Transcripts For CSPAN3 Senate Health Committee On Lowering Health Care Costs 20240714

The committee on health, education, labor and pensions will come to order. Senator murray has an important meeting right now and she has asked me to proceed with the hearing because we have six excellent witnesses and we want to make sure that we hear from each of you, and we want the senators to have a chance to ask questions of each of you. So patty should arrive about 10 00. When she comes, why, well interrupt and let her make her Opening Statement and then we will resume the hearing. Good morning, senator murphy. Nearly a year ago dr. Brent james from the National Academies testified before our Senate Health committee with a startling statistic. Up to onehalf of what the American People spend on Health Care May be unnecessary. Let me repeat that. Up to half of the 3. 5 trillion the United States collectively spent on health care in 2017 was unnecessary according to dr. James, and many of the other witnesses at our hearings agreed with that. Thats 1. 8 trillion, three times as much as we spend on all of our national defense, 60 times as much as we spend on pell grants for college students, about 550 times as much as we spend on national parks. A recent gallup poll found that the cost of health care was the biggest financial problem facing American Families. Like every american family, both democrat and republican United States senators are concerned about the cost of health care. Health care has become a tax on the Family Budgets and on business and on the federal and state government. Warren buffett has called it a tape worm on the american economy. Over the last two years this committee has held 16 hearings on a wide range of topics related to reducing the cost of health care, specifically how do we reduce what the American People pay out of their own pocket for health care . These included hearings on the cost of Prescription Drugs on the 340b drug discount program, on primary care and on the importance of vaccines. Last december i sent a letter to experts at the American Enterprise institute and the Brookings Institution, to doctors, economists, governors, insurers, employers and other health care innovators, asking for specific steps that congress could take to lower the cost of health care. We received over 400 recommendations, some as many as 50 pages long. In may senator murray and i released for discussion the Lower Health Care cost act of 2019, a package of nearly three dozen proposals from 16 republican senators and 14 democratic senators. That is designed to reduce what americans pay out of their own pockets for health care. Since then weve received over 400 additional comments on the legislation, and todays hearing was scheduled to hear your feedback on this legislation that will reduce what americans pay out of their own pockets for health care. First, it ends surprise billing. Second, the legislation creates more transparency. There are seven bipartisan proposals in the bill that will eliminate gag clauses and anticompetitive terms in insurance contracts, designate a nonprofit entity to unlock insurance claims for employers, ban pharmacy benefit managers for charging more for drugs than the pbm paid for the drug, and require patients to be given more information on the cost and quality of your care. You cant lower your Health Care Costs until you know what your Health Care Costs actually are. Third, it increases Prescription Drug competition. There are nine bipartisan proposals within this legislation to bring more lower cost generic and buy similar drugs to patients, thats about 90 of the drugs prescribed. Here are a few ways it will Lower Health Care costs. Ensure patients dont receive a surprise medical bill, which is when you receive a 300 or maybe a 3,000 bill two months after your surgery because one of your doctors was outside of your Insurance Network. Many senators including senator cassidy, senator hassan, senator murkowski and many others are interested in ending surprise billing. It lowers the cost of Prescription Drugs by helping Similar Companies Speed Drug Development through a transparent, modernized and searchable patent database. Senators collins, holly, and others worked on this provision. Improves the drug administrations drug database to keep it up to date, a proposal offered by senator cassidy and senator durbin. I am mentioning the senators name on purpose because i want it to be clear how much work has been done by democratic as well as republican senator s on the provisions of the bill. Prevent citizen perishes that can be used to unnecessarily delay drug approval. It clarifies that the makers of brand biological products such as insulin are not gaming the system to delay new lower cost buy similars from coming on the market. Senators smith, cassidy and kramer. Eliminate a loophole allowing Drug Companies to get exclusivity just by making small tweaks to an old drug, a proposal from senators roberts, cassidy and smith. Bans gag clauses to prevent employers and patients from knowing the price and quality of Health Care Services. This proposal from senators cassidy and bennet, would allow an employ to know, for example, a Knee Replacement might cost 15,000 in one hospital and 35,000 at another. Requires Health Care Facilities to provide a summary of services when a patient is discharged from a hospital to make it easier to track bills and requires hospitals to send all bills within 30 Business Days to prevent unexpected bills many months after care. Thats from senator enzi and senator casey. Requires doctors and insurers to provide patients with price quotes on their expected outofpocket costs for care so patients are able to shop around, a proposal from a number of senators including cassidy, young, murkowski, ernst, endi, sullivan, kennedy, braun, hassan, bennet, brown, casey, White House House and rosen. It prevents outbreaks from senators roberts and peters and more proposals, for example, banning anticompetitive terms in Health Insurance contracts to prevent patients from seeing other lower cost, high quality providers. The wall street journal identified dozens of cases where anticompetitive terms and contracts between Health Insurers and systems increased premiums and decreased choice. Banning pbms from charging Employers Health insurance plans and patients more for the drug than the pbm paid to acquire the drug, which is known as spread pricing. Eliminating a loophole allowing the first generic drug to submit an application to the fda that can block other generic drugs from being approved. Provisions to help americans stay healthy by preventing obesity and improving care for expectant moms and babies. Provisions to incentivize Health Care Organizations to use the best cybersecurity practices to protect your Health Information privacy, and other senators may have addition alley dal ideas wo vote on in a markup later this month. For example, senators murphy and cassidy are working to improve access to Mental Health care, building on their work in this Committee Last year that became a part of the support act. Im optimistic that we can get to agreement to include something on that in this bill as well. Other committees in the senate are also working on their own packages of legislation to lower the cost of health care. Since january senator murray and i have been working in parallel with senator grassley and senator widen, who heads the finance committee, theyre working on their own bipartisan bill which they plan to markup this summer. The Senate Judiciary committee is working on some bipartisan bills to address high drug costs and has held a hearing on consolidation in health care. In the house of representatives, energy and commerce, ways and means, judiciary committee, all reported out bipartisan bills to lower the cost of Prescription Drugs. Secretary azar and the department of health and Human Services have been extremely helpful in reviewing and providing Technical Advice in a timely way on various proposals to reduce Health Care Costs, and the president has called for ending surprise billing and r reducing the cost of Prescription Drugs. The administration has also taken steps to increase transparency so families and employers can better understand their Health Care Costs. For the last Decade Congress has been locked in an argument about the individual Health Insurance market where 6 of americans get their Health Insurance, especially for americans without subsidies the cost of Health Insurance remains way too expensive. I am sure that the debate about how to fix that will continue, but that is not this discussion. This is a different discussion. We will never have lower cost Health Insurance until we have lower Cost Health Care, which is why our lower Cost Health Care cost act of 2019 takes steps that will actually bring down the cost of health care that americans pay out of their own pocket. The bill will lead to doctors, hospital, Insurance Companies and employers providing americans a better experience and a better outcome at a lower cost. I want to thank senator murray and her staff. Shes not here at the moment, but her staff is. Led by evan shots and nick bath and my staff led by david cleary and grace graham, who worked together to find about three dozen proposals that democrats and republicans agree on to reduce Health Care Costs. This is not unusual for our committee because we found a way to provide solutions to difficult problems that members of both republican and democratic caucusesqes can sup. We did it with fixing no child left behind, with the 21st century cures act, for user fee funding for the food and drug administration, and most recently in the fireworks over Justice Kavanaugh we had 72 senators of both parties working together to produce the legislation that dealt with the Opioid Crisis. Our goal for this legislation, the Lower Health Care cost act of 2019, is to be one more example of that sort of cooperation because the American People expect us to Work Together to provide ways to reduce what they pay for health care out of their own pockets. Now, as i mentioned earlier, well proceed with the witness testimony. I will introduce the witnesses now. When senator murray comes we will ask her to make her Opening Statements, then well proceed with the witnesses and then we will go to questions from the senators. Im pleased to welcome the six witness, Sean Kavanaugh is the first. He serves as chief Administrative Officer at alladade. It is a startup founded in 2014 working to develop and strengthen accountable Care Organizations in order to reduce Health Care Costs and improve care. He joined alla dade in 2017 and during the same year served as adviser for parent ping, an innovative bostonbased Held Technology company as well as omada health. Prior to 2017 he was deputy administrator and director for the center for medicare at the u. S. Center for medicare and medicaid services. He now sits on the board of directors for the center of medicare advocacy. He is a graduate of the university of pennsylvania, received his master in Public Health from johns chopkins. Dr. Ben epilito is an Economic Research fellow at the American Enterprise institute. He focuses on Health Economics and Health Policy. His recent work pertains to price regulation, specifically surprise medical billing. He graduated from emory before receiving his masters and ph. D. In economics at university of wisconsin, madison. Tom nichols is executive Vice President of Government Relations and Public Policy of the American Hospital association, representing approximately 43,000 individuals and serves nearly 5,000 hospitals, Health Care Systems and health care providers. Mr. Nichols has been with the American Hospital Association Since 1994. He was director of the American College of emergency physicians, washington office, before that. Senator collins, would you like to introduce ms. Mitchell . I would. Thank you, mr. Chairman. Mr. Chairman, i know i speak on behalf of all of the members of the committee in welcoming you back and saying it is great to see you looking so well. Thank you. Thank you. I very much appreciate the opportunity to introduce elizabeth mitchell. Although she is testifying in her role as the president and ceo of the Pacific Business group on health, i wanted the committee to know that she is a native mainer, who we hope is only temporarily living on the west coast. Before her work took her across the country, ms. Mitchell led a multitude of Health Care Organizations in the state of maine, including serving as ceo of the Maine Health Management Coalition and the network for Regional Health care improvement in portland. In those roles she was a powerful catalyst for Health Care Transparency and quality improvement. She also served in the maine state legislature. Although ms. Mitchell and i are in different political parties, i can tell you that i have always found her work to be insightful, practical and nonpartisan. Given her extensive efforts to improve Health Care Transparency and quality, i was pleased to recommend ms. Mitchell for the federal position focus payment model technical advisory committee, one of the longest committee names possible, ptac, where she served as vice chair. Ive very much look forward to hearing elizabeths testimony this morning from an employer perspective. Thank you, mr. Chairman. Thank you, senator collins. Welcome, ms. Mitchell. Mr. Mr. Frederick isasi is executive director of families usa. Isasi is right, right . Nonprofit Consumer Health advocacy organization, that promotes high quality, affordable patient and Community Centered health system. He was for best practices. In addition to work with the governors, he serves as Vice President for Health Policy at the Advisory Board commission, and as Senior Legislative Council on the finance committee in the Senate Pension committee for jeff begman. Welcome. And the final witness is marilyn bartlett, special projects coordinator for state of montana, commissioner of securities and insurance, shes recognized as leader in Health Care Cost reforms and legislative initiatives as well as improving benefit cost plan effectiveness, before working for the montana commissioner, she was Health Care Administrator and managed health care for 33,000 individuals, distributed 200 million in annual benefit. Shes credited with negotiating down the state Health Care Plan costs and increasing Price Transparency in montana. Thanks to all of you for coming. Mr. Cavanaugh, lets begin with you. Welcome. Thank you, mr. Chairman. Im shawn cavanaugh, chief Administrative Officer at aladade. We partner with physicians in value based payment models. Mr. Chairman, you