>> right. >> rather than a blunt instrument. i note with no small amount of irony that some of my republican friends are all in favor of shifting much higher costs on to the backs of senior recipients and looking for systems that have higher co-pays, have higher out of pocket expenses, more confusion, if you will, and complexity. but this is fine in thing a gra gait. but somehow when you're offering thi things more nuanced and fine tuned, somehow we're diving in and suggesting that this is something that's negative or nefario nefarious. i, with all due respect, reject that notion. trying in an unvarnished fashion to give us some useful

information. it's congress that's continually added complexity. it's congress that hasn't stepped up for decades. and now we reach a point where it can't continue as it is. i see my time is about to expire. i was very interested in pursuing the transitional care process in terms of care coordination. i will probably submit something to you in writing on that because we have some legislation we're reintroducing to try and have a transitional care payment in the light of the larger context. thank you, mr. chairman. >> thank you. mr. buchanan is recognized for five minutes. >> thank you, mr. chairman, for holding this important hearing today. i represent about 200,000 seniors that rely on medicare in my district. i want to assure that the seniors have access to quality health care, as all of us do. millions of americans are struggling, especially the

seni seniors living in our area on fixed incomes. i understand the average income of a med gap policyholder is less than $30,000. in florida we have over 650,000 seniors on medicare have that policy. it's critical in allowing the seniors who live on fixed income to budget the needed care and unexpected medical expenses. should we be concerned that restricting supplemental coverage could result in skipped doctor visits that are actually ne needed and could lead to more costly care in the long-term? >> well, mr. buchanan, again, i want to emphasize that our approach is not to restrict access to supplemental coverage or deny people the option of buying supplemental coverage. we do think that they should face at least a portion of the cost implications of that choice. when you pay a supplemental insurance premium, you're only

paying a small fraction of the added cost to the medicare program. and so we think that people need to see a bit of that added cost that the taxpayers incur as a result of their decision. but for sure, they ought to retain the choice. in our chapter on benefit redesign, we present an analysis that shows that if the benefit package is redesigned along the lines that we describe of catastrophic coverage and a restructuring of the co-pays, and some people react to that by reducing their supplemental coverage. in fact, they may be better off financially and that's because right now a lot of people are buying supplemental coverage out of fear and uncertainty because of the lack of catastrophic coverage and the confusing benefit design. but the amount they it pay in for supplemental coverage, they

don't get out again in benefits. they are overpaying for it. and so they could actually be better off if we have a redesign benefit package and less comprehensive supplemental coverage. >> second, i just want to ask you because we have limited time, in your report the commission highlights some serious concerns with the demonstration program that cms is currently implementing for dual eligible individuals. i'm concerned, or i get these concerns expressed to me, that cms is implementing this program with nothing definitive in terms of measurements or some way to compare the outcomes. should cms be using some sort of measuring stick to gauge success while helping the people that are at risk in terms of that population? >> we think that having a strong measurement system is a very important part of moving towards a new approach for duelly

eligible beneficiaries. many of these are really quite vulnerable patients that have either cognitive or physical limitations and have really unique clinical and social service needs. so we think an important part of this movement needs to be a robust measurement system. we have limited measures currently for the so-called snips, the special needs plans that serve duelly eligible beneficiaries under medicare advantage. that measurement system is not robust enough. the good news is that cms has engaged the national quality forum, which is sort of the national ash tor to enhance the measurements for the duelly eligible population that's encouraging but there's more work. >> why haven't they taken a more aggressive approach in terms of measuring it?

i don't know how you manage it if you can't measure it, from that standpoint? >> i think that they are taking an approach to push the measurement ahead. it's just the synchronizing of that with the demonstrations that has us worried. we're worried about really large demonstrations that move too quickly relative to our ability to assess quality in the plans. >> thank you, and i yield back, mr. chairman. >> thank you. mr. mcdermott is recognized. >> thank you, mr. chairman. thank you, mr. hak bart, for coming here and talking to us. you talked briefly about something i want to expand on. primary care, in about two weeks, the supreme court is dods going to decide whether we have a national plan or the affordable care act. one of the needs is going to be for primary care physicians.

