program or no request in the rural access to emergency devices program. in the case of these program and administration's request, these are challenging budget times and require tough choices, and the budget reflects a request for the program that we think are effective and that we need. in the case of small hospital improvement programs, we have rural hospital flexibility grant program with a $25 million request for that. that program focuses on what we see as the most vulnerable of the rural hospitals sector, the critical access hospital, and there's going to be 25 million requested to support quality improvement and performance improvement working to improve states and their activities. in the case of the rural access emergency devices program, we -- this is a program that places automatic external defib laters

in rural communities, and we think the need is largely met in that program, not only through federal funding, but through state and private sector funding, but we do allow people to come in through our outreach funding to get at the same issue. they could come in for outreach funding or network funding for a request in the budget and do the same thing in the sense they can develop a program that seeks to purchase supplies and put them in the communities. the remaining need out there, it can be met through the outreach program. >> and the hospital improvement program you'd continue is a $25 million program? >> yes, sir. >> that in the current year spending 25 and preparing another 25 next year? >> correct? >> the 20 this year for similar purposes goes away in the president's budget? >> yes. the program, there's no request for that, funded historically at 15 million and the other 5

million is request for emergency devices program. >> what are the -- what obstacles do you see in telehealth. we have people telling us there are still issues they are trying to work through with your department in telehealth. what do you say are the top obstacles to move forward? >> one of the issues we're trying to get at for telehealth is the issue of cross state license, and you may have providers located in one state, but providing services in another state. the congress provided funding through the health program and we have grants with the federation of state medical boards and state and psychology boards and working with licensing boards so that if a psychologist was practicing in missouri while providing services in another state, rather than having complete two completely different license applications, they can adopt a common license so it's easier to practice across state lines and protects patient safety in terms of licensing and credentialing

for that provider. that's one way we are trying to get at it. we have been investing in telehealth for a number of years. we know it improves access to care, and a challenge is finding out what applications have the best clinical outcomes, and so evidence base for telehealth could be expanding. what we did this past year is put money into a tele-emergency based program, and we are trying to understand how do outcomes from emergency care compare to the services face-to-face? that's a question any insurerments to know about, and the more we learn about evidence base and what works best in telehealth, we can target investments moving forward. >> may we move forward with that even with the next panel there. senator murray? >> mr. morris, i'm a strong supporter of hrsa's work force health care training programs, in particular the critical

support to physicians and other providers that agree to work in our rural and under served areas, and i want to recognize your agency's important role in documenting work force shortages through the national center analysis, and i wanted to ask you, what are the current projections -- what do the current projections say about our national health care work force shortage? >> sure. demand is expected to increase for primary care services through 2020 due to the effect of the population is ageing, growing, and then there are also impacts that you referenced earlier in terms of folks having coverage results in them seeking more services, and so the national center has done some projection work, and they estimate a shortage of 20,000 full-time equivalent physicians by 2020.

this is mitigated somewhat by if we were able to take advantage of the supply of nurse practitioners and p.a.s and use them to the full extent of their training. if that happens in the trends and training and deployment, if that happens, shortage drops down to 6,000. we see shortages of mental health, and social workers, and psychologists, and psychiatry is not a service in rural communities, but even some rural communities have challenges in terms of the allied health work force and regular nursing, and so those are all challenges that they face. they increase the national service and advantage of that is right now, we fund the service scholarship down to the level of funding available based on how under served they are. basically, what the score is in the health professional shormg area, and more funding available and that in the president's budget would allow us to fund more clinicians to be supported

in the community, and so that would, you know, lower, and rural communities have access to it. it's been a lifeline for rural communities as i noted before, 50%, under 50% of the placements have real communities, and rural represents 17% of the population. >> okay. how can we continue to leverage the health center programs to ensure residents stay in rural areas? anything we can learn from the

program to attract other specialists? talk to me about that? >> one of the big lessons is you can do residency training. so much of the training takes place in large academic health centers. get them exposed to training, you know, the hope is they'll be interested in that training. they'll be interested in that community-based training. so we'll see them working in our rural health clinics and our community health centers and our small hospitals. i think the teaching health center shows the path forward. and i think that informed the president's request around really reshaping how we train physicians and creating a new grant program to do community-based training. and that would include rural communities. we know also from some of the work we do with the rural training tracks, which started in your stale in colville, washington, this is a unique model where they do one year in an academic health center and two years in a rural setting. 70% of the graduates end up

practicing in rural communities. i think the evidence is strong that if we do more community-based training, we'll meet the needs better. the teaching health centers are a first step towards it, and i think the president's request is another step toward that. >> yeah, i completely agree. i've seen this working in my state. where you practice and do your residency really makes a difference on where you stay. and when we have such a need in our rural community, having those residents in those rural communities, doing their residency, it works really well. so i hope we can continue to build on that. and i thank you. >> senator cochran? >> mr. chairman, thank you for convening this hearing on the challenges that we're facing in our rural communities throughout america in making available health care services, some of

which are partially paid for by federal government agencies. and we hope to learn from this hearing ways to provide the needed resources up to the point where we are authorized to do so. it's been brought to my attention that the health resources and services administration has released a grant notice regarding the intent to provide funding for a telehealth focused research center cooperative agreement. could you tell us more what that is and what are you looking for in an applicant and what are the goals that would be funded by this cooperative agreement? >> yeah, i think this builds on the comment i made earlier that, again, i think we know telehealth improves access. and i think the real challenge is finding out what the impact of that increased access is. what we're hoping to do with this research center is to help build the evidence base for finding out which applications work best and deliver the best outcomes. and so what we're looking for are experienced researchers who can do comparative outcome

research. so we can look at you provide a telehealth service and here is the outcome. how does that compare to whether you had it face-to-face. i think that will really inform the evidence base. >> are you encouraged by the results of your applications and those who are petitioning the government to choose them? >> we've gotten a lot of calls on this funding opportunity, just in the week it's been out there. >> mr. cavanaugh, i understand the centers for medicaid and medicare services restrict reimbursement for telehealth based on geographic locations. how do you administer that? how do you choose which urban areas, for example, are more eligible than others for telehealth reimbursement? >> thank you for the question, senator. in this statute, it gives us instruction to allow telehealth to be provided in certain geographic areas. pleased that with help from our colleagues at the office of rural health policy a few years

ago, we changed our regs to expand the definition of rural areas that qualify. but the geographic restrictions really originate in the statute. the good news is through the innovation center, which congress created, we're able to move beyond those barriers and test new models of telehealth without regard to the geographic barriers and some of the other statutory restrictions. we have a number of very interesting telehealth models that are being tested currently, including the health link model i mentioned in my testimony. >> thank you very much. >> senator moran? >> mr. chairman, thank you very much. thank you for you and senator murray having this hearing. a very important one certainly from a senator from kansas, but really for the country. let me start with mr. morris. tell me what statistics are there that demonstrate over a period of time how many rural hospitals are closing or being -- in addition to that are threatened to close.

i've seen an ap story just in the last few days indicating that 50 rural hospitals have closed, that expectations for more -- a total of 50 hospitals in the rural u.s. have closed since 2010, according to the ap. and the pace has been accelerating with more closures in the past two years than the past ten. this is according to the national rural health association. i've also seen the study from the north carolina research agency, organization indicating 47 i think is the number of hospitals that have closed. my question is do you consider those numbers accurate? and what kind of study analysis do you have about cause? what are the -- what can we pinpoint the cause for those closures? and what is your expectation for that trend in the future?

>> yeah, mr. moran, thank you for that question. this is an issue we've been tracking, and those numbers align with what we've found in our and we're working with the university of north carolina. they're one of our rural health research centers. and their work is very solid. you know, i think that we're trying to get a better handle on what is driving the closures. i don't think that there is one single factor behind it. i think what is it's very community specific sort of issue. in some cases, it may be that the community has lost population and may not have the volume to support a full service hospital. but there are also a variety of other market pressures that may be having an impact on it. it's certainly something that we're going to continue to study further, and the university of north carolina center will probably lead those efforts. we'll be happy to share with you all those findings. they are looking at a study that we hope to have out next year that looks at what happens in a community after a hospital closes. just doing some informal calling around to get a handle on this. in some communities, the

hospitals close and we see a situation where another provider can step in and still provide a broad range of ancillary was services. maybe they have expanded their telehealth. maybe they expanded the clinic hours so they're not just open 9:00 to 5:00. and the community seems okay. in other cases there is a definite gap when a hospital closes, specifically around emergency services. but with the 34 hospitals that have closed since 2013, that is an uptick from the previous two years. what is interesting is the same number of hospitals have closed in urban areas, but i think as you know, when a hospital closes in a rural area, it's a little different than when it closes in an urban area. so this is going to be a real priority for us from a research

perspective over the next couple years. and we'll certainly work with our colleagues at cns and across the department to better understand and see what other resources can be brought to bear. >> mr. morris, i'd be interested in knowing the research outcome of what happens to a community following a hospital closure, but i also would encourage for that research or -- for research to be conducted that would indicate what steps could we have taken to have prevented the closure in the first place. i'm pretty certain in most instances the research will demonstrate significant consequences, often pretty dire to a community and to patients. i think that we ought to be more prospective is how do we avoid this? what are the precipitating

causes. i agree with you it's not one thing. population and demographics is something maybe we can't control here. but certainly the regulatory environment, the cost structure is important to those hospitals. physician and other health care provider recruitment, retention. and then the reimbursement rate. and on that topic, i wanted to ask you about the idea of cost-based reimbursement. what is the evidence that when we say we're reimbursing costs at 101% of costs that that has any real meaning in the real world? i mean, isn't the reality that when we say we are reimbursing more than costs, we only reimburse -- not all costs are reimbursable. we create this impression that a hospital is getting more than what it costs them to operate. is there analysis? can you quantify really what is going on in a hospital when we tell them or when we tell the public that your hospital is getting 101% of costs when it's really reimbursable costs? >> yeah, that is a -- as you know, that's a very complicated question. you know, it goes back to the historical costs of the hospital and if they converted to critical access, what those historical costs feed into, what they would be paid under the ch reimbursement status. so it does vary from state to state. but i would be happy to get back with you and also with your staff. we can connect you with some of

