i've been scribbling all morning. i'm happy to be. i'm not the students -- >> we will be the last few minutes of this event to go live now to the house energy and commerce subcommittee, hearing on health and the impact of the health care law on medicaid advantage programs. medicare beneficiaries have until december 7 to change the health plan as a part of the annual enrollment opportunity. a committee chair is congressman joe pitt. ..

a high rate of satisfaction, and approximately 28% of medicare beneficiaries have chosen to participate in medicare advantage. the affordable care act, aca has noted in a july 4, 2012 congress shall budget office report cut $716 billion from medicare, including 308 billion from medicare advantage of load. in april of 2010, the medicare act projected that these payment cuts would result in an

enrollment decrease in the program in as much as 50%. the aca also required cms effective january 1, 2012, to provide quality bonus payments to the plans that achieve four, 4.5 and five stars on a five-star quality rating system developed by cms. rather than implemented a bonus structure lead out in the law which would have led to these cuts going into effect in 2012. cms announced in november of 2010 that it would conduct a nationwide demonstration. the m.a. quality demonstration from 2012 through 2014 to test and alternative method for calculating and a wording bonuses. the general accountability office, the gal, in response to a request by senator orrin hatch noted that the demonstration

projects designed need, quite made it unlikely that the demonstrations would produce meaningful results, "-end-double-quote, and recommended that hhs canceled the demonstration. it also stated him a quote, we remain concerned about the agencies legal authority to undertake the demonstration. with a price tag of $8.35 billion over ten years. the medicare actuary noted that this demonstration would offset more than one third of the reduction in the payments projected to occur under aca from 2012 to 2014. effectively masking the first wave of aca mandated cuts until next year. a recent report by the kaiser family foundation warned that more than half a million beneficiaries may have to switch to another m.a. plan or return

to the fee-for-service medicare in 2014 as a result of the aca. in addition to the plant availability, questions are being raised about the possibility of rising costs and limited provider networks in the future as more aca mandated cuts go into effect. i would like to thank the witnesses for being here today and i look forward to the testimony regarding how the aca will impact of the medicare advantage program. thank you and i will yield the remainder of my time to representative burgess. >> thank you for calling the hearing this morning. we see the headlines and everything going wrong in healthcare. but sometimes we forget that there are some things that actually are going okay. there are things this committee and previous congresses have worked on, and that's one of the things we are going to be

discussing this morning. sometimes we are so busy triaged and that we don't allow ourselves the luxury of things working as intended. my opinion is medicare advantage is working, and it's important to hold hearings like this to learn from those successes and see where we can build upon those successes and where the potential threats that are undermining the benefits and services that now over 25% of seniors are experiencing and how those might be threatened. medicare advantage allows integrated care coordination to community font to bring in for medicare. athe plans are lower in cost. they are bringing management to the care coordination to patients lives and encouraging wellness activities and actually using physicians to the maximum ability of their license rather than always referring to a specialist. there are those conditions that can be managed by general interest to family practice

physicians, and we ought to encourage that and not punish them. as money is taken into the system and plans are forced to eliminate services that meet them such a good deal for seniors, we have to keep a watchful eye. we are all hearing about people wanting to be able to keep their doctor. will people keep the benefits they now have a medicare advantage. the harm of the cut is compounded when the money isn't reinvested in the medicare program. we've heard that before. you can't count the money that you take out of medicare and counter that began as a savings when you are not investing the money in part a or b. one change that has been bipartisan mr. gonzález that used to be part of the committee was allowing a return -- offered a bill that would allow seniors to switch plans between and a plans in the first three months of the year right after the open

enrollment for go. that was a reasonable suggestion of his at the time and one i think the committee could support. mr. chairman, i would also like to -- i had some time to go through the archives and i encountered a very brilliant and insightful opinion piece that was printed in the wall street times of june, 2012 and i would like to offer for the record. >> without objection, so ordered. >> the gentleman yields back and now the chair recognizes the member of the health subcommittee for an opening statement. >> thank you, chairman and into the witnesses for being here to share your expertise. today i am pleased we have the opportunity to talk about medicare and the positive reform introduced by the affordable care act to medicare advantage. while the majority of the 52 million beneficiaries are in the traditionally federally administered federal program, medicare advantage or m.a.

offers beneficiaries an alternative option to receive benefits through private health plans. 15 million people, or 29% of all medicare beneficiaries, or enrolled in m.a. plans as of september, 2013. an increase of 20% since 2010. the aca included reforms to medicare advantage payments policies and the number of benefits and protections for beneficiaries go through speech 11 and a traditional medicare. for example medicare must cover wellness visits and preventive services with no copayments were coinsurance. the aca insures the m.a. plans beginning in 2014 spend at least 85 cents of every dollar received on premiums on actual care. beneficiaries will also receive discounts on their medications when they reach the coverage gap or the doughnut hole in medicare part the. these counts will grow over the next several years until the gap is closed. in addition, the aca aims to

provide the quality of m.a. plans to improve the quality of m.a. plans by rewording plans to deliver high-quality plans with bonus payments incentivizing quality patient care over quantity of services provided is the key to improving health care outcomes and reducing waste in the rising cliffs of healthcare. the aca will also bring m.a. payments more in line with traditional medicare payments. on average, medicare has been bringing more per and will lead to these private m.a. plans than the cost of care and traditional medicare. by reducing the payments over time, there will be greater. he between m.a. and traditional payments resulting in savings that will benefit enrollees and help secure the solvency in the medicare trust fund for a longer appear co. of time. now critics of these payment reforms predicted that m.a. cost to enrollees would rise and the

provider network of plan choices with the decrease in m.a. enrollment for the drop. changes in provider participation, pricing and coverage occur every year as an inherent part of decision-making including before the passage and that's why we provided the tools to end scheuer the seniors are protected from potential changes private plans might make. in addition they continue to have the choice that suits their individual choice needs and continues to maintain the ability of these code ability to pick a traditional medicare. i look forward to hearing from the witnesses on recent trends on medicare advantage and i think we can agree to work as a committee needs to continue beyond the improvements we've made in the aca. to continue to strengthen the program for seniors is critical. we can't return to the ways before the affordable care act. we must move our health care system to one of quality and efficiency in all of medicare. so thank you again, mr. chairman. and i yield back the balance of

my time to. >> the chair thanks the gentleman and recognize the rece chair of the full committee mr. upton for five minutes to. >> every day we are hearing from folks and families across the country about how the president told care bill has wreck havoc on their own healthcare coverage with millions receiving cancellation notices, millions more are facing premium rate shock and others to wonder if

the future of the program somewhat say maybe government, the future of the program and could put coverage at risk for thousands of beneficiaries in 2014 and many more in the future. according to the report by the kaiser family foundation, more than half a million beneficiaries would lose their existing medicare beneficiary plan next year which would then force those seniors and disabled americans to switch their

current plan or return to a traditional fee-for-service plan. more than a hundred thousand beneficiaries enrolled in medicare advantage and 2013 201l not be able to enroll in a medicare advantage plan at all in 2014. likewise, for thousands of americans the most vulnerable if you like your doctor you will be able to keep your doctor is another broken promise. reports confirm that many medicare advantage enrollees will see a change in the provider networks as a result of the new law. so empty promises may be of little concern for some, but they have real consequences for the americans who expect us to do no harm. americans deserve to know why their existing coverage is changing when they are promised otherwise come into this morning will be an important opportunity to get some answers from a number of experts. we appreciate you being here, and i yield over to the doctor area.

>> thank you, mr. chairman. over 37,000 of my constituents in louisiana or enrolled in medicare advantage plans. m.a. offer high-quality care and additional benefits more than a traditional medicare, yet despite m.a. blank popularity, m.a. has challenges. the healthcare law cuts medicare advantage by over $200 million. now i'm a doctor. when i see the people that come to see me or having this many cuts in programs that cover them come intuitively common sense tells you that they would have increased problems finding a doctor and higher premiums and higher copayments, fewer benefits and plan choices. even now with only 20% of the cuts implemented, there are reports of these problems already. i come along with the congressman and 50 other members of congress, have found a letter opposing other cuts to the m.a. program. i urge my colleagues on the committee to make the same

commitments to their constituents have come to rely upon medicare advantage and without i would yield. >> will you yield me back the balance? >> i yield my time back to the chairman. >> i yield to mr. shimkus. >> i thank the chairman for yielding. look, medicare advantage has been around since what? the late '80s? it was medicare plus choice, then it was medicare advantage. but the word advantage means exactly what it says, it's an advantage. it's kind of interesting that the democrats that created this affordable care act demanded that the coverage that policies have minimum coverage requirements, and that's why the cost of so many of the policies have gone up and people have been notified they are not going to be able to keep those policies january 1 of 2014

because they are demanded to include so many additional claims. why would medicare advantage not cost more as there are more things and more provisions in the medicare and physical examinations, nurse checking up to make sure the patient got the medications filled and returned for their appointment in a timely follow-up. succumbing to gut the program -- and that's what this is all about. i'm looking forward to the witnesses have to say about it. but it makes no sense to cut the program that 29% of medicare beneficiaries have chosen and it's gone up over the years each and every year. i yield back the. >> the chair now recognizes the ranking member, the emeritus mr. dingell for five minutes for an opening statement. >> i commend you for this hearing. my questions will require a yes or no answer.

