tv House Panel Examines Medicare Payment Systems Changes CSPAN July 10, 2017 2:58pm-3:24pm EDT
rethinks how we site. >> watch "the communicators" tonight at 8:00 eastern on c-span 2. next, a look at medicare, its payment systems and provisions of the program set to expire. members of the house ways and means subcommittee heard from the medicare payment advisory commission, an independent agency that advises congress. this is about an hour and a half.
good afternoon. excuse me, the first hearing of the health subcommittee ways and means will come to order as members are aware, the full subcommittee organized earlier this year, ratified our subcommittee assignments. however, i'd like to take the opportunity to introduce members on my side of the aisle, and then we'll recognize ranking member levin to do the same on his side of the aisle. i'll introduce members who are actually here right now, and then we'll recognize members as they get here later. so to my right, mr. adrian smith from nebraska. lynn jenkins from kansas and kenny marshall from texas. that i will yield to the gentlemen from michigan. >> thank you very much. >> mr. thompson is next to me, a veteran member of this institution. and brian higgins, we welcome you back, doubly.
and others will be coming. we have votes at 2:15 i think, so, i guess each of us will make a brief opening. >> we will. >> i yield back, thank you. >> thank you, mr. levin. i look forward to working with members. >> -- has arrived. we were just introducing ourselves. >> i'll tell you that i look forward to working together, as we have talked about before. i'd like to recognize our staff, and i will recognize mr. levin to do so on his side of the aisle. first on the republican side, staff director emily murray. behind me, who is joined by our professional staff of lisa ghraibert, nick uleki, stephanie parks and alyssa halisi, and also down on the end there or legislative assistant taylor trot. and my personal staff whitney
daff ner and abbey finn. mr. levin, you're recognized. >> amy all heads up our staff. sara levin, no relation, and melanie hegrin. and from our office also, daniel. thank you. >> it is my pleasure to welcome you back. mr. miller, to the health subcommittee to help us continue the discussion on our medicare program, payments systems and extenders. it's time we took next steps in strengthening our medicare program as the committee continues to look for ways to reform medicare, the commission's insights and analysis will be very valuable to our efforts. today is a great opportunity for us to hear advice in order to better understand policies that
will improve the program and ensure we are making good use of taxpayer dollars. this year's march report brings us new information and data that should help strengthen our discussion in this particular area. in his testimony, mr. miller will highlight numerous inefficiencies in the post acute care space. one statistic that i personally found quite staggering is that nearly $30 billion, with a "b," in the current post-acute care baseline is being used inefficiently. mr. miller will also highlight the expiring medicare extenders. med pac has commented on these programs over the years, and we will use today's hearing to give everyone a refresher course. extending these programs has a cost and when we spend money in one area we're making a decision not to fund priorities in other areas. clearly there are many areas in need of reform within the
medicare space in the medicare program. med pac has proposed innovative solutions and i look forward to hearing more from the report. meeting with medicare providers around my district and state, i've heard overwhelmingly that overbearing regulations are increasing, burdening providers and seem to be driving out and discouraging small providers in particular. i'm worried about the direction we're heading in this area. i'm hopeful my colleagues on the subcommittee, the full ways and means committee of this congress can work together with the new administration to not only spur innovation but reduce regulatory burdens across the medicare program. with that, i'd like to introduce today's witness, mark miller, the executive director of the payment advisory commission, med pac. welcome back. and before i recognize ranking member levin for an opening statement, i ask unanimous consent that all members'
written statements be included within the record. with that, i recognize ranking member mr. levin. >> thank you very much, mr. chairman and it's a pleasure for us to work with you and your colleagues. and to you, dr. miller, thanks for joining us today. and for the important role that med pac plays in informing medicare policy, we've had a chance to look at your report. maybe not read each page the long one, but an excellent executive summary. and unfortunately, as mr. tiberi and i you -- discussed, this is the first hearing of this subcommittee. and i regret that we did not have an earlier hearing on the consequential health legislation that the republicans introduced and passed. that bill as we know would have taken away coverage from 24 million americans.
