[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
ADMINISTRATION'S PRINCIPLES TO STRENGTHEN AND MODERNIZE MEDICARE
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JULY 19, 2001
__________
Serial No. 107-39
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J. D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
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C O N T E N T S
__________
Page
Advisory of July 12, 2001, announcing the hearing................ 2
WITNESSES
U.S. Department of Health and Human Services, Hon. Tommy G.
Thompson, Secretary............................................ 7
SUBMISSIONS FOR THE RECORD
Advanced Medical Technology Association, statement............... 60
Alliance to Improve Medicare, statement and attachment........... 62
National Association of Chain Drug Stores, Alexandria, VA,
statement and attachments...................................... 66
ADMINISTRATION'S PRINCIPLES TO STRENGTHEN AND MODERNIZE MEDICARE
----------
THURSDAY, JULY 19, 2001
House of Representatives,
Committee on Ways and Means
Washington, DC.
The Committee met, pursuant to notice, at 10:30 a.m., in
room 1100 Longworth House Office Building, Hon. Bill Thomas
(Chairman of the Committee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE,
July 12, 2001
FC-9
Thomas Announces a Hearing on the
Administration's Principles to Strengthen
and Modernize Medicare
Congressman Bill Thomas (R-CA), Chairman, Committee on Ways and
Means, today announced that the Committee will hold a hearing on the
Administration's Principles to Strengthen and Modernize Medicare. The
hearing will take place on Thursday, July 19, 2001, in the main
Committee hearing room, 1100 Longworth House Office Building, beginning
at 10:00 a.m.
Oral testimony at this hearing will be from invited witnesses only.
The witness will be the Honorable Tommy Thompson, Secretary of the U.S.
Department of Health and Human Services. However, any individual or
organization not scheduled for an oral appearance may submit a written
statement for consideration by the Committee and for inclusion in the
printed record of the hearing.
BACKGROUND:
On July 12, 2001, President George W. Bush unveiled a set of
principles to guide Congress in its work to strengthen and improve
Medicare, while adding a prescription drug benefit to the program. The
hearing will examine the Administration's Medicare modernization
principles in greater detail.
In announcing the hearing, Chairman Thomas stated: ``The President
has shown courage in tackling the challenges of this complex and vital
program. His leadership will provide momentum in developing bipartisan
solutions to Medicare's growing shortfall, and help modernize the aging
Medicare program with the inclusion of 21st century prescription drug
and preventative care benefits.''
FOCUS OF THE HEARING:
Over the past several months, the Health Subcommittee has held a
series of hearings on various aspects of the Medicare program in need
of improvement. In those hearings, the Subcommittee has examined the
need to add a prescription drug benefit to Medicare, challenges to
long-term program solvency, opportunities to modernize the fee-for-
service benefit package, ways to enhance private--sector options for
beneficiaries, and regulatory barriers confronting providers.
The full Committee hearing will give the Administration an
opportunity to present its recommendations for solving the challenges
facing the Medicare program.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
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and hearing date noted on a label, by the close of business, Thursday,
August 2, 2001, to Allison Giles, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
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close of business the day before the hearing.
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The above restrictions and limitations apply only to material being
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Note: All Committee advisories and new releases are available on
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noted above.
Chairman Thomas. If our guests can find seats, please, and
our Members.
Thirty-six years after its inception, the Medicare Program
is woven into the fabric of lives of almost 40 million American
seniors and people with long-term disabilities. They have
placed their trust in Congress and the administration to ensure
a system of accessible and affordable health care that
continues to address their needs.
Medicare stands under a lengthening shadow of rising costs
and antiquated processes. The problems confronting it are real.
If we do not act now, combined Medicare spending will quadruple
as a percentage of the economy by 2075. Most of us will not be
here at that time, but we have children and grandchildren who
will be counting on Medicare.
Modern technology offers the prospect of a longer and
richer life through phenomenal advances, primarily in
prescription drugs. Almost 400 new drugs have been developed in
the past 10 years. Access to these drugs must form a
fundamental part of the structure of Medicare. I say must form
a fundamental part of the structure of Medicare because it does
not today. This has to be achieved in a way that protects the
program's long-term financial viability while making it more
responsive to beneficiaries and providers that serve our
seniors and disabled. Given these responsibilities, simply
adding an expensive new outpatient prescription drug benefit to
the program cannot be the answer.
President Bush has established a broad and coherent
framework for crafting a modern Medicare Program. His
principles offer hope and reassurance to seniors and the
disabled in critical aspects of their lives. They reflect
President Bush's administration's powerful commitment to
quality health care.
I am delighted to once again welcome Secretary Tommy
Thompson who joins us today to discuss these principles and how
we can work together to revitalize the critical program that is
before us.
Nine hearings on how best to improve and streamline the
vast Medicare Program have been held this year either by the
full Committee or the House Subcommittee under the leadership
of Chairwoman Nancy Johnson.
Mr. Secretary, you have begun to lay the groundwork. Since
we last saw you, you have tackled some key problems at the
often criticized and formerly named Health Care Financing
Administration (HCFA) with the help of its new administrator,
Tom Scully, who I believe joins us here today. I know you will
ensure that its successor, the new Centers for Medicare and
Medicaid Services, or CMS, gets off to a strong start with a
renewed commitment to service and quality of care.
Not every change needed to improve Medicare requires
legislation. Under your existing administrative authority you
have taken initial steps to strengthen the program and to
implement many of the administrative reforms suggested in a
bipartisan letter from House Subcommittee Chairwoman Nancy
Johnson and its Ranking Member, Pete Stark, which I believe was
sent to you in the middle of May. I hope more will be done to
fully implement their comprehensive and detailed
recommendations.
I know that working together we can coordinate structural
improvements that can be achieved administratively, with, of
course, more fundamental reforms that will require
congressional involvement.
We all know we have a big job ahead of us. Mr. Secretary, I
look forward to working with you and with the President and
with my colleagues in getting the job done this year.
And with that, I would recognize the Ranking Member, the
gentleman from New York, my friend Mr. Rangel.
[The opening statement of Chairman Thomas follows:]
Opening Statement of the Hon. Bill Thomas, a Representative from the
State of California, and Chairman, Committee on Ways and Means
Thirty six years after its inception, the Medicare program is woven
into the fabric of the lives of almost 40 million American seniors and
people with long-term disabilities. They have placed their trust in
Congress and the Administration to ensure a system of accessible and
affordable health care that continues to address their needs.
Medicare stands under a lengthening shadow of rising costs and
antiquated processes. The problems confronting it are real. If we do
not act now, combined Medicare spending will quadruple by 2075. Most of
us will be dead and gone by then, but we have children and
grandchildren who will be counting on Medicare.
Modern technology offers the prospect of a longer and richer life
through phenomenal advances in prescription drugs. Almost 400 new drugs
have been developed in the past ten years. Access to these drugs must
form a fundamental part of the structure of Medicare. But this must be
achieved in a way that protects the program's long-term financial
viability while making it more responsive to beneficiaries and the
providers that serve them.
Given these responsibilities, simply adding an expensive new
outpatient prescription drug benefit to the program is not the answer.
President Bush has established a broad and coherent framework for
crafting a modern Medicare program. His principles offer hope and
reassurance to seniors and the disabled in critical aspects of their
lives. They reflect his Administration's powerful commitment to quality
health care.
I am delighted to once again welcome Tommy Thompson, Secretary of
Health and Human Services, who joins us today to discuss those
principles and how we can work together to revitalize this critical
program for our nation's seniors and disabled citizens.
Nine hearings on how best to improve and streamline the vast
Medicare program have been held this year by either Ways and Means or
its Health Subcommittee, illustrating the dedication we share with the
Administration to providing quality health care to future generations.
Mr. Secretary, you have already begun to lay the groundwork. Since
we last saw you, you have tackled some key problems at the often
criticized and formerly named Health Care Financing Administration, or
HCFA, making Medicare more responsive to its beneficiaries and
providers. With the help of its new Administrator, Thomas Scully, who
joins you here today, I know you will ensure that its successor, the
new Centers for Medicare and Medicaid Services, or CMS, gets off to a
strong start, with a renewed commitment to service and quality of care.
Not every change needed to improve Medicare requires legislation.
Under your existing administrative authority, you have taken initial
steps to strengthen the program and to implement many of the
administrative reforms suggested in a bipartisan letter from Health
Subcommittee Chairwoman Nancy Johnson and its Ranking Member, Pete
Stark, on May 14. I hope more will be done to fully implement their
comprehensive and detailed recommendations.
Working together, we can coordinate structural improvements that
can be achieved administratively with more fundamental reforms that
require Congressional involvement.
We have a big job ahead of us. I look forward to working with you,
Mr. Secretary, with the President, and with my colleagues on Ways and
Means, to get the job done this year.
Mr. Rangel. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for once again coming before us. I want to apologize
if you see Members leaving. Unfortunately, the leadership has
scheduled a very, very important bill, the charitable choice
bill. It's one of the main points that the President has made
in his speeches. A large part of that includes tax provisions,
and it is embarrassing that we would have you here at the same
time that many of us, from time to time, will not only have to
go to the floor to vote, but to explain our position on the
bill. But as you well know, being a well-seasoned politician,
that this is not an affront to you, but the problems that we
face in trying to get a legislative schedule on the floor as
well as in our Committee.
As relates to the job that is before you, let me be candid.
There have been no campaign promises that were made by
President Bush, or then-Governor Bush, that I did not support.
He amazed me as to how he ``out-gored'' Gore on the question of
reforming Medicare, prescription drugs, patients' bill of
rights, and so I just was wondering how we would be working
together toward those goals.
Now, so far we have principles, and that is good because
the budget being the way it is, you do not have to pay for the
principles. But sooner or later, we know that it's going to
cost. That is where the rubber hits the road, dealing with the
details, as the Chairman has pointed out. Of course, as
Chairwoman Nancy Johnson and my colleague, Pete Stark, to whom
at this time with the Chair's permission, I would like to
yield.
Mr. Stark. I thank the Chairman for yielding and join in
welcoming Governor Thompson. The President's Medicare
principles, Mr. Secretary, remind me of, as they do my Ranking
Member, that campaign talking points are not really a genuine
effort to lead us to anything productive. An old saw, they are
all hat and no cattle. They raise more questions than they
answer, and they merely hint at what is to come. And from what
I can tell, that is not very pretty for Medicare beneficiaries.
We still don't know if the President has a plan to add
prescription drug benefits to Medicare and what the plan would
be, unless it's just simply these discount cards, and they
leave much to be desired. We still don't know what the
President supports in order to fulfill his promises. Is he
willing to guarantee benefits at least as good as those offered
today to current beneficiaries for the foreseeable future? Is
he willing to show the same commitment to America's Medicare
beneficiaries as he has shown to wealthy Americans who
benefited from the recent tax cuts?
The only policies he has unveiled is this drug discount
card program; as I call it, the Buck Rogers Rocket Ranger
discount plan. And if these cards were the answer we wouldn't
have the current outcry for real Medicare coverage that we have
today. The little bit of research that is out there shows that
these cards often provide little or no discount.
I had a letter from the Kansas insurance commissioner that
I would like to insert in the record. I won't read the letter,
but she states her concerns with the discount programs that
operate in Kansas. Quoting her, she says, the most common
complaint is that while the literature touts the discounts
upwardly of 40 to 60 percent, the discount is considerably
less, often less than 10 percent, and closes her letter with
the adage that what sounds too good to be true remains too good
to be true.
The Bush discount card is a placebo, at best. And I guess I
have to warn you, Mr. Secretary, today I am petitioning the
court to intervene as a plaintiff in the lawsuit filed by the
National Association of Chain Drugstores and the National
Community Pharmacists Association against yourself and Mr.
Scully. The lawsuit contends, and I agree, that the program is
illegal. It was created in secret and did not consult with the
Congress, as all too often does not happen, at least with the
Democrats. We are never advised of what is going on in the
Medicare issue, and that is no way to begin bipartisanship.
And I'm sorry that--I promise if we take your deposition, I
won't do it during muskie season, unless you would like to do
it up in northern Wisconsin when they are biting and I will
come there to take your deposition. But I look forward to your
other testimony and our discussion today, and thank you for
being with us.
Secretary Thompson. Thank you.
Chairman Thomas. Well, Mr. Secretary, with those opening
remarks, welcome to the Committee once again. Any written
statement you have will be made a part of the record, and we
invite you to address the Committee in terms of the concerns
you have in front of you, in any way you see fit. And with
that, welcome.
[The opening statement of Mr. Ramstad follows:]
Opening Statement of the Hon. Jim Ramstad, a Representative from the
State of Minnesota
Mr. Chairman, thank you for holding this important hearing on the
Administration's principles for strengthening and modernizing Medicare.
The eight principles outlined by the Administration provide an
excellent framework for common-sense and compassionate improvements to
the Medicare system.
Representing a state penalized by the unfair and unjust Medicare
managed care reimbursement formula, I know firsthand the difficulties
that seniors face when irrational federal government decisions deny
them the choices they deserve.
And as one who represents an area with literally hundreds of
medical technology companies, I also know firsthand the damage to small
businesses, their employees and seniors when the federal system
irrationally delays or denies coverage of their innovative products. I
understand the dilemma facing seniors when they are denied life-saving
and life-improving technology, and I've authored legislation to ensure
that seniors have access through Medicare to crucial new technologies.
That's why I'm so encouraged by the Administration's leadership on
making Medicare make sense and better serve our nation's seniors.
I am grateful to Secretary Thompson for appearing today to lay out
the Administration's principles, and I look forward to working with him
and my colleagues to bring this 1965-era program into the 21st Century.
Thank you, Mr. Chairman.
STATEMENT OF THE HON. TOMMY G. THOMPSON, SECRETARY, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Secretary Thompson. Thank you very much, Chairman Thomas.
Chairman Thomas. Mr. Secretary, I will tell you that these
microphones are very unidirectional, and so if you will get
fairly close to it and talk directly into it. We are going to
change the sound system soon.
Secretary Thompson. Thank you. Thank you, Chairman Thomas,
Congressman Rangel, Congressman Stark, and Chairperson--
Chairwoman Nancy Johnson, and all the other members of this
Committee. Thank you for this opportunity to testify before you
today.
I am very pleased to be here to discuss President Bush's
framework for modernizing and improving the Medicare Program
and to talk to you about some very exciting initiatives now
underway.
Medicare has provided health care security for millions of
Americans for more than 35 years, yet Medicare's benefit
package has often remained rooted in the 1960s. For example,
outpatient prescription drugs, an increasingly essential part
of effective health care, are not included in the package.
Coverage for preventive services have lagged behind
developments in private insurance plans. Medicare's current
cost-sharing structure does not include protections for the
sickest beneficiaries with the highest medical costs. Put
simply, it is past time to modernize and improve the Medicare
system.
That is why the President has worked so hard with Members
of Congress from both parties to develop a framework to guide
legislative reform efforts to strengthen and improve the
Medicare program and to keep the Medicare benefit secure. Since
I last testified before this Committee, I have moved my office
to the Centers for Medicare and Medicaid Services, or CMS, what
was formerly called HCFA, Health Care Financing Administration.
I spent a week out in Baltimore, learning and listening and
developing initiatives. I met many dedicated professionals. But
I also found a system that needs fundamental changes in it to
provide the health care that seniors and disabled citizens need
and which Congress expects us to do.
The President passionately shares that view. Last week it
was my privilege to join him as he described the principles
that he believes should underlie any effective modernization
effort. We want to improve Medicare at every level, both in the
functioning of its programs and the quality of its benefits.
But there are many things that can be done now, even before we
tackle the larger issue of comprehensive modernization of the
system. President Bush and I are moving forward with
significant changes that will help ensure that Medicare better
serves seniors, both today and in the future.
First we appointed Tom Scully and Reuben King Shaw to be
the number one and number two people at CMS. First, we are
advancing constructive regulatory relief to enable physicians,
nurses and other care givers to spend more time with patients,
which has always been a criticism that they spend too much time
on paperwork. As you know, I am taking aggressive steps to
bring a culture of responsiveness to the whole Department of
Health and Human Services (HHS). Nowhere is this culture more
needed than at CMS, which I heard from all of you; from both
political parties. This is the Department's largest agency and
was the problem child. But it also provides health benefits to
more than 70 million Americans.
And to get the ball rolling, I have instructed CMS to hold
listening sessions out in the field, just like each of you
holds town-hall type meetings to better understand what your
constituents are thinking. CMS officials need to hear from the
people affected by their programs, including seniors, Medicaid
recipients, the disabled, the physicians and health care
providers.
We are also creating seven private sector health insurance
working groups to suggest improvements to the way that CMS
interacts with physicians, health care providers and
beneficiaries.
We are also forming a group of in-house experts from the
wide array of Medicare program areas within HHS. I am asking
them to think innovatively about how we can reduce
administrative burdens and simplify our rules and regulations.
We are already taking some major steps, but CMS will eliminate
unnecessary data that has been demanded of hospitals and
skilled nursing facilities in their Medicare cost reports. We
are going to eliminate those report requirements as soon as we
can after September 30th, 2001, when they expire in the law.
This is going to shrink the cost reporting by about 10 percent,
something that hospitals have written to each of you
complaining about.
We are also doing away with redundant questionnaires and
getting rid of time-consuming cost calculations that we have
demanded of nursing facilities by over 50 percent. We are also
doing away with the repetitive questioning on third-party
beneficiary cost reports.
I also want to announce a change in the development of the
new evaluation and management guidelines that doctors use to
bill Medicare. Physicians found the first sets of guidelines
from 1995 and 1997 cumbersome, and we have now been working
with a contractor to improve them. But we also want to work
with the physicians and the hospitals to identify constructive
solutions. And we want to work with Medicare+Choice plans, many
of which have complained about Medicare complexity. We want
them to participate in Medicare in order to give seniors the
same kind of choices that they enjoyed before retiring.
For example, we are taking steps to speed up our review of
the plan marketing materials. In addition to implementing the
congressionally mandated. Much shorter 10-day turnaround, we
are considering the use of other steps to streamline the
process for those managed care organizations with good track
records of following the rules.
Let me give a final example of the kind of initiative we
are undertaking. As administrator Tom Scully has indicated
previously in his response to recommendations from Nancy--
Congressman Nancy Johnson and Representative Stark--we need to
review the patient antidumping requirements. We have directed
CMS to go back and revise these regulations, redefine what a
hospital is so that they protect patients without creating the
unnecessary burden on the hospitals or physicians.
But in addition to streamlining the rules, we can also
reduce costs. The President and I believe we must act now to
provide immediate assistance to seniors who currently have to
pay for prescription drugs. So beginning this fall, on October
1, Medicare beneficiaries will be able to choose among
Medicare-endorsed prescription discount cards offered by
competing drug discount card programs. Seniors compose
virtually the only population in the country that still pays
full price for drugs. And under the administration plan,
Medicare-approved drug discount cards will create market
pressures that will allow seniors to benefit from drug
manufacturing rebates and some things they cannot now receive
in the discount card markets and, as a result, seniors will be
able to get discounts immediately this year up to 25 percent
off of retail drug prices. That is real money, real savings in
seniors' pockets. And all beneficiaries will be permitted to
enroll in one program beginning on or after November 1, about 3
months from now, with discounts beginning in January 2000.
Medicare prescription discount cards would have a one-time
enrollment fee no greater than $25. And this would be a one-
time fee to cover the enrollment costs. Some plans have
indicated that they do not intend to charge any fee at all.
Plans would be required to enroll all seniors who wish to
participate and would have to provide a discount on at least
one brand and/or generic prescription drug in each therapeutic
category. They would have to offer a comprehensive national or
regional network of retail pharmacies. And all plans would be
required to offer customer service to participating
beneficiaries, including a toll free telephone help line, and
Medicare would endorse all discount card applicants that meet
the qualifying criteria.
But let me be clear, ladies and gentlemen of the Committee.
While the discount drug card offers immediate tangible and
immediate help to seniors, it is not a substitute for a
comprehensive prescription drug benefit, and this is only the
first step. Ultimately, we must work together on a broader
initiative to strengthen Medicare, to modernize its structure,
and to make it more adaptable to the real-world needs of
ordinary people.
And that is why the President last week explained his eight
core principles that should be at the heart of any
comprehensive effort to improve and strengthen Medicare. And
here's an outline of those priorities.
First, all seniors should have the option of a subsidized
prescription drug benefit as part of modernized Medicare. Every
senior. About 27 percent of senior beneficiaries have no
prescription drug insurance today, and must pay for drugs
entirely out of their own pockets or go without needed
medication. That is unacceptable, and it will change under the
President's leadership.
Second, modernized Medicare should provide better coverage
for preventive care, serious illness, and catastrophic
diseases. Medicare's preventive benefits should have zero
copayments--zero copayments--and should be excluded from the
deductible. Medicare's traditional plan should have a single
index deductible for Parts A and B, provide a true cost
protection for high-cost illness, and take other steps to
protect seniors from high expenses for all kinds of health
care.
Third, today's beneficiaries and those approaching
retirement should have the option of keeping the traditional
plan, with no changes, no higher premiums, no changes in cost
sharing or supplemental coverage, period.
Fourth, Medicare should provide better health insurance
options like those available to all Federal employees. Plans
should be able to provide Medicare-required benefits at a
competitive price, and beneficiaries who choose less costly
options should be able to keep most of the savings, even if
that means that they may pay no premium at all.
Fifth, Medicare legislation should strengthen, then, the
program's long-term financial security. Between now and 2030
the number of Medicare recipients is expected to increase
rapidly from 40 million to 77 million. Medicare relies
primarily on payroll and income taxes to finance its benefits.
