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93–636 PDF 2015

PPACA IMPLEMENTATION: UPDATES FROM CMS 

AND GAO 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JULY 31, 2014 

Serial No. 113–170 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

TIM MURPHY, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

GREGG HARPER, Mississippi 

PETE OLSON, Texas 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

BRUCE L. BRALEY, Iowa 

BEN RAY LUJAN, New Mexico 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

KATHY CASTOR, Florida 

PETER WELCH, Vermont 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

GENE GREEN, Texas 

JOHN D. DINGELL, Michigan (ex officio) 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 4 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 85 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, prepared statement ............................................................................. 86 

WITNESSES

Andrew Slavitt, Principal Deputy Administrator, Centers for Medicare and 

Medicaid Services ................................................................................................. 9 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 90 

William T. Woods, Director, Acquisition and Sourcing Management, Government Accountability Office .................................................................................. 60 

Prepared statement .......................................................................................... 63 

Answers to submitted questions ...................................................................... 95 

SUBMITTED MATERIAL

Democratic Staff Report of July 2014, ‘‘Benefits of the Health Care Reform 

Law,’’ Democratic Committee Members’ Districts, 1 submitted by Ms. 

DeGette ................................................................................................................. 5 

Democratic Staff Report of July 2014, ‘‘Benefits of the Health Care Reform 

Law,’’ Republican Committee Members’ Districts, 1 submitted by Ms. 

DeGette ................................................................................................................. 5 

Article of July 17, 2014, ‘‘Health Care Coverage under the Affordable Care 

Act–A Progress Report,’’ by David Blumenthal and Sara R. Collins, The 

New England Journal of Medicine, submitted by Mr. Green ........................... 37 

Article of July 23, 2014, ‘‘Health Refom and Changes in Health Insurance 

Coverage in 2014,’’ by Benjamin D. Sommers, Thomas Musco, Kenneth 

Finegold, Munira Z. Gunja, Amy Burke, and Audrey M. McDowell, The 

New England Journal of Medicine, submitted by Mr. Green ........................... 44 

Majority memorandum, submitted by Mr. Murphy .............................................. 87 

1The fact sheets have been retained in committee files and also are available 

at http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID= 

102587. 

(1) 

PPACA IMPLEMENTATION: UPDATES FROM 

CMS AND GAO 

THURSDAY, JULY 31, 2014 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 9:19 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Tim Murphy 

(chairman of the subcommittee) presiding. 

Members present: Representatives Murphy, Burgess, Blackburn, 

Gingrey, Harper, Gardner, Griffith, Johnson, Ellmers, DeGette, 

Braley, Schakowsky, Castor, Tonko, Yarmuth, Green, and Waxman 

(ex officio). 

Staff present: Mike Bloomquist, General Counsel; Sean Bonyun, 

Communications Director; Matt Bravo, Professional Staff Member; 

Leighton Brown, Press Assistant; Karen Christian, Chief Counsel, 

Oversight and Investigations; Noelle Clemente, Press Secretary; 

Brad Grantz, Policy Coordinator, Oversight and Investigations; 

Brittany Havens, Legislative Clerk; Sean Hayes, Deputy Chief 

Counsel, Oversight and Investigations; Emily Newman, Counsel, 

Oversight and Investigations; Jean Woodrow, Director of Information Technology; Phil Barnett, Democratic Staff Director; Peter 

Bodner, Democratic Counsel; Brian Cohen, Democratic Staff Director, Oversight and Investigations, and Senior Policy Advisor; Lisa 

Goldman, Democratic Counsel; Elizabeth Letter, Democratic Press 

Secretary; Karen Lightfoot, Democratic Communications Director 

and Senior Policy Advisor; and Matt Siegler, Democratic Counsel. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. MURPHY. Good morning. I convene this hearing of the Subcommittee on Oversight and Investigations to review the implementation of the Patient Protection and Affordable Care Act. Our 

first witness this morning, Mr. Andy Slavitt, the Principle Deputy 

Administrator at the Centers for Medicare and Medicaid Services. 

This is Mr. Slavitt’s first testimony as a CMS employee, but not his 

first appearance before this subcommittee. Some of you may recall 

that Mr. Slavitt appeared before us last October to testify on behalf 

of one of the contractors who built the Healthcare.gov site. So welcome back. 

Our ongoing concern about Healthcare.gov is one of the reasons 

that we are holding this hearing today. Exactly 1 year ago this 

2 

week, members of this committee will remember that we heard 

from CMS Administrator Tavenner who told us that 

Healthcare.gov would be ready on October 1. We were told that it 

would work, everything we be fine. And later, we found out that 

that wasn’t quite the same thing. In fact, the contractors told us 

the same thing, that it would be working. 

Our reviews of the Web site were brushed aside. But we know 

how our fears of a massive flop were well-founded. The rollout of 

the Affordable Care Act was an unmitigated disaster. I think everybody agrees with that. 

So, Mr. Slavitt, we are hoping to hear from you today candidly 

and honestly about how things are progressing. And, frankly, we 

hope we hear with the same candor from you as an administration 

official that we heard last fall when you testified on behalf of QSSI, 

the company that built the hub for Healthcare.gov. 

Mr. Slavitt’s new role also comes at an opportune time for the 

administration to address the systemic problems that led to the 

Healthcare.gov disaster. After Mr. Slavitt’s testimony, we will hear 

from William Woods with the Government Accountability Office. 

Today, the GAO has released a review of the failed October 1 

launch of Healthcare.gov, confirming what this committee learned 

during its own review of the Web site, the administration didn’t 

have the expertise, couldn’t meet deadlines and didn’t have the 

leadership or organizational skills to manage this massive undertaking. And GAO also has given us a price tag for this boondoggle, 

a broken Web site that the President promised would be as easy 

to use any an ecommerce site, cost the taxpayers nearly $1 billion. 

That took a lot of taxpayers’ money from their hard-earned paychecks to come up with that 1 billion, and many taxpayers aren’t 

happy about that. 

We will also hear from the GAO that these costs are still going 

up. Some of my colleagues may whine and complain that we are 

spending too much time examining the failed Web site launch. I am 

not surprised. They don’t want to talk about it. But the reality is 

these problems are still playing out, and may impact this fall’s 

open enrollment period. 

We still do not know if the administration has a system in place 

capable of handling inconsistencies, inaccurate subsidies, web security, or whether CMS will ever put in place a functioning payment 

system. 

We will ask today about the Healthcare.gov contracts and the 

GAO report. But as we head into open enrollment this fall, patients 

and families need to know how this law will affect them because, 

each day, the ACA is making our healthcare system more expensive, fragmented, and restrictive. 

Earlier this summer, insurers were required to notify the administration plans for premium rates in 2015. We hope that witnesses 

today will provide information on the rates that have been submitted, when the public will know them with enough time to plan 

for their purchase, and whether the public will ever see $2,500 in 

savings that the President promised. 

Speaking of promises, we also want to know if Americans will be 

able to keep their doctor and if they were able to keep their plan 

if they liked it. Earlier this year, this committee heard testimony 

3 

from representatives of the insurance industry who noted that the 

requirements in the healthcare law required the cancellation of 

millions of policies. We hope to hear whether the administration 

predicts widespread cancellations and uncertainty again this fall. 

And it is not only individual plans that we are concerned about. 

Last week, the IRS finally began releasing information related to 

the enforcement of the employer mandate. This may be surprising 

to many. The administration has after all delayed this several 

times. But it certainly raises questions about what will happen 

when one of the law’s most controversial pieces finally goes into effect. 

Finally, I remain concerned about the overall impact of this law. 

Millions of Americans had their health insurance cancelled because 

of the law only to find that the plans they are now forced to buy 

are much more expensive in premiums, copays, deductibles or all 

the above. Some people may qualify for subsidies and others do not. 

At the same time, the law’s massive cost and destructive impact on 

the economy will continue to be felt for years. 

I again thank both the witnesses for testifying. 

[The prepared statement of Mr. Murphy follows:] 

PREPARED STATEMENT OF HON. TIM MURPHY

Our first witness this morning is Mr. Andy Slavitt, the Principal Deputy Administrator at the Centers for Medicare and Medicaid Services. This is Mr. Slavitt’s first 

testimony as a CMS employee, but not his first appearance before this subcommittee—some of you may recall that Mr. Slavitt appeared before us last October 

to testify on behalf of one of the contractors who built HealthCare.gov. 

Our ongoing concern about HealthCare.gov is one of the reasons that we are holding this hearing today. Exactly 1 year ago this week, members of this committee 

will remember that we heard from CMS Administrator Tavenner, who told us that 

HealthCare.gov would be ready on October 1. The contractors told us the same 

thing. Our reviews of the Web site were brushed aside, but we know how our fears 

of a massive flop were well-founded. The roll-out of the Affordable Care Act was an 

unmitigated disaster. So, Mr. Slavitt, we hope to hear from you today about how 

things are progressing—and frankly, we hope to hear the same candor from you as 

an administration official that we heard last fall when you testified on behalf of 

QSSI, the company that built the hub for HealthCare.gov. 

Mr. Slavitt’s new role also comes at an opportune time for the administration to 

address the systemic problems that led to the HealthCare.gov disaster. After Mr. 

Slavitt’s testimony we will hear from William Woods with the Government Accountability Office. Today, the GAO has released a review of the failed October 1st launch 

of HealthCare.gov confirming what this committee learned during its own review of 

the Web site: The administration didn’t have the expertise, couldn’t meet deadlines, 

and didn’t have the leadership or organizational skills to manage this massive undertaking. And GAO also has given us a price tag for this boondoggle. A broken Web 

site that the President promised would be as easy to use as any e-commerce site 

cost the taxpayers nearly $1 billion. And we’ll also hear from GAO that these costs 

are still going up. 

Some of my colleagues may whine that we’re spending too much time examining 

the failed Web site’s launch. I’m not surprised they don’t walk to talk about it, but 

the reality is these problems are still playing out and may impact this fall’s open 

enrollment period. We still do not know if the administration has a system is in 

place capable of handling inconsistencies, inaccurate subsidies, or whether CMS will 

ever put in place a functioning payments system. 

We will ask today about HealthCare.gov contracts and the GAO report, but as we 

head into open enrollment this fall, patients and families need to know how this 

law will affect them because each day, the ACA is making our health care system 

more expensive, fragmented, and restrictive. Earlier this summer, insurers were required to notify the administration of plans for premium rates in 2015. We hope the 

witness today will provide information on the rates that have been submitted, when 

the public will know them with enough time to plan for their purchase, and whether 

the public will ever see the $2,500 in savings that the President promised. 

4 

Speaking of promises, we also want to know if Americans were able to keep their 

doctor and if they were able to keep their plan if they liked it. Earlier this year, 

this committee heard testimony from representatives of the insurance industry who 

noted that the requirements in the health care law required the cancellation of millions of policies, and we hope to hear whether the administration predicts widespread cancellations and uncertainty again this fall. 

And it is not only individual plans that we are concerned about. Last week the 

IRS finally began releasing information related to the enforcement of the employer 

mandate. This may be surprising to many—the administration after all has delayed 

this several times—but it certainly raises questions about what will happen when 

one of the law’s most controversial pieces finally goes into effect. 

Finally, I remain concerned about the overall impact of this law. Millions of Americans had their health insurance cancelled because of the law, only to find that the 

plans they are now forced to buy are much more expensive. Some people may qualify for subsidies, others do not. At the same time, the law’s massive cost and disruptive impact on the economy will continue to be felt for years. I again thank both 

the witnesses for testifying and now recognize the ranking member for 5 minutes. 

Mr. MURPHY. And now recognize the ranking member for 5 minutes. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you so much, Mr. Chairman. Well, I have 

got to say, I don’t really think we could go on August recess without having another hearing on the Affordable Care Act, because 

this is now the twelfth one we have had in the last 10 years. As 

I have been saying the last couple years, the ACA Oversight is a 

really important topic, but I would feel a whole lot better if we 

were actually doing oversight on what is happening now with the 

ACA instead of just rehashing old issues over and over again. 

You are right. We will stipulate the rollout of the ACA was an 

unmitigated disaster. But I guess I would like to know how long 

we are going to keep beating this drum? Because when you look 

at what has happened since the unmitigated disaster of the rollout, 

things are actually improving. And just about every prediction that 

was made about the law has turned out to be wrong once we got 

going. So I think we should spend our time trying to figure out how 

to make the law work even better for the millions of Americans 

who are now enrolling and getting health insurance. 

So in the last year, we had hearings where the majority insisted 

that Americans would be hit by insurance rate shock. Instead, the 

majority of new enrollees in ACA coverage are paying less than 

$100 a month. The majority insisted that the broken 

Healthcare.gov Web site would never be fixed, but thank goodness 

it was. And millions of Americans used it to sign up for coverage. 

They insisted that many Americans would not pay for coverage 

once they signed up. But the insurers all came in here and told us 

that was not correct that people in fact were paying. They insisted 

that 2015 premiums would skyrocket. But again, that is proving 

not to be true. In fact, in many cases, enrollees will be able to reduce their premiums next year. They insisted that Americans did 

not want or need health insurance coverage. But over 20 million 

Americans have received coverage under the ACA, and the un-insurance rate has dropped precipitously since January. The vast 

majority of new enrollees are happy with their plans. 

5 

1The fact sheets have been retained in committee files and also are available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=102587. 

Now, these are important facts, Mr. Chairman. And in the interest of making the hearing as fact-based as possible, I want to talk 

about some fact sheets released earlier today by the Energy and 

Commerce Democratic staff on the benefits of the Affordable Care 

Act in every congressional district in the country. I would ask 

unanimous consent to enter the fact sheets for each committee 

member into the record, Mr. Chairman. 

Mr. MURPHY. Without objection, so ordered. 1

Ms. DEGETTE. Thank you. And I just want to talk about some 

of the benefits of the law in my home State of Colorado. 

In Colorado, there are 240,000 State residents who were previously uninsured but who now have quality affordable health coverage because of the Affordable Care Act. In Colorado, our uninsured State residents has declined by about a third. Almost 2.1 million people in Colorado, including 460,000 children and 860,000 

women, now have health insurance that covers preventative services without any copayments or deductibles. Fifty thousand young 

adults in Colorado retained health coverage through their parent’s 

plans. More than 40,000 seniors have received Medicare Part D 

drug discounts worth $118 million. 1.8 people in Colorado are protected by ACA provisions that prevent insurance companies from 

spending more than 20 percent of their premiums on profits and 

administrative overhead. Because of these protections, over 210,000 

individuals in the State received approximately $41.7 million in insurance company rebates. Up to 294,000 children in Colorado with 

preexisting health conditions can no longer be denied coverage by 

insurers. 

So even if you disagree with the law, it is important to note that 

the ACA is helping our constituents. I hope we can end these relentless attacks and we can help more constituents obtain coverage 

under the law. 

We should look at the example for Medicare Part D. I can attest 

to it, because I was here. Many Democrats, including me, did not 

vote for the law and had real concerns about how it was implemented. But we still had town hall meetings and other events so 

that our seniors got coverage that cut their drug costs. I hope we 

can work, as we look into the next year, in a bipartisan way to 

make the ACA even better, instead of trying to find ways to undermine and repeal it. 

Now, I appreciate the witnesses coming today. I know GAO has 

some important insights into CMS contracting for Healthcare.gov. 

And anything we can do to improve that contracting is good for me. 

I hope CMS has learned from the Web site’s flawed launch. And 

I want to know the plan to make sure they do better moving forward. 

And I want to welcome you, Mr. Slavitt. You are new to CMS. 

You will have primary responsibility for the Web site. So I hope 

you can tell us what you plan to do in 2015. 

Thank you, Mr. Chairman. 

Mr. MURPHY. The gentlelady’s time has expired. I now recognize 

Dr. Burgess for 5 minutes. 

6 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I thank the chairman for the recognition, thank 

Mr. Slavitt for joining us here again at our subcommittee. 

You know, throughout the development and the rollout of 

Healthcare.gov, this subcommittee had repeated assurances that 

the systems were and would be ready to go, and that the implantation was on track. At a hearing in September, literally days before 

the October 1 launch of Healthcare.gov, we had repeated assurances from the then director of the Center for Consumer Information and Insurance Oversight, Mr. Gary Cohen. He said unambiguously that on October 1, Americans would be able to go online, 

would be able to see premium net of subsidy, and would be able 

to sign up. We all know now that those assertions were fact-challenged. 

The Center for Medicare and Medicaid Services undertook this 

mammoth project without effectively planning for its development 

or its oversight. This has led to hundreds of millions of taxpayer 

dollars being wasted. Again, Gary Cohen and other HHS officials 

told us time and again that the Web site was working. That was 

factually incorrect. It was not working. And it still may not be 

working, because the back-end systems, those systems that are responsible for actually paying providers, have not been built. 