while handing out nearly $1 trillion in tax cuts for the wealthy. indeed, the very wealthy and corporations. it would cut medicare by cutting more than $800 billion from the program and shifting costs to patients. it would allow states to eliminate or weaken crucial market reforms, including essential health benefits, community rating, and protections for older workers. it was opposed by doctors, hospitals, patients, aarp, almost everybody who is a participant in the work that you do, dr. miller. though, all of our colleagues here on the republican side did vote for it. but this hearing is about medicare. with all that is deeply harmful in the basic law
or ligs that -- legislation that the republicans passed, there has been much less attention paid to the bill that would do to medicare. the bill eliminates .9% payroll tax on high earners, depriving the hospital insurance fund of $75 million in order to benefit people moring more than $200,000. it grants a windfall to wealthy investors by eliminating the tax on unearned income. and it would provide a $28.5 billion tax break to pharmaceutical companies which will create a shortfall in the part b trust fund. beneficiaries who will be directly responsible if that were to pass for a portion of this shortfall, causing an
$8.7 billion premium increase. these provisions would shorten the solvency of the medicare trust fund. what's more, they would fundamentally break a promise we heard over and over again from the president that he would not cut medicare or medicaid. the republicans have also neglected to address other important issues that medicare faces. and let me comment briefly on perhaps the most important one. the prescription drug spending crisis. i hope we can spend some time today on that. skyrocketing drug costs have devastating consequences for the middle class and for federal health programs. the medicare trustees have told us that program spending in part d increased by 15% in 2015 alone
in part b, jo has found medicare often pays more for physician administered drugs than other payers including med ere aicaid the v.a. the commission pointed out perverse incentives that impact industry behavior and contribute to higher costs for the public. so i hope this hearing will provide us an opportunity to discuss this and other important issues that you raise with so much depth, dr. miller, in your report. i yield back. >> thank you, mr. levin. i would remind members that this hearing is called the medicaid hearing on the current status of the medicare program, payment systems and extenders. i gave tremendous leeway to mr.
levin in his opening statement. more than has ever been given to me in the minority, but we are going to keep this topic from here on out on the topic that was given to members when this committee hearing was released. and before i ask mr. miller to begin, i just want to recognize constituents in the audience. mike de manna, a teacher at orange middle school in delaware county and some eighth grade students. can you stand up in the back? mr. de manna, are you back there? >> did you leave already? he already left? oh, no. they heard a guy from michigan, and they all bolted. just kidding! >> that's carrying rivalry too far. >> mr. miller -- >> michigan beat ohio state. is that what happened? >> it's been a while. mr. miller, you are recognized for five minutes. thank you. >> thank you. chairman tiberi, ranking member
levin, distinguished committee members i am mark miller, on behalf of the commission i thank you for asking us to testify today. as you have mentioned, we are a small, independent congressional support agency required by law to provide analysis and recommendations to the congress. our work in all instances is guided by three principles. assuring access -- beneficiary access to high-quality care, protecting the taxpayer dollar, and paying providers and plans in a way to accomplish these goals. with respect to the program's status, medicare spending is about $650 billion annually. 3.5% of gdp. given the enrollment of the baby boom and rates of spending per beneficiary, the medicare program is projected to grow faster than the economy is projected to grow and continue to raise issues of affordability for both the taxpayer and the beneficiaries that finance the program. by law, our march report makes a series of payment recommendations on various fee
for service sectors. each year we produce analysis on access, supply, utilization, the private equity markets. quality and financial status. i have recommendations across a range of fee for service sectors that i can discuss, but i want to focus on the fact that over the last many years the commission has paid particular attention to the post-acute care sector. i am referring to skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care hospitals. the commission has made recommendations to restrain unnecessarily high payments, improve the equity of payment systems for both patients and providers, and improve quality measurement and also to direct the secretary's attention to program integrity issues. for 2018 we recommend a two-year payment freeze for skilled nursing facilities, a 5% payment reduction for home health agencies and a 5% payment reduction for inpatient rehabilitation facilities. medicare profit margins in each of these sectors is 13% or more
