Hearings to examine modernizing health care, focusing on how shoppable services improve outcomes and lower costs.

1[Senate Hearing 119-187]2[From the U.S. Government Publishing Office]34                                                        S. Hrg. 119-18756                        MODERNIZING HEALTH CARE:7                         HOW SHOPPABLE SERVICES8                    IMPROVE OUTCOMES AND LOWER COSTS910=======================================================================1112                                HEARING1314                               BEFORE THE1516                       SPECIAL COMMITTEE ON AGING1718                          UNITED STATES SENATE1920                    ONE HUNDRED NINETEENTH CONGRESS2122                             FIRST SESSION2324                               __________2526                             WASHINGTON, DC2728                               __________2930                            OCTOBER 22, 20253132                               __________3334                           Serial No. 119-163536         Printed for the use of the Special Committee on Aging3738[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3940        Available via the World Wide Web: http://www.govinfo.gov4142                                __________4344                   U.S. GOVERNMENT PUBLISHING OFFICE4561-906                  WASHINGTON : 20254647-----------------------------------------------------------------------------------4849                       SPECIAL COMMITTEE ON AGING5051                     RICK SCOTT, Florida, Chairman5253DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York54JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts55TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona56RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia57ASHLEY MOODY, Florida                ANDY KIM, New Jersey58JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland59                              ----------60                McKinley Lewis, Majority Staff Director61                Claire Descamps, Minority Staff Director6263                         C  O  N  T  E  N  T  S6465                              ----------6667                                                                   Page6869Opening Statement of Senator Rick Scott, Chairman................     170Opening Statement of Senator Kirsten E. Gillibrand, Ranking71  Member.........................................................     37273                           PANEL OF WITNESSES7475Mark Cuban, Co-Founder, Entrepreneur, Cost Plus Drugs, Dallas,76  Texas..........................................................     577Dr. G. Keith Smith, MD, Co-Founder, Surgery Center of Oklahoma,78  and the Free Market Medical Association, Oklahoma City,79  Oklahoma.......................................................     780Dr. Don Moulds, Ph.D., Chief Health Director, CalPERS,81  Sacramento, California.........................................     882Dr. Jeanne Lambrew, Ph.D., Director of Health Care Reform, and83  Senior Fellow, The Century Foundation, New York, New York......    108485                                APPENDIX86                      Prepared Witness Statements8788Mark Cuban, Co-Founder, Entrepreneur, Cost Plus Drugs, Dallas,89  Texas..........................................................    4690Dr. G. Keith Smith, MD, Co-Founder, Surgery Center of Oklahoma,91  and the Free Market Medical Association, Oklahoma City,92  Oklahoma.......................................................    4893Dr. Don Moulds, Ph.D., Chief Health Director, CalPERS,94  Sacramento, California.........................................    5095Dr. Jeanne Lambrew, Ph.D., Director of Health Care Reform, and96  Senior Fellow, The Century Foundation, New York, New York......    559798                        Questions for the Record99100Mark Cuban, Co-Founder, Entrepreneur, Cost Plus Drugs, Dallas,101  Texas..........................................................    67102Dr. G. Keith Smith, MD, Co-Founder, Surgery Center of Oklahoma,103  and the Free Market Medical Association, Oklahoma City,104  Oklahoma.......................................................    68105Dr. Don Moulds, Ph.D., Chief Health Director, CalPERS,106  Sacramento, California.........................................    69107Dr. Jeanne Lambrew, Ph.D., Director of Health Care Reform, and108  Senior Fellow, The Century Foundation, New York, New York......    72109110                       Statements for the Record111112Alex Oshmyansky, MD, Ph.D. and Mark Cuban Statement..............    77113American Hospital Association Statement..........................   308114Families USA Statement...........................................   311115Federation of American Hospitals Statement.......................   314116New York State of Health.........................................   316117Purchaser Business Group of Health Statement.....................   319118Purchaser Business Group of Health; Leveraging Health Care119  Statement......................................................   321120Small Business Majority Statement................................   506121122                        MODERNIZING HEALTH CARE:123                         HOW SHOPPABLE SERVICES124                    IMPROVE OUTCOMES AND LOWER COSTS125126                              ----------127128                      Wednesday, October 22, 2025129130                                        U.S. Senate131                                 Special Committee on Aging132                                                    Washington, DC.133    The Committee met, pursuant to notice, at 3:27 p.m., Room134216, Hart Senate Office Building, Hon. Rick Scott, Chairman of135the Committee, presiding.136    Present: Senator Scott, McCormick, Justice, Tuberville,137Johnson, Moody, Husted, Gillibrand, Warren, Kelly, and Warnock.138    Also present: Senator Marshall.139140                 OPENING STATEMENT OF SENATOR141                      RICK SCOTT, CHAIRMAN142143    The Chairman. The Senate Special Committee on Aging will144now come to order. Free market capitalism has helped make the145United States the envy of the world. It helps spur innovation,146keep costs down, and give consumers options, empowering them to147shop around and find what works best for them. When you shop148around, you think about price, quality, and value, and the free149market allows you to find the option that suits your needs and150your budget.151    For too long, Americans have been robbed of the ability to152make informed choices in healthcare because they don't have the153information they need. Our country has allowed the U.S.154healthcare system to operate in the shadows without price,155transparency, or true consumer choice. The result is a156complicated system of inflated "Is this the best doctor for my157needs?" We ask, is this doctor in my network?158    Instead of asking if the cost of the surgery or medicine159could be more affordable or better quality elsewhere, we ask160how much is the copay? Trying to navigate the bureaucracy to161get answers to healthcare costs and pricing can be incredibly162intimidating, especially for vulnerable populations like many163in our aging community with healthcare emergencies happen and164we don't always have time to research and shop around for our165best option, but for a huge section of our healthcare needs,166there is clearly a better way to operate for everyone from167patients to doctors.168    What I'm talking about is known as shoppable services and169they include elective surgeries, lab tests, prescription drugs,170and more. These kinds of healthcare services make up roughly 40171percent of all healthcare costs and there is significant172potential to introduce consumer-driven, free market reforms173like price and transparency into this space to help drive down174healthcare costs for all Americans, including our aging175population.176    We know some sites and pharmacies charge more than others177for these exact same shoppable services. For example, hospitals178charge more than ambulatory surgical centers. In Medicare, we179try to address this problem through site neutral payment180reform, but in the commercial insurance space, things get more181complex. That's because in the current commercial marketplace,182it's up to every insurer to reach a cost arrangement.183    With healthcare providers, those agreements have different184reimbursement rates and those differences get passed on to185consumers at different rates. Because of these agreements, the186cost differences are not always tied to quality, meaning two187patients could be receiving the same treatment, but one could188be paying significantly more because of the cost agreement made189behind closed brewers and they can actually get a completely190different quality and different service not tied to price at191all.192    For example, MRIs or essentially fancy command cameras that193take lifesaving pictures. You have a digital camera, you have a194phone, how much your neck picture costs, yet there's a wide195disparity in pricing and cost passed on to the patient196depending on their insurance provider. Lab tests, they're the197same. The cost of the test can vary widely by providers, but198you're receiving the same quality lab result no matter what you199or your insurance provider is paying generic drugs, which is up200to 90 percent of the drugs dispensed.201    At Affirmity Pharmacy, there typically isn't upfront price202transparency for conservative price shop. That makes no sense,203and I typically quote more specific price examples, but204providers don't like to publicly list their prices and rely on205hiding the actual cost of services they're providing. Not only206does this secrecy make it difficult for consumers to make smart207market driven choices, it allows prices to inflate and drives208up cost for everyone.209    Price transparent transparency is not a partisan concept.210It's common sense. When patients can see prices, they can make211informed choices. When providers compete on price, quality and212costs go down price, when they compete on price and quality213costs go down because we don't operate this way right now,214there's too much inflated pricing in the healthcare system, and215that's true whether you're in New York or whether you're in216Florida.217    The current system simply does not incentivize people to218seek lower cost options. Healthcare doesn't have to be any more219complicated than a lot of other things. I spent most of my life220in business and I've run one of the largest healthcare221companies in the world. I learned pretty quickly that when you222make things simple, give people price, transparency and focus223on outcomes and quality, the result is lower costs, healthier224patients, and a better system for everybody.225    Today, we have the opportunity to hear from witnesses who226have put what I've said into action and look forward to hearing227how they are working to provide service for our aging228population and all Americans. I'm also eager to hear their229thoughts on how we can work to empower patients to make230decisions and reduce some of the inflated costs in our231healthcare system.232    Hope today's hearing will be the start of the discussion on233how price transparency and competition can drive down costs,234improve quality for all Americans, but especially our agent235population. Now, I welcome my ranking member, Senator from New236York, Senator Gillibrand, for her opening statement.237238                 OPENING STATEMENT OF SENATOR239             KIRSTEN E. GILLIBRAND, RANKING MEMBER240241    Senator Gillibrand. Thank you, Chairman Scott, and thank242you for calling today's hearing. Thank you to all our243witnesses. This is going to be an excellent hearing. Everyone244in this room today is here because we all agree that the cost245of healthcare is too high in the richest country in the world.246    It is unacceptable that one in three adults skip or247postpone getting healthcare that they need because of the cost.248It's unconscionable that one in three adults do not take their249medication as prescribed because of costs. This afternoon, we250will hear from a wide range of witnesses who will share their251expertise on how Americans' ability to shop for health plans,252medical services, and drugs can help them access the care they253need at a cost they can afford.254    Every year during open enrollment, tens of millions of255Americans visit the Health Insurance Marketplace to shop for a256plan that works for their family. They're able to see if plans257include the doctors that they need or the medications that they258need and weigh the differences between them based on premium259costs, deductible amounts, and other factors that matter their260households. It's the ultimate shoppable service.261    Unfortunately, at the end of this year, crucial tax credits262that help hardworking families afford the Marketplace health263plans are going to expire. On average, these families will have264to pay more than twice as much for their premiums in 2026, and265many enrollees will have to pay more. It's a cost they266definitely can't afford.267    Nearly five million Americans will likely lose their268healthcare coverage and become uninsured. These enhanced tax269credits particularly help many of the five million adults270between the ages of 50 and 64 who buy their insurance through271the Marketplace. These enrollees are people who've had to scale272back hours at their job to care for aging parents, people273forced to work part-time until they retire because of a274physically demanding career, or people who retire early and275can't get private insurance because of preexisting conditions.276    Over half of the people said to lose tax credit eligibility277altogether are within this age range, many within an income278level just above the eligibility cutoff for the standard tax279credit. By January, they could pay tens of thousands more in280premium costs. That's a lot of money out of your pocket when281you're trying to save for your retirement.282    In nearly every state, because of age rating, older adults283can already pay nearly three times as much as younger adults do284for the same plan. Losing tax credit eligibility will compound285those higher costs. These older enrollees also have greater286healthcare needs. Even if their premium costs increase287dramatically, they're more likely to keep their bank-breaking288coverage and be forced to make difficult choices between basic289necessities, whether it's food or rent. Older adults who290ultimately lose their coverage may avoid seeking care until291their needs become an emergency and will then enter the292Medicare program at 65 in poor health and ultimately require293more cost-intensive care.294    I've heard from a lot of constituents across the state295about the positive impacts these enhanced premium tax credits296have had on their ability to live with dignity, and potentially297have to make those devastating choices that will make it very298difficult to survive. One constituent asked, "Do I pay for my299healthcare coverage and be healthy, or pay for the food that I300feed for my family? This is what it comes down to. I'm always301going to choose my family."302    "So now, if I go to a doctor for my debilitating migraines,303or my diabetes, or emergency care, I'll have to pay more out of304pocket because I can't afford the premiums," another305constituent shared. "I depend on my health insurance for daily306medication, frequent appointments, and procedures. I'm a New307Yorker who has worked full-time since I was 19 and still can't308get ahead in life. I can't afford to see doctors without309insurance, and my employer plan is unaffordable. What am I310supposed to do?"311    These enhanced premium tax credits have been a key driver312of the record 24.3 million Americans being signed up for313coverage in the Marketplace. They play a vital role in bringing314down the cost of accessing high-quality care. For many315enrollees, the cost of care is still incredibly high, and this316is not the entire solution, but it will address an urgent317affordability crisis that's happening right here, right now.318    For example, people in Idaho have already started signing319up for coverage, and in less than 10 days, people across all320the other states will too. If Congress doesn't act to extend321these credits before enrollment begins, Americans will322experience sticker shock at the rate hikes and may decide to323drop coverage with only a very slim possibility of them ever324being able to come back.325    I stand ready to work with my colleagues on this to reach a326bipartisan deal and extend the critical tax credits that will327allow consumers to shop for healthcare plans that cover the328cost of medical services, and drugs and what they need to get329for their healthcare.330    I look forward to the discussion about how to lower costs.331I know you all have some really great ideas that I want to hear332about, and I'm excited that this committee is working on how333can we best lower costs. Thank you.334    The Chairman. Thank you. Now, I'd like to welcome our335witnesses, all of whom are at the forefront of challenging the336status quo in today's healthcare system.337    First, I'd like to recognize Mark Cuban our second Shark.338This year Mr. Cuban is the co-founder of Cost Plus Drugs339company, an innovative online pharmacy that's changing how340Americans purchase their medications.341    At his company, he lists the medications actual costs as a34215 percent transparency markup and sells directly to consumers.343For millions of Americans struggling with high prescription344costs, especially seniors on fixed incomes, this model has345shown that transparency and competition can deliver real346savings.347    Thank you for being here. You may begin your testimony.348349           STATEMENT OF MR. MARK CUBAN, CO-FOUNDER,350          ENTREPRENEUR, COST PLUS DRUGS, DALLAS, TEXAS351352    Mr. Cuban. My Shark Tank companies hate selling on Amazon,353but most don't have a choice. About 162 million Americans shop354there, and if you want to reach them, you have to play by355Amazon's rules. Amazon knows this and takes full advantage356adding, and raising fees, and even launching competitive357knockoffs. They get away with it because they control the358marketplace, and because 162 million people shop there, which359makes Amazon incredibly sticky.360    What does that have to do with healthcare? Insurance361companies work the same way. Over 300 million Americans have362some kind of coverage, commercial, ACA, Medicare, or Medicaid.363Every one of those plans hires a pharmacy benefit manager, or364PBM, to run their drug benefits. The biggest PBMs all owned by365the largest insurance companies, control pharmacy benefits for366about 270 million Americans. That's a lot of power, and that's367also 70 percent more people than Amazon reaches.368    Like Amazon, PBMs control the store shelves, but their369shelves are called formularies; the list of drugs your370insurance will cover. If a drug isn't on the formulary, it's371invisible to doctors and patients.372    Here's the kicker. Unlike Amazon, which wants lower prices,373PBMs actually prefer higher prices. They say they negotiate374lower drug costs, but they don't. They auction off access to375their formularies to the highest bidders. Drug companies pay376their rebates and fees. PBMs demand so their drugs can be377covered and prescribed. If they don't pay, they lose access to378millions of patients and plenty of doctors costing them379billions.380    These rebates and fees are based on a percentage of a381drug's list price called WAC, the wholesale acquisition cost.382The higher the list price, the more money PBMs make. Because383PBMs are so powerful, that inflated list price becomes the384reference point for the entire drug supply chain.385    Take a hypothetical $600 brand name drug. The PBM strongly386suggests the manufacturer set the price at $600 with a 50387percent rebate, and another 10 percent in fees, leaving the388manufacturer with $240 net. Meanwhile, wholesalers buy the drug389at that same $600 list price. How many industries do you know390where the wholesalers pay the full list price?391    The three major wholesalers all use the same list price and392get paid almost identical fees. There's zero competition, and393their fees are also because they're tied to list price. They394make more money when prices rise. Pharmacies buy from395wholesalers at about a five percent discount. You think PBMs396would reimburse them more than their costs so they can make a397profit? They don't.398    When a pharmacy fills a brand prescription for an insured399patient, it's often reimbursed less than what it paid for it.400If it doesn't fill enough of those money-losing prescriptions,401PBMs or wholesalers can penalize them. It's no wonder402independent pharmacies are disappearing.403    Now, what does the patient pay? If they're uninsured, they404pay that $600 list price. If they're insured but haven't met405their deductible, they still pay the full $600. That's crazy.406We were told that PBMs negotiate lower prices for patients, but407they're so bad at their jobs, they can't even get patients a408deal that's better than the retail price. The rebates and fees409that they collect on that $600, flows straight from the410patient's pocket to theirs.411    Patients are getting ripped off because PBMs and412wholesalers insist on using inflated list prices instead of413transparent net prices. Because the whole system is built414around list prices, everyone, PBMs, wholesalers and insurers415have an incentive to keep prices rising and they almost always416do. It's costing patients' tens of billions of dollars and417forcing many to go without the medications they need.418    Here's the saddest part. Self-insured employers, states,419the Federal Government, they all keep on signing contracts that420lock in this broken system. We blame PBMs, but the real problem421is the CEOs, administrators, and state officials who keep422renewing these contracts. Every one of them complains about423rising healthcare costs while signing deals that make prices go424up.425    Big-brand Pharma is part of the problem, too. They hate426PBMs, but still play along. If manufacturers, wholesalers, and427payers, moved to net pricing, meaning the price after all428rebate and fees, patients' out-of-pocket costs could drop by429half overnight, saving patients billions every year.430    There's a reason the U.S. has the highest drug prices in431the world. We're the only country that uses PBMs. There's a432reason we have some of the lowest price generics; PBMs can't433control generic pricing from companies like Cost Plus Drugs.434What do we do? One, count all cash payments toward deductibles.435Two, based patient out-of-pocket costs on net price, not list436price. Three, separate formularies from PBMs to end their437power, and four, specialty tier, it's just an excuse to charge438more.439    Fix that, and we finally put patients, not PBMs, back at440the center of American healthcare. Thank you.441    The Chairman. Thank you. Next, I'd like to introduce Dr.442Keith Smith, co-founder of the Surgery Center of Oklahoma, and443the Free Market Medical Association. Dr. Smith is a nationally444recognized leader in healthcare transparency and free market445reform.446    More than 25 years ago, he helped establish the Surgery447Center of Oklahoma, one of the first facilities in the Nation448to post all-inclusive upfront prices for every single surgical449procedure covering the surgeon, facility, and anesthesia, all450in one transparent bundle. His center consistently delivers451care at a fraction of the cost of traditional hospital452settings, while maintaining exceptional outcomes and patient453satisfaction.454    In addition to his clinical work, Dr. Smith co-founded the455Free Market Medical Association, which brings together456physicians, employers, and patients to promote transparent,457market-driven solutions in healthcare. His leadership has458inspired similar models across the country, proving that when459providers compete on price and quality, patients win.460    Dr. Smith, thank you for being here today. Please begin461your testimony.462463        STATEMENT OF DR. G. KEITH SMITH, MD, CO-FOUNDER,464465        SURGERY CENTER OF OKLAHOMA, AND THE FREE MARKET466467          MEDICAL ASSOCIATION, OKLAHOMA CITY, OKLAHOMA468469    Dr. Smith. The Surgery Center of Oklahoma was founded in470May 1997. The goal was to gain control of the medical and471financial treatment of our patients. The problem was that even472a minor surgical procedure performed at a large hospital meant473bankruptcy for many patients, including insured patients.474    Consistent with their attempts to maximize revenue, big475hospitals denied physicians many times the tools and supplies476they thought appropriate to treat patients, and yet, hospitals477continue to book ever-increasing profits even today.478    I've changed this model. Our model is grounded on mutually479beneficial exchange. While we save patients tens of thousands480of dollars currently the only ones walking through our door,481patients paying for their own care are about half the482population. Because if someone else is paying, they don't shop483or care how expensive something is.484    We were excluded from insurance from the very start, which485meant that we had to be creative. We started quoting patients'486all-inclusive prices. It was simple math. What fee did the487surgeon think was fair? What was fair for anesthesia, and what488was the time and materials-based charge for the facility? It489turns out that our prices were usually less than the patients490in-network deductible and copay.491    Today, our total charges are still only one-sixth to one-492tenth of what large hospital systems near us charge for the493same procedure, and even more extreme price discrepancies are494routine. In fact, we recently performed a tonsillectomy on a495child for $3,875 after the family had been quoted $72,000 by a496Dallas area hospital. Our prices remain half what Medicare pays497big hospitals and less than what Medicaid payments are to the498hospitals for the very same procedure.499    The Surgery Center of Oklahoma quoted prices over the phone500to patients until 2009, which is when I launched the first501website displaying all-inclusive surgical prices. I had three502goals in mind, all of which I would argue have been achieved.503First, I wanted sticker-shocked patients to easily find us.504Second, I wanted to start a price war so patients far from505Oklahoma could use our pricing as leverage in their local506market. Third, I wanted to better understand why the same507market discipline other industries must endure was seemingly508not a thing in healthcare.509    The first patients to arrive after posting our prices were510Canadians. These patients are forced to wait in lines longer511than the misery they can endure without care. Then, it was the512uninsured beneficiaries of self-funded health plans, and513members of cost sharing ministries. Approximately, half our514patients travel from out of state or out of the country to515Oklahoma City for their surgical care.516    As news of the success of our model has grown, so has the517number of facilities, and I'm happy to report large hospitals518who have now copied us price matching in the industry has had a519deflationary effect even on the price gouging facilities as520they stand to lose business and patients if they don't compete.521    Our model also increases the quality of care because522physicians with unpredictable outcomes shy away from this523tightly disciplined space. The good surgeons would rather524perform a surgery at my facility due to better conditions and525the higher pay they actually receive while building the surgery526center and changing the market.527    My mission is now grown. I now also run Atlas Billing528Company, which facilitates payment bundles for the Surgery529Center of Oklahoma, and is now curating and implementing530surgical bundles for many other facilities now attempting to531accommodate price-sensitive buyers and patients.532    I'm also co-founder of the Free Market Medical Association,533a mission-driven organization that works to bring buyers and534sellers together in the United States, promotes market535discipline in the industry, and now has 37 state chapters.536    To the industry big shots, or as I call them, the cartel,537the healthcare system in this country isn't broken. It's538working exactly as it was designed, meant to enrich the539corporate elite and intermediaries at the expense of patients540and the American people at large.541    Fortunately, the alternative approach I've described is542becoming more widespread as insurance deductibles balloon, and543delays and denials become more commonplace. Affordable, high-544quality care is fortunately available for victims of the545system. I predict that shoppable medical services will become546particularly critical for older Americans as an increasing547number of physicians opt out of or severely curtail their548exposure to Medicare. Thank you.549    The Chairman. Thank you, Dr. Smith. Now, I'd like to550introduce Dr. Don Moulds, the Chief Health Director for the551California Public Employees Retirement System, CalPERS. Dr.552Moulds oversees one of the largest public health purchasers in553the United States, governing more than 1.5 million public554employees, retirees, and their families.555    Under his leadership, CalPERS pioneered the use of556reference-based pricing, where they set clear benchmarks for557elective procedures like joint replacements that allowed558patients to shop for care that meets both cost and quality559standards. Dr. Moulds brings valuable insight into how large560purchasers can use data and competition to make healthcare561markets work the way every other market due to the benefit of562the consumer.563    Thank you for being here. Please begin your testimony.564565           STATEMENT OF DR. DON MOULDS, PH.D., CHIEF566        HEALTH DIRECTOR, CALPERS, SACRAMENTO, CALIFORNIA567568    Dr. Moulds. Chairman Scott, Ranking Member Gillibrand,569members of the committee, thank you for inviting me to testify570on behalf of the California Public Employees Retirement System.571My name is Don Maltz and I serve as Chief Health Director for572CalPERS with more than 1.5 million members.573    CalPERS is the largest commercial health benefits purchaser574in California, and the second largest commercial purchaser in575the Nation. We contract with numerous large health insurance576companies to provide our members with a variety of health plan577offerings. In 2024, we spent about $12.5 billion dollars to578purchase health benefits for active and