of false narratives. -- watch sunday night -- >> watch sunday night on c-span2's "book tv." >> senate confirmation hearings a supreme not to be court justice are expected in september. senators are likely to question him about roe versus wade, the 1973 decision that struck down restrictions on abortion. on tuesday, c-span's "landmark in-depth looks an at roe v. wade. >>leaders and scholars on health care and the economy testified on how to reduce the administrative cost of health

care. the hearing was held by the senate health education labor and pensions committee. it is one hour and 42 minutes. >> senate committee on health education, labor, and pensions will come to order. senator murray and i will each have an opening statement. then i will introduce the witnesses. the senators will then have five minutes to ask questions. this is our third hearing on reducing health care costs. hearing, dr. james testified that a minimum of 30% and as much as 50% of all health care spending is waste. let's pause for a moment and realize what a remarkable statement that is. dr. james has led a major health care system as a member of the we had a of medicine, panel there of equally impressive witnesses and nobody really disagreed with his estimate.

that hearing, we focus on reducing what we spend on health care by examining two things. one, reducing unnecessary health care tests and prescription drugs. two, preventing -- how to prevent -- it is all the time spent filling out insurance claims. administrative costs are much higher in the united states than other countries according to a witness on our first hearing, administrative costs account for 8% of all health care spending in the u.s., roughly, that a fashion that is 200 62 $4 billion compared to 1% to 3% -- $264 billion compared to 1% to 3% for other countries. while many administrative tasks in the health-care system come from outside the federal government such as insurance

company or state requirements, the federal government is clearly at fault for some of this burden. for example, there is a a lot of excitement over electronic health care records in washington, d.c. many said the systems would make it easier for doctors and patients to access a health record and share the information with other doctors. since 2011, the federal government has spent 38 billion -- $38 billion requiring doctors and hospitals to install electronic health record systems through the meaningful use programs in medicare and medicaid. the federal government provided payments to doctors and hospitals to buy those systems and created specific requirements for how doctors must use the system, penalizing doctors who did not comply. unfortunately, health record systems have ended up being something that physicians to o often dread. rather than a tool that is useful. for example, dr. reid blackwell, a family physician who shares a residency program with three clinics in the tri-cities areas of east tennessee is required to

have an electronic health record system because he sees medicare and medicaid patients. he initially received payments from the federal government to implement the system come up and now he has to pay a monthly maintenance fee to electronic health records company as well as paying for periodic upgrades to the system. all of these costs add up to being far more expensive than the paper records he used to keep or the initial payment the government provided. he still is unable to see the electronic health record of a patient discharge from a hospital across the street. that is because the hospital does not use the same software that dr. blackwell does. so instead, he has to call the hospital and have paper copies of his patient records faxed to his office. there is technology to make as -- his electronic health record system communicate with a local hospital record system so he would not have to have them fax

the record to his office. however, he would have to pay $300 per month to the company for each of the 88 doctors and nurses in his practice. what this means is that for his 88 doctors and the nurses, the doctor would have to spend $26,400 every months. -- every month. $316,000 -- three injured $316,800 a year just to see his patient's health records from across the street or other doctors. the system that was opposed to make things easier has instead make -- made it record keeping more expensive and doctors still cannot see the patient records. this is just one example of how it can add to the administrative burden that doctors face. according to the american hospital association, there are 629 different regulatory

requirements from four different federal agencies. that doctors, hospitals, and other health care providers have to comply with. these range from requiring doctors and nurses to medicare andn maintaining clients with privacy law to make sure the right signs are hanging around the office. the average community hospital needs 23 full-time employees just to keep up with the regulations about what a has bill to do to participate in medicare called conditions of participation according to the american hospital association. when the federal government adds one more question or one more itl, it -- or one more rule, may not seem like it makes much of a difference but added together for doctors, those questions and rules add up to more time spent on paperwork and less time treating patients. the trump administration is

-- has taken a look at what administrative tasks are required by the federal government and i am glad to see that the administrator of cms which oversees medicare and medicaid recently proposed streamlining many of the agency's birding requirements. -- burdening requirements. this is one step. i look forward to hearing about more of what the present government can do. as we look at how to did reduce health care costs, we should keep in mind that what may seem like a good idea or a magic bullet in washington, d.c. may actually result in something very different for doctors, nurses, and hospitals. senator murray. >> thank you mr. chairman. i am glad we are continuing our discussion on health care costs. knowsue i know if -- i families in my home state are concerned about as many of them struggle to afford the care they need. and i look forward to hearing from all of our witnesses today and how it fits into the big

picture. i believe there are opportunities to help reduce health care costs by reducing complexity while maintaining quality and safety for patients. we know the current administrative system is fragmented with different federal, state, and private protocols for things like billing and measuring the quality of care. i am interested to hear from our witnesses for ideas to simple if -- to simplify and align requirements while maintaining to make sure that patients are getting safe quality care and service. unfortunately, instead of pursuing policies to address high administrative costs, president trump is pursuing a path of health care sabotage including ideas that will make this problem worse. in fact, the trump administration's office of management and budget is currently reviewing a new sabotage step that will do even more to let insurance companies offer junk plans that not only undermine protections for people with pre-existing conditions, but also no requirements that -- but also ignore requirements that ensures that it is spending most of its money on patients.

an analysis from the national association of insurance commissioners shows the most popular junk plans spend on average half of their revenue on things that have nothing to do with patients'health care needs. in other words, president trump wants to make it easier for insurance companies to discriminate against people with pre-existing conditions and reward themselves with bigger executive bonuses. i think we can all agree we should be looking for steps to reduce administrative costs and make health care affordable. this idea from president trump moves us in the exactly the wrong direction. unfortunately, the administration is focusing on sabotaging family health care. from day one, president trump has focused on rolling back family health care and protection for people with pre-existing conditions, even though the people have utterly rejected the agenda.

like a year ago when they spoke up against the mean spirited to try tobill that get medicaid and put families back at the mercy of big insurance companies, who could jack up prices for people with pre-existing conditions. fortunately, those efforts failed and president trump has now decided to sabotage health care from the oval office and -- instead. he dramatically cut investments to help people understand their health care options and get covered. he pushed a partisan tax-cut bill which meant lower rates for massive insurers, higher premiums for families. he handed the reins back to insurance companies by looking for ways to make it easier to sell junk insurance with dodge -- that dodges patient protections like those for people with pre-existing conditions, women, and seniors. he abandoned patients and the court of law by having his justice department take the highly unusual step of refusing to defend pre-existing conditions and core. -- in court.

