>> but also they got smarter about how they delivered care, they used other types of practitioners, they did a lot with peer support specialists, and the cost dynamic is different -- >> do you have a cost analysis you could share with us, because i think it's intriguing. >> i'd be happy to share with you what's been done to date and, certainly, some descriptive analysis and the metrics that they're using to measure. >> sounds great. my second question was, since we went to the third, is it noncompliance with medical illnesses because they're bouncing in and out because their diabetes is out of control, for example? >> it's hard to generalize. the population -- both. but, clearly, two things that both could be improved with inte grated, coordinated and accountable systems. >> and do you have any idea, well, that'd be a follow-up

question for a later time. i'm trying to understand which of this is compress bl whereas perhaps this would be. what percent of in this goes with mental health and physical health issues? swh we'll call that our bucket analysis, and we'll work on getting you some analysis across the board for the committee's consideration. >> chair thanks the gentleman. we have a follow-up question from dr. christensen. >> just a very brief question. as you know, the territories with medicaid cap and not all of the help for medicare really have struggled to provide services for our dual eligibles, so i just wanted to know if this process of coordination, if your office also looks at this issue in the u.s. territories. >> our office is intended to be a resource for the states and the territories who are interested in improving care so, yes, we are available to work with the territories, absolutely.

>> chair thanks the gentle lady. that concludes panel one. chair thanks the director for her excellent testimony and yields to the ranking member for unanimous -- >> thank you, mr. chairman. i would ask to, well, i would ask for unanimous consent to submit for the record the first report that ms. bella's office submitted to congress as required by the aca. that one member i think dr. burgess was asking about. >> without objection, so ordered. >> and then i'd ask unanimous consent to enter the statement of the president of sei owrks. >> without objection, so ordered. >> thank you. >> i'll ask the second panel to come forward, and i'll introduce them in the order of testimony. robert egge is the alz alzheimes president, billy millwee is the

associate commissioner for medicaid and children's health insurance program at the texas health and human services commission. denise levis hewson is the director of clinical programs and quality improvement at community care of north carolina. and shawn bloom is the president and ceo of the national pace association. your written statements will be made part of the record, ask that you would summarize each of your opening statements in five minutes before the question and answer period. at this point the chair recognizes robert egge. >> good afternoon, chairman pitts, ranking member pallone and distinguished members. i am robert egge, and i thank you for the opportunity to appear here today. i want to begin by telling you about john and his wife, emma. john and emma are an elderly, low-income couple who depend on both medicare and medicaid. john has alzheimer's disease and

die beet. john's physician has been consistently attentive to his diabetes but not to his alzheimer's. because of john's impairments due to his alzheimer's, john has been increasingly unable to comprehend instructions, so john's diabetes and his overall health have steadily deteriorated. for her part, emma has been ill equipped to help john manage the demands of his dementia and diabetes because of her own health and the lack of caregiver training and support that's been offered to her. because of all of this, john and emma began taking frequent trip toss the hospital er where john was rarlded as a noncompliant diabetic. it wasn't about john being obstinate or unmotivated, but due to his inability to self-happening his care.

those that did recognize his dementia were at a loss of what to do about it. so he continued to show up at the emergency room at ever more frequent intervals. each time he was sent home with discharge orders often explained to him without 'em ma even present that he had no hope of following. these er episodes were disconnected from his physician's care. john's hospitalizations increased, his health deteriorated, claims to medicare and medicaid mounted. reluctantly, john and emma decided he could no longer live in his home but had to enter a nursing home much sooner than either of them had hoped or expected. as reported in the alzheimer's association's facts and figures, there are an estimated 5.4 million americans like john with alzheimer's with no known means to stop the progression, and

there are caregivers like emma who help care for them. they form a disproportionate share of the dual eligible population. 61% of dual eligible individuals are cognitively or mentally impaired. nearly one in six has alzheimer's or other dementia. in nursing homes 59% of residents live with these conditions. similarly, at any point in time about one-quarter of all hospital patients age 65 and older have alzheimer's or other dementias. so this population is large in scale, and it's also very large in cost. medicare payments for beneficiaries of alzheimer's and ore dementias are three times greater than without these conditions and medicaid payments are nine times higher. these facts lead to the first of two points i want to conclude with today. individuals with alzheimer's that depend on medicare and

medicaid make up such a large, vulnerable and cost-intensive share of the dual eligible population that policymakers should focus on these beneficiaries in pilots, demonstrations and broader system reform efforts. recognizing this group is offering an opportunity to improve care while controlling cost. the other major point is that focusing on improving care for dual eligible individuals with alzheimer's won't only deliver benefits for these millions of americans, but will also help beneficiaries more generally. over the years our growing prevention and self-management and patient-centered care, today in a similar way our growing awareness of the widespread impact of cognitive impairments should draw much-needed attention to themes such as reducing program complexity, the detection, diagnosis of medical

conditions and to putting in place care plans that recognize not only an individual's cognitive abilities, but fully recognize and support the critical role of the unpaid family caregiver. the foundation of effective care is in diagnosis, care planning and medical record documentation. principles contained in mr. markey's bill which the association strongly supports, moreover, the insights apply across the dual eligible and medicare populations. again, thank you. the alzheimer's association greatly appreciates the opportunity to address these issues, and we look forward to our continuing work with the subcommittee. >> chair thanks the gentleman and recognizes mr. millwee for five minutes. >> [inaudible]

