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77–382 2012

THE PRESIDENT’S FISCAL YEAR 2013 BUDGET 

PROPOSAL WITH U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

SECRETARY KATHLEEN SEBELIUS 

HEARING

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FEBRUARY 28, 2012 

Serial No. 112–21 

Printed for the use of the Committee on Ways and Means 

( 
ii

COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman

WALLY HERGER, California 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

GEOFF DAVIS, Kentucky 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

RICK BERG, North Dakota 

DIANE BLACK, Tennessee 

TOM REED, New York 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

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 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

Jennifer Safavian, Staff Director 

Janice Mays, Minority Chief Counsel 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 
iii

C O N T E N T S 

Page

Advisory of February 28, 2012, announcing the hearing ..................................... 2 

WITNESS

The Honorable Kathleen Sebelius, Secretary, U.S. Department of Health and 

Human Services ................................................................................................... 6 

SUBMISSIONS FOR THE RECORD 

Center for Fiscal Equity, statement ....................................................................... 83 

National Health Law Program, statement ............................................................ 88 

(1)

THE PRESIDENT’S FISCAL YEAR 2013 BUDGET 

PROPOSAL WITH U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

SECRETARY KATHLEEN SEBELIUS 

TUESDAY, FEBRUARY 28, 2012 

U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, DC. 

The Committee met, pursuant to notice, at 1:05 p.m., in Room 

1100, Longworth House Office Building, Hon. Dave Camp [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 
2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

Tuesday, February 28, 2012 

Chairman Camp Announces Hearing on the 

President’s Fiscal Year 2013 Budget Proposal with 

U.S. Department of Health and Human Services 

Secretary Kathleen Sebelius 

House Ways and Means Committee Chairman Dave Camp (R–MI) today announced that the Committee on Ways and Means will hold a hearing on President 

Obama’s budget proposals for fiscal year 2013. The hearing will take place on 

Tuesday, February 28, 2012, in 1100 Longworth House Office Building, beginning at 1:00 p.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from the invited witness only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

BACKGROUND:

On February 13, 2012, President Obama submitted his fiscal year 2013 budget 

proposal to Congress. The President’s proposed budget contained his tax, spending, 

and policy proposals for the coming fiscal year, including his proposed budget for 

the Department of Health and Human Services and the programs it operates and 

oversees. Many of the Department’s programs such as Medicare, efforts to assist 

those who lack health insurance, and Temporary Assistance for Needy Families are 

within the Committee’s jurisdiction. 

In announcing this hearing, Chairman Camp said, ‘‘Given that the President’s 

plan does nothing to protect and save the Medicare program for future 

generations, it will be interesting to learn why the Administration is content to end Medicare as we know it. While the Administration turns a blind 

eye to Medicare and the seniors it serves, they are aggressively pushing 

forward with implementation of their health care law, despite the Supreme 

Court reviewing its constitutionality, resistance from many States, and opposition from the American people. Finally, Members will review the Administration’s proposals affecting human services programs, including 

Temporary Assistance for Needy Families, child support, and child welfare.’’

FOCUS OF THE HEARING:

U.S. Department of Health and Human Services Secretary Sebelius will discuss 

the details of the President’s HHS FY13 budget proposals that are within the Committee’s jurisdiction. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit 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 submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all re-
3

quested information. ATTACH your submission as a Word document, in compliance 

with the formatting requirements listed below, by the close of business on Tuesday, March 13, 2012. Finally, please note that due to the change in House mail 

policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call 

(202) 225–1721 or (202) 225–3625. 

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 to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word format and MUST 

NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised 

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

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

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

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

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– 

3411 TDD/TTY 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 on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/.

Chairman CAMP. The Committee will come to order. We do have 

a vote in progress. This is a little bit unusual. 

I have visited with Mr. Levin and we will have a looser Gibbons 

Rule in terms of voting. We will go by seniority once we return, so 

Members, feel free to come and go, to make sure you are able to 

make that vote. 

Secretary Sebelius, thank you for joining us today for a discussion of the President’s 2013 budget. 

The Administration’s budget is a reflection of his priorities and 

vision for the country. I am disappointed to say that in reviewing 

the Health and Human Services’ budget for fiscal year 2013, I find 

myself asking where is the leadership, where is the plan, where is 

the vision. 

Despite repeated promises by the Administration to strengthen 

Medicare, to make health care more affordable for all Americans 

and to reduce the country’s debt and deficits, the President’s budget fails to accomplish any of these goals. 

The President’s budget lacks guidance about one of the greatest 

challenges facing the Federal Government, and by extension, 

American taxpayer, the long term solvency of Medicare. 
4

The Medicare trustees have made it very clear that Medicare is 

going broke and that without reform, it will not be able to provide 

the benefits so many seniors rely on. The Hospital Insurance Trust Fund alone has more than $8 trillion in unfunded liabilities and is slated to go bankrupt in roughly 

10 years. 

With more than 10,000 baby boomers becoming eligible for benefits each day, it is critical that Republicans and Democrats work 

together to secure Medicare’s future and ensure current and future 

beneficiaries have continued and uninterrupted access to much 

needed care. 

This budget also lacks any assurance or evidence that the health 

care law will make health insurance more affordable. Last year, 

health insurance premiums rose by 9 percent for the average 

American family purchasing insurance in the workplace. 

In part, health care costs are directly impacted by regulations 

and guidance being issued by your Department, including government mandated health benefit packages and exchanges. 

Take, for example, your government mandated benefits in actual 

value and cost saving bulletins. If implemented, these bulletins will 

significantly increase the price of health insurance. 

Using these bulletins instead of standard regulatory procedures, 

you have chosen to hide the expected costs of your decisions for the 

American people. 

It is clear that each decision your Department makes impacts the 

price of a monthly insurance premium, and one more mandate, one 

more service, and one more Washington requirement only adds to 

the likelihood that costs will increase, not decrease. 

In addition to the costs consumers bear today, this budget ensures they will face even greater costs in the future. 

The President’s fiscal year 2013 budget contains the highest deficit ever proposed and fails to deliver on his promise to cut the deficit in half by the end of his first term. 

For example, in our human resources jurisdiction, instead of consolidating programs and ending those that do not work and making 

real reforms to others, your budget proposes creating more programs and increasing spending on others by over $10 billion, and 

how exactly does that help cut the deficit? I would also note that in addition to the $1 billion already spent 

on implementing the health care law, the budget requests an additional $1.35 billion in 2013. 

Even more troubling is the fact that the President’s budget requests funding for an additional 848 full time equivalent IRS employees compared to 136 CMS employees, solely for the purpose of 

implementing the health care law. 

What does this say about health care when you request more 

than six times the number of IRS employees than CMS employees? 

Furthermore, over the next 10 years, spending in Medicare, Medicaid and Social Security will increase as a percentage of GDP from 

9.7 to 11.2 percent. 

Madam Secretary, all this boils down to is more money for Washington to spend, more government employees to spend it, and not 

a dime in deficit reduction for the hard-working American taxpayer.
5

I would like to close with a couple of additional points, Madam 

Secretary. On previous occasions, Members of the House and Senate have written to you and your agency seeking information about 

how the health care overhaul is being implemented. 

Too often, these inquiries are either ignored or Members are receiving incomplete and insufficient explanations. 

Congress and in particular this Committee has a responsibility 

to conduct oversight of your Department. We expect full cooperation from you and your Department so we can ensure that taxpayer 

dollars are used effectively, efficiently, and in compliance with the 

law.

Many Americans opposed the new health care law because they 

believed it to be an unconstitutional power grab by Washington, 

forcing Americans to buy government approved insurance and then 

taxing them if they do not was not bad enough, it is something I 

hope the Supreme Court throws out pretty soon. 

Recent actions by your Department prove that Americans have 

even more reason to worry, that decisions made behind closed 

doors, in secret, by a small cadre of insiders, will impact our most 

fundamental constitutional rights. 

Madam Secretary, I hope you can provide some additional information today on how we address these problems for the American 

people. I look forward to your testimony. 

I will now recognize Ranking Member Levin for his opening 

statement.

Mr. LEVIN. I will shorten my statement and enter a larger 

statement into the record, Mr. Chairman. 

Actually, I think we can say it quite briefly, health care reform 

is working. The prophets of doom and gloom are being proven 

wrong. Already—and you will testify to this and welcome—there 

are successes. 

For the first time in years, according to the Chief Actuary for the 

Centers for Medicare and Medicaid Services, growth in national 

health expenditures was slow, thanks to health care reform. It is 

reducing overpayments and will reform the way we deliver services.

We have strengthened through health care reform Medicare and 

improved the benefits. For example, four million Medicare beneficiaries saved more than $2 billion last year because health care 

reform closed the prescription drug doughnut hole. 

Health reform is not just helping those on Medicare, it is helping 

all Americans save money. My statement, for example, shows what 

has happened for 86 million Americans in terms of preventive care, 

2.5 million young adults have been covered through their parents’ 

policies, nearly 50,000 Americans are now receiving health care 

who were denied because of preexisting conditions, and 3,800 employers have received much needed help to retain benefits and 

lower costs for countless retirees and their spouses. 

Let me just repeat once again, we welcome you, and we think 

this system, this reform, is working. 

It was just a few days ago, Mr. Chairman, that you said ‘‘I will 

not rest until Congress, the Supreme Court or the Attorney General dismantles ObamaCare.’’ 
6

Health care reform is working. I think the trouble with its opponents, the real trouble is they are facing successes for millions and 

millions of American people. 

Chairman CAMP. Mr. Price. 

Dr. PRICE. Thank you. Madam Secretary, I want to welcome you 

and appreciate you joining us again today, and I look forward to 

your statement. 

STATEMENT OF THE HONORABLE KATHLEEN SEBELIUS, 

SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Secretary SEBELIUS. Thank you, Congressman. It is nice to be 

here with the Ways and Means Committee. 

I wanted to thank the Chairman, Ranking Member and Members 

of the Committee for the opportunity to discuss the President’s 

2013 budget for the Department of Health and Human Services. 

Our budget helps create an American economy that is built to 

last, by strengthening the Nation’s health care, supporting research 

that will lead to tomorrow’s treatments and cures, promoting opportunity for America’s children and families, so everyone has a 

fair shot to reach his or her full potential. 

It makes investments that we need right now to keep our economy growing in the right direction, while reducing the deficit in the 

long term, to make sure that the programs that millions of Americans rely on will be there for generations to come. 

I look forward to answering your questions, but first, I want to 

share some of the budget highlights. 

Over the last 2 years, we have been working diligently to deliver 

the benefits of the Affordable Care Act to the American people. 

Thanks to the law now in place, we have 2.5 million young Americans who have health coverage today, thanks to getting coverage 

through their parents’ plans. 

More than 25 million of our senior citizens have taken advantage 

of free recommended preventive services under Medicare. 

Small businessowners are taking advantage of the tax breaks on 

their health care bills that allow them to keep their health insurance and hire more employees. 

This year, we want to build on the important efforts by continuing to support States as they work to establish affordable insurance exchanges by 2014. 

Once these competitive marketplaces are in place, they will ensure that all Americans finally have access to quality affordable 

health coverage. 

Because we know that the lack of insurance is not the only obstacle to care, our budget also invests in the health care workforce. 

The budget supports training more than 7,100 primary care providers and placing them in parts of the country where they are 

needed the most. 

We are investing in expanding America’s network of community 

health centers. 

Together with our 2012 resources, our budget creates more than 

240 new access points for access care along with thousands of new 

jobs.

Altogether, the health centers will provide access to quality care 

for 21 million people, 300,000 more than last year. 
7

This budget also continues our Administration’s commitment to 

improving the quality and safety of care by spending health care 

dollars more wisely. It means increasing our investments in health 

information technology, and improving care for those who rely on 

both Medicare and Medicaid. 

It also means funding the first of its kind CMS Innovation Center, our own R&D Support Center, which is supporting and 

partnering with physicians, nurses, hospitals, private payers and 

others, who have accepted the challenge to develop a new sustainable health care system. 

In addition, our budget ensures that 21st century America will 

continue to lead the world in biomedical research by maintaining 

funding for the world’s leading researchers at the National Institutes of Health, and will support their work with an emphasis on 

outcomes research that compares the risks, benefits and effectiveness of medical breakthroughs, so we can get the biggest pay off 

possible for our research dollars. 

The Administration recognizes that in order for the country to 

succeed, we need to invest in tomorrow’s scientists, as well as tomorrow’s teachers, engineers, doctors, and architects. 

Today, too many young children have their futures short-changed 

because they start school behind and never catch up. 

We know that high quality early education programs put kids on 

a path to school success and to lifetimes of opportunity. 

High quality early education does not just lead to higher test 

scores and graduation rates. We know it leads to more productive 

adults, stronger families, and more secure communities. 

That is why our budget increases funding to support the 962,000 

children in Head Start, and the 1.5 million American children in 

federally funded child care assistance programs. 

Our investments also support critical reforms in both Head Start 

and child care programs to raise the bar on quality. This year for 

the first time, we will require Head Start programs that do not 

meet important quality benchmarks to compete for funding. 

Our budget supports a new child care quality initiative that allows States to invest directly in programs and teachers, so that individual child care programs do a better job of meeting the needs 

of children and of their families. 

Investing in health care cutting-edge medical research, early 

childhood education and other priorities that help us create an 

American economy built to last requires resources. 

That means we have to set priorities, make difficult tradeoffs, 

and ensure we use every dollar wisely. 

Our budget does this, helping reduce the deficit even while we 

invest in areas critical to our Nation’s future. That starts with continuing support for President Obama’s historic push to stamp out 

waste, fraud and abuse in our health care system. 

Over the last 3 years, every dollar we have put into health care 

fraud and abuse control has returned more than $7. Last year 

alone, these efforts recovered more than $4 billion. 

Our budget builds on those efforts by giving law enforcement the 

technology and data to stop perpetrators early and prevent payments based on fraud from going out in the first place. 
8

The budget reflects the careful review we gave every program, 

looking for opportunities to make them leaner and more effective. 

It includes some difficult cuts we would not have made if our Nation’s fiscal health in tight budget times did not require them. Our budget also contains more than $360 billion in health care 

savings over 10 years, most of which comes from reforms to Medicare and Medicaid. 

These are significant, but they are carefully crafted to protect 

beneficiaries. For example, we proposed significant savings in 

Medicare by reducing drug costs, a plan that both lowers the overall cost of Medicare and puts money back in the pockets of Medicare beneficiaries. 

Our budget makes smart investments where they will have the 

greatest impact, and ensures millions of Americans will have access to the health care they need, funds cutting-edge biomedical research, and invests in our youngest children, so they can achieve 

their fullest potential, and it puts us all on a path to build a 

stronger, healthier and more prosperous America for the future. 

Thank you again for the opportunity to be here today, and I look 

forward to our conversation. 

[The prepared statement of Hon. Kathleen Sebelius follows:] 
9

** This Testimony is Embargoed Until 

10:00 AM, Tuesday February 28, 2012** 

(>.~ 

,.,.,~f- STATEMENT OF 

KATHLEEN SEBEU US 

SECRETARY 

u.s. DEPARTMENT OF HEALTH AND HUM AN SERVICES 

ON 

THE PRESIDENT'S FISCA L YEAR 2013 BUDGET 

BEFORE THE 

COMMITTEE ON WAYS AND MEANS 

UNITED STATES HOUSE OF REPRESENTATIVES 

FEBRUARY 28, 2012 
10

Tesfimon }' of 

Srcrelary Kathleen Sc~ liu s 

U,S.Dcpartmrnt of Hullh and Human Srr\'ices 

~fore Ihe 

United Siales House of Represe nlalin s 

Com millei! on Wa}'s and Means 

Febru~ry 28, 2012 

Chainnan Camp. Ranking Member t cvin. Knd Members of the Commiuec, thank you for the invitalion to 

discuss the I'residem'S FY 2013 Budget for the Dcpanmcm of Ilcahh and Iluman Sen'i,es (1II IS), 

Thc Iludgel for Ihe Dcpanmenl ofHeahh and Human Services (HHS) in,'csls in health care. disease 

pre,'enlion. social ser"ices. and seienlilie researeh. HHS makes in"esllllenls where thc)' will ha"e!he 

grealest imp;tct build OIl Ihe elTons of our panners. and lead to me:mingl'ul gains in health and 

opponunily for Ihe Americun people. 

The I'resident's liscal year (FY) 2013 Iludgel for HHS includes a reduclion in discrelionary funding for 

ongoing acti,·ilie •• and legislati"e proposals that would sa"C an estimated S350.2 billion O,'cr ten years. 

The Budgettotal~ $940.9 billion in oullays and proposes $76.7 billion in diserelional')' budgel aUlhority. 

This funding will enable IIlIS 10: Strengthen Ikallh Care: Suppon Amcrkan Families: Ad"ance 

Scientific KnowlC<!ge and lnnovalion: Sirengthen Ihe Nation's lIealth and I'luman Sen'iee lnfrastruclure 

and Workfllrce: Increase Efficiency. Transparency. and Accountability of IHIS I'rograms: and Complete 

the Imp1cmemation of the Il.<ocowr)' Aet 

STRENGTtlEN tlEALTtI CARE 

Ddi1'l!rinR n~fin Ol fh ~ Aflor"ob/~ Cor~ AellO Ihe Am ri on eop/ : The Affordable Care Act 

expands access 10 affordable hcahh eo,"emge 10 millions of Americans. increases COnSumCr prot~..::tions to 

enSure individuals have co,'crnge when IlIe)' need it most. and slows increases in health costs. Effecli"e 

implementation of the AITortlable Care Act is central to the implo,'ed liseal outlook and wdl-being oflhe 

Nation. The Centers ror MC<!icare & Medicaid Services (CMS) is requesting an additional Sl billion in 

diSj:retionary funding and 136 full-time C<jui\,alents 10 continue implementing Ihe AITortlablc Care Act 

including AITortlabic Insurance Exchanges. and to help keep up wilh Ihc growth in Ihe Medicare 

population. 

Exp"IIlI "IIlllmprOl'e lI ollllln ur"nce CO"u oge: Beginning in 2014. Affordable Insurance ~changcs 

will provide improvcd access to insurance CO"crage for millions of Americans _ Exchanges will make 

purchasing pri"ate health insurance easier by pro"iding eligible indh'iduals and small businesses wilh 

one_stop shopping where Ihey Can compare benefit plans. New premium tax credils and reductions in 

cost_sharing will help ensure Ihm eligible individual. can afford to pay for the COSI ofpri"ale cm'crage 

Ihrough Exchanges. I'Y 2013 will be 11 crilieal year for building Ihe infrdStroclure and inili:,ling the many 

business operdtions critical 10 enabling Exchanges 10 begin operalion on Janual')' I. 2014. The expansion 

ofhcahh insurance coverage for millions of low-income indi"iduals who " -ere pre"iousl)' not eligibic for 

eo"eragc also begins in 2014. e MS has worked closely with stalCS 10 enSure Ihey are prepared 10 meet Ihe 

2014 deadline and will conlinue lIiis outreach in I'Y 2013. 

Mnn)' imponanl privale markel refonns have alread)' gone into eITee!. providing new righls and bene filS 

to consumers Ihat arc designed to pulthcm in charge of their own health care. The Affordable Care Act's 

I'alient's Bill of Rights allo,,-s young adults to stay on lheir parents' plans until age 26 and ensures thaI 

consumers n.ocei"e the care they need wben they get sick and nced it Inost by prohibiting rescissions nnd 

, 
11

lifetime dollar limits on coverag~ for care. and beginning to phase out annual dollar limits, The ncw 

nwr1<ct refonns also guaramce inde['('ndent re\'iews ofem'crage disputes. Temporm)" progr.uns li~e the 

Early Retiree Reinsuranec I'lan (ERR!') and thc l're.Existing Condition In surancc I'lan (I'C]I') a,,' 

supporting affordable co,"erugc for individuals " 'ho olkn face difficultics obtaining priv'le insurance in 

the current manetplace. Addilionally. ,...~te ",,·iew and medical loss ratio (MLR) provisions helps enSure 

thai health Carc premiums are ~epl reasonable and affordable year ancr year. The already operational fmc 

re"icw provision gives states addilional resourees 10 detennine if a proposed health care premium 

increase is unreasonable and. in many cases. help enable Siale aU lhorilies t<) deny an unreawnable rale 

increase. J IHS rev;"ws large proposed increases in Siaies that do not h.,·c effecli"e rale review programs. 

The MI.R pro\'isions gunfllntce Ihal. staning in 2011. insurance companics usc", Icasl 80 ['('rcem or 

S5 p<:rccnt of premium revenuc. depending on the market. 10 pro,-ide Or impro"e health tare for their 

customcrs Or give Ihem a n:batc. 

S/~ ::>Ig/htl/ the De/boer)' S)"Mem: The Affordable Care Act establishcd a Center for Medicare and 

Medicaid Inno\'ation ([nno\'ation Cenler). The Inno\'ation Center is lasked wilh d~veloping. leSling. 

and-f", those Ihat prove successful--cxpanding innovative paymenl and delivery system models to 

impro,'c qua lily of care and reduce COSIS in Medicare. Medicaid, and the Children's Health Insurunce 

Program (CIUP). Since Ihe Innovation Center beg.1n operalions;t has undenakcn an ambilious agenda 

encompassing patienl saf~I)". coordination <:>f Carc among multiple providers. and enhanced primary Care. 

Thl'S<! projects can ser"" as crocial stepping stones lowards a hig.hcr..qualily. more cflident health ean: 

system. 

HIlS is also " '",king 10 enSure Ihallhe mOSI ,'ulnerabfc in Our Nalion ha,'e full acceSS \Q .eamk-·ss. 

high..quality health eare. The Affordable Care ACI eSlablished a new ofTtcc \Q more effecti"ely integrale 

benefIts and ;mpro"e coordination belwcen SlalCS and the Federal Government for those who an' digible 

for both Medicare lind Me-dicaid. While Mcdiearc·Mc-dicaid beneliciaries make up a rdati"ely small 

ponion ofenrolhncnt in thc two programs. they reprcsent a signilicant ponion ofcxpcnditures. IIIIS is 

currenlly supponing 15 States as Ihey dcsign models of care Ihat beller integrale Mcdicare and Medicaid 

gc"'ices and is designing addilional dcmonstrations to continue to improve earc. 

CMS is cutTenll}" otli:ring three iniliati"es that will help spur Ihe development of Aceounlable Care 

Organi~.ations (ACOs) for Medicare beneficiaries. ACOs are groups of health providers "ho join logcther 

1<) give high..qualily. coordinated eare 10 Ihe patienlS Ihey se"'c, Ifan ACO meets qualily Siandards. it will 

be cligibk 10 share in sa\"ings il achieH'S f", Ihe Medicare program. and may be subjcclto losscs. offering 

a powerful incenti,'c \Q restructure carc \Q bener se,,'C palients. 

""suril'g Acctu' f/) Quali/)' Oue/<)r VU/lleraillt P<)pu/micm,., Ikalth Centers are a key component of 

the Nation's health care safety nel. The Pn:sident"s Budget includes a total ofS) billion. including an 

increase of S300 million from mandatOlY funds under Ihe Affordable Care Acl. to the llealth Centers 

program. This investmenl ,,';]1 pmvidc Americans in underse,,'cd areas. both rural and urban. wilh access 

10 comprehensi,'e primary and prc"cnli,'c health care sc"'iccs. This funding will create 25 new health 

centcr sile'S in areas ofthc country where Ihcy do nOi cUlTCmly exist and prm'ide access 10 quality can' f'" 

21 million ['('opk. an incrca$(: of 300.000 additional palients Ovcr FY 2012. The Budgcl also promotes a 

policy ofsleady and suslainable health center growth by dislributing Affordable Care Ael resources over 

the lonS·lenn. This policy safeguards resourees for new and c.~isting health ccnters to continue serviees 

and ensures a smooth IranSilion as health centers increase their capacity to pro"ide care as aceess to 

insu""~llce eO"c""~ge e~pands. 

imprOl'ing IItD/theDU QUUlif)" m,d Pu/im/ Suf~/)" : The AOordable Care ACI direcled lUIS 1<) develop a 

nali<)nal siralegy 10 improve health eare SC"'iees delivery. palienl health ouleomes. and populalion health. 

[n FY 2011. 111 IS released Ihe National Siralcgy for Quality Impro.-cmeni in ]lcalth Care. which 

3 
12

highlighl~ three br<Ji>d aims: Beller Care. l!calthy People and Communitics. and AIlOrdablc Care. Since 

publishing the StMeg)·. IIIIS has focuse<J on galhering additional inpUI from private partners alld aligning 

new and existing III IS activities with the St",legy. IIiIS will enhance Ihe Stratcgy by incorporating input 

from slah·holdcrs and de\"Cloping metrics to measure progress toward achieving Ihe Strategy·s aims and 

prioriti~"S. Already. the Siralegy is serving as a blucprint for quality imprO\·cmcnt aelivitics aCross Ihe 

country. 

CMS will continue funding for Ihe 1':'rtnl"1'>hip for Patients. an iniliutive lauuched in April2011lhal selS 

aggressi,·" targcts for impro,·ing the quality of hcalthcare: n."ducing preventabic hospital-acquired 

conditions by 40 percent and preventable readmissions by 20 pereent by the end of2013. as compared 10 

2010. 

I",·e,·'ing in Imro.·«Iion: HI-iS is eOntmilled 10 advancing Ihe usc of healt h infonnation t«hnolog)· 

(health In. The Budgel includes S66 million. an increase ofS5 million. for Ihe Ofike of the National 

Coordinalor for Ilcallh Infonnation Technology (ONe) to acccleMe the adoptioll of health IT and 

promote electronic health records (EHRs) as tools 10 improve bo1h Ihe health of individuals and Ihe health 

care system as n whole. The increase will allow ONC to provide more assiSiance 10 health care providers 

as Ihey heeome meaningful users of health IT. I'unhennorc. thmugh Ihe Ilcalth Infonnation Technology 

for Economic and Clinicail lealih ACI (1-IJTEClI) provisions oflhe American Reeo\"Cry and Rci",·cstment 

Act. CMS is providing hospitals and medical professionals "ho participate in Medicare and Medicaid 

with subslantial incentive paymenls for Ihe adoplion and meaningful use ofEliRs. As ofthc end of2011. 

CMS had made intcnti,·c payments 10 15.859 pmviders who have Illetlhe objectives for meaningful usc 

in the Medicare EIIR Incenti"e Pros",m and IS.I32 providcrs who have adopte"d. implelllented. or 

upgraded ElIRs in the MC<licaid EIIR Incentive l'rog"'lll. lJy encouraging providers to moderni,.c their 

systellls. this inveSlment will improve Ihe qualit), of care and prot""l patient safety. 

SUPPORT AMERI CAN FAM ILI ES 

lIea//hy De'"e/opmenl !l/Child,en alld "·a",ilit:s: HilS oversees many progr~llls Ihal support children 

and families. including Ilead Stan. Child Care. Child Suppon. and Tempo",ry Assistance for N""dy 

Families (TANI'). The FY 2013 Budget request invests in early education. recognizing the mle 

high-quality carly education pmg",ms can play in preparing children for sehool Success. The rcquest also 

suppons TANF and proposcs to reStOt\: funding for Ihe Supplemental Grams wilhout increasing o,-erall 

TANF funding. 

j"'·e)/iJlg in Educa/ir;m by S llpIWrling all Early Leaming farn Ag~Jlda: The FY 2013 Uudgel 

suppons critical refonns in llead Sinn and a Child Care quality iniliative that. when taken logether with 

the Race to the Top Early Learning Challenge. are key demen!.> oflhe Administration·, broader 

education refonn agenda d~"';igncd to improve our Nation·. competitiveness by helping every child enter 

school ready for success. 

On November 8. 2011 Ihe Presidenl announced impoManl new sleps 10 improve the 4uality ofser"ices 

and accounlability al l-lead Stan cenlers across the COUlII!)·. The Uudgel reque51S over S8 billion for I-lead 

Stan programs. an increase of SS5 million owr FY 2012. to maintain services for Ihe 962.000 children 

currently participating in the program. This investment will also provide resources to cITe"Clivel)" 

implement new regulations that require grantees Ihat do nOi meel high quality benchmarks to compele for 

continued funding. inlroducing an unprecedented ic"cI ofaccounlabilily inlo the I lead Slart program. By 

directing taXP.1yer dollars to programs that ofTer high-quality I lead Slart services. Ihis robust. open 

competition for Head Slart funding will heip 10 ensure Ihal Ilead Slart programs provide Ihe besl available 

early education sen'ices 10 our mOS! vulnerab!e children. 

, 
13

The Budgel provides $6 billion for child care. an increase of$825 million over FY 2012. This funding 

Ic"ci will pro"ide child care assiSlancc 10 70.000 more children lhan could otherwise rec"';w services 

wilhoul Ihis increased in"cslmcnt 1.5 million children in 101al. In addilion 10 providing funding for direcI 

assiSlanee 10 more children. the Budgel includ~'S $300 million for a new child care qualilY in itiUlive Ihal 

SWles would usc 10 inveSI direcll)' in programs and leaehers so Ihal individual child carc progmms can do 

a beller job ofm~'e1ing Ihe carl)' !caming and care needs of children and families_ The funds would also 

support eITorts 10 mcaSure lh~ qualil)' of individual child Care programs through a raling syslcm Or another 

s),stcm of qualit)' indicators. and to cleMI)' communicalc progr~m-spccific infonnation 10 parenls so the)' 

can make infanned choic~'S for their families. Thcsc inl"Cstmcnts arc consistcnt wilh Ihc broader 

rcaulhori~.ation principlcs outlined in lhe fludgel. which encompass a rcfonn agenda lhal would help 

lransfonn lh,' Nation'S child carc syslcm 10 one lhal is focused on continuous qualil)' impro"cment and 

provides more low.income children acccSS 10 high.qualily early educalion seningS lhat suppon children', 

!caming, developmcnt. and suCcess in school. 

Imp'() ~ lhe F().<ur lJr~ Sym·m: The Budget includcs an addilional $2.8 billion over len years 10 

suppon improvemenlS in child welfare_ Addilionall"\.'S/)urees will suppon inccntives 10 sImes to improw 

outcomes for children in fosler care and lhose who a", receiving in,homc services from thc child welfine 

syslem. and also 10 require that child support payments madc on behalfof children in foster care be us..'ti 

in Ihe besl imeresl oflhose children. The BudgcI also creates a new lecn pregnancy prevenlion progr~m 

sp"cifically largeted 10 youlh in fOSlcr care. 

Child SupptJn: The Budgel includ~'S a SCI of proposals 10 "ncourdge slal~'S 10 pay child suppon 

coll«tions to families rather than retaining those pa),mclllS. This elTon includes a proposal to encourage 

swtes to provide all currenl monthl), child suppon colicetions to TANF families. Recognizing thaI 

healthy families need more thall financial suppon alone, Ihe proposlll would also rl'quire states to include 

parenting time provisions in inilial child suppon orders and increase l"\.'SOurees to suppon and facililate 

non"tustodial parents' access 10 and visilalion with Iheir child",n. and impkm~nt domestic vinlcnec 

safeguards. The Budget n:quest also includes new cnfOr<;cmcnt mechanisms lhal will enhance child 

suppon collecliOIl efrons. 