Consumers may believe the Web site is fixed because some of the 

frontend problems have been addresses. But there is no way to 

verify inaccuracies about things like citizenship and income level, 

or insure that the correct subsidies are being paid for insurance 

premiums. 

Thanks to this investigation, we now have definitive proof that 

the Department of Health and Human Services was fully aware 

that these systems were not ready for prime time. Their own contracting documents show that they only expected 65 percent of the 

Federal exchange to be ready on October 1. And then, of course, we 

are continuously reminded that the promises made by the administration simply could not be kept because the groundwork had not 

been done and the Web site was not prepared. We are all still wondering what happened to the promised $2,500 in premium savings 

that every family in America could look forward to. We are all wondering what happened to the ability for people to keep their doctors. We are all wondering what happened to the ability for people 

to be able to keep their insurance plan. 

Now, Mr. Slavitt, Mr. Cohen also was asked at his last appearance here in January about the issue on the risk corridors and risk 

sharing. The question came up about what if there is not enough 

money in the risk corridor to actually cover the premium shortfalls 

that the insurance companies are experiencing. And would he look 

to—that was Mr. Cohen—would he look to supplementing those 

funds from general revenue of the Treasury of the United States. 

He couldn’t answer the question. I asked him if he could provide 

us with a legal memorandum upon which he relied to obtain the 

ability to get funding from other sources if the internal funding 

was not enough to cover the cost of the risk corridors. That was 

January. I am still waiting. I would like to know if I am going to 

7 

receive an answer to that question. And if so, when that answer 

might be forthcoming. 

The fact of the matter is, both the Department of Health and 

Human Services and the White House failed to heed internal and 

external warnings about the lack of readiness of the exchanges. 

Now, we have the General Accountability Office report. And it is 

astonishing to see that after all the money has been spent, not all 

of it wisely, the Agency continues to ignore recommendations and 

continues to pump money into what may be a futile effort. 

We are well on track to sink over $1 billion into the development 

of this Web site. We have very little to show for our money. I am 

eager for the testimony of the witnesses today. I thank the chairman for the recognition. I will yield back the time. 

Mr. MURPHY. The gentleman yields back. I now recognize the 

ranking member of the full committee, Mr. Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

This is the twelfth hearing this committee has held on the Affordable Care Act since enrollment began in October 2013. These 

hearings, if you look at them, all have one purpose: to undermine 

the Affordable Care Act regardless of the facts. The hearings have 

misled the public and I think squandered taxpayers’ dollars. In 

fact, the Affordable Care Act is a historic success. It has made comprehensive healthcare reform a reality for the American people. 

More than 8 million people have signed up for private health insurance plans through the Federal and State marketplaces, exceeding 

CBO’s enrollment estimates by over a million people. 

An additional 6.7 million individuals have enrolled in Medicaid 

or the CHIP program as of May of this year. Three million young 

adults under the age 26 have enrolled in their parent’s health insurance plans. And the fact sheets the Democrats put out from our 

staff reveal that in my district alone, if I can be parochial, 17,000 

residents who were previously uninsured now have quality affordable health coverage because of the Affordable Care Act. 

So I am giving some perspective that the law has been a success. 

It is accomplishing what Congress and President Obama intended. 

Instead, we have another hearing of this committee, or another 

subcommittee of this full committee, trying to say how the Affordable Care Act has problems and did things wrong and presumably 

should lead us to the conclusion it should be repealed. 

Well, in a lawsuit, there is a word called stipulate. We can stipulate to what the GAO has reported. And they have reported some 

things that for which we ought to be concerned. Because despite 

the success of the law, the initial rollout of Healthcare.gov had serious flaws. And I’m glad we are going to hear from GAO, the Government Accountability Office, on their investigation of 

Healthcare.gov contracting. We should always try to learn from 

mistakes, not dwell on them but learn from them. And I am glad 

that Mr. Slavitt is here to tell us what the administration has 

learned and what is being changed as a result. 

8 

I have had experience with flawed contracts. I was the chairman 

of the Oversight Committee. And we released a report that identified nearly 200 contracts worth over a trillion dollars that involved 

significant waste, fraud, abuse, or mismanagement. The FBI had 

a contract to create a virtual case file system that had to be cancelled after spending over $100 million. The Department of Homeland Security’s contract to build a high-tech border fence—that was 

supposed to keep out all these immigrants, and we are still having 

problems—that fence had to be canceled after wasting a billion dollars. The Coast Guard had a multibillion-dollar deep water contract 

to build boats that would not float. 

My point is not to excuse the Healthcare.gov problems, but to put 

them in context. With the exception of Tom Davis, Congressional 

Republicans showed little interest in these enormous wastes of taxpayers’ dollars when George W. Bush was President. I think we 

should care about waste, fraud. and abuse no matter who is President. And I am proud that Healthcare.gov was fixed quickly. Not 

as quickly as I would have liked, but fixed nevertheless and in time 

to help millions of Americans enroll for insurance coverage. 

But I want to learn what went wrong so CMS can do a better 

job for the next time, not the way the Republicans handle this, see 

we told you so. There are problems, we told you there would be 

problems. OK. And then their conclusion is, repeal it so they can 

replace it. But they have never given us a replacement. Well, people are getting insurance who couldn’t get it in the past because 

they had preexisting medical conditions. People are finding that 

their insurance can’t be canceled on them after they have paid just 

because they got sick. Women are not discriminated against. People 

who couldn’t afford it can now get insurance because we give them 

tax breaks in order to pay for it. 

So I am eager to learn what the Agency is doing so enrollment 

in 2015 goes more smoothly. We have unequivocal proof that 

healthcare reform is a success. We now need to make the 2015 enrollment period as smooth as possible so we can build on the success. Let us go toward trying to make things better, not dwell on 

things that were wrong, especially if you learned the lessons and 

fixed the problems. 

Mr. MURPHY. The gentleman’s time has expired. Just a message 

to members and to our folks giving testimony today: We are expecting votes around 10:30, 11:00—10:25, 10:40, I should say. And so 

we are going to try to go through this. I will have a quick gavel 

and ask all members really to stick with their 5 minutes as we go 

through this, or I will really bang it hard. And then we will move 

forward. If we need to be interrupted by votes, we will come back 

right after votes to complete things. 

So now I would like to introduce the witness on the first panel 

for today’s hearing. Mr. Andy Slavitt is the Principal Deputy Administrator for the Centers for Medicare and Medicaid Services. In 

his new role, he will be responsible for agency wide policy and operational program coordination as part of a new management structure that comes in response to lessons learned from the rollout of 

Healthcare.gov and recommendations put forth to the secretary. 

I will now swear in the witness. Are you aware that the committee is holding an investigative hearing, and when doing so has 

9 

the practice of taking testimony under oath? Do you have any objections to testify under oath? 

Mr. SLAVITT. No, I don’t. 

Mr. MURPHY. And the Chair advises you that under the rules of 

the House and rules of the committee, you are entitled to be advised by counsel. Do you desire to be advised by counsel during today’s testimony? 

In that case, would you please rise, raise your right hand? I will 

swear you in. 

[Witness sworn.] 

Mr. MURPHY. Thank you. The witness answered the affirmative, 

so you are now under oath and subject to the penalties set forth 

in Title XVIII, Section 1001 of the United States Code. You may 

now give a 5-minute summary of your written statement, Mr. 

Slavitt. 

STATEMENT OF ANDREW SLAVITT, PRINCIPAL DEPUTY ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID 

SERVICES 

Mr. SLAVITT. Good morning, Chairman Murphy, Ranking Member DeGette, and members of the subcommittee. I am Andy Slavitt, 

Principal Deputy Administrator of CMS. 

I joined CMS 3 weeks ago from the private sector where I spent 

the last 20 years principally working with physicians, hospitals, 

health plans, and employers on solutions to problems of healthcare 

cost, quality, and access. In the private sector, I both started my 

own healthcare technology business and run larger scale health 

services organization with more than 30,000 employees. 

In late October of last year, I began my involvement with the Affordable Care Act implementation when I joined a group of people 

helping the CMS team on the turnaround effort of the health insurance marketplace. I am very pleased to appear before you today. 

And before answering your questions, I will briefly walk you 

through some of the progress of the Affordable Care Act to date 

and talk about our priorities for the coming period. 

There is growing evidence that suggests that the Affordable Care 

Act is making a difference in the lives of millions of Americans. In 

the first full year, millions of Americans selected a private insurance plan through the State or Federal health exchange marketplace, and millions more have retained coverage on their parents’ 

policies or have qualified for Medicaid or CHIP. 

In addition, we are seeing historically low growth in overall 

health spending, which has continued into 2014. This is good news 

for consumers with the typical premium paid for a policy purchased 

in the marketplace under $100, and good news for taxpayers as the 

recent Medicare Trust Fund report shows. And, importantly, this 

success is not being achieved by Government policy alone, but in 

partnership with the private sector as insurers grow by competing 

to provide better access to quality affordable services. 

Now, as we move into our second year of marketplace implementation, we must build on the progress that is underway and heed 

the lessons of the last year. Let me outline for you our highest priorities. First, we are focused on increasing the value consumers get 

when they come to the marketplace. This means continuing to imVerDate Mar 15 2010 10:34 May 11, 2015 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\113-170 PPACA - CMS, GAO-MAKE PDF\113-170 PPACA - CMS, GAO -PENDING WA
10 

prove the information, plan options and affordability of the shopping experience. 

Second, we have critical technical and operational priorities. We 

must continually add automation. That has begun with critical releases this summer and will continue this year and in following 

years. While the consumer facing Web site is of course live, we are 

adding functionality to allow consumers to easily renew their coverage. Whether on the consumer-facing side or the back end, our 

technology improvements will be more continuous and more incremental. We have a very strong sense of our critical path. Our software releases so far have been on time, and we are managing these 

deliverables daily. 

Third, let me address our management priorities to improve execution. As part of the turnaround team, I experienced firsthand the 

challenges of the first year of marketplace implementation. And at 

CMS, I am now helping to oversee a series of changes to improve 

the management of the marketplace. As Secretary Burwell announced in June, we have created clear, top-down accountability. 

We have also improved the management end of, and communication with, our key contractor with better defined requirements, 

metrics driven contract reviews, and requirements for skinning the 

game. We have expanded our testing protocols and built more testing into the schedule. 

Even as we address the major concerns from last year, new ones 

will emerge. And our management structure and team must surface and address issues in a disciplined manner, just as we did during the turnaround. 

This coming year will be one of visible and continued improvement, but not perfection. We are in the early stages of a program 

newly serving millions of consumers and are still learning about 

the best ways to support their unique needs. And we are setting 

up and testing new processes and new technologies along the way. 

From my experience at this stage, businesses begin to see how 

closely their design matches the battle tested needs of the market. 

Good organizations focus, prioritize, and learn and continuously improve their operations and the services they provide. It is not always easy, but we understand what we need to do and are making 

the right progress to have a successful open enrollment, and continue to deliver on the promise of the Affordable Care Act to improve healthcare access, cost and quality for all Americans. 

Thanks, and I look forward to your questions. 

[The prepared statement of Mr. Slavitt follows:] 

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15 

16 

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Mr. MURPHY. Thank you. I appreciate your comments and appreciate your candor here before, because my very first job when I was 

a young man was mucking out horse stalls. And I felt like the difference between—but what I got to do was I got to ride the horses. 

So it was a nice reward. The difference between that job and this 

job is I don’t get to ride the horses anymore. So I appreciate your 

honesty and candor in this. And I want to ask you some questions 

on those lines. You may recall that a year ago, Congress was told 

repeatedly the Healthcare.gov Web site was fine, it was ready. The 

months, days and weeks leading up to it, everything was ready to 

go. And the President said it would mirror the public’s experience 

with other Web sites. So we have to ask, will Healthcare.gov be 

fully ready this fall? 

Mr. SLAVITT. Thank you, Chairman. So I obviously wasn’t here 

last year. It does sound like, certainly from the GAO report that 

I have seen, that a couple of things happened. First, the technology 

build was certainly bigger and more complicated than people expected. And I think the scope expanded because of that. And, secondly, as the GAO pointed out, there were some significant issues 

with the management of the project. 

Mr. MURPHY. But for the future? Because you said it wouldn’t be 

perfection. So are there going to be hiccups this fall, too? 

Mr. SLAVITT. I am sorry? 

Mr. MURPHY. Are there going to be some hiccups in the Web site 

implementation this fall? 

Mr. SLAVITT. I think this year, we are in a vastly different situation. For one, we have a Web site that is already up and live and 

running. 

Mr. MURPHY. Yes. 

Mr. SLAVITT. We are adding continued improvements. And we 

are adding them in a much less risky fashion. We are doing releases frequently over the course of the summer, putting things live 

into production. We have built in a big testing window. So, you 

know, everybody will remain on their toes and nervous. Everybody 

knows what they need to do. 

Mr. MURPHY. But I—— 

Mr. SLAVITT. But we are expecting to have a good open enrollment. 

Mr. MURPHY. But the GAO said there were still significant risks 

for the next open enrollment period. So you are saying everything 

is going to be fine and ready? 

Mr. SLAVITT. I think our job is to manage those risks, understand 

those risks, surface them and—— 

Mr. MURPHY. I don’t want to take out my shovel. I just want to 

know—because if there is going to be problems, I would much rather you just tell the committee, ‘‘Look, we anticipate these problems, 

here is the actions we are taking to move forward.’’ I think the 

whole committee would appreciate that so we don’t have to get 

caught up in this guess game. 

Mr. SLAVITT. Yes. Sure. Well, I expect that it won’t be perfect 

with serving millions of people. 

Mr. MURPHY. OK. 

Mr. SLAVITT. There are certainly difficult situations. People are— 

many of them are enrolling in insurance for the first time. It is a 

21 

bumpy process at times. I think we have got a committed team of 

people though that by and large are doing a very good job, but 

there will clearly be bumps. 

Mr. MURPHY. Any anticipation how many more people you will 

be enrolling in the fall, or how many will be enrolling for the first 

time? 

Mr. SLAVITT. I don’t know that. 

Mr. MURPHY. Do you know in terms of your review of this, so far 

of those who have enrolled how many of those have enrolled for the 

first time? 

Mr. SLAVITT. I have only seen the media reports, which I can’t 

pull a number. But it was, I think, far greater than a half. But I 

have only seen that in the media. 

Mr. MURPHY. When Secretary Sebelius was here before, I asked 

her a series of questions. I will repeat those to you. But I asked 

her how many were new. How many were people who previously 

had insurance and got a pink slip and was discontinued. How 

many were people who were newly eligible because of Medicaid. 

And of all those who signed up, how many were paying the same, 

less, or more. 

Mr. SLAVITT. Um-hum. 

Mr. MURPHY. And she said really the Web site has no way— 

there is no way of knowing any of those things. Would you agree 

that is true? 

Mr. SLAVITT. Yes. I think that data is not yet known by us. I 

think we are getting a bead on what premiums people are paying. 

So that is good. We have a sense that there is good affordability 

offered to—— 

Mr. MURPHY. But when we see these numbers on how many people signed up—10 million, 11 million, whatever it is—compared to 

the 45 million for which there was a need for health insurance, we 

really still don’t know how many of that original 40, 45 million are 

served new by this. 

Mr. SLAVITT. So the Administrator has a chart in her office, 

which she calls her prettiest picture, and it is a graph of the uninsured rate over time. And it shows a drop to 13 percent—— 

Mr. MURPHY. So is that specifically reviewed by your office or by 

HHS to specifically look at people who are uninsured before and 

now are insured? Because you just told me that you can’t really determine that, and Secretary Sebelius told me there was no way of 

knowing that. 

Mr. SLAVITT. Yes. There is no way to determine that from the 

Web site. 

Mr. MURPHY. OK. 

Mr. SLAVITT. We do know the uninsured rate from the recent 

Gallup Report is down to 13 percent. 

Mr. MURPHY. Have you tried to sign up for one of the plans on 

the Web site? 

Mr. SLAVITT. I have—now that I am a Federal employee, I am 

in the FEHBP Blue Cross plan. 

Mr. MURPHY. So you don’t have to be in the Affordable Care Act 

yourself? 

Mr. SLAVITT. I am a Federal employee. 

22 

Mr. MURPHY. Yes, well OK. And I am just curious, have you also 

reviewed with people if they have tried to access their physicians? 

The plan allows an initial visit and some other preventative care— 

not as much preventative care as I would like. But have you surveyed persons to find out if they have been able to see their physicians for follow-up appointments, their costs for example—to review their costs, their payment levels, their copay, their 

deductibles, have you reviewed any of those things? And—— 

Mr. SLAVITT. I will have to get back to you on that. I don’t think 

we have any hard data, but I can certainly look and try to followup. 

Mr. MURPHY. Thank you. I will keep track of time here. And, Ms. 

DeGette, you are recognized for 5 minutes. 

Ms. DEGETTE. Thank you, Mr. Chairman. 