>> that might be better. i'd like to spend a few minutes speaking to you about the star plus program. the star plus program is a cap tated managed care model that integrates acute and community-based care services for the disabled population in texas. this includes the dual eligible members. a little bit about the texas medicaid population. there are about 3.2 million people on medicaid in texas today. of that number, about 700,000 are classified as disabled, and of that about 400,000 are duals. these represent about 25% of the medicaid population, but approximately 58% of the total medicaid costs. where does star plus originate? it originated in 1998 as a pilot in houston. it was created largely to address concerns about cost, quality and access to services for the age blind and disabled

population, also the subset we refer to as duals, and to address how we could better integrate long-term care for that population. the program started with about 58,000 people in 1998. today star plus now serves 42 texas counties and 257,000 people m in march 2012 the program was expanded to serve another 370,000 people in texas and 80 counties, and here's how the program works at a very high level. it's an integrated care delivery model in a cap i tated managed care environment. so we take acute care services and long-term services and bundle them together, delivered through the hmo. a service coordinator really work with that patient to get them services that they need. the service coordinator's responsible for assessing that person's need and insuring that the needs are met, and by doing that it provides an early intervention so we keep people out of the hospital, the

emergency room and out of the nursing institutions. several studies to date by our external quality review organization have shown the model is effective. we've decreased inpatient services, hospitalization by about 22%, reduced visits by 15%, and more importantly people who are involved in the program report a high degree of satisfaction with the program. we're excited about the opportunity now to work with cms on how we can better coordinate care and look forward to working with melanie bella and her program that she just started. >> chair thanks the gentleman and recognizes. [applause] ms. hewson for five minutes. >> good afternoon, chairman pitts and ranking member pallone. i appreciate the opportunity to tell you about our program. a collaborative organization of regional networks of health care

providers, physicians, hospitals, health departments, social service agencies and other community organizations. each network is a nonprofit organization, and i work for the central office that helps coordinate and provide support to all of the 14 networks. we create medical homes matching each patient with a primary care provider who leads an interdisciplinary team. professionals who coordinate seamless medical services aimed at producing better outcomes. our challenge is to cut cost without changing benefits and fees. as you start looking at changing the benefit package and fee structures, often times you're pushing the patient into other delivery areas like the emergency room. you need engaged providers to do this program and engaged patients to be successful. sustainable savings from learning to deliver care in a smarter and more coordinated

way. we started as a pilot in 1998, and we've been adapting and refining this model, really targeting the highest cost and highest risk. what's different about our program is it's led by physicians who are charged with changing the face of health care at the local community level. it's a bottom-up governance, it's key to getting by at the practice level. we've begun to make some significant changes in local delivery systems. it's built on a model where each patient has a medical home. we have 1400 across north carolina. in our 14 networks that provide the infrastructure to provide wrap around support to the medical homes, we have about 600 care managers, we have 30 medical directors, 18 clinical pharmacists and ten local psychiatrists. these are local people managing local patients and driving improvements in their systems. the physicians are engaged because they're part of the solution. they lead the local teams, they decide how to collaborate best to get the best results.

efforts to improve care and save money are owned by those who directly provide that care. our care managers know their patients, they know the community and the resources, and that varies greatly. care managers are the boots on the ground. they connect the dots between the patient and the doctor, home health and other community resources. we believe that all health care's local and community support for individuals with multiple chronic conditions can significantly aim prove health -- improve health outcomes. one of the channels is defining the impact bl population. you have to have the information and data to go after those patients and manage them and provide the right support so they can have better outcomes. we serve over a million medicaid recipients. we started as a medicaid program, now we have about 80,000 duals that are enrolled with our program. in addition, about 180,000 of those are age, blind disabled, so those represent a fairly

large, significant patients. partners in this organization to manage these individuals you have to follow them across different providers and delivery systems. we hope that this committee will look hard at better aligning medicare and medicaid services at the patient and community level, allow for shared service in a per-member, per-month management fee that provide risk management. we are a fee for service system. the delivery system must be patient-centered. the important thing to remember is that patients need changes over time, so a system must follow their needs across settings and providers. our community-based medical home and network infrastructure focuses on population management strategies, and we, you know, we aim to achieve the triple aims that we hear a lot in the literature which is not only about improving quality, access and reliability, but reducing the cost of that care. we've learned some key lessons