the folks at the university of north carolina as well some of our experts to better understand it. >> in today's setting -- i would welcome that. in today's setting, can you confirm for the record that when we talk about reimbursing a hospital, their costs, that they are receiving something significantly less than actual cost of operating the hospital? >> i think in some cases that may be true. it's hard to say that nationally, because it's different depending on the historical cost structure to the hospital. you know, it might be different for kansas than it is for alabama. and, you know, as you know hospital structures costs, it's a science on to itself. so i'm happy to get back to you on more of that. i would also just to respond to your earlier question, we are trying to do what we can to avoid closures. and i think we've done with the investments in the flex program, we're really focusing on making sure that hospitals -- ch is not required to report that quality data to medicare, but we encourage them to do. so we've seen a significant

increases in the numbers of chs reporting their quality. if they can do and they can benchmark their quality, they can demonstrate more value back to their community. we also led a contract last year to work with rural hospitals that are struggling in high poverty counties. so we have an example in tallahassee, mississippi, mr. cochran's state, where we're able to send consultants in there to help them turn around their finances and improve their financial bottom line. so within the resources we have in there, we're keenly aware of the precarious nature of some rural hospitals and whether it's our flex program or that contract, or even our outreach and network fund we can begin to get at it. we're doing all we can to help stabilize folks so we're not in a closure situation. >> i can tell you that very few hospitals in kansas who receive, quote, cost-based reimbursement are able to survive in the absence of a tax levy to support the hospital. >> yes, sir. >> thank you, mr. chairman. >> thank you, senator moran. senator capito? >> thank you, mr. chairman. and i want to thank the panel.

and i'm from the state of west virginia. so i'd like to ask a question to mr. cavanaugh on -- in your testimony, you talked about the new initiative health link now which is pairing telemedicine and telepsychiatry. this program is currently being tried in three states. i was wondering what measurable data the pilot program is showing you, and what are the prospects of expanding this to other rural communities? as we know, there is a shortage of mental health professionals everywhere, and rural america is probably exponentially so. >> you're correct, senator. before i was at the center for medicare, i was at the center for medicare and medicaid innovation. when we did the innovation awards, there were quite a few telehealth and telemedicine proposals. and i was surprised at the number that had a link to behavioral health and psychiatry, just as you

mentioned. we have some early evaluations of those, but they're very qualitative, meaning in case studies of how they have fared in standing up the program. we hope in the next year to have some quantitative data. i'll remind the committee, the statute set up the innovation center and said these models can be tested and they can be expanded if they meet certain cost savings and/or quality improvement standards. so we intensively evaluate all these models. so we hope in the next year to have some more quantitative results. one of the things i would say is many of the innovation center models are being tested at very large scale. some of them are being tested at smaller scale. and this would be one that is at smaller scale. even the we get very promising data, i don't think the next step would be to go to national with it. it would be to incrementally move to more communities. we're hope to feel have data soon. we have made all our valuations public and we will certainly share wit this committee as soon as we have news. >> well, thank you. i think one of the obstacles that all of us who live in rural states that are combatting every day is the lack of high speed rural broad band access. and certainly that's got to be impacting telehealth into the rural health initiatives. are you running into this in

some of your telemedicine initiatives? is this a problem that you've identified as well, or you have anything on that? >> again, certainly anecdotally as we talk to some of our wardees. it does affect what communities they think they can test these models in and which communities they wish they could test these models in. we don't feel we at medicare have the tools to help with that but we do recognize it as a barrier. and it's important, because i do think whether it's telehealth or other technology, i think telemedicine technologies, i do think broad band is going to be essential to that. >> and it's a challenge. it's a challenge. you know, anecdotally recently, mr. morris, in talk with our hospitals and emergency room physicians, we were talking with

the anesthesiologist the other day, one of the things that is cropping up now is that lack of total number of residencies so that there are several hundreds. i've heard 500, and then maybe into a thousand graduates of medical schools who don't match, and they don't get a residency. and that obviously stalls out their professional career. they've got student loans. and all sorts of other issues. are you looking at -- i mean, i think we should be looking at rural health as a way to expand the availability of residencies to fill this gap. do you have any -- i know you talked a little bit about residencies in your opening statement. >> yeah. wet are -- we do recognize the challenge you have just laid out. and one of the things we initiated about five years ago was to put a grant together with the national rural health association to expand these rural training tracks. there were about 23 of these across the country. and that number had been fairly static over the years. and now they're about 34. so we have increased the number of rural training tracks. what is unique about the rural training tracks. although is a total cap on the number of residencies that can be supported, there is

flexibility under the cap for new rural training tracks there is an opportunity to create rural residencies and to work with our partners at cms through that flexibility under the residency cap. and again, we know this is an evidence-based model that works. and we've seen some real successes from it. >> i certainly would be very supportive of any kind of way to meet -- to solve. this could help solve more than just one problem here if we were able to expand that and use it wisely. and i'll just make a comment at the end. those of us who live in rural america are always frustrated that it's assumed by the more urban areas that it's cheaper to

deliver medical services in a rural area, because typically, wages are maybe a little bit lower. but you have workforce shortages. you have travel times. you have all kinds of other issues that it's frustrating for us i think to make the case. i mean, we're always having to make the case, as you know. you're in this too. and so i applaud your efforts in helping us deliver the message to all of the health care dollars need to be allocated -- it's not as easy in rural america as some in the urban areas might think it is. thank you. >> dr. cassidy? >> hey, gentlemen. i was looking down but listening. so one of you pointed out the cause for closure is multifactoral. i accept that. i'm curious. it seems like the only business model that is actually going to work in a rural setting is volume. you don't have the critical mass of patients partly because so many are uninsured and partly because your pay makes medicaid so poor. i say this, because we just passed an sgr bill which promoted alternative payment models, the organization all rely on value purchases with the implication that volume decreases. so is one of the factors in this multifactorial problem that the business model can only survive with big volumes and the push is away from volume and more towards quality?

have you run molds on this? i'm wondering if there is any hope for these hospitals out besides an outright subsidy, be it through a tax base or be it through some federal legislation. >> i think, senator, you're putting your finger on a very important challenge that we all face as we move forward, which is, as you say, how do rural health providers not just survive but thrive into the new setup of the sgr reform bill. i think there is multiple ways this can happen. one is -- >> but let me ask before you go forward, because i have a specific question. >> sure.

>> do you have studies showing the effect of, say, an accountable co-organization which needs a critical mass of people with a very good pair mex on a capitated basis receiving their preponderance of care at this institution? is there such a study looking as to whether or not this model will work for rural hospitals? >> so i'm not aware of any studies. we are pleased to say, though, there has been a lot of skepticism whether acos could work in rural areas. in the shared savings program, which i'm responsible for, we do have 15 -- so we have about 7.3 medicare fee for service medical beneficiaries aligned with acos. about 15% are living in rural america. >> let me ask, though. you can live in rural america, but still get your health care at geisinger. so it wouldn't be that you had a local hospital. it would be that you're linked with a urban hospital or semi urban. you know, something such as that. so are these in the rural hospitals, what is the health of the rural hospitals and those settings in which you just described?

those acos you just described. >> so you make a good point. i would remind you, though, the beneficiaries are aligned through their use of primary care, not necessarily where they get their primary care. >> preponderance of primary care. you can live in a rural area and be in an aco that has a significant urban presence because there are acos that span both times of communities. and there are those that are strictly in rural areas there is one called a national rural aco which is combining rural acos across the country. i think it's early for us to know what the relative success of rural versus urban acos. >> i'm sorry. and i have limited time. so i'm trying to focus. what is the health of the rural hospitals in those areas in which there is an aco which governs, which has responsibility, if you will, for the rural patient? because i'm really -- this is about hospitals. so the we have an aco which kind of aggregates the care into an urban hospital setting, that would actually be starving the rural hospital. >> i don't have the data that you're requesting. we can certainly go back and see if it's something we can compile for you. >> okay.

