Transcripts For CSPAN3 Politics Public Policy Today 20150508

Any real meaning in the real world . I mean, isnt the reality that when we say we are reimbursing more than costs, we only reimburse not all costs are reimbursable. We create this impression that a hospital is getting more than what it costs them to operate. Is there analysis . Can you quantify really what is going on in a hospital when we tell them or when we tell the public that your hospital is getting 101 of costs when its really reimbursable costs . Yeah, that is a as you know, thats a very complicated question. You know, it goes back to the historical costs of the hospital and if they converted to critical access, what those historical costs feed into, what they would be paid under the ch reimbursement status. So it does vary from state to state. But i would be happy to get back with you and also with your staff. We can connect you with some of the folks at the university of North Carolina as well some of our experts to better understand it. In todays setting i would welcome that. In todays setting, can you confirm for the record that when we talk about reimbursing a hospital, their costs, that they are receiving something significantly less than actual cost of operating the hospital . I think in some cases that may be true. Its hard to say that nationally, because its different depending on the historical cost structure to the hospital. You know, it might be different for kansas than it is for alabama. And, you know, as you know hospital structures costs, its a science on to itself. So im happy to get back to you on more of that. I would also just to respond to your earlier question, we are trying to do what we can to avoid closures. And i think weve done with the investments in the flex program, were really focusing on making sure that hospitals ch is not required to report that quality data to medicare, but we encourage them to do. So weve seen a significant increases in the numbers of chs reporting their quality. If they can do and they can benchmark their quality, they can demonstrate more value back to their community. We also led a contract last year to work with rural hospitals that are struggling in high poverty counties. So we have an example in tallahassee, mississippi, mr. Cochrans state, where were able to send consultants in there to help them turn around their finances and improve their financial bottom line. So within the resources we have in there, were keenly aware of the precarious nature of some rural hospitals and whether its our flex program or that contract, or even our outreach and network fund we can begin to get at it. Were doing all we can to help stabilize folks so were not in a closure situation. I can tell you that very few hospitals in kansas who receive, quote, costbased reimbursement are able to survive in the absence of a tax levy to support the hospital. Yes, sir. Thank you, mr. Chairman. Thank you, senator moran. Senator capito . Thank you, mr. Chairman. And i want to thank the panel. And im from the state of west virginia. So id like to ask a question to mr. Cavanaugh on in your testimony, you talked about the new Initiative Health link now which is pairing telemedicine and telepsychiatry. This program is currently being tried in three states. I was wondering what measurable data the Pilot Program is showing you, and what are the prospects of expanding this to other Rural Communities . As we know, there is a shortage of Mental Health professionals everywhere, and Rural America is probably exponentially so. Youre correct, senator. Before i was at the center for medicare, i was at the center for medicare and Medicaid Innovation. When we did the innovation awards, there were quite a few telehealth and telemedicine proposals. And i was surprised at the number that had a link to Behavioral Health and psychiatry, just as you mentioned. We have some early evaluations of those, but theyre very qualitative, meaning in case studies of how they have fared in standing up the program. We hope in the next year to have some quantitative data. Ill remind the committee, the statute set up the Innovation Center and said these models can be tested and they can be expanded if they meet certain cost savings and or Quality Improvement standards. So we intensively evaluate all these models. So we hope in the next year to have some more quantitative results. One of the things i would say is many of the Innovation Center models are being tested at very large scale. Some of them are being tested at smaller scale. And this would be one that is at smaller scale. Even the we get very promising data, i dont think the next step would be to go to national with it. It would be to incrementally move to more communities. Were hope to feel have data soon. We have made all our valuations public and we will certainly share wit this committee as soon as we have news. Well, thank you. I think one of the obstacles that all of us who live in rural states that are combatting every day is the lack of high speed rural broad band access. And certainly thats got to be impacting telehealth into the rural health initiatives. Are you running into this in some of your telemedicine initiatives . Is this a problem that youve identified as well, or you have anything on that . Again, certainly anecdotally as we talk to some of our wardees. It does affect what communities they think they can test these models in and which communities they wish they could test these models in. We dont feel we at medicare have the tools to help with that but we do recognize it as a barrier. And its important, because i do think whether its telehealth or other technology, i think telemedicine technologies, i do think broad band is going to be essential to that. And its a challenge. Its a challenge. You know, anecdotally recently, mr. Morris, in talk with our hospitals and emergency room physicians, we were talking with the anesthesiologist the other day, one of the things that is cropping up now is that lack of total number of residencies so that there are several hundreds. Ive heard 500, and then maybe into a thousand graduates of medical schools who dont match, and they dont get a residency. And that obviously stalls out their professional career. Theyve got student loans. And all sorts of other issues. Are you looking at i mean, i think we should be looking at rural health as a way to expand the availability of residencies to fill this gap. Do you have any i know you talked a little bit about residencies in your opening statement. Yeah. Wet are we do recognize the challenge you have just laid out. And one of the things we initiated about five years ago was to put a grant together with the National Rural Health Association to expand these rural training tracks. There were about 23 of these across the country. And that number had been fairly static over the years. And now theyre about 34. So we have increased the number of rural training tracks. What is unique about the rural training tracks. Although is a total cap on the number of residencies that can be supported, there is flexibility under the cap for new rural training tracks there is an opportunity to create rural residencies and to work with our partners at cms through that flexibility under the residency cap. And again, we know this is an evidencebased model that works. And weve seen some real successes from it. I certainly would be very supportive of any kind of way to meet to solve. This could help solve more than just one problem here if we were able to expand that and use it wisely. And ill just make a comment at the end. Those of us who live in Rural America are always frustrated that its assumed by the more urban areas that its cheaper to deliver medical services in a rural area, because typically, wages are maybe a little bit lower. But you have workforce shortages. You have travel times. You have all kinds of other issues that its frustrating for us i think to make the case. I mean, were always having to make the case, as you know. Youre in this too. And so i applaud your efforts in helping us deliver the message to all of the Health Care Dollars need to be allocated its not as easy in Rural America as some in the urban areas might think it is. Thank you. Dr. Cassidy . Hey, gentlemen. I was looking down but listening. So one of you pointed out the cause for closure is multifactoral. I accept that. Im curious. It seems like the only Business Model that is actually going to work in a rural setting is volume. You dont have the Critical Mass of patients partly because so many are uninsured and partly because your pay makes medicaid so poor. I say this, because we just passed an sgr bill which promoted alternative payment models, the organization all rely on value purchases with the implication that volume decreases. So is one of the factors in this multifactorial problem that the Business Model can only survive with big volumes and the push is away from volume and more towards quality . Have you run molds on this . Im wondering if there is any hope for these hospitals out besides an outright subsidy, be it through a tax base or be it through some federal legislation. I think, senator, youre putting your finger on a very important challenge that we all face as we move forward, which is, as you say, how do Rural Health Providers not just survive but thrive into the new setup of the sgr reform bill. I think there is multiple ways this can happen. One is but let me ask before you go forward, because i have a specific question. Sure. Do you have studies showing the effect of, say, an accountable coorganization which needs a Critical Mass of people with a very good pair mex on a capitated basis receiving their preponderance of care at this institution . Is there such a study looking as to whether or not this model will work for rural hospitals . So im not aware of any studies. We are pleased to say, though, there has been a lot of skepticism whether acos could work in rural areas. In the shared savings program, which im responsible for, we do have 15 so we have about 7. 3 medicare fee for Service Medical beneficiaries aligned with acos. About 15 are living in Rural America. Let me ask, though. You can live in Rural America, but still get your health care at geisinger. So it wouldnt be that you had a local hospital. It would be that youre linked with a urban hospital or semi urban. You know, something such as that. So are these in the rural hospitals, what is the health of the rural hospitals and those settings in which you just described . Those acos you just described. So you make a good point. I would remind you, though, the beneficiaries are aligned through their use of primary care, not necessarily where they get their primary care. Preponderance of primary care. You can live in a rural area and be in an aco that has a significant urban presence because there are acos that span both times of communities. And there are those that are strictly in rural areas there is one called a National Rural aco which is combining rural acos across the country. I think its early for us to know what the relative success of rural versus urban acos. Im sorry. And i have limited time. So im trying to focus. What is the health of the rural hospitals in those areas in which there is an aco which governs, which has responsibility, if you will, for the rural patient . Because im really this is about hospitals. So the we have an aco which kind of aggregates the care into an urban hospital setting, that would actually be starving the rural hospital. I dont have the data that youre requesting. We can certainly go back and see if its something we can compile for you. Okay. Okay. Continue, then. Because that was kind of the point you. Had another point. Im sorry i interrupted. So continue. I just want to make the broader point, senator, that we have heard from a lot of rural providers that they are excited about the prospects of getting into new payment models because they do find fee for Service Payments frustrating. They think theyre efficient providers in many cases, probably are. We do have one large initiative out of the Innovation Center called transforming clinical practice. And this is where were going to help small practices. Not the hospitals necessarily, but small physician practices. Give them Technical Assistance so they can develop the infrastructure and the knowledge to in that, ill just go back to this. Because its the hub is what matters here. If the hub is a rural hospital and that could potentially help, although under valuebased purchasing, youre still going to be emphasizing keeping people out of the hospital. And i dont see you tell me. Is there a Business Model that works for a small rural hospital that is not volumebased . I can see it working for the primary care providers, but i dont see one working for a rural hospital. If youre looking for that, our best hope is probably the Accountable Care organization with the aco being a primary player in that. And as i mentioned in my testimony, weve got two different programs to help rural hospitals. We provide them seed capital to help them form an aco and get into the shared savings program. Its very early both in the aco program and in these models that were running. Im sorry. So in that model, what is the im sorry. Im going a little bit long. Can i have it . What is the minimum number of patients you would need in order for that rural aco to work . So the aco it doesnt change the minimum number in the basic program, which is 5,000 alined medicare patients. Now that would be for primary care provider. But 5,000 patients would not support a rural hospital with a ct scan and o. R. , et cetera. The minimum number required to maintain a certain x number of hospital beds . Im sorry. I should have been clear. 