everybody knows that we need half the doctors to be in primary care, but we only have about a third. why is that? because of compensation. and you had asked the ruk, the relative value update committee, to do a comprehensive review of the enm coats. they talked you out of that. and came back with a new set of codes for care transition than for chronic care management. i'd like to hear your understanding because clearly the ruk is where the prices are decided. 87% of their recommendations are accepted by med-pac, and it's dominated by specialists. there's never -- the primary care people don't have a chance

in that committee. so i'd like to hear you talk about how we're ever going to get it balanced so that a primary care physician can make a decent living at some places and therefore, go into that part of medicine or are we just going to have this same mess until we have a real breakdown in the system? >> i don't remember ever being talked out of anything by the ruk, just for the record. >> maybe that's my interpretation. >> yeah. let me make a few points. one we have pushed aggressively for a number of years for there to be a significant effort across the board to improve the relative values in the medicare payment system. what we have said is that cms is overly dependent on the ruk for determining relative values.

and we have urged them for a period of years now to develop alternative sources of information and expertise that can, not necessarily replace the ruk, but at least compliment what they get from the ruk. we are particularly concerned that estimates of time, the time involved in each of the 7,000 codes, are off and maybe not by a little, but off substantially. time is the single -- the time estimate is the single-most important factor in determining the relative value. so if the time estimates are off, that's a big deal. the ruk process for estimating these things, they do surveys of physicians in various specialties and that's the raw material. but often the response rate to the surveys is very limited. a small number of physicians enter the issue of self-interest in the responses.

so we think cms needs to develop alternative data bases. for example, on the specific issue of time. >> i'd like to stop you there. i put a bill in saying you should have your own analytic people doing this rather than the ruk. what is it that prevents you from doing that? >> if the question is what prevents cms from doing that -- >> yes. >> we think they need to be less dependent on the ruk and have more alternative sources of information to guide their decisions. it sounds like we're together on that issue. one last point on primary care. we do think that this revaluation could help primary care, but the problems we face in primary care are so urgent that we need to do something in addition to improving the relative values. part of that is incorporated in the patient protection and affordable care act for primary

care, as you well know. we think that's a constructive step. but it may be that we need to do some additional stopgap measures. for example, payments for care coordination in addition to looking at the relative value. >> may i make another suggestion, that is make medical school free and require four years of primary care in repayment to the country as we do with rotc officers. if we did that, we'd have people in the pipeline coming out trained to do primary care and we'd have them not deeply in debt. that seems to be one of the main things we don't talk about when we talk about payment reform. thank you, mr. chairman. >> mr. gur lack is recognized. >> thank you, mr. chairman. mr. hak bart, i'm just going to raise a quick question with you and rather than you reply now, maybe you might want to get back

to me later because it deals with the march report, and not the june report. but i did want to raise this issue with you with the hope that you can provide us with your insight and thoughts on it. i have a constituent who got three days of home health care services and ultimately the agency billed for that service for a total of $1,500. ended up getting reimbursed for $3,000 even though it was only billed at $1,500 because of episode of care regulations. >> uh-huh. >> as they are currently written. so we wrote to cms about this issue and got a response back from lawrence wilson, director of the policy group, who says basically that in med-pac's march report shows to free standing home health agencies in 2010 were an average 19.4% higher than the provider's cost.

a huge amount of reimbursement of the cost. the estimate of margins for home health agencies in 2012 is estimated to be 13.7%. as a result, we, cms, are working diligently to implement provisions to recompute the payment rates for home health care services to ensure they more accurately align with the servi services. do you have any thought, at the moment or, again, get back to me after the hearing with a more comprehensive answer, as to where your opinion is with their examination of this issue, such a high reimbursement for services above the cost of the providers, and what can be done to make those reimbursements more accurately reflect the c t costs being charged by the agencies. >> i would like to look into the first part of your comment about your particular constituent question and the circumstances

