U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

22–185 2017

THE DEPARTMENT OF 

HEALTH AND HUMAN SERVICES (HHS) 

FISCAL YEAR 2017 BUDGET REQUEST 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 10, 2016 

Serial No. 114–FC09 

Printed for the use of the Committee on Ways and Means 

( 


joloto on DSKB35BYQ1 with HEARING
ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

TOM RICE, South Carolina 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

DAVID STEWART, Staff Director 

JANICE MAYS, Minority Chief Counsel and Staff Director 


joloto on DSKB35BYQ1 with HEARING
iii 

C O N T E N T S 

Page 

Advisory of February 10, 2016 announcing the hearing ...................................... 2 

WITNESSES 

The Honorable Sylvia Burwell, Secretary, United States Department of 

Health and Human Services ............................................................................... 8 

SUBMISSION FOR THE RECORD 

National Association of Chain Drug Stores, statement ........................................ 142 

QUESTIONS FOR THE RECORD 

The Honorable Sylvia Burwell ................................................................................ 81 


joloto on DSKB35BYQ1 with HEARING

joloto on DSKB35BYQ1 with HEARING
(1) 

THE DEPARTMENT OF 

HEALTH AND HUMAN SERVICES (HHS) 

FISCAL YEAR 2017 BUDGET REQUEST 

WEDNESDAY, FEBRUARY 16, 2016 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, DC. 

The committee met, pursuant to notice, at 2:00 p.m., in Room 

1100, Longworth House Office Building, the Honorable Kevin 

Brady, [chairman of the committee] presiding. 

[The advisory announcing the hearing follows:] 


joloto on DSKB35BYQ1 with HEARING
2 


joloto on DSKB35BYQ1 with HEARING22185.001

COMMiTTEE ON 

' 

Chairman Brady Announces Hearing on the Department of Health and Human 

Services' Fiscal Year 2017 Budget Request 

The Chairman of the House Committee on Ways and Means, Kevin Brady (R-TX), today 

announced that the Committee will hold a hearing on the Department of Health and 

Human Services' (HHS) Fiscal Year 2017 Budget Request. TestifYing at the hearing will 

be HHS Secretary Sylvia Mathews Burwell. The hearing will take place Wednesday, 

February 10, 2016, in Room llOO of the Longworth House Office Building, 

beginning at 2:00 P.M. 

Oral testimony at this hearing will be from HHS Secretary Burwell only. However, any 

individual or organization may submit a written statement for consideration by the 

Committee and for inclusion in the printed record of the hearing. 

Details for Submission of Written Comments: 

Please Note: Any person(s) and/or organization(s) wishing to submit wrillen comments 

for the hearing record must follow the appropriate link on the hearing page of the 

Committee website and complete the informational forms. From the Committee 

homepage, http://waysandmeans.house.gov, select "Hearings." Select the hearing for 

which you would like to make a submission, and click on the link entitled, "Click here to 

provide a submission for the record. " Once you have followed the online instructions, 

submit all requested information. ATTACH your submission as a Word document, in 

compliance with the formatting requirements listed below, by the close of business on 

Wednesday, February 24, 2016. For questions, or if you encounter technica l problems, 

please call (202) 225-3625 or (202) 225-26 10. 

Formatting Requirements: 

The Committee relies on electronic submissions for printing the official hearing record. 

As always, submissions will be included in the record according to the discretion of the 

Committee. The Committee will not alter the content of your submission, but we reserve 

the right to format it according to our guidelines. Any submission provided 10 the 

Committee by a witness, any materi als submitted for the printed record, and any wrinen 

comments in response to a request for written comments must conform to the guidelines 

listed below. Any submission not in compliance with these guidelines will not be printed, 

but will be maintained in the Committee fi les for review and use by the Commiuee. 

I. All submissions and supplementary materials must be submitted in a single document 

via email, provided in Word format and must not exceed a total of I 0 pages. Witnesses 

and submitters are advised that the Committee relies on electronic submissions for 
3 

f 


joloto on DSKB35BYQ1 with HEARING22185.002

printing the official hearing record. 

2. All submissions must include a list of all clients, persons and/or organizations on 

whose behalf the witness appears. The name, company, address, telephone, and fax 

numbers of each witness must be included in the body of the email. Please exclude any 

personal identifiable information in the attached submission. 

3. Failure to follow the fonnatting requirements may result in the exclusion of a 

submission. All submissions for the record are final. 

The Committee seeks to make its facilities accessible to persons with disabilities. If you 

are in need of special accommodations, please call 202-225-1721 or 202-226-34 1 I 

TTDrTTY in advance of the event (four business days notice is requested). Questions 

with regard to special accommodation needs in general (including availability of 

Committee materials in alternative formats) may be directed to the Committee as noted 

above. 

Note: All Committee advisories and news releases are available 

at http://www. waysandmeans.house.gov/. 
4 

Chairman BRADY. Thank you for joining us today, Secretary 

Burwell. We appreciate your time and welcome to the Ways and 

Means Committee to speak about the President’s fiscal year 2017 

budget request for the Department of Health and Human Services. 

I would like to begin the day by speaking generally about this 

year’s budget. Even though the President knows that he does not 

have much time left in office to solve real problems, he has decided 

to put forward in my view a budget that really is not rooted in reality for yet another year’s budget proposed trillions of dollars of 

new tax increases and more wasteful Washington spending. 

The President’s efforts to secure his liberal legacy does not come 

cheap. While the United States likes to break records, the American people are not cheering for the most expensive budget in our 

Nation’s history. 

The President has chosen to completely ignore the very real fiscal challenges our country faces in the immediate future. This 

budget is a missed opportunity, especially for the programs at your 

department that impact the lives of millions of Americans. 

For example, last year when you testified at the Energy and 

Commerce Committee you said the Affordable Care Act was leading to substantial savings for households, businesses, and the Federal Government, but we know that is not the case today. 

In fact, the nonpartisan Congressional Budget Office recently 

found the government spending on health care programs would 

grow from $1.1 trillion this year to $2 trillion in 2026. 

We also know that many Affordable Care Act recipients are 

watching their premiums increase by double digits every year. And 

the Medicare Hospital Insurance Trust Fund that our seniors rely 

on will be exhausted in 2026, four years earlier than projected. 

These are serious problems that need real solutions, but these solutions are nowhere to be found in this irresponsible and very expensive budget. 

To add insult to injury, the budget also duplicates programs that 

already exist at your own agency. One proposal calls for a new program to provide short-term financial help to those in need, even 

though that is already the central purpose of the Temporary Assistance for Needy Families Program. 

Another calls for a new Home Visiting Program run by the Ag. 

Department, despite the current Home Visiting Program run by 

HHS. 

Instead of duplicating programs we already have, Washington 

needs to effectively reform our welfare program and finally help 

more Americans climb the economic ladder through work, and 

while we will disagree more than we agree today, I do believe there 

are some important areas of cooperation. 

I am glad the White House has finally faced reality in one area 

and agreed that the so-called Cadillac tax simply is not workable. 

We must also work to put Medicare on a sustainable path, and 

while we do not agree with the specifics in the proposal presented 

today, we do agree we need to address spending on post-acute care 

and medical education. 

I believe we can also find some common ground in the TANF reauthorization proposal that includes many of the items that were 

released by this Committee last July in its TANF discussion draft. 


joloto on DSKB35BYQ1 with HEARING
5 

And when it comes to child welfare, there is broad agreement 

about the need to keep kids from entering foster care in the first 

place. We share the belief that all programs should be evaluated 

and held accountable for making a positive difference in the lives 

of children across our country. 

So, Secretary, thank you again for joining us today. I now yield 

to the distinguished ranking member from Michigan, Mr. Levin, for 

the purposes of an opening statement. 

Mr. LEVIN. Thank you, Mr. Chairman. 

And, Madam Secretary, a warm welcome. 

I think this will be your last appearance at least as you plan before us unless there is a special call, and I hope you will not brag 

about it, but you come with a sense of accomplishment and pride 

in those accomplishments. 

If you just look back a few years, there has been so much positive 

change. Eighteen million previously uninsured Americans now 

have health insurance, 18 million. The growth of health care cost 

has been substantially reduced. One hundred and twenty-nine million Americans now do not have to worry about having their health 

care coverage denied or their premiums increased because of preexisting conditions. 

The tens of millions who now have free preventive care and we 

do not see the consequences perhaps in this Committee, but they 

are real. 

The re-admissions have gone down also because of ACA, and the 

last enrollment period, and we hope you will cover on this, 13 million, 13 million signed up. 

About ten days ago I met a woman who told us this story. She 

had breast cancer. She lost her job. She lost her health insurance. 

Because of ACA, she was able now to be covered, and then her 

breast cancer reoccurred, and she looked at all of us and essentially 

said, ‘‘I would not be here today if it were not for health care reform and ACA.’’ 

There are millions of people like this, some with breast cancer, 

some with diabetes, some with other chronic ailments who have 

coverage, and without that coverage would be sicker, without that 

coverage they may not have survived. 

So you will hear a lot of ideology today. We have been through 

that so many times on the floor of the House, efforts to repeal, but 

I think the realities are so different than that ideology. 

The President’s budget also proposes important reforms to Medicare. I hope you will cover on those. 

And for Mr. Blumenauer and myself and others, there has been 

finalized advanced care planning codes, which is important. The 

Administration is also suggesting that we head on tackle the opioid 

abuse epidemic, as well as providing some additional money for 

mental health. 

I want to close by touching on a real health crisis. I was in Flint 

two days this weekend. What has happened there is not only intolerable, inexcusable, but with consequences that we cannot foretell. 

Dan Kildee has proposed a bill with the support of a lot of us to 

address the needs there. 

This is a national crisis. The Senate is now debating a bill, and 

there is an effort by two Senators from Michigan to add some funds 


joloto on DSKB35BYQ1 with HEARING
6 

to help address this crisis, this human crisis, in Flint for families 

and especially for children. 

And so I will be asking you questions about the possible role of 

HHS. I think you have already begun. 

I think it highlights what is really in the end the test for all of 

us. Behind these statistics, behind all of the data are the lives of 

individuals in this country, and all of us who supported ACA are 

proud to have done that, and as we go forth in our district and beyond, we see what it has meant in the lives of the people in our 

district and this country. 

I yield back. 

Chairman BRADY. Without objection, all the members’ opening 

statements will be made part of the record. 

Our sole witness today is the Honorable Sylvia Matthew Burwell, 

Secretary of the U.S. Department of Health and Human Services. 

Sworn in on June 9th, 2014, Secretary Burwell is the 22nd Secretary of Health and Human Services. 

Prior to serving at HHS, Secretary Burwell was the Director of 

the Office of Management and Budget. 

Welcome, Secretary Burwell. The committee has received your 

written statement. It will be made part of the formal hearing 

record, and you have five minutes to deliver your remarks, and you 

may begin when you are ready. 

Welcome. 

STATEMENT OF THE HONORABLE SYLVIA BURWELL, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Secretary BURWELL. Thank you, Mr. Chairman and Ranking 

Member Levin, as well as Members of the Committee. I want to 

thank you for the opportunity to discuss the President’s budget for 

the Department of Health and Human Services. 

As many of you know, I believe that all of us share common interests and that we can find common ground. The last legislative 

session, this Committee embraced the spirit of bipartisan leadership when it took historic steps to pass the Medicare Access and 

CHIP Reauthorization Act of 2015, and I want to thank you for 

your leadership on that issue. 

The budget before you today is the final budget for this Administration and my final budget. The budget makes critical investments 

to protect the health and wellbeing of the American people. It helps 

ensure that we can do our job to keep people safe and healthy. It 

accelerates our progress in scientific research and medical innovation and expands and strengthens our health care system, and it 

helps us to be responsible stewards of the taxpayers’ dollars. 

For HHS, the budget proposes $82.8 billion in discretionary 

budget authority. Our request recognizes the constraints in our 

budget environment and includes targeted reforms to Medicare, 

Medicaid, and other programs. 

Over the next ten years, these reforms to Medicare would result 

in net savings of $419 billion. 

This budget invests in the safety and health of all Americans. An 

issue that we have been working on at home and abroad I want 

to start with and that is as we work to stop the spread of the Zika 


joloto on DSKB35BYQ1 with HEARING
7 

virus, the Administration is also requesting more than $1.8 billion 

in emergency funding, with $1.48 billion for HHS. 

We appreciate the Congress’ consideration of this important and 

timely request so that we can implement the essential strategies to 

combat this virus. 

I know the rise in opioid misuse and abuse and overdose has affected many of your constituents. Affected every day in America, 78 

people die of opioid related deaths, and that is why this budget proposes significant funding in this space, over $1 billion to combat 

the opioid epidemic. 

Today too many of our Nation’s adults and children with 

diagnosable mental health disorders do not receive the treatment 

that they need. So this budget proposes $780 million to close that 

gap. 

Research shows that early interventions can set the course of a 

child’s success, and that is why we propose extending and expanding the Home Visiting Program to help even more families in need 

support their children’s growth. 

While we invest in the safety and health of Americans today, we 

must also relentlessly push forward on the frontiers of science and 

medicine. This budget invests in the Vice President’s Cancer Initiative. This is a vital investment for our future. Each one percent 

drop in cancer death rates saves our economy approximately $500 

billion, not to mention the comfort and security that it brings families across the country. 

Today we are entering a new era in medical science. With a proposed increase of $107 million for the Precision Medicine Initiative 

and $45 million for the Administration’s Brain Initiative, we can 

continue that progress. 

But for Americans to benefit from these breakthroughs in medical science, we need to ensure that all Americans have quality, affordable and accessible health care. The Affordable Care Act has 

helped make historic progress. Today more than 90 percent of 

Americans have health coverage. This is the first time in our Nation’s history that this has been true. 

This budget seeks to build on that progress by improving the 

quality of care that patients receive, spending our health dollars 

more wisely and putting an engaged, empowered, and educated 

consumer at the center of their care. By advancing and improving 

the way we pay doctors, coordinate care, and use health data and 

information, we are building a better, smarter, healthier system. 

Finally, I want to thank the employees of HHS. In the past year 

they have helped to end the Ebola outbreak in West Africa. They 

have advanced the frontiers of medical science. They have helped 

millions of Americans enroll in health coverage, and they have 

done the quiet day-to-day work that makes our Nation healthier 

and stronger, and I am honored to be a part of this team. 

As members of this Committee, I think, know, I am personally 

committed to working closely with you and your staff to find common ground and deliver impact for the American people. 

With that, thank you and I am happy to take your questions. 

[The prepared statement of Ms. Burwell follows:] 


joloto on DSKB35BYQ1 with HEARING
8 


joloto on DSKB35BYQ1 with HEARING22185.003

Statement by 

SyMa M . Bun,·ell 

Secretary 

U.S. Department of He.'llth and Human Services 

on 

The Pr·esident's Fiscal Yea r· 2017 Budget 

before 

Conmlittee on Ways and Me:ms 

U.S. House of Repr·esentath>cs 

February 10, 2016 

Chainnru1 Brady, Ranking Member Levin, ru1d Members of the Conunittee, thru1k you for the 

opportunity to discuss the President's FY 2017 Budget for the Department of Health and Human 

Services (HHS). Last legislative session, this Conunittee took historic steps to pass the 

bipartisan Medicare Access and CHIP Reauthorization Act of2015. We thru1k you for your 

leadership on that important issue and look forward to working with you on implementation in 

the year ahead. 

ll1e Department has made historic strides towards ensuring that all Americans have access to the 

building blocks of healthy and productive lives- a prioritytbat 1 know we share. ·nlatlks to the 

Affordable Care Act, we have helped millions of Americru1s find quality, affordable insurru1ce, 

and slowed the growth in health care costs for fami lies and taxpayers. At the same time, we have 

worked to improve the quality of coverage- with more protections ru1d benefits, like wellness 

visits and some cru1cer screenings now offered at no extra cost- no matter where you get your 

insurance. Alongside this work, we have responded to a number of national and global health 

challenges. In coordination with our partners across the federal govenunent, we led a response 

to the Ebola outbreak in West Africa and prepared our infrastmcture here at home, and have 

helped to unite global health leaders to prevent and respond to future outbreaks. We convened 
9 


joloto on DSKB35BYQ1 with HEARING22185.004

state leaders in our fight against prescription dnag abuse as part of a nationwide three-pronged 

strategy to drive progress. And we advanced the frontier of medicine through cutting-edge 

research in genomics and technology. lllfough all these efforts, we have worked to ensure the 

responsible stewardship of taxpayer doll ars by taking steps to further strengthen program 

integrity, saving money for the taxpayer and making sure our programs deliver in the best 

possible way for those we serve. 

l l1 e President's FY 2017 Budget for HHS builds on this progress through critical investments in 

health care, science and innovation, and human services. TI1e Budget proposes $82.8 billion in 

discretionary budget authority, and additional mandatory nmding to narther support specific 

initiatives in the discretionary budget. ll1is includes investments in critical prioriti es that I know 

we share-cancer research, opioids abuse prevention and treatment, and behavioral health 

efforts. TI1e Budget recognizes our continued conm1itment to balancing priorities within a 

constrained budget environment through legislative proposals that, taken together, would save on 

net an estimated $242 billion over 10 years. 

Building upon the Success"s of the Affonlable Care Act 

TI1e FY 2017 Budget advances access, afTordability, and quality in our nation's health care 

system- goals that we share with Congress and this Conunitlee. Through targeted investments. 

the Budget expands access to care, particularly for naral and underserved populations, 

strengthens services for American lndians and Alaska Natives, and suppo1ts primary and 

preventive care. 

2 
10 


joloto on DSKB35BYQ1 with HEARING22185.005

E:.pauding Access to Health Insurance Coverage. 1l1e Affordable Care Act is expanding 

access to care for millions of Americans who would otherwise be uninsured. improving quality 

of care for people no mat1er how they get their insurance, while slowing the growth in healthcare 

costs nationwide. To encourage more states to expand Medicaid, the Budget would give any 

state that chooses to expand Medicaid eligibility three years of full federal support, no matter 

when the state expands. 1l1e Budget also funds the Children 's Health Insurance Program 

through FY 2019 to ensure comprehensive and affordable coverage for beneficiaries as well as 

budget stability for states. We look forward to working with Congress to el\1end this program for 

the millions of children who depend upon it. 

In vesting iu Heallh Centers. For 50 years, health centers have deli vered comprehensive, high -

quality, cost-effecti ve primary health care to patientS regardless of their ability to pay. Today, 

more than 1,300 health centers operate over 9,000 sites and provide health care services to 1 in 

14 people in the United States, including to nearly 1.2 million patients at 447 centers in Texas 

and 600,000 patients at 247 centers in Michigan. Healt h centers also play a role in reducing the 

use of costlier care through emergency departments and hospitals. 1l1e Budget invests 

$5.1 billion in health centers, including $3.75 billion in mandatory resources, to serve over 27 

million patients across the country in FY 2017. 

Bolstering the Nation 's Health Care Workforce. 1l1e Budget includes investments of nearly 

$ 14 billion over ten years u1 our Nation's health care workforce to improve access to bealthcarc 

services, particularly in mral and other underscrved co1mnunities. 'l11is includes support for over 

10,150 National Health Service Corps clinicians servu1g the primary care, mental health and 

3 
11 


joloto on DSKB35BYQ1 with HEARING22185.006

dental needs of more than 10.7 million patients in areas with limited access to care. l11e request 

includes additional funding to place providers in rural areas and other underserved communities 

in order to expand access to treatment for prescription opioid and heroin abuse and to improve 

access to cmcial mental and behavioral health services. We know this is a priority for many of 

you on this Committee. 

Strengthenu1g Health Omcomes u1 Indian Country. l11e FY 2017 Budget continues the 

Administration's commitment to support and streugtben services in Indian Country. l11e Budget 

funds the Indian Health Service (IHS) at $6.6 billion, an increase of$402 million over FY 2016, 

to bolster programs that serve over 2 million American Indians and Alaska Natives at over 650 

health care facilities across the United States. The Budget includes $67 million in new 

investments in the critical area of behavioral health to address bigh rates of mental illness, 

substance abuse, and suicide in tribal communities. ll1e Budget also fully li.mds contract support 

costs, which provides critical overhead funding to tribes who operate faci lities under self· 

detennination and self-govemance agreements. 

Strengthening Health Programs u1 the Territories. l11e Budget removes the cap on funding to 

Medicaid programs in the U.S. territories to better align territory ~vledi d programs with those 

of States and expands eligibility to 100 percent of the Federal poverty level in territories 

currently below this level. TI1is proposal would gradually increase the share of Medicaid costs 

covered by the federal govemment a~ territories modernize their Medicaid prognuns- providing 

critical healthcare funding to Pueno Rico and helping to mitigate the effects of its liscal crisis. 

4 
12 


joloto on DSKB35BYQ1 with HEARING22185.007

Healthcare Delh•erv Svstem Refonn 

At HHS, we arc focused on moving towards a health care system that delivers better quality of 

care, spends dollars in a smarter way, and keeps people healthy. The Budget advances the 

Department's work in three critical areas: improving the way providers are paid, finding better 

ways to deliver care, and creating better access to health care infonnation for providers and 

patients. 

Impro••i11g the Way Providers Are Paid Rather than paying for the quantity of tests and 

screenings that providers order- a common practice- the Department is moving toward paying 

for the quality of care given. For patients, this can lead to more frequent communication with 

their care provider and fewer mmecessary trips back to the hospital. 1l1e Budget includes 

proposals to establish competitive bidding for Medi care Advantage payments and introduce 

value-ba~ed purchasing for certain Medicare providers. ·nle Budget also ellcourages 

participation in altemative payment models through a number of proposals, including creating a 

bonus payment for hospitals that collaborate with certain alternative payment models. ll1e 

Department has already conunitted to moving Medicare fee-for-service payments to 30% in 

alternative payment models by the end of20 16, and 50% by 2018. We believe that we are on 

track to meet our goal, and look forward to working with Congress to build on this progress. 

lmpr01•i.ng Care Deli••ery. To drive progress in the way care is provided, HHS is focused on 

improving the coordination and integration o f health care, engaging patients more fully in 

decision-making, and improving the health of patients- with an emphasis on prevention and 

wellness. As p<U1 of that, we are focused on improving access to care by investing in and 

5 
13 


joloto on DSKB35BYQ1 with HEARING22185.008

supporting telehealth, especially for mral areas. 1l1e Budget proposes to expand the ability of 

Medicare Advantage plans to deliver services via telehealth, and to enable mral health clinics 

and federally qualified health centers to qualify as originating tclehealth sites under Medicare. 

Impr01•i11g A ccess to Information. In an effort to promote transparency on price. cost. and 

billing for consumers, the Budget supports the standardization of billing documents and 

elimination of surprise out-of-network charges for privately insured patients receiving care at an 

in-network facility. 1l1e Budget also provides continued investments to achieve secure, seamless 

data interoperability in order to better serve individuals, providers. and payers. including a 

funding increase and new authorities for the Office of the National Coordinator for Health 

Infonnation Technology. 

8 uildi11g E1•ide11ce to Drive Systemic lmprovemem. Refonning the delivery system requires an 

evidence base of effective practices. 1l1e Budget proposes an increase of $24 million for health 

services research at the Agency for Healthcare Research and Quality (AHRQ) to advance and 

improve the perfonnance of the healthcare system. For example, AHRQ data show that 87,000 

fewer patients died in hospitals due to patient hanns from 2010 to 20 14-saving nearly 

$20 billion. While we are encouraged by this progress, substantial challenges remain to build a 

health system that meaningfully involves patients in decision making, and consistently uses high 

quality evidence to provide safe and high quality care for all. 

Retfuci11g tire Cost of Prescriptio11 Drugs;, J\!ledicaul all{/ Medicare. Nationally, prescription 

dntg spending growth has accelerated to its highest rate since 2002 aod is projected to dri ve 

6 
14 


joloto on DSKB35BYQ1 with HEARING22185.009

overall healthcare cost growth. New therapies and cures change lives, but too many Americans 

stmggle to afford the medications they need. TI1e Department is focused on improving patient 

access to affordable prescription dntgs, developing innovative purchasing strategies, and 

incorporating delivery system refonn concepts like value- and outcome-based models into dnag 

purchasing arrangements. The Budget includes a number of proposals. including Medicare Part 

D negotiation, aimed at improving access to necessary treatments and increasing the value that 

Americans are getting from their medications, while continuing to encourage important and 

lifesaving im10vations. 

Jmpro•'illg Health care for Dual Eligible Beneficiaries. As members of this Committee are 

aware, people enrolled in both Medicaid and Medicare have complex and often costly health care 

needs. TI1e Budget includes legislative proposals to improve access for dual-eligible 

beneficiaries, while decreasing overlap and inefficiencies that currently exist between the two 

payers. 

Keeping People Healthv and Safe 

The President's Budget builds on the Department's strategy to address prescription dnag abuse, 

invests in cmcial behavioral health services, and strengtltens our nation's public health 

in.frastmcture. 

Pre•'elltiug Prescriptiou Drug Abuse. Prescription drug abuse impacts the lives of millions of 

people across the country- with 78 Americans dying in opioid-related deaths every single day. 

TI1e Budget proposes significmtt new discretionary mtd mandatory ftmding totaling nearly 

7 
15 


joloto on DSKB35BYQ1 with HEARING22185.010

$1.1 billion to build on investments funded by Congress in FY 2016 and to execute on the 

Department's three-pronged evidence-based approach to combat the opioids crisis: 

Exp(llldulg the Use of Medication-Assisted Treatmelll. The new two-year, $1 billion 

mandatory ftmding investment will help ensure that every American who wants to get 

treatment for an opioid addiction will be able to. These funding levels will enable 

individuals with opioid use disorder to get treatment in FY 2017 and FY 2018 by 

reducing costs, engagi11g patients, and expanding access to treatment. 

• Improvii1g Prescribing Praaices. The Budget invests in programs that support improved 

prescribing practices, including by supporting improved uptake of CDC's upcoming 

prescribing guidelines for providers. TI1e Budget also proposes to require states to track 

high prescribers and utilizers of prescription drugs in Medicaid- saving $770 million 

over 10 years- and bolsters other critical efforts to support providers with the tools they 

need. 

• E>.pandii1g the De••elopment all(/ Use of Naloxone. To best prepare communities and 

first responders, the Budget includes a total of $22 million for programs that support the 

use of naloxone - a life-saving dmg. Among other critical programs, the Budget invests 

in the Rural Opioid Overdose Reversal Grant program to target mral areas hit hardest by 

opioid abuse. 

Expanding Access to J'-'lenwl and Other Belun•ioralllealth Care. Despite the expanded 

behavioral health coverage for millions of Americans by the Affordable Care Act, less than half 

of children and adults with diagnosable mental health disorders receive the treatment they need. 

To address this gap, the Budget proposes a total of $999 million, including a new two-year 

8 
16 


joloto on DSKB35BYQ1 with HEARING22185.011

$500 million investment in mental health care, to help engage individuals with serious mental 

illness in care, improve access to care by increasing service capacity tluough certified 

community behavioral health clinics, boost the behavioral health workft>rce, and ensure that 

behavioral health care systems work for everyone. A portion oft11e two-year, $500 million 

mandatory initiative will allow six additional states to participate in the Certified Community 

Behavioral Health Clinic Demonstration- established by section 223 of the Protecting Access to 

Medicare Act of2014under this Committee's leadership. 

Combatiug A11tibiotics Resistaut Bacteria. The emergence of antibiotic-resistant bacteria 

continues to be a significant public health concem. The FY 2017 Budget includes $877 million 

to continue expanding the nation's ability to protect patients and communities by implementing 

interventions that reduce the emergence and spread of antibiotic-resistant pathogens. TI1is 

funding will also support ongoing ground-breaking research to aid the development of new dmgs 

and diagnosti c products, building the nation's treatment options for these dangerous pathogens. 

I11vesti11g iu Domestic mullmematioual Prepared11ess. 'D1e Depattment leads critical efforts to 

strengthen our public health infrastructure here at home and bolster the nation's preparedness 

against chemical, biological, nuclear and radiological attacks. The Budget invests $915 million, 

an increase of$2 million, for domestic and intemational public health i1tfrastructure, including 

funding to expand implementation of the Global Health Security Agenda (GHSA) to strengthen 

capacity in Phase 2 countries to address publi c health emergencies. Over the next five years, the 

United States will work with more than 30 partner countries- represen1ing over four billion 

people- to help them prevent, detect, and effectively respond to infectit>us disease threats. I am 

9 
17 


joloto on DSKB35BYQ1 with HEARING22185.012

pleased to share that work with many of these countries has already begun. We appreciate the 

funding provided by Congress last year for this crucial priority. 

As we work aggressively to combat the spread ofZika, the Administration is requesting more 

than $1.8 billion in emergency funding, including $1.48 billion for HHS, to enhance our ongoing 

effoJ1S both domestically and internationally. TI1e requested resources will build on our ongoing 

preparedness efforts and will support essential strategies to combat this vims, such as rapidly 

exp<mding mosquito control programs; accelerating vaccine research and diagnostic 

development; enabling the testing 1md procurement of vaccines and diagnostics; educating health 

care providers, pregnant women and their partners; improving epidemiology and expanding 

laboratory and diagnostic testing capacity; improving health services and supports for lowincome pregnant women, and enhancing the ability of Zika-affected countries to bener combat 

mosquitoes and control transmission. We appreciate the Congress's consideration of this 

important request. 

Ser~ ing Refugees nn.d Unnccompalliefl Cltildre11. In light of a global displacement crisis, the 

Administration has committed to expanding the Refugee Admissions Program in FY 2016 and 

FY 2017. All refugees are subj ect to the highest level of security checks of any category of 

traveler to the United States. At HHS, the Administration for Children and Families' role is to 

link newly-arrived lnunanitarian populations, including refugees as well as asylees, Cuban 

entnmts, and special immigrant visa-holders, to key resources necessary to becoming 

self-sufficient, integrated members of American society. llte Budget provides initial financial 

and medical assistance for an estimated 213,000 entrants, 100,000 of which are refugees, 

10 
18 


joloto on DSKB35BYQ1 with HEARING22185.013

consistent with the Administration's commitment to admitting at least 100,000 refugees in 

FY2017. 

HilS is legally required to provide care and custody to all unaccompanied children apprehended 

by immigration authorities until they are released to an appropriate sponsor to care for them 

while their immigration cases are processed. Based upon the recent increase in unaccompanied 

children apprehended at the Southwest border, ACF is taking prudent steps to add temporary 

capacity so that we are adequately prepared. To ensure that HHS can provide care for all 

unaccompanied children in FY 2017, the Budget includes the same amount of total base 

resources available in FY 2016, as well as a contingency fund that would trigger additional 

resources only if the caseload exceeds levels that could be supported with available funding. 

Building Blocks fot· Success at Evety Stage of Life 

TI1e Budget request supports the Department's efforts to serve Americans at every stage of life, 

including by promoting the safety and well-being of our nation's children. and helping older 

Americans live as independently as possibl e. 

illl'estillg i11 Child Ca.re a.11d Ea.r(v Lea.mi11g. Reseatch bas shown the significant positive 

impact that early teaming programs cru1 have on a child's development and lifelong well-being. 

TI1e Budget proposes strategic investments to make affordable, quality child care available to 

every low- and moderate-income frunily with young children; to build on investments to expand 

access to high quality early leaming programs including both Head Start and the newly 

ll 
19 


joloto on DSKB35BYQ1 with HEARING22185.014

authorized Preschool Development Grant program; and to invest in voluntary. evidence-based 

home visiting prognm1s that have long-lasting, positive impacts on child development. 

The Administration's investment in Head Start services has more than doubled access for infants 

and toddlers over the course of the Administration, and significant investments have been made 

to strengthen the quality of services that Head Start provides. TI1e FY 2017 Budget provides a 

total of $9.6 billion for the Head Start program, which includes the resources necessary to 

maintain this expansion of services. In addition, the Budget builds on the investments made in 

FY 2016 to expand the number of children attending Head Start programs that offer a full school 

day and year program. which is proven to be more effective than programs of shorter duration 

and helps meet the needs of working parents. In collaboration with the Department of 

Education, the Budget includes $350 million for Preschool Development Gnmts to support states 

in building and expanding high-quality preschool systems. 

TI1e President's Budget continues the historic proposal to provide $82 billion over 10 years in 

additional mandatory funds for child care to ensure that all low- and moderate-income working 

famili es with young children have access to high-quality child care. 11tis proposal will increase 

the number of children served to a total of2.6 million by 2026 and raise the quality of care 

children receive. In addition, the FY 2017 Budget includes almost $3.0 billion in discretionary 

child care funding, an increase of about $200 million, to support states, tribes, and territories as 

they implement the new health, safety, and quality requirements of the bipartisan child care 

reauthorization, and to create pilots that will test and evaluate strategies for addressing the child 

care needs of working fami lies in mral areas and families working non-traditional hours. 

12 
20 


joloto on DSKB35BYQ1 with HEARING22185.015

Supportiug Child Welfare. 1l1e Department plays a critical role in supporting child welfare, 

particularly among vulnerable populations. 1l1e Budget includes $1.8 billion over 10 years to 

ensure that child welfare professionals have the right training and skills- proven to be linked to 

better outcomes for children across a range of measures. ·n1e Budget also includes a package of 

investments designed to do more to prevent the need for foster care and assist children and 

families so that children can e ither be reunited with their biological parents or placed in a 

pennanent home. 

Modernizing the Approad1 for Adtlressing Pow!f·ty. Finally, the Budget seeks to strengthen the 

nation's safety net to meet our 21 st century poverty challenges. A total of 15.5 million children 

lived in poverty in 2014, a staggering number that translates into lost opportunity. productivity. 

quality of life. and lifespan. Twenty years af\er creating the Temporary Assistance for Needy 

Families (TANF) program, funds are proposed to refonn and strengthen this critical program that 

serves approximately 3 million children per month. 1l1e Budget increases funding for TANF to 

help offset some of the erosion to the block granL while laying out the basic principles for 

refonn- including moving towards a stronger accountability framework for states coupled with 

increased flexibility, ensuring better targeting ofT AJ\IF funds, and creating a renewed focus on 

reducing child poverty. We look forward to working with lawmakers to strengthen the 

program's effectiveness in accomplishing its goals. 

S upportu1g Older Adults. As members of this Committee are aware, the population age 65 and 

over is projected to more than double to 98 million in 2060. In FY 2017, HHS continues to 

make investments to address the needs of older Americans, many of whom require some level of 

13 
21 


joloto on DSKB35BYQ1 with HEARING22185.016

assistance to live independently and remain in their homes and conmmnities for as long as 

pos.sible. The Budget continues to propose refonns that help to protect older Americans from 

idcutity theft, to support access to counseling, respite, and nutrition services that will aU ow states 

to provide approximately 205 million meals to over 2 million older Americans nationwide. 1l1e 

Budget also continues the Department's commitm nt to s upport effecti ve Alzheimer's disease 

research, education, and outreach, as well as patient, family, and caregiver services. 

Leading the World in Science a nd Innovation 

1l1c FY 20 17 Budget builds on tbe historic gains the Department has made in medical and 

scientific research and lays the ground work for scientific and teclmological break1hroughs for 

the 21" century. 1l1anks to biomedicaJ research, including NIH investments, cardiovascular 

death rates in the United States have fall en by more than 70% in the last 60 years. Cancer death 

rates are now fall ing 1-2% per year; each 1% drop saves approximately $500 billion. 

Breakthroughs in HIV therapies enable people in their 20's to li ve a full life span. TI1e FY 2017 

Budget includes $33.1 billion for the NIH, an increase of $825 million, to build on the funding 

provided by this Congress in order to advance our shared commitment to support research that 

promotes economic growth and job creation. and advances public health. 

Laullchi11g the Cancer Moonshot. Investments in research bave led to significant developments 

in the prevention, screening, and treatment of cancer. To suppo11the Vice President's Cancer 

Moonshot, the Budget includes a multi-year $755 million initiative that accelerates the nation's 

fight against cancer by expanding access to clinical trials, pursuing new vaccine tedmology, and 

funding exceptional opportunities in cancer research. 1l1ese investments will drive scientific 

14 
22 


joloto on DSKB35BYQ1 with HEARING22185.017

advances that aim to understand the causes of cancer, discover new prevention strategies, 

improve early detection and diagnosis. and develop effective treatments. 

Adva11Ci11g Precisio11 Medici11e. Recent breakthroughs in genomics, computing, and molecular 

medicine have ushered in a new era where more treatments are based on the genetic 

characteristics of each patient. The Budget increases ftmding for the Precision Medicine 

Initiative by $107 million to a total of $309 million to support critical new studies on therapies. 

and to continue to scale a cohort study to gather data on the interplay of environmental 

exposures. physical parameters, and genetic infonnation. 

lm•esti11g i11the BRAIN lllitiatil•e. Despite the advances in neuroscience in recent years, the 

underlying causes of most neurological and psychiatric conditions remain largely unknown due 

to the vast complexity of the human brain. To further revolutionize our understanding, the 

Budget provides ru1 increase of $45 million, for a total of $195 million within NIH. for the 

BRAIN Initiative. 1l1is research has the potential to discover underlying pathologies in a vast 

array of brain disorders and provide new avenues to treat, cure, and even prevent common 

conditions, such as Alzheimer's disease, autism. depression, schizophrenia, and addiction. 

Making the Depm1ment Sti'Onge•· 

One of my top priorities as Secretary is to position the Departmelll to most effectively fulfi ll its 

core mission by investing in key mru1agement priorities, including progrrun integrity ru1d 

cybersecurity. I appreciate the Committee 's interest in these critical issues. 

15 
23 


joloto on DSKB35BYQ1 with HEARING22185.018

Streugtlteuurg Program Imegrity. The Budget continues to make cutting fraud, waste, and 

abuse a top Administration priority by requesting $199 million in new program integrity 

investments in FY 17. The Budget fully funds the Health Care Fraud and Abuse Control 

(HCFAC) discretionary cap adjustment. In FY 14 alone the HCFAC program retumed over 

$3.3 billion to the Federal govemment and private citizens. TI1e Budget includes proposals that 

will expand and strengthen the tools available to CMS and states to combat fraud, waste, and 

abuse, including in stale Medicaid programs. In total, proposed program integrity investments 

and authorities in the Budget will yield an estimated $25.7 billion in scorable and non-scorable 

savings to Medicare and Medicaid over ten years. 

Focrjj·iug 011 Stewards/tip. To improve the efficiency of the Medicare appeals system and 

reduce the backlog of appeals awaiting adjudication at the Office of Medicare Hearings and 

Appeals (Olv!HA), HHS has developed a comprehensive strategy that involves additional 

funding, administrative actions, and legislative proposals. TI1e Budget includes resources at all 

levels of appeal to increase adjudication capacity and advances new strategies to alleviate U1e 

CtUTent backlog. The Budget also includes a package of legislative proposals that provide new 

authority and additional funding to address the backlog. 

Conclusion 

Members of the Committee, U1ank you for the opportunity to testify today and for your continued 

leadership on these important issues. I am grateful to have you as partners a~ we make the 

investments critical for today while laying a stronger foundation for tomorrow. I want to 

16 
24 

f 


joloto on DSKB35BYQ1 with HEARING22185.019

conclude by thanking the men and women of our Department, who work tirelessly every day to 

deliver impact for those we serve-U1e American people. I welcome your questions. 

17 
25 

Chairman BRADY. Thank you for your testimony. 

We will now proceed to the question and answer session. 

Secretary, exchange enrollment for 2016 will be significantly 

lower than the nonpartisan Congressional Budget Office projected 

when the law passed, in fact, about half that level, and it has been 

lower for every year since the law passed, and despite spending 

over $1.7 trillion on coverage, poor enrollment results show Americans just are not buying what the President is selling on this law. 

In fact, millions would rather pay the punitive individual mandate 

tax penalty than buy Washington designed insurance they do not 

want and often cannot see their preferred doctors or hospitals. 

So it is not surprise the law is not working as advertised, and 

that is because the theories behind this, the Washington designed 

products, punitive mandates are just fundamentally flawed. 

So do you believe the exchange enrollment projections—I am not 

talking Medicaid—exchange enrollment projections made by CBO 

at the time of the law’s passage and not met each year since are 

fundamentally flawed? 

Secretary BURWELL. So with the—— 

Chairman BRADY. Is the CBO wrong or is it the enrollment just 

continues to fail to even come close? 

Secretary BURWELL. I think with regard to the most recent 

CBO numbers, as we look at those numbers, the most important 

thing to focus on is the number of uninsured, and when we look 

at CBO’s original projection there, in terms of that drop, and what 

we have achieved as a Nation, we are actually slightly higher in 

terms of the number of reduction of uninsured. 

