A REVIEW OF THE ADMINISTRATION'S FY2007 HEALTH CARE PRIORITIES HEARING BEFORETHE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECONDSESSION FEBRUARY 15,2006 Serial No. 109-113 Printedfortheuse ofthe Committee onEnergy and Commerce AvailableviatheWorldWideWeb: http://www.access.gpo.gov/congress/house U.S.GOVERNMENTPRINTINGOFFICE 30-310PDF WASHINGTON 2006 : ForsalebytheSuperintendentofDocuments,U.S.GovernmentPrintingOffice Internet:bookstore.gpo.gov Phone:tollfree(866)512-1800;DCarea(202)512-1800 Fax:(202)512-2250 Mail:Stop SSOP,Washington,DC20402-0001 COMMITTEEONENERGYANDCOMMERCE JOEBARTON,Texas,Chairman RalphM.Hall,Texas JohnD.Dingell,Michigan MichaelBilirakis,Florida RankingMember ViceChairman HenryA.Waxman,California FredUpton,Michigan EDWARDJ.Markey,Massachusetts CliffStearns,Florida RickBoucher,Virginia PaulE.Gillmor,Ohio EDOLPHUSTowns,NewYork NathanDeal,Georgia FrankPallone,Jr.,NewJersey EdWhitfield,Kentucky SherrodBrown,Ohio CharlieNorwood,Georgia BartGordon,Tennessee BarbaraCubin,Wyoming BobbyL.Rush,Illinois JOHNSfflMKUS,Illinois ANNAG.ESHOO,California HeatherWilson,NewMexico BartStupak,Michigan JohnB.Shadegg,Arizona EliotL.Engel,NewYork CharlesW."Chip"Pickering, Mississippi AlbertR.Wynn,Maryland ViceChairman GeneGreen,Texas VlTOFOSSELLA,NewYork TedStrickland,Ohio SteveBuyer,Indiana DianaDeGette,Colorado GeorgeRadanovich,California LoisCapps,California CHARLESF.BASS,NewHampshire MikeDoyle,Pennsylvania JosephR.Pitts,Pennsylvania TomAllen,Maine MaryBono,California JimDavis,Florida GregWalden,Oregon JanSchakowsky,Illinois LEETERRY,Nebraska HildaL.Solis,California MikeFerguson,NewJersey CharlesA.Gonzalez,Texas MikeRogers,Michigan JayInslee,Washington C.L."Butch"Otter,Idaho TammyBaldwin,Wisconsin SueMyrick,NorthCarolina MikeRoss,Arkansas JohnSullivan,Oklahoma TimMurphy,Pennsylvania MichaelC.Burgess,Texas MarshaBlackburn,Tennessee GreshamBarrett,SouthCarolina BUDALBRIGHT,StaffDirector DAVIDCavicke,GeneralCounsel REIDP.F.STUNTZ,MinorityStaffDirectorandChiefCounsel (ii) P*iU lO0!^ Contest 1oq$ / tsf- j CONTENTS Page Testimonyof: Leavitt,Hon.MichaelO.,Secretary,U.S.DepartmentofHealthandHumanServices 26 Additionalmaterialsubmittedfortherecord: Leavitt,Hon.MichaelO., Secretary,U.S. DepartmentofHealthandHumanServices, responsefortherecord j02 CMS Library C2-07-13 7500 Security Blvd. Baltimore, Maryiartd 2l2M (III) A REVIEW OF THE ADMINISTRATION'S FY2007 HEALTH CARE PRIORITIES wednesday, february 15, 2006 House ofRepresentatives, CommitteeonEnergyand Commerce, Washington, DC. The committee met, pursuant to notice, at 2:00 p.m., in Room 2123 of the Rayburn House Office Building, Hon. Joe Barton [chairman] presiding. Members present: Representatives Hall, Bilirakis, Upton, Stearns, Gillmor, Deal, Whitfield, Norwood, Shimkus, Wilson, Fossella, Radanovich, Walden, Terry, Ferguson, Otter, Murphy, Burgess, Blackburn, Dingell, Waxman, Markey, Pallone, Brown, Rush, Eshoo, Stupak, Engel, Wynn, Strickland, DeGette, Capps, Allen, Schakowsky, Solis, Gonzalez, Inslee, Baldwin, and Barton. Staff present: Chuck Clapton, Chief Health Counsel; Melissa Bartlett, Counsel; Ryan Long, Professional Staff Member; Nandan Kenkeremath, Counsel; Bill O'Brien, Research Analyst; David Rosenfeld, Counsel; Brandon Clark, Policy Coordinator; Chad Grant, Legislative Clerk; John Ford, Minority Counsel; Chris Knauer, Minority Investigator; Purvee Kempf, Minority Counsel; Amy Hall, Minority Health Professional Staff Member; Bridgett Taylor, Minority Health Professional Staff Member; Jessica McNiece, Minority Research Assistant; and Jonathan Brater, Minority StaffAssistant. Chairman Barton. The committee will come to order. The chair recognizes himselffor a five minute opening statement and then we will recognize Mr. Dingell for a five minute opening statement. Then all the members who wish to make an opening statement will be recognized for one minute. Letus see as I setthe clock. Good afternoon, I want to begin by welcoming the Secretary of Health and Human Services, the Honorable Michael Leavitt, to the Energy and Commerce Committee. We look forward to working with you this year and we look forward to hearing from you today about the Administration's fiscal year 2007 health care priorities budget. I want to thank you for your assistance in developing the recent reform package that we put in place for the Medicaid Program. As a former governor, youunderstandand appreciate the needto improve this program. Through the passage ofthe Deficit Reduction Act, we are beginning to sustain Medicaid for those people who most often need the health 2 care, and to get good health care through good jobs in a thriving economy instead of a Government welfare program. Reforms that we have adopted recently are beginning to rescue the program from the threat offinancial collapse that has drug the program down over the last 10 to 15 years. We look forward to working with you in the future to implement