in north carolina with the dual population, and you've heard it by several of the other testimonies today that they have multiple comorbidities, they use the system more than a lot of other populations, they take a lot of medicines, and so they truly do benefit from a wrap around support at the community level. our total annual budget for community care is about 1% of the total medicaid costs in north carolina. our commitment to quality doesn't just mean better care, it also leads to significant program savings. we ask the analytics company to help us estimate savings, and they've done that, and you've got more information at that in some of the handouts. our trend data's fairly significant in terms of cost and savings. mr. chairman, i'd like to thank you and the members of your subcommittee for the opportunity to be here today and discuss these issues, and we hope we can be a resource to you as you move ahead. >> chair thanks the gentle lady and recognizes mr. bloom for five minutes. >> thank you very much, chairman pitts, ranking member pallone and distinguished members of the

subcommittee. i'm shawn bloom, ceo of the national pace association. on behalf of npa and it members, i'm honored to testify today and appreciate the time you've allotted us. i'd like to focus on three things, very briefly describe pace to you and then offer some suggestions regarding ideas with respect to overcoming pairiers that we've expanded -- identified in expanding pace and three, the ability to expand pace to dually eligible. first and foremost, pace is a fully-integrated model of care that exclusively serves the oldest and sickest subset of the duals. we do so in a manner that is really focused in the communities in sense that we're community-based. our goal is to allow individuals to remain live anything their homes in the community. we reduce nursing home use, reducing hospitalization, and we do that in comprehensive family.

the heartbeat within pace is the concierge team if you want to call it that, in the sense that they are fully-employed staff that on a daily basis are involved in the care, delivery and management of the care of the individuals that we serve. and the third key feature of pace is we're accountable. we're accountable in the sense that we're accountable to government for the payment provided to pace, 90% of which comes from medicare and medicaid, and we're accountable to the families of the people we serve, and i think those have effectively aligned incentives for pace. we are fully accountable for the cost and quality of care that we provide. those that we serve are able to stay out of the hospital and achieve good health care. i think recognizing the effectiveness of pace, a recent report states, quote, fully integrated managed care plans and pace providers offer the best opportunity to improve care coordination across medicare and

medicaid services. authorized by the balanced budget act of 997 -- 1997, we are a tested model of care, and we're interested in finding ways to grow. there have been significant obstacle, and we'd like to talk just a minute about those now. one, symptom of the regulatory -- some of the regulatory requirements focus on the process of care, and those requirements have so far hinlderred growth, innovation and efficiency in how we deliver care. two, fairly significant capital start-up costs and long lead times for a program that accepts full financial risk for a population that is on average is about 300 people. that's a significant undertaking. and our eligibility is very narrow. we serve a very small subset of the duals, 55 years or older, and you have to be nursing home eligible. we believe there's opportunities to expand the availability of pace. so to overcome these barriers we

recommend the following modifications, and this is based op a decade of operational experience under the current regulation. one, allow us to more appropriately use contract community-based physicians. two, take full advantage of the state license capability of nurse practitioners and physician assistants to practice up to their level of standards within the state practice acts, and then without compromising pace participants' receipt of care and assessment, allow more flexibility to personalize the use of teams based on the individual's needs, not using a one size fits all approach. and lastly, allow states -- and this is something of great interest to pace providers right now -- encourage them to see pace as a means by which to pull people out of nursing homes. some of our pace programs without great state support have had the ability to do that. with respect to voluntary demonstrations, we have five ideas with the goal of expanding pace and finding additional

regulatory modifications. one, we'd like to expand eligibility to patients under 55. these are typically physically disabled individuals that we believe would benefit from pace. two, allow high-cost beneficiaries to have access to pace, many of which are not currently nursing home eligible. three, reduce pace organizations' reliance on the pace center which is really the focal point for the organization of services but not necessarily the need to kind of do it all there. fourth, the ability to kind of implement alternative approaches to providing part d drugs. right now we have to implement part d in the benefit of a very small program. and lastly, a demonstration with the objective of increasing medicare-only patients. currently, about 90% of beneficiaries in pace is dual, but we believe it should be applicable to others. if i had more time, i could give

you a great story but, unfortunately, i've run out of time. we appreciate the opportunity to testify before the committee, and as mentioned before pace is a tangible, proven model of care, and we look forward to working with the committee to find ways to expand it reach. thank you very much. >> chair thanks the gentleman, thanks the panel for your opening statements and will now do a round of questioning. the chair recognizes himself for five minutes for that purpose. mr. millwee, as you know, states are generally not informed about hospitalizations or prescription drug information for dual eligibles. how important is medicare data to states in coordinating care and reducing costs associated with dual eligibles? >> well, you're certainly correct. without that data we can't know the health condition of the dual eligible member, and i think it's going to be critical as they, the center for medicare and medicaid coordination forms to provide states with that data

so that we can implement the disease management programs that can be more cost effective if we were to have that data. >> how does texas share in the savings generated through the star plus program with the federal government? how important is it for states to be able to share in the savings generated by integrated care program for duals? >> well, today we don't share in that savings. the program was put in place to serve the population absent the need to sharing that savings, and it's been recent that cms was open again to discussions with the state about potential gain-sharing arrangements. so as we get that medicare data, we believe we can take to cms a proposal that will demonstrate that star plus has created savings not only for the state on the medicaid side, but also for the federal government on the medicare side. so we'll be developing a proposal to take to cms.