retired members and579their families.580    CalPERS employs a range of innovative cost containment581strategies to address rising medical costs. Among these is582reference-based pricing, which is proven to be an effective583tool for addressing shoppable services that tend to vary584greatly in price.585    In 2011, CalPERS implemented a reference pricing program586for hip and knee replacements, which are good examples of587services with significant cost variation across facilities.588Through this program, 46 California hospitals that met quality589standards agreed to a fixed price of $30,000 for these590surgeries. Members who chose reference price facilities paid591standard co-insurance, while those who opted for non-592participating facilities were responsible for any costs above593the reference price. In addition to their standard co-594insurance, within two years, the program increased the portion595of members that used the preferred facilities from about 50596percent to 64 percent.597    What was particularly noteworthy was that the non-598referenced price facilities reduced their charges to meet the599CalPERS reference price. As a result, price variation decreased600dramatically. The average price dropped from $35,000 to601$25,000, while the non-referenced price facilities dropped602their prices from $43,000 to about $27,000.603    While we anticipated savings from the consumer choice604effect, the most significant impact was the downward pressure605on the market. Overall, the program remains in place today, and606our analysis reveals sustained savings of approximately four607million annually through 2020.608    In 2012, CalPERS introduced a second reference pricing609program for colonoscopy, cataract, and arthroscopy services,610establishing a set reference price for procedures performed in611hospital outpatient settings to incent members to choose612ambulatory surgery centers, which are comparatively less613expensive and higher quality.614    As with hip and knee replacements, we saw members choose615the more cost-effective sites of care, resulting in five616million in savings per year. An average reduction of 21 percent617for these procedures. CalPERS extended its ambulatory surgery618center-referenced pricing program to 12 additional procedures619in 2018.620    Last year, CalPERS implemented a member incentive program621to encourage members to use independent labs instead of much622more costly hospital-owned labs. Early data suggests that623preferred lab use increased by modest four percent in that624first year and saved our members $2.4 million in the first625year.626    This program is different from earlier reference pricing627programs in that it eliminates cost sharing for members using628the low-cost labs, but does not increase their cost sharing for629using higher price labs.630    Reference-based pricing has shown promise, but it does have631its limits for smaller purchasers. Without the data resources632of CalPERS, access to transparent pricing information is633critical. Moreover, research suggests that if implemented as634broadly as possible, reference pricing only saves about five635percent of total cost of care.636    Overall savings are limited by the small number of637procedures where reference pricing makes sense. While reference638pricing is well-suited for non-emergent elective procedures639with significant price differences, many healthcare services640are far less shoppable. This is one of the reasons why CalPERS641adopts a broad-based approach for reducing costs. For example,642we have included cost trend guarantees in our newest contracts643with our third-party administrators and our pharmacy benefits644manager in order to achieve critical financial alignment.645    Addressing high-cost markets is also a priority. CalPERS646pace prices that are about one-third higher in Northern647California than it does in Southern California, largely because648of a comparative lack of provider competition in the north.649    Thank you again for inviting me to participate in today's650hearing. CalPERS is proud of the savings we've achieved through651our reference pricing programs, which is one part of the kind652of broad-based approach that is necessary to reign in653healthcare costs.654    I welcome your questions.655    The Chairman. Thanks for being here. Now, I'd like to turn656it over to Ranking Member Gillibrand to introduce your witness.657    Senator Gillibrand. Thank you, Chairman Scott. I want to658move to introduce our final witness, Dr. Jeanne Lambrew. Dr.659Lambrew is the Director of Healthcare Reform and senior fellow660at The Century Foundation, previously having served in661President Obama's Administration, first as director of the662Office of Health Reform at the U.S. Department of Health and663Human Services, where she worked to ensure passage of the664Affordable Care Act.665    Dr. Lambrew served as President Obama's Deputy Assistant666for Health Policy, where she helped to guide the implementation667of the Affordable Care Act. Most recently, Dr. Lambrew served668as the Commissioner of Maine's Department of Health and Human669Services following her appointment by Governor Janet Mills.670    Thank you for being here, and you may begin your testimony.671672        STATEMENT OF DR. JEANNE LAMBREW, PH.D., DIRECTOR673674         OF HEALTH CARE REFORM, AND SENIOR FELLOW, THE675676             CENTURY FOUNDATION, NEW YORK, NEW YORK677678    Dr. Lambrew. Chairman Scott, Ranking Member Gillibrand, and679members of the committee, thank you for the opportunity to680testify today.681    As you've heard from other witnesses, competition,682streamlining, and shopping can optimize value. However, the683nature of illness, and injury, and their costs, means that most684people can't finance healthcare on their own. This is why every685industrialized nation has some sort of health insurance system.686As such, I'll discuss shopping and transparency for health687plans rather than health services, with a focus on older688Americans purchasing coverage on their own.689    The Affordable Care Act created a shopping platform called690Health Insurance Marketplaces. Marketplaces offer health plans691that have different levels of coverage. Shoppers can see if692their doctors or drugs are covered, and some marketplaces are693active purchasers requiring insurers to use some of the694strategies discussed here today.695    This shopping experience is enhanced by premium tax696credits. These credits are competitively set based on a697benchmark plan. Currently, eligible employees pay no more than6988.5 percent of income for that benchmark plan, with lower699income people paying lower percentages. These tax credits are700like vouchers. With your tax credit, you can shop for any plan701in the Marketplaces.702    While improvements can and should be made, the Marketplaces703work. Premium growth has averaged just two percent in the past704five years, choices have expanded, and enrollment doubled since7052020 to 24 million people. About half of these people are self-706employed, or small business workers, and many are rural707residents or veterans.708    Marketplace coverage is especially important for older709Americans. Nearly one in four Marketplace enrollees is aged 55710to 64. Nearly one in ten older Americans relies on coverage711purchased on their own, and the uninsured rate among people712ages 50 to 64 has dropped by 50 percent due to Marketplace713changes and the other ACA reforms.714    This is about to change. The budget reconciliation law and715recent rules will reduce Marketplace coverage. Moreover, the716enhanced premium tax credits currently in place will end in717December. As a result, the average Marketplace enrollee will718pay more than twice as much out of pocket for premiums starting719in January.720    There's no historical precedent for such a large 1-year721increase for so many Americans. The cost increase will be even722higher for people with incomes above 400 percent of the federal723poverty level if the cutoff of premium tax credits is724reinstated. Over half of people losing tax credit eligibility725will be people ages 50 to 64.726    For example, a 60-year-old couple with income of $85,000,727will face an average increase of $22,000. This represents 27728percent of their household income. The impact varies by729location. The same couple will pay $28,000 more in Savannah,730Georgia, and about $31,000 more in Caribou, Maine.731    To put this into context, if this couple paid that extra732amount until they become Medicare eligible, it will consume733over 60 percent of the typical retirement savings. Others will734simply be unable to afford these premiums. They'll become735uninsured. Older people losing coverage are at greater risk of736unmet needs, worse health, and premature death.737    The impact will extend to other Americans as well. Medicare738costs are likely to rise to pay for the unmet needs of739previously uninsured enrollees. The individual market stability740and affordability will be reduced according to all insurance741commissioners across the country, and in the words of the742American Hospital Association, there will be an impact on the743entire community, even those with coverage, because of an744influx of uninsured patients into emergency departments causing745longer waits, stressing the whole healthcare system, and the746inability to get the care that they need.747    In conclusion, Americans want clear choices and affordable748options for health coverage as well as healthcare. Extending749tax breaks for private health insurance can help achieve that750goal.751    Thank you for the opportunity to present this testimony.752    The Chairman. Thank you. Now, we'll go to questions. We'll753start with Senator Tuberville.754    Senator Tuberville. Thank you, Chairman. Thanks all of you755for being here today and talking about a subject that's very756important to all Americans across the country, and as Dr. Smith757said, an out-of-control healthcare system, which it is.758    Mr. Cuban, innovative companies like Cost Plus Drugs have759already proven that bypassing traditional PBMs can deliver real760savings at pharmacy counters. President Trump has announced761Trump RX, a new website to connect patients directly with the762best prices. How might Trump, and RX, and direct patient763programs improve affordability for patients, your basic, while764you're doing this?765    Mr. Cuban. Yes. I mean, we'll work with Trump RX. I mean,766it's incredible. It's stupendous. It's like the most incredible767program ever, and so, we're excited to offer them our API so768that they'll be able to download our daily prices so when they769go down, everybody benefits.770    Plus, I like what they're doing with the MFNs because as I771mentioned in my comments, our brand drugs are more expensive772because PBMs are involved, and with Trump RX and the MFN773program, that allows manufacturers to work around the PBMs and774work directly to patients. I think it'll save seniors. It'll775save everybody a lot of money.776    Senator Tuberville. You think this is the future?777    Mr. Cuban. I don't think it solves the ultimate problem of778how the system is designed, but I think it's something that we779obviously agree on because that's what Cost Plus Drugs is; we780publish our entire price list every day.781    Senator Tuberville. Your company posts drug prices with782full cost breakdowns. How does this transparency help save783patients money?784    Mr. Cuban. I mean, you know, with costplusdrugs.com, any785patient can just go look at their price for their medication,786and so there's no uncertainty, but more importantly, by seeing787our markup of only 15 percent and seeing our costs, that builds788trust. I always tell everybody in our company that what we789really sell in this industry is trust. I think that's what's790really allowed us to grow so quickly.791    Senator Tuberville. If you sold Ozempic and somebody else792went through PBMs how much cost would they save?793    Mr. Cuban. Well, if you look at what's happening now where794the PBMs work with sponsors, they're typically being charged795$1,300. If you look at the direct-to-consumer programs that are796being put out there by Novo and Lilly, it's $499 or less and797probably falling. There's already a significant difference, and798the crazy part is that difference of $800 typically goes right799into the pocket of the PBM, who then decides how much they're800going to give to the employer. It's a huge amount as of right801now.802    Senator Tuberville. Thank you. Dr. Smith, the Surgery803Center of Oklahoma has proven that real price transparency can804lower cost and improve patient access, which is something we805often hear discussed in the context of PBMs and prescription806drugs.807    What inspired you to create this transparent surgical808model, and what parts of the traditional healthcare system,809much like PBMs in the drug space, were you trying to get810around?811    Dr. Smith. Well, we started the Surgery Center of Oklahoma812because, frankly, practicing in a big hospital as an813anesthesiologist, I served as an accessory to a financial814crime. Surgeons were also being denied the tools, many of them815required to appropriately treat patients due to the cost-816cutting measures at hospitals trying to maximize the revenue.817    I didn't grow up in a home like that. I grew up--it was a818golden rule; mutually beneficial exchange. As a hospital-based819physician, the only way I could escape that was to own and820control my own facility. Where I was responsible to the821patients, not just for the medical treatment, but also the way822financially we dealt with them.823    If a patient asks, you know, "What can you do about this824bill?" My answer was everything including not charge them.825We're in a good position to be charitable on an individual826basis. That's really the answer. We started it because we827wanted to be in control of the medical and the financial828journey the patient had in their healthcare experience.829    Senator Tuberville. You know, some people argue that830patients won't shop for care, or that is too complicated to831understand. Do you think that is true? What savings have you832seen for patients when prices are available?833    Dr. Smith. Well, patients will not only shop for care, but834they'll vote with their feet. Half the patients we see at835Surgery Center of Oklahoma do not live in Oklahoma, and we see836patients from Europe, and Africa, all over the United States.837    Self-funded employers see such an insane price difference838between our prices and the local hospital where they're doing839business. They waive all out-of-pocket for those employees and840a companion to fly to surgery at General Oklahoma and have841their procedure, and not just us, but those who've copied us.842    People will shop, and they'll travel, and furthermore,843they'll hold our price up in front of their local hospital and844tell them, match this, or I'm going to Oklahoma City. We had a845patient from Georgia that was going to be charged 40,000 for a846urologic procedure, and our online price was 4,000, and the847hospital matched our price. Because that would've been the848second patient that month that came to Oklahoma City, and they849didn't want to see that. The patient reached out to me later850and said, "You saved me $36,000, and you didn't even perform851the surgery."852    There is a market that is developing. It's a competitive853market. It's driving prices down. It's driven prices down854Oklahoma City, I know, and quality goes up at the same time.855    Senator Tuberville. Thank you for what you're doing. Thank856you, Mr. Chairman.857    The Chairman. Thank you, Senator Tuberville. Ranking Member858Gillibrand.859    Senator Gillibrand. Thank you very much. Ms. Lanmbrew, why860do so many adults between the ages of 50 and 64 rely on the861enhanced premium tax credits, and how do you anticipate adults862between the age of 50 and 64 will be impacted if these enhanced863premium tax credits are not renewed? How will they be able to864save for retirement? What will the impact be?865    Dr. Lambrew. Yes. Just to start with--we know that as866people approach age 65, they often go to part-time work, some867retire early, some are forced to retire early. Those working in868a hard construction job or some other physical job just can't869make it till age 65 when they can enroll in Medicare, which is870why we really see 23 percent of all of our marketplace871enrollees are in that age group versus 15 percent of the rest872of the population, so it definitely is a more important source873of coverage for that group.874    It's also important for rural areas where we also know875residents are older. Farmers typically don't get employer-based876insurance. They have to buy coverage on their own. We just know877that these demographics make it more important for them, and878the numbers are pretty stark that the cost of health insurance879across the board is too high.880    We should look at all available options to lower employer881coverage, Medicare, Medicaid, and Marketplace coverage, but for882these people right now to be facing these kinds of numbers,883again, an average of over $20,000 for a couple at 60, that is884impossible for a lot of these families to deal with, but your885choices are, if you're chronically ill, do I pay that amount to886maintain my coverage or do I become uninsured? And what does887that mean?888    I do wish many of these programs that we're talking about889today would be a solution for those people. They will help. I890have no doubt that these will help, but I think there's more891that will be needed for people who are older, chronically ill,892who are about to face these hard, large coverage or large out-893of-pocket premium increases.894    Senator Gillibrand. Thank you, Doctor. Mr. Cuban, can you895speak to this conversation about unaffordable deductibles? Can896you talk a little bit about what this will result in, whether897it's increased hospital visits, emergency room visits. What898does this vicious cycle of unaffordable healthcare cost lead899to, and how does it stress the healthcare system?900    Mr. Cuban. Well, no matter what your premiums are and you901pay them, if you can't afford your deductible, you don't really902have insurance, and what ends up happening is either you go to903the emergency room, you do nothing at all, or you are at the904mercy of the provider hoping they can provide some sort of905financing for you. Either way, it creates very difficult906situations for seniors, for entrepreneurs, for anybody in that907situation.908    You know, as I alluded to in my comments, we don't do909anything to help people who are unable to afford their910deductibles, and in fact, we make it more difficult. Dr. Smith911alluded to the fact that, you know, the cost of a surgery could912be extremely high, and if you can't afford your deductible, you913can't get it. In the case of pharmacy benefits, if you have a914drug like Eliquis where the list price is $600, and you have a915$4,500 deductible under an ACA silver plan, you're going seven916months having to pay full list price, and if you can't afford917to do that, you're out of luck.918    Senator Gillibrand. Right. Dr. Smith, you mentioned how an919increasing number of physicians are either opting out or920severely limiting their exposure to Medicare patients. Why are921physicians increasingly dropping Medicare, and how are these922patients going to get the care they need?923    What factors are driving up the cost of providing care,924particularly for older adults, and what can be done on the925federal level to provide greater stability for these practices926to enable them to treat older adults?927    Dr. Smith. Yes, I think Medicare is a burdensome quagmire.928It's heavily regulated. I probably get 10 emails a day asking929me to pay somebody to attend a course to figure out how to930navigate this new regulation that's come out. It's very931burdensome.932    Also, the payments to individual physicians. The933independents have not really kept up, and frankly, they've been934wrong. Top-down pricing seems to always be wrong. It's either935too high or too low, and that's what happened when RBRVS came936into place in 1992. True pricing comes from market activity,937and that's absent in the Medicare program.938    Senator Gillibrand. That's right.939    Dr. Smith. When an anesthesiologist like me is paid $78 for940the anesthesia required for a surgeon to do a knee replacement,941that's a message, and message sent, message received. The last942open-heart surgery for which I provided anesthetic in 1992,943Medicare paid me $285. I knew it wasn't personal. You know,944prices are just signals, and that wasn't personal.945    That was just an idea of what my time was worth, and I946walked away, and I haven't accepted Medicare payments since I947treat patients free of charge instead of file claims, but it's948payments, and its regulatory burden, and frankly, risk.949    Senator Gillibrand. Yes. Thank you.950    The Chairman. Thank you. Senator Johnson.951    Senator Johnson. Mr. Chairman, again, excellent hearing. I952think it's kind of notable when you have a hearing on how to953improve outcomes and lower costs. Most Republicans show up, we954have the ranking member here on the Democrat side. It's pretty955interesting. We're looking ahead on how to do that, but I think956in order to fix a problem, you have to really define what the957problem is. You have to look at the past, and I don't want to958dwell too much on the past, but right now there's been a lot of959talk about extending the enhanced temporary subsidies that were960put in place to help people through the pandemic.961    I have talked a little bit about Obamacare, and Ms.962Lambrew, you were part of the Obama administration during the--963after the passage, but leading up the implementation of it.964    Dr. Lambrew. Correct.965    Senator Johnson. You were there when President Obama was966out there saying that Obamacare would lower the average premium967for a family by $2,500 a family. Correct?968    Dr. Lambrew. I was there when we talked about slowing the969growth of healthcare. Yes.970    Senator Johnson. President Obama made that claim, right,971$2,500 lower premium per family. Correct?972    Dr. Lambrew. Over time with slower growth.973    Senator Johnson. Okay. That hasn't panned out, has it?974    Dr. Lambrew. It has.975    Senator Johnson. It has not.976    Dr. Lambrew. We have seen slower growth in the health977insurance profit base.978    Senator Johnson. Inflation has gone up 39 percent since9792013. I've seen, again, it's very difficult because you have a980whole range of premiums, but just one benchmark premiums up to981118 percent. That's three times the rate of inflation, so no,982that was, did not occur.983    Premiums have skyrocketed because of the faulty design of984Obamacare. President Obama said, you can keep your doctor, you985can keep your healthcare plan. That was PolitiFact 2013 "Lie of986the year." Correct?987    Dr. Lambrew. Today, there is no lower percentage of people988with employer-based covers than there was.989    Senator Johnson. People lost their doctors. For example,990Obamacare, outlawed high risk pools, which worked beautifully991in states. They worked beautifully in Wisconsin. As an992employer, we used them all the time. It worked great. You993outlawed those. Yyou outlawed short-term plans. Again, that was994PolitiFact 2013 "Lie of the year."995    Let's just look at enrollment history. Obamacare impacted996Medicaid expansion, and then, there's problems with that, but997let's focus just on the individual market. That was the other998thing that Obamacare, again, fix all these, you know, this999marketplace for individuals.1000    There were about 12 million people prior to Obamacare1001taking advantage of the individual markets. You completely1002disrupted that, got rid of high-risk pools, got rid of short-1003term policies. Before the pandemic, there were 14 million1004people on the Obamacare exchanges, so two million more people1005on these individual policies. Then all of a sudden with the1006enhanced premiums, all of a sudden, we're up to 24 million1007people.1008    Now, are you aware of the problem we're having with the no1009premium policies and phantom policies where you have1010unscrupulous agents and brokers signing people up without their1011knowledge? They get a commission. The premium tax credit goes1012directly to the insurance companies. We've seen estimates of1013$20' to $30 billion per year of premiums going to the insurance1014companies on phantom policies. People make no claims on them.1015Are you aware of that?1016    Dr. Lambrew. I am aware that there are agents and brokers1017that have been falsely signing people up. Last year, action was1018taken, 500 of them were unsubscribed----1019    Senator Johnson. Again, so we've gone from----1020    Dr. Lambrew [continuing]. this year, the H.R. 1 did include1021many policies to address that, but the reality is that those1022people are the victims, and we are trying to make sure that we1023keep these people covered.1024    Senator Johnson. My point being, we went from 12 million to102514 million, now up to 24 million. That's not 24 million real1026people. The uninsured in the country, there million1027    Dr. Lambrew. The uninsured rate in this country has1028dropped, sir.1029    Senator Johnson. Again, you're saying this is going to be a1030huge problem. Now, isn't it true that the original design of1031Obamacare, there were no subsidies for people making more than1032400 percent of the poverty line? Correct?1033    Dr. Lambrew. Yes, there are currently three to four times1034more subsidies for people----1035    Senator Johnson. Just answer the question. The original1036design of Obamacare, nobody above--working, is making more than1037400 percent above the poverty line, got a subsidy. Correct?1038    Dr. Lambrew. People who have employer-based coverage get a1039subsidy. People with Medicaid get a subsidy. People before the1040Affordable Care Act buying coverage on their own, the retirees,1041could not get help from the Federal Government.1042    Senator Johnson. The enhanced subsidies started providing1043subsidies for people above 400 percent poverty. This is talking1044about people who have higher, higher out-of-pockets that didn't1045qualify for subsidies in the original Obamacare. The subsidies1046aren't going away when the enhanced premiums go away, they1047still--the original design of Obamacare stays in place.1048Correct?1049    Dr. Lambrew. We know that people have been significantly1050helped by the improvements that were made in 2021, and people1051will be hurt if they leave, so many pandemic policies;1052telehealth----1053    Senator Johnson. Those were temporary enhanced tax credit.1054Those were temporary enhanced subsidies, and the Democrats in1055their law, they scheduled them to expire this year. Right?1056Republicans had no point in that at all.1057    Dr. Lambrew. The 2017 bill----1058    Senator Johnson. That all that was designed by Democrats to1059expire----1060    Dr. Lambrew [continuing]. also extended policies that1061ended, that just got extended without being paid for. Tax1062extensions happen all the time.1063    Senator Johnson. You are claiming harm to people that never1064qualified for the subsidy under the original Obamacare. Now,1065you're also saying, because you're quoting people at the1066hospitals, if these enhanced subsidies expire as they were1067meant to do by Democrats, it's going to be a calamity for the1068hospital industry. How all's happening is we're going back to1069the original Obamacare, so what you're saying is going back to1070the original design of Obamacare is going to be a calamity for1071hospitals.1072    Dr. Lambrew. Going back to 1965 practices for medicine are1073also a calamity. I mean, we figured out something that worked.1074It should be extended. People have been helped by it. Costs1075have been growing slower than private employer-based coverage,1076choices have gone up. Could it be improved? Without a doubt.1077    I think it is a fact that the uninsured went down. Cost1078growth has not been excessive. We have more choices.1079Deductibles have actually gone down. We really have seen in the1080last few years people able to choose deductibles that are now1081on average $400, not the higher amount.1082    Senator Johnson. Ms. Lambrew, my point is a number of1083goals. My point is, if these enhanced subsidies expire, all1084that happens is we go back to the original design of Obamacare,1085which didn't work, didn't lower premiums, people couldn't keep1086their doctor, couldn't keep their healthcare plan. It's been a1087disaster.1088    The reason Democrats want to extend these subsidies, the1089reason we have subsidies is to mask the fact that Obamacare1090drove premiums sky high, and what this hearing's about is how1091can we bring those actual premiums down, deliver better1092outcomes.1093    We've got some great examples here. Doctors from Oklahoma1094is doing some marvelous things called bringing consumerism the1095free market principles back into healthcare. Republicans are1096interested in that. Democrats aren't. Thank you, Mr. Chairman.1097    The Chairman. Thank you, Senator Johnson. Senator Husted.1098    Senator Husted. Thank you, Mr. Chairman. I appreciate you1099hosting this hearing today, and I know that--I want to start1100out by healthcare inflation is a problem for everybody in the1101American economy. It's the number one driver of inflation in1102the 21st century. What we have now doesn't work, and so,1103hopefully, we can constructively have conversations about how1104we make it work.1105    One of the ways that we have driven down some costs are1106over-the-counter drugs, moving prescription drugs to over-the-1107counter drugs. It saves American consumers $170 billion1108annually. Working with Senator Hassan we have a streamlining1109marketplace, access, and reform for therapeutics called Smart1110OTC Act, which will help the FDA identify drugs that could be1111candidates for over-the-counter and help companies move those1112to over-the-counter more quickly through the FDA. I would1113encourage us all to look at that as we move forward.1114    Now, Mr. Cuban, thank you for the example that you used1115with the monopoly and Amazon that's in consumer products, which1116we know is troublesome. You know, monopolies create higher1117prices, lower quality in general, but that's in a consumer1118marketplace. Healthcare, oh my gosh, people don't have choices1119at all. They have no choice, for most people, about where they1120go to consume that healthcare.1121    I think that you make a great point, but the healthcare1122system seems to be conspiring to create a monopoly, marketplace1123monopolies, across all aspects of what it does for a service1124that everybody must have, which makes the pressure of cost and1125quality even more stark.1126    I do have--Mr. Moulds, I want to ask you a question about1127anti-competitive contracting for healthcare. Because we know it1128creates a monopoly environment. It increases costs. I'm going1129to give you four examples, and I want you to react to these all1130or nothing clauses, anti-steering, most-favored nation clauses,1131gag clauses, which create anti-transparency. All of those carve1132up marketplaces and don't allow for competition. I want your1133thoughts on what eliminated them, and we might do to improve1134patient benefits, quality, and lower costs.1135    Dr. Moulds. We've actually been involved in litigation on1136some of these at CalPERS in California. The all-or-nothing1137clauses in particular were the subject of a lawsuit there, and1138in general, you know, they are some of the challenges, but by1139no means the only challenges we are seeing in California,1140increasing consolidation, not just in the north. I mentioned1141that our costs are about 35 percent higher in the north, but in1142the south where we've historically seen pretty good,1143comparatively good----1144    Senator Husted. If consolidation, though, in contracts that1145restrict, isn't that----1146    Dr. Moulds. Some of the contracts----1147    Senator Husted. The combination, isn't that lethal?1148    Dr. Moulds. Potentially. Absolutely, yes, but some of these1149provisions we don't see as commonly in contracts in California1150anymore, but we still have consolidation.1151    Senator Husted. Mr. Cuban, you understand markets pretty1152well. You have a reaction to those?1153    Mr. Cuban. Yes, I think it's awful. As an example, we1154wanted to build on CalPERS, and it was fair, they told us that1155we didn't carry certain brands, but we just asked, why not add1156Cost Plus Drugs to your network? Because if we're cheaper, buy1157from us, and if we're not, don't buy from us.1158    Cost Plus Drugs doesn't have exclusives with anybody. We1159just stand by the fact that we think we'll be better for1160patients because we're less expensive, and so, we were told,1161and this isn't just CalPERS, any of the big PBMs, when I go and1162speak to a CEO, I give them the test, and the test is just ask1163your PBM if you can add Cost Plus Drugs to your network and1164only use us if we're less expensive. 