Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - August 02, 2007)

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By Mr. GRASSLEY (for himself and Mr. BAUCUS):

S. 1947. A bill to amend title XI of the Social Security Act to improve the quality improvement organization (QIO) program; to the Committee on Finance.

Mr. GRASSLEY. Mr. President, I am pleased to join my good friend and colleague Senator BAUCUS to introduce the Continuing the Advancement of Quality Improvement Act.

The purpose of this legislation is to reform Medicare's troubled Quality Improvement Organization, QIO, program. QIOs and their predecessor organizations have long been responsible for ensuring that the care Medicare beneficiaries receive is medically necessary, meets recognized standards and is provided in appropriate settings. They are currently tasked with a wide variety of important roles ranging from investigating beneficiary complaints of poor quality care to giving technical assistance to Medicare providers for improving health care quality.

I have been an advocate of reforming the QIO program for quite some time. About 2 years ago, I initiated an investigation into a number of the QIOs. Those investigations revealed a program that is in desperate need of reform. This program was running with little or no oversight, and it was expending more than $1 billion every 3 years with little measurable results. In other words, I found trouble. Let me elaborate on a few disturbing things that I discovered. I found that one QIO leased residential properties for board members and a CEO. That same QIO also used Federal funds to lease automobiles for its top executives. I also found other QIOs who had board members and staff attend conferences, many at lavish resorts.

I was not the only one to identify serous concerns with the QIOs. Others identified concerns too. Specifically, the Institute of Medicine, IOM, the General Accountability Office, GAO, and the Department of Health and Human Services, HHS, Office of the Inspector Geheral (OIG) all identified numerous concerns about the effectiveness of this program. These independent organizations also voiced their concerns with the manner in which it is operated and have made recommendations for major reform. Their findings clearly show the need to hold the Centers for Medicare and Medicaid Services, CMS, and the organizations that serve as QIOs accountable for the important tasks they must perform.

The Continuing the Advancement of Quality Improvement Act will ensure that the QIO program is not only effective in improving the quality of care provided to our Medicare beneficiaries, but also that it operates in an effective, efficient and accountable manner. Much of this legislation is based on the investigations that I conducted and the troubling findings that I came across and on the work of the IOM, the GAO, and the HHS OIG.

First, the Continuing the Advancement of Quality Improvement Act would focus the mission of the QIO program on quality improvement. QIOs currently have many diverse responsibilities. As a result, they served conflicting roles of both ``regulator'' and ``technical assistant.'' This conflict poses significant barriers to QIOs effectively serving either role, and we have come to learn that they really don't perform either function particularly well.

The legislation would also address this conflict by following the IOM's recommendation to make the sole purpose of QIOs to be technical assistants for quality improvement and performance measurement. The HHS Secretary would be required to transfer all other QIO: responsibilities to other entities called Medicare Provider Review Organizations, MPROs, in a manner that will support the needs of beneficiaries and be accountable to them.

Second, the legislation would improve the beneficiary complaint review process that I think is in desperate need of reform. You may recall that in 2006 we read about the plight of Mr. Schiff. Mr. Schiff went to a QIO and filed a complaint about the care provided to his wife, who died. The QIO in that case was unresponsive to Mr. Schiff. He was forced to take legal action to learn what the QIO found out about his wife's death. He should not have had to do that. After all, he was the one who filed the complaint with the QIO in the first place because he thought that someone did something wrong that lead to his wife's death. It was at that juncture that I learned that the beneficiary complaint review process was too opaque and ineffective. More importantly, beneficiaries were not being properly served. In fact, I came to learn that complainants often do not receive the findings of the investigation conducted by the QIO. Now I ask; what sense does that make?

The Continuing the Advancement of Quality Improvement Act would require MPROs to report the investigational findings to the complainant and refer the provider to a QIO for technical assistance and/or the appropriate regulatory body for sanctions. In other words, this part of the bill would bring transparency to a process now shrouded in a cloud of silence.

