illegal, was this improper? >> thank you for your question. it's, proper is an interesting question, because if you establish the obligation, the provider provided the service, the provider billed correctly and the provider was paid. one would argue that it was proper, but not f.a.r. kplients. >> should the obligation have been entered into in the first place? was that proper? >> it so, thank you again for your question, so was it proper? if it was, so proper -- i don't understand word proper. >> i'd lake to address that. and this is going on the appropriations, the appropriations area.

so just if if funds are available, one we have the authority to contract. done improperly, but we do have the authority to contract for these services. funds are available. then they're proper. the paintyments are proper, from an appropriations and authorities. >> so let me ask this followup to mr. murray. have these actions have ratified? in other words has this been blessed by the va. i want to know whether you think this was appropriate or not. >> we know the office of inspector general recently reviewed unauthorized commitments and the purchase card program. for those that were identified to the oig, we did 100% review of that entire sample and we

referred those to the head of contracting activity for, for ratification, review and ratification if appropriate. so that's where those are. now those were, with respect to purchase card transaction above the micro purchase threshold, so if they were identified as being, we did have the authority and under the va acquisition regulations which says can you go to 10k. if they were above the $10,000 for fee care and they were non-f. and the non-f.a.r. based, they probably require ratification, and if they require ratification we could perhaps make an argument that they perhaps were not proper. >> i will allow a colleague to follow up on this. but for the record i'll ask mr. williamson what is knowable about the cost of purchasing this care without contract, $7

billion, do we know it or is it noble. i realize i don't have time now. but we'll can this question-- ask this question for the record. i'll yield back to the chair. >> thank you. >> thank you, mr. chairman. i'm aiming this? the direction of mr. murray and mr. doyle. i'm not sure which but there's a business in my district that supplies specialized shoes, die betzic shoes and custom inserts to vets through the va. this business didn't have a contract. in november of 2014 they were notified that the custom orthotic appliance and related service released a request for proposals. the business filled out all the paperwork. they were denied for not meeting the minimum technical requirement of not having a

podorthi ichlt podorthist podorthist on staff. how do you pay them? >> i'll need to explore more the specifics of this case. but the requirements, if it was done by vision 11 it was probably done by the local contracting office. they work for me and my organization. they probably worked very closely with the prosthetic folks to develop it. now i don't know about the contract situation or not, but it is possible that they were being bought under the micro purchases threshold, $3,000, by the local prosthetic folks with the government purchase card. >> and i guess my follow-up question to that is the owner did say they would receive a purchase order that would have a credit card number on it and an exprags date. they couldn't purchase more than one set of shoes or

incertificates per time. and my question is when you're talking about this particular organization serviced about 200 veterans in my district and now they can no longer do that. there really is no competitor. when businesses that are highly specialized that service veterans get suck in this cycle in the va between they don't know, they're not setting the rules. they're responding to an organization saying, yes we'll join with you in partnership to provide some specialized care. and so, you know, it's harmful to the folks on the other end of this trying to comply, getting an rfp in the mail saying now you have to sign up for this. they've been providing this for a couple years already, and now they get thrown out, and it was fine nongs ras long as they were being paid through the credit card number. don't you see an inequity in that when you try to keep service providers even available? they have no idea what's complicit and not complicit. >> i would say this sounds like,

if they were doing repetitive orders with the government purchase card, one would make the argument it's a split requirement. if it goes above the purchases threshold of $3,000, there should be an f.a. rfrpts-based contract in place. >> and you can check this out? >> yes. >> appreciate it. i yield back, mr. chairman thanks. >> thank you. ms. rice you're recognized for five minutes. >> thank you, mr. chairman. i feel like i missed something here. i'm just trying to figure out why, maybe mr. murray you can answer this question. why is there such a reluctance to apply f.a.r. regulations when you're talking about non-va care, if you can give that answer suck sincely, because i have a lot of other questions. >> i don't sense a reluctance at this leadership level.

all leadership levels i see. pc3, choice, provider agreements seem to be the preferred approach for providing care to the community. that, and if you want to delve into this, i think that chief acquisition officer, the head of contracting activity for the health administration might have some sense for why this is true or could be true in the field. >> one of the things that we try to address and we try to do it with the legislation request that came in was to recognize that there are some vendors that may shy away from doing business with the government. we're not known as being the most streamlined and most easiesteast easiest to deal with. they have to apply for federal contract wage statutes. there's a lot they have to do to do business with the government. what we're trying to recognize rwreckrecognize, we want to do business with our

providers. our last preference would be what has been termed the individual authorizations. so we want to have that as really kiefrpd the backstop as we go through this hierarchy of providing care we see that as the least-preferred option, but one that we don't want to take away from approximately 400,000 veterans that are being served by some of those small providers -- >> it's become a $7 billion backstop. right? >> i don't know all seven of that, all seven of that is for overall fee, and some of that has happened through f.a. rfrpts and non-f.a.r. >> the problem is that there's no kpree-sieve auditing that has been done. i guess, mr. williamson if you could, what i see a pattern of is either gao or inspector general saying here's a problem here's how you fix it and an

intensal or negligent failure on the part of the va to take recommend dagtss and actually implement them. so can you just tell us what you've recommended the va do and where they are still lacking? >> well of course, as you know we as you know on the high risk list recently and part of the justification for that was that they are not implementing many of the recommendations. in fact, over 100 recommendations we've made that va has not implemented just in the health care area alone. so just to -- there are 22 recommendations and i don't want to use all your time up. lt me give you a couple examples. one is we recommended that va keep track wait times for veterans that went to non-va