>> we are not questions yet. >> i don't have an opening statement. thank you mr. chairman. >> anyone else on your side. the opening statements have been made by the members. i watch her as the panel of the five witnesses. the first is mr. douglas holtz-eakin, president of the american action for him. mr. joe baker the president for the american right center to adopt babies to doctor bob margolis, ceo health partners and cochair man of the health partners. ms. marsha gold, senior fellow at the mathematica policy research and jon kaplan managing rector of the boston consulting group. written testimony will be made part of the record and you will have five minutes to summarize your testimony. and at this time, the chair recognizes mr. holtz-eakin for an opening statement.

>> thank you mr. chairman and members of the committee for appearing today. let me take this opportunity to emphasize a few points i made in my opening statement. as it has been pointed out by the chairman and others in opening statements, medicare advantage is a valuable and popular part of medicare with nearly 30% of beneficiaries enrolled in it, increasing enrollment each year. and it does provide extra services and innovative approaches to healthcare in the medicaid program. it disproportionately serves lover income beneficiaries and minorities, and it has been -- it has been a program of choice for them but most importantly, medicare advantage is not fee-for-service medicine unless it represents an important opportunity to move away from the practice of medicine that has proven costly and that the words volume over quality and the american healthcare system. unfortunately, medicare advantage is under a fourfold funding reduction of provisions in the affordable care act and then others more recently.

the first stems from reductions in the fee-for-service spending per se. the second body altercation then tv good benchmark for the fee-for-service and accounting. third, the implications of the health insurance pack that will come online in 2014 which will affect many m.a. plans and further act as a pressure on the ability to provide benefits and forth in the recent requirement cms provider changes in the coding intensity for medicare advantage. the result of the changes are inevitable. first will be fewer plans. estimates range from 60 to 140 in 2014. there are reports of 10,000 cancellation notices and 50,000 in the state of new jersey and these all represent further violations of the pledge if you like your health insurance you can keep it under the affordable care act. there will be fewer enrollees and there will be up to 5 million fewer by 2019 when the

cuts are fully implemented. and these reductions are disproportionately borne by low-income americans. estimates are 75% of the impact hit to those making less than $34,200. the next step for the plans that do survive is to pass along these reductions in the form of either higher cost sharing or benefits or more limited networks that provide benefits with fewer choices. these are not the voluntary decisions of insurers. they are the consequence of the law that limits their ability to provide options to beneficiari beneficiaries. going forward, i would emphasize that it's important to preserve this steppingstone to coordinated care and the better practice of medicine and medicare and that it would be undesirable for the congress to repeat the practice of using medicare advantage as a funding source for the further expansions of other program initiatives. this is a valuable program that

has proven on the ground to provide high-quality care, innovative approaches to medicine and it's a popular choice of many of the beneficiaries for the further reductions in the undesirable policy step. thank you and i look forward to answering your questions. >> that gentle man mr. baker for five minutes for an opening statement. >> thank you, chairman and ranking member parliament and a distinguishedistinguished membee subcommittee. medicare is a national profit that works to provide access to affordable care for older adults and people with disabilities and we thank you for the opportunity to testify on the medicare advantage plan. each year we cancel the lead cocounsel people about topics ranging from enrolling in the plan to appealing the d- claim it. we find medicare advantage are good options for some but not all was medicare. the callers are satisfied with the plan and their inquiries are

resolved. others buy the plan are challenging. the callers may struggle to resolve billing issues, cope with coverage denials, compare their details and other issues. in particular we observe the people choosing among the medicare advantage plans sometimes as a dizzy experience. we urge people to revisit the plan's coverage as annual changes to plan benefits, cost sharing, provider networks and other coverage are common place each year yet research suggests inertia is widespread. there are too many plans into variables and meaningful choices among the plans. it offers a blueprint for constructing the system with hospitals and other providers are paid accordingly according to the quality of care that they provide. medicare is that e.g. greater for these reforms. as such it includes a set of policies designed to make the medicare advantage system more

efficient and to enhance the plan quality. alongside the physicians, hospital and other healthcare providers medicare advantage plans have been and should be playing an important role in the transformation. medicare advantage included in the aca are intended to secure the high-value care. in other words, better quality at a lower price. recent changes to m.a. by the aca have strengthened the program in addition to improving medicare's overall financial outlook the aca through added benefits they are a cost sharing and improved plan quality. for instance, the aca expand coverage for the preventive services and prohibits medicare advantage plans from charging the original medicare for renal dialysis, chemotherapy and skilled nursing facility stays and requires the plans spend 85% of the premiums and federal payments on the patient care. these and other changes that

would be aca has brought should be preserved. it's important to note that the aca this occurred largely from the medicare advantage payments producing the positive for the medicare program. benefiting both current and future beneficiaries. improved cost efficiency and medicare translates into real progress for older adults and people with medicare and people with disabilities. for example, in 2014, the part b. premium remained at the level amounting to 194 per month. while many predicted the changes to medicare advantage would lead to the widespread disruption, we have not seen that among our clients that we see generally. the premiums benefit levels and availability of the plans remain relatively stable. in fact the medicare advantage market is now better and more robust for consumers and enrollment continues to be on

the rise. while there appears to be an increased incidence of medicare advantage provider network this year we must stress that we see this every year changing provider networks are an inherent risk of any managed care system. our advice to the medicare beneficiaries remain the same. people can switch to another medicare advantage plan or back to original medicare into traditional medicare during the open enrollment took out which is occurring right now in any situation where the current plan doesn't meet their needs. in closing, we believe congress should do more to simplify plans for the coverage rules for people with medicare advantage. we recommend the notice regarding annual plan changes regarding changes on the plan networks and further streamline and standardize plans improving the appeal system and adequately funding independent counseling resources like this ship program. we also urge congress to expand the range of supplemental

options available to people with original medicare for those cases where medicare advantage plans are not the best fit for beneficiaries needs and also to allow people to go back and forth between the medicare advantage plan and the program with more facility. we thank you for the opportunity to testify today. >> we now recognize doctor margolis for a summary of the opening statement. >> thank you esteemed committee members for the invitation to address you today. i come to address the merits of medicare advantage having as many years of experience in the program and can tell you without any hesitation that it is the most effective federal program giving seniors to high quality care through coordination and measurement of quality and outcomes. i come wearing multiple hats as my 40 years in healthcare policy have taken me many directions, the california association of

physician groups which i chaired in which represents over 90% of all coordinated to patients in california. my board representation in the chairmanship which has proven through extensive measurement and transparency that the quality and measurement that occurs in medicare advantage is superior to the fee-for-service original alternatives. as you mentioned, my role as healthcare partners, but recently as a doctor that practiced for over 20 years in the urban inner-city hospitals in los angeles serving primarily seniors and other disadvantaged patients. when i saw that without a quick vacation the fee-for-service mentality of the original medicare or as we like to refer to a t. for volume is not coordinating care for seniors.

