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Hearing on Programs that Reward Physicians Who Deliver High Quality and Efficient Care

February 07, 2012

Hearing on Programs that Reward Physicians Who
Deliver High Quality and Efficient Care








February 7, 2012


Printed for the use of the Committee on Ways and Means


Subcommittee on Health
WALLY HERGER, California, Chairman

PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia

RON KIND, Wisconsin

JENNIFER M. SAFAVIAN, Staff Director and General Counsel
JANICE MAYS, Minority Chief Counsel





Lewis G. Sandy, MD
Senior Vice President, Clinical Advancement, UnitedHealth Group

David Share, MD, MPH
Vice President, Value Partnerships, Blue Cross Blue Shield Michigan (BCBSM)

Jack Lewin, MD
Chief Executive Officer, American College of Cardiology

John L. Bender, MD
President & CEO, Miramont Family Medicine

Len Nichols
Director, Center for Health Policy Research and Ethics


Hearing on Programs that Reward Physicians Who
Deliver High Quality and Efficient Care

Tuesday, February 7, 2012
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.


The subcommittee met, pursuant to notice, at 10:01 a.m., in Room 1100, Longworth House Office Building, Hon. Wally Herger [chairman of the subcommittee] presiding.

[The  advisory of the hearing follows:]


     *Chairman Herger.  The subcommittee will come to order.

     We are meeting today to hear from individuals to have experience to share that will inform us as we continue our effort to reform Medicare payments to physicians.  At our last hearing on this topic, we heard about different payment model options and efforts to test them in the private sector.

     This second hearing focuses on more incremental, private sector‑driven approaches to reforming patients.  We will hear shortly from private payers, a physician organization, and a practicing physician who are engaged in efforts that reward physicians who provide high‑quality and efficient care to patients.  A common theme will be how all of these key stakeholders are collaborating in private sector efforts to improve care while lowering the cost of providing it.

     All but one of our witnesses, even those representing health plans, are physicians who are leading efforts to achieve this shared goal.  I fully expect you will find their stories compelling.  Our Democrat colleagues have called an economist who talk about the need for collaboration but with the view that government, not those providing the care, should lead the way.

     Our end goal in all of this remains addressing the Sustainable Growth Rate formula through comprehensive physician payment reform done in a fiscally responsible manner.  This past December, the House passed a bill that would have provided a two‑year reprieve from SGR cuts.  This would have provided the longest period of stability for Medicare physician payments in nearly a decade.

     It is worth noting that the last time that physicians knew what their payment updates would be for 24 months was when a Republican‑led Congress enacted the Medicare Modernization Act in 2003.  It would have also provided time to determine a payment reform policy that constitutes a true solution ‑‑ it is important to remember that merely averting cuts is not a fix.

     The House bill would have facilitated the collection of information to assist in determining a sound policy prescription for paying physicians moving forward.  The bill directed studies by the nonpartisan Medicare Payment Advisory Commission and the Government Accountability Office.  It prompted this and other congressional committees with Medicare jurisdiction to consult with physician organizations.  The focus of this information collection effort is, not coincidentally, the topic of today’s hearing, how to reward physicians for providing quality, efficient care to beneficiaries.

     Unfortunately, the Democrat‑controlled Senate continued its habit of providing patches a couple months at a time, which led us to our current situation, one that again sees us too close to an unsustainable physician payment cut.  While I am concerned about my Northern California constituents and the other beneficiaries and physicians throughout the country, I trust that the Conference Committee will address this issue in a more responsible manner.

     In the meantime, this committee is focusing on what it can do now to bring a permanent resolution to the SGR program.  I am confident the experience that our witnesses will share today will assist us greatly as we continue down this path.

     Before I recognize Ranking Member Stark for the purpose of an opening statement, I ask unanimous consent that all members’ written statements be included in the record.  Without objection, so ordered.

     *Chairman Herger.  I will now recognize Ranking Member Stark for five minutes for the purpose of his opening statement.

     *Mr. Stark.  Thank you, Mr. Chairman, for holding this hearing today to try and explore how the private sector payers are rewarding physicians who deliver high‑quality and efficient care.  This continues discussions we began, I guess, last May to review innovative delivery and payment system reform efforts.

     I agree with you, Mr. Chairman, that it is important to hear from the private sector.  But I also would note that we are only three weeks away from a 27 percent cut in Medicare physician payments.  We keep avoiding the topic of Sustainable Growth Rate formulas in favor of the easier conversations about delivery system reforms, around which we have much stronger agreement.  If we don’t fix Medicare’s physician payment formula, we are going to lose the ability to collaborate with the private sector because the physicians will abandon Medicare.

     We all share the blame here.  I would like to blame it all on the Republicans, but I can’t.  We are more than a decade away into the debacle known as SGR reform.  We have known this hasn’t worked for many years, but neither side has been able or willing to come together to enact a permanent solution.  And the biggest reason is the cost.

     The way the formula was designed, we would have over $300 billion to correct the formula.  We have an opportunity.  Members on both sides of the aisle and the capital are agreeing to ‑‑ more members are agreeing to the idea of using the war spending, overseas contingency operations, it is called, as a financing mechanism to pay off the SGR program.

     Without objection, I would like to make part of the record a letter signed by most of America’s physician professional societies in support of this.

**Information Not Provided**

     *Chairman Herger.  Without objection.

     *Mr. Stark.  Thank you, Mr. Chairman.

     I am encouraged by this conversation and I am curious to hear from our witnesses today.  And I think most of them will agree that SGR reform is the number one issue facing physicians.  We have got to get this issue behind us, and then we will be able better to devote our attention to implementing reforms, as discussed at today’s hearing.

     I would like to note also that to look at purely private sector efforts is not exactly the answer.  Mr. Nichols, I think, will highlight the synergy between government initiatives to change payments to promote quality efficiency in their private sector counterparts.

     Though many of my more conservative colleagues are loath to hear this, the new health reform law is promoting public‑private initiatives to incentivize high‑quality, efficient care.  Examples like the Challenge grants through the new Center for Medicare and Medicaid Innovation, accountable care organizations, bundled payment initiates, are all public‑private partnerships, and they are moving ahead.

     Their impact goes beyond Medicare, and we are testing models we want to spread across payers.  So I am excited about the synergy that we are seeing between the private sector and government, and I look forward to hearing from today’s witnesses and hope we can discover new opportunities for collaboration.

     Thanks very much.

     *Chairman Herger.  Thank you.

     Today we are joined by five witnesses, who are in the order they will testify:  Dr. Lewis Sandy, who is the senior vice president of Clinical Advancement at UnitedHealth Group; Dr. David Share, who is vice president of Value Partnerships at Blue Cross Blue Shield in Michigan; Dr. Jack Lewin, who is the chief executive officer of the American College of Cardiology; Dr. John Bender, who is the president and CEO of the Miramont Family Medicine in Fort Collins, Colorado; and Mr. Len Nichols, who is a professor of Health Policy at George Mason University and the director of the Center for Health Policy Research and Ethics.

     You will each have five minutes to present your oral testimony.  Your entire written statement will be made a part of the record.

     Dr. Sandy, you are now recognized for five minutes.



     *Dr. Sandy.  Thank you, Mr. Chairman.  Mr. Chairman, Ranking Member, and members of the committee, my name is Dr. Lewis Sandy, and I am senior vice president for Clinical Advancement at UnitedHealth Group, a diversified health and well‑being company based in Minnetonka, Minnesota.  Our mission is to help people live healthier lives.

     I would like to highlight some of our innovative programs in transparent physician performance assessment, practice transformation through payment and delivery reform, and the importance of aligned incentives, all of which help the millions of Americans we serve.  I thank you for the opportunity to testify this morning.

     Private sector innovations can be applied to the modernization of public programs such as Medicare.  Medicare need not start from scratch nor go it alone.  By working with and learning from private sector innovations, public programs can more rapidly be modernized to meet the needs of those they serve.

     For example, we are implementing a large‑scale transparent performance assessment program that provides feedback to both physicians and to consumers, the UnitedHealth Premium Designation Program.  Anyone inside health care knows there are differences in quality.  Just ask a doctor or a nurse.  But how are doctors to know how their practices compare?  How are patients to know?  And how can more information help both?

     The premium program uses the extensive data we have from claims and other administrative data sources and analyzes care patterns using sophisticated analytics.  We evaluate physician performance on quality and efficient across 21 different areas, including primary care and specialties such as cardiology and orthopedics.  Quality is measured first, and only those physicians who meet or exceed quality benchmarks are then evaluated for cost efficiency.

     The measures we use are based on national standards, and incorporate feedback and guidance from specialty societies and practicing physicians.  We display the results in summary form on our consumer websites to inform their health care decisions, and we provide physicians we detailed information to support their quality improvement.