But the significant increase in retirees means that there will
be fewer workers to help sustain the Medicare Program. In order
to support good planning for the entire program, Medicare's
separate trust funds should be unified to provide a clear and
meaningful measure of Medicare's overall financial security
that is not vulnerable to accounting gimmicks. Financial
security cannot be achieved simply by increasing reliance on
unspecified financing sources.
Sixth, the management of Medicare should be streamlined so
that Medicare can provide better care for seniors. For example,
Medicare should be allowed to use competitive bidding tools to
improve quality and reduce the cost.
Seventh, Medicare's rules and procedures which we have
already started should be updated and streamlined. Instances of
fraud and abuse should be substantially reduced, I believe.
Finally, Medicare should encourage high-quality care for
all seniors. Medicare must support efforts by plans and
providers to improve care through more collaborative programs
that use protected data on quality and safety. Medicare should
help seniors get better care through improved information on
quality and Medicare should revise its payment system to reward
better performance and encourage investments that improve
quality of care without increasing budgetary costs.
These are the commitments that President Bush and his
administration are making to improve Medicare for every senior.
Doing so is not only a political duty, it is a public trust,
one I know that we all want on a bipartisan basis to discharge
faithfully and effectively.
Thank you, Mr. Chairman and Members. I will be glad to
answer your questions.
[The prepared statement of Secretary Thompson follows:]
Statement of the Hon. Tommy G. Thompson, Secretary, U.S. Department of
Health and Human Services
Chairman Thomas, Congressman Rangel, and distinguished Committee
members, thank you for this opportunity to testify before the Committee
today. I am pleased to be here to discuss President Bush's framework
for modernizing and improving the Medicare program to prepare it for
the challenges we face in the coming decades. The President's framework
builds on many of the ideas developed by Members of this Committee and
other Members of Congress who have long been working to bring the
Medicare program up to date, including a prescription drug benefit. The
President is committed to working with Congress on a bipartisan basis
to enact these principles into law, to help today's seniors and
tomorrow's seniors get the coverage they need, and to help keep
Medicare's promised benefits secure. I will also describe some
additional administrative steps that reflect the President's
principles, as well as proposals developed by your Committee on a
bipartisan basis. These steps reflect our commitment to take action now
to support your bipartisan interest in strengthening the Medicare
program.
Medicare has provided health care security for millions of
Americans for over thirty-five years. When Medicare was created in
1965, the benefit package was similar to most private health insurance
packages of the time. Since then, medicine has changed profoundly and
the health insurance options available to most Americans have changed
along with it. Yet Medicare's benefit package has in many ways remained
rooted in the 1960s. As you all know, outpatient prescription drugs, an
increasingly essential part of effective health care, are not included
in the benefit package. Coverage for preventive services has also
lagged behind developments in private insurance plans. Additionally,
Medicare's current cost sharing structure does not include protections
for the sickest beneficiaries with the highest medical costs. For
example, individuals who need hospital care face deductibles of almost
$800 for each hospital stay, as well as additional cost-sharing
requirements (see chart 1). While private health insurance plans
generally include stop-loss limits to provide protection against very
high medical expenses, Medicare has no such protections. And, as we all
know, even Medicare's current benefits are not secure for the
retirement of the Baby Boom.
CHART 1
MEDICARE DOES NOT PROTECT AGAINST SERIOUS ILLNESS
----------------------------------------------------------------------------------------------------------------
Beneficiary Pays:
-------------------------------------------------------------------------------
Days 1-60 Days 61-90 Days 91-150 Over 150 days
----------------------------------------------------------------------------------------------------------------
Medicare........................ $792 payment per $198 per day...... $396 per day...... All costs
hospital spell.
Standard Blue Cross/Blue Shield $100 payment per $0 per day........ $0 per day........ $0 per day
Plan for Federal Employees. hospital
admission.
----------------------------------------------------------------------------------------------------------------
The President's Framework for Strengthening Medicare
In order to ensure that Medicare will meet the needs of the
estimated 77 million Americans who will be beneficiaries of the program
by 2030, Medicare must be strengthened and improved. The President has
worked with members of Congress from both parties to develop a
framework to guide legislative reform efforts to modernize the Medicare
program and to keep Medicare's benefits secure.
We believe that reform should be guided by the following set of
eight principles:
1. All seniors should have the option of a subsidized prescription drug
benefit as part of modernized Medicare.
Nearly 90 percent of Medicare beneficiaries use at least one
prescription drug per year. Yet about 27 percent of beneficiaries have
no prescription drug insurance and must pay for drugs entirely out of
their own pocket or go without needed medications. A recent study found
that Medicare beneficiaries without drug coverage used 8 fewer
prescriptions per year than those with coverage; for lower income
seniors the gap in utilization was even greater. Low income seniors
without coverage used 14 fewer prescriptions per year than those with
coverage. While one might hope that the seniors with lower prescription
drug costs are simply choosing not to obtain prescription drug
coverage, giving seniors quality private-sector prescription drug
benefits not only protects them from the risk of high prescription drug
expenses, but also helps make all prescription drugs more affordable
through innovative tools to reduce their drug costs--by negotiating
volume discounts and helping seniors choose the best treatment for them
while avoiding adverse drug interactions.
Medicare's subsidized drug benefit should protect seniors against
high drug expenses and should give seniors with limited means the
additional assistance they need. Seniors should have the opportunity to
choose among plans that use the tools widely available in private drug
plans to lower costs and improve quality of care. The drug benefit
should encourage the continuation of the effective, voluntary coverage
now available to many seniors through retiree health plans and private
health plans. Today, almost 30 percent of Medicare beneficiaries have
employer-provided retiree health coverage, and we must help ensure that
employers continue to offer this voluntary benefit. The new drug
benefit should also be available through Medigap plans and as a stand-
alone drug plan for seniors who prefer these choices. When Medicare
implements the drug benefit, states should not face maintenance of
effort requirements for their own drug programs outside of Medicaid.
2. Modernized Medicare should provide better coverage for preventive
care and serious illness.
Medicare has been slow to cover proven treatments for preventing
illnesses and saving lives. Coverage often comes long after preventive
treatments are widely available in private insurance plans. For
example, mammograms were first shown to save lives in the early 1980s
by identifying breast cancer that could be treated at an earlier, more
curable stage--but Medicare did not cover the recommended annual
mammograms until 1998. This Committee understands the value of Medicare
preventive benefits and has crafted important legislation in 1997 and
again in 2000 to expand preventive benefits for Medicare beneficiaries.
The development of new technologies and new treatments for the most
serious illnesses, such as intensive life support for patients with
major heart attacks, makes it possible for more seniors to survive
potentially fatal illnesses. Unfortunately, Medicare beneficiaries who
are sickest often pay the most for their health care costs--exactly the
opposite of the way that logical insurance plans work. For example,
beneficiaries who incur costs of $25,000 or more are on average
responsible for over $5,100 in cost-sharing due to Medicare's
deductibles, copayments, and coverage limits. With modern technology,
such costs are not that uncommon: The cost for treating a patient with
heart disease who needs an implantable defibrillator exceeds $35,000.
Patients treated in hospital outpatient departments face copayments
that may reach 57 percent of the total payment. So, a typical senior in
need of breast reconstruction after a mastectomy would pay coinsurance
of $764, or nearly half of the $1,563 total payment. For patients with
multiple hospital outpatient visits and procedures, the costs can stack
up. To protect beneficiaries when they need help the most, private
insurance plans generally include ``stop-loss'' limits. Stop-loss
limits provide guaranteed protection against very high medical
expenses. Despite its important coverage gaps, Medicare has no stop-
loss protection.
We believe that Medicare's existing coverage should be improved so
that its benefits provide better protection when serious illnesses
occur and provide better coverage to help prevent serious illnesses.
These changes should not reduce the overall value of Medicare's
existing benefits. Medicare's preventive benefits should have zero
copayments and should be excluded from the deductible; Medicare's
traditional plan should have a single indexed deductible for Parts A
and B to provide better protection from high expenses for all types of
health care; and Medicare should provide better coverage for serious
illnesses, through lower copayments for hospitalizations, better
coverage for very long acute hospital stays, simplified cost sharing
for skilled nursing facility stays, and true stop-loss protection
against very high expenses for Medicare-covered services.
3. Today's beneficiaries and those approaching retirement should have
the option of keeping the traditional plan with no changes.
Many people in Medicare today, and others who are approaching
retirement, have good supplemental coverage for prescription drugs and
other medical expenses. If they wish to continue in the traditional
Medicare plan with no changes in their premiums, benefits, or
supplemental coverage, they should be able to do so.
4. Medicare should provide better health insurance options, like those
available to all Federal employees.
Medicare has lagged behind in providing reliable health insurance
benefit options for beneficiaries that best meet their own
circumstances and preferences. The Federal government, many state
governments, and most large private employers help their employees get
the care that is best suited to their needs by offering them several
health care plans, along with useful information to help them choose
the best one for their budget and needs. Medicare has failed to provide
America's seniors with the same kind of reliable health care options
that every Federal employee has received for decades--a fact which is
particularly evident right here in the Washington area (See chart 2).
For many beneficiaries, particularly those in rural areas, Medicare
offers only one health insurance plan--it is strictly one-size-fits-
all. Previous legislation to address this problem, including the
establishment of the Medicare+Choice program, has not had the intended
effect of providing more reliable health insurance options for all
Medicare beneficiaries.
CHART 2
FEDERAL EMPLOYEE PROGRAM PROVIDES MORE OPTIONS
[GRAPHIC] [TIFF OMITTED] T4872A.001
Plans should be able to bid to provide Medicare's required benefits
at a competitive price, and beneficiaries who choose less costly
options should be able to keep most of the savings--so that a
beneficiary may pay no premium at all. In areas where a significant
share of seniors choose to get their benefits through private plans,
the government's share of Medicare costs should eventually reflect the
average cost of providing Medicare's required benefits in the private
plans as well as the government plan. Low-income seniors should
continue to receive more comprehensive support for their premiums and
health care costs.
5. Medicare legislation should strengthen the program's long-term
financial security.
Medicare faces substantial financial challenges in the not-too-
distant future (see Chart 3). Between now and 2030 the number of
Medicare beneficiaries and older is expected to increase rapidly from
40 million to 77 million. Since Medicare relies primarily on payroll
and income taxes to finance its benefits, this increase means that the
payroll taxes of fewer workers per beneficiary will be available to
support Medicare's covered benefits. Expenses will further rise because
health care costs are expected to increase.
CHART 3
BABY BOOMER RETIREMENT WILL STRAIN MEDICARE
[GRAPHIC] [TIFF OMITTED] T4872B.001
Legislation should strengthen Medicare's ability to plan for and
provide its benefit entitlement in the years ahead, thereby improving
the program's long-term financial security. To support good planning
for the entire program, Medicare's separate trust funds should be
unified to provide a straightforward and meaningful measure of
Medicare's overall financial security that is not vulnerable to
accounting gimmicks. Financial security cannot be achieved simply by
increasing reliance on unspecified financing sources.
6. The management of the government Medicare plan should be
strengthened so that it can provide better care for seniors.
Medicare needs more modern, competitive management tools: the
traditional Medicare program has not been able to use competitive
approaches to help keep its costs down. Its fee-for-service contracting
requirements are outdated, so providers must work with a complex claims
processing system that makes it more difficult to serve patients
effectively. Contracting reform should be implemented to improve
efficiency and performance. In addition, Medicare should be allowed to
use competitive bidding tools to improve quality and reduce costs for
durable medical equipment, prosthetics and orthotics, and clinical lab
services--provided that the government plan is not allowed to create
new price controls and that seniors continue to have choices.
Medicare needs more modern medical management tools: traditional
Medicare does not provide efficient integrated services for many
seniors who need support for managing their illnesses, particularly in
the case of chronic disease. Beneficiaries who wish to participate in
innovative programs such as disease management should be able to do so.
Finally, Medicare's process for covering new technologies should be
streamlined.
7. Medicare's regulations and administrative procedures should be
updated and streamlined, while the instances of fraud and abuse
should be reduced.
Medicare is a complex system of ever-changing rules and regulations
that affect 40 million beneficiaries and over one million physicians
and other health care providers who serve them. Patients and providers
face variable and inconsistent policy interpretations from various
contractors and from different offices with overlapping jurisdictions
within the Federal government itself. Rules may vary across areas and
over time.
Complexity, variability, constant changes, and the existence of
some rules that are just not workable all contribute to the need to
reduce regulatory and administrative burdens in Medicare. Needed relief
in regulation and oversight should be implemented and I will discuss
some new initiatives later in my testimony. This will allow providers
to spend more time and effort on patient care and less on paperwork
while continuing to ensure the integrity of Medicare funds.
8. Medicare should encourage high-quality health care for all seniors.
Medicare's most important goal should be to enable seniors and
disabled Americans to get the high quality error-free health care they
deserve. Currently, there are too many instances where beneficiaries
fail to get recommended treatments, and there are too many instances of
beneficiaries being hurt by medical errors.
Medicare should support efforts by plans and providers to improve
care through more collaborative programs that use protected data on
quality and safety. Medicare should help seniors get better care
through improved information on quality. Medicare should revise its
payment system to reward better performance and encourage investments
that improve quality of care without increasing budgetary costs.
Medicare's risk adjustment system for private plans should reward
health plans for treating the toughest cases and finding innovative
ways to provide care and reduce complications for chronically ill, high
cost patients. Medicare should address the additional challenges facing
rural health care providers in delivering high-quality care.
TAKING ACTION NOW
These are the principles that the President wants to see embodied
in legislation to strengthen and improve Medicare. To help seniors and
pave the way for these future improvements, we are also committed to
taking the steps we can administratively--in many cases, to take
advantage of flexibility that Congress has wisely provided in the past.
I would like to discuss two main areas of administrative action. First,
I want to talk about our initiative to give all Medicare beneficiaries
access to the kind of discounts that a competitive system can provide
them--the system that is incorporated in all of the major Medicare drug
benefit proposals pending before Congress. Second, I want to talk about
our efforts to provide regulatory relief--so that fraud and abuse of
the Medicare program can be reduced even as doctors gain more time to
spend with their patients.
Medicare Rx Discount Card--While the Administration believes that
the addition of a Medicare prescription drug benefit should be included
within an integrated modernization of the Medicare program, we intend
to act now to provide immediate assistance to Medicare beneficiaries
currently without prescription drug coverage. Because beneficiaries
without coverage often have no source of bargaining power, they often
pay higher retail prices for their medications. Beginning this fall,
Medicare beneficiaries will be able to choose among Medicare-endorsed
Rx discount cards, offered by competing drug discount card programs.
These cards will provide a mechanism for beneficiaries to gain access
to the effective tools widely used by private health insurance plans to
negotiate lower drugs prices and provide higher-quality pharmaceutical
care. Discount cards are currently available in the marketplace through
a variety of sources, including pharmacy benefit managers (PBMs), some
Medigap insurers, and retail drugstores. People with Medicare would be
able to use the cards when they buy prescriptions to get discounts of
perhaps between 10-25 percent off retail prices.
All beneficiaries will be permitted to enroll in one program
beginning on or after November 1, 2001 with discounts beginning in
January 2002. Medicare-endorsed discount card programs will conduct
marketing and enrollment activities, aided by support from the Centers
for Medicare & Medicaid Services (CMS). Enrollment is limited to
Medicare beneficiaries and beneficiaries will be permitted to enroll in
only one Medicare discount card program at a time.
We believe this initiative will provide a number of additional
benefits for seniors that many of them do not enjoy now:
First, we believe that providing comparative
information to the elderly and disabled about actual drug
prices will spur greater competition and lower prices than we
see today.
Second, we believe these cards will create market
pressures that will allow Medicare beneficiaries to benefit
from drug manufacturers' rebates--something most seniors cannot
obtain currently in the discount card market now.
Third, we believe these competitive pressures will
lead to other innovations that improve quality and patient
safety--like broader availability of the computer programs to
identify adverse drug interactions, and better advice on how
seniors can meet their prescription drug needs at a more
affordable cost.
Medicare Rx Discount Cards would have to meet several
qualifications to receive Medicare endorsement:
Plan sponsors could charge an enrollment fee no
greater than 25 dollars. This would be a one-time fee to cover
enrollment costs. Some plans may not charge any fee.
Plans would be required to enroll all beneficiaries
who wish to participate.
Plans would have to provide a discount on at least
one brand and/or generic prescription drug in each therapeutic
class.
Plans would have to offer a broad national or
regional network of retail pharmacies.
Plans would be required to offer customer service to
participating beneficiaries, including a toll-free telephone
help line.
All discount card applicants that meet the
qualifying criteria would be endorsed by Medicare.
Regulatory Relief--As you know, I am taking aggressive steps to
bring a culture of responsiveness to all of HHS. The Center for
Medicare and Medicaid Services (CMS) is one of the Department's largest
agencies, providing health benefits to more than 70 million Americans.
This year alone the Medicare, Medicaid, and SCHIP programs will pay an
estimated $476 billion in benefits, and each year Medicare alone
processes nearly one billion claims from over one million physicians
and other health care providers.
Medicare and Medicaid are wonderful programs, but they are huge and
they are complex. Their rules generate many of the concerns that our
constituents bring to your attention and mine. Of course, there is a
genuine need for rules and regulations. But rules should exist to help,
not hinder, our efforts to assist people, and help control costs and
ensure quality. When regulations, mandates, and paperwork obscure or
even thwart the help providers are trying to give, those rules need to
be changed. Our constituents, the Americans who depend on Medicare and
Medicaid, the physicians and other health care providers who care for
them, and the American taxpayers who fund the program deserve better.
And so, I am working with the Office of the Assistant Secretary for
Planning and Evaluation and CMS to reform the way Medicare works,
making it simpler and easier for everyone involved, as well as
simplifying other departmental regulations. We are dedicating ourselves
to listening closely to Americans' concerns, learning how we can do a
better job of meeting their needs, and serving them in the best way we
can.
As I announced last month at Northwestern University Hospital, I am
doing a top to bottom review of the agencies and looking for
opportunities to streamline regulations without increasing costs or
compromising quality. To this end, I am calling for a new regulatory
reform initiative to look for regulations that prevent hospitals,
physicians and other health care providers from helping people in the
most effective way possible. This initiative will determine what rules
need to be better explained, what rules need to be streamlined and what
rules need to be cut altogether while still providing beneficiaries
with high quality care and protecting the interests of taxpayers. And
to implement this initiative, I have developed a three-pronged approach
that will get us on the right track, to listening, to learning, and
then to administering all federal health care programs as effectively
as possible.
Under the first prong of my plan, we are going to start listening
more to the public. This spring, I actually moved my office to CMS
headquarters in Baltimore for a week to get acquainted with the inner
workings of the Agency. I learned a lot, and at the end of the week I
had an amazing listening session with actual Medicare beneficiaries and
others to hear what they had to say about Medicare--talk about learning
a lot!
While people really like Medicare and Medicaid, they have a lot of
suggestions for improving them. We need to do more of this type of
listening. And so I am directing CMS to start holding more listening
sessions out in the field, away from Washington, DC and away from
Baltimore, and out in the areas where people have to live and work
under the rules we develop. These people may not have such easy access
to policymakers to share their good ideas and concerns. Most of you in
Congress have these kinds of listening sessions with your local
constituents on a regular basis. I did this all the time as Governor of
Wisconsin, and I can't begin to explain how useful it was. I want our
people in CMS to hear from local seniors, the disabled, large and small
providers, State workers, and the people who deal with Medicare and
Medicaid in the real world. I want to get their input so we can run
these programs in ways that make sense for real Americans in everyday
life. We hear from some of these people now, but I want to get input
from many, many more.
Some of the people who we hear from the most are the individual and
institutional providers who are dealing with our rules every day. They
are the ones caring for our beneficiaries, and they are the ones
filling out many of the forms, trying to understand the rules, and
working to do the things they spent years training to do--making people
healthy. And so the second prong of my approach will focus specifically
on their expertise. I am going to convene seven health sector
workgroups to suggest ways that we can improve their interactions with
CMS and the Medicare program to reduce regulatory complexities and
burdens. For example, the American Hospital Association recently
released a report, ``Patients or Paperwork: The Regulatory Burden
Facing Hospitals.'' It found that the regulatory burden means that
every hour spent providing actual patient care generates at least 30
minutes--and sometimes an hour--of paperwork. We need to do more to
address burdens like this to improve our operation of Medicare, so that
health care professionals can spend more time delivering the care for
which they were trained, and so that beneficiaries can spend more time
with their doctors and other providers--not in waiting rooms.
I want to hear from the broad range of providers, from those in
rural offices and inner city clinics to the suburban health centers and
urban hospitals. I want to hear from the large hospital systems and the
small, two doctor practices and the solo providers. I want input from
folks like medical equipment providers, group practice managers,
physician assistants, and nurses--for example, we have an emerging
health care professional (particularly nurses) shortage crisis in parts
of America today, and I want to hear good ideas for how to fix it.
These professionals who are in the field every day can give us good
ideas that improve our management of these vitally important programs.
This type of input is good for our beneficiaries not only because
regulatory reform will allow physicians and providers to spend more
time caring for beneficiaries, but also because it will encourage
physicians and providers to remain in the Medicare program. To ensure
that CMS responds to these ideas and comments, a senior level staff
person has been assigned to each provider industry.
In no way will we diminish our interest in fighting waste fraud and
abuse. The vast majority of providers are only interested in delivering
needed care, but for the small percentage of people who take advantage
of the system, we will continue our aggressive efforts to protect the
funds that taxpayers have entrusted to our use.