and now many of us are concerned that president trump has nominated a supreme court justice who will strike down health care for millions of americans. care makes on health clear he is a serious threat to family's health care and protections to people with pre-existing conditions. i hope republicans join us and -- in rejecting his nomination just like they joined us in rejecting trumpcare when it threatened our families across the country. i also hope they will come back brindown health care costs. because i know that is what families in my state are counting on us to do and i have no doubt patients across the country felt the same way. >> thank you, senator murray. will now introduce the witnesses and i last -- i will ask senator murkowski to introduce our first witness who has come a long way. >> thank you, mr. chairman. i thank you for including on this distinguished panel becky hallward. becky has not only been a great

an assist to my staff in office, but she has been a strong leader in alaska. she is the president and ceo of the alaska state hospital and nursing home association. prior to this, she served as the commissioner for administration under the governor where she provided business support services to our state government. that department oversees management of the retiree health plans for more than 80,000 covered lives. she has served as the regional director of communication and marketing for providence health in alaska. she has an extraordinary breadth of understanding of the associated health care cost in rural states and recognizing some of the challenges that we have heard before this committee.

as i have attempted to outline them. and the impact to our smaller facilities, our more remote facilities. she brings extraordinary experience to the committee. i appreciate that we will have her voice added to this important discussion this morning as to how we can work to decrease administrative spending when it comes to health care costs. thank you. i look forward to the comments we will get from becky this morning and appreciate her making the long haul from alaska to begin -- to be here this morning. >> thank you, senator murkowski: our second witness will be not chief, he is president executive officer of america's health insurance plans, the national trade association representing health insurance providers. previously, he held another -- a number of other leadership positions at fortune 200 companies.

earlier, he worked for the congressional budget office. dr. david cutler is our next witness. he is a harvard college professor of applied economics at harvard. he served on the council of economic advisories for the national economic council during the clinton administration. was senior health care to the obama campaign. he held a number of positions with the national institute of health. the academy of sciences, the institute of medicine. dr. robert book is our fourth witness. he is a health economist who advises at the health care and economic expert forum. -- for the american action forum. he is a senior research director at health systems innovation network llc. he has had a wide range of experience including senior research fellow and health economics at the heritage foundation on the faculty of the industrial college of the armed forces. senior associate of the lowland group. welcome, and again, to our witnesses, we will go down the

road. -- down the road. welcome. >> good morning. i'm the president ceo of the alaska state hospital and home -- and nursing home association. on behalf of i -- of my member hospitals, thank you for having me here to testify today. health care providers face a variety of administrative burdens from state, local, and regulations. i will focus my remarks on the growing number of federal regulations and the impact of this administrative burden on our health care system. health care provider share the same goals of improving quality and keeping patient safety. providers recognize the importance of a stable regulatory framework that allows them to focus on patients and invest resources in improving health care access. we appreciate recent work done by cms in addressing regulatory burdens. given the pace of change, more must be done. close to 24,000 pages of regulations were published in 2016 alone. the american hospital

association quantified the cost in a recent report. hospitals, health systems, and care providers must comply with 629 discrete regulatory requirements across nine domains. spending $39 billion annually in administrative activities related to regulatory compliance. spending $7.5o million on regular tory -- on regulatory compliance. for skilled nursing facilities, the cost of complying exceeds $735 million annually. this is not a time when margins for skilled nursing facilities are less than 1%. we often discuss administrative burden in terms of direct cost. it is important to recognize the opportunity costs. the opportunity cost is the next best thing you could have done with the financial and human resources spent on something for -- or the value of the foregone

alternative. it highlights the reality of scarcity. when a dollar or staff hours spent on administrative cost, it is not available for something else. financial and human resources spent in regulatory compliance cannot be used for adding services, hiring doctors or nurses, or addressing community needs. there are steps the federal government can take to adjust -- address the growing mountain of regulation while ensuring safety. we recommend better align and regulatory appliances within federal agencies and programs. regulators should provide clear guidelines and reasonable timelines for the implementation of new rules. conditions of participation for medicare, a significant source of the cost of regulatory compliance, should be evidence-based. aligned with other laws to industry standards and flexible. requirements for the meaningful use program should be streamlined and increasingly focused on interoperability. finally, congress, cms, and the office of inspector general should revisit requirements aimed at combating fraud to

provide the flexibility necessary to support high-quality care. skilled nursing facilities face new unfunded mandates to hire staff and establish compliance programs under the requirements of participation -- and participation. due to their sheer volume and specificity, they are difficult to implement. cms should revise the requirements of participation to make them more outcome focused and patient is centered we recommend the automatic revocation of cna trading -- aaining that it receives penalty be addressed through changes at the federal statute. we urge congress to adjust -- address the requirement that 5% receive a federal survey each year. this unfairly penalizes small states with few facilities and i want to thank senator michalski for her interest in this issue. rapid improvement in patient safety are occurring at scale in our nation's hospitals. voluntary partnerships between cms and providers to improve

quality like the partnership for patients and the american health care association's quality initiative are resulting in measurable improvements in patient care. skilled nursing facilities are improving. alaska providers are exceeding national trends in several areas. alaska hospitals reduce the rate of death from severe sepsis from 20% to just under 5% in two years. behind the statistics are real people. someone's mother, someone's friend, someone's child. alive today because of this collaborative work. we must focus our resources on the quality improvement partnerships yielding real results for patients. the issue of administrative burden comes under sharp focus in rural america. it requires to implement and rural areas lack scale. small hospitals simply cannot continue to effectively comply with an ever-growing burden of federal regulations. for a large hospital, the

opportunity cost of a regulation may mean a program delayed. for a small town, the choice is more difficult. the opportunity cost for rural communities may be the loss of services. i want to thank the committee for the commitment to improving the nation's health care system and having me here today. >> victoria: -- >> thank you. mr. isles, welcome. isles, -- matt isles, president and ceo of america's health insurance plans. i appreciate the opportunity to testify on reducing health care costs. every american deserves access to comprehensive coverage choices without regard to pre-existing conditions that help to improve their health and financial security. our members are committed to advancing this goal. our members invest in a wide range of initiatives to improve patient care and protect patients from unnecessary treatments.

our written testimony focuses on four areas. first, we provide an overview of how consumer dollars are invested in the commercial market. our graphic and analyses show that the vast majority of every health care dollar goes to pay directly for medical treatment and services. the rest funds programs and services that improve health and increase health care choices. second, we reviewed that some of the administrative activities carried out by health insurance providers, including medical management, and care management and care coordination and fraud prevention. these all work together to improve the health care experience and reduce costs for consumers. third, we offer examples of how health insurance providers are working to simplify administration for doctors and nurses. finally, we outline our recommendations on steps that can be taken with help from industry partners and policymakers to address barriers to simplifying processes and providing more value to patients. health insurance providers have a 360 degree view of how people

use their coverage and care. our members have pioneered many strategies for making health care more effective and affordable. for example, several research studies show wasteful spending and health care. two thirds of physicians report that at least 15% to 30% of care is unnecessary. health insurance providers use medical management tools to help patients get the right care at the right time in the right setting with a focus on better, smarter care. we work with clinicians to help confirm treatment regiments ahead of time and ensure the use of the most cost effective therapies. prior authorization is one example of an effective medical management tool to ensure better, smarter care. although it is supply to less than 15% of covered services, it effectively addresses over use and misuse of procedures in commercial and public programs. with prior authorization, our members analyze whether a treatment is safe and effective for a particular patient based on the best available clinical evidence. insurance providers also ensure

