. Their arbitrary 
documentation requirements add to the administrative burden.
    As a surgeon, I was unsurprised with the study that showed 
trauma surgeons spend 73 full 24-hour days in 1 year of work to 
complete the documentation required to satisfy Medicare billing 
requirements. The electronic medical records, or EMRs, make 
matters worse. These inefficient systems tether physicians to 
their computers. One time motion study found that physicians 
spend 2 hours on the computer for every hour of patient time. 
We did a study of our own at UCSF and found the neurosurgery 
residents spend 20 hours of their overnight call shift logged 
into the computer. As doctors, we feel relief like we can focus 
on clinical care again if the EMR goes down. What does it say 
about a technology that its failure improves service delivery?
    The advent of EMR mail out clinicians to access their 
medical records remotely, but that is transformed into an 
environment where it's expected that physicians be constantly 
attached to their computer. Much of this is due to CMS's 
meaningful use mandate of computerized physician order entry 
and order reconciliation, along with regulations like the 
appropriate use criteria, which just adds meaningless clicks to 
our workflow. All of this relegates the physician to an order 
entry clerk, completing cumbersome tasks in the EMR which could 
be performed by a medical assistant.
    We physicians feel the strain with our nursing colleagues, 
who must hunt us down for trivial orders that they, as licensed 
healthcare professors, are also more than qualified to enter. 
These constant interruptions and superfluous warning messages 
generated by the EMR also lead to distracted clinicians, alarm 
fatigue, and more near-miss events.
    The answers to these burdens is not more top-down 
regulation. It lies with fostering a competitive, dynamic 
marketplace which values efficiency and quality. Ultimately, 
it's time to give the market a chance to drive meaningful 
change in healthcare delivery, allowing frontline physicians to 
focus on what matters most, providing quality care to patients 
without the suffocating weight of unnecessary administrative 
burdens.
    Chairman Whitehouse. Thank you very much. Chairman Wyden.

                   STATEMENT OF SENATOR WYDEN

    Senator Wyden. Thank you very much, Mr. Chairman. 
Congratulations to you in putting together the National 
Basketball Association (NBA) all stars for us today in this 
field of looking at administrative inefficiency.
    And let me start this way. We're going to spend that $4.5 
trillion this year on American healthcare. There are 330 
million of us. You divide 330 million into $4.5 trillion and 
you could send every family of 4 in America a check for $50,000 
and say, here, get your healthcare. So, the three of you have 
really helped us to get into some of the details, and let me 
start this way.
    Mr. Benedict, as I listened to your testimony, what you did 
is basically unravel the insurance company argument for prior 
authorization. What the insurance companies so often say to all 
of us is that authorizations are supposed to help patients get 
better care. And what you've said is based on your analysis and 
your work as it relates to the asthma medicines, the inhalers, 
people get worse care. So, this is really a key area for us to 
look at.
    And I guess my first question to the three of you, are 
there other areas that you think we should, under the 
leadership of the Chairman and Senator Grassley, in a 
bipartisan way, are there other areas where you believe we 
should look at the prior authorization issue in terms of 
patients getting worse care rather than better care as the 
insurance companies claim, other areas, if possible.
    Mr. Benedict. From my perspective, there should be greater 
coordination for the policies and the processes for prior 
authorization. That would streamline the process. You would 
better understand exactly what was expected and the turnaround 
time would improve.
    On top of that, I would have the payers publicly document 
statistics around that to ensure that they're expediting what 
would be these preauthorization denials and at what rate that 
they are denying. So, to whatever extent you could go into the 
details to help the market better understand where the 
bottlenecks are that are coming between the provider and 
patient care would be very helpful.
    Senator Wyden. Other examples? Dr. Cutler.
    Dr. Cutler. Yes. Maybe just step back a tiny bit. The 
typical payer has a few thousand prior authorization codes. 
Call it 4,000-5,000 prior authorization codes. Roughly half are 
on the medical care side and half are on the pharmaceutical 
side. Most of those sort of came about haphazardly. Like, for 
example, once upon a time, it was appropriate to do prior 
authorization on antihypertensive medications and so the legacy 
of those are still around, but at this point every single 
medication is generic, so there's no benefit to doing that. And 
there is, as Mr. Benedict was saying, enormous costs.