So I agree that it is important to make the Federal exchange 

Web site, and also the States, work as well for people. And I am 

sure, Mr. Slavitt, you agree with that too, don’t you? 

Mr. SLAVITT. Yes, I do. 

Ms. DEGETTE. And we want to make it as easy as we can for people to enroll. And especially as we reenroll in the 2015 plans, is 

that correct? 

Mr. SLAVITT. That is correct, Congresswoman. 

Ms. DEGETTE. Now—up till now, even despite the admitted problems with the Web site, 8 million people enrolled in the marketplaces, is that correct? 

Mr. SLAVITT. Correct. 

Ms. DEGETTE. And about 6.7 million enrolled in the Medicaid expansion, is that right? 

Mr. SLAVITT. That is right. 

Ms. DEGETTE. So, obviously, people were able to utilize those 

Web sites to get health insurance, is that right? 

Mr. SLAVITT. That is correct. 

Ms. DEGETTE. Now, I was looking at the part of the GAO report, 

and the GAO made five recommendations in the report. Are you 

aware of that? 

Mr. SLAVITT. Yes, I am. 

Ms. DEGETTE. And what is your opinion of those recommendations? 

Mr. SLAVITT. We agree with most of those recommendations. 

Ms. DEGETTE. Which ones done you agree with? 

Mr. SLAVITT. I think the only thing in the GAO report that I 

think needs a little further clarification—it is not that I don’t necessarily agree with it, it is the characterization of the Accenture 

contract. And I think it was characterized as ballooning in cost 

when in fact I think the Accenture contract was—there was an initial contract before the work was completely scoped—— 

Ms. DEGETTE. OK. Let me stop you, because that was one of 

their findings. But that wasn’t one of their recommendations. 

Mr. SLAVITT. Correct. 

Ms. DEGETTE. Their recommendations—— 

Mr. SLAVITT. So I agree with all their recommendations. 

Ms. DEGETTE. You agree with all five of their recommendations. 

And what steps are you taking to implement those recommendations? 

23 

Mr. SLAVITT. So we are doing a number of things. First of all, 

in the contracting front, it is very clear now who can give work to 

Accenture, how work gets approved, how that contract gets managed and, frankly, importantly, Accenture has skin in the game to 

make sure that they deliver. Again, I wasn’t here last year, so I 

can’t speak precisely to how the project was managed. But I can 

tell you that, now, there is daily intensive management of the 

project. The risks and issues and concerns are also surfaced and 

dealt with. We have built early warning indicators, and there is an 

accountability difference that I think is very significant. 

Ms. DEGETTE. Are you looking at the interoperability issues as 

well? That was one of the problems we had before. 

Mr. SLAVITT. There are, as you point out, Congresswoman, many 

different pieces of this project in order to go well. And so the coordination and the systems integration is something that I think 

was missing last year. And it is in place this year. 

Ms. DEGETTE. Now, are you doing anything that goes beyond the 

recommendations in this GAO report, Mr. Slavitt? 

Mr. SLAVITT. Yes. Well, fortunately or unfortunately, the GAO 

report wasn’t news to the people at CMS. I think the people at 

CMS, who worked awfully hard but lived through that nightmare, 

don’t want to go through that again. So I think actions were underway well before seeing this report. And I think they fall into the 

categories that I have talked about: contracting reform, technical 

and managerial oversight, focused and disciplined project management. 

Ms. DEGETTE. Now, we keep hearing about how expensive the 

cost overruns and everything else in setting up Healthcare.gov 

were. Just as an aside, Mr. Chairman, I would like to know how 

much this lawsuit against the President is going to cost. But be 

that as it may, Mr. Slavitt, I want to ask you do you think we are 

going to be protected from cost overruns for the 2015 enrollment 

period? 

Mr. SLAVITT. So again, I wasn’t here last year. But the two 

things that went wrong last year, one of them actually was simply 

the inability for anybody, and quite reasonably so—and this happens in the private sector—to estimate how big this project is and 

how complex it is. We have got a better handle on that now. I don’t 

expect those overruns. 

Secondly, to the point of the GAO report, the contractor wasn’t 

managed tightly with clear deliverables and requirements. That 

has been put to bed as well. So those two things are in much, much 

better shape. 

Ms. DEGETTE. And were you aware—one last question. Were you 

aware that the uninsured rate in this country dropped 25 percent 

after the implementation of Healthcare.gov and the full implementation of the ACA? 

Mr. SLAVITT. Yes. Yes, Congresswoman, that sounds right. 

Ms. DEGETTE. Thank you. I will yield back, Mr. Chairman. 

Mr. MURPHY. I will recognize Mr. Harper for 5 minutes. 

Mr. HARPER. Thank you, Mr. Chairman. And thank you for being 

here today. And I have a couple of questions I would like to ask. 

First of all, who is performing the role of systems integrator 

now? Who is doing that? 

24 

Mr. SLAVITT. Optum. The firm is Optum. 

Mr. HARPER. OK. I am sorry. 

Mr. SLAVITT. My prior company. 

Mr. HARPER. And so who has that role now? 

Mr. SLAVITT. Optum. The firm Optum does. 

Mr. HARPER. OK. 

Mr. SLAVITT. Plays that role. 

Mr. HARPER. I got you. Yes. Some questions I would like to ask 

about some reports. Early this summer, we learned that there were 

nearly 4 million inconsistencies in the applications submitted via 

Healthcare.gov. Those inconsistencies are primarily for citizenship 

status or income. The failure to calculate these properly could 

mean that millions of Americans could have to pay back incorrectly 

calculated subsidies. So earlier this summer, it was reported that 

there were millions of these. First of all, how did this happen? And 

can’t the Web site check for accuracy? 

Mr. SLAVITT. Sure. So I appreciate the question. Inconsistencies 

occur because of the changes that occur in peoples’ lives. And people end up having more current information than Government 

databases. So we ran last year, during open enrollment, hundreds 

of millions of checks against Government databases to check on income and citizenship status and so forth. And in some occasions 

where people particularly are in low-wage jobs, they are in seasonal work and other kinds of circumstances, their income is unpredictable. Or in other cases, they haven’t file taxes before because they haven’t made enough money. So what happens when 

that happens—and just to give you a perspective on this, for a typical family of four, there are 21 records searched through our automated process. If even one of those records turns up not to be a 

match because of income or some other thing, we have to pursue 

documentation. And we do indeed pursue documentation to try to 

ensure that these people are in fact telling the truth. And we have 

done that—— 

Mr. HARPER. How—— 

Mr. SLAVITT. I am sorry? 

Mr. HARPER. How could a person on the form be a citizen or not 

be a citizen? Is that something that you can verify? 

Mr. SLAVITT. There is documentation status. There is—whether 

it is a naturalization status and so forth. Those are sometimes not 

as current in the Government database as what the individual resident has in fact in their life. 

Mr. HARPER. So, in an application—one application could have 

multiple inconsistencies, correct? 

Mr. SLAVITT. That is correct. 

Mr. HARPER. And do you have a number of how many Americans 

were affected by this problem? 

Mr. SLAVITT. So I think there were a couple of million people who 

had inconsistent information that needed to be matched of some 

form or another. About—I would say roughly half of those are income changes. So these are people who will have to come back to 

the Web site—and we are urging people to do that—and make 

some adjustment, because it will spill out of course on their tax 

form. Of the other half, we have cleared, as of July 1, 425,000 inconsistencies. And greater than 90 percent of those are indeed in 

25 

favor of the individual consumer who had more up-to-date information than we did. 

Mr. HARPER. You know, and this is obviously something we want 

to make sure doesn’t continue. So what assurances can you give us 

today that we won’t see these problems during the next enrollment 

period? 

Mr. SLAVITT. Well, I think what we are learning is that a certain 

amount of these data discrepancy problems are going to be a fact 

of life. 

Mr. HARPER. Yes. 

Mr. SLAVITT. Because of the fact that we have people who do 

have variations—high variations in their income levels. And so that 

is going to occur in coming years. What is going to be different next 

year is we have now just released software that allows us to get 

at those inconsistencies much more quickly. What is important 

though is that people who we reach out to and we need additional 

documentation from, get in touch with us and get them back to us. 

Mr. HARPER. Thank you, sir. And I will yield back. 

Mr. MURPHY. Mr. Tonko for 5 minutes? 

Mr. TONKO. Thank you, Mr. Chair. Mr. Slavitt, welcome. 

And you earlier went through some national stats. And I have 

received information on my district who have been waiting to get 

info. And in the 20th Congressional District in New York, 11,000 

residents who were previously uninsured now have quality, affordable health coverage because of the ACA. The number of uninsured 

residents in my district has declined by some 23 percent. 214,000 

individuals in the district, including 137,000 women and 54,000 

children now have health insurance that covers preventative services without any copays, coinsurance, or deductible. And 262,000 

individuals in my district now have insurance that cannot place annual or lifetime limits on their coverage. And up to 37,000—37,000 

children in my district with pre-existing conditions can no longer 

be denied coverage for health insurance purposes. 

I think that is a tremendous bit of improvement. We obviously 

want to continue to grow those numbers. But it is comforting to 

know that that kind of success is coming the way of our district. 

And so, Mr. Slavitt, part of the promise of creating the one-stop 

marketplaces was the ability to shop for health plans side-by-side 

and then apply in an apples to apples comparison. While the Federal Healthcare.gov site has done a good job in this regard in displaying the premiums and deductibles of various plans, it has been 

more difficult to assess differences in health plan networks or 

whether a particular doctor is in-network for a given plan. Could 

you tell us what CMS is doing to make it easier for consumers to 

access this information in advance of the upcoming open enrollment period? 

Mr. SLAVITT. Thank you, Congressman. So you are indeed correct. And, in fact, in the last year, I believe the typical consumer 

had dozens—several dozens of options to choose from in health insurance. And our job is to try to continue to grow that. But as you 

point out, we have to make the information people are looking for 

more readily apparent and more easy to see. So we are asking the 

insurance companies this year to put direct links to the provider 

directory that fits the individual plan. But I would also just ask 

26 

consumers to do, and I would ask if you would talk to people in 

your district, is that those directories that the insurance companies 

keep, they are not always up to date. They try to keep them up to 

date. But it is always good to call the insurance company or to 

check with your—if there is a physician that you want to see to 

make sure that they are in the network, because this is really important information for people to choose from. 

Mr. TONKO. OK. And in terms of allowing a consumer for example to search only for plans in which their doctor is covered, 

could—— 

Mr. SLAVITT. We don’t have that ability. That is the kind of thing 

that might come in future years. 

Mr. TONKO. What kind of obstacles stand in the way of that happening? 

Mr. SLAVITT. You know, I think one of the lessons learned from 

this project is to take disciplined incremental steps to making 

progress, not trying to do too much. And, you know, our schedule 

is pretty much filled with things that are important to make sure 

we are executing well. And I think those are the kinds of innovations that I could really see us getting excited about adding in future years. But it didn’t make the cut this year. 

Mr. TONKO. Um-hum. And if I could just ask you a quick question about the Medicare Trust Fund? The trustee’s report, as you 

know, came out on Monday. And they are talking about the fund 

being secure through 2030. That is 13 years longer than was projected in 2009 when the ACA was passed. The report noted that 

these changes may be due to the cost saving provisions of the ACA. 

Do you believe that to be correct? 

Mr. SLAVITT. Well, I am not going to hold myself out as an expert, but it sounds logical. 

Mr. TONKO. And in fact, since passage of the ACA, the Medicare 

costs have grown at or near record lows, is that not correct? 

Mr. SLAVITT. That is correct. 

Mr. TONKO. So would you anticipate any continuing or additional 

benefits coming via Medicare? 

Mr. SLAVITT. Yes, I would. 

Mr. TONKO. OK. Well, we appreciate the leadership that you 

have born with the ACA. And we thank you for the improvements. 

And I know on behalf of the district that I represent, the numbers 

are very encouraging. I share them with you here this morning, 

and we are going to continue to work to further improve so that 

one of these fundamental rights, the affordable and accessible quality healthcare for all, is continued. So—and strengthened. 

So with that, I yield back. And thank you, Mr. Chair. 

Mr. MURPHY. The gentleman’s time has expired. Now, I recognize 

Mr. Griffith for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I do appreciate that. 

Mr. Slavitt, thank you for being here this morning. 

You have indicated and testified that you were previously employed by Optum/QSSI, is that correct? 

Mr. SLAVITT. That is correct. 

Mr. GRIFFITH. And I think I heard you say in your opening statement that you left their employee approximately three weeks ago, 

is that also correct? 

27 

Mr. SLAVITT. A little longer than that. Yes, that is correct. 

Mr. GRIFFITH. A little longer, how long? 

Mr. SLAVITT. I could get you the exact date. 

Mr. GRIFFITH. Well, I don’t need the exact date. Four—between 

3 and 4 weeks? 

Mr. SLAVITT. Yes, yes, yes. You are—something in that nature. 

Mr. GRIFFITH. OK. 

Mr. SLAVITT. Yes. 

Mr. GRIFFITH. Here is the question. You now work for CMS. 

Mr. SLAVITT. Um-hum. 

Mr. GRIFFITH. And from what I understand, you are a very talented individual. And that is a good thing for CMS. But if I understood your testimony as well, you have indicated that your previous 

employer is managing the Web site as the systems integrator, is 

that correct? 

Mr. SLAVITT. Um-hum. That is correct. 

Mr. GRIFFITH. OK. So then the natural question, as an oversight 

committee is, how are you able to manage your former employer? 

And doesn’t this create a conflict of interest? 

Mr. SLAVITT. Sure. Thank you for the question. So, Congressman, 

there is, as you know, an ethics pledge that I signed. And along 

with that, disposed of all of my stock basically that I had had in 

the company. 

Mr. GRIFFITH. I—— 

Mr. SLAVITT. It is completely clear. I recused myself. 

Mr. GRIFFITH. You disposed of all of your stock? You said basically. 

Mr. SLAVITT. Yes, all of—yes. 

Mr. GRIFFITH. OK. 

Mr. SLAVITT. I am—yes, I am not trying to qualify that. 

Mr. GRIFFITH. I didn’t think you were, but I wanted to make sure 

on the record that you are saying you got rid of all of your stocks. 

Mr. SLAVITT. OK. Thank you. Yes, I got rid of all my stock and 

any other ties, as appropriate. I have signed—and I am not qualifying with as appropriate—as was appropriate. So now as a public 

servant, I have a very clear set of rules to follow. I have this ethics 

pledge. And then within that ethics pledge, I have a limited waiver 

which allows me, for the purposes of health reform implementation 

only on the Web site, to be able to interact with all of the contractors, including Optum, as it solely benefits the implementation of 

the project. And so I do that and exercise that very carefully and 

very prudently. But that is a publicly available waiver that I can 

make sure to get to you, if you would like. 

Mr. GRIFFITH. If you would, that would be great. 

Mr. SLAVITT. OK. 

Mr. GRIFFITH. And then I would like to talk about that waiver 

process. Because normally, in my experience, when you move from 

the private sector into the public sector, there is usually some kind 

of a period of not dealing with your former employer. That is usually a year or more. And if you could explain that process, how they 

came to this? And you said it was a limited waiver. We can certainly look at that later. But if you could explain that process, I’d 

appreciate it. 

28 

Mr. SLAVITT. Yes. So it is I think a 15-page document, which is— 

and I can get you the details. But—— 

Mr. GRIFFITH. I would appreciate that. 

Mr. SLAVITT. But it is a—2 years is the waiver. And I think the 

only exception—I am sorry, 2 years is the agreement not to communicate with my old employer. And then there is this narrow exception for interaction relative to this implementation process. 

Mr. GRIFFITH. All right. And I appreciate that. Let me ask you 

some questions about your former employer, because Optum/QSSI 

is a subdivision or is a subsidiary of UnitedHealth Group, isn’t that 

correct? 

Mr. SLAVITT. That is correct. 

Mr. GRIFFITH. And in their 4/17 quarter 1 of this year earnings 

call, the UnitedHealth Group President and CEO, Steven J. 

Helmsley, recognized employees and said that, you know, we try to 

move our employees around in different divisions of the company. 

And so I am a little concerned about how much of a firewall is built 

between Optum/QSSI and UnitedHealth Group, because 

UnitedHealth Group is participating in some of the exchanges and 

in the Federal exchange. And so we have a situation where again 

there is an appearance of a conflict or in-propriety because if you 

are shifting folks around, I said to one of my staffers this morning, 

what do they have a machine like they did on Men in Black and 

they zap their memories and they remember nothing that they 

saw? Because it would appear that the folks at QSSI who then report to UnitedHealth Group—and, in fact, Larry Renfrow is—has 

an office—a title or a hat in both companies. And if that is the 

case, aren’t they able then to gain information on competitors by 

participating in the process and in all these meetings, and then get 

an advantage over their competitors in the healthcare Web sites? 