5,000 is the minimum to get into the aco program, the shared savings program. Youre asking from an actuarial standpoint do we have some sense of what aligned lives would be needed. I dont know the answer. I tell you, we cannot make wise decisions regarding Public Policy unless you have those numbers. Because ultimately, they got to make money. And unless you can give us some data that this there is a Business Model that works on an alternative payment model, were wasting our time. And i say that not to scold. Im swaying have to make decision. We would ask yall to come back with that, if i can ask the indulgence of my chair and Ranking Member. I yield back. Thank you. Thank you, senator. Anybody have a followup question . We maybe have time for one or two other questions if anybody has one. Mr. Morris, in response to senator morans question, you believe there are states that reimburse the total cost of a critical access hospitals operation . No, sir. What i was saying is that because and sean can correct me if i get any of this wrong. You know, when you set the cost based reimbursement rate, its based on historical costs. And we just see some fluctuations from state to state in what that initial base is. But its more complicated than that. And i can get back to you with more information on it. I think we expect you to get back to us on that. Okay. But i think the point is well made that these rural hospitals are not in the profitmaking business, even if they get 100 101 of the allowable reimbursement. But there are states that have a formula that allows that, well be anxious to see which states are doing that and how they figured out how to calculate everything that is spent by the hospital to operate into their cost basis. And to respond to mr. Cassidys question too, i would say that we do have examples of hospitals even with low volumes that have been able to make it work. I think it really is situationally dependent. There is a base level of volume you need. I agree with that. But weve got some Success Stories out there where folks have been able to bring primary care and align the physicians and the hospitals in a way, figure out what lines of service they can get into that makes sense for that community, arrange relationships with upstream providers that make it work. So what we would like to do is use our funding to sort of be the connecting of the dots between that, identify those models, and maybe replicate them in other communities. All right. Mr. Cavanaugh . Yes, go ahead. Thank you, mr. Chairman, and thank you for helping me ask my question, and i appreciate the answer. This is a Home Health Care question. Some of our hospitals, more fewer than used to provide Home Health Care services because they cant afford to. But the Affordable Care act includes a provision that requires Medicare Beneficiaries to have a facetoface encounter with a physician who certifies the need for that Home Health Care services. The implementation of this facetoface requirement raises lots of concerns with Home Health Care provider, hospitalbased or otherwise. And the documentation that is necessary, it sure seems to the providers as unclear. And the backlog of audits is increasing. There is a real uncertainty as to what the cms standard is for providing satisfactory facetoface encounter. Most of the appeals have been overturned in favor of the Home Health Care provider. But my question is do you see this as a problem . Does cms have a plan to respond to clear up the confusion, provide certainty and reduce the backlog . Yes, senator. I think you have put your finger on a challenge that weve been taking on headon. The first thing is in rule making last year, we simplified youre correct that the Affordable Care act created the facetoface standard. Our initial rule making in addition required a narrative from the physician, a narrative writing, which providers found ambiguous. So we withdrew that requirement. So we still have the facetoface requirement, but not the requirement for a narrative description of the need. We continue to have dialogue with the Home Health Industry to make sure they understand what were looking for. We are exploring afters personally, im very interested in finding a way to facilitate people making the documentation. As you say, there are a lot of auditor reviews to these. Some get overturned, but many are upheld. Even when theyre upheld, its often about the documentation and not about whether the service was needed, whether it was provided. I mean, granted there is fraud. But im not talking about that. Im talking about a lot of services that were truly needed, truly provided but poorly documented. And im trying to find fought there is anything the agency, any role we can play to facilitate that without facilitating bad behavior by a subset of the industry. Thank you for that answer. I appreciate your attitude and approach toward attempting to solve this. And it is finding that place in which you dont punish those who are doing the right thing. And you do punish or prevent those who do bad things. Mr. Chairman, thank you. Thank you, and thank you to the panel. Im sure well have some questions submitted in writing as well. I appreciate your time today. And now well move to the second panel. And as the second panel is coming up, that Panel Includes tim wolters, the director of reimbursement at citizens Memorial Hospital in bolivar, missouri. And he is also a reimbursement specialist at the Lake Regional Health system at osage beach, missouri. Dr. Kristi henderson, chief telehealth and innovation officer at university of Mississippi Medical Center in jackson, mississippi. Ms. Julie peterson, the cmo of pmh Medical Center in prosser, washington. And mr. George stover, the ceo of rice county hospital district in lyons, kansas. So thank you all for being here. Mr. Wolters, if you want to start with your testimony, well go right down the line, then. Thank you, chairman blanche, member murray, first the chance to discuss current challenges. Again, im tim wolters. I oversee government reimbursement programs in bolivar, missouri and osage beach missouri. 50 rural hospitals have closed since january 2010. Rural hospital closure means more than just the loss of access to health care for a community. As a rural hospital is frequently the largest employer in town, its closure represents an economic blow as well. My written testimony provides several examples of what is working in rural hospitals, including Quality Health care at a reasonable price to the Medicare Program, and programs like the medical home program which improves the health in our communities. I want to focus my oral comments, though, on four specific challenges rural hospitals face. First, patient volumes are lower at rural hospitals, and also fluctuate significantly on a daytoday basis, making it difficult to manage staffing levels. My written testimony has a graph on page three that shows the daily census at lake regional for the month of january showing significant daily fluctuations, including a high census of 103 patients on january 15th and a low of 66 patients on january 25th. A significant fluctuation. Second, medicalization is significantly higher at rural hospitals than urban hospitals. Page 4 shows urban hospitals average only 30 utilization compared to 42. 5 at rural hospitals. The challenge of such high medicalization is medicare cuts represent a higher of our budget. And we have less commercial and managed care volume to subsidize the medicare losses. The third challenge is the cumulative impact of medicare cuts. The graph on page 5 compares estimates using cms data of hospital costs versus payments from 2011 through 2023. The poptop line represents the costs and bottom line payments factoring in productivity and fixed cuts under the Affordable Care act and the sequestration cut under the budget control act. The difference between the lines represents medicares lost reimbursements, and it grows annually exceeding 17 by 2023. The cumulative impact of these cuts over this time period from my two hospitals is estimated to be about 120 million. Beyond all of the cuts weve been facing, recovery of a contractor or rac program is draining our resources. Lake regional currently has over 500 medicare claims worth about 3. 5 million in medicare reimbursement. The final challenge we face is the increasingly complex Regulatory Environment in which we operate. Page 7 shows six different medicare perspective Payment Systems and six different medicare fee schedules we must manage with each of these systems changing on a regular basis, including changes to the midnight rule that ms implemented in 2013. Also, we understand the reason for the change to icd10 this fall, and weve been training extensively for the conversion. But this is one more significant change in our operations that we must implement with scarce funds available. Both my hospitals were early adopters of Electronic Health records and have achieved stage 2 status. However, meaningful use funding nearing an end and the requirements continuing to increase, this is also become an Administrative Burden for us to keep up with the changes that cms implements. In conclusion, with 50 rural hospitals closing since january 2010, Congress Must act to prevent further erosion of health care in Rural Communities. We appreciate congressional action to protect the funding we receive. For example, hr2 eliminates the annual threat of a significant reduction in the medicare fee schedule. It also provides a 30month extension in the medicare low volume and medicaredent programs and extends the Home Health Care addones. For rural pps hospitals to survive, Congress Must continue to support these programs, in fact making them permanent. Likewise, rural hospitals should be exempted from a sequestration and future medicare cuts. We also need continuous support for programs like the 340b drug discount program, a lifeline for cms, which also saves money for the state and the federal government. Finally, grant fund shotgun be made available for rural hospitals to assist with the transition to icd10 and the larger conversion to future care delivery in future models. Thank you for the opportunity to present this testimony today, and i look forward to answering questions you may have. Thank you, mr. Wolters. Dr. Anderson . Chairman cochran, chairman blunt, Ranking Member murray and distinguished members of the subcommittee, its my pleasure to join you today to discuss how telehealth is improving health care in Rural Communities. My name is Kristi Henderson and im a Nurse Practitioner and serve at the university of Mississippi Medical Center in jackson. Mississippi ranks at the bottom for overall health, obesity, heart disease, diabetes, and preventible hospitalizations. More than half of mississippis three million citizens live in a rural community, and almost a quarter live at or below the federal poverty level. Twothirds of mississippis hospitals are located in rural areas and lack sufficient resources in specialty care. But despite these facts, telehealth in our state is increasing access to health care and improving outcomes and lowering costs. The ummc center for telehealth began in 2003 with the teleemergency program connecting critical access emergency to departments to physicians at our trauma center. 