this program and also to working with the governors ofthe 50 States to implementthe program. I want to highlight some ofthe changes in the law that has not yet received the public attention that they deserve. According to the Congressional Budget Office, 115,000 disabled children covered by the Family Opportunity Act will receive improved health care services as a result of the recently passed Deficit Reduction Act. The new law will provide access to new home and community based care to 120,000 additional individuals who will facilitate 100,000 nursing home residents to return to their communities through the Administration's Money Follows the Person Administration Program. These are the true results ofMedicaid reform. Better access forbetter care for those in our society who need our assistance. There is still much to do to improve long-term health care service delivery and financing, as well as to promote Medicaid managed care. I have received your proposals regarding additional improvements to the Medicaid program. I look forward to working with you this year on some ofthose programs. This year, the Secretary and the Administration will also begin to implement the Medicare prescription drug benefit. Making this program succeed is a high priority ofyours; it is a high priority ofthis committee that I chair. Since it began, critics have tried to make patients believe that they are not smart enough to understand the new Medicare drug benefit, that it would provide inadequate coverage, and that signing up is not worth their time because it cannot save them any money. The critics are wrong about this. They were wrong when they complained about the Medicare prescription drug card. They were wrong when they said nobody would offer any insurance plan, and they are wrong now. Some sense political advantage in condemning the program and others cannot bring themselves to admit that free markets actually work. Transparency in competition will drive down prices and provide lower costs to consumers. Even ifthe critics do not get it, the Medicare beneficiaries certainly appear to be getting it. That is why over 3.6 million Medicare beneficiaries have already signed up for the new benefit. You told me earlier today that there are close to 24 million Americans that have been enrolled in the program through one means or another, and enrollment is increasing at approximately 250,000 people per week. That sounds like a success story to me. Ifyou add that to the fact that the premium which 3 we estimated was going to be $37 a month is now down to an average of $27 a month, that appears to me againto be a successful program. This is a huge undertaking and there are going to be glitches. My goal is the same as yours, get rid of those glitches. The committee is going to work closely with you and with Dr. Mark McClellan at CMS to get these glitches noticed, number one, and solved, number two. We will have the first ofwhat will probably be several hearings on that specific topic on March the 1st when Dr. McClellan is going to testify before the Health Subcommittee. I expect at that hearing thatwe will ask him some very direct questions about where the problems are and what is being done orhas been done to fix those problems. Another high priority for this committee this year is going to be the reauthorization of the National Institutes of Health and its related programs. I want to restate my deep commitment to reauthorizing the NIH and would ask your assistance in working out the technical details so that we can enact this long overdue legislation. In addition, this committee needs to authorize the Ryan White Care Act. I believe that funding unauthorized programs is not a responsible practice and I anticipate that the committee will work to reauthorize that program this year. I also intend to work with you and your agency on ways to continue to reform Medicare reimbursement and particularly the focus on position payment reform. In order to preserve access to Medicare services for future generations, we must look at how we are spending our Medicare dollars today and what the incentives are to our physician community to continue to provide quality health programs and care for our senior citizens. Another priority ofthe committee is going to be to work with you and your agency on the proposals outlined in the Administration's budget to provide consumers with greater access to comparative price and quality data about their health care providers. I could go on but my time has expired. Welcome to the committee and we look forward to your testimony and the questions that follow it as soon as every member has been given a chance to make an opening statement. With that, I want to recognize the distinguished Ranking Member of the committee and Dean of the House that has served the longest continuous service in the House of Representatives, the Honorable JohnDingell