SITlmglhf!II TA{\'f- llnil CUIlI~ JoIJs: Thc Budgel would provide cominued funding for Ihc TANF 

progrum and would fund Ihe Supplemcntal Grants for Population Increases. When Congress takes up 

rcauthori~.ation. wc want 10 work with lawmal:crs III Slrengthen the program's eITeeti"cnl"SS in 

accomplishing ilS goals. This should include using p"rformancc indicalor.; 10 dri,'c progrJrn impro,-emenl 

and ensuring lhal slalc!; have lhe flexibilil), 10 engagc recipiem.- including families wilh serious barriers 

to emplo)'mcnt- in Ihe mOSI eITectivc activitics to promote success in Ihe workforce. We also "'anI 10 

work Wilh Congress 10 revisc the Contingency Fund to make il morc eITective during """onomic 

downturns_ 

Million lI<,o,IS IlIillol;, : The Million Heans lnitiati,'c is a nalional public-private iniliali,'c aimed al 

pre"enting I million heart all:.eks and slrol;es o,'er 5 years. from 2012 to 2017. h seeks to r~'duec the 

number of people who nccd treatment and improve the quatit)' oftrealmcn! that is available. h focuses on 

increasing Ihe number of Americans who havc their high blood pressure and high choleslerol under 

conlroL n:ducing Ihe number of people who smoke. and n:ducing Ihc 3wragc imake of sodium and lOIns 

fals. To achic\'c lhis o,",:rall goal. the Iniliali,'c will promole m~'dicalion managemenl and suppan n 

network of eleclronic heahh r<'<:ord regislrics 10 lrnck blood pressure and choleslerol control. along with 

man)' other public-private eollabornliolls In FY 2013, Ihe Budget requests $5 million for CDC to achiC\'e 

measumblc OUlcomes in Ihesc "reas. 

5 
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ADVANCE SCIENTI FIC KNOWLEDGE AND INNOVATION 

t:nIUJflcil,g lIealll' Ca,e Decisim,-Ma/;ing: The IIIIS Budget includl"S S599 million for resear<:h that 

compares the risk. benefits. and encCli\'c"ess ofditlcrent medical treUlmenlS and slrlllegies. induding 

health care deli"ery. medical devices. and drugs. induding $78 million from the Palient-Cenlcred 

Outcomes RCSl:urch Trusl Fund cSlablished by the Atlbrdahlc Care Act. E\'idence gencraled through Ihis 

reSl:areh is intended 10 hdp palients make infonned heahh carc deci,ions Ihat beSI meellheir needs. This 

Ie"d offunding " 'ill printarily suppon research conducted b)' Nil!. cOre research activities ,,"ilhin Ihe 

Agency for Ilcahhcarc Research and QualilY (AIIRQ). and dam capacity activities within Ihe Office of 

thc Sl-..:retary. Resourees from the Trust Fund will .uppon comparati\'e clinical err~ti"encss research 

dissemination. impro\'cd researeh infrastruclUre. and tra ining ofpatient-centen.-d outcomes researehers, 

HHS core research will be coordinated to complemenl projects supported through the Trust Fund and 

through the independent I'aticnt.centcred Outcomcs Resc",ch Institute. 

STMENGTHEN TIlE NATlON'S Ii EALHI AND UUMAN SERVICE INFRASTR UCTURE ANO 

WORK fORCE 

'''''e,'lillg ill /II/rll.<lrl/cl/lre: A strong health won.force is key to ensuring that more Americans can get 

the quality care the}' need to stay healthy. The Budget includes SfJ77 million. an increase of$49 million 

O\'cr I' Y 2012. within IIII.SA to expand the cap",ity and impro\"C the Imining and distribution of primary 

care. denllli. and pediatric health providers. The Budget will suppon the placement of more than 7.100 

primary care providers in underseryed ",caS and begin im'estments thm expand the capacity of institutions 

to tm;n 2.800 additional primar)" care providers over 5 years. 

INCREASE EFFICIENCV. TRANSPARENCY. AN I) ACCOUNTABILI'o' OF HUS PROGRAMS 

LMng Wi/kin (Jur Mellns: IIi IS is COmmilled to improving the Nalion's heahh and wcll·being whilc 

simuhancousl)" contributing to deficit reduction. The FY 2013 discretionary requCSt dcmonStnllCS this 

commilment by maintaining ongoing im'cstmcnts in areaS most centmlto advancing thc 11115 mission 

while mnking reductions to lower priority arcaS. reducing duplication. and increasing administrative 

emeleodes. Overull. the FY 2013 request includes over $2.1 billion in tenninatioos and rcdutlions to 

fund initiatiyes while achieving savings in a eonstruin,-'tl fiscal environment. Muny nfthese reductions. 

such as the $452 million cut to the Low Income Ilome Energy Assistance Progrum (L1l1EA!'j. the 

$177 million cut to the Children's lIospillll Graduate Medical Education Payment Program. and the $327 

million cU1lO Community Sen'ices Block Grants. " 'cre "cry difficult to makc. but are necessital~'tl b)' the 

current fiscal cn,-ironment. 

In Scptemi>cr 2011. the Administration detailed p plan for l-..:onomic growth and dencit reduction. The 

FY 2013 Budget follows this blueprint in its legislative proposals. presellling a jXlc!:age of health savings 

propoSals that woutd S,,'C more than 5360 billion m'cr 10 years. with almost all ofthcs..- savings coming 

from Medicare and Medicaid. Medicare proposals would encoumgc high-<juality. cfficicnt carc. increase 

th~' ayailability of generic drugs and biologics. and implement Structural refomlS 10 encourage 

beneficiaries to scd value in their health Care choices. Thc lludg~"\ also """ks to make Medicaid more 

flexible. cfficient. and accountable while strengthening Medicaid program integrity. Together. the 

FY 201 3 discretional)' budget request and these legisluti"c proposals allow HI IS to supportthc 

Adll1inistl"'~tion's challenging )"et complel11entary goals ofin\'csting in the future and establishing a 

sustainable fiscal oUitook. 

I'rogranl IIIIq:rily ami O" ersighl: The I'Y 2013 Budget continucs to make progrnm integrity a top 

priority. The Budget includes $610 million in discretionary funding for Health Care I'raud and Abuse 

Control (HCFACj. the full amount authori1.cd under the Budget Control Ac\ of 2011 (IlCA). The Budget 

6 
15

also proposes to full), fund discl\:tionar), program intcgrit)' initiati"cs at S581 million in FY 2012. 

consistent with the BCA. The discretionary in"cstment supports the continued I\:duetion of the Medicare 

fee-for-SCI'"\'iec improper pa),ment rate: investments in pl\:wntion-focuscd. data-drivcn initiativC'S like 

predictive modeling: and III IS-Department of Justice Health Care Fraud I'revention and Enforcement 

Action Team (IlEA T) initiativcs_ including t.kdicare Strike Forcc tcams and lighting phamlaeeutical 

fraud. 

From 1991 to 2011. IICFAC programs have relumed over S20.6 billion to the Medicare TruSI Funds, and 

the cUlTCnllhrec_year retum-Qll_in"CSlmcnt of7.2 to I is the highcst in the history of the IICI'AC 

program. The Budget proposes a 10_year diseretionaf)' in""stment ),idding a conscrvati"" estimate of 

SII.3 billion in Mcdicare and Medicaid savings and 16 program integrit)' proposals to build on the 

Affordable Care Ac!"s comprehensi,'c fraud fighting amhoriti~"S for sa"ings of an additional S3.6 billion 

over 10 years. 

Additionally. the Budget includes funding increases for significant ovcrsight activities. The request 

includes S84 millioo for the Office ofM~"dicare tlearings and Appeals_ an increase ofSl2 million. to 

continue to process the increasing numb<:r of administrative law judge appeals within the ,tatutOI)' 9O-da)" 

timeframc while maintaining the quality and accuracy of its decisions. The Budget also includes $370 

million in discretional)' and mandatol)' funding for the Office of Inspector Gen~",1 (OIG). a 4 perccnt 

increase from FY 2012. This increase will enablc DIG to cxpand eMS Program Integrity elTorts in areas 

such as I [EAT. improper payments, and focus on investigativc elTorts on civil fraud. ovcrsight of grants. 

and the Ol"''''tioo of neW Aflordablc Care Act programs. 

Additionally. Durable Medical Equipment (DMEJ Competitive Bidding is providing competiti,'e pricing. 

whilc continuing to ensure acCess 10 quality m~"dical equipment from accredited suppliers. which will 

savc Medicare S25.7 billion oVCr 10 years and help millions of Mc"diearc b<:nefieiarics sa,'e $17.1 billion 

in out-of-pocket costs over 10 )·ears. The Budget proposes tn extend some ofihe ell1ciencies ofDME 

Competitiw Bidding tn Medicaid by limiting Federal reimbursement on certain DME services to "hat 

Ml"die~re would ha"c paid in the same stutc for the same scrvices. This proposal is cspected to save 

Ml"dicaid S3.0 billion owr 10 years. 

COMPLETING I M I'LEMENTATION OFTH E RECO V ERY An 

The American R~'(:overy and Reinvcstment Act provided SI40 billion to HHS progr~ms. of which SilO 

billion had been spent b)' gr~nt and contract recipients by Ihe end ofFY 2011. The vast majority of these 

funds hdped state and local communitics cope with the cff~'(:ts of the economic recession, 

Thousands of jobs were also cre:,ted or saved. including subsidized employment and training for o,'er 

260_000 peoplc through thc Temporal)' Assistance for Needy Families (TANI') program Emergency 

Contingency Fund. 

The Recovcl)' Act provided states fiscal rdiefthrough a ten'poral)' increase in Federal matching 

paymems ofS84 billion for Medicaid and foster care and adoption assistance. 

IIII S Recovery Act funds are also making long_tenn iO\'cstments in the health of the American people 

and the health care system itself. Beginning in FY 2011 nnd cominuing for the next few years. III IS will 

b<: in"losting mOre than $20 billion to support implementation ofhcalth infonnation technology in the 

health care industry on a mass seale. This clTort is e~pected to significantly improve the quality and 

ell1ciency of the U.S. health care systcm. In addition. $11} billion in Rtx:o\'cl)' Act funds were investcd in 

biomedical research programs around the count I)'. induding a major efrort to document genomic changes 

in 20 of the most common cancers and to build researeh laboratory capac it)". Of more immediatc impa<:t. 

7 
16

f 

SI billion has been supporting prevention ami wcllness progrJllls. including projc;:ts in 44 communities 

with a tOlal combined population of ovcr 50 million aimC<.i "t reducing tobacco usc lmd the chronic 

diseases associatcd with obesity. 

l UI S has also mel the challenges oftransp3n-ncy and accountability in the management uf il' Re;:o"cf)-

Act funds. Mure than 23.000 grantees and cuntraelOrs with Rc"<:u,"ery Act fundin g from mlS 

diseretionaf)' programs haw submilted reports on the status ofthcir projccts owr thc last 10 quarters. 

More than 99 percent of the n"<;juir<."i.l rccipient reports ha"c been submitted on time and arc ""ailablc 10 

the public on Rcco'·Cf)-.go": non-filers have bo.-cn sanctioned. Finally. lU IS Rc"<:owf)' Act program 

managers are working hand_in_hand with the Secretary-s Council on I'rogram Integrity tu ensure (hal risks 

for fraud_ abuse. and waSte arc identifil"i.l and steps are taken 10 mitigate thus.: risks. 

Thank you for the opportunity (0 (estify. I will be happy to answer any questions you may have. 

8 
17

Mr. HERGER [Presiding]. Thank you, Secretary Sebelius. I was 

surprised that you failed to even mention the need to reform the 

Medicare physician payment formula in your eight page written 

statement. Even more troubling is that President Obama continues 

to recommend that the SGR be dealt with by expanding the deficit 

and debt. 

The President’s budget proposes to spend $429 billion to fix the 

SGR, without suggesting any offsets, a deficit financed SGR package failed the Democrat controlled Senate a couple of years ago, 

and it certainly would not pass this House. 

Instead of doing something to protect seniors’ access to their doctors, the Administration chose to cut Medicare by more than onehalf trillion dollars to fund a new entitlement that our country cannot afford. 

As a result, reforming the SGR has become exponentially more 

difficult, and doctors in my Northern California District and across 

the country are wondering if they will ever get more certainty 

about their payments. 

The Administration has yet to offer a single serious suggestion 

as to how to reform Medicare for physician payments. Is this truly 

a priority for the Administration? 

Secretary SEBELIUS. Mr. Herger, I think the President from the 

outset of this Administration has recommended a long term fix for 

the SGR proposal. In each of the last several HHS budgets, we recommended specific offsets for those proposals, some 2, some 4 

years.

The President’s 10 year budget includes a 10 year fix to the SGR 

proposal, unlike the month to month, week to week, day to day operations that we have been seeing. 

I could not agree more that a long term fix is required. As you 

know, the President’s budget taken as a whole indeed does propose 

not only to fix the SGR, but to lower the deficit. 

We feel that we are eager to work with Congress on a long term 

fix. We are eager to look at the situation. I would suggest it is not 

an HHS fix, it is a budget fix that is required for the 48 million 

Americans who currently rely on Medicare and more coming in 

every day. 

Nothing could be more important than ensuring that they will 

have their health care providers, and we are eager to work with 

you to make sure that happens. 

Our budget does contain an SGR fix, not only now but into the 

next 10 years. 

Mr. HERGER. The Medicare savings in the budget, the President’s budget, totals $302.8 billion, but the estimated cost for the 

SGR fix is $429 billion. Taken together, that means the President 

is proposing to increase Medicare spending by nearly $130 billion 

over the next 10 years. 

Is that not just making the entitlement crisis even worse? 

Secretary SEBELIUS. Again, Mr. Herger, I think the President’s 

budget anticipates a long term Medicare fix, not entirely made up 

from within the Department of Health and Human Services. 

He feels that making sure that Medicare beneficiaries have access to doctors is something that has failed to be dealt with by Congress for years, the gap keeps growing year in and year out. 
18

We have proposed a variety of strategies, but his budget as a 

whole does have a 10 year fix built into the budget as well as deficit reduction overall recommended. 

We do have some of those proposals within our budget, but the 

President’s budget as a whole does recommend a long term fix and 

no deficit, additional spending for this matter. 

Mr. HERGER. I might say that the Republicans look forward to 

working with you and the Administration. 

Secretary SEBELIUS. That would be great. 

Mr. HERGER. Thank you. The Ranking Member, Mr. Levin, is 

recognized for 5 minutes. 

Mr. LEVIN. Welcome again. Fortunately, your testimony was 

given to us in advance. Those of us who went to vote and missed 

your testimony had a chance to read it. 

Let me just ask you, I tried to touch on it in my opening remarks, about how it is going. How would you sum up how health 

reform is going, what it has meant so far? You live with it every 

day if not every minute. 

Just give us your very personal view as to what is happening. 

Secretary SEBELIUS. Congressman, I have the opportunity to 

visit around the country, not only health care providers and some 

of the best medical systems in the world who are eagerly implementing strategies around care improvements and quality improvements, but also to talk to individuals who have already benefited 

from some of the early aspects of the health care law. 

I was with a group of women the other day in Baltimore. There 

was a mother of a child born with a preexisting health condition 

who now knows that her child has insurance coverage, not only 

now but into the future. 

We had a young recent college graduate who is trying to decide 

whether to go to law school or work in a social service project who 

has insurance on her parents’ health plan, one of 2.5 million Americans who has already taken advantage of that. 

We had two new National Health Service Corps’ providers with 

us in that room, two young doctors who wanted to practice in their 

community but were afraid that the debts they were acquiring as 

a result of medical school would be too significant to look at community service. 

The National Health Service Corps is helping them pay those 

scholarship loans so they can indeed turn around and serve their 

communities.

We know efforts are underway in the Medicare system that millions of seniors have already taken advantage of, accessing at least 

one of the new preventive services that no longer have co-pays, like 

mammograms and colon cancer check-ups, and have taken advantage of the new wellness visit, which is now a yearly annual visit. 

We have millions of Americans that have now instead of trying 

to make their prescription payments out of pocket because they 

reached the doughnut hole, had almost $4 billion worth of relief because of closing of the doughnut hole in the health care plans. 

I talk to people each and every day who are already seeing the 

benefits. There are a lot of people who are eager for the new insurance markets to exist, who are paying higher and higher rates, who 
19

see their policies not covering the needs for their families, who are 

locked out or priced out of the market. 

We are seeing new benefits take hold and folks eager for 2014 

to arrive and have a reset of the insurance marketplace. 

Mr. LEVIN. As to the exchanges, do you want to just briefly give 

us a report on that? 

Secretary SEBELIUS. We are working actively with States 

around the country to implement State-based health insurance exchanges. I would say we have virtually every State in the country 

who have taken a plan and grant. 

We have about 28 who are in the process of working on implementation grants. We have States who have strengthened their insurance oversight, which is critical right now, to make sure that 

they actually are reviewing year to year rate increases. 

I know as a former insurance commissioner, some States have 

the resources to do that, and a lot did not. 

We are working on IT programs and outreach programs. We see 

Governors doing everything from issuing executive orders to helping to pass legislation, Republicans and Democrats, who feel a 

State-based exchange is the preferable way to go. 

For those States who do not choose to build an exchange on their 

own in their own area, we are putting together the framework to 

make sure that every American has access to the benefits of an exchange marketplace beginning in 2014. 

Mr. LEVIN. Thank you. 

Chairman CAMP [Presiding]. Thank you, Madam Secretary. In 

order to put the President’s budget into context, I compared it to 

what he had proposed spending last year. 

With regard to the health insurance exchange subsidy, using the 

same time period, 2011 through 2016, this year’s proposal predicts 

a $33 billion increase, almost a third more will be spent on subsidies than what was anticipated and predicted last year over the 

exact same budget period. This is just in the exchanges. 

To me, it means either one of two things. Either health insurance 

premiums in the exchange are going to be more expensive than 

first predicted, or more employers will drop health care coverage, 

forcing more people into the government run exchanges, or a combination of those two. 

I would just ask your opinion, which of those do you think that 

is?

Secretary SEBELIUS. I have to confess, Chairman Camp, I do 

not know all the underlying assumptions that those numbers are 

based on. 

We are clearly watching very closely what is happening in the 

marketplace. I do not think there is any question that as rates continue to go up, employers are making a moment by moment decision.

We are also informed by what has happened in the one fully 

fledged operational exchange in the State of Massachusetts, which 

preceded the Affordable Care Act, where employers not only did not 

drop coverage, did not drop coverage, but additional employers 

came into the marketplace. 
20

I think that gives us a real live example of what happens when 

you have affordable available coverage with some competition in 

the market. 

Chairman CAMP. More than a 30-percent increase in the budgeted spending on health insurance exchanges is a significant departure from last year’s prediction. 

I would just wonder what would cause a $33 billion increase? It 

either has to be the exchanges are going to be more expensive or 

more employers are going to drop coverage, and therefore, more 

people will be in the exchanges, and therefore, they are more expensive.

Secretary SEBELIUS. Chairman Camp, what is the $33 billion 

you are referring to? 

Chairman CAMP. When looking at last year’s budget over the 

same time period, 2011 to 2016, this year’s budget, using the same 

time period, just in the exchanges, is saying there will be $33 billion more spent over that period in the exchanges, in that 5 year 

period, than last year. 

My question to you is why is it going up by a third? Why is there 

a $33 billion increase? My estimate is it is either the subsidies, the 

exchange subsidies, are much more expensive, and/or employers 

are dropping coverage and more people are going in. I just wanted 

your opinion on that. 

Secretary SEBELIUS. Nothing has changed in terms of the exchange subsidy rates that was built into the law when this bill was 

passed almost 2 years ago. 

I would be delighted to go back and get you a very specific answer, but I am still a little baffled. It could be the budget window 

has moved. I really do not know—— 

Chairman CAMP. The budget window did not move. 

Secretary SEBELIUS. I mean we are in a different year, so the 

budget window for 5 years is out a year further. I do not know the 

$33 billion that you are referring to, and I would be glad to try to 

get you—— 

Chairman CAMP. Last year’s budget window was also 2011 

through 2016. If maybe you could respond in writing. 

Secretary SEBELIUS. I will do that very quickly. I just cannot 

answer that question at the moment. 

Chairman CAMP. Also in your statement, which I did have a 

chance to read—thank you for getting it to us early, and I apologize 

for the vote and not being able to hear your oral testimony. 

With regard to entitlement reform, under the section of your 

statement headed ‘‘Living Within Our Means,’’ the budget proposes 

to spend $126 billion more on Medicare over the next decade than 

would otherwise occur under current law. 

The President has said that Medicare reforms are needed to put 

our Nation on stable financial footing, but your statement really 

does not address Medicare reform or any direction or specifics on 

how we can protect and preserve Medicare. 

Can you tell me what is the plan to make sure that Medicare is 

here for today’s and tomorrow’s seniors? As we all know, it is going 

to go broke in the next 10 to 15 years. That does not really change 

under this budget. 
21

What is being done to help seniors, to make sure Medicare is 

there for them? 

Secretary SEBELIUS. Actually, Chairman Camp, passage of the 

Affordable Care Act according to CBO and various other analyses, 

added about 12 years to the life of the Medicare Trust Fund. 

The President’s budget adds an additional 2 years with some additional proposed savings, and we would be the first to acknowledge that is not the next generation and beyond. 

We are eager to engage in a comprehensive conversation about 

the future of not only Medicare but a variety of entitlement programs while we protect beneficiaries. 

I think what we can tell you pretty definitively is the proposal 

put forward and passed by the House Republicans that actually 

shifted costs to the backs of Medicare beneficiaries, whether they 

be seniors or disabled folks, with no real underlying health care 

costs transformation, is not something that is able to be supported 

by this Administration. 

The voucher program, that would essentially end Medicare as we 

know it. Shift costs onto seniors, and yet no underlying health reform——

Chairman CAMP. I do not see any plan in this budget for the 

long term sustainability of Medicare. I will give you it extends 

Medicare’s life by 2 years. 

I do not think that gives much comfort to seniors who are looking 

for a long term—those who are at or near retirement who are looking for the solvency of Medicare over the next 30 or 40 years. 

I will say that sustainability for 2 years comes largely at the cost 

of provider cuts in part A, which how sustainable those will be over 

the long term, we cannot tell. 

I do not see any real reform to Medicare here. I appreciate the 

talking points with regard to our budget, but at least we had a 

plan that really addressed the long term solvency of the program. 

Medicare is still going broke in the next 10 to 15 years, and I 

do not see anything in this budget that specifically addresses that. 

I see money spent on a doc fix and provider cuts. 

Secretary SEBELIUS. Mr. Chairman, I would suggest that in the 

Affordable Care Act, for the first time, are the real tools, not only 

to have an opportunity to look at a sustainable Medicare Program 

long term and a sustainable Medicaid program long term, but really more importantly or as importantly, to address underlying 

health care costs which affect the private sector. 

What we do not want to do is just keep shifting dollars onto either payments on the backs of beneficiaries or private payers. 

We have to actually get a handle on the overall health care costs. 

I think some of the strategies in the Affordable Care Act to use for 

the first time the public payment system as an innovative strategy, 

moving us to a value based payment system, moving away from a 

volume based system, is not only going to be enormously cost effective and patient effective in Medicare and Medicaid, but can be 

enormously helpful for the private sector, which is why they have 

enthusiastically embraced a lot of the new innovative strategies 

that are beginning to be realized. 

Chairman CAMP. All right. Thank you. Mr. Stark may inquire. 
22

Mr. STARK. Thank you, Mr. Chairman. Madam Secretary, thank 

you, as always, for your work in these fields. 

If we were to replace traditional Medicare with a voucher or 

some kind of fixed payment plan as my colleagues on the other side 

voted for in the Ryan budget, in your position, what would you suggest? What would be the effect of that on Medicare beneficiaries? 

It is probably a selfish question, but for my kids. If you throw 

them into the private insurance market with a voucher that arguably would not pay today’s rates, what happens? 

Secretary SEBELIUS. Well, I do not think there is much question, at least the analyses done on the original proposals is there 

is a very substantial cost shift onto beneficiaries, and no real indication that overall costs would go down. 

It is not that we are saving money. The government is saving 

money, but health care costs continue to rise, and one could speculate given the fact that Medicare Advantage has been in place for 

years and was allegedly going to lower costs through competition 

with the fee-for-service plan, and that really has not proven to be 

an effective strategy, that costs would rise even more significantly 

than they are now. 

The government would shift the cost of providing health care 

from a government beneficiary ratio where it is today much more 

heavily onto beneficiaries. 

Seniors would pay more and disabled people would pay more 

overall on their health care costs. 

Mr. STARK. Could we speculate for a minute on the doomsday, 

worse case scenario, whatever you want to call it. 

Whenever people want to project that Medicare is going to go 

broke, I cannot speak to Medicaid, we have to leave that to our sister Committee, but in the case of Medicare, it would be my understanding that the maximum that we would have to increase the 

payments from employers and employees to keep Medicare solvent 

for the indefinable future would be about half a percent, a quarter 

on employees and a quarter on the employers. Not an insignificant 

amount.

If that were the maximum as I am led to believe, it hardly 

sounds like doomsday to me. Am I about in the right ballpark of 

that half a percent? 

Secretary SEBELIUS. I think, Mr. Stark, it is my understanding 

that if you just froze things in place, what is really incumbent upon 

all of us, and I would eagerly work with Members of Congress to 

look at this scenario—looking at our overall health spending, not 

Medicare in isolation or Medicaid in isolation. Those are frankly 

two of the largest insurance programs in the world. 

What we are doing in terms of just overall health costs, where 

we are spending significantly more than any nation on Earth, and 

yet we have fairly mediocre health results. 

That to me is the underlying challenge that we have, and within 

solving that challenge, how we eliminate duplication, go after 

waste and fraud, figure out strategies that actually intervene at a 

much earlier stage with preventive care and wellness care, go to 

the underlying causes of 75 percent of our deaths here in America, 

which are smoking and obesity. 
23

If we could actually address that, it will lower costs overall and 

produce a healthier country. 

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

Chairman CAMP. Thank you. Mr. Johnson is recognized for 5 

minutes.

Mr. JOHNSON. Thank you, Mr. Chairman. Thank you, Madam 

Secretary. The Democratic health care law provided $1 billion to 

implement the health care overhaul. Now, the President is requesting another $1 billion for implementation of the same law. 

I do not understand how HHS can blow through this kind of 

money when many of the provisions it is supposed to implement do 

not even take effect until 2014. 

Your testimony has a section you refer to as ‘‘Living Within Our 

Means.’’ How can you say that HHS is committed to deficit reduction and living within your means when you are continuing to 

make requests like this? 

It is just another example of how the Administration drastically 

underreported the cost of the health care law. 

Can you tell us exactly where the money is going and how much 

more do you think you are going to need before we get to the point 

where it really takes effect? 

Clearly, those first numbers were off. 

Secretary SEBELIUS. Well, actually, Mr. Johnson, they were off. 

The good news is we are underspending what was estimated. The 

original estimations for implementation of the health care act, and 

this was part of the public testimony, and actually would have been 

in some reconciliation legislation but was not able to be considered, 

was about $1 billion a year. 

We have to date, as of December of this year, obligated about 

$475 million of the original $1 billion. We are spending after 2 

years significantly below what the estimate was. 

Mr. JOHNSON. But you are asking for another billion. 

Secretary SEBELIUS. I would love to finish this. What we have 

coming up in the remainder of 2012 and again out of that $475 million, about $260 million is HHS spending. The rest is with our companion agencies. 

We anticipate that during the remainder of fiscal year 2012, the 

first $1 billion will be spent. That will be about 21⁄2 years into implementation, significantly again below the $1 billion a year that 

was estimated. 

In 2013, we are requesting about $800 million to come into the 

overall implementation of health reform, to build one time build 

out for the framework of a federally operated exchange, which is 

part of the law. 

That will go into everything from education and outreach to 

building the IT system to setting up the technology, and the remainder of that $1 billion request to the Centers for Medicare and 

Medicaid Services, Mr. Johnson, is directed toward Medicare and 

Medicaid activities, not to the exchanges. 

Mr. JOHNSON. You had $1 billion to start with for setting all 

that up and you are asking for another billion this year. 

I do not think you really adequately answered that, but let me 

ask you another question. 
24

Medicare actuaries at CBO have warned it is unclear if current 

Medicare cuts can be sustained or if they will instead reduce access 

to care or lower the quality of care for Medicare beneficiaries. 

I hear from back home in all areas of health care, doctors, hospitals, rehabilitation centers, who say they are seriously considering not accepting Medicare or will have to close because of reimbursement issues and burdensome regulations. 

Are you going to put steps in place so you can identify access 

problems before they become a crisis? How are you going to keep 

seniors from being denied access? 

Secretary SEBELIUS. Congressman, I think there is no higher 

priority within not only this Administration but certainly within 

CMS to make sure that beneficiaries are getting the health care 

they need and deserve. 

We have a very active monitoring process. I would say the most 

significant blooming challenge, and the Chairman and I discussed 

this a bit, is the not long term addressing of the doctor payments 

in Medicare. 

The reason that providers are getting very frustrated is that we 

have not indeed found a long term solution, making sure that providers know if they engage in the Medicare system, they will be 

paid, month to month, year to year. 

We are watching that very closely. As I say, the President’s 

budget includes a 10 year fix to the SGR program. We would love 

to engage with you and Congress and have a multi-year fix. That 

has not happened. 

As you know, we have come right up to the precipice, and last 

year had to actually suspend payments for a period of time to get 

a fix done. 

We are eager to look at reimbursement to providers being the 

most essential, I think, component of making sure there is some 

certainty to deliver benefits. 

Mr. JOHNSON. Doctors are an important part of our society. 

Thank you, Mr. Chairman. 

Chairman CAMP. Thank you. Mr. Brady is recognized for 5 minutes.

Mr. BRADY. Thank you, Mr. Chairman. There is no question, I 

think, and now a year later, we can tell the President’s health care 

plans costs are exploding. 

Prices are up for families and businesses. Many businesses are 

preparing to drop their private coverage and move their workers 

into the exchanges at cost to taxpayers. Many other businesses are 

working hard to stay under the 50-employee limit. 

One thing that worries me is how we will treat the seniors who 

today rely upon Medicare Advantage, a hugely popular program in 

my State and others. 

I saw in a recent White House blog that one of the staff, NancyAnn DeParle, stated the $200 billion in cuts to Medicare Advantage 

programs that was predicted to disrupt seniors’ access to health 

care ‘‘turned out to be wrong.’’ 

Can you tell me what percentage of the cuts to Medicare Advantage called for under the President’s health care law—how many 

have been implemented so far? 
25

Secretary SEBELIUS. Well, Mr. Brady, what is not going to happen is a cut to Medicare Advantage. What is going to happen is a 

gradual reduction in the overpayments to Medicare Advantage, 

which were being paid at about 12 to 14 percent more than traditional fee to service—— 

Mr. BRADY. According to CBO, those reimbursements will be cut 

from Medicare Advantage. Your actuary said the impact would be 

over seven million American seniors would lose coverage and almost 50 percent of seniors would no longer be enrolling in Medicare 

Advantage. Is your actuary correct? 

Secretary SEBELIUS. We have seen just the opposite. Enrollment has increased 10 percent. 

Mr. BRADY. When you say it is just the opposite, is it not true 

only 4 percent of the cuts contained in the law have been implemented and you backfilled it recently with $6 billion of grants to 

the same Medicare Advantage providers? 

How can you truthfully say that there has not been an impact 

when in fact these cuts have been delayed, I think, probably for 

election year gain. 

How can you say there has been no impact when the cuts have 

not occurred? 

Secretary SEBELIUS. As you just said yourself, cuts have been— 

the reduction in overpayment has begun. 

Mr. BRADY. But they have been delayed. Correct? 

Secretary SEBELIUS. No, that is not true, sir. The average plan 

premiums are down. 

Mr. BRADY. I am sorry. I am asking you about the cuts within 

the law. 

Secretary SEBELIUS. We are reducing the payments to companies, not to providers. We are by law reducing the payments, and 

that actually has begun to be a very successful strategy. 

At the same time, for the first time ever—— 

Mr. BRADY. I am just trying to get to the truth here. Are you 

saying—will you agree that according to your actuaries, only 4 percent of the cuts have taken place? 

Secretary SEBELIUS. I assume that is accurate. 

Mr. BRADY. You backfilled that with over $6 billion of grants. 

Secretary SEBELIUS. We have put in place for the first time 

ever a quality program so that higher performing Medicare Advantage plans for the first time are actually receiving a quality bonus, 

the lower performing plans are not. 