12 years later, telehealth allow us to provide over 35 medical specialties to 166 sites around the state, including Community Hospitals and clinics, Mental Health facilities, schools and colleges, corporations, prisons, and even in the patients homes. We connect sites in 52 of the states 82 counties and serve an average of 8,000 patients a month. Since 2003, we have been awarded over 9. 7 million in federal grants to purchase devices, conduct workforce training, and enable the technology that we use to serve patients daily. This early funding allowed us to test Delivery Systems, areas of practice, and Service Locations in order to craft an effective and impactful model worth replicating. Without early critical support from usda, hrsa, fdc and others, our network would have been very slow to deploy, taking the longest to reach those with the most need. Today our system is completely selfsustaining. A critical factor to our continued sustainability is the reimbursement parity available in mississippi. Prior to 2013, Insurance Companies in mississippi did not reimburse for Telehealth Services. We argued that mississippi would ultimately save money if they did, and undertook a series of Pilot Projects to prove it. We were successful. In 2013 and 2014, governor bryant signed legislation mandating that health Insurance Companies reimburse for Telehealth Services at the same rate as inperson services. These policies changes were the catalyst for the rapid growth of our system. While increased reimbursement may cost more in the shortterm, years of data from our state and numerous others prove that the cost savings achieved through better chronic disease management, fewer er visits, and aggressive Preventative Care far outweigh the expenditures. Given the success we have seen in mississippi, i can only imagine the exponential impact of offering similar federal parity for Mental Health. I commend cms for opening new code sections for reimbursement and hope the committee will encourage them to expand coverage for more services in more communities, be they rural or urban. Without reliable connectivity, we cannot serve rural patients. Thanks to support from universal Service Funds and our Telecom Partners we are able to bring much needed health care to rural mississippi. It is this connectivity enabling remote patient monitoring in the home that is changing lives in ruralville, mississippi. Last fall we launched a Research Pilot aimed at managing 200 uncontrolled diabetics through aggressive inhome monitoring and intervention. Once enrolled, patients are sent home with an electronic tablet that monitors glucose readings daily, provides educational information, and transmits health data to specialists monitoring them hundreds of miles away. For the first time these patients have access to a medical Team Dedicated to their care, ophthalmologist, endocrinologists, pharmacists, nutritionist and nurses. Preliminary results show that the majority of patients have already met or exceeded the goals that were set for the end of the study. With one exception, none of our patients have gone to the er or been admitted to the hospital for their diabetes. The results are improved care at a reduced cost. So we look forward to working with the committee and would like you to consider these few points. The need to test reimbursement parity at the federal level, particularly for remote patient applications. The only way for us to know if the success of pilots like ours can be replicated at the federal level is to test it. Now is the time for cms to pilot new reimbursement parity models for telehealth, especially were inhome monitoring impact is the greatest. The continuing need for support for telehealth. While our network has become selfsustaining, it will not be complete until we reach every mississippian. The need for federal funding remains, and efforts to coordinate opportunities across the agencies should be encouraged. The need to remove geographic barriers for reimbursement. Rural or urban, telehealth is a powerful tool in improving access to care and should be incentivized. We recommend that geographic restrictions for cms reimbursement be removed. And then lastly, the need for continued support for universal Service Funds. A reduction in any of the usf fund willing not only impact current operations, but will significantly hinder our efforts to offer remote patient monitoring in Rural Communities. Fund shotgun be protected. Our mission is to increase access to health care and improve outcomes and reduce costs. Telehealth allows that to happen. I thank the subcommittee or to the opportunity to testify today and look forward the answering your questions. Thank you. Thank you, dr. Henderson. Ms. Peterson . Chairman blunt, Ranking Member murray and members of the subcommittee, thank you for the invitation to testify today. My name is julie peterson, and im the administrator of pmh Medical Center, a critical access hospital located in prosser, washington, a community of about 6,000 people. Pmh is organized as a Public Hospital district, and we serve about 68,000 rural residents in two counties and five small towns. The mission of Rural Health Care providers like pmh is to ensure access to high quality, Affordable Care for populations that are challenged disproportionately by distance, poverty, age, chronic conditions, and cultural barriers. Many of our patients do not have reliable transportation, paid sick leave, and the other resources that allow them to travel to receive care outside of their communities. In short, Rural Communities are older, sicker, have poor health status, and face significant economic challenges. Its never been easy to provide access to high quality care in these communities, and its more difficult today than ever before. As is the case with most Rural Communities and hospitals, pmh is more than just a hospital. We are the backbone of the community Health System. What you may think of as traditional hospital activity makes up just slightly more than a quarter of our business today. In my written testimony, i included an extensive list of the nonhospital services that we provide. Everything from primary care to our 911 ems service. We are a fully integrated Delivery System dedicated to meeting the health needs of our community in a coordinated way. But the current reimbursement system does not recognize that reality. Reimbursement is siloed, and there are as many ways as we get paid as there are services we provide. This makes sustaining a coordinated Health System for our community very difficult. For example, i need to be moving forward to create medical homes for my residents. I need to be integrating Behavioral Health and medical health in my Rural Health Clinics. But there are so many reimbursement variables that i cannot assure my board that we can sustain these programs. The current fragmented Financial System destabilizes rural health. Another challenge we face is that many people in our area remain uninsured. Thats despite the fact that our state had a very successful Medicaid Expansion program. We provide coverage to 535,000 additional washingtonians through expanded medicaid and the Health Insurance exchange enrolled another 170,000 washingtonians. These efforts need to continue. Rural communities also face greater shortages of Health Care Professionals than their urban counterparts. As the ceo, physician recruitment is a constant activity for me. I have an aging workforce, and our doctors are still required in many cases to participate in call, which is not the case in urban areas. So they work very, very long hours, and they see far more complex cases in the clinic setting. Programs like the National Health service core and the nurse training initiatives enable many communities like mine to attract the providers that they need. These challenges our unique population, the fragmented population and work financial shortages make it very difficult for Rural Health Care facilities to survive. We need flexibility. In washington, as senator murray pointed out, weve identified about ten very small critical access hospitals that might be facing eminent closure. That awareness has led the association, the department of health, the state office of rural health and others to begin seeking new Delivery System models. Our goal in washington is to develop and test one of these new models within the next 12 to 18 months that is a very ambitious timeline, but it is justified in view of the plight of some of these smallest facilities. One invaluable tool in this effort is the cmmi grant that provides 65 million to the state for the healthier Washington Initiative. We also have two rural hospital collaboratives that are funded in part through hrsa grants that are working with critical access hospitals and rural clinics to pioneer Rural Network development and outreach. The federal office of Rural Health Policy and the Washington Office of rural health have been generous partners in these efforts. We will need continued help from these officers and from cms if we are to succeed. Finally, id like to take a moment to brag a little bit about the leadership shown by all of our washington hospitals in advancing quality of care and patient safety. The centerpiece of this effort was an 18 million grant that funded our hospital associations participation in the hospital engagement network. This quality and Safety Improvement work, this 18 million grant, has generated 235 million in Health Care Savings through a reduced readmissions, fewer hospital acquired conditions, and healthier babies. Thats just one example of how our rural hospitals are preparing for a future where measuring quality, efficiency, and service will be essential. We are ready to demonstrate our value to partner hospitals, health plans, and to our patients. Rural providers are dedicated to ensuring that the people who live in Rural Communities have access to the highest quality of Affordable Medical care. Im optimistic that we can achieve this goal. The programs that were discussing at this hearing today are valuable tools on that journey. Thank you. Thank you, ms. Peterson. Mr. Stover . Mr. Chairman and members of the committee, thank you for the opportunity to speak to you today. My name is george stover, and i serve as the chief executive officer of hospital district number one of rice county in lyons county. Lyons has a population of 3800. Our community hospital, which first opened in 1959 is a 25bed critical access hospital that employees approximately 150 individuals. Rural Community Hospitals have a long and distinguished commitment of providing care for all who seek it, 24 7, 365. More than 36 of all kansans live in rural areas, and depend on a local hospital serving their community. Rural hospitals face a unique set of challenges because of the remote geographic location, small size, scarce workforce, physician shortages, higher percentage of medicare and medicaid patients, and a constrained Financial Resources that limited access to capital. These challenges alone would make it difficult for many rural hospitals to survive. However, one disturbing challenge that is becoming ever increase leg more prevalent is the added regulatory burdens that are being placed