ofMichigan. [The prepared statement ofHon. Joe Barton follows:] 4 PreparedStatementoftheHon.JoeBarton,Chairman,CommitteeonEnergy andCommerce Goodafternoon. Letmebeginbywelcoming SecretaryMichaelLeavitttodaytothe Energy & Commerce Committee. We look forward to hearing him testify about the Administration'sFiscalYear2007HealthCarePriorities. First, Mr. Secretary, I want to thank you for your assistance in developing the important reforms we put into place for the Medicaid program starting this year. As a former governor yourself, you understood and appreciated the need to improve this program. Through passage ofthe Deficit Reduction Act, we will sustain Medicaid for thosepeoplewhooftenneedhealthcarethemostandcanaffordittheleast. Iwantmany moreAmericans to gettheirhealthcarethroughgoodjobs inathriving economy instead offrom a government welfare program, but we will always need Medicaid to help the poor and disadvantaged. The reforms we adoptedto rescue the program fromthe threat of financial collapse are the same ones that Democratic and Republican governors all requested. Ilookforwardtoworkingwithyouto seethatthegovernorsgetthetoolsthey needtobettermanagetheprogramanddeliveritsbenefitstothepooroftheirstates. I want to briefly highlight at least some ofthe changes in the law that have not recently receivedthe public attentionthatthey deserve. Accordingto the Congressional Budget Office, 115,000 disabled children covered by the Family Opportunity Act will receiveimprovedhealthcare services. Thenewlawwillprovideaccesstonewhomeand communitybasedcareto 120,000 individuals; anditwillfacilitate 100,000nursinghome residentstoreturntotheircommunitiesthroughtheAdministration'sMoneyFollowsthe Person Demonstration. These are the true results ofMedicaid reform -better access to bettercareforthosewhomostneedourassistance. There is still much to be done to improve long-term care service delivery and financing as well as to promote Medicaid managed care. I have received the Administration's proposals regarding additional improvement to the Medicaid program andIlookforwardtoworkingwithyouthisyearonthem. This year the Secretary and the Administration also are required to administer the new Medicare prescription drugbenefit. Makingthis program succeed is ahighpriority ofyours,anditisahighpriorityofmine,too. Since it began, critics have tried to make patients believe that they are not smart enough to understand the new Medicare drug benefit, that it provides inadequate coverage, andthat signing up isn'tworththeirtime because itcannotpossible save them adime. Thecriticsare simplywrong. Theywerewrongwhentheycomplainedaboutthe Medicare prescription drug card. They were wrong whenthey said nobody would offer anyinsuranceplans. Andtheyarewrongnow. Some sense political advantage in condemning the program, and others can't bring themselves to admit that free markets, transparency and competition will drive down prices and provide lower costs to consumers. Even ifthe critics don't get it, Medicare beneficiaries certainly do. That is why over 3.6 Million Medicare beneficiaries have already signed up for the new benefit. That is also why the premiums that these beneficiariesarepayinghavedroppedfromtheinitialestimateof$37 downtoanaverage of$25 permonth. The implementationofthisnewdrugbenefitwas ahugeundertaking, andithashad its share of glitches. My goal is the same as yours: Get rid of the glitches. The Committee willworkcloselywiththe SecretaryandDr. MarkMcClellanatC-M-S toget problems noticed, examined and solved, and to do it all soonerinsteadoflater. We will have the firstofwhatwill likelybe several hearings on thistopic onMarch 1st,whenDr. McClellan will testify before the Health subcommittee. I expect that we ask him very direct questions about where the problems have been and what C-M-S is doing to fix them. The Energy & Commerce Committee and its chairman are committed to doing 5 whatever it takes to make sure this program provides the benefits that Medicare beneficiariesexpectanddeserve. Anotherhigh priority forthe Committee will be the reauthorization ofthe National Institutes ofHealth (NIH) andrelatedprograms. I wantto restate my deep commitment toreauthorizingtheNIH andwould ask forthe Secretary's assistance inworking outthe technical details so that we can enact this long overdue legislation. In addition, the authorization for the Ryan White CARE Act has now lapsed. I believe that funding unauthorizedprograms is not a responsible practice, and I anticipate thatthe Committee willworktoreauthorizetheseprogramsthisyear. Ialso intendtoworkwithyouthisyearonwaystoreformMedicarereimbursement, and particularly focus on physician payment reform. In order to preserve access to Medicare services for future generations, we must look at how we are spending our Medicaredollarstodayandwhataretheincentivesforprovidingqualityhealthcare. Another top priority ofthe Committee will be