     This program includes now nearly 250,000 physicians in 41 states, and through this program we know that quality and efficiency variations are significant and that they matter.  Cardiologists, for example, who earn our quality designation have 55 percent fewer redo procedures and 55 percent lower complication rates for stent placement procedures.  Orthopedic surgeons who earn a quality designation have 46 percent fewer redo procedures and a 62 percent lower complication rate for knee arthroscopy.  And the overall incremental savings between a premium‑designated quality and efficient physician and a non‑designated physician is 14 percent.

     This program demonstrates that large‑scale, transparent performance assessment can be done today, and that the information helps physicians and patients.  But we have also learned that information alone will not achieve transformation and higher levels of system performance.

     Thus we have also launched practice transformation programs and payment and delivery reforms, working again in collaboration with physicians and hospitals, that combine support for delivery system improvement with aligned incentives.

     We currently are piloting patient‑centered medical home programs in 13 states, and we are developing 8 to 12 accountable care organization projects this year across diverse communities that help care providers modernize the way they deliver care.

     These are promising payment and delivery reforms, but even these are not enough.  Another key component is consumer empowerment and activity, coupled with aligned incentives.  For example, we developed an incentive‑based diabetes health plan to help patients with diabetes stay healthy and adhere to their physician’s recommended care plan.

     Many lessons from our experiences can be applied to public programs.

     First, expert physician and specialist society collaboration is critical in developing appropriate measures for quality, efficiency, patient safety, and other dimensions of performance, and these measures in the measurement program must be fully transparent.

     Second, this information must be presented in actionable format and with aligned incentives.  Information alone, while helpful, is unlikely to move the needle.

     Third, financial incentives must be significant and must come from savings achieved from ongoing improvements in delivery system efficiency.

     Fourth, new models of care, new roles in information technology support, are needed for true transformation.  For example, embedded nurse care managers in our patient‑centered medical home programs provide vital support for care transitions, patient education, and coordination.

     And fifth, programs such as value‑based benefit designs can help people become more activated and involved in their own care.

     In conclusion, stakeholders must work together to develop an integrated, comprehensive approach to transform care delivery.

     Thank you for the opportunity to share our experience with the committee.  I look forward to your questions and comments.

     [The statement of Dr. Sandy follows:]

     *Chairman Herger.  Thank you.

     Dr. Share, you are now recognized.



     *Dr. Share.  Thank you, Chairman Herger, Congressman Stark, and members of the subcommittee for inviting me to participate in your discussion about private payers’ efforts to improve provider performance.

     I am Dr. David Share, vice president of Value Partnerships at Blue Cross Blue Shield of Michigan, which is a nonprofit insurer  with 4.3 million members.  It is one of the 38 Blue Cross Blue Shield plans covering nearly 100 million people in every county and zip code in the country.

     Decades of private payer and government efforts have fallen short of ensuring that people have ready access to affordable, effective, high‑quality care.  In 2004, BCBSM wiped the slate clean and began a dialogue with physician leaders aimed at creating a common vision of a high‑performing health system and an incentive program to help realize it.

     A key learning was that imposing solutions on providers is an extrinsic motivation, with providers putting half of their creative energy into doing an end run around new expectations and resisting meaningful change.  In contrast, harnessing intrinsic motivation and professionalism inspires physicians to devote the full measure of their creative energy to transforming the systems they use and the results they achieve.

     In 2004, the Physician Group Incentive Program, or PGIP, arose out of these discussions based on communities of caregivers with shared responsibility for an identified population of patients, with the aim of enhancing community well‑being and, in doing so, relying on shared information systems, shared care processes, and shared responsibility for outcomes at a population level, all guided by the patient‑centered medical home model.

     Other requirements for success including physicians forming organizations with effective leadership, administrative and technical support, tools to help in reengineering systems of care, and having both latitude and autonomy.  Nearly 15,000 physicians in PGIP serve 2 million Blue members and 5 million Michigan residents.

     The participants include about 6,000 primary care physicians in over 90 physician organizations comprised of over 4,000 physician practices, and only two of these are integrated delivery systems, with the vast majority being one to four physician practices, most of those being in private practice.  There are 780 patient‑centered medical home‑designated practices, with another 3,000 actively working to achieve that status.

     In response to an organized system of care program aimed at aligning and integrating primary care physicians, specialists, and facilities, 40 nascent organized systems of care have been established.  In contrast, the 700 pages of the ACO regulations have inspired three prospective Michigan pioneer ACO applicants.

     A culture of cooperation has emerged.  At quarterly meetings, 350 physician organization leaders discuss best practices and common challenges; and between meetings, regional learning collaboratives delve more deeply.  These collaborative relationships and physician’s leadership role have generated palpable enthusiasm and a full sense of ownership of the program and its goals across the state.

     We have transformed fee‑for‑service payment into a fee‑for‑value approach, with all fee increases for primary care and specialty physicians now dependent on system transformation and population performance.  I want to emphasize:  Payment is a tool, not a solution.  Without full engagement of physicians, a focus on community, and an explicit vision and purpose, any payment method will fall short and can be misused.

     Fee for service isn’t the problem, and global payment isn’t necessarily the solution.  We have established an annual incentive pool of $110 million, which rewards physician organizations for modernizing systems of care and optimizing performance.  There are over 30 distinct initiatives available to these physician organizations, which keeps them constantly modernizing at the edges of their individual current capabilities.  The more ambitious they are, the more resources are made available to them.

     Physicians in the patient‑centered medical home‑designated can earn up to a 20 percent increase in office visit fees, focusing on relationship‑based care, not procedures.  Physicians also can receive additional fee‑for‑service payments for chronic illness care management services.  And starting in 2012, hospitals’ payment will be tie‑barred to population‑level performance, effectively aligning their incentives with those of physicians.

     Early results are compelling, with a 22 percent lower rate of admission for potentially avoidable conditions, 10 percent lower ER use, 8 percent lower radiology use, and overall, a 2.2 percent total cost trend or increase for the Blue PPO products.

     The physician group incentive program, with its focus on partnership, system transformation, population management, and fee‑for‑service payment, has moved Michigan from procedure‑based care to relationship‑based care and from volume to value.

     I appreciate your interest and attention, and look forward to the discussion.  Thank you.

     [The statement of Dr. Share follows:]

     *Chairman Herger.  Thank you.

     Dr. Lewin is recognized.



     *Dr. Lewin.  Thank you, Chairman Herger and Ranking Member Stark and ‑‑

     *Chairman Herger.  If you can hit your mike button, please.

     *Dr. Lewin.  Oh, yes.  Thank you.  There we go.  Thank you, Chairman Herger, Ranking Member Stark, and committee members.  I am Dr. Jack Lewin, representing the American College of Cardiology, 40,000 cardiologists, advanced practice nurses, pharmacists, and other clinicians.

     Our purpose is to transform cardiovascular care and improve heart health, and we are doing that.  In the last 10 years we have had a 30 percent reduction in morbidity and mortality across cardiovascular care in the United States.  And the science in the pipeline is amazing.  We are soon going to be replacing aortic valves without cracking the chest.  We have got stem cell programs coming, miracle drugs in the pipeline.  But the costs are out of control.

     For 30 years, with the American Heart Association, the ACC has been developing guidelines and performance measures to bring better science to the point of care.  Recently we have developed appropriate use criteria, new tools for diagnostic imaging, and for procedures that actually improve quality and lower cost at the same time.

     This isn’t cookbook medicine.  Clinical judgment is still important.  But getting science to the point of care more effectively improves quality and improves care for patients, and lowers costs.  That is what is important.  And physicians need to lead these processes.

     Now, how does it work?  Well, the clinical tools we have developed that actually bring science to the point of care include the national cardiovascular data registries.  These are six hospital registries and one called Pinnacle, which is an outpatient register.  Together, we have 20 million patient records, and we are providing outcomes results to hospitals and doctors all across America in cardiovascular care.  And it is making a difference.

     We have also developed a tool called FOCUS, which helps at the point of care ‑‑ and it can be a mobile app ‑‑ that helps choose the right image among a bewildering array of new technologies in these regards that can get the right test the first time and save significant dollars.

     So going forward, we need payment reforms, with incentives, linked to these kinds of tools to make the kind of changes needed.  In the testimony, you will see that in Wisconsin, we have a program called Safe Care, applying all these tools across a large number of medical groups and hospitals to really achieve some of these results.  A similar program is going to happen in Florida under Safe Care.

     We have got a clinical decision support system using the FOCUS tool to improve the appropriateness of imaging that is now across the entire State of Delaware.  Very exciting.  And the Cardiovascular Performance Improvement Program, where we work with some of the insurance partners here like United, Blue Cross Blue Shield of Michigan, and others, actually rewards doctors for better outcomes and better performance.  So we are moving in the right direction.

     Is there any evidence that this can work, that these kinds of things actually reduce cost and improve quality?  Let me tell you about the Door to Balloon Program.  This is a program to speed up the treatment of heart attack, “Door” being the door to the emergency room, “Balloon” being angioplasty and stents to relieve the obstructed coronary artery in a serious kind of heart attack called a STEMI.