Mr. SLAVITT. So let me clarify two things. 

Mr. GRIFFITH. OK. Please. 

Mr. SLAVITT. First, nobody on the Healthcare.gov project is permitted to go back and to go outside of the project and transfer into 

United Healthcare. That is expressly prohibited. Secondly, just an 

important clarification, because it is a little bit confusing: United 

Healthcare and UnitedHealth Group are two different things. So 

UnitedHealth Group is a parent company that has two divisions. 

Mr. GRIFFITH. Right. 

Mr. SLAVITT. One is called Optum. One is United Healthcare. 

And so I don’t want anybody to have the impression that Optum 

is a part of this insurance company. It is actually a sister company, 

a separately run entity—— 

Mr. GRIFFITH. Well, but it is a wholly un-subsidiary, is it—— 

Mr. SLAVITT. Correct. Correct. 

Mr. GRIFFITH. OK. All right. 

Mr. MURPHY. The gentleman’s time has expired. 

Mr. GRIFFITH. Thank you. I will have some follow-up questions 

and will present for answers after the meeting. OK. Thank you. 

Mr. MURPHY. Thank you. I now recognize Ms. Castor for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. Good morning. 

Throughout the country, everyone is seeing the benefits of the 

Affordable Care Act. And as of today, Americans who are interested 

29 

can access new fact sheets that provide statistics based upon each 

congressional district. So I encourage you to go to the Democratic 

Web site of the Energy and Commerce Committee and—or call 

your member, and we can provide those. 

Now, I want to share some facts about the benefits of the law in 

my Florida district in the Tampa Bay area. There are over 24,000 

individuals in my district who were previously uninsured but now 

have quality, affordable health coverage because of the Affordable 

Care Act. The number of uninsured in my district has declined by 

15 percent. Now, that could have been higher if the Republican 

controlled legislature and our Governor would have expanded Medicaid in Florida. In fact, almost a million additional residents, Floridians, could have health insurance. That is 43,000 of my neighbors in the Tampa Bay area who could have been covered, but they 

remain uninsured because Florida refused to expand Medicaid. But 

over 40,000 people in my district were able to purchase coverage 

through the new health insurance marketplace, and nearly 10,000 

young adults were able to retain coverage through their parent’s 

plans. 43,000 of my older neighbors received Medicare Part D prescription drug discounts worth $8.2 million. I mean, that is a great 

shot in the arm and terrific money back into their pockets. 

So as we plan for the second year of open enrollment, we all 

want to make sure that we don’t have the computer problems that 

we had last go around. So I want to ask you some questions about 

premiums, especially for the 2015 period. Now, open enrollment begins in November, is that correct? 

Mr. SLAVITT. Correct. 

Ms. CASTOR. November—— 

Mr. SLAVITT. 15. 

Ms. CASTOR. 15. 

Mr. SLAVITT. Yes. 

Ms. CASTOR. So folks need to at some point—when will the Web 

site be ready to compare plans? 

Mr. SLAVITT. So we are going to be sending out notices to people 

starting in October to come back to the Web site, update their information and letting them know that on November 15, they will 

be able to either, if they choose, come back to the Web site, shop 

for a plan, compare premiums and choose the plan they want, or 

as happens with Medicare Part D, Medicare Advantage, and most 

employers, if they choose to do nothing, they will be able to automatically reenroll if their existing plan is offered. 

Ms. CASTOR. OK. And the deadline is in February—— 

Mr. SLAVITT. February 15. 

Ms. CASTOR. February 15 of 2015. 

Mr. SLAVITT. 2015. 

Ms. CASTOR. Now, Republicans have predicted that premiums 

would skyrocket for the next go around, increasing by as much as 

50 percent. But we can now test those numbers because the new 

rates are rolling out across the country. Are there any signs of the 

out-of-control rate increases that the Republicans have predicted? 

Mr. SLAVITT. So far, the rate increases that have been publicly 

available from Rhode Island, Washington, and Delaware have all 

been in the mid-single digits. California, I believe, is going to come 

out with their numbers today. So I think that will be closely 

30 

watched, because of the size of the State. Colorado’s, I believe, have 

been very steady by and large. So while this isn’t going to be true 

for every single individual in every single county in America, by 

and large the early results look positive—very positive. 

Ms. CASTOR. Great. And is it accurate to say that there are more 

choices in the marketplace this go around, or will it depend upon 

the State? 

Mr. SLAVITT. There will be more choices this year than last year. 

Ms. CASTOR. So what does competition tend to do when you 

have—when consumers have more choices? 

Mr. SLAVITT. Better prices, better value, better services. 

Ms. CASTOR. Does that mean that if you have greater competition 

that puts pressure on the insurance companies to keep their premiums low? 

Mr. SLAVITT. I think this is one of those win-win situations 

where the private sector can grow by actually providing more value 

to consumers. And that appears to be what is happening. 

Ms. CASTOR. And what else helps keep premiums low under the 

Affordable Care Act? 

Mr. SLAVITT. Well, certainly, the preventive visits do. The ability 

for people to qualify for tax credits. You know, I think there is a 

whole host of things that—— 

Ms. CASTOR. You know, one of my favorite ones—what we did in 

the Affordable Care Act is the 80/20 rule, the medical loss ratio 

that says when a consumer purchases a policy, they have to get 

something meaningful. And insurance companies can’t spend too 

much on profits and administrative costs. And when they do, they 

have to rebate the money back to consumers. And for my—because 

I represent the State of Florida, we are really happy that our consumers are going to receive $42 million back this summer. I have 

already heard from many of our—my neighbors. And sometimes 

those rebates go back to the employer. So you do need to keep an 

eye, isn’t that right? 

Mr. SLAVITT. Yes. In fact, the numbers that I have seen are that 

something like $9 billion has been returned to and saved by consumers in that process. 

Ms. CASTOR. That has been very important in this day and age. 

Thank you very much. 

Mr. MURPHY. The gentlelady’s time has expired. I now recognize 

Mr. Johnson for 5 minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman. Mr. Slavitt, it is good 

to see you today. You and I have had chances to interact before, 

and I appreciate you being with us. I agree with Mr. Griffith, based 

on your background, it looks like CMS is going to be the beneficiary 

of your experience and background. 

Mr. SLAVITT. Thank you. 

Mr. JOHNSON. You have talked about your many years in the private sector. Could you give a very quick summary of your years of 

experience and expertise and what it primarily focused on? 

Mr. SLAVITT. Sure. So I started my own health information technology company back in the ’90s. It was a small business that 

ended up serving consumers. I ended up selling that business. I 

worked with Optum for a number of years. I oversaw the health 

information technology business and grew that. I worked very 

31 

closely on building lots of industry wide capabilities around things 

like revenue cycle management, population health management. I 

worked closely with hospitals, with physician groups, with health 

insurance plans, State Governments, all really focused on quality, 

cost and access issues. 

Mr. JOHNSON. OK. And to summarize, I think when you were responding to Mr. Griffith’s questions, you led the team that basically 

made Healthcare.gov usable in October, correct? 

Mr. SLAVITT. That is correct. 

Mr. JOHNSON. OK. So I want to ask you, you have all of those 

years of experience and expertise in information technology, specifically in the healthcare arena. How much should Healthcare.gov 

have cost? 

Mr. SLAVITT. That is a really good question, and I am not sure 

I know the answer to it. It is not unusual for large-scale health 

projects—for example, I can think of big projects from Kaiser 

Permanente when they installed electronic medical records—to cost 

a couple billion dollars to put in place. It is hard to know what the 

benchmark is to build a consumer facing Web site and set of backend systems to connect to 50 States, to Medicaid plans, to insurance companies. So I am not quite sure. 

Mr. JOHNSON. Well, let me help you a little bit. Because I don’t 

know if you remember or not, but my background is a 30-year information technology professional. 

Mr. SLAVITT. Yes. I do. 

Mr. JOHNSON. So I have been through the lessons learned and 

the trial by error of trying to project costs of complex IT systems 

like this. The GAO says that we spent nearly a billion dollars on 

this, with the cost climbing. Do you believe that taxpayers have received a good return on their investment thus far? 

Mr. SLAVITT. Congressman, I think two things happened. And it 

is hard to know how much fits into each category. The one thing 

that happened is, clearly, this was a more complex project and 

needed a lot more work than people expected. And for that part, 

I think—— 

Mr. JOHNSON. And that goes without—yes. And see, that goes 

back to the genesis of some of the questions that we got into the 

last time you and I were here. If you have a firm set of requirements, and if you have a systematic life cycle design process, it is 

much easier to project those costs. 

Mr. SLAVITT. Right. Yes. 

Mr. JOHNSON. I know when I was doing large-scale program 

management on large IT systems, the industry general rule was 

that in the life cycle of a complex system, that the implementation 

part—the design, the building, the implementation part is only 

about 25 percent of the cost—the life cycle cost of a system. The 

rest of the cost is in maintenance, operations and further on down 

the road. So if this thing has already cost the taxpayers a billion 

dollars or more to get to where we are today, we can reasonably 

expect that this is going to cost billions, billions more over the life 

cycle of this thing, correct? 

Mr. SLAVITT. Yes, I couldn’t put an estimate on that. 

32 

Mr. JOHNSON. But you do agree with the concept in general that 

maintenance and operation costs a heck of a lot more overtime 

than the initial implementation does, right? 

Mr. SLAVITT. I do think there will be an ongoing operating cost. 

I don’t know that it will be greater. I think that I have to look, and 

I would have to look at the budget request, which I don’t have with 

me. 

Mr. JOHNSON. OK. Well, the budget request has nothing to do 

with how much it is going to cost. 

Mr. SLAVITT. To do—— 

Mr. JOHNSON. You understand how the industry works. 

Mr. SLAVITT. Yes. 

Mr. JOHNSON. You understand the life cycle of software development. You understand that. But I appreciate it that you don’t really want to answer that question. 

Mr. SLAVITT. I don’t know the answer. 

Mr. JOHNSON. The GAO says ultimately more money was spent 

to get less capability. Do you agree with that? 

Mr. SLAVITT. I think there were clear inefficiencies—— 

Mr. JOHNSON. Because a lot of it is still not working. 

Mr. SLAVITT. I think there were clear inefficiencies in how this 

was managed. I think, didn’t it also say, Congressman, that in the 

real world, it is not always possible to know your scope going in. 

In an ideal world, you can. But I think the estimates proved that 

they need to do more work in the—— 

Mr. JOHNSON. Thank you, Mr. Chairman. And I agree that it is 

not always possible to know the scope, but it is possible to fence 

the scope and, therefore, knowing that what you are going to pay 

for is what you are going to get, which is clearly not what happened here. 

Mr. MURPHY. Thank you. The gentleman’s—— 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. MURPHY. The gentleman’s time has expired. I again remind 

members, please keep it in the timeframe, because we are expecting votes in a few minutes. And I want to be fair to everybody. Mr. 

Yarmuth, you are recognized for 5 minutes. 

Mr. YARMUTH. Thank you very much, Mr. Chairman. Mr. Slavitt, 

thank you for your testimony and your work. 

I want to talk about some of the things that have happened in 

Kentucky since we are actually doing an update, and I am very 

proud of the experience we have had so far in my State. But there 

was actually some pretty astounding news earlier this week regarding the trustees of Medicare coming from them about the prospects 

for viability of the Medicare trust fund. Are you familiar with that 

information? 

Mr. SLAVITT. Yes, I am, Congressman. 

Mr. YARMUTH. Could you tell us what has happened? Because, 

as I recall, when we passed the Affordable Care Act in 2010, at 

that time the trustees were projecting the trust fund would be insolvent by 2017. 

Mr. SLAVITT. I believe, if I am not mistaken, that in summary 

the projection is the trust fund life expectancy was extended to 

2030. 

33 

Mr. YARMUTH. 2030. So that is pretty astounding that in 4 years 

the projection extended the life—the viability of Medicare by 13 

years. And there was also some really fascinating and I think impressive data about pro-beneficiary expenditures that they essentially were flat year to year, there is no increase when historically 

they have been running at somewhere between 5 and 10 percent 

annually, is that correct? 

Mr. SLAVITT. That is correct. 

Mr. YARMUTH. All right. Thank you. So one of the things that I 

know we have spent a lot of time talking about, people who have 

signed up for insurance in the private insurance market under the 

Affordable Care Act. But this is data that has come about from the 

Commissioner of Medicaid in Kentucky. And I think this is so impressive. If you look at the top map, that is the 120 counties of 

Kentucky, color coded by the percentage of uninsured citizens in 

those counties prior to the ACA. 

[Chart.] 

Mr. YARMUTH. And red and orange—which are most of the counties in Kentucky, I think all but probably a dozen—were rates of 

17 to 20 percent, and then more than 20 percent. The bottom map 

is the current situation. And it is staggering to me because—the 

green is under 13, is under 11 percent, 8 to 11 percent, and blues, 

5 to 8 percent, and the dark blue, less than 5 percent—we have 

counties in Appalachia, southeastern Kentucky, that went from 

having the highest uninsured rate in the State, over 20 percent, to 

the lowest uninsured rate, under 5 percent. And that to me is a 

staggering accomplishment. In Kentucky, we essentially have insured about half of the previously uninsured population of the 

Commonwealth, in a State that has very poor health historically 

and currently, and people who are in desperately in need of 

healthcare. And what is even more important, I think, than that 

is that the report of the commissioner of Medicaid in Kentucky 

talked about how preventive service utilization has increased dramatically to almost 16 percent. An annual dental visit, which they 

weren’t doing before. Adult preventive services increased by almost 

37 percent, breast cancer screening by 20 percent, colorectal cancer 

screening by—up by 16 percent. Very, very important health measures that I think will pay off for the Commonwealth economically 

but also for the life of these citizens going forward. 

And also what is, I think, very important to note is how much 

reimbursements went up for providers in the Commonwealth, totals of—let us see. Reimbursements from now—those now covered 

under Medicaid expansion went up by $284 million in just the first 

6 months. So, many of those hospitals and doctors and other providers who were providing uncompensated care for Kentucky residents are now being compensated. And that also is a great benefit 

to the taxpayers and the treasury of the Commonwealth. 

So I just mention those things because it is very clear to me that 

States that embrace the Affordable Care Act and are committed to 

making it work are having very, very positive experiences. The adverse experiences are coming in States where the administrations 

of those States, the governments decided in some cases just not to 

participate in, and other cases to try and sabotage the law. 

34 

So I thank you for your work and for the information you 

brought to us today. I yield back. 

Mr. SLAVITT. Thank you. 

Mr. MURPHY. The gentleman yields back. Dr. Gingrey, you are 

recognized for 5 minutes. 

Mr. GINGREY. Mr. Slavitt, one of the members earlier asked or 

made the comment that because of the medical loss ratio—I think 

maybe they were talking about the State of Florida—how much 

money was returned to the consumer of health insurance through 

the plans. Let me start out by specifically asking you this, because 

this has also been reported: If an individual ended up receiving an 

incorrect subsidy that they were not entitled to, what will be done 

to rectify this issue? Specifically, will they be sent additional funding if the subsidy was too low? Or will they need to pay back the 

money if the subsidy was too high? And when will consumers know 

if they owe the Government more money? 

Mr. SLAVITT. Yes. Thank you for the question, Congressman. So 

if individuals have changes in their income, the best advice is they 

should come back to the Web site and update that information so 

that their tax credit and premium can be updated. For those adjustments that are not made, when it comes to tax time, they will 

either receive a refund or they will have additional money that 

they will owe. 

Mr. GINGREY. Well, I think we need to get some specific answers 

on questions like that, because this pay and chase model, as we 

know in past, absolutely in regard to let us say paying Medicare 

claims that were fraudulent, and then you have to go chase them 

down to try and get them back, you never do. You are aware of this 

GAO report that came out—well, I guess today. And it states that 

in January, CMS awarded a new company a contract to continue 

work on the Federal marketplace for $91 million, right? 

Mr. SLAVITT. Correct. 

Mr. GINGREY. GAO says in the report that the cost now has ballooned to more than $175 million, is that correct? 

Mr. SLAVITT. That is what the report says, yes. 

Mr. GINGREY. Yes. Right. And the investigation of course ended 

a few months ago. Do you know if the cost—this estimated cost of 

91 million that is now 175 million that is in the report, has it gone 

up even further since the report? 

Mr. SLAVITT. No. I think the estimate of the total contract—and 

again, this is not what has been paid, this is what is being budgeted—is about 170 million. That is correct. 

Mr. GINGREY. You know, that is a pretty big error, 91 million 

versus 175 million—how is it you can offer a contract for $91 million and have it grow that much over such a short period of time? 

