and you are engaged with the patients who need you the most. in the under 65 population, less than 10% of all of the patients, consume 55% of all the medical spend, and these are typically people with chronic disease, they need differential attention. if there's evidence that they are not doing that, they are disqualified from an award. one further statement on this, it's meant to be a multiyear award, so we look for consistency of performance over time, not a quick hit. and the reward goes up as the consistency occurs. so if mary smith, a patient has multiple chronic disease, take care of her over time. the only way you can win is actually stablize her, improve her outcomes, lets break down, less readmission, er, that kind of thing. >> and there are two areas of quality, kind of a retrospective

of analysis based on measures articulated at the national quality forum. but i think an important issue to raise is the fact that many of these plans donphysicians -- patients see multiple doctors in a community, particularly those with chronic diseases or multiple chronic diseases, the information isn't coordinated. we have played a role of not being remote relative to these practices and simply paying claims, but actually become a part to the actual delivery of care. so to the extecht that we can create anning a greg gait organized record. the second issue relates to decision support. the good news about having complete data on the patient s that we have complete data on the patient and the bad news is quite a bit given the con trants of time, it would be hard to relate all that to the patient and what represents the safest levelings of care.

so the ability to -- into actionable ablgtivities that can be pursued by the physician in concert with the team ends up being an important issue. and the third part, we can talk about more as we go forward, is the role of the patient. for all the best intentions of doctors, patients are frequently not adhere toog therapy. we have done a lot to -- consider the role of the patient in all of this as we tackle the issues of total costs. >> i would like to add in, because your question is such an important one, but as we move to models that create accountability for total medical spending, how do we be sure that quality doesn't get sacrificed along the way. and what it's proving to be very essential is to pair that medical spending with a very broad set of quality and outcome measures with known targets that

recht a continuum to great care, there are 64 quality and outcome measures in our portfolio measures that our physicians are responsible for. there are major targets from good to great, with great that tells us the best that can be achieved by a group of patients what. we see these organizations doing is embracing those measures with the data we provide to them and the substantial incentives that are on the table to do well at these measures and systematically over their five-year contract period, quite aggressively moving toward care for patients. and the measures include not just improved process, that's important. but also measures of health outcomes and measures of patient care experiences. you can't accept accountability for patient health outcomes without thinking about what

happens to that patient when they're outside of your four walls living their life, working on issues of adhering to chronic disease and managing our health. so these processes are -- individual patients what their lifestyle is, what their constraints are around managing their condition. and what we have seen even in the first two years of their performance, on the outcome measures, them moving to the highest level of performance that our data tells us it's popular to achieve very important advances in health outcomes at the same time that they're managing overall medical spending. >> i would like to add to that, our rewards program moving around a continuum. >> health employer measures? >> star measures and you have to

achieve six out of nine of the various ones, they include cancer screening, glauk coma screening, when they hit six out of those nine they receive a reward for that and each of the programs will layer on other factors on top of that such as generic dispensing rates, improving readmission rates and the payments for all of those move up as you move along the continuum of their reward program. the reward program is important because it works in all areas including rural areas. we had two practices in south dakota this last year that are going to receive $102,000, these are pcp practices. we had four in montana with more than $100,000 to come into this e eight in utah for $490,000 and these are practicing receiving rewards for quality outcomes for their patients.

>> i want to bring up an issue that might be a little bit different. mr. edwards, you mentioned humana uses different approaches to account for variation in practices and i want to ask about delivery of health care in rural america because that's obviously where iowa fits. could you expand on what humana does differently in rural areas, what challenges you have help can'ter and what you have found to be successful? >> a couple of things, recently we have partnered with a company called gencare. these guys opened so far 13 clinic based primary care centers that provide coverage to seniors and primarily low income in underserved neighborhoods and rural areas and this group will grow to add 40 centers over the next few years. second thing we have secreted in this rewards program called a pod. and what we have done is in

rural area where is you have a small patient panel, we put a team together which includes a nurse practitioner to go into the office and to help them understand the disease management programs and the things that can be done to help serve the rural population. >> you just brought up nurse practitioners and i know it was in your written testimony and just now touched on it for the first time, would there be supervision requirements in the case of nurse practitioners and i'm interested in what type of response you have seen from the physician in the community with the idea of using nurse practitioners? >> the key thing for the rural providers is they're absent actionable data, data that they can use to help manage their

patients. so the nurse practitioner comes in in a soft way with data and shows them what they can do to improve the health of the patients that they're seeing and they have a team of other folks that go with them to have the ability to contact a doctor and take a doctor with them if they need to. but we have had no issue with a nurse practitioner going in and sitting side by side with a physician. >> as regards to rural care, it actually behooves the physician to have the sort of support that a nurse practitioner can provide. so in a nonfee for service environment it nds up being more lucrative for the primary care profession. the other challenge, we haven't spoken about electronic medical records. the ability of data, one of the challenges of a lot of these small practices in rural communities is the expense associated with implementing an

electronic medical record. so in many yays your're seeing sophistication of -- ishlgtively creating an environment to what we've started to see. leveraging technology and payment reform in other words to bring some other models to these other communities. >> don't we have a long ways to go in health it? i asked abearlier panel on a scale from one to ten.

