not conclude by the time of the vote. if that could be agreed to, i would join with the other gentleman to try to start. we wouldn't need the agreement. >> i would no way impede that and support that if we need them back and that's appropriate for them to finish. >> on a point of order? >> any other gentleman? >> yes. not to eat up more time, but they are here. i just want to point out that, you know, your hearing, our hearing was a conflict with a lot of other hearings when we scheduled it. that's why members are back and forth. there's no guarantee that won't happen again. it's the way things work here. i do like the comprehensive aspect of this where you had a bunch of good panels in here and i'd like to hear from the tsa. i hate to waste time. we got 45 minutes to go at these

folks, and i have questions to ask of them as i'm sure you are. if we have to bring them back, we will. i yield back. >> any other member wish to speak to this? >> this committee stands in recess for five minutes while we redress and make a ruling at that time. thank you. [inaudible conversations] [inaudible conversations] >> the committee comes to order. we will start our unanticipated third panel. i appreciate you two being here to answer questions before the committee. it is my understanding having worked with both sides and my understanding from the two of you, i have yet to speak with, that should this panel run short, that is members not be

allowed to fully ask all the questions that we have here today, that you both will personally agree to come back and participate in another hearing as a follow-up. we'll call this part one of part one of this hearing, and i would hope and expect that the two of you would also be able to attend that second hearing. we'll come to it by mutual agreement in terms of date. it will be your own panel so you're not offended by anybody. is that your understanding? >> mr. chairman, yes it is. >> mr. kair? >> yes, mr. . >> as long as we have the ranking member here and there's an understanding of how that will proceed, we will proceed. mr. lee kair, assistant of add min stray tear for security options and rob kin kane is

assistant administrator for security technology. do you solemnly swear that the testimony you are about to give it is the truth, nothing but the truth? let the record reflect they answered in the affirmative. we ask is to allow you to take five minutes for your opening statements. adhere to the red light that appears before you. there's some leeway with that. keep your comments to five minutes, and you can submit any additional testimony you cannot give verbally. at this time, we week news first m. kane for five minutes. >> good afternoon. we appreciate the opportunity to appear before you today to discuss the transportation security administration's risk base driven approach to aviation security and specifically the

use of advanced imaging technology. as a chief technology officer, i will focus on the aspects and lee will discuss the human aspect. before going into detail, the technology is vital to the nation's ability to keep travelers safe in the 9/11 world. we face a determined enemy bent on our way of life. they arrested a man planning an attack on the dc subway system and a young saw disrespectful frankly -- saudi man was arrested. whether it was a failed attack in 2009, the plot in october, or the intelligence plots we see every day, al-qaeda and intelligence groups continue to target our system. we have to detect today's threat, not yesterday's. we have a able system that works

in several measures. one aspect of the check point is what we're hear to discuss today. mr. chairman, well hidden devices are among the gravest threat to security. while there's no sell veer bullet, this gives us the best opportunity to detect the threats. we piloted the technology in early 2007 knowing of these threats. following analysis, we employed the technology nationwide. after the christmas day attack, we accelerated it. we know that well-concealed devices like those used in 2009 are detected by ait. up to the image operator to recognize the anomaly. beyond effectiveness there's two issues to address. ait units in airports cannot store, print, or transmit images. it requires different software to make this a possibility.

the officer reviewing the picture does not see the passenger. ait does not produce photographic quality images to permit personal identification. we are now testing other detection software to further enhance privacy by eliminating passenger's specific images and highlighting the anomalies on a outline. this provides the same detection capability of previous versions of the imaging technology. passengers appreciate it. on safety, this technology is safe tar all passengers and employees. the radiation from back scatter machines has been independently confirmed by the food and drug administration, standards and technology, john hopkins university, and the u.s. army among others. all this testing confirmed that the radiation dose is well within established standards. they are incapable of producing the energy required to generate

radiation at a level to exceed the established standards. fail safe mechanisms are up stalled to shut the machines down should they begin operating in unexpected ways. multiple tests occur on each individual unit before it is used to screen passengers. ongoing tests goes on every unit to confirm safe continued operation. additional testing is tested if a machine is relocated. they are required to notify fda and tsa if they have radiation levels above the standard. we committed to all radiation tests online so the public can see for themselves if their home airports have safe technology. while reviewing older reports, there were errors in the contractor's recordkeeping. we are taking steps to ensure they are not repeating including testing those where they are an error, retraining the work force. they are doing those surveys, extending the evaluation of the

protocols and having increased expertise on our own tsa experts review the surveys. these steps enhance our ability to ensure all technology is safe. with that, i turn it over to lee. >> thank you. i recognize mr. kair for five minutes. >> good afternoon and thank you for the opportunity to appear before you today regarding the transportation security administration's use of imaging technology at airport security check points. as stated, current intelligence reminds us that commercial aviation remains a top terrorist target. on christmas day, farouk attempted to blow up a plane with a device that would not and could not be discovered by a metal detector. our dedicated adversaries is dependent upon our ability to

have the latest technologies and procedures. as head of the security operations, overseeing the work of the front line security employees, i assure you our nearly 50,000 officers and managers at over 450 airports nationwide are dedicated to our important security mission. every day tsa screens nearly 2 million passengers to assure they arrive safely. there's a variety of safety teaks to ensure the transportation systems are secure including advanced imaging technology. while there's no silver bullet with aviation security, a combination with our check point procedures and the work of the dedicated work force provides us with the best tools to detect threats. passengers may request alternate screening. as we deploy technology, tsa evolves pat down procedures as

well as mitigate threats. there are a few things to clarify regarding the pat down procedures. first, only a small percentage of passengers require a pat down during the secretary screening process. they are conducted by same gender officers and all passengers have the right to request private screening at any time during the process. anything, any passenger may choose to be accompanied by an individual of their choosing such as a parent, guardian, or traveling companion throughout the process. while it is necessary to ensure that all passengers are properly screened, tsa is sensitive to passenger needs. for example, our officers are trained to work with parents and passengers with special needs to ensure a respectful screening process for the entire family. additionally, tsa's office of civil rights and liberties maintains a coalition of more than 70 disability related groups who partner with tsa to inform the check point screening procedures including the use of

advanced imaging technology. we continue to work closely with these groups to ensure we are constantly improving the training we provide to the officers which ultimately enhances the passengers' experience. while we continue to work with the stake holders and partners, we are dead kitted to -- dedicated to inform the traveling public regarding the use of technologies such as ait and our procedures. we want to ensure the traveling public understanding the screening process while protecting the information terrorists could use in an attempt to circumvent screening protocols. we worked with parters to post signs in the airport, ait, website, and via press conferences and social networks platforms. through this, tsa reached millions of individuals nationwide to inform them about airport security policies and procedures. additionally, tsa is committed to answering questions and receiving feedback from the public regarding their screening

experience. to achieve this, we utilize a number of communication tools including the tsa accountant center, talk to tsa web feedback tool, local customer service managers, and up put on the tsa blog among other avenues. tsa is committed to building upon best practices to mitigate risk and make the transportation system as safe as possible. earlier this month, administrator outline the a vision for the future of airport security screenings as we develop additional risk-based initiatives that shift away from a one size fits all approach from airport check points. tsa anticipates this approach will enable tsa to better focus resources while enhancing the passenger experience. we want to thank the subcommittee for holding this hear on tsa's use of advanced imaging technology and for its work in overseeing the agency's efforts to ensure the transportation security. we are pleased to answer any

questions you might have. >> thank you. i'll now recognize myself for five minutes. we have a great need in this country to secure aircraft and transportation in general. the threat is real. let there be no mistake from anybody anywhere that the threat is very real. i appreciate the good hard work that the tens of thousands of agents do. most are trying to do a good job, working hard, placed in a difficult situation. in fact, # a lot of them who siped up to do this didn't envision they would be involved in pat downs and ding things they were not anticipating to do. i appreciate both of you in your degree of participation with public service. mr. kane, for instance, 20 years in the coast guard and whatnot, we appreciate that. nevertheless, i do and am very frustrated from the lack of candor coming from the security

administration. the tsa has a notorious reputation of doing things differently than what they say. that's not an attack of you two. i want to note at the beginning it is not a direct criticism on any one of you personally, but given that you're sitting here, an i'm glad you are, and we're going to have this discussion, i just want to note that it is our role and responsibility to make sure that we improve security and still protect people with their fourth amendment rights, that we min minimize the nature in which this technology is deployed, not just the technology, but the pat downs as well. with that said, i want to start to dive in here a little deeper on the machines and start, for instance, start with you, mr. kane. these machines as i understand it were built to the specifications; react? >> yes, mr. chairman.

>> yet i have heard "the imaging technology we use cannot store, export, print, or transport images." is that true? >> the machines in the airports cannot store, transmit images. the software packages on the machines does not allow that in the airport. we have machines in the testing environment where we do have that capability. >> same machines though right? >> same machines hardware wise. >> same machines. >> hardware wise. >> you just -- my understanding, and i'm looking at the freedom of information act put out there in the specifications put out. let me read a few things. enabling and disabling picture filter shall be modified by user shall be defined by the user's access. when in test mode, the whole body imaging machine, the wbi, allows exporting the image data

in realtime, shall provide secure means of high speed transfer of image data, shall allow exporting of image data raw and reconstructed. did i misread anything here? is that accurate? >> i believe you are referring to probably a prior specification, some of which we've cleaned up in subsequent engineering change proposals to make sure the test modes are separate. you referenced a test mode. that mode does not exist in the airport environment. those machines have a different software package. >> you said the same machines have those capabilities. the network, each of them are built with a quote on quote network interface with an ether net interface connection. the network interface is con figured with an ip address that suggests it's transferring images, is it not? >> none of the machines today are networked. that capability is in the hard -- are not in the hardware of that

machine. >> they have the capability of doing it, and you actually do capture and transmit images; right? think about this. from the stand point of the fact someone goes through the machine, capture the image, it's transferred into another room. that image appears on the screen. >> that's correct. >> how is that not capturing or transmitting the image? >> the point is we don't save the image or transmit them. that's the same part of the meres and that review station is part of that the advanced imaging technology machine, and, of course, there's a display monitor on the machine to look at the image to identify anomalies to be resolved. >> under oath, i want to ask you both, do you transmit images that you have captured in airports ever? have you done that? >> captured in airportings, i'm completely uni ware of having done that.

i would say no under oath we do not transmit images from the airport. >> have you ever done that? >> i'm unaware of us doing that. >> i'm uni ware, sir. >> you have in your specifications that you have to have these capabilities. why was that in there in the first place? >> clearly, when we developed in type of technology like any other piece of technology we have, we have to do extensive testing, do extensive training to be able to deploy those machines, therefore, we have the capability on those machines to operate in the test mode, to capture images, to be to transmit images to other machines in the networks we use in testing facilities we have that capability. we don't have that capability in the airports. we separated that capability completely out from anything that's in the airport, and the other piece we have images we use that were taken from volunteers and typically those are paid volunteers that we use

in the testing processes to capture the images. >> what about the so-called level z access? imaibilitys under quote on quote level z access, enable and disable image filters, export raw image data in test mode, identify level access capabilities, down load data. how many people have user access level z capability? >> that's a question for mr. kane. >> sorry. >> mr. chairman, i'm in the sure of the exact number, but i'd like to say the specifications to make sure we give greater confidence to people we were not doing the things people are talking about, we removed the capabilities from the access. those are maintenance technicians and people in my lab have that. >> can you provide provide this committee the e-mail or the paperwork that would verify you changed that and when it was changed? >> mr. chairman, i certainly

will do that for the record. >> when i see under the tsa website, "the image cannot be stored, transz mitted or printed and deleted once viewed." that's false right? it has that capability. >> it's not a matter of flipping a switch. the software on the airport machines does not allow that capability in the airport. the software in our testing machines is a separate software and has that capability in our labs. >> has it ever had that capability? >> in those initial, first, i believe 47 that we rolled out, that capability was on the machines to flip that switch, that z level access that you're referring to. we recognize we wanted to change that, and we made a change in the airports and retrofitted it to the machines in the airport. >> the committee would appreciate that paperwork. my apologies, i did not realize

how far over time i was. i will now recognize the gentleman from minnesota for five minutes or more if you'd like. >> thank you. mr. chairman, i think it's important to get the questions answered that you need answered. i have no objection to the time. let me popped this to death to be clear. i'm reading the requirements on sensitive security information, and it says tsa policy dictates the passenger privacy is maintained and protected during passenger screening. to ensure the passenger's safeguards systems prohibit the storage and exporting of images during normal screening operations. while not used for normal operation, the capability to capture images of nonpassengers or training in evaluation purposes is needed. to ensure the image capturing remain private, there's two

distinct modes, screening mode and test mode. during screen mode, they are prohibited from passenger data including tsp. during test mode, they are not capable of conducting passenger screening. is that accurate to you? >> yes, congressman. >> okay. so what we need to do is give assurances to people who are doubtful on that. how do you suggest we do that? >> it's very difficult times to do that. we talked about it. we offered up the specifications, made some of those changes you referred to, changed the specifications to make it clear on how we operate the machines, put out an impact on how we are trying to operate the machines and straightforward with the public with the sign nag and the other messaging mechanisms to make it clear on how we have the data.