upon health care providers. More specifically, i would like to briefly touch upon the challenges related to the medicare policy on direct supervision of Outpatient Therapeutic Services and the 96hour physician certification requirement. In 2009, the center for medicare and Medicaid Services issued a new policy for direct supervision of Outpatient Therapeutic Services that hospitals and physicians recognized as burdensome and unnecessary policy change. In essence, the new policy requires that a supervising physician be physically present and in the department at all times when Medicare Beneficiaries receive Outpatient Therapeutic Services. As a result, many hospitals have found themselves at increased risk for unwarranted actions. While the congressional action last year to delay enactment was applaud by rural hospitals like mine, the protections afforded it under the legislation expired at the end of 2014. Rural hospitals are again at risk for exposure unless Congress Takes action. The 96hour physician certification requirement relates to the medicare conditions of participation on the length of stay for critical access hospitals. The current medicare condition of participation requires critical access hospitals to provide acute inpatient care for a period that does not exceed on an annual average basis 96 hours per patient. In contrast, the medicare condition of payment for critical access hospitals requires a physician to certify that a beneficiary may reasonably be expected to be discharged within 96 hours after admission to the critical access hospital. As a rural hospital administrator, the discrepancies between the conditions of participation and the conditions of payment have caused confusion and challenges. Equally troubling, the president s fiscal year 2016 Budget Proposal calls for critical access hospitals reimbursement to be reduced from 101 to 100 of allowable costs. This reduction, which would be on top of the 2 reduction associated with sequestration would effectively eliminate any opportunity for a positive financial margin. Further, the recent consideration by congress on the trade Promotion Authority bill that extends sequestration cuts on medicare providers potentially exacerbates our financial challenges. Toward that end, a recent analysis within our state showed that 69 of rural kansas Community Hospitals had a negative medicare margin. The average rural medicare margin was a negative 9. 3 . As a result of this trend and the fact that many rural hospitals serve a higher percentage of Medicare Beneficiaries, many rural Community Hospitals in kansas must seek some form of direct tax support from their local communities. In summary, it is critically important that our Rural Communities across the nation are able to access quality Health Care Services. Therefore, steps should be taken to minimize the regulatory burdens that are placed on Rural Health Care providers. I strongly encourage this subcommittee to support solutions that address the aforementioned issues. Thank you again for the opportunity to be appear before you. And i would be happy to stand for any questions. Thank you. Thank you, mr. Stover. I think ill go last this time. So the order would be senator murray, senator cochran, senator moran. Senator murray . Thank you very much, mr. Chairman. Thank you very much to all of our panelists. I really appreciate all of you participating today. Ms. Peterson, im really excited to hear about the Delivery System reform work under way. And im proud that our hospitals have been recognized as National Leaders in increasing the quality and safety of care. Im particularly excited about the recent grant from the centers for medicare and Medicaid Innovation you mentioned in your testimony to support the healthy Washington Initiative efforts to improve care statewide that will reduce costs and stabilize some of our rural hospitals. What have you found to be the most significant barriers to integrating care in the first year of this effort . At this point, and youre right, it is very exciting what is going on in the state of washington, i would go back to that fragmented reimbursement system. Not only are the incentives different based on what line of service youre providing, but as my colleague mentioned about the racs and the amount of time it takes to reimburse some of these systems, its years out before we know what our true Financial Condition really is. So i would call out that fragmented reimbursement system. But we also need current early relevant data to move forward with when we talk about valuebased purchasing and population health. So i would say stability in reimbursement is one of the barriers. And the other is just a true reliable database for rural residents. Okay. And talk to us about some of the specific reforms that we can expect to be seen implemented in the first year of this. Well, what i would expect to see is this continued Movement Towards value based purchasing and defining quality. And, again, i think so Washington State has done an excellent job of doing that. And led by the Washington State hospital association, all of the hospitals in washington are participating in reporting their quality data. So the rurals are right in there. I would expect that thats going to continue to happen. What i would like to see is more focus on what is relevant in Rural Communities. When we report in to hospital to compare, too frequently that grid of data has gaps for our rural facilities because were not measuring those things that are occurring and really contributing towards quality outcomes and reduced costs in rural hospital. Such as . You know, our hospital acquired conditions, our ability to reduce readmissions from our Emergency Department and our in patients. One of the grants that you mentioned, the Community Paramedic program is actually hosted by my hospital, and its been a tremendous success taking our ems resources out into the community to see people after theyve been discharged. Make sure that theyre following their discharge instructions, getting their prescriptions filled, and that they have made that primary care followup. So those are some of the things id like. Weve had chance to talk than, but its fascinating to me that just that human touch on somebody, making sure they take their medication or follow what was told to them when they left the hospital reduces costs in the long run. It does. And theyre in their own home where they can think through their questions. We also get a look at the home and the environment theyve been discharged into make sure its safe and appropriate. Its a great program. Im really looking forward to more on that. One last question. What more can cms do to help Rural Communities make greater use of telemedicine . Well, telemedicine in the context we usually talk about is a direct link between the patient and a provider in a remote location, or a patient talking to someone at an academic Medical Center. And our facility, we also use telemedicine to support our local providers. So they can have that consult discussion with somebody at the university of washington or someone at swedish. Cms right now, and i think mr. Cavanaugh answered some questions about the metropolitan statistical area restrictions that we have. Thats a very antiquated assumption that if you increase telemedicine, youre going increase costs. In fact, youre going to take that very scarce workforce that we have in Rural America, and youre going to be able to extend it. It will be more efficient. And youll create access in our communities. Okay. Very good. Thank you very much for being here and your testimony. I appreciate it. Thanks, mr. Chairman. Thank you. Senator cochran . Mr. Chairman, dr. Henderson, you mentioned in your testimony that the reimbursement parity issue was an important factor in the growth of services that are rendered through television and Telehealth Services. The diabetes Pilot Project you described a real are really remarkable. And obviously i like the potential for significant cost savings if they could be expanded into communities across the country. What do you see as the programs that could be expanded . Are we talking about the diabetes Pilot Project . Is that a possibility to serve more communities . Yes. So we can expand the Diabetes Program to other geographic regions, but we can also expand it to other chronic diseases. And that program in particular is a Remote Patient Monitoring Program where were helping day to day with patients in their home manage their disease and keep them healthy. And using the resources that are in that community more efficiently. But from telehealth perspective, it really is about connecting and coordinating all the care team. Its not just a physician service. Its a nursing one. Its interpreters. Its case managers. Its patient navigators. Once you have this infrastructure and connectivity, you can connect any of those resources to bring what would only be at an academic Medical Center to a rural community. Thank you for your leadership. We think we benefit from these experiences that youve described for us today. And i hope we can help achieve those goals of expansion and improved access for less costs. Yes, thank you. Circumstances mr. Moran . Mr. Chairman, again, thank you very much for conducting this hearing. And i appreciate our witnesses. Thank you for what you do in your communities to make certain that citizens, patients are well cared for. Let me start with the kansan. Mr. Stover, welcome to our nations capitol. Thank you for coming from kansas to testify. I want to go back to what i was trying to raise with the Previous Panel about actual costbased reimbursement. Can you give us an idea of even though presumably you receive 101 of costs, what really of even though presumably you receive 101 of cost, what really what percentage of your actual costs are covered by the reimbursement. You might start by telling us the percentage of your patients are medicare and medicaid and is there public or taxpayer support for your hospital. How do you make this work even though presumably the images youre getting 101 of your cost. Thank you, senator. Within hospital district number one in rice county our medicare volume is about 63 medicaid volume of about 10 . We are a taxing entity. We are able to appropriate tax funds from our district which is about 900,000 whats interesting with that number, in our fiscal year ending in 2014, we ended up having to write off nearly 800,000 to medicare bad debt. So that essentially washes itself out. When it comes to the cost base, youre absolutely right. Our reimbursement of 101 does not equate to our total cost of providing the health care within our facility. I would not knowing that number off the top of my head exactly, but i would say its probably around the 75 to 80 margin, which covers our costs. So we have to look towards our local tax base to make up that difference or otherwise start looking at reduction of services which we do not want to do. It used to be that hospitals would tell me that that mix, that 70 some medicare medicaid, you suppose you do everything you can to cost shift those to those who have private insurance. But are those opportunities available now as is it better to have a medicare patient and private pay patient and medicaid patient as far as revenue . How do you compensate for less than actual reimbursement of cost. Where do you make up that money other than taxes . Can you do it with private pay . We work towards our uninsured, our private pay in their struggles but no it doesnt come towards are you pleased when a blue cross and blue shield covered patient walks in your door . Does that mean this is a better deal than in it was medicaid or medicare . We look forward to the Blue Cross Blue Shield patient coming to our facility. The percentage of those who come in the door is a small percentage. A very small percentage, yes, sir. You mentioned uninsured and having to write off costs, im not trying to portray this in partisan or the way the issue is looked around here too often, but under the Affordable Care act, a theory is there