[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
LOWERING UNAFFORDABLE COSTS: EXAMINING
TRANSPARENCY AND COMPETITION IN
HEALTHCARE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MARCH 28, 2023
__________
Serial No. 118-16
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Published for the use of the Committee on Energy and Commerce
govinfo.gov/committee/house-energy
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
54-163 PDF WASHINGTON : 2024
-----------------------------------------------------------------------------------
COMMITTEE ON ENERGY AND COMMERCE
CATHY McMORRIS RODGERS, Washington
Chair
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
ROBERT E. LATTA, Ohio Ranking Member
BRETT GUTHRIE, Kentucky ANNA G. ESHOO, California
H. MORGAN GRIFFITH, Virginia DIANA DeGETTE, Colorado
GUS M. BILIRAKIS, Florida JAN SCHAKOWSKY, Illinois
BILL JOHNSON, Ohio DORIS O. MATSUI, California
LARRY BUCSHON, Indiana KATHY CASTOR, Florida
RICHARD HUDSON, North Carolina JOHN P. SARBANES, Maryland
TIM WALBERG, Michigan PAUL TONKO, New York
EARL L. ``BUDDY'' CARTER, Georgia YVETTE D. CLARKE, New York
JEFF DUNCAN, South Carolina TONY CARDENAS, California
GARY J. PALMER, Alabama RAUL RUIZ, California
NEAL P. DUNN, Florida SCOTT H. PETERS, California
JOHN R. CURTIS, Utah DEBBIE DINGELL, Michigan
DEBBBIE LESKO, Arizona MARC A. VEASEY, Texas
GREG PENCE, Indiana ANN M. KUSTER, New Hampshire
DAN CRENSHAW, Texas ROBIN L. KELLY, Illinois
JOHN JOYCE, Pennsylvania NANETTE DIAZ BARRAGAN, California
KELLY ARMSTRONG, North Dakota, Vice LISA BLUNT ROCHESTER, Delaware
Chair DARREN SOTO, Florida
RANDY K. WEBER, Sr., Texas ANGIE CRAIG, Minnesota
RICK W. ALLEN, Georgia KIM SCHRIER, Washington
TROY BALDERSON, Ohio LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho LIZZIE FLETCHER, Texas
AUGUST PFLUGER, Texas
DIANA HARSHBARGER, Tennessee
MARIANNETTE MILLER-MEEKS, Iowa
KAT CAMMACK, Florida
JAY OBERNOLTE, California
------
Professional Staff
NATE HODSON, Staff Director
SARAH BURKE, Deputy Staff Director
TIFFANY GUARASCIO, Minority Staff Director
Subcommittee on Health
BRETT GUTHRIE, Kentucky
Chairman
MICHAEL C. BURGESS, Texas ANNA G. ESHOO, California
ROBERT E. LATTA, Ohio Ranking Member
H. MORGAN GRIFFITH, Virginia JOHN P. SARBANES, Maryland
GUS M. BILIRAKIS, Florida TONY CARDENAS, California
BILL JOHNSON, Ohio RAUL RUIZ, California
LARRY BUCSHON, Indiana, Vice Chair DEBBIE DINGELL, Michigan
RICHARD HUDSON, North Carolina ANN M. KUSTER, New Hampshire
EARL L. ``BUDDY'' CARTER, Georgia ROBIN L. KELLY, Illinois
NEAL P. DUNN, Florida NANETTE DIAZ BARRAGAN, California
GREG PENCE, Indiana LISA BLUNT ROCHESTER, Delaware
DAN CRENSHAW, Texas ANGIE CRAIG, Minnesota
JOHN JOYCE, Pennsylvania KIM SCHRIER, Washington
DIANA HARSHBARGER, Tennessee LORI TRAHAN, Massachusetts
MARIANNETTE MILLER-MEEKS, Iowa FRANK PALLONE, Jr., New Jersey (ex
JAY OBERNOLTE, California officio)
CATHY McMORRIS RODGERS, Washington
(ex officio)
C O N T E N T S
----------
Page
Hon. Brett Guthrie, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 4
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 6
Prepared statement........................................... 8
Hon. Cathy McMorris Rodgers, a Representative in Congress from
the State of Washington, opening statement..................... 10
Prepared statement........................................... 12
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 16
Prepared statement........................................... 18
Witnesses
Chris Severn, Cofounder and Chief Executive Officer, Turquoise
Health......................................................... 20
Prepared statement........................................... 23
Answers to submitted questions............................... 311
Matthew Forge, Chief Executive Officer, Pullman Regional Hospital 26
Prepared statement........................................... 28
Marilyn J. Bartlett, Senior Policy Fellow, National Academy for
State Health Policy............................................ 30
Prepared statement........................................... 32
Answers to submitted questions \1\
Sophia Tripoli, Director, Center for Affordable Whole-Person
Care, Families USA............................................. 34
Prepared statement........................................... 36
Answers to submitted questions............................... 313
Benedic Ippolito, Ph.D., Senior Fellow, American Enterprise
Institute...................................................... 52
Prepared statement........................................... 54
Answers to submitted questions............................... 329
Submitted Material
Inclusion of the following was approved by unanimous consent.
Letter of March 27, 2023, from Cynthia A. Fisher, Founder and
Chairman, PatientRightsAdvocate.org, to Mrs. Rodgers, et al.... 121
Letter of March 28, 2023, from Sterling N. Ransone, Jr., Board
Chair, American Academy of Family Physicians, American Academy
of Family Physicians, to Mr. Guthrie and Ms. Eshoo............. 123
Statement of the American Hospital Association, March 28, 2023... 128
Letter of March 23, 2023, from The Alliance to Fight for Health
Care to Hon. Jason Smith, et al................................ 136
Statement of the American Medical Association, March 28, 2023.... 140
Letter of March 27, 2023, from Charles N. Kahn III, President and
Chief Executive Officer, Federation of American Hospitals, to
Mr. Guthrie and Ms. Eshoo...................................... 148
Letter of March 28, 2023, from Cheryl DeMars, Chief Executive
Officer, Employers Health Care Alliance Cooperative (The
Alliance), to Mrs. Rodgers, et al.............................. 155
----------
\1\ Ms. Bartlett's answers to submitted questions have been retained in
committee files and are available at https://docs.house.gov/meetings/
IF/IF14/20230328/115581/HHRG-118-IF14-Wstate-BartlettM-20230328-
SD003.pdf.
Statement of the National Health Council, March 28, 2023......... 159
Statement of the National Community Pharmacists Association,
March 28, 2023................................................. 162
Letter of March 20, 2023, from Cynthia A. Fisher, Founder and
Chairman, PatientRightsAdvocate.org, to Mrs. Rodgers and Mr.
Pallone........................................................ 165
Article of September 27, 2022, ``How a Hospital Chain Used a Poor
Neighborhood to Turn Huge Profits,'' by Katie Thomas and
Jessica Silver-Greenberg, New York Times....................... 171
Statement of the American Benefits Council, April 15, 2021....... 179
Statement of Consumers First, March 28, 2023..................... 190
Statement of Evan R. Goldfischer, President, and Deepak A.
Kapoor, Chairman, Health Policy, Large Urology Group Practice
Association, March 28, 2023.................................... 196
Study by the Physicians Advocacy Institute, ``COVID-19's Impact
on Acquisitions of Physician Practices and Physician Employment
2019-2021,'' April 2022 \2\
Presidential Executive Order, ``Executive Order on Promoting
Competition in the American Economy,'' July 9, 2021............ 203
Study by the American Enterprise Institute, ``Policy Solutions
for Hospital Consolidation,'' by Brian J. Miller and Jess M.
Ehrenfeld, November 2022....................................... 223
Report of MedPAC, ``Report to the Congress: Medicare and the
Health Care Delivery System, Chapter 6: Aligning fee-for-
service payment rates across ambulatory settings,'' June 2022
\2\
Report of the Inspector General, Department of Health and Human
Services, ``Medicare and Beneficiaries Paid Substantially More
to Provider-Based Facilities in Eight Selected States in
Calendar Years 2010 Through 2017 Than They Paid to Freestanding
Facilities in the Same States for the Same Type of Services,''
June 2022 \2\
Article of August 23, 2022, ``The $18,000 Breast Biopsy: When
Having Insurance Costs You a Bundle,'' by Lauren Sausser, NPR.. 235
Letter from Kevin Kuhlman, Vice President, Federal Government
Relations, NFIB, to Mr. Guthrie and Ms. Eshoo.................. 248
Statement of the Pharmaceutical Care Management Association,
March 28, 2023................................................. 251
Article of February 17, 2023, ``Estimating the Impact of New
Health Price Transparency Policies,'' by Stephen T. Parente,
INQUIRY: The Journal of Health Care Organization, Provision,
and Financing \2\
Study by the Division of Economic and Health Policy Research,
American Medical Association, ``Competition in Health
Insurance: A comprehensive study of U.S. markets,'' 2022 \2\
Article of March 23, 2023, ``New Poll: Majority of Voters Support
Aggressive Congressional Action to Lower Hospital Prices,''
Arnold Ventures................................................ 262
Report of the Alliance to Fight for Health Care and Morning
Consult, ``Coverage and Reforming the System,'' February 2023.. 265
Article of March 24, 2008, ``Building Something Worth Building
For All Patients,'' by Rep. Michael Burgess, Health Affairs
Forefront...................................................... 282
Report of the Foundation for Government Accountability, ``How
health care incentives are saving money in Kentucky,'' by Jared
Rhoads, The Dartmouth Institute for Health Policy and Clinical
Practice, March 8, 2019........................................ 285
Letter of March 28, 2023, from Mary R. Grealy, President,
Healthcare Leadership Council, to Mr. Guthrie and Ms. Eshoo.... 302
Report of the Government Accountability Office, ``Medicare:
Increasing Hospital-Physician Consolidation Highlights Need for
Payment Reform,'' December 2015 \2\
Report of the Departments of Health and Human Services, Treasury,
and Labor, ``Reforming America's Healthcare System Through
Choice and Competition'' \2\
----------
\2\ The information has been retained in committee files and is
included in the Documents for the Record at https://docs.house.gov/
meetings/IF/IF14/20230328/115581/HHRG-118-IF14-20230328-SD003.pdf.
Report of the Government Accountability Office, ``Private Health
Insurance: Markets Remained Concentrated through 2020, with
Increases in the Individual and Small Group Markets,'' November
2022 \2\
Report of the Congressional Budget Office, ``The Prices That
Commercial Health Insurers and Medicare Pay for Hospitals' and
Physicians' Services,'' January 2022 \2\
Statement of the Foundation for Government Accountability,
``Lowering Unaffordable Costs: Examining Transparency and
Competition in Health Care,'' by Jonathan Ingram, Vice
President of Policy and Research, and Hayden Dublois, Data and
Analytics Director............................................. 304
Executive Order 13877 of June 24, 2019, ``Improving Price and
Quality Transparency in American Healthcare To Put Patients
First,'' Federal Register, Vol. 84, No. 124.................... 307
----------
\2\ The information has been retained in committee files and is
included in the Documents for the Record at https://docs.house.gov/
meetings/IF/IF14/20230328/115581/HHRG-118-IF14-20230328-SD003.pdf.
LOWERING UNAFFORDABLE COSTS: EXAMINING TRANSPARENCY AND COMPETITION IN
HEALTHCARE
----------
TUESDAY, MARCH 28, 2023
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:02 p.m., in
the John D. Dingell Room 2123 of the Rayburn House Office
Building, Hon. Brett Guthrie (chairman of the subcommittee)
presiding.
Members present: Representatives Guthrie, Burgess, Latta,
Griffith, Bilirakis, Johnson, Bucshon, Hudson, Carter, Dunn,
Pence, Crenshaw, Joyce, Harshbarger, Miller-Meeks, Obernolte,
Rodgers (ex officio), Eshoo (subcommittee ranking member),
Sarbanes, Cardenas, Ruiz, Dingell, Kuster, Blunt Rochester,
Craig, Schrier, Trahan, and Pallone (ex officio).
Also present: Representatives Allen, Balderson, and Matsui.
Staff present: Alec Aramanda, Professional Staff Member,
Health; Jolie Brochin, Clerk, Health; Seth Gold, Professional
Staff Member, Health; Grace Graham, Chief Counsel, Health; Jack
Heretik, Press Secretary; Nate Hodson, Staff Director; Peter
Kielty, General Counsel; Emily King, Member Services Director;
Carla Rafael, Staff Assistant; Lydia Abma, Minority Policy
Analyst; Waverly Gordon, Minority Deputy Staff Director and
General Counsel; Saha Khaterzai, Minority Professional Staff
Member; Una Lee, Minority Chief Health Counsel; Greg Pugh,
Minority Staff Assistant; and C.J. Young, Minority Deputy
Communications Director.
Mr. Guthrie. The subcommittee will come to order.
The Chair recognizes himself for an opening statement.
OPENING STATEMENT OF HON. BRETT GUTHRIE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Today we are holding a bipartisan hearing to examine the
rising cost of healthcare for patients and their families.
Rising costs of care for individuals is one of the single
greatest threats to the overall economic security of Americans.
Over the past 30 years, the cost of healthcare has steadily
risen by almost 5 percent, annually. In 2021 costs eclipsed 4
trillion annually, amounting to roughly $13,000 per person.
Rising costs have coincided with a sharp rise in
consolidation within the healthcare industry. There have been
almost 1,800 hospital mergers between 1998 and 2021, leading to
about 2,000 fewer hospitals throughout the country. Larger
health systems are also buying physician practices at record
rates. More than 80,000 physician practices were acquired in
2018, a marked increase over the more than 35,000 acquired in
2012.
The three largest pharmacy benefit managers represent over
80 percent of the marketplace, and many have merged with
insurance companies, specialty pharmacies, retail pharmacies,
and even drug distribution.
Today we spend 31 percent of all healthcare expenditures on
hospital services, 20 percent on physician services, and 9
percent on prescription medications. It is important to note
that these are just recent trends. The point of today's hearing
is to better understand these trends, which I believe can be
achieved through greater price transparency in the healthcare
system.
Despite having all this aggregate expenditure information
widely available to the public, patients and employers are
unable to access an upfront price for giving an item or
service. They cannot make informed decisions about how and
where to spend their money as they can in virtually every other
industry. Consequentially, this leads to high, unexpected
costs, a lack of trust with the healthcare system, and a
reluctance to seek critical healthcare services.
Not long ago, a constituent called me. He was frustrated
because he could not find the price to get a simple healthcare
procedure done. He had health insurance, but was trying to find
high-quality care at the best price within his budget.
Unfortunately, this was a--is a frustration shared by millions
of Americans.
I hope today that--I hope that today can be a start on
finding bipartisan solutions to make healthcare pricing more
transparent and the healthcare system easier to navigate for
patients. We should start with any improvements necessary to
the Centers for Medicare and Medicare Services' Hospital Price
Transparency Rule and the multidepartment Transparency in
Coverage Rule.
These rules require hospitals to publicly post prices of
hundreds of common procedures on their website in a user-
friendly format and require private health plans to disclose
information about pricing and what patients are obligated to
pay. All of this information gives patients and employers that
pay for health insurance for their employees more information
and some peace of mind to know how much their healthcare
procedures or services would cost ahead of ahead of receiving
the care.
It is imperative for the Biden administration to conduct
greater enforcement efforts on these rules to better serve
patients with clear and actionable price information.
It is also crucial for Congress to codify and strengthen
these important transparency rules to support a more efficient
price transparency regulatory environment.
Congress should also consider solutions to make other parts
of the healthcare system more transparent. We should build on
our bipartisan work to make the pharmacy benefit managers more
transparent and ensure patients as well as employers are
getting the best possible deal on their prescription drug
benefits. This could also lead to greater access to biosimilars
and generics when they come to market.
Shining a light on middlemen who are making prescriptions
more expensive is one important step to bolster competition and
lower prices.
Further, patients, especially seniors, are unnecessarily
paying more money for the same service because of the location
where it was delivered, which requires further discussion.
It is well past time to carefully examine the root causes
of these inefficiencies that are plaguing patients with higher
costs and more confusion. By working together across the aisle,
I am hoping we can make important strides to make the
healthcare system easier for patients to navigate, so they can
get the healthcare they need. To that end, I look forward to
today's discussion.
I really appreciate working with the ranking member and our
staffs together to put this wonderful panel together. Every
witness is a bipartisan witness and was--is brought together,
and we really appreciate it.
[The prepared statement of Mr. Guthrie follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Guthrie. I appreciate your hard work, and I yield back,
and I will now recognize my good friend, the gentlelady from
California, Representative Eshoo, for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman, for holding this
important hearing, and welcome to all the witnesses. We can't
wait to start asking you questions.
The late Uwe Reinhardt--he was a prestigious health
economist who often appeared before this subcommittee--famously
said ``It's the prices, stupid'' when critiquing why the U.S.
spends so much on healthcare. Twenty years since Dr.
Reinhardt's seminal analysis, our Nation's inflated healthcare
prices are still the primary reason why the U.S. spends
significantly more on healthcare than any other country in the
world.
A quick comparison to other large, wealthy nations shows
the U.S. is an outlier. We spend two to three times more on
prescription drugs and medical devices. We spend $10,000 more,
on average, per hospital discharge. We spend seven times more
per capita on health insurance administrative costs. Despite
spending nearly 18 percent of GDP on healthcare, we have fewer
practicing doctors and nurses, fewer hospital beds per capita,
and a lower life expectancy than other wealthy nations. We also
have the highest avoidable death rates and maternal and infant
mortality, and an obesity rate nearly two times more than the
average of our peer nations. None of this, none of these points
are bragging rights, for sure.
In other words, we spend more, but we get much less. So
that is why I am pleased that we are holding this important
hearing on healthcare transparency today. I am fully supportive
of the efforts to shine a light on the fraud and the waste and
the abuse percolating in our healthcare industry. But we need
to do more than shine a light. Fortunately, over the past 2
years, we have made some major strides.
First, we finally gave Medicare the ability to directly
negotiate prescription drug prices, which will save taxpayers
more than $300 billion over 10 years. The Biden administration
has implemented price transparency regulations, which require
hospitals to publicly post prices for all their services on
their websites in a user-friendly format.
Now, the hospitals, I would say, have been slow to comply.
But CMS recently found that 70--at least 70 percent of
hospitals are in compliance with the rules over 2 years after
they were finalized. But this has to be 100 percent
participation. CMS is now stepping up enforcement measures
against the 30 percent of hospitals who remain noncompliant.
And I would just put out a call today: Don't fall into the CMS
enforcement lane. Do it yourselves. You have had time, do this.
Third, we are finally wrangling the abuses by Medicare
Advantage programs. The administration has taken steps to
recover improper payments to private plans and return this
money to the Medicare Trust Fund. This is going to put money
back into the pockets of American taxpayers and protect the
long-term solvency of Medicare for future generations.
Looking forward, we have to examine reforms to pharmacy
benefit managers, PBMs, the secretive middlemen in the
prescription drug industry that drive up prices and keep out
affordable drugs. And, Mr. Chairman, I was glad to hear in your
opening statement that you view this the same way.
Mr. Guthrie. Absolutely.
Ms. Eshoo. Count me in with you to do something about this.
We really have to start spending smart. This means spending
money on preventive care, public health, and biosecurity. So
again, I am glad that we are having this hearing today.
But I am disappointed that we didn't receive the witness
testimony until 1:00 yesterday, even though the hearing was
noticed 3 weeks ago. But let's have a good hearing.
I want to acknowledge--and I saw them out in the hall--the
patients--the patient rights advocates. They all have patient
gowns on. I don't see them in the hearing room. I guess they
will come in shortly. But I want to acknowledge their advocacy,
because advocacy is always highly instructive to Congress.
[The prepared statement of Ms. Eshoo follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Eshoo. So with that, Mr. Chairman, I yield back.
Mr. Guthrie. Thank you. The gentlelady yields back. I now
recognize the chair of the full committee, Chair Rodgers, for 5
minutes for an opening statement.
Ms. Eshoo. There they are.
OPENING STATEMENT OF HON. CATHY McMORRIS RODGERS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
Mrs. Rodgers. Yes. Thank you, Mr. Chairman. There they are,
the patient rights advocates.
Welcome, thank you for being here.
[Applause.]
Mrs. Rodgers. Yes, welcome to the Energy and Commerce
Committee and a very important hearing today. And it is an
issue that we are addressing with bipartisan support. I really
appreciate the comments of the chairman, the ranking member, as
we are focused on driving down the cost of healthcare.
It is a top concern, as cost of living has surged. More
than 60 percent of Americans are living paycheck to paycheck.
It means they are just one medical bill away from a financial
emergency, one doctor visit away from not being able to pay the
rent for their groceries or gas.
A recent poll of Americans with health insurance found more
than half ranked reducing healthcare costs as their top
healthcare policy priority. For a more secure and healthier
future, people need to have certainty and stability.
As the ranking member just mentioned, the United States
spends more on healthcare as a percentage of our economy than
any other developed nation, and CBO projects that the Federal
healthcare costs per person are expected to grow faster than
the economy, meaning the U.S. will continue to spend more as a
percentage of our economy. So I am pleased that we are working
together in a bipartisan way to hold this hearing on what the
Federal Government can do about the high cost of healthcare.