>> it is the ability to do the things you said obtained in the cast ware opposed to the hardware? >> at one time you could flip a switch, but we separated that kate, and the operate machines don't have that ability. >> if you want to go to the airport, the software at any begin airport is disabling all the problems he has or concerns that he has? does not allow them in >> it's difficult to see that at the airport from a nonexpert, but we can -- >> take an expert with him? on that? okay. do the millimeter wave scanners as effective or more effective? >> i can't talk about the specific requirements and capabilities in open hearing. >> you can't tell me whether or not they are effective as the others?

>> so what i would say is both met our specifications, so we have specifications we put out and both met the specifications in very near similar levels, and they flipped a bit depending where you used them. >> i mean, i don't accept your answer that you can't tell us in open session, but i will for the moment because the basic point is it's interchangeable and the tsa is satisfied with whatever machine is at a begin airport that it's doing the job you wanted done? >> that's fair to say, congressman. >> now, the only reason you don't go just to the wave scanner where there's no issue at all with regard to radiation, is the tsa says it is so low that it's not a problem? >> that's one the reasons. it is very safe technology, and it's very, very low radiation as we tested independently many times, but the other is it is useful for multiple technologies. as we talked about, we need to address the threat.

having a number of people working on the problem of addressing the threat is useful to us. having competition in the marketplace where we are the primary buyer in the world of technologies useful to us as well. >> i'm all about competition on that as the f136 debate will cft, but the fact of the matter is if you thought it was a risk of danger, you take the chance of anomalies than take the chance with the competitor. >> we think the technology is very safe, yes. >> will you make available to the public your evaluation studies and make the equipment available for up dependent testing? >> we've never made the equipment available for independent testing. that would expose it to a lot of public information that we wouldn't share publicly in terms of its capabilities. >> you don't think there's a way to do that and not expose it? it's done all the time. >> radiation wise, we have done that with independent value day tores, john hopkins and

standards and technology just making available to the public to look at those machines, no, we wouldn't be able to do that. >> but other than making it generally available to the public, you would make it availability to other up dependent sources qualified to make an evaluation? you would do it if set up appropriately? >> yes, sir. >> okay. do you know whether or not the materials that were used by the shoe bomber and the underwear bomber or whatever you call them could have been detected by the ait machines? >> what ait does is detect anomalies on the body. those are anomalies to the body, so, yes, it detects those materials. we have found, you know, tested against similar types of materials in the labs and certainly on the operation in the day day-to-day use. there's thins similar to those types of materials as well. >> one the witnesses testified

that the department of homeland security and tsa basically funded a national academy of sciences report where it made a recommendation for evaluating the effectiveness of all initiatives in a systematic way and then had a process out there. do you follow that prosays when evaluating the different techniques? >> i think if you talk about the process we use for developing our technologies, yes, we use a systematic process in doing that. >> do you use the one from the national academy of sciences? >> the one from the department of homeland security. >> do you know how that measures up to the congress recommendations? >> i don't. >> can you get that for the record for us? >> certainly. >> how your policy and standards and evaluation process lines up with the national academy of sciences in the 2008 report paid for by the homeland security and tsa. >> yes, sir. >> thank you very much, i yield

back, mr. chairman. >> chair now recognizes the gentleman from texas for five minutes. >> thank you very much. y'all, in response to privacy concerns you implemented the pat down search as well as the secondary pat down search for ano , ma'am -- anomalies. you could do searches at the airport and pat downs are legal, limited in its intrusiveness as it is consistent with satisfactory of the administrative need that justifies it. limited and intrusiveness is key there. look at the slides we've got up here. i'm concerned that these -- these are not even the secretary pat downs, but the primary pat downs. this is a child, another child.

there are people who would go to jail touching a child like this. do you think these are the least intrusive means you can come up with to ensure security? >> sir, we actually sit every morning in an intelligence brief where we learn what is coming at us from our attackers, and what is evident to us is that the, those that wish to do us harm are very willing to use techniques which go against our social norms and try to use things that will use our process against us, and that was proven out actually in flight 253 with the placement of a bomb that used all nonmetallic components, and so we have done extensive testing in what techniques we

can use in order to be able to detect items like that using process and technology so that we can mitigate that threat while also being as conscious as possible about the passengers experience coming through as well as allowing passengers to expeditiously -- >> you indicated in your testimony that only a small percentage of passengers have undergone a secondary screening. i've had the misphenomenonture of -- misfortune of being one of those passengers. i was taken into a private room without the option of having anyone accompanied my. i was thoroughly searched. a rescran would have avoted that. isn't that less intrusive when there's five anomalies detected on my body? >> without getting into the

sense of security part of when we do what type of screening, when we have an anomaly in a sensitive area, we do want to make sure that we properly screen that area using a pat down. any passenger is authorized to have a companion in that private screening room with them, and we use whatever technique we can. >> i would have rather had this happen in the sun. despite as embarrassing as it was, i preferred to stand out there and let the rest of the people at the airport see what i was subjected to. i'm concerned also about the safety of your hard working tsa officers. why do none of the officers that work around the x-ray machines in particular not wear the same safety badges that anybody who works at a hospital is required to wear? this seems like a low-cost way to ensure the safety of the people working for you. >> congressman, these are

different, and they are very, very low levels of radiation used by these machines, and they are well within public use limits. there are national standards for implementing a program that you're referring to, and we are well, well below any of those leveling that cause us to put the radiation badges on the workers. >> i can understand why you're not willing to open up the entire software process to peer review, but would you be willing to allow up dependent agencies or independent science community to test the amount of radiation that these machines emit? >> sir, we have done a number of independent tests, and we have ongoing independent tests for all of these machines in the airports. john hopkins did the study on the back scanner technology as an independent body. the army's public health command comes into airports. they look at our radiating

machines in airports, and they use test and survey methods and they've done extensive testing on the machines. clearly, and consistently they show very, very low levels of radiation. >> i see the time expired. i'll wait around for the next round of question. i have another page. >> thank you, the gentleman yields back. i now recognize the gentleman from maryland -- or illinois? >> thank you, mr. chairman. thanks for being here. how many of these machines are in place now? >> there are nearly 500 in airports in 78 different airports. >> how many do you need if you're going to use them at every location and every gate? >> we're working through what that would be. some depends on the final capability of the machines especially with this automated targeted software we bought. you get more people through

those. that's somewhere less than 1800, but the number will be something less than that. we have around 2 200 airport leap -- lanes in the country. >> is there a concern you have? if those were all in place, with the new technology and the time to get through, it would not change the time it takes to get x number of people through o'hair operate a day? >> congressman, we arecepstive to that -- sensitive to that. the final number depends on the technology. right now you see it in an airport sitting in a walk through detector to alleviate that concern. we won't cause that to be the impact at the check points. >> is there a projected time frame to have these all in place? a range? >> i can tell you that we have

nearly 500 in the airports today, 500 in the president's fiscal year budget request. how the fiscal year plays out, we'll see, but we think there's 500 within the level and fiscal year 12 question is for 275 more additional machines. >> you mentioned the new capabilities and technologies that would be more generic in terms of what body images are shown? >> yes, you see at the machine itself a generic outline, same for everyone, and you just see that, and the anomalies show up on the that. that allows to do the resolution at the machine to a very limited pat down or targeted pat down. if i keep my blackberry in the pocket, and the officer has to resolve that alarm there in my

pocket. >> the reason i'm asking if it seems like it's a reasonable period of time before the technology is available, you want to start shifting to those right away before you purchase 2200 of them. >> that technology will be available and stated a number of times we expect the next procurement to have that capability. >> thank you. i yield back. >> earlier, i heard exactly what you said, i want to make sure. have any of these machines transmitted, have you e-mailed, have you sent anything back to the head quarters, and i believe your answer to that was you were unaware of any; right? >> correct. >> why isn't the answer to that no? it doesn't even have the capability. that gives me a pause to think about that, and you came to the conclusion, well, not that i'm aware of isn't definitive as no,

it's not even capable of doing it. it's like if i said can your airplane, did you fly to new york in the airplane? no, it can't fly. >> i can tell you no authoritatively since we rolled them out in airports. i was no involved with the program from inception, i don't know what occurred earlier in the programs' inception. i'm virtually for certain, but i wasn't in the airports and how they were used in the airports, but tsa says we vice president. i just can't say before my time there. >> i appreciate that, but just because you're on the record, i find the inconsistency between the record. i won't take the time of this committee, but that is the concern. instead of hearing a definitive no, it's not capable, i read

specifications, ip address, ether net, it basically has the capabilities, and that's the challenge. i've taken this gentleman's time. i yield back my time and recognize the gentleman from maryland for five minutes. >> chairman, i just noted you all stopped the clock for about two or three minutes, so did you know that? let me just say, gentlemen, you all have a very tough job. you have a very, very tough job. you were not here earlier when i said that. you got to protect the public. at the same time, you have to make sure you have a fair balance so that you're not intruding into people's lives unreasonably and their bodies, and that's a tough one, and as i listen to all of what has been

said so far, there has been an overhanging at this hearing, and i think with the chairman's statement just now, there is a very, very significant shadow hanging over tsa, and that is clearly that and it goes to a five letter word, "trust." and you all, i mean, you know, when i listen to all of discussions, you all, there's a lot of information you cannot divulge, and i'm no intelligence expert, but i would imagine part of the problem is you don't want to let people know what certain things are happening with these machines so that they can get around them i guess, am i right? does that make sense?