would be more people insured. Has that proven to be true in light of what you just said about hoping that the private insurance covered patient walks in the door . We have seen a small increase of those individuals that are once uninsured. We funded them to be enrolled am medicaid in our state based nco program that we have. We have seen a small increase in the marketplace of those that once did not have insurance but otherwise found it on the marketplace. But when you look at the overall, that is a very small percentage of those individuals. They still find themselves uninsure uninsured. Some hospital administrators have told me that even with additional insured, that the copatients and deductibles are higher and the bad debt expense has increased. The way i described this is, somebody who had a 100 copayment could come up with 100 but if its a 5000 copayment, they cant do that so you end up writing off more even though there might be a slight increase in insured . Thats correct, were finding that even though the copays in the past have been lower, were find being the copays now are on a payment plan and and in turn sometimes we have to write those off. Let me ask a broader question. I just like to have the summary of the cost associated with telemedicine and how they are paid for. As i was listening to your testimony, i jotted down three things i think that the hospital would have to pay for the equipment, im interested if you could just im sure youve told this in your testimony but i would like to get this in a short summary so that i can understand it. You have to figure out how to pay for the equipment. And finally how does the provider get reimbursed for providing the service . My question there is when the university of kansas Medical Center in kansas city provides telehealth to the rice County District number one hospital is there a reimbursement to the physician who is present in kansas city at the Major Hospital and is there any reimbursement that then comes to the hospital thats providing the service at the other end . I dont know who is the person to answer that question. Your points are absolutely correct. How were doing it in our state, our center for telehealth is providing all of the equipment. Thanks to the federal funding dollars im able to employ that. That is not an up front capital cost. Would that be true generally across the country that there are grants available for the equipment . The majority of all of these programs have started off with grant money. In our state were able to pay the provider who provides the service, they are paid through reimbursement here youre talking about the provider in the rural setting . Im talking about the other side. Right. So where the patient is there can be a facility fee billed and that can be reimbursed as well and that helps offset their cost for facilitating that inter interaction. Typically its not a provider to provider because both providers cannot be paid for the same service. If you have a generalist with a specialist and they both do ab exam, then they both can bill. You have a general practice physician at rice County District hospital one and specialist, both of them can bill . If they are doing different services, yes. So there is no disincentive as long as youre in a state that allows parity reimbursement reimbursement. When we talk about that reimbursement, does it matter whos providing medicaid versus medicare ver vus private insurance . Is there the same in all three settings . Its not and depends on your state and what the legislation allows for and medicare has geographic restrictions as well. In our state, all public and private players have a parody re reparity reimbursement. Do you want me to stop or ask one more . Mr. Stover or mr. Walters, how does it work in missouri as far as medicare versus medicaid versus private pay for telehealth or mr. Stover how does it work in our state . We invested in telehealth, the geographic restrictions are search that we have they are rural for purpose of the Medicare Program four are those are considered urban for telehealth. The patient is in that Rural Health Clinic and they are not covered by medicare and cannot access Telehealth Services. There are times the patient may have an event going on and like to have the doctor see the patient but if its an urban facility, they cannot use telehealth. So we essentially would have to transport the patient by ambulance to the e. R. To access care that probably could have been provided by telehealth excepts for the fact that medicare defines that as a urban facility. From a reimbursement of cost to the Medicare Trust fund that doesnt make sense right . No, sir. You used all of your time. You mentioned you had a health tax provided about 900,000 but you lost 800,000 in medicare bad debt is that what you said . Yes, sir. How would you have medicare how would you have medicare bad debt . Its the bad debt that we recognize on our medicare cost report. Its not bad debt that the medicare system owes you thats correct. And in your reporting to medicare, youre reporting, you have 800,000 of bad debt. Thats correct. I see. Thats helpful to me to understand that. Mr. Walters i saw theres a ap story out in kt wmu story out today on harvard study that indicates that of the 195 hospital closures nationwide, they had little impact on patients unless you are in rural settings and that headline says in Rural Missouri but its clear they mean rural may mean rural settings anyway. You had close to the hospital in oceola closed. Do you want to talk about what your system did to alleviate some of that loss of service. Thank you, senator, yes, the hospital about 35 miles north of boliver closed november the 1st and that represented a loss to that community. No more emergency room and loss of quite a few jobs. We did step forward and have taken over the operation of the Ambulance Service and weve taken over the operation of their Rural Health Clinic. In fact we converted that into a walkin clinic open seven days a week, 12 hours a day to provide access to the patients in that area. Weve also taken over the operation of the Retail Pharmacy they had only pharmacy in town. Weve added Rehabilitation Services for physical and Speech Therapy services in the community. We try to provide Outpatient Care and the ambulance care to transport them to whatever hospital is appropriate when a patient has a need for emergency care. So weve tried to help alleviate the loss to that community, that certainly is a severe loss to osceola. I think the payer mix, almost the exactly you described about the same payer mix you have . My system is about 65 medicare medicaid. How much uninsured . About 7 at this point. So you have medicare and medicaid, and rest has some rest of your patients have some kind of coverage . Some sort of commercial coverage, correct. On rack audits did you mention mr. Walters you had 500 claims currently . That is still setting at the alj level and the backlog at the hearings center for the alj. So weve had about 1,000 denials overall over the past four or five years and weve appealed 85 of the denials. Of those that have been heard weve been successful about 90 of the time in overturning the denial but the vast majority of appeals are still setting at the level and probably will be for another couple of years. Cms suspended rack audits because there is no processor continuing to have audits . They are reworking the contracts for the racks so they have essentially suspended activity while they are renewing the contracts. Nef said they are going to make some changes but it appears that may not go far enough in trying to correct whats wrong with the rack program. The overly aggressive incentives to deny claims and take their percentage fees and regardless of the fact that most of those get overturned, this no penalty to the rack auditor at this point. So they cannot deny me as i want but keep it for several years while the appeal is in process. The 3. 5 million, you had to give that drk you had to return that money . Right, the money is gone right now, were waiting for it to hopefully come back somewhere down the road. If your current and past history was right, the odds are in 90 youll get that money back but you dont know when you get it back and the use of the money is gone and cant plan to get it back. Yes sir thats correct. Whats your rack audit history or just pure views on how the system is working . I couldnt agree more that the incentives dont align with a helpful process. Coding and determining whether someone is an observation patient or inpatient is very complex. We do welcome the ability to go through a legitimate audit process, the problem is these are essentially bounty paid claims, 9 to 12 or whatever the percentage is. Of any claims they overturn. They also have the ability to look at the entire record and second guess the physician who saw the patient at 2 00 in the morning in the er. So they are looking at a closed record of fourday length of stay that e. R. Physician had the information they had from the patient at the time, i think the other thing, theres a very, very long window that they can go back and deny those claims and review those claims and that also needs to be shortened up. Mr. Silver . Within our facility, being a critical access hospital, we are maybe the outlier that we have not had any particular rack issues or weve had minor ones but we have not been i guess were just the outlier. But within kansas, we have a number of our my colleagues and those facilities out there that are faced with the continuance of having to fight for or prove through their appeal process. Is this process different for critical access hospitals . Im not aware individually. You happen to be a critical access hospital but you dont know thats why your experience is different . That would be correct. Im using the more ran standards. One of the big areas that they are looking at is the decision to admit or not to admit a patient. One difference with a critical access hospital the inpatient outpatient is still cost reimbursed and less of an impact on medical reimbursement there, they get paid for the care, whether called inpatient or outpatient for a pps hospital we get paid a higher payment for inpatient admission or observation payment. A significance difference in the level of payment. One other major position is whether you should have put the person in the hospital or not . They are not questioning the care we provide. They are saying should not have been an inpatient and that changes the level of rei am birs bursments we get. Although they are looking at critical access claims in some areas. Ive been told on the hospital wage index is that rural hospitals can constantly form more and more behind compared to counterparts in other places, would you think that would be an accurate statement . Yes, it is because the data the cms used to determine the wage index is several years old and what happens is the wage data goes down and paid less and therefore have less to spend on salaries and becomes a cycle where you end up paying less to your staff. You dont give the pay increases that maybe an urban hospital would give. You constantly gradually fall behind urban areas. That does become a problem in rural areas. Similar are observations on wage index from ms. Peterson or mr. Stover. The wage index relative to critical reimbursement is not as significant as a pps setting however the idea that physicians and specially trained nurses and fleb om mists and technicians can be recruited to rural areas for less than they would earn in the urban areas is simply not true. We compete on a National Level for these very, very scarce resources. Same observation, mr. Stover. Yes mr. Chairman i would agree with my colleague ms. Peterson. My last question would be on telemedicine, are you getting reimbursed do you have Behavioral Health also . We do yes. Are you being reimbursed for Behavioral Health in the same way for other health items . We are. Your goal is to recapture all costs . Correct. And to interest teg great Behavioral Health into clinic as well. Do