Improving price transparency in our healthcare system is
one of the ways that we can drive down costs. It is fundamental
to restoring the doctor-patient relationship. Right now it is
nearly impossible for patients or their employers to shop for
the best and most affordable care they or their employees need.
It is nearly impossible for people to plan ahead and budget
their healthcare costs.
Take, for example, Dani Yuengling from South Carolina. She
needed a biopsy and had a $6,000 deductible. Her hospital's
price tool estimated that she would pay $1,400. After receiving
the bill, she found out that the true cost of the service was
nearly 18,000, and she was on the hook for more than $5,000.
Patients shouldn't be in the dark until after they receive care
and their bills come.
Now, the Trump administration finalized two rules on price
transparency. The first rule requires hospitals to post
standard charges and payer-specific rates for all items and
services and a consumer-friendly display of at least 300
shoppable services like an MRI. The second rule requires
insurers to post comprehensive rate information and provide
patients personalized pricing information for 500 items and
services. That includes a wide spectrum of services, from
routine doctor visits and imaging services to more complex care
like knee replacements, or even delivering a baby.
Unfortunately, independent evaluators broadly agree that
most hospitals have not complied fully with the rules. We need
stronger enforcement at CMS, which to date has only leveled--
levied two penalties against hospitals for not posting accurate
information for patients.
We will hear from a hospital in my district that is
transparent and in compliance with the rules about their
experience, and why we should have reasonable expectations that
other hospitals should comply with these rules. Eastern
Washington employers have also been on the forefront of
utilizing price transparency for good. Schweitzer Engineering
Laboratories in my district, one of the largest private
employers in eastern Washington, has been a leader in utilizing
price transparency to deliver better quality care at lower
prices.
We know from stories like these, if fully implemented,
these rules help Americans. A recent economic analysis found
that, together, both rules could reduce spending for privately
insured individuals by tens of billions through 2025 alone,
with low-income Americans seeing the most significant benefits.
Ranking Member Pallone and I have worked together on oversight
for these rules for the past 2 years, and I look forward to
continuing that bipartisan work today.
Additionally, we will also examine how more competition can
help lower healthcare costs. Hospital physician and health
insurance markets have become increasingly consolidated.
Consolidation hasn't just been limited to hospitals buying
other hospitals or physician groups buying other physician
groups, also known as horizontal integration. We have seen a
rise in vertical integration, where purchases occur across
different sectors within the healthcare system.
For example, this could mean hospitals acquiring physician
groups or insurers buying PBMs. For patients, this could mean
their insurance company may own their doctor's practice, their
pharmacy, and the PBM that decides what they pay for medicine.
These--are these arrangements in the best interests of
patients? It remains to be seen, and one of the reasons why we
are having this hearing today.
So thank you. Thank you to the witnesses. We are grateful
for your expertise and work, and looking forward to having this
bipartisan conversation.
[The prepared statement of Mrs. Rodgers follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mrs. Rodgers. I yield back.
Mr. Guthrie. Thank you. I thank the Chair for yielding. The
Chair now recognizes the gentleman from New Jersey, the ranking
member of the full committee, Mr.--Representative Pallone for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Guthrie.
Today's bipartisan hearing builds on this subcommittee's
critical efforts to lower healthcare costs and make coverage
more affordable. More Americans have health coverage today than
ever before, thanks to the Affordable Care Act and the
expansion subsidies included in the American Rescue Plan and
the Inflation Reduction Act.
A record-breaking 40 million people have gained coverage,
and a record high 16.5 million Americans have coverage through
the ACA marketplace. Millions of families have seen the cost of
their monthly insurance premiums go down by more than 20
percent. The average family is saving $2,400 in premiums a
year, thanks to the ACA enhancements we made over the last 2
years. And the Inflation Reduction Act will also lower
prescription drug prices for America's seniors.
We are making significant progress, but high healthcare
costs and affordability continue to be a challenge and a
financial burden for American families. Our healthcare system
is complex and challenging. Too many patients are forced to
wait until after they receive care and have the medical bill to
fully understand how much they owe.
Patients deserve greater transparency in the prices they
pay for healthcare. Today consumers are not able to easily
obtain price information in advance. Sometimes the price
information that is provided is inaccurate and misleading,
making it difficult to determine the true value of the care.
And patients also face wide price variations. The lack of
transparency makes it difficult to compare across providers in
advance of receiving care.
Prices for healthcare services also vary widely across
different geographic areas, but also across providers in the
same geographic area. According to an analysis by the New York
Times, a single hospital can have up to a 300 percent price
difference for the same service, depending on the insurer.
Another analysis by the Peterson Center and the Kaiser Family
Foundation found the price of a joint replacement for knee or
hip surgery varied widely across the 20 largest metropolitan
areas, ranging from less than 20,000 to more than 70,000.
So a lack of transparency into these prices makes it
difficult for both consumers and employers to make informed
decisions. Employers have difficulty accessing data that could
help them negotiate competitive prices and design high-value
plans.
The contracts of pharmacy benefit managers are also opaque.
This makes it difficult for employers and plan sponsors to
understand drivers of cost and negotiate savings. We also need
greater oversight and enforcement of pharmacy benefit managers.
We must also build on the Hospital Price Transparency Final
Rule and the Transparency in Coverage Final Rule requirements.
The Hospital Price Transparency Rule is meant to bring more
transparency to healthcare by requiring hospitals to display
charges for the most-used services in a consumer-friendly way.
However, I am concerned by reports that many hospitals are
either acting slowly or not yet complying with the final rule.
I am also troubled by reports that some hospitals are
making it more difficult for consumers to access the
information. I understand that some hospitals are requiring
consumers to input personally identifiable information in order
to access information that should be easily available, or
burying the information deep in their websites.
All this is inexcusable, so I look forward to hearing from
the witnesses on what reforms are necessary, and what more
Congress can do to further strengthen those regulations.
While greater price transparency is important, I don't
believe it is sufficient in and of itself to expand coverage or
to improve affordability. Today 43 percent of U.S. adults are
inadequately insured, and half of uninsured or underinsured
Americans face problems paying their medical bills. More than
40 percent of adults have delayed or forgone medical care
because of the cost. And more than 100 million Americans have
medical debt. So transparency alone will not help lower out-of-
pocket costs for families.
We need to couple greater transparency with real solutions
that will lower costs, and that is why we must continue to
build on the historic progress we have made over the last 2
years. We need to continue to expand coverage and make
healthcare more affordable and accessible for all Americans. It
is critical that we make the ACA subsidy expansions permanent
and build on the success of the Inflation Reduction Act to
further lower drug prices for consumers.
So today's hearing is an important bipartisan step in our
continued effort to reduce healthcare costs. I look forward to
the witnesses' testimony.
[The prepared statement of Mr. Pallone follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Pallone. And with that, Mr. Chairman, I would yield
back, Chairman Guthrie.
Mr. Guthrie. Thank you. I thank the ranking member for
yielding back.
The Chair reminds Members that, pursuant to the committee
rules, all Members' opening statements will be made part of the
record.
Are there any further opening statements? Any opening
statements on the Republican side, any on the Democrat? Any
further opening statements?
Seeing none, I would like to introduce our witnesses. Our
first witness today is Chris Severn, cofounder and CEO of
Turquoise Health. Our second witness is Matthew Forge, CEO of
Pullman Regional Hospital. Our third witness is Marilyn
Bartlett, senior policy fellow with the National Association of
State Health Policy. Our fourth witness will--is--witness is
Sophia Tripoli, director of healthcare innovation at Families
USA. And our final witness today is Ben Ippolito, senior fellow
in economic policy studies with the American Enterprise
Institute.
I thank you all for being here and the time that you put
into being here today and preparing for--to be here today. I
thank you.
Some of you--most of you have testified. If you haven't,
you have 5 minutes. You will see a green button, and--a yellow
button means it is getting close to time to--yellow light, time
to wrap up. And then--that is right, we get to push the buttons
on our side--the lights will wrap up, and then red means that--
to finish up, if possible.
So we will start with our first witness. Our witness will
be Mr. Severn.
You are recognized for 5 minutes for an opening statement.
STATEMENT OF CHRIS SEVERN, COFOUNDER AND CHIEF EXECUTIVE
OFFICER, TURQUOISE HEALTH; MATTHEW FORGE, CHIEF EXECUTIVE
OFFICER, PULLMAN REGIONAL HOSPITAL; MARILYN J. BARTLETT, SENIOR
POLICY FELLOW, NATIONAL ACADEMY FOR STATE HEALTH POLICY; SOPHIA
TRIPOLI, DIRECTOR, CENTER FOR AFFORDABLE WHOLE-PERSON CARE,
FAMILIES USA; AND BENEDIC IPPOLITO, Ph.D., SENIOR FELLOW,
AMERICAN ENTERPRISE INSTITUTE
STATEMENT OF CHRIS SEVERN
Mr. Severn. Chairman Guthrie, Ranking Member Eshoo, members
of the Health Subcommittee, thank you for the opportunity to
testify at today's hearing.
We started Turquoise Health in 2020 as a direct response to
the 2019 Executive orders on price transparency for hospitals
and health insurers. In my 10-year background working with the
secret contracts negotiated between providers and insurers, it
was clear to me this sudden profusion of price transparency
data would both spur healthcare price competition and reform
the patient financial experience.
Prior to January of 2021, there was no accessible market
data for patients to price shop. Perhaps equally important,
there was no data to drive regional macroeconomic price
competition. In late 2020, as we prepared to launch Turquoise,
a platform that would allow patients to browse these new prices
for free, bipartisan efforts in Congress passed the No
Surprises Act. This new legislation detailed a much-needed
workflow for communicating good-faith estimates for insured
patients. Critically, it also outlined an avenue for patients
to dispute inaccurate estimates after the fact.
These three laws each mandate essential data and system
changes that will finally permit insured patients and their
employers to know the cost of care. Any significant
modification to these laws could lead to the overall dilution
of the intended dual aims of creating competition and
empowering savvy consumers of healthcare.
There are three main themes I aim to shed light on today:
What is the state of compliance with existing transparency
mandates? What impacts are we already observing on the
economics of healthcare? And three, in what areas can
additional government effort further the impact of these laws?
On the state of compliance, Turquoise is one of the few
data companies that monitors all 6,000 hospital websites on a
quarterly basis and all health insurance websites on a monthly
basis. As of March 1st, we have seen over 5,100 hospitals
publishing price information, compared to just 1,800 hospitals
this time 2 years ago.
Health insurers were required to publish pricing data 18
months after hospitals, starting July 1st of 2022. As of March
1st, we have discovered over 180 insurers with pricing data
published, an increase from 69 in July of last year. We
estimate these prices to represent 96 percent of covered
commercially insured lives in the United States.
Notably, the new insurance disclosed data represents prices
for all types of providers, not just hospitals. This creates a
compelling new competitive dynamic around the site of care:
When is it most cost effective to treat in a hospital or
surgery center or at home?
On the impact of the new transparency mandates, the sudden
infusion of billions of healthcare prices into the system
requires time for the industry and innovators like Turquoise to
adjust. The initial setup time required for data ingestion,
software development, and consumer adoption explains much of
the gap in perception between the optimism felt by startups
like Turquoise and the skepticism felt by--in the press, excuse
me.
Turquoise has now nearly 50,000 website visitors browsing
prices for free every month, a 400 percent increase from a year
ago. This data also reaches patients and employers through 20
distribution partners working on care navigation. Critically,
we are also beginning to see this data embedded into the
clinician workflow at the time of the referral.
Will these new efforts to decrease the cost--will these new
efforts decrease the cost of healthcare in the U.S.? There is
existing literature to support that competition and consumer
choice will lead to lower prices.
But these new laws also present a second massive
opportunity to reduce the administrative costs of healthcare,
which studies note to exceed 30 percent of every dollar spent
in the U.S.--healthcare dollar spent in the U.S.--by
standardizing the payment of medical claims and the
reimbursement methods negotiated between providers and
insurers.
That being said, we are still far from seeing the full
impact of this new data on the industry. While dozens of
academic researchers now use this data to monitor and publish
on economic progress, we need continued government intervention
to carry out price transparency's potential. Notably, hospitals
and payers should be held accountable to publish transparency
data. Enforcement has lagged, and this delays progress for
patients.
The No Surprises Act needs enforcement dates for key
outstanding critical measures such as the convening of good-
faith estimates across multiple providers and the provision of
the advanced explanation of benefits. These two requirements
permit the vast majority of America's commercially insured
patients to benefit from the consumer protections of the law.
Finally, hospitals should be required to publish data in a
standard format. CMS introduced this format in November of 2022
as a recommendation, and this should be made a requirement as
soon as possible in order to create cleaner data sets for
patients.
Thank you for your time today and for your continued focus
on healthcare price transparency in the U.S.
[The prepared statement of Mr. Severn follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Guthrie. I thank you for your testimony.
The Chair now recognizes Mr. Forge for 5 minutes for your
opening statement.
STATEMENT OF MATTHEW FORGE
Mr. Forge. All right, thank you. Good afternoon, Chairs
Rodgers and Guthrie, Ranking Members Pallone and Eshoo, and
members of the committee. Thanks so much for having me all the
way from Pullman out to see you today.
Again, my name is Matt Forge, I am the chief executive
officer for Pullman Regional Hospital. I have served as a
leader in rural healthcare in Idaho, Washington, and Wisconsin
over the past 8 years and certainly understand the importance
of pricing transparency, especially as it relates to supporting
effective healthcare decision making for individuals and
families seeking healthcare.
You know, we really are here for the communities that we
serve, everything that we do. Pullman Regional Hospital is a
public hospital district, so everything that we do is in
relation to their best interests. Transparency is really,
really important to us. I want to give you kind of a--we have
been compliant with the law since 2019, which we are really
proud of. And so I want to give you kind of a ground-level
observation and look into that.
So first of all, let's talk with--about the positives that
we have experienced with the transparency in the law. You know,
one, it is driving a greater understanding of a really complex
environment, down to the ground level. So not just within our
communities to patients--patients are having conversations that
they have never had before--but also within our organization,
as we are able to provide more thorough information that our
patients can utilize in their decision making, which is
fantastic.
I think the second one, which we are really, really excited
about now, is it is creating a table that we can go with people
like Schweitzer Engineering and other industries within our
community--it is creating a table where we are looking at data
and having conversations about how to lower cost and increase
value of healthcare within our environment. Those are really,
really important conversations to have, and I think for one of
the--for the first time we are starting to have those in our
community.
Three--and I think is a big reason why we are here today--
is greater competition. Now, Pullman Regional Hospital is one
of five hospitals in our region, so of course we are competing.
And I think the important thing is that we are not just talking
about cost. I think when we are having those conversations with
our patient financial counselors and our patients about a joint
replacement surgery, we are talking about quality as well. So
we are talking about cost, but we are talking about quality.
And it is really coming to the table and having those
conversations together.
Now, we have been there since 2019. I have personally been
working on this my entire career, trying to--you know, point-
of-care cost reporting is something that people are really
interested in. It is a challenging thing to accomplish.
So the first challenge that we face is making it accurate
and meaningful. We all know healthcare is a complicated
business. It changes all the time. It is a fingerprint
business. That means every individual that comes in has a
little bit different experience. They have a different
employer. And so making sure that that information is accurate
and meaningful is difficult. And especially in rural America,
that is something that we are really struggling with. But
there's a lot of people putting a lot of time and effort into
that.
Managing constant changes. Health insurance plans change
every single year. You know, our regulations are changing
consistently. We are spread thin as leaders. So, of course,
managing those constant changes, pricing strategies, payer
contract tracking, changes in the marketplace are difficult. So
managing that here.
And then a big one is competing priorities. We have to
recruit physicians. We have to manage healthcare needs within
our community. All these things come up against ensuring that
we have great pricing transparency. So while it is one piece,
it is a part of a bigger puzzle that will--that we are working
hard to solve.
And then, as we look forward to opportunities and how we
can get help from you all today, is continue to align
incentives. I mentioned working with industries within our
community. We are talking about data. That data is becoming
transparent. We are talking about real-life things, real-life
problems, and making progress there.
Continue to help us simplify. Our patients are asking for
that. Our communities are asking for that. We are asking for
that. It is not a simple process, and we need to continue to
work with each other to simplify this.
And then how can we minimize distractions? You know, these
programs are fantastic. I am a huge believer in all of them,
and I work hard in doing that. Getting them to be operational
is extremely challenging. And if we are managing multiple
priorities through this, it makes it more and more difficult to
handle these things, especially from a rural perspective. So
help us minimize distractions.
Again, this is a really important topic, and I really
appreciate you guys having me today. Thank you.
[The prepared statement of Mr. Forge follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Guthrie. Thank you for being here. I know that you
traveled a long way. I know the Chair enjoys showing great
things that are happening in her home State, so thanks for
making the long trip. I appreciate it.
Next, Ms. Bartlett, you are the national policy--policy
fellow for National Association of State Health Plans, but your
State health plan was Montana. So please give our regards to
your Governor. We miss him on the committee, and tell him hello
for us.
You are now recognized for 5 minutes for an opening
statement.
STATEMENT OF MARILYN J. BARTLETT
Mr. Bartlett. Thank you. Chair Rodgers, Ranker Pallone,
Chairman Guthrie, and Ranking Member Eshoo. Thank you for this
opportunity to testify this afternoon. I am a senior policy
fellow with the National Academy of State Health Policy, but I
am also a healthcare cost consultant. And today I am speaking
as Marilyn Bartlett, a forensic accountant focused on following
the money in the healthcare system to support policy, employer-
sponsored health plans, and all with the goal of lowering
healthcare costs.
I hope my testimony today will help the committee not only
understand the challenges for healthcare purchasers, but the
opportunities to make systemic and lasting change to benefit
all Americans.
Let me begin by sharing a story about the Montana State
employee health plan. It has been hailed as something
revolutionary, but what we did was nothing more than demanding
transparency, analyzing the data, and negotiating for fair
prices. The fact that this is remarkable is indicative of a
dysfunctional market that is our current model.
I was hired in late 2015 by the State of Montana to save
the health plan from insolvency. It had just ended a year
losing 28 million. By 2017 we had $112 million in reserves and
had achieved a savings of $121 million.
How did we do it? We negotiated contracts with every
Montana hospital to reimburse as a multiple of Medicare Cost
Plus. No longer were we going to stand for a secret discount
off of an unknown figure.
And we had contracts. There was no balance billing of
members. We terminated our traditional PBM, we moved to a
transparent passthrough model, and we also removed CVS from our
pharmacy network because they would not accept our prices. We
invested strongly in primary care.
So what happened? Employees have had enhanced benefits.
They have had no raise to premium--last time was in 2016. And
we were able to return over 50 million taxpayer dollars to
Montana General Fund because we were over-funded.
The effort was bipartisan. The Democratic Governor and the
Republican legislature worked together, and the State employees
in the union were engaged throughout the process. We disrupted
the status quo.
Since then, other States have successfully launched
reference-based pricing. Oregon State employees have seen a
savings of 33 percent in the first year. California's State
employee plan saw savings between 12 and 18 percent for various
surgical procedures. And imagine the tremendous savings you
could have if the Federal Employee Health Benefits plan were to
take a similar approach with your 8 million members.
Other employers and unions have effectuated meaningful
change, but it is often against strong headwinds from the
industry that profits from the status quo. The State of New
Jersey and their unions achieved billions in savings by
launching a payment integrity program and a PBM reverse
auction. SEIU 32BJ used data to stop egregious billing, and a
small Pennsylvania county has identified 4 million in savings
by negotiating directly with hospitals.
The Hospital Transparency Rule was passed in order to allow
plans and consumers to compare prices of services and supplies
across hospitals. Patient Rights Advocate reports only 25
percent of the hospitals have published complete machine-
readable files containing all of the required files which are
needed for a consumer, and especially for an employer,
providing benefits.
The Consolidated Appropriations Act mandates employers to
have full access to their data, yet carriers are blocking them
at every turn, evidenced by a string of lawsuits. Owens &
Minor, a large, publicly traded company headquartered in
Virginia, has been forced to sue Anthem to get their plan data
after 18 months of demands. A recent survey found that 89
percent of the voters believe Congress should take action to
reduce health--hospital prices, and 72 percent are in agreement
that the prices should be limited to two times the Medicare
rate.
We can and we must do better. The State of Montana plan did
it, other employers are doing it, and the Federal employee
health plan can do it. But we have to have price and cost
transparency.
Thank you again for your bipartisan leadership.
[The prepared statement of Ms. Bartlett follows:]
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Mr. Guthrie. Thank you. The gentlelady yields back.
Now the Chair now recognizes Ms. Tripoli for 5 minutes for
your opening statement.
STATEMENT OF SOPHIA TRIPOLI
Ms. Tripoli. Chair McMorris Rodgers, Ranking Member
Pallone, Chair Guthrie, Ranking Member Eshoo, members of the
committee, thank you for the opportunity to testify today. It
is an honor to be with you this afternoon.
On behalf of Families USA, a leading national, nonpartisan
voice for healthcare consumers working to ensure the best
health and healthcare equally accessible and affordable to all,
I want to thank you for this critical discussion on healthcare
affordability, transparency, and competition.
Today's hearing is urgently needed. Our healthcare system
is in a crisis, evidenced by lack of affordability and poor
quality. It will take all of us working together across
political parties from rural and urban communities alike to fix
it.