Mr. SLAVITT. So I think the proper characterization of that contract is that the scope of the contract was completed after the initial contract was awarded. So I wouldn’t characterize the cost as 

ballooning. I would actually characterize it as the proper scope 

with the contractor, Accenture, was determined after they got 

going. And the reason for that, if you don’t mind me saying, is because Accenture needed to be brought in in an urgent situation to 

take over for a contractor that was leaving. And so they agreed to 

an initial amount. And this was before my time. And then agreed 

35 

that they would come back after they got started, started the transition from CGI. And then they would come to terms with how 

much the scope ought to be. 

Mr. GINGREY. Mr. Slavitt, in my remaining time, let me ask you 

this. You have been with CMS now for what, 3 weeks? 

Mr. SLAVITT. Three weeks. 

Mr. GINGREY. And you are the number two guy there, right? 

Mr. SLAVITT. Correct. 

Mr. GINGREY. You know, when—back in 2009/2010 timeframe 

when we marked up this Bill, a lot of us on this side of the aisle 

felt like that if the American people were going to have this Affordable Care Act—un-Affordable Care Act forced down their throat, 

that members of Congress and members of the administration, the 

President, cabinet members, political appointees like yourself—you 

are not a career bureaucrat—— 

Mr. SLAVITT. That is correct. 

Mr. GINGREY. You have been appointed by the President to come 

into this important position. We felt, and still feel—many of us still 

feel that you ought to eat your own dog food. And members of Congress, I think it is appropriate, we are doing that. We had to come 

off the Federal Employee Health Benefit Plan and get on the DC 

health link. And yet you members of the administration, the President and his family really ought to be doing the same thing. If— 

I know you worked in IT. But let us just say if you worked for Ford 

Motor Company, would you drive a Chevrolet? I kind of doubt it. 

Mr. SLAVITT. I would hope not. 

Mr. GINGREY. I think you probably would drive a Ford. 

Mr. SLAVITT. I would—— 

Mr. GINGREY. But what do you think about that in these remaining few seconds? Respond to me. Do you think it would be appropriate as a show of good faith to the American people that you guys 

and gals that are running this show that forced it upon us would 

be in the same plan that the American people have to be in? 

Mr. SLAVITT. My understanding is that the President and his 

family are on the exchange. I don’t know this for a fact. But that 

is my understanding. And if it is determined that the rest of us 

should be on the exchange, I would happily do that. 

Mr. GINGREY. Well, if you—if that is true, please let me know. 

And I know we are limited in time. And I yield back, Mr. Chairman. 

Mr. SLAVITT. OK. 

Mr. MURPHY. I thank the gentleman to yield back. I now recognize Mr. Green for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. And to my good friend 

and colleague from Georgia—who I am going to miss—I not only 

drive Chevys, but I am also on the plan. We had to buy ours 

through our exchange. And so—but I want to thank the chairman 

and ranking member and our witness for testifying. 

For decades, the United States has had the highest rate of uninsured in the industrialized world. This drives up costs and puts 

families at risk of bankruptcy when they get sick. The main reason 

is why we have a health sick system rather than a healthcare system, because millions of Americans can’t get the care they need 

outside the emergency room. In our own district in Texas, a very 

36 

urban district, the Affordable Care Act’s enabled almost 20,000 

people previously uninsured to get quality, affordable coverage. 

Overall, the insurance rate in our district has fallen by 8 percent. 

Fifty-two thousand people in the district would have had access to 

coverage if Texas had expanded Medicaid, and hopefully we will 

still get to that. 

Earlier this month, the New England Journal of Medicine—not 

Fox News, not a left- or right-wing Internet site, but the New England Journal of Medicine—released two reports on coverage under 

the ACA. And I would like to read a quote from them: ‘‘With continuing enrollment . . . the numbers of Americans gaining insurance for the first time—or insurance that is better in quality or 

more affordable than their previous policy—will total in the tens of 

millions.’’ 

And, Mr. Chairman, I would like to ask unanimous consent to 

place that article in the record. 

Mr. MURPHY. Without objection. 

[The information follows:] 

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Mr. GREEN. Thank you. 

Mr. Slavitt, are you familiar with these reports? 

Mr. SLAVITT. Yes, at the high level. 

Mr. GREEN. Earlier this week, the Gallup Poll released their own 

latest total numbers of Americans having insurance. Are you familiar with that survey? 

Mr. SLAVITT. Yes, I am, Congressman. 

Mr. GREEN. The—similar, the Urban Institute and Commonwealth Fund conducted surveys. Can you discuss that also? 

Mr. SLAVITT. I am familiar with those two, yes. 

Mr. GREEN. OK. Would you agree that the findings of both Gallup and the New England Journal of Medicine are consistent with 

the millions of Americans signing up for healthcare? 

Mr. SLAVITT. They are consistent, very encouraging. 

Mr. GREEN. OK. At this point, the only thing keeping millions 

more Americans from signing up for the coverage is the refusal of 

Republican Governors and State legislatures to expand Medicaid. If 

they did, another 5 million Americans would be eligible for insurance. 

Mr. Chairman, I think the Affordable Care Act, obviously, coming out of the chute, it was a problem. But it has been fixed. And 

hopefully we will see in the renewals it happen. But it is working, 

although a lot of us had tough times in October into mid-November 

who supported it. 

Mr. Slavitt, what is CMS doing to address the execution of the 

technology lessons learned from the first enrollment section? 

Mr. SLAVITT. Well, Congressman, I got to this project when it 

was beginning the turnaround stage at the end of October. And I 

think what we are doing now is essentially carrying over—just as 

we did in the turnaround. There is no magic to it. It is basic blocking and tackling. It is good communication. It is, quite frankly, a 

lot of the recommendations that have come out of the GAO report 

and making sure that we have precise requirements. It is daily 

management. It is senior level accountability that goes all the way 

up to the secretary. 

Mr. GREEN. You know, I advocated in Texas, having served a lot 

of years in the State legislature, is that we should have had a 

Texas plan that we could have done. Some States had good examples of their plan, some not. Could you talk about that? Like, I 

know the State of Maryland and some other States had problems. 

And I don’t know if they are fixed or not. But were they similar 

to what we had on a national scale for our States that didn’t have 

a State plan? 

Mr. SLAVITT. In terms of the challenges, or just in terms of what 

they got done in their State? 

Mr. GREEN. Yes. Were they on a smaller scale, having the same 

challenges that we were? 

Mr. SLAVITT. I think it is probably safe to conclude at this point, 

towards the end of 2014, that it was the rare State, and maybe 

Kentucky’s one of them, that didn’t underestimate how difficult 

this would be, given all of the complexities of tying into Medicaid, 

tying into insurance companies, offering a consumer Web site. In 

the first year of any new program, in my experience, whether it is 

public sector or private sector, it is sometimes bumpy. The same is 

53 

going to be true in the second year. But those problems become 

more and more minor, and we get better all the time. 

Mr. GREEN. To the best of your knowledge, for example if a State 

wanted to create their own plan now, there is nothing in the law 

that would prohibit them from approaching CMS or HHS, either 

that or expanding in Medicaid coverage? 

Mr. SLAVITT. That is correct. 

Mr. GREEN. OK. Thank you, Mr. Chairman. I will yield back my 

time. 

Mr. MURPHY. The gentleman yields back. I now recognize Dr. 

Burgess for 5 minutes. 

Mr. BURGESS. Again, thank you, Mr. Slavitt, for being here. You 

heard my comments during the opening statement about the 

memorandum that Mr. Cohen suggested that I might have. And I 

again just want to underscore that that is important to me. And 

even though Mr. Cohen is no longer at CMS, I would very much 

like to see that. 

Mr. SLAVITT. It is my understanding that we have just recently 

sent it. So if you don’t receive it, I will follow-up with your office 

and make sure that you have it. 

Mr. BURGESS. All right. Very well. You know, and it is kind of— 

I was just thinking it has been almost a year ago, really right now, 

that your boss, Marilyn Tavenner, was here. And we talked about 

some things about the upcoming launch of Healthcare.gov. But of 

course, that was just a little less than a month after the unilateral 

decision by the President to delay the employer mandate. Now, I 

remember asking Ms. Tavenner about how—was she involved in 

that decision. And she asserted that she was not. I asked her how 

she found out about it. And she said her chief of staff told her, 

which I found rather astonishing. If my chief of staff came and 

gave me information like that, I mean I would be curious as to 

where that came from. And she seemed to lack curiosity about how 

that decision was reached. But let me ask you this, we are a year 

later. The employer mandate is now supposed to kick in about a 

week and a half after Election Day in November. Is it your understanding that the employer mandate will in fact be enacted in November, or can we expect a further delay of that? 

Mr. SLAVITT. So I am still working my way around the Federal 

Government, trying to understand how it all works. 

Mr. BURGESS. Good luck. 

Mr. SLAVITT. Thank you. My understanding—and you could 

please correct me if I am wrong—is that that is an IRS and Treasury area of responsibility. So I haven’t been exposed to that so 

much yet. 

Mr. BURGESS. My personal belief is that we will never see the 

employer mandate. I have no inside information, obviously. I am 

not speaking for the committee. I am just speaking for myself. 

When you look at the disruption that was caused in the individual 

market, October, November, December of last year, and remind 

yourself that that was only 15 percent of the insurance market that 

had that convulsion, had that happened to the entire—both the 

large group market, the small group market, the individual market 

all at once, it would have been pretty disruptive. 

54 

Now, you heard Mr. Gingrey talk about members of Congress 

and members of the administration should take the same thing 

people have to take. I agree with that. In fact, I did not take the 

BC Exchange that was offered to Members of Congress and their 

staff. I said, ‘‘Look, I’ll do what other people in my district have to 

do.’’ I went to Healthcare.gov, bought a bronze plan off the Web 

site. The biggest mess I have ever been involved in in my life. But 

I finally got through. It took about three and a half months to do 

so. Now, I am wondering what my rate is going to be next year. 

I have got the most expensive health insurance policy I have ever 

had, an enormous deductible. But what can I look forward to in the 

next insurance year? You talked about you wanted a successful 

open enrollment. Is it going to be successful? What are the rates 

going to look like? 

Mr. SLAVITT. Yes. So I think we are at a stage now where—and 

indeed, this is one of our high measures for success, making sure 

that there are enough choices and enough affordability. And, of 

course, each State is going through their own process and going 

through rate reviews. We have seen some States publicly now come 

out with their rates. I believe Rhode Island, Washington. California 

today is going to have I think an announcement with what their 

rates are. I couldn’t tell you, Congressman, about Texas, because 

I don’t know. But generally speaking, what we have seen are rates 

that are in not the double digit increased levels but in the mid-single digit levels. That is not going to necessarily be the case in every 

county in America, but that seems to be what is happening on average. 

Mr. BURGESS. But still, I mean, you mentioned that in three or 

four States. We have got a long way to go before renewal rates 

across the country are in evidence. 

Mr. SLAVITT. No question. No question. 

Mr. BURGESS. I mean, you are the Principle Deputy Administrator. Do you have any responsibility or involvement in the renewal or the rate filings? 

Mr. SLAVITT. I think these rate filings get reviewed and approved, you know, at the State level. There is a process. And I 

think it is in the mid-process. I believe right now that the—— 

Mr. BURGESS. Let me just interrupt you, because my time is running up. Do you receive interim reports or updates on what those 

State filings are? 

Mr. SLAVITT. I think there has been an initial submission, and 

I have seen a high-level report. But this is not yet final information. 

Mr. BURGESS. And is your office going to make those rate filings 

public information? Will we have the availability to access that? 

Mr. SLAVITT. When they become final, absolutely. Absolutely. 

Mr. BURGESS. Again, as a Healthcare.gov member from the State 

of Texas of the Federal fallback, I would very much like to know 

what my renewal rates are for next year. 

Mr. SLAVITT. Of course. 

Mr. BURGESS. Thank you, Mr. Chairman. I will yield back. 

Mr. MURPHY. The gentleman’s time has expired. I recognize Ms. 

Schakowsky for 5 minutes. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

55 

I just wanted to tell you, Mr. Slavitt, I don’t know if your office 

and your position is actually in charge, but we have gotten tremendous cooperation from CMS when we have had constituent issues. 

And, you know, clearly, it comes out. Consumers get confused, have 

a lot of questions, have some problems. I get irritated sometimes. 

On the other side, I feel like there is an embracing of these problems rather than a constituent service attitude to fix the problems. 

And when we have tried, we have had good success. And so I just 

wanted to tell you I appreciate that. 

I also just wanted to say that the minority staff has done a district by district, the benefits of the healthcare reform law in all the 

districts in the country. And it is just wonderful to see how the 

number of people that in my district, 283,000 people in my district, 

including 51,000 children and 120,000 women now have health insurance that covers preventive services without any copays, coinsurance, or deductibles. Needless to say, that is huge. 

Mr. SLAVITT. Very good news. 

Ms. SCHAKOWSKY. And up to 36,000 children in my district with 

preexisting conditions can no longer be denied coverage by health 

insurers. It is just lots and lots of good news, including the new 

Medicaid enrollees that are now being covered. 

But I did have a question. So we are talking somewhat about the 

States that have expanded Medicaid and have not. Twenty-six 

States, the District of Columbia, have expanded Medicaid coverage 

under the Affordable Care Act. And in those States, Medicaid is 

seeing great success. Enrollment has increased substantially, and 

the percentage of the population without insurance has declined 

dramatically. And I am asking you, Mr. Slavitt, if you have seen 

studies that compare the decline in the number of uninsured in 

States that did and did not expand Medicaid? 

Mr. SLAVITT. Yes, I have seen those studies. 

Ms. SCHAKOWSKY. And can you tell me what you found? 

Mr. SLAVITT. The States that have expanded Medicaid—and I 

will have to get back to you on the exact figure—have seen significantly lower rates of uninsured than those States that did not expand Medicaid. 

Ms. SCHAKOWSKY. But we have seen a decline in any case in 

most—isn’t it in all States? 

Mr. SLAVITT. Declined in any case, and a bigger decline in States 

that have expanded Medicaid. 

Ms. SCHAKOWSKY. And have you seen the estimates about the 

number of Americans that would receive healthcare coverage if all 

50 States expanded Medicaid? Do you know the size of this estimate? 

Mr. SLAVITT. I believe that it is an additional 5 million, if I am 

not mistaken. 

Ms. SCHAKOWSKY. All right. Thank you. And if that is the case, 

and I believe you that it is, this is really an appalling number, 5 

million Americans who would receive healthcare coverage if Republican Governors and State legislatures took the simple step of expanding Medicaid. It is obviously good for people when more people 

have health insurance. 

But, Mr. Slavitt, what about healthcare providers? How does the 

Medicaid expansion help them? 

56 

Mr. SLAVITT. So my information is anecdotal. But it appears that 

if there’s a dramatic reduction, or a significant reduction in uncompensated care, it appears that this has been a very good thing for 

providers. 

Ms. SCHAKOWSKY. And this committee has spent the last 3 years 

looking for some Affordable Care Act-related scandal. And despite 

all their concern, they have systematically ignored an ongoing 

healthcare tragedy: the dereliction of duty by Republican Governors 

around the country who refuse to expand Medicaid. For those who 

have not been following this closely, the Affordable Care Act provides 100 percent Federal funding for the first 3 years for the 

States to expand Medicaid coverage to millions of low-income 

Americans, right? 

Mr. SLAVITT. That is correct. 

Ms. SCHAKOWSKY. And yet for some reason, Republican Governors in dozens of States have refused to expand coverage to lowincome insured individuals in their States, correct? 

Mr. SLAVITT. That is correct. 

Ms. SCHAKOWSKY. Well, this to me is a real scandal. The expansion doesn’t cost States a dime. It provides quality affordable coverage for millions of Americans working hard just to get by. Yet 

some Republican Governors and State legislatures are deliberately 

refusing to provide coverage to millions of uninsured Americans. 

And, Mr. Chairman, that it seems to me is an issue this subcommittee really should look into. And I yield back. 

Mr. MURPHY. The gentlelady yields back. I now recognize Mrs. 

Blackburn for 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And thank you for 

being with us today. Overseeing this implementation, getting to the 

bottom of a lot of the questions, I think is very important, and continuing to do our due diligence. And I know that several people 

have mentioned the New England Journal of Medicine article from 

last week, the health reform and changes in health insurance coverage. And my friends across the aisle have wanted to tout that as 

being something to prove their point. 

I think that it is important though to go in here and look at how 

the authors came to the conclusion that 5.2 percent more had insurance, that there was a decline in those without insurance from 

September 2013 to June of 2014. And then the authors mention the 

limitations of their study. They said that the study did not distinguish between persons enrolling for the first time and those who 

were changing their enrollment. And I really wonder how many of 

those that had to buy more expensive policies, new policies that 

were Obamacare compliant? How did that affect that number? 

And the authors measured improvement and access to care by 

asking two questions. First, did the survey participants identify a 

personal doctor? And, second, did the survey participants report 

difficulty paying medical bills? Well, it seems to me a more important outcome measure would be whether a person was actually able 

to see the doctor. Because in our district, we hear from people they 

can’t get access to the doctor. They have got access to the queue, 

because they have got a card. They can’t get access to the doctor. 