the treatment is provided in the most important care setting by a qualified license provider and it is provided with other needed services. we are working with many others to improve prior authorization processes and by making it more electronic, we can further improve its effectiveness and efficiency. health insurance providers have invested billions of dollars to monitor, detector, and eliminate fraud. we are a founding member of the health care fraud prevention partnership which includes the federal government, stated as, -- state agencies, law enforcement, and health plans. has saved, the hfpb hundreds of millions of dollars through the detection and prevention of fraud. we are working with others to simplify operations without sacrificing quality. for example, through partnership with the council for affordable quality health care, our members collaborate with other stakeholders to develop standard rules for electronic transactions. because of this work, an

increasing number of transactions are now electronic. however, there is more work to be done. a 2016 schq report estimated that more than 3 billion manual transactions occur each year. insurance providers have played a leading role in solving web portals to provide easy access for physicians to multiple plans for key eligibility and determination information. such as co-pays, and adaptable. -- and deductibles. it provides access to current information on claim status, reducing time and paperwork. the harmonized performance measures are -- our core quality measures collaborative report high-quality evidence-based care. our industry is working to encourage further improvements including moving away from paper transactions, achieving interoperability for measuring quality, creating privacy laws for behavioral health, improving electronic transactions, recognizing fraud detection and prevention.

thank you for the opportunity to testify and i look forward task -- to answering the committee's questions. >> thank you mr. isles. dr. cutler, welcome. >> thank you for inviting me to testify today. my name is david cutler. i'm a professor of economics at harvard where i have been teaching and working in health care for about 25 years. i'm delighted to talk about the role that the administration and congress and others can play in reducing administrative expenses in u.s. health care. health-care expenses are a major drain on the economy. 30% of the health care bill in the u.s., $1 trillion a year, is devoted to administrative expense. that is approximately twice what the united states spends on caring for cardiovascular disease and three times what we spend on treating cancer. most of the expenses for billing and insurance related services,

two thirds of which are occurring providers offices. hospitals, gilded nursing facilities, and the like. there are several reforms that would reduce administrative costs in the u.s. some of these have been picked up by other witnesses. let me try to give them a bit of a typology. first is simplifying the complexity with which patients are coded. for example, when a patient visits the emergency department, they are one of five different codes that can be put in. the particular code depends on the past history of the patient and other conditions. as a result, an enormous amount of manpower spent searching through the record and finding every possible condition the patient could of had so that he -- could have had it so that he or she can be put into a higher category for reimbursement. this is wasted time, effort, and money that could be directed to other uses. second, something that has been mentioned, standardizing preauthorization requirements. a great share of the cost is

documenting things associated with prior authorization. for example, if one service is going to be provided, proof that what was done in advance actually occurred and had the requisite outcome. i have been in hospitals where they show me the procedures for billing radiology. just radiology services at one hospital across all the different payers and the manuals they comply with our over one foot thick. the reason is each different insurer will have their own policies and each payer working have theirsurer will own policies related to preauthorization. there is an army of coders and medical record keepers who are kept employed keeping up-to-date with that. the third issue is the integration of medical record and billing systems. this is something that chairman alexander mentioned. which is absolutely right. which is in most industries, computers take over for people.

what happens in health care administration is that people take over for computers. you have an electronic medical record system that keeps some information, a billing system that keeps separate information, the two don't talk to each other. as a result, you have people involved on the one and people involved in the other and it is extremely costly to do that. as the chairman said, the requirements with regards to integration have not kept up with where we need to be. that's a serious problem. the best guess of researchers is that we could eliminate at least half, if not more, of the administrative cost burden and thus reduce medical spending in the u.s. by 8% to 15% if we were to simplify the administrative transactions associated with billing and insurance. the unfortunate circumstance is that these changes will not occur on their own. even the big players in the private sector and health care are not enough to make these changes occur without additional help from the federal

government. if you look at other industries that have successfully reduced administrative expense, they have a common theme. the single biggest player in the industry has been intimately involved with this. in the case of retail, it was the product of companies like walmart that standardized billing packaging and coding and all sorts of things so that the transaction, which in health care involve several people, and several people on the insurers and, involves nobody in retail. a second example is the federal reserve which standardized financial transactions in the 1970's and has kept that system up to date over time. that has saved expenses for banks and other financial institutions. it could only happen with the -- happened with the federal government being involved. what we see is the big player has to take part or it doesn't happen. therefore, what i recommend, and

explicit because i believe in explicit goals and consequences, is that the department of health and human services develop and implement a plan to reduce the administrative burden and health care by 50% within the next five years. i believe that such a plan is achievable and attainable. it would have enormous benefits for the economy and i don't think it will happen without actions by this congress and the administration. i encourage you to act rapidly. thank you for having me here and i look forward to answering any questions you may have. >> thank you. >> thank you. following dr. books testimony, i will step out for an appointment. senator murkowski will chair the hearing for a while and i rank her for that. dr. book, welcome. >> thanks for the opportunity to discuss my research on health care administrative costs.

to summarize, casa grid three levels. health plan level, at the provider level, and at the patient level. when patients have to schedule appointments and read the bills they receive in cross match them and make sure everything is right. there is a significant amount of research at the health care level. smaller amount of research on administrative costs. no research at the patient level. that affects everyone of us one way or another. the primary problem that we have in this discussion is that most reports give administrative cost as a percentage of total spending. including spending on direct patient care. it is especially a problem in talking about and it in a straight of cost at the plant level. someone might claim that medicare administrative costs are 2% or 5%, those of private are 20%. it sounds so much higher. medicare has mainly patients who

are 65 and older or disabled. on average, they need more health care the people covered in private plans. we take administrative costs divided by much longer, we get a smaller percentage. it makes them look very efficient. but really, there administrative cost percentages lower not because they are more efficient but because they have sicker patients. that has nothing to do with her administrative costs. it turns out if we look at the correct way to do this, look at it in terms of how much administrative cost the risk of percent. they don't scale with the dollar value of claims. don't scale that much with the number of claims. if you look at the claims process and medicare, it is a quarter percent of medicare's entire budget. doing that more efficiently are having fewer plans is not going to affect their administrative costs are a much. medicare administrative cost

averaged $509 per person and private costs were $453 per person. they were a lot closer and medicare turned out to be a little bit higher. the same occurs when we occur systems in different countries. that is either at the health plan level or the provider level. one study that attempted to compare hospital administrative cost and noted that hospitals employ large numbers of decisions. -- numbers of physicians. that is not the way health care is organized in the united states. the physicians are paid separately. they proceeded to report administrative cost as a percentage of total hospital expenditures. if the hospital expenditures include payments to physicians, then the same administration is going to be a lower percentage. the countries that did that looked so much more efficient. they were just being measured differently. the don't tell us anything about whether costs are higher in one country or another because we have not made an appropriate comparison.