100 percent of the time,1165they've been told no.1166    Senator Husted. Mr. Moulds, do you have something you want1167to add to that?1168    Dr. Moulds. Well, I want to just start by saying that Mr.1169Cuban's work in this space has actually been enormously helpful1170to us. Having his prices out there has helped us negotiate1171prices in our contract, so we are grateful for that. We did1172negotiate in our most recent contract that starts in January,1173provision that allows us to carve out so we continue to look at1174where we can----1175    Senator Husted. Is that a yes?1176    Dr. Moulds. That is a always open to the conversation not a1177yes.1178    Senator Husted. Well, I'll just close with this, is that1179you talked about consolidation. You have these tools that are1180used inside the marketplaces where people want to consolidate.1181They want to limit others competing in their space, which1182allows them to basically command whatever price they want.1183    No market would work well like that, but in a healthcare1184marketplace where people don't have choices, I can decide if1185I'm buying water, I may not, I may decide to buy something1186else, but in healthcare, I don't have a choice, and I know that1187that's what Mr. Smith's trying to create; choices, but I'm1188hopeful that we can eliminate some of these tools that are1189being used to carve up markets and drive up prices. Thank you,1190Mr. Chairman.1191    The Chairman. Thank you, Mr. Warnock.1192    Senator Warnock. Thank you, Chair Scott, and Ranking Member1193Gillibrand for organizing this meeting or this hearing, I1194should say.1195    Nine months ago in this committee, I warned that seniors in1196Georgia could see a $20,000 annual increase in healthcare1197premiums should congressional Republicans let enhanced1198affordable care tax credits expire, and here we are just over a1199week before the start of open enrollment and we're in an even1200worse place than we were nine months ago.1201    Mr. Cuban, most Americans probably know you as an investor1202in startups and innovative small businesses. I'm a fan of Shark1203Tank.1204    Mr. Cuban. Thanks.1205    Senator Warnock. In that role and as an entrepreneur1206yourself, is it fair to say that you know a little bit about1207how small business owners and entrepreneurs think about their1208money and startup expenses?1209    Mr. Cuban. I would say so, yes.1210    Senator Warnock. Would you say that among those1211considerations and expenses, that includes their healthcare1212expenses----1213    Mr. Cuban. Yes.1214    Senator Warnock [continuing]. and how their healthcare1215costs factor into their plans for growth and sustainability?1216    Mr. Cuban. Yes, sir.1217    Senator Warnock. Let me show you something. These are the--1218this is the cost of the premium for a senior in 2025. This1219person is 62 years old. Small business owner in Georgia, taking1220home just $65,000 in 2025. The other side show the cheapest1221option for that same Georgian, so $228.17 a month. Now, with1222the expiration of these tax premiums, $1,142.71 cents. That's1223quite a jump.1224    How would this monthly jump affect that Georgian's ability1225to grow her small business or even just make ends meet?1226    Mr. Cuban. It makes her make a lot of hard choices, either1227to try to find the money to pay for the premiums or to go1228without insurance, and I think the greatest challenge has been1229in all of this is that small business owners, Americans that1230are on the ACA, haven't had enough time to plan for it.1231    It's one thing to know that your premiums are going up,1232it's another thing not to know how much and how soon, right?1233Now we're just--you know, in Texas, people are just now1234starting to see open enrollment and more we'll see in a couple1235weeks, and as a small business looking to the ACA for their1236employees, it's going to be terrifying for them.1237    Senator Warnock. If they forego insurance, is it fair to1238say that, well, that would drive up premiums for everybody?1239    Mr. Cuban. Yes, of course. You know, because healthy people1240are going to be most likely not to take insurance, right?1241    Senator Warnock. This gut punch for small businesses1242impacts the overall economy because small businesses are such a1243big part of our economy.1244    Mr. Cuban. Well, of course, if you take--you know, there1245are 33 million companies in this country. 30 million of them1246are solopreneurs, one-person entrepreneurs' companies, and if1247you are taking $800, give or take, a month out of their1248pocketbooks, they can't invest it in inventory, et cetera, et1249cetera. It makes it much more difficult to run your company.1250    Senator Warnock. Yes, I would imagine that come November12511st, more of my colleagues on the other side of the aisle will1252start hearing from folks in their own states who won't be able1253to afford their healthcare next year.1254    In fact, millions of people across the country are starting1255to log on today to see their plan premiums for next year1256double, and that's not the exception. Like, that's quite1257prevalent. People are seeing their premiums double, as you see1258here, triple, quadruple, all because my friends on the other1259side of the aisle refuse to fund the government and fund1260healthcare.1261    Dr. Lambrew, why are older Americans especially harmed,1262older Americans especially harmed, by the expiring premium tax1263credits?1264    Dr. Lambrew. Well, in addition to there being more of them1265in the marketplace than would be in the general population, we1266also know that older people have greater healthcare needs, so1267we look at the average healthcare costs for a 55-to 64-year-1268old. It is three times the average healthcare costs of an 18-to126924-year-old, so their needs are greater.1270    That also means that if, when, these price increases hit1271them, it will probably force those harder choices. Again, "Do I1272follow the advice of my doctor? Do I take a medication as1273needed, or skip pills, or forgo them? Do I choose between my1274retirement savings, my groceries?"1275    There was a story of a woman from Georgia who's 57-year-old1276who said, "This amount may not seem much to the government or1277to the insurance companies, but for me, it would most likely1278mean sacrificing essentials, groceries, gas, basic necessities1279that I rely on."1280    Senator Warnock. Given that reality, do you think it's a1281good idea for Congress to wait until December 31st to address1282this crisis?1283    Dr. Lambrew. I do not. People are shopping in Idaho1284already. They're looking in 12 or 13 states at the actual1285prices they're going to pay. A week from Saturday, they're1286going to go in, and we know from last years' experience three1287million people came in the first two weeks, and if they come in1288and their prices are going to be much higher than they expect,1289they may never come back.1290    Senator Warnock. Thank you so much. This is a crisis. It1291needs to be addressed right now, and I would urge my colleagues1292to join us in funding the government and extending these1293healthcare premiums for the healthcare of millions of1294Americans. Thank you very much, Mr. Chairman.1295    The Chairman. Thank you. Senator Moody.1296    Senator Moody. Thank you, Senator Scott. I appreciate you1297calling this hearing. I'm one of the newest U.S. Senators, and1298it pains me to say about every hearing I'm in, we hear more and1299more ways government can throw money at a problem to fix it,1300and it's so great that we're having a hearing on outside of1301government, throwing more money at a problem, ways that we1302might actually bring down prices.1303    I appreciate all of you being here today, taking time to be1304here. Many of you have experience in this area and have great1305suggestions on this and experience on this topic. I think the1306next step is our chairman might hold a Shark Tank for1307healthcare ideas on how to bring--just be ready, that's the1308next invitation, I'm sure.1309    You know, in most every other industry, we expect a fair1310and free market, and it's always expected that you would know1311the prices as consumers when you're shopping. It seems to be1312the only area where we don't have transparent pricing,1313especially, and we especially need to focus on it, when1314shoppable services represent 35 to 40 percent of U.S.1315healthcare spending.1316    If the data's right and we spend $14,570 per person per1317year on healthcare, that is more than per capita than any other1318country on Earth, and that just is insane to me. Thankfully, we1319have leadership that's digging in and trying to figure out how1320we can come up with new ideas to tackle prices.1321    What was shocking to me is that, and when I look back over1322the course of my own medical history, it's so clear and it's1323been there all along; you never find out how much things cost1324until months later when bills start showing up. In fact, only132517 percent of Americans know how much their healthcare products1326or services cost before they receive them. That is insane, and1327no wonder no one is shopping. It's a captive market of1328consumers.1329    I appreciated hearing your testimony, Mr. Smith, about the1330Surgery Center of Oklahoma and how you challenged other1331facilities to offer competitive pricing. The one example you1332gave was, one family was quoted $72,000 for a procedure at a1333major hospital, and then when they found their way to you, they1334only paid $3,875. Since you opened your facility, how many1335other facilities started like yours, either in your state or1336nationally, that you know of1337    Dr. Smith. If you include all of those on the continuum who1338are either posting prices or agreeing to enter into single-case1339agreements for a single case, for a price, to those who will1340quote a price over the phone but won't write it down, it's in1341the hundreds. It's not in the thousands, but it's such a1342dynamic situation because every time a big hospital or a1343surgery center that's not inclined to reveal prices is faced1344with losing a patient.1345    To me, well, Bridge Surgery Center in Indianapolis, to1346Texas Free Market in Austin, and anyone that's a member of the1347Free Market Medical Association, they have to step up now and1348match those prices or they lose those patients, and it's about1349half the people in the country that have sticker shock, either1350directly or indirectly, through their proxy buyer, their self-1351funded employer.1352    Senator Moody. When you started, were there any federal1353regulatory or statutory hurdles to you starting this clinic up,1354or have you been faced with those since you started? Is there1355anything that we can do to make it easier for places like yours1356to start?1357    Dr. Smith. The two hurdles that I think this movement faces1358are; one, is the overpayment that is sent to hospital-owned1359doctors and facilities by Medicare. Because they use that extra1360money to consolidate the industry and to run independent1361physicians and facilities out of business. That site neutrality1362is what I think people are talking, and I don't advocate paying1363the independents more. I advocate paying the hospitals less.1364    Senator Moody. How quickly, after you started, did you1365start seeing the market adjust around you?1366    Dr. Smith. I'm sorry?1367    Senator Moody. After you started your first surgery center,1368how quickly did you see the market adjust to start trying to be1369competitive with you, or did you not see that?1370    Dr. Smith. We did not see that really until I posted the1371prices online in 2009. When we opened in 1997, the response of1372the industry was to try to crush us through the state1373legislature. In 2009, when we posted the prices, that's when we1374began to see price matching, not just in Oklahoma, but all over1375the country because patients will travel to have surgery1376performed.1377    Senator Moody. Thank you, Chairman.1378    The Chairman. Thank you, Senator Moody. Senator Warren.1379    Senator Warren. Thank you, Mr. Chairman. Thank you for1380holding this hearing, and thank you, Ranking Member. Military1381families keep us safe, and DODs TRICARE program, it's supposed1382to keep those military families healthy. Since 2009, the1383TRICARE pharmacy benefit has been administered by Express1384Scripts, the Nation's largest pharmacy benefit manager, or PBM.1385Express Scripts decides which pharmacies are in-network or out.1386When one of those nine million military families' needs to pick1387up a prescription, Express Scripts decides where they can go to1388have it filled, and then they pay the pharmacy.1389    Now, Express Scripts is owned by the multi-billion dollar1390health insurance company, Cigna, and Cigna also owns a mail1391order pharmacy called Accredo that participates in TRICARE. In1392other words, Cigna owns the company that pays the pharmacies1393and it also owns the pharmacy chain that is getting paid the1394result.1395    Well, Express Scripts can reimburse the other pharmacies1396and give inflated payments to its corporate cousin, Accredo.1397Express Scripts has been caught doing exactly that kind of1398self-dealing in other government programs, but right now, the1399Department of Defense refuses to check how much it is costing1400taxpayers and TRICARE.1401    Mr. Cuban, you understand this business. Let me ask you,1402would requiring Express Scripts to disclose the difference1403between what it pays its affiliated pharmacies and the1404unaffiliated pharmacies help save taxpayers money or cost1405taxpayers money?1406    Mr. Cuban. It would save a lot of money, and it would keep1407smaller independent pharmacies in business.1408    Senator Warren. Okay. You know, that makes sense to me. It1409seems pretty common sense here. More transparency would save1410taxpayer money, but the Congressional Budget Office disagrees1411with you and me on this. According to the CBO, price1412transparency would cost taxpayers money because other1413pharmacies would allegedly join together to demand higher1414reimbursements. That's their argument here.1415    Mr. Cuban, you talk with pharmacists a lot. Do you think1416that independent pharmacists don't know that Accredo right now1417is getting a sweetheart deal, and that the independents are1418just waiting for information to be told so that they could1419demand more money?1420    Mr. Cuban. I can't speak for all the independent, but I can1421speak for costplusdrugs.com, and so, I went to TRICARE, and I1422have done this in the past many times and looked up the price1423of some common low-cost drugs, so you know, just recently, I1424looked up and our price is lower, whether it's 30 or 90 pills1425than the TRICARE price, is for anybody who is in-network, but1426off base.1427    If they're out-of-network, we're dramatically lower, so we1428don't need to band together to know that we can be cheaper. All1429we have to do is look at some of their prices, and it's obvious1430that we're cheaper.1431    Senator Warren. Okay. This information is actually already1432out there?1433    Mr. Cuban. Yes. I mean, it's just by looking at--and I'm1434just talking about the copays. We're not even talking about1435what Express Scripts, what the taxpayers still have to pay to1436Express Scripts, Accredo. Which is more, they're not doing this1437for nothing, and so, I mean, taxpayers are getting ripped off.1438Period. End of story.1439    Senator Warren. Okay.This is where I want to see more1440transparency.1441    Mr. Cuban. Correct.1442    Senator Warren. You think that's a good thing?1443    Mr. Cuban. That's a great thing.1444    Senator Warren. Oh, okay. That's a great thing. Good. I'll1445settle for that answer. All right, so DOD claims that this1446hasn't affected military families, but that is based on data1447from--they said this has not affected military families based1448on data from, you guessed it, Express Scripts.1449    When the Government Accountability Office reviewed just a1450little slice of this data, they discovered, "persistent1451inaccuracies," including misreporting the number of people who1452lost access to their local pharmacies because the pharmacies1453were pushed out of the TRICARE network. They left for the very1454reasons you described, but that was just a one-time review. I'm1455pushing DOD to audit this information every single year.1456    Dr. Lambrew, you served as commissioner of the Maine1457Department of Health and Human Services, so you understand the1458importance of program integrity. Do you think that auditing1459this program would help save taxpayers money, or cost taxpayers1460money?1461    Dr. Lambrew. Senator, it would save money.1462    Senator Warren. It would save money. You know, I just want1463to point out here, Mr. Chairman, self-dealing by the pharmacy1464benefit managers keeps the cost of prescription drugs high,1465both for the taxpayers and for consumers.1466    I'm going to keep pressing CBO to update their analysis of1467the PBMs. I hope to work with all of my colleagues to pass1468proposals to reign in self-dealing by the PBMs in TRICARE and1469beyond, including my bill with Senator Hawley that would make1470the same company cannot own a PBM, and an insurance company,1471and pharmacy at the same time. Look, we need to stop these1472giant corporations from ripping off American taxpayers and get1473a little more competition in the drug market. Thank you, Mr.1474Chairman.1475    The Chairman. Thanks, Senator Warren. Senator Justice.1476    Senator Justice. Mr. Chairman, thank you. Thank you to all1477the witnesses. Better turn the thing on. First and foremost, I1478mean this from the bottom of my heart, this discussion needs to1479happen on, and on, and on. We know we're dealing with a train1480wreck here, a runaway train wreck, and absolutely something's1481got to be done. Now, I don't have a clue in the world why on1482Earth transparency is bad.1483    Let me just say this before I go any further. I've got to1484just tell you this story real quick. We're in a government1485shutdown right now, and really included from my standpoint, I'm1486not very happy with the Democrats, but at the same time, I was1487just going down the hall just a little while ago, and there was1488a lady standing there that's a custodian, and she was talking1489to a friend of hers, and the friend doesn't know what to do,1490and because the friend is so upset, the friend's crying and1491she's crying.1492    I would tell us all just one simple thing, because I'm not1493here for anything really, and truly when it really boils down1494to it, at the end of everything we do, there's a name and1495there's a family, and we should all take that to heart.1496    Now, with all that being said, on top of all that, I would1497say to you just this, I'd go back to when I was a Governor, and1498I've got to read to you one thing. I'd even halfway forgotten1499about this, but I signed a bill when I was a Governor not long1500ago, House Bill 2263, into law. The first of its kind is1501legislation that crack down on the PBMs. It requires insurers1502and PBMs to pass along negotiated drug savings directly to the1503patients, helping lower cost, helping lower cost of West1504Virginia with commercial insurance.1505    Let me tell you, I speak in really common terms. I've just1506got a very quick couple of questions, but in a state like ours,1507Mr. Cuban, you know, many people rely on independent1508pharmacies. What kind of pressures are the PBMs putting on1509these pharmacies?1510    Mr. Cuban. It's horrific. I mentioned in my testimony that,1511first of all, the wholesalers buy drugs at the list price, and1512then they sell to the pharmacies at just under the list price,1513which means those independent pharmacies, small businesses, are1514out a lot of money. For instance, on an Eliquis $600 point1515price, they're out $570 and they need to collect that money1516back as soon as possible. What PBMs do is not only wait to get1517the value of the float, but they also under reimburse them.1518    Instead of paying them at least the $570 so they can break1519even, they pay them less knowing that there's only so much they1520can take where they'll either, A, go out of business, or, B,1521send the prescription to one of their captive pharmacies, and1522that in turn means they're not supporting their patients.1523    Let me tell you something that a lot of people don't1524appreciate; that last five feet between the patient and the1525pharmacist is some of the most important, important time any1526patient will ever spend. Because if they're getting medications1527that conflict with each other, then some really bad things can1528happen. We underappreciate pharmacies, and the big PBMs are1529literally, purposely, as far as I can tell, putting them out of1530business.1531    Senator Justice. Well, I couldn't agree more. Let me just1532end by saying just simply just this; all of us, all of us1533realize the problem. All of us have got to have enough guts to1534do something about the problem, don't we? I mean, that's what1535it really boils down to.1536    You know, like I said, I didn't come here for anything.1537I've got white hair, and ride around on a scooter and I've got1538Baby Dog. I mean, for crying out loud, when it really boils1539right down to it, I speak the truth, and I ask people to help.1540With all that being said, the last thing I'd say is just this1541on a lighter note mark, when is Kyrie going to be able to play?1542    Mr. Cuban. Hopefully, November.1543    Senator Justice. It's going to match. I would absolutely1544love it. The last of my last I would say is just simply this;1545this is my prediction from a basketball coach that's coached15461,350 games, a semi-pro team, Mavericks will win it all this1547year.1548    Mr. Cuban. Out of your mouth to God's ears.1549    Senator Justice. Thank you so much.1550    The Chairman. Thanks, Senator Justice. Senator Kelly.1551    Senator Kelly. Thank you, Mr. Chairman, and thank you to1552all of our witnesses for being here today.1553    I'm going to start with Dr. Lambrew. Thank you for your1554work on implementing the Affordable Care Act, which made1555coverage more affordable for millions of folks across the1556country, including in Arizona State that I represent. Now, with1557the expiration of the enhanced ACA premium tax credits and some1558new federal enrollment restrictions taking effect, I think it's1559fair to say that the progress we've made is at risk.1560    In Arizona, many older adults and working families rely on1561Marketplace coverage for insurance before they are eligible for1562Medicare. I've spoken to many of them, and when Senator Justice1563talks about names and families, these are real people. I've1564talked to many of them over the last couple weeks, but looking1565beyond next year's enrollment, the combination of the tax1566credit expirations and the administration's new rules and1567Medicaid funding cuts that are coming, this could leave1568Americans with higher premiums without a lot of options.1569    In Arizona, these aren't abstract numbers. They are real1570families, real people. A guy I spoke to just a couple days ago1571named Dennis is 66 years old. He's on Medicare, his wife is1572not. Lives in Lake Havasu City. He worked in ship repair for1573over 33 years, never went to college, just went to high school,1574but became a project manager. His wife is 62, she depends on1575ACA coverage until she's 65.1576    They've got three years of trying to deal with this. They1577pay $440 a month for her insurance through the ACA, but they1578get a $720 tax credit. When these tax credit lapse, her premium1579will go from $440 to $1,100 a month, and this threatens their1580retirement plans.1581    This guy worked really hard. They've got six kids that are1582nieces and nephews that they raised. They're not going to be1583able to live out their retirement dreams now because their1584excess income that they had is going to go for insurance.1585That's it.1586    It gets worse for other people. Robin, 60-year-old woman1587from Sedona. She says the expiration of ACA subsidies could1588lead to significant increases in her healthcare costs because1589she also gets a premium tax credit? She said it's going to make1590her have to decide between rent and healthcare. It's that1591simple for millions of people across the country; having a1592place to live or having healthcare insurance, and she told me1593that she is not looking for a handout, she's looking for a hand1594up.1595    Can you speak to the broader economic and health system1596effects that we could see if these policies lead to large1597coverage losses. How is it going to affect states like Arizona,1598and West Virginia, and Florida, and New York, and Kansas, you1599know, places that have rural areas? What should we expect to1600see?1601    Dr. Lambrew. Thank you for that question. To talk first1602about the uninsured and then about reduced enrollment. We had1603hit a record low percentage of Americans who are uninsured in16042022, and 2023, and 2024. We actually have never done better.1605    The Congressional Budget Office projects that a few years1606out, the number of uninsured in this country will increase by160750 percent as a result of these changes, plus the Medicaid1608changes that are on the horizon. We know from our hospitals and1609health systems and other providers who try to provide care to1610people who may not be able to pay, may not be able to afford1611it.1612    It will strain the healthcare system, which could mean more1613rural hospitals close, mean more clinics really struggle to1614keep their hours, to keep their nurses to really survive in a1615climate with less reimbursement. There will be health system1616effects, not just for those directly affected, but anybody in1617that rural community who may not be able to get the services1618that can no longer be sustained.1619    There's also a broader economic effect. Mr. Cuban talked1620about small businesses needing this kind of support for their1621workers to stay healthy. We have an estimate that 339,000 jobs1622could be lost just because of the expiration of these premium1623tax credits. Because it affects hospitals, it affects1624communities that are around those hospitals, and that1625translates into $2.5 billion loss revenue every year for1626certain local governments.1627    Those are just two examples of the health system and the1628economic effects of not continuing these tax credits.1629    Senator Kelly. I've got some other questions. I know I'm1630out of time. This is obviously a complicated issue. You know,1631healthcare in the United States is incredibly complicated. I've1632got some questions I want to submit for the record to Mr. Cuban1633and to Mr. Smith, but thank you again to all of you for being1634here.1635    The Chairman. Thank you, Senator Kelly. Senator Marshall,1636thank you. Welcome to our committee hearing. You're up.1637    Senator Marshall. Thank you so much, Chairman. I appreciate1638the invite to come. Welcome to our guest as well. Could you1639imagine going into a restaurant and you look at the menu, you1640have your choice between a good Kansas City strip, or some day-1641old chicken with gravy and cream on it to make it taste good1642and not knowing what the price tags are?1643    Could you imagine you need a new pickup truck to pull the1644fishing boat with? And you go online, you look at a Ford, and a1645Chevy, and a Dodge. Of course, the Dodge is the best, but you1646want to look at the price to help figure out which is the best1647deal, but for some reason, in healthcare, it's the only1648industry in the world, in America, that doesn't have a price1649tag with it, so consumers have no idea.1650    When a patient would come to me and I would say, "Look, you1651need an infertility surgery." They would say, not, "What does1652it cost?" They would ask, "Does my insurance cover it?" For1653seven, eight years, we've been working on legislation, a price1654tags bill. I want to just briefly describe it to you all, if1655you don't mind what it does. I want to make sure I get this1656right.1657    It requires public reporting of negotiated rates, cost, and1658cash prices for services at hospitals, surgery centers, imaging1659centers, and clinical labs, so price tags for the hospital,1660much