Every person in the United States should have affordable,
high-quality healthcare that prevents illness, allows them to
see a doctor when they need it, and helps to keep their
families healthy. Yet almost half of all Americans report
forgoing medical care due to the costs. A third say that the
cost affects their ability to secure basic needs like food and
housing. And over 40 percent of American adults, 100 million
people, face medical debt. Unaffordable healthcare is a
persistent problem for national and State governments and
affects the economic vitality of middle-class and working
families.
Despite this financial burden, our health is not better.
Our moms and babies die at higher rates, and a quarter of a
million people a year are killed by the healthcare system for
medical errors, infections, and the like. Make no mistake:
America's families are suffering, and swift action is needed.
At its core, this crisis is driven by a misalignment
between the business interests of the healthcare sector and the
health and financial security of our Nation's families.
Healthcare industry consolidation has eliminated competition
and allowed monopolistic pricing to push our Nation's families
to the brink of financial ruin. Americans of all watched as
their local hospitals have become health systems, and those
systems were bought by large healthcare corporations to
increase prices year after year. These higher prices are passed
on to families as annual increases, and insurance premiums and
cost sharing have become profit margins for large hospital
corporations.
Since 2015, hospital prices have increased as much as 31
percent nationally, now accounting for nearly one-third of U.S.
healthcare spending, and growing four times faster than
workers' paychecks. And these prices are irrational, with a
knee replacement costing three times as much in Sacramento,
California, than in Tucson, Arizona, and an MRI at Mass General
Hospital in Boston, Massachusetts, ranging from $800 to $4,200,
just depending on the insurance carrier.
Particularly concerning is that healthcare is one of the
only sectors in the U.S. economy where consumers are blinded to
healthcare prices until after they have received a service and
a subsequent bill. This lack of transparency is a major barrier
to the healthcare sector competing based on fair prices and
high-quality care.
But it doesn't have to be this way. We know what is driving
the crisis, and we know how to fix it. Solutions can be
deployed right away to end these pricing abuses, restore
competition, and make healthcare more affordable.
We urge the committee to consider well-vetted, bipartisan
solutions, including strengthening and codifying price
transparency rules, addressing payment differentials that
incentivize consolidation and drive up costs, and limiting
anticompetitive behavior in provider and health plan contracts.
Ultimately, the healthcare sector's economics must change
to align with the health and financial security of the American
people. Congress has overwhelming public support to do this: 93
percent of Americans agree that we pay too much for the quality
of care that we get, and 9 in 10 voters believe that Congress
should act to reduce hospital prices.
I would like to finish my remarks with the story of Kynghee
Lee from Ohio to illustrate just how anticompetitive these
prices have become. Ms. Lee has arthritis, and once a year goes
to a rheumatologist for a steroid injection in her hand to
relieve her pain. Each round of injection costs her $30. But in
2021, when she arrived at her usual office to see her regular
rheumatologist, she found they had moved up one floor in the
building. She thought nothing of it until she received a bill
for nearly $1,400. Ms. Lee's infusion clinic was moved from an
office-based practice to a hospital-based setting, resulting in
a price increase of more than 4,500 percent for the exact same
service from the exact same provider.
This is a national scandal. This committee has the power
and responsibility to stand up for our Nation's families and
stop pricing abuses driven by big healthcare corporations.
I thank the committee for your time and look forward to
answering any questions you might have.
[The prepared statement of Ms. Tripoli follows:]
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Mr. Guthrie. I thank you for your testimony. I appreciate
it.
I will note there is a vote on the floor. We still have 318
left to vote, so I know we are going to have time for the
next--to finish our opening statements, and then we will--
probably one or two people may be able to ask questions. We
will see how it moves forward.
But now, Dr. Ippolito, I will recognize you for 5 minutes
for an opening statement.
STATEMENT OF BENEDIC IPPOLITO, Ph.D.
Dr. Ippolito. Well, thanks very much, Chairman Guthrie,
Ranking Member Eshoo, and members of the subcommittee. My name
is Benedic Ippolito. I am an economist at the American
Enterprise Institute here in Washington, D.C.
You know, the high costs of healthcare underpin nearly
every health policy debate that we have and, frankly, many
nonhealth policy debates. Rising costs in programs like
Medicare and Medicaid create budgetary pressures for the
government, right? That stresses tax bases, and it crowds out
other valuable uses for that fund--those funds. Whether it is
lowering taxes, whether it is spending money on other programs
you like, you can't do it if healthcare is taking all the
money.
Within the employer-based market, rising insurance costs
eat away at the wage growth of workers. And across all of those
settings, it becomes more expensive to expand insurance, either
to cover more people or to cover more services. Of course, all
of that isn't necessarily a problem, per se, if we think that
healthcare spending reflects the demands of consumers, their
preferences, right, be it clinical quality, nonclinical value,
convenience, whatever it might be.
However, at this point there is very ample evidence that
much of our spending reflects market frictions and
inefficiencies rather than consumer preferences. And I think
this hearing today is highlighting two key sources of those
frictions.
Markets require informed consumers who have meaningful
choice. If purchasers--whether it is individuals, a State
health plan, an employer--if they do not have any meaningful
choice, then their decision reflects nothing about their
preferences, it just reflects the fact that that was the only
option they had. And the same goes for a purchaser who doesn't
have any information. If you make a choice but you don't really
know the full cost of that PBM, insurance plan, whatever it is,
well, that choice doesn't really reflect your underlying
preferences. And that really is the fundamental problem here.
So in both of those cases, we have high prices that can
persist for reasons that are divorced from value. So economic
theory and empirical evidence are very clear that improving
competition within healthcare markets increases pressures on
firms to improve quality and decrease costs. Increasing
transparency in conjunction can help market actors make the
best use of the choices that are made available to them and
push markets to invest in the things they value by providing
clear signals, by moving with their feet--voting with their
feet, if you will.
In other words--and I do think this is the key point here--
more competition and transparency doesn't just lower spending
in some indiscriminate manner. Rather, it targets spending that
does not reflect value to consumers. And that is the key point,
I think, to this hearing.
Beyond this, policies that make progress along these
dimensions, particularly transparency, are important for
informing the policymaking process. We need an accurate
understanding of how markets work and when they do not. That is
key to redesigning incentives that, for example, may affect
consolidation incentives that were brought up earlier, and
understand when more active intervention is justified.
And I will just take a moment to highlight we are probably
going to talk about a lot of policies that are informed by the
last 10 or so years. There has been an explosion of
understanding of the commercial healthcare market. We much
better understand the prices and the spending in those markets,
how important consolidation is, and that is a direct function
of the fact that we have much better data today about
commercial healthcare prices than we did, say, 10 or 15 years
ago.
In my written testimony I emphasize a host of specific
policy options that can help address high healthcare costs by
increasing competition and transparency, with a particular
emphasis on those that have attracted bipartisan interest in
recent years. And I will just note that that was coauthored
with Loren Adler of the Brookings Institution and was recently
copublished by AEI and Brookings. I am not going to summarize
that list now, but I will note that this is an issue that spans
just about every part of healthcare.
And so that is a long way of saying that this hearing is
keying in not just on healthcare costs in general, but rather
two of the most important underlying sources of inefficient
spending in healthcare markets.
And I thank you for the invitation to be here today, and I
look forward to your questions.
[The prepared statement of Mr. Ippolito follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Guthrie. The gentleman yields back.
Like I said, there is a vote on the floor. There are two
votes. And so we are going to recess the committee. And as soon
as the second vote is cast, I am going to come straight back.
So--and then I will be the first one recognized. So people,
plan to get back accordingly. I appreciate it.
The committee will be in recess.
[Recess.]
Mr. Guthrie. The committee will come back to order.
It is now time for Members' questions, and the Chair will
recognize himself for the purpose of--5 minutes for the purpose
of asking questions.
So, Ms. Bartlett, I know that you were in the Montana
healthcare policy, and so my question is, what I--we want
individuals out shopping for their healthcare. We want
individuals to have access to that, and shop for their
healthcare.
But I think what is going to drive the system more--I mean,
it would be difficult if I was in your situation in Montana,
and calling, trying to make a--negotiate with hospitals,
whatever. But when you have 21,000 covered lives--I think that
is what you had--it is more bargaining power, I would say, for
you to move forward. And I think getting our big employer
groups involved in this would be important to really--to make
this work the way that we think it should work.
And so my questions were, what did you find--where did you
find the most excess spending in Montana?
And then what were a couple of the biggest drivers in
spending?
And as you spent less, did your employees have less care,
or did you spend less and they still had quality care? Because
we all want to make sure we have quality as well.
So I would like to ask you that: What were the big costs,
what were the big drivers of your costs, and as you spent less,
did they have less care?
Mr. Bartlett. Well, thank you, Chairman Guthrie.
Our biggest spend was in hospitals. And being an accountant
and getting my data, I analyzed it, and 43 percent of our plan
spend were in the Montana hospitals. So I knew I had to hit
that first.
And we didn't have price transparency. I would argue we
still don't have it now, totally. But what I did was run my
claims through an independent Medicare repricer to see what I
was paying at different hospitals as a multiple of Medicare.
And I found the highest was 611 percent. And I found a range
that two of the hospitals were at that had high quality. And to
me, they became the efficient hospitals, and I definitely
negotiated to get them in the range. So we did separate
contracts with each hospital to negotiate to get in the range.
I also implemented Health Care Blue Book, which would show
prices as red, yellow, green and quality as red, yellow, green,
so that employees could shop right now.
I do believe that at that point employees were looking for
a full bit of information to make decisions, but I also feel,
as an employer, I was a fiduciary. I had to make sure only
reasonable costs were spent, and I was also a steward of
taxpayer dollars. So I had to make sure everything was
transparent. I knew the Medicare rate, and I could verify
whether or not they were.
Now, you raise a really good question about the size of
employer. I had a total of 31,000 lives on the plan.
Mr. Guthrie. Oh, 31,000. I thought it was 21.
Mr. Bartlett. And yes, that did give me bargaining power. I
have worked with employer forums, employer groups that bring
together employee plans to do that. They still are struggling
to get their data from their carrier, and they also come up
against a wall with the carriers and with the consultants,
large brokerage firms, any brokerage firm who has a vested
interest to keep them where they are because of commissions.
So transparency of the whole chain of middlemen and payers,
I broke a lot of that out. I fired Aon, I did my own data
analysis, and I fired our TPA, I fired our PBM, and contracted
differently.
Mr. Guthrie. Well, so I guess my question--you know, I used
to work in the automotive supply business. And I will tell you,
if I had a 611 percent markup on a product that I was selling
them, the CEO of said automotive company would have fired the
buyer buying from me moving forward.
But the question is just how you know the price. So we want
to get into transparency, where people know the price they are
shopping for. I don't know if it is too high, too low, or
whatever, but the market can determine that if people know what
the price is.
And so, as we develop transparency, what do you think are
the one or two things that absolutely are musts for us to make
sure that you have access to? Because you said you went to a
lot of effort, and lot of people aren't going to have that kind
of buying power. So what is an absolute must for you to know
what the marketing----
Mr. Bartlett. I think two things you need. In my world it
was--hospital prices was the big thing, although I did save 23
percent on pharmacy. But you needed to make sure you have the
price. And we are starting to see that in a few of the hospital
price transparency files that are complete. I can see the
prices by every plan, and I can see the cash price. And I have
been surprised.
And STAT published an article showing that 55 percent of
the charges are--cash price are lower than the insurance-
negotiated rate.
Mr. Guthrie. Well, thank you. I am sorry I am out of time.
I had some more questions. I had some for Mr. Severn, and I
will submit those for the record.
The Chair now yields back to himself and will recognize the
gentlelady from California, my friend Ms. Eshoo, for 5 minutes
for questions.
Ms. Eshoo. Thank you, Mr. Chairman, for holding this
hearing.
And to each of the witnesses, I think you all are terrific.
You are highly instructive, given your experience, where you
come from, what you do.
This is about transparency and, like, who can be against
transparency, right? Except there are some people that are. So
this is an important hearing.
I have to say, though, that I am somewhat skeptical that
patients pick hospitals based on price. I think we go to the
hospital that our insurance network covers. Because people
that--their out-of-pocket costs are what are foremost in their
mind. I think that insurers need to negotiate prices to lower
hospital costs. And in some areas, you know, there are health
systems that have been bought up--that have bought up every
practice in town, and they can demand insurers pay whatever
price they set.
So I think that in this whole examination, Mr. Chairman, we
need to bring the insurers in here and the PBMs. We really want
to get at hidden costs and how they operate, and then how we
should operate based on how they operate. I think that that
would be an important examination for us. Great.
To Dr. Ippolito, it is nice to see you again. Thanks for
coming back to the committee. Civica Rx is, as you know, it is
a nonprofit drug company. They announced in August that it
would offer an important generic drug to treat prostate cancer
for $160 a month. This is about $3,000 a month less than the
average cost for someone on a Medicare Part D plan. But many
health plans are having trouble getting this lower cost to
their members because of obstruction by PBMs.
So I think there is an evident answer to my question. Why
do you think PBMs--what do you think they have to gain by
keeping their costs so high for Medicare beneficiaries?
Dr. Ippolito. Well, I mean, PBMs are certainly at the--they
have long been blamed for the phenomenon of very high-list
prices for many brand drugs. And particularly in Medicare Part
D----
Ms. Eshoo. Right.
Dr. Ippolito [continuing]. That can really----
Ms. Eshoo. But why do you think they are doing it?
Dr. Ippolito. It is because they get paid on the rebates,
the differential----
Ms. Eshoo. It is all about money.
Dr. Ippolito [continuing]. Between the list and the net
price.
Ms. Eshoo. Right, it is all about money.
What would you suggest to us that we do to get at how PBMs
manipulate costs this way? That is a--I mean, this is a
stunning difference right here.
Dr. Ippolito. Yes, I----
Ms. Eshoo. You know, $160 a month versus over 3,000 and
over.
Dr. Ippolito. Yes, it is an enormous difference. And I
think the central point, the big difference between list and
net prices in the drug market represents one of the most
dysfunctional parts of healthcare, at least in its current
form. So anything you can do to try and align lists and net
prices in the drug market aligns--it doesn't just lower the
out-of-pocket for the senior taking that drug. What it does is
it aligns the incentive. Suddenly, the insurer has the same
incentive to negotiate for the same low net price that the
consumer gets at the out-of-pocket--out-of-pocket, right?
So I think, in terms of conceptual approach, that is the
key: aligning the list and the net price in the drug market.
Ms. Eshoo. Thank you.
To Ms. Tripoli, welcome back. I know Families USA has
testified at our subcommittee many, many times to the
betterment of the hearings and what we do.
Sutter Health has--is really dominant in my congressional
district, and they have a new CEO that came in and met with me
maybe a few weeks ago--3 weeks ago, something like that, very
recently--and before he even asked me what I had on my mind, I
told him. And at the top of my list was that they were turning
away new patients with traditional Medicare but accepting
patients who have Medicare Advantage and private insurance.
Obviously, I don't support that. I don't support that
practice. And these complaints have come from my constituents.
When I asked him about it, he said that as they moved to hire
more doctors, that that would--that policy would not remain in
place. But when we circled back with them, they had changed
their mind about it. Not a good policy.
Is this--in your view or your understanding, is this a
common practice of health systems nationwide?
Ms. Tripoli. Thank you for the question, and I would agree
that is--it is outrageous. I think it is just another example
of how broken the markets have become, where we have large
systems like Sutter with dominant power, and they are able to
make all kinds of decisions about prices, turning away patients
because of the types of rates that they are getting. So it is
completely, completely unacceptable, I would agree.
Ms. Eshoo. But what it is is that the privately insured are
favored over the publicly insured. So how would you address
that? What would you recommend this committee on a bipartisan
basis to do?
Mr. Guthrie. You have got to sum up there, when----
Ms. Eshoo. Mm-hmm.
Ms. Tripoli. I think it is the very solutions that we are
here----
Ms. Eshoo. Oh, it is way over.
Ms. Tripoli [continuing]. To talk about today.
Ms. Eshoo. You can respond in writing to me in length.
Mr. Guthrie. OK.
Ms. Eshoo. Thank you.
Thank you, Mr. Chairman.
Mr. Guthrie. Yes, we want to hear your response.
Ms. Tripoli. Thank you for the question.
Ms. Eshoo. Yes, we need the response.
Mr. Guthrie. So the Chair now recognizes Chair Rodgers for
5 minutes for questions.
Mrs. Rodgers. Thank you, Mr. Chairman. I have long said
that price transparency is foundational to restoring the
doctor-patient relationship. And as I mentioned in my opening
statement, we have studies that show billions in savings for
the healthcare system.
I wanted to start by asking each one of you if you agree,
yes or no, that robust price transparency will empower patients
and help with the downward pressure on prices.
I will start----
Mr. Severn. Yes. Yes.
Mrs. Rodgers. I will just go across.
Mr. Severn. I will start real quick. I mean, there is a
reason I dropped everything and started a business with a bunch
of great people to work on this. It is a really big event that
all these prices are now public.
In the first effort over these past 2 years, especially for
innovators that jumped in, is get all the data and create
market forces. I am not an economist, but----
Mrs. Rodgers. OK, thank you.
Mr. Severn [continuing]. Before----
Mrs. Rodgers. I want to keep this going.
Mr. Severn. Yes, oh, yes.
Mrs. Rodgers. OK, Mr. Forge, yes.
Thank you.
Mr. Forge. Yes, absolutely.
Mrs. Rodgers. Thank you.
Mr. Forge. Yes.
Mr. Bartlett. Yes, absolutely, too.
Mrs. Rodgers. Thank you.
Ms. Tripoli. Yes.
Mrs. Rodgers. Great.
Dr. Ippolito. Yes.
Mrs. Rodgers. Great. We are unified.
So coming back to Mr. Forge, I am just personally very
proud of the work that you have done at Pullman Memorial
Hospital, a critical access hospital in eastern Washington
leading the charge on price transparency. And it is clear that
you also believe that you are doing right by your patients.
Hospitals around the Nation should look to Pullman as an
example.
So do you believe that your experience is one that can be
scaled and replicated nationwide?
Mr. Forge. Well, I think, you know, first of all, I think
transparency is always good. You know, we are all really smart
people, and we can solve problems. If they are under the table,
we are going to have a difficult time doing that. So I think,
first and foremost, getting these challenges on the--you know,
pricing and these things--on the table is how we are going to
solve them.
I think it is a big challenge as you are looking across the
country. We are going to have to prioritize it as a key
strategy, because there are so many priorities in healthcare.
So absolutely, I think it can be scaled.
Mrs. Rodgers. Thank you. Would you speak to recommendations
that you have for improving hospital transparency experience,
while making sure that the data is available to patients and
employers?
Mr. Forge. Well, I think making--I think data is going to
be the key to it. I think right now we are having to fight to
get access to data. But once we do have access to data and we
are sitting down with our partners like we are doing with the
business community in Pullman, we are able to come up with
solutions that make our communities a great place to receive
care, a great place to live, and a great place to conduct
business.
Mrs. Rodgers. Great. Thanks again for being here.
Mr. Forge. Thanks for having me.
Mrs. Rodgers. Mr. Severn, I--you know, so we all agree on--
that price transparency is important.
There's been a lot of issues with the hospital
requirements. And unlike Pullman, not all the hospitals are in
compliance with the CMS standards. And, you know, we need to
have data quality completeness and user friendliness.
So I wanted to ask, Turquoise helps hospitals come into
compliance with the Federal regulations. If we increase
hospital standards for data quality and completeness, do you
have advice on the biggest challenges hospitals face?
And are there ways that we can help mitigate those
challenges while increasing the quality of the data and
compliance?
Mr. Severn. Yes, there was--it is a great question. There
was a big initial setup of publishing this data for hospitals
in Pullman and a lot of others, and they had to guess on a
format, because there was no standard format. With the payer
rule, there was a prescribed format: the table looks like this,
the columns are named this. And hospitals would have
appreciated that and, you know, innovators and folks using the
data would have appreciated that.
And so, you know, we now have a suggested standard that
came out, and I would suggest making that enforced. And I think
that also helps hospitals know, if we follow this standard, we
are in compliance, we are not guessing, and we don't have a
question mark when CMS comes and looks at our file.
Mrs. Rodgers. And I would also like you to speak to how you
believe this is going to improve patient care. So increased
compliance, better data, how is that going to bolster the
patient-facing transparency, and ultimately directly helping
patients?
Mr. Severn. Yes, there was a great point earlier about will
patients shop for care. And, you know, I hope they do, we are
banking on it.
But, you know, when my primary care doctor says, ``Hey, you
need an MRI'' and there are four health systems in San Diego, I
want those prices in front of my primary care to say, ``Hey,
you could go to any of these four. You could save $1,000 if you
go to Sharp instead of UCSD.'' And so, by making a standard,
you speed up that data reaching the EHR in front of the doctor,
so that they have that data in front of them.
Mrs. Rodgers. Well, again, it is just--thank you all for
being here. I really appreciate your input on this important
issue. And we are--we have more work to do.
Thank you, I yield back.
Mr. Guthrie. I thank the gentlelady for yielding back, the
Chair for yielding back. The gentleman from California, Mr.
Cardenas, is recognized for 5 minutes for questions.