The beneficiaries finally have a place to make—— 

Mr. BRADY. There are no real cuts, you have backfilled it—— 

Secretary SEBELIUS. No, that is not true. Sir, that just is not 

true.

Mr. BRADY. You started your answer to me saying there has 

been no cuts in Medicare Advantage. 

Secretary SEBELIUS. Four percent is what the actuary quoted. 

I am agreeing with your numbers. We are now in year two of the 

strategy. What we are seeing is more plans, lower prices for beneficiaries, better quality. 

I think that is kind of a win-win situation. 

Mr. BRADY. You will say that and you are saying that will con- tinue because the $206 million in cuts will occur in the future? 
26

Secretary SEBELIUS. Yes, sir. We are seeing more companies— 

the companies are well aware of what the framework of the law is. 

We are not saying—— 

Mr. BRADY. Your own people are saying those cuts will push 

seven million American seniors off Medicare Advantage, cutting 

nearly half of them out of enrollment. 

Secretary SEBELIUS. Sir, with all due indifference to actuaries, 

they are not running the companies. 

Mr. BRADY. Those are your actuaries. 

Secretary SEBELIUS. We are seeing the companies, the insurance companies running Medicare Advantage programs, coming 

into the market. More plans are available—— 

Mr. BRADY. Because the cuts have not occurred, would you not 

agree?

Secretary SEBELIUS. They know exactly what the framework is. 

I do not agree. 

Mr. BRADY. You are giving them grants to stay in the marketplace.

Chairman CAMP. The time has expired. Mr. McDermott is recognized.

Mr. MCDERMOTT. Thank you, Mr. Chairman. Secretary 

Sebelius, I do not think the President could have picked a better 

person to be the Health and Human Services’ Secretary, given your 

insurance background and your Governor’s background. I know 

that you have managed these programs out at the State level. 

As I listen to this debate about whether there are cuts or not, 

let me clarify something. Does Medicare guarantee the doctors can 

submit their usual and customary fees? 

Secretary SEBELIUS. Yes. 

Mr. MCDERMOTT. They get to set the price, and then you pay 

how much of that? Seventy percent? Sixty percent? 

How do you decide that? Doctors sound like farmers to me. I am 

a doctor, so I can say that. They sound like farmers. There is never 

a good year. This is the year we had too much rain or too much 

sun or too much something. 

Doctors always say they are underpaid, but they are submitting 

amounts that you do not pay. That is your stewardship of the Federal purse, is that not correct? 

Secretary SEBELIUS. The payment schedule, as you know, Mr. 

McDermott, is determined a year at a time with a global look to 

provider fees, and it is well known to providers, which is why I 

think we have 99 or 99.6 percent of all medical providers participating in the Medicare Program. 

Mr. MCDERMOTT. We are actually listening to .4 percent bellyache about the fact that they did not get every dime they billed? 

Secretary SEBELIUS. I think what is true, and I am very sympathetic to this and also eager to work on a long term strategy, is 

having looming a 30 percent budget cut with the sustainable 

growth rate not fixed, and having that come up year in and year 

out, month in and month out provides a level of serious instability 

to the program long term. 

I think that is something that we must fix, that the President 

is eager to work on, his budget includes it, but that is the instability of Medicare, not, I do not think, the other payment issues. 
27

Mr. MCDERMOTT. That was built into the Medicare system by 

Chairman Thomas of this Committee in 1997 in the Balanced 

Budget Act. 

Secretary SEBELIUS. It worked for a number of years because 

it was supposed to rise and fall. I would suggest over the last decade, it has been not so terrific. 

Mr. MCDERMOTT. Built into the Affordable Care Act was an attempt to develop a new payment system for doctors, not based on 

volume.

I see this press release that just came out on the largest Medicare fraud in Dallas, Texas, $375 million to one doctor. 

I ask myself, how did he get away with that for 5 years. Was it 

revealed because somebody blew the whistle on him or was it because your format of looking at the bills found this guy down there, 

and he was doing it on the basis of volume. 

He collected the largest number of Medicare beneficiaries in history, in the entire country. This guy was building up his money by 

putting through volume. That is what it looks like to me. 

That is why the efforts in the Affordable Care Act to get to a new 

payment system really makes sense to me. 

Secretary SEBELIUS. I think all of the above is true. What the 

Congressman is referring to is that today in Texas, a single health 

care provider was arrested, and has been billing 78 Texas home 

health agencies fraudulently. 

We think the amount is somewhere around $375 million. It could 

be well more. 

I think it is part of the effort that is really underway with the 

HEAT Task Force, which includes not only the Department of 

Health and Human Services’ personnel, but Justice Department, 

U.S. Attorneys and investigators on the ground, to really target 

where we think the fraud hot spots are, and building the predictive 

modeling which looks at billing errors. 

In the past, you really could not do that very easily because there 

were six different billing systems, so you could not even look at 

data real time. 

I think this is an indication that we are beginning to at least 

turn some of the corner, and we intend to be very serious about it. 

You are absolutely right, in the long run, paying doctors differently is part of an overall reform strategy, and again, not only 

affects Medicare Programs, but will affect private payers. 

Paying on volume, the number of tests you do, the number of 

days someone spends in a hospital, the number of things done, as 

opposed to quality outcomes, preventive interventions, more timely 

access, and a patient center care system, I think, is where we need 

to go in this country as rapidly as possible. 

In the short term, we need a strategy that assures doctors that 

if they are taking 48 million Medicare beneficiaries and treating 

them, we need to make sure the government is a good payment 

partner and they do not have to worry month to month, week to 

week, about whether they are going to get paid. 

Mr. MCDERMOTT. Thank you. 

Chairman CAMP. Time has expired. Chairman Ryan is recognized for 5 minutes. 
28

Mr. RYAN. Thank you. Madam Secretary, we had Rick Foster, 

your chief actuary at CMS, in the Budget Committee this morning 

to testify, along with Steve Goss from Social Security. 

He went into great length and discussed sort of the virtue of a 

premium support like model, and how having bid based pricing, 

competitive bidding, can help to actually reduce cost growth, to 

help stretch that health care dollar further, and to get the best 

benefit at the lowest possible price. 

I would just encourage you to listen to some of the testimony he 

has offered and some of the wisdom he has given, and some of the 

lessons we have learned through various things like Part D and 

DME, other issues, where we have been able to, through bid based 

pricing and competitive bidding, stretch our health care dollars further.

I want to ask you about your latest budget proposal, page 55 of 

your budget, where you talk about strengthening IPAB to reduce 

long term care drivers of Medicare cost growth. 

You take the cap from GDP plus one to GDP .5, and obviously, 

that achieves savings. Some of the tools available, it talks about offering new tools to IPAB, including consideration of value based 

benefit design. 

What does that mean? 

Secretary SEBELIUS. What does ‘‘value based benefit design’’ 

mean?

Mr. RYAN. Yes. 

Secretary SEBELIUS. I think it means you look at outcome 

strategies which is part of our direction in the Affordable Care Act, 

so we are implementing, for instance, through the innovation center everything from bundled payment strategies, to see if that actually lowers hospital re-admissions, to make sure doctors and follow 

up placements are coordinating. 

We are looking at medical home models to look at chronically ill 

and where our care delivery could be more effective, and prevent 

re-admissions in the first place. 

We are looking at patient partnerships, to look at hospital acquired infections. 

All of those are value based payment strategies. 

Mr. RYAN. Does it mean changing the benefit design to get better value? 

Secretary SEBELIUS. It is not changing necessarily the benefit 

design. It is changing the way that the delivery system works. 

Mr. RYAN. Does that mean IPAB is given this tool for them to 

decide how that is to be interpreted? 

The point I am trying to make is in one sentence, the budget and 

the Affordable Care Act says IPAB cannot change beneficiaries’ 

benefit designs. 

Secretary SEBELIUS. That is correct. 

Mr. RYAN. In another sentence, it says IPAB should be given 

this tool to implement value based benefit designs. It seems to me 

there is a contradiction here. I am trying to understand how that 

occurs and how IPAB will come down on that. 

It strikes me that IPAB is given this discretion to interpret what 

that means and that could clearly collide with beneficiary design. 
29

That is question one. How is that not a contradiction? That is the 

question.

Question two is what is the status of IPAB? I understand you are 

supposed to select the Board this year and it is supposed to be up 

and running next year. I think implementing recommendations by 

2014, if I am not mistaken. Can you give me a status update on 

that?

Secretary SEBELIUS. Sure. Let me take the first question. As 

you know, Chairman Ryan, the IPAB statutory framework is they 

are prohibited as an entity from doing certain things, from shifting 

costs under beneficiaries, from changing the benefit package, so 

there are a series of prohibitions that control what IPAB’s recommendations need to be as they look at a more efficient and effective way to deliver health care. 

Also, IPAB does not do anything, implement anything. They 

make recommendations to Congress. If the targeted spending is 

above what the IPAB target is, they are charged with making recommendations to Congress about how to make up that difference. 

Mr. RYAN. If Congress does not act, do their recommendations 

go into place? 

Secretary SEBELIUS. If Congress does not act, if Congress fails 

to act on the recommendations or substitute those recommendations, I am directed to implement the IPAB recommendations. 

Congress is the intervening body receiving the recommendations. 

Mr. RYAN. Is the required threshold more than a majority vote 

for Congress’ action? 

Secretary SEBELIUS. Congress clearly can act. Although the 

recommendations come to Congress, IPAB does not have the authority to implement anything on its own. 

In terms of the status of IPAB, at this point, as you know, the 

statute entails having Members who would be nominated by a series of both legislative leaders and the President, confirmed by the 

U.S. Senate. 

There are active discussions underway about those possible candidates, vetting those folks. It is not an easy task because this 

must be a full time job. They cannot have any conflicts with any 

of the possible payment sources. That discussion is underway. 

Mr. RYAN. What is your general time line? 

Secretary SEBELIUS. I really do not know, Chairman, because 

IPAB is not likely to even be operational into 2018 or 2019, given 

the cost trends. 

Mr. RYAN. The recommendation is 2014, correct? 

Chairman CAMP. The time has expired. Mr. Tiberi is recognized 

for 5 minutes. 

Mr. TIBERI. Thank you, Madam Secretary. Welcome to our Committee. Thank you for being here. 

Three points and then a question. First point is I had a constituent who met with CMS late last year over a program that he 

believes would save, and he has documentation on this, $200 million a year to CMS, and also save beneficiaries. 

He was kind of laughed out of the building, he said, because that 

was not very much money. 

We sent a follow up letter to CMS, and have been given kind of 

the brush off. I would like to send you a letter. 
30

Secretary SEBELIUS. I would appreciate that. 

Mr. TIBERI. And have you look into it, thank you very, very 

much.

Secretary SEBELIUS. $200 million is real money. 

Mr. TIBERI. I agree. The second issue is you and I had a discussion last year when you were here about my godmother, who just 

lost her physician because he began not accepting not only new 

Medicare patients, but got rid of former Medicare patients. 

Just a week ago, I received a letter, a copy of a letter, that was 

actually sent to your boss, the President of the United States, and 

I spoke to this doctor who I have never met before or talked to before. Her name is Deborah Morris. I would like to read you part 

of it. 

It says ‘‘Dear Mr. President: I can no longer afford to take new 

Medicare patients. I have seen a lot of inadequate management of 

Medicare patients, including my own parents. We can no longer afford to spend the time it takes to address multiple problems Medicare patients face. 

Rather than trying to accept inadequate time or costs, I have decided to decline seeing new patients. I just cannot afford to treat 

them. A free market even if for only 3 to 5 years would eventually 

level out the costs so that the true costs could be assessed. 

I am not even going to address the burn out all these issues create. All my colleagues have expressed concern that we as doctors 

will not even be able to get medical care when we retire because 

all the good doctors are burning out and quitting.’’ 

Mr. Chairman, I would like to submit this letter for the record, 

along with an attachment that she included from a Medical Journal entitled ‘‘Government Medicine is Hazardous to Your Health.’’ 

Again, I think it is a problem. You do not need to comment on 

it.

Chairman CAMP. Without objection. 

Mr. TIBERI. Thank you, Mr. Chairman. 

[The insert of Hon. Patrick Tiberi follows:] 
31

Dear Mr. Presiden!, 

This anic:k WIll in one of my medical publiclrioos. [don', know if the author IeIlI you. copy, bul his lhouehU ~ VCf}' 8CClII"IIC.. 

I Q1I no Ion~ afTord 10 like _ Mediem: pa!~1J. My staff does noI warn • salary tut. My supplic. ha~ 

never 10'" <I/:Iwn in price:. My computer suppon ncvef COCS <I/:Iwn in price. My INIlpraclia: iruurance never 

toes down. My utiliries ... vcr 10 <1/:1"",. My equipment and ~pairs ofcum:llt eqllipm~ 40 not ao <1/:1"" in 

price. Every reimbursement Cut comes righr OUI ormy pocket. 

I ~ oeen ,101 oflllldequalC mMaScmcnt ofMcdican palients i""h.dinll my 0"'" paronlS. We can roo lonllcr 

.lford to q>erod rhe lime il taku to """"""' m~lt ;pte problems Medicare paricnUi face and therefore inteJl1lre 

em. Rather than Ir)'inli 10 -=PI that inadequate rime indiO! ~ is "'bHtet" !hart nochinaM, I have decided to 

declinr: sceinll newparienl1 t jllS! "",·r afford to UU1!ht:m. When you i00i<,, ~reimblne"""'lJ.l don'l 

know how you ~ MY. '"yes, that's. fai, priee formedic.al CIIC.

H 

The pmbIem " il!t your uleul.11ons reprdi"li Medicare reimbursement is !hit the "Jprice of moediul areH hu 

been shifted to much IhII no ont: knows the II\IC ,·.Iue aoymore. A fme market, even i(for only 3-5 yun 

would evenrually k~d OUIlhe C05U $0 thai 1M lI'uecosts could be assessed. [know lIIis would be painM (Of 

some al first, but I don·,...,..,y other way. 

Monyphy$ician$, ir>eludl"ll myxlf, used to gj~ lway. 100ofcm. I still "nochalicH paticnll ",110 cxpress to 

me their hardships. BUI when illiC15 10 when: you till bately pay your 0"'" bilil. charity dcc:liDe$ and costs 110 

"" 

Codi", ,,;\1'twardoomputeriwion is tile o!hcr rc:ason!he costs kre-p goina up. Willi codi", ,,;\ftware, many 

p/lyIi<:iansIbillinli sp«ialiSlS an heading 10 Kminars Ieami/lli 10 maximitt every singk ttli,,*- In o!her words, 

roo more charity. 

And, [·m noI e~n liol nli to address the: bum-OUl arl of h,:~ IU\le$ create. All mycollCl~_e~press o;o.-.:cm 

thaI we. as doctors., won't even be able 10 8CI imdlcal cm when we JlCe<I il beeause.lJ !he 11000 doctors are 

buminll mll and quiUina. 

I regret I don'. ha~ any 0Iher "'IIIIestions fur 1M problems. 

Thank you ror)'OUt tilllC and.tt)'O\l do rOt my~lIIItry. 

Vuy sincerely. 

DebOfah L. Mori MD 

CC: PIlriclr. Tiberi, Shmod Brown, Rob Portman 
32

From the President: 

Government Mec!icine Is 

Hazardous to Your Health 

lee D. Hieb. M.D. 

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....... .,od I<IIfer .... IN A, oepotttd "' • <tody bv ,too N"""", 

Kochey _h F...-.d .<'d \I\tf!>tId ~t;\ 'If <he doctor; 

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'" i-
33

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34

~ .. I<M~ ~do ... n<!Iftg"""doaots ""''''"'111(0.'0 Do. 

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35

Mr. TIBERI. I think it is a problem that continues to occur 

throughout our Nation. 

The final issue I would like to see if you would answer a question 

on, the Bishop of Columbus, Bishop Frederick Campbell, put out a 

letter a couple of weeks ago after the ruling you put out, and I 

would like to read part of it. 

This was sent out to his constituency within the Columbus Diocese, which also includes, according to Bishop Campbell, a number 

of schools and a number of charities. 

I quote from his letter regarding the HHS’ recent ruling, ‘‘In so 

ruling, the Administration has cast aside the First amendment to 

the Constitution of the United States, denying to Catholics our Nation’s first and most fundamental freedom, that of religious liberty, 

and as a result, unless the rule is overturned, we Catholics will be 

compelled either to violate our consciences or to drop health care 

coverage for our employees, and suffer the penalties for doing so. 

The Administration’s sole concession was to give our institutions 

1 year to comply. We cannot, we will not comply with this unjust 

law.’’

In talking to Bishop Campbell, he believes the so-called ‘‘accommodation’’ recently issued by the President does nothing to remedy 

the problem, and that the regulation encroaches on the religious 

freedoms and the First amendment. 

CRS just put out a report saying if employers, for instance, had 

100 employees, Madam Secretary, and refused to comply with the 

mandate, there would be a $100 a day fine for each individual employee.

You could add that up to $3.65 million for the year. The Diocese 

of Columbus has many more than just 100 employees, all of whom 

when they got hired knew what health care they were getting, and 

the Bishop and I talked about the President so clearly saying if you 

like what you have, you can keep it. He said that over and over 

many times. 

My question to you is if they refuse the mandate, refuse to violate their First amendment, refuse to violate their religious beliefs, 

and refuse to pay the fine, what consequences as an employer will 

Bishop Campbell face? 

Secretary SEBELIUS. Congressman, I think what you are referring to is a portion of the Affordable Care Act where we were directed to develop a set of preventive health measures specifically 

for women’s health, which has been a missing piece of a lot of insurance puzzles for a long time. 

We turned to the independent doctors and researchers at the Institute of Medicine who came back with eight recommendations, 

well women screening and domestic violence screening, contraceptive coverage, mental health services, which are often missing from 

parts of the plan. 

We then looked around the country at the 28 States which have 

mandatory contraception laws already in place, many of which existed from the mid-nineties, and looked at the way those laws are 

enacted, particularly with regard to religious freedom and religious 

facilities, and proposed in the rule the exemption that was the 

most commonly used among States who had any kind of exemption. 
36

That rule was finalized at the end of January, and it fully exempts churches and church affiliates. We think it also applies to 

likely most parochial schools, many religious high schools. 

Those employers who are not fully exempt in the declaration in 

January would be given a year to comply, and we pledged to work 

with religious leaders around their religious objections. 

In February, I joined the President in announcing that we will 

be promulgating a rule which will, I think, both not only ensure 

religious liberty but also women’s health benefits. 

It mandates that insurance companies, not the providers, but insurance companies will be making available to women at their 

choice—we will have a provision dealing with self-insured plans 

who work through third party administrators, to make sure anyone 

with a religious exemption will not provide or pay for or refer people to contraception services, and maintain their religious freedom. 

On the other hand, we will make sure that women across this 

country do not by the virtue of where she works or where her 

spouse works or where her parents work have health benefits that 

are limited. 

I think the accommodation made to religious providers, which 

does not come into effect for 18 months, is one that protects religious liberty but makes sure that women’s health services will be 

full and complete for the first time ever in the history of this country.

Chairman CAMP. The time has expired. I did not hear what 

would be the penalty if they did not comply, to Mr. Tiberi’s question. We are way over time here, but if you could. 

Secretary SEBELIUS. I have no idea. It is a hypothetical. If you 

want to submit that in writing, I will get you an answer in writing. 

Mr. TIBERI. Thank you. 

Chairman CAMP. Thank you. Mr. Lewis is recognized for 5 minutes.

Mr. LEWIS. Thank you very much, Mr. Chairman. Madam Secretary, thank you for being here today. Thank you for your vision. 

Thank you for your leadership. 

You know, Madam Secretary, I believe that health care is a right 

and not a privilege. As we implement the Affordable Care Act, I 

know we are moving closer and closer to that promise of health 

care for all Americans. 

I am so proud of the success you are having with the Affordable 

Care Act. Already, millions of young people have access to their 

parents’ health insurance. Millions of seniors with free preventive 

care and low costs on prescription drugs. That is just the beginning.

I want to take just a moment to thank you for your commitment 

to women’s health. That is important. 

No man, no State, no Federal Government, should be able to tell 

a woman what she can or cannot do with her body. 

Madam Secretary, Republicans in Congress have made it a first 

priority to repeal the Affordable Care Act and put insurance companies back in charge. After all the success we have had, I think 

this is just a bad idea. 
37

Can you tell us, tell Members of this Committee, what would 

happen to American families, consumers and seniors, if Republicans repeal health reform? 

Secretary SEBELIUS. Congressman, I think the benefits that 

you just recited with 2.5 million young Americans who now have 

coverage who were uninsured 2 years ago would go away. 

Clearly, seniors would lose the preventive care measures that 

now they can access without co-pays or co-insurance through Medicare. We know that millions of seniors are doing just that. 

The 3.5 million almost 4 million seniors who are watching their 

doughnut hole payments for prescription drugs be cut in half this 

year would again be in a situation where they would have to choose 

between buying groceries or buying their medicine. 

We know that parents who have children with preexisting health 

conditions would once again have the insurance companies lock 

them out of the marketplace. Cancer victims who now know their 

benefits cannot run out in the middle of treatment would be back 

in the soup. 

I think back to the discussion that I know is of great concern to 

this Committee overall, there would be no opportunity to really 

look at the overall trajectory of health care costs. 

Insurance companies would pick and choose who gets covered. 

The health insurance market would continue to shrink, which it 

has been doing year in and year out, as young and healthier people 

drop out because of the lack of competition and the lack of affordable coverage. 

I think short term, it is bad news for millions of people who already have engaged with the benefits. Long term, it is even worse 

news. There would be no health care spending control, and there 

would be very little opportunity for small businessowners and individuals to ever have affordable health coverage. 

Mr. LEWIS. Madam Secretary, some people suggest that the Affordable Care Act will be bad for small business. Can you describe 

how this Act helps small businesses? 

Secretary SEBELIUS. Well, I do not think there is any question, 

and some of this is based on days in the insurance department in 

Kansas, small businessowners, family farmers and others are often 

at the shortest end of the stick in the insurance market. 

They do not have any market leverage because they do not have 

enough employees to negotiate for their own policy. 

If there is a health incident of any family member or any employee, they actually pay significantly higher rates. I think on average they are paying about 20 percent more than their large competitors are paying for exactly the same coverage. 

Year in and year out, those rates are sky rocketing, again, because often they do not have market power. 

In the days where there will be a State-based insurance exchange, small businessowners will not have to join an association 

or provide any membership fee or so anything else, they will have 

a new shopping marketplace where they will be part of a much 

larger virtual pool. 

Preexisting conditions may not be considered. Companies will 

have to compete on the basis of price and product for the first time 

ever, and small businessowners, I think, not only get tax credits 
38

now and into the future, but are potentially the biggest winners in 

the new marketplace. 

Mr. LEWIS. Thank you very much, Madam Secretary. 

Chairman CAMP. Thank you. 

Mr. LEWIS. Thank you, Mr. Chairman. 

Chairman CAMP. Thank you. Mr. Davis is recognized for 5 minutes.

Mr. DAVIS. Thank you, Mr. Chairman. I would like to move 

away from health issues for a moment and talk about human services, from temporary assistance to needy families, to child care and 

child support enforcement. 

I know we both share the view that the programs are important 

to families as they move to self sufficiency. 

While they all have a similar goal of helping low income families, 

for the most part, they operate independently. I notice there is a 

tremendous amount of program redundancy and also a lack of ability of systems to communicate. 

Before I came to Congress, I ran a consulting firm focused on 

system integration, in effect, helping companies maximize effectiveness by minimizing complexity. 

In the private sector, a well run business will coordinate information and resources between its operating divisions, saving a lot of 

money in the process in reducing overhead, being much more agile 

in being able to respond to customers. 

Unfortunately, many of your human services programs do not operate this way. 

I chair the Human Resources Subcommittee and deal with this 

on a weekly basis here in Congress. 

Inside HHS, there are many legacy systems and processes that 

are siloed, many of which were actually put in place when you and 

I were children. 

As you know, the House has moved several bipartisan efforts to 

standardize the exchange of data and reporting in human service 

programs.

The most recent example was in the recent Middle Class Tax Relief and Job Creation Act. We had referred to a provision inside 

that as ‘‘data standardization,’’ and the Chairman worked very 

hard to make sure that got all the way through the Conference 

Committee.

My view is that you cannot fix what you cannot measure. Data 

standardization will make reported and collected data more interactive and useful to better measure our outcomes and proactively 

identify problems and improve the effective use of taxpayer dollars. 

Our over arching long term goal was to improve the efficiency 

and coordination of these programs and to help more families become self-sufficient. 

I think there is some common ground here. 

What I am interested in is hearing your thoughts on data standardization in general, but several questions or a question with several parts. 

First, do you agree the human service programs are siloed and 

could operate in a more efficient manner? 
39

Second, do you think the data standardization provision will be 

helpful in better coordinating programs and services, and in fact, 

should be expanded into other parts of your jurisdiction? 

Third, what more can Congress do to help your Department 

bring these programs into the 21st century? 

I am focused very much on the processes. There will always be 

ideological or policy issues where we may disagree. From a fundamental business perspective, I would like to hear your views on 

this.

Secretary SEBELIUS. Mr. Davis, my understanding from our 

staff is this effort on data standardization was not only enormously 

productive and found a lot of common ground, but we are eager to 

continue to work with you and others on identifying other areas. 

I do not think there is any question that government programs 

are often siloed. We have done an effort across the Department of 

Health and Human Services to look at redundancies, try to eliminate areas where we are repeating mechanisms. 

We have gone to a data sharing platform in many systems where 

people are not any longer building new data systems to support 

some unique program by looking at ways to share that. 

We would be eager to find additional strategies. Sometimes new 

eyes and looks at budgets reveal things that people have not seen 

from the outside. 

I am a huge believer in the more efficiently we can operate any 

of our programs, the more strategies we can implement, not only 

that have been in place in the private sector 10 years ago, but some 

of them 50 years ago are all good news. 

I would look forward to that. Again, I think the project that you 

mentioned, my understanding is it is off to a good start. We would 

love to find additional ways to continue that. 

Mr. DAVIS. I appreciate that. One thing that I would note, I 

know the gentleman from Washington State mentioned earlier 

about the recent fraud case in Dallas, Texas—when we look at improper payments, the wider aspect of this, about 10.5 percent of all 

payments coming out of the Center for Medicare and Medicaid 

Services fall into the category of improper. 

Frankly, as an engineer by background, I am not looking at this 

in terms of that, but most of the challenges that I think we are facing are driven by broken processes in this area with payments. 

We do look forward to working with you on this. Would you like 

to see this standardization effort extended into the health care jurisdiction, for us to move that legislation, and would you help us 

move that data standardization legislation into the space with the 

Center for Medicare Services to address this issue? 

Secretary SEBELIUS. I would certainly love to continue a conversation. I am not quite sure what the global question implies. I 

can tell you in the improper payment space, I just want to make 

it very clear to Members of Congress that improper payment and 

fraud are two very things. 

There are health care providers who do not fill out a form accurately and it is sent back and they fill it out accurately. That is 

an improper payment. 

It is important to reduce those numbers, and we have had a program in place of lots of training and outreach. 
40

Some is fraud. We are also building, I think, for the first time 

ever a central data system, a predictive modeling system, using 

some of the strategies that have been very effective in the private 

sector for decades, finally bringing them to this program. 

Again, I would just look forward to continuing the conversation 

and finding ways to make this more applicable across the board. 

Mr. DAVIS. Thank you, Madam Secretary. Thank you, Mr. 

Chairman.

Chairman CAMP. Thank you. Mr. Reichert is recognized for 5 

minutes.

Mr. REICHERT. Thank you, Mr. Chairman. Welcome, Madam 

Secretary. Thank you for being here today. 

I think that all of us on this panel agree with you on a number 

of things that you have testified to today. Some of those, I would 

like to quickly repeat. 

Quality versus quantity. I think we can all agree that is a goal. 

Efficient service. Cost effective service. Accessible service. All of 

those things that I think all of us who are trying to resolve this 

issue would agree would be a great thing to accomplish, but we 

know it is going to take a while. 

I want to focus on the cost increase. The Chairman touched on 

this question as did some others, and a promise that was made by 

the President. 

This was a promise that everyone could keep their health insurance if they liked it, if you like your health insurance, you can keep 

it. I think Mr. Tiberi mentioned that earlier. 

You and I had a conversation the last time you appeared here, 

I think, regarding this issue. 

Since that time, your own organization has said on regulation on 

grandfathered health plans, ‘‘Seven out of ten employers will not 

be able to maintain their grandfathered status. 

According to a survey completed last Fall by Towers Watson, one 

out of every ten mid-sized or big employers expect to stop offering 

health care coverage to workers after insurance exchanges begin in 

2014.

That seems to run contrary, at least from my perspective, to the 

President’s promise. 

Also connected with this issue is the 11.4 million Americans who 

have their own health savings accounts have great concerns as to 

whether or not they will be able to keep their health care plans because of the restrictions of the law placed upon health savings accounts.

Can you commit today that the 11.4 million Americans with 

HSAs will be able to keep their plans in 2014 and beyond? 

Secretary SEBELIUS. Congressman, as you know, as part of the 

implementation strategy, we are looking at what will constitute 

health insurance, and some of those plans are very much companions to a health insurance plan, and would very much be applicable 

on into the future. 

Others are not insurance plans. They are really kind of savings 

plans for portions of health care costs that are not covered by insurance, but they do not accompany a health care plan. 

It is impossible to say across the board what will happen as part 

of the goal of the Affordable Care Act, as you know, is to have a 
41

health insurance plan which has a comprehensive set of benefits, 

but also has affordable characteristics. 

Your notion that somehow companies in grandfathered plans will 

not be able to keep their grandfathered plan is really not accurate. 

What that reflects is employers changing the plan on a voluntary 

basis in a marketplace where they are looking to newer, innovative 

strategies or other operations, so they have made the choice to 

change the insurance plan outside the grandfather rule. It is nothing that the Affordable Care Act is imposing on them. It is the employer/issuer’s choice. 

Mr. REICHERT. Do they not make that decision based upon the 

language in the law though? 

Secretary SEBELIUS. No, sir. The language in the law basically 

defined what you have in 2010, and it put some framework around 

that snapshot. 

If an employer in a voluntary market chooses to change that 

plan, he or she is well within their capability of doing that, and 

they are doing that all the time. That is what the projection is. 

Mr. REICHERT. If I may, Madam Secretary. The bottom line is 

if you like your health care plan, you are not going to be able to 

keep it. It is going to change. 

The last question I have is that thanks to Children’s Hospital’s 

Graduate Medical Education Program, Children’s Hospitals have 

not only expanded their residency programs, they have also increased their training experience and services in underserved communities, expanding children’s access to care. 

Hospitals like Children’s train over 5,600 full time equivalent 

residents annually. 

The Administration has proposed cutting this funding by twothirds. Have you looked into the impact of this cut on children’s access to health care, and how it will look in the future? 

Secretary SEBELIUS. I have, Congressman. I have actually visited with a lot of the leaders at Children’s Hospitals across the 

country.

There is no question that in a better budget time, I think a robust funding of all graduate medical education would be the preferred path forward. 

What this budget reflects is a redirection of some of those dollars 

to research universities and others who are focused primarily on 

additional primary care providers. 

There are other sources of funding outside of the Children’s 

Graduate Medical Education that funnel into Children’s Hospitals. 

We are watching very closely the good work they do in the access 

to care, and will continue to monitor that as we move forward. 

Mr. REICHERT. Thank you, Mr. Chairman. 

Chairman CAMP. Thank you. Mr. Neal is recognized. 

Mr. NEAL. Thank you, Mr. Chairman. 

Madam Secretary, I do not think we should understate the 

progress you have been making in the area of fraud. I think there 

are many more stories that dominate headlines and evening newscasts.