okay. continue, then. because that was kind of the point you. had another point. i'm sorry i interrupted. so continue. >> i just want to make the broader point, senator, that we have heard from a lot of rural providers that they are excited about the prospects of getting into new payment models because they do find fee for service payments frustrating. they think they're efficient providers in many cases, probably are. we do have one large initiative out of the innovation center called transforming clinical practice. and this is where we're going to help small practices. not the hospitals necessarily, but small physician practices. give them technical assistance so they can develop the infrastructure and the knowledge to -- >> in that, i'll just go back to this. because it's -- the hub is what matters here. if the hub is a rural hospital

and that could potentially help, although under value-based purchasing, you're still going to be emphasizing keeping people out of the hospital. and i don't see -- you tell me. is there a business model that works for a small rural hospital that is not volume-based? i can see it working for the primary care providers, but i don't see one working for a rural hospital. >> if you're looking for that, our best hope is probably the accountable care organization with the aco being a primary player in that. and as i mentioned in my testimony, we've got two different programs to help rural hospitals. we provide them seed capital to help them form an aco and get into the shared savings program. it's very early both in the aco program and in these models that we're running. >> i'm sorry. so in that model, what is the -- i'm sorry. i'm going a little bit long. can i have it? what is the minimum number of patients you would need in order for that rural aco to work? >> so the aco -- it doesn't change the minimum number in the basic program, which is 5,000

alined medicare patients. >> now that would be for primary care provider. but 5,000 patients would not support a rural hospital with a ct scan and o.r., et cetera. the minimum number required to maintain a certain x number of hospital beds? >> i'm sorry. i should have been clear. 5,000 is the minimum to get into the aco program, the shared savings program. you're asking from an actuarial standpoint do we have some sense of what aligned lives would be needed. i don't know the answer. >> i tell you, we cannot make wise decisions regarding public policy unless you have those numbers. because ultimately, they got to make money. and unless you can give us some data that this there is a business model that works on an alternative payment model, we're wasting our time. and i say that not to scold. i'm swaying have to make decision. we would ask y'all to come back with that, if i can ask the indulgence of my chair and ranking member. i yield back. thank you. >> thank you, senator. anybody have a follow-up question? we maybe have time for one or

two other questions if anybody has one. mr. morris, in response to senator moran's question, you believe there are states that reimburse the total cost of a critical access hospital's operation? >> no, sir. what i was saying is that because -- and sean can correct me if i get any of this wrong. you know, when you set the cost based reimbursement rate, it's based on historical costs. and we just see some fluctuations from state to state in what that initial base is. but it's more complicated than that. and i can get back to you with more information on it. >> i think we expect you to get back to us on that. >> okay. >> but i think the point is well made that these rural hospitals are not in the profit-making business, even if they get 100% -- 101% of the allowable reimbursement. but there are states that have a formula that allows that, we'll be anxious to see which states are doing that and how they figured out how to calculate everything that is spent by the

hospital to operate into their cost basis. >> and to respond to mr. cassidy's question too, i would say that we do have examples of hospitals even with low volumes that have been able to make it work. i think it really is situationally dependent. there is a base level of volume you need. i agree with that. but we've got some success stories out there where folks have been able to bring primary care and align the physicians and the hospitals in a way, figure out what lines of service they can get into that makes sense for that community, arrange relationships with upstream providers that make it work. so what we would like to do is use our funding to sort of be the connecting of the dots between that, identify those models, and maybe replicate them in other communities. >> all right. mr. cavanaugh? yes, go ahead. >> thank you, mr. chairman, and thank you for helping me ask my question, and i appreciate the answer. this is a home health care question. some of our hospitals, more -- fewer than used to provide home

health care services because they can't afford to. but the affordable care act includes a provision that requires medicare beneficiaries to have a face-to-face encounter with a physician who certifies the need for that home health care services. the implementation of this face-to-face requirement raises lots of concerns with home health care provider, hospital-based or otherwise. and the documentation that is necessary, it sure seems to the providers as unclear. and the backlog of audits is increasing. there is a real uncertainty as to what the cms standard is for providing satisfactory face-to-face encounter. most of the appeals have been overturned in favor of the home health care provider. but my question is do you see this as a problem? does cms have a plan to respond to clear up the confusion, provide certainty and reduce the backlog? >> yes, senator. i think you have put your finger on a challenge that we've been taking on head-on.

the first thing is in rule making last year, we simplified -- you're correct that the affordable care act created the face-to-face standard. our initial rule making in addition required a narrative from the physician, a narrative writing, which providers found ambiguous. so we withdrew that requirement. so we still have the face-to-face requirement, but not the requirement for a narrative description of the need. we continue to have dialogue with the home health industry to make sure they understand what we're looking for. we are exploring avenues. personally, i'm very interested in finding a way to facilitate people making the documentation. as you say, there are a lot of auditor reviews to these. some get overturned, but many are upheld. even when they're upheld, it's often about the documentation and not about whether the service was needed, whether it was provided. i mean, granted there is fraud. but i'm not talking about that. i'm talking about a lot of services that were truly needed, truly provided but poorly documented. and i'm trying to find fought there is anything the agency, any role we can play to

facilitate that without facilitating bad behavior by a subset of the industry. >> thank you for that answer. i appreciate your attitude and approach toward attempting to solve this. and it is finding that place in which you don't punish those who are doing the right thing. and you do punish or prevent those who do bad things. mr. chairman, thank you. >> thank you, and thank you to the panel. i'm sure we'll have some questions submitted in writing as well. i appreciate your time today. and now we'll move to the second panel. and as the second panel is coming up, that panel includes tim wolters, the director of reimbursement at citizens memorial hospital in bolivar, missouri. and he is also a reimbursement specialist at the lake regional health system at osage beach, missouri. dr. kristi henderson, chief telehealth and innovation officer at university of mississippi medical center in jackson, mississippi. ms. julie peterson, the cmo of pmh medical center in prosser, washington.

and mr. george stover, the ceo of rice county hospital district in lyons, kansas. >> so thank you all for being here. mr. wolters, if you want to start with your testimony, we'll go right down the line, then. >> thank you, chairman blanche, member murray, first the chance to discuss current challenges. again, i'm tim wolters. i oversee government reimbursement programs in bolivar, missouri and osage beach missouri. 50 rural hospitals have closed since january 2010. rural hospital closure means more than just the loss of access to health care for a community. as a rural hospital is frequently the largest employer in town, its closure represents an economic blow as well. my written testimony provides several examples of what is working in rural hospitals, including quality health care at

a reasonable price to the medicare program, and programs like the medical home program which improves the health in our communities. i want to focus my oral comments, though, on four specific challenges rural hospitals face. first, patient volumes are lower at rural hospitals, and also fluctuate significantly on a day-to-day basis, making it difficult to manage staffing levels. my written testimony has a graph on page three that shows the daily census at lake regional for the month of january showing significant daily fluctuations, including a high census of 103 patients on january 15th and a low of 66 patients on january 25th. a significant fluctuation. second, medicalization is significantly higher at rural hospitals than urban hospitals. page 4 shows urban hospitals average only 30% utilization compared to 42.5% at rural hospitals. the challenge of such high medicalization is medicare cuts

represent a higher% of our budget. and we have less commercial and managed care volume to subsidize the medicare losses. the third challenge is the cumulative impact of medicare cuts. the graph on page 5 compares estimates using cms data of hospital costs versus payments from 2011 through 2023. the pop-top line represents the costs and bottom line payments factoring in productivity and fixed cuts under the affordable care act and the sequestration cut under the budget control act. the difference between the lines represents medicare's lost reimbursements, and it grows annually exceeding 17% by 2023. the cumulative impact of these cuts over this time period from my two hospitals is estimated to be about $120 million. beyond all of the cuts we've been facing, recovery of a contractor or rac program is draining our resources.

lake regional currently has over 500 medicare claims worth about $3.5 million in medicare reimbursement. the final challenge we face is the increasingly complex regulatory environment in which we operate. page 7 shows six different medicare perspective payment systems and six different medicare fee schedules we must manage with each of these systems changing on a regular basis, including changes to the midnight rule that ms implemented in 2013. also, we understand the reason for the change to icd-10 this fall, and we've been training extensively for the conversion. but this is one more significant change in our operations that we must implement with scarce funds available. both my hospitals were early adopters of electronic health records and have achieved stage 2 status. however, meaningful use funding nearing an end and the requirements continuing to

increase, this is also become an administrative burden for us to keep up with the changes that cms implements. in conclusion, with 50 rural hospitals closing since january 2010, congress must act to prevent further erosion of health care in rural communities. we appreciate congressional action to protect the funding we receive. for example, hr-2 eliminates the annual threat of a significant reduction in the medicare fee schedule. it also provides a 30-month extension in the medicare low volume and medicare-dent programs and extends the home health care add-ones. for rural pps hospitals to survive, congress must continue to support these programs, in fact making them permanent. likewise, rural hospitals should be exempted from a sequestration and future medicare cuts. we also need continuous support for programs like the 340-b drug discount program, a lifeline for cms, which also saves money for the state and the federal

government. finally, grant fund shotgun be made available for rural hospitals to assist with the transition to icd-10 and the larger conversion to future care delivery in future models. thank you for the opportunity to present this testimony today, and i look forward to answering questions you may have. >> thank you, mr. wolters. dr. anderson? >> chairman cochran, chairman blunt, ranking member murray and distinguished members of the subcommittee, it's my pleasure to join you today to discuss how telehealth is improving health care in rural communities. my name is kristi henderson and i'm a nurse practitioner and serve at the university of mississippi medical center in jackson. mississippi ranks at the bottom for overall health, obesity, heart disease, diabetes, and preventible hospitalizations. more than half of mississippi's three million citizens live in a rural community, and almost a quarter live at or below the federal poverty level. two-thirds of mississippi's hospitals are located in rural areas and lack sufficient resources in specialty care. but despite these facts, telehealth in our state is increasing access to health care and improving outcomes and

lowering costs. the ummc center for telehealth began in 2003 with the tele-emergency program connecting critical access emergency to departments to physicians at our trauma center. 12 years later, telehealth allow us to provide over 35 medical specialties to 166 sites around the state, including community hospitals and clinics, mental health facilities, schools and colleges, corporations, prisons, and even in the patients' homes. we connect sites in 52 of the state's 82 counties and serve an average of 8,000 patients a month. since 2003, we have been awarded over $9.7 million in federal grants to purchase devices, conduct workforce training, and enable the technology that we use to serve patients daily. this early funding allowed us to test delivery systems, areas of practice, and service locations in order to craft an effective and impactful model worth replicating. without early critical support from usda, hrsa, fdc and others, our network would have been very slow to deploy, taking the longest to reach those with the most need. today our system is completely self-sustaining.