>> yes, sir. >> on the other hand, you have a congress who whichments to -- wants to know and the public wants to know, and that's kind of a tough situation, and i guess what i want to get to is, you know, i want to have that trust. i want to believe that just like members of congress raised their hand and swear to protect the people we represent, that you all go in there every day trying to figure out how you can best protect every single person that uses our air ways, and so how would you all suggest begin all that i -- given all that i just said and what you know that we establish, get that trust back, you know? because apparently, and, you know, the more i think about it, it's so easy to lose the trust

when you can't give up so much information, when you got millions of opportunities for something to go wrong, but how do we get back there because that's what it's all about. i mean, first of all, you have to have the trust, but there's another piece of this. you've got to do things in a way that is least intrusive, but there has to be a level of trust for people to believe that you're doing it in the least up trucive way -- intrusive way, so help me with that. >> mr. congressman, all i can say is when you look back at previous attacks even since 9/11, our adversary does look for processes or prohibited items which are items which are not prohitted at the time such as 9/11, they used an attempt

not prohibited at the time or look at what our process is and try to use the process against us such as the richard reed shoe bomb. they recognized at the time that using a nonmetallic improvised explosive device through a meal detector was a vital way of going through. we have to look every day what are we seeing from a threat perspective and trying to put processes or technology in place to avoid that type of a risk or threat, and at the same time be able to communicate with the traveling public so they know what to expect when they come to the check point. it is a balancing agent we have to balance every day, and it boils down to having a very active dialogue with the american public. we use a variety of ways to do that incoming, you know -- including, you know, pretty rebust dialogue on the internet. we have an award winning blog where we encourage the american people to have that discussion

with them about why it is we are doing what it is we do every day, and we want to make sure that the traveling public is able to navigate our screening process. >> out of time, but i wanted to ask you this. when the heard the representative earlier testify ring one of the things she talk about is training, and there seemed to be, you know, i think part of trust too is that people feel that they are treated with respect, that they may be going through a difficulty, but somebody hears them, understands them, somebody has empathy. i think that goes a long ways towards trust also, and i just comment and my time is up. >> yes, sir, i couldn't agree with you more on that. we imp size to the -- emphasize to the officers, who are some of the most trained and tested of any profession out there. one of the things we emphasize with the officers is proper communication to deescalate the traveling process, just traveling much less screening is

a stressful proposition for a family going through. our officers are trained and for the most part do a good job of deescalating stresses. we retrained our entire work force about two and a half years ago to emphasize customer service as well as security because the two actually go hand own hand. we have another training initiative this year to get at that same exact issue of good communication that deregulates stress to a system in getting through -- it's a partnership with the american public where we want them to help us in the screening process going through our check points. >> gentleman yields back. we recognize the chairman of the overall committee from california for five minutes. >> thank you, mr. chairman, and thank you for your patience in getting through a long day. this is an important panel. we waited for you two because this committee has serious doubts about the effectiveness

and deficiency and authority for some of the things you're doing. i think that's pretty clear. the chairman is particularly interested in the full body scanners. i'm interested in the overall process, so as someone who was here on 9/11 and remembers president george w. bush telling us it wouldn't change america, i'm concerned that it has. you represent 50,000 well-meaning people. i debate well-trained because your turnover is still pretty darn high and it's hard to have that many new people and say they are well-trained. every time i go through security i see training. that's a good thing, but i see the need for training every time i go through. let me give you something other than full body scanner for relief. i fly more than 40 round trips a year plus overseas trip. for more than six years i carried in my carry on bag gouge and every flight a pair of

folding scissors. that pair of scissors was taken away two weeks ago. that pair of folding scissors, if you open them up has one inch of blade times two, and it's overall length is two inches. i have researched and can want find a basis for taking that away. do you have an explanation for that kind of subjectivity? were they wrong -- 40 times two is 80. you know, 320 times they were wrong, or right one time? >> we did an analysis on the prohibited items list on november 2005, that time frame with a risk-based analysis. >> i remember my tooth being taken away after liquids were a problem in the british situation. you didn't have an answer. you took them away and then made

the answer 3 ounces. the scissors, are they prohibited? >> during that analysis in november 2005, that time frame, we changed the prohibited items list, and the sis sore of a length less than four inches are not prohibited. i don't have an explanation why they would have been removed two weeks ago. >> eight weeks earlier i had a .12 millimeter taken away. it was five inches long. can you explain that one? >> small tools were another piece of the analysis that was done, and there is some discretion on tools where if it could be used as a bludgeon, it's prohibited. if it's a normal tool less than 7 inches, it's allowable. all that information is up on tsa.gov. >> oh, i went there, but when you say you've got to be

kidding, you get threatened. you get people who make it very clear they are law enforcement, so i'm concerned about something. i'm concerned that some people think less than 5 inch.12 millimeter open end box wrench is a bludgeoning tool and a point and cutting and two inches of little rest of the scissors are somehow dangerous, but they only do it very infrequently. please, as a guy with a motorcycle, don't ask me to explain why i had a 12 millimeter in a box from the wrong coast, but these things happen. you don't have a consistent system to test. today, you're saying we are safer, well, in fact, only a fraction of the people are going through the full body scanners and the full scanners are repeatedly false positiving. suspect that true?

isn't it true that my statement is fair that only a fraction of people go through them with huge false pos sieves today? -- positives today? >> today, only a fraction of the people go through them. they have false positives, not a huge number of false positives. >> how about in san diego, it's every fifth person that goes through gets a secondary. >> that's possible. >> 20% is not huge, but close enough to huge if you're one the people getting a pat down. you heard testimony here tread that in fact, low level x-ray is long standing to be a problem. what assurance do we have here today that you're not going to be the next situation in which you say, well, it's not a problem, but members on the day who go back and forth across this country literally 50 round trips a year are not getting overexposed if in fact you implement full them this procedure. >> the machines have been tested

repeatedly to show how safe they are and independently how safe they are, tested against standards that have a host of experts on them, and they set those standards that we work towards. we're well below the standards for this technology, the back scanner in particular that you're referring to. >> i'm referring to people involuntarily getting x-rays or forced to a secondary because they said, no, i don't want to. the trusted traveler, granted it's bankrupt, but that contributes to the question year after year after year, each time you find out what you didn't know which right now includes you can't detect a bomb sown into a human being, and as a result, you are not going to pick up a bomber willing to have surgery to plant explosives under their skin. that's been said here and well adopted here today.

-- well-documented here today. would you please report back to the committee the following: earlier today it was in the opening of mr. kair's opening statement, you talked about what people can have and not have in the consistent. i go through those check points all over the country regularly. what i don't see is i don't see anything that says here is a traveler's right. you have a right to a private pat. you have a right -- i know i'm over, but a lot of us have. i've seen tsa people traveling with another person to stand back, go over there. they are denying what you said was a right here today, and i hold you to post the tsa to post that i have a right to have my spouse, you have a right to have your child or whatever with you during any secondary and not be

told they must go over there, stand over there, you will be arrested if you don't move away. the exact opposite happened in the experience of thousands of travelers. will you agree to post so travelers know that your tsa people are wrong if they try to say stand back, you can't be there. >> sir, i believe the description about, you know, being able to have a traveling companion or family member with you particularly in the private screening area is up on the website. >> website doesn't make it. >> we will need to move on here. >> will you commit it's available to the public at the point in which they are being told that they cannot have that person with them? >> part of the challenge that we have is that sigh nag, you know, we run into having too many sipes -- signs out there, so having a posting is difficult for us because there's requirements. >> the chair recognizes that as

a no. if you want to add testimony, this is the problem with trying to fit this in. about to be called for votes. it is the policy to recognize those who sit on the subcommittee first ring so i'm going to recognize the chairman of the transportation committee, full member of this committee and subcommittee first. >> okay, we -- have we bought 250 of the rapid scan scapers? is that -- scanners, is that purchased or being purchased; is that correct? >> that's correct, congressman. >> what's the estimated cost of that equipment? >> all told for the equipment purchase so far is around $122 million for both. >> l3, did the former secretary

chair off talks or communicate with either of you two? >> no, congress mapp, he did not. >> no, for me too. >> can you provide to the committee records of communications between those involved and the acquisition of the equipment? >> i'm not sure how to locate records. there was no one in tsa involved with him in the axis of the qiement -- acquisition of the equipment. >> can you provide the committee, can you check the records of representatives of, what is it l3 that you purchased that equipment from? >> i'm sorry? >> the equipment was purchased, rapid scan and millimeter wave. i'm interested in finding out the context of the former secretary with tsa either prior to, during, or at some time of the acquisition, can you check your records? >> congressman, we can do that.

i can tell you who was not involved in the acquisition of the machines any time after being secretary at least and clearly as oversight of the department, there would have been involvement before that. >> all right. we had actually the back scanner is nothing new. i remember five years ago we had a stick devices that you could deploy or software that would give you stick image rather than the full body scan rchg -- is that correct? are you aware? >> no, i'm not. >> i'm not. >> you're now testing that? >> the automated target software with the generic outline of a person. >> when do you expect those tests to be finished? >> we have them on the millimeter wave, the l3 machines

in the airports today. they will finish up with the specific testing on those by the end of this month. >> okay. >> with a 45-60 day -- >> i can't believe it because five years ago that software was available, so we didn't have -- objections were raised five years ago, and we were told that technology was available. you have testing in your testimony, testing began in 2007 incoming testing of eval-- including testing of evaluation of airports. when did you first notify congress you were going to deploy the equipment and it was fully tested? >> i'm not sure there was a specific time frame that we did that, congressman. i know in our budget request when we requested the machines and funding for them --

>> denied evaluation of testing at those airports? >> provided very substantial briefings and -- >> that was after the deployment? at least to my staff. >> that's possible, congressman. i don't know that we came up in advance of the point to everyone on the hill. >> are you aware of the latest testing of the equipment that gao conducted in december? >> we're aware of gao's testing as well as the other ongoing testing. >> do you feel that, again, what this remind me of is the puffers, the failure rate was totally unacceptable. would you concur with that evaluation? >> i think we look at different types of testing and we think the machines are effectiveness the types of threats we are looking at. we do daily testing in airports across the country.

>> that's your self-testing. have you -- you have been briefed by gao on their testing? >> yes, i have. >> and you find that acceptable level of performance? >> i'd like to think we can perform very well at 100%. >> do you find the level of failure acceptable that gao reported now that you have the equipment in place? >> so the specific number i think -- >> well, first of all ring we're not talking numbers because it's classified, but the failure has been pronounced. mr. pistol said it was, that gao was clever. do you feel that, again, having reviewed this, is that a failure rate that's acceptable? >> we spent, a quarter of a billion dollars on deploying this equipment and staffing it,

and i've had it tested, and to me, it's not acceptable. >> i would like to see us do better. >> if we could reveal the failure rate, the american public would be outraged at that expenditure. it seems you opted for a sort of popularity poll. you said that 80% of the people do not object to accepted the use of that technology even though it doesn't work, so that's the basis on which we deploy it, expensive screening technology. >> no, congressman. that's a partial basis, but the other testing in the labs, field, and airports every day -- >> well the public may accept it, but i will not. thank you, and i yield back.