like Surgery Center of Oklahoma is doing.1661    Number two, it ensures group of health plans have access to1662claims data and prevents third-party administrators from1663restricting data access. Anyone who's ran a business, isn't it1664frustrating? We're trying to convert from a traditional1665insurance to a self-funded model, and the insurance companies1666won't give us our own data, whose data is that? We fix that.1667Number three, it requires patients to be provided an itemized1668bill for each succinct service as well.1669    I'll start with Dr. Smith. What impact would that have on1670healthcare costs, specifically across the country, in your1671guesstimation?1672    Dr. Smith. I think it would have a real positive effect on1673costs because more companies would self-fund, and self-funded1674companies are essentially our proxy buyers for individuals.1675They have the same sticker shock that an individual does, and1676if a company has their own data and they can actually look at1677claims, they can compare what they paid.1678    Senator Marshall. I think you got a great point. The only1679one whose health insurance costs are not going up are self-1680funded plans that have a direct primary care doctor running1681that, the folks in there as well. Do you think it would bring1682down the prices of the hospitals you're competing with? Would1683they bring their prices down?1684    Dr. Smith. Oh, absolutely, and because the self-funded1685companies with sticker shock would patronize price-transparent1686facilities like mine, and the hospitals would have to match1687that or they'd lose all that business.1688    Senator Marshall. Mr. Cuban, you could talk about the1689pharmacy industry, how PBMs hide it, or you could just talk1690generally about healthcare, what the impact of a price care,1691price tax bill would do. What do you think?1692    Mr. Cuban. It would be great. I mean, like for my1693companies, we're already starting the process of direct1694contracting, and the only way you can direct contract is if you1695know the prices, and by knowing the prices, we can make our own1696determinations about what our cost of care would be. Because1697once we have our claims, we can look at our historical claims1698and kind of extrapolate to see where they're going.1699    Point number two to that, is it would crush the big1700insurance companies because it allows us, and this is what1701we're doing, to direct contract with providers and b, just work1702with a third-party administrator to handle all the services and1703just figure out the care navigation with a third-party as well.1704You know, it's rare that insurance companies take all the1705insurance risks these days, and so, this is just one more way1706to accelerate the move from them toward people, companies, in1707particular, taking responsibility for all of their own care.1708    Senator Marshall. Dr. Moulds, do you have anything to add1709to what the impact of the price tags bill?1710    Dr. Moulds. No. Anything that can be done to increase price1711transparency from our perspective is going to be a good thing.1712You know, we have a much better sight line into prices because1713of our size. We require a lot of information through our1714contracts. There's still opacity out there, but for folks who1715are smaller employers, for example, they often don't, and they1716don't have the same kind of sight line, and it's incredibly1717important for them as well.1718    Senator Marshall. My belief is whatever we can do to turn1719patients into consumers, again, is going to help bring the cost1720of healthcare down, and if you want to be a consumer, you have1721to know the prices as well.1722    Mr. Cuban, you want to talk a little bit just about the1723opaqueness of PBMs, the traditional PBMs, and how they truly1724are hiding the cost from my mom and dad when they go to their1725local pharmacist.1726    Mr. Cuban. You know, Cost Plus has been in business for1727three and a half years, and we're still the only pharmacy that1728publishes their entire price list. As Mr. Moulds mentioned, he1729used us as a reference price when the FTC investigated the1730PBMs. They use Cost Plus Drugs as a reference price, and so,1731they're doing all they can to prevent transparency.1732    They also do the same thing with contracts. Anytime you1733have a contract with an employer in particular, or State, or1734Federal Government, they always put in there maybe other fees1735that we charge you. Right? Then, they'll play games like with1736rebate GPOs. What a Rebate GPO is, you would think a PBM is big1737enough to just negotiate with the brand manufacturers and get1738the best rebates they can, but that's not what they do. They1739create these intermediary subsidiaries called Rebate GPOs that1740in turn go and negotiate with the brand manufacturers.1741    Take let's, in any given example, 60 percent in rebates1742given back 40 percent to the actual PBM, who in turn goes to1743the plan sponsor and says here's the whole 40 percent, not1744disclosing that they kept 20 percent through their Rebate GPO.1745    Those are the types of things, and there's a long list1746more, but I will say the one thing for every employer or1747anybody listening is if you're paying any fees as a percentage1748of a price of a drug, you're getting ripped off.1749    Senator Marshall. That's why we call it DE or Delinking.1750The bill takes care of that as well, and the bad news is1751they're moving these GPOs offshore so they don't have to obey1752any of our laws. Thank you so much, chairman. Thank you for1753holding this hearing.1754    The Chairman. Thank you, Senator Marshall. Senator1755Gillibrand.1756    Senator Gillibrand. For Dr. Moulds, CalPERS has implemented1757reference-based pricing for certain procedures like knee and1758hip replacement surgery or colonoscopies. CalPERS has also1759incentivized its members to use independent laboratories for1760shoppable lab services. You emphasize in your testimony that1761there is no one-size-fits-all solution for rising healthcare1762cost.1763    What factors does CalPERS consider when deciding to adopt1764reference-based pricing for certain procedures or services?1765What are the limitations in using reference-based pricing, more1766broadly? Are there certain procedures or services for which1767this doesn't work or creates a problem?1768    Dr. Moulds. Thank you for the question. Yes, there are some1769things that are better fitted for shoppable responses. For1770example, the most recent reference pricing program we have is1771with labs. We are essentially eliminating cost sharing for our1772members who forego the hospital owned lab and instead go to1773independent labs where we've pre-negotiated a much lower price.1774    You know, the reason that we're structuring it that way is1775so that it's entirely a carrot-based intervention rather than a1776stick, and with a stick-and-carrot intervention, like some of1777our other programs, the one thing that we don't want to happen1778is for our members to go down to get their lab work, only to1779find out what their cholesterol numbers look like, et cetera,1780that it's prohibitively expensive, and then never seek the care1781they need.1782    We have to be thoughtful about when we do it, about the1783implications of foregone care. You know, CalPERS members either1784work for the State of California or a public sector entity like1785a city, county, school district, or a fire district. They stay1786with their employers for a very long time. Their long-term1787health is incredibly important to us.1788    It's what we're in the business of doing, make sure that1789they stay as healthy as possible, but also if they are1790foregoing care, particularly preventative services, we're going1791to see those costs later on down the line in the form of worse1792conditions that are far more expensive to treat.1793    Senator Gillibrand. Dr. Smith, can you talk a little bit1794about improving Medicare physician fee schedule? Because we1795talked a lot about the problems. Can you talk about how to fix1796those problems, and what your best recommendations would be for1797this committee?1798    Dr. Smith. Yes, I'm no good at policy. I'll take a swipe at1799it. I think one of the first things that maybe should be1800considered is eliminating provisions on balance billing. If a1801physician thinks their service is worth $500 and Medicare1802beneficiary agrees, but the fee schedule only pay them $100.1803There should be no prohibition on an arrangement between that1804physician and that Medicare beneficiary for what they consider1805without any interference. A mutually beneficial exchange.1806    Right now, there is a hard limit on the fee schedule and no1807one can charge beyond that. I would probably start there, and1808that will make the Medicare beneficiary a pretty intense1809shopper, and that tends to drive prices down as well.1810    Senator Gillibrand. I feel like this hearing has been very1811useful. We've gotten a lot of good ideas about how we reduce1812costs from each of you. Some studies show that healthcare1813consolidation also leads to increased healthcare costs.1814    To any of you who want to talk about this, to what extent1815do you agree with these findings? And could you please describe1816your experiences with healthcare consolidation as increase in1817healthcare costs, starting with Mr. Cuban?1818    Mr. Cuban. I mean, I don't have anything specific to add to1819that other than our own experiences that when a PBM owns a1820pharmacy. When an insurance company has an investment in 101821percent of the doctors out there, they are going to optimize1822for their top line.1823    I can tell you that when you look at the biggest insurance1824companies, they have 2,500-plus subsidiaries. You know, the1825intercompany transfers for just one of them alone is equal to18260.3 percent of the U.S. GDP, so you know that they're gaming1827the system in every way they can, and if you just intermediate1828them or disaggregate, separate them, you'll see prices fall1829because they won't be able to arbitrage the financial system.1830    Senator Gillibrand. Yes. I've seen it where even different1831funds acquire whole sets of healthcare practices, and they do1832it because they know they can make money. What I've noticed is1833a patient, and what my constituents have noticed as patients,1834is that the services decline, that you're not actually getting1835the quality of care that you had before.1836    Can you talk a little bit about that as well, any of you?1837Also, what does this do to rural areas? I think one of the1838biggest hard-hit areas it's going to be in rural areas. Because1839when you're a provider in rural areas, you don't have the1840economies of scale, you don't have the ability to do cost-1841cutting, but honestly, people need healthcare to survive.1842    Part of my conclusions about this is that if we look at1843healthcare as much more of a human right, as opposed to a1844business model, you have a different approach. Some of the1845things that you've offered are consistent with that. Like, let1846the customer know how much things cost, publish it in advance,1847let the market work better. Giving that information to1848consumers, to the patient, is vital to get costs down.1849    Also, in your last recommendation, Dr. Smith, you were just1850saying give patients more control. Because they may be willing1851to pay a little more than Medicare will cover to get the1852benefit of that doctor, and that's also interesting, so anyone1853can answer the question. Go ahead.1854    Dr. Moulds. I mean, you know, just elaborating on some of1855the earlier figures that I was citing about the differences1856between the North and the South and California. We see a more1857than two to one difference in prices. When we compare our least1858competitive counties to our most competitive counties on1859hospital prices, the most efficient 10 percent are at about 621860percent of Medicare. The least efficient 10 percent are above1861350 percent of Medicare, so tremendous price variation.1862    Mostly, you can tie it back to a lack of competition. Just1863generally speaking, anything that can be done to oversee1864consolidation is going to be of critical importance. For us,1865absent that, having other tools to get at those kinds of1866differences in areas that really, you know, when we talk about1867shoppable services, we provide a travel benefit for our members1868who are getting hips and knees if they need to go out of1869county.1870    Without that, we wouldn't be able to do reference pricing1871in counties that uniformly are above 300 percent of poverty--I1872mean, sorry, above 350 percent of Medicare. It's a tremendous1873problem in California.1874    Senator Gillibrand. Dr. Lambrew?1875    Dr. Lambrew. I will just quickly add that I think this1876issue of consolidation within states, especially areas that are1877rural, is a great concern to state policymakers as was well as1878federal policymakers because they're on the front line right1879now of some of these negotiations between large health systems1880and insurance companies. How do they manage kind of this cost1881growth that they can't actually totally control? Because self-1882funded plans are outside of states purview.1883    I think we'll see a lot of bills next year, I think, at the1884state level, on this topic. I will just go back to rural1885because I think many states are thinking hard about whether1886some of the funds from the Rural Health Transformation Program1887that's rolling out this fall can be used for different types of1888payment models for those rural hospitals that may be critical1889access hospitals.1890    Some of these hospitals just don't have enough volume to--1891even if you paid them 300 percent of Medicare to support the1892day in and day out services, so thinking creatively and1893differently about how we support access to rural services, not1894just hospitals, I think, will be on the horizon as well.1895    Dr. Moulds. If I could add just one point on the rural1896issue. Rural areas are not driving healthcare costs in1897California. We understand that in some rural areas it is more1898challenging to provide healthcare services. Some of them are1899still more expensive than they should be, but that's not what's1900going on. It is the populated areas where you still have very1901high prices that are driving healthcare costs in California.1902    Senator Gillibrand. Got it. Thank you, Mr. Chairman.1903    The Chairman. Thank you. Mr. Cuban, how does the level of1904transparency that--your Cost Plus, right, you know your prices1905and then your cost, you add 15 percent, right? You just tell1906everybody, so everybody knows, so how's that changed behavior?1907How's that changed? What have you watched?1908    Mr. Cuban. I mean, I look to see who's--people start1909shopping more, to answer your question directly, because now1910they know when they go to the pharmacy counter and they're1911shocked by a price, and we get emails, and calls, and letters1912all the time; "I thought this medication was going to cost me1913$900. I went to cost plus and it was $21." Then, they tell1914people Cost Plus is growing and we don't spend a penny on1915advertising, and the reason is, when you save somebody money on1916their healthcare and their medications, they're going to tell1917everybody.1918    The Chairman. How many employees do you have at Cost Plus?1919    Mr. Cuban. Seventy, maybe. That includes manufacturing.1920    The Chairman. All right. How do you structure your health1921plan?1922    Mr. Cuban. Our own health plan?1923    The Chairman. Yes.1924    Mr. Cuban. We created something called Cost Plus Wellness,1925where we're going and we're doing direct contracting with1926providers around Texas and where we have employees. I met with1927a lot of CEOs and CFOs of hospitals and found out where the1928insurance companies were taking advantage of them. They1929underpay their contracted rate with high deductibles. You1930turned the hospital into a subprime lender with the delays from1931the preauthorizations, so we said we'll do none of those1932things. If you give us a better reference price, we'll pay you1933cash up-front, no deductibles and no preauthorization. We're1934able to get a much better price.1935    What we're going to do that's different at, by the end of1936the year, we'll have costpluswellness.com where we're going to1937publish all our actual contracts. Because when we talk about1938transparency, it's one thing to talk about prices, but most1939companies don't have the sophistication to understand the1940contractual details. We'll publish them for anybody to copy.1941    Then for our employees, they have no out-of-pocket when we1942work within the system. For our employees, for any drugs from1943Cost Plus Drugs, they have no out-of-pocket as well.1944    The Chairman. If they go outside the system, what happens?1945    Mr. Cuban. If it's for healthcare, someone's in a car1946accident somewhere, then we have kind of a healthcare1947navigator, we call our healthcare CEO, that will call the1948hospital and say, "Hey, we'd like the cash price." Because the1949craziness, part of the craziness of this healthcare industry is1950the biggest insurance companies will negotiate a $25,000 rate1951for a hip replacement, and any Tom, Dick, or Harry walking in1952off the street can probably get it for $15,000, and so, we'll1953negotiate directly to get the better price.1954    The Chairman. Do your employees have any costs at all in1955healthcare?1956    Mr. Cuban. Yes, in some of them. Depending on which one of1957the companies they're in, they do, but for the Mark Cuban1958companies directly, they do not.1959    The Chairman. Okay. When you do--why do you have them have1960any skin in the game?1961    Mr. Cuban. Why don't we?1962    The Chairman. Why do you have--why do they have, you know,1963do they have any charge at all? Why do the employees have any1964charge at all? What's the rationale for that?1965    Mr. Cuban. I mean, it's really just because as a startup,1966we're progressing through all this. The goal is to get them so1967they don't have any responsibility because we want to use it to1968retain them. Now, I get where you're going with your question.1969You want smart shoppers going out there to be able to make the1970best decisions, but we'll have a healthcare CEO, CFO who goes1971out there and does the negotiating for them.1972    The Chairman. They won't have a choice.1973    Mr. Cuban. Well, they'll have a choice. I mean, they'll1974have the opportunity, but if it's not going to cost them1975anything, nobody complains. Because what we're saying is, like,1976if you have a favorite doctor that you've always used and we're1977switching for whatever reason, we'll go to that doctor and say,1978"Hey, we'd like to do a direct contract with you. What will you1979charge us?"1980    The Chairman. What if they say no, and I'm not going to do1981that?1982    Mr. Cuban. Then we'll pay their going rate because we want1983our employees to be happy.1984    The Chairman. Okay. Dr. Smith, are government policies and1985regulations helping you or hurting you?1986    Dr. Smith. Well, indirectly hurting us, I think, because we1987pay tax, unlike the not-for-profit hospitals. As you pointed1988out earlier today, we also are alarmed at how aggressively1989hospital systems are acquiring physician practices and hiring1990physicians. That has decreased the number of independently----1991    The Chairman. Why would they do that?1992    Dr. Smith. Well, yes, it's vertical integration and it's1993consolidation. It's all the above. The number of independent1994practicing physicians is dwindling in the country, and so, this1995movement is curtailed to the extent that they have no sort of1996entrepreneurial instinct or vision at all. I operate, for the1997most part, out of the government regulatory sphere. We accept1998no government payments. We just accept payments directly from1999that.2000    The Chairman. Could you open up another surgery center2001right now?2002    Dr. Smith. Could I?2003    The Chairman. Yes. Is there any government limitations?2004    Dr. Smith. The only government limitations on opening up a2005surgery center or a hospital is if you wish to accept federal2006payments that's illegal for a hospital.2007    The Chairman. Why would that be illegal?2008    Dr. Smith. That was a provision in the Affordable Care Act.2009    The Chairman. What's the rationale for that? I mean, what2010you've said is your way cheaper than Medicaid and your way2011cheaper than Medicare. Shouldn't they want a lot of competition2012like you?2013    Dr. Smith. Yes, I can only speculate the prohibition on2014opening new physician hospitals. It's actually worse than that.2015The prohibition expanded to, or it included, expanding,2016existing physician-owned hospitals. I was told that that was2017part of getting the American Hospital Association to the table2018to endorse the bill, but I'm speculating. That's just what I2019was told2020    The Chairman. Mr. Cuban, so who's on your health plan,2021right? It does take Cost Plus--you know who's on your health2022plan, right?2023    Mr. Cuban. I have a bunch of different companies, but2024that's generally,2025    The Chairman. You, I mean, the CEO of the company would2026know who's on the plan, right?2027    Mr. Cuban. Not necessarily, no.2028    The Chairman. They would know who's----2029    Mr. Cuban. I mean, generally, yes, but I've got a lot of2030different companies, so I couldn't----2031    The Chairman. Okay. Would you be okay if there was just an2032agent that could just sign up somebody and you paid 100 percent2033of it?2034    Mr. Cuban. No, of course not.2035    The Chairman. Okay. Would it surprise you that in the2036COVID--you know, what Senator Warnock was talking about, that2037the way it works is an agent can sign anybody up they want as2038long as they know their name, address, and birthdate, and then2039the money goes directly to the insurance company, so does that2040sort of make sense to you?2041    Mr. Cuban. Of course not.2042    The Chairman. Okay. Do you think there might be fraud? That2043people would take advantage of it?2044    Mr. Cuban. I mean, I think salespeople are going to find2045ways to make money, aren't they, no matter what.2046    The Chairman. Yes. Dr. Moulds, so what did you--so how many2047different reference things are you doing? How many different2048procedures?2049    Dr. Moulds. Eighteen at the moment----2050    The Chairman. Okay. How much--sorry.2051    Dr. Moulds. Eighteen different procedures and they're2052structured differently, but in three buckets, essentially.2053    The Chairman. Okay. You've said that the prices in certain2054places of the hospitals are higher than others. Why would that2055be?2056    Dr. Moulds. As I've said, I think a lot of it has to do2057with competition. Some of it is independent of that. I mean,2058certainly, there are places where it is harder to run a2059hospital than in other places.2060    The Chairman. Let's say Sacramento. How many delivery2061system, hospital delivery systems are there?2062    Dr. Moulds. There are one, two, three, four--four.2063    The Chairman. How many do you contract with2064    Dr. Moulds. All of them2065    The Chairman. Is there different pricing?2066    Dr. Moulds. Yes. Negotiated through, generally speaking,2067either through the insurance companies that we contract with or2068through our third-party administrator.2069    The Chairman. How big of a customer are you?2070    Dr. Moulds. Well, we're the largest purchaser in2071California.2072    The Chairman. If somebody said they're not going to talk to2073you, would it impact their business much?2074    Dr. Moulds. Yes.2075    The Chairman. Okay. You were talking about rural hospitals,2076and I think all of us want to make sure rural hospitals stay in2077business. Would you do a hip surgery at a rural hospital?2078    Dr. Moulds. Any hospital----2079    The Chairman. They do hip surgeries, and you do it?2080    Dr. Moulds. For any hospital that is of sufficiently high2081quality.2082    The Chairman. How many surgeries would you want them to2083have?2084    Dr. Moulds. Hips, as I understand it, I'm not that kind of2085doctor. As I understand it, generally, there are multiple2086knees--as in a single knee more than once or multiple single2087hips, pretty rare.2088    The Chairman. Dr. Smith, how many, if you--before you went2089to do a rural hospital, how many--would you want to go to a2090physician that did one a year?2091    Dr. Smith. Yes, I would pick the physician, and they--you2092know, I'd say they'd need to do 100 a year. If the surgeon had2093confidence in a facility and the crew there, that would be the2094biggest indicator that they know what they're doing.2095    The Chairman. In a typical rural hospital, how many, if2096they were going to do, they do get 100?2097    Dr. Smith. They would not do 100, no.2098    The Chairman. You probably wouldn't want to go there for2099your care?2100    Dr. Smith. No.2101    The Chairman. Right. Mr. Cuban, do you think you could2102apply the same principle to some or other areas of healthcare?2103Could we do it with MRIs and CT scans?2104    Mr. Cuban. Yes, particularly with those. Because it's just2105equipment, and some technicians, and some qualified doctors.2106    The Chairman. Have you worked with the department of War?2107Are they contracting with you?2108    Mr. Cuban. No.2109    The Chairman. Why not?2110    Mr. Cuban. I have no idea.2111    The Chairman. Have you talked to them?2112    Mr. Cuban. I have not talked directly. When the DOD went2113out for one of their bids, their requirement was that thick,2114you know, and it just wasn't worth the time.2115    The Chairman. Okay. The same for the VA and same for2116TRICARE?2117    Mr. Cuban. Yes, same.2118    The Chairman. Senator Warner was saying that you were2119checking the price, I think you said something. How did you2120find that you were able to look at the TRICARE book? You could2121see what their price was?2122    Mr. Cuban. Actually, just the copays. We were cheaper than2123their copays.2124    The Chairman. Why would you be cheaper than our copays?2125    Mr. Cuban. Because they're stealing.2126    The Chairman. Have they--I mean, is there----2127    Mr. Cuban. Makes no sense. Does it?2128    The Chairman. Can they----2129    Mr. Cuban. There's a reason why they don't publish their2130price list. To Dr. Moulds' point, prices vary by customer, to2131customer, to customer. That's how they maximize their margins,2132and that's how they're able to control. You know, Dr. Moulds2133was smart enough to get a carve out from his PBM. Most2134companies are not big enough, are able to do that.2135    The PBMs will require that you buy from their pharmacy,2136that you buy from, you know, specialty. The fact that there's a2137specialty tier for generic drugs or any drug. Every drug is2138special in its own way. You know, if you are being offered a2139specialty tier, you're being ripped off.2140    The Chairman. Yes. Dr. Moulds, so do you know anybody else2141that's gotten a carve out, and why, you're just so big you can2142get whatever you want?2143    Dr. Moulds. We can't get everything we want. We certainly2144try to get the things that we think we need. We do not get2145everything that we would like to have in our contracts. I am2146not aware of other entities offhand that have carve outs. It2147would not surprise me if larger purchasers sometimes.2148    The Chairman. Have you been able to get into any employers2149that way?2150    Mr. Cuban. There's more and more carve outs now for GLP-1s2151because one PBM sold their access to the formulary and excluded2152another GLP-1. Some of those large customers are able to get2153carve outs for GLP-1, specifically, but typically, we'll push,2154we will get those big companies to start working with2155transparent PBMs that include us in their network.2156    The Chairman. Dr. Moulds, what will it take for Mr. Cuban2157to get your business? I mean, how can he get in? Because you2158did it because of somebody like him. Right?2159    Dr. Moulds. As I said, it was very helpful to have his2160prices published and to be able to use them in our2161negotiations. We looked very expansively in our most--we just2162renegotiated our PBM contract for a January 1st, 2026, start.2163    We look comprehensively at a number of different solutions,2164including multifaceted ones of the kind that Mr. Cuban has2165mentioned. There are a lot of things that PBMs do in addition2166to buying drugs. They distribute drugs. They help manage2167formularies, et cetera. You know, breaking that up is something2168that we always have as a vision for our future.2169    It is enormously complicated thing to take on. We have2170taken pieces of that and incorporated it in a broader approach2171right now, but we're not precluding a future where we do2172something that breaks apart what they provide and contracting2173independently for those solutions.2174    The Chairman. Is there something that the PBMs are doing2175that you can't do?2176    Mr. Cuban. No--I mean, let me qualify that. We don't have2177access to all brand drugs. What we're told from the brand2178manufacturers is the reason we they don't sell to us is because2179it's been intimated to them from the big PBMs that if they do2180work with us, they will see their portfolios diminished on2181their formularies.2182    Formularies give the big PBMs 100 percent of their power.2183If they didn't have control of formularies--and look, there's2184no specific skillset that they have that the State of2185California couldn't recreate for creating their own2186formularies, right? They just go out and negotiate that2187formula, and effectively, auction off access to that formula.2188    If you disaggregated by law formularies from PBMs2189companies, patients would have better experiences because they2190would be more dependent on their doctors, and the entire rebate2191system would collapse like that. When the entire rebate and2192fees system collapsed, the price of medications would fall2193depending on the medication, 30 to 80 percent.2194    Their control of formularies gives them every bit of2195leverage.2196    The Chairman. Why do you think PBMs are started?2197    Mr. Cuban. Why were they started? Yes, back in the day, it2198was about negotiating pricing, and that's what they did, but2199they don't negotiate prices today. If they negotiated prices,2200they would just publish a price list. Hey, and I wouldn't be in2201business, right? Because they're big, they should be able to2202buy for a lot less than we can, but they don't negotiate2203prices. What they negotiate is what they auction off as access2204to their formulary.2205    You see