mention dr. Jans testimony, where he talked about waste in the Health Care System. I think we all face a fundamental decision how were going to get rid of that waste and it boils down to a choice of two approaches. One is competition and the other is regulation. I personally have a background in regulation. One might say the ultimate regulator. I worked at cms. I published regulations all year long, centrally administering prices, in a previous career worked at the maryland rate setting system, i set all rates in maryland, and whenever possible, rely on competition, not regulation. I applaud the approach the committee is taking to try to ensure competition works wherever possible. We believe maintaining a robust physician sector is essential to supporting competition and high value care. Unfortunately this approach is at risk as hospitals have been purchasing Physician Practices and hospital consolidation is a growing impediment to competition and high value care. Over half the markets in the country are considered highly consolidated by objective standards of hospital consolidation. We know when hospitals merge, prices includes, quality stagnates. Hospitals argue it will lead to greater efficiency and more coordinated care but the evidence doesnt bear it out. Gag clauses, antitearing and all or nothing clauses are prime examples of excess market power, enabling anticompetitive behavior. These practices run counter to movement to value based care. Aladade supports competition to the overly consolidated markets. Surprise billing occurs because of market failure. Patients dont have time or information necessary to shop to avoid bills. We applaud this committees willingness to take on this issue and willingness to consider multiple solutions and put patient interests firsz. All payers claims databases. For many years, studies of the American Health care system relied on medicare claims data. This is problematic. It is different than the private insurance sector and patients are different as well. Many anticompetitive behaviors are using multi claims database. Applaud restrictions on pbm spread pricing. Pbm should compete on high value formulators, and should generate revenue that way, not by taking advantage of asymmetry in information between drug manufacturers and health plans and employers. Finally, i support time limits on provider billing, i think thats patient centric, we work with quite a few small practices, rural practices, and wonder whether some of them may struggle with a 30 day limit. I ask the committee to consider whether small rural practices should have longer time frames. Finally, a couple other things the committee hasnt done but should consider in future legislation. Eliminate facility fees for services that be provided in a physician office. These fees are unnecessary and have helped fuel hospital consolidation. Anything you can do to support physicians and independent practices, loan payment programs even for those in private practices would be great. We encourage the committee to reform con rules that often give hospitals monopoly powers. We encourage you to reinvigorate antitrust enforcement and grant the ftc ability to review anticompetitive behavior by hospitals. And finally, our personal story, we believe hospitals should be required to share patient centric data. Theres literature that shows when a patient is discharged from a hospital and sees a primary care physician shortly thereafter, they do better, they have fewer readmissions. Thats one of our big strategies, have the doctors visit the patient after discharge. We go to local hospitals, say we will bear cost of interface and setting up you alerting us when theyre discharged. Most hospitals comply because they realize it is good for their patients. But there are a subset of hospitals that refuse to share data for competitive reasons. We think hospitals ought to be compelled to share the data, especially when we bear the costs. Cms proposed a rule in this regard, and are supportive of that. Anything that fosters patient centric data sharing thats good for health and safety the committee should support. Thank you for your time. Thank you for your testimony. Dr. Ippolito, welcome. Thank you very much. Chairman alexander, Ranking Member murray, when she arrives, and members of the committee, thank you for the opportunity to appear before you today to discuss the Lower Health Care costs act. My name is benedic ippolito. I am Research Fellow at the American Enterprise institute. I first want to applaud the committee on the evidence based and constructive proposal. Together, the provisions in this bill will meaningfully increase competition and transparency in health care markets. If enacted, this ladies and gentlemen would lower insurance premiums and drug prices for consumers. And would ensure patients are no longer exposed to Surprise Medical Bills. By lowering costs, the bill would improve access to health care. It is a laudable, one of the most impressive Health Policy bills in recent years. Much of my written testimony will echo recommendations submitted by Health Policy experts at aei and Brookings Institution earlier this year. In my remarks this morning, i will focus on two provisions of the Lower Health Care costs act, establishing a Transparency Organization to Lower Health Care costs and ending Surprise Medical Bills. First, the provision establishes nongovernmental entity that would assemble and analyze data for commercial insurers would improve our understanding of the private health care market. Im going to echo previous comments, saying the federal government already regulates many parts of the private health care market, yet much of our understanding of health care has traditionally come from public payers like medicare. As previously noted, this represents a substantial problem. Ensuring a vibrant, competitive private market requires policy makers are not flying blind. Assembling National Data on the private market in this manner would improve research and in turn improve policy making. Secondly, i would like to discuss surprise medical billing, a feature of the Health Care System thats received considerable recent attention. All three proposals included in the draft legislation represent serious attempts to resolve the issue. With that said, adopting an in network guarantee is the best option. It represents a straightforward and market oriented way to stop Surprise Medical Bills before they ever occur rather than adjudicating them after the fact. By tasking hospitals with ensuring that physicians are in network for insured patients, market actors would need to bargain over prices themselves, rather than having the prices set by arbitration. Physicians at in Network Hospitals have two choices. Either come to agreement with the insurer as many do already, or choose to be paid by the hospital if they prefer. This would force the small number of bad actors to stop surprise billing patients and impose little additional burdens on the majority of providers that do not engage in this behavior. This approach receives support from a wide array of Health Policy experts, including those at the Brookings Institution, center for budget and policy priorities, georgetown law, and my colleague at aei. As scholars of brookings note, in network guarantee is the only option that would fully address the market failure that gives rise to surprise bills, and as economists at yale further emphasize. The resulting payments would be generated by market forces. I agree with these assessments and i think this is a point worth emphasizing, with an in network guarantee, there are no more surprise bills to adjudicate after the fact. We need not rely on an arbiter to tell us which of either the provider or insurer is more reasonable. The bills simply do not happen, and we task market actors figuring out what an appropriate market price is. An alternative option would have disputes over out of Network Bills adjudicated by an arbiter. While i understand the appeal of this process, i think in practice arbitration effectively represents an inferior version of setting a simple benchmark. The arbiter ultimately musty side what a reasonable price for a service is, like any price setter would. Moreover, the process is less transparent, includes unnecessary expenses, can be unpredictable. Takes resolution out of the hands of market actors and does not stop surprise bills from occurring in the first place. An arbitration scheme is not the best option for resolving surprise medical billing. While some pieces are yet to be finalized, i want to be clear on one thing. This bell represents an impressive bipartisan effort to meaningfully Lower Health Care costs for americans. I applaud your efforts and genuinely thank you for the opportunity to be here today and look forward to your questions. Thank you, dr. Ippolito. Senator murray asked that we continue with the witness statements and then she will make her statement at the end of miss bartletts comments. Mr. Nickels, welcome. Thank you, mr. Chairman. Appreciate the opportunity to be here today. My name is tom nickels, executive Vice President for American Hospital association here to represent the 5,000 member hospitals. The Committee Identified several important areas where we can make the Health Care System work better and cost less for patients. On each of these we stand ready to work with you. On surprise medical billing, bottom line, we must protect patients from Surprise Medical Bills and they support a federal legislative solution to do so. Protecting patients means limiting cost sharing to an in Network Amount as draft legislation does and keep them out of subsequent negotiation between providers and the health plan. Once the patient is protected, providers and payers should be allowed to determine fair and appropriate reimbursement. The committee put forward a discussion draft three further option to address surprise billing. In network guarantee or matching approach would require facility based practitioners to contract with every plan for which a facility has a contract. This approach interferes with a fundamental relationship between hospitals and Physician Partners and severely limits practitioners ability to negotiate terms with insurers. This could be hard for rural areas that are already challenged to recruit practitioners. We believe health plan shouldnt be absolved of the function of negotiating rates with providers. The second option, independent dispute resolution process with balanced bills paid at the median contracted rate, while they believe hospitals and payers should negotiate reimbursement for out of Network Claims without government involvement, there may be a role for a dispute resolution process not for homspitals but physicia claims. We encourage you to look at s 1531 as an option for determining out of network reimbursement. It allows a market based, flexible. Efficient negotiation to take place. With much structure of the process outlined is positive, we believe an automatic payment prior to initiating dispute resolution undermines a providers opportunity to negotiate fair reimbursement. The baseball style arbitration similar to what new york and other states implemented and doesnt include hospitals appears to be an efficient process that places responsibility to initiate the request with the provider or health plan, not the patient. Studies shown 34 reduction in out of network billing. Decisions largely split between providers and payers, and not a noticeable inflationary impact on premium costs. Third option, establish a benchmark rate. We oppose a National Rate such as median contracted in network rate, even if geographically adjusted, it would not capture many factors that specific health plans and providers consider. Were concerned setting a reimbursement standard will be disincentive to provide adequate networks. We share the goal of increasing transparency in the Health Care System, but have serious concerns with a couple policies proposed. For example, discussion draft prevenlts decliner steering restrictions by insurers. These and others in the transparency section would inl fringe on provider and Health Care Contracting in ways that could limit it. Designed to improve quality and coordination of care while reducing costs. Put another way, commercial insurers cannot be allowed to have it both ways. That is enjoy savings from providers shouldering financial risk under a value based care arrangement while simultaneously encouraging the same patients to go elsewhere for care. Likewise, unfair for rural hospitals to allow them to cherry pick which hospitals in the system they contract with. We strongly urge the committee to remove those provisions. I want to thank the committee for looking for ways to improve the health and wellbeing by investing in health priorities, vaccinations and data systems. We appreciate the committee look at Maternal Health as hospitals work to improve outcomes, we are redoubling efforts to improve health and welfare of mothers and babies. I want to thank you for efforts to work on drug prices. Runway prices means many cannot afford medications and conditions cant be managed. We support drug pricing provisions in the bill. Each seeks to increase competition. We also in our testimony identify additional actions the committee may consider, such as further increasing transparency and pricing through the fair act. Mr. Chairman, we have an opportunity to help patients with Health Care Costs and affordability. Thank you. Miss mitchell, welcome. Thank you. My heart is still in maine. And members of the committee. Thank you for this opportunity. I am president and ceo of the Pacific Business group on health. We are a Nonprofit Coalition of large public and private purchasers, seeking to achieve higher quality, more Affordable Care on behalf of employees. It is an honor to be here. This is the right discussion to be having. Thank you for your bipartisan leadership. Members collectively spend over 100 billion annually. Purchasing health care on behalf of employees, collectively for over 15 million americans. Members are committed to health and wellbeing of employees, and buying Health Care Services that promote optimal health. Even the largest private purchasers of health care in the world cannot overcome the current industry consolidation, oh pass tee, anticompetitive practices, and egregious pricing in u. S. Health care. It may seem surprising an organization representing Large Private Sector Companies would seek policy intervention into the market. And it is surprising. My members are committed to private sector Market Driven solutions but inch of u. S. Health care, the market