Mr. Cardenas. Thank you, Chair Guthrie and Ranking Member
Eshoot, for holding this hearing, and thank you to our
witnesses for being here to give us your expertise and your
opinions.
Americans are getting crushed by skyrocketing healthcare
costs. Medical debt is weighing down far too many people,
preventing them from spending on basic necessities and causing
deeper financial pain beyond their healthcare. It is shameful
that an individual's health can completely derail them
financially. And what is worse, in most cases there is no
information about how to make the best decision about their
care.
I am glad to see new rules being instituted to increase
transparency about cost and coverage and in hospitals and
healthcare settings. But there is still much to be done to make
sure these rules are implemented in a way that is usable and
easy to understand.
I apologize, I am having a hard time reading my notes
because I have allergies. And I was talking to one of my doctor
colleagues, and he goes, ``Let's go walk outside. It is a
beautiful day,'' right? I forgot that I am probably going to
get hit with my allergies. By the time I got to this building,
I can barely see, and my eyes are watering. And I was walking
with a doctor. My point is he couldn't help me in the moment.
So access is real and different for every person. And in
America, it appears, in my opinion, in districts like mine,
which are a little bit lower-income than average, access and
how we communicate with people really can make the difference
as to whether or not they are going to get the care that they
deserve and need, even though they might have insurance, even
though they might have coverage. How to access that coverage is
a real issue.
So, Dr. Ippolito, thank you for providing your remarks
today, and I hope I said your name right. That is the way I
used to call my uncle. His first name was Hipolito. You are the
second person in my life I have met with the same name.
Part of having real transparency is ensuring that the
information is accessible and understandable to everyone. To
your knowledge, what efforts are being made to ensure that cost
disclosures and comprehensible and easy, accessible--that are
comprehensible, and easy, accessible for all, including for
those with limited health literacy or reduced access to digital
platforms?
Dr. Ippolito. Well, I think the answer to that is there is
sort of twofold. The first is that making sure that the
submitted forms come in some type of reasonable format that
includes both the raw data that is submitted to places like
Turquoise that they use, and the stuff that is put in the user-
friendly format. But the second piece of this is places like
Turquoise.
I mean, this is how markets work. Sometimes information is
put out, and it is complicated. But Consumer Reports exists.
You don't need to know everything about a car and everything
about an engine to understand which one is better and which one
is worse. And so there really is a role for places just like
Turquoise, actually.
Mr. Cardenas. Thank you.
In districts like mine, Spanish is the primary language for
many, many families. And to your knowledge, what efforts are
being made to ensure that non-English speakers can still have
the same tools at their disposal to make informed decisions?
Dr. Ippolito. You know, I am not sure about the answer to
that question right now. I would have to look it up after.
Mr. Cardenas. OK, thank you very much. Does anybody have an
answer to that question?
Please.
Ms. Tripoli. I think on the price transparency requirements
in particular, my understanding is there is not a requirement
for the information to be in any other language other than
English.
Mr. Cardenas. OK. Well, thank you for that. I think that in
this very diverse country, we should make an effort to at least
make sure that it is accessible to people, and that if there's
language barriers, we have the technology and the ability to
make it more accessible, which at the end of the day means
better outcomes for individuals, for people. So thank you for
that answer.
I also want to acknowledge the impact of the cost of
medications on American families as well. I am thrilled that
the Inflation Reduction Act was signed into law, and with it
the many provisions to lower drug costs. But there are still
several aspects of the drug-pricing pipeline that are unclear
at best. As we turn our attention more to the role of pharmacy
benefit managers, or PBMs, as they are called, in the cost of
drugs, I am left wondering why there is so little transparency
in this space.
Dr. Ippolito, how might greater public transparency around
rebates and who they go to impact costs? Can you discuss some
of the benefits that we could expect?
Dr. Ippolito. Yes. PBMs are extraordinarily--have
extraordinarily complicated contractual relationships. And when
you say PBMs, I would include things like PBM aggregators that
are at a whole different level but affiliated with those
entities as well.
The problem is it makes it extremely difficult if you are a
plan sponsor, if you are an employer, to evaluate that contract
and compare two PBMs to each other if the contracts are very
complicated, there's 20 different fees, and you may or may not
even be getting all the rebates passed through to you.
So the point about simplifying that information, making it
clear to the person purchasing the plan how much this costs and
what exactly I am getting suddenly makes it much, much easier
to compare one PBM versus the other.
Mr. Cardenas. Thank you very much.
With that, I will yield back the balance of my time.
Mr. Guthrie. I thank the gentleman for yielding back. The
Chair now recognizes Dr. Burgess for 5 minutes for the purpose
of asking questions.
Mr. Burgess. I thank the chairman. Great panel today. I am
glad we are doing it.
Transparency is something that is--a lot of us talk about.
It has been very, very difficult to achieve. I would be remiss
if I did not acknowledge the signing of the Executive order in
June of 2019. I was down at the White House when that happened,
and I could not believe the people in the audience that day and
how genuinely excited they were that someone at some level had
finally elevated this to the point where something was actually
going to get done.
I--you know, as a Member of the House, and Article 1 in the
Constitution, I don't think Executive orders are the way to go,
I think we should do it legislatively. But we had not been able
to do it legislatively. So the President did it with an
Executive order and, to my surprise, it did not disappear 2\1/
2\ years ago, when the presidency changed.
Well, Mr. Chairman, I would like to ask--it is a short
document, but it is a phenomenal document, so I would ask
unanimous consent to introduce into the record President
Trump's Executive order on price transparency.
Mr. Guthrie. Any objection?
Seeing none, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Burgess. So, Dr. Ippolito, let me ask you. And one of
the things I have worked on for a number of years--I never
understood why in the Affordable Care Act they carved out and
said physician-owned practices or physician-owned hospitals
could not expand after the passage of the Affordable Care Act.
So I have a bill with Henry Cuellar of Laredo. It is a
bipartisan bill to repeal the ban on physician-owned hospitals.
Personal experience myself, owning an ambulatory surgery
center, my dad, who was a general surgeon, actually had a
physician-owned hospital when he was in practice--I think
doctors understand what it takes to make a hospital run, and
they want the best facility for their patient. They want their
patients to go to a facility that meets their needs and is
obviously of top notch in quality.
I have worked with a hospital in McAllen, Texas, Doctors
Hospital Renaissance, for many years on these policies. They
operate on the Texas-Mexico border, a 530-bed general acute
physician-owned hospital. During the pandemic, Doctors Hospital
Renaissance converted its rehabilitation hospital--
rehabilitation unit into a 102-bed COVID hospital in a matter
of 10 days. They had to get a waiver from CMS to do that
because they weren't allowed to expand as a physician-owned
hospital. But a phenomenal service they provided in a part of
the world that really wasn't receiving much in the way of
services.
And then, in addition to all of that, prior to COVID they
received an accreditation for and opened several medical
residency programs in primary care to bolster the physician
workforce in what is a very underserved area of our State.
So I would just like to hear your thoughts on the value of
physician-owned hospitals. If we are going to combat
consolidation in the healthcare space, physician-owned
hospitals, do they play a role in this?
Dr. Ippolito. Yes. I mean, I think one of the lessons over
the last, say, 20 or 30 years is that we ought to take any
competition where we can get it in healthcare markets. And, you
know, the bar ought to be very high for impeding entry of new
competitors. And so, yes, there is some concern about, you
know, potential cream-skimming with physician-owned hospitals.
But to be completely honest, I don't really know that it is
more acute in those settings than it is in, say, an environment
where an insurer is vertically integrated with physicians. So
that is a long way of saying----
Mr. Burgess. Yes.
Dr. Ippolito [continuing]. It is a reasonable addition.
Mr. Burgess. I would refer you to an article in Health
Affairs of March of 2007 that I wrote that actually refuted
that concept. Brilliant article.
[Laughter.]
Mr. Burgess. So let me ask you this: Is there anything
that--else we can be doing to support the smaller and
independent practice of medicine?
Dr. Ippolito. Yes, I mean, there's a number of things. I
guess there's two buckets. One is getting rid of barriers to
entry for new competitors. So whether that is certificate of
need laws in some States--I don't think Texas has one----
Mr. Burgess. Not anymore.
Dr. Ippolito [continuing]. But I think a number of other
States have them still. Whether it is scope of practice, trying
to make sure that people can actually practice up until their
training. And on the other end, you have got to think about
other policies that really do make it difficult for physician
practices to compete with hospitals. Getting paid much less to,
for example, administer a drug compared to a hospital-based----
Mr. Burgess. Right.
Dr. Ippolito [continuing]. Facility suddenly makes it very
difficult for that kind of facility to----
Mr. Burgess. So site neutrality is something this committee
should focus on.
Let me just ask you one last question. Mark Cuban came into
our Doctors Caucus a few weeks ago and talked about his
company, Cost Plus Drugs. They offer generic drugs at a
discount, transparent price by removing PBMs altogether. Do you
see a future for that type of activity?
You talked about a line list of net prices. It seems like
that is what is being accomplished there.
Dr. Ippolito. Yes, at least for some drugs it seems like
there is a reasonable future for that kind of arrangement.
It is going to be challenging in the big-name brand drug
market to do that. But on the plus side, it is another sort of
effort to chip away at the current standard of very high list
prices and low net prices. We have seen that in other places.
We have seen insulin makers lower list prices. We have seen by
biosimilar makers that are competing with Humira offer products
at lower list price versions. And so I think the totality of
evidence suggests there is at least an effort to move in that
direction.
So that is a reasonable goal, and I think that is one way
to do it.
Mr. Burgess. Thank you, Mr. Chairman. I will yield back.
Mr. Guthrie. I thank the gentleman for yielding back. The
Chair now recognizes Dr. Ruiz for 5 minutes for the purpose of
asking questions.
Mr. Ruiz. Thank you all for being here today.
High healthcare costs continue to be a challenge for
American families. About half of Americans have reported
difficulty affording healthcare. Time and time again, my
constituents tell me they ration or forgo medication or care
because of the cost. In the emergency department, the first
question I would get was, ``Am I going to be OK?'' And the
second question was, ``How much is this going to cost? Am I
going to be able to afford it?''
So even in nonemergency healthcare settings, patients
cannot see prices in advance and are forced to wait until after
they receive medical care and get the bill to fully understand
how much they owe.
Ms. Tripoli, can you discuss some of the challenges
patients face in navigating the health system and how
increasing transparency can help patients achieve savings?
Ms. Tripoli. Absolutely. Thank you for the question. I
think there are two.
The big purpose of price transparency is that we have a
system where we actually don't know what the prices are until
we get a service and we get a bill. Price transparency helps to
crack that wide open. The most important pricing information
that we need in price transparency is the negotiated rate. That
is the rate that is being negotiated behind closed doors
between dominant health systems, hospitals, and plans and then
buried in proprietary contracts with no insight or oversight
from the public.
Pulling out that information gives patients the ability to
say, ``I want to get my MRI for $80 at this facility, and not
for $3,000 at the one half-mile down the road.'' It has direct
ability for consumers to be able to shop and also for
policymakers to be able to intervene where prices have gotten
too out of control.
Mr. Ruiz. Thank you. You know, and I agree, patients
deserve greater transparency in the prices they pay for
healthcare. But right now, despite the transparency rules that
went into effect in January 2021, it is still difficult for
consumers to access pricing.
So, Ms. Tripoli, in your testimony you discussed how some
hospitals are failing to fully comply with the Hospital Price
Transparency Final Rule. Can you briefly discuss how hospitals'
failure to fully comply with the provisions of the final rule
is making it difficult for consumers to access critical
information on pricing?
Ms. Tripoli. Absolutely. I think that it is just another
example of the gaming of keeping pricing--prices hidden, how
broken the markets are, that this pricing information is
incredibly valuable for hospitals to keep hidden so they can
increase prices year after year with no insight or oversight
from the public.
So I think being able to pull down the pricing information
is critical. We are seeing hospitals doing everything from not
posting any pricing information to posting a price as a
percentage of Medicare, for example, 120 percent of Medicare,
which is meaningless for most consumers. They are publishing
information in various formats that are not usable or machine
readable. They are using a lot of ``N/As'' as examples, as
well.
Mr. Ruiz. Yes, so what are some ways Congress can further
strengthen the final rule?
Ms. Tripoli. Congress absolutely should be strengthening
and codifying, increasing--including, as we have heard some of
the testimony already today about creating more standards
around the format, outright prohibiting hospitals from being
able to price--post anything other than a dollar-and-cents
amount. The actual price is what we need. More streamlining
around the names of services, so we can actually compare and
understand what the services are across hospitals.
And I would also say that increasing the fine for hospitals
that don't comply. The $2 million max fine is not sufficient to
incentivize most hospitals to comply.
Mr. Ruiz. I would also add the out-of-pocket costs for
patients, as well, given the different health insurances that
are out there.
I continue to be concerned with reports of low hospital
compliance, and I believe Congress needs to further strengthen
the regulation. I believe we also need to couple transparency
with policies that will further expand coverage and lower
healthcare costs.
So, Ms. Tripoli, can you discuss how the subsidy expansions
included in the Inflation Reduction Act are helping lower costs
for families?
Ms. Tripoli. Absolutely. I mean, the bottom line is that
our families are facing a healthcare affordability crisis. The
extensions of the subsidies that were passed through the IRA
were critical to be able to support families in a moment when
100 million people are facing medical debt because they can't
actually afford the cost of care. So we absolutely should be
extending those subsidies to continue to support families.
And we also have to address the root problem of what is
driving our affordability crisis. It is prices, it is
predominantly driven by prices by hospitals due to unchecked
consolidation from the last several decades. And so it is
really--it is critical that we are--it is both/and. We have to
also look at the root causes to address the affordability
crisis.
Mr. Ruiz. Well, thanks to the subsidy expansion in the
Inflation Reduction Act, millions of families have seen the
cost of their monthly insurance premiums go down, and the
average family is saving $2,400 in premiums a year. More than
40 million Americans are enrolled in the health coverage
through the Affordable Care Act, the highest total on record.
It is imperative that we make permanent the enhanced premium
tax credits.
So I thank you, and I yield back my time.
Mr. Guthrie. The gentleman yields back. The Chair now
recognizes Mr. Griffith for 5 minutes for questions.
Mr. Griffith. Thank you, Mr. Chairman.
Mr. Severn and Mr. Forge, we have been discussing the
Hospital Price Transparency Rule, which obligates the
hospitals, as you have been testifying about, to post the
``discounted cash price'' for services to their website. But it
seems like some cash prices are not available at specific
hospitals.
Are there any barriers in place prohibiting hospitals from
complying and posting these cash prices?
Mr. Forge. I mean, I think there's a lot of challenges
that's associated with posting cash prices. Fundamentally, they
are in there. They are--we are talking about lists of
thousands. I know that we are looking at top 300s, but there is
a lot in there. We have mentioned the negotiated prices, you
know, that we are talking about.
I think the part that we haven't talked enough about is
transparency around payer strategies. You know, a lot of times
in healthcare you are talking--in hospitals it is a 24-hour
business, you know, that we are providing care. And, you know,
you are looking at, potentially, three service lines that have
a profit margin that helps support, you know, the other ones.
I think that, you know, sometimes hospitals have a, you
know, have a difficulty, you know, sharing some of that. It is
complicated, and it is difficult to manage. And so that is
where we are with that.
Mr. Griffith. And do you agree with that, Mr. Severn?
Mr. Severn. Yes, cash prices are interesting for hospitals,
because when this law came out you had 6,000 hospitals--some of
them didn't have a cash pricing policy. Some did, some didn't.
And this law forced them to think about cash prices maybe for
the first time formally.
And when we think about competition, if you have options,
and you are uninsured or you have a high deductible and you
want to cash pricing option, Pullman or a hospital can say,
``Hey, we have a clear menu of cash prices, come on in.'' And
to me, that is competition.
And so, if there is a hospital that hasn't come up with a
clear cash pricing strategy or is late to the game, that is
just market competition. And we--you know, we would hope to
display sort of cash pricing certainty on the Turquoise website
to reward forward-thinking hospitals doing that.
Mr. Griffith. And let me continue, Mr. Severn. How can HHS
strengthen the price transparency rules and improve compliance
so that consumers and tech developers can access all prices
systemwide and more meaningfully shop for the best care?
Mr. Severn. Is this a question about the hospital rule, or
payer rule, or both combined?
Mr. Griffith. Let's go with both.
Mr. Severn. OK. So on the hospital rule, you know, we have
had 2\1/2\ years with this. It is enforcing the standards. So
adopting the standard as required, and enforcing it.
On the payer rule, you know, because it is all items and
services for all providers, the data is just so much bigger.
You know, I wish we had a scale replica of the comparison in
size. And for that it is more course correction. There is a
good process that CMS has going technically for technical
specifications with the payer rule. I would say continue that
process, continue iterating. It comes down to minor course
corrections: adding a few fields, renaming a few fields, being
more specific. And we will see more proliferation of these
rates on the payer side.
Mr. Griffith. Well, and having these rates out there is
helpful.
I recently met with a company that works in Ohio: Sidecar.
I think they have actually worked with you some at Turquoise.
And what they do is they figure out--based on the region that
is set up by the ACA, they figure out what the average cost is
for various procedures, and they cover you. They don't go
through middlemen. They just say, ``We are going to give you
the money for the average cost. If you spend more, that is your
choice. You can spend more, but it is out of your pocket. If
you spend less, you can save that savings for future medical
care.'' Or you can click a box that says ``Send me the check.''
And I think that is an interesting, disruptor concept. We will
see how it goes as it goes forward.
Last week, ProPublica published a report that found Cigna,
which covers or administers healthcare for 18 million people,
built a system to instantly reject claims for not being
medically necessary without its doctors even opening or looking
at the patient's file to make them go through extra steps.
Mr. Forge, based on your experience as a hospital CEO, what
impact does this type of a system do when it automatically
rejects medical claims? What does it do to the patients?
And I have got about 39 seconds.
Mr. Forge. Sure. Well, I talked about it earlier in terms
of distraction. You know, we have to train and get our people
ready in denials management, you know, making denials
management a priority. And so they are working hard, you know,
to do that. That keeps us away from strategies to help, you
know, support our patients, you know, up to the right speed.
So, you know, we have a lot of distractions out there--
those are one of them--that is preventing us from helping our
patients.
Mr. Griffith. And in the last couple of seconds that I have
I would just say that is what makes Sidecar--and I am not fully
advocating it, I am just saying it makes it kind of
interesting, because they get rid of all those middlemen and
you, the consumer, get to help drive what is going to happen.
And you can either spend more on a doctor if you particularly
want that doctor, or find somebody who has a lower price or a
hospital that has a lower price. And I think putting the
consumers in charge--I understand there are some who may never
use that, but there's a lot of us out there that would start
doing it, and that creates the competition Mr. Severn has been
talking about.
My time is up, I yield back.
Mr. Guthrie. The gentleman yields back. The Chair now
recognizes Ms. Blunt Rochester for 5 minutes for questions.
Ms. Blunt Rochester. Thank you, Mr. Chairman, for the
recognition, and thank you to our witnesses for your
testimonies. I am grateful that we are having this hearing
today that is focused on how the lack of price transparency is
making healthcare unaffordable for countless Americans.
The Federal Government has recently made strides toward
increasing transparency in the commercial healthcare market
through two important Federal rules. But it is clear that more
must be done to help Americans struggling with the crushing
weight of healthcare costs.
Ms. Tripoli, in your testimony you note that almost half of
Americans have reported having to forego medical care due to
cost. Almost a third of Americans indicate that the high cost
of medical care is interfering with their ability to secure
basic needs like food and housing. And although 8.2 million
fewer Americans are struggling with medical debt under the
Biden-Harris administration, too many Americans continue to
have problems paying their medical bills.
Can you give specific examples of how healthcare
transparency can result in lower healthcare prices, and also
let our constituents know why we should have faith in the
policies that we are discussing, that they really will bring
down cost?
Ms. Tripoli. Thank you for the question. I think there are
two pieces to the price transparency rule that are really
important. One is the negotiated rates and making sure we can
actually see how irrational prices have become, and then we can
make informed policy decisions that target where they have gone
too far in the price gouging direction. The other part of that,
as was also mentioned earlier, is around making sure that you
can understand out-of-pocket costs. Those are the two most
important pieces of information for consumers.
At the end of the day, price transparency is about
disrupting the status quo in the hospital business model, which
is keep prices hidden, buy up the local competition, price
gouge year after year, all on the backs of the American people.
So price transparency both for hospitals and for plans helps to
disrupt that market and give policymakers, purchasers,
employers the tools and consumers to be able to get a better
deal in healthcare.
Ms. Blunt Rochester. Thank you.
The Hospital Price Transparency Rule requires that
hospitals publish a consumer-friendly online tool that allows
people to shop for services and make informed decisions. Yet
some patients may not have the medical literacy necessary to
navigate and take full advantage of the online tools.
Mr. Forge, it sounds like your hospital has been successful
in developing a tool that is simple to navigate, yet
comprehensive. What steps did you take to accomplish this, and
how can other hospitals replicate your success?
Mr. Forge. Well, a couple of things. We have a transparency
website that went up in 2019. So we have a place, you know,
right on our website that is directing patients right there.
And I think that you hit on a good point that is something that
we are really working on that I think benefits everybody, which
is medical literacy.