So while my colleagues across the aisle talk about how many 

people have insurance, I would like to remind everyone that having 

57 

an insurance card is not the same as having medical care. And I 

continue to hear from people in Tennessee who lost their health 

plan. They liked it. They can’t keep it. I hear from people that have 

not been able to keep their doctor because of the narrow networks 

in Obamacare. I hear from people who go to the doctor and need 

a test, but can’t get the test because their copays and their coinsurance are too high. They can’t afford it. This stuff is too expensive 

to afford. 

And, finally, we are hearing from some of our Tennessee insurance carriers, they are going to have a 19 percent increase in the 

health insurance premiums in 2015. So it is kind of like adding insult to injury. You have got this stuff. You can’t use it because it 

is too expensive to afford. The copays are too high. You have an 

insurance card, but you can’t get in to see the doctor and you are 

having to wait. I don’t understand why my colleagues across the 

aisle continue to defend this thing. 

But, today, we are shifting our focus to oversight and the way 

that taxpayer dollars—I remind everyone, taxpayer dollars are paying for this. And the people don’t like it. On January 1, 2014, HHS 

certified to Congress that the American health benefit exchanges, 

the marketplace, were verifying their applicants for advanced payments of the tax credits. Cost share and reductions were indeed eligible. However, the GAO secret shopper investigation found that 11 

out of 12 secret shoppers were able to obtain health insurance and 

qualify for premium tax credits using fictitious identities and 

fraudulent documents. Now, let me, for the benefit of my colleagues, talk a little bit about what a secret shopper program does. 

When I had my marketing business, we would run secret shopper 

programs for malls and shopping centers and chambers of commerce. You would identify where your problems are. And then you 

get in there and you clean them up. The problem is the system allows fraud. If you have got 11 out of 12 that something is wrong, 

Mr. Slavitt, that is a failing grade. There had been over 30 delays 

in implementation. The President has made multiple unilateral 

changes. And, you know, we are here to learn about the contracting 

practices that took place at CMS with the botched implementation 

of this law. We are looking at the GAO study. This thing is not 

much better. 

Let us talk about this contract. So January, CMS awarded a contract to a new company to continue work on the Federal marketplace. It was a $91 million contract, correct? 

Mr. SLAVITT. Correct. 

Mrs. BLACKBURN. OK. Now, GAO says that cost has ballooned to 

more than $175 million, is that correct? 

Mr. MURPHY. You can answer that question. 

Mr. SLAVITT. That is what the report says. I don’t agree with 

that characterization, but it is what the report says. 

Mrs. BLACKBURN. OK. Thank you. I will submit the rest of my 

questions. I yield back. 

Mr. MURPHY. Thank you. Now, we have just been called to vote. 

We will go through Mrs. Ellmers’ questions, and then we will take 

a break and come back for the second part. 

Mrs. Ellmers, you are recognized for 5 minutes. 

58 

Mrs. ELLMERS. Thank you, Mr. Chairman. And thank you for 

being with us, Mr. Slavitt. 

I would like to go back to a little bit of the discussion you had 

with my colleague from Ohio, Mr. Johnson. I know you had made 

some comments there at the end where you pointed out that, in the 

real world, things are much more realistic. And that ideologically, 

many times things seem like they are going to be better than they 

are. I would say to you, sir, that that is exactly why I ended up 

running for office, being a nurse, because I did see—and my husband, as a doctor, saw that the plan that was going forward was 

not going to be realistic. And I think we have learned over time 

that that is the case, and that there were many promises made 

that have not been kept—well intended, but not true for the American people. So I do share with you that same sentiment but realize, too, that that is why we feel so strongly about this issue, that 

the American people do need to see what can be realistic and 

achieved in good healthcare in this country, and good healthcare 

coverage. 

You did also have an exchange with Mr. Johnson on the cost of 

Healthcare.gov, and what it should have cost. You reluctantly did 

not answer the question of the cost being a billion dollars, is a billion dollars too much for the implementation thus far? 

Mr. SLAVITT. So thank you, Congresswoman. I have not seen a 

study yet which looks at what the appropriate cost for building the 

entire Healthcare.gov system should be. But, of course, I do acknowledge that our colleagues at the GAO pointed out that there 

were absolutely inefficiencies and waste in the way the contract 

was managed. So at the very least, we know there was some. I 

would hesitate to say though that it was entirely waste, because 

there was a really significant set of systems built. And I think 

those systems have significant long-term value for the country. 

Mrs. ELLMERS. You know, there again, it gets back to that same 

issue of what is realistic, what is achievable. And, you know, simply throwing money at it, and then looking back in hindsight to determine what did work and didn’t, I think we all are learning from 

this experience. So that, of course, has value. I don’t know how you 

measure it. But the American taxpayers are still on the hook for 

this. And that is again why we are taking the approach we are, 

which is, when is it going to be enough? When are we going to 

achieve the goals at a cost effective measure? 

I want to look into some of the issues with security breaches. Are 

you aware at this time of any problems that the Web sites—from 

the building of the Web site, and that there are still concerns? Are 

you aware of any right now? 

Mr. SLAVITT. So there have been no successful malicious attacks. 

And, certainly to the best of my knowledge, no one’s individual 

data has ever been compromised from the Healthcare.gov Web site. 

Mrs. ELLMERS. So to the best of your knowledge, and just based 

on the answer that you gave, you are not seeing that there were 

any related information breaches in Healthcare.gov or traveling 

through the Federal exchanges that you would consider a security 

breach? 

59 

Mr. SLAVITT. We have not seen any malicious attacks that have 

been successful. And we have not seen anybody’s personal information in any way get compromised. 

Mrs. ELLMERS. What is the definition of a successful breach? 

Mr. SLAVITT. Well, I am not trying to be cagy, just that nobody 

has successfully penetrated the security system to the best of my 

knowledge, Congresswoman. 

Mrs. ELLMERS. Are you aware of any companies building, operating, or otherwise working on Federal exchanges, obtaining access 

to information that they should not have? Anyone who is outside 

of the system or working on—that have? 

Mr. SLAVITT. Not to my knowledge. 

Mrs. ELLMERS. And information on enrollees or applicants, none 

there as well? 

Mr. SLAVITT. No, not to my knowledge. 

Mrs. ELLMERS. Are you aware of any changes to site protocols or 

standards to address breaches to accessed information? 

Mr. SLAVITT. I think it is fair to say that the security team does 

continuous monitoring and makes changes and puts in new patches 

as new—different security things have been found out about in the 

industry and so forth. So there is a continuous monitoring—— 

Mrs. ELLMERS. Can we obtain that information over time, any of 

the changes and updates that may have taken place for the committee? 

Mr. SLAVITT. Sure. Let me figure out what I can share. I obviously don’t want all of the things that our security team does to 

be well understood by the wrong people. But I want to make sure 

to get you the information you need. 

Mrs. ELLMERS. OK. Thank you. Thank you, Mr. Chairman. I 

yield back. 

Mr. MURPHY. Thank you. They have called votes. 

Mr. Slavitt, we thank you for your testimony. Members will have 

a few days to get other questions to you. And we would appreciate 

a quick, thorough, and honest response. 

Mrs. DEGETTE. Mr. Chairman, can I move to strike the last 

word, just very briefly? 

Mr. MURPHY. Sure. 

Mrs. DEGETTE. I just want to—Dr. Burgess had mentioned earlier that HHS didn’t respond to the committee’s request for an 

analysis of its legal authority to make payments in connection with 

the risk corridors program. I have just been told that HSS did respond to the request and provided a response to the committee on 

Jun 18, 2014. And in the response, they also included a legal analysis. So I wanted to clarify the record. And I wanted to also make 

sure that if Dr. Burgess, or you or the committee staff did not receive that, we will get another copy to you. 

Mr. MURPHY. Dr. Burgess? 

Mr. BURGESS. Well, in fact, I did not receive it. But I would be 

anxious to look at it and see if it answers the question as it was 

asked. And, Mr. Chairman, if I could have the indulgence of one 

brief follow-up with Mr. Slavitt? 

Mr. MURPHY. Yes, very brief. 

Mr. BURGESS. Mr. Slavitt, we have heard a lot of discussion 

about the fact that when this thing went live, the back-end part 

60 

of the system was not built. Is it now built and available and ready 

to use, the part that pays providers? 

Mr. SLAVITT. So the part that pays the issuers, issuers are getting paid today. 

Mr. BURGESS. How about the doctors and hospitals? 

Mr. SLAVITT. The doctors and hospitals get paid by the health 

plans, not by the exchange—not by the marketplace. 

Mr. BURGESS. OK. So the back-end part of the system is up and 

fully functional? 

Mr. SLAVITT. No, no, no. The back-end part of the system is going 

through continuous releases. Today, we are paying the issuers on 

an estimated basis. There will be a coming release this year 

where—by the end of this year—where they will begin to get paid 

at a policy level basis. And then next year, continued automation 

will occur to tie everything into the back end of CMS’ systems. 

Mr. BURGESS. OK. Mr. Chairman, it just begs the question. Have 

the right people been paid the right amount of money? These are 

taxpayer dollars that are—— 

Mr. SLAVITT. I will follow-up—— 

Mr. MURPHY. What we will do is we will follow-up with some 

questions to you. 

Mr. SLAVITT. Yes. I will be happy to follow-up. 

Mr. MURPHY. Mr. Woods, we will probably reconvene—our votes 

will probably take us to 11:30. So this will be in a brief recess until 

11:30. And we will be back. Thank you very much. 

[Recess.] 

Mr. MURPHY. This reconvenes the Subcommittee on Oversight 

and Investigations. I would now like to introduce the witness on 

the second panel for today’s hearing. Mr. William T. Woods is the 

Director with the Acquisition and Sourcing Management Team at 

the Government Accountability Office. He provides overall direction 

for GAO’s review of contracting activities at defense and civilian 

agencies. 

I will now swear in the witness. Are you aware that this committee is holding an investigative hearing, and when doing so has 

the practice of taking testimony under oath? Do you have any objections to testifying under oath? 

Mr. WOODS. None whatsoever. 

Mr. MURPHY. The Chair then advised you that under the rules 

of the House and the rules of the committee, you are entitled to be 

advised by counsel. Do you desire to be advised by counsel during 

your testimony today? 

Mr. WOODS. No, I do not. 

[Witness sworn.] 

Mr. MURPHY. Thank you. You are now under oath and subject to 

the penalties set forth in Title XVIII, Section 1001 of the United 

States Code. You may now give a 5-minute summary of your written statement. 

STATEMENT OF WILLIAM T. WOODS, DIRECTOR, ACQUISITION 

AND SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WOODS. Thank you, Mr. Chairman, Ranking Member 

DeGette. It is a pleasure to be here this afternoon to talk to you 

61 

about Healthcare.gov and the work that we have done looking into 

that system. 

When the Web site was launched in October of last year, there 

were, of course, a number of problems. We got a lot of requests 

from the Congress to review what happened and why. Those requests came from both the House and the Senate, from both sides 

of the aisle. We got requests from committee chairs, from ranking 

members, from individual senators, individual congressmen across 

the board. And what we decided to do was to combine all of those 

requests and conduct a body of work that addressed all of the 

issues that were raised in those various requests. We have a number of engagements underway to address all of those issues. 

The one that we will be talking about today is contracts. But let 

me just mention, we have one that is nearing completion on privacy and security concerns with respect to the Web site. And we 

also have a report that is on-track for issuance later this year on 

information technology management. That report will look at the 

use of best practices in the development of this information technology system. 

But I am going to be talking today about our first report that 

was publicly released yesterday. And that is on the contracting aspects of Healthcare.gov. And I am going to be talking about our 

three objectives. The first thing we reviewed was the acquisition 

planning by CMS for the Web site. Secondly, we looked at the oversight of the cost schedule and performance of that system. And 

then, thirdly, we looked at a range of contractor performance issues 

with respect to Healthcare.gov. 

We focused on the largest task orders and contracts that were in- volved here. Our report mentions that CMS had spent about $840 

million for development of the system. And that was through 

March. Obviously, the spending has continued, and that number is 

likely higher today. But as of the time that we completed our work, 

it was $840 million. 

And we focused on the largest. We reviewed in depth two task 

orders and one contract. Just briefly, those task orders are, one, 

first to CGI Federal for development of the federally facilitated 

marketplace. That is basically the Web site itself, as well as some 

back office systems that support the enrollment process, the financial management process, plan management, et cetera. 

We also looked at a task order awarded to QSSI. And that is for 

the data hub. The data hub is a system that interfaces with other 

agencies. There are roles that other Federal agencies need to play 

to make this system work: the Internal Revenue Service, the Department of Homeland Security to verify immigration status, et 

cetera. So lots of agencies have a role here. And the data hub system is that system that allows for communication among all of 

those agencies. 

And then the third contract that we looked at is one with 

Accenture. That was awarded on a sole source basis by CMS in 

January of this year for continued development of that federally facilitated marketplace. 

Before I get to our specific findings, I just wanted to make an observation that there really are some common threads that run 

through all of the work that we did here. And those threads are 

62 

first of all complexity. This was an enormously complex undertaking. As I said, there were lots of Federal agencies involved, a 

number of States involved, industry partners, healthcare plans. 

Lots of players. There were also lots of systems that had to interact 

with each other. And that added to the complexity. Another thread 

that runs through—and you will see that when we get to the findings in a moment—is the pressure of deadlines. The Affordable 

Care Act itself set January 1, 2014, as the date when the enrollment took effect. The Department of Health and Human Services 

backed up from that January deadline and set an October 1, 2013, 

time for when the system needed to be ready to go, when they 

could throw the switch, the go-live date, that sort of thing. They 

needed to have things in place by October 1 of 2013. And that 

drove a lot of the decisions that were made by CMS. And then the 

third thread that runs through all of our findings is the changing 

requirements. Things were constantly evolving, which made it difficult not only for CMS personnel to keep things on track but also 

for the contractors to keep up with those changes. Some of those 

were anticipated changes, things they knew going in they did not 

yet know. But others were—they were learning as they went along. 

Let me get into the specific findings in the three areas that I 

mentioned. In the area of—— 

Mr. MURPHY. Could you summarize, because you are already a 

couple minutes over? We want to ask you a number of questions, 

so if you could just summarize your final findings. 

Mr. WOODS. Certainly. Yes. 

Mr. MURPHY. Thank you. 

Mr. WOODS. In the area of planning, our bottom line assessment 

is simple yet sobering. And that is that CMS began and undertook 

the development of the Healthcare.gov system without adequate 

planning, despite facing a number of challenges that increased both 

the level of risk and the need for oversight. 

In the oversight area, we saw increasing costs across the instruments that we looked at. Both of the task orders experienced cost 

increases, and the new contract awarded to Accenture also saw cost 

increases. Those cost increases were due to a number of factors. As 

I said, some requirements were unknown at the time they awarded 

these instruments. When those costs became known, when those 

requirements became known, the costs increased. The cost schedule 

and performance issues were exacerbated by inconsistent and 

sometimes absent oversight. 

And then in the third area about contractor performance, we saw 

primarily in the CGI Federal task order an increasing sense of 

frustration on the part of CMS with the contractor’s inability to be 

able to comply with contract requirements and meet deliverable 

schedules. That frustration grew to the point where they decided 

not to renew the contract with CGI and instead to move to a different solution, which is to award the contract to Accenture. 

So those are our three findings. We have a series of recommendations to address some of the issues. And I would be delighted to get 

into the specifics of that as the hearing goes forward. 

[The prepared statement of Mr. Woods follows:] 

63 

64 

65 

66 

67 

68 

69 

70 

71 

Mr. MURPHY. Thank you, Mr. Woods. We appreciate your thoroughness and your candidness. 

So as you described things like inconsistent or absent oversight, 

you said oversight weaknesses, a lack of adherence to planning requirements compounded by acquisition planning challenges. And 

when Mr. Slavitt testified earlier, he said fortunately or unfortunately, the GAO report wasn’t news. So as you are going through 

this, with regard to the oversight, did people within CMS know 

that these problems were brewing? 

Mr. WOODS. We saw some indication that the problems were 

known, particularly with the CGI issues that I mentioned earlier. 

That was well documented, what their concerns were. Other aspects, though, Mr. Chairman, were not quite as visible. And let me 

point out one area. We found a number of instances—and our count 

was about 40—where changes were being made to the contract requirements at the direction of people that did not have the authority to do that. 

Mr. MURPHY. Within CMS—— 

Mr. WOODS. Within CMS. These were largely—— 

Mr. MURPHY. When you say did not have the authority, you 

mean they had not discussed these with Mr. Cohen or Ms. 

Tavenner? 

Mr. WOODS. Well, the only person within CMS that has authority 

to change the contract in a manner that increases the Government’s obligations is the contracting officer. 