is broken. A functional market does not regularly drive families into bankruptcy. It does not depend on go fund me campaigns for treatment costs, and it does not absorb a decade of u. S. Wage growth. If the worlds largest, most sophisticated companies are challenged by high quality, Affordable Care, it is simply unfair to expect that of Small Businesses or families. The dysfunction so profound, we are seeking your support to make a functional market in the u. S. Health care system possible. We believe this bill goes a long way to achieving that. There are several important points, but three i want to highlight. Theres strong evidence that Cost Effective delivery, high quality care is possible and should be expected. Although we prefer Market Solutions to the problem of high costs, Government Action is needed. We also support your efforts to control drug pricing and urge you to go even further and to include provisions that support primary care and Mental Health. Most importantly, we want to say it is possible, and we have bold innovations, driven by employer members, walmarts recent pilots with Specialty Services. This is a program, Employer Center of excellence, administered for hip and Knee Replacements and surgeries. We set high quality standards, vet and select the best facilities in the country, and support employees to use these. I provided for your reference a recent Harvard Business review article on results of the program, but it is important to highlight, patients that participated reported 98 satisfaction and better patient reported outcomes. Readmission and complication rates were markedly lower. The Program Results demonstrate it is possible to save money by reducing Unnecessary Services and improving outcomes and Patient Experience while highlighting that practices this bill seeks to address are barriers to Widespread Adoption of the model. Additionally, we support, strongly support elements that remove gag clauses on sharing of price and quality information by providers. It is hard to imagine providers are barred from sharing information about quality and costs with patients. We strongly support elements of the bill that ban anticompetitive contracting practices, antitiering, all or nothing, and similar clauses used to gain market power and raise prices, irregardless of quality or variable performance. We urge congress to enable Medicare Beneficiaries to toif and seek care from high performing centers in a similar program. We strongly support protection of patients from out of network deductibles, surprise billing, and we support option three, benchmark for payment. Strongly recommend setting payments based on average payments to specialty physicians, 125 of medicare rates. While it may be unusual to have us ask for price setting, we believe this fairly captures costs, we think it is the most straightforward, efficient, transparent approach to regulating prices. A second best solution would be use of payments based on median contracted payment rates, although we are concerned the resulting benchmarks under this method would reflect prices that are already too high. We strongly also recommend that the definition of services in surprise billing be expanded to include ground and air ambulance services. We are pleased you have acknowledged this is a problem, and understand states are limited in addressing the problem due to federal jurisdictional authority, and it is up to congress to fix this directly. We strongly support all of the transparency initiatives, including establishment of all payer claims database, urge you to consider complete data access, including pricing and allowed amounts for greatest utility of this database. We would ask that physicians and patients have key roles in governance of such a database, and that these data sets are mutually accessible, coordinated with Regional State databases. We look forward to additional questions and discussion among most of the provisions in the bill, particularly and finally we strongly support everything included in the bill that addresses drug pricing and ask you to go further. We strongly support elements that require transparent reporting from benefit managers to plan sponsors. Lack of transparency makes it impossible for most employers to know prices, rebates and other complexities, much less negotiate lower prices. Thank you. Thank you, miss mitchell. Mr. Isasi. Welcome. Thank you very much. I am frederick isis. Director of families usa. We served as a leading National Voice for consumers here in washington, d. C. And on the state level. The mission is to allow every individual to live to the greatest potential, ensuring the best health care is accessible and affordable to all. Thank you for the opportunity to testify. The cost and quality of the American Health care is a profound economic and Public Health problem. And utterly bipartisan issue. Almost half the public cannot see a doctor when they need to because of cost. About a third say they have trouble paying for basic necessities because of Health Care Costs. Twothirds of the public believe we as a nation dont get good value from the Health Care System. Analysis of the Health Care System supports the publics perception. Despite spending 2 or 3 times more than other wealthy nations on health care, we live shorter lives than those in other wealthy nations. The u. S. Health care system is more likely to fail its people and even our moms and babies are dying at higher rates. As a nation, we can do better for families and it is well past time that the Health Care System change. Families across the country who face ever increasing Health Care Costs are often forced to make untenable decisions, pay a medical bill or buy groceries to feed the family. Pay the electric bill to keep the heat on or buy a childs asthma medication. At its worst, out of control Health Care Costs and lack of quality can be truly devastating. I want to talk about debra from the chairmans home state of tennessee, a remarkable woman who shared her story with our story bank. Debra worked hard. Went to college. Studied. Graduated. She worked in a successful career as a micro biel gist for the state of tennessee, in 2012, after going to the hospital for a routine hip replacement, debra received a hospital acquired infection. This created a multi year cycle that resulted in her losing her job and almost everything she worked for. Following the surgery, infection sped to vertebra and discs, by 2016 was at risk for full spinal collapse. She had ten back surgeries and at times was placed in a drug induced coma. Today shes bedridden, in extreme pain. Since her first surgery, moved from employer coverage to the marketplace and now medicare. Paying for her care has taken all her savings. She told us i had about 2 million in surgery plus a bunch of other expenses, including an iv antibiotic that was 850 a day. Before this, i had a brand new house. The car was repossessed and house went into foreclosure. Debra was in the hospital when repo papers claimed. I didnt expect this to happen. It hit me so hard and took everything. This isnt what i thought would happen to me. Any of us, any of us could be debra, any of us could be building our lives, saving, contributing to society, and then because of Poor Health Care quality and out of control costs, all we worked for can be taken from us. It is time for our nation to take a long, hard look at our Health Care System, the system should work for families to ensure the best health possible, not threaten economic independence and vitality. Families usa strongly supports Lower Health Care costs act. An important step in the right direction, we provided comments about the legislation. Before i conclude, i want to briefly focus on legislation prohibition on Surprise Medical Bills. Your legislation would end this practice and profound Financial Insecurity it creates. The most critical aspect would ban charging patients out of Network Rates while receiving in network care. This is most critical. It would establish a mechanism to ensure providers cant charge outrageous amounts of money for these categories of out of network services. Recent studies have shown as providers consolidation reached alltime highs, providers are leveraging lack of competition to charge ever escalating prices. These are a central reason Health Insurance premiums are going up, and we strongly encourage maintaining provisions and legislation that not only prohibit surprise bills from out of network and outrageous sums charged for services. The work you do on the committee is vital to the Long Term Health and wellbeing of every person in this country. We hope the work will continue and legislation will be enacted this year. Thank you for the opportunity to testify. I look forward to responding to questions. Miss bartlett, welcome. Chairman alexander, senator murray, distinguished members of the committee, im honored to speak today about my success in lowering Health Care Costs for montanans. When i was appointed administrator at the Montana State Employee Health plan, reserves were projected to be minus nine million in less than three years. Instead, the reforms we implemented resulted in a reserve balance of 112 million to the positive in that time frame. I then joined Montana Insurance commissioner Matt Rosendales office to research and draft legislation aimed as lower Prescription Drug costs. The Montana State plans drug benefit was through a purchase cooperative with seven different contracts. I researched the data files. Found spread pricing, limited access, arbitrary changes to pharmacy reimbursements, limited rebate pass through. I terminated these agreements and we contracted with a pbm that offers a transparent old pass through model with audit ability. When cbs refused to accept our level of reimbursement, i kicked them out of the network and immediately saved 1. 6 million for montanans. We saved 7. 4 million in the first year, 23 . That might not sound like a lot to some of you from larger states than montana, but in the u. S. , the privately insured market has 140 billion in pharmacy spend, a 23 reduction could generate 32 billion savings. As proposed, your bill addresses spread pricing to generate savings. The bill addresses compensation disclosure for brokers and consultants. The Current System is flawed. The broker consultant acts as the buyers agent, but most often is paid by the seller through confidential agreements. My colleagues found up to 17 undisclosed Revenue Streams for brokers, consultants, tpas, associations, and other costs within employer plans. I needed consultant expertise to help us make the changes that had to take place in the montana plan. I contracted with alliant. It only allows for direct compensation to them from the plan. Compensation disclosure for brokers and consultants is a good step. However, i recommend the committee strongly consider extending requirements to all third parties that provide products or services to a plan. The bill includes traditional provisions intended to put downward pressure on costs by increasing visibility. In my experience, i found these transparency efforts are only effective in reducing total costs if you also Pay Attention to the prices. The prices must be fair. As i delved into claims data, i found extraordinary variations in prices charged by similar hospitals for identical procedures. The ram 2. 0 study confirmed this level of variation across the United States. Hospitals develop a secret charge master for prices that you cannot see, so they set prices by the charge master. The Insurance Company or tpa comes in and negotiates a secret discount off that charge master. When i delved into our information, it was plain to see we had no control. So i contracted with allegiance benefit management plans as our tpa. Together we negotiated reimbursement rates and contracted with all montana hospitals, including the 48 rural critical access hospitals. Medicare pricing is a common, publicly available reference and we paid a multiple of it. We are now paying a transparent and fair price and this change on its own saved millions for our health plan in montana. Hospitals payments consume 40 to 50 of a plans resources, so i urge the committee to consider provisions to force hospitals to justify their prices, not just disclose them. Im an accountant. I follow the money. I saved Montana State employee plan millions of dollars while not raising employee or employer contributions over a fiveyear period. I did this by analyzing data, demanding transparency and fair pricing, finding the right partners, taking money out of the system and getting it back to the taxpayers and members. It was my fiduciary duty to do so. The bill before you demands Better Business practices from the Health Care Industry and i thank you for that. Thank you, miss pabartlett. Now go to senator murrays Opening Statement and questions from senators to witnesses. Senator murray . Thank you very much, mr. Chairman, thank you to all of the witnesses for your excellent testimony. I, too, heard from families across my home state of washington struggling to afford health care and i have been clear from the start, democrats are at the table. We are eager to work with republicans to bring costs down for health care for all. The bill that were talking about today is an important step in the right direction, it is also proof that when republicans and Democrats Join at the table, put partisanship aside, put our families first, we can find common ground, help the people looking to us for relief on health care. People like stacy, a woman from seattle, she wrote to my office about how she got an unexpected er bill for over a thousand dollars after she had a bike accident because while the hospital she visited was in network, one of the doctors who treated her was not. And stacy also shared with me how her mother has struggled with high Health Care Costs, too, because after her mother was diagnosed with type one diabetes, she was forced to move in with stacy to afford her insulin. So families like stacys, and there are so many of them, are really looking to us for help. Im glad the legislation works to address surprise billings, so patients like stacy will no longer get caught off guard by exorbitant charges for out of network care through no fault of their own. And i especially want to thank senators has en, bennett, young, murkowski for their work on this issue. This bill works to open the doors for cheaper generic insulin that could bring down costs for patients like stacys mom, would make it harder for Drug Companies to game the system and put up road blocks to competition from cheaper generic drugs. I want to thank senators