Third, the Continuing the Advancement of Quality Improvement Act would ensure that limited resources go to providers that need them the most. The GAO recently found that QIOs prioritized their assistance to providers who would be easiest to help rather than the providers who were most in need of help. In other words the QIOs decided it was easier to take a B plus student and make them into an A student rather than putting their resources into the D student to bring them up to par. I guess that way they thought that they would look better and more successful. But if you ask me; that is not the best way to spend limited taxpayer resources. Now, this bill will insure that if demand for technical assistance exceeds available resources, the QIOs would give priority to providers that are in rural or underserved areas, in financial need, have low performance measures or have a significant number of beneficiary complaints. In other words the help is going to go to those who need it most.

Fourth, the Continuing the Advancement of Quality Improvement Act would make QIO data more available to CMS and providers for quality improvement and patient safety purposes. Amazingly enough, QIOs are currently restricted from sharing such data despite the obvious value of this data for improving health care quality. This legislation would permit the sharing of QIO data with providers for quality improvement and patient safety purposes and require CMS to make recommendations on how to improve the data sharing process.

Fifth, the Continuing the Advancement of Quality Improvement Act would promote competition in the QIO program. This is a giant leap forward. These organizations are currently not subject to significant competition because of limitations on who can be a QIO and the availability of noncompetitive contract renewals. This lack of competition has led to a gross lack of accountability and stagnation in the QIO program. This legislation would promote competition by allowing other types of organizations to serve as QIOs and eliminate noncompetitive renewals.

Sixth, the Continuing the Advancement of Quality Improvement Act would enhance governance at the QIOs. During the course of my investigations I identified repeated failures in governance. I exposed board members who were more interested in helping themselves than helping others.

This bill will also address board member conflicts of interest. My investigations identified numerous incidents of questionable QIO governance practices and board member conflicts of interest. Since the QIO program receives over $400 million in taxpayer funding every year, it is reasonable for us to expect not only that QIOs are governed in an ethical manner free of conflicts of interest, but also that CMS appropriately oversees the program. This legislation would require QIOs to comply with board governance requirements and would require CMS to establish procedures to address conflicts of interest and follow those procedures.

Finally, the Continuing the Advancement of Quality Improvement Act would increase much needed accountability in the QIO program. The I0M, the GAO and the HHS OIG have all questioned the effectiveness of the QIO program. This legislation would require the Secretary to perform interim and final evaluations of program effectiveness not only at the individual QIO level, but at the overall QIO program level as a whole. Also, high performing QIOs would receive financial rewards while low performing QIOs would receive financial penalties. Finally, the Secretary would be required to submit a more detailed annual report showing performance results of QIOs and MPROs and details on how taxpayer dollars are spent.

We have been placing more emphasis on the quality of care that our Medicare beneficiaries receive from providers. You see this as we require more transparency in the Medicare program with the public reporting of provider quality measures. You also see this as we transform Medicare from being a passive payer of services of any quality to a value-based purchaser. These are important reforms that will help improve the quality of care provided in the Medicare program and work toward ensuring that limited resources are used more efficiently and wisely.

As we move toward a payment system based on quality, the reforms in this bill will position the QIO program to support that transformation in Medicare to a quality-based purchaser by making the tools and assistance available to help Medicare providers improve the quality of the care they provide. The Continuing the Advancement of Quality Improvement Act would ensure the QIO program's ability to provide this assistance in an effective, efficient and accountable manner and correct the problems currently plaguing the program.

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Mr. GRASSLEY. Mr. President, I am pleased to join my good friend and colleague Senator BAUCUS, as well as Senators LINCOLN, ROBERTS, CONRAD, ENZI, SCHUMER, COCHRAN, SALAZAR, SMITH, BINGAMAN, and SNOWE, to introduce the Pharmacy Access Improvement Act.