     Using an educational program and our data in the United States, we have taken the time it took to treat a heart attack, averaging over two hours, down to what science tells us is necessary, under 90 minutes, or even better, under 60 minutes.  Now, three years later, using this Door to Balloon Program, more than 90 percent of U.S. hospitals are under 90 minutes and half are under 60 minutes.

     Here is the point.  We have reduced the length of stay from five to three days, on average.  We have reduced the cost by 30 percent.  This is over 4‑ to $5 billion a year.  This is important.

     So we have even talked about a big idea of actually putting a challenge out to hospitals and cardiologists across the country to say, if you can reduce Medicare costs by 10 percent over 10 years ‑‑ by the way, that would be about $300 billion ‑‑ why don’t we split the difference between the hospitals, doctors, and Medicare so that people can build these systems and make this happen.  Imagine that kind of a win/win/win for patients and for doctors.

     The conclusion for me would be to say that providing physicians and other health care providers with data on their performance and tools to improve their performance is going to improve quality and lower costs.  To do this, to get it done, Medicare and private payers have got to encourage new incentives through the development of widespread use of clinical data registries that allow tracking and improvement of care systemically, along with payment reforms and incentives.  Put those two together and we are going to see costs go down, quality go up.  And we have got examples of it today.

     Thanks for the opportunity to speak about several of these exciting improvement collaborations underway in cardiology, and we look forward to working with you to help solve America’s problems in health care costs at the same time we improve patient care quality.  Thank you.

     [The statement of Dr. Lewin follows:]

     *Chairman Herger.  Thank you.

     Dr. Bender is recognized for five minutes.



     *Dr. Bender.  Thank you, Chairman Herger and distinguished members of the Subcommittee on Health.  I am Dr. John Bender.  I am a family physician in Fort Collins, Colorado, and I am CEO of Miramont Family Medicine, which is a network of patient‑centered medical homes.

     Now, in 2002, my wife Therese and I moved back to Larimer County, where we were from, and we purchased one of the oldest practices in Fort Collins, Colorado.  They had been there for over 40 years, and were basically doing things the same as they had in the 1970s.  They left me one computer and one employee.  That was 10 years ago.

     Today we have over 50 employees, 14 providers, including 8 physicians; we have over 80 computers and a centralized data center, serving four different parts of our state.  And we have about 27,000 patients.

     Now, during this same period of time in Larimer County, 34 primary care physicians closed their doors or stopped providing primary care services.  Eight of these were actual bankruptcies.  And yet at the same time, we saw a doubling in the number of emergency room beds and an increase by the number of emergency room physicians by 50 percent, suggesting that if patients didn’t have a patient‑centered medical home like myself, they were going to the emergency room at a later stage of their illness for a higher cost, increasing health care premiums for everyone across the state.

     Now, how is it that Miramont was able to double in size, grow at 34 percent per year to the size that we achieved, in this economy while other family physicians were saying, I give up, and walking away?  Well, part of it was, in 2007, we made the conscious decision that we were no longer going to just focus on volume.

     We were going to make sure that we had a high‑quality product that was safe and efficient, and believed that if we built the best product in the marketplace, that consumers would vote with their feet and we would be able to maintain our solvency ‑‑ because, after all, I didn’t want to be the 35th practice to close or the ninth physician to bankrupt.

     So we pursued NCQA patient‑centered medical home recognition.  That is the National Committee of Quality Assurance.  We achieved level 3, which is the highest level of patient‑centered medical home.  It basically meant that we, after a six‑month audit period, were able to show improvements in our work flow and the way we retooled things so that we could deliver team‑approached care.

     We also had, for example, a patient portal, where patients could go online, look up their labs, see their clinic record.  They could send me a HIPAA‑compliant email, or they could schedule appointments.  And we also conducted care coordination through the transitions of care, as people went from hospitals to nursing homes, et cetera.

     Our next big break came in 2008 with the multi‑payer patient‑centered medical home pilot.  This was the brainchild of Dr. Paul Grundy and others at IBM, who had compelled the top payers in the United States, WellPoint, UnitedHealth Group, CIGNA, Aetna, and Humana, to test the patient‑centered medical home model.  It was based on some of the beliefs and work that Dr. Barbara Starfield had published 10 years earlier, suggesting that if we put an emphasis on primary care, we could bend the health cost curve.

     So 17 pilots were selected.  Miramont was one of them.  It was convened under a group called the Health TeamWorks, and it was basically an alliance of payers, including insurers, employers, and physicians.  We agreed on the quality metrics that we were going to track to show improvement on, and we also agreed on a three‑tiered payment system based on fee‑for‑service, per‑member‑per‑month fees, and pay for performance.

     Now, fee‑for‑service was included, and I will tell you why.  There was an understanding that volumes in primary care were actually too low, and if we were going to pull people out of emergency rooms and urgent care and other high‑cost centers, we would have to incentivize primary care physicians in order to help them to build the capacity to see the increased volumes.

     Per‑member‑per‑month fees ensured that I was able to provide what was other non‑revenue‑generating activity such as having a diabetic nurse educator in‑house, or a psychologist, and doing care coordination.

     Then finally, pay‑for‑performance bonuses made certain that we just didn’t report our metrics to a centralized data registry, but we were actually working to try to reach certain target goals to help improve our delivery of evidence‑based medicine.

     The results are in, and they are fabulous.  UnitedHealth Group has told us that Miramont reduced hospital readmission rates by 83 percent compared with our peers.  A year ago, the State Medicaid program joined the pilot, and they said that we have an ER utilization rate that is a negative 219 percent ‑‑ negative 219 percent ‑‑ compared with our peers.

     So I call on the Subcommittee on Health of the Ways and Means Committee of the House of Representatives to compel the Department of Health and Human Services to immediately deploy the patient‑centered medical home payment standard nationally in order to conserve the strength of the primary care workforce, in order to increase the quality of health care delivered to entitlement beneficiaries, and to also reverse the escalating costs that are burdening the American taxpayer by using a payment method, a payment standard, that has been proven and is now being adopted in the private sector.

     Thank you.

     [The statement of Dr. Bender follows:]

     *Chairman Herger.  Thank you.

     Mr. Nichols is recognized for five minutes.



     *Mr. Nichols.  Thank you, Chairman Herger.  Thank you, Ranking Member Stark, and other members of the committee and subcommittee.  I am honored to offer my thoughts on incentive realignment today.

     My name is Len Nichols.  I am a health economist.  I direct the Center for Health Policy Research and Ethics at George Mason University.  I am also the editor‑in‑chief of a new online journal, the Community on Payment Innovation, jointly sponsored by the ACC and the American Journal of Managed Care, which, by the way, has already published a report by colleagues of Dr. Share on his innovative PGIP program.  I am on the board of the NCQA, which devised the patient‑centered medical home criteria Dr. Bender just spoke about.  And I was recently selected as the innovation advisor to CMS.

     But I do want to make crystal clear at the outset my written testimony and spoken views are mine and mine alone.  I do not speak for any organization, public or private, nor for any other person, living or dead.

     Let me start with some good news.  Health care stakeholders around the country get it, and they are responding to the incentive realignment signals now embedded in the Affordable Care Act.  They are devising private initiatives, some of which you have just heard about; but even more importantly, they are devising public‑private partnerships that are our best hope for improving health, improving care, and lowering costs for all of us over time.

     It seems to me we face two broad alternative pathways to achieve our goals.  One path entails severely reducing coverage, eligibility, and prices paid in public programs, or even eliminating them altogether.  In other words, we could cut our way to fiscal balance, and in so doing, reduce access to care for millions of Americans.  I fear this pathway would likely fail, for the ensuing cost shift to the private sector would drive up premiums and cost us yet more high‑wage jobs in a never‑ending cycle of decline.

     Alternatively, we could align incentives so thoroughly that we actually link the self‑interest of clinicians with our common interest in cost growth reduction and quality improvement while covering all Americans.  This is by far the most humane way to our shared objective.  Quite simply, we need value‑based payment systems where value has three dimensions:  clinical quality, patient experience, and efficiency.

     I will emphasize three points.  Number one:  While fee‑for‑service is part of the problem, in the real world fee‑for‑service is also ubiquitous and therefore it cannot be jettisoned overnight.  We must develop transition business models to enable clinician groups to move from fee‑for‑service alone to more sustainable incentive structures without going bankrupt.

     Point number two:  The ACA has signaled to the country that business as usual is over, and business as usual is over because we can’t afford it.  Every one of the initiatives you have heard about today and that Karen Ignagni of AHIP reported on a fascinating conference in October, referenced in my written statement.  Patient‑centered medical homes, bundling, accountable care organizations, or organized systems of care in Dr. Share’s terminology, all have a conceptual counterpart in the ACA.