kanz, shaheen, smith, casey, cassidy, roberts, and many others for working together on many of the ideas in this will. And those are just a few of the many common steps we were able to come together on, thanks to work of senator peters, duckworth, roberts, this includes strong response to threat of vaccine hesitancy, supports efforts to counter misinformation and increase vaccination rates in communities at risk of outbreaks, investment in Public Health data systems pushed for by kaine, king, isaacson against Public Health threats, would ensure that state, local, Tribal Health departments have guidance on obesity prevention efforts thanks to senator jones and scott. Includes proposals frto echo th model we heard about in hearings on the Opioid Crisis so it can be used to bring care to more people in more places, address more health care needs. It includes proposals to update Electronic Health records, to make health data more accessible for providers and patients alike, and would take a much needed step to respond to our countrys Maternal Mortality crisis, including supporting investments for care for pregnant women, providing bias training to address the fact that women of color in particular are dying at unacceptably high rates. Overall, this bill offers a lot of good bipartisan steps. Mr. Chairman, i hope we can continue to improve it in the coming days by continuing to work on proposals such as senator baldwin and brawn, smith and murkowskis important drug Price Transparency bill. But i want to just say to be clear, if were going to bring down costs across the board, help families that are struggling, this is no place to stop on this bill. Far from it. Even as this bill offers families important relief on many issues, the administrations policies are undermining health care for tens of millions of people across the country. They have rejected democrats efforts to defend protections for people with preexisting conditions, coverage for people nationwide from a partisan lawsuit thats now moving through our courts. President trump has allowed Insurance Companies to go back to selling junk plans that lead people with preexisting companies vulnerable, and refuse to take significant action to curb drug prices, despite campaign promises. And he slashed investments in helping people navigate the Health Care System and get the plans that are right for them. To put a finer point on it, when your car is totalled, you cant fix the windshield and expect to start driving. We have a lot of work ahead to do with this, and i am really glad that we are here together on this legislation, and im going to keep making it clear, it needs to be a first step, not a last one. Democrats understand that, families do as well. We have a lot of critical work ahead of us beyond this. So thank you very much, mr. Chairman. Thank you, senator murray. And before you came, i said much the same thing. Health care is a big topic, there are a number of areas on which we disagree and we will continue to debate, but one thing we have been able to do and i think senator murray and the Committee Members and the staffs, identify nearly three dozen provisions, about 16 from republicans, 14 from democrats, and we have a few more were working on such as the Cassidy Murphy provision on health care, and another that senator murphy mentioned. All of these are aimed at reducing the costs of health care paid for out of your own pocket. So these are first steps. I agree with her on that. There are other issues we need to work on but have been able in the committee in fixing no child left behind, 21st century cures, opioids, many other things we agree on, and move ahead in meaningful ways. So i thank her for working in that way and complimented both staffs before she came. Now, i only have five minutes just like each senator does, so i hope we can have an efficient back and forth. I have two or three questions i would like to ask. Mr. Cavanaugh, being at cms, youve seen the health care in a broad sense. This legislation basically seems to me to do three things, and surpri end surprise billing. Provisions aimed at transparency, increasing transparency. You cant reduce the cost until you know the cost. The third thing is to, you mentioned this yourself as a former regulator, we have nine provisions to increase competition for generic and buy similar drugs which are 90 of drugs prescribed. If you look at those three areas, surprise billing, transparency, and increasing competition, do you see those as meaningful steps and which one would have the most impact on reducing costs of what they pay out of their pocket for health care . Sure. I dont see them as that different. I feel like surprise billing is addressing failure of the market where the consumer is not in position to be an informed consumer making choices, theyre in distress, going somewhere without full information. Transparency again is what makes markets work so people know what theyre doing. These are all to me procompetitive policies, thats why i applaud the committee. If i had to quantify the magnitude, i think title 3 ones labeled procompetition about certain hospital negotiating tactics, i think that will have the most direct and immediate, but i think theyre all growing in the same direction. Mr. Nickels, transparency is a big theme. We talked a lot about it. On the 340 b program, hospitals put on their website where the money goes. 340 b is a law that says drug discounts should go to help low income people. Why shouldnt hospitals be required to report that same information to hersa, any problem with that transparency in your view . Mr. Chairman, were all for transparency. We have a voluntary initiative among members, 340 b members, all 1100 of them complied putting out that information. Why dont you take that information and give it to hersa . I think the plan is by end of the summer, we will have all that information. Want to give people time, it can be complicated, we intend providing to hersa hernames of folks signed up. Health centers have to let us know. If you talk about transparency and the law says the money is to be spent for low income folks that we at least ought to see how it is spent. Doesnt mean we tell you how to spend it, we would know how it is spent. Mr. Ippolito, let me go to surprise billing a minute. A lot of senators that worked on that, you spent some time on it. Seemed to me the problem is out of network doctors, that the solution is to have in network doctors. That seemed to me to be the simplest solution to the problem, and also saves the most money. All three proposals we put out take the patient out of it. In other words, there are no more surprise bills. The question is how do we reduce Health Care Costs the most. The other two provisions are the benchmark type provision, which the house seemed to prefer, and then arbitration. You talked about it some in your testimony but isnt arbitration really a sort of benchmark . I dont see much difference between the two. And what are the problems with arbitration as opposed to the house benchmark proposal or the one that i am instinctively liking, make everybody in n network. The short answer, theres not much difference in practice between an arbitration system and benchmark system. The reason is basically that if you think about what the arbiter is doing, they have to make the same decision that the person choosing a benchmark has to make. They have to choose which one is more reasonable. The only way to do that as far as i am aware, you have to know what the reasonable number is, which one is closer. When i look at that in terms of practice, i think it is very, very similar. There are some differences between the two options. It tends to be a little less transparent, tends to be a little more expensive, over the long term, experts worry it might be a little less predictable about how it will evolve over time. Some will disagree on that point. Generally speaking, the answer is theyre quite similar at their core. And your preference, number one, is in network guarantee. Number two, well, you tell me. My ordering is the order you were going down. I like in Network Matching specifically because it is the way we solve the problem in every other market. When you go get your carr car replaced, you dont have to worry about unexpected bill from the person that painted the bumper. Not because we have an arbitration system to litigate bumper bills, it is because we go with all in pricing in most markets. Thats how we solve the issue. To me, that seems the most natural. My time is up. Thank you very much. Senator murray. Thank you, mr. Chairman. Mr. Nickels, senator alexander asked about the 340 b program that requires pharmaceutical companies to provide discounts on crucial outpatient drugs for low income patients. 340 b is one of the most effective programs managing high drug costs that we currently have, and there arent taxpayer funds involved in providing those discounts, correct . Thats correct, drug company funds. I want to be clear, we can all debate the best way to oversee the program, were not talking about wasting taxpayer dollars. Correct. Mr. Nickels, hospitals do a lot of reporting as part of their participation in medicare, as part of their medicare cost reports, do hospitals report on labor costs, Physical Plant expenses, marketing costs and other things . Yes, all of the above. But medicare doesnt pay hospitals for some of the costs like marketing. Yes. Some are unallowable, but we still report them. Mr. Isasi, families usa supported establishment of a minimum medical loss ratio for health plans. Does the mlr require plans to report on administrative costs like marketing and executive compensation . It absolutely does. So mr. Isasi, senators baldwin, brawn, smith, murkowski have a bill requiring them to report those costs when they make price increases over 10 . Do you think thats helpful information. It is critically important. Important to remember these drugs are life and death for people. This information should be available to the public and policy makers. So you would support that approach. 100 . We also encourage examination of launch price as well as increases. Miss mitchell, many states, including my home state of washington passed legislation to end Surprise Medical Bills. Your Organization Works with large employers to bring down the cost of health care. Why is it important to your members for the federal government to act . Well, we have multi state employers and it is often variation across states that really increases the challenge for them, so we need federal legislation in this area. One of the issues that we are debating is what is the appropriate rate for an insurer to pay for a surprise bill. What impact do you think the proposals that we have in our discussion draft bill have on enrolling premiums and access to care. The experience in california is it has no effect on premiums. We believe that we can achieve fair pricing. 25 of hospitals are succeeding under medicare rates. We think there are significant opportunities for business practice improvement and increased efficiency among hospitals, but we believe thats a fair rate and could be sustained. Thank you. Mr. Nickels, the bill that were talking about here today addresses a number of Public Health issues that are critical to conversations regarding Health Care Costs. One issue of increasing concern that i have heard so much about is rise in Maternal Mortality rates. We i believe have to do more to reduce those preventable deaths, and many deaths occur not during childbirth itself but during weeks and months before or after childbirth. Can you tell us how hospitals are working with Community Partners to help make sure women have the information and health care they need to avoid unnecessary illness or Death Associated with pregnancy . Yes, thank you. Youre absolutely correct. Twothirds of maternal deaths do not occur in childbirth in the hospital, it is before and after as you know. We are working with Community Partners, part of a coalition thats led by acog, for many years to try to trace it better. The bill provides more funding, focus. The senate took action last year, theres legislation in the house by representative kelly we support, we need to do as much to solve this problem and ought to have a deadline where we really solve this problem nationally. Thank you very much. Appreciate that. And mr. Nickels, on one other topic, over a thousand cases of measles reported in the u. S. In 2019. Greatest number in nearly three decades. More than 80 of those in my home state of washington. Those outbreaks put families and communities at risk, put unnecessary strain on our health care and Public Health care system. I was overwhelmed by what i saw in clark county where we saw the majority of these, and costs it took to Public Health officials, the community itself, all of the reporting, looking for people. Im glad the bill includes provisions to combat misinformation and increase vaccination rates. How can Health Care Facilities, providers, Public Health professionals Work Together to increase what we call Vaccine Confidence . We are very supportive of provisions in the bill. You go a long ways that direction. We hear from members, increasingly, about measles outbreak, what it is doing to the communities. What it is doing to their facilities. We all need to Work Together, and you put your finger on it, it is misinformation out there causing the problem that has to be fixed. Thank you. My time is up. Thank you. Senator collins . Thank you, mr. Chairman. Miss mitchell, you dedicated a substantial portion of your career toward promoting more transparency in Health Care Pricing as well as higher quality. And as a result today, the state of maine is one of the best states where you have all payer claims database. I joined senators rick scott and cory gardner in introducing a bill that would create a consumer friendly database for Prescription Drug prices. In your written testimony you talked about two powerful examples of an employer who was overpaying for Prescription Drugs. One was a kidney patient where the employer cost was 138,000 every two weeks, now looks like it is going to go down to 26,000. The other was a pediatric patient, the cost for the employer was 750,000 and now using a different hospital, that cost may be only a third of that amount. So what led to those Success Stories . Was it Greater Transparency, was someone negotiating for the employer . What produced those kinds of results . Thank you, senator collins. I think those are important examples of both the problems in the system and also the opportunities to fix them. These cases could not have been addressed without transparent price information. Only large employers can have access to that information often times. We believe with Greater Transparency more actors, more employers, insurers would identify Solutions Like this. I wanted to point out particularly in the case of a pediatric patient, those annual costs of 750,000 were brought down to 250,000 a year, same drug, and they were neadministed at home at the request of the family. A winwin for the employer and patient. We believe transparency would enable more Success Stories like that. Thank you. Mr. Nickels, some of the rural hospitals in maine are worried about increased transparency because their prices because of the smaller Patient Population that theyre serving tend to be higher than their urban counter parts. Those rural hospitals are really important to communities, and allow people to live where they can get care. So how do we balance the need to maintain a Rural Infrastructure for health care and the need to lower prices which is imperative. Youre right. We need to be mindful of impact of any of these policies on Rural America and unintended consequences these policies can have. Rate setting that was discussed here a little bit, rural hospitals, yes, costs are higher, margins are smaller, they have a more difficult time getting staff physicians, nurses, et cetera. We cant have a National Rate imposed, that will be a race to the bottom. Whatever we do here, ending surprise bills, i think everybody agrees on that. And there are provisions in the bill that do that. But there are other provisions in the bill like rate setting that worry us, particularly impact on rurals. Miss mitchell, let me return to you for my final question. Bio logics are a category of drugs most expensive. The committee i chair had a number of hearings on this issue. What we found is that the brand name manufacturer puts out patents that prevent bio similars coming to market. By contrast, bio similar uptake in europe is much more prevalent than in the United States. In fact, the former fda commissioner estimated of all bio similars that have been approved by fda actually made it to market in a timely fashion, that American Consumers would save more than 4. 