And I think we all would accept that in terms of how we get to 

that reduction, it is good when we have a lower unemployment 

rate, and that often leads to fewer people being uninsured. It is 

good when it comes through the marketplace, and it also happens 

through Medicaid. 

With regard to the comparison of the numbers, I think you know 

that at the end of this open enrollment, CBO’s adjusted number is 

around 13 million. Our number is about 12.7 in terms of the enrollment in the marketplace, and one of the big changes from CBO’s 

original estimates, CBO estimated a couple of things. 

One is that there would be great movement from the employerbased market to the marketplace, and that we have not seen, and 

as part of CBO’s changes, I think that is an important part of what 

they are considering. 

We now have the numbers before us, and one of the numbers 

that CBO expressed, whether it is a concern or not, is that people 

would move from their employer-based care to the marketplace 

care, and when we have not seen that, but you see an uninsured 

number going down, but you do not see as many people in the marketplace as they originally projected. 

Chairman BRADY. Two thoughts. One, you focused on what happens in the insured, including Medicaid, when the question is really related to the exchange enrollment area, and the numbers you 

cite are enrolled, not paying customers within that, which we know 

it will lower again taking us below the projections. 


joloto on DSKB35BYQ1 with HEARING
26 

We just see structural problems, disagree with the approach of 

this law. This Congress, this Committee will continue to work toward repealing it and replacing it with more patient-centered care. 

Final question while you are here. I want to talk to you about 

my requests for information regarding the Obamacare Cost Sharing Reduction Program. For more than a year, both Energy and 

Commerce and this Committee have been asking HHS for documents and interviews about how the Administration decided to 

funds cost sharing reduction payments from an account dedicated 

to something else, premium tax credits. 

The law is very clear. It states payments from the premium tax 

credit account only may be made for tax refunds and refundable 

tax credits. Cost sharing reduction payments are neither of these. 

They are payments made to insurers to reimburse for additional 

benefits provided to eligible beneficiaries. Nevertheless, this Administration has paid out more than $5 billion in these payments in clear disregard of the law. This Committee has the constitutional obligation to oversee how the Administration implements the programs paid for by American taxpayers 

and has waited patiently for the necessary information. 

In response to our inquiry on January 19th of this year your assistant secretary wrote that Congress did not have a legitimate 

oversight need for the information requested. This does not represent a good faith attempt to respond to congressional oversight. 

This Committee determines what constitutes legitimate oversight, 

not a HHS assistant secretary. 

So let me be clear. It should not be necessary to subpoena the 

information this Committee needs to conduct oversight, but if HHS 

does not respond to this Committee’s information request, I will not 

hesitate to issue subpoenas for these documents. 

So my question to you, and you can resolve this today: will you 

provide this Committee the documents requested and allow requested employees to speak with staff, or will I have to compel 

your cooperation? 

Secretary BURWELL. Mr. Chairman, my understanding of 

where we are, and we have had letters back and forth, I have had 

an opportunity to speak with Chairman Upton where this is also 

in terms of your committee and Chairman Upton’s committee that 

we are having both of these conversations; have spoken directly 

with him, and my understanding is with regard to that issue that 

we are at a place in terms of an agreement of what our next steps 

forward are in that space. 

I think with regard to the substance of the issue at hand, which 

was the question of the authorities, that we believe and have cited 

we believe that the authority exists in U.S. Code 13–3124, which 

I think is the exact provision. We have filed our brief as recently 

as last week. 

I think you know this is a matter where the House of Representatives is suing the department and myself with regard to this 

issue, and so we have filed that brief. I think we are in conversations with your staff to provide in terms of the issues in the conversation that you have asked for. 

And so I think that we are taking that next step right now, is 

my understanding of where we are. 


joloto on DSKB35BYQ1 with HEARING
27 

Chairman BRADY. I do not think that is the case, but here is 

my point. This Committee has oversight interests separate from 

the House’s litigation. We have responsibilities and oversight that 

extend well beyond this particular program that the Administration’s actions have affected. 

The law is clear. The dollars will be spent. The Administration 

spent it in complete disregard to that law. That is why we are investigating this action, and so we are going to continue to seek 

those documents, and I am hopeful that the agency will be forthcoming both on the documents and making those staff available for 

interviews because we will not give up in this regard. 

So with that I would like to recognize the distinguished Ranking 

Member from Michigan, but I have been instructed that the House 

will adhere to the 15 minute rule very tightly. So we are going to 

recess until after these three votes, Madam Secretary, and then we 

will be back at that point. 

The committee is recessed. 

[Recess.] 

Chairman BRADY. Secretary, thank you for being patient. We 

just took a short hearing and made it shorter. So after Mr. Levin 

questions, we will be going to three-minute questioning, and it will 

be strictly enforced. We want as many members to be able to visit 

with you today as possible. 

I will now recognize the distinguished ranking member, Mr. 

Levin. 

Mr. LEVIN. Thank you. 

In order to expedite, Mr. Chairman, everybody’s opportunity, I 

will limit myself to three minutes. 

Thank you. 

There was discussion here about the cost sharing issue. I just 

want to mention, Mr. Chairman, the Republicans decided to file a 

lawsuit, and now they want to take depositions outside of that lawsuit. I am not sure what the motivation might be. 

You mentioned in your opening statement about TANF. I think 

you and I agreed that we would have an effort on a bipartisan 

basis with the subcommittee leadership on both sides to work out 

possible changes, and I hope we will proceed on that basis. 

Let me just ask you about Flint. There is a panel discussion 

going on now. The person who first came across, I think, the deep 

problems there is testifying. I think also the Mayor of Flint is 

there. 

So if you would discuss the HHS role because there are so many 

health aspects to this in terms of the CDC role, in terms of health 

care for these kids in their schools, et cetera. 

So could you briefly describe what you are undertaking? The 

State failed in its responsibility. The Federal Government is stepping up to the plate here. Tell us what you contemplate. 

Secretary BURWELL. So the President asked HHS to take the 

lead in terms of the interagency effort, working with EPA, HUD, 

USDA and FEMA, and we have done that. The Assistant Secretary 

for Preparedness and Response, Dr. Nicki Lurie, is leading that effort from an HHS perspective with Dr. Karen DeSalvo, the nominee for the office of the Assistant Secretary for Health. So that is 

our lead team. 


joloto on DSKB35BYQ1 with HEARING
28 

Our efforts are focused on two fundamental things in terms of 

where we are and the go forward, supporting the State, the county 

and the community in two fundamental things. 

The first is clean water and water that is potable, drinkable, and 

usable for the community. That has some short-term issues, and 

that has to do with things like FEMA helping get bottled water 

out, the installation of filters, which HUD is helping with, in terms 

of making sure people are putting in those filters right. 

So there is the short-term solution, and then there is the longer 

term solution in terms of piped water being clean and usable. Focusing on that part, EPA obviously is leading much of the Federal 

Government’s work in that space. 

The second part of our effort in terms of what we are focused on 

in our plan is to support the local community as well as the State 

in determining the extent of the problem cost. In other words, how 

many children are suffering from elevated levels of lead, and then 

the attendant circumstances from a public health’s perspective that 

come with that? 

As we determine that, then determine how we go forward and assist in mitigating those circumstances. 

Mr. LEVIN. And in terms of health services, in particular, if you 

would just describe that because in mental health I was deeply 

troubled to learn there is one social worker, I think, for the entire 

elementary school system, and you have here a major health crisis 

for thousands of children who are now threatened through no fault 

of their families at all. Tell us a bit about that. 

Secretary BURWELL. So the mental health and the behavioral 

health we think is an extremely important thing, and when we activated our efforts and the President asked us to go in, we activated SAMHSA, the Substance Abuse and Mental Health part of 

HHS so that they are supporting and providing behavioral health 

for the children, for the parents, for everyone. 

We do that in crisis whether that is where other kind of crises 

occur, natural disasters, shootings or other things. And so 

SAMHSA is also a part of our extended effort on behavioral health. 

With regard to other parts of the health issue, we have worked 

with USDA, and USDA is making sure that WIC will pay for a formula that does not need to be water mixed. 

Mr. LEVIN. If it is mixed with water, it makes it worse. 

Secretary BURWELL. Right. So USDA is taking those steps. So 

we are working on the health issues both in a preventative form, 

in terms of pregnant mothers, as well as making sure that these 

children are getting tested. 

And we are using our HHS facilities and sites to help with that, 

and whether that is using our health centers that are funded 

through HHS or using our Head Start facilities to get the information correctly to parents so they know that they need to get tested, 

and so we are supporting the State and the local community in 

that effort to get the children tested and then to do the follow-up 

services needed. 

Testing is also something paid for in Medicaid. 

Mr. LEVIN. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 


joloto on DSKB35BYQ1 with HEARING
29 

Mr. Johnson, you are recognized for three minutes. 

Mr. JOHNSON. Thank you, sir. 

Madam Secretary, I would like to start by asking you about the 

President’s budget for refugee resettlement. Is it not correct that he 

proposes increasing the number of refugees to at least 100,000? 

Secretary BURWELL. That is correct, by 2017. By 2016, 85. 

Mr. JOHNSON. Now, that is an increase of over 30,000 from 

2015, with many of those refugees coming from Syria. It is no secret I oppose the President’s plan. We just cannot take the chance 

of a terrorist slipping through because we cannot vet these folks. 

Since Texas receives about ten percent of all refugees, my constituents are very troubled, but you know what else is troubling? 

These refugees end up on social welfare programs like food stamps 

and Medicaid, and for more than just a few of them. In fact, in 

2013, over 91 percent of Middle East refugees received food stamps 

while fewer than half worked any point in the last five years. 

Madam Secretary, with all of these Syrian refugees coming in, 

how much is this going to cost the American taxpayer, given their 

long-term use of social welfare programs? 

And what are we looking at? After all, we are over $19 trillion 

in debt right now. 

Secretary BURWELL. So with regard to the issue and our role 

in the refugees, I think you know our role is at the point at which 

the refugees have been placed that we do limited support to the 

local communities and to the refugees for a limited space of time. 

I would be interested in making sure we get the numbers that 

you have with regard to the work numbers because the numbers 

that I have seen are generally higher than that in terms of the percentage of people that actually through our refugee programs that 

end up working. So I would love to make sure we can follow up 

with your staff to understand if there is a difference in the numbers that we are seeing because that is related to this issue of the 

estimates of the total cost to communities and other services. 

Mr. JOHNSON. Yes, we would be glad to get those to you. 

Where are you on issuing new Medicare cards without Social Security numbers? Are you still on track to reissue all Medicare cards 

by 2019? 

Secretary BURWELL. Congressman, this is one that you and I 

had both similar interests and similar questions, and in terms of 

2019 and that time frame, yes, we are very much on track to meet 

those deadlines that have been legislated. I have actually pushed 

the team to see if there is any way that we can beat those deadlines, but we are certainly on track at this point. 

Mr. JOHNSON. Thank you, ma’am. 

Mr. Rangel, you are recognized. 

Mr. RANGEL. Thank you, Mr. Chairman. 

Welcome. Puerto Rico, I understand that you have had some 

changes with the DSH formula as well as removing the cap from 

Medicaid, but since I have been in the Congress, Puerto Rico’s 

health care system has been far below the national in terms of the 

access to quality health care, and as a result of the recent fiscal 

crisis, it is my understanding a lot of doctors and health providers 

have left the island. 


joloto on DSKB35BYQ1 with HEARING
30 

This changing in the formula, what does this mean in dollars and 

cents as relates to $82 billion discretionary funds that you have? 

Secretary BURWELL. So with regard to the proposal that we 

currently have, I think as you said, what we want to do is try and 

get the Medicaid efforts to a place where they are more similar to 

those for the rest of Americans in the country. 

Mr. RANGEL. They are crippled now, and all I want to know is 

in terms of fiscal relief, I mean, what you talk about is equity and 

fairness that we should have had. Now they are crippled for a variety of reasons, and health care is a major reason. 

In the three minutes I have, could you tell me out of your budget 

how much is set aside to try to give assistance to our citizens, most 

of whom are not Muslim, but to make it easier; how much money 

is set aside to help them in this fiscal crisis? 

Secretary BURWELL. So there are a number of places in the 

President’s budget that—— 

Mr. RANGEL. Total, if you brought them all together, what 

would it amount to? 

Secretary BURWELL. That I will have to go because I need to 

work with my colleagues at Treasury and we will get back to you. 

Mr. RANGEL. Why do you not give an estimate so I will have 

some idea of the degree of urgency that HHS has placed on this? 

Because a large part of their problem is within the power of 

HHS. 

Secretary BURWELL. I think at this point I will have to get 

back in terms of the number. The number is a large one. 

Mr. RANGEL. Well, whatever formulas you have changed, when 

we do anything on the committee, we have to put a dollar estimate 

on what is it going to cost. 

Secretary BURWELL. And we do have a dollar estimate in the 

budget, and I will get back on the number. I am—— 

Mr. RANGEL. You could not even guess how much of the 82 billion we are changing the formula, bringing equity and fairness, 

bringing it up to Stateside, providing more money for a disproportionate share, Medicaid caps removed. 

Secretary BURWELL. With regard, there are a series of proposals throughout the budget—— 

Mr. RANGEL. How soon can I brag about how your office has 

comes to the assistance of our citizens in Puerto Rico? 

Secretary BURWELL. You will be able to do it by the end of the 

day. 

Mr. RANGEL. That is fair enough. I pass. 

Chairman BRADY. Thank you. 

Mr. Tiberi, you are recognized. 

Mr. TIBERI. Thank you, Mr. Chairman. 

Secretary Burwell, thank you for being here. 

As you know, I think you would agree—maybe not—Obamacare’s 

co-ops have been a disaster, and after using American taxpayers’ 

piggybank, more than half have failed. This morning, the Columbus Dispatch, my hometown newspaper, I was greeted with this 

headline: ‘‘Customers mad about late notice. Ohio Health dropped.’’ 

So Ohio Health is the largest hospital system in central Ohio, the 

largest, and these articles, and there is a second one that I am 


joloto on DSKB35BYQ1 with HEARING
31 

going to submit for the record, Mr. Chairman, both of them, and 

we will get you a copy of both of these articles. 

They indicate that a company called InHealth, which is a co-op, 

headquartered in Westerville, Ohio, is under enhanced oversight, 

which means CMS is concerned about its financial stability and it 

is closely monitoring its operations. 

The article that I read this morning says about 9,000 Ohioans 

are enrolled in InHealth, and they recently got some bad and surprising news. At the last minute, InHealth decided to drop most 

Ohio Health hospitals and doctors from their network, leaving 

them with few options now that the enrollment period has passed. 

So this article from this morning’s paper talks about a couple in 

Marion, Ohio. Marion County has one hospital. It is an Ohio 

Health hospital. So this couple now has to drive over 20 miles to 

go to a hospital outside of the county to get an in-network hospital 

rather than go to the one just down the road that they have been 

using for years. 

Another article from last week quotes a man from Westerville 

where InHealth is headquartered in my district, also had a preferred hospital, Ohio Health, that he went to that is now out of network for him. 

So these folks in this article have been going to doctors and hospitals that they wanted to until they got onto this co-op that was 

created under Obamacare. So the article goes on to talk about how 

this co-op is struggling, and the article now also says that these 

folks are now going to have a narrower provider network because 

of the mandates and regulations under Obamacare. 

So what I do not understand is how the Administration that has 

been crowing about consumer and patient protections in the President’s health care law allow a co-op that was created under the 

health care law, can allow this co-op that is supposed to be closely 

monitored, pull the wool out. 

And you will see the article here. Some of these people are just 

devastated from losing their doctors and hospitals, to allow a provider to pull out of a provider network, provide a major announcement, major changes, after the enrollment period has passed. 

[The information follows:] 


joloto on DSKB35BYQ1 with HEARING
32 


joloto on DSKB35BYQ1 with HEARING22185.020

Customers mad about late notice 

Copyright @, The Columbus Dispatch, All rights reserved. 

OHIOHEAL TH DROPPED 

Customers mad 

about late notice 

By Ben Sutherly The Columbus Dispatch 

Page I or' 

Some central Ohio consumers say a Westervillebased 

health insurer intended to keep quiet about its plan to drop 

OhioHealth hospitals and doctors from its provider network 

until it was too late for many of its enrollees to change their 

health plan. 

As of 

Tuesday, 45 

people had 

fi led 

complaints 

with the Ohio 

Department 

of Insurance, 

and The 

Dispatch 

obtained 

http://ircader.olivcsoftware.com/Oiivc/iReadcrrrCO/Sharcdi\rticlc.ashx?document• TCD... 2/ 10/2016 
33 


joloto on DSKB35BYQ1 with HEARING22185.021

Customers mod about late notice 

about half of 

the 

complaints 

through a 

publicrecords 

request. 

In those 

complaints, 

the 

consumers, 

who mostly 

Jive m 

Franklin or 

Delaware 

counties, 

Page 2 of5 

expressed frustration over InHealth Mutual's last-minute 

notice to consumers about its plan to drop most OhioHealth 

providers as of March I. As many as 9,000 people could be 

affected statewide. 

Many consumers said they were not notified oflnHealth's 

plan to narrow its provider network until last week, though 

some received robocalls on Jan. 30, the day before the 

deadline to sign up for health insurance through the federally 

run health-insurance marketplace. 

Richard "Rich" Schooley, himself an insurance agent, said 

he carefully vetted InHealth's coverage before he purchased 

coverage through the marketplace, only to receive a letter 

last Wednesday telling him that OhioHealth would be 

dropped from the network on March 1. 

hnp://ireader.olivcsofiware.comfOiive/iReaderffCD!SharedArticle.ashx?document=TCO... 2/1012016 
34 


joloto on DSKB35BYQ1 with HEARING22185.022

Customers mad about late notice Page 3 of S 

"It's terribly wrong, and it really screwed the consumer," 

said Schooley, 53, of Canal Winchester. "We're stuck; they 

can do anything they want to do. That's not fair; that's not 

right." 

InHealth officials declined to be interviewed for this 

article, but in a statement, the company reiterated that it is a 

nonprofit mutual insurance company that is "doing all we 

can to work in the best interests of our members." 

In an interview last week, an Inl-Iealth official 

acknowledged that efforts to get OhioHealth to agree to 

lower reimbursement rates had broken down by late 

December. 

During the first half of January, InHealth's leaders 

decided to drop OhioHealth from the provider network. An 

official with the Ohio Depa1tment of Insurance said that 

InHealth contacted the department late on Jan. 15, triggering 

a required 15-day review period during which depmtment 

officials review documents to ensure that insurance 

companies clearly explain provider-network changes to 

consumers. 

However, an official with the Ohio Department of 

Insurance said nothing stops insurers from starting the 

notification process during the 15-day review period. The 

Department of Insurance did not encourage lnHealth to 

begin the notification process earlier. 

"We consider this decision to be a business decision of the 

company," the official said. 

The official said the department sometimes gets notices 

from insurance companies about their plans for a "market 

hllp://ircader .ol ivesoft warc.com/Oiive/i ReaderffCD/SharedArticlc.ashx?documcnt=TCD... 2/ 1 0/20 16 
35 


joloto on DSKB35BYQ1 with HEARING22185.023

Customers mad nbout late notice Page 4 ofS 

disruption" that ultimately doesn't happen. "This is, from 

our perspective, not a done deal until it's a done deal." 

But some Ohioans said they are furious that InHealth is 

putting coverage with Ohio-Health on the line. 

"I feel cheated," sa id Victoria Lawson of Franklin 

County's Pleasant Township. She and her husband, both in 

their 60s, have an InHealth policy. "InHealth needs to pony 

up and come to an agreement with OhioHealth." 

InHea lth has said that OhioHealth is an "outlier" in how 

much it charges for care. OhioHealth has said what it 

charges is competitive. 

Ohioans who buy coverage tlu-ough healthcare.gov 

typically cannot sign up for a different plan after the openenrollment period ends. There are some exceptions that 

allow for a special enrollment period; among them, the loss 

of a job, a move or the birth of a child. 

But an eleventh-hour change in an insurance company's 

provider network isn't one of them. 

The federal government will not create a special 

enrollment period for people affected by lnHealth's decision, 

said Andy Slavitt, acting administrator for the Centers for 

Medicare & Medicaid Services, in a conference call last 

week. 

But Aaron Albright, a CMS spokesman, said the federal 

government will review InHealth's provider network to 

make sure it is adequate. 

Sonya Peria and her husband, Chris, live in Marion and 

said they will not have an in-network hospital close by as a 

result of the change. 

http:/frreader .olivcsoflware.corniOI iveli RcaderfrCD/SharedAiticle.ashx?document: TCD .. . 21 I 0120 16 
36 


joloto on DSKB35BYQ1 with HEARING22185.024

Customers mad about late notice Page 5 of 5 

"It does put us in a very difficult situation," Mrs. Peria 

said. "It's not my fault that this happened." 

bsutherly@dispatch.com @BenSutherly 

http://ircader.o I i vesoft ware.com/ 01 i ve/i Reader(]'CD/SharedA rt ic le.ashx?document=TCD... 2/ 1 0120 16 
37 


joloto on DSKB35BYQ1 with HEARING22185.025

Insurer, OhioHcalth split could hurl 9,000 Page I of4 

Copyright© , The Columbus Dispatch, All rights reserved. 

HEALTH COVERAGE 

Insurer, OhioHealth 

split could hurt 9,000 

By Ben Sutherly The Columbus Dispatch 

true 

While wintering in Florida this past weekend, Rick and 

Linda Vierow received a troubling voicemail from their 

health insurer, In Health Mutual. 

In Health was cutting a major central Ohio hospital 

system, Ohio Health, from its provider network on March 

1. For the Vierows, who are early retirees in their 50s, that 

meant their physicians and some of their preferred 

hospitals would no longer be part of their health plan's 

provider network. 

The Vierows had just purchased their health policy 

through Ohio's federally run health-insurance marketplace. 

So they scrambled to find another plan whose network 

included their doctors before Sunday, the last day to sign up 

for marketplace coverage for 2016. 

http://ireader.olivesoftware.com/OiiveliReaderffCD/SharedArticle.ashx?document=TCD... 211012016 
38 


joloto on DSKB35BYQ1 with HEARING22185.026

Insurer, Ohiollealth split could hurl 9,000 Page 2 of4 

They enrolled in an Anthem Blue Cross and Blue Shield 

policy whose network included their doctors but not their 

preferred hospital, OhioHealth Riverside Methodist Hospital. 

And the new policy is not compatible with a health-savings 

account. 

The Vierows, who live in Westerville, were not happy 

with the last-minute notice that they received from InHealth. 

They are among more than 9,000 Ohioans enrolled in 

lnHealth coverage through the marketplace who could be 

affected by the split. 

"We find it very difficult to believe that providers and 

insurers can change the product that radically midstream," 

Mr. Vierow said. 

People who buy coverage through Ohio's health-insurance 

marketplace typically cannot sign up after the openenrollment period ends. There are some circumstances that 

can trigger a special enrollment period - the loss of a job, a 

move, the birth of a child- but an eleventh-hour change in a 

plan's provider network isn't one of them. 

The last-minute notice "is a significant concern to this 

organization," said Dr. Bobbie Freeman, chairwoman of 

InHealth's operating board, as well as its chief 

administrative officer and chief medical officer. "We did 

everything we could to get the decision made and 

notification given in a timely fashion." 

She said the Ohio Department of Insurance completed a 

mandated review of InHealth's plan to drop OhioHealth 

from its network on Friday, after which Inl-Iealth 

immediately began to notify its members of the change. 

llp:// irca er ivesoflware. om ii ve iR ad ffC aredArt e.ashx?docum TC .. . 2/ l 0/2016 
39 


joloto on DSKB35BYQ1 with HEARING22185.027

Insurer, OhioHeallh split could hurt 9,000 Page 3 of4 

InHealth had 2,646 members with marketplace and nonmarketplace coverage that accessed care through OhioHealth 

last year. Hundreds of members who are pregnant, already 

undergoing a course of treatment or possessing a current 

authorization for health-care services with an affected 

facility or provider can receive that care at in-network rates, 

InHealth said. 

Freeman called Ohio-Health "an outlier" in how much it 

charges for care, noting hospitals associated with Mount 

Cannel Health System and Ohio State University offered 

lower rates. lnH.ealth doesn't negotiate directly with 

OhioHealth, instead accessing its services through a thirdparty agreement with a company called Ohio Health Choice. 

In an emailed statement, OhioHealth said:"We do not 

disclose our negotiations publicly. What we can say is that 

our contract reflects what we believe to be a competitive, 

commercial market rate." 

About 15 percent of OhioHealth providers will remain 

part of InHealth's network through other contracts, Freeman 

said. 

Last fall, the federal government placed InHealth under 

"enhanced oversight." It is one of about two dozen 

"consumer operated and oriented plans," many of which 

have shut down in the past year. 

InHealth remains financially sound, Freeman said, though 

it might not turn a profit until 2018. 

InHealth said this past fall that it was trying to slow the 

rate at which it's burning through its cash reserves, in part by 

working to get hospitals, doctors and other providers in its 

http://i reader .ol ivesoft ware.com/0 I i veli ReaderHCD/SharcdArt ic e.as hx?doc ment TCD. .. 211 0/20 16 
40 

f 


joloto on DSKB35BYQ1 with HEARING22185.028

Insurer, Ohio Health split could hurl 9,000 Page4 of4 

health network to agree to lower reimbursement rates. 

bsutherly@dispatch.com @BenSutherly 

hllp://ireader.olivesofiware.com/Oiive/iReaderffCD/SharedAnicle.ashx?documenr-TCD... 2/ 10/20 16 
41 

Secretary BURWELL. With regard—— 

Chairman BRADY. Madam Secretary, I apologize. Time has expired in the three minutes, and hopefully you will get a chance to 

respond to that a little later. 

Dr. McDermott, you are recognized. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

I will respond. The Republicans gutted the risk corridor money, 

and so these co-ops are going down. That is what happened in 

Ohio. So there is no mystery to what happened. 

The newspaper just did not go to the fact that the Republicans 

in the Congress had taken away the risk corridor money. 

Mr. TIBERI. Will the gentleman yield? 

Mr. MCDERMOTT. No. I have got only three minutes. 

I want to ask you a question about drug costs because drug costs 

are scaring the living daylights out of people, and when we put 

Part D in the law, the Republicans put it in by caving to the pharmaceutical industry and tied the hands of the Secretary and taped 

his or her mouth shut so you cannot negotiate any kind of reductions in drug prices; is that correct? 

Secretary BURWELL. At this point I do not have negotiating authority. That is one of the things we had asked for in our budget, 

for specialty and high cost drugs. That is one of the proposals that 

is in the President’s budget right now. 

Mr. MCDERMOTT. Does the Veterans Administration have the 

ability to negotiate reductions? 

Secretary BURWELL. Yes, they do. 

Mr. MCDERMOTT. Do you know the percentage reductions that 

they have negotiated there? 

Secretary BURWELL. We know that they have been able to 

achieve cost savings. 

Mr. MCDERMOTT. Twenty percent, 30 percent? 

Secretary BURWELL. I would have to ask the Secretary of the 

VA. 

Mr. MCDERMOTT. You do not know them? 

Secretary BURWELL. Yes. 

Mr. MCDERMOTT. How much money do you spend in Medicare 

on pharmaceuticals? 

Secretary BURWELL. The number, the percentage continues to 

risk, and that is why this is one of the areas of focus for us in 

terms of we know that in the most recent year for statistics, 2014, 

we saw a 12 percent increase in just the pharmaceutical costs. 

Mr. MCDERMOTT. What is the dollar amount that you spend? 

Secretary BURWELL. We can get back on the dollar amount. In 

percentage terms it is a growing percentage of the overall Medicare 

budget, which is 52 percent of all of the entitlements at HHS. 

Mr. MCDERMOTT. Let’s say you spent $100 billion on pharmaceuticals, right? Just for a hypothetical. 

Secretary BURWELL. Yes. 

Mr. MCDERMOTT. If you reduced that, if you could negotiate a 

20 percent reduction, that would be $20 billion saved; is that correct? 

Secretary BURWELL. Yes, it is. 

Mr. MCDERMOTT. If you could negotiate a 40 percent reduction, 

it would be 40 billion, right? 


joloto on DSKB35BYQ1 with HEARING
42 

That is what the Veterans Administration says, somewhere between 40 and 60 percent reduction, and it seems to me that you 

have asked for that in this budget. Tell us about what is in the 

budget as far as negotiating ability. 

Secretary BURWELL. So there are number of things that are in 

the budget with regard to the high cost drug issue. This is one of 

them in terms of negotiating authority. We have also asked for the 

authority for us to pool with States and Medicaid to create Medicaid pools so that the States can negotiate in a more effective way 

in terms of drug costs for the States. 

The third thing that I would mention in the area of high cost 

drugs that is in this budget that I think is important is speeding 

up the closure of the doughnut hole for our seniors. Right now 

through the ACA, the closure that originally occurred has saved 

$20 billion for ten million seniors in the country, and so working 

through our ability to do that are three of the priorities we have. 

Chairman BRADY. Thank you. All time has expired. 

Mr. Reichert. 

Mr. REICHERT. Thank you, Mr. Chairman. 

Thank you, Madam Secretary. 

I just want to cover quickly some of my major concerns with the 

President’s budget. Reduces biologics market exclusivity from 12 to 

seven years, a serious impact on TPP and the biologics industry. 

It cuts medical education payments to hospital by ten percent; 

cuts reimbursement to critical access hospitals, which are the small 

rural hospitals like Sequim Valley Hospital that you are familiar 

with coming from Washington State for those many years; cuts 

payments to long-term care hospitals, skilled nursing facilities, 

home health agencies; cuts Medicare Hospice payments. Those are 

some of my major concerns. 

But I want to also in my short time thank you for your work 

with the Bill and Melinda Gates Foundation, for promoting women’s health, children’s health, and fighting global poverty, and all 

those things that you have done. You know, I know your heart. It 

is a caring heart, and so I am going to move away from partisanship messages for a moment and ask for your help, and I’m going 

to ask for the President’s help and the Vice President’s help, the 

Administration’s help on this. 

I am on a mission, and I want you to be a part of the mission, 

and the mission is this. The President has said we are taking a 

moon shot on cancer, $755 million in this effort. But here is a 

group of people I am going to share with you who are left out. 

One of the most common side effects from cancer treatments is 

lymphedema. It afflicts an estimated 15 percent of all survivors 

and 40 percent of all breast cancer patients. As beneficiaries live 

longer, an even greater emphasis must be placed on self-care. 

These lymphedema patients need these compression garments. I 

am asking today, Madam Secretary, for your help, the Administration’s help in providing the care for 40 percent of breast cancer survivors who need these garments. 

The money we save, the health issues that we can avoid, providing these garments, well, they are not measurable. Can you help 

us with that? 


joloto on DSKB35BYQ1 with HEARING
43 

Secretary BURWELL. Congressman, I will look at it and follow 

up and follow up directly with you. 

Mr. REICHERT. Can you help us with that? 

Secretary BURWELL. I assume it is a payment issue in terms 

of what we do and do not pay for? Is that what it is? 

Mr. REICHERT. We just need your help. Yes. Would you help us 

with that? 

Secretary BURWELL. I will look into it and work to see what we 

can do within our authorities. You know, when it is a payment 

issue—— 

Mr. REICHERT. It has been years, and the $755 million we are 

asking for, the President asked for, at least some consideration for 

the help of these people suffering from this disease should be considered. 

I yield back. 

Chairman BRADY. Thank you. 

Mr. Lewis, you are recognized. 

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

Madam Secretary, welcome. 

Secretary BURWELL. Thank you. 

Mr. LEWIS. Thank you for your service and for all your great 

and good work. 

Madam Secretary, as you well know, the CDC is headquartered 

in my congressional district. Can you talk about public health preparedness generally? Are we ready? Are we prepared? 

My understanding is that the Zika cases have already been reported in the United States. Do we have an estimate or the potential cost of this virus? 

Secretary BURWELL. So the Zika virus, I think, is part of the 

broader preparedness, and fortunately, the work that we did in 

Ebola has put us in a place where there are a number of things 

that help us. 

But with regard to the Zika virus specifically, I think it is important to note a number of things that are very important. First of 

all, the most important concern we have right now is pregnant 

women, and I think you know we have put out the guidance that 

indicates that any woman that is pregnant, the CDC recommends 

you do not travel to any of the regions because microcephaly, the 

birth defect, that while we have not been able to scientifically put 

the causal link, we have enough concern that we have made that 

recommendation. 

So focus on pregnant women. Next is we need to make sure that 

we are focusing on controlling the mosquitos that cause it. This is 

different, and I think many people will harken back to Ebola, but 

this is fundamentally different because it is passed by a mosquito 

biting someone who has the disease and then biting another person. 

Eighty percent of the people that have it do not know, and so 

this is a part of what is a very large problem, and for those that 

do have it, it is about a week’s worth of fever, and sometimes they 

think that it is the flu or something else. 

With regard to our domestic preparedness, we have a plan together with the CDC, the NIH, the Assistant Secretary for Preparedness Response in terms of our homeland preparedness. 


joloto on DSKB35BYQ1 with HEARING
44 

What we need to do though, and we have the supplemental that 

we have proposed, is make sure that we are able as Nation to be 

prepared as we go into the summer months, especially in the 

South. 

So there are two mosquitos that transmit this. One is a very efficient transmitter, meaning it will bite four individuals in a meal, 

and so you can imagine how that gets passed. The other mosquito, 

that mosquito is limited into the Deep South in our country. The 

other mosquito can cover almost up to 20 or so States. That one 

bites other things, but I still may be a transmitter. 

So we need to get in place the right communications, the right 

public health, and the right mosquito control before we hit the 

South. 

Right now in the United States no continental cases have been 

passed by a mosquito to a person. It is travelers coming back, and 

one sexual transmission in Dallas. In Puerto Rico, we have a situation where already we are seeing mosquito pest cases. 

And so those are the elements we need to do. We have a plan. 

That is why we have asked for the funding. 

Mr. LEWIS. Thank you, Madam Secretary. 

Chairman BRADY. Thank you. 

Dr. Boustany, you are recognized. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

Secretary Burwell, I want to get the Administration’s clarification on health reimbursement arrangement or health reimbursement accounts. In 2013, harsh penalties were applied to small business owners who use these health reimbursement accounts for 

their employees to the tune of $100 per day per employee. 

I questioned Secretary Lew about this last year during the budget talks, and subsequently the Administration put this on hold for 

less than a year. 

I heard from Randy Noel in Louisiana, who is a small business 

owner, he has been advised to pay these penalties because the time 

in which this was put on hold was less than a year. 

There has been so much uncertainty, but this is a very draconian 

penalty. Is the Administration going to eliminate this penalty or 

would you work with us? Because Mike Thompson and I have bipartisan legislation; it is bicameral and it is also bipartisan in the 

Senate, to eliminate these harsh penalties. 

Secretary BURWELL. Is this the rulemaking that you spoke 

with Marilyn Tavenner about? Is it that particular rulemaking? 

Mr. BOUSTANY. I actually had a conversation with Secretary 

Lew about this. I think I did raise this with Marilyn Tavenner as 

well. 

Secretary BURWELL. I want to follow up because there are two 

different provision, and I am not sure which one we are talking 

about here. 

Mr. BOUSTANY. Well, this is specifically about the health reimbursement arrangements which allow for employers to provide dollars’ assistance to their employees. It is fine under ACA, but for 

some reason the Administration going back to 2013 imposed a $100 

per day per employee penalty. 

It is very draconian on these small businesses, and Secretary 

Lew admitted it was a problem last year. It was put on hold, but 


joloto on DSKB35BYQ1 with HEARING
45 

for really less than a year. I think it was like six or seven months, 

and now we have this penalty re-imposed. 

These small business owners do not know what to do. We think 

it ought to be eliminated. These employers are trying to help their 

employees and provide for insurance. 

Secretary BURWELL. Let me check and follow up. It is on the 

tax side though. Is that why you went to Secretary Lew? 

Mr. BOUSTANY. Well, I did raise it because it is a tax issue, but 

it also is a health issue. 

Secretary BURWELL. Okay. I will follow up on our end. 

Mr. BOUSTANY. I intend to ask Secretary Lew about it when 

we have him in front of the committee as well. 

Secretary BURWELL. Okay. I will follow up with the Secretary. 

This one probably sits with them, but as you reflect, it is an important part of the—— 

Mr. BOUSTANY. It is a health issue. 

Secretary BURWELL. Yes. So I will follow up. 

Mr. BOUSTANY. Thank you. 

I yield back. 

Chairman BRADY. Thank you. 

Mr. Neal, you are recognized. 

Mr. NEAL. Thank you, Mr. Chairman. 

Thank you, Madam Secretary. 

Madam Secretary, the Massachusetts delegation lunched today 

with Michael Botticelli and the Sheriffs’ Association of Massachusetts to talk about the opiate crisis. Governor Baker, to his credit, 

has suggested that more than 1,200 to 1,300 people died last year 

in Massachusetts of opiate addiction. 

Heroin is being sold on the streets of Springfield and Hartford for $2.50 a bag, and clearly the movie HBO presented called ‘‘Heroin on Cape Cod’’ is riveting. I would recommend it to anybody who 

might be interested in what has happened. 

The President’s Drug Czar today, Mr. Michael Botticelli, said 

that part of the problem clearly is the overuse of prescription 

drugs, and that it has heralded a new era in how to treat addiction. 

Seventy-eight people as you noted lose their lives every day as 

a result of these drugs, and you have offered several proposals in 

your budget to deal with this alarming epidemic. 

Could you give us greater detail as to how you suggest that we 

might proceed? 

And applause to the President for suggesting $1 billion in new 

expenditure to address this issue. 

Secretary BURWELL. So an issue that is deeply important to 

me. As many of you know, I am from the State of West Virginia 

where the problem has been acute for many, many years. So a priority since I came. 

When I came to HHS, we put together a three-part strategy in 

order to make progress on it. The first has to do with prescribing. 

We know in 2012 there were 250 million prescriptions of opioids. 

I think you all know how many adults there are in our country, 

and the idea that in 2012 there were 250 million prescriptions, the 

overprescribing is a problem. We need to take that on. 

As part of that, the CDC will be issuing new regulations. We 

know pain is important. It is important to be treated, but the overVerDate Sep 11 2014 13:18 Mar 27, 2017 Jkt 022185 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22185.XXX 22185

joloto on DSKB35BYQ1 with HEARING
46 

prescribing that has occurred, we need better direction. So that’s 

part one. 

Part two is medication assisted treatment, and right now as you 

reflect in terms of the numbers that are in your State and in many 

of the States represented here, we need these people to be in medication assisted treatment. There is not access to the treatment, and 

that is one of the major parts of the funding that you mentioned. 

It is to create an ability for States and communities. 

So the money would go to SAMHSA and a little bit to HRSA, and 

that money would then go on to States and communities because 

we need to build the capacity for the medication assisted treatment 

for these people because right now they come into law enforcement. 

You were just meeting with the sheriffs. I have met with the 

sheriffs. I met with them in Massachusetts with Governor Baker. 

What they will tell you is we are not social workers, but we see 

these people time and time again and have nowhere to send them. 

The third element of the strategy, and sadly we have to have this 

element, is naloxone or some people call it Narcan, which is the 

drug when people have overdosed because sadly we have so many 

people that are in a state from either heroin or prescription drugs 

and they have overdosed, and at that point we are just trying to 

save lives. 

And so some of the money will go to move and fund naloxone at 

the community level. 

Much of the money we are asking for is about moving it to the 

States and communities that are in need so that they can build 

their capacity to work against these three strategies. 

Chairman BRADY. Thank you. 

Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you. 

Madam Secretary, two quick issues. I think they are pretty 

straightforward and pretty simple. The House has inquired about 

the basic health program, and I was able to receive a briefing from 

your Assistant Secretary for Financial Management, Elaine Murray, who is here today and came and gave me some good insight 

into the process. 

Out of that discussion, we put forward a request for documents 

on something that we learned about, and that was a document 

called ‘‘the big ugly table’’ that she said was critical in putting together the basic health plan. 

Now, recognizing that we are not in litigation so that there is no 

concern there, we have requested this document and other documents, including the memorandum of understanding between CMS 

and the IRS. 

The results have not been forthcoming. We have gotten, you 

know, redacted information followed up, back-forth, back-forth. The 

latest was literally a 234-page printout of public information from 

the CMS Web site that is submitted to Congress. 

In the spirit of Congressman Rangel and the dispatch with which 

you were able to easily answer his inquiry, can you get us this ‘‘big 

ugly table’’ by the end of the day along with the CMS–IRS memorandum of understanding? 

Secretary BURWELL. So, Congressman, my understanding is 

that we have turned over documents. We—— 


joloto on DSKB35BYQ1 with HEARING
47 

Mr. ROSKAM. They have not been responsive. 