    In a rough guess, working with some colleagues, my guess is 
about half of the prior authorization codes, a couple thousand 
for a typical insurer, are serving no useful medical purpose. 
They're a legacy of when we wanted to make sure that people 
were using the generic drug instead of the branded drug and now 
the branded drug doesn't even exist.
    Senator Wyden. Let's do this, Dr. Cutler, and to all of 
you. This is very helpful. And if you could just give us a list 
of other areas, medicines and the like, which would fit Mr. 
Benedict's example, I think that would be very helpful.
    One last question. Dr. Cutler, I like very much what you're 
talking about with respect to standardizing these prior 
authorizations. And my question to you here, because we've 
talked about these kinds of things over the years, is about the 
next step. Because obviously people are going to say, hey, this 
is a big deal under the Chairman and Senator Grassley, you guys 
going to figure it out, but it's not like flicking on a light 
switch. We're going to have to take the next step.
    In your view, and your scholarship, Dr. Cutler, what would 
be the next step for all of us here who want to deal with the 
prior authorization issue through the standardization you 
recommend?
    Dr. Cutler. It's going to be a process and not a single 
piece of legislation. So, it's going to be a process to start 
off and say, first, remove the prior authorization where it's 
not appropriate, where the providers are already bearing the 
risk. Second is do the spring cleaning. That is, work together 
to get rid of the stuff that's no longer valuable. Third, think 
about situations particularly where CMS and private payers are 
requiring people to go through records, human beings to go 
through records where we can gather all the information 
electronically and say let's just move towards an electronic 
submission rather than--fourth is to continue to expand the 
payment models so that we're not paid for just documenting, but 
we're paid for actually doing a better job.
    Senator Wyden. I'm over my time. Thank you very much, Mr. 
Chairman. An important hearing.
    Chairman Whitehouse. Thank you. Senator Grassley.
    Senator Grassley. I'm going to ask all my questions for Dr. 
DiGiorgio. Your testimony talks about the weight of daily 
administrative burdens put on doctors and frontline healthcare 
workers. What's the source of these administrative burdens? Can 
you give an example of a top-down regulation the Federal 
Government should remove today that wouldn't compromise 
patients' safety or quality?
    Dr. DiGiorgio. I think, broadly speaking, what I'd really 
like to see is a shift from CMS being a plan provider to being 
a plan regulator. I think CMS is largely focused on the minutia 
of the fee schedule and unburdening CMS from that would allow 
it to focus more on things like the adequate risk adjustment 
model and population health quality control.
    And specifically, I'd love to see CMS go on a quality diet. 
I'd like it to install a living system of quality metrics where 
metrics are retired as they're shown to no longer be useful and 
new metrics can come into place that would instead of focusing 
on the frontline clinicians and how we practice care, focus 
more on larger hospital systems and hospital practices, helping 
to improve the clinician experience.
    I think we need to make sure that any new quality metrics 
are easily collected using existing technology and that we're 
not adding additional administrative burden for data collection 
for these metrics.
    Senator Grassley. You describe the importance of fostering 
competitive dynamic healthcare marketplace that values 
efficiency and quality. Is Medicare Advantage a marketplace 
where we can foster competition to address administrative 
burden problems in our healthcare system, and if so, what can 
we do to make it more competitive?
    Dr. DiGiorgio. Yes. I think absolutely Medicare Advantage 
is a space that could foster competition, but there has to be a 
lot more competition. If we're talking about inefficient prior 
authorizations, we shouldn't need to regulate efficiency in the 
health plans if there is adequate competition. So, I think we 
need to improve competition with more plans entering the space. 
And in addition, I'd like to see equalization between Medicare 
fee-for-service and Medicare Advantage with a unified quality 
reporting system and star rating system between the two types 
of Medicare.
    Senator Grassley. Your testimony stated employment growth 
of healthcare administrators outpacing growth in the number of 
new doctors by over 20 to 1 in recent years. What are these 
administrators doing in the healthcare system, who are they, 
and why haven't they returned value to our healthcare system 
and decreased spending?