>> thank you. mr. bloom, you wanted to talk about the benefits of pace to consumers. please explain your idea to modernize the pace program to include alternative settings of care and why is the facility requirement a burden on the program today? >> yeah. you know, i think historically pace program, if you drive by pace program, you'll see what appears to be a very large day center in which there's space for rehab, social services, perm care and possibly a kitchen. it's been a convenient kind of focal point, but what we've discovered over time is that the ability of pace to grow is somewhat geographically constrained by the center. to the extent we could begin contracting out, for example, for day center services using existing infrastructure down the street would allow us to grow the program without undertaking significant capital cost in setting up a new center every time we want to expand our geographic market. that's but one example, and i could certainly offer you more. >> thank you. ms. hewson, you note in your testimony that the cc and c

could have saved the state of north carolina approximately $1.5 billion between 2007 and 2009. and that 100 president of all -- 100 percent of all medicaid savings stay in the state. how are those shared with your organization? >> at this point they're not shared. it goes back into the medicaid budget. but we have been able to maintain provider fees at 95% of medicare, so in a way that's a way to provide the infrastructure building and sustainability. the money goes back into keeping the medicaid program and dealing with the state budget issues. >> um, your testimony -- do you have more information on what portion of those savings are associated with the 80,000 dual eligibles you serve? >> i can -- i don't have it on hand, but we could certainly get that information for you. we are missing some of the medicare data to be able to tell a complete story on the duals at this point. >> how are the duals enrolled in your program? is that mandatory enrollment?

>> it's voluntary. they typically choose -- they're going to a provider that's participating with us, and often times it's the provider that encourages them to enroll because they can then provide the wrap around support service of the care coordinators. >> are the other 220,000 duals in north carolina mostly served through fee for service, or are there other coordinated care programs in the state to serve those duals? >> we have, i think, two pace programs and several in application, and then there's medicare advantage programs, a few of those. primarily, the rest are in fee for service. >> thank you. mr. egge, in your testimony you note several beneficiary examples where the complexity of the system prevents frail duals from gaining access to available services. you note that a fully-integrated system could alleviate administrative barriers. do you believe such a system is a one size fits all, or do you

believe there could be a variation of models that could be used to help improve beneficiary access to care? >> we think, first of all, there is great variety in the experience of people with alzheimer's that are dementias. our suspicion is that there are going to be some very important common elements that we can use in designing any kind of system. but at this point innovation and looking at different types of approaches and how they work is very appropriate as we learn what's going to work best. >> the chair thanks the gentleman and recognizes the ranking member, mr. pallone, for five minutes for questions. >> thank you, mr. chairman. i wanted to ask initial questions of ms. hewson and also mr. bloom. in medicare we've always maintained the principle that enrollment in managed care plans is voluntary for all medicare men beneficiaries. so let me start with ms.hewson. as i understand it, your plan is

voluntary for medicare beneficiaries. is that correct, and how does that impact the program, that it is voluntary? >> well, it is correct. i think by being voluntary there's probably less enrollment than if it was an opt-out program. but typically, they're enrolling because they want to have assured access to a primary care physician that they go to, and that physician is encouraging them so that they can use the resources of the network that supports the physician in leading their care. >> and then similarly, mr. bloom, i know that the pace association has long believed that it's important to have beneficiaries buy in through voluntary enrollment rather than requiring dual eligibles into pace. did you want to comment on that too? >> yeah. pace, dually eligible beneficiaries have the opportunity to opt in and out of pace, and that has been the long standing track record within the pace program since its intseng. having said that, we have very, very low levels of disenrollment

which aligns the incentive to keep the eye on quality to the beneficiaries. >> i know in a release last week many of the groups interviewed raised concerns about access to care for beneficiaries, particularly individuals who have established relationships with doctors already. and i just want you to know, i support efforts to get duals into better care relationships, but we need to be careful not to take away benefits from the lowest income beneficiaries. let me go back to mr. bloom. we recognize that pace is a specialized program focused on the very medically needy and a fragile population, so it's not intended to say all nine million dual eligibles. but currently pace organizations have an enrollment of about 22,000 people nationwide, and while we don't know exactly how many people could be eligible, we know it's not nine million. it's, obviously, there are a lot more people that you could

serve. you described the desire of pace organizations to expand enrollment. so can you just tell me a little bit about what congress could do to help pace grow and the questions you have about growing too fast? you know that pace has long been supported by bipartisan members of the committee, but we want to make expansions that would work and help improve care for people and not create problems. >> very good question. very good question. first off, i think, as melanie testified earlier it's very important to note that the duals are a very diverse population. this ranges from the young disabled to the elderly that are simply low income to the elderly that are frail to older individuals with intellectual disabilities. it's a very diverse population, and i think based on our experience working with other integrated-type providers, there are different approaches for different populations that we need to look at. in the context of pace, pace is very well designed for a very high-need, very functionally impaired population. the examples i gave earlier with