Like the physicians, providers, and beneficiaries who live and work
with Medicare every day, the Department's staff have dealt with the
system for years, and they have suggestions about how we can operate
the Medicare program more simply and effectively. They certainly have
heard from all of you and from many, many providers about what could be
fixed. To examine these important concerns, I am forming a group of in-
house experts from the wide array of Medicare's program areas, and I am
asking them to think innovatively about new ways of doing business,
reducing administrative burdens, and simplifying our rules and
regulations. Today, providers are forced to spend more time keeping up
with the latest rules and interpretations rather than keeping up with
providing patient care. And frankly, the complexity of the program
makes it difficult for those of us who administer it to keep up. It is
difficult to educate beneficiaries and our business partners when there
is so much complex information to explain. And it is hard to
appropriately target fraud and abuse without unfairly burdening the
vast majority of honest physicians and other providers. This group of
experts will develop ways that we can reduce burden on providers
without increasing Federal costs or undermining quality of care,
eliminate complexity wherever possible, and make Medicare and Medicaid
more ``user-friendly'' for everyone involved.
These outreach efforts will allow us to hear from all of these
different segments of people who deal with Medicare and Medicaid, from
the beneficiaries and the public at large to the physicians and
providers to the Department's employees. We are going to listen to
them, and we are going to learn how we can do a better job. But
listening is not enough. Getting together and generating great
solutions is not enough. So we are going to take action. We are going
to use all of this wonderful input, and we are going to improve the way
we do business and make Medicare and Medicaid easier for everyone
involved with them. I have already started by taking some bold steps
based on feedback we have received from the public:
Improvements for Hospitals and Skilled Nursing Facilities
I am eliminating unnecessary data that has been demanded of
hospitals and skilled nursing facilities in their Medicare Cost
Reports. There is a statutory requirement that, for payment, hospitals
report their overhead for old capital costs and new capital costs. We
will eliminate these reporting requirements for most hospitals as soon
as we can after September 30, 2001, when they expire in law. This will
shrink the cost report by about 10 percent. This is not enough, but it
is a start, and we plan to do more.
There also is a questionnaire, called form 339, that providers
currently have to fill out with their cost report. It requires
information on office expenses, deferred compensation, and other data
not required in the cost report. This seems kind of crazy to me, to
have to do an extensive report and then to have yet a different
questionnaire on top of the report. And I understand that some of the
questions on this form request information we do not even need from
some providers. So we are going to eliminate a number of them, and we
are going to fold the ones we do need into the cost report. This will
give us one form, not two, to collect only the information we need, not
the information we don't need. While providers will still have to
answer some of these questions for the report, at least there will be
less of them, and the report and the questions will all be in one
place. This is one example of the little things about working with
Medicare that drive providers crazy, and we are working hard to make it
better.
Similarly, under the law we have been paying skilled nursing
facilities by blending cost-based and prospective payment systems. This
has required providers to collect a lot of data and perform extensive
calculations on the cost reports. Starting this month, the law requires
all of these facilities to be paid 100 percent prospectively. That
means we no longer need all of those calculations. We will therefore
look to simplify cost reporting for SNFs.
At the same time we are working to eliminate unnecessary
requirements, we have new requirements to contend with. For example,
the BBRA requires hospitals to report some new data on their cost
reports for periods beginning on and after October 1, 2001. So we have
to continue to search for ways to make the work simpler where we can.
We have established regulatory reform workgroups to further review
these and other regulatory reporting requirements to determine what
further improvements we can make. And I will hope to hear from many
other people and to work with this Committee and Congress to get even
more ideas on making these cost reports more sensible and easier to
complete.
Improvements for Physicians
Another bold step that I want to announce today is a change in our
development of the new Evaluation and Management (E&M) guidelines that
physicians use to bill Medicare for their doctor visits. We know that
physicians' primary work is to provide clinical care, not
documentation. We have been working on a third version of these
guidelines, which are based on the AMA's Current Procedural Terminology
(CPT) that physicians use to bill insurance companies. Physicians found
the first two sets of guidelines, developed in1995 and 1997,
cumbersome. We agree, and have been working with a contractor, Aspen
Systems, to improve them, but physicians have continued to express
concern that these guidelines are hindering, not helping, the delivery
of appropriate patient care.
We had hoped that this current effort would be a way to reduce
burdens on physicians, but it appears it needs another look. So I have
directed Aspen Systems to stop their work on this current draft while
we reassess and re-tune our effort. Additionally, I am turning to the
physician community to help design constructive solutions. After six
years of confusion, I think it makes sense to try to step back and
assess what we are trying to achieve. We need to go back and re-examine
the actual codes for billing doctor visits. For the system to work, the
codes for billing these visits need to be simple and unambiguous. I
look forward to working with the AMA and other physician groups to
simplify the codes and make them as understandable as possible.
Improvements for Medicare+Choice Plans
In addition to working with physicians, we also want to work with
our Medicare+Choice plans. Many of these plans have complained about
the complexity of the program, and justifiably so. We want to
facilitate participation of high-quality plans in Medicare to give
beneficiaries more stable choices like the ones many Americans enjoy
before retiring. For example, we are taking steps to speed up our
review of plan marketing materials to ensure that seniors have timely
and accurate information. In addition to implementing the
Congressionally mandated, much shorter 10 day turnaround, for this
fall's contracting cycle we intend to streamline the process of
reviewing marketing materials. Following the fall contracting cycle,
CMS will examine the success of this process with the hope that it can
be expanded to possibly include other marketing materials throughout
the contract year. We also will consider performing targeted reviews of
marketing materials only for those managed care organizations that have
solid track records, including histories of complying with CMS
requirements. We are exploring authorities and flexibilities to focus
on monitoring and oversight of those plans that need the most
attention. Additionally, we also hope to streamline the way plans
report the financial risks that they impose on their participating
physicians. Currently, these annual reporting requirements are
extremely detailed and complex, and we want to find less burdensome
alternatives for reporting this information. We also intend to clarify
requirements that plans provide marketing information about competing
plans in their area.
As in systems that have been successful at providing reliable,
high-quality plan choices, like the Federal Employees' system, the
Medicare program should take the responsibility to provide reliable,
unbiased information for seniors on their coverage options and patient
rights. To help us provide the information that seniors need, we will
conduct a $35 million education and advertising campaign this fall.
All these ideas build on the valuable bipartisan suggestions of
this committee for improving the Medicare program, contained in a
useful set of recommendations to CMS Administrator Scully from
subcommittee Chairman Johnson and Representative Stark. I would like to
elaborate further on some of your specific ideas.
One such area that really needs another look relates to the patient
anti-dumping requirements. These requirements were intended to ensure
that patients in emergencies, including women in active labor, were not
turned away from hospital emergency rooms because of lack of insurance.
While the law in this area is well intentioned, we understand that
providers view the current regulations as burdensome. I have directed
CMS to go back and revise these regulations and make any necessary
changes to ensure they protect patients without creating unnecessary
burdens on the hospitals or physicians.
Another idea is contractor reform. As you know, the Administration
has presented a specific legislative proposal to enable Medicare to
process claims in a more responsive and efficient way.
We are also implementing your ideas for ``frequently asked
question'' support for beneficiaries, for using on-line tools to
improve the efficiency of Medicare+Choice enrollment and other program
activities.
We will continue to work with you to do more. I think you will
find, as I have said many times before, the excuse for doing things
because ``that's the way we've always done it'' isn't going to work
anymore. I am committed to changing things. I am confident that our new
approach will go a long way toward making Medicare and Medicaid more
user-friendly. I am genuinely excited about the progress we are going
to make, and I am confident that we can build on these steps to enact
the legislation to improve Medicare that is overdue.
Conclusion
While we regard the Medicare Rx Discount Card and our regulatory
relief efforts as an important first step to provide immediate
assistance to Medicare beneficiaries and to improve the program for
them, I want to reiterate the importance that the Administration
attaches to the need for broader Medicare improvements, based on the
President's eight principles that I have outlined here. The discount
card is only a first step, not a substitute for comprehensive
prescription drug benefit combined with other needed legislative
reforms. I stand ready to continue to work with you in a bipartisan
fashion to strengthen the Medicare program, modernize the benefit
package, strengthen its financial underpinnings, and provide access to
high quality, innovative treatments for our nation's seniors and
disabled populations now and in the future.
Chairman Thomas. I thank you very much, Mr. Secretary.
As was indicated in the opening remarks of some of my
colleagues, the idea of moving administratively, apparently, is
something that my colleagues are not as familiar with as they
should have been. To me it's ironic that for the 8 years of the
previous administration, and especially in the last 3 or 4, and
the intense discussion about trying to provide prescription
drugs to seniors, and especially those who are forced to pay
retail as seniors, had to be played out in the legislative
arena exclusively and which, without the passage of
legislation, nothing could be done for seniors is just
amazingly false; because as you have indicated, this
administration focused on actually doing something about the
problem rather than running on the problem for political
purposes, and has already moved administratively to provide,
admittedly, a modest reduction in the price for seniors, and
you have done it administratively. I want to compliment you on
that.
In the last Congress we attempted to move legislatively a
prescription drug program. We were required in that legislation
to attempt to change the structure of the Health Care Financing
Administration through legislation to create a structure that
would negotiate prices for prescription drugs and for
Medicare+Choice prices.
Now, the benefit of a competitive negotiated model in
prescription drugs, the Congressional Budget Office (CBO)
indicated to us, was a double or triple savings over a single-
model non-negotiated plan which was, of course, the
administration's.
So my focus would be one, thank you for the rapid
administrative move to provide an initial reduction in costs to
seniors; but, have you, one, administratively structured the
former Health Care Financing Administration--now the Centers
for Medicare Services--to create a structure that would allow
competitive bidding? And does the President's plan envision a
competitive prescription drug program which would get those
savings through placing some of the plans at risk and forcing a
competitive model?
I repeat, all that was required to be done legislatively in
the previous administration. How much of this can be done
administratively from your side, Mr. Secretary?
Secretary Thompson. We are looking at all of those things,
Mr. Chairman. We are moving as rapidly as we possibly can to
provide the competition to provide for improvements,
simplifying the rules and the regulations so that
Medicare+Choice can stay in the market, which has been a
difficulty. And we are doing the same thing in the area of
hospitals and providers and we will continue to do so. We think
that all of the things we have done so far are within the
confines of our ability to get that done, and we will continue
to do so. We will continue to come back to this Committee and
to other Members of the House and the Senate in order to share
with you our concerns if we run into problems, but also share
with you our results and what we intend to do.
Chairman Thomas. It's ironic that the reward for moving
rapidly in an administrative manner is to be sued. I look
forward to working with you. I hope you continue to advance the
administrative changes. And when you have run the string out,
it will be our goal to provide you with additional
opportunities to continue to make changes administratively,
and, where necessary, work with you cooperatively to do the
required legislative changes, so that instead of a hope and a
promise, we can actually deliver a modernized Medicare, with
prescription drugs for all seniors and disabled under Medicare.
I thank you very much.
The gentleman from New York.
Secretary Thompson. Thank you Mr. Chairman.
Mr. Rangel. Thank you Mr. Chairman. I partially agree with
the Chairman in terms of supporting the administrative
initiatives that the President has expressed. But I am just a
little too old to wait for that string to run out before we
provide a legislative solution.
The only problem I had with the President's announcement of
the principles was that it appeared as though this was a major
initiative. The problem, Mr. Secretary, is that any time
someone starts talking about giving assistance for prescription
drugs, older people and people with less income and fixed
income really believe that we have taken care of the problem.
They don't distinguish between the President and the Congress.
They want help.
And so this is relief and we should laud it. But we have to
make certain that we don't give the impression that we resolved
the problem. And I don't think you have either. And so Mr.
Thomas is a lot younger than me, he can wait for these strings
to run out. But I am certain that the President, when he was
campaigning, wasn't talking about these strings running out. He
said together he will work with the Congress and provide
quality care and, at the same time, that it would be fiscally
responsible.
Now, in your testimony, you talk about the soundness of the
Medicare system, and one of those principles is strengthening
the program's long-term financial security. The Part B--strike
that. The Medicare Hospital Insurance Trust Fund, in your
opinion, what is it's fiscal position?
Secretary Thompson. Part A are you talking about?
Mr. Rangel. Part A.
Secretary Thompson. Part A is running a surplus at the
present time, and Part B is running a deficit.
Mr. Rangel. Now, Part A has never been in better shape in
57 years, and it is solvent to 2029, and we have to monitor
that very carefully. How can Part B, just for purposes of
understanding, how can they be running a deficit when it is not
an entitlement? It is supported by general revenues. And I
don't know any other program that goes before the
Appropriations Committee that we can say, as citizens or as
lawmakers, that is in a deficit.
Chairman Thomas. Will the gentleman yield briefly?
Mr. Rangel. I hate to do that because I always see you, but
I very seldom have a chance----
Chairman Thomas. I don't want to interrupt the gentleman's
rhythm. But I don't know whether he misspoke when he said that
Medicare was not an entitlement. Medicare is an entitlement,
and I believe the record would show----
Mr. Rangel. Well, I misspoke.
Chairman Thomas. Thank you.
Secretary Thompson. Part B is also financed by premiums.
Chairman Thomas. I just want to make sure that no one
listening to us believes that this Committee is not an
entitlement.
Mr. Rangel. Medicare Part B is an entitlement. I want to
know if it is funded in part by general revenues, how can we
say it has a deficit? That is what I want. I apologize, because
I thought that you were going to get involved in that. But you
are right. And my question is if Part B is in part funded by
general revenues, which we have to go to the Appropriations
Committee to get, how can we say now it runs in a deficit?
Secretary Thompson. As you know, Congressman, in 1997, Part
A was in less good financial shape.
Mr. Rangel. Yes.
Secretary Thompson. And this Congress passed legislation
that transferred home health to Part B. And that solidified
Part A to be more financially secure up to 2029 with that
change. Part B, when you include Part B and Part A together,
which this administration believes is the right thing to do
and--and now this can be debatable. But we feel as an
administration, in order to put Medicare on a sound fiscal
footing, you have to look not only at Part A and Part B in
separate avenues, you have to look at it as a total package.
And when you look at a total package, the amount of
expenditures for the operation of Part B exceeds the income by
approximately $700 million. And Part A exceeds the outgoes by
about $500 million. And so there is a deficit when you combine
A and Part B.
Mr. Rangel. Now, you are kind of changing the accounting
rules in order to reach that conclusion. So rather than
challenge what you would like to do in combining Part A and
Part B for determining its fiscal standing, it would seem to me
that the only way to bring Part B into balance is that you
would consider either reducing provider benefits, reducing the
beneficiaries' benefits, or increasing the payroll taxes. Now,
the President has ruled out the latter, and I don't see--if we
are not going to the Appropriations Committee, how do you
intend to bring about this fiscal balance with part B?
Secretary Thompson. We think--and we have looked at it in
many different ways, Congressman--that with the eight
principles that I have outlined and which the President
articulated last Thursday, and by combining part A and B, that
we put it on a financially secure footing. And we will be able
to do it with the principles, with working with you, and with
working with the other Members of the House and Senate.
Mr. Rangel. OK. You have already disregarded the payroll
increases, right?
Secretary Thompson. That is correct.
Mr. Rangel. Have you disregarded reduction in benefits?
Secretary Thompson. Yes, we have.
Mr. Rangel. Have you disregarded reducing the provider's
obligations?
Secretary Thompson. We have--we are making changes. We are
streamlining them and making them more efficient, Congressman.
Mr. Rangel. Thank you.
Chairman Thomas. The gentleman from Illinois wish to
inquire?
Mr. Crane. Thank you Mr. Chairman.
Mr. Secretary, in your testimony this morning you state,
quote, Medicare should help seniors get better care through
improved information on quality. Medicare should revise its
payment system to reward better performance and encourage
investments that improve the quality of care without increasing
budgetary costs.
And I think we are all supportive of increasing the quality
of care for all beneficiaries, but could you please elaborate
on how this administration would revise its payment system
without increasing budgetary cost to reward performance? And I
am particularly interested in what the quality indicators might
be and how they might be applied.
Secretary Thompson. Well, there are many ways in which we
expect to do that, Congressman. First off, in adding more
preventive health coverage; being able to get to seniors
sooner; more diagnostic treatments; better nutrition and so on,
which we hope to be able to put into new proposals to
strengthen Medicare, would reduce the amount of cost.
Number two, we expect to find ways to automate and put in
place new technologies to make the administration of hospitals
and clinics more efficient; therefore, being able to reduce the
cost.
Number three, we are trying to find ways to simplify the
rules and regulations in the contracting out, in allowing us
more flexibility to contract, which would reduce the cost.
And fifth and finally, we hope with the new technology, we
would be able to reduce doctors' mistakes and be able to
improve the quality.
All of these things are under review. A lot of these things
are under Committee study right now, and we are expecting to
make a lot of suggestions to this Committee to other Members to
accomplish just what we have pointed out in our principles, and
hope to work with you on a bipartisan basis to develop a
proposal that will strengthen all of the things that I have
mentioned.
Mr. Crane. Thank you, Mr. Secretary. I yield back the
balance of my time.
Chairman Thomas. Thank the gentleman. The gentleman from
Florida wish to inquire?
Mr. Shaw. Yeah. Mr. Secretary, it is interesting because I
had turned to the same part of your statement that Mr. Crane
just read from, talking about better performance and
encouraging investments to improve the quality of care. One of
those matters we introduced last year and was passed and it has
to do with digital mammography. Mr. Kleczka and I worked
together to have that included so that the fee structure for
mammography would reflect this added technology. Obviously,
that is an added cost initially. But from the answer that you
just gave to Mr. Crane, you certainly acknowledge that better
and earlier diagnosis of these things can, in the long run,
actually give us some tremendous savings.
Early diagnosis, particularly in the area of cancer and
breast cancer, is tremendously important. It can have the--it
can make the difference between a lumpectomy and a mastectomy.
It can mean the difference as to what type of after care is
necessary with some of the very tough areas as chemotherapy and
radiation and all of those things that follow that.
So I am very much encouraged by your comments with regard
to the--with use of the new technology and recognizing that we
need to really work and get into that.
Another area that I think we need to take a good hard look
at is, again, in the area of dealing with women and being sure
that they have access to the very, very latest. When you get
into pap smear tests, I think these are very important for
particularly some women who are considered to be high risk.
Every other year is not enough. We should work toward putting
women who are at high risk and allowing them to have that test
every year.
I believe under current law that men certainly can have the
prostate examination every year, and when you get to be a
certain age, I understand that if you live long enough every
male will have it.
Secretary Thompson. That is correct.
Mr. Shaw. And I think that, even though I understand that
age doesn't necessarily increase the risk of cervical cancer,
that we should recognize, though, that some women who are at
greater risk should have more frequent tests. Would you like to
comment on that?
Secretary Thompson. Well, thank you so very much,
Congressman. Let me just quickly respond to a couple of your
points. First, in regards to digital mammography and the new
digital machines, it is one of those breakthrough technologies
that we need to do more about, and we need to be able to use
the Medicare system and the hospital system for best practices.
And what you and Congressman Kleczka have done in regards to
that, I compliment you.
And one of the final things I did as Governor of the State
of Wisconsin before I left to take this job is to purchase two
new digital mammography machines for the University of
Wisconsin hospital. And it's the right thing to do.
With regard to women's health it is so important for us to
expand women's health in America. Because women, and as head of
households, purchase--80 percent of the medical dollars are
spent through their purchases. We have to make sure they are
well informed and, through a good women's health program at the
national level and at the State level, I think we can make a
lot of progress.
The third and most important that you were mentioning is on
preventive health. And this Committee has been acknowledged as
one of those Committees that has been very visionary in looking
forward to find ways to come up with preventive health
measures, and I compliment the Committee for doing that. I'm
trying to develop in the Department a whole new philosophy on
preventative health. I think it's the most important thing that
we can do to hold down medical costs in the future, and to
develop reimbursement systems along encouraging preventative
health measures. And I can't tell you--this is an item that I
have a great deal of passion for and I am very pleased that you
raised it because it is something we badly need, and I am very
pleased that the President put this in as one of his main
principles on the redevelopment and strengthening of Medicare
systems in America.
Mr. Shaw. I just have one other comment before I yield back
my time. And it's wonderful to have someone like you who
recognizes the importance of Governors and States and
coordination with us at the Federal level. You certainly were
invaluable in rewriting the welfare laws for this country,
which has profited so many of the less fortunate and made them
productive human beings again. And I recall working with you
and you were very, very appreciative of the fact that we were
reaching out to the Governors, and there is a world of
knowledge out there and a world of experience and I am glad to
see you where you are.
Thank you, Mr. Secretary, and I yield back.
Secretary Thompson. Thank you very much, Congressman Shaw.
Chairman Thomas. Thank the gentleman. Gentleman from
California, Mr. Stark, wish to inquire?
Mr. Stark. Thank you Mr. Chairman.
Mr. Secretary, getting back to this drug card, it's my
understanding that these applications like the discount card
program require a clearance under the Paperwork Reduction Act,
and there is a note on your Web site that the application is
pending OMB approval; and you're saying the applications are
due from these drug companies on August 27. That is 45 days.
But your internal documents suggest that following normal
procedures, it would take 160 days for the--for you to go
through the Paperwork Reduction Act process. How is that--how
do you work that out?
Secretary Thompson. Well, this----
Mr. Stark. Are you avoiding the Paperwork Reduction Act?
Secretary Thompson. No, we are not, Congressman. But what
we are doing is we are using this as a payment measure, a
reimbursement thing.