You know, I mean, it is a very complicated system and
difficult for patients to understand. And so we are just trying
to give multiple methods: a website, but also in-person, you
know, care conferences. Like I told you, the patient financial
counselors are really helping to train patients on--right at
the front end of service, to make sure that they are making the
right decisions for themselves and their families.
Ms. Blunt Rochester. Thank you. You know, I am really
concerned about this because I looked at a couple of these
websites, and they are not equal. And some are still very hard
to understand.
And so, Ms. Tripoli, I would also like to hear your
perspective on how hospitals can make it easier for consumers
and employers to compare prices for services and make informed
decisions.
Ms. Tripoli. Absolutely. I think, first and foremost, we
have got to get all the hospitals complying with the basic
rules. And we know we have got a lot of work to do to be able
to get there. I think part of that is making sure we have more
standardization across what the required services are, so that
when you are looking for an MRI in one hospital, that same MRI
is showing up in another hospital. There is a little bit of
variability right now.
And I think the other piece to point out is we also have to
clean up the data files. Like, we have to actually have prices.
We have to have the same standard way for how we are describing
services, so that consumers can actually understand. You know,
most folks don't know what a CPT code is.
Ms. Blunt Rochester. Right.
Ms. Tripoli. So we need a description to explain, well,
what does that mean?
Ms. Blunt Rochester. Exactly.
Ms. Tripoli. And what price am I getting for that service?
Ms. Blunt Rochester. Thank you. I have, like, 30 seconds
left, but Ms. Bartlett, I cochair the Primary Care Caucus, and
so I was really pleased and interested to hear about your work
with primary care. Can you tell us how you invested in primary
care, and how that specifically helped save the plan from
insolvency?
Mr. Bartlett. Yes, thank you. We implemented five on-site
or near-site primary care clinics. Employees and dependents
could have an appointment online. They could schedule--all
appointments were 20 minutes. You could do back-to-back
appointments. We negotiated radiology, ultrasound lab contracts
with independents that were wonderful. We also had health
coaches for diabetic care clubs. And so we improved access,
because the employees had no cost to go to these.
Ms. Blunt Rochester. That is so powerful.
Thank you, Mr. Chairman, and I yield back.
Mr. Guthrie. Thank you. Ms. Blunt Rochester yields back.
The Chair now recognizes Dr. Bucshon for 5 minutes for the
purpose of asking questions.
Mr. Bucshon. Thank you, Mr. Chairman, and I will start by
expressing my appreciation to the members of this committee and
the witnesses here today for what seems to be a shared
commitment to lowering the costs of healthcare by increasing
transparency and accountability in our healthcare system.
Many of you know about my long-time interest in a program
known as 340B, named for a section of the Public Health Service
Act in which it appears. The 340B drug-pricing program was
created by Congress in 1992 to enable providers, and I quote,
``to stretch scarce Federal resources as far as possible,
reaching more eligible patients and providing more
comprehensive services.''
If you take away one thing from my comments today, let it
be this: I support the 340B program, and I want to see it
succeed. I want Federal resources to be put to good use. I want
services to reach more patients, and I want patients to have
access to more comprehensive services.3
40B operates by allowing certain entities--theoretically,
those that serve our most vulnerable populations--to purchase
prescription drugs from manufacturers at a discount. They are
permitted to pocket that discount because we expect that they
are providing disproportionate amounts of charity care for
patients who are uninsured or underinsured. But because
Congress failed in 1992 and in the last 30 years since to set
clear guidelines and parameters for the program, we have no way
of knowing when the program is being exploited, and we know
that it is.
And that is not just my opinion. A GAO report and a report
from this committee's Oversight Subcommittee a number of years
ago said so very clearly.
Although I have heard rumors and have seen smaller-scale
examples, for the last decade, at least, exploitation of the
340B program was clearly and strikingly demonstrated in a New
York Times article published last September. I encourage all of
my colleagues to read the article, which I will submit for the
record.
I ask unanimous consent to submit that for the record.
Mr. Guthrie. Hearing no objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Bucshon. The gist of this is--and I am quoting again--
``Starting in the mid-2000s, big hospital chains figured out
how to supercharge the program''--I am quoting from the
article--``where patients with generous private insurance could
receive expensive drugs but on paper make the clinic's
extensions of poor hospitals to take advantage of 340B.''
The article discusses how a large hospital system in
Richmond, Virginia--not far from here, in the former district
of our late friend and former committee member, Don McEachin--
did just that. It purchased a 340B-eligible hospital in a poor,
predominantly Black neighborhood, used the hospital's 340B
status to purchase discounted drugs for use at points of care
across the system, decreased services to patients at that 340B
hospital, including closing its ICU, and profited to the tune
of $100 million per year on the 340B program.
We also know from disclosures of Fortune 500 companies that
340B is seen for--by profit entities as a revenue generator for
shareholders. For example, CVS Health, the fourth-largest
company in the country, warned investors in its 2022 annual
shareholder filing that changes to the 340B program could, and
I quote, ``materially and adversely affect the company.''
Information like this informs us exactly where the 340B
discounts are likely not going to: the patients.
I hope to eventually work on broad, large-scale reforms to
the program. But in the short term, consistent with this
hearing, I am calling for Members of Congress to join me in
advocating for more transparency on the discounts.
Can we not agree that entities benefiting from the
discounts need to show the American people what they are doing
with the savings, and for that matter, what the savings are?
This wouldn't be difficult, because CMS already requires many
types of providers, the grantees, to report similar data.
So Mr. Forge, does Pullman Hospital report its annual
amounts of charity care and payer shortfall?
Mr. Forge. Yes, we are required to share our charity care
outlay----
Mr. Bucshon. To CMS, correct. And if Congress asked Pullman
to report how much savings in 340B they receive in the
aggregate each year, would that be feasible?
Mr. Forge. I think anything is feasible. I think we can
share any information that is asked for us--you know, asked
from us. Transparency in the spirit is what we are looking for.
I can say that it is a challenging program to manage. We
have to get outside help to help us manage that.
Mr. Bucshon. Right, a lot of smaller facilities like yours
have to have third-party people to do----
Mr. Forge. Correct.
Mr. Bucshon [continuing]. That reporting. But it is being
done, including in my district. And if a small critical-access
hospital like yours has the ability to collect and submit data,
I have no doubt that other entities do as well.
I don't think there is anything hospitals should be afraid
of when it comes to 340B transparency, honestly. If an
institution needs this benefit to continue helping patients,
let them show us so we can support those efforts and make sure
we have a strong program.
With that, Mr. Chairman, I yield back.
Mr. Guthrie. I thank the gentleman for yielding. The Chair
now recognizes Mrs. Dingell from Michigan for 5 minutes for
questions.
Mrs. Dingell. Thank you, Mr. Chairman, and thank you,
Ranking Member Eshoo, for convening this hearing.
Nobody--Democrat, Republican, independent, anybody--should
be harmed by medical expenses. And as healthcare continues to
rise, it is important that consumers have access to accurate
pricing information about their healthcare.
You know, I think the current healthcare system is
gobbledygook. I am healthy, but for--I have had an infection,
and I have had three CAT scans at three different institutions
in the last 3 months. They have all been between 6 and $8,000.
Medicare covers a few hundred, my insurance covers another few
hundred, but each of them has a different amount, and the rest
of it goes into Never Never Land. And I am one of the lucky
ones, because I have Medicare and insurance. People can't
understand the system.
And talk to a pharmacist or a patient these days. Pharmacy
benefit managers? I had a pharmacist ranting at me that a pill
that cost them $10 for 30 pills, they were--the pharmacy
benefit manager was charging the customer $700. It is wrong.
So the Hospital Price Transparency Final Rule is a step in
the right direction to improve transparency in healthcare
prices. It went into effect in January 2021. But since the
hospital rule went into effect, studies have found that most
hospitals are not meeting all the requirements of this final
rule.
Ms. Tripoli, one concern we continue to hear is the
difficulties with the erratic compliance, with some estimates
being as little as 16 percent of hospitals being in full
compliance of the regulations. What do you think the obstacles
are to preventing this compliance?
Ms. Tripoli. Thank you for the question. I think, at the
end of the day, it is just about the business model of the
sector, which is to keep prices hidden so that they can
continue to increase prices year after year on the backs of the
American people. There is not a strong enough financial
incentive or requirement to get prices--disclose prices,
because that pricing information is the most valuable piece of
information in the hospital business model.
So price transparency, unveiling prices, requiring the
negotiated rate to be disclosed for the public is hugely
powerful, disrupts the status quo, and it actually allows
policymakers to make targeted decisions about how irrational
prices have become, and it allows academics to understand where
does high value occur--value care occurring, where is low-value
care occurring, and then we can make targeted interventions to
make sure all people living in this country have high-value
care.
Mrs. Dingell. So some of my colleagues were asking this
question, but I am going to ask it again as, you know, what can
we do to help encourage that compliance?
You said there's no incentives. Do we penalize? There is--
what specifically would you recommend we do to start to
increase this compliance number?
Ms. Tripoli. I think strengthening and codifying the rule
into statute is a good step in terms of strengthening on top of
the requirements that are already there.
I think specifically prohibiting hospitals from posting
prices as a percentage of Medicare or a percentage of gross
charges--so we actually need dollars and cents. Dollars----
Mrs. Dingell. So talk in English.
Ms. Tripoli. Exactly, in English. To that point, we
actually need to understand beyond a confusing code that most
folks don't understand what that is, a description that puts
things in layman's terms: What is this?
We need more standardization across the services that we
can actually compare apples to apples, and not oranges to
grapefruits.
And I would say the other piece that has not been mentioned
yet is we need quality information. The only way to assess
high-value care is if we have price and quality together so we
can determine is that a value product that--and are we getting
our money's worth for that?
Mrs. Dingell. Thank you. And I should have said Spanish or
French or--``layman's language'' is a much better word.
Ms. Tripoli. Absolutely.
Mrs. Dingell. Mr. Severn, while the rule also requires
hospitals to publish the prices of common health services, we
have heard about challenging--the challenges of accessing the
data. What kind of data are hospitals currently reporting, and
how is a lack of standardization contributing to data
inconsistencies?
Mr. Severn. Yes, thank you for the question. So with about
5,100 hospitals in our database now, which is much better than
2 years ago, we have had to written--we have had to write over
1,000 unique programs to bring that data in.
If you had a standard, not only is it easier to ingest all
the data and enforce compliance, it also puts some pressure on
the gobbledygook of the rates, because there is now a column
and a suggested format that--it is a payment method column. And
if the payment method is really simple--just cash, a full,
inclusive rate--patients and referring physicians and employers
will go towards the upfront price. And so, you know, the
standard will beget competition on simplicity, as well.
Mrs. Dingell. I am out of time, so I will yield back, Mr.
Chairman.
Mr. Bucshon [presiding]. I yield briefly to the gentleman
from Texas for a unanimous consent request.
Mr. Burgess. Thank you, Mr. Chairman. As a consequence of
my excellent staff, they were able to dig up the excellent
article that I referenced from Health Affairs from 15 years
ago.
[Laughter.]
Mr. Burgess. And I ask unanimous consent to put that in the
record.
Mr. Bucshon. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Bucshon. I now yield to the gentleman from Florida for
his 5 minutes for questioning, Mr. Bilirakis.
Mr. Bilirakis. Thank you. Thank you, Doctor. I appreciate
it, and I want to thank the panel for their testimony.
Dr. Ippolito, as you know, Community Health Centers are
required under law to have a sliding fee schedule for low-
income patients based on their needs. One way they do this is
by passing through the 340B rebates to their patients to lower
their prescription drug costs. This allows health centers to
meet the unique needs of their communities, and they do an
outstanding job.
However, when they utilize contract pharmacies, we have
seen instances where these pharmacies will take these rebates
and not pass them on to patients. Do you think that is fair?
Dr. Ippolito. Well, I mean, I--it certainly seems to
undermine the goals of that program. And I think it speaks to
this broader question about the 340B program, which is, as it
increases in size, are we comfortable with how the program is
actually targeted? Are the right sort of institutions
benefiting?
We heard earlier about--a question about, well, which
hospitals are benefiting? Is it community access hospitals? Is
it safety-net hospitals? Is it the Johns Hopkins and the elite
academic medical centers of the world? I think this is a
question that is along those same lines.
Mr. Bilirakis. Thank you. Should we be concerned by the
consolidation incentives you mentioned in your testimony, your
written testimony, that also allows for single entities to take
340B rebates that should instead be legally passed on to the
patient?
How do we incorporate a policy that ensures consistent
compliance and accountability in the program?
And that is the bottom line. So if you could comment on
that, I would appreciate it.
Dr. Ippolito. Yes. I think, if you think about 340B, the
two big questions are is it targeted well, and is it
functioning just literally the way we think it is supposed to
be functioning? Are the discounts going where they are on paper
supposed to be going? Are there duplicate discounts between the
Medicaid program and the 340B program?
When you talk about--you mentioned consolidation--I heard
at the beginning of that. You know, one of the ramifications of
this whole program is that it gives this enormous arbitrage
opportunity to hospitals that have 340B status, that suddenly
they have a big opportunity to propose to a physician that
practices independently: ``If you come affiliate with us, we
have an enormous advantage on our acquisition costs for these
medications, and we can basically share that with you.'' And so
it is another contributor to this phenomenon of greater
consolidation over time, and it goes back to that question
about targeting.
Mr. Bilirakis. OK. Again, Dr. Ippolito, can you discuss if
the way that Medicare reimburses for physician-administered
drugs has contributed to the consolidation trend of hospitals
purchasing local physician practice offices?
And how do we fix this problem without further squeezing
small independent providers?
Dr. Ippolito. Well, yes. A Medicare payment policy is like
a double whammy on top of a 340B. So 340B gives the hospital a
big advantage on the acquisition cost, and then Medicare pays
the hospital-affiliated facility more than it would an
independent physician to administer that drug. And there
certainly have been proposals to address that. I know H.R. 19,
I believe, incorporated some site-neutral payments, even just
for administration of drugs.
But that is part of this broader effort that places like
MedPAC have highlighted. There are certain services that seem
like they are basically the exact same service, and they don't
really need access to the hospital. And so we ought to start
thinking about whether we should reimburse those things in a
way that is both saving Medicare money, but it doesn't
disadvantage these independent physician practices quite as
much.
Mr. Bilirakis. Thank you very much.
Finally, I am interested in implementation of the price
transparency rules--and I know that my good friend Mrs. Dingell
here on this.
Mr. Severn and Ms. Bartlett, how can HHS not only boost
hospital compliance but ensure that compliant hospitals have
prices that make sense and are easy to understand for the
consumer--that is the bottom line for it to work--so that
patients and websites can access more prices and more--
meaningfully shop for the best care, please?
We will go ahead and start with Mr. Severn. I don't have a
lot of time, though.
Mr. Severn. Thanks for the question. The first--and I have
said this a few times--there is a standard that is suggested.
And the moment that standard is enforced and there is an
enforcement date, it makes it easier for all of us to see what
is in these files. It shouldn't be just Turquoise, a company
with the resources, that can go through and process all this
data. It should be easier to access this. And so the first step
to making compliance and enforcement easier is having a
standard to look through these 6,000 files.
Mr. Bilirakis. Thank you.
Ms. Bartlett?
Mr. Bartlett. I would agree. I think having a standard, a
template, as--would be the first big step to get those prices
out, and standard descriptions and everything. But some
standards would be great.
Mr. Bilirakis. Thank you.
I don't--I ran out of time, so I will yield back. Thank
you, I appreciate it.
Mr. Bucshon. The gentleman yields back. I now recognize the
gentlelady from Washington, Dr. Schrier.
Ms. Schrier. Thank you, Mr. Chairman. Thank you to all the
witnesses for being here today, and a big, special thank you to
Mr. Forge for coming out from Spokane, from Pullman. Thank you
for the work that you have done for rural patients.
You have all pointed out how transparency is critical in
bringing down costs and for patients to know what they are
paying for.
Dr. Ippolito, I was intrigued by the discussion in your
testimony--and many people have commented on it now--about
different Medicare reimbursement rates, depending on whether--
what procedures take place in a hospital, a hospital-affiliated
center, or a freestanding clinic, or an ambulatory center that
is not associated. And, of course, this sets up all kinds of
wrong incentives.
And this is not pointing at the people doing the wrong
thing for the wrong reason, it is just that when you have, say,
an orthopedic surgeon who has to do a knee replacement, there
may be pressure from all kinds of directions for that doctor to
do a knee replacement in a hospital rather than an outpatient
surgical center, even though for a low-risk patient doing that
is the safer and better thing to do and even though, you know,
in a hospital--a hospital is a very expensive place to stay for
a night, when you can just as well go home and do your rehab
and PT at home.
So, you know, I was just going to ask you to expand a
little bit on all of this, what we should do about it, whether
you are finding that hospitals are buying up ambulatory
surgical centers to kind of run around this issue, and how you
suggest fixing it.
Dr. Ippolito. Well, sure. I mean, the short answer to your
last question there is ``yes.'' There has certainly been a lot
of consolidation of facilities that otherwise would have not
been affiliated with a hospital into the hospital sphere, if
you will.
I will just emphasize one thing that hasn't really come up
is that, especially in the Medicare market, the site of service
doesn't just affect, like, aggregate Medicare spend or
something like that, which obviously matters for taxpayers and
budgets and all those things, which are very real. But it
matters for the person who is getting the care, because your
out-of-pocket can be a 20 percent coinsurance. Well, if the
bill is larger, 20 percent of a larger bill is a larger bill,
you know.
Ms. Schrier. That is right.
Dr. Ippolito. And so I think we don't want to lose sight of
that. It is one of the examples where consolidation issues
sometimes sound abstract. They affect the medium and the long
run. That is an example where, yes, you can affect the
consolidation incentives in a meaningful way, like you point
to, but in the short run it materially affects out-of-pocket
spending for people. So it is one of the avenues through which
we can really make a big difference in the relatively short
term.
Ms. Schrier. And I think you brought up a really
important--there about whether people feel that if you are
paying 20 percent of the bill, then you actually feel--and you
can have some power in making those decisions.
Mr. Severn, you were talking about MRIs costing vastly
different amounts at different locations. And I was going to
say that, with many insurance companies--for example, with
mine--there is a copay. And so I don't feel it if there is a
higher price or a lower price for the MRI, and the insurance
company negotiates whatever price they want that has nothing to
do with the list price.
I was wondering if you could talk a little bit about
transparency there, but also how to give people more agency so
that, when there is a higher or a lower price out there, it
serves us to go for the place with the lower price. Give us
some, like, good skin in the game, if I am explaining that----
Mr. Severn. Thanks for the question. So there's a couple
ways to summit Transparency Mountain.
You mentioned one of them, which is just copay-based plans.
And there's a lot of startups innovating to say, hey, no matter
where you go, here is the copay.
You know, giving patients the skin in the game, there's a
couple of different mechanisms. High-deductible plans is one.
Having a percent, coinsurance, is one. And it is back to the
issue of, hey, 20 percent of a bigger number is more money,
right? And so the problem with saying patients need skin in the
game but without giving them a variable that is necessary to
calculate that skin in the game is what was so ludicrous before
2021.
Now we have this key negotiated rate variable, where if you
have a high deductible plan or a percent coinsurance, you can
do the math as a patient. But I think what I am advocating for
is they shouldn't have to do the math. You know, companies like
Turquoise should make it as simple as possible, like you are
buying a toaster off Amazon, to say you will pay $50 if you go
here.
Hopefully, that answers your question.
Ms. Schrier. Thank you. Yes, I appreciate it. And I know
how much people are suffering from high prices.
I just wanted to lastly touch on PBMs. I use insulin. I
have seen the price of insulin go up from about $40 a bottle to
north of 300 now. We have talked about that before and the role
of PBMs in those pricing changes. And just want to say to my
colleagues I am happy and ready to work on combating some of
these perverse incentives for pharmacy benefit managers, where
they get compensated more for a higher negotiated medication
price.
So thank you. I yield back.
Mr. Bucshon. The gentlelady yields back. I now yield to the
gentleman from Ohio, Mr. Johnson, for his 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman, and thank you to our
witnesses for being here today.
I think this is a crucial time for discussion on price
transparency, and I thank the chairman for having this hearing.
It comes as Congress is in the middle of debt limit discussions
with the President, and healthcare costs are a really big part
of what is driving the national deficit. The Medicare Trust
Fund will be insolvent in less than 5 years, and our national
debt is over $31 trillion, a major reason why healthcare costs
are simply too high.
Runaway healthcare prices are bankrupting the country,
often putting everyday Americans, our constituents, in
financial distress. They are having to choose between paying
for healthcare or paying for groceries, energy, and other
necessities. Oftentimes, they go without the healthcare that
they need because they can't afford to go to the doctor, and
they can't afford the insurance premiums that would get them
there.
Healthcare costs now make up nearly 20 percent of GDP. This
is not sustainable. At a time when inflation is crushing
families, it is our responsibility to scrutinize the
contributors to these skyrocketing costs and either call for
regulatory changes or make statutory changes when appropriate.
So my first question, Dr. Ippolito, how can increased
healthcare price transparency and competition tamp down these
costs and start to give families a little more wiggle room?
Will this help change the trajectory for healthcare costs?