you have any studies that woe indicate how much better they would be if youre dealing with Behavioral Health problems at the same. A component of our program is around medical adherence and lifestyle and behavior changes which needs a small Mental Health component as well for behavior change. Were incorporating into that and not through with that study yet to publish it but were offering Mental Health services on College Campuses and schools and one that will continue to grow and our biggest demand right now. My personal belief that even certainly societally if you deal with Mental Health like its a every other health issue the cost comes back many many, i think many times but my personal belief is even in the Health Care Context that you deal with every other health issue and such in a more effective way if you deal with Behavioral Health like its a health issue rather than youve got lesser reimbursement and less of a commitment, whatever that i hope we can get there. Im glad that youre getting there on your telemedicine program. Would you like a minute . No thank you though. Properly close out here. Well leave the record open for a week for questions to be submitted. We thank our panel for coming and we are going to adjourn until 10 00 a. M. On thursday april the 16th. Thank you all for being here. That cant be right. On may the 16th. Thank you all. To mark the 60th anniversary lieutenant lieutenant michelle d. Johnson will talk about the role in proceeding leadership for first. Johnson is first female head of the academy. Live coverage begins at 1 00 p. M. Eastern here on cspan3. Last month World Bank President Jim Young Kim talked about the role about ending extreme poverty by 2020. He spoke to the center for strategic and international studies. What a wonderful day, the Cherry Blossoms are out. Before we begin, when we have Public Events we start with a little bit of a safety announcement. Im the responsible Safety Officer here today if anything happens, please follow my instructions, the exits are here in front of us and emergency escape route is down on that corner. Well go outside and meet across the street in the lovely park under the Cherry Blossoms. Please follow me if we have to do something. Let me just ill be very brief because we want to hear dr. Kim. This is a remarkable man who has done exceptional things with his still short life. I cant believe everything hes been doing and now hes taking on probably one of the most awe dishs goals possible, to eliminate streamextreme poverty by 2030. So many problems in washington were obsessed with them whether its the iranian deal or isis, but here we have a genuinely inspirational opportunity to focus on a problem. I cant tell you how grateful i am that someone of dr. Kims talent and energy is willing to lead all of us into a new consciousness about whats possible. Its not about the problems that were dealing with, its the opportunities that we have in our future. And i would like to say thank you to him for leading this effort and we need to get right on with his program. Would you with your warm applause welcome dr. Kim. [ applause ] good morning, thank you john, for having us here and for that kind introduction, thanks everyone for being here and those on the web cast, thank you for watching. And this is the second time ive spoken in this beautiful room and im very happy to be here again. Before i begin though, i want to pause and remember the 147 students at the University College in kenya senselessly murdered a few days ago. Schools and universities are sacred grounds and all who study there should be safe as a former University President , this hit very close to home. I will actually be talking about conflict conflict fragility and violence later. 15 years into the new millennium millennium, truly at the critical cross roads much of the attention has been about concerns about the slow moving Global Economy and uncertainties over the price of oil and conflicts from the ukraine to the middle east to parts of africa. When we look at the longer term picture, we see the decisions made this year will have an enormous impact on the lives of billions across the world for generations to come. 2015 is the most important year for Global Development in recent memory. In july World Leaders will gather to discuss how well finance our Development Priorities in the years ahead. In september World Leaders will come together at the United Nations to establish the Sustainable Development goals. A group of targets and goals set for 2030. In december, World Leaders will gather again in paris to work out an agreement based on government commitments to lessen the severe short and longterm risks of climate change. At the same time, weve witnessed the emergence of a major new player in development, the Asian Infrastructure Investment Bank led by china. Now with more than 50 countries and regions signing on as members, with the right environment and labor and procurement standards, the Asian Infrastructure Investment Bank and the new Development Bank established by the brooks countries can become great new forces in Economic Development of poor countries in emerging markets. We at the World Bank Group see these Development Banks as strong allies in tackling the enormous challenge of bringing much needed infrastructure to the developing world. Our mission is defined by two goals, to end extreme poverty by 2030 and boost shared prosperity among the 40 poorest in lower and middle Income Countries. These goals are ambitious and as we think about the new Development Banks wefl have to admit theres more than enough work to go around. By 2030 well likely need 40 more energy and face a 40 short fall of fresh water. Pressures that may well be further accelerated by climate change. We estimate that the developing world will need an additional 1 to 1. 5 trillion every year to be invested in infrastructure and roads and bridges and railways and increasingly desal nation facilities. If the worlds Multilateral Banks can form alliances, Work Together and support development that addresses these challenges, we will all benefit, especially the poor and most vulnerable. Its our hope and expectation that these new institutions will join the multilateral Development Banks and our private sector partners on a shared mission to help Economic Growth. I will do everything in my power to find innovative ways to work with these banks. Next week at the International Monetary fund here in washington, i will continue my discussion about these exciting potential collaborations. Our ambitions for Economic Development couldnt be higher. Were no longer talking about billions ss ss of dollars for Economic Development, were talking about trillions of dollars which means we must be creative and use all resources to leverage the much needed private Sector Investment to build jobs. The decisions we make this year and alliances we form in the days ahead is that the world has made substantial progress already. In 1990 when the population was 5. 2 billion, 36 of people lived in extreme poverty. Today with the World Population of 7. 3 billion people an estimated 12 live in extreme poverty. Over 25 years weve gone from 2 billion living in extreme poverty to fewer than 1 billion. But we still have nearly 1 billion People Living on less 1. 25 a day. Few of us can even imagine what thats like. Lets remember what poverty is. Poverty is 2. 5 billion people not having access to Financial Services like bank accounts. Poverty is 1. 4 billion people without access to electricity. Poverty is having to put your children to bed at night without food and poverty is not going to school because in order to survive everyone in the family needs to make a few cents every day. Some say its impossible to end extreme poverty especially in 15 years, but we know its possible. We know in port because of our past success and because weve learned from years of experience about whats worked in particular context and whats not. And later in the year ill talk in depth about strategies to boost prosperity for the bottom 40 , especially in middle Income Countries. But today i want to talk about a broad strategy to lift nearly a billion people out of extreme poverty and into the modern world. Inside the World Bank Group for the past 50 years weve continuously distilled and analyzed our Global Experience in fighting poverty. As a result our advice to government has evolved over time. We now know that our strategic advice must evolve even more. Our strategy to end extreme poverty based on the best Global Knowledge now available can be summed up in three words. Grow invest and insure. Let me talk about each one. First grow the World Economy needs to go faster and grow more sustainably. It needs to grow in a way that insures that the poor receive a greater share of the benefits of that growth. We can reach the end of extreme poverty only if we mark a path today toward a more robust and inclusive growth that is frankly unparalleled in modern times. Decades of experience taught us that Economic Growth is the primary driver of increased personal income and Poverty Reduction. Sustained growth requires Macro Economic stability in the form of low inflation manageable debt levels and Reliable Exchange rates. Government policies also must prioritize growth in sectors that increase the incomes of the poor. They must make investments in the broad variety of areas in foot against extreme poverty. For instance in countries with great amounts of mineral wealth, governments can encourage growth by investing in improved Education Systems and more diversified economies. In most of the developing world, efforts to end extreme poverty require us to focus on boosting agricultural productivity. Despite the global migration, 70 of the extreme poor live in rural villages. Providing services to rural populations. Our experience is china shows that in poor economies, growth in agriculture is four times more powerful in lifting people out of poverty than growth in manufacturing and services. How can countries follow chinas example . It depends on the local circumstances. Sometimes its just a matter of giving farmers more control over how and what they produce. This is what vietnam did doing the economic renovation in the late 1980s, over the next three decades, over the following three decades, they became a top exporter of rice and coffee and tea and poverty rate fell from 57 to 5 . Helping farmers improve yields creasing access to better seeds and markets. One study in bangladesh six years after constructing 3,000 kilometers of roads to collect communities to markets, Household Incomes increase by an average of 74 . Promoting growth and agriculture depends in part on the integrity of the global food system. At next weeks spring meetings well be releasing a new discussion paper to develop a strong food system one that raises incomes of the poorest and provides adequate nutrition and at the same time combats climate change. Now thats the growth part of the strategy. The second part of the strategy is to invest. By that i mean investing in people especially through education and health. The opportunity to get children off to a good start happens just once. Investments made in children early in life bring far greater returns than those made later on. Poor nutrition and disease can have lifelong implications for mental and physical health and adult earnings. Clean water and sanitation facilities both at home and in school also have a substantial impact on future professional opportunities to help children avoid infections that cause Developmental Disabilities and ensure attendance even after the beginning of menstruation. Investment of kbirl girls and women in particular is important, it has a multiplier effect. Mothers have healthier children and when they have Financial Resources more likely to invest in the next generation. In schools, we also must set clear learning standards. The level of learning among young people today in many countries is alarming. Over 50 of young people in kenya who have completed six years of schooling cannot read a simple sentence. Over 70 070 of children completing Primary School in mozambique do not have basic numercy skills. We know that using new technology can help transform educational outcomes. For example, Bridge International academies uses softwears and tablets and school that teach 100,000 students in kenya and uganda. After two years, students average scores for reading and math have risen high above their Public School peers. And the cost per student at bridge academies is just 6 per student per month. One of the most effective ways to encourage investment in the extreme poor and improve health and Educational Service delivery is accountability. One study in tanzania found doctors in clinics spends 29 minutes in any day seeing patients. According totory research in india, primary teachers in Public Schools are absent 25 of the time. Primary care doctors are absent 40 of the time. Governments can help poor people monitor and Discipline Service providers for these failures and create incentives to do better. Those that do so will reap far greater returns on their Human Capital investments. The final part of the strategy is to ensure, this means that governments must provide social safety nets as well as build systems to protect against disasters and rapid spread of disease. National associate assistance and insurance schemes protect against setbacks like illness and unemployment and promote growth and Human Capital development. Cash transfer programs can be substantial and cost effective. Brazil has cut extreme poverty by 28 in a decade for a cost of just about 0. 