Mr. Stark. No. I just wondered--any of these plans
requiring the Paperwork Reduction Act, according to your own
internal memos, about a minimum of 160 days, and I just
wondered how you were getting it done in 45 days rather than
160.
The other question is that you are required under the
Federal Advisory Committee Act to publish notices in the
Federal Register at least 15 days in advance of holding a
meeting that comments on this. And I am wondering if you or Mr.
Scully met with any of the pharmaceutical benefits managers
(PBMs), Merck, or Managed Care LLC, or Express Scripts, or
Caremark, or WellPoint prior to working out this plan.
Secretary Thompson. Absolutely not.
Mr. Stark. You never met with any of them.
Secretary Thompson. We have not, Congressman. We met with
them the day that--I believe Tom Scully, you can ask him
directly. But I believe the administrator, Tom Scully, met with
them on the day before it was announced. But in regards to
pulling together the program, it was done internally,
Congressman.
Mr. Stark. No lobbyists, no Debra Steelman, no lobbyists
from Pharma, you never meet with anybody----
Secretary Thompson. I can only speak for myself. I did not,
Congressman Stark. This was something that----
Mr. Stark. You know that would be against the law, don't
you?
Secretary Thompson. Yes, I do, and I did not meet with
them.
Mr. Stark. We will get Scully later in deposition. I would
rather, if you want to swear him, I would be glad to bring him
to the mike.
Mr. Stark. Mr. Secretary, one of the things you are talking
about in combining these trust funds is a common deductible.
How much would you estimate the new deductible would be?
Secretary Thompson. We have not costed it out, Congressman,
at this point in time. We want to work with you and other
Members of this Committee. We have set out the principles. We
would like to have a unified discussion. But we have not----
Mr. Stark. Would you agree it should be kept below $100.
Secretary Thompson. I don't want to make that statement
today, Congressman.
Mr. Stark. Because it is estimated that it would be $400,
and 80 percent of the Medicare beneficiaries use Part B where
they only pay $100 deductible. Only 20 percent of the Medicare
beneficiaries use Part A and they got an $800 deductible. So if
you raise that common deductible above a hundred bucks you are
basically penalizing four out of five beneficiaries by raising
their deductible. Are you aware of that?
Secretary Thompson. I am fully aware of what you are
saying, Congressman Stark. I would also like to point out what
we are trying to do, we are trying to strengthen Medicare. We
are trying to add some additional benefits. We are also trying
to have one deductible.
Mr. Stark. How do you do that without putting any more
money into the program? What kind of magic--I mean, I
understand this Buck Rogers card here won't save anybody any
money, but how do you strengthen the program without either
cutting benefits as the managed care plans do today to make a
profit, or cutting back the payment to providers, because you
are not mentioning putting any more revenue in this program?
You are not suggesting--you are cutting benefits or cutting
back payments to providers in an effort to privatize the plan,
to free up the general revenues because you want to--you are
not talking about a specified source of money for the
Department of Defense, and yet we are going to fund them every
year.
Why should part B have some specified source? Why shouldn't
we just understand that since 1965 seniors have come to depend
on Medicare and that the Republican administration wants to
privatize it, turn it back into an insurance program to benefit
the American Association of Health Plans and stick it to the
seniors. That is what your plan does, and that is what these
principles do, and you know it full well.
Secretary Thompson. Congressman Stark, I would like to
respond if I might be able to. You can use your harsh language
any way you want to try and demonize this plan. I am here to
tell you that one of the number one things that the President
said is that every senior should be able to be covered. Every
senior should have a choice to be able to stay in the plan that
they want or the newly defined plan. And they will have that
choice, just like you have a choice, like I have a choice and
everybody that is covered.
We did not want to turn this into a partisan thing. I think
we are coming in front of you and we are here to offer what we
think is a very constructive suggestion. I would love to be
able to work with you, and I would love to be able to tell you
and I am as passionate about helping seniors as you are. And I
am a Republican and you are a Democrat. And I think we should
forget about that when we are working on this subject and see
if we can't come together and come up with a very constructive,
positive, new, strengthened Medicare with additional benefits.
And if you are willing to do that, I certainly am, and I think
we can accomplish both of our objectives.
Chairman Thomas. The gentleman's time has expired.
Mr. Stark. The indications so far haven't been that. You
haven't been forthcoming with us. You have had secret meetings
that the Democrats haven't been included in, and that is no way
to start out on a bipartisan basis.
Secretary Thompson. I have met with many Democrat
Congressman and Senators. In fact, I am meeting with a lot of
them this afternoon. Most of the people that I have met with
have actually been D's rather than R's on this subject.
Chairman Thomas. The gentlewoman from Connecticut, the
Chairwoman of the Health Subcommittee, wish to inquire?
Mrs. Johnson OF CONNECTICUT. Thank you. I would like to
welcome you, Mr. Secretary, to the Ways and Means Committee and
thank you for working with us on a lot of administrative
reforms that frankly are extremely important to the sheer
survival of the small providers out in the rural areas, the
small towns, and the neighborhoods of our cities. If we don't
move aggressively on administrative reform, we will not have
the delivery system that our seniors need and all other
Americans depend upon.
But I also want to commend you on the vision you put before
us. Now that isn't to say that we all agree on exactly how we
can get there, and it also isn't to say that we all agree on
the pace at which we can get there. But not to acknowledge the
bigness of the vision that is embodied in your testimony and
that the President is discussing is to weaken ourselves,
whether we are Democrats or Republicans, because we have had a
terrible time providing preventative benefits to seniors under
Medicare under the old system.
You know it took us 5 years to get mammograms. That is just
terrible. You know, pap smears last year. It is disgraceful. So
your focus on preventative health is something we have got to
take seriously and think through seriously.
The other thing that you have offered that neither party
has had the courage to talk about is that a catastrophic level
prescription drugs is nice but a catastrophic protection
against all health care costs is frankly what the future is
going to demand of us in Medicare. And if we can get and--and
we don't know yet and Mr. Stark doesn't know and I don't know
to what extent we could offer the seniors of America real
protection against a catastrophic level of expenses, not just
prescription drugs, across the board. Because under current
law, they are exposed to a catastrophic level of nursing home
expenses and their only salvation is to spend down to poverty
and Medicaid. So don't think that for a moment Medicare offers
our seniors health care security. It doesn't. They just don't
know it. So the idea that we could offer seniors catastrophic
protection is something we do have an obligation to look at,
and truthfully we know from the private sector that
responsibility for first dollar coverage does reduce overall
costs.
Now, not all seniors can afford a higher deductible. We
have an obligation to look at that, just like we have always
looked at the ability of poor seniors to participate in
Medicare and we currently cover all the deductibles, all the
premiums, all the costs for a lot of low income seniors. But
for us as a Committee not to be even willing to look at and
entertain the thought that with a higher deductible we might be
able to provide a level of protection that has never been
offered under Medicare and that in modern medicine and in
modern life is becoming more than more essential would be
irresponsible. Whether we do this through an option and how we
move there would be irresponsible.
I don't know how much we can do this year, but I thank you
for putting on the table a broader vision of health security
for seniors and a bigger view of prevention. Because if we
don't get there, to just say to seniors that the old program is
what you should love and cherish is a totally inadequate
response, and the problem isn't just prescription drugs.
So I look forward to working with you and I hope every
Member of either party or all three parties will keep an open
mind as we go through this. We may not be able to do all this
this year. But not to recognize that there is something bigger
than the Democrats' prescription drug program or our
prescription drug program would be a crime. And secondly, not
to recognize that neither our prescription drug bill nor the
Democrats' prescription drug bill provided one penny of relief
for seniors for 2 years is also irresponsible. So I have been
talking with a lot of groups for 2 months about how we could do
a discount card.
I am glad to see you using executive authority on behalf of
all the seniors. The preceding administration used it to use
unemployment compensation funds for hitherto unprecedented
uses. So--and they didn't talk to us about that. So you know, I
am just delighted that you put on the table that seniors can't
wait for some relief and that we have got to--as important as
our work is this year we have got to begin to look at 5 years,
10 years, 15 years, 20 years and the kind of health security
America's seniors will need.
I am sorry to have used my questioning time for a
statement. But in light of Mr. Stark's comments I just think it
is imperative that we try to lay aside the partisan
differences. The issues are simply too challenging, and there
isn't anyone on this Committee who knows the answers. So I urge
all of us to work together and to work with you, Mr. Secretary.
Secretary Thompson. Can I make a quick comment,
Congresswoman Johnson? I couldn't agree with you more. This is
going to require bipartisan support if we are going to do it.
And it is a great opportunity for prescription drugs, for
catastrophic coverage, and my first love, which is preventive
health, really to look at this sincerely and come up with a
comprehensive thing.
You mentioned something that really I would like to quickly
address, and that is the delivery of health care in America. We
have a delivery system that is straining. And I think it is
imperative that we look at this on a bipartisan basis,
especially trying to develop new technologies for the
prescribing of drugs, for the interaction of drugs, for
admissions into hospitals. So much is being done outside of the
medical delivery system and should be incorporated into the
medical delivery system that could improve it considerably. I
would love to work with you on that.
Chairman Thomas. The gentlewoman's time has expired. The
gentleman from New York, Mr. Houghton, wish to inquire?
Mr. Houghton. Thank you, Mr. Chairman. Mr. Secretary, as
always, it is good to see you. We are lucky to have you, your
experience and your vision, and we are honored to have you
right here today.
I want to go from the macro issues to a more specific
issue. That has to do with rural America. In rural areas like
mine in New York we have had trouble at tracking the
Medicare+Choice plans because reimbursement levels are so low.
I guess the question I have got very, very specifically is are
there things we can do different to make sure that the
competitive system works better in areas with low populations?
Secretary Thompson. We certainly are looking at this very
seriously, Congressman. We are looking at the possibilities
coming up with some demonstration programs and trying to
develop a combination of the fee for service and the Health
Maintenance Organizations (HMOs) and trying to develop maybe a
Preferred Provider Organization (PPO) or some other spinoff
that would be able to allow these individuals to deliver the
choices, but be able to make a profit at the same time. We are
trying to develop many different ways to simplify the forms,
the rules and the regulations that seems to be a tremendous
burden on the Medicare+Choice programs, and so we are doing a
lot of things internally.
I will be coming to you and to other Members with some of
the suggestions that we are working on hopefully to prevent
further erosion of those individuals getting out, but also
allowing for new companies, new opportunities for more choices
for people that live in your congressional district and a lot
of people that live in my State of Wisconsin that have the same
kind of difficulties that you are articulating here.
Mr. Houghton. Thank you very much.
Chairman Thomas. The gentleman from Pennsylvania, Mr.
Coyne, wish to inquire?
Mr. Coyne. Thank you, Mr. Chairman. Mr. Secretary, as you
know, Pennsylvania has a highly effective PACE program, Program
of All-Inclusive Care for the Elderly, a prescription drug
program for seniors over 65 and with low income.
Secretary Thompson. Yes.
Mr. Coyne. And one of the President's principles is that
seniors ought to have the option of a subsidized prescription
drug program benefit as part of modernized Medicare. That is
his proposal. How do you see a subsidized prescription drug
program through Medicare affecting State run programs like the
one I pointed out, the PACE program in Pennsylvania?
Secretary Thompson. I don't see it having much of an impact
per se, Congressman. I would look at it as a way in which it
would allow the seniors better coverage. If the State of
Pennsylvania doesn't change it, we will not in any way
adversely impact on the PACE program in Pennsylvania. And so it
would be an added--I don't know all the details of the PACE
program, I am familiar with the generalities, but I would think
that our--depending upon how we come out of Congress, but what
the President is envisioning and what I am talking about today,
this would be through the Medicare system and would be in
addition, an additional resource for your senior citizens in
Pennsylvania.
Mr. Coyne. So with a highly effective program like the PACE
program you would see no negative effects?
Secretary Thompson. I do not, Congressman. I would see
nothing but pluses.
Mr. Coyne. On another subject, is the Federal government
willing to stand behind the drug discount cards? To what extent
will the Federal government stand behind them and what sort of
consumer protections or remedies will be available for the
benefits and the discounts if the discounts are not delivered?
How would you remedy anything that would?
Secretary Thompson. Congressman, we are going to have an
annual review. We are going to have an annual review so that we
would be able to find out if there are complaints and we could
decertify those providers. We are not putting any Federal
dollars into it. We are giving the Good Housekeeping Seal of
Approval for Medicare.
It is giving the block of 40 million people the opportunity
to join a very vigorous robust PBM that will be able to go in
and negotiate the best discounts possible. The pharmacist will
enroll, we will be able to look and supervise them. If they are
not measuring up, we will be able to suspend that enrollment in
the future. So there would be an annual review that will take
into consideration any complaints, any problems that develop.
That is where we are going to have the control.
And finally, and one thing that is being overlooked, is we
are going to a year from now start publishing, start publishing
the cost of the drugs and the lowest cost. So that your senior
citizen in Pennsylvania will be able to look at this whole list
of 100 drugs and find out the prescription and find out the
other substitutes, the other generic drugs, and be able to pick
which company is doing the best and then after 6 months could
choose that company.
Mr. Coyne. How would you see that working inasmuch as the
senior citizen or the recipient, the beneficiary would be able
to get that information? How would that work?
Secretary Thompson. It is going to be on the Internet. We
are going to have a 1-800 number, and we are going to have it
staffed 24 hours a day, 7 days a week in the former HCFA
office. I fine everybody in my office one buck, so I will have
to pay myself. Now the Center for Medicare Services. And we are
also providing and requiring the PBMs to do the same thing. So
there is many avenues of information that will be given out for
seniors to receive.
Mr. Coyne. Thank you. Thank you.
Chairman Thomas. Thank the gentleman. The gentleman from
California, Mr. Herger, wish to inquire?
Mr. Herger. Thank you very much. It is very refreshing to
have you with us, Mr. Secretary. President Bush's principles
call for Medicare legislation to, quote, strengthen the
program's long-term financial security. Given that, absent
reform, combined Medicare spending will quadruple from 2.25
percent at growth domestic product today to 8.5 percent of
gross domestic product, GDP, in 2075, changes are obviously
needed. Can you tell us more about what the administration is
recommending with regard to solvency?
Secretary Thompson. What we are hoping for is that we can
work with you, Congressman, on a bipartisan basis and fill out
the details of our principles and be able to bring in some cost
efficiencies to make sure that the senior is going to be able
to receive all of their benefits and the coverages. By
competition and giving them the choice of staying in the same
fee-for-service program that they now have or a new competitive
program, we feel that we are going to be able to put this on
financially secure ground that is going to be able to continue
Medicare for your children and grandchildren the same as for
mine.
Mr. Herger. Well, I thank you very much, and I think what
is so very important, and you certainly mentioned this earlier
in your testimony, is that this challenge is not a Republican
or a Democrat or----
Secretary Thompson. It isn't.
Mr. Herger. Conservative or liberal challenge. These
challenges, the only way we are going to meet them is by all of
us working together to solve them. Obviously the longer we wait
it becomes more difficult. So I do thank you and the
administration for your efforts in this area.
Secretary Thompson. Thank you very much, Congressman. You
are absolutely correct, we need to do it on a bipartisan basis.
There are several things that need to be improved. And working
together in a bipartisan way, we could really strengthen
Medicare, make it modern and give seniors the kind of coverage
that they really are requiring and requesting. And that of
course is catastrophic coverage. That is preventative coverage
and it is prescription drug coverage, the three main things,
and we can do it together and I think we would all feel very
proud of ourselves if we were able to do that.
Mr. Herger. Thank you. I yield back.
Chairman Thomas. Thank the gentleman. The gentleman from
Louisiana, Mr. McCrery, wish to inquire?
Mr. McCrery. Thank you, Mr. Chairman. And thank you, Mr.
Secretary, for sharing your time with us today. I would like to
elaborate a little on my colleague from California's line of
questioning with respect to the budget and the impact that
Medicare will have on future budgets in this country. He said
accurately that it is predicted that Medicare will grow to 8.5
percent of our GDP if no changes are made by 2075. Just to put
it in a little different perspective, CBO has testified before
this Committee that if no changes are made in Medicare,
Medicaid and Social Security, by 2075 those three programs will
consume over 100 percent of the Federal budget if the Federal
government continues to spends about 18, 19 percent of GDP. So
you know, it is just incredible to me that this Congress has
taken this long to join with some administration, any
administration, and promote meaningful reform of not only
Medicare but Medicaid and Social Security.
So I applaud the efforts of this administration to work
with both sides of the aisle, Democrats and Republicans, on
common sense reform that not only will preserve Medicare for
the seniors of today and for me and you and the baby boom
generation, but for future generations of Americans, both
seniors and not so seniors.
I want to quote from the President's principles that you
outlined. ``When popular alternative plans are established, the
government's contribution to any one Medicare plan should
eventually be tied to the average cost of all Medicare plans,
preventing any one plan from driving up the costs that all
Americans must pay.''
Can you expound upon that a little bit and tell us why it
is important we move to a competitive model?
Secretary Thompson. Just like everything else. Competition
and more choices allows for efficiencies to be developed. But I
want to make sure--you know, everybody is going to say, well,
that means they are going to do away with the fee-for-service
program. Absolutely not. The President, that is his number one
principle outside of prescription drug coverage, is that
seniors will be able to continue their same fee-for-service
program if they so desire. But the other programs that are
going to have a lot of efficiencies built in are going to give
seniors the same choices they had before they became seniors,
the same choices that you have as a Congressman, the same
choices I have and all the employees in the Department of
Health and Human Services. When you have that kind of
competition, that kind of choices, you can come up and develop
the best health insurance program for yourself and your family,
and that is what we want to do for seniors. We want to
modernize it so that seniors can choose the best program, and
if they can save money in the process, so be it, and they can
pocket that. And if they want to continue on with the same
Medicare Program that they have now, that is fine.
But that is the beauty of what the President is pointing
out. It gives them those choices and building in those
efficiencies and that competition depending upon what the
senior wants to do.
Mr. McCrery. In fact, Mr. Secretary, we know in other areas
of our economy that competition not only provides more choices
for our society but it promotes innovation, it promotes
efficiency and it promotes better pricing for the consumer. And
isn't that part of the administration's plan, to make sure that
Medicare along with Social Security and Medicaid doesn't bust
the budget, so to speak, in the out years, driving cash in the
general budget from national defense, from highways, roads,
environmental protection, courts, all the other things that the
Federal Government must fund?
Secretary Thompson. That is very true, and that is why the
President feels so strongly about the need to do it now.
Everybody is talking about prescription drug benefits, both
sides of the aisle, in fact all three political parties now,
and we have an opportunity with that kind of focus to really do
what is right and develop a strong Medicare system with
choices, with additional benefits and with one deductible. That
is going to pay the seniors so many more dividends and put this
program on a financially secure footing that is going to last.
And we have this opportunity, and I hope that we work together
collectively and with bipartisanship to get this job done, and
I thank you for your comments.
Mr. McCrery. I applaud your efforts.
Chairman Thomas. The gentleman from Michigan, Mr. Levin,
wish to inquire?
Mr. Levin. Thank you. Welcome, Mr. Secretary. I think your
passion is laudable. I just want to say the more I hear and
take at face value these passionate statements about preserving
Medicare, about a prescription drug cost, about the need for
prescription drugs, the more concerned I am how we are taking
away the resources that would be needed. It is inconsistent in
my judgment to talk with passion, and I believe it, about
preserving Medicare and a new prescription drug program and
then passing programs or proposals here that are going to
obviate the availability of resources for either. And it is
clear as we continue to pass bills through this Committee and
pass bills through this Congress that we are taking away the
resources to carry out the very objects about which you have, I
think, deep and sincere passion.
But I don't want to put you on the spot on that. I want to
instead ask you about some of these principles and what they
mean. The first principle, one, all seniors should have the
option of a subsidized prescription drug benefit as part of
modernized Medicare. Does that mean in Medicare?
Secretary Thompson. Yes.
Mr. Levin. And that means a prescription drug benefit in
Medicare for those who are on fee-for-service as well as other
options?
Secretary Thompson. The details have not been worked out
yet, Congressman, but it is our strong feeling that every
American should have prescription drug benefits and the
opportunity to be covered and those in low income should be
subsidized to make sure that they have it.
Mr. Levin. But still you are saying as part of that really
means in a modern Medicare system. So fee-for-service as part
of that there would be a prescription drug benefit?
Secretary Thompson. There will be a fee-for-service with
prescription drug benefits, absolutely.
Mr. Levin. Okay. Next in that regard I want to ask you, and
leave a little time for discussion of preventative care,
principle three is today's beneficiaries and those approaching
retirement should have the option of keeping the traditional
plan with no changes. It says those approaching retirement. Is
the implication of that statement that the present traditional
plan might not be available in a reformed Medicare for those
who are not seniors today or not approaching retirement?
Secretary Thompson. That decision has not been made,
Congressman.
Mr. Levin. It is left open by the way you have it worded.
Secretary Thompson. I know it. We are trying to put out the
principles and we are trying to work with you on the details to
come up with that. But the President wants to make sure that
all seniors that are approaching that age and are in or under
Medicare right now are going to be able to have their same
program.
Mr. Levin. By that guaranty, that principle doesn't
guarantee the traditional plan for those who are not in those
two categories?
Secretary Thompson. We think that the new programs,
Congressman, are going to be so much superior or that most
seniors will want to take the best program for themselves.
Mr. Levin. But you are hedging.
Secretary Thompson. I don't want to hedge. I am just
telling you that those decisions have not been made.
Mr. Levin. So the way the principle is stated, it does not
assure the present conventional plan for those who are neither
seniors nor approaching retirement. That is the way the
principle is written?