Mr. MURPHY. Who was? 

Mr. WOODS. I am sorry? 

Mr. MURPHY. And who was that? 

Mr. WOODS. I don’t have the name right at my finger—— 

Mr. MURPHY. But what I am wondering here is do you know if— 

so what—the problems with the Web site—it took longer to develop 

it. The security wasn’t a question. People had problems signing up, 

and with inconsistent or absent oversight. So I am wondering in 

some case, you are saying there was actions taken without authorization. Several dozen of these, I believe, that you documented. 

Mr. WOODS. That is correct. 

Mr. MURPHY. So people were making change orders, and that 

was leaving some problems. But there was also absent oversight. 

So some people in charge were not meeting, were not paying attention, were not monitoring this contract? Or they were monitoring 

some things and making the wrong decisions? Was it both, or one 

or the other? 

Mr. WOODS. A combination of things. There are a number of people with different roles to play. As I mentioned, there is a contracting officer. But there was also, on the program side, a governance board review process. And that process was designed to provide high level management oversight. And what we found there 

was that that process simply did not work as intended. 

Mr. MURPHY. Now, we also had heard that there was a McKinsey 

Report commissioned by then Secretary Sebelius which made it 

pretty clear they weren’t going to meet their deadlines. Did they 

know within CMS that these deadlines couldn’t be met, and that 

under the pressure which you had listed such as the January 1 

72 

deadline, or the complexity of this, did they know that this really 

wasn’t ready for prime time? 

Mr. WOODS. We found some indication in the files that we reviewed that in the spring timeframe, the spring of 2013, that estimates were made that the federally facilitated marketplace would 

only be 65 percent complete by the October 1 deadline. 

Mr. MURPHY. So they knew then in the spring. Did they know 

that in August and September? 

Mr. WOODS. The state of knowledge continued to progress from 

the spring through the end of the summer. And they became increasingly concerned that the deadline would not be met. One of 

the principal oversight functions and processes that we saw, and 

that we were very concerned about, is there was supposed to be, 

according to the original schedule, an operational readiness review 

conducted in the spring of 2013. That operational readiness review 

was moved from the spring to the fall, to September of 2013, just 

weeks before—— 

Mr. MURPHY. And when they did that review, did they know it 

wasn’t going to work? 

Mr. WOODS. Well, as I said, there was some indication in the 

files that they thought only 65 percent would be complete. 

Mr. MURPHY. So when Ms. Tavenner—— 

Mr. WOODS. The purpose of that operational readiness review is 

to either confirm that the system will work or find out what is 

wrong. 

Mr. MURPHY. So when—— 

Mr. WOODS. So that there is enough time to fix it. 

Mr. MURPHY. So when Ms. Tavenner came before this committee, 

or more specifically when Mr. Cohen came before this committee 

within days of the launch, and he said everything was going to be 

fine by October 1, what you are saying to this committee is there 

was ample evidence to say that was not true? 

Mr. WOODS. We saw some indication that there was progressively increasing knowledge that there were problems in meeting 

that launch date. 

Mr. MURPHY. OK. And did Mr. Cohen know that? 

Mr. WOODS. I don’t know that. 

Mr. MURPHY. But either through lack of oversight, he should 

have known it, or he knew it and reported to this committee under 

oath that everything was fine, and August 1, it was going to be 

ready for launch? What you are telling us, there was ample evidence in what is reviewed that people within HHS knew it was not 

ready, and people under oath told this committee something entirely different? 

Mr. WOODS. Yes. I don’t know what specific individuals knew or 

did not know. But we saw evidence in the files that we reviewed 

that there was a knowledge within the Agency that the operational 

readiness was in jeopardy. 

Mr. MURPHY. Thank you. I am over time. I will now turn to Ms. 

DeGette for 5 minutes. 

Ms. DEGETTE. Well, this is an important issue. So you are saying 

people within the Agency knew that the Web site was not ready, 

correct? Yes or no? 

Mr. WOODS. We did—we saw evidence in the files—— 

73 

Ms. DEGETTE. You saw yes that people—do you think that people 

in the Agency knew that the Web site would collapse on October 

1, yes or no? 

Mr. WOODS. I can’t speak to that particular characterization. 

Ms. DEGETTE. You don’t have any—do you have indication from 

the files that people in the Agency knew that the Web site would 

not work on October 1? 

Mr. WOODS. Yes, we saw that. Yes. 

Ms. DEGETTE. Can you produce that to this committee, please? 

Mr. WOODS. There was a series—— 

Ms. DEGETTE. No, can you produce it—— 

Mr. WOODS. Absolutely, ma’am. Yes. 

Ms. DEGETTE. Thank you. 

Mr. WOODS. Yes, ma’am. 

Ms. DEGETTE. Now, my next question, because Ms. Tavenner 

and Mr. Cohen did come in here and testify under oath several 

days before, as the chairman has said, that the Web site would 

work. Do you have evidence in your files that Mr. Cohen or Ms. 

Tavenner knew that this Web site would not work, yes or no? 

Mr. WOODS. No, I cannot speak to the knowledge of any individual. 

Ms. DEGETTE. Thank you. Now, in your opening statement, you 

talked about some provisions the GAO was coming up with to 

strengthen the Web site for—some recommendations for privacy 

and security concerns, is that correct? 

Mr. WOODS. Well, this particular report that we are speaking to 

today just deals with the contracting aspect—— 

Ms. DEGETTE. Right. But you talked about—— 

Mr. WOODS. Not—— 

Ms. DEGETTE. But—— 

Mr. WOODS. Not for security and privacy. That—— 

Ms. DEGETTE. OK. So you are not looking at privacy and security? 

Mr. WOODS. Other teams within GAO are looking at—— 

Ms. DEGETTE. Are looking—— 

Mr. WOODS. At that work—— 

Ms. DEGETTE. Are you aware of any security breaches in the 

Web sites, yes or no? 

Mr. WOODS. No, I am not. 

Ms. DEGETTE. OK. Now, the GAO made five recommendations 

you reference in your opening statement to CMS to avoid the mistakes that you had identified, is that correct? 

Mr. WOODS. Yes. 

Ms. DEGETTE. And I just want to go through those recommendations, because you said we should. And I think it is important to 

know. The recommendations I think are good recommendations, 

but they are a little vague. And so I am going to ask you about 

each one of them if you have specific details. But then also, I am 

going to ask you, Mr. Woods, to supplement your testimony and 

provide to this committee, and to CMS, specific details on each one 

of them. Because I think it is important for the CMS to actually 

be able to implement these recommendations. And our last witness 

said he agreed with the recommendations, and he did want to implement them. 

74 

The first recommendation is that CMS should take steps to assess the causes of the increase in cost of the continued development 

of Healthcare.gov and the delays in functionality of the Web site, 

and develop a plan to mitigate those costs and delays. Can you 

briefly give us a little more detail on what steps the GAO believes 

CMS should take to make those assessments? 

Mr. WOODS. Certainly. We did see cost increases in the 

Accenture contract, the current contract—— 

Ms. DEGETTE. So what steps do you think CMS can take to rectify these problems? 

Mr. WOODS. We think that they need to step back and identify 

the causes, the reasons why costs continue to increase, in that particular contract. 

Ms. DEGETTE. OK. And do you have any thoughts what should 

be included in a mitigation plan? 

Mr. WOODS. They need to make sure that costs are under control, 

and that the schedule can be met. 

Ms. DEGETTE. Yes. I think those two things are key. Now, the 

next thing the GAO recommends is that quality assurance surveillance plans and other oversight documents are collected and used 

to monitor contract performance. How can those documents be effectively used to monitor performance? 

Mr. WOODS. The quality assurance surveillance plan is a standard document that is required in most efforts of this size that provides a roadmap for how the Agency—any agency—is going to oversee the contractor’s performance. 

Ms. DEGETTE. Right. Does the GAO have thoughts on how it can 

be used to do that? 

Mr. WOODS. Yes, it—— 

Ms. DEGETTE. OK. If you can give us that information, that 

would be great. 

Mr. WOODS. Certainly. 

Ms. DEGETTE. I want to go through your other recommendations 

briefly while I still have time. 

Mr. WOODS. Certainly. 

Ms. DEGETTE. The GAO also recommends that CMS formalize 

existing guidance of the responsibilities of personnel assigned oversight duties. So as I understand it, the roles and responsibilities 

were spelled out in some way. How would formalizing existing 

guidance prevent confusion about the responsibilities and authority 

going forward? 

Mr. WOODS. This gets to the issue of unauthorized individuals 

making changes. 

Ms. DEGETTE. OK. Great. 

Mr. WOODS. And when they learned of that, there was internal 

guidance provided to all of the people that—but that has not been 

institutionalized. It has not been made part of the permanent guidance at—— 

Ms. DEGETTE. OK. OK. So they already have a way they are 

doing it? That just needs to be formalized? 

Mr. WOODS. It needs to take the next step. 

Ms. DEGETTE. Perfect. Now, the next thing, you recommend giving staff direction on acquisition strategies and developing a procVerDate Mar 15 2010 10:34 May 11, 2015 Jkt 037690 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 F:\113-170 PPACA - CMS, GAO-MAKE PDF\113-170 PPACA - CMS, GAO -PENDING WA
75 

ess to ensure that acquisition strategies are completed on time. 

Can you flesh that out a little bit for us? 

Mr. WOODS. That was a very important deficiency that we identified, is that there were a number of steps that CMS took to expedite the rollout of Healthcare.gov. 

Ms. DEGETTE. Yes. 

Mr. WOODS. But each of those individual steps added risk to the 

process. And the purpose of the plan, of the acquisition strategy, 

is to first of all identify those risks to be able to come up with a 

plan to address them. And we found that that acquisition strategy 

was not prepared. 

Ms. DEGETTE. Right. So does GAO have some ideas what this 

process could look like if done appropriately? 

Mr. WOODS. The process is already in place. 

Ms. DEGETTE. OK. 

Mr. WOODS. The regulations at HHS are very clear. 

Ms. DEGETTE. OK. 

Mr. WOODS. In fact, there is a template. It just wasn’t done in 

this particular case. 

Ms. DEGETTE. Oh, great. So they just need to follow the existing 

way. Perfect. 

Mr. WOODS. Exactly. 

Ms. DEGETTE. Last, you recommended ensuring that information 

technology projects adhere to the requirements for governance 

board approvals before proceeding with development. What exactly 

does that mean? What governing board are you referring to? What 

are the requirements? And why did the board approval process fail 

the first time around with Healthcare.gov? 

Mr. WOODS. Yes. The Agency had a system in place that provided for an oversight board to review the progress of the system. 

The problem that we found is that those governance board meetings were held with incomplete information, and that decisions 

were not made as we would have expected to either approve, disapprove, or make modifications in the—— 

Ms. DEGETTE. So what you are saying is once again, this was a 

failure to follow the existing rules that they had? 

Mr. WOODS. There was a process in place. They did not follow it. 

Ms. DEGETTE. Thank you. Thanks for your indulgence, Mr. 

Chairman. 

Mr. MURPHY. Yes. I now recognize Mrs. Ellmers from North 

Carolina for 5 minutes. 

Mrs. ELLMERS. Thank you, Mr. Chairman. Thank you, Mr. 

Woods, for being with us today. And as I am sitting here listening 

to your report findings, I am incredibly amazed by the inefficiency 

that went forward with a plan of action that was in place. And I 

keep coming up with the same question of why? Why were these 

steps taken? Why was action taken the way that it was? Why were 

there unauthorized individuals making decisions? But I think one 

of the most glaring questions that I have, based on your findings, 

is that—and you use the word that they expedite, they took measures to expedite the rollout, that that added risk, obviously. And 

that was a failed strategy, essentially. Why in your opinion, based 

on your findings, did they stay with that October 1 rollout date 

76 

when they knew, based on what I am listening to, that it was not 

going to be accurate and successful, and that it would be a failure? 

Mr. WOODS. Well, the law itself, the Affordable Care Act, set a 

hard deadline of January 1, 2014. 

Mrs. ELLMERS. Um-hum. 

Mr. WOODS. And they needed to have some period where consumers could determine their eligibility, look at plan availability 

and make decisions about what plans they wanted to choose by 

that January 1 date. 

Mrs. ELLMERS. Um-hum. So they stuck with the October 1 date 

knowing that their time was running out, so now, this is me just 

again trying to process why they would go forward with something 

that obviously was not put together well, and the steps were 

taken—it wasn’t an efficient system. And yet they were moving forward. So based on your knowledge, they had to go forward with 

that October 1 date so that they could have the enrollee numbers 

that they were looking for by January 1, regardless of the fact that 

it wasn’t going to work? 

Mr. WOODS. That has been CMS’ position is that they needed to 

stick with that October 1—— 

Mrs. ELLMERS. So they had to stick to that date, because they 

needed those numbers of individuals signing up essentially, yes? 

Mr. WOODS. Well, they needed to comply—to have a system in 

place by January 1 in order to comply with the Affordable Care 

Act. 

Mrs. ELLMERS. Right. OK. So I am going to go back to some of 

the questions also on the tech surge—when the tech surge was implemented. To the best of our knowledge, and based on your report 

findings, we understand that there was a, again, tech surge in October to fix the site after Healthcare.gov’s failed October 1 launch. 

Based on your investigation, what actions did CMS take in October 

to fix the site? 

Mr. WOODS. In October, they continued to work with CGI Federal. 

Mrs. ELLMERS. Um-hum. 

Mr. WOODS. But the level of frustration reached the point in November of 2013 where they sent yet another letter detailing the 

shortcomings of the contractor, asking for a corrective action plan. 

CGI responded to that, and clearly disagreed with CMS’ assessment at that point. 

Mrs. ELLMERS. OK. So they were disagreeing with it. So was 

CGI—I mean, because there were other contractors involved, too, 

is that correct? 

Mr. WOODS. There were many other contractors involved. 

Mrs. ELLMERS. Yes. 

Mr. WOODS. Correct. 

Mrs. ELLMERS. OK. But particularly, it was CGI that is where 

the frustration was—where the disconnect was? 

Mr. WOODS. They were responsible for the heart of the system, 

if you will. 

Mrs. ELLMERS. OK. 

Mr. WOODS. And that is where most of the dollars were in terms 

of contract expenditures. 

77 

Mrs. ELLMERS. Um-hum. So to that point, based on the fact that 

CGI was the main contractor for that, were there other contracts— 

was their contract extended? Were there any new issued contracts 

based on the frustration that CMS had? 

Mr. WOODS. The CGI contract had been extended earlier until 

February of 2014. 

Mrs. ELLMERS. And that was before October 1? 

Mr. WOODS. I believe that was before October—— 

Mrs. ELLMERS. OK. So it was already extended before October 1? 

Mr. WOODS. That is correct. 

Mrs. ELLMERS. OK. Then to that point, were there any other contractors that were selected, knowing that CGI was not necessarily 

doing what was necessary for the repair of the Web site? 

Mr. WOODS. The only contract that I am aware of is the new one 

to Accenture to continue with development of the federally facilitated marketplace. 

Mrs. ELLMERS. Accenture. And can you refresh my memory on 

when that actually took place, when that new contract went forward? 

Mr. WOODS. That was January of 2014. 

Mrs. ELLMERS. That was January. OK. Well, Mr. Chairman, I 

have gone over on my time, and I apologize. Thank you. Thank 

you, Mr. Woods. 

Mr. MURPHY. Thank you. I now am going to recognize the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you so much for being here today. I appreciate it very much. 

The report indicates that CMS did not engage in effective planning or oversight. What do you recommend they do in the future 

to make sure they have proper planning and oversight, because 

they apparently dropped the ball? 

Mr. WOODS. They have the tools in place. 

Mr. GRIFFITH. OK. 

Mr. WOODS. One of the primary tools is a strategic plan. An acquisition strategy is what it is called. There is actually a template 

in the HHS’ regulations for each of the areas that need to be addressed. And fundamentally, it is a tool designed to identify the 

risks that the Agency is undertaking, and to be able to come up 

with a plan to be able to mitigate those risks. But they did not follow it. So the tools are there. They did not use the tools that were 

there. 

Mr. GRIFFITH. Now, I might ask you an open-ended question because I think it is important that we get this perspective from time 

to time. And that would be out of the report, what have we not 

asked you about that we probably should have asked you about, or 

the people watching this at home, something that they ought to 

know about your report that you haven’t already covered in your 

testimony here today? 

Mr. WOODS. Well, one thing that comes to mind is the next enrollment period. 

Mr. GRIFFITH. Um-hum. 

Mr. WOODS. I think people are wondering, are we going to experience similar problems, or are we in better shape? And that is why 

we have one of our recommendations that is focused on the current 

78 

contract with Accenture where we have seen some cost growth, and 

we think the Agency needs to make an assessment of why that cost 

growth has occurred, whether they are in fact on schedule, and 

whether there are any risks to the 2015 enrollment period. 