providers. they have not yet done that. we've talked to them about it. they still haven't done that. >> what's the reason for them not having done it? >> we don't really know. >> well when you ask them you tell them how to do it -- >> i think what they're looking at, they want to close the case from the time the veteran starts the process of getting an appointment, they want to do that in 90 days and they are tracking that. but for some reason, they're reluctant to track the 30 day. >> why? >> good question. i don't know that they've given us a great answer on that. >> what would be a good answer? is there a good answer? >> they probably don't have the systems to do it. it takes a lot of work. it does take some good data. but that's not a good reason necessarily, for not doing it. >> mr. williamson, you've laid out a blueprint for how the va

can improve, whether it's tracking wait times don't better audits to see where these multibillion dollar expenditures are going. and i guess what i -- maybe there isn't an answer to this. but it seems to me that you have not been able to get any satisfactory answers as to why your recommendations have not been implemented and maybe you're not the right person to answer this. but i don't know if anyone at the va -- i haven't heard mr. murray give any explanation as to why. >> i think part of it is it always comes back to the same issues no matter what your -- what program you're in in the va. the data is often insufficient. the automated systems they have in many cases cannot produce the kinds of things they need. and it comes down to a lack of oversight, both at the local level and at the headquarters level and time and time again, the claims processing problems

we found on the emergency care for nonservice connected veterans, same thing. >> the problem is that you -- there will be no overall cultural shift at the va unless there is meaningful oversight, whether you're talking about this issue or you're talking about how whistle blowers are treated or anything else. that's really part of the problem, isn't it? >> it comes down to accountability. it's not there. >> thank you, mr. williamson. i yield back mr. chair. >> thank you miss rice. mr. lambborn. >> thank you mr. chairman. and i appreciate your leadership in pursuing yet another scandal, basically. here it is june 1st. it's another month and we've got another scandal. it seems like the whole year has been like this. i for one am getting sick and tired of it. mr. williamson, i'd like to ask you for some background in this whole issue.

whether we call the contract illegal or improper or noncompliant, what can go wrong when the va doesn't follow the proper procedures as regards to these contracts? mr. williamson. >> are you talking to me? >> yeah. >> oh okay. i thought you were -- >> so from a gao perspective. >> you know, i'm not a lawyer or a -- expert either. and i'm -- in listening to what i've heard today from the va witnesses, i'm a bit confused because on one hand you know, they say there's no impetus and there's no reluctance to go to a fire-based process for non-va care providers. i think there obviously is. otherwise, mr. fry would not have had the difficulty he's had. i think i would want -- i would

want to know -- i would want to know what a far-based system would mean to accessible care for veterans. because the end game here is still providing high quality, accessible and cost-effective care for veterans. and so if a remedy to solve the problem, if a -- if it's determined that a far-based system should be used here, the remedy should -- i would want to know how long it would take in this process for a person -- for a contract to be executed. and what the process means. i would want to know how it would affect the accessibility to care for veterans. also, one thing we haven't mentioned yet is a the whole idea of what it would mean for the acquisition workforce. when we did our clinical care work, we found the contracting officerses and the contracting

office representatives who do most of the legwork for the contracting officers are already stressed in terms of workload. if you increase that workload, you double it ten fold, whatever it would mean to get a far-based system then you know, what would it mean in terms of a budget for hiring new people and so on? i just don't know what a far-based system would do in terms of accessibility and the workforce. that's what -- that's what we need to know. >> well, it's interesting the gao has identified six categories of problems that can arise when proper oversight is not provided by the va. the type of provider care, credentialing and privileging clinical practice standards, medical records documentation, business processes, and maybe the most important, to me, access to care. so let me turn now to mr. fry.

would you agree that those six areas are called into question when proper procedures are not followed? >> well, yeah, absolutely. and in addition to that when federal contracts are required and you don't use them there are terms and conditions that are completely missing from the contract. by federal statute, you're required to have terms and conditions. these include the termination for convenience, termination for default, the disputes clause, fair and reasonable price determination, just a whole host of issues not -- and probably even more important in terms of health care, the safety and efficacy terms and conditions that are required to be followed by these specific contractors. without those contracts, without a contract without those terms and conditions the contractor is free to do what he or she wants. >> and that is my concern.

ms. anderson, in regards to your statement earlier, i have to agree with you, the government is obligated to pay for services that are rendered even if the proper foundation wasn't, you know -- the procedures weren't followed in soliciting those services. we are considering a far-based contract and what it will take to become compliant and then to mr. william son's point to what end. would that result in immediate care to the veteran. and i chaired a work group in july of 2014 and that work group was responsible past what -- with identifying measures and

how do we become compliant. we realized after three-hour sessions over four months that there were lots of hurdles to overcome. not the least of which labor issues consultation with labor hiring hiring a work -- contracting officer workforce establishment 600. how immediate can we give the payor at that point? still, we need to get through the hurdle pes. working with the department of labor, working with omb, working with the department of justice, we -- in the -- we have embedded in the legislation protections,

credentialing, quality of care. >> my time is way over. i just want to make the point that no one is arguing that the government should not pay these contracts. i'm concerned about what gao and mr. fry has identified as what can go wrong when the procedures are not followed. mr. chairman, thank you for your indulgence. i yield back. >> thank you, mr. chairman. first of all, my deepest apologies. for the you and what i understand and you understand much more clearly is that verchs care is a zero sum proposition. if one veteran doesn't receive the care they're entitled to then it's a failure. your situation is unacceptable. the thing i would encourage you on is -- and i looked into this -- the tort issue. that's your recourse on this and they will always try and throw