5 billion. Do you have any thoughts and do you support the provisions in our bill that attempts to prevent the gaming of the patent system to delay the advent of bio similars to the marketplace . Absolutely. We strongly support any of the changes that will enable increased access to buy similars, and anything that prevents. There needs to be strong action on pricing, we strongly support the provisions. Thank you. Thank you, senator collins. Thank you, mr. Chairman. And Ranking Member murray for your work to address rising Health Care Costs. I also want to give special thank you to your staffs. These are complex issues, lots of stakeholders, therefore lots of incoming for the staffs and theyve been terrific. Americans called on congress to act and i applaud members of this committee and both sides of the aisle for taking these calls seriously. I am particularly encouraged by the momentum behind the work to end the absurd practice of Surprise Medical Bills. People get Health Insurance precisely so they wont be surprised by health care bills. So it is completely unacceptable that people do everything theyre supposed to do to ensure their care is in their Insurance Network and then still end up with large, unexpected bills from an out of network provider. As mentioned, i have been working with senator cassidy, murkowski and others to address this issue in a bipartisan way. We worked over a year on this issue, received and incorporated feedback from many on the panel. I am grateful for your testimony. This hearing is an important step forward as we work to protect consumers and surprise medical billing. Mr. Cavanaugh, i want to start with a question to you. My colleagues and i in our Bipartisan Working Group agree that patients must be removed from surprise billing disputes. But it has become clear theres no benchmark payment rate that plans and providers can agree would be an appropriate one size fits all approach. During your time, you experienced firsthand how difficult it is to set uniform payment rates that work well throughout the country. Can you briefly touch on why that work was so challenging . Sure. Thank you, senator. Again, if you think about Medicare Advantage which is an analogy, Medicare Advantage, if you go out of network, there are limits on balanced billing and set rate that the provider will be paid because it is a highly regulated system. But thats built on an enormous infrastructure of medicare fee for Service Program that takes thousands of employees in baltimore working every day, so theres an infrastructure thats been refined over time, it is not perfect, but built on something. If you were to go the benchmark route in this legislation, i should preface saying we support all three approaches, because you protect the consumer. Dont have a preference for that after that. But i do think and the legislation tries to anticipate you will run into as you try to a benchmark rate is rate setting. You will run into unanticipated consequences, someone will need to figure out how to adjudicate all those situations, make sure. Youre not billing on the medicare fee schedule that a an agency administering it. Youre starting from scratch. Even when you establish a benchmark rate, it is hard to maintain it as applicable rate across the country for all providers . I think what youre getting at, i think theres unanticipated consequences from this that if you decide to go that way, we would all learn will take more work than any of us can anticipate. But it is one of the approaches. Yes. Thank you. Mr. Nickels, we heard a lot of disagreement throughout this process how to best create a payment resolution that works for all parties. So yes or no, based on your experience, do you believe theres a benchmark rate you and your colleagues in the provider and Payer Community can agree to that congress can legislate into federal law and apply across the country . We do not. Given lack of consensus on what a correct benchmark payment rate would look like,unwise to congress to legislate an inflexible benchmark, especially when we know if we get it wrong, it would take another act of congress to undo it. Do you believe in independent dispute resolutions similar to whats law in 12 states for hospitals, providers and payers and why or why not . Of the three options in the bill, thats the most preferable option. Wed preforecontinue negotiating with our insurance colleagues. I think particularly for physicians, the rural physicians, going back to senator collins question, the dispute resolution system, much like in new york state which has proved effective, efficient would be the best option that is in the bill. Thank you very much. I yield the remainder of my time. Senator cassidy . Doctor, i like much of your testimony. Be still my heart. What you did in montana, if i wasnt married to my wife, and i dont know your status, nonetheless, but that said. Dr. Ippolito, two stories. My daughter got kicked off of alice in wonderland in central park. We took her to the emergency room. Shes bleeding from her forehead. And the er said we dont have a plastic guy. Go to his office. I got a bill for 3,000 for glue the guy put in that took him five seconds to place. I was at a tennis match here in d. C. And all of a sudden, i get this black spot. I call an ophthalmologist. He says youre having a retsinal tear. Go to the er. They say you dont need an er. Well hook you up with the ophthalmologist. Both emergencies. Now in that case, i think i got a bill for 1500. Both out of network. Does Network Matching help me in either of those situations in which i was not seen in a hospital but rather referred to the Physicians Office . Yes, thats a very good question and good clarifying question. The innetwork guarantee would take care of a very large portion of the surprise bills, but they are the ones that occur at your innetwork facility. So on the other hand, what ms. Hasson was speaking of, i do gather that under the proposal that she and i have, i would have been cared for in both situations in which there would have been an innetwork price, and so there would have been an out of network dispute, but i wouldnt have paid 3,000 for 20 seconds worth of glue or 1500 probably worth it because i got my retinal back in place but nonetheless, it was out of network. So theres a superiority. And i think were naive if we dont think that there will be more migration out of the innetwork hospital into a setting not covered by an innetwork rate if were to put restrictions upon that which a physician could bill. I mean, we would just be naive to think so. I would clarify one point. The first is that both in arbitration and a benchmark system would have covered you in that case that youre talking about. Arbitration and benchmark but not an innetwork. Innetwork would need to be paired with something else. The other thing about benchmark is that this is a ratio of miss moody, will you hold that up, please. She calls heres vanna white. If you see dark blue has the highest rates of care. Dark brown has the lowest rates. Its easier to get doctors in florida than it is to get doctors in alaska so, therefore, you must pay doctors in alaska more. Market forces, if you will. Dr. Cavanaugh would like that. I suspect even in florida there are a great variation. If youre in miami, you probably get more docs willing to work and in a rural area, fewer. But i will make the point as ms. Hasson did that to have a benchmark would require a complexity that would reflect both different states as well as different areas within a state. And i do think thats a complexity there. I think its an important point and its the reason why the benchmark and the arbitration options included in the bill that were talking about are based on the average innetwork rate in the area. The second point im not sure our benchmark is but i have im happy to circle back. And the other thing i want to dispute is that you mentioned in your testimony that thank you. You mentioned in your testimony i should also raise this. I want to make the point that the purple are states which, as lavatories of democracy have put in arbitration models and the orange tennessee orange for our chair are states which have the benchmark but no state has a Network Matching. So empirically, i want to just say theres a prejudice among our states for and i see Washington State either has uw purple or lsu purple. Im not sure what that is. One thing in the sense that the data do indicate most hospitals do not produce out of Network Bills for innetwork patients which really, i think, if were mapping that would suggest that in all 50 states oh, i accept that. Thats a superiority of the dispute resolution. But i have limited time so im going to make one more point. And your testimony you suggested that the dispute resolution will be more expensive but cbo scores the savings of the hasson cassidy proposal at 17 billion and the Network Matching is only 9 billion. And so there is it might be expensive, but its less expensive than Network Matching. Ill probably hang for a second round if there is but now i will out of time yield back. Thank you, senator cassidy. Senator smith. Thank you, chair alexander. Great to have you back. And thank you Ranking Member murray. Theres been some really good work done on this bill. Im grateful for all of you being here today to testify and answer some of our questions. I believe that the number one thing that i hear about from minnesotans across the board is their worries about rising Health Care Costs. And often they hone down right away to the rising cost of Prescription Drugs. So i am really glad that the proposal that we have before us includes some good drug pricing provisions, and im glad the bipartisan bill that ive worked on with senator cassidy, the protecting access to biosimilars act is included which would help to bring down the help more lowcost biosimilars into the market like insulin. And also the proposal, the bill that i worked on with senator roberts, the ensuring innovation act which will prevent the ability of Drug Companies to make minor tweaks in their formularies which is an anticompetitive strategy that benefits the Drug Companies and not consumers. Mr. Isasi, i know your organization has done a lot of work on the issue of how to lower the cost of Prescription Drugs. I have first a general question. Whats your feedback on the proposals that we have in this bill, and is there anything more that you think what else do you think we should be doing . Well, we support very much support the proposals in the bill primarily aimed at transparency. But it is not nearly far enough. And we strongly support your bill around patent abuses and first filers. We also strongly support the notion that price is the problem. And we should not get confused and we need to address drug pricing. We need the government to get in there and a majority of americans, including republicans, want the government in there to help fight for fair prices. Right. Exactly. Several of you made the point that increased transparency is useful but that is not the only thing thats going to address lowering drug pricing. And thank you. I appreciate you mentioning the bill that was i think it was the first bill i introduced when i came to the senate which was essentially it cracks down what it says is it would allow subsequent generic a little technical but subsequent drug filers to share Market Exclusivity with first filers if they win that litigation so they dont have the it actually does something about the exclusivity in a way that i think is meaningful. Do you agree . It will allow us to refocus the drug industry on innovation and not reward smart lawyers. Exactly. Not that we have anything against smart lawyers. However i want to go to another issue that i think is really important. Its important to minnesota. This is something that senator braun and i have been working on. It has to do with the allpayer claims database. Ms. Bartlet, it sounds like in montana youve done a lot of work with this. And this all claims database has been incredibly useful in minnesota to help us get a handle on whats happening with drug products like insulin. How much minnesotans are paying on average and how those prices have risen over time. It has given our department of health a very, very important tool for addressing some of these issues. And i think one of you said how important it is to look at this information on a regional level. So the bill that we have before us includes does work to advance the work of all