minister ben gentleman miffer netanyahu as well as attending a dinner with the prime minister. president trump also meeting with palestinian leader mahmoud abbas and go on with the vet can and meet with pope francis and attending the nato summit in brussels and the g-7 meetings in sicily. >> never let anyone define you. and that is the first lesson i want to leave you with. only you define who you are. only you. >> our hearts should be open, not just to falling in love but to the world. we need to look. we need to care. and we need to contribute. >> don't ever let anyone tell you that your dreams are silly. and if you have to look back on your life, regret the things that you did and not what you didn't do. >> nothing stays still. things will change.

the question for you is whether and how you will participate in the process of creative change. >> just a few past commencement speeches from the c-span video library and watch more on saturday, may 27, monday, may 29, memorial day, and june 3 on c-span and c-span.org. >> the house committee took a look at the state of medicare recently. its payment systems and expiring provisions. mark miller heads up the independent agency that advices congress on policy issues affecting the federal program. he testifies. >> good afternoon.

the first hearing of the health subcommittee ways and means will come to order as members are aware, the full subcommittee organized earlier this year ratified our subcommittee assignments. mr. tiberi: i'd like to introduce members on my slile and recognize ranking member levin to do the same on his side of the aisle. i'll introduce members who are here right now and then we'll recognize members as they get here later. so to my right, mr. adrian smith from nebraska. lynn jenkins from kansas. mr. kenny marchant from texas. with that i'll yield to the gentleman from michigan. mr. levin: thank you very much. mr. thompson is next to me, a veteran member of this institution. and brian higgins, we welcome you back doubly. and others will be coming. we have votes at 2:15, i think,

so i guess each of us will make a brief opening and then we will vote. i yield back. thank you. mr. tiberi: thank you, mr. levin. i look forward to working with members. mr. levin: we're introducing ourselves. mr. tiberi: with that i'll tell you i look forward to working together as we have talked about before and i'd like to recognize our staff and i'll recognize mr. levin to do so on his side of the aisle. first on the republican side, staff director emily murray. behind me who is joined by our professional staff of lisa, nick, stephanie parks, and alyssa and also down the end there, our legislative assistant taylor trot, and my personal staff, whitney, whoever she might be. and abby.

mr. levin, you're recognized. amy who heads up our staff, sarah levin, no relation, and melanie egrin, and from our office, also, daniel. thank you. mr. tiberi: well, it's my pleasure to welcome mr. miller back to the health subcommittee to help us continue the discussion on our medicare program, payment system and extenders. it's time we took the next steps in strengthening our medicare program as the committee looks for ways to reform medicare. the commission's insights and analysis will be very valuable to our efforts. today is a great opportunity for us to hear advice from a nonpartisan congressional support agency in order to better understand policies that will improve the program and ensure that we're making good use of taxpayer dollars.

this year's march report brings us new information and data that should help strengthen our discussion in this particular area. in his testimony, mr. miller will highlight numerous inefficiencies in the postacute care space. one statistic that i personally found quite staggering is that nearly $30 billion with a b in the current postacute care baseline is being used inefficiently. mr. miller will highlight the medicare extenders. medpac will use -- we will use today's hearing to give everyone a refresher course. extending these programs has a cost, and every time we spend money in one area we're making a decision not to fund priorities in other areas. clearly, there are many areas that are in need of reform within the medicare space and medicare program.

medpac has innovative solutions and i look forward to hearing from the report. meeting with medicare providers around my district and state recently, there's been a resounding krn that i've heard from all of them, and that is overbearing regulations are increasing, burdening providers and seem to be driving out and discouraging small providers in particular. i'm worried about the direction we're heading in this area. i'm hopeful that my colleagues on the subcommittee, the full ways and means committee and this congress can work together with the new administration to not only spur innovation but reduce regulatory burdens across the medicare program. with that i'd like to introduce today's witness, mark miller, the executive director of the medicare payment advisory commission, medpac. welcome back, mr. miller. before i recognize ranking member levin for an opening statement, i'd ask unanimous consent that all members' written statements be included in the record. without objection. i recognize mr. levin.