there. on the issue of medicare margins for home health agencies, i can confirm that our analysis shows that on average the margins are very, very high, well up in the te teens, as the letter says and therefore, we have recommended a series of changes in the home health payment system. one is to rebase the rates and lower the rates. but also changes to improve the case make system so the payment for any given home health episode is a function not just of a base rate, but also adjustments for the patient's condition and the like. we think there are real problems in those conditions specific adjustments that need to be fixed as well. >> good. if you can get back to us on what you view the progress is being made at cms to do exactly what you're recommending and whether you think it's being

done as expeditiously as it should be, given the high rates of return the agencies are getting in the reimbursements, we'd appreciate that response. >> sure. and part of this issue is in cms's court and part is in the congress's court in terms of setting the base rates. >> okay. thank you. thank you mr. chairman. >> i want to go back to a question that was being asked just a bit ago about the duel-eligibles and the financial alignment demonstration programs. excuse me. and as you had already indicated that many of these beneficiaries are dealing with complex physical and also cognitive disabilities. if the state chooses to enroll into these new health plans, is it possible that they will see

their treatment plans disrupted? >> we fear that that's a possibility. so we think that the demonstrations need to be designed in a way to minimize that risk. for example, there can be some transitional steps taken. before the state passively enrolls any beneficiary in a plan, there needs to be very clear communication. not just with the beneficiary, but also with the beneficiaries, providers, so there's an opportunity at the front end to say, no, i don't want to be part of this, thank you very much. >> because these are very fragile individuals, for the most part, and a change in a doctor or a change in a hospital or some provider could really negatively effect them. >> yes. and that's part of the reason that we think the communication needs to be not just to the benefit ri, but also to others who may advise the beneficiary,

like physicians or family members. we're talking potentially about patients with cognitive limitations that would have real difficulty understanding this. so we think real care needs to be taken before anybody's passively enrolled, which means enrolled without them making an affirmative choice. we also think even if they aelect to go along, it may be appropriate to include transitional mechanisms, like including the patient's providers in the network for at least a period of time to facilitate a smooth transition. >> will there be an opportunity for them to make the choice or will they be forced to go into that program? and secondary to that, an existing plan able to compete with that transition? >> well, the opportunity for existing medicare advantage plans to compete, you know, that

will all be a function of how the rules are set up at the state level. these are demonstrations that would vary in their specifics state by state. and so, you know, it needs to be evaluated on that basis. >> well, i hope it will be evaluated and allow people to make a choice and to have a choice because that is important that we make sure as we move forward that we give the beneficiary and their families helping them make that choice a choice in who will be providing those services. i have one additional question. some say that these beneficiaries could simply opt out, but as med-pac has noted before, would this population find it challenging to navigate a process like that, an opt out process? >> yes. as i said, that's a concern we have and we think that the communication needs to be beyond just to the beneficiaries. there needs to be other people brought into the loop,

providers, family members, state agencies that advise beneficiaries. there needs to be a very carefully-designed communications plan to make sure that patients are not inadvertently coerced into arrangements that simply won't work r for them. we're talking about very vulnerable patients in some instances. >> the last question is. is there a possibility this could lead this large demonstration program to resemble more of a waiver program? >> yes. and that is one of our principle concerns. in fact, in our chapter in the june report, we talk about that. the state proposals, as i understand it, now envision in access of 3 million beneficiaries being moved into these new arrangements. that is, by our reckoning, not a

demonstration project but a program change. and we would prefer to see e a smaller number and a much more focused way so we don't do inat ver tent harm and so we have the means to carefully evaluate how well this effort has worked. >> well, i thank you because that's just what i'm thinking. if it's just a waive, it's a waiver program. otherwise, it's not a demonstration program and we will not get good information by moving the entire group at one time. thank you. i yield back my time. >> thank you. i want to again thank mr. hak bart for your testimony today. the opportunity to discuss med-pac's recommendations is of great value to this subcommittee. i appreciate that med-pac is taking on issues that are important to the viability and stainability of the medicare program. considering the extent of the fiscal challenges facing the medicare program as well as our

country, it is essential that congress consider all available options. such a comprehensive review is needed to ensure beneficiaries have access to high-quality care through a medicare program that is on sound financial footing. we must change our current course. we look forward to continuing to work with med-pac as we carry out that important work. as a reminder, any member wishing to submit a question for the record will have 14 days to do so. if any questions are submitted, i would ask our witness to respond in a timely manner. with that, the subcommittee is adjourned.