it is a problem sometimes to identify and collect administered of costs, documents were not designed for researchers. it is hard to track down costs and we end up making estimates. i can tell you for sure, if the answer is a percentage, it is wrong. asking for percentage in this case is asking the wrong question. more recently, i have looked into how the aca affected administrative costs of target insurance. the exchanges were supposed reduce the ministry of cost of covering private sector individuals. it turns out the insurance companies did save the money. costs went from $414 for percent to $265 per person. the total went up a hundred $93 because the federal government spent more money setting up the exchanges that they saved in administrative costs for the companies.

i would like to address one story that has been going around. i think it was mentioned at an earlier hearing in this stare. the duke university hospital has 900 beds and 5000 billing -- 1500 willing clerks. i thought that seems like the wrong comparison because they have a lot of outpatient care which has nothing to do with hospital heads. we checked on duke's website and inpatient care represents about 2% of the visits. i talked to the associate vice president of their health care, they do have a staff of 1500. they also handle medical records, patient check-in, cass management, and all other sorts of functions. we asked how many people actually handle just billing for duke hospital, turned out to be 15. not 1500, 15. i think i am out of time. thank you very much.

i will be happy to answer questions. >> thank you all. i appreciate what you have contributed this morning. we will begin with questions. senator young's first up but he is not here. senator isakson. isakson: i want to make sure i heard this right. you said you thought we got to have a goal of reducing a administrative expenses by 50% within five years. is that true? mr. book. that is correct. >> you think that is doable? >> i do. >> what is the largest single thing you could do? >> the three items i gave he would be the three, simplifying the complexity with with we are coding patients, you don't have

to search everything that the patient has ever had. standardizing preauthorization requirements. the don't have to deal with and are systems for preauthorization from every insurer and every business. electronically integrating medical records and billing systems that you didn't have to have people to take information from one system and put it in another. those three would go a great deal of the way. >> on the last point, in terms of software, -- those of two of the bigger ones it. is it true that they are not? interoperable doesn't that at tremendously to the costs? >> that is exactly what i was thinking of. >> you are making me look good. [laughter] >> i appreciate making me look good, too. >> that's two for let me make two. this point for everybody. as chairman of the veterans committee, we have just gone through a process of deciding to

make our software interoperable with the department of defense. they have been totally separate. different software systems, different everything else. they have just signed one of the largest contracts in the history of the federal government to acquire cerner, it covers the dod as well. marginal veterans health care and dod health care to one service. you think things like that will help reduce the overall costs? >> i do believe so. especially if done in a way where you can view across all the different systems so they can really see what is needed for each particular patient when you need it and avoid all of the integration hassles.

>> georgia tech and it led developed a system called fire. are you familiar with that? >> i'm not. >> interoperable software between different ip systems for health care so that they can talk to each other. i found out, i end up in the united states senate and we're dealing with merging cerner. what i have basically come to learn is that all the great simplifications and technology is complicated when you have two separate sets of systems operating and i have to talk to each other. i believe that one of the most important things you can do to reduce the cost of administration and record-keeping, i would think pre authorization, too, will be to have as much standardization of software as possible so wherever the patient comes from,

and whatever hospital or position is serving them, the system is common so they don't have to unscramble the egg all over again. that is one of the major costs we have seen. that is what we are doing in the v.a. and we hope we are proven to be right in the future. on the preauthorization, how much preauthorization -- is that primarily on surgeries? >> it occurs throughout the health care. it is on surgeries, radiology, testing minor procedures, it , happens all over. >> is it designed to reduce the amount of health care claims that are filed? >> it is designed to reduce the amount of health care claims. there is nothing wrong with having some differences in policies, some are more generous. the issue is that there are so many different ones that it is impossible to keep up with them.

typical providers may be facing thousands of different preauthorization requirements depending on exactly which company the patient is insured by and which individual employer sponsored that. they may have customize their own preauthorization requirements. >> one quick question. i had a case a number of years ago where someone in my company went to the dermatologist to have a mole removed and had to have it tested. the insurance would not pay for it. they would've paid for it had been malignant. it seems like that's a catch-22. does that still go on? >> it does. >> thank you madam chairman. >> senator murray? >> thank you to all of our witnesses for being here today. in april, your association

commented on the medicaid services proposal to expand the availability of short-term plans. you wrote that you are concerned that substantially extending access to limited duration insurance will negatively impact conditions in individual health insurance market, exacerbating problems of access to affordable coverage. one of the reasons you stated was that short-term plans a offered to consumers only after submitting information about their health status or prior medical conditions. we spent a lot of time focusing on paperwork that provider still within our health care system. one of the problems with the trump administration sabotage of our health care system is the paperwork burden it will impose on patients and families. can you tell us more about the information patients are often required to submit to purchase short-term plans? >> sure. i think as a basic starting

point, is important that we have supported access to coverage for pre-existing conditions. there are some incidences where short-term plans are in the market and they will be asking consumers for a particular medical information. theill very based on insurance provider. it could be around use of medical services in the past or other risk factors. that is the type of information that would be asked for in short-term policies. when we are talking about the impact on the individual market, that is why we asked rest some concern about how this would impact the rest of the market. we said they should be short-term and nonrenewable. and we emphasize the need for clear disclosure to consumers. we want to make sure there is no confusion as to what policy a

consumer is buying. they need to know if it is comprehensive coverage or a short-term plan. we emphasize the need for clear communication. >> i appreciate that. i am glad we are looking at a bipartisan way to look at this but i want to make sure we do not impose new paperwork burdens for our patients. dr. cutler, i am worried that in addition to putting burdens on patients, there will also be burdens on providers that will then be cast onto patients in the form of health care cost. talk about how the coverage in short-term plans compared to normal market coverage. do patients have to typically pay more out-of-pocket if the use short-term?

>> typically, yes. the short term policy will not cover services as generously. it as to the different set of policies that providers have to be aware of. many times there will be limitation on medications or services they might access, in which case the providers have to then spend more in the way of resources trying to figure out where to direct the patient. this complex of the ads to expense without reducing the needs of the patients. >> when hospitals and clinics receive less of the payment from insurers and more out-of-pocket, does this increase or decrease the amount of time they spend on bill collection? >> a much greater increase. many more resources are being devoted to collecting money from patients than used to be. this has been a big burden.

>> what is the likelihood patients will not be able to pay, leaving hospitals with uncompensated bills? >> there he high. the typical american family has $600 in its bank account. so in face with a $3000 deductible, they do not have the resources on hand to pay for it. so they either put it on a credit card or the provider institution works out an arrangement and then spends a lot of money collecting down the road. >> i am really concerned. if we expand the use of insurance plans, hospitals and clinics will have to do more work to collect bills. and when patients can't afford bills, hospitals will have more uncompensated costs. that increases cost for everyone. that is my concerned with this and when we should all be aware of. i appreciate your responses.