Dr. Ippolito. Yes. Well, I mean, it is a necessity, to some
degree. If an employer or an individual doesn't really have
much in the way of choice, well, there is not much way for them
to put any downward pressure on prices in their local market.
And I think we have certainly heard about specific examples of
that today.
You know, in terms of a high-level point, you know, it is
easy to lose sight of the direct impact that competition in
healthcare costs have on people. We forget you don't see that
if you have employer-based coverage, that costs $20,000 a year.
And economic theory and evidence is extremely clear: Employees
pay for that, every cent of it. Every time we see healthcare
costs go up, even if just for a sliver of workers, we see the
wages adjust for that sliver of workers.
And so we really need to hammer home that point. This is
not some abstract budgetary issue that affects the government
in some sense. It is an issue that directly affects people,
both through wages and their tax bill and so many other things.
Mr. Johnson. OK. Better price transparency throughout the
healthcare system will result in greater competition, lower
costs, and create a better level of trust between patients,
insurers, and providers. Congress has given the Biden
administration the tools necessary to ensure compliance of the
hospital price transparency regulations already on the books.
So my next question, Ms. Tripoli: In your opinion, what
could be done by CMS or the executive branch to better ensure
compliance with the hospital price transparency regulations?
Ms. Tripoli. I think, at the end of the day, this is about
hospitals failing to comply. They have the requirements. We
have been--it is a Federal rule. We have been in implementation
for 2 years. At this point we would expect to see much higher
compliance, and not just a--the--posting some prices, complete
data files.
So I think, at the end of the day, this is about hospitals
showing up and doing their part and complying with Federal
rules.
Mr. Johnson. OK, all right.
Mr. Severn, you work to help patients obtain a good-faith
estimate of what they will pay for services they need under the
No Surprises Act, which mandated that providers furnish such
estimates. It has been a challenge to implement this part of
the law in cases where multiple providers or facilities are
involved.
Do you have recommendations for Congress or CMS to improve
data sharing to make good-faith estimates seamless and ensure
patients have access to accurate cost information?
Mr. Severn. Thank you for the question. So to answer that
question, I will give a couple of stats.
You know, we say there are 5,300 hospitals, it looks like
as of today, that have prices posted; 4,600 over that have
negotiated rates, 4,500 have cash prices. I think these numbers
are important, because those stats are pretty high, and we are
in this data every quarter. And so maybe a lot of things that
you saw last year and the year before show you that there
aren't as many prices. There are quite a few prices out there,
what we call coverage in the market.
The next step, as you mentioned, is these prices turn into
good-faith estimates, and these estimates need to be packaged.
And the beautiful thing about No Surprises is that there is
teeth to create an estimate that is accurate within $400. And
so, to us, that is the next step. That is where this is going
next is, great, your prices are out there. We need to get them
to a patient before time of service, and then you need to be--
it needs to be enforced that the estimate is accurate.
Mr. Johnson. Isn't it amazing how a free enterprise economy
actually works to drive down costs when you tell people what
they are going to pay for stuff?
Mr. Chairman, I yield back.
Mr. Bucshon. The gentleman yields back, and I recognize
Mrs. Trahan from Massachusetts for her 5 minutes.
Mrs. Trahan. Thank you, Mr. Chair.
Healthcare in the United States operates on a free market
system, where larger systems command higher rates of
reimbursement with their market clout and smaller, often urban
or rural systems have limited opportunity to negotiate higher
prices. As many of my colleagues have said here today, this
contributes to the strong getting stronger and the weak getting
weaker, as providers with market clout can demand higher
reimbursement from insurers.
During COVID we saw a number of rural hospitals closed
because of this trend. And in the district I represent, we are
seeing the same threat to access among urban community
hospitals. We are told that hospital mergers and consolidation
are supposed to increase efficiencies and lower costs, but
community hospitals have not been part of market consolidation,
and therefore they lack negotiating power. These hospitals
don't have strong operating margins to begin with and provide
care for some of the most underserved communities across the
country, so they often aren't invited to join larger systems.
Mr. Ippolito, do larger hospitals and hospital systems
charge more than smaller community hospitals for the same
services because they cost more at larger facilities, or is it
simply because these large hospital systems wield more
negotiating power and can therefore fetch higher reimbursement
rates for the services they provide?
Dr. Ippolito. It is to some degree both, but it is
important to remember that the costs are endogenous. The
hospital gets to choose how much things cost, and Partners has
made different decisions about their underlying cost structure
than, for example, a smaller community hospital.
But there is no getting around the second point. They have
more negotiating leverage, and that is absolutely correct.
Mrs. Trahan. Thank you. In Massachusetts, outside of cities
like Boston, we have lower-income communities that rely on
stand-alone providers. These providers have the lowest prices
and operate with the fewest resources. They cannot command
prices, and many of them are limiting essential services and,
in the worst cases, are on the brink of closing entirely.
Ms. Tripoli, where is access to care most threatened due to
the limited market clout of smaller community hospitals?
Ms. Tripoli. I think, at the end of the day, what we know
about the markets is that these large, dominant systems are
able to buy up independent physician practices. And that is one
of the greatest trends we are seeing right now in terms of
vertical integration. And that has a direct impact not only on
prices, but also access to care, and particularly primary care
for many of the communities around our country.
And so one of the solutions we can do right now to end one
of those incentives for big systems buying up smaller doctors'
offices is to expand site-neutral payments, and--which will
also result in significant savings for the system and also for
the beneficiary.
Mrs. Trahan. So my followup question to that was that I am
exploring policy solutions to address this access-to-care
challenge that is disproportionately hurting low-income
communities, especially in the district I represent.
So if you could share some of the challenges facing smaller
community hospitals and some of the ways that we can improve
reimbursement for these kinds of hospitals, that would be
helpful.
Ms. Tripoli. That was directed for me?
Mrs. Trahan. Yes.
Ms. Tripoli. Again, I think one of the things we can do
right off the bat, which is what is under discussion for this
committee here today, is expanding site-neutral payments, which
eliminates this perverse incentive for big systems to buy up
independent doctors' offices, which has a direct impact on
making sure that we have access to critical care in
communities.
The other thing that I would just say is one of the other
things we are seeing in terms of dominant market power is a lot
of anticompetitive practices, including restricting providers
from being able to go to competing systems, which has also a
direct impact on access to care in communities. So I think
taking a closer look at the different types of anticompetitive
practices that are occurring between plans and providers, and
prohibiting some of those practices that we know that lead to
burnout, reduced access to care, drive up prices, and result in
poorer quality care.
Mrs. Trahan. Great. Thanks so much.
I yield back.
Mr. Guthrie. The gentlelady yields back. The Chair now
recognizes Mr. Carter from Georgia for 5 minutes for the
purpose of asking questions.
Mr. Carter. Thank you, Mr. Chairman, and thank all of you
for being here. I appreciate it very much.
This is my ninth year in Congress, and I have to tell you--
I am just beginning my ninth year and, you know, when I first
got here 8 years ago, the first thing I did was to go to the
FTC and ask them to look at the vertical integration that
exists with the insurance company owning the PBM, owning the
pharmacy.
To me, it is a direct conflict of interest. All this could
be resolved by just saying the insurance company can't own the
PBM, and saying the PBM can't own the pharmacy. If we did away
with that, we wouldn't have any problem. We would have what all
of you have been calling for today, and that is competition,
and that is what we need.
Obviously, transparency is a big part of it. I am not going
to repeat everything that you have heard here. You know that 3
PBMs control 80 percent of the market--75, 80 percent of the
market. That in itself is a big problem. When you have the
insurance company that owns the PBM, you have steering going on
because they are trying to get them to their pharmacy. All of
that you understand.
I want to ask you, Ms. Bartlett, because I was intrigued. I
haven't, unfortunately, been able to sit here the whole time to
listen. But what was done in Montana with our good friend and
former colleague, with--or who is now the Governor--I guess it
may have been done before then, but nevertheless, thank you for
what you did. But you mentioned that you all had changed PBMs,
I think, at one point.
Did you know if the PBM before--were they engaging in
spread pricing?
And all of you know what spread pricing is, I am assuming,
and I am sure you do. So----
Mr. Bartlett. Yes, thank you for the question. The PBM we
had previously was engaged in spread pricing.
They also had contracted with CVS to be the rebate
aggregator who would bring all the rebates in. And we were
given $20 per drug rebate. And from my previous experience, I
knew that that was way, way, way too low.
Mr. Carter. Right.
Mr. Bartlett. And then they also had contracted with a
specialty pharmacy that was owned by an insurance company. And
so----
Mr. Carter. Go figure.
Mr. Bartlett. Oh, yes. Going through that contract, you
were able to see all the places that needed to be cleaned up.
And so I terminated all those contracts and went for a
transparent passthrough.
Mr. Carter. You know, I mentioned earlier about the FTC.
And finally, last summer, they are undertaking a study now, a
6B study looking at the impact that PBMs are having on
independent retail pharmacies. Four percent of all independent
retail pharmacies are going out of business every year,
primarily because of the low reimbursement by the PBMs.
And of course, you know, it is such a problem, particularly
when you think about the fact that the independent pharmacies
adjudicate their claims through the insurance company.
Therefore, the insurance company that owns the PBM that owns
the pharmacy has all that information right there.
We had a case in middle Georgia just here in the last year
where they were cut off by one of the PBMs and all of their
patients were transferred to the mail order pharmacy that was
owned by the PBM. That is--I mean, it is so obvious to me, and
thank goodness my colleagues are getting it now and
understanding what is going on. And thank goodness the FTC is
undertaking this study.
I know you find it hard to believe--we get updates from
them as to how the study is going, and they are having trouble
getting the PBMs to cooperate. I can't imagine. But
nevertheless, that is happening.
I want to mention--and I know it is self-serving, but I do
have legislation, and it is bipartisan legislation. It is
called the Drug Price Transparency in Medicaid Act of 2023. And
it is to improve transparency and eliminate the use of spread
pricing. You all know what is going on right now--it made news
yesterday with the attorney general of Ohio and what he is
doing--that is the kind of thing we need. That is the kind of
action that needs to be taken.
Dr. Ippolito--I am sorry, I know you have been before us
and before the Doctors Caucus, and thank you for your expertise
in this field as well. But what about--you know, the thing that
concerns me is employers don't get it, either. They don't
understand. They don't know. What can we do to help employers
understand and see just how rogue this is?
Dr. Ippolito. Well, I mean, I think what--you referenced
your bill, and I think CBO will tell you--I am sure they have--
that if you give the employers better information, their
expectation is that they are going to change their behavior if
they better understand, really, what the rebate levels are,
what the gross spend and what the net spend really is.
Mr. Carter. Right.
Dr. Ippolito. The only thing I will add--it has come up a
couple times--you have got to make sure that those things
actually incorporate more than just the PBM, but it has to
include the rebate aggregator, the one level higher than the
PBM, just to make sure that you get the full picture.
But I think their expectation is my expectation. If you
know more, you are going to make a better decision and you are
going to be--it is going to make it easier to compare the PBMs
against each other if these fees and the costs are much
clearer.
Mr. Carter. You know, I will tell my age here, but I can
remember practicing pharmacy and--when PBMs were nothing more
than processors. That is all they did, was process claims. And
then they evolved into this now that is causing--you know, all
of us in Congress, and Democrats and Republicans alike, we want
accessibility, affordability, and quality in healthcare. That
is what we want.
Well, right now, pharmacists are the most accessible
healthcare professionals in America. Ninety-five percent of all
Americans live within 5 miles of a pharmacy. If you start doing
away with independent retail pharmacies, that is going to end.
Therefore, it will impact accessibility to healthcare in
America.
I am sorry, Mr. Chairman, I know I am over, and I will
yield back. Thank you.
Mr. Guthrie. The gentleman's time has expired, and he
yields back. We will complete the members of the committee, and
then go to people who are waiving on to the committee. So next
would be Dr. Dunn from Florida.
You are recognized for 5 minutes.
Mr. Dunn. Thank you very much, Mr. Chairman.
You know, policies to promote transparency in healthcare
pricing are a sure way to address the pressing issue of high
healthcare costs. Empowering consumers with knowledge about the
true cost of healthcare services and products will put more
Americans in the driver's seat when it comes to their family's
health and spending.
President Trump executed a number of transparency policies
across the healthcare continuum, from drugs to insurers to
hospitals to doctors. And this committee must ensure that this
compliance with these new rules continues or is enacted.
However, policies such as price caps and price setting
actually pervert the market and limit access to consumer
choices. That is not the path we should follow. Instead, I
think we should be promoting the transparency that everybody
has talked about so well tonight and thus competition to ensure
healthcare markets operate in a way that serves the consumers.
Mr. Severn, we have seen greater compliance amongst
insurers rather than hospitals when it comes to their
respective transparency rules. But the size and complexity of
the data files has made this information difficult for
consumers to use in a meaningful way. I appreciate what
Turquoise has been able to accomplish in the private sector
when it comes to distilling these complex data sets to empower
patients.
Will this data continue to improve the availability--the
legibility, if you will--of the data and continue to improve
with time, or should we consider tweaks to the regulation to
assist with the processing of data?
Mr. Severn. Thank you for the question. You know, I will
leave it up to others, not myself, to decide where best to
tweak this.
But what I would recommend is there is a process right now
for the insurance data to be modified through a technical back-
and-forth that occurs on GitHub, which CMS runs. And over 9
months in the--since this data has come out, every month it has
gotten more accessible, easier to work with. More companies and
more third parties are making use of it, distributing it to
patients and downstream.
So I would recommend continued tweaks, at least through the
GitHub process with CMS, and then I will leave it to regulators
to decide if more needs to happen in the text.
Mr. Dunn. How about enforcement?
Mr. Severn. Enforcement on the payer side is, you know, a
little harder to address. I might not fully speak over that,
because it kind of filters out to States and----
Mr. Dunn. OK, we haven't been doing it, for the most part.
I think there's a couple of isolated instances, but we haven't
been doing it.
Mr. Forge, the theme of this hearing is competition. It
seems that you have, in fact, created competitive value for
your patients in--by complying with the Hospital Price
Transparency Rules as a community-based critical access
hospital. How does price transparency enhance your ability to
compete with larger competitors?
Mr. Forge. Well, I think we have kind of addressed it a
little bit earlier. I think the--what it focuses on for us,
what we can really compete at is with quality. You know, when
you are talking about competing on price, you know, volumes
really takes the ticket right now. And so we are kind of, you
know, where we are.
But if we can continue to provide a better product, and we
can prove it, and a better service, maybe our volumes will
continue to grow, we will gain more leverage. The cost has got
to be a part of that equation.
Mr. Dunn. So I would say--I am a doctor in my real life. I
would say that I have seen, you know, large hospital systems
that simply did not compete on cost. They didn't use the
benefit of their size to get low cost for themselves, which
they would then--they didn't pass on to the consumer. So I
think you have some potential to compete on cost, as well.
Dr. Ippolito, we have seen PBMs become vertically
integrated with large health companies and pharmacies. I
completely associate myself with the remarks of my colleague
Mr. Carter. You have previously written, however, that the
effects of that integration is somewhat unclear. I am fairly
confident that such integration drives higher costs for
consumers.
Do you have recommendations for transparency-oriented
policies Congress could enact that would shed some light on the
effects of that vertical integration?
Dr. Ippolito. Yes. So I will maybe clarify my prior
writing.
The effects of vertical integration, as a general
proposition, are a little bit less certain, just because
conceptually there can be things like better adherence or
better communication between various levels of the organization
that could provide value.
That said, if you want to think about high level, what is
important, you know, what do these contracts look like? Where
are the incentives, right? Are there incentives to steer
patients or steer volume to things that deliver, you know,
revenues for you? If there is a choice between, for example, a
pharmacy-dispensed product and a physician-administered one and
you run a pharmacy, do you tend to steer people to the
pharmacy?
Those are the kinds of questions I would be asking when it
comes to vertically integrated firms like you are talking
about.
Mr. Dunn. Thank--I want to thank the panel for their time
today.
And, Mr. Chairman, I yield back.
Mr. Guthrie. The gentleman yields back. The Chair now
recognizes Mr. Latta for 5 minutes for questions.
Mr. Latta. Well, thank you, Mr. Chair, and thanks for
today's hearing, and also thanks for our panelists.
I am sure the Chair has already said we have three
different subcommittees that have been running today in the
committee, so we appreciate your indulgence.
Mr. Forge, if I could start my questioning, what can or
should the Federal Government do to make price transparency
requirements and compliance criteria clearer--this has always
been the tougher one--and more user-friendly for hospitals
while also being useful for the--our patients out there?
Mr. Forge. Well, I think, you know, basically, just
simplification. You know, how do you simplify the regulations
so that, you know, more hospitals can comply with them, you
know, with less resources, less, you know, less effort, less
work? We need simplification of these things.
The truth is we have to compete in rural America with big
hospitals. We have to compete in that area. And so we need a
little bit of help to make that easier for us to do so at that
level.
Mr. Latta. Well, you know, you bring up a question when you
say ``simplification'' because, again, I know that when I go
through my health facilities in the 5th district and around the
region, you know, sometimes you look around and also we have
had panels here before us of docs and other individuals, and
I--you know, after a while you have to ask this question: How
much time do you get to practice? How much time are you
actually doing, really, the medical end of this job, instead of
all of the paperwork?
And I know I have been in some doctors' offices that they
have invited me in, and as I observed things for a little
while, I say, ``Who is actually practicing medicine here
instead of filing forms?''
So how do we--you know, how do we get the simplification in
there? Because we all know it needs to be done. But how do we
do it?
Mr. Forge. Good question. I spend most of my days trying to
solve that for our teams, as it is.
I think, you know, the volume of change in regulations is a
big part of it. You know, we are adopting--adapting to new
concepts, to new programs, to new deals every month, every
year. And the volume of that becomes excessive. We need to kind
of get back to why we are here.
An example would be simplifying the CPT codes. What do we
have, 10,000 codes, you know, that we are working on? I know
that is really important for value-based care, and I am all for
that, but we have to figure out ways to make it easier for
providers just to take care of patients and for us to get clear
bills out to our patients.
Mr. Latta. Well, thank you very much.
Dr. Ippolito--I hope I pronounced that--is it
``Eppolitto''?
Dr. Ippolito. Ippolito, but I have heard----
Mr. Latta. Ippolito, I am sorry. We have heard much about
transparency in the 340B program. And while I believe in the
importance of transparency, I want to ensure that steps we take
do not deny the resources from the hospitals that need them.
So do you believe we can increase transparency over the
340B program without serious consequences for our hospitals
that use the program?
Dr. Ippolito. Yes, sure. When it comes to 340B, I think the
first step is transparency on two elements. Number one, is it
just functioning the way that we expect it to function? And
then, number two, how are the hospitals actually using that
money?
And I think the answers to those questions should inform
any potential reform efforts that people have in mind. And they
certainly would be relevant to your question about if you have
a hospital that is genuinely delivering a lot of, say,
uncompensated care and they are using their funds in that
manner, then, you know, maybe we--even if you want to reform
340B, you want to make sure you protect that kind of
institution. And so transparency seems like the first kind of
step in that direction.
Mr. Latta. Well, thank you. Let's see if--maybe I can do
this real quickly in my last minute and 9 seconds for the
panel: Would you each briefly opine on what you believe to be
the most significant driver of high healthcare costs?
And maybe in 1 minute for all five of you. What is the
driver in high healthcare costs?
Mr. Severn. Lack of competition and, particularly, the
hospital spend, most likely.
Mr. Forge. Complexity.
Mr. Bartlett. The middlemen.
Ms. Tripoli. Consolidation, particularly in the hospital
sector.
Dr. Ippolito. Yes, I would echo that: consolidation on the
provider side.
Mr. Latta. Well, Mr. Chairman, you know, I think if we can
get it down in one word for an answer of what is driving the
cost, I think we are doing pretty good.
But I want to thank our witnesses, and, Mr. Chairman, I
thank you for holding today's hearing, and I yield back the
balance of my time.
Mr. Guthrie. I thank the gentleman for yielding. Next
will--I recognize Mr. Joyce for 5 minutes for questions.
Mr. Joyce. Thank you for yielding, Mr. Chairman, and to the
committee for having this hearing today on such an important
topic.
As this committee looks to address healthcare costs, we
need to make sure that we are addressing misguided incentives
that are ballooning those costs. As has been mentioned here
today, one of the biggest drivers in increasing spending over
the last 10 years has been the 340B drug-pricing program. The
340B drug-pricing program was created in 1992 and aimed at
enabling certain healthcare providers known as covered
entities--and this is a quote--``to stretch scarce Federal
resources to reach more eligible patients or provide more
comprehensive services.''
Between 2000 and 2020, the number of covered sites
participating in the program grew from 8,100 to over 50,000.
During this period, discounted purchases in the program grew
from $4 billion to 38 billion from 2007 to 2020.
Mr. Chairman, I would like to ask unanimous consent to
enter into the record an article from December in the Wall
Street Journal to join the one entered by my friend and
colleague Dr. Bucshon earlier today.
Mr. Guthrie. Any objection?
Seeing none, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Joyce. Thank you. Both of these detail a myriad of
issues in a program which highlight the need for changes to be
made.
I want to also be clear that we must ensure that any reform
in this space cannot come at the expense of patient access to
medications.
Dr. Ippolito, can you explain in detail how the 340B
program is contributing to the overall trend of increased costs
for patients that we are seeing in the healthcare marketplace
right now?