    Dr. DiGiorgio. Largely, what Dr. Cutler mentioned, is they 
are taking all the unstructured data that physicians are 
putting into our clinical documentation and attempting to make 
it structured data to fit into certain billing codes and 
quality metric formula. A lot of that could be automated, I 
believe, using again existing technology.
    But really, CMS creates sort of a floor of the 
documentation burden. So, if CMS says that a certain Current 
Procedural Terminology (CPT) code or billing code requires XYZ, 
then physicians are going to be encouraged to put XYZ in every 
single one of our notes to try to get that billing code. And 
again, all these administrators go through our notes, try to 
maximize which code can be assigned to each instance of 
clinical documentation and put that in, and bill it regardless 
of the payer.
    Senator Grassley. My last question, your testimony spoke to 
the lack of labor productivity gains in healthcare over recent 
decades. In other words, doctors haven't become more efficient, 
even with new technology like electronic medical records. How 
should we approach regulating Artificial Intelligence, given 
the impact of top-down regulations on current technology?
    Dr. DiGiorgio. Yes, I think AI has huge potential to do a 
lot of that administrative work. Again, taking unstructured 
data and creating structured data out of it. I am worried that 
we would over regulate it. If I went back to 1990 and told all 
physicians that we're going to computerize paper charts and 
have instant access to data and imaging, I think everyone would 
be thrilled with the amount of efficiency gains we would have 
with that technology. That never happened because we over 
regulated EMR with things like meaningful use. And so, I am 
worried that we would take the same approach to AI and take 
away any potential efficiency gains with over regulation.
    Senator Grassley. Thank you. Thank you, Mr. Chairman.
    Chairman Whitehouse. Thanks very much. It seems to me that 
you all seem to agree that there are too many quality measures 
and that heads are nodding yes. And that that creates a lot of 
noise and not so much signal. I'm not going to ask you now 
because it would take a lot of time, but I would ask you as a 
question for the record to consider how we should work through 
the reduction of excess quality measures, given that they come 
from so many different sources.
    Sometimes it's the hospital itself, sometimes if it's a 
county hospital, it's the county. If it's a state hospital, 
it's the state. Even if it's not a state hospital, it's the 
state health department. There are several federal entities. 
And to stop all of it and provide some order to the chaos is a 
complex administrative task, so I'd like your advice on that.
    And in addition, if you're going to strip down to simple, 
signal effective, quality reporting, you've got to figure out 
who makes the choice and who is to be trusted. So, if you could 
also let me know who you think the best agency is who would be 
the overseer of the quality measures spring cleaning.
    Onto prior authorization, I think the spring cleaning issue 
that half of them are of no use is important for us to address. 
I think the reporting on which the insurance companies are 
using prior authorization to delay payment for cashflow 
purposes and unfortunately to delay treatment in the process of 
delaying payment, so reporting on the timeliness of prior 
authorization clearances, I think, is a terrific idea. And in 
other cases, it seems the prior authorizations aren't needed at 
all.
    And I'd like to ask Mr. Benedict to comment on when you 
have an ACO and when providers are being paid or not paid, 
depending on the efficiency in which they deliver care and the 
quality of the outcomes that they're delivering, what does that 
do to the incentive to overcharge or upcharge or add procedures 
just for the sake of running up the billing score, which 
presumably is what prior authorization is intended to defend 
against. But it seems that with an ACO, you're defending 
against a nonexistent problem.
    Mr. Benedict. It's in the best interest for an ACO to most 
proficiently provide the highest quality care based upon the 
payment mechanism. As you all know, value-based approach to 
medicine changes behavior. Specifically, in the world that we 
live in with fee-for-service only being the driver for how 
revenue is brought into a particular organization or practice, 
you will find that there will be more erroneous tests that are 
ordered because they can and there is really no consequence to 
it.
    Now, I'm not saying they're doing it because they want to 
run the bill up, but if you look at the data, more tests are 
ordered because there is not accountability; hence, accountable 
care organization. When you're accountable, not just for the 
quality, which is most important, but the financial component 
of how you operate within your office and you treat your 
patients you are mindful in ways about what you should do most 
efficiently, and you consider paths you might otherwise not if 
you were in a fee-for-service world. And we saw that firsthand 
as we made the transition from fee-for-service doctors into 
Accountable Care Organization doctors. It was palpable.