Mr. GRIFFITH. And my hearing is not as good as it should be. You 

are talking about the cost growth—what was that phrase you used? 

Mr. WOODS. Cost increases. We—— 

Mr. GRIFFITH. OK. 

Mr. WOODS. And we have somewhat of a disagreement with the 

Agency about the term ‘‘cost growth.’’ And that is why I am reluctant to use it. Their position is that any cost increase since about 

April of this year is totally based on new requirements, so it is unfair to call that cost growth. Our position is that when you look— 

before that, when they initially awarded that contract at an estimated value of $91 million, and now it is at 175—that the Agency 

needs to make an assessment about why those costs increased from 

the 91 to the 175. 

Mr. GRIFFITH. What—— 

Mr. WOODS. And let me just add that may not—that is not the 

end of it. That contract continues in place today. Our numbers are 

dated in terms of, you know, we completed our audit work a couple 

of months ago. So costs on that particular contract are almost certainly higher today than they were at the time that we completed 

our audit work. And we think the Agency needs to make an assessment about why costs continue to grow. 

Mr. GRIFFITH. Well, I think they do, as well. And I appreciate 

you raising that point. And it is kind of interesting, it would seem 

to me some of those new requirements are probably because it 

didn’t work the first time around, wouldn’t you agree? 

Mr. WOODS. There are enhancements to the system. 

Mr. GRIFFITH. Um-hum. 

Mr. WOODS. They are constantly changing and trying to make 

improvements to the system. The ones that—early on, I think you 

are right that those are related to the inability of the system to 

function as intended originally. But the Agency tells us the more 

recent cost increases are due to enhancements. 

Mr. GRIFFITH. All right. Well, I appreciate that. And I appreciate 

your testimony here today. And I am happy to yield my last 55 seconds to whomever might want it. 

Mrs. ELLMERS. I will—— 

Mr. GRIFFITH. Mrs. Ellmers? 

Mrs. ELLMERS. Thank you. Thank you. I do have one follow-up 

question. And it has to do with the conversation you were just having with my colleague. When we were talking about the cost increases, you had mentioned that enhancements are what has been 

cited as the reasoning. My question for you is, did CMS get congressional approval for the additional funding or spending, I guess 

I should say? 

Mr. WOODS. Yes. I am not aware of what that process was at all. 

Mrs. ELLMERS. So to your knowledge, and based on the report, 

you did not see any effort put forward to come to Congress for additional funding for spending? 

Mr. WOODS. I can’t speak to that. We didn’t see it, but that 

wasn’t part of our review. 

79 

Mrs. ELLMERS. OK. Thank you, Mr. Woods. And thank you to my 

colleague for yielding. 

Mr. MURPHY. Thank you. I am going to do a second round with 

Ms. DeGette and I. So just as a follow-up here, are you saying that 

CMS is not analyzing why the contract with Accenture is growing 

in cost? 

Mr. WOODS. We don’t think that they have done that fully yet. 

Mr. MURPHY. This original contract, which was a cost plus contract, who signed that contract? Who is responsible for that? 

Mr. WOODS. Those contracts are signed by the contracting officer. 

And as I said, I don’t have that name in front of me. 

Mr. MURPHY. Do those have to be approved by Mr. Cohen and 

Ms. Tavenner? 

Mr. WOODS. I don’t know. 

Mr. MURPHY. Do you know, in their chain? 

Mr. WOODS. I don’t know. 

Mr. MURPHY. Is that something that your study encompassed to 

find that paper trail or look at that? 

Mr. WOODS. We did not review that, no. 

Mr. MURPHY. Well, let me ask you too. You talked about the 

pressure of deadlines, the January 1, 2014. But a number of delays 

were put into place, the employer mandate or the retirement issue, 

enforcement of canceled plans, individual mandate to the shop 

plan. Should the rollout have been delayed as well? 

Mr. WOODS. I am not sure about that. But your observation 

about delays is accurate. When they realized that they would not 

be able to be fully functional by October 1, they did make some 

tradeoffs and pushed projects that they thought they were initially 

going to be able to complete by October 1, pushed that off into the 

future. And the small business program that you mentioned is one 

of them. The financial management module was also pushed off 

until a later date. 

Mr. MURPHY. But none of those delays caused a delay in the Web 

site? Many of things that are mentioned, they didn’t cause a delay 

in the Web site readiness? These several dozen other changes internally which were one of the factors in delay in the Web site readiness, though, am I correct? 

Mr. WOODS. Well, the Web site was launched. I am not sure—— 

Mr. MURPHY. Well, you had said a number of decisions made 

during I guess this 2013 to 2012, were part of the complexity 

that—you mentioned a couple things. One, there wasn’t proper 

oversight of the contract. And the second thing, a number of internal changes were made by someone who didn’t have the authority 

to make those changes. 

Mr. WOODS. That is correct. 

Mr. MURPHY. So do you know, or can you find out for us, in 

terms of, if someone is making these changes, who approved the 

decision for them to these changes, or who gave that person the authority to be in that position to make those changes? Do you have 

that information? 

Mr. WOODS. There are a number of people working with the contractors on a day-to-day basis. And the 40 instances of changes, or 

direction to the contractor, were made by multiple individuals. 

Some of these were technical people, as I said, working side-by-side 

80 

with the contractor. Some of them were more senior officials. All 

of the changes though ultimately were ratified by the person with 

authority to do that, and that is the contracting officer. 

Mr. MURPHY. But what, did it go to the level of Ms. Tavenner 

or Mr. Cohen? 

Mr. WOODS. I don’t know. 

Mr. MURPHY. Is that something your records could reveal? This 

is a follow-up to what Ms. DeGette was asking as well. We need 

to know if your records show, or if you can find out for us—I don’t 

think—you have an excellent investigation. But it is very important to know this, if they knew or should have known in terms of 

approving these changes, or being aware that the Web site wasn’t 

ready, or—well, just let me ask that part. Do you have any information on those? 

Mr. WOODS. Well, as I said, we will certainly review our materials and provide an answer to that question. 

Mr. MURPHY. Because it comes to this point, this committee, 

members of each side of the aisle has different points of view on 

issues with regard to healthcare reform. That is fine. That is part 

of what makes our Nation great. People have differences of opinion, 

they move forward on that. But there are certain standards within 

a committee that I think we should be unified in understanding 

that if someone comes before this committee under oath and claims 

that something is ready to roll out on October 1, that everybody 

should be able to sign up, knowing full well that it is not, it is either incompetence, it is dereliction of duty, it is sloppiness, it is 

lack of supervision oversight, or it is perjury to this committee. It 

is perjury in terms of making a claim they know is not true, or 

making the claim they have no business of making. The only answers to questions like is the Web site ready October 1 are yes, no 

or I don’t know. Anything beyond that, when the claim was made 

by Mr. Cohen to this committee under oath that October 1, everybody would be ready to sign up, it is clear from your investigation 

and your testimony that people within the agencies knew it was 

not ready. So any information you could provide us that tells us if 

they knew and made false claims to this committee, or if they 

didn’t know and made false claims to this committee, it is important for the integrity of this committee to let us know. And if you 

could submit that information to this committee, I would be grateful, your papers and other reviews of that. 

Ms. DeGette, you are recognized for 5 minutes. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. And, Mr. 

Woods, I can understand why the Chairman is concerned about 

this, based on your testimony today. So I want you to think very 

clearly about what your investigation found and what you have testified to this committee today when I asked you these questions, 

because I don’t want the record to be confused. And I don’t want 

a misimpression to be left. 

Are you aware of either Ms. Tavenner or Mr. Cohen coming before this task committee and lying about whether they knew that 

the Web site was not ready? 

Mr. WOODS. No, I cannot speak to that. I don’t know. 

81 

Ms. DEGETTE. You don’t know. Do you know whether Ms. 

Tavenner or Mr. Cohen personally knew that the Web site was not 

ready, yes or no? 

Mr. WOODS. No, I do not know. 

Ms. DEGETTE. You don’t know that. Do you know whether Ms. 

Tavenner or Mr. Cohen specifically approved those changes? 

Mr. WOODS. No, I do not know. 

Ms. DEGETTE. You don’t know that either. 

Mr. WOODS. No. 

Ms. DEGETTE. Do you know who within the Agency did approve 

those changes? 

Mr. WOODS. Ultimately, those changes were ratified and approved by the contracting officer. 

Ms. DEGETTE. The contracting officer. So you could give us that 

information, who that was? 

Mr. WOODS. Absolutely. Yes. 

Ms. DEGETTE. Thank you very—I just think—and I know the 

Chairman agrees. We don’t want to loosely be throwing around allegations of perjury or anything else when we know—and we don’t 

want to put words in your mouth either. So I think we are clear 

on that. 

There is one more thing I wanted to clarify about your testimony 

today. Your first recommendation that in your report on this topic, 

as we discussed, was take immediate steps to assess the causes or 

continued FFM cost growth and delayed system functionality, and 

develop a mitigation plan designed to ensure timely and successful 

system performance. Is that right? 

Mr. WOODS. That is correct. 

Ms. DEGETTE. And that is the one you are concerned about CMS 

following as they look at implementation of the 2015 program, is 

that correct? 

Mr. WOODS. The effort that is underway by Accenture is to move 

the development forward to be ready for the 2015—— 

Ms. DEGETTE. Right. And that relates to that recommendation? 

Mr. WOODS. Yes, it does. 

Ms. DEGETTE. OK. 

Mr. WOODS. We think—— 

Ms. DEGETTE. And—— 

Mr. WOODS. We—— 

Ms. DEGETTE. What? 

Mr. WOODS. We think that CMS needs to make that assessment 

in order to ensure itself it is on track for that enrollment period. 

Ms. DEGETTE. Right. For next year. Right. 

Mr. WOODS. Right. 

Ms. DEGETTE. Now, you were sitting here I believe when we 

heard the testimony of the previous witness, is that correct? 

Mr. WOODS. Yes, I was. 

Ms. DEGETTE. Mr. Slavitt. And I specifically asked Mr. Slavitt if 

he had reviewed the five recommendations GAO had made. Do you 

remember hearing that? 

Mr. WOODS. Yes. 

Ms. DEGETTE. And do you remember hearing Mr. Slavitt say 

that CMS agrees with all five of the recommendations? Do you remember hearing that? 

82 

Mr. WOODS. I remember hearing that, yes. 

Ms. DEGETTE. OK. So I would just—you know, sometimes I like 

to have both the Agency witness and the GAO so that they can answer each other’s issues. But I just want the record to be clear that 

Mr. Slavitt has said that they recognize this recommendation, they 

intend to comply with it. And I think, Mr. Chairman, we should follow-up and make sure that happens. Thank you. And I yield back 

the balance of my time. 

Mr. MURPHY. OK. Thank you. I now recognize Dr. Burgess for 5 

minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. Mr. Woods, thank you 

for being here. And let me just commend the Government Accountability Office on great work. This has not been easy, and I appreciate how difficult it has been to be here today. And I appreciate 

your forbearance. 

Now, along the lines of what Ms. DeGette was just asking you, 

do you know whether or not the Center for Medicare and Medicaid 

Services is adopting your recommendations right now? 

Mr. WOODS. What they told us is that they fully agreed with four 

of our recommendations, and they partially concurred with our fifth 

recommendation. 

Mr. BURGESS. Have you any evidence that you can point to that 

shows that in fact they are taking steps to comply with four of 

those recommendations? 

Mr. WOODS. We have seen some indication—— 

Mr. BURGESS. Well, you have their assurances, but is there anything that you can point to in data and fact that they are taking 

those recommendations? 

Mr. WOODS. What they told us is that they are providing additional training in certain areas that they plan to implement those 

recommendations. We are hopeful that they do. We have a normal 

regular process for following-up with agencies to make sure that if 

they tell us that they are going to implement recommendations 

that they in fact do so. 

Mr. BURGESS. OK. 

Mr. WOODS. So that process will continue at GAO. 

Mr. BURGESS. Well, and I look forward to the follow-up hearing 

we have about that implementation. 

Now, you know, a lot was written in August of 2012 about CMS’ 

or HHS’ lack of production on rulemaking as it related to the essential health benefit. And, in fact, that rulemaking was delayed. 

The rule actually came out about a week after Election Day that 

year. I don’t know if you recall that. In your work, was there any 

evidence that that delay was politically motivated? Or am I just 

being overly sensitive and overly cynical by the rule coming out a 

few days after Election Day 2012? 

Mr. WOODS. We found no indication of that, sir. 

Mr. BURGESS. So your inference is I am being overly cynical? 

Mr. WOODS. We found nothing to point us in that direction. 

Mr. BURGESS. Well, let me just point out to you, why—on this 

committee, it has come up several times today. I mean, Mr. Cohen 

was here. I think it was about 10 or 11 days before October 1. And 

I asked him a very direct, very specific question. In fact, I tried to 

do a John Dingell and said yes or no, the Web site will be ready 

83 

on October 1? He gave me what I presumed to have been a wellrehearsed and studied answer, because he repeated it verbatim 

twice. And it essentially said on October 1, consumers will be able 

to go online, see premium net of subsidy, and make their purchase. 

Now, as we know, that didn’t actually turn out to be the case. So 

it is a valid question to ask. He must have known that 10 days before the launch date, because it sounds like from your report that 

it was pretty clear that things weren’t going well. Am I wrong 

about that? 

Mr. WOODS. I simply can’t speak to what he knew or didn’t know 

at any particular point in time. 

Mr. BURGESS. Well—— 

Mr. WOODS. But I can say that we found indications in the documents that we reviewed that the system was projected to be only 

65 percent complete by that October 1 deadline. 

Mr. BURGESS. If you had been sitting here and asked that question, and reminded that you were under oath, would you have answered it the same way Mr. Cohen did? 

Mr. WOODS. I can’t really respond to—— 

Mr. BURGESS. Well, let me ask you this, because you have got 

written in your report, as the October 1, 2013, deadline for establishing enrollment through the Web site neared, CMS identified 

significant performance issues involving the FFM, the Facilitated 

Federal Marketplace, contractor. But the Agency took over only 

limited steps. Can you provide for the committee what correspondence, what evidence, what documents you relied upon to come to 

that conclusion, to make that statement? 

Mr. WOODS. Absolutely. We can summarize what led us to that 

conclusion. And we would be happy to do that. 

Mr. BURGESS. As a part of making this statement, did you have 

access to internal emails within the Center for Consumer Information and Insurance Oversight at CMS? 

Mr. WOODS. We reviewed lots of documents, contract documents, 

emails, memos. So we had very good access to lots of information 

from CMS. 

Mr. BURGESS. And I appreciate that. I would simply ask that 

that access be made available to this committee, the documents, 

the emails, the transcripts that you have, would make that available to our subcommittee, for the staff—— 

Ms. DEGETTE. Mr. Chairman, I believe we already have that information in this subcommittee. 

Mr. MURPHY. Well, let us find out. 

Ms. DEGETTE. It has been produced already. 

Mr. BURGESS. Again, I would ask that we be certain that you 

have produced the information the subcommittee staff is asking for. 

Mr. WOODS. We would be happy to work with the committee on 

that. 

Mr. BURGESS. And let me just ask you one last thing. In your 

opinion, is the Web site—open enrollment period this time is going 

to be much shorter than last time—in your opinion, are they going 

to be ready for the second open enrollment period? 

Mr. WOODS. I am not in a position to make that judgment. That 

is why we had the recommendation that we did is that we think 

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CMS needs to make that assessment of cost and schedule to make 

sure that they are on track. 

Mr. BURGESS. Because there is the possibility they would not be 

able to meet that? 

Mr. WOODS. We said in the report that the risk is that there 

could be some impact on the 2015 enrollment period, and that is 

why we had the recommendation that we did. 

Mr. BURGESS. OK. And I thank you for your answers. 

Mr. MURPHY. The gentleman’s time has expired. 

Mr. BURGESS. And I thank you for being here. I yield back. 

Mr. MURPHY. Thank you. I ask unanimous consent that the 

member’s written opening statements be introduced into the 

record. And without objection, the documents will be entered into 

the record. 

Mr. Woods, I want to thank you for your thorough and candid 

GAO report. All this committee requests is honesty, thoroughness, 

and details. And GAO’s reputation as a nonpartisan investigative 

report organization is based on that ability to honestly and thoroughly provide the truth to a candid world. So we appreciate that. 

Members will have several questions for follow-up. We do ask 

that you respond to them in a quick manner. We also ask your 

commitment that you will share your work with our majority and 

minority staffs, so they can also review them with you and get 

other details. 

So in conclusion, I would like to thank all the witnesses and 

members that participated in today’s hearing. In remind members 

they have 10 business days to submit questions for the record. 

And with that, I adjourn this hearing. 

[Whereupon, at 12:53 p.m., the subcommittee was adjourned.] 

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