respect to barriers to growth were really focused on the federal side. i would argue that there are an equal number, if not a greater number, of barriers that exist on the state side. one of which, and i'll just throw it out many this era that we live in today, you can get into a nursing home within a day typically. it often takes you four to six weeks to get into a community-based service program like pace. that is because of the eligibility determination process in most states as well as some other administrative and other obstacles that exist. that is a significant barrier for growth in addition to some kind of state-specific obstacles. >> what do you think, what's your sense of how many additional people could be helped, you know, could go into pace if we, if we made the improvements, you know, if we managed to do things that you're suggesting to change it, to make it for accessible? >> with good question as well. you know, it's probably important to note we are not a health plan.

at the heart of pace is a provider. we fully employ all, i think 90% of our care is provided directly by pace employees, physicians, nurses and the like, so we are not going to be able to scale each individual program on par with the unitedhealth plan or other large commercial health plans. having said that, we do have programs that are as large as 2600 people, we have programs as small as 40. so this is a program that can move large and small, so i think each program is capable of serving several thousand people, but i think you need multiple programs on the ground. >> theoretically, if you had a lot of them, you could handle a lot more people. >> correct. >> but they're going to have to be small. >> the solution is to replicate the availability of the model throughout the country. and some states i think as the other witness testified, state of north carolina has two on the ground, they're filling the entire state with pace. they'll have ten in development in two years. pennsylvania is another state

where almost the entire state's full. state of new jersey within two years will probably have pace available to every senior in the state. it takes a lot of leadership on the state, it takes a long-term vision, and i think it takes a strategic kind of approach for budgeting for medicare long-term care cost which looks beyond the next six to nine months. i think it's possible, and you're seeing it across the states today. >> all right, thank you. >> thank you. >> gentleman's time has expired. let me just ask each of you what we've heard from this panel in various forms is the fact that integrated-type care model is possible, and it does work seemingly every time it's tried. is that something that i understand, although the programs may be different than we've heard about, they all, basically, involved an integrated model of care with someone being responsible for the patient? we'll start with mr. millwee from texas. >> well, i think you're right. there are integrated care models

out there, and none of these are mutually exclusive. there is no best answer. we have the star plus program because it works for us. we also have pace. star plus and pace can coexist, or they work well together. i'm familiar with the north carolina model, and it could work very well for texas in a rural or area where we have star plus in urban areas. so i think the answers are out there. i think states have done a lot of innovative work on this very important issue for us because of the medicaid expenditure and also medicare is going to benefit from that too. so the models are out there. >> yes, mr. bloom. >> yeah. i think that's exactly the answer. i couldn't agree more. the only thing i would add is that if you look at commercial health plans which typically are an approach to integrating care for the duals, they attempt through their contract network to integrate care, but they do a wonderful job, i think, in improving the coordination of care for the most part. but they often will carve out long-term care racing from their payment, and that is the

population we serve. so i think as mr. millwee mentioned, these are programs that work very comply meant ri, albeit for distinct populations and segments of the duals. if done right, and i think texas is a good example, it provides great hope, great opportunity and also provides the right so-called service product for the right population based on their unique needs at a particular point in time. but i do think this is the direction to go, yes. >> mr. egge, obviously, the independence at home is a little bit different, but still it is care coordination, is that not correct? >> that's right. with independence at home and other models, our aim is not to create certain silos just for those with alzheimer's and dementia, but make sure every system is fully dementia capable. we just want to make sure that whatever systems are there, we fully recognize the important of dealing with cognitive impairment in the caregiver. >> i have to say your story

about the gentleman with alzheimer's who also had diabetes who accessed care the best that they could, i mean, that's a tough thing to listen to as a physician, that someone could be exposed to that many gaps in their care in seemingly a caring and competent environment of a major hospital emergency room. that's just tough to hear. ms. hewson? >> i agree with the other panelists. other than i don't think just having integrated care assures that you're doing the right thing. i think you have to have a delivery system that does the right thing, and integrated care just is a way to align the incentives and the reimbursement strategies. in north carolina we are not yet align inside the reimbursement strategy although we're one of the 15 states that will be working with a coordinated office to develop a plan along that line. but, you know, we also have a very strong bias towards the medical home and keeping folks in the community, you know,

delivered primarily through primary care providers is a model that's worked very well for us. >> but primarily, you do have to have -- someone has to be responsible for that patient's care. >> absolutely. >> in my limited view of the world that is, obviously, a physician, a single physician, but nevertheless, somebody has to be accountable for that, for that patient's care on an ongoing basis. what do you make of the fact that the med pack report from this year, the current one, says less than 2% of all duals are enrolled in some type of integrated care program? are they just not counting accurately because they're missing all of you out there, or is it truly that we're only capturing, indeed, a very, very small percentage of the dual eligibles? >> i think -- >> anyone feel free to answer. >> i think medpac is counting when medicaid and medicare are putting funding together it's an integrated approach which the pace model is an example of both medicaid and medicare funding