     The growing private sector interest in care innovation emerging from the CMMI is the proof that ideas and efforts in the public and private sector are converging, which is extremely good news because every single clinician I have ever met, and I am old enough to have met quite a few, wants one set of incentives, one set of quality metrics from payers, one set of patient acuity adjusters, rather than the Byzantine plethora they labor under today.

     Number three:  Neither private nor public sector payers can do this by themselves.  Private payers sometimes need public payers to help with local provider market power, and as Dr. Sandy said, public payers can benefit from adopting the supple nuance with which private payers tailor incentives for different marketplaces.

     I will close with three observations that I think are relevant.  As an editor‑in‑chief focused on payment innovation, I have learned that many practicing physicians are skeptical of new payment models that don’t have quality or patient acuity components.

     Second, as an informal advisor to three different applications to the recent Innovation Challenge grant initiative from CMMI, I saw the immense value of having a vision of a community health system.  In each case, leadership originated in a different place ‑‑ a consumer‑oriented health system agency in one case, a local nonprofit health plan with a history of collaboration in another, a forward‑thinking single specialty group armed with data and a commitment to quality.

     But in each case, local employers, hospitals, plans, and of course, other clinicians and community voices we recruited, in two cases including the state Medicaid program, until by the end only Medicare had not yet joined these promising local incentive arrangements that are squarely aimed at a sustainable version of the three‑part aim.  The point of the applications and this initiative is to entice Medicare to join the party that the private sector devises, and others like it.

     Finally, as a participant in CMMI’s new Innovation Advisors program, I recently spent two and a half days in a hotel near Baltimore with 72 of my new best friends.  CMMI hopes to deepen our skills in innovation and quality improvement while we bring them new ideas from the real world outside the Beltway.  But the best part of this was in seeing the energy and talent from across the country that is now committed to achieving the three‑part aim in a wide array of institutions and settings.

     I would suggest to you that the Innovation Advisors program is proof that there is now broad recognition that top‑down payment and delivery changes will not work, that frontline clinicians and managers and nurses and plans and patients all have to work out the details that will work for them where they live and work, and that we all need all the tools we can muster, from the public sector, the private sector, the recent reform law, and the God we worship in our own ways, to get this done in time for our health care system and our country.

     Thank you very much.

     [The statement of Mr. Nichols follows:]

     *Chairman Herger.  Thank you.

     Dr. Sandy, I understand that your company’s network includes approximately 650,000 physicians, a number nearly equal to the number of doctors who participate in Medicare.  As your quality and efficiency program touches many of these physicians, and considering that other private payers have similar programs, would you say that a good number of Medicare participating physicians have exposure to a program such as yours?

     *Dr. Sandy.  Well, thank you, Mr. Chairman.  We do have close to 650,000 physicians and other health care professionals, including nurses, chiropractors, mental health workers, and so on in our broad network across the country.  The premium program that I mentioned in my testimony encompasses, at current scale and scope, close to 250,000 physicians across 21 different specialty areas of medicine.

     So given that scope, I don’t know the exact answer, but I would venture to say that the vast majority of those physicians, aside from those that don’t typically take care of Medicare patients such as pediatricians, have had exposure to our program and probably similar programs by others in the private sector, and those physicians also take care of Medicare beneficiaries.

     *Chairman Herger.  Thank you.

     Dr. Share, the number of Michigan physicians participating in your program is very impressive, and that they group together in the physician organization is an interesting feature.  As someone who represents a very rural district in Northern California, I know it has always been a difficult challenge to develop integrated delivery systems in rural areas.  Can you describe the level of physician participation in the rural or more remote parts of Michigan as well as the size of organizations in those areas?

     *Dr. Share.  Certainly.  The incentive program that we have is intentionally designed to be inclusive of both sophisticated, vertically integrated delivery systems and small one‑ and two‑physician practices, and also to get all of them, regardless of their size and structure, to come together collectively to share responsibility for a population in common.

     So there are physician organizations in nearly every county in the state, and there are many, many rural physicians who are involved in these physician organizations.  Some of them, interestingly, have come together under an umbrella organization run by the state medical society that provides comprehensive administrative and technical structure to support the smaller practices who join in confederations of private practices, one‑ and two‑person doctor offices, so that they don’t have to create the analytic infrastructure and the information systems all by themselves.

     This has empowered them to be full partners in this program, equally engaged, equally exciting.  There are individual physicians in one‑person offices who have stunning stories to tell about how they have transformed their practice, including way up in the upper reaches, far reaches of the Upper Peninsula.

     So I think this program has touched nearly every community and every type of practice, including rural practices, absolutely.

     *Chairman Herger.  Thank you.  That is exciting.

     Dr. Bender, your story of transformation is remarkable.  You note that your practice made these investments without regard to health care overhaul and without regard to SGR because these were things you couldn’t control.  You also note that it would take other small practices two years or less to complete such transformation.

     What advice would you offer to other physicians who struggle to make major practice changes, given the constant pressure placed on them by the reimbursement system?

     *Dr. Bender.  Well, thank you, Chairman Herger.  They need two things, leadership and courage.  Leadership means, to get involved in a patient‑centered medical home, they have to tell their staff, hey, we are going to do this.  They have to believe in it.  The group has to eat, sleep, and drink the model.

     This requires delegation.  I couldn’t have done this without the superior HR structure that we have at Miramont, with excellent employees who are committed to this process.  Because it is brain damage.  It is very difficult to go through change.  People hate change, but they love progress, and to get to the point where we are excited about what is new at Miramont as opposed to, my goodness, we are doing thing differently.

     The other part, courage:  Physicians are scared.  They don’t know what is going to happen with the health care overhaul.  They are worried about regulations, malpractice, et cetera, et cetera, SGR threats.  And really what I tell them is, the opposite of careless is not always ‑‑ or, I am sorry, the opposite of cautious is not always careless, but sometimes the opposite of cautious is courage.

     Are they choosing not to do it just because they think that it is going to be careless?  Or are they choosing not to do it because they are afraid?

     *Chairman Herger.  Thank you.

     Mr. Stark is recognized.

     *Mr. Stark.  Thank you, Mr. Chairman.  I thank the witnesses for participating with us today.

     Mr. Nichols, you talked about why public and private payers must work together to align incentives.  So while this hearing has been informative, it seems to me that the focus just on private sector initiatives misses a larger picture.  Could you talk some more about the need to combine the public and private sectors to see if we can get those stars in alignment?

     *Mr. Nichols.  Be glad to, Congressman Stark.  Basically, the simple reason they have to cooperate is because most clinicians treat all kinds of patients.  And it turns out in lots of specialty cases and in some locales, a majority of a clinician’s patients might be public, so they are the biggest market share.  They are typically the biggest market share for hospitals, and they are often also so for specialists, including cardiology, I might point out.

     So if you don’t get the sectors aligned, if you don’t get the incentives aligned, clinicians are going to be both confused and, as Dr. Bender might say, unhappy about it.  And so the best way to transform patient care is to get them aligned.

     That does not mean they all have to pay the exact same level.  I certainly believe in the private enterprise system.  I certainly believe in competition.  But I also think it makes sense for the clinicians to face the very same set of incentives, the very same set of feedback loops, the very same set of metrics.

     The very idea that United would have one set of metrics and Aetna a different one and CIGNA a third and Medicare a fourth and Medicaid and yada yada yada ‑‑ by the end of the day, what is the clinician going to do?  What they think is best independent of what they are being paid by.

     So the smartest thing to do is to get the incentives aligned.  Now, there are lots of reasons that is difficult to do, but there are about 300 million reasons it is a good idea to do as soon as possible.

     *Mr. Stark.  Thank you.  Also, it is my understanding that we are probably the only industrialized nation that does not use a comparative effectiveness measure.  And I hasten to point out that all the comparative effectiveness programs, whether they are for pharmaceuticals or medical procedures, don’t include cost.  And of course, there is this ‑‑ for some reason; I think it is mostly political fodder, but people are suggesting that using comparative effectiveness would lead to rationing.

     I wondered, both Dr. Sandy and Dr. Share, what is your reaction to that?  Comparative effectiveness, if you had that available to you across the board ‑‑ some professions or segments, thoracic surgeons, for instance, have done their own.  For about five or seven years, they have collected data on every procedure that every member of the club or college, whatever you call it, has provided to a patient, and the outcome, and they have tracked the patients.  But that is a small group in the firmament of medical providers.

     What do you think about the rationing issue?

     *Dr. Sandy.  Well, thank you, Congressman Stark.  The comment I would say around comparative effectiveness research is, it is absolutely essential that there be investments in understanding of the differences in clinical effectiveness between different treatments so that physicians can have the best science and information to help inform the choices in their care, and that patients then can have that information as well so that they can make their informed choices.

     I think what I really would underscore and echo and support is the phrase that Dr. Lewin laid out.  He used the term bringing science to the point of care, and I would strongly support that.  And I think organizations such as the American College of Cardiology, the Society for Thoracic Surgery that you mentioned, these medical specialty societies are really at the forefront of doing that.