Secretary BURWELL. So I would like to follow up with staff to 

understand. Our staffs need to get together to understand this. 

Mr. ROSKAM. Great. It is a complete mystery, and time is short. 

So I want to move to another issue, but it is to the point of absurdity. So if you can intervene and get us the ‘‘big ugly table,’’ which 

according to the briefing was critical to the decision making, along 

with the memorandum of understanding between CMS and IRS, 

that would be helpful. 

Secondly, we heard testimony at the Oversight Subcommittee 

about the fraud and erroneous payment rate from CMS. The Deputy Administrator said the number is 12.7 percent. The remedy or 

part of a solution Mr. Blumenauer and I are working together for 

a common access card using the same technology that DoD uses 

and has used in the financial services arena. 

We received some technical assistance, but it was like pulling 

teeth from CMS; had to get the Administrator personally involved 

to get this done. Okay. Because he is meeting people who do not 

want to change things. 

But this, Madam Secretary, as we both know, is a system that 

desperately needs to change. Would you be willing to help Mr. Blumenauer and me, as we are trying to move forward, get the technical assistance and put together a common access card pilot program that we can see if it works and if it saves money? 

We are persuaded it will do that, but we need your help and we 

need your personal help substantively because we are meeting a lot 

of passive-aggressive folks that do not want to be helpful. 

Will you help us? 

Secretary BURWELL. I will look into seeing what we can do in 

terms of whether we have—is it statutory? Is that why we are providing technical assistance? 

Mr. ROSKAM. Yes. 

Secretary BURWELL. Because it is statutory. Okay. Then let us 

look into it and understand because I think hopefully this is the 

kind of thing that will move us along the electronic health benefits 

end using technology and data to do delivery system reform. So I 

would like to understand it more fulsome and figure out if we can 

provide technical assistance if it is statutory. 

Chairman BRADY. Thank you. All time has expired. 

Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you, Mr. Chairman. 

And, Madam Secretary, the President’s budget indicates that, 

quote, ‘‘The Administration is deeply concerned about rapidly growing prescription drug prices.’’ 

Certainly that is a concern that is so real to many consumers 

who are basically faced with the choice: your money or your life. 

While I am fully supportive of the Biden Cancer Moon Shot Initiative that you referred to to try to convert some of the pain and 

grief that he and so many families have, unless the Moon Shot addresses accessibility for so many of our neighbors, it will really be 

just a shot in the dark. 

The one thing that we already know without any more research 

on drug effectiveness is that an unaffordable drug is 100 percent 

ineffective. I applaud each of the budget’s legislative proposals that 


joloto on DSKB35BYQ1 with HEARING
48 

you outlined to Mr. McDermott. Together they would save taxpayers over $172 billion. 

Republicans are always telling us about how entitlements need 

to be brought under control and Medicare is unsustainable. I think 

the place to begin is by cutting those who think they are entitled 

to charge the highest drug prices in the world to Medicare and 

Medicare consumers. 

Clearly legislation is required, but you and I know that lightning 

could strike the Capitol dome in the same place not twice but ten 

times, and this Congress would not be willing to stand up to the 

pharmaceutical lobby. It is essential that the Administration use 

every tool at its disposal to prevent price gouging. 

You are aware that 50 of our colleagues have asked that you and 

the NIH use existing authority to at least set some standards for 

prices when taxpayers paid for the research that led to a drug. Can 

you assure that our request is receiving your thorough consideration? 

Secretary BURWELL. It is. It is. Your letter we have received. 

Thank you, and we are continuing to try and pursue every administrative option. 

We have proposed legislative and statutory changes as part of 

the budget but are looking at a wide array, which we welcome your 

letter and your suggestion. 

Mr. DOGGETT. I am pleased with your Dashboard, with your 

proposal on Part B payment models. I hope you can build on the 

oncology care model from the Innovation Center. 

I believe that when you ask that we mandate pharmaceutical 

companies to provide certain information that is vital, that is a 

good idea, but I hope that you will consider requesting that they 

voluntarily provide that information this year and will continue to 

look for ways to bundle pharmaceuticals with other services, will 

implement your bio-similar reimbursement rule, and take every 

step you can, knowing this Congress will do little, but there are 

still steps you can take to help American families on pharmaceutical price gouging. 

Thank you so much. 

Chairman BRADY. Thank you. All time has expired. 

Mr. Smith, you are recognized. 

Mr. SMITH of Nebraska. Thank you, Mr. Chairman. 

And thank you, Secretary, for your presence here today. 

I do want to follow up on a characterization made earlier that 

it is Republicans’ fault for removing some funds, therefore causing 

the co-ops, the Obamacare consumer oriented and operated plans 

to collapse. 

I do want to add though that on April 11th, 2014, from a fact 

sheet from CMS they stated that, quote, ‘‘We anticipate that risk 

corridors’ collections will be sufficient to pay for all risk corridors’ 

payments.’’ I just want the record to reflect that. 

But certainly the collapse of CoOpportunity Health for Nebraska 

and Iowa has been a huge deal in Nebraska. Many Nebraskans are 

still smarting from it. Actually a constituent named Pam has lost 

her coverage three times, thanks to the Obamacare, the entire plan 

that certainly denied her the coverage she was told she could keep, 

that she could afford, that covered her preexisting condition. 


joloto on DSKB35BYQ1 with HEARING
49 

And so I do have a question though. As it relates to the Administrators of CoOpportunity Health for Nebraska and Iowa, it is my 

understanding that they kind of saw trouble on the horizon. So 

they requested the opportunity to suspend enrollment, and that request was denied. 

Can you speak to that? 

Secretary BURWELL. We discussed this, I think, last year when 

I was before the committee, and I would like to follow up in terms 

of where they felt the request because we did not, when I followed 

up, feel that there was a request at all that came into us and that 

was denied. 

So I would love to follow up because when I followed up on this 

before, we had not received that request. 

Mr. SMITH of Nebraska. Okay. 

Secretary BURWELL. And so let us understand because we work 

with all of the co-ops on this issue. Our number one priority is the 

consumer, as you are indicating. That is our priority as well. That 

is why, to be honest, a number of the co-ops came out before this 

open enrollment as we worked with the States that are their primary regulator. We worked with the States on that issue. 

So the consumer is the number one concern. So if we can understand how they felt they did that because if there was a process 

that is unclear or something there, I think it would serve everyone 

else if we can learn from this example. 

Mr. SMITH of Nebraska. Right. And overall, you know, we heard 

a couple of months ago I think it was that the co-op program is on 

sound footing, and yet we have now learned that Maine, I believe, 

who was the only one at one point turning a profit, is now beginning to lose money. 

Where do we stand on that entire issue? Are they on as solid 

footing as we were told some weeks ago? 

Secretary BURWELL. So with regard to that, as you know, at 

that point as when we came to open enrollment, we worked with 

all the States to make sure that the State Commissioners of Insurance and we felt they were. 

With the facts that we have and had at that time, that is where 

we are. I think we also have taken steps to help the co-ops in terms 

of how they can access capital if they need it. That guidance was 

put out about two weeks ago as well. 

We are going to continue to monitor closely with the States. 

Mr. SMITH of Nebraska. Thank you. 

Thank you. 

Chairman BRADY. All time has expired. 

Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Madam Secretary, thank you very much for being here and the 

outstanding work that you and your team do. 

I’ve got a couple of issues I would like to get a response on. The 

first is the recovery audit contractors, the RACs. I have had dealings with these folks in my district, and I am assuming other folks 

on the committee have as well. 

The idea that a provider would have to wait 800 days for a decision is just wrong, and I am hoping that you are going to be able 

to tell me that you are working on fixing that. 


joloto on DSKB35BYQ1 with HEARING
50 

And I know that the Provider Relations Coordinator Program has 

done some good in this area. Are there plans to expand that so we 

can get this number down to let people in some cases stay in business? 

And then also I want to talk to you a little bit about TeleHealth. 

Congressman Black and I have legislation that would expand TeleHealth. It is a way that you can accomplish two I think very important goals. One is to save money, and the other and most important is to save lives. 

I know the President’s budget has provisions in there to expand 

the venues whereby TeleHealth can be used, and also to allow it 

to be used in Medicare Advantage. 

And I would be interested in knowing if you have some sort of 

means by which to collect data on the cost savings because if we 

can quantify that, I am sure it will help us expand TeleHealth even 

more. 

Secretary BURWELL. With regard to the first issue in the RACs, 

we have made changes. And so if it goes beyond the 60 days, they 

don’t get the money, in terms of the RACs. We’ve actually put in 

place changes with the feedback. 

Mr. THOMPSON. With the contractors? 

Secretary BURWELL. Yes. Yes. And so if it goes beyond that period of time, it doesn’t. If at any point the decisions are overturned 

in the process, they don’t get the money either. And so we put in 

place a number of steps in response to the criticisms that we have 

heard about RACs. With regard to the telemedicine issue, as you 

stated, we have several proposals in our budget. We think this is 

an important place to make a difference, both in terms of quality 

of care that we can provide, access in rural areas, particularly. It’s 

very important. 

And right now, we have, we have those numbers scored. And so 

we have been able to score the savings that we think can occur by 

using telemedicine. And so we can get to you all as you all are considering your legislation how we score those numbers. And there 

are two different provisions, both in terms of our federally qualified 

and rural health clinics being initiation sites for telemedicine, as 

well as making sure that in Medicare Advantage it can be paid for. 

Which is sometimes one of the prohibitive things with telemedicine. 

Mr. THOMPSON. Well, we’d like to see those numbers and that 

methodology, and also would love a commitment from you to work 

with us to make sure we can further expand telemedicine. Because 

it does save lives and does safe money. 

Secretary BURWELL. Yes. And we’ll probably come to it, I think, 

if we’re going to talk about the Indian Health Service as well. 

Mr. THOMPSON. Thank you. 

Chairman BRADY. Thank you. Ms. Jenkins, you’re recognized. 

Ms. JENKINS. Thank you, Madam. Or, Mr. Chairman. Thank 

you, Madam Secretary, for being here. As many of my colleagues 

on this Committee have already mentioned, the President’s health 

care law has continued to fail so many Americans. Over the past 

few weeks, I’ve hosted almost 20 town halls throughout Kansas. 

And folks back home often tell me how they face increased premiums with fewer options for care. 2016 premiums are expected to 

increase by 15 to 25 percent in my home state of Kansas. This simVerDate Sep 11 2014 13:18 Mar 27, 2017 Jkt 022185 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22185.XXX 22185

joloto on DSKB35BYQ1 with HEARING
51 

ply is not right, especially in the face of a failed economic recovery. 

And I, along with my colleagues here, continue to work to replace 

Obamacare, repeal it, find proposals that drive competition, lower 

cost and improve health care quality for all Americans. One particular provision of Obamacare that’s especially cumbersome and 

drives up healthcare costs for the everyday American is the requirement that individuals have a prescription from a physician in 

order to purchase over the counter medicine with their health savings accounts and flexible savings accounts. And I have worked on 

a bill, HR1270, the Restoring Access to Medication Act, which 

would eliminate this unnecessary requirement that’s both confusing and frankly, it’s just a waste of time for patients and physicians. And we’ve worked closely on this legislation now for three 

years, with my colleague, Representative Kind, from Wisconsin. 

When you testified in front of our committee last June, I asked if 

you would support us on this type of legislation. At the time you 

indicated you weren’t familiar with the issue. Have you had a 

chance within the last year to review it now? And if so, would you 

support the legislation? 

Secretary BURWELL. With regard to the issue in terms of driving down the costs on the over the counter prescriptions, I apologize in terms of the specifics of the legislation. We’ll need to come 

back to you on that. In terms of the basic concepts of making 

things simpler and easier, we’re working at that across the board. 

And whether it’s the announcement that occurred yesterday with 

Walgreens about over the counter and Niloxone and other drugs 

like that. So the concept of this is something that I think we want 

to continue to work on. With regard to the specifics, I will need to 

get back. 

Ms. JENKINS. Okay. Well, I believe this is just a few easy, common sense approach. It’s bi-partisan. If the Administration will just 

take a look at it. It’s kind of frustrating, year after year after year 

to have you come before us as if you’re not interested in looking 

for some of these common sense solutions to help all Americans, especially when they do have bi-partisan support. So thank you. I 

yield back. 

Chairman BRADY. Thank you. Mr. Paulsen, you’re recognized. 

Mr. PAULSEN. Thank you, Mr. Chair, and thank you Secretary. 

Secretary Burwell, Mr. Larson. Thank you, Secretary, Madam Secretary, for being here. Madam Secretary, several states have closed 

down their exchanges, and many other states are facing some challenging financial situations with self-sustainability. That includes 

MNsure, which is Minnesota’s exchange in the program. And a new 

audit found out that over a five month period last year, MNsure 

repeatedly failed to properly determine the eligibility of enrollees, 

resulting in potentially 271 million dollars in overpayments. That’s 

271 million dollars of taxpayer money. And this is the headline 

from the Minneapolis Star Tribune, just a week and a half ago. I’d 

like to enter this for the record, Mr. Chairman. And these are overpayments that occurred despite the fact that a report a few months 

earlier had warned MNsure that it was not accurately applying eligibility requirements. Now, the President’s health care law, it does 

require that state-based marketplaces, that they be self-sufficient. 

It requires that they follow the law. But HHS doesn’t really seem 


joloto on DSKB35BYQ1 with HEARING
52 

to be doing anything to enforcement it on the enforcement side. Instead, they’ve acknowledged or they’ve given more money, in terms 

of no-cost extension requests through the end of this year. And so 

it seems there’s no gatekeeper. There’s no enforceable plan. 

And this is really not about being against Obamacare. It’s about 

enforcing the law and making sure the taxpayers are protected, 

and continuing to hold these exchanges accountable is going to ensure that patients ultimately are not going to be hurt when there’s 

a change in health insurance. So my understanding also is that 

after all these reports, after all these audits, throwing away millions of dollars in taxpayer money, HHS’s own inspection, Inspector 

General, is also going to be coming out potentially with a report in 

a few weeks that will explore issues with MNsure’s internal controls. So your own Inspector General is acknowledging some of 

these problems. So can you just share anything with us about the 

upcoming report that might be coming out? And more importantly, 

just can you give a little bit of plan of action for making sure that 

MNsure is following the law? 

Secretary BURWELL. So with regard to the state based marketplaces, as you reflected, a number of them are in various states and 

have been able to achieve certain things and not. And when they’re 

not, you know, the Administration has engaged. And HHS has engaged with them. And whether that’s in Hawaii or security issues 

in other state exchanges. And so we do engage on that. The IG’s 

report is something we look forward to, and will be a part of us determining what are the appropriate next steps for us in terms of 

that engagement. 

But across the board, as different state based marketplaces have 

had different issues, I think you probably know we have engaged 

and at various points and times needed to switch them to the platform, if they aren’t able to meet certain of the conditions that you 

articulated. That they are making sure that there are adequate 

networks. That there are different types of issues. Most have been 

technology related, but not all. 

Mr. PAULSEN. Okay. So we’ll see some enforcement mechanisms, some follow ups, some follow through? 

Secretary BURWELL. We look forward to the IG’s report, when 

we will receive it. I think you know; we work with the IG as part 

of program integrity across the Affordable Care Act. It’s something 

we work for. But also we want to let them have their independent 

view. And then they come back and tell us what they have found. 

[The information follows:] 


joloto on DSKB35BYQ1 with HEARING
53 


joloto on DSKB35BYQ1 with HEARING22185.029

Audit finds lax eligibility checks for public health programs in 

Minnesota 

Overpayments could be as high as $27 1 million in public health programs. 

By Christopher Snowbeck 

Star Tribune 

JANUARY 28.2016- 9:31PM 

A new audit suggests that many people who enrolled in public health 

insurance through MNsure last year might not have qualified, driving 

as much as $271 million in overpayments during a five-month period. 

The report issued Thursday by Legislative Auditor James Nobles 

looked at a sample of cases from early 2015 and found errors in 38 

percent of those who enrolled through the state's health insurance 

exchange in either the Medical Assistance or MinnesotaCare programs. 

Auditors applied the error rate to a larger group that enrolled through 

MNsure to project the potential cost. 

"We all know there's going to be some error, but this is higher than an 

acceptable error rate," said Cecile Ferkul, the deputy legislative auditor. 

The state Department of Human Services (DHS), which uses the 

MNsure system to run the programs, said the repo1t points to issues that 

it continues to address, although officials questioned whether the audit 

overstates the problem. 

The auditor's report focused on the po1tion of MNsure used for the 

state's public health insurance programs, which generally provide 

coverage for lower-income Minnesotans. 

As of March 2015, more than half of the 870,000 people enrolled in 

public health care programs had done so through the MNsure system, 

according to the audit. 

It looked at a sample of 157 enrollments through MNsure between 

January and March 20 15, and found that 59 of them were not eligible 

for the public program from wh ich they were receiving coverage. 

The projected overpayment by the state for these enrollees between 

January and May 2015 was about $104,213 combined, according to the 

report. 

Auditors applied the error rate to all people who enrolled through 
54 


joloto on DSKB35BYQ1 with HEARING22185.030

MNsure during the first qua1ter, and estimated that somewhere between 

80,902 people and 132,140 people were either ineligible for coverage 

or had been placed in the wrong program. 

The projected overpayment by the state between January and May was 

somewhere between $115 million and $271 million. 

"The Department of Human Services did not adequately verify that 

people who enrolled in public health care programs through MNsure 

were eligible for those programs," the report concluded. "This is a 

repeat finding." 

Of the 59 people in the auditor's sample who weren't eligible for the 

coverage they were receiving, 44 of them weren't eligible for any 

coverage, the rep01t found. 

DHS officials, however, questioned this finding. Using a different 

methodology, DHS audited 128 cases between October 2014 and 

March 2015 and found only one case in which an enrollee did not 

qualify for any public program, Deputy Commissioner Chuck Johnson 

said in an interview. 

Plus, the audit covered a period during which the depa1tment didn 't 

have a process for renewing coverage that would effectively check 

eligibility, Johnson said. A process for handling renewals is now in 

place, Johnson said, although he acknowledged problems with attempts 

to use the system for 64,000 people last month. 

'We need to improve' 

Even with those qualifiers, Human Services Commissioner Emily 

Johnson Piper said she took the findings of the audit seriously. 

"We need to improve, and the need to improve is critical," said Piper, 

who was named commissioner in December. "Not only our IT 

infrastructure needs to be improved, but also our business practices and 

customer service as we move forward." 

Minnesota launched the MNsure exchange in 2013 to implement the 

federal Affordable Care Act. It's an option for individuals and families 

to buy private coverage, and also is the new eligibility and enrollment 

system for the state's public health insurance programs. 

In November 2014, Nobles released a report that found problems 

determjning eligibility by DHS, which is a primary user of MNsure for 
55 


joloto on DSKB35BYQ1 with HEARING22185.031

eligibility and enrollment in public programs. 

The new report found that DHS did not fix nine of I I problems 

detajled in the 2014 audit. 

In a written response, Piper said the timing of the new audit did not 

allow DHS enough time to correct all problems from the earlier report. 

She pledged, however, that the department is working to make the 

system better. 

Republicans who have been critical of the MNsure exchange, as well as 

the federal health law, jumped on the latest report. 

"We've spent more than $300 million on this failed Obamacare 

exchange, and it somehow still can't figure out how to prevent 

hundreds of millions in benefits from going to those who aren't 

eligible," said Rep. Greg Davids, R-Preston, in a statement. 

Sen. Michelle Benson, R-Ham Lake, said in a statement that "citizens 

who need assistance and taxpayers who provide that assistance have 

both been fa iled by MNsure." 

During a news conference Thursday morning at MNsure's headquarters 

in St. Paul, Gov. Mark Dayton said he had not seen the audit repo1t, but 

said the system has improved. 

Dayton cited recommendations this month from a state task force that 

said Minnesota should stay the course with MNsure, rather than jump 

to the federal government's HealthCare.gov exchange. The federa l 

website would not handle determinations for Medical Assistance and 

MinnesotaCare. 

"We're better off having this program in our own hands, controlling 

our own destiny," Dayton said during the news conference. 

Enroll through Sunday 

MNsure called the Thursday news conference to encourage 

Minnesotans to use the exchange to buy private coverage from now 

through Sunday, which is the close of the current open-enrollment 

period. 

ln general comments before being asked about the new audit, Dayton 

referenced how MNsure workers have struggled with the health 

exchange system since it was originally planned. 
56 

f 


joloto on DSKB35BYQ1 with HEARING22185.032

" I was part of those original decisions," the governor said, "and I look 

back now and I realize that we just ... seriously underestimated the 

magnitude of this task." 
57 

Chairman BRADY. Thank you. Mr. Larsen, you’re recognized. 

Mr. LARSON. Thank you, Mr. Chairman. And thank you for 

holding this hearing. And Secretary Burwell, it’s always a pleasure 

to have you here. And I wanted to thank you sincerely for your continuing outreach. You are a model of how we believe that the relationship between the executive and legislative branches should 

work. And I want to thank you. I want to commend the President 

and you for the budget. And especially, as Mr. Neal has addressed 

already, the more than billion dollars that have been put forward 

to address this long term epidemic that we’re facing with heroin 

overdoses and opiates. And I also want to commend Senator Shaheen and Congressman Courtney. The New England delegation has 

come together in looking head on at this epidemic. I think this is 

something that affects every member in this institution, in all 

states. There’s nothing partisan about it. We are in the throes of 

an epidemic. And it is my hope that while I think the billion is appropriate, by the time that we get through sorting out and going 

to regular order, if in fact we do, that too many more people are 

going to have passed away. And so what we’re hoping, in the New 

England delegation, I hope that Members of the Committee can 

join with us in sending a letter to the President. I think we need 

emergency supplemental funding now, along the lines of Senator 

Shaheen and Congress Courtney have called for, that would provide the 600 million dollars that could be used immediately by 

those on the front lines of trying to deal with this, this epidemic. 

I would note that just since January 28th in New London, Connecticut, 24 deaths occurred. The Zika virus is something certainly 

that needs our attention, et cetera. But I dare say that this is a 

far greater epidemic and needs our immediate attention. And for 

so long, has been swept under the floor. I commend Mr. Neal for 

bringing this to the attention of the entire New England delegation. It’s my sincere hope that the committee can join together to 

see if we can’t get supplemental funding. I hope you can join us in 

that effort. 

Secretary BURWELL. We look forward to working with the Congress across the board in whatever appropriate way to get the 

funding that we need. We think the funding and moving it to communities is important, and we’ll look forward to working with the 

Congress. 

Mr. LARSON. Thank you. 

Chairman BRADY. Thank you. Mr. Marchant, you’re recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. Ms. Burwell, one 

of the most significant things that’s happened in Texas in this last 

year as far as health care was that at least one of the largest 

health care providers, it may be our largest, Blue Cross, Blue 

Shield, completely walked away from and abandoned its PPO program. And anybody that had an individual policy had to convert to 

basically their HMO plan. That’s, that has basically created most 

of the calls about health care in my office this year. 

You’re proposing, and you’ve just given notice of a benefit and 

payment parameters regimen that’s coming up. And my concern is, 

does this new regimen that you’re laying out, force the private insurance companies more into abandoning their PPOs and more into 


joloto on DSKB35BYQ1 with HEARING
58 

an HMO plan? Or will it provide them sufficient room to where 

they can actually operate a PPO model? 

Secretary BURWELL. Well, with regard to the, the rule making 

and where that will go, I don’t think it is something. I think there 

are a number of things that these companies are considering when 

they’re making these decisions. And I think they are two different 

things. There’s the marketplace, in terms of those folks who are 

going to the individual marketplace. And then there’s the employer 

based market. And what we know in both of those marketplaces— 

and obviously the employer based market is separate from the marketplace that we see some narrowing of the networks. 

One of the things in the marketplace though is that you must 

have an adequate network. That there’s at least a test for that for 

the marketplace in terms of what we’re doing. And so many companies are making these decisions. They’re making the decisions. It 

is a private market. And they’re following the consumer. In terms 

of what we saw statistically, what happened from 13 to 14 and 14 

to 15, what we saw is the consumer actually making choices that 

they were choosing a narrower network and lower price versus a 

broader network and higher price. And I think we see the insurers 

responding to that in both the private market as well as the marketplace market, the employer based market. And so we want to 

do this to make sure that choice is available. And this year in the 

marketplace, in nine out of ten counties for most of the marketplace participants, there were three or more choices. And that’s a 

part of getting to that space. And this comes back to the other 

question about the networks. What I think we believe is an important part of this is downward pressure on overall healthcare costs. 

Because that’s what’s driving insurer decisions. And that’s why this 

concept of delivery system reform, an engaged, empowered, educated consumer at the center, where we pay for value, not volume, 

where we use data and information and where we change the way 

we deliver care, is the important when we think over the long 

term. 

Mr. MARCHANT. Mr. Chairman, if I can just ask one final question. Is there a place that I can go—— 

Chairman BRADY. I’m sorry, Mr. Marchant. All time has expired. Mr. Reed, you’re recognized. 

Mr. REED. Thank you, Mr. Chairman. Welcome, Madam Secretary. Madam Secretary, a limited time, I’m looking for an area 

where we may be able to advance some legislation this year in regards to reform that we can agree upon. And one of those areas is 

welfare reform. And I read the budget in particular. And I was 

very interested in pages 55 through 59 of the summary of the 

budget, dealing with TANF, and the issue of flexibility and the Upward Mobility Project. Could you touch on what the Administration’s looking at in regards to giving greater flexibility to local and 

state entities that you reference in the summary portion of the 

budget in regards to things like Upward Mobility and others? 

Secretary BURWELL. I think this is something we’d want to 

work with the Congress on. And think as was indicated that there 

has been bi-partisan work in the space of what we need to do further. I think we’re very focused on the work elements and making 

sure that the money goes, the TANF money. And our approach is 


joloto on DSKB35BYQ1 with HEARING
59 

about that. And so this is a place where I think we welcome the 

opportunity to work with Congress. 

Mr. REED. And are there any areas in particular you could identify for us in regards to greater flexibility, the Administration 

would be willing to engage in a conversation giving to local and 

state entities that are in this space doing this much needed work? 

Secretary BURWELL. I think we’d like to come back and have 

that conversation. Is it all right if we follow up with staff? Because 

I think the bi-partisan effort that was moving last year had a number of these elements that I think we thought were, were good and 

positive and would like to support, if we can be specific. 

Mr. REED. Are there any, any areas in particular you can identify? 

Secretary BURWELL. I’d like to come back on the specifics. 

Mr. REED. Well, we’d appreciate having that conversation and 

being involved in that conversation, as it’s an issue that we’re taking up in our office. As we want to reform this area. The other area 

that I’m looking at is if there is a better way that in your opinion, 

Madam Secretary, that we could measure the success of these outcomes? Often I find in this area measurement of the success is how 

much money we spend in this regard. Is there anything in your 

personal opinion you think we could do better, other than just 

measuring cash or dollars spent on these programs? That maybe 

we could have that conversation of changing the metrics. Is there 

anything you personally would like to work with us on in regards 

to changing those metrics from a cash basis? 

Secretary BURWELL. I think one of the metrics that we all want 

is knowing how many people actually get into gainfully employed 

situations for an extended period of time. 

Mr. REED. Oh, I so appreciate that. 

Secretary BURWELL. That’s not the only measure, in terms 

of—— 

Mr. REED. Are there any other measures you have? 

Secretary BURWELL. But that is one that I do think is an important one. And why, we believe, the money should be more targeted than it currently is in terms of what it’s being for in states. 

Mr. REED. I so appreciate, commend to that metric change. Because I think it is much needed in this culture, to measure the outcome based on success in regards to people getting into a self-sufficiency mode, standing on their own two feet themselves. Is there 

any other metric you’d be willing to discuss personally that you 

think is a better metric, to see how these programs are doing? 

Secretary BURWELL. I think when we come back on the specifics of the flexibility, let’s have that conversation. 

Mr. REED. I look forward to that. And I thank you always for 

your hard work, and appreciate working with your office in regards 

to the issues that we have addressed with you before. With that, 

I yield back. 

Secretary BURWELL. Thank you. 

Chairman BRADY. Thank you. Mr. Becerra, you are recognized. 

Mr. BECERRA. Thank you, Mr. Chairman. Madam Secretary, 

thank you very much. And always a pleasure to have you with us. 

Ma’am, before I ask my question, can I just say thank you for what 

I know you had a hand in, in the President’s proposed budget, to 


joloto on DSKB35BYQ1 with HEARING
60 

try to deal with Medicaid reimbursement for citizens on the island 

of Puerto Rico. And the fact that right now Puerto Rico’s going 

through a very difficult time financially, they’re trying to right the 

ship. And one of the worst things that they can face is a situation 

where they are having a really difficult time funding the healthcare 

that their residents need. Which ultimately becomes an even worse 

crisis if people aren’t getting care now, before things get really bad. 

So thank you for that proposal to try to balance the way we treat 

the U.S. citizen on the island of Puerto Rico. 

I’m interested in, if you can give me comment on the Affordable 

Care Act’s provision that expanded the use of Medicaid so that 

families that are working but earn very modest incomes can still 

qualify for healthcare through, if not the exchange, then the Medicaid Expansion Program. I know a number of states have incorporated that Medicaid Expansion Program. Others haven’t. Those 

states that haven’t, can you tell us how many states have not yet 

incorporated Medicaid? How many individuals including children 

are impacted by not having health insurance, as a result of states 

refusing to adopt Medicaid Expansion? And can you tell us what 

the impact has been for those states that have incorporated the 

Medicare—Medicaid Expansion Program into their healthcare? 

Secretary BURWELL. So right now, 30 states plus the District 

of Columbia have done the expansion. And if all the rest of the 

states that aren’t expanded did it, we estimate that there would be 

four million additional people who would no longer be uninsured. 

3.1 million directly in terms of the individuals that would become 

eligible. But in all the states where expansion has occurred, there 

are portions of the population that were eligible but do not sign up, 

but as part of the expansion, come to sign up. So the total number 

becomes four million. 

With regard to the proposal in our budget, in the conversations 

with many governors across the country that are not in, one of 

their concerns is, ‘‘Will the Federal Government stay and be a 

part?’’ That’s a question that, that I am consistently asked. Our 

proposal gets to that fundamental of making sure they know for 

the first three years, they know what their budgeting will be, 

which is an important consideration for governors. In terms of the 

benefits we’re seeing to the individual, the health and financial security that it means is something that I think everyone can understand. With regard to the economics, in Kentucky, we know that 

the estimates are 40,000 jobs created by 2021. 30 billion dollars 

into the state’s finances. In addition, when we have analyzed those 

places where there are hospital closures—and we know that’s happening across the country for a number of reasons. But in the 

states that have expanded, the hospital closures as a percentage 

are smaller. And we believe that’s attributable to uncompensated 

care that is no longer occurring. 

Mr. BECERRA. Thank you. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. Mr. Young, you’re recognized. 

Mr. YOUNG. Thank you, Mr. Chairman. Madam Secretary, I appreciate being here. I, I came here a few years ago. I haven’t spent 

a lifetime doing this. And I came here to solve problems. And I 

have to say I’ve been frustrated in the last few years. And frustrated because of what I hear back from my constituents. One of 


joloto on DSKB35BYQ1 with HEARING
61 

the main things I hear from my constituents is that Obamacare 

isn’t working. That they don’t like it. That their costs are going up. 

They regard their health insurance as all but useless. Deductibles 

are skyrocketing. Premiums are going up. And there’s, there’s data 

to support these things. Premiums for example, CBO expects an increase in seven and a half percent. Cost of bench mark plan, across 

the 37 states that utilize the federal exchange. But you know, eyes 

start to glaze over, when I talk to my constituents about all of the 

specific numbers. They just want us to fix this thing. And you 

know, meanwhile it’s been talked about, that availability of coverage continues to narrow. And you know, I came here to solve 

these problems. It doesn’t seem like we have a functioning system 

when so many of my constituents decide instead to pay the IRS tax 

penalty instead of buying insurance. That seems like a real problem. It doesn’t seem like we have a functioning system when costs 

continue to go up. When the American people are told that their 

premiums would instead go down or be the other direction. 

It doesn’t seem like we have a functioning system, when in the 

state of Indiana, one of our largest insurers, Assurant, a national 

carrier, left the exchange. And so forth. And so I guess in the interest of trying to solve problems, I’ve asked this before. It’s become 

a big ideological totemic battle between Republicans and Democrats, conservatives and liberals. But are there mandates that you 

as Secretary would be willing to work with Congress on repealing, 

vis-a-vis Obamacare? If not all of them. Which has been the position of the Administration in the past. Are there specific mandates 

that you would be willing to work with us on repealing? And I’ll 

give you the remaining 40 seconds to offer a response. And you can 

offer whatever else you might have in writing, please. 

Secretary BURWELL. There are many things I think most people in America don’t want to go back to a place where pre-existing 

conditions keep you off your healthcare. Where if your child had 

cancer at the age of 15, that they’ve reached annual and lifetime 

limits. And these are some of the important changes that—— 

Mr. YOUNG. Is Obamacare working? I guess I’ll just interject 

here. And you can supplement it with written testimony. 

Secretary BURWELL. Yes. So, yes. And I believe in the area of 

access we’ve seen strong improvements. 

Mr. YOUNG. Because I’m not hearing that from Hoosiers. I am 

not hearing consistently that Obamacare is working. 

Secretary BURWELL. I think the question is—— 

Mr. YOUNG. Do you have surveys that substantiate that? 

Secretary BURWELL. Yes, in terms of actually people in the 

marketplace. We have seen the marketplace satisfaction—— 

Mr. YOUNG. I’m talking Americans more generally. Do they like 

Obamacare? 

Secretary BURWELL. Americans more generally? But what 

Americans like is, that you don’t have to worry about pre-existing 

conditions. Is that the question that’s asked? 

Chairman BRADY. Thank you. All time has expired. 

Secretary BURWELL. That is a different question that he has 

asked? 

Chairman YOUNG. We can deal with that issue together in a 

different way. Thank you. And I yield back. 


joloto on DSKB35BYQ1 with HEARING
62 

Chairman BRADY. Thank you, Madam Secretary. I’m going 

to—— 

Secretary BURWELL. And I think there are places we can. 

Chairman BRADY. Thank you. I’m going to recognize Mr. Kelly. 

And then we’re going to back to one. I just wanted to make sure 

we can get everyone on. Mr. Kelly, you’re recognized. 

Mr. KELLY. Thank you, Chairman and Madam Secretary. I appreciate your being here. We talked before, on the side. My concern 

is, when it comes to the quality incentive payments in the Medicare 

Advantage Plan—this is what we were talking about—I don’t expect you to be able to answer this now. I know you’re going to get 

back to me about it. But those plans were set up to incentivize a 

more efficient operation. And under the rule-making process, Mr. 

Kind and I have a piece of legislation also with Mr. Doyle and Mr. 

Guthrie. And so it’s bi-partisan. Under the bench mark caps, we’re 

rolling the QIPs into that and saying, ‘‘This is the cap.’’ So if you’re 

a four or five star rated plan, there’s no incentive for you to go beyond that. I mean, it just isn’t reachable. So essentially you’re 

being paid at the same rate. I mean, the cap sets a cap. You can 

get paid lower amounts but you can’t get paid higher amounts. And 

the result of that—and I’m asking you—do you have to have legislation to do that, or can you do it internally? I think it’s an interpretation of the benchmark cap. 

Secretary BURWELL. And we will come back on whether or not 

we have the statutory authorities across the board in terms of the 

work that we’re doing in the CMI, the Innovation Center, in terms 

of making sure you have that ability to have that upward movement for good, strong players. We have changed that. And so this 

is a particular case I just need to understand what we have. In the 

most recent proposals on our accountable care organizations, we 

use the logic that you just articulated and have made fixes. So in 

this particular area on the four and five stars, do we have those 

still? 

Mr. KELLY. Yeah. And I appreciate it. Because I think the real 

issue is, how soon can we get this done? Because if it’s an incentive, then it has to truly be an incentive. 

Secretary BURWELL. For good behavior. 

Mr. KELLY. It can’t be a non-incentive that’s described as an incentive. 

Secretary BURWELL. Yes. 

Mr. KELLY. So we will get that to you in writing. If you can get 

back to us quickly, I appreciate that. With that I yield back, Chairman. 

Chairman BRADY. Thank you. Mr. Blumenauer, you are recognized. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. Madam Secretary, I’m going to send you a little note about end of life care. 

And I appreciate that I’m not talking to you about, ‘‘Can we make 

the change?’’ It’s made. I’m interested in how we can implement it 

more effectively. And I would really appreciate a chance to visit 

with you about that at some point. But I want to pick up where 

Mr. Young left off. Because I feel sometimes like I’m in an alternative universe. I have roundtable discussion in Oregon repeatedly. 

And yeah, there are hiccups and problems. But it’s an entirely difVerDate Sep 11 2014 13:18 Mar 27, 2017 Jkt 022185 PO 00000 Frm 00066 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22185.XXX 22185

joloto on DSKB35BYQ1 with HEARING
63 

ferent universe. Providers like what’s going on. We’ve expanded 

service. We’ve put millions, hundreds of millions of dollars into the 

system. Now, my friend from Kansas talked about the problems. 

That’s a state that didn’t expand it. And the question I would ask 

to you is, gee, if Kansas had been one of the 30 states that had 

actually expanded the program and had hundreds of millions of 

dollars in their health care system, being able to take care of people who were too poor to qualify for the ACA, would it make a difference? 

Or in the case of Indiana, which has sort of expanded it, but not 

in a clean, straight-forward way, it appears from an untrained eye 

to be kind of a jerry-rigged system that doesn’t really work well in 

terms of the expansion. Can you talk for a moment about what difference that would make and why I’m getting almost universally 

positive reactions from hospitals, insurance providers and people on 

the street? None of the evil things that were rumored happened. 

Inflation is down. Premiums are not skyrocketing like they used to. 

I remember the debates we had. And my friends who are concerned 

have not been working over the five years to refine it. They’re trying to blow it up or to chip away at it. What difference would it 

make if there was actual straight-forward expansion in states like 

Indiana and Kentucky? 

Secretary BURWELL. I think the point you raised about the premium increases, it is one of the things that, as we look at historically what premium increases were before, in the individual market they were in the double digit space. In the employer based market right now, over time, for a family, what that, what we have 

seen is four out of the five years have been the four lowest on 

record since these records were kept in 1999. That is, that means 

things are increasing but they’re increasing at a much lower rate, 

to your point. 

I understand that still feels like increases for consumers, which 

is why we’ve got to move to delivery system reform. With regard 

to the issue of Medicaid Expansion, I think we do see in many of 

the states that have expanded, those benefits in terms of what it 

means in the community and the money. It’s the money and the 

paid for services. In addition, for individuals, we see many more 

people being treated for diabetes. That leads to longer term reduction in cost if we can get ahead of diabetes. 

Chairman BRADY. Thank you. Mr. Renacci, you’re recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. Secretary Burwell, 

thank you for being here and thank you for reaching out to my office before the hearing. I’m sorry we were not able to connect, but 

I really appreciate you reaching out to all the committee members. 

I think that’s important. You do not have an easy job. We all recognize that. So thank you for what you do. I’m hoping that as this 

year comes to an end, we can work on some things together. As you 

know, the ACA included a new program aimed at reducing hospital 

readmissions, called the Hospital Readmission Reduction Program. 

The goal of this program is one that I and many of my colleagues 

support. In fact it’s estimated that nearly 18 billion per year is 

wasted on avoidable readmissions of Medicare patients alone. 

Secretary BURWELL. Yes. 


joloto on DSKB35BYQ1 with HEARING
64 

Mr. RENACCI. However, the implementation of this program 

has been problematic, especially for those hospitals serving low income populations. Evidence suggests that economically disadvantaged patients, especially patients eligible for both Medicare and 

Medicaid, are much more likely to be readmitted within 30 days of 

discharge, regardless of a physician’s efforts to educate them on 

proper post-discharge care. This has also an effect of disproportionately harming hospitals that take care of those that need it most. 

I’ve said all along, this is not a Republican or Democrat issue. This 

is really an issue of fairness of service to those individuals. Do you 

believe that readmission program criteria can be improved by adding clear adjustments for dual-eligible status, as well as for other 

plan readmissions, such as those following trauma? 

Secretary BURWELL. We do believe in our studying and we appreciate the money that the Congress gave us to do the actual analytics, which should be completed by October. In the space of dualeligibles people with chronic conditions and the socio-economic 

issues that you’re talking about, those things come together and 

they come together in high-cost people. And so we are doing the 

work to understand analytically. We had put out a proposal for 

some changes related to other areas where it has a negative impact 

if you are taking. We got comments back that people didn’t like 

that as a solution. 