a critical factor to our continued sustainability is the reimbursement parity available in mississippi. prior to 2013, insurance companies in mississippi did not reimburse for telehealth services. we argued that mississippi would ultimately save money if they did, and undertook a series of pilot projects to prove it. we were successful. in 2013 and 2014, governor bryant signed legislation mandating that health insurance companies reimburse for telehealth services at the same rate as in-person services. these policies changes were the catalyst for the rapid growth of our system. while increased reimbursement may cost more in the short-term, years of data from our state and numerous others prove that the cost savings achieved through better chronic disease management, fewer er visits, and aggressive preventative care far outweigh the expenditures. given the success we have seen in mississippi, i can only imagine the exponential impact of offering similar federal parity for mental health.

i commend cms for opening new code sections for reimbursement and hope the committee will encourage them to expand coverage for more services in more communities, be they rural or urban. without reliable connectivity, we cannot serve rural patients. thanks to support from universal service funds and our telecom partners we are able to bring much needed health care to rural mississippi. it is this connectivity enabling remote patient monitoring in the home that is changing lives in ruralville, mississippi. last fall we launched a research pilot aimed at managing 200 uncontrolled diabetics through aggressive in-home monitoring and intervention. once enrolled, patients are sent home with an electronic tablet that monitors glucose readings daily, provides educational information, and transmits health data to specialists monitoring them hundreds of miles away.

for the first time these patients have access to a medical team dedicated to their care, ophthalmologist, endocrinologists, pharmacists, nutritionist and nurses. preliminary results show that the majority of patients have already met or exceeded the goals that were set for the end of the study. with one exception, none of our patients have gone to the er or been admitted to the hospital for their diabetes. the results are improved care at a reduced cost. so we look forward to working with the committee and would like you to consider these few points. the need to test reimbursement parity at the federal level, particularly for remote patient applications. the only way for us to know if the success of pilots like ours can be replicated at the federal level is to test it. now is the time for cms to pilot new reimbursement parity models for telehealth, especially were

in-home monitoring impact is the greatest. the continuing need for support for telehealth. while our network has become self-sustaining, it will not be complete until we reach every mississippian. the need for federal funding remains, and efforts to coordinate opportunities across the agencies should be encouraged. the need to remove geographic barriers for reimbursement. rural or urban, telehealth is a powerful tool in improving access to care and should be incentivized. we recommend that geographic restrictions for cms reimbursement be removed. and then lastly, the need for continued support for universal service funds. a reduction in any of the usf fund willing not only impact current operations, but will significantly hinder our efforts to offer remote patient monitoring in rural communities. fund shotgun be protected. our mission is to increase access to health care and improve outcomes and reduce costs. telehealth allows that to happen. i thank the subcommittee or to the opportunity to testify today and look forward the answering your questions.

thank you. >> thank you, dr. henderson. ms. peterson? >> chairman blunt, ranking member murray and members of the subcommittee, thank you for the invitation to testify today. my name is julie peterson, and i'm the administrator of pmh medical center, a critical access hospital located in prosser, washington, a community of about 6,000 people. pmh is organized as a public hospital district, and we serve about 68,000 rural residents in two counties and five small towns. the mission of rural health care providers like pmh is to ensure access to high quality, affordable care for populations that are challenged disproportionately by distance, poverty, age, chronic conditions, and cultural barriers. many of our patients do not have reliable transportation, paid

sick leave, and the other resources that allow them to travel to receive care outside of their communities. in short, rural communities are older, sicker, have poor health status, and face significant economic challenges. it's never been easy to provide access to high quality care in these communities, and it's more difficult today than ever before. as is the case with most rural communities and hospitals, pmh is more than just a hospital. we are the backbone of the community health system. what you may think of as traditional hospital activity makes up just slightly more than a quarter of our business today. in my written testimony, i included an extensive list of the nonhospital services that we provide. everything from primary care to our 911 ems service. we are a fully integrated delivery system dedicated to meeting the health needs of our community in a coordinated way. but the current reimbursement system does not recognize that reality. reimbursement is siloed, and there are as many ways as we get paid as there are services we provide.

this makes sustaining a coordinated health system for our community very difficult. for example, i need to be moving forward to create medical homes for my residents. i need to be integrating behavioral health and medical health in my rural health clinics. but there are so many reimbursement variables that i cannot assure my board that we can sustain these programs. the current fragmented financial system destabilizes rural health. another challenge we face is that many people in our area remain uninsured. that's despite the fact that our state had a very successful medicaid expansion program. we provide coverage to 535,000 additional washingtonians through expanded medicaid and the health insurance exchange

enrolled another 170,000 washingtonians. these efforts need to continue. rural communities also face greater shortages of health care professionals than their urban counterparts. as the ceo, physician recruitment is a constant activity for me. i have an aging workforce, and our doctors are still required in many cases to participate in call, which is not the case in urban areas. so they work very, very long hours, and they see far more complex cases in the clinic setting. programs like the national health service corps and the nurse training initiatives enable many communities like mine to attract the providers that they need. these challenges, our unique population, the fragmented population and workforce shortages make it very difficult for rural health care facilities to survive. we need flexibility. in washington, as senator murray pointed out, we've identified about ten very small critical

access hospitals that might be facing eminent closure. that awareness has led the association, the department of health, the state office of rural health and others to begin seeking new delivery system models. our goal in washington is to develop and test one of these new models within the next 12 to 18 months. that is a very ambitious timeline, but it is justified in view of the plight of some of these smallest facilities. one invaluable tool in this effort is the cmmi grant that provides $65 million to the state for the healthier washington initiative. we also have two rural hospital collaboratives that are funded in part through hrsa grants that are working with critical access hospitals and rural clinics to pioneer rural network development and outreach. the federal office of rural health policy and the washington office of rural health have been generous partners in these

efforts. we will need continued help from these officers and from cms if we are to succeed. finally, i'd like to take a moment to brag a little bit about the leadership shown by all of our washington hospitals in advancing quality of care and patient safety. the centerpiece of this effort was an $18 million grant that funded our hospital association's participation in the hospital engagement network. this quality and safety improvement work, this $18 million grant, has generated $235 million in health care savings through reduced readmissions, fewer hospital acquired conditions, and healthier babies. that's just one example of how our rural hospitals are preparing for a future where measuring quality, efficiency, and service will be essential. we are ready to demonstrate our value to partner hospitals, health plans, and to our patients.

rural providers are dedicated to ensuring that the people who live in rural communities have access to the highest quality affordable medical care. i'm optimistic that we can achieve this goal. the programs that we're discussing at this hearing today are valuable tools on that journey. thank you. >> thank you, ms. peterson. mr. stover? >> mr. chairman and members of the committee, thank you for the opportunity to speak to you today. my name is george stover, and i serve as the chief executive officer of hospital district number one of rice county in lyons, kansas. lyons has a population of 3800. our community hospital, which first opened in 1959 is a 25-bed critical access hospital that employees approximately 150 individuals. rural community hospitals have a long and distinguished commitment of providing care for all who seek it, 24/7, 365. more than 36% of all kansans live in rural areas, and depend

on a local hospital serving their community. rural hospitals face a unique set of challenges because of the remote geographic location, small size, scarce workforce, physician shortages, higher percentage of medicare and medicaid patients, and a constrained financial resources that limited access to capital. these challenges alone would make it difficult for many rural hospitals to survive. however, one disturbing challenge that is becoming ever increasingly more prevalent is the added regulatory burdens that are being placed upon health care providers. more specifically, i would like to briefly touch upon the challenges related to the medicare policy on direct supervision of outpatient therapeutic services and the 96-hour physician certification requirement. in 2009 the center for medicare and medicaid services issued a new policy for direct supervision of outpatient therapeutic services that

hospitals and physicians recognized as burdensome and unnecessary policy change. in essence, the new policy requires that a supervising physician be physically present in the department at all times when medicare beneficiaries receive outpatient therapeutic services. as a result, many hospitals have found themselves at increased risk for unwarranted enforcement actions. while the congressional action last year to delay enactment was applaud by rural hospitals like mine, the protections afforded it under the legislation expired at the end of 2014. rural hospitals are again at risk for exposure unless congress takes action. the 96-hour physician certification requirement relates to the medicare conditions of participation on the length of stay for critical access hospitals. the current medicare condition of participation requires critical access hospitals to provide acute in-patient care for a period that does not exceed on an annual average

basis 96 hours per patient. in contrast, the medicare condition of payment for critical access hospitals requires a physician to certify that a beneficiary may reasonably be expected to be discharged within 96 hours after admission to the critical access hospital. as a rural hospital administrator, the discrepancies between the conditions of participation and the conditions of payment have caused confusion and challenges. equally troubling, the president's fiscal year 2016 budget proposal calls for critical access hospitals' reimbursement to be reduced from 101 to 100% of allowable costs. this reduction, which would be on top of the 2% reduction associated with sequestration, would effectively eliminate any opportunity for a positive financial margin. further, the recent consideration by congress on the

trade promotion authority bill that extends sequestration cuts on medicare providers potentially exacerbates our financial challenges. toward that end, a recent analysis within our state showed that 69% of rural kansas community hospitals had a negative medicare margin. the average rural medicare margin was a negative 9.3%. as a result of this trend and the fact that many rural hospitals serve a higher percentage of medicare beneficiaries, many rural community hospitals in kansas must seek some form of direct tax support from their local communities. in summary, it is critically important that our rural communities across the nation are able to access quality health care services. therefore, steps should be taken to minimize the regulatory burdens that are placed upon rural health care providers. i strongly encourage this subcommittee to support solutions that address the aforementioned issues. thank you again for the opportunity to appear before you. and i would be happy to stand for any questions. thank you. >> thank you, mr. stover.