     One of the things that in my opinion would be helpful is that these societies are at the forefront, but there are other societies that would like to move in this direction to develop detailed clinical registry information, to help inform the physicians that are part of that specialty area to collect that information.  That has been a challenge.

     It is gratifying ‑‑ there is a fledgling effort, by the way, called the NQRN, the National Quality Registry Network, a multi‑stakeholder coalition, to advance this frontier.  And we think that would be a very important development to support.

     *Mr. Stark.  If I may just have another second, Mr. Chairman, wouldn’t the requirement for keeping electronic records, which now everybody is supposed to do, help toward building this comparative effectiveness study?

     *Dr. Sandy.  Well, again, one of the things that your question points out is the issue of the challenges of administrative simplification and the fact that many physicians do not have electronic health records.  While electronic health records sometimes aren’t architected to collect detailed information, it is an important start to help promote that kind of data collection for the purposes that I have outlined.

     *Mr. Stark.  Thank you.

     *Dr. Share.  Mr. Chairman, could I just add a brief note in response to Mr. Stark’s question?

     *Chairman Herger.  Very quickly.

     *Dr. Share.  Yes.  So we have actually embarked on a very ambitious approach to empowering the provider community, in the spirit of our partnership approach, with the workings of comparative effectiveness research, putting them into the hands of the provider community.

     We have 17 distinct hospital‑based, multi‑institutional, data registry‑driven, collaborative quality improvement programs that have dramatically decreased the rate of mortality and morbidity, and saved money while doing so.  And we are now in the process of linking claims data to the quality data across the state to empower CFOs, CEOs, and physician leaders to use that integrated data set to improve value in hospital care.

     *Mr. Stark.  Thank you.

     *Chairman Herger.  Mr. Johnson is recognized for five minutes.

     *Mr. Johnson.  Thank you, Mr. Chairman.

     Dr. Share, it is interesting to learn the improvements you are making in Michigan.  Do you ever talk to Blue Cross in Dallas?

     *Dr. Share.  Do we talk to Blue Cross in Dallas?  We talk to the Health Care Service Corporation, which I believe is a nonprofit.  It is a Blue licensee, so it is a Blue plan.  And it is multi‑state.  It is in Texas, Illinois, and I am not  sure where else.

     We have talked to them a good bit about this collaborative quality improvement approach using comparative effectiveness research in daily practice across an entire state, and they are beginning to adopt that model.  We haven’t talked to them about our physician group incentive program yet.

     *Mr. Johnson.  So the Blues aren’t united across the country?

     *Dr. Share.  The Blues are united across the country in terms of having really rich relationships at the local and regional level with the provider community, and each developing payment transformation and practice transformation approaches that fit the needs and the circumstances of those communities.  And we share experience and knowledge about what works across the Blue association.

     We are now actually working towards developing a set of tiered incentive programs, tiered in the sense of benefits being ‑‑ the out‑of‑pocket costs for members being lower if you are using a medical home doctor, for example, to try and bring our approaches into more alignment while still respecting local circumstances.

     *Mr. Johnson.  And what are your ideas?  Do you all have some innovations that you are trying to share with Medicare?

     *Dr. Share.  We are actually partnering with Medicare in the context of the advanced medical home demonstration project.  And in keeping with Mr. Nichols’ comments, we have aligned incentives where we have 480 of our patient‑centered medical home‑designated practices involved in an incentive program that includes Medicare and Medicaid funding as well as Blue Cross funding.

     It has actually significantly enhanced the focus on a common set of quality measures, a common set of efficiency measures, and a common approach to care management across all of these 480 practices.  So working with CMS in this way, bringing them into our regional innovative approach, has amplified what we are able to do.

     As an example, though, of how sometimes CMS has a bit of a hard time fully embracing and trusting a local or regional effort, one of our approaches is to provide the incentive payments to the physician organization, as I mentioned, for their collective success at achieving value for a population of patients.  The physician organization can then invest the money in better care management systems, information systems, et cetera.  CMS has required that its incentive money must be paid 80 percent to the individual medical home practices.  That makes it harder for them to band together and create common systems with aggregated resources.

     So tremendous opportunities to partner with CMS.  More opportunity, I think, to do so in ways that aren’t constraining, that free the local community to do its best.

     *Mr. Johnson.  Yes.  But what I am hearing you saying is CMS isn’t listening to you.

     *Dr. Share.  No, they listen.  They are an active partner, and they are trying to think through the best way to do it also.  And as a partner, they naturally have an instinct to say, well, we really think it will be best if we tested an incentive models, where the doctors get reimbursement or an incentive payment made directly to them.  So that is important to us.  We didn’t come to yes on exactly how approach that.

     *Mr. Johnson.  Thank you.

     Dr. Lewin, you know, as we explore new systems for Medicare physician payment, in your experience what are some of the key points we need to keep in mind?  And what does Congress need to do to apply these programs to Medicare?

     *Dr. Lewin.  Well, the faster Congress really moves forward with payment incentives, I think we will see progress.  We know that we have to be able to measure our way to success, so we do need registries.  And registries work with electronic health records.

     So you have the electronic health record; a registry tracks a whole set of conditions and gives feedback to the hospitals and the doctors in terms of how they are doing so that they can begin to compete with themselves and with their peers on producing better and better results.  Ultimately that is going to get reported back to consumers so that people will be able to choose where they get their health care based on improved outcomes.

     The extent to which Medicare can move more swiftly to payment reforms, I think we would see progress there.  I love the CMMI grant program, but we will probably take three years or four years before we can see the results of those programs and apply them.  Meanwhile, our deficit keeps increasing as a nation.

     I would hope that we would begin to do some national demonstration projects coming right up in 2013 that would split the difference of savings between Medicare and the hospital and physician partners.  So if we end up ferreting out unnecessary stents and unnecessary defibrillators, or choosing the right image and reducing the cost of imaging, and reducing the number of admissions and readmissions to hospitals by improving the treatment of heart failure ‑‑ that is going to reduce the income to the hospitals.  Right?  Because they won’t have as many admissions.  They won’t have as many procedures and images.

     So to help offset that, splitting the savings between Medicare and the provider community of doctors and hospitals is a way you could get people to move much faster.  But we would need to require that while they are doing that, they are measuring how much progress they are making in a way that is effective and scientifically valid, and report that back so that we can see what we are doing.

     *Chairman Herger.  The gentleman’s time has expired.

     *Mr. Johnson.  Thank you, sir.

     *Chairman Herger.  Mr. Thompson from California is recognized for five minutes.

     *Mr. Thompson.  Thank you, Mr. Chairman, and thank you for holding the hearing.

     I would like to just piggyback on something that the chairman and the ranking member both spoke on, and that is the importance of fixing the SGR program.  I have got to tell you, in my district that is what I hear about most ‑‑ from the medical profession, from patients, people on Medicare.

     They have long forgotten all the manufactured crisis that was sent out on the talking points for the health care reform stuff.  They want to make sure that they are going to get paid for the medical services that they provide, and Medicare patients want to make sure they are going to have a doctor to go to.  And it stops right about there.

     I have not had one Medicare person stop me on the street and say, hey, I think electronic records are good, bad, or otherwise; the Affordable Care Act is doing this, that, or the other thing.  But the SGR is critically important, and I don’t think it is enough to say if the Senate Democrats didn’t do this or the House Republicans didn’t do that.  We have dropped the ball on this thing.

     I think Mr. Stark nailed it when he said that it is the cost, $300 billion to fix this thing.  Well, the bad news is if we wait another five years, it is over $600 billion.  And I applaud my colleague and ranking member for raising a proposal as to how it can be paid for.

     We need to come together as Members of Congress, party stripe notwithstanding, and figure out how we come up with the dollars to fix this because right now ‑‑ Mr. Nichols talked about the importance of partnerships.  This is not a partnership.  It is not happening.  The Congress is not doing its fair share.  If you use the breakfast analogy, we are bringing the eggs.  And that is just not good enough, and I think we need to move quickly on that.

     Mr. Nichols, on the Affordable Care Act, this has in fact moved towards ‑‑ some of these programs have moved towards payment reforms.  And I think that is an important part of this bill on the part of a lot of us, and so I am glad to see this happening.

     Can you talk about how the ACA reforms are moving private sector providers to develop and explore new forms of health care delivery that encourage efficient delivery and quality care?

     *Mr. Nichols.  I would be glad to, Congressman Thompson, and let me start with the program which I think is the most comprehensive, and that is the Comprehensive Primary Care Initiative, which you may know was actually offered to health plans so that they would indeed apply for the grant.

     Then, once selected, what they are looking for is five to seven markets around the country where they have a sufficient market share to really reach a large number of practices.  And they will go back and jointly recruit physician practices to join the program, to join the party, and to devise payment arrangements that will work for those local communities.