So we we did not go forward with that as a change. But we do 

believe this is a space where we need to understand where it 

makes a difference and how our rules can help support those that 

are taking care of those that are difficult to take care of. You may 

also know about the piece we just announced, that the Center for 

Medicaid and Medicare Innovation, where we’re actually funding 

the efforts to do support. So you connect those people with the 

right services. As a means by which we’re going to test whether 

that improves quality and lowers cost. So there are a number of 

steps we’re taking. We believe it’s an issue that we are looking 

closely at. 

Mr. RENACCI. Thank you. I have a bill that I know has 75 cosponsors, Republicans and Democrats. So I hope we can work together on fixing this issue. Thank you, and I yield back, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Kind in the corner you’re recognized. 

Mr. KIND. Thank you, Mr. Chairman. 

Madam Secretary, thanks for your testimony today and for the 

job that you’re doing. See, I want to direct your attention. Chairman Brady and I have been working on legislation reform in the 

post-acute care setting for increased efficiency, better outcomes, 

cost savings. So we’d like to engage your office to make sure we’re 

heading in the right direction so we can get moving on that legislation. 

Secretary BURWELL. We look forward to engaging. 

Mr. KIND. Also, as you know, I’ve been a real stickler when it 

comes to payment reform in the healthcare system, trying to drive 

the system to more quality value outcome-based payments. And 

there’s a lot churning right now. I just want to give you some time 

today to give us an update and what’s been going on to get to a 


joloto on DSKB35BYQ1 with HEARING
65 

value-based reimbursement system and if we’re starting to see 

some cost savings as a result. 

Secretary BURWELL. Yes. So the commitment that we made 

last January for the first time I committed that Medicare payments, 30 percent of them would be in value, not volume. It was 

the first time we’d made that sort of commitment for Medicare, and 

I am hopeful and expecting that we will meet our 2016 goal of 

reaching that. We hope that by 2018 it will be 50 percent. Obviously I will not be here, but we’ll be here to make sure that we 

are on that trajectory. And in terms of what that does in terms of 

the savings, we believe that those are real. 

The other place where we’re actually starting to see numbers and 

dollars in terms of the savings is in the accountable care organizations, and we have done the models and the demonstrations. You 

statutorily gave us standards that had to be met. Quality could not 

be decreased and we had to have savings in order for them to scale. 

The actuaries have scored these, and we are able to meet that test. 

We’ve seen several hundred million in just a one- and two-year period of time, and so we are starting to see that. 

We have taken the input and have rolled out an additional group 

of the ACOs, the accountable care organizations, and actually just 

today you saw the governor of Alabama speak because we’re working with him on Medicaid in this space as well, and those are regional accountable care organizations. 

Mr. KIND. We’ve also been seeing in recent years some remarkable cost savings on a per capita basis in the Medicare program in 

particular, but without a reduction in benefits for the services that 

our seniors are receiving. Can you give us an update on that? 

Secretary BURWELL. Yes. We are in terms of those per capita 

costs, and that’s what we have to focus on. Because we have a 

growing population in Medicare, focusing on the per capita is 

where we’re keeping our eye on the ball. And that’s everything 

from reducing those costs to making sure they’re going into the 

prevention and getting those free preventative services that help us 

save costs over time. We’re seeing some increase, we’d like to see 

more. 

Mr. KIND. I think if we keep setting those financial incentives 

to value quality, we’re going to see a lot of innovation, a lot of reform by our providers themselves. We’re going to work very hard 

to hit the mark. So I encourage you to keep your eye on the ball 

in that regard. I think it’s one of the keys to how successful 

healthcare reform is ultimately going to be in the future. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Meehan, you’re recognized. 

Mr. MEEHAN. Thank you. 

Secretary, I was appreciative of your commentary regarding the 

over-prescription of the opioids and the tremendous precursor implications of that with the heroine problem. We have a group of 

former prosecutors working on a comprehensive approach. I would 

really enjoy if you would communicate back with us while we’re 

looking at this so we can collaborate on this issue rather than discovering later what the intentions are. Can I switch my comments 

for a moment? 


joloto on DSKB35BYQ1 with HEARING
66 

And I appreciated your opening with the idea of a patient-centered delivery model. You opened with discussions about bringing 

healthcare to children at home, and the value of the home now in 

a changing healthcare perspective in creating not only just efficiency, but you know yourself when you can deliver healthcare personnel into that setting, the observations they make with respect 

to the patient and the environment, support of the family, ability 

to maintain their drug regimen, things of that nature have so 

many other benefits. 

And yet we’re seeing a recommendation by the budget to reduce 

compensation for copays, introduction of copays for home 

healthcare that isn’t generated after a hospital stay, home-infusion 

therapy, another thing in which we can take an opportunity for a 

patient to not have to go to a more expensive setting for that same 

kind of service. These are examples and ways in which I think we 

can find that home-centered care as a way to drive down health 

costs as well as continue to see real quality enhanced. 

And I hope you can work on that and give me a sense why would 

we be looking at copays when Congress actually in the 1970s found 

that that was counterproductive. 

Secretary BURWELL. I think the overall concept is what we’re 

moving towards generally, and so with those specific examples that 

you’ve given you need to understand why those specific examples. 

Because the general premise in terms of the demonstrations, the 

funding that we’re doing is all about that home-based care because 

we do believe it can both increase quality and reduce price. And so 

most of the changes are going in that direction. So I don’t know if 

there are exceptions to the—— 

Mr. MEEHAN. I know you’ve got the data exclusivity from biologics and I know we’re looking at that seven-year standard. I have 

real concerns about what it’s going to do for innovation, and I hope 

that you will be able to characterize what it is going to do. I mean 

we are all working on the reduction of costs, but there’s also going 

to be an impact. That number of 12 years was reached for a reason, 

and it wasn’t something that was arbitrary. 

And so the concern we have with a seven-year standard is what 

it will mean and particularly as we’re looking at new challenges 

from Zika viruses to great new pathways to deal with cancer. But 

that’s an issue for another moment, and I thank you, and I yield 

back. 

Chairman BRADY. Thank you. 

Mr. Pascrell, you’re recognized. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Secretary Burwell, thank you for being here today. You’ve been 

an outstanding secretary, and you’ve got a year to go. I don’t know 

who’s going to take your place. Maybe Dr. Kevorkian, who knows. 

Last year at this very budget hearing, you pledged to work with 

the Congress to find a solution to incorporate unique device identifiers, UDIs, and to health insurance claims to help improve patient 

safety and quality of care. I’m reading and hearing day after day 

from all over the country about a major problem which we are not 

addressing. 

CMS has put forward no solution. CMS has indicated that it 

would support pilot programs to demonstrate the feasibility of UDI 


joloto on DSKB35BYQ1 with HEARING
67 

in claims. But to my knowledge, no such pilot has been launched. 

CMS has not taken any steps to ensure that such a pilot gets off 

the ground. Even if one were to launch today, results would be 

back for years, and we would miss our opportunity to implement 

this important policy that can help save lives. 

Quite frankly, the time is up. CMS has failed to come up with 

a solution to incorporate UDI in its claims databases as recommended by the FDA. Device safety experts have recommended 

it and even you during your confirmation hearing. As you know, 

CMS works for you, so what steps do you plan to take to ensure 

that the agency starts to proactively support UDI in claims using 

every tool at their disposal. And I would claim before you answer 

the question that the industry itself, the industry itself, it’s looked 

at very, very carefully at chapter and verse about this industry. 

Madam Secretary. 

Secretary BURWELL. With regard to UDIs since our last conversation about this, we have made progress in terms of what 

we’ve done on the Office of the National Coordinator’s side and actually put out guidance that says that the UDIs will be a part of 

the electronic health records. And when we think about why we 

want the UDIs in terms of having a place where one can go and 

find out if someone had something—if we need to track back, having that be a part of the individual’s record we think moves a long 

way with regard to the questions of ensuring and using this tool 

as a tool for safety. And so have taken steps in that particular 

space. 

With regard to those who make—we have external guidance that 

comes from external boards on when we make differences and 

changes in the claims and what we do in terms of claims records. 

At this point they have not come to making a recommendation. We 

still continue to engage and have those conversations. But with regard to getting to the safety—— 

Chairman BRADY. Madam Secretary, I apologize. The time has 

expired. 

Ms. Black, you’re recognized. 

Mrs. BLACK. Thank you, Mr. Chairman. 

Secretary, thank you for being here today. These are a lot of topics, and I’d like to say that these are topics that are certainly important to our taxpayers, they’re important to our patients as well, 

and I appreciate you being here to answer these questions. 

I want to hold up a report that just came out yesterday, the Senate report that there were illegal benefits benefitted from $750 billion in Obamacare subsidies. And the report goes onto talk about 

how there is not a coordination between HHS and the IRS on these 

subsidies. The report says that there were over 500,000 immigrants 

that got these tax credits, but there wasn’t verification and never 

was there verification sent in to show even after the tax credits 

went out that these folks were here legally in the country. 

And so what we’ve seen in other programs where the money goes 

out the door, it’s very difficult to get that money back again. So 

there seems to be a lack of coordination in verifying that these 

folks are here in the country legally, and this is hard-earned taxpayer money that is going out the door. And so I want to know 

what your plan is to make sure that before these dollars go out the 


joloto on DSKB35BYQ1 with HEARING
68 

door that we can verify someone’s status because we know that 

once the IRS has to go back and try to chase the money, very little 

of that money comes back. So do you have a plan for making sure 

that this does not occur? 

Secretary BURWELL. So with regard to one of the things I think 

that was important in the report is it did reflect that we don’t 

know whether they were illegal or not. What we know is they 

didn’t provide the documentation. And as we—— 

Mrs. BLACK. And so how long a time period would you have let 

go by with these tax credits going out before there was a 

verification. 

Secretary BURWELL. With regard to that, we follow he statutory guidelines, and that’s about 90 days. And so last year 470,000 

folks were cut off within that approximately 90-day timeframe. And 

the thing that I think is also important to recognize in terms of the 

connects that you’re talking about is those individuals that did not 

have verification will not be able to get the tax credits. And the 

other thing is the IRS will follow up in terms of their filing. 

Mrs. BLACK. But the tax credits already went out the door. 

Secretary BURWELL. For the period of time that is—— 

Mrs. BLACK. Yes. For that period of time, so—— 

Secretary BURWELL [continuing]. We follow the statutory—we 

follow the statutory guidelines, and we don’t know if there—— Mrs. BLACK. $750 million went out the door. 

Secretary BURWELL. But we do not know that they weren’t supposed to receive them. Many of the people that go through the process of verification actually have the right documentation. 

Mrs. BLACK. Excuse me. I’m running out of time, but I want to 

tell you I do have a bill that says no subsidies without verification 

whether that’s in the self-cessation, verification needs to be done 

before the money goes out the door. We have seen this in so many 

of the entitlement programs where the money goes out, we can’t 

verify and there are billions—literally billions of dollars that are 

going out in these programs, and I just don’t understand why 

someone can’t come up with their verification. I mean if I make out 

an application for something and it’s not complete, then I don’t get 

whatever service it is that I’m applying for. I think that’s really the 

direction we have to go. 

Chairman BRADY. Thank you. Whole time has expired. 

Mr. Davis. 

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

There are many things that I really like about this proposed 

budget, especially the continuous support for federally qualified 

health centers, home visiting, the addressment of behavior health, 

issues relative to substance abuse prevention and treatment. But 

I also have some serious concerns about the proposed funding for 

graduate medical education. 

Madam Secretary, I noticed that your budget once again calls for 

a 10 percent cut in indirect medical education payments to teaching hospitals. Yet my teaching hospitals tell me that the cost of 

these programs are significantly greater than the direct and indirect GME payments they receive. 

In fact, most of the major teaching hospitals in Chicago are 

training an excess of 100 doctors over the residency cap and we 


joloto on DSKB35BYQ1 with HEARING
69 

still face significant access to care problems in my community. I’m 

concerned that these cuts that are proposed would result in fewer 

doctors being trained. That will heighten the access to care problem. Wouldn’t it make more sense or be better to lift the cap and 

train more rather than fewer physicians? 

Secretary BURWELL. I think the changes that we propose on 

both sides, on the Medicare side as well as the children’s GME 

side, are about trying to make sure that we do get the right numbers of physicians and types of physicians. And so the proposals 

that we put forth are both about targeting in terms of higher need, 

higher-need communities as well as primary care and the specialties where we don’t. And that’s what are changes are targeted towards in terms of making sure that we are in the Medicare space 

paying for those physicians that will do Medicare and Medicare 

hospitals and making sure that we’re targeting the right things. 

And that’s the objective of the proposals. 

Mr. DAVIS. And I note that you’re also seeking authority to kind 

of move more towards primary care. 

Secretary BURWELL. That’s correct. 

Mr. DAVIS. Position training and I’m certainly in agreement 

with that. But when I look at the aging of our population with 

10,000 new seniors every day, don’t we also need specialists, cardiologists and neurologists to deal with the needs of this population 

group? 

Secretary BURWELL. Yes, we are targeting both primary care 

underserved, getting positions to go to underserved as well as the 

issue of specialties where we are short. And so we are trying to 

have all of this assistance in the medical education be more targeted to those areas. It is—— 

Mr. DAVIS. Thank you very much. I thank you for doing a great 

job and I yield back the balance of my time. 

Secretary BURWELL. Thank you. 

Chairman BRADY. Thank you. 

Ms. Noem, you’re recognized. 

Mrs. NOEM. Thank you, Mr. Chairman. 

Secretary Burwell, I wanted to draw attention today to an emergency situation I have in South Dakota with my Native American 

constituents that aren’t getting healthcare. And I certainly know 

you’re aware of the situation, but I want to hear today how you 

plan to fix it. 

The Federal Government has a responsibility to our tribes to provide for their healthcare because of treaty obligations. And frankly 

they failed to follow through on their promise to do so. In fact, in 

the Great Plains area, we have reports of inappropriate conduct including nepotism, favoritism in hiring practices, reassignment of 

employees who are underperforming or have been poorly trained as 

well all leading to very low quality delivery of healthcare. 

In fact, a bombshell 2010 Senate report laid out a lot of these allegations, and these problems have been going on for long before 

I’ve been in Congress, for a decade or more. And the fraud, the 

abuse, the waste is rampant in the Great Plains area. 

And since then, even since that 2010 report, little has changed 

within IHS. And I know you’ll speak to funding levels, but, before 

a Senate committee last week, your acting deputy secretary specifiVerDate Sep 11 2014 13:18 Mar 27, 2017 Jkt 022185 PO 00000 Frm 00073 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\22185.XXX 22185

joloto on DSKB35BYQ1 with HEARING
70 

cally stated that there has been an increase of 43 percent in funding into IHS in recent years. So we know we can’t simply throw 

more money at the problem, that there has to be a whole culture 

change at IHS that has to happen. 

And what I’m concerned about is that last year CMS inspections 

of the facilities in Rosebud and Pine Ridge showed that it was a 

dangerous situation. In fact, what was so ironic was that CMS said 

that it was going to terminate its provider agreements to IHS and 

the irony of that is that we have one federal agency saying it won’t 

make federal payments to another federal agency when they’re 

both housed within the same department. And it shows the bureaucratic absurdity of the situation we have going on in South Dakota. 

And at this very minute, my Rosebud tribal members are driving 

over an hour to get emergency healthcare services because the 

IHS’s hospital ER was closed due to dangerous care being provided 

there. So it’s not necessarily just funding; there’s other issues as 

well. The mismanagement, the misconduct in the Great Plains area 

needs to be dealt with and frankly it goes from one administrator 

to the next. I know that one has recently been reassigned, but then 

I also hear that he’s come to Washington D.C. to a different position, wasn’t necessarily penalized for his lack of doing his job in 

South Dakota and in the Great Plains area. 

I want to hear your strategies for how you’re going to implement 

change in culture in this Great Plains region. But I also believe 

that buried within your IHS budget justification this year you have 

a paragraph that says IHS places a high priority on corrective action in the Great Plains area. The problem is that this paragraph 

appears to be literally copied and pasted from the justifications 

over the last four years. 

So there’s nothing that indicates to me that we’re going to have 

a change. It tells me that, yes, you’re aware of the problem, but I 

don’t know that you have a plan to fix it. And frankly we’re putting 

people’s lives in jeopardy in South Dakota. And we have emergency 

rooms that are closed down and an agency that will not reimburse 

another agency because we have people addicted to drugs and alcohol doing procedures on people, sterilization of utensils that’s happening by handwashing. 

So I need your answers, probably written, because I’m out of 

time. I hope you know how serious I am about this. But if you’d 

respond to me in written form, I would be eternally grateful. 

Secretary BURWELL. Yes, and I would just say this is a place 

where I think we may need your help as well. 

Mrs. NOEM. I will help. 

Secretary BURWELL. Because I am committed but I don’t have 

a year—I have 11 months and days left. 

Mrs. NOEM. Yeah. 

Secretary BURWELL. But I believe we need to get a different 

answer and outcome. And so this is a place where I may come back 

to you for help and assistance. 

Mrs. NOEM. I’m there. Thank you. 

Secretary BURWELL. Because changing culture is both the relationships on the ground. You know better than I do being from the 

region. It’s going to take a lot, but Dr. Wakefield and I are committed. 


joloto on DSKB35BYQ1 with HEARING
71 

Chairman BRADY. Thank you. 

Mrs. NOEM. Thank you. 

Chairman BRADY. Madam Secretary, thank you. 

Mr. Crowley, you’re recognized. 

Mr. CROWLEY. Thank you, Mr. Chairman. 

Madam Secretary, welcome. I, too, think you’re doing a great job. 

I’m pleased to see the Administration’s initiative to improve funding for mental and behavioral healthcare issues. One of the often 

overlooked benefits of the Affordable Care Act is that it’s extending 

insurance coverage to millions of Americans. It also has improved 

access to previously unavailable or unaffordable mental health 

treatments. 

For example, a recent GAO examined six of the states that 

adopted the ACA’s Medicaid expansion and found improved access 

to behavioral healthcare. There is more work that needs to be done 

in this area. Which the fiscal year 2017 budget highlights. Can you 

talk generally about the changes we face in expanding access to 

treatment for mental and behavioral healthcare and how the President’s budget proposed to address some of those changes? 

Secretary BURWELL. It’s on a number of fronts, this money will 

be used, and I think one is about actually supporting the access to 

care in communities. And that’s a big part of what the money is 

about is making sure that we have the access to care. The other 

is for providers, and this gets back to the issue we were just discussion. The IHS is an incredible example of this in the tribes in 

terms of making sure we have the right providers. 

Parts of this money actually will be directed towards the IHS 

and other places to make sure we have enough providers that can 

provide the care. The final element of the strategy is about making 

sure for those who have severe mental illness that we get them 

into care early. That’s about connecting to them and having places 

for them to go. 

Mr. CROWLEY. One of the other areas that I’m very excited 

about that you address in the budget is the issue of child care. It’s 

so critical to a child’s development for school and for life and it’s 

also critical to helping working families, minimum—who are trying 

to get into the workforce and stay in the workforce, to make sure 

the child is taken care of in an enriching environment, a loving environment. Can you discuss very quickly or briefly the Administration’s proposal to improve access to the quality of child care in this 

country? 

Secretary BURWELL. There are two elements to it. It is, one, 

the implementation that we have been given in terms of improving 

childcare and direction. We’ve been given discretionary funding 

that will be used to implement what the Congress has given us. 

But I think you also know we have a large mandatory proposal 

that would be about expanding childcare so that people could have 

that access and go to work and do the things that they want to do 

as a family in terms of young children and having care for them 

as they go to work. And that is a large proposal that’s on the mandatory side that would be quality, but expansion in terms of those 

served. 


joloto on DSKB35BYQ1 with HEARING
72 

Mr. CROWLEY. I’m very familiar with it because I’m working 

with Senator Casey and with Congressman Frankel on this very 

issue itself and sponsoring it—— 

Secretary BURWELL. We’re excited about that legislation. 

Mr. Crowley [continuing]. Here in the House. But thank you for 

the proposal within the budget and for the great work that you’re 

doing. So with that, Mr. Chairman, I yield back the balance of my 

time. 

Chairman BRADY. Thank you. 

Mr. Rice, you’re recognized. 

Mr. RICE. Thank you, Mr. Chairman. 

And thank you, Secretary Burwell, for being here. I appreciate 

you reaching out to me earlier in the week. Very thoughtful, and 

I appreciate the information you provided to the Committee. I have 

a couple of questions, one with respect to the Medicaid expansion 

and the 20 states that haven’t expanded. I don’t know if you heard, but the United States has $18 trillion 

in debt and both the Office of Management and Budget and the 

Congressional Budget Office, they don’t agree on many things, but 

they agree we’re on an unsustainable path. So let me ask you: If 

you had a wonderful uncle who loved you so and said, look, if you’ll 

buy a house, maybe a more expensive house that you can afford, 

I’ll make the payments for you. And let’s say that uncle was just 

going into bankruptcy. Would you take him up on his offer? 

Secretary BURWELL. The question of the analogy, I would just recognize that we’ve reduced the deficit in this country by $4 trillion. And the budget that’s before us right now has an additional 

$2.9 trillion over a period in terms of reduction. And so I think in 

terms of the accuracy of the analogy in terms of where we are as 

a nation, in the President’s budget, we will keep the deficit-to-GDP 

ratio—will get down to that 2.7 level which we haven’t been in 

many years. 

Mr. RICE. I served on the Budget Committee for three years, 

and every official from OMB and CBO that I talked to that entire 

time said that we are on an unsustainable path. 

Let me ask you this: The South Carolina Exchange was the ninth 

Obamacare exchange to close. It closed in December out of 23 that 

were formed nationwide. Twenty-two of the twenty-three lost 

money in 2014. Nineteen of the twenty-three had claims in excess 

of premiums. Why is that? 

Secretary BURWELL. With regard to the issue of the co-ops, 

when we think about the co-ops entering and we think about business, often stable players that have been in a business enter new 

spaces. Or sometimes what we have is a situation where you have 

new players entering an old business. In the case of the marketplace—— 

Mr. RICE. Why are they losing money? Is it because our government is inept to run the healthcare system, or is it because we just 

did really bad projections and we didn’t know that we were going 

to actually pay out more in claims that we collected in premiums? 

How could we have missed it that bad? 

Secretary BURWELL. The co-ops are private businesses. I think 

you’re referring to the co-ops, not—— 

Mr. RICE. Yeah, I—— 


joloto on DSKB35BYQ1 with HEARING
73 

Secretary BURWELL. The co-ops are private companies. And 

with regard to the decisions of those companies, you’re right. Those 

are business decisions that a company is making that we the government do not have control over. 

Mr. RICE. Weren’t they created with government money, taxpayer money? 

Secretary BURWELL. They were created with government loans, 

loans that were cut in terms of—— 

Mr. RICE. Let me ask you this. 

Secretary BURWELL [continuing]. The support that they were 

going to get. 

Mr. RICE. I’m running out of time, but let me ask you this: Eight 

million people in 2014 paid a penalty for not signing up for 

Obamacare. How many were enrolled? 

Secretary BURWELL. In terms of the enrollment? 

Mr. RICE. Yeah. 

Secretary BURWELL. Last year at the end of open enrollment it 

was about 11.6 million folks. 

Mr. RICE. So almost as many chose to pay a penalty rather than 

sign up. Why is that? 

Secretary BURWELL. Many people are making—— 

Chairman BRADY. Madam Secretary, if you would answer that 

in writing, I apologize. All the time is expired. I know your hard 

stop was 4:30. We have two members who have waited patiently. 

Can we finish these out? And we understand your schedule is—— 

Secretary BURWELL. Okay. I actually can delay the—yes, let’s 

stay. 

Chairman BRADY. Great. 

Mr. Smith, you’re recognized. 

Thank you, Madam Secretary. 

Mr. SMITH of Missouri. Thank you, Mr. Chairman. 

Ms. Secretary, 37 percent of Medicare Advantage beneficiaries have annual incomes below $20,000 annually. I represent one of 

the poorest congressional districts in the country. So protecting the 

Medicare Advantage program for low income beneficiaries is extremely important to my constituents. The Medicare Advantage 

program offers extra financial protection such as maximum out-ofpocket limits, extra benefits and care coordination activities. 

If plans are focused to restrict some of these benefits as a result 

of the funding cuts in the President’s budget of roughly $77 billion, 

do you believe that these cuts could result negatively, impact low 

income beneficiaries who may then face higher cost out of pocket? 

Secretary BURWELL. So what we’ve seen in terms of the 

changes that we’ve done to date in Medicare Advantage, the program continues to grow and grow in a healthy pace. We’ve seen 

premiums not have great increases and 99 percent of folks have access and coverage. And so in terms of what we’ve done to date, we 

have tried to take steps that are in ways that will not have the 

kind of impact that you’ve described. We believe what we’re proposing won’t. 

We also know that when we compare—and this gets to the entitlement issues that we began this hearing with, and it’s appropriate to end here, is the issue of in a world where we know that 

the fee for service Medicare recipients on a per capita basis are 


joloto on DSKB35BYQ1 with HEARING
74 

paying much less than these Medicare Advantage. And MedPAC 

and other have analyzed that there are changes that are important 

to saving the taxpayer money. 

And so we’re trying to get that balance so we don’t have the outcome you described. We don’t want that. But also make sure that 

as the taxpayers’ money is being used in Medicare Advantage that 

it’s being used wisely. 

Mr. SMITH of Missouri. So, yes or no, do you think the $77 billion cut is going to affect my constituents on Medicare Advantage? 

Secretary BURWELL. No, we think that what it will do is create 

many of the changes we’re proposing about competition coming 

back to the earlier point about markets. And so we believe that 

what we’re proposing will not have those negative impacts. 

Mr. SMITH of Missouri. Okay. Thank you. 

Chairman BRADY. Thank you. 

Mr. Dold for the final question. 

Mr. DOLD. Thank you, Mr. Chairman. Madam Secretary, first of 

all, thank you so much for reaching out to our office. I certainly appreciate that. And I also want to thank you for being willing to 

work with the Committee. And I think that some of the things that 

we want to do is we want very much the same things. We want 

to access to quality care at an affordable rate, and that’s certainly 

what I’m hearing from my constituents. That’s what we’re looking 

for. 

Unfortunately, as you may know, we had some market disruptions in Illinois in the fall of 2015. One of the most popular PPO 

plans basically said we’re not going to offer the PPO. 173,000 Illinoisans were forced to scramble to find a new plan in a much narrower network. And ultimately we heard—I heard on a regular 

basis that moms would have to choose between their oncologist or 

the pediatrician that they take their kids to or those types of 

things. 

The other interesting part of is that is that since open enrollment 

has closed, several of those insurance companies have expressed 

their concerns about remaining in the exchanges for 2017. So the 

question I have for you is: What are you doing or is the agency 

doing to try to help prevent market disruptions going forward? 

Secretary BURWELL. With regard to that in terms of the marketplace, the two things are, one, is it a product the customer demands, and, two, the issuers in the marketplace. We just ended 

with 12.7 folks in. The issue of market stability, we saw nine out 

of ten folks in the marketplace be in counties where there are three 

or more issuers, which is about choice and competition. 

We know we have more work to do, though, to your point. And 

we are taking those steps. We announced that there would not be 

a special enrollment period for tax issues this year, and we did that 

before December 15th to get people to come in before January 1st. 

We’ve eliminated a number of special enrollment periods. I’m sure 

you’ve heard this from a number of the issuers. That’s one of the 

things that they think will contribute to stability. 

The other thing they asked us for is estimates of their risk adjustment numbers early. So there are a series of steps that we’re 

taking to continue to promote a stable marketplace. 


joloto on DSKB35BYQ1 with HEARING
75 

Mr. DOLD. I appreciate that. A couple things with regard to the 

budget. I want to thank you on the mental health side of things, 

and there’s a lot more work that needs to happen there. But I also 

want to share my concerns with my good friend from Illinois on the 

funding for graduate medical education, and I also want to make 

sure I’m raising a concern on the biologics. Taking it down to seven 

years I think is an enormous concern with regard to innovation, 

and I think, again, signals something that we have a 12-year date 

exclusivity right now. To take it to seven is problematic in my 

view. 

Finally, I wanted to just talk to you about something that I think 

is important as we talk about waste fraud with in Medicare, and 

that’s the Medicare Common Access Card, something I’ve worked 

with Congressman Blumenauer on, Congressman Roskam. We’re 

losing approximately $60 billion in fraud admittedly by CMS. And 

what the Medicare Common Access Card would do is have a chip 

in it. Right now we’ve got identity theft running rampant. This is 

an issue for seniors. Would CMS be interested or at least open to 

a pilot program doing a Medicare Common Access Card? 

Secretary BURWELL. As I mentioned when Mr. Roskam asked 

about it, I want to look into figuring out what are our authorities 

and how this would work. 

Mr. DOLD. I certainly appreciate that. Thank you, Madam Secretary. 

Chairman BRADY. Thank you all. Time has expired. We had an 

earlier discussion about the comparisons between Part D and the 

VA. Without objection, I’ll submit for the record a letter from CBO 

outlining their reasons why it would simply not result in savings. 

So ordered. 

[The information follows:] 


joloto on DSKB35BYQ1 with HEARING
76 


joloto on DSKB35BYQ1 with HEARING22185.033

0 CONGRESSIONAL BUDGET OFFICE 

U.S. Congress 

Washington, DC 20515 

Honorable Ron Wyden 

United States Senate 

Washington, DC 20510 

Dear Senator: 

Peter R. Orszag, Director 

April 10,2007 

You asked a number of questions relating to the Medicare drug benefit and options for allowing 

the Secretary of Health and Human Services (HHS) to negotiate over the prices paid for dnrgs 

under that benefit. The Medicare Modernization Act contained a provision that prohibits the 

Secretary both from interfering in the negotiations between drug manufacturers and the 

prescription drug plans (POPs) that deliver the Medicare benefit, and from requiring a particular 

formulary or instituting a price structure for the reimbursement of covered drugs. 

Responses to the questions you raised are below. 

Could negotiating by the Secretar y over drug p•·ices obtain savings for the M ed icare 

program if those negotiations wer e limited to sel ective instances? 

As the Congressional Budget Office (CBO) indicated in a previous letter, negotiations limited to 

a few selected drugs or types of drugs could potentially generate cost savings.• For example, 

negotiations could be focused on drugs with no close substitutes or those with relatively high 

prices under Medicare. In such cases, CBO assumes that the effect of the Secretary's actions-if 

he or she took advantage of the new authority-would primarily renect the use of the "bully 

pulpit" to pressure drug manufacturers into reducing prices. 

Although cost savings might be possible in selective instances, the impact on Medicare's overall 

drug spending would likely be limited. Bully pulpit strategies would probably be effective only if 

they were constrained to a small number of drugs; otherwise, the pressure of the spotlight would 

be dissipated. Consequentl y, spending on the small number of affected drugs would likely 

account for only a small fraction of expenditures under the Medicare drug benefit. Furthermore, 

even if the Secretary focused on a select number of drugs, the effect might be limited because 

pressure from POPs and public relations concerns already affect pricing-so the incremental 

effect of giving HHS additional options for exerting pressure would generally be small. Finally, 

drug manufacturers could seek to limit the impact of the Secretary's actions by setting higher 

initial prices for their drugs, to offset any potential price concessions from negotiations with the 

Secretary. As a result, CBO expects that the overall impact on federal spending from 

1 See Congressional Boodgco Orticc, Lcucr 10 the Honorable Ron Wyden regarding ohe aooohorioy 10 negotiaoc prices 

for single-source drugs for Medicare beneficiaries (March 3, 2004). 

www.cbo.gov 
77 


joloto on DSKB35BYQ1 with HEARING22185.034

Honorable Ron Wyden 

Page2 

negotiations targeted at selected drugs would be modest. Beyond that general conclusion, the 

precise effect of any specific proposal would depend importantly on its details. 

Recent negotiations over Cipro and FluMist showed significant savings relative to prevail ing 

commercial prices, but several factors substantially l imi t their relevance to Medicare 

negotiations. In the case of Cipro, which can be used to treat anthrax, the relevant negotiations 

were conducted in the climate of a national emergency immediately following the auacks of 

September ll'h and deaths from anthrax-laced letters. FUJ1hermore, Cipro's patent protection was 

close to expiring and several manufacturers were poised to produce that drug once the patelll 

expired. That set of circumstances gave particular force to the threat issued by Secretary 

Thompson to seek authority for generic production of Cipro, which was apparently instrumental 

in bringing the negotiations to a close. FluMist, a nasal form of flu vaccine, was relati vely new at 

the time of the relevant negotiations. T he manufacturers of that product apparently overestimated 

detnand for it and therefore had large stockpi les on hand that would have l iu le or no use once the 

flu season ended. Although HHS was able to negotiate price reductions for FluMist in December 

2003, its manufacturer chose soon thereafter to give away a substantial quantity of the vaccine 

free of charge- and even then demand apparently remained low. The exceptional circumstances 

associated with those two examples limit their applicability to the case of drugs covered by the 

M edicare benefit. 

If the Sect·etary were gi ven author ity to negotiate by Congr ess and used that authority, 

would it be possible to obtain savings to M cdicar·e? 

The key factor in determining whether negotiations would lead to price reductions is the leverage 

that the Secretary would have to secure larger price concessions from drug manufacturers than 

competing POPs currently obtain2 When several drugs are available to treat the same medical 

condition, POPs can secure rebates from selected drug manufacturers by giving their drugs 

preferred status within formularies. Because enrollees are encouraged to use such preferred drugs 

(through lower cost-sharing requirements), manufacturers are wi l ling to offer price concessions 

to the POPs in order to give their drugs preferred status and thereby increase their market share. 

By itself, giving the Secretary broad authority to negotiate drug prices would not provide the 

leverage necessary to generate lower prices than those obtained by PDPs and thus would have a 

negligible effect on Medicare drug spending. Negotiation is likely to be effective only if it is 

accompanied by some source of pressure on drug manufacturers to secure price concessions. The 

authority to establ ish a formulary, set prices administratively, or take other regulatory actions 

against firms failing to offer price reductions could give the Secretary the ability to obtain 

significant discounts in negotiations with drug manufacturers. In the absence of such 

2 See Congressional Budget Oflicc. Leuer to the Honorable William H. Frist, M.D .. regarding CBO's estimate of 

the effcet of striking the "noninterference" po·ovision as added by P.L. 108-173. the Medicare Prescription Drug. 

Improvement, and Modernization Act of 2003 (January 23, 2004}; and Congressional Budget Office, cost estimate 

for H .R. 4, the Medicare Prescription Drug Price Negotiation Act of 2007 (January 10, 2007). 
78 


joloto on DSKB35BYQ1 with HEARING22185.035

Honorable Ron W yden 

Page3 

authority, the Secretary's ability to issue credible threats or take other actions in an effort to 

obtain significan t discounts would be limited. Broad negotiating authority would not necessarily 

result in the type of targeted approach that could produce savings. CBO thus estimates that 

providing broad negotiating authority by itself would likely have a negligible effect on federal 

spending. 

Since 2003, has anything changed-other· than the Sccr ctar·y saying he would not 

negotiate- that would indicate whether such negotiation would be successful? 

Since the enactment of the M edicare Modernization Act, HHS has issued certain regulations to 

implement the drug benefit that suggest a reluctance to limit the availability of drugs to enrollees, 

even if the result is somewhat higher drug spending. 

Under the act, POPs are required to cover at least two drugs in each therapeutic class of drugs 

that treat the same condition. Because a common definition of therapeutic classes did not exist, 

the law also provided for U.S. Pharmacopoeia, a pri vate standard-setting entity, to establish a 

model set of classes, which POPs were encouraged but not required to follow. In its regulations, 

HHS required POPs to cover all or substantially all drugs in several important classes, including 

antipsychotic medications. (That requirement was established on the grounds that failure to cover 

such a broad set of medications would discourage individuals from enrolling in the benefit or in a 

drug plan that provided less extensi ve coverage.) In addition, those regulations encouraged POPs 

to cover at least one drug in each subclass of drugs that U.S. Pharmacopoeia specified, even 

though that was not required under the legislation. The regulations reduced the rebates that POPs 

can secure and raised the cost of the drug benefit? T he motivations affecting those regulations 

would presumably also affect the negotiating stance of the Secretary,limiting the l ikel ihood that 

the negotiations would yield lower drug prices. At the same time, the regulations have reduced 

the rebates obtained by POPs and thus created some potential for additional savings. 

T he current HHS Secretary has indicated that he would not pursue drug price negotiation if given 

the authority to do so, and it is difficul t for CBO to predict what actions future HHS Secretaries 

might or might not take. Simply put, it may be difficult through legislation to force a Secretary to 

pursue negotiations aggressively if he or she is reluctant to do so. 

3 See Congressional Budget Ofr.cc, All A11tliysis of the Presidem's Budgetary Proposals for 2006 (March 2005), 

Appendix A, and Congressional Budget Oflice, L.cuer to the Honorable Joe Barton and the Honomble Jim McCrery 

regarding potential effects of disclosing price rebates on the Medicare drug benefit (March 12, 2007). 
79 

f 


joloto on DSKB35BYQ1 with HEARING22185.036

Honorable Ron Wyden 

Page4 

l hope this analysis is helpful to you. If you would like additional information on this subject, 

CBO would be pleased to provide it. The staff contacts for this analysis are Tom Bradley and 

Philip Ellis. 

cc: Honorable Max Baucus 

Chairman 

Committee on Finance 

Honorable Charles E. Grassley 

Ranking Member 

Sincerely, 

~/L~ Peter R. Orszag 

Director 
80 

Chairman BRADY. Madam Secretary, I want to thank you for 

appearing for us and extending your time. While we have disagreements, you have been very professional, very responsive and clearly 

dedicated to your job. So thank you very much for being here today. 

Members may submit written questions be answered later in writing. Those questions and your answers will be made part of the formal hearing. With that, to Madam Secretary and others, the Committee stands adjourned. 

[Whereupon, at 4:42 p.m., the Committee was adjourned.] 

[Questions for the record follow:] 


joloto on DSKB35BYQ1 with HEARING
81 


joloto on DSKB35BYQ1 with HEARING22185.037

Secr·etary Burwell's Hearing on 

"The ]>resident's Fiscal Year 2017 Budget" 

Ways & Means Conunittee 

Feb..uary 10, 2016 

All responses are accurate as of Febru01y 10. 2016 

Questions fm· the Record: Secr·etarv Bm·well 

Questions from Rep ese~~tative Tiberi ofO/tio: 

Secr eta ry Bm·weU, as you well know, Qbamacare's CO-OP pr·ogr-nm has been a 

disaster·. Aft.er· using the Amer·ican taxpayer· as a piggybank, mor e than half of these 

entities have failed. I know many of my colleagues shar·e my concer·ns, and I want to 

highlight a recent incident with a CO-OP in Ohio, InHealth. Press reports have 

indicated tJ1at InHealth is under· enhanced oversight, which means CMS is 

concerned about its fmanciaJ sta bility and is closely monit.oring its oper-ations. 

About 9,000 Ohioans ar·e enrolled in In Health, and they r•ecently got some 

surprising news: at the lnst minut.e, InHeaJth decided to drop most OhioHenJth 

hospitals and doctor'S fr·om their provider· n etwor·k leaving them with few options 

now that open enrollment has passed. Now, I understand that this Obamacare COOP is st..uggling-- that's what happens when Washington thinks it knows best and 

engages in crony capitalism. And I understand that they a r-e just. one of mnny 

issuers forced to nar-row provider networ·ks because of Obamacar·e's rnandat.es and 

r·eguJations. 

But w hat I don't under·stand is how an Administration that crows about consumer 

and patient protections in the Pr·esident's health care law c:m allow a C0 -01' it is so 

closely monitoring to pull the wool over people's eyes and not announce major 

changes to pro'\ider net:wor·ks until after the open enrollment period has passed. 

1. Secr etary Bm·well, is monitoring decisions a bout providers networks part of 

CMS's enhanced over"Sight of the CO-OPs? Will ther e be r ecourse for 

enr ollees who feel tricked ? 

Answer: We are focused on monitoring and supporting the remaining CO-OPs and 

making sure that consumers whose CO-OPs will not offer coverage for 2016 retain 

access to high-quality, affordable health insurance. 

'll1ere are inherent risks in any start up; the insurance market is especially challenging. 

Each CO-OP is different and faces its own unique challenges. CO-OPs entered the health 

insurance market with a number of challenges, including: buildiJlg a provider network 
82 


joloto on DSKB35BYQ1 with HEARING22185.038

and no previous claims experience on which to base pricing, while facing competition 

from larger, experienced issuers. 