seniors that have multiple chronic diseases who are vulnerable and especially those that are poor and with less and fewer resources need an ideal system that helps with great information and a physician advisor to help them navigate through a very difficult and complex health-care system and manages them longitudinally across time. as a physician i can tell you every physician dino manages his or her patients with a great desire to do the best outcome that doesn't have the infrastructure to coordinate and the resources to follow that patient longitudinally through their healthcare needs. if that is the one advantage that coordinated care population health managed care, however you choose to name it, population health for those that perhaps are unfamiliar with the term really is having patients select

a doctor through a network, through a health plan and then having that organization take the responsibility through a per member, per month for the total care of that patient is totally changes the incentives and the incentives drive behaviors. the behavior within a coordinated care program are one of false promotion, d. for her and delay chronic disease through much more intervention, disease management, pharmacy management, making sure the patients get their visits and households -- health care programs so that we explain how that works in our organization which is relatively large. we care for over 250,000 medicare advantage patients through that you have and those in the affiliate and employed physicians in five different states. and the way that works is through great information technology which is a big

investment, but an important investment that allows us now to segment the population into areas of need and these fine programs specifically to those areas of need. so for instance there are home care programs for those most honorable but have trouble getting into the doctor's office and avoid buying one calls into trips to the emergency room. there are comprehensive care clinics for those that have very complex diseases where there is individual care plans monitored by the team, and i have to say that without a quick vacation, health care best delivered is a team sport and it's great to have a physician in the center of the team but having the care managers and disease management and the social workers, having dietitians and home care capabilities is a key component of making it an effective system, so i ask you without any equivocation please, continue to support m.a. strengthen it, help it grow to

support special needs programs, supports moving the duel into medicare advantage and into a coworker needed away with the states. ..

my testimony today makes three points that i hope will inform the congressional debate on the medicare advantage program today. my indie band of findings i should say in general are closely aligned with the positions and opinions expressed by medpac. first and foremost, and we for this and a few other places here today, the m.a. program is strong with rising enrollment and widespread plant availability that's expected to continue through 2014, despite the concerns that the cutbacks in thing that would discourage plan participation or make plans less attractive. there's 50 million people in the program, 29% of all beneficiaries in all time high. although it varies a lot across the country and i think it's important to recognize that health is local and the circumstances are different, the kind of care dr. margolis mentioned happens in some places and not others.

second, despite concerns over plan terminations in 2014 there are almost as many new plans injuring in 2014 as terminating come and since the aca was enacted, average in premium to enrollees has declined, and they will still be lower in 2014 than they were in 2010. exit and entry are essential characteristics of a competitive the market. medicare beneficiaries today have an average of 18 medicare advantage choices, as well as options as well as options to stay in the traditional medicare program and with or without a supplement. medicare beneficiaries can keep your plan. it's called medicare, whether you're in medicare advantage or medicare traditional. second of it's difficult to see the rationale on a national basis for paying private players for more than medicare currently spent on the traditional program. particularly when there's so much concerned with the deficit and debt. medicare is historically --

payments below or equal to what medicare would expect to be in the traditional program for beneficiaries who enroll in the plan. this changed in 2003, and by 2009, payments were considerably higher than medicare would've paid for the same beneficiaries if they were in the traditional program. this cause every beneficiary more in added part b premiums and provide a little incentives for m.a. plans to become more efficient. when i examined the 2009 plan data i found wide variation in m.a. plans cost relative to traditional medicare spending, even controlling for plan levels, plan types and payment levels. that suggest there was room for a lot more efficiency in the program, variable across plants. and the policy changes that were in the aca reflect recommendations that congress is on medicare payment advisory commission has advocated for years. third, many of the concerns

raised about 2014 offerings either to my mind from what i've looked at are not consistent with evidence or inherent part of the way competitive markets work. and they are already addressed by protections in place in the program. only 5% of beneficiaries, of enrollees in 2013 will have to shift plants. most will be able to stay in the same type of plan. the average premium was down 21% between 2010-2013, for a beneficiary, and premiums stable in 2014. some beneficiaries will see their premiums rise in 2014, but they will still be paying less than 2010. and the historical patterns hold, some of the beneficiaries will switch around so that they can get a better deal. clearly, payment reductions can encourage plans from

participating -- discourage plans to to spread in medicare advantage, but this doesn't yet appear to be an issue. medicare has a number of protections for this such as network adequacy and quality standards required notice of change in plans and other means. because in a choices voluntary there also is the option to return to traditional medicare. in its 2013 march report to congress, medpac concluded that the payment changes under the affordable care act have improved the efficiency of the program and may have encouraged plants to respond by enhancing quality. all the while continuincontinuin g to increase in may enrollment through plans and benefit packages that beneficiaries find attractive. i believe my analysis and testimony a consistent with medpac's conclusion. thank you for your time and i look forward to any questions. >> the chair thanks the generally. now recognize mr. kaplan, five minutes for a summary of his opening statement.

>> chairman pitts, ranking member alone and members of the subcommittee, thank you for the opportunity to testify today. minus jon kaplan and i'm senior partner of the boston consulting group. i have a healthier background of over 25 years working closely with both nonprofit and for-profit health care entities throughout the entire health care industry. earlier this year i led a team that analyzed differences in health outcomes between patients enrolled in traditional medicare and those enrolled in private medicare advantage health plans. we found that patients enrolled in the medicare advantage plans have better health outcomes than those participating in traditional medicare. there are three key findings from our research. first, the m.a. patient under sample receipt higher levels of recommended preventive care, and have fewer disease specific complications. second, during acute episode required hospitalization, the patients in the m.a. plans spent

almost 20% less time in the hospital than those in traditional medicare. in addition they have less reignition into the hospital. finally, the percentage of people who died in the year we studied was substantially higher in the traditional medicare sample than those in the medicare advantage of sample. this is a striking finding, and one that we hope to explore further in a longitudinal multi-your study. our study did not directly address the causes of these differences. in my experience, however, the key factor is m.a. itself and how the plans are organized and managed. first, these plants alive financial incentives with clinical best practices. second, the recruit the most effective provider and include only those who practice high quality medicine. third, they put a strong emphasis on active care management and invest resources and prevention to keep patients healthy, stable and out of the hospital.

there are many indications in our study that these three mechanisms are responsible for the better health outcomes of the m.a. patient. take the example of diabetes. to clinical standards for diabetes care our frequent hb h. one seed testing and rigorous cleaning for kidney disease. our data show that the m.a. sample had substantially higher number of both tests than the traditional medicare sample. this stronger focus on prevention helps keep patients healthy and avoid the need for a high destructive and expensive acute-care intervention. for example, we found that diabetic patients in m.a. have dramatically less foot ulcers and applications than those patients in traditional medicare. align incentives and active care management also help explain lower utilization rates, take the example of emergency room visits. in our traditional medicare match sample, but four out of 10 of the patients visit the emergency room at least once per

year. for many portions of medicare advantage, this figure dropped to around two out of 10. our last -- one last find issue. among the three types of m.a. plans that we studied, the very best health outcomes were for those patients in the capitated m.a. plan. findings show that decapitation is actually effective at preventive medicine and active care coordination. let me conclude by suggesting some implications of our study for health policy. in my opinion medicare advantage plans are an extreme example of a successful public-private partnership. these plans represent an integrated care delivery model that use effective provider incentives, real-time clinical information and care coordination capabilities to improve quality and lower costs. in my opinion, federal policy should be supporting and not discouraging more medicare patients to enroll in m.a.

their health outcomes and the entire u.s. health care system are likely to be better as a result. thank you for inviting me to speak. i look forward to answering your questions. >> the chair thanks the gentleman. that concludes the summaries. before we go to questioning i would like to ask consent to submit for the record a letter from the 60 plus association. without objections ordered. i will now begin the questioning, recognize myself for five minutes for that purpose. mr. holtz-eakin, since passage of the president's health care plan, millions of americans and their families have received insurance cancellation notices. do you think medicare advantage maybe obama cares next victim? and if so, what might beneficiaries in pennsylvania expect over the coming years in terms of plan choices, costs, forgone benefit offerings and provider networks? >> thank you, mr. chairman.