claims i cant say this. Allpayer claims databases, but ive heard some concerns from the Minnesota Department of health and others about how this actually would work in realtime and what it might do or not do to help states get the information that they need. So im going to ask mr. Ippolito this. You know some of my you know a little about the concerns that Minnesota Department of health has had with this. How do you respond to the concerns that they have raised, specifically that the legislation before us as drafted might not provide states with timely access to data that they need, as well as the federal government, from selfinjured plans . There are multiple approaches of achieving the same goal when we think about allpayer claims databases. As i understand the bill and i could be misread, but i understand it as an effort to try and create a federal allpayer claims database for those regulated plans but also allow state ones to coexist and, in fact, combine their data with the federal data set. Now the one catch is that i do believe they have to share their data with the federal government. And so to the extent thats a sticking point, im certainly amenable to rethinking the exact structure, but i do think at a base line, they can coexist. At least in theory. Maybe as im about to run out of time, senator braun may have some questions about this as well, but i am very eager to resolve this issue so the great work that ms. Bartlet was talking about can proceed at the state level and the federal level. Great. Thank you. Im out of time. Thank you. The chairman has left for a committee. Hell be back in a few minutes. In his absence, ill continue. Senator braun . Thank you, Ranking Member murray. Wish we had more than five minutes. This is such an important topic, and i think as you can understand, 14 proposals from the other side of the aisle, 16 from our side. This is a big deal. Im approaching this as recently as a ceo of a company that brought Health Care Issues into the c suite ten years ago. It needs to be there, not in hr if were going to fix it. I want to give you history on what i did. Was not a member of a group as large as ms. Mitchells. Wish i had been. I was simply frustrated as a main street entrepreneur that every year, it was the same issue. Premiums kept rising. Id get this smirk of, youre lucky its only going up 5 to 10 a year. And i want to let the industry know, as well as the american public, that we are with you there. That it is a crisis. And i would challenge the industry, we shouldnt need 14 proposals from one side of the aisle, 16 from this side to be fixing whats 18 of our gdp. If it was any other part of our gdp, competition and transparency would have gotten rid of the whole mess through the process at works elsewhere when you got it. Through that frustration, heres what worked for us. And im seeing some of it being incorporated in these ideas that were talking about. I figured out back then, and we havent talked much about the user, the consumer, the employee. Completely atrophied in terms of being involved in the market because its been so paternalistic. When the Insurance Company basically said, hey, part of this is the fact the people that use it never ask how much does it cost. They dont want to be involved in it. And i think thats important. I devised a plan that did force skin in the game. Gave all the tools you could get, including Health Savings accounts, and basically emphasized wellness, not remediation. Did everything in the kitchen sink. Basically cut costs out of the gate by 50 . And for my employees, covering preexisting conditions and no caps on coverage, which we need to do as conservatives and republicans. Its part of obamacare. That just wasnt going to work due to its structure. We need to get with it. Ive not had a premium increase now into the tenth year because ive got my employees engaged every time they enter the Health Care System. They at least see how much does it cost and look at their alternatives, despite the industry not doing much to accommodate it. It can be done. Were running out of time. Employers are getting frustrated. Most arent as passionate as i am or maybe the group in california. And theres a clear alternative on the other side. I give this as a warning to the industry. You ought to be fixing it yourselves, not having us here having to nudge you with legislation that couldnt occur in any other sector of our economy. My question is going to be directed first of all, excellent slate of witnesses. Maybe theres another round, and we can get more in. I always stay here until the last person is standing. This will be it for ms. Mitchell. In your group, which looks like its got a lot of large employers, im sure a lot of what i said kind of resonates. Where have you what have you done to look at the other end of the equation . Consumers drive most markets with full transparency and the desire to get the best choice of quality and price. Do you think the consumer, the employee has atrophied to where if we do make it more transparent and get the industry to ever get out of its doldrums, will we have employees, consumers, patients be willing to have some skin in the game and help the system out as well . Absolutely. And i think patients and families absolutely have skin in the game. The health of their families. But they are in a completely untenable, unfair situation. They have no information. Were talking about providers that even being allowed to share information with them. The providers that they trust. And we ask them to be responsible consumers with no ability to do so. No cost information. No relative quality information. So our members, and you would always be welcome as an honorary member, our members are trying any innovative approach they can to actually work with their employees to address their concerns. So we absolutely believe transparency is necessary and that we will have active involvement of patients. So what i did is devised a plan with dollar one. You do have skin in the game. But then capped costs to where you can never go broke because you had a bad accident or got sick. And it did work. And ive had a id love to show those details with you. I think youre saying the same thing that i am. We all, for families, along with edg education, its the most important thing out there. Thats the other thing going up faster than Health Care Costs. The Industry Needs to really take this as a warning and a challenge. Were going to get some stuff across the finish line here. Its only nipping at the flacnk. Its not going to happen unless we go to the other plan, which is medicare for all. Thats what basically all other countries have done. Were at a moment in time where we can keep the best of what weve got, but its got to reform itself or else that will be the only alternative. Industry, wake up. Thank you. Thank you. Senator baldwin. Thank you. So i am certainly encouraged by the committees effort to address health costs and Critical Issues like surprise billing, but i am very frustrated that we have not begun to hold Drug Companies accountable for jacking up prices of existing medications. In the past five years, prices of brand name drugs have increased at ten times the rate of inflation, putting lifesa lifesaving treatments out of reach for far too many families. Meanwhile, drug company ceos are seeing bigger paychecks. Reports show that the median drug companys ceo pay increased by 39 in 2018 with some of the highest paid executives making 20 million to 50 million per year. That is why i worked with colleagues on both sides of the aisle, including senators braun, murkowski and smith on the fair drug pricing act to require basic transparency of Drug Companies when they increase prices of existing drugs. I really urge the committee to add our bipartisan bill to the Lower Health Care cost measure that we will vote on in the near future. Drug companies spent 172 million in lobbying last year. They work hard to defend and often distract from their price increases, often by citing industrysponsored statistics that show large investments in developing new cures. But we have numerous studies showing the opposite. One recent study found that nearly 80 of every dollar spent by big Drug Companies goes to something other than research and development. Things like marketing or stock buybacks. The market is clearly broken, and taxpayers deserve to know what we are getting for our money. Mr. Isasi, why do we need to include the fair drug pricing act in this package to ensure systematic transparency for drug price increases . And why is it important for companies to report specific metrics, things Like Research and development expenditures, marketing and advertising expenditures and other items . Tharchlg you very much for the question. We strongly support the legislation that youve worked so hard on. We believe its very important. As you point out, this industry is currently broken. We are incentivizing smart legal tactics and not innovation. We and these drugs are life saving. At the very least the companies should be able to justify like insurance plans do, like hospitals do, why theyre charging what theyre charging and what the increases are for. Thank you. To be clear, this bipartisan bill simply asks companies to report more information on their pricing decisions to taxpayers. Innovative companies who invest significant resources in research and development should have the opportunity to demonstrate the value of their investment to the public. And this bill would do nothing to prevent a manufacturer from increasing prices. Mr. Mitchell and mr. Isasi, can you explain how ms. Mitchell, sorry. Can you discuss how more data on drug pricing issues and expenditures will help policymakers, researchers and other industry stakeholders make Better Health care decisions . This information is critically important. What we know is, for example, that most of the drug pipeline has dried up. They have converted to generic drugs, right in so these drugs are talked about, these huge price spikes have the least amount of competition. Theyre not necessarily the most effective drugs. So we should have transparent information about exactly why the price is going up. And we would take it even further. Why the launch price existed, if this is real innovation thats adding to American Families. Without that information, thats whaping right now is that Drug Companies are making more and more money, not because theyre saving lives, not because theyre curing illness but because theyre extorting a distorted market. I would simply agree. The problem is the pricing. And everything were talking about, rebates, thats just obscuring the actual issue here which is the pricing. Our members are trying to offer discounts. They dont they are basing those on estimates because they cant get insight into the actual price of the drug. So we absolutely need transparency but its just the starting point. Thank you. My time has expired. Senator romney . Thank you, Ranking Member murray. Appreciate the members of the panel coming together to inform us on this most critical issue for the american family. I very much sympathize with the comments made by senator baldwin. Prescription drugs, i think, is an area of important focus for this committee. And an area where an opportunity is apparent for us to help the american consumer. One of the things senator braun and i have worked on as a measure to help in this regard is to assure that individuals who are responsible for coinsurance for the prescription of their for Prescription Drugs, the coinsurance rate is determined on the net price, not the retail price of the drugs. So that when rebates or the like have been provided that the consumer has the advantage of that feature and hope that that becomes part of the final bill. But most of the discussion today has focused on differing points of view with regard to surprise billing. So i want for a moment to focus on that area. Mr. Cavanaugh, you indicated that one of the challenges with benchmarking is that you have a huge network of people that are responsible for setting medicare rates, but something of that nature doesnt exist if we were to put in place a benchmark system. On the other hand, ms. Mitchell indicated she would set the benchmark based upon the medicare rates. So would that not remove the complication that youre concerned about, which is to simply set a benchmark rate and do it based upon either 1. 25 times the medicare rate or 1. 5 times or equal to, but basically use that as the benchmark figure . Would that remove that complexity you were concerned about . Sure. Thank you, senator. The only point i was trying to make is in Medicare Advantage theres a benchmark that operates this way but its publicly known. Like i can go online and tell you today what the benchmark rate is in every community for every service. This legislation, one of the options, would create a new benchmark rate with a different methodology and someone is going to have to go and build that and figure out what those rates are. I didnt mean to make any bigger point than that. Ms. Mitchell, do you have any comment on that . Again, we think this is the most straightforward, efficient and transparent way to come up with fair rates and the evidence supports the rate. Would anyone want to comment on the advantage or disadvantage of using that system, which is using if could use a benchmark, using the medicare benchmark and keying off of that as opposed to an arbitration process . Im concerned just at first blush with the arbitration process, its going to be highly complex with after the facts, negotiations going on, and differences in different communities and arbitrators that may or may not be familiar with the specific circumstances. Would it just be a lot easier just to tie into the medicare rate one way or the other . But if people have differing views, mr. Nickels, please. Thank you, senator. Id have a different view. I think our concern is, first of all, its well documented and congress own Advisory Board medpac says that medicare does not pay the cost for hospitals that are fair. And to base anything on medicare rates i think is a mistake. Secondly, theres no difference between that and medicare for all, which was just described earlier, which we have real concerns about. And the third thing i would say is one of our concerns about setting a rate is if its out there, what we want is for negotiation to occur between providers and insurers. If theres a default rate, why wont the insurer just always go to the default rate . There wont be a negotiation. They wont have Broad Networks which they need and i think were coming back to the same thing as medicare for