During the run up to the health care debate, I pushed the Democratic leadership really hard as an act of credibility to continue to 

weed out fraud wherever it can be found. 
42

It is still estimated, as you know, that there is up to $50 billion 

of fraud in Medicare. Is that number accurate as you see it? 

Secretary SEBELIUS. I think, Mr. Neal, it is almost impossible—if we knew where it was, we would go get it. 

Mr. NEAL. Sure. My point is you are making progress. 

Secretary SEBELIUS. It is a substantial program and we think 

there is probably way too much fraud involved in the operations. 

Mr. NEAL. I think it should be acknowledged that the effort is 

now being made on a sustained basis. 

Secretary SEBELIUS. There is no question that the tools that 

were provided as part of the Affordable Care Act are the toughest 

antifraud legislation ever in the history of this country, doubling 

criminal penalties, giving us new civil sanctions, setting up resources for the first time on a department to department basis. The 

Justice Department and HHS are very much at the table focused 

on hot spots. 

The ability to build a predictive modeling system. Recredentialing of providers in some of the most troubled areas, all 

of which is beginning to pay big dividends. 

The Attorney General and I were able to announce a couple of 

weeks ago that in calendar year 2011, the largest single year for 

recovering fraudulent efforts, $4 billion was returned to the trust 

fund. Medicaid funds were returned to Medicaid. 

These efforts are really just beginning. We are 2 years in. I do 

not think there is any question that for the first time, there is a 

very serious, very focused—driven from the President on down—effort to really target, and not just prosecute after the fact, but prevent before the money goes out the door, and that is going to be 

a huge change. 

Mr. NEAL. I think that needs to be acknowledged. I am pleased 

with the way you framed it. 

I do share Mr. Reichert’s concerns about Children’s Hospitals. 

We have an exceptional one, as you know, in Boston. They have petitioned me, obviously, to raise the issue with you. I cannot think 

of better advocacy than the role they play every day. That is a 

jewel in the hospitals across Massachusetts. 

I think where we might be able to find additional money for 

them, it would be very helpful. 

In addition, the rehabilitation hospitals. They are concerned 

their funding has been flat now since about 2004. I would urge 

there. I have a substantial rehab hospital as well. Of course, across 

Massachusetts, you could find a hospital in many places. 

It is very important to all of us, not just in terms of first class 

health care, but as a great economic engine for research across the 

New England region. 

Thank you, Mr. Chairman. 

Chairman CAMP. Thank you. Dr. Boustany is recognized. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

Secretary Sebelius, in July of last year, you told the House Energy and Commerce Committee IPAB may not ration care but you 

admitted this word remains undefined in the 2010 law. 

The health law only requires IPAB to protect seniors’ access to 

the extent feasible—when dealing with meeting mandatory spending targets. 
43

As a physician, a heart surgeon, who has dealt with a lot of quality initiatives that gave demonstrable results with regard to quality 

in the hospital where I practiced, I feel very comfortable in speaking for a number of physicians across this country and Members of 

Congress in a bipartisan way who have deep concerns about IPAB 

and how it may affect the doctor/patient relationship. 

Mr. Ryan asked some intricate questions over some of the terms 

that were laid out. I want to take it down to a very basic level that 

I think everybody in the room could easily understand. 

Could you please tell seniors if you plan to define the word ‘‘rationing’’ when you issue rules for setting up and implementing 

IPAB?

Secretary SEBELIUS. I am certain that definition will be defined, and just to clarify once again, Congressman—— 

Mr. BOUSTANY. You are saying yes? 

Secretary SEBELIUS. IPAB cannot implement any recommendations. They are a recommending body. They do not implement anything. They do not control the Medicare benefit package. They do 

not control the spending package. 

The last thing they can do, according to the law, is ration care. 

Mr. BOUSTANY. But the IPAB recommendations go into effect 

unless a majority—— 

Secretary SEBELIUS. If Congress fails to act. If it fails to object 

to an IPAB recommendation—— 

Mr. BOUSTANY. Why is the bar set so high in the law for Congress? Two-thirds vote in the House, two-thirds in the Senate to 

change IPAB. 

Secretary SEBELIUS. I think there is a sense that Congress 

would object to issues or cuts that would harm beneficiaries. IPAB 

is prohibited from that. They cannot ration care. They cannot—— 

Mr. BOUSTANY. It is a seeming contradiction. You are planning 

to define ‘‘rationing’’ in the implementation? 

Secretary SEBELIUS. I would assume we will make a series of 

definitions around what IPAB can and cannot do based on the law. 

Mr. BOUSTANY. Okay. Thank you. Let me change tracks now. 

In December 2011, there was an article published in Health Affairs 

that stated that HHS knew in 2010 that the CLASS Program 

would not work. 

It was noted the Obama Administration quietly negotiated a series of legislative fixes to the law aimed at maintaining the long 

run stability of CLASS, but these amendments were never discussed with this Committee, yet you waited until February of 2011, 

nearly a year later, after the law was passed, to announce that 

CLASS was totally unsustainable as written. 

It seems as if your Department knew for some time that the program would not work, and yet you did not bring this information 

that was requested forward to Congress. 

I have to tell you, having sent a number of letters on this, working with Senator Thune and others, I am a bit irate that I first 

learned about these supposed fixes in a journal article because we 

had been requesting documents since last March. 

However, in the documents we have received from your Department, not one word mentions secret back room deals HHS was 

making in early 2010. 
44

Why has not the Department released this information? 

Secretary SEBELIUS. Congressman, I have no idea who was in 

the back room with whom and making deals. That was certainly 

nobody from our Department. 

What I can tell you is that during the Fall when there was discussion about the CLASS Act, and subsequently prior to votes, our 

actuary, the CMS actuary, did present open testimony that was 

available, casting some real doubt about the long term viability of 

the program. 

As you know, when CLASS was put into law, I was directed to 

come to Congress before a program could be started—— 

Mr. BOUSTANY. My time is running short. In follow up to letters we have recently submitted and in the past, I would like for 

your Department to disclose details of HHS meetings and contacts 

with CBO regarding CLASS over the past 2 years. 

Secretary SEBELIUS. I would be happy to. 

Mr. BOUSTANY. Thank you. 

Chairman CAMP. Mr. Roskam is recognized for 5 minutes. 

Mr. ROSKAM. Thank you, Mr. Chairman. Thank you, Madam 

Secretary.

Madam Secretary, much of the HHS component of the White 

House budget deals with the President’s health care overhaul. 

I would like just to have a conversation with you about that. 

Back in 2008, then candidate Obama promised that his plan would 

save the average family $2,500 on their premiums, and yet according to Kaiser Health News, workers paid an average of $132 more 

for family coverage in 2011 alone. 

The rhetoric did not match the reality, did it? 

Secretary SEBELIUS. As you know, the plan is not implemented 

yet for families. That will be the case. The Congressional Budget 

Office has actually estimated that families will save thousands of 

dollars once the exchanges are up and running, but the vast majority of Americans do not yet have access to affordable available coverage. That is correct. 

What you are seeing is a private market continuing to escalate 

year in and year out as they have for years prior to the Affordable 

Care Act. 

Mr. ROSKAM. How about when the President said you can keep 

your health care coverage if you like it. If you like it, you get to 

keep it. Yet, the reality is, according to Bloomberg at least, 9 percent fewer businesses are offering medical coverage than in 2010. 

There, the rhetoric did not meet the reality, did it? 

Secretary SEBELIUS. Well, again, Congressman, I think what 

you are seeing is it would not have mattered if we had passed the 

Affordable Care Act or not. 

The private market is in a death spiral and has been in a death 

spiral I would say for 10 to 15 years, with more and more employers dropping coverage as rates continue to skyrocket. 

For the first time, I think we have an opportunity, and we have 

seen some pretty good news with new rate review going on in 

States across the country, where double digit rate increases are 

being withdrawn, where insurance commissioners are stepping up 

for the first time and making studies on actuarial soundness. 
45

We are going to see some stability, but short term, we will still 

see a very shaky market until we get to 2014. 

Mr. ROSKAM. All right. Back in 2009, President Obama told the 

American public that he was ‘‘Pledging to cut the deficit that we 

inherited in half by the end of my first term in office.’’ 

That rhetoric surely did not meet reality, is that not right? 

Secretary SEBELIUS. Unfortunately, as you well know, Congressman, the President inherited probably the worse downturn in 

the economy since the Great Depression. 

Mr. ROSKAM. It is true, the rhetoric and reality do not connect? 

Secretary SEBELIUS. We are currently, I think, on a positive 

trajectory, but that is not likely to happen, which is why he needs 

a second term. 

Mr. ROSKAM. Yes, so we can keep doing trillion dollar deficits. 

Turning back to your conversation with Congressman Tiberi a 

minute ago, under this new health care law, the Secretary of 

Health and Human Services has required a group of individuals to 

really violate a fundamental belief that they have. 

You walked through and had a little bit of a discussion, but it 

was not really clear to me what the remedy is for the Department 

if you have an organization that says look, with all due respect to 

the Department of Health and Human Services, we are going to follow our conscience. We are going to follow the fundamental belief 

that we think we have, and we do not agree with the interpretation 

in the guidance of the Federal Government. 

What is the remedy, Madam Secretary, that you have? For exam- ple, you have the ability to fine these organizations $100 a day per 

employee. Let’s say you have a hospital. That is $50,000 a day. 

That is $1.8 million in fines. 

What else can you do to make them comply? 

Secretary SEBELIUS. Congressman, I think that the issue of religious liberty is one that I and the President take very, very seriously.

The issue of women’s health coverage is also one that I take very 

seriously.

What we have proposed and what we will put into a rule and solicit comments on, and we are already doing outreach to a variety 

of not only religious employers but labor groups and women’s 

groups and providers, is an accommodation so that the employers 

who have a religious objection to contraceptive coverage do not 

offer, do not pay for, do not refer people to contraception. 

On the other hand, their employees, whether she be a teacher or 

a doctor or a janitor, will have a choice about her own health care 

services, and be provided, according to the recommendations of the 

Institute of Medicine. 

Chairman CAMP. The time has expired. 

I do hope that the Secretary will give as much weight to the 

First amendment to the Constitution as to the other factors you 

have mentioned. 

Mr. Levin and I have consulted. There will be a series of votes 

about 3:15. We are going to move into 3 minutes. I am going to 

have to keep very tight on the time here so that everyone has an 

opportunity.

Mr. Becerra is recognized for 3 minutes. 
46

Mr. BECERRA. Madam Secretary, thank you very much for 

being here. I am heartened some by the conversation here because 

while 2 years ago we had a very wrenching debate about trying to 

move reform in this country forward, now it seems like the concerns are around the edges, about improving health care. 

There are some concerns, but I think no one would deny that 

there have been remarkable improvements made to the system. 

You mentioned some. 

I know there are over 54 million Americans who today are receiving expanded preventive health care services. Some additional 30 

million or so seniors who are receiving expanded preventive services.

There are seniors who today have saved some $2 billion from not 

having to pay for prescription drugs through the doughnut hole, 

where they would have to pay out of pocket the whole cost. 

There are some four million small businesses today that can 

claim a tax credit for providing health care coverage to employees 

that before they would not cover. 

There are some 72,000 children who have become newly insured 

because today there are protections against discrimination by 

health insurers, health insurance companies, against children who 

have preexisting conditions. 

You mentioned the 2.5 million young adults who today have insurance because they are able to stay on their parents’ insurance 

coverage.

There are some 20,000 Americans/consumers who no longer have 

lifetime limits on their benefits. 

Surprise, surprise, what I think is very important as well, we 

have been hearing about how this reform would be a job killer. 

In fact, last year, some 300,000 jobs were created in the health 

care sector. One in every five jobs created last year was in the 

health care sector. 

I think there are any number of good surprises, and we thank 

you for all the work you are doing to try to make it even better 

as we continue forward. 

A question to you regarding the Medicare Advantage Program, 

which you were asked about earlier. It seems to me you made a 

very important point. We are not making any cuts to the Medicare 

Advantage Program. We are reducing the amount they have been 

overpaid for years. 

I think you mentioned the amount of overpayment on average. 

Do you remember what that number was that you said? 

Secretary SEBELIUS. It is about 13 percent more than fee-forservice side by side. 

Mr. BECERRA. If I recollect, no senior would be deprived of 

health care through Medicare. They may find their health insurer 

may decide to change the package of benefits a bit, but not the core 

benefits that Medicare requires or guarantees to every senior in 

America. Is that right? 

Secretary SEBELIUS. That is correct. If anything, what we are 

seeing, Congressman, in spite of the accusations 2 years ago that 

somehow reducing this subsidy, which was built in by Congress 

years ago to overpay companies to encourage them to come into the 

market, reducing that subsidy would somehow have a damaging ef-
47

fect on Medicare Advantage, but what we are seeing is companies 

do just the opposite. 

They are eagerly coming into the space, staying in the space. 

Medicare beneficiaries have choices in virtually every part of the 

country between fee-for-service and Medicare Advantage plans, and 

rates for Medicare Advantage plans are coming down. 

Mr. BECERRA. All right. Thank you. 

Chairman CAMP. Time has expired. Mr. Gerlach is recognized. 

Mr. GERLACH. Thank you, Mr. Chairman. 

Madam Secretary, I would like to get back real quickly to the 

Medicare fraud issue, if I might. 

The Department of Justice estimates the fraud problem to be about $60 billion a year. Congressman Neal mentioned the figure 

of $50 billion a year. You indicated you do not have a clear estimate of what that is. 

Let’s assume it is $50 billion a year. Take that times ten. That is $500 billion over a 10 year budgeting window. 

In your testimony, you indicate here that you have some initiatives going on within HHS that by a conservative estimate would 

save $11.3 billion in Medicare and Medicaid savings, as well as another $3.6 billion over 10 years through this comprehensive fraud 

fighting effort. That is $15 billion over 10 years compared to a $500 billion problem. I think that is about 3 percent, actually. 

Why is there not more being done to really root out fraud? You 

said if we knew where it is, we would go after it. We do know it 

is phantom billing. We know it is the criminal use of physicians’ 

UPIN numbers. We know it is stealing beneficiary identifications 

for criminal use. 

We know how it is occurring, so why are you only proposing a 

3 percentage point reduction in fraud over 10 years? 

Secretary SEBELIUS. Congressman, I think there is no question 

we need an ‘‘all of the above’’ strategy, and that is exactly what we 

are doing, I would say for the first time. 

We have a senior administrator who is for the first time charged 

with building a fraud and antifraud system throughout the program.

We are as I said re-credentialing providers, using the law enforcement tools, building a predictive modeling system, bringing 

the billing strategies into one—we are doing exactly that. 

Mr. GERLACH. Have you thought about using a smart card system? Germany uses a smart card access system, which has eliminated fraud. The Department of Defense uses a smart card system 

to prevent fraud. 

Are you looking at that specific effort to tie beneficiary with the 

service provider at the time of the transaction to eliminate fraud? 

Secretary SEBELIUS. We are. There are a number of strategies 

looking at a different kind of Medicare card that would be less easy 

to access and less easy to steal or share. 

There are about 50 different billing systems that currently take 

the card. We are working actively—— 

Mr. GERLACH. Could you share that information with us? 

Secretary SEBELIUS. Certainly, sir. 

Mr. GERLACH. Okay. Thank you, Madam Secretary. 
48

Secretary SEBELIUS. If you have new strategies, I would love 

to hear them. 

Mr. GERLACH. We have a pretty good idea we would love to 

share. Thank you, Madam Secretary. 

Chairman CAMP. Thank you. Dr. Price is recognized for 3 minutes.

Dr. PRICE. Thank you, Mr. Chairman. 

Madam Secretary, welcome back. 

Secretary SEBELIUS. Thank you. 

Dr. PRICE. I wonder if you ever relished the irony of a former 

State executive director of the Trial Lawyers Association heading 

the Health and Human Services Department? Does that ever cross 

your mind at all? 

Secretary SEBELIUS. No. 

Dr. PRICE. Good. Some of us relish in that. Mr. Lewis asked you 

what would happen if the President’s health care law were repealed. You went through a whole series of scare tactics that you 

revealed to the American people. 

You know better than that, Madam Secretary. There are wonderful, positive proposals and options to be able to get folks covered, 

to be able to solve the insurance challenges, to address some of the 

real costs that are driving physicians out of being able to take care 

of patients, and driving patients away from being able to see doctors, that we ought to have a honest debate about. 

The President has mentioned over and over if you like what you 

have, you can keep it. Grandfathered plans have been talked about. 

You said yourself if you keep what you had in 2010, then you are 

eligible for grandfathering. 

The fact of the matter is that the law stipulates that if anything 

changes, if an employee is added, if there is a benefit that is 

changed at all, then one is not eligible. 

Secretary SEBELIUS. That is not accurate, Congressman. I 

would be glad to provide you the details. 

You cannot shift—— 

Dr. PRICE. I look forward to that. 

Secretary SEBELIUS. You cannot shift costs onto beneficiaries 

and you cannot cancel benefits to the detriment of beneficiaries. 

Dr. PRICE. It is huge for seniors, and they are being denied 

right now. You mentioned that 99.4 percent of physicians are seeing Medicare patients. Do you know how many are limiting the 

Medicare patients that they see? 

Secretary SEBELIUS. I do not, sir. 

Dr. PRICE. It would be an important number to know. I would 

suspect——

Secretary SEBELIUS. I can tell you we have an active monitoring system, and we are not getting complaints from people. 

Dr. PRICE. This is from one of your third party administrators, 

this is denial of payment to a physician. This is all that came in 

the mail. 

It says ‘‘Dear Provider: In January, your facility filed nine claims 

to Dr. Smith that were suspended because the diagnosis code was 

not consistent with patient gender.’’ 
49

What is he supposed to do with that? How is he supposed to figure out whether or not he is able to care for that patient again or 

not?

This is the kind of hassle that is driving physicians out of the 

practice of medicine. The costs of health care are huge challenges. 

The practice of defensive medicine, as you know, is massive. 

What does your bill do to address the practice of defensive medicine?

Secretary SEBELIUS. As you know, Congressman, there is about $50 million in various programs that are currently being funded, 

some of which look like they have great promise for—— 

Dr. PRICE. Any liability reform, any lawsuit abuse reform in 

your bill? Is that not how you address defensive medicine? 

Chairman CAMP. Time has expired. Mr. Doggett is recognized. 

Mr. DOGGETT. Thank you. Madam Secretary, I come, as you 

know, from a State that officials like some Members of Congress 

compete to come up with the most critical comments about the Affordable Care Act, and yet only yesterday in our State Capitol in 

Austin, a State official testified that when this law is implemented, 

the percentage of Texans who have insurance will go up from 74 

percent to 91 percent. I hope he under estimated it and we can get 

it higher than that. 

We have heard just now about all these wonderful proposals that 

are out there, but the Republicans have had more than a year now 

to advance the ‘‘replace’’ part of ‘‘repeal and replace,’’ and to date, 

all we have is one page of 12 platitudes that they adopted with enthusiasm last January. 

A concern that I have is what happens in nay sayer States like 

Texas, which has so many uninsured individuals that could and I 

hope will benefit from the Affordable Care Act. 

Texas, of course, when it came to those who are high risk, it took 

the no, we will not help approach, and you reached out, and a number of States for different reasons, did not provide the high risk 

pool, and provided a network or national network of high risk pools 

for those States like Texas that said no. 

If Texas, which has sent back about $900,000 of the $1 million 

grant they got to begin preparing, if Texas is not ready in January, 

will you be ready to assure people in Texas that they can get access 

to the exchanges through the Affordable Care Act? 

Secretary SEBELIUS. Congressman, as you know, the way the 

Act is written, States have the authority and the ability to not only 

set up a State-based exchange, but with resources and technical assistance provided by the Federal Government. 

If indeed a State opts not to take advantage of setting up a program at the State level, we are directed to set up a Federal exchange.

The discussion earlier about additional resources at the Department of Health and Human Services are to do just that, to put the 

framework together for a Federal exchange, to make sure that 

Americans regardless of where they live will have access to the 

benefits that an exchange can provide come January 2014. 

Mr. DOGGETT. If Texas sets up a program and like our Medicaid program, it is far inferior to that in other States, how much 

flexibility does the State have, or put another way, how likely is 
50

it that our citizens end up with a State program that provides 

much less in the way of coverage and benefits than those in other 

States under the announcement you made recently about these 

State exchanges? 

Chairman CAMP. If you could answer quickly because time has 

expired.

Secretary SEBELIUS. Well, I think the essential health benefit 

definition that you are talking about tries to balance a comprehensive insurance policy with affordability, and with the notion that 

insurance is regulated at the State basis. 

I think there are some underlying rules, what categories need to 

be covered, anti-discrimination, making sure there is competition 

and no cherry picking. 

Hopefully, we will have some State flexibility reflecting the fact 

that those programs as benchmarked plans have been marketed 

and priced at the State and can be up and running. 

Chairman CAMP. Thank you. I do want to remind my friend 

from Texas that we did have a health care bill that did not cost 

$1 trillion. It did cover preexisting conditions, and was the only 

piece of legislation scored by CBO as reducing health care premiums.

Mr. DOGGETT. Was that something from this year that you all 

have introduced or are you talking about the alternative—— 

Chairman CAMP. The alternative, and it has been re-introduced 

by Congressman Herger. It is currently in the legislative arena. 

Mr. Buchanan is recognized. 

Mr. DOGGETT. Will we be marking it up any time soon? 

Chairman CAMP. Mr. Buchanan has the time. 

Mr. BUCHANAN. Thank you, Mr. Chairman. I want to thank 

Madam Secretary for being here today. 

I want to shift gears a little bit. I represent a district in Florida, 

but being the only Member of Ways and Means in Florida, I want 

to talk about pill mills. 

Prescription drug abuse is a national epidemic. I have an L.A. 

Times article here. ‘‘Deaths from drugs now out number traffic fatalities in the U.S. data shows. In 2009, 37,485 deaths.’’ 

You probably know this, but in Florida, seven people a day are 

dying from prescription drugs. There are more pill mills in Florida 

than McDonald’s. 

They are saying the overall cost, one study, has the abuse at $70 

billion a year. 

I had three mothers come in, all of them lost their son or daughter.

I have a very good friend that was the chief executive officer of 

the YMCA, which is large in our area. His son was weight training, 

hurt his back at 18. I think he was a football player or wrestling. 

He got on OxyContin. All of a sudden, he is dead now, 6 months 

later.

What are we doing or what are you doing, what is your area 

doing to address this concern? 

It used to be even in the workplace about drugs and alcohol. 

Now, these kids are getting—I do not say it is just kids—a lot of 

them are getting hooked up on these pain killers. 
51

Secretary SEBELIUS. It is a very serious problem and you are 

absolutely right, the data is enormously alarming where prescription drugs have now out paced criminal drugs in terms of over 

abuse and deaths and injuries. 

We are trying to approach this along with the private sector in 

several areas. We have efforts at the State level through the Medicaid program looking at—— 

Mr. BUCHANAN. Madam Secretary, just because we are so 

short on time. 

Secretary SEBELIUS. We would love to get you a full answer 

and tell you what is going on. 

Mr. BUCHANAN. I have introduced a bipartisan bill, a lot of 

Democrats, every Democrat in Florida, and all the Republicans on 

it.

Secretary SEBELIUS. We would like to work with you on that. 

Mr. BUCHANAN. I would like to get you that bill and have you 

consider it and ideally support it. 

Secretary SEBELIUS. Okay. Thank you. 

Mr. BUCHANAN. The other thing is I just want to say in terms 

of Florida, it has been talked about here today, is the whole thing 

of SGR and doc fix. We have a lot of doctors very concerned. 

I came to Washington in 2007. We have addressed the doc fix 

probably five/six/seven times, last year, three times roughly. 

I do not know how you run a practice, how you run a business 

this way. A lot of them are trying to make long term capital investments in their practices. They said we cannot do it. The banks will 

not even support them. 

We really need to have you guys provide some leadership on this 

because obviously it is not getting done any other way. 

The President and the Administration really needs to step up 

and address this because in Florida, health care is so critical when 

we have obviously more seniors than most States, and health care 

is critical to our seniors. We need good doctors and to be able to 

keep them and pay them. 

Chairman CAMP. All right. Time has expired. Mr. Smith is recognized for 3 minutes. 

Mr. SMITH. Thank you, Mr. Chairman. Thank you, Madam Secretary.

I want to touch on a few budget related health care items. The 

first being critical access hospitals, and the second being the 

Medigap plans, and then also this new fee increase at FDA to cover 

a 17-percent increase in their budget, if time allows. 

Regarding the critical access hospitals, as you know, and I think 

you can appreciate, service in a rural State, how important health 

care is. These critical access hospitals really are modest gateways 

to health care and are entry points to health care. 

The President’s budget has proposed reducing the reimbursement 

to critical access hospitals. Can you tell us kind of the background 

to that strategy and what the impact might be? 

Secretary SEBELIUS. I cannot do it with any precision in terms 

of the years it would hit. I share your concern about the importance of critical access hospitals. 

I know in the overall payment strategy, we are continuing to pay 

an increased amount to critical access hospitals as we move for-
52

ward, recognizing that often they are the only service provider in 

an area, and it is essential to keep them there. 

I can get you a more detailed answer in writing, sir. 

Mr. SMITH. I know they are very concerned about the proposed 

reduction. I do look forward to hearing more on that. 

The budget also recommends that seniors with the Medigap 

plans, which have near first dollar coverage, pay a surcharge equal 

to roughly 30 percent of their Medicare part B premium. 

Can you speak to why the President recommended this policy? 

Secretary SEBELIUS. Well, I think there is a market strategy 

that indicates having some investment among consumers, and the 

Medigap plans are a positive step forward. He is following some 

recommendations that have been made over time and looking at 

some of the market strategies that seem to be effective. 

Mr. SMITH. What do you see the impact being? I hear from seniors concerned and obviously providers as well. 

Secretary SEBELIUS. Well, I think there are a variety of plans, 

many of which, as you know, do not provide dollar one coverage 

from the outset. We have looked carefully at the health outcomes, 

measuring the plans. 

This is seen as a way to not only reduce some revenue in the 

long run, but also discourage what may be redundant use of services, and have some strategies in place that actually are more cost 

effective.

There are a variety of plans that currently without any impact 

on beneficiaries do not have the dollar one payment by the company.

Chairman CAMP. Mr. Thompson is recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. Madam Secretary, 

thank you very much for being here today and for your willingness 

to stay as long as necessary to answer all these questions. It is refreshing——

Chairman CAMP. There is a hard stop at 3:15 with our vote, so 

we do not have all day. 

Mr. THOMPSON. Do I have 12 minutes or 3 minutes? 

Madam Secretary, you were kind of cut off when you were speaking to the issue of medical liability and what some of the promise 

has shown. Is there anything else you want to add to that? 

Secretary SEBELIUS. Well, I can tell you, and I will make it 

very brief, we are encouraged under the Agency for Healthcare Research and Quality. We were directed to put some dollars out to 

look at possibilities with hospital systems and provider groups that 

actually are working in the market. 

I think we will be coming back to Congress very shortly with a 

robust set of options. We are encouraged by what we are seeing, 

some programs that really work. 

Mr. THOMPSON. Thank you. I am encouraged by what I hear 

in my district in regard to the Affordable Care Act. People are glad 

that they cannot be cut off from their insurance if they get sick. 

They are glad their kids can stay on until they are 26 years old. 

Seniors are very, very happy that the doughnut hole is closing. 

Just today, I had a major California insurer in my office who was 

very complimentary about the things we put forward in health care 

reform.
53

They have some real good statistics as to how that is benefiting 

California consumers, as well as consumers in other States where 

they operate. 

It is not all doom and gloom. I think we are seeing some really 

positive and refreshing success as a result of this bill. 

I am particularly encouraged by HIT. Everybody I talk to at 

home is glad we are moving to health information technology, and 

they are seeing the improvements, and they are putting it in place. 

Can you discuss why health IT is important and what is the expansion looking like? 

Secretary SEBELIUS. Well, I think there is some great news 

there, again, we have now twice as many doctors and hospitals 

using electronic health records as were using them 2 years ago. 

That is a huge up tick. We think that trajectory is going to continue.

What we know by looking at the information is that having an 

electronic record is the best way to coordinate patient care. It enables providers to eliminate duplication, lower medical errors, and 

provide much more patient centered care, in that patients actually 

own their own information, can look at their own information, monitor their own information. 

What we are also seeing, Congressman, is a huge number of jobs 

being created, not only in the software companies building these 

systems, which often are companies under 50, and any one of them 

could be the next Google or Microsoft, but the number of health IT 

workers——

Chairman CAMP. I am afraid I am going to have to stop you 

there.

Mr. THOMPSON. Thank you very much. 

Chairman CAMP. We are just running short. Mr. Schock is recognized for 3 minutes. 

Mr. SCHOCK. Thank you, Mr. Chairman. Welcome, Secretary 

Sebelius.

Secretary SEBELIUS. Thank you. 

Mr. SCHOCK. Do you agree with the effort to lift the ban on 

using Federal funds on lobbying campaigns? 

Secretary SEBELIUS. To lift the ban? 

Mr. SCHOCK. Correct. 

Secretary SEBELIUS. We just recently got a proposal in the 

2012 budget which we are in the process of implementing. I do not 

know anything about a proposal lifting the ban. 

Mr. SCHOCK. The President’s budget lifts a longstanding prohibition on using Federal funds in lobbying campaigns. 

Secretary SEBELIUS. I do not know anything about that effort. 

I do know that language added to our budget in 2012 went well beyond what has been the longstanding policy, and I know there are 

Members of Congress who have expressed some concern that in 

looking at the 2013 budget, we would look at that expanded language, which the language that has been in place for a long time 

affects Federal agencies. 

The language in the 2012 resolution that was reached actually 

reaches down to grantees and stakeholders and implies that their 

activities can no longer be engaged in any kind of activities to 

change public policies. 
54

I am not involved in an effort and I am really not aware of an 

effort to lift the ban. I am sorry if I am not answering your question.

Mr. SCHOCK. No, you are. In fact, I am glad to hear that you 

are not involved in that. My question really targets the grantees, 

which you mentioned just a moment ago. 

Secretary SEBELIUS. Which is brand new language. This is not 

a longstanding policy. It is brand new language in 2012. 

Mr. SCHOCK. To allow them to use Federal funds? 

Secretary SEBELIUS. No. The ban that we are now expected to 

implement reaches down into grantees and their activities at a 

State, local, municipal or a school board level. 

Mr. SCHOCK. The folks who are receiving dollars from the Federal Government, grantees, who may be currently using them for 

lobbying campaigns—— 

Secretary SEBELIUS. To change public policy. 

Mr. SCHOCK. Okay, to change public policy. We call that ‘‘lobbying.’’ Okay. 

The people that are using Federal dollars to change public policy 

will no longer be able to do that once your rule is fully implemented?

Secretary SEBELIUS. That is my understanding. Yes, sir. 

Mr. SCHOCK. Okay. Thank you. Second, I have a question about 

the Agency’s desire to change the time period for biologics. My understanding there is an effort underway to change pharmaceuticals 

that are biologics based from the current 12 year time period. 

I was just wondering if you could speak to why you believe that 

is important. 

Secretary SEBELIUS. I am sorry. I want to make sure I answer 

the question accurately. Yes, sir. I just wanted to make sure what 

the span was. 

This has been under discussion for a while to lower the strategy 

from 12 years to 7 years, which I think is seen as an assistance, 

frankly, to consumers, to get products to the market in an affordable fashion and a much more timely basis. 

Chairman CAMP. Ms. Jenkins is recognized. 

Ms. JENKINS. Thank you, Mr. Chairman. Thank you for being 

here, Madam Secretary. 

Secretary SEBELIUS. My Congresswoman, nice to see you. 

Ms. JENKINS. That is right. The Affordable Health Care Act 

makes it clear that health insurance subsidies are only available 

to individuals and families enrolled in an American health benefit 

exchange, which is defined in the law as a State-based exchange. 