>> dr. cutler, in your testimony you discuss an economic arms race between payers and providers. insurers introduce requirements, providers must fulfill before they can get paid in response to the new rules provider hires additional personnel, it goes on and on. consumers get stuck with the bill. other actions that congress can take to incentivize payers and providers from avoiding this escalation? that is question number one and question number two, is whether federal payers, like medicare and medicaid, are they part of this problem? >> on the first question, yes, there is a good deal that could be done on standardization.

i want to go back to the question asked before. the complex city of coding is a clear example of this, where an insurer will require additional codes before it pays a higher amount and then more people have to be hired to code the codes. so standardizing or eliminating the severity of adjustments would make a lot of sense, because then you do not have to get into an arms race. on the preauthorization requirements, again you have a situation where it could be reasonable for one insurance to say they will have a tougher preauthorization requirement, and they do not recognize the burden placed on the providers and other insurers by now contributing to the cacophony of different things a small provider system has to deal with. and integrating filling systems and medical record systems, this is an area where the federal government has responsibility of

standardization and it has not done so in this dimension, which has been a lost opportunity so far. i think in all of these, there are areas where the federal government will have to be involved. in terms of the federal payers, they vary. the medicare program involves less administered of cost than medicaid does. preauthorization requirements are minimal in medicare. preauthorization is relatively small other than you have things associated with complexity. but by and large it eliminates some of those costs. medicaid is different in part because patients turn from one kind to another. so sometimes it is not entirely

clear who will be insuring the patient when they come for services. or even if at all if the patient will be insured. difficulty getting universal insurance coverage has played havoc on providers in terms of lost revenue and in terms of increased expense associated with having to monitor patient, collect from them based on their plan and see through all the other parts of it here it >> in your response to me, dr., you referenced the coding and severity levels. you discussed in your testimony the potential for severity neutral payments whereby providers are paid for more severe cases. what agreements between payers and providers to allow providers

to share in some of those savings for agreeing to severity neutral compensation required new legislation or regulation? >> in order to be effective, you would have to do it for the vast part of the health-care system, because it is very difficult to have different payers different requirements. so the greatest gains would come from standardization and harmonization. the reason why many providers and insurers have knock on there is because if the federal government is acting a different way, there it is no reason. has to be in harmony. >> good point. as we think about prior

authorization, things that are important enough with there are a number of private efforts in the congressional purview, what is happening with affordable quality health care, they have created a committee with over 100 organizations looking at how can you standardize these transactions to get more simplified ways of operating. so there are efforts that are happening that more needs to be done. >> thank you. >> senator hassan. >> thank you for being here today. we are talking a lot this morning about administrative burdens in the health care system. i think it is important that we remember the most significant part of this whole discussion,

which is patients other families. i am the mother of a son with complex medical needs. at various times -- he has severe cerebral palsy. he does not speak. or use his fingers are communicate clearly to the outside world although he is cognitively understanding, he is time-consuming. we have been very fortunate because ben has had incredible providers and caregivers. but i have experienced what it is like to jump through hoops and to be stuck in the middle between insurers and providers. we have private insurance but medicaid covers been. sometimes dealing with an insurance company employee who does not have the expertise to understand the significance of the medical record he is looking at. i have also been there when insurance all of a sudden

decides to switch them from one medication that works for him that he has been on for years to another medication. he has had about 10 doctors and 20 medications. i hear from granite stators who experience these frustrations. it is hard to spend all day on the phone, wondering if prior authorization went through. it is particularly hard when you are juggling a job and caring for kids. we have talked about the importance of integrating medical records. it is also important to patient safety. at 3:00 in the morning when your hospital that owns your physician practice tells you they cannot get access to your sons primary care health record because they are on different electronic systems, and all of a sudden your doctor is saying, do you remember 15 years ago what antibiotic we used?

it is scary. so when we are talking about administrative burdens, what really would make a difference is to eliminate these burdens for patients on these families, not just for the time and effort, but for good patient outcomes. what can congress do to help reduce administrative burdens in the health care system for patients and their family? >> thank you for that excellent question. to echo what others have said, i think more alignment within private payers around things like preauthorization, around billing, and to dr. cutler's point, not just private ayers, -- private payers that federal , payers as well. from a hospital perspective, the federal government, with the many ways it funds health care, does not handle all of these

things consistently. i think there is a role for the federal government in looking at federal payers and how federal payers manage preauthorization, billing requirements. and there is much more role in health insurance plans in taking steps to streamline these requirements to make it easier for patients. >> thank you for sharing your story. i think it is important to recognize the impact on patients. that is where we need to start. thinking about the burden on families and caregivers, i think getting to and interoperable system where medical records are able to be accessed from anywhere at any time in an electronic fashion, i think senator isakson touched on some of the challenges. health plans can only be one part of the solution.

it has stored between plants, providers, and the government. so making it simpler in real time would alleviate a lot of the burden to have to bring in the patient in the first place. >> i want to echo what was said. i also want to make a comment. while the federal government has been slow to act in some areas, a number of states have been progress in terms of trying to increase interoperability in terms of your right to access records everywhere. i think we can do much more with the technology backbone but also the personal interactions to make sure that people have access to their records.

>> know i'm running out of time for class dr. book? >> your story illustrates exactly what i was going to mention in my testimony about the administrative burden on patients that people do not talk about. i've experienced that myself. not just in health care. a experience an issue like this with the irs. one person says i pay, then i got a letter saying i didn't pay. one thing we could do is establish a safe harbor from anti-trust that could inhibit different information systems from talking to each other so they would not be afraid they would be prosecuted for pollution because they talk to each other about -- also there is a lot of restrictions on patient access to their own data.

i have an implanted defibrillator. the company that made it used to have a web portal where patients could access their own data. it was shut down. it was found to violate some regulation. i don't see weather should be a regulation that prevents patients from accessing their own data at 3 a.m. and any other time. >> i appreciate that. thank you for letting me go over. i will cement a question on transparency and outcomes. >> thank you, senator. it is such an important question. we think about the administrative burden. day ithe end of the , comes back to the patient and their families. i want to ask about the minimum role of five where cms requires at least 5% but no fewer than five skilled nursing facilities in a state every year. in alaska we have 17 facilities. so we are in a situation where we have the benefit of about 30%

cms surveys, five each year. you put that in a state like california, i do not know how many facilities they have. we all know it is well over 17. you mention that the rural areas lack scale and that forces even greater costs on a facility, because of these requirements. you have civil penalties you have to deal with and the reality of undergoing the frequency of these surveys. can you briefly state to this

issue of scale in our rural facilities, and how regulations just like this can add to the already heightened cost? >> sure. you accurately describe the thank you for the chance to answer that question. you accurately describe the minimum of five rule. i happen to know that california has 1200 facilities. so they received a federal survey every 20 years. mine is every three to four years. that is important because the federal surveys have two responsibilities. to oversee and to check the facility itself. so there tend to be a high number of deficiencies, not all related to patient care. there is a tremendous burden on the facility after a survey,

they get a write up of detailed plans of correction. for each individual item found in the survey. those are resources they could be devoted to patient care. sen. murkowski: the suspect your opportunity cost. >> absolutely. it could be devoted to other things. why is it hard in a rural facility? you have 11 beds. and five facilitators to send on you for week. they are going to find things that you will have to write up and address. it is a tremendous direct cost and opportunity cost. we think there should be one standard framework for surveys that is consistent across states. our facilities welcome the opportunity to correct things related to patient care. but many of these things are not. for example, we had a facility working really hard to serve culturally appropriate food to its elders.