mr. levin: thank you very much, mr. chairman. it's a pleasure for us to work with you and to your colleagues. and to you, dr. miller, thanks for joining us today. and for the important role that medpac plays in informing medicare policy. we've had a chance to look at your report, maybe not read each page along one but an excellent executive summary. and unfortunately, as mr. tiberi and i discussed, this is the first hearing of this subcommittee. and i regret that we did not ve an earlier hearing on the consequential health legislation that the republicans introduced and passed. that bill, as we know, would have taken away coverage from 24 million americans while handing out nearly $1 trillion in tax cuts primarily for the

wealthy, indeed the very wealthy and corporations. it would gut medicaid by cutting more than $800 billion from the fram -- program and shifting costs to patients. it would allow states to eliminate or weaken crucial market reforms, including essential health benefits, community rating and protections for older workers. it was opposed by doctors, hospitals, patients, aarp, almost everybody who is a participant in the work that you do, dr. miller. though all of our colleagues here on the republican side did vote for it. but this hearing is about medicare. with all that is deeply harmful in the basic law or legislation that the republicans passed, there's been much less

attention paid to the damage that bill would do to medicare. the bill eliminates .9% payroll tax on high earners, depriving the medicare hospital insurance fund of $75 billion in order to benefit people making more than $200,000. it grants a windfall to wealthy investors by eliminating the tax on unearned income, including capital gains and dividends. and it would provide a $28.5 billion tax break to pharmaceutical companies which will create a shortfall in the part b trust fund. beneficiary who will be directly responsible if that were to pass for a portion of $8.7 hortfall, causing an billion premium increase. these provisions would shorten the solvency of the medicare

trust fund. what's more, they would fundamentally break a promise we heard over and over again from the president that he would not cut medicare or edicaid. the republicans have also neglected to address other important issues that medicare faces, and let me comment briefly on perhaps the most important one. the prescription drug spending crisis. i hope we can spend some time today on that. skyrocketing drug costs have devastating consequences for the middle class and for federal health programs. the medicare trustees have told us that programs spending in part d increased by 15% in 2015 alone. in part b, g.a.o. has found

that medicare often pays more for physician administered drugs and other federal payers, including medicaid and the v.a. medpac has made a number of recommendations to address medicare prescription drugs spending. notably, the commission has pointed out perverse incentives that impact industry behavior and contribute to higher costs for the public. so i hope this hearing will provide us an opportunity to discuss this and other important issues that you raise with so much depth, dr. miller, in your report. i yield back. mr. tiberi: thank you, mr. levin. i'd remind members that this hearing is called the medicaid hearing on the current status of the medicare program, payment systems and extenders. i gave tremendous weight to mr. levin in his opening statement.

more than ever given to me in the minority. but we are going to keep this topic from here on out on the topic that was given to members when this committee hearing was released. before i ask mr. miller to begin, i just want to recognize some constituents in the audience. mr. mike demana, a teacher at orange middle school in delaware county, and some eighth grade students. can you stand up in the back? mr. demana, you back there? did you leave already? he already left? mr. levin: is anybody here from michigan? mr. tiberi: they heard a guy from michigan and they all bolted. just kidding. mr. levin: that's rivalry too far. mr. tiberi: too far. mr. levin: michigan beat ohio state. mr. tiberi: it's been a while. dr. miller, you're recognized. dr. miller: mr. chairman, ranking member, i'm mike miller, on behalf of the

commission i'd like to thank you for asking us to testify today. as you've already mentioned, we're a small congressional agency required by law to provide analysis and recommendations to the congress. our work in all instances is guided by three principles, ensuring beneficiary access to high quality care, protecting the taxpayer dollar and paying providers and plans in a way to accomplish these goals. with respect to the program's status, medicare spending is about $650 billion annually. a 3.5% of g.d.p. given the enrollment of the baby boom and rates of spending per beneficiary, the medicare program is projected to grow faster than the economy is projected to grow and continue to raise issues of affordability for both the taxpayer and the beneficiaries that finance the program. by law, our march report makes a series of payment recommendations on various fee for service sectors. each year we produce an analysis on access, supply,