Further, the law requires that in order to be eligible for exchange 

subsidies, the ‘‘individual must be enrolled through an exchange established by the State.’’ That is a quote. 

In response to Mr. Levin’s question, you explained that it is clear 

that many States will not set up exchanges. As you know, the law 

does not allow subsidies to flow through Federal exchanges. 

However, back in August, the IRS issued a proposed rule allowing premium subsidies to be made available in all exchanges, 

whether State or federally run. 

The IRS Commissioner responded to a congressional letter on 

this matter stating and I quote ‘‘The statute includes language that 
55

indicates that individuals are eligible for tax credits whether they 

are enrolled through a State-based exchange or a federally facilitated exchange.’’ 

I cannot find the term ‘‘federally facilitated exchange’’ in the 

health care law. I am just wondering exactly where in the law is 

the term ‘‘federally facilitated exchange’’ or what specific language 

authorizes the Administration to allocate subsidies via the Federal 

exchange.

Secretary SEBELIUS. Congresswoman, I would be glad to get 

you that answer in writing. There are some very detailed legal 

analysis and also a variety of statutory language. I will be sending 

that back right away. 

Ms. JENKINS. Okay. It appears, and I would just be curious if 

you would agree, that essentially the IRS is amending the health 

care law through the regulatory process. 

Secretary SEBELIUS. I do not think that is accurate at all. I will 

send you the statutory references and the legal interpretation. 

Ms. JENKINS. Okay. If the law provides it is only Federal, it is 

only allowed for the State run exchanges—— 

Secretary SEBELIUS. I will be happy to answer this question in 

detail. It has been analyzed and looked at. You may disagree with 

the analysis, but I will be delighted to get you the language in the 

statute and the legal interpretation of that language. 

Ms. JENKINS. Okay. Those of us in Congress—I can get a little 

defensive when our constitutional authority to write tax policy is 

taken away from us and imposed through a regulatory agency. 

Thank you. I yield back. 

Chairman CAMP. Thank you. Mr. Larson is recognized. 

Mr. LARSON. Thank you, Mr. Chairman. Thank you, Secretary, 

for being here. 

Let me say that I am very proud of the Affordable Health Care 

Act. Sometimes called ‘‘ObamaCare,’’ but I kind of like that as well 

because it is pretty clear that the President does care. 

At the end of the day, that is what it is all about, even here on 

this Committee where sometimes we appropriately, and good Members on both sides of the aisle, deal with all of the economic issues 

and all of the green shade issues, et cetera, but what an honor to 

have a person of your capability of both a former Governor who 

knows how to administrate and get to solutions, and also a woman, 

who understands the incredible balance that needs to take place in 

this day and age, and finally, because of the Affordable Health 

Care Act, bringing into parity the women’s health issues that you 

talked about. 

I thank you for making and moving responsibly the accommodations that your Agency has to Catholic charities and to our university systems. It is great to see Father Jenkins and the Affordable 

Health Care people all coming forward and praising your efforts in 

this area. 

At the core of this, when you look at these issues, where 15,000 

women still are susceptible to cervical cancer and die every year, 

you begin to appreciate and understand the importance and significance of this, as well as people and constituents who say to me 

every single day, I do not care whether you are a Democrat or Re-
56

publican or independent, I have a 19 year old son that needs a liver 

implant. Please, keep that Act enforced. 

How many more people do you think will benefit by this? People 

want to see solutions. I commend you and your Agency for being 

about solutions. 

Secretary SEBELIUS. Thank you. 

Chairman CAMP. Thank you. Mr. Paulsen is recognized for 3 

minutes.

Mr. PAULSEN. Thank you, Mr. Chairman. Thank you, Madam 

Secretary, for being here as well. We had a chance to talk in the 

past about some medical device issues. 

I want to just follow up and ask a question here. All things being 

equal, do you believe that encouraging the use of lower cost alternatives like generics, generic drugs, for example, makes sense for 

both the patient as well as the consumer as a way to help lower 

health care spending overall? I assume that is a goal you would 

generally agree with. 

Secretary SEBELIUS. I think the more consumer information 

that people have about effective outcomes and prices is great, absolutely.

Mr. PAULSEN. I think you would probably agree we have a 

shortage of primary physicians. 

Secretary SEBELIUS. We do. We are filling that pipeline thanks 

to some of the resources in the Affordable Care Act. We do. 

Mr. PAULSEN. I should just share that one of my chief concerns 

with the new health care law is a provision in there that does not 

allow those that have flexible spending accounts or health care savings accounts to access the purchase of over-the-counter medications unless they have a doctor’s prescription. 

I have certainly heard from a lot of suburban mom’s and constituents in general that have been frustrated about how they get 

Claritin for their kids or Advil, whatever it might be. 

They sort of resort to having to visit the doctor or the primary 

physician to get a prescription for Advil or some of these generic 

drugs.

It is not accessing a lower cost alternative to lower health care 

costs.

Do you think the prohibition that is in the current law should 

be changed or repealed or would you be willing to work to modify 

that to the benefit of more consumer driven health care for those 

over-the-counter/generic drugs? 

Secretary SEBELIUS. I think, Congressman, the notion about 

the provision was not to discourage the purchase of generic drugs. 

It was to recognize that health savings accounts are often for 

health needs that are not being met. 

The same way that most insurance coverage does not cover overthe-counter medicines, the health savings account was brought in 

line with what insurance policies currently have in place. 

Clearly, people hopefully will continue to buy aspirin and buy a 

variety of over-the-counter drugs. They just will not use their 

health insurance policy or their health savings account to do that. 

Mr. PAULSEN. I just want to mention the flexible spending account as well. These are their own health care dollars. They set 

them aside through their employer’s plan. 
57

I had one constituent who said this rule is really a burden for 

consumers as well as physicians since additional office visits are required to get an over-the-counter medication prescription, and 

these FSAs really are a valuable tool. They are used by a lot of 

hard working Americans to help manage and hold down these out 

of pocket costs. 

This is a significant issue. I do not know if it was overlooked in 

the concept of the new law passing, both FSAs and HSAs. This is 

definitely an issue that I think we should work on. 

Secretary SEBELIUS. I would be glad to talk to you further 

about that. 

Mr. PAULSEN. Thank you. I yield back. 

Chairman CAMP. Mr. Marchant is recognized. 

Mr. MARCHANT. Thank you, Secretary. I am very concerned 

about the Texas women’s health program’s current Medicaid and 

waiver status. 

This program was first implemented in 2007 and must receive 

HHS waiver approval. 

It is currently authorized by HHS through the end of next 

month. The program currently provides services to over 100,000 

Texas women on an annual basis. 

I would like to ask three or four questions, and if we do not have 

time for you to answer, I would appreciate you submitting an answer in writing to me. 

What is the current status of the HHS’ review of the waiver for 

the Texas women’s health program? Number one. 

Number two, please tell us about the HHS’s main reasoning behind its review for the current Texas waiver request. Is this reasoning consistent with other waiver requests for similar health programs from other States? 

In the past, has not HHS allowed States to make the decision 

about who can be a qualified provider? Has HHS ever tried to overturn a State law about who can be a qualified provider, and the 

last question is is the waiver being refused because of a current 

Texas law that prohibits State funding to go to Planned Parenthood?

Secretary SEBELIUS. Congressman, I would be glad to answer 

those questions in writing, but let me just say at a 30,000 foot 

view, this ruling is very consistent with what has been Medicaid 

policy around women with a family planning waiver to be able to 

choose a provider. 

It is consistent with the information we gave to Indiana in June 

2011. We made it very clear to Texas we are eager to have this program continue. Their women’s health program provides coverage 

to, as you say, about 183,000 women in Texas. 

It is very important, and we want to work with them around the 

policies that are allowable to move this forward. 

I will be glad to answer your specific questions in writing. 

Mr. MARCHANT. Okay. Thank you. 

Chairman CAMP. Thank you. Mr. Blumenauer is recognized. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. Thank you, Secretary.
58

Let me just say coming from one of those States that are low 

cost, high quality, our legislature just passed legislation. Governor 

Kitzhaber, probably the best qualified—— 

Secretary SEBELIUS. I think he is living in my office. 

Mr. BLUMENAUER. We just want to say there is a commitment 

top to bottom to take advantage of the potential of this legislation. 

I think we have demonstrated billions of dollars of savings in the 

past. We hope to have flexibility for people that want to charge 

ahead on this. 

I think you were too kind earlier to Congress when people talked 

about the fast track provision in the legislation. It seems to me it 

is Congress that has been spineless and has had to try to have it 

both ways. 

They want to cut costs. They do not want to say no to anybody. 

The procedures that are here in this legislation do not have any restriction on majority in the House. 

In the Senate, where it appeared to take a 60 vote threshold to 

literally do the most mundane of business, it seems to me that putting that in here so there would not be the goofy procedural thing 

that has driven Republicans and Democrats alike in the House 

crazy in the other body, it still makes us responsible. 

We have a chance. I thought you were too kind. Anybody who is 

concerned about it ought to look at what is written. I think it is 

very, very reasonable. 

I identify with some of the comments my friend, Mr. Gerlach, 

talked about, smart cards and moving forward. 

I would think there are techniques here that personally I am 

very interested in pursuing. Indeed, what can be done under flexible savings accounts, I think, is different than drawing on insurance. Not just for over-the-counter medications but also some types 

of physician services that are not now eligible, that seem a little 

goofy to me. 

I wanted to go back to the contraception controversy. It seems to 

me that for years, there were Catholic institutions that had provisions exactly like this in their health care coverage, as well as a 

number of States that have been doing this for years, without controversy.

Is that correct? Would you care to elaborate on that at all? This 

mystifies me that some Catholic institutions have been doing this 

for years and now all of a sudden it is a threat to religious liberty. 

Secretary SEBELIUS. I do not think there is any question that 

there are a variety of religious facilities, Catholic universities, hospitals, systems, others, who have long offered contraceptive benefits to their employees and let the employee pick and choose whether or not to access those benefits based on his or her own faith/belief system, some to comply with State laws in place, some in 

States where there was not a State law in place. 

Chairman CAMP. Mr. Berg is recognized. 

Mr. BERG. Thank you, Mr. Chairman. Thank you, Secretary, for 

being here. 

First of all, I would like to echo my colleagues’ concerns about 

the President’s health care overhaul, with the un-elected IPAB, and 

also the regulatory encroachment on religious freedoms. 
59

Having said that, coming from North Dakota, I think a State 

with high access and affordable health care, one of the things I am 

most concerned about is critical access hospitals. 

North Dakota has 36 of those, and my understanding is this pro- posal would impact them by about $1.2 million. With almost 20 

percent of our population in rural North Dakota—excuse me—in 

rural America, I am concerned about that access. 

Obviously, coming from Kansas, I understand you have many of 

the same issues. 

My question really relates to what process did you go through in 

terms of consulting and including the rural practitioners with this 

proposal that is presented? 

Secretary SEBELIUS. Well, I think, Congressman, I do share 

your concern about access in rural areas. It is a critical issue and 

one that I did see in Kansas. 

I can assure you also that the head of one of our key agencies 

is a fellow North Dakotan, Mary Wakefield, who each and every 

day reminds us that every policy as we implement this—she informs a lot of our policies—need to be done with rural health care 

providers in place. 

I think we are confident this proposal does not jeopardize long 

term access because there are other funding streams that increase 

in this proposal, but we are going to watch this very closely because access in a rural area is critical and a critical care hospital. 

Mr. BERG. I will yield back. 

Chairman CAMP. Ms. Black is recognized. 

Mrs. BLACK. Thank you, Mr. Chairman. Madam Secretary, we 

all know and it has been said a couple of times here before that 

the President did say prior to the passage of this legislation that 

if you like what you have, you can keep it. 

We are continuing to find out that is not true. I do want to point 

to the fact that I have been reading this and I am almost finished 

with it, but I am astounded with the number of times it says in 

here ‘‘The Secretary shall establish,’’ ‘‘The Secretary shall promulgate rules,’’ ‘‘shall develop standards,’’ ‘‘The Secretary may develop 

and impose appropriate penalties,’’ over and over again, a lot of authority is given to you as the Secretary. 

Where I am concerned is knowing that there was a Senate hearing where you said you did not consult with the Bishops before the 

Administration announced a change in the conscious protections. 

What can we be assured of as we move forward that you are 

going to have an open rulemaking process and that you are going 

to involve those entities that are going to be impacted by these 

rules and regulations that need to be written? 

Secretary SEBELIUS. Congresswoman, I did not talk to the 

Bishops because the President talked to the Bishops. I felt that was 

sufficient since he is my boss. 

We did promulgate a rule in July. We got 200,000 public comments on that rule. We consulted with a whole variety of people in 

addition to those comments. 

This was a very open process. It was a very inclusive process, 

and I can guarantee you there was a very robust dialog that went 

on between July when the initial rule was put forward and January when it was finalized. 
60

Mrs. BLACK. In those comments that you got, were there comments from the entities that were going to be directly affected? 

Secretary SEBELIUS. Absolutely. There were comments from 

providers. There were comments from women’s groups. There were 

comments from labor organizations. There were comments from 

university presidents, religious leaders, charity groups. 

We heard from a whole lot of people, 200,000 comments. Yes, 

ma’am.

Mrs. BLACK. I hear what you are saying, that the President was 

the one who met with the Bishops. 

Secretary SEBELIUS. Yes. 

Mrs. BLACK. And had those comments. I guess there was maybe 

not a communication between what was said to the President and 

then what eventually came out on this because the Bishops were 

quite surprised to find that this ruling, which they were told from 

my understanding, was not going to occur, and there would be no 

effect on the way in which they were operating. 

Again, going back to the President saying if you like what you 

have, you can keep it. 

Secretary SEBELIUS. Churches are totally exempt from this ruling. The Bishops and the churches that they run and their church 

affiliates are exempt from this rule. 

Mrs. BLACK. It seems to me again we are having our freedoms 

taken away from us, and I hope we are not going to see that continue as we go through this rulemaking process, and there are a 

lot of rules to still be made. 

Chairman CAMP. Mr. Pascrell is recognized for 3 minutes. 

Mr. PASCRELL. Thank you, Mr. Chairman. Madam Secretary, it 

is obvious that the President recognizes that we cannot simply 

make Draconian cuts to solve the deficit problem. 

It sounds good. It is an over simplification and it does not work. 

It only adds to the deficit later on. 

New payment models, more efficient delivery of care, and curbing 

Medicaid fraud are all better options than transitioning to a voucher program that shifts the costs to beneficiaries. Nobody is denying 

that.

I personally believe we can balance the deficit without cutting 

Medicare for seniors and breaking our promises to them. 

My question is while the Republican budget proposals shift the 

burden to Medicare beneficiaries by transitioning to a voucher program, how does the President’s budget cut costs without changing 

the fundamental structure of Medicare or cutting benefits? 

Secretary SEBELIUS. Well, Congressman, the President both as 

part of the Affordable Care Act and then again in this budget window, has proposed I would say a gradual slowing down of some of 

the cost increases. 

We have talked about Medicare Advantage. This budget contains 

some additional proposals dealing with drug costs, that Medicare 

should take advantage of some of the drug rebates that are currently in place in the Medicaid program, which would save significant dollars. Additional fraud efforts. 

The basic package of benefits that is a guarantee to seniors and 

those with disabilities, the 48 million Americans who rely on Medicare day in and day out, is not harmed by this. 
61

In fact, what we are seeing is care improvements and beneficiaries, every time the dollars go down and premiums go down, 

beneficiaries actually have more money in their pockets. 

Seniors have actually had a great deal of relief, those in the 

doughnut hole, from the closing of the doughnut hole. 

As Medicare Advantage premiums go down, that saves beneficiaries money because they pay less of their co-pay and their 

share of those costs. 

It has been a win-win situation that slows down the growth 

trend, which was significantly ahead of inflationary costs, and yet 

protects the guaranteed benefits for the beneficiaries. 

Mr. PASCRELL. Thank you. 

Chairman CAMP. Thank you. Mr. Reed, last but not least, is recognized.

Mr. REED. Thank you, Mr. Chairman. Thank you, Madam Secretary.

Madam Secretary, I have a very direct question for you. On the 

individual mandate penalty, is it a tax? Yes or no? 

Secretary SEBELIUS. I am not a lawyer so I am not equipped 

to answer that question. 

Mr. REED. When the OMB Director stated before the House 

Budget Committee that the individual mandate penalty is not a 

tax, President Obama has publicly stated it is not a tax, yet your 

legal briefs in the Supreme Court case in writing submitted on 

your behalf, because you are a named defendant in that proceeding, 

states the minimum coverage provision is as a tax law. 

Do you agree with your attorneys’ assertions to the Supreme 

Court that it is a tax provision? 

Secretary SEBELIUS. I think it operates the same way a tax 

would operate, but it is not per se a tax. 

Mr. REED. It is not a tax but it operates as a tax. That is your 

testimony?

Secretary SEBELIUS. I am not a lawyer. I do not want to try 

to quote the legal briefs. I would defer to my legal team. I am not 

really going to try to parse this back and forth. 

Mr. REED. With that, I yield back. I know we have to vote, Mr. 

Chairman.

Chairman CAMP. All right. I want to thank the Secretary for her 

time today. 

We do have votes on the House Floor. 

Secretary SEBELIUS. Thank you, Mr. Chairman. 

Take good care of Traverse City. 

Chairman CAMP. I will. With that, this hearing is now adjourned.

[Whereupon, at 3:34 p.m., the Committee was adjourned.] 

[Questions for the Record follow:] 
62

Secreta r}' Sebelius Questions for the Record 

1I ~e Commi"« on Wa}'s & Means 

February 28, 2012 

The lIo no hle Kenny Ma...,h~n l 

I. Wha! is Ihe cUHrnl slalUS of litiS's .... ' ·ic"· of Ihe wa iH r ror !he Tuas ,Vomen'. llraUh 

I'rogram? 

Answer: As you know, Texas has elected to move fo ..... 'ard with a State rule Ihm will restrict 

freedom of choice of health care providers for women enrolled in the Women's Health Program 

efT~-':lil e Mareh 14,2012, Consistent with longstanding statutory provisions that assure free 

choice of family planning providers, thc Demonstration does not provide lhe Stale Ihe aUlhority 

10 impose such a limitalion, and we advised the Slate in lellers dated December 12, 2011 and 

Mareh 15, 2012 Ihat such aUlhority would nol be gmnled, In lighl of the Slate's preference to 

mOl'c fo ..... 'ard in implementing the State rule, the Centers for Medicare & Medicaid Scrviccs 

(CMS) is not in a posilion 10 eXlcnd or renew the current Demonslmtion, excepl for purposes of 

phasing OUI the Demonstralion. 

2, Please tell me abonl fillS'. main reasonin g behind i15 rnicw for Ihe current Tens 

wainr .... quest? b this rusonin g consistent wilh olher wai,'er req uests for sim il ar hulth 

programs from olher sllItcs? 

'\05wer: Initi all y irnplemem,"d in January 2007, Texas' Women's Hcallh Program 1115 

Medicaid Family Planning Demonslration was SCI to expire On D..-.:ember 31, 2011, CMS 

gr'dIltcd Texas a Icmporary eXlcnsion of the Demonstration until Mareh 31, 2012, As Ihe State 

has elected to rno~e fo ..... 'ard with a State rule lhat restricts freedom of choice of health care 

providers for " 'omen enrolled in the Women's Health Program, CMS;s not in a position to 

extend or renew the current Demonstration, except for purposes of phasing out the 

DemonSiration, 

3. ln t he past. ~sn't IIlI S a llo .. -ed . tall.':5 10 make d«isions aboul who <an be a qua lified 

pro,'ider? lI ~ 11 liS enr tried to o\'trturn a statt la ... aboul .. -ho u n be B qUlllificd 

prlwider? 

,\nswer: One of the fundamental asp«1S of the Medicaid program is the stalutory provision at 

section 1902(a)(23)(A) of the Social s«urity Act which provides lhat /T. ledicaid beneficiaries 

may obtain covered scrvices from any qualified providcr willing 10 undenake Ihe scrvice, 

Section 1902(a)(23)(B) sets fonh addilional protections for a beneficiary's free choice offamily 

planning prol'iders. Texas requested approval to limit access to specific providers for reasons 

not related to their qualifications 10 provide such services. 

.Is the ... i\ 'tr being refused beuuse of Texas law that prohibits 51. ,e money from going 

to Planned Parenthood? 
63

Answer: eMS was unable 10 eXlend or renew lhe currenl DcmonSlration, e~eepl for the purposes 

ofphasing OUI the Demonstralion, becausc the Slate has cie<:ted to move forward wilh a Slate 

rule lhal will reslncllhe freedom of choice of health care providers for women enrolled in the 

Women's Ikallh Progrom. 

2 
64

The ""norahle nan Rdchert 

L Lymphedema affects an estima ted I.S 10 3 miliion Medicare beneficiaries. lndivi,luals 

of len need constanl care to a"oid r«ur ..... ol infeClions. While ~Iedicare don co,'er and pay 

for Slatutorily liR,iled thenpy and scquenlial comprl'Ssion pumps, n,any ,alien ~ ~ uffer 

from rccurrent inf«lions. pro nsi" ~ degndalion in Iheir condition and c,'cnlnal 

disability bccau~e they cannOI afford Ihe con'l,,",,,!, ion bandages and garmcnt~ required for 

.... ·eryday , elf_care. I have hea rd from patients and pro"iden that state comprru ion 

garnlents arc a ncc.""ary form or treatment ror patients ..-ith Lyn'phedcma. They state 

compr".ion garments help to impron the quality of life and stan ofT l"i'Oecurring 

i,,(<<lion. for patient •. Wh)' doc. e MS not eo .... r these t...,atments? Do.., e MS "Nd a 

statutor)" change in order to prm'ide co .... ragc ror then garments? 

An ...... r: Currentl y. Medicare covcrs durable pneumatic compressors. refem.'<.l to as lymphedema 

pumps. aOO appliances used in conjunction with Ihese pumps uOOer the Part I) benefit fOT durable 

medical equipment. These equipment and accessories arc used to !real lymphedema and are 

covered because they fall under a defmetl Medicare benefit eatcgory. In order for items 10 be 

covered by Medicare. they must mCCI the dcfinilion ofa Medicare-covered benefit defmcd in the 

statule. Howe,"CT. il is importanllo nole Ihal allhough Medicare provides coverage for cenain 

ilems. il docs not provide covcrage for e\"Cry ilem wilh potential use for a person wilh a medical 

problem. e\"Cn if a physician preseribes Ihe ilem. Other devices used 10 lreal lymphedema. such 

as sleeves and stockings. are n01 covered by Medicare because Ihey do not mccllhe definition of 

durable mcdicalequipmenl or any olher Mc'<.licare benefit category established by law. 

2. It's my understanding that there is ( urrenll)" no benefit categor)" for (on rage of 

disposable negati .... prrssure wound therapy rnn though such technology ,,'U appro"ed hy 

the rnA in 201)9. I undulitand Ihat Ihis disposabk technolog)' un sa,'e Medicare money 

henuse, unlib the cur...,ntly eonre<! durable mediul equipment whk h is paid for on a 

monthly renlal basi •• it docs not require payment for unused medica l da y!. Where is e MS 

in the pr""""s of ....... ·ising the benefit category so that Medica ..... beneficiari.., ha .... aceen 10 

disposable negati ... , prr.surr wound therapy de"ices? 

An . ..... r: In order for items 10 be coverctl by Medicare. they must meellhe definition ofa 

Medicare-co\"ercd benefit. However. il is imponanl to note that although Mc<licare provides 

cowrage for cenain ilems. il docs nOI provide eO"crage for every item with potential use for a 

person wilh a medical problem, even if a physician prescribes Ihe ilem. Disposable negative 

pressure wound Iherapy devices are 110t covered by Medicare because Ihey do nol meel the 

definilion of durable mc<lical equipment. 

3 
65

The ""norahle Vcrn Ru~hal\ l\ 

I. Following ul' on our di eu ~s ion ou the de~dly outbreak of presHilllion drug ~bu . 

In addition 10 going after " I,ill mills," is it win to u amine way. to keep people oIT then 

addicti" e prn criplion drugs from the slart? 

Can Yllu 11'11 me wh y. with such a r""u' lIn limitiog the u, e ornuclltic pain killers, Ihat the 

Centus ror Medinrr and Medicaid Seryices (CMS) has initiated a co.'c .... gr re"icw to 

po,sibly limit aeee" to a cO!iI_effeetin, nlln_;n"ui,", alternatin for pain treatment for 

Mediurr paticnts called TENS or TranscutanNlus Elcctrieal Nen'e Stimul ation? 

This therapy has ",,"en a\'ailahle 10 "'Icdicart palients fllr decades and has "en bccn 

snpported by C,\IS Ihru a Na lional Clln ragc Iktumination in 1995. TENS is uailable 10 

all federal employecs through the go,'crnmenl heallh plans, to Vrtcrans Ihru the VA and 

Tricart . and 10 mosl Amcricans Ihru their prinlc hullh insurance. 

Is il ... ise 10 be pushing mOrt people 11I"'ard adtlicti" c . nb. tance. ,,'hen othe r oplions are 

available? 

AI15Wer: C~IS rc<:ognizcs the burden ofehronic pain and the imponanee of supponing pain 

management Slrategics Ihm are founded on sciemific cvidenee, Following the publication ofa 

repon by the American Acadcmy of Neurology in 2010. which found that TENS was ineffective 

for chronic lower back pain, we oclieved il was imponant to open a nmional coverage analysis to 

review Ihe available evidence. 

A description of the proposed re"iew was posted On the CMS coverage ,,·ebs;t.:: on Seplemocr 

13,2011, as the first step in the national coverage detennination process. Public comments were 

invited on the review proposal for a 30 day period and 359 comments " 'ere received. We are 

continuing to review the comments recti"cd and " 'ill move forv.·ard wilh the coverage 

dcteml;nation process;n the future. 

, 
66

The Honorahle Peter Roskam 

L Pleast confirm that CMS's broad emon tr ti on nthorit y would pcrmit the 

den lopn'cnt and utili7.l1tion of a ph}'sidan n'cdital necessity templat e in son,c or II &rt'u 

of the demonstralion project? 

AnjOnr: e MS has the authority to develop a template for Medicare-funded ilems Or services 

that comply with all applicable rules. policics. and regul3lions. 

2. Please confirm Ihal, undcr CMS's broad demOU, Ir&lion authority, Ihc agency would uol 

need I'~perwork Rwuclion ACI (PRA) apprO"al 10 e\"C o[lf util i~e suth a lemiliale? 

Ans.nr: eMS demonstration authority, Section 402 of the Social Security Amendments of 

1967, pennits the Se<:retary 10 waive only cenain requirements from Titles XVIII and XIX of the 

Social Se<:urity Act The wai"er aUlhority dO<.'S nO! eXlend to the Paperwork Reduction Act 

As nol~>d above. eMS docs not believe the development ofa clinical template is n~'Cessary 10 

implement thc demonstration. Nevertheless. eMS continues to work collaboratiwly with its 

industry partners to explore ways to ensure compliance with existing co,'crage guidelines 

including those related to the documentalion of the face-to-face encounter. 

J_ I. il not accural" Ihat man y print" payers and Mwieaid program. nlili ze a medica l 

neee .. il y ph}'sidan lemjllalc? 

Answcr: Many private payers and Medicaid progmms utilize a medical necessity physician 

template. 

4_ 1' luSt confirm Ihat Ihe modcl lem jllale that I ha,'c jlrtviou. ly St nl 10 ),our office meet. 

all of the req uirt'mcnls dtOscribed in CGS's Deu. Physic;"" lellcr. 

Answcr: There is no single diagnosis that eonfinns the need for a power mobility device (PMD). 

This makes il dif1ieult to create a standard gcnemlized fonn 10 ensure that the beneficiary's 

clinieal condition meelS the Medicare requirements. To be covered b)' Medicare. a beneficiary 

must require a PMD to complete thcir activilics of daily living in the home. eMS and its 

contractors hal'e created a series of educational materials to assist physicians with establishing 

medical ne<:cssit)' when comple!ing lhe congressionally mandated face-to-face examination. 

Howel'er. fonns such as the one previously sent tcnd to be too gcnerallo show a beneficiaries' 

clinical condition. Medicare policy requires a more detailed narrative assessment thai prol'ides a 

clinical jlicture ofthe benefidary's condition re lated to mobility needs. 

5. Will e MS Indude a tcmlliatc in the demonstration program and ifnol, why nOl? 

An, wcr: e MS docs not belic'·e the del'dojlment of a clinicallemplate is necessary to 

implement the demonstmtion_ This demonstration is not introducing new Medicare 

documentation requiremenls; instead. it is simply collecting the documentation earlier in the 

5 
67

process. The documelllatiOIl requirementS are outlined in the existing local co,-eragc 

detcmlin3tion (LCD)_ 

eMS looks forward to cOnlinuing to <-ngage stakeholders in exploring ways to clarify existing 

coverage guidelines, including those re1al~-d 10 the documentation of the face-to-fact e1lCOunlCr. 

Any clinical template resulting from these discussions would be available for nation .... ·idc usc. 

6 
68

The Honorahle Adrian Smilh 

I. The I'r...,iden!'s bndgell)rOposes ~ 17 percent spending increase for the Food and I)rug 

\dmini tr ti n o" er 20 12. lIowcn r, 98l'eN'ent of Ih ~t inereue co ... " fron, ~ new 

N' ~to ry tu on food prod ntus. Under this I'roposed regi li on fcc. con'panics would 

pay Ihe gonrnment ... e ..... I)· for u isling as a food producer or m~nuraclurcr. In Nebras ka 

alone this new tax wou ld hit 1.754 fad lilies. ,\I usn A, Seerela ry Vilsack has b«n 

discn" ing for w«ks the ~"ing! he pro.o u .... d fron' inc rused ()1'I'rali()nal effici encin ,,-ilhin 

USDA. li e reduced Irnel. ntili7.ed carly retire ... enT pr!>gra ... s. a nd consolidated cell ph()nc 

co nTr~C S. S« ..... tary Vils aek snw appro~i matc y S90 n,imon wit h these actions. line you 

and Ihe leadership I FnA consideN'd y aClion, like Ih\'$\', as ()1' posed I() raising lu n on 

food makH"? Why is a food ~ on consu ... ers the only ' ... r? 

Answer: I assure you that HHS also has b«-n looking 31 operational efTIciencies and other belttightening meaSureS. As pan of Our cost-saving measures. HHS is impl~m~nling the Ex«utivc 

OrMr On Promoting Efficient Spending to achieve savings related to travel. vehicles. IT. 

printing. and other COSts. 

Regarding FDA. the FY 2013 Presiden!"s Budget includes significant savings related to FDA's 

information technology (IT) expenditures. The estimate of IT savings for FDA for FY 2013 is 

$19.7 million. and the savings will occur in tlt1\.'C areas. 

First. FDA has been .... ·orking to consolidate its IT infrastructure int() m()re moocm data centcr 

facilities. During FY 2013. we will realize $6.0 million in savings as due to our consolidation 

efTons. 

SCC()nd. FDA is launching an initiative t() reduce the number of redundant laptops and other IT 

devices. This efT()n will produce $5.1 mi1li()n in savings. 

Finally. other initiatives across all FDA programs will yicld an additi()nal $8.6 mi1li()n in IT 

savings. The other initiatj,'es include retiring legacy IT s~'Stems. modifying IT business 

proccsses. and otocr forms of IT database savings. 

Rcgarding the pro]Xlsed registration fcc. FDA is still engaging ..... ith indust!), 10 design a uscr fee 

program related t() food facilities. We belie"c tltat tlte result of this engagcment will be a fee 

program modeled on other successful user fcc programs Ihat C()ngress enacted for I' DA. As 

FDA intends for the user fee t() sup]Xln food safety activities that provide benefit t() tlte industry 

paying the fcc. it ..... ould be cunsidered a "user fee" ratocr titan a "tax." 