they received a report saying they served too much fish. sen. murkowski: there is no such thing as too much fish. >> i wasn't aware there was in alaska either. these are the kinds of things that are costing resources, staff time, dollars and put burdens on small facilities. sen. murkowski: let me ask about the rural health care strategy. cms announced this several months ago and wants to focus on this rural health care strategy. i sent a letter suggesting there is no one rural lens. that it needs to be broader. can you speak to that aspect of it? if we just think of -- you have urban, you have rural, and you treat them differently that way. explain to the committee.

>> when we think about rural, our definition is different. a rural hospital in colorado might be 100 beds. wherek at a community there is an eight bed hospital plus swing beds. so the needs of the facilities will be very different. we appreciate the desire to have a rural lens but we think it needs to be not just a single lens. it needs to consider the different geography and patient populations and types of facilities. i think the operative word is flexibility. when you look at alaska, the needs will be much different than they are in iowa. i think there are many examples like a point to of ways that cms could take that philosophy and develop more flexibility and be

more responsive to the needs of our community, whether it is electronic health records or other areas. sen. murkowski: we would welcome that input as they do work forward on the strategy. thank you. senator smith? >> thank you. thank you to all of our panelists for being here today. or interesting. i am going to brag on minnesota. we are national leaders when it comes to delivering high-quality care and we have been an innovator when it comes to reducing administrative costs. one innovation is minnesota health care administrative simplification initiative. it launched a series of reforms to standardize and automate health care transactions and it is saving tens of millions of dollars in minnesota. how can this inform changes we can make at the federal level?

it strikes me that states have so much to do with how these programs are implemented and how insurance companies are regulated. can you speak about that? dr. cutler: yes. there are a number of areas where states can make enormous progress. minnesota should be proud. utah has also made progress. those are very good and that they provide great examples to work from. they show concrete savings and satisfaction on the provider system. they show how insurers and providers and patients can come together. they also reach a limit in terms of what they can do.

they cannot do things that affect medicare because that is federal and they cannot do that. they also cannot affect the large firm market. i think they provide significant savings and proof of concept we can then use to build both nationally and in related domains. senator smith: so they can demonstrate what works, experimenting and then that could inform we do it the federal level. though certainly it can't solve the issues of the federal level. mistrial's commode you like to comment? >> i think that is a good observation. you can learn a lot from the state level. but when we think about how health care operates in different regions of the country, how it is practiced in the upper midwest or california, to scale it on a national level

is informative in terms of the steps the federal government or congress could take to move things forward. it is hard to replicate exactly what minnesota would have done in every other state. senator smith: i am interested in this as a way of demonstrating what we might be able to do as we try to figure out how to tackle this. i have been working on legislation to figure out how to support these kinds of public/private partnerships at the state level and i look forward to talking with other members of this committee. i would like to go to the question of preauthorization that senator hassan was talking about, the impact it has on people. i can't tell you the number of

minnesotans that have told me about their frustration of getting caught in this catch-22, trying to get the care they need and getting hung up on the documentation they need. you raise this as an opportunity for simplification reforms. i wonder if you would support the kind of standardizing of prior authorization protocols that dr. cutler was talking about? mr. eyles: i think it has potential. i think it is important to look at which population is being served by which program. medicaid is different than medicare. but there are elements that could be standardized. our members are working through examples to create a standardization and make it easier for providers to take patients out of it. i think it has a lot of

potential. senator smith: thank you. dr. cutler, where do you see the resistance to this kind of standardization? resistance come i'm trying to think of the right word. resistance is what is going to my mind it is more reluctance. ,trey great extent it comes from the insurers because they have customized their systems and put them in place. they do it for each individual business that they ensure your then you say, we have to have standardization. but what will happen to what i put in place? it is the cost of change is staring them in the face and they are perplexed as to how to deal with that. it reminds me of providers when they were faced with the choice of buying electronic medical records are not. most of them had a hard time buying it, but once they did, they are extremely glad they

did. they believe they provide better patient care. so it is a question of getting over the hump. that says yes we can do this and then we will achieve these benefits. senator smith: there is a complexity in the way that america uniquely provides health care to people. most complexity is there for a reason that made sense some time. but have you clear that out for the benefit of the patients and their families? thank you. sen. murkowski: thank you senator smith, senator cassidy: >> senator cassidy: i am very interested in this topic. on my website i have making health care affordable again. we address administrative cost. there is a cognitive dissonance. dr. cutler you mentioned how

ascribing to the federal government the role of making things less administratively burdensome. it makes me feel it i have dropped acid. not that i have ever -- for the record, i have never dropped acid. [laughter] have a gossidy: we torry overload 629 different regulatory requirements from four different federal agencies. you could give me the same thing for insurance. having practiced medicine, it is incredible how much the federal government loads upon us. my job dropped when you said most providers are pleased about the electronic health record. i read the leading cause of , burnout is the electronic health record. not sure who is finding it -- who is so enamored. the electronic health record is so burdensome. somebody put in their testimony 30 minutes of clicking for every

, five minutes of seeing a patient. it is a parallel reality. i say that not to chide or confront, but just to observe. dr. book, i like your perspective. we have not looked at the administrative burden upon the patient or physician, but on the system. one model we talk about the direct primary care model, in which a patient pays a monthly fee and the doctor does not know the insurance company for those services paid for by the monthly fee and the patient does not have a deductible rather just a monthly fee. senator cantwell and i have the bill that would promote this.

directughts about chimeric care? -- direct primary care? dr. book: i am not familiar with it but it sounds like it has potential. i would want to know is what percentage of health-care system will be affected by that? it could be effective for a large percentage of patients, but the large dollars are going into very sick patients needing specialty care. senator cassidy: the way it works is you would still have catastrophic coverage on top. it started in washington state. but for that ambulatory service if i have a headache on friday , afternoon, i don't go to the emergency room, i go to the doctor with whom i have a contract. that seems to work for both the patient and the doctor. dr. book: it sounds like it has potential. i would be happy to look into it later. senator cassidy: you mentioned

the issue with prior authorization. help medicare doesn't have prior authorization. they have an ungodly amount of waste fraud and abuse. of priora tension authorization with the absence i it in that it care but, like your concept, could be standardized? for you to suggest it is not a burden on the patient, when i would see patients, my nurse would just put the phone on speaker as she heard over and over again, your call is very important to us, please hang on. 45 minutes later, that very important call would the answered. doctors perceive the prior authorization -- why could this not be integrated into the electronic medical record? why does my nurse have to be on the phone as opposed to the

insurance company being able to otherwise access? mr. eyles: the challenge right now is on interoperability. cassidy: i thought they got all of my filling data. why don't they use that? mr. eyles: that maybe for some plans and not all medical systems. that may be a good example of something we can learn from in terms of how we could apply it more broadly. senator cassidy dr. cutler, you : mentioned there's an increased overhead associated with the plans, and yet what i have read that in countries such as the netherlands that only use private plans like the netherlands, they still have half of our administrative overhead. so it does not seem inherent that it will be the federal government. there is something the netherlands does that is different. any comments?