indeed, i am concerned about the future of medicare advantage. as i said in my opening statement. the work we've done on the implications of aca cuts, for example, in pennsylvania would suggest that in 2014 there would be an average loss of benefit, beneficiary of about $2200, that this is about a 19% reduction in those benefits. and that we would see a decline in -- about 113,000 pennsylvanians. those numbers for 2014 are of concern, but i am more troubled by the trajectory over the succeeding five years of the full cuts under the affordable care act as to whether medicare advantage will remain a viable option within the medicare program and deliver the comprehensive benefits. i just want to echo the statements that we heard in many of the opening remarks. the medicare population is so

different than when medicare was originated. it is now a population that has multiple chronic conditions and comorbidities and it requires a coordinator approach to care. that's the route to both better health and a financial future for medicare as a whole. medicare advantage i think is an important steppingstone. >> thank you. dr. margolis, as you know this committee has been committed in a bipartisan form to address access concerns in part by improving the flawed position for the for participating medicare doctors. however, i believe medicare advantage plays a key role in ensuring the physician and patient relationship for seniors and the disabled. what impact, in your opinion, was the permanent solution to the flawed formula have on the viability of the medicaid -- medicare advantage program. >> thank you, mr. pitts. there's no question that the

cuts that are proposed and coming up on medicare advantage, and i would specifically stress the rescaling of the risk adjustment factor which really was a key component in what i believe is making it a positive incentive to care for the sick and fragile patient was to be paid based on the acuity of the patient. and so the potential of reducing significantly payments relative to the most expensive patients starts to slip back into that possibility that the people will not be able to gain care if they are really sick. and that is a potential, serious problem. and i would also like to say that medicare advantage should not, in our opinion, be the pay for foreign sgr fix. i think as you for from all the other witnesses that it is

extremely important for the seniors of our country, 10,000 more of which are inching medicare everyday to be able to access good coordinated care, and especially for that 5% of patients that are eating up 52% of all health care dollars, the sickest and most fragile patients, to be able to access the doctors of their choice and get the care they need. >> here's a question for the panel. medicare advantage has a proven record of success and is popular with seniors because it provides better services, higher quality of care and increase a care coordination. to ensure the program's viability, i believe there are several existing reform proposals for medicare advantage that merit further discussion and feedback. concepts like overlaying a value-based insurance design over the existing medicare advantage program to address a substantial variation and value across health care services and providers. bipartisan policies such as those introduced by

representative t. of pennsylvania that would restore choice of medicare advantage beneficiaries and not limit their options to traditional ffs or the existing plants. improvements to the program special needs plans, improvements to the programs risk adjustment framework that would improve accuracy and payments and account for chronic condition. what reforms could we consider that would ensure the viability of the program in promoting maximum value and high quality, coordinated care for medicare beneficiaries? we will start with you, mr. kaplan. >> first of all, thank you, mr. chairman. the best way i would answer that question is that there are a lot of successes that already in place in medicare advantage. i think everybody on the panel tonight and today has said that medicare advantage is a program to look at with some very positive reactions. what i think happens when a new in the medicare advantage program is that it allows for more of a freedom of choice

among the different competitors in their being the insurance companies that are offering those programs, and allows for the members to choose to go into those programs to navigate themselves around to different programs to make a choice and to find what best meets their needs. that sort of freedom of choice has allowed for the program to prosper based on what they offer to the members who sign up for the programs as opposed to mandating things in different ways. so the competitive model amongst the different insurance companies are offering different programs in different states, i think that strong model has allowed for the growth of the program to be so successful and effective at practicing the medical care that we are all talking about and we want to do for these senior populations. >> i'll give you this question and submitted in writing to you if you could respond for the record. the chair now recognizes the ranking member for five minutes. >> thank you, mr. chairman.

i'm going to ask my questions of mr. baker, because you seem be able to clear up a lot of the myth that i'm hearing from republican side. as you've heard opponents of the aca are going to say that medicare advantage program will be obsolete because of cuts in the affordable care act. i mean, the republicans basically think the affordable care act is the end of the world. i mean, you understand all that. mr. baker, do you feel that the medicare advantage program is stronger now and more secure for beneficiaries than before the affordable care act? if you could just answer that. >> sure. i think there are a couple of components to the. one is that the equalization payments between medicare advantage program and the traditional original medicare program i think once again is an equity that it has an established, as was the fact that part b premiums have come down or have stabilized for everyone in the medicare program.

i think the other piece is that consumers are better protected in medicare advantage. some plants had increased cost sharing for services like chemotherapy. higher cost sharing than is allowed in the traditional medicare program. affordable care act has equalized once again cost-sharing so that sick or beneficiaries are not discriminate against. the 85% medical loss ratio that's required in medicare advantage now making sure that 85% of those premium dollars both from consumers at those from the government are going towards medical costs not of the administrative cost. the star rating and we now have a reading program where plans have one to five stars based upon their quality and plant performs. this has been an important tool, for consumers to choose between plans. and also that quality information has been getting out to consumers and i think more could be done in that regard but i think it's very good. the other thing is the out of pocket maximum spirit that were introduced over the course of

the last few years, and have provided important protections for consumers. so that these medicare advantage protections not only make the program more equal, if you will, between their traditional medicare original medicare program but also ensure that consumers are better protected with consumer rights and protections once they are in a plant. >> so obviously you feel that medicare advantage is stronger and more secure because of the aca? >> yes, i do get i think consumers are better protected within the medicare advantage program because of the aca. >> do you think the changes pursuant to the aca give beneficiaries more confidence to the program, might even make the more comfortable in choosing the medicare advantage plan? >> i think it does. i think the aca with the star ratings program, with other quality initiatives in the medicare advantage plans may make consumers more confident. we find that folks are looking at these star ratings, looking at these other quality metrics that are not available, are now

available under the aca. i think they also are, many of the consumers that we talk to appreciate that they have a choice between medicare advantage and original medicare. i think it's also important that the original medicare program, which is the base of all of this, be kept strong and they kept as a very viable option for folks that medicare advantage either hasn't worked for or it won't work for in the future. >> can you tell me how robust the choices are for seniors in the m.a. program? how many choices do they have? >> right. i think on average consumers continue to have about 18 plan choices, and i think gold went through some of those metrics in her testimony. we find for the most part, this is both good and the medicare advantage program as well as in the part d prescription drug program, the consumers are really, the biggest question we have from consumers is they have too many choices and they are

too confused by the variety of plants. over the last years the center has made some headway in tamping down them of choices that are not meaningful. by that i mean there might be one little tweak to a plan to make a somewhat different than another plan that a company is offering. folks get confused by those tweets that don't have a real substantive component to them. so narrowing choices in that way and helping people make better choices. >> and you don't feel that that's what i mean again, you don't buy the naysayers who say that the aca is going to their choices for seniors in the m.a. program? >> it has not at this point, not subject of a. we see plenty of plan choices out there in the markets where we are seeing clients. once again, our problem in counseling most of our consumers, but all of our consume it isn't that they don't have a choice, is that they have too many choices of medicare advantage plans.

before passage of the aca and after passage of the aca. >> thank you very much. >> the chair thanks agenda and i recognize the the vice chair of the full committee for questioning. >> thank you, mr. chairman. and thank you all for being here. dr. margolis, i want to come to you. you talked a bit about the fragile and vulnerable populations, and i want to go back to that. recently found out that those medicare advantage enrollees that have end-stage we will disease have access to a coordination that is not available to others. but it's not an option for those that are in standard. in medicare. so why should medicare advantage not be an option for all medicare enrollees? >> thank you, ms. blackburn. i support that. i believe that ordination of

care is ideal for sick and fragile patients, especially the srd. i know there are pilots now at cms to try to incorporate population health for esrd. i would encourage them to be strengthened. i think it is an artifact of the way the law was originally written that esrd patients were not allowed to enroll in medicare advantage. that could and should be changed, in my view. the way that works is that if a patient has chronic renal disease and enrolled in medicare advantage and becomes an end-stage patients they can stay in medicare advantage, but if they've already diagnosed as end-stage renal disease, they are not loud to a role in medicare advantage. >> it would be an element of fairness into the system that would allow -- >> i believe that would be a key improvement, yes, ma'am. >> mr. chao become want to come to you for a minute. i love listening to your hearing

today. i to tell you in my district seniors love their medicare advantage. we've had a program called silver sneakers, and artistic. and people, to a town hall meetings. they talk to me about silver sneakers and how they are doing. i've looked at some of the work that they've done and the surveys, ma better outcomes for physical and emotional health. more activity. it's just been a great program so as i've listened to you all to do, talk to me for a minute. we talk about stabilizing medicare, giving seniors more choices, giving them more options. should medicare advantage not be the platform for medicare reforms and give seniors more choices and options, not less? >> first of all, thank you. for the nice comments. i am a huge fan of medicare advantage for exactly the

reasons you say. it aligns the incentives so that the providers and payers work together to figure out what's the best way to take care of the members and their patients. when they outlined the incentives, to start work on things and is one of most important things is to coordinate care, as dr. margolis, talk about witches let's coordinate the care, especially as complex members and so forth. let's find a second help them to prevent having these diseases either progress or even begin. all of these things are aligned. all these things are the idea of aligning incentives, coordinating care of. and it's all for the benefit of the member. okay, and so, therefore, i do believe as you said that medicare advantage is a wonderful pilot for us as a society, we as a society. because what it does is it shows that we can find a way to curb the growth of health care costs. we can find a way to improve -- >> so curb the cost, give greater access, and provide better outcomes? >> direct. >> mr. holtz-eakin, do you want to weigh in?