and has been that way for over a decade. in each of these sectors we are again recommending that changes in the payment system would be made so that we pay more on the basis of patient need and that that will result in greater equity across different types of providers. we believe that if the congress were to follow this recommendation something like $30 billion over the next ten years in unnecessary payments could be avoided. in other reports, the commission has recommended moving away from the siloed approach to post acute care delivery and instead move towards a unified payment system for post acute care providers. and, again, pay on the basis of patient need rather than site of care. and also, this would increase the potential to measure quality of care more accurately. turning to part c and part d, managed care and medicare has continued to show strong growth. currently accounting for 31% of enrollment. and there are multiple plans
available in virtually every county of the u.s. on average, plans are bidding below fee for service, which is a significant improvement since 2010. the dollar value of extra benefits that they provide has been increasing, and the commission has made a few recommendations in this area. most notably, to recapture payments from excess coding that targets plans that are most aggressively engaged in that coding, and we have also recommended increasing the overall benchmark in m.a. in order to treat plans more fairly. in the part d drug program, beneficiary enrollment has been increasing and there continues to be access to standalone plans, managed care plans, and low- -- plans for the low-income population. ov overalspending growth is 7% annually. but the portion of the program paid exclusively by the government is increasing at an annual rate of 20% because the number of beneficiaries reaching the catastrophic cap has
accelerated over the last few years, currently accounting for more than 50% of spending. the commission made three recommendations to address this problem, but most notably we recommend shifting more risk to the plans for these catastrophic costs and couple that with additional tools for the plans to manage that risk. with respect to extenders, i note that over the last several years the commission has done work on ambulance payments, including a more targeted rural assistance policy, therapy caps where we have tried to strike a balance between cap restraints and exceptions for needy beneficiaries. and then we have specific recommendations on each of the special needs plans categories. and finally, we have made several proposals for rural hospital payment adjustments. with that, i am happy to take your questions. >> thank you, sir. mr. miller, your testimony reflected some of the medicare extenders in writing. these programs are -- congress
needs to address and determine whether we should extend them or not. many of the programs have been extended several times in the past without any policy modifications. and by the way, for members that's a vote that's occurring. there are two votes, my belief is. so we'll begin asking questions. and mr. miller has agreed to sit tight while we go vote and come back. i'm going to begin the questioning. and if you feel you need to skedaddle over there, please do and please come back after the votes. yeah, we'll come back. mr. miller, can you talk through each of the extenders and what med pac has concluded about each one of them. >> in five minutes, that's a little bit difficult, but i'll do that. well -- what i want to say quickly is all of this has analysis and detailed work behind it, but i'll try and hit you with the top line. special needs plans. we have made recommendations for each of the categories. we have recommended continuing
the institutional special needs plans. with respect to part d special needs plans, we have recommended that you continue those, but you have a requirement for integrated care between medicare and medicaid. for the chronic care special needs plans, we have said that, for, you know, dominant conditions like aids and esr d they make sense, but for conditions like diabetes, congestive heart failure, we'd create greater flexibilities in the regular m.a. plans to basically replicate a special needs type of model in the regular plans and would discontinue those. on therapy -- on hospital payment, there is a low volume adjuster which we originally made recommendations that the congress should take up, which it did. and with all respect, our point here is that it hasn't been constructed properly. it keys off the number of medicare admissions when it