I am pleased with how well the Medicare Part D program is working. It has demonstrated how effectively private sector competition can work in delivering an entitlement benefit. The program has defied official predictions and come in under budget by $113 billion compared to the baseline projected in 2006. Premiums, initially estimated at $37 for 2006, in fact averaged $23; in 2007 they fell to an average of $22. We understand that this year's bids are even lower and that premiums are expected to fall again next year. The vast majority of Medicare beneficiaries have enrolled in the program, and while there were some troubling start-up problems initially, beneficiaries are very pleased with their plans.

At the same time, the first years of implementation of the Part D program have revealed some areas in which the program can be improved. One is related to pharmacy participation in the program. Changes are needed to ensure that Part D treats pharmacies as Congress intended and to make the program friendlier to pharmacists and independent pharmacies.

As Senator BAUCUS, Senator LINCOLN, and my other colleagues and I talked to beneficiaries, pharmacists, pharmacy owners and prescription drug plans about changes that would make Medicare Part D work better, many of our discussions centered around how to make sure that Part D works not just
for the beneficiaries, the chain drug-stores, and the plans, but also for the local, independent pharmacies, the long-term care pharmacies, and the safety net pharmacies that many beneficiaries rely on. That is exactly what this bill is intended to do.

My colleagues and I hope with this bill to improve contracting for pharmacies, increase CMS's and prescription drug plans' customer service, and give beneficiaries better access to pharmacies. Let me give you some of the specifics of the bill.

First, the Pharmacy Access Improvement Act would strengthen standards for ensuring convenient beneficiary access to pharmacies. During the first two years of implementation, CMS has permitted some plans to meet the pharmacy access requirements in the law by counting non-preferred and out-of-network pharmacies. The plans charge higher cost-sharing at these pharmacies to discourage their use and drive utilization to preferred pharmacies. Counting non-preferred and out-of-network pharmacies to meet the access requirements is clearly not what Congress had in mind in establishing the beneficiary access guarantees in the law. To correct this problem, this bill would require that plans, with certain exceptions, count only ``open'' pharmacies, those that are accessible to the general public, in meeting the Medicare pharmacy access standard.

It also would require plans to count only their preferred in-network pharmacies, not the non-preferred pharmacies, in determining whether they meet the access standard.

The bill would allow pharmacies to initiate negotiations with plans under the ``any willing pharmacy'' provision regardless of whether they had already rejected, or failed to act on, previous offers from the plan.

The bill also would help ensure the inclusion of safety-net pharmacies in a prescription drug plan's network by preventing plans from specifically excluding 340B entities in the terms of their contracts. 340B entities include federally qualified health centers, migrant health centers, health centers for residents of public housing, school health centers, as well as black lung clinics, entities receiving grants for early intervention for HIV under the Ryan White Act, disproportionate share hospitals, and others. They serve more than ten million people.

Many of these entities operate their own pharmacies, which operate under different constraints than other retail pharmacies. They may have abbreviated hours or be available only to patients of the 340B entity. If 340B entities' pharmacies are not available as in-network pharmacies in Part D, these patients may have difficulty getting their prescription drugs.

The Model Safety Net Pharmacy Addendum was developed by the Centers for Medicare and Medicaid Services and the Health Research and Services Administration to facilitate 340B entities' participation in Medicare Part D. Because it takes the 340B entities' special circumstances into account, it has appropriate contract language for Part D plans to use when contracting with safety net pharmacies. Under the bill, plans would have to apply the Model Safety Net Pharmacy Addendum to their contracts if a 340B entity so requests.

The bill also would require plans to include a contract provision to allow these safety net pharmacies to waive cost-sharing if the entity so requests. Many safety-net pharmacies waive cost-sharing for their patients, but the Part D plan contracts typically prohibit this. Given that 340B entities serve low-income and poor populations, we believe those entities should be able to waive cost sharing for drugs, and our bill would facilitate that.