. . [inaudible conversations]

[inaudible conversations] [inaudible conversations] a government report on the medicare payment system calls for a small increase for doctors in 2012.

the administration believes that we have to be looking very very closely at the events of japan before we have to apply whatever lessons that can be and will be learn. >> energy secretary stephen chu and nuclear revelatory chairman

gregory. >> guest: were on capitol hill testifying and energy departments fiscal year 2012 budget and rear power safety issues following the earthquake and tsunami in japan. watch the complete hearing now on line at the c-span video library. search, watch, clip and share. it is washington your way. the head of the medicare payment advisory commission this week said his organization is trying to craft a new formula for medicare payments to doctors. since 1998th congress has passed legislation every year known as the doc fix overwriting schedule cuts in medicare payments to doctors. this ways and means subcommittee hearing is an hour and 40 minutes and is chaired by california congressman wally herger. they are on your screen.

on medicare payment policies. during this congress, we must come together to address a fiscal crisis of monumental proportions. every program no matter how important to be sure scarce taxpayer dollars are being used appropriately and efficiently. therefore i find it fitting that in our and not grow meeting, we would hear from medpac, the insight and guidance we received from medpac will be very important as we seek ways to reform the medicare program and improve the accuracy of provider payments while also ensuring that medicare beneficiaries have access to high-quality care.

congress relies on medpac's medicare provider payment recommendations because they are based on sound policy and strong data analysis. provisionally medicare is spending is outpaced grows in the economy at large and is a major driver of our long-term debt. the congressional budget office projects that medicare spending will nearly double as a share of u.s. economy over the next 25 years. by 2050, the big three, federal entitlement programs, medicare, medicaid and social security are projected to exceed total tax revenue with medicare being the largest of the three. we cannot bring about a fiscally sustainable future if these trends continue.

medpac's analysis is invaluable in helping us better understand when growth in medicare spending is appropriate and when medicare payments need to be adjusted. last year congress passed a massive health care overhaul law that permanently reduces medicare payments to a number of providers. less than 3% of the more than -1/2 trillion dollars in cuts from medicare came from actual delivery reform. we must do better than that. which is why we also rely on med pack's june report to congress they guide us toward proposals that offer real reform instead of just turning payment dials up or down. this will help ensure that medicare savings yield better outcomes for medicare's

beneficiaries. i think i speak for all of us up here, republicans and democrats alike, that we are still looking for the silver bullet that will permanently reformed the physician payment system in a fiscally responsible manner and i look forward to working with medpac defines such a solution. i want to offer a warm welcome to our invited witness, medpac chairman glenn hackbarth. thank you for joining us today and i look forward to hearing your testimony. i would also like to extend a special word of thanks to medpac executive director mark miller and the entire medpac staff for their hard work on this report. before i recognize ranking member 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. i now recognize ranking member stark for his opening statement. >> thank you mr. chairman and i join you in welcoming glenn and medpac. the efforts of medpac and their staff have helped us in the past. many of the recommendations in the current provisions are medpac's work and they have informed a number of -- they have formed a number of the reforms that are in the law that modernize the delivery of health care that better rewards value over volume and encourages better coordination. they helped us with ideas to lower preventable readmissions come the testing of bundled payments, medical homes in hospital value-based purchases. we have made difficult decisions in order to reign in rising

health care costs and it would not have been possible without the advice of medpac. the end result of the program was improved benefits, lower costs for beneficiaries, taxpayer savings and innovations we hope will improve patient care and strengthen finances for the medicare solvency or an additional number of years. this we think is better then the program that favors vouchers or shifting of costs to the very beneficiaries who medicare was created to serve. while my republican colleagues and i in many areas where we disagree, there are several areas where we have worked together including medicare's broken physician payment system, the house democrats passed comprehensive reform for the physician's payment system in the last congress and i hope getting a long-term solution is at the top of our to-do list.

as this your progress as i look forward to getting continued input and advice from mr. hackbarth and the medpac staff and will continue to rely on your expertise and advice as we undertake our medicare oversight responsibility. thank you mr. chairman. >> mr. hatch art, i want to thanked -- anyway i would like you to go ahead and proceed with your testimony and we do have two boats going on now so i would like to have you maybe give your testimony and then we will recess until following are two boats and then we will come back but if you would proceed with your testimony. >> thank you mr. chairman mr. stark i especially appreciate the warm welcome and

the acknowledgment of the work of the medpac staff. we have a terrific staff and without them we couldn't do our work. as you know, medpac is a nonpartisan congressional advisory body and so our goal, our sole mission is to help you with the difficult decisions that you must make each year. each year we produced two reports, the march report which usually focuses primarily on payment updates and then a june report that range is more broadly across medicare issues. we have 17 commissioners as you know. six of them have clinical training as either positions or r. and's. six of our commissioners have high-level executive experience with health care delivery organizations. for high-level government experience and then six academic who publish frequent peer-reviewed journals.

and some of us have more than one of these credentials. i mentioned the credentials to emphasize that we are people who have experience in different facets of medicare programs and our goal is to bring that experience to bear for the benefit of the program, the beneficiaries it serves and the taxpayers who finance it. because we have a lot of experience doesn't necessarily mean that we are always right. we can be right or wrong like anybody else but you can't be assured that our agenda as the commission is the same as yours, high-quality care for medicare beneficiaries at the lowest possible cost for taxpayers. despite the diversity of the medpac commissioners, we typically have a high degree of consensus on recommendations. this march report is no exception. there are 12 recommendations in our march report that represents

a total of 187 yes votes versus only two no votes and three extensions. the march report as they say, here's a summary of the major recommendations in the march report. there are recommendations on payment updates for each of the payment systems that medicare uses for physicians, hospital inpatient and outpatient dialysis services and hospice services. we are recommending a 1% increase in the medicare rates for surgery centers. half of a 1% increase in the rate and then 04 skilled nursing facilities, home health agencies inpatient rehab facilities and long-term care hospitals. and the case of home health services we are recommending a rebasing of the rates as we have in previous years as well as some changes in the case system

and a per episode co-pay for medicare beneficiaries. and then as we do each year in our march report we also do a status report on parts c medicare advantage program in part d the prescription drug program. i want to pick up chairman herger on one of the points he you made in your introduction. this report is principally about how much the unit price should change for medicare services. but we can't get to where we want to go in terms of an efficient medicare program providing high-quality medicare beneficiaries at a reasonable cost for taxpayers if we focus only on the unit prices. in addition to that we must look at the relative values that we pay for different types of services. we must also look at the payment methods that we use and try new

innovative payment methods that create better incentives for high-value care and then finally we also must look at the incentives for medicare beneficiaries. so mr. chairman those are my summary comments and i look forward to the opportunity to talk further about our report. >> thank you very much and again as i mentioned earlier, to allow our members to vote we have two boats going on, we are going to recess and we will reconvene immediately after the second vote. with that we stand in recess. the health subcommittee of ways and means will reconvene.

mr. hatch arthur want to thank you for your testimony. in medpac's report, you recommend that congress should freeze medicare payment rates for inpatient rehabilitation facilities, long-term care hospitals and skilled nursing facilities. can you explain what led the commission to recommend freezing payment rates for these providers? >> mr. chairman, the analysis that we go through where each of the provider sectors takes into account a variety of different factors. one of which is their financial margin on medicare business where that data is available but we also look at access to capital, the quality of services

to medicare beneficiaries, whether facilities are opening or closing, so it is sort of a multifactorial analysis that we go through. and so the specifics for each of those sectors bury a little bit. but in general what they have in common is that the projected margins are healthy for each of those and we think that there is ample room for efficient providers of those services to operate within the existing rates, so no increase in the rates is necessary. >> thank you. currently there is no co-payment for home health care. in the march report medpac recommends that most medicare beneficiaries be required to pay a co-payment for each episode of home health care they receive.

the commissioners recommended that exceptions be made for low income beneficiaries and those being discharged from the hospital. could you explain why the commission arrived at this recommendation and the impact it would have on over utilization and fraud? >> yes. well, this is a challenging issue for medpac. this is an issue where we actually did have a dissenting vote and an abstention which i indicated earlier is fairly unusual for us. we concluded, the majority, the vast majority of us concluded that 150-dollar per episode co-pays was an approach great prayed and necessary step to help curb unnecessary utilization of home health services. as you know, home health is

aware that utilization has increased rapidly and in particular in some parts of the country. and by its nature, it is a service where there aren't clear clinical guidelines as to appropriate use of the service. and under those circumstances, we think it is an appropriate thing to do to ask the beneficiaries to pay a modest co-pay. to put the 150-dollar per episode co-pay in context, for a beneficiary with a typical number of visits, home health visits and episodes, it would work out to about $8 per visit, so a smaller amount that same beneficiary would pay for a physician office or outpatient therapy visit. so, it is modest but we think it is appropriate. and i would emphasize the point that you picked up on, which is its targeted to apply it only to

beneficiaries who art netted two home health from the community. it doesn't apply to medicare beneficiaries following a hospital stay or a stay in a skilled nursing facility and there is an also an exemption from the co-pay for beneficiaries who use four or fewer home health visits. >> thank you for that. some have expressed concerns that the addition of a home health co-payment would drive seniors to other sites of care such as outpatient facilities. our seniors currently required to pay a co-payment for the care they receive in these outpatient settings? >> yes, that is true. they are required to pay co-pays. home health is one of the few services for medicare

beneficiaries are not required to pay a co-pay. and as i indicated in determining what we thought was an appropriate home health co-pay we take into account how much beneficiaries pay for some of these alternative services. >> so in your opinion, this would not -- home health co-payments would not shift beneficiary to other sites of service? >> that is our expectation, yes. >> it would not shift them, yes. >> i thank you again for your testimony. now the gentleman from california, mr. thompson, is recognized for five minutes. >> thank you mr. chairman. thank you mr. hackbarth for being here. in your march 2010 report, you state that medicare is a single largest payer in regard to medicare -- in regard to health care and you also going to say that for the next decade, that

cost is going to slow vis-à-vis the previous decade i think was you are looking at 6% growth between now and 2019. it was almost 10% in the past decade, and i'm assuming that part of that reason is because of a health care reform legislation that was passed. now the idea was to pass legislation that -- and at the same time creating better care, better health and lower cost. and there was a very interesting article in the national journal, i think it was last friday, that that is entitled adept orioles and they state that whether it wants to or not the health care system would reinvent itself. the health care laws is a clearinghouse of sorts for policies that have circulated among health health care analysr years but struggle to gain traction, and isn't the truth of

the matter that much of what was put into the health care reform bill where it either came from medpac advised or proposals that medpac itself put forward? >> well, certainly there were many provisions that were linked to past recommendations of medpac. >> so bundling around hospital administrations, that was one of your recommendations? reducing hospital readmissions? >> yes. >> that was a medpac recommendation? value-based purchasing aimed at rewarding quality? >> yes. >> primary care investments and expanded primary care reimbursement? >> yes. >> payment accuracy including reducing medicare advantage over payments? >> yes. >> adoption of the comparative effectiveness research? >> yes. >> and expanded fraud fighting

authorities? >> yes. >> thank you. the other question i have, as you know i think first-hand i am very concerned about representation for rural areas and is cochair of the bipartisan rural health care coalition, we have been very very active in trying to bring attention to that issue. rural health care delivery has a lot of unique challenges, shortages of health care providers and probably spills over into others as well but geographic remoteness, low patient volume and disproportionately high medicare populations, limited access to integrated health care systems and a lack of electronic networks to efficiently manage health care. and i understand that it is probably a challenge for you to

to -- and i know you don't do it personally but it is a challenge to get that appropriateness or a portion on the commission but in your report there is not even a mention of the word rural and i think it is kind of -- it is a concern for those of us who live in rural areas and represent rural areas. is there anything you can tell us that we can look forward to? are we going to address this issue? are we going to get proportional representation on that board? >> thank you mr. thompson for raising this. we have talked about this issue before. we share your concern about assuring access to quality care for beneficiaries in rural areas and assuring appropriate payment for providers in rural areas. in fact, the very first report

that i did on becoming chairman of med pack is medicare in rural america. typically they commit -- medpac report and in every report sense, every march report sense, there aren't fact lots of analyses directed specifically at the issue of fair payment for rural providers. let me cite a couple of examples. >> i said report. i met your testimony. >> okay. in this march report let me just highlight a couple of examples that are important. we have recommended changes in the payment systems for lots of different medicare providers but in this particular report we talk about fairness in payment for skilled nursing facilities and home health agencies, and we have made recommendations in changing the case mix system

used to allocate those payments. among the benefits from those changes would be increase payments for rural providers of home health services in skilled nursing facility services. so throughout all of our reports there are issues like that where we are trying to assure accuracy and fairness in payment which we think is very important. now on the specific issue of representation, we have four commissioners that have significant rural experience out of our 17. we have to physicians and then to people. >> the gentleman's time has expired. thank you. the gentleman from texas, mr. johnson is recognized for five minutes. >> thank you mr. chairman. thank you for being here today. appreciate saying you are out to get good value for what we spend and medicare. i am committed to making sure that medicare revise high-quality care at the same time being wise with taxpayer

dollars. your report mentions a variation between medicare payments for the same services in different settings. medicare generally pays more for service in a hospital then than in an ambulatory surgical center. does this create an incentive for care to be provided in one setting over another based on our our reimbursement? >> yeah. that is our concern mr. johnson and it is a growing concern, and we see some shifts towards hospital-based services that may be driven at least in part by higher payment levels. >> are you looking to do something about it? >> we are in fact and it is a tricky issue to deal with for a variety of reasons but in particular because the patients are often different so it can be the exact same service. for example some type of ambulatory surgery but the patients that go to the hospital are sicker on average.