Secretary Thompson. That is the way the principle is
written. But it is also open-ended to allow for this Committee
and Members of Congress to change and fill in the details. We
don't want to be so prescriptive that we would come up here and
have you criticize us, Congressman--I say that in a very
laudatory way--that you would criticize us for not giving you
the opportunity to have input. We want to be able to have the
principles general enough so that you and all the Members will
be able to have input so that we can develop a true bipartisan
proposal.
Mr. Levin. I just want to emphasize when it is worded that
way, it sends a clear message that there is an assurance for
some but not for others. And I know my time is up. So I will
ask you, if you would, to take another look at the letter that
Mr. Foley and I sent you about preventive benefits, cholesterol
and hypertension screening. The response we received to this
area that you feel so deeply about was a very general response.
Secretary Thompson. Okay.
Mr. Levin. Maybe Mr. Foley, if he is here----
Secretary Thompson. Can you tell me when the letter was? I
will take a look at it and call you next week about it because
preventative health is something that we need to do in America.
Mr. Levin. It was March 8.
Chairman Thomas. Thank the gentleman. The gentleman from
Michigan, Mr. Camp, wish to inquire?
Mr. Camp. Thank you, Mr. Chairman, and, Mr. Secretary, I
appreciate you being here and I appreciate your testimony. I
commend you for what you are trying to do. Your written
testimony I believe is excellent, and the time is now, because
this issue gets more difficult to resolve as time goes on, as
you have mentioned. And over the years we have had a lot of
battles on a lot of issues in this Congress, whether that is
balancing the budget. Some said we do that and some said we
couldn't balance the budget and have tax relief, some said we
couldn't have welfare reform, that that would be a race to the
bottom. And clearly your optimism and can-do attitude here in
trying to positively move forward on an issue that is critical
to our seniors I think is important, and I commend you for
doing that.
I think in terms of the focus I am interested in is
particularly this principle of a modernized Medicare Program
which will help provide better coverage for seniors and help
assist with preventative care and serious illness. Could you
expand on the opportunities there in the President's reform
proposal, please?
Secretary Thompson. We look at this system as a way to
bring in some competition and choices.
Chairman Thomas. If the Secretary would suspend for just
one moment. There is a vote on. It is a vote on the rule on
H.R. 7. The Chair intends to continue the hearing through the
voting process. So if Members who don't anticipate being called
rather quickly for questioning would like to go vote and come
back, we will continue the hearing. Thank you.
Secretary Thompson. Thank you. And those choices we think
are going to bring a lot of innovations, as you have indicated.
We think that the Federal Employees Health Benefit Program is
one that we would like to incorporate into the Medicare system.
And as Blue Cross and Blue Shield is required under the law, in
order to bid on the Federal Employees Benefit Program has to
have seven programs in every county in America. And I would
love to see the seniors in America to have seven choices of
what could be the best program to be developed for that
individual person, whether it be in Kentucky, whether it be in
Florida, whether it be in New York or Wisconsin. And I think
that is what we are really driving at. I think it would
benefit. I think seniors would respond and say, you know, I had
those choices before I became 65 and I will have those choices
again. I really appreciate that opportunity.
Mr. Camp. I also think in the prescription drug area as you
testified, 27 percent of seniors don't have prescription drug
coverage. There has been pretty broad consensus in the
Congress, I would say an overwhelming majority of
Representatives and Senators feel that a modernized Medicare
Program must have a prescription drug component in it, and I
think that is a critical part. I commend you for having that in
your plan as well. And even though I appreciate your comments,
particularly coming from a rural area in Michigan, the idea of
having the choices available to seniors in every county, and in
my county I am able to get assistance through the Federal
health benefit plan and able to get the care for myself and my
family, I think if we could do that for seniors it would be a
very positive step forward.
So I thank you for your testimony and look forward to
working with you on this. Thank you.
Chairman Thomas. Thank you. Does the gentleman from
Minnesota, Mr. Ramstad, wish to inquire?
Mr. Ramstad. Thank you, Mr. Chairman. Mr. Secretary, always
good to see my neighbor from Wisconsin. I appreciate the good
work you are doing. I want to thank you and the President for
providing Congress with an excellent framework for reforming
Medicare, including the prescription drug benefit that we know
is needed.
As you know, Mr. Secretary, I represent Minnesota's medical
alley, home to some of the best medical technology companies in
the world. I have been touting the significant quality and cost
saving benefits of technology for years, was very encouraged by
the President's emphasis on strengthening Medicare, as he said,
to ensure the new generation of medical technology is available
to seniors, which I think is absolutely critical.
But I must say, Mr. Secretary, I am concerned that the
CMS--I have to quit saying HCFA--CMS, the Center for Medicare
and Medicaid Services, concerned that that there is a proposal
by CMS to reduce the reimbursement for international
classification of diseases (ICDs) in the inpatient, ICDs being
the implantable cardiovascular defibrillators like the one that
was recently implanted in Vice President Cheney which was, as
you know, made in Minnesota in fact.
I believe our seniors deserve the same access to this life
saving technology as the Vice President received. And recently
two of my colleagues Ms. Dunn and Mr. Hayworth joined me in
asking CMS to delay this reduction in reimbursement for ICDs in
the inpatient setting because they are already notoriously
underreimbursed. And I am sure you will agree that reducing the
reimbursement for these life saving devices will limit patient
access, and that is not the message that either Congress or the
administration would want to send to the seniors of America.
Can you tell me today if CMS will delay this change?
Secretary Thompson. I can't tell you without looking at it,
Congressman. But I certainly can tell you that I will look at
it and get back to you the beginning of next week. And I can
tell you that I will lean heavily on them and I am fairly
confident that we will come up with the right answer. But I
would like to point out what you are saying is exactly what
needs to be done. We have got to get more new technology into
the health care system. This is something that is going to
drive down costs, impact patient safety and quality of care,
and it is going to be in the lines of prevention that is
important.
The President believes this. I am passionate about it, as
you are, and I thank you so very much for bringing it up,
because it is something that we badly need. And if CMS is
making a mistake on this I am confident we will change it.
[The following was subsequently received:]
In order to ensure that Medicare pays appropriately for
defibrilator implants, CMS is not delaying this change. I agree that
Medicare beneficiaries deserve access to life saving technology, and I
also appreciate your concerns, as well as those of other Members, that
Medicare pays appropriately for the implantation of defibrillator in an
inpatient hospital setting. CMS reviewed the most recent data available
on the relative costs and charges of services performed during an
inpatient hospital stay, and these data indicated that the cost of
implanting a defibrillator was lower than the cost of other cardiac
procedures in Diagnoses Related Groups (DRGs) 104 and 105. As a result,
CMS separated defibrillator implant cases from other cases involving
cardiac procedures in those DRGs. This lowers payment rates for
defibrillaor implant cases, and increases payment for other cardiac
procedures in DRGs 104 and 105, effective October 1, 2001. CMS will
continue to examine the costs of cardiac procedures and make future
adjustments in order to ensure that we continue to pay appropriately
for these services.
Mr. Ramstad. I certainly appreciate that can-do spirit and
your commitment to get back to us on that in such speedy
fashion. It would be a horrible message to send that the Vice
President receives this and seniors don't have the same access
to that life saving technology. And Medicare seniors, as you
agree, do deserve the same access to technology as the rest of
us, as those of us who are nonseniors, although I think
technically I probably qualify now for that status.
I want to ask you also about the overarching problem with
respect to managed care reimbursement and the arcane and
archaic and unconscionable adjusted average per capita cost
(AAPCC) formula. I have raised this issue with you before, as
you know. I believe the President's principles of long-term
financial security for Medicare and high quality health care
for all seniors are absolutely vital. But I don't think they
can become a reality until we reform the highly flawed
reimbursement formula for Medicare managed care. And you know
we made some improvements at least in statute, but States like
mine, Minnesota, yours, Wisconsin, Mr. Nussle's, Iowa, and so
many States that deliver high quality health care but have done
it in a cost efficient manner are penalized by this arcane,
ridiculous formula that is counterproductive, that penalizes
frivolity and waste instead of rewarding States that have
delivered high quality health care in a cost effective way.
So I look forward to working with you and my colleagues to
reform the reimbursement formula. I think we have to scrap the
current formula so that seniors in all States across America
have access to quality cost effective care. I assume I can
count on your commitment to work to bring equity to Medicare
reimbursement.
Secretary Thompson. Congressman, all I can tell you is you
sound like I would be spouting off when I was Governor about
those formulas.
Mr. Ramstad. Keep sounding off as Secretary.
Secretary Thompson. I know exactly what you are talking
about. I have testified in my former life on that particular
subject, and we are looking at it and I welcome your assistance
and your cooperation, and I am confident we can improve it.
Mr. Ramstad. The final statement, Mr. Chairman, if we can
do as you suggest, take off the Republican hats, take off our
Democrat hats, and even our Independent hats, work in a
bipartisan, pragmatic, common sense way, we can get it done
this year. We can; don't you agree?
Secretary Thompson. I really believe we can and I think we
should.
Mr. Ramstad. Thank you.
Chairman Thomas. Mr. Secretary, we have been informed from
the floor we have two votes consecutively, which means it is
going to be a while for us to come back. We probably will be
able to resume at 12:15. Does your schedule permit you to wait
and then perhaps entertain additional questions from Members?
Secretary Thompson. Chairman, I have never said no to the
Ways and Means Committee, even though it will be difficult.
Chairman Thomas. I appreciate that. We are going to try to
move through. And therefore, rather than recess at this time I
will recognize the gentlewoman from Connecticut and she can
proceed, and if any Members are willing to come back we might
be able to loop them through. But we are under 5 minutes on
this vote. Then there will be another vote following.
I thank the Secretary for his indulgence. The gentlewoman
from Connecticut.
Mrs. Johnson OF CONNECTICUT. [Presiding.] I thank the
Chairman for his courtesy. I voted early so we could try to
keep this going throughout the votes, but because of the
consecutive votes we can't do that. But having already voted
and having used my earlier time to express my opinion on a
number of issues, I do want to just put on the record the fact
that this issue, this possibility of merging the A and B
deductibles, needs to be looked at also from the point of view
of what would be the consequences of merging the A and B
systems, because as we look at regulatory reform we are
beginning to run into the snaky consequences of our past
actions. And one of our past actions was to move part A costs
to part B. So now you have, for instance, home health services
billed under both programs and it is very complicated for the
providers to know whether they are billing under A or B, and
this will be a bigger and bigger problem.
So what I would like to ask you is if would you give us
some help in looking at what would be the provider impact of
merging those two systems? What would be the administrative
savings of merging those two systems? Because Mr. Stark's
concern with cost is genuine and where the resources are going
to come from, and of course in the past that has been a big
reason of why we haven't done a better job of preventative
health benefits.
But when you look at the big picture, all the separate
systems of the A/B services and the administrative structure
that imposes to me makes little sense. But we need a lot more
than just that kind of intuitive response. Would you be willing
to commit the resources to look at what the implications for
both government accountability and provider capability are of
merging A and B administratively?
Secretary Thompson. Congresswoman Johnson, absolutely. It
needs to be done. In fact, we are already working on that, and
we will continue to work on it. It needs to be looked at
seriously. The President believes it is the right thing to do,
as I do. And we will be looking at the pros and the cons and
how we could integrate them together, and we will be working
with you and with other individuals on this Committee to come
up with the best plan.
Mrs. Johnson OF CONNECTICUT. It is important to remember
that no business runs itself this way, separates out one
portion from another. I see we have been joined by my
colleague, Mr. Ryan. I will recognize him.
Mr. Ryan. Thank you, Chairwoman. Secretary Thompson, it is
great to see you here again. I am always sorry that you didn't
get the Wisconsin hospitality here in some of the questioning.
This bitter partisanship is no way to solve a problem as large
as what we are facing. So I hope that in the future you will be
met with good bipartisan dialogue.
I think it is important for people who are watching the
debate to know that if we don't add any benefit to Medicare, it
is still going to go bankrupt. As you showed in your charts,
the baby boomers are coming. And when we nearly double the
amount of seniors we have in this country, it is going to put a
lot of pressure on the existing program. It will eventually
become insolvent in a number of decades, according to the
trustees. In about 2016--correct me if my number is not right--
we are not going to have enough FICA taxes to cover existing
benefits. So it seems like you have an incredible challenge
facing you, which is, one, the benefit structure is not modern
and we are basically giving people 1965 health care in the year
2001 with respect to Medicare.
In Wisconsin, where we come from, the mere fact that people
have to buy these costly supplementals just to fill in all the
gaps that Medicare doesn't currently cover, and that doesn't
even include prescription drugs, is testament to the fact that
it is an unmodern program, no longer comprehensive, and at the
same time we are trying to modernize and improve the benefit
structure like prescription drugs and other important
principles you have articulated, we have this inventory
problem. So we have to fix the solvency, get more money in the
system through price competition, and modernize the benefits, a
real conflicting agenda.
So you really have an incredible challenge. I appreciate
these principles. I just wanted to ask you to clarify something
because those who detract against comprehensive reform often
try to say you are going to lose what have you right now. You
are not going to have the chance of keeping what you have and
you are going to go on this roller coaster. They often say
privatization, but privatization would mean no government
intervention, you are on your own, and that is clearly not the
case.
Could you explain just exactly what kind of choices people
will face under the principles you have outlined?
Secretary Thompson. Absolutely. First off, let me thank
you, Congressman Ryan, for your hospitality, your friendliness
and your job that you are doing for Wisconsin. I appreciate
that as a person that has watched you for several years now,
and I am always impressed.
Second, in regards to your question, people love to have
choices. People love, you know, to be able to pick and choose.
And what we are trying to do is we are trying to set up a
system to say to that senior citizen, who some people like to
scare, that they are going to somehow lose something, they are
not going to lose, they are going to get better. It is going to
be an improved system. And if they want the old system, they
can have it. But the new system is going to provide coverage
for prescription drugs. It is going to provide for catastrophic
diseases which Medicare doesn't provide for. It is going to
expand preventative coverage. So that a senior can go and
decide for himself or herself what is the best program for
them, and it may be better nutrition. It may be more expanded
drug coverage or it may be a larger deductible.
But they will have that choice. But to really allay any
fears that that senior has, they can maintain their existing
program. But we think most seniors when they compare and say
this is my existing program but this is better, seniors are
going to take what is better for them, and that is what we
want. We want to give them the same choices that you have,
Congressman, the same choices that I have. And we can pick and
choose. And let's set it really out there. Seniors are very
bright people. They know what is going to be the best for them.
Let's give them the opportunity to have an expanded benefit
program and let them decide which is the best for them.
Mr. Ryan. That is what is interesting is because we as
Members of Congress, you as a Federal Government employee, we
have a book we get where we have all of these options and
choices of which plans we want, which are comprehensive. We
simply want to give seniors that same choice, and in addition
to keeping what they already have. It kind of goes with the old
metaphor, in Elroy, Wisconsin, when you were growing up, you
may have had just one general store that everyone had to go to
for all their goods.
Secretary Thompson. That was the Thompson Grocery Store.
Mr. Ryan. That is right. I thought you were. You were
monopolists in Elroy. Maybe your forefathers were. You have one
place to do your shopping for your health care benefits, you
are beholden to a monopoly. Right now we have a Federal
Government monopoly for health care for seniors in most places
in America. What we are trying to do here is give seniors more
choices so that the individual, the consumer, the senior
citizen is the center of the health care universe, not the
government, and so that people compete for their business and
as people compete for seniors' businesses and try and win over
their support through their personal choice, we then save
money. We have more competition, which roots up inefficiencies.
That is how it seems like we can get to the twin almost
sometimes seeming exclusive goals of saving Medicare for the
next generation and the generation after and improving people's
benefits.
So when we see some of this partisanship that we have here,
I am sorry you have to come and experience this but if we can
push that aside and work as Democrats and Republicans together
with your leadership, and you have shown in Wisconsin that you
can do that, you can bring Republicans and Democrats together.
I am just excited about you being here leading this effort. I
am excited about your passion. Now the Nation can see the
passion and the abilities that you have shown for us here in
Wisconsin that you can bring Democrats and Republicans together
to save this program. I am just really excited to get going on
this, and I just thank you for what you are doing. I sure hope
we can do this this year.
Secretary Thompson. Congressman, you are so correct. I
thank you for your very generous comments and I appreciate them
very much. But everybody in America knows that we have to have
prescription drug coverage for seniors, and everybody wants to
do that. I haven't found anybody in Washington that has come up
to me and said, Secretary, we don't want to have seniors have
prescription drugs. I have not met that first person. Everybody
believes that, Democrats, Republicans or Independents. And that
gives us the catalyst, the opportunity that doesn't come around
very often in government, to work together like we did in 1965
when the first program was set up to really modernize,
strengthen, expand, give people choices and give them the
opportunity to have the best Medicare system for everyone and
be able to allow it to be able to be passed down to their
children and grandchildren.
As the President pointed out, one of the best cars was the
1965 Mustang but it didn't have power brakes, it didn't have
power steering. But it was a great car. Medicare was a great
health system back in 1965. But in 35 years it has gotten old.
It needs some modernization. It needs some opportunities. That
is what we can do together. I think if we did it together, all
parties, all individuals would look back on this and say it was
the right thing to do. We stood up, we were counted and we made
the tough choices, but look what we were able to accomplish.
Mr. Ryan. Thank you, Mr. Secretary. I also want to thank
you for acting early, because if you look at the bills that we
are moving through Congress last session, the prescription drug
benefit that we talked about, Republicans and Democrats didn't
kick in for a couple of years. Your early action in trying to
administer a partial benefit in prescription savings right now
is the first time to my knowledge that a Cabinet Secretary has
been able to bring us some solutions and some ideas right away
so that we can bring in and extend some relief to seniors
today, not 2 or 3 years from now.
So we do have another vote. I notice that most of our
Committee Members aren't back yet, so I think the Committee
will stand in recess, as directed by the Chairman, until the
vote concludes. Thank you.
Secretary Thompson. Thank you, Congressman.
[Recess.]
Mr. Ramstad. [Presiding.] The hearing will come to order.
The Secretary will be back momentarily. Chairman Thomas is
delayed on the House floor in connection with the pending
legislation, and so we will resume the questions of the
gentleman--welcome back, Mr. Secretary. We will resume the
questions with the gentleman from Maryland.
Mr. Cardin. Thank you, Mr. Chairman. And Mr. Secretary it
is a pleasure to have you before our Committee. And I very much
appreciate your comments on preventive health care because I
agree with you completely. Mr. Thomas and I, in 1997, co-
authored the Preventive Health Care Package, which you referred
to as, I think, visionary, and we agree with you. Will you let
me just alert you to some problems that we are having.
Part of that 1997 package included, for example, colorectal
screening, and we're finding that because of the problem in
getting reimbursement for the office visit, which is necessary
before you have the colonoscopy, that very few seniors are, in
fact, taking advantage of this service because the
reimbursement structure has not kept up with the technology,
and that is the one of the issues I know that you have
mentioned.
So let me just urge you to not only look at ways of
expanding preventive health care services, but also at those
coverage services that are not being fully implemented today
because of administrative problems within the agency. I would
urge you to look at that and try to find ways that we can make
these services available to greater numbers of beneficiaries.
Secretary Thompson. Congressman, if I could, I would
suggest--and I appreciate that. I would love to have you write
me or call me with suggestions, because you believe like I do,
that preventative health care is the way to go in America. And
we need to do more of it, and we need to get our reimbursement
formula set up so that preventative health is really considered
first. And any suggestions you can have I would love to get
them. I love new ideas, and if you have got a way to do it, I
would solicit your information as----
Mr. Cardin. I promise you I will take you up on your offer
and I will work with you on this.
Secretary Thompson. I would appreciate it.
Mr. Cardin. Let me mention another area of health reform
that you did not mention in your statement, and I would
encourage you to take a look at it, and that is graduate
medical education and the way that we reimburse for graduate
medical education. We have the best quality training facilities
in the world, and the way that we currently fund graduate
medical education puts a real burden on the Medicare system
because Medicare pays the lion's share of the cost of graduate
medical education, even though the trained medical personnel
are used by all Americans regardless of age.
I filed what's known as the ``All-Payer Graduate Medical
Education Act.'' It created a structure through which all of
the users of our health care system contribute to the cost of
graduate medical education. It is supported by the academic
centers. The academic centers are under tremendous strain right
now to continue their traditional mission. They receive some
reimbursement for the cost of training, but they also usually
treat the largest amount of uncompensated care patients and the
most difficult patients. And I believe that as part of Medicare
reform we need to look at a fair way to ensure that graduate
medical education is adequately funded in this country without
unduly burdening the Medicare system. I really hope that we can
work together on that issue as well.
Secretary Thompson. I thank you for it. I mean, these are
the kinds of ideas that we need to sit down and discuss in a
bipartisan fashion and come up with solutions and I--all I can
say is thank you for offering it, and I will take you up on it
and I want to work with you.
Mr. Cardin. Let me lastly mention the EMTALA, the Emergency
Medical Treatment and Active Labor Act, recommendations that
you mentioned in your testimony, specifically about the
hospitals and the definition of a hospital for treating
emergency patients. We are making progress in this area. I
think the Patients' Bill of Rights will clarify access to
emergency care requirements within our HMOs. But it is
interesting, if you take a look at some of the problems that
hospitals are facing today, one of the reasons that they are
under tremendous financial pressure is the large number of
uncompensated care that they provide. In addition, problems
with HMO reimbursement have also had an impact on the strength
of the margins of our hospitals.