i think i'll go last this time. so the order would be senator murray, senator cochran, senator moran. senator murray? >> thank you very much, mr. chairman. thank you to all of our panelists. i really appreciate all of you participating today. ms. peterson, i'm really excited to hear about the delivery system reform work under way in washington state. and i'm really proud that our hospitals have been recognized as national leaders in increasing the quality and safety of care. i'm particularly excited about the recent grant from the centers for medicare and medicaid innovation you mentioned in your testimony to support the healthy washington initiative, efforts to improve care statewide that will reduce costs and stabilize some of our rural hospitals. what have you found to be the most significant barriers to integrating care in the first year of this effort? >> at this point, and you're right, it is very exciting what is going on in the state of washington, i would go back to

that fragmented reimbursement system. not only are the incentives different based on what line of service you're providing, but as my colleague mentioned about the racs and the amount of time it takes to reimburse some of these systems, it's years out before we know what our true financial condition really is. so i would call out that fragmented reimbursement system. but we also need current rurally relevant data to move forward with when we talk about value-based purchasing and population health. so i would say stability in reimbursement is one of the barriers. and the other is just a true reliable database for rural residents. >> okay. and talk to us about some of the specific reforms that we can expect to be seen implemented in the first year of this. >> well, what i would expect to see is this continued movement towards value-based purchasing and defining quality. and, again, i think so

washington state has done an excellent job of doing that. and led by the washington state hospital association, all of the hospitals in washington are participating in reporting their quality data. so the rurals are right in there. i would expect that that's going to continue to happen. what i would like to see is more focus on what is relevant in rural communities. when we report in to hospital to compare, too frequently that grid of data has gaps for our rural facilities because we're not measuring those things that are occurring and really contributing towards quality outcomes and reduced costs in rural hospitals. >> such as? >> you know, our hospital acquired conditions, our ability to reduce readmissions from our emergency department and our inpatients. one of the grants that you mentioned, the community paramedic program is actually hosted by my hospital, and it's been a tremendous success taking

our ems resources out into the community to see people after they've been discharged. make sure that they're following their discharge instructions, getting their prescriptions filled, and that they've made that primary care follow-up. so those are some of the things i'd like -- >> we've had chance to talk than, but it's fascinating to me that just that human touch on somebody, making sure they take their medication or follow what was told to them when they left the hospital reduces costs in the long run. >> it does. and they're in their own home where they can think through their questions. we also get a look at the home and the environment they've been discharged into make sure it's safe and appropriate. it's a great program. >> i'm really looking forward to more on that. one last question. what more can cms do to help rural communities make greater use of telemedicine? >> well, telemedicine in the context we usually talk about is a direct link between the patient and a provider in a remote location, or a patient talking to someone at an

academic medical center. and our facility, we also use telemedicine to support our local providers. so they can have that consult discussion with somebody at the university of washington or someone at swedish. cms right now, and i think mr. cavanaugh answered some questions about the metropolitan statistical area restrictions that we have. that's a very antiquated assumption that if you increase telemedicine, you're going increase costs. in fact, you're going to take that very scarce workforce that we have in rural america, and you're going to be able to extend it. it will be more efficient. and you'll create access in our communities. >> okay. very good. thank you very much for being here and your testimony. i appreciate it. thanks, mr. chairman. >> thank you. senator cochran? >> mr. chairman, dr. henderson, you mentioned in your testimony that the reimbursement parity

issue was an important factor in the growth of services that are rendered through television and telehealth services. the diabetes pilot project you described are really remarkable. and obviously i like the potential for significant cost savings if they could be expanded into communities across the country. what do you see as the programs that could be expanded? are we talking about the diabetes pilot project? is that a possibility to serve more communities? >> yes. so we can expand the diabetes program to other geographic regions, but we can also expand it to other chronic diseases. and that program in particular is a remote patient monitoring program where we're helping day to day with patients in their home manage their disease and keep them healthy. and using the resources that are in that community more efficiently. but from telehealth perspective,

it really is about connecting and coordinating all the care team. it's not just a physician service. it's a nursing one. it's interpreters. it's case managers. it's patient navigators. once you have this infrastructure and connectivity, you can connect any of those resources to bring what would only be at an academic medical center to a rural community. >> thank you for your leadership. we think we benefit from these experiences that you've described for us today. and i hope we can help achieve those goals of expansion and improved access for less costs. >> yes, thank you. mr. moran? >> mr. chairman, again, thank you very much for conducting this hearing. and i appreciate our witnesses. thank you for what you do in your communities to make certain that citizens, patients are well cared for. let me start with the kansan. mr. stover, welcome to our nation's capital. thank you for coming from kansas to testify.

i want to go back to what i was trying to raise with the previous panel about actual cost-based reimbursement. can you give us an idea of even though presumably you receive 101% of costs, what really -- what percentage of your actual costs are covered by that reimbursement? you might start by telling us what percentage of your patients in medicare or medicaid, what's your paid mix. is there public or taxpayer support for your hospital? how do you make this work even though presumably the image is that you're getting 101% of your costs? >> thank you, senator moran. within rice county our medicare volume is about 63%. medicaid volume of about 10%. we are a taxing entity.

we are able to appropriate tax funds from our district, which is about $900,000, what's interesting with that number, in our fiscal year ending in 2014, we ended up having to write off nearly $800,000 to medicare bad debt. so that essentially washes itself out. when it comes to the cost base, you're absolutely right. our reimbursement of 101% does not equate to our total cost of providing the health care within our facility. i would not -- knowing that number off the top of my head exactly, but i would say it's probably around the 75 to 80% margin, which covers our costs. so we have to look towards our

local tax base to make up that difference or otherwise start looking at reduction of services which we do not want to do. >> it used to be that hospitals would tell me that that mix, that 70% some medicare medicaid, you suppose you do everything you can to cost shift those to those who have private insurance. but are those opportunities available now as -- is it better to have a medicare patient and private pay patient, a medicaid patient as far as revenue? how do you compensate for less than actual reimbursement of cost. where do you make up that money other than taxes? can you do it with private pay? >> we work towards our uninsured, our private pay in their struggles, but no, it doesn't come towards -- >> let me ask you the question this way, mr. stover. are you pleased when a blue cross and blue shield covered

patient walks in your door? does that mean this is a better deal than in if it was medicaid or medicare? >> we look forward to the blue cross blue shield patient coming to our facility. >> and the problem is the percentage of those who come in the door is a small percentage. >> a very small percentage, yes, sir. >> you mentioned uninsured and having to write off costs, and i'm not trying to portray this in any partisan or the way the issue is looked around here too often, but under the affordable care act, a theory is there would be more people insured. has that proven to be true in light of what you just said about hoping that the private insurance covered patient walks in the door? >> we have seen a small increase of those individuals that were once uninsured. we funded them to be enrolled in medicaid in our state-based mco program that we have.

we have seen a small increase in the marketplace of those that once did not have insurance but otherwise found it on the marketplace. but when you look at the overall, that is a very small percentage of those individuals. they still find themselves uninsured. >> some hospital administrators have told me that even with additional insureds, that the co-patients and deductibles are higher and therefore the bad december expense has increased even those with those who have insurance. the way i described this is, somebody who had a $100 co-payment could come up with $100 but if it's a $5,000 co-payment, they can't do that so you end up writing off more even though there might as you say be a slight increase in insured? >> that's correct, we're finding that even though the co-pays in the past have been lower, we're finding that the co-pays now

those individuals are now on a payment plan and in turn sometimes we're having to write those off. >> let me ask a broader question. perhaps it's dr. henderson, but ms. peterson talked about telemedicine as well. i just like to have the summary of the costs associated with telemedicine and how they are paid for. as i was listening to your testimony, i jotted down three things i think that the hospital would have to pay for, the equipment, i'm interested if you could just -- i'm sure you've told this in your testimony but i would like to get this in a short summary so that i can understand it. you have to figure out how to pay for the equipment. and finally how does the provider get reimbursed for providing the service? my question there is, when the university of kansas medical

center in kansas city provides telehealth to the rice county district number one hospital, is there a reimbursement to the physician who is present in kansas city at the major hospital and is there any reimbursement that then comes to the hospital that's providing the service at the other end? >> i don't know who is the person to answer that question. >> your points are absolutely correct. how we're doing it in our state, is that our center for telehealth is providing all the the equipment. so thanks to some of these federal funding dollars, i'm able to deploy that. so that is not an up-front capital cost. >> i know you're talking about mississippi but would that be true generally do you think across the country, that there are grants available for the equipment? >> the majority of all of these programs have started off with grant money. >> thank you. >> and then in our state we're able to pay the provider who provides the service. so the telehealth physician or nurse-practitioner are paid

through their reimbursement -- >> here you're talking about the provider in the rural setting? >> i'm talking about the other side. >> right. >> so where the patient is there can be a facility fee billed and that can be reimbursed as well and that helps offset their cost for facilitating that interaction. typically it's not a provider to provider because both providers cannot be paid for the same service. if you have a generalist with a specialist and they both do an exam, then they both can bill. >> you have a general practice physician at rice county hospital district number 1 and a specialist at the k.u. medical center. both of them can bill? >> if they're doing different services, yes. >> so there is no disincentive to a provider to make this happen? >> as long as you're in a state that allows for parity reimbursement. >> i'll have to figure that out. and finally, let me ask you to clarify for me when we talk about that reimbursement does it matter who the payor -- who

is providing the insurance medicaid versus medicare versus private insurance. is your answer the same in all three settings? >> it's not and it depends on your state and what the legislation allows for and then medicare has geographic restrictions as well that we've heard. in our state, all public and private payers in mississippi medicare have a parity reimbursement for telehealth. same as in person. >> chairman, do you want me to stop or ask one more? >> just one more. >> so mr. stover or missouri -- maybe this would make senator blount happy. mr. walters. how does it work in missouri as far as medicare versus medicaid versus private pay for telehealth or mr. stover how does it work in our state? >> i can answer that in missouri. we've invested heavily in telehealth. using grant funds for the

equipment. the problem with medicare, its geographic restrictions are such that we have a network of 12 rural health clinics we operate. they are rural for purposes of being rural health clinics under the medicare program. four of those clinics are considered urban for telehealth purposes. is the patient is in that rural health clinic and they are not covered by medicare and cannot access telehealth services. we also have six long-term care facilities that we operate. two of those six are in urban locations. so there are times when the patient may have an event going on at the long-term care facility. we like to have a doctor see that patient. but if it's at an urban facility they cannot use telehealth and the medicare program. so we essentially would have to transport the patient by ambulance to the e.r. to access care that probably could have been provided by telehealth except for the fact that medicare defines that as a urban facility. >> from a reimbursement of cost to the medicare trust fund, that doesn't make sense, right? >> no, sir.