next on c-span 3, a senate confirmation hearing for the come knee to head the federal aviation administration. at the heritage foundation's weekly blogger's briefing, davis talks about his decision to leave the party and become a republican. and allen west hosts a forum on helping small businesses in the african-american community. we'll be showing you two events on friday about military veterans. at 9:00 a.m. eastern time, a discussion about housing issues facing veterans and the national housing conference. live coverage on c-span 2. and the pentagon and the

veterans affairs department host a conference on preventing suicide. kathleen sa beelhouse is expected to participate. live coverage begins at 8:00 a.m. eastern. this weekend on american history tv, harvard professor john stoufr on the civil war and the movement to end slavery. >> it's one of the fascinating aspects of abolitionism is that when lincoln gives his inaugural, the abolitionists are still a minority and they are still despised. what transforms abolitionists into respected critics of the american scene is fort sumter. >> saturday night at 8:00 eastern. all from our series on the

contenders. a look at eugene debs, a socialist candidate for president. sunday at 7:30 p.m. american history tv this weekend on c-span 3. the senate transportation committee questioned the nominee to be the head of the federal aviation administration. michael huerta is being questioned by the senators, as he's been nominated to be the head of the faa. senator questioned him about new pilot safety programs to address fatigue. this is just over an hour.

the senate committee will come to order. i'd like to thank our witness for being here, mr. her ta, who the nominee to be the faa administrator. i'm priding at the request of the chairman of the full committee who is here.

i'm going to go to ahead and make an opening statement. i want to grt you for your norm nomination by the president to be the next faa administrator. i'm glad the president has put your name forward for two reasons. first, you urned the nomination and served deputy administrator and acting administrator for the past several months. when you came in front of the committee the first time, i recall there were many whispers about did you have enough background in aviation. you have demonstrated that's a nonissue and brought a great skill set, mind set to this job and we thank you for that. to me, what's most important, is that once you were con fronted with the challenges of running such a complex agency, you have demonstrated a strong leadership and strong judgment in this job. now that's not to say there aren't problems to solve. there are several areas we need improvement. and i do feel that it overall, the faa has been making great progress under your watch. second, it's important the faa have a confirmed administrator

as soon as possible. i know it's a presidential election year and i know the faa administrator term is for five years, but not having an administrator sends the wrong message to the airline industry and to others about how important administrator is in this next phase of implementation of technology. they were instrumental in enacting an faa authorization bill in february and there are a number of rule makings and other actions that are supposed to be completed within the next six to nine months or even a year after this enactment. i believe without a confirmed administrator, it will make that more difficult down the road. as a result, i expect the implementation of the faa modernization act. we will have challenges in getting that done on time. so mr. her ta, if you were confirmed, you are going to have a lot of challenges ahead.

we had a chance to speak about some of those in my office. we spoke about aviation safety, which the top priority. it's also one of the top priorities of the aviation subcommittee. we spoke about the challenges of modernization and i know you have had some firsthand experiences with that. we touched on the greener skies initiative, a pilot program that demonstrates the capabilities in the near term and we spoke of the improved sequencing process for faa certification. i understand the faa has real resource constraints, but the process should not be a bottleneck costing aerospace sales or exports or jobs. the faa bill requires the agency to look at wheyways to improve the process and i know that this is under review. finally, we spoke about the faa and its efforts to help those of the active duty military interested in careers in aviation in maintenance repair get the certifications they need

to help us and to help our industry. so i look forward to your testimony today and again, thank you for your willingness to serve. >> may i ask a -- make i make a request to my friends. i'm in the middle of 24/7 negotiations on the highway bill and it's going well. i'm due to meet -- do you mind if i gave one and a half minutes of praise for this wonderful man and charge out the door. would that be all right? >> absolutely. >> thank you for the job you're doing. >> it's going to turn to you momentarily to resolve the last few issues. and i'm very hope fful. but thank you. so i will ask to place my statement into the record and i will summarize. i'm so pleased with the nomination of mr. michael mer ta and i want to congratulate michael and his