self interests is important. i believe i'm more optimistic when i leave than when i came. thank you. [ applause ] coming up. house ways and means comment hearing on medicare payment p l policy.

guns were causing the problems when really the government were san sanctioning. the medicare payment advisory commission recommended a fee for service payment model this week. the medicare payment commission or medpac is an independent agency established by the balanced budget act in 1987 to advise congress on payment policies. this is an hour and 20 minutes.

the report that the program will go bankrupt 12 years from today clearly time is of the es sent sense. the sub comment has heard from several experts on ways to reform and improve the program in order to bring the program into the 21st century slow the rate of growth and protect medicare for feature

generations. we welcome glen here today to discuss the program. it neither encourages appropriate utilization of care nor protects the high out of pocket costs. the evidence shows that supplemental coverage that eliminates some of the cost sha sharing resofts in higher

program costs and higher premiums for all ben fishairs. while maintaining an appropriate level and quality of quarter in rural areas is a challenge, it is what we deserve.

we must insure that payments made on behalf of beneficiaries and taxpayers are appropriate. this information is especially helpful as congress assesses a series of special payment adjustments which are set to exspear e expire by the end of the year.

we must review policies. i'm eager to discuss the view on how to better improve care coordination on ben fieficiarien the dual population. some of the past successes may be at risk. some of this is clearly necessary but i'm concerned that the unilateral actions to address this population's needs may undermine the protections guaranteed to all medicare

beneficiaries. this is a critical issue to get right the first time and i know that med pack is concerned about it as well. thank you for being with us today. i look forward to your suggestions on how we can improve medicare and i want to congratulation and thank you for accepting an pointment. medicare is one of our nation's

best programs. but it needs fine tuning and changing to keep it relevant. do iing so would dest nate them. the majority on them list on tight fixed in cucomes. increased coste iing leads to increased production. the costs discourage people from receiving necessary health care. the home health co payment for instance, i think is largely ascribed to be used by old sick poor widows.

there are other offsets available as well. the over seas operations money. is available to us. and i dislike the notion that we need to increase cost for beneficiaries to fix the payment system. i look forward to your thoughts and for the people eligible for

medicare and medicaid. i hope you will address the idea that medicare is going to go broke. the adjustments menecessary to keep medicare alive less than a 3% increase in premiums. age and differences and changes that we have already done. i thank you and i thank again chairman holder for holding this hearing and inviting you back to in form us about the state of medicare. thank you mr. chairman. today we are joined by glen

hack hackbar are th the chairman of med pack. he has served for ten years and is appearing before the sub comment this time. we are pleased to have you with us again. you will have five minutes to present your written testimony. if you could hit your mike. >> okay. thank you. >> thank you chairman and ranking members of the sub comment. i appreciate this opportunity to talk about our june 2012 report. the report contains six chapters and covers quite a bit of ground including reforming the design. in particular for duly eligible

beneficiaries risk adjustment and management plans and medicare coverage for home in fusion services. i am going to focus my opening comments on two of those chapters. our chapter on benefit design includes the recommendation that the congress should redesign medicare's benefit package with the following elements. first, no change in agregate cost sharing at the point of service. add to the program out of pocket limit as it is sometimes called. third, where ever possible used fixed specific dollar amount co pays. and 4th, give the secretary of

hhs broad authority to modify the benefit package established by the congress. and finally, imposed an additional charge on supplemental insurance purchased by medicare beneficiaries. it is based on the following conclusions by med pack. cost sharing is a blunt instrument and a fee for service provider like medicare. that said, we do not believe that ago gre rate patient cost sharing should be increased. we believe that the current

structure should be redessigred. we believe in effective redesign would add catastrophic coverage and converting co insurance to fixed dollar co pays. we do not favor prohibiting coverage but we do believe that they should bare at least a portion of the cost that, that poses on the taxpayers. let me turn to the chapter on rural care. the patient protection and affordable care act asked med pack to first access to care and quality of care and the appropriateness of the

adjustments in the system for rural providers. we checkeded information from beneficiaries surveys and focus groups and site visits to rural providers and medicare claims and cost reports. as well as meetings with many associations that have an interest in expertise in surral issues. our major findings are on access we find that there are large differences in service use across the united states. but only small differences between urban and rural providers in the same region. this suggests that access is similar and beneficiary satisfaction with access is