utilization, the private equity markets, quality and financial status. i have recommendations across a range of fee for service sectors that i can discuss, but i want to focus on the fact that over the last many years, the commission has paid particular attention to the postacute care sector. i'm referring to skilled nursing facilities, home health agencies, in-patient rehabilitation services and long-term care hospitals. the commission has made recommendations to restrain unnecessarily high payments, improve the equity of payment systems for both patients and providers, improve quality measurement and also to direct the secretary's attention to program integrity issues. for 2018 we recommend a two-year payment freeze for skilled nursing facilities, a 5% payment reduction for home health agencies and a 5% payment reduction for in-patient rehabilitation facilities. medicare profit margins in each of these sectors is 13% or more and has been that way for over

a decade. in each of these sectors, we are again recommending changes in the payment system would be made so that we pay more on the basis of patient need and that will result in greater equity across different types of providers. we believe that the congress were to follow this recommendation, something like $30 billion over the next 10 years unnecessary payments could be avoided. in other reports, the commission has recommended moving away from the siloed approach to postacute care delivery and instead move towards another payment system and, again, pay on the part of patient need rather than the side of care and this will increase the potential to measure quality of care more accurately. turning to part c and part d, managed care and medicare has continued to show strong growth. currently accounting for 31% of enrollment and there are multiple plans available in virtually every account of the u.s.

on average plans are bidding blow fee for service which is -- below fee for service which is significant since 2010. the extra dollars they've been providing is increasing and the commission has made a few recommendations in this area. most notably to recapture payment fathers access coding that targets plans that are most aggressively engaged in that coding and we've also recommended increasing overnight all benchmark in m.a. in order to treat plans more fairly. in the part d drug program, beneficiary enrollment has been increasing and there continues to be access to stand-alone plans, managed care plans and low-income -- plans for the low-income population. overall, spending growth is about 7% annually, but the portion of the program paid exclusively by the government has been increasing at an annual rate of 20%. this is because the number of beneficiaries reaching the catastrophic cap has accelerated over the last few years. they currently count for more than 50% of the spending.

the commission has made three recommendations in this area to address this problem, but most notably we recommend shifting more risk to the plans for these catastrophic costs and couple that with additional tools for the plans to manage that risk. with respect to extenders, i will note that over the last several years, the commission has done work on ambulance payments, including a more targeted rural assistance policy, therapy caps where we've tried to strike a balance between cap restraints and exceptions for needy beneficiaries, and then we have specific recommendations on each of the special needs plans categories. and finally, we've made several proposals for rural hospital payment adjustments. with that i'm happy to take your questions. mr. tiberi: thank you, sir. mr. miller, your testimony reflected some of the medicare extenders and writing and these programs congress needs to address and determine whether we should extend them or not.

many of these programs have been extended several times in the past without any policy modifications. and by the way, for members, that's a vote that's occurring and there are two votes, my belief is, so we're going to begin asking questions and mr. miller's agreed to sit tight while we go vote and come back so i'm going to begin the questioning. if you feel you need to get over there, please do and please come back after the votes. yeah, we'll come back. so mr. miller, can you talk through each of the extenders and what medpac has concluded about each one of them? dr. miller: in five minutes that's a little bit difficult but i'll -- what i do want to say really quickly is all of this has analysis and detailed work behind it but i'll just try and hit you with the top line. special needs plans. we've made recommendations for each of the categories. we've recommended continuing the institutional special needs plans.

with respect to part d special needs plans, we've recommended that you continue those but you have a requirement for integrated care between medicare and medicaid. for the chronic care, special needs plans, we have said that for, you know, dominant conditions like aids and asrd they make sense but for conditions like diabetes, congestive heart failure, we would create greater flexibilities in the regular m.a. plans to basically replicate a special needs type of model in the regular plans and would discontinue those. on therapy -- on hospital payment, there's a low volume adjuster which we originally made recommendations that the congress should take up which it did, and with all respect, our point here is that it hasn't been constructed properly. it keys off the number of medicare admissions when it should key off the total admissions and i can take that

up on questions in just in the interest of keeping moving along. we also think there are adjusters like medicare dependent hospitals that those type of adjusters and the two concerns i'll express there is often you can get two adjusters that are aimed at the same problem. medicare dependent hospital, a low-volume adjuster as the case may be. we think you should be very conscious of duplication and when the adjuster goes to the provider, be conscious of the distance it is from another provider because you don't want to be sending a subsidy to two hospitales that are, say, within 10 miles of each other and you're basically propping up two operationes that are having a hard time meeting their fixed cost. on ambulance, we generally let the extenders expire and then reorganize the fee schedule to focus more on -- less on basic life support transports and more on advanced life support.