barriers up, both in the private sector and in the public. >> the tort program it essentially investigates themselves. the attorney acts as their investigator. >> trust me people win these. what i'm saying is if this was wrong, there are people out there to assist you, there are veteran attorneys that are veterans themselves, that their job is to try and help make this right. >> so the va has a six-month head start to coach witnesses. the issue for you is that all the rest of this is kind of irrelevant. the issue is what happened to you and i would just say from your perspective there's two things happening here. we're kind of at the 40,000 foot reform discussion here. my advice to you is that go down that road pursue that hard and that's where you can redress

your -- >> that's what i'm doing now and i'm witnessing that program is ineffective as far as va investigating themselves. the va attorney sends the information that i send the attorney/investigator to the the actual hospital risk management coordinator who then tells the privacy officer which records they need to keep or manipulate or lose and then tells the department head how to coach their resident specifically through the legal matter. >> i appreciate you all being here. i'm going to -- my colleague from new york, miss rice was hitting on this, mr. williams. i've seen this before. gao puts out 22 recommendations.

what exactly is the wait of a gao recommendation? exactly what does that do? >> well you are because the congress is -- we have a report to the congress and the congress provides the leverage we need. and it's formed like this that we have that bring those things to life. >> exactly. and this is why. and, again mr. murray, i can ask about some of these. but i do think -- and i think it was not necessarily a rhetorical question. what we're in is -- and this needs to be fixed. but this is a much broader issue. this is a reform issue. this goes back to the va being all things for all people. not to antagonize my chairman, but this is the va trying to build hospital webs this is the va trying to do everything for everybody. and i've been saying that we need to have that discussion to figure out how do we best leverage both the private sector, the public sector, our promises to our veterans, get quality care and do it in the most cost-effective manner.

so we're hear, i would argue, dealing with a very important issue and it's granular. they do matter. the bigger issue here is that if i would ask the questions -- and, again, i don't think they're fair to you, mr. murray, is what should the va be doing, how do we fix this contracting what is the purpose of this and then we'll get back into mr. fry pointing out where those holds are in there. this is probably not the forum for that. i don't question that we're all trying to get to the same point, but you heard mr. levante. this is what happened when you break faith. he doesn't believe anybody is going to get good care and we can tell him countless stories of the highest quality health care delivered in the va by a hospital and it will be irrelevant to him. i think that's a noble goal for us to continue to strive for, but i don't think we're going to get there in the current system. i'm quite confident your 22

recommendations will be recommended two years from now and we'll still be trying to implement them. that is a horrible condemnation on the entire process. >> they have implemented seven of them. >> it is. and it's not because of the motive is to not provide quality care. i thank you for your time. i apologize for your situation. and i think you personal united states the problems in this contracting process. i'm stunned by the kind of bureaucratic incompetentence, the corruption, the lack of leadership demonstrated here today where what i've heard is, yeah, we have that's rules, but they're really not important.

the kind of lawlessness that exist necessary this department is just extraordinary. mr. fry, what you heard here today was essentially, oh splitting hairs. it's not improper, it's really not illegal. but we don't follow the law here because we're somehow above the law. mr. fry, could you comment on what you've heard today? >> that's exactly right. let's talk about those purchases above $10,000. they are using the same method allege above $10,000. that authored has never exited. every purchase every acquisition of health care above $10,000 must have a far based contract in place and i will take issue with miss anderson. we can't pay that unless it's been ratified by a contracting

officer. a contracting officer must do an obligation. we're going ahead and liquidating the obligation. those are improper payments, by the way. our own regulations and the gao red book and other statutes state that we will not pay unauthorized commits until they're ratified. we've done it wholesale. to my knowledge not a single one of these requirements above $10,000 has ever been ratified. and we've bought billions of dollars worth of health care. if that isn't illegal, i don't know what is but i guess we can parse words here. >> in fry, is there anybody else in senior leadership besides yourself that actually cares about getting this right? >> it doesn't appear that there's anyone outside my organization that cares. i come to work every day and i watch this malfeesance i watch

this malpractice. they've made a mockery of the federal acquisition system. the far has the same force and effect of the law. we all know that. it's used and certainly the attorneys know that and we're just ignoring it. this sibts isn't done in any other government agency. you wouldn't get this same story. this is just another example of us trying to blow smoke up your sleeve. >> is secretary mcdonald just a place holder? >> i hope secretary mcdonald cares. again, i think secretary mcdonald dislikes these scandals, this malfeesance more than anybody else because he's got a very short window here to move the va forward. and, again, he moves us two steps forward and we move 12 steps backwards anytime one of these scandals arises.

>> thank you. >> mr. frye, i let me just follow up on this. if every single one of these contracts was far qualified or whatever the verb would be what would the time commitment and the cost be to that process? >> from $1 to $10,000, we have a nonfar compliant system in place. it's like falling off a rock. the appropriate terms and conditions are in that contract. it is simply a process where authorized personnel not contracting officers sign this contract and they're on the way to the doctors. it's been this way for four years. we all recognize, including council, that it is not compliant with the far. so a year ago in july afternoon

all that effort, the veterans health administration summarily rejected it. it didn't go far enough for them. >> that is my concern that we heard from my colleague that a company that had been providing services was obviously somebody draw attention to that they didn't have a contract, they tried to go through a contract. but, in fact, the process was so burdensome, what ended up happening is the veterans didn't get the podiatry they needed because that company was disqualified and there was no other company available. so i want to try to understand, how do we get from here -- i recognize the problem. i agree with you, we've got a problem. how do we get from here to veterans all all cross the country getting timely care in a cost efficient high quality