they have more underlying conditions and are at higher risk of a bad event and so they are done at the hospital outpatient department so that they are closer to backup in case something goes wrong. and so, if you go to equal payment, you have to make sure that it is properly risk-adjusted so the different types of patients seen in the different settings. >> i understand that you the ui to be able to work that problem i think. >> and we are working on that and i hope we will been a king some recommendations. >> thank you. so you have got a plan for studying these payment variations? i appreciate that. our health care delivery system needs to focus on the right procedures to the right patient at the right time and place and as the current payment system make that hard to achieve? >> it does. it creates incentives often for more costly services than are

absolutely necessary for patients and as we just discussed a minute ago, sometimes not in the lowest cost, most efficient setting. >> okay, we know you are interested in combating waste fraud and abuse in the medicare system and we have heard about the problems across all areas of the country including reports of alleged fraud and home health services are occurring near my district in dallas. secretary sebelius has said that her agency is setting up new checks to screen providers before they are for accepted into the system. can you comment on what progress has been made and becoming more proactive redder than reactive and preventing fraud? >> we do not specifically engage in the operational side of enforcement but we have recommended that the secretary monitor home health use for unusual patterns, very high

levels of use and that the congress give the secretary the authority to do things like limit new providers, limit payment when aberrant patterns of home health use or found, and so our contribution to this has been mostly to identify some of these very unusual patterns, so in some areas of the country you will see home health use that is seven times the national average we think that is an analysis that is a useful screening tool for the secretary and justice department to use. >> and you think she is taking your statistics and doing anything with them? >> our understanding is that they are intensifying their focus on medicare fraud in general, but in particular in the home health area. >> that is an interesting word

you chose, testified. thank you mr. chairman. >> thank you. the chairman eels that. the gentleman from new jersey mr. pascrell is recognized for five minutes. >> thank you mr. chairman. mr. chairman i think that glenn hackbarth bring some unique qualities to our committee and that the recommendation from medpac, many of them were incorporated into the affordable health care bill. which is now the law of the land. so when people talk about they made cuts but they didn't get into the entitlements where the real money is and social security did not add to the debt, and now they miss the point about the health care

legislation because one third of it dealt with medicare and medicaid, addressing the entitlement but specifically adopting many of your recommendations. that is a fact of life. we employed now chapter and verse with the recommendations that the commission made are in there. this is entitlement reform. what was the purpose of your recommendations? if you read your report,, and not just read with somebody else said about it, but if you read your report, you are saying thad reform, this is changing how we look at medicare and medicaid. so, one of the fundamental problems we face in health care deliverance, no use putting a system together if we don't have the people to deliver it. so we spend quite a bit of time

on workforce and inputting the legislation together, doctors and nurses how to get more doctors and nurses. we know about the shortages which are going to cripple the system regardless of what the system is and how we want to deliver it to the patient. you don't have the personnel that is properly trained, updated etc.. you offer to solutions. both of which were involved or implemented, put into the health care reform which we hope will be implemented. the idea of a payment reform like paying for quality outcomes and delivery system reform such as medical homes and the accountable care organizations. you were very very specific. do you think that these reforms, these two reforms, will help improve the delivery of health care for medicare beneficiaries

and more importantly, do you think that these are essential changes to medicare itself? >> well it is certainly our hope and expectation that those two reforms would both improve quality and care for medicare beneficiaries and we hope also reduce the cost. in each case, medical homes and acos, there are a lot of important issues to be worked out and each idea i am sure will evolve over time but we think they are promising steps. >> mr. chairman, mr. chairman? i want to bring to your attention something. most of these reforms and changes were never scored. never scored. which means we do not have a true picture of the amount of

savings when we move from pay for service for proper care and health for the patient. we don't know really what the results will be. that was never scored. and i would can tend to do, if you look at your recommendation and you look at very specifically the health care reform act, that you can find areas where it doesn't take too much to conclude that there must be a savings for moving away from fee-for-service and into those specific things which you just mentioned. would you agree with me? >> well certainly that is why we recommended them is that we think by moving away from straight fee-for-service payment, changing the incentives for providers, helping them focus on value, changing the organization of care delivery can result in better care at lower cost so those editorials

editorials. >> so those editorials and those politicians and congressman on both sides of the aisle, i'm going to ask the question and make the statement. >> the gentleman's time is expired. >> can i finish the question? >> very quickly, please. >> then i will try to answer it. the question is, the editorials and those congressman on both sides of the aisle who said very specifically that we need to get to entitlements in order for us to have. >> the gentleman's time has expired. you can submit submit or if we get a second round you can submit in writing and i am sure sure -- again we are over -- again the gentleman's time is expired. i might also mentioned, several of these issues that you brought

up were scored, but they scored so small they weren't listed. >> many of them or not and i will go over them one by one if you wish. >> the gentleman's time has expired. without the gentleman from georgia, dr. price is recognized for five minutes. >> thank you mr. chairman. in your assessment, the handout that we got, you have the volume growth increasing significantly. can you cite for us the main drivers of that volume briefly? >> dr. price you are referring to -- right. so that principle drivers are the topline red-lined spending for medicare beneficiaries, so a small piece of it is due to the annual updates and payment

rates. that is the lowest line, the goal update line. the difference between the red line and the yellow line is due to changes in the volume and intensity of service. so more visits, more procedures, more imaging tests, things of that nature. >> what would you say would be be -- are there intended as a shins patients in the program itself that drive that volume? >> well, the amount that we pay for a service can influence volume and one of the issues --. >> anything else? >> differences in burden of illness from year-to-year can affect volume. changes in technology as new technology develops, concerns about malpractice can be a factor in volume growth.

>> and would you say that there are folks out there and the community, and the medical arena that are working to decrease those costs as well on their own? >> absolutely. >> and when we as a government or as a society identified those, shouldn't we use some of those as best practices? >> absolutely. as somebody who ran and large physician practice, that was one of the things that we tried to do most often was to learn from colleagues. >> in fact that is kind of their hallmark of health care isn't it? to find out what works best in music? i would like to ask you to address please the issue of physician owned facilities, hospitals, surgery centers. all of the reports that i have seen and read an olive my personal experience leads me to believe that they are oftentimes drive the highest quality of care at the greatest efficiency and the lowest possible cost per patient.

yet we as a society disincentive and impact punish them for doing what they are doing. how would you address that? >> well, it is a tricky issue dr. price. on the one hand i've ran a large multispecialty practice where we brought all kinds of services in-house, and so we were self referring to our colleagues and we thought that was good for patients. on the other hand, there are instances where that soper broken cause problems. >> shouldn't we be addressing the self referral as opposed to saying you can't have any of those things? do you disagree with the fact that physician owned entities out there oftentimes have the highest quality at the lowest cost per patient? >> no i don't disagree with that. i think that can often be the case. >> do you agree or disagree with the statement that we as a

congress and if the government have put in place policies that will actually diminish the ability of those kinds of services to be in existence? >> yes, there are some policies but here is the tricky part about it. the problem isn't sufficient ownership or say or self referral per se. it is the combination of self referral with fee-for-service payment of awards more volume and intensity and often mispricing the services that creates the real substantial profit opportunities. >> so i hear you say then if we had a level playing field and allowed physician owned entities to compete with other entities, level playing field, same pricing mechanism and the like, same reimbursement echinus mbeki would be supportive of that opportunity? is that right? >> the first step is to try to get the price is right so there

aren't undue profit opportunities. the second step is to try to move to new payment systems that don't reward volume intensity but will reward better care. >> mr. chairman let me say this because my time is very brief. i think we are missing a huge opportunity by reporting those individuals that actually provide the highest care at the lowest cost and we are punishing those individuals for doing what they are doing and i look for to my second round. >> i thank the gentleman. the gentleman's time has expired. the gentleman from washington, mr. riker, is recognized for five minutes. >> thank you mr. chairman and welcome. thank you for being here today. there is a movement among employers toward people who i've called the value-based benefit designware preventative primary and chronic disease care is cheaper for employees. and things like high-end imaging

and unnecessary emergency room visits what sort of was touched on already or high cost drugs those things that have been identified as not having i guess any way proven value are more expensive. these coverage programs are combined with wellness programs and incentives for things like improved physical activity and nutrition. there are some great examples from washington state including group health, costco which all use different approaches to providing very structured, purposeful health care to their employees. medicare by comparison seems to be behind the curve a little bit. some have said maybe even in the dark ages, but medicare advantage offers promise though for coordinated care. would you agree with that? >> yes, i would.

>> medpac has encourage congress and cms to add pay for quality components to the fee-for-service payment system and medicare, but this is just one step. could medicare actually change its benefits is structured to be more innovative and value-based even if it goes to the doctors question of best practices? >> yes. in fact, it is an issue that is currently on the medpac agenda and we will have a chapter on the subject in our june report this coming june and we are looking hopefully moving towards the recommendations on redesign of medicare benefit package. >> would it be possible for you to share some of those ideas that you are looking at? >> we are not to the point of concrete recommendations. we are drawn to the idea of value-based insurance design. in fact one of the medpac commissioners as one is the leading academic thinkers behind

the value-based insurance design movement. >> so your discussion and a recommendations, how long has that discussion been ongoing? >> well on this particular issue of i think we had one session last year and then we had a session in february and then our upcoming meeting in a couple of weeks. >> so your first awareness of this issue and discussion started last year and you have had another meeting since? so we are sort of behind the curve here on this issue and so we have gone a year. what is the expectation on the recommendations being presented, published? >> well, you know, i don't want to get in front of my colleague a final conclusion. as they say, i think we will have a chapter in our june report. it won't include recommendatione

recommendations but it could have clear directional signals and then if we have agreement in june, we will come back next year and potentially consider this. >> it could be a while before we see a value-based system and medicaid. >> at will and of course it will require legislation. >> what could congress do to help you speed the process up or probably more likely slow it down? >> we are well aware of the interesting congress on the issue and there is a lot of interest on medpac commissioners so it isn't for a lack lack of interest or effort but it is a complex issue to change the medicare benefit package. >> are we looking at two years, three years, four years? >> i would hope if we are going to make recommendations that it would be in our next cycle. we operate on a september to june cycle so we would take them up in the fall. >> when is your next meeting? >> two weeks. >> it is a public meeting? >> all of our meetings are

public. >> can you provide me with the date and time of the meeting? >> absolutely. >> the chairman yields back. the gentleman from california the ranking member mr. stark is recognized for five minutes. >> thank you mr. chairman and glenn thank you again for all the good work that medpac does. i know mr. herger has been concerned about co-payment for certain beneficiaries who use home health services. it is my understanding that home health users are older, poorer, more frail and more likely to -- in the overall medicare population and i am concerned about putting further questioning on this population. i gather some medpac commissioners were as well given that the commission as i understand it was not unanimous

on this proposal. what were the concerns of those who didn't support the idea? >> mr. stark they are much like what you just described, that the co-pay would fall disproportionately on april marble portion of the medicare population which was an issue that all of us, including those of us who voted yes on the recommendation took very seriously and so what we tried to do was taylor a recommendation in ways that would minimize, although not eliminate, that impact. and it is also important to keep in mind as you well know, that using co-pays is not new and medicare. it is the norm in medicare and they inevitably fall on users of services you tend to be sicker and the like.