5 of gdp. Despite successes like this, 870 million People Living in poverty still do not have any access to social assistance. Another critical element of insurance is protecting people against catastrophic risks. Examples include universal Health Care Systems and efforts to improve the quality of Health Care Services and disaster Risk Management and financing tools like drawdown facilities. Now, for those not in finance, this may sound technical but the socalled catastrophic bonds are very effective make funding immediately available to countries responding to natural disasters and sim approaches should be used against pandemics. Ebola revealed shortcomings systems to protect and respond to outbreaks but also showed us that the poor are likely to suffer the most from pen demices. The World Bank Group has been working with partners on a new concept that would provide much needed Rapid Response financing in the face of an outbreak. The idea behind a facility is to mobilize sources through public funding and market and private insurance mechanisms. In the event of an outbreak, countries would receive rapid disbursements of funding which would save lives and protect economies. Now, theres no single blue print for countries in their efforts to end extreme poverty. But the strategy i just outlined suggested there are clear priorities for the future. First, agricultural productivity must increase. Second, we have to build infrastructure that provides access to Energy Irrigation and markets. Third, we must promote freer trade that specifically provides greater access to markets for the poor and enables entrepreneurs in lower and middle Income Countries to create jobs. We have to invest in health and education, especially for women and children. And finally, we have to implement the social safety nets and provide social insurance initiatives that protect against impact of natural disasters and pandemic pandemics. Nine months ago the World Bank Group started one of the most ambitious reorganizations in our history. We knew we needed to restructure in order to meet the evolving needs of low and middle Income Countries. In a world where capital is much more easily available, we needed to emphasize our greatest strengths and that is the ability to marry our vast knowledge to innovative financing to deliver programs that have the greatest impact on the poorest. Our new global practice is cost Cutting Solutions areas and regional units working closely with governments to develop customized Poverty Reduction programs. These are based on analysis of wide range of local factors including the location of People Living in extreme poverty. Our aim is to help countries translate Global Experience into Practical Knowledge and solve their most difficult problems. We know that ending extreme poverty will be extraordinarily difficult. In fact, the closer we get to our goal, the more difficult it will be. The most persistent poverty will be in fragile virmts. In five years we expect half of the extreme poor will live in conflicted areas. And conflict as weve seen over and over can have devastating effects on our efforts to fight poverty. Poverty itself can create a fertile landscape for conflict. For example where people feel excluded from discrimination or corruption, may take up arms. These factors made it easier for extremists in the middle east and africa to recruit for their cause. More violence destroys buildings and bridges and schools and clinics and most importantly lives. This destruction of course causes even more poverty. We can help break this vicious cycle and promote security if we implement Development Policies and programs that promote growth invest in Human Capital and ensure people against risk that can plunge them into poverty. Initiatives to strengthen institutions are going to also be very important. Governments must be more accountable to citizens and work to reduce arbitrary treatment and demands from bribes from poor people. This too will help minimize the likelihood of violent conflict and eliminate drivers of poverty. When conflict persists, the hard truth is that Poverty Reduction is extremely difficult. When the fighting stops though progress is possible. Over the last two years, ive made three trips with United Nations secretary general ban kimoon to the Great Lakes Region into the horn of africa. Our purpose was to take advantage of these opportunities when the fighting stops. And these three regions weve worked with partners to collectively move billions of dollars to promote Regional Development and taken steps to increase cross border political and economic cooperation, which we hope will make conflict less likely. Weve also increased investments to benefit the poor and most vulnerable, reducing the drivers of fragility. Our partners include the European Union African Union and islamic Development Bank. This kind of collaboration is what gives us hope and a fighting chance to end extreme poverty. It wont be easy. Development has never been easy. We find encourage. On the record of the past 25 years, we reduced extreme poverty by two thirds and shown that great gains can be made to the strategy of grow, invest earn insure. In the fight to end extreme poverty, many countries succeeded in taking something that made it seem possible and made it impossible. The end of extreme poverty is no longer just a dream. The opportunity is before us. Governments of the world must seize this moment. Our private sector partners must step up. The World Bank Group our Multilateral Bank partners and new partners on the horizon must also seize this moment. We have to now collaborate with real conviction and distinguish our generation as the one that ended poverty. Were the first generation in Human History that actually can end extreme poverty. This is the great challenge and great opportunity. We will be guided by half century of evidence and practice. Its doable. Its in our sights and it will be, i believe human kinds most significant and mem oral achievement. We can end extreme poverty but the final push must begin right now. Thank you very much. [ applause ] i wish i could start every day with that. It makes you feel your day is worth living. Thank you. Just have to tell you that dr. Kim has a Board Meeting so hes going to have to leave, hard stop at 10 25. The realities of fighting poverty, you have to go to Board Meetings. Ill be ruthless and im going to ill moderate to bring questions out but id like to start with one question if i may, dr. Kim. That is when you said this isnt about spending billions, this is electricals s trillions and talking about the profit seeking private sector. Governments usually know how to work with the Nonprofit Sector of the private sector but dont really know how to work effectively with the profit seeking. What are your authorities about how to establish this parltenership . Well if you just look at the numbers, so, john you know official Development Assistance the foreign aid was 130 billion last year. All of us that multilateral Development Banks were part of that world. If you add up every dollar that the multilateral Development Banks can provide, its somewhere in the order of 180 to 200 billion plus. But were talking about 1 to 1. 5 trillion in developing countries. Theres no way to get there without the private sector. Now, its a very difficult time and capital now is without question beginning to move out of the emerging markets. And in order to be able to reach this goal were going to have to be much more clever about how we utilize the extremely valuable grant based official Development Assistance that countries provide and link it to the kinds of investments that we know will be the creator of jobs and path to ending poverty. How do you do that . Well, one of the things were trying to do and one of the papers that well be presenting at the spring meetings next week, is one in which all of us all of the multilateral Development Banks and imf sat down together and said lets look at all of the sources and put them together and thats a thing strategically how we use it most effectively. If you look at all of the different sources start with improved domestic resource mobilization, weve got to help countries collect taxes in a more fair and reasonable way. Thats got to be on the table. And you know, i was in london in a paying literally paying tribute to the u. K. Government and Prime Minister cameron for sticking with this pledge of providing 0. 7 of Gross National income to development. But there were a lot of criticisms inside the uk and its remarkable that they stood up under those criticisms and kept going. One of them was, why should we taxpayers provide aid to countries that themselves dont collect taxes . Especially from the rich . This is a question we put on the table. But one of the things were learning is that the synergy between public and private sector are part of the great hope Going Forward. For us we focus specifically on supporting the small and Medium Enterprises in developing countries that can create the jobs that lift people out of poverty. But its tricky its a very complicated business getting that right. Even within our own organization, we have people who are very focused in the Public Sector and private sector and they are now talking to each other much more but its relatively new. My own sense is that weve now got to bring the private sector into the discussion on development. There are people like paul pullman at unilever who have been extremely dedicated to getting into the Development Conversation from the beginning. The private sector was never part of the conversation. And we basically asked them to make donations after everything was decided. This time for the first time the private sector will be at the table talking to us how we can reach these goals. I was a government guy for 25 years and must say, i had a bias about it but its not a bad thing for the private sector to make profits especially if we can channel them a way we believe there are many winwinwin situations out there. The bottom line is unless we create bankable projects, projects in which there will be a return, we wont get the infrastructure built. We focus so much on doing this. We created something called the Global Infrastructure facility. And specific clipally its focused on using 50 years of experience in doing this thing and bringing it to the table so we can prepare the projects. Now, a Sovereign Wealth Fund doesnt have a whole staff of people used to putting together projects for bridges in