Provider networks are established via private contracts between health care providers and 

insurers, including CO-OPs, who frequently negotiate about the tenus of such 

agreements, and frequently change from year to year. We continue to monitor network 

adequacy to detennine whether networks meet requirements, and will work with state 

departments of insurance to resolve consumer complaints. 

While ! understand the disruption a decision like this can cause for consumers, it is 

intportant to note that plans still must maimain adequate wo ~ that meet federal and 

state standards. If consumers are concemed that their plans aren 't meeting these 

standards, they should contact their state Department of Insurance, which has primary 

authority for overseeing network adequacy. 

2. Secr etary Burwell, I was intdgu ed by the statement in the budget that the 

Adminish·ation believes it has incr eased the solvency of the Hospital Tm st 

Fund by 15 yeai'S. 

Can you provide the Conunitt.ee with a detailed breakdown of the policies 

that yield enough savings t o gain 15 yea1-s? 

Answe1·: 1l1e proposed changes in health and tax policies included in the FY 2017 

budget would help extend the life of the Medicare Hospital hJstrrance Trust Fund by 

over 15 years. l l1ese changes are outlined in the second response below. 

3. Specifically, can you highlight the Medicare Pa1"t A savings and the increased 

taxes the Administ1'3tion has identified to a chie,•e this outcome? 

Answer: Budget proposals that generate significant Pa1t A savings and thereby help 

e;..iend the life of the Trust Fund include proposals that support delivery system reform. 

promote efficient care, and align payments more closely with costs of care in both 

traditional Medicare and Medicare Advantage. 

In addition, the revenue proposal, "Rationalize Net Investment Lncome and SelfEmployment Contributions Act (SECA) Taxes," will also help e:-1end the life of the 

Medicare Trust Fund. 111e proposal would ensures that all business income of highincome taxpayers is subject to the 3.8 percent net investment income tax (NIIl), while 

dedicating all new and current tax revenue from the NUT to Medicare's Hospital 

hlsurance Tmst Ftmd. 

4. How much, in total and year-by-year, is needed to extend solvency fo1· 15 

yeru-s? 

2 
83 


joloto on DSKB35BYQ1 with HEARING22185.039

Answer·: During the 10-year budget window, the FY 2017 Budget's Medicare legislative 

proposals will save a net $4 I 9 billion (over a third of which would impact spending from 

the Hospital Insurance Trust Fund), wbile the net investment income tax proposal would 

dedicate over $500 billion to the Hospital Insurance Trust Fund. While the Budget 

projects savings over a 10-year period, savings from these proposals would grow over 

time and would be sufficient to extend solvency of the Part A Trust Fund by over 15 

years. 

(Dollars in Millions, negative numbers renect savings) 

5 Years 10 Years 

FY 2017 FYs 17-21 FYs 17-26 

Total Medicare Legislative Savings (3,729) (98,215) (419,438) 

Proposals (Parts A, B, C, and D) 

Rationalize Net Investment Income and (389) (194,215) (524,774) 

Self~ Employment Contributions Act 

Taxes (Effects on the Hospital 

Insurance Trust Fund) 

Total (4,118) (292,430) (962,212) 

Questions for Representati••e Holding ofNortlt Carolina: 

Secretm-y Burwell, I Ullderstand that you heanl from North Carolina's InsunUJce 

Conunissioner· ear·Uer this month. Accor·ding to Commissioner· Goodwin's letter· to 

you, he is ' highly concem ed1 that 'insurers may withdr·aw from the individual 

market in Nor1h Ca rolina altogether.> ln Nor1h Car·oUna, ther·e are only thr·ee 

Qualified Health Plans (QHPs), ''ith the lar gest covering over· two-thiJ·ds of the 

ma rket. They have been appr·ovetl for a n avemge m te hike of 32..5 per·cent for· 1016. 

J. As insurer'S prh•ately discuss whether to continue to raise mtes a nother· 30% 

or pull out of the ma r·ket entir-ely, how would you exphlin to Nor1h 

Carolinians that the mar·ket is wor·king for them? 

Answer: HHS' priority is to provide Marketplace customers with access to qua lity, 

affordable coverage. In the years since the passage of the Affordable Care Act, we bave 

seen increased competition ~unong health plans and more choices for consumers.

1 During 

the third Marketplace Open Enrollment, nine out often returning customers were able to 

choose from three or more issuers lor 2016 coverage, up from seven in ten in 2014. In 

North Carolina specifically, 74 percent of consumers had the option to purchase coverage 

for S75 per month or less after the advance premium tax credit . 

1 www bhS:goy/about/oewsi2015JQ7/30/comoetitjon-and=ehojce-in-the-health-insurance-marketplacelowered-oremiums-in-2015.html 1 hllps;//asoe.hhs.gov/sites/default/files/pdf/1721761201 6Healthlnsumnce.OOf 

3 
84 


joloto on DSKB35BYQ1 with HEARING22185.040

At the end of open enrollment in January, about 12.7 million Americans, including 

6 13,487 North Carolinians, selected or were automatically reenrolled in affordable, 

quality health plans for 20 16 coverage through the Marketplaces.3 Based on analysis 

through late December 2015, more than 8 in 10 individuals who enrolled in a 20 16 

Marketplace plan qualified for an advance premium tax credit for the 20 16 plan year. 

As for the rates in North Carolina, ACA Marketplaces help consumers shop around for 

the best deal. Marketplace consumers can purchase any available plan regardless of 

health conditions, and tools such as the doctor lookup and out-of-pocket cost calculator 

help them find the plan that meets their needs. Last year, 2.39 million returning 

HealthCare.gov consumers, more than 40%, switched plans. They saved an average of 

$42 per month, or about $500 annuall y.4 ln contrast, average rate changes reported in rate 

fi lings assume that all consumers stick with their current health insurance plan. In 

particular, they assume that no consumers enroll in any new plans offered for 2017, even 

though new plans frequently offer lower prices. This doesn't reflect reality, given that a 

large share of returning Marketplace consumers switched plans last year. 

In addition, preliminary rates are not final rates. Preliminary rates often change 

significantly before being fina lized. In particular, they are subject to state regulator 

review, which led to $ 1.5 billion in savings for consumers in 2015. Last year, final rates 

in some states were below proposed rates. Lastly, it is important to remember that tax 

credits go up along with premiums. 85% of Marketplace consumers receive tax credits, 

which are designed to protect consumers from premium increases and help make 

coverage affordable. Tax credits increase if the cost of the second lowest-cost silver, or 

benchmark, plan goes up. So if all premiums in a market go up by similar amounts, 85% 

of Marketplace consumers in that market will not necessarily pay more because their tax 

credits will go up to compensate. Rate increases reported in the rate fil ings do not account 

for tax credits. 

Moving forward, HHS is eager to build on the progress in reducing the number of 

uninsured Americans - an estimated 17.6 million Americans gained coverage as the 

Affordable Care Act's coverage provisions have taken effect,

5 and the Nation's uninsured 

rate is below I 0 percent for the first time since data collection began over five decades 

ago. And because of the ACA, Americans across the country have access to better 

insurance, no matter where it's purchased. 

Six years ago, if you were one of America's 13.7 million cancer survivors, or the millions 

living with a chronic disease, it was almost impossible to get health insurance. Today, no 

one can be denied coverage because of a pre-existing condition. 

3 https://www.cms. gov/Ncwsroom/MediaRclcascDatabasc/Fact·ShcciS/?0 16·Fact-shcets-item:;t2Q 16-02. 

04.html 

' hup://www. hhs.gov/blog/20 16/04/ 12/premiums-tast· year -much-lower-than-ini! ial-rates-suggested.html 

s https://aspc. hhs. gov/health· i nsurance-co, er~ge-and-a fl'ordable-care-act·asoe·issue·brie f-september • 20 I 5 

4 
85 


joloto on DSKB35BYQ1 with HEARING22185.041

Six years ago, having insurance didn't necessarily mean you would get any help paying 

for basic care. Today, 137 million Americans with private insurance have preventive care 

at no extra cost. 

And six years ago, families had to worry that their insurance would stop paying claims 

when they needed it most. Even if you never missed a premium payment, a major illness 

could mean bankruptcy. Today, annual and lifetime caps on most benefits are gone and 

families are protected. 

As you know, individuals are able to purchase health insurance outside of the 

annual open enrollment period if they prove to HHS that they have experienced a 

' qualifying life event.' .Insurers have told HHS that consumers enrolled through 

special enrollment periods are utilizing up to 55 percent more services than those 

consumers that enrolled during the open enrollment period. I have heard from 

insurers in my state that these special enrollment pel'iods are ' being gamed.' 

Without confidence that HHS will properly process or deny special enrollment 

period applications, insurers may choose to not offer their products on the 

exchange. 

2. What actions is HHS taking to prevent individuals from 'gaming the system> 

and what actions is the agency taking to r eassur e insurers that this is not 

taking place? 

Answer: Special enrollment periods (SEPs) are one way to make sure that people who 

lose health insurance during the year or who experience major life changes like getting 

married have the opportunity to enroll in coverage outside of the annual Open Enrollment 

period. SEPs are a longstanding feature of employer insurance. We are committed to 

making sure that SEPs are available to those who qualify for them, while also putting in 

place measures to protect SEP program integrity. 

We continue to review the rules around SEPs in order to keep them fair for issuers and 

for consumers. We have announced several changes including: 

• clarifying language to make the rules of the road are clear to everyone, 

• reviewing all SEPs and eliminating those that are no longer necessary, such as: 

o Consumers who enrolled with too much in advance payments of the 

premium tax credit because of a redundant or duplicate policy 

o Consumers who were affected by an error in the treatment of Social 

Security income for tax dependents 

o Lawfully present non-citizens that were affected by a system error in 

determination of their advance payments of the premium tax credit 

o Lawfully present non-citizens with incomes below 100% FPL who 

experienced certain processing delays 

o Consumers who were eligible for or enrolled in COBRA and not 

sufficiently informed about their coverage options 

o Consumers who were previously enrolled in the Pre-Existing Condition 

Health Insurance Program; and 

5 
86 


joloto on DSKB35BYQ1 with HEARING22185.042

• providing stronger enforcement so that special enrollment periods serve the 

purpose for which they are intended and do not provide unintended loopholes. 

We will continue to monitor how special enrollment periods are used and we 

anticipate that we may make changes in the nature. 

Question from Represemati1•e Do/d of Illinois: 

Secr etary Burwell, I have become aware of a measure moving thr·ough the World 

Health Organization that seeks to prohibit the marketing of any milk products 

consumed by young children up to th r·ee yea rs of age. My mtderstanding is that this 

was developed with little or· no public input. Tltis measure carries significant public 

health, trade and economic implications for· the U.S. dair-y irtdush -y that need to be 

further· examined. 

o \>Vill you comntit to wor·king with tltis Committee and all impacted 

stakeh older-s to haJt tills process untiJ these implications ar-e fully 

understood? 

Answer·: At the request of Member States, the World Health Organization (WHO) 

developed draft guidance on ending the inappropriate promotion of foods for inf ants and 

young children,

6 and presented it to the WHO Executive Board (EB) for potential 

endorsement. Tit is draft guidance aims to support cotmtries in protecting and promoting 

optimaluutrition for children during the first three years of life, a critical window for 

health and nutrition outcomes. 

WHO developed the draft guidance using a Scientific and Technical Advisory Group 

(STAG) process. l11e STAG was convened in2013 and produced several repoa1s, 

including a draft of the guidance that was presented to WHO in 2015. WHO beld online 

and in-person public consultations in August 2015, revised the guidance, and presented it 

to Member States for the WHO Executive Board (EB) meeting in January 201 6. During 

the EB meeting, WHO agreed to hold an additional consultation from 1-29 Febmary 

20 16 to allow time for further Member State comment. l11e guidance is not binding on 

Member States. 

·n1e WHO draft guidance advises Member States on ending inappropriate promotion to 

consumers of foods for infants and young children, not to limit product availability. The 

draft does not seek to prohibit the marketing of all milk products consumed by young 

children, or to revise recommendations for optimal infant and child feeding practices. 1l1e 

document does recommend that countries prohibit the promotion of breast-milk 

substitutes marketed for feediJtg children up to three years of age. 

HHS is working with other relevant Federal agencies (including Depa1tment of State, 

Department of Conm1erce, USTR, USAID, USDA, among otl1ers) to prepare a teclmical 

6 As presented in report EB138/8: Ma erna~ infant and young child nutrition. Available at 

http://apps. who. intlgblebwha/odf files!EB 138fB 138 8-en.pdf (Accessed March 14, 2016). 

6 
87 


joloto on DSKB35BYQ1 with HEARING22185.043

comment submission to WHO, and has had multiple conversations with stakeholders on 

the matter. HHS will continue to work with the other agencies and discuss remaining 

coucems with stakeholders. 

Questions from Representative lvfeehan Pennsylvania: 

President Obama p•·omised that Obamaeare will be affordable. The fact is that 

individuals and families have been subject to double-digit incr eases in premiums 

and deductibles. The p•·eJniums for the second-lowest p1·iced silver plan increa.sed 

by neal'ly 11 o/o in Pennsylvania between 2015 and 2016. This is consistent. with the 

average national premiwn increase of 11.3% for a silve•· tier phln. NatiouaUy, the 

average deductibles for the lowest-cost Obamacar e plans inCI'eased from 2015 to 

2016 by 10.6% for individuals and 10% for families. A highe1· deductible means 

higheJ' out-of-pocket expenses for individuals and fnntilies. And as a J'esolt, 

individuals a1-e putting otT medical ca1-e. Republicans nrc worlilltg on delive•·ing on 

the p•·omise of expandiltg access to nffordable health care insumnce coverage. 

1. Wh at am I supposed to teD my constituents ltbout why Obantacare is 

increasingly unaffo•·dable? 

Answer: The Affordable Care Act takes significant steps towards ex')Janding coverage 

and improving access to health care while also improving the quality and atfordability of 

health care for all Americans. It strengthens the private health insurance market and 

ex1ends financial assistance to moderate-and low-income Americans to help make health 

insurance coverage more affordable. For example, for consumers in the 38 states using 

the bealthcare.gov platfomt, more than 8 in 10 individuals who em·olled in a 2016 

Marketplace plan qualified for an advance premium lax credit with an average value of 

$294 per person per month7

• In fact, most people can fmd monthly premiutns for $75 or 

less, after fmancial assistance. 

ACA Marketplaces help consumers shop around for the best deaL Marketplace 

consumers can purchase any available plan regardless of health conditions, and tools such 

as the doctor lookup and out-of-pocket cost calculator help them find the plan that meets 

their needs. Last year, 2.39 million retuming HealthCare.gov consumers, more than 40%, 

switched plans. 1l1ey saved an average of $42 per month, or about $500 annua lly. 

8 In 

contrast, average rate changes reported in rate filings assume that all consumers stick 

with their cutTen! health insurance plan. In particular, they assume that uo consumers 

em·oll in any new plans offered for 2017, even though new plans frequently offer lower 

prices. "01is doesn't reflect reality, given that a large share of returning Marketplace 

consumers switched plans last year. 

7 https://aspe.hhs.gov/odf-reoort/health-insurance-marketplaces-20 16-average-orem ium s-a fter -advanceFremium-tax-eredits-38-states-using-healthcaregov-eligibilitv-and·cnrollmcnt-plntform 

http://www.hhs.gov/blog/2016104/12/premiums-last-year-much-lower-than-initial-rates-suggested.html 

7 
88 


joloto on DSKB35BYQ1 with HEARING22185.044

Lastly, it is important to remember that tax credits go up along with premiums. 85% of 

Marketplac-e consumers receive tax credits, which are designed to protect consumers 

from premium increases and help make coverage affordable. Tax credits increase if the 

cost of the second lowest-cost silver, or benchmark, plan goes up. So if all premiums in a 

market go up by similar amounts, 85% of Marketplace consumers in that market will not 

necessarily pay more because their tax credits will go up to compensate. Rate increases 

reported in the rate filings do not account for tax credits. 

I am concem ed that HHS is proposing Medicare policies that are not patientcentered and would likely drive up Medicar e spending . . For example, the 

Administration proposes to implement a $100 per episode co-payment for home 

health services that are not preceded by an inpatient hospital stay for all new 

beneficiaries. Despite the Admjnistration's estimate of cost savings, the Medicare 

Payment Advisory Commission (MedPAC) has highlighted that a disadvantage of 

requiring beneficiary cost-sharing for home health is that it could encourage 

Medkare beneficiaries to use more expensive post-acute care settings. In the 1960s, 

Medica•·e •·equired a co-payment for home health services. In •·epealing the co-pay 

in 1972, Cong•·ess recognized that the co-payment resulted in shifts to more costly 

settings. 

2. Why would the Administration propose a policy that Congress has already 

rejected? 

Answer: Thank you for raising this important issue. This proposal is consistent with 

Medicare Payment Advisory Commission (MedPAC) recommendations to introduce a 

copayment for these services. MedPAC notes that beneficiaries without a prior 

hospitalization account for a rising share of home health episodes and that adding 

beneficiary cost sharing for home health care could be an additional measure to 

encourage appropriate use of home health services. Since many of these services are 

funded by Medicare Part B, MedPAC notes that decreases in home health spending 

growth would reduce Part B premiums. 

While home health utilization and spending have grown over the past decade, home 

health services represent one of the few areas in fee-for-service Medicare that does not 

currently include beneficiary cost-sharing. Adding cost-sharing is expected to 

encourage beneticiaries to consider the appropriate use of home health services. 

This proposal has appropriate safeguards to make sure that its implementation will not 

unfairly burden beneficiaries or restrict access to care. We appreciate your concern and 

would be happy to answer additional questions or provide a staff-level briefing. 

The 12 years of data exclusivity for biologics may be among the few areas of 

bipartisan agreement in the Affordable Care Act. I am disappointed that the 

Administration undercut U.S. law by negotiating data exclusivity of less than 12 

years in the Trans-Pacific Partnership and is now proposing to reduce the market 

8 
89 


joloto on DSKB35BYQ1 with HEARING22185.045

exclusivity period to 7 yea rs. While the Administr ation suggests that reducing 

exclusivity prevents high drug prices, the Administration fails to acknowledge the 

reduction's potential effect on innovation. 

3. Why does the Administration reject the ACA's carefully negotiated 12 years 

of data exclusivity and what calculation has HHS made as to the impact on 

the innovation of novel biologics? 

Answer: The budget proposal to reduce the exclusivity period to 7 years in the United 

States is one of several proposed reforms designed to increase access to generic drugs and 

biologics. 

With regard to the Trans-Pacific Partnership (TPP) Agreement, the U.S. opening 

proposals on pharmaceutical intellectual property provisions were based on existing U.S. 

law, under which the current standard for market exclusivity for biologic drugs is 12 

years. Biologics exclusivity was one of the most challenging issues in the TPP 

negotiations. The Administration fought hard for an outcome as close to U.S. Jaw as 

possible. The result was a negotiated compromise that guarantees 8 years of protection 

for biologics by our TPP partners. This level of protection for biologics still spurs 

innovation in biologic medicine, which offers great potential for new treatments and 

cures. 

I am concerned that the ACA's reduction in Disproportionate Share Hospital (OSH) 

payments minimizes the correlation between participation in the Medicare DSH 

program and higher Medicare costs for urban hospitals with more than 1.00 beds 

like those that serve and employ individuals in my District. The problem is further 

exacerbated by CMS' switch to using the S-10 worksheet to calculate 

uncompensated care. My understanding is that the S-10 is not consistent with how 

hospitals repo•·t data. One analysis finds that Pennsylvania hospitals in the 

aggregate would see a 43.6% loss in payments as a result of the switch to S-10. If 

CMS is interested in capturing data more broadly, the Agency must ensure that it 

does not cherry pick data points to paint the picture it wants to see. In seeking to 

know what supplemental payments a hospital receives, CMS should not be bl.ind to 

a hospital's Medicare losses. 

4. What is the status of CMS' efforts to implement the S-10? 

Answer: The Affordable Care Act modified the method for computing Medicare DSH 

adjustments, beginning in 2014, and for each subsequent fisca l year. Under this 

provision, hospitals eligible to receive Medicare DSH payments receive 25 percent of the 

amount they would have received under the statutory formu la for Medicare DSH 

payments previously in effect. The remaining amount, equal to 75 percent of what 

otherwise would have been paid as Medicare DSH payments, will be paid to Medicare 

DSH hospitals based on their share of the total amount of uncompensated care for all 

Medicare DSH hospitals for a given time period. In addition, the Secretary has the 

9 
90 


joloto on DSKB35BYQ1 with HEARING22185.046

authority to estimate uncompensated care based on appropriate data, including altemative 

data where the Secretary feels that proxy data is a better estimate for the costs of treating 

the uninsured. 

ln FY 2014, CMS determined that Worksheet S-10 of the Medicare cost report could 

potentially provide the most complete data for Medicare hospitals. For a full report on the 

potential data sources considered, please visit: http://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/Acute lnpatientPPS/dsh.html. At the time, CMS also noted that 

Worksheet S-10 is a re latively new data source that has been used for specific payment 

purposes only in relatively restricted ways (for example, to provide a source of charity 

care charges in the computation of EHR incentive payments). 

Because of concems regarding variations in the data reported on Worksheet S- 1 0 of the 

Medicare cost report and the completeness of these data, CMS did not propose to use data 

from the Worksheet S-1 0 to determine the amount of uncompensated care for FY 20 14. 

However, since FY 20 14 hospitals have been on notice that Worksheet S- 1 0 could 

eventually become the data source for CMS to calculate uncompensated care payments. 

CMS continues to be lieve reporting on Worksheet S- 1 0 will improve over time 

particularly in the area of charity care reporting, which is already being used and audited 

for payment determinations related to the EHR Incentive Program. 

CMS has stated that they may proceed with a proposal to use data on the Worksheet S-1 0 

to determine uncompensated care costs in the future. The Worksheet S-1 0 could 

ultimately serve as an effective source of more direct data regarding uncompensated care 

costs for purposes of determining the allocation of uncompensated care payments once 

hospitals are submitting accurate and consistent data through this reporting mechanism. 

In the interim, CMS is committed to taking steps such as revising and clarifying cost 

report instructions, as appropriate. 

As you know, 43 colleagues joined me in sending a letter to CMS outlining concerns 

with the way the Agency is implementing Medicar e payment reform for clinica l 

laboratories as required by the Protecting Access to Medicare Act of 20 14. We are 

currently awaiting a response from CMS. I'm hoping you can address several 

concerns. 

S. Wby did CMS exclude a number of laboratories from the r eporting process? 

Wouldn't you expect this exclusion to skew the market data resulting in 

Medicare rates that a re not reflective of market r a tes? 

Answe r: We appreciate your concems. As CMS's January g•h response noted, we are in 

active rulemaking on this topic and cannot provide much comment, but will be sure your 

comments are considered as CMS prepares the fi na l rule. If you did not receive the letter, 

please let us know and we would be happy to send you a copy. In October 2015, CMS 

published a proposed rule to implement section 216 of the Protecting Access to Medicare 

Act of20 14 (PAMA) requiring applicable clinical laboratories to report on how much 

private insurers pay for laboratory tests, which will be used as the basis for new Medicare 

10 
91 


joloto on DSKB35BYQ1 with HEARING22185.047

payment rates. In the proposed rule, CMS proposed to define the term " laboratory" 

according to the definition used in the Clinical Laboratory Improvement Amendments 

(CUA) regulations. We also addressed how to meet the statutory requirement that an 

"applicable laboratory" receive a majority of its Medicare revenues from the clinical 

laboratory fee schedule or the physician fee schedule. In addition, we proposed a low 

expenditure threshold to reduce the reporting burden on small laboratories, as authorized 

byPAMA. 

We are currently reviewing the public comments received in response to the proposed 

rule, including many comments regarding the definition of an "applicable laboratory". 

We will carefully consider those comments in developing a final rule implementing 

PAMA. 

6. In light of clear statutory language, why did CMS exclude ''proteins" from 

the biomarkers t hat an Advanced Diagnostic Labor atory Test must be able 

to analyze? What is the status of implementation and has t he Agency made 

any adjustments to the implementation timeline? 

Answer: The Protecting Access to Medicare Act of2014 (PAMA) defines an Advanced 

Diagnostic Laboratory Test (ADL T) as "a clinical diagnostic laboratory test covered 

under Medicare Part B that is offered and furnished only by a single laboratory and not 

sold for use by a laboratory other than the original developing laboratory (or a successor 

owner)". To qualify as an ADL T (which receives special treatment under the new 

payment system established by PAMA), the test must also meet one of three additional 

criteria, including (as one option) that the test is "an analysis of multiple biomarkers of 

DNA, RNA, or proteins combined with a unique algorithm to yield a single patientspecific result." 

ln its proposed rule published in October 2015, CMS considered how best to 

operationalize this complex statutory definition. CMS subsequently received many 

comments on the proposed rule including comments on the proposed definition of an 

ADLT. We are currently reviewing those public comments and we will carefully 

consider them in developing a final rule implementing PAMA. 

Rep. Diane Black and I intr oduced legislation, the Federal Exchange Data Breach 

Notification Act of 20 15 (H.R.SSS), last year to r equire the government to notify 

consumers if their information is compromised on the Obamacar e excha nges. We 

1·emain concerned about the potential for breaches. 

7. Could you provide an update regarding any improvements that the 

Department of Health and Human Services (HHS) has made to the security 

a nd privacy controls for t he Obamacar e Federal Data Hub? 

II 
92 


joloto on DSKB35BYQ1 with HEARING22185.048

Answer: The privacy and security of consumers' information is a top priority. When 

consumers fill out the ir online health care Marketplace applications, the infonnation they 

are providing is protected by stringent security controls. While no system is immune from 

attempted attacks or intrusions, CMS continually maintains and strengthens the security 

of HealthCare.gov and its supporting systems. HHS conducts continuous monitoring 

using a 24/7, multi-layer IT professional security team, third-party penetration testing, 

and a change management process that includes ongoing testing and mitigation strategies 

implemented in real time. To date, no person or group has maliciously accessed 

personally identifiable information through HealthCare.gov or supporting systems. 

HHS has taken significant steps and implemented robust security controls to protect the 

security and privacy of the systems and connections supporting HealthCare.gov, 

including the Hub. HHS developed these systems consistent with federal statutes, 

guidelines, and industry standards that help safeguard the security, privacy, and integrity 

of the systems and the data that flow through them. HealthCare.gov and the Hub have 

been determined to be compliant with the Federal Information Security Modernization 

Act of2014 (FISMA), based on standards promulgated by the National Institute of 

Standards and Technology (NIST). Marketplace systems are also in compliance with a ll 

the relevant privacy and security statutes, including the Privacy Act of 1974. 

TI1e Hub and its associated systems are protected via layered security (i.e. Defense in Depth) 

to mitigate information security risk, including penetration testing, which happens on an 

ongoing basis using industry best practices to appropriately safeguard consumers' persona l 

information and agency data. As part of the ongoing testing process, and in line with federa l 

and industry standards, any open risk findings are appropriately addressed using risk 

mitigation strategies and implementing compensating controls. The security of the system is 

a lso monitored by sensors and other tools to deter and prevent unauthori zed access. 

8. What funding does HHS devote to cybersecurity protection for the exchanges 

and mor e broadly? 

Answer: The Department dedicates resources to support the responsibility of securing 

millions of individuals' personal health information, conducting highly sensitive 

biodefense work, reviewing new drug applications and clinical trial data, and issuing 

more grants than any other federa l entity. Ln FY 2016, Hl-IS is dedicating a total of$51 

million to support cybersecurity activities to ensure that the program has resources to 

appropriately plan, mitigate, and address cyber threats. The FY 2017 President's Budget 

maintains these investments. In addition to these resources, H HS agencies request 

additional support for cybersecurity through their programs. In the FY 2017 President's 

Budget, CMS requested funding to enhance cybersecurity by completing a transition to 

an enterprise approach for managing information security and privacy. 

Health Insurance Marketplace cybersecurity is part ofCMS' overall investment in 

In formation Technology for the Marketplaces. Tile FY 20 17 Budget requests a 

Marketplace IT program level of $657 million. This investment supports systems 

integration, testing, and security across the Marketplaces to ensure integration and testing 

of new code, and security standards for consumer and issuer data. CMS has implemented 

12 
93 


joloto on DSKB35BYQ1 with HEARING22185.049

secm·ity controls and reviews, including ongoing penetration testing and automated 

scatming, consistent with FISMA requirements and industry best practices. As part of the 

ongoing testing process, and in line with federal and industry standards, any open risk 

findings are addressed with risk mitigation strategies and compensating controls. 

Marketplace IT systems are continuously monitored by sensors and other tools to deter 

and prevent unauthorized access. 

The Centers for Medicnre and Medicllid Services (CMS) finalized its Medicar e l

1 at1 

B r-eimbursement policy for· biosimilars to combine aU biosimilars into one :1verage 

sales price calculntion nnd paymen t code. EtTecth'ely, the payment policy tt·eats 

biosimilar'S as if they ar·e gen etics. Biosimilnt·s a r·e not copies of one anothet·like 

generics. 

9. What is CMS' mtiona le for· the blended payment. mte for· biosimilai'S? 

Answer : Biosimiliars hold great promise for all Americans, includi11g Medicare 

beneficiaries, and CMS is committed to a payment approach that will provide a fair 

payment in a healthy marketplace. Competition fosters innovations that redefine markets. 

Overall, the availability of generic drugs, in competition with each other and with 

branded products, has improved price and availability of drugs. Competition among 

biosimilars can do the same for Medicare beneficiaries - improving quality, price, and 

access. 

While we appreciate that there are differences between multiple source drugs and 

biosimilars, from a payment policy perspective, it is reasonable to treat them similarly. 

l11ey both have significant similarities with their predecessor product (a reference 

product for biosimilars and an innovator product for generics) and they are both approved 

through an abbreviated pathway. Further, we believe that biosimilars and multiple source 

drugs will have similar marketplace attributes; like generics, biosimilars will compete for 

market share with each other as well as with the reference product. 

Given the robust marketplace for biologicals, we do not believe that a payment policy 

that encourages greater competition will drive manufacturers out of the market. To the 

contrary, we believe there is a strong need for lower cost altematives to high cost 

biologicals, and the statute provides an incentive for the development of the biosimilars 

market by providing for reimbursement that includes a 6 percent add-on of the reference 

product's Average Sales Price. 

Questio11s from Represe11tati11e Price of Georgia: 

MACRA Implementation 

Secretary Bul'\veU, in a t·eview of the pt·oposed FY 2017 Budget for th.e Centet'S fot· 

Medicar-e and Medicaid Ser-vices (CMS), I didn't see any discussion r·egat·ding how 

CMS will be distl'ibuting to medical societies the J'esour·ces provided in MACRA for 

quality measure developmen t and othet· quality r elated activities. I belie"e that 

13 
94 


joloto on DSKB35BYQ1 with HEARING22185.050

Congress provided $15 million per year starting in FY 2016 and to date none of that 

money has been made available. 

1. Can you share with the Committee HHS' plans for getting this money to the 

provider community for measure development activities? 

Answer: MACRA provides CMS with $ 15 million annually (rom FY 2015 to FY 2019 

to develop a framework for future clinician quality measurement development to support 

the Merit-based Incentive Payment System and Alternative Payment Models. To meet 

the requirements of the statute, CMS posted the draft Measure Development Plan on 

December 18, 2015, with a public comment period through March I, 20 16. Per the 

statute, the final plan will be posted in May, followed by updates thereafter as 

appropriate. This plan will be used to guide the priority areas for measure development. 

CMS recogni zes the importance of measure development as we work to implement the 

provisions of MACRA. The process of preparing a measurement proposal concept, 

seeking bids, and assessing competitive bids will soon be underway. CMS has actively 

engaged with specialty societies to Jearn about their interests in the funding, and is 

synthesizing the results of these engagement sessions in order to spend contract dollars in 

a way that meets the needs of these organizations. 

2. The President's Budget discusses the implementation of MACRA and 

alternative payment models being developed. What plans do HHS and CMS 

have in place to ensure that every altem ative payment model developed by a 

medical society that meets the criter·i a for being a qualified alternative 

payment model gets implemented and is ready for physicians to participate 

in starting January I, 2019? 

Answer: MACRA established a new independent advisory committee, the PhysicianFocused Payment Model Technical Advisory Committee (PTAC). The PTAC meets on a 

periodic basis to review physician-focused payment models submitted by individuals and 

stakeholder entities and prepare comments and recommendations on proposals that are 

received, explaining whether models meet criteria for physician-focused payment 

mode.ls. 

We look forward to receiving recommendations for new physician-focused payment 

models. We will need stakeholder engagement with the PTAC, including physicians and 

other clinicians, to suggest well designed, robust models that could meet the statutory 

criteria to be an eligible APM. 

The PTAC currently anticipates meeting on a quarterly basis to assess physician-focused 

payment model proposals, but the frequency of meetings may change depending on the 

number and complexity of proposals received. All meetings will be public, with timely, 

advance notice of meetings provided through the Federal Register. We encourage 

stakeholders to attend these meetings and provide comments and input to the PTAC on 

14 
95 


joloto on DSKB35BYQ1 with HEARING22185.051

the proposals; remarks may be made during the public comment portion of the meetings 

or comments may be submitted in writing. 

After reviewing proposals, the PTAC will prepare comments and recommendations 

regarding whether the models meet the physician-focused payment model criteria 

established by HHS. The PTAC will submit its comments and recommendations to the 

Secretary, who will then review them and post a detailed response to them on the CMS 

website. 

3. How is the money available under the Centers for Medicare and Medicaid 

Innovation (CMMI) being used to pr ovide technical assistance, data support, 

and review opportunities for p hysician societies that are developing 

alternative payment models for MACRA'? 

Answer: Congress provided funding in MACRA for CMS for technical assistance to 

small practices, rural practices, and practices in medically underserved health 

professional shortage areas. This technical assistance could be provided by entities such 

as regional extension centers and regional health collaboratives to offer guidance and 

assistance to physicians and other clinicians. 

The technical assistance is to focus on the performance categories under the Merit-based 

Incentive Payment System (MLPS), helping to make it as seamless as possible for these 

clinicians and practices to comply with MIPS requirements and helping interested 

practices transition to implementation of and participation in an alternative payment 

model (APM). 

We requested feedback from the physician and broader clinician community last year on 

how best to implement this technical assistance. We anticipate releasing a proposed 

MACRA implementation rule, including a 60-day comment period, this spring. We look 

forward to continued engagement from Congress and the health care community, 

including discussing the role that the Centers for Medicare and Medicaid Innovation 

(CMMI) can play in developing alternative payment models for MACRA. Currently, in 

developing and testing payment and service delivery models, CMMI is providing 

opportunities for stakeholders, including members of physician societies, to gain 

experience with new payment models and to participate in forums like the Health Care 

Payment Learning and Action Network. 

4. Is CMMI working to develop APMs under MACRA? Will the 

Comprehensive Care for Joint Replacement Model (CJR), a new episodebased payment model for lower extr emity joint replacement, be considered 

an APM under MACRA? 

Answer: MACRA established a particular definition of alternative payment models 

(APMs) and established what qualifies as an "eligible APM," for purposes of evaluating 

whether an EP is a qualifying APM participant (QP) for a year. QPs receive a payment 

incentive and are exempt from the Merit-Based Incentive Payment System for the year. 

15 
96 


joloto on DSKB35BYQ1 with HEARING22185.052

While c reating this new category of eligible APMs provides for promising incentives for 

a growing number of EPs in the future, we expect the initia l years to be ones of 

development as we apply lessons learned and continue to refine the program. The statute 

creates a high bar for eligible APMs. Many currently existing APMs- at the Innovation 

Center and in the private sector - are not likely to meet all these requirements, but some 

will. We will continuously search for opportunities to expand the range of options for 

participation in eligible APMs within the contours of the statute. In keeping with the 

statute, it is our intent to align the MIPS and the APM incentives to the extent feasib le, 

thus allowing maximum flexibility for physicians and other clinicians who are not yet 

ready to participate in eligible APMs to participate in MIPS and then migrate to e ligible 

APMs when they are ready. 

As we move forward with MACRA implementation, we will continue to gather and 

incorporate feedback from stakeholders as we promote additional physician-focused 

APMs and work to define the details of the e ligible APM criteria conta ined in statute. We 

anticipate releasing a proposed MACRA implementation rule, including a 60-day 

comment period, this spring. We look forward to continued engagement from Congress 

and the health care community. 

5. It should come as no surprise that we take issue with CMMI's broad 

interpretation of authority. Are we to anticipate that CMMJ will continue to 

exploit the authority granted under Section Ill SA by promulgating 

additional mandatory demos wher e patients are thereby used as test 

subjects? How will CMM I identify the patient population and services to be 

targeted in future demos? 

Answer: Section I liSA of the Social Security Act (the Act) authorizes the Innovation 

Center to test innovative payment and service de livery models to reduce program 

expenditures while preserving or enhancing the qua lity of care furnished to Medicare, 

Medicaid, and Children's Health Insurance Program beneficiaries. While I appreciate 

your concern, the statute does not require that models be voluntary, but rather gives the 

Secretary discretion to design and test models that meet certain requirements as to 

spending and quality. 

Models to be tested under section 111 5A of the Act must address a defined population for 

which there are either deficits in care leading to poor clinical outcomes or potentially 

avoidable expenditures. Ln addition, the Secretary must focus on models expected to 

reduce program costs while preserving or enhancing the quality of care. All models 

include monitoring and evaluation of patient care. Section l ll SA(b) of the Act 

describes a number of payment and service delivery models that the Secretary may 

choose to test, but the Secretary is not limited to those models. The Innovation Center 

will continue to use these statutory criteria, inc luding input from interested parties, for 

selecting and designing future models. 

16 
97 


joloto on DSKB35BYQ1 with HEARING22185.053

Section ttl SA requires that models which fail or are expected to fail to improve the 

quality of care within current spending or reduce spending while maintaining the 

quality of care be terminated or modified. 

6. What exactly are the processes used by CMS to evaluate and modify models, 

and how does CMS deem a model to be worthy of termination? 

Answer: Every I l iSA model has a rigorous, rapid-cycle, evaluation conducted by an 

independent team that unfolds concurrently with model implementation. In every model 

evaluation, we strive to determine the impact of the innovation on patient and provider 

experiences, outcomes and quality of care, and program expenditures. While each model 

is different and requires a customized evaluation approach, common components include: 

regular surveys of beneficiary experience of care, analysis of claims-based utilization and 

qua lity of care outcomes, and qualitative data collection, such as patient and caregiver 

focus groups. We make sure that our models are well designed- and we use all 

appropriate scienti fie and statistical methods to study the impact of the model test relative 

to what would have happened in the absence of that model test. 

We are required to terminate or modify an Innovation Center model unless the model is 

expected to improve the quality of care without increasing spending, reduce spending 

without lowering the quality of care, or both improve the quality of care and reduce 

spending. CMS uses these criteria to determine if a model should be terminated or 

modified based on the data available from the model evaluations and other sources. 

CJR-Focused Questions: 

7. The Comprehensive Care Joint Replacement model is expected to capture 

nearly 800 acute care hospitals with at least I 20,000 joint replacements a 

year. What data did CMMI rely on in developing the CJR model in orde•· to 

conclude that the CJR model will lead to improved care? 

Answer: The CJR model is informed by other models and demonstrations currently and 

previously conducted by CMS and will explore additional ways to enhance coordination 

of care and improve the quality of services through bundled payments. Medicare tested 

innovative approaches to paying for orthopedic services in the 3-year Medicare Acute 

Care Episode (ACE) demonstration. CMS is currently testing additional approaches 

under the Bundled Payments for Care Improvement (BPCI) initiative. Both of these 

models informed the design of the CJR model. 

CMS will provide technical assistance to hospital participants in the CJR model through 

educational webinars and other tools. Furthermore, in response to a hospital's request 

and in accordance with our regulations and applicable privacy laws, we will provide 

beneficiary claims information ( I) in summary fom1at, (2) as raw claims line feeds, or (3) 

both, depending on the hospital's preference. These data will encompass the total 

expenditures and claims during the acute hospitali zation and the 90 day post-discharge 

episode for the hospita l's beneficiaries whose anchor diagnosis at discharge assigned the 

hospital stay to MS DRG 469 or 470. We will make these data available for both the 

17 
98 


joloto on DSKB35BYQ1 with HEARING22185.054

hospital's baseline period and no less often than on a quarterly basis with the goal of 

making these data available as often as on a monthly basis if practicable during a 

hospital's performance period. 

In addition, because we are proposing to incorporate regional pricing data in the creation 

of prices for the CJR model, we will provide comparable aggregate expenditure data 

available for all claims associated with MS DRGs 469 and 470 during an episode period 

for the census region in which the participant hospital is located. We believe that making 

these data available will enhance participating hospitals' ability to identify existing care 

patterns that need to be changed or strengthened as well as the kinds of strategies needed 

to improve their care practices so that they can be most successful under the model. 