all. Id like to follow up, if i can, senator. Please. To be clear, again, when we are going through an arbitration process, were using a benchmark. You have to decide who wins and who loses. So ultimately were doing the same thing. So at i would push back and simply say that if you think medicare is too low and thats completely fine with me, then it doesnt mean you cant use metd care. At least in concept. You can say medicare times two, medicare times three, whatever number you think is appropriate. The one advantage that has is it isolates it from being gamed by the market actors. That is, trying to engage in these shenanigans to be in or out of network to affect the benchmark rate thats a function of that. Thats the one advantage. Ms. Mitchell . Thank you. I concur. I would also point out that 25 of u. S. Hospitals manage their cost well enough that they are successful under medicare rates. And were not talking yet about costs. The recent report by ran shows that hospitals bill commercial payers average 240 of medicare. So what is the actual cost to provide that care and how do we agree on a common standard . We believe that 125 is fair. Thank you very much. Mr. Chairman . Thank you, senator romney. Senator casey. Mr. Chairman, thank you very much. I want to thank you and the Ranking Member for the work youve done on this issue and for the panel. Were doing a lot of hearing juggling. Mr. Chairman, i wanted to raise something i know youre aware of and were trying to get done. And this is the reform in the fdas authority to regulate over the counter drugs. All of us, i think here, have an interest in making sure that any Prescription Drug is safe and effective according to the most uptodate information available. This is Bipartisan Legislation that senator isaacson and i have worked on for many years, or at least several years. And were hoping we can get it done. Mr. Chairman, i just wanted to, for the record, ask you to commit to pushing ahead and finding a way to pass this legislation. The socalled overthecounter monograph reform legislation. You know that i think its very important and would like to find a way to pass it. So thank you for the question. I appreciate that. Im glad thats on the record. Not that it was essential but were grateful for that work and trying to move it forward. I wanted to move to a question about some developments that have played out over several the last several years now, but something even more alarming that just arose in the last couple of weeks. We know that this with regard to what happens on the exchanges as well as regard to medicaid itself, i wont dwell on that today. But we do know that from data just released earlier this year, 7 million fewer people have health care. Theres a good article that describes this data that gallup found. Heres a name of the article dated january 23rd, 2019, by sarah cliff in the publication vox. Under trump, the number of uninsured americans has gone up by 7 million. Thats a title of the article. This is compounded by what the administration is undertake with regard to the official poverty measure. We know that if this proposal is adopted and the official poverty measure is tied to socalled chain cpi, and im reading from a letter i drafted signed on by or cosigned by 42 senators, quote, because chain cpi shows slower inflation over time, fewer americans would fall below the poverty line in the future, unquote. Heres what it affects. Health and Human Services bases its annual poverty guidelines on the official poverty measure threshold. That will affect medicaid, the childrens Health Insurance program, maternal and Child Health Block grant, the Community Services block grant, headstart, School Breakfast program, on and on and on. So this is the letter that weve sent to the administration to reconsider this proposal. I ask all of that, and i want to direct this question to mr. Isasi to ask what your view is on that. In terms of those two, what i would call undermining forces with regard to what were trying to do here with regard to lowering Health Care Costs. First and foremost, families usa is proud of this committee to build legislation that will address Health Care Costs. But we have to be very clear. What American Families support to be able to be healthy and if they get sick, get care and not go bankrupt. So efforts to undermine the ability of families to get real meaningful coverage is the opposite of that goal, right . So were very deeply concerned. Weve seen hundreds of thousands of people lose coverage as you point out. In particular, i think one of the most troubling things is the fact weve seen over 300,000 children lose coverage. In terms of chain cpi, were very concerned about this and now there are another half million americans will lose coverage because of this and access to other programs youre describing, over half of those will be children. So i think this committee is focused on the notion that families want Financial Security and to know their Health Care Costs arent going to bankrupt them. We should all be pulling in that same direction. So were deeply concerned about this. Thanks mr. Chairman. Senator casey, thank you. Senator murkowski. Thank you, mr. Chairman. And thank you. I apologize i wasnt here to hear your testimony. Ive had an opportunity to read it and appreciate the perspectives that you all lend to this very important discussion. My colleagues here on the committee know every time i ask a question when it comes to health care its always through the lens of, what is the impact on our rural areas and areas in my state that are beyond rural . And so i look at all of this through the perspective of one who says, well, yeah, we dont want anticompetitive provisions, but if i only have one hospital, one clinic, one provider, how does all this work . I want to start with you, mr. Cavanaugh. You spoke to the potential impacts of the transparency and anticompetitive provisions on rural health providers. When we are looking at the various proposals that we have in front of us as ways to reduce the costs, im curious to know whether your review has included situation situations where you have a community with a single hospital, a single prominent insurer. Who has the most negotiating power there . How do you determine an innetwork rate in an area where you dont have innetwork providers . When we talk about similar Geographic Area in a lot of my communities, in 80 of the communities in the state, were not connected by any kind of a road. How do we define this . So you have looked at this through the regulators perspective and one who is looking at the Broader Market as a whole now. Do you think it is possible for us at the National Level to adopt a standard payment methodology that can account for this wide discrepancy and just differences . Thank you for the question. In the context of surprise billing, all three approaches are equal in that first and foremost, they protect the consumer. From the perspective, we represent independent physicians throughout the community. Theyre not the ones involved in surprise billing. So i applaud that. The first order of business is to protect the consumer. They all do that. After that, you really, as i think you accurately point out, then its a dispute between insurers and providers. It becomes problematic where either the Provider Community is consolidated or, and we are followly concerned when the insurer community is consolidated. So some of the approaches are stronger in a competitive market. It makes a lot of sense when you have multiple providers and insurers hashing it out. It may become more difficult in a Rural Community where its just one provider. But i worry that, again, we try to do one size fits all because thats most convenient for us back in washington, d. C. We want some kind of a standard, but i remain concerned that in certain places, its not possible. Let me turn to you, dr. Ippolito. In your written testimony you provide different options when talking about, in order to stay open, hospitals need to ensure adequate staffing. One option is to top up the payment rate, to ensure theyre willing to work and to man that insurers guarantee reasonable market rates to doctors. So when you say in order to stay open, hospitals need to ensure adequate staffing, last year, or no, last week in tennessee, the 107th rural hospital in the country closed since 2010. Were going the wrong way here in terms of encouraging our rural hospitals to keep their doors open. How do you line up your statement there with adequate staffing . Well, i think theres a basic economic challenge that faces rural hospitals that dont face urban hospitals. Its a challenge that exists outside of the surprise billing specific scenario fair enough. But when were talking about surprise billing, how does this keep the doors open . Maybe i should caveat that comment by saying conditional on this being a sufficiently robust area that a hospital can stay open, then i dont think any of the particular issues about surprise billing are going to be fundamentally problematic. If theres a concern over a higher level decline in the profitability or even just ability to exist of rural hospitals, then i certainly hear the concern. I think simply the solution to that is probably not found in anything related to surprise billing but something a little more directly aimed at those rural hospitals. Mr. Chairman, my time has expired. Ive got a lot more questions but ill stick around to listen to others. Thank you senator murkowski. Senator rosen. Welcome back, mr. Chairman. And thank you to you and senator murray for Work Together on this important package for all of you being here today. Im going to give a special shoutout to ms. Bartlett who is a university of nevada graduate. I really appreciate that. And i want to add to senator murkowskis rural concerns. What i want to do is focus on section 404 of the bill which authorizes grants to expand the use of telemedicine to increase access to Specialty Services and underserved areas. At home in nevada, i hear over and over again that preserving access to quality care is one of the issues and every area is underserved. Its currently drafted and anybody here can chime in. The funds that are authorized can be used for telemedicine equipment, training and program evaluation. And so i have kind of a twopart question. What doels you think is effective to get a program, a Telemedicine Program up and running . And what do you think the minimum time span would be reasonable for Telemedicine Program, especially once we get some templates done . The point youre making is incredibly important. And ive spent a lot of time working in rural Health Care Issues. And as you point out, what we need in Rural America are true disruptions that allow for health care to be delivered in high quality settings that arent the old Business Model of a hospital with four walls. Its very expensive. Project echo is a phenomenal example of a program that allows for and in this case it started in new mexico. Folks in very rural parts in frontier communities in new mexico to get Better Health care than they were getting in the hepatitis clinic in albuquerque. It trains the providers in those communities. Two, evidencebased standard of care. It creates a learning community. And third, it allows providers who have really challenging patients to talk to each other and learn. Those are all critical elements. As you point out, turn keying Something Like project echo around this country is an incredible example of how we can gelts high Quality Health care to Rural America. Do you think creating templates would be a good working model . Absolutely. Senator collins graciously shared that i am from maine. Much of maine is also frontier, and i worked closely with many rural hospitals in the state. We are very sensitive to the pressures on those hospitals. They are very real. And we hear hospital and physician executives saying they have to charge inflated prices to subsidize the care that we arent appropriately paying for like Maternity Care or primary care. We need to look at direct ways to subsidize that care. And we need to be thinking about rural patients instead of just rural hospitals. I also was extremely encouraged in my time on the physician focused technical advisory committee. There were innovative proposals like hospital at home that were supported by physicians. New ways to deliver care to rural patients that needed hospital level treatment. So telemedicine, hospital at home. These innovations are essential to bringing care to those communities. So this is a great these are great things. So how can we consolidate or find in a common place these kinds of templates that other places across america can see the challenges they have maybe in a particular disease or area they want to improve upon . How do you knowledge that we can put these good examples and export them to other communities across the country . Fortunately, this congress has created the Innovation Center at cms. There are demonstrations under way, specific to rural hospitals. One is in pennsylvania and the other in maryland, its a global budget for all hospitals but really started with global budgets for rural hospitals. Dont make these rural hospitals dependent on inpatient admissions. So they can do all the other things mentioned. And that should be the platform. These are publicly funded. There will be public evaluations. There will be dissemination of the learning. Youre right. We need to get these lessons and models out to the country. What ways can we through this bill or others help you potentiate whats happening across this country and export that . What do you need from us . I think the Innovation Center has all the tools thanks to this congress. If you continue to support them. But as always, put pressure on them. Go faster, go better and be more public. These innovations are going to be available to us. This is about need creating really interesting disruptions. But scope of practice is something that we all have to get a handle of. Senator murkowskis state has been a real leader in thinking about new ways for service to be provided by new kinds of providers. Scope of practice is critically important. And senator murray was very involved in creating a National Workforce commission. That commission needs to be funded. We need to understand the dollars flowing into work force and what our communities actually need. We have total misalignment between the federal dollars flowing through medicare and the needs of our communities. Thank you. I think my time has expired, but thank you. Thank you. Senator kaine. Appreciate the work of the chair and getting our package in a good place we can hopefully move forward with it. Since the discussion just recently happened about rural hospitals, i want to follow up and look at it a slightly dch l different way. Mr. Nickels, 107 rural hospitals have closed. 