the care of that individual. our program, which serves over a million, is still a fee for service system, so none of ours are count inside the medpac report. so the delivery system is integrated, the financing is not. >> and what are the barriers to -- or is there a problem with being a fee for service system? does that work well for you? >> well, i think that you have to align the incentives. there's still silos, and there's cost shifting that occurs. so i think aligning the financial strategies and having, you know, medicare and medicaid sharing in those responsibilities, taking care of in this instance the duals is really important. so i think that's why we wanted to be one of those 15 states to develop that integrated model which aligns the integration with financing in addition to delivery. >> do you think more federal control is necessary? >> i mean, could you do your jobs better with more -- >> [inaudible] >> yeah, i think so too. okay, my time's expired.

i'll recognize dr. cassidy for five minutes. >> sir, the star plus program, now, i'm just trying to understand it. ms. bella said that 70% of the costs of dual eligibles in medicaid is related to the custodial -- not custodial, but the long-term care aspect of it. but, and most of the medicaid acute medical expense, if you will, the wrap around for that which medicare does not cover. it seems like your savings are quite substantial if -- and i'm not challenging you, i'm just trying to learn -- that the provider or the medicare organization, managed care organization with which you are contracting the only place they can lower cost is in the medicaid component of the acaught care -- acute care. is that correct? >> that's not the only place they have to manage cost and

achieve effectively better utilization. it's through a number of mechanisms, acute and the long-term care service and support sides. remember, we're talking in star plus about the entire age blind disabled population. it's not just a model for dual eligibles. so about 40-50% are -- >> i see, i see. >> so you have an acute care model of care that's integrated with long-term care, and what the hmo will likely do is leverage those less expensive community-based services to keep them out of the more expensive acute care services which is what we both want to do. we want to chemopeople out of -- keep people out of nursing facilities and hospitals, and sometimes a personal attendant will do that for you. >> so just for a specific example, if you can use your medicare dollar to get a personal attendant for a patient who is prenursing home, if you will, then that can save money

on the medicaid side which would be a much greater expense by using the medicare dollar to pay for a service that would not be available under medicaid, is that kind of a -- >> that's correct. in fact, you might use a medicaid cost to save medicare money on the acute care side. and that's what we need to work through with cms to talk about how we can leverage that to talk about some gain sharing opportunities. >> now, mr. bloom, although you said you're not a health plan, you really do appear to be a staff model hmo. i mean, you're at risk, and you're using your own people. you're the -- >> t an absolute fair statement, and i think we feel that burden every day in some of the requirements we have to shoulder with -- >> let me ask you because i only have a couple of minutes, i don't mean to be rude. so when you speak of going beyond the duals into the medicare only, again, effectively, you're becoming a staff model hmo for medicare patients. >> correct. i would argue, however, that

what we're suggesting is not all medicare patients, but those that we believe are high-need, high-risk and need kind of a medical home. >> now, next i've been fascinated with your -- since dr. melson came from baton rouge to speak to her, and i've read about your program. but i've spoken to folks who criticize it and say really the cost savings are not there. in your testimony you ghei an an -- gave an anecdote that spoke of an individual, but the spread sheet pace has been shown to not save money s. that a fair or unfair criticism? >> i think it's unfair. there has been a definitive government study, two of which, actually, that looked at the medicare cost in pace and found at worst we were budget neutral. on the medicaid side, there has never been a defin ty study of cost. having said that, we continue to see states add today the list of pace states. to the extent that you set your rates appropriately, all of which are senately below nursing

home -- significantly below nurse being home cost, then you will save money. >> now, again, maybe the criticism was that by keeping people out of the nursing home, they're still getting nursing home per diems, that you, again, there are medicaid savings that are not realized. now, again, i'm channeling right now, i'm not -- >> yeah. i think what you're suggesting is, yes, our pace rate includes a component of costs that reflect the full risk that we are assuming for long-term placement. >> correct. >> and there are, you know, roughly on any given day 7-8% of the people are permanently place inside a nursing home at cost or less not to the state. at cost to us, not to the state. so, again -- >> so it's a cohort savings, if you will. >> the state is, literally, in many ways -- >> i'm about out of time, sorry. can you send those two articles you have?