>> you used all of your time and all of my time. it was astounding. >> missouri and kansas cooperating. >> miss stover, you mentioned you had a health tax provided i think you said about $900,000 a year but you lost $800,000 in medicare bad debt? is that what you said? medicare bad debt? >> yes, sir. >> how would you have medicare -- i'm sure there's a simple -- everybody on the panel understands this, but i don't. how would you have medicare bad debt? >> it's the bad debt that we recognize on our medicare cost report. >> it's not bad debt that the medicare system owes you -- >> that's correct. >> in your reporting to medicare, you're reporting you have $800,000 of bad debt. >> that's correct. >> i see. that's helpful to me to understand that. mr. walters, i saw there's a ap

story out today and a kwmu story today on a harvard study that indicates that of the 195 hospital closures nationwide, they had little impact on patients unless you were in rural settings and that headline says in rural missouri but it's clear they mean rural -- it's a missouri stair but te may mean rural settings anyway. >> you had close to the hospital in oceola closed. do you want to talk about what you did, what your system did there to try to alleviate some of that loss of service? >> thank you, senator, yes, the hospital in osceola about 35 miles north of bollivear, it closed november the 1st. and that represented a loss to that community. no more emergency room and loss of quite a few health care jobs. we did step forward and have taken over the operation of the ambulance service and we've taken over the operation of their rural health clinic. in fact we converted that into a

walk-in clinic open seven days a week, 12 hours a day to provide access to the patients in that area. we've also taken over the operation of the retail pharmacy they had, only pharmacy in town. we've added rehabilitation services for physical and occupational and speech therapy services in the community. we try to provide outpatient care and the ambulance care to transport them to whatever hospital is appropriate when a patient has a need for emergency care. so we've tried to help alleviate the loss to that community, but that certainly is a severe loss to osceola. >> i think the payer mix, almost exactly the same payer mix you describe, there stover, and maybe you, ms. peterson, about the same payer mix you have. >> my system is about 65% medicare/medicaid. >> how much uninsured? >> about 7% at this point. >> so you have medicare and medicaid, and rest has some -- rest of your patients have some

kind of coverage? >> some sort of commercial coverage, correct. >> on rack audits, did you mention mr. walters you had 500 claims currently? >> that are still setting at the alj level and the backlog at the hearings center for the alj. so we've had about 1,000 denials overall over the past four or five years and we've appealed about 85% of the denials. of those that have been heard at any level of appeal we've been successful about 90% of the time in overturning the denial. but the vast majority of the appeals are still sitting at the alj level and probably will be for another couple of years. >> and has cms suspended rack audits right now because there is no process or are you continuing to have audits? >> they are reworking the contracts for the racks so they have essentially suspended activity while they are renewing the contracts.

cms said they are going to make some changes but it appears that may not go far enough in trying to correct what's wrong with the rack program. the overly aggressive incentives of recovery auditors to deny claims and take their percentage fees regardless of the fact that most of those get overturned. there's really no penalty to the rack auditor at this point. so they can deny. sometimes they pay the money back, sometimes they keep it. but they keep it for several years in the appeals process. >> the $3.5 million, you had to give that -- you had to return that money? >> right, the money is gone right now, we're waiting for it to hopefully come back somewhere down the road. >> if your current and past history was right, the odds are in 90% you'll get that money back but you don't know when you get it back and the use of the money is gone and can't plan to get it back. >> yes, sir, that's correct. he. >> ms. peterson, have you had similar -- what's your rack

audit history? or just your views on how that system's working. >> i couldn't agree more that the incentives don't align with a legitimate helpful audit process. coding and determining whether someone's an observation patient or an inpatient is very complex. we do welcome the ability to review those and go through a legitimate audit process. the problem is these are essentially bounty paid claims, 9% to 12% or whatever the percentage is. of any claims they overturn. they also have the ability to look at the entire record and second guess the physician who saw the patient at 2:00 in the morning in the er. so they are looking at a closed record of a four-day length of stay that e.r. physician had the information they had from the patient at the time. i think the other thing is there's a very, very long window that they can go back and deny those claims and review those claims and that also needs to be shortened up.

>> mr. silver? >> within our facility, being a critical access hospital, we are maybe the outlier that we have not had any particular rack issues or -- we've had minor ones but we have not been -- i guess we're just the outlier. but within kansas, we have a number of our -- my colleagues and those facilities out there that are faced with the continuance of having to fight for or prove through their appeal process. >> is this process different for critical access hospitals? >> i'm not aware individually. >> you happen to be a critical access hospital but you don't know that's why your experience

is different? >> that would be correct. >> i'm using the moran standard. so i'm going another three minutes here. >> one of the big areas that they are looking at is the decision to admit or not to admit a patient. one difference with a critical access hospital the inpatient outpatient is still cost reimbursed and less of an impact on medicare reimbursement there, they get paid for the care, whether called inpatient or outpatient for a pps hospital, for a hospital like ours we get paid a higher payment for inpatient admission or observation payment. a significance difference in the level of payment. the recovery auditors -- >> one other major to audit is whether you should have put the person in the hospital or not? >> right. they are not questioning the care we provide. they are saying should not have been an inpatient and that

changes the level of reimbursements we get. although they are looking at critical access claims in some areas. >> i've also been told on the hospital wage index that rural hospitals can constantly form more and more behind compared to counterparts in other places, would you think that would be an accurate statement? >> yes, it is, because the data the cms used to determine the wage index is several years old and what happens is the wage data goes down, you're paid less, therefore you have less to spend on salaries. it becomes kind of a cycle where you end up paying less to your staff. you don't give the pay increases that maybe an urban hospital would give. so you gradually fall behind in urban areas. that does become a problem in rural areas. >> similar observations on wage index from ms. peterson or mr. stover?

>> the wage index relative to critical reimbursement is not as significant as a pps setting, however the idea that physicians and specially trained nurses and phlebotomists and technicians can be recruited to rural areas for less than they would earn in the urban areas is simple i why not true. we compete on a national level for these very, very scarce resources. >> same observation, mr. stover. >> yes, mr. chairman, i would agree with my colleague, ms. peterson. >> dr. henderson, my last question would be on telemedicine, are you getting reimbursed -- do you have behavioral health also? >> we do, yes. >> are you being reimbursed for behavioral health in the same way for other health items? >> we are. >> your goal is to recapture all costs? >> correct. and to interest great behavioral health into clinic as well.

>> do you have any studies that woe indicate how much better they would be if you're dealing with behavioral health problems at the same. >> it's interesting. in our diabetes program a component of our program is around medical adherence and lifestyle and behavior changes, which needs a strong mental health component as well for behavior change. we're incorporating into that. we're not through with that study yet to publish it. but we're offering mental health services even on college campuses and schools. it's one that will continue to grow and our biggest demand right now. >> my personal belief that even -- certainly societally if you deal with mental health like it's every other health issue, the cost comes back many, many, whatever you 13e7bd comes back i think many times. but my personal belief is even in the health care context that you deal with every other health

issue in a more effective way if you deal with behavioral health like it's a health issue rather than you've got lesser reimbursement and less of a commitment, whatever that i hope we can get there. i'm glad that you're getting there on your telemedicine program. >> would you like a minute? >> no, thank you though. >> properly close out here. we'll leave the record open for a week for questions to be submitted. we thank our panel for coming and we are going to adjourn until 10:00 a.m. on thursday, april the 16th. thank you all for being here. that can't be right. may the 16th? on may the 16th. thank you all.

[ room noise ] tonight on "the communicators," at this year's consumer electronics show we met up with author peter nowak who says we're in a new phase of human development and through robots and other technology we're likely to enhance the human condition. >> robots is an especially interesting one because 2014 i think was the year of robot angst. i don't know if a day went by when i didn't see some kind of story about how robots are stealing jobs from humans and that we're all going to end up out of work. it's on a dailybase you hear stories about there's a robot that's a better bartender than humans, here's a robot that's a better waitress or waiter than

humans and so on and so on. the thing that i find -- the point that gets missed is that every prior revolution or advance in automation has actually resulted in better jobs for humans. we're really worried about the robots taking our jobs and we're having a hard time imagining what we're going to be doing not just 200 years from now but even ten years from now. i think history has shown that we will figure out a way to combine with the robots to create new jobs again, that were previously unimaginable. >> tonight at 8:00 eastern on "the communicators," on c-span 2 2. >> the internet and tv expo recently wrapped up its meeting in chicago. join us this weekend for a number of speeches from that event. we'll kick things off with remarks from comcast chair and ceo brian roberts, whose company just dropped plans to merge with time warner. see that saturday at 10:00 a.m.

eastern on c-span. later on saturday it's comments from fcc chair tom wheeler. he talked about net neutrality among other issues. then on sunday commerce secretary penny prits guerre and her speech to the group. 5:00 p.m. eastern, 2:00 pacific on sunday. also on c-span. >> remarkable partnerships. iconic women. their stories in "first ladies: the book." >> she did save the portrait of washington which was one of the things that endeared her to the entire nation. >> whoever could find out where frances was staying, what she was wearing, what she was doing what she looked like who she was seeing, that was going to help sell papers. >> she takes over a radio station and starts running it. i mean huh? how do you do that? and she did it. >> she exerted enormous influence because she would move a mountain to make sure that her husband was protected.