     As every member of this panel has said to you, America is a big old diverse country.  The idea that we can make one set of rules apply everywhere is just a little bit, well, last century.  So here we are, and what is great about CPCI is indeed you are getting the plans and the government to work together to find a way to get to exactly what Dr. Share was talking about, what makes it work in Michigan versus Virginia versus California.  That is among the more interesting ones.

     But I also want to emphasize the most recent innovation challenge grant, which basically was an open‑ended invitation to provider groups, plans, people around the country.  And while CMMI has not released the final numbers that have come in on applications because the grants have not been made, I know, from the people that I know who applied, very large numbers of people were very interested in this program ‑‑ I mean thousands around the country.  And we know this because when you apply, you get an email back that says, you are the 400‑whatever.

     So over 6,000 people exhibited letters of interest.  Over 2,000, we think, actually submitted proposals.  That tells you something about the scale of people around the country who are hungry to do exactly what Dr. Bender talked about, and that is, how do you make incentives work where we are?  And they are trying to tell the government, this is the best way to work for us.  I can think of no better way to encourage the kind of partnership we all agree on.

     *Mr. Thompson.  Thank you.

     Dr. Share, one of the programs, the multi‑payer advanced primary care initiative ‑‑ and I think Blue Cross Blue Shield in Michigan is part of that ‑‑ do you agree with CMS that CMS can be a catalyst in increased innovation in a health care system?  And does this participation in this program lend to that?

     *Dr. Share.  Yes, I do agree.  As it happens, in Michigan ‑‑ and by the way, I mentioned earlier, we have 480 medical home practices in the demonstration project, which represent over half of the medical home practices in the eight states in the demo nationally ‑‑ we actually had our physician group incentive program several years before in place, so we had a structure.  We had engagement.  We had made tremendous strides in developing medical homes and improving performance.

     So in our context, CMS came in and actively partnered with us, piggybacking on the work, building on the foundation we had laid.  In other communities, they are beginning.  They are starting with 10 medical home practices, with intention to grow that number.  And the influx of support and focused attention and commonality of measurement approach by CMS has really jump‑started their effort, has amplified their interest and their ability.

     So I think in different communities it will play out differently.  But there is no question the answer is yes.

     *Mr. Thompson.  Thank you.

     *Chairman Herger.  The gentleman’s time is expired.

     Mr. Kind is recognized for five minutes.

     *Mr. Kind.  Thank you, Mr. Chairman, and thank you for holding this very important hearing.  Again, we have an excellent panel and your testimony here today is very appreciate and quite inspirational.

     I mean, what I have heard you in your testimony, reading through your written submission as well, it is hard to find any inconsistency in what is happening in the private world versus what reforms are being advocated in the Affordable Care Act.  And Dr. Nichols, I couldn’t agree with you more.  There has to be a convergence or harmony in delivery system and essentially payment reform between both the private and the public spheres or it is not going to work very well.

     I am proud that I hail from a state, Wisconsin, that seems to be out ahead of the cost curve.  And Dr. Lewin, I am going to go to you shortly here to talk about the Smart Care project that you have submitted to CMMI for an update on that.

     But you look at certain models of care that are proving very effective, from the Mayo system to Gundersen, to Marshfield, to Aurora, to Dean, to Theta Care ‑‑ highly integrated, coordinated, patient‑focused, which provide models of where we need to drive the health care delivery system, and hopefully, ultimately ‑‑ and I think this is going to be the verdict on any type of health care reform in this country ‑‑ the payment reform that is desperately needed.

     We have got direct control over Medicare, and I would love to see fee‑for‑service die as quickly as possible so we can get to a value‑ or quality‑based reimbursement system, which sounds to me what you guys are all working on right now with the type of initiatives and the type of projects and demonstrations that you are involved in.

     Dr. Lewin mentioned the Smart Care project in Wisconsin.  You are teaming up with the Mayo System of La Crosse, my hometown, but also UW Health Systems in Aurora in the state.  Could you explain a little bit more what the goal is, how it is going to assist physicians, how it is going to lead to better quality outcomes for the patients, and how you see that working?

     *Dr. Lewin.  Great.  Well, it really is a physician‑mediated approach, and it uses really all the tools that we have developed in cardiovascular medicine to achieve a result of better outcomes, better patient care at a lower cost.

     So a good example will be the use of the Pinnacle registry in the outpatient setting to better and more consistently manage high blood pressure, dyslipidemia ‑‑ you know, cholesterol and so forth ‑‑ anticoagulation, and heart failure, to reduce the number of heart attack admissions, strokes, and heart failure admissions.

     Now, this is billions of dollars nationally, billions and billions.  And in Wisconsin, it is going to be a lot of money.  And even with the integration that you have got there, there is still a lot of progress that we know can be made.

     In addition to that, we are going to be applying the FOCUS tool on the inpatient side as well to choose the right image.  There is a bewildering array of images now.  There are dozen kinds of echo tests, a dozen kinds of nuclear tests, CT, MR, positron emission, and the science just keeps growing faster and faster.

     How do you choose the right test for the right patient?  Or does the patient even need the test?  Well, staying up with that science is awfully difficult.  So using the FOCUS tool helps you, with six clicks at the point of care, make sure that either you are ordering a test or you don’t need to order a test, figuring it out right away, far better than a radiology benefit manager approach, where you are calling a number and asking for permission.

     They are going to apply that across Wisconsin; also going to apply appropriate use with shared decision‑making to help prepare patients who have coronary artery disease, determine whether in their future which pathway they are likely to go down ‑‑ medical therapy, angioplasty and stents, or bypass surgery.

     Now, a lot of times people end up in the cath lab on the table, partly sedated, where they are going to make a decision about whether they need a stent or not.  That is not when you want to ask that question.  You need the shared decision‑making early on.  You need to explain to the patient what the options are, what the complications might be of procedures, and then, if the anatomy finally says it is a grey zone, you would have prepared the patient who would have said, I would rather go the stent in that circumstance, or I would rather take the medical therapy.

     That needs to be done early.  And if we do that early, a lot of people will move toward less intense care.  They would try the medicine, or they would try the stent rather than the surgery.

     So I think applying all these tools across the board and then using the registries, both inpatient and outpatient, to give the hospitals, the medical groups, feedback on their performance ‑‑

     *Mr. Kind.  I love your phrase, bring science to the point of care.

     *Dr. Lewin.  Yes.

     *Mr. Kind.  Another way of saying it is, let’s find out what works and what doesn’t and drive that information into the hands of our providers and patients through share decision‑making.  So I don’t know why there is all this angst and concern about comparative effectiveness research.  That seems to be the whole point of driving science into the point of care and into the hands who need it the most.

     *Dr. Lewin.  Yes.

     *Mr. Kind.  And Dr. Sandy, this sounds very consistent, what UnitedHealth has been doing with imaging services and trying to use clinical studies and support tools for physicians in order to deal with it.  We may not have time this round to get your response, but I would like to follow up a little bit more on what UnitedHealth has done in that area, too.

     Thank you, Mr. Chairman.

     *Chairman Herger.  Thank you.

     Mr. Reichert from Washington is recognized for five minutes.

     *Mr. Reichert.  Thank you, Mr. Chairman.  Thank all of you for the hard work that you are doing in this field.  I know it is not an easy answer, as we have been struggling with this as a nation for many, many years.

     We have some doctors on the Ways and Means Committee, as you know.  Most of us are not doctors, so we are wading through the information that you have all given us.  But I want to focus on coordinated care as it relates to chronic care and how that plays into the doctor reimbursement issue.

     We all agree that everyone’s goal here is quality care, efficient care, access, and reduced cost.  You have all talked about cooperation, the culture of cooperation, collecting data, information, and facts.  You have talked about health IT and clinical data registry.

     Well, even in our own government system, the VA we know has a great health IT system, but the Department of Defense, pretty much nothing.  So how do they even ‑‑ they can’t even communicate.  How do we expect them to reach outside into the private sector?  And it gets more complicated, I know.

     So all of this is tied together.  It needs to be, I agree with all of you, a physician‑driven, patient‑driven solution to all this.  And you are all making progress.  But there are a couple of things that bother me.

     I think, first of all, I liked Mr. Nichols’ comment about we need to have Medicare join the party that the private sector is throwing.  I think that is a good point.  And this leads me to my two questions, and I will ask them together.

     So we know that the average 75‑year‑old suffers pretty much from three chronic health conditions out of five chronic diseases that most of you have been dealing with ‑‑ heart disease, cancer, stroke, COPD, and diabetes.  In your opinion, does the original fee‑for‑service model in Medicare work going forward?  I am going to guess I know what the answer is on that.  And how do we work together to build this coordinated care for these seniors who are trying to live with and manage these three chronic diseases?

     The second question, and more specific, is to the issue of a group that I met with not too long ago, and it is regarding the illness of lymphedema, sometimes brought on by cancer treatment, sometimes as a birth illness.  Lymphedema is covered by some insurance companies.  The treatments are sometimes long and drawn out, and you probably all know some of the side effects when the treatment is not given.  And some of the compression garments, for example, are covered by some insurance companies but not covered by Medicare.