Tocse fees ..... iIl allo ..... FDA t() reduce the risk ()fillness associa(ed witlt food and feed. decrease 

the frequency and se"crity of food- and fecd-bornc illness outbreaks. reduce instaoces of 

c()ntaminat;()n. and greatly diminish the burdcn on Amcrican businesses and toc U.S. ec()oomy 

due to foodbome illness events. Without sufficient and reliable fee re,·enue. we can expect the 

unacceptably high human toll offoodbon'c illness to continue ...... ith toc resulting disruptions 10 

the food system and the cconomic burdens 10 the food indu,try that result from foodbornc illness 

outbn:aks_ 

7 
69

These proposed user fee investments are quite modest compared to the economie value of the 

nation's food and feed supplies and the costs that the publie. industry. government. and the 

health care system experience during an Qutbrcak. FDA is engaging with the food industry and 

Qther food safety stakeholders to develop a workable fee structure that will ha"e broad suppon 

within the food industry. other stakeholders. and Congress. 

8 
70

The lIonorahleTom Price 

I. l\1adam ~Crelar} , I was pleased 10 sec Ihe s«Iions of Ihe recenll}' relnsed 2013 Can 

L.elter perlaining 10 mwication Iherap)' managen'ent. The in'llro"ements included a 

grl;'aler focu s on OUIrueh and educalion, 10 ensure I'art I) beneficiaries arl;' aware of Ihe 

I\1TM bcoeli!, as we ll as an u pansion of Ihe nnmber of largeled conditions. Ilhink aceen 

10 I\1TM scn"iees from local ph rmaci s is crilin l 10 eonlrolling prc~e ription drng 

u pcndilUrt"!I in l\1edicare Pa rt I), a nd 10 keeping n niors heaUhy. The C. II Lettcr also 

, lall'S Ihal CMS .. -ill .... conducting an analysis of Ihe I'arl I) MTM program. Wilh I"C'lpect 

10 Ihat ana lysis, I understand Ihal Iheagency hn contracted with an oulside firm to 

in" l'S tigaIC Ihe benefits of MTM on the enrrenl eligible I>opuiation. Can yo u hell' me 10 

undersland wh y we ha,', been told it may take anolher fcw yurs for this slndy to he 

a" ailahle? Under enrrent restrictions, seniors must SU rrer from" multiple chronic 

eundilions" and be pl"C'lcribed " muUiple mediutiun, " .... rorl;' they arl;' cligible rur I'art I) 

I\1TM sen' ices. This stud y euuld be inslrnmental in helping us 10 dctermine how we ca n 

bt. t ta rgct Medkarr bcneficiarirs who wonld .... nefit the most rrom i\1T1\1 . en-ice •. What 

can we do 10 . peed np lu timdrame for stud y r""ults? 

An. ,,·er: : Thank you for yuur inquiry reg.1fding the Part D Medicalion Therupy Man.'gement 

(MTM) and your support for the improvements to the progrum CMS is instituting for the 2013 

plan year. C~IS is evaluating the impact of MTM in a chronically ill population through a two 

year study that began in August 2011 . A final report is due at the end of the study, " 'ith an 

interim report due to CMS after the f,rst . 4 months. 

While I understand your enthusiasm for moving forward expeditiously with this study, this is a 

very labor intensive study thm involves both quantitative and qualitative analyses. 

For additional infonnation, I invite YOlltO review the seope of work for the project available at 

, II 

;t ' 

I I i I 

The SOW for the MTM project starts on 

2. Sec~ tar}' Sebe'ius, as you know, Congress, firsllhrough the Oeficil Redllction a nd laler 

through the Affordable Care Act, changed Ihe ~}' in which pharmacies would be 

~imbursed for generic drugs in the Medicaid program, Federal Upper Limiu are to be 

u lcu lated using A.-erage Manufactu~r Price, Thr inlent of Congress ... as to mOre 

accurately reimburse pharmacies for Ihe (ost of generic drugs. It is the rul e of stat es 

howenr, to adjllst dispensing fees to ensure phnmacies are also wcc llntely reimbursed for 

the cOSlto dispense prescription drugs 10 Mediuid patients, Can ),011 tell nt e what sleps 

}'OU are taking 10 ensllre thai Slates adjusl pharmacy dispensi ng fees before Federal Upper 

Limits based on Anrage Manufacturer Pritt go into eff«l? 

Allswer: We agree that phannacists should be appmpriately reimbursed for the cost to dispense 

prescription dl"1,lgs tu Medicaid patients. Payment for Medicaid covered drugs is dependent Ull 

the methodologies set furth ill each State's individual Medicaid State plan. and a State Can 

9 
71

~xen;isc its flexibility in determining th~ actual r<,imbursem~nt for a specific drug. " uMher, 

while CMS does OOt establish specific criteria for States to use h~n sening their dispensing 

fees, dispensing fees muSt be appruved by CMS as paM ofth~ Medicaid Stale plan. States are 

re$p<msibl .. for senin g reasonable dispensing fees to appropriately reimburse pharmacy providers 

for the .... rvices they prO"ide in dispensing a prescription to a 1'ok..-:li caid beneficiary, 

We hav .. proposed in Our R'Ccntly published notice ofproposcd rule making (NI'RM) (MMedi caid 

Program; Cov .. red Outpatie nt Drugs" (CMS·2345-P), that Once the reimbu rsement for the drug is 

properly detcmtint...-:I. th .. dispensing f~.., should refleet the pharmacist's professional scrv c~'S and 

costs. 

3. Sr e...,ldl")' Scmlius. Thank )'ou for rt'li ponding to the !leerntmr 9. 2011 leller I sent alung 

.. -ith 39 bipartisan 1I ~ Memhe rs r.-garding the U.S. Pren nlin Sen'ice Task Furce draft 

...,contmendalion aga inst lal e·s dfic anligen (I'SA) bU M screening. W ... 'e .... 

concer ned that I'SA screening. while imperfect. has """n enurmously helpful in impro,-ing 

mcn's chance ofsurv;" al of pro, tate eancer by more than 40 I""",cnt since il' widesprud 

adoption. 

In your rt'lipOn5r. )'OU slated Ihat "The Oepa rtmenl has the disc retion 10 modify or 

eliminate em-erage for Ihe I'SA t..,.1 basM un the Tas k Foree ruommendation. (buI) I du 

not intend 10 eliminate conrage of this sc...,ening lest under Medi ca re at Ihi. linte." 

I .. -uuld likr "OU to cla rif)' what bcnefits the statute aClually allo .. -, Ihe Secrelary 10 

" modify or eliminate," .. it a pl""a", the PSA 1<'51 is nOI une of them. The SK .... tal")· " 'a. 

8nnled authority unMr seclion 4105 of I'PACA to modify or eliminate Medica r e con rage 

of any pren nlali" r stn'ice a. definM in 1861(ddd )(3) that " has not ruei"M a grade of A, 

II, C, ur 1 by Ithel Task Force." 1I0 .. n er, Sectinn 4105 n plieitl}' . btes that thc Se-c retal")"s 

ne ... auth nrit)' dues not apply to the cn"""'ge nf diagnoslic or Ireatment cn i< ..,. . Because 

the I'SA lesl is a diagnostic blund t..,.t e&tcgoril.etl in a sepa .... te section of the statute·· 111-61 

(00 )(2)(8) of the Social SeCUril)' ACI - the), ar e, therefo .... , onlside Ihe ope oflhe Tas k 

f'urce li nd Secreta l")'" a bility 10 modify Mediu re cu,'eragt. lin .. ' then Can ynn wrile a leiter 

sa)'ing thai ),o n ha"e tlisfreti on to eliminale Or aller cO" erage of Ihis ,'ita IIHI from Our 

u nio"" bUI jusl ha,'c ehosen nOlto do il atlhis lime? 

Although IIIIS has lonted its "uemplion" to the pre,'enti" e sen 'ices ma ndate liS mirroring 

those of the Slates, unlike Ihe newl)' imposed fetl eral mantlale, ma n)' siai es do nOI require 

coverage for a ll n )A·a pproved contncepti>'ts antl multiple Siaies ha,'e ex plicitl)' chosen to 

rejec t certdin FDA-labeled "conlra cepti,'e:s" from lheir ma ndAtes, For nample, Arkansas 

and ,"Iorlh Carolina d ea rly ('ulutlc from lheir mandates so·ta lled "eme rgenc), 

contraception," while Tens' la ... excludes "abortifacients or a n)' other d rug or de"ice tlllll 

terminates a pregnanc),," 

Olher Sla te la .. ·s· inclutling Georgia, Maine, antl Rhode l~nd - cla rif)' Ihat their mandal es 

are nOllO include a borlion· intlud ng tl r ugs, " eeping in mind Ihat tllese la ... s eX I)lititly 

n clutle Ihe abOiI ion drug RU-486 li nd pre·ddl e the II ppro"a l of d substantially similar 

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72

drug, ella, that the FI)A has labeled as "contraception," the HilS mandated connge 

prccmpu the principles, if not the leller, of these lawl, 

Wu any consideration gi"en by yo ur offiu to the conflict between the broad new federal 

contrac\'plin mandale and the clear, duly enatted udu ion $ (If , o-calkd "cmugency 

C(lnfraccpli,'es" and " ab(lrlifacicnt drug," e(lntained in the law. of tbese senral SlatesJ 

R"'Iue, t that any e(lmmunkalion/di. eus.i(ln rega rding 51ale n elu. i(ln. (If • .....,.lIed 

"emergency cm,traccpli ... ," and "ab(lrtifacienl drugs" hi' disci(l5ed to the C(lmmiUCI'. 

Anl ,,'er: We have taken into consideration the input of States, religious organizations. " 'omen's 

groups and others. and eomments ..... e received on an amendment to the 2011 Imerim Final Rules 

regarding ..... omen·s pre"enti,,\' serviees. and c(lnsidered before we finalized that amendment. 

"'hich provides for a religious empl(lyer exemption from the contraceptive coverage requirement. 

With respect t(l your comment aoout Medicare coverage of services that the USPSTF does n(lt 

recommend. Seeti(ln 4105 (If the Affordable Care Act provides auth(lrity to modify or eliminate 

c(lvcrage ofcenain preventi"e services that are described in section 1861(ddd)(J). Such 

"preventi"" scrvices" include. among other things. "the screening and preventi\'c scrvices 

described in IS61(w,.,){2)." other than an electrocardioSram. Prostate cancer screening tests are 

included by this cross-reference because those tests are listl"d in section 1861( ..... ,.,){2){D). While 

the Dcp.1nment has discretion to modify or eliminate Medicare coverage for the screening PSA 

test baso."d on the US Preventi,·" Services TaSK Foree's recommendation. I do nO! intend to 

propose any changes to co\'eragc of this screening test under Medicare at this time. With respect 

to private plans. the Affordable Care Act pennits plans or issuers to provide coverage for 

services in addition to lhose n.'commended by the Task Force. thereby allo ..... ing co,'erage for 

I'SA screening to cominue. As indicated by Ihe Affordable Care Act. the USPSTF 

recommendations are an imponant source ofinfonnation regarding the modification or 

elimin31ion ofcO\'erage for cenain preventi"e services. I expect providers would use these 

recommendations. as wcll as other infonnation on best practices. to roucate their patients on the 

clinical appropriateness of any service. tCSI. or course oftrealmcnt thcy recommend as pan of an 

ongoing discussion ofcach patiem's care. 

4. ~1)' office ((lntinues to hnt conctrn~ " -ilh the reported s{)_911 °'\' audit ed crr(lr ratH bdng 

relnsed by eMS' contr~CIOrs. I am ad"iscd thaI this errOr .... te is a direct rbult of 

confusion among phy.ician. a. 10 the proper paperwork dtd to pmp<'rl)' preoeribe 

I'M Os (I'o"-er Mobility I)e"ius) on ""'half of their patients, In fact. I regularly hear from 

slakehoiders regarding a lack of clarity and con. isttnq" associated with the paperwork 

need ..... to pmperlJ file I'MI) claims On a beneficiary'S behalf. To that end, phJsicians and 

physician ss ociations hM,'c long recognized the significance or utili zing dinicaltemplatH 

for patient u~minalion . likcwise. se"e .... l member. of Congress, in an anempllo reduce 

the error rate, haH specifiu ll y requested thMt eMS de"elop a sta ndard template for 

doctors to IIle in presc ribing a I'M I). Although eMS has agreed to dcnlop such a tem.lIat e, 

it has)'" to be released. When will CMS release the PMD face-to-face " 'a lu ation template 

Ihat ph)'sicians can rely on 10 establish mediu l necessily and ,'alidates that Ihe treating 

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73

I.hysician conduclcd Ih ~ congressionally mand lcd fac e-to-facc mellital c'·alualion of Ihe 

at ~n l? 

An . .. ·cr: e MS is in the process of developing an electronic ciinicaltcmplate as pan of 

providers electronic heahh ",cords (E1[R). An initial dmft of the template is a,·ailable on the 

eMS website at htlO;/lwww.cms.govIRe!<earch.Sta!is!ics.lla!a-and_SY'!emslComnu!er_Data_and_ 

SntemslESM DIEk=ctmnicCiinicaITempbtc.html CMS is ..cti,·ely seeking input On this lemplate 

and Slakeholders Can submil comments on the d ... ftto eclinicahcmpla!e@'cms.hhs.gov. In 

addition. e MS will host a series of Open Door Forums to allow suppliers 10 comment and submit 

f""dback On the dra ft template; the schedule for future ODFs can b..> found on the e MS website. 

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74

The lIonorahlc ,\HOO Schock 

L Madame S«relary. eff«lin J a nuary 1$1 of OI~. Ihe Ur nl hullh law (' « lion 901 0) 

,,-ill imJ>on an nnu 1 fee on certa in hullh insnranee provide rs. including Mediea id 

Ma naged Ca re pl all, . ThiJ fee. Iruled as ao cH in lu under the lu code. will be 

ap[>OrliOll ed a mong heallh insurance I'ro"ide,", . ubjr'" 10 Ihe lu. whieh " 'ill be a set doll ar 

amOU1I1 for a given )"ur. based on Iht 10lal amount of " net premiums wrifl en" by Ibe 

pro,-ider for Ih ~ pre" iOIlS yu r (u. Ib ~ Iu will be im [>Osed on 20 15 for net premiums 

,,-riflen in 201~ . I a n, concerned abolll Ihe effecl of Ihis lu on ,Ia l",,' ,\ Ied ica id budgets 

since Medicaid Managed C. ~ J>lans colleel millm " Ihrough dir« 1 payments from 

slalr Medica id [lrogra n .. inslead of Ihrough indi " idua l beneficiaries. 1 fur Ihis In will 

impael Ial ~ Medica id blldgel. on a dollar fo r dollar ba. i. siner . Ial .. s a~ required 10 pay 

an ac luari ll ' . ound rale 10 Medica id pla n •. Thll~ •• Ial " ,,-ho alru d)' art slruggling IInder 

Ibe burden oflh .. currenl Medica id Mainlenance of [ ffort (I"-IOl:) ag ru n, enl. will ha,' .. 10 

usc addilional .Iale fund. 10 con'[lCII. ale for lhe fed eral fees pa id b)' Medica id [lla n. Ihal 

are. alrn dl' in financial di. lreu . I/ow doe, Ihe Departmenl of Hea lth and Huma n Sen-i eff 

plan 10 acco unt for Ihe incruse in Medica id n pendilu rff solei), due 10 Ihe In bOlh allhe 

fede.,,1 a nd . Ial e le,-el wilhoul impacting Med iu id benefici ariff' aCctSS 10 care? 

An. wer: Wc are currently ... orking with lhe Treasury Dcpanment 10 analyze the "arious 

provisions ofscction 9010 oflhe Affordable Care Act on Medicaid managed care plans. 

including the provision that exempts cenain emities that focus on public programs from the fcc. 

The statute specifics that the entity must Ix: a non-profit organization licensed in a State. comply 

... ith lobbying provisions under IRS code 501(c)(3). and deri,·c at least 80 percent of its revenue 

from Medicare. Medicaid. or the Children's Health Insurance Program (CHIP). We are assisting 

the Treasury Dcpartm~n1 as lhey prepare to implemenl Seclion 90 10. 

2. My office has rccci d many ronstituent ro n,mllnica lions O[lJ>O!l ing Ih r 25% multiple 

procedure pa)'menl reductio n 10 the prof""sional com[lOI,ent of cerla in \'& ed diagnoslic 

imaging sen'iers inlcr[lreled by Ihe . an, e physician. on Ihr same palienl, during the . ame 

..,.. ion. This reduction. ",hich ",enl into effect on J anua ry 1.2012. impaels I,alienls ",ho a..., 

of len Ihe nllUI challenging. sllch U lrauma palienls or one. " 'ilh po .. iblc cance r metasla. '" 

Acco rd ing 10 a reeent stud}' publi. hed in Ihe J ourna l of Ibe Ameri can College of Radiology. 

any efficiencies Ihal ma), n ist in Ihe [lrofes.ional componenl of ad.-aneed di agnosti c 

imaging a rt in Ihe 3-5% rwnge. Is CMS conducling a ny slatislical Or data a nal,'sis that 

ju. lififf Ihe decision to apply a 25·/. cui on Ibe pr ofessional componenl ? A. a folio .. ' up. 

docs HHS plan 10 sha re Ihe specific dala set Ihat wa. used in supporl of Ihe pa,-monl 

...,duolion? 

An . ... er: CMS based this policy on a rigorous analysis orthe data ...... hich showed that therc are 

eflkicncies when physicians take multiple images in the same session. While eMS 

ac~nowlcdged that efficiencies may vary across code pairs. the analysis demonstrated that a 2S 

percent rcdl.lCtion in the professional component of the payment is reasonable, In fact. the data 

suggest that the efficiencies 'nay e\"Cn Ix: hig.her than 25 percent. This is further supponed by Ihe 

conllnents the Medicare I'ayment Advisory Commission (MedPAC) sub'nil1ed Ofllhe CY 2012 

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75

Physician Fee Schedule pN.!po$ed rule, which recommended a reduction of SO """,em in the 

professional componem. 

Medicare spending for imaging services paid under the physician fee schedule has gro" 'n 

drnmatically in "..:enl ~ea", due to an increase in the numlx-r and intensil~ oflhese services. 

Medl'AC has SlatOO thallhis ~olume growlh may signal that lhese services are mispriced. 

Further. CMS described the dala and methodology it uS<.'<I in the Calendar Year (CY) 2012 

Physician Fee Schedule fmal rule and mel wilh induslry represcntati,'cs 10 further dcscrilx- ils 

melhodology;n Decemlx-r 2011 (subsequenllo publicalion oflhe final rule). 

3. It hu com .. 10 my attention that form ... CMS Adminislralor. [)r. l)onBld n .. rwiek. 

,·isit .. d " "0 diagno. lic imaging facililie ~ in the Midw .. st in Augu. 1 2011. Buring Iho ... it . 

Dr. n .. rwiek had the opporlunity 10 wilne,,", fi rsl_hand the pNWe,. .... diologi. t. undertake 

" 'hen they inlerpret muUifile images from Ih .. challcnging flalienl' " 'ho require nlUllipl .. 

It>iS during the u mt se .. ion. on the Same da)·. Acco rdin g 10 indi idual ~ pre.enl. I>r. 

Berwick admillcd Ihallhne a re "irlually no ffid nci ~ " 'ithin the professional comflonenl 

whtn a single radioiogisl inlcrflrNs mullipl .. images from Ihe sa me palienl. during lhe Same 

session, on lhe Same da)·. In lighl of Ihese conclusions. would il nOI make SenS<' for eMS 10 

con.ider rtsc inding Ihe 2S-/. r.lI'I'R on Ihe prof .... ional componenl? Would yon be willing 

10 ,·i. il a diagno.lic imaging faci lilY 10 see lbe work of radiologi. ls' firsl-hand ? 

An. w .. ., As mentioned above. CMS' payment policy is supported by the data CMS anal)7.ed. as 

well as McdPAC analyses. 

4. I ,.-a. plused 10 sa .edion. of Ihe 2013 Call Leller induded a grca tcr focu s on outruch 

and Nlucalion 10 l'a rlB beneficia ri .. .so lhey are awa re of the medicalion IhcraflY 

management benefit. as ... II as Ihe fl~n ion of Ih number of largeled condition,. I 

belie .... ae~e$s to "'~dicalion Ihenpy n,anagemenl ser,'ic .. from a local ph rn,aci 1 i, 

criliul to conlrolling flrcscriplion drug upenditurt5 while also keeping seniors htallhy. 

The 20 13 C. II L~lIcr aho stated lhal CMS ... ill ~ condueling n ana ly.i, oflhe Part [) 

medication th r~p ' man~gement flrog .... m. It i. my understanding Ihal CMS has alrr ad y 

co nlr~ led wilh a n oul. ide firm in order 10 in .... ligalr Ihr benefils of medicRlion Ihenlpy 

ma nagemf nt on Ihf cu"fnlly eligiblf poflulalion. While lundu.land the nted for II 

Ihorough in\"tstiga lion, can yo u explain ... h)' ",·e ha,'e bren lold il " 'ill ta ke. fe ... ytars for 

Ihi. Slud)' to be a,'a ilablt? G i,"t n Ihe curnnl rtstrielions on I'art 0 medicalion Ihe .... fI}" 

ma nagement sen·ic .. s. this Sind)" could be in. trumcnlal in helping u. 10 dCl ermine ho ... w'" 

u n b .... llargellhi. sen-ice for Ihose benefici ari .... Ihat w·ould benrfit the mos!. Whal can ..... 

do 10 s[!ted up Ihe limcframe fur Ihe . Iud)· resul .. ? 

An . ... er: Thank ~ou for your inquiry regarding the Part D Medication Therapy Management 

(MTM) and ),our support for Ihe impro"emems to the program CMS is inslilUIing for the 2013 

fllan year. CMS is evaluating the impact ofMTM in a chronically ill population Ihrough a IWO 

year study that began in August 20t1. A final report is due atlhe cnd of the study. with an 

imerim report due 10 CMS ancr the first 14 momhs. 

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While I understand your enthusiasm for mO"ing forward eXp<:ditiously with this study. this is a 

very labor imensive snxly that involves both quamitaliw and qualit31ive analyses. 

For additional infonnation. I invile you to review the seop<: of work for the proje<:t available at 

lhe following address: 

hllps:llw ..... w.lbo.govn s=opoonunit)'&mQ(k= fonn&tab=eore&id=dTd54 7191 ~·dlJde 9aade9bge 

d2Q405& cview=O. (Once atlhis address. click on ·SBRAD lDltLScctions_B lhru_M,docx. " 

The SOW for lhe MTM proje<:t Starts on page 68 of the documem.) 

S. As you kno,,', CongrO'n re,'isn! the formula f ... r h .... ' · pha rmacirs a .... t ... b<> rrimbu ned r ... r 

generic drugs and multiple ~ ... urce drugs in Ihe Medic~id pr ... gr m in recent )'e~n. Under 

currrni ~w, the Anrage M~nuractu .... r l'rkO' (AM I') is usn! t ... set the Fwc .... 1 Upper 

Limil$ (fUL,J. Thu" a n aceur~lc oa lculali ... n ... fboth AMI' and UI.~ a re depcndent ... n ... ne 

an ... ther. We understand that CMS .... ntinu"'! t ... delay acti ... n on a final AMI' rul e until 2013 

a, tbat is the time when pro,-iden a .... upccled t ... c ... mply wilh the .... Iat ed FULs. Cur .... nl 

law rrquir"'l C{'ol S t ... implemcnl a . moolhing pr .... .,.. r ... r Ih. AM I' as rrimbunen,ents a .... 

ca lcu lat ed yel CMS ha, yet t ... c ... mply with thi, , Ialul ... ry requirement. Why has CMS said 

"ia the prop .... ed rule Ihat it ,,-ill n ... t mak .. the AI\ II' a final rule until 2013 ,,-hen thr 

.... gulati ... n was published in carl)' 2012? Oocs CMS plan I ... publish FUL's as fin al based"," 

Ihe ' .... ,ghted AM I', bero .... a final regulation has been l .. ucd1 Whal Impact analysis, If an y. 

has CMS d ... ne ... n pharmacy relmbuncmentthat ~ ba,.:d ... n the m ... ~t rccenl FUL.? 

An. wer: EfT«ti"e Oclober 1, 2010, the Affordable Care Act modified the previous statutory 

provisions that provide for the establishment ofa Federal Upp<:r l.imit (FUl.l for multiple souree 

drugs. The proposed rule ..... ould establish the FUl. reimbursement for mulliplc souree drugs at 

175 p<:reenl of weighted monthly average manufacturer price (AMP) in the aggregate. We 

believe that this policy " 'ill resull in adequate reimbursement for phamtaey providers, while 

achieving savings for the Medicaid program. A recent report from the Government 

Accountability Oftke (GAO) showed that the FUl. reimbuTSCment level under the Affordable 

Care Act is 35 pereenl higher than what pharmacists pay for the drug in the aggregate. We 

believe that these levels are generally in excess of the actual acquisition cost of the drug. as 

detailed in the analysis in the proposed rule. and thai our findings are consistent with those of the 

GAO. 

Section 2503(d) oflhe Affordable Care Act specifics that the FUL amendmenls "sllalltake 

effCCl." wilhout regard 10 whether or not final regUlations to carry 01.11 sllch amendments have 

been promulgated,-In order (0 facilitatc this change, lasl fall, CMS began publishing draft FUL 

files on our Web sile for revicw and comment. These draft FUL prices are based on the mOSI 

recently reponed AMP and AMP unit data. We ha"c slressed thaI Ihe draft Affordable Care ACI 

FUL melhodology and reimbursemenl files arc drafts. and unlil such lime as they are made final. 

the December 31. 2006 FULs will remain in cffcrt. 

CMS published the proposed rule on February 2, 2012. with a 60 day public comment period. 

Following lhe con"nent period. CMS will carefully review and consider all commems before 

issuinS a final rule. 

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77

The pl"Qp<Jsed ruk alS(> addresses the smoothing process for the FULs for muhiple source drugs. 

also note thm CMS previously issued sulrregulmory guidance to manufacturers On the AM I' 

smoothing process, This manufacturer relellS<.' can be found on CMS's Web si!C at 

ht!p, lIww"·. medicaid'Gov M~-dicaid-CH11'·l'roGram·lnform3tionlB)"_ 

Topicsl£knefitsIPrcscription·DrugsIProgrnm·Rdcase.,html. 

6. Congrt$s' intent in changing the wa y pharmacies are reimbursed for generic drugs in 

Ih ~ Mediuid program, was 1(1 mo ...... ecural ely rtimbun~ pharnlaciQ f(lr Ihe e(l.1 (If 

generic drugs. Currcnl law requires '-cderal Upper Limits (FULs) to be u lculaled using 

Ihe A"erage Manufaclure I'';ce (AM I'). lI(1wenr, it is Ihe r(lle (lftbe slale, to adjusllheir 

dispensing fees 1(1 ensure pharmacies can he accuralely reimbuned for Ihe cosl of 

dispensing pr""",ipli(ln drugs 10 Medicaid palienl5. Can )'OU nplains whal sleps O \'IS i. 

laki ng to cnsure thaI states adjusllhc pharmacy dispensing fees before fU ..... bascd on 

AM I' go inl(l effccl? 

Answer, We agree that phammcists should be appropriately reimbursed for the coS! of 

dispensing preserip1ion drugs 10 Medicaid re\:ipients. Paymenl for I> ledicaid co,"ered drugs is 

dcpendent on lhc mclhodologies SCI fOl1h in cach Statc's Medicaid Slate plan, and a State can 

exereise its ncxibility in determining lhe actual reimbursement for a specific drug. FUl1hcr. 

whilc eMS docs nOl establish specific criteria for Stales 10 use when sening lheir dispensing 

fees. eMS musl appro"c dispensing fees as pan oflhe Medicaid Stale plan, and Slates an: 

l'CSp<Jnsible for sening reasonable dispensing fccs to appropriately reimburse phamlacy 

providers. 

CMS prop<Jscd in ilS recenlly published notice ofprop<Jsed rulemaking (NPRM) {"Medicaid 

Program: Co .... ·r~'<l OUlpatient Drugs" (CMS·2345·1'). that once the rcimbursemcnl for the drug is 

properly dctcnnined. the dispensing fet: should n:ncctthc pharmacist'S profcssional services and 

COSls. 

7. I c(lnlinue 10 hear ab(lullhc concerns and problcms being Ul'ericncnl onr Ih ~ 

markeling (If I'art 0 I'rcferrcd IIct"-ork I'lans f(lr Ihe 2012 pl an yur, such s (ml'lo)'e"" (If 

Ihe Seni(lr lltalth Ilisuranc" lliformation I'Mgram ,,'h(l do n(ll inform bcncficia';". thaI 

Ihey nffll to go a sl'ecific pharma cy ill ordcr 10 rt<:dn a net"'ork disc(lunt. Addilionally. 

Ihe Mnlkare I'lan Finder 1001 ~ n(lt include any (lb,-ious information for lIInikare 

bcneficiaries 10 go to a sp«ific pharmacy wilhin Iheir preferred netwnrk plan in orde r to 

recei"e a lowtr-prescriptinn drug co-payment. II Ihi ~ informatinn Inle. and if , wh}' is 

ClIIS alio"-ing employe"s (If the Sc-nior Il caUh Insurance nform~tion I'Mgram 10 Slctr 

patients 10 specific plans? Docs ClIIS plan to reform it, cllrrent policies SO that th 

MediufC I'lan Finder pro"ides clear and ob.-ious edllution. On ils fronl page for eumple. 

Ihat will pro"ide beneficiaries wilh an ex planation ofprderred network plans and Ihe cost 

implications (If choosing one? Finall)'. what is Ihe rationale for e MS not requiring a 

beneficiary to inl'ul bOlh a preferred and non-preferred pharmacy network int(l the 

Mcdicwre Plan Finder so a seni(lr ,,'ill be allie to sec the actual difference in c(lSIS? 

16 
78

Answer: The Medi care Plan !,inder (MPF) is a valuable tool that allows beneficiaries. as well as 

Ihe mostly volunteer counselors in the State Heallh Insurance Assistance Programs (SIII Ps). to 

cOlllpare Medicare preseriplion hcalth and drug plans on the basis of costs. quality and coverage. 

MOSI Pan 0 plans offer one network. with no preference between network and oUI-of-network 

phannacies. Aeeause this infonnation is nol applicable to most plans, il would nol be useful 10 

mOSI Medicare beneficiaries. Howe"cr, the MPF docs provide infonnation about preferred 

phannacies at various points in the tool: 

In MPF, bene ficiaries ha"e the opponunity to seleci a phannacy in Step 3 of4: Sek'ct Your 

Phannacies. Ur>der this step there is a note: "Please selecl up to two pltannacies. If the 

beneficiary's phannacy isn't in a plan's network. the cOSllhey will see is the full price oflhe 

drug .... ·ith nO insurance. Note Ihat SOme plans may charge lower drug prices at p ..... fcned 

pharmacies and higher prices al non-prefem,d phamlacies:' 

I'rior to April 19. 20]2. if the beneficiary chose Ihe "1 dOn'l .... ·ant to add phannacies nOW"" 

bullon. a pop-up bo" displayed. The pop-up again references that selecting a phannacy will 

provide a more accurate estimate of the drug costs. Beginning on Apri] 19. 20 12. the 

beneficiary will be required to sek-ct a phannacy. 

The beneficiary can look at tht' "Your I'lan IRtails" pagc under Ihe Drug Costs & Cm'erage 

tab for prnlmmcy infom13tion. 

Beneficiaries can review the "What You Pay" se.:tion ar>d click onto each phannacy tab to 

see the phannacy type. The pham13ey will be deseribed as Preferred-Network Pltannacy. 

Net .... ·ork Phannacy. or Out-of-Network Phannacy. 