manner? >> sure. and i realize there are issues sometimes with veterans getting care. >> would you agree there's an added cost for all this administrative procedure on top? i'm not condoning it. i'm asking you -- >> i have no idea if there's an added cost. >> we're talking about 600 additional people. >> there is a requirement under the federal acquisition law to do it. i don't make the law. i comply with the law. >> that's up to us. what i'm asking you is what is the cost to the system for each one of thegs authorizations to be compliant. you're asking the wrong person. you would have to ask the program officials. >> do you agree that there is a cost? there's potential delay, there's the administrative procedure

that has to go on there are individuals that have to be involved? do you agree that there -- >> i agree there's a cost of doing business using any system, whether it's the federal acquisition regulation or any other system. by the way, i'm ambivalent if the federal acquisition wasn't used, that's fine. but we have to have a system. we can't just spend money willy-nilly. let's promulgate those rules and comply with the rules. >> what do you think is the correct dollar amount that we would have the balance of being able to supervisor contracts, but not have he ever last paper clip be covered by there contractual obligation? >> i have no idea. i'm not a prach r program

official. i can tell you this we have far based contracts in place. pc-3 is a far base contract. it provides specialty care and it goes up into the hundreds of thousands of dollars and veterans are getting care every day using pc-3. >> do all the providers in the pc-3 network have a far based contract? >> no. there's another far-based contract which you're familiar with called arch. i'm not that familiar with it because it's not a program official. >> let's praid operate out the ones that are possible. i'd like to hear more about the pc-3 far based contracts and not chase every last one down a rapid hole with 600 new

employees. but let's try to use a public/private arrangement. >> thank you mr. chairman. i've got a question or two for you. i want to ask you about the proposed legislation that the va ham has come up with and i think ms. anderson made reference to it. basically to let va off the hook and say you don't have to follow far any more for these contracts. one of the abuses that can happen when far is not followed is there's the potential for cronyism or higher prices.

it's sort of like soul sourcing of contracts and the taxpayer isn't given the benefit of competing bids and that kind of thing. would you agree with me that the legislation va is proposing could allow for those problems to arise? >> i am and i'm concerned about that sort of thing. whether it's travel or conference spending or payroll got a major initiative to make sure we -- you know payroll is where it needs to be in terms of contracts.

perhaps more is required be complexed. the control that i'm inkreegd with is that we use these individual to see if they pass the threshold of $1 million annually. we're doing a lot of this, for instance. >> the specific logic that concerns me in the proposed bill is that, quote, health care can be ae warded without any law that would ourselves require the use of competitive procedures for furnishing of care and services. unquote. to me, na opens the door for potential crony im. would you lie to comment on that same question, mr. frye? >> that piece disturbs me, as well.

i'm ambivalent. but we have to develop those rules, go through the rule-making process, put those rules in place and then we have to enforce the rules and hold people accountable. we come down here i read the newspaper every day. why don't we follow the rules? it's because no one has been held accountable at all for these violations of federal regulations and law in the course with these obligations for fee-basis care. and i suspect no one will ever been held accountable.

>> mr. chairman, i appreciate your leadership on this issue and i yield back. >> thank you. you're recognized for five minutes. >> i want to follow up on the questioning in terms of the va's position that was stated that following far would impact a large number of veterans by comp miegzs immediate access to care and our community providers. forgive me if this was already spoken about, but do you share that >> i share it's very much a concern. again, unless i know more about how a far-based system would work for purchase care for non-va providers and i know how long that takes to execute these contracts i can't give you and answer. if i had that i would -- what my concern is it will take a longer

period of time to do and in the meantime that veteran, the access that that veteran has to that non-va provider is going to be degraded. >> so you have to figure out a way for far not to apply and implement your recommendations. >> it wasn't our recommendations on that particular aspect. but i'm listening to all the dialogue here. and i think that whatever -- we have to know some facts first about how such a system would work. >> where can you get those facts from? >> what smp. >> where can you get those facts from? >> first of all for the care that's given, if 80% of the

veterans use the pc-3 network of providers, that would solve a lot of your problem. but they don't. very minute number currently use it for a lot of reasons. in any case -- >> do you think that's the answer, that could be one of the answer? >> certainly part of the answer, it is. for every other form of care you have this issue of far based and whether we're doing this illegally or not. but the remedy has to be once you know the answer to the question and get some clarity not only on the accessible care issue but also the cost because i think that the impact on the acquisition workforce in va would be potentially quite a bit more in terms of having to hire more people. you have to get those answers first and i haven't heard it

here. >> well that's the problem at these hearings. a lot of questions are asked and very few answers actually are received. thank you. >> ma'am, can i follow on the your question, please? >> mr. chairman? sure. >> so i find myself in complete agreement with mr. williamson that we have to balance this need for access and provide the right structure that represents the interests of the taxpayer. so it's balancing what's good for veterans and what's good for taxpayers. the answer to the question is how we look at that and how we balance that i own that for the department. i'll work to put that together. i would love to meet with the committee or staff as we do this to get entrepreneur put. i have to find a way that allows to us balance this to meet needs of the veteran, to manage their access while at the same time representing the interest of the taxpayer and recognizing the federal acquisition regulations and all the appropriate laws. i own that for the department. >> well thank you for that offer.