so it is always a challenging balancing act. we think by having a modest co-pay, $150 targeted on admissions from the community that we have tailored it in a way that minimizes the adverse impact. >> okay, and i know that you have a long history at medpac of recommending parity in payments between medicare advantage in the fee-for-service side, and your recent report summarizes your earlier recommendations about medicare advantage and estimates at at that the medicare advantage plans are paid on average 113% of the traditional fee-for-service. didn't private managed care plans originally come into medicare savings and do more for less? in other words, for 20 years they were paid 95% of our fee-for-service i believe or thereabouts and over time we

have actually moved from demanding they do better and trying to demand that they breakeven. you have long recommended that there be a financial neutrality between medicare advantage and fee-for-service. i think that is correct. >> that is correct. >> the affordable care act take steps to begin to bring financial neutrality between those two programs. can you tell us what that back is seeing in the 2011 landscape in terms of medicare advantage availability, and moment, premiums? >> yeah. well enrollment is up. the number of plans is down somewhat. and the reduction is primarily due to the reduction in private fee-for-service plans, because of the requirement and acted several years ago that fee-for-service plans could not

operate if there were a chordata care or coordinated network plan available. so some of the private fee-for-service plans have left the program and that is the single biggest factor in the reduction of the number of available plans. membership is as i say up in the most recent numbers. >> again, thank you very much for your advice to this committee. we appreciate it and appreciate the work you do. thank you mr. chairman. >> i thank the gentleman who yields back. i now recognize provide is the gentleman from pennsylvania, mr. gerlach, to inquire. >> thank you mr. chairman. i had a question with regard to your recommendations relative to radiologic and other imaging services. can you briefly give me a summary of what your recommendations there are? >> well, on the specific issue

of imaging in this report, i don't think we have made any specific recommendations in this report. co-in the past, on previous reports, we have made a number of recommendations related to how the price for imaging services is set. in some instances we think those prices have been too high and we have recommended specific changes to reduce the price. >> understand this professional component and technical component to the reimbursement structure and there is already been an adjustment downward for the technical component. is there also a recommendation that you want to implement to also reduce the professional component of that reimbursement for radiological services? >> we have look at the recommendations for reducing the professional component as well. >> what is that based on? >> for duplication of work would be an example.

quinn to test it down on the same patient at the same time, the amount of work is reduced because you don't have to do some things twice. it is the same patient, same time and that may justify a reduction in the professional component. >> okay, so you are obviously concerned about utilization overall and therefore by reducing the professional component aspect of that you can reduce utilization? >> well, certainly there indications that when the price is too high, you get more utilization. people go to areas that are more profitable. they invest in equipment if there's significant profit in that area so it is very important to keep the prices right. it is close to the cost as possible. >> is there an understanding in your review process of how the services, about to begin with? for example at the radiologist

and i'm thinking of one and one of my hospitals, who does a service based upon ever throw from another physician. if there is a reduction in their professional component of that radiologist service, but the radiologist didn't initiate the service. the radiologist to the referral, how would a referral-based system cutting the professional component for a service based on referral from somebody from the outside, how would that affect utilization? >> served, i just want to make sure i understand the situation. so this is a radiologist who has received a referral for imaging service and you are saying if their professional component is reduce? >> yes. if i understand what you are talking about his reducing professional components for that service. >> and again what we have talked

about are making adjustments in very specific instances. for example when you are doing multiple images on the same patient during the same visit and we think there is some economies in doing it that way and it is appropriate to reduce the professional component in instances like that. we have not said across the board let's reduce the imaging services because we think we want to try to suppress utilization. we take a much more targeted approach than that. >> is it only in multiple cases of multiple services or imaging work being done with one patient at one time that you are suggesting that change? >> specifically on the work component, i think it is multiple services. there have been in the physicians fee schedule also changes in the practice expense for physician services that have

changed the payment levels for different types of services. >> okay. and in coming up with this recommendation who did you talk to within, within the profession to get a sense of how patients come to undertake those imaging services undertaken, both referral and in some instances the physician able to do imaging services on his own or her own face upon her practice. did you talk to in essence to come up with the conclusion that there are to be a change in the professional component of the services being reimbursed? >> one of the things that i am most proud of in that pack is that we to reach out to all of the relevant professional associations. as you well know in this particular area there are also some coalition of the people imaging field, professional physicians and imaging equipment

manufacturers, and we hear often from those people and exchange ideas. all of their recommendations when we make them we have open public discussion, draft recommendation is discussed in a public meeting. we solicit input from affected parties on those recommendations before we finally asked. we have got a very open process. >> i yield back. >> the gentleman from california, mr. nuñez is recommend that -- recognized for five minutes. >> i would like to yield five minutes to the gentleman from georgia, mr. price. >> i thank my friend from california for yielding and i appreciate the continued response. i want to follow-up on the comments that mr. gerlach was just making it and the line of questioning on the multiple test. for example, if a patient is coming for a certain mri

procedure, one procedure, the cost of that procedure that are borne by the facility and by the physician involved in interpreting that are pretty much fixed. correct? >> on the interpretation side or the technical component related to the equipment? >> both. >> well, the cost of operating the equipment is influenced by the volume of service provided so you make a capital expenditure. the more you use that equipment to lower your unit cost for. >> the machine doesn't know whether it is one patient or to patients that are getting the two different procedures, right? the volume is the number of procedures itself. is not how many patients there are. >> that is right. doesn't natter whether they are distinct patients. >> say of a patient coming in for an mri on the cervical spine

and a patient coming in for an mri on the cervical spine. those two are separate and distinct and require the uses of the machine itself, technical side and then the interpretive side that position is using his or her best knowledge and information and expertise to interpret that. you wouldn't say that has a volume component would you? >> in terms of interpreting? no. >> the positions i've got to be fixed you said, right? we ought not decrease reimbursement based on whether or not one patient or two patients? >> based on whether it is one versus two, no, but as new technologies imaging being one example becomes more widely used, more frequently used, i do think it is reasonable for a cost per unit of service as the experience level goes up, to go

down. that happens in on most every market for every service in it, make. >> i might be able to buy it if it were to see spine mris on the same patient at the same time. ..

>> tms doesn't do that, and ama sponsored and does that. it's people from the professional societies sitting down together to determine the relative values for the work element. >> if the special society says no, that's not the appropriate reimbusment for this procedure, do they have ultimate authority in that? >> it's an e lab rot process. >> who makes the final decision? it is in cms. >> there you go. >> but the vast majority of cases they adopt the recommendations from the ama sponsor. >> can you name a single procedure -- because the cost that is government reimburses, pays physicians for the care, allows to the access of care; right? >> sure. >> can you name a single procedure for which physicians

are being reimbursed in real dollars more today than where they were 15 years ago? >> not off the top of my head. >> yeah, and i'd love to have you get back because i don't think there is one. i say that in all sincerity and honestly. what we are doing is limiting the access availability of patients r your mom, your folks, seniors across the country access to care. that's where we ought to be looking. >> what i'd like to do is if we can put this slide up, see, medicare payments to physicians have been going up quite rapidly, in fact. >> if i may, mr. chairman, the payment per -- for procedures for physicians, for visitation,

the cost of a patient to come to an office for a visit is drastically reduced from 15 years ago; right? >> i'm not trying to be arguing. >> either am i. >> the prices, you and i would agree, the increase of prices, the price per office visit, price per procedure has gone up relatively slowly. that's bottom line on this graph. but the amount of income that physicians gets from medicare has gone up rapidly, the red line. >> in real dollars, mr. chairman, if i may, inflation adjusted dollars that line goes below. >> the red line represents a 5.5% increase, average increase per year since the year 2000. >> the gentleman's time has expired. >> thank you. >> if time permits, we may try to go for a second round of

questioning. now the gentleman from oregon is recognized for five minutes. >> thank you, mr. chairman. welcome, doctor, nice to be a north westerner here if i dare. before i get to my questions here, i just wanted to allow you to finish your thought you had with my good friend from georgia because we watch a certain amount of different impulses, you know? there are some who suggest that the solution to exploding medicare costs is to basically voucher this and index it at a level that is dramatically below the cost of inflation, medical inflation, something that would be the curve going down, down,

and if there are problems associated with -- i'm you folks try to split the difference. i mean, you are cognizant of the problems. you deal with the practice patterns. you recommend year after year after year after year to congress and administrations things that could help bend that cost curve. there's quite a bit of bipartisan push back over the years. that's not political. that's just because people get pinched, and they don't want to redo stat costs. my impression is that as we constructed the affordable care act that we actually included most of the over -- they don't have maybe the teeth that some would like. they don't implement them instantly. there's too many pilot projects

and test this, but they are there. i am curious if you want to just finish answering the question because if the spending per beneficiary is going up compounded over 5% per year, it's suggested there's a whole lot of procedures and a whole lot of more expensive somethings that are going on there, and i just want to make sure you're able to complete your thought. >> right, right. so, i'd guess i summarize our view on this with a few points. one is overall it's our sense that there's enough money in the physician fee schedule, medicare pays enough for physician services overall to assure adequate access for medicare beneficiaries. however, we're concerned about how the money is distributed. we think we pay too much for

some types of services and too late for other types of services, primary care would be an example where we are worried the payments are too low. we think some redistribution of the payments is appropriate, and then finally, we think had ought to be a high priority goal for medicare to move to new payment systems that just don't reward more vol yule and -- volume and intensity, but reward higher value care for both medicare beneficiaries in the program. i would agree that just holding down the price increase the way the yellow line has is not the best way to get good care for medicare beneficiary. >> and, that, of course, is why we attempted to have a comprehensive approach that incorporated these elements in, and hopefully they can be incorporated sooner rather than later after they are tested to make a system that does reward

health care value over volume. >> right. >> and i find it a little ironic that some of my republican friend talk about massive cuts in, for example, in medicare advantage, when, in fact, it's a move to try to deal with the quality of the system, and they propose to replace it with something that would be far more draconian than any modest adjustment in medicare advantage. >> if i may, could i just -- >> i only have 30 seconds left. >> you were generous, sorry, go ahead. >> there's just one area where i wanted to leave with your review because we're watching care in hospice merge, and there's an opportunity for us to be able to give quality care for people we used to talk about within the last six months.