Additionally. under the Pltannacy & Mail Order Infom13tion. if a user clicks onto the 

phannacy hyperlink. the chan shows the phannacy namc. pharmacy type and if the phamtacy 

is preferred. Ncxt to the word preferred there is a question mark. If a uscr clicks onto the 

queslion mark. the definition ofl'referred f'hannacies is ir>dicated ("If your plan has 

preferred phannacics. you may sayC money by using them. Your prescription drug OOStS 

(such as copayment Or coinsurance) may be less at a prefened phannacy because it has 

ag ....... '<l with your plan 10 charge less.""). There are Ihree options that appear under the 

]'referred heading. A "Yes"" displayed ur>dcr Preferred Column. indi cates thaI the phannacy 

is a "Preferred" phammcy and the beneficiary may save money by using thcm because it has 

agreed with the plan to charge less. If there is a "NO"" listed. that means il is I10t a preferrednetwork phannacy. ralher a net .... ·ork pharmacy. Howner. "NO" also ir>dicates that lhere are 

preferred-network pharmacies a~ailable in the plan's network. rf a "Not applicable" displays 

in the column thenlhe plan does not ofTer any preferred phannacics in their network. 

As mentioned above. beginning on April ]9.2012. beneficiaries will be required to select a 

phamt3cy whcn using the MPF. This will assist beneficiaries and counselors in selecting the 

proper pharmacy and understanding how the price cstimale of the Plan Finder is based on that 

phannacy. CMS is continuously evalullting the MPF to ensure thai bencficiaries. SHIPs. and 

other users have the most up-to-date ar>d useful infonnatioll to make thc most informed drug plan 

choices based on their individualnc<.'<ls. 

17 
79

The lIonnra hle h~rle. ~~ne l 

L I understand th~t in 201 3 a"ailable funding for "uerIO Rico Medic9n- ,\dvaul agc (MA) 

in Puerto Rico is going 10 b~ CU I by onr S200 million. Wilh n"~r 70 p~r enl of the 

Mcdiurf b~neficiaries in PuerlO Ri co being CO"cred under M,\, this co uld han a 

dc ... tin g iml'act on aec..,S IO hu llb u re. ~ia ll y sc .... ie~ s . h a$ dental. ,'i$ion, rural 

transportation and sub$idi7,cd co-payments and dedu ib s that Mcdicare Fer for Se .... ·ice 

do" not offer. 

Witb the high pO"crty raleand tb<"le potentia l cuts what un 11115 and CMS do 10 hdp th 

peo/lle of I'uerlo Rico for the 20/3 1\1,\ plan year? 

'\ns,,'cr: I understand your concern about Medicare Advantagc (MA) payment rates in Puerto 

Rico. In the fall of2010. CMS conductc-d a detailed analysis of M(X)icare Fc'C-For·Service (FFS) 

spending in Puerto Rico. The results of that analysis confinn Ihat Medicare enrollment. cost. and 

use patterns in Puerto Rico are different than those in the States. More specifically. benefIciaries 

in Puerto Rico arc required to opt into Part B coverage whereas on the mainland. beneficiaries 

are automatically enroll(x) in I'an 13 and must opt out 10 decline it. The result of this enrollment 

differenec is that the proportion of the Medicare population with Pan B covcrage is lower in 

Pueno Rico (46 pereent) as compared to the mainland (91 pereent). Given this differential. and 

because beneficiaries who enroll in Medicare Advantage are enrolled in both Pan A and Pan B. 

we concluded the I'I'S rate calculation in Pueno Rico should be based exclusively on 

beneficiaries who are enrolled in both Pan A and Pan B. This refinement was included in the 

FFS ratC'S that eMS' Orrke of the Actumy calculated and was announced in the 2012 Rate 

Announcement published on April 4. 2011. This change resulted in an increase of 0.4% in the 

blended benchmark for "ueno Rico in 2012. 

We havc thoroughly reviewed the methodology u~ to calculate FFS rates and believe that with 

lhe refinements made last year .... e have achieved the best and most accurate estimate ofFFS 

costs in Puerto Rico. Therefore. for 2013 ,,"'e are already using the best methodology to calculate 

FFS rates in Pueno Rico. meaning as MA payments begin to be tied to FFS rates. the island has 

already benefIted from this special and targeted methodology. I app .... 'l:iate the concerns you 

ha,'c raised regarding Pueno Rico and look fo,...·ard to working with ou in the future to ensure a 

strong MA program exists on the island. 

18 
80

The lIonorahle [ar! nJumrnauer 

L Stcntary St liu . among it. man y other ac hi e"emenlli. tht Affordable CUt Act 

pro,-ided new options to imprOH the qnality of u re for Mediure patients near th t end of 

their i' . Under the Concurrent Ca re rh'mon tr ti n a uthori7.ed under etli n 3 1-10, 

Medicare can choon lift ...... n h01 pict pro,-ide rs 10 pro"ide concurrenl <nratiH benelil. 

alongsidc their hospict bcnefils, a bcnefit ,,-hieh se'-eral pri"ale insurers alrudy offer. In 

designing thi, den","SI""Iion, il is in'porta nl 10 t n, nn thai hospice pro,-ider< he able to 

pa rlicipate by allo,,-ing payn,.nt lor cunolh-e scn-ic .. 10 h. distinct Irom rcimbur<cmcII' 

for hospice sen-i . ... I look lorwa rd 10 ncei"ing all updal e Irom yonr agency on the design 

of this demonstn tion program. 

Ans,,·tr: Thank you for your feedback: " 'e will ccnainly take inlo consideration your ideas for 

paymenl of curative services when we begin the design phase of this demonstration. 

Z. Ste .... lary Scbelius. since ZOO-l. Ihe GOHrnmcnt Accounlability Officr has i.oucd Iweln 

reporls d""umcnling Medicare program "ulncrabililics lor improper par ments and fraud. 

While il is impossible 10 calcnlal. prcdsely. the cost 01 fraud likely run. inlo Ihe billion. 01 

dolla rs annually. To assi. t )'our agency's tremendons efforhlo limil fraud a nd a bu. e. I 

han inlroduced, logc ther " 'ilh Mr. Ge rlach 01 I>enn. yln ni. and Sens. Kirk and Wyden. 

legisl ation prO\'iding for a .ommon access n rd for Medicare benefidaries. The Mrdicarc 

Common Access Card Act 01 20 11 . II.R. 2925. eslablish"" a pilot projcel namining the 

ability of sma rl ca rd technology 10 eliminate fnud and proteel beneficiary informalion. 

Replacing the paper Medinr. urd " 'ilh a sma rt nrd Ihat sff urcly store. a Medicare 

bencficial"}"s personal inlormalion allo"-, beneficiaries and pro" ider< to confirm roctipl of 

st n ·ice:. al tht lime . e ..... k es a .... rendered and helps 10 pre,·t nl Inudu.tnt claims. I'leau 

pro,-ide lour ,·ie,,·s on how imprond Iran. action 5ccurit), can red uce fraud a nd abusr 

within the pro.-iJion of Mediurt st ..... icK. 

An . ... er: I share your commitmenllo stopping ... aste. fraud and abuse in the Medicare program 

alld your interest in learning whal technologies can help us achie"e this goal. The AlTordable 

Care Act provided the Cellters for Medicare & Medicaid Services (CMS) wilh significant new 

authorilies 10 ellhancc its o"crsigln of Medicare. helping shift the focus to fmud prevention by 

providing ne ... aUlhorilies 10 irn:reasc screcning of providers alld suppliers before they enroll in 

allY oflhese health programs. implement lemporary moratoria on lIew providers in high risk 

areas. and eSlablish requirements for compliarn:e programs. These rn:w act;vit;es are 

complemenll-d by Ihe passage of the Small Business Jobs ACI of201 0. which required CMS 10 

imp1cmcot prediclive anal)1ics lechnology. and provided financial resourccs 10 do so. CMS is 

now deploying predicli"e allal>~ics technology in ils Fraud Prevcmion Syslem (I' PS) 10 review 

all Medicare FFS claims prior to payment For the first lime. eMS has a real·t;me view of FFS 

claims across elaim types and thc geographic wnes ofils claims processing contractors. This 

allows CMS to more easily idemify fraudulent providers by delecting patterns and aberrancies_ 

CMS has begun i""cstigaling the potcntial application ofsman card t<'Chnology to the Medica", 

program. including the possible benefi .. in prewnting fraud. Ihe cos .. of implementation. and 

" 
81

" -hellier 3 succ~ssful pilot could be ~xtended to meellhe needs of the 50.2 million benefkiaries 

and loS million pr<.>viders we serve in 2012. 

20 
82

f 

[Submissions for the Record follow:] 

The Honorahle Richard Neal 

I. In A[lril of 2009, Congress [lused Ihc Genelic Informalion No n-Iliscriminalion Acl of 

2008 (G IN,\). G INA inl[lOses nnderwriting restriclions on Ihe use of genetic inforn.alion on 

heaHh insu ..... ,., nd em[lloycrs on ly. In addi.ion, GINA's legisla.in history ..... nects clcar 

Cong ..... ssiona l inlent 10 lraek .he IIII'AA f"'nlcwork, and no. 10 subject long_term ure 

insnrns 10 any of .he suluta nfi\'C I'rohibi.ions ap[llic~ble 10 hulth insunnee. 

lI owe\'er, in II liS' pro[lOscd rule regarding G INA. IIIIS u pliciUy UI.nds G INA's 

prohibition on Ihe usc d disclMu ..... ofgenctie informalion 10 long lerm care insurance 

~nd issue,., of long lerm care insurance polides. 

Secretar)' Sebelins, G INA is wriUen 10 ucludc 10ng_IHm care insurance from lhe 

I"Clilriclions on underwriling using genetic informalion, and Ihe legislati.·c hislory in bo.h 

Ihe Senale and lIonse affirnl fhal oongressiona l intent. Thi. is erilicallo e.un ..... lhe "iabilily 

of Ihe long_term ca rr insurance protluct. I wrole 10 )'O U in Nonmber of lasl yrar to join in 

Ihe npr,,"io" of congr."ional conCHn Iha l Ih. Departmenl has nCffded it •• Ialntory 

authority by prn[lO. ing 10 apply Ihr G INA rule to long_term nrr insurers. I undersland 

Ihat Ihe Deparln.enl i. getting clo. e to finali.;ing lhesr regulations. Can yon lell n.e how )'OU 

plan 10 addre,. this issur? 

Answer: I appre.:ia!e your concerns with the Dcparlnlent's proposed rule. which would prohibil 

long-Ienn care insurers fronl using genetic infonnmion for under ..... iting purposes. As the final 

rille to implement the GINA prote.:tions has oot yet been published. the Depar1ment is not in a 

position to discuss Ihe final policies. How.,,·er. be assured that in developing the final rule. Ihe 

Depar1ment is carefully considering the vjcws cxpressed in response to Ihe pro[lOse<I rule and Ih. 

potenlial impacl oflhe proposed rule on the long·t.nn care market. 

21 
83

Comml'nlS for Ihl' Rl'eord 

U.S. House ofRepresenlath'es 

Committee on Ways and Means 

The President's Fiscal Yt'ar 2013 8udgt't PrOIJOsais 

Dl'parlml'nt of Health and Human Sl'rviees 

Tuesday. February 28. 2012. I :00 PM 

By Michael G. l3indller 

Center for Fiscal Equity 

Clminnan Camp Ranking Memocr Levin. thank you for til." opponunity to slIbmitthese 

comments for the record to the House Ways and Means Commin~'C. The beginning of the 

budget debate for a ne"' year brings with it the opportullit)' to rethink proposals. Til." Center for 

Fiscal Equity is using this opportunit)' to clmnge our proposed fix for Social Security alld Health 

Care. As always. our proposals are in the context of our basic proposals for tax and budget 

refoml. which are as follows: 

A Value Added Tax (V An to fund domestic military spending and domestic 

discretionary spending with a rate betwccn 10% and 13%. which makes sure very 

American pays something. 

• Personal income surtaxes onjoil1l alld widowed filers with net annual incomes of 

$100,000 and singlc f,lers carning $50.000 per year. 

• Employee contributions to Old Agc and Survivors Insurance (OASI) with a lower income 

cap. which allow. for lower paymel1l le,-cis to wealthier retirees without making ocnd 

points more progre'l'live. 

• A VAT·like Net Business Receipts Tax (NBRT). which isesscntially a subtraction VAT 

" -ith additional tax expenditures for family support. health care and the private delivery 

of govern men tal se ... ·ices. to fund entitlement spending and replace income tax filing for 

most people (including people who file " 'ithout paying). the corporate income tax. 

busine'l'ltax fi ling through individual income taxes and the employer contribution to 

OASI. all payroll taxeS for hospital insurance. disability insurance. unemployment 

inslIrnnce and survivors undcr age 60. 

Discretionary activities of the Dcp.1rtment of Hcalth and Human Services would be funded by 

thc V A T. While somc of our V AT proposals call for regional brea~downs of taxing and 

spending, thcy do not for this dcpartmenl. Whilc some activities, such as thc Ccntcrs for Discase 

Control. exisl oUlsidc the Washington. DC mctro area. evcn lhcsc are site spttific rathcr than 

spread OUI on a nation·widc basis 10 sc ... ·c thc public at largc. Whilc somc government activities 

benefit from national and regional distribution. hcal1h research will not 
84

The one ",foml that might eventually be consid~r~-d in this area is to mOre explicitly link 

gowrnment funded research with ownership of the re.ults, SO that the Depanm~nt might fund 

SOme of their operations with license agr~ .... m~nts for sOme of the resuiting research. enabling an 

expand~d research agenda without demanding a higtwr budget allocation, 

Ofcoursc, regionalizalion is possible iflhe Unifonned Public Heallh Service is put inlo lhe role 

of see ing mon: palients, panicularly elderly patients and lower incomc palients who arc less lhan 

well served by cost containment slratcgies limiling doctor fecs, Mcdicaid is notoriously bad 

because so fcw doctQT'S acccpl lhese patienls due 10 lhe lowcr compensalion levels, although wc 

are encouraged Ihe hcalth care refonn is al1cmpting 10 reduce Ihm In:nd. Mcdicare will head 

dow" Ihat rood shonly if somelhing is not done aboullhe Doc Fix. II may become inevilable 

that we expand the UPIIS in order to lrea1 patients who may no longer be able 10 find any mher 

medical can:_ If that were to happen, sueh can: could be organized n:gionally and funded wilh 

regionally ba5ed laxes, such as a V AT, 

The mher possible area of cOSt savings has 10 do " 'ilh care, now provided fo, fre..-, On the NIH 

campus. While palients " 'ilhout insurnnce should be able to continue to r~'Ceiw fn. .... car~, 

patients wilh insurancc likely could be required to make some Iype <>fpayment for care and 

hospitali7.3tion, Ihus allo"'ing an expansion <>fcare, grealer assislance to palients " 'ho slill face 

financial hardship in aSsocialion wilh Iheir illnesses and a resloration of some care Ihal has becn 

discontinued due 10 budgel eUlS to NIH, 

The bulk of our comments have to do with heallh and retirement security. 

Onc of the most oIi-.citcd reforms for dealing with the long Icnn deficit in Social Securit}' is 

increasing the income cap to cover more income " -hile increasing bend points in the calculation 

ofbenefits, the taxability of Social Securily benefits or c,'en means testing all benefits. in order 

to actually increa$C revenue rather than simply making the program mOre generous to higher 

income earners, Lo""cring Ihe incom~ cap on ~mplo)'ee contributions, " 'hile eliminating il from 

employer conlribulions and cn;,diting the employer conlribution ~'<[ually n;,mQ\'eS the need for any 

kind of bend points al all. while lhe increas..-d floor for filing lhe income sunax eff~'Ctivcly 

removes Ihis irlCOme from la,xalion, "leans testing all payments is nOI advis.1blc gi"cn the 

mo,'cmcnt ofrelin:ment income to defined contribution progrJms, which may collapse wilh lhe 

slock markel - making some basic benet;t essential to evel)'onc, 

Moving the majority of Old Age and Survivors Tax collection to a consumption tax, such as the 

NBRT. effectively expands the tax ba5e to collect both wage and non· wage incomc while 

remO"ing the cap from that income. This allows for a lower tax rate than would othcrwi$C be 

possible while also increasing the basic benefit SO that Medicare Part B and Pan 0 premiums 

may also be increased without decreasing the income to beneficiaries, ln e~as in g those 

premiunls essentially $Oh'.,. Iheir long term finand~ ll' roh em s while allowing re""a l of Ih. 

0"" Fi ~, 

I fpersonal accounts are add~-d 10 lhe syslem, a higher ratc could be collected, ho"'e,'er r~'Cenl 

cconomic hislory shows Ihat such in'"CSlments are beller madc in insun:d cmplo),er vOling slock 

mlher Ihan in unaccounlable index funds, which giw Ihe Wall Slreet Quants 100 much power 

ovcr the economy whilc funhcr insulating ownership from management. Too much separation 

gives CEO. a free hand to di,'cn income from shareholders 10 their own compensation through 

cronyism in compensation committees, as well as giving them an incentive 10 cut labor COSIS 

more than Ihe economy can sustain for consumplion in order to realize e\'en grealer bonuses, 
85

Employee_ownership ends the incemive to enact job-killing tax cuts on dividends and capital 

gains. which leads to an unsustainable demand for credit and money supply growth and 

eventually to eeonomic collapse similar to the one most recemly experience<l. 

The NBRT base is similar to a Value Added Tax (VAT). but not idemicaL Unlike a VAT. an 

NURT would nO! be visible On l\.'Ceipts and should nO! be zero rated at the border - nor .hould it 

be applied to impons. While both collect from consumers. the unit of ""alysi. for the NHRT 

should be the business rather than the transaction. As such. its application should be universal -

covering both public companies "ho cu=ntly file business income taxes and private companies 

who currently file their business expenses on individual Mums. 

A key provision of our proposal is con""lidation of existing child and hou$Coold benefits. 

including the Mongag.: Ime"'st and Propeny Tax Deductions. into a single ",fundable Child Tax 

C",dit of at least $500 per momh. per child. payable with wages and cn'dited against the NBKT 

rather than individualtax<"S. Assistance at this level. especially if matched by state governments 

may very well trigger another baby boom. especially since adding child",n will add the 

additional income now add~-d by buying a bigger house. Such a baby boom is the only ",allong 

term ""IUlion to the demographic problems facing Social Security. Medica", and /l.k -dicaid. 

which are more demographic than fiscal. Fixing that problem in the right way definitely adds 

"alue 10 tax reform. 

The NBRT should fund $Crvices 10 families. including e<lucalion at allle\'cis. mental health care. 

disability benefits. Temporary Aid to N,'Cdy Families. Supplemental Nutrilion Assislance. 

Medicare and Medicaid. Soch a shift would radically ",docc the budget needs ofllHS, while 

improving services to vulnerable populations. 

The NBKT could al"" be used to shift governmental spending from public agencies to private 

providers " 'ithout any involvement by the go,'emment - especially if the several states adopt~-d 

an identica l tax siructure, Either employers as donors Or ,,·orkcrs as recipients could designate 

that revenues that would otherwise be collected for public schools ,,·ould instead fund the public 

Or private school of their choice. Pri"al,· mental healt h providers could be preferred On the same 

basis Over public mental health institutions. This is a feature that is impossible with the FairTax 

Ora VAT alone. 

To extract COSt savings undcr the NBKT. allo,,' companies to otTer services privately to both 

employees and retirees in exchange for a substantial tax benefit. provided thlt services arc at 

least as gen.:rous as the current programs. Employers who fllnd catastrophic care would get an 

e,'en hig,l\<:r b.!nefit. ,,'ith the proviso that any care "" provided be superior to the care available 

through Medicaid. Making employers responsible for most costs and for all cost savings allows 

Ihem to use SOme market power to get 10"'er ml~'S. but not SO much that the free market is 

destroyed. Increasing Part B and Pan D premiums al"" makes it mOre likely that an employerbased syst<.'m ""ill be suppon~-d by retirees. 
86

Enacting the NBRT is probably the most promising way to decrease health care costs from their 

current upward spiral - as employers wlKJ would be financially responsible for this care through 

taxes " -ould ha\'e a real incentive to limit spending in a way that individual taxpayers simply do 

nOl ha\-e the means or incenti\-e to exereise. While not all employers would panicipate. toose 

who do would dramatically alter the market. In addition. a kind ofbencficiary exchange could be 

established $0 that panicipating employers might trade credits for the funding of former 

employees who retired elsewhe ..... $0 that no one must pay unduly for the medical costs of 

workers who spent the majority of their careers in the service of other employers. 

Co nceivably. NBRT offsets could exceed rewnue. In this case. employers would reeci,'c a VAT 

credit. 

Thc Center calculates an NBRT rate of27"/~ before offsets for the Child Tax Credit and Health 

Insurance 8!elusion. or 33~. after tlte e.~clusions are ineluded, This is a "balanccd budget"' rate. 

h could be sellower if the spending categories funded reccive a supplement from incomc ta .~es. 

These calculations arc. of course. subject 10 change based o n belter models. 

Thank you for the opponunity to address Ihe commiltce_ We arc. of course. available for direcl 

testimony or to anSWer questions by members and staff_ 
87

f 

Com aet Sheet 

Michael Bindner 

Cenler for Fiscal Equily 

"Canterbury Square. Suite 302 

Alexandria, Virginia 22304 

57 1·3)4·8771 

fiscalcQuil)"@wriwnnet 

Commille .. on \\Ia)'! Mnd MUllS 

Thf Prt':S iden" s Fiscal Ynr 2013 Bud1,:cl Proposals 

U<'parllll<'nt of Health and HlImall S<'n"ic<'s 

nlt':Sday. FebrnMrY 21'1. 2012. 1:00 PM 

All submissions must include a lisl Mall d;"nts. persons and/or organizations on whose behalf 

the wimess appears: 

This testimony is not submilted on behalf of any cliem. person or organizalion Olhcr Ihan the 

Cenlcr itself. which is so far unfundC"<! by any donations, 
88

TESTIMONY BEFORE THE H ousE COMM llTEE ON W AYS & Mt:ANS 

rOR TIl E IlEA RING O:-:Tm : Plu:sml::-:T's rlSCAl YUR201J BUI>G .:T I'ROI'OSAl WITII 

U.S. Ilf:PARnIEI'T o l· III: ... l Til & II IA :-: SI:RVICI:.s SI:CRF.T ... RV KATlll I:I;:-: SI:BI:I,IUS 

February 28, 2012 

HYTlIE 

NATIONAL H EALTH LAW PROGRAM 

The Nalional Ileahh Law J'l"Qgram ("NHeLP'') submits this testimony to the Iiouse Comminee 

on Ways & Means, NHeLP prot~'Cts and advances the heahh rights of low income and 

ullderserved individuals_ The oldest non·profit ofilS kind. Nl lel.l' advocates. educates and 

litigates al the federal and stale levels. ConsiSlent with Ihis mission. NHcLP works 10 ensure thai 

all people in the United Slalcs--inciuding women-have access 10 qualily health care including 

prevenlive health services. The Patient Proteclion and Affordable Care ACI ('1he AC,\ '") 

similarly recognizes Ihat prevenlive heallh services are crilical 10 individual and communily 

health. and IMt COSI is oflcn a barrier to accessing n~'Cd~'<I prel'entive services. The ACA also 

acknowledges the critical role thai a woman's health plays in Ihe health and well·being of her 

family and hcr community. as well as womcn's disproponionalcly lowcr carnings. by explicilly 

requiring Ihal women's preventivc health services be covered wilhoul eosl-sharing. 

Heahhcare coverage decisions should be baS<.-d On acccpled siandards ofml-dical care 

recognized by the various professional medical academies. "Slandards of care'" arC practices IMt 

are medically appropriale. and the services Ihal any practitioner under the circumSlances should 

be expecled 10 render. Ewry person who cnlers a doclor's office Or hospital eXp<.><:ls thai the Care 

he or she receives will be based on medica! evidence and meet accepted medkal guidelines - in 

other words. that care will compon with m~'<Iical standards of care. Refusal elauses and denials 

or care. howcver. violatc Ihese slandards. They underminc standards of care by allowing or 

requiring health care pl"Qfessionals and institutions 10 abrogate their responsibility to deli"cr 

services and infonnalion Ihal would olherwise be n:quired by generally aceepled practicc 

guidelines. Ultimalely. refusal clauses and insliwtional denials of care COnniCl wilh 

professionally developed and accepted medical standards ofcare and have adverse heallh 

consequences for patients. NHeLP's publication, !Jmlll,-C"re ReO""I.<. __ l.!.n<krm;,,;lIg Q,mHly 

Care [or 1I'0m"II (Appendix AJ. is an eXlensive analysis of medical slandards ofca", for 

women's health and Ihe impact ofrcfusal clauses and inslilUtional denials of care on health 

access and qualiIY.' 

'Susan Berke F<>&el & Tracy A. W.itz. lI.ulr/d :u,"" </~" k Urnk,,,,;,,;"11 Quu/i,y Cur<for W"",..n. 1'1.,', He. l,h 

L.w I'rot;n>'" (2010). 

hllr :lly",, ".hcallh"w. ~IfS:'''''''''<IIIo.I'h CaR: Rcfu",l. Undc:nninin1L~Y Cat<" fo< ",,,,",,n.pdf. 

t444 15' NW. Suit. 1105 • W .. hin,'on, Il(: 20005 

1701 Wihhi .. 8M:!. Su it. J1SO lo>Anl"lo>,CA 90014 

101 Eu , W" ..... rSIr"'",. Sui,,, G·7 c"rrboro. NC 27510 

www.hukhtaw.o,* 
89

NHeLP strongly suppor1S the Depar1ment of Health and Human Services (HHS) 

requiremcnt thm most ncw health insurancc plans covcr women's pre"cmi"e hcalth services, 

including contraception, without cost-sharing. The dl'Cision significantly benefits millions of 

women who are currently insured or who will obtain health insurance through the ACA- and 

one that will el'sure that most women have access \0 contraception without expensive co-pays, 

saving some women up to $6()() per year. The Administration tc<:el1lly adopted a religious 

emplo}'er exemption Ihal would allow eer1ain religious employers 10 refuse to cover 

contraception. as they would otllcrwise be required \0 do. and also announced thm it will develop 

rules to ensure that women can obtain comraeeptivc coverage m no additional cost while also 

allowing non-profit religiously-affiliated employers. such as hospitals or univcrsities. to refuse to 

provide contraceptive coverage. Despite these accommodations. the drive \0 deprive women of 

the righl to oblain affordablc bir1h conlrol continues. NHeLP strongly opposes effor1S to 

undem,inc the health and autonomy of women. Every woman should be able to make her own 

decisions about whcther or ",hen to have children based on hcr own beliefs and needs. 

Employers and insurance companies should not be able to impose their ideology to override the 

health care decisions o f individual women. 

A. TilE REQUIREMENT TO COVER CONTRACEPTIVES AS A COMPONENT 

OF PREVENTIVE CARE IS EVIOENCE-BASE D, 

The ACA requires group health plans and hcalth insurance issuers to cover certain 

preventive services without cost-sharing.l Among other Ihings, the ACA requires new group 

health plans and health insurance issuers to cover such additional women's health preventive 

care and screenings as provided for in guidelines suppor1cd by HHS.J By doing so. thc ACA 

recognizes that women have unique reproductive and gender specific health needs. 

dispropor1ionately lower incomes, and dispropor1ionately higher out-of-pocket health care 

expenses. HHS commissioned the independent Institule of Medicine of the Nalional Academies 

("10M") to conduct a scientific fCview and provide recommcndations on specific prel'cntivc 

measufCS that meet women's unique health needs and hclp kecp women healthy. HHS charged 

the 10M with convening a comminee to detennine the preventive scrvices necessary 10 ensure 

womcn's health and well-being: 

To Ihis end, Ihe 10M convened a commiu~..., of 16 eminenl rcsear<:hers and practitioners 

to serve on the Committee on Preventive Services for Women.! The Commilk .... mct five times in 

six monlhs.o It reviewed c,xisting guidelines, gathcred and fCviewed evidence and litemture. and 

considered public comments.' In reaching its recommendations the [OM also relied on thc input 

, Falionl Froleclion and AITnrdablr Care ACI ("ACA··). Fub. t,. No. 111_148, 124 Sial. It9 (2010). omrntkd by 

11.311h Care and Edo<ation Reconcilialion Ael. J'ub. I.. No. 111·152. 12~ Slat. 1029(2010). § 2713(a). ~2 U.S.C. § 

300gg·1J. 

, ACA § 2713(3)(4). 42 U.S.c. § 300&i\·1 3. 

'Insi. "(Medici",, O(lhe Nal'l Academies. Clin;cal Pre""",;, .. &r.·;N:~fi" W""'~~: OOS;nglM Gap. (2011). 

"'" .... iom.edw-lmed·alFiles.%,'P.!!!!%20Fil...r.1011IClinK:al·I're\·emiv.-S ..... ices·for-W"",,,,,-Closing·lhe· 

~~\enli\,"''''K: .. f"",omen'''~ i!M. 

M . 

• /d. 

, /d. 
90

of indep<'ndent physicians, nurses, scientists. and other e.xp<'rts. With respcctto women, the 10M 

idcntified g.1pS in the covcmgc for preventive services not already addressed by the ACA. 

including services reeommended by the United States Preventive Services Task Foree, the Bright 

Futures recommendations for adolescents from the American Academy of Pediatrics. and 

vaccinations sp<'cified by the Centers for Disease Control and Prevemion's Advi50T)' Comm;Uee 

on Immuni zation Pmet;ce •. The 10M recommended that. among othcr things. women receive 

coverage for all United States Food and Drug Administration ("FDA "}-appro\"ed methods of 

contmception free of cost-sharing because: (I) pregnancy a/Tects a bro.1d population; (2) 

pregnancy prevention has a large potential impact on hcalth and well-being: and (3) the quality 

and strength of the evidencc is supportive of the recommendation to provide cOnir.lceptil"e 

coverage free of cost-sharing.I IU IS recently adopted the eight recommendations submitted by 

the 10M. which include the recommendation that women receive coverage for all FDA·approved 

methods of contraception free of cost·sharing.~ Requiring cOI'erage of all eight preventive 

services rccommcnded by the 10M. including covemge of all-FDA approved methods of 

contmception. is good medical and eeonomic policy. 

8. CONTRACEI'TION EFFECTIVELY I'REVENTS UNINTENDED 

I'REGNANCIES, AND WOM EN NEE D TO 8 1:: AOLE TO SELECT Til E 

METII OI) TlMT IS MOST APPROI'RIAn:. 

Family planning is an essential prevcnlivc service for the heallh of women and families. 

In 2008, there were sixty·six million women ofreproduclivc agc (ages 13-44) in Ihe Uniled 

Slalcs.

lo Over half of these women-Ihirty_six million-were in need of contraceptive services 

and supplies because they wcre sexually active witll a male. capable of becoming pregnant, and 

ncither. pregnant nor sec~ing to becomc ~regnan1.11 Eac~ >'ear, nearly half o~tl~e pre~a!lCies in 

the United States are unmtended-meanmg they were either unwam~'d or mlSllmed. - I'ony-tll"o 

p<'TCent of unintended pregnancies end in abortion.l ) By age 45, more than half of all women in 

the United States .... ·ill h31'e eXp<'ricnced an unintended pregnancy. and four intcn will havc had 

an abortion. " Unintended pregnancy disproponionally impacts women of color: sixty-seven 

percent ofpregnsncies among African Alllcrican ..... olllen. fifty-threc p<'reent of pregnancies 

among Latina women. and fony p<'rccnt of pregnancies among ..... hite women are IInimcnded.l ~ A 

' /d . 

• U.S. Ocp'1 or lIe.llh &. lIuman S"", •.. lIeallh Res. & S",,· •. Admin .. Women', 1'''''''''''1'''. S.",kes: Required 

/to.tlh I'tan Co'·..agc Guideti..,.. hup;J/" .... "W.hr;<a-gm·/wnmen'lIui<lctin ... 