basically rebalance the payments there. and then we also took one of the adjusters for rural providers and targeted it to low-density counties where you'd have a harder time covering your fixed cost. i can stop any time. mr. tiberi: no, keep going. mr. miller: on the therapy cap, what we said there was is that there is an extreme variation in the utilization of outpatient therapy. i want to be really clear. we think it's a very valuable benefit and we're thinking there is evidence that it helps beneficiaries, but we also think it's relatively open to abuse. so we would adjust the caps downward to about the 70th percentile of the distribution, but couple that with a review of exceptions that makes specific decisions about the exceptions outside of the cap instead of a blanket check box-type exception. i'm going to stop there.

i'm sure i've left something out. mr. tiberi: we can come back if you remember later or we can ask you a question on the second round. so you would -- mr. miller, you and i have had private discussions in the past about the free-standing emergency departments that are popping up around parts of the country. and there seems to be a new one popping up every month or so in my state of ohio. this is a topic that i know medpac will be publishing in its june report and be released about a month from now. can you give us a preview? are you allowed to do that? mr. miller: i'll do that. i'll also go back a little bit in history. we talked about this in our june, 2016, report and we also talked about it in our march -- the report we're talking about here. this is the one where we said we should be collecting claims identified for on and off campus because we're really

blind right at the moment in kind of analyzing this phenomenon. the commission is very concerned about this. there has been a lot of growth. there is concern that growth is occurring in markets where they're either saturated or relatively high income. not necessarily poor populations and in june we won't have additional recommendations but we'll identify three issues, three, four issues for us to think about and then come back with recommendations. . one thing we're concerned about is that the admission of an off-campus emergency room may not in the patient population and intensity of service may not look like your standard on-campus emergency room. maybe we need to start thinking about a payment structure that reflects the fact that they have a different patient mix and in some ways a different mission. i'll hold that one for last. the second thing is in the legislation that the congress

passed on site neutral where the congress was saying after a certain date if you purchase a physician practice you don't get the richer outpatient rate, we're concerned that there's a provision in there that if you attach services to an emergency room, you can actually get around that prohibition. we'll be discussing that. the last thing i wanted to bring up is in the rural areas. we think there may be a role for free standing emergency rooms in isolated rural communities or an isolated rural communities that don't have the patient population to support a full-scale in-patient operation. we have ideas that we have been talking through where you could restructure the in patient subsidies and support freestanding emergency rooms in isolated rural areas. it's not that free standing emergency rooms have no role anywhere, we have concerns about their growth in certain areas of the country, and then we think we'll probably not got quite the

right incentives out in the rural areas. chairman tiberi: one follow-up. if you have the diane black main hospital, the main hospital with the main emergency department and then 10 miles away you have the freestanding black fire -- excuse me, emergency department. oes medicare get data on the visits to that 10 mile away facility? 9 maint art of hospital? mr. miller: it's all mashed together. chairman tiberi: you can't discern if i go to the freestanding one or the main one? mr. miller: we cannot. and we're concerned about that. that was the recommendation we made here in this report to say that c.m.s. should begin to develop a modifier so that when the claim flows come in we know it's occurring on or off tamm cam pus. chairman tiberi: thank you. thank you so much. when we get back i'm going to

yield to mr. levin for his questioning. we'll be back in a few minutes. thank you. this hearing is recessed until we get back. thank you. fun fun- [captions copyright national able satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. isit ncicap.org] chairman tiberi: the hearing will come back to order. we have been joined by a few of my colleagues who weren't here when i did the introduction. i want to just recognize the members who are here