that a big part of the problem as a result is going2206back to when we talked about deductibles, right? All the stuff2207about the ACA, well, you would think of PBM, if they truly were2208about negotiating prices to the benefit of patients, they2209wouldn't make patients pay full list price for a medication2210until they hit their deductible.2211    What happens when that insured patient has that $2,5002212deductible and it's a $400 medication, you know, out of the2213$400, let's just say $200 of it goes right to the PBMs pocket.2214    The Chairman. Yes. Dr. Smith, have you calculated for just2215the surgeries that you do, that you have prices of how much2216Medicare would save or just even Medicaid in your state? Take2217Oklahoma. Do you have any feel for what--take Medicaid. Have2218you ever looked at what you could save if you--if everybody2219just got your prices?2220    Dr. Smith. I think I could answer that in a roundabout way.2221Oklahoma County, it's the largest county in Oklahoma, and they2222have 1,100 employees. The first year we were directly2223contracted with them, those 1,100 employees saved $750,000 out-2224of-pocket. The Oklahoma County Health Plan saved $3.25 million.2225Those prices we were offering were less than what Medicaid pays2226the hospital, but that's 1,100 lives.2227    I think if you extrapolate that out to the number of2228Medicare, Medicaid beneficiaries, it could be tens of millions,2229dozens of millions of dollars, easily.2230    The Chairman. If Medicare, Medicaid had a complete choice2231that people go wherever they want, and we gave the money to the2232enrollee, you think they could buy better prices?2233    Dr. Smith. Oh, yes. You would essentially turn Medicare2234into the same sort of cooperative arrangement that cost sharing2235ministries have embraced where the member pays and then they're2236reimbursed, so, that caused extreme shopping. Yes.2237    The Chairman. They would bring them in and make them2238shoppers.2239    Dr. Smith. Yes.2240    The Chairman. Mr. Cuban, you're starting to produce sterile2241injectables. Was that an easy process? Was the government2242really a good partner in helping you do get that done?2243    Mr. Cuban. No, it wasn't an easy process, and if I can add2244one more thing on the cost for Medicare and Medicaid. There2245have been multiple studies that showed if Medicare bought, I2246think it was oncology drugs, through Cost Plus Drugs, it would2247save $6 billion a year, $1 billion a year for urology drugs.2248    To go back to your question on our manufacturing facility,2249we had to work with the FDA and it was slow, but it was2250efficient and we were able to get it done. Honestly now, since2251the change in administration, we're extending that and they've2252been very good to work with and much quicker.2253    The Chairman. Are you like three times, four times, five2254times the international--same thing. Your prices, are your2255costs way higher than if you did this in Vietnam, or India, or2256China?2257    Mr. Cuban. No. Because we're mostly robotic, we're all2258robotic. I'd say we're really close to being as cheap, if not2259cheaper, than overseas.2260    The Chairman. All right. By the way, do you tell people2261where drugs are made?2262    Mr. Cuban. I'm sorry?2263    The Chairman. Do you tell----2264    Mr. Cuban. Oh, where the source country is? Yes, we don't.2265At this point in time, it's something we're discussing. We have2266one drug that's made in China, that might move to two. We have2267a bunch that are made in India, but we check and we do batch2268checking and all that, and we're increasing the number that we2269get done here.2270    Part of the challenge we have is the big wholesalers have2271these contracts with American manufacturers, and I forget the2272term, but it's like either deliver or your SOL. That really2273makes things a lot difficult for us when it comes to when--for2274them to be able to compete with pricing.2275    The Chairman. What do you think your prices, and especially2276as you buildup more volume, what do you think your prices are2277going to be on injectables versus something?2278    Mr. Cuban. Well, they're already cheaper than anywhere2279else, right? And in terms of competitive with international, we2280should be less expensive.2281    We're changing how we do it. We've created these mobile2282pods so that we'll be able to not only make sterile2283injectables, but we'll be able to make N-of-1 selling gene2284therapy so we can park one of these mobile pods outside of2285hospital.2286    When they're doing all kinds of genetic, I'm not--my2287partner Alex over here knows this stuff better than I do, but2288when they're doing N-of-1 analysis, we'll be able to convert it2289to a biologic that they can use with a child, and it'll cost a229010th of what it currently costs.2291    The Chairman. Do you think you could open up generic drug2292manufacturing the same price as India and China?2293    Mr. Cuban. Yes. Now we might not have the scale initially--2294--2295    The Chairman. Yes, but once you get to scale.2296    Mr. Cuban. Yes. I mean, it's robotics. It's all robotics.2297    The Chairman. If you're doing one billion pills a year, you2298think you can get there?2299    Mr. Cuban. Yes.2300    Senator Gillibrand. I have to go.2301    The Chairman. Okay.2302    Senator Gillibrand. Should I just go?2303    The Chairman. Yes.2304    Senator Gillibrand. I just want to thank you guys so much2305for your testimony. I have to leave, he's insatiable. He's got2306more questions. I want to just tell you, I appreciate your2307testimony, and this committee is doing some really important2308work on how we can help older Americans, and this affordability2309hearing has been magnificent. Thank you so much.2310    The Chairman. Dr. Smith, why do you think hospitals aren't2311doing this?2312    Dr. Smith. Well, they are. Now, many of the hospitals in2313the Oklahoma City area that tried to put me out of business2314early on are now the recipients of referrals that I send them.2315We fortunately had enough national exposure that patients from2316all over the country now ask for pricing for procedures that2317can only be performed in their hospital.2318    When a CEO or a CFO gets a call from me, it's about a2319patient from Florida, or Arizona, or Nevada who needs a colon2320resection or a brain tumor removed. I cobble those prices2321together and quote them to the buyer, either the individual or2322the self-funded employer cost-sharing ministry. Invariably,2323those prices are extremely reasonable. I then pay that2324hospital.2325    These hospitals are coming into this movement. They've kind2326of put their toe in the water, but it is spreading because2327they're not afraid of the carriers. They're not afraid of the2328carriers with a single-case agreement.2329    The Chairman. Yes, but if the Affordable Care Act didn't2330outlaw what you're doing, you probably feel like there'd be a2331lot more of these around the country?2332    Dr. Smith. Oh, yes.2333    The Chairman. Yes. Dr. Lambrew, what do you think of high-2334risk pools?2335    Dr. Lambrew. You know, there's a fair amount of research on2336how they operated back then. I looked at Texas's when I was2337living in Texas, and there was a concern that for people with2338preexisting conditions, they would often have to wait months to2339get into it. They were often getting capped payments so that2340they would run out of insurance, which is why I think most2341people who have cancer or work with people who have some sort2342of disease, much prefer integrating those people into2343mainstream health insurance.2344    You know, now, we really have a situation where anybody can2345get health insurance with a preexisting condition and not worry2346about whether their coverage will be there for them. The2347Affordable Care Act has maximum out-of-pocket limits. It makes2348sure the essential health benefits are covered, and it really2349makes sure that, hopefully, we all don't need that kind of2350health insurance. When we need it, it's there.2351    The Chairman. Here's actually what's happened since the2352Affordable Care Act came in to being. The premiums have2353skyrocketed. Back then a catastrophic plan had a $5,0002354deductible. Most of these ACA plans now have unbelievable2355deductibles. It's what people didn't want to get, and2356supposedly the ACA was going to say everybody's going to get2357all this stuff covered.2358    Well, now what's happened is premiums are up over 1002359percent, copayments are up, deductibles are up. I mean, the2360deductibles are ridiculously high. Well, here's what's happened2361with these extended credits. What we're talking--what some2362people are talking about is these extended credits, the ACA,2363nothing goes away. Nothing than nobody's losing. You're up to2364400 percent--so let me give you an example. If you make--let's2365see, you can make up to--400 percent would be $128,000 for a2366family of four, a couple of 30. Basic, there's almost no2367change, but you can be worth two million and make $225,000, and2368the Federal Government is still subsidizing your healthcare.2369    The only way we're ever going to get this fixed is we're2370going to have to start doing what you guys are doing. Number2371one, we've got to let people buy the insurance they want to2372buy. Do you want to be told what--how to cover your employees?2373No. You'd like to say, "For my employees, I'm going to do it2374this way, and if I don't like it, I'll change it." You can't do2375that. Right?2376    Number two, is you ought to--if we are going to help2377people, like if you want to help your employees, you probably2378should let them shop. We don't do that. Then, we wonder why2379healthcare costs have just--they're out of control.2380    What I like about what you guys are talking about is if2381we've got to shop for this stuff we do, we're going to get2382better. We're going to get better price, and Dr. Smith, you2383said at lunch today, is there a correlation between--and in2384most businesses, there's a correlation between price and2385quality? How about healthcare? What do you think?2386    Dr. Smith. Well, it's inverse because----2387    The Chairman. The opposite what you would think.2388    Dr. Smith. It's completely upside down. Yes, if you have so2389much uncertainty that you can't quote a price, you're probably2390not very good at what you do, and that's the logic behind it.2391    The Chairman. Yes. Well, first of, I want to thank you2392for--thanks for being here. Thanks for taking all the2393questions. One thing we're trying to do up here is get2394everybody more informed about healthcare so we can make better2395decisions. The healthcare system that we have created, you2396would never create. It doesn't work. It costs way too much2397money. We don't have the outcomes we need. We're spending more2398than other developed countries with worse outcomes. I mean, in2399business you would go bankrupt.2400    If any Senators have additional questions for the witnesses2401or statements to be added, the hearing record will be open2402until next Wednesday at 5:00 p.m.2403    I want to really thank each of you for being here.2404    [Whereupon, at 5:36 p.m., the hearing was adjourned.]24052406=======================================================================24072408                                APPENDIX24092410=======================================================================24112412                      Prepared Witness Statements24132414=======================================================================24152416                 U.S. Senate Special Committee on Aging24172418           "Modernizing Health Care: How Shoppable Services2419                   Improve Outcomes and Lower Costs"24202421                            October 22, 202524222423                      Prepared Witness Statements24242425                               Mark Cuban24262427    My Shark Tank companies hate selling on Amazon - but most2428don't have a choice. About 162 million Americans shop there,2429and if you want to reach them, you have to play by Amazon's2430rules.2431    Amazon knows this and takes full advantage - adding new2432fees, raising old ones, forcing sellers to buy ads, and even2433launching copycat products that compete directly with them.2434They get away with it because they control the marketplace -2435and because 167 million people pay $139 a year for Prime, which2436makes Amazon incredibly "sticky."2437    So what does that have to do with healthcare?2438    Insurance companies work the same way. Over 300 million2439Americans have some kind of coverage - commercial, ACA,2440Medicare, or Medicaid. Every one of those plans hires a2441Pharmacy Benefit Manager, or PBM, to run their drug benefits.2442    Three giant PBMs - all owned by the biggest insurance2443companies - control pharmacy benefits for about 270 million2444Americans. That's 70% more people than Amazon reaches.2445    Like Amazon, PBMs control the "store shelves." Their2446shelves are called formularies - the lists of drugs your2447insurance will cover. If a drug isn't on the formulary, it's2448invisible to doctors and patients.2449    Here's the kicker: unlike Amazon, which wants lower prices,2450PBMs actually prefer higher ones.2451    They say they negotiate lower drug costs - but they don't.2452They auction off access to their formularies to the highest2453bidder. Drug companies pay the rebates and fees PBMs demand, so2454their drugs can be covered and prescribed. If they don't pay,2455they lose access to millions of patients - costing them2456billions.2457    Those rebates and fees are based on a percentage of the2458drug's list price - called WAC, the Wholesale Acquisition Cost.2459The higher the list price, the more money PBMs make.2460    Because PBMs are so powerful, that inflated list price2461becomes the reference point for the entire drug supply chain.2462    Take a hypothetical drug - Brand A. The PBM tells the2463manufacturer to set the list price at $600, with a 50% rebate2464and another 10% in fees, leaving the manufacturer with $2402465net.2466    Now, what does the patient pay?2467      If they're uninsured: $600.2468      If they're insured but haven't met their deductible:2469still $600.2470    And yes, the PBM still gets its rebate on that sale. PBMs2471and the insurance companies that own them love high deductibles2472because they keep collecting rebates while patients pay full2473price. Insurance carriers love it even more when patients can't2474afford their deductibles - because then they never have to pay2475out from premiums.2476    So patients end up paying the highest prices of anyone -2477all because PBMs insist on using inflated list prices instead2478of transparent net prices.2479    Meanwhile, wholesalers buy the drug from the manufacturer2480for $600. The three major wholesalers all use the same list2481price, so there's zero price competition, and because their2482fees are also based on WAC, they profit more when prices rise.2483    Pharmacies buy from wholesalers at around a 5% discount -2484about $570 in this case, but when they fill a brand2485prescription for an insured patient, they're often reimbursed2486less than what they paid. They literally lose money on most2487brand-name drugs, and if they don't fill enough of those money-2488losing prescriptions, PBMs and wholesalers hit them with even2489more penalties. No wonder independent pharmacies are being2490crushed.2491    Make it make sense. It doesn't.2492    Because the whole system is built around list prices,2493everyone - PBMs, wholesalers, and insurers - has an incentive2494to keep WAC going up, and it almost always does. Patients are2495the ones who pay the price.And here's the saddest part: self-2496insured employers, states, and anyone contracting with the big2497PBMs are signing off on this system. They approve plans that2498force patients to pay list price without realizing how badly2499their members are getting ripped off. We blame PBMs - but the2500real problem is the people and governments who keep signing2501these contracts without a clue2502    And big brand pharma is part of the problem too. They hate2503the big PBMs , but they let themselves get trapped in this mess2504with formularies and WAC based pricing.2505    If they moved to all net pricing , out of pocket prices to2506patients would drop immediately.There is a reason the USA has2507the highest brand pricing in the world and it's because we are2508the only country that uses PBMs.2509    Coincidence. I think not /)2510    What to do?2511      Require that all cash pays are counted against2512deductibles2513      Require that patient out of pocket costs are based2514exclusively on net pricing not WAC2515      Separate formularies from PBMs2516      Use administration leverage to require manufacturers to2517use net prices and marginsrather than list prices and rebate/2518fees2519      Get rid of GCRs and DIRs25202521                 U.S. Senate Special Committee on Aging25222523           "Modernizing Health Care: How Shoppable Services2524                   Improve Outcomes and Lower Costs"25252526                            October 22, 202525272528                      Prepared Witness Statements25292530                         Dr. G. Keith Smith, MD25312532    The Surgery Center of Oklahoma was founded in May of 1997.2533Our goal was to gain control of the medical and financial2534treatment of our patients. The problem was that even a minor2535surgical procedure performed at a large hospital meant2536bankruptcy for many patients, including insured patients.2537Consistent with their attempts to maximize revenue, hospitals2538denied physicians the tools and supplies they thought2539appropriate to treat their own patients-and yet hospitals2540continue to book ever increasing profits even today. I have2541changed this model. Our model is grounded on mutually2542beneficial exchange. While we save patients tens of thousands2543of dollars, currently the only ones that walk through our door2544are patients paying for their own care (about half the2545population) because if someone else is paying, they don't shop2546or care how expensive something is.2547    We were excluded from insurance at the start which meant2548that we had to be creative. We started quoting patients all-2549inclusive prices. It was simple math: what fee did the surgeon2550think was fair, what was the fair anesthesia charge and what2551was the time and materials based charge for the facility. It2552turns out that our prices were usually less than the patient's2553in network deductible and co-pay. Today our total charges are2554still only 1/6th to 1/10th of what large hospital systems near2555us charge and even more extreme price discrepancies are2556routine. In fact, we recently performed a tonsillectomy on a2557child for $3875 after the family had been quoted $72,000 by a2558Dallas area hospital. Our prices remain half of what Medicare2559pays hospitals and less than Medicaid payments to hospitals for2560the same procedure.2561    The Surgery Center of Oklahoma (www.surgerycenterok.com)2562quoted prices over the phone to patients until 2009 which is2563when I launched the first website displaying all-inclusive2564surgical prices. I had three goals in mind, all of which I2565would argue have been achieved. First, I wanted sticker-shocked2566patients to easily find us. Second, I wanted to start a price2567war, so patients far from Oklahoma could use our pricing as2568leverage in their local market. Third, I wanted to better2569understand why the same market discipline other industries must2570endure was seemingly not a thing in healthcare.2571    The first patients to arrive after posting our prices were2572Canadians. These patients are forced to wait in lines longer2573than the misery they can endure without care. Then it was the2574uninsured, beneficiaries of self-funded health plans and2575members of cost-sharing ministries. Approximately half our2576patients travel from out of state or out of the country to2577Oklahoma City for their surgical care. As news of the success2578of our model has grown, so has the number of facilities-and I'm2579happy to report-large hospitals-who now have copied us.2580    Price-matching in the industry has had a deflationary2581effect, even on the price-gouging facilities, as they stand to2582lose business and patients if they don't compete. Our model2583also increases the quality of care because physicians with2584unpredictable outcomes shy away from this tightly disciplined2585space. The good surgeons would rather perform a surgery at my2586facility due to better conditions and the higher pay they2587receive.2588    While building the surgery center and changing the market,2589my mission has now grown. I now also run Atlas Billing Company2590(www.atlasbillingcompany.com) which facilitates payment bundles2591for the Surgery Center of Oklahoma and is now curating and2592implementing surgical bundles for many other facilities now2593attempting to service price-sensitive buyers and patients. I am2594also a co-founder of the Free Market Medical Association2595(www.fmma.org), a mission-driven organization that works to2596bring buyers and sellers together in the United States,2597promotes market discipline in the industry and now has 37 state2598chapters.2599    To the industry big shots, or as I call them the cartel,2600the healthcare system in this country isn't broken-it is2601working precisely as designed, meant to enrich the corporate2602elite and intermediaries at the expense of patients and the2603American people at large. Fortunately, the alternative approach2604I've described is becoming more widespread. As insurance2605deductibles balloon and delays and denials become more2606commonplace, affordable, high quality care is available for2607victims of the system. I predict that "shoppable" medical2608services will become particularly critical for older Americans2609as an increasing number of physicians opt out of or severely2610curtail their exposure to Medicare.2611    Thank you.26122613                 U.S. Senate Special Committee on Aging26142615           "Modernizing Health Care: How Shoppable Services2616                   Improve Outcomes and Lower Costs"26172618                            October 22, 202526192620                      Prepared Witness Statements26212622                        Donald B. Moulds, Ph.D.26232624Introduction26252626    Chairman Scott, Ranking Member Gillibrand, and Members of2627the Committee, thank you for inviting me to testify on behalf2628of the California Public Employees' Retirement System (CalPERS)2629and discuss how shoppable services can help control health care2630costs. I will be using our reference pricing program and other2631aligned purchasing innovations as case examples.2632    My name is Don Moulds and I serve as the Chief Health2633Director for CalPERS. With more than 1.5 million members,2634CalPERS is the largest commercial health benefits purchaser in2635California and the second largest commercial purchaser in the2636nation after the federal government. We contract with numerous2637large health insurance companies to provide our members with a2638variety of health plan offerings that include health2639maintenance, preferred provider, and exclusive provider2640organization (HMO, PPO, and EPO) plans, as well as Medicare2641Supplemental and Medicare Advantage (MA) plans. In 2024, we2642spent over $12.4 billion purchasing health benefits for active2643and retired members and their families on behalf of the State2644of California (including the California State University) and2645nearly 1,200 public agencies and schools.2646    In my testimony, I will outline successes and lessons2647learned from CalPERS' two reference pricing programs: our hip2648and knee replacement reference pricing program and our2649Ambulatory Surgery Center Reference Pricing program. I will2650also describe a new program we instituted last year to2651incentivize our members to use independent laboratories for2652shoppable lab services rather than higher cost hospital-based2653labs. Finally, I will touch on our experience with a price2654transparency tool.2655    As I share our experiences, I wish to underscore that there2656is no "one size fits all" solution for rising health care2657costs. The cost-driving challenges are multifaceted. So too2658must be the solutions. We've learned that initially encouraging2659ideas can have underwhelming results or unintended consequences2660and that purchasers must be ever vigilant in monitoring and2661evaluating interventions to ensure they produce the outcomes we2662are seeking. Having said that, CalPERS considers consumer-2663oriented incentives, such as reference pricing, to be an2664integral part of our value-based purchasing model. At the end2665of my testimony, I will discuss other mechanisms that CalPERS2666utilizes to provide superior health care services at the2667greatest value for our members.26682669About CalPERS26702671    For more than nine decades, CalPERS has provided retirement2672and health security for state, school, and public agency2673members serving more than two million members as the nation's2674largest defined-benefit public pension fund.2675    As part of our role in administering health benefits for2676members and their families, CalPERS is committed to ensuring2677access to equitable, high-quality, affordable health care.2678    To promote competition and keep premiums affordable,2679CalPERS regularly commissions competition studies. For example,2680based on results from the 2021 study, CalPERS implemented2681health plan service expansions and introduced lower-cost HMO2682plans. These efforts increase competition within the CalPERS2683insurance marketplace and put downward price pressure on the2684premiums, positively impacting CalPERS members and2685employers.\1\,\2\2686---------------------------------------------------------------------------2687    \1\ See CalPERS, Pension & Health Benefits Committee Agenda Item26887a, available at https://www.calpers.ca.gov/docs/board-agendas/202103/2689pension/item-7a--a.pdf2690    \2\ See CalPERS, Competition Study & 2022 New Plans, Area2691Expansion, and Benefit Changes, available at https://2692www.calpers.ca.gov/docs/board-agendas/202103/pension/item-7a-attach-2--2693a.pdf2694---------------------------------------------------------------------------2695    To control rising health care costs, CalPERS works to align2696financial incentives with the health plans and Pharmacy Benefit2697Manager (PBM) we contract with, aiming to mitigate cost trend2698increases. In June 2024, CalPERS awarded new five-year2699contracts for its self-funded PPO plans to Blue Shield of2700California (BSC) and to Included Health, which serves as the2701population health management vendors. The contracts are2702designed to promote savings and improve quality by establishing2703financial incentives and clinical performance guarantees. BSC2704and Included Health have committed64 million at-risker the term2705of the contract if they do not meet the program's goals for2706controlling medical cost trends and improving quality. The2707contracts set the initial medical trend cost target at 5.5% in27082025, decreasing annually to 3% by 2029. If CalPERS' medical2709cost trend is lower than the target, BSC and Included Health2710stand to share in the savings.2711    In July, CalPERS announced a new five-year pharmacy2712benefits contract with CVS Caremark (CVS) designed to address2713rising costs of prescriptions while ensuring access to safe and2714effective medications for members. Under the agreement, CVS has2715committed $250 million at-risk over the term of the contract2716for controlling drug costs and improving health outcomes.2717Similar to our HMO and recent PPO contracts, the new PBM2718contract builds on CalPERS' broader efforts to align health2719care affordability with quality and equity. By aligning2720pharmacy benefits with our overall health care goals, CalPERS2721aims to create a model that can serve as a blueprint for2722purchasers across the nation.27232724Reference Based Pricing27252726    CalPERS mitigates medical trend increases through cost and2727quality conscious strategies, including leveraging curated2728hospital networks for better pricing, implementing value-based2729purchasing and integrated health models, fostering competition,2730and flex-funding. One contributor to increased health care2731costs is significant price variation for the same service. For2732example, lab services tend to vary greatly in price, despite no2733quality difference. Additionally, the prices for procedures2734provided in hospital outpatient departments are typically2735higher than those charged in freestanding centers due to the2736hospitals' higher costs and stronger bargaining position with2737insurers. In fact, Medicare reimburses hospital-based2738outpatient procedures at rates substantially higher than those2739it pays freestanding ambulatory facilities.\3\ As such,2740employers and insurers have started to utilize programs2741encouraging employees and enrollees to select the most cost-2742effective setting, including reference pricing models, which2743CalPERS has had success with. In a reference pricing model, the2744payor sets a maximum price for a specific health care service.2745Patients still have the option to receive that service at a2746facility of their choice, but they are responsible for charges2747above the reference price. This process helps contain costs2748while maintaining access to quality care by encouraging members2749to choose a pre-arranged high-quality, lower-cost provider for2750certain medical services. Patients who require hospital2751outpatient services due to specific clinical needs or limited2752local options are not subject to cost-sharing initiatives.2753---------------------------------------------------------------------------2754    \3\ See Robinson, James C., Timothy T. Brown and Christopher2755Whaley. "Reference-Based Benefit Design Changes Consumer Choices and2756Employers' Payments for Ambulatory Surgery. Health Affairs 2015 34:3,2757415-422 https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.119827582759---------------------------------------------------------------------------2760CalPERS Experience #1: Hip and Knee Reference Pricing27612762    In January 2011, CalPERS and Anthem Blue Cross of2763California (Anthem), our prior third-party administrator for2764our PPO plans, implemented a reference pricing program for2765high-cost elective procedures with minimal quality difference2766among facilities. CalPERS initially aimed to control inpatient2767hospital orthopedic surgery costs for total hip and total knee2768replacements. The program involved 46 hospital inpatient2769facilities statewide that accepted a reference price of $30,0002770and met quality and volume standards. Members who used the2771designated reference price facilities were responsible for2772their standard coinsurance payments. However, members who chose2773a non-designated facility were responsible for any charges2774above the $30,000 reference price. Medical exceptions were2775granted for non-routine procedures, and travel benefits were2776available for members living over 50 miles from a designated2777facility. A significant level of effort was devoted to both2778implementation and member education.2779    Results: The reference pricing program successfully2780increased the proportion of members who used designated2781facilities from about 50% to 64% within two years. Notably,2782non-reference pricing facilities lowered their charges to match2783the CalPERS $30,000 reference price. In turn, price variation2784for hip and knee replacements decreased dramatically. The2785average price at preferred facilities dropped from $35,000 to2786$25,500, while the non-reference pricing facilities reduced2787their prices from $43,000 to $27,000.2788    A study by University of California Berkeley health2789economists found that CalPERS' reference pricing program saved2790$5.5 million in its first two years, with the average price per2791procedure declining by 26% or about $9,000.