>> i would just echo the fairness issue. we know that medicare as a whole is facing a very, very problematic financial future. if we can find ways to control those costs and provide medicare we should. spent let me ask you this. when you look at the limitation of the aca and accounts that are being made, who is most impacted by the m.a. katz that of there? is a seniors? is a physician's? isn't the support system for seniors? where in your research the you see? >> this is, in fact, directed to the seniors whose choices were restricted, whose benefits will be reduced, and i'm deeply concerned about the long implications. i understand this one at mr. baker about consumer protections and confidence in the program, but that's at odds with the fact that the cbo for

example, projects that there will be 5 million fewer enrollees in medicare advantage in 2019. if they felt more confident we would have 10,000 new seniors every day. you would see it rise, not fall. and i think that is stark testimony to the financial underpinnings being not strong enough and that will limit the benefits and the choices to seem just. >> yield back. >> now recognize the ranking member america's mr. dingell, five minutes for questions. [inaudible] >> thank you for your courtesy and kindness. this is an important moment in the american people are counting on us. i'm concerned that the committee might be holding another hearing to try to scare people about the affordable care act. and its impact on medicare advantage. when the facts do not support those claims. the questions i had today will focus on how aca impacts medicare advantage as well its traditional medicare. i would point out that when we adopted the idea of medicare

advantage, we were told that they're going to give us a lot more, more insurance and a lot less cost to senior citizens. and i've heard constant whining ever since that we have not done that. in any event, we have a problem here because that program is costing taxpayers significantly more than traditional medicare, while providing only similar services. so, mr. baker, yes or no, is it correct that in 2009 before passage of aca the cms paid medicare advantage plans $14 billion more than at the center been provided under traditional medicare? yes or no? >> yes spent in the end of this averages out to about $1000 per beneficiary, yes or no? >> yes. >> now, additionally am a ms. gold, a 2009 medpac report

found that medicare advantage payments benchmark was 118% of what medicare would spend, is that correct? >> yes. .. correct, yes. >> is it correct that medicare advantage enrollment has

increased 30% from 2010 to 2013, yes or no? it seems like they are doing pretty well, doesn't it? now is that correct be average but a care beneficiary will have a choice between a team pla plag the favorable to them in 2014, yes or no? >> yes. >> the affordable care act has not resulted in a drastic increase in the number of plans available to seniors who choose to participate in medicare advantage nor as it decreased the number of people participating in the program. is that correct, yes or no? i note that it's provided many benefits to this population and will continue to do so. most importantly, the aca has improved the solvency of the entire medicare program,

something which is not popularly addressed by people who were critical of aca. is that correct hospital insurance trust fund is now solvent through 2026 fax that is ten years longer than prior to the passage of aca. yes or no? >> yes. >> that tends to show that it's quite helpful. in 2012, 34.1 million medicare beneficiaries were able to have access to preventive services such as mammograms and colonoscopies with limited cost sharing. is that correct, yes or no? >> yes. >> 7.9 million seniors have saved over $8.9 billion since the passage of aca and that is thanks to the doughnut hole being closed, is that right?

>> yes. >> and it's good to be closed sometime by 2020, is that right? >> that's correct, yes. >> this committee has a great tradition working together to solve the issues of the day. i hope that we can resume this with a focus on the fact rather than continuing to try to scare people about the affordable care act. let's work together and see that ito seethat it has a chance to e the benefits to the society and the practice of medicine and the sick and ailing. thank you for the courtesy. >> i now recognize the vice chair of the subcommittee for questions. >> thank you mr. chairman and douglas holtz-eakin. do you have any thoughts on the 14 billion-dollar excess costs for medicare advantage the chairman reference to? >> the reimbursement should be aligned with quality and i think the most important issue is the

quality of care under medicare advantage has posed for the fee-for-service medicine. >> i was here through the entirety of how i habit came thh the kennedy and through congress and it's becoming pretty obvious today that there were some assumptions of some promises that were made in the affordable care act but have now turned out to not be true and i would submit that those were not just errors, those were actually purposeful deceptions. if the administration had been honest with americans about this bill, it's very likely would have never passed. so the affordable care act does take $716 billion out of the medicare program; is that correct? and the portion for medicare advantage is about 150 billion; is that correct?

so that's taken away from the seniors and the medicare advantage plans and i can't remember speeches given during the democratic convention in 2012 that these were over payments to doctors and hospitals. it's not a cut if it's just taking away money that should have been paid in the first place. do you recall those speeches? >> not specifically but i remember the claims. >> do you agree with the association, congressional democrats that these cuts were ridding the plans of an efficient payments? spinnaker i don't agree with that. they are part of a strategy of cuts that have backfired. it limits access to seniors in the end and it doesn't take out excess cost and the continued reliance on the strategy is going to damage medicare and not save its financial future. we need to change strategies. >> i agree with you.

it was an article in usa today that talks about a story about a patient in dorothy her doctor had bad news after her last checkup but it wasn't about her diagnosis, her medicare advantage plan from united was terminating her doctors contract after february 1 and she also found out she was losing her oncologist at the group. so what kind of seems like this is a direct consequence of cutting the plan by $150 billion. would i be correct in characterizing that as such? >> they will be increasingly caught in the middle. they have obligations for cost sharing and benefits and there will be less money coming to them created the only recourse would be to restrict whatever excess benefits they had. >> so this is a story that we

are likely to hear repeated over time? >> i think that what we have heard is the leading edge of what will be a bigger problem. >> said the association has on its website the myths about medicare advantage cuts and one of them is that medicare advantage cuts would hurt seniors abilities to hurt her -- see their doctors. if the current plan allows you to see a plan to veto physician nothing will change. in light of this information, do you think that is an accurate statement? >> no i don't and it will be increasingly inaccurate over time. to judge it by 2014 is a mistake because of the foreseeable future that concerns me the most. >> i candice gave the notion that the entirety of the affordable care act was sold to the american people on deception. the consequences of that deception are now coming more evident every day. i'm particularly sensitive to the fact patients will be excluded from their doctors.

i wish the administration had been more honest and again i can't help but feel it was an active and purposeful deception. let me ask a question following up on some of the stuff chairman dingell was asking. the cuts of medicare advantage of the cuts were taken out of part a and b. but not reinvested; is that correct? >> those cuts will be used to pay for medicaid expansion and insurance subsidies and exchanges. the money will be gone the moment they are spent a velocity there for medicare to be. >> i'm just a simple country doctor that you are an economist so how do you reconcile the fact that they are claiming that is a savings that is increasing the solvency when the money was taken and spent for some other activity? >> asked us to fight, that is an accounting fiction. there are no real resources to pay the bills from providers for real patients. >> i will yield back my time.

>> the gentle lady from florida for five minutes for questions. >> good morning and welcome to the panel. i would like to thank the chairman and ranking member for holding this hearing on how the affordable care act is improving and strengthening medicare and medicare advantage. according to a study that was done a couple of months ago, in my area of florida where we have a large percentage of our grandparents and parents who rely on medicare, a number of statistics jumped out on the improved benefits and medicare. one is what mr. dingell mentioned the closing of the doughnut hole for the prescription drugs. in the greater tampa bay area, over 77,000 of my neighbors now have major savings in the drug cost under medicare part d. due to the drug discounts. they have been worth over