because of care, because of changes in treatment patterns, sometimes people in "hospice" live longer than people who are given intensive treatments. icu's and chemo is expensive and painful therapies, i'm wondering if there's a way going forward to work with you to think a little bit about the recalibration of what hospice cares means, ways that better meet the needs of patients and families might be less expensive, but certainly better care. >> the gentleman's time expired. the gentle lady from tennessee, mrs. black is recognized for five minutes. >> thank you, mr. chairman. i want to go to the issue of outpatient settings, and your report verifies something that i've heard within the district in that there's a significant

variation in the amount of services provided in outservice settings with medicare primarily . this variation, of course, results in an undesirable financial up sentive such as the surgical centers organized as a hospital outpatient department at least in part to receive the higher payments. does the commission have a plan for siding this, and if so, do you have a sense for where this policy options will be that may result from this review? >> yes. it is an issue that we're actively looking at. we are concerned that the disperties in payment for the same service based on location, the location where it's provided, can cause problems under some evidence that, in

fact, it is causing problems as you indicated, people are converting to hospital status simply for the -- to get the benefit of the higher payment, and clearly, that's a problem. as i indicated earlier in response to mr. johnson's question, it is a little bit tricky in the sense that although the service might be the same, for example, begin ambulatory surgical procedure, the patients receiving it could be different between the asc and the hospital outpatient department, and i know this from experience. having run a large group, we did surgery in both asc's and hospital outpatient departments, and we would send quite consciously the more difficult patients in the hospital outpatient department. same surgery, but they are riskier patients because of morbidities and the like, and we wanted them in the hospital in

case something went wrong and we needed backup. because they were sicker patients, we paid the hospitals more than we paid the asc. it was an adjustment in effect for the higher risk of the patient, so what we need to do is move towards equal rates for the same service or a risk-adjusted basis, and that last part is the tricky part in this that we're looking at. >> thank you, and that certainly makes sense, but at the current time where you look at apples to apples, it doesn't appear to be that way so i think that is certainly a wise thing to take a look at. additional question, the report notes beneficiaries receiving the part d low income subsidy account for nearly 22% of all enrollees or they reach the donut hole. further these low income

subsidies account for 2 million of the 2.4 million enrollees who reaches spending cap in 2008. your report also notes that the average per capita spending for the low income subsidy enrollees were double that of the nonlow income subsidy enrollees, and i know that these low income enrollees are probably for the most part sicker and they require more medication, but this disperty really is alarming. do you have any recommendations on how we might be able to better control the cost for this population? >> we have not looked specifically at that. we have done some research that suggests that there may be differences in risks that are not fully captured by the existing risk adjustment systems, and that may be a reason for the higher

unitization. you're talking about a low income population, the tool of using co-pays to try to limit access utilityization. these are people who don't have much income and appropriately need to be protected from excessive co-pays. if we don't do that, then there's the risk they won't get needed drugs and will have higher costs. >> i don't discount that, but what i've seen with my experience sw emergency room nurses when people have an opportunity to have a smore gus board -- smorgus board or more options available to them, they overuse the sfs -- services because they are available. i'm not casting stones there. if we order the buffet, we order more food than if we had ordered an individual plate. how do you make sure the services that are required are

services that are really needed and not used because they are there. >> the gentle lady's time expired. the gentleman from wisconsin, mr. kind is recognized for five minutes. the gentleman, the ranking member is recognized. >> i ask unanimous consent to put the "national journal" article in the record. >> without objection. the gentleman from wisconsin for five minutes #. >> thank you, mr. chairman and your staff for the update today. this is an important hearing, hearing the recommendations you are making. we appreciate the work you put in this with the effort to provide us guidance on where to go with the medicare program. i notice in the january 2011 report, you reported on various geographic variations in the health care system, ewe unitization areas that were

high, and in fact, you noted that the area with the greatest service use, miami, is nearly twice the level of ewe tillization than the least used area which is my hometown of lacrosse, wisconsin. yows not making -- you're not making recommendations on how to deal with this variation around the country. why are not not being more explicit, and will you in the future provide greater guidance in this area? >> well, we think, mr. kind, that the best way to reward high hall health care delivery whether it's in lacrosse or perhaps the provider in miami is through changing the payment systems, moving away from future service payment to new payment methods. >> i agree. are you going to come up with specific proposals on how to do that? >> we have made many proposals, medical home, aco's, bundling around hospital admissions, many

of them picked up, and so we think payment reform is the best way to move to value. >> most of that is in the affordable care act. >> that's correct. >> again, relying on your rumtions in the past, what about systematic reform under medicare? >> there's a lot of discussion in recent years about geographic variation, and one of the points that i think has been missed in that is that, you know, we can talk about reach into the country and how florida is more expensive than wipes, but there is -- wisconsin, but there is variation within wisconsin, within florida -- >> right. >> if you apply a geographic approach, we want to reward wisconsin, and penalize florida, there's going to be a lot of collateral damage. >> exactly. geographic variation is concurring within congressional districts and the communities itself.

it's less wisconsin versus florida as it is from individual providers no matter where you find them. that's the pain on reform. you indicated in your march 4 report, you're right, we recognize managing updates and rates alone will not solve a fundmental problem with the current medicare fee for service system, that providers are paid more when they deliver more services without regard of the quality or value of the additional services. i think that's going to be the key, and the ultimate verdict on health care reform if we can move to a different reimbursement or payment system that rewards outcome and value, that, i think, will solve problems as far as the cost curve, but also the quality of care we're striving for out there. i was hoping med jpac would have -- medpac would have been more affirmative which is all necessary and good, but something many dramatic in proposal. >> well, the challenge that we

have, you know, everybody says that fee for service is bad because it rewards volume. for sure that's true. from my perspective, the worst legacy of fee for service is that we've got a fragmented delivery system. >> right. >> where people don't work together to improve care for patients. they all in too many instances operate separately, don't community kate well, coordinate well, in that the difficult thing about payment reform is that you can change payment method, but there has to be someone at the other end to receive it. >> right. >> there has to be a reorganization. >> i agree. you are probably aware under the affordable care act, two things happen through the institute of medicine. they'll have an update for the first time in the reimbursement formula using real data, realtime, instead of proxy data. that's important. they have a study now to change

fee for service for a fee for value reimbursement system. that can go to the administration for implementation, which, again, i think is key. that's already moving forward under health care reform which, again, i think will be the key to sustaining the system that we have in a much more affordable basis, but getting better outcomes too. the thing with the accountable care organization, medical homes, bundling, that's fine for pilots, but it's saying you need to structure yourself in this fashion to be rewarded instead of saying you're rewarded for value and outcome of care. you figure it out. as far as what's the best approach to achieving because obviously smaller groups have a little more difficulty than the larger provider to form aco's or medical home models, wouldn't you agree? ? yes. physicians who are well practiced is it's difficult to assess their performance. >> right. >> because of small selection. >> the time expired.

>> thank you. >> we have -- everyone has asked a question. there's a couple members that would like to ask a second question, so we will begin to move to that. the gentleman from georgia, dr. price for five minutes. >> thank you, mr. chairman. i look forward -- so many questions. i look forward to being able to provide some for you and respond in writing. the part a primarily hospital services, part b, primarily physician services. what percent of the part b is physician reimbursement? >> actually 2md's opposed to other health professionals? >> yes. >> it's about 12-13% of physicians. is that the number or what share of part b? >> that's fine because i think there's this sense by many that

if you whack away and whack away at the docks, you -- docs, you can control the cost. in fact, if we continue to whack away at what the physicians gain for their services, for their carry and compassionate knowledgeable services, we will rid truly harm the access to quality care in this country. physicians just can't do that anymore. can't do that anymore. that's what i hear from my colleagues, former medical colleagues at home and across the country who say that the -- what i was trying to get to with the previous line of questioning on not having any significant increase in reimbursement and all insurance pegs itself to medicare now in terms of reimbursement so the federal government coals the payments to physicians for every procedure in this country. i want to talk about a couple other items though in the short time i have available. you mentioned about the rock,

having the ability to have significant input to the cost for the payment of the physician services. also, agreed it was cms with the final say. >> right. >> the roc itself as i understand it has significant speedometer -- responsibility for about 90% of the cost of the payments provided. that number may or may not be right, but half of medicare visits are through primary care, yet the number of primary care physicians is in the teens, and maybe even lower, maybe single digits in terms of percent. how do you reconcile that? >> certainly that's a sore point among primary care physicians that they are underrepresented and the process is skewed against them in various ways.

>> isn't that part of the problem, though, of setting up the apparatus that we have that you rarely, if ever, get to the right answer because you rarely have the right people in the room? >> yeah, you know, medicare has very complicated payment systems, as you know. better than most people, i'm aware of not only the complexity, but also some of the weaknesses. the problem, however, it's not like we can say, oh, it's these medicare administer prices or prices set by the competitive market. as you just indicated, private ensurers tend to say medicare's way is better that what we used so let's adopt medicare's fee schedule. >> there's price fixing from the federal government. >> it is a difficult system, but there aren't clear better alternatives. just one point on the -- >> there are clearly better alternatives, and i look forward to that discussion. >> i look forward to that as well.

one point about how private insurers use the medicare system. typically, what they use is the relative values. they set their own conversion factor. the place is not the same. >> that's true. it's 90% or 110%. let's talk relative values. the evaluation of management codes, the doc visit codes if you will. my understanding -- what evidence, what science went into the setting of those codes? are you aware of the initiation? >> the original system back in the early 90s was based on an extensive research project done by bill skhal at harvard and the process was established for purposes of maintaining the system. >> maintaining is the right word. as i understand it, there's not

a critical evaluation of the codes and what we insent with office visits. >> actually, by law, there is a five year review. each five years, they do a comprehensive review of the work of values. that doesn't mean every single code, but it's a far-reaching review. >> it compares to what has been. i would suggest is compares to what has been the occurrence opposed to looking at whether or not we are getting the desire -- >> in fact, a critical question if the whole system is do we want to face the prices for different services on estimates of the cost of producing them, or do we want to take into account the value of the service to patients? >> which brings me to a value question. all of the values comments seem to imply that every single patient can have an ideal outcome regardless of the

diagnosis and regardless of the clinical status. how do you pay for value in a patient who has a terminal disease, at the end of life, and needs care and compassionate care for that? it will be a lousy outcome. >> when i talk about pay for value, i'm talking about, number wop, looking at population served, and not individual cases. as i think you're pointing out, individual cases are sometimes unavoidable bad results. that's not a sign of poor care. you look across broader populations, risk adjust for the underlying conditions, and you use measures that take into account things like patient satisfaction. it's not just outcomes. you know, terminal patient could receive good care. it's high quality, humane care.

>> the gentleman's time expired. the gentleman from washington, mr. mcdermmot is recognized. five minutes. >> thank you. i decided i better come up here and ask the question after watching this on the television. >> okay. >> i think the least known committee in the medical industrial complex in the united states is the ruc and the impact that they have, and i'd like to submit for the record a graph from the medical group management association, the annual physician compensation in productive survey. it's 1990 to 2008, -- 1992 to 1998. you can see when it started and the top line is the speshtist's income, and the bottom line is primary care. i started looking and figuring out who is on the ruc and how do they do this, and they clearly

submit recommendations to cms and nine times out of ten or more than that, maybe 95 times out of 100, the cms accepts recommendations; is that correct? >> that is correct, yes. >> it is not sent by cms, but being set by a private committee controlled by the medical association -- american medical association; is that correct? >> that's correct. i would point out that what we've recommended, and this was two or three years ago now, is that cms take a more assertive role and not just be a passive receiver of recommendations, but be more directive in what they need to look at and change the dynamic that otherwise exists within the ruc. they have taken some steps in that direction. >> i would like to submit

another article into the record from the new england medical journal. it says in 2006 the ruc rumtions, well, med pac went up on 227 services and down on 26. there has never been any bending of the curve on the basis of the ruc. >> that's pree sicily our concern. the dynamics of the ruc are that there's lots of incentive to identify a service for higher payment. there's very little up sentive to collect data -- incentive to collect data. what we have said is that cms needs to readdress that imbalance of incentives in ruc to direct them by looking at particular services likely to be overvalued. >> do you think it might be better just to collect your own debt and never mind the ruc? why should the medical

association be setting their own fees? how are you ever going to get control of costs if you let the fox decide what the key to the hen house are going to be used for in >> well, what we've recommended is a hybrid approach where cms does not turn over the keys to the fox, is much more assertive in the process, but then takes advantage of the expertise of the relative specialties to provide input to that process, so it's a rebalancing of the system. we think professional expertise with data analysis by cms. >> how about a rebalancing of the components inside the ruc? my looking at the list, depending how you look at people, what you can figure out, is that mostly it's a balance heavily weighted towards

specialists and not primary care physicians. >> that, too, is the concern of ours, and certainly it's a concern of many of the primary care physicians and relevant professional societies. >> it seems to me that the biggest problem that those of us who are supporting of the president's plan still have about what's going on is that controlling costs is still not very well done. we've done well in accidents in including more people through the exchanges and that sort of, but the question is ultimately going to be how come we're spending 16% of gdp or 17% of gdp and the swiss are spending 11%, and the french are spending 12% and whatever. what -- where is that 5% coming from is what i've been looking at trying to figure out, and i keep coming back to the fact that medicare allowed usual customary fees in the original