>> one is the notion of -- the reality is for most stalkers, they have a paper record and the electron electronic medical record or may be able to access information about you. but your doctors don't communicate with each other, i'm assuming that you theoretically see multiple doctors. one thing we need is health information exchange so i can be provid provided information about you generated by others. how do you convert massive amounts of information about you into specific activities that will correct problems relative will our level of compliance as

a team, relative will to the medical literature and what's safe and effective for you. >> wasn't there some way to help some incentives? isn't there some bright people to figure that out? >> there are two things, one is incentives for using electronic medical records--if you went to another doctor that did a lab test that represents a contra indication to the medication i gave you. >> there are two ways, one is by jouc downloading the information i can prescribe. the pharmacy benefit manager, to

know in fact whether you filled the precipitation. first is i ordered the drug and the next thing is whether the patients comply. >> fewer than 50% of patients accessed their medication. >> i was talking to -- she was telling me exactly that problem. and their heart mortality morbidity rate was not good. are you taking the meds, they ask? oh, yeah, yeah, we're taking our meds. but they weren't. but they tie into the pharmacy so they checked with the pharmacy, it was a local in house pharmacy and found out

that they weren't taking your meds, and they went back to the patient and saying you're not taking your meds, take your meds. >> and our scaleable technologies can be implemented in many cases for free. >> the most direct way to addressing privacy issues is from the member. in addition to privacy issues and permission of the -- >> i think the same thing, overprecipitations by other doctors. >> one thing we can do is that patients are shopping. so we infact can a accumulate from a variety of electronic

records from pharmacies. that's the sort of information we could then communicate back to the treating commission, as it relates to the specific patient to warn them about this patient's propensity to ask for narcotics. >> it seems to me that your organizations, that i'm looking well beyond medicare fee for services today. what should we focus on as realistic goals in the near term to improve payment for the fee for service system, shall we focus on data reporting, bundle payments or incentives. what can we do in our existing frame work that still moves us forward in the right direction.

>> i'll take a shot at it. >> so one of the fundamental problems of the sgr that may be obvious but hasn't been stated here is that it deals with individual actors, individual clinicians as actors, but the targets are set based on a population of physicians across the country whose behavior, they have no influence over. so the individual actor has no real incentive around efficiency no real ability to call on anything. so what you have heard across all five of these testimonies is organizations that are dealing with payment in a way that rhetts not to individuals, but to organizations. to organizations that have been willing to accept accountability for both total medical spending and for the quality and outcomes of patient care. and so one of the most important things, i think, that you can do as you look to fix or replace

sgr, is to move forward a model that doesn't deal with individual clinicians and doesn't set targets based on a population of other clinicians that they don't know and never will. but rather to have physicians identi identify who are the organizes they work with. and of course not every physician nor ever physician group or physician around the country is not ready for that group. we have only two signed up. those organizations are ready for that. i think by sending a signal that that's where we're going and by taking the initial step of having clinicians identify who is the other set of clinicians that they're going to share accountability with. and by starting with what we have done in our case, outside of our aqc moodal.

>> the official steps are defining who it is you're going to share accountability with and starting accountability for quality and moving accountability for quality. >> it's a terribly important point that i would exercise as well. as long as we're dealing with the physician community as the granular level. what we would encourage you to do is come in with clinics -- so

they have a reason to go there. another point that i would make is a september theme in what you're hearing is the emphasis on primary care, because that's the gateway to the system, if we had health care system, we would have a robust primary care system. instead what we have is more of a medical rescue system, which is why it's dominated by hospitals and high-tech specialists so the underlying truth that we haven't spoken to here, if you want to manage a primary care population, you want to manage a primary care community, in california, the primary care community is withering and dying on the vine while hospital edifices are being built with billions of dollars. >> which organize as i said small performance teams of primaries, over half of which were in solo practices or practices of less than three,

not sophisticated practices. by giving them a total expected cost of care to beat, and some structure, they actually pay attention to the quality and most importantly they pay attention to who are the chronic patients that run -- 10% of the patients who run up two-thirds of the cost, who are these patients and what do they need? we have assigned nurses to them to follow them into the community. where do you break down? at home. where do you fail to comply your meds at home and a lot of times the primary doesn't have direct support of that. so we support that by providing home assessments. medications are critical. a lot of these patients are on ten or more medications. nobody ever refused the full picture. not only do they not comply, they have too many and they have drugs that interact or make them unstable. so we try to get the primaries