$100 million to the medicare beneficiaries in the greater tampa bay area. that is very substantial and that is due to the affordable care act but also due to the affordable care act just in the greater tampa bay area over 100 million seniors now have medicare coverage that includes preventative services. they can go get the mammograms, the colonoscopies without copayments or deductibles. that is a very important improvement. mr. baker i think you testified that these improvements apply in traditional medicare and the medicare advantage; is that correct? to make some plans that offer those preventive benefits and others did not. and of course traditional medicare to ask so wha not so wa and it is made sure they were in the traditional medicare and all medicare advantage plans as well. >> i would like to take a page

out of how mr. dingell asks the question sometimes and i would like to get a yes or no answer. earlier this year to public and the house adopted a budget that proposed drastic changes to medicare. the budget that was adopted by the end of traditional medicare and medicare advantage and put in place a new system in 2024 so if you are 55 or younger this would really impact your future and medicare. rather than an role in the traditional medicare advantage under the republican budget instead beneficiaries would receive a voucher that would privatize medicare and you would get a coupon and most analysts raised concerns that this would in essence shift their significant cost to our parents and grandparents that rely on medicare. it appears to break the promise that he will be able to live

from the -- a catastrophic diagnosis. i would like to know from each of you do you support that kind of change to medicare and medicare advantage, yes or no? >> i do support of change. the report that came out this summer would save the cost for beneficiaries and the government indicating it had broken the increasing cost. >> all right. and mr. baker asked. >> i do not support that and our organization does not support the proposal for the reasons that you indicated that it would not. the cost would not keep up with healthcare cost and more would come out with seniors and they would lose the healthcare they currently have. >> ibb that is important for congress to assure the security for seniors. my apolitical answer which is

hard to do in washington i'm sure is to say this is about patient care. >> yes or no. >> be integrated and coordinated care system development whether through that program. >> would you review the proposal? >> we don't generally take positions on legislation. we let you do that but there is there's anumber of technical qus and issues that have been raised about the cost shifting that what happened to the medicare beneficiaries that are important to answer before any change to a very popular program were made. >> i believe that the idea of using a voucher type system which is very a ten to what is being done in the medicare base already is a good idea. >> that republican paul ryan budget included provisions to repeal the affordable care act

including the important reforms to medicare, the closing of the coverage gap known as the doughnut hole and preventive services that are such a great benefit to many of the neighbors and a wellness exams and important medicare fraud prevention provisions. do you support the repeal yes or no because my time has run out. >> just yes or no real quick because my time is up. >> yes or no. [laughter] >> of the reforms in medicare to include it in. >> there are parts that should be repealed. >> beneficiaries would be pretty upset if they were repealed. >> i think protections are important. they need to be continued and be in place. >> i would answer differently

depending on the provision. >> the chair recognizes the gentleman and the chair emeritus for fiv five-minute. >> i arrived late and i didn't get to hear the testimony. >> the gentle lady from illinois for five minutes for a question. >> i just wanted to make the point is tha that i think that representative castor was getting at to remind my colleagues who are now complaining about cuts to medicare in the affordable care act these were the same cuts that were included in the budget but instead of strengthening medicare, the republicans wanted to give tax breaks to millionaires. a couple of questions. the implication by my colleague

was changes that will eliminate the networks are caused by the affordable care act and i'm just wondering in your research i know with part d. is important and make sure the formulary is the same. with medicare advantage, or that change is likely in the network or something prior to the affordable care act as well? >> i think there is a lot of volatility in this marketplace as well as in the part d. marketplace. so every year we are very clear with the beneficiaries that if they are in the medicare advantage plan they need to check that coverage because the formularies which is a list that changes every year and provider

networks, the providers also decide to leave the network or to no longer be involved. >> but this isn't new -- >> this is an inherent part of the plan that has been around since the mid-80s and even before. so this is an ongoing issue. this kind of instability if you will is in hair and and it's part of the risk of the plan that goes along with the benefits that we've talked about as well. >> they said something about the precarious future of medicare and funding problems. i wonder if you can talk about the effect on solvency that the affordable care act has had on medicare. >> i think we noted earlier as i

was responding to mr. dingell blank commented that there is a longer period and to the extent that has been looked at through the years as a bellwether for the health of the medicare program were one of the best places we have ever been in the second, something to the benefit of all people is a stable part b. premium. the medicare costs are at historically low growth rates. >> and that is what you have to say. >> all of the people with medicare are seeing the benefits of the cost containment in the aca that have occurred in private plans into the government-run medicare program. >> i also wanted to talk about the low income seniors. medicare provides cost-sharing protections for low-income seniors through the medicare savings program.

i'm wondering if we are truly concerned about protections for love income beneficiaries rather than paying more than medicare to the medicare advantage plans wouldn't it be better to invest additional resources in the medicare savings program improving outreach and enrollment and coverage? >> the short answer to that is yes. we are very concerned. the biggest problem is folks that can't afford their coverage whether they are in the original program or the medicare advantage program and the medicare savings program help lover and come. above medicaid income levels but lower income folks. 50% have incomes over $22,500 a year and many of them are struggling to afford coverage as well as dental work. is strengthening the medicare savings programs were subsidy programs particularly if we are looking at the sgr into doing that simultaneously?

>> that's what i wanted to ask about. we would like to permanently repeal it. the program that pays the part d. premiums is set to expire at the end of the year. so don't you think of the s. time we deal with sgr we ought to do with that? >> it's imperative the program continue to be dealt with with the sgr and continue to reauthorize. >> i yield back. >> i recognize the gentleman from illinois for five-minute. >> thank you mr. chairman. sorry i had to excuse myself during the testimony. a couple points. one is i like myself and a handful of other staffers make sure that we were enrolled in our new health care plan because we couldn't get confirmation. fortunately i got confirmation that i'm finding out like everybody else i have less coverage at a higher cost.

the concern is as it is exhibited by the constituents on medicare advantage we will see the same thing of her in medicare advantage and so i think that this is a timely hearing because it's like everything else in this new movement of health care. everybody is going to get less coverage and higher cost, no matter who you are or where you are in this country because of these before. i was hearing the committee went secretary sebelius affirmed that the fact that they double counted the $500 million. you can just check the transcript and check the testimony. it took five minutes to get out of. about in the end, she said we double counted because we had a $500 billion of savings out of

medicare that is going to go to obamacare and of course we were strengthening medicare by $500 billion. having that as a part of the record, how can we say that medicare has strengthened? is medicare now stronger than it has ever been? >> i don't bb of the trust fund reveals anything about the future solvency of medicare. the facts on the ground are that in recent years the gap between the premiums into payroll taxes going in is $300 billion. >> that is a cash flow deficit. we get 10,000 beneficiaries every day and the absence of general reform that allow people to get the care that they need and deserve and abby slover cost growth it will fall under its own financial weight.

>> for the secretary to affirm, $500 billion that isn't really chump change in the big picture of health care costs. i am getting comments from constituents in the district who medicare advantage folks now their benefits are being reduced. they are losing access to their preferred physicians. this is under the current system now. my question is how much worse can this get for my seniors who opt out for medicare advantage? again if the strategy for controlling costs is a traditional one of just cutting the provider members and whether its doctors, hospitals, it will backfire. that approach without reform that gives you the prevention and coordination and the better

care congress ends up having to put the money back in because you haven't solved the problem. to not put the money back and is tonight bullies i -- deny seniors care. >> to have access to dialysis and the like and i know that you have a special focus in that arena. as the network shrinks especially in rural america what happens to the options, what could happen to the options? >> i think that you heard that the cuts are not advisable in the future. i must say with all due respect to the committee i think that it appeared he adjustments to get medicare advantage back to the fee for service which was enacted is not the issue that should be focused on. what should be focused on in my view is that we are potentially reducing the payment for acuity of the sickest patients which

will ensure avoiding the sick patients. those are the ones that need coordination and population health and the access to good care and that is the issue that i would hope the committee would take a serious look at because without that, while we may or may not have shrinking networks and i think that we will because even today we see news reports of united and others canceling thousands of other doctors from the program, the real issue as a physician and someone that cares about seniors is the sickest and most fragile patients that eat up all of the cost of healthcare are the ones that ought to be protected by having appropriate acuity adjusted payments for the physician groups that are managing it in a way that supports better outcomes for

transparency all of the store managers are positive that support quality performance outcomes and pay accordingly based on managing the sickest seniors. >> thank you ranking member for having a hearing today and the us is foassist for taking the to testify. we are critical that they have low to moderate incomes and complex healthcare needs my first question is it did extend the life of medicare by putting more money on medicare and the yes or no answer to that but it actually extended the life of medicare. >> i have no knowledge of the

fact. >> i don't study the trust fund. >> i think that's -- we may have a difference of opinion but i think that's acknowledged it did extend the life of medicare with the affordable care act. mr. baker in your testimony you discussed changes to medicare advantage under the affordable care act that included policies to make the medicare advantage more efficient and reduce overpayments to bring the plans were in line with traditional medicare and enhanced plan quality can you elaborate on some of these improvements in managed care under the affordable care act? >> making sure across the board of the plans are covering preventive services as well as the original medicare. another is the easy 5% medical loss ratios in ensurin ratio su% from every dollar. as a consumer dollar were government dollar. once again the star rating

program and the out-of-pocket maximum driving has provided an important financial protection to folks within a medicare advantage plan into the store ratings have made it easier for the consumers to choose among the plans they do have many choices in the market and the problem we frequently see his folks not being able to choose among the plans that has helped. >> it actually refusing to quit taking the general medicare because they want to bother patienttheirpatients to go in. >> what would you have to further improvement of care advantage? >> once again, we are very supportive of some of the things that have come out of medicare advantage. we want to make sure that there are meaningful choices in the

plans, so really standardizing in the sense that that is appropriate and possible. we would love to have more data on the appeals to see where there might be problems in a particular plan. we would like to make sure there are better notices so this issue that we have been talking about with regards to slimming down some of the networks we do think that there could be more pinpoint in particular notices sent to consumers in the fall. many find out about this from their doctor and it would be nice if they found out about it from their plan in september when they get their annual notice of change so they can be ready in the < period. finally beatnik sure that it continues to be a strong programming and database program for folks and by that we can help by increasing the availability of medigap policies and people can switch back and forth between the programs as necessary. hispanic we have heard of

medicare advantagmedicareadvante changes in aca and medicare advantage would lead to widest breadth disruption of the market. from your perspective, has this been the case? >> we do not see widespread disruption at this point. we have seen some of the provider issues with providers leaving the networks. two things there. they have either chosen the plans that continue to have those providers and their network or have reverted to the original medicare program where the proprietors are available to them. >> you have written extensively about medicare and the scientific studies must meet certain established standards to be accepted including the transparency and peer review and confidence levels to establish the validity. as a professional researcher i'm interested to hear your thoughts on a study which in my opinion the standards i believe there are many questions that we need to have answered before we can definitely say that the results have great meaning.