>> i would like to thank the witnesses. you're now excused. let me just say, it really doesn't matter how the system has changed. because if you're not going to follow whatever system is there because you don't have the discipline, you don't have the leadership, it really just doesn't matter. at the end of the day there has to be a rule of law. and this is just -- i think you -- some of the witnesses today just, you know, really demonstrated how lawless this organization is. you're now excused. we had an opportunity today to hear about the problems in the dfl department of veterans affairs. with regard to oversight of its non-va health care programs. this hearing was necessary to accomplish a number of items. one, to identify the continuing widespread problems of procurement of nonva health care.

two, to allow va to provide answers as to why these problems still exist and have been allowed to continue for so long. and three, to assess next steps that must be taken by the department in order to stem the continued waste of taxpayer dollars and jeopardize services provide to veterans. i ask unanimous consent that all members have five legislative days to exclude extraneous materials and submit their remarks. without objection, so ordered. i would like to once again thank all of our witnesses and audience members for joining us at today's conversation. with that, this hearing is now adjourned. >> and we'll have more on health care when health and human secretary sylvia burwell testifies on wednesday before the house ways and means committee. she will discuss the skas

challenging federal subsidies in the health care law, implement action of the law and the hhs 2016 budget request. live coverage starts here at 10:00 a.m. eastern here on wspan 3. >> we'll talk to colorado freshman senator corey gardner about the defense senate bill the defense is working on this week. then john garamundy on the strategy to fight isis in syria. later, phillip gordon of the council on foreign relations talks about his recent piece for politico titled the middle east is falling apart. washington journal live on c-span. join the conversation by phone or on facebook or twitter. >> director of clinical

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disease and following up over a longer period of time. so we're currently in an era that we're trying to harness the genome for a decade. and information about sociology geography, demographics where you live, where the railroad track res in your city what your likelihood to get diabetes on the basis of your educational background and what is your likelihood of developing diabetes or retention if you have less access to the right kind of food or the right kinds of instruction bes sodium consumption. little things like that that could have enormous impacts on population heths. dr. patrick ogherra, sunday night at 8:00 eastern and

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>> my name is simon lester. i'm here from the cato institute. thank you all for coming out today. thanks to those of you watching on the internet and as i understand it c-span2. we have what i think will be a very interesting and informative policy forum for you today on removing online barriers to medical care. this is sometimes referred to as at the le medicine or tele health. i expect to learn a lot from this forum myself. i was following the eu trade negotiations and i saw in one of the legal texted they released that germany had exclusively

excluded tele medicine. this offenses me, it nowed me and i wrote a paper in response to that saying actually, in trade negotiations government should affirmatively try to liberalize cross border trade in medical services. but i realize if i were to hold a folz policy forum, it will be hard to fill my own office much less the forum and talk about telemet more generally and invite some experts on the issue. i think it's probably best to start with the basics and get into the nuances as we go along. for most people, medical care is something that takes place in a doctor's office or a hospital. you go into the doctor's office you wait a bit, they have 1970s era paper forms, you fill those

out. you wait some more and they take you to another room and you wait again. but what if instead of that you could take out your smartphone and place a skype call to a doctor, go do some other things get some lunch and when the doctor is available, you have your online consultation right over the phone. obviously, i'm not talking about surgery here, but routine consultation. the problem is in the highly regulated medical care there are lots of hurdles that get in the way and there are a number of start-up companies that are trying to break them down. but it's not easy. it's been a struggle. so our first panelist is going to give us an overview of this emerging industry. the regulatory efforts that they face. renee is a senior counsel

focusing on health care policy. i came across her name when i was reading issues when he was quoted. we're going to turn to jeff rose at the end there jeff is bringing a fascinating case on behalf of a texas veterinarian who was fooil fined by his state's medical board for offering veterinary advice online. among other case, this involves important issue of free speech and although it involves a veterinarian, it potentially has implication s implications for those more generally. finally, we have jeff sharpstein. he's a policy walk and a former high ranking golf official dealing with health care matters. he is currently an associate dean and professor. before that he was a deputy

commissioner. josh, i suspect, will be made the voice of caution here saying hold on here, you free marking libertarians. we need some regulations in place. each of our panelists will speak about 12 15 minutes and then we'll open it up for any questions. if any has any cell phones, please turn them off. now to renee who will get us started started. >> thank you very much. by way of disclosure even though -- yeah. even though simon did introduce me i do represent a lot of telemedicine stakeholders, hospitals, health systems health plans some of the leading tele medicine companies. so some of my comments may be skewed in that direction.

i have a quick powerpoint we're going to go through here. telehealth, telemedicine, they're used interchangeably. for example, medicare has a restrictive definition -- they use the word telehealth, which involves two-way, real-time, interactive communication. it has to be audio, visual. i put this up there just to show you that we can't even agree on a definition. we can't even agree on the terms. i see somebody here from the american telemedicine, so they use the term telemedicine. on these issues, i look at it very broadly. to me, it's just the delivery of health-related care, services, education and information via telecommunications technology. that's it, very simple for me.

even some of the usages of telemedicine, as you can see, we'll get into some of this later, i'm sure during the question and answer session. these are really the sort three telemedicine modalities. some folks will say the remote patient monitoring is separate and apart, and i think gary and i have talked about this before, they consider remote patient monitoring separate and apart from telemedicine, not part of telemedicine. i wanted to give you a flavor that there's a complexity here that we really need to pay attention to. we've talked about real time. there's digital images and audzo files are stores, a central provider who can look at this at some point. there is no interaction between patient and, doctor. remote patient monitoring is exactly what it sounds like. you monitor patients digitally across distances and providers get information and can intercede at any point during that process. so what is driving the issue, what is driving the discussion of telehealth and telemedicine?