>> "first ladies," now a book, published by public affairs, looking inside the personal life of every first lady in american history. based on original interviews from c-span's "first laudies" series. learn about their lives ambitions, families, and unique partnerships with their presidential spouses. first ladies. presidential historians on the lives of 345 iconic american women. filled with lively stories of fascinating american women who survived the scrutiny of the white house, sometimes at a great personal cost often changing history. c-span's "first ladies" is an illuminating, narng, and inspiring read. now available as a hard cover or e-book through your favorite bookstore or online book seller. with live coverage of the u.s. house on c-span and the senate on c-span 2 here on c-span 3 we complement that coverage by showing you the most relevant congressional hearings

and public events. then american history tv with programs that tell our nation's story including six unique stories. the civil war's 150th anniversary, visiting battlefields and key events. american artifacts. touring museums and historic sites to discover what artifacts reveal about america's past. history bookshelf, with the best known american history writers. the presidency looking at the policies and legacies of our nation's commanders in chief. lerkts in history with top college professors delving into america's past. and our new series real america featuring archival government and edge educational films from the 1930s through the '70s. c-span 3 created by the cable tv industry and funded by your local cable or satellite provider. watch us in hd like us on facebook and follow us on twitter. coming up next here on c-span 3 it's a senate small business committee hearing on seafood industry safety and regulations. witnesses discuss these and other relates issues including

the lack of foreign workers to fill temporary and seasonal jobs within the industry. the committee's chaired by louisiana senator david vitter who's introduced a bill that would increase inspection standards on imported seafood to ensure foreign inspectors meet u.s. safety standards. this is an hour 20 minutes. >> good afternoon. we're going to start our hearing today on the impact of federal labor and safety laws on the u.s. seafood industry. thanks for joining us today. we're going to be hearing from two panels of expert witnesses and stakeholders a federal panel o'o'who i'll ibtntroduce in a minute, and a stakeholder panel. i want to thank all our witnesses who are here to testify on these important issues. as anyone who's visited louisiana knows, we enjoy great quality seafood and that plays a major role in our culture and our economy. and this is true for other

states in the united states. it's an important part of our economy. in louisiana that seafood industry supports 20,000 jobs in the state with an annual economic impact of over $1.7 billion. more regionally, the gulf states produce 70% of the nation's oysters, 69% of domestic shrimp, and are a leading producer of domestic hard and soft shell blue crabs. more broadly, the seafood 's industry is responsible for creating jobs and revenue that support so many families along the gulf, in alaska and elsewhere, including the east coast and the west coast. seafood processors in louisiana and across the gulf coast rely on seasonable foreign workers to fill the most labor-intensive positions throughout the sector. these workers come to the united states legally under the h2b visa program. this program is vital to many in

the seafood business as many of these operations take place in small rural communities where access to a stable, reliable labor force can be extremely difficult. recently we've seen the difficulty of compliance with this program increase, most notably the department of labor's decision to stop accepting private wage rate surveys which has often forced businesses to reallocate their financial resources. and that has been a big, big cost increase for these businesses. another area that requires attention is ensuring the safety of seafood that's being imported into the country. it is imperative that we ensure that foreign imports are playing by the same rules and regulations that our domestic producers operate under. that's one of the reasons i introduced the imported seafood safety standards act. this legislation increases inspection rates, quality

standards, and penalties in order to protect american families. in closing, we need to make sure that federal regulations of all types, like the two areas i've highlighted, do not unfairly and negatively impact our small domestic seafood providers. what washington bureaucrats often fail to realize is that their rule making can literally put some small businesses like domestic seafood producers out of business, so we need to focus on these and other regulatory areas. again, i thank everyone for being here today and i look forward to our discussion. with that i'll turn it over to our ranking member. senator shaheen. >> thank you, mr. chairman and thank you to all of our panelists this afternoon for being here. as the chairman said, seafood is a big issue in my home state of new hampshire. just as it is in louisiana. even though we only have 18

miles of coastline, it is an industry that is important to the state, both because of our tourism industry and the fishing -- the pleasure boat fishing that goes on off the coast of new hampshire, but also because we have not only a small fishing industry, but we also have a fish processing industry in new hampshire. and mr. chairman, in the interest of brevity and because i have to leave early, i'm going to submit my full statement for the record but i just wanted to raise a couple of concerns. one is not directly related to this hearing, but since we're talking about seafood, i feel compelled to talk about the concerns that we have in new hampshire and the northeast relative to the fishing quotas that have been set by the department of commerce, and specifically by noaa. over the past few years, the federal government has found that the declining levels of cod

in the gulf of maine have been dramatic. there is some disagreement about that among scientists and among the fishing industry, but they have set very dramatic, very low quotas that have almost totally decimated the fishing industry in new hampshire and, again, i appreciate that that's not the subject of today's hearing, but it is an issue that we are very concerned about and that i think it is something that we need to deal with because of its impact on our small business fishing fleet in new hampshire. the other issue that is relevant to today's discussion is one that is having an impact in new hampshire as well. and that is the impact of creating a separate federal program to remove catfish inspection authority from the fda. as some of you probably already

know, the 2008 farm bill transferred the inspection of catfish alone from fda to the department of agriculture, and it left the fda with the jurisdiction of all other seafood products. that means that all of our seafood processors that handle catfish will now be subject to two separate sets of regulations. this is a costly and unnecessary burden on these businesses. it will kill jobs and hurt economic development. and in fact, just the prospect of this regulation has put a freeze on job creation in some of those companies in new hampshire. one seafood company, highliner foods, which i have had the opportunity to tour, has put on hold the job expansion that they would like to do because of the uncertainty around these regulations. mr. chairman, i'd like to enter this letter from highliner foods, for the record. >> without objection. >> if i can.

this duplicative regulation doesn't just affect the seafood industry. and it's not really about food safety, i believe. i think it's an effort to set up trade barriers against foreign catfish that will dramatically affect not only the seafood processing business in new hampshire and this country but it also could put us open to challenge at the wto and trade retaliation against other agricultural industries. so, mr. chairman, i have been working with other members of the senate to try and repeal this duplicative program. i hope we can do that. i think it's unnecessary and i hope that we will have the opportunity to do that and to further discuss this, not just in this committee but when we get to the floor of the senate. so thank you, again, to our panelists for being here and i look forward to the discussion today. >> thank you, senator shaheen.

>> we'll now go to our first panel of witnesses, our federal panel. i'll introduce both, then we'll hear their testimony and have discussion following their testimony. dr. steven solomon is deputy associate commissioner for regulatory affairs at the fda. he was appointed to that in april 2014. prior to his appointment, he served in several capacities at the fda since 1990. dr. solomon holds a dvm degree from ohio state university and a masters of public health from johns hopkins university. and prior to joining the fda, he owned and operated a private veterinary practice. and he will be followed by miss portia wu, assistant secretary of the employment and training administration within the u.s. department of labor. she was appointed to that in april 2004 and she now leads that employment and training

administration with its mission to address our nation's workforce needs through high-quality training and employment programs. prior to that, she held a number of positions in public, non-profit and private sector situations, including serving at the white house on the domestic policy council, a special assistant to the president for labor and workforce policy. ms. wu holds a yale law school degree and a degree from yale college and a masters degree from cornell and is originally from albany, new york. welcome to both of you. and we'll start with dr. solomon. >> good afternoon. chairman vitter, ranking member shaheen, and members of the committee, i am dr. steve solomon, deputy associate director for regulatory affairs at the food and drug administration administration. and i appreciate the opportunity to appear before you today, discuss the agency's ongoing efforts to oversee the safety of the u.s. seafood supply.

fda has a strong regulatory program in place to ensure the safety of both domestic and imported seafood. in fact, the hazard analysis and risk preventive control framework of fda seafood safety program is a basis for the preventive controls requirements for other fda-regulated foods called for in the fda food safety moderation act, or fsma. the agency has a variety of tools to ensure compliance with seafood safety requirements including inspections of both domestic and foreign processing facilities, 100% electronic screening of all imported products, examination and sampling of domestic seafood, and seafood offered for import in the united states. domestic surveillance sampling of imported products. inspection of seafood importers and foreign country program assessments. in today's testimony, i want to discuss the fda's regulatory framework for overseeing the

safety of the u.s. seafood supply, emphasizing the agency's risk-based efforts with regard to imported seafood. processors of fish and fishery products are subject to fda's hazard analysis critical control point regulation. the regulation requires domestic and foreign processors of fish and fishery products to understand the food safety hazards associated with their process and product and require a preventive system to control for those hazards. every processor is required to have and implement a written haccp plan whenever a hazard analysis reveals one or more food safety hazards that are reasonably likely to occur. foreign processors who export seafood to the united states also have to have -- apply to the haccp regulation. in addition, haccp regulations require importers to understand the hazards associated with the

products they are importing, and to take positive steps to verify that the obtained shipments from foreign processors who comply with these requirements. in recent years, there have been reports of seafood in the united states being labeled with incorrect market names. fda's aware that there may be economic incentives for some seafood producers and retailers to misrepresent the identity of the seafood species that they sell to buyers and consumers. while seafood fraud is often an economic issue, we have heightened concerns when species substitution poses a public health risk. the agency has invested in significant scientific advancements to enhance its ability to identify seafood species using state-of-the-art dna sequencing. fda is actively working to transfer this technology which will enable the seafood industry and others to monitor and test