    Chairman Whitehouse. Let me stop you on that particular 
point because as you made the transition from a fee-for-service 
model to a value-based model, you nevertheless still had to 
keep track of the whole fee-for-service system and that's still 
the case.
    Mr. Benedict. That is still the case.
    Chairman Whitehouse. Would it be better, Dr. Cutler, if we 
moved to a more robust hybrid payment model so that the 
tracking through fee-for-service could be lifted in addition to 
the billing through fee-for-service?
    Dr. Cutler. Absolutely. In many cases, there's no reason to 
do that tracking because they're the ones who are bearing the 
risk and so documenting all of it that way is really just a 
waste.
    Chairman Whitehouse. And I was interested in the comments 
that I think you all seem to agree on about cleaning up 
electronic medical records. Mr. Benedict serves on the Board of 
Rhode Island Quality Institute, which is a group that I founded 
years ago as Attorney General in the wake of the crossing the 
quality chasm into errors, human reports and all of that, and 
we focused a lot on first health information technology, then 
health information exchange, and we've been pretty robust in 
all of that. So, it's disappointing for me to hear that that 
technology is now the vector for more trouble than it's worth.
    And I was struck by Dr. DiGiorgio's comment that his 
clinical care improves when the EMR system goes down. So, my 
time is up, but I would very much appreciate it, if in the same 
way, you'll do a written response by a question for the record 
(QFR) on the question of how we negotiate the super abundance 
of quality measures problem with any advice you have on trying 
to figure out how we solve the problem of the health 
information exchange, which was intended to be a beautiful 
thing. Thank you.
    With that, Senator Johnson is next up, then Senator Kaine, 
then Senator Marshall.

                  STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman. Appreciate this 
hearing. Again, it's similar to others we've had where, you 
know, we're talking about putting a band aid on a dying 
patient. And so, I want to talk a little bit about the root 
cause. You know, Dr. Cutler is an economist. What would happen 
if let's say buying a car was an entitlement and there were no 
regulations on what kind of car you would buy, what would the 
American people do? They'd go out and buy the most expensive 
car possible, right?
    Dr. Cutler. Very expensive cars.
    Senator Johnson. So, you'd end up having them put 
regulations. You know if you want this kind of truck. That's 
what's happened in healthcare. You know, Mister or Doctor--
whatever, Doctor. Sorry. I'm terrible at that. You mentioned 
excess federal regulation. You said regulatory burdens, 
Medicare billing requirements, CMS creates a floor. We need 
increased competition and none of the things we're talking 
about increases competition. None of the things we're talking 
about actually reduces regulation. So, the root cause of all of 
this is a third-party payer system.
    Mr. Benedict, why do independent physicians need to 
associate with your association? Why do they think they need 
that?
    Mr. Benedict. Without the scaffolding, we can provide 
around them that helps them ease the administrative burden.
    Senator Johnson. You wouldn't be necessary if it weren't 
for all these administrative burdens caused by the third-party 
payer system really driven by government-run healthcare. So, as 
long as we've got this massive government-run healthcare third-
party payer system that--I mean you're not going to change 
government. I mean, you can talk about fee-for-service going to 
a value-based model. Again, those are just buzz words. It's not 
going to reduce the regulatory burden just like Diagnostic 
Medical Sonography (DMS) didn't really fix the paper burden. It 
made it worse, or I assume it didn't make any improvements. So, 
why are we talking about transitioning to something that 
actually would increase regulation? You know, why are we 
talking about high deductible insurance plans to cover the 
catastrophic events and then bring consumers back into the 
process? I mean, isn't that the real solution?
    Dr. Cutler, what other area of our economy are people 
participating in that part burning out because of 
administrative burdens? Not that there aren't administrative 
burdens in other areas of our economy, but this is kind of 
unique to healthcare, right?
    Dr. Cutler. It is unique to healthcare. It's also the case, 
while I share many of your sentiments, unfortunately, many 
people don't use their high deductible health plan in the 
appropriate way either.