should key off of the total admissions. and i can take that up on questions. and just in the interest of keeping moving along. we also think that there are adjusters like medicare dependent hospitals that, those types of adjusters. the two concerns i will express there is often you can get two adjusters that are aimed at the same problem. medicare dependent hospital, a low-volume adjuster, as the case may be. we think you should be conscious of duplication. and when the adjuster goes to the provider, be conscious of the distance it is from another provider because you don't want to be sending a subsidy to two hospitals that are, say, within ten miles of each other and you're basically propping up two operations that are having a hard time meeting their fixed cost. on ambulance, we generally let the extenders expire and then reorganize the fee schedule to focus more on -- less on basic
life support transports and more on advanced life support, basically rebalance the payments there. and then we also took one of the adjusters for rural providers and targeted it to low-density counties where you would have a harder time covering your fixed costs. i can stop anytime. >> no. keep going. >> on the therapy caps, what we said there was is that there is an extreme variation in the utilization of outpatient therapy. i want to be really clear. we think it's a very valuable benefit and we think there is evidence that it helps beneficiaries, but we also think it's relatively open to abuse. so we would adjust the caps downward to about the 70th percentile of the distribution but couple that with a review of exceptions that makes specific decisions about the exceptions outside of the cap instead of a blanket check box type of
exception. i am going to stop there. i am sure i have left something out. >> we can come back to it if you remember later. or we can ask you a question on the second round. >> i am sure i left something out. >> mr. miller, you and i have had private discussions in the past about the free-standing emergency departments that are popping up around parts of the country. and there seems to be a new one popping up every month or so in my state of ohio. this is a topic that i know med pac will be publishing in its june report and be released about a month from now. can you give us a preview? are you allowed to do that. >> i'll do that and go back in history. we talked about this in our june 2016 report and also in our march -- the report we are talking about here. this is the one where we said that we should be collecting
claims identified for on and off campus because we're really blind at the moment and kind of analyzing this phenomenon. the commission is very concerned about this. there has been a lot of growth. there is concern that growth is occurring in markets where they're either saturated or relatively high income, not necessarily poor populations. and in june we won't have additional recommendations, but we're going to identify three or four issues for us to think about and then come back with recommendations. so one thing we are beginning to get concerned about is the mission of an off-campus emergency room may not -- and the patient population and intensity of service may not look like your standard on-campus emergency room. so maybe we need to start thinking about a payment structure that reflects the fact that they have a different patient mix and in some ways a different mission. a second thing is that -- i'll hold that one for last.
a second thing is, in the legislation that the congress passed on site neutral where the congress was saying after a certain date if you purchase a physician practice you don't get the richer outpatient rates, we're concerned that there is a provision in there that, if you attach services to an emergency room, you can actually get around that prohibition. we'll be discussing that. the last thing i wanted to bring up is, in the rural areas, we think there may be a role for free-standing emergency rooms in isolated rural communities or in isolated rural communities that don't have the patient population to support a full-scale, inpatient operation. we have ideas that we have been talking through where you could restructure the inpatient subsidies and support free-standing emergency rooms in isolated rural areas. so it's not that free-standing emergency rooms have no role anywhere. we have concerns about their growth in certain areas of the
country and then we think we're probably not got quite the right incentives in the rural areas. >> one follow-up. if you have the diane black main hospital. you have the main hospital, the main emergency department. and then ten miles away you have the free-standing black fire -- excuse me -- emergency department. does medicare get data on the visits to that ten-mile-away facility? or is it part of the main hospital emergency -- >> it's all mashed together. >> so medicare, or you at med pac, you can't discern if i go to the free-standing one or the main one. >> and that's -- we cannot, and we are concerned about that. that was the recommendation we made here in this report to say that cms should begin to develop a modifier so that, when this claim flow comes in, we know it's occurring on or off campus.
>> great. thank you. thank you so much. >> i understand you have to break. >> when we come back i'll yield to mr. levin for his questioning. we'll be back in a few minutes. thank you. this hearing is recessed until we get back. thank you. our hearing has come back to order. we are joined by a few of my colleagues who weren't here when