>> they have competing private plans that are highly regulated. they do not impose preauthorization requirements. senator casey: it goes back to the standardization. >> they don't have all the different severity codes and all of that. they have eliminated a lot of the administrative things. caskey: -- senator cassidy two more things. : i have heard of a real-time benefit analysis going to the interchange between senator murray and dr. cutler, the patient does not know how much something costs. i will note these horror stories under obamacare policies not under limited programs. that said a real-time benefit , analysis where you can press a button and the patient automatically knows how much they owe relative to their co-pay, i am told some insurers have it but it is not widely implemented. why would this not be more broadly available? >> most of these tools are available through our members.

well over 80% have them. are they being used? senator cassidy i am saying they : have not been deployed. in the sense i can go to my mri, i can click and showed that i have $200 back to pay. dr. cutler: it is true. some do not have it. some have it and they do not make it available, or it is difficult to access. senator cassidy: seems like we need to make an app for that. dr. book: i can tell you from personal experience sometimes , they get it wrong. a provider told me there was some left on my deductible when i had filled my out of pocket for the year. so the information is not always correct. it is a great concept and it works well in the pharmacy but it does not seem to work anywhere else. senator cassidy i am way over. : thank you for your indulgence. sen. murkowski: i think we will

have an opportunity for second-round. senator warren, senator warren: the cost of health care is too high and today we are focused on in ministry to cost. i want to talk about how much private insurance companies spent on administration. compared to public programs like medicare. there has been debate about how to do this comparison. the 2018 trustees report states administrative costs for medicare are $8.1 billion. that is 1% 2% of expenditures. that is a lot lower than in private insurance, which is between 10% and 12%, depending on who paid for the study. some people argue medicare beneficiaries have higher medical costs than younger , healthier people on private coverage. it makes administrative cost of artificially small. so we should use dollar amounts

instead. dr. book, you made this argument and did an analysis that claims medicare actually spends more dollars per beneficiary on administrative cost than private insurance. dr. book: correct. senator warren: how did you reach that conclusion? you argue that we should the ways thell the other federal government subsidizes medicare. by doing things like keeping records, writing laws maintaining federal buildings, ways the federal government, the list go. your analysis specifically says you want to take a flat percentage of expenses in the general government function. this is in your work. general government function part of the federal budget and really

-- relabeling that as medicare administrative costs. so you are saying that because we're sitting here today discussing medicare at this hearing, we should count as medicare costs a piece of the salary of every member of this committee, a piece of the cost to keep the lights and electricity and air-conditioning in the room, a piece of the salary for the capitol hill police officer at the door, all as part of medicare's administrative cost? dr. book: i was trying to do an apples to apples comparison between medicare and private. senator warren: i'm just looking at what you said. dr. book: the items you mentioned are pennies. what is more important -- senator warren: look. i am trying to use the best data

possible. there only pennies because i got a few things. i am all for trying to use the best data possible. when trying to figure out what something costs. but this approach does not have any credibility at all. this is a game to inflate the numbers. i want to look at some of the numbers that are not in dispute. mr. eyles, you are here working today for the insurance company. the five largest for-profit insurers reported roughly $20 billion in profit last year. can you tell me, how does that compare to the profit the federal government makes on medicare and medicaid? mr. eyles: it is important to look at the context of profit. senator warren: how does it compare? mr. eyles: i cannot say. senator warren: zero. it compares to zero. the federal government not --

the federal government does not profit. and the indian health service, tri-care, veterans health service. these programs are about providing health care, not raking in money for profits and handing out dividends to shareholders. we can go back and forth on whether administrative cost in medicare are 2% or 7%. but one thing is clear. when giant for-profit companies divide up who gets what out of the premium dollars that they in they never forget to set , aside a few billion dollars for themselves. that is why it is time to crack down on shady practices that insurance companies use to juice their profits at the expense of families who are struggling to get by, and it is time for everyone to be covered and we

start treating health care like the basic human right that it is, not like a profit center for multibillion-dollar corporations. thank you. sen. murkowski: thank you. senator scott: i have decided to pass my time on two mr. cassidy. i want to make a quick comment on that medicare for all. having spent 25 years in the insurance industry, one of the things we to do is understand and appreciate the overall cost that the government bears for every program we have. when we are spending $4 trillion and bringing in $3 trillion, the taxpayers are the ones who are losing because their money is coming to washington for programs that could better be provided to the private sector. you cannot not look at every facet of what causes something.

you cannot articulate with great specificity the real challenge the taxpayer has, all of the nuances the government brings with it when it provides health care or any other service. sen. cassidy: q thank you, senator scott. i just can't help but in all due respect, senator warren commented on a couple things. dr. book, your analysis has credibility with me. the first am i saw the doj was doing a major fraud thing on the ripoffs in florida and louisiana on medicare, and i realized blue cross was running on their own ticket and instead it is the doj doing it for cms, i realized it was not being included in part of it.

as regards to medicare for all, i can't help but mention that as urban institute as well the tax policy center has come up with numbers roughly the same that medicare for all would increase federal budget commitments by $32.6 trillion in the first 10 years of full implementation. we would have to double taxes and it would not be enough. just to say there has to be a little bit of a note of reality as opposed to wishful thinking. back to the questions i had. mr. eyles, a major part of the administrative overhead associated with all of this is negotiating prices. somebody pointed out to me that medigap policies proliferate even in the obamacare markets.

partly is that medigap policies are able to piggyback onto medicare pricing. all of that effort to negotiate has been done. you can say i am going to pay a medicare pricing and the insurance company can come in. mr. eyles, what would you say if you only had one or two insurance companies in a state, like in louisiana, you said, we're going to allow insurers to come in and use medicare pricing or a multiple and they are immediately in business to provide competition to the stakeholders? why is it important? it has clearly been shown when you only have one or two insurers. cost goes up. competition drives down cost. that make it after what dr. cutler said in countries like the netherlands, what of the ways they regulate is by pricing.