to work with you on the proposals outlined in the Administration's budget to provide consumers with greater access to comparative price and quality data about theirhealth care providers. I believe that with the developmentofhealthsavingsaccounts and similarinitiativesthatencouragepatients tobecomeconsumers,wehavethepotentialtorevolutionizethedeliveryofhealthcarein thiscountry. Ifthesemodels aretosucceed,however,weabsolutelymustbeabletogive patientsthetoolsthattheyneedtobecome smarterconsumers. As Chairman of this committee, I plan to work with President Bush, Secretary Leavitt, Members of Congress, and our health care colleagues to work to ensure our citizens continue to have access to the best health care in the world. Thank you again, Mr. Secretary,forappearingheretoday. Ilookforwardtohearingyourtestimony. MR. DlNGELL. Thankyou, Mr. Chairman. Good afternoon, Mr. Secretary. Forty-six million Americans are uninsured. Six million more Americans have become uninsured since President Bush took office. The public health infrastructure and all ofits programs are limping. The President's Budgetmoves us inthe wrong direction. After signing into law reconciliation legislation with $28 billion in cuts to Medicaid over the next ten years, the President has returned with a fiscal year 2007 budget that makes another $42 billion in cuts to a program that provides health insurance for more than 58 million Americans. The Congressional Budget Office already documented that the first round ofcuts would cause thousands to lose coverage each year. These additional cuts will likely have that same effect on thousands more. Second, the Administration is proposing billions in tax breaks to encourage individuals and families to move out of decent employer- sponsored coverage into high-deductible health plans in the individual insurance market. For a "mere" $156 billion a year we will have a programbut will erode employer coverage, discriminate against the sick, provide little benefitto those ofmodestmeans, and increase the deficit. Third, the Medicare budget again moves in the wrong direction. The budget fails to include any proposals to fix the documented problems in D-D the Part for disaster-drug benefit. The budget also fails to include 6 one dime to address the pending Medicare payment cuts. According to the American Medical Association, physicians will see payment cuts totaling $102.5 billion in the next seven years. This has been ignored by the Administration. Likewise, the budget does not provide any of the MedPAC recommended cuts to HMO and private plan payments which alone would save $50 billion over that same time. Instead, it proposed $105 billion in cuts over the next 10 years to hospitals, skilled nursing home facilities, and other providers all of which are vital parts of the Medicare's Fee-for-Service Program that enrolls the vast majority of seniors today. The President also proposes another increase in Part B premium for beneficiaries, the third premium increase brought forward by Republicans since 2003. The budget also proposes an automatic cut in provider payments at any time general revenue is funding more than 45 percent ofthe program. Fourth, the Centers for Disease Control and Prevention, the National Institutes of Health, and the Health Resources and Services Administration, the Food and Drug Administration, and other Public Health Services agencies all play an important role in the protection of public health, yet they get the back ofthe Administration's fiscal hand in this budget. The Food and Drug Administration is supposed to protect us every day from bad food, unsafe pharmaceuticals, and other dangers of this sort. The budget does not give us enough to protect against counterfeit drugs, adulterated food, or unsafe medical devices. The budget does not do enough to support people training, equipment, and facilities that we rely on to protect our homeland from public health emergencies that are causedby man ornature. The budget does not do enough to support the discovery ofnew and improved treatments and cures for cancer, diabetes, stroke, and Alzheimer's, and other diseases that afflict so many of our Americans. In this budget, the National Institutes ofHealth will sponsor less research this year than it did last year. Clearly that is wrong. The community health centers remain under funded, as do the other health safety net public healthprograms. Finally, the Administration is missing in action concerning the catastrophic healthcare situation facing the greater New Orleans region still hurting from Hurricane Katrina. Simply put, almost six months after the storm, with billions appropriated for recovery efforts, thousands of Americans are now receiving healthcare services in such facilities as tents and a city zoo. Americans deserve better from this budget. They expect better. And I hope we are able to get it forthem. Thank you, Mr. Chairman.