So once again, it comes back to an issue in which Medicare
is really paying the lion's share of costs of uncompensated
care costs. It is another area that we need to take a look at
reforming, particularly as to how we reimburse the HMOs. If
they are going to use the hospitals that have large amounts of
uncompensated care, that is one thing, because then they are
helping to pay for the cost. But if they are not and they are
still getting the reimbursement under Medicare as if they are
using them, that is creating inequity within the system.
So this is another area in which I just urge that we review
how we pay for uncompensated care within the Medicare system to
make sure that it is fair for all the users of the system.
Those are some of the issues in Medicare reform that cry out
for change and that would make the system far more cost
effective.
Secretary Thompson. It certainly would Congressman Cardin.
And as you know, the EMTLA, the law, the way it is set up, as I
understand it, is that if a hospital purchased a physician
clinic, or has a diagnostic building somewhere outside of the
environs of the hospital, they have to provide for some kind of
emergency care because it is part of the hospital. And so it is
very expensive, very time consuming.
And what we are trying to do, which I announced today, is
we are redefining what a hospital is so that we are redefining
what an emergency room is that would be able to take care and
solve that particular problem. But the rest of the ideas that
you have, let us work together and let us see if we can't do
what is right in order to make the administration, as well as
the delivery of health care much better.
Mr. Cardin. Thank you, Mr. Secretary. I will follow up with
letters.
Secretary Thompson. Please. Thank you I encourage you to do
so.
Mr. Ramstad. The gentleman's time has expired.
Mr. Secretary, just let me say in response to your
appearance here today, to say that you are a breath of fresh
air in this town is a gross understatement, and we certainly
appreciate what you just said and your willingness to work in a
bipartisan way on these problems on reforming medication is
very refreshing indeed.
Next questioning will be by the gentlewoman from the State
of Washington, Ms. Dunn.
Ms. Dunn. Thank you very much, Mr. Chairman, and welcome
Mr. Secretary. It is good to have you before us again, and we
appreciate your being able to carve out enough time so that we
can all go through the questioning. I want to just make comment
on a couple of things we have already heard about. I am
relieved, as I hear you talk about how we are going to
communicate with seniors after we put this Medicare reform
package together. I think there is a lot of fear among folks
who may not be in the position of easily being able to change
their ways, and so to take that fear off, to tell them they can
stay involved in traditional Medicare I think is helpful. But
also the 1-800 number and some of the other ways that we will
communicate with them what their choices are and help them out
in deciding what is best for them, I think that is very
important.
And I also want to say to you that I am refreshed by the
administrative action you have already taken. I want to ask you
a question on it, but the drug discount card, I think, is going
to be wonderful. And we have to carve this into a position so
that we are not putting the onus on prescription drug people or
pharmacy people alone; that it is a fair burden. But to provide
something like that to seniors administratively that could have
been done over the last many years and wasn't, I think that is
just great.
I wanted to ask you to comment on the waivers situation,
because what I am hearing is that under your leadership, we
have been able to do a lot in allowing States to test out, and
I think that is a very good way to experiment and decide how
things are done well. I wonder if you would comment on that.
Secretary Thompson. You mentioned three subjects I really
am happy about. What we are trying to do first is information.
We are trying to hold hearings, just like town hall meetings
that you hold in your State and in your congressional district
through the Centers for Medicare Services, not only with
beneficiaries, but also with providers, so that they understand
the new rules, we can get the feedback and we can work with
them in a much more cooperative fashion. And I told all the
people at Centers for Medicare Services, instead of trying to
find a way to say no, try to find a way to say yes. If you
can't say yes, come up with a denial, but explain it so that
people understand that if they do it a different way they can
get it. That is number one.
Number two, in regards to a 1-800 number, we are doing
that, but we are also going to put out a $35 million publicity
operation this fall to explain to the seniors, you know, what
we are offering, to be able to give them an idea all the
Medicare--we are going to have a 1-800 number and it is going
to be staffed 24 hours a day, 7 days a week. So your questions
can be asked. And we think that is going to be very helpful. We
don't want--you know, it has been--in the past you know you can
demagogue this issue and you can scare seniors. What we want to
do is give seniors the opportunity to know what is available,
and that they are--they are very smart people. They have an
opportunity to pick and choose what is best for them, and that
is what we are trying to do.
In regards to the prescription drug card, we don't want to
take it out on the pharmacist. We want to be able to go to the
pharmaceutical companies and with the power of 40 million
subscribers, you are going to be able to get a good discount
from the pharmaceutical companies and be able to pass that on
through the pharmacists to the individual senior citizen. And
that is what the program is all about.
Ms. Dunn. Could you, Mr. Secretary, talk about waivers for
a moment?
Secretary Thompson. Waivers, when I started, we were
about--we had about 632 waivers and amendments to State plans
that were behind. And I made a dedicated decision that we were
going to clean up the backlog and make prompt decisions. And I
am happy to be able to report to you, Congresswoman Dunn, that
as of September 1st, we should be completely cleaned up of all
the backlog and be able to proceed and be able to make
responses to State governments within 90 days, so that they can
move forward.
I come from that background as you know, and I want to be
able to give States the flexibility. Your State of Washington,
you know, your Governor, Gary Locke, has got some innovative
ideas. They should be able to develop better programs. Let us
see what works and then let us take what is best from
Washington and export it to other States and other governmental
districts and improve the health care system. And that is why
it is important for us to move rapidly and make quick decisions
and decisions that require neutrality as far as finances, but
flexibility to give the States the opportunity to move forward
with new ideas.
Ms. Dunn. I appreciate that a lot. I think that is amazing
because what we have heard is some of those waivers have been
hanging around since the mid 1980s. And for you, without your
full cadre of appointed positions completed yet, to be able to
move so quickly, I think is really a great first impression for
some of us.
I want to just follow up with a sort of a question that you
may not even want to handle, but some of us on this Committee
also do a lot of tax relief legislation. In 1993 the budget
increased the base of--for seniors of what can be taxed in
their Social Security income from 50 percent to 85 percent.
Seniors now are paying taxes on 85 percent of their Social
Security income. Those dollars were taken by the then-President
and put into the Medicare fund so it would be very hard for us
to get those dollars back to reduce that rate again.
Is there any way you could see tying a reduction in the
basis of Social Security funds that are taxed to Medicare as we
go through this process? Is that a long shot or is that
something we could think about doing?
Secretary Thompson. I haven't looked at it. I don't want to
make a snap decision on it. But I would be more than happy to
review it and get back to you if that would be permissible.
Ms. Dunn. It was an idea that came up in the last few days
and I think it might be something we will want to do. It may be
too expensive, but we really want to get those dollars that are
taxed for seniors living on Social Security down as quickly as
we can. Thanks, Mr. Secretary.
Secretary Thompson. Thank you so much.
Mr. Ramstad. The gentlewoman's time has expired. The
gentleman from Washington State, the good Dr. McDermott.
Mr. McDermott. Thank you. Mr. Secretary, there has been a
lot of talk about prevention. The President talked about
covering physical examinations, periodic physical examinations,
and the intention--is your intention to put that into the bill?
Does he support covering periodical physicals?
Secretary Thompson. Congressman McDermott, the President
feels very strongly on prevention as I do, as you do. And we
have not delineated what should be included, what should not be
included at this point in time. We want to work with you on the
details. And so I would say from my point of view, yes, it
would more than likely, and should be included, but it is going
to have to be something that we work together on what can be
included and what can't be.
Mr. McDermott. I have got a bill.
Secretary Thompson. I know you do. But I don't want to get
into the----
Mr. McDermott. All right. Let me just say why I put the
bill in. We spend a lot of time here trying to decide what new
technology, we ratchet up all--the latest thing in colonoscopy,
the latest thing in mammograms, and we want to spend millions
of dollars, but we never do an evaluation as to whether it
makes sense to do some of those things. We let the specialties
drive up some of these things without doing what managed care
does, which is a gatekeeper who says this is somebody who
really ought to think about doing this, on more than doing
that, and I think that that is why a routine physical
examination is something that would not cost more, and it
probably would actually save some money because you wouldn't do
some of the higher price tests. And that is why I include it.
Let me go to the second thing.
Secretary Thompson. Can I respond quickly?
Mr. McDermott. Sure.
Secretary Thompson. I think you are absolutely correct,
Congressman. And I think you are going in the right direction.
But I would like to quickly point out that I believe, and this
is my own personal opinion, that we are doing a woefully
inadequate job in the delivery of health care in not using the
new technology.
On the physical examination I agree with you, but I have to
disagree that I think there is so much more that could be done
for patients' safety, quality of health care, improved
efficiency, by using new and better technology, and a much more
reduced paper situation and admissions, on prescribing drugs
and on the administering of the drugs.
Mr. McDermott. I don't disagree with that. Now, the next
question is, you have talked about technological breakthroughs,
and you know where I am going. If one of the major issues or a
number of the major issues you deal with in Medicare are things
like Alzheimer's disease and Parkinson's, and we can go right
down the list. It seems to me that the issue of stem cell
research has had a report from every single major scientific
organization in this country, including yesterday the NIH,
National Institutes of Health, all saying that we ought to
pursue embryonic stem cell research.
Now, I have been watching this issue, first told it was
going to be decided in June and then it was going to be in
July, and now we are to the end of August. And I, you know, you
and I have been in this business long enough to know when the
fix is in. It is really hard to believe that anybody is going
to make a decision then. What are you going to know? What is
the President going to know at the end of August, except for
the fact that he will have visited with the Pope? What other
issue will he have gotten any information on this issue that is
not already out there and understood by a hundred of his
advisers? What is the delay really about unless it is just
plain politics?
Secretary Thompson. It is not. And I want to allay your
fear of that, Congressman. I have been with the President and
as you know, I have been very much involved in this subject.
And----
Mr. McDermott. And we are supportive of it.
Secretary Thompson. And I requested NIH to make the report.
And NIH responded. And I want to tell you, I have been with the
President. This president is working harder on this issue,
looking at the pros and the cons. He has some real strong
feelings, and he wants to make sure when he makes the decision
that it is the right decision. And he is not looking at
politics at all in regard to this. I know you may find that
hard to believe.
But I have seen this individual. He is very engaged, more
engaged, listening to more people on this subject, and I am one
of those individuals that have given him information, and I
know he is reading it. I know he is discussing it. I know he is
meeting with people. And I am confident he is going to make a
decision and it is going to be in the relatively near future.
Mr. McDermott. Well, let me just say, in your
communications with him, I hope that you will take this message
to him. There are two things that are going to happen. One of
them happened the other day and is going to continue and I
think escalate. That is leading scientists from USC, San
Francisco said good-bye, I am not going to waste my time in the
United States. I am going to Cambridge where they have been
doing this for years. They have a commission over there that
judges the ethical issues. They are way down the road ahead of
us. So that is going to be one of the things that happens
continually.
The second thing that is clearly happening from recent
newspaper reports is the research is going on out there. And
unless you think the Congress is going to pass a bill that says
no one can do this research, it is going to go on out there,
and the government is not going to have a single thing to say
about it. And I think that the President has an opportunity, if
he has some strong feelings about it, to get into it in a way
that cuts off this sort of--people will be cloning whatever
they want over in Virginia, or in Pennsylvania or wherever. It
is going to go on because the search for knowledge is not going
to be stopped by one administration here or there.
It is a question of what role we are going to play in it in
terms of whether we further it and try and direct it or put any
kind of restraints on it. The longer he delays, the more these
other paths will be taken. And I think that I can't emphasize
strongly enough, it was not a good decision to have stopped the
process. But since he has done it, he would be a lot better off
politically to get out of it as quick as possible. There is
nothing to lose. He has nothing to lose at this point.
Secretary Thompson. Thank you, Congressman McDermott.
Mr. Ramstad. The gentleman's time has expired. We were just
informed that the Secretary has to leave shortly after 1:00, so
we are going to have to move right along. I just want to add
one comment. I just hope the President is listening to you and
Nancy Reagan on stem cell research.
The gentleman from Georgia, Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman. Thank you Mr.
Secretary. You know you hear a lot of criticism in this town
about HMOs. I compare the Medicare Program, the Medicare
insurance program is just a giant government-run HMO. You have
pointed out a lot of the inefficiencies of it. A lot of it, I
think, comes from the fact that the Board of Directors of the
Medicare insurance, the Members of Congress, and you have seen
some of the disagreements that we have here today, and some of
the expressions of those Members of the Board of Directors. I
plan to share your information on the principles of the
President's 8 points, principles, with my seniors in the
district that I represent, and also with the providers. I think
you have some very good advice there for us to do.
My question kind of goes back to the Medicare prescription
discount card. Could you kind of walk us through exactly how
the new discount card proposal will yield a real savings to the
Medicare beneficiaries and how do these cards differ from what
is currently on the market? And what level of savings can our
beneficiaries expect to receive? How much of those savings will
come from the pharmaceutical manufacturers, versus the
pharmacists? I do think there needs to be a sharing in this and
I believe you have expressed that earlier. But I would like to
have that reassurance and also a walk-through. I would like to
say this about our neighborhood pharmacists. I think we have to
keep them in mind through this whole process.
The neighborhood pharmacist is probably one of the most
trusted individuals within the community. They probably answer
more questions when it comes to the prescription drug than the
prescriber of the prescription. And I do think too that they
would probably be a very good outlet for CMS when it comes to
putting out the information for our seniors because of the
trust that our seniors do have with our local neighborhood
pharmacists. So if you could kind of walk us through and how
one versus the other and how the savings will occur.
Secretary Thompson. I will certainly try, Congressman
Collins. And let me point out that the individuals that pay the
highest amount for drugs are the uninsured, especially the
uninsured senior, the 27 percent, because they walk into the
pharmacist and they have nobody to run interference, to do
their purchasing for them and to get the best price. So they
are the ones that are paying the highest price. And usually,
they are the ones that are the least able to afford it. And so
the prescription drug card is set up so that all of these
seniors, especially the 27 percent, have got the buying power
of a State government, of an HMO, of an insurance company, to
be able to get the best price for that individual. So it is
going to be the biggest help to the 27 percent of the seniors
that don't have any coverage whatsoever.
Now, we set it up so that we wouldn't have one company; we
are going to have possibly 10 to 12 companies that are going to
meet the requirements and be able to bid, to be able to use the
seal from CMS, the seal of good approval. And this gives those
PBMs the opportunity to go to a pharmacist, but more than that,
go to a pharmaceutical company and get the best price they
possibly can. And when you have the purchasing power of the
potential 40 million Americans, 12.4 percent of the population
that purchases one third of the drugs in America, you can well
imagine that you are going to have tremendous purchasing power
and be able to get the best price from the pharmaceutical
companies.
So I believe that those PBMs will be able to get the
biggest discounts from the pharmaceutical companies. In regards
to pharmacists, they are going to have to voluntarily enroll.
It is not a mandatory program. But in order to become a
licensed PBM, they have to say to CMS that they are going to be
able to provide coverage for all seniors that they represent.
And that means in your community, Congressman Collins, as well
as my community, if we have subscribers, that means they are
going to have to go and enroll those pharmacists. And those
pharmacists are going to want, I believe, to be enrolled
because it is going to increase their traffic considerably and,
therefore, it should be a benefit to the local pharmacist for
the added business that it is going to bring in.
Now, will their prices be lower? Yes. But will they
increase businesses? Yes. And so I, for one, you know, come
from a rural area, and the pharmacists are very important and
we don't want--and we take into consideration. That is why this
program, I think, is one of those win-win programs. It is
certainly a win for the seniors. It is certainly going to be, I
believe, a win for the pharmacists. And it is certainly going
to be a win for your constituents, and that is why we think it
is a very viable program, and we think that once this gets up
and running, it is going to give probably somewhere in the
neighborhood of 20- to 25-percent reduction.
Now, is that--that is a wonderful first step. But it is
only the first step. And that is why we have got to go the next
bigger step and restructure and give a prescription benefit to
every senior in America.
Mr. Ramstad. The gentleman's time has expired.
Mr. Collins. Thank you, Mr. Secretary. And I am very
encouraged by the fact that you all are moving the ball
forward. Thank you very much.
Mr. Ramstad. The gentleman from Ohio, Mr. Portman.
Mr. Portman. Thank you, Mr. Chairman. And Governor, thank
you very much for being here again and providing us with
refreshing testimony. I want to thank you particularly for your
personal commitment to reform at what used to be known as HCFA
and now known as CMS, and for your choice of Tom Scully, who I
think is a reformer and will do a good job there. The fact that
you moved your office out there and lived for several days with
those good folks and tried to figure out some of their problems
is very impressive, given all that is happening here in
Washington and all you are involved in. You have got a lot of
work to do, and I applaud you for what you are doing
administratively for starters, but also looking, of course, at
the longer term problems and coming up with these principles.
I would encourage you to be very aggressive within the
administration and up here on the Hill to push us on Medicare
reform. It is a tough issue. It involves some difficult
political decisions, but nothing is more important over the
next couple of years as we look at these very difficult fiscal
realities we face. You mentioned the fact that we will have
many more folks who will be retired as compared to those
working. That is true with regard to both Social Security and
Medicare. The Medicare number is even more troublesome and the
potential cost increase is even more dramatic, which could have
a terrible effect, of course, on the seniors I represent and
around the country. So thank you. Keep pushing us and keep
pushing the administration.
With regard to the card, some of the questions I had have
already been answered. As you probably know, Governor Taft has
proposed a similar program in Ohio. I think it has tremendous
benefit to help seniors who find it so difficult to meet their
prescription drug needs because of the high cost. And I
understand what you are saying with regard to higher volume and
potentially lower margins. I just want to echo the comments
that have been made by my colleagues, Ms. Dunn and Mr. Collins,
that you seem to be in agreement with, which is that our
neighborhood pharmacies, many of which were family owned, do
have a lot of credibility out there.
They are the ones who often, in these kinds of programs,
end up taking the hit and get those lower margins, rather than
some of the manufacturers. And I would hope that through the
PBM mechanism that you have described that we would see a fair
distribution of that lower margin as well as higher volume
which, I agree with you, can end up being a win-win if it is
properly administered. And I know you will be flexible as this
program is put in place as well to be sure that we are getting
good information as to how it is working, to insure that
seniors are benefiting, but also our mom-and-pop stores and
pharmacies can continue to provide that good service that they
do.
I wondered if you could comment on another issue that has
arisen in connection with the card, again, which I support. But
that is with regard to nursing homes. As you know, many of our
seniors who are in nursing home facilities get very specialized
care in the area of prescription drug coverage. This is an area
that involves a lot of intermediary companies that provide this
care, and it is unclear to me how the prescription drug card
would relate to those seniors who are in the nursing home
context. I wonder if you could comment on that or perhaps
respond in writing.
Secretary Thompson. Well, first off, the pharmacist within
the nursing home is going to have to enroll. They are going to
have to meet certain requirements in order to enroll with the
PBM. The PBM will have certain things that they offer. They are
going to have to be willing to sell the drugs at the price that
was negotiated with the pharmaceutical companies and pass that
on to the senior resident in the nursing home. And the senior
is going to have additional choices. They will be able to have
their choice either to go in-house or go to another pharmacy in
the community, or apply for the drugs through a mail order.
So the senior is going to have many choices. And it should
be one in which it is going to be beneficial to everybody
involved.
Mr. Portman. Are you concerned about the disruption of what
often happens now, which is more of a managed care approach to
seniors, the unit doses that they use, the drug packaging that
is done and is very specialized, as you know, and the 24-hour
emergency delivery services they provide at nursing homes,
other specialty services? Do you think that this will disrupt
that kind of managed care approach to drug benefits currently?
Secretary Thompson. I don't think so, Congressman, but, you
know, this is really in the embryonic stages. But I don't
believe that. And I just would like to thank you for you
leadership on a lot of reform issues. And hopefully this is one
that we can listen to you for some advice and suggestions on
how we can improve it.
Mr. Portman. Absolutely. One other quick question. You
talked earlier about how this may differ from some existing
programs. One that has come to my attention, the Readers Digest
card, apparently that is a program that is popular among some
seniors in my area. How will this differ from the Readers
Digest approach?
Secretary Thompson. Well this is going to be much, much
broader. I mean, this is going to be----
Mr. Portman. Bigger discounts because of higher volume?
Secretary Thompson. Bigger discounts. It is going to be
broader. It is going to have all seniors, you know, that want
to really get involved with Medicare, you know, to be able to
have the seal of good housekeeping approval by CMS. And I would
just think that the weight of that seal and the support of the
Federal Government supervising the private sector--the beauty
of it is the private sector is going to do it. The Federal
government is not going--it is not going to cost us anything
except for the time put in to reviewing, whether or not the
PBMs are doing a good job. And with that kind of partnership, I
just think it is going to be a tremendous opportunity for
seniors to get the best discounts possible.
Mr. Portman. Thank you very much.
Mr. Ramstad. The gentleman's time has expired. The
gentleman from Wisconsin, Mr. Kleczka.
Mr. Kleczka. Thank you, Mr. Ramstad. Mr. Secretary, I think
this whole drug card business is being overstated, not only in
the press, but also in your comments today. I think the direct
answer to Mr. Collins' question as to how this is going to
affect the local pharmacies. One of two things are going to
happen. Number one, because of these cards being used by
Medicare recipients, they are going to be forced to give them
the discount and it is going to come off of their bottom line.
It is going to come off the small spread they have from filling
prescriptions.
Or the other thing which I think is going to happen, and
this is probably more realistic, is the bulk of these PBMs are
going to go to mail order, and so our local pharmacist, the
pharmacist in Elroy, Wisconsin, is going to get X out of the
deal, Okay? But this whole benefit, or this whole discount drug
card is liberalism at its worst. At least the traditional
liberals, when they come up with a program like this to benefit
people, they provide some Federal financing or government
financing for it, Okay?