as a provider, what would you first think of that? >> i am going to defer a detailed answer to my insurance colleague. what i will note that medicare does not cover costs in my state. multiple is fair. there are insurance companies currently were basing multiples off of medicare. i do think that as we have this conversation whether it is , medicare for all or some other variation of medicare pricing, it is important to note that medicare does not often cover costs. in my state it is pretty generally speaking. sen. cassidy: i can't help but say that under graham cassidy, the amendment we put up, medicaid in alaska would have had their true cost recognized. for some reason, your governor opposed it, but that is up to him. mr. eyles: we support having access to choice and competition

within the marketplace. we think that is important. right now the knowledge about the medicare fee schedule, what medicaid is paying is available out there. we want to make sure plans are negotiating with physicians in the most effective way and we are moving the system toward paying for the value, not just looking at what medicaid or medicare will be paying. sen. cassidy: let me interrupt because the problem is that all of that requires a lot of negotiating and putting together a provider panel. right now we have whole counties in iowa that do not have a single insurer. i don't want the best to be the enemy of the adequate. dr. book, any thoughts? dr. book: i think it is interesting to note how medicare makes its prices. they do not negotiate with providers. they set prices by regulation. sen. cassidy: but they do look at cost reports. dr. book: they look at cost reports and they survey 100 physicians for each code they are reviewing and ask them to

evaluate the service compared to other services and answer a few questions on a five-part scale. whether it is about the same, more difficult, or less ethical hearing. sen. cassidy: but the physician does not have to take medicare. insurance companies can set rates to physicians and other providers. we don't have the insurer. i am looking for a solution. dr. cutler, any comments? yes.utler: dr. cutler: getting more firms into insurance, more competition is beneficial. anything we can do to make it easier. my sense is that that is less of an issue than some other things. i do think we ought to be moving

medicare payments away from a fee-for-service level. >> i'm not saying that. dr. cutler: we would think about some kind of transition, it here are how we are going to move rates over time. >> calpers has used reference pricing effectively to lower expenses. they do a survey of providers. quality is equal so they say we will give you 20 k. you can pay the difference. it turns out everybody lowered their prices and we pay the same across the board. it seems to have worked. can we use more of that? it is price transparency and bringing it relevant to the patient. what are your thoughts about insurance companies using it more?

i will open it up to the other panel. we're over time. >> thanks, senator. i think there is interest in looking at innovative pricing models to mature we are getting the most value. the question comes down to participation in networks and if you will have access to an adequate range of providers and do they have real-time transparency. there are a lot of things to think about. anything that provides greater transparency to the patience and understanding about what the difference is in quality is a good thing. so i think there is interest in those kinds of activities. >> anybody else for a quick cancer? >> -- quick answer? >> i would like to add that in california, you are dealing with a very large market of providers. as we have this conversation, we cannot forget the safety net providers who are like hospitals, open 24 hours a day. we need to make sure that as we look at things like competition and price transparency, we are

also addressing our safety net and making sure we do not lose it. >> one comment, which is the reference pricing has been a huge success. what they do, they call the patient and say, you are scheduled for hip replacement. if you go to this institution, it is $50,000. the other one is $20,000. therefore you are going to pay a $40,000. if you do not do that, if you just say there is a high deductible policy and so on, people do not switch where they go. it goes back to what we were talking about with senator murray. people do not understand insurance policies at all so they do very little price shopping. in a high deductible policy there is zero price shopping. it is when it is more intensive to go to you and say, mr. cutler, you can either pay $40,000 or $200.

i can show you the quality metrics. which would you like? then people will switch. so it works well, but it is not as easy as we would like it to be. dr. book: there are administrative costs to implementing that. in some cases, the administrative costs might be worth it. sometimes administrative costs are actually spent on useful things. that is an example of it. you're calling the people up, explaining the situation. something they may not be able to look up themselves because providers are not posting prices in advance. making more information available is costly, but it is worth it. >> we advocate making the providers post in advance. dr. book: that would be good, yes. >> thank you. senator murray: i want to thank our witnesses for being here. thank you. >> to wrap up on prior

authorization, i think senator hassan spoke to it. there is so much frustration that goes on on the patient side and administratively. it seems it is one of these situations where, in order to meet the requirements, you have got to make sure you are either putting your administrative assistant on speaker phone for 45 minutes, and you have to stay on. it requires greater burden to provide the authorization that will effectively work to reduce the cost. it seems to me that there is a line here when you are bringing on people to handle this.

will the standardization that has been suggested, is that enough? in other words are we at a point , where we effectively started a secondary business with dealing with the insurance companies to get the sign off and to get the approval? is it just standardization that will address this, or is there more to this? this is something everyone is complaining about. dr. cutler? dr. cutler: i think standardization and i.t. being related. you want to standardize and you want to make it easy to transfer the information from the medical record as proof that the requirement has been met. so that it can be seamless.

the physician says i would like to do x, insurance policies are clearer because of standardization and then i.t. systems can provide verification that it was done. then you don't need the people involved. so you get part of the way there by standardizing. you get another part of the way through easy interchange. senator murray: i understand that, but i go back to the hospital where we have eight beds and your staff is limited and the requirements are as significant as they are for a major hospital in seattle. so back to the issue of scale and why a rural strategy is going to be important to recognizing that it is not equally situated. even with the full integration of electronic medical records, i do not know if you have additional suggestions that

speak to these smaller facilities that they are extraordinary cost. >> i think technology is a piece of this. it can be a help, but right now it is sometimes a hindrance. we have to figure out the technology piece, recognizing there might be other steps we need to take to really enable us to continue to have a rural health care structure that is meaningful. as an example, a little tiny medical center on an island is going to spend $65,000 this year on upgrading to meet meaningful use. they are not going to see patient benefits for those dollars. they are having to purchase a software package with functionality they do not need. and earlier this year, they had less than 10 days cash on hand. $65,000 when you deal with billions of dollars in my not

seem like a lot, but for the residents of that community it is very important. so one of the things we encourage is revisiting our current framework for electronic health records, removing some of the barriers, ensuring we have interoperability, which was a promise that has not been realized. then we might see enough improvement that it could be sufficient. >> thank you. the hearing record will remain open for 10 days. members may submit additional information. the health committee will meet again on august 15. wednesday, thank you for being with us and providing such great testimony to the committee. with that, we stand adjourned.

[captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> this is the final day of the progressive conference. we will hear remarks from jim castro, and others. coverage starting at 6:00 p.m. eastern on c-span. night, congressional

historians -- >> one of the questions people ask all the time, is this the most uncivil time in history? certainly the years leading to the civil war. when a host member came over because he disagreed with what he said. a lot of senators cheered on that house member. a musical about alexander hamilton. he was shot by the sitting vice president. that is pretty dramatic. we have had terrible political times. >> there was one brawl before the civil war that had 80 members on the floor fighting one another. pulled hismembers wig off during the fight.

somebody else yelled, he scalped him. that was enough levity to stop the fight. congressional historians, sunday night on "q&a." next week on american history tv on c-span3, the first of our americat series, 1968, in turmoil. we look back 50 years, starting monday, discussing the vietnam war. on tuesday a look at the presidential campaign of that year. wednesday, civil rights and race relations. thursday a discussion on liberal politics. friday, conservative politics. on saturday, women's rights.