8. How will CMMI monitor the effects of CJR throughout the duration of the 

program? 

Answer : As with all Innovation Center models, during the CJR model, CMS will 

monitor and evaluate the impact of the model to guard against any unintended 

consequences that might negatively impact beneficiaries. With respect to monitoring for 

access to care, CMS will apply the ir existing authority and tools to monitor for 

overutilization and underutilization of care under the CJR model. These tools include 

data analysis, the process of tracking patterns of utilization and trends in the delivery of 

care, and medical review, a clinical audit process by which we verify that services paid 

by Medicare were reasonable and necessary. With respect to monitoring for quality of 

care, CMS will use their existing authority to audit claims and services, use the Quality 

Improvement Organizations to assess for quality issues, use CMS authority to investigate 

allegations of patient ham1, and to monitor the impact of the quality metrics for the 

model. Beneficiaries also have the ability to report concerns about the model to Quality 

Improvement Organizations and through 1-800-MEDICAR£. Finally, CJR model 

participants will also be monitored for compliance with all existing rules and regulations. 

The evaluation will include both quantitative and qualitative data and will use a variety of 

methods and measures in assessing quality. This will include claims based measures 

such as increases in readmissions and ER visits, Hospital Consumer Assessment of 

Healthcare Providers and Systems (HCAHPS) satisfaction and care experience measures, 

and functional performance change scores from the required patient assessment 

instnnnents in Home Health Agencies (HHAs) and Skilled Nursing Facilities (SNFs). In 

addition, CMS plans for the evaluation to include a beneficiary survey that will be used to 

assess the impact of the CJR model on beneficiary perceptions of access, satisfaction, 

pain, mobility, and other relevant functional performance measures. 

9. Will CMM I be able and ready to halt the demo immediately if shown to 

reduce the quality of care? 

Answer : As concems are identified, CMS can initiate audits and corrective action under 

existing authority. In addition, under Section 1115A(b)(3)(B) of the Social Security Act, 

the Secretary is required to terminate or modify an Innovation Center model unless the 

model is expected to improve the quality of care without increasing spending, reduce 

18 
99 


joloto on DSKB35BYQ1 with HEARING22185.055

spending without lowering the quality of care, or both improve the quality of care and 

reduce spending. If during the course of testing the CJR model it is determined that 

termination or modification is necessary, such actions will be undertaken through 

rulemaking as necessary. 

10. Current information from conversations with several BPCl conveners for 

hospitals and hospital awar dees indicates a large number of hospitals, or 

systems, have not •·ealized favo•·able reconciliations for CY2014 o•· QI-Q2 

2015. Given the rapid pace of the CJR start date and the extremely limited 

time participating hospitals have to obtain, analyze, decipher, and make 

decisions from the historical data, how do you expect the CJR model to be a 

success? 

Answer: The CJR model has the potential to improve quality in four ways. First, the 

model adopts a quality first principle where hospitals must achieve a minimum level of 

episode quality before receiving reconciliation payments when episode spending is below 

the target price. 

Second, higher episode quality, considering both performance and improvement, may 

lead a hospital to receive quality incentive payments based on the hospital's composite 

quality score, a summary score reflecting hospital performance and improvement on t\vo 

measures: one related to the complication rates for elective hip or knee replacements and 

the other measuring patient experience of care. 

The composite qua lity score also takes into consideration a hospital's submission of 

patient-reported outcomes and limited risk variable voluntary data. 

Third, in addition to quality performance requirements, the model incentivizes hospitals 

to avoid expensive and harmful events, which increase episode spending and reduce the 

opportunity for reconciliation payments. 

Fourth, CMS provides additional tools to improve the effectiveness of care coordination 

by participant hospitals in selected Metropolitan Statistical Areas. These tools include: I) 

providing hospitals with relevant spending and utilization data; 2) waiving certain 

Medicare requirements to encourage flexibility in the delivery of care; and 3) facilitating 

the sharing of best practices between participant hospitals through a learning and 

diffusion program. 

The CJR model includes certain financia l safeguards for participant hospitals. There is 

no repayment responsibility in performance year I, a stop-loss limit of 5 percent in 

performance year 2, a stop-loss limit of I 0 percent in performance year 3, and a stop-loss 

limit of20 percent in performance years 4 and 5 for participating hospitals other than 

rural hospitals, Medicare-dependent hospitals, rural referral centers, and sole community 

hospitals. The stop-loss limit for these hospitals will be at 3 percent in performance year 

2 and 5 percent in performance years 3 through 5. A parallel approach has been finalized 

for the stop-gain limits to provide proportionately similar protections to CMS and 

19 
100 


joloto on DSKB35BYQ1 with HEARING22185.056

hospital participants, as well as to protect the health of beneficiaries. The CJR model 

also gradually phases in repayment responsibility with a reduced discount percentage for 

repayment responsibility in years 2 and 3. 

CMS will also provide technical assistance to hospital patticipants in the CJR model 

through educational webinars and other tools. Moreover, in response to a hospital's 

request and in accordance with our regulations and applicable privacy laws, we will 

provide beneficiary claims information (I) in summary format, (2) as raw claims line 

feeds, or (3) both, depending on the hospital's preference. These data will encompass the 

total expenditures and claims during the acute hospitalization and the 90 day postdischarge episode for the hospital's beneficiaries whose anchor diagnosis at discharge 

assigned the hospital stay toMS DRG 469 or 470. We will make these data available for 

both the hospital's baseline period and no less often than on a quarterly basis with the 

goal of making these data available as often as on a monthly basis if practicable during a 

hospital's performance period. In addition, because we are proposing to incorporate 

regional pricing data in the creation of prices for the CJR model, we will provide 

comparable aggregate expenditure data available for all claims associated with MS DRGs 

469 and 470 during an episode period for the census region in which the participant 

hospital is located. We believe that making these data available will enhance 

participating hospitals' ability to identify existing care patterns that need to be changed or 

strengthened as well as the kinds of strategies needed to improve their care practices so 

that they can be most successful under the model. 

11. Pe•·formao ce estimates of hospita ls in CJR markets (using available data 

from CMS and BPCI historical and l>erformance period data from the same 

or similar markets and estimates of trend fa ctors) indicate that nearly 75% 

(579 of 794 hospitals) will show annual losses under C.rR (many in the 

millions of dollars) if they are unable to dramatically affect post-acute care 

service utilization and achieve provider alignment across the entire care 

continuum, a function not traditionally performed by hospitals or physicians. 

Given the complexity of implementing effective care r edesign under CJR, do 

you anticipate a percentage of hosl>itals to stop p•·oviding hip and knee 

•·eplacements because this mandatory prog•·am has the potential to c•·eate a 

cataclysmic financial downfall? 

Answe•·: The model's goal is to give hospitals a financial incentive to work with 

physicians, home health agencies, skilled nursing faci lities, and other providers to make 

sure beneficiaries get the coordinated care they need. Patients, hospitals, physicians, and 

post-acute care providers all stand to gain from the successful implementation of the CJR 

model. By improving care coordination throughout the episode, unnecessary care can be 

reduced, and quality outcomes improved. There will be an opportunity for hospitals to 

earn more through partnerships with physicians and post-acute care providers as care 

coordination is improved, and opportunities for hospitals to share these funds with 

physicians and post-acute care provider collaborators in care redesign. We anticipate 

hospitals will continue to serve patients needing hip and knee replacements and improve 

collaboration with other post-acute providers in the community leading to improved 

outcomes for beneficiaries. 

20 
101 


joloto on DSKB35BYQ1 with HEARING22185.057

Furthermore, the CJR model includes certain financial safeguards for participant 

hospitals. There is no repayment responsibility in performance year I, a stop-loss limit of 

5 percent in performance year 2, a stop-loss limit of I 0 percent in performance year 3, 

and a stop-loss limit of20 percent in performance years 4 and 5 for participating 

hospitals other than rural hospitals, Medicare-dependent hospitals, rural referral centers, 

and sole community hospitals. The stop-loss limit for these hospitals will be at 3 percent 

in performance year 2 and 5 percent in performance years 3 through 5. A parallel 

approach has been finalized for the stop-gain limits to provide proportionately similar 

protections to CMS and hospital participants, as well as to protect the health of 

beneficiaries. The CJR model also gradually phases in repayment responsibility with a 

reduc.ed discount percentage for repayment responsibility in years 2 and 3. 

CMS will also provide technical assistance to hospital participants in the CJR model 

through educational webinars and other tools. Moreover, in response to a hospital's 

request and in accordance with our regulations and applicable privacy laws, we will 

provide beneficiary claims information (I) in summary format, (2) as raw claims line 

feeds, or (3) both, depending on the hospital's preference. These data will encompass the 

total expenditures and claims during the acute hospitalization and the 90 day postdischarge episode for the hospital's beneficiaries whose anchor diagnosis at discharge 

assigned the hospital stay toMS DRG 469 or 470. We will make these data available for 

both the hospital's baseline period and no less often than on a quarterly basis with the 

goal of making these data available as often as on a monthly basis if practicable during a 

hospital's performance period. 

In addition, because we are proposing to incorporate regional pricing data in the creation 

of prices for the CJR model, we will provide comparable aggregate expenditure data 

available for all claims associated with MS DRGs 469 and 470 during an episode period 

for the census region in which the participant hospital is located. We believe that making 

these data available will enhance participating hospitals' ability to identify existing care 

patterns that need to be changed or strengthened as well as the kinds of strategies needed 

to improve their care practices so that they can be most successful under the model. 

CMMI and ACOs 

12. The Pioneer ACO program appears to be your most "successful" program 

judging by the fact that it was the only program you chose to expand. Albeit 

there is no indication that the Pioneer ACO model met the statuary criteria 

for expansion. Nonetheless, 13 of 32 A COs, approximately 40%, dropped out 

of Pioneer after just one year. Is this a program capable of sustaining itself? 

Answer: The Pioneer ACO Model is the first model designed and tested by CMMI to be 

certified for expansion by the CMS Office of the Actuary and the Secretary of HHS. 

Under the Affordable Care Act, the Secretary has the authority to expand an Innovation 

Center model in duration and scope for Medicare if: I) an expansion is expected to 

reduce spending without reducing the quality of care or improve the quality of care 

without increasing spending 2) the CMS Chief Actuary certifies that an expansion would 

21 
102 


joloto on DSKB35BYQ1 with HEARING22185.058

reduce or maintain net program spending and 3) an expansion would not deny or limit the 

coverage or provision of benefits to Medicare beneficiaries. The CMS Office of the 

Actuary has reviewed the Pioneer ACO Model's early independent evaluation results, as 

well as conducted its own additional analyses, and concluded that an expansion of the 

Pioneer ACO Model as it existed in the first two performance years would reduce net 

program spending under Medicare. The Secretary has also determined that an expansion 

of the Pioneer ACO Model would maintain or improve quality and would not deny or 

limit coverage or provision of benefits, thereby allowing the Secretary to expand this 

model. 

In terms ofsustainability for the Pioneer ACO Model, the model began on January I, 

2012 as a five-year model developed by CMMI to test whether alternative design 

elements might enhance ACO effectiveness and ultimately inform policy changes to 

improve the Shared Savings Program by means of future rulemaking. The model 

concludes in 20 16. Regarding the Pioneer ACOs that chose to leave the model, CMS 

always expected that a subset of Pioneer ACOs would leave the model over time. CMS 

respects the need for individual organizations to make decisions that are most appropriate 

for their circumstances but we are encouraged that several of the Pioneer ACOs 

transitioned to being participants in the Medicare Shared Savings Program and the Next 

Generation ACO Model. These developments bolster CMS' confidence that 

incorporating elements of the Pioneer ACO Model into the Shared Savings program will 

help those alte rnative payment armngements improve outcomes for beneficiaries and 

Medicare, as well as increase provider participation in them. As we learn through 

demonstrations and stakeholder comment what works well in the model= subsequent 

rulemaking for the Shared Savings Program will be informed by lessons learned from our 

experience. 

13. Total spending on all CMMI experiments to date has a mounted to $4.335 

billion. Only one progra m has been selected for expansion, yet it generates 

minimal savings. How do you justify wasting billions of taxpayer funds? 

Answer : ln 2014 alone, Medicare A COs improved quality of care and saved an 

estimated S41 1 million. From 20 I 0 to 2014, there was a 17 percent decline in patient 

harm resulting in an estimated 2.1 million fewer hospital-acquired conditions, an 

estimated 87,000 fewer patients dying in hospitals and nearly $20 billion in health care 

costs saved - likely the result of various programs that support and incentivize hospitals 

to share best practices for reducing avoidable harm. While there's still more work to do, 

the new programs implemented and models being tested are providing the tools needed to 

sustain the historic slowdown in health care cost growth we've seen since 20 I 0. 

The Innovation Center's portfolio of models has attracted participation from a broad 

army of health care providers, states, payers, and other stakeholders, and serves 

Medicare, Medicaid, and Children's Health Insurance Program (CHIP) beneficiaries in 

all 50 states, the District of Columbia and Puerto Rico. Over 4.7 million Medicare, 

Medicaid, and CHlP beneficiaries are or soon will be receiving care furnished by the 

more than 6 1 ,000 providers participating in Innovation Center payment and service 

delivery models. Beyond the impact for these beneficiaries, Innovation Center models 

22 
103 


joloto on DSKB35BYQ1 with HEARING22185.059

are impacting tens of millions of additional Americans by engaging thousands of other 

providers, payers, and states in model tests and through qua lity improvement etTorts that 

extend across the country. Innovation Center models are making important contributions 

towards building a health care delivery system health care system that leads in 

innovation, delivers atTordable, high-quality medicines, and results in healthier people. 

CBO recently estimated in a report dated July 30, 2015 that the work of the Innovation 

Center would yield $38 billion in savings over the next ten years (20 16 to 2025). 

Problems with EHRs 

14. How much federal money has been used to invent implementation of EliRs? 

Answe r: The American Recovery and Reinvestment Act (ARRA) appropriated $2 

billion to the Office of the National Coordinator tor Health Information Technology 

(ONC) to implement the HITECH Act. ONC used its ARRA funds to support the 

development of a national health IT infrastructure that enabled providers to leverage 

health information to improve the quality and efficacy of the care they deliver to their 

patients. The $2 billion was a one-time influx of fund ing. Outside of this funding, ONC's 

annual budget has been approximately $60 million since 2007. The Center for Medicare 

and Medicaid Services (CMS) EHR Incentive Programs provided payments to eligible 

professionals and hospitals to adopt, implement, and demonstrate meaningful use of 

certified EHR and have paid approximately $33.6 billion in incentive payments. As with 

all our funding, we are committed to proper stewardship of taxpayer dollars. 

15. Did we invent behavior that deployed EHRs before we had the right 

architecture to deliver on digital healthcare? Aren't we backtr acking now to 

c reate the sort of inte roperability and data liquidity that we should have 

developed as initial standards? 

Answe r: The EHR Incentive Programs rule and the ONC certification program have 

been successful in driving adoption and use of EHR technology. In the seven years since 

the HITECH Act was enacted, the nation has seen dramatic advancement in the use and 

adoption of health IT. Specitically, nearly all (97%) acute care hospitals have adopted 

certified health IT and three-quarters (74%) of physicians have adopted certified health 

IT. 

ONC recognizes that collaborative commitments across government and industry are 

needed to address chall enges for the U.S. to rea lize the fi.1 1l benefits and potential of a 

secure, interoperable electronic health information infrastructure that seamlessly supports 

the health system and provides individuals with safe, person-centered care. As adoption 

increases, ONC and CMS have worked together to advance standards-based 

interoperability, including through provisions in the fa ll 20 15 release of the latest health 

IT certification rule and EHR Incentive Programs rule. 

16. Aren't we challenged to get the EHR vendors to coope rate to the level beyond 

their own self-inter ests and acting towa rd bette r a national a1·chitecture that 

ser ves not only the Medicare beneficiaries, but all patients? 

23 
104 


joloto on DSKB35BYQ1 with HEARING22185.060

Answer : ln its Shared Nationwide lnteroperability Roadmap, ONC identified near-term 

actions and roles that health IT stakeholders should perform to make immediate progress 

and impacts with respect to interoperability. The Roadmap is a shared, industry wide set 

of milestones, calls to actions, and commitments that lays out a focused series of steps 

and activities that we need to collectively undertake to achieve interoperability and 

enable a learning health system. Though ONC defines a path to short term success, the 

Roadmap is also designed to lay out a long-term vision and was developed with extensive 

input from federa l agencies, Congress, and health IT stakeholders, including consumers, 

healthcare providers, health IT developers, and public health. It provides an opportunity 

to improve coordination and includes a set of milestones by which we can judge progress. 

The Roadmap specifically called out three specific principles: I) supporting consumer 

access, 2) not blocking information, and 3) implementing federally recognized, national 

standards around interoperability so all products speak the same language. ln February 

2016, Secretary Burwell announced at the Healthcare Information and Management 

Systems Society (HIMSS) meeting that companies providing electronic health records to 

90% of hospitals agreed to take action to implement those three commitments. 

Additionally, hospitals including the tive largest and many others that span a total of 46 

states also stepped up and agreed to these commitments. We are optimistic about this 

unpara ll eled public-private sector collaboration on interoperability. 

A New Approach to Meaningful Use 

17. Most everyone agrees we need to move away from the current way of doing 

things - both in MU and EHR ce•·tification. Our patients and physician 

colleagues have joined in unison to call for serious reform. Given 

Administrator Slavitt's recent comments admitting that the Meaningful Use 

program needs reform, how specifically has ONC been advising CMS in 

r ethinking the MU progr am? 

Answer : ONC and CMS have been working side by side to update the Medicare and 

Medicaid EHR Incentive Programs, advance the certification of health IT towards care 

delivery goals, and to implement MACRA .. Ln addition, we have been working with 

physician and consumer communities and have listened to their needs and concerns. For 

Medicare physicians and other practitioners, we will be sharing details and inviting 

comment on our proposal to implement the EHR requirements in MACRA as we roll out 

our proposed regulations this spring. 

Several critical principles inform the important work of both agencies. First, we aim to 

reward providers for the outcomes technology helps them achieve with their patients. 

Second, we want to allow providers the flex ibiliry to customize health IT to their 

individual practice needs. Technology must be user-centered and support physicians. 

Third, we need to level the technology playing field to promote innovation, including for 

start-ups and new entrants, by unlocking electronic health info•mation through open APls 

-technology tools that underpin many consumer applications. This way, new apps, 

analytic tools and plug-ins can be easily connected to so that data can be securely 

accessed and directed where and when it is needed in order to support patient care. 

24 
105 


joloto on DSKB35BYQ1 with HEARING22185.061

Finally, we aim to prioritize interoperability by implementing federally recognized, 

national interoperability standards and focusing on real-world uses of technology, like 

ensuring continuity of care during referrals or finding ways for patients to engage in their 

own care. 

ONC and CMS will continue working together to prevent information blocking, improve 

the EHR Incentive programs, and support a health IT environment that rewards 

innovation and user-centered technology. 

18. Jn March, your agency will release guidance for a new MIPS p•·ogram. What 

impact do you expect this will have on MU? What other impacts a•·e you 

anticipating as a result of MIPS? 

Answe•·: The Medicare Access and CH IP Reauthorization Act of2015 (MACRA), 

through the Merit-based Incentive Payment System (MTPS), considers quality, resource 

use, clinical practice improvement activities, and meaningful use of health IT in 

calculating how Medicare physician and practitioner payments are detennined. While 

MACRA continues to require that Medicare physicians and practitioners be measured on 

their meaningful use of certified EHR technology for purposes of determining their 

Medicare payments, it provides new flexibility to determine how to measure that use. 

CMS is working closely with provider groups, the consumer community and other 

important stakeholders to ensure we release an effective proposed rule this spring. The 

law requires that we continue to measure the meaningful use ofONC Ce11itied EHR 

Technology under the existing set of standards. While MACRA provides an opportunity 

to adjust payment incentives associated with EHR incentives, it does not eliminate 

meaningful use. In addition, the MlPS only addresses Medicare physician and 

practitioner payments; the EHR incentive programs for Medicare hospitals and Medicaid 

have a different set of statutory re.quirements. 

The process is ongoing, and we are committed to learning and improving and 

collaborating on the best solutions. Ultimately, we believe this is a process that will be 

most successful when physicians and innovators can work together directly to create the 

best tools to care for patients. We look forward to working collaboratively with 

stakeholders, including Congress, on advancing MACRA implementation and working to 

ensure this change is successful in the months ahead. 

The Viability of the Health Care Exchanges: 

19. On November 19 of last year, United Health care, one of the countr y's largest 

insurers, reported that it was scaling back advertising of individual plans for 

this year due to a r eduction in expected earnings of$425 million. The 

company a lso reported t hat it saw no r eason to expect an improvement in t he 

current climate and that it was considering not offe.-ing an exchange plan in 

20 17. Another large national insurer, Aetna, has made similar undertones. A 

third large national insurer, Humana, is also tem1ioatiog several of tbe large 

25 
106 


joloto on DSKB35BYQ1 with HEARING22185.062

healt h plans it offers on the exchanges. Secretary, what do these 

announcements suggest about the viability of the healthca re exchanges? 

Answer: The Marketplace is strong and growing. During the third Marketplace Open 

Enrollment nine out of ten returning customers were able to choose from three or more 

issuers for 20 16 coverage, up from seven in ten in 2014. During this same period, 12.7 

million Americans selected affordable, quality health plans for 20 16 coverage through the 

Marketplaces. In fact, this year 60 percent of our new enrollees signed up in time to have 

coverage by January I , compared to about 40 percent of new enrollees last year. 

Health plans are learning how to price and how to offer competitive products that 

consumers want. We also know that the Marketplace created one of the largest pools of 

new customers for insurance companies in years. Even as the market meets today's 

needs and signs millions of new consumers up in record numbers, we also pay attention 

to adjustments that are needed as the Marketplace matures- whether that's creating new 

decision support tools for consumers, or strengthening risk adjustment, or clarifying the 

rules of the road on Special Enrollment Periods. We have full confidence that the 

Marketplaces will continue to thrive for years ahead. 

Insolvency of the Medicare Hospital Insurance T r ust Fund : 

20. Last yea•·, Medicare's h·ustees projected the date of exhaustion fo•· the 

Medicare hospital insurance trust fu nd at 2030. CBO has accelerated that 

da te by 4 years - to 2026 which is within the budget window. This is so even 

though the large Medicar e spending cuts included in Obamacare- allegedly 

used to offset the huge costs of that new entitlement- were also supposed to 

extend the life of Medicare. Given t his imminent date of 2026, what are you 

doing to ensure the long-term viability of the Medicare progra m? 

Answer: The FY 2017 Budget includes a package of Medicare legislative proposals that 

will save a net $419 billion over I 0 years by supporting delivery system reform to 

promote high-quality, efficient care, improving beneficiary access to care, addressing the 

rising cost of pharmaceuticals, more closely aligning payments with costs of care, and 

making structural changes that will reduce federal subsidies to high-income beneficiaries 

and create incentives for beneficiaries to seek high-value services. These proposals, 

combined with tax proposals included in the FY 20 17 President's Budget, would help 

extend the life of the Medicare Hospital Insurance Trust Fund by over 1 5 years. 

Competitive Bidding: 

21. The curr ent competitive bidding system is failing patients, why do you think 

furthe•· expansion of a broken program is a good idea? 

Answer: The Durable Medicare Equipment, Prosthetics, Orthotics and Supplies 

(DMEPOS) competitive bidding program is an essential tool to help Medicare set 

appropriate payment rates for DMEPOS items by replacing the existing, outdated, 

excessive fee schedule amounts with market-based prices. The program has resulted in 

reducing beneficiary out-of-pocket costs, providing significant savings to the Medicare 

program and taxpayers, and reducing over-utilization and fraud. It has also achieved 

26 
107 


joloto on DSKB35BYQ1 with HEARING22185.063

billions in savings for Medicare and beneficiaries. Additionally the program has ensured 

continued beneficiary access to high quality items and services without compromising 

beneficiary health and safety. 

22. Starting on January I, 2016, CMS has significantly reduced reimbursement 

rates for DM E items in non-competitive bid areas. Secretary Bunvell, can 

you give me specific details (other than using claims data) how you are 

monitoring the impact that these cuts are having on patient access to DME 

items in non-competitive bid areas? 

23. If you determine that there are access problems with DME items in noncompetitive bid areas because of the recent cuts, how you will remedy these 

problems and how long the process will take? Can you stop the second cut 

due to take effect on July I, 2016? 

Answer to 22-23: CMS has been using a real-time claims analysis to monitor health 

status results in the DME competitive bidding program and other Medicare payment 

systems. The analysis for the DME competitive bidding program includes key indicators 

of the health status of beneficiaries and their access to DMEPOS items and services such 

as deaths, hospitali zations, emergency room visits, physician visits, admissions to skilled 

nursing facilities, average number of days spent hospitalized in a momh, and average 

number of days in a skilled nursing facility in a month. We also monitor beneficiaries 

who no longer have claims for a competitively bid item after the program began, 

beneficiaries who may at some point need the item, and beneficiaries who currently have 

claims for competitively bid items. CMS is doing a similar type of analysis and 

monitoring for the adjusted DME fee schedule rates during the 6-month transition period 

and after this transition period. In addition, CMS will be monitoring assignment rates of 

suppliers. Assignment means that the suppliers have agreed to accept Medicare allowed 

rate as full payment for the DME item. If there are any issues identified through our 

monitoring, we will take appropriate actions depending on the situation. 

Local Coverage Determinations (LCDs) 

24. Can you explain the agency's views on the recent increase of LCDs that at·e 

being adopted act·oss the country on a national scale, and what your agency 

is doing to ensure that Medicare coverage for precision medicine 

appt·opriately fosters innovation and patient care? 

Answer: Local coverage determinations (LCDs) are authorized by statute to allow the 

Medicare Administrative Contractors (MACs) flexibility in creating innovative and 

effective coverage policies to meet the needs of beneficiaries in their regions. The LCD 

process may also provide more expeditious coverage for new technology than may be 

available at the national level. In creating local policies, the MACs must fo llow the LCD 

development process established by CMS, including opportunities for public comment 

and input from the local medical community through a Contractor Advisory Committee 

(CAC). In some cases, the MACs may draw upon specialized expertise available at 

another MAC or may work together to develop more consistent policies. However, if a 

MAC proposes to adopt a draft policy developed by another MAC, it must still follow all 

27 
108 


joloto on DSKB35BYQ1 with HEARING22185.064

the required procedural steps, including solicitation of public comments and presentation 

to the CAC, within its own jurisdiction. More infonnation on the LCD process is 

available in Chapter 13 of the Medicare Program Integrity Manual at 

http:l/www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/pim83cl 3.pdf. 

l11e promise of precision medicine is delivering the right treatments, at the right time, to 

the right person. It is through this promise that we are given one oft he greatest 

opportunities for new medical breakthroughs that we have ever seen. Payment decisions 

for individuals' care will come under the smne processes as all items and services 

coverable under Medicare Fee for Service. l11ese include coverage by claim by claim 

adjudication, local coverage detennination or national coverage detenuiuatiou. For drug 

coverage under Part D, plan sponsors· fonuularies must include adequate coverage of the 

types of drugs most commonly needed by Part D enrollees, all new drugs must be 

reviewed by the plan for inclusion on the fommlary, and sponsors must have procedures 

in place that ensure enrollees have access to Part D drugs that are not included on its 

fonnulary. 

Questio11s from Representative Je11ki11s: 

Madame Sec1-eta•-y, as l di.scussed during the hearing, one particular provision of 

Obamacare that is especially cumbe1-some and drh•es up health care costs fot· 

everyday Ameticans is the •·equirement. that individuals have a pt·esct·iption from a 

physician in ordet· to pm·chase over-the-count.er medicine with t.heir health savings 

accounts and flexible spending accounts. I have worked on bill H.R. 1270 - the 

Restot·ing Access t.o Medication Act-which would eliminate tllis w1necessa•-y 

t·equirement that is confusing and a waste of time for patients and physicians. 

have worked closely on this legislation for over tlu·ee years with my collea gue, 

Rept·esenta tive Ron Kind ft·om Wisconsin. When you t estified in fJ•ont of this 

committee last June, 1 asked if you would suppo11 this type of legislation. At the 

time you indicilted you wet·e not fnmiliat· with the issue. 

1. Aftet· having ti.me to r e\<iew H.R. 1270, would you support this bi-partisan 

legisli1tion'? 

An swer : 111-llnk you for raising this issue. As I have said before, we are willing to work 

with Congress ou any proposal that improves access, affordability, quality, and health of 

the economy. l11is proposal could have substantial revenue effects and does not meet this 

test without including an offset. I would defer you to my colleagues at the Department of 

Treasury for specifics around their regulations. 

2. In addition, the J>rogram of All-Inclusive Care for the Elderly (or PACE) has 

a proven track record of pi'Oviding the h.ighest quality of ca1·e to some of our 

most vulnerable seniors- those who need a nursing home level of cat·e but 

wish to continue living in the conununity. Howevet·, the pt·ogram only serves 

28 
109 


joloto on DSKB35BYQ1 with HEARING22185.065

35,000 people and PACE organizations say they could sen •e many 

mot·e. What is the administmtion doing to build on this successful progmm? 

Answet· I share your support for the PACE program, and CMS is taking steps to 

modemize and streamline PACE enrollment and services. 

While PACE has proven successful in keeping frail elderly individuals in the community, 

we agree that we should revise certain regulatory provisions to afford more flexibility as 

a means to encourage the expansion of the PACE program to more states, increase access 

for pa1ticipants, and fmther enhance the program's effectiveness at providing care while 

reducing costs. CMS is proposing to revise and update policies to reflect subsequent 

changes in the practice of caring for PACE participants and changes in technology based 

on our experience implementing and overseeing the PACE program. CMS continues to 

receive numerous suggestions from PACE organizations, beneficiaries, Members of 

Congress, and other stakeholders and looks forward to working with stakeholders 

throughout the mlemaking process. 

CMS is dedicated to continuing to explore new opportunities and ideas to further 

strengthen PACE programs and services. In addition to updating PACE regulations, we 

are working to implement the PACE limovation Act of2015, which expanded the 

department's authority to allow waivers in order to conduct demonstration projects that 

involve PACE. CMS is actively working with stakeholder and advocacy groups to 

detem1ine how the PACE comprehensive care approach can be combined with 

community care models and expanded to reach a broader population. We will keep your 

staff apprised of the status of the pilot. 

3. CuJTently Medicare beneficiaries who enroll in t he Pt·ogr am of All-Inclusive 

Car e for the Elded y (o•· PACE) do not have the option to keep the Pat"f. D 

plan of theit· choice. For many, this is a disincentive to em·oiJ in 

PACE. What steps would CMS t·equire to allow Med.icare beneficiaries to 

have a choice in the Part D plan they enroll in if they choose to enroll in 

PACE? 

Answet·: Beneficiaries who join a PACE program get Part D-covered dmgs and all other 

necessary medication from the PACE program. Similarly, in most cases, beneficiaries 

who choose to join a Medicare Advantage Plan that includes prescription drug coverage 

must take the dmg coverage that comes with the Medicare healt11 plan if it's offered. 

While we believe coordination between medical and dmg benefits under the current 

system is beneficial, we would be happy to provide technical assistance on any proposals 

you may have in this area. 

Questions for Represelltative Black of Tennessee: 

29 
110 


joloto on DSKB35BYQ1 with HEARING22185.066

Last September, the Chairman and members of the Ways and Means Committee 

sent a Jetter to CMS asking for critical information on the oversight of the CO-OP 

program. In their r esponse, CMS states that t he agency took assertive actions 

towards the failing CO-OPs, including placing many on COJTective Action Plans o•· 

Enhanced Oversight Plans. 

1. Can you tell me whether CMS required New York to submit to them a 

corrective action plan? 

CMS provided the Committee with the letters they sent to specific CO-OPs asking for 

corrective actions, but the Health Republic Insurance of New York was not sent a letter. 

2. It seems unbelievable CMS would overlook the largest CO-OP, covering by 

far the most enrollees, in t heir corrective action plans. How was it that t his 

was missed? 

Answer: No. CMS did not issue a corrective action plan to New York prior to the 

decision to wind down the CO-OP. However, CMS regularly uses enhanced oversight 

plans (EOPs) and corrective action plans (CAPs) as part of our CO-OP monitoring and 

oversight process, as laid out in the CO-OP loan agreements and recommended by the 

HHS OIG. CMS places a CO-OP on an EOP or CAP when it identities an issue that can 

be resolved through corrective action. 

CMS ordered an independent audit of Health Republic in summer 20 I 5 based on early 

warning signs about the CO-OP's finances. This independent auditor found higher losses 

than the CO-OP had expected or projected in its financial reporting to CMS. In this case, 

the financial problems confronting Health Republic appeared to be too severe to address 

or correct through a CAP. In the interests of consumers and taxpayers, CMS worked 

with the State Department of Financial Services, which is the primary insurance 

regulator, to wind down the CO-OP and to ensure that consumers would have coverage 

through the end of the year. 

3. How did CMS prioritize their oversight actions for various CO-OP's, if, 

evidently, th.is was prioritized not by size, scope, or cost? 

Answer: CMS is committed operating as a proper steward of the taxpayer dollars issued 

through the loan program and to administering the CO-OP Program for the benefit of 

consumers. Since awarding both start-up and solvency loans, CMS has been closely 

monitoring and evaluating the CO-OPs to assess performance and compliance, and has 

engaged regularly with state DO Is, which are the primary regulators of insurance issuers 

in the states. 

All CO-OPs are subject to standardized, ongoing reporting to and interactions with CMS 

that include weekly, biweekly, or monthly calls to monitor goals and challenges; periodic 

on-site visits; performance and financial auditing; and monthly, quarterly, semi-annual, 

30 
111 


joloto on DSKB35BYQ1 with HEARING22185.067

and annual reporting obligations. Since March 2015, CMS has conducted site visits of 

CO-OPs in IS states. We believe these visits are a ene~i tto plans, consumers, and 

taxpayers. These visits provide CMS with an opportunity to verify whether and how a 

CO-OP meets its obligations. During these visits, CMS reviews management structure 

and staffing, financial status, business strategy, the policies and procedures of the COOP, marketing and sales information, and operations, including vendor management and 

oversight. CMS also reviews whether a CO-OP is meeting their obligations for medical 

management and member relations. CMS also collaborates with DO Is concerning each 

CO-OP loan recipient. 

CMS prioritizes its oversight efforts based primarily on the financ ial reporting and 

regulatory reporting it receives from the CO-OPs on an ongoing basis. CMS monitors 

the CO-OPs' overall financial condition using several factors of the Federal Deposit 

Insurance Corporation's Uniform Financial Institutions Rating System. CO-OPs have 

monthly, semi-annual, and annual reporting requirements, including financ ial statements, 

balance sheets, income statements, statements of cash now, and enrollment statistics. 

Last year, CMS increased the data and financial reporting requirements for CO-OPs. 

Each CO-OP is required to provide a semi-annual statement of its compliance with all 

relevant State licensure requirements, and, if necessary, an explanation of any 

deficiencies, warnings, additional oversight, or any other adverse action or determination 

by DOls received by the CO-OP. If the CO-OP is experiencing compliance issues with 

State regulators, the CO-OP is required to describe the steps being taken to resolve those 

issues. CMS meets monthly with the state insurance regulators regarding each CO-OP. 

This additional financia l data collection has helped CMS to identify underperforming 

CO-OPs and gives CMS the opportunity to work with the CO-OPs and DO Is to help 

correct issues that are identified. 

4. Are you similarly looking into whether Health Republic misrepresented their 

fin ances to you? 

Answer: As a normal course of action, in any of the situations where a CO-OP is no 

longer operating, CMS is conducting financia l reviews and audits to ensure that funds 

were spent appropriately. After a CO-OP has been placed in receivership, CMS is 

limited in its ability as a creditor to control or investigate a CO-OP that has gone into 

supervised liquidation under state law. However as called for in statute, once a CO-OP 

loan agreement (like other Federal loans) is terminated, the loans become due as present 

debts, and CMS is obligated by statute to refer those debts to the Civil Division of the 

Department of Justice for collection. 

The changes necessary to implement Section 2 of the Patient Access and Medicare 

Protection Act could be accomplished through the use of a billing modifier and a fee 

schedule update. In the past, CMS has used this method to address situations 

similar to the one we are discussing today. Further, modifiers and fee schedules arc 

routinely updated as need. 

31 
112 


joloto on DSKB35BYQ1 with HEARING22185.068

5. Keeping that in mind, I am having difficulty understanding w hy CMS is 

insisting that the law requires a non-routine update that cannot be 

implemented until July? 

6. What sort of advanced planning is usually necessary for C MS to implement 

these types of cha nges in its system? I would like to know how often CMS 

updates its fee schedules for products and services, on average, each year. 

Answer: We are aware of and appreciate your concerns regarding this issue. CMS began 

working on implementation of the Patient Access and Medicare Protection Act of 20 IS 

(PAMPA) when it first passed Congress in late December. S ince PAMPA was signed 

into law at the end of December, it would not have been feasible for CMS to implement it 

on January I, 2016. Given the amount of system changes required and the testing 

involved, the soonest they a re able to implement this change is July I, 2016. Until these 

changes are implemented, payments for these items will be based on the adjusted DME 

fee schedule amounts. The DME adjusted fee schedule rates are currently in a SO/SO 

blend during this 6 month transition period. The average reductions for these Group 3 

complex rehabilitative whee lchair accessories are about I 0 percent. On or after July I, 

20 16, suppliers will receive the full fee schedule amount. 

To ensure beneficiary access to these accessories particularly for these vulnerable 

populations, advance payment may be ava ilable for suppliers. According to our 

regulations, an advance payment means a conditional partial payment made by the 

contractor in response to a claim that is unable to process within established time limits. 

Suppliers are able to submit a single advance payment request to their Medicare 

Administrative Contractor for multiple claims during this period. These advance 

payments may be issued if certain regulatory requirements are met. 

CMS will be monitoring beneficiary access closely during this time to ensure they 

receive the wheelchairs and accessories that they need. 

In Medicare, Medicaid a nd the private secto•·, health care delivery a nd payment 

systems are seeing sig nificant and accelerating change. Yet the Program of A UInclusive Care for the Elderly (or PACE), which pioneered so many of the features 

we now seek to build into our health care system, is being constrained by regulations 

that are almost a decade old. 

7. What is the administration doing to update these regulations and provide 

more flexibility to PACE so tha t our seniors can have greater access to its 

gold-standard, proven and re plicable model of in tegr ated, community-based 

and person-centered cat·e? 

Answer: I share your support for the PACE program, and CMS is taking steps to 

modernize and streamline PACE enrollment and services. 

32 
113 


joloto on DSKB35BYQ1 with HEARING22185.069

While PACE has proven successful in keeping fi·ail elderly individuals in the community, 

we agree that we should revise certain regulatory provisions to afford more flexibility as 

a means to encourage the expansion of the PACE program to more states, increase access 

for participants, and further enhance the program's effectiveness at providing care while 

reducing costs. CMS is proposing to revise and update policies to reflect subsequent 

changes in the practice of caring for PACE participants and changes in technology based 

on our experience implementing and overseeing the PACE program. CMS continues to 

receive numerous suggestions from PACE organizations, beneficiaries, Members of 

Congress, and other stakeholders and looks forward to working with stakeholders 

throughout the rulemaking process. 

CMS is dedicated to continuing to explore new opportunities and ideas to further 

strengthen PACE programs and services. 

I am concerned that •·ecent news indicates too much instability in the individual 

market. Although you are highlighting a 90 percent coverage rate, enrollment 

expansions in the individual market are far below initial projections. Consumers 

who are willing to do their pa•·t by paying a full year of premiums are paying higher 

rates because the exchanges allow people to sign up for "just-in-time" medical 

services during what are designated as "special enrollment periods (SEPs)." 

I've heard you talk about the "strength of the marketplace" but I also hear about 

the mmions of dollars in issuer losses coming in a significant proportion from these 

SEPs, and I' m concerned about the long-term sustainability of the market. I 

recognize your agency recently announced the elimination of7 SEPs, but my 

understanding is that three of t hem were already expired, and t he other four do not 

address the problem in a significant manner. I also find it ironic that days later 

your agency announced a brand new SEP for delinquent tax filers. 

I am also concerned about the ever moving and expanding open enrollment (OE) 

period. The original ACA regulations had OE periods that ended in early 

December. Allowing individuals to continue to em·oll after the current policy year 

can encourage anti-selection and letting purchasers pay for only a partial year of 

coverage, while stiiJ r eceiving a full year of coverage. 