would you agree that these are some of the questions we have answered before the validity of the conclusions as a result of mr. kaplan blank study? >> usually when you have a study they undergo the methods laid out. i didn't have time to do a thorough review of the study but both ie and a colleague looked at it quickly and the details that you would want to see which would ordinarily be there didn't appear in the paper. it was a sort of finding that over one year so many people and i don't think that anyone else expects that is a possible findings of there are some real questions about the risk adjustment and the selection of the facts that are in the study.

>> i'm out of time. >> mr. kaplan do you want to take a moment to offer a response? >> i appreciate the comments. thank you for the question. we did have our studies reviewed and we were surprised by the findings. that caused us to pause because we were so shocked by the data we didn't have an agenda walking into this. so we did have it reviewed by a number of organizations and medical centers to challenge what we were saying. i understand she didn't have the time to review it to be thorough but we went through a substantial reviews and what we said in this is the one finding about mortality was the one that had the greatest concern and why we wanted to go forward in a longitudinal study as opposed to looking at it retrospectively but i wouldn't throw out all of

the findings. >> we recognized mortality is the one most concerning and no one wants to publish the fact if you sign up for medicare advantage you have a hyperbola buddy of living than if you sign up for the medicare fee-for-service rate it was a finding that we found. >> it wouldn't have been accepted in the journal because the detail was unfair. i'm not saying there may not be questions but the detail wasn't in the report to know whether in fact that was legitimate or not and it wouldn't have gotten through the peer review. >> we had it reviewed by the leading academics because we wanted to get out at the market as quickly as possible. >> we now recognize the doctor for questions. >> thank you very much. i would have to say that mathematica policy research might sound a little more highbrow than boston consulting group that if any of you know anything about the boston consultative group it is one of the most upstandin outstanding s

in the country and i do know a little bit about that. in your testimony you suggested, and i'm paraphrasing a little bit, but you suggest that the president fulfilled his promise to the seniors when he said if you like your healthcare plan you can keep it. if you like your doctors you can keep her. and you said it's called medicare and suggesting implying if you have a notice from a medicare advantage plan that you have selected that you are no longer going to be able to remain on the plan or you would have to get out of the business because of the 14 billion-dollar cut, 14% cut over ten years something like $300 billion k. it was okay because you still have medicare fee-for-service. i would suggest that it's pretty disingenuous to say that if you

like your plan you can keep it because you get kicked out of medicare advantage and you can go to the medicare fee-for-service if you can find a doctor. it's clear that the medicare advantage program is under attack and that the beneficiaries are being able to feel the effect of the over $300 billion of direct and indirect costs included in the obamacare and with plan cancellation notices that said tens of thousands of the country seniors, some of the most vulnerable citizens are faced with this uncertainty that i just talked about. individuals are losing coverage that they are happy with and the doctors with which they are comfortable. this is a tragedy. a bill that was rushed through congress without any serious debate strictly partisan vote is now impacting people's lives and their personal healthcare decision. mr. holtz-eakin would you please

explain to the committee the reality of those potentially millions of people, seniors who lose coverage over the next few years especially when it comes to a reduction in the financial security and benefits? >> i think this is a very real possibility. it is one thing to mandate that the plan covers certain benefits and offers us to seniors and it's another thing to be in existence so they can take advantage of it. in the absence of a financial situation they will not have those choices were that care and in deed they've already made that choice and will see their plans taken away from them. >> the distinguished chairman emeritus had to leave but she made thahemade the statements th us about the $14 billion but it would save.

he was only presenting one side of the balance sheet. what was spent on medicare advantage whether that is a little too much is open to question. but the savings that occurred to medicare, and we the taxpayer because of the medicare advantage program that has paid the medicare and all the features of traditional medicare fee-for-service does not have. this benefit is used by seniors and all walks of life and is prevalent for the seniors that i think that you said earlier with lower incomes. to the benefits and coverage will affect over income seniors more vertically than others. >> 75% will be experienced making less than $32,000 ballpark. >> what with the loss of the

project will cost me into the population's? >> they are the most formidable and in the program that has given them not just the services into traditional fee-for-service, but additional services and in a fashion of coordinated care and quality outcomes. it is a loss in the personal choice. >> i appreciate your leadership on this issue. seniors are just now learning that the upheaval of the healthcare system is not limited to the individual insurance market. at the purpose of the hearing today they now know that it will affect them as well. and they may lose benefits. we have heard testimony from mr. holtz-eakin and mr. kaplan. seniors may lose benefits and access to doctors and be forced to pay more for the coverage,

plain and simple. and i yield back. >> the gentle lady for five minutes. >> thank you mr. chairman. welcome to the panelists this morning. from what i have read over all the medicare beneficiaries should expect and responded to the question that we are answering today. in part those improvements are made possible by the savings that came from equalizing the reimbursement of medicare advantage and those of traditional medicare. as a family physician and an old fee-for-service, i especially think that with the reform that the outcomes from both can be equally beneficial to the

beneficiaries. but i represent a territory of the u.s. virgin islands and sometimes we have unique circumstances and suffer unintended consequences. i want to ask a question on behalf of my colleagues from the puerto rico. with the revised methodology for medicare advantage plans using benchmarks based on the fee-for-service should it coordinate the timing of the medicare advantage and the fee-for-service processes? for example, cms put out the 2014 fee-for-service patients rate that changed the medicare disproportionate share payments to hospitals but this was after the medicare advantage process of 2014 has closed in june presenting the medicare advantage plans from recovering the substantially increased. shouldn't they address this lack of internal coordination for

2014 and the harm to the plans and beneficiaries? >> clearly i'm not an expert on the ratesetting that i would say that my understanding is that medicare advantage base rates are set on the equivalency and it makes very logical sense to me that we should have all of the built in the fee-for-service cost in the base rate when the medicare advantage rates are s set. so that would answer or direct and answer and i think it is well known that cms has not calculated the fact that it would probably be pushed out further so that they haven't given credit to the fix each year in setting the base for medicare advantage.

so there are a variety of medicare advantage issues i think related to how medicare base rates are set. >> i hope that answers the question. i want to ask a question. we have heard a lot about the spikes and premiums. while some plans have increased costs, isn't it true that overall average premiums paid by the enrollees have declined since the affordable care act was enacted, and can you elaborate a little more on the premium changes. so what factors contribute to the differences of the premiums among the plans? like me add another part to the question because of time. is it true that more than 70% of beneficiaries that are in the traditional medicare are the ones subsidizing the lower premiums for medicare advantage? >> taking the second question first it is true all beneficiaries subsidized plus

the taxpayers because that covers it, too. the costs vary a lot across the country into some of them are more efficient than others and some providers are more efficient than others. premiums have difference fee-for-service payments and in some areas of the country providers are stronger and they are able to negotiate higher rates so there's less money available for extra benefits. in some areas of the country some of the plans decided to give it back in less cost-sharing plaintiff service rather than lower the premiums so there are a lot of reasons things differ. the spikes between doctors and health plans has a history that goes back years. you're trying to get the most you can out of the system and at the best thing the policymakers can do is to set good standards

to say we want to buy quality and value and to reinforce that i think they do start to do that and getting those right in figuring out across both programs, both medicare advantage and fee-for-service health to make the care better for the beneficiaries because i don't think that care is as good as it should be a matter what you're in across the plans which isn't even all their fault which has a lot to do with providers in different areas and how willing they are to get together and how fragmented they are and especially for the beneficiaries that have chronic illness they need to providers to talk to each other and that is hard to change. the plans are dealing with that and we are dealing with that otherwise the beneficiary gets cost with the bill and the costs go up. >> the gentleman from louisiana for five minutes for question.