But what we are doing now, this administration is promoting
this program, and it is going to come out of other people's
hides. All right? These benefit managers, the PBMs, for the
most part, we have seen they don't necessarily pass off or pass
on the savings that they get through the volume purchasing. But
I am aware that four companies that are dealing with the White
House on this drug discount card now, 90 percent of the
business they do is all mail order.
So if we are worried about our local pharmacies, this
business is going to be gone because if you want to save 10 or
12 percent you are going to have to mail your scrips down to
Florida and 5, 6 days later, you are going to get the
medications back.
Mr. Secretary, you indicated that in modernizing medicine
or Medicare, you are really hoping to have some type of a
bipartisan solution. My question is, has your agency, has HHS
currently been working with congressional staff on trying to
develop this proposal to modernize Medicare?
Secretary Thompson. Yes.
Mr. Kleczka. Okay. Has any Democratic Members of Congress
or staff been invited to participate?
Secretary Thompson. Yes, many.
Mr. Kleczka. Okay. No one that I am aware of on the
Committee, Democrats I should say, or their staff had been
invited. Am I missing something?
Secretary Thompson. Congressman Kleczka, I would love to
work with you.
Mr. Kleczka. Well, I am just saying, have you invited Pete
Starks' staff, who is the ranking minority Member on the
Subcommittee?
Secretary Thompson. I believe--I don't know if--how many--
--
Mr. Kleczka. See, we keep talking bipartisanship. But now
in the development of the reform, I am not aware of any
Democrat Members of Congress or a staff person invited.
Secretary Thompson. Well, Congressman, that is just not
true because we have worked considerably on a bipartisan basis.
Mr. Kleczka. Well could you identify a staff person that
has been part of this discussion?
Secretary Thompson. I can't identify a staff person right
now, but I can tell you that I have met with many Congressmen,
Democrats and Republicans.
Mr. Kleczka. No, I am talking about actual discussions on
putting together this modernized Medicare bill.
Secretary Thompson. I was not in the meetings, but I have
instructed them that they meet with both political parties as
often as they possibly can, and----
Mr. Kleczka. Could you check with the staff and maybe--I
keep wanting to call you Governor.
Secretary Thompson. But I would like to also point out
about the card. You are under a misinterpretation on one thing,
Congressman Kleczka, that these PBMs cannot only do mail
orders. That is prohibited. They also have to enroll the
pharmacists, so it is not only going to be mail order. It has
got to be both.
Mr. Kleczka. And Mr. Pharmacist, even though you have a
very small margin in writing these or filling these
prescriptions, we are going to send you a hundred seniors with
these cards, you are going to have to eat the cost, right?
Secretary Thompson. No.
Mr. Kleczka. There is no way they are going to get the
drugs cheaper from the pharmaceutical company. That is why the
Drugstore Association now is livid over this thing. It is a
great liberal proposal, but we are not putting any money where
our mouth is.
Secretary Thompson. Congressman, we are hopeful and we
believe strongly that the large discounts are going to come
from the pharmaceutical companies, not the pharmacists. That is
where the big savings are going to be. And yes--we, you are
absolutely correct. We do not put any Federal dollars into this
thing. We think the beauty of the program is that it is going
to be run by the private sector, and we think the pharmacists,
the local pharmacists in your congressional district and I know
many of them, are going to benefit from this because they are
going to get increased individual traffic from the people that
will be able to purchase drugs now.
Mr. Kleczka. That is a concern they are sharing with me.
They, Governor, don't agree with you.
Secretary Thompson. I know a lot of people don't, but--I
don't think you can say that, and I know I can't at this point
in time. I just think that the program is going to work and I
think that we will have to come back and discuss it in 6
months, and we will see if you are correct or I am correct.
Mr. Kleczka. Okay. Thank you very much.
Mr. Ramstad. The gentleman's time has expired. The
gentleman from Pennsylvania, Mr. English.
Mr. English. Thank you, Mr. Secretary. Mr. Secretary, I
have learned a great deal from your testimony today and I have
seen you go through a battery of questions and even be accused
of liberalism, which is something I don't gather you were
accused of all that often when you were up at Wisconsin, but
Mr. Kleczka may have a different take on that.
Mr. Kleczka. Will the gentleman yield?
Mr. English. No, I would prefer to ask my question. Mr.
Secretary, we in northwestern Pennsylvania are very pleased
that you have made it such a high priority to move forward on a
Medicare prescription drug program to the extent that you are
able to now create a discount drug card and looking toward--and
we recognize that your card is just a step toward a
comprehensive drug program under Medicare.
One of the issues raised by my colleague from Pennsylvania,
Mr. Coyne, had to do with States like Pennsylvania that already
have made the investment in their seniors and created their own
State drug program. One of the things we learned in last year's
debate is that in order to accommodate seniors in States like
that, it is important to have a drug program that is flexible
enough that you can wrap it around existing benefits.
Do you view it as a priority to create a program at the
Federal level that can be integrated with State programs, and
what issues do you see with that integration?
Secretary Thompson. Well, I think you have to have a
program that is going to be--I don't know if ``integration'' is
the proper word. But you have to be able to have a program that
is going to work in concert with the State program, Congressman
English. You have got the Medicaid program. And that, of
course, is going to pick up in a lot of cases where Medicare
leaves off. So what we have to do, I don't know if
integration--but we have to be able to be willing to look at
the Medicaid program as well. I don't think we can do it all
this year, but if we could build the Medicare Program in a
strong fashion and give people a choice, I think it is going to
benefit the State programs, especially your PACE Program in
Pennsylvania and your Medicaid program and will strengthen it
if Medicare is able to do a lot of things.
For example, if we are able to develop a better prevention
program and be able to get people before they get really sick,
that is going to benefit the State dollars. And so all of this
together, this building one upon the other, is going to be
helpful for Pennsylvania as it is for the State of Wisconsin.
Mr. English. One of my other colleagues had expressed a
concern that actions in Congress or the administration might
``obviate the availability of resources for Medicare,'' which
in northwestern Pennsylvania, we would rephrase that as not
enough money. I am wondering, looking at the budget that the
President's leadership pushed forward, having made a commitment
to, as I recall over $300 billion to modernize Medicare, and
put in place a prescription drug program, which is double the
investment that the House had contemplated last year in passing
our bipartisan bill, do you feel, at this point, that the House
has committed the resources in its budget to modernize
Medicare?
Secretary Thompson. I think you have done an excellent job,
Congressman, and I think it shows how serious this Congress is
about addressing this problem. And let us hope that we are
going to be able on a bipartisan basis to do the job that is
necessary for our seniors across America. And that includes
prescription drugs. That means a Medicare Program with expanded
benefits for catastrophic coverage and for prevention, and also
put it on a financially secure basis so that your children and
grandchildren are going to be able to have the coverage that
they deserve.
Mr. English. And on that point, you have been very
correctly raising the issue of reform as part of the picture.
My understanding is that absent reform, combined Medicare
spending will quadruple from 2.2 percent of GDP to 8.5 percent
by the year 2075. You are an actuary of this, or I am sorry, a
trustee?
Secretary Thompson. Yes, sir.
Mr. English. Is that accurate? And do you feel that we have
to fix this all at once?
Secretary Thompson. That sort of actuarial study has
certainly shown, but it is even more imminent than 2075 because
2016, you are going to see a precipitative drop as far as out
go versus income. And so really, in 2016 there will be some
built up IOUs from the government that will keep it solvent
until 2029. But 2016 you start going the other way. And so it
is important, you know, for people to understand. It is not
2029. It is not 2075. It is 2016 that really is the date that
is the most prevalent one to consider.
Mr. English. Thank you, Mr. Chairman.
Chairman Thomas. The gentleman's time has expired. The
Secretary has been here for 3 hours, and he has to leave no
later than 1:10. So if possible, so that all three of you can
get your questions in, I will now call on the gentleman from
Massachusetts.
Mr. Neal, if you could possibly shorten your time so the
other two colleagues could also inquire.
Mr. Neal. Thank you, Mr. Chairman. I just want to
compliment the Secretary on the appointment of Mr. Scully. I
think that is an exceptional appointment and I won't be going
to your deposition, I can tell you that.
Secretary Thompson. Thank you, Congressman.
Mr. Neal. Mr. Secretary, yesterday I met with Steve Crosby,
who is the Secretary of Administration and Finance in the State
of Massachusetts and they oversee Medicaid and Medicare issues
for the State. He talked to me about many of the consumer
issues that are pending in Massachusetts right now, including
efforts to coordinate drug purchasing for those enrolled in the
senior pharmacy assistance program, Medicare and Medicaid,
State workers and the underinsured and the uninsured.
My question is, how will the administration's discount drug
plan interact with the State-run plan like the one that is
being developed in Massachusetts at the moment? And could my
constituents participate in both this new Federal program and a
State discount program as well? And will this new Federal
benefit preempt State initiatives like those being developed in
Massachusetts? If the Federal discount is better for one drug
and the State discount is better for another, can my
constituents participate in both plans and shop for the best
priced drugs, and if so----
Secretary Thompson. If they are seniors, yes.
Mr. Neal. Yes to all three?
Secretary Thompson. Pardon?
Mr. Neal. Yes to all three parts of the question?
Secretary Thompson. If they are a senior, they will be able
to participate in the State program and the Federal program if
they so desire. And this program is not going to interfere with
any State programs like Massachusetts or any other State that
is developed. But what it intends to do, really, is to help the
uninsured, the 27 percent of the seniors in America, which is
approximately 12 million, 10 to 12 million Americans that don't
have any drug coverage whatsoever. And they are the individuals
that pay the highest price because they have nobody running
interference for them, either with the drug companies or the
pharmacist, to get the best price. And another beauty of this
card is a year from now we are going to have all of the
listings, the PBMs have got a list, all of the drugs they are
selling, both the generic drugs as well as the main drugs.
Mr. Neal. One last question, and then I will use a point of
reference. The hospitals where I live are still complaining
that they are in trouble. Levels of reimbursement they say are
not adequate. And I know part of it rests with the Balanced
Budget Act. But the other part of it obviously rests with
interpretations that you are going to make in an administrative
capacity. But that is across the State. And those are the best
hospitals arguably in the world in Massachusetts, and they
really are all singing from the same hymnal. They need help.
Secretary Thompson. I am hearing that refrain not only in
Massachusetts. I heard it when I was in Texas. I heard it and I
have heard it in Wisconsin.
Congressman Neal, as you know, the Balanced Budget Act made
some changes and there have been some improvements since the
Balanced Budget Act. We are looking at ways, and I would
appreciate your suggestions on how we might be able to
restructure and improve the payment structures. But we also,
under, you know----
Mr. Neal. Be assured I am going to be on Tom Scully big
time about this issue.
Secretary Thompson. Pardon?
Mr. Neal. Be assured I am going to be on Tom Scully big
time about this issue.
Secretary Thompson. He is here right now smiling, I am
sure, behind me and knows that full well.
Mr. Neal. Thank you, Mr. Secretary.
Secretary Thompson. Thank you, Congressman Neal.
Mr. Ramstad. I thank the gentleman from Massachusetts and I
join in his comments of praise about Mr. Scully. And I now
yield to the gentlelady from Florida, Mrs. Thurman.
Mrs. Thurman. Thank you. And since Mr. Scully is here I
just want to also tell you, Mr. Thompson, he is very good at
getting us back on the phone after we have made a phone call.
So that just adds to whatever everybody else has said. But I
need to go into a couple of questions.
You announced a couple of months ago about changing the
date on the HMO Medicare choice program information going out
to seniors. I have to tell you that has created a huge issue in
the district. I mean, absolutely these people are scared. They
don't understand. They don't know why, and they are calling it
a disaster. It doesn't make sense. How are we going to get the
word out?
But with that in mind, I also have been able to pull your
budget for the next year, particularly on the area of Medicare
education program. I wish some of our appropriators were here,
because it actually has been reduced by about $48.2 million
over this next year, so when you do that, I don't know how we
are going to be able to do this educational program and get
this information out in a timely fashion for some of these
folks. And I just bring that up because they are very, very
scared.
Secretary Thompson. Congresswoman, I understand that. But
what we are trying to do, and we were faced with a real----
Mrs. Thurman. I know.
Secretary Thompson. We were faced with a real dilemma and
the real dilemma was that a lot of the Medicare-Plus Choice
HMOs were saying, you know, we don't ---we are going to have to
pull out. And if we could give a little bit more time in order
to look at our financing and--we are trying to keep them in.
And I understand, you know, your constituents and we are trying
to be very sympathetic to that, and we are trying to figure out
a way----
Mrs. Thurman. But I am actually trying to help you here,
because I want the rest of the Congress to understand that we
are cutting your budget to do exactly what you are trying to
get done, and that is to make sure they have the right
information. And these are people who, in fact, have been
pulled out last year and only by a fact of getting an incentive
payment in there were we able to bring back into, so they are
back in there.
Secretary Thompson. Thank you for your help.
Mrs. Thurman. The other thing I am just going to bring up,
you don't have to answer it right now, is nurses shortage, a
huge issue across this country, part of the hospital costs that
are going up. They can't find nurses. We are not doing anything
about education. I would like to call on your Governors to, in
fact, start implementing some programs whether it is some kind
of scholarship aid, whatever, to help in that area.
Secretary Thompson. I agree with you. I couldn't agree with
you more.
Mrs. Thurman. The other thing that I would like to talk to
you about, and this is a concern to me. And it is actually an
amendment that I have run a couple of times in this Committee.
The card is great, but the fact of the matter is I tend to
agree, at looking at some of these issues, I don't think the
pharmaceutical companies are going to give us a break. I just
don't believe it. I mean, they are out there already on this
patent trying to extend patents so that they can have
additional time instead of putting in a generic.
So I don't know how we are going to get them to work. But
there is a way the Federal government could have done this, and
that was through the Federal supply program, and in fact, that
if I just look at like Drugstore.com or Merck Medco, if you
take the 10 percent and the 25 percent that you gave, I will
tell you, and I will show you those numbers. But, in fact, the
Federal supply schedule is still lower than even what this card
can do and quite frankly it doesn't cost the Federal government
any money. We are just negotiating in an area that we have
already negotiated. So I just lay that on the table; something
to think about.
Secretary Thompson. Thank you.
Mrs. Thurman. I think it is something that could be done.
We do VA contracts already. It is something that we could--
actually cost nothing to the Federal Government and would work.
The last thing that I am going to say, though, is somebody
mentioned in this Committee just a little while ago about Blue
Cross, Blue Shield and all of these, you know, opportunities
that we might have in providing senior citizens plans. They are
already leaving. I mean they are not--I don't know how we are
going to encourage them back. We know for a fact that of the 15
percent in managed care today we are going to be down to 12
percent by the end of this year. I mean, that has been kind of
out there from what I----
Secretary Thompson. I am afraid you are correct. I hope
that we can stem the bleeding, but I am afraid you are correct.
Mrs. Thurman. So, but even when we add these choices, I
mean, right now already, one of the reasons those folks are
telling us they are leaving is because we don't give them
enough money. I mean that is their argument. I am not sure that
that is the total argument, because I think networking has a
lot to do with this and providers participating in it.
So the other issue, especially after all these tax cuts and
we continue to get these tax bills, and you know, part of our
administration last year said we need to provide some more
dollars into Medicare and we needed to save some of that
surplus money to do that to strengthen, and in fact, do exactly
some of the kind of things you have said.
I am very concerned that we are going to do a lot of these
things and the cost is going to be shifted to the
beneficiaries, which is what has happened under Medicare Choice
programs today. But we will talk. Thank you.
Mr. Ramstad. The gentlelady's time has expired.
Secretary Thompson. But Congresswoman, I need your help. I
need your ideas. I need----
Mrs. Thurman. Call me, because I haven't gotten that phone
call yet.
Secretary Thompson. OK.
Mr. Ramstad. Mr. Secretary, I know your drop dead time for
leaving----
Secretary Thompson. You can call me, too.
Mrs. Thurman. I have.
Mr. Ramstad. I will set up a conference call for you. I
know the Secretary's drop dead time for leaving is 1:10, but
your staff just graciously consented to one more line of
questioning.
Mr. Doggett. I have about 5 minutes.
Mr. Ramstad. So the Chair will recognize the gentleman from
Texas for the final questioning, Mr. Doggett.
Mr. Doggett. Mr. Secretary, this week we were reminded once
again by Phillip Morris that it provides a public service to
programs like Medicare because its product kills people before
they consume significant amounts of moneys from programs like
Medicare. Earlier this month, I requested that you determine
whether your Department is fully implementing executive order
13193, concerning our leadership in global tobacco control and
prevention programs. And I would just want to draw that to your
attention and not ask you for a full response today.
Secretary Thompson. Did you write me that?
Mr. Doggett. Yes, sir. I did. And your Department has
acknowledged receiving the letter and, in fact, I advised them
that I would be asking you about it today. But I--it is obvious
you don't have that information. And I am just asking you to
give it your attention for a prompt written response.
Secretary Thompson. OK.
[The following was subsequently received:]
The written response referred to by Representative Doggett
regarding the allocation of funds received by the States under the
Family Violence Prevention and Services Act is being prepared and will
be transmitted to each Member of Congress who signed the incoming
letter.
Mr. Doggett. Second matter is also one that I am only
asking for your prompt written response on. And it concerns a
matter that you will be receiving a bipartisan letter on.
Earlier this year your Department provided the States a notice
of the allocation that they would receive under the Family
Violence Prevention Services Act, a subject I know you are
personally interested in. Unfortunately, that notice of the
allocation was in error. It was inaccurate. And by the time
that the Department corrected this allocation, the Texas
legislature, in its biannual session, had adjourned. The
legislature appropriated, based on the inaccurate information
and we feel now that in Texas, and this is not just Texas, but
particularly in our State, that there will be hundreds of
families that will not have the services through these violence
prevention programs because they----
Secretary Thompson. Do you know how much money was
involved?
Mr. Doggett. Yes, sir. I think what we are asking for is a
reprogramming of about $615,000. And so I would just ask you
again if you would take a look at that. You will be receiving
that letter shortly, and try to get back with us because it is
very important.
On to the key matters that you have testified to in my
remaining seconds. In principle number three, when you use the
term ``approaching retirement'' in that guarantee, what do you
believe approaching retirement is, agewise?
Secretary Thompson. We haven't made a decision.
Mr. Doggett. I mean, does it include, 50, 55? Can you give
me a range of what you are talking about?
Secretary Thompson. I presume all of those.
Mr. Doggett. That it would include people 50 and above but
not necessarily below 50?
Secretary Thompson. We never made a determination. I would
think 50 probably.
Mr. Doggett. You--I saw you explain this program the night
it was announced on the Lehrer News Hour, and you responded to
questions about the Federal Government's role by saying we
don't pay any money at all. It is beautiful. And I guess some
would view it as beautiful and some would view it as a free
lunch approach. But my question to you is, if it is beautiful,
and it is free to the Federal government, why are you directing
it only toward seniors and not to the millions of people in our
country that are in exactly the same situation, who pay the
highest prices in the world because they happen to be
uninsured?
Secretary Thompson. You raise a valid point. We just want
to make sure that it is successful. We think it is going to be.
I know Congressman Kleczka does not believe that it is going to
be as successful as I do and we will have to come back here 6
months from now.
Mr. Doggett. So you are willing to consider that
alternative.
Secretary Thompson. Congressman Doggett, I love new ideas.
And you have got new ideas, whether it is a Democrat or
Republican, I will try and implement it. And I want to work
with you.
Mr. Doggett. I am glad to hear that. And I am going to come
back to that point. But I want to, in these seconds, to be sure
that I understand your request for proposal on this, ask that
under the discount program that they guarantee that the retail
price or the discount price, whichever is lower, will be
available with this discount card. Doesn't that, in itself,
suggest that often the retail price is going to be lower than
the discount price?
Secretary Thompson. It presupposes that in some----
Mr. Doggett. That could happen.
Secretary Thompson. It could happen, yes. But I would say
not often.
Mr. Doggett. You say that you are seeking 10 to 25 percent
off of retail prices. You don't mandate any pharmaceutical
company in this country to discount its prices, do you?
Secretary Thompson. No.
Mr. Doggett. And indeed, when you talk about----
Secretary Thompson. Listen, I don't have that power. If you
want to give me that power, Congressman, I will do it. All I
can do is--Congressman Kleczka says no, he won't do that. But
if you want to give me that power, I will exercise it.
Mr. Doggett. Under this program that you have, are you
going to provide that any of the discount card providers who
can't assure a minimum of 10 to 25 percent will be removed from
the program?
Secretary Thompson. We will supervise it on an annual
basis.
Mr. Doggett. Are you going to set that as the minimum?
Secretary Thompson. No.
Mr. Doggett. I mean, you could have a program with 1
percent, and since I see the red light coming on, let me just
go back because I think it is an appropriate place to end, and
an important point.
I have done a survey in the course of this hearing. Not one
Democrat on this Committee, not one Member of the Committee
that has responsibility for Medicare, has been asked to meet
with you or Mr. Scully. And I think it is great you are over
here. I appreciate the attitude that you have expressed. But
the Committee that has jurisdiction, as far as the Democratic
side, if you really want us engaged, if this is to be a
bipartisan program, it has to be more than happy talk.
Thank you, Mr. Chairman.
Secretary Thompson. Mr. Doggett, it is not happy talk. I am
on Capitol Hill at least 1 day a week and I will come and see
you and talk to you.