8. Does HHS plan to significantly eliminate more SEPs in the near future, and 

will there be any attempt to enforce or attest the existing ones? 

Answer: Special enrollment periods (SEPs) are one way to make sure that people who 

lose health insurance during the year or who experience major life changes like getting 

married have the opportunity to enroll in coverage outside of the annual Open Enrollment 

period. SEPs are a longstanding feature of employer insurance. We are committed to 

making sure that SEPs are available to those who qualify for them, while also putting in 

place measures to protect SEP program integrity. 

33 
114 


joloto on DSKB35BYQ1 with HEARING22185.070

We continue to review the rules around SEPs in order to keep them fair for issuers and 

for consumers. We have announced several changes including: 

• clarifying language to make the rules of the road are clear to everyone, 

• reviewing all SEPs and eliminating those that are no longer necessary, such as: 

o Consumers who enrolled with too much in advance payments of the 

premium tax credit because of a redundant or duplicate policy 

o Consumers who were affected by an error in the treatment of Social 

Security Income for tax dependents 

o Lawfully present non-citizens that were affected by a system error in 

determination of their advance payments of the premium tax credit 

o Lawfully present non-citizens with incomes below 100% FPL who 

experienced certain processing delays 

o Consumers who were eligible for or enrolled in COBRA and not 

sufficiently informed about their coverage options 

o Consumers who were previously enrolled in the Pre-Existing Condition 

Health Insurance Program. 

We have also provided stronger enforcement so that special enrollment periods serve the 

purpose for which they are intended and do not provide unintended loopholes. For 

example, we will conduct an assessment of plan selections that are made through certain 

special enrollment periods to evaluate whether consumers properly ac·cessed coverage. 

Our program integrity team will pull samples of consumer records nationally and may 

request additional information from some consumers or take other steps to validate that 

consumers properly qualified for these special enrollment periods. The tindings from the 

assessment will help us to inform future policy and operational improvements to enhance 

program integrity. We will continue to monitor how special enrollment periods are used 

and we anticipate that we may make changes in the future. 

9. Does HHS plan to limit or expand the open enrollment period? 

Answer : As you may know, each year CMS releases a Proposed Notice of Benefit and 

Payment Parameters, in which we detail certain proposed policies for the upcoming plan 

year. In the 2017 payment notice, CMS proposed dates for the individual market annual 

open enrollment period for the 2017 benefit year. For 2017, we proposed to maintain the 

same open enrollment period we adopted for 20 16-that is, November I, 2016, through 

January 31, 2017. The rule also noted that we are considering defining the open 

enrollment period for coverage year 2018, and sought comment on what that period 

should be. 

I 0. T he Healtbcare.gov website has a tab front-and-center that asks users to see 

if t hey can get cover age outside the OIJen enr ollment period. Do you keep 

tr·ack of who is getting coverage through SEPs and exactly for· what r·easons, 

such as giving birth, moving, etc., or are they just all lumped together ? 

34 
115 


joloto on DSKB35BYQ1 with HEARING22185.071

II. If they are lumped together, why can't you keep track of what SEPs are 

being used, in order to ensure federal dollars are being spent appropriate ly? 

12. If you a r e not able to keep track of SEPs, how will you carry out back end 

enforcement? 

Answe t·: Special enrollment periods (SEPs) are one way to make sure that people who 

lose health insurance during the year or who experience major li fe changes like getting 

married have the opportunity to enroll in coverage outside of the annua l Open Enrollment 

period. SEPs are a longstanding feature of employer insurance. We are committed to 

making sure that SEPs are available to those who qualify for them, while a lso putting in 

place measures to protect SEP program integrity. 

We continue to review the rules around SEPs in order to keep them fair for issuers and 

for consumers. We have announced several changes including: 

• c larifying language to make the rules of the road are clear to everyone, 

• reviewing all SEPs and eliminating those that are no longer necessary, such as: 

o Consumers who enrolled with too much in advance payments of the 

premium tax credit because of a redundant or duplicate policy 

o Consumers who were affected by an etTor in the treatment of Social 

Security Income for tax dependents 

o Lawfully present non-c itizens that were affected by a system error in 

determination of their advance payments of the premium tax credit 

o Lawfully present non-citizens with incomes below 100% FPL who 

experienced certain processing delays 

o Consumers who were eligible for or enrolled in COBRA and not 

sufficiently informed about the ir coverage options 

o Consumers who were previously enrolled in the Pre-Existing Condition 

Health Insurance Program; and 

• providing stronger enforcement so that special enrollment periods serve the 

purpose for which they are intended and do not provide unintended loopholes. 

We have also provided stronger enforcement so that special enrollment periods serve the 

purpose for which they are intended and do not provide unintended loopholes. For 

example, we will conduct an assessment of plan selections that a re made through certain 

special enrollment periods to evaluate whether consumers properly accessed coverage. 

Our program integrity team will pull samples of consumer records nationally and may 

re.quest additional information from some consumers or take other steps to validate that 

consumers properly qualified for these special enrollment periods. The findings from the 

assessment will help us to inform future policy and operational improvements to enhance 

program integrity. 

We will continue to monitor how special enrollment periods are used and we anticipate 

that we may make changes in the future 

35 
116 


joloto on DSKB35BYQ1 with HEARING22185.072

13. Does HHS plan to limit o•· expand the open enrollment pe•·iod? 

Please see response to Question 9. 

Questions from Represemati1•e Kel~y of Pl!lmsy/V(mia: 

Despit.e support f1-om both p:u1ies and ft·om the Administration fo.- Quality 

Incentive Payments in Medicare Advantage, those payments have been reduced or 

eliminated f01· many 4 and 5-sta•· plans because of the ACA MA benchmark 

cap. Madame SecJ-etary, I r ecently introduced legislation- HR 4275, along with my 

colleagues Ron Kind, Mike Doyle and B1-et.t Guthrie - that would solve this 

p1·oblem. 

1. But we believe that HHS has the authority to make the change WITHOUT 

legislation. A stJ·ict •·eading of the law mtdemunes the intent of the ACA to 

pay for value in Medicare Advantage. Wi.U you ask your lawye•-s if they can 

re-examine their inte1·p•·etation t.o fmd a way that you can exclude the quality 

payments from the calculation of the cap? 

Answe1·: We appreciate your interest in this area and your support of the Agency's 

efTo1ts to pay for value. We do not believe we have the discretion to eliminate 

application of the pre-ACA rate cap or exclude the bonus payment from the cap 

calculation. 1l1e bonus pa)1nent is based on an increase to the ' applicable percentage' 

which is a component of the benchmark calculation itself. 

l11 e Budget includes a proposal to refom1 Medicare Advantage payments to improve the 

efficiency and achieve sustainabitity of the program for all Medicare beneficiaries. This 

proposal has four components that better incentivize Medicare Advantage plans to submit 

cost-effective bids while preserving beneficiary supplemental benefits and enhancing 

quality incentives. As part of the balanced and comprehensive approach, the proposal 

would standardize quality bonus payments across counties by removing the doubling of 

the quality bonus payment which is only available in certain areas and lifting tl1e cap on 

benchmarks for plans that are entitled to receive a quality bonus payment. I look forward 

to working with the subcommittee to enact refomts to Medicare Advantage pa)1uents. 

Questiom from Reprel·entative Smith of Nebraska: 

As you know, I continue t.o be concem ed about the solvency of the •·emaining 

Consume•· Oriented and Operated Plans (s), and whether the taxpayer dollars 

loaned to the CO-Ol's will eve•· be 1-epaid. 

In a Janua1-y 6, 2016, letter, CMS Acting AdministJ"atm· And1·ew M. Slavitt stated 

"CMS wi.U use eveJ"y available tool to t•ecoup loan funding" f1•om C O-OPs which are 

wow1d down. Please provide an updat.e on1-ecovery of funds from CO-OPs which 

ha,•e been 01· :u -e being wound down. 

36 
117 


joloto on DSKB35BYQ1 with HEARING22185.073

1. Has HHS or CMS estimated how much money will be •·ecove•·ed from the 

failed CO-OPs? Lf so, what is that estimate and how was it calcuJated'! 

Answc1·: CMS takes our obligation to taxpayers very seriously. While it is too early to 

tell how much money can be recovered, CMS will take aggressive steps to recover all the 

money we can. Providers can still submit claims after U1 e date of a service, meaning that 

it wil l take time to develop a full picture of a CO-OP's fmances. Collection efforts will 

be dictated by the terms of the loan agreement, and state and federal laws. We have 

begun the fonual process of recovering funds by tenuinating loans for many CO-OPs and 

notifying them of their obligation to repay U1e loans. We are working in close 

collaboration witl1 tl1e US Depa1tment of Justice and will use all available tools to recover 

loan funds owed by these companies. 

2. What is the fmancial status of the r emaining CO-OPs? Do you expect 

additional CO-OPs to suspend oper dtion s in 2016? If so, how many? 

Answc•·: CMS is closely monitoring the eleven remaining CO-OPs. Each of these COOPs were approved by their State Department of Insurance to offer coverage for the 2016 

plan year. We will continue to work closely with the Departments of Insurance to protect 

consmners <md taxpayers. 

3. Do you p1·oject the r emaining CO-OPs will repay theb· loans on time, under 

the t emts of their contr-acts with CMS? What is the basis for that 

detemlination? 

Answer : As you know, Ute CO-OP loans are nol due to be repaid until 5 to fifteen years 

after the date funds are disbursed under the Joan. We will continue to work with the 

remaining CO-Ops so that they are best positioned to fulfill their obligations under the 

tenns of the loan agreements. 

Questions from Representati1•e Kind of Wisconsil1: 

I ltave become awa•·e of a measure moving tlu·ough the World Health Organization 

that seeks to prohibit the marketing of any milk consumed by yowtg cllildren. My 

understanding is th1s was developed with tittle or no public input. This measure 

canies significant public health, trade and economic implications for the US dairy 

industl-y that need t.o be fw1her cxanlined. 

J. Will yon commit to working with this Comm.ittee and aiJ impacted stakeh oldc•-s 

to halt this process unti.l these implications are fully understood'! 

Answe1·: At the request of Member States, the World Health Organization (WHO) 

developed draft guidance on ending the inappropriate promotion of foods for infants and 

young chi ldren,

9 and presented it to the WHO Executive Board (EB) for potential 

• As presented in repon EB138/8: Maternal, infant and young child nutrition Available a1 

http://apps. who. inlfgl:>'ebwha/pdf files!EB 138/B 138 8-<:npdf (Accessed March 14. 2016). 

37 
118 


joloto on DSKB35BYQ1 with HEARING22185.074

endorsement. lhis draft guidance aims to suppott countries in protecting and promoting 

optimal nutrition for children during the first three years of life, a critical window for 

health and nutrition outcomes. 

WHO developed the draft guidance using a Scientific and Technical Advisory Group 

(STAG) process. TI1e STAG was convened in2013 and produced several reports., 

includiJ1g a draft of the guidance that was presented to WHO in 2015. WHO held online 

and in-person public con$ultations in August 2015, revised the guidance, and presented it 

to Member States for the WHO Executive Board (EB) meeting in January 2016. During 

the EB meeting, WHO agreed to hold an additional consultation from 1-29 Febmary 

2016 to allow time for further Member State comment. ll1e guidance is not bindiJ1g on 

Member States. 

ll1e WHO draft guidance advises Member States on ending inappropriate promotion to 

consumers of foods for infants and young children, not to limit product availability. The 

draft does not seek to prohibit the marketing of all milk products consumed by young 

children, or to revise recommendations for optimal infant and child feeding practices. 'n1e 

document does recommend that countries prohibit the promotion of breast-milk 

substitutes marketed for feeding children up to three years of age. 

HHS is working with other relevant Federal agencies (including Department of State, 

Department of Conunerce, USTR, USAID, USDA, among others) to prepare a teclmical 

comment submission to WHO, and has had multiple conversations wit11 stakeholders on 

the matter. HJ-IS will continue to work with the other agencies and discuss remaining 

concems with stakeholders. 

Questions from Represellfative Rangel of New York: 

Madame Secreta ry-I want to ask you a question about third-party pr•emium 

assistance pi'Ogmms that are operated by non-profits. Some of these progr·ams have 

existed prior to t.h e passage of the Affordable Care Act and UL'lny for· decades. 

Since CMS ·e sed an Interim Final Rule in Mar·ch 2014, raising the issue of thirdparty payment of health insumnce pr·emiums, a growing number ofinsumnce 

caiTiers a1·e r·efusing to accept thh·d par1y payments fr·om non-pr·ofit organizations. 

These non-profit organizations have a lon g and proven track r ecor·d of helping 

people with chronic conditions mainta.in affor·dable hea.lth co,,erage. I understand 

that ther·e ar·e cer1ain statutory provisions related to premium assistance provided 

through the Ryan Whlte Care Act and for our tribes. 

1. Can you explain why HHS does not r·equire insurance companies to accept 

third-party payments fi'Om non-profits on behalf of insured people with 

chronic conditions? Is ther·e anything in the sta tute that bar-s you from doing 

so? Isn 't it appr·opriate to consider· applying the same protections to people 

battUng kidney disease as those you've applied to people with HIV'! Do you 

38 
119 


joloto on DSKB35BYQ1 with HEARING22185.075

agree that both groups should be protected from discriminatory insurance 

practices? 

Answer: Thank you for raising this important issue. In the l.nterim Final Rule, CMS 

required QHP issuers to accept payment from entities such as the Ryan White HlY/AIDS 

Program, tribes, tribal organizations and urban Indian organizations, in part because 

federal or state law authorizes, or policy specifically envisions third party payment of 

premium and cost-sharing amounts by these entities. 

For example, section 402 of the Indian Health Care Improvement Act and the relevant 

regulations, which implement the Affordable Care Act, provide that Marketplaces may 

permit Indian tribes, tribal organizations and urban Indian organizations to pay 

aggregated QHP premiums on behalf of qualified individuals, subject to terms and 

conditions detennined by the Marketplace. 

In addition, the Ryan White HIV/AIDS Program has been authorized to provide 

insurance assistance for low-income people living with HTV since 1990 under the Ryan 

White Comprehensive AJDS Resources Emergency (CARE) Act. States have the 

authority to use AJDS Drug Assistance Program grant funds to purchase or maintain 

health insurance or plans when the coverage includes the relevant therapeutics and the 

cost of such coverage does not exceed the costs of otherwise providing the therapeutics 

directly. This provision was added in 2000 by the Ryan White CARE Act Amendments 

of2000. 

As noted in the November 4, 2013 FAQ, it has been suggested that hospitals, other health 

care providers, and other commercial entities may be considering supporting premium 

payments and cost-sharing obligations with respect to qualified health plans purchased by 

patients in the Marketplaces. HHS has significant concerns with this practice because it 

could skew the insurance risk pool and create an uneven field in the Marketplaces. 

Issuers may still choose to accept third party payments from non-profits, and in an FAQ 

published in February 2014,10 CMS noted that it does not believe this creates adverse risk 

selection so long as the criteria for premium assistance is based on financial need, not 

health status, and that the assistance continues through the entire plan year. 

I would like to paint a picture for you of the type of people charitable premiumassistance organizations are trying to help. These are people with very significant 

health care needs, but very little in terms of financial resources. For example, the 

American Kidney Fund (AKF) p1·ovides charitable assistance to disabled individuals 

who ar e on dialysis. These patients tend to be older - 48 percent are older than 60. 

They're also disproportionately minority when compared to the U.S. population ; 38 

percent of AKF grant recipients are African American and 15 percent are of 

Hispanic ethnicity. Fully 70 pe1·cent of the patients AKF helps are unemployed, 

while another 20 percent work only part-time. To qualify for assistance f1·om AKF 

10 hups://www.cms.gov/CCIIO/Resources/Fact·Sheets·and· FAOs/Downloads/third·party-paymellls·ofpremiums-fbr·Qua l ifocd·heahh·plans·in·the-marketplaces-2-7-l4.pdf 

39 
120 


joloto on DSKB35BYQ1 with HEARING22185.076

for health insm·an ce p1-erniums, patients must ha"e extr emely low-income relati"e to 

expenses. Sixty percent of the patients AKF assists ha"e annual household incomes 

mtder $20,000. At the same tinte, they ha"e :n •emge mmual out-of-pocket medical 

expenses of close to $7,000. 

This is an economic:tUy and physically f1-agjle popul:ttion. Wh en insurers •·efusc 

third-party payments from a n on-p•·oflt like the AKF, this jeopa•·dizes patients' 

access to appropl"iate CO\'emge. 

In my con g•·cssional distl"ict, I have around 100 patients who •·ecei"ed assistance 

from AKF. And ac1·oss t he state of New Yo•·k, we have ove1· 2000 patient.s who have 

recei"ed ss ~1ance in 2015. 

1. Do you think that iltsm·e•-s may be engaging in disc•·iminatory p1·actices? 

One of the goals of the ACA was to prohibit disclimination a gainst people 

with p•·e-existin g conditions? Do you agr ee tltis policy undemtines that goal 

and encourages disCJ"imlnato•-y pmctices by iJtSm·e•-s to occm·? 

Answe•·: ·n1e Affordable Care Act refom1ed the health insurance marketplace to ensure 

that individuals with pre-existing conditions are able to access care by prohibiting 

insurance plans from discriminating against consumers with pre-existing conditions or 

charging them more because they got sick or lifetime limits on their insurance. ln 

addition, with respect to the Marketplace specifically, the ACA provides for both tax 

credits to help consumers afford their premiums, and reduced cost- sharing for consumers 

who qualify. ·n1ese market refonns and financial assistance work together to ensure 

access to care. 

As noted in the HHS Notice of Benefit lmd Payment Parameters for 2017 proposed mle, 

HHS is considering whether to expand the list of entities from which issuers are required 

to accept payment to include not-for-profit charitable organizations in future years. If 

such not-for-profit charitable organizations were included, HHS would also intend to 

include guardrai ls aimed at minimizing the impact on the risk pool, such as limiting 

assistance to individuals not eligible for other Minimum Essential Coverage and 

requiring assistance until the end of the calendar year. 

Questio11 from Representative Dm•is 1/li.JJois: 

Madame Secretary - I w:u1t to :1sk you a question about. thlrd-pa11y p•·entium 

assistance programs that are opemted by non-p•·oflts. Some of these programs ha"e 

existed prior to the passage of the Affordable Ca1-e Act and many for decades. 

Since CMS •·eleased an lnterim Final Rule in Ma1·ch 2014, mising the issue ofthl•·dparty payment of health insumnce prentiunlS, a growing number of insumnce 

canie1-s are r efusing to accept third pa11y p:1yments fi'Om non -profit o•·ganizations. 

These non-p•·oflt o•·g:mizations ha"e a lon g and pro,•en tmck •·ecord of helping 

people with chronic conditions maintain affordable health co"erage. I tuuleJ'Stand 

40 
121 


joloto on DSKB35BYQ1 with HEARING22185.077

thai ther·e are certain statuto ry provisions •·elated to pt·emium a ssistance provided 

through the Ry:m W hite Car e Act and for our tJ·ibes. 

1. Can you explain w hy HHS does not •·equire insu ..ance companies to accept 

third-party payments fnmt non-profits o n behalf of iJtsut·ed people with 

chronic conditions? Is there anything iJ1 the statute that bat'S you from doing 

so? 

Answer: In the Interim Final Rule, CMS required QHP issuers to accept payment from 

entities such as the Ryan White HTV I AIDS Program, tribes, tribal organiz ations and 

urban Indian organizations, in part because federal or state Jaw autbori zes, or policy 

specificaUy envisions third party payment of premium and cost-sharing amounts by these 

entities. 

As noted in the November 4. 2013 F AQ, it has been suggested that hospitals, other health 

care providers, and other commercial entities may be considering supporting premium 

payments and cost-sharing obligations with respect to qualified health plans purchased by 

patients in the Marketplaces. HHS has significant concems with this practice because it 

could skew the insurance risk pool and create an uneven field in the Marketplaces. 

CMS later c larified that the concems addressed in the November 4, 2013 FAQ would not 

apply to payments from private, not-for-profit foundations if they are made on beha lf of 

QHP en.roll ees who satisfy de fined criteria that are based on financial status and do not 

consider enrollees· health status. CMS noted that it does not be lieve this c reates adverse 

risk selection so long as the criteria for premium assistance is based on financial need, not 

health status, and that the assistance continues through the entire plan year. 

QuestiQII$ from Represe11tati1•e Pascre/1 of New Jersey: 

In your response to my question about. how HHS wiD work to supp011. incorporatiJtg 

UDI into health insurance claims, you stated that there are extel"llal boar·ds that 

pro,,ide r econunendations on chan ges and additions to the claims form. HO\veve•·, as 

you know, those ot·ganizations take guidance ft'Om health plans, including Medica•·e, 

and CMS plays a substantial r·o1e in developing those t·econunendations. The 

decision to incorpomte UDI into the claints form has implications fo•· othe •· agendes 

within HHS. FDA has repeatedly expressed suppor1 for· UDI i.n claims to bolst.er· its 

ability to conduct post-ma rket sw-veillance of m(.'tfical devices. The major pr·oblem 

with duodenoscopes shed llght on a numbe •· of deficiencies in the cm·rent postmarket surveillance system and highlighted the need to provide FDA with 

additiona.l tools to perfomt this essential agency fwtction. 

l. As the head of the depa11ment thnt ove1-sees both of those agencies, how do you 

plan to ensure that CMS' puticipation in that process adequately a ccounts 

for implication s for· other agencies, particularly FDA? 

Answer : We share the important goal of improving patient safety through post-market 

41 
122 


joloto on DSKB35BYQ1 with HEARING22185.078

surveillance and adverse event reporting for medical devices with UD!s. Because the 

Department firmly believes that post-market surveillance for medical devices is critical, 

we are moving forward with the incorporation of UDis into electronic health records. 

ONC's approach is a strong step towards incorporating UDI into electronic health record 

technology and making that information ready and accessible for patients and clinicians 

to use at the point of care. Additionally, having UDis incorporated into EHRs will allow 

the use of a device to be linked with a patient's experience with that device, thereby 

generating better information for patients and providers to make well-informed decisions, 

and fac ilitate medical device innovation and safety surveillance. 

In the meantime, CMS and the FDA look forward to continuing to explore options that 

would improve surveillance in a timely and effective manner. Both agencies are 

committed to capturing appropriate data and sharing information transparently to improve 

the quality and safety of care delivered to people across the nation. FDA and CMS also 

support the recommendation by the National Committee on Vital and Health Statistics to 

consider conducting voluntary pilot tests of the benefits, costs, and feasibility of UD.Is in 

claims reporting. Voluntary pilots should address key challenges to adding UD!s to 

claims, including significant technological hurdles and costs (for providers, payers and 

others), as well as difficulties in validating UDis reported on claims. 

2. T he Centers for Medicare and Medicaid Ser vices (CMS) has made investments 

totaling more than $2 billion to pilot new del.ivery and payment system 

models. While many of these are promising, furth er expel'ience and 

evaluation will be needed to know what works and what can be replicated. At 

the same time, CMS can build on existing model.s that have already stood the 

test of time, including the Program of All-Inclusive Care for the Elderly. 

How is CMS balancing its investment in new models with its investment in 

expanding existing, proven models? 

Answer: I share your support for the PACE program, and agree that is it important to 

build on successful existing models as we test other delivery system reforms. 

While PACE has proven successful in keeping frail elderly individuals in the community, 

we agree that we should revise certain regulatory provisions to afford more flexibility as 

a means to encourage the expansion of the PACE program to more states, increase access 

for participants, and further enhance the program's effectiveness at providing care while 

reducing costs. CMS is proposing to revise and update policies to reflect subsequent 

changes in the practice of caring for PACE participants and changes in technology based 

on our experience implementing and overseeing the PACE program. CMS continues to 

re-ceive numerous suggestions from PACE organizations, beneficiaries, Members of 

Congress, and other stakeholders and looks forward to working with stakeholders 

throughout the rulemaking process. 

CMS is dedicated to continuing to explore new opportunities and ideas to further 

strengthen PACE programs and services. 

42 
123 


joloto on DSKB35BYQ1 with HEARING22185.079

At the same time, the Innovation Center looks forward to building on its existing work 

while testing new models. The Secretary has the authority to expand the duration and 

scope of a model through rulemaking if certain statutory criteria are met: (I) an 

expansion is expected to reduce spending without reducing the quality of care, or 

improve the quality of care without increasing spending (2) the CMS Chief Actuary 

certifies that an expansion would reduce (or would not result in an increase in) net 

program spending and (3) an expansion is expected to not deny or limit coverage or 

benefits. The Innovation Center conducts an independent evaluation of each payment 

and service delivery model tested. Using these evaluation results, as well as other 

available data, the Innovation Center makes decisions regarding expansions in 

accordance with the statutory requirements and each model's unique elements. 

The Innovation Center is also committed to developing and testing new models. New 

models are developed in accordance with the innovation Center's purpose to test 

innovative payment and service delivery models to reduce program expenditures while 

preserving or enhancing the quality of care for Medicare, Medicaid, or Children's Health 

Insurance Program (CHIP) beneficiaries. Moreover, in accordance with section 

1115A(b), models to be tested under section Il l SA must address a defined population for 

which there are either deficits in care leading to poor clinical outcomes or potentially 

avoidable expenditures. During the development of models, the Innovation Center builds 

on ideas received from stakeholders and consults with clinical and analytical experts, as 

well as with representatives of relevant federal and state agencies. Through these efforts, 

the Innovation Center balances investment in expanding existing models and testing new 

initiatives. 

3.CMS is long overdue in finalizin g regulations to adopt a standard claim 

attachment. Once CMS adopts and implements a standard claims 

attachment, how does the agency intend to integrate this information into 

databases that also contain information from claims? Does the agency intend 

to provide FDA, r esearchers, innovators and registries with access to claims 

attachment data in the same manner that the agency has provided access to 

claims data? If so, bow, and if not, why not'? 

Answer : The Se-cretary is required to promulgate a fina l rule to establish a transaction 

standard and a single set of associated operating rules for health claims attachments. In 

2005, HHS issued a proposed rule which would have established both transaction and 

content standards for claims attachments. Due to stakeholder comments, that rule was 

never finalized. HHS is closely tracking the work of the standard setting organizations on 

the development of claims attachment standards. In fact, in February 20 16, the National 

Committee of Vital Statistics (NCVHS) has scheduled hearings from stakeholders on 

claims auachments. CMS looks forward to future recommendations from NCVHS on this 

topic. 

4. Section 2 of the Autism Collaboration, Accountability, Research, Education, 

and Support Act of2014 (Public Law 113-157) requires the Secretary of HHS 

to designate an official to oversee national autism spectrum disorder 

r esearch, ser vices, a nd support activities. lt also directs tbe official to 

43 
124 


joloto on DSKB35BYQ1 with HEARING22185.080

implement such activities taking into account the strategic plan developed by 

the Interagency Autism Coordinating Committee and ensure that duplication 

of activities by federal agencies is minimized. What is the status of the 

designee? 

Answer: The Department looks forward to announcing this spring a designee to (1) 

oversee national autism spectrum disorder research, services, and support activities, (2) 

implement autism spectrum disorder activities, takjng into account the strategic plan 

developed by the Interagency Autism Coordinating Committee and (3) ensure that autism 

spectrum disorder activities of the Department of Health and Human Services and of 

other Federal departments and agencies are not unnecessarily duplicative. In addition to 

their existing duties, this designee will serve as Autism Coordinator for the 

Department. We expect this appointment in the near-term, and will keep your office 

appraised. 

5.A number of hospitals in my state of New J ersey have expressed concerns 

about the change to the Hospital outpatient reimbursement included in the 

Bipartisan Budget Act of 2015 (Public Law 114-74). Can you please clarify 

whether the Hospital Outpatient .Departments that are currently 

grandfathered will be able to relocate and add ser vices without losing their 

status as a Hospital Outpatient Department? 

6.New J ersey Hospitals have asked that t he regulatory guidance on the Hospital 

outpatient r eimbursement policy included in the Bipartisan Budget Act of 

2015 (Public Law 114-74) be issued as soon as possible. Would CMS be 

willing to issue pt·oposed regulations on thh policy before it issues the 

Outpatient Prospective Payment Rule, such as part of the Inpatient 

Prospective Payment proposed regulation to be issued in the Spring session 

of20l 6? 

Answer: CMS has posted publicly that this provision will be addressed through 

rulemaking in the CY 20 17 Hospital Outpatient Prospective Payment System (OPPS) 

proposed rule which is generally issued in the summer. Here is the link to the notice: 

https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/Downloads!Note-Regarding-lmplementation-ofSection-603-of-the-Bipartisan-Budget-Act-of-20 15.pdf. 

If there is a scenario regarding implementation of Section 603 that you are concerned 

about and want to call attention to it for the proposed rule, CMS would be happy to 

review any comments you would like to submit. In addition, the public will have the 

opportunity to comment on the proposed rule per the standard notice and comment 

rulemaking process. Additionally, please feel free to reach out to Jim Esquea on my staff 

to discuss any specifics. 

44 
125 


joloto on DSKB35BYQ1 with HEARING22185.081

7. CMS has l.am•ched m•p•·ecedented new initiatives to release Med.ica•·c claims 

data on proccdm·es, medications and some medical supplies. CMS last yeat· 

even expanded access to Medicare claims data to researche1-s and 

manufactm·e•-s of medical p•·oducts. And, just last month, CMS issued 

regulations that will enhance the use and availability of Medicm·e data in 

implementing legislation that was championed in a bipa1-tisan way and 

advanced by the former chaim1an of this committee, who now also happens 

to be the Spe:1ker of the House. ln implementing aU these policies, CMS has 

described claims data as an " essentiaJ ing•·edient to buiJding a bette•·, 

smarter, healthier system" t.hat would help "make smarte•· and more 

inf01med healthca•·e decisions". The most common Medicare hospital 

procedm·e involves hip and knee implantation procedures, affecting 400,000 

seniors per year and a ccounting for $7 billion in spending. And that doesn' t 

even count the millions of patients with ca•·diac sten ts and other in• planted 

devices. Adding the unique device identifie•· to claims data would ensure that 

this information can be just as ' 'aluable for implants as they ar e fo•· drugs 

and other medical inten •entions. Given that CMS believes that Medicnrc 

claims data are criticaUy impm-tant to improve patient ca1·e and reduce costs, 

why is it different for medical implants used in the most common Medicare 

procedures? Why docs CMS believe claims dnta are essential to our learn.ing 

healthca•·e system, just not fo•· medical implants? 

Answer: Congressman, we share the important goal of improving patient safety through 

post-market surveiUance and adverse event reporting for medical devices with UDis. 

Because the Department fim1ly believes that post-market surveillance for medical devices 

is critical, we are moving fonvard witl1 the incorporation ofUDis into electronic health 

records. ONC's approach is a strong step towards incorporating UDI into electronic 

health record technology and making that infonnation ready and accessible for patients 

and clinicians to use at the point of care. Additionally, having UDis incorporated into 

EHRs will allow the use of a device to be linked with a patient's experience with that 

device. tl1ereby generating better information for patients and providers to make wellinformed decisions, and fac ilitate medical device umovation and safety surveillance. 

In the meantune, CMS and the FDA look forward to contiuuu1g to explore options that 

would unprove surveillance in a timely and effective mmmer. Both agencies are 

committed to capnariJ1g appropriate data and sharing iJuonnat ion transparently to improve 

the quality and safety of care delivered to people across the nation. FDA a11d CMS also 

support the recommendation by the National Committee on Vital a11d Health Statistics to 

consider conducting volunlal)' pilot tests of the benefits, costs, and feasibility ofUDis in 

clauus reportiJ1g. Voluntary pilots should address key challenges to adding UDis to 

claiJns, u1cluding significm1t technological hurdles and costs (for providers, payers and 

others), as well as difficulties in validati11g UDis reported on claims. 

Questions f rom Represe11tati1•e Crowley of New York: 

45 
126 


joloto on DSKB35BYQ1 with HEARING22185.082

For over 10 years, HRSA has been oven ceing a p1·ocess at UNOS to •·evise the o•·gan 

donation system so that it is mor e needs-based .-ather than solely geographic-based. 

As this p1·ocess has continued, stakeholden in New Yo1·k State and othe1· states 

impacted by the current p1·ocess are eagerly awaiting resolution, as are the many 

patients who remain on the o•·gan transplant wait list. 

1. Can you p•·ovide infonnation about the timeline fo•· a decision and an update on 

what p•·ogress HRSA and UNOS a1·e making with these delibe•·ations? 

An swer: Any change in the OPTN liver allocation policy must be consistent with the 

requirements and principles of the OPTN final mle, which articulates the goals to be 

achieved through OPTN organ allocation policies. TI1ese policies must, among other 

factors, be based on sound medical judgment and seek to achieve the best use of donated 

organs. be desigJled to avoid the wastage of organs, avoid futile transplants, promote 

patient access to transplantation, promote the efficient management of organ placement, 

and not be based on a candidate's place of residence or listing (except to the ex1ent 

necessary to satisfy other requirements). 

Consistent with OPTN processes and requirements for the development of changes to the 

liver allocation policy, several key activities and policy changes have been completed in 

the last several years. Since 2014, the foUowing steps have been taken to infonn 

discussions of potential changes to the liver allocation policy regardiJJg geographic 

challenges and altemative approaches to liver allocation. 

HRSA anticipates that the Liver Committee will publish on the OPTN web site a policy 

proposal for public comment (60-day comment period) by January 2017, then 

subsequently review the feedback. Nex1, the OPTN Board will vote on a policy proposal. 

Questions from Ways aiUI Means Committee: 

1. Does the Administt-ation plan to use physician developed A UC in the 

o•·dering of advan ced inmging st.udies instead of the ongoing p•·iorauthorization policies? Please explain to the Committee why the Agency 

will not meet the implementation deadline of J:mu:u-y 2017 and please tell 

the Conunittee a date ce11ain as to when this program will be implemented. 

Answe1·: CMS is required to adhere to rapid timelines for establishing a new Medicare 

Appropriate Use Criteria (AUC) program for advanced imaging services. The number of 

clinicians impacted by the scope of this progJ·am is significant as it will apply to every 

physician and practitioner who orders applicable diagnostic imaging services. TI1is 

crosses almost every medical specialty and could have a particular impact on primary 

care physicians since their scope of practice can be quite vast. We believe the best 

implementation approach is one that is diligent., maximizes the opportunity for public 

comment and stakeholder engagement, and allows for adequate advance noti ce to 

physicians and practitioners, beneficiaries, AUC developers, and Clinical Decision 

Support mechanism developers. It is for these reasons we proposed a stepwise approach, 

46 
127 


joloto on DSKB35BYQ1 with HEARING22185.083

adopted through rulemaking, to first define and lay out the process for the Medicare AUC 

program. However, we also recognize the importance of moving expeditiously to 

accomplish a fully implemented program. 

2. In order to improve patient outcomes and enhance quaUty of care, the new 

formula by which Medicare will reimburse physicians will incoqJOrate 

patient engagement features. As structured, the beneficiary engagement 

subcategory within the Merit-Based Incentive Payment System (MIPS) 

references beneficiary self-management training and recognizes that to 

achieve successful beneficiary self-management training, the patient's selfmanagement capabilities must first be assessed. The tool providers use to 

assess patient self-management capability makes a difference. 

3. As CMS develops MIPS, will it direct providers to rely on an empirically 

validated, interval level, patient self-management assessment tool to 

determine a beneficiary's self-management capabilities? The use of 

measures that are validated and proven reliable through extensive peerreviewed studies, national and interna tional usage and that have empirically 

validated interval level measurement have proven capabilities to be acted 

upon - through intervention by patients and providers- in order to improve 

self-management and reduce unwarranted utilization. 

Answer to 2-3: As laid out in statute, the Merit-based Incentive Payment System 

(MlPS) is a rigorous value-based purchasing program for physician and practitioner 

services. EPs will be scored under MIPS based on a single composite performance score, 

which will factor in performance in four weighted categories: quality, resource use, 

clinical practice improvement activities, and meaningful use of certified electronic health 

record technology. We are working hard to establish the proposed measures and activities 

that will fall under each of the four MIPS categories and appreciate the feedback we have 

received from stakeholders, particularly regarding areas that are new to CMS, such as 

clinical practice improvement activities. We are committed to building a program that 

fulfills the goals of advancing quality and value, while being adaptive to the needs of 

each clinician's individual practice and patient population. We anticipate releasing a 

proposed MACRA implementation rule, including a 60-day comment period, this spring. 

We look forward to continued engagement from Congress and the health care 

community. 

4. What is the status of CMS's efforts to stop improper payments before they 

are made? What impediments exist, if any, for using recovery auditor to 

execute pre-payment reviews of Medicare l)ayments? 

Answet·: CMS' program integrity strategy is moving beyond the reactive "pay and 

chase" method toward a more effective, proactive strategy that identifies potential 

improper payments before they are made, keeps unscrupulous providers and suppliers out 

of Medicare and Medicaid at the outset, quickly removes wrongdoers rrom the programs 

47 
128 


joloto on DSKB35BYQ1 with HEARING22185.084

once they are detected, and corrects improper payments as quickly as possible. CMS uses 

many tools as part of this strategy, such as prior authorization. CMS believes using a 

prior authorization process will help ensure that all relevant coverage, coding, and 

payment requirements are met before the service is rendered and the claim is submitted 

for payment. 

CMS also uses prepayment reviews as part of this proactive strategy. CMS' Medicare 

Administrative Contractors, which process Medicare Part A and Part B medical claims or 

OMEPOS claims for Medicare Fee-For-Service (FFS) beneficiaries, may conduct 

prepayment reviews after the service is provided and the claim is submitted for payment 

but before the claim is paid. CMS continues to focus on prepayment reviews of claims 

that have historically resulted in high rates of improper payments. This will help stop 

improper payments before the claims are paid, and as a result, reduce the improper 

payment rate. 

CMS also utilizes a sophisticated predictive analytics technology, called the Fraud 

Prevention System (FPS), to prevent and detect fraud, waste, and abuse in the Medicare 

FFS program. The FPS provides a comprehensive view of Medicare FFS provider and 

beneficiary activities in order to identity and analyze provider networks, billing patterns 

and beneficiary utilization patterns, and detect patterns that represent a high risk of 

fraudulent activity. Over the first three years of implementation, FPS identified or 

prevented $820 million in inappropriate payments. 

The statute specifically authorizes CMS to make payment to Recovery Auditors only 

from amounts recovered. However, in September 20 12, CMS allowed Recovery 

Auditors to review claims before they are paid as part of the Recovery Auditor 

Prepayment Review Demonstration. The demonstration was conducted in seven states 

with high incidences of improper payments and fraud, as well as four states with the high 

numbers of short hospital stays. As part of the close-out process for the existing 

Recovery Auditor contracts while CMS worked to procure new contractors, the 

prepayment demonstration was paused and remains on hold while CMS assesses its 

options regarding the procurement of the next Recovery Auditor contracts. 

5. What is the timeline HHS/CMS expects to adhere to in terms of fin alizing 

the procurement for the next round of Recovery Audit contracts? 

Answer: The current Recovery Auditors are under contract to continue their active 

recovery auditing work through July 2016 to allow completion of the new procurement 

process. In November 20 I 5, CMS posted the Request For Proposal (RFP) for the new 

Medicare Fee-for-Service Recovery Auditor contracts. CMS is actively engaged in the 

procurement process for the next round of Medicare Fee-for-Service Recovery Auditor 

contracts. 

J have become aware of a measure moving through the World Health Organization 

that seeks to prohibit the marketing of any milk consumed by young children. My 

understanding is this was developed with little or no public input. This measure 

carries significant public health, trade and economic implications for the US dairy 

48 
129 


joloto on DSKB35BYQ1 with HEARING22185.085

industry that need to be further examined. 

6. WiU you commit to working with this Committee and all impacted 

stakeholders to halt this process until these implications are fully 

understood? 

Answer: At the request of Member States, the World Health Organization (WHO) 

developed draft yuidance on ending the inappropriate promotion of foods for infants and 

young children, 1 and presented it to the WHO Executive Board (EB) for potential 

endorsement. This drdft guidance aims to support countries in protecting and promoting 

optimal nutrition for children during the first three years of life, a critical window for 

health and nutrition outcomes. 

WHO developed the draft guidance using a Scientific and Technical Advisory Group 

(STAG) process. The STAG was convened in 2013 and produced several reports, 

including a draft of the guidance that was presented to WHO in 2015. WHO held online 

and in-person public consultations in August 2015, revised the guidance, and presented it 

to Member States for the WHO Executive Board (EB) meeting in January 2016. During 

the EB meeting, WHO agreed to hold an additional consultation from 1-29 February 

20 16 to allow time for f1ll1her Member State comment. The guidance is not binding on 

Member States. 