\4\ Initially, the2792program sought to create savings through consumer decisions,2793but market changes and hospital pricing had the biggest impact.2794We learned anecdotally that non-reference pricing facilities2795were lowering prices to draw CalPERS members. Berkeley2796economists concluded that 14% of the savings arose from more2797individuals selecting reference-based pricing facilities, while279886% were due to cost reduction. Our analysis showed that the2799program continued to generate approximately $4 million in2800annual savings through 2020, with participating facilities2801expanding from 46 to 72. Additionally, members who utilized2802reference pricing facilities had lower rates of complications2803and infections with similar follow-up admission rates. Patient2804experience was also shown to be better at the reference pricing2805facilities.2806---------------------------------------------------------------------------2807    \4\ See Robinson, James C., and Timothy T. Brown. "Increases in2808consumer cost sharing redirect patient volumes and reduce hospital2809prices for orthopedic surgery." at Health Affairs 32.8 (2013): 1392-28101397. https://doi.org/10.1377/hlthaff.2013.01882811---------------------------------------------------------------------------2812    In terms of our overall health care spend, savings from2813reference pricing have been relatively modest, but the model2814has nonetheless offered valuable insights and lessons that may2815inform future strategies and potentially yield further savings.28162817      More member outreach could have been beneficial, such as2818phone calls or letters to members who had been referred to a2819procedure that could have been done at an ASC or a pop-up in2820the price transparency tool when members searched for a2821reference pricing procedure.28222823      Our reference price has applied only to the facility2824portion of the procedure and excluded professional fees and2825other related costs. Adopting a bundled payment approach2826alongside reference pricing could be beneficial.28272828      CalPERS has used a single statewide price that is easily2829communicated to members, despite significant price variation by2830region, with Northern California historically much more2831expensive than Southern California. Cost savings could be2832improved with regional pricing, but it might be more difficult2833to explain to our members.28342835CalPERS Experience #2: Ambulatory Surgery Center Reference2836Pricing28372838    In 2012, CalPERS and Anthem introduced a second reference2839pricing program for Colonoscopy, Cataract and Arthroscopy2840services. Under this program, procedures not performed at an2841Ambulatory Surgery Center (ASC) have a set reference price.2842Similar to the hip and knee replacement procedures, we2843identified large price variations for colonoscopy, cataract,2844and arthroscopy services. The variation mainly depended on the2845location of care, specifically whether procedures were provided2846by Hospital Outpatient Facilities vs. ASCs. We noticed a2847substantial increase in routine non-screening colonoscopies at2848ASCs, climbing from 70% to over 90%. In contrast, Anthem's2849broader business had around 75% of these procedures at ASCs.2850    Results: The University of California, Berkeley's2851evaluation of this program showed total savings of $5 million2852each year and realized average reductions of 21%. Specifically,2853cataract surgeries resulted in $1.3 million in savings (20%2854reduction), colonoscopies saved $7 million (28% reduction), and2855arthroscopies contributed $2.3 million (17% reduction) across a2856two-year timeframe.\5\,\6\ As a result, in 2018,2857CalPERS extended its ASC reference pricing program to 122858additional procedures, including endoscopic and laparoscopic2859procedures.2860---------------------------------------------------------------------------2861    \5\ See Robinson, James C., Timothy T. Brown and Christopher2862Whaley. "Reference-Based Benefit Design Changes Consumer Choices and2863Employers' Payments for Ambulatory Surgery." Health Affairs 2015 34:3,2864415-422 https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.11982865    \6\ See Robinson, James C, Timothy T. Brown and Christopher Whaley.2866"Association of Reference Payment for Colonoscopy With Consumer2867Choices, Insurer Spending, and Procedural Complications." JAMA Internal2868Medicine 2015;175;(11):1783-1789. https://jamanetwork.com/journals/2869jamainternalmedicine/fullarticle/24347328702871---------------------------------------------------------------------------2872CalPERS Experience #3: Member Incentive Lab Program28732874    In 2024, CalPERS implemented a member incentive program for2875labs due to high price variation with no quality difference.2876National research shows that lab services in hospitals (e.g.,2877large health systems) cost roughly 3.7 times more than those at2878independent labs.\7\ Our data indicates the markup may be even2879higher, especially compared with California's two largest2880independent lab providers.2881---------------------------------------------------------------------------2882    \7\ See Chang, Jessica, Katie Martin, Yuvraj Pathak and Marissa2883Myers. "Price Markups for Clinical Labs: Employer based Insurance Pays2884Hospital Outpatient Departments 3X Than Physician Offices and2885Independent Labs for Identical Tests." Health Care Cost Institute,2886https://healthcostinstitute.org/images/pdfs/HCCI%20Lab%20Brief--2887103124.pdf2888---------------------------------------------------------------------------2889    Our program offers no cost sharing for preferred2890independent labs in California, but non-preferred labs require2891standard coinsurance. In contrast to the other reference2892pricing programs, the lab incentive program provides financial2893incentives for our members to choose the lower-cost option2894without imposing additional costs for those who opt out.2895    While we are still evaluating this program, preliminary2896results indicate it increased preferred lab use by 4% and saved2897members $2.4 million in its first year. As a result, we are2898expanding outreach to improve awareness of the program and2899encourage more use of the preferred lab sites.29002901CalPERS Experience #4: Price transparency tool29022903    To aid price shopping, CalPERS provided a price2904transparency tool for PPO members in 2014 that allowed members2905to use an app to search for location, price, and quality of2906services. The tool was created to empower members to shop for2907services based on both price and quality, fostering greater2908member engagement. When paired with reference pricing, the goal2909was to create a more informed and engaged member.2910    Results: Ultimately, the price transparency tool fell short2911of delivering expected overall cost savings. Members saved on2912imaging costs, but spending in other 'shoppable' categories and2913reference pricing procedures showed no decrease.2914    We found that few of our members used the tool, especially2915for price shopping. Even though 24% of CalPERS households2916registered to use the tool, only 12% used it to search prices,2917and just 4% maintained usage (3 or more times, at least 90 days2918apart). Our experience is consistent with other research in2919this area.\8\ A small fraction of people sign up for these2920tools, and among those who sign up, few use the tool before2921seeking care. Furthermore, when they do use the tool to search2922prices, for most services, users do not choose a lower cost2923provider.2924---------------------------------------------------------------------------2925    \8\ Desai S, Hatfield LA, Hicks AL, Chernew ME, Mehrotra A.2926Association Between Availability of a Price Transparency Tool and2927Outpatient Spending. JAMA. 2016;315(17):1874-1881. doi:10.1001/2928jama.2016.42882929---------------------------------------------------------------------------2930    As such, CalPERS stopped offering the tool after 2.5 years2931due to the added cost of the tool. We found that there are a2932limited range of services that are truly `shoppable' and that2933our benefits with low cost sharing diminished the relevance of2934price shopping for most services. While members express an2935interest in quality and pricing, their decisions frequently2936hinge on the referrals they receive from healthcare2937providers.\9\ Additionally, rural communities lacked sufficient2938options to facilitate a meaningful comparison.2939---------------------------------------------------------------------------2940    \9\ Semigran, H., Gourevitch, R., Sinaiko, A., Cowling, D., &2941Mehrotra, A. (2018). Patients' views on price shopping and price2942transparency.. The American journal of managed care, 23(6), e186e192-2943ee192. Available at: https://pubmed.ncbi.nlm.nih.gov/28817296/29442945---------------------------------------------------------------------------2946Limitations on Reference Based Pricing29472948    Reference based pricing has shown promise, but it is not a2949panacea. Research suggests that if implemented as broadly as2950possible, it saves about five percent of total cost of2951care.\10\ Considering that CalPERS spends approximately $2.32952billion each year (or $6.4 million per day) on the affected PPO2953population, the savings are quite modest.2954---------------------------------------------------------------------------2955    \10\ White, Chapin, and Megan Eguchi. Reference Pricing: A Small2956Piece of Health Care Price and Quality Puzzle. National Institute for2957Health Care Reform. Available at: https://nihcr.org/wp-content/uploads/29582016/07/Research--Brief--No.--18.pdf2959---------------------------------------------------------------------------2960    Overall savings are limited by the small number of2961procedures where reference pricing makes sense. While reference2962pricing is well suited for non-emergent elective procedures2963with significant price differences, many healthcare services2964are not "shoppable."2965    Our experience has shown that while price referencing2966programs can work, to truly manage rising health care costs,2967other issues need to be addressed, including:29682969      Competition: CalPERS has found that insufficient2970competition results in higher prices. Since 2010, competition2971among hospitals and providers in California has lessened,2972notably in rural regions.\11\,\12\ As of 2018, 52%2973of specialists and 42% of primary care physicians were in2974health system-owned practices.\13\ In markets with fewer2975hospitals, consolidation led to a 12% increase in premiums, a29769% rise in specialist fees, and a 5% rise in primary care costs2977from 2013 to 2016.\14\2978---------------------------------------------------------------------------2979    \11\ See California Health Care Foundation (CHCF), The Sky's the2980Limit: Health Care Prices and Market Consolidation in California,2981available at https://www.chcf.org/wp-content/uploads/2019/09/2982SkysLimitPricesMarketConsolidation.pdf2983    \12\ See California Health Care Foundation (CHCF), Markets or2984Monopolies? Considerations for Addressing Health Care Consolidation in2985California, available at https://www.chcf.org/publication/markets-2986monopolies-health-care-consolidation-california/2987    \13\ Ibid.2988    \14\ See Health Affairs, Consolidation Trends In California's2989Health Care System: Impacts On ACA Premiums And Outpatient Visit2990Prices, available at https://www.healthaffairs.org/doi/full/10.1377/2991hlthaff.2018.047229922993      To address abuses in this space, Congress could pass2994laws to stop anti-competitive practices in contracts between2995providers and health plans. Specifically, we support the2996passage of the Healthy Competition for Better Care Act (S.29971451), which encourages a more open market, fosters2998competition, drives innovation, improves quality, and reduces2999---------------------------------------------------------------------------3000costs.30013002      Transparency: We see transparency as vital in developing3003shoppable services but emphasize that it should be user-3004friendly for all stakeholders. CalPERS maintains a3005comprehensive claims data warehouse to track health care costs3006and outcomes, allowing us to identify cost drivers and innovate3007in areas like reference pricing. Other payers may lack this3008long-term data, making federal standards for hospital3009transparency crucial. We commend the Administration's efforts3010to ensure comprehensive and precise reporting of hospital price3011data.30123013      Innovation: Beyond reference pricing, CalPERS3014continuously explores innovative approaches to reduce costs and3015improve quality. For example, CalPERS, in alignment with other3016large public purchaser partners in California, adopted a subset3017of quality and outcome measures and tied significant financial3018accountability to high-performance on these measures for our3019health plans. These measures, known as the Quality Alignment3020Measure Set (QAMS), and the financial incentives tied to them,3021aim to improve care for clinically important conditions for3022which there are major opportunities for improvement and3023evidence-based measures in current use. The QAMS consists of3024five measures, all of which are nationally endorsed, evidence-3025based NCQA HEDIS measures: Childhood Immunizations, Controlling3026High Blood Pressure, Comprehensive Diabetes Care - Poor Control3027(HgbA1c >9 percent), Colorectal Cancer Screening, Maternity3028Care (reflecting a combined score for Timeliness of Prenatal3029Care and Postpartum Care).30303031Conclusion30323033    Thank you, again, for inviting me to participate in today's3034hearing. CalPERS' application of Reference Pricing models3035demonstrates modest but notable savings in shoppable services.3036However, truly curbing rising health care costs requires a3037thoughtful, multi-faceted approach. CalPERS is uniquely3038positioned to assist the Committee as it develops policy and I3039welcome your questions on how we manage health care costs.30403041                 U.S. Senate Special Committee on Aging30423043           "Modernizing Health Care: How Shoppable Services3044                   Improve Outcomes and Lower Costs"30453046                            October 22, 202530473048                      Prepared Witness Statements30493050                       Dr. Jeanne Lambrew, Ph.D.30513052[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]3053=======================================================================30543055                        Questions for the Record30563057=======================================================================30583059                 U.S. Senate Special Committee on Aging30603061           "Modernizing Health Care: How Shoppable Services3062                   Improve Outcomes and Lower Costs"30633064                            October 22, 202530653066                        Questions for the Record30673068                               Mark Cuban30693070                           Senator Mark Kelly30713072    Question:30733074    You have pushed for greater transparency and fairness in3075prescription drug pricing. Many Americans, including seniors on3076fixed incomes, continue to struggle with rising drug costs3077despite recent reforms.3078    As new drug pricing models and federal policies take shape,3079there is concern about how these changes will affect the3080stability of supply and the ability of smaller providers and3081rural hospitals to keep essential medicines in stock. We all3082agree that prescription drug costs are too high, but in states3083like Arizona, many people rely on Medicare and Medicaid. So3084even small pricing shifts could have ripple effects on access3085and affordability, especially for small hospitals, community3086pharmacies, and rural clinics.3087    How can future pricing models and market changes avoid3088unintentionally raising costs or limiting access for patients3089who rely on public programs or small community providers?30903091    Response:30923093    The solution is for states to stop working with industry3094behemoths and instead join together to create their own group3095purchasing organizations (GPOs). These state-run GPOs could3096purchase everything from generic and brand medications to3097medical equipment. Their aggregate buying power would shift3098pricing and availability leverage away from PBMs, wholesalers,3099and insurance companies and move it directly to the states."31003101    Question:31023103    How can we encourage transparency and competition in the3104drug market while maintaining a reliable supply of medicines3105for seniors and people with chronic conditions?31063107    Response:31083109    If states work together to purchase all medications, from3110the cheapest generics to the most expensive therapies, they can3111use their combined volume to require that all purchases are3112made at a net price. This model would also require all3113associated costs, markups, and prices to be published, ensuring3114full transparency and removing any question about whether the3115pricing is fair."31163117                 U.S. Senate Special Committee on Aging31183119           "Modernizing Health Care: How Shoppable Services3120                   Improve Outcomes and Lower Costs"31213122                            October 22, 202531233124                        Questions for the Record31253126                         Dr. G. Keith Smith, MD31273128                           Senator Mark Kelly31293130    Question:31313132    It's clear that transparent, all-inclusive pricing has3133allowed patients to save tens of thousands of dollars.3134    At the same time, many older Americans, particularly those3135in rural or lower-income areas, still struggle to access care3136because of high hospital costs and reduced Medicaid3137reimbursement rates.3138    For transparency to work, it also has to be fair and3139accessible to patients on Medicare and Medicaid. This is also3140important for those in rural areas who may not have multiple3141provider options, which makes it hard to make informed3142decisions about their care.3143    How can we expand shoppable health care so that patients in3144places like rural Arizona can actually benefit from transparent3145pricing and consumer choice, rather than seeing these reforms3146limited to larger or urban health systems?31473148    Response:31493150    Thank you for your question. While certain, high-complexity3151services can only be delivered in high population areas due to3152specialization of personnel and equipment, primary care,3153imaging, simple surgical and obstetrical care can be delivered3154in rural areas and has been traditionally. My great uncle,3155Walter Bayes, owned the only hospital in Chickasha, Oklahoma3156(some of the old-timers still talk about Bayes Hospital). His3157ownership and control of the facility allowed him to treat3158patients as individuals, both medically and financially. Most3159of the rural hospitals in Oklahoma (and I'd bet nationally)3160were established, owned and controlled by the physicians3161working in the small towns. I would suggest that just as my3162surgery center is owned and controlled by the physicians3163working there, physician ownership of rural hospitals3164(currently prohibited by Stark laws) would solve part one of3165rural health care's issue: supply. Ownership would not only3166powerfully recruit new graduates from residency, it would3167almost certainly draw urban physicians, disgruntled with their3168job as a hospital employee or otherwise grinding out a living3169in a corporate atmosphere. Demand, is part two of rural health3170care's issue, fueled by relieving patients of a large part of3171their out of pocket expense. Medicare price controls have not3172only caused shortages on the supply side, but, relieved of so3173much of their out of pocket expense, the demand side by3174patients without sticker shock has overwhelmed the restricted3175supply of personnel and services. I would suggest that allowing3176physicians to own the hospitals and repealing balance billing3177provisions which currently restrict physician fees to the3178"Medicare allowable" would together bring more market3179discipline to rural care. Any physician inclined to abuse3180patients with this new freedom would find their waiting room3181empty as more arriving competitors would keep this temptation3182in check. I hope this answer is helpful to you and in line with3183your inquiry.31843185                 U.S. Senate Special Committee on Aging31863187           "Modernizing Health Care: How Shoppable Services3188                   Improve Outcomes and Lower Costs"31893190                            October 22, 202531913192                        Questions for the Record31933194                         Dr. Don Moulds, Ph.D.31953196[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]31973198                 U.S. Senate Special Committee on Aging31993200           "Modernizing Health Care: How Shoppable Services3201                   Improve Outcomes and Lower Costs"32023203                            October 22, 202532043205                        Questions for the Record32063207                       Dr. Jeanne Lambrew, Ph.D.32083209                        Senator Raphael Warnock32103211    Question:32123213    According to Justice in Aging, 1 in 5 Americans between the3214ages of 50 to 64 are enrolled in Medicaid, with 5 million of3215those individuals covered through Medicaid expansion. Older3216adults also face challenges with employment, something that the3217Special Committee on Aging examined just last month.3218    How will older Americans face barriers to health coverage3219under H.R. 1's new Medicaid work requirements?32203221    Response:32223223    According to KFF, older Medicaid enrollees may be most at3224risk of losing coverage due to work requirements that begin in3225January 2027. The percent of non-disabled, non-parent adults3226with Medicaid coverage that are employed or in school is 723227percent of those ages 19 to 27, 66 percent of those ages 27 to322849, but less than half (48%) of enrollees ages 50 to 64.3229    In addition to its new work requirements, H.R. 1 makes3230other changes to Medicaid. An estimated 90 percent of the 223231Americans age 50 years or older will be affected by these3232changes. Given the greater use for health care of older than3233younger people, the loss of Medicaid coverage could have dire3234health consequences.32353236    Question:32373238    Can you describe how loss in health coverage due to work3239reporting requirements will increase costs in Medicare as3240seniors age into the program?3241    Due to the expiration of enhanced Premium Tax Credits3242(PTCs), older Americans are at risk of losing health care3243coverage due to facing one of the highest premium increases.3244This might have ripple effects on the rural healthcare system3245in states like Georgia, with 71 rural hospitals and 94 rural3246health clinics, which disproportionately serve older Americans.32473248    Response:32493250    Research suggests that people who were uninsured in the3251year before enrolling in Medicare had higher health needs and3252significantly higher costs than those who were previously3253uninsured.32543255    Question:32563257    How will the expiration of enhanced PTCs and Medicaid cuts3258affect the financial viability of rural hospitals and clinics3259in Georgia?32603261    Response:32623263    A recent analysis by the Urban Institute estimates that the3264failure to continue current premium tax credits will result in32657.3 million people losing ACA coverage and 4.8 million people3266becoming uninsured. This, in turn, would reduce office-based3267physician service spending by $5.1 billion. It would also3268reduce hospital spending by $14.2 billion and increase3269uncompensated care for hospitals by $2.2 billion.3270    The analysis estimates that Georgia hospitals will be among3271the hardest hit, potentially experiencing a 20.8 percent3272increase in hospital uncompensated care. The National Rural3273Health Association estimates that 50 percent of rural hospitals3274nationwide are operating with negative margins: the funding3275reduction from the expiration of enhanced premium tax credits3276could cause them to reduce services or close altogether.32773278    Question:32793280    How can Congress alleviate the financial burden of rural3281health providers and the subsequent rise of healthcare costs3282among older Americans?3283    Response:32843285    Congress could prevent rural health providers from seeing3286more uninsured, older Americans by extending the enhanced3287premium tax credits. Older Americans pay more than younger3288Americans for individual health insurance, so they will face3289higher out-of-pocket premiums. Additionally, over half of those3290who will lose eligibility for tax credits altogether are ages329150 to 64.3292    Further, Congress could limit the coverage loss from H.R. 13293in a number of ways, including exempting older Medicaid3294enrollees from its policies like work requirements.3295    In addition to doing no harm, Congress could take numerous3296actions to lower health care costs such as accelerating action3297on high drug prices, reducing overcharging by insurers and for-3298profit health care providers, and supporting safety net3299services and providers to maintain the health of rural and3300underserved communities.33013302=======================================================================33033304                       Statements for the Record33053306=======================================================================33073308                 U.S. Senate Special Committee on Aging33093310           "Modernizing Health Care: How Shoppable Services3311                   Improve Outcomes and Lower Costs"33123313                            October 22, 202533143315                       Statements for the Record33163317          Alex Oshmyansky, MD, Ph.D. and Mark Cuban Statement33183319[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]33203321                 U.S. Senate Special Committee on Aging33223323           "Modernizing Health Care: How Shoppable Services3324                   Improve Outcomes and Lower Costs"33253326                            October 22, 202533273328                       Statements for the Record33293330             American Hospital Association (AHA) Statement33313332    On behalf of our nearly 5,000 member hospitals, health3333systems and other health care organizations, as well our3334clinician partners - including more than 270,000 affiliated3335physicians, two million nurses and other caregivers - the3336American Hospital Association (AHA) appreciates the opportunity3337to submit this statement to share the hospital field's comments3338on how to reduce health care costs for seniors.33393340OVERVIEW OF NATIONAL HEALTH SPENDING33413342    America's hospitals and health systems understand and share3343your concerns regarding the high cost of health care. Hospitals3344continue to face a perfect storm of financial pressures driven3345by persistent cost growth, inadequate reimbursement and3346shifting care patterns driven by both policy changes and an3347older, sicker population with more complex, chronic conditions.3348Despite escalating expenses, Medicare reimbursement continues3349to significantly lag behind inflation. At the same time, the3350practices of certain Medicare Advantage (MA) plans to increase3351delays, denials and underpayments are exacerbating the3352financial burden faced by hospitals. These challenges create3353significant barriers to hospitals' ability to continue to3354provide access to essential services and care, especially for3355our nation's seniors.3356    Rising prescription drug prices also continue to be a major3357cost driver for both patients and hospitals and health systems.3358Average drug expenses per patient increased nearly 20% between33592019 and 2022.\1\ In addition, a government report found that3360drug companies increased prices faster than inflation for3361approximately 2,000 drugs between January 2022 and January33622023, with an average price increase of 15.2%.\2\ Compounding3363this problem are decisions made by drug companies to price new3364drugs coming onto the market at record-high levels, with the3365median price of a new drug in 2023 costing $300,000 and3366increasing to $370,000 in 2024.