i will tell you i've been practicing law for 17 years, and this is, i think, for the last two years, the first time where i feel as if telemedicine and telehealth have arrived. what's driving some of this? part is the aging population. we're supposed to reach almost 370 million people by 2030. i think even more important than that is the percentage of those folks that are going to be 65 and older, almost a fifth of the population. obviously, the oler you are, the older your population, the more health-related issues you're going to have. do we have the capacity to take care of our population in addition to all the other things we need to do in the system? this is also coupled with the fact that a lot of folks are predicting a shortage of physicians. you see here, almost 65,000 by next year. it's going to double by 2025, so you've got an increasing population, increasing share of aged population, plus you've got

the shortfall of physicians. you also have a healthcare system that's really in a transition from a fee for service environment, where payers pay for services per encounter, to one i will call income for outcome, where your payment, your reimbursement is based on healthcare outcomes, quality, metrics. we're in that transitional phase right now with problems that everybody has read about. and also, technology. the sophistication of a lot of the health technology that exists today is incredible, incredible. the question, can our healthcare system absorb, pay for, and adequately manage the risk of this new technology? that's part of the reason we're here now in terms of the telt health market overview, these numbers are all over the map, but what i can tell you is, most financial researchers, most economists are

very bullish on this market. bcc research predicts that the global telehealth market is going to reach $28 billion by 2017. global health data says it's going to be $33 billion by 2018. bergen estimates we're going to be at $22 billion by 2020. ihs predicts in the united states we're going to be in the neighborhood of about $500 million by next year. towers watson, which is one of the leading employer-employee benefits firms, said it could result in $6 billion a year in health savings across the board for u.s. companies, just to give you a flavor of what's happening. we've already talked a little bit about the landscape that's changing. we've talked about the transition from a fee for service environment to one in which we're really, really paying attention to outcome.

the benefits of telemedicine. so what are some of the legal and regulatory issues we face? the first one we always talk about is licensure and i'll talk about it for about five minutes. i think it's an important issue in that i think there's some ready-made solutions that some folks are attempting. the other thing, too, about licensure is we tend to look at it from the physician perspective, but there are a lot of mid level and other providers that we also have to consider. scope of practice, which i'll talk about very briefly, and how physician-patient relationships are established, and why those requirements may be a barrier. there are some states taking care of that in their own way. coverage and reimbursement, it runs the gamut from very restrictive payment approaches by medicare to a mixed bag in medicaid to a better overall picture for private payers. we probably won't touch on the rest of this given my limited number of time.

let's just talk about licensure. you need to understand that licensure follows the patient. there are medical practice acts all over the united states that governs what constitutes medicine. if somebody is practicing medicine, they need to be licensed in this state. what state do they need to be licensed in if you have a patient in one location and a physician in another state? in the united states, it's where the patient is located. so you can see how this impacts telemedicine, if you've got a duly licensed physician in pennsylvania, for example, who's providing online care for telecare to somebody in north dakota. they need to be licensed in north dakota unless they meet a number of exceptions. we're going to talk about some of the solutions that have been developed recently. this has been a long-standing barrier. one of the reasons i think is if you really think about healthcare in the united states, although there are some local differences, i think for the most part, a lot of the core requirements are the same across

the board. the doctor is practicing in california. the doctor is practicing in florida, especially if you're practicing in urban areas. is there really a difference between the practice of medicine in miami, los angeles, new york, chicago? that's the question that needs to be address.ed. there are some exceptions to obtaining a full regular license. i talk about some of these here, special telemedicine license. there's a consultation exception as well, which we don't need to get into, but those exceptions usually don't resolve the overall issue of having to obtain a license in a number of states. the federation of state medical boards, which is the organization that represents 70 state and osteopath medical boards across the country has come up with a medical license compact that only apply toes physicians. basically it's a system by which licensure portability is made a

little easier. depending on whether or not a state is a part of the compact. so for all states that are part of the compact being licensed in one compact state makes it easier to get a license in another compact state. so you can practice. the problem here is you still have to apply. it's not like there's a licensure compact where you're deemed license. and there are some other issues with the licensure compact. so far, i think six states have signed on to the compact and a part of the compact, according to the federal of state medical boards. they need seven to make this work, so we're almost there. i think another 15 have billed in various stages of the legislative process, so you could see 10 to 11 states being members of the compact by the end of this year. so you will get this going. so this is one stakeholder's attempt to address the licensure issue. the other big issue i see -- oh, before we go on, i should talk about nonphysician licensure

compacts are being developed for nurse practitioners, physician assistants, but nurses already have their licensure compact, which i think 24 states are a member of. interestingly enough, the nurse licensure compact, the big states are not members, texas, california, florida are not members of that compact. so it limits the utility of the nurse licensure compact. the other issue is scope of practice. how physician-patient relationship is established. the one thing here i want to emphasize is that in order for physician-patient relationship to be established among other things, most states require some kind of examination of the patient. what constitutes an examination varies from state to state. in a lot of states, an in-person examination of that patient is required. as you can imagine in the telemedicine encounter, that may

be difficult. some states have seen fit to pass statutes which allow that examination to occur by telemedicine, meaning if you can get the same information that you can get in the telemedicine encounter that you would get in an in-person encounter, those states say that's fine. the problem is we have not yet developed enough peripheral and diagnostic technology to make those examinations to facilitate those kind of examinations yet. what we see a lot of -- or what i see a lot of is folks providing telemedicine services without actually doing any examination. there is a video connection with that particular patient and a lot of folks are concluded that that's enough. that really doesn't constitute an examination by telemedicine. now, the federation of state medical boards again came up with a model policy for the appropriate use of telemedicine technologies that sought to