africa but we do. Were hoping well put those projects together and bring our safeguards and our procurement standards and everything to the table and prepare those projects and then the decision will be on whether to invest, we feel we can create a clear picture of risk an reward. A lot of these people have all of these ideas about these projects being too risky. We think that by bringing our experience to the table theyll understand that actually the risk reward ratio is very favorable and that theyll begin to invest. Thats exciting. Were going to open up and id ask you sir in the back your hand is up with the microphone. Hustle over. We dont have time. Thank you. Thank you, john zhang with cti tv of taiwan. The question about the initiative to establish the aaib and what do you think of this event and what other ways that the world bank can cooperate with aaib . Thank you. Were weve been the World Bank Group has a close relationship with china. Its really a remarkable relationship and it goes back a long way but the recent relationshipwise shaped in many ways by my predecessor bob zellic, he orchestrated a brilliant process to put together a report called china 2030. In that is the blue print for reforms taking place today. Changing the chinese growth model from one focused on investments and exports to one focused on consumption and services. All of these things that despite the lower still very highlower growth rate of 7 , they are continuing. This is part of a long conversation that weve been having with china. We then did a report on urbanization and now doing well on health. Our communication with them is very close. Weve been talking about this Asian Infrastructure Investment Bank from the very beginning. My position has been the same from the very beginning, my goodness, we have so much need for infrastructure that we welcome new players, the Chinese Government has been very clear to us this is not competition for us but that they have been very, very clear that they want to cooperate and weve already been cooperating. Its still early days. Theyve not they dont have articles of agreement yet and not decided what kind of instruments they are going to put together but i can think of many potential joint projects. We have this Global Infrastructure facility to invest there. And the conversations are just beginning and the fundamental issue for us is your enemy cannot be other institutions. Your enemy has to be poverty. If your enemy is poverty, the natural thing to do is welcome players that can do the infrastructure that can end poverty. The gentleman here in the blue jacket. Good morning, dr. Kim my name is simon youll have to talk leader. My question is pretty much from the african point of view. Most of the things you raised was pretty much about how developed countries use attacks to aid most of their developing countries. What is the world bank doing in a situation regarding having to build in the developing countries social safety or Social Security or situation of tax system because if you as World Bank Group actually ininvolve or engage this developing countries in this aspect, then they will learn as a policy of the world bank to engage as citizens to come into that line, even if there is no money in terms of poverty for the low income or poor people what the system and infrastructure is already in place. Thats one aspect. One question, because i have too many other people. Answer this question. Let me take what i think i understand your question to be. So on the one hand if theres one thing that i think has changed most dramatically about the World Bank Group its the extent to which we engage our clients in discussions about what the right thing to do is. You know in 19 early 1990s, i was part of a group called 50 years is enough. We were on the streets trying to argue for the closing of the World Bank Group. We lost that argument, very good because i have this job now. And i have to tell you, ive not seen any institution that is as open as the world bank in taking criticism or changing practice over time. Now they work very closely with countries to try to figure out what is it they want in terms of their own development path. And secondly, we are now aggressively moving forward so that every single project will have beneficiary feedback. The people who are benefitting the program, well get feedback directly from them. We also worked on programs that increase the accountability by just for instance, very simple things like putting posters on the outside of school saying to the community the hours that the teacher is supposed to be there. And giving them a number to call if they dont show up. So working with countries, accountability, working with the citizens themselves is extremely important. And a critical part of it and one of the things i mentioned is building institutions is extremely important. So were very working very hard to build institutions. Now, some of the problems of inability to collect taxes, there are countries extremely poor countries where the top 1500 wage earners are exempted from paying taxes. Weve got to call that what it is. This is not acceptable. So we want to bring about fair tax systems and we think that what well find is that often the collecting of higher taxes or doing other things like removing fuel subsidies which are the most regressive tax system you can imagine that those kind of things bringing more money into the public budget will allow countries to be able to provide the kind of social support mechanisms like cash transfers that we know to be effective. You know, the strategy that i laid out grow, invest insure, was not always the strategy of the World Bank Group. For a long time we focused on growth of gdp. But this particular formulation is new that putting Growth Investment in people and insuring the poor against plunging into poverty, this is something new for us. And we want to help every country, especially in africa get there, a huge part of the focus is going to be on africa. Thats where i think some of the most difficult challenges exist but its also the place where we have the highest ambition. Alex, the lady with the green blouse. Thank you, im julie howard. Thank you very much for your focus on agricultural productivity. I wonder if you would comment on the world banks decision to withdraw core funding from the cgir centers of International Agricultural research and World Bank Leadership from those institutions . We havent withdrawn funding from cgir. We recognize the importance of Agricultural Research and were in the process of finding how we can support it over time. Our focus on Agriculture Research Getting Better seeds at the expansion of Extension Services this is all very real and its just simply what we did was there was a part of a budget that had been without review simply renewing different grants to different groups over a very long period of time. Were moving that into the light of day and finding the right way to support through our parts of the budget these particular efforts. Right here in the third row, please. Im john harinson, George Washington university. You said almost nothing about the Institutional Foundation requirements, im thinking particularly about civil those issues are critical. The reference to it was an accountability. There are many ways people have been doing it. In afghanistan where travel is so difficult we have brought villagers and members of Civil Society into the project itself by giving them cell phone cameras so they have cell phones and cameras and take picture of the project. They have a function where they can get rid of the pictures. That level wasnt happening 20 years ago. Its part of the tremendous change in the World Bank Group. Its one of the most difficult things to do. Alex. You talk about violence and how it increases chances for poverty. Could you elaborate on any World Bank Initiatives or plans and the middle east libya, yemen, syria, iraq, gaza. When i meet with leaders of governments sometimes they ask us for support of arms. We continue do that. We dont supply funding for arms. Its a constant conversation ive been having with the great thinkers and leaders in that particular region. To what extent is the problem idea lodge ideological. For those who say its very much an economic problem. My guess is its somewhere in the middle. Well try to do everything we can to have potential recruits that are there because they cant get a job and dont have an education. Even though the gdp per capita have gone sky high, educational outcomes are still low. Something that happened in the prospects of quickly improving educational outcomes. Essentially take learning modules from the con academy. There are fantastic teachers out there in every language. What they do is essentially put very simple but effective lessons into a format. What Bridge Academy does is puts very low cost tablets and tablets are as inexpensive as 25 to make. They put them in the classrooms. As the students learn the great secret is to teachers are learning too. For 6 per student per month theyre able to do that. What the teachers do is walk around and help the student who is need the most help. The great news about the middle east is theres a shared language language. Theres a shared literature. There a way we could take to scale a new educational program. Will that make a huge difference . Im not sure. We know if we can have a region wide discussion on education and take on other issues the another huge issue is water. Were not naive in thinking that measures that are focused on Economic Development will stop all conflict. Well allow one last question. The gentleman in the third row. Thank you. Good morning. Charles newsstad from the state department. Given the fact that the soviet and chinese systems are so different both economically politically and idealogically, what would the strategies be that they would have to use to work with them on this . Did you say youre from the state department . State department. You used a term soviet. Im just in habit. Im too old to change. One of the lessons that i know the leaders of the Asian Infrastructure bank and the new Development Bank will learn is that multilateralism is really hard. Its always been really hard. It continues to be really hard. The reason its hard is, the reason i have to run back is our board lives with us. Its right in the building. One of the great things about having a board that lives with us is people get to know each other. They find ways of getting past difficulties that they wouldnt i dont think, if they only came a few times a year. Is china serious about reducing poverty . Oh, my god. The chinese have lifted many people out of poverty. Theyre also a member in very Good Standing of the World Bank Group and endorsed fully our goal of poverty. The end of extreme poverty is one of those things that the entire world has been able to agree on. Its probably the one Sustainable Development goal Going Forward in accept that everyone seems to agree on. For us its really a question of just insuring that we get every single bit of experience advice, solutions that work in other areas and provide them to every one who has embraced this target. My understanding is in april of 2013 when the goal to end extreme poverty was endorsed, it was the first time that the group has a goal. If youre going to try to accomplish something you have to set clear target with a clear end date. We have it now. End of extreme poverty by 2030. You have to think if your organization is structured in the right way. We knew that Global Knowledge was not flowing as well as it could throughout the organization. We want to be the group that provides that to them and to everyone else. There are 50 other people that would like to ask questions. We dont have times because president kim has to get back to the bank. Let me just say this is an agenda that hes outlined not just for the world bank but for all of us. This is a goal everyone should embrace. We should all say thank you to you for your vision, leadership and would you please thank him with your awepplause. [ applause ]