    Senator Johnson. Because we don't require them to. You 
know, in any healthcare plans, you know, the only deductibles 
ever paid is like a $10 copay. So again, people don't really 
care about the cost of drugs. I mean, again, we have taken the 
benefit of free market competition out of healthcare and that's 
the problem we're dealing with. So, again, anything else we're 
talking about here literally is putting a band aid on a dying 
patient. I'd like to revive the patient. So, I've seen a lot of 
heads agreeing with me.
    Dr. Cutler. I would say the only caveat there would be you 
could globally attack this issue with value-based approached to 
contracting; namely, global capitation and risk. Because then 
you actually change behavior. There is responsibility for the 
cost associated with the care delivered.
    Senator Johnson. Well, wouldn't you be better off with 
independent physicians doing that themselves or a lot more 
different insurance companies where you actually had true 
competition. You know, Mr. Benedict, you mentioned the word 
``the market.'' Where is there a market in healthcare 
truthfully?
    Mr. Benedict. It's local.
    Senator Johnson. It doesn't really exist. I mean, we have a 
complete failure of a marketplace here. We've got government 
control, by and large, setting the terms for how the insurance 
companies operate and the only thing they've come up with in 
terms of restraining costs are pre-certifications. And we see 
the damage done by that, but what else is there to control 
costs? So, you're suggesting doing away with that. You know, 
then Katy bar the door in terms of runaway costs. I mean, what 
is the current dollar value in terms of how much more Americans 
spend for healthcare versus other countries in the world, at 
least double, right?
    Mr. Benedict. Multiples more.
    Senator Johnson. So, it's completely broken. So again, why 
aren't we looking at the root cause of this as opposed to, 
again, these buzz word solutions that I just don't think would 
actually work. I mean, I know it's an attempt within the system 
that's probably going to be impossible to change.
    Mr. Benedict. I would only retort that's really tearing out 
the entire chassis and that may be necessary, but along the way 
for us to control those costs there are opportunities for us.
    Senator Johnson. One final point, in Wisconsin, I think 
this is occurring. There are doctors who are just dropping out 
of the system. Not taking Medicare and Medicaid patients and 
just literally charging cash. It's unbelievable how, first of 
all, cost effective it is. Like $55 for a half-hour visit and 
the doctors love it. I think we ought to start figuring out a 
way to transition that were doctors are at the top of the 
treatment pyramid rather than being crushed at the very bottom 
and become independent again like it was only a few decades 
ago. Thank you, Mr. Chairman.
    Chairman Whitehouse. Senator Kaine.

                   STATEMENT OF SENATOR KAINE

    Senator Kaine. Thank you, Mr. Chairman. Senator Johnson 
started off and said that the problem was the third-party payer 
system. I thought he was going to go full Bernie on me there 
for a minute. I was intrigued with the opening. This is a great 
hearing and great witnesses, so just a couple questions.
    So, Dr. Cutler, your chart, which I was intrigued by, so 
you believe just implementing, you know, basic technology 
reforms, efficiencies and improvements could save us about $130 
billion a year and that's just administrative improvements. 
Senator Marshall and I are on the Health, Education, Labor, and 
Pensions (HELP) Committee together, and he and I have been 
working really hard on pharmacy benefit managers (PBM) reform. 
We've got a good PBM reform bill out of the Committee on the 
floor of the Senate. I think it was with an 18 to 3 vote. We're 
waiting for, hopefully, getting some floor time on that. That's 
a big saver too and that's not necessarily administrative, but 
it's just going at a piece of the system in this weird 
complexity that we have where we've got a middleman sucking up 
huge profits who do no research and produce nothing. I mean, 
they were designed, I guess, to try to control somewhat what 
pharmaceuticals people were getting. And instead, they often 
are blocking access to lower cost pharmaceuticals because they 
collect a percentage price of what they're providing to 
patients.
    And so, if it's $130 billion we could save just by dealing 
with administrative efficiencies, Dr. Cutler, do you do any 
kind of work on kind of what are the just excess slosh and 
profit is that if we were a little more efficient and took that 
out what we might save?