their products to confirm the species purchased is correct. turning now to imports specifically, it is the importer's responsibility to offer for entry into the united states a product that is fully compliant with all applicable u.s. laws. fda has numerous tools and authorities that enable the agency to take appropriate action regarding imported product. in recent years, the agency has significantly increased its number of foreign food inspections. furthermore, if fda requests to inspect a foreign facility, and is refused, fsma gave the agency the authority to not allow that facility's food submission into the united states. besides haccp inspection of foreign facilities, the agency also conducts surveillance of food offered for import at the border to check for compliance with u.s. requirements. fda reviews all import entries electronically prior to the product being allowed into the country. the agency has implemented an

automated screening tool, the predict system, which significantly improves fda screening of imported food. predict utilizes the admissibility history of the firm and/or a specific product and incorporates the inherent risk associated with the product. for example, a predict review includes the facility inspection history, data quality concerns, sample analytical findings. and type of product that the firm offers for entry into u.s. commerce. based on this electronic screening, the agency will direct resources to the most critical entries that have the greatest impact on public health. a subset of the import entry's flag may be physically inspected and/or sampled at varying rates depending on the type of the seafood product and risk factors described. another key regulatory tool for controlling imported goods is the import alert. import alert informed fda field personnel that the agency has sufficient evidence or other

information about a particular product producer, shipper or importer, to believe that future shipments of an imported product may be violative. on the basis of that evidence, fda field personnel may detain the article that is being offered for import in the united states without physically examining the product. the agency has over 45 active seafood import alerts that focus on imports from certain firms, products, and/or countries based upon past violations or public health concerns. an import alert shifts the burden to the importer to demonstrate that the product meets fda regulatory requirements. for example, fda imposed a countrywide import alert on five aquaculture species from china in june 2007 due to the presence of unapproved animal drugs. these entries are currently subject to private laboratory testing before they're allowed

into domestic commerce. finally, i'd like to note that the fda's working globally to better accomplish its mission to promote and protect the public health of the united states. as one example, the agency has conducted foreign country assessments to evaluate the country's laws for and implementation of good agriculture practices. fda uses the information from country assessments to target better surveillance sampling of imported aquaculture products, informed the planning of foreign seafood haccp inspections, provide additional evidence for potential regulatory actions, and approve collaboration with foreign government and industry to achieve better compliance with fda's regulatory requirements. in closing, oversight of the safety of the u.s. food supply continues to be a top priority for fda. the agency has a strong regulatory program in place for seafood products. we'll continue to work with our domestic and international

partners to ensure the safety of both domestic and imported seafood. thank you, again, for the opportunity to appear before you today, and i'd be happy to answer any questions. >> thank you very much, doctor. now we'll hear from ms. wu. welcome. >> thank you. came vitter, ranking member shaheen, members of the committee, thank you for having me here today to discuss the h2b program and the seafood industry. my name is portia wu, and i'm the assistant secretary at the employment and training administration at the department of labor. together with the department of homeland security we administer the h2b program. the h2b program allows employers to meet legitimate needs for temporary foreign workers and the department takes very seriously its statutory responsibility to administer this program and to ensure that u.s. workers have meaningful access to these job opportunities, that their wages and working conditions are not adversely affected. these efforts also help protect

foreign-born workers from exploitation. the department recognizes the vital role the h2b program plays for the seafood industries. many seafood employers are multigenerational family-owned the jobs these businesses provide are critical to local communities and create additional jobs in other related industries. and, mr. chairman, as you referenced, these businesses are often a remote or rural areas and they can struggle to attract and retain a sufficient workforce necessary to provide seafood products for the united states and for the world. thus, many do depend on temporary workers, including temporary foreign workers. over the last five years, employers in some of the largest seafood producing states, like louisiana and maryland were among the top ten users of the h2b program. last year, approximately 55% of the seafood jobs certified by the department of labor were located in the gulf coast states, ranging from shrimp boat deck hands in texas to seafood

and crawfish processors and packagers in louisiana. we understand that seafood employers and others are impacted by the current annual 66,000 number cap on h2 b workers. that cap is set by congress. and we are, again, seeing demand nationwide that exceeds that cap. the department is committed to maintaining a fair and reliable application process for those who use the program. last week, in order to quickly reinstate the h2b program and to bring continuity to that program, the department of labor and homeland security jointly issued two new regulations. one is an interim final rule establishing the overall framework for the h2b program. i should note it's open for public comment until june 29th. the other is a final updated wage rule that allows the use of

private wage surveys in certain circumstances in keeping with the recent court decision. these rules immediately restore processes for approving prevailing wage requests and labor certification applications so the program can continue to operate. they expand employer requirements for recruitment and consideration of u.s. workers. so united states workers have a fair shot at finding and applying for these jobs. it also permits employers in the seafood industry to continue to stagger the entry of their h2b workers into the united states. the regulations strengthen worker protections by clarifying employer obligations with respect to wages, working conditions and benefits that must be offered to h2b and u.s.

workers alike. and finally, as i noted, the rules explicitly include the use of private wage surveys, which were restricted by a recent court decision. and so we set guidelines for how these employers, these surveys can now be used. and that includes state surveys which are often used in the seafood industry. both the department of labor and dhs are trying to ensure a smooth transition between the former regulations and the new rules. first and foremost, anyone who had already applied under the old rules or who were in line does not have to change anything. they will continue to operate under the prior regulations. second, the new regulations allow an expedited process for employers who have a start date of need before october 1st, 2015. so people will have time to quickly transition. in conclusion, the department of labor strives to maintain an h2b program that's both responsive to legitimate employer needs where qualified u.s. workers are

not available. and to provide adequate protections for u.s. and foreign temporary workers. doing so is not only good for law-abiding employers, including employers in the seafood industry, but also for the many u.s. workers seeking jobs in fields that rely heavily on the program. thank you, again, for this opportunity and i look forward to answering your questions. >> okay. thank you. and we'll start with our questions. and let me begin with you on one of the topics you discussed directly. and that's private wage surveys. isn't it correct that the new rule you're describing greatly limits compared to past practice, greatly narrows and limits the use of private wage surveys? >> senator, it is true that in december last year, we had our previous rule allowed significant use of private wage surveys. that use was injoined by a court in december of last year. and the court's opinion lays out

a great deal of reasoning including concerns about how private wage surveys might undercut wages and some other reasons that, for example, surveys that use only entry-level wages are not permissible under the law. they found that to be a violation of the law. at that time, we had to immediately suspend the use of surveys because of the court's order. however, with our new rule, we allow surveys in limited circumstances. there are some, and again, it's in keeping with the court's order, we believe, where, for example, an occupation isn't well represented in the statistics. we also allow for state conducted surveys. many states do this. there are basic criteria in keeping with the court's order. for example, as i mentioned, you have to look at average wages in an industry not simply entry-level wages. but we believe this may be an opportunity for many in the seafood industry to take advantage of this provision. we actually, i was talking with some of your folks from

louisiana today, and we were putting out some assistance next week to explain to people how they can use these surveys. in the transition provisions, we also said that, for example, if you already got your certification but haven't brought your workers in and wondering can i go back and get a new survey wage as long as it complies with our basic criteria, we put in a provision to allow people to go back and adjust that wage. >> well, ms. wu, as you know, there's a lot of concern that the new system is too narrow and narrows the use of these surveys way beyond anything that would be absolutely required or demanded by the court. what's your reaction to that critique, which i think is a fair one? >> thank you, senator. i think we believe that the new provisions are in keeping with the court's order. i should note that the state provided surveys, frankly may be getting criticism from the other side going beyond what the court

allowed. i do think it may be an avenue that industries, particularly the seafood industry could take advantage of and have taken advantage of it in the past. >> does use of these surveys allow for recognizing differences which exist from one local area to others within the state? >> yes, senator, it could. it's up to the state as to what level of detail is conducted in the surveys. they certainly could provide a survey where there are differences in locality. obviously with different sorts of tasks in the industry. they would have different level of wages. and the department is not in the business of dictating how employers should pay their wage, or not. i know some employers, for example, use peace rate. they'll be able to continue doing so. >> okay. and dr. solomon, my

understanding that in 2014, only about 2.77% of all seafood imports were inspected. do you think that percentage is adequate? and if not, what does the fda plan to do differently? >> so the seafood safety system i described during my testimony is multifacetted. so there's many components of it. first, it's putting the hazard analysis critical control point regulations in place which puts the burden on the processor to produce safe product. then we have oversight by doing foreign inspections of them. then we also conduct inspections of regulations by the importers. so the testing that takes place at the border is a verification activity or a surveillance activity to try and find, if there's any flaws in this system and how it's working and to identify them and verification activities. we test at different rates a sampling.

so taking generic rates for seafood, we test higher rates for certain products, certain commodities, higher risk areas, and much higher rates than that because we want to have additional verification for those particular aspects, which pose the greatest safety concerns. >> i understand all of that. i didn't mean to suggest by my question that you just do one thing. you just stop 2.77% at the border tested. so as part of that overall effort, do you think the net inspection rate of 2.77% is adequate? >> examination at the border at the verification activity at the rates we do, we think is a viable control measure in light of all of the other measures that we have in place. >> so you have no plans to increase it? >> with the resources we currently have, we would not just increase sampling testing. if the agency had additional resources, we would focus on all the aspects of the framework --

>> why would you increase it if you have more resources? >> greater oversight in how the system's working, we would do more foreign inspections, importer examinations. but, again, not on a universal basis, on a risk basis. >> the level you do now is not optimal. >> we think we actually have very few food-borne illnesses associated with seafood products. but with more resources, the agency could do more. >> okay. i -- i'm just trying to understand you're suggesting it's adequate, but in the next sentence, you say you'd certainly do more with more money. >> so it's a risk basis in terms of looking at the products that are coming in. with additional resources, we could look at lower levels of risk. we're looking at the highest levels of risk now. >> a batch of actually tested and rejected seafood imports has be