We have found that long-term care pharmacies similarly operate under conditions different from those of retail pharmacies serving the general population. For institutionalized populations, each resident's daily drugs must be specially packaged to help ensure that each gets the drugs meant for her, not for other residents. Long-term care pharmacies specialize in this, but the Part D rules to date do not adequately reflect how long-term care pharmacies work with long-term care facilities, which affects residents' access to these pharmacies. Our bill would require the Secretary to establish rules that include pharmacy access standards for long-term care residents.

Another problem that has arisen in the implementation of Part D concerns the ability of beneficiaries to obtain extended supplies of their drugs from a local pharmacy. Our bill therefore would ask the Secretary to establish standards for access to pharmacies that dispense extended supplies of covered drugs.

We have also heard from our local independent pharmacies that many, despite contract terms, face delayed payments from prescription drug plans. Given that the pharmacies must pay for their drugs on a more abbreviated schedule, these delays have created cash-flow crises for some pharmacies and put some at risk of closing. As much as I hate to legislate contract terms, I would hate more for the independent pharmacies in my State to close and my beneficiaries to be left without a pharmacy. In our bill, we would require plans to pay most pharmacies within 14 days upon receipt of an electronically submitted clean claim. For paper claims, they would have 30 days. If they were late, the prescription drug plans would have to pay the pharmacies interest. If a pharmacy submitted claims electronically and requested electronic payment, the plan would have to pay electronically.

Because long-term care pharmacies operate under unusual circumstances compared with retail pharmacies, our bill would allow pharmacies in long-term care facilities, or that contract with long-term care facilities, at least 30 days but no more than 90 days to submit their claims for reimbursement to the plans.

Another problem involves how plans use maximum allowable prices as the upper limit of what they will pay a retail pharmacy for the cost of a drug. What has come to light is that some plans will not disclose to the contracting pharmacies exactly what the maximum allowable prices are either when the contract is proposed to them or even after they sign the contract.

It seems unconscionable to me that a pharmacy would be expected to sign a contract where the price term is hidden and not disclosed. In the Medicare program, no other health care providers are subject to signing a contract in which they don't know what they will get paid.

Another abusive practice by some plans occurs when they do not update their maximum allowable prices in a timely manner. When a pharmaceutical company raises its price for a drug the pharmacy has to pay that new higher price right away. But the plan might not update what it pays for weeks. That leaves the pharmacy to absorb the difference. The plans that do this know exactly what they are doing. They know they are making the pharmacies eat the higher cost while they delay updating their payment rates. To address these concerns, the bill would require plans to disclose to pharmacies their ``maximum allowable cost'' pricing, and also to update those prices as they change, through an Internet website and a toll-free phone number.

Similarly, the bill would require plans to update their prescription drug pricing standard at least every seven days. The drug pricing standard changes frequently, and the price the pharmacy is paid is based on that standard, and so it seemed fair to us that the prescription drug plans' payments should reflect recent changes.

Our bill is intended to improve CMS's and prescription drug plans' service to pharmacies. It would require the HHS Secretary to establish a pharmacists' toll-free hotline. Prescription drug plans would have to establish separate pharmacists' and physicians' toll-free hotlines, and would have to comply with customer service standards established by the Secretary. We hope this will prevent pharmacists being placed on long holds when they have customers standing at the counter waiting for their drugs.

We have some questions about pharmacists' average dispensing fees, and under the bill the HHS Inspector General would conduct a study of dispensing fees, including studying whether the pharmacist is dispensing a standard prescription or an extended one; whether the pharmacist is in a chain store or an independent pharmacy; whether the pharmacy dispenses specialty pharmacy products, or is a long-term care pharmacy. The Inspector General's report would be due October 1, 2008.

I believe that with these changes, the Medicare Part D program will work even better for beneficiaries and for the pharmacies that serve them. As we refine the Medicare Part D program, we want to build on its success even as we hope to make it fairer to all the stakeholders involved, the beneficiaries, the pharmacies, the PDP plans, and the manufacturers. I believe this bill does just that.

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