    Dr. Cutler. So, I think, as a whole, the country could save 
close to half of medical spending. Let's call it between a 
third and a half of medical spending, which I think as we were 
talking about earlier, would be, you know, enough for tens of 
thousands of dollars per American family. Some of that is on 
the administrative end, some of that is on things like prices 
that are way too high. You know, pharmaceutical prices that are 
higher than they need to be in the U.S., elsewhere. Some of it 
is profit. Like, for example, in pharmaceutical companies, but 
for example, most hospitals and physician groups are not 
earning high profit. Where the money is going is it's going to 
the administrative stuff and to all the other aspects of 
running things. So, it's almost like the worst of everything 
because it's not even that someone is benefiting from that 
money. It's just that we're employing all these people to do 
stuff that's not contributing to our health, in many ways 
harming it.
    Senator Kaine. I wanted to ask, Mr. Benedict, you talked 
about this physician burnout phenomenon. I have worked with 
colleagues to pass a bill that we're working to reauthorize now 
called the Lorna Breen Healthcare Provider Protection Act, 
which is named after an Emergency Room physician who sadly died 
by suicide in the beginning phases of COVID who was working in 
a hospital in New York, got COVID, sat out for two weeks, came 
back too quickly. Her last publication--she was a very well 
published physician. Her last publication before she died was 
on physician burnout.
    Now, there was a unique burnout during COVID because of the 
scale of death and injury, but her published work talks about 
the very phenomenon that you guys were describing, which is, 
hey, I did this because I want to work with patients. I don't 
want to be endlessly inputting information. And I think as we 
look at provider shortages, and particularly in some areas like 
behavioral health or rural America shortages, they're going to 
get more acute unless we solve this problem. So, I really 
appreciate you bringing up the physician burnout piece.
    When three of the four categories of pressures that create 
this burnout phenomenon are kind of tied to the reason for the 
hearing that should make us have a sense of urgency about it. 
And then, Dr. DiGiorgio, I wanted to drill down on something 
you said, and I was not quick enough to write it down and 
follow it. But you said you might hope that we could equalize 
maybe Medicare fee-for-service, Medicare Advantage 
reimbursement rates, and then you said something about quality 
rating system. Tell me what you meant by that.
    Dr. DiGiorgio. I meant subjecting the CMS fee-for-service 
to the same star ratings that we give to the Medicare Advantage 
plans.
    Senator Kaine. And tell me why that would be a good idea.
    Dr. DiGiorgio. I think it would increase transparency. I 
think there's a bit of cost shifting that goes on in fee-for-
service. And certainly, the beneficiaries in the fee-for-
service model are not subject to the same risk adjustment 
formula that the beneficiaries in the Medicare Advantage plan 
are.
    Senator Kaine. So, I mean, I'm intrigued by this because 
your testimony is not necessarily anti-regulation. That would 
be a form of regulation. It would be taking the existing CMS 
practice and making it better rather than allowing a disharmony 
that is contributing to negative outcome, so I take your point 
and I appreciate you bringing that up. I yield back to the 
Chair.
    Chairman Whitehouse. Senator Marshall.

                 STATEMENT OF SENATOR MARSHALL

    Senator Marshall. All right. Thank you so much, Mr. 
Chairman.
    I think I want to start just describing that I've lived 
this nightmare as a practicing physician for 25 years running a 
private obstetrician gynecologist (OB/GYN) practice and then 
additionally as running a private hospital as well. This issue 
of prior authorization is the number one administrative burden 
for physicians, but it's also disruptive to the hospital.
    And Mr. Chairman, you understated the problem. It's hard to 
imagine that as senators, but we've understated the particular 
problem. I'll just tell a quick story. Running our hospital had 
a horrible ice storm on a Wednesday night. Thursday morning the 
hospital is booked for surgeries. Orthopedic surgeries already 
starting at 7:30 and they're going to go 'til 10:00 at night. 
The other operating rooms (ORs) are full. We have a finite 
number of surgeons, anesthesia, and nursing staff.