>> yeah. >> now, ms. hewson, you actually have your pediatric population in your ccn, and you have your duals in your ccn. your savings you describe are global. what percentage of those are attributable to the dual eligibles, and that's my last question. >> i would say a greater percentage are due to the age, blind and disabled which include the dual eligibles, so we have over 100,000 straight medicaid. so when we look at savings, we're looking primary hi at the age, blind and disabled that are on medicaid. we're missing some of the hospital data on medicare and part d and part b data. >> you've done a good job of analyzing your data -- thank you. i yield back. >> gentleman's time has expired. the chair recognizes dr. kris chen ten -- christensen for five minutes for the purposes of questions. >> thank you, mr. chairman. i guess i have a pretty broad

question that anyone could answer, probably address it mainly to mr. bloom and ms. hewson. i know that minority figure very disproportionately in alzheimer's cases as well. but some of the most, some of the sickest, um, individuals in medicare and medicaid, of course, are racial and ethnic minorities. so can each of you tell me what percentage of your population are people of color of those that you serve are the referrals proportional to the need? is more outreach needed? and are you experiencing the same positive outcomes and cost savings in the racial and ethnic minority population compared to the others? >> i don't have those numbers with me today. i do know that there is an equal benefit, but i just don't have those numbers with me today. but we'd be glad to get those for you. >> yeah. i can't cite specific statistics, but i'm fairly confident that the majority of

people served by pace are minorities. um, i anecdotally know of many programs where it's nearly 100% based on the neighborhood in which they exist, but i'd be happy to get you those specific figures. yeah. it is a program that is focused on that segment of the population, absolutely. >> we serve all the minority medicaid population in the state. we have all the safety net providers participating in our program, and in the medical home models when you actually look at some the quality performance metrics, um, have been able to really show improvement in disparities because if you're providing best care for die weets, you're doing it across the board for all your patients. so that's been a very rewarding quality metric that we've been tracking. i'll be glad to send you more information if you like. >> thanks. i know that they're there, we just weren't hearing about them,

and i would expect that the models that you're talking about would be improving the care across the board. mr. bloom, um, have you, um, had occasion to look at or been asked to look at the pace model in any of the territories, and if you know or do you foresee any barriers that would prevent you from setting up one of the pace programs in one of the offshore areas? >> we did have some official and very preliminary discussions with puerto rico a number of years ago. they didn't progress on anything constructive after that, however. having said that, we're always open, and i'm not aware of any barriers of expanding pace into any of the territories, and actually would argue what little i know about the program, i think it would be very mutually beneficial. >> it sounded that way to me too. everybody's talked about, you know, the need for your programs and the fact that your programs are really community-based.

one of the amendments that i was involved in the afford be bl care act -- affordable care act had to do with grants for community health workers. and i was just curious as to whether you utilize them in your programs and for mr. egge, um, do you think that the community health worker would be a program that would be of assistance in the care giving even as the alternate care giver in the alzheimer's situation? >> yes. we have certainly found that's the case. services are provide inside the community by social workers and by others can be tremendously important, especially at the early stages of also heymer's and dementias where people are still able to live quite successfully in the community. if they have that kind of support, we've found that's extremely important to well become both for the individual and for their care gives as well. >> anybody else use community health workers? >> in north carolina --

>> [inaudible] >> and with the self-management of chronic disease we engage community health advisers that actually live in the community that they're doing the chronic self-management program, so they've been very, very beneficial. >> thank you. um, i'm always concerned that the issue of quality of health care is often pitted against whether health care costs as you're bundling and trying to bring these programs together, do you see any problems in moving forward to insure that the dual eligible health care quality and access in the health outcomes are not pitted against or held hostage to the health care cost containment issues? >> well, and star plus, we believe that critical to that is the external quality review

organization where we aren't dependent upon just the state's data, we're not didn't upon the hmo data, but have an independent source to verify. sure, the program is cost effective, but is it providing high quality service or access to services where they should be? so we belief that is critical. and -- believe that is critical. and as we learn more about quality and its importance on the program to change the program to respond to those concerns. >> anyone else? this is my last question. >> i would simply say in pace we are, as i mentioned, we operate at full financial risk for all medicare and medicaid and medically necessary services as the provider with no carveout, no co-pay, no deductible limitations. we are immensely motivated and incentivized to provide good health outcomes. as the provider of care and the bearer of risk, at the end of the day we're accountable, and it is truly in our best interest to get out in front of

individual's care needs, so that is what perfectly aligns the incentives within pace. >> gentle lady's time has expired. chair now recognize it is gentleman from virginia for five minutes. >> thank you, mr. chairman. and i yield my time to you, mr. chairman. >> that's very kind of you. [laughter] let me just ask you, mr. mill we, since we have a little additional time, you have talked in your testimony about the service coordinators, but some people say, well, you're adding personnel, so you're going to be adding cost. how does that work? how do you justify that? >> well, some might speculate that would increase cost, but actually that service coordinator, remember, that service coordinator is a clinical person who's working with that client, so that clinical service coordinator is actually a dollar saver in many ways because they're identify what that patient needs and how to get that for them. so that we can have those early interventions so we don't have the hospitalizations or the nursing facility admits or the emergency department visits.