loosen some of the restrictions involved in the practice of telemedicine, and one of the things they talked about was the examination issue and really leaving that up to the physician. let the physician decide whether or not they have enough information to continue the relationship to diagnose and treat. unfortunately, unlike the nurse licensure compact this policy sort of exits in the ether. i think some state medical boards have sought fit to adopt some or all of this, but there's really not a lot of energy behind passage of the fsnb model policy. i will say a lot of other stakeholders have developed incredible protocols. i know the american telemedicine association has an accreditation program for direct to consumer care. the american medical association is developing their own set of protocols. so there's a lot of activity in the space that's occurring right

now. the other thing i want to talk about before i leave is reimbursement. this is a particularly vexing issue at the federal level. i should tell thaw under the medicare telehealth benefit, just a little under $14 million was paid out last calendar year. this is out $615 billion in total reimbursements last year. i think that represents .0023%. of the total. so basically, medicare doesn't really pay for telehealth. there are a number of reasons for this. the first being that the approach taken by medicare is that this is really for people in the most rural of counties in the united states. that's the first restriction. there are only certain kinds of providers that can actually provide services and be paid under this benefit. the patient has to present a certain kind of facility. the patient cannot be in the home, for example, and receive services and have the professional be paid under this. and the last thing is only

certain codes are paid for. so if you look at the code there seems to be a trend towards assessment and evaluation and psychological and psychiatric services. there seems to be a trend towards having those kinds of services reimbursed as opposed to others. obviously, there's a bias that telemedicine is really not suitable for nonurgent primary care purposes. medicaid is a little different. most medicaid programs, and as you know, medicaid has more flexibility to decide what services they will and will not cover. most medicaid programs cover telehealth and telemedicine in some form. but the coverage requirements vary state by state. some of them follow the medicare restrictive rules, some are more liberal on the issue. if you cover remote patient monitoring, if you cover ford, there's no uniformity. really, there's no logic to what

states can and will cover. i think this could change, especially if medicaid programs come under increasing fiscal pressure. private payers, the private payer world is probably in a better spot. a number of states, and gary, correct me if i'm wrong, almost half the states now have statutes in place that require private pairs to pay for telemedicine services if those same services are covered and provided in person. basically states are forcing private payers to cover telehealth and telemedicine. the definition of telehealth and telemedicine and what is covered varies state by state. they don't mandate the same reimbursement levels. i should caution us on that. but the private payer approach i think is a little bit better than you have with the public payers. even with states that don't have these statutes in place, what we

find is a lot of private payers see a benefit in providing these services, whether they're required or not. i've listed here some plans, and none of them are clients, some plans that are known as being progressive about telehealth and telemedicine services. i'll leave with you that. i will finish by saying that the other aspect to really, really pay attention tv happens when you provide the services online.

>> thanks. one of the reasons why telemedicine presents such a challenge is because medicine is a vivid illustration of a peculiar reality in america, which is everything is forbidden unless it is expressly permit.. so this amazing interesting, fresh innovation comes along and all the medical boards say, well, we can't do that. we need to write 10,000 regulations to do it. we have to subdue it in the regulatory process because, after all, this is america. if we don't have a telemedicine statute, you better not be doing it. in part, that's because we have a 19th century or early 20th century regulatory model. we have 50 different states, each with their own regulatory boards, and that doesn't even take into account the fact that americans can now talk to people all over the world. there are billions of people who have benefited from the expertise of well educated americans, and it's completely unclear whether or not they can get it. the thing about telemedicine, at bottom, it's just two people talking to each other. that's it.

people are talking to each other. one person wants some knowledge that another person has, and they want to share it. at least by reputation, we live in a free country, so what does the first amendment, the free speech clause in particular, have to say about that? this turns out to be a really interesting and one of the most important unsettled questions in constitutional law. let me begin by telling you a story. imagine -- and this is a true story. imagine a group of scottish missionaries go to rural nigeria. a married couple finds a stray cat. and they think they're going to adopt it, but there are no veterinarians in rural nigeria. there's no pedestrian food. but one thing they have is a cell phone tower. so these missionaries can get on the internet. they go all the way around the planet and you'll find ron heinz. he is a retired physically disabled texas licensed

veterinarian with a ph.d. in biology. he spent his career working with exotic animals at a research facility here in maryland. he worked at sea world. he was in private practice. he's just an amazing veterinarian who, after he retired, because his disabilities made it impossible for him to continue to work, he still wanted to help animals. so one day, he and the missionaries in rural nigeria start writing e-mails to each other about what to do about the cat. how should we feed the cat? how can we make sure this cat stays healthy? what are the things we should looking out for? ron and the missionaries are exchanging e-mails. ron starts doing this with other people too, mostly for free, although occasionally he would charge people a flat fee of a couple of bucks, just to help him cover the cost of keeping his website going. he never made any money doing it. what has just transpired? a disabled 70-year-old man in

texas writes an e-mail to a scottish missionary about a cat in nigeria. that's a crime. ron heinz had his veterinary license suspended fined, forced to retake a portion of the veterinary licensing exam and had to shut down his website and stop doing it. why is that? because under texas law, you have to physically examine the animal before you can offer any opinion about it. this house-bound was supposed to get on an airplane and fly to nigeria before he could offer an opinion of any kind about this cat, and never mind there are no veterinarians and the cat would be completely without care without ron. ron wasn't prescribing medicine or sending drugs, he was just offering an opinion, that's it, two people talking to each other. what does the first amendment have to say about that? the first amendment is supposed to protect the right of americans, which of ron hines is an american, and anybody subject to american jurisdiction can be able to have useful conversations about the world. we brought a first amendment lawsuit. the trial court, the federal trial court said you're right.