    We had seven or eight admissions overnight. People falling, 
breaking their wrists, breaking their hip, so I give authority 
to, look, we're going to bring everybody in at 5:30 in the 
morning, start the cases at 5:30. A 90-year-old lady fell and 
broke her hip, which is a critical life-threatening thing to a 
90-year-old lady. And you get everybody there and then the 
administrator comes and says, oh, we can't do this case. How 
come? Well, we don't have prior authorization yet.
    You know that story is told over and over that insurance 
companies are now using this to ration care. It's delaying care 
and purposefully delaying care hoping, I guess, that they die 
before they do the surgery. But there's good news. We're going 
to reintroduce our prior authorization bill, Seniors Timely 
Access to Care Act this June, and this is the solution. So, we 
know the solution. Now, we need Congress to move forward. What 
this bill does, among other things, is set guardrails, 
streamlines, and standardizes the process for prior 
authorization. This prior authorization reporting requirement 
in our bill is the Rx to cut down waste, fraud, and abuse.
    We've got the solution. Fifty-three Senate co-sponsors, 10 
senators on this Committee, including the Chairman, are co-
sponsors of this legislation that we're reintroducing in June, 
if I didn't get that message right. We've got 326 House 
members. We have 550 outside organizations. We've now got a 
zero Congressional Budget Office (CBO) score, so I speak to the 
Minority and the Majority staff that we now have a zero CBO 
score on it and there shouldn't be any reason that everybody on 
Budget, on HELP and Finance Committee shouldn't co-sponsor this 
bill and be passed with unanimous consent.
    I appreciate the Chairman continuing to highlight this 
situation. Now, here's the bad news is our bill only addresses 
Medicare. We need to go into the private practice as well. 
Certainly, what we're seeing back home is Medicare Advantage, 
started off as a great thing, kind of a value-based theme, but 
now it's being abused. Imagine that. That we're having horrible 
products sold out there over a giveaway for a toaster. You too 
can have cheap Medicare Advantage solution as well.
    I don't know that I've got a lot of questions for our 
witnesses. I'm very grateful. I appreciate your testimony. I've 
lived the same nightmare that you are living, but maybe, Dr. 
Benedict, just speak a little bit about the Medicare group 
versus what you're seeing in the private sector perhaps.
    Mr. Benedict. Lack of standardization, it varies across the 
board, depending upon who you're dealing with. Product design, 
prior auth denials, policies and processes that are different 
from payer to payer. So, it's very difficult to traverse your 
way through. We provide scaffolding around our providers to 
help them to relieve them from that burden. And it's even 
difficult for us, who know what I consider to be the game 
around not getting timely responses back and holding back 
really what's important, care that's necessary to the patient 
at a time in which it's much important.
    Senator Marshall. Yes. Dr. Cutler, are you seeing Medicare 
as a problem, Medicare Advantage, but it's also in the private 
sector, obviously.
    Dr. Cutler. It's also in the private sector. It's Medicare 
Advantage, commercial insurance, and Medicaid are the biggest 
ones where you see it.
    Senator Marshall. Dr. DiGiorgio, anything to add? I think 
we beat the horse pretty good here.
    Dr. DiGiorgio. Yes, I totally agree. My wife's also an OB/
GYN, so I think she feels the pressure as well as me. And I 
think, to the administrative burdens, when my four-year-old 
daughter says she's playing doctor, and that means she takes 
out her toy laptop and starts typing. She sees my wife and I 
come home and just spend our waking hours at home----
    Senator Marshall. I'm so sad to hear that.
    Dr. DiGiorgio. Yes, you know, on our laptops.
    Senator Marshall. This is why none of my kids went into 
medicine. My wife, a nurse, I'm a doctor, four kids, zero going 
to healthcare. It's because the administrative burden is the 
tip of the iceberg, let alone, a nurse who hasn't seen a 
patient for 10 years telling me I shouldn't do a hysterectomy 
is very frustrating. Thank you, Mr. Chairman.