" Jennif ... I. F"",. Sl.1nt.,· K. tt ""shaw&. Adam Sonfi<ld. Gullm"",1\<-r In<l .• COt",,,,,r,,,i,,, N"dsand&n'i",s; 

Nmional and Slate /)a,a. 2008 Updm. 3 (20tO), hll p:llw,w •. ulim acho~jnl.conl li '·e=IIf<Xl!_ 

200H.{!!!f. Tr"jd -

" La"·""",. II. Finet &. Siante)" K. llonshaw. m,,,,,'ili" i~ Rmts ofUninrtntkd f',~g",,,,q int"" Unil,d Slar ... 

IIJ'}J and 2001.l'c"(><.'<li,·.,0II SC .• ual & Rcprod. Ilcahh. Vol. 38. No.2 (2006). 

lI r:lI ..... ·w.&uumachcr.<><WpubM><rh!fu IU}899006.(ldf, Gullmll<hcr tn$1.. Facls on IndlieM "bo,,;on ;n II!;, Un;,.d 

Siat •• (Au8. 2011). "" w .agi.u .... orgIpubsith induced abortioo. hlml. 

" Insl. ofMedkine orlh. Nal'l Academies. '''pra noIC J. 

"Gullma<bcr tnSt .• Facl Sh«1: Foe"on lmil/Cfd "be ... i"" in the Un; .. d Sial" (Aug. 20It). 

~! p, " .... ·" .&""m""I'W;I".<>rWpubsllh indu«<! abonioo.h1ml. 

La"·"",,,. II. Finer &. Mia R. 7..olno, Unint""kd rngna~' in Ilk> Unjted Simes: I~j<knunnd Di,,,,,,;t; ... 2006. 

Conlraceplion. Vol. 8J. No. S (2(111). 
91

woman has an eighty-five p"reent chance of an unintended pregnancy ifshc uses no method of 

comraception." More than fifty pereent of unintcndcd pregnancics inlhc Unilcd SlaiCS occur 

among Ihc sixlcen pereem of women al risk for unimcnded pregnancy who are nOi using any 

contraceptive melhod.' 1 According 10 the Guumacher Institute. in the United States publicly 

funded family planning services and supplics alonc hclp women avoid approximately 1.5 million 

unintcnded pregnancies each year. II If these services WCre not pr(lvided in 2008. unintended 

pregnancy rates would have been 47 pereent higher. and the aoo"ion rate would have been 50 

pereent higher.'" Increased access 10. and usc of. contraceptive infonnalion and services could 

reducc the mte of these unwanted pregnancies. 

fiowever. as the 10M repoM rcrognizcd. not all comrnccplive methods are righl for e"ery 

woman. and acecss 10 the full range of pregnancy pre"ention options allows a woman to choose 

the most eiTe>:tive method for her lifestyle and health status. Current methods for preventing 

pregnancy include hormonal controceptives (such as pills. patches. rings. inj~"C abks. implants. 

and emergency contraception). barrier methods (such as male and female condoms. cervical 

caps. contraceptive sponges. and diaphragms). intrauterine contraception. and male and female 

sterilization. As the 10M repo"cd. female sterilization. intrauterine contraception. and 

contraceptivc implants have failure mtes of less than one perecm.1(I lnjectable and oml 

contraceptivcs have failure rates of seven and nine percent. largely due to misuse.l ' Failure rates 

for barrier methods arc higher?:! 

c. CONTRACEI'TIV.:S ARE WIOELY USE!) IN TilE UN ITEIl STAn:S. 

Most sexually active women in Ihe United States use comrnceplion 10 prevent pregnancy. 

Contraceptive usc is nearly universal in women who arc sexually active with a male pa"ner: 

morc than 99 percent ofwQmen 15-44 years of age who have ever had sexual intcr(:Qurse with a male have lIsed at least one contraceptive method. lJ This is true for nearly all women. of all 

religious dcnominations . .!oI Indeed. the overwhelming majority of scxual1y active women of all 

denominations who do not wam to become pregnant are using a comrnceptive method.l

! 

Approximately 98 percent of sexually aClive Calholic women have used c0111rnceplive methods 

'· Id. 

" R""hclllonson Gold., I .• GUllma<hor tn$' .. ,v.XI SltpSP IIm. ,ko·s FomjJy Plonni"g P'ogrom: Lew"ogi"g the 

P",<mia/ o[.lI<dkaid and nil. x in an E.,.,!,·ing If.alth Cart S),,"m (2009). 

h" p:lL ... _'" --:.&"1'111 ""!l!iL.0I"£!1!!L Mil'l. , IS '''J'S.....JI<l fl. 

" Jennirer I. Frost. SumlO)' K. Ilensh.w & Adam Sonfleld. GulIln""h ..... lnst.. COIll rncf!PI;'~ ,v~ds and &n'lcu : 

,valionu/ and SI"'e DolO. 1OOI:J Update S (2010). hllp ;/!", w.RUl1m "" hcr.OIll. pubs/win{COIl .-.c.!>I~ 

2~. 

r+ ld. 

" Ins'. ofM<:<.!icirn: oflne Nan I\ead ...... i, ... supra ",,'e 4. 

" /d. 

" Id. 

" William" D. ~Ioshcr & 10 I"", ... U •• I>/G:m/r""'plkm in lhe U"i"JSwIt.: / W:J2- 1008. 1"",', Cu. for 110,1,11 

SlaliSli,>, Vilat .nd tt o.t,h Slali,,;. •. S<:ri .. 23. No. 29 (20lCl). 

,. Raohd K. Jon"" & J""'lI Drowoko. GUIlIn"", hcr tn<1 .. (""'ml. , ing ("am" mianol Wi.dom: Nrw Evi,unce on 

Religion aM Con" ""e",;'''' Use (2011 ). hl1p;lb< .... "!,Il."lImaclH:r.oraIpulo:<lRetj&ion .... nd.c""'rac.pli' lJ e.~f. 

" Id. 
92

banned by lhe Catholic hurl:h. ~6 Even among those Catholic women who attcnd churl:h oncc a 

momh or mOrl:. only two perl:cm rely on natural family planning melhods 10 prl:\'em unintendcd 

pregnancies. 27 Consislcm wilh the data cSlablishing Ihalthcre is nearly universal use of birth 

control, a recent poll by Public Policy Polling ("ppp") shows Ihal lifty_si~ percent ofvOlers, and 

lifty-three percellt of Calholic vOlers. support Ihe dedsion 10 require plans 10 cover birth c011l1"(>1 

with cosHharing.

ll Further. according to thc 1'1'1' poll.lifty-seven of all votcrs, and fifl)'-Ihrl:e 

pereent of Catholic mlers. Ihink Ihal women emplo)'ed by Catholic hospitals and universilies 

have Ihe same righls to comraceplive coverage as other women.19 

D. COST rREVENTS WOMEN FROM ACCESSING CONTRACEI'TIVE 

INFORMATION AND SERVICES. 

Onc ofthc major barriers to consistenl cont .... ceptivc usc for women - who are also 

disproportionately low-income - is thc high out-of-pocket cost that ranges fl"(>m SJO to $50 per 

month. Women who are poor alS(> h.we unintended pregnancy rate s that are more than live times 

Ihe rale for women in the highest ineome level. JO In fact. unintended pregnancy rates are highest 

among poor and low-inc011le women. women aged 18-24, cohabiting women and minority 

women.)1 Low-income women are the least likely to have the resoun::es to obtain reliable 

methods offmnily planning, and yet. they are most likely to be impacted negatively by 

unintended pregnaney.>l 

Increased usc of longer-acting, reversiblc comraceplivc methods. which have lowcr 

failure rates, could further help women reduce uninlended pregnancy. These more elTective 

melhods o f contraception, however, also have Ihe most up-fl"(>nt cosls, which put them outside of 

Ihe reach of many women.J

) In 2008. for e~al1lple. only 5.5 percent of"'omen using 

contraception chose the more effecti"e and longer-Ierm methods:" As the 10 M t"C<:ognizcd. the 

"elimination of cost sharing for contraception ... could greatly increase its usc. including use of 

Ihe more effective and longer-acting methods, especially among poor and low-income women 

most at risk for unintended pregnaney." )) In this regard. the California Kaiser Foundation Health 

Plan's experience is infonn31ive. The Califomia Kaiser Foundation Health Plan eliminated 

,. /d. 

" Id. 

,. Pub. Policy Rose"",h Inlt .. f"bruary l'RRl Religion de 1'00ilic. Trtxl<ing I'all (Feb. 20 ln 

hit p:llpu blie",1 igion.o!&i""""'" hl20 I 2IOUjan ua,y ·track i n&::P<>Il. 20 I 2J. ,. /d. 

)0 law""",. II. Fine' &. Stanley K. ll.n,h. w . • upro not. 12. 

" Lawrenc. II. Fine, &. Kalhryn Kool. Unif1I""kd i'regm",ry Rat . ul 1M SIal. IL, .. I. I'c""""li"" on S.xual &. 

Rcprod. 11 •• llh Vol. 43. No. 2 (201 1). 

"Sheila D. RU'lgi. Mkh.ll. M. Doty &. Sant R. COllins. Th< Commonw~ lth Fund. Women 01 Ri.l<: Why M~'I}' 

/rom", Or<! Forgoing .Vnded lIeallh Car<! (2009). 

hll 1':1,-"·,, " .cnn, nwn" calth r u nd .2!lIt:imed iall'i I."tubl ieat ion<lt ... ""O.j.20flrief?2009!M3\ IW nm.n 2031% 20R i 'ltI' DF 1262 It ... lgi ..... ""'cn at risk iss"" brier Final.Mr. 

I) lnst. or Medici •• aftne Nal'l " .ademi, ... supra . 

" Jennif", I. Frtl$I &. Ja<quclinc K I)""""h. Factor. A.,,:x:ialedwilh Cantra<:epri, .. Choi<Yand lncrmshtenl Method 

u.~, P.rspecl;'·" on Sex"al &. It.prod. l leahh. Vol. 40. No.2 (200S). 

" In,l. of Medicine of the Nal'l " .ademi ... '"pro note . 
93

copaymenls for Ihc mOSI cffcclivc contraccplivc mel hods in 2002 . .!li Prior 10 Ihe change. users 

paid up to 5300 for 5 years of use; after elimination of the co-payment. use of these methods 

increased by 137 pcrcem.J1 

E. PREVAILI NG MEIl ICAL STANDARIlS OF CARE REQ UIRE THAT WOMEN 

HAVE ACCESS TO CO NTRACEPTIVE INFORMATION ANI) SERVICES. 

The govemment should make II .. a/III car e CO"erage decisians based on scientific 

evidence and good econom ic policy, not on the religious and moral beliefs of some institutions. 

Health care Icfusals and denials of carc, also known as "conseienec" clauses. arc based on 

ideological and political justifications thm have no basis in scientific evidence. good medical 

practice. or patient needs. These policies violate the essential principles of modem health care 

delivery: evidence-based practice. patient eenteredness. and pre\"emion. "Standards of care" arc 

practices thai arc medically ne<.:essary and the services Ihat any practitioner under Ihe 

circumstances should be expe<.:ted to render. Refusal clauses and denials ofcarc undennine 

standards of care by allowing or requiring health care professionals and/or institutions to 

abrogate their responsibilily to provide services and infonnation that would otherwise be 

required by generally accepted pmctice guidelines. Refusal clauses and denials of care allow 

employers and insurers companies to "opt-om" of meeting medical sl3ndards of care. 

Women consider a number of factors in delermining whe lher 10 becom<: or remain 

pregnant. including; age, educational goals. economic siluation. the presence ofa partner and/or 

othel children. medical condition. meni al health. and whether they 31e taking medications thm 

are contraindicated for pregnancy. For example. a number of commonly prescribed 

pham13ceuticals are known to cause impainnents in the developing fetus or to creme adverse 

health conditions if a woman becomes pregnant while taking them. Approximately 11.7 million 

prescriptions for drugs the FDA has categorized as Prcgnancy Classes I) (the", is evidence of 

fetal haml. butlhe pot<:ntial may be acc<:ptable despite Ihe harm) or X (contraindicated in women 

who are or ma~ become pregnant) are filled by significant numbers of women ofreproductivc 

age each year. I I'regnancy for women taking thcse drugs carries risk for materna l hea lth and/or 

fetal health.J9 Women taking these drugs who might be at risk for pregnancy are advised to use a 

reliable form of contraccption to prevent pregnancy." 

.. Kelly Cleland el al .. "a"'ily Plannltlg Uj Cosl·S, ... ing Pm"lltll;. ... lIe"llh Se",·ia. New Eng. J. Moo. Vol. 37 .. No. I (April 20t I). h"p :lfh "ahhpoli<y~rCKn'.""irn.~t42M. 

" Id. 

" Eleanor B. SchwWI.C1'1.. D<>eu"'~tlloli()tlafC()tIlrocepfi<m ond PregtlOlK)' W""'tI Pre'CI"ii>itlg PQ(emiol/y 

T~,o ogeni< Mfdieoli" ... fOf" Rfproduc'i, .... Age Wom~tI. Annals<)rlnlcmal M«I .. Vol. 147. No.6 (2007): Eleanor II. 

S<:hwat"l. <1. al .. ?rescriptiun ojTrmlogmic M.,liealium; In Unil.d Siur •• Amhu/aIOf)' /'rUl'li ...... Am. J. of ~Ird .. VoI.I18(200S) . 

.. /d.: [)" 'id L. Ei><nl>cJ"l! 1.1 al.. ('''''''iding C<mlra«pfionjor Womfn Toling ('oIOIIIiall)" Trrologrtlic MrJicolions: 

A $u""'YOjlnlf,nol.ll.aici", ('hpieia",' Kno"·/fJ8f. AililllMSQlod Ilmri,"s. J. Gen. Inl<mal M«I .• Vol. 25. No. 4 

(2010). 

" Id. 
94

UnintendC'd pregnancy is associated with maternal morbidily and mortalily. The World 

Hcalth Organization recommends thm pregnancics should be spaced at least t,,,o years apart." 

Pregnancy spacing allows the woman's body to reco,'cr from the pregnancy. Funhcr. if a woman 

bcromes pregnant while breast feeding. the health of both her baby and felus may be 

compromised as her body shares nutrients between them. According to the American College of 

Obsletricians and Gynecologists, women who beeome pregnant less Ihan six months after their 

previous pregnancy are 70 pereent more likely to have membranes rupture prematurely. and are 

at a significantly highcr risk of othcr eomplications:z Recognizing the importance of family 

planning. HHS includcd famil y planning as a focus area ofthc Hcalthy I'coplc 2020 heallh 

prommion obj~,(:lives :l I'leahhy People 2020 aims 10 increase the proportion of intended 

pregnancies and 10 improve pregnancy spacing. Specific indicators of goal achievemelll inelude 

increasing: (I) intend~,(/ pregnancies from 51 percent to 61 percenl; (2) pregnancy spacing to 18 

months; (3) the proportion of women at risk for unintended pregnancy who usc contraceptives to 

100 pereent: and (4) the proportion oftecns who use contraceptive mcthods that both prevent 

pregnancy and prevent sexually transmined disease to 73.6 pereent." 

Millions of women live with chronic conditions such as cardiovascular disease. diabetcs. 

lupus. and epilepsy. which ifnot properly controlled. can lead 10 health risks or even death 

during pregnancy. Denying these women access 10 contraceptive infonnation and services docs 

not comport with medical standards that recommend pregnancy prcvention for these medical 

conditions. 

Refusal clauses increase health disparities by imposing significant burdcns on thc heallh 

and well-being of affected womcn and their families. These are burdcns that fall 

disproportionately and most harshly on low-income womcn. severely impacting their hcalth 

outcomes and their ability to give infonned consent for medical care. Low-income women. and 

low.income women of color already experience seveI"<' health disparities in reproductive health, 

maternal health outcomes. and birth outcomes. Cardiovascular disease. lupus. and diabetes. for 

example. are chronic diseases that disproportionately impact women of color. The incidence rate 

for lupus is three {imes higher for African American women than for Caucasian women:l 

Similarly. although an estimated 7.8 pereelll of Americans have diabetes. the prevalence rate (the 

number of cascs in a population at a specifIC timc) is higher for women of color in all age groups, 

with obesity and family history being significant risk factors for Type II diabetes:6 Nearly one 

out often African American women and one in fou"een Lalinas ofrcproductive agc experience 

"Cicky MarSlon. Rep'''' ufu 11'1/0 T~chniculConsu/lUl;OI1 OI18j"h ''''''''';11).!. \\'<>rld Health Organi",""'m. (IWlC 

13.15.2005). 

"Am. Cotto ofObslclnciJn, & G)"lK'Coiogi.t'. SM'e""·~«1'heA"'. Coli. oIO/mo,,-I"/I,,,,, & Gp,.ro/"I'jm 10 ,he 

U.S. S""""'. C"",m. OI1I/~,,/lh. £dll<: .. u,lx". &, P<lU;OIU!. Pub. 1I."r!hS"l>romm. <lltSaf' ,lfOlherhooil(April H. 

2002) . 

., U.S. Cu •. f<>l" Di ... .., Conlrol I';. P",,"enlion. l!c.llh l'<-ople 2020 Summ.ryofObje<li,·.s: Farnil)' PI.nning. 

:I!k.llh l"(I!!OJ!Ie.,("120 9/!opi<sobic<'i'·<:<10 0Jpdr<l t" ornil'Pl:>nnina,;.e!!f. 

M. 

"U.S. [)cp., ofHeat,h I';. l!urnan Serv' .. omceon Women, Heahh. L",,,,,: f"re'l,,,,,,tlyA.AeJQue,.,'o,os(June 13. 

2001). hltp11"'''" ....... ''omon'hc''j''' ~blicali<> ''o"c.puh ica'ion''fa<;l·sbeellt"P",~. 

"u.s. [)cp., of lka l,h & Ilurnan S,,· •.. Nan Di.be,,:. Inform"ion Ckarin&i>o""" o;"b<'<sO' ... n·i .... ·• 

IEP.;;. J;u"",<, ."iddk.n;h.",~,· J"'puh'·",:<''):./ .... · 1I'~ n~; Ann S. name •. T"., £pid"mi<: ol0b<.ilyund Dil,""!". 38 

Tc~.l!c.n In.t. I.1 42 (2011). 
95

an unintended pregnancy each year." hmceessible and unaffordablc contraceptive counseling 

and services contribute to thc5c disparities. 

Hean disease is Ihe number one eause of death for women in the United States:- The 

American College of Cardiology and thc American can Association Task Foree on Practice 

Guidelines issued specific recommendations for management of women with valvular hean 

disease.' 9 They conclude that individualized preconception management should provide the 

patient with infonnation about contraception as well as maternal and fetal risks of pregnancy.so 

Some cardiac conditions in which the physiological changes brought about in pregnancy are 

poorly tolerated include valvular hean lesions such as severe aonie stenosis, aonic regurgitation. 

mitral stenosis, and mitral regurgitation all with II I_IV symptoms, aortic or mitral valve disease, 

mechanical prosthetic valve requiring amicoagulation and aortic regurgitation in Marfan 

syndrome.l ' 

The American College ofObslelricians and Gynecologists and Ihe American Diabetes 

Associalion have developed practice guidelines for Ihe preconception care for women wilh 

pregestational diabetes. According to the American Diabetes Associalion. planned pregnancics 

greatly f~eilit~le diabetes care. Their recommend~lions for women with diabetes with 

childbearing potential include: (I) use of efTective contraceplion al all limes unless Ihe patient is 

in good metabolic control and actively trying to conceive: (2) counseling about the risk of fetal 

impainncnt associated with unplanned pregnancies and poor metabolic control; and (3) maintain 

blood glucose Ie"els as close \0 normal as possibk for at leasl two to three months prior to 

coneeption.)l The American College of Obstetricians and Gync.::ologists further reeommcnds 

lhat"[aJdequate maternal glucose control should be maintained ncar physiologicallevc1s before 

conceplion and Ihroughoul pregnancy to decrease Ihe likelihood of spontaneous abonion, fetal 

malformation. fetal macrosomia [excessive birthweightj, intrauterine fetal death, and neonatal 

morbidiIY."" 

Similarly, contraception plays a critical role in preparing a woman with lupus for 

pregnancy. Lupus is an auto-immune disorder of unknown etiology which can aff~'{;t multiple 

pans oflhe body such as Ihe skin.joims. blood, and kidneys wilh mulliple end-organ 

involvement. Often labelcd a "woman's disease:' nine out often people with lupus are women.~ 

Wonten " 'ilh lupus who become pregnant face particularly increased risks. A large review of 

Uniled Slates hospital data found the risk of maternal death for women with lupus is twenty 

"Susan A. Cohen. AiJorliontmd lI'o",e~ olCoIor: n,., Bigger riclllrr. II Guumacher Policy Rc,icw 3 (Sum"Ie'" 

20081 1!!!~ ww" .gullmachcr·9flIJP\lbs/2!l£Uillgml t0302.h'ml. .. Lori M"",a. ff a! .. Tr=li~g Jl"um<"n', A ... are"" ... oIIfMrl DisMse: AnAmerkan /1M" AuMiation ,\"mional 

SIUd).·, 109 J. Am. Ilcarl ASS'" 573 (Feb. 4. 20Q(1) . 

.. Ro~ O. IJ.o"""·''''!.. GuitkU"".jor Ii", .lfanag<m<nI olPatim" M'itn l"ol"ul"r /lear' Diu".<. Am. Coli. of 

Cardiology/Am. Ikon Ass'" T:l$k F'If<c on l'ra<1.i« Guiddincs(Cnmm. on Mgm'. "fPa,icnLl wi,h Yah'ol", lleon 

Dis<ase~ 9& J. Am. Coli. of Cardiology 1949-1984 (Nov. 1998). 

" 'd. " 'd. " Am. Diabc"", Ass·n. $lal1<1arJ$olme<lkol car. in <lio""t".)OO6. 29 Diab<.,"c< Care S4 (2006). 

" Am. Coil. of Obstetricians & G}·ne<olov,im. ACOG Pradiu /Jull'''n No. 60: I'rrgt,mlkmal dialH!te. m.llil",. 

lIS Ob,!elTic. 8; Gyne<ology 675 (200S) . 

... U.S. Ocp', of llcal'h 8; Human SrvS .• Oflicc on Women'S Ilcallh. '"pro 001.46. 

_ .................. eLP 
96

times the risk of non-lupus pregnant women. )) These women were three to seven times more 

likely to suITer from thrombosis. thrombocytopenia, infcrtion. renal failure. hypcnension, and 

preeclampsia.J.6 Women who suITer from moderate or sewre organ involvement due 10 lupus are 

at significantly higher risk for dcwloping complications during pregnancy, and the guidclin~s 

discussed above regarding chronic discase apply to women with those CQ·morbidities.J1 This 

should be taken into considcration in the dcrision to beeomc pregnant or to carry a pregnancy to 

tenn.)1 

Historically, women with lupus were discouraged by the medical community from 

bearing children. This is no longer always troe, however. pregnancy for women with lupus is 

always considcred high risk. and should be undcnaken when. ifal all possiblc, the disease is 

under CQntrol. The National Institute of Arthritis and Musculoskeletal and Skin Diseases 

r'NIA MS") recommends that a woman should have no signs or symptoms of lupus before she 

becomes pregnanl.~ In addition. NIAMS directs women as follo,,'s: "00 nOl stop using your 

method ofbinh control until you have discussed the possibility of pregnancy with your doctor 

and he or she has dctennined that you are healthy enough to become prcgnanl.·-64 

F. DEN YI NG WO~U N ACCESS TO CONTRACEI'T\VE INFORM,\TION ANI) 

SERVICES UNI>ERMIN.:S QUALITY OF CAR}: .'OR WOMEN. 

Ideological restrictions occur at various levels, including the institUliorl31 and health 

system level and the politicallel·el. Refusal clauses arc statutory or regulatory "opt out"" 

provisions that impede patient access to ncressary and desired health care services and 

infonnation. At the institutional1cvel. the restrictions that have the greatest impact on access to 

care are those imposed by institutions controlled by religious entities. In pan icular, the Catholic 

health system has th ... broadest religion-based health care restrictions. The U.S. Conference of 

Catholic Bishops has issued Till! Ethical and Religious Directil"l:sfor Catholic l'/eultll Can! 

SerdCl.'S for all Catholic medical instilUlions. The Direetives specify a range of services that are 

prohibited, including contraception. Refusal clauses at the institutionallevcl undem,ine medical 

standards of care by allowing health care systems and facil ities to prohibit even willing providers 

from delivering medically needed care, even in emergencies. At the politicallcvel,legislation 

enacting refusal clauses impose restrictions unrelated 10 health and safety on womcn's ability to 

acress reproductil'e health care services. These reS!rictions are driven by political ideology. 

electoral politics, and mher political considerations that hal'e nothing 10 do with evidence-based 

medicine. 

Broad refusal clauscs fail to account for (or even consider) the significant burdens that 

denials of care hal'e on patients. Existing law already protects health care providers and religious 

" Megan I:. B. Clo"~. e1.1.. A n{ll;"""/ slud)'O/ll>ecomP/;roli()ltS()//~p"s;n 1l"8/1()"'J'. lW Am. J. Ob'I"'. & 

G)"r.c<:<>t. t2k I,d (Aug. 2(08). 

,. Mat tne.)-c.4. 

" Id. 

o. Nat'II .. 1. of Anhril;, & Mu""u o>~ek1at & Skin I)i .. aus. L/JPUs: " f'ulient Cur. Guid /()I" NU"tJunJOther 

/f,orth Pro/ ••• iQl1(}/' 27-62. POlient tnform'lion Shcr14·' (3d cd. Scp<o 20(6) . 

.. /d. at 45.#>. Palient Infonn.tion Shoet No. t 1 . 

.. rd. at J'a,iontlnfon".t;on Sheel No.4. 
97

cmplo)'crs who object to providing certain services based on their religious or moral beliefs. The 

ncw HHS contraccptivc coverage requiremcnt exempts houses of worship and othcr religious 

non-profits that primarily employ and servc people ofthcir faith. Over 330,000 houses of 

worship will likely fall under HHS' exemption. The requirement that most new health plans fully 

cover contraception without cost-sharing helps ensure that an individual woman can make her 

OWn decision about whether to usc birth control. A woman who opposes contraception need not 

use il. The criticism of the preventi l'e se rviccs rule distorts these facts. No one will be compelled 

to use birth comrol (of course c011lraeeptivc use is ncarly universal in women who an: se.xually 

active with a male partner. irrespective of religious affiliation). No one will be foreed to condone 

comraceptive use. The rule concerns col1lmccpli"c cO"erage only. not abortion. Twenty-eight 

states already require employers to provide eOl1iracepti'"e eo'"erage; the ACA ensures that 

women across the country will have the same benefits. 

A more expansive refusal clause is therefore not only unnecessary. but would also 

dallgerously threaten wOlnen's health and well-being- subjugating a woman's access \0 health 

care to the ideological desires of her employer or insurer. Rcrently proposed refusal clauses, 

such as S. 2043. S.2092, and S. Amendment 1520 to S. 1813, would expand what an employl'r or 

insurance company- religiously affiliated or not--can refuse to cover. S.B. 2043. for example. 

would penn it ,my person. e,'en the owner of a grocery store or car repair shop. to deny his 

employee coverage for contraception or sterili7.ll1ion services. S.B. 2092 seeks to deny women 

even access to iI/forI/1liiian about birth control and sterilization. S. Amendment 1520 is e'-en 

broader and allows any cmployer or insurer \0 refuse \0 provide coverage for virtually oily 

service otherwise required by the ACA. Not only do these proposals discriminate against 

women, they undemline the whole point of health insurance. which is to pool and minimi:tc risk. 

An insurance program that fails to cover services that meet standards of medical care fails at its 

esscntialtask. It is also inadequate and unsafe. 

These proposals are not just bad policy; they also contravene § 1557 of tile ACA and 

Title VII of the Civil Rights Act of 1964. 42 U.S.c. § 2000c (:1 S('q. Section I 557(b) of the ACA 

provides that. "Nothing in this title (or an amendmel1i made by this title) shall be construed to 

invalidate or limit the rights. remedies, procedures. or legal standards available to individuals 

aggrieved under ." Title VII of the Civil Rights Act of 1964 (42 U.S.c. § 2000ct"lsl!q.)." ln 

2000, thc Equal Employment Opportunity Commission made clear that an employer'S failure to 

provide insurance coverage for prescription contraceptives, in an otherwise CQmprehcnsive 

prescription drug plan. constitutes unlawful discrimination under Title Vll.61 Longstanding and 

senled law rccogni:tcs the right of women to have contraception eOI'ered in the same way that 

other drugs are co'"cred by health insurance. 

In sum. exp.ll1sive refusal claU5Cs arc inconsistent with medical evidence and the right of 

all people to access health care that meets modem standards of appropriate medical care. Most 

women are covered by health insurance oITered by their employer.6

] While mOSI American 

" U.S. EqLJ3t Emp', OpportunilY C"",m·n. Deci,i"n on C.,,·crag< ofC(m'raccplion (1)<:<:. 14.2000). 

~I! P.:I""""W '"""'.Iilltip.!I;l"'~i'iol\:.<<>n lraOerl1inn hlm . ., Ush. Ranji &. Alin' S,lgankotr. Tho lien!)" J. ":,; .. r Family Foundalion. lI'a ..... "·s llealln ("ure CMr/book: Key 

fJndings from lhe K"iser WomM "s lIe,,/lh Su'"'"')' 10 (21)11). hllp :II"",, ,,".kff.orgI"om.,,,hoall~uploadl8l6-1.pdf. 
98

women ofreproduclive age have some fonn of private insurance. Ihe eXlenllO which Ihey have 

comracepli"e co,'erage can difTer dramatically depending on Iheir type ofinsurance,6J The ACA 

ra:ognizcs the imponance of prevemive services 10 the health and well-being of individuals. 

their families and their communities. Preventive services are required to be covered without COStsharing in order to ensure that all foreseeable barriers to aceess to preventive services arc 

removed. Allowing employers or insurers to era:t new barriers in the form of refusal clauses 

vastly undermines the promise of the ACA to improve the health of the nation. Every woman 

should be able to make her own decisions about whether or when to prevent pregnancy based on 

her o"'n beliefs. ootthe beliefs of her employer or insurer. 

G. CONCLUSION 

Refusal clauses and denials of care should be evaluak-d using the same measurements 

used 10 eva luate quality generally. with toc goal of providing care that is evidence-based. patientcentered. and preventative. All women should ha\'e access 10 the health care services thcy need 

based on medical evidence. Iheir personal health needs. and their own beliefs. Low-income 

women and low-income women of color arc disproponionalely burdened by refusal clauses. and 

existing health disparities are eX1K:erbated. Employers. insurers. and hospital corporations should 

not be allowed to imp!ISC tocir ideology on women. 

For more infonnation or questions. plcase contact Susan Berke Fogel. Director of 

Reproductive I-Iealth. at fogel@' hcalthlaw.org or(818)621-7358. 

Thank you . 

., n-.e J lenr), 1. Kaise, l'"",i1y Found .. ' f'iIJ<Jjng.from 1/'" Kai$er Women'" 1/,(j{lh Surwy (lulY 20(15), 

l": II "'w tT.Df'iI"'om"". alt hluploodl"'om,,"_an d, hc. lh-c",,, n" iOl1.I ",o nl ey nndings rrom 'l hc _ka i ..... _ 

wom"" ... hc.llh-,uI"'ey.pdr. 
99

Æ 

C ONTACT I I'WORM ATION 

Name: Susan Berke Fogel, NHeLP Dir('Ctor of Reproductivc Health 

Organization: The National Health Law Program (N HeLP) 

Address: 1444 I Street NW, Suite 1105 Washington, DC 20005 

Phone Number: (818) 62 I -7358 

Conlacl E-mail Address: fogel@'hcahhlaw.org