\3\,\4\3367---------------------------------------------------------------------------3368    \1\ https://www.aha.org/system/files/media/file/2025/04/The-Cost-3369of-Caring-April-2025.pdf3370    \2\ https://aspe.hhs.gov/reports/changes-list-prices-prescription-3371drugs3372    \3\ https://www.reuters.com/business/healthcare-pharmaceuticals/3373prices-new-us-drugs-rose-35-2023-more-than-previous-year-2024-02-23/3374    \4\ https://www.reuters.com/business/healthcare-pharmaceuticals/3375prices-new-us-drugs-doubled-4-years-focus-rare-disease-grows-2025-05-337622/33773378---------------------------------------------------------------------------3379HOSPITAL PRICE TRANSPARENCY REQUIREMENTS33803381    We appreciate Congress' ongoing interest in hospital price3382transparency to provide consumers with access to the price3383information they need, which is specific to their course of3384treatment.3385    Hospitals and health systems must comply with both state3386and federal price transparency policies, which include the3387federal Hospital Price Transparency Rule and provisions in the3388No Surprises Act. The Centers for Medicare & Medicaid Services3389(CMS) monitors hospital price transparency compliance, which3390includes requirements for a consumer-friendly display of3391shoppable services information, as well as comprehensive,3392machine-readable files. Since the Hospital Price Transparency3393requirements went into effect in 2021, hospitals have invested3394countless staff hours and substantial resources in adhering to3395the provisions and remain committed to ensuring they meet the3396regulatory requirements, even as the provisions have been3397continually modified since implementation.3398    We are concerned with legislative proposals that would3399diverge from current regulatory requirements and impose3400additional administrative burdens on hospitals and health3401systems. For example, provisions have been drafted that would3402no longer recognize price estimator tools as a method to meet3403the shoppable services requirement under the Hospital Price3404Transparency regulations. This change would both reduce access3405to a consumer-friendly research tool and unfairly penalize3406hospitals that have spent significant capital to comply with3407the regulation.3408    Price estimator tools offer consumers an estimate of their3409out-of-pocket costs based on their insurance benefit design,3410such as cost-sharing requirements and prior utilization, as3411well as the patient's annual deductible. This is an important3412feature of these tools that is not available from a shoppable3413services spreadsheet. Eliminating the use of price estimator3414tools as a method to meet the shoppable services requirement of3415the Hospital Price Transparency Rule would therefore reduce3416price transparency for patients. We urge Congress to reject3417this potential change.3418    As Congress seeks to make statutory changes to price3419transparency standards, it is important for legislators to3420consider the adjustments that CMS regularly makes to the3421Hospital Price Transparency Rule. These include changes related3422to standardization, new data elements, file accessibility, and3423the accuracy and completeness affirmation, as well as changes3424to CMS' monitoring and enforcement processes. CMS currently3425requires hospitals to use a standard format to comply with the3426machine-readable file requirement, which includes data elements3427such as negotiated rate contracting type or methodology, an3428accuracy and completeness affirmation, and (as of Jan. 1, 2025)3429an "estimated allowed amount."3430    CMS also requires that hospitals' price transparency3431information be more easily found on their websites. In the3432calendar year 2026 outpatient prospective payment system3433proposed rule, CMS considered drastically changing these3434requirements once again, both in terms of the required data3435elements in the machine-readable files and the attestation3436language. Should Congress pass price transparency legislation3437that does not align with current requirements or the new3438requirements expected to be finalized in the coming months, it3439would negate the work that CMS has done to update the rule3440based on lessons learned since the regulation took effect.3441    Regarding compliance and enforcement, hospitals may be3442required to have an authorized hospital official certify the3443accuracy and completeness of the hospital's machine-readable3444file during the monitoring and enforcement process. CMS can3445also require hospitals to provide additional documentation at3446the agency's request, including contracting documentation3447needed to validate the hospital's negotiated rates and3448verification of the hospital's licensing status.3449    CMS publicizes hospital-specific information on all3450compliance assessment and enforcement activity, which it now3451updates regularly on a public website. This includes details3452related to CMS' assessment of hospital compliance, any3453compliance actions taken against a specific hospital, the3454status of the compliance action(s) and the outcome of the3455action(s). Since the hospital price transparency requirements3456took effect in 2021, CMS has changed the requirements and3457guidance several times. While many of these changes have made3458expectations clearer and easier to comply with, their repeated3459implementation requires significant time and resources.3460    Hospitals and health systems are eager to continue working3461towards providing the best possible price estimates for their3462patients.34633464    The AHA asks Congress to take the following steps to3465support these efforts:34663467      Review and streamline the existing transparency policies3468with a priority objective of reducing potential patient3469confusion and unnecessary regulatory burden on providers.34703471      Focus efforts on ensuring pre-service estimates can be3472as accurate as possible, including by simplifying benefit3473design.34743475      Continue to convene patients, providers and payers to3476seek input on how to make federal price transparency policies3477as patient-centered as possible.34783479      Refrain from advancing additional legislation or3480regulations that may further confuse or complicate providers'3481ability to provide meaningful price estimates while adding3482unnecessary costs to the health care system.34833484REJECT SITE-NEUTRAL PAYMENT CUTS34853486    The AHA strongly opposes efforts to expand site-neutral3487payment cuts, which would jeopardize access to care for3488seniors. Current Medicare payment rates appropriately recognize3489that there are fundamental differences between patient care3490delivered at hospital outpatient departments (HOPDs) compared3491to other settings. HOPDs treat patients who are more likely to3492be sicker and more medically complex while also being held to3493stricter patient safety standards and regulatory requirements.3494    This is especially true in rural communities. Medicare3495beneficiaries in rural areas -including those who are dually3496eligible for Medicaid - disproportionately rely on HOPDs to3497meet their increased health care needs since they have less3498access to office-based physicians.\5\ Additional Medicare cuts3499to these facilities will have a direct impact on the level of3500care and services available to patients in rural communities.3501---------------------------------------------------------------------------3502    \5\ https://www.aha.org/system/files/media/file/2024/01/analysis-3503hospitals-health-systems-are-critical-to-preserving-access-to-care-for-3504rural-communities-report.pdf3505---------------------------------------------------------------------------3506    The cost of care delivered in HOPDs accounts for the unique3507benefits that hospitals and health systems provide to their3508communities - which are not provided by other sites of care.3509This includes investments made to maintain standby capacity for3510natural and manmade disasters, public health emergencies and3511unexpected traumatic events, as well as delivering 24/73512emergency care to all who come to the hospital.3513    Existing site-neutral payment cuts have already created3514significant financial challenges for many hospitals and health3515systems. This is largely because Medicare significantly3516underpays hospitals for the cost of caring for patients. The3517latest analysis, from 2023, shows that on average, Medicare3518paid only 83 cents for every dollar spent by hospitals,3519resulting in over $100 billion in underpayments.\6\3520---------------------------------------------------------------------------3521    \6\ https://www.aha.org/system/files/media/file/2025/04/The-Cost-3522of-Caring-April-2025.pdf3523---------------------------------------------------------------------------3524    The AHA urges Congress to reject any additional site-3525neutral cuts, which would exacerbate the financial challenges3526facing hospitals and health systems and reduce access to3527essential care for Medicare beneficiaries, especially those3528living in rural and underserved communities.35293530CONCLUSION35313532    Thank you for your consideration of the AHA's comments on3533issues related to reducing health care costs for seniors. We3534look forward to working together to ensure patients continue to3535have access to quality care in their communities.35363537                 U.S. Senate Special Committee on Aging35383539           "Modernizing Health Care: How Shoppable Services3540                   Improve Outcomes and Lower Costs"35413542                            October 22, 202535433544                       Statements for the Record35453546                         Families USA Statement35473548    Chair Scott and Ranking Member Gillibrand, we want to thank3549you for holding this important andtimely hearing on health care3550affordability, and to offer our sincere appreciation to all of3551thewitnesses and senators who are lifting up the impact that3552unaffordable health care costs have onour nation's families,3553especially older adults.3554    Across the country, Americans are sounding the alarm: the3555cost of health care is too high, thesystem too complex, and3556relief is desperately needed. In 2025, nearly half of all3557Americansstruggle to afford the health care that they and their3558families need due to the high cost.\1\ More than a quarter of3559older Americans, who spend more on health care than any other3560age group, reportbeing very concerned they will be unable to3561pay for lifesaving health care in the future.\2\ Evenfamilies3562with commercial coverage are spending up to 25% of their3563monthly budget on health carecosts.\3\ These high costs have3564left 100 million families grappling with medical debt they may3565neverpay off.\4\3566---------------------------------------------------------------------------3567    \1\ KFF, Americans' Challenges with Health Care Costs, July 11,35682025. https://www.kff.org/health-costs/issuebrief/americans-challenges-3569with-health-care-costs/3570    \2\ Nicole Willcoxon, Older Adults Sacrificing Basic Needs Due to3571Healthcare Costs, June 15, 2022. Gallup, Inc. https://news.gallup.com/3572poll/393494/older-adults-sacrificing-basic-needs-due-healthcare-3573costs.aspx;Centers for Medicare and Medicaid Services, National Health3574Expenditure Data, U.S. Personal Health Care Spending By Age and Sex35752020 Highlights. https://www.cms.gov/research-statistics-data-3576andsystems/statistics-trends-andreports/nationalhealthexpenddata/3577downloads/ageandgenderhighlights.pdf3578    \3\ Sara R. Collins, Shreya Roy, and Relebohile Masitha, "Paying3579for It: How Health Care Costs and Medical Debt Are Making Americans3580Sicker and Poorer: Findings From the Commonwealth Fund 2023 Health Care3581Affordability Survey," The Commonwealth Fund, October 26, 2023, https:/3582/doi.org/10.26099/bf08-3735.3583    \4\ Noam N. Levey, "100 Million People in America Are Saddled With3584Health Care Debt," KFF Health News, June 16, 2022, https://3585kffhealthnews.org/news/article/diagnosis-debt-investigation-100-3586million-americanshidden-medicaldebt/.3587---------------------------------------------------------------------------3588    Rising health care costs stem from a fundamental3589misalignment between the business interests ofthe health care3590sector - including big drug companies, corporate hospital3591systems, pharmacybenefit managers (PBMs), and insurers - and3592the health and financial security of our nation'sfamilies. The3593unchecked growth of big health care corporations and a lack of3594oversight over theirbusiness practices have led to monopolistic3595health care practices and prices, reduced access tocare, worse3596health outcomes, and lower wages for workers. Health care3597industry players chargeexcessive health care prices and take3598advantage of loopholes that drive inefficient health3599carespending that has little to do with the quality of care3600patients receive. This was all true beforerecent policy changes3601like the passage of H.R. 1, which cuts $1 trillion from our3602health care system,compounding this crisis by limiting access3603to affordable care while failing to provide families withrelief3604from high health care costs.3605    It's time to put partisanship aside and provide Americans3606with desperately needed relief fromcrushing health care costs.3607Congress must take immediate steps to support families whose3608healthand financial security are in jeopardy, while also3609committing to address the root causes of ournation's health3610care cost crisis by taking on price gouging by corporate health3611systems. The firststep is for Congress to come together to3612extend enhanced premium tax credits for the nearly22 million3613Americans who rely on them to help them afford comprehensive3614health coveragefrom the federal or state health insurance3615Marketplaces.\5\ If Congress fails to prevent these keytax3616credits from expiring this year, millions of Americans will see3617their health insurance premiumsskyrocket next year - more than3618double on average,\6\ with many paying not just hundreds3619butthousands of dollars more for health coverage - and roughly3620four million people will lose coveragealtogether.\7\3621---------------------------------------------------------------------------3622    \5\ Centers for Medicare & Medicaid Services. "2025 Marketplace3623Open Enrollment Period Public Use Files." May 12, 2025. https://3624www.cms.gov/data-research/statistics-trends-reports/3625marketplaceproducts/2025marketplace-open-enrollment-period-public-use-3626files.3627    \6\ Andrew Sprung. "Trump administration takes one more whack at3628the ACA marketplace." Xpostfactoid. September 4, 2025. https://3629xpostfactoid.substack.com/p/trump-administration-takes-one-more3630    \7\ Congressional Budget Office, The Effects of Not Extending the3631Expanded Premium Tax Credits for the Number of Uninsured People and the3632Growth in Premiums, December 4, 2024.https://www.cbo.gov/system/files/3633202412/59230-ARPA.pdf.3634---------------------------------------------------------------------------3635    The Aging Committee has a key role to play in discussing3636and advancing bipartisan andcommonsense legislation that would3637remedy some of the most obvious health system failings, andthe3638American people are eager to see action. A new poll from3639Families USA and Hart ResearchAssociates shows that lowering3640health care costs is the top priority for Americans3641acrossdemographics, even surpassing concerns related to3642housing, jobs, crime, and immigration. Over 9in 10 voters think3643it is important that Congress and the President act to lower3644health carecosts to reduce stress on family budgets, bring down3645the cost of living, and to make healthcare more affordable and3646accessible to millions of families around the country.\8\3647---------------------------------------------------------------------------3648    \8\ Families USA, "New Poll: Crushing Health Care Costs Top3649Priority for Voters" October 22, 2025,https://familiesusa.org/press-3650releases/new-poll-crushing-health-care-costs-top-priority-for-voters/36513652---------------------------------------------------------------------------3653Congress Must Act Now to Make Health Care Tax Credits Permanent36543655    A top priority for this Committee and your colleagues in3656Congress must be to permanently extend the expiring enhanced3657premium tax credits to ensure millions of people can continue3658to afford their health insurance. Millions of American workers3659who don't get coverage on-the-job or through Medicaid or3660Medicare qualify for premium tax credits for a plan on3661healthcare.gov or a state marketplace if their current3662household income is at least $15,060 for an individual or3663$31,200 for a family of four, and they do not have other3664options for affordable health coverage.\9\ If Congress does not3665intervene, these individuals and families will enter the annual3666open enrollment period for health coverage on November 1 and be3667hit with premiums that may be double or triple what they paid3668last year, with no guarantee that any tax credit relief will be3669available to them later. The effect on families, communities,3670and local economies will be devastating.3671---------------------------------------------------------------------------3672    \9\ "Advance premium tax credit (APTC)," HealthCare.gov, U.S.3673Centers for Medicare & Medicaid Services, accessed July 25, 2025.3674https://www.healthcare.gov/glossary/advanced-premiumtax-credit/ and36752024 federal poverty guidelines,https://aspe.hhs.gov/sites/default/3676files/documents/7240229f28375f54435c5b83a3764cd1/detailedguidelines-36772024.pdf. The minimum income limits are slightly higher in Alaska and3678Hawaii due to those states'poverty guidelines. The income limits will3679increase slightly for 2026 - people may qualify then if their incomes3680their incomes are above 2025 federal poverty guidelines, listed3681here:https://aspe.hhs.gov/sites/default/files/documents/3682dd73d4f00d8a819d10b2fdb70d254f7b/detailedguidelines-2025.pdf3683---------------------------------------------------------------------------3684    These tax credits are a lifeline for workers and their3685families, including those with serious andchronic health3686conditions like diabetes, heart disease, and cancer who need3687access to regular careto stay healthy and keep working when3688they don't get insurance through their job. If Congress failsto3689act, older adults would be some of the hardest hit. For3690example, a couple in their early 60searning a combined income3691of $90,000 will see their premiums spike by more than 250% -3692awhopping increase of more than $26,000 per year. In some3693states, their premiums will increase byover $50,000.\10\3694---------------------------------------------------------------------------3695    \10\ Cheryl Fisch-Parcham, "Health Premiums To Spike for American3696Workers and Small Business Owners If Enhanced Health Care Tax Credits3697Are Not Made Permanent" Families USA https://familiesusa.org/wpcontent/3698uploads/2025/10/National-ImportancePremiumTaxCredits-FactSheet--3699October-2025-Update.pdf3700---------------------------------------------------------------------------3701    The enhanced premium tax credits have been lifechanging for3702people like Amy from New Castle,Colorado who runs a small print3703publishing business with her husband that garners a3704householdannual income of about $40,000. While her husband is3705covered by Medicare, Amy relies on themarketplace for the3706health insurance she needs to manage her chronic health3707condition. Utilizingenhanced premium tax credits, her monthly3708premiums dropped from a staggering $923 to just$1.57 each3709month. Only with these credits can Amy get the coverage she3710needs to stay healthy,keep their small business open, and3711contribute to the local economy.\11\3712---------------------------------------------------------------------------3713    \11\ Lauren Rubenstein, "Behind the Numbers: The Real Americans who3714will be Hardest Hit if Congress Lets Premium Tax Credits Expire"3715Families USA, September 25, 2025 https://familiesusa.org/resources/3716behindthe-numbers-the-real-americans-who-will-be-hardest-hit-if-3717congress-lets-premium-tax-credits-expire/3718---------------------------------------------------------------------------3719    Amy needs Congress to take immediate action, and she isn't3720alone: Roughly three-quarters ofAmericans polled from across3721the country - and across party lines - want Congress to act3722toextend the enhanced credits.\12\3723---------------------------------------------------------------------------3724    \12\ Families USA, "New Poll: Crushing Health Care Costs Top3725Priority for Voters" October 22, 2025, https://familiesusa.org/press-3726releases/new-poll-crushing-health-care-costs-top-priority-for-voters/37273728Committing to an Agenda that Addresses Root Causes of High3729---------------------------------------------------------------------------3730Health Costs37313732    Beyond providing immediate relief and certainty to families3733and older adults who utilize theenhanced premium supports, this3734Committee and your colleagues in Congress have an3735importantopportunity and responsibility to take on the3736corporate interests and underlying drivers of highhealth care3737costs and advance pro-consumer reforms to the health care3738system that put moneyback in people's pockets. To that end,3739almost all of below priorities have bipartisan and3740bicameralsupport in Congress and would make important strides3741to begin addressing corporate abuses inhealth care, and our new3742poll shows that voters across the political spectrum believe3743thesebold actions will be most effective at immediately3744bringing down costs:\13\3745---------------------------------------------------------------------------3746    \13\ Families USA, "New Poll: Crushing Health Care Costs Top3747Priority for Voters" October 22, 2025,https://familiesusa.org/press-3748releases/new-poll-crushing-health-care-costs-top-priority-for-voters/37493750      Requiring all hospitals to disclose rates they charge in3751---------------------------------------------------------------------------3752dollars and cents (91% support),37533754      Prohibiting health systems from charging Medicare more3755for the same procedure ifperformed at a hospital facility3756instead of a doctor's office (84% support),37573758      Prohibiting Medicare Advantage companies from3759exaggerating health risks to get paid more(79% support),37603761      Eliminating legal loopholes that allow health care3762providers to overcharge (75% support),37633764      Restricting aggressive billing practices like surprise3765billing (73% support),37663767      Reducing unnecessary middlemen between patients and3768providers, who increase costs(72%),37693770      Closing legal loopholes that allow drug companies to3771raise prices by blocking generics(87% support),37723773      Allowing Medicare to negotiate lower prices on more3774drugs (89% support), and37753776      Reforming the way doctors and providers are paid, so pay3777is based on keeping peoplehealthy and quality of care rather3778than the number of procedures (80% support).37793780    Thank you again for holding this timely and critical3781hearing. Now, more than ever, families acrossthe country are3782feeling the negative impacts of our nation's affordability3783crisis firsthand and areeager for Congress to pass legislation3784that provides meaningful relief and reaffirms that theirelected3785representatives are doing all they can to deliver on their3786promises to lower costs andimprove health care. The journey to3787fully transform our health care system so that it truly works3788forAmerican families is long, but Congress holds the power to3789take the next critical steps. FamiliesUSA stands ready to3790support you in this essential and urgently needed work.37913792                 U.S. Senate Special Committee on Aging37933794           "Modernizing Health Care: How Shoppable Services3795                   Improve Outcomes and Lower Costs"37963797                            October 22, 202537983799                       Statements for the Record38003801               Federation of American Hospitals Statement38023803    The Federation of American Hospitals (FAH) submits the3804following statement for the record in advance of the Senate3805Special Committee on Aging hearing on "Modernizing Health Care:3806How Shoppable Services Improve Outcomes and Lower Costs." As3807the national representative of more than 1,000 leading tax-3808paying hospitals and health systems throughout the United3809States, we strongly support efforts to improve health care3810transparency and empower patients with actionable information.3811Hospitals have been committed partners in implementing federal3812price transparency requirements, investing significant3813resources to comply with evolving regulations issued by the3814Centers for Medicare & Medicaid Services (CMS).3815    The FAH supports the goal of ensuring that patients have3816access to clear, accurate and actionable cost-sharing3817information. Providing this information empowers patients to3818make more informed decisions about their health care. Since the3819issuance of the 2019 Executive Order on price transparency,3820hospitals have undertaken a vast modernization effort to make3821pricing more accessible and understandable for patients. This3822effort has evolved from posting gross charges to publishing3823complex, standardized data files that detail negotiated rates3824with insurers, discounted cash prices, and estimated allowed3825amounts in a usable format. Further, our members have developed3826price estimator tools to help patients plan for their care and3827expanded resources to connect families with financial3828assistance programs. These advances have required significant3829new investments in staff, technology, and vendor support. While3830CMS initially projected hospitals would spend roughly $2503831million on compliance from 2020 to 2025, actual investments3832have far exceeded that figure-particularly for hospitals that3833stepped up early to meet changing federal rules and lead the3834way on transparency.3835    We appreciate the current Administration's results-oriented3836approach and active engagement with hospitals when it comes to3837compliance with transparency regulations. FAH members report3838that CMS is expeditiously closing enforcement actions when an3839appropriate corrective action plan has been initiated and3840completed. Some of these enforcement matters involve simple3841issues like unexpected website glitches, and CMS' approach to3842these cases has ensured that access to a compliant machine-3843readable file is restored quickly through a cooperative3844enforcement process. The current enforcement approach also3845maximizes compliance by including critical opportunities for3846education. In particular, initial warning letters have opened3847up cooperative dialogue between hospitals and CMS that allow3848both to develop a more sophisticated understanding of hospital3849pricing and price transparency. This process also provides the3850most expeditious path to promptly resolve minor and inadvertent3851issues with machine-readable files. The FAH recommends3852maintaining the current orientation toward education and3853impactful results in monitoring and enforcement activities.3854    Given the significant progress hospitals have already made-3855and with new federal transparency requirements taking effect on3856January 1, 2025-the FAH urges policymakers to support a period3857of regulatory stability. Constantly changing rules create3858unnecessary costs and administrative burdens that pull3859resources away from patient care, without meaningfully3860improving the information patients receive. Stability will3861allow hospitals to strengthen existing systems, enhance data3862accuracy, and make the most of the substantial investments they3863have already made-all while confronting financial pressures,3864cybersecurity risks, and the growing costs of caring for the3865uninsured.3866    The FAH also calls on Congress and CMS to bring balance to3867transparency efforts by ensuring that health plans meet the3868same high standards now expected of hospitals. The Transparency3869in Coverage Rule was designed to provide a full picture of3870health care pricing, but enforcement and oversight of payer3871data have fallen behind. Modernizing these requirements-so that3872payer data is complete, accurate, and includes qualifying3873payment amounts under the No Surprises Act- is critical to3874achieving our shared goal of promoting transparency and3875shoppability. A balanced approach that includes both providers3876and payers is in the best interest of patients, employers, and3877taxpayers.3878    Hospitals have not just complied with transparency3879regulations-our members have built the infrastructure that3880makes price transparency real for patients. We look forward to3881working with Congress to ensure the successful implementation3882of transparency measures across the health care system.38833884                 U.S. Senate Special Committee on Aging38853886           "Modernizing Health Care: How Shoppable Services3887                   Improve Outcomes and Lower Costs"38883889                            October 22, 202538903891                       Statements for the Record38923893                   New York State of Health Statement38943895    The following stories came from consumer emails in reaction3896to recent announcements regarding the impact of H.R. 1. on3897health coverage:3898    1) Trump is an absolute terror and my heart breaks for the3899people who are going to suffer because of what he is doing.3900Republicans have blood on their hands. I am praying that I can3901figure out an affordable solution to pay for health insurance-I3902have a chronic condition that requires a lot of meds and3903testing, so people like me are being disproportionately3904affected by this change. Shame on the GOP-I am devastated.3905    2) New York State has been a leader in expanding healthcare3906access. I hope that leadership will continue in the form of3907sustained resistance to federal policies that undermine the3908health and wellbeing of your residents. Thank you for accepting3909and considering these comments.3910    3) Only since the Affordable Care Act have I been able to3911get all the things I need as a type 1 diabetic. Only since the3912Affordable Care Act have I even been able to be covered by3913health insurance. Because of my "pre-existing condition" that I3914was born with; I could never get coverage before. It is3915complete and utter bullshit that millions of other Americans3916and I have to suffer because of the greed and ruthlessness of3917the federal government. Profit over patients; it's sickening. I3918want to personally thank Donald Trump and his puppets for the3919possible death sentence for myself and millions of others.3920    4) Please stand up to this authoritarian administration.3921Especially those living with HIV in this country. What are we3922supposed to do without coverage? Just die? We're forced to pay3923high monthly premiums for nothing and now literally nothing.3924Where's the empathy? This is NYC! Don't let the people that3925actually pay taxes for the city be the ones to suffer. None of3926this makes sense.3927    5) I recently received an email stating that I would be3928losing my NYS Essential Plan Health Insurance due to cuts at3929the federal level. This is extremely disheartening as I have3930spent the last year battling stage three