so they literally pay for themselves time and time again. by having that intervention and that, in a way, advocate to make sure the people who need those services whether they're medicaid or medicare, that they're getting those things. >> so you have demonstrable savings you can point to in your program in texas? >> absolutely. absolutely. >> and do you think that works in texas? do you think it would transition or translate to work on a national scale? >> well, i think it could work in other states. i think the model is transferable. i don't think that people who are sick in texas are any different that much really than people in washington or california, but i think that they could -- the model is completely transferable to other states. >> do you have, can you share data with the committee not necessarily right now, but is there data you can share with us as to the actual dollar figures that can be saved? >> we certainly can. we can provide the committee

with that. >> and how do you get around hipaa? >> well, we wouldn't provide you with client-specific data. we would provide you with the identified aggregate information that -- >> but more generally, how do the service coordinators themselves, how do they navigate the system under the constraints of hipaa? this. >> well, they're working with the client as an agent of the client. so they, they can -- >> so they're fully integrated -- >> they're fully integrated into it, so they're not really burdened by hipaa. >> generally, how do they monitor the day-to-day health of a patient? is it telephonic or how do they do it? >> it's not high-tech, it's high touch. it's people talking to people, picking up the phone and talking to that person, finding out how they're doing. we do use electronic health records a lot of the hmos are moving to that, but it really comes down to a relationship. picking up the phone and calling to see what they need. >> and, you know, that's what's

so critical, somebody caring about someone else. and mr. egge's story that still haunts me, you know, somebody caring about someone else, that wouldn't be happening. >> right. >> i'm going to yield back the balance of my time and recognize the gentleman from massachusetts for five minutes for the purpose of questions. >> thank you. thank you, chairman burgess, very much. mr. egge, you did a good job in highlighting the important place for alzheimer's patients in this discussion. more than 22% of seniors with alzheimer's disease qualify for both medicare and medicaid coverage. often these seniors rely on medicaid to pay for expensive nursing home services since alzheimer's patients can require constant attention. nursing home care for patients and alzheimer's can, ultimately, wind up being three times as expensive as nursing home care for those without it. as a result of those costly

nursing home stays, in 2004 the average medicaid payment for a medicare beneficiary over 65 with alzheimer's was nine times larger than the average medicaid payment for other beneficiaries in the same group. as such, seniors with alzheimer's represent an extremely vulnerable portion of the dually-eligible population. i also have a particular interest in alzheimer's sin my mother pass -- since my mother passed away from it which is why i created the alzheimer's caucus with congressman smith from new jersey 13 years ago. i've seen it, you know, firsthand, and i know the incredible commitment that our family had to make to keep my mother at home during that entire period of time. one ongoing problem is the disconnect between those in the medical office seeing patients and those in the home caring for them.

in your testimony, mr. egge, you mentioned the bill that dr. burgess and be i have introduced, the hope for alzheimer's act, which would encourage doctors the to diagnose alzheimer's patients earlier. after a diagnosis is made t-bill that allows caregivers to be included in a conversation between doctors and patients to help plan for the disease and treatments. that conversation would give caregivers and doctors the reason to be working together because it will be the caregiver who will help the patient remember their diabetes medication and avoid ending up in a hospital. in your testimony you talked about john who suffered from diabetes but because of his alzheimer's disease found it difficult to follow his doctor's instructions. as a result, he ended up in the emergency room. and the doctors there were unaware of the alzheimer's

disease which struggled, which created a struggle to provide further care. can you, mr. egge, explain how a formal and documented diagnosis of alzheimer's will help to improve care amongst different providers and settings? >> we've found from our experience that the documentation of alzheimer's is critical to coordinated care. definitely. so the reason it matters is because you cannot provide appropriate care if you don't know dementia exists. >> [inaudible] >> of course, to how you handle instructions or compliance, for instance, whether it can be directed to the -- [inaudible] >> perhaps to a surrogate when not. so in that sense it's fundamental. it's also fundamental when we think about documentation of the condition, the medical record because it follows that person with a well functioning system from setting to setting. we know that care transitions are one of the more risky

moments for those with alzheimer's because of all the problems that can happen especially in a hospital setting and others as they transition in and out. so it's critical to this community that there is that documentation, diagnosis then documentation. >> so this is an amazing number but just one disease, alzheimer's, last year cost the federal government $130 million out of medicare and medicaid. just an astounding number. it's about a quarter of the defense budget, and that's just one disease, alzheimer's. how will the hope act support caregivers and help provide them access to the resources they need to care for their loved ones to keep them in home and, as a result, keep down the cost to the program? >> that's a great question. one element of the hope act in particular is ground breaking in that it provides for the first time for the health care provider to have consultations with the caregiver whether or

not the individuals with alzheimer's or the dementia is present which is extremely important because sometimes it's most appropriate for the conversation to happen in a number of different ways. so we applaud that. that's great to be built on the recognition of how important the caregiver is for these individuals. >> thank you, mr. egge. you know. by the time, it's 130 billion now, by the time all the baby boomers have it, the bill for alzheimer's will equal the defense budget. it'll be about 500 or $600 billion a year. so i think it's also calling upon us to increase the nih research business so that we can find a cure because, ultimately, we can't balance the budget if we have a problem like this that is on the horizon. thank you, mr. chairman, so much. >> gentleman's time has expired and, actually, that concludes today's hearing. i remind members they have ten business day toss submit questions for the record -- days to submit questions for the record, and i ask the