the first amendment applies. the state of texas tried to get it dismissed on the ground that when two people talk to each other, if that conversation is subject to occupational licensing, the conversation is by definition physical conduct. so if ron hines writes an e-mail that says you should try to feed your cat some shredded pork or something like that the law treats that as though ron hines is taking a scalpel and cutting a hole in the animal. they say by definition it is conduct, even if it's just words. so the first amendment doesn't apply at all. it's not that the first amendment applies and you thoop lose under whatever balancing test there is, it's that it doesn't apply at all. the federal trial court said the first amendment applies to this. so then the state of texas asked for a special appeal, and we went up to the federal court of appeals. and in march the federal court of appeals reversed. they say you know what? we disagree with the trial court. we are going to call that

conduct. if you are speaking and you are giving someone individualized personal advice, we're going to call that conduct. so what's going on? well, what's going on here is the collision between two inventorierble constitutional doctrines. one is that state governments have broad authority to license occupations. that is well established in the law. we challenge it all the time. at i.j., it leads to all kinds of irrational barriers to entry. one of the yoens why medicine and other kinds of professions are expensive and hard to get into is because lobbyists aggressively create all kinds of barriers. set that aside, supreme court has said that states have broad latitude. the supreme court has also said that the protections of the first amendment are broad. what happens when those two things intersect? the supreme court had an interesting case several years ago that was about advice to foreign terrorists. some american doctors and physicians were providing individualized technical advice

to foreign terrorist groups about how to resolve their grievances nonviolently. one was a kurdish liberation movement, and the other one was the tamil liberation movement in sri lanka. these groups were concerned about being prosecuted by the federal government for providing individualized advice, which the federal government considered to be material support to terrorist groups. and so the question that went up to the supreme court was, is individualized advice that consists of nothing but speech, you're not sending money, guns, bombs or anything, you're just talking to them about the law. is that something protected by the first amendment? and the skrourt said yes, the first amendment applies. it turns out the federal government has a huge interest in suppressing advice to terrorists because it just kind of on frees you resources for terrorists to do other things. but the first amendment applies. so we tried to take that precedent and we said to the

federal court in the fifth circuit, we said look, if the first amendment at least applies to individualized tenlal advice to murderus foreign terrorists, surely it applies to this utterly harmless disability veterinarian in texas who just talked to somebody about a cat. the court said no. here's another interesting case about the first amendment that's also from a few years ago. it involved what are calls animal crush videos. there are people out there, perhaps probably not anybody in this room, but there are people out there who like to exchange videos about animals getting tortured, and that provides them with sexual titillation. the question the supreme court addressed is whether or not this applies to a statute that restricts communication in the form of animal crush videos. the supreme court said, you know what, this is america, this might be repugnant speech, but the first amendment applies to repugnant speech, so it applies to animal crush videos. what does this mean for ron hines, the veterinarian in texas?

what it means is if he decided that he wanted to talk to kurdish terrorists about how to -- let's say they have a herd of cats or something like that and they're using that herd of cattle to sort of support their fighters or something, he could talk to them about that and the first amendment would apply to that conversation if he were to be prosecuted by the federal government for providing material support to terrorists. now, if ron hines also wanted to exchange animal crush videos with scottish missionaries in rural nigeria, the first amendment would apply to animal crush videos. but according to the fifth circuit, the first amendment doesn't apply if ron hines is actually just trying to help an animal. so if he wants to help terrorists or he wants to trade fetish videos, no problem. but if he just actually wants to sit down and talk to somebody to help their animal, no first amendment protection.

this is a big issue. the federal courts of appeals disagree about the extent to which the first amendment applies. so we have a case from the early 2000s in california that involved medical marijuana. this was before -- california at that point had said that medical marijuana would be okay, that physicians could prescribe it, but it's actually still legal under federal law. so doctors have a controlled substances license from the drug flrchlt agency to be able to prescribe drugs. it turned out that there are a group of doctors who wanted to say to their patients, look, i'm not going to prescribe marijuana for you, i can't do that. but i'm going to tell thaw actually in your case i think there's a valid medical reason for using marijuana. so it was just a conversation between a doctor and a patient. the u.s. court of appeals said you know what, the first amendment protects that conversation and the drug enforcement agency can't pull your controlled substances license just because you're a

doctor having a conversation with a patient about medical marijuana. as long as you're not illegally prescribing it. because the first amendment -- we cited it extensively in the fifth circuit. but on the other end of the country, in the 11th circuit, there's a case that's going on right now that's sometimes called the glocks versus docs. it forebade physicians from asking their patients about whether they own guns, keep guns loaded. sometimes you go to the doctor and the doctor might say, are you wearing your seat belt, because accidents actually kill people. accidental gun discharges or suicide by gun, those are legitimate public health issues. so anyway, the gun lobby didn't like the fact some that some doctors were asking people about guns and they thought it was an invasion of privacy, so they got a law passed that said doctors aren't allowed to ask people about guns. a group of doctors brought a lawsuit and said, look, the first amendment protects my right to have a conversation with a patient. just because we're in a

doctor-patient relationship doesn't mean that we have completely surrendered our free speech rights, and the government can tell us to say and do whatever we want. the 11th circuit court after peels said nope, when a doctor is having a conversation with a patient, even if it is just a conversation, you're not touching them, not doing anything, that is conduct to which the first amendment doesn't apply. you may notice that the medical marijuana issue is kind of a liberal issue, and the ninth circuit court of appeals on the west coast, kind of a liberal court.