in small performance teams to understand who among their panel of patients are at highest risk, who among them have chronic disease and are you paying attention to them out of the site of your office? and we try to give them help in that regard with nursing support in the community and in the home. and if mary smith is the chronic patient breaks down, the doctor is informed immediately if she's admitted, the doctor is informed immediately. it provides strong financial rewards to them, we haven't increased their getting their fees. >> are doctors being edge indicated on on the people using dietary supplements, it's my understanding if you're on say, crestor, that it would be very wise to take co-q10 to make up

for some of the deficits in some areas. this area is not very well defined. do you agree with me on that. >> a lot of people don't know that, they'll take crestor and not realize they may be putting themselves in some order of jeopardy if they don't balance it with co-q10. >> 21% of our medical spending is for prescription drugs. 24% of our medical spend is for in patient hospital. so the drug part of the equation is dramatically increasing. a lot of primaries do not know what drugs their patients are on, and if you ask the patient, they can't reliably tell you. so we create a drug profile of all the medications they're on. sometimes you're on a two of the

same medications, one is a generic, and one is a name brand so they're taking a double. ily try to revise that, that educate s them and stabilizes te patient. and that's where so much of the cost of the system is, i know it's true in this region. >> and senator, at the risk of being disagreeable, but in after all is our kitchen table, right? i think we need to spend some time on -- >> i have already changed my remark in my mind. i think people are accessing

alternatives therapies or supporting a lot of alternatives therapies in ways of supporting patients. just as an example of something that i think everybody accepted vitamin d and calcium to prevent osteoporosis, that suggests that a normal diet in the absence of supplements is probably more than act cat. we need to be careful about what we suggest and prescribe, particularly as we become more sophisticated with these decision support tools, we need to make sure that we're quite rigorous. on the sgr report, i just want to suggest that the real issue that we're grappling with is total cost. considering sgr in isolation

isn't going to get us to perform the right health care delivery system. we'll just be doing the same thing over and over again if we don't address that. >> i would like to add to that. a couple of suggestions is make sure you vary you're programs to allow for practice variations, because they're not all the same. so whatever you're going to do for fee for service, you have to have different programs. maybe developing a hybrid that begins with fee for service and transition to payments based on outcome is going to be a couple of quick hits for you, i think. >> mr. chairman, i want to come back to the point that was discussed earlier with regard to elect troonic medical records. i mean in some ways, mr. riceman, you said that that's not the most important issue to focus on, i agree with that. mr. burrell, you were talking about all the issues with regard to patients who have medications

that perhaps are conflicting with what they need. it just strikes me that so many of these things of duplication and medical errors could be eliminated if we had a system where people's medical information was available, sort of irrespective of where they access the health care system. and it strikes me, because i was at the hearing the chairman referenced where we asked the panel about where we were on a scale of one to ten, and maybe that's not a good way to measure it. but everybody said in that two to three range and i think the issues are the standards of inoperaibility which we don't seem to have come up with a solution yet. but everybody talks about this

issue in anecdotal form about what it costs to add to the health care system. it seems like so much of this could be fixed. i don't know again how we achieve that. i know that it was discussed a lot. has been discussed a lot in the past. but i'm very understand satisfied with the progress we're making toward that. the question i had with regard to i think it was dr. saf on, you had falked about the program that you have, alternative quality contracts. and there was ladainian tomlinson year? july, the any england journal of medicine found that health spending decreases were associated with referral patterns rather than with reduced utilization and i'm asking if you agree with that,

one, and if you do, what can we be doing to put downward pressure onoutization, that's really the issue. >> very important issue, and yes i do agree with those findingsa in year one, of these fife-year contracts, what most organizations reach for as the most easily achievable savings is savings that they can -- in very mart ways that don't disrupt clinical relationships partly because they have accountability for patient experience as well. and so they're doing things like moving care related to lab tests or imaging or basic procedures where there aren't established clinical relationships and the patient is very happy to go to wherever the clinician tells him as long as it's convenient. so there are significant savings to be realized and there were many groups that reached for those savings in year one. the hardest job is to change

utilization, because changing utilization is changing how physicians think and then changing how they behave. and what we're seeing in year two, and what we're seeing now in years three and four, is that those utilization changes have really started to take hold. the infrastructure that they're putting in place, for example to prevent avoidable admissions, avoidable use at the emergency department by doing innovative things like having practitioner -- if they need urgent care, let's take care of them over here where we won't incur the expense of an emergency room visit, we'll take care of the patient's needs, they won't wind up in a bed, because if you have a hospital and an isolation, you not only get a er visit, you have a

hospital admission too. but we all have to realize that changing utilization is that much tougher task because it does involve changing how physicians think and how they act. >> i would like to go back to your data question because that would make you feel a little bit better about it. because we have come a long way. >> nation wide? let's talk about nationwide. six nationwide? >> we just purchased a company that has a rules engine that we're able to run every one of our 2,200 medicare members through that engine, overnight and it will deliver back to us actionable gaps in care, including issues with drugs not being