The WHO draft guidance advises Member States on ending inappropriate promotion to 

consumers of foods for infants and young children, not to limit product availability. The 

draft does not seek to prohibit the marketing of all milk products consumed by young 

children, or to revise recommendations for optimal infant and child feeding practices. The 

document does recommend that countries prohibit the promotion of breast-mi lk 

substitutes marketed for feeding children up to three years of age. 

HHS is working with other relevant Federal agencies (including Department of State, 

Department of Commerce, USTR, USAfD, USDA, among others) to prepare a technical 

comment submission to WHO, and has had multiple conversations with stakeholders on 

the matter. HHS will continue to work with the other agencies and discuss remaining 

concerns with stakeholders. 

The Office of Civil Rights (OCR) is seeking a $3.6 million increase in funding for 

fiscal2017, $1.36 million of which it would use to enforce the ACA's nondiscrimination provision, which is expected to inc•·ease the OCR's wo•·kload by 25 

percent as it reviews cases on whether insurers' specialty drug cost-sharing or 

medical service exclusions are discriminatory. Discrimina tory practices related to 

the disp•·oportionately high cost-sharing required for drugs for the treatment of 

HIV have been widely reported in the media. However, increasingly ther e have 

been r eports a bout such treatment in other chronic diseases, such as rheumatoid 

a•·thritis, psoriasis and psoriatic arthritis, multiple scle•·osis and even some types of 

11 As presented in report EB 138/8: Maternal. infant and yow1g child nutrition. Available at 

http://apps.who.int/gb/ebwha/pdf fi les/EB 138/B 138 8-en.pdf (Accessed March 14, 20 16). 

49 
130 


joloto on DSKB35BYQ1 with HEARING22185.086

cancer. One way to ensure appropriate access and sufficient patient protections is to 

have robust oversight prior to plan marketing, so beneficiaries are not forced to the 

last resort of the office of civil rights. 

7. How does HHS intend to ensure that benefit designs, including the use of 

high cost sharing tiers, and the utilization management practices like step 

ther apy/fail first protocols are used appropriately and don' t inhibit access to 

medications for chronic diseases for beneficiaries? 

Answer: As detailed in the Draft 2017 Letter to Issuers in Federally-Facilitated 

Marketplace, non-discrimination in benefit design with respect to EHB is a market-wide 

consumer protection that applies inside and outside of Marketplaces for nongrandfathered health insurance plans offered in the individual and small group markets. 

An issuer does not provide EHB if its benefit design, or the implementation of its benefit 

design, discriminates based on an individual's age, expected length of life, present or 

predicted disability, degree of medical dependency, quality of life, or other health 

conditions. 

As part of that guidance CMS cautioned issuers to avoid discouraging enrollment of 

individuals with chronic health needs. For example, CMS noted that if an issuer refuses 

to cover a single-tablet drug regimen or extended-release product that is customarily 

prescribed and is just as effective as a multi-tablet regimen, absent an appropriate reason 

for such refusal (such as a substantial difference in the cost of the two regimens), such a 

plan design might effectively discriminate against, or discourage enrollment by, 

individuals who would benefit from such innovative therapeutic options. As another 

example, if an issuer places most or all drugs that treat a specific condition on the highest 

cost fomlUiary tiers, that plan design might effectively discriminate against, or 

discourages enrollment by, individuals who have those conditions. 

The enforcement of this standard is largely conducted by States. CMS has encouraged 

States that are enforcing the Affordable Care Act to consider a number of strategies for 

assessing compliance with this standard including, but not limited, to analysis of 

information entered in the QHP Plans and Benefits Template. 

8. How will HHS ensure that both plans participating in the Exchanges, as well 

as plans participating in MA-PD ar e offering robust formulary access for 

medications that treat chronic diseases? 

Answer: CMS has policies to promote access to medications for consumers enrolling in 

coverage through the Marketplace and for Medicare beneficiaries. With regard to the 

Marketplaces, Qualified Health Plans must offer a range of benefits including benefits in 

at least ten broad categories, including prescription drugs. As noted in the answer to 

question # 8 below, as part of the certification process, CMS reviews data submitted by 

plans to ensure non-discrimination in QHP prescription benefit design. 

50 
131 


joloto on DSKB35BYQ1 with HEARING22185.087

Part of this review includes reviews for adverse tiering, which occurs when a formu lary 

benefit design assigns most or all drugs in the same therapeutic class needed to treat a 

specific chronic, high cost medical condition to a high cost-sharing tier. Since adverse 

tiering is potentially discriminatory, this review may examine the tier placement of 

prescription drugs to determine whether QHPs are also consistently placing drugs used to 

treat these medical conditions on a high cost-sharing tier. 

For Medicare, CMS encourages Part 0 sponsors, including MA-PD sponsors, to submit 

formularies similar to those in widespread use today. CMS reviews the formulary to 

ensure inclusion of a range of drugs in a broad distribution of therapeutic categories and 

classes, in order to satisfy the Medicare Modernization Act (MMA) requirement that a 

sponsor's categorization system does not substantially discourage enrollment by any 

group of beneficiaries. CMS will consider the specilic drugs, tiering and utilization 

management strategies employed in each formu lary. 

A Health Business Daily article, "CMS Might T ake Deepc•· Dive Into Outlier Drug 

Costs to Find Discriminatory Designs" (June 29, 2015), states, "Although the issue 

of discriminatory plan design is on the radar of the National Association of State 

Insurance Commissioners, few, if any, states have the qualitative rigor needed to 

conduct a sophisticated analysis of benefit designs. Moreover, they generally don't 

have clinicians, pharmacists or statisticians on staff. Identifying outliers might be 

easier fo•· states where only a few ca!Tiers compete." 

9. What steps are being taken by CCHO and CMS to analyze the prevalence of 

these aggressive tactics, including specialty tiers and the frequent use of step 

therapy/fail first p•·otocols and the potential health outcome impact on 

patients in the exchanges and Medicare? 

Answer: l11ank you for raising this important issue. It is critical that patients are able to 

access the care they need when they need it and I look forward to working with you 

broadly on these issues. ln addition to the reviews for non-discrimination in EHBs as part 

of the 2017 QHP Certification process, CMS has proposed to review QHP's formulary 

drug list to ensure non-discrimination in their prescription benefit design. CMS has 

proposed to perform an outlier analysis that compares seeking certification to be offered 

through an FFM and flag those identified as outliers based on both includes both Statelevel and national lower threshold values. QHPs that are outliers have an unusually high 

number of drugs that are subject to prior authorization and/or step therapy requirements 

in a particular United States Pharmacopeia category and class. CMS requires that QHPs 

meet or exceed both threshold values. CMS also encourages States performing plan 

management functions to implement this type of review. 

In addition, as we have in prior years, CMS will review each QHP's prescription drug 

coverage to determine that it meets applicable standards laid out in regulation. Based on 

data submitted by issuers in the prescription drug template, this review will analyze the 

availability of drugs recommended by nationally-recognized clinical guidelines used in 

the treatment of specific medical conditions. The medical conditions included in the 

51 
132 


joloto on DSKB35BYQ1 with HEARING22185.088

review include the following: bipolar disorder, breast cancer, diabetes, hepatitis C, HIV, 

multiple sclerosis, prostate cancer, rheumatoid arthritis, and schizophrenia. In addition to 

analyzing the appropriate coverage of drugs recommended by the clinical guidelines, the 

review will also analyze cost-sharing requirements associated with these drugs so that 

they are not used to dissuade consumers with such conditions from enrolling in the QHP. 

This portion of the review will identify QHPs that are outliers based on the presence of 

unusua lly high cost-sharing requirements for specific drugs. Other additional medical 

conditions may be considered as part of future reviews. 

Finally, CMS will conduct a review of each QHP's coverage of standard treatment 

protocols for the treatment of certain chronic and high-cost medical conditions which 

includes the associated medical services and drug coverage for first and second line 

therapies as recommended by nationally-recognized clinical guidelines. CMS is also 

concerned about adverse tiering, which occurs when a formu lary benefit design assigns 

most or all drugs in the same therapeutic class needed to treat a specific chronic, high 

cost medical condition to a high cost-sharing tier. Since adverse tiering is potentially 

discriminatory, this review may examine the tier placement of prescription drugs to 

determine whether QHPs are also consistently placing drugs used to treat these medical 

conditions on a high cost-sharing tier. 

With regard to monitoring the use of utilization management tools and specialty tiers in 

Medicare Part 0, as a part of fonnulary review, CMS will look to existing best practices 

to check that Part D sponsors' use of prior authorization, step therapy, and quantity limits 

is consistent with such practices. CMS will look to current industry standards as well as 

appropriate guidelines that might be found from expert organizations and to the use of 

such standards in existing drug sponsors that are widely used by seniors and people with 

disabilities. CMS will ensure that sponsors' use of such tools is consistent with best 

practices. CMS will also compare formularies among the applicants to analyze the 

comparative use of practices such as prior authorization, step therapy, and quantity limits. 

ln cases where a sponsor may fall outside of best practices, the sponsor will be asked to 

provide a reasonable justification for its practices. CMS' expectation is that formu lary 

benefit management tools will be used in Part D formu laries consistent with the way they 

are applied in existing formulary systems. 

CMS will only approve specialty tiers within formularies and benefit designs that comply 

with the following: 

• Only one tier is designated a specialty tier exempt from cost-sharing exceptions. 

• Cost-sharing associated with the specialty tier is limited to 25% after the standard 

deductible and before the initial coverage limit (or up to 33% for sponsors with 

decreased or no deductible under alternative prescription drug coverage designs). 

When applying a reduced deductible, sponsors are limited to the maximum 

specialty coinsurance levels as defined each year in the Bid User Manual. The 

deductible applied to the non-specialty tiers may not exceed the deductible that is 

applied to the specialty tier. 

• Only Part D drugs with sponsor negotiated prices that exceed the dollar-per-month 

amount established by CMS in the annual Call Letter may be placed in the specialty 

52 
133 


joloto on DSKB35BYQ1 with HEARING22185.089

tier. CMS will apply an up front evaluation across all plans for drugs that exceed the 

dollar per-month threshold and are intended for inclusion in the specialty tier. 

• If not all drugs (including all strengths) within a category or class meet the criteria 

for inclusion in the specialty tier, the sponsor must ensure that placement of the 

remaining drugs among rhe other tiers of the formulary does not substantially 

discourage enrollment. 

10. Moreover, CMS has proposed in the most r ecent draft Notice of Benefit and 

Payment Parameters ways to standa•·dized benefit designs. While 

standardization has some benefits fo•· consumers, some of the agency's of 

proposed designs would perpetuate t he discriminator y natur e of what we' re 

seeing in the exchanges. Some states have taken action to addr ess this 

discrimination through legislation (e.g., Capping monthly out of pocket 

pharmacy costs); what steps is the agency to support these state efforts and 

ensure that it doesn't take steps to actually hurt those efforts? 

Answer: Standardized plans would be optional for issuers, meaning health plans would 

not be required to offer them. However, we believe that standardized options would allow 

consumers to more easily compare plans offered by different issuers within each metal 

level and thereby simplify the consumer shopping experience by allowing them to focus 

their selection on other factors like networks, premiums, and quality. Each of these 

options is standardized in terms of in-network cost-sharing: deductible, annual limitation 

on cost-sharing, and copayment or coinsurance for a key set of EHBs that comprise a 

large percentage of the average enrollee's total spending. 

With respect to prescription drugs, we proposed that standardized options have the four 

drug tiers currently utilized in our consumer-facing applications at this time- generic, 

preferred brand, non-preferred brand, and specialty drug tiers. However, we proposed to 

allow issuers to offer additional lower-cost tiers if desired. Slightly more than half (56 

percent) of the proposed 2016 FFE QHPs have more than four drug tiers. We believe 

that standardized options would be a valuable consumer tool that allows consumers to 

more easily compare plans. However, as noted above, CMS also plans to conduct 

rigorous review for potentially discriminatory benefit design during the certification 

process, including specific reviews for prescription drugs. 

11. The Medicare Part I) Program has continued to come in under cost 

estimates, but also bas in place important patient protections. For instance, 

Part I) plans are required to provide a 3 month tr ansition supply fo•· 

beneficiaries who are stable on medication, but have lost formulary access to 

the medication or are subjected to new fail first policies. No such protections 

are in place for beneficiaries r eceiving benefits through the Exchange. Why 

has HHS not provided protections consistent with those provided to 

Medicare beneficiaries for enrollees in Exchange plans? 

53 
134 


joloto on DSKB35BYQ1 with HEARING22185.090

Answer: The Marketplace and Medicare are different programs with different 

authorizing statutes. 

As you may know, marketplace plans must have processes in place that allow an enrollee, 

the enrollee's designee, or the enrollee's prescribing physician (or other prescriber, as 

appropriate) to request and gain access to clinically appropriate drugs not otherwise 

covered by the health plan (a request for exception). In the event that an exception 

request is granted, the plan must treat the excepted drug(s) as an essential health benefit, 

including by counting any cost-sharing towards the plan's annual limitation on costsharing. 

In addition, as noted earlier, CMS has proposed to review QHPs' formulary drug list to 

ensure non-discrimination in QHP prescription benefit design. CMS has proposed to 

perform an outlier analysis where plans are compared to other plans seeking certification 

to be oiTered through an FFM and flagged when identified as outliers. The outlier 

calculation includes both State-level and national lower outlier threshold values. CMS 

requires that QHPs meet or exceed both threshold values. QHPs that are outl iers have an 

unusually high number of drugs that are subject to prior authorization and/or step therapy 

requirements in a particular United States Pharmacopeia (USP) category and class. CMS 

also encourages States performing plan management functions to implement this type of 

review. 

12. Non-medical switching is defined as, "when patients that are stable on a 

medication are switched for non-medical reasons for the puq)OSe of 

controlling costs to the insurer/payer." As a result of these medication 

switches, patients may suffer negative side effects and/or may not longer 

respond to treatment even if returned to their original medication. In fact, 

patients who are switched may increase utilization costs due to unintended 

medical consequences of the switch. Data on this type of activity is critical to 

protect patients and track the cost of switching. How will the agency collect 

data a nd monitor this issue on behalf of beneficiaries to ensure NM S does 

not lead to problems with adher ence to medication or changes in utilization 

costs as a result of the switch? 

13. Are you aware of any instances where plans have passed on additional costs 

to patients or forced patients to switch from one medication to another in 

orde•· to facmtate increased cost-savings? Are the health and safety 

consequences of this activity well known and/or understood? 

Answer: From the Marketplace perspective, CMS does not have access to or track 

individual patient data - such data resides with private Marketplace issuers. However, as 

described in greater detail above, all Marketplace plans must provide essential health 

benefits (EHB), including prescription drugs. Marketplace regulations contain a 

prohibition on discrimination and provide that an issuer does not provide EHB if its 

benefit design, or the implementation of its benefit design, discriminates based on an 

54 
135 


joloto on DSKB35BYQ1 with HEARING22185.091

individual's age, expected length of life, present or predicted disability, degree of medical 

dependency, quality of life, or other health conditions. 

14. Given the recent release and retraction of a proposed Part B drug demo 

project within CMM I, can you inform us of the status of this project and 

whether this project will be subject to public review and comment? 

Answer: Last fall, HHS convened a forum that brought together consumers, providers, 

employers, manufacturers, health insurance companies, representatives from state and 

federal government, and other stakeholders to discuss ideas on how our country can meet 

the dual imperatives of encouraging drug development and innovation while protecting 

access and afTordability. We came away with feedback to address these challenges in a 

holistic fashion addressing three important areas: (I) increasing access to information to 

support better health care decisions, (2) driving innovation that improve and save lives, 

(3) and strengthening incentives in the delivery system to reward quality care to patients 

and encourage value-based and outcomes-based decision making. 

Coming out of that forum, we have identified several areas of potential opportunity for 

consideration and collaborative policy development. The need for beuer information 

about drug prices and impacts on patients and providers in making beuer health care 

decisions was one theme that we heard across multiple panels. To that end, in December, 

we took a first step forward by providing more detailed information on Medicare 

spending on prescription drugs, for both Part B (primarily drugs administered in doctors' 

offices and other hospital outpatient settings) and Part D (primarily drugs patients take 

themselves) to better infom1 decision making. The Medicare Drug Spending Dashboard 

provides important information to the public in an accessible format, but, more important, 

it served as a lirst step to provide other in format ion that can enrich the picture. 

We are examining potential ways to support increased access to information, drive 

innovation, and strengthen incentives to improve quality care. We continue to look at a 

number of options in this area.12 

I 5. Increasingly, we have been made aware of regulato•·y and legal barriers that 

p•·event drug manufactu•·ers and health plans f•·om ado1Hing value-based or 

risk-based contucting concepts. What regulatory options (if any) does 

I:IHS/CMS have o•· is it considering to mitigate govemment price repo•·ting 

barriers that impede flexibiiHy for innovative models in drug pricing? 

Answer: As part of its effort to provide additional infom1ation, increase transparency, 

and address the affordability of prescription drugs, CMS has released an online 

dashboard to look at Medicare prescription drugs for both Part B and Part D. These 

categories include drugs with high spending on a per user basis, high spending for the 

program overall, and those with high unit cost increases in recent years. Having this 

infonnation ava ilable to the public in an accessible format should inform health care 

decisions, policy considerations and encourage collective problem solving around these 

ll All responses arc accurate as of february 10,2016 

55 
136 


joloto on DSKB35BYQ1 with HEARING22185.092

important issues. We believe that, by sharing this information and allowing people to 

analyze the data, we can increase the knowledge around dmg spending and support 

efforts that are evaluating whether public dollars are being spent most effectively. 

Notably, the dashboard does not provide the net prices paid to manufacturers or the 

rebates to plans and prescription benefit managers. ln the Part D program, we are not 

permitted to disclose the rebates paid by manufacturers to Part D plan sponsors. And for 

Part B, Medicare does not receive a rebate, but pays 106 percent of the estimated average 

sales price of each drug, which reflects the average prices paid by physician offices and 

hospital outpatient departments net of discounts and rebates. 

ln addition to these efforts related to transparency, we are working to encourage 

innovation. On September I, 2015, the Center for Medicare & Medicaid Innovation 

(CMMI) announced a program to test Value-Based Insurance Design (V-BfD) in 

Medicare Advantage (MA) plans. The program will examine the utility of structuring 

patient cost-sharing and other health plan design elements to encourage patients to 

consume high-value clinical services, thereby improving quality and reducing costs. 

Under this model, organizations can choose to reduce or e liminate cost-sharing for items 

or services, including covered Part D drugs, they have identified as high-value for a given 

target population. 

On Friday, October 30, 2015, the Centers for Medicare and Medicaid Services 

(CMS) r eleased the Calendar Year (CY) 2016 Medicare Physician Fee Schedule 

(MPFS) Final Rule for public review. Within this rule were provisions finalizing 

Section 218(b) of the Protecting Access to Medicare Act (PAMA) (PL-1 13-93) 

relating to mandating the consultation of appropriate use criteria (AU C) by 

ordering physicians prior to r eferring Medicare patients for select advanced 

diagnostic imaging services. In the final rule, CMS has announced that they will not 

be able to meet the January 2017 implementation deadline a nd in fact, stated that 

they will not commit to any date-certain for implementa tion of this Congressional 

policy. Importantly, this policy, which passed the Energy and Commerce 

Committee, Ways and Means Committee, and the Finance with unanimous support 

and then the Congress with strong bipartisan support and i.s viewed as an important 

" down payment" for payment ref01·ms in Fee for Ser vice (FFS) program. 

16. In light of the fact that CMS has already informed stakeholders that a 

statutory deadline will not be met, please provide a detailed plan for when 

CMS intends to fully implement the program and come into compliance 

with the statute. 

Answer: The Protecting Access to Medicare Act includes rapid timelines for 

establishing a new Medicare Appropriate Use Criteria (AUC) program for advanced 

imaging services. The number of clinicians impacted by the scope of this program is 

massive as it will apply to every physician and practitioner who orders applicable 

diagnostic imaging services. This crosses almost every medical specialty and could have 

a particular impact on primary care physicians since their scope of practice can be quite 

56 
137 


joloto on DSKB35BYQ1 with HEARING22185.093

vast. We believe the best implementation approach is one that is diligent, maximizes the 

opportunity for public comment and stakeholder engagement, and allows for adequate 

advance notice to physicians and practitioners, beneficiaries, AUC developers, and CDS 

mechanism developers. It is for these reasons we proposed a stepwise approach, adopted 

through rulemaking, to first define and lay out the process for the Medicare AUC 

program. However, we also recognize the importance of moving expeditiously to 

accomplish a fully implemented program. 

17. Advancements in personalized medicine are becoming even more critical in 

our pursuit to prevent as well as cure the toughest diseases. Diagnostics are 

a key component of personalized medicine and are becoming more complex 

and sophisticated in the information they provide. As a result, the 

laboratories which perform these personalized diagnostics are incr easing in 

importance. What is the Agency doing to ensure that health plans offered 

through the Affordable Care Act arc ensuring comprehensive laboratory innetwork options with ample choices for patients and their providers? 

Answer: As you know, the Affordable Care Act requires all health insurance issuers in 

the individual and small group markets to offer a core set of benefits called the essential 

health benefits (EHB). Plans must offer benefits in at least ten broad categories, one of 

which is laboratory services. The exact laboratory services offered in each state may 

vary and are based on a benchmark plan, chosen by the state. 

18. When will CMS roll the medical home(s) out, and which medical-home 

models ultimately will qualify as MACRA APMs? 

Answer: Under the Medicare Access and CHIP Reauthorization Act of 2015, CMS has 

new authority to develop Alternative Payment Models (APMs) for paying Medicareparticipating physicians under Part B, outside of the traditional fee-for-service 

method. One of these APMs is defined as 'a medical home expanded under section 

111 5N of the Social Security Act, which is an exception to the requirement that APMs 

' bear financial risk for monetary losses that are in excess of a nominal amount.2 Please 

tell the Committee which models are currently under consideration by CMS to be 

medical homes expanded under Section 1115A. 

MACRA established a particular definition of alternative payment models (APMs) and 

established what qualifies as an "eligible APM," for purposes of evaluating whether an 

eligible professional (EP) is qualifying APM participant (QP) for a year. The statute 

creates a high bar for eligible APMs. Many currently existing APMs- at the Innovation 

Center and in the private sector- are not likely to meet all these requirements, but some 

will. We will continuously search for opportunities to expand the range of options for 

participation in eligible APMs within the c.ontours of the statute, including considering 

potential medical home models that qualify as eligible APMs. As we move forward with 

MACRA implementation, we will continue to gather and incorporate feedback from 

stakeholders as we promote additional physician-focused APMs and work to define the 

details of the eligible APM criteria contained in statute. We anticipate releasing a 

57 
138 


joloto on DSKB35BYQ1 with HEARING22185.094

proposed MACRA implementation rule, including a 60-day comment period, this spring. 

We look forward to continued engagement from Congress and the health care 

community. 

Reform of the Clinical Laboratory Fee Schedule (CLFS), as required by Section 216 

of the Protecting Access to Medicare Act of 2014 (PAMA), is of significant interest 

to me and my constituents. A primary concem is the plan by CMS to use taxpayer 

identification number, or TIN, to determine which laboratories will r eport private 

payer data. 

19. Will CMS ensure all laboratories are able to comply with a new reporting 

system? How so? 

20. Will CMS establish an altemative, more expansive methodology to identify 

laboratories that must report to the Agency, in order to ensure full market 

representation that includes a statistically significant number of 

independent, hospital, and physician laboratories? 

21. If CMS used NPJ number or CLJA number to identify laboratories that 

must report, how many labor atories would be reporting into the new 

system? 

AdditionaiJy, t he PAMA statute required CMS to issue final rulemakjng on CLFS 

reform by June 30,2015, providing both labor atories a nd the agency with sufficient 

time to create the necessary systems to collect, certify, report, and calculate data, 

with new reimbursement r ates going into effect January 1, 2017. CMS bas failed to 

meet this schedule. A proposed rule was not issued until October I, 2015, and there 

still is no fin al rule. A January 1, 2017 effective date seems unlikely. 

22. What is the status of the final rule and what are CMS' plans to provide 

laboratories with sufficient time and guidance to comply with r eporting 

requirements? 

Answer: On October 1, 2015, CMS published a proposed rule to implement section 216 

of the Protecting Access to Medicare Act of20 14 (PAMA) requiring applicable clinical 

laboratories to report on how much private insurers pay for laboratory tests, which will be 

used as the basis for new Medicare payment rates. In the proposed rule, CMS proposed to 

define the term " laboratory" according to the definition used in the Clinical Laboratory 

Improvement Amendments (CLJA) regulations. CMS also addressed how to meet the 

statutory requirement that an "applicable laboratory" receive a majority of its Medicare 

revenues from the clinical laboratory fee schedule or the physician fee schedule. In 

addition, CMS proposed a low expenditure threshold to reduce the reporting burden on 

small labomtories, as authorized by PAMA. 

CMS is currently reviewing the public comments received in response to the proposed 

rule, including many comments regarding the definition of an "applicable laboratory". 

We will carefully consider those comments in developing a fina l rule implementing 

P AMA section 216. 

58 
139 


joloto on DSKB35BYQ1 with HEARING22185.095

Secretary Burwell, as you well know, Obamacare's CO-OP program bas been a 

disaster. After using the American taxpayer as a piggybank, more than half of these 

entities have failed. I know many of my colleagues share my concerns, and I want to 

highlight a recent incident with a CO-OP in Ohio, l.nHealth. Press •·eports have 

indicated that In Health is under enhanced oversight, which means CMS is 

concerned about its financial stability and is closely monitoring its 

operations. About 9,000 Ohioans are enrolled in In Health, and they recently got 

some surprising news: at the last minute, In Health decided to drop most OhioHealth 

hospitals and doctors from their provider network leaving them with few options 

now that open enrollment has passed. Now, I understand that this Obamacare COOP is struggling< that's what happens when Washington thinks it knows best and 

engages in crony capitalism. And I understand that they are just one of many 

issuers for ced to narrow provider networks because of Obamacare's mandates and 

r egulations. 

But what I don't understand is how an Administration that crows about consumer 

and patient protections in the President's health care law can allow a CO-OP it is so 

closely monitoring to pull the wool over people's eyes and not announce major 

changes to p•·ovider networks until after the open enrollment period has passed. 

23. Secreta •·y Burwell, is monitoring decisions about providers networks part of 

CMS's enhanced oversight of the CO-OPs? Will tbere be recourse for 

enrollees who feel tricked? 

1 am disappointed that CMS has already announced they will not provide a Special 

Enrollment Period for these Ohioans, a decision tbat seems all the more perplexing 

when CMS is allowing one for those who broke the rules and failed to file their 

taxes. And, frankly, more Washington mandates are not what's needed. 

Answer: We are focused on monitoring and supporting the remaining CO-OPs and 

making sure that consumers whose CO-OPs will not offer coverage for 2016 retain 

access to high-quality, affordable health insurance. 

There are inherent risks in any start up; the insurance market is especially challenging. 

Each CO-OP is different and faces its own unique challenges. CO-OPs entered the health 

insurance market with a number of challenges, including: building a provider network 

and no previous claims experience on which to base pricing, while facing competition 

from larger, experienced issuers. 

Provider networks are established via private contracts between health care providers and 

insurers, including CO-OPs, who frequently negotiate about the terms of such 

agreements, and frequently change !Tom year to year. We continue to monitor network 

adequacy to determine whether networks meet requirements, and will work with state 

departments of insurance to resolve consumer complaints. 

59 
140 


joloto on DSKB35BYQ1 with HEARING22185.096

While I understand the disruption a decision like this can cause for consumers, it is 

important to note that plans still must maintain adequate networks that meet federa l and 

state standards. If consumers are concerned that their plans aren't meeting these 

standards, they should contact their state Department of lnsurance, which has primary 

authority for overseeing network adequacy. 

Part B CMM I Demo: 

24. Does data exist to demonstrate that cuts to drug r eimbursement for 

physician administered treatments results in lower health care costs? 

25. Has CMS evaluated how this model will impact an oncology practice's 

ability to •·emain independent and keep cancer patients out of more costly 

care settings? 

26. Has CMS evaluated how the .Part B demo will impact OCM participants? 

27. How will CMS select which value based purchasing tools are used for Stage 

2? Does CMS plan to go through a rulemaking process for Stage 2 of the 

demo? 

28. Why did CMS choose to include 75% of physicians as opposed to a pilot 

rolled out to a smaller-scale audience? 

29. Once CMS accounts for sequester and the prompt pay discount, how does 

that affect the calculation of the add-on percentage? 

Answer: We are examining potential ways to support increased access to information, 

drive innovation, and strengthen incentives to improve quality care. We continue to look 

at a number of options in this area. 

Last fall, HHS convened a forum that brought together consumers, providers, employers, 

manufacn1rers, health insurance companies, representatives from state and federal 

government, and other stakeholders to discuss ideas on how our country can meet the 

dual imperatives of encouraging drug development and innovation while protecting 

access and affordability. We came away with feedback to address these challenges in a 

holistic fashion addressing three important areas: (I) increasing access to information to 

support better health care decisions, (2) driving innovation that improve and save lives, 

(3) and strengthening incentives in the delivery system to reward quality care to patients 

and encourage value-based and outcomes-based decision making. 

Coming out of that forum, we have identified several areas of potential opportunity for 

consideration and collaborative policy development. The need for better information 

about drug prices and impacts on patients and providers in making better health care 

decisions was one theme that we heard across multiple panels. To that end, in December, 

we took a first step forward by providing more detailed information on Medicare 

spending on prescription drugs, for both Part B (primarily drugs administered in doctors' 

60 
141 

f 


joloto on DSKB35BYQ1 with HEARING22185.097

offices and other hospital outpatient settings) and Part D (primarily drugs patients take 

themselves) to better inform decision making. The Medicare Drug Spending Dashboard 

provides important information to the public in an accessible format, and also serves as a 

first step to provide other information that can enrich the picture13• 

u All responses are accurate as of February I 0, 2016. 

61 
142 

[Submission for the record follows:] 


joloto on DSKB35BYQ1 with HEARING22185.098

NACDS NATIONAL ASSOCIATION OF 

CHAIN DRUG STORES 

Statement 

Of 

The National Association of Chain Drug Stores 

For 

United States House of Representatives 

Committee on Ways and Means 

On 

Department of Health and 

Human Services' (HHS) Fiscal Year 2017 Budget Request 

February I 0, 2016 

2:00P.M. 

II 00 Longworth House Office Building 

National Association of Chain Drug Stores (NACDS) 

1776 Wilson Blvd., Suite 200 

Arlington, VA 22209 

703-549-300 I 

www.nacds.org 
143 


joloto on DSKB35BYQ1 with HEARING22185.099

NACDS Statement on 1-11-IS Fiscal Year 201 7 Budget 

February 10, 2016 

l)age 2 

Introduction 

The National Association of Chain Drug Stores (NACDS) thanks Chairman Brady and the 

members of the Committee on Ways and Means for the opportunity to submit the following 

statement for the record regarding pharmacy-related provisions contained within the Fiscal Year 

20 17 Department of Health and Human Services (HHS) Budget. NACDS and the chain 

pharmacy industry are committed to partnering with Congress, HHS, patients, and other 

healthcare providers to improve the quality and affordability of healthcare services. 

NACDS represents traditional drug stores and supermarkets and mass merchants with 

phannacies. Chains operate more than 40,000 phannacies, and NACDS' chain member 

companies include regional chains, with a minimum of four stores, and national companies. 

Chains employ more than 3.2 million individuals, including 179,000 phannacists. They fill 

over 2.9 billion prescriptions yearly, and help patients use medicines correctly and safely, 

while offering innovative services that improve patient health and hea lthcare affordability. 

NACDS members also include more than 850 supplier partners and over 60 international 

members representing 22 countries. For more information, visit www.NACDS.org. 

As the face of neighborhood hea lthcarc, community pharmacies and phannacists provide 

access to prescription medications and over-the-counter products, as well as cost-effective 

health services such as immunizations and disease screenings. Through personal interactions 

with patientS, face-to-face consultations, and convenient access to preventive care services, 

local pharmacists are helping to shape the healthcare delivery system of tomorrow- in 

partnership with doctors, nurses and others. 
144 


joloto on DSKB35BYQ1 with HEARING22185.100

NACDS Sta1emcn1 on I Il lS Fiscal Year 2017 Oudgcl 

February 10,2016 

Page 3 

Concerns with Budget Proposal 

NACDS apprecia1es HHS's proposed goals 10 reduce heahhcare cos1s and produce a more 

efficient healthcare system; however, we have concerns with some proposals contained in the 

FY20 17 HHS Budger. HHS has proposed excluding brand and authorized generic drugs 

from the calculation of average manufacture price (AMP), thereby calculating Medicaid 

Federal Upper Lim.its (FULs) based only on generic drug prices. While the goal of this 

provision may be to decrease Medicaid costs, we believe it may in fact reduce access to 

prescription drugs and pharmacy services for Medica.id patients, resulting in increased overaU 

healthcare expenditures. 

Given that AMP has not yet been used as a basis for pharmacy reimbursemen1, and that 

AMP-based FULs remain in draft form, we believe the FY20 17 budget proposals changing 

the calculation of FULs are premature. It is necessary for the Centers for Medicare and 

Medicaid Services (CMS) to mee1 its goal of ensuring that pharmacies are not reimbursed 

below their costs using the reimbursement formula created by the Affordable Care Act. 

Therefore, we urge Congress to reject this proposal that would conflicl with CMS' objective 

of ensuring fair and adequate reimbursement for pharmacies so that the Medica.id population 

does not suffer a loss of access. 

The FY20 17 HHS Budget also includes a number of proposals to cut waste, fraud and abuse 

in !he Medicare and Medicaid programs. including the ability to suspend cover'.tge and 

payment for questionable Part D prescriptions, the abilily to impose civil monetary penahies 

for providers and suppliers who fail to update enrollment records, and the authority to 

es1ablish a program that would require that high-risk Medicare bene ficiaries only utili ze 
145 


joloto on DSKB35BYQ1 with HEARING22185.101

NACO$ $1a1cmcnl on HHS Fiscal Year 2017 Budge! 

February I 0, 20 16 

Pagc 4 

certain prescribers and/or pharmacies to obtain controlled substance prescriptions (i.e. a 

pharmacy lock-in program). NACDS applauds HHS for working to eliminate fraudulent 

activities from federal programs. However, NACDS urges HHS to move forward in a 

cautious manner so as not to disrupt beneficiary access or jeopardize beneficiary health. This 

can be done by ensuring that overly-burdensome requirements are not placed on providers to 

the point of interfering with the ability to treat and care for patients. For example , any 

potential program which limits a beneficiary's ability to obtain their prescription medications 

must ensure legitimate beneficiary access to needed medications is not impeded. Policies to 

reduce ovemtilization must be balanced with maintaining access to prescription medications 

by the beneficiaries who need them most. 

We have specific concerns that a lock-in provision may actually be a baJTier to care as supply 

chain issues exist around controlled substance medications that are beyond the pharmacy's 

control. If a pharmacy is unable to obtain the medication for a lock-in patient, then it creates 

a barrier that could result in hann to the patient's health. Mechanisms must be developed 

and executed to allow a phannacy, in consultation with the prescriber, to fill legitimate 

prescriptions without needlessly delaying treatment for beneficiaries. To minimize any 

potential ham1 and address supply issues, a beneficiary should be allowed to use all locations for a 

pharmacy organization if that pharmacy uses a common database with an integrated patient profile. 

Additionally, to reduce the potential for further abuse and confusion, claim rejections should occur at 

the point of sale, otherwise pharmacies will have no way to detennine whether a beneficiary is 

enrolled in a lock-in program. 
146 


joloto on DSKB35BYQ1 with HEARING22185.102

NACOS Statement on HI-IS Fiscal Ycar2017 Budget 

February 10.2016 

PageS 

The FY2017 budget inc ludes severa.l provisions to increase the utilization of generic drugs. 

NACDS app.lauds the inclusion of these impottant provisions, which would encourage the 

use of generic medications by Medicare Low Income Subsidy beneficiaries, and promote 

generic competitio n for biologics. Increasing generic utilization is one of the most effective 

ways of controlling prescription drug costs, and the generic dispensing rate of retail 

phamJacies-83.5 percent-is higher than any other practice setting. 

NACDS believes there are other opportunities to reduce program spending while vastly 

improving the health of Medicare beneficiaries; including improving access for underserved 

beneficiaries and the beller use of medication therapy management (MTM) services. 

Pharmacists as Pt·oviders 

As the U.S. healthcare system continues to evolve, a prevailing issue will be the adequacy of 

access to affordable, quality healthcare. The national physician shortage coupled with the 

continued expansion of health insurance coverage in recent years will have serious 

implications for the nation's healthcare system. Access, qua lity, cost and efficiency in 

healthcare are all critica l factors - especially to the medically underserved. Without ensuring 

access to requisite healthcare services for this vulnerable population, it will be very difficul t 

for the nation to achieve the aims ofhealthcare reform. 

The medically-underserved population includes seniors with cultural or linguistic access 

barriers, residents of publi c housing, persons with HIY/AlDS, as well as rural populations 

and many others. Significant consideration should be given to innovative initiatives within 

the medically underserved population to enhance healthcare capacity and strengthen 
147 


joloto on DSKB35BYQ1 with HEARING22185.103

NACDS Statement on HI·IS Fiscal Year 20 17 Budget 

February 10.2016 

rage 6 

community partnerships to offset provider shortages and the surge in individuals with 

healthcare coverage. 

Pharmacists play an increasingly important role in the delivery of services, including key 

roles in new models of care beyond the traditional fee-for-servic.e structure. Pharmacists are 

engaged with other professionals and participating in models of care based on quality of 

services and outcomes, such as accountable care organizations (A COs). Pharmacists now 

commonly provide immunizations and medication therapy managemenl (MTM) services. 

In addition to medication adherence services such as MTM, pharmacists are capable of 

providing many other cost-saving services (subject to state scope of practice laws). 

Examples include access to health tests, helping to manage chronic conditions such as 

diabetes and heart disease, plus expanded immunization services. However, the lack of 

pham1acist recognition as a provider by third-party payors, including Medicare and 

Medicaid, limits the number and types of services pharmacists can provide, even though fu lly 

qua lified to do so. Retail pharmacies are often the most readily accessible healthcare 

provider. Research shows that nearly all Americans (94 percent) live within five miles of a 

retail pharmacy. Such access is vita l in reaching the medically underserved. 

We urge you to increase access to much-needed services for underserved Medicare 

beneficiaries by supporting H.R. 592/S. 3 14, the Pharmacy and Medically Underserved 

Areas Enhancemem Act, which will allow Medicare Part B to utilize pharmacists to their full 

capability by providing those underserved beneficiaries with services (subject to state scope 

of practice laws) not currently reaching them. This important legislation would lead not only 
148 


joloto on DSKB35BYQ1 with HEARING22185.104

NACDS Statement on HI-IS Fiscal Year 2017 Budget 

February 10, 2016 

Page 7 

to reduced overall hcalthcare costs, but also to increased access to hea lthcare services and 

improved healthcare quality. 

The Benefits of Pharmacist-Provided MTM 

Poor medication adherence costs the U.S. hea lthcare system $290 billion annually. 

Pharmacist-provided services such as MTM are important tools in the effort to improve 

medical ion adherence, patient health and healthcare a ffordability. Sludies have shown that 

patients who are adherent to their medical ions have more favorable health outcomes, such as 

reduced mortality, and use fewer healthcare services (especially hospital readmissions and 

ER visits). These studies included patients with cardiovascular disease, chronic obstructive 

pulmonary disease (COPD), high cholesterol and diabetes. Current MTM restrictions require 

that Medicare Part D beneficiaries suffer from multiple chronic conditions, be prescribed 

multiple medications, and meet a minimum annual cost threshold of$3, 138 in 20 15 for their 

prescriptions before they are eligible for Part 0 MTM. According to the CMS MTM Fact 

Sheet, approximately 85% of programs opt to target beneficiaries with atleastlhree chronic 

diseases in 2014. This is a comributing factor to the lower than projected eligibility levels in 

the MTM program. 

NACOS has long been supportive of exploring new and innovative approaches to improve 

the Part 0 MTM program. One of the approaches we believe can be successful is the 

Enhanced MTM Model pilot allowing Part 0 plans the opportunity to utilize new and 

innovative approaches to MTM, such as more efficient outreach and targeting strategies and 

tailoring the level of services to the beneticiary's needs. The Enhanced MTM Pilot program 
149 

Æ 


joloto on DSKB35BYQ1 with HEARING22185.105