similar for rural and urban beneficiaries. on the issue of quality of quarter the quality provided by rural providers is similar and has some what higher mortality on some processes of care. these may be due to rural volumes and as well as the need to provide emergency services in remote areas. third, on the issue of payment add kwae say, we find that medicare payments are adequate for rural doctors and hospitals. we evaluated each using criteria. the patient provision targeted

to providers and three is the special payment preserve incentives for cost conscio consciousne consciousness. targeting could be tighter or better justified. with that i'm happy to answer your questions. >> the medicare benefit has not changed in structure since 1965. can you explain why the commission found it was necessary to offer recommendations on how the fee for service benefit should be redesigned? >> yes, the most important element of any insurance program should be to protect people

against very high cost of illness. as you well know, medicare does not include any catastrophic limit on out of patient cost. the existing structure of patient cost sharing is quite complicated and very difficult for many beneficiaries to understand. we had the web of co payments and co insurance that can be be wildering to many. that lack of catastrophic coverage and the complexity of the cost sharing creates uncertainty and anxiety and we believe contributes to the demand as a way of protection against this uncertainty. we think by redesigning the

program we could update it and make it more consistent and reduce uncertainty and more fairly distribute the cost. >> thank you. i'm aware of how challengething it can be for providers to remain viable. i agree that rur aal ben fis fishiaries have access to care. as congress has to make tough decisions pertaining to specific payment adjustment policies, can you elaborate on your principles for evaluating special payments with an example of how to allow them? >> sure. so, our three principles are that special payment adjustment should be targets to isolated

providers. if that provider were to go out of exsite eps that it would compromise needed access for beneficiaries. the amount of adjustment ought to be based for data. so if we adjust for low volume providers have higher he costs when they have low vollium. med pack had recommended in the past for that. we think it out to be consistent on how much cost in reverse when you have low volume. we don't think the current is justified in that way. the third principle is that where ever possible we would like the payment adjustment to

be an add onto a prospective payment which retains the incentive as opposed to cost reimburseme reimbursement. i appreciate the commission's wo work, in our too often fragmented health care system. i'm interested in the notion of establishing payment policy. we heard testimony from a private health plan at a previous hearing that uses such an approach. the providers decide who they want to collaborate with and determine what they need to do some provide high quality care. does the commission believe that giving provider s flexibility

population is a promises approach. one of the lessons that we draw from the demonstration projects that have been run on care coordination is to be successful a program has to be carefully woven into the practice environment where it occurs. it is not possible to achieve good care coordination by imposing it extermly. it is not the type of thing that you can plug in. it needs to be more organic. so our general approach is to say that medicare should move away from fee for service to payment systems that establish both financial and clinical responsibility for a defined population and then allow for

viders the flexibility to adality care coordination and hold them accountable for the results. >> thank you. >> mr. stark is recognized for five minute. >> thank you. thank you very much. >> in reforming the benefit design. you've got both a cap to project high out of pocket costs and changes to the supplemental insurance and i have r reservations about the medigap policy which would increase costs for beneficiaries but i agree that the cap would be an improvement.

why do you recommend that both of these policies happen together? >> we do think that they should be done together. we think they are linked. we think if we make the cost sharing more redictable and then in that context, if the b beneficiary wants to continue to

buy the coverage they should shoulder some of the cost. some see costs go up and some see costs go down. why was this important? >> when we look at the medicare benefit package and compare it to benefit packages offered in private market. we don't think that the existing medicare package is too rich compared to what exists for a privately insured.

we out to not make it richer or leaner. won't there be costs going down by 250 and up, as i understand it you will have more, up and then down. that is the way that the numbers work. they are those that have high expenses in benefit from the

catastrophic limit. this is the first responsibility from a good insurance program. the ones that would see the costs go up would be beneficiaries who tend to use fewer services and those who use only part b services and do not have a hospital admission. for any given beneficiary the risk of in curing high costs.

>> thank you mr. chairman. your recommendations dealing with additional charge, i have to agree with pete. it leads to increased utilization of services. can you talk about why it is important to address sum mental cuoverag coverage? because i'm of the belief that if a guy thinks that he needs extra cuffrage he ought to be able no to the buy a premium. >> we think that they should be

free to buy that coverage. that is why we didn't propose a regulatory restriction to buy it. having said that, the evidence to us increases cost to the medicare program and to the taxpayors and we think it is appropriate to make that decision to face at least a portion of the additional cost. >> well you say you think. do you have data that proves it. >> that costs go up? >> yes, we do. >> and is there anyone part of the country where it is more prevalent than another? >> i would be happy to get date to on that for you. i don't have the data in my head, m