Dr. Ippolito. Well, in terms of the patient effect, I think
there's probably two things that would come to mind. The first
is that, in theory, the money is supposed to be used to help
fund care for patients, typically, that cannot afford to pay.
So one of the big questions is, is that actually how the money
is being used? And if it is not, that is something that is
worth addressing.
And then I think the second point that I would emphasize is
that this is another one of these policies that tends towards
the direction of more consolidation, because it gives certain
entities, hospitals, a big arbitrage opportunity over stand-
alone physician practices. And so it pushes in the direction of
more consolidation. That pushes in the direction of higher
costs for patients.
Mr. Joyce. So you brought up a very interesting point. So
you addressed is this being utilized for the patients who need
that care? Do you think it is? And do you think that that
explains the $4 billion increase to $38 billion over 13 years,
or is this being abused?
Dr. Ippolito. I think the perhaps most sort of damning
answer is that I have no idea. I have no idea how the money is
used, because I don't think there really is any effective
oversight. I think it operates through HRSA, and I don't even
know that there are standards for how the money is supposed to
be spent, let alone how the oversight is supposed to work.
So that seems like an area that, for program integrity and
just making sure it is doing what people want it to do, that
seems like an area where transparency would be particularly
useful.
Mr. Joyce. So I addressed the district where I serve,
Pennsylvania's 13th congressional district, which is rural and
underserved, and I see great benefits from 340B programs for
several of the rural hospitals. But I share your concerns if
this process is being overutilized and abused.
Mr. Forge, to follow up on my colleague Dr. Bucshon's
questions on reporting HRSA, do you think if Congress were to
ask to compare current metrics on charity care with the total
amount of savings that Pullman gets in a year from 340B or--
from 340B programs, that the need for the program would
outstrip any savings that the hospital will get?
Mr. Forge. I am not sure that I can speak to that. But what
I do know is that, in rural areas, hospitals that should
benefit from 340B, in my experience, have had a tough time
doing so. I think they are getting to the point where they are
figuring it out, and we are starting to feel the benefits. But
I don't think that all the places that should be feeling the
benefits from 340B are feeling that.
Mr. Joyce. Do you feel that there might be better metrics
that we in Congress should use to fully grasp the value to
patients that hospitals can provide with these programs, with
these savings?
Mr. Forge. Sure. I think maintaining viability and
sustainability of these, you know, hospitals, these community-
based hospitals in rural areas is the priority. So how do we,
you know, look at 340B in these areas as an effective measure
to keep these hospitals going, keep 24-hour emergency care
services going, and make sure that these people have access to
services where they live?
Mr. Joyce. I thank you for your concise answer, because I
don't think there is anything that hospitals should be afraid
of when it comes to 340B transparency. If a hospital needs that
support, it should be obvious, and it should be transparent.
And for--the hospital that you run and in many districts are
exactly who this program is meant to serve, but I do wonder
whether this same story would be clear for every hospital. And
I look forward to working with my colleagues in a bipartisan
way to address this issue.
Thank you, Mr. Chair, and I yield back.
Mr. Guthrie. The gentleman yields back. The Chair now
recognizes Mr. Pence from Indiana.
Oh, I am sorry, excuse me. The gentleman recognizes Mrs.
Harshbarger for--yes, Harshbarger for 5 minutes for the purpose
of questions.
Mrs. Harshbarger. Hey, thank you, Mr. Chairman, and thank
you, witnesses, for being here today. This is informative for
me.
I have been a pharmacist 37 years, and PBMs are just from
the devil. OK?
And Ms. Bartlett, you are my kind of gal, OK? And I do want
to ask you one question. You have already heard from Mr. Carter
about the PBMs, but you said you used a transparent passthrough
PBM. Can you tell me who that is?
Mr. Bartlett. Yes, that was Navitus.
Mrs. Harshbarger. Navitus, OK. And there are some
transparent PBMs out there.
Mr. Bartlett. Yes, there are.
Mrs. Harshbarger. Integra, and----
Mr. Bartlett. And you have to make sure it is in the
contract.
Mrs. Harshbarger. Yes. I will be talking to you later.
Mr. Bartlett. OK.
[Laughter.]
Mrs. Harshbarger. And I want to follow up on something that
Mr. Griffith talked about, and I want to talk about that
ProPublica report that was published last week.
And this is for Mr. Severn. You know, I am also concerned
about the pricing, what they charge: a blood test, $1,000. And
I have looked at these, because people bring them in to me.
Remember, we are the most trusted healthcare professional.
Everybody lives 5 minutes from a pharmacy. And by gosh, they
utilize us. All right? I guess--are all laboratories that are
not hospital-based required to post their prices?
Mr. Severn. Thanks for the question. The simple answer is
yes. And that is what is so great. We had 18 months where we
only had hospital prices, and now 9 months ago we are mixing
nonhospital prices into the fray, which should create more
competition.
Mrs. Harshbarger. So the labs have to report that, as well?
Mr. Severn. The----
Mrs. Harshbarger. If they are not hospital-based?
Mr. Severn. The insurance companies report the negotiated
rates with labs on their behalf.
Mrs. Harshbarger. OK. Are they doing that?
Mr. Severn. Yes, we----
Mrs. Harshbarger. OK.
Mr. Severn. Billions of rates now just live on the
Internet.
Mrs. Harshbarger. You know, we had the biggest--in the
history of the country in my district, so there is no
competition. We all know competition makes everything better,
and it drives prices down. And there was a hospital--well, it
really wasn't a hospital. They published their prices, their
cash prices online on Facebook, compared it to the hospital,
and people were angry, very angry. It is just getting the
information out there.
And I guess this is for everyone: If suddenly the curtains
were pulled back on all healthcare prices, and consumers could
see prices systemwide in healthcare by the insurance payer and
the plan as well as discounted cash prices, what would happen?
What would happen?
And I will start with you, sir.
Mr. Severn. I think people would get in their cars and
start driving to Pullman or somewhere more affordable.
[Laughter.]
Mr. Forge. I think they would be confused.
Mrs. Harshbarger. They would.
Mr. Forge. I think they would be confused.
Mrs. Harshbarger. They would be saying, ``I have been
paying too much for a long time.''
Mr. Forge. Yes, that is for sure.
Mrs. Harshbarger. Yes, ma'am.
Mr. Bartlett. And I think employers would be very glad to
see that, to see that their plan is paying much more than the
cash price----
Mrs. Harshbarger. Those----
Mr. Bartlett [continuing]. And compare it to their claims
data and see that there is probably some medical spread pricing
going on too.
Mrs. Harshbarger. Totally. Self-funded, they have no idea.
They have no idea.
Mr. Bartlett. You are right.
Mrs. Harshbarger. Yes, ma'am.
Ms. Tripoli. When we get to full transparency, I think it
would give policymakers the tools to be able to intervene where
prices have become completely irrational, so we can actually
bring down the cost of care for the American people.
Mrs. Harshbarger. Yes.
Dr. Ippolito. Yes, like the last two, employers and
policymakers might be the biggest users of that in the end.
Mrs. Harshbarger. Yes, where----
Dr. Ippolito. Where are the prices high, where are they
low, and why?
Mrs. Harshbarger. We compare prices at Walmart versus
Amazon, don't we? Well, why can't we do that with healthcare?
We can. They call me for a price on a medication at the
pharmacy, and I better be lower.
Though I could talk--I could ask you a whole lot of other
questions, but I do have one for you, Dr. Ippolito, and it is
about certificate of need. If you are talking about
competition, you don't have competition in that arena, do you?
That is one glaring area where healthcare system lacks
competition. And I hear about it from my constituents all the
time. And these certificate-of-need regulations require
hospitals and healthcare providers to obtain government
approval before they can build new facilities, expand existing
facilities, or purchase certain types of equipments, even beds.
Making matters worse, the laws allow existing providers to
prevent competition by giving them the ability to object to new
certificate-of-need application submitted by their would-be
competitors. And many view these certificate-of-need laws as
being the epitome of government interference, suppressing
competition.
Do you agree that, as a whole, those certificate-of-need
laws are misguided?
Dr. Ippolito. Yes. Well, I think at this point we have
about 30, 40 years of evidence, and that evidence isn't
particularly kind to certificate of need, however well-
intentioned they were. At this point, I think we need as few
impediments to competition as possible in the healthcare
market.
Mrs. Harshbarger. Yes, I guess that is--my time is up. I
will submit some more questions to you in writing, though. OK?
All right. With that, Mr. Chairman, I yield back.
Mr. Guthrie. Thank you. The gentlelady yields back, and the
Chair now recognizes Ms. Kuster for 5 minutes for questions.
Ms. Kuster. Thank you, Mr. Chairman, and thank you to our
witnesses for being with us today.
As my colleagues on both sides of the aisle have stated,
healthcare costs are unaffordable for literally millions of
Americans. On top of high costs, patients are also navigating a
confusing landscape where they can't realistically plan for how
much lifesaving treatment will cost them or if they will be
able to afford it. This uncertainty often leads to decisions
that only further harm a patient's health and burden the
medical system, such as delaying care and rationing medication.
Patients rely on supports like the 340B program, which
provides discounts on essential prescription drugs to
vulnerable communities. Without programs like 340B, healthcare
would simply be out of reach for too many. We can and must do
better by our constituents.
One tool at our disposal are the efforts by this
administration to increase transparency by enforcing existing
compliance law that require hospitals and health plans to make
the costs of services public, as we have been discussing today.
Another tool is increasing transparency about how hospital
bills patients depending on where the care is provided. I am
working to introduce bipartisan legislation to give patients
the peace of mind that they will pay the same amount for care,
regardless of where the care is provided.
Ms. Tripoli, Families USA has supported these site-neutral
payment policies because they will save consumers money. How
would changing hospital billing for clinically appropriate
services help lower costs for patients?
Ms. Tripoli. Absolutely. It is really about just reducing--
eliminating an incentive in the payment, the way we reimburse
for care, that drives towards higher-cost outpatient care and
allows hospitals, when they acquire physician practices, to
rebrand them as outpatient facilities, they then tack on a
facility fee, which consumers are paying directly, thousands of
dollars.
I think we have seen from a variety of different
projections, from MedPAC to CBO to the Committee for
Responsible Budget, significant savings, not just for the
system--estimates up to $153 billion over the next decade--also
would include lowering premiums and cost sharing for Medicare
beneficiaries by $94 billion. And for those in the commercial
market up to $466 billion.
It is a no-brainer in terms of cost savings for the
American people.
Ms. Kuster. Thank you so much. Site-neutral policies are
also a tool to help strengthen the Medicare program overall.
Mr. Ippolito, your recent report, ``Procompetitive Health
Care Reform Options for a Divided Congress,'' highlighted that
site-neutral payments could reduce Medicare spending. How could
expanding this policy save the Federal Government and taxpayers
money?
Dr. Ippolito. Well, I mean, the savings to taxpayers are
clear. Right now, Medicare pays substantially more for care if
it is delivered in one of these settings that was just
discussed, the ones that are owned by hospitals, as opposed to
a physician-owned facility.
And so I still want to emphasize, though, there's two
pieces of this. There are direct savings to Medicare. There's
direct savings to the government, the taxpayer. Those are very,
very important. But there are also direct savings to
beneficiaries in the form of out-of-pocket spending.
Coinsurance can be a percentage of the price. So if the price,
the underlying price, is higher, the coinsurance is going to be
higher.
And so that is an important thing to keep in mind here, and
that is a near-term benefit of these policies.
Ms. Kuster. Well, thank you. Another aspect of lowering
costs for patients is ensuring they can choose less expensive
generic drugs.
I am reintroducing my bipartisan bill, Increasing
Transparency in Generic Drug Applications Act of 2022. This
legislation would make it easier for lower-cost generic drugs
to come to market, making lifesaving prescription drugs more
affordable for patients across the country. By increasing
transparency in the FDA's approval process, manufacturers will
be able to bring more generic drug options to pharmacies
faster.
We must continue to support a competitive drug market that
encourages high-quality, lower-cost drug manufacturing. With
that, I look forward to working with my Energy and Commerce
colleagues on these important policies that can increase
transparency and lower costs for patients and taxpayers.
And I yield back.
Mr. Guthrie. The gentlelady yields back. We are trying to
figure out who is next in line.
And next is Mr. Obernolte.
Mr. Obernolte, you are recognized for 5 minutes for
questions.
Mr. Obernolte. Thank you very much, Mr. Chairman. Thank you
to our witnesses.
Mr. Severn, I would like to start with you. You know, we
have been having this robust discussion that is--we are talking
about price transparency. But really, the consequence of our
inability to have price transparency is that we don't have
functional, free markets for healthcare in the United States.
And we have seen the consequence of that not only in a lower
standard of care here but in much, much higher pricing, which I
think we are all kind of incentivized here, both there and here
on the dais, to try and fix.
Mr. Severn, I admire the work that you have been doing
trying to enhance the visibility of price data. But, I mean, if
we don't have a functional healthcare market where consumers
are making decisions about where to go for their healthcare
based on that data, then the data doesn't do us any good,
because we need those consumers to be using the data to make
decisions. And when we have got a market where most if not all
the costs are borne by health insurance companies, then it is
not the consumers making the choices.
So I know you have been talking about--I think your exact
words were ``getting more skin in the game from consumers,''
and I wanted to tunnel down on that a little bit. So you talked
about high-deductible health plans, copays. What do you think
is the optimal strategy?
I mean, realistically, given where we are with the Federal
Government's regulation of healthcare markets, what are the
realistic next steps to getting us to--more towards a
functional healthcare market?
Mr. Severn. Thank you for the question. I think we are
starting to see a ripple effect, where this data is making its
way, you know, to smaller and smaller organizations and
ultimately the consumer, you know, employers, care navigators,
nurse care navigation companies, and then now we are starting
to see many more tech companies like Turquoise pop up and put
this data right in front of the consumer.
You know, our stats is that we have got--this time a year
ago we had 12,000 people a month on our site, and now we have
50,000. So as you start to see more data filter in and more
companies pop up, you see better consumer experiences.
And there is one piece of the transparency in coverage law
that we haven't seen many payers use yet, which is issuing
rebates back and writing off those rebates against the MLR. I
think we are just going to keep seeing innovation, and we are
only 9 months into this data being public.
Mr. Obernolte. OK. Mr. Ippolito, kind of a similar line of
questioning for you, and I am particularly interested, because
I know you have done a lot of thinking about this. The other
countries have done this a lot more thoroughly and with a lot
more innovation than we have. We spend three times as much per
capita as countries like Singapore, who have allowed consumers
to take a much more active role in their choices about
healthcare.
So what would you think about doing what Singapore has
done, in pairing high-deductible health insurance plans with,
essentially, a coinsurance program where the government sets
aside 100 percent of the amount for the maximum deductible for
a year, and gives it to the consumer in a health savings
account and says, ``Look, this is your money,'' you know,
``This will meet 100 percent of your deductible, spend it on
what you want to spend it on. But by the way, it rolls over if
you don't use it at the end of the year. And if you don't use
it after 5 years, it rolls over into a retirement account. So
it is yours. It has got your name on it.''
Would that kind of a system work here, do you think?
Dr. Ippolito. Yes, it is sort of like a prefunded HSA, kind
of, it sounds like.
I think--whenever I think of those kinds of systems, I
think there is a lot of promise. And I think one of the most
important parameters that I focus on is it is not just that you
have liability, it is that you have liability that you
understand. And so, if you were to ask me to prioritize things,
I would say making sure that people actually understand the
incentives they face, not just that they know they are going to
get a percentage of the bill, but making it clear.
So that means using things like reference pricing, using
things like networks, which are very salient to people, using
things like copayments, which are very salient to people. Those
kinds of things, it is not just that you have the incentive, it
is that the incentive is very clear to you. And then I think
that kind of arrangement has a little bit more potential, and
we are likely to see the benefits.
Mr. Obernolte. Sure. Well, I mean--and I understand that we
are talking about transparency and consumer pricing for
healthcare here. And the panel--and I know everyone is pivoting
back to that.
But, I mean, you said something, Dr. Ippolito, in your
testimony that resonated so much I wrote it down. You said,
``ample evidence that--there is ample evidence that healthcare
spending in the United States reflects economic frictions
rather than consumer choice.'' And my point is consumer choice
doesn't matter when it is not consumers making the choices.
So when you hand them an account and you say, ``look, this
is your money, here is a card, you can access it, do with it
what you want, you are in charge of your healthcare,'' the
health insurance system is there to backstop you if you have
costs that are greater than what this account can make, can
bear, but this is your money. I mean, if you look at economic
studies, it is very clear that kind of consumer buy-in is what
is going to be required to make our healthcare markets in the
United States function again.
And let me also point out in my remaining 14 seconds that
Singapore, in addition to spending about a third what the U.S.
does per capita for healthcare, has the highest quality
healthcare in the world by any objective measurement. So there
is a lot of room for improvement for us.
But thank you very much for your testimony today.
I yield back, Mr. Chairman.
Mr. Guthrie. The gentleman yields back, and the Chair
recognizes Mr. Pence for 5 minutes.
Mr. Pence. Thank you, Mr. Chairman, and thank the witnesses
for being here today.
Hoosiers and, as my congressman--as Congressman Crenshaw is
very aware--and all Americans are facing higher medical costs
and fewer options for care, particularly in rural communities.
Complex medical fee structures, surprise billing, and confusing
coverage plans have further eroded patient trust in our
healthcare system.
Improving healthcare price transparency, however, would
inject needed competition for healthcare facilities and
ultimately lower costs for patients. This is especially needed
in the Hoosier State, which consistently ranks among having
some of the highest hospital prices in the country.
Across southern Indiana, rural facilities are closing at an
alarming rate, as they are all across the country, lowering
access to care for vulnerable communities. Lack of competition
has patients with fewer alternatives to access care,
particularly in rural communities across Indiana's 6th
district, my district. These issues are exasperated by
unsustainable workforce shortages and skyrocketing labor costs.
There have been recent efforts to improve transparency,
such as the Trump-Pence administration's 2019 HHS rule
requiring hospitals to disclose standard charges, as well as
transparency-in-coverage requirements for health insurers.
However, it is clear there is still more that needs to be done
so that Hoosiers and all Americans can make the best medical
decisions for themselves and their families.
Dr. Ippolito, several years ago Congress took steps to
harmonize Medicare payments between various sites of care for
the same services provided through a site-neutral payment
model. However, the services covered under the existing policy
are relatively small--are a relatively small portion of
outpatient services, since almost all existing facilities are
grandfathered in by the legislation.
Do we know what portion of facilities are grandfathered in
under this policy, and the scope of outpatient hospital
spending the current policy impacts?
Dr. Ippolito. Well, you are certainly right that it is a
very limited policy.
I don't know the number of facilities, but I can tell you
that it represents less than a percentage of Medicare's total
outpatient spending. I think it is 0.8 percent of Medicare's
outpatient spending. So it affects a very small share.
Mr. Pence. OK, thanks. How would patients be impacted if
the policy were to apply to a greater universe of providers and
services?
Dr. Ippolito. Well, Medicare and commercial market patients
would benefit in the long run, because it reduces the incentive
to keep consolidating the provider side in the market. In the
immediate term, there is an obvious benefit to Medicare
beneficiaries in the form of lower out-of-pocket spending.
Their out-of-pocket is often a function of the price of the
service. And if that price goes down, their out-of-pocket goes
down.
Mr. Pence. So it might be a good idea?
Dr. Ippolito. Well, I think so. But, you know, nobody voted
for me, so----
Mr. Pence. All right, thank you.
And Mr. Chair, I yield back.
Mr. Guthrie. The gentleman yields back. The Chair now
recognizes Mr. Crenshaw for 5 minutes for the purpose of asking
questions.
Mr. Crenshaw. Thank you to the Chair. Thank you to my
friend from Indiana. I counted three mentions of Hoosiers.
[Laughter.]
Mr. Crenshaw. It is a thing. All right.
So thank you all for being here. I appreciate your patience
with us.
You know, I want to start out by saying, you know, let's
frame this problem. So everybody needs healthcare. We can
debate whether or not it is a right, per se, but everybody
needs it, and we all agree that it is too expensive and that
our payment system is largely to blame. It is not operating
like a proper marketplace.
We have a couple of things that we want in our system. We
want to increase quality. We want to maintain our innovative
edge. We are one of the few countries that still maintains
these promises of quality, but we want it to be cheaper and
accessible. OK.
And now, I would articulate that the only forces that
really drive down prices while also maintaining an innovative
edge and quality are choice, competition, transparency. And
that is what we are here to talk about today.
The complexity of healthcare makes transparency a really
difficult problem. It is not like going to the grocery store.
And so I would encourage this committee to focus on the entry
point that everybody faces in healthcare, and that should be
our legislative entry point, and that is primary care and what
we can do to make primary care more accessible and easier for
the patient, because that is your quarterback.
That is--that should be the person you use to navigate the
rest of the immensely complex healthcare system. You can give
me all the spreadsheets in the world on price transparency. I
still can't figure it out. And I am a pretty experienced
patient, OK? It is just--it is so complex.
And so I want to talk about primary care, and my favorite
type of primary care, direct primary care, with you, Dr.