     How do you bring this together?  These folks, if they are not treated correctly, they end up with these compression garments prematurely.  It doesn’t do the job.  They need to have massage therapy.  They need to have some followup.  How do you tie in Medicare with the chronic diseases that I have talked to and follow up with those folks that are dealing with chronic illnesses?  Because eventually, this lymphedema issue can result in infections and even death, as you know.

     Anyone who wishes to address the question.  Dr. Share?

     *Dr. Share.  So you had two questions, the first being that I think it is essential to align the incentives of the physicians so that a meaningful proportion of their reimbursement becomes dependent upon them doing the right thing, not just with an individual patient but at the population level; also, dependent with patients with common chronic or multiple chronic illnesses, which are challenging to address.

     It is not as if we can simply successfully address that within the context of one physician’s office because primary care doctors and specialists and doctors in hospitals tend to wind up seeing these same patients at different points in time.  So we really need an organized system of care, the language we are using, where there are clinically integrated systems and also sophisticated, organized care management approaches that help providers across settings manage a group of patients.  And it needs to be patient‑centric.

     So while the work of the cardiologist is really seminal and important, patients with cardiac illness don’t just get treated by cardiologists.  So you have to have a system where the primary care folks have the same data and the same scientific evidence at the point of care.  So that is one answer.

     The second question that you asked had to do with the frustration that patients and families experience when difficult medical illnesses have different types of coverage depending upon the insurer they have.  And especially if you are switching insurers over time, the same person with the same problem may not have access to the same services.

     So I would just say there that the key is to define or really breathe life into the notion of medical necessity because most insurers say medically necessary care is covered, but then we don’t have enough evidence to always define what is medically necessary.

     So that is where I think comparative effectiveness research comes in because it can help to really rigorously define answers to those key questions.

     *Mr. Reichert.  Thank you.

     *Chairman Herger.  The gentleman’s time is expired.

     Mr. Blumenauer is recognized for five minutes.

     *Mr. Blumenauer.  Thank you very much, Mr. Chairman.

     Dr. Lewin, I want to go back to where you left off with my colleague, Congressman Kind.  Your testimony spoke to shared decision‑making, the reference here to giving everybody more choices and having conversations where they will be the most productive and useful.

     I would say, parenthetically, I have legislation based on what we had previously with the Ways and Means Committee; despite a little kerfuffle, it actually was unanimously supported by members of the committee and one of the few areas of broad agreement, that we need to strengthen not just the information for patients, but the guarantees that their wishes would be respected.

     You made a reference there that I think is important.  Some people think of this as just end of life.  But patients more frequently are subjected ‑‑ the patient and the patient’s family are subjected to very challenging circumstances, often when they are not perhaps in the frame of mind that is clear.  They may be clouded with pain or medication, anxiety, and quick decision.

     I wondered if you could just elaborate on this notion of shared decision‑making, how you envision it moving forward, and things that the Federal Government might be able to do either within the ambit of the legislation that is standing or changes that we should make.

     *Dr. Lewin.  Thank you, Congressman Blumenauer.  It is an incredibly good question.

     We feel like, with cardiologists and physicians in general, we have these guidelines and performance measures to help us guide the science.  We still use clinical judgment.  If patients had guidelines, I think what they would have is they would know ‑‑ we would give them some ability to understand what questions they should be asking their clinician when they come in.

     So we have developed, at Cardiology, figuring we need the patients as partners in care with us if we are going to reduce costs, something called CardioSmart.  It is a website, but it is interactive.  It has mobile applications.  It allows patients, when they come in to either their primary care doctor or their cardiologist, to know enough about their condition to ask the right questions, and to be able to ask whether, am I really a better candidate for medicines, or should I be thinking about angioplasty and stents, or do I need a defibrillator?

     Those kinds of questions are not things patients are typically challenged to think about ahead of time.  So we would like the patient to come in with the questions they need to ask and work with their doctor, and then truly participate in deciding how that care is going to go in the future, whether they really need this test or whether they really need this procedure or how, in fact ‑‑ whether they need a generic medicine or the most expensive medicine on the market.

     Those kinds of decisions, if we could get those to be shared, I think patients would engage in a positive way to reduce costs and improve outcomes.  So we think that this is a critical part of the overall picture of improving quality and lowering costs.

     *Mr. Blumenauer.  Thank you very much.  I appreciate that, Doctor, and I am hopeful that this is something that we can have a broader conversation.  I will give to you a piece of legislation that we are working on, but would welcome an opportunity for further feedback.

     Mr. Chairman, I will just say, you recall that we were all concerned ‑‑ when we were debating health care reform, we all were concerned to make sure that patients had the information, that they could make decisions, and those decisions would be respected.

     You will recall we had some actually touching testimony from committee members.  I think of Geoff Davis from Kentucky, who talked about a problem that he had with his mother at a late stage.  And I would like to see if this might be an area that the committee could review.

     I will share with each of you legislation to try and ‑‑ we call it Personalize Your Health Care, to make sure that we do everything we can, whether it is Medicare or other mechanisms, that physicians are encouraged and maybe even paid to have a conversation like this.

     One of the problems that a number of people here have talked about is that physicians are usually paid when they do something to somebody.  But to sit down and talk to them, to empower them and to learn, that is off the ‑‑ that is kind of either a different code or it doesn’t happen.

     Mr. Chairman, I would look forward with you and the subcommittee that maybe we could have a little conversation about this before our work is done.

     *Chairman Herger.  I think the point is well made.  I look forward to working with the gentleman and the committee on this very important issue.

     The gentleman from Washington, Mr. McDermott, is recognized.

     *Mr. McDermott.  Thank you, Mr. Chairman.

     Willie Sutton was once asked, “Why do you rob banks?”  And he said, “Well, that is where the money is.”  And it seems to me that what I am listening to you talk and reading all of this is that chronic illness is where the money is spent.

     Playing off of what Mr. Blumenauer just said, several years ago, Sandy Levin and I put an amendment into the Medicare legislation requiring that everybody who applies be given a set of final directives that they can fill out so that they can decide a little bit about what will happen to them in the future.  We went back a year later to find out how many had actually done so, and less than 20 percent had filled them out.

     One of the questions I have is, the issue of how an is going to ever control costs if we don’t get the patient involved early on thinking about what the final process is.  When you get to 65, the wheels are starting to fall off, so at that point at least you know that you have an end in sight.  When you are 30, it is very hard to get anybody to think about this stuff at all.

     But I am interested, Mr. Nichols or Dr. Nichols.  You have been at the Boeing Clinic and you have been at the Virginia Mason experience, in my state I know about, and we have heard about your experience with some other places.

     How do they deal with this whole question ‑‑ and maybe, Dr. Lewin, you want to join in on this ‑‑ how do you deal with the question of getting patients to think about this before they are in the cath lab, sedated, and then you ask them, do you want a stent?  I mean, how are they doing this to make it work?

     *Mr. Nichols.  Well, I can tell you, Congressman, there are a couple of really fascinating examples around the world, actually.  One class of things is getting people engaged in assessing their own health.  I know of a program in South Africa where an insurance company actually pays people to do the health risk assessment.  So you get rewarded for doing it.

     But then when you do it, you have to go take it to your primary care doc, and you work with that physician about what is right for you.  And, you know, I have a pretty bad family history in heart, and my secretary does not, and she is a whole lot younger, so we have very different pathways.  But the clinician will work out with us what is the best pathway for you to be healthy.  That is the key, sir.  How do you want to manage your trajectory in life?

     It turns out this program gets people incentivized.  They start doing the things.  They basically give them what you and I would call green stamps, rewards for doing the right stuff along the way.  This program, they are filling up three airplanes a day with people taking vacations on the green stamps they have earned.  They are spending 2 percent of the premium on the promotion.  They are saving 5 percent off trend three years in a row.

     So it has to do with incentivizing the patient to begin to engage in managing their own health with a clinician.  It has to do with hooking them up with a real live doc you know and trust and takes care of you, who lays out a pathway for you, and then you get incentivized.

     Now, at the end of one’s lifespan, one might think about having that conversation in lots of different ways.  But you probably know of Mt. Sinai in New York, Diane Meier, the person who invented the ‑‑ I think it is called the Center for Advancement of Palliative Care.

     What she has is a team that basically ‑‑ and I know you are a physician ‑‑ teaches clinicians how to talk to families because, as you know, sir, we don’t teach them that all that well in medical school.  And most clinicians think about, what I am supposed to do is save, protect, keep them alive.  In fact, what families and patients often want nearer the end are, what are my options?  What are my choices?  What is going to happen to me?  What is it going to be like?  What do I really have to choose among?

     That is where those conversations teaching the clinicians how to talk to families and the patients can often have a heck of a lot of what I would call effective shared decision‑making down the road, where people tend to take the least invasive option because they want to spend as much quality time with their families as they can.