10 this year. One last night in tennessee. I was not aware of that, and im sorry to hear it. Weve had two hospitals close in virginia. One in Patrick County and one in lee county. There have been heartbreaking stories about the effect of rural hospital closures. I read one in the New York Times dealing with a hospital in southeastern kansas where i grew up. Another Washington Post article dealing with closure of a hospital in oklahoma. Theres a solution. Not a magic oneitem solution but there is a solution for many of these communities. 93 of the 107 hospitals that have closed in Rural America since 2010 are in states that have not accepted Medicaid Expansion. The two hospitals in virginia that closed, virginia has now accepted medicate expansion but the two hospitals that closed, closed years before the state accepted Medicaid Expansion. And they said to our legislature, if you would accept Medicaid Expansion, we can keep the hospital open. Now that virginia has done that, at least one of the hospitals is exploring, can they reopen . Its a lot harder to reopen a hospital than keep it open but nevertheless, theres a possibility. But when we have these discussions about rural health, that is a statistically very very significant piece of data. Theyve closed in states that did not embrace Medicaid Expansion. I know hospitals dont like medicaid reimbursement rates. But the different between medicaid reimbursement and charity care for which youre not compensated is a significant factor in the bottom line of a hospital. Ill have you speak to this, mr. Nickels. Theres some things we can do in this bill and should. There are some things state legislatures have been able to do since the Supreme Court rendered the ruling about it being a state option. And when i read articles and people are decrying that their community is losing a Health Care Resource and people are losing access to care that theyve had in the community for their entire life and they have it within their capacity not to solve every financial woe on a balance sheet, but to dramatically affect whether the hospital can stay open or not, and yet they are choosing to not embrace medicaid, theyre consigning their rural hospitals to a situation where it is very likely theyll continue to close. So i hope one message that we might deliver from this committee from congress, and i certainly am glad my state eventually got this message is theres no glory to being the last one, the caboose. When medicaid passed, it was an option, not a mandate. The last state to embrace medicaid, 1982, arizona. They were 17 years after the majority of states before they finally embraced medicaid. When the Affordable Care act passed and there was now a Medicaid Expansion option, where did arizona fit . They were one of the first in. With two republican houses, with the republican governor because what they realized is what do they get by being the caboose on medica medicaid . What did they get by waiting 17 years . They got worse health care for hundreds of thousands of people over 17 years. They arent going to be the caboose the second time. Weve had 35 states have done the expansion. Dont compete to be the caboose. If you want your rural hospitals to have a chance of staying alive, Medicaid Expansion will keep these pillars from closing. Mr. Nickels, you wanted to comment on this . Totally agree there. Theres a crisis in Rural America. A crisis with rural hospitals and no question from our members, the ones feeling it the most, are in nonexpansion states. Our members worked in those states to try to convince the legislatures. And theyve been successful in some. Virginia was one of them. They take the lead in trying to get Medicaid Expansion. No question when you look at the issue that thats probably the number one concern. That doesnt mean things like broadband arent important. That does mean the telemedicine provision in this bill isnt important but theres a lot that has to be done. The cmmi example that sean used is an excellent one. There are rural models we should be experimenting with. The important thing is people need to have coverage. Thank you. Thank you, mr. Chair. Thank you. Weve completed our round of questioning. And we have a vote at noon. I think senator murkowski and senator braun may have a question to ask. Senator murkowski . Thank you, mr. Chairman. I dont know whether the issue has come up previously in the round of questioning, but when we look at some of the surprises that come in and alaska is a very high cost state. I mentioned 80 of our communities are not expected by roads. How do we get to the hospital . We fly. Its air ambulance. Its medevac. And it is not unusual for a medevac to be between 50,000 and 100,000. Some alaskans have more and more are seeking insurance. I want to ask this question to you, ms. Bartlett. You have you are from montana . Thats correct. Okay. So youve got big open space out there, former state plan administrat administrator. Have you made any progress within your state to address air ambulance costs within the health plans there . I know this is not part of what were dealing with, but again, as were talking about those cost drivers, im trying to understand if there are some areas where we have seen some headway. Thank you, senator murkowski. Within the state Employee Health plan, we set reimbursement at 250 of medicare and thats what we paid. Whether you were in network or out of network. At the same time, i served on an interim committee to deal with this issue. And the result of that committee was legislation that did pass within montana that was requires initial payment to either be the normal innetwork payment that would be made, the billed amount or negotiated amount because that allows for the member to be held harmless. At that point, the member is definitely held harmless. And then if the other party, whether it be the air ambulance or the experience Company Believes its not a fair airjts then it goes to arbitration and thats the commissioner of insurance. And thats been work willing within montana . It absolutely is working well within the state health plan. We immediately saw all of the out of network air ambulance come in network except for one, and that particular air ambulance has a service has closed a couple of their areas, but they were not in rural places. So we have seen we have not had lost care at all. Thank you for that. Mr. Nickels, i wanted to just extend the question that i directed to mr. Cavanaugh earlier about the differences within regions, the variations in rural markets. A benchmark payment rate based on average negotiated rates for a region in my view appears to be the most simple and predictable framework. But do you believe that a benchmark rate based on negotiated rates within a region adequately accounts for those variations that we see within the rural markets . And can you speak more broadly to the impact of such a model where you have few providers and few insurers. Yeah, as you know, we do not support that sort of approach, and we do believe that and address this to senator collins when they were here. If you set a National Rate, it will not acknowledge local conditions. It will not acknowledge a place like alaska. We fear the harm it will do most, and senator collins mentioned this is to Rural America where prices are higher, margins are smaller and the danger of something going wrong here is very greater than it is elsewhere. There are some untested ideas being discussed here. And we need to make sure, whatever we do, does no harm to Rural America. Thats why we think that, get the patient out of the middle of this. We all agree with that. I dont think theres any disagreement. We think of the approaches the committee has talked about that arbitration is the best one. Anything with a benchmark rate, however its described or defined will create, i think, a significant problem for Rural America. Id like to clarify. Mr. Ippolito . The arbitration system and benchmark system included in the help bill both reference the local innetwork rate as the benchmark rate. So when we think about an arbitration system and think about a benchmark rate, theyre both based at the guidance to a arbiter would be based on the same thing the benchmark would be which is a local rate. So i do think thats worth emphasizing. Im going to ask mr. Nickels and ms. Bartlett, sounds like a rebuttal. Well, a question that i answered earlier from senator hassan. Thats why we dont like that rate thats in that bill as it relates to having a benchmark. We think there should be no benchmark. It should be arbitration and negotiation between two parties and one of them will win. One will lose. There will not be a bnchmark. Thats why we think thats a better approach thats in your bill. Within montana, this legislation was passed in the 2017 session and there have been no case goes to arbitration. Okay. Thank you. We go to democratic senator murray. Do you have any questions . No, mr. Chairman. I just want to thank all of our witnesses for being here and for all your help and input. Mr. Chairman, thank you for working so dill gently on this. Thank you. Senator kaine . Ill make it very quick. One for mr. Nickels and one for ms. Mitchell. David ricks, chairman of the board of eli lilly just came out publicly that he wants to get rid of pbm rebates. Wants them to go directly to the pharmacy and the individual. I applaud him for sticking his neck out as a major individual in the Health Care Industry. American hospital association, my local hospital embraced i think they called it care lite or something but it was still the charge master being published in its inscrutable form where you couldnt understand it. Would the American Hospital association be willing to publish an understanding form, charge masters across all hospitals and, in talking to a lot of people that really know what makes the Current System not work, would you be willing to expose third Party Arrangements between providers and Health Insurance companies . Which so many people have told me if that ever happened, it would break the system and youd cascade into transparency and competition. And i know thats a load, but give me your quick comment on it. I hope i can remember all that. Charge master first. Charge master is a daunting experience. Sean can probably speak to it from cms. Weve worked with cms to publicize more of the charge master. But i agree with you. I dont think thats data that people need. Something that gives people prices to the degree that we can do it, to the degree we can make that simple enough for people to understand, i think thats the way we should go. And we would definitely its mandatory that you find out how to do it. What about the Third Party Agreements between providers and Insurance Companies, which glue the whole system with opaqueness. That we would disagree with. I figured you would. I just wanted it on im certainly predictable. And weve raised concerns. The administration has discussed that. The ability for two parties to have private contractual negotiations is important. Even the federal trade commission which has never been the big east. In a robust, competitive market, id agree. In a broken system like yours, id get with it. Ms. Mitchell, do you see the industry, especially hospitals, 30 of the health care bill, kind of resisting right there in terms of what they think . Any chance the industry will start coming around to where we dont have to legislate them into action . One can hope. I would say that if these secret negotiations between providers and plans worked we would not be sitting here. I think the everyone in america deserves insight and information about their medical care, the quality, the outcomes and the cost. We are all in this together. We all have skin in the game. We need a system that is responsive to the American People that requires and presumes transparency and accountability. Agree 100 . Thank you. One question, ms. Mitchell, and then well wrap up. The bill that senator murray and i propose requires pharmacy benefit manager to give employees information on the rebates in the system so employers understand what they are paying for. So if a pharmacy benefit manager negotiated a 400 discount, and lets say 600 insulin price, the employer would know that instead of 600, the price is 200. Uhhuh. How will we know the employer will pass that 400 discount on to the patient who has diabetes . I think its an important question. And many of our members are doing this now. They are offering and extending the rebates to their employees, but as i said earlier, they dont have the actual cost and price information. So they are using the estimates. The problems with spread pricing and rebates off wildly inflated prices make this more complex and convoluted. So they are looking for ways to decrease these costs for their employees and transparent clear pricing is part of that. Thank you very much. I want to thank our six witnesses. I want to thank the senators, senator murray and our staffs. This is the way the United States senate is supposes to work. Weve taken an area where theres plenty of room for lots of contentious discussion, and we have it here. The area of health care. And weve said, all right at least we can see health care. At least we can see, identify some ways to reduce Health Care Cost people pay for out of their own pockets. Weve talked about surprise medical billing. Weve talked about transparency. There are a number of provisions if the bill that you have said. A number increase drugs, 90 of prescriptions. As senator murray said, these are steps in the right direction. I hope our committee can move ahead and vote on this. We call marking it up, giving it to senator mcconnell, senator schumer. Lets make it a law. This has been through 16 hearings, hundreds of comments from people affected. We still have a few things to work out. We end up with three dozen proposals from equal number of democrats and republicans. Were on a good track doing what the American People expect us to do. The hearing record will remain open for five days. Members may submit Additional Information for the record within that time if they would like. Thank you for being here. The committee will stand adjourned. I had my wrong glasses on. Within 10 days. Good catch. The committee will stand adjourned. In 1979, a Small Network with an unusual name rolled out a big idea. Let viewers make up their own minds. 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