Ippolito, if that is all right. A lot of the conversation today
is about the traditional care model, where we have patients
interacting with primary care providers, specialty care
providers in different clinical settings, all of that. It is
complex. It is overwhelming. Can you talk about how
personalized care models like direct primary care can play in
creating a wider, more competitive healthcare marketplace?
I guess I should define what I am talking about really
quick, which is effectively a monthly fee for a primary care
doctor, which is all inclusive. It doesn't matter how many
visits you have, it is independent of insurance. It is
essentially a subscription service for healthcare. And in the
Houston area we are talking 60 to 70 bucks a month.
Dr. Ippolito. I mean, yes. So to echo a point I made
earlier, given what we see in the healthcare market, we ought
to be encouraging just about any kind of competition we can
get. And so I think that is sort of the baseline.
When I think about direct primary care, you know, honestly,
it fits pretty well within what you might think of as a sort of
optimal insurance design if you were starting from scratch.
That is, you really focus insurance on protecting people in the
catastrophic situations, but then you try and have competition
under a more normal pricing structure for more regular
services. And I think that is--at least conceptually, that is
what a lot of direct primary care seems to be trying to get at.
Mr. Crenshaw. Do you think it could have a positive effect
on overall healthcare spending?
Dr. Ippolito. You know, it is always tough with spending. I
guess I will say two things.
The first is that, at least as I understand these models,
they are often a capitated approach. Capitated payments do have
really good incentives, right? So that is a good thing.
The second point, though, is that, when you think about
primary care, it is often difficult to evaluate that on pure
cost savings, because part of what you are doing is you are
giving people access to care that they might need, right? And a
lot of that care is really high value. Getting somebody on an
antihypertensive or a statin is a really big ROI.
And so I don't know that I would emphasize pure cost
savings. Instead, what I would do is say it is--there is a
potential to really get more efficient spending, right?
Mr. Crenshaw. Yes.
Dr. Ippolito. Especially----
Mr. Crenshaw. Well, certainly because you are keeping
people out of the emergency room, and what our goal should be,
this continuity of care. Our goal should be every American
knows who their primary care doctor is. That is definitely not
the case right now. You think, like, do I call my--if you have
a problem, do you--do I call my insurance? Do I just go to the
ER? Nobody knows what to do. You need a quarterback.
All right, and I got 54 seconds. So Mr. Severn, could you
talk to us about--you get all this data, you guys have all this
experience gathering this data. Can you talk about what we
should do to make it more transparent and readable to the
consumer, so we can actually translate it?
Mr. Severn. We have talked about the hospital standard
that, you know, is suggested right now, and I think we have
pretty unanimously said we would love that standard to be
enforced. And that does make these spreadsheets a little bit
more apples-to-apples comparable.
It also--you know, I mentioned this a bit earlier--it has
got a column that says ``payment method.'' And there is a
spectrum of complexity to these payment methods. And what you
will find is not just price pressure, but you reward simpler
payment methods. So I will go to the doctor that can say, hey,
it is $50 up front versus some sliding fee or percent of
charge.
Mr. Crenshaw. OK. Thank you, and I yield back.
Mr. Guthrie. The gentleman yields back. The Chair now
yields to Dr. Miller-Meeks for 5 minutes for the purpose of
asking questions.
Mrs. Miller-Meeks. Thank you, Mr. Chair, and I thank all
our witnesses who are here. It is a fascinating discussion. I
could certainly ask questions for more than 5 minutes.
As an ophthalmologist, I moved our small three
ophthalmology practices to have a cash-based payment and a
discount for paying cash because it was simpler for patients
than trying to navigate through their insurance company.
And I think it is interesting, as we talk about
consolidation and competition and PBMs, that, you know, one of
the biggest errors was in the establishment of Medicare,
Medicare having different reimbursement for different States
rather than a single reimbursement for a single procedure or a
single visit, which would--then would have led to competition
and medical tourism throughout the United States.
And in 2010, when the Affordable Care Act was being
implemented, myself and many other individuals warned that
prices would go up, that premiums would go up with the passage
of the Affordable Care Act. We especially were concerned about
consolidation, hospital-to-hospital consolidation, physician
practices becoming larger physician practices or being
purchased by hospitals, and that--we warned at that time that
those procedures and things being done in doctor's offices
would then move to hospital-based clinics, and the prices would
go up.
And it is not just the price goes up. As Dr. Ippolito said,
the patient's cost share is also much greater. So their out-of-
pocket cost is also greater.
So consolidation increases healthcare prices and insurance
premiums as well as worsens equal access for care to patients
in rural communities and medically underserved communities. And
why is that? Because consolidation threatens competition. It
doesn't matter if you have price transparency if there is no
competition. So as you drive out competition, the value of
price transparency in certain areas decreases.
You know, we have seen an increasing number of physician
groups get absorbed by health systems, such as the recent
purchase of Oak Street Health by CVS and more physicians
working in integrated groups and more Medicare beneficiaries
being directly affected by the high cost of integration. For
example, the numbers of diagnostic and imaging lab tests being
performed in a hospital has increased dramatically. We are
pushed as physicians within a hospital to do things within the
hospital, and this has led to Medicare incurring tens of
millions of dollars of unnecessary costs, as was pointed out.
And one of the things we talked about is the payment
reform--or payment reform that we think Congress should
consider, which is site neutrality. And what other things could
we encourage providers to remain--other things to do to
remain--providers to be independent, which could help with
competition, Dr. Ippolito?
Dr. Ippolito. I am sorry. Could you repeat the last part of
that?
Mrs. Miller-Meeks. What other things can we do, payment
reforms can we do, to encourage both, you know, physicians----
Dr. Ippolito. Sure.
Mrs. Miller-Meeks [continuing]. To remain independent, site
neutrality being one of those.
Dr. Ippolito. Sure. So, you know, think about any payment
policy that pushes in the direction of consolidation. So site-
neutral, making sure 340B doesn't push too far in that
direction. That is one.
At the State--while there are State policies the Federal
Government could, in principle, have effects on, things like
certificate of need, which some States still do have--we have
tons of evidence on that at this point--we can talk about
things like scope of practice.
Especially when you talk about rural areas, the natural
level of competition that is going to be supported is going to
be lower. And so you have really got to push everywhere you
can. You have got to think about where can we realistically
harness telehealth, right? Certain areas, mental health, things
like that, you have a lot of opportunity to use that.
But still, you know, at the end of the day, I think about
the U.S. healthcare system in sort of three buckets. There's
the really competitive markets, big cities; there's the
plausibly competitive markets, a lot of midsized cities that
may have one big, big provider; and then you have got rural
areas. And you just do need to recognize that rural areas are a
little bit different and be open to being a little bit more
creative in those settings.
Mrs. Miller-Meeks. Thank you so much for that answer. And
we have talked some about PBMs, and as a State senator in 2019
I put forward a bill in Iowa for transparency within the PBM
and for the rebates, half of the rebate to go back to the
person paying for the drugs. I got it through the Senate, but
not the rebate part, the transparency part. We finally did not
get it through the House that year, but we finally did. But 3
years later, we still don't have the transparency data coming
forward, which we are finally getting to come forward.
And as you all know, the three largest PBMs--CVS Caremark,
Express Scripts, and OptumRx--manage about 80 percent of all
prescriptions in the United States, up from 48 percent a decade
ago. And, you know, this is very pivotal in how we make
decisions. We have--one of the PBM tactics--and I won't talk
about all of them, but it is something that Representative
Carter and I have worked on--is the growing practice of
misappropriating patient assistance dollars for the benefit of
the PBM's bottom line. A middleman places increasing cost on
patients by relying more on coinsurance and deductibles, copay
assistance, an important bridge to ensure access to needed
medications.
So Ms. Bartlett, what financial burdens do accumulators
place on patients when copay assistance maximum is reached?
[No response.]
Mrs. Miller-Meeks. I may have to use--have you submit that
in writing, because my time is----
Mr. Bartlett. I definitely will.
Mrs. Miller-Meeks [continuing]. Expired, so----
Mr. Bartlett. I definitely will. I got the question.
Mrs. Miller-Meeks. So if you would submit that in writing,
I would thank you.
Thank you, Mr. Chair. I yield back.
Mr. Guthrie. Thank you. I thank the gentlelady for yielding
back. We have now completed--the Members who are--of the
committee--we have three that waived on, two that are present.
So we--it looks like we have two more witnesses, so thank you
all for your patience, and we will now go to our members of the
full committee that are meeting here with us today, and the
first will be Ms. Matsui from California.
You are recognized for 5 minutes.
Ms. Matsui. Thank you very much, Mr. Chairman and Ranking
Member Eshoo, for having this very important hearing today and
allowing me to waive on. And thank you for the witnesses for
being here today. I want to ask Mr. Forge a question.
I would like to briefly discuss the 340B program, which I
know has been discussed here. But as many of my colleagues
know, I have long been a champion of the 340B program, which is
a critical part of the healthcare safety net that all our
constituents depend on.
Unfortunately, there has been a lot of criticisms about
this program lately, and I am concerned about some of the
conversation around 340B happening today, which is why I felt
compelled to waive on. 340B is, first and foremost, a program
to provide discounted drugs to low-income patients. But some of
the critics of this program seem to forget that 340B has
another critical purpose: to help safety-net providers to
provide critical services to underserved patients and to
empower them to stay open, especially after the strains of the
past few years.
Mr. Forge, can you share some of the programs or services
Pullman Regional is able to offer because of your 340B
discounts?
And what would happen if the hospital is no longer able to
participate in the 340B program?
Mr. Forge. Well, I want to answer you in a couple of
different ways.
You know, first of all, it impacts more than just Pullman
Regional Hospital. You know, there are local pharmacies who we
contract with, which are really lifelines for small
communities, you know, that they are serving. Colfax,
Washington, is one that comes to mind.
You know, we are working in rural areas on 2 to 4 percent
margins, you know, really tight margins. And so, you know,
maintaining access to high-quality, board-certified physicians
in our emergency room, for example, you know, making sure that,
you know, we have 24-hour access to obstetric care, et cetera.
You know, 2 to 4 percent is not a lot, you know, it doesn't
go a long ways. And so 340B, without that, you know, we would
most likely have to cut some critical services to our service
area as well as lose some lifeblood providers to our
communities.
Ms. Matsui. Oh, absolutely. Now, you mentioned pharmacies.
One way that PhRMA and other 340B critics have attempted to
chip away at the program is by restricting entities from using
contract pharmacies.
Mr. Forge, I know that Pullman Regional has relationships
with several contract pharmacies to help you distribute your
discounted drugs. Can you share why it is so important to your
hospital and the patients you serve to use contract pharmacies?
Mr. Forge. Well, you know, I have to say that we have had
positive and negative experiences with contract pharmacies, and
the most positive ones have been with the community-based, you
know, pharmacies. So I kind of want to stick with that. You
know, we haven't always had positive ones, but they are--and
the reason why there is one better than the other, it really
comes down to the service and--the customer service that goes
back to the patient, goes back to the people that live in the
community.
Ms. Matsui. Certainly.
Mr. Forge. You lose that a little bit with some of those
bigger ones.
Ms. Matsui. Certainly, yes. I have another question for you
regarding transparency around 340B.
Some of the latest proposals on 340B reform have suggested
a need for greater accountability. Mr. Forge, can you briefly
describe the requirements your hospital already faces when it
comes to submitting data to HRSA and maintaining records
documenting compliance with 340B requirements?
Mr. Forge. Sure. You know, I will talk, you know, back to
my experiences. I have worked in multiple rural communities in
critical access areas.
Some of the hospitals that I worked with were not able to
meet the regulatory standards because of the high bar that they
have, you know, within 340B. And therefore, those communities--
in very rural Idaho, for example--weren't able to benefit from
those.
You know, in other areas we had a little more expertise on
our team. We were able to kind of pull that off in Wisconsin.
And now, you know, back in Pullman, we are still figuring it
out. We have to rely on outside resources to help us manage the
340B thing. That just tells you how complicated that it really
is. We have multiple audits per year that really stress our
team outside of normal operations--our finance teams, that is.
And so it is a standard that we are continuing to strive to
do. We take it seriously. We want to be accountable to that.
But that becomes more and more difficult as we go, and more
complexity keeps being added.
Ms. Matsui. Absolutely. You know, I understand, you know,
but I am concerned about proposals that unnecessarily burden
you. You have already gone through all of that.
I really appreciate the reminder of the importance of this
program. I think we all agree that it is very important, and I
don't want this program to be a scapegoat of high drug pricing
and other problems that we know exist with our healthcare
system. So I really do appreciate this committee bringing this
up today, and I would really like to strengthen 340B and make
sure it is there for the right reasons.
So thank you very much, and I yield back.
Mr. Guthrie. Thank you. The gentlelady yields back, and
next will be Mr. Allen.
You are recognized for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman, and thanks for waiving
me on.
To give you a little background about why I am very
interested in this is--and I want to thank the witnesses for
staying with us and talking about this important issue. But
back from 1991 to 2000--of course, I was running a construction
business back then--and about 80 percent of our work was
healthcare. And in fact, one of my clients asked me to serve as
chairman of the hospital board, and I did that for--from 1991
to 2000.
And it was pretty interesting, how things evolved, because
in the construction business you got to know what your costs
are or you are not going to be in business very long. And what
I learned about hospital accounting is--and one of the things
we worked on--is we really didn't know what it cost us to do
business. We knew that we charged a dollar, that at that time
Medicare was paying about 60 cents on the dollar. And the
insurance companies started--you know, they at one time were at
$1. Of course, we had a functional free market healthcare
system back then, and then they dropped below Medicare.
So I said we better figure out what our cost is here, or we
are going to be out of business real quick. And unfortunately,
that hospital is consolidated now, along with two other
hospitals, and we have no locally owned or operated hospitals
in my hometown of Augusta, Georgia.
And, you know, the--I was also asked to, as the ranking
member on the Health, Employment, Labor, and Pensions
Subcommittee over at Education and Workforce, which covers
about 160 million lives all year, ERISA, healthcare, and I
was--I was asked to serve on the Healthy Future Task Force
Subcommittee.
And again, my question to all the experts--and we had some
great testimony from folks talking to us about where healthcare
is and what we got to do as far as affordability is concerned,
but not one could tell me where our healthcare dollars are
going. Not a single one. In fact, they said it was impossible.
And I think it is because we don't have a functional free
market system to compare anything to.
And so I said, ``How do we peel the onion back here?''
And--because we got tax dollars going into this, we got premium
dollars going into this. And guess what? You know, we are--I
was in Israel. Eight percent of their GDP, healthcare. Nobody
complained about their healthcare system. And I have a hard
time finding folks that are happy with the healthcare system,
you know, with their healthcare or the providers happy with
healthcare in this country.
But, Ms. Tripoli, your organization advocates for patients.
And so what is the most single important thing to make sure
that patients know about how their healthcare dollars are being
spent?
Ms. Tripoli. Well, I think you really nailed it, which is
there has been an incredible shift over the last 60 years.
Hospitals that used to be these community-based institutions
have emerged into these megacost centers, and communities have
watched their local hospitals disappear. It is a major problem.
It is the number-one driver--it is one of the biggest drivers
of unaffordable care in the form of higher prices.
So I think, for consumers, it is knowing that, it is
knowing that their local hospital doesn't exist anymore. And so
we need to think about the types of solutions that we can
implement that are going to bring down the cost of care for the
American people. It is the very solutions we are talking about
today in terms of strengthening price transparency, codifying
that rule----
Mr. Allen. Exactly, yes.
Ms. Tripoli [continuing]. Expanding site-neutral payments.
Mr. Allen. Yes, right. Well, good, thank you.
Mr. Severn, we--as part of the Healthy Future Task Force we
had several companies--and Walmart is involved in what is
called direct contracting for healthcare. Could you--and of
course, obviously, they are doing it and our business community
is going to figure this out, but we are going to have to have a
functioning free market healthcare system to do it, because the
government is driving everything right now.
But they have been able to use direct contracting to
personalize care for their employees. Mr. Severn, can you
comment on and tell us about your experience with direct
contracting?
Mr. Severn. Prior to this transparency data being published
in 2021, direct contracting was really only possible for large
employers that could act as payers. They could pay the
consultants, they could buy the data sets. With this new
transparency data public, the barrier to direct contracting
goes down, and so we will see more companies much smaller than
Walmart have the ability to enter into direct contracts with
providers, just based off the available----
Mr. Allen. Yes. And one of the things we wanted to do in
our committee was to allow companies to form co-ops to do this,
that they could then have the influence of a large contractor.
Listen, you all been great. Thank you so much for your
testimony.
And thank you, Mr. Chairman, again.
Mr. Guthrie. Thank you.
Mr. Allen. I yield back.
Mr. Guthrie. I thank the gentleman for yielding, and we do
have one more. We have Mr. Balderson from Ohio, who is waiving
on for the hearing for 5 minutes.
You are recognized for 5 minutes for questions.
Mr. Balderson. Thank you, Mr. Chairman, I appreciate the
waiver, and thank you all for hanging in there today. I will be
brief.
Mr. Severn, from your experience with your patient-facing
transparency tool, do you agree that, when provided accurate
pricing data, patients make informed judgments on where they
want to receive care?
Mr. Severn. The short answer is patients are just starting
to learn that this data is there. And we are very early in
seeing patients use this data. The best way to present the data
is something simple, a consumer experience like we see
elsewhere on Amazon or other e-commerce sites. Once that is
possible on Turquoise and other sites, to say ``this is the
upfront cost, this is the only bill you are going to get,'' we
will see a huge consumer uptake here. But we are just starting
to see this at Turquoise.
Mr. Balderson. I agree. Unfortunately, CMS disagrees with
you, since it denied an innovative health plan by claiming it
is, and I quote, ``not reasonable to expect prospective
enrollees to understand'' a new, unique plan.
Last year I wrote a letter, a bipartisan letter, to CMS in
support of increasing access to innovative health plans that
already are providing price transparency for patients. These
plans are similar, somewhat similar, to the ones used in
Montana by Ms. Bartlett, as they offer set reimbursement for
anything you can do in the healthcare system. This allows
consumers to shop for care and receive information about their
cost obligations at any given provider--not just any given
provider in their network, any given provider, period.
But what Mr. Severn is saying is that the consumers can and
do have the ability to shop for value. As we increase the level
of price transparency in our healthcare system, it is important
to ensure that the entire system keeps up, and lessons learned
in one place are applied to others to maximize their benefits
for patients.
Mr. Forge, I myself come from rural Ohio, in Ohio's 12th
congressional district, but I also have central Ohio, which has
some of the big healthcare systems. Just like yours, though,
the smaller one serves smaller communities. No one wants to be
more punitive to the small community hospitals that are already
stretched thin and trying to serve their patients, but we all
agree that price transparency is important.
How do we work with these hospitals to make sure their
price transparency experience is a positive one for the
hospital and patients?
Mr. Forge. Well, good question. I appreciate it.
Mr. Balderson. Thank you.
Mr. Forge. I think, though, the first step is just
recognizing that they need the help, right, recognizing that we
need--you know, we need support, and making sure that it is a
good experience.
But I think it comes back down to, you know, really
thinking about those families and those individuals, and really
helping those people with their medical literacy, helping them,
you know, access programs like Mr. Severn here, and helping
people access, you know, what people and the--that have bigger
resources and bigger health systems have access to.
So it is recognizing it, you know, removing barriers, and
continuing to focus on improving.
Mr. Balderson. OK. Thank you. My last question, Mr. Severn
is for you again, I apologize.
Starting this year, insurers were required to provide
personalized pricing information for 500 items and services to
their enrollees. Have you tracked insurer compliance with this
aspect of the rule?
Mr. Severn. We don't track insurer compliance with that
aspect. We just look at the machine-readable file, the second
piece of the requirement. That is what we track.
Mr. Balderson. How is it working?
Mr. Severn. You know, the stat we shared is 96 percent of
covered lives are represented in the data across 181 payers as
of today, which is much quicker than the hospital compliance--
--
Mr. Balderson. Yes, it is. Thank you.
Mr. Chairman, I yield back, and I thank you all again.
Mr. Guthrie. Thank you.
The gentleman yields back. Seeing no further witnesses,
that concludes witness questions.
Thank you all so much for being here. I know it has been a
long afternoon, but I know you are passionate about these
issues as bipartisan. We are, as well, and look forward to
making this the first of many efforts to get to the point where
we are going to have transparency in the healthcare system, so
that people can--we need healthcare systems to be--to exist, so
they are going to need to do what they need to do--exist--but
we also need information so people can make fair choices. So we
are looking forward to that, moving forward.
I do have a list that I have shared with the ranking member
of documents for the record from the majority and the minority.
Any objection?
Without objection.
Ms. Eshoo. No objection, Mr. Chairman.
Mr. Guthrie. No objection, so it is so ordered.
[The documents appear at the conclusion of the hearing.
\1\]
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\1\ The list of accepted documents has been retained in committee
files and is included in the Documents for the Record at https://
docs.house.gov/meetings/IF/IF14/20230328/115581/HHRG-118-IF14-20230328-
SD003.pdf.
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Mr. Guthrie. And then I want to remind the Members they
have 10 business days to submit questions for the record. And I
ask the witnesses to respond to the questions promptly. Members
should submit their questions by the close of business on April
the 11th.
And without objection, the subcommittee is adjourned.
[Whereupon, at 4:32 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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