     I will turn it to Jack.

     *Dr. Lewin.  I think that there are some people with heart failure, for example.  We are trying to pull together videos to help people look on that CardioSmart site at somebody who is in the same circumstance that they are in and hear about their story over the next six months.

     For many people, the end stage, a class 4, New York Heart Association class 4 heart failure, the patient needs to know that they are limited to end stage here, and they can become comfortable and start doing things to make themselves feel better and be with their families rather than heading to the intensive care unit for multiple procedures.

     There is also another little element of this we shouldn’t forget, and that is the medical malpractice piece.  It is back to the patient laying in the cath lab.  The physician is really worried there, if the patient hasn’t clearly understood that they would rather go medical therapy if they could.  They are very worried about not doing the procedure because they don’t know whether the patient is going to take the meds.

     So I think that there are a bunch of elements there.  But we can do so much better at helping people make their own better decisions and working with them.

     *Mr. McDermott.  Is there any evidence ‑‑ Mr. Chairman, may I ask one question to follow that?

     *Chairman Herger.  Maybe to be followed up in writing.  Time is expired.

     *Mr. McDermott.  Okay.  I want to ask you about how you get physicians to get patients to sit and talk about it.

     *Chairman Herger.  I thank the gentleman.

     Now the gentleman from Florida, Mr. Buchanan, is recognized for five minutes.

     *Mr. Buchanan.  Thank you, Mr. Chairman.  And I also want to thank our witnesses for taking the time today.

     In Florida, like my district, I have 180,000 seniors 65 and older.  And I am very concerned about the quality of care our seniors are getting.  In terms of the way doctors are being reimbursed, I hear it every single day, many of them that practice for 20 years ‑‑ they are afraid to leave their practice because there might not be someone else to take their practice.  There is not the enthusiasm.

     They said every year it gets more uncertain in terms of the payment plan or how they get reimbursed.  It is a very big issue.  I know our cardiologists in one of our big practices in our area just lost 30 percent.  That came out of nowhere for them.

     So I guess, Dr. Lewin, why don’t you give us your thoughts on what is happening with the reimbursement or the unpredictable pay that doctors are getting reimbursed all over the country, but especially in Florida, where you have heavy, heavy Medicare patients.

     *Dr. Lewin.  Well, as you probably know, Congressman Buchanan, Medicare changed the payments for diagnostic services in the private practice setting for cardiologists in 2010, and they reduced by about 30 percent the modern day stethoscope tools of the cardiologist in the office, which are stress testing and nuclear testing and other ways that we use to diagnose patients.

     The result of that was we had almost a wildebeest migration of cardiologists moving from private practices to hospital employment.  And in fact, five years ago when I first came to the American College of Cardiology, 70 percent of the cardiologists were in private practice, 30 percent were in academic or hospital practice.

     Today it has completely flipped.  We now have 70 percent in hospital‑based practice or employment and 30 percent in private practice, and those remaining 30 percent are struggling because ‑‑ and it is difficult because we pay the hospital outpatient portion of that at a much higher rate than the private practice.  And the patient, obviously, pays a higher copay.

     So what has happened to cardiology practices, really, is the economics ‑‑ and it is largely Medicare economics ‑‑ have forced them to move toward hospital employment.

     *Mr. Buchanan.  That is what I hear every day.

     Dr. Bender, let me ask you, I am just talking with a lot of doctors that we have in our area.  But I don’t know how ‑‑ as a business person myself for 30 years, I don’t know how people make decisions in terms of capital improvements however we have got one large firm looking at trying to add facilities or in terms of hiring.  I got here in 2007 and there has been probably five or six times where we have had to adjust or deal with the SGR doc fix.

     As someone that has built a successful practice, and obviously you are also running a business, how does that affect you in terms of looking to the future, in terms of providing service to patients and everything?

     *Dr. Bender.  Thank you, Congressman Buchanan.  So I do not have a part‑time patient‑centered medical home, as you can imagine.  We offer services regardless of payer source.  So right now, maybe the good news is Medicare is getting my patient‑centered medical home for free because WellPoint, UnitedHealth Care, and the other groups that are funding it through the pilot are basically paying for it.

     Whether that is sustainable long‑term, probably not, particularly since I am 40 percent Medicare.  SGR threats are ‑‑

     *Mr. Buchanan.  In our case in Florida, we are 80, 90 percent Medicare for a lot of these doctors.

     *Dr. Bender.  Yes.  So it would be much more difficult to have a patient‑centered medical home pilot.  And so, for example, four years ago, when SGR did not get repealed on time and my Medicare patients were delayed for like 30 days, I called my bank and I took a $70,000 signature loan, and that is how I covered my payroll.

     Now, since that time we have had the derivative markets and the Wall Street excesses, and the banking regulations have changed.  I can’t call my banker now and ask for a $70,000 signature loan.  If SGR is not repealed, we would be bankrupt.

     *Mr. Buchanan.  Thank you, Mr. Chairman.

     *Chairman Herger.  Thank you.

     Dr. Bender, you state that your practice is providing better quality to patients with diabetes and other common conditions.  How big a role did embracing the concept of being measured on key accepted quality measures play in facilitating the quality improvements?

     *Dr. Bender.  Thank you, Chairman Herger.  It is huge.  When I was in paper, I had no idea how many diabetics I had, much less how many of them were at goal.  Now I get a report every month that basically tells me now just how my individual practice is doing but how I compare to others in my region.

     So, for example, if we are at 80 percent for a certain metric, that might be good, but it is in a vacuum.  Once I learn that the others in the state are at 95 percent, then I realize, wow, I need to work on it.  Or maybe everyone else is at 40 percent and I am the thought leader.  And then they are calling me, and we discuss in a way that is FTC‑proof.  You know, there is no price fixing; it is academic and collegial.  But we all work together to improve our quality in the pilot.

     *Chairman Herger.  Thank you.

     Dr. Lewin, did you have something to add to that?

     *Dr. Lewin.  Well, I just want to say that it is measure to manage.  You have got to give doctors and hospitals continuous feedback on outcomes and performance, and when you do, we just have it built into us.  We want to improve.

     So making that part of what we do in the future as part of our whole system is going to make the whole difference in moving us toward higher‑quality care.  And if you put payment incentives with it, then you double the incentive and the progress.

     *Chairman Herger.  Thank you.

     *Mr. Stark.  Mr. Chairman?

     *Chairman Herger.  Yes?

     *Mr. Stark.  Just a moment for a ‑‑

     *Chairman Herger.  Yes.

     *Mr. Stark.  I just wanted to ask Dr. Bender if he knows what tomorrow is.

     *Dr. Bender.  Other than Wednesday, I am uncertain.


     *Mr. Stark.  Uh‑oh.  Lewin, you are not doing your job.  Do you know what tomorrow is?  Tomorrow is National Heart Day, and my 10‑year‑old is going to school in fifth grade to jump rope for Heart Day.  Get with it, you guys.  You have got to get your PR machine going here.

     *Dr. Lewin.  We have got the whole month, sir.

     *Mr. Stark.  If you don’t know that tomorrow is ‑‑

     *Dr. Lewin.  It is National Heart Month and National Heart Week.

     *Mr. Stark.  I expect you all to jump rope.

     Thank you, Mr. Chairman.

     *Chairman Herger.  You are welcome.

     *Mr. Stark.  Thank the witnesses for excellent ‑‑

     *Chairman Herger.  Everyone in this room will know what tomorrow is now, so I thank you.

     I want to thank each of our witnesses for your testimony today.  Your private sector experience with rewarding physicians for quality efficiency is of keen interest as we seek to reform Medicare physician payments.  The fact that the different stakeholders are working together, in many cases, on this endeavor gives me increasing hope that Medicare can learn from these efforts so we can find a long‑term solution that has been so elusive.

     I appreciate the physician leadership exemplified by our witnesses because we need the physician community to be active participants in our reform effort.  Together we must find a better way.  The stakes are high.  The current rate of growth in Medicare spending is unsustainable.  And the congressional habit of short‑term fixes is creating a great deal of uncertainty for physicians and beneficiaries.

     Further, the program will go bankrupt if changes are not made.  This is our reality.  While I, along with many on the Republican side, believe we ultimately need to bring competition and market forces into the Medicare program in order to reduce costs, we will also continue to move forward on finding the best way to eliminate the SGR and replace it with responsible reform.

     Any member wishing to submit a question for the record will have 14 days to do so.  If any questions are submitted, I ask the witnesses to respond in a timely manner.

     With that, the subcommittee is adjourned.

     [Whereupon, at 11:33 a.m., the subcommittee was adjourned.]

Public Submissions For The Record

American College of Gastroenterology

American Society of Clinical Oncology
Center for Fiscal Equality
Gundersen Lutheran Health System
Integrated Healthcare Association
Pacific Business Group on Health
The Alliance of Specialty Medicine