    Chairman Whitehouse. Thank you, Dr. Marshall. What I hope 
we're going to end up doing here is putting together a package 
of legislation that focuses in this area of transitioning away 
from fee-for-service and reducing administrative burdens. And 
then one of the benefits of being on the Budget Committee is 
that we get priority attention from CBO so we can do scoring 
and then we're in a position to recommend to the Finance 
Committee or to the HELP Committee the package that we've 
worked on here. So, I'm eager to have your support and input in 
that process. I am a co-sponsor of that bill and appreciate it 
very much.
    As we close, I just want to flag one last area that sort of 
bedevils me where administrative burdens and administrative 
tests that are designed for a completely different situation 
interfere with proper decent, humane provision of care, and 
that is for patients who are terribly ill and may very well be 
at or near the end of their lives. When you're in that 
category, if your family needs you to be in a nursing home for 
a variety of reasons related to the family's ability to provide 
care at home, you've got to go and spend three days and two 
nights in a hospital first, which is, A, terrifying and, B, 
very expensive.
    Now, you can see the potential logic for that in a general 
population with a fee-for-service system to try to limit 
nursing home spending, but in this particular situation it's 
stupid, cruel, and expensive. You also look at respite care. 
There are programs to provide respite care to help home 
caregivers deal with the stress of having to take care of a 
family member at home. Respite care sends the patient to a 
hospital, again, terrifying and expensive, instead of sending a 
nurse or a nurse practitioner to help the family at home.
    There are ridiculous standards for being bedridden before 
you can get home care, which again are nothing but cruel and 
stupid as you're nearing the end of life. There are plenty of 
people who three or four days before they pass can walk around 
the garden and to go out and sit in the garden is a beautiful 
thing as you're nearing the end of your life. And to say you 
can't get care because you're not bedridden enough when you're 
in that situation is cruel, idiotic, and expensive. And there 
are a package of things like that, and I've been trying to get 
Capability Maturity Model Integration (CMMI) to offer a program 
that allows waiver of all of those requirements for a 
population that is in that circumstance.
    And in the grand spirit of bureaucratic insensibility, 
despite years of effort, I'm now through my third CMMI 
director. They all love it, but nobody can get it done. These 
are waivers that have all been granted in other circumstances, 
so it's not a problem with the waiver. This is a population 
that is not that hard to define. If they wanted, I'd be happy 
to narrow it to ACO population or federally qualified health 
center population to run this because I believe that if you 
stripped all these stupid requirements, you would dramatically 
improve the experience of those last days and weeks for the 
families.
    And so, I'm going to continue to persist on that. I'm 
actually driving that at the highest levels to the Secretary of 
the Department of Health and Human Services (HHS) to try to 
make sure I get their attention because this seems to be such 
an easy thing to do. So, this problem of bureaucratic 
requirements has all sorts of tentacles throughout the whole 
system.
    And I guess I'll close with a final question for the record 
to any of you. We've talked here a lot about the over supply of 
quality reporting measures, including did you like the food, 
which is nice to know but not exactly pertinent to patient 
care, the problem of prior authorizations on multiple levels, 
the turning of EMRs and health information exchange from a 
benefit into a liability, and the need to get off of fee-for-
service and accelerate to hybrid models so people like Mr. 
Benedict don't have to do double duty and both run a fee-for-
service practice at the same time that they're running a value-
based practice and double up the administrative load.
    If there are other areas, like, for instance, my end-of-
life thing in which you have thoughts or comments to expand the 
scope of this hearing, I'd be delighted to hear those as well. 
This has been a very helpful panel. We really do hope to get 
this done. We're in a sweet spot here, I think, where doctors 
can provide better care, patients can receive better care, the 
healthcare system gets less expensive and burdensome, and it's 
kind of win/win/win, but we've got to simply have the 
intellectual rigor to go through decades of bureaucratic 
underbrush and clear out what is no longer working and fix what 
needs to be updated.
    So, thank you all for your help and cooperation in our 
efforts. And again, thank you to Dr. Marshall, who comes at 
this, not only as a senator, but also as a practitioner. Thank 
you. The hearing will adjourn for--what do we have, a week, 
seven days for anybody else who has QFR, and if you could 
respond as quickly as possible. With that, I'll call the 
hearing to its conclusion.
    [Whereupon, at 11:11 a.m., Wednesday, May 8, 2024, the 
hearing was adjourned.]
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