legislation, and we are continuing it in this -- with ruc as an extension of it as i see it. am i misreading the facts? >> no. we believe how medicare pays for services is an important contributor to the level of expenditure in the rate of growth. if we ever want to reduce the rate of growth, let alone reduce the level of expenditure, if we want to ever improve the value of medicare expenditures, we need to change the payment methods. >> the gentleman's time expired. the gentleman from new jersey is recognized for five minutes. >> thank you. mr. chairman, i looked oifer the report -- over the report from the centers for medicare and medicaid, the april report of 2010. that also is an interesting document, and i just wanted to

clarify something we started to get into before. on the previous question, clearly, the cbo and the cms scored all the legislative language. i misspoke. trying to get to the point, i didn't finish my point before. it did score all of the words in the 970 pages or so. that health care reform bill in that bill, in the act, they did not get as much credit though, the point i'm trying to make to delivery system reforms that we believe those of us who support

the legislation, support the act will lead to better care at lower costs. >> right. >> we -- mr. chairman, we had the chairman actuary year, remember? it was in this room last month. >> right. >> i asked him why these provisions with respect credited with more savings because if you look at the chart ring they go each one of the provisions, and you see a lot of zeros of course and low numbers and other things, but things we're talking about before the pilot testing for pay for performance, the technical corrections to hospital value-based purchasing. they support the patients' centered medical homes, that's

just a small part of this. there is a small list in the report which we were provided. it's very, very clear. the question what we're saying is, those of us who support the legislation in the act, why we think that these things will lead to better care and lower costs. or else why did we put the bill together in the first place? we had the actuary here, and i asked why these provisions with respect credited with more savings than the charts would indicate, so you can score it and not get credit for the savings. >> uh-huh. >> i don't think -- >> i don't think that's a score that, you know, we probably wait for the results because we didn't get results. they said we don't have enough information. >> right. >> is that correct? >> that's my understanding of why they didn't. >> he answered this, he answered that he believed in their potential to save medicare

money. >> right. >> he stated for the record, but that he didn't have enough data to estimate the amount of savings they would be given. how am i doing so far? >> i think you've accurately described the situation. the concepts can be sound. the concepts have to be turned into operational payment systems, and then you have to get providers to convert to those new payment systems. there are connections there. >> not up like the changes we made to medicare since its gipping in the 60s. we made dramatic changes to the medicare program, dramatic changes and when we went out from the point we were at. this is not unusual, not something that, well, what is it going to be in 2022. the charts here go up to 2019. >> yeah. >> i think they are very

optimistic, but i hope that all of us, all of us recognize these provisions. these provisions are the breath and the width of medicare and medicaid entitlement changes. we are changing business in the health care act, aren't we, -- >> that's certainly the goal. that's why we recommended the various provisions that we did that were included in the law. we think that they have the potential to change. >> okay. so if these ideas in health care reform which would move us towards paying for the quality of care rather than the quantitity of care, something my friend from wisconsin keeps talking about, i would assume everybody understands, i know

that there will be push backs from the medical profession, certain parts of the -- >> the gentleman's time is up. >> you heard them, not identified as entitlement reform, then what the heck can be? thank you, mr. chairman. >> the gentleman's time expired. mr. hackbarth, the commission intends to continue different approaches in payments in an attempt to provide options aimed at fixing the problem. can you preview the timing and substance of commission's work on this pressing issue? >> yeah. our hope is that we will have recommendations in the fall, draft recommendations in september, final recommendations for vote within the commission in october. that's a hope. we've got to, of course, do a

lot of work between now and then and forge a consensus on what to do. the work, we think is urgent. it's motivated by a growing concern of commissioners that the sgr is a growing threat to access to services for medicare beneficiaries. i want to be clear, we don't see wide scale evidence of that right now, but our concern is that the repeated difficult process of trying to avert large scale cuts in physician payments and doing that over and over, sometimes multiple times in the same year for the cumulative effect of that exercise is undermining both physician and beneficiary confidence in the medicare program, so for a long time, i've been able to sit before the subcommittee and say, yeah, sdr is a problem, but we

don't see an imminent threat to access. we think we're getting closer to that tipping point, and so we are looking at options for potentially addressing that. just, if i may, mr. chairman, just one last point. i don't want to create the false expectation that we can come up with a new payment system that is not gipping to have the budget -- not going to have the budget score attached to it, that the big sdr budget problem is going to go away. i don't think there's a rational policy option that will make that number go away. i think the question for the congress is not whether we're going to spend more than the sgr baseline says. i think everybody in this room, actuaries, trustees, everybody knows we're going to spend more than the sgr says we will. the only question now is whether we're going to spend more by making last minute adjustments,

throwing more money into the existing payment system, or whether we're going to spend more strategically to achieve more important goals for the medicare program. we think the latter course is the wise course. we hope to develop a package to have a cost, a budget cost to it, but will achieve some important goals for medicare reform going forward. that's our goal. now, whether i can, you know, get the consensus within medpac, i don't know until we're further into the process, but that's the mind set i have. >> thank you for your comments. as you know, this is a bipartisan major concern that as members of congress, we deal with when talking to our physicians is one that we need to place and it's important for you to know as i'm sure you ought do, that this is a high priority of us, of this committee, certainly of the subcommittee, and again, i want

to thank our witness for your testimony today. as a reminder, any member wishing to submit a question for the record will have 14 days to do so. mr. hackbarth, if any questions are submitted, i ask that you respond in a timely matter. with that, the subcommittee is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> up next on c-span2, awe trail ya's -- australia's prime minister takes questions from the parliament. after that, tsa oversight hearing, and later, general petraeus testifies about military operations in afghanistan.

>> next, australia's prime minister takes questions from parliament. they were asked about the government's plan for carbon tax and policy. these highlights from parliament took place in february and earlier this month. >> hell loy, i'm -- hello, i'm david speers. over the next half hour, we'll bring you highlights of the parliament. over the start of the year, the government renewed commitments on climate change announcing fresh plans to put a price on carbon, starting with a carbon tax next year and trading to an emissions trading scheme. the opposition is opposed

warning this will drive up power bills and cost jobs. during this latest sitting, the government renewed sittings to multiculturism after some criticism, the government argues that multiculturism in this country is working. amidst reports that the opposition is concerned about the muslims integrating in an australian society. ♪ ♪ >> my question is for the minister on climate change. i refer the minister to revolutions up to $113 million, credits invalidated because they have been in store by improperly credit dated, poorly installed, or because of the panels

involved. will the minister institute any independent investigation and what will the minister do to address the government's chronic incompetence in failure to deliver fundamental services? >> the minister for climate change. >> thank you very much, mr. speaker, and i thank the member for the question because it provides the opportunity to correct the record in relation to this particular issue. in fact, in fact, mr. speaker, since the renewable energy targeted was initiated in 2001 by the howard government, over 100 million renewable energy ser certificated from been indicated. since 2001, 3.5 million renewable certificates have not been validated by the regulator. i aid vice the reasons for this

is a bricks in the system, and others failure to submit the necessary documentation, but the regulators indicated in advice that none have been dealt with in this manner due to safety issues e -- emerging. the safety issues are resubmitted with the proper document and vol dated. the office of renewable energy regulator checks each batch to ensure that the requirements are complied with, and the regulators also been given new enforcement powers by this government through amendments to the legislation in june to maintain a robust compliance system. now, mr. speaker, there's nothing new i'm advised in filing the warrant protest of the review of the scheme, and, mr. speaker, in this respect, in fact, almost a million of the renewable energy certificates have been invalidated were done

so in 2003 during the term of the howard government without any specific review of what had happened. mr. speaker, the legislation is already subject to biannual reviews, the first of which is due now in 2012, and what we are seeing here, yet again, is an effort by the opposition to misrepresent facts to create a scare campaign, and they do not do their dekalb policy work. [inaudible conversations] >> the leader of the opposition. >> mr. speaker, my question is to the prime minister, and refer to a visit i made today to author and rita clark at their fruit and vegetable shop a $6,000 a month power bill in connection in connection increases to $1500 just under

the tax. >> order, order. >> why won't the prime minister be hoppest with the os -- honest with the australian people about the impact of the carbon tax on the cost of food? [inaudible conversations] >> the prime minister. >> thank you very much, mr. speaker, and i thank the leader of the opposition for his question, and as the leader of the opposition well knows even in the words of his question, he's continuing his campaign of misleading and generating fear amongst the australian community, and it's the leader of the opposition -- [inaudible conversations] >> order. >> which to hang out in a fruit and junior college table shop an -- vegetable shop and said to the owners that he has done them a great disservice, told them nontruth, told them something he knew not to be true at the time he said it, and it did for no other purpose than to further his campaign, and he's

disinterested. it is not right, mr. speaker. it is not right to go around saying things that are untrue in order to generate fear in the community. that is what the labor of the opposition is doing. let me say what we stand for on this side is giving businesses -- >> order. >> that you went through today certainty. giving them certainty so they know as they make the arrangements of their business, what arrangements actually apply so they can through their business plans with certainty. now, it seems to me a little interesting, mr. speaker, that at one point, the leader of the opposition actually thought certainty was important for businesses. at one point he was wondering around saying things like on the 19th of july i think businesses deserve certainty. on the 19th of july, i think

what business needs is a period of certainty and stability. what the treasurer said on the 2 1st of july, we understand the people want certainty, but now, of course, according to the leader of the opposition's promising australian businesses, well, he said it on morning tv today where he was asked the question big business is obviously a little concerned, a little confused, what leads to this and whatted leader of the opposition said, well, completely it's up in the air and with no certainty. with those words, the leader of the opposition has named his own campaign, create fear, try and stop a confident nation dealing with the challenges of the future, and if his campaign fails and we price carbon on the 1st of july 2012 as i intend to do, then he will go to the next

election with a plan to wreck the australian economy which is economic vandalism. i plan to rip away from the certainty they need. i plan to correct this nation's reputation in international markets. i plan to rend a void in important investment decisions that australian businesses have made. i plan to see electricity prices rise and rise and rise and rise because there is no certainty in investment in electricity. a plan to remend the households, the household assistance we have begin them to make -- given them to make sure hard working australians have less money in their purses than they had before. >> prime minister? >> thank you, mr. president. my question is to the minister representing the minister for climate change and energy

efficiency. can the minister tell the senate the benefits to the australian economy of putting a price on carbon. in particular, what certainty this carbon price gives businesses around future investment decisions? [inaudible conversations] [inaudible conversations] [inaudible conversations] >> when the interjections across the chamber cease, we will proceed. [inaudible conversations] >> the minister representing the minister for climate change and energy efficiency. >> thank you, mr. speaker. i thank you for the question. mr. president, passing carbon is an asenior economic reform that would transform our economy and

it is a major economic reform that the opposition is simply not up to. it is a reform. it is a reform to transform our economy and boost economic reform. we know on this side of the chamber that what we have to provide is certainty to business so they make the investment decisions which are necessary for the transformation of the economy. what the opposition appears to have forgotten is that business up -- up investmentizations are made for many years, not just for next years, but for the next five years or ten years. certainty around a price on carbon means that businesses are better able to plan and prepare for the future decisions. certainty around a price on carbon is fundamental for the better planning and preparations

for the future decisions. mr. president, we are at o time in this country and parliament where we face a choice. do we want to shape the future or simply want to have the future imposed upon us? on this side of the chamber, we have senators who are prepared to look to the future, prepared to perform for the future, a party that is prepared to build for today for tomorrow. what we are faced with is a party of wreckers, nothing but a party of wreckers. let's find a man who knows how to draw, a man who knows how to destroy, but a man incapable of leadership, a man of incapable of leadership. >> the time expired. . senator wong. >> i have a supplementary