cancer. The Essential3931Plan has saved my life as I would not have been able to pay the3932over a million dollars in costs for chemotherapy, radiation,3933and surgery. I am 47 years old, a single mother of four with3934some in college, hold a masters degree, and work full time as3935an Executive Director of a Not for Profit. I am very concerned3936for my health moving forward and how my family will be affected3937by my difficulties in paying for health insurance and doctor's3938bills. I hope that there is something that can be done to save3939this critical health insurance for New Yorkers.3940    6) I have been covered under the United Healthcare3941Essential Plan which has been a Godsend to me and my family. We3942have been able to receive the care we need since the ACA Act3943was implemented. We just received the email about the changes3944to this plan and it is incomprehensible. The Federal Government3945should want to help people, not harm them.3946    7) It is my understanding that these cuts are being3947implemented to fund tax cuts for the top 1% in this country. It3948makes no sense. Why do they want to punish people who are3949already struggling? Food prices are higher than ever. People3950are being laid off left and right. We see the Democrats are3951doing their best to bring Republicans to the table for3952precisely this issue. We support them and hope this can be3953resolved. Cutting healthcare subsidies for working people is3954not the answer. We thank you for all you do, and we hope this3955horrifying new policy can be reversed.3956    8) I've been on the Essential plan for years, and I depend3957on my health insurance for daily medication, frequent3958appointments and procedures. I'm a New Yorker that has worked3959full time since I was 19 and still can't get ahead in life. I3960have multiple heath concerns, including an auto immune disease.3961It makes me sick to think my coverage is ending because the3962president wants to play with the money. This is completely3963unacceptable and will likely result in people dying. This needs3964to be corrected. I can't afford to see my doctors (yes3965multiple) without insurance and my employer plan is completely3966unaffordable. What am I supposed to do? Come July I'm just out3967of coverage with no options? This is absolutely sickening. Do3968better NY. Trump is running this country.3969    9) I've just received an email stating that as of July 1,39702026, I will no longer be covered by the Essential Plan in NY.3971I am incredibly upset and frustrated that the political games3972being played by US Senate and House Republicans at the behest3973of convicted felon and adjudicated rapist Donald Trump, and his3974advisors and authors of Project 2025, such as Stephen Miller,3975who have no regard for the general public and the citizens of3976this country whom they are supposed to protect, will now result3977in myself and many, many other New Yorkers losing their health3978care. I work two part-time jobs, neither of which offers3979benefits or health care, and cannot afford to pay for monthly3980health care premiums offered by the New York State of Health3981program. You can't pull blood from a stone, and I can't3982magically make money appear that doesn't exist in my paychecks.3983I need NY State, and our duly elected officials who are meant3984to be working FOR US, the citizens who elected them, to find a3985way to fix this, whether it be by passing a new healthcare3986plan, or repealing Trump's "Big Beautiful Bill" which is3987neither big, nor beautiful, and restoring my proper healthcare.3988I am on medications for life, which I will not be able to3989afford to pay for without insurance, and I am frankly3990absolutely disgusted with the state of our elected3991representatives and their incredibly obvious lack of care about3992who they see as their"enemies." Something needs to be done, and3993I can promise you on my part, I will never be voting for3994anybody affiliated with the Republican Party ever again, as3995they clearly do not consider me and all those like me to be3996worth helping. I can also promise you that I will not ever3997again be voting for anyone affiliated with the Democratic Party3998who does not fight for my rights.3999    10) I will likely be one of the New Yorkers impacted. For4000the purposes of this comment, I strongly prefer to remain4001anonymous. The changes due to H.R.1 feel personal. I can't help4002but feel that it is as though America is turning its back on4003the poor. When I initially qualified for Medicaid, I was very4004thankful, but I also didn't want to "abuse"the system, so I've4005kept my use to the absolute minimum, preventative appointments4006only. I try to keep well so that I don't pull on an already4007burdened system. Still, the results of the election sent a4008message. The message is that the majority of Americans are not4009happy with people like me-- who are not fully qualified for4010disability and also do not feel well enough to work. We are4011already poor. It doesn't feel right that we are also now kicked4012off of our medical insurance. Also, I would like to point out4013that many other social support systems are tied to Medicaid4014eligibility: rides to medical appointments, eligibility for4015food pantries, and discounted shopping services. I'm facing4016losing all of this. I realize that NY is doing all it can and I4017appreciate that. I'm not against the Basic Health Plan but I4018don't think I'll be able to benefit as I'm not part of the4019"working" NY. I believe it when I hear that my Governor is4020trying to work for New Yorkers. I truly believe she would4021listen if I described the difficult situation that I'm facing,4022but I find all of this disappointing. Where is the kindness to4023the poor that New York is known for? I pray that we will4024weather this storm.4025    11) Well, we all know how shitty Donald Trump is being but4026this one takes it. Costing all of the poor-middle class ranged4027Americans their health insurance, so he can continue to get4028richer since he went bankrupt so many times. Now....we all have4029to pay for it. I can't afford the ridiculous costs of health4030insurance this is going to cost me.4031    12) Do I pay to be healthy and have coverage or feed my4032family, is what this comes down to. I'm always going to choose4033my family. So now, if I go to the doctor for my hemeplegic4034migraines or my diabetes or need emergency care, I'll have to4035pay even MORE out of pocket because I don't have healthcare4036because I can't afford the monthly premiums. MAKE AMERICA GREAT4037AGAIN! Let me know when this happens.4038    13) We need to stand up to Trump and his disgusting4039administration by sticking UP for New Yorkers. We are not like4040that. We do not abandon our neighbors. We need to find a way.4041New Yorkers will not forget. If we're left to suffer we will4042remember, but if we are supported, we will remember that too.4043Which do you prefer? I'm so proud to live in New York, this is4044breaking my heart and spirit. Please reconsider terminating the40451332 waiver. Please.4046    14) I am submitting this comment in response to New York4047State's request for public input on the forced termination of4048Essential Plan coverage due to federal policy changes. As4049someone whose coverage will end on July 1, 2026, I want New4050York State officials to understand the very real impact this4051decision will have on working New Yorkers who have relied on4052this program.4053    I am a small business owner who relocated from Florida to4054New York City specifically to build my practice and life in a4055state that demonstrated a genuine commitment to healthcare4056access. The Essential Plan has been essential to my ability to4057operate my business while maintaining the health security that4058allows me to serve my clients and contribute to New York's4059economy. That decision to move here now feels undermined by4060federal policymakers who appear indifferent to the needs of4061working people.4062    My academic training, which culminated in a PhD, taught me4063to evaluate policy through evidence and impact. The evidence4064here is clear: terminating coverage for individuals who qualify4065for and depend on this program will result in worse health4066outcomes, increased financial stress, and decreased economic4067stability for thousands of New York families.4068    I understand that New York State did not choose this4069outcome and is being forced to implement a federal decision4070that contradicts our state's values and priorities. I4071appreciate that the state is providing advance notice and has4072committed to supporting affected individuals through this4073transition. However, I want to emphasize how inadequate any4074transition will be when the end result is a loss of4075comprehensive, affordable coverage.4076    The federal government's characterization of this decision4077as "deeply unfortunate" does not capture what it means for4078people like me. It means anxiety about whether I can afford the4079healthcare I need. It means uncertainty about whether an4080unforeseen health-related issue would bankrupt me. It means4081questioning whether I made the right choice in building my life4082and business in New York when the federal government can4083arbitrarily strip away the healthcare access that made that4084choice viable.40854086    I urge New York State officials to:40874088      Advocate forcefully at the federal level for reversal of4089this policy decision.40904091      Explore every possible state-level option to maintain4092coverage or provide comparable alternatives.40934094      Ensure that any transition process prioritizes4095continuity of care for individuals managing serious health4096conditions.40974098      Continue to publicly document and communicate the harm4099this federal decision causes to New Yorkers.41004101    15) The fight in Congress over the Republicans plan to4102discontinue the tax credits for ACA premiums must continue.4103Premium tax credits make health insurance accessible for4104millions of U.S. citizens. Without the tax credits, cost of4105premiums will skyrocket, rendering health insurance4106inaccessible for millions. Make no mistake - access to health4107insurance directly equates to access to healthcare. Healthcare4108costs in the U.S. are astronomical and would very easily4109bankrupt millions of average U.S. households.4110    The ACA allows citizens who have no access to group4111insurance plans through their employment, access to insurance.4112This includes the self-employed, contract/sole proprietors (a4113fast-growing number of workers since online work has become so4114popular with companies and workers), freelance workers, and4115less than full-time W2 employees.4116    I am a self-employed, private practice psychotherapist. I4117worked long and hard to earn a master's degree at one of the4118nation's top universities. I do not have access to group4119insurance because I am a solo practice clinician. Although I am4120incorporated, group insurance plans for companies require two4121or more employees. Even though my spouse does a great deal of4122administration for my business, spouses are disqualified from4123counting towards that minimum. He is a contract employee/sole4124proprietor, so he has no employer-based health insurance.4125Therefore, the ONLY access to health insurance we have is the4126ACA.4127    NOTE: When workers have health insurance through their4128employers, the employer pays a share. Additionally, premiums4129are paid PRE-tax. Self-employed/small business owners do not4130get these benefits. Premiums are paid fully out-of-pocket POST-4131tax. Furthermore, premiums do not count as out-of-pocket4132healthcare costs, so we are unable to claim them as an expense4133on our federal taxes. This is truly unfortunate, since average4134health insurance premiums can easily be $1000/month or more and4135would meet the 7.5% of total income to qualify as an itemized4136deduction on our federal taxes.4137    So, in summary, the thinly veiled excuse used by4138Republicans, that those needing ACA premium tax credits are4139looking for "a handout" or want to "get something for free" is4140not only incredibly insulting, but wholly untrue. Also, the4141indisputable lie being propagated by the Trump administration4142and right wing/propaganda media outlets that undocumented/4143illegal immigrants can get insurance through the ACA (or4144Medicaid) needs to be loudly and adamantly disputed and4145disproved. This needs to happen every day until their4146disinformation and propaganda messaging is shown for what it is4147- an outright lie.41484149                 U.S. Senate Special Committee on Aging41504151           "Modernizing Health Care: How Shoppable Services4152                   Improve Outcomes and Lower Costs"41534154                            October 22, 202541554156                       Statements for the Record41574158              Purchaser Business Group on Health Statement41594160    The Purchaser Business Group on Health ("PBGH") applauds4161the committee for holding this timely hearing on the most4162pressing issue in health care: Affordability. Our members (one4163of whom is an expert witness during today's hearing) agree.4164Cost control and affordability emerged as the top issue for4165large employers and public purchasers in PBGH's 2025 Annual4166Survey(1) against a backdrop of escalating costs(2) and growing4167fiduciary risk.(3)4168    We agree with the premise of this hearing, which is that4169while policy debates typically center around the problems of4170our health care system, we ought to focus primarily on the4171solutions. PBGH and our members have developed thoughtful4172policy solutions(4) - informed by the real-world experience of4173purchasers - to improve America's health care system,4174including:41754176      Strengthening and codifying the Administration's two4177price transparency rules and ensuring purchasers have full4178access to their health care claims data under federal law.41794180      Prohibiting anticompetitive contracting practices in the4181health care industry, which limit purchasers' ability to direct4182contract, develop and use high performance networks, or4183implement reference pricing strategies that leverage4184independent sources of price data.\1\4185---------------------------------------------------------------------------4186    \1\ Traditionally, the prevailing reference for health care service4187pricing information has been Medicare's reimbursement rate, such that4188purchasers' reference pricing strategies have benchmarked to a multiple4189of Medicare (e.g., 150 or 200%). However, since hospitals and insurers4190were required to publish their negotiated rates publicly, it is now4191also possible for purchasers to compare the prices they are paying for4192health care services to the market rates for those services that have4193been negotiated and agreed to between health care providers and payers4194/ other purchasers.41954196      Removing barriers to direct contracting for medical4197services, so purchasers can exercise their buy-side market4198power to help employees shop for high-quality, fairly priced4199---------------------------------------------------------------------------4200care.42014202      Supporting direct/advanced primary care, to improve4203patient access to valuable preventive services and ensure that4204patients are appropriately referred to high-quality, fairly4205priced specialist care through the unconflicted advice of their4206trusted primary care physician.42074208      Scrutinizing the role intermediaries (i.e., PBMs, TPAs)4209play in driving health care costs up.42104211      Reforming policies that directly or indirectly4212contribute to consolidation in health care markets, which4213lessens choice and leads to higher prices without gains in4214quality.In addition to these policy solutions, PBGH has been4215deeply engaged in supporting employers to use the price4216transparency data to lower their health care costs and improve4217health outcomes.42184219    In addition to these policy solutions, PBGH has been deeply4220engaged in supporting employers to use the price transparency4221data to lower their health care costs and improve health4222outcomes.42234224The PBGH Health Care Data Demonstration Project42254226    PBGH and our purchaser members have been at the forefront4227of using the data made available under the Hospital Price4228Transparency ("HPT") Rule as well as the Transparency in4229Coverage ("TiC") Rule with a first-of-its-kind data4230demonstration project.(5) In January 2025, PBGH announced the4231deployment of this initiative, which aggregates and analyzes4232the de-identified claims and demographic data from five large4233purchasers across 10 regional markets alongside the price4234transparency datasets. Through partnerships with Milliman,4235Embold, and Leapfrog, we also integrated individual provider4236quality metrics and hospital safety scores, as high quality of4237care is a top priority for our purchaser members.42384239    This demonstration project has delivered important insights4240to purchasers on how the prices they pay compare to the market4241and what network selection and benefit design opportunities4242exist. The findings of this project are being used now by the4243participating purchasers to:42444245      Determine what fair prices for health care services are4246in their regional market and assess one's own costs and quality4247against other networks in the market.42484249      Identify high quality clinicians to develop Centers of4250Excellence, design high performance networks, and steer4251employees to high-quality, fairly priced providers.42524253      Validate existing direct contracting relationships as4254well as identify opportunities for new direct contracts.42554256      Hold service provider partners accountable for4257competitive prices/rates, contractual performance guarantees,4258and full compliance with federal price transparency rules.42594260    The results of this first iteration of PBGH's demonstration4261project were recently released to the public on September 24,42622025(6) and were announced via press release on October 16,42632025.(7) As a sign of our commitment to supporting this4264Committee in its important work to improve health care4265affordability and health outcomes, we are enclosing a copy of4266the PBGH whitepaper "Leveraging Health Care Price4267Transparency," which details the findings, market implications,4268and policy implications of the initial phase of the project.4269    PBGH sincerely appreciates the Committee's attention and4270dedication to advancing policies that improve health care4271affordability and outcomes, and which facilitate purchasers'4272ability to achieve these objectives on behalf of America's4273workforce.42744275    Sincerely,42764277    /s/4278    Elizabeth Mitchell, President and CEO4279    Purchaser Business Group on Health42804281********************************42824283Endnotes42844285(1) PBGH (May 13, 2025) "PBGH Announces Jumbo Employers' Top 54286Health Care Priorities" Announcement [Link]42874288(2) Mitchell (Jul. 2, 2025) "Want to Lower the Price of Eggs?4289Start with Health Care Costs" US News & World Report [Link]42904291(3) PBGH (Mar. 31, 2025) "Purchaser Innovation and Policy4292Engagement Against a Backdrop of Unaffordability and Fiduciary4293Risk" Issue Brief [Link]42944295(4) PBGH (Jan. 31, 2025) "Purchaser Policy Priorities in 2025"4296Issue Brief [Link]42974298(5) PBGH (Jan. 29, 2025) "PBGH Launches Groundbreaking Health4299Care Data Project, Tackling Data Transparency Challenges and4300Strengthening Employer Fiduciary Compliance" Announcements4301[Link]43024303(6) PBGH "Are We There Yet? Making Transparency Work for4304Purchasers and Patients" Webinar [Link]43054306(7) PBGH (Oct. 16, 2025) "PBGH Unveils Breakthrough Data4307Demonstration Project, Empowers Employers to Expose Hidden4308Costs and Hold Vendors Accountable" Press Release [Link]43094310                 U.S. Senate Special Committee on Aging43114312           "Modernizing Health Care: How Shoppable Services4313                   Improve Outcomes and Lower Costs"43144315                            October 22, 202543164317                       Statements for the Record43184319  Purchaser Business Group on Health: Leveraging Health Care Statement4320[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]43214322                 U.S. Senate Special Committee on Aging43234324           "Modernizing Health Care: How Shoppable Services4325                   Improve Outcomes and Lower Costs"43264327                            October 22, 202543284329                       Statements for the Record43304331                   Small Business Majority Statement43324333    As a leading representative of America's 36 million small4334businesses, Small Business Majority is pleased to submit this4335written statement for the record underscoring the urgent need4336to extend the Affordable Care Act's (ACA) enhanced premium tax4337credits (EPTCs). The extension of these enhanced credits is4338essential to ensure that the millions of small business owners,4339self-employed entrepreneurs, and small business employees who4340rely on the ACA Marketplace can continue to access affordable4341healthcare coverage.4342    Small Business Majority is a national small business4343organization that empowers America's entrepreneurs to build a4344thriving and equitable economy. From our 12 offices across the4345country, we engage our network of more than 85,000 small4346businesses and 1,500 business and community organizations to4347deliver resources to entrepreneurs and advocate for public4348policy solutions that promote inclusive small business growth.4349Our work is bolstered by extensive research and deep4350connections with the small business community that enables us4351to educate stakeholders about keys issues impacting America's4352entrepreneurs, with a special focus on the smallest and most4353under-resourced businesses.4354    Access to affordable, quality health insurance is essential4355to the growth and success of small businesses nationwide, as it4356not only allows entrepreneurs to pursue their ventures with the4357security of insurance coverage but also helps small businesses4358attract and retain talented employees. Due to the skyrocketing4359cost of employer-sponsored coverage options, however, most of4360our nation's smallest businesses cannot afford to offer health4361insurance to their employees. This is especially challenging4362for older individuals who are pursuing small business ownership4363as a means to create income streams later in life. These4364individuals may be deterred from starting businesses altogether4365without the availability of affordable healthcare options4366provided by the ACA Marketplace.4367    Without access to coverage through an employer, millions of4368small business owners and employees rely on individual coverage4369through the ACA Marketplace. In fact, nearly half of all4370Marketplace enrollees under the age of 65 are either small4371business owners, self-employed entrepreneurs, or employed by a4372small business with less than 25 employees.1 Small business4373owners and self-employed entrepreneurs are three-times more4374likely to enroll in the Marketplace and a projected 5 million4375small business owners and self-employed entrepreneurs will have4376enrolled in coverage through the Marketplace this year alone.24377    Recent Marketplace enrollment growth over the last several4378years has been a direct result of the successful expansion of4379premium tax credits approved by Congress in 2021 and then4380extended in 2022. An analysis by the U.S. Department of the4381Treasury found that 82% of all small business owners and self-4382employed entrepreneurs enrolled in the Marketplace in 2022 (2.74383million individuals) claimed the premium tax credit.3 This4384includes nearly 300,000 entrepreneurs with incomes above 400%4385of the federal poverty level who would not have qualified for4386the credit without these enhancements. The EPTCs have4387undoubtedly helped lower the cost of coverage for millions of4388entrepreneurs who previously struggled to afford healthcare and4389oftentimes went without coverage entirely just so they could4390keep their business running.4391    While the EPTCs have lowered costs and expanded access to4392affordable coverage for Main Street, millions of small business4393owners and employees enrolled in the Marketplace stand to see4394their premiums skyrocket by an average of 75% next year if4395Congress fails to extend the enhancements by the end of this4396year.4 Many small business owners may ultimately face the4397difficult choice between closing their business to access4398coverage through a larger employer or going without health4399insurance altogether to keep their entrepreneurial dream alive.4400Small business owners understand what's at risk, and that's why4401our polling found that 74% of small business owners support4402extending the EPTCs.54403    To highlight both the critical importance of the ACA and4404the EPTCs for small business owners, as well as the impact4405their expiration would have, we have included several quotes4406from entrepreneurs in our network who rely on these credits4407each month.44084409"I'm definitely glad to have some support from the federal4410government when it comes to payingfor my health insurance, but4411even with that support it's still a struggle. The cost keeps4412going up,about $100 more every year. Back in 2010, I was paying4413$50, maybe $75 or $100 per month formy health insurance. I'm4414single, no kids, and I'm in fairly good health. I eat well, I4415exercise-soit's frustrating to see the premiums rise while the4416coverage and services seem to decline yearafter year. That4417said, I'm still grateful the Affordable Care Act Marketplace4418exists, but with theenhanced premium tax credits set to expire,4419I honestly won't be able to afford my plan if thathappens.4420Right now, I pay about $550 a month, and that's with tax4421credits covering around50%. Without those credits, it would4422cost close to $1,000 a month-which I simply couldn'tafford.4423Before the ACA, I only had insurance now and then, when I could4424scrape together themoney. As a freelancer, that was just the4425reality. The federal subsidy is essential because4426smallbusinesses-collectively the largest employer in the4427country-are the backbone of our economy.We are the economic4428engine that drives growth and opportunity nationwide."44294430Karin Mckie, Owner of Tree Falls Productions in Chicago, IL44314432"With the enhanced premium tax credits, my $545 monthly premium4433is reduced to $0.00.Without the tax credits, my monthly4434premiums could cost me close to $1000/month. That'ssimply4435unaffordable. At that point, it would be more cost-effective4436for me to drop my insuranceand self-insure, like I did for4437years before this year. If I have to choose between health4438insuranceand a place to live and work, I'll choose a home."44394440Nance L. Schick, Owner of Third Ear Conflict Resolution, VA44414442"I get my health coverage through Connect for Health Colorado4443and I receive the enhanced PTCwhich covers 90% of my $4004444monthly premium. This is very important as I need4445healthcoverage to recover from being hit by a car as a4446pedestrian. I'm able to keep running mybusiness while receiving4447the healthcare I need."44484449Sydney Jackson-Clockston, Owner of Citrine Unlimited in Fort4450Collins, CO44514452"As a self-employed individual, my premium is $340 per month.4453Without the tax credits, I wouldpay over $1200 per month for my4454coverage. This is hugely important to me as someone with4455amuscle disease, Spinal Muscular Atrophy, that requires health4456insurance to treat. I'm onmedication that prevents its4457progression and without it, I may lose the ability to walk."44584459Courtney Vargas, Owner of Empower Independent Living Services4460in Santa Rosa, CA44614462"My name is Andrea Deutsch, and I am the mayor of Narberth,4463Pa., where I am also the ownerof Spot's - The Place for Paws, a4464pet store that I have created and worked for the past 22 years.4465Iam also a Type 1 diabetic and must have health insurance in4466order to get the medical care I needto remain alive and4467healthy. Thanks to the Affordable Care Act, I can no longer be4468outrightdenied health insurance as a person with a pre-existing4469condition. Thanks to the enhanced taxcredits, I still pay over4470$700 a month for my health insurance, but it is manageable.4471Without theenhanced tax credits, I would be paying4472approximately $1,400 per month for my same plan.The cost of the4473plan goes up every year, so it may even be more next year. Keep4474in mind, thisplan is not for the care of an entire family. It4475is simply to cover a single individual - me. Thiswould be4476incredibly burdensome for me as a small business owner to4477sustain, and would beincreasingly difficult as costs rise. I am4478not alone in this struggle. The crushing weight of thecost of4479health insurance, without the enhanced tax credits, threaten4480the ability of smallbusinesses such as mine to exist. I am,4481consequently, asking Congress to affirm theircommitment to4482stand with small business and to continue to support the4483enhanced tax credits."44844485Andrea Deutsch, Owner of Spot's - The Place for Paws in4486Narberth, PA44874488    As the open enrollment period for the ACA Marketplace is4489just days away, small business owners will soon be met with4490catastrophic premium increases when they go to re-enroll in4491coverage next month if Congress does not take immediate action4492to extend the EPTCs. Allowing these enhancements to expire4493would be nothing short of a disaster for our nation's small4494business economy, which depends on access to affordable,4495quality healthcare to keep its doors open. The expiration would4496also create more barriers for older adults seeking to start and4497grow their own business, many of whom may seek out these4498options to sustain their livelihood after retiring from their4499prior careers. We call upon Congress to support our nation's4500small business community by ensuring that our nation's job4501creators have the opportunity to access quality and affordable4502healthcare options. Healthy businesses are sustainable4503businesses, and without support from Congress, our business4504community will pay unimaginable debts to an already broken4505healthcare system.4506    For any questions or additional information, please contact4507our Government Affairs Director, Alexis D'Amato.45084509    Sincerely,4510    /s/45114512    John Arensmeyer, Founder & CEO, Small Business Majority45134514                             [all]