Mr. Doggett. You have not seen--you have talked about all
these meetings with Democrats, with more Democrats than
Republicans. But you have not, prior to today on any aspect of
this, talked with a single Democrat on this Committee, and I
think that is unfortunate and it is similar to some other
things that have happened with this administration, where there
is good talk about bipartisanship, but it only means photo
opportunities, not involvement in decisionmaking.
Secretary Thompson. If that is the case, and my staff has
not talked to any of your staff, it is unfortunate. We will try
and rectify that.
Mr. Doggett. Thank you very much.
Mr. Ramstad. The gentleman's time has expired. We want to
thank you, Mr. Secretary, for appearing before the Committee
for 3 hours and 19 minutes, for bringing your bipartisan
leadership to Medicare reform. And also want to thank Mr.
Scully for being here today and the staff for both of you.
Thank you for your hard work and for the attitude that you
bring, the spirit of bipartisanship to this important reform.
Look forward to working with you. The hearing is adjourned.
[Whereupon, at 1:20 p.m., the hearing was adjourned.]
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helping patients lead longer, healthier and more productive lives
through the development of new lifesaving and life-enhancing
technologies. AdvaMed is pleased to present this testimony on behalf of
our member companies and the patients they serve.
AdvaMed applauds President Bush's Principles for Medicare Reform,
released on July 12, 2001, which emphasize the importance of
encouraging high-quality health care for all seniors, better coverage
of preventive care and treatments for serious illnesses, increased
patient access to the most modern health care options and improved
management of the program. Medical technologies are key in helping to
realize these goals.
Medicare should encourage high-quality health care for all seniors,
including better coverage for preventive care and serious
illnesses.
The rapid pace of innovation for diagnosing, treating and curing
diseases and illnesses continues to drive the high quality of health
care available to Americans. However, according to the President,
``Medicare takes way too long to authorize new treatments. We must act
now to ensure that the next generation of medical technology is readily
available to America's seniors.''
The President's statement underscores the importance of reducing
the current delays of 15 months to five years in Medicare patients'
access to new technologies. By keeping pace with advances in medical
technology, Medicare can improve patients' quality of care and put
Medicare on solid financial ground.
The Administration can make substantial progress in reducing
Medicare delays by:
Properly implementing key technology access reforms
in the Benefits Improvement and Protection Act of 2000,
including provisions calling for temporary, transitional
payments for new technologies in both the inpatient and
outpatient settings.
Creating a Medicare Office of Technology and
Innovation to improve the Centers for Medicare and Medicaid
Services' (CMS) accountability, openness and coordination in
making timely decisions.
Establishing decision deadlines to improve
accountability. For technologies subject to a national coverage
decision, CMS should take a total of 6-12 months to set
coverage, coding and payment policy and make the technology
available to patients.
Maintaining and strengthening the local Medicare
coverage process as an important channel for early patient
access to new technologies. CMS should support local decision
making processes to ensure the continuation of timely, flexible
access to new technology. A wide range of local contractors
should continue to work with public stakeholders in creating
new medical policies and assign local codes as needed.
Medicare should provide better health insurance options, and the
management of the government Medicare plan should be
strengthened so that it can provide better care for seniors.
AdvaMed strongly supports reduced bureaucracy and streamlining, but
we are concerned that contractor consolidation could impair local
coverage decision-making for critical new therapies. AdvaMed emphasizes
the continued importance of local decision making to help ensure the
prompt and appropriate use of new technologies.
AdvaMed also supports broader reforms to the Medicare program to
give consumers the ability to choose among a range of competing health
plans, as well as the traditional Medicare program. We believe it will
be critical to ensure a minimum number of competing health plans in
each geographic area, so consumers who are empowered to choose among
competing health plans will make sure they have access to the high-
quality, innovative medical technologies and procedures they need.
However, implementation of the President's plan should not expand
Medicare purchasing authority prematurely. AdvaMed firmly believes in
the benefits of market-based competition for providing patients with
choices for the most current, high quality health care but the way this
important change is implemented will have profound effects on its
success. It will be crucial not to implement expanded purchasing
authority for the Medicare fee-for-service program before a sufficient
number of competing private plans are available in all major geographic
areas.
Conclusion
AdvaMed believes that these reforms, and other important changes
related to prescription drugs, will help provide Medicare beneficiaries
with the modern, state-of-the art care that they deserve, within a
framework of market-based, competitive health plans. At the same time,
the President's plan would address the solvency of the Medicare trust
fund--an essential part of any reform proposal.
The President's proposal provides great opportunities for seniors
to benefit from the unprecedented advances in innovation happening in
health care today. We look forward to working with this Committee, the
Congress and the Administration on ways to improve the quality of care
available to seniors through Medicare and foster the delivery of
innovative therapies for patients.
Statement of the Alliance to Improve Medicare
Introduction
The Alliance to Improve Medicare (AIM) is the only organization
focused solely on fundamental, non-partisan modernization of the
Medicare program to ensure more coverage choices, better benefits
(including prescription drug benefits), and access to the latest in
innovative medical practices, treatments and technologies through the
Medicare system. AIM coalition members include organizations
representing seniors, hospitals, small and large employers, insurance
plans and providers, doctors, medical researchers and innovators, and
others.
The structure of the traditional Medicare program has changed
little in more than three decades and, consequently, has not kept pace
with many of the dramatic improvements in health care delivery. AIM is
dedicated to achieving comprehensive modernization of the traditional
Medicare program through policy research and educational programs for
Members of Congress and their staff, the media, and the American
public.
AIM applauds the Bush administration's recognition of the need to
strengthen and improve the Medicare program to provide high quality
health care for senior citizens. AIM shares many of the Bush
Administration's principles for Medicare modernization including
support for providing more and better coverage options, improving
coverage of preventive care services, strengthening the program's
financial foundation, and reducing regulatory burdens on beneficiaries,
health plans, and providers.
AIM also supports access to prescription drug coverage provided as
part of broader modernization. AIM members support an integrated,
market-based Medicare drug benefit. The discount card program proposed
by the Bush Administration is a way to assist seniors who need
prescription drugs in the short-term. AIM urges Congress and the
Administration to continue work toward a long-term, integrated drug
benefit for all seniors.
Key Principles for Medicare Modernization
AIM has identified seven key principles to guide Medicare
modernization efforts. These principles seek to improve both the
administration of the Medicare program and the benefits provided to
program beneficiaries.
First, AIM supports improvement of health care coverage through
better coordination of care including health promotion and disease
prevention efforts. The traditional Medicare program has not kept pace
with private sector benefits and plans offering preventive health care
and screening measures such as annual physicals, hearing and vision
tests, and dental care. Medicare beneficiaries, more so than other
population age groups, can benefit from these preventive measures which
can help reduce long-term costs and ensure appropriate, early treatment
of health problems. Private sector Medicare providers should have the
flexibility to incorporate these measures as part of basic health care
services.
Second, AIM supports improvement of health care coverage through
increased consumer choice. Medicare beneficiaries should have the
option to choose from a range of coverage options similar to those
available to Members of Congress, federal employees and retirees, and
millions of working Americans under 65 years of age who are covered by
private plans. The Medicare managed care program, Medicare+Choice,
seeks to provide these types of coverage options to seniors nationwide.
Unfortunately, inadequate payments and excessive regulation of private
sector providers participating in Medicare+Choice have seriously
constrained the ability to expand coverage areas and have caused
numerous plans to withdraw from coverage areas where reimbursement was
inadequate to cover even the costs of basic care.
Third, AIM supports improving coverage through increased
competition among all plans and providers in the Medicare program.
Medicare's managed care option, the Medicare+Choice program, is an
alternative to and competitor with traditional fee-for-service
Medicare. The federal government, through the Centers for Medicare and
Medicaid Services (CMS), currently regulates Medicare+Choice plans
while also acting as a participant itself through the traditional fee-
for-service program. AIM believes this dual role is anti-competitive.
Medicare reform and modernization efforts must be evaluated based on
success in increasing market competition and availability of basic,
affordable coverage to Medicare beneficiaries, not on increasing CMS's
regulatory powers and oversight activities.
Fourth, AIM believes prescription drug coverage should be provided
to all Medicare beneficiaries as part of comprehensive, market based
Medicare modernization. The opportunity for reform and modernization is
presented by the recognized need to cover prescription drug benefits
for Medicare recipients. Congress and the Administration should take
this opportunity and not simply layer a new, stand-alone drug program
onto the traditional Medicare program without addressing the program's
outdated and inadequate financial and structural systems. The program
in its current form cannot meet the coming challenges presented by the
retirement of the baby boom generation which will more than double the
number of Medicare beneficiaries. Any Medicare reform proposal must
address the real structural and financial problems of the Medicare
program.
Fifth, AIM urges Congress to continue to review and address the
financial crisis facing health plans and providers. Adequate financing
is necessary to establish a solid foundation upon which to build a
better Medicare and ensure the long-term financial integrity and
solvency of the Medicare program. Health plans, hospitals and doctors
have been hit hard and patient care has been and will continue to be
affected. Congress recognized the damage caused by BBA '97 and has
provided some restorations in payment funding. These small repayments
represent a good start at addressing the financial crisis caused by the
cuts. AIM encourages Members to continue to ensure appropriate and
timely payments for these providers and plans to ensure appropriate
care for Medicare beneficiaries.
Sixth, AIM believes that the current rigid and outdated Medicare
benefit structure and bureaucracy must be replaced. A recent AIM report
outlined Medicare regulatory burdens on both Medicare beneficiaries and
on health plans and providers. The report, ``Improving Medicare
Management for Everyone'', identifies areas of complexity for both
senior citizens and providers including health plans, hospitals, and
medical technology innovators. AIM identifies beneficiary concerns
including the lack of clear information on benefits and eligibility,
access to prescription drug benefits, and difficulties understanding
Medicare paperwork. The report also outlines provider regulatory
burdens including inconsistent Medicare program policies, slow
responses to provider concerns and inquiries, and an inflexible
Medicare bureaucracy.
Finally, AIM believes Medicare administrators must reduce excessive
program complexity and bureaucracy caused by the more than 110,000
pages of federal rules, regulations, guidelines and mandates. AIM
supports the elimination of real fraud and abuse in Medicare but our
members believe this can be achieved without relying on unnecessarily
complex and heavy-handed regulation. Providers and plans must not be
forced to divert resources from patient care in order to respond to
ever-changing regulations.
Conclusion
AIM urges the 107th Congress to consider sensible, long-term
solutions to the problems confronted by the Medicare program and by
Medicare beneficiaries and we urge Members to work together on a
bipartisan basis to achieve comprehensive Medicare reform. AIM
appreciates the opportunity to submit this statement for the hearing
record and we look forward to working with the Committee as they
examine options for Medicare.
AIM Principles for Medicare Modernization
July 2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
Address Offer Drug
AIM Principles for Medicare Financial Crisis Improve Coverage Improve Coverage Improve Coverage Benefit through Cover Medical Reduce Medicare
Modernization and Ensure through Expanded by Increasing through More M+C Medicare Technologies Bureaucracy and
Financial Future Benefits Consumer Choice Competition Modernization More Quickly Complexity
--------------------------------------------------------------------------------------------------------------------------------------------------------
S. 357 YES. NO. YES. YES. YES. NO. NO.
Redefines No provisions to Restructures as Reforms fee-for- Offers drug No provisions No provisions
(Senator John Breaux (D-LA) solvency for improve fee-for- ``competitive service and benefit as to speed to reduce
and Senator Bill Frist (R- Part A and Part service premium Medicare part of ``High approval of overall
TN)) B Trust Funds. Medicare system'' to managed care Option'' new medical government
(Sec. 101; new program encourage plans programs by benefits technologies regulation of
(Based on National Bi- SSA Title XXII, benefits by to stay in creating package in fee-for- Medicare
Partisan Commission on the Part D) adding program and/or separate through fee- service beneficiaries,
Future of Medicare) preventive expand management for-service program. health plans
benefits. operating offices and and Medicare Medicare or providers.
areas. Creates Medicare Board. managed care managed care
new agency to (Sec. 101; new plans. plans are
oversee managed SSA Title XXII, Includes urged to
care program. Part E) reforms for quickly cover
(Title III) both programs. new
(Sec. 101; new technologies.
SSA Title
XXII, Part A)
S. 358 YES. NO. YES. YES. NO. NO. NO.
Redefines No provisions to Improves and Establishes Drug benefit is No provisions No provisions
(Senator John Breaux (D-LA) Medicare improve fee-for- strengthens separate not to speed to reduce
and Senator Bill Frist (R- solvency. service Medicare Medicare agency incorporated approval and overall
TN)) Requires annual Medicare managed care to run Medicare into standard coverage of government
report on trust program program through managed care benefit new medical regulation of
fund status. benefits by competitive program and package. technologies Medicare
(Title I, adding system modeled drug benefit. in fee-for- beneficiaries,
Subtitle B). preventive FEHBP. (Title (Title I, service. health plans
care. III) Subtitle A) Medicare or providers.
managed care
plans are
urged to
quickly cover
new
technologies.
S. 1135 Somewhat. YES. NO. Somewhat. NO. YES. NO.
Proposal would Fee-for-service No provisions to Allows Drug benefit is Proposal seeks No provisions
(Senator Bob Graham (D-FL)) index Part B and Medicare improve and competition for not to improve and to reduce
deductible to managed care increase select fee-for- incorporated speed coverage overall
inflation and programs would consumer service into standard decisions for government
change Part B include choices for contracts. benefit new regulation of
monthly premium preventive coverage. (Title I, Sub. package. technologies. Medicare
to sliding benefits. D) Allows Proposal does beneficiaries,
scale payment (Title IV) competition for not address health plans
based on drug benefit coding or or providers.
income. (Title contracts. payment.
V) (Title III, (Title I, Sec.
Sec. 301) No 101)
provisions to
improve
competition in
Medicare
managed care.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Statement of the National Association of Chain Drug Stores, Alexandria,
Virginia
Mr. Chairman and Members of the Committee. The National Association
of Chain Drug Stores (NACDS) appreciates the opportunity to submit this
statement for the record regarding our perspectives on the Bush
Administration's principles for Medicare reform. NACDS membership
consists of over 180 retail chain community pharmacy companies that
employ over 100,000 pharmacists. The chain community pharmacy industry
is comprised of more than 33,000 retail community pharmacies, including
20,000 traditional chain drug stores, 7,800 supermarket pharmacies and
5,300 mass merchant pharmacies. Chain operated community retail
pharmacies fill nearly 63% of the more than 3 billion prescriptions
dispensed annually in the U.S.
NACDS has reviewed the President's Medicare Reform Principles and
believes that they are broad enough to be realistic, and indeed, even
supportable goals for Medicare reform. However, as the community
pharmacy industry has learned over this past week, the specific
``details'' are important regarding how these principles will impact
Medicare beneficiaries. Therefore, it is difficult to make any final
judgement about how these principles will impact our industry and the
beneficiaries that we serve.
For example, the principles talk about better ``prescription drug
benefit coverage'' and better ``coverage for preventative care and
serious illness for seniors''. We do not see how these principles could
be realized through a prescription drug discount card program. Indeed,
this program seems to defy these principles. We strongly object to this
program, which was announced last week by the Administration. In fact,
NACDS and the National Community Pharmacists Association (NCPA) are
seeking to enjoin the Department of Health and Human Services from
moving forward with this program because of the economic harm that it
will inflict on community pharmacy, and the false promise that it
represents for our nation's Medicare beneficiaries in reducing the cost
of medications. We have attached to this statement a copy of the
complaint that NACDS and NCPA filed this week. Found on the NACDS web
site at http://www.nacds.org/user-documents/DiscountCardLawsuit.pdf.
In an effort to promote real reform of the Medicare program and the
establishment of a true, comprehensive pharmacy benefit for seniors, we
have developed our own principles with seven other national pharmacy
organizations (see attached).\1\ We intend to use these principles to
evaluate our support for the various Medicare pharmacy benefit
proposals that have been introduced and may be marked up by this
Committee. We appreciate the opportunity to submit this statement for
the record and look forward to working with the Administration and the
Congress in developing a reformed Medicare program.
---------------------------------------------------------------------------
\1\ Document reflects founding members of the Pharmacy Benefits All
(PBA) Coalition. Other organizations continue to join.
---------------------------------------------------------------------------
``Pharmacy Benefits All'' Coalition
A Unified Agenda for American Pharmacy--June 2001
American College of Clinical Pharmacy (ACCP)
American Pharmaceutical Association (APhA)
American Society of Consultant Pharmacists (ASCP)
American Society of Health-System Pharmacists (ASHP)
Food Marketing Institute (FMI)
National Association of Chain Drug Stores (NACDS)
National Community Pharmacists Association (NCPA)
National Council of State Pharmacy Association Executives (NCSPAE)
As policymakers discuss a comprehensive outpatient pharmacy benefit
for seniors, the ``Pharmacy Benefits All'' Coalition encourages
Congress and the Bush Administration to carefully consider the views of
the nation's pharmacists and pharmacies--one of our nation's largest,
most accessible, and consistently most trusted group of health
professionals.
Pharmacy Organizations: Who We Represent
Our organizations represent the spectrum of American pharmacy
practice--independent and chain community pharmacists and pharmacies;
hospital and health-system pharmacists; clinical pharmacists in
academic health centers, medical group practices, and clinics;
pharmacists practicing in managed care organizations; consultant
pharmacists in long-term and senior care facilities; home health care
pharmacists; and virtually every other type of pharmacist and setting
where patient care and medication use occur. We are unified in our core
beliefs concerning the development of an outpatient pharmacy benefit
for seniors.
Outpatient Pharmacy Benefit For Seniors: What We Believe
Seniors Should Have Access to a ``Pharmacy Benefit''_Not
Just a ``Drug Benefit''
We believe that seniors should have access to a comprehensive
pharmacy benefit. This includes coverage for the most appropriate
medication for the senior, as well as the professional services of
pharmacists and pharmacies that assure effective outcomes from
medication use.
Pharmacists can work together with the patient and their physicians
to help assure that medications are clinically appropriate and cost
effective. As a result, preventable drug-related problems, such as side
effects and drug interactions, can be avoided. For these reasons, we
believe that seniors should have access to a ``pharmacy benefit,'' not
simply a ``drug benefit.'' In addition to providing the medication, a
meaningful pharmacy benefit would include important components such as
collaborative medication therapy management (MTM) services for seniors
with chronic medical conditions, refill reminders, extended pharmacist
counseling, and outcomes monitoring and evaluation.
Some proposals do not meet these important tests. For example,
``prescription drug discount card'' programs do not provide adequate
pharmacy coverage for seniors, and represent price controls on
pharmacies, which are private-sector businesses. Moreover, simply
providing coverage for medications is only part of the answer to
assuring that seniors have access to a comprehensive pharmacy benefit.
Medications are safe and effective only when they are used
appropriately. Inappropriate medication use leads to hospitalizations,
emergency room visits, and other unnecessary medical costs for which
Medicare is already paying a substantial price.
Seniors recognize that pharmacists are the most qualified health
professional to provide this level of care and service. Seniors should
have the choice of and access to the pharmacist and pharmacy that best
meet their specific health care needs.
An Outpatient Pharmacy Benefit Should Pay Pharmacists and
Pharmacies for the Services that Meet the Special Needs of the
Senior Population
Any outpatient pharmacy benefit must recognize that the nation's
pharmacists and pharmacies are the individuals and entities that
actually provide the medications and professional services that are
essential to assure that medications are optimally used.
Payment to pharmacists and pharmacies for providing these products
and services must recognize the important health care needs of the
senior population, including such services as medication compliance
packaging, prescription compounding, and patient education and
counseling. Payments should be reasonable and adequate to cover the
professional, administrative, and business costs of providing these
products and services--as well as a reasonable return on investment--in
all pharmacy practice settings in which the care and services are
provided.
Pharmacists and Pharmacies Should Deliver Care to Seniors
under the Outpatient Pharmacy Benefit
Most of the senior outpatient pharmacy proposals introduced to date
turn the administration, management, and delivery of services over to
``private sector'' entities sometimes referred to as prescription
benefits managers (PBMs). For example, under several existing
proposals, PBM's are charged with ``managing care,'' ``developing drug
formularies,'' ``increasing generic drug use,'' ``negotiating discounts
with pharmaceutical manufacturers'', ``placing price controls on
pharmacies,'' and ``providing medication therapy management programs to
seniors.''
PBMs can and do have an important role in performing many of the
administrative tasks associated with providing the pharmacy benefit to
seniors. We believe that the nature and scope of ``patient care and
cost management'' tasks that these proposals would assign to PBMs needs
further thorough discussion. Pharmacists and pharmacies are the real
``private sector'' providers of care and service to patients.
Pharmacists and pharmacies provide services and work with patients at
their point of care to help assure appropriate medication use and
accurate dispensing. Senior citizens will ultimately rely on
pharmacists and pharmacies to achieve the outcomes we all seek for a
successful outpatient pharmacy benefit.
What We Pledge
Our organizations are jointly committed, prepared, and able to work
with the 107th Congress, the Bush Administration, the pharmaceutical
industry, HCFA, physician organizations, senior advocacy groups, and
other interested parties to help design an outpatient pharmacy benefit
for seniors that improves medication use, helps control overall health
care costs, and enhances the quality of life.
An outpatient pharmacy benefit for seniors will be the single most
substantial and important addition to the program since its inception
35 years ago. We must assure that any new program established provides
the most cost effective pharmacy benefit to seniors and the Medicare
program. Seniors, taxpayers, and the public at large deserve nothing
less than our best effort.
[An additional attachment is being retained in the Committee
files.]