>> i thought i was a way after. you said there should be better coordination for care. i thought that your testimony was most about what the patient experiences as opposed to what the economist might say. just point out when using the premiums would be lower relative to ten, that is because the market is offering lower-cost premiums with higher deductibles and allowing people to take their choice and therefore they are choosing a lower-cost. it's not a function of -- that is the function. a stomach i don't believe so. we don't have good data on the other cost-sharing but i don't believe there is evidence why that has happened. >> as common sense would suggest that people are voting with their pocketbooks and vote for a

lower-cost plan. doctor margolis. we had a controversy between mr. kaplan and ms. gold that says they are not sure that there is improved quality data. your testimony is excellent. my gosh, when you show the plans versus the fee-for-service and the readmission rate is so much lower and the number of hospital days, etc. that is proof of what you ar were disturbing is the coordinated care is that a fair statement? >> thank you for that compliment, sir. >> there are things that are very evident. first of all i'm a high promoter of transparency and quality transforming. so i recognize the star program as a very good step forward. i wish there was a similar

program so we would have evidence of whether medicare and fee-for-service is creating -- >> with me emphasize because i take care of the special needs patients that you mentioned the end-stage renal disease. that is where the care is the most important, yet you describe the cuts that go to the special needs program; correct? >> yes i think i said several times the greatest threat at the moment is that if we cut through the risk adjustment rescaling of the benefit of the adjusting payments based on the acuity, we unfortunately answer to incentivize what used to be called cherry picking which is avoiding high cost patients that is a disaster for seniors and as you can see in the written testimony, if you really manage the high cost seniors with companies that care and with end-of-life care, with all of those kind of innovative programs, you can make a

dramatic reduction in utilization. >> i'm going to cut you off for a second because you made your point. ms. gold and mr. baker continued to say that they have not seen the problems that we are predicting. and yet this wonderful graph in your testimony shows that we are just on the leading edge of these cut and there's compounding cuts that go through what you had in 2019 whether it is dramatic cut ultimately what the plans will receive. my character dies the graph correctly quick. >> yes sir. it's what i said -- >> i'm sorry i just have one minute 30 seconds left. you have been describing the things that can happen in these programs like special needs plans based upon 2015 that if we just extrapolate that and have mr. baker and ms. gold come back in 2019 come at that point it's fair to say that we are more likely than not to be able to say at this point we have seen a

negative impact of the accumulative effect of the cuts upon the patient care. >> i believe that is an accurate statement. >> so do i. a i have a doctor gg home to lose a woman -- a woman losing her m.a. plan that is a diabetic and has had this service help her so tremendously. mr. holtz-eakin can you rest this myth that the sp10 prolonged the life of the medicare trust fund? the doctors go out of the trustful and all of the money that goes out over the treasury has spent every dime and it's gone. >> when mr. dingell or mr. green suggested they prolong the life through the aca and you flacks say -- flatly say with your

credentials you just totally dispute that. >> i testified numerous times in the year since about the fiction of government trust funds being able to pay any bills. >> i yield back. >> the chair thanks the gentleman and recognize mr. sarbanes for five minutes for questions. >> thank you mr. chairman. i appreciate the testimony of the panel. >> he said that seniors are now learning that the aca is going to cause them harm. i don't think seniors are learning -- i think seniors are being told that by fear mongering members of the other party who don't like the sp10.

and i think if seniors look carefully at their experience over the last couple of years in which the positive impact of the aca has begun to be felt, they will conclude that in fact the sp10 is benefiting now. you look at the closing of the doughnut hole and the new coverage of the certain kinds of preventive care services and annual wellness visits where copayments have any money to end of the incentive structures that have been put in place to improve management of care and chronic conditions and a more sensible way. within the traditional medicare

fee-for-service contracts as well. there is just item after item of improvements which are there because of the affordable care act which are making the medicare plan and medicare coverage more robust for the seniors. so it's just wrong to suggest that this is going to be harmful for the senior population. this hearing is titled what beneficiaries should expect under the president's health care plan medicare advantage. and i think they could expect good things. everybody here generally is

saying good things about the medicare advantage program. that isn't disputed that we have. it's whether the affordable care act is having a negative impact on what 29% of medicare beneficiaries have access to, or a positive impact. so, when mr. baker and ms. gold to say good things about the medicare advantage program, which they have, that is not somehow a contradiction on the other statements and testimony that they are offering here. i think it is very consistent. it's just you believe in contrast to the other witnesses here that the affordable care act is actually strengthening and improving the medicare advantage act. my understanding is that the premium that was offered initially to the medicare advantage plan which is i think 114% against what the

fee-for-service rate is was done because the government wanted to incentivize the market and the private health insurance industry to come in and innovate and was successful in doing that if you have the beneficiaries that are now in the plans it shows that that has happened but along the way because of the analysis we discovered that that's premium was no longer justified and was going to somethings that ended up being a waste from the standpoint of the medicare program. i used up most of my time but can you talk about two or three things you think the affordable care act has done to improve the medicare advantage program i think all of us want to remain strong.

>> one is the medical loss ratio making sure most of the money that goes to the 85% goes to medical care and closure of the doughnut hole in the preventive care services. i would also add the affordable care act does set up programs to enhance the word and aged care in the fee-for-service through the traditional program in the accountable care organizations and other mechanisms as well as strengthen medicare advantage programs in many states partnering with the federal government with regard to coordinated care for people eligible for medicaid and medicare and that is a aca generated a program that does have promise and needs to be monitored but it looks like it has promise. >> the gentleman from virginia is recognized for questions. >> thank you mr. chairman. i want to highlight an example. my 83-year-old mother reports that her rate has ms. risen.

for her to keep the policies that she has she's now paying higher rates. when secretary sebelius was here in april she claimed medicare rates were decreasing nationwide so i did a survey in my district and we found that more had their rates going up, not a huge amount as mr. baker testified at ththe biggest group or a bigger group was those who stayed about the same. a couple folks reported the rate had gone down. i'm just wondering is this the case from your prospective nationwide at the medicare advantage rates are going down as the secretary testified earlier this year? >> we can get back but i don't think those are the facts. emphasizing there are differences across the regions and states in the united states. >> let me go to that point because one of the reasons was that i represent a very world

district where it takes hours to get to the nearest hospital depending on where you are located as a result of obamacare and the cuts to medicare we lost a hospital a few months back that was to have the top three reasons why they were closing the hospital. is that more likely to be a problem where the rates are going up as opposed to the more urban areas? >> it's hard to narrow the networks because you don't have choices so they don't have the option to do that. >> they have one choice and now they have to joy depending what part of the county you live in a good distance to get to the next where they only have one choice depending what direction they go. i do appreciate that. doctor margolis, i asked you a question, too. you were talking about the

healthcare and doctor cassidy showed the truck from the testimony how the cuts are coming and you indicated earlier in the testimony that is going to limit access for some folks. is that going to be worse in the rural districts like mine? >> i think it is predictable that the cuts will affect oral areas where there's fewer choices rather than the rim areas -- urban areas where there is more competition. i can't say that i have evidence. >> comment sense would lead to that. do you want to disagree click. >> yes because the aca has the lowest payment counties actually benefiting in some of the rural counties they will continue to have 115% of the fee-for-service so i don't think it's payment in the rural areas with managed care and getting it set up but i don't think it is the payment

changes that are causing the problem. >> so you would disagree with the folks that had you would've told them they were mistaken in looking at their numbers? >> unfortunately two out of three things that th they the ls the problem the other was the war on cole, the downgrading it also responsible to this administration, but the other two things they listed were the aca and the cuts to medicare. so two out of the top three have hurt my people and i'm concerned about it and i think it is going to affect perhaps the folks who are the elderly and also disproportionately represented in the rural areas of my district three of mr. holtz-eakin, you indicated we shouldn't be looking at the medicare advantage rates based on 2013 that we should be looking to the future. can you explain that? >> i am concerned that the current experience has been by

the administration program which i will take this opportunity to say not a lot of plans are uniformly wonderful. it's a good idea to have